Petition for Writ of Certiorari — USEC, Inc. v. Eurodif S.A. (Nos. 07-1078, 07-1059)

$6

~ FILED

No. 07. 071078 FEB15 2008

adie OFFICE OF THE CLERK

Supreme Court of the United States

USEC INC. and

UNITED STATES ENRICHMENT CORPORATION,

Petitioners,

v.

EURODIF S.A.; COMPAGNIE GENERALE DES

MATIERES NUCLEAIRES; COGEMA, INC.;

AD HOC UTILITIES GROUP; and UNITED STATES,

Respondents.

On PETITION FOR A Writ oF CERTIORARI TO THE

UNITED StaTEs Court OF APPEALS

FOR THE FEDERAL CIRCUIT

-_-——

PETITION FOR A WRIT OF CERTIORARI»

SHELDON E. HocHBERG

Counsel of Record

Eric C. EMERSON

CHARLES G. COLE

MICHAEL A. VaTis

JOHN P NOLAN

STEPTOE & JOHNSON LLP

1330 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 429-3000

Attorneys for Petitioners

USEC Inc. and United States

Enrichment Corporation

212923 ed

COUNSEL PRESS

(800) 274-3321 * (800) 359-6859

QUESTION PRESENTED

The antidumping law allows for duties to be imposed

on “foreign merchandise . . . sold in the United States at

less than its fair value.” The Commerce Department

construed that phrase as including transactions in which

a U.S. customer furnishes cash and fungible raw material

to a foreign producer and receives a substantially

transformed finished product. The question presented

in this case is whether the Federal Circuit erred in failing

to accord Chevron deference to that construction, when

a contrary one will prevent the Commerce Department

from applying the antidumping law to imports causing

or threatening material injury to a domestic industry.

a0

RULE 29.6 STATEMENT

USEC Inc. owns 100% of the stock of United States

Enrichment Corporation. USEC Inc. has no parent

corporation and no publicly held company owns 10% or

more of its stock. USEC Inc. is a publicly held company

whose stock is traded on the New York Stock Exchange

under the symbol “USU”.

il

TABLE OF CONTENTS

Page

QUESTION PRESENTED .................. i

RULE 29.6 STATEMENT ............ceeee0. ii

TABLE OF APPENDICES .................. vi

TABLE OF AUTHORITIES ................. viii

ED © inns Videos dgnenwexcdwenbe 1

EE 60046 va dteecenénndesdednnse 1

STATUTORY PROVISIONS INVOLVED ..... 2

STATEMENT OF THE CASE ............... 3

I. STATUTORY BACKGROUND......... 4

II. FACTUAL BACKGROUND ........... 6

III. THE PROCEEDINGS BELOV ....... 8

A. The Commerce Proceedings ....... 8

B. CIT Review and Commerce’s

Redetermination ...........scccee- 10

C. Federal Circuit Decisions on

Interlocutory Review .............. 12

iv

Contents

Page

D. Proceedings on Remand from the

PUTED v ccdbdnecdcdbos vases 14

E. Final Federal Circuit Decision ..... 15

F. Proceedings Regarding Imports of

EE ond euk ce eckednkvats oe 16

REASONS FOR GRANTING THE PETITION ..— 17

I. THE COMMERCE DEPARTMENT

REACHED A REASONABLE CON-

STRUCTION OF AN AMBIGUOUS

STATUTORY PHRASE. ........cccees: 20

A. Congress Has Not Directly Spoken

to the Question Presented in This

GIG Nid écknnedveavacds iaeabeadiue 20

B. Commerce’s Construction of

the Antidumping Statute Was _

RRR EP apie Fira n i SneS 22

1. The Term “Sale” Has Been

Broadly Construed When Used in

Regulatory Statutes. ........... 23

Vv

Contents

Page

2. Commerce’s Construction of the

Antidumping Law Is Consistent

With the Line Congress Has

Drawn Between “Goods” and

“Services” in a Relevant Trade

DRL: vc ccccxnudéouwsdeeacaese 27

C. The Federal Circuit Departed From

the Teachings of Chevron and ©.

DOES oc Kudbwieeccdscnccbsuscnse 28

II. THIS CASE PRESENTS AN ISSUE

WITH IMPORTANT NATIONAL

SRT EMME Koc cccsscasvdecessyne 32

ee MTT TTT 37.

vi

TABLE OF APPENDICES

Appendix A — Opinion Of The United States

Court Of Appeals For The Federal Circuit

Decided March 3, 2005 .................24..

Appendix B — Opinion Of The United States

Court Of Appeals For The Federal Circuit

Decided September 9, 2005 .................

Appendix C — Opinion And Judgment Of The

United States Court Of Appeals For The

Federal Circuit Decided September 21,

DE See coe aad Cabbie wenden ces

Appendix D — Final Determination By The

Department Of Commerce Dated December

een eda bw kukkeke’s6en oes

Appendix E — Amended Final Determination By

The Department Of Commerce Dated

ee nc dcctaweveneesckeeens

Appendix F — Opinion Of The United States

Court Of International Trade Decided March

ee eS, Se iv eneweees eee

Appendix G — Final Remand Determination By

The Department Of Commerce Dated June 23,

EG LaCie ia dodbesceeeusiebeseetees

vii

Appendices

Appendix H — Opinion Of The United States

Court Of International Trade Decided

ED DER EE Sede wccecenececoectccess

Appendix I — Opinion And Order Of The United

States Court Of International Trade Decided

i ks dekh ane eee

Appendix J — Order For Remand Of The United

States Court Of International Trade Decided

PG IPT OPT TE POT TT Terie er

Appendix K — Final Results Of Redetermination

By The Department Of Commerce Dated

ae

Appendix L — Opinion Of The United States

Court Of International Trade Decided May 18,

PPS ch db rensdindudetenesadshcananbeecs ne

Appendix M — Final Results Of

Redetermination By The Department Of

Commerce Dated June 19, 2006.............

Appendix N — Opinion Of The United States

Court Of International Trade Decided August

ETD At cide essd Reha sandseidnccduwknc nse

ies ‘etl = 73,

meee

viii

TABLE OF CITED AUTHORITIES

Page

CASES

Atlantic Cleaners & Dyers, Inc. v. United States,

ED dbs t a cceceeuduneneneues 31

Bershad v. McDonough,

428 F.2d 693 (7th Cir. 1970) ................. 21

Callery Properties v. FPC,

335 F.2d 1004 (5th Cir. 1964) ................ 25

Chevron U.S.A., Inc. v. Natural Resources

Defense Council, Inc.,

ais cues etnseennnee passim

Dist. of Columbia v. Carter,

nc oss was ctadeusebwns 22

Environmental Defense v. Duke Energy Corp.,

SE ED bed ncescnsctvveboune 31

Eurodif S.A. v. United States,

411 F.3d 1355 (Fed. Cir. 2005) ............. passim

Eurodif S.A. v. United States,

414 F. Supp. 2d 1263 (Ct. Int’l Trade 2006)... 14

Eurodif S.A. v. United States,

423 F.3d 1275 (Fed. Cir. 2005) ............. passim

ix

Cited Authovities

Page

Eurodif S.A. v. United States,

431 F. Supp. 2d 1351 (Ct. Int’) Trade 2006)... 14

Eurodif S.A. v. United States,

442 F. Supp. 2d 1367 (Ct Int'l Trade 2006) ... 15

Eurodif S.A. v. United States,

506 F.3d 1051 (Fed. Cir. 2007) ............. 1, 15,17

FDA v. Brown & Williamson Tobacco Corp.,

SPEED Sc ceed icccuncéscecscdens 22

Florida Power & Light Co. v. United States,

307 F.3d 1364 (Fed. Cir. 2002) ............. passim

Gray v. Powell,

re Pere eer 24, 25

Nat'l Park Hospitality Ass’n v. Dep’t of Interior,

I icin cc dceeabewnntessees 30

National Cable & Telecommunications Ass’n

v. Brand X Internet Services,

Pee EE, ee divicccccnevceseseus passim

NSK Ltd. v. United States,

115 F.3d 965 (Fed. Cir. 1997) ................ 13, 27

Puerto Rico v. Shell Co. (P-R.),

ee tee ceeeiadens i

a

C ited Authorities

SEC v. Nat'l Sec., Inc.,

393 U.S. 453 (1969) ....... peseceecsesecs

Skranak v. Castenada,

425 F.3d 1213 (9th Cir. 2005) .............

Techsnabexport v. United States,

515 F. Supp. 2d 1363 (Ct. Int’] Trade 2007)

United Gas Improvement Co. v.

Callery Properties, Inc.,

382 U.S. 223 (1966) ............ eb

United Gas Improvement Co. v.

Continental Oil Co.,

ee ee ERNE) we vecccvsesccvccccecs

United States v. Cleveland Baseball Co..,

532 U.S. 200 (2001) ......... cece eee eee

United States v. Fausto,

Se es PEED vivid vcccccccccsececes

USEC Inc. v. United States,

259 F. Supp. 2d 1310 (Ct. Int’] Trade 2003) ...

~ USEC Inc. v. United States,

281 F. Supp. 2d 1334 (Ct. Int’l Trade 2003) ...

USEC Inc. v. United States,

Be GBs Be BU GUD o oc bccccccscccescess

1,12

‘Smarutes

19 U.S.C.

19 U.S.C.

19 U.S.C.

19 U.S.C.

19 U.S.C.

19 U.S.C.

19 U.S.C.

19 U.S.C.

19 U.S.C.

19 U.S.C.

19 U.S.C.

28 U.S.C.

28 U.S.C.

41 U.S.C.

42 U.S.C.

xi

Cited Authorities

Page

EE dh veeecescneesdnceseseenbeess 2,5

PPT TeTTrerrer errr Te 2,5

Ach s concedtesueetsecescebun 2, 5-

EEE $eCeccsvnsvacseccevcdos 5

NEED b60 ce0scocceredcusenune 6

PED wesrscdesasehesetunes bie 6

DT ¢éadinenseesseuctscideeteente 5

DEE kvccbecducedaneveccebeses 5

DE icivcernscysteudesuesne beeen 5

Ch wttdbitedeiagdnstenenes ; Oe

DD cc0enssnneenesoteeepen 18, 27, 28

paneer: 1

TE ticnhaniceiseetsshnbnewe 12

Css capedcondheveuantid 13, 29

REE Wehbe ecb tnduvddcndnesesauess 6

xii

Cited Authorities

Page

INTERNATIONAL AGREEMENTS

Agreement Concerning the Disposition of Highly

Enriched Uranium Extracted From Nuclear

Weapons, U.S.—Russ., Feb. 18, 1993, Temp.

State Dep’t No. 93-59, 1993 WL 152921 ...... 33

Amendment to the Agreement Suspending the

Antidumping Investigation on Uranium From

the Russian Federation, 73 Fed. Reg. 7705

(Dep’t of Commerce Feb. 11, 2008) .......... 35

ADMINISTRATIVE PROCEEDINGS

Final Remand Determination, USEC Inc. v.

United States (Dep’t of Commerce June 23,

Eh ee bi dg oe eke acd bw se’ 3 passim

Low Enriched Uranium from France (Dep’t of

Commerce June 19, 2006) (final results of

redetermination) ...............-.eeeeeeees 15

Low Enriched Uranium from France (Dep't of

Commerce March 3, 2006) (final results of

ee ee eeter 14

Low Enriched Uranium from France, 66 Fed.

Reg. 65,877 (Dep’t of Commerce Dec. 21, 2001)

(final affirmative determination) .......... passim

xiii

Cited Authorities

Low Enriched Uranium from France, 67 Fed.

Reg. 6,680 (Dep’t of Commerce Feb. 13, 2002)

(amended final determination) ..............

Uranium from the Russian Federation,

71 Fed. Reg. 32,517 (Dep’t of Commerce June

EE et Uckccargll . bag bade ed &euis teks auae wes

RULBS

Py CE ED e005 bbicccccesccnsesoneud’s

REGULATIONS

SP Gs PEED bce cccccccecvcesscccssen

MISCELLANEOUS

Press Release, USEC, “USEC and U.S. Energy

Department Sign Accord” (June 18, 2002) ...

World Nuclear Ass’n, Information Paper:

Uranium Enrichment (Oct. 2007) ...........

Page

36

on

USEC Inc. and United States Enrichment Corporation

(collectively “USEC”) respectfully petition for a writ of

certiorari to review the judgment of the Federal Circuit in

this case.

OPINIONS BELOW

The final judgment of the court of appeals is reported

at 506 F.3d 1051. (App. 31a).

The question presented by this petition was raised and

decided on interlocutory appeal; the court of appeals’

judgment on interlocutory appeal is reported at 411 F.3d

1355 (App. la), affirmed on rehearing at 423 F.3d 1275

(App. 24a). The decision of the U.S. Court of International

Trade from which interlocutory appeal was taken is

reported at 281 F. Supp. 2d 1334 (App. 268a). The

Department of Commerce’s original determination is

reported at 66 Fed. Reg. 65,877, (App. 41a), and its

redetermination following initial judicial review,

(App. 147a), is available at http://ia.ita.doc.gov/remands/

03-34.pdf.

JURISDICTION

The judgment of the court of appeals was entered on

September 21, 2007. Extensions of the time for filing a

petition for writ of certiorari were granted by Chief Justice

Roberts on December 11, 2007, and January 15, 2008. The

jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

2

STATUTORY PROVISIONS INVOLVED

Section 1673 of Title 19, U.S. Code (2000), provides in

relevant part that:

If-—

(1) the administering authority 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 value, and

(2) the Commission determines that—

(A) an industry in the United States—

(i) is materially injured, or

(ii) is threatened with material

injury, or

(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 importation,

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 merchandise.

3

STATEMENT OF THE CASE

At issue is a fundamental question with regard to

the scope of the antidumping law of the United States:

whether the Commerce Department can reasonably

determine that imported foreign merchandise has been

“sold” within the meaning of that law where a foreign

producer receives fungible raw material and cash from

a U.S. customer and delivers a substantially transformed

finished product.

; Based on the totality of the circumstances, the |

Commerce Department concluded that the transactions

in this case—involving low enriched uranium—

constituted sales of merchandise under the antidumping

law. Because the transactions were found to have taken

place at dumped prices and to have injured a U.S.

industry, the Department imposed off-setting duties. The

Federal Circuit, however, reversed Commerce’s

determination, concluding that the transactions involved

sales of services outside the scope of the antidumping

law. It relied on its own interpretation of certain

provisions of the contracts as creating a continuous chain

of title in the buyer to the raw materials and finished

product. The court’s decision was subsequently

implemented so as to exclude imports made pursuant to

such contracts from the scope of the antidumping order.

The Federal Circuit’s decision was clearly improper

under Chevron U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984), as it usurped

the Commerce Department’s authority to interpret and

apply ambiguous terms in a statute the Department is

responsible for administering. By giving conclusive

4

effect to the contract terms drafted by the foreign

producer and U.S. customer, and ignoring the

circumstances of the transactions and the purposes of

the antidumping law, the decision undermines the ability

of the Commerce Department to fulfill its statutory

mission of protecting U.S. industries from unfairly

priced imports. At the same time, the decision threatens

a historic disarmament agreement between the United

States and Russia. This agreement uses the U.S.

commercial nuclear fuel market as a channel to facilitate

the conversion of nuclear weapons of the former Soviet

Union to peaceful use—an objective that will be

jeopardized if that market is disrupted by unfairly priced

imports of enriched uranium. Such market disruption

would also threaten the viability of the sole remaining

domestic uranium enrichment facility, as well as a project

to build a new enrichment facility employing a more

advanced enrichment technology, both of which utilize

the only U.S. enrichment technologies available to meet

U.S. defense needs.

Thus, the Federal Circuit’s decision—indefensible

under Chevron—has enormous implications for both the

scope of the antidumping law and U.S. energy security

and non-proliferation objectives.

I. STATUTORY BACKGROUND

“Dumping” describes the practice of international

price discrimination whereby a producer or exporter

sells its merchandise in an export market at less than

fair value. The U.S. antidumping regulatory framework

is embodied in the Tariff Act of 1930, as amended. The

Tariff Act defines “dumping” as “the sale or likely sale

5

of goods at less than fair value,” 19 U.S.C. § 1677(34)

(2000).' The Act provides that, when “foreign merchandise

is being, or is likely to be, sold in the United States at less

than its fair value,” and when those sales are found to cause

or threaten to cause “material injury” to an industry in the

United States, antidumping duties shall be imposed on

imports of that merchandise. /d. § 1673.

The Department of Commerce and the United States

International Trade Commission are jointly responsible for

administering the antidumping law. Commerce determines

whether foreign merchandise is being sold in the United

States at less than its fair value, id. §§ 1673(1), 1677(1),

and the Commission determines whether a domestic

industry producing a product “like” the imported

merchandise has been materially injured or threatened

with material injury. Jd. § 1673(2). Upon the filing of a

petition by an affected domestic industry, both agencies

conduct their own investigations, and if both agencies make

affirmative final determinations, Commerce will issue an

antidumping duty order. /d. § 1673d(c)(1).

In its investigation, Commerce calculates a dumping

margin based on the “normal value,” which is generally

determined by reference to the prices at which the producer

or exporter sells the same goods in its home market or in

third-country markets. The dumping margin is the amount

by which the normal value exceeds the U.S. price of

the subject merchandise. /d. § 1677b. Importers of

merchandise subject to antidumping duty orders must then

pay cash deposits in the amount of this dumping margin in

order to enter that merchandise into the United States.

1. Unless otherwise indicated, all references to the United

States Code are to the 2000 edition.

6

Id. § 1673e(a)(3). The actual amount of duty owed on

particular imports is determined retrospectively through

administrative reviews that may be requested on an annual

basis. Jd. § 1675(a)(1).

II. FACTUAL BACKGROUND

Nuclear power plants generate approximately 20%

of the electricity consumed in the United States each

year. The fuel for these plants is fabricated from low

enriched uranium (“LEU”), which typically is produced

through a process of enrichment. Enrichment involves

increasing the level of fissionable U,,. from 0.711% (the

percentage by weight found in natural uranium) to levels

that will sustain a chain reaction needed to generate

electricity (generally 3-5%). Uranium in which'the U,,.

content has been enriched to a level of 20% or more is

weapons-grade material and is referred to as “highly

enriched uranium” or “HEU.”

The United States has only one plant in operation

that produces LEU for nuclear fuel. This plant is owned

by the U.S. government and operated by USEC

pursuant to a lease entered into under the terms of the

USEC Privatization Act of 1996, 42 U.S.C. § 2297h.

Companies that produce LEU such as USEC and

the French company in this case, Eurodif S.A., are called

“enrichers.” Transactions between enrichers and their

utility customers generally involve one of two types of

contracts: “EUP” contracts (or “enriched uranium

product” contracts) or “SWU” contracts (“separative

work unit” contracts). There is no difference in the LEU

that is produced and deliverea to the customer in the

two transactions.

7

In an.E UP transaction, the utility contracts for the

delivery of LEU and pays a cash price that covers the

entire value of the LEU. There is no dispute that LEU

imports pursuant to EUP contracts involve sales of

merchandise subject to the antidumping law.

In a SWU transaction, the utility also contracts for

the delivery of LEU, but pays cash and delivers raw

material (natural, or “unenriched,” uranium) to the

enricher. There is no requirement in the contract that

the LEU be produced from the unenriched uranium

delivered by the customer. Because of the nature of the

production process’ and the fact that natural uranium is

fungible and is not physically segregated by the enricher

according to who supplied it, the LEU delivered to a

customer is not produced from the batch of natural

uranium delivered by that customer. Enrichers

continuously produce LEU from their fungible inventory

of unenriched uranium, and the LEU delivered by an

enricher may have been produced even before the utility

provided any natural uranium pursuant to its contract

or even before the order for the LEU was placed. App.

49a, 219a.

2. Both USEC and Eurodif use the gaseous diffusion

method for producing LEU. Their plants are among the largest

industrial plants in the world. The gaseous diffusion process

involves continuously forcing and recycling uranium hexafluoride

gas under pressure through more than 1,000 cascades, each of

which contains porous membranes or diaphragms. As U,,.

molecules are lighter than the U,,, molecules that are also

contained in uranium as it comes out of the ground, the process

results in two streams of gas, one slightly enriched in U,,, and

one that is somewhat depleted in U,,.. See World Nuclear Ass'n,

Information Paper: Uranium Enrichment (Oct. 2007), http://

www.world-nuclear.org/info/inf28.htm!.

8

Ill. THE PROCEEDINGS BELOW

A. The Commerce Proceedings

On December 21, 2001, following a year-long

antidumping investigation, Commerce published a notice

of final determination regarding LEU from France. Low

Enriched Uranium from France, 66 Fed. Reg. 65,877

(Dep’t of Commerce Dec. 21, 2001) (App. 41a),

as amended, 67 Fed. Reg. 6,680 (Dep’t of Commerce Feb.

13, 2002) (App. 90a) (collectively “Final Determination”).

In its Final Determination, the Department found that

LEU from France was being sold, or was likely to be sold,

in the United States at less than fair value. In addition, the

U.S. International Trade Commission determined that the

domestic uranium enrichment industry was being injured

or was likely to be injured by the foreign imports. As a

result of these determinations, Commerce issued an

antidumping duty order with regard to imports of French

LEU. The Department calculated an antidumping duty

rate of 19.95 percent.’

3. At the same time Commerce also issued an affirmative

countervailing duty determination (7.e., a determination

regarding subsidies provided by foreign governments to the

production of the imported merchandise) involving LEU from

France, as well as affirmative countervailing duty determinations

involving LEU produced by another foreign enricher and

imported from Germany, the Netherlands, and the United

Kingdom. While the initial appeals involved those countervailing

duty determinations as well as the antidumping duty

determination on LEU from France, the countervailing duty

orders have either been revoked or are not at issue here.

9

The central issue in the antidumping proceeding before

Commerce, and in the subsequent appeals to the U.S. Court

of International Trade (CIT) and Federal Circuit, was

whether LEU imports pursuant to SWU transactions

constituted sales of merchandise, subject to the

antidumping law, or sales of services, outside the scope of

that law.

Commerce concluded that all LEU entering the

United States from France was subject to the

antidumping law “regardless of the way in which the

sales for such merchandise were structured,” App. 47a,

54a, and that this conclusion furthered Congress’s intent

in enacting the antidumping law. App. 63a.

Commerce found that enrichment accounts for 60%

of the value of the LEU, and that it substantially

transforms the unenriched uranium, thereby creating a

“new and different article of commerce.” App. 62a-63a.

The Department also noted that imports under.

either form of contract involve trade in goods, and

that exclusion of imports pursuant to “contract

manufacturing” from the scope of the antidumping law

would have “profound implications for the international

trading system as a whole” by enabling parties to convert

“trade in goods into trade in so-called ‘manufacturing

services’.... We simply do not consider a major

manufacturing process to be a ‘service’ in the same sense

that activities such as accounting, banking, insurance,

transportation and legal counsel are considered by the

international trading community to be services.”

App. 63a-64a. The Department found that the overall

arrangements in both EUP and SWU transactions

involved the sale of LEU and that “{iJn reaching this

10

conclusion, we have looked beyond the four corners of

the contract and have examined the totality of the

circumstances surrounding the transactions... .”

App. 80a.

Accordingly, the antidumping order applied to all

imports of LEU from France, including imports pursuant

to SWU contracts.

B. CIT Review and Commerce’s Redetermination

Eurodif S.A., the foreign enricher in this case,

contested Commerce’s Final Determination before the

Court of International Trade. Eurodif argued that the

importation of LEU pursuant to SWU transactions

involved sales of services outside the scope of the

antidumping law. Its arguments were based, in part, on

Commerce’s “tolling” regulation, 19 C.F.R. § 351.401(h)

(2007). A tolling arrangement is one in which the tollee

provides raw materials to the toller, who produces

finished merchandise that is delivered to the tollee. The

regulation provides guidance as to which entity’s prices

and costs (7.e., the toller’s or the tollee’s) will be examined

in determining whether dumping has occurred.

The CIT agreed with Commerce that the tolling

regulation does not exempt imported merchandise from

antidumping proceedings. USEC Inc. v. United States,

259 F. Supp. 2d 1310, 1325 (Ct. Int’l Trade 2003)

(App. 131a). Nevertheless, the CIT remanded the case

to Commerce for reconsideration of how the tolling

regulation affected the Department’s conclusion that

transactions under SWU contracts involved a sale of

goods, not services.

1]

On remand, the Department considered both the tolling

regulation and its prior precedent, and reexamined the

extensive evidence of record regarding how SWU

transactions were actually implemented. Final Remand

Determination, USEC Inc. v. United States (Dep’t of

Commerce June 23, 2003) (App. 147a). The Department

found that these transactions involve “the transfer of

ownership [from the enricher to the utility] in the complete

LEU product for consideration,” App. 217a, and constituted

a sale of merchandise. App. 219a-220a. Commerce explained

that the enricher “hold[s] inventories of uranium from

various sources, including uranium owned by the enricher

itself, and produce[s] LEU without relying solely upon the

input from a particular customer.” App. 221a. Commerce

found that the enricher, not the customer, owns the LEU

from the time it is produced until the time it is delivered

“because the LEU produced by the enricher cannot be

identified as having been derived from the feedstock

provided by any particular custemer.” App. 219a. Further,

the record indicates that LEU delivered to a

utility customer by an enricher under an

enrichment contract may be produced before

any natural uranium supplied by that customer

could have been part of the production process

for that LEU, thereby making it impossible to

conclude that the LEU produced and delivered

by the enricher is in any way derived from the

uranium supplied by the customer.

Id. Based on these factors, Commerce concluded that the

delivery of LEU pursuant to SWU transactions involves a

sale of merchandise subject to the antidumping law. App.

222a.

12

The CIT, on review, rejected the Department’s

conclusion. USEC Inc. v. United States, 281 F. Supp. 2d

1334 (Ct. Int’] Trade 2003) (App. 268a). Focusing

exclusively on the provisions of the SWU contracts,

rather than the total evidence of record considered by

the Department, the CIT found that the contracts create

a “legal fiction” that the natural uranium delivered by

the utility is enriched by the enricher and returned as

LEU to the utility, and “suggest an intention to establish

a continuous chain of ownership in the utility. ...”

App. 277a. In the CIT’s view, regardless of the facts of

the enrichment process and how SWU transactions are

implemented, “the contracts delineate a transaction in

which a utility provides raw material to an enricher, pays

for the service of processing the material, and obtains

the finished product after the manufacturing service has

been performed.” App. 278a.

C. Federal Circuit Decisions on Interlocutory

Review

The parties then sought and obtained an order

from the CIT permitting an interlocutory appeal to the

Federal Circuit pursuant to 28 U.S.C. § 1292(d)(1).

USEC Inc. v. United States, 27 C.1.T. 1925 (2003) (App.

306a). The Federal Circuit granted the interlocutory

appeal and affirmed the CIT’s decision. Furodif S.A. v.

United States, 411 F.3d 1355, 1361-64 (Fed. Cir. 2005)

(“EFurodif I’) (App. 11a-21a).

In evaluating what it referred to as “[t]he

[c Jharacterization of [e |nrichment(cjontracts,” App. 12a,

the Federal Circuit placed central reliance on a previous

case in which the court was called upon to characterize

13

U.S. Government SWU contracts under a different statute,

the Contract Disputes Act (CDA), 41 U.S.C. § 601, et seq.

(1988), to determine whether interest was payable on

certain judgments against the United States, Florida

Power & Light Co. v. United States, 307 F.3d 1364

(Fed. Cir. 2002). In that case, the court had agreed with the

government’s argument that contracts for the enrichment

of uranium by the Department of Energy were service

contracts not covered by the CDA. App. 15a-16a. The court

below extended Florida Power’s contract-based approach

to this case. In its view, “the contracts in this case” made

clear that ownership of neither the natural uranium nor

the LEU was “meant to be vested in the enricher during

the relevant time periods that the uranium is being

enriched.” App. 15a. “As a result, the ‘transfer of ownership’

required for a sale under [NSK Ltd. v. United States, 115

F:3d 965 (Fed. Cir. 1997)] is not present here.” App. 15a.

USEC and the United States then sought rehearing

and rehearing en banc, in part based on the court’s

improper reliance on Florida Power as a basis for failing

to defer to Commerce’s construction of the antidumping

statute. Subsequent to those filings, this Court handed

down its decision in National Cable & Telecommunications

Ass'n v. Brand X Internet Services, 545 U.S. 967 (2005),

which clarified that a court must defer to an agency’s

construction of a statute even if the court had reached a

different interpretation in a prior judicial decision unless

that prior decision had found that the statute compelled

the court’s interpretation. /d. at 982-85. USEC and the

United States brought this decision to the attention of the

court in a Rule 28(j) letter. See Fed. R. App. P 28(j). The

Federal Circuit denied rehearing en banc, but granted

rehearing for the limited purpose of addressing the

14

applicability of the Brand X decision. While acknowledging

that under Brand X deference would be due to Commerce

if the antidumping statute were ambiguous, the court

stated, “We now clarify ... that the antidumping statute

unambiguously applies to the sale of goods and not

services.” Eurodif S.A. v. United States, 423 F.3d 1275, 1278

(Fed. Cir. 2005) (“E’'urodif IT’) (App. 28a).

D. Proceedings on Remand from the Federal

Circuit

Following remand to Commerce, Eurodif S.A. v.

United States, 414 F. Supp. 2d 1263 (Ct. Int’l Trade 2006)

(App. 317a), Commerce stated that it would not assess

antidumping duties on imports under SWU transactions.

It concluded, however, that it need not amend the scope of

the antidumping order because LEU imported pursuant

to SWU transactions is physically indistinguishable from

imports of LEU pursuant to EUP transactions that would

continue to be covered by the order. Rather, in future

administrative reviews it would examine the facts of record

regarding particular imports and apply the Federal Circuit

decisions to those imports. Low E'nriched Uranium from

France, (Dep’t of Commerce March 3, 2006) (final results

of redetermination) (App. 320a).

On appeal, the CIT rejected Commerce’s approach and

ordered it to modify the scope of the antidumping duty

order to exclude all entries of French LEU imported

pursuant to SWU transactions. Eurodif S.A. v. United

States, 431 F. Supp. 2d 1351 (Ct. Int’l Trade 2006) (App.

327a).

15

Commerce then adopted language limiting the scope

of the antidumping order, while continuing to note its

disagreement with both the Federal Circuit’s decisions

in Eurodif J and IJ and the CIT’s rejection of its first

redetermination. It also specified a form by which the

French enricher and U.S. utility customer could certify

that particular imports met the conditions for exclusion

from the order. Low Enriched Uranium from France,

(Dep’t of Commerce June 19, 2006) (final results of

redetermination). (App. 340a).

E. Final Federal Circuit Decision

Following the CIT’s affirmance of Commerce’s

second redetermination, Fwrodif S.A. v. United States,

442 F. Supp. 2d 1367 (Ct Int’l Trade 2006) (App. 356a),

the United States and USEC again appealed to the

Federal Circuit. The United States argued that the

CIT had erroneously rejected Commerce’s first

redetermination approach. USEC argued that the

determination whether particular imports of LEU were

excludable from the order pursuant to the Federal

Circuit’s earlier decision should be affected by certain

additional factors, e.g., whether an affiliate of the

enricher supplied the unenriched uranium in the

transaction and whether the unenriched uranium was

delivered to the enricher after the delivery of the LEU

to the utility customer. The Federal Circuit concluded

that both appeals raised issues that could best be

resolved when particular facts were at issue, and

dismissed the appeals as unripe. Hurodif S.A. v. United

States, 506 F.3d 1051 (Fed. Cir. 2007) (App. 31a).

16

With the Federal Circuit’s dismissal of the appeals,

the Federal! Circuit’s interlocutory decisions in Furodif

I and Furodif IT have now become incorporated in a final

judgment. Absent review by this Court, those decisions

will become the governing law regarding the dividing

line between trade in goods that are subject to the

antidumping law and trade in services that are outside

the scope of the antidumping law.

F. Proceedings Regarding Imports of Russian

LEU

The impact of the Federal Circuit’s decisions is

already being felt in another important antidumping

case. It is one that has significant implications for the

continued successful implementation of a bilateral

program for the importation of Russian LEU derived

from the dismantling of nuclear weapons of the former

Soviet Union. The case involves an antidumping

investigation ints uranium imported from Russia that

was suspended in 1992 as a result of an agreement

between the United States and Russia. The agreement

currently limits imports of Russian LEU but permits

the importation of LEU that has been produced through

a process of down-blending the highly enriched uranium

in the weapons material with uranium with a much

lower U,,. content. In the pending case, Commerce

has conducted a sunset review and concluded that

terminating the suspension agreement would likely lead

to the continuation or recurrence of dumping. Uranium

from the Russian Federation, 71 Fed. Reg. 32,517 (Dep’t

of Commerce June 6, 2006).

17

On September 27, 2007, however, in light of the

Federal Circuit’s decisions in Furodif, the CIT remanded

that determination and directed Commerce to exclude

future imports of Russian LEU pursuant to SWU

transactions from the scope of that case. Techsnabexport

v. United States, 515 F. Supp. 2d 1363 (Ct. Int’l Trade

2007). On December 21, 2007, Commerce filed the results

of its remand with the CIT. In its remand results,

Commerce applied the Eurodif precedent, and concluded

based on the specific facts in that review that dumping

would likely continue or recur if the suspended

investigation were terminated. Other parties in the case,

including an association of U.S. utilities and the Russian

exporter of LEU, have filed comments with the Court

of International Trade urging the court to expressly

direct Commerce to explicitly exclude all imports of

Russian LEU pursuant to SWU contracts from the case.

The court has not yet ruled on Commerce’s remand

determination.

REASONS FOR GRANTING THE PETITION

The Federal Circuit’s decisions improperly narrow

the scope of the antidumping statute. They significantly

limit the protection that law was meant to afford to

domestic producers from injurious, unfairly priced

imports. Because of the Federal Circuit’s exclusive role

in the appellate review of antidumping cases, its

decisions will conclusively decide the question presented

absent review by this Court.

The antidumping statute clearly applies to sales of

merchandise, but it does not define when merchandise

is “sold.” In particular, Congress has not “directly spoken

18

to the precise question at issue” in this case: whether the

statute encompasses import transactions where the U.S.

customer supplies cash and raw materials to the foreign

producer and the foreign producer delivers a substantially

transformed finished product. In this circumstance, the

Federal Circuit’s failure to defer to Commerce’s reasonable

construction of the statute is fundamentally inconsistent

with Chevron, 467 US. 837.

The Department considered the language and purpose

of the antidumping law and examined the “totality of the

circumstances” to determine that the import transactions

in this case constitute sales of merchandise under the

antidumping statute. The reasonableness of that

construction is illustrated by cases interpreting other

regulatory statutes applying to the “sale” or “purchase” of

goods, where courts have interpreted such terms broadly—

looking beyond the formalities of the contract—to

effectuate the regulatory purposes of the statute at issue.

Moreover, Commerce’s approach to the dividing line

between what constitutes a transaction involving goods,

rather than one involving services, is consistent with how

Congress has drawn that line in another trade statute. See

19 U.S.C. § 2114b(5) (defining “services” as “economic

activities whose outputs are other than tangible goods” for

purposes of delineating the U.S. Trade Representative’s

authority for negotiating international agreements on trade

in services).

Rather than deferring to the Commerce Department’s

reasonable construction of the antidumping law, the Federal

Circuit placed significant weight on its own characterization

of U.S. government SWU contracts in Florida Power, a

case that arose under a different statute with a different

19

purpose. The court’s approach would remove imported

merchandise from the scope of the antidumping law

based solely on the manner in which the parties choose

to structure their transaction—a result that the

Commerce Department reasonably concluded could not

have been intended by the Congress.

Finally, the Federal Circuit’s decisions are having a

significant impact beyond the immediate case. By

removing antidumping constraints on LEU imports

when SWU contracts are employed, the Federal Circuit’s

decisions jeopardize conditions of fair pricing in the U.S.

LEU market. This in turn threatens the continued

successful implementation of a historic agreement

between the United States and Russia for the

importation of LEU down-blended from nuclear weapons

of the former Soviet Union. In addition, by removing

legal constraints on unfairly priced LEU imports, the

decision also threatens market disruption that could

undermine the viability of the only operating U.S. —

enrichment plant, and jeopardize initiatives to expand —

U.S. capacity to produce enriched uranium. Such

initiatives include a multi-billion dollar project now

being deployed by USEC at U.S. government facilities

pursuant to agreements with the Department of Energy

using the only advanced U.S. enrichment technology

available to meet future U.S. defense needs.

20

I. THE COMMERCE DEPARTMENT REACHED

A REASONABLE CONSTRUCTION OF AN

AMBIGUOUS STATUTORY PHRASE.

This petition presents a classic example of the

trouble that a federal appellate court can cause when it

fails to follow the basic framework of Chevron. Under

that decision, the court must first determine whether

the Congress has “directly spoken to the precise question

at issue.” Chevron, 467 U.S. at 842. If not, then the court

must “not simply impose its own construction on the

statute as would be necessary in the absence of

administrative interpretation,” but must defer to a

“permissible construction of the statute” by the agency.

Id. at 843 (citation omitted); see National Cable &

Telecommunications Ass'n v. Brand X Internet

Services, 545 U.S. 967, 980 (2005) (“If a statute is

ambiguous, and if the implementing agency’s

construction is reasonable, Chevron requires a federal

court to accept the agency’s construction . . . even if the

agency’s reading differs from what the court believes is

the best statutory interpretation.”). Here, the Federal

Circuit failed to follow this funde#mental principle.

A. Congress Has Not Directly Spoken to the

Question Presented in This Case.

The antidumping law does not define the terms

“merchandise” or “sold,” and Congress has not spoken

directly to the precise question at issue here. There is

no explicit congressional guidance as to whether the

phrase “foreign merchandise ... sold” includes

transactions such as the ones at issue here: where the

U.S. customer supplies cash and raw materials to the

21

foreign producer and the foreign producer delivers a

substantially transformed finished product.

In Eurodif II, the Federal Circuit concluded that

“the antidumping statute unambiguously applies to the

sale of goods and not services.” App. 28a. But this

conclusion missed the central point. No one contests that

the statute applies to the sale of goods and not services.

The question is what “sale of goods” (or, more precisely,

“merchandise . . .sold”) means, and whether that phrase

encompasses transactions like the ones at issue in this

case. On that issue the statute is ambiguous.

This Court has previously held that analogous

statutory terms were ambiguous. For example, this

Court has concluded that whatever the term “sale” may

mean in other contexts, its meaning in the Securities

Exchange Act of 1934 was not unambiguous and required

an examination of the Act’s purpose and its relation to

the particular conduct at issue. SEC v. Nat'l Sec., Inc.,

393 U.S. 453, 466-67 (1969). As the circuit courts have -

similarly observed, “(t]he phrase ‘any purchase and sale’

... is... not to be limited or defined solely in terms of

commercial law of sales and notions of contractual rights

and duties.” Bershad v. McDonough, 428 F.2d 693, 696-

67 (7th Cir. 1970) (collecting cases). ““Whatever the terms

“purchase” and “sale” may mean in other contexts,’ they

should be construed in a manner which will effectuate

the purposes of the specific section of the Act in which

they are used.” /d. (quoting SEC. v. Nat'l Sec., Inc., 393

U.S. at 467 (alteration in original omitted)).

22

This is consistent with a more general principle: “In

determining whether Congress has specifically

addressed the question at issue, a reviewing court should

not confine itself to examining a particular statutory

provision in isolation. The meaning—or ambiguity—of

certain words or phrases may only become evident when

placed in context.” FDA v. Brown & Williamson Tobacco

Corp., 529 U.S. 120, 132 (2000). “[WJords generally have

different shades of meaning, and are to be construed if

reasonably possible to effectuate the intent of the

lawmakers; andj this meaning in particular instances is

to be arrived at, not only by a consideration of the words

themselves, but by considering, as well, the context, the

purposes of the law, and the circumstances under which

the words were employed.” Dist. of Columbia v. Carter,

409 U.S. 418, 420 (1973) (quoting Puerto Rico v. Shell

Co. (PR.), 302 U.S. 253, 258 (1937)).

B. Commerce’s Construction of the Antidumping

Statute Was Reasonable.

Given the antidumping statute’s silence as to how

the phrase “merchandise ... sold” should be applied

where a customer supplies raw materials to a foreign

producer and in exchange receives a finished product,

Commerce appropriately considered the statute’s

underlying purpose and the totality of the circumstances

relating to the SWU transactions. On that basis it

reasonably concluded that, like imports of identical LEU

under EUP contracts, LEU imports pursuant to SWU

transactions involved a sale of merchandise. Commerce’s

approach in this regard was consistent with precedent

in other regulatory settings where agencies and

reviewing courts had to determine if a “sale” subject to

23

the regulatory statute had taken place, and other indicia

of how Congress wants the line drawn in international

commerce between what constitutes trade in goods and

what constitutes trade in services.

1. The Term “Sale” Has Been Broadly

Construed When Used in Regulatory

Statutes.

Many regulatory statutes apply to “sales” of goods

between contracting parties. In interpreting the reach

of such statutes, regulatory agencies and cour’s have

looked beyond the contract language to determine

whether a “sale” or “purchase” subject to the regulatory

regime has taken place, and have given due regard to

the realities of the transaction at issue and the purpose

of the underlying statute.

For example, in United Gas Improvement Co. v.

Continental Oil Co., 381 U.S. 392, 392-400 (1965), the

Court held that the phrase “sale in interstate commerce

of natural gas” in the Natural Gas Act applied to a

transaction in which the pipeline company did not

purchase natural gas, but rather leased gas fields and

arranged for the production of gas by another company.

Because there was no transfer of title to the gas, the

pipeline claimed there was “no sale.” Nevertheless, this

Court upheld the Federal Power Commission’s decision

that the Natural Gas Act applied. It found that the

transaction was “very close in economic effect to

conventional sales of natural gas,” id. at 396. The Court

stressed the importance of not undermining a regulatory

24

act’s scope by applying overly technical interpretations

of “sale” under local law:

Without impugning in any way the good

faith and genuineness of the transactions, we

think it clear that the lease-sales here in

question can nonetheless be considered “sales”

of natural gas in interstate commerce for

purposes of the Act. A regulatory statute such

as the Natural Gas Act would be hamstrung if

it were tied down to technical concepts of local

law.

Id. at 400 & n.7. The Court further stressed the need to

interpret statutory terms “by reference ‘to the purpose

of the Act and the facts involved in the economic

relationship’ rather than exclusively by reference to

common law standards or local law.” Jd.

The Court in United Gas Improvement relied on the

“closely analogous” case of Gray v. Powell, 314 U.S. 402

(1941). In Gray, a railroad leased coal mines, mined the

coal using a contractor, and then consumed the coal in

its own operations. The railroad argued that it was not

subject to the price controls of the Bituminous Coal Act

of 1987 because there had been no “sale or other

disposal” of coal within the meaning of the Act.

Specifically, the railroad pointed out that, “as lessee of

the mineral rights [the railroad] is the owner of the coal

when it is extracted and until it is consumed and

therefore no title ever passes” from the independent

contractor to the railroad. The Court rejected this focus

on title as the basis for identifying a “sale or other

disposal” of goods, holding that “the purpose of Congress,

7?

25

which was to stabilize the industry through price regulation,

would be hampered by an interpretation that required a

transfer of title, in the technical sense, to bring a producer’s

coal, consumed by another party, within the ambit of the

coal code.” 314 U.S. at 416.‘

Indeed, courts have found a sale of goods for regulatory

purposes even where there was no delivery of goods at all.

In Callery Properties v. FPC, 335 F.2d 1004, 1021 (5th Cir.

1964), the court held that the Federal Power Commission

could find a sale of natural gas based on payments under

take-or-pay contract provisions even when no natural gas

was delivered. “When viewed realistically in light of

the imperative necessity for long term gas supply

commitments, we agree with the Commission that this

arrangement constitutes a sale within its power of

regulation.” The Supreme Court later expanded the relief

granted, but did not disturb the ruling on the scope of

“sale.” United Gas Improvement Co. v. Callery Properties,

Inc., 382 U.S. 223 (1966).

Just as the agencies in those cases, Commerce here

looked to the purpose of the antidumping statute and the

characteristics of the transactions in concluding that asale

of merchandise occurred. As Commerce concluded in its

Final Determination, “Congress did not intend the

{antidumping} and [countervailing duty] laws to be

applicable to merchandise based upon the way in which

parties structure their transactions. .. .” App. 65a.

ae

4. In addition, the Court rejected the rail: 2ad’s claim that

it was the “producer” of the coal within the meaning of the Act’s

exemption for coal “consumed . . . by the producer’”: “To

determine upon which side of the median line the particular

instance falls calls for the expert, experienced judgment of those

familiar with the industry.” Gray, 314 U.S. at 413.

26

These cases show that, in order to assure the

effectiveness of a regulatory scheme, this Court has

found a sale of goods even when there was no contractual

transfer of title to the goods. Similarly, here Commerce

reasonably could conclude that application of the

antidumping law should not be undermined by the “legal

fiction” in the parties’ contracts that the customer retains

title to a quantum of raw material until it receives the

LEU. Commerce’s conclusion is particularly reasonable

in light of the facts found by the Department (and not

disputed by the CIT or Federal Circuit):

¢ the enricher produces a new and substantially

transformed product (LEU) from commingled

fungible unenriched uranium (App. 62a-63a, 69a,

218a);

¢ the LEU is not produced from the raw material

delivered by the customer—and may even have

been produced before the customer delivered the

unenriched uranium (App. 219a);° and

¢ from the time of production through the time of

delivery of the imported LEU to the customer,

no customer could claim ownership of the

delivered LEU (App. 219a).

5. Indeed, there is no requirement under aSWU contract that

the enricher produce anything in response to the customer’s order.

An enricher may fill the order with LEU produced in the past or

with LEU obtained from third parties, as is the case with USEC’s

delivery of Russian LEU down-blended from nuclear weapons of

the former Soviet Union. This further indicates that the object of

the transaction is not a service to be performed by the enricher on

the customer’s property, but rather the supply of LEU by the

enricher—the same object as in the case of an EUP contract.

27

Thus, even in light of the definition of sale in prior

Federal Circuit case law—“a transfer of ownership to

an unrelated party and consideration,” NSK Ltd. v.

United States, 115 F.3d 965, 975 (Fed. Cir. 1997)—a “sale”

could reasonably have been found here. Certainly, under

the broad view of “sale” taken by this Court and the

regulatory precedents cited, the Department’s

construction was permissible.

2. Commerce’s Construction of the

Antidumping Law Is Consistent With the

Line Congress Has Drawn Between

“Goods” and “Services” in a Relevant Trade

Statute.

The proper interpretation of a law may be affected

by a later enacted statute not directly amending the

statute at issue. See, e.g., United States v. Fausto, 484

U.S. 439, 453 (1988) (“This classic judicial task of

reconciling many laws enacted over time, and getting

them to ‘make sense’ in combination, necessarily

assumes that the implications of a statute may be altered

by the implications of a later statute.”). That principle

of interpretation is relevant here.

An indication of congressional intent as to the

dividing line for international trade purposes between

trade in services and trade in goods is the provision of

U.S. trade law, enacted in 1984, that authorizes the U.S.

Trade Representative to negotiate trade agreements

covering services. 19 U.S.C. § 211 4a. It defines “services”

as “economic activities whose outputs are other than

tangible goods.” Jd. § 2114b(5). Congress’s view that an

economic activity resulting in the output of a tangible

28

good does not constitute a “service” for international

trade purposes further supports the reasonableness of

Commerce’s interpretation that SWU transactions—

which unquestionably involve the production and

importation of a tangible good—do not constitute the

provision or sale of a service.

Indeed, the Federal Circuit’s ruling creates a gap in

Congress’s allocation of responsibilities for international

trade matters. The USTR has authority to negotiate

trade agreements covering “services,” which § 2114b(5)

defines as not including economic activities whose

outputs are tangible goods. As that definition makes

clear, this authority covers such traditional services as

banking, insurance, and advertising, but plainly does not

cover manufacturing or processing that yields a tangible

good, whether it is enriched uranium, a sophisticated

computer chip, or a machine tool. Thus, the Federal

Circuit has created a situation in which some key

economic activities that result in imports into the

United States are neither subject to the Commerce

Department’s jurisdiction under the antidumping law as

sales of goods nor subject to the authority of the USTR

to negotiate rules covering such imports under

international agreements relating to services.

C. The Federal Circuit Departed From the

Teachings of Chevron and Brand X.

Rather than deferring to Commerce’s reasonable

construction of the phrase “merchandise . . . sold” in the

antidumping statute, the Federal Circuit focused on how

the court itself had characterized SWU transactions in

its own Florida Power decision. In that case, the court

29

was presented with the question of whether SWU

contracts between the Department of Energy and US.

utilities should be considered sales of goods or sales of

services under the Contract Disputes Act, 41 U.S.C.

§ 601, et seg. (1988). The court found that the transactions

had aspects of both categories: “In light of the evidence

that DOE used feed material from other customers, and

sometimes its own feed material, to fulfill a particular

... order of enriched uranium, this case does not fall

neatly into either the above categories. ...” See Florida

Power & Light Co. v. United States, 307 F.3d 1364, 1373

(Fed. Cir. 2002) (emphasis added).

Despite its recognition in Florida Power that SWU

transactions do not “fall neatly” on either side of the

goods/services divide, the Federal Circuit in Eurodif I

treated this issue as having been decisively resolved:

“Holdings of this court are no less decisive because they

may have been difficult to develop.” App. 17a. But that

very “difficulty” in characterizing the DOE SWU

contracts reflects ambiguity—precisely the sort of

ambiguity that, when applied to this case, should have

signaled to the court its duty to defer to Commerce's

reasonable construction. But, on rehearing, the Federal

Circuit nevertheless insisted that its decision in Florida

Power was entitled to persuasive weight.°

The court’s reliance on Florida Power was improper

for two fundamental reasons. First, Florida Power

interpreted an entirely different statute—the Contract

Disputes Act. That statute is focused on delineating the

rights of the parties to the contract relative to each other.

6. See Eurodif I], at App. 28a (noting that in Ewrodif J the

court had found Florida Power to be “persuasive” authority).

30

See Nat'l Park Hospitality Ass’n v. Dep’t of Interior,

538 U.S. 803, 805 (2003) (“The CDA establishes rules

governing disputes arising out of certain Government

contracts.”). This case, however, involves the Commerce

Department’s construction of the antidumping statute,

the purpose of which is to protect nonparties to the

import contracts—domestic producers that must

compete with imports from foreign producers. In this

context, contract provisions cannot be given dispositive

weight. Given the starkly different purposes of the

statutes at issue in Florida Power and here, reliance on

that case was unwarranted.’

Second, even if Florida Power had interpreted the

antidumping statute, its conclusion could not justify the

court’s refusal to give deference to Commerce’s

reasonable interpretation of the statute unless it was

clear that Congress had unambiguously intended that

imports pursuant to SWU transactions do not constitute

sales of LEU. “A court’s prior judicial construction of a

statute trumps an agency construction otherwise entitled

to Chevron deference only if the prior court decision

holds that its construction follows from the unambiguous

terms of the statute and thus leaves no room for agency

7. For much the same reason, court decisions addressing

commercial disputes between the parties to a contract are not

relevant here. In that context, in declaring the relative rights of

the parties, the court may properly seek to give effect to the

intentions of the parties as reflected in the language of their

contract. In addition, there is no agency application of a statute

to be considered. Those cases are not determinative of how a

transaction should be characterized under a regulatory regime

where the interests of third parties are implicated and an expert

agency has been designated to implement the statute.

31

discretion.” National Cable & Telecomms. Ass’n v.

Brand X Internet Servs., 545 U.S. 967, 982 (2005). The

court of appeals plainly expressed its unwillingness to

“ignore our previous holdings” because of the factual

similarities of the underlying transactions. App. 28a,

citing to App. 17a. But that is precisely what it must do |

under Brand X. See id. (court must approach inquiry as

if it were “reviewing the agency’s construction on a blank

slate”); see also Skranak v. Castenada, 425 F.3d 1218,

1220 (9th Cir. 2005) (under Brand X, a court reviews

subsequent agency determination as if it had “never

addressed the topic”). Since Brand X would have

required the Federal Circuit to take a “blank slate”

approach even if its earlier decision had interpreted the

antidumping statute, the Federal Circuit’s reliance on

Florida Power—which arose under a completely

different statute—is even less appropriate.

In short, the Federal Circuit’s decisions in Furodif

I and I] fail to follow the teachings of Chevron and Brand

X. The court concluded that a transaction it deemed to

be a sale of a service under one statute cannot be a sale

of merchandise under an entirely different statute unless

Congress specifically says it is. This conclusion is

contrary to repeated instruction from this Court that

the same words used in different statutes, or even in

different parts of the same statute, can have different

constructions depending upon the purposes of the law.

See, e.g., Environmental Defense v. Duke Energy Corp.,

127 S. Ct. 1423, 1433-34 (2007); United States v.

Cleveland Baseball Co. , 582 U.S. 200, 213 (2001); Atlantic

Cleaners & Dyers, Inc. v. United States, 286 U.S. 427,

433 (1932). Moreover, the Federal Circuit’s approach

places a burden of explicit statement on Congress when

32

it has entrusted application of the second statute to

an expert agency with knowledge of complex industry

arrangements. And the Federal Circuit reached this

conclusion despite the two statutes’ very different terms

and entirely different purposes; despite the role of the

Commerce Department in interpreting the antidumping

law; and despite the fact that the court in Florida Power

itself found the characterization of such contracts to be a

close question even under the Contract Disputes Act.

Il. THIS CASE PRESENTS AN ISSUE WITH

IMPORTANT NATIONAL IMPLICATIONS.

The Federal Circuit’s decisions have important

implications for U.S. trade law, for national security, for

our nation’s energy policy, and for jurisprudential principles

of deference to Executive Branch agencies. Any of these

implications alone would warrant this Court’s granting

certiorari. That all of these factors are present here makes

this case especially worthy of this Court’s consideration.

First, this case involves the basic question: what is a

sale of merchandise covered by the antidumping statute?

This question is central to the jurisdiction of the Commerce

Department and the scope of protection afforded domestic

industries by that law. Because of the pivotal importance

of this question, it was certified to the Federal Circuit, which

issued two opinions attempting to address it. The Federal

Circuit’s rulings have the potential to create a significant

loophole in the antidumping law that would exclude import

transactions from the scope of that law based on how the

contracts are structured. Arrangements for contract

manufacturing are prevalent throughout industry—and

will certainly become more prevalent in import transactions

if the Federal Circuit's decisions are not reversed.

33

Second, application of the Federal Circuit’s ruling

to LEU has important implications for national security,

as it endangers the continued successful implementation

of a 1993 agreement between the United States and

Russia for the dilution (or “down-blending”) of weapons

material and sale of the resulting LEU in the United

States.* In that agreement (commonly known as the

“Megatons to Megawatts” program), Russia agreed to

sell 500 metric tons of highly enriched uranium converted

to LEU over a period of twenty years. Under the

agreement, USEC, as U.S. executive agent, each year

purchases the down-blended LEU in amounts equal to

approximately one-half of the annual U.S. consumption

for LEU, and ten percent of total U.S. electricity

consumption.

In doing so, USEC assumes all risk associated with

the sale of the down-blended LEU, including the risk of

maintaining a sufficiently large backlog of SWU and

EUP contracts to absorb both the large quantity of

down-blended LEU and the roughly equal amount of

LEU that USEC produces in Kentucky, at the sole

remaining U.S. uranium enrichment plant. The revenues

from these contracts are used to pay for the LEU

imported under the HEU Purchase Agreement, as well

as the cost and upkeep of the domestic LEU plant and

investment in a project (discussed below) to deploy new

U.S. uranium enrichment technology that is critical to

U.S. national and energy security.

8. Agreement Concerning the Disposition of Highly

Enriched Uranium Extracted From Nuclear Weapons,

U.S.—Russ., Feb. 18, 1993, Temp. State Dep’t No. 93-59, 1993 WL

152921 [hereinafter “IIEU Purchase Agreement” or “Megatons

to Megawatts”.

34

As of December 31, 2007, there remain

approximately 178 metric tons of Russian HEU—

equivalent to approximately 7,000 nuclear warheads—

to be down-blended and sold in the United States. This

‘represents approximately 35% of the total amount of

weapons material to be down-blended under the

program. Absent measures to restrain dumping of LEU

imports, completion of the program is at risk.

In addition to producing LEU by down-blending the

highly enriched uranium in nuclear warheads, Russia has

significant capacity, through four large enrichment

plants, to produce LEU from natural uranium far in

excess of its domestic needs. If this Russian LEU can

be imported into the United States outside the scope of

the antidumping law, it would disrupt the market

conditions needed to ensure the continued success of the

weapons dismantling program, since imports of

commercially-produced LEU at dumped prices would

undermine USEC’s ability to sell the down-blended

Russian LEU.

The U.S. government has been able to maintain the

necessary market conditions for the suecess of the

Megatons to Megawatts program because of a 1992

agreement with Russia (referred to as the “Russian

Suspension Agreement”) that suspended an antidumping

investigation on imports of uranium from Russia,

including imports of LEU. That agreement permits

imports of Russian LEU under the Megatons to

Megawatts program, and pursuant to an amendment

signed on February 1, 2008, will permit very limited

35

imports of commercial LEU under annual quotas.’

However, if the loophole created by the Federal Circuit

in this case is not corrected, the ability to enforce those

quotas will be undermined. Since the Russian Suspension

Agreement is predicated upon the antidumping law,

unless the Eurodif loophole is closed Russia will be able

to export unlimited quantities of LEU pursuant to SWU

transactions over and above any quotas established in

the Russian Suspension Agreement. Failure to correct

this loophole would thus leave the U.S. government

without the means to ensure that the market remains

favorable to full implementation of the Megatons to

Megawatts program.

Moreover, the Court of International Trade has

concluded that, in light of the Hwrodif decisions, imports

of Russian LEU under SWU contracts cannot be subject

to the antidumping law. Techsnabexport v. United States,

515 F. Supp. 2d 1363 (Ct. Int'l Trade 2007). Because the

Federal Circuit’s Eurodif decisions have been treated

as controlling in the Russian proceeding, their

foundations have not been reexamined in that case.

Accordingly, this case alone provides a complete record

for review of the statutory interpretation issue affecting

both proceedings.

Third, USEC is currently seeking to finance and

deploy a new multi-billion dollar enrichment plant under

its 2002 Memorandum of Understanding with the United

9. The amendment to the Russian Suspension Agreement

is reproduced at 73 Fed. Reg. 7705 (Feb. 11, 2008).

36

States Department of Energy.'® Removal of the

protections that the antidumping law provides against

unfairly priced LEU imports could undermine that

endeavor. It would also threaten the viability of the

existing U.S. enrichment plant. This could further

increase the United States’ dependence on foreign

sources of energy at a time when energy independence

is increasingly regarded as a vital aspect of economic

and national security. Moreover, both USEC’s new plant

and its existing plant employ the only uranium

enrichment technologies available to meet U.S. defense

needs. Other enrichment plants that are being developed

or under consideration would employ foreign enrichment

technologies, which are subject to restrictions that

render them unavailable for the defense needs of the

United States military.

Finally, this case raises broader jurisprudential

issues regarding lower courts’ adherence to the

principles set forth by this Court in Chevron and in

Brand X. Those principles require due regard for

Executive Branch functions and respect for expert

agency determinations when construing and applying

critical terms like “sale” in regulatory regimes created

by Congress.

10. See Press Release, USEC, “USEC and U.S. Energy

Department Sign Accord” (June 18, 2002), available at http://

www.usec.com/v2001 02/Content/News/NewsTemplate.asp?

page =/v2001_02/Content/News/N ews Files/06- 18-02. htm.

37

CONCLUSION

Few international trade cases have the manifest

importance of this one. On this rare occasion when a

trade law decision implicates such significant national

policies, the petition for a writ of certiorari should be

granted.

Respectfully submitted,

SHELDON E. HocHBERG

Counsel of Record

Eric C. EMERSON

CHARLES G. COLE

MICHAEL A. VATIS

JOHN P NOLAN

STEPTOE & JOHNSON LLP

1330 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 429-3000

Attorneys for Petitioners

USEC Inc. and United States

Enrichment Corporation

la

APPENDIX A— OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FEDERAL

CIRCUIT DECIDED MARCH 3, 2005

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

Nos. 04-1209, 04-1210

EURODIF S.A., COMPAGNIE GENERALE DES

MATIERES NUCLEAIRES, and COGEMA, INC.,

Plaintiffs-Appellants,

and

AD HOC UTILITIES GROUP

Plaintiff-Appellant,

V.

UNITED STATES,

Defendant-Cross Appellant,

and }

USEC INC. and UNITED STATES

ENRICHMENT CORPORATION,

Defendants-Cross Appellants.

March 8, 2005, Decided

2a

Appendix A

OPINION

JUDGES: Before BRYSON, Circuit Judge, PLAGER,

Senior Circuit Judge, and PROST, Circuit Judge.

OPINION BY: PROST

PROST, Circuit Judge.

This interlocutory appeal comes to us from the

United States Court of International Trade, which

certified four separate questions for appeal to this court.

The Ad Hoc Utilities Group (““AHUG”), Eurodif S.A.

(“Eurodif”), Compagnie Generale des Matieres

Nucleaires (“CGMN”) and Cogema, Inc. appeal two

issues from the Court of International Trade. The United

States, USEC, Inc. and the United States Enrichment

Corporation (the latter two collectively referred to as

“USEC” in this opinion) cross-appeal two issues. We

affirm the Court of International Trade’s decision

affirming the Department of Commerce’s (“Commerce”)

industry support determination. We also affirm the

court’s decision that uranium enrichment contracts

constitute a provision of services, rather than a sale of

goods. Finally we reverse the court’s decision regarding

subsidies, and hold that overpayment for uranium

enrichment services by foreign government entities

cannot constitute a countervailable subsidy. Because we

need not review the court’s decision regarding

Commerce’s application of the tolling regulation in the

context of export price determination, we decline to do

so.

3a

Appendix A

BACKGROUND

Enriched uranium fuel rods are used by the utility

industry to generate nuclear power. The process of

producing those rods involves multiple steps. First,

uranium ore must be mined. Second, the ore must be

milled or refined into concentrated uranium. Third, that

concentrated uranium must be converted into uranium

hexafluoride. Fourth, that uranium hexafluoride must be

enriched into low enriched uranium (“LEU”). Fifth, and

finally, LEU is used to fabricate uranium rods. This case

involves the fourth step in the process of creating

uranium rods—the enrichment of uranium hexafluoride

into LEU.

Many utilities in the United States contract to buy

uranium from a third-party seller and then contract to

have that uranium enriched by a uranium enricher.

Only one entity in the United States enriches uranium

into LEU-USEC, formerly an arm of the federal

government. A variety of foreign enrichers, including

Eurodif, CGMN and Cogema, compete with USEC and

also enrich the uranium of American utility companies.'

Contracts for enriched uranium come mainly in two

different forms. The first form involves contracts that

provide money for the sale of enriched uranium,

otherwise known as enriched uranium product, or EUP

1. The Court of International Trade thoroughly documented

the factual background to this case in its opinion. See USEC Inc.

v. United States, 281 F.Supp.2d 1334 (Ct. Int’l Trade 2003)

(“USEC IT”).

|

ae

4a

Appendix A

contracts. The second form, the form relevant to this

appeal, involves the transfer of unenriched uranium by

a buyer to an enricher and the purchase of separative

work units (“SWU”) from the enricher. In these SWU

contracts, the enricher enriches the unenriched uranium

and delivers LEU to the purchaser. Although the

enricher may not necessarily produce a particular

utility's LEU from the uranium that utility provides to

the enricher, the utility retains title, during the

enrichment process, to the quantity of unenriched

uranium that it supplies to the enricher.

In most of the transactions relevant to this case,

AHUG and American utilities entered into SWU

contracts with European enrichers. These utilities

compensated enrichers to process unenriched uranium

into LEU. In another critical transaction, a partially

public French utility, Electricite de France (“EdF’”’),

entered into an SWU contract with French enricher

Eurodif. In that contract, EdF allegedly paid Eurodif

greater than adequate compensation for the enrichment

of uranium.

On December 7, 2000, USEC petitioned Commerce

to undertake an antidumping and countervailing duty

investigation focusing on LEU coming from France,

Germany, the Netherlands, and the United Kingdom.

On December 21, 2001, Commerce issued its

final determinations in that investigation. Those

determinations focused on two main issues: (1) whether

SWU contracts were contracts for the sale of goods and

not services and, therefore, subject to U.S. antidumping

Sa

Appendix A

and countervailing duty statutes, and (2) whether

domestic utilities or foreign enrichers were “producers”

of LEU for the purposes of determining whether or not

there was sufficient industry support to begin an

antidumping and countervailing duty investigation in the

first place. In its final determinations, Commerce

concluded that SWU contracts are contracts for the sale

of goods and not services. It also decided that the foreign

enrichers of uranium, and not the domestic utilities, were

“producers” of LEU.

AHUG and the foreign enrichers party to this case

appealed Commerce’s determination to the Court of

International Trade, arguing that a uranium enrichment

contract is a contract for the provision of services and

not the sale of goods and, therefore, not subject to federal

antidumping and countervailable subsidy statutes.

AHUG also disputed Commerce’s contention that only

the foreign enrichers are “producers” for domestic

industry support determination purposes, arguing that

Commerce’s determination that foreign enrichers were

“producers” of LEU was inconsistent with its prior

decisions. AH UG further contended that if the domestic

utilities are considered producers of LEU, Commerce

would not have sufficient domestic industry support to

commence an investigation pursuant to 19 U.S.C.

§ 1673a(c)(4).

The Court of International Trade agreed with AHUG

and determined that Commerce’s characterization of the

enrichment contracts between AHUG and foreign

enrichers as contracts for the sale of goods was not

6a

Appendix A

sustainable. USEC Inc. v. United States, 259 F.Supp.2d

1310, 1324-26 (Ct. Int’l Trade 2003) (“USEC 7”). It also

found that Commerce’s determination that the foreign

enrichers were “producers” of LEU was against the

weight of the evidence and inconsistent with prior

Commerce decisions. /d. at 1317-26. As a result, the court

remanded the case to allow Commerce to reconsider its

determinations.

In its remand determination, Commerce reiterated

its original positions. Final Remand Determination,

USEC Inc. and United States Enrichment Corp.

v. United States (June 28, 2003) (“Remand

Determination”). AHUG and the foreign enrichers then

appealed that remand determination to the Court of

International Trade. In its second consideration of

Commerce’s determinations, the court concluded that

(1) Commerce’s interpretation of the word “producer”

in the context of making an industry support

determination was reasonable and in accordance with

law; (2) uranium enrichment contracts were contracts

for services and not for goods; (3) payment by a foreign

government entity of more than adequate remuneration

to a foreign enricher for enrichment services qualified

as a countervailable subsidy; and (4) Commerce’s

interpretation of the word “producer” for the purposes

of making an export price determination was

inconsistent with its previous determinations in other

cases and thus not in accordance with law. USEC Inc. v.

United States, 281 F.Supp.2d 1334 (Ct. Int’] Trade 2003)

(“USEC IT”).

7a

Appendix A

Because the resolution of the issues decided by the

court in USEC I] are potentially dispositive of this entire

case, the Court of International Trade certified four

specific questions for appeal to this court. The four

certified questions are:

(1) Whether Commerce’s decision not to apply its

tolling regulation to determine whether American

utilities should be considered “producers” of low

enriched uranium (LEU) for the purposes of

determining whether there was enough domestic

industry support to proceed with an investigation is in

accordance with law. (Commerce determined that foreign

enrichers and not domestic utilities were “producers”

of LEU for the purposes of determining domestic

industry support. Remand Determination at 6-36.)

(2) Whether Commerce’s decision that the

enrichment of uranium feedstock pursuant to separative

work unit (SWU) contracts constitutes a sale of goods

instead of services is supported by substantial evidence

and in accordance with law. (Commerce determined that

SWU contracts like EUP contracts are contracts for the

sale of goods. Remand Determination at 70-81.)

(3) Whether Commerce’s decision that payment of

more than adequate remuneration for enrichment

services by partially public foreign entities to foreign

enrichers constitutes a countervailable subsidy is in

accordance with law. (Commerce determined that the

transaction between EdF and Eurodif was a sale of

goods to a government entity for more than adequate

8a

Appendix A

remuneration and, therefore, subject to the

countervailing duty statute. Remand Determination at

82-99.)

(4) Whether Commerce’s decision to apply a

definition of “producer” in the context of export price

determination that is different from the definition it used

in the industry support determination is reasonable and

therefore in accordance with iaw. (Commerce determined

that foreign enrichers were “producers” of LEU for the

purposes of determining LEU export price. Remand

Determination at 69-70.)

We have jurisdiction to hear this appeal under

28 U.S.C. § 1292(d)(1).

DISCUSSION

In reviewing the Court of International Trade’s

decisions in this case, we apply the same standard used

by that court in evaluating Commerce’s determinations,

findings and conclusions and hold unlawful any decisions

found to be unsupported by substantial evidence

or otherwise not in accordance with law. 19 U.S.C.

§ 1516a(b)(1)(B)(i) (2000).

A. The Tolling Regulation and Commerce’s Industry

Support Determination

Before an antidumping and countervailing duty

investigation can be initiated, the petition on which that

investigation is based must meet certain industry

9a

Appendix A

support requirements. A petition is considered to be filed

on behalf of an industry if:

(i) the domestic producers or workers who

support the petition account for at least 25

percent of the total production of the domestic

like product, and

(ii) the domestic producers or workers who

support the petition 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

petition.

19 U.S.C. § 1673a(c)(4)(A) (2000).

Commerce determined that in order to be a producer,

an entity must have a “stake” in the domestic industry in

question. Commerce then defined having a “stake”

as undertaking the “actual production of the domestic like

product” within the United States. Remand Determination

at 13. Commerce’s industry support determination

considered USEC to be the only domestic producer of

LEU. Accordingly, Commerce found that there was

sufficient domestic industry support to begin an

antidumping and countervailing subsidy investigation. The

Court of International Trade affirmed Commerce's

determination that foreign uranium enrichers were

“producers” for the purposes of § 1673a(c)(4)(A).

10a

Appendix A

On appeal, appellants AHUG, Eurodif, CGMN and

Cogema argue that American utility companies should

be considered “producers” for the purposes of

determining whether USEC’s petition has sufficient

industry support to trigger Commerce’s antidumping

and countervailing duty investigation. In support, they

note that Commerce’s tolling regulation orders

Commerce not “to consider a toller or subcontractor to

be a manufacturer or producer where the toller or

subcontractor does not acquire ownership, and does not

control the relevant sale, of the subject merchandise or

foreign like product.” 19 C.F.R. § 351.401(h) (2004).

According to the appellants, if the tolling regulation were

applied in this case, Commerce could not initiate any

antidumping or countervailing duty investigation

because the domestic utilities would be considered

“producers” for the purposes of an industry support

determination—and given such a definition of

“producer,” the dictates of § 1673a(c)(4)(A) would not be

satisfied. They draw further support for their argument

from prior Commerce determinations that held that

control of the aspects of manufacture is sufficient to

qualify an entity as a “producer.” Finally, they buttress

their argument by alleging that Commerce improperly

and inconsistently applied the tolling regulation by using

it to determine the export price of LEU but declining to

apply it in its industry support determination.

The Court of International Trade rejected AH UG’s

argument and sustained Commerce’s interpretation of

the term “producer” for the purpose of an industry

support determination as well as its refusal to apply the

lla

Appendix A

tolling regulation to encompass American utilities within

the definition of the term “producer.” USEC I], 281

F:Supp.2d at 1346. The court supported its holding by

determining that Commerce’s use of the tolling

regulation was in keeping with the purposes of the

industry support statute and that Commerce’s

interpretation of the word “producer” was reasonable

and, thus, in accordance with law. /d. On this issue, we

agree with the Court of International Trade and affirm

Commerce’s initial industry support determination.

Commerce’s determination that domestic utilities

were not “producers” of LEU is consistent with the

purpose of § 1673a(c)(4)(A). Section 1673a(c)(4) speaks

of “industry support” and, as expressed in legislative

history, Congress intended the industry support statute

“to provide an opportunity for relief for an adversely

affected industry and to prohibit petitions filed by

persons with no stake in the result of the investigation.”

S.Rep. No. 249, 96th Cong., Ist Sess. 47 (1979). This view

was echoed by the Court of International Trade when it

noted that “[t]he language in the legislative history is

broad and unqualified. It contrasts industries suffering

adverse effect with those having no stake: the former

have standing, the latter do not.” Brother Indus. (USA),

Inc. v. United States, 801 F.Supp. 751, 757 (Ct. Int'l Trade

1992). Commerce interpreted having a “stake” as

requiring that a company “perform some important or

substantial manufacturing operation.” Remand

Determination at 14 (internal quotations and citations

omitted). There is no basis to conclude that Commerce’s

interpretation in this context is unreasonable or not in

accordance with law.

12a

Appendix A

Further, determining the export price of a good and

determining whether a petition has enough support for

an investigation to be initiated are two different tasks

that were delegated to Commerce for different purposes.

Thus, using the tolling regulation in one context but not

using it in another is a clearly insufficient basis upon

which to conclude that Commerce’s action was not in

accordance with law.

B. The Characterization of Enrichment Contracts

Under the statutory scheme adopted by Congress,

the sale of goods (or “merchandise”) is covered by the

antidumping duty statute. See 19 U.S.C. § 1673. The

provision of services, however, is not covered by that

statute.

In a previous case dealing with SWU contracts and

the Contract Disputes Act (“CDA”), we agreed with the

government’s argument that an SWU contract for the

enrichment of uran‘um is a service contract and, thus,

not covered by the CDA. See Fla. Power & Light Co. v.

United States, 307 F.3d 1364 (Fed.Cir.2002). The parties

dispute the relevance of Florida Power to this case.

On appeal, the government and USEC submit that

Commerce’s finding that SWU contracts are contracts

for the sale of goods is supported by substantial evidence

and in accordance with law and that the Court of

International Trade’s holding to the contrary should be

reversed. They rely on three principal contentions.

l3a

Appendix A

First, they argue that this court’s precedents in NTN

Bearing Corp. of Am. v. United States, 368 F.3d 1369

(Fed.Cir.2004), AK Steel Corp. v. United States, 226 F.3d

1361 (Fed.Cir.2000), and NSK Ltd. v. United States, 115

F.3d 965 (Fed.Cir.1997) support their argument that the

SWU contracts in question were sales of merchandise

and not arrangements for services. They point to this

court’s construction of the word “sold” in NSK as

supporting the view that a sale requires “both a transfer

of ownership to an unrelated party and consideration.”

See NSK, 115 F.3d at 975. They also cite to our opinions

in AK Steel and NTN as supporting this construction.

According to the government and USEC, this

straightforward interpretation should cover the SWU

contracts because those contracts involved a transfer of

title to LEU from the enricher to the utilities upon

sampling and weighing of the LEU and consideration

paid by the utilities to the enrichers.

Second, the government and USEC assert that

Commerce’s characterization of the SWU contracts as

contracts for the sale of goods is in keeping with the

general purpose of the antidumping statute, which they

articulate as “provid{ing] domestic producers protection

from all dumped imports.”

Third, the government and USEC point to the

deferential standard of review under which we review

Commerce determinations as precluding a reversal of

Commerce’s determination on this issue. They argue that

because Commerce’s determination that SWU contracts

are contracts for the sale of goods is, in their eyes,

l4a

Appendix A

supported by substantial evidence and in accordance

with law, we should affirm it.

It is on these grounds, according to the appellants,

that Florida Power is inapposite to this case. Because

Florida Power dealt with a contractual dispute under

the CDA and not an antidumping investigation, it is not,

in their view, applicable here. Moreover, they argue that

Florida Power stands for the proposition that “SWU

contracts [fall] into neither [the category of sales of goods

nor the category of contracts for services].” As support,

they point to language in our opinion in Florida Power

that indicates that an SWU contract “does not fall neatly

into” either side of the goods-services divide. See Fla.

Power, 307 F.3d at 1373. The government and USEC

consider this language sufficient to support Commerce’s

determination given the deferential standard of review

to be applied in this case.

The Court of International Trade rejected

Commerce’s determination that the SWU contracts in

this case were contracts for the sale of goods and not

services, resting its decision on the fact that the

enrichers never obtained ownership of either the feed

(unenriched) uranium during enrichment or the final

LEU product. USEC II, 281 F.Supp.2d at 1339.

Furthermore, according to the court, the SWU contracts

between the utilities and the enrichers demonstrated “an

intention to establish a continuous chain of ownership

in the utility while maintaining the enricher’s ability to

cover its obligations under the contract should it

encounter difficulties in producing or providing LEU for

lSa

Appendix A

a customer.” Jd. The court also found that “nothing in

the evidentiary record supports a determination that the

enricher has any ownership rights [under the SWU

contracts].” Jd. at 1340. Agreeing with the Court of

International Trade, we reject Commerce’s

determination that the SWU contracts in this case are

contracts for the sale of goods.

In reviewing the contracts in this case, it is clear

that ownership of either the unenriched uranium or the

LEU is not meant to be vested in the enricher during

the relevant time periods that the uranium is being

enriched. While it is correct that a utility may not receive

the LEU that was enriched from the exact unenriched

uranium that it delivered to the enricher, it is

nevertheless true that up until the sampling and

weighing of the LEU before delivery, the utility retains

title to the quantity of unenriched uranium that is

supplies to the enricher. The utility’s title to that uranium

is only extinguished upon the receipt of title in the LEU

for which it contracted. Therefore, 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 uranium or the finished LEU. As

a result, the “transfer of ownership” required for a sale

under NS&K is not present here.

As previously noted, we explicitly dealt with whether

or not SWU contracts were contracts for services or

goods in Florida Power (albeit in the context of a CDA

claim and not in the context of an antidumping

investigation). In that case, the government argued that

l6a

Appendix A

SWU contracts were contracts for services and not

goods. There, the government pointed out in its briefs

that the SWU contracts in that case consistently referred

to “enrichment services” and that the “fundamental

purpose” of those contracts was “the provision of

enrichment services.” The government further declared

that the utilities’ argument in that case that the SWU

contracts arranged for the sale of goods because title

passed between utilities and enrichers “rest[ed] on [a]

technicality.” *

The relevant SWU contract terms in that case are

identical to the contract terms in this case. Indeed, the

government successfully defeated the CDA claim of the

utilities in Florida Power solely on the ground that the

SWU contract in that case was a contract for services

and not for goods. And while Florida Power is not

binding precedent for this case because of the different

statutory scheme involved, we find its reasoning and its

conclusion persuasive.

2. The title argument that “rest[ed] on [a] technicality” in

that case is strikingly similar to the title argument that the

government advances in this case. There, the government argued

that despite the temporary transfer of title of uranium from the

utility to the enricher, the fact that the utilities were entitled to

claim any leftover material from uranium enrichment (also

known as “tails”) showed that the SWU contract was a contract

for services. Here, the utilities were likewise contractually

entitled to reclaim the uranium “tails” and title to the quantity

of unenriched uranium transferred by the utility only passed to

the enricher once the utilities received title to the LEU from

the enrichers.

17a

Appendix A

In addition, while itis true that we stated that SWU

contracts “[do] not fall neatly into either [a sale of goods

or a contract for services],” our opinion definitively held

that the SWU contract in that case was a contract for

the provision of services. Fla. Power, 307 F.3d at 1373.°

Holdings of this court are no less decisive because they

may have been difficult to develop. Indeed, our

characterization of the SWU contract in Florida Power,

however we may have arrived at it, created the sole basis

for denying the utilities in that case relief under the

CDA. And even under the deferential standard of review

that we apply in this case, we choose not to ignore our

previous holdings, particularly where the circumstances

in a previous case are nearly identical to the case at hand.

3. In regards to the contracts between utilities and the

government for enrichment of uranium, we stated in Florida Power:

It seems clear that if the government purchased

natural uranium directly from a third party, enriched

the uranium, and sold it to the customer utilities, the

contracts would be for the disposal of personal property

and would be covered by the CDA. It seems equally

clear that if the government simply enriched each

utility’s uranium for a fee, it would be providing a

service, not disposing of personal property.

In light of the evidence that DOF used feed

material from other customers, and sometimes its own

feed material, to fulfill a particular enriched customer’s

order of enriched uranium, this case does not fall neatly

into either the above categories, but it is closer to the

latter. The nature of the contractual pricing scheme, in

particular, persuades us that the transaction is properly

characterized as a service rather than a sale.

307 F.3d at 1373.

18a

Appendix A

Moreover, while the statutory schemes involved in

Florida Power and those involved in this case are

different, they do not change the essential nature of the

transaction involved in this case. Even though the

government is correct in arguing that the general

purpose of the antidumping statute is not the same as

the general purpose of the CDA, it is incorrect in

asserting that this dissimilarity of purposes is sufficient

to compel a different result in this case. A contract for

services of the kind that we discuss here entails a certain

set of obligations on the part of contracting parties that

do not change with the statutory scheme. Thus, unless

Congress specifically gave guidance in the statutory text

that certain contracts normally considered service

contracts should be considered contracts for the sale of

goods in the antidumping context, the different overall

purposes of the CDA and antidumping statute are

insufficient to alter our analysis here. And nothing in

the text of the antidumping statute or its legislative

history evidences such a Congressional intent to

re-characterize contracts like the SWU contracts at

issue in this case for the purposes of antidumping

investigations by Commerce.

The persuasive power of Florida Power might be

mitigated if the government were capable of showing

that the contract in that case differed in relevant part

from the contracts in this case. No such showing has been

made. In Florida Power, we held that an SWU contract

was not a contract for “the procurement of property”

under the CDA. 307 F.3d at 1373-74. Though we did say

that SWU contracts do “not fall neatly” either into the

19a

Appendix A

category of contracts for services or the category of

contracts for the sale of goods, we found that “the nature

of the contractual pricing scheme. . . persuade[d] us that

the [SWU] transaction is properly characterized as a

service rather than a sale.” Jd. The pricing scheme in

the Florida Power SWU contracts is the same as the

pricing scheme in the contracts at issue in this case. In

both cases, utilities bought separative work units from

enrichers. In both cases, they delivered unenriched

uranium and monetary compensation to enrichers in

return for enrichment services. In both cases, there were

similar title and transfer provisions. And in both cases, ©

the contracts explicitly contemplated the rendering of

“enrichment services.”

We therefore conclude that the SWU contracts at

issue in this case were contracts for the provision of

services and not for the sale of goods. Accordingly, we

find that the LEU produced as a result of those contracts

is not subject to the antidumping statute and hold that

Commerce’s contentions to the contrary are not in

accordance with law.

C. EdF, Eurodif and Countervailable Subsidies

In order to be subject to a countervailing cuty (or

subsidy) investigation, an arm of a foreign government

must make a “financial contribution” to a manufacturer

that can take one of four forms:

(i) the direct transfer of funds, such as

grants, loans, and equity infusions, or the

20a

Appendix A

potential direct transfer of funds or liabilities,

such as loan guarantees,

(ii) foregoing or not collecting revenue

that is otherwise due, such as granting tax

credits or deductions from taxable income,

(iii) providing goods or services, other

than general infrastructure, or

(iv) purchasing goods.

19 U.S.C. § 1677(5)(D) (2000). A public entity can provide

a subsidy if it provides goods or services to a

manufacturer for less than adequate remuneration or if

it buys goods from the manufacturer for more than

adequate remuneration. 19 U.S.C. § 1677(5)(E). The

statute does not contemplate the purchase of services

for more than adequate remuneration to be a subsidy.

The government and USEC assert that EdF, a

partially public French utility, entered into a uranium

enrichment contract with Eurodif that paid Eurodif more

than adequate remuneration. In their view, the contract

was also for the sale of goods (instead of services)

and thus covered by 19 U.S.C. § 1677(5)(E). In the

alternative, they argue that the contract between EdF

and Eurodif provided more than adequate remuneration

to one step (enrichment) in the manufacture of a good

(LEU in this case) and was thus covered by § 1677(5).

As a result, the transaction between EdF and Eurodif

was subject to a countervailing duty investigation.

2la

Appendix A

The Court of International Trade rejected the

government’s principal theory but agreed with its

alternative theory. The court found that “Commerce’s

distinction between manufacturing processes that lead to

the production of subject merchandise and other services

that do not produce tangible goods is consistent with the

language and purpose of the countervailing duty statute.”

USEC II, 281 F.\Supp.2d at 1350. The court further

elaborated that this theory was in keeping with the

statutory language “because it preserves a real distinction

between ‘goods’ and ‘services.”” Jd. We must disagree.

Section 1677(5) is clear as to what constitutes a

subsidy—and the purchase of a service by a foreign public

entity, however related to the manufacture of a good, is not

contemplated in the statute as being a subsidy.‘ While the

provision of services by a government entity to another

entity for less than adequate compensation may be

considered a subsidy, the plain language of § 1677(5) does |

not allow for the purchase of services by a government

entity from another entity to be considered a subsidy. Thus,

to the extent that the government argues that Commerce

is owed deference under Chevron U.S.A., Inc. v. Natural

Res. Def. Council, Inc. , 467 U.S. 837, 842-48, 104 S.Ct. 2778,

81 L.Ed.2d 694 (1984), we reject that argument because

we find that the plain meaning of the statute is

unambiguous.

4. Section 1677(5)(B) defines a subsidy as including the case

in which an authority “provides a financial contribution ...toa

person and a benefit is thereby conferred.” Section 1677(5)(D),

quoted supra, defines “financial contribution.”

22a

Appendix A

Furthermore, § 1677(5)(D)(iii) clearly shows that

Congress was aware of the distinction between contracts

for services and contracts for goods. Aware of the

distinction, Congress could have easily included the

purchase of services by public entities in the statutory

definition of a subsidy. Because it did not, we must assume

that the omission was intentional. See Clay v. United States,

537 U.S. 522, 528, 123 S.Ct. 1072, 155 L.Ed.2d 88 (2003)

(“When Congress includes particular language in one

section of a statute but omits it in another section of the

same Act, we have recognized, it is generally presumed

that Congress acts intentionally and purposely in the

disparate inclusion or exclusion.” (internal quotations and

citations omitted)).

While the Court of International Trade, the

government and USEC are correct that the purpose of the

subsidy statute is to defeat unfair competitive advantage,

that purpose cannot exceed the metes and bounds of the

subsidy statute as established by its text. See Negonsott v.

Samuels, 507 U.S. 99, 105, 113 S.Ct. 1119, 122 L.Ed.2d 457

(1993) (“{A court’s] task is to give effect to the will of

Congress, and where it has been expressed in reasonably

plain terms, that language must ordinarily be regarded as

conclusive.” (quoting Griffin v. Oceanic Contractors, Inc.,

458 U.S. 564, 570, 102 S.Ct. 3245, 73 L.Ed.2d 973 (1982))).

Given that we have already concluded that the SWU

contracts in this case were contracts for the provision of

services and not for the sale of goods, we hold that

19 U.S.C. § 1677(5) is inapplicable in this case. Accordingly,

Commerce’s determination to the contrary is not in

accordance with law.

23a

Appendix A

D. Commerce’s Tolling Regulation and Its

Determination of Export Price

Because our holdings regarding the previous three

issues obviate the need for us to reach the issue of whether

Commerce properly employed its tolling regulation in its

determination of export price, we decline to do so.

CONCLUSION

For the reasons stated above, we hold that:

(1) Commerce’s determination that USEC’s petition

had sufficient industry support to trigger an antidumping

and countervailing subsidy investigation was in accordance

with law;

(2) Commerce’s finding that the SWU' contracts in this

case were contracts for the sale of goods was neither

supported by substantial evidence nor ir »ecordance with

law; and

(3) Commerce’s application of 19 U.S.C. § 1677 to the

SWU transaction between EdF and Eurodif was not in

accordance with law.

Therefore, we affirm the Court of International Trade’s

decision regarding Commerce’s industry support

determination. We likewise affirm the court’s finding that

the SWU contracts in this case were contracts for services

and not for goods or merchandise. We reverse the court’s

holding that EdF’s SWU contract with Eurodif made the

LEU produced by Eurodif subject to the countervailing

subsidy statute.

AFFIRMED-IN-PART and REVERSED-IN-PART

24a

APPENDIX B — OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FEDERAL

CIRCUIT DECIDED SEPTEMBER 9, 2005

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

Nos. 04-1209, 04-1210

EURODIF S.A., COMPAGNIE GENERALE DES

MATIERES NUCLEAIRES, and COGEMA, INC.,

Plaintiffs-Appellants,

and

AD HOC UTILITIES GROUP

Plaintiff-Appellant,

V.

UNITED STATES,

Defendant-Cross Appellant,

and

USEC INC. and UNITED STATES

ENRICHMENT CORPORATION,

Defendants-Cross Appellants.

September 9, 2005, Decided

JUDGES Before BRYSON, Circuit Judge, PLAGER,

Senior Circuit Judge, and PROST, Circuit Judges.

OPINION BY: PROST

25a

Appendix B

OPINION

ON PETITION FOR REHEARING

PROST, Circuit Judge.

ORDER

More than three months after we decided this case,

the Supreme Court issued its opinion in Natzonal Cable

& Telecommunications Ass'n v. Brand X Internet

Services, _ U.S. __, 125 S.Ct. 2688, 162 L.Ed.2d 820

(2005). In letters disclosing National Cable as a

supplemental authority pursuant to Federal Circuit Rule

28(j), the United States, USEC, Inc. and the United

States Enrichment Corporation (collectively,

“Petitioners”) contend that the Supreme Court’s

reasoning in National Cable strongly supports

arguments presented in their petitions for rehearing.

We grant the petitions for rehearing by the panel for

the limited purpose of addressing the applicability of

National Cable to this case. In all other respects, we

reaffirm our earlier opinion and judgment. See Eurodif

S.A. v. United States, 411 F.3d 1355 (Fed.Cir.2005).

I

In National Cable the Supreme Court heard an

appeal from the Ninth Circuit in a case involving the

proper regulatory classification of broadband cable

Internet service under the Communications Act of 1934,

48 Stat. 1064, as amended by the Telecommunications

Act of 1996, 110 Stat. 56. See 125 S.Ct. at 2696. The Ninth

Circuit had vacated a ruling by the Federal

Communications Commission (“FCC”) to the extent the

26a

Appendix B

FCC’s ruling concluded that cable modem service

was not “telecommunications service” under the

Communications Act. Jd. at 2698. “Rather than analyzing

the permissibility of that construction under the deferential

framework of Chevron, . . . the Court of Appeals grounded

its holding in the stare decisis effect of AT&T Corp. v.

Portland. .. .” Id. (citations omitted).

The Supreme Court reversed and remanded. It held

that “[{a] court’s prior judicial construction of a statute

trumps an agency construction otherwise entitled to

Chevron deference only if the prior court decision holds

that its construction follows from the unambiguous terms

of the statute and thus leaves no room for agency

discretion.” Jd. at 2700. It similarly stated that “[b]efore a

judicial construction of a statute, whether contained in a

precedent or not, may trump an agency’s, the court must

hold that the statute unambiguously requires the court’s

construction.” Jd. at 2702.

The Supreme Court explained that Chevron set forth

a two-step process to evaluate whether an agency’s

interpretation of a statute is lawful. At step one we

determine “whether the statute’s plain terms ‘directly

addres[s] the precise question at issue.’ ” Jd. (quoting

Chevron U.S.A. Inc. v. Netural Res. Def. Council, Inc., 467

U.S. 837, 848, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)). If we

determine that the statute is ambiguous on the precise

question at issue, “we defer at step two to the agency’s

interpretation so long as the construction is ‘a reasonable

policy choice for the agency to make.’ ” Jd. (quoting

Chevron, 467 U.S. at 845, 104 S.Ct. 2778). On the other hand,

if we determine that the statute is unambiguous on the

precise question at issue, we do not defer to the agency’s

se eee” h | a ae er owe lc ll

27a

Appendix B

interpretation, regardless of whether that interpretation

is grounded in a reasonable policy choice. See id.

II

Petitioners argue that the holding of National Cable

strongly supports their contention that we erroneously

relied upon Florida Power & Light v. United States, 307

F.3d 1364 (Fed.Cir.2002), to conclude that the

Department of Commerce’s (“Commerce’s”) finding, that

the separative work units (“SWU”) contracts at issue in

this case were contracts for the sale of goods and

therefore subject to the antidumping duty statute, is not

in accordance with law. In particular, the United States

argues that we have not held, either in Florida Power

or here, “that the antidumping ‘statute unambiguously

requires’ that the term ‘sold’ excludes the acquisition of

imported merchandise in exchange for raw materials

and cash.” Similarly, USEC, Inc. and the United

States Enrichment Corporation (collectively, “USEC”)

contend that we “erroneously relied upon the earlier

determination of this Court in Florida Power & Light

Co. v. United States so as to fail to give appropriate

deference to the Commerce Department’s conclusion

that the import transactions [here] involved a sale of

merchandise under the antidumping law.”

{il

As a preliminary matter, Petitioners are incorrect

to the extent they imply that we found ourselves bound

by Florida Power in this case under the doctrine of stare

decisis. To the contrary, we specifically stated that “

Florida Power is not binding precedent for this case”

but that it is “persuasive” authority. Ewrodif, 411 F.3d

28a

Appendix B

at 1363; cf National Cable, 125 S.Ct. at 2701 (noting that

the Ninth Circuit held that a prior judicial construction

of a statute categorically controls an agency’s contrary

construction).’

On the other hand, Petitioners are correct to the

extent they point out that in Florida Power we did not

expressly hold that the antidumping duty statute

“unambiguously” applies to contracts for the sale of

goods only and “unambiguously” does not apply to the

contracts at issue in this case in particular. And although

in our opinion in this case we did expressly hold that the

countervailing duty statute unambiguously does not

allow for the purchase of services to be considered a

subsidy, Eurodif, 411 F.3d at 1365, as in Florida Power

we did not expressly state that the antidumping duty

statute unambiguously applies to contracts for the sale

of goods only and unambiguously does not apply to the

contracts at issue in this case in particular.

We now clarify by stating expressly that the

antidumping duty statute unambiguously applies to the

sale of goods and not services. In our opinion, we stated

that “(ujnder the statutory scheme adopted by Congress,

the sale of goods (or ‘merchandise’) is covered by the

1. In this regard, we rejected the argument that we should

ignore the analysis and reasoning of Florida Power because that

case involved a different statutory scheme. We chose not to ignore

Florida Power, but instead to recognize its persuasive power,

because the nearly identical circumstances in that case were

those surrounding SWU contracts. See Eurodif, 411 F3d at 1363.

Appendix B

antidumping duty statute” but that the “provision of

services, however, is not. .. .” Ewrodif, 411 F.3d at 1361.

While we did not use the term “unambiguous,” we clearly

foreclosed any argument that § 1673 is ambiguous

on the precise question of whether the antidumping

duty statute encompasses contracts for services.

It undoubtedly does not.

Commerce’s characterization of the SWU contracts

at issue in this case would contradict, we conclude, the

statute’s unambiguous meaning because it is clear that

those contracts are contracts for services and not goods.

While Petitioners concede that a sale of goods requires

a transfer of ownership, see United States’ Petition for

Rehearing at 9 (citing NSK Ltd. v. United States, 115

F.3d 965 (Fed.Cir.1997)) and USEC’s Petition for

Rehearing at 2 (same), they do not recognize the critical

importance of the indisputable fact that, pursuant to the

contracts at issue in this case, enrichers never obtain

ownership of either the feed (unenriched) uranium

during enrichment or the final low enriched uranium

(“LEU”) product. Nevertheless, the inescapable

conclusion flowing from this circumstance is that the

enrichers do not “sell” LEU to utilities pursuant to the

SWU contracts at issue in this case.

As we stated in our opinion:

In reviewing the contracts in this case, it

is clear that ownership of either the

unenriched uranium or the LEU is not meant

to be vested in the enricher during the relevant

30a

Appendix B

time periods that the uranium is being enriched.

While it is correct that a utility may not receive

the LEU that was enriched from the exact

unenriched uranium that it delivered to the

enricher, it is nevertheless true that up until the

sampling and weighing of the LEU before

delivery, the utility retains title to the quantity

of unenriched uranium that is supplie[d] to the

enricher. The utility’s title to that uranium is only

extinguished upon the receipt of title in the LEU

for which it contracted. Therefore, 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

uranium or the finished LEU. As a result, the

“transfer of ownership” required for a sale [of

goods] is not present here.

Eurodif, 411 F-3d at 1362. We adhere to that analysis today,

noting that the complete absence of a transfer

of ownership over LEU requires that we reject Commerce’s

application of the antidumping duty statute to the SWU

contracts.

IV

This Order constitutes the panel’s action in response

to the petitions for rehearing. We conclude that our analysis

in this case is consistent with the Supreme Court’s holding

in National Cable, and we reaffirm our decision that

Commerce’s finding that the SWU contracts were contracts

for the sale of goods and therefore subject to the

antidumping duty statute was not in accordance with law.

3la

APPENDIX C — OPINION AND JUDGMENT OF

THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

DECIDED SEPTEMBER 21, 2007

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

2007-1005, -1006

EURODIF S.A., COMPAGNIE GENERALE DES

MATIERES NUCLEAIRES, and COGEMA, INC.,

Plaintiffs-Appellees,

and

AD HOC UTILITIES GROUP

Plaintiff-Appellee,

Vv.

UNITED STATES,

Defendant-Appellant,

and

USEC INC. and UNITED STATES

ENRICHMENT CORPORATION,

Defendants-Appellants.

DECIDED: September 21, 2007

Before MICHEL, Chief Judge, LOURIE, Circuit Judge,

and ROBERTSON, District Judge.*

_--—

* Honorable James Robertson, District Judge, United

States District Court for the District of Columbia, sitting by

designation.

32a

Appendix C

ROBERTSON, District Judge.

In this dispute about the correct application of the

antidumping statute, 19 U.S.C. § 1673, to enriched

uranium feedstock, appellants United States, USEC

Inc., and United States Enrichment Corp. (the latter

two collectively referred to as “USEC”) appeal from a

judgment of the United States Court of International

Trade. Hurodif S.A. v. United States, 442 F.Supp.2d

1367 (Ct. Int’l] Trade 2006). In 2005, we issued two

interlocutory opinions in the same case, Hurodif S.A. v.

United States, 411 F.3d 1355 (Fed.Cir.2005) ( “Eurodif

I”), and Eurodif S.A. v. United States, 423 F.3d 1275

(Fed.Cir.2005) (“Eurodif II”). Because the issues

appellants raise in the instant appeal concern only the

application of those decisions to future entries of low

enriched uranium, we dismiss the appeal as unripe.

I. BACKGROUND

In Furodif] and Eurodif 11, we found that separate

work unit (“SWU”) contracts for the enrichment of

uranium were contracts for services, rather than for the

sale of goods, and that the low enriched uranium

(“LEU”) produced under those contracts was therefore

not subject to the antidumping statute. Hurodif J, 411

F:3d at 1364; Furodif IT, 423 F.3d at 1278. Following those

decisions, the Court of International Trade issued a

remand order, instructing the Department of Commerce

(“Commerce”) to revise its final determination and order,

and to “explain how its final determination and order

on remand has eliminated all SWU transactions” in

33a

Appendix C

accordance with our decisions. Eurodif S.A. v. United

States, 414 F.Supp.2d 1263 (Ct. Int’] Trade 2006)

(“Hurodif III”). Acting pursuant to that order,

Commerce excluded LEU covered by SWU contracts

from its recalculation of the duty margin, Final Results

of Redetermination Pursuant to Court Remand,

Kurodif S.A. v. United States (Mar. 3, 2006), but it did

not modify the scope of the antidumping duty order to

exclude future imports of LEU covered by SWU

contracts.

Plaintiffs-Appellees Eurodif S.A., Cogema, and

Cogema, Inc. (collectively referred to herein as

“Eurodif”) supported Commerce’s action, as far as it

went, but they also asked the Court of International

Trade to require Commerce to amend the scope order

so that it would expressly exclude LEU covered by SWU

contracts. Defendant-Appellant USEC supported

Commerce’s decision not to amend the scope order, but

asserted that it was error for Commerce to exclude all

LEU imported pursuant to SWU contracts from its

recalculation without investigating the facts behind each

contract to determine whether the transaction was a sale

of services, as stated in the contract, or was in fact a

sale of goods.

The Court of International Trade agreed with

Eurodif. It found that our opinions in Kurodif / and

Eurodif I] took into account the factual circumstances

operating behind the individual contracts in this case and

therefore that Commerce was correct to exclude all LEU

covered by those SWU contracts from its recalculation.

34a

Appendix C

Eurodif S.A. v. United States, 431 F.Supp.2d 1351, 1354

(Ct. Int’] Trade 2006) (“Eurodif 7V”). Furthermore, the

Court of International Trade concluded that our previous

opinions required Commerce to rewrite the scope of the

antidumping duty order, and it remanded the case to

Commerce once again with instructions to amend the

order to exclude all LEU covered by SWU contracts

from the “class or kind of merchandise” covered by the

order. /d. at 1355 (citing 19 U.S.C. § 1673e(a)(2)). On this

second remand, Commerce redefined the scope of the

antidumping order to exclude any entry of LEU that is

accompanied by a certification claiming that the entry

is made pursuant to a SWU contract. The Court of

International Trade sustained, Ewrodif S.A. v. United

States, 442 F.Supp.2d 1367 (Ct. Int’] Trade 2006)

(“Eurodif V”), and this appeal followed. We have

jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

Il. DISCUSSION

In Eurodif] and Eurodif I], we found that the SWU

contracts at issue “in this case” were contracts for the

sale of services that were not subject to the antidumping

statute. See Furodif 1, 411 F.3d at 1362, 1364. We did not

address how Commerce should determine whether

future entries of LEU are made pursuant to SWU

contracts. The contentions of the government and USEC

on this appeal are directed to future entries. They argue

that Commerce should be permitted to suspend

liquidation of future LEU imports until it determines—

transaction-by-transaction and by administrative

review—whether the SWU contract exception applies.

35a

Appendix C

USEC additionally argues that the scope amendment

and certification should be modified now to make it clear

that future LEU imports will not be outside the scope

of the antidumping law if the unenriched uranium is

either (a) obtained from an affiliate of the enricher or

(b) delivered to the enricher after entry.

Neither the procedural question presented here

(scope review vs. administrative review) nor the

substantive questions relating to affiliation of the

enricher are ripe for decision. The doctrine of ripeness

is designed “to prevent the courts, through avoidance of

premature adjudication, from entangling themselves in

abstract disagreements over administrative policies, and

also to protect the agencies from judicial interference

until an administrative decision has been formalized and

its effects felt in a concrete way by the challenging

parties.” Abbott Labs. v. Gardner, 387 U.S. 136, 148-49,

87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). It is drawn “both

from Article ITI limitations on judicial power and from

prudential reasons for refusing to exercise jurisdiction,

but, even in a case raising only prudential concerns, the

question of ripeness may be considered on a court’s own

motion.” Nat'l Park Hospitality Ass’n v. Dep’t of

Interior, 538 U.S. 803, 808, 123 S.Ct. 2026, 155 L.Ed.2d

1017 (2003) (citing Reno v. Catholic Soc. Servs., Inc., 509

U.S. 43, 57 n. 18, 113 S.Ct. 2485, 125 L.Ed.2d 38 (1993)

(citations omitted)).

“

36a

Appendix C

Administrative Review vs. Scope Determination

The Court of International Trade found that an

administrative review is not the “proper forum to

address whether merchandise is within the scope of an

order,” and that Commerce’s own regulations authorize

a different mechanism for this purpose: a “scope

determination.” Furodif IV, 431 F.Supp.2d at 1356. At

the request of any interested party, Commerce may

“initiate an inquiry” as to whether merchandise is within

the scope of an antidumping duty order. /d. (citing 19

C.F.R. § 351.225(b)). If the Secretary determines that

the product in question is included within the scope of

the order, he may instruct Customs to suspend

liquidation for each unliquidated entry, effective as of

the date the scope inquiry was initiated. 19 C.F-R. §

351.225(1)(2). That determination is reviewable by the

Court of International Trade. 28 U.S.C. § 1581(c).

Appellants argue that this scope determination

process is inadequate, because, as a practical matter, an

entry of LEU under review will be liquidated before

Commerce can complete its determination. They assert

that determining whether a particular transaction is

entitled to the SWU-contract exception requires a

careful analysis of the contract itself and an opportunity

to investigate the manner of its execution. The

administrative review process would permit Commerce

to suspend liquidation while such an assessment takes

place, but the scope determination process permits

Commerce to suspend liquidation only after the

Secretary has issued a preliminary scope ruling. USEC

37a

Appendix C

notes that liquidation typically occurs ten months after

entry, but Commerce’s previous assessments of LEU

contracts have taken seventeen to eighteen months.' As

a result, appellants argue, the scope determination

process will not be completed before the entry under

review has been liquidated, mooting the review.

This dispute is about what may or may not happen

with the next LEU case—a case about which we have no

facts. Our decisions in Furodif J and Eurodif II did not

resolve the procedural! problem that USEC and the

government have presented here, but we decline to

attempt a resolution on this record. We have held that

SWU contracts are contracts for services and that the

LEU in this case entered under SWU contracts.

Whether the next contested shipment of LEU is covered

by a valid SWU contract is a question that must await

the next case. If Commerce is correct, and the next

disputed LEU entry is liquidated before Commerce can

complete its scope review, the dispute will not be

rendered non-justiciable, as it would be “capable of

repetition, yet evading review.” S. Pac. Terminal Co. v.

ICC, 219 U.S. 498, 515, 31 S.Ct. 279, 55 L.Ed. 310 (1911).

1. Eurodif responds that Commerce’s regulations provide

for the issuance of final scope rulings within 120 days, but the

regulation clearly states only that a decision “normally” will be

reached within that time. 19 C.F_R. § 351.225(1(5).

38a

Appendix C

LEU Obtained from or Sold to Affiliates

The more substantive questions USEC brings on

this appeal also require a specific factual context for their

resolution, and such a record is not before us. USEC

wants it made clear that future LEU imports will not

avoid antidumping penalties if the unenriched uranium

was either (a) obtained from an affiliate of the enricher

or (b) delivered to the enricher after the importation of

the LEU. Although USEC does not challenge our finding

that the contracts in this case were contracts for the sale

of services,” it seeks clarification as to whether our

holding would apply to future entries with these

characteristics. Until we have record evidence regarding

such entries, however, USEC’s questions are non-

justiciable. Elec. Bond & Share Co. v. S.E.C., 303 U.S.

419, 443, 58 S.Ct. 678, 82 L.Ed. 936 (1938) (“We are

invited to enter into a speculative inquiry for the purpose

of condemning statutory provisions the effect of which

in concrete situations, not yet developed, cannot now be

definitely perceived. We must decline that invitation.”).

III. CONCLUSION

For the aforementioned reasons, we dismiss.

DISMISSED.

2. USEC initially requested that we order Commerce to

reopen the record of the SWU contracts analyzed in Eurodif I

and Furodif IT to examine purchases of unenriched uranium from

affiliates, but now acknowledges that it raised this question in

its appeal of Commerce’s final redetermination of the

antidumping duty, and that we rejected that appeal. Eurodif S.A.

v. United States, 217 Fed. Appx. 963 (Fed.Cir.2007).

39a

Appendix C

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

2007-1005, -1006

EURODIF S.A., COMPAGNIE GENERALE DES

MATIERES NUCLEAIRES and COGEMA, INC.,

Plaintiffs-Appellees,

and

AD HOC UTILITIES GROUP

Plaintiff-Appellee,

v.

UNITED STATES,

Defendant-Appellant,

and —

USEC INC. and UNITED STATES

ENRICHMENT CORPORATION,

Defendants-Appellants.

JUDGMENT

ON APPEAL from the United States Court of

International Trade

in CASE NO(S). 02-CV-00219 and 02-CV-00234

This CAUSE having been heard and considered, it is

ORDERED and ADJUDGED:

DISMISSED

40a

Appendix C

ENTERED BY ORDER OF THE COURT

s/ Jan Horbaly

Jan Horbaly, Clerk

DATED SEP 21 2007

4la

APPENDL. D — FINAL DETERMINATION BY

THE DEPARTMENT OF COMMERCE

DATED DECEMBER 21, 2001

FEDERAL REGISTER

Vol. 66, No. 246

Notices

DEPARTMENT OF COMMERCE

International Trade Administration

Import Administration

[A-427-818]

Notice of Final Determination of Sales at

Less Than Fair Value: Low Enriched

Uranium From France

66 FR 65877

DATE: Friday, December 21, 2001

ACTION: Notice of final determinations of sales at less

than fair value.

EFFECTIVE DATE: December 21, 2001.

42a

Appendix D

FOR FURTHER INFORMATION CONTACT:

Victoria Schepker or Edward Easton, at (202) 482-1756

or (202) 482-3003, respectively; AD/CVD Enforcement,

Office 5, Group II, Import Administration, Room 1870,

International Trade Administration, U.S. Department

of Commerce, 14th Street and Constitution Avenue, NW,

Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all citations to the

statute are references to the provisions effective January

1, 1995, the effective date of the amendments made to

the Tariff Act of 1930 (the Act) by the Uruguay Round

Agreements Act (URAA). In addition, unless otherwise

indicated, all citations to Department of Commerce

(Department) regulations refer to the regulations

codified at 19 CFR part 351 (April 2000).

Final Determination

We determine that low enriched uranium (LEU)

from France is being sold, or is likely to be sold, in the

United States at less than fair value (LTF'V), as provided

in section 735 of the Act. The estimated margins of sales

at LTF’V are shown in the Continuation of Suspension

of Liquidation section of this notice.

43a

Appendix D

Case History

The preliminary determination in this investigation

was published on July 13, 2001. See Notice of

Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Low

Enriched Uranium from France, 66 FR 36743 (July 13,

2001) (Preliminary Determination). The petitioners’

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

producer of the subject merchandise, and its owner,

Compagnie Generale des Matieres Nucleaires (Cogema)

(collectively, Cogema/Eurodif or the respondent), filed

case briefs on antidumping methodological issues on

September 28, 2001, and rebuttal briefs on October 9,

2001. A rebuttal brief was also filed by the Ad Hoc

Utilities Group (Ad Hoe Utilities Group or AHUG).’

1. The petitioners in this investigation are USEC, Inc., and

its wholly-owned subsidiary, United States Enrichment

Corporation (collectively USEC); and the Paper Allied-

Industrial, Chemical and Energy Workers International Union,

AFL-CIO, CLC, Local 5-550 and Local 5-689 (collectively PACE).

2. The members of the Ad Hoe Utilities Group are: Arizona

Public Service Co., Carolina Power & Light Co., Dominion

Generation, Duke Energy Corp., DTE Energy, Entergy

Services, Inc., Exelon Corporation, First Energy Nuclear

Operating Co., Florida Power Corp., Florida Power and Light

Co., Nebraska Public Power District, Nuclear Management Co.

LLC (on behalf of certain member companies), PPL

Susquehanna LLC, PSEG Nuclear LLC, South Texas Project,

Southern California Edison, Southern Nuclear Operating Co.,

Union Electric Company, and Wolf Creek Nuclear Operating

Corp.

44a

Appendix D

A public hearing on the antidumping methodological

issues was held on October 23, 2001.

On October 22 and 23, 2001, the petitioners,

respondent, and the Ad Hoc Utilities Group filed briefs

on common scope issues in the antidumping and

countervailing duty investigations of low enriched

uranium from France, Germany, the Netherlands and

the United Kingdom. Rebuttal briefs on these common

scope issues were filed on October 29, 2001, and a public

hearing on the common scope issues was held on October

31, 2001. In response to a September 28, 2001 submission

by the European Commission to Mr. Grant Aldonas,

Under Secretary for International Trade, regarding the

antidumping duty (AD) and countervailing duty (CVD)

investigations of LEU from France, Germany, the

Netherlands, and the United Kingdom, and Mr. Aldonas’

November 7, 2001 reply to this letter and the November

22, 2001 submission from the European Commission, the

petitioners, respondent and the Ad Hoc Utilities Group

filed briefs that addressed the content of this

correspondence.

This final determination was originally scheduled to

be issued on November 26, 2001. On November 6, 2001,

the Department tolled the final determination deadlines,

until December 13, 2001, to accommodate a delayed

verification and briefing and hearing schedule in the

companion countervailing duty investigation, due to the

events of September 11, 2001.

45a

Appendix D —

Amended Scope of Investigation

For purposes of this investigation, the product

covered is all low enriched uranium (LEU). LEU is

enriched uranium hexafluoride (UF,,) with a U™ product

assay of !ess than 20 percent that has not been converted

into another chemical form, such as UO,, or fabricated

ini 0 nuclear fuel assemblies, regardless of the means by

which the LEU is produced (including LEU produced

through the down-blending of highly enriched uranium).

Certain merchandise is outside the scope of this

investigation. Specifically, this investigation does not

cover enriched uranium hexafluoride with a U™ assay

of 20 percent or greater, also known as highly enriched

uranium. In addition, fabricated LEU is not covered by

the scope of this investigation. For purposes of this

investigation, fabricated uranium is defined as enriched

uranium dioxide (UO,), whether or not contained in

nuclear fuel rods or assemblies. Natural uranium

concentrates (U,0,) with a U** concentration of no

greater than 0.711 percent and natural uranium

concentrates converted into uranium hexafluoride with

a U concentration of no greater than 0.711 percent are

not covered by the scope of this investigation.

Also excluded from these investigations is LEU

owned by a foreign utility end-user and ix sorted into

the United States by or for such end-user solely for

purposes of conversion by a U.S. fabricator into uranium

46a

Appendix D

dioxide (UO,) 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 investigation is

classified in the Harmonized Tariff Schedule of the

United States (HTSUS) at subheading 2844.20.0020.

Subject merchandise may also enter under 2844.20.0030,

2844.20.0050, and 2844.40.00. Although the HTSUS

subheadings are provided for convenience and customs

purposes, the written description of the merchandise

subject to this proceeding is dispositive.

Scope Clarification

For further details, see Comment 2 of the “/ssues

and Decision Memorandum for the Antidumping Duty

Investigation of Low Enriched Uranium from France”

(Decision Memorandum) from Bernard T. Carreau,

Deputy Assistant Secretary for Import Administration,

to Faryar Shirzad, Assistant Secretary for Import

Administration, dated concurrently with this notice.

47a

Appendix D

Goods Versus Services

Applicability of AD/CVD Law

The Preliminary Determination

In the preliminary determinations in the LEU

investigations, we determined that all LEU entering the

United States from Germany, the Netherlands, the

United Kingdom, and France is subject to the AD and

CVD investigations on LEU regardless of the way in

which the sales for such merchandise were structured.

See, e.g., Notice of Preliminary Determination of Sales

at Less Than Fair Value: Low Enriched Uranium from

Germany and the Netherlands; and Postponement of

Final Determinations, 66 FR 36748, 36750 (July 13,

2001). We based our preliminary determinations on

several factors. First, we found, and no party disputed,

that LEU entering the United States constitutes a good,

the tangible yield of a manufacturing operation.

Moreover, under the U.S. Customs regulations, we

recognized that ‘any item within a tariff category for the

Harmonized Tariff System constitutes merchardise for

customs purposes. See 19 CFR 141.4 (2000). In this case,

LEU is normally classified under HTSUS 2844.20.0020,

but also satisfies three other HTSUS classifications

described as enriched uranium compounds, enriched

uranium, and radioactive elements, isotopes, and

compounds.

Second, in our preliminary determinations we found

it to be a well-established fact that the enrichment

48a

Appendix D

process is a major manufacturing operation for the

production of LEU, and that enrichment is a required

operation in order to produce LEU. We found that no

party disputes that the enrichment process constitutes

substantial transformation of the uranium feedstock. We,

therefore, preliminarily concluded that the LEU

enriched and exported from Germany, the Netherlands,

the United Kingdom and France are products of those

respective countries, and are subject to these

investigations.

Third, we found that there are significant volumes

of LEU sold pursuant to contracts that expressly provide

separate prices for SWU and feedstock (?.e., contracts

for enriched uranium product (EUP)), and that no party

disputes that such sales constitute sales of subject

merchandise. Rather, it is only those transactions in

which utility companies obtain LEU through separate

purchases of SWU and feedstock from separate entities

that the Ad Hoc Utilities Group (AH UG) contends cannot

be subject to the antidumping law. We preliminarily

determined that there was little substantive commercial

difference between the two types of transactions. We

found that, simply because an unaffiliated customer

purchases subject merchandise through two

transactions, instead of a single transaction, does not

mean that the merchandise entering the United States

is not subject to the antidumping law.

Fourth, we preliminarily determined that, contrary

to respondents’ arguments, the tolling regulation does

not provide a basis to exclude merchandise from the

49a

Appendix D

scope of an investigation. Rather, we found that the

purpose of the tolling regulation is to identify the seller

of the subject merchandise for purposes of establishing

export price, constructed export price, and normal value.

Thus, under the tolling regulation, the issue is not

whether the LEU in question is subject to the

antidumping law, but rather who is the seller of the

subject merchandise for determining U.S. price and

normal value or, more specifically, what is the

appropriate way in which to value subject merchandise

and foreign like product. To the extent that sales of

subject merchandise are structured as two transactions,

we stated that we would combine such transactions to

obtain the relevant price of the subject merchandise.

Fifth, we preliminarily determined that enrichers

are the sellers of LEU in both types of transactions-

either as an exchange of SWU and uranium feedstock

for cash, or as an exchange of SWU for cash and a swap

of uranium feedstock. We preliminarily determined that

regardless of whether the utility company pays in cash

or in kind for the natural uranium content, the LEU is

delivered under essentially the same contract terms,

including warranties and guarantees pertaining to the

complete LEU product. Second, enrichers do not use the

uranium feedstock provided by the utility companies.

Instead, the natural uranium is typically delivered

shortly before, or even after, delivery of the LEU,

making the delivery of such uranium a payment in kind

for the natural uranium component of the LEU. Third,

the utility company does not have control over the

process used to produce the LEU that the utility

50a

Appendix D

company receives. Rather, the enricher controls the

manufacture of LEU, as demonstrated by the fact that

the product assay under the contract (transactional

assay) differs from the product assay produced and

delivered by the enricher (operational assay). The

enricher makes the decision of the particular product

based upon its own operational requirements and inputs

costs. We preliminarily determined that, taken together,

these facts indicate that enrichers are in effect selling

LEU under both types of contractual arrangements.

Discussion

For these final determinations, we have concluded

that all LEU from the investigated countries entering

the United States for consumption is subject to the AD

and CVD laws. We have carefully considered all

comments received on this issue in response to our

preliminary determinations and, for the reasons stated

below, do not find persuasive the arguments that the

LEU at issue is exempt from the AD and CVD laws.

For these final determinations, respondents and

AHUG are joined by the EC in raising again the issue

of whether the AD and CVD laws can be applied to goods

sold pursuant to contracts for the provision of

enrichment. Respondents and AHUG contend that,

under such contracts, LEU is not sold to, or in, the

importing country. Respondents contend that, for these

transactions, enrichment companies sell enrichment

services, which is a component of LEU. Accordingly, for

those entries of LEU, sold pursuant to SWU contracts,

Sla

Appendix D

these parties assert that the AD and CVD laws are not

applicable because respondents are not selling subject

merchandise and because there is no sale of subject

merchandise in the United States.

In our view, respondents and AHUG have confused

fundamental concepts concerning the application of the

unfair trade laws. The AD and CVD laws were enacted

to address trade in goods. Thus, respondents and AHUG

have confused what is being sold in a particular

transaction with what is being introduced into the

commerce of the United States. The Department finds

that the issue of whether merchandise entering the

United States is subject to the AD and CVD laws

depends upon whether the merchandise produced in, and

exported from, a foreign country is introduced into the

commerce of the United States.

In particular, the language of section 735(a)(1) of the

Act states that “the administering authority shall make

a final determination of whether the subject merchandise

is being, or is likely to be, sold in the United States at

less than fair value.” See also section 731(1) of the Act.

We have consistently interpreted these provisions to

pertain to merchandise from the investigated country,

and not to companies. See Jia Farn Mfg. Co. v. United

States, 817 F. Supp. 969, 973 (CIT 1993) (““LTFV

determinations and antidumping duty orders are

rendered upon the subject merchandise from a certain

country under the investigation.”). In other words, AD

and CVD cases proceed in rem (7.e., against the good as

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

parties to the import transaction).

$2a

Appendix D

Similarly, in conducting countervailing duty

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

Department to impose duties if, inter alia, “the

administering authority determines that the government

of a country or any public entity within the territory of

a country is providing, directly or indirectly, a

countervailable subsidy with respect to the manufacture,

production, or export of a class or kind of merchandise

imported, or sold (or likely to be sold) for importation,

in the United States.” We believe the statute is clear that,

where merchandise from an investigated country enters

the commerce of the United States, the law is applicable

to such imports.

In these investigations, no party disputes that the

LEU entering the United States constitutes

merchandise. As the product yield of a manufacturing

operation, the Department continues to find that LEU

is a tangible product. Second, it is well established, and

no party disputes, that the enrichment process is a major

manufacturing operation for the production of LEU, and

that enrichment is a required operation in order to

produce LEU. Thus, we find that the enrichment process

constitutes substantial transformation of the uranium

feedstock. We continue to find, therefore, that the LEU

enriched in and exported from Germany, the

Netherlands, the United Kingdom and France is a

product of those respective countries.

Finally, we find, and no party disputes, that the LEU

at issue enters into the commerce of the United States.

Thus, the question of whether enrichers sell enrichment

53a

Appendix D

processing, as compared to LEU, is not relevant to the

issue of whether the AD and CVD law is applicable.

Rather, it is only relevant in these investigations for

purposes of determining how to calculate the dumping

margin and how to determine who is the producer/seller

of subject merchandise.

In seeking to equate what is being sold with a service

that is beyond the scope of the AD and CVD laws,

respondents and AHUG assert that the enrichment of

uranium is akin to the cleaning of a suit.* They contend

that a person who takes a suit to a cleaner and picks up

a clean suit is merely paying for the service of cleaning.

In the case of enrichment, they assert, a person provides

natural uranium to an enricher who returns enriched

uranium and is paid for the services.

We agree that a cleaner merely provides a service

for which one is paid. However, we disagree with the

appropriateness of the analogy used for purposes of

understanding what is occurring in these cases. In the

case of cleaning services, the cleaner merely returns to

its customer a cleaned suit; no substantial transformation

takes place, and no merchandise is being produced.

Enrichment of uranium, however, is a critical step in the

production of nuclear fuel. The production of uranium

in the nuclear fuel cycle consists of five stages: mining,

milling, conversion, enrichment, and fabrication. A

distinct product is produced at each stage. Milled

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

Petitioners’ Rebuttal Brief at 26.

54a

Appendix D

uranium is converted into uranium hexafluoride.

Uranium hexafluoride is used to produce enriched

uranium. Enriched uranium is used to produce fuel rods.

And fuel rods are used in nuclear-generating facilities

to produce electricity. In the case of enrichment, it is

uncontested that enrichment results in the production

of two separate products: low enriched uranium and

uranium tails (or depleted uranium which can be re-

enriched to produce enriched uranium).

Respondents’ and AHUG’s reference to the term

“services” in their arguments mischaracterizes the

nature of the enrichment operations, and attempts to

place a major manufacturing operation which produces

merchandise squarely outside the realm of trade in

goods, based solely upon the way in which particular

sales of such merchandise are structured. We find,

however, that regardless of whether the sale is

structured as one of enrichment processing or LEU, in

all cases the trade in LEU is a trade in goods, as the

transactions in question result in the introduction of

LEU into the commerce of the United States.

Accordingly, the Department determines that all LEU

produced in the investigated countries and entering the

United States for consumption is subject to these

investigations.

AHUG and respondents insist that the AD and CVD

laws can only be applied where the sale of LEU occurs

in a specific way (7.e., where the merchandise is sold in a

single transaction). AHUG further insists that the law

is inapplicable because the utility companies cannot be

55a

Appendix D

considered the sellers of subject merchandise since they

do not sell LEU, but instead sell electricity to U.S.

consumers. Accordingly, AHUG and respondents

conclude that the law cannot apply because no entity sells

the subject merchandise.

We disagree. It does not matter whether the

producer/exporter sold subject merchandise as subject

merchandise, or whether the producer/exporter sold

some input or manufacturing process that produced

subject merchandise, as long as the result of the

producer/exporter’s activities is subject merchandise

entering the commerce of the United States. The first,

and threshold, question we must ask is whether the

merchandise entering the United States is subject

merchandise. All else flows from this. The second

question is what transaction does the Department look

at to determine export price.

Further, we believe Congress intended the law to be

applicable where the subject merchandise enters the

commerce of the United States, even where the

transaction for such merchandise does not take the form

of a simple, single chain of commerce involving a solitary

manufacturer/exporter, a single sales price, and a single

unaffiliated purchaser in the United States. Congress

enacted specific provisions that demonstrate a clear

intent to make merchandise entering the United States

subject to the law even though the sale by the exporter

to the first unaffiliated purchaser is not a sale of subject

merchandise. In constructed export price transactions

involving further manufacturing, for example, subject

S6a

Appendix D

merchandise enters the United States, but through a

process of further manufacturing, is often sold to the

first unaffiliated purchaser in the form of non-subject

merchandise. The form of the sale, however, does not

prohibit the application of the law. To the contrary, to

address those situations Congress enacted special

provisions that require the Department to determine

whether there are dumping margins and to apply duties,

as appropriate, to such merchandise. See section 772(b)

of Act. Even where the first sale to an unaffiliated

purchaser is far removed from the subject merchandise

that enters the commerce of the United States, such

merchandise is covered under the law, and Congress

enacted a specific provision establishing a basis for

calculating export price. For example, where rollerchain

constitutes the subject merchandise and enters the

United States, but the first sale to an unaffiliated

purchaser is the sale of a motorcycle that contains the

rollerchain, the law is applicable to such entries of

rollerchain. See section 772(e). See also SAA at 825.

While there is no specific statutory provision that

dictates how the Department is to calculate the value of

subject merchandise and the export price in the

circumstances in these LEU investigations, the absence

of such a provision does not render the law inapplicable

where the facts demonstrate that the product in question

enters into the commerce of the United States, as in this

case.

S7a

Appendix D

Use of the Term “Enrichment Services” in Other Legal

Contexts

In seeking to demonstrate that for the transactions

at issue the enrichment companies provide enrichment

services, perform a value-added service, and do not sell

the subject merchandise, respondents contend that the

U.S. government has advocated on behalf of USEC

before U.S. domestic courts that enrichment contracts

are contracts for services, and accordingly, that the

Uniform Commercial Code (UCC), which only pertains

to goods, does not apply to such contracts. Moreover,

the parties contend that U.S. courts have ruled in

USEC’s favor, finding that the UCC did not apply to

such transactions because they were sales contracts for

services, not for goods. The parties conclude, therefore,

that because the U.S. government has recognized that

the sales in question are sales of services, to be

consistent, the Department cannot apply the AD or CVD

law to these transactions.

We do not view those determinations as relevant to

the issue of whether LEU that enters the commerce of

the United States is subject to the AD and CVD laws.

The respondents and AHUG are mixing two entirely

different statutory regimes, which play different roles

and have different purposes. Other legal or regulatory

regimes are not determinative of how the Department

is to treat such transactions under the AD and CVD laws.

For example, the court’s finding in Florida Power &

Light Co. v. United States that the transfer of title of

uranium feedstock “does not rise to the level of

58a

Appendix D

‘procurement’ or ‘disposal’ of property” was made in the

specific context of determining the applicability of the

Contract Disputes Act to government contracts and is

not relevant, much less binding, for purposes of the

application of the AD and CVD laws.‘ In Barseback Kraft

AB and Empress Nacional Del Urnaio, S.A. v. United

States, the court ruled that the UCC did not apply to

the contracts at issue because the UCC does not apply

to government contracts.’ Moreover, the UCC addresses

the rights and obligations of the parties to a specific

contract, and is therefore not determinative of whether

the overall trade is one involving goods or services. As a

general principle, different terms can have different

meanings under different statutes, and parties are

entitled to make their claims pursuant to the case law

and precedent of the particular relevant statute, even

where those claims appear to be at odds with other claims

made pursuant to the case law and precedent of another

statute that has an entirely different purpose.

Tolling

Respondents and AHUG also seek to obtain an

exemption under the law for the LEU at issue through

the application of the Department’s tolling regulation,

set forth at 19 CFR 351.401(h).

We disagree with respondents’suggested

interpretation for several reasons. First, we do not

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

5. 36 Fed. C1. 691 (1996), aff'd 121 F.3d 1475 (Fed. Cir. 1997).

59a

Appendix D

interpret section 351.401(h) of the Department’s

regulations to be relevant or applicable in determining

whether merchandise entering the United States is

subject to the AD and/or CVD laws. Instead, section

351.401, including subsection (h) on tolling, was intended

to “establish certain general rules that apply to the

calculation of export price, constructed export price and

normal value,” and not for purposes of determining

whether the AD and/or CVD laws are applicable.

See 19 CFR 351.401(a) (2000). Our interpretation that

the tolling regulation is intended solely for purposes of

calculating dumping margins is further supported by the

absence of any parallel provision on tolling in the CVD

regulations.

Furthermore, in practice, we have never applied, nor

relied upon, section 351.401(h) to exempt merchandise

from AD proceedings, nor have we ever applied the

provision in CVD proceedings. Moreover, our application

of the tolling regulation in SRAMs from Taiwan does

not support AH UG’s or respondents’ claim for exemption

from the AD and CVD laws. In that case, we applied

the tolling regulation, seeking to determine which party

made the relevant sale of subject merchandise. We found

that the U.S. design house made sales of subject

merchandise to unaffiliated purchasers in the United

States, and therefore based our determination of U.S.

price and normal value upon the transactions made by

6. Static Random Access Memory Semiconductors From

Taiwan: Redetermination on Remand, (May 2, 2000). The text

of this determination can be found on the Department’s Internet

site at http://ia.ita.doc.gov/remands/00-48.htm.

60a

Appendix D

the U.S. design house. In that case, we applied AD duties

to all entries of SRAMs from Taiwan, regardless of

whether the U.S. design house or the Taiwan exporter

made the sale of subject merchandise. Therefore, our

decision in SRAMs from Taiwan establishes no basis

for excluding the LEU in question from these

investigations. Further analysis of the tolling regulation

in these antidumping investigations for purposes of

determining EP CEP and NV is provided below.

Temporary Import Bonds, Foreign Trade Zones, and

American Goods Returned

Respondents also cite the Department’s treatment

of subject merchandise entering the United States under

Temporary Import Bonds (TIBs), into Foreign Trade

Zones (FTZs), and as American Goods Returned, as

examples of where subject merchandise enters the

United States without being subject to duties, and to

support their claim that the Department is not

authorized to impose duties on subject merchandise

unless there is a sale of such merchandise. However,

these provisions cited by respondents are not instances

in which the merchandise enters the United States for

consumption without the imposition of AD and

countervailing duties. By operation of law, goods entered

under TIBs are prohibited from entering the United

States for consumption. For FTZs, where the

merchandise enters the United States for consumption,

antidumping and countervailing duties are imposed.

See 15 CFR 400.33(b)(2)(2000). The Department’s

treatment of goods entering FTZs or under TIBs is,

6la

Appendix D

therefore, consistent with the practice that the AD and

CVD laws apply to goods that enter the commerce of

the United States.

With respect to American Goods Returned (AGR),

this provision is only applicable to merchandise that has

not been substantially transformed in another country.

AGR only applies to U.S. merchandise that is further

manufactured in minor respects in another country, such

that the product that is returned to the United States is

not substantially transformed. As discussed below, this

provision is not applicable in this case.

Substantial Transformation and Country of Origin

Respondents also argue that the Department’s

country-of-origin rationale in this case is contrary to

federal and international regulation of transactions

involving uranium and enrichment services.

Respondents state that the enrichment process does not

wipe away the country of origin of the uranium; rather

it remains the same for materials tracking purposes after

enrichment as it was before enrichment. Respondents

conclude that it is irrelevant that enrichment is a major

manufacturing process and that the enrichment process

constitutes substantial transformation of the uranium

feedstock. Accordingly, respondents contend that the

Department’s conclusion as to the country of origin of

the enrichment cannot be used to establish the country

of origin of the unitary LEU, because LEU itself has

two countries of origin, namely the country of origin of

the uranium and that of the separative work unit.

62a

Appendix D

We disagree. The Department’s country-of-origin

determinations are made pursuant to the agency’s

authority to determine the scope of its investigations and

AD/CVD orders. In contrast, the federal and

international regulation of transactions in uranium

referred to by respondents reflect requirements adopted

for purposes of non-proliferation. Thus, the Nuclear

Regulatory Commission (NRC) tracks the origin of

natural feedstock for the purpose of tracing the

worldwide movement and ultimate disposition of the

feedstock, while the U.S. Customs Service and the

Department determine the country of origin for the

merchandise entering the United States for purposes of

tracking international commercial transactions and

assessing duties. The NRC has no role in determining

the country of origin for customs duty purposes.

Moreover, the Department and the Customs Service

make country-of-origin determinations for the product

entering the United States, which in this case is LEU,

not feedstock and SWU, as respondents suggest. Indeed,

the Department has in the past determined in other

proceedings covering uranium that the process of

enrichment constitutes substantial transformation of the

uranium, and therefore, that enrichment confers country

of origin upon the product entering the United States

for AD purposes.

In the current case, petitioners have indicated, and

no party has disputed, that the enrichment of uranium

accounts for approximately 60 percent of the value of

the LEU entering the United States. We find that

enrichment processing adds substantial value to the

ee

we

63a

Appendix D

natural uranium and creates a new and different article

of commerce and therefore confers a different country

of origin upon the product for purposes of the AD and

CVD law.

As a final matter, the unfair trade laws must be

applicable to merchandise produced through contract

manufacturing, just as they are applicable to

merchandise manufactured by a single entity. To do

otherwise would contravene the intent of Congress by

undermining the effectiveness of the AD and CVD laws,

which are designed to address practices of unfair trade

in goods, as well as have profound implications for the

international trading system as a whole. To the extent

that contract manufacturing can be used to convert trade

in goods into trade in so-called “manufacturing services,”

the fundamental distinctions between goods and services

would be eliminated, thereby exposing industries to

injury by unfair trade practices without the remedy of

the AD and CVD laws.

While the term “enrichment services” is common in

the industry, the enrichment of uranium feedstock is no

more a “service,” as that term is normally understood

in the international trading community, than a

production process that results in the manufacture of

textiles, semiconductors, or corrosion-resistant steel. An

importer of textiles who provides yarn to a textile

manufacturer may view the transaction as nothing more

than the purchase of “weaving services.” An importer

of semiconductors who provides a patented design mask

to a foundry to be pressed into a wafer for purposes of

64a

Appendix D

making a microchip may view such a transaction as

nothing more than the purchase of “pressing services.”

Similarly, an importer of corrosion-resistant steel who

provides hot-rolled steel to a rolling mill may view the

transaction as nothing more than the purchase of “rolling

and coating services.”

Yet, no matter what the purchaser chooses to call

the transaction, and no matter what terms may be

common in the industry, nothing can change the

fundamental facts associated with all of these

transactions. In each of these three cases, the purchaser

has contracted out for a major production process that

adds significant value to the inpu

This text is long and has been trimmed here. Open the source document for the complete record.