United States v. Eurodif S.A.

PETITIONER: United States
RESPONDENT: Eurodif S. A.
LOCATION: United States Enrichment Corporation

DOCKET NO.: 07-1059
DECIDED BY: Roberts Court (2006-2009)
LOWER COURT: United States Court of Appeals for the Federal Circuit

CITATION: 555 US (2009)
GRANTED: Apr 21, 2008
ARGUED: Nov 04, 2008
DECIDED: Jan 26, 2009

ADVOCATES:
Caitlin J. Halligan - argued the cause for the respondents
H. Bartow Farr, III - argued the cause for the petitioners in 07-1078
Malcolm L. Stewart - Deputy Solicitor General, argued the cause for the petitioner in 07-1059

Facts of the case

This case examines the correct application of federal antidumping statutes to so-called "separate work unit" (SWU) contracts for the production of low enriched uranium (LEU). The case, brought by the federal government and the United States Enrichment Corporation, has been consolidated from two cases both alleging that Eurodif, a French corporation, imported LEU in violation of federal antidumping laws. Based on a decision from the U.S. Court of Appeals for the Federal Circuit holding that SWU contracts for the production of LEU are contracts for services rather than goods and are therefore immune from the antidumping laws, the U.S. Department of Commerce excluded all LEU entering the country from antidumping regulations if accompanied by a certificate that the uranium was imported under an SWU contract. The Court of International Trade sustained the Commerce Department decision.

On appeal, the U.S. Court of Appeals for the Federal Circuit dismissed the case, saying that it was "unripe" for judicial review. The court held that the issues raised by the government only concerned the application of the Department's decision regarding future importation of LEU; and, therefore, the court did not have a specific factual context in which to review the claim.

Question

Should 19 U.S.C. Section 1673, which calls for "antidumping" duties on foreign goods, but not services, that sell at less than fair value in the U.S., apply to imported low enriched uranium?

Media for United States v. Eurodif S.A.

Audio Transcription for Oral Argument - November 04, 2008 in United States v. Eurodif S.A.

Audio Transcription for Opinion Announcement - January 26, 2009 in United States v. Eurodif S.A.

David H. Souter:

The third and final statement that I have this morning is in No. 7-1078, United States against Eurodif, et al., and a companion case, United States against a company known as USEC, Inc., and others.

This case has come to us on writ of certiorari to the United States Court of Appeals for the Federal Circuit.

Section 731 of the Tariff Act of 1930 calls for what it calls antidumping duties on foreign merchandise sold in the United States at less than its fair value, but the Act does not touch international sales of services.

These cases are about the application of this provision to exchanges of low enriched uranium known as LEU, a highly processed derivative of natural uranium that nuclear utilities use to make fuel rods.

Utilities occasionally buy LEU from foreign suppliers for a single payment in cash.

Usually however, they provide unenriched uranium to a foreign enricher together with enough cash to pay for the energy needed to convert the unenriched uranium to LEU, and that -- that energy is known in the industry as “separative work units” or this is the way they pronounce it or “swoo”.

These SWU contracts treat the transaction as a sale of uranium enrichment services.

The Commerce Department, however, determined that SWU contracts resolved in the sale of goods and therefore covered by Section 731.

The respondents, a foreign enricher and a coalition of domestic utilities, challenged this determination before the Court of International Trade, which agreed with them and reversed.

The Federal Circuit then affirmed agreeing with the Court of International Trade that SWU contracts are clearly contracts of the sale of services not goods.

In a unanimous opinion filed today with the clerk of Court, we reversed, because Congress charged the Commerce Department with administering Section 731, the Department's interpretation governs unless it conflicts with unambiguous statutory language whereas an unreasonable resolution of statutory ambiguity.

Although the distinction in 731 between goods and services is clear in many situations, it breaks down, whereas in a case like this, a combination of cash and a commodity here exchanged for a product that uses that very commodity as a constituent material.

We therefore asked whether by applying 731 to SWU contracts, the Commerce Department unreasonably resolved the statutory ambiguity.

In concluding that SWU contracts result in a sale of LEU, the Department found that the parties treat the unenriched uranium as a fungible commodity and that the enricher in economic reality owns the LEU that provides the utilities prior to delivering it to them.

The Department emphasized that the enrichment process works what it called a substantial transformation on unenriched uranium and creates the essential character of LEU.

These two facts in combination, the exchange of an untracked fungible commodity and a substantial transformation of that same commodity reasonably capture a common understanding of the sale of a good.

Moreover, these criteria find support in the purposes of antidumping duties, which is to protect domestic industry from unfairly priced foreign products.

If as the respondents urge SWU contracts were beyond the reach of Section 731, many other transactions could be restructured to circumvent antidumping duties as well.

Contracts for imported pasta would be replaced by separate contracts for wheat and wheat processing services, sweater imports would give way to separate contracts for wool and knitting services, and the antidumping duties would primarily chastise the uncreative.

The Commerce Department's attempt to foreclose this absurd result by treating SWU transactions as sale of goods is eminently reasonable.