01-274. Notice of Initiation of Antidumping Duty Investigations: Low Enriched Uranium From France, Germany, the Netherlands, and the United Kingdom

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Initiation of Antidumping Duty Investigations.

EFFECTIVE DATE:

January 5, 2001.

FOR FURTHER INFORMATION CONTACT:

James Terpstra (Germany, the Netherlands, the United Kingdom) at [phone], and Gabriel Adler (France) at [phone], Office 6 and 5, respectively, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, Room 1870, 14th Street and Constitution Avenue, NW, Washington, DC 20230.

Initiation of Investigations

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are references to the provisions codified at 19 CFR Part 351 (2000).

The Petitions

On December 7, 2000, the Department of Commerce (the Department) received petitions filed in proper form by USEC Inc., and its wholly owned subsidiary, United States Enrichment Corporation. On December 26, 2000, the Department received a letter from USEC amending the petitions to add the Paper, Allied-Industrial, Chemical and Energy Workers International Union, AFL-CIO, CLC, and Local 5-550 and Local 5-689 (collectively PACE) to the petitions as an interested party pursuant to section 771(9)(D) of the Act. In addition, PACE filed its own letter on December 26, 2000, expressing support for and joining the petitions. The Department received from the petitioners information supplementing the petitions throughout the 20-day initiation period.

In accordance with section 732(b) of the Act, the petitioners allege that imports of low enriched uranium from France, Germany, the Netherlands, and the United Kingdom are being, or are likely to be, sold in the United States at less than fair value within the meaning of section 731 of the Act, and that such imports are materially injuring an industry in the United States.

The Department finds that the petitioners filed these petitions on behalf of the domestic industry because they are an interested party as defined in sections 771(9)(C) and (D) of the Act and have demonstrated sufficient industry support with respect to each of the antidumping investigations that they are requesting the Department to initiate (see the Determination of Industry Support for the Petitions section below).

Scope of Investigations

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

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

The merchandise subject to these investigations is classified in the Harmonized Tariff Schedule of the United States (HTSUS) at subheading 2844.20.0020. Subject merchandise may also enter under 2844.20.0030, 2844.20.0050, and 2844.40.00. Although the HTSUS subheadings are provided for convenience and U.S. Customs purposes, the written description of the merchandise under investigation is dispositive.

During our review of the petitions, we discussed the scope with the petitioners to ensure that it accurately reflects the product for which the domestic industry is seeking relief. Moreover, as discussed in the preamble to the Department's regulations (62 FR 27323), we are setting aside a period for parties to raise issues regarding product coverage. The Department encourages all parties to submit such comments by January 17, 2001. Comments should be addressed to Import Administration's Central Records Unit at Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230. The period for scope comments is intended to provide the Department with ample opportunity to consider all comments and consult with parties prior to the issuance of the preliminary determinations.

Determination of Industry Support for the Petitions

Section 771(4)(A) of the Act defines the “industry” as the producers of a domestic like product. Thus, to determine whether the petitions have the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The International Trade Commission (ITC), which is responsible for determining whether “the domestic industry” has been injured, must also determine what constitutes the domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product (section 771(10) of the Act), they do so for different purposes and pursuant to separate and distinct authority. In addition, the Department's determination is subject to greater limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to the law.^[1]

Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation,” i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition. Moreover, the petitioners do not offer a definition of domestic like product distinct from the scope of these investigations.

The domestic like product referred to in the petitions is the single domestic like product defined in the Scope of Investigations section, above. The Department has no basis on the record to find the petitioners' definition of the domestic like product to be inaccurate. The Department, therefore, has adopted the domestic like product definition set forth in the petitions.

Section 732(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 732(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (1) At least 25 percent of the total production of the domestic like product; and (2) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition. Finally, section 732(c)(4)(D) of the Act provides that if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the administering agency shall: (i) Poll the industry or rely on other information in order to determine if there is support for the petition as required by subparagraph (A), or (ii) determine industry support using a statistically valid sampling method.

In order to estimate production for the domestic industry as defined for purposes of this case, the Department has relied upon not only the petitions and amendments thereto, but also upon “other information” it obtained through research and which is attached to the Initiation Checklist (See Import Administration AD Investigation Initiation Checklist (Initiation Checklist) and Industry Support Memorandum from Melissa G. Skinner to Holly A. Kuga dated December 27, 2000 (Industry Support Memorandum). Based on information from these sources, the Department determined, pursuant to section 732(c)(4)(D), that there is support for the petition as required by subparagraph (A). Specifically, the Department made the following determinations. For France, Germany, the Netherlands, and the United Kingdom, the petitioners established industry support representing over 50 percent of total production of the domestic like product. Therefore, the domestic producers or workers who support the petitions account for at least 25 percent of the total production of the domestic like product, and the requirements of section 732(c)(4)(A)(i) are met.

On December 19, 2000, the Ad Hoc Utilities Group (the Utilities Group) (Arizona Public Service Co.; Carolina Power & Light Co.; Commonwealth Edison Co.; Consumers Energy; Dominion Generation, Duke Energy Corp.; DTE Energy; Entergy Services, Inc.; First Energy Nuclear Operating Co.; Nuclear Management Co.; PSEG Nuclear LLC; Southern Nuclear Operating Co.; Union Electric Company (d/b/a AmerenUE); and Wolf Creek Nuclear Operating Corp.) filed a letter asserting that the Utilities Group members are domestic producers of LEU and that the petitioners lack industry support, because USEC produces less than 25 percent of domestic LEU. On December 20, 2000, Eurodif/Cogema and Urenco filed a submission claiming that the petitioners did not have standing in order to file the petitions. Both the Utilities Group and Eurodif/Cogema and Urenco argue that the petitioners are in the business of providing a service (i.e., the enrichment of uranium), rather than manufacturing a product, and the antidumping law does not apply to services. In addition, they argue that the vast majority of the petitioners' production of enriched uranium is performed under a tolling arrangement, whereby the utilities provide the petitioners with converted uranium, and retain title to the input while the petitioners enrich it. The utilities and foreign respondents argue that the utilities are the producers for these transactions.

On December 21, 2000, the petitioners submitted a letter to rebut the Utilities Group's comments on industry support. The petitioners argue that the tolling regulation has no relevance in determining who is a U.S. producer or manufacturer of the domestic like product for standing purposes. In addition, the petitioners argue that the Utilities Group provided no factual support for its claim that its members are producers of LEU, and that it is not an interested party.

On December 22, 2000, the petitioners submitted additional comments with regard to the above comments made by the Utilities Group and Eurodif/Cogema and Urenco.

As explained in The Petitions section above, PACE filed a letter on December 26, 2000, joining the petitions.

On December 26, 2000, Eurodif/Cogema and Urenco submitted additional comments regarding their December 20, 2000, submission on industry support.

Based on our analysis of the comments received from the Utilities Group, Eurodif/Cogema, Urenco, and the petitioners, the Department determined that the utilities were not part of the domestic industry producing LEU. See Industry Support Memorandum, where we found that the utility companies do not engage in any manufacturing type of activities with respect to the production of LEU.

Because the Department determined that the utilities were not part of the domestic industry, the Department received no opposition from the LEU industry to the petitions. Therefore, the domestic producers or workers who support the petitions account for more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for or opposition to the petitions. Thus, the requirements of section 732(c)(4)(A)(ii) are also met.

Accordingly, the Department determines that the petitions were filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act. See the Initiation Checklist.

Export Price and Normal Value

The following are descriptions of the allegations of sales at less than fair value upon which the Department based its decision to initiate these investigations. The sources of data for the deductions and adjustments relating to home market price, U.S. price, and constructed value (CV) are detailed in the Initiation Checklist. Where the petitioners relied on data reported by a market researcher, the petitioners also supplied affidavits from company officials regarding this data. In addition, we spoke to the market researcher to establish that person's credentials and to confirm the validity of the information being provided. For purposes of these initiations, we have not relied on specific margins where the petitioners' sources were unable to firmly establish the identity of the producer. See Initiation Checklist and Memorandum to the File, Telephone Conversation with Source of Market Research used in Antidumping Petitions to Support Certain Factual Information, dated December 27, 2000. Should the need arise to use any of this information as facts available under section 776 of the Act in our preliminary or final determinations, we may re-examine the information and revise the margin calculations, if appropriate.

The petitioners based their allegations on a 33-month period because of the long-term contracts that are characteristic of the uranium industry. See the Initiation Checklist. The Department will consider the appropriate period of information collection in this case after initiation. As discussed below, the following margins are based on constructed value: France 18.28 to 53.30 percent, Germany 19.44 to 29.52 percent, the Netherlands 10.76 to 29.22 percent, and the United Kingdom 15.57 to 23.25 percent.

France

Export Price

The petitioners based prices of Eurodif's/Cogema's sales to U.S. utilities on information obtained from market research. Although the petitioners stated that Eurodif/Cogema makes sales to the U.S. utilities through its affiliated company in the United States, making U.S. prices constructed export prices (CEP), the petitioners made no deductions to the CEP for selling expenses.

Normal Value

With respect to normal value (NV), the petitioners stated that they were not aware of any sales made by Eurodif/Cogema in France since January 1998. Instead, the petitioners based NV on a Eurodif/Cogema sale to Japan, its largest third country market as reported in an affidavit from a company official with the petitioners. The petitioners did not make any adjustments to the starting price.

Although the petitioners provided information on NV, they also provided information demonstrating reasonable grounds to believe or suspect that sales of LEU in the third country market were made at prices below the fully absorbed COP, within the meaning of section 773(b) of the Act, and requested that the Department conduct a country-wide sales-below-cost investigation.

Pursuant to section 773(b)(3) of the Act, COP consists of the cost of manufacturing (COM), sales, general, and administrative (SG&A) expenses, and packing. The petitioners calculated Eurodif's COM including raw material cost, energy, labor, variable and fixed costs. G&A expenses were derived from the Eurodif financial statements while financial expenses were calculated from the consolidated parent company financial statements. See the Initiation of Cost Investigations section below.

Based upon the comparison of the prices of the foreign like product in the comparison market to the calculated COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP, within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a country-wide cost investigation with respect to sales in Japan. In the event that the Department determines that Japan is the appropriate market upon which to base normal value, we will conduct a COP investigation. Because the comparison market prices petitioners used for LEU sales are below the COP, the petitioners based NV on CV. The petitioners calculated CV incorporating the same costs used for the COP. The petitioners included in CV an amount for profit which was based on the profit of Eurodif from its financial statements.

Based upon the comparison of EP to CV, the petitioners calculated estimated dumping margins ranging from 18.28 to 53.30 percent.

Germany

Export Price

For Germany, the petitioners based EP on prices from reports of Urenco's U.S. sales of LEU published by the petitioners' market researcher. The petitioners stated that Urenco makes sales to U.S. utilities through its affiliated sales agent in the United States. Thus, the petitioners contend that the U.S. sales should be treated as CEP sales in the investigation. However, for purposes of the petition, the petitioners stated that they did not make any adjustments to the starting price.

Normal Value

With respect to NV, the petitioners based Urenco's home market prices for LEU on an affidavit from a company official with the petitioners. The petitioners stated that they did not make any adjustments to the starting price.

Although the petitioners provided information on home market prices, they also provided information demonstrating reasonable grounds to believe or suspect that sales of LEU in the home market were made at prices below the fully absorbed COP, within the meaning of section 773(b) of the Act, and requested that the Department conduct a country-wide sales-below-cost investigation.

Pursuant to section 773(b)(3) of the Act, COP consists of the COM, SG&A expenses, and packing. The petitioners calculated Urenco Deutschland's COM including raw material cost, energy, labor, variable and fixed costs. G&A expenses were derived from the company's financial statements while financial expenses were calculated from the consolidated parent company financial statements. See the Initiation of Cost Investigations section below.

Based upon the comparison of the prices of the foreign like product in the home market to the calculated COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP, within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a country-wide cost investigation. Because the home market price is below the COP, the petitioners based NV on CV. The petitioners calculated CV incorporating the same costs used for the COP. The petitioners included in CV an amount for profit which was based on the profit of the Urenco Deutschland's financial statements.

Based upon the comparison of EP to CV, the petitioners calculated estimated dumping margins ranging from 19.44 to 29.52 percent.

The Netherlands

Export Price

For the Netherlands, the petitioners based EP on prices from reports of Urenco's U.S. sales of LEU published by their market researcher. The petitioners stated that Urenco makes sales to U.S. utilities through its affiliated sales agent in the United States. Thus, the petitioners contend that the U.S. sales should be treated as CEP sales in the investigation. However, for purposes of the petition, the petitioners stated that they did not make adjustments to the starting price.

Normal Value

With respect to NV, the petitioners explained that they were not aware of any sales made by Urenco in the Netherlands during the 33-month period. Instead, the petitioners based their NV on a Urenco sale to the Republic of Korea, its largest third country market as reported in an affidavit from a company official with the petitioners. The petitioners stated that they did not make any adjustments to the starting price. Although the petitioners provided information on NV, they also provided information demonstrating reasonable grounds to believe or suspect that sales of LEU in the third country market were made at prices below the fully absorbed COP, within the meaning of section 773(b) of the Act, and requested that the Department conduct a country-wide sales-below-cost investigation.

Pursuant to section 773(b)(3) of the Act, COP consists of the COM, SG&A expenses, and packing. The petitioners calculated Urenco Nederland's COM including raw materials, energy, labor variable and fixed costs. The petitioners claimed to be unable to obtain a copy of Urenco Nederland's 1998 or 1999 financial statement. As a surrogate, all costs were derived from the Urenco Deutschland's financial statements, except depreciation and financial expenses. See the Initiation of Cost Investigations section below.

Based upon the comparison of the comparison market prices of the foreign like product to the calculated COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP, within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a country-wide cost investigation with respect to Korea. In the event that the Department determines that Korea is the appropriate market upon which to base normal value, we will conduct a COP investigation. Because the NV petitioners used for LEU sales is below the COP, the petitioners based NV on CV. The petitioners calculated CV incorporating the same costs used for the COP. The petitioners included in CV an amount for profit which was based on the profit of the Urenco Deutschland's financial statements.

Based upon the comparison of EP to CV, the petitioners calculated estimated dumping margins ranging from 10.76 to 29.22 percent.

The United Kingdom

Export Price

For the United Kingdom, the petitioners based EP on prices from reports of Urenco's U.S. sales of LEU published by their market researcher. The petitioners stated that Urenco makes sales to U.S. utilities through its affiliated sales agent in the United States. Thus, the petitioners contend that the U.S. sales should be treated as CEP sales in the investigation. However, for purposes of the petition, the petitioners stated that they did not make any adjustments to the starting price.

Normal Value

With respect to NV, the petitioners based Urenco's home market price for LEU on an affidavit from a company official with the petitioners. The petitioners stated that they did not make any adjustments to the starting price.

Although the petitioners provided information on home market prices, they also provided information demonstrating reasonable grounds to believe or suspect that sales of LEU in the home market were made at prices below the fully absorbed COP, within the meaning of section 773(b) of the Act, and requested that the Department conduct a country-wide sales-below-cost investigation.

Pursuant to section 773(b)(3) of the Act, COP consists of the COM, SG&A expenses, and packing. The petitioners calculated Urenco (Capenhurst), Ltd.'s COM including raw materials, energy, labor variable and fixed costs. G&A expenses were derived from the Urenco Ltd.'s financial statements while financial expenses were calculated from the consolidated parent company financial statements. See the Initiation of Cost Investigations section below.

Based upon the comparison of the prices of the foreign like product in the home market to the calculated COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP, within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a country-wide cost investigation. Because the home market price is below the COP, the petitioners based NV on CV. The petitioners calculated CV incorporating the same costs used for the COP. The petitioners included in CV an amount for profit which was based on the profit of the Urenco Ltd.'s financial statements.

Based upon the comparison of EP to CV, the petitioners calculated estimated dumping margins ranging from 15.57 to 23.25 percent.

Initiation of Cost Investigations

As noted above, pursuant to section 773(b) of the Act, the petitioners provided information demonstrating reasonable grounds to believe or suspect that sales in the home markets, or respective third country market of France, Germany, the Netherlands, and the United Kingdom were made at prices below the fully absorbed COP. The petitioners requested that the Department conduct country-wide sales-below-cost investigations in connection with the requested antidumping investigations for these countries. The Statement of Administrative Action, accompanying the URAA states that an allegation of sales-below-cost need not be specific to individual exporters or producers. SAA, H. Doc. 103-316, Vol. 1, 103d Cong., 2d Session, at 833(1994). The SAA, at 833, states that “Commerce will consider allegations of below-cost sales in the aggregate for a foreign country, just as Commerce currently considers allegations of sales at less than fair value on a country-wide basis for purposes of initiating an antidumping investigation.”

Further, the SAA provides that “new section 773(b)(2)(A) retains the current requirement that Commerce have ‘reasonable grounds to believe or suspect' that below cost sales have occurred before initiating such an investigation. ‘Reasonable grounds’ * * * exist when an interested party provides specific factual information on costs and prices, observed or constructed, indicating that sales in the foreign market in question are at below-cost prices.” Id. Based upon the comparison of the adjusted prices from the petitions for the representative foreign like products to their COPs, we find the existence of “reasonable grounds to believe or suspect” that sales of these foreign like products in the relevant markets for France, Germany, the Netherlands, and the United Kingdom were made at prices below their respective COPs within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating the requested country-wide cost investigations with respect to each of the four countries.

Fair Value Comparisons

Based on the data provided by the petitioners, there is reason to believe that imports of LEU from France, Germany, the Netherlands, and the United Kingdom are being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

The petitions allege that the U.S. industry producing the domestic like product is being materially injured, or is threatened with material injury, by reason of the individual and cumulated imports of the subject merchandise sold at less than NV. The petitioners contend that the industry's injured condition is evident in the declining trends in net operating profits, net sales volumes, profit-to-sales ratios, and capacity utilization. The allegations of injury and causation are supported by relevant evidence including U.S. Customs import data, lost sales, and pricing information. We have assessed the allegations and supporting evidence regarding material injury and causation, and have determined that these allegations are properly supported by accurate and adequate evidence and meet the statutory requirements for initiation (see Initiation Checklist at Attachment II Re: Material Injury).

Initiation of Antidumping Investigations

Based upon our examination of the petitions on LEU, and the petitioners' responses to our supplemental questionnaire clarifying the petitions, as well as our conversation with the market researcher who provided information concerning various aspects of the petitions, we have found that the petitions meet the requirements of section 732 of the Act. Therefore, we are initiating antidumping duty investigations to determine whether imports of LEU from France, Germany, the Netherlands, and the United Kingdom are being, or are likely to be, sold in the United States at less than fair value. Unless extended, we will make our preliminary determinations no later than 140 days after the date of these initiations.

Distribution of Copies of the Petitions

In accordance with section 732(b)(3)(A) of the Act, a copy of the public version of each petition has been provided to the representatives of the governments of France, Germany, the Netherlands, and the United Kingdom. We will attempt to provide a copy of the public version of each petition to each exporter named in the petition, as appropriate.

International Trade Commission Notification

We have notified the ITC of our initiations, as required by section 732(d) of the Act.

Preliminary Determinations by the ITC

The ITC will determine, no later than January 22, 2001, whether there is a reasonable indication that imports of LEU from France, Germany, the Netherlands, and the United Kingdom are causing material injury, or threatening to cause material injury, to a U.S. industry. A negative ITC determination for any country will result in the investigation being terminated with respect to that country; otherwise, these investigations will proceed according to statutory and regulatory time limits.

This notice is issued and published pursuant to section 777(i) of the Act.

Dated: December 27, 2000.

Holly A. Kuga,

Acting Assistant Secretary for Import Administration.

Footnotes

1.  See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 639, 642-44 (CIT 1988); High Information Content Flat Panel Displays and Display Glass Therefore from Japan: Final Determination; Rescission of Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991).