Tuesday, September 23, 2003

Vol. 21, No. 59

US Trade Court Hands USEC a Setback

USEC, the only uranium enrichment facility in the U.S., has suffered a legal setback in its pursuit of antidumping complaints against foreign enrichers Cogema and Urenco. The U.S. Court of International Trade earlier this month, for a second time, ruled against the Commerce Department and USEC on the scope of the case against the foreign enrichment companies.

Reviewing a remanded finding from Commerce, the three-judge court essentially ruled that the secondary market for uranium fuel, the "separative work unit" contracts, cannot be part of the market in which USEC claims the foreign fuel suppliers are using government subsidies to allow them to sell below cost. In the earlier case, and again on remand, Commerce concluded that both the SWU contracts and contracts for the "enriched uranium product" constitute sales of merchandise subject to the antidumping and countervailing duty laws. The two contracts for SWUs and for the physical product -- said Commerce, were "functionally equivalent."

The court disagreed in its original decision remanding the case to Commerce and was not persuaded by the agency s analysis on remand. In the case of SWU contracts, noted the court, the utility owns the uranium and uses the enrichment company only to increase the amount of fissile uranium in the fuel. "Because the enricher does not obtain ownership of the [low enriched uranium] under SWU contracts, the transfer of LEU by the enricher to the utility cannot constitute a sale of merchandise. ... Nothing in Commerce s remand determination provides any evidentiary or legal basis for a contrary conclusion."

On two other remanded issues, the court sided with Commerce. The court agreed with Commerce that USEC "is the sole domestic producer of [low enriched uranium]." That gives USEC the standing to sue under the trade laws. The nuclear utilities, who challenged Commerce and USEC on the definition, "are industrial users and purchasers of LEU," said the court, "rather than producers, because they do not actually produce LEU in the United States and they do not maintain any manufacturing operations or facilities for the production of LEU."

The court also upheld Commerce s decision that "the statutory countervailing duty provisions are applicable to imports of LEU under both EUP contracts and SWU enrichment contracts."

In a written statement, USEC, based in Bethesda, Md., said the "full impact" of the reversal of Commerce on the scope of the contracts "is not yet clear." The company added, "We remain confident that the ultimate outcome of these cases will be favorable to USEC. The court s decision is another step in an ongoing process of decision and appeal. Nothing changes; all countervailing and antidumping duties remain in effect until the U.S. Court of Appeals for the Federal Circuit finally rules on these appeals."

USEC was created by privatization of the former enrichment program of the U.S. Department of Energy in the early 1990s. Using its elderly gaseous diffusion plant at Paducah, Ky., the company generated $1.3 billion in revenues in 2002. The company is developing advanced centrifuge capacity at its former gaseous diffusion plant near Portsmouth, Ohio. [KM]

Copyright 2003 Elsevier Science