Opinion Recap: U.S. v. Eurodif
Amy Howe discusses today’s opinion in No. 07-1059, United States v. Eurodif, S.A. et al, together with No. 07-1078, USEC Inc. et al. v. Eurodif S.A. et al. [Note: As an associate at Steptoe & Johnson from 1998-2000, Amy represented USEC in several proceedings but was not involved in the federal court proceedings in this case.]
For eight years, the antidumping proceedings against Eurodif, a French uranium enricher, revolved largely around a single question: whether SWU contracts – whereby a domestic buyer provides Eurodif with cash and unenriched uranium in exchange for receiving a specified quantity of low enriched uranium – are sales of goods subject to the antidumping laws or, alternatively, sales of services that are exempt from the antidumping laws. On Monday, January 26, 2009, the Court disposed of this question with just over six pages of analysis: because, in the Court’s view, the Department of Commerce had reasonably determined that the SWU contracts were sales of goods, it reversed the Federal Circuit’s decision to the contrary. In so doing, the Court likely did not break any significant new ground in either administrative law generally or antidumping law specifically; however, as the Court hints in the closing paragraphs of its opinion, a decision in Eurodif’s favor might have had significant effects on Commerce’s ability to enforce antidumping laws.
In a unanimous opinion by Justice Souter, the Court began its analysis by reminding its readers of the precise question presented by the case: “The issue is not whether, for purposes of 19 U.S.C. § 1673, the better view is that a SWU contract is one for the sale of services, not goods.” Instead, the Court explained, “[t]he 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.”
Turning to the merits of the question before it, the Court took “two threshold propositions . . . as given”: (1) Commerce’s determination that Section 1673 was not limited to cash-only sales was a reasonable one; and (2) even if the parties to a SWU contract do actually regard the contract as one for services, rather than sales, substance should prevail over form in statutes involving regulatory and tax issues. The Court acknowledged that some transactions – such as a customer taking a dirty shirt to a laundry – clearly involved sales of services, but it reasoned that “the line blurs when the facts get more complicated, and SWU contracts exemplify a class of transactions that the Federal Circuit recognized does "not fall neatly either into the category of contracts for services or the category of contracts for the sale of goods.'” In such a scenario, the Court continued, it looks “to an authoritative agency for a decision about the statute’s scope.”
Unlike the laundry scenario, in which the customer simply receives the same shirt (albeit a cleaner version) that he dropped off, two characteristics of the SWU contracts “reasonably capture a common understanding of the sale of a good”: (1) the utility provides fungible unenriched uranium feed and cash to the enricher; and (2) the uranium feed is substantially transformed by the enricher. Thus, the Court explained, Commerce “reasonably placed [SWU contracts] within the ambit of the sale of goods.” This conclusion is bolstered, the Court continued, by the practical consequences of a holding that SWU contracts are instead sales of services: “any EUP contract could be structured as a SWU contract simply by splitting the transaction in two, one contract to buy unenriched uranium and another to enrich it.” This possibility, standing alone, likely would have been enough to convince the Court to reverse, but the Court was also clearly moved by the broader consequences that might flow from allowing the decision below to stand: virtually all contracts for the sales of good could be restructured into separate contracts for the commodity and the services, with the result that “antidumping duties would primarily chastise the uncreative.”