Preliminary Results of Countervailing Duty Administrative Review: Low Enriched Uranium from France

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Preliminary Results of Countervailing Duty Administrative Review.

SUMMARY:

The Department of Commerce (the Department) is conducting an administrative review of the countervailing duty order on low enriched uranium from France for the period May 14, 2001 through December 31, 2002¹. For information on the net subsidy for the reviewed company, please see the “Preliminary Results of Review” section of this notice. Interested parties are invited to comment on these preliminary results. (See the “Public Comment” section of this notice).

EFFECTIVE DATE:

February 5, 2004.

FOR FURTHER INFORMATION CONTACT:

Carrie Farley at (202) 482-0395 or Tipten Troidl at (202) 482-1767, Office of AD/CVD Enforcement VI, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, Room 4012, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230.

SUPPLEMENTARY INFORMATION:

Background

On February 13, 2002, the Department published in the Federal Register the countervailing duty order on low enriched uranium from France. See Amended Final Determination and Notice of Countervailing Duty Orders: Low Enriched Uranium from France, 67 FR 6689 (February 13, 2002). On February 3, 2003, the Department published an opportunity to request an administrative review of this countervailing duty order. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request an Administrative Review, 68 FR 5272 (February 3, 2003). We received a timely request for review of Eurodif S.A. (Eurodif), by both respondents and petitioners.² On March 25, 2003, the Department published the initiation of the administrative review of the countervailing duty order on low enriched uranium from France, covering the period of review (POR) May 14, 2001 through December 31, 2002. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Revocation in Part, 68 FR 14394 (March 25, 2003).

On May 2, 2003, the Department issued a questionnaire to the Government of France (GOF) and Eurodif. On June 19, 2003, the Department received questionnaire responses from the GOF, and Eurodif. On October 23, 2003, the Department published in the Federal Register an extension of the deadline for the preliminary results. See Low Enriched Uranium from France, Germany, the Netherlands, and the United Kingdom: Extension of Preliminary Results of Countervailing Duty Administrative Reviews, 68 FR 60643 (October 23, 2003). On October 14, 2003 and November 3, 2003, we issued supplemental questionnaires to respondents. On October 31, 2003 and November 7, 2003, we received supplemental responses from respondents. From November 11 through November 14, 2003, we conducted verification of the responses of Eurodif and the GOF.

In accordance with 19 CFR 351.213(b), this review covers only those producers or exporters for which a review was specifically requested. The company subject to this review is Eurodif. This review covers 2 programs.

Scope of Order

For purposes of this order, 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 order. Specifically, this order 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 order. For purposes of this order, 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 order.

Also excluded from this order 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 re-exported 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 order 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 is dispositive.

Period of Review

The POR for which we are measuring subsidies is May 14, 2001, through December 31, 2002.

Company History

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

Programs Preliminarily Determined To Confer Subsidies

1. Purchase at Prices that Constitute “More Than Adequate Remuneration”

Eurodif provides low enriched uranium to EdF. EdF is a wholly-owned French government agency that supplies, imports and exports electricity. EdF is regulated by the Gas, Electricity and Coal Department of the Ministry of Industry (DIGEC) and the Budget and Treasury Departments of the Ministry of France. EdF is the major supplier of electricity in France and EdF's nuclear facilities account for approximately 85 percent of the power supplied by EdF in 2002. To date, EdF has entered into three long-term contracts with Eurodif to secure LEU. The first contract was negotiated in 1975; Eurodif began enrichment at its Georges-Besse gaseous diffusion facility in 1979.

In the Final Affirmative Countervailing Duty Determination: Low Enriched Uranium from France, 66 FR 65901 (December 21, 2001) (1999 LEU) we found this program to be countervailable. The facts on which this determination was made have not changed. EdF is still owned by the GOF, and because EdF is purchasing a good from Eurodif a financial contribution is being provided under section 771(5)(D)(iv) of the Act. In addition, because this program is available only to Eurodif, we continue to find that this program is specific under section 771(5A)(D)(i) of the Act.

Next, we must determine whether a benefit is provided to Eurodif under this program. Under section 771(5)(E)(iv) of the Act, a countervailable benefit may be provided by a government's purchase of a good for “more than adequate remuneration.” Under section 771(5)(E)(iv) of the Act, the adequacy of remuneration will be determined in relation to the prevailing market conditions for the goods being purchased in the country which is subject to investigation. Therefore, in order to determine whether the prices paid by EdF constitute “more than adequate remuneration,” we must compare the prices paid by EdF to Eurodif with the prices paid by EdF to its other suppliers.

Due to the difference in the pricing structure between Eurodif and EdF, as compared with the pricing between EdF and its other suppliers, it is important to make certain adjustments to our comparison. Unlike most other customers, EdF provides its own energy for Eurodif to use when producing LEU for EdF. In 2001, Eurodif paid EdF for the energy it used and re-billed EdF an identical amount. In 2002, Eurodif and EdF changed their billing practice so that EdF now pays Eurodif in energy for the energy Eurodif uses to produce EdF's LEU. For both years, Eurodif charged EdF for the operational costs associated with the production of its LEU. As EdF does not supply electricity to its other LEU suppliers, these suppliers charge EdF a single price per separative work unit (SWU). Thus, we have used this single price per SWU as our benchmark price. In order to make a proper comparison between the benchmark price and the government price (i.e., the price paid by EdF), the Department has included both operational and energy prices paid by EdF to Eurodif.

As part of the arrangement for obtaining LEU, customers often provide an amount of natural uranium equal to that which theoretically went into the LEU they are purchasing. The record does not contain information on the value of the natural uranium provided by EdF or other customers to Eurodif. In the “Issues and Decision Memorandum from Bernard T. Carreau, Deputy Assistant Secretary for AD/CVD Enforcement II to Faryar Shirzad, Assistant Secretary for Import Administration concerning the Final Affirmative Countervailing Duty Determination: Low Enriched Uranium from France - Calendar Year 1999” (Decision Memorandum) dated December 13, 2001, we assumed that the value of all natural uranium is the same. See Decision Memorandum at 5. In making the comparison in this review we have continued to assume that the value of all natural uranium is the same in instances where EdF supplied its own feed material for enrichment. Thus, we have not included a value for the natural uranium component of the LEU delivered to EdF by Eurodif .

In order to determine whether a benefit was provided to Eurodif during the POR, we calculated a per-SWU price for both the energy and operational components of the LEU purchased by EdF from Eurodif based on the price for the component divided by the quantity of SWU. To derive the per-SWU energy component cost under the new billing arrangement in 2002 where we did not have a euro price, we multiplied the MwH/SWU rate paid by EdF to Eurodif by Eurodif's cost of electricity from EdF. After adding these two components together, we compared the per-SWU price paid to Eurodif by EdF during each calendar year with the per-SWU price paid by EdF to its other LEU suppliers during each calendar year. Based on our analysis, we preliminarily determine that prices paid by EdF to Eurodif were higher than prices EdF paid to its other suppliers. Therefore, in accordance with section 771(5)(E)(iv) of the Act, we preliminarily determine that this program conferred countervailable benefits to Eurodif during both 2001 and 2002. Because EdF's purchases of this product from Eurodif are not exceptional but, rather, are made on an ongoing basis from year to year, we determine that the benefit conferred under this program is recurring under section 351.524(c) of the Department's Regulations. Therefore, the benefit is expensed in the year of receipt, i.e., the year in which the purchases are made. To calculate the benefit conferred to Eurodif, we multiplied the calculated price differential by the quantity of SWU component of the LEU purchased from Eurodif by EdF during each calendar year.

Although the cash component of EdF's LEU purchases from Eurodif was paid on a “per-SWU” basis, the contracts also contained provisions for the natural uranium component of the LEU as well as the electricity used by Eurodif in the production of EdF's LEU. As stated above, we have determined that the value of the natural uranium component of the LEU produced by Eurodif from EdF's feed material is equal to that produced by EdF's other suppliers from EdF's feed material. Therefore, we did not need to calculate a price differential for the natural uranium component of the LEU. Rather, the natural uranium components of the LEU cancelled each other out.

Also, we calculated an additional benefit from sales pursuant to the contract listed in Exhibit 16 J of Eurodif's June 19, 2003 questionnaire response. For a more detailed discussion, see Memorandum on “Eurodif's sales pursuant to the contract provided in Exhibit 16J of the June 19, 2003 questionnaire response,” dated January 29, 2004, in the case file in the Central Records Unit, main Commerce building, room B-099 (the CRU).

Next, we multiplied the benefit amount by the sales of subject merchandise to the United States, divided by total sales, and divided the result by sales that entered U.S. Customs during calendar years 2001 and 2002 respectively. Thus, we have calculated the ad valorem rate for this program using the following formula:

A = B * (C/D)

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Where:

A = Ad Valorem Rate

B = Subsidy Benefit

C = Sales of Subject Merchandise to the United States During the Calendar Year

D = Total Sales During the Calendar Year (including COGEMA sales on behalf of Eurodif)

E = Sales That Entered U.S. Customs During the Calendar Year

On this basis, we preliminarily determine a net countervailable subsidy under this program of 6.20 percent ad valorem for 2001 and 1.40 percent ad valorem for 2002 for Eurodif.

2. Exoneration/Reimbursement of Corporate Income Taxes

Under a specific governmental agreement entered into upon Eurodif's creation, Eurodif is only liable for income taxes on the portion of its income relating to the percentage of its private ownership. Eurodif is fully exonerated from payment of corporate income taxes corresponding to the percentage of its foreign government ownership and is eligible for a reimbursement of the amount of corporate income taxes corresponding to its percentage of French government ownership. Based on this governmental agreement, Eurodif was exonerated from a portion of its 2000 and 2001 corporate income taxes filed during calendar years 2001 and 2002. This tax exemption constitutes a financial contribution within the meaning of section 771(5)(D)(ii) of the Act. Further, because the tax exemption is limited to Eurodif, the benefit is specific in accordance with section 771(5A)(D)(i) of the Act. In 1999 LEU, we found this program to be countervailable. See Decision Memorandum at 7.

As noted above, Eurodif was also eligible for a reimbursement of the amount of income taxes corresponding to its percentage of French government ownership. Eurodif reported that the portion of its taxes attributable to French government ownership was paid in 2000 and 2001, and was reimbursed in 2001 and 2002. In 1999 LEU, we found this program to be countervailable. See Decision Memorandum at 7. No new information has been provided in this review to warrant reconsideration of these determinations.

To calculate the benefit conferred upon Eurodif from both parts of this program, we divided the amount of exonerated and reimbursed taxes in each calendar year by Eurodif's total sales during that calendar year. We adjusted Eurodif's sales denominator using the methodology described in the “Purchase at Prices that Constitute ``More Than Adequate Remuneration” section, above. On this basis, we preliminarily determine a net countervailable subsidy to Eurodif from this program of 0.34 percent ad valorem in 2001 and 1.63 percent ad valorem in 2002.

Verification

In accordance with section 782(i) of the Act, we conducted verification at Eurodif and the GOF on November 11 through November 14, 2003.

Preliminary Results of Review

In accordance with section 703(d)(1)(A)(i) of the Act, we have calculated an individual rate for Eurodif, the only company under review, for 2001 and 2002. We preliminarily determine that the total estimated net countervailable subsidy rate is 6.54 percent ad valorem for 2001 and 3.03 percent ad valorem for 2002.

If the final results of this review remain the same as these preliminary results, the Department intends to instruct the U.S. Customs and Border Protection(CBP), within 15 days of publication of the final results of this review, to liquidate shipments of low enriched uranium from France by Eurodif entered, or withdrawn from warehouse, for consumption from May 14, 2001 through September 11, 2001 at 6.54 percent ad valorem and from February 13, 2002 through December 31, 2002 at 3.03 percent ad valorem of the f.o.b. invoice price. The Department also intends to instruct CBP to collect cash deposits of estimated countervailing duties at 3.03 percent ad valorem of the f.o.b. invoice price on all shipments of the subject merchandise from the reviewed company, entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this review.

Because the URAA replaced the general rule in favor of a country-wide rate with a general rule in favor of individual rates for investigated and reviewed companies, the procedures for establishing countervailing duty rates, including those for non-reviewed companies, are now essentially the same as those in antidumping cases, except as provided for in section 777A(e)(2)(B) of the Act. The requested review will normally cover only those companies specifically named. See 19 CFR 351.213(b). Pursuant to 19 CFR 351.212(c), for all companies for which a review was not requested, duties must be assessed at the cash deposit rate, and cash deposits must continue to be collected, at the rate previously ordered. As such, the countervailing duty cash deposit rate applicable to a company can no longer change, except pursuant to a request for a review of that company. See Federal-Mogul Corporation and The Torrington Company v. United States, 822 F.Supp. 782 (CIT 1993) and Floral Trade Council v. United States, 822 F.Supp. 766 (CIT 1993) (interpreting 19 CFR 353.22(e), the antidumping regulation on automatic assessment, which is identical to 19 CFR 351.212(c)(ii)(2). Therefore, the cash deposit rates for all companies except those covered by this review will be unchanged by the results of this review.

We will instruct CBP to continue to collect cash deposits for non-reviewed companies at the most recent company-specific or country-wide rate applicable to the company. Accordingly, the cash deposit rates that will be applied to non-reviewed companies covered by this order will be the rate for that company established in the most recently completed administrative proceeding. See Notice of Amended Final Determination and Notice of Countervailing Duty Order: Low Enriched Uranium from France, 67 FR 6889 (February 13, 2002). These rates shall apply to all non-reviewed companies until a review of a company assigned these rates is requested.

Public Comment

Pursuant to 19 CFR 351.224(b), the Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results within five days after the date of the public announcement of this notice. Pursuant to 19 CFR 351.309, interested parties may submit written comments in response to these preliminary results. Unless otherwise indicated by the Department, case briefs must be submitted within 30 days after the date of publication of this notice, and rebuttal briefs, limited to arguments raised in case briefs, must be submitted no later than five days after the time limit for filing case briefs, unless otherwise specified by the Department. Parties who submit argument in this proceeding are requested to submit with the argument: (1) a statement of the issue, and (2) a brief summary of the argument. Parties submitting case and/or rebuttal briefs are requested to provide the Department copies of the public version on disk. Case and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310, within 30 days of the date of publication of this notice, interested parties may request a public hearing on arguments to be raised in the case and rebuttal briefs. Unless the Secretary specifies otherwise, the hearing, if requested, will be held two days after the date for submission of rebuttal briefs, that is, thirty-seven days after the date of publication of these preliminary results.

Representatives of parties to the proceeding may request disclosure of proprietary information under administrative protective order no later than 10 days after the representative's client or employer becomes a party to the proceeding, but in no event later than the date the case briefs, under 19 CFR 351.309(c)(ii), are due. The Department will publish the final results of this administrative review, including the results of its analysis of arguments made in any case or rebuttal briefs.

This administrative review is issued and published in accordance with sections 751(a)(1) and 777(I)(1) of the Act (19 U.S.C. 1675(a)(1) and 19 U.S.C. 1677f(I)(1)).