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Notice of 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 (CVD) order on low enriched uranium (LEU) from France for the period January 1, 2004, through December 31, 2004. For information on the net subsidy for the reviewed company, please see the “Preliminary Results of Review” section, infra. If the final results remain the same as the preliminary results of this review, we will instruct U.S. Customs and Border Protection (CBP) to assess countervailing duties as detailed in the “Preliminary Results of Administrative Review” section, infra. Interested parties are invited to comment on these preliminary results. (See the “Public Comment” section, infra).

DATES:

Effective February 15, 2006.

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FOR FURTHER INFORMATION CONTACT:

Kristen Johnson, 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; telephone: (202) 482-4793.

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SUPPLEMENTARY INFORMATION:

Background

On February 13, 2002, the Department published in the Federal Register the CVD order on LEU 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 1, 2005, the Department published an opportunity to request an administrative review of this CVD order. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 70 FR 5136 (February 1, 2005). On February 1, 2005, we received a timely request for review from Eurodif S.A. (Eurodif)/Compagnie Generale Des Matieres Nucleaires (COGEMA), the French producer/exporter of subject merchandise covered under this review, and on February 25, 2005, we received a timely request for review from petitioners.[1] On March 23, 2005, the Department published the initiation of the administrative review of the CVD order on LEU from France, covering the January 1, 2004, through December 31, 2004, period of review (POR). See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 70 FR 14643 (March 23, 2005).

On April 5, 2005, the Department issued a questionnaire to Eurodif/COGEMA and the Government of France (GOF), collectively “the respondents.” On May 31, 2005, the Department received questionnaire responses from Eurodif/COGEMA and the GOF. On August 3, 2005, the Department issued a supplemental questionnaire to respondents and received their questionnaire responses on August 19, 2005. A second supplemental questionnaire was issued to respondents on September 14, 2005. On October 17, 2005, the Department published in the Federal Register a notice of extension of the deadline for the preliminary results of this administrative review. See Notice of Extension of Time Limit for Preliminary Results of Countervailing Duty Administrative Reviews: Low Enriched Uranium from France, Germany, the Netherlands, and the United Kingdom, 70 FR 60284 (October 17, 2005). The Department received a response to the September 14, 2005, supplemental questionnaire from Eurodif/COGEMA on December 20, 2005, and from the GOF on December 21, 2005.Start Printed Page 7925

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

Scope of the Order

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

Certain merchandise is outside the scope of this order. Specifically, this order does not cover enriched uranium hexafluoride with a U235 assay of 20 percent or greater, also known as highly enriched uranium. In addition, fabricated LEU is not covered by the scope of this order. For purposes of this order, fabricated uranium is defined as enriched uranium dioxide (UO2), whether or not contained in nuclear fuel rods or assemblies. Natural uranium concentrates (U3 O8) with a U235 concentration of no greater than 0.711 percent and natural uranium concentrates converted into uranium hexafluoride with a U235 concentration of no greater than 0.711 percent are not covered by the scope of 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, 2004, through December 31, 2004.

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 is wholly owned by AREVA, a corporation principally owned by 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 Be Countervailable

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. Since 1979, when Eurodif began enrichment at its Georges-Besse gaseous diffusion facility, Eurodif and EdF have entered into long-term supply contracts. All deliveries of the subject merchandise to EdF during the POR were made pursuant to the 1995 contract.

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, 70 FR 39998 (July 12, 2005) (LEU 2003 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 of Eurodif's 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 LEU for EdF. Operational costs associated with the production of the LEU, however, are charged to EdF by Eurodif.

Conversely, EdF does not supply electricity to its other LEU suppliers. As such, these other suppliers charge EdF a single price per separative work unit (SWU).[2] Therefore, in order to make a proper comparison between the benchmark price (i.e., the single price per-SWU) and the actual price (i.e., the price paid by EdF to Eurodif), we have 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 goes into the LEU they are purchasing. The record, however, 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,” Start Printed Page 7926dated December 13, 2001, we assumed that the value of all natural uranium is the same (see discussion at page 5). Therefore, 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 8, 2006, Memorandum concerning the Calculations for the Notice of Preliminary Countervailing Duty Results: Low Enriched Uranium from France.[3] After adding these two components together, we compared the per-SWU price paid to Eurodif by EdF in 2004 with the per-SWU price paid by EdF to its other LEU suppliers in 2004. Based on our analysis, we preliminarily determine that prices paid by EdF to Eurodif were higher than prices EdF paid to its other suppliers. Therefore, in accordance with section 771(5)(E)(iv) of the Act, we preliminarily determine that this program conferred countervailable benefits to Eurodif in 2004. Because EdF's purchases from Eurodif are not exceptional but, rather, are made on an ongoing basis from year to year, we determine that the benefit conferred under this program is recurring under 19 CFR 351.524(c). Therefore, we have expensed the benefit in the year of receipt, i.e., calendar year 2004.

To determine the program rate for the POR, we first multiplied the benefit amount by the sales of subject merchandise to the United States divided by total sales, and then divided the result by the sales that entered U.S. customs territory during calendar year 2004. Specifically, 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 Calendar Year 2004

D = Total Sales during Calendar Year 2004 (including COGEMA sales on behalf of Eurodif)

E = Sales that Entered U.S. customs territory during Calendar Year 2004

On this basis, we preliminarily determine the net countervailable subsidy from this program to be 1.53 percent ad valorem.

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 2003 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 2004), Eurodif filed its 2003 corporate income tax return. Based on the governmental tax agreement, Eurodif was exonerated from a portion of its 2003 income taxes filed during the POR. Eurodif was also reimbursed that portion of its 2003 income taxes attributable to the 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 are 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. Consistent with the methodology that we employed in the “Purchase at Prices that Constitute ‘More Than Adequate Remuneration’ ” section above, we multiplied the total 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 2004. On this basis, we preliminarily determine a net countervailable subsidy of 3.53 percent ad valorem for this tax program.

Preliminary Results of Review

In accordance with section 703(d)(1)(A)(i) of the Act, we have calculated a subsidy rate for Eurodif/COGEMA for calendar year 2004. We preliminarily determine that the total estimated net countervailable subsidy rate is 5.06 percent ad valorem.

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. Consequently, 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.

If the final results of this review remain the same as these preliminary results, the Department, however, intends to instruct CBP to collect cash deposits of estimated countervailing duties at 5.06 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 administrative review. We will also 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 are those established in the most recently completed administrative proceeding conducted under the URAA. See Amended LEU Final Determination. These rates shall apply to all non-reviewed companies until a review of a company assigned these rates is requested.

Public Comment

Pursuant to 19 CFR 351.224(b), the Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results within five days after the date of the public announcement of this notice. Pursuant to 19 CFR 351.309, interested parties may submit written comments in response to these preliminary results. Unless otherwise indicated by the Department, case briefs must be submitted within 30 days after the date of publication of this notice. 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 Start Printed Page 7927specified 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 section 751(a)(1) and 777(i)(1) of the Act.

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Dated: February 8, 2006.

David M. Spooner,

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 of the concentration of “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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[FR Doc. E6-2166 Filed 2-14-06; 8:45 am]

BILLING CODE 3510-DS-P