[Federal Register Volume 66, Number 93 (Monday, May 14, 2001)]
[Notices]
[Pages 24325-24329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-12063]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-427-819]


Notice of Preliminary Affirmative Countervailing Duty 
Determination and Alignment with Final Antidumping Duty Determination: 
Low Enriched Uranium from France

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of Preliminary Affirmative Countervailing Duty 
Determination.

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EFFECTIVE DATE: May 14, 2001.

FOR FURTHER INFORMATION CONTACT: Michael Grossman at (202) 482-2786, 
Office of AD/CVD Enforcement VI, Group II, Import Administration, 
International Trade Administration, U.S. Department of Commerce, Room 
4012, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

Preliminary Determination

    The Department of Commerce (the Department) preliminarily 
determines that countervailable subsidies are being provided to certain 
producers and exporters of low enriched uranium (subject merchandise) 
from France. For information on the estimated countervailing duty 
rates, please see the ``Suspension of Liquidation'' section of this 
notice.

SUPPLEMENTARY INFORMATION:

Petitioners

    The petition in this investigation was filed by USEC Inc., its 
wholly owned subsidiary, United States Enrichment Corporation (USEC) 
and the Paper, Allied-Industrial, Chemical and Energy Workers 
International Union, AFL-CIO, CLC, and Local 5-550 and Local 5-689 
(collectively PACE) (the petitioners).

Case History

    Since the publication of the notice of initiation in the Federal 
Register (see Notice of Initiation of Countervailing Duty 
Investigations: Low Enriched Uranium from France, Germany, the 
Netherlands, and the United Kingdom, 66 FR 1085 (January 5, 2001) 
(Initiation Notice)), the following events have occurred: On January 
11, 2001, we issued countervailing duty questionnaires to the 
Government of France (GOF) and to Eurodif, S.A. (Eurodif), the 
producer/exporter of subject merchandise cited in the December 7, 2000 
petition. On March 20, 2001, we received questionnaire responses from 
Eurodif, S.A. and its majority owner, Compagnie Generale des Matieres 
Nucleaires (COGEMA), and the GOF. COGEMA acts as a sales agent for 
Eurodif's exports to the United States. On March 27 and April 10, 2001, 
we issued supplemental questionnaires to Eurodif/COGEMA and the GOF 
(collectively respondents). On April 26, 2001, we issued an additional 
supplemental questionnaire to Eurodif/COGEMA. On April 5 (amended on 
April 9), April 25, and May 1, 2001, we received supplemental 
questionnaire responses from respondents.
    On February 21, 2001, we issued an extension of the due date for 
this preliminary determination from March 2, 2001 to May 7, 2001. See 
Low Enriched Uranium from France,

[[Page 24326]]

Germany, the Netherlands, and the United Kingdom: Extension of Time 
Limit for Preliminary Determinations in Countervailing Duty 
Investigations, 66 FR 11000 (February 21, 2001) (Extension Notice).
    On May 3, 2001, consultations in accordance with Article 13.2 of 
the Agreement on Subsidies and Countervailing Measures were held in 
Geneva, Switzerland with the Government of France and the Delegation of 
the European Commission.
    In the Initiation Notice, we invited interested parties to comment 
on the scope of these investigations. We received comments from 
respondents on January 17, 2001, and from petitioners on January 23, 
2001. In addition, we received comments from the Ad Hoc Utilities 
Group, an industrial user/consumer, on April 5, 2001. Our analysis of 
these comments can be found in the May 7, 2001 Public Memorandum to 
Bernard Carreau entitled Low Enriched Uranium from France, Germany, the 
Netherlands and the United Kingdom; Comments on the Scope of the 
Investigations, on file in the Central Records Unit, Room B-099, of the 
Main Commerce Building.
    On April 27, 2001, petitioners submitted a new subsidy allegation 
stemming from Eurodif's contract with Electricite de France (EdF). Due 
to the lateness of the allegation, we have not yet had an opportunity 
to fully review petitioners' allegation and decide whether to initiate 
an investigation. We will address it after this determination. If we 
decide to initiate on this allegation, then prior to making our final 
determination, we will issue a preliminary analysis memorandum 
regarding this allegation and allow the parties to comment.

Scope of the Investigation

    For purposes of this investigation, the product covered is low 
enriched uranium (LEU). LEU is enriched uranium hexafluoride 
(UF<INF>6</INF>) with a U<SUP>235</SUP> product assay of less than 20 
percent that has not been converted into another chemical form, such as 
UO<INF>2</INF>, or fabricated into nuclear fuel assemblies, regardless 
of the means by which the LEU is produced (including LEU produced 
through the down-blending of highly enriched uranium).
    Certain merchandise is outside the scope of this investigation. 
Specifically, this investigation does not cover enriched uranium 
hexafluoride with a U<SUP>235</SUP> assay of 20 percent or greater, 
also known as highly enriched uranium. In addition, fabricated LEU is 
not covered by the scope of this investigation. For purposes of this 
investigation, fabricated uranium is defined as enriched uranium 
dioxide (UO<INF>2</INF>), whether or not contained in nuclear fuel rods 
or assemblies. Natural uranium concentrates 
(U<INF>3</INF>O<INF>8</INF>) with a U<SUP>235</SUP> concentration of no 
greater than 0.711 percent and natural uranium concentrates converted 
into uranium hexafluoride with a U<SUP>235</SUP> concentration of no 
greater than 0.711 percent are not covered by the scope of the 
investigation.
    The merchandise subject to this investigation is classified in the 
Harmonized Tariff Schedule of the United States (HTSUS) at subheading 
2844.20.0020. Subject merchandise may also enter under 2844.20.0030, 
2844.20.0050, and 2844.40.00. Although the HTSUS subheadings are 
provided for convenience and U.S. Customs purposes, the written 
description of the merchandise under investigation is dispositive.
    In the Initiation Notice we invited parties to comment on scope 
issues raised by this investigation. These comments are addressed in a 
scope memo dated May 7, 2001. However, to the extent that some of the 
comments on scope issues re-argue the determination of industry support 
for the petition, we draw parties attention to Section 702(c)(4)(E) and 
732(c)(4)(E) which states in pertinent part: ``after the administering 
authority makes a determination with respect to initiating an 
investigation, the determination regarding industry support shall not 
be reconsidered.''

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
regulations codified at 19 CFR part 351 (2000).

Injury Test

    Because France is a ``Subsidy Agreement Country'' within the 
meaning of section 701(b) of the Act, the International Trade 
Commission (ITC) is required to determine whether imports of the 
subject merchandise from France materially injure or threaten material 
injury to a U.S. industry. On January 31, 2001, the ITC published its 
preliminary determination finding that there is a reasonable indication 
that an industry in the United States is being materially injured, or 
threatened with material injury, by reason of imports from France of 
subject merchandise. See Low Enriched Uranium from France, Germany, the 
Netherlands and the United Kingdom, 66 FR 8424 (January 31, 2001).

Alignment With Final Antidumping Duty Determination

    On May 4, 2001, petitioners submitted a letter requesting alignment 
of the final determination in this investigation with the final 
determination in the companion antidumping duty investigation. 
Therefore, in accordance with section 705(a)(1) of the Act, we are 
aligning the final determination in this investigation with the final 
determination in the antidumping duty investigation of low enriched 
uranium from France.

Period of Investigation

    The period of investigation (POI) for which we are measuring 
subsidies is January 1, 1999, through December 31, 1999.

Company History

    Eurodif was formed in 1973 by French and foreign government 
agencies to provide a secure source of LEU, in order to facilitate the 
development of nuclear energy programs in participating countries. 
During the POI, Eurodif was 44.65 percent-owned by COGEMA, which itself 
is principally owned by a subsidiary of the Commissariat d'Energie 
Atomique (CEA), an agency of the GOF. Further, Eurodif was 25 percent-
owned by SOFIDIF, a French company 60 percent-owned by COGEMA, thereby 
effectively placing COGEMA's ownership of Eurodif during the POI at 
approximately 60 percent. The remaining major shareholders of Eurodif 
during the POI were ENUSA, an entity of the Spanish government, 
SYNATOM, an entity of the Belgian government, and ENEA, an entity of 
the Italian government.

Programs Preliminarily Determined To Confer Subsidies

1. Purchase at Prices That Constitute ``More Than Adequate 
Remuneration''

    Eurodif provides low enriched uranium to EdF. EdF is a wholly-owned 
French government agency that supplies, imports and exports 
electricity. EdF is regulated by the Gas, Electricity and Coal 
Department of the Ministry of Industry (DIGEC) and the Budget and 
Treasury Departments of the Ministry of France. EdF is the predominant 
supplier of electricity in France, having provided 94 percent of the 
total electricity generated in France in 1998. EdF's nuclear facilities 
account for approximately 75 percent of the

[[Page 24327]]

power supplied by EdF. To date, EdF has entered into three long-term 
contracts with Eurodif to secure LEU. The first contract was negotiated 
in 1975; Eurodif began enrichment at its Georges-Besse gaseous 
diffusion facility in 1979.
    Petitioners have alleged that the GOF, through EdF, purchased LEU 
from Eurodif at prices that constitute ``more than adequate 
remuneration'' under section 771(5)(E)(iv) of the Act. Petitioners have 
alleged that the prices paid by EdF were established to cover Eurodif's 
depreciation charges on the Georges-Besse plant, and to provide Eurodif 
with a stable cash flow to help meet its financial obligations.
    Respondents have argued that, as alleged, the subsidy relates to 
the provision of services, not the purchase of goods. Therefore, any 
such subsidy, were it to exist, would not be countervailable. In this 
context, respondents assert that Congress, the courts, and USEC itself 
have recognized that USEC (and its predecessors) is a service 
provider.\1\ Absent any difference between the operations of USEC and 
Eurodif, respondents assert that Eurodif is merely a service provider, 
like USEC.
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    \1\ Respondents have cited several U.S. court cases in which 
USEC is claimed to have represented itself as a service provider, 
rather than a producer of goods. None of the cited cases pertain to 
the AD/CVD law. Rather, these cases pertain to different laws which 
have separate and distinct purposes from that of the AD/CVD law. 
Moreover, the parties' own characterizations of their activities in 
other contexts does not establish how the Department is to examine 
such activities for purposes of the AD/CVD law. Respondents also 
contend that USEC identifies itself as an ``enrichment service 
provider'' in a number of other fora, including in submissions made 
to the Department in the context of the suspended antidumping duty 
investigation on uranium from Kazakhstan. Regardless of how a party 
has characterized itself in the past in other contexts, the 
Department is charged with determining whether the manufacturer's 
activities qualify to establish it as the producer of the subject 
merchandise and must reach that determination on the record before 
it.
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    In our determination of industry support at the time of initiation 
of this investigation, we found that USEC is the producer of LEU 
because of the nature and extent of its manufacturing operations. See 
Memorandum for Holly A. Kuga entitled Determination of Industry Support 
for the Antidumping and Countervailing Duty Petitions on Low Enriched 
Uranium from France, Germany, the Netherlands, and the United Kingdom 
(December 27, 2000). In accordance with section 702(c)(4)(E) of the 
Act, the Department cannot revisit a determination of industry support 
after initiation. Further, we noted that the Department bases its 
determination of who qualifies as a producer upon an examination of a 
company's production operations, not the particular configuration of 
the sales. For purposes of this determination, we accept Eurodif's 
assertion that its operations are no different from those of USEC. 
Therefore, we preliminarily find that Eurodif is the producer of LEU, 
the product subject to this investigation.
    We preliminarily determine that EdF's purchases from Eurodif 
constitute a government financial contribution because EdF is wholly-
owned and controlled by the GOF. This treatment of EdF is consistent 
with our policy with respect to the treatment of government-owned 
utility companies. See, e.g., the Final Affirmative Countervailing Duty 
Determination: Certain Cut-to-Length Carbon-Quality Steel Plate from 
the Republic of Korea, 64 FR 73176 (December 29, 1999) and Final 
Affirmative Countervailing Duty Determination: Steel Wire Rod from 
Venezuela, 62 FR 55014 (October 22, 1997). In addition, because this 
program is available only to Eurodif, we preliminarily determine that 
this program is specific under section 771(5A)(D)(i) of the Act. 
Because the government is purchasing a good from Eurodif, a financial 
contribution is being provided under section 771(5)(D)(iv) of the Act.
    Next, we must determine whether a benefit is provided to Eurodif 
under this program. Under section 771(5)(E)(iv) of the Act, a 
countervailable benefit may be provided by a government's purchase of a 
good for ``more than adequate remuneration.'' Under section 
771(5)(E)(iv) of the Act, the adequacy of remuneration will be 
determined in relation to the prevailing market conditions for the 
goods being purchased in the country which is subject to investigation. 
Therefore, in order to determine whether the prices paid by EdF 
constitute ``more than adequate remuneration,'' we must compare the 
prices paid by EdF to Eurodif with the prices paid to Eurodif by its 
other customers.
    Due to the difference in the pricing structure between Eurodif and 
EdF, as compared with the pricing between Eurodif and its other 
customers, it is important to make certain adjustments to our 
comparison. Unlike most other customers, EdF provides its own energy 
for Eurodif to use when producing LEU for EdF. Eurodif pays EdF for the 
energy it uses and re-bills EdF an identical amount. Respondents state 
that this billing procedure for energy is done simply for tax purposes 
and argue that the actual prices paid by EdF for LEU cover the costs of 
operation only, not energy costs. Other customers that do not provide 
their own electricity simply pay one price, which takes into account 
both operational and energy costs. In order to make a proper comparison 
to the prices paid by other customers to Eurodif, the Department has 
included both operational and energy prices paid by EdF in order to 
determine the prices paid by EdF.
    As part of the arrangement for obtaining LEU, customers often 
provide an amount of natural uranium equal to that which went into the 
LEU they are purchasing. The record does not contain information on the 
value of the natural uranium provided by EdF or other customers to 
Eurodif. Therefore, for purposes of this comparison, we have assumed 
that the value of all natural uranium is the same, regardless of the 
customer. Thus, in making the comparison we have not included a value 
for the natural uranium component of the LEU purchased by EdF. 
Additionally, to ensure that our benchmark is representative of market 
conditions, we used prices paid by Eurodif's customers which are not 
Eurodif shareholders.
    In order to determine whether a benefit was provided to Eurodif 
during the POI, we compared the price paid to Eurodif by EdF during the 
POI with the weighted-average price paid to Eurodif by its non-
shareholder customers during the POI. Based on our analysis, we 
preliminarily determine that prices paid by EdF to Eurodif were higher 
than prices Eurodif received from its non-shareholder customers. 
Therefore, in accordance with section 771(5)(E)(iv) of the Act, we 
preliminarily determine that this program conferred countervailable 
benefits to Eurodif during the POI.
    Because EdF's purchases of this product from Eurodif are not 
exceptional but, rather, are made on an ongoing basis from year to 
year, we determine that the benefit conferred under this program is 
recurring under section 351.524(c) of the CVD Regulations. Therefore, 
the benefit is expensed in the year of receipt, i.e., the year in which 
the purchases are made.
    To calculate the benefit conferred to Eurodif, we multiplied the 
calculated price differential by the quantity of separative work units 
(SWUs) component of the LEU purchased from Eurodif by EdF during the 
POI. Although the cash component of EdF's LEU purchases was paid on a 
``per-SWU'' basis, the contracts also contained provisions for the 
natural uranium component of the LEU as well as the electricity used by 
Eurodif in the production of EdF's LEU. Because we have determined that 
the value of the natural uranium component of the LEU is equal for both 
EdF and Eurodif's other

[[Page 24328]]

customers, as stated above, we did not need to calculate a price 
differential for the natural uranium component of the LEU. Rather, the 
natural uranium component of the LEU purchased by different classes of 
customers cancelled each other out.
    Next, we divided this result by Eurodif's adjusted total sales 
during the POI. Based on our review of the responses, it appears as 
though respondents did not report a value for the natural uranium 
component of certain LEU sales. Therefore, in order to determine more 
accurately the level of subsidy applicable to the subject merchandise, 
we have estimated a value for this component. Based on petitioners' 
estimation that the enrichment component accounts for 60 percent of the 
value of LEU, we have increased the reported sales value to include an 
estimated value for the natural uranium component. We recognize that 
this is an estimate of the value of LEU sold by respondents. We intend 
to seek additional information from respondents prior to our final 
determination. On this basis, we preliminarily determine a net 
countervailable subsidy under this program of 13.62 percent ad valorem 
for Eurodif.

2. Exoneration/Reimbursement of Corporate Income Taxes

    Under a specific governmental agreement entered into upon Eurodif's 
creation, Eurodif is only liable for income taxes on the portion of its 
income relating to the percentage of its private ownership. Eurodif is 
fully exonerated from payment of corporate income taxes corresponding 
to the percentage of its foreign government ownership and is eligible 
for a reimbursement of the amount of corporate income taxes 
corresponding to its percentage of French government ownership. Based 
on this governmental agreement, Eurodif was exonerated from a portion 
of its 1998 corporate income taxes filed during the POI. This tax 
exemption is a financial contribution within the meaning of section 
771(5)(D)(ii) of the Act. Further, because the tax exemption is limited 
to Eurodif, the benefit is specific in accordance with section 
771(5A)(D)(i) of the Act. Therefore, we preliminarily determine that 
the exoneration of income taxes under this program is countervailable.
    As noted above, Eurodif was also eligible for a reimbursement of 
the amount of income taxes corresponding to its percentage of French 
government ownership. Eurodif reported that the portion of its taxes 
attributable to French government ownership was paid in 1999, but was 
not reimbursed until 2000, which is outside the POI. In addition, 
Eurodif reported that it did not receive any reimbursements of 
corporate income taxes during the POI for any taxes previously paid. 
Therefore, we preliminarily determine that Eurodif did not receive a 
benefit during the POI with respect to the portion of its income tax 
corresponding to French government ownership.
    To calculate the benefit conferred upon Eurodif from the 
exoneration part of this program, we took the amount of exonerated 
taxes and divided by Eurodif's total sales during the POI, adjusted as 
noted in the ``Purchase at Prices that Constitute ``More Than Adequate 
Remuneration''' section, above. On this basis, we preliminarily 
determine a net countervailable subsidy to Eurodif from this program of 
0.32 percent ad valorem.

Verification

    In accordance with section 782(i) of the Act, we will verify the 
information submitted by respondents prior to making our final 
determination.

Suspension of Liquidation

    In accordance with section 703(d)(1)(A)(i) of the Act, we have 
calculated an individual rate for Eurodif, the only company under 
investigation. We preliminarily determine that the total estimated net 
countervailable subsidy rate is 13.94 percent ad valorem. The All 
Others rate is 13.94 percent ad valorem, which is the rate calculated 
for Eurodif.
    In accordance with section 703(d) of the Act, we are directing the 
U.S. Customs Service to suspend liquidation of all entries of the 
subject merchandise from France, which are entered or withdrawn from 
warehouse, for consumption on or after the date of the publication of 
this notice in the Federal Register, and to require a cash deposit or 
bond for such entries of the merchandise in the amounts indicated 
above. This suspension will remain in effect until further notice.

ITC Notification

    In accordance with section 703(f) of the Act, we will notify the 
ITC of our determination. In addition, we are making available to the 
ITC all non-privileged and nonproprietary information relating to this 
investigation. We will allow the ITC access to all privileged and 
business proprietary information in our files, provided the ITC 
confirms that it will not disclose such information, either publicly or 
under an administrative protective order, without the written consent 
of the Assistant Secretary for Import Administration.
    In accordance with section 705(b)(2) of the Act, if our final 
determination is affirmative, the ITC will make its final determination 
within 45 days after the Department makes its final determination.

Public Comment

    In accordance with 19 CFR Sec. 351.310, we will hold a public 
hearing, if requested, to afford interested parties an opportunity to 
comment on this preliminary determination. Any requested hearing will 
be tentatively scheduled to be held 57 days from the date of 
publication of the preliminary determination at the U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230. Individuals who wish to request a hearing must submit a written 
request within 30 days of the publication of this notice in the Federal 
Register to the Assistant Secretary for Import Administration, U.S. 
Department of Commerce, Room 1870, 14th Street and Constitution Avenue, 
NW., Washington, DC 20230. Parties should confirm by telephone the 
time, date, and place of the hearing 48 hours before the scheduled 
time.
    Requests for a public hearing should contain: (1) The party's name, 
address, and telephone number; (2) the number of participants; and, (3) 
to the extent practicable, an identification of the arguments to be 
raised at the hearing. In addition, six copies of the business 
proprietary version and six copies of the non-proprietary version of 
the case briefs must be submitted to the Assistant Secretary no later 
than 50 days from the date of publication of the preliminary 
determination. As part of the case brief, parties are encouraged to 
provide a summary of the arguments not to exceed five pages and a table 
of statutes, regulations, and cases cited. Six copies of the business 
proprietary version and six copies of the non-proprietary version of 
the rebuttal briefs must be submitted to the Assistant Secretary no 
later than 5 days from the date of filing of the case briefs. An 
interested party may make an affirmative presentation only on arguments 
included in that party's case or rebuttal briefs. Written arguments 
should be submitted in accordance with 19 CFR 351.309 and will be 
considered if received within the time limits specified above.
    This determination is published pursuant to sections 703(f) and 
777(i) of the Act. Effective January 20, 2001, Bernard T. Carreau is 
fulfilling the

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duties of the Assistant Secretary for Import Administration.

    Dated: May 7, 2001.
Bernard T. Carreau,
Deputy Assistant Secretary, Import Administration.
[FR Doc. 01-12063 Filed 5-11-01; 8:45 am]
BILLING CODE 3510-DS-P