Washington (Platts)--4Nov2008

The US Supreme Court took its turn Tuesday in wrestling with the
complexities of an eight-year-old case in which uranium supply company USEC
and the US government argued that US antidumping duties should apply to
low-enriched uranium exported to the US by French enricher Eurodif, a
subsidiary of Areva.

The critical issue in the case is whether uranium enrichment should be
considered a good or a service. Under the antidumping law, goods are subject
to the import duties but services are not.

Part of the case's complexity comes from the unusual features of the
nuclear fuel market. In most utility purchases of enriched uranium, the
utility pays separately for the natural-uranium "feed" and the work by the
enricher to raise the enrichment level of uranium-235 to the levels needed to
fuel a nuclear power plant.

Under such contracts, the utility provides the enricher with feed
material, but the enriched uranium it later receives is not necessarily
produced from the same material.

During the one-hour argument, the justices tried out analogies to
describe the enrichment process. Chief Justice John Roberts asked if it could
be compared to diamond-cutting. But US Deputy Solicitor General Malcolm
Stewart argued that, unlike the diamond, the enriched uranium at the end of
the process is not simply an improved version of the same product, because it
would not necessarily have come from the same feed the utility supplied.

Justice Antonin Scalia used the analogy of wool from the US that is sent
to Europe, where it is made into sweaters and then sold to a department store
in the US. But Caitlin Halligan, the attorney representing Eurodif, said a key
difference is that the department store makes a subsequent sale. The
utilities, on the other hand, consume the enriched uranium, once it is
fabricated into nuclear fuel, she said.

Whether merchandise was "sold" is a key question under the trade law.

The court is scheduled to issue a decision in the case before its current
term ends next summer.

--Daniel Horner, daniel_horner@platts.com