[00:00:01] Speaker 06:
I move for the admission of Jessica L. Hanna.

[00:00:07] Speaker 06:
She's a member of the bar and she's in good standing with the highest court, also California.

[00:00:13] Speaker 06:
I've known her credentials and I'm satisfied that she possesses the necessary qualifications.

[00:00:22] Speaker 06:
You know, Jessica, they say that time flies when you're having a lot of fun.

[00:00:27] Speaker 06:
And I've come to find out that time really flies when you're working hard.

[00:00:33] Speaker 06:
If that's the case, I bet this past year has been a blur for you because of your hard work.

[00:00:39] Speaker 06:
And your work ethic is evidenced by the high quality of your work product.

[00:00:47] Speaker 06:
I've observed that you burn the respect of your fellow clerks on the Federal Circuit.

[00:00:53] Speaker 06:
And that's a testament, not only of your legal prowess, but also of what I've come to find and enjoy of your professional character.

[00:01:03] Speaker 06:
I wish you the best of luck.

[00:01:07] Speaker 06:
And I know that here we have a practitioner, an attorney, a woman.

[00:01:13] Speaker 06:
that is an excellent lawyer and that will become a leading light in the U.S.

[00:01:18] Speaker 06:
IP bar.

[00:01:20] Speaker 06:
We're going to miss you.

[00:01:22] Speaker 00:
Well, it's kind of hard not to grant the motion now, isn't it?

[00:01:28] Speaker 00:
Judge Scholl and I have no problems with the motion.

[00:01:31] Speaker 00:
It is granted.

[00:01:32] Speaker 00:
Jessica, please stand up and turn towards the clerk of our court who will swear you in.

[00:01:37] Speaker 05:
Do you solemnly affirm that you will report yourself to an attorney in council of this court, but rightly and according to the law,

[00:01:50] Speaker 00:
All right, now on to other business of the day.

[00:01:53] Speaker 00:
Our first case this morning is 2014-1292, the United States versus American Home Assurance Company.

[00:02:03] Speaker 00:
Please proceed.

[00:02:10] Speaker 03:
May it please the court, my name is Herbert Shelley.

[00:02:13] Speaker 03:
I'm here today with Mr. Mark Horne.

[00:02:14] Speaker 03:
We represent American Home Assurance Company.

[00:02:20] Speaker 04:
This is kind of a unique situation in this case, in that the principle claimed by the government to be owed by American Home Assurance results from customs activity in liquidating the entries, which was admittedly void and incorrect.

[00:02:45] Speaker 04:
The entries were first liquidated

[00:02:50] Speaker 04:
Mistakenly, because American Home was the exporter and importer of these goods from American Home as a bonds form, was involved in an administrative review at the Commerce Department, which resulted in another party to that review filing an appeal to the Court of International Trade.

[00:03:13] Speaker 04:
The preliminary injunction in this case that was issued that pertained only to that company

[00:03:19] Speaker 04:
but customs interpreted it to later, interpreted it to possibly apply to American home.

[00:03:26] Speaker 04:
Congress gave liquidation instructions to customs on these.

[00:03:29] Speaker 02:
The original June 2504 liquidation was valid, correct?

[00:03:38] Speaker 02:
That was timely.

[00:03:38] Speaker 04:
It was timely at that point, whether it was correct or not.

[00:03:46] Speaker 04:
It was a timely liquidation, which was protested.

[00:03:50] Speaker 04:
and nothing happened but the protest while the litigation involving the other company proceeded at the CIT.

[00:03:59] Speaker 04:
At the CIT in 2005, the decision was made pertaining to the other company.

[00:04:09] Speaker 04:
Customs at that time

[00:04:12] Speaker 04:
through the correspondence they sent to the Council for American Own indicated that they were not clear whether they had had the authority to issue the initial liquidation instructions.

[00:04:23] Speaker 02:
You say the June 3rd 2005 reliquidation had the effect of sort of put in crude terms wiping off the books.

[00:04:35] Speaker 02:
the June 25th, 2004 liquidation.

[00:04:39] Speaker 04:
Yes, the 2005 liquidation was invalid because it was re-liquidation was invalid because it was issued more than 90 days after the original

[00:04:48] Speaker 04:
notice of the determination.

[00:04:50] Speaker 02:
The government argues, and I'm wondering what you're responding to, the government says isn't that a little bit inconsistent to say that an invalid reliquidation, which is your position, could have the effect of wiping off the books of valid liquidation?

[00:05:06] Speaker 04:
Although that's exactly what happened because one customs issued the reliquidation in 2005.

[00:05:12] Speaker 04:
Customs voided the original 2004 liquidation and

[00:05:18] Speaker 04:
reinstated and there was at that point no valid liquidation involved for the entries because the 2005 liquidation was invalid.

[00:05:27] Speaker 04:
Customs dissolved the 2004 liquidation because of the 2005 liquidation and there was nothing there.

[00:05:35] Speaker 04:
The only thing that could happen at that point then is the 2004 liquidation had to have become a deemed liquidation because there is no other valid liquidation of the entries at that point.

[00:05:48] Speaker 02:
No.

[00:05:49] Speaker 02:
So you're saying it was the deemed liquidation at zero percent?

[00:05:52] Speaker 04:
Zero percent, because that was the rate declared on the entry of the goods.

[00:05:56] Speaker 06:
Mr. Chiller, did the original liquidation that occurred within six months of instructions going to customs to liquidate in the first instance, correct?

[00:06:05] Speaker 04:
Yes, Your Honor.

[00:06:06] Speaker 06:
Why does that not prevent the deemed liquidation argument?

[00:06:11] Speaker 04:
Because the entry was never finalized.

[00:06:13] Speaker 04:
The liquidation was never finalized because a protest was filed with customs challenging the liquidation.

[00:06:19] Speaker 04:
And so it was left open.

[00:06:21] Speaker 04:
Bills were never sent to the importer to collect the duties that were liquidated in 2004.

[00:06:28] Speaker 04:
So it was an open entry at that time.

[00:06:30] Speaker 04:
And customs, after the 2005 reliquidations, customs on its own initiative, dissolved the 2004 liquidation.

[00:06:39] Speaker 04:
So at that point, something had to have happened to deal with how the entry should be liquidated and duties collected.

[00:06:51] Speaker 06:
Does that mean that the reliquidation had to avoid the original?

[00:06:58] Speaker 04:
Yes, and yes, Your Honor, we believe that the reliquary did void the original, and customs by then sending new bills, consistent with the 2005 liquidation, which is at an amount greater than the original 2004 liquidations, imposed a bill based on the 2005 time period, which included additional interest for the year during the litigation, and at that point,

[00:07:27] Speaker 06:
Is your argument affected or impacted by the failure of HHS to have filed an appeal following the protest?

[00:07:41] Speaker 04:
No, in fact, what the court did, the court tried to resolve the situation, I think, and using the precedent involved and the laws involved, because even the lower court admitted that the reliquitations were invalid.

[00:07:54] Speaker 04:
And the judge tried to find a solution to the issue.

[00:07:58] Speaker 04:
And the way he did it was determined that because American Home did not appeal the 2005 reliquidation, that it waived its right.

[00:08:13] Speaker 04:
And therefore, the new reliquidation amount was valid.

[00:08:17] Speaker 04:
We don't believe that's accurate, because in this particular situation,

[00:08:22] Speaker 04:
The court said that the pending protest for 2004 had not been denied at the time that the 2004 liquidations were voided by customs.

[00:08:33] Speaker 04:
That was done a few weeks later.

[00:08:34] Speaker 04:
According to the judge, because the protest was still pending,

[00:08:40] Speaker 04:
eight American homes should have appealed that the protest to maintain its strides.

[00:08:47] Speaker 06:
I would think that after it was realized that the reliquidations had been processed by error, that you would have scrambled at that point to the following day before the CRT.

[00:09:03] Speaker 04:
Well, Your Honor, we don't believe we had an obligation to protest.

[00:09:07] Speaker 04:
The only thing that we could have sued on at that time was the shout out.

[00:09:12] Speaker 06:
A lot of time, as you know, the filing before the CIT, that's where you get a new injunction.

[00:09:19] Speaker 06:
And most of the, it's often the case that this is done to protect your interest.

[00:09:25] Speaker 04:
We would have, we did, in this situation, Your Honor, there was no protest.

[00:09:29] Speaker 04:
pending at the time.

[00:09:30] Speaker 04:
The 2004 protest had finally been denied.

[00:09:36] Speaker 04:
Once that protest was denied, we had no obligation to file a new protest for the 2005 reliquidations.

[00:09:44] Speaker 04:
We had the option, which is what we took,

[00:09:47] Speaker 04:
to wait until customs filed a collection action against us and to raise our defenses to the collection action in that action for CIT rather than our filing a protest and filing an appeal of 2005.

[00:10:03] Speaker 00:
Do you mind if I ask you to comment on the government's cross appeal now about why 580 interests should be awarded?

[00:10:13] Speaker 04:
No.

[00:10:13] Speaker 04:
Go ahead.

[00:10:14] Speaker 04:
580 interest, your honor, is a statute, as I'm sure you know, was written and enacted in 1799.

[00:10:22] Speaker 04:
It was enacted in the first piece of legislation when the United States was begun because it was the first thing that they needed to do in order to derive revenue to help run the new country.

[00:10:38] Speaker 06:
You're familiar with the USGSP system, correct?

[00:10:42] Speaker 06:
Yes.

[00:10:43] Speaker 06:
So if the United States unilaterally lowers tariffs with the GSP country, say Ecuador, are those tariffs general tariffs or are they special tariffs as you would argue in the case of an antitoken duty?

[00:11:02] Speaker 04:
Well, a GSP tariff gives a benefit to a country because of its developing country status.

[00:11:07] Speaker 04:
And I would argue that they are applied as a tariff, a duty applicable to all imports from that country at an equal rate.

[00:11:17] Speaker 04:
But it's not a tariff that remains in effect forever, like a normal duty is in effect until Congress changes that duty.

[00:11:27] Speaker 04:
In a GSP situation,

[00:11:29] Speaker 04:
USTR annually, but they do re-evaluate GSB staff.

[00:11:35] Speaker 06:
They do that under the authority of Congress.

[00:11:37] Speaker 06:
Congress has extended authority to the USTR to handle these type of programs on its behalf, correct?

[00:11:46] Speaker 06:
Correct.

[00:11:46] Speaker 06:
So my question is, does that not become the general tariff to that particular country?

[00:11:52] Speaker 04:
It becomes the duty applicable to those products covered from that country, but it's not a typical tariff, Your Honor, because

[00:12:00] Speaker 04:
it's a special benefit given to that country, and it is not... What about negotiated rates under trade agreements?

[00:12:07] Speaker 06:
For example, even trade liberalization in the WTO?

[00:12:13] Speaker 04:
Well, in the WTO in the negotiations, the respective countries negotiate a deal and agree upon a rate to be applied to whatever product is being negotiated, but that

[00:12:27] Speaker 04:
that negotiated rate does not become applicable until Congress adopts it and incorporates it into the EU law, so it becomes a new thing.

[00:12:35] Speaker 06:
When Congress considers, when the trade package is brought home, and now Congress is considering the big terror schedules that are attached to it, a trade package,

[00:12:44] Speaker 06:
Are you arguing that there's no political considerations, there's no special interests or domestic type considerations involved in Congress deciding the outcome of the package?

[00:12:58] Speaker 04:
I know that there are all kinds of inputs that come into it, but once Congress has taken into account all of the input that it believes appropriate and

[00:13:11] Speaker 04:
passes a piece of legislation that incorporates the final number for each of these components, that becomes the new duty.

[00:13:17] Speaker 06:
So I guess you would agree then that even what we would call a general tariff or a general duty under this DMFN rate as we know it now, that they come inherent with political concerns such as protection of particular industries or products.

[00:13:43] Speaker 04:
they may or may not, your honor, depending on how the particular industry or whoever was interested in a particular product.

[00:13:51] Speaker 06:
I say that because your argument is that back in 1799 that when the tariffs were originally adopted that they were adopted primarily to raise revenue for the country and that they did not have attached to them any type of

[00:14:11] Speaker 06:
consideration, let's call it domestic protection considerations.

[00:14:16] Speaker 04:
That's your... I don't argue that they did not have any protectionist impact.

[00:14:23] Speaker 04:
We do argue though, and I believe it's substantiated, that the primary consideration at that time was the collection of revenue.

[00:14:29] Speaker 06:
So whenever Congress wants to protect an interest, it can do so by raising the general tariff.

[00:14:35] Speaker 04:
That will happen, yes, Your Honor, but that is

[00:14:39] Speaker 04:
very different from the situation of an anti-dumping duty, which does not fall into that category and did not exist in 1799 or even in the next 100 years, more than 100 years after that.

[00:14:54] Speaker 04:
So at that time, only regular duties could have been considered and anti-dumping duties

[00:14:59] Speaker 04:
which the court has found to be special duties that are unique and different from regular duties is what is at issue here.

[00:15:11] Speaker 00:
Mr. Shelley, you're well into your rebuttal time.

[00:15:13] Speaker 00:
Now, we'll restore the full amount if you are satisfied with this so far.

[00:15:18] Speaker 00:
Sure.

[00:15:18] Speaker 00:
Yes.

[00:15:19] Speaker 00:
Okay.

[00:15:21] Speaker 00:
Very good.

[00:15:21] Speaker 00:
All right.

[00:15:21] Speaker 00:
Mr. Kenney.

[00:15:31] Speaker 01:
May it please the court, Edward Kenney from the Department of Justice and with me is Brandon Rogers from U.S.

[00:15:37] Speaker 01:
Customs and Border Protection.

[00:15:40] Speaker 02:
uh... your honor uh... uh... mister shali has agreed the uh... two thousand four liquidation uh... were timely liquidation i'm sorry to jump into the time is fleeting i'd like to sort of pick up on what we were discussing uh... the presiding judge and judge reyna were discussing which is showing that the five eighty interest issue i'm sorry five eighty interest

[00:16:04] Speaker 02:
Let's assume that the government was in a position and as a matter of law or policy, whatever, it could have one of these interests but not both.

[00:16:16] Speaker 02:
Which would it prefer and why?

[00:16:18] Speaker 02:
In other words, if the government had to live with just 580 interests or just equitable interests,

[00:16:24] Speaker 02:
in these sorts of cases, which would it prefer and why?

[00:16:28] Speaker 02:
I realize you say you're entitled to both, but just in response to my question, what would you pick?

[00:16:35] Speaker 01:
Your honor, I don't think I'm prepared to answer on behalf of the government whether one is more favorable or the other to the government.

[00:16:43] Speaker 02:
Well, just a matter of policy, which, in other words, if there could only be one based on which you know the law and so forth and, you know, the policy, what would the government prefer?

[00:16:56] Speaker 01:
your honor I would have to say that would it almost vary in individual cases for example?

[00:17:05] Speaker 01:
I believe it would because if there's still money under the bond, if the bond hasn't been exhausted there would be 1505D interest accruing and then the government would be seeking if it's a recalcitrant surety where the government had to sue that surety to collect

[00:17:25] Speaker 01:
we would be seeking 580 interest because that is obligations due under a bond for duties.

[00:17:32] Speaker 01:
In this situation, the bond was assumed by duties alone.

[00:17:38] Speaker 01:
So right at the start, that bond was used up by duties.

[00:17:41] Speaker 01:
So in this case, we're seeking equitable interest for the time value of money to return the parties back to the position when the obligation was originally incurred.

[00:17:50] Speaker 00:
Yes, but if you were to get 580 interest, it would also serve to do that.

[00:17:56] Speaker 01:
To an extent, it could do that, yes.

[00:18:01] Speaker 00:
Here's my thinking.

[00:18:03] Speaker 00:
Equitable interest is an equitable determination by the judge.

[00:18:06] Speaker 00:
It does not have to be awarded.

[00:18:09] Speaker 00:
It usually is awarded, but it is to restore time value of money.

[00:18:13] Speaker 00:
Suppose you were in a scenario where inflation was at such a rate that nobody's earning more than, say, 2% return on their investments over time.

[00:18:22] Speaker 00:
The government comes along and collects 580 interest at 6% return.

[00:18:26] Speaker 00:
Is there still a need to compensate the government for and or domestic industry, whoever?

[00:18:31] Speaker 00:
Is there still a need to compensate for loss of time value of money if you just earned a 6% interest rate?

[00:18:39] Speaker 01:
Well, yes, Your Honor, because they're two different tracks.

[00:18:48] Speaker 01:
Equivalent interest is a compound type interest.

[00:18:50] Speaker 01:
It's just the same formula as 580 interest.

[00:18:56] Speaker 01:
Based on the T-bill rate, it's compounded just like any other type of time value of money type interest.

[00:19:04] Speaker 01:
580 interest is, as you said, your honor, 6% per annum.

[00:19:07] Speaker 01:
And the reasoning that there's a difference here is because

[00:19:16] Speaker 01:
580 interest is supposed to prompt the sureties.

[00:19:19] Speaker 01:
It's a penalty type interest to get the sureties to comply with their obligations, whereas equitable interest is just to put the parties back in the same position.

[00:19:32] Speaker 00:
You haven't answered my question at all.

[00:19:34] Speaker 00:
And you know that, because you've just skirted around giving me purposes behind the various forms of interest.

[00:19:41] Speaker 00:
If 580 interest was enacted in order to encourage prompt payment of bonds, I have no problem with that.

[00:19:50] Speaker 00:
Can't it simultaneously serve the purpose of ensuring that the government also gets the time value of its money?

[00:19:59] Speaker 00:
certain situations.

[00:20:00] Speaker 00:
Now there may be situations where interest rates are such that the time value of money really ought to be calculated more at an 8% rate.

[00:20:07] Speaker 00:
Ah, well maybe that opens the door to the need to supplement 580 interest with equitable interest.

[00:20:12] Speaker 00:
But that is very much at the trial court's decision making it seems to me.

[00:20:18] Speaker 00:
But what I'm not understanding is why the government thinks it's going to double dip on interest.

[00:20:26] Speaker 01:
I would agree that, as you said, depending on the time and the economics of the prevailing periods of time, 6% might not compensate the government.

[00:20:39] Speaker 01:
6% might compensate the government if you're evaluating it on a time value of money type issue.

[00:20:47] Speaker 00:
And isn't that what the court does when it's assessing equitable interest?

[00:20:53] Speaker 01:
Exactly.

[00:20:54] Speaker 00:
Yes.

[00:20:55] Speaker 00:
So why, if we were to agree with you that the government was entitled to 580 interest, what you've argued in your brief is, ah, yes, but don't touch the equitable interest.

[00:21:03] Speaker 00:
Give us both.

[00:21:04] Speaker 00:
Isn't the only logical thing to do if we agree with you on your 580 interest argument to vacate and remand the finding of equitable interest for the district court to reassess the need for equitable interest in light of the receipt of the 580 interest, understanding the purpose for which equitable interest is supposed to serve?

[00:21:24] Speaker 01:
I would respectfully disagree, and I do so because the equitable interest is serving to put the parties back into their same position, and 580 interest is serving the other reasoning, which is to ensure that securities pay their obligations.

[00:21:48] Speaker 00:
And you don't think that the 580 interest also satisfies the need to ensure the government has the time value of money?

[00:21:59] Speaker 01:
Depending on the economic situation, maybe not.

[00:22:02] Speaker 01:
However, Your Honor, in a situation where perhaps, in a situation where 6% does just meet the time value of money element,

[00:22:14] Speaker 01:
The parties would just be back in the same position as they were.

[00:22:20] Speaker 01:
element of what the government's position is on 580, that it's a punitive type of interest to when the government has to sue, has to sue on collection under an obligation that the bonds always said that, you know, pay upon demand.

[00:22:40] Speaker 01:
There's no real downside for the surety to not pay the government on its demand if

[00:22:49] Speaker 01:
they're only going to be in the same position had they invested the money if they didn't pay back in this situation in 2005 and they paid in 2015 and it's just time value of money they're really not at a loss.

[00:23:05] Speaker 01:
That's why 580 is and it's phrased the way it is in that upon all bonds in which suits are brought for the recovery of duties interest shall be allowed

[00:23:18] Speaker 01:
It's only when the government has to come and collect, and this is after all the administrative processes of dunning them and sending demand letters and all of that.

[00:23:28] Speaker 01:
Here, finally, they're being called to task.

[00:23:32] Speaker 01:
But surely they're being called to task for ignoring the government.

[00:23:35] Speaker 01:
Otherwise, there'd be no downsides.

[00:23:39] Speaker 02:
Ken, let me ask you.

[00:23:40] Speaker 02:
You're saying the 580 in those situations is an automatic interest, no equitable considerations.

[00:23:48] Speaker 01:
Once the government has to sue for collection, yes.

[00:23:54] Speaker 02:
Now, what are we to make then of the language in the great American insurance case?

[00:24:00] Speaker 02:
Recent decision in 2013 where there's a lengthy discussion there and Judge Toronto states that there's an equitable component

[00:24:12] Speaker 02:
to the 580.

[00:24:14] Speaker 02:
I think he says, assuming 580 interest is available as a matter of law, there's an equitable consideration that comes into play to determining whether, in fact, to be recovered.

[00:24:26] Speaker 02:
What is the government's position on that?

[00:24:28] Speaker 02:
Because I don't think either side has discussed that aspect of the 580 interest.

[00:24:33] Speaker 01:
No, Your Honor.

[00:24:34] Speaker 01:
In the Great American case, this court, and for the reasons stated,

[00:24:42] Speaker 01:
Procedural deficiencies in order for this court to get to those types of events.

[00:24:47] Speaker 02:
That's true, but I think one of the reasons, it seemed to me, and correct me if you think I'm wrong, but it seemed to me in reading the decision that Judge Toronto was saying, look, the reason we're affirming the decision of the CIT not to get to the 580 issue

[00:25:04] Speaker 02:
not to allow the government to present it was that there's a factual, equitable component and that wasn't brought out in time.

[00:25:13] Speaker 02:
So in other words, Judge Serrano was saying we're affirming the decision of the CIT not to hear this

[00:25:19] Speaker 02:
because the CIT was correct in that there was factual development of an equitable nature.

[00:25:26] Speaker 02:
So, I mean, it seems to be, Judge Toronto seems to be saying in Grade American that there's an equitable component in the 580 calculus.

[00:25:37] Speaker 02:
Now, do you agree or disagree with that?

[00:25:39] Speaker 01:
Well, Your Honor, I do understand that, recognize that.

[00:25:46] Speaker 01:
To the same extent, and we also have the case that... You agree or disagree?

[00:25:52] Speaker 02:
I mean, first of all, do you agree that Judge Toronto says there's an equitable component?

[00:25:58] Speaker 01:
Yes.

[00:25:59] Speaker 02:
Okay, now, that's point one.

[00:26:00] Speaker 02:
Point two, do you think that's correct or incorrect?

[00:26:04] Speaker 02:
I realize that because it's a decision that we have to follow.

[00:26:08] Speaker 01:
I agree, Your Honor.

[00:26:10] Speaker 01:
However, to the extent that it wasn't the basis of that holding in that case, the basis of the holding in the case is that there is procedural deficiencies.

[00:26:17] Speaker 02:
Yeah, but you said the procedural.

[00:26:18] Speaker 02:
No, you're correct.

[00:26:19] Speaker 02:
No question about it.

[00:26:20] Speaker 02:
It was a procedural deficiency.

[00:26:23] Speaker 02:
But the basis, as I read it, for our court to affirm

[00:26:29] Speaker 02:
the CIT's decision on that procedural deficiency was the finding that there was an equitable component in 580 interest.

[00:26:39] Speaker 02:
So, I mean, for that reason, I'm not sure, I don't think, at least I have difficulty seeing how those statements in there were dictated.

[00:26:47] Speaker 01:
Your Honour, we also have the other TSCs, the Federal Circuit of the Case, Federal Insurance,

[00:26:54] Speaker 01:
And we also have... But that wasn't an anti-dumping case.

[00:27:00] Speaker 01:
It was not an anti-dumping case exactly.

[00:27:02] Speaker 02:
And General and Great Americans speak specifically to 580 insurance in the anti-dumping setting.

[00:27:11] Speaker 01:
It does, Your Honor.

[00:27:12] Speaker 01:
However, if I could explain, the federal insurance case deals directly with 580 interest and goes to the decision on 580 interest.

[00:27:24] Speaker 01:
And in deciding that case, it's just deciding that this situation, this law apply.

[00:27:33] Speaker 02:
Let me ask you this.

[00:27:35] Speaker 02:
If we were to agree with the government, what would your position be if a decision came down from this panel saying,

[00:27:42] Speaker 02:
We agree with the government that as a matter of law, 580 interest is not barred, but citing to great American insurance, there has to be some determination in the district court as to the equitable component of 580 interest.

[00:27:59] Speaker 02:
So we would say as a matter of law, it's not barred, but the district, I'm sorry, but the CIT has to decide in the first instance whether the equities favor it citing great American.

[00:28:12] Speaker 01:
Well, I would say also that there is a... I would respectfully disagree with that to the extent that even if there is an equitable component, just like there is a case law discussing there's an equitable component to equitable interest, but that component in the realm of time value of money is just the fact that there was demand, that demand was unsatisfied.

[00:28:39] Speaker 01:
And that's the

[00:28:42] Speaker 01:
the equitable consideration there.

[00:28:45] Speaker 01:
It's the same, if the court is going to proceed under that matter, there's the same equitable elements of there was a demand, an obligation under a bond and a demand, and that demand was not paid.

[00:28:59] Speaker 02:
So I would submit that that, or specifically submit that that would be the equitable... You're saying that the, in this case, that to the extent there's an equitable component in the 580 calculus,

[00:29:11] Speaker 02:
It's already been addressed by the analysis that took place with respect to pure equitable interest.

[00:29:17] Speaker 02:
Correct your honor.

[00:29:18] Speaker 02:
So you would say in this case it's not necessary?

[00:29:21] Speaker 02:
Correct your honor.

[00:29:22] Speaker 00:
I have two questions about my lack of knowledge about how this process works entirely.

[00:29:29] Speaker 00:
Number one, is the government going to keep this money or are they going to give it to the domestic industries?

[00:29:34] Speaker 00:
I mean, if to the extent that there is interest related to time value of money and that the dumping harm the domestic industries and that the surety of $600,000 wasn't enough to cover that harm, do they get the interest or is the government going to keep the interest?

[00:29:49] Speaker 01:
We're in a situation where there's never been an equitable interest awarded by the court, so there's no situation that hasn't arisen yet.

[00:30:01] Speaker 01:
However, the statute does say that interest earned in the CBSOI, interest earned on anti-dumping duties, will be distributed.

[00:30:15] Speaker 01:
So I think that's the likely scenario where that will be evaluated.

[00:30:20] Speaker 01:
Whether 580 interest is interest earned on anti-dumping duties might be a different situation.

[00:30:27] Speaker 00:
But we don't know yet.

[00:30:28] Speaker 00:
We don't know yet.

[00:30:31] Speaker 00:
OK.

[00:30:31] Speaker 00:
And so I have one last question, which is, is all of this only relevant to the period from 99 to 2006, the Byrd Amendment?

[00:30:42] Speaker 00:
Yeah, but it's a different... I mean 580 is going to apply, obviously, to any time period, but what I mean is this, all of the arguments about putting the money in a special fund for distribution, not an interest-bearing account, that's only that limited window of time, right?

[00:30:58] Speaker 01:
Exactly, Your Honor.

[00:31:00] Speaker 01:
That subset of that argument is only applicable during that period of time.

[00:31:04] Speaker 00:
So what happens now?

[00:31:05] Speaker 00:
I mean, you know, I realize that this universe is in that third amendment time, but now, these are stupid process questions, sorry.

[00:31:12] Speaker 00:
But now, is it the case that when the government collects anti-dumping duties, it holds them in the general treasury for later distribution to qualified domestic industries who have been harmed by the anti-dumping?

[00:31:25] Speaker 01:
You're talking about within the CDSOA period.

[00:31:28] Speaker 01:
Now, the entries don't come under the CBSOA, the revenue goes into the general treasury.

[00:31:39] Speaker 00:
So I guess, do the domestic industries now not get compensation ever when they're harmed?

[00:31:46] Speaker 00:
Okay, so I know how many stupid questions I said.

[00:31:49] Speaker 00:
I don't really fully get it.

[00:31:50] Speaker 00:
I'm just curious.

[00:31:51] Speaker 00:
So my understanding is the time period that we're talking about, the money collected by the government is then divided up among domestic industries who file the correct paperwork.

[00:32:02] Speaker 00:
I'm going to give you your rebuttal time.

[00:32:04] Speaker 00:
Don't worry.

[00:32:04] Speaker 00:
But domestic industry who were harmed

[00:32:08] Speaker 00:
you know, by the anti-dumping of the importer, right?

[00:32:12] Speaker 00:
Isn't that what happens in 1999-2006?

[00:32:15] Speaker 00:
So I guess post-2006 I'm wondering, do the domestic industries now no longer get any sort of remuneration when they're harmed by an importer?

[00:32:26] Speaker 01:
Not under these.

[00:32:27] Speaker 01:
That's correct.

[00:32:28] Speaker 01:
It goes into the general treasury.

[00:32:29] Speaker 01:
That was the way it was prior to the CDS.

[00:32:31] Speaker 00:
No, I know.

[00:32:31] Speaker 00:
I know it was that way prior, but I just didn't know what happened post-Bird Amendment in 2006 on.

[00:32:36] Speaker 00:
So from 2006 on, the government just keeps the anti-dumping duties, and the domestic industries get no remuneration for the harm that they've done.

[00:32:44] Speaker 01:
One second, Your Honor.

[00:32:46] Speaker 01:
My consult might cancel for one second.

[00:32:54] Speaker 01:
Exactly, Your Honor.

[00:32:55] Speaker 00:
Okay good, no that's fine.

[00:32:57] Speaker 06:
The reason that the Burt Amendment process comes into play here is the argument again that these are special duties, correct?

[00:33:09] Speaker 06:
My question to you.

[00:33:11] Speaker 06:
So our case of Wheatland Tube and Apex Exports, they're being argued as cases that go against your position.

[00:33:20] Speaker 06:
How do you respond to that argument?

[00:33:22] Speaker 01:
Wheatland Tube, they're trying to come up with a

[00:33:26] Speaker 01:
an analysis or figuring out a margin, you're not talking about interest to be applied to a recovery here.

[00:33:42] Speaker 01:
I think there was a countervailing duty in Meatland, too.

[00:33:46] Speaker 01:
When they were trying to figure out the formula, they were wondering whether they should include, because you had to include, one of the criteria was import duties, whether they should include anti-dumping duties and or just regular customs duties.

[00:34:03] Speaker 01:
And for that scenario of figuring it out.

[00:34:06] Speaker 06:
Yeah, I understand that part.

[00:34:08] Speaker 01:
So it's a different scenario.

[00:34:09] Speaker 06:
How does this affect your argument?

[00:34:11] Speaker 01:
I think we're apples and oranges here with that.

[00:34:15] Speaker 01:
How?

[00:34:15] Speaker 01:
Because here we're talking about applying interest to a... We're at the stage of collections.

[00:34:23] Speaker 01:
Collections of duties.

[00:34:27] Speaker 01:
And the anti-dumping duties are another form of duties, just like

[00:34:32] Speaker 01:
other general duties that need to be collected.

[00:34:35] Speaker 01:
There's no reason to create a dichotomy of some regular customs duties.

[00:34:42] Speaker 01:
We're really going to try and use all laws to recover, yet anti-dumping duties, we would not do that.

[00:34:51] Speaker 01:
The surety would then be at a position to say,

[00:34:55] Speaker 01:
Well, let's put the anti-dumping duty, we'll put that off and pay that later.

[00:35:00] Speaker 06:
Forget about the surety right now.

[00:35:03] Speaker 06:
What's your position on, are anti-dumping duties, are they to be treated as general customs duties for purposes of 580?

[00:35:18] Speaker 01:
Yes, to the extent that 580 talks about duties in general, it talks about all duties.

[00:35:24] Speaker 01:
is our position.

[00:35:25] Speaker 01:
So yes.

[00:35:26] Speaker 00:
Okay, I want to be able to restore your rebuttal time.

[00:35:28] Speaker 00:
So we're five full minutes over.

[00:35:30] Speaker 00:
So we're going to add to Mr. Shelley's time to the extent he needs it.

[00:35:35] Speaker 00:
Now let's let him have his rebuttal.

[00:35:38] Speaker 00:
Did you ask for two minutes of rebuttal?

[00:35:40] Speaker 00:
Is that what you had asked for?

[00:35:41] Speaker 00:
I had asked for three.

[00:35:42] Speaker 00:
Three?

[00:35:42] Speaker 00:
Okay.

[00:35:43] Speaker 00:
We'll see.

[00:35:45] Speaker ?:
Yes.

[00:35:45] Speaker 00:
We'll see how it goes.

[00:35:46] Speaker 00:
Okay, Mr. Shelley.

[00:35:50] Speaker 04:
Thank you, Your Honor.

[00:35:52] Speaker 04:
I'd like to look at the CDSOA question.

[00:35:57] Speaker 04:
First comment Mr. Kenney made about interest being included in CDSOA monies that go into the special accounts.

[00:36:07] Speaker 04:
The only interest that could be included would be 1677G interest.

[00:36:11] Speaker 04:
collected from an importer for an underpayment of duty.

[00:36:15] Speaker 04:
And so if customs did collect, because the declaration of the amount of duty was too small, the importer didn't pay enough money, that interest would be included in going to the special account.

[00:36:28] Speaker 04:
And all of that total amount would then be distributed to an affected domestic producer.

[00:36:34] Speaker 00:
So now, is it true that domestic producers don't get anything?

[00:36:37] Speaker 04:
When the law was repealed,

[00:36:42] Speaker 04:
Domestic producers can continue to obtain distributions of funds that were collected prior to October 2007.

[00:36:50] Speaker 04:
For current and anti-dumping duties being collected going forward from October 1, 2007, they do not.

[00:36:57] Speaker 04:
Now the system is back to the way it was prior to the CDSOA.

[00:37:01] Speaker 04:
So it goes down to the general treasury.

[00:37:04] Speaker 04:
And then you get the question of whether equitable interest should be payable.

[00:37:08] Speaker 04:
And in this situation,

[00:37:11] Speaker 04:
The trial court's decision on why equitable interest is payable is to give full compensation to the government for the lack of use of these funds during this period of disagreement about who owes who what.

[00:37:24] Speaker 04:
It's not the case though for these particular entries because the government will not get any interest at all because it does not get the funds that are collected during the CDSOA period of time and there cannot be any interest.

[00:37:42] Speaker 00:
But that was why I asked the government lawyer who was going to keep the interest.

[00:37:46] Speaker 00:
There won't be any interest.

[00:37:48] Speaker 00:
Well, under the current rule of interest.

[00:37:51] Speaker 00:
So if equitable interest is warranted, the government, the answer to his question was, as far as I understand it, it sounds as though equitable interest would flow to the domestic industry, who are the harmed party who did lose the money through the time value of money.

[00:38:07] Speaker 04:
If, in fact, it was awarded to a particular entry,

[00:38:12] Speaker 04:
and they were then put into the special account because it is part of the total anti-dumping duties collected for this product that's subject to the CDSOA.

[00:38:23] Speaker 04:
The effective domestic producer will get the total amount of money, which would, in that situation, include the anti-dumping duties collected plus the equitable interest applicable to it because it would, in this situation, cover the surety who didn't pay.

[00:38:36] Speaker 06:
But to be clear, outside of the CDSOA,

[00:38:39] Speaker 06:
context, this interest would not go to domestic producers.

[00:38:44] Speaker 04:
No.

[00:38:44] Speaker 04:
Outside of that, all of the money would go to the Treasury, the NEPDs collected, plus any other bill.

[00:38:49] Speaker 06:
And before the Burt Amendment, there were no distributions that were made to any of the domestic parties.

[00:38:55] Speaker 02:
No.

[00:38:55] Speaker 02:
Not at all.

[00:38:56] Speaker 02:
Not at all.

[00:38:56] Speaker 02:
That was the unique situation.

[00:38:58] Speaker 02:
So let me ask you.

[00:38:59] Speaker 02:
On the 580 interest, how do you read great American insurance?

[00:39:04] Speaker 02:
It does say that there's a equitable component in the determination of 580 interest.

[00:39:11] Speaker 02:
Do you agree with that?

[00:39:13] Speaker 02:
Yes.

[00:39:13] Speaker 02:
Okay.

[00:39:14] Speaker 02:
So if we were to say that as a matter of law, the recovery of 580 interest is not barred,

[00:39:22] Speaker 02:
but there has to be a determination of the equitable considerations that are relevant.

[00:39:28] Speaker 02:
What would you say would be those equitable considerations?

[00:39:31] Speaker 04:
Well, I think the equitable considerations for 580 would be much more minor, if you can say that, than a typical equitable interest because 580 is a statutory interest.

[00:39:43] Speaker 04:
It's not equitable interest.

[00:39:44] Speaker 04:
It's set by the statute, the amount of duty

[00:39:47] Speaker 04:
Interest to be applied is set by the statute, and it's set on what duties it's supposed to apply, which gets to the question, dumping duties, are they part of duties in the 580, which we obviously agree are included in 580.

[00:40:04] Speaker 04:
So I think it's a statutory interest versus equitable interest situation.

[00:40:08] Speaker 04:
I think there are equitable principles that a trial court might consider involving whether to award the 580 interest

[00:40:15] Speaker 04:
But I think they're very different from the interest the equitable interest that they should consider in determining whether it towards actual equitable interest under their powers to grant additional compensation.

[00:40:28] Speaker 04:
Okay, thank you.

[00:40:30] Speaker 00:
Anything further, Mr. Shelley?

[00:40:31] Speaker 00:
Yeah, thank you.

[00:40:32] Speaker 00:
Okay, thank you.

[00:40:33] Speaker 00:
Mr. Kenney, you may use two minutes of rebuttal only limited to, of course, your cross appeal.

[00:40:43] Speaker 01:
Yes, Your Honor.

[00:40:44] Speaker 01:
I do agree with Mr. Shelley and what he was saying about the 580 interest being statutory interest and to that extent.

[00:40:52] Speaker 00:
So to the extent that you wrongly answered Judge Schell's questions in your initial presentation when you agreed with him that it was equitable rather than statutory, you're now changing in rebuttal your position or did you sort of not realize you were giving that away earlier?

[00:41:08] Speaker 01:
I did not realize I was giving that away.

[00:41:11] Speaker 01:
However, it is obviously a statutory element and just like in federal insurance.

[00:41:19] Speaker 00:
Maybe you didn't understand where the questions were leading.

[00:41:21] Speaker 00:
Is it equitable a la does the lower court have the freedom to disregard it and not award it?

[00:41:27] Speaker 00:
Right.

[00:41:28] Speaker 00:
And your view is precisely what now?

[00:41:31] Speaker 01:
If it's applicable, it's mandatory to apply, as in the federal insurance case.

[00:41:37] Speaker 00:
So there's no discretion.

[00:41:40] Speaker 00:
The court has to award it.

[00:41:43] Speaker 02:
Yes.

[00:41:44] Speaker 02:
What happens then with what's said in American, in Judge Toronto's case?

[00:41:55] Speaker 01:
I believe that in the Great American case, it was decided, as I stated before, it was decided on the procedural grounds.

[00:42:04] Speaker 02:
Right, but he talks about the equitable component.

[00:42:07] Speaker 02:
Mr. Shelley says, when I asked him about that Great American case, his response was, as I understood it, that yes, that's what Great Americans says, there is an equitable component, but it's

[00:42:21] Speaker 02:
Maybe I'm misusing his words, minor equitable considerations compared to the broader equitable considerations that apply in the case of equitable insurance per se.

[00:42:35] Speaker 02:
Do you understand that?

[00:42:36] Speaker 01:
Equitable interest.

[00:42:37] Speaker 01:
Yes, Your Honor.

[00:42:39] Speaker 01:
To the extent... You said there's some little equities in the 580 calculus in line with Great American, but they're nothing compared to the big equities that come into play in equitable... If I'm understanding it, I think I agree with Mr. Shelley, because the small equity would be just the fact that it was demanded, or we've had to sue, it was demanded and it was not.

[00:43:02] Speaker 00:
Is it possible that you would read Judge Turano's language, and I'm actually going to read you the sentence so that you don't have to try and do it from memory, but he says, and I believe this is the sentence that Judge Schultz's questions are focusing on, the characterization leaves rather than disposes of questions about whether 580 applies to anti-dumping duties at all and whether

[00:43:23] Speaker 00:
If so, case specific equitable considerations are relevant to its application as is common under other variously worded authorizations to apply penalties.

[00:43:33] Speaker 00:
Would it be the government's position that I should interpret this sentence as especially with the whether if so language by Judge Toronto that he wasn't saying equitable considerations were necessarily applied, but rather leaving open the possibility that when another court looked into 580,

[00:43:50] Speaker 00:
They could conclude it was either statutory and mandatory, or maybe had equitable.

[00:43:54] Speaker 00:
In fact, footnote two, which is attached to that sentence, and when you read all the cases he cites, in every one of them, those statutes only allowed for the assessment of those penalties if a determination of willfulness was, for example, rendered.

[00:44:08] Speaker 00:
things like that intentionality malice all of the fact that you think you think that we're we're quite a bit different from this one so is it your view that maybe he wasn't being definitive but was rather opening the door for another court to consider exactly exactly uh... it wasn't when i was discussing uh... that it's really the great american case was decided on a procedural issue and the rest of it was

[00:44:36] Speaker 01:
left open.

[00:44:37] Speaker 01:
And what we're guided by is federal insurance.

[00:44:44] Speaker 00:
Thank you.

[00:44:46] Speaker 00:
Clues are proceeding in this case.

[00:44:48] Speaker 00:
The case is taken under submission.

[00:44:50] Speaker 00:
I thank both councils.

[00:44:51] Speaker 00:
The argument was very helpful.

[00:44:53] Speaker 00:
Our next case today