[Federal Register Volume 66, Number 4 (Friday, January 5, 2001)]
[Notices]
[Pages 1085-1088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-385]


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DEPARTMENT OF COMMERCE

International Trade Administration

(C-427-819, C-428-829, C-421-809, C-412-821]


Notice of Initiation of Countervailing Duty Investigations: Low 
Enriched Uranium From France, Germany, The Netherlands, and the United 
Kingdom

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

ACTION: Initiation of countervailing duty investigations.

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EFFECTIVE DATE: January 5, 2001.

FOR FURTHER INFORMATION CONTACT: Michael Grossman (France) at (202) 
482-3146; Robert Copyak (Germany) at (202) 482-2209; Stephanie Moore 
(The Netherlands) at (202) 482-3692; and Eric B. Greynolds (United 
Kingdom) at (202) 482-6071, Office 6, Group II, Import Administration, 
International Trade Administration, U.S. Department of Commerce, Room 
1870, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

Initiation of Investigations

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 references 
to the provisions codified at 19 CFR Part 351 (2000).

The Petitions

    On December 7, 2000, the Department of Commerce (the Department) 
received petitions filed in proper form by USEC Inc., and its wholly 
owned subsidiary, United States Enrichment Corporation. On December 26, 
2000, the Department received a letter from USEC amending the petitions 
to add the Paper, Allied-Industrial, Chemical and Energy Workers 
International Union, AFL-CIO, CLC, and Local 5-550 and Local 5-689 
(collectively PACE) to the petitions as an interested party pursuant to 
section 771(9)(D) of the Act. In addition, PACE filed its own letter on 
December 26, 2000, expressing support for and joining the petitions. 
The Department received from petitioners information supplementing the 
petitions throughout the 20-day initiation period.
    In accordance with section 702(b) of the Act, petitioners allege 
manufacturers, producers, or exporters of low enriched uranium from 
France, Germany, the Netherlands, and the United Kingdom received 
countervailable subsidies within the meaning of section 701 of the Act.
    The Department finds that petitioners filed these petitions on 
behalf of the domestic industry because they are an interested party as 
defined in sections 771(9)(C) and (D) of the Act and have demonstrated 
sufficient industry support with respect to each of the countervailing 
duty investigations that they are requesting the Department to initiate 
(see the Determination of Industry Support for the Petitions section 
below).

Scope of Investigations

    For purposes of these investigations, the product covered is low 
enriched uranium (LEU). LEU is enriched uranium hexafluoride 
(UF<INF>6</INF>) with a U\235\ 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 these investigations. 
Specifically, these investigations do not cover enriched uranium 
hexafluoride with a U\235\ assay of 20 percent or greater, also known 
as highly enriched uranium. In addition, fabricated LEU is not covered 
by the scope of these investigations. For purposes of these 
investigations, 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 these 
investigations.
    The merchandise subject to these investigations is classified in 
the Harmonized Tariff Schedule of the United States (HTSUS) at 
subheading 2844.20.0020. Subject merchandise may

[[Page 1086]]

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.
    During our review of the petitions, we discussed the scope with the 
petitioners to ensure that it accurately reflects the product for which 
the domestic industry is seeking relief. Moreover, as discussed in the 
preamble to the Department's regulations (62 FR 27323), we are setting 
aside a period for parties to raise issues regarding product coverage. 
The Department encourages all parties to submit such comments by 
January 17, 2001. Comments should be addressed to Import 
Administration's Central Records Unit at Room 1870, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230. The period for scope comments is intended to provide the 
Department with ample opportunity to consider all comments and consult 
with parties prior to the issuance of the preliminary determinations.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the relevant foreign governments as well as 
representatives from the Delegation of the European Commission for 
consultations with respect to the countervailing duty investigations. 
The Department held consultations with representatives of the 
governments of France, Germany, the Netherlands, the United Kingdom, 
and the Delegation of the European Commission on December 21, 2000. See 
the December 22, 2000, memoranda to the file regarding these 
consultations (public documents on file in the Central Records Unit of 
the Department of Commerce, Room B-099).

Determination of Industry Support for the Petitions

    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petitions have the requisite industry support, the statute directs the 
Department to look to producers and workers who produce the domestic 
like product. The International Trade Commission (ITC), which is 
responsible for determining whether ``the domestic industry'' has been 
injured, must also determine what constitutes the domestic like product 
in order to define the industry. While both the Department and the ITC 
must apply the same statutory definition regarding the domestic like 
product (section 771(10) of the Act), they do so for different purposes 
and pursuant to separate and distinct authority. In addition, the 
Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
like product, such differences do not render the decision of either 
agency contrary to the law.\1\
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    \1\ See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass Therefore from Japan: Final Determination: 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).
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    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition. Moreover, the petitioners do not offer a definition of 
domestic like product distinct from the scope of these investigations.
    The domestic like product referred to in the petitions is the 
single domestic like product defined in the Scope of Investigations 
section, above. The Department has no basis on the record to find the 
petitioners' definition of the domestic like product to be inaccurate. 
The Department, therefore, has adopted the domestic like product 
definition set forth in the petitions.
    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) At least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. Finally, section 702(c)(4)(D) of the Act 
provides that if the petition does not establish support of domestic 
producers or workers accounting for more than 50 percent of the total 
production of the domestic like product, the administering agency 
shall: (i) poll the industry or rely on other information in order to 
determine if there is support for the petition as required by 
subparagraph (A), or (ii) determine industry support using a 
statistically valid sampling method.
    In order to estimate production for the domestic industry as 
defined for purposes of this case, the Department has relied upon not 
only the petitions and amendments thereto, but also upon ``other 
information'' obtained through research, which is attached to the 
Initiation Checklist (See Import Administration CVD Investigation 
Initiation Checklist (Initiation Checklist), December 27, 2000, and the 
Industry Support Memorandum from Melissa G. Skinner to Holly A. Kuga 
dated December 27, 2000 (Industry Support Memorandum)). Based on 
information from these sources, the Department determined, pursuant to 
section 702(c)(4)(D) of the Act, that there is support for the petition 
as required by subparagraph (A). Specifically, the Department made the 
following determinations. For France, Germany, the Netherlands, and the 
United Kingdom, the petitioners established industry support 
representing over 50 percent of total production of the domestic like 
product. Therefore, the domestic producers or workers who support the 
petitions account for at least 25 percent of the total production of 
the domestic like product, and the requirements of section 
702(c)(4)(A)(i) are met.
    On December 19, 2000, the Ad Hoc Utilities Group (the Utilities 
Group) (Arizona Public Service Co.; Carolina Power & Light Co.; 
Commonwealth Edison Co.; Consumers Energy; Dominion Generation, Duke 
Energy Corp.; DTE Energy; Entergy Services, Inc.; First Energy Nuclear 
Operating Co.; Nuclear Management Co.; PSEG Nuclear LLC; Southern 
Nuclear Operating Co.; Union Electric Company (d/b/a AmerenUE); and 
Wolf Creek Nuclear Operating Corp.) filed a letter asserting that the 
Utilities Group members are domestic producers of LEU and that the 
petitioners lack industry support, because USEC produces less than 25 
percent of domestic LEU. On December 20, 2000, Eurodif/Cogema and 
Urenco filed a submission claiming that the petitioners did not have 
standing in order to file the petitions. Both the Utilities Group and 
Eurodif/Cogema and Urenco argue that the petitioners are in the 
business of providing a service (i.e., the enrichment of uranium), 
rather than manufacturing a product, and the countervailing duty law 
does not apply to services. In addition, they argue that the vast 
majority of the petitioners' production of enriched uranium is 
performed under a tolling arrangement, whereby the utilities provide 
the petitioners with converted uranium, and retain title to the input 
while the

[[Page 1087]]

petitioners enrich it. The utilities and foreign respondents argue that 
the utilities are the producers for these transactions.
    During consultations, the governments and Delegation expressed the 
same views as the Utilities Group and Eurodif/Cogema and Urenco with 
respect to USEC's standing to file these petitions.
    On December 21, 2000, the petitioners submitted a letter to rebut 
the Utilities Group's comments on industry support. The petitioners 
argue that the tolling regulation has no relevance in determining who 
is a U.S. producer or manufacturer of the domestic like product for 
standing purposes. In addition, the petitioners argue that the 
Utilities Group provided no factual support for its claim that its 
members are producers of LEU, and that it is not an interested party.
    On December 22, 2000, the petitioners submitted additional comments 
with regard to the above comments made by the Utilities Group and 
Eurodif/Cogema and Urenco.
    As explained in The Petitions section above, PACE filed a letter on 
December 26, 2000, joining the petitions.
    On December 26, 2000, Eurodif/Cogema and Urenco submitted 
additional comments regarding their December 20, 2000, submission on 
industry support.
    Based on our analysis of the comments received from the Utilities 
Group, Eurodif/Cogema and Urenco, and the petitioners, the Department 
determined that the utilities were not part of the domestic industry 
producing LEU. See Industry Support Memorandum, where we found that the 
utility companies do not engage in any manufacturing type of activities 
with respect to the production of LEU.
    Because the Department determined that the utilities were not part 
of the domestic industry, the Department received no opposition from 
the LEU industry to the petitions. Therefore, the domestic producers or 
workers who support the petitions account for more than 50 percent of 
the production of the domestic like product produced by that portion of 
the industry expressing support for or opposition to the petitions. 
Thus, the requirements of section 702(c)(4)(A)(ii) are also met.
    Accordingly, the Department determines that the petitions were 
filed on behalf of the domestic industry within the meaning of section 
702(b)(1) of the Act. See the Initiation Checklist.

Injury Test

    Because France, Germany, the Netherlands, and the United Kingdom 
are ``Subsidies Agreement Countries'' within the meaning of section 
701(b) of the Act, section 701(a)(2) applies to these investigations. 
Accordingly, the ITC must determine whether imports of the subject 
merchandise from these countries materially injure, or threaten 
material injury to, a U.S. industry.

Allegations of Subsidies

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files, on 
behalf of an industry, a petition that: (1) alleges the elements 
necessary for an imposition of a duty under section 701(a); and (2) is 
accompanied by information reasonably available to petitioners 
supporting the allegations.

A. France

    We are initiating an investigation of the following programs 
alleged in the petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in France:

1. Purchase of Enriched Uranium at Prices that Constitute ``More Than 
Adequate Remuneration''
2. Partial Exemption from Corporate Income Taxes

B. Germany

    We are initiating an investigation of the following programs 
alleged in the petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in Germany:

1. Enrichment Technology Research and Development Subsidies
2. Regional and City Enrichment Construction Subsidies
3. Forgiveness of Centrifuge Enrichment Capacity Subsidies
4. Federal Subsidies

C. The Netherlands

    We are initiating an investigation of the following programs 
alleged in the petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in the Netherlands:

1. Centrifuge Enrichment Technology Research & Development
2. 1981 Equity Conversion
3. Subordinated Shareholder Loan provided by Ultra-Centrifuge Nederland 
N.V.
4. 1998 Shareholder Loan
5. Subsidized Loan Forgiveness
6. Wet Investeringsrekening Law (WIR) Investment Incentives
7. Regional Investment Premiums

D. The United Kingdom

    We are initiating an investigation of the following programs 
alleged in the petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in the United 
Kingdom:

1. Forgiveness of Decommissioning Debt
2. Extraordinary Asset Write Downs Prior to Transfer of British Nuclear 
Fuels Ltd. Enrichment Facilities (BNFL)
3. 1993 Debt Forgiveness
4. Loan-Stock Debt Forgiveness
5. Nuclear Industry Finance Act Loans and Loan Guarantees Under the 
Atomic Energy and Nuclear Industry Finance Acts
6. European Investment Bank Loans
7. Subordinated Shareholder Loan Provided to Urenco Ltd. by BNFL
8. Regional Development Grants (RDGs) to British Nuclear Fuels Limited 
Enrichment Ltd. That Are Tied to the Capenhurst Enrichment Facility and 
RDGs to BNFL That Are Attributable to Urenco Ltd.
9. Centrifuge Development Grant Tied to Capenhurst Facility
10. Fossil Fuel Levy
11. Financial Assistance Under the Electricity Act of 1989

    We are not initiating an investigation of the following programs 
alleged in the petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in the United 
Kingdom.
1. Transfer of A3 Plant From BNFL to Urenco Ltd. at Less Than Adequate 
Remuneration
    Petitioners allege that BNFL's sale of the A3 plant to Urenco Ltd. 
in 1995 was conducted at a price that was less than its book value, 
and, therefore constitutes a sale of a good by a government entity for 
less than adequate remuneration. In support of their contention, 
petitioners state that the cash price paid for the A3 plant 
(<brit-pound>29.3 million) was below the plant's true book value which, 
according to their estimations, should have been valued at 52.8 
million.
    Section 771(5)(E)(iv) of the Act states that the adequacy of 
remuneration shall be determined in relation to the prevailing market 
conditions which include price, quality, availability, marketability, 
and other conditions of purchase or sale. The mere fact that the A3 
plant was allegedly sold at a price that was below its book value is 
not enough information to warrant initiating an investigation of a less 
than adequate remuneration allegation without any reference to 
prevailing market conditions for the good in question.

[[Page 1088]]

Therefore, we are not initiating on petitioners' less than adequate 
remuneration allegation on the grounds that petitioners have not 
provided sufficient information to warrant initiating an investigation 
of this program.
2. Extraordinary Write Down Taken by BNFL in 1993 Provided a Potential 
Benefit to Urenco Ltd.
    In 1993, BNFL transferred its enrichment production at the 
Capenhurst facility to Urenco Ltd. in exchange for one-third ownership 
in Urenco Ltd. Petitioners state that when BNFL exchanged the 
Capenhurst facility for ownership in Urenco Ltd., BNFL incurred an 
extraordinary charge of <brit-pound>40 million to cover the 
restructuring of the enrichment operations. Petitioners claim that 
because of the non-transparency of Urenco's restructuring, they have 
been unable to determine how to attribute the entire <brit-pound>40 
million written off by BNFL. However, petitioners contend that the one-
third interest in Urenco Ltd. that BNFL gained may not have been a fair 
market exchange and that the <brit-pound>40 million charge taken by 
BNFL may have somehow provided subsidy benefits to Urenco Ltd. that 
were not reflected in the terms of the restructuring.
    The only evidence that petitioners have provided in support of this 
allegation is a press article stating that BNFL made a <brit-pound>40 
million charge to cover the merger of its Capenhurst uranium enrichment 
plant. However, petitioners provide no evidence to indicate that this 
charge should have somehow been attributed to Urenco Ltd. Furthermore, 
petitioners provide no information demonstrating how the <brit-pound>40 
million charge allegedly taken by BNFL resulted in BNFL obtaining its 
one-third interest in Urenco Ltd. at less than adequate remuneration. 
As noted above, the adequacy of remuneration shall be determined in 
relation to the prevailing market conditions which include price, 
quality, availability, marketability, and other conditions of purchase 
or sale. Petitioners have not addressed any of these factors. On this 
basis, we are not initiating an investigation of petitioners' less than 
adequate remuneration allegation. However, because the 1993 corporate 
restructuring of the Urenco Group is involved in several allegations on 
which we are initiating investigations, during the course of this 
investigation we will request additional information from respondents 
regarding BNFL's extraordinary charge of <brit-pound>40 million.

Allegations and Evidence of Material Injury and Causation

    The petitions allege that the U.S. industry producing the domestic 
like product is being materially injured, or is threatened with 
material injury, by reason of the subsidization of individual and 
cumulated imports of the subject merchandise. Petitioners contend that 
the industry's injured condition is evident in the declining trends in 
net operating profits, net sales volumes, profit-to-sales ratios, and 
capacity utilization. The allegations of injury and causation are 
supported by relevant evidence including U.S. Customs import data, lost 
sales, and pricing information. We have assessed the allegations and 
supporting evidence regarding material injury and causation, and have 
determined that these allegations are properly supported by accurate 
and adequate evidence and meet the statutory requirements for 
initiation (see Initiation Checklist at Attachment II Re: Material 
Injury).

Initiation of Countervailing Duty Investigations

    The Department has examined the countervailing duty petitions on 
low enriched uranium from France, Germany, the Netherlands, and the 
United Kingdom, and found that they comply with the requirements of 
section 702(b) of the Act. Therefore, in accordance with section 702(b) 
of the Act, we are initiating countervailing duty investigations to 
determine whether manufacturers, producers, or exporters of low 
enriched uranium from these countries receive subsidies. See the 
December 27, 2000, memoranda to the file (for each country) regarding 
the initiation of each investigation (public versions on file in the 
Central Records Unit of the Department of Commerce, Room B-099).

Distribution of Copies of the Petitions

    In accordance with section 702(b)(3)(A) of the Act, a copy of the 
public version of each petition has been provided to the 
representatives of the governments of France, Germany, the Netherlands, 
and the United Kingdom, as well as to the Delegation of the European 
Community. We will attempt to provide a copy of the public version of 
each petition to each exporter named in the petition, as appropriate.

ITC Notification

    Pursuant to section 702(d) of the Act, we have notified the ITC of 
these initiations.

Preliminary Determination by the ITC

    The ITC will determine by January 22, 2001, whether there is a 
reasonable indication that an industry in the United States is 
materially injured, or is threatened with material injury, by reason of 
imports of low enriched uranium from France, Germany, the Netherlands, 
and the United Kingdom. A negative ITC determination for any country 
will result in the investigation being terminated with respect to that 
country; otherwise, the investigations will proceed according to 
statutory and regulatory time limits.
    This notice is published pursuant to section 777(i) of the Act.

    Dated: December 27, 2000.
Holly A. Kuga,
Acting Assistant Secretary for Import Administration.
[FR Doc. 01-385 Filed 1-4-01; 8:45 am]
BILLING CODE 3510-DS-P