[00:00:04] Speaker 03:
We have five cases before us today.

[00:00:09] Speaker 03:
One case has already been disposed of and handled on the briefs.

[00:00:14] Speaker 03:
So we have four cases for argument.

[00:00:17] Speaker 03:
The first case is Boomerang II, LLC versus the United States, 16-15-54.

[00:00:24] Speaker 03:
Mr. Shangrin, I understand you're going to speak first.

[00:00:31] Speaker 03:
Am I correct?

[00:00:31] Speaker 03:
You're speaking for six minutes.

[00:00:33] Speaker 03:
You're going to reserve three minutes

[00:00:35] Speaker 03:
Rebuttal and then follow mr. Cooper you you have four minutes reserving to is that correct?

[00:00:45] Speaker 03:
Councillor bond you have 11 minutes and Councillor Nunez four minutes correct all right all right you may proceed Good morning your honors may it please this honorable court I'm Roger Shagran Shagran associates on behalf of plaintiff appellants boomerang at all

[00:01:03] Speaker 06:
Our case comes down to one issue.

[00:01:07] Speaker 06:
Does DOC regulation 351-401F and DOC's longstanding practice require that when the department finds transactions between affiliated companies, it must decide whether to collapse these affiliated companies, or doesn't it?

[00:01:25] Speaker 05:
The government, in its briefed report... The Commerce Department never made a decision on that issue.

[00:01:29] Speaker 05:
Is that correct?

[00:01:30] Speaker 05:
They did not.

[00:01:31] Speaker 05:
Did you ever argue that to the Commerce Department?

[00:01:34] Speaker 06:
We argued the affiliation issue as to similar affiliated companies or collapsing issues doing the same things in transactions.

[00:01:45] Speaker 05:
But you never argued as to the Colombian data.

[00:01:47] Speaker 06:
That is correct.

[00:01:48] Speaker 05:
Even though you did make an argument as to why the Colombian data shouldn't be used.

[00:01:53] Speaker 06:
Yes, that is correct.

[00:01:54] Speaker 06:
Why isn't that a failure to exhaust?

[00:01:57] Speaker 06:
Because, Your Honor, this is one of the issues, as in the regulations, most of the issues that the Department

[00:02:03] Speaker 06:
addresses and determining its dumping calculations that the department must do.

[00:02:08] Speaker 06:
So a party cannot fail to exhaust its remedy when the department has to do something.

[00:02:13] Speaker 05:
I don't understand that.

[00:02:14] Speaker 05:
The department has a lot of regulatory obligations to consider and a lot of statutory obligations to consider and they do them and they think they've done them correctly.

[00:02:24] Speaker 05:
If you think they haven't, it's incumbent upon you under the exhaustion statute and regulation to

[00:02:32] Speaker 05:
raise that to them so that there can be a decision for them to make and then be reviewed by the CIT.

[00:02:38] Speaker 05:
Isn't that correct?

[00:02:39] Speaker 06:
No.

[00:02:40] Speaker 06:
With all due respect, you're on the ruling district.

[00:02:41] Speaker 05:
So you think that if there's any statute of regulation out there that poses an obligation on commerce, you're allowed to raise it for the first time at the CIT?

[00:02:51] Speaker 05:
As to certain items, yes.

[00:02:52] Speaker 06:
That can't be the exhaustion rule.

[00:02:54] Speaker 06:
Well, we believe that's what these courts have found.

[00:02:57] Speaker 05:
And in addition here, as the court recognized.

[00:02:59] Speaker 05:
Can you point to a decision from this court

[00:03:01] Speaker 05:
that says that.

[00:03:03] Speaker 06:
Well, normally you defer on exhaustion to the CIT.

[00:03:07] Speaker 05:
We don't defer to the CIT on exhaustion.

[00:03:10] Speaker 05:
We review it for abuse of discretion, but we don't defer to the legal articulation.

[00:03:15] Speaker 06:
Correct.

[00:03:15] Speaker 06:
It's an abuse of discretion remedy.

[00:03:17] Speaker 05:
But it's not an abuse of discretion on their legal interpretation, the exhaustion rule.

[00:03:22] Speaker 05:
It seems to me, if your view is that as a matter of law, you can

[00:03:27] Speaker 05:
neglect to respond or neglect to raise an issue and raise it on the first time to the CIT, that that's an incorrect interpretation of basic exhaustion principles, not just in these cases, but in administrative law as a whole.

[00:03:42] Speaker 06:
Well, and as the court below found here, the first time the Department of Commerce ever utilized any of these Colombian transactions

[00:03:51] Speaker 06:
for any use was in its final determination.

[00:03:52] Speaker 05:
But that's always going to be the case if they change their mind on a final determination.

[00:03:57] Speaker 05:
Are you saying that if commerce uses a different calculation they used in the initial determination, that you're free to raise any arguments whatsoever that you may not have known about because the other party raised them, but you just chose not to?

[00:04:12] Speaker 06:
Well, I think that is the case.

[00:04:14] Speaker 05:
And in this particular circumstance, for example, the sound is- What support is there for that that's a correct legal interpretation of an exhaustion rule?

[00:04:21] Speaker 06:
I believe that and, you know, we can further refer your analysis that for issues that the department must make, I mean, there's a whole number of them.

[00:04:33] Speaker 06:
There's very few issues in the statute and the regulations that require the parties to raise those issues in the department.

[00:04:40] Speaker 06:
There are myriad issues which is why we have a several hundred page final decision here that the department must make or else they're not doing dumping calculations.

[00:04:49] Speaker 03:
And we think it's common for issues to be raised.

[00:04:54] Speaker 03:
And I guess your argument is that you did not have an opportunity to address this particular issue.

[00:04:59] Speaker 03:
That is correct, Your Honor.

[00:05:01] Speaker 03:
But the data was on the record.

[00:05:03] Speaker 06:
The data was placed on the record.

[00:05:04] Speaker 06:
In thousands of pages of data, this data was placed on the record.

[00:05:08] Speaker 03:
Right.

[00:05:08] Speaker 03:
But you're looking at establishing constructive value for profit.

[00:05:13] Speaker 03:
And you have profit data on the record.

[00:05:17] Speaker 03:
Why did you not respond to that or at least raise that or see it or foresee that knowing that commerce can switch between a preliminary and a final determination and say, I'm going to at minimum object to this for the following reasons or alert commerce to the need to collapse?

[00:05:37] Speaker 06:
Your honor, there were a number of alternatives for profits.

[00:05:41] Speaker 05:
There weren't that many, though.

[00:05:42] Speaker 05:
This is not a case where there were

[00:05:45] Speaker 05:
There were hundreds and hundreds of data sets that could be used.

[00:05:48] Speaker 05:
There was no more than six or seven countries or things.

[00:05:52] Speaker 05:
And this isn't a case where commerce plucked this data

[00:05:56] Speaker 05:
without notice from anybody's argument.

[00:05:58] Speaker 05:
I mean, the other side specifically argued to use this data.

[00:06:02] Speaker 05:
You specifically argued against it.

[00:06:04] Speaker 05:
You just didn't come up with the argument you have now that you made for the first time to the CIT.

[00:06:09] Speaker 05:
Are you saying that argument wasn't available to you when you made your response in your rebuttal brief?

[00:06:14] Speaker 06:
Not that it was clearly unavailable, but this was one phrase in a 67-page brief.

[00:06:18] Speaker 06:
And in fact, counsel for the Saudis did not even say one word about this issue at the hearing.

[00:06:25] Speaker 06:
nor to the department.

[00:06:27] Speaker 04:
So this came out of the blue.

[00:06:28] Speaker 04:
You agree that the issue is raised, though, by your adversary, correct?

[00:06:32] Speaker 06:
We agree that there was a phrase in their 67-page brief with this issue.

[00:06:37] Speaker 05:
Which you responded to.

[00:06:38] Speaker 05:
I mean, how can you say it came out of the blue when you specifically made a response and said, you can't use this data?

[00:06:45] Speaker 05:
If you're going to argue against the use of the data, aren't you obliged to tell Commerce all the reasons that you can't use the data?

[00:06:51] Speaker 06:
With all due respect, Your Honor, no, we don't believe so.

[00:06:53] Speaker 06:
We believe that.

[00:06:55] Speaker 05:
I don't understand.

[00:06:57] Speaker 05:
Please don't talk over me.

[00:06:57] Speaker 05:
I don't understand how that's a correct legal articulation of basic exhaustion principles.

[00:07:03] Speaker 05:
If you're on notice,

[00:07:04] Speaker 05:
that a certain decision and certain evidence may be relied on, and you have an opportunity to address all arguments why it shouldn't be relied on, and you fail, you have failed to exhaust.

[00:07:15] Speaker 04:
I want to talk to you about the statute 28 U.S.C.

[00:07:18] Speaker 04:
section 2637D.

[00:07:20] Speaker 04:
It says that the Court of International Trade shall, where appropriate, require the exhaustion of administrative remedies.

[00:07:29] Speaker 04:
So the shall seems to make a requirement that they have to do it.

[00:07:33] Speaker 04:
How do you interpret where appropriate?

[00:07:37] Speaker 06:
We believe as a reviewing court, you have to find that they abuse their discretion.

[00:07:42] Speaker 06:
They did have to make this decision.

[00:07:44] Speaker 06:
The court did make this decision based on the record.

[00:07:48] Speaker 06:
And as I just told Judge Hughes, they said, look, there was no due process for the parties because the department never

[00:07:57] Speaker 06:
gave the parties an opportunity to raise all these issues because the first time

[00:08:02] Speaker 06:
they took this action was in their finance foundation.

[00:08:06] Speaker 04:
That is what they argue now.

[00:08:07] Speaker 04:
Today, you're arguing something a little different, though.

[00:08:09] Speaker 04:
I mean, I shouldn't say they argued.

[00:08:11] Speaker 04:
The CIT held that was the basis for the CIT's decision.

[00:08:14] Speaker 04:
But what I hear from you is something a little different.

[00:08:16] Speaker 04:
It sounds like you're saying there was no exhaustion of remedies, because this is something commerce should have done anyway.

[00:08:21] Speaker 06:
That is correct.

[00:08:22] Speaker 04:
So that's a different rationale than the CIT's rationale.

[00:08:24] Speaker 04:
That is correct.

[00:08:24] Speaker 06:
Well, we agree with the CIT's rationale, but we do believe that.

[00:08:27] Speaker 05:
But the CIT's rationale would mean that every time commerce comes up with a different

[00:08:32] Speaker 05:
methodology and its final determination that the exhaustion requirement goes out the window because they've always come up with a new methodology that is after the briefing that you haven't specifically been given an opportunity to respond to.

[00:08:46] Speaker 06:
Hopefully not every time.

[00:08:48] Speaker 06:
This was the issue that decided whether this would be an affirmative or negative determination.

[00:08:53] Speaker 05:
I don't understand how we could cabin that.

[00:08:56] Speaker 05:
If you're allowed to not raise arguments when you're on notice that that data might be used,

[00:09:01] Speaker 05:
and sit on your hands, and then after the CIT actually uses that, or the Commerce actually uses that data, say, oh, we have this new argument that we could have raised, but we didn't.

[00:09:11] Speaker 05:
That doesn't seem to me to be a proper legal articulation of exhaustion principles.

[00:09:16] Speaker 05:
And if that's the legal articulation, I don't even think we have to get to abuse of discretion.

[00:09:22] Speaker 05:
I think it's an incorrect statement of general legal exhaustion principles, which the statute clearly incorporates.

[00:09:29] Speaker 05:
OK, I'll save the rest of that for a minute.

[00:09:31] Speaker 03:
Thank you very much.

[00:09:32] Speaker 03:
We'll restore your time.

[00:09:39] Speaker 02:
Good morning, Your Honors.

[00:09:40] Speaker 02:
There are three key points I'd like to get to about why remand is required here, and then I'd also like to address the exhaustion point that Judge Hughes has raised.

[00:09:50] Speaker 03:
Let me point out what my concern with the exhaustion situation is.

[00:09:55] Speaker 03:
If data is submitted by a respondent in a proceeding,

[00:10:01] Speaker 03:
It seems to me that the parties can get that data and review it and run their numbers and actually come out with their own estimate as to what a potential dumping margin could be generated by those numbers.

[00:10:16] Speaker 03:
And if we're in a situation where parties can do that, and they do do that in the course of an investigation,

[00:10:28] Speaker 03:
then say, well, we're not going to bring up this issue because this issue may lead down the path to a de minimis situation or low margins.

[00:10:37] Speaker 03:
And we'll focus instead here and not get into this.

[00:10:42] Speaker 03:
It creates a situation where you have two bites at the apple.

[00:10:48] Speaker 03:
And by remaining silent, you benefit from knowing what the actual margin is and then come in

[00:10:55] Speaker 03:
before the CIT and then this court arguing that you should have gotten or that the other number should have been used.

[00:11:04] Speaker 02:
And I completely hear that concern, Your Honor.

[00:11:06] Speaker 03:
I can see you bringing up the other side of your argument if we were talking about the respondents having not exhausted their remedies for the same reasons that I stated.

[00:11:18] Speaker 02:
Yes.

[00:11:18] Speaker 02:
And I think the key way to cabin that concern and to address, I think, Judge Hughes's concerns

[00:11:24] Speaker 02:
is that the focus of the exhaustion doctrine should be on what the agency has given notice to the parties are the key issues.

[00:11:31] Speaker 02:
And so if the agency has not suggested that an issue is pertinent.

[00:11:35] Speaker 05:
How can you say that the data for profits, which data to be used, was not the agency didn't give you notice?

[00:11:43] Speaker 05:
They specifically gave you notice.

[00:11:45] Speaker 05:
There were a lot of different inputs on the records.

[00:11:47] Speaker 05:
Your friends on the other side were arguing for the precise data that commerce ended up using.

[00:11:55] Speaker 05:
I don't know what else that they have to do.

[00:11:57] Speaker 05:
If what you're saying is commerce cannot change its mind from its preliminary determination to its final determination without giving you, as my colleague says, a second bite at the apple, well, that's not exhaustion principles.

[00:12:10] Speaker 05:
I mean, are you saying that you had no opportunity to respond to this argument raised by your friends on the other side?

[00:12:17] Speaker 02:
We are not saying that, Your Honor.

[00:12:19] Speaker 05:
Well, isn't that the basis of exhaustion doctrine?

[00:12:22] Speaker 05:
that if you have an opportunity, the argument is in play, and you fail to respond and raise all arguments in support of your position, you fail to exhaust.

[00:12:30] Speaker 05:
Isn't that basic administrative law?

[00:12:32] Speaker 02:
I would respectfully disagree.

[00:12:33] Speaker 02:
And what I would suggest, Your Honor, is if you think about it.

[00:12:35] Speaker 05:
Can you cite to me a case that says that?

[00:12:37] Speaker 02:
Certainly, Your Honor.

[00:12:38] Speaker 02:
So the CSX transportation case from the DC Circuit, we cite in our brief 584 F3, 1076.

[00:12:44] Speaker 02:
If you think about it in the larger administrative law context as you're doing,

[00:12:49] Speaker 02:
Can you cite to me a case from this court that says that?

[00:13:01] Speaker 02:
Sure, sure, I get that.

[00:13:04] Speaker 05:
If they come up with some wild new reason that no party is raised, they went to new data,

[00:13:09] Speaker 02:
Well, it's not just that no party has raised it.

[00:13:10] Speaker 02:
I mean, if you think about it in the rulemaking context, lots of commenters might suggest all sorts of things.

[00:13:16] Speaker 02:
And as an interested party, you don't have to comment on every other commenter.

[00:13:20] Speaker 05:
This isn't a case where there are thousands and thousands of commenters, like a regular agency regulation in rulemaking.

[00:13:25] Speaker 05:
This is a case where there are, at most, four or five parties.

[00:13:29] Speaker 05:
And you did respond to the arguments of your friends on the other side.

[00:13:32] Speaker 05:
I know you specifically

[00:13:35] Speaker 05:
decided not to file a rebuttal brief, but that doesn't get you out of exhaustion.

[00:13:38] Speaker 02:
Well, I would say there have been about a half dozen or so cases in the CIT where the CIT has specifically held that even when parties to an anti-dubbing proceeding have raised issues,

[00:13:53] Speaker 02:
The other side is entitled to rely on the preliminary determination, which is the agency's notification of what the relevant issues are.

[00:13:59] Speaker 02:
And then if the agency changes its mind at the final determination, without giving notice to the parties or giving them an opportunity to comment.

[00:14:07] Speaker 04:
But what about the situation where the agency gave its initial determination and then both parties complained about the agency's determination and explained why different data should have been relied upon?

[00:14:20] Speaker 04:
So why isn't that enough notice?

[00:14:22] Speaker 04:
You know, it's not a situation where the party's so fine that just we're okay with that determination and didn't contest it, and then the Commerce on its own went ahead and changed its mind in the final determination.

[00:14:37] Speaker 04:
Instead, this is a situation where both sides said, we don't like your initial determination, and explained why and gave alternatives, and then Commerce adopted one of them, right?

[00:14:47] Speaker 02:
That's correct, Your Honor, but I think if you look at the actual proceedings before commerce, the suggestion of using this particular Colombian transaction was really an afterthought for everyone.

[00:14:56] Speaker 02:
It was an afterthought for... What do you mean it was an afterthought?

[00:14:59] Speaker 05:
It was specifically in the briefs at least one party opposing you.

[00:15:04] Speaker 02:
It was in the brief for about half a page when 40 other pages had been spent on... Is there a page length requirement for raising it?

[00:15:10] Speaker 02:
It's a proportionality issue, Your Honor.

[00:15:12] Speaker 05:
I mean, if it was in a footnote, maybe you'd have an argument.

[00:15:15] Speaker 02:
But it's a proportionality issue, Your Honor, where if both sides spend 40 pages arguing about one option, and then they spend half a page arguing about another option, and then at the hearing, nobody even talks about it.

[00:15:23] Speaker 02:
Commerce doesn't ask questions about it.

[00:15:25] Speaker 02:
The other party doesn't raise it as an option.

[00:15:26] Speaker 05:
Let me ask you procedurally.

[00:15:28] Speaker 05:
If you think that you have to get notice, how would that even work in this system?

[00:15:31] Speaker 05:
I mean, commerce makes an initial determination.

[00:15:34] Speaker 05:
They get briefings, there may be a hearing, then they issue a final determination.

[00:15:37] Speaker 05:
Do you think that every time commerce decides we may alter our initial determination, that they have to issue a new initial determination and allow for this to go forward all over again?

[00:15:48] Speaker 02:
Absolutely not, Your Honor, but what they do have to do is they have to do the required analysis and they proceed at their own risk.

[00:15:53] Speaker 02:
If they issue a final determination that adopts a new methodology that they haven't given notice that the parties do, and they don't do the required analysis... Well, how would they get that notice?

[00:16:02] Speaker 05:
That's what I just asked you.

[00:16:03] Speaker 02:
Well, there are different ways they could give notice, or if they do adopt a new methodology, we're not saying they can't, it's just then they would have to do all of the required analysis that goes along with that new methodology.

[00:16:13] Speaker 02:
That's all I was suggesting.

[00:16:14] Speaker 05:
So basically, you're saying if they changed the methodology from their initial to the final determination,

[00:16:19] Speaker 05:
they still have to issue another final determination after that.

[00:16:22] Speaker 02:
They do not have to, Your Honor.

[00:16:24] Speaker 02:
But they would have had to, if they had done this collapse analysis.

[00:16:26] Speaker 05:
Or the result is that you're allowed to raise any argument whatsoever on review to the CIT.

[00:16:31] Speaker 02:
Certainly not any argument.

[00:16:32] Speaker 02:
Only important aspects of the issue that commerce did not address when it adopted a new methodology without giving the parties notice of it.

[00:16:40] Speaker 02:
That's it.

[00:16:40] Speaker 03:
You're well into your, I'm sorry.

[00:16:43] Speaker 04:
We have another question.

[00:16:44] Speaker 04:
I want to ask you the same question I asked your colleague there.

[00:16:47] Speaker 04:
28 U.S.C.

[00:16:49] Speaker 04:
section 2637D says that the Court of International Trade shall, where appropriate, require the exhaustion of administrative remedies.

[00:16:58] Speaker 04:
How do you read the language where appropriate?

[00:17:01] Speaker 04:
Is it discretionary, or is it just applying the rule saying where appropriate for sometimes it's not appropriate, for example, where there's surprise or futility?

[00:17:11] Speaker 02:
I would agree, Your Honor, that I think it's not appropriate where there is not notice to the parties from the agency

[00:17:17] Speaker 02:
of the methodology or issue that the agency is using or of the fact that the issue is something agencies consider.

[00:17:24] Speaker 04:
So basically... But is it a legal determination or is it discretionary?

[00:17:28] Speaker 02:
I would say it's certainly not a purely legal determination.

[00:17:30] Speaker 02:
It does depend on the particular facts before the... before the... in the agency proceeding as the agency, you know, what does the agency signal to the parties are the key issues.

[00:17:40] Speaker 02:
And so that does require some consideration of the facts and you apply them the law of exhaustion doctrine to those... to that factual record.

[00:17:47] Speaker 03:
Okay, thank you.

[00:17:59] Speaker 00:
Thank you.

[00:17:59] Speaker 00:
May it please the court.

[00:18:01] Speaker 00:
I'd like to start by addressing this notice contention head on.

[00:18:05] Speaker 00:
The argument that commerce has to notify the parties of what commerce will be addressing in the final decision is exactly contrary to how the process works and how commerce has established the process.

[00:18:17] Speaker 00:
As boomerang itself argues in its opening brief at page 17, commerce's practice in its final decision is to address the part that the arguments

[00:18:26] Speaker 00:
made by the interested parties.

[00:18:28] Speaker 00:
And we see that even in just how the final decision is structured.

[00:18:32] Speaker 00:
Commerce starts out with the arguments, and it ticks through each one.

[00:18:36] Speaker 00:
And so given the regulation on comments and rebuttals, importantly rebuttals, it is the parties that tee up the arguments and develop them, develop both sides of them, for commerce to decide.

[00:18:49] Speaker 03:
In your view, is this argument adequately teed up?

[00:18:54] Speaker 03:
I mean, your colleagues on the other side say that this is half a page, half a page or a page in a 47-page brief.

[00:19:05] Speaker 00:
Yes, Your Honor.

[00:19:06] Speaker 00:
It was squarely at play.

[00:19:09] Speaker 00:
At the latest, by the time the parties had the opportunity to file rebuttal briefs.

[00:19:14] Speaker 00:
The Columbia sales were placed on the record early in the proceedings when Commerce asked for third country data.

[00:19:22] Speaker 03:
There was a verification on that data?

[00:19:24] Speaker 00:
I'm not aware of whether there was verification on the data or not.

[00:19:27] Speaker 00:
But that hasn't been raised as a problem.

[00:19:32] Speaker 00:
And so the data were on the record.

[00:19:35] Speaker 00:
They were expressly raised in Jessica's case brief.

[00:19:38] Speaker 00:
And I do have a few sites for the court.

[00:19:40] Speaker 00:
I'll use the public data.

[00:19:43] Speaker 00:
They were raised not only as options for constructed value profit, but also

[00:19:52] Speaker 00:
at, for example, page 3521, 3487, and that section in the, in Jesco's, oh wait, well, not sure if that's how I should write it, but Jesco raised these as a viability argument for commerce to use to calculate normal value, and that was several pages in their brief.

[00:20:16] Speaker 00:
And then separately, they raised this, for example, at page 6933 and 6934.

[00:20:23] Speaker 00:
So there's two pages, one and a half at least, discussing the option of using Jesco's own sales and using the Columbia sales specifically.

[00:20:33] Speaker 00:
And in Boomerang's rebuttal at 3617,

[00:20:43] Speaker 00:
They expressly acknowledge that Jesco has raised these arguments.

[00:20:46] Speaker 00:
So this is a quote.

[00:20:48] Speaker 00:
Jesco, quote, suggests that the department can use the profits on Jesco's sales to Columbia for CB profit.

[00:20:55] Speaker 00:
So this is Boomerang's own rebuttal brief.

[00:20:56] Speaker 00:
And then they raise certain arguments about that.

[00:20:59] Speaker 00:
So this was at issue.

[00:21:00] Speaker 00:
It was acknowledged to be at issue by Boomerang.

[00:21:04] Speaker 00:
Boomerang certainly didn't raise this issue.

[00:21:06] Speaker 00:
U.S.

[00:21:06] Speaker 00:
Steel filed no comments or rebuttal comments at all.

[00:21:10] Speaker 00:
And so one of U.S.

[00:21:11] Speaker 00:
Steel's arguments is that, well, actually parties don't have any incentive to intentionally withhold arguments from commerce.

[00:21:19] Speaker 00:
That may be true or not, but the fact remains that they didn't raise this argument to commerce.

[00:21:24] Speaker 00:
And whether that's because of an intentional omission, because of an afterthought, because of a change in strategy on their part really doesn't matter.

[00:21:32] Speaker 00:
The point is that

[00:21:34] Speaker 00:
Commerce officials, interested parties should not have to duplicate their efforts in this investigation simply because of an afterthought or an omission by certain parties.

[00:21:45] Speaker 04:
What about the abuse of discretion standard review?

[00:21:47] Speaker 04:
I mean, how is there an abuse of discretion by the CIT below when it found that there was no exhaustion of remedies?

[00:21:56] Speaker 04:
There was an exhaustion.

[00:21:58] Speaker 04:
I got it reversed.

[00:21:59] Speaker 00:
So the abuse of discretion happened here because the CIT's

[00:22:04] Speaker 00:
reasoning was legally erroneous, and to the extent they made any findings a fact, the finding a fact was basically simply because there was a change between the preliminary and the final decision.

[00:22:15] Speaker 00:
Therefore, automatically plaintiffs had no opportunity to raise this issue to commerce.

[00:22:21] Speaker 05:
And do you think, I'm a little confused about that too, about the way you briefed this, because I know we've said it's abuse of discretion in an individual case, but it seems to me that

[00:22:32] Speaker 05:
The proposition of whether new notice is required before Congress can change its position from an initial to a final determination is a legal question.

[00:22:42] Speaker 05:
It is not a discretionary question in each case.

[00:22:46] Speaker 05:
That seems to me, if the rule is that they always have to give new notice on issues of importance, then we have to determine if that's consistent with the statutory and regulatory scheme.

[00:22:56] Speaker 05:
And in that, we can answer de novo, right, as a matter of law.

[00:23:00] Speaker 05:
Precisely your honor yes, and that is we do we did raise that if we agree with you that they don't have to Then I think you just said I think you're probably right that if it's an error of law underpinning the The excuse of the exhaustion here, then it's an abuse of discretion Yes, if there is an error of law at the CIT which there is because their reasoning is

[00:23:27] Speaker 00:
The reasoning that parties can rely on the preliminary decision is completely wrong under this court's case law, including Kora Stahl.

[00:23:34] Speaker 00:
In Kora Stahl, the plaintiff sought to rely on the CIT's preliminary decision, which soundly rejected their argument.

[00:23:41] Speaker 00:
And this court said, no, you still have to follow the procedure of filing case briefs.

[00:23:46] Speaker 03:
That's commerce's.

[00:23:48] Speaker 03:
What obligation does commerce have to provide any type of notice when it's going to change its methodology?

[00:23:54] Speaker 03:
Suppose that commerce decides right after the preliminary determination it's going to change its methodology and rely on third country sales as opposed to some other methodology.

[00:24:07] Speaker 03:
Are they required to notify or should they notify at that point in time to the parties or is this case one where you're arguing that the switch happened at the very last minute and there was no time to notify?

[00:24:24] Speaker 00:
Well, I'll try to break down your question a bit.

[00:24:26] Speaker 00:
I think what happens in the normal course of a commerce investigation or administrative review is that the preliminary decision is issued and then the parties have what is basically an adversarial process to raise problems that they see with the preliminary decision and then to rebut, importantly to rebut.

[00:24:44] Speaker 03:
What's at that point in time?

[00:24:44] Speaker 03:
Commerce has already decided to make a switch, but nobody knows about it.

[00:24:48] Speaker 00:
Well, hypothetically, I know there are cases where if Commerce may issue a letter to the parties saying, please submit additional data on this issue, and that may provide notice to parties that Commerce is looking for additional options for a certain value.

[00:25:05] Speaker 00:
I don't think that happened here.

[00:25:06] Speaker 00:
Here, Commerce did bring in additional

[00:25:11] Speaker 00:
constructed value information.

[00:25:12] Speaker 00:
So if it's a sort of thing where commerce is requiring additional information, there will be notice to the parties because there will be communication between commerce and the parties.

[00:25:21] Speaker 00:
But that's not what happened here.

[00:25:23] Speaker 00:
What happened here is that the parties teed up this issue about constructed value profit.

[00:25:28] Speaker 00:
Importantly, it was the plaintiffs, it was Boomerang, that had a problem with

[00:25:33] Speaker 00:
the preliminary choice of Saudi steel.

[00:25:37] Speaker 00:
And so it's a little odd.

[00:25:37] Speaker 00:
They say they should be able to rely on the preliminary decision when they're the ones challenging it.

[00:25:42] Speaker 00:
So the parties teed up this issue for constructed value profit.

[00:25:45] Speaker 00:
There were six or seven options.

[00:25:48] Speaker 00:
And so this was the adversarial process.

[00:25:50] Speaker 00:
And then at the end, commerce weighed them all and concluded that the best option was the Columbia sales.

[00:25:59] Speaker 05:
Do you think, hypothetically, if we had a different case where there was a huge record and there was lots of different data that could support more than one methodology and the initial determination, Commerce used one methodology relying on one set of data, all the briefing was on that methodology and a limited set of data, if Commerce decides to come up with an entirely new methodology based upon data never before mentioned by anybody,

[00:26:30] Speaker 05:
in their final determination, might that be a circumstance where exhaustion might not be required?

[00:26:36] Speaker 00:
In that case, too, the same question would apply.

[00:26:39] Speaker 00:
The question would be, was this issue squarely in play?

[00:26:41] Speaker 00:
Did the parties have a reasonable opportunity to address this?

[00:26:46] Speaker 00:
And I don't hear my colleagues saying that they had no notice or they had no opportunity to address.

[00:26:51] Speaker 05:
One of them did address the Columbia data.

[00:26:55] Speaker 05:
They just didn't come up with the new argument that they did for the first time with CIT.

[00:26:59] Speaker 00:
Precisely so this this case is a great example where the issue was squarely in play and as your honor suggests There may be other cases if there were hundreds and hundreds of potential options where that may not be true But it certainly is true here.

[00:27:11] Speaker 04:
Do you agree that commerce never actually considered the issue?

[00:27:14] Speaker 00:
Now being asked for us to consider and that the CIT actually considered well We agree to the extent that there's nothing in the record where commerce writes out its analysis, but we cite a case that

[00:27:26] Speaker 00:
the National Association of Mirror Manufacturers, which is cited in the SAA, the Statement of Administrative Action, where what that case says is that it's applying to a commission determination, but absent some showing to the contrary

[00:27:41] Speaker 00:
the commission is presumed to have considered all the evidence on the record.

[00:27:45] Speaker 04:
How is that consistent with your position in your CIT briefing on page A136 where you specifically say that plaintiffs deprived commerce of the opportunity to consider this issue?

[00:27:57] Speaker 00:
So that was related to our failure to exhaust argument and I can see how the court would think that there's an inconsistency but I'd like to briefly describe a little bit of procedural history that might clarify.

[00:28:07] Speaker 00:
So before the CIT

[00:28:09] Speaker 00:
the plaintiff's only argument regarding collapsing was that commerce made the wrong decision on the merits, and the CIT sets that out in pages 7 to 8 and 13 to 14 of its decision.

[00:28:19] Speaker 00:
And the CIT itself understood the plaintiffs to be arguing that commerce had implicitly considered the issue.

[00:28:27] Speaker 00:
So those were the issues at play, and we were arguing that the plaintiffs not only failed to give commerce the chance to

[00:28:35] Speaker 00:
the opportunity to consider this but failed to give commerce the opportunity to write up its analysis in support of its decision and so those were the issues before the CIT.

[00:28:46] Speaker 04:
So you see a distinction between inherently considering it and actually writing about it.

[00:28:52] Speaker 00:
Yes, and I'd like to point out one last thing.

[00:28:54] Speaker 00:
I see my time has almost elapsed but the regulation on collapsing which the plaintiffs point out it says that when commerce will collapse but the important thing here is that it says

[00:29:05] Speaker 00:
The key criteria is when, quote, the secretary finds that there is a significant potential for manipulation of price or production.

[00:29:14] Speaker 00:
And so that trigger has not occurred here of the secretary finding.

[00:29:18] Speaker 00:
And that indicates discretion in commerce.

[00:29:20] Speaker 00:
So simply because commerce did not write out its collapsing determination, there's no indication that commerce thought that there was any significant potential for manipulation of price or production here.

[00:29:33] Speaker 05:
Can I just ask you a procedural question?

[00:29:34] Speaker 05:
I know you're out of time, but if we agree with you on exhaustion, what do we do?

[00:29:38] Speaker 05:
Do we affirm the CIT on different grounds, or do we conclude there was legal error in the exhaustion decision and send it back for a decision consistent with our decision?

[00:29:54] Speaker 00:
The best reasoning, we believe, would be to affirm on other grounds, because the only reason that the CIT provided was this change between the preliminary and the final.

[00:30:02] Speaker 00:
And so it's appropriate for this court to resolve that as a matter of law and the inquiry there.

[00:30:08] Speaker 05:
But did your friends on the other side raise any other challenges to commerce's determination apart from the newly raised argument that would have to be resolved?

[00:30:20] Speaker 00:
May it please the court.

[00:30:41] Speaker 01:
I'm Nancy Noonan from the law firm of Aaron Fox on behalf of Jubail Energy Services and Dufarco SA.

[00:30:47] Speaker 01:
For short, we call them collectively Jesco.

[00:30:50] Speaker 01:
Just to briefly revisit the notice issue, again, as the court is aware, the third country data for Jessica was placed on the record almost eight months before the preliminary determination was issued.

[00:31:04] Speaker 01:
And the parties had plenty of opportunity to make comments.

[00:31:07] Speaker 01:
At that point, they didn't even know what commerce would be doing with that third country data.

[00:31:11] Speaker 01:
So the parties had plenty of opportunity to raise a collapsing issue if they thought there was one to be raised.

[00:31:17] Speaker 01:
Second, on the issue of whether constructed value profit was in play and should have been, the parties were aware that they needed to exhaust their remedies, I'll just point out that the Department of Commerce itself, suespante, after the preliminary determination,

[00:31:33] Speaker 01:
placed on the administrative record that Tenaris, a financial statement, which was one of the options that was considered.

[00:31:40] Speaker 01:
So again, on May 9th, 2014, Commerce itself places this on the record solely for the purpose of constructed value.

[00:31:49] Speaker 01:
And the parties had the opportunity to provide more comments then about whether the Tanara statement should be used, whether something else should be used.

[00:31:56] Speaker 04:
Was that before the final determination?

[00:31:58] Speaker 01:
Yes, ma'am.

[00:31:59] Speaker 01:
Yes, your honor.

[00:32:00] Speaker 01:
And then finally, in our case brief, yes, it was only a half page.

[00:32:04] Speaker 01:
But that half page included the actual calculation that Jesco was providing that should be used for CV profit.

[00:32:11] Speaker 01:
So the parties were aware of the impact using the CV profit rate would have on the margin.

[00:32:17] Speaker 01:
And we also provided an exhibit showing how that was calculated.

[00:32:21] Speaker 01:
So I believe that there was plenty of notice in the case brief that parties could have rebutted if they were so inclined.

[00:32:30] Speaker 01:
So from our perspective, though, this case is about commerce's calculation of constructed value profit.

[00:32:36] Speaker 01:
This is an important issue, which commerce did carefully consider.

[00:32:40] Speaker 01:
All of the parties agree commerce was required to base constructed value profit on, quote, any other reasonable method.

[00:32:48] Speaker 01:
The applicable statutory provision does not reference any sort of minimum profit that must be used, but it does reference a cap on profit if a cap can be calculated.

[00:33:00] Speaker 01:
So it gives the Department of Commerce wide discretion on how to calculate CV profit.

[00:33:06] Speaker 01:
And that should be decided on a case-by-case basis.

[00:33:12] Speaker 01:
And while it is our position that the sales that were used were in the ordinary course of trade, the statutory provision that was applied does not even reference sales in the ordinary course of trade.

[00:33:23] Speaker 01:
So even with affiliation, even with collapsing, it may be that commerce in its discretion could still use these sales, which would make this issue actually moot.

[00:33:34] Speaker 01:
about whether the collapsing analysis should have been conducted.

[00:33:40] Speaker 01:
In reviewing the data on the record, Commerce specifically determined that Jesco's third country sales to Columbia were the best available option for determining C.B.

[00:33:49] Speaker 01:
profit.

[00:33:49] Speaker 01:
Commerce specifically found the sales met all the requirements for C.B.

[00:33:53] Speaker 01:
profit set out under the preferred method.

[00:33:56] Speaker 03:
Can you address real quickly what your opponents argue and that's that Commerce was required by law

[00:34:03] Speaker 03:
to conduct a single entity analysis here.

[00:34:08] Speaker 03:
I mean, you're arguing that the use of these third country cells was reasonable.

[00:34:14] Speaker 03:
They're arguing that you don't get there because commerce should have, they're required by law, to have collapsed those cells into the single entity.

[00:34:25] Speaker 01:
Sure, Your Honor.

[00:34:26] Speaker 01:
It's our position that commerce was not required to conduct such an analysis.

[00:34:31] Speaker 01:
One, the affiliation alone does not automatically trigger in every case a discussion of collapsing.

[00:34:39] Speaker 01:
There's plenty of cases out there where they're affiliated party transactions, and commerce does not put anything in the decision.

[00:34:46] Speaker 03:
Is that requirement limited to normal value in looking at the affiliation of domestic companies, or does it also extend to the export sales?

[00:34:59] Speaker 01:
I think it extends to any time commerce is going to use some sort of transaction or data that was between two affiliated companies.

[00:35:09] Speaker 01:
So in this case, we did use sales to the affiliate.

[00:35:14] Speaker 01:
They were above cost.

[00:35:15] Speaker 03:
But here, commerce did engage in a single entity collapse.

[00:35:20] Speaker 01:
Right, yes.

[00:35:21] Speaker 03:
They ultimately decide to use what's clearly on the record an affiliated company, sales to that affiliated company.

[00:35:28] Speaker 03:
Why wouldn't Commerce say we need to also collapse this into the single entity?

[00:35:35] Speaker 03:
I mean, they already did that with a number of companies.

[00:35:37] Speaker 01:
Right.

[00:35:38] Speaker 01:
Well, Your Honor, those other companies were in fact 100% owned by the parent company at issue.

[00:35:44] Speaker 01:
This affiliate in Columbia was not 100% owned.

[00:35:48] Speaker 01:
There were some other companies that owned the company as well.

[00:35:51] Speaker 03:
But there's not 100% requirements, is there?

[00:35:53] Speaker 01:
No, there is not, Your Honor, but it does show a distinction in this case amongst these companies as to why they were not on all fours exactly the same and therefore should be treated the same.

[00:36:03] Speaker 01:
And we feel there was no evidence of significant potential for price manipulation.

[00:36:08] Speaker 01:
And of course, the affiliate reseller was not actually a producer.

[00:36:11] Speaker 03:
Why is there no potential for price manipulation?

[00:36:15] Speaker 03:
These are affiliated companies.

[00:36:18] Speaker 01:
Well, we think, Your Honor, because of the not as much ownership as there is when there's 100% ownership in those other companies that were collapsed.

[00:36:27] Speaker 01:
This ownership was a little bit over 50%.

[00:36:30] Speaker 01:
Yes, still majority owned, but again, you've got other factors in play.

[00:36:34] Speaker 01:
And the regulation on collapsing instructs Commerce to be looking at level of common ownership, whether there's managerial employees and board employees that are sitting on both.

[00:36:46] Speaker 03:
You're out of time, but let me ask you this last question.

[00:36:49] Speaker 03:
Did Commerce conduct an arm's length transaction analysis with respect to the sales to Columbia?

[00:36:56] Speaker 01:
Yes, Your Honor, and also a below-sales test.

[00:36:59] Speaker 03:
They tested for the... Am I correct to reject some of those cells because they were not at arm's length?

[00:37:03] Speaker 01:
Yes.

[00:37:03] Speaker 01:
Yes, they did.

[00:37:04] Speaker 01:
Yes, they did.

[00:37:18] Speaker 03:
Sharon, I'm going to restore you back to three minutes since we took you over.

[00:37:22] Speaker 06:
Thank you, your honor.

[00:37:23] Speaker 06:
Just a few quick points.

[00:37:24] Speaker 05:
Can you start with the last question I asked to the government, what you think we should do if we disagree with the trial court's exhaustion analysis?

[00:37:33] Speaker 05:
Can we just affirm, or are there issues you think that need to be addressed on remand?

[00:37:39] Speaker 06:
There's only one issue in this case, whether they need to do a collapse analysis.

[00:37:43] Speaker 05:
So if we disagree and find that you failed to exhaust that, then we can just affirm.

[00:37:49] Speaker 05:
Correct.

[00:37:50] Speaker 06:
But, Your Honors, here the court should not do that.

[00:37:53] Speaker 06:
And that's because in response to your earlier question, Judge Hughes, you know, where commerce changes their methodologies in the final, they do do it all the time.

[00:38:02] Speaker 06:
The key is that they do it in accordance with law.

[00:38:04] Speaker 06:
And here, clearly, under the statute, the regulation in their past practice, finding you have transactions between affiliated parties and then not doing a collapsing analysis is arbitrary and capricious.

[00:38:17] Speaker 06:
Here, as Judge Reyna said, even though this information was placed on the record at the beginning of the case, there was no verification of any Colombian data.

[00:38:25] Speaker 06:
Verification takes place prior to briefing.

[00:38:28] Speaker 06:
So there's no reason for us to believe that Congress would use the respondents' Colombian data when they didn't even bother to verify it.

[00:38:37] Speaker 04:
Now, Congress said- Did you ask for verification?

[00:38:39] Speaker 06:
We did not.

[00:38:41] Speaker 06:
I mean, verification takes place in all investigations.

[00:38:44] Speaker 03:
Did you follow verification comments?

[00:38:47] Speaker 06:
Yes, we did.

[00:38:47] Speaker 03:
Pre-verification comments?

[00:38:48] Speaker 06:
We did file pre-verification comments.

[00:38:50] Speaker 06:
And you didn't ask for verification on themselves?

[00:38:53] Speaker 06:
We did just as Saudi and U.S.

[00:38:54] Speaker 06:
issues.

[00:38:55] Speaker 06:
And Commerce often does make changes between its prelim and final and does either amended preliminaries or it serves notice to parties via letter and says, we're considering a change.

[00:39:07] Speaker 06:
We invite further comment.

[00:39:09] Speaker 06:
We just did it in a case two weeks ago in an administrative review.

[00:39:11] Speaker 06:
So that happens.

[00:39:12] Speaker 06:
Quite often finally just as the exhaustion issue We did find one case on point here was mentioned chorus style and we would note in that CFC case from 2007 where this court found that chorus had failed to exhaust its remedies It said and I quote this is not a case for example in which the private party was denied access to critical information Prior to the time its case brief was due or in which the agency changed its position

[00:39:42] Speaker 06:
Here, the agency did change its position.

[00:39:44] Speaker 05:
Right, I know that issue.

[00:39:44] Speaker 05:
You can't take that statement out of context and say that every time the agency changes its position, you're excused from exhaustion.

[00:39:52] Speaker 06:
Not only where it is a fundamental requirement.

[00:39:55] Speaker 05:
Where you were denied critical information.

[00:39:58] Speaker 05:
And you were not denied any critical information here.

[00:40:01] Speaker 05:
It was all on the record, and it was being argued as a basis for calculations.

[00:40:05] Speaker 06:
Not only.

[00:40:05] Speaker 06:
This court said, or the agency changes its position.

[00:40:08] Speaker 06:
And here, the agency made a radical change in its position

[00:40:12] Speaker 06:
And it acted arbitrarily and cautiously.

[00:40:15] Speaker 05:
Don't overstate the record.

[00:40:16] Speaker 05:
They didn't make a radical change in their position.

[00:40:18] Speaker 05:
They didn't change the methodology, except instead of relying on one set of data for profits, they used another set of data for profits.

[00:40:26] Speaker 05:
They didn't go from actual value to a constructed value or from non-adverse facts to adverse facts.

[00:40:33] Speaker 05:
They changed profit data that you were on notice was in the record and was, in fact, being urged

[00:40:40] Speaker 05:
to be used by commerce by your opponents.

[00:40:42] Speaker 06:
But to me, the radical change is they use profit data from related parties that should have been collapsed.

[00:40:48] Speaker 06:
And we think you should send that back to the department.

[00:40:50] Speaker 06:
Thank you, Your Honors.

[00:41:01] Speaker 03:
Two minutes.

[00:41:03] Speaker 02:
Thank you very much, Your Honor.

[00:41:05] Speaker 02:
I just want to quickly address some of the points besides exhaustion.

[00:41:08] Speaker 02:
I understand the court has

[00:41:10] Speaker 02:
express certain views about exhaustion.

[00:41:11] Speaker 02:
But quickly, I just want to point out some other things in response to what counsel raised during their argument.

[00:41:17] Speaker 02:
The first is that this really is an extremely important issue.

[00:41:20] Speaker 02:
This is a dispositive issue.

[00:41:23] Speaker 02:
It could swing commerce 180 degrees between not issuing anti-dumping duties and issuing anti-dumping duties if commerce had considered this collapsing analysis and undertaken it.

[00:41:32] Speaker 02:
With respect to the particular evidence of the need for collapse.

[00:41:37] Speaker 02:
If it's that important, why didn't you raise it?

[00:41:40] Speaker 05:
Well, going back to the exhaustion... I mean, you've made no argument to me, or at least no satisfactory argument, that you were unable to raise this, that you were unaware of it, that if you had exercised due diligence that you couldn't have raised it, if it was that important, then you should have told Commerce that so that we could have a reasoned determination from them to rule on.

[00:42:00] Speaker 05:
We might very well agree with you.

[00:42:01] Speaker 02:
I understand your position, Your Honor.

[00:42:03] Speaker 02:
The best I can say to that is what I said before, which I understand you may not agree with, which is that the parties were completely focused on other issues, that all of the briefing, not all of the briefing, 99% of the briefing was focused on other methods of calculating CV profit.

[00:42:17] Speaker 02:
All of the hearing was focused on other methods of calculating CV profit.

[00:42:20] Speaker 02:
And we think, you know,

[00:42:22] Speaker 02:
It is an important concern that you don't want parties larding their briefs with arguments that may not be necessary.

[00:42:30] Speaker 02:
And if you start saying any time you fail to raise an issue that commerce hasn't given you notice is relevant to the proceedings, that's going to be exhaustion, then parties are going to have to start adding all sorts of arguments into their briefs.

[00:42:42] Speaker 02:
And I don't think that would be better.

[00:42:43] Speaker 04:
Are you saying that any time your adversary raises an issue, you'll have to respond to it?

[00:42:47] Speaker 04:
Is that what you're saying?

[00:42:49] Speaker 04:
the issue is.

[00:42:50] Speaker 04:
It was a small issue, I guess.

[00:42:51] Speaker 04:
You're saying it's just half a page.

[00:42:53] Speaker 04:
It's one of many arguments made.

[00:42:55] Speaker 04:
And so you didn't respond.

[00:42:56] Speaker 02:
I would think we would not be able to make the argument we're making today if this was the key focus of Jessica's brief.

[00:43:01] Speaker 02:
If they had spent the bulk of their brief, the focus of the brief, it was one of their prime arguments.

[00:43:06] Speaker 02:
But it was an afterthought on the last page of their discussion of CB profit that they didn't give any real credence to, that was not raised by them at the hearing, that commerce never asked about,

[00:43:15] Speaker 02:
There was just no thought whatsoever to the people acting on the ground that this was a relevant issue that needed to be solved.

[00:43:21] Speaker 04:
No, you're talking about the hearing.

[00:43:22] Speaker 04:
I'm sorry.

[00:43:24] Speaker 04:
You're talking about the hearing.

[00:43:25] Speaker 04:
I don't know.

[00:43:26] Speaker 04:
Where does that take place in the process?

[00:43:27] Speaker 04:
Is that after you've sent me the brief?

[00:43:29] Speaker 02:
That's after the briefing.

[00:43:30] Speaker 02:
That's correct, Your Honor.

[00:43:31] Speaker 04:
And so there was a hearing.

[00:43:32] Speaker 04:
So how would you know at that point?

[00:43:35] Speaker 04:
How does relying on that help when the time for you to respond to it would have been in your brief?

[00:43:40] Speaker 02:
Well, Your Honor, I would think something like if Commerce was asking lots of questions at the hearing, because the whole point of the hearing is for Commerce to consider the arguments of the parties, if it was suggesting, hey, this is a way we might go, then counsel could have raised their issues.

[00:43:54] Speaker 02:
And they could have suggested maybe post-hearing briefing on this particular issue would be appropriate, because we think there are some issues that, some potential problems with this data that haven't been properly fleshed out.

[00:44:05] Speaker 02:
So that's what we would suggest.

[00:44:07] Speaker 02:
Okay, thank you very much.