Source: http://www2.bloomberglaw.com/public/desktop/document/United_States_v_Eurodif_SA_555_US_305_129_S_Ct_878_172_L_Ed_2d_67
Timestamp: 2013-05-24 03:28:08
Document Index: 51374607

Matched Legal Cases: ['§1677', '§1673', '§1673', '§1673', '§1673', '§ 1673', '§ 1673', '§ 1677', '§ 1673', '§ 1673', '§ 1673', '§ 1673', '§ 1673', '§ 1673', '§ 731', '§ 101', '§ 1673', '§ 1677', '§ 1677', '§ 1673', '§ 351', '§ 601', '§ 1673', '§ 1677', '§ 1673', '§ 1673', '§ 1673', '§ 1673', '§ 602', '§ 1673', '§ 1673', '§ 1673', '§ 1673', '§ 706', '§ 1673']

United States v. Eurodif S.A., 555 U.S. 305, 129 S. Ct. 878, 172 L. Ed. 2d 679, 30 ITRD 1801 (2009), Court Opinion
United States v. Eurodif S.A., 555 U.S. 305, 129 S. Ct. 878, 172 L. Ed. 2d 679, 30 ITRD 1801 (2009) [2009 BL 13913]
UNITED STATES, PETITIONER v. EURODIF S. A. ET AL., USEC INC., ET AL.,
PETITIONERS v. EURODIF S. A. ET AL.
Nos. 07-1059 and 07-1078.
ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
Argued November 4, 2008.
Decided January 26, 2009.[fn*]
DUMPING [1] Dumping — Finding of dumping ►37.01 ►37.371 [Show Topic Path]
Statutes — Tariff Act of 1930 ►120.19 [Show Topic Path]
Commerce Department properly determined that sales of uranium enrichment services could be treated as sales of foreign merchandise subject to antidumping provisions of Tariff Act of 1930.
[2] Dumping — Administrative procedure ►37.01 ►37.49 [Show Topic Path]
Statute at 19 U.S.C. §1677(1) gives determination to Commerce Department, in first instance, whether separative work unit (SWU) contract is one for sale of services or goods; when Commerce exercises this authority in course of adjudication, its interpretation governs in absence of unambiguous statutory language to contrary or unreasonable resolution of language that is ambiguous, and this is so even after change in regulatory treatment, which is not basis for declining to analyze agency's interpretation under Chevron framework.
[3] Dumping — Finding of dumping — Administrative procedure ►37.01 ►37.371 ►37.49 [Show Topic Path]
Commerce reasonably concluded that 19 U.S.C. §1673 is not limited by its terms to cash-only sales—otherwise, any sale of manufactured product could be exempted from operation of §1673 by contractual term stating part of purchase price in terms of commodity; in applying §1673, Commerce is not bound by legal fiction created by SWU contracts that very feed uranium delivered by utility to enricher is enriched and then returned as low enriched uranium to utility since form should be disregarded for substance and emphasis should be on economic reality.
[4] Dumping — Finding of dumping — Administrative procedure — Judicial procedure ►37.371 ►37.49 ►37.51 [Show Topic Path]
SWU contracts exemplify class of transactions that Federal Circuit recognized does not fall neatly either into category of contracts for services or category of contracts for sale of goods and this represents very situation in which court looks to authoritative agency for decision about statute’s scope, which is defined in cases at statutory margin by agency’s application of it, and once choice is made court asks only whether agency's application was reasonable. [5] Dumping — Finding of dumping ►37.371 [Show Topic Path]
Good analytical grounds show that SWU transactions are reasonably placed within ambit of sale of goods, and Commerce's reliance on such grounds is reinforced by practical reasons aimed at preserving effectiveness of antidumping duties; thus, where domestic buyer’s cash and untracked, fungible commodity are exchanged with foreign contractor for substantially transformed version of
same commodity, Commerce may reasonably treat transaction as sale of a good under 19 U.S.C. §1673.
[fn*] Together with No. 07-1078, USEC Inc. et al. v. Eurodif S. A. et
[***682] [**879] Nuclear utilities generally procure their fuel, "low enriched uranium"
(LEU), [**880] through one of two types of contracts. Under an "enriched uranium
product" (EUP) contract, the utility simply pays the enricher cash for
LEU of a desired quantity and "assay," i.e., its percentage of the
isotope necessary for a nuclear reaction. The amount of energy required
to enrich a quantity of "feed uranium" to a given assay is described in
terms of an industry standard called a "separative work unit" (SWU).
Under a "SWU contract," the utility provides a quantity of feed uranium
and pays the enricher for the SWUs to produce the required LEU quantity
and assay. SWU contracts do not require that the required number of SWUs
actually be applied to the utility's uranium. Because feed uranium is
fungible and essentially trades like a commodity, and because profitable
operation of an enrichment plant requires the constant processing of
feed uranium from the enricher's undifferentiated stock, the LEU
provided to a utility under a SWU contract cannot be traced to the
particular unenriched uranium the utility provided.
[***683] Petitioners (collectively, USEC), who run the only uranium enrichment
factory in the United States, petitioned the Commerce Department
(Department) for relief under the Tariff Act of 1930, which calls for
"anti-dumping" duties on "foreign merchandise" sold in this country at
"less than its fair value," 19 U. S. C. § 1673, but does not touch
international sales of services. USEC alleged that LEU imported from
European countries under both EUP and SWU contracts was being sold in
the United States at less than fair value and was
materially harming domestic industry. In its final determination, the
Department concluded that LEU from France, including LEU acquired under
SWU contracts, was being sold here at less than fair value. Among other
things, the Department rejected the claim that such transactions were
sales of enrichment services, as provided in SWU contracts. The Court of
International Trade (CIT) ultimately reversed, noting the "legal
fiction" expressed in SWU contracts that the very feed uranium delivered
by a utility to an enricher [*306] is enriched and then returned as LEU to the
utility. Finding that the record did not support a determination that
the enricher has any ownership rights, the CIT reasoned that the
Department's decision was unsupported by substantial evidence and not in
accordance with law. The Federal Circuit affirmed, approaching the
issues much as the CIT had.
Held: The Department's take on the transactions at issue as sales of
goods rather than services reflects a permissible interpretation and
application of § 1673. Because § 1677(1) gives this determination to the
Department in the first instance, the Department's interpretation governs
in the absence of unambiguous statutory language to the contrary or an
unreasonable resolution of ambiguous language. See, e.g., Chevron U. S.
A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837. Two
threshold propositions must be accepted. First, the Department reasonably
concluded that § 1673 is not limited by its terms to cash-only sales. If
that were the case, any sale of a manufactured product could be exempted
from the section's operation by a contractual term stating part of the
purchase price in terms of a commodity. Second, since public law is not
constrained by private fiction, see, e.g., Tcherepnin v. Knight,
389 U. S. 332, 336, the Department is not bound by the legal fiction
created by SWU contracts that the very feed uranium delivered by a
utility to an enricher is enriched and then returned as LEU to the
utility. [**881] Thus, the test of the Department's position turns first on
whether the statute clearly excludes a transaction involving mixed
payment for LEU that may and almost certainly will be produced from
uranium feed distinct from what the utility provides. Although it is
undisputed that § 1673 applies to the sale of goods, not services, the
section simply does not speak with the precision necessary to say
definitively whether it applies to the LEU and the agreement giving the
utility a right to get it. This is the very situation in which the Court
looks to an authoritative agency for a decision about a statute's scope.
Once the choice is made, the Court asks only whether the Department's
application of the statute was reasonable. Where, as here, cash plus an
untracked fungible commodity are exchanged for a substantially
transformed version of the same commodity, [***684] the Department may reasonably
treat the transaction as the sale of a good under § 1673. Cf. Powder Co.
v. Burkhardt, 97 U. S. 110, 116. The Department's position is reinforced
by practical reasons aimed at preserving antidumping duties'
effectiveness. It is undisputed that such duties apply to LEU sold to a
domestic utility by foreign enrichers under an EUP contract calling for a
single cash price that is less than fair value. Such a transaction
obviously opens the domestic enrichment industry to material injury, the
very [*307] threat that § 1673 was meant to counter. But the same injury will
occur if a SWU contract is untouchable. Under a SWU contract, the
domestic utility pays cash to a third party for un-enriched uranium and
provides this along with additional cash in exchange for LEU; any EUP
contract could be structured as a SWU contract simply by splitting the
transaction in two, one contract to buy unenriched uranium and another to
enrich it. And the restructuring would not stop with uranium; contracts
for many types of goods would be replaced by separate contracts for the
goods and for processing services, and antidumping duties would primarily
chastise the uncreative. The Department's attempt to foreclose this
absurd result by treating such transactions as sales of goods is
eminently reasonable. Pp. 9-16.
[**882] [*308] JUSTICE SOUTER delivered the opinion of the Court.
[1] Section 731 of the Tariff Act of 1930 calls for "antidumping" duties
on "foreign merchandise" sold in the United States at "less than its
fair value," 19 U. S. C. § 1673, but does not touch international sales
of services. These cases test the application of this antidumping
provision to imports of low enriched uranium (LEU), a highly processed
derivative of natural uranium used as nuclear fuel, when domestic
utilities contract to obtain LEU for cash plus unenriched uranium
delivered to a foreign enricher. Although the parties' contracts call
these transactions sales of uranium enrichment services, the Commerce
Department treats them as sales of "foreign merchandise" subject to the
antidumping provision. The issue is whether the Commerce Department's
way of seeing the transactions as sales of goods rather than services
a permissible interpretation and application of § 1673. We hold that
There are five steps in transforming elemental uranium into fuel rods
for nuclear power-plants. After uranium ore is mined, it is milled into
uranium concentrate called "yellowcake," which is next converted into
uranium hexafluoride gas or "feed uranium." The fissionable isotope in
unenriched feed uranium is then concentrated, producing LEU in pellet
form, which is in turn made into uranium fuel rods. These cases are
about the fourth step: enriching uranium feedstock into LEU.
The uranium isotope needed for a nuclear reaction, U-235, amounts only
to .711 percent by weight of natural uranium. Uranium whose concentration
or "assay," of U-235 has been [***685] [*309] enhanced to 20 percent or more is
weapons-grade, highly enriched uranium (HEU), whereas LEU has a U-235
assay of 3 to 5 percent, making it useful as nuclear fuel. One way to
produce LEU, and the method at issue in these cases, is gaseous
diffusion,[fn1] whereby gaseous feed uranium is pushed through a long
series of filters, separating the gas into two streams. The stream
passing through the filters (the "product stream") [**883] gains a higher
concentration of the lighter U-235 isotope than the stream that is
filtered out (the "tails"). Because the concentration reached at each
individual filter is minor, the gas must be forced through hundreds or
even thousands of filters, at great expenditure of electricity, before
the product stream reaches the desired assay. The amount of energy
required to enrich a quantity of feed uranium to a given assay is
measured in terms of an industry standard called a "separative work unit"
or SWU (pronounced "swoo"). In practice,
however, a given degree of enrichment will depend on adjusting the
quantities of two separate variables, feed uranium and electricity, in
inverse proportions. Thus, if the electric rate is stable but the value
of feed uranium falls, an enricher may produce LEU by "overfeeding,"
subjecting a greater quantity [****2] of feed uranium to fewer SWUs, and when the
value of feed uranium goes up and electricity does not, "underfeeding"
can use more SWUs to squeeze extra U-235 from the tails.
Nuclear utilities generally get LEU in one of two ways. Under an
"enriched uranium product" or "EUP" contract, a utility simply buys a
desired quantity and assay of LEU for cash. Under a "SWU contract," the
utility provides a quantity of feed uranium and pays the enricher for the
SWUs to produce the quantity and assay of LEU called for.[fn2] Despite
[*310] their name, SWU contracts do not require that the contractual number of
SWUs actually be applied to the quantity of uranium provided, Notice of
Final Determination of Sales at Less Than Fair Value: Low Enriched
Uranium From France, 66 Fed. Reg. 65877, 65884 (2001) (hereinafter LEU
from France); rather, the enricher remains free to overfeed or underfeed
so long as it delivers the specified LEU. Moreover, because feed uranium
is fungible, and "for all intents and purposes, trades like a commodity,"
ibid., and because profitable operation of an enrichment plant requires
the constant processing of feed uranium from the enricher's
undifferentiated stock, the LEU provided to a utility under a SWU
contract cannot be traced to the particular unenriched uranium the
utility provided.
Petitioners, USEC Inc. and its subsidiary, United States Enrichment
Corporation, (USEC collectively) run the only
uranium enrichment factory in the United States,[fn3] which was built by
the United States Government in the 1950s and run by various federal
agencies until it was leased to USEC in 1998. In December 2000, USEC
[***686] petitioned the Commerce Department for relief under § 731 of the Tariff
Act, alleging that LEU imported from France and other European countries
under both EUP and SWU contracts was being sold in the United States at
less than fair value and was materially harming domestic industry.
Notice of Initiation of Antidumping Duty Investigations: Low Enriched
Uranium From France, Germany, the Netherlands, and the United Kingdom,
66 Fed. Reg. 1080 (2001).
Section 731 of the Tariff Act of 1930, as added by § 101 of the Trade
Agreements Act of 1979, 93 Stat. 144, as amended, 19 U. S. C. § 1673,
provides a two-step process to address [*311] harm to domestic manufacturing
from foreign goods sold at an unfair price:
"If [**884] —
"(1) the administering authority [the Secretary
of Commerce] determines that a class or kind of
foreign merchandise is being, or is likely to be,
sold in the United States at less than its fair
"(2) the [United States International Trade]
Commission determines that —
"(A) an industry in the United States —
"(B) the establishment of an industry in the
United States is materially retarded, by reason
of imports of
that merchandise or by reason of sales (or the
likelihood of sales) of that merchandise for
"then there shall be imposed upon such merchandise an
antidumping duty, in addition to any other duty
imposed, in an amount equal to the amount by which the
normal value exceeds the export price (or the
constructed export price) for the [****3] merchandise. . . ."
See also § 1677(1) (designating the Secretary of Commerce as the
"`administering authority'"); § 1677(2) (explaining that the term
"`Commission'" refers to the United States International Trade
The Tariff Act's antidumping provision derives from similar terms in
the Anti-Dumping Act, 1921, 42 Stat. 11, which were adopted to "protec[t]
our industries and labor against a now common species of commercial
warfare of dumping goods on our markets at less than cost or home value
if necessary until our industries are destroyed. . . ." H. R. Rep.
No. 1, 67th Cong., 1st Sess., p. 23 (1921).
Following the USEC charges, the Commerce Department opened an
investigation into the practices of respondents, a [*312] French enricher,
Eurodif, S. A., its owner, Compagnie Général des Matières Nucléaires
(now AREVANC), its U. S. subsidiary, COGEMA (now AREVA NC, Inc.), and
United States utilities that consume LEU (Eurodif collectively). Eurodif
conceded that EUP contracts were for the sale of LEU, but argued that SWU
contracts involved only the sale of uranium enrichment services, and were
therefore outside the scope of § 1673. LEU From France,
66 Fed. Reg. 65882-65883.
In its final determination, the Commerce Department concluded that LEU
from France, including LEU acquired under SWU contracts, was being sold,
or likely to be sold, in the [***687] United States at less than fair value.[fn4]
Id., at 65878.
In deciding that SWU contracts are for a sale of LEU, not enrichment
services, the Department stressed several features of the transactions.
First, because the enrichment process accounts for approximately 60
percent of the value of LEU and works a "substantial transformation" on
uranium feedstock, id., at 65881, enrichment creates "the essential
character" of LEU, id., at 65884. Second, "enrichers not only have
complete control over the enrichment process, but in fact control the
level of usage of the natural uranium provided." Ibid. Third, the
utilities themselves take no part in the manufacture of LEU and are the
sole purchasers of the product. Ibid.
The Commerce Department also rejected the argument that LEU transferred
pursuant to SWU contracts should not be [**885] considered "sold" in light of a
"tolling" regulation then (but no longer) in effect. Ibid. The regulation
stated that a "toller," a subcontractor who sells processing services
in, [*313] or material for incorporation into, subject merchandise, would not be
considered a manufacturer or producer "where the toller or subcontractor
does not acquire ownership, and does not control the relevant sale, of
the subject merchandise." 19 CFR § 351.401(h) (2000) (withdrawn in
Import Administration, Withdrawal of Regulations Governing the Treatment
of Subcontractors, ("Tolling" Operations), 73 Fed. Reg. 16517 (2008)
(hereinafter Tolling Operations)). This regulation, the Commerce
Department explained, was intended to apply in situations where a good is
first sold by a manufacturer and then resold by an exporter or reseller.
LEU from France, 66 Fed. Reg. 65880. The regulation provides that in such
a situation the second sale should be used to calculate the
U. S. price and normal value of the manufactured good; however, [****4] the
Commerce Department concluded, the regulation was not meant to preclude
antidumping duties where a manufacturer makes the only relevant sale
that can be used to establish U. S. price and normal value. Ibid.;
id., at 65884-65885.
Finally, the Commerce Department reasoned that language in SWU
contracts speaking of the transactions as the sale of enrichment services
could not control, lest deferring to the parties' characterizations allow
them to "convert trade in goods into trade in so-called `manufacturing
services,' . . . thereby exposing industries to injury by unfair trade
practices without the remedy of the [antidumping] laws." Id., at 65881. In
economic reality, the Commerce Department said, "the contracts designated
as SWU contracts are functionally equivalent to those designated as EUP
transactions." Id., at 65885.[fn5]
[*314] Eurodif challenged the Department's determination before the Court of
International Trade (CIT), which remanded for "a more persuasive
[***688] explanation" of the tolling regulation. USEC Inc. v. United States,
259 F. Supp. 2d 1310, 1326 (2003). On remand, the Commerce Department
repeated that the tolling regulation governed which price should be used
to calculate antidumping duties, not whether imports are subject to the
antidumping provision in the first instance. Final Remand Determination,
USEC Inc. and United States Enrichment Corporation v. United States
(June 23, 2003), App. G to Pet. for Cert. 211a (hereinafter Final Remand
Determination). The Department further explained its conclusion that SWU
contracts lead to transfers of LEU for consideration. The contracts and
other evidence in the record convinced the Department that "enrichers
own, and hold title to, all the LEU they produce," id., at 217a, a
conclusion grounded on findings that "enrichers hold inventories of
uranium from various sources, including uranium owned by the enricher
itself, and produce LEU without relying solely upon the input from a
particular customer." Id., at 221a. Finally, the Department emphasized
that the enrichers "have complete control over the enrichment process
and control the amount of uranium and energy actually used in producing
the LEU." Id., at 231a.
The CIT was unconvinced and reversed, relying on what it candidly
recognized as a "legal fiction" expressed in SWU contracts, "that the
very feed uranium delivered by a [**886] utility to an enricher is enriched and
then returned as LEU to the utility." USEC Inc. v. United States,
281 F. Supp. 2d 1334, 1339 (2003). The CIT reasoned, because "nothing
in the record support[ed] a determination that the enricher has any
ownership rights," the Commerce Department's determination was
"unsupported by substantial evidence and not in accordance with law."
Id., at 1340.
USEC challenged this conclusion in an interlocutory appeal to the Court
of Appeals for the Federal Circuit, which [*315] affirmed. Eurodif S. A. v.
United States, 411 F. 3d 1355 (2005) (Eurodif I). The court approached
the issues much as the CIT had, with the observation that "the SWU
contracts in this case do not evidence any intention by the parties to
vest the enrichers with ownership rights in the delivered unenriched
[****5] uranium or the finished LEU." Id., at 1362. It recalled that in a
previous case, Florida Power & Light Co. v. United States, 307 F. 3d 1364
(CA Fed. 2002), it had accepted the Government's position that SWU
contracts were for services, not for "`disposal of personal property,'"
and so were outside the cause of action provided by the Contract Disputes
41 U. S. C. § 601 et seq. Eurodif I, supra, at 1363, and n. 3 (quoting
Florida Power & Light Co., supra, at 1373). While the court conceded
that SWU agreements "do `not fall neatly' either into the category of
contracts for services or the category of contracts for the sale of
goods," 411 F. 3d, at 1364 (quoting Florida Power & Light Co., supra,
at 1373-1374), it still concluded that "even under the deferential standard
of review that we apply in this case, we choose not to ignore our
previous holdings." Eurodif I, supra, at 1363.
Shortly after this decision, we held in National Cable &
Telecommunications Assn. v. Brand X Internet Services, 545 U. S. 967,
982-983 (2005), that a court's choice of one reasonable reading of an
ambiguous statute does not preclude an implementing agency from later
adopting a different [***689] reasonable interpretation. On rehearing, the Federal
Circuit responded to National Cable & Telecommunications Association by
explaining that it had not rejected the Commerce Department's position
because it conflicted with the prior interpretive choice that carried the
day in Florida Power & Light. Eurodif S. A. v. United States,
423 F. 3d 1275, 1277-1278 (2005) (Eurodif II). The Circuit, rather, saw
no statutory uncertainty to be resolved: "the antidumping duty statute
unambiguously applies to the sale of goods and not services" and "it is
clear that [SWU] contracts are contracts for services and not [*316] goods."
Id., at 1278. After final judgment was entered, Eurodif S. A. v. United
States, 506 F. 3d 1051, 1053 (CA Fed. 2007) (Eurodif III), we granted
certiorari 553 U. S. ___ (2008), to consider whether transactions under
SWU contracts may be subjected to antidumping duties under the Tariff
Act. We now reverse.
[2] The issue is not whether, for purposes of 19 U. S. C. § 1673, the
better view is that a SWU contract is one for
the sale of services, not goods. The statute gives this determination to
the Department of Commerce in the first instance, § 1677(1), and when
the Department exercises this authority in the course of adjudication,
its interpretation governs in the absence of unambiguous statutory
language to the contrary or unreasonable resolution of language that is
ambiguous.[fn6] United States v. Mead Corp., 533 U. S. 218, 229-230
(2001) (citing Chevron U. S. A. Inc. v. Natural Resources Defense
Council, Inc., 467 U. S. 837 (1984)). [**887] This is so even after a change in
regulatory treatment, which "is not a basis for declining to analyze the
agency's interpretation under the Chevron framework." National Cable
& Telecommunications Assn., 545 U. S., at 981. "`[T]he whole point of
Chevron is to leave the discretion provided by the ambiguities of a
statute with the implementing agency.'" Ibid. (quoting Smiley v.
Citibank (South Dakota), N. A., 517 U. S. 735, 742 (1996)).[fn7]
[*317] [3] In approaching the Department's position on the application
of § 1673, two threshold propositions must be taken as given. First, we
think the Department reasonably concluded that § 1673 is not limited by
its terms to [****6] cash-only sales. Otherwise, any sale of a manufactured
product could be exempted from the operation of [***690] § 1673 by a contractual
term stating part of the purchase price in terms of a commodity.[fn8]
Second, in applying § 1673, the Commerce Department is not bound by the
"legal fiction [created by SWU contracts] that the very feed uranium
delivered by a utility to an enricher is enriched and then returned as
LEU to the utility." USEC, 281 F. Supp. 2d, at 1339. The parties are
free to contract as they wish, and they may genuinely regard SWU
agreements as contracts for the sale of enrichment services. But,
whatever the significance of such a term in a contract dispute, cf.
Florida Power & Light Co., 307 F. 3d 1364, it is well settled that in
reading regulatory and taxation statutes, "form should be disregarded for
substance and the emphasis [*318] should be on economic reality." Tcherepnin v.
Knight, 389 U. S. 332, 336 (1967). See also Frank Lyon Co. v. United
States, 435 U. S. 561, 573 (1978) ("`In the field of taxation,
administrators of the laws, and the [**888] courts, are concerned with substance
and realities, and formal written documents are
not rigidly binding'" (quoting Helvering v. F. & R. Lazarus & Co.,
308 U. S. 252, 255 (1939))). Surrender to private contractual terms is
especially uncalled for in dealing with international tariffs, as
Congress saw when it amended the Tariff Act to say that the sale of
foreign merchandise includes "the entering into of any leasing
arrangement regarding the merchandise that is equivalent to the sale of
the merchandise." Trade and Tariff Act of 1984, § 602(b)(2), 98 Stat. 3024,
19 U. S C. § 1673.
Since public law is not constrained by private fiction, the test of
the Department's position turns first on whether the statute clearly
excludes a transaction involving mixed payment for LEU that may and
almost certainly will be produced from uranium feed distinct from what
the utility provides. No one disputes that § 1673 applies to the sale of
goods, not services, LEU From France, 66 Fed. Reg. 65882-65883. Nor do
we think anyone would deny that the exchange of cash combined with a
commodity for a product that uses that very commodity as a constituent
material is sometimes a sale of services and sometimes a sale of goods,
the distinction being clear at the extremes. A customer who comes to a
laundry with cash and dirty shirts is clearly purchasing cleaning
services, not clean shirts. And a customer who provides cash and sand to
a manufacturer of generic silicon processors is clearly buying computer
chips rather than sand enhancement services.
[4] But the line blurs when the facts get more complicated, and SWU
contracts exemplify a class of transactions that the Federal Circuit
recognized does "`not fall neatly' either into the category of contracts
for services or the category of contracts for [***691] the sale of goods."
Eurodif I, 411 F. 3d, at 1364 ([*319] quoting Florida Power & Light Co.,
supra, at 1373-1374). The agreement is not like the laundry ticket,
which says that the same shirts are supposed to come back, just minus
the dirt around the collar. And it is not on all fours
with the agreement of the chip buyer and the manufacturer, in which it
is inescapable that the silicon processors delivered are a separate good
from [****7] the sand provided. Section 1673 simply does not speak with the
precision necessary to say definitively whether it applies to the LEU
and the agreement that gives the utility a right to get it.
This is the very situation in which we look to an authoritative agency
for a decision about the statute's scope, which is defined in cases at
the statutory margin by the agency's application of it, and once the
choice is made we ask only whether the Department's application was
reasonable. As to that, the Commerce Department relied on two related
characteristics of these transactions in deciding SWU contracts should
be treated as a sale of LEU. It stressed that the utility in a SWU
contract provides cash plus a fungible commodity that is not tracked
after its delivery to the enricher, in exchange for a product owned by
the enricher.[fn9] [*320] And it recognized that [**889] the enrichment
process results in a substantial transformation of the unenriched
The combination of these characteristics reasonably captures a common
understanding of the sale of a good. Because an individual's shirts are
not fungible, they are tracked during the cleaning process and returned
to the same customer who brought them in; there are no good reasons to
treat them as owned for a time by the laundry, and no one does. And
without any transfer of ownership, the salient feature of the transaction
is the cleaning of the shirt, a service. Conversely, where a constituent
material is untracked and fungible, ownership is usually seen as
transferred, and the transaction is less likely to be a sale of
services, as the Court explained years ago in distinguishing a common-law
bailment from a sale:
"[W]here logs are delivered to be sawed into boards,
or leather to be made into shoes, rags into paper,
olives into oil, grapes into wine, wheat into flour,
if the product of the identical articles delivered is
to [***692] be returned to the original owner in a new form, it
is said to be a bailment, and the title never vests in
the manufacturer. If, on the other hand, the
manufacturer is not bound to return the same wheat or
flour or paper, but may deliver any other of equal
value, it is said to be a sale or a loan, and the
title to the thing delivered vests in the
manufacturer." Powder Co. v. Burkhardt, 97 U. S. 110,
116 (1878).[fn10]
[*321] And when the manufacturer is not only free to return
different material, but also substantially transforms the material it
uses, it is even more likely that the object of the transaction will be
seen as a new product, not work on enduring material of primary interest
to the buyer. After all, what makes the hypothetical exchange of sand
for silicon processors so obviously a sale of goods is the extreme
transformation brought about by the chip manufacturer.
[5] These are good analytical grounds to show that SWU transactions are
reasonably placed within the ambit of sale of goods, and the Department's
reliance on them is reinforced by practical reasons aimed at preserving
the effectiveness of antidumping duties. There is no dispute that LEU
sold under an EUP contract at less than fair value must be subjected [****8] to
antidumping duties under § 1673, there being a clear sale of goods when a
domestic utility pays a single sale price in cash for the feed uranium
and enrichment components represented by LEU. If foreign enrichers set
this price below the fair value of LEU, the domestic enrichment industry
[**890] is obviously open to material injury, the very threat the antidumping
statute was meant to counter, see H. R. Rep. No. 1, at 23. But the same
injury would occur if a SWU contract were untouchable. Under a SWU
contract, the domestic utility pays cash to a third party for unenriched
uranium and provides this along with additional cash in exchange for
LEU; any EUP contract could be structured as a SWU contract simply by
splitting the transaction in two, one contract to buy unenriched uranium
and another to enrich it.[fn11] And the restructuring would not stop with
[*322] contracts for imported pasta would be replaced by separate contracts for
wheat and wheat processing services, sweater imports would give way to
separate contracts for wool and knitting services, and antidumping
duties would primarily chastise the uncreative.[fn12] The Commerce
Department's attempt to foreclose this absurd result by treating SWU
transactions as sales of goods is eminently reasonable.
[***693] III
Where a domestic buyer's cash and an untracked, fungible commodity are
exchanged with a foreign contractor for a substantially transformed
version of the same commodity, the Commerce Department may reasonably
treat the transaction as the sale of a good under § 1673. We therefore
reverse the judgment of the Federal Circuit and remand the cases for
[fn1] LEU can also be produced through a centrifuge method or by
back-blending unenriched uranium with weapons-grade uranium.
[fn2] Many SWU contracts give the utility the option of providing a
comparable quantity of uranium concentrate in lieu of the specified feed
uranium. App. 13, 83, 268-69 (Sealed).
[fn3] There are only five major uranium enrichers in the world, a
scarcity that illustrates the "huge financial investment in facilities
and a technically skilled work force" necessary to support the enrichment
process. LEU from France, 66 Fed. Reg. 65884.
[fn4] The Commerce Department concluded in a separate determination that
LEU from the United Kingdom, Germany, and the Netherlands was not being
sold, or likely to be sold, at less than fair value. Notice of Final
Determinations of Sales at Not Less Than Fair Value: Low Enriched Uranium
from the United Kingdom, Germany and the Netherlands, id., at 65886.
[fn5] In February 2002, the International Trade Commission found that
imports of LEU from France materially injured the enrichment industry in
the United States, allowing the imposition of antidumping duties. U. S.
Int'l Trade Comm'n, Low Enriched Uranium from France, Germany, the
Netherlands, and the United Kingdom (Pub. No. 3486).
[fn6] The specific factual findings on which an agency relies in applying
its interpretation are conclusive unless unsupported by substantial
evidence. 5 U. S. C. § 706(2)(E).
[fn7] Respondents' assertion that the Commerce Department's prior tolling
regulation is inconsistent with its position in these cases is there fore
beside the point. For the reasons given by the Department in its remand
determination, we are not convinced that the tolling regulation precludes
viewing SWU transactions as the sale of LEU; but even if it did, it has
since been withdrawn, Tolling Operations, 73 Fed. Reg. 16517, and cannot
now constrain the Commerce Department's interpretive authority under
Chevron. National Cable & Telecommunications Assn., 545 U. S., at 981
("Unexplained inconsistency is, at most, a reason for holding an
interpretation to be an arbitrary and capricious change from agency
practice under the Administrative Procedure Act"). Likewise, even if the
position taken by the Department of Energy in Florida Power & Light Co.
v. United States, 307 F. 3d 1364 (CA Fed. 2002), was inconsistent with
the Government's position here, it would not speak to the deference owed
the Commerce Department under Chevron.
[fn8] Respondents argue that, after determining that SWU contracts
involved the sale of LEU, the Commerce Department employed an
impermissible methodology by constructing the normal value of the LEU
based on the combined costs to Eurodif of obtaining feed uranium and
enrichment. Brief for Respondent Eurodif S. A. et al. 48-50. These
calculations, respondents argue, "were a charade, underscoring that the
antidumping laws cannot be applied to these SWU contracts." Id., at 48.
To the degree respondents' argument is that antidumping duties may never
be applied to mixed cash-commodity sales, it is doomed by
implausibility. If respondents are contending that the Commerce
Department's dumping determination improperly assessed the normal value
of LEU, they are raising an issue well outside the scope of our grant of
[fn9] Eurodif argues that the Commerce Department erred in concluding
that enrichers own LEU prior to its delivery under a SWU contract. Id.,
at 36-37. While the precise form of this argument is unclear, it fails
under any reading. Respondents seem to mean that the Commerce
Department's interpretation of § 1673 is impermissible as being
inconsistent with the formal terms of SWU contracts, an argument we
rejected above. The argument could also be read to suggest that the
Commerce Department lacked substantial evidence to conclude that,
contractual formalities aside, enrichers in fact own the LEU provided
under SWU contracts prior to its delivery. But the evidence in the record
not only supports the Department's conclusion, it compels it. It is
undisputed that the LEU delivered under a SWU contract is not actually
derived from the feed uranium provided as consideration; as CIT
observed, the notion that the same feed uranium delivered by a utility to
an enricher is enriched and then returned as LEU to the utility is "a
legal fiction." USEC Inc. v. United States, 281 F. Supp. 2d 1334, 1339
(2003). Moreover, the enricher is free to vary the amount of feed uranium
used to produce an order of LEU, either stockpiling feed uranium or
supplementing its stores from other sources. Finally, the SWU contracts
at issue provide that the utility retains title to the feed uranium until
delivery of the LEU, at which point it obtains title in the LEU. In light
of this process, some entity must own the LEU prior to delivery and
obtain title to the feed uranium after delivery, absent some modern
analog to the abhorrent possibility of an abeyance of seizen; the
enricher is the only serious candidate.
[fn10] Common law definitions do not necessarily control the meaning of
terms in modern trade laws; we merely mean to show the long pedigree of
the distinction relied upon by the Commerce Department.
[fn11] This would be particularly easy in these cases, since COGEMA,
Eurodif's parent company, "is a major world supplier of natural uranium
for the production of LEU." Final Remand Determination, App. G to Pet.
for Cert. 221a, n. 38. In fact, many SWU contracts provide that if a
utility fails to deliver feed uranium, the enricher will substitute feed
uranium of its own, which may then be purchased from the enricher. App.
13-14, 185-186, 537 (Sealed).
[fn12] Eurodif suggests the Commerce Department could combat such
circumvention of antidumping duties by taxing domestic downstream sales
of such products. Brief for Respondent Eurodif S. A. et al. 53-54. But
this ignores the substantial number of manufactured goods that are not
resold. More fundamentally, this argument fails to explain why the
Commerce Department should be required to chase after downstream
resellers when the first sale has the same economic substance.