[00:00:00] Speaker 02:
We'll hear argument on behalf of the appellee, Mr. Sternhell.

[00:00:05] Speaker 00:
Thank you, Your Honors.

[00:00:06] Speaker 00:
Philip Sternhell for United States Steel Corporation.

[00:00:09] Speaker 00:
We thank the court for its time in light of these somewhat unusual circumstances.

[00:00:15] Speaker 00:
While appellants in their briefs seek to portray this appeal as a series of errors by commerce and taking adverse actions against the appellants, what the appellants are actually proposing is a fairly sweeping alteration

[00:00:28] Speaker 00:
in the burden of proof that they bear in front of commerce.

[00:00:32] Speaker 00:
Commerce's actions are well supported by the record, and USCL respectfully submits that the Court of International Trade's decisions affirming commerce's remand results can be affirmed in whole.

[00:00:44] Speaker 00:
Each of the three issues raised by the appellants shares a common theme and a common flaw.

[00:00:50] Speaker 00:
They ask the court to assume the very facts that they need to establish, and they seek a benefit that they're not entitled to.

[00:00:57] Speaker 00:
First, appellants demand that all of the untested bill it be treated as carbon when the record in fact demonstrates that both carbon and alloy bill it was used.

[00:01:06] Speaker 00:
They demand that they receive a scrap offset when they can't account for when and from what products the scrap was produced.

[00:01:14] Speaker 00:
And they demand that commerce use non-market economy freight charges instead of a more appropriate surrogate simply because the non-market economy freight forwarders were paid in US dollars.

[00:01:24] Speaker 00:
To be clear,

[00:01:25] Speaker 00:
None of these were adverse actions taken by commerce.

[00:01:29] Speaker 00:
With respect to the carbon, the issue of the carbon versus the alloy billets, we just want to stress that the issue is not whether mill certificates can connect the type of billets used to the steel to the OCTG that was actually produced or that sampling can never be used in establishing the composition of OCTG.

[00:01:51] Speaker 00:
The issue is the connection of the mill certificates

[00:01:54] Speaker 00:
to the unsampled quantities.

[00:01:56] Speaker 00:
And there is no evidence here that a particular contract number or particular condom is necessarily composed of the same type of OCTG that comes from the same type of billet.

[00:02:10] Speaker 00:
We have nothing in the orders.

[00:02:13] Speaker 00:
We have nothing in the mill certificates themselves.

[00:02:17] Speaker 00:
And we know that these runs took place across a number of months.

[00:02:22] Speaker 00:
used, in some cases, six different suppliers of billet and across multiple heats.

[00:02:28] Speaker 00:
So we have nothing to say that the OCTG in each condom was identical.

[00:02:33] Speaker 00:
There is evidence.

[00:02:35] Speaker 02:
Would you comment on their concern about taking the average of the surrogate values?

[00:02:42] Speaker 00:
Certainly.

[00:02:42] Speaker 00:
I think what we have here is what commerce was faced with was evidence going in both directions.

[00:02:51] Speaker 00:
certainly some evidence from the mill certificates that some of the OCTG, at least the tested OCTG, was composed from carbon billet.

[00:03:04] Speaker 00:
We also have evidence on the other side that at least some of the contract numbers and some of the OCTG was composed of alloy billet, with the evidence going in both directions.

[00:03:21] Speaker 00:
with the appellants taking the extreme position that all of the untested OCTG was carbon, Commerce came to a reasonable conclusion to split it in the middle, I think as Judge Goldberg described it as a solomonic solution.

[00:03:43] Speaker 00:
The standard of review here is whether or not Commerce's determination in that regard was supported by substantial evidence.

[00:03:52] Speaker 00:
while you could certainly come to perhaps a different average or a different conclusion, that's not sufficient to reject commerce's determination.

[00:04:06] Speaker 00:
It's not sufficient to disregard the deference that commerce is owed in that respect.

[00:04:16] Speaker 00:
I would also like to touch on the issue

[00:04:21] Speaker 00:
of the quote unquote mistake that appellants focus on in their briefing.

[00:04:27] Speaker 00:
And respectfully, we believe that this entire argument put forward by the appellants is really a sideshow.

[00:04:34] Speaker 00:
Because to be clear, the statement that the appellants made below in the prior to the preliminary results proposing an alloy-based surrogate as appropriate for the entirety of the subject merchandise

[00:04:52] Speaker 00:
That was not inaccurate, or at least it was not wholly inaccurate.

[00:04:56] Speaker 00:
So the idea that this contention that it was a mistake sort of lacks the necessary predicate that it was actually false or that it was actually wrong.

[00:05:08] Speaker 00:
And in any event, commerce considered whether or not it was a mistake, and we believe appropriately rejected that contention based on the progression of the record.

[00:05:20] Speaker 00:
Initial identification is alloy.

[00:05:22] Speaker 00:
They looked at the inventory slips.

[00:05:24] Speaker 00:
They looked at the incomplete mill certificates and the website screenshots and came to the conclusion that some of this OCTG came from billet that was alloy.

[00:05:38] Speaker 00:
If I may move on to the scrap offset issue, we just want to highlight that

[00:05:48] Speaker 00:
The issue here is one of timing and scope.

[00:05:51] Speaker 00:
A scrap offset is a benefit that the appellant would be entitled to if they could prove that the scrap was generated during the period of review and if they could show that the scrap was generated from the subject merchandise.

[00:06:08] Speaker 02:
You didn't dispute that there should be a scrap offset.

[00:06:11] Speaker 02:
Is that right?

[00:06:13] Speaker 00:
No.

[00:06:13] Speaker 00:
I mean, I think if you can show

[00:06:17] Speaker 00:
that there was scrap generated from the subject merchandise during the period of review, then you are entitled to a scrap offset.

[00:06:28] Speaker 00:
But if here, the only information they provided was not tied to the subject merchandise and it was not tied to the period of review.

[00:06:38] Speaker 00:
So we don't know, I think, and more to the point, commerce looked at it and said, we cannot determine where and when

[00:06:47] Speaker 00:
this scrap was produced.

[00:06:49] Speaker 03:
In other words, there was a lack of proof.

[00:06:51] Speaker 00:
Certainly, yes.

[00:06:52] Speaker 00:
And the appellants here bore the burden below of establishing that offset.

[00:07:00] Speaker 00:
Commerce looked at the evidence that they put into the record, determined that they were not entitled to it, that they didn't cross that threshold.

[00:07:09] Speaker 00:
And commerce's determination in that regard is due a great deal of deference.

[00:07:16] Speaker 02:
So why shouldn't that be estimated just the same way that surrogate value is estimated?

[00:07:23] Speaker 02:
I'm sorry, why shouldn't they estimate the... It's a matter of proof because we appreciate their difficulties of tracing particular scrap to particular shipments.

[00:07:35] Speaker 00:
I think... I apologize.

[00:07:38] Speaker 02:
Please.

[00:07:39] Speaker 00:
I think there are...

[00:07:43] Speaker 00:
scenarios in which it can be estimated.

[00:07:46] Speaker 00:
And perhaps this is some of the decisions or some of the reviews that the appellants point to, for instance, in drawn stainless and multilayered wood, utility scale wind towers.

[00:08:02] Speaker 00:
The respondents there provided information

[00:08:08] Speaker 00:
from which an estimate could be derived, from which the information, particularly, was it produced from the subject material, subject goods, was it produced during the period of review, that even if you couldn't come to an exact number, you could come to something that commerce was comfortable with.

[00:08:29] Speaker 00:
What we have here is an absence of that, where commerce said, we don't even have enough to make that estimate.

[00:08:38] Speaker 00:
And so I think that's where commerce found itself.

[00:08:43] Speaker 00:
And this wasn't a punitive action.

[00:08:46] Speaker 00:
The respondents here bore the burden of putting that evidence into the record.

[00:08:53] Speaker 03:
Are you saying that with respect to the first issue, there was enough evidence, data from which an average could be taken, but not for the scrap?

[00:09:04] Speaker 00:
Yes.

[00:09:04] Speaker 00:
Well, I think with the first issue,

[00:09:08] Speaker 00:
There is sufficient evidence to demonstrate that both carbon and alloy billet was used.

[00:09:16] Speaker 00:
And Commerce couldn't come to a conclusion that didn't have evidence to say 80-20, 60-40.

[00:09:25] Speaker 00:
And so they selected 50-50 as the average that they used.

[00:09:32] Speaker 00:
Again, you could possibly come to a different conclusion.

[00:09:37] Speaker 00:
Commerce's determination is entitled to deference.

[00:09:40] Speaker 00:
With the scrap, it's the complete absence of evidence that any of the scrap that was sold, any of the scrap that they're claiming should be used as an offset, actually came from the subject materials.

[00:09:57] Speaker 00:
We don't have anything tying that scrap that they're claiming

[00:10:02] Speaker 00:
to the subject materials or to production during the period of review.

[00:10:09] Speaker 00:
Both of those are necessary predicates to granting the offset.

[00:10:20] Speaker 02:
Thank you.

[00:10:21] Speaker 02:
We'll hear from your colleague.

[00:10:23] Speaker 00:
Thank you.

[00:10:30] Speaker 02:
Mr. Preheim.

[00:10:31] Speaker 01:
Good morning.

[00:10:32] Speaker 01:
May it please the court?

[00:10:33] Speaker 01:
I don't have anything to add, but I'm certainly happy to entertain any questions the court may have for the government.

[00:10:40] Speaker 03:
Your colleague didn't have time to deal with the freight costs.

[00:10:44] Speaker 03:
Perhaps you might address that.

[00:10:46] Speaker 01:
Certainly, Your Honor.

[00:10:48] Speaker 01:
The statute presumes that government action distorts prices that non-market economy exporters pay for their inputs.

[00:10:56] Speaker 01:
But commerce will normally make an input, value an input,

[00:11:00] Speaker 01:
purchased from a market economy supplier and paid for in a market economy currency with the price paid to the market economy supplier.

[00:11:08] Speaker 01:
Of course, here we had a chain where Chen Di paid a freight forwarder who paid a Chinese agent who then paid a Korean market economy carrier.

[00:11:16] Speaker 01:
Now, we had the prices paid from Chen Di to the freight forwarder and the prices paid from the freight forwarder to the Chinese agent, but we simply had no information about how much money was paid

[00:11:27] Speaker 01:
from that Chinese agent to the market economy carrier, the Korean carrier.

[00:11:32] Speaker 01:
And that's the information that commerce needs.

[00:11:35] Speaker 01:
Now, Cheng Di did provide documentation, but all that documentation said was that the payment was made in U.S.

[00:11:43] Speaker 01:
dollar settlement.

[00:11:44] Speaker 01:
But it didn't provide the critical information, which was the actual amount of the payment.

[00:11:51] Speaker 02:
Anything else you need to tell us?

[00:11:53] Speaker 01:
Nothing further.

[00:11:54] Speaker 01:
Thank you.

[00:11:55] Speaker 01:
Thank you both.

[00:11:58] Speaker 02:
Thank you for coming to present.

[00:12:00] Speaker 02:
Thank you.

[00:12:02] Speaker 02:
The case is taken under submission.