Thursday, February 05, 2009

Eurodif, finally

Eurodif is a dumping case.  This is the Customs Law Blog.  Usually, I skip over the dumping cases.  But, this is the U.S. Supreme Court.  So . . . let's get to it.

The relevant facts are simple.  The importer "buys" low enriched uranium for money plus unenriched uranium.  The contract styles this as a service agreement by which the uranium is enriched and returned to the buyer.  The dumping laws apply to sales of goods and not to services.  So the issue is ultimately whether the dumping laws apply to this transaction.

The Commerce Department, (i.e., the "master of the dumping laws"), says it does.  The way Commerce sees it, the contract is for the sale of LEU.  Part of their reasoning for this is that the foreign enricher holds fungible uranium in inventory from a number of sources including uranium it owns. Further, the enricher has complete control over the process.  The Court of International Trade and the Court of Appeals for the Federal Circuit found that nothing in the contracts vested title over the uranium in the enricher and, as a result, both courts held the contract to be for services.  

Think about it this way, when you take you car in to be painted, you don't give the title to the body shop.  But, what if you could drop off your 1968 VW Bug for painting and, without any delay, drive off with a different freshly painted 1968 VW Bug?  What just happened, a sale or service?  The latter is kind of like what happened with the uranium.

The Supreme Court looked at this the way all good administrative lawyers do: 

The issue is not whether . . . the better view is that [the contract] is one for the sale of services, not goods.  The statute gives this determination to the Department of Commerce in the first instance, . . . and when the Department exercises this authority in the course of adjudication, its interpretation governs in the absence of unambiguous statutory language to the contrary or unreasonable resolution of language that is ambiguous.

In other words, this is a Chevron case and Commerce will be upheld if its interpretation of an ambiguous statute is permissible.  And, as often happens when Chevron is invoked, the Court found for the agency.

According to the decision, the agency may properly apply the ADD law beyond cash-only sales. Otherwise, importers could switch to barter and avoid the law.  Second, Commerce did not have to accept the premise that the uranium delivered to the enricher was the same LEU returned to the US.  In other words, it is a different freshly painted 1968 Volkswagen.  Further, the Court noted that the enrichment process results in a "substantial transformation," which indicates a sale.

So, the Supreme Court of the United States has unanimously spoken and held:

Where a domestic buyer's cash and an untracked, fungible commodity are exchanged with a foreign contractor for a substantially transformed version of the same commodity, the Commerce Department may reasonably treat the transaction as the sale of a good under § 1673.  We therefore reverse the judgment of the Federal Circuit and remand the cases for further proceedings consistent with this opinion.

1 comment:

aglu said...

The information on transactions with uranium is not always authentic. Too much privacy.
http://law-us.blogspot.com/