No. 07-1059
In the Supreme Court of the United States
UNITED STATES OF AMERICA, PETITIONER
v.
EURODIF, S.A., ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
PAUL D. CLEMENT
Solicitor General
Counsel of Record
JEFFREY S. BUCHOLTZ
Acting Assistant Attorney
General
THOMAS G. HUNGAR
Deputy Solicitor General
LEONDRA R. KRUGER
Assistant to the Solicitor
General
JEANNE E. DAVIDSON
PATRICIA M. MCCARTHY
STEPHEN C. TOSINI
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217
JOHN B. BELLINGER, III
Legal Adviser
Department of State
Washington, D.C. 20520
WILLIAM J. HAYNES II
General Counsel
Department of Defense
Washington, D.C. 20301
JOHN J. SULLIVAN
General Counsel
JOHN D. MCINERNEY
Chief Counsel for Import
Administration
QUENTIN M. BAIRD
Attorney
Department of Commerce
Washington, D.C. 20230
DAVID R. HILL
General Counsel
Department of Energy
Washington, D.C. 20585
QUESTION PRESENTED
Section 1673 of Title 19 of the United States Code provides that, when "a class or kind of foreign merchan dise is being, or is likely to be, sold in the United States at less than its fair value," to the detriment of a domestic industry, the Department of Commerce (Commerce) shall impose antidumping duties on entries of the for eign merchandise. The question presented is:
Whether the court of appeals erred in rejecting Com merce's conclusion that foreign merchandise is "sold in the United States" within the meaning of 19 U.S.C. 1673 when a purchaser in the United States obtains foreign merchandise by providing monetary payments and raw materials to a foreign entity that performs a major man ufacturing process in which substantial value is added to the raw materials, thereby creating a new and different article of merchandise that is delivered to the U.S. pur chaser.
PARTIES TO THE PROCEEDING
Petitioner is the United States of America.
Respondents who were Plaintiffs-Appellees below are Eurodif S.A., Compagnie Generale des Matieres Nu cleaires, and COGEMA, Inc.
Respondent who was the Plaintiff-Intervenor-Ap pellee below is Ad Hoc Utilities Group.
Respondents who were the Defendant-Intervenor- Appellant below are USEC Inc. and United States En richment Corporation.
In the Supreme Court of the United States
No. 07-1059
UNITED STATES OF AMERICA, PETITIONER
v.
EURODIF, S.A., ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
The Solicitor General, on behalf of the United States of America, respectfully petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Federal Circuit in this case.
OPINIONS BELOW
The final judgment of the court of appeals (App., infra, 1a-7a) is reported at 506 F.3d 1051. The opinion of the court of appeals on interlocutory appeal (App., infra, 8a-28a) is reported at 411 F.3d 1355, and its order denying a petition for rehearing (App., infra, 29a-35a) is reported at 423 F.3d 1275. The opinion of the Court of International Trade from which interlocutory appeal was taken (App., infra, 36a-68a) is reported at 281 F. Supp. 2d 1334, and its initial remand order (App., infra, 178a-219a) is reported at 259 F. Supp. 2d 1310. The De
partment of Commerce's Notice announcing its final determinations in its antidumping investigation of low enriched uranium from France (App., infra, 220a-262a) is reported at 66 Fed. Reg. 65,877. Its decision on first remand from the Court of International Trade (App., infra, 69a-177a) is unreported.
JURISDICTION
The judgment of the court of appeals was entered on September 21, 2007. On December 12, 2007, the Chief Justice extended the time within which to file a petition for a writ of certiorari to and including January 19, 2008, and on January 14, 2008, the Chief Justice further ex tended the time to and including February 15, 2008. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).
STATUTORY PROVISION INVOLVED
Section 1673 of Title 19 of the United States Code is reproduced in the appendix to this petition (App., infra, 263a).
STATEMENT
1. The antidumping-duty statute provides a remedy to domestic manufacturing industries harmed by unfair foreign competition, by imposing special duties when "foreign merchandise is being, or is likely to be, sold in the United States at less than its fair value." 19 U.S.C. 1673(1). Antidumping duties are "the amount by which the normal value [i.e., the price when sold 'for consump tion in the exporting country'] exceeds the export price [i.e., the price when sold 'to an unaffiliated purchaser in the United States']" for the merchandise. 19 U.S.C. 1673, 1677a(a), 1677b(a)(1)(B)(i). That difference is known as the "dumping margin." 19 U.S.C. 1677(35)(A).
The imposition of antidumping duties requires two independent determinations. First, the Department of Commerce (Commerce) must determine that the subject merchandise was sold in the United States for less than fair value, or "dumped," during a period of investigation. 19 U.S.C. 1673(1); see 19 U.S.C. 1677(1). Second, the International Trade Commission (ITC) must determine that the domestic industry was materially injured or threatened with material injury by virtue of dumped imports. 19 U.S.C. 1673(2); see 19 U.S.C. 1677(2). If both final determinations are affirmative, Commerce is sues an antidumping-duty order directing United States Customs and Border Protection (Customs) to assess du ties in an amount equal to the dumping margin for the goods. 19 U.S.C. 1673d(c)(2), 1673e(a)(1).
An interested party may challenge final antidump ing-duty determinations before the Court of Interna tional Trade (CIT) pursuant to 19 U.S.C. 1516a(a)(2) and 28 U.S.C. 1581(c). Commerce's determinations must be sustained unless "unsupported by substantial evidence on the [administrative] record, or otherwise not in accor dance with law." 19 U.S.C. 1516a(b)(1)(B)(i).
2. In 2001, the Department of Commerce initiated an investigation into imports of low-enriched uranium (LEU) from France, as well as from a number of other European countries, based on information that foreign enrichers of uranium were selling LEU at less than fair value and thereby injuring a domestic industry. Low Enriched Uranium From France, Germany, the Neth erlands, and the United Kingdom, 66 Fed. Reg. 1080 (2001) (notice of initiation of antidumping investigation).
a. LEU is a critical component for the domestic production of nuclear power. It is typically produced by enriching natural uranium, which contains, by weight, approximately 0.711% of the fissionable isotope U235, through a process of isotope separation that increases the concentration of U235 to a desired level. Most nuclear utilities require fuel with a U235 concentration of between 3% and 5%. Once natural uranium is enriched to create LEU, the finished product is used to produce fuel rods, which are in turn used in nuclear reactors to generate electricity. App., infra, 181a-182a; 230a-231a.
Utilities in the United States generally acquire LEU in one of two ways: (1) by paying cash to an en richer for a quantity of LEU at a given U235 concentra tion; or (2) by delivering a quantity of unenriched ura nium (known as "feedstock") to an enricher, and paying the enricher for "separative work units" (SWUs), in ex change for a quantity of LEU at a given U235 concentra tion, or "assay." App., infra, 182a-184a. SWUs are a "measurement of the amount of energy or effort requi red to separate [i.e., increase the concentration of] a giv en quantity of feed uranium into LEU" at a specified concentration of U235. Id. at 183a.
b. Upon commencing its investigation into LEU imports from France, Commerce invited interested par ties to comment on the investigation's scope. 66 Fed. Reg. at 1080. Although no party disputed that LEU ac quired pursuant to purely cash transactions was poten tially subject to antidumping duties, respondent Ad Hoc Utilities Group, a group of U.S. utilities that purchase and consume both imported and domestic LEU, submit ted comments contending that imported LEU acquired pursuant to SWU transactions should be excluded from Commerce's antidumping investigation because SWU contracts "constitute the provision of services, not the production or sale of goods subject to the antidumping law." Low Enriched Uranium from France, 66 Fed. Reg. 36,744 (2001) (notice of preliminary determination of sales at less than fair value and postponement of final determination). Commerce preliminarily determined that, because "there is little substantive commercial dif ference" between cash-for-LEU contracts and SWU contracts, LEU acquired pursuant to both types of con tracts fell within the scope of its antidumping investiga tion, but invited further comments on the issue. Id. at 36,745-36,746.
In December 2001, Commerce issued its final deter mination that LEU from France was being sold, or like ly to be sold, in the United States at less than fair value. App., infra, 220a-262a. Commerce also concluded that all LEU from France is subject to the antidumping law, "regardless of whether the sale is structured as one of enrichment processing or LEU." Id. at 231a. Com merce found that "the enrichment of uranium accounts for approximately 60 percent of the value of the LEU entering the United States," and that "enrichment pro cessing adds substantial value to the natural uranium and creates a new and different article of commerce." Id. at 238a-239a. As Commerce explained, "it is the en richer who creates the essential character of the LEU. The enrichment process is not merely a finishing or com pletion operation, but is instead the most significant manufacturing operation involved in the production of LEU." Id. at 251a. Thus, "the enrichment process es tablishes the essential features of the LEU, creating a clearly distinct product from uranium feedstock." Ibid. Finding that "the enrichment process is a major manu facturing operation for the production of LEU" that results in "substantial transformation of the uranium feedstock," Commerce concluded that "the LEU en riched in and exported from Germany, the Netherlands, the United Kingdom and France is a product of those respective countries" subject to the antidumping law. Id. at 229a-230a.
Commerce considered and rejected the notion that a utility that acquires LEU pursuant to an SWU contract pays merely for enrichment "services" rather than for the purchase of merchandise. As Commerce explained,
the unfair trade laws must be applicable to mer chandise produced through contract manufacturing, just as they are applicable to merchandise manufac tured by a single entity. To do otherwise would con travene the intent of Congress by undermining the effectiveness of the [antidumping-duty and other] laws, which are designed to address practices of un fair trade in goods, as well as have profound impli cations 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 el iminated, thereby exposing industries to injury by unfair trade practices without the remedy of the [trade] laws.
App., infra, 239a.
Commerce determined that, "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." App., infra, 240a. When a "purchaser has contracted out for a major production process that adds significant value to the input and that results in the substantial transformation of the input product into an entirely different manufactured product," Commerce "simply do[es] not consider [such] a major manufactur ing process to be a 'service' in the same sense that activ ities such as accounting, banking, insurance, transporta tion and legal counsel are considered by the interna tional trading community to be services." Ibid. Rather, Commerce has "always considered the output from man ufacturing operations that result in subject merchandise being introduced into the commerce of the United States to be a good." Ibid.
Commerce also found "that the overall arrange ment, even under the SWU contracts, is an arrangement for the purchase and sale of LEU." App., infra, 250a- 251a. The clear nature and purpose of the SWU con tracts was for "an exact amount of LEU to be delivered [by the enricher to the utility] over the life of the con tract." Id. at 253a. "And it is this bottom line (i.e., a precise amount of LEU delivered over the life of the contract) that forms the fundamental nature of the ag reement between buyer and seller in a SWU contract." Ibid.
Morever, nothing in the SWU contracts required or envisioned that the uranium feedstock provided by the utility would itself necessarily be used to produce the LEU delivered to the utility. To the contrary, "enrich ers not only have complete control over the enrichment process, but in fact control the level of usage of the natu ral uranium provided by the utility company." App., infra, 252a. Indeed, "an enricher, in fulfillment of a SWU contract, may actually use more or less natural uranium and more or less SWU than is provided for in the contract (and by the utility customer). The enricher has complete control over these important production decisions." Id. at 253a.
Accordingly, Commerce concluded that "the con tracts designated as SWU contracts are functionally equivalent to those designated as EUP transactions [i.e., traditional contracts for the sale of LEU]," and that "the overall arrangement under both types of contracts is, in effect, an arrangement for the purchase and sale of LEU." App., infra, 254a, 255a. "First, both types of transactions have one fundamental objective-the deliv ery of LEU at a specific time and location, with a spe cific product assay, as agreed upon in the contract." Id. at 255a. Second, under both types of transactions, "util ity customers are not concerned with how LEU is pro duced or the amount of work expended (SWU) to pro duce such LEU. Instead, utility customers are inter ested in obtaining a specific quantity of a standardized product at a specified product assay." Ibid. "Further, under both types of contracts, because the LEU is pro duced at an operating tails assay determined by the en richer, the enricher ultimately determines how much ur anium feed is used, the amount of SWU actually ap plied," and so forth. Id. at 256a. Finally, "for both types of contracts ownership of the LEU is only transferred to the utility customer upon delivery of the LEU. Consis tent with this provision, for both types of transactions, the enricher incurs the risk of loss with respect to the LEU." Ibid.
Commerce rejected respondents' arguments that a regulatory subsection concerning the treatment of sub contractors engaged in so-called "tolling" operations precluded application of the antidumping-duty statute to imported LEU obtained through SWU transactions. See 19 C.F.R. 351.401(h) (providing that Commerce will "not consider a toller or subcontractor to be a manufac turer or producer where the toller or subcontractor does not acquire ownership, and does not control the relevant sale, of the subject merchandise"). Commerce explained that the tolling provision is not "relevant or applicable in determining whether merchandise entering the Uni ted States is subject to" the antidumping law. App. in fra, 235a. Rather, the tolling provision is part of a regu lation that "was intended to 'establish certain general rules that apply to the calculation of export price, con structed export price and normal value,' and not for pur poses of determining whether the [antidumping or other trade] laws are applicable" in the first instance. Ibid. (quoting 19 C.F.R. 351.401(a) (2000)). Commerce ac knowledged that it had previously applied the tolling provision to classify a subsequent sale of the merchan dise by a tollee or contractor (i.e., the entity obtaining the tolled merchandise from the toller or subcontractor), rather than the sale made by the toller or subcontractor, as the relevant sale for purposes of calculating the dumping margin, but Commerce concluded that it had "never applied, nor relied upon, section 351.401(h) to exempt merchandise from [antidumping] proceedings." Ibid.
c. In February 2002, the ITC determined that an industry in the United States was materially injured by imports of LEU from France at less than fair value. Specifically, the ITC found that such imports had a sig nificant negative impact on respondents USEC Inc., and its subsidiary, United States Enrichment Corporation (collectively USEC), the only domestic enricher of ura nium. See United States Int'l Trade Comm'n, Pub. No. 3486, Low Enriched Uranium from France, Germany, the Netherlands, and the United Kingdom (Feb. 2002) <http://hotdocs.usitc.gov/docs/pubs/701 731/pub3486. pdf> (determination and views of the Commission).
Shortly thereafter, Commerce issued an order di recting Customs to assess antidumping duties on LEU from France. Low Enriched Uranium from France, 67 Fed. Reg. 6680 (2002) (notice of amended final determi nation of sales at less than fair value and antidumping duty order).
3. Respondent Eurodif S.A., a French enricher of uranium, challenged Commerce's final determination, along with its owner, respondent Compagnie General des Matieres Nucleaires (COGEMA), and COGEMA's U.S. subsidiary, respondent COGEMA, Inc. The CIT remanded to Commerce for further explanation, focus ing in particular on Commerce's determination that its tolling regulation does not apply to SWU transactions. App., infra, 178a-219a. Although the CIT acknowledged that the tolling regulation does not "exempt merchan dise from [antidumping] proceedings," the court con cluded that the regulation is nevertheless relevant be cause "a determination that the enricher provides a toll ing service would mean that the price charged by the enricher to the utility for the enrichment cannot form the basis of the export price for the purpose of deter mining dumping margins." Id. at 206a. The court deter mined that the circumstances of this case resembled previous cases in which Commerce had examined tolling arrangements in which a tollee had provided raw materi als to a toller, which in turn produced and delivered a finished product to the tollee. Id. at 197a. Noting that Commerce had determined in those cases that the toll ing transaction is not a "relevant sale" for purposes of calculating the dumping margin, id. at 190a-192a & n.9, the CIT ruled that Commerce's decision not to apply the tolling regulation in this case "require[d] a more persua sive explanation than provided in the agency's determi nations." Id. at 207a.
In its determination on remand, App., infra, 69a- 177a, Commerce provided further explanation of its de termination that the tolling regulation does not apply to SWU transactions. Based on the "totality of the circum stances," Commerce concluded that the tolling regula tion did not apply for several reasons, including that "the enrichers make the only relevant sales that can be used for purposes of establishing U.S. price and normal value." Id. at 126a. Commerce found that the SWU transactions were "relevant sales" because, among other things, "these sales represent the transfer of ownership in the complete LEU product for consideration." Id. at 131a.
Specifically, "[b]ased upon the contracts and other evidence of record," App., infra, 131a, Commerce found that "[t]he enrichers transfer ownership of, and title to, the LEU to the utilities upon delivery of the merchan dise for consideration." Ibid. By contrast, "utility cus tomers hold title to the natural uranium feedstock that they provide to the enrichers," and "[t]he contracts state that the enrichers transfer title to the LEU to the utili ties upon production and delivery of the LEU." Id. at 132a. Thus, it is only at the time of delivery that "title to the LEU is transferred to the customer, and [the cus tomer's] title to the feed material is extinguished." Ibid. Moreover, Commerce explained, because the enricher treats the natural uranium feedstock as fungible, prior to delivery of the LEU "[t]he customer does not hold title to the LEU, nor does she hold title to the feed ma terial contained within the recently produced LEU." Id. at 133a. As Commerce found, "LEU produced by the enricher cannot be identified as having been derived from the feedstock provided by any particular cus tomer." Ibid.
Indeed, "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." App., infra, 133a (emphasis added). According ly, Commerce found that the operation of the SWU con tract scheme "mak[es] it impossible to conclude that the LEU produced and delivered by the enricher is in any way derived from the uranium supplied by the cus tomer." Ibid.
Based on those findings, Commerce concluded that, "between the time in which the LEU is produced and the time in which it is delivered as specified under the contract, the enricher holds title and holds ownership in the complete LEU product." App., infra, 133a. Com merce further found "that enrichers make a * * * sale when they transfer ownership of the complete LEU to the utilities through the delivery of such merchandise for consideration." Id. at 134a (citing NSK Ltd. v. Uni ted States, 115 F.3d 965, 973 (Fed. Cir. 1997)); see NSK Ltd., 115 F.3d at 975.
4. The CIT reversed. App., infra, 36a-68a. The court rejected Commerce's conclusion that enrichers ob tain ownership of LEU enriched under SWU contracts, finding that "although the enrichers obtain the right to use and possess the feedstock, and assume the risk of loss or damage, there is no evidence that they ever ob tain ownership of either the feed uranium or the final enriched product." Id. at 44a. The court determined that the transfer of LEU from the enricher to the utility therefore cannot constitute a "sale," id. at 45a (citing NSK Ltd., 115 F.3d at 975), and that Commerce's con trary determination was neither supported by substan tial evidence nor in accordance with law, id. at 46a. The court certified the question for interlocutory appeal un der 28 U.S.C. 1292(d). Slip op. No. 03-170 (Dec. 22, 2003).1
5. a. The court of appeals affirmed the CIT. App., infra, 8a-28a. The court concluded that SWU contracts are contracts for the provision of services, not for the sale of goods, and that LEU that enters the United States pursuant to SWU contracts therefore is not "mer chandise * * * sold" within the meaning of 19_U.S.C. 1673(1). App. infra, 17-24a. The court agreed with the CIT's conclusion that "the SWU contracts in this case do not evidence any intention by the parties to vest the enrichers with ownership rights in the delivered unen riched uranium or the finished LEU," and also its con clusion that the SWU transactions therefore cannot be said to constitute "sales" of merchandise for purposes of the antidumping statute. Id. at 20a.
The court of appeals found further support for its conclusion in its earlier decision in Florida Power & Light Co. v. United States, 307 F.3d 1364 (Fed. Cir. 2002), in which it had held that, although SWU contracts do not clearly constitute either contracts for services or for goods as they do "not fall neatly" into either cate gory, they are "best characterized" as a service contract for purposes of the Contract Disputes Act of 1978, 41 U.S.C. 601 et seq. App., infra, 20a-24a; see Florida Power & Light Co., 307 F.3d at 1373.2
b. While the government's petition for rehearing was pending, this Court issued its decision in National Cable & Telecommunications Ass'n v. Brand X Internet Services, 545 U.S. 967 (2005), which held that "[a] court's prior judicial construction of a statute trumps an agency construction otherwise entitled to * * * defer ence only if the prior court decision holds that its con struction follows from the unambiguous terms of the statute and thus leaves no room for agency discretion." Id. at 982. The government brought the decision to the Court's attention, pointing out that the court of appeals' reliance on Florida Power & Light Co. was inconsistent with the principles of agency deference that the Court reaffirmed in Brand X. In an order denying rehearing, App., infra, 29a-35a, the court rejected that argument, stating that it had not considered itself "bound" by Flor ida Power, but had treated it only as "'persuasive' au thority" for the proposition that SWU contracts are con tracts for services, not goods. Id. at 32a. The court fur ther held that Commerce's construction of 19 U.S.C. 1673 did not, in any event, warrant deference under Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984), be cause "the antidumping duty statute unambiguously ap plies to the sale of goods and not services." App., infra, 33a.
Notwithstanding its previous acknowledgment that SWU contracts do "not fall neatly" into either the goods or services category, Florida Power & Light Co., 307 F.3d at 1373, the court of appeals also found that "it is clear that [the SWU] contracts are contracts for services and not goods." App., infra, 33a. The court based that conclusion on "the critical importance" of what it charac terized as "the indisputable fact that, pursuant to the contracts at issue in this case, enrichers never obtain ownership of either the feed (unenriched) uranium dur ing enrichment or the final low enriched uranium ('LEU') product." Ibid. In the court's view, "the ines capable 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." Id. at 33a- 34a.
6. On remand, the CIT determined that the court of appeals' decision required Commerce to rewrite the scope of its antidumping order with respect to future LEU entries, as well as to exclude past LEU entries covered by SWU contracts from its duty calculations. 431 F. Supp. 2d 1351, 1354-1355 (2006); 442 F. Supp. 2d 1367 (2006). The government appealed the CIT's conclu sion with respect to future entries of LEU. The court of appeals dismissed that appeal as non-justiciable. App., infra, 1a-7a.
REASONS FOR GRANTING THE PETITION
The Federal Circuit has incorrectly overridden the views of the expert agency responsible for administering and interpreting the antidumping-duty statute. By failing to defer to Commerce's reasonable statutory interpreta tion, the court has opened a potentially gaping loophole in the Nation's trade laws that will encourage domestic buy ers and foreign producers to structure their transactions as contracts for "services" in which title to the finished merchandise is not formally vested in foreign producers before passing to the domestic buyer. The Federal Circuit erred in fashioning an irrational exception to the coverage of the antidumping-duty law that permits industries to evade antidumping duties based on the form, rather than the substance, of their transactions. The court's construc tion of the statute is not compelled by its text and serves only to undermine the statutory scheme that Congress designed to protect domestic industry from unfair foreign competition.
The importance of the decision below extends far be yond the economic realm. By narrowing the effective reach of the antidumping law, the court's decision jeopar dizes the full implementation of an agreement between the United States and the Russian Federation, under which Russia has undertaken to supply the United States with LEU produced by diluting highly enriched uranium from nuclear weapons. The successful implementation of that agreement, which is a key element of this Nation's nuclear nonproliferation policy, depends on Commerce's ability to apply the antidumping-duty laws to restrict imports of less-expensive LEU produced through commercial enrich ment processes in Russia.
The decision below also endangers the financial viabil ity of the only domestic uranium enricher, USEC, which is the sole source of supply for certain types of nuclear fuel used for military purposes. USEC's continued survival is important to ensure the reliability of the Nation's nuclear arsenal and the availability of fuel for nuclear-power mili tary vessels, as well as to ensure national energy security. This Court's review is therefore warranted.
I. COMMERCE PERMISSIBLY CONCLUDED THAT LOW- ENRICHED URANIUM IMPORTED PURSUANT TO SEPA RATIVE WORK UNIT TRANSACTIONS IS SUBJECT TO THE ANTIDUMPING-DUTY STATUTE
This Court has long held that courts are to accord def erence to reasonable interpretations of a statute adopted by the agency that has been "charged with responsibility for administering the provision." Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 865 (1984). The treatment of LEU purchased pursuant to SWU transactions under the anti dumping-duty statute is, as Commerce acknowledged from the outset of this proceeding, an "exceptionally complicated issue," 66 Fed. Reg. at 36,744, as to which the statute is silent. Under Chevron, Commerce's final determination should have been upheld.
1. Congress has conferred on Commerce the authority to administer the antidumping-duty law by investigating allegations that imports are being dumped in the United States, making final determinations regarding sales at less than fair value, and issuing orders to remedy such unfair trade practices. 19 U.S.C. 1673(1), 1673a(a)(1), 1673d(c)(2), 1673e(a)(1); see 19 U.S.C. 1677(1). As the Federal Circuit has long recognized, "[a]ntidumping investigations are complex and complicated matters in which Commerce has particular expertise." Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1379 (2001) (quoting Thai Pineapple Pub. Co. v. United States, 187 F.3d 1362, 1367 (Fed. Cir. 1999), cert. denied, 529 U.S. 1097 (2000)). Com merce's interpretations of the antidumping-duty statute, articulated in the course of antidumping proceedings, are for that reason entitled to Chevron deference. Id. at 1382.
2. The antidumping-duty statute applies to "foreign merchandise * * * sold in the United States." 19 U.S.C. 1673(1). The statute does not define the term "sold," nor does it speak directly to the question presented in this case: Whether a foreign entity that accepts a combination of monetary consideration and raw materials in exchange for providing substantially transformed, finished merchan dise to a U.S. customer has "sold" that merchandise within the meaning of Section 1673(1), such that the merchandise is subject to antidumping duties if it enters the United States at prices below its fair value.
Taking "the totality of the circumstances" into account, Commerce concluded that, for purposes of Section 1673, LEU that enters the United States pursuant to such trans actions is "foreign merchandise * * * sold in the United States." App., infra, 126a, 134a. That conclusion reflects a reasonable interpretation of the antidumping-duty stat ute. As Commerce found, the enrichment of uranium is a "major manufacturing process," id. at 240a, that both "adds substantial value to the natural uranium and creates a new and different article of commerce," id. at 239a. In that respect, Commerce reasoned, enrichment is not pure ly a "service" in the sense that "activities such as account ing, banking, insurance, transportation and legal counsel are considered by the international trading community to be services." Id. at 240a. Commerce accordingly conclud ed that LEU obtained pursuant to SWU contracts, like any "output from manufacturing operations" that "results in the substantial transformation of the input product into an entirely different manufactured product," is merchandise potentially subject to the antidumping law. Ibid.
Commerce further found, "[b]ased upon the contracts and other evidence of record," that the SWU transactions at issue in this case "represent the transfer of ownership in the complete LEU product for consideration." App., infra, 131a. Specifically, Commerce found that, in SWU con tracts, "the utility customers hold title to the natural ura nium feedstock that they provide to the enrichers," but that they do not have or receive title to the finished LEU immediately upon its production; rather, title to the LEU is transferred to the utilities only when the enricher deliv ers the LEU to them. Id. at 132a. Morever, because the enricher treats the natural uranium feedstock as fungible, prior to delivery of the LEU a utility "customer does not hold title to * * * the feed material contained within the recently produced LEU." Id. at 133a. Indeed, there is no necessary correspondence between the raw-material feedstock provided by a utility customer and the LEU ulti mately delivered to the customer; the operation of the SWU contract scheme "mak[es] it impossible to conclude that the LEU produced and delivered by the enricher is in any way derived from the uranium supplied by the cus tomer." Ibid.
In short, because utility customers that enter into SWU contracts gain ownership of the finished LEU solely as a result of the consideration they provide to an enricher, Commerce reasonably concluded that such transactions constitute the "sale" of "merchandise" for purposes of the antidumping laws. App., infra, 131a ("[T]hese sales repre sent the transfer of ownership in the complete LEU prod uct for consideration."), 134a ("[E]nrichers make a * * * sale when they transfer ownership of the complete LEU to the utilities through the delivery of such merchandise for consideration.") (citing NSK Ltd. v. United States, 115 F.3d 965, 973 (Fed. Cir. 1997)).
Ultimately, Commerce explained, to draw distinctions between merchandise obtained strictly via cash exchange and merchandise obtained via "contract manufacturing," or what are in substance part barter, part cash sales, would "contravene the intent of Congress" and "expos[e] indus tries to injury by unfair trade practices without the remedy of" the antidumping law. App., infra, 239a. As Commerce concluded, "nothing in the statute in any way indicates that Congress did not intend the [antidumping] law[] to be ap plicable to merchandise based upon the way in which par ties structure their transactions for such goods entering the commerce of the United States." Id. at 240a.
II. THE FEDERAL CIRCUIT ERRED IN FAILING TO DEFER TO COMMERCE'S REASONABLE INTERPRETATION OF THE ANTIDUMPING-DUTY STATUTE
The Federal Circuit overrode Commerce's interpreta tion of the antidumping statute based on the court's own determination that the parties to SWU transactions do not intend to vest ownership of the raw materials or the fin ished merchandise in the enricher "during the relevant time periods that the uranium is being enriched." App., infra, 20a. The court concluded that, absent evidence of "any intention by the parties to vest the enrichers with ownership rights in the delivered unenriched uranium or the finished LEU," enrichers cannot be said to "sell" LEU to utilities pursuant to SWU contracts. Ibid. That conclu sion is incorrect.
As a preliminary matter, the Federal Circuit's determi nation is directly contrary to Commerce's own finding that, "between the time in which the LEU is produced and the time in which it is delivered as specified under the contract, the enricher holds title and holds ownership in the com plete LEU product." App., infra, 133a. Even leaving that agency finding aside, moreover, the Federal Circuit's de termination is at odds with the undisputed fact that utili ties do not receive title to the LEU until it is delivered to them. Id. at 132a ("The contracts state that the enrichers transfer title to the LEU to the utilities upon production and delivery of the LEU."); id. at 133a ("[A]t the point in time in which the enricher produces the LEU but before delivery is performed, the customer * * * does not hold title to the LEU."). The court of appeals, like the CIT be fore it, affirmed Commerce's finding on that point. Id. at 20a (explaining that "the utility retains title to the quantity of unenriched uranium that it supplies to the enricher," and that title in the feedstock "is only extinguished upon the receipt of title in the LEU for which [the utility] con tracted") (emphasis added); see id. at 44a (affirming that "title passes to the enriched product" only when "it is re turned in enriched form") (citation omitted). The court nevertheless dismissed Commerce's reasonable inference that, when title passes to the utility, it passes from the en richer, without so much as attempting to offer an alterna tive explanation for the identity of the party from whom title passes to the purchasing utility. Id. at 20a.
In any event, even assuming arguendo the correctness of the Federal Circuit's determination that the enricher never acquires title to the LEU, the judgment below rests on an erroneous interpretation of the antidumping-duty statute. The Federal Circuit reasoned that, even though the operation of the SWU contracts makes clear that title to the LEU passes to the utility upon delivery of the LEU (and not before), no "sale" of LEU occurs because the par ties' contracts evidence no intent to vest ownership in the enricher, and title therefore does not pass from the enrich er to the utility. See App, infra, 33a (referring to "the cri tical importance of the indisputable fact that * * * en richers never obtain ownership of the feed (unenriched) uranium during enrichment or the final low enriched ura nium") (emphasis added); id. at 20a (reasoning that no "sale" occurs because "the SWU contracts in this case do not evidence any intention by the parties to vest the en richers with ownership rights in the delivered unenriched uranium or the finished LEU") (emphasis added). Thus, the Federal Circuit squarely held that mere passage of title to the recipient of a finished product is insufficient to support a finding of a "sale" within the meaning of Section 1673(1); rather, title must first vest in the party that manu factures the finished merchandise, then pass from the man ufacturer to the recipient of the merchandise, in order for a "sale" to occur.
There is no basis in the text of Section 1673(1) for the Federal Circuit's mandate that title must vest in the manu facturer in order for a SWU-type contract to constitute a "sale" of "foreign merchandise," namely, finished LEU. For purposes of coverage under the antidumping-duty statute, the question is not whether a particular person has "sold" foreign merchandise; rather, the statute speaks in the passive voice, and asks only whether foreign merchan dise "is being * * * sold," without regard to the identity of the specific parties or entities from which title is passing. 19 U.S.C. 1673(1). As the court of appeals acknowledged, a "sale" typically occurs when ownership is conveyed in exchange for consideration. App., infra, 18a, 20a; see Web ster's New International Dictionary 2203 (2d ed. 1957). It is undisputed that, under a SWU-type arrangement, a util ity provides raw materials and monetary consideration to the enricher and, in exchange, receives delivery of and title to finished LEU that is not traceable to the particular lots of uranium feedstock supplied by the utility. App., infra, 20a, 131a-132a. Commerce was surely correct that the enricher was, in fact, the seller. See pp. 6-8, 11-12, supra. But whomever the courts below considered to be the seller, there is no question that what occurs is a sale. Whatever ambiguity might arise when the final product uniformly incorporates the raw material provided by that particular buyer, there is clearly a sale where, as here, the enricher supplies a finished product for combination of cash and feedstock, with no guarantee that the buyer will get its feedstock back. Here, the utility originally had title to a particular lot of raw materials (and to the requisite amount of monetary consideration) and, as a result of the SWU transaction, ended up with title to a different lot of finished merchandise. The utility has thus received title to LEU that it did not previously own in exchange for the payment of consideration; it was certainly reasonable for Commerce to conclude that such a transaction qualifies as a "sale."3
Even if the plain text of the statute could support the court of appeals' construction, the statute does not compel it. As this Court has repeatedly acknowledged, the term "sale" has different meanings in different contexts. This Court has accordingly affirmed reasonable agency inter pretations that focus on the substance of the transaction in order to effectuate the purposes of the relevant statutory scheme. See SEC v. National Sec., Inc., 393 U.S. 453, 466- 467 (1969) (affirming the SEC's construction of the statu tory term "purchase or sale of any security" to include a stock swap accomplished during a merger for purposes of the antifraud provisions of the securities laws, reasoning that, "[w]hatever the terms 'purchase' and 'sale' may mean in other contexts, here an alleged deception has affected individual shareholders' decisions in a way not at all unlike that involved in a typical cash sale or share exchange," and "[t]he broad antifraud purposes of the statute and the rule would clearly be furthered by their application to this type of situation"); United Gas Improvement Co. v. Continental Oil Co., 381 U.S. 392, 400 (1965) (holding that sales of leas es of land containing gas reserves constitute "'sales' of na tural gas in interstate commerce" for purposes of estab lishing Federal Power Commission jurisdiction under the Natural Gas Act, 15 U.S.C. 717 et seq., reasoning that "[a] regulatory statute such as the Natural Gas Act would be hamstrung if it were tied down to technical concepts of local law").
Commerce has reasonably construed the antidumping- duty statute to encompass transactions in which title to a newly produced good passes to a U.S. customer that has paid consideration in exchange for the finished product. That construction is clearly a permissible interpretation of the term "merchandise * * * sold," and moreover it serves to further the purpose of the statute in which that term appears: to protect domestic manufacturers from unfairly traded imports.
The court of appeals' decision, by contrast, effectively provides a roadmap for circumvention of the Nation's trade laws. The production of virtually all merchandise involves processing for which the parties could contract separately, in the same manner as SWU contracts. For example, steel could be obtained by supplying iron ore for "smelting and rolling services"; lumber could be obtained by supplying trees for "harvesting and milling services"; and semicon ductors could be obtained by supplying silicon for "pro cessing services." See App., infra, 239a-240a. If allowed to stand, the decision below threatens to permit numerous industries to escape antidumping duties by carefully draft ing their contracts to ensure that no contract provision evidences an intent to vest ownership of those items of commerce in the entities that produce them. The Federal Circuit's holding creates the potential for widespread eva sion of antidumping-duty orders and thus for eviscerating the protections that Congress intended to afford domestic industry by enacting the antidumping-duty statute. The plain language of the statute does not command that counterintuitive result, and this Court's review is war ranted to correct it.
III. THE DECISION BELOW THREATENS U.S. FOREIGN POLICY AND NATIONAL SECURITY INTERESTS
The consequences of the decision below go far beyond the substantial adverse effect on the effective administra tion of the trade laws. The decision below, in a truly un precedented manner for a trade case, threatens to under mine U.S. foreign policy and national security interests in the remarkably sensitive context of nuclear fuel, nonprolif eration, and ensuring domestic supplies for nuclear weap onry. Because enriched uranium is essential to nuclear power, the government's ability to regulate its entry into the United States is a matter of great significance. The court's decision in this case puts at risk full implementation of an international nuclear nonproliferation agreement and the continued survival of the only domestic source of nu clear materials for military uses. Those consequences fur ther justify this Court's intervention.4
1. First, the decision below threatens to undermine the United States' Highly Enriched Uranium (HEU) Agree ment with the Russian Federation, a key element of U.S. nuclear nonproliferation policy, which is dependent on the proper application of antidumping law to imported LEU.
Under the HEU Agreement, signed in 1993, the Rus sian Federation has undertaken by 2013 to convert 500 metric tons of weapons-grade HEU-enough for approxi mately 20,000 Russian nuclear warheads-into LEU for use in generating electricity in the United States. In re turn, the United States has agreed to purchase LEU downblended from 30 metric tons of weapons-grade HEU each year through 2013. See Agreement Concerning the Disposition of Highly Enriched Uranium Extracted from Nuclear Weapons, U.S.-Russ., Feb. 18, 1993, State Dep't No. 93-59, 1993 WL 152921. USEC, the sole domestic en richer of LEU, serves as the U.S. Executive Agent under the agreement. In that capacity, USEC purchases the downblended LEU, resells the material to U.S. utilities, and uses the proceeds to pay the Russian Government.
The foundation for the HEU Agreement was laid in 1992, when Commerce agreed to suspend an antidumping investigation into Russian uranium that had been promp ted by a surge of low-price Russian uranium imports into the United States. See Uranium from Kazakhstan, Kyrg yzstan, Russia, Tajikistan, Ukraine, and Uzbekistan, 57 Fed. Reg. 49,235 (1992) (notice of suspension of investiga tions and amendment of preliminary determinations). The antidumping suspension agreement restricts imports of Russian LEU produced through commercial enrichment processes, but exempts from those restrictions "any or all" HEU, and LEU produced through a process of downblen ding HEU "resulting from the dismantlement of nuclear weapons." Id. at 49,237.5 The suspension agreement, which was negotiated in parallel with the HEU Agreement, thus provides an important incentive for the Russian Fed eration to produce LEU for export through a process of downblending, rather than through the less costly (and hence more profitable) method of enriching natural ura nium through commercial processes.
The court of appeals' decision critically undermines the effectiveness of the antidumping suspension agreement as it affects enriched (as opposed to downblended) LEU, and thereby threatens the effectiveness of the HEU Agree ment as well. Suspension agreements apply only to mer chandise subject to the antidumping-duty law. See 19 U.S.C. 1673c(l) (limiting scope of suspension agreements with nonmarket economy countries to "merchandise under [antidumping] investigation"); see also 19 U.S.C. 1673c(c) (generally limiting scope of suspension agreements to "subject merchandise"); 19 U.S.C. 1677(25) (defining "sub ject merchandise" as, inter alia, "the class or kind of mer chandise that is within the scope of an [antidumping] inves tigation). If LEU purchased pursuant to SWU contracts is not subject to the antidumping-duty law, as the Federal Circuit has held, Russia will have a strong economic incen tive to avoid application of the antidumping suspension agreement by structuring transactions as the French en richers and utilities did in this case.
If such an effort is successful, Russia would have far less incentive to continue to produce LEU via the rela tively more expensive process of dismantling nuclear war heads, rather than producing LEU by commercial enrich ment. See Memorandum from Joseph A. Spetrini, Deputy Assistant Secretary for Policy and Negotiations, to David M. Spooner, Assistant Secretary for Import Administra tion, Issues and Decision Memorandum for the Sunset Re view of the Agreement Suspending the Antidumping In vestigation on Uranium from the Russian Federation 6 (June 6, 2006) <ia.ita.doc.gov/frn/summary/ RUSSIA/E6- 8758-1.pdf> (Sunset Review Memorandum); Final Results of Five-Year Sunset Review of Suspended Antidumping Duty Investigation on Uranium from the Russian Feder ation, 71 Fed. Reg. 32,517 (2006). Russia is the largest enricher of uranium in the world, and enriching natural uranium for commercial LEU sales is the most economi cally viable use of its vast enrichment capacity. Sunset Review Memorandum 6. Today Russia has substantially more enrichment capacity than necessary to supply its own domestic market, and other markets-notably in the Euro pean Union and Asia-have imposed restrictions on im ports of Russian uranium products. Ibid. Absent full im plementation of the antidumping suspension agreement, Russia would have a strong financial incentive to direct its enrichment capacity toward commercial enrichment of natural uranium for the U.S. market, rather than down blending weapons-grade uranium, for the same market at higher cost. Ibid. It might terminate the HEU Agreement after one year's notice, as permitted under the Agreement, or it might halt or slow its performance under the Agree ment, to the detriment of U.S. foreign policy and national security interests.
Even if Russia continued full performance under the HEU Agreement, the Agreement might still be threatened by a failure fully to implement the antidumping suspension agreement. Competition from commercially enriched Rus sian LEU would threaten USEC's ability to resell some or all of the downblended LEU that it is committed to pur chase in its capacity as the U.S. Executive Agent under the HEU Agreement, which would, in turn, threaten USEC's ability to continue to raise the revenue necessary to pur chase that material from Russia.
In short, successful implementation of the HEU Agree ment depends in significant part on the government's abil ity to use the antidumping laws to regulate the entry of LEU from foreign sources, so that downblending of wea pons-grade HEU remains commercially feasible. The deci sion below effectively obliterates a crucial part of the framework that underlies the HEU Agreement, and thus stands as an obstacle to accomplishing the Agreement's objective of converting Russian nuclear warheads to peace ful uses.
2. Second, the court of appeals' decision threatens the ongoing economic viability of USEC, the only domestic entity that enriches uranium. Because other countries generally require that their nuclear products and technol ogy be used only for peaceful purposes, USEC operates the only facility in the world that can produce nuclear ma terials for U.S. military use. Its continued survival is, ac cordingly, a matter of compelling importance to U.S. na tional security interests.
The government relies on USEC to supply enriched uranium for a variety of military purposes. USEC is the sole supplier of the LEU used to fuel the government- owned nuclear reactors that produce tritium, a radioactive isotope necessary to maintain the U.S. nuclear arsenal. USEC also supplies the enriched uranium required for the operation of the space nuclear program. In addition, the U.S. Navy's nuclear-powered submarines and aircraft car riers are fueled with HEU and rely upon its availability. When the current supply of that material is depleted, the Navy will require a sustainable domestic provider of HEU. Today, USEC is the only domestic provider of enrichment services.
USEC currently operates only one facility in the Uni ted States that can be used to produce enriched uranium for military purposes. That facility, which is located in Paducah, Kentucky, enriches uranium through gaseous diffusion, a process that is commercially obsolete at cur rent prices. USEC is presently planning to replace the Paducah facility with a new centrifuge facility to produce LEU in Piketon, Ohio, for which USEC must raise signifi cant capital in commercial markets. It will be difficult or impossible for USEC to raise that capital if investors do not view the U.S. market for enriched uranium as stable and profitable. If left unreviewed, the decision below would destabilize that market, threatening both the eco nomic viability of the facility that USEC already operates as well as its plans to replace that facility with updated and more cost-effective technology. As a result, the decision below, far from a garden-variety trade case, threatens the United States' ability to produce materials critical to mili tary operations.
3. Finally, by radically limiting domestic industry's protection from imports of dumped enriched uranium, the decision below threatens to increase the United States' dependence on foreign energy sources. If Russia enjoys unfettered access to the market for LEU in the United States, its vast capacity for enrichment will weaken finan cial support for expansion of domestic enrichment capacity and leave the Russian Federation as the predominant sup plier of enriched uranium for domestic electricity genera tion.
CONCLUSION
The petition for a writ of certiorari should be granted.
Respectfully submitted.
PAUL D. CLEMENT
Solicitor General
JEFFREY S. BUCHOLTZ
Acting Assistant Attorney
General
THOMAS G. HUNGAR
Deputy Solicitor General
LEONDRA R. KRUGER
Assistant to the Solicitor
General
JEANNE E. DAVIDSON
PATRICIA M. MCCARTHY
STEPHEN C. TOSINI
Attorneys
JOHN B. BELLINGER, III
Legal Adviser
Department of State
WILLIAM J. HAYNES II
General Counsel
Department of Defense
JOHN J. SULLIVAN
General Counsel
JOHN D. MCINERNEY
Chief Counsel for Import
Administration
QUENTIN M. BAIRD
Attorney
Department of Commerce
DAVID R. HILL
General Counsel
Department of Energy
FEBRUARY 2008
1 The CIT also rejected Commerce's determination that the tolling provision is altogether inapplicable in this case. App., infra, 50a-56a. The CIT held, however, that Commerce acted reasonably in declining to apply the tolling provision in determining the members of the affec ted domestic industry. Id. at 56a-59a.
2 The court of appeals did not consider the applicability of the tolling provision. App., infra, 9a, 27a.
3 Contrary to the court of appeals' assertions (App., infra, 20a-24a), there is no conflict between Commerce's final determination in this case and the government's position in Florida Power & Light Co., supra. In Florida Power & Light Co., the question was whether Department of Energy (DOE) SWU contracts qualify as "contract[s] * * * entered into by an executive agency for * * * the disposal of personal proper ty" for purposes of the Contract Disputes Act of 1978 (CDA), 41 U.S.C. 602(a), which governs the resolution of disputes arising from certain types of government contracts. The government in that case success fully argued that SWU contracts were not contracts for "the disposal of personal property" within the meaning of the CDA, but were instead contracts for the provision of enrichment services, and that resolution of the dispute therefore was not governed by the CDA. Florida Power & Light Co., 307 F.3d at 1373. Unlike the CDA, application of the antidumping-duty statute does not turn on the nature of a particular contract between producer and consumer, but rather turns on whether the course of dealing between the parties results in a "sale" of "mer chandise." As Commerce properly recognized in its final determination in these proceedings, a contract to purchase manufacturing services can result in the "sale" of "merchandise" for purposes of the antidumping- duty statute. See App., infra, 240a-241a.
4 The government notes that bills are currently pending in commit tees in Congress that would explicitly provide that "any contract or transaction for the production of low-enriched uranium" qualifies as "a sale of foreign merchandise" under the antidumping-duty statute, 19 U.S.C. 1673. See H.R. 4929, 110th Cong., 1st Sess. (2007); S. 2531, 110th Cong., 1st Sess. (2007). There is no guarantee, however, that the legislation will be enacted, much less that it will be enacted in its pre sent form.
5 The Governments of the United States and Russia signed an am endment to the suspension agreement on uranium from Russia on Feb ruary 1, 2008. See Amendment to the Agreement Suspending the Anti dumping Investigation on Uranium from the Russian Federation, 73 Fed. Reg. 7705 (2008). The amendment adjusts the limits on Russian exports of commercial LEU to the United States. Id. at 7706.
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
Nos. 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
Sept. 21, 2007
Before MICHEL, Chief Judge, LOURIE, Circuit Judge, and ROBERTSON, District Judge.1
ROBERTSON, District Judge
In this dispute about the correct application of the antidumping statute, 19 U.S.C. § 1673, to enriched uran ium feedstock, appellants United States, USEC Inc., and United States Enrichment Corp. (the latter two col lectively referred to as ("USEC") appeal from a judg ment of the United States Court of International Trade. Eurodif 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, Eurodif S.A. v. United States, 411 F.3d 1355 (Fed. Cir. 2005) ("Eurodif I"), and Euro dif 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 Eurodif I and Eurodif II, we found that separate work unit ("SWU") contracts for the enrichment of ur anium 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. Eurodif I, 411 F.3d at 1364; Eurodif II, 423 F.3d at 1278. Following those decisions, the Court of International Trade issued a remand order, instructing the Department of Com merce ("Commerce") to revise its final determination and order, and to "explain how its final determination and order on remand has eliminated all SWU transac tions" in accordance with our decisions. Eurodif S.A. v. United States, 414 F. Supp. 2d 1263 (Ct. Int'l Trade 2006) ("Eurodif 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, Euro dif S.A. v. United States (Mar. 3, 2006), but it did not modify the scope of the antidumping duty order to ex clude future imports of LEU covered by SWU contracts.
Plaintiffs-Appellees Eurodif S.A., Cogema, and Cog ema, 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 ex pressly exclude LEU covered by SWU contracts. De fendant-Appellant USEC supported Commerce's decis ion 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 with out investigating the facts behind each contract to deter mine 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 Euro dif. It found that our opinions in Eurodif I and Eurodif II took into account the factual circumstances operating behind the individual contracts in this case and there fore that Commerce was correct to exclude all LEU cov ered by those SWU contracts from its recalculation. Eurodif S.A. v. United States, 431 F. Supp. 2d 1351, 1354 (Ct. Int'l Trade 2006) ("Eurodif IV"). Further more, 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" cov ered by the order. Id. at 1355 (citing 19 U.S.C. § 1673e(a)(2)). On this second remand, Commerce re defined 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, Eurodif S.A. v. United States, 442 F. Supp. 2d 1367 (Ct. Int'l Trade 2006) ("Eurodif V"), and this appeal fol lowed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).
II. DISCUSSION
In Eurodif I and Eurodif II, 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 Eurodif I, 411 F.3d at 1362, 1364. We did not address how Commerce should determine whether future entries of LEU are made pursuant to SWU con tracts. The contentions of the government and USEC on this appeal are directed to future entries. They argue that Commerce should be permitted to suspend liquida tion of future LEU imports until it determines-trans action-by-transaction and by administrative review- whether the SWU contract exception applies. 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 sub stantive questions relating to affiliation of the enricher are ripe for decision. The doctrine of ripeness is des igned "to prevent the courts, through avoidance of pre mature 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 (1967). It is drawn "both from Article III 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, (2003) (citing Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993) (citations omitted)).
Administrative Review vs. Scope Determination
The Court of International Trade found that an ad ministrative 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 dif ferent mechanism for this purpose: a "scope determin ation." Eurodif IV, 431 F. Supp. 2d at 1356. At the re quest of any interested party, Commerce may "initiate an inquiry" as to whether merchandise is within the scope of an antidumping duty order. Id. (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 liqui dation for each unliquidated entry, effective as of the date the scope inquiry was initiated. 19 C.F.R. § 351.225(l)(2). That determination is reviewable by the Court of International Trade. 28 U.S.C. § 1581(c).
Appellants argue that this scope determination pro cess is inadequate, because, as a practical matter, an en try of LEU under review will be liquidated before Com merce can complete its determination. They assert that determining whether a particular transaction is entitled to the SWU-contract exception requires a careful anal ysis of the contract itself and an opportunity to inves tigate the manner of its execution. The administrative review process would permit Commerce to suspend liq uidation while such an assessment takes place, but the scope determination process permits Commerce to sus pend liquidation only after the Secretary has issued a preliminary scope ruling. USEC notes that liquidation typically occurs ten months after entry, but Commerce's previous assessments of LEU contracts have taken sev enteen to eighteen months.2 As a result, appellants ar gue, the scope determination process will not be com pleted before the entry under review has been liquida ted, 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 Eurodif I and Eurodif II did not resolve the procedural problem that USEC and the government have presented here, but we decline to at tempt 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. Whe ther 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 dis puted LEU entry is liquidated before Commerce can complete its scope review, the dispute will not be ren dered non-justiciable, as it would be "capable of repe tition, yet evading review." S. Pac. Terminal Co. v. ICC, 219 U.S. 498, 515 (1911).
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 av oid 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 find ing that the contracts in this case were contracts for the sale of services,3 it seeks clarification as to whether our holding would apply to future entries with these charac teristics. 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 (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.
* Honorable James Robertson, District Judge, United States District Court for the District of Columbia, sitting by designation. 1 Eurodif responds that Commerce's regulations provide for the issu ance 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(f)(5). 2 USEC initially requested that we order Commerce to reopen the record of the SWU contracts analyzed in Eurodif I and Eurodif II to examine purchases of unenriched uranium from affiliates, but now ac knowledges that it raised this question in its appeal of Commerce's final redetermination of the antidumping duty, and that we rejected that ap peal. Eurodif S.A. v. United States, 217 Fed. Appx. 963 (Fed. Cir. 2007).
APPENDIX B
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 3, 2005
Before BRYSON, Circuit Judge, PLAGER, Senior Circuit Judge, and PROST, Circuit Judge.
PROST, Circuit Judge.
This interlocutory appeal comes to us from the Uni ted States Court of International Trade, which certified four separate questions for appeal to this court. The Ad Hoc Utilities Group ("AHUG"), Eurodif S.A. ("Euro dif"), 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 Corpor ation (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 sup port determination. We also affirm the court's decision that uranium enrichment contracts constitute a pro vision 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.
BACKGROUND
Enriched uranium fuel rods are used by the utility industry to generate nuclear power. The process of pro ducing those rods involves multiple steps. First, uran ium ore must be mined. Second, the ore must be milled or refined into concentrated uranium. Third, that con centrated uranium must be converted into uranium hex afluoride. 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.4
Contracts for enriched uranium come mainly in two different forms. The first form involves contracts that provide money for the sale of enriched uranium, other wise known as enriched uranium product, or EUP, con tracts. The second form, the form relevant to this ap peal, 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 en richer may not necessarily produce a particular utility's LEU from the uranium that utility provides to the en richer, 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 con tracts with European enrichers. These utilities compen sated 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 deter minations 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 and counter vailing duty statutes, and (2) whether domestic utilities or foreign enrichers were "producers" of LEU for the purposes of determining whether or not there was suf ficient 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 ser vices. It also decided that the foreign enrichers of uran ium, 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 In ternational 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 fed eral antidumping and countervailable subsidy statutes. AHUG also disputed Commerce's contention that only the foreign enrichers are "producers" for domestic in dustry support determination purposes, arguing that Commerce's determination that foreign enrichers were "producers" of LEU was inconsistent with its prior de cisions. AHUG 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 en richers as contracts for the sale of goods was not sus tainable. USEC Inc. v. United States, 259 F. Supp. 2d 1310, 1324-26 (Ct. Int'l Trade 2003) ("USEC I"). 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 Com merce decisions. Id. 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. Uni ted States (June 23, 2003) ("Remand Determination"). AHUG and the foreign enrichers then appealed that re mand determination to the Court of International Trade. In its second consideration of Commerce's determina tions, the court concluded that (1) Commerce's interpre tation of the word "producer" in the context of making an industry support determination was reasonable and in accordance with law; (2) uranium enrichment con tracts 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 sub sidy; 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'l Trade 2003) ("USEC II").
Because the resolution of the issues decided by the court in USEC II are potentially dispositive of this en tire case, the Court of International Trade certified four specific questions for appeal to this court. The four cer tified questions are:
(1) Whether Commerce's decision not to apply its tol ling regulation to determine whether American utilities should be considered "producers" of low enriched uran ium (LEU) for the purposes of determining whether there was enough domestic industry support to proceed with an investigation is in accordance with law. (Com merce determined that foreign enrichers and not do mestic utilities were "producers" of LEU for the purpos es of determining domestic industry support. Remand Determination at 6-36.)
(2) Whether Commerce's decision that the enrich ment 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 serv ices by partially public foreign entities to foreign enrich ers constitutes a countervailable subsidy is in accor dance with law. (Commerce determined that the trans action between EdF and Eurodif was a sale of goods to a government entity for more than adequate remunera tion and, therefore, subject to the countervailing duty statute. Remand Determination at 82-99.)
(4) Whether Commerce's decision to apply a defini tion of "producer" in the context of export price deter mination that is different from the definition it used in the industry support determination is reasonable and therefore in accordance with law. (Commerce deter mined that foreign enrichers were "producers" of LEU for the purposes of determining LEU export price. Re mand 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 de cisions 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 in vestigation can be initiated, the petition on which that investigation is based must meet certain industry sup port 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 pro duced 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 pro ducer, an entity must have a "stake" in the domestic in dustry in question. Commerce then defined having a "stake" as undertaking the "actual production of the do mestic like product" within the United States. Remand Determination at 13. Commerce's industry support de termination 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 investiga tion. The Court of International Trade affirmed Com merce's determination that foreign uranium enrichers were "producers" for the purposes of § 1673a(c)(4)(A).
On appeal, appellants AHUG, Eurodif, CGMN and Cogema argue that American utility companies should be considered "producers" for the purposes of deter mining whether USEC's petition has sufficient industry support to trigger Commerce's antidumping and coun tervailing 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 appel lants, if the tolling regulation were applied in this case, Commerce could not initiate any antidumping or countervailing duty investigation because the domes- tic 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 Com merce 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 inconsis tently applied the tolling regulation by using it to deter mine the export price of LEU but declining to apply it in its industry support determination.
The Court of International Trade rejected AHUG's argument and sustained Commerce's interpretation of the term "producer" for the purpose of an industry sup port determination as well as its refusal to apply the tolling regulation to encompass American utilities within the definition of the term "producer." USEC II, 281 F. Supp. 2d at 1346. The court supported its holding by determining that Commerce's use of the tolling regula tion 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 ac cordance with law. Id. 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 pur pose of § 1673a(c)(4)(A). Section 1673a(c)(4) speaks of "industry support" and, as expressed in legislative his tory, Congress intended the industry support statute "to provide an opportunity for relief for an adversely af fected industry and to prohibit petitions filed by persons with no stake in the result of the investigation." S. Rep. No. 249, 96th Cong., 1st Sess. 47 (1979). This view was echoed by the Court of International Trade when it no ted 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 Deter mination at 14 (internal quotations and citations omit ted). There is no basis to conclude that Commerce's in terpretation in this context is unreasonable or not in ac cordance with law.
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 purpos es. 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 ac cordance 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 uranium 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 par ties 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 evi dence 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.
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 argu ment 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 con sideration." 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 consider ation paid by the utilities to the enrichers.
Second, the government and USEC assert that Com merce's characterization of the SWU contracts as con tracts for the sale of goods is in keeping with the general purpose of the antidumping statute, which they articu late as "provid[ing] domestic producers protection from all dumped imports."
Third, the government and USEC point to the def erential standard of review under which we review Com merce determinations as precluding a reversal of Com merce'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, sup ported 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 Com merce's determination given the deferential standard of review to be applied in this case.
The Court of International Trade rejected Com merce's determination that the SWU contracts in this case were contracts for the sale of goods and not ser vices, resting its decision on the fact that the enrichers never obtained ownership of either the feed (unen riched) uranium during enrichment or the final LEU product. USEC II, 281 F. Supp. 2d at 1339. Further more, according to the court, the SWU contracts be tween 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 en counter difficulties in producing or providing LEU for a customer." Id. The court also found that "nothing in the evidentiary record supports a determination that the enricher has any ownership rights [under the SWU contracts]." Id. at 1340. Agreeing with the Court of In ternational 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 rele vant 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 uran ium 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 con tracted. Therefore, the SWU contracts in this case do not evidence any intention by the parties to vest the en richers with ownership rights in the delivered unen riched uranium or the finished LEU. As a result, the "transfer of ownership" required for a sale under NSK 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 investi gation). In that case, the government argued that 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 "en richment services" and that the "fundamental purpose" of those contracts was "the provision of enrichment ser vices." The government further declared that the utili ties' argument in that case that the SWU contracts ar ranged for the sale of goods because title passed be tween utilities and enrichers "rest[ed] on [a] technical ity."5
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 bin ding precedent for this case because of the different statutory scheme involved, we find its reasoning and its conclusion persuasive.
In addition, while it is 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 1373.6 Holdings of this court are no less decisive because they may have been difficult to develop. Indeed, our charac terization of the SWU contract in Florida Power, how ever 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 prev ious holdings, particularly where the circumstances in a previous case are nearly identical to the case at hand.
Moreover, while the statutory schemes involved in Florida Power and those involved in this case are differ ent, they do not change the essential nature of the trans action involved in this case. Even though the govern ment 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 differ ent result in this case. A contract for services of the kind that we discuss here entails a certain set of obli gations on the part of contracting parties that do not change with the statutory scheme. Thus, unless Con gress specifically gave guidance in the statutory text that certain contracts normally considered service con tracts should be considered contracts for the sale of goods in the antidumping context, the different overall purposes of the CDA and antidumping statute are in sufficient 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 Com merce.
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 pro perty" under the CDA. 307 F.3d at 1373-74. Though we did say that SWU contracts do "not fall neatly" either into the category of contracts for services or the cate gory of contracts for the sale of goods, we found that "the nature of the contractual pricing scheme . . . per suade[d] us that the [SWU] transaction is properly char acterized as a service rather than a sale." Id. The pric ing 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 un enriched uranium and monetary compensation to enrich ers 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 is sue 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 con tracts 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 duty (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 potential di rect transfer of funds or liabilities, such as loan guarantees,
(ii) foregoing or not collecting revenue that is oth erwise due, such as granting tax credits or de ductions 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 pro vide 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 ade quate remuneration. 19 U.S.C. § 1677(5)(E). The sta tute does not contemplate the purchase of services for more than adequate remuneration to be a subsidy.
The government and USEC assert that EdF, a par tially public French utility, entered into a uranium en richment 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 alterna tive, 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.
The Court of International Trade rejected the gov ernment's principal theory but agreed with its alterna tive theory. The court found that "Commerce's distinc tion 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 sta tute." USEC II, 281 F. Supp. 2d at 1350. The court fur ther elaborated that this theory was in keeping with the statutory language "because it preserves a real distinc tion between 'goods' and 'services.'" Id. We must disa gree.
Section 1677(5) is clear as to what constitutes a sub sidy-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.7 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 consid ered 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, 842-43 (1984), we reject that argument because we find that the plain meaning of the statute is unam biguous.
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 dis tinction, Congress could have easily included the pur chase of services by public entities in the statutory def inition 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 (2003) ("When Congress in cludes 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 govern ment and USEC are correct that the purpose of the subsidy statute is to defeat unfair competitive advan tage, 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 (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 conclu sive." (quoting Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570 (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. Accord ingly, Commerce's determination to the contrary is not in accordance with law.
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 whe ther 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 antidump ing and countervailing subsidy investigation was in ac cordance with law;
(2) Commerce's finding that the SWU contracts in this case were contracts for the sale of goods was nei ther supported by substantial evidence nor in accor dance 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 sup port determination. We likewise affirm the court's fin ding that the SWU contracts in this case were contracts for services and not for goods or merchandise. We re verse 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
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 II"). 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 unen
riched uranium transferred by the utility only passed to the enricher once
the utilities received title to the LEU from the enrichers. 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 per sonal 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 DOE used feed material from other customers,
and sometimes its own feed material, to fulfill a par ticular 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 par ticular, persuades us that the transaction is properly
characterized as a service rather than a sale. 307 F.3d at 1373. 4 Section
1677(5)(B) defines a subsidy as including the case in which an authority
"provides a financial contribution . . . to a person and a benefit
is thereby conferred." Section 1677(5)(D), quoted supra, de fines "financial
contribution."
APPENDIX C
UNITED STATES COURT OF APPEALS
FRO 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
Sept. 9, 2005
Before BRYSON, Circuit Judge, PLAGER, Senior Circuit Judge, and PROST, Circuit Judges.
ON PETITION FOR REHEARING
PROST, Circuit Judge.
ORDER
More than three months after we decided this case, the Supreme Court issued its opinion in National Cable & Telecommunications Ass'n v. Brand X Internet Ser vices, -U.S.-, 125 S. Ct. 2688 (2005). In letters disclos ing National Cable as a supplemental authority pur suant to Federal Circuit Rule 28(j), the United States, USEC, Inc. and the United States Enrichment Corpora tion (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 ap peal from the Ninth Circuit in a case involving the pro per 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 Communi cations Commission ("FCC") to the extent the FCC's ru ling concluded that cable modem service was not "tele communications service" under the Communications Act. Id. at 2698. "Rather than analyzing the permis sibility of that construction under the deferential frame work 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." Id. at 2700. It similarly stated that "[b]e fore a judicial construction of a statute, whether con tained in a precedent or not, may trump an agency's, the court must hold that the statute unambiguously requires the court's construction." Id. 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 de termine "whether the statute's plain terms 'directly ad dres[s] the precise question at issue.'" Id. (quoting Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843 (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.'" Id. (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 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 Depart ment 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 accor dance 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 Enrich ment 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."
III
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. Eurodif, 411 F.3d at 1363; cf. National Cable, 125 S. Ct. at 2701 (noting that the Ninth Circuit held that a prior judicial construc tion of a statute categorically controls an agency's con trary construction).8
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 "un ambiguously" applies to contracts for the sale of goods only and "unambiguously" does not apply to the con tracts 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 al low for the purchase of services to be considered a sub sidy, Eurodif, 411 F.3d at 1365, as in Florida Power we did not expressly state that the antidumping duty sta tute unambiguously applies to contracts for the sale of goods only and unambiguously does not apply to the con tracts at issue in this case in particular.
We now clarify by stating expressly that the anti dumping duty statute unambiguously applies to the sale of goods and not services. In our opinion, we stated that "[u]nder the statutory scheme adopted by Congress, the sale of goods (or 'merchandise') is covered by the anti dumping duty statute" but that the "provision of servic es, however, is not. . . ." Eurodif, 411 F.3d at 1361. While we did not use the term "unambiguous," we clear ly foreclosed any argument that § 1673 is ambiguous on the precise question of whether the antidumping duty statute encompasses contracts for services. It undoubt edly 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 Re hearing 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 dur ing enrichment or the final low enriched uranium ("LEU") product. Nevertheless, the inescapable con clusion flowing from this circumstance is that the enrich ers 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 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 en richer, it is nevertheless true that up until the samp ling and weighing of the LEU before delivery, the utility retains title to the quantity of unenriched ur anium 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 evi dence any intention by the parties to vest the enrich ers with ownership rights in the delivered unen riched 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 Com merce'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 an alysis 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.
APPENDIX D
UNITED STATES COURT OF
INTERNATIONAL TRADE
SLIP OP. 03-121
Court Nos. 02-00112, 02-00113, 02-00114, 02-00219, 02-00221, 02-00227, 02-00229, 02-00233
USEC INC. AND UNITED STATES ENRICHMENT CORPORATION, PLAINTIFFS
v.
UNITED STATES, DEFENDANT
Sept. 16, 2003
Before: POGUE, WALLACH, and EATON, Judges.
OPINION
POGUE, Judge.
In USEC Inc. v. United States, 27 CIT ___, 259 F. Supp. 2d 1310 (2003) ("USEC I"),1 this Court remanded aspects of the final affirmative antidumping and coun tervailing duty determinations of the Department of Commerce ("the Department" or "Commerce") with re gard to low enriched uranium ("low enriched uranium" or "LEU") from France, Germany, the Netherlands, and the United Kingdom.2 The Court instructed Commerce to evaluate the applicability of its tolling regulation, 19 C.F.R. § 351.401(h), to determine whether the interven ors (the "utilities," also the "Ad Hoc Utilities Group" or "AHUG") should be designated as producers of LEU. USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1326. The Court further directed that if Commerce found the tol ling regulation applicable, the agency should also (1) re consider whether application of the regulation affects the determination as to which companies are "produc ers" for the purpose of the industry support determin ation, USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1328; and (2) reconsider its application of the countervailing duty laws. USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1329. The Court now reviews the results of the remand as presented in Commerce's Final Remand Determi nation, USEC Inc. and United States Enrichment Corporation v. United States (June 23, 2003) ("Remand Determ."). Jurisdiction lies under 28 U.S.C. § 1581(c) (2000) and 19 U.S.C. § 1516a(a)(2)(B)(i) (2000).
Background
The antidumping and countervailing duty investi gations at issue here covered all low enriched uranium. Low enriched uranium is used to produce nuclear fuel rods, which in turn produce electricity in nuclear reac tors. See, e.g., USEC I, 27 CIT at ____, 259 F. Supp. 2d at 1314. Uranium enrichment is one of five steps in the production of nuclear fuel.3 See id.; LEU from France, 66 Fed. Reg. at 65,879. At issue in this proceeding is whether, for purposes of application of the antidumping and countervailing duty statutes, the "separative work unit" contracts entered into by the utilities and the com panies that enrich the uranium feedstock (the "enrich ers") constitute subcontracting arrangements involving the purchase of services or sales of enriched uranium.
As we more fully explained in USEC I, nuclear utili ties employ two types of contracts for procuring LEU from uranium enrichers. See, e.g., USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1314. One is a contract for enriched uranium product ("EUP contract"), in which the utility simply purchases LEU from the enricher. See LEU from France, 66 Fed. Reg. at 65,878, 65,884. In an EUP contract, the price paid for the LEU covers all elements of the LEU's value, including the feed uranium and the effort expended to enrich it. Tran script of Dep't of Commerce Hearing in the Matter of Low Enriched Uranium from France, Germany, the Netherlands, and the United Kingdom (Oct. 31, 2001), Jt. App. Tab 6-A at 46 ("Hrg. Trans."). As noted in USEC I, all parties to this action agree that sales of en riched uranium product constitute sales of merchandise subject to the antidumping and countervailing duty laws. USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1314.
The second type of contract is called a "separative work unit" or "SWU" contract. A "separative work unit" is a measurement of the amount of energy or effort re quired to separate a given quantity of feed uranium into LEU and depleted uranium, or uranium "tails," at speci fied assays. See LEU from France, 66 Fed. Reg. at 65,884. Under a SWU contract, a utility purchases sep arative work units and delivers a quantity of feed uran ium to the enricher. LEU from France, 66 Fed. Reg. at 65,878, 65,884-85.
As discussed in USEC I, because feed uranium is fungible, the specific feed uranium provided by a utility need not be used to produce LEU for that utility. See USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1315 (citing Resp. Br. of USEC, Inc. Opp'n Cogema/Urenco Mot. J. Agency R. at 16-17 & n.21). Enrichers maintain inven tories of feed uranium, which is not segregated according to source or ownership, and any uranium held by the enricher may be used to produce LEU for any customer. Id.
Utilities purchase feed uranium from third parties,4 and prior to delivering the feed uranium to the enricher, the utilities have title, risk of loss, power to alienate or sell, and use and possession of the feed uranium. The utility retains title to feed uranium supplied to the en richer until the enricher delivers the LEU ordered by the utility. In addition, at the time of delivery of the LEU, the enricher recognizes that title to the LEU is also held by the utility. As stated in one of the contracts in the record, "[t]itle to the Feed Material shall remain with [the utility] until the [LEU] Delivery associated with such Feed Material . . . at which time the Feed Material shall be deemed to have been enriched; where upon [the utility] sha[ll] have title to such [LEU] asso ciated with such Feed Material and title to such Feed Material will be extinguished." Uranium Enrichment Services Contract between [Utility A] and Urenco, Jt. App. Tab 3-F at JA-1364; see also Uranium Toll En richment Services Contract between [Utility B] and COGEMA, Inc., Jt. App. Tab 3-A at JA-1210; Uranium Enrichment Services Contract between [Utility C] and COGEMA, Inc., Jt. App. Tab 3-E at JA-1302; Uranium Enrichment Services Contract between [Utility D] and Urenco, Jt. App. Tab 3-G at JA-1399. In USEC I, we described the SWU transactions as follows:
Pursuant to the SWU contracts, risk of loss or dam age to the feed uranium, as well as use and posses sion, pass from the utility to the enricher upon deliv ery of the feed uranium to the enricher. However, the enricher does not obtain title to the feedstock; rather, actual title is at all times with the utility. Nor does the enricher have the power to sell a util ity's feedstock to a third party. Moreover, it appears clear on this record that at the moment when the LEU is delivered to the utility by the enricher, the utility has title to and ownership of the LEU. The feed uranium does not become an asset of the enrich er, nor is it ever reflected as such on the enricher's books and records.5
USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1315 (internal citations omitted).
In reaching its original affirmative antidumping and countervailing duty determinations, Commerce found that under both LEU and SWU contracts the enrichers were producers of LEU for purposes of the less-than- fair-value determination.6 The agency concluded that EUP and SWU contracts were "functionally equivalent," in that "the overall arrangement under both types of contracts is, in effect, an arrangement for the purchase and sale of LEU." LEU from France, 66 Fed. Reg. at 65,884-85.
In USEC I, this Court concluded that the circum stances of the SWU transactions at issue resemble those of earlier cases involving "tolling" or "subcontracting" arrangements in which Commerce applied its tolling regulation, 19 C.F.R. § 351.401(h), to determine that the tollee, rather than the toll manufacturer, or subcontrac tor, was the producer of the subject merchandise. The Court therefore directed Commerce to assess the applic ability of the tolling regulation, and thus, the propriety of designating the enrichers as producers of LEU and respondents in the antidumping and countervailing duty investigations. See USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1326, 1331. The Court also directed Commerce to explain why it applied a different definition of the term "producer" in the context of determining industry sup port than that used in the context of calculating the dumping margin. USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1328.
In its Remand Determination, Commerce concludes once again that the enrichers, rather than the utilities, are the producers of LEU, finding that (1) "the enrich ers make the only relevant sales that can be used for purposes of establishing U.S. price and normal value," (2) the enrichers "are the only companies engaged in the production of LEU," (3) the enrichers "control the pro duction of LEU," and (4) the utilities are "industrial users and consumers of LEU." Remand Determ. at 52. Commerce also explained that the different definitions of the term "producer" are warranted by the purposes underlying the relevant statutory provisions. Id. at 14-15, 22-23, 25.
Standard of Review
This Court will uphold an agency determination un less it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).
Discussion
I. Ownership of the Subject Merchandise
Commerce bases its selection of the enrichers as the producers of LEU primarily on its conclusion that under the terms of the contracts, the enrichers own all of the LEU that they have produced but not yet delivered. See Remand Determ. at 52, 59. Commerce asserts that the enrichers transfer title to and ownership of the LEU to the utilities upon delivery of the LEU. Id. Therefore, Commerce argues, the delivery of the LEU effects a transfer of title and ownership for consideration, which constitutes a sale under NSK Ltd. v. United States, 115 F.3d 965, 973 (Fed. Cir. 1997), and a relevant sale for the purposes of calculating a dumping margin. Id. at 59-60.
As we discussed in USEC I, however, the SWU con tracts governing the transactions at issue establish a legal fiction that the very feed uranium delivered by a utility to an enricher is enriched and then returned as LEU to the utility. See USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1321-22; Oral Arg. Trans. at 33-34, 38, 41. The Court concluded that although the enrichers obtain the right to use and possess the feedstock, and assume the risk of loss or damage, there is no evidence that they ever obtain ownership of either the feed uranium or the final enriched product. USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1315, 1323; see also Oral Arg. Trans. at 30-35, 38, 41. Moreover, the contractual provisions ad dressing the retention of title in the feed uranium and passage of title in the LEU suggest an intention to es tablish a continuous chain of ownership in the utility while maintaining the enricher's ability to cover its ob ligations under the contract should it encounter dif ficulties in producing or providing LEU for a customer. See, e.g., Oral Arg. Trans. at 33-34 (noting that the con tractual provisions specifying that a utility obtains title to LEU are necessary because "if title to the product material were not specified clearly in the contract, there could be a question"), 38 ("[The enricher] receives mat erial that it is holding for the account of the Utility cus tomer, to be enriched and returned. And, when it is re turned in enriched form, title passes to the enriched pro duct. Title is extinguished in the feed."); Uranium En richment Services Contract between Cogema, Inc. and [Utility E], App. to Response of USEC to Dep't of Com merce's Remand Determ. of June 23, 2003, Tab 1 at JA-9003 ("USEC Remand App."); Uranium Enrichment Services Contract between [a utility] and Urenco, USEC Remand App. Tab 2 at JA-9074; see also contracts cited supra pp. 5-6. For example, these provisions enable the utility to claim the amount of feed uranium delivered, or the value thereof, from the enricher in the event that the enricher breached the contract. Such a contractual arrangement, which is apparently beneficial to both parties, is aided by the essential fungibility of the material at issue. Parsing the contractual provisions at issue does not lead to the conclusion that the enricher obtains ownership over the LEU and then sells it to the utility. Rather, the contracts delineate a transaction in which a utility provides raw material to an enricher, pays for the service of processing the material, and ob tains the finished product after the manufacturing ser vice has been performed.
Because the enricher does not obtain ownership of the LEU enriched under SWU contracts, the transfer of LEU by the enricher to the utility cannot constitute a sale of merchandise under NSK Ltd. v. United States. See 115 F.3d 965, 975 (Fed. Cir. 1997) (concluding that a sale "requires both a transfer of ownership to an unre lated party and consideration"). Nothing in Commerce's Remand Determination provides any evidentiary or le gal basis for a contrary conclusion. Commerce's basic premise in the Remand Determination is that "the en richers make the only relevant sales that can be used for purposes of establishing U.S. price and normal value." Remand Determ. at 52. This statement, however, begs the question whether these transactions can truly be construed as relevant sales of merchandise. Com merce's duty is to investigate "sales" at less than fair value. The agency's assertion that the enrichers' trans actions with the utilities are the only transactions that could be such sales, without more, does not establish that there is an evidentiary or legal basis to conclude that those transactions constitute sales for purposes of our antidumping statutes.
Commerce's subsidiary factual determination is no more well-founded. Commerce asserts that because the utilities only hold title to the feedstock at the time prior to delivery, "[t]he enricher, by contrast, would have rights as to the LEU." Remand Determ. at 58. Com merce, however, cannot and does not provide any evi dentiary basis for this supposition; nothing in the record supports a determination that the enricher has any ownership rights. Accordingly, Commerce's determin ation is unsupported by substantial evidence and not in accordance with law.
II. Equivalence of EUP and SWU Contracts
In addition to its claim that the enrichers obtain own ership of the
LEU, Commerce also bases its conclusions upon the assertion that EUP and
SWU contracts are fundamentally equivalent. Commerce states that
the completed product, LEU, is entering the market place through the transactions
at issue. Utility cus tomers cannot obtain LEU by purchasing enrich ment
alone. Ra