Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Notices 65877

1The petitioners in this investigation are USEC,

Inc., and its wholly-owned subsidiary, United

States Enrichment Corporation (collectively USEC);

and the Paper Allied-Industrial, Chemical and

Energy Workers International Union, AFL-CIO,

CLC, Local 5–550 and Local 5–689 (collectively

PACE).

2The members of the Ad Hoc Utilities Group are:

Arizona Public Service Co., Carolina Power & Light

Co., Dominion Generation, Duke Energy Corp., DTE

Energy, Entergy Services, Inc., Exelon Corporation,

First Energy Nuclear Operating Co., Florida Power

Corp., Florida Power and Light Co., Nebraska Public

Power District, Nuclear Management Co. LLC ( on

behalf of certain member companies), PPL

Susquehanna LLC, PSEG Nuclear LLC, South Texas

Project, Southern California Edison, Southern

Nuclear Operating Co., Union Electric Company,

and Wolf Creek Nuclear Operating Corp.

DEPARTMENT OF COMMERCE

International Trade Administration

[A–427–818]

Notice of Final Determination of Sales

at Less Than Fair Value: Low Enriched

Uranium From France

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final determinations of

sales at less than fair value.

EFFECTIVE DATE: December 21, 2001.

FOR FURTHER INFORMATION CONTACT:

Victoria Schepker or Edward Easton, at

(202) 482–1756 or (202) 482–3003,

respectively; AD/CVD Enforcement,

Office 5, Group II, Import

Administration, Room 1870,

International Trade Administration,

U.S. Department of Commerce, 14th

Street and Constitution Avenue, NW.,

Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

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 Department of

Commerce (Department) regulations

refer to the regulations codified at 19

CFR part 351 (April 2000).

Final Determination

We determine that low enriched

uranium (LEU) from France is being

sold, or is likely to be sold, in the

United States at less than fair value

(LTFV), as provided in section 735 of

the Act. The estimated margins of sales

at LTFV are shown in the Continuation

of Suspension of Liquidation section of

this notice.

Case History

The preliminary determination in this

investigation was published on July 13,

2001. See Notice of Preliminary

Determination of Sales at Less Than

Fair Value and Postponement of Final

Determination: Low Enriched Uranium

from France, 66 FR 36743 (July 13,

2001) (Preliminary Determination). The

petitioners 1 and the respondent,

Eurodif, S.A. (Eurodif), the sole

producer of the subject merchandise,

and its owner, Compagnie Generale des

Matieres Nucleaires (Cogema)

(collectively, Cogema/Eurodif or the

respondent), filed case briefs on

antidumping methodological issues on

September 28, 2001, and rebuttal briefs

on October 9, 2001. A rebuttal brief was

also filed by the Ad Hoc Utilities Group

(Ad Hoc Utilities Group or AHUG).2 A

public hearing on the antidumping

methodological issues was held on

October 23, 2001.

On October 22 and 23, 2001, the

petitioners, respondent, and the Ad Hoc

Utilities Group filed briefs on common

scope issues in the antidumping and

countervailing duty investigations of

low enriched uranium from France,

Germany, the Netherlands and the

United Kingdom. Rebuttal briefs on

these common scope issues were filed

on October 29, 2001, and a public

hearing on the common scope issues

was held on October 31, 2001. In

response to a September 28, 2001

submission by the European

Commission to Mr. Grant Aldonas,

Under Secretary for International Trade,

regarding the antidumping duty (AD)

and countervailing duty (CVD)

investigations of LEU from France,

Germany, the Netherlands, and the

United Kingdom, and Mr. Aldonas’

November 7, 2001 reply to this letter

and the November 22, 2001 submission

from the European Commission, the

petitioners, respondent and the Ad Hoc

Utilities Group filed briefs that

addressed the content of this

correspondence.

This final determination was

originally scheduled to be issued on

November 26, 2001. On November 6,

2001, the Department tolled the final

determination deadlines, until

December 13, 2001, to accommodate a

delayed verification and briefing and

hearing schedule in the companion

countervailing duty investigation, due

to the events of September 11, 2001.

Amended Scope of Investigation

For purposes of this investigation, the

product covered is all low enriched

uranium (LEU). LEU is enriched

uranium hexafluoride (UF6) with a U235

product assay of less than 20 percent

that has not been converted into another

chemical form, such as UO2, 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

U235 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 (UO2), whether or not contained

in nuclear fuel rods or assemblies.

Natural uranium concentrates (U3O8)

with a U235 concentration of no greater

than 0.711 percent and natural uranium

concentrates converted into uranium

hexafluoride with a U235 concentration

of no greater than 0.711 percent are not

covered by the scope of this

investigation.

Also excluded from these

investigations is LEU owned by a

foreign utility end-user and imported

into the United States by or for such

end-user solely for purposes of

conversion by a U.S. fabricator into

uranium dioxide (UO2) and/or

fabrication into fuel assemblies so long

as the uranium dioxide and/or fuel

assemblies deemed to incorporate such

imported LEU (i) remain in the

possession and control of the U.S.

fabricator, the foreign end-user, or their

designed transporter(s) while in U.S.

customs territory, and (ii) are reexported within eighteen (18) months of

entry of the LEU for consumption by the

end-user in a nuclear reactor outside the

United States. Such entries must be

accompanied by the certifications of the

importer and end user.

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 customs purposes,

the written description of the

merchandise subject to this proceeding

is dispositive.

Scope Clarification

For further details, see Comment 2 of

the ‘‘Issues and Decision Memorandum

for the Antidumping Duty Investigation

of Low Enriched Uranium from France’’

(Decision Memorandum) from Bernard

T. Carreau, Deputy Assistant Secretary

65878 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Notices

for Import Administration, to Faryar

Shirzad, Assistant Secretary for Import

Administration, dated concurrently

with this notice.

Goods Versus Services

Applicability of AD/CVD Law

The Preliminary Determination

In the preliminary determinations in

the LEU investigations, we determined

that all LEU entering the United States

from Germany, the Netherlands, the

United Kingdom, and France is subject

to the AD and CVD investigations on

LEU regardless of the way in which the

sales for such merchandise were

structured. See, e.g., Notice of

Preliminary Determination of Sales at

Less Than Fair Value: Low Enriched

Uranium from Germany and the

Netherlands; and Postponement of Final

Determinations, 66 FR 36748, 36750

(July 13, 2001). We based our

preliminary determinations on several

factors. First, we found, and no party

disputed, that LEU entering the United

States constitutes a good, the tangible

yield of a manufacturing operation.

Moreover, under the U.S. Customs

regulations, we recognized that any item

within a tariff category for the

Harmonized Tariff System constitutes

merchandise for customs purposes. See

19 CFR 141.4 (2000). In this case, LEU

is normally classified under HTSUS

2844.20.0020, but also satisfies three

other HTSUS classifications described

as enriched uranium compounds,

enriched uranium, and radioactive

elements, isotopes, and compounds.

Second, in our preliminary

determinations we found it to be a wellestablished fact that the enrichment

process is a major manufacturing

operation for the production of LEU,

and that enrichment is a required

operation in order to produce LEU. We

found that no party disputes that the

enrichment process constitutes

substantial transformation of the

uranium feedstock. We, therefore,

preliminarily concluded that the LEU

enriched and exported from Germany,

the Netherlands, the United Kingdom

and France are products of those

respective countries, and are subject to

these investigations.

Third, we found that there are

significant volumes of LEU sold

pursuant to contracts that expressly

provide separate prices for SWU and

feedstock (i.e., contracts for enriched

uranium product (EUP)), and that no

party disputes that such sales constitute

sales of subject merchandise. Rather, it

is only those transactions in which

utility companies obtain LEU through

separate purchases of SWU and

feedstock from separate entities that the

Ad Hoc Utilities Group (AHUG)

contends cannot be subject to the

antidumping law. We preliminarily

determined that there was little

substantive commercial difference

between the two types of transactions.

We found that, simply because an

unaffiliated customer purchases subject

merchandise through two transactions,

instead of a single transaction, does not

mean that the merchandise entering the

United States is not subject to the

antidumping law.

Fourth, we preliminarily determined

that, contrary to respondents’

arguments, the tolling regulation does

not provide a basis to exclude

merchandise from the scope of an

investigation. Rather, we found that the

purpose of the tolling regulation is to

identify the seller of the subject

merchandise for purposes of

establishing export price, constructed

export price, and normal value. Thus,

under the tolling regulation, the issue is

not whether the LEU in question is

subject to the antidumping law, but

rather who is the seller of the subject

merchandise for determining U.S. price

and normal value or, more specifically,

what is the appropriate way in which to

value subject merchandise and foreign

like product. To the extent that sales of

subject merchandise are structured as

two transactions, we stated that we

would combine such transactions to

obtain the relevant price of the subject

merchandise.

Fifth, we preliminarily determined

that enrichers are the sellers of LEU in

both types of transactions—either as an

exchange of SWU and uranium

feedstock for cash, or as an exchange of

SWU for cash and a swap of uranium

feedstock. We preliminarily determined

that regardless of whether the utility

company pays in cash or in kind for the

natural uranium content, the LEU is

delivered under essentially the same

contract terms, including warranties and

guarantees pertaining to the complete

LEU product. Second, enrichers do not

use the uranium feedstock provided by

the utility companies. Instead, the

natural uranium is typically delivered

shortly before, or even after, delivery of

the LEU, making the delivery of such

uranium a payment in kind for the

natural uranium component of the LEU.

Third, the utility company does not

have control over the process used to

produce the LEU that the utility

company receives. Rather, the enricher

controls the manufacture of LEU, as

demonstrated by the fact that the

product assay under the contract

(transactional assay) differs from the

product assay produced and delivered

by the enricher (operational assay). The

enricher makes the decision of the

particular product based upon its own

operational requirements and inputs

costs. We preliminarily determined that,

taken together, these facts indicate that

enrichers are in effect selling LEU under

both types of contractual arrangements.

Discussion

For these final determinations, we

have concluded that all LEU from the

investigated countries entering the

United States for consumption is subject

to the AD and CVD laws. We have

carefully considered all comments

received on this issue in response to our

preliminary determinations and, for the

reasons stated below, do not find

persuasive the arguments that the LEU

at issue is exempt from the AD and CVD

laws.

For these final determinations,

respondents and AHUG are joined by

the EC in raising again the issue of

whether the AD and CVD laws can be

applied to goods sold pursuant to

contracts for the provision of

enrichment. Respondents and AHUG

contend that, under such contracts, LEU

is not sold to, or in, the importing

country. Respondents contend that, for

these transactions, enrichment

companies sell enrichment services,

which is a component of LEU.

Accordingly, for those entries of LEU,

sold pursuant to SWU contracts, these

parties assert that the AD and CVD laws

are not applicable because respondents

are not selling subject merchandise and

because there is no sale of subject

merchandise in the United States.

In our view, respondents and AHUG

have confused fundamental concepts

concerning the application of the unfair

trade laws. The AD and CVD laws were

enacted to address trade in goods. Thus,

respondents and AHUG have confused

what is being sold in a particular

transaction with what is being

introduced into the commerce of the

United States. The Department finds

that the issue of whether merchandise

entering the United States is subject to

the AD and CVD laws depends upon

whether the merchandise produced in,

and exported from, a foreign country is

introduced into the commerce of the

United States.

In particular, the language of section

735(a)(1) of the Act states that ‘‘the

administering authority shall make a

final determination of whether the

subject merchandise is being, or is likely

to be, sold in the United States at less

than fair value.’’ See also section 731(1)

of the Act. We have consistently

interpreted these provisions to pertain

to merchandise from the investigated

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Notices 65879

3See Respondents’ Joint Case Brief, at 38, 39; see

also Petitioners’ Rebuttal Brief at 26.

country, and not to companies. See Jia

Farn Mfg. Co. v. United States, 817 F.

Supp. 969, 973 (CIT 1993) (‘‘LTFV

determinations and antidumping duty

orders are rendered upon the subject

merchandise from a certain country

under the investigation.’’). In other

words, AD and CVD cases proceed in

rem (i.e., against the good as entered),

rather than in personam (i.e., against the

parties to the import transaction).

Similarly, in conducting

countervailing duty investigations,

section 701(a)(1) of the Act requires the

Department to impose duties if, inter

alia, ‘‘the administering authority

determines that the government of a

country or any public entity within the

territory of a country is providing,

directly or indirectly, a countervailable

subsidy with respect to the

manufacture, production, or export of a

class or kind of merchandise imported,

or sold (or likely to be sold) for

importation, in the United States.’’ We

believe the statute is clear that, where

merchandise from an investigated

country enters the commerce of the

United States, the law is applicable to

such imports.

In these investigations, no party

disputes that the LEU entering the

United States constitutes merchandise.

As the product yield of a manufacturing

operation, the Department continues to

find that LEU is a tangible product.

Second, it is well established, and no

party disputes, that the enrichment

process is a major manufacturing

operation for the production of LEU,

and that enrichment is a required

operation in order to produce LEU.

Thus, we find that the enrichment

process constitutes substantial

transformation of the uranium

feedstock. We continue to find,

therefore, that the LEU enriched in and

exported from Germany, the

Netherlands, the United Kingdom and

France is a product of those respective

countries.

Finally, we find, and no party

disputes, that the LEU at issue enters

into the commerce of the United States.

Thus, the question of whether enrichers

sell enrichment processing, as compared

to LEU, is not relevant to the issue of

whether the AD and CVD law is

applicable. Rather, it is only relevant in

these investigations for purposes of

determining how to calculate the

dumping margin and how to determine

who is the producer/seller of subject

merchandise.

In seeking to equate what is being

sold with a service that is beyond the

scope of the AD and CVD laws,

respondents and AHUG assert that the

enrichment of uranium is akin to the

cleaning of a suit.3 They contend that a

person who takes a suit to a cleaner and

picks up a clean suit is merely paying

for the service of cleaning. In the case

of enrichment, they assert, a person

provides natural uranium to an enricher

who returns enriched uranium and is

paid for the services.

We agree that a cleaner merely

provides a service for which one is paid.

However, we disagree with the

appropriateness of the analogy used for

purposes of understanding what is

occurring in these cases. In the case of

cleaning services, the cleaner merely

returns to its customer a cleaned suit; no

substantial transformation takes place,

and no merchandise is being produced.

Enrichment of uranium, however, is a

critical step in the production of nuclear

fuel. The production of uranium in the

nuclear fuel cycle consists of five stages:

mining, milling, conversion,

enrichment, and fabrication. A distinct

product is produced at each stage.

Milled uranium is converted into

uranium hexafluoride. Uranium

hexafluoride is used to produce

enriched uranium. Enriched uranium is

used to produce fuel rods. And fuel rods

are used in nuclear-generating facilities

to produce electricity. In the case of

enrichment, it is uncontested that

enrichment results in the production of

two separate products: low enriched

uranium and uranium tails (or depleted

uranium which can be re-enriched to

produce enriched uranium).

Respondents’ and AHUG’s reference

to the term ‘‘services’’ in their

arguments mischaracterizes the nature

of the enrichment operations, and

attempts to place a major manufacturing

operation which produces merchandise

squarely outside the realm of trade in

goods, based solely upon the way in

which particular sales of such

merchandise are structured. We find,

however, that regardless of whether the

sale is structured as one of enrichment

processing or LEU, in all cases the trade

in LEU is a trade in goods, as the

transactions in question result in the

introduction of LEU into the commerce

of the United States. Accordingly, the

Department determines that all LEU

produced in the investigated countries

and entering the United States for

consumption is subject to these

investigations.

AHUG and respondents insist that the

AD and CVD laws can only be applied

where the sale of LEU occurs in a

specific way (i.e., where the

merchandise is sold in a single

transaction). AHUG further insists that

the law is inapplicable because the

utility companies cannot be considered

the sellers of subject merchandise since

they do not sell LEU, but instead sell

electricity to U.S. consumers.

Accordingly, AHUG and respondents

conclude that the law cannot apply

because no entity sells the subject

merchandise.

We disagree. It does not matter

whether the producer/exporter sold

subject merchandise as subject

merchandise, or whether the producer/

exporter sold some input or

manufacturing process that produced

subject merchandise, as long as the

result of the producer/exporter’s

activities is subject merchandise

entering the commerce of the United

States. The first, and threshold, question

we must ask is whether the merchandise

entering the United States is subject

merchandise. All else flows from this.

The second question is what transaction

does the Department look at to

determine export price.

Further, we believe Congress intended

the law to be applicable where the

subject merchandise enters the

commerce of the United States, even

where the transaction for such

merchandise does not take the form of

a simple, single chain of commerce

involving a solitary manufacturer/

exporter, a single sales price, and a

single unaffiliated purchaser in the

United States. Congress enacted specific

provisions that demonstrate a clear

intent to make merchandise entering the

United States subject to the law even

though the sale by the exporter to the

first unaffiliated purchaser is not a sale

of subject merchandise. In constructed

export price transactions involving

further manufacturing, for example,

subject merchandise enters the United

States, but through a process of further

manufacturing, is often sold to the first

unaffiliated purchaser in the form of

non-subject merchandise. The form of

the sale, however, does not prohibit the

application of the law. To the contrary,

to address those situations Congress

enacted special provisions that require

the Department to determine whether

there are dumping margins and to apply

duties, as appropriate, to such

merchandise. See section 772(b) of Act.

Even where the first sale to an

unaffiliated purchaser is far removed

from the subject merchandise that enters

the commerce of the United States, such

merchandise is covered under the law,

and Congress enacted a specific

provision establishing a basis for

calculating export price. For example,

where rollerchain constitutes the subject

merchandise and enters the United

States, but the first sale to an

65880 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Notices

4 49 Fed. C1. 656 (2001) (No. 96–644C).

5 36 Fed. C1. 691 (1996), aff’d 121 F.3d 1475 (Fed.

Cir. 1997).

6Static Random Access Memory Semiconductors

From Taiwan: Redetermination on Remand, (May 2,

2000). The text of this determination can be found

on the Department’s Internet site at http://

ia.ita.doc.gov/remands/00–48.htm.

unaffiliated purchaser is the sale of a

motorcycle that contains the rollerchain,

the law is applicable to such entries of

rollerchain. See section 772(e). See also

SAA at 825.

While there is no specific statutory

provision that dictates how the

Department is to calculate the value of

subject merchandise and the export

price in the circumstances in these LEU

investigations, the absence of such a

provision does not render the law

inapplicable where the facts

demonstrate that the product in

question enters into the commerce of

the United States, as in this case.

Use of the Term ‘‘Enrichment Services’’

in Other Legal Contexts

In seeking to demonstrate that for the

transactions at issue the enrichment

companies provide enrichment services,

perform a value-added service, and do

not sell the subject merchandise,

respondents contend that the U.S.

government has advocated on behalf of

USEC before U.S. domestic courts that

enrichment contracts are contracts for

services, and accordingly, that the

Uniform Commercial Code (UCC),

which only pertains to goods, does not

apply to such contracts. Moreover, the

parties contend that U.S. courts have

ruled in USEC’s favor, finding that the

UCC did not apply to such transactions

because they were sales contracts for

services, not for goods. The parties

conclude, therefore, that because the

U.S. government has recognized that the

sales in question are sales of services, to

be consistent, the Department cannot

apply the AD or CVD law to these

transactions.

We do not view those determinations

as relevant to the issue of whether LEU

that enters the commerce of the United

States is subject to the AD and CVD

laws. The respondents and AHUG are

mixing two entirely different statutory

regimes, which play different roles and

have different purposes. Other legal or

regulatory regimes are not determinative

of how the Department is to treat such

transactions under the AD and CVD

laws. For example, the court’s finding in

Florida Power & Light Co. v. United

States that the transfer of title of

uranium feedstock ‘‘does not rise to the

level of ‘procurement’ or ‘disposal’ of

property’’ was made in the specific

context of determining the applicability

of the Contract Disputes Act to

government contracts and is not

relevant, much less binding, for

purposes of the application of the AD

and CVD laws.4 In Barseback Kraft AB

and Empress Nacional Del Urnaio, S.A.

v. United States, the court ruled that the

UCC did not apply to the contracts at

issue because the UCC does not apply

to government contracts.5 Moreover, the

UCC addresses the rights and

obligations of the parties to a specific

contract, and is therefore not

determinative of whether the overall

trade is one involving goods or services.

As a general principle, different terms

can have different meanings under

different statutes, and parties are

entitled to make their claims pursuant

to the case law and precedent of the

particular relevant statute, even where

those claims appear to be at odds with

other claims made pursuant to the case

law and precedent of another statute

that has an entirely different purpose.

Tolling

Respondents and AHUG also seek to

obtain an exemption under the law for

the LEU at issue through the application

of the Department’s tolling regulation,

set forth at 19 CFR 351.401(h).

We disagree with

respondents’suggested interpretation for

several reasons. First, we do not

interpret section 351.401(h) of the

Department’s regulations to be relevant

or applicable in determining whether

merchandise entering the United States

is subject to the AD and/or CVD laws.

Instead, section 351.401, including

subsection (h) on tolling, was intended

to ‘‘establish certain general rules that

apply to the calculation of export price,

constructed export price and normal

value,’’ and not for purposes of

determining whether the AD and/or

CVD laws are applicable. See 19 CFR

351.401(a) (2000). Our interpretation

that the tolling regulation is intended

solely for purposes of calculating

dumping margins is further supported

by the absence of any parallel provision

on tolling in the CVD regulations.

Furthermore, in practice, we have

never applied, nor relied upon, section

351.401(h) to exempt merchandise from

AD proceedings, nor have we ever

applied the provision in CVD

proceedings. Moreover, our application

of the tolling regulation in SRAMs from

Taiwan does not support AHUG’s or

respondents’ claim for exemption from

the AD and CVD laws.6 In that case, we

applied the tolling regulation, seeking to

determine which party made the

relevant sale of subject merchandise. We

found that the U.S. design house made

sales of subject merchandise to

unaffiliated purchasers in the United

States, and therefore based our

determination of U.S. price and normal

value upon the transactions made by the

U.S. design house. In that case, we

applied AD duties to all entries of

SRAMs from Taiwan, regardless of

whether the U.S. design house or the

Taiwan exporter made the sale of

subject merchandise. Therefore, our

decision in SRAMs from Taiwan

establishes no basis for excluding the

LEU in question from these

investigations. Further analysis of the

tolling regulation in these antidumping

investigations for purposes of

determining EP, CEP and NV is

provided below.

Temporary Import Bonds, Foreign Trade

Zones, and American Goods Returned

Respondents also cite the

Department’s treatment of subject

merchandise entering the United States

under Temporary Import Bonds (TIBs),

into Foreign Trade Zones (FTZs), and as

American Goods Returned, as examples

of where subject merchandise enters the

United States without being subject to

duties, and to support their claim that

the Department is not authorized to

impose duties on subject merchandise

unless there is a sale of such

merchandise. However, these provisions

cited by respondents are not instances

in which the merchandise enters the

United States for consumption without

the imposition of AD and countervailing

duties. By operation of law, goods

entered under TIBs are prohibited from

entering the United States for

consumption. For FTZs, where the

merchandise enters the United States for

consumption, antidumping and

countervailing duties are imposed. See

15 CFR 400.33(b)(2)(2000). The

Department’s treatment of goods

entering FTZs or under TIBs is,

therefore, consistent with the practice

that the AD and CVD laws apply to

goods that enter the commerce of the

United States.

With respect to American Goods

Returned (AGR), this provision is only

applicable to merchandise that has not

been substantially transformed in

another country. AGR only applies to

U.S. merchandise that is further

manufactured in minor respects in

another country, such that the product

that is returned to the United States is

not substantially transformed. As

discussed below, this provision is not

applicable in this case.

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Notices 65881

Substantial Transformation and

Country of Origin

Respondents also argue that the

Department’s country-of-origin rationale

in this case is contrary to federal and

international regulation of transactions

involving uranium and enrichment

services. Respondents state that the

enrichment process does not wipe away

the country of origin of the uranium;

rather it remains the same for materials

tracking purposes after enrichment as it

was before enrichment. Respondents

conclude that it is irrelevant that

enrichment is a major manufacturing

process and that the enrichment process

constitutes substantial transformation of

the uranium feedstock. Accordingly,

respondents contend that the

Department’s conclusion as to the

country of origin of the enrichment

cannot be used to establish the country

of origin of the unitary LEU, because

LEU itself has two countries of origin,

namely the country of origin of the

uranium and that of the separative work

unit.

We disagree. The Department’s

country-of-origin determinations are

made pursuant to the agency’s authority

to determine the scope of its

investigations and AD/CVD orders. In

contrast, the federal and international

regulation of transactions in uranium

referred to by respondents reflect

requirements adopted for purposes of

non-proliferation. Thus, the Nuclear

Regulatory Commission (NRC) tracks

the origin of natural feedstock for the

purpose of tracing the worldwide

movement and ultimate disposition of

the feedstock, while the U.S. Customs

Service and the Department determine

the country of origin for the

merchandise entering the United States

for purposes of tracking international

commercial transactions and assessing

duties. The NRC has no role in

determining the country of origin for

customs duty purposes. Moreover, the

Department and the Customs Service

make country-of-origin determinations

for the product entering the United

States, which in this case is LEU, not

feedstock and SWU, as respondents

suggest. Indeed, the Department has in

the past determined in other

proceedings covering uranium that the

process of enrichment constitutes

substantial transformation of the

uranium, and therefore, that enrichment

confers country of origin upon the

product entering the United States for

AD purposes.

In the current case, petitioners have

indicated, and no party has disputed,

that the enrichment of uranium

accounts for approximately 60 percent

of the value of the LEU entering the

United States. We find that enrichment

processing adds substantial value to the

natural uranium and creates a new and

different article of commerce and

therefore confers a different country of

origin upon the product for purposes of

the AD and CVD law.

As a final matter, the unfair trade laws

must be applicable to merchandise

produced through contract

manufacturing, just as they are

applicable to merchandise

manufactured by a single entity. To do

otherwise would contravene the intent

of Congress by undermining the

effectiveness of the AD and CVD laws,

which are designed to address practices

of unfair trade in goods, as well as have

profound implications for the

international trading system as a whole.

To the extent that contract

manufacturing can be used to convert

trade in goods into trade in so-called

‘‘manufacturing services,’’ the

fundamental distinctions between goods

and services would be eliminated,

thereby exposing industries to injury by

unfair trade practices without the

remedy of the AD and CVD laws.

While the term ‘‘enrichment services’’

is common in the industry, the

enrichment of uranium feedstock is no

more a ‘‘service,’’ as that term is

normally understood in the

international trading community, than a

production process that results in the

manufacture of textiles, semiconductors,

or corrosion-resistant steel. An importer

of textiles who provides yarn to a textile

manufacturer may view the transaction

as nothing more than the purchase of

‘‘weaving services.’’ An importer of

semiconductors who provides a

patented design mask to a foundry to be

pressed into a wafer for purposes of

making a microchip may view such a

transaction as nothing more than the

purchase of ‘‘pressing services.’’

Similarly, an importer of corrosionresistant steel who provides hot-rolled

steel to a rolling mill may view the

transaction as nothing more than the

purchase of ‘‘rolling and coating

services.’’

Yet, no matter what the purchaser

chooses to call the transaction, and no

matter what terms may be common in

the industry, nothing can change the

fundamental facts associated with all of

these transactions. In each of these three

cases, the purchaser has contracted out

for a major production process that adds

significant value to the input and that

results in the substantial transformation

of the input product into an entirely

different manufactured product. We

simply do not consider a major

manufacturing process to be a ‘‘service’’

in the same sense that activities such as

accounting, banking, insurance,

transportation and legal counsel are

considered by the international trading

community to be services. Instead, we

have always considered the output from

manufacturing operations that result in

subject merchandise being introduced

into the commerce of the United States

to be a good. The only questions we

have grappled with in all these

instances is who is the appropriate

producer/seller of the merchandise and

how to calculate export price and

constructed export price.

While respondents and AHUG note

that the practice in the uranium

industry with respect to the transactions

at issue was established long before the

Department initiated these

investigations, in the Department’s

view, the issue we are addressing is

unfair trade practices. In the

Department’s view, nothing in the

statute in any way indicates that

Congress did not intend the AD and

CVD laws to be applicable to

merchandise based upon the way in

which parties structure their

transactions for such goods entering the

commerce of the United States.

In sum, the application of the AD and

CVD laws does not depend upon

whether a producer/exporter sells an

input to the subject merchandise, or the

subject merchandise itself, but rather

whether the activities of the producer/

exporter result in the subject

merchandise being introduced into the

commerce of the United States.

Calculating Export Price, Constructed

Export Price and Normal Value

Comments of the Parties

Respondents and AHUG contend that

the Department must base its evaluation

of dumping upon sales of the subject

merchandise, which should reflect all

elements of the merchandise’s value. In

terms of EP and CEP, these parties

contend that the statute refers to the

price at which the merchandise is sold

by the producer or exporter. In addition,

AHUG and respondents cite to the

agency’s decision in SRAMs from

Taiwan, where the Department

determined that the relevant sale under

the tolling regulation must be the sale of

subject merchandise reflecting the full

value of such merchandise.

AHUG and respondents contend that

the principles for determining which

sales are relevant, as embodied in the

tolling regulation and applied in the

SRAMs case, are directly pertinent to

deciding whether the sale of enrichment

services by the respondents, and sales of

services in general, can be treated as

relevant for purposes of the AD law.

65882 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Notices

These parties assert that the Department

should determine that: (1) The

enrichment companies do not produce

or take title to the uranium feedstock;

rather it is supplied to them in bailment;

(2) the sale of enrichment does not

constitute the relevant sale for purposes

of determining EP and CEP because the

sales in question do not reflect the full

value of the subject merchandise; and

(3) the respondents are not in a position

to set the price of the product because

such companies have no control over

the full cost of LEU for the transactions

at issue.

Petitioners respond that the

respondents and AHUG place heavy

emphasis on the Department’s ‘‘relevant

sale’’ discussion in the SRAMs case,

which petitioners contend was not

intended to provide the guiding

precedent in a case where the U.S.

customer obtains the raw materials in

one transaction and exchanges them for

finished goods in another transaction, as

in these investigations. The petitioners

state that the respondents’ and AHUG’s

position is erroneous in claiming that

the Department’s redetermination in

SRAMs compels the conclusion that the

enricher does not make the ‘‘relevant

sale’’ because its price does not include

all of the cost components of the

finished product. Moreover, they add,

even if SWU transactions were tolling

transactions, the Department’s tolling

precedent does not establish that tolling

transactions are outside the scope of the

AD law.

Petitioners further contend that the

fact that enrichers have control over the

production process used to produce

LEU under SWU contracts is relevant to

the Department’s determination with

respect to the relevant sale, and contrary

to the arguments raised by respondents

and AHUG. Petitioners add that the

issue of who controls the production of

the finished product is a key factor in

determining whether a party is a

producer or toller.

With respect to the sales contracts, in

their case brief, petitioners argued that

the enrichers are actually sellers of LEU

under both SWU and EUP contracts

because in both arrangements the LEU

is produced at an operating tails assay

determined by the enricher, and

therefore the enricher determines the

amount of feed used, the amount of

SWU actually applied, and the assay of

the tails that will be produced.

Petitioners further noted that, although

a customer may designate a

transactional tails assay in a SWU

contract, but not in an EUP contract,

there is not a significant difference. To

illustrate this point, petitioners note

that, by designating a transactional tails

assay in a SWU contract, the customer

determines only the amount of uranium

feedstock it must provide to the

enricher, and the amount per SWU the

customer will pay. However, the

customer’s designation of the

transactional tails assay does not

determine the amount of uranium

feedstock used by the enricher or the

amount of SWU actually used by the

enricher. Petitioners maintain that this

is determined by the operational tails

assay used by the enricher in the

production of LEU. Petitioners assert

that enrichers operate in essentially the

same manner when they produce LEU

under contracts where the customers

supply the uranium feedstock as they do

when they produce LEU from their own

uranium feedstock.

Respondents reject petitioners’

assertion that enrichers are actually

sellers of LEU based upon the utility’s

delivery of uranium feed material as a

payment-in-kind of uranium for the

natural uranium component of the LEU.

Respondents contend that enrichment

services contracts contain detailed

payment terms, and establish a price for

the enrichment services sold, but do not

contain any provisions for a payment of

uranium in any form. Respondents add

that it is virtually impossible for a

payment-in-kind to occur because title

does not pass to the enricher while the

uranium is being enriched. Moreover,

they explain that if a payment of

uranium were occurring, the enricher

would have to recognize it as a payment

in its financial statements, which they

assert does not occur, as the Department

verified. Finally, respondents note that,

by adopting the payment-in-kind theory,

the Department would create a

contractual arrangement between parties

that completely differs from the contract

itself.

Respondents further dispute the

petitioners’ conclusion that the

enricher’s return of different uranium

rather than the exact material provided

by the customer turns the transaction

into a payment-in-kind. Respondents

argue that, in determining whether a

service is being performed, one must

look at the essence of the transaction,

and what the customer contracted to

purchase, not what material is given

back to the utility company.

Furthermore, they state, because

uranium is fungible, it makes no sense

to require firms to identify each atom of

uranium transported or processed. They

note that, in a previous submission by

the petitioners, USEC explicitly stated

that uranium is a fungible commodity

and that a fabricator may use its own

inventory of enriched uranium or have

enriched uranium delivered by other

utility companies.

In addition, respondents contend that

the Department did not base its

dumping margin calculations upon the

number of SWUs or the price per SWU,

but instead treated the sale as if it were

a sale of LEU. Respondents note that the

Department’s price calculation is based

upon the quantity of uranium and the

quantity of SWUs involved, which has

no correlation with the agreed upon

price per SWU. Respondents contend

that in doing so the Department is

changing the material terms fixed on the

date of sale into one in which the terms

are not fixed until a later date, and then

unilaterally, by notification from the

customer. Respondents contend that

this violates the statutory requirement

that the Department base its calculation

on the actual costs reflected in the

respondent’s books and records, ignores

the long-standing practice of making AD

comparisons on a production or

process-neutral basis, and uses a

methodology that is completely contrary

to the date of sale methodology applied

by the Department in the same cases.

Respondents also note that the

Department assigned a value to the

natural uranium in the Preliminary

Determinations where no price was

provided, notwithstanding that the

uranium provided by the utility

company was not a cost to the enricher,

and was not charged to the customer at

all. Respondents contend that the

surrogate uranium cost that the

Department used violated the statutory

requirement that it base its calculation

on the actual costs incurred. They

reiterate that the cost of the uranium to

the enricher is zero. The respondents

add that, although the uranium is

processed, it is never paid for by the

enricher, nor is it considered revenue,

nor does it appear in the enricher’s

books. Therefore, they contend,

uranium may not be treated as a cost

when calculating constructed value.

AHUG also contends that the SWU

contracts are unequivocally contracts for

services, arguing that the enrichers hold

the LEU as bailees for their utility

customers, and if a particular delivery of

LEU does not contain the exact same

physical feed as that delivered by the

utility, it contains feed delivered to the

enricher by another utility. Therefore,

AHUG asserts, the fungibility of the feed

does not alter the actual commercial

terms of the contracts or the nature of

the transaction.

AHUG also disagrees with the

Department’s preliminary determination

that there is little commercial difference

between EUP and enrichment contracts.

AHUG contends that enrichment

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Notices 65883

7This discussion addresses the concepts of export

price, CEP, and who is the producer/exporter of the

subject merchandise—all issues that are relevant

under the antidumping law. We note that, under the

countervailing duty law, section 771(5)(E)(iv)

defines as a benefit the purchase of goods for more

than adequate remuneration. Because we have

determined that SWU contracts involve the

purchase of LEU, we determine that these

transactions constitute the purchase of goods.

8Antidumping Duties; Countervailing Duties;

Final Rule, 62 FR 27295, 27411 (May 19, 1997).

contracts require payment for

enrichment services, and therefore, the

contract does not reflect all elements of

the value of the LEU delivered, as do the

EUP contracts. Furthermore, AHUG

contends that LEU production is usually

arranged through three, not two

transactions: the purchase of U3O8, a

contract for conversion services, and a

contract for enrichment services. In

addition, AHUG argues that the

Department proposes that U.S. utility

contracts for the purchase of each of

these components can be cumulated to

derive an unfair price even in the

absence of a sale of that LEU in the U.S.

market that reflects all elements of its

value. AHUG argues that this theory

seems to state that when utility

companies arrange for the production of

LEU through these separate contracts,

they are selling LEU to themselves.

AHUG asserts that the Department is

simultaneously attempting to attribute

the utilities’ transactions with the

mining companies and the conversion

service providers to the enrichers, even

though the enrichers are not parties to

those other transactions, have no control

over the process, and receive none of

the revenue from such sales. AHUG

claims this theory cannot be supported.

Petitioners respond that, contrary to

respondents’ and AHUG’s contentions,

the contractual obligation of a customer

in a SWU transaction to supply

converted uranium is properly viewed

as part of the quid pro quo that the

customer must provide in order to

obtain LEU from the enricher.

Petitioners add that there can be no

question that provision of the natural

uranium is like the payment of the cash

price for the SWU, a contractual

obligation that must be met by a utility

purchaser under a SWU contract in

order to acquire a wholly new product,

i.e, LEU from the enricher.

Petitioners note that, in the

preliminary determinations, the

Department identified three factors that

petitioners had cited in support of its

position. First, with respect to

warranties and guarantees, LEU and

EUP are delivered under essentially the

same type contract. Second, the

enrichers do not use the specific

feedstock supplied by a particular

customer to produce LEU for that

customer. Third, the enrichers, not the

utility companies, control the process

used to produce the LEU under either

type of contract. Petitioners state that,

contrary to respondents’ criticism of the

‘‘essentially identical’’ language in the

preliminary determinations, the

Department was not saying that SWU

and EUP contracts were identical in

every respect, nor is it necessary for the

Department to so find.

Respondents reject petitioners’

arguments on whether the enricher

controls the production process, arguing

that the relevant question is not whether

enrichers own and control the

production process for LEU, but rather

whether the customer is purchasing a

service. Respondents add that, because

the quantity of uranium feedstock to be

supplied by the customer is set pursuant

to the contract, for a specified tails

assay, the customer, not the enricher,

has the control over its cost of supplying

uranium feedstock.

Discussion

For these final determinations, we

find that the enrichment companies are

the only producers and exporters of the

subject merchandise in these cases and,

therefore, are the appropriate

respondents for determining EP, CEP

and NV. We will address the application

of the Department’s tolling regulation

first, and then the nature and substance

of the sales contracts at issue.7

Tolling

In establishing general rules for

calculating EP, CEP and NV, we

promulgated section 351.401(h) of our

regulations to address the treatment of

subcontractors and tolling operations

under the AD law.8 The purpose of the

regulation is to enable the Department

to identify the appropriate seller of

subject merchandise and foreign like

product for purposes of calculating EP,

CEP and NV. SRAMS from Taiwan

(‘‘The company that is the first ‘‘price

setter’’ for subject merchandise is also

the company that is the producer of the

merchandise.’’). To that end, the tolling

regulation states that the Department

will not consider a toller or

subcontractor to be a manufacturer or

producer where the toller or

subcontractor (i) does not acquire

ownership of the subject merchandise;

and (ii) does not control the sale of

subject merchandise. 19 CFR 351.401(h)

(2000).

Department Precedents

In SRAMs from Taiwan, the key case

relied upon by the respondents and

AHUG, we addressed the issue of

whether producer status should be

conferred upon the U.S. design house or

the Taiwan foundry. In that case, the

issue for the Department was which

sale—the sale by the design house or the

sale by the foundry—should be used to

calculate EP and CEP. The Department

stated that ‘‘the ‘‘relevant sale’’ must be

a sale by the company that owns the

merchandise entirely, including all

essential components, can dispose of

the merchandise at its own discretion

and, thus, controls the pricing of the

merchandise and not merely the pricing

of certain portions of production.’’ Id. at

4.

In making the distinction between the

sale by the foundry and the sale by the

U.S. design house, we examined the role

played by the foundries and design

houses in the production of subject

SRAMs, as well as the nature of the

product produced. We found that the

design was not only an important

component of the product, but in fact

defined the essence of the finished

product. Because the design house not

only developed the design, but also

controlled how it was used in

production by the foundry and the way

that the products incorporating it were

distributed in the marketplace, the

Department concluded that the design

house directed the production of the

subject merchandise. Id. at 5. In our

view, the role played by each entity as

well as the nature of the product

produced are important considerations

in identifying the appropriate party as

the producer of the subject

merchandise.

In addition, since the enactment of

the tolling regulation, the Department

has also recognized that the regulation

‘‘does not purport to address all aspects

of an analysis of tolling arrangements.’’

Polyvinyl Alcohol from Taiwan: Final

Results of Antidumping Duty

Administrative Review, 63 FR 32810,

82813 (June 16, 1998). In that case, we

acknowledged that, in assessing

whether a company is a producer, we

are not restricted to the four corners of

the sales contract. Moreover, we

emphasized that we will make our

decision as to whether a party is a

producer or manufacturer for purposes

of determining EP, CEP and NV based

upon the totality of the circumstances.

Id. In Polyvinyl Alcohol from Taiwan,

we further recognized that, while

examining the production activities of a

party may not be decisive in every case,

whether a party has engaged directly or

indirectly in some aspect of production

is an important consideration in

identifying the appropriate party as the

producer. Id. at 32814.

65884 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Notices

Enrichment Companies Are Producers/

Exporters of LEU

In this case, we have determined that

the enrichment companies are the

producers and exporters of the subject

merchandise for purposes of

establishing EP, CEP and NV for several

reasons. First, the enrichment process is

such a significant operation that it

establishes the fundamental character of

LEU. Second, the enrichers control the

production process to such an extent

that they cannot be considered tollers in

the traditional sense under the

regulation. Third, utility companies do

not maintain production facilities for

the purpose of manufacturing subject

merchandise. Finally, we find that the

overall arrangement, even under the

SWU contracts, is an arrangement for

the purchase and sale of LEU. Each

element is discussed further below.

While no single factor is dispositive of

our determination, on balance we have

determined that the enrichment

companies are the producers and

exporters of the subject merchandise.

First, in this case it is the enricher

who creates the essential character of

the LEU. The enrichment process is not

merely a finishing or completion

operation, but is instead the most

significant manufacturing operation

involved in the production of LEU.

Enrichment raises to a specified assay

the level of U235 contained in the

product. While the types of advanced

technology used to perform this

operation vary, without the enrichment

process, one would not be able to

separate the molecules necessary to

produce LEU. Like the design mask in

SRAMs, the enrichment process

establishes the essential features of the

LEU, creating a clearly distinct product

from uranium feedstock. Moreover, the

enrichment process imparts the

essential character of the product, LEU,

and delineates the purpose for which

the product is to be used. As noted

above, LEU is a product for which there

is virtually no alternative commercial

use but as part of the nuclear fuel cycle.

Without the enrichment of natural

uranium, LEU could not be produced.

There are currently two technologies

in use to enrich feedstock, gaseous

diffusion and centrifuge. Each method

requires a huge financial investment in

facilities and a technically skilled work

force. In fact, the centrifuge technology

has been years in the making and has

required millions of dollars in research.

So highly specialized is it, and so

expensive to develop, that three major

European governments combined their

resources to develop the technology and

create Urenco. While there are hundreds

of nuclear facilities around the world

that require LEU for fabrication into fuel

rods in order to operate their reactors,

there are only five major enrichers in

the world. This underscores the

technological sophistication and

expense required to enrich uranium into

LEU. Adding to the expense and

complexity of establishing an

enrichment operation is an intricate web

of national and international regulatory

regimes and oversight commissions.

Enrichment facilities are similar to

design houses in the semiconductor

industry. It is the patented design of the

mask that incorporates the intellectual

property, accounts for a substantial

portion of the value, and constitutes the

essence of the microchip. The design is

what makes the chip and what gives it

its unique function: storing memory and

thus enabling a computer to operate.

Just as the design imparts the essential

characteristics of a microchip,

enrichment imparts the essential

characteristics of LEU.

Second, we find that enrichers not

only have complete control over the

enrichment process, but in fact control

the level of usage of the natural uranium

provided by the utility company. We are

aware that SWU is universally defined

as the standard measure of enrichment

services. However, the definition of

SWU further provides that it is the effort

expended in separating a specified

amount of feed into a specified amount

of enriched uranium at a specified

product assay and a specified amount of

waste at a specified assay. In each of the

contracts, while the amount of LEU

being purchased is not expressly stated

(unless it is an EUP contract) the

product assay, tails assay, and number

of SWU are specified. It is the precise

combination of the product assay order

and the number of SWUs specified in

the SWU contract that results in an

exact amount of LEU to be delivered

over the life of the contract. The most

important factor in determining whether

the contract is fulfilled is whether the

utilities receive the precise amount of

LEU that results from the application of

the SWU equation that is explicitly

spelled out and agreed upon in the SWU

contract. And it is this bottom line (i.e.,

a precise amount of LEU delivered over

the life of the contract) that forms the

fundamental nature of the agreement

between buyer and seller in a SWU

contract. With this understanding in

mind, the enricher then has

extraordinary leeway in determining the

precise combination of SWU and

feedstock to be used in the production

of the LEU required by the SWU

contract. The enricher’s decision will

depend upon such factors as the relative

costs of electricity, feedstock, even the

market price of ‘‘SWU,’’ which, for all

intents and purposes, trades like a

commodity. As the record reflects,

enrichers therefore run their facilities in

a manner that they determine is most

efficient.

For example, an enricher, in

fulfillment of a SWU contract, may

actually use more or less natural

uranium and more or less SWU than is

provided for in the contract (and by the

utility customer). The enricher has

complete control over these important

production decisions. The utility

company, on the other hand, provides

the specifications and receives a

product, as specified in the contract

through the application of the SWU

equation. Thus, the utility company

obtains no more control over the

production process than any customer

who orders custom-made merchandise

would obtain. In our view, the enricher

has extensive control over the

production process, and complete

control over the amount of SWU or feed

to be used in any given transaction. The

extensive control further demonstrates

that the enricher is not acting in a

tolling capacity for the transactions at

issue.

Third, in this case, the U.S. utility

companies do not maintain production

facilities for the purpose of

manufacturing subject merchandise.

Unlike the U.S. design house in SRAMs

from Taiwan, but like the U.S. importer

in Polyvinyl Alcohol from Taiwan, the

U.S. utility companies perform no

manufacturing function whatsoever

with respect to the production of LEU.

These companies have no LEU

manufacturing operations; no capital

investment in production facilities; no

employees dedicated to manufacturing

LEU; and add no value to the product

through the performance of

manufacturing operations. Most

important, we find that the utility

companies are the only purchasers of

LEU and can only obtain LEU from

enrichment companies. By contrast,

enrichment companies’ sole activity is

to produce LEU for use by utility

companies.

Finally, we find that the overall

arrangement under both types of

contracts is, in effect, an arrangement

for the purchase and sale of LEU. The

parties have made a comprehensive

comparison of the terms of the contracts

for SWU and EUP, arguing that the

terms of the contract demonstrate that

the contracts designated as SWU sales

are not, in fact, sales of LEU. While we

recognize that the provision of uranium

feedstock may not be a payment-in-kind

in the formal sense under these

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Notices 65885

contracts, we maintain that the

arrangement between buyer and seller

in a SWU contract nonetheless is

dedicated to the delivery of LEU, and

critical to the trade in LEU. In reaching

this conclusion, we have looked beyond

the four corners of the contract and have

examined the totality of the

circumstances surrounding the

transactions in deciding which sale is a

valid representation of subject

merchandise.

The Nature of the SWU Contract

In this case, based upon the way in

which the industry produces and sells

LEU, we find that the overall

arrangement between the parties

indicates that enrichment companies are

engaged in selling, and utility

companies are engaged in purchasing,

LEU. These transactions may be

construed differently in other contexts,

such as for purposes of taxation, or for

purposes of establishing the liabilities of

the parties to the contract. However, for

purposes of calculating a price for LEU,

based upon our examination of the

overall circumstances of the

arrangement under both types of

contracts, we find that the contracts

designated as SWU contracts are

functionally equivalent to those

designated as EUP transactions.

First, both types of transactions have

one fundamental objective—the delivery

of LEU at a specific time and location,

with a specific product assay, as agreed

upon in the contract, under the same

warranties and guarantees that apply to

all LEU delivered by respondents.

Second, utility customers are not

concerned with how LEU is produced or

the amount of work expended (SWU) to

produce such LEU. Instead, utility

customers are interested in obtaining a

specific quantity of a standardized

product at a specified product assay.

This pertains to both types of

transactions. Indeed, SWU contracts are

based upon a set formula that provides

the utility company with a fixed

quantity of LEU over the life of the

contract.

Further, under both types of contracts,

because the LEU is produced at an

operating tails assay determined by the

enricher, the enricher ultimately

determines how much uranium feed is

used, the amount of SWU actually

applied, and the assay of the tails that

will be produced. Thus, it is clear that

enrichers not only exercise the same

level of control over the production

process for both types of contracts, but

also perform the exact same

manufacturing operations, regardless of

whether the sale was made under a

SWU contract or an EUP contract.

In addition, there are provisions in

SWU contracts that further demonstrate

that the underlying arrangement is

designed to operate in much the same

manner, regardless of the type of

contract, and that whether the enricher

or the utility company provides the

uranium feedstock does not

substantially alter that arrangement.

These provisions are proprietary. See,

e.g., Urenco Business Proprietary

Section A Response, Volume 1, Tab B1,

Contract section F.3. Furthermore, for

both types of contracts ownership of the

LEU is only transferred to the utility

customer upon delivery of the LEU.

Consistent with this provision, for both

types of transactions, the enricher

incurs the risk of loss with respect to the

LEU. In light of the above, therefore, we

believe, as a practical matter, that the

arrangement between the utility

company and the enricher under a SWU

contract is functionally equivalent to the

arrangement under an EUP contract for

purposes of determining EP and CEP.

Moreover, as discussed above, the

enrichment companies engage in the

most significant portion of the

production of LEU, and thus the value

of enrichment is beyond question the

most significant element of value in

determining the price of LEU. In

addition, LEU, the subject merchandise,

is the merchandise resulting from this

production operation. Accordingly, we

believe the pricing behavior of the

enrichment companies in these

transactions is relevant to the

Department’s determination of whether

the LEU in question is introduced into

the commerce of the United States at

less than fair value.

Therefore, because the pricing

behavior of the enrichers in these

transactions is relevant to the

Department’s determination and

because the arrangement between the

utility company and the enricher under

a SWU contract is functionally

equivalent to the arrangement under an

EUP contract for purposes of

determining EP and CEP, we have

included these sales in our

determination of EP and CEP in these

investigations.

In assigning a specific monetary value

to the natural uranium component, we

estimated the market value using the

average price the enrichers charged their

customers for natural uranium for LEU

contracts. For SWU contracts, when

comparing U.S. Price with Normal

Value based on constructed value, we

valued natural uranium using exactly

the same value for both sides of the

equation. For example, for any given

shipment pursuant to a SWU contract

we determined the quantity (i.e. kgs) of

associated feed uranium by applying the

industry standard formula for product

and tails assay specified in the contract.

We valued this quantity using POI

average per-kg price for natural uranium

charged by enrichers. This exact same

amount was included in normal value.

Period of Investigation

The period of investigation (POI) is

October 1, 1999, through September 30,

2000. This period corresponds to the

four most recent fiscal quarters prior to

the month of the filing of the petition

(i.e., December 2000).

Verification

As provided in section 782(i) of the

Act, we conducted verification of the

sales information submitted by Cogema/

Eurodif from July 23 through July 27,

2001, in France, and from August 13

through August 16, 2001, in the United

States. We conducted verification of the

constructed value (CV) information

submitted by Cogema/Eurodif from July

30 through August 3, 2001. We used

standard verification procedures

including examination of relevant

accounting and production records, and

original source documents provided by

the respondent.

Analysis of Comments Received

All issues raised in the case and

rebuttal briefs by parties to this

antidumping proceeding are listed in

the Appendix to this notice and

addressed in the Decision Memorandum

for this investigation, dated December

13, 2001, which is hereby adopted by

this notice. The Decision Memorandum

for this case is on file in room B–099 of

the main Department of Commerce

building. In addition, a complete

version of the Decision Memorandum

can be accessed directly on the World

Wide Web at http://ia.ita.doc.gov/frn/

summary/list.htm. The paper and

electronic versions of the Decision

Memorandum are identical in content.

Changes Since the Preliminary

Determination

Based on our findings at verification

and analysis of comments received, we

have made adjustments to the

calculation methodology in calculating

the final dumping margins in this

proceeding. These adjustments are

discussed in detail in the Calculation

Memorandum, dated December 13,

2001. For the final determination, we

made the following revisions:

(1) We adjusted the transportation

insurance amounts to account for the

respondent’s clerical errors.

(2) We adjusted movement expenses

and U.S. duty charges for certain

65886 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Notices

1The petitioners in these investigations are

USEC, Inc. and its wholly-owned subsidiary,

United States Enrichment Corporation (collectively

deliveries to correct the respondent’s

clerical errors.

(3) We revised the inventory carrying

costs for various U.S. deliveries to

account for the respondent’s clerical

errors.

(4) We adjusted the total cost of

manufacturing reported in the U.S. sales

database to be consistent with changes

made to the total cost of manufacturing

in the constructed value (CV).

(5) To reflect the opportunity cost of

a particular contract provision exercised

by one customer, we calculated an

imputed expense and applied it to the

indirect selling expense ratio of that

customer, for all deliveries to the

customer.

(6) Based on the respondent’s revised

calculation from verification, we

adjusted the home market indirect

selling expense ratio used to calculate

indirect selling expenses added to CV.

(7) We recalculated the defluorination

expenses included in CV based on the

tails produced during the POI.

(8) We excluded purchased LEU from

the calculation of the weighted-average

cost of LEU produced in the POI.

(9) We recalculated the financial

expense rate based on the financial

statements of CEA Industrie, the entity

that consolidates Cogema’s accounts.

(10) We recalculated selling, general

and administrative expenses to include

certain research and development

expenses.

Final Determination of Investigation

We determine that the following

weighted-average percentage dumping

margins exist for the period October 1,

1999, through September 30, 2000:

Manufacturer/exporter Margin

(percent)

Cogema/Eurodif ............................ 19.57

All Others ...................................... 19.57

Continuation of Suspension of

Liquidation

Pursuant to section 735(c)(1)(B) of the

Act, we are instructing the U.S. Customs

Service to continue to suspend

liquidation of all entries of LEU from

France that are entered, or withdrawn

from warehouse, for consumption on or

after July 13, 2001 (the date of

publication of the Preliminary

Determination in the Federal Register).

The Customs Service shall continue to

require a cash deposit or the posting of

a bond equal to the estimated amount by

which the normal value exceeds the

U.S. price as shown above. The

suspension of liquidation instructions

will remain in effect until further notice.

International Trade Commission

Notification

In accordance with section 735(d) of

the Act, we have notified the

International Trade Commission (ITC) of

our determination. As our final

determination is affirmative, the ITC

will determine, within 45 days, whether

imports of subject merchandise are

causing material injury, or threaten

material injury, to an industry in the

United States. If the ITC determines that

material injury or threat of injury does

not exist, the proceedings will be

terminated and all securities posted will

be refunded or canceled. If the ITC

determines that such injury does exist,

the Department will issue an

antidumping order directing Customs

Service officials to assess antidumping

duties on all imports of the subject

merchandise entered, or withdrawn

from warehouse, for consumption on or

after the effective date of the suspension

of liquidation.

This determination is issued and

published in accordance with sections

735(d) and 777(i)(1) of the Act.

Dated: December 13, 2001.

Faryar Shirzad,

Assistant Secretary for Import

Administration.

Appendix—Issues in Decision

Memorandum

1. Common antidumping and countervailing

duty scope issues

2. Amendment of the scope to exclude

imported enriched uranium consumed in

the conversion or fabrication of exported

uranium

3. Double-counting the subsidy in the

calculation of the dumping margin

4. Treatment of ‘‘blended price’’ contracts

5. Calculation of the less than fair value

(LTFV) margin based on delivered and

undelivered sales

6. Valuation of electricity as a component of

low enriched (LEU)

7. Whether to collapse Eurodif and Cogema

8. Whether defluorination costs are at arm’s

length

9. Accrual for tails disposal

10. Calculation of a constructed export price

(CEP) offset

11. Recalculation of inventory carrying costs

12. Imputing certain expenses to Cogema/

Eurodif

13. Selling, general and administrative

(SG&A) expenses

14. Financial expenses

15. Purchased product

16. Constructed value (CV) profit

[FR Doc. 01–31509 Filed 12–20–01; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–412–820; A–421–808; A–428–828]

Notice of Final Determinations of Sales

at Not Less Than Fair Value: Low

Enriched Uranium From the United

Kingdom, Germany and the

Netherlands

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: December 21, 2001.

ACTION: Notice of final determinations of

sales at not less than fair value.

FOR FURTHER INFORMATION CONTACT:

Frank Thomson or James Terpstra,

Office of AD/CVD Enforcement VI,

Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, NW., Washington,

DC 20230; telephone: (202) 482–4793 or

(202) 482–3965, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

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 Department of

Commerce (Department) regulations

refer to the regulations codified at 19

CFR part 351 (April 2000).

Final Determination

We determine that low-enriched

uranium (LEU) from the United

Kingdom, Germany and the Netherlands

is not being sold, or is not likely to be

sold, in the United States at less than

fair value (LTFV), as provided in section

735 of the Act.

Case History

The preliminary determinations in

these investigations was published on

July 13, 2001. See Notice of Preliminary

Determination of Sales at Less Than

Fair Value: Low Enriched Uranium

From the United Kingdom; Preliminary

Determinations of Sales at Not Less

Than Fair Value: Low Enriched

Uranium From Germany and the

Netherlands; and Postponement of Final

Determinations, 66 FR 36748 (July 13,

2001) (Preliminary Determinations). The

petitioners 1 and the respondents,