E6-3176. Low Enriched Uranium from France: Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, U.S. Department of Commerce.

SUMMARY:

The Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on Low Enriched Uranium (LEU) from France in response to requests by USEC Inc. and the United States Enrichment Corporation (collectively, petitioners) and by Eurodif, S.A.(Eurodif), Compagnie Générale Des Matières Nucléaires (COGEMA) and COGEMA, Inc. (collectively, Eurodif/COGEMA or the respondent). This review covers sales of subject merchandise to the United States during the period February 1, 2004 through January 31, 2005.

We preliminarily determine that U.S. sales have been made below normal value (NV). If these preliminary results are adopted in our final results, we will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties based on the difference between the constructed export price (CEP) and the NV. Interested parties are invited to comment on these preliminary results. See the Preliminary Results of Review section of this notice.

EFFECTIVE DATE:

March 7, 2006.

FOR FURTHER INFORMATION CONTACT:

Mark Hoadley or Myrna Lobo, AD/CVD Operations, Office 6, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On February 13, 2002, the Department published the antidumping duty order on LEU from France in the Federal Register (67 FR 6680). On February 1, 2005, the Department published a notice of opportunity to request an administrative review of this order (70 FR 5136). On February 1, 2005 and February 25, 2005, the Department received timely requests for review from Eurodif/COGEMA and from petitioners, respectively. On March 23, 2005, we published a notice initiating an administrative review of the antidumping order on LEU from France covering one respondent, Eurodif/COGEMA. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 70 FR 14643 (March 23, 2005).

The Department issued its original questionnaire, sections A through C, on May 2, 2005, and received timely responses. On September 29, 2005, the Department extended the deadline for the preliminary results of this antidumping duty administrative review until February 28, 2006. See Low Enriched Uranium from France; Extension of Time Limit for the Preliminary Results of the Antidumping Duty Administrative Review, 70 FR 58381 (October 6, 2005). On October 11, 2005, the Department issued a section D and supplemental sections A through C questionnaire and received timely responses, after granting deadline extensions, on December 8, 2005. The Department issued further supplemental questionnaires on January 12, 2006 and February 3, 2006 and received timely responses.

On January 25, 2006, pursuant to an allegation filed by petitioners, the Department initiated an investigation to determine whether Eurodif/COGEMA's purchases of electricity from Électricité de France (EdF), an affiliated supplier, during the period of review (POR), were made at prices below the cost of production (COP). The Department also issued a questionnaire¹ to obtain EdF's COP for electricity on the same date and received a timely response on February 6, 2006. For purposes of these preliminary results the Department has used the information reported for EdF. However, the Department may solicit some clarifying information from respondent regarding EdF's COP after the issuance of the preliminary results, and we will take such information into account in its cost calculation for the final results of this review.

Period of Review

This review covers the period February 1, 2004, through January 31, 2005.

Scope of the Order

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

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

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

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

Analysis

Home Market Viability

In accordance with sections 773(a)(1)(B) and (C) of the Tariff Act of 1930, as amended (the Act), to determine whether there was a sufficient volume of sales in the home market and/or in third country markets to serve as a viable basis for calculating NV, we compared Eurodif/COGEMA's volume of home market sales of the foreign like product to the volume of U.S. sales of the subject merchandise. Pursuant to sections 773(a)(1)(B) and (C) of the Act and section 351.404 (b) of the Department's regulations, because Eurodif/COGEMA's home market sales were greater than five percent of the aggregate volume of U.S. sales of the subject merchandise, we determine the home market to be viable. However, because all sales were to a single affiliated customer and the Department was unable to confirm these sales to be at arm's length, we have used constructed value (CV) as NV, for purposes of these preliminary results. We have consistently used CV as the basis for NV in past segments of this proceeding, see, e.g. Notice of Preliminary Results of Antidumping Duty Administrative Review: Low Enriched Uranium from France, 69 FR 3883 (January 27, 2004).

Fair Value Comparisons

To determine whether sales of LEU from France were made in the United States at less-than-fair value (LTFV), we compared the CEP to CV, as described in the Constructed Export Price and Calculation of Normal Value Based on Constructed Value sections of this notice. In accordance with section 777A(d)(2) of the Act, we calculated CEPs and compared them to CV.

We note that during the POR, the respondent sold LEU in the United States pursuant to contracts in which the respondent undertook to manufacture and deliver LEU for a cash payment covering only the value of the enrichment component; for the natural uranium feedstock component, the respondent received an amount of natural uranium equivalent to the amount used to produce the LEU shipped under contracts referred to as separative work unit (SWU)² contracts. However, the product manufactured and delivered by the respondent was LEU. For purposes of our antidumping analysis, we have translated prices and costs involved in SWU contracts into an LEU basis, increasing those values to account for the cost of the uranium feedstock involved. These adjustments are described in greater detail below.

Constructed Export Price

In accordance with section 772(b) of the Act, CEP is the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise, or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter. During the POR, Eurodif/COGEMA's U.S. sales were made to its U.S. affiliate, COGEMA Inc., which then resold the merchandise to unaffiliated customers. Therefore, Eurodif/COGEMA classified all of its U.S. export sales of LEU as CEP sales.

As stated in section 351.401(i) of the Department's regulations, the Department will use the respondent's invoice date as the date of sale unless another date better reflects the date upon which the exporter or producer establishes the material terms of sale. In this review, we find that the material terms of sale are established by the contract between COGEMA Inc. and the U.S. customer. Therefore, as in prior reviews, we have used the contract date as the date of sale. See Notice of Final Results of Antidumping Duty Administrative Review: Low Enriched Uranium from France, 70 FR 54359 (September 14, 2005).

The Department calculated CEP for Eurodif/COGEMA based on packed prices to the first unaffiliated customer in the United States. For all sales involving payments on a SWU basis, we translated the prices to an LEU basis, as indicated above, by adding a value for the uranium feedstock used in the production of the LEU. This value was derived from the respondent's reported entered value of feed, which was based on publicly available information used for customs entry purposes. We made deductions from the starting price, net of discounts, for movement expenses (foreign and U.S. movement expenses, expenses associated with shipment of sample assays, and movement of customer feed from North America to France, marine insurance, merchandise processing and U.S. harbor maintenance fees, and brokerage) in accordance with section 772(c)(2) of the Act and section 351.401(e) of the Department's regulations. In addition, in accordance with section 772(d)(1) of the Act, we also deducted credit expenses and indirect selling expenses, including inventory carrying costs, incurred in the United States and France and associated with economic activities in the United States.

Furthermore, in accordance with sections 772(d)(3) and 772(f) of the Act, we made a deduction for CEP profit. The CEP profit rate is normally calculated on the basis of total revenue and total expenses related to sales in the comparison market and the U.S. market. In this case, all home market sales were to an affiliate; consequently, we based CEP profit on the costs and revenues reported for AREVA's front end division, which is COGEMA's parent company and represents the highest level of consolidation for Eurodif. See CV section below and Memorandum to the File from Mark Hoadley and Myrna Lobo, “Analysis of Eurodif/COGEMA for the Preliminary Results of the Third Administrative Review of Low Enriched Uranium (LEU) from France,” dated February 28, 2006 (Prelim Analysis Memo).

Calculation of Normal Value Based on Constructed Value

Section 773(e) of the Act provides that CV shall be based on the sum of the costs of materials and fabrication of the foreign like product, plus amounts for selling, general, and administrative expenses (SG&A), profit, and U.S. packing costs. In accordance with section 773(e)(2)(B)(iii) of the Act, we based general and administrative (G&A) expenses on amounts derived from Eurodif's financial statements. In our calculation of the interest expense, we based financial expenses on the financial statements of AREVA. For selling expenses, we used information on indirect selling expenses in third countries provided in the questionnaire response. Where appropriate, we made circumstance of sale (COS) adjustments to CV, in accordance with section 773(a)(8) of the Act and section 351.410 of the Department's regulations.

Electricity is considered a major input in the production of LEU. Eurodif obtained electricity from its affiliated supplier, EdF. On December 19, 2005, petitioners alleged that Eurodif purchased electricity from EdF at prices less than the affiliated suppliers' COP during the POR. After reviewing petitioners' major input allegation, the Department determined that it provided a reasonable basis on which to initiate an investigation of Eurodif's purchases of electricity from EdF. See Memorandum from Mark Hoadley to Barbara E. Tillman, Director, Office 6, “Antidumping Duty Administrative Review of Low Enriched Uranium from France (2/1/04-1/31/05), Petitioners' Allegation of Purchases of a Major Input From Electricité de France (EdF), an Affiliated Party, at Prices Below the Affiliated Party's Cost of Production,” dated January 25, 2006.

Section 773(f)(3) of the Act states that “{i}f, in the case of a transaction between affiliated persons involving the production by one of such persons of a major input to the merchandise, the administering authority has reasonable grounds to believe or suspect that an amount represented as the value of such input is less than the cost of production of such input, then the administering authority may determine the value of the major input on the basis of the information available regarding such cost of production, if such cost is greater than the amount that would be determined for such input under paragraph (2).” In applying the major input rule under section 351.407(b) of the Department's regulations, the Department will normally compare the transfer price between affiliates to the market price for the input to ensure that the transfer price is at least reflective of the market price. For major inputs, the Department then compares the transfer price and the market price to the COP to ensure that the transfer price charged recovers the producer's costs of production. We evaluated the affiliated supplier's reported electricity COP accordingly.

On January 25, 2006, the Department solicited information from the respondent regarding the calculation of EdF's COP. Based on the response received on February 6, 2006, we have calculated the average cost of electricity for EdF. For details on calculations of EdF's cost of electricity see Prelim Analysis Memo. Because the calculated COP for electricity exceeded the transfer price Eurodif paid to EdF for the electricity purchased, we calculated CV based on EdF's COP for electricity, in accordance with section 773(f)(3) of the Act.

In addition, the Department requested that Eurodif/COGEMA provide details on certain research and development (R&D) projects undertaken by its affiliate, the Commissariat à l'Energie Atomique (CEA). Because Eurodif/COGEMA did not provide the requested information and the Department does not have any data on the record regarding CEA's R&D expenditures, we must rely on secondary information. As facts available and pursuant to sections 776(a) and (c) of the Act, we are relying on USEC's R&D expenditures on centrifuge technology as a surrogate for CEA's R&D expenditure because it is the only information on the record relating to R&D. Section 776(c) of the Act provides that the Department shall, to the extent practicable, corroborate secondary information used for facts available by reviewing independent sources reasonably at its disposal. The Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H.R. Doc. 103-316 (SAA), at 870 (1994), explains that the word “corroborate” means that the Department will satisfy itself that the secondary information to be used has probative value. Because USEC's R&D appears to be for the very same technology and it is conducted by a company in the same industry, we consider the information relevant and corroborated. We have therefore added an amount for R&D based on an average of USEC's costs over five years as done in the previous review. See Issues and Decision Memorandum for Final Results of the Administrative Review of the Antidumping Duty Order on Low Enriched Uranium from France (2003-2004) dated September 6, 2005, at Comment 7.

In addition to the adjustments described above, in calculating CV we recalculated the reported defluorination cost. For a full discussion of the adjustments in calculating CV see Prelim Analysis Memo.

We calculated profit in accordance with section 773(e)(2)(B)(iii) of the Act as explained in the SAA at 841. We used a CV profit rate based on AREVA's front end division as reported by respondent. See Prelim Analysis Memo.

Currency Conversion

We made currency conversions pursuant to section 351.415 of the Department's regulations based on rates certified by the Federal Reserve Bank.

Preliminary Results of Review

We preliminarily determine that the following dumping margin exists:

Manufacturer/Exporter	Margin (percent)
Eurodif/COGEMA	7.70

Duty Assessment

The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. Pursuant to section 351.212(b) of the Department's regulations, the Department calculates an assessment rate for each importer of the subject merchandise for each respondent. Liquidation of the entries of LEU under review remains enjoined; however, if the injunction is lifted, the Department will promptly issue appropriate assessment instructions directly to CBP.

Cash Deposit Requirements

The following cash deposit rates will be effective with respect to all shipments of LEU from France entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results, as provided for by section 751(a)(1) of the Act: (1) For Eurodif/COGEMA, the cash deposit rate will be the rate established in the final results of this review; (2) for previously reviewed or investigated companies not listed above, the cash deposit rate will be the company-specific rate established for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the subject merchandise; and (4) if neither the exporter nor the manufacturer is a firm covered by this review, a prior review, or the LTFV investigation, the cash deposit rate shall be the “all other” rate established in the LTFV investigation, which is 19.95 percent. See Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Low Enriched Uranium from France, 67 FR 6680 (February 13, 2002). These deposit rates, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Public Comment

Pursuant to section 351.224(b) of the Department's regulations, the Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results within five days after the date of publication of this notice. Pursuant to section 351.309 of the Department's regulations, interested parties may submit written comments in response to these preliminary results. Unless extended by the Department, case briefs are to be submitted within 30 days after the date of publication of this notice, and rebuttal briefs, limited to arguments raised in case briefs, are to be submitted no later than five days after the time limit for filing case briefs. Parties who submit arguments in this proceeding are requested to submit with the argument: (1) a statement of the issues, and (2) a brief summary of the argument. Case and rebuttal briefs must be served on interested parties in accordance with section 351.303(f) of the Department's regulations.

Also, pursuant to section 351.310 (c) of the Department's regulations, within 30 days of the date of publication of this notice, interested parties may request a public hearing on arguments raised in the case and rebuttal briefs. Unless the Secretary specifies otherwise, the hearing, if requested, will be held two days after the date for submission of rebuttal briefs. Parties will be notified of the time and location.

The Department will publish the final results of this administrative review, including the results of its analysis of issues raised in any case or rebuttal brief, no later than 120 days after publication of these preliminary results, unless extended. See section 351.213(h) of the Department's regulations.

Notification to Importers

This notice serves as a preliminary reminder to importers of their responsibility under section 351.402(f) of the Department's regulations to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

This administrative review and notice are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: February 28, 2006.

David M. Spooner,

Assistant Secretary for Import Administration.

Footnotes

1.  Section A of the questionnaire requests general information concerning a company's corporate structure and business practices, the merchandise under investigation that it sells, and the manner in which it sells that merchandise in all of its markets. Section B requests a complete listing of all home market sales, or, if the home market is not viable, of sales in the most appropriate third-country market (this section is not applicable to respondents in non-market economy (NME) cases). Section C requests a complete listing of U.S. sales. Section D requests information on the cost of production (COP) of the foreign like product and the constructed value (CV) of the merchandise under investigation. Section E requests information on further manufacturing.

2.  A SWU is a unit of measurement of the effort required to separate the U235 and U238 atoms in uranium feed in order to create a final product richer in U235 atoms.