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###### Department of Commerce

###### International Trade Administration 

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

# AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

# ACTION:

Initiation of countervailing duty investigations.

# 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 (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 these investigations. Specifically, these investigations do 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 these investigations. For purposes of these investigations, fabricated uranium is defined as enriched uranium dioxide (UO2), whether or not contained in nuclear fuel rods or assemblies. Natural uranium concentrates (U3                        O8) 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 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                               ( print 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] 

                        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                               ( print 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 (£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.                               ( print 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 £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 £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 £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 £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 £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 £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. 

# Footnotes

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).                        
        Back to Citation      

[FR Doc. 01-385 Filed 1-4-01; 8:45 am] 

BILLING CODE 3510-DS-P