[00:00:11] Speaker 03:
Good afternoon, Your Honor.

[00:00:17] Speaker 03:
Before I present my argument, I would like to just state that I am a little under the weather and I apologize in advance if I ask you to repeat the question.

[00:00:32] Speaker 03:
May it please the court?

[00:00:32] Speaker 03:
The principal issue in this case is can commerce, by a statutory exception,

[00:00:40] Speaker 03:
applicable to investigations, when the statute does not provide for such an exception in reviews.

[00:00:49] Speaker 04:
Can I ask you a question about the SAA?

[00:00:52] Speaker 04:
Because I asked my clerk to see what the SAA said about this.

[00:00:58] Speaker 04:
And there is a provision in the SAA at page 843, which I'll read to you.

[00:01:07] Speaker 04:
I'm sure you don't have.

[00:01:11] Speaker 04:
reflects the express intent of the negotiator that the preference for the use of the average to average or transaction to transaction comparison be limited to the investigation phase of the anti-dumping procedure.

[00:01:24] Speaker 04:
Therefore, as permitted by Article 2.4.2, the preferred methodology in reviews will be to compare average to individual export pricing.

[00:01:34] Speaker 04:
So that sounds as though quite apart from the question of whether the targeted dumping

[00:01:40] Speaker 04:
provision applies here that in reviews, the transaction to average comparison is the one to be used anyway.

[00:01:50] Speaker 04:
And what am I missing here?

[00:01:52] Speaker 04:
Am I misunderstood?

[00:01:58] Speaker 03:
But there was also a section in the SAA that also provided that in a departure from the previous methodology.

[00:02:09] Speaker 03:
that in investigations and in parasitical language, not reviews, national authorities will provide a calculation method on an average-to-average basis.

[00:02:27] Speaker 04:
But your argument here is that the targeted dumping provision doesn't apply to reviews.

[00:02:32] Speaker 04:
It only applies to investigations and that in reviews you can't use

[00:02:37] Speaker 04:
the average to transaction comparison that is provided for in connection with the target dumping provision?

[00:02:44] Speaker 03:
No, we do not argue that you cannot use the average to average comparison in reviews.

[00:02:50] Speaker 04:
No, not average to average.

[00:02:51] Speaker 04:
Average to transaction.

[00:02:53] Speaker 03:
You can use an average to transaction.

[00:02:55] Speaker 03:
Obviously, you can use it.

[00:02:58] Speaker 03:
But in this case, under the regulations that were used, the principal methodology is average to average.

[00:03:08] Speaker 03:
That is what they used in this investigation.

[00:03:11] Speaker 03:
What we claim is that if commerce uses the average to average methodology as it did here, it cannot then apply an exception which is only applicable to investigations.

[00:03:26] Speaker 04:
We are not arguing... The exception allows them to use an average to transaction comparison, correct?

[00:03:33] Speaker 03:
Correct.

[00:03:34] Speaker 04:
If there is a determination... Okay, so you're objecting to the use of the average to transaction comparison.

[00:03:40] Speaker 03:
We are objecting to, under the statute, an exception is provided to allow commerce to first do an analysis... No, but just try to answer my question.

[00:03:54] Speaker 04:
So you're objecting to their use of an average to transaction comparison based on a finding of targeted dumping.

[00:04:01] Speaker 04:
Correct.

[00:04:02] Speaker 04:
But what I'm saying to you is that the SAA appears to say that in reviews, the preferential method, quite apart from targeted dumping, is average to transaction.

[00:04:15] Speaker 04:
That is correct, Your Honor.

[00:04:16] Speaker 03:
So why are we here?

[00:04:19] Speaker 03:
Because that is not what was done here, Your Honor.

[00:04:25] Speaker 03:
There was a preliminary determination based upon an average to average methodology in calculating the anti-dumping margin.

[00:04:36] Speaker 02:
After the preliminary... Are you saying that because they started using an average to average methodology, they weren't permitted to switch to an average to transaction methodology?

[00:04:50] Speaker 03:
The regulations that... No, no, that's a yes or no question.

[00:04:53] Speaker 03:
They cannot use, there is no exception provided.

[00:04:58] Speaker 02:
Let me ask you this then.

[00:04:59] Speaker 02:
If instead of starting with the average to average, they had started with the average to transaction methodology, would that have been OK?

[00:05:08] Speaker 03:
That is what they used in previous reviews.

[00:05:11] Speaker 03:
That was the methodology for 14 years prior to this review.

[00:05:15] Speaker 03:
The AT method was the preferred.

[00:05:18] Speaker 02:
I'm not understanding what you're saying.

[00:05:20] Speaker 02:
It seems to me that the arguments in your brief

[00:05:23] Speaker 02:
that the statute excluded the use of the average to transaction methodology altogether in administrative reviews.

[00:05:30] Speaker 02:
Clearly, that's not what you're saying today.

[00:05:32] Speaker 02:
But I don't understand what you're saying, because they did use an average to transaction methodology here, which you now seem to say was OK.

[00:05:39] Speaker 02:
I understand your argument.

[00:05:45] Speaker 03:
Under the regulations that existed during this review,

[00:05:51] Speaker 03:
The preferred method was the average to average method.

[00:05:55] Speaker 03:
Commerce determined a margin based upon average to average.

[00:06:00] Speaker 03:
It then applied an exception that does not exist in the statute.

[00:06:05] Speaker 02:
OK, that's what I want to ask you about.

[00:06:07] Speaker 02:
You say they did the average to average first and then applied an exception.

[00:06:12] Speaker 02:
If instead of doing that, they would have just started out saying, we think there might be targeted dumping here.

[00:06:17] Speaker 02:
We're going to start with an average to transaction methodology.

[00:06:20] Speaker 02:
Would that have been permissible?

[00:06:25] Speaker 03:
Under the regulations, they cannot... Under the regulations that exist, they must start with an average to average methodology.

[00:06:36] Speaker 02:
They cannot first go to the... And then, under your view, they're never allowed to use the exception for average to transaction?

[00:06:47] Speaker 03:
Not on the basis of a targeted dumping analysis.

[00:06:50] Speaker 04:
But they can do it without a targeted dumping analysis based on the part that I read you from the SAA?

[00:06:58] Speaker 03:
The SAA and the regulations in that respect are contrary.

[00:07:03] Speaker 03:
Because what the SAA is saying that in a normal situation, in a review, commerce starts with the AT method.

[00:07:13] Speaker 03:
What?

[00:07:14] Speaker 03:
Congress is the average to transaction method.

[00:07:19] Speaker 03:
And there is no reason then to apply an exception because you start off with the AT method.

[00:07:26] Speaker 03:
And that's the way it was done for 14 years.

[00:07:29] Speaker 03:
So what difference does it make?

[00:07:31] Speaker 04:
You say for 14 years they've used the average to transaction.

[00:07:35] Speaker 04:
They're now using the average to transaction again.

[00:07:38] Speaker 04:
What's the matter with that?

[00:07:40] Speaker 03:
Because under the regulations, they first start with the average to average.

[00:07:44] Speaker 02:
Okay, and under the regulations... But their regulations also explicitly permit them to use an average to transaction methodology if they think there's targeted dumping.

[00:07:54] Speaker 03:
Correct, but they're using that because they're taking the exception provided for in investigations... No, they're not at all.

[00:08:04] Speaker 02:
You just said they used the average to transaction methodology in reviews for 14 years.

[00:08:10] Speaker 02:
It's not based upon the

[00:08:12] Speaker 02:
the statute, it's based upon what their past practices and the SAA recognized that past practice.

[00:08:19] Speaker 03:
Yes, but they then changed their practice.

[00:08:22] Speaker 03:
This was the first review where they, and what they are doing currently, is applying an average to average methodology for calculating anti-dumping from the start.

[00:08:36] Speaker 03:
For 14 years, they applied average to transaction with zeroing.

[00:08:42] Speaker 03:
They don't do that now.

[00:08:44] Speaker 03:
Instead, they start with the average to the average and then applying the exception that only applies to investigations under the statute.

[00:08:54] Speaker 03:
If they find targeted dumping, then they go to the AT method, the average to transaction method.

[00:09:05] Speaker 03:
What we are arguing is that under the statute,

[00:09:08] Speaker 03:
The exception only applies to investigations.

[00:09:11] Speaker 02:
But the logic of that argument then is that they can never use the average of transaction methodology in reviews.

[00:09:21] Speaker 02:
If they change again their regulations, but what they... No, but you're saying that the statute only provides the exception for investigations.

[00:09:31] Speaker 02:
If they can only use the average of transaction methodology in investigations,

[00:09:36] Speaker 02:
whatever they do under the regulations, they can't do it for review.

[00:09:42] Speaker 02:
If that's your view of the statute.

[00:09:44] Speaker 03:
Well, that's because they changed the regulation.

[00:09:47] Speaker 01:
But the statute itself doesn't place any restriction on commerce's selection of a comparison method in reviews, does it?

[00:09:56] Speaker 01:
It places on investigations, but not on reviews, right?

[00:10:04] Speaker 01:
1677F.

[00:10:06] Speaker 01:
1D1B.

[00:10:09] Speaker 03:
It's not a restriction, Your Honor.

[00:10:12] Speaker 03:
We think that the statute provides for an exception in investigations allowing the administrating authority to conduct a targeted dumping analysis and then use an alternative method.

[00:10:31] Speaker 01:
But it doesn't provide anything about

[00:10:36] Speaker 01:
that methodology in reviews.

[00:10:39] Speaker 01:
No, it does not.

[00:10:40] Speaker 01:
So since it's silent, why can't an agency fill the gap?

[00:10:47] Speaker 03:
Because if you look at the statutory structure, the intent of Congress is clear first.

[00:10:54] Speaker 04:
The intent of Congress is clear.

[00:10:55] Speaker 04:
It just said in the SAA that you can use the average to transaction methodology in reviews.

[00:11:04] Speaker 03:
But that's not what was done in this case, John.

[00:11:07] Speaker 03:
They used the average-to-average methodology.

[00:11:10] Speaker 02:
No, they didn't.

[00:11:11] Speaker 02:
They started out with the average-to-average.

[00:11:13] Speaker 02:
That's true.

[00:11:13] Speaker 02:
They decided it didn't fully capture the dumping going on, and they elected to use the average-to-transaction methodology.

[00:11:20] Speaker 03:
By applying the exception that only applies to investigations.

[00:11:26] Speaker 02:
I'm sorry, you're baffling me.

[00:11:29] Speaker 02:
So you say that if they had started with the average to transaction methodology, that would be okay.

[00:11:33] Speaker 03:
Well, that would be contrary to the regulation that this now exists.

[00:11:37] Speaker 04:
Because in your view, the regulations only allow average to transaction if there's a finding of targeted dumping.

[00:11:45] Speaker 03:
That's the way the regulation now reads.

[00:11:50] Speaker 02:
So you talk about the statute being silent as regards to reviews.

[00:11:55] Speaker 02:
But doesn't the statute actually specifically contemplate an average transaction methodology for reviews when it sets a time limit on what transactions you can consider when you're using that methodology?

[00:12:08] Speaker 03:
I don't disagree with that.

[00:12:10] Speaker 03:
That's the way it was done for 14 years prior to this review.

[00:12:13] Speaker 02:
But if that is still in the statute, that it requires if you're using the average transaction methodology, you only look at transactions within a month of the period.

[00:12:25] Speaker 02:
then that is Congress's specific intent that you can use an average to transaction methodology in a review period, isn't it?

[00:12:36] Speaker 03:
I don't disagree that Congress contemplated.

[00:12:39] Speaker 02:
So if commerce has a regulation that says the preferred method is x, the fact that Congress would still allow them to use y doesn't mean that they're exercising an exception under the statute.

[00:12:52] Speaker 02:
The statute already allowed them to do that.

[00:12:55] Speaker 03:
But it's arbitrary and capricious to treat one plaintiff or one respondent different than the other.

[00:13:02] Speaker 02:
Well, that's not the argument you've made.

[00:13:06] Speaker 02:
The statutory structure.

[00:13:07] Speaker 02:
I mean, isn't there a long history of precedent that commerce has great latitude in determining how it does each initial review period with regard to each different company?

[00:13:21] Speaker 03:
If you look at the statutory structure,

[00:13:25] Speaker 03:
There are provisions in the statute, which I will cite right now, 1677 F1C and E, which provide for similar exceptions.

[00:13:38] Speaker 03:
And in each of those provisions, Congress stated that the exception is applicable to investigations or reviews.

[00:13:50] Speaker 03:
In this particular case, with the exception, only applies to investigations.

[00:13:55] Speaker 03:
So when you argue that the silence with respect to reviews allows the administrative authority to provide for that exceptions for reviews, that is contrary to this statutory structure and construction.

[00:14:18] Speaker 03:
When Congress intended an exception to be applicable to both,

[00:14:24] Speaker 03:
Reviews and investigation is so provided for that.

[00:14:29] Speaker 04:
Is what you're saying that commerce could use the average to transaction methodology in reviews, but it couldn't do it because it found targeted dumping?

[00:14:41] Speaker 04:
Is that what you're saying?

[00:14:43] Speaker 03:
No, I'm not talking about it.

[00:14:45] Speaker 03:
What we are saying is that commerce sought by its regulation

[00:14:53] Speaker 03:
to calculate a module using the average to average method.

[00:15:01] Speaker 03:
The statute provides that you can use an alternative methodology if you start with the average to average method in investigations, but does not provide for a similar exception in reviews.

[00:15:18] Speaker 04:
OK, I think we're out of time.

[00:15:19] Speaker 04:
We'll give you one minute for rebuttal.

[00:15:28] Speaker 00:
May it please the court.

[00:15:46] Speaker 00:
The judgment of the trial court should be affirmed and Commerce's final determination should be sustained.

[00:15:51] Speaker 00:
Commerce's interpretation of 19 U.S.C.

[00:15:53] Speaker 00:
1677 F-1D2

[00:15:56] Speaker 00:
to provide for the consideration in administrative reviews of the pattern of prices and application of an alternative comparison method is entitled to deference under Chevron Step 2.

[00:16:08] Speaker 02:
For each of the... Do we even need to get to Chevron Step 2?

[00:16:11] Speaker 02:
I mean, doesn't the... Once you look at the statute that explicitly references the average of transaction methodology in terms of the time limits for looking at transactions in the SAA, it seems pretty clear that

[00:16:24] Speaker 02:
Congress itself intended to permit this use of an average transaction methodology?

[00:16:31] Speaker 00:
Correct, Your Honor, that in certain circumstances that the average transaction methodology would be appropriate in commerce.

[00:16:38] Speaker 00:
The gap is that if Your Honors look at 1677 F-1D, that under investigations the comparison methods are set out and when to use those comparison methods, when to use average to average

[00:16:51] Speaker 00:
when to use average of transaction, when to use transaction, transaction.

[00:16:54] Speaker 00:
But the gap is that in reviews, there is no mechanism provided.

[00:16:58] Speaker 00:
Now under the SAA, it explains that commerce's practice at the time was to use, to prefer average of transaction.

[00:17:07] Speaker 00:
As explained in the final modification that commerce issued in 2012, the average of transaction preference was changed because of its

[00:17:19] Speaker 00:
its obligations under the WTO.

[00:17:22] Speaker 00:
And because of those obligations, Commerce determined that it was no longer going to prefer the average transaction, that it was then going to prefer, excuse me, it was going to follow its practice and investigation.

[00:17:36] Speaker 00:
And that was all under the Chevron Step 2, because again, the comparison method that was going to be applied in reviews was not... I don't understand why it's Chevron Step 2.

[00:17:48] Speaker 04:
As Judge Hughes pointed out, the statute references this, and the SAA, which is an unusual piece of legislative history, which is almost has the same significance as the statute itself, it says that this average to transaction method will be used.

[00:18:06] Speaker 04:
Well, yes, the average.

[00:18:07] Speaker 04:
Right, so?

[00:18:09] Speaker 00:
Well, average to transaction, and at the time that the legislation was passed, the average to transaction was the preferred methodology.

[00:18:15] Speaker 00:
At the end of the day, if the argument is, and it seems to be this is what the argument is that JBS is making, is that the commerce was not permitted to use the average transaction clearly under the SAA.

[00:18:29] Speaker 00:
It was contemplated by Congress that commerce had the ability to apply average transaction, and in fact, the statute specifically states under subsection D. So what's the end of it, isn't it?

[00:18:41] Speaker 02:
Well, we would argue, yes, we would agree, yes, Your Honor, but in the alternative that... What you're saying is whether or not you can use it under the statute is plain on the face.

[00:18:53] Speaker 00:
On the face.

[00:18:53] Speaker 02:
The circumstances in which you can use it were not dictated by Congress and you promulgated regulations.

[00:18:59] Speaker 02:
Those are what we should get deference to.

[00:19:01] Speaker 00:
Yes, yes, Your Honor.

[00:19:02] Speaker 01:
And in any case, preferred is not an absolute.

[00:19:06] Speaker 00:
Correct.

[00:19:07] Speaker 00:
And that's what you would find actually in the current regulation, 351.414.

[00:19:13] Speaker 00:
C, I believe, is that commerce is to use average to transaction or an alternative comparison method as appropriate in a particular case.

[00:19:22] Speaker 00:
And the SAA also, excuse me, the final modification also says on a case-by-case basis.

[00:19:27] Speaker 00:
So, commerce is contemplated and Congress contemplated that commerce could apply it at the time the

[00:19:35] Speaker 00:
The methodology was to prefer A to T, but it was obviously contemplated by Congress and the administration at the time as reflected in the FAA that certainly, and also in the statute, that commerce could apply average of transaction.

[00:19:50] Speaker 00:
And again, under Subjection B2, clearly the average transaction methodology is contemplated.

[00:19:58] Speaker 00:
It is actually stated that what price period commerce is to use in applying the average transaction.

[00:20:07] Speaker 00:
So if the argument is that commerce erred in using average transaction, clearly, and that's at the end of the day is what we're arguing, right?

[00:20:14] Speaker 00:
At the end of the day, JBM is saying commerce should not have used average transaction.

[00:20:19] Speaker 00:
it was contemplated that commerce was allowed to use average transaction when it's found to be appropriate.

[00:20:26] Speaker 04:
Anything further?

[00:20:28] Speaker 00:
Sorry?

[00:20:28] Speaker 04:
I say anything further?

[00:20:30] Speaker 00:
On this particular issue?

[00:20:32] Speaker 00:
Anything.

[00:20:33] Speaker 00:
Anything further?

[00:20:35] Speaker 04:
You don't have to use audio.

[00:20:38] Speaker 00:
I mean, one issue I would, the fourth issue I think is worth discussing from our perspective because that this is an issue actually is going to come up

[00:20:48] Speaker 00:
in another case before the court and that appeals to be discussed in April.

[00:20:55] Speaker 00:
The issue of the plain language of 19 USC 1677 F-1D1B which is the argument that commerce is required to consider the intent or the business reasons behind patterns of prices and we would encourage the court to read the statute, the plain language of the statute.

[00:21:14] Speaker 00:
There is absolutely no support in the statute

[00:21:17] Speaker 00:
for commerce that would require commerce to consider these other factors.

[00:21:22] Speaker 00:
The factors are clearly laid out.

[00:21:23] Speaker 00:
There's a pattern of prices that differs significantly on the purchaser's regions or time periods.

[00:21:29] Speaker 00:
And commerce explains why that pattern cannot be addressed using the average to average or transaction to transaction.

[00:21:36] Speaker 00:
Commerce may apply the average to transaction method.

[00:21:39] Speaker 00:
There is no mention of any criteria in there that would require commerce.

[00:21:45] Speaker 00:
to apply that.

[00:21:46] Speaker 00:
It doesn't mention comparison methods.

[00:21:50] Speaker 01:
It doesn't dictate comparison methods.

[00:21:55] Speaker 00:
Exactly.

[00:21:56] Speaker 00:
But in D1B, looking at the actual pattern of prices, the analysis there, and whether to use average or transaction, it does not state that commerce is

[00:22:08] Speaker 00:
to find there's a pattern explained by a particular reason.

[00:22:11] Speaker 00:
It states that if commerce finds this pattern and explains it and then why it can't be taken into account, it can use the average of transaction.

[00:22:19] Speaker 00:
There's absolutely, again, no support in the statute and JBS argument fails under Chevron Step 1 and certainly under Chevron Step 2 was reasonable for commerce to

[00:22:29] Speaker 00:
consider that.

[00:22:30] Speaker 00:
And one final note is that makes sense because the pattern of prices is meant to look at suspicious price patterns.

[00:22:38] Speaker 00:
It doesn't look at the home market prices.

[00:22:40] Speaker 00:
It looks only at the U.S.

[00:22:43] Speaker 00:
prices.

[00:22:43] Speaker 00:
So the idea that dumping is supposed to be addressed doesn't make sense because that's not the purpose of the pattern of prices.

[00:22:51] Speaker 00:
It's just looking what's happening on the U.S.

[00:22:53] Speaker 00:
side.

[00:22:55] Speaker 00:
If you're on this, do not have any further questions.

[00:22:58] Speaker 00:
We would respectfully request that the court affirm the judgment of the trial court.

[00:23:02] Speaker 04:
Thank you, Ms.

[00:23:03] Speaker 00:
Devine.

[00:23:06] Speaker 04:
Thank you.

[00:23:07] Speaker 04:
Mr. Milosky.

[00:23:18] Speaker 03:
I think what's not impressed is the question that an exception is uniformly, narrowly construed.

[00:23:27] Speaker 03:
And in this particular case, the exception is only applied by statute with respect to investigations.

[00:23:37] Speaker 03:
I think it is a slippery slope to allow commerce in this particular situation or other situations to apply an exception where the statute does not apply it to a particular provision.

[00:23:54] Speaker 03:
And this is exactly what has happened here.

[00:23:57] Speaker 03:
Commerce

[00:23:58] Speaker 03:
determined to use the average to average method in this review and then sought and did by applying an exception that is applicable only to investigations to this review.

[00:24:19] Speaker 03:
You think that would lead to a slippery slope of allowing commerce to apply

[00:24:28] Speaker 03:
an exception to other provisions in the anti-dumping duty laws, they do not exist.

[00:24:38] Speaker 03:
Okay.

[00:24:38] Speaker 03:
Thank you, Mr. Moravsky.

[00:24:39] Speaker 04:
Thank you, Drill Council.

[00:24:41] Speaker 04:
The case is presented.