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Notice

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

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Information about this document as published in the Federal Register.

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AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (the Department) is conducting an administrative review of the countervailing duty order on low enriched uranium from France for the period January 1, 2003, through December 31, 2003. For information on the net subsidy for the reviewed company, please see the “Preliminary Results of Review” section of this notice. Interested parties are invited to comment on these preliminary results. (See the “Public Comment” section of this notice).

EFFECTIVE DATE:

March 7, 2005.

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FOR FURTHER INFORMATION CONTACT:

Kristen Johnson at (202) 482-4793, AD/CVD Operations, Office 3, Import Administration, International Trade Administration, U.S. Department of Commerce, Room 4014, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

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SUPPLEMENTARY INFORMATION:

Background

On February 13, 2002, the Department published in the Federal Register the countervailing duty order on low enriched uranium from France. See Amended Final Determination and Notice of Countervailing Duty Order: Low Enriched Uranium from France, 67 FR 6689 (February 13, 2002) (Amended LEU Final Determination). On February 3, 2004, the Department published an opportunity to request an administrative review of this countervailing duty order. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation: Opportunity to Request an Administrative Review, 69 FR 5125 (February 3, 2004). We received a timely request for review of Eurodif S.A. (Eurodif)/Compagnie Generale Des Matieres Nucleaires (COGEMA), the producer/exporter of subject merchandise covered under this review by both respondents and petitioners.[1] On March 26, 2004, the Department published the initiation of the administrative review of the countervailing duty order on low enriched uranium from France, covering the January 1, 2003, through December 31, 2003 period of review (POR). See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Revocation in Part, 68 FR 15788 (March 26, 2004).

On April 21, 2004, the Department issued a questionnaire to the Government of France (GOF) and Eurodif/COGEMA. On June 1, 2004, the Department received questionnaire responses from the GOF and Eurodif/COGEMA. On October 19, 2004, the Department published in the Federal Register an extension of the deadline for the preliminary results. See Low Enriched Uranium From France, Germany, the Netherlands, and the United Kingdom: Extension of Time Limit for Preliminary Results of Countervailing Duty Administrative Reviews, 69 FR 61470 (October 19, 2004). On October 4, 2004, and January 13, 2005, we issued supplemental questionnaires to respondents. On November 1, 2004, and January 28, 2005, we received supplemental responses from respondents.

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

Scope of Order

The product covered by this order is all low enriched uranium (LEU). LEU is enriched uranium hexafluoride (UF6) with a U235 product assay of less than 20 percent that has not been converted into another chemical form, such as UO2, or fabricated into nuclear fuel assemblies, regardless of the means by which the LEU is produced (including LEU produced through the down-blending of highly enriched uranium).

Certain merchandise is outside the scope of this order. Specifically, this order does not cover enriched uranium hexafluoride with a U235 assay of 20 percent or greater, also known as highly enriched uranium. In addition, fabricated LEU is not covered by the scope of this order. For purposes of this order, fabricated uranium is defined as enriched uranium dioxide (UO2), whether or not contained in nuclear fuel rods or assemblies. Natural uranium Start Printed Page 10990concentrates (U3O8) with a U235 concentration of no greater than 0.711 percent and natural uranium concentrates converted into uranium hexafluoride with a U235 concentration of no greater than 0.711 percent are not covered by the scope of this order.

Also excluded from this order is LEU owned by a foreign utility end-user and imported into the United States by or for such end-user solely for purposes of conversion by a U.S. fabricator into uranium dioxide (UO2) and/or fabrication into fuel assemblies so long as the uranium dioxide and/or fuel assemblies deemed to incorporate such imported LEU (I) remain in the possession and control of the U.S. fabricator, the foreign end-user, or their designated transporter(s) while in U.S. customs territory, and (ii) are re-exported within eighteen (18) months of entry of the LEU for consumption by the end-user in a nuclear reactor outside the United States. Such entries must be accompanied by the certifications of the importer and end user.

The merchandise subject to this order is currently classifiable in the Harmonized Tariff Schedule of the United States (HTSUS) at subheading 2844.20.0020. Subject merchandise may also enter under 2844.20.0030, 2844.20.0050, and 2844.40.00. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise is dispositive.

Period of Review

The POR for which we are measuring subsidies is January 1, 2003, through December 31, 2003.

Company History

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

Programs Preliminarily Determined To Confer Subsidies

1. Purchases at Prices That Constitute “More Than Adequate Remuneration”

Eurodif provides LEU to Electricite de France (EdF), a wholly owned French government agency that supplies, imports, and exports electricity. EdF is the major supplier of electricity in France, and is regulated by the Gas, Electricity, and Coal Department of the Ministry of Industry and the Budget and Treasury Departments of the Ministry of Finance. To date, EdF has entered into three long-term contracts with Eurodif to secure LEU. The first contract was negotiated in 1975; Eurodif began enrichment at its Georges-Besse gaseous diffusion facility in 1979. Eurodif and EdF entered into a subsequent contract in 1995, under which the POR purchases were made.

In the Final Affirmative Countervailing Duty Determination: Low Enriched Uranium from France, 66 FR 65901 (December 21, 2001) (LEU Final Determination), and the Final Results of Countervailing Duty Administrative Review: Low Enriched Uranium from France, 69 FR 40871 (July 7, 2004) (LEU Final Results), we found this program to be countervailable. The facts on which this determination was made have not changed. EdF is still owned by the GOF, and because EdF is purchasing a good from Eurodif, a financial contribution is being provided under section 771(5)(D)(iv) of the Tariff Act of 1930, as amended (the Act). The program is specific under section 771(5A)(D)(i) of the Act because it is available only to Eurodif.

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

Due to the difference in the pricing structure between EdF and Eurodif, as compared with the pricing structure between EdF and its other suppliers, it is necessary to make certain adjustments for the comparison. Unlike most other customers, EdF provides its own energy for Eurodif to use when producing LEU. Beginning in 2002, EdF started to pay Eurodif in energy for the energy that Eurodif uses to produce EdF's LEU. Eurodif charges EdF, however, for the operational costs associated with the production of the LEU. As EdF does not supply electricity to its other LEU suppliers, these suppliers charge EdF a single price per separative work unit (SWU).[2] Thus, we have used this single price per-SWU as our benchmark price. In order to make a proper comparison between the benchmark price and the actual price (i.e., the price paid by EdF to Eurodif), we included both an operational and energy price paid by EdF to Eurodif.

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

In order to determine whether a benefit was provided to Eurodif/COGEMA during the POR, we calculated a per-SWU price for both the energy and operational components of the LEU purchased by EdF from Eurodif. See the February 28, 2005, Memorandum concerning the Calculations for the Notice of Preliminary Countervailing Duty Results: Low Enriched Uranium from France (Preliminary Calculations Memorandum).[3] After adding these two components together, we compared the per-SWU price paid to Eurodif by EdF Start Printed Page 10991in 2003, with the per-SWU price paid by EdF to its other LEU suppliers in 2003. Based on our analysis, we preliminarily determine that the per-SWU price paid by EdF to Eurodif was not higher than the per-SWU price paid by EdF to its other suppliers and, therefore, EdF's LEU purchases from Eurodif did not confer a countervailable benefit during the POR.

We, however, did calculate a countervailable benefit from a sale pursuant to the contract listed in Exhibit 21 of Eurodif/COGEMA's June 1, 2004, questionnaire response.[4] Consistent with our approach in the LEU Final Results, we expensed the benefit in the year of receipt. For a further discussion, see the Preliminary Calculations Memorandum. We then multiplied the benefit amount by the sales of subject merchandise to the United States divided by total sales, and then divided that result by sales that entered U.S. customs territory during 2003. Thus, we calculated the ad valorem rate for this program using the following formula:

Where:

A = Ad Valorem Rate

B = Subsidy Benefit

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

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

E = Sales that Entered U.S. customs territory during the Calendar Year

On this basis, we preliminarily determine the countervailable subsidy from this program to be less than 0.005 percent ad valorem.[5]

2. Exoneration/Reimbursement of Corporate Income Taxes

Under a specific governmental agreement entered into upon Eurodif's creation, Eurodif is only liable for income taxes on the portion of its income relating to the percentage of its private ownership. Eurodif is fully exonerated from payment of corporate income taxes corresponding to the percentage of its foreign government ownership and is eligible for a reimbursement of the amount of corporate income taxes corresponding to the percentage of its French government ownership. In the LEU Final Determination and LEU Final Results, we found this program to be countervailable. No new information has been provided in this review to warrant reconsideration of our determination.

During the POR, (i.e., calendar year 2003), Eurodif filed its 2002 corporate income tax return. Based on the governmental tax agreement, Eurodif was exonerated from a portion of its 2002 income taxes filed during the POR. Eurodif was also reimbursed that portion of its 2002 income taxes attributable to its percentage of French government ownership during the POR. This tax exemption and reimbursement constitute a financial contribution within the meaning of section 771(5)(D)(ii) of the Act. Further, because the tax exemption and reimbursement is limited to Eurodif, the benefit is specific in accordance with section 771(5A)(D)(i) of the Act.

In accordance with 19 CFR 351.509(b), we calculated the benefit under this program by determining the amount of corporate income taxes that Eurodif would have otherwise paid, absent the program, on the tax return it filed during the POR. Specifically, we added the amount of exonerated taxes and the amount of reimbursable taxes during the POR. We then divided the total benefit amount by Eurodif's total sales for calendar year 2003. We adjusted Eurodif's sales denominator using the methodology described in the “Purchases at Prices that Constitute ‘More Than Adequate Remuneration’ ” section, above. This methodology is consistent with our approach in the LEU Final Results. On this basis, we preliminarily determine a net countervailable subsidy of 1.23 percent ad valorem under this tax program.

Preliminary Results of Review

In accordance with section 703(d)(1)(A)(i) of the Act, we have calculated an individual rate for Eurodif/COGEMA for 2003. We preliminarily determine that the total countervailable subsidy rate is 1.23 percent ad valorem.

If the final results of this review remain the same as these preliminary results, the Department intends to instruct the U.S. Customs and Border Protection (CBP), within 15 days of publication of the final results of this review, to liquidate shipments of LEU from France by Eurodif/COGEMA entered, or withdrawn from warehouse, for consumption from January 1, 2003, through December 31, 2003, at 1.23 percent ad valorem of the f.o.b. invoice price. The Department also intends to instruct CBP to collect cash deposits of estimated countervailing duties at 1.23 percent ad valorem of the f.o.b. invoice price on all shipments of the subject merchandise from Eurodif/COGEMA entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this review.

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

We will instruct CBP to continue to collect cash deposits for non-reviewed companies at the most recent company-specific or country-wide rate applicable to the company. Accordingly, the cash deposit rates that will be applied to non-reviewed companies covered by this order will be the rate for that company established in the most recently completed administrative proceeding. See Amended LEU Final Determination, 67 FR 6689 (February 13, 2002). These rates shall apply to all non-reviewed companies until a review of a company assigned these rates is requested.

While the countervailing duty deposit rate for Eurodif/COGEMA may change as a result of this administrative review, we have been enjoined from liquidating any entries of the subject merchandise. Start Printed Page 10992Consequently, we do not intend to issue liquidation instructions for these entries until such time as the injunctions, issued on June 24, 2002, and November 1, 2004, are lifted.

Public Comment

Pursuant to 19 CFR 351.224(b), the Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results within five days after the date of the public announcement of this notice. Pursuant to 19 CFR 351.309, interested parties may submit written comments in response to these preliminary results. Unless otherwise indicated by the Department, case briefs must be submitted within 30 days after the date of publication of this notice. Rebuttal briefs, limited to arguments raised in case briefs, must be submitted no later than five days after the time limit for filing case briefs, unless otherwise specified by the Department. Parties who submit argument in this proceeding are requested to submit with the argument: (1) A statement of the issue, and (2) a brief summary of the argument. Parties submitting case and/or rebuttal briefs are requested to provide the Department copies of the public version on disk. Case and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310, within 30 days of the date of publication of this notice, interested parties may request a public hearing on arguments to be raised in the case and rebuttal briefs. Unless the Secretary specifies otherwise, the hearing, if requested, will be held two days after the date for submission of rebuttal briefs, that is, 37 days after the date of publication of these preliminary results.

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

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

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Dated: February 28, 2005.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

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Footnotes

1.  Petitioners are USEC Inc. and its wholly owned subsidiary, United States Enrichment Corporation.

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2.  The “separative work unit” or (SWU) is the unit of measure of effort required to carry out isotopic separation of the uranium from its natural state to the concentration or “assay” required for power plant use.

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3.  A public version of the document is available on the public record in the Central Records Unit (CRU) located in the main Commerce Building in room B-099.

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4.  The details of this transaction are business proprietary.

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5.  Where the countervailable subsidy rate for a program is less than 0.005 percent, the program is not included in the total countervailing duty rate. See, e.g., the Other Programs Determined to Confer Subsidies section of the Issues and Decision Memorandum that accompanied the Final Results of Administrative Review: Certain Softwood Lumber Products from Canada, 69 FR 75917 (December 20, 2004).

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[FR Doc. E5-927 Filed 3-4-05; 8:45 am]

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