[00:00:00] Speaker 03: Mr. Park, please proceed. [00:00:02] Speaker 03: Thank you, Your Honors. [00:00:12] Speaker 06: May I please support? [00:00:13] Speaker 06: My name is David Park from Arnold & Porter on behalf of Plaintiff Appellant Next Deal Company Limited. [00:00:20] Speaker 06: I'm here this morning to address four issues on affirmative. [00:00:24] Speaker 06: First, Commerce's calculation of Next Deal's constructed value profit [00:00:29] Speaker 06: using a third country profit weight for a company that had no ties production or sales to the home market was unsupported by substantial evidence and contrary to law. [00:00:40] Speaker 06: Second, commerce violated the plain language of the statute in failing to apply a constructed value profit cap. [00:00:48] Speaker 06: Third, commerce's determination that it could not use zero or negative profits in its CV profit calculations were contrary to law. [00:00:56] Speaker 06: And fourth, [00:00:57] Speaker 06: Commerce's determination that Next Day was affiliated with Pasco was unsupported by substantial evidence and contrary to law. [00:01:04] Speaker 06: With respect to the first issue in terms of the calculation of CV profit, the purpose of the anti-dumping statute is to measure the degree to which a respondent sells merchandise in the United States at less than normal value of the merchandise sold in the home market. [00:01:21] Speaker 06: It's essentially a price discrimination statute where you look at the conduct of the respondent in question, [00:01:27] Speaker 06: and you compare prices between the two markets. [00:01:30] Speaker 06: Prior to this case, even when relying on constructed value, commerce had consistently relied on a profit value that was based or tied to the home market. [00:01:41] Speaker 06: In this case, however, commerce had departed from that practice, contrary to the statute. [00:01:47] Speaker 06: Instead, commerce relied on the financial statements first in the underlying investigation. [00:01:54] Speaker 03: I'm sorry, but I think the home market limitation is only present in the statute with regard to the profit cap. [00:02:00] Speaker 03: I don't see the home market limitation present in the statute with regard to the CV profit calculation. [00:02:05] Speaker 06: It's embedded into the three statutory provisions, Your Honor, if I may. [00:02:18] Speaker 06: In terms of looking at the three options for [00:02:22] Speaker 06: determining the appropriate profit cap 1677BE2A presents three options. [00:02:31] Speaker 06: Roman 1, it says the actual amounts incurred and realized by specific exporter producer being examined in the investigation or review for selling general and administrative expenses and for profits in connection with production and sale for consumption in the foreign country. [00:02:49] Speaker 06: of merchandise that is the same general category of products as the subject merchandise. [00:02:53] Speaker 06: So the first option limits it to the foreign country which commerce has specifically interpreted and stated in the regulations means the market in which constitutes the comparison market in which case would be Korea. [00:03:06] Speaker 00: Is it your suggestion that these provisions including I and II and III that they are in order [00:03:15] Speaker 00: They're not in order, right? [00:03:19] Speaker 06: That is correct. [00:03:19] Speaker 00: That's just one of the three options that commerce had to choose from. [00:03:23] Speaker 00: It's not that they're required to turn to same general category goods of the foreign country. [00:03:30] Speaker 06: That's correct, Your Honor. [00:03:32] Speaker 06: All three options are given without a specific hierarchy, but all three have a limitation to the foreign country. [00:03:40] Speaker 06: So option one is the actual exporter or producer in question [00:03:44] Speaker 06: And there it is the same general category of merchandise in the foreign country. [00:03:49] Speaker 06: Option two is other producers in the foreign country of the foreign like product. [00:03:55] Speaker 06: So it's not same general category. [00:03:57] Speaker 06: This option two is limiting it to the foreign like product, which is essentially the subject merchandise, but also again in the foreign country. [00:04:05] Speaker 06: And then option three is any other reasonable method. [00:04:08] Speaker 06: So that doesn't limit it to the home market at the outset. [00:04:11] Speaker 06: However, it provides a cap and the cap says, [00:04:14] Speaker 06: that the amount allowed for profit may not exceed the amount normally realized by exporters or producers, again, for consumption in the foreign country of merchandise that's in the same general category. [00:04:26] Speaker 06: So the way that it is set up is they're all tied back to the foreign country, the home market. [00:04:33] Speaker 06: The differences are which parties they're referring to and whether it's limited to the foreign-like product, which would be just the merchandise in question, [00:04:41] Speaker 06: or a broadening, which would be the same general category, which is broader than the foreign-like product. [00:04:47] Speaker 06: Those are the options that they have to choose from, Your Honor. [00:04:50] Speaker 06: In this particular instance, Commerce chose option three, but it chose to also ignore the profit cap. [00:04:58] Speaker 06: And in doing so, it claimed that because there was no same general category of merchandise in the original termination, it didn't even make an attempt to cap the profits tied to [00:05:10] Speaker 06: again, the home country in this particular instance. [00:05:13] Speaker 06: On remand, it simply stated its calculated profit rate as a profit cap, essentially not capping it at all, just saying that those two were the same. [00:05:22] Speaker 06: Where we think commerce erred, Your Honor, is that the statute specifically does give commerce an ability to broaden the scope of the products it's examining. [00:05:34] Speaker 06: In other words, we talked about options one and three referring to [00:05:38] Speaker 06: the same general category of merchandise, which is broader. [00:05:41] Speaker 06: If they chose option two, they had to stick with the foreign-like product. [00:05:44] Speaker 06: But it's in broadening the category of products that they're examining that they can still find sources within the home country, which is the preference here. [00:05:53] Speaker 06: All three options go to that. [00:05:55] Speaker 06: But what commerce did instead, it kept referring to the primacy of the foreign-like product and saying, because there is no other products within the same general category, [00:06:08] Speaker 06: We're going to go and use the profit of Tenaris in the original investigation, a company that has global operations many times larger than the respondent in question, but with no production or sales in the home market. [00:06:20] Speaker 06: On remand, they included a Russian company. [00:06:22] Speaker 06: But again, this is a price discrimination statute, Your Honor. [00:06:25] Speaker 06: And by including the profits of wholly unrelated companies from their sales and production in wholly unrelated markets, you're essentially creating, ignoring the statute, [00:06:37] Speaker 06: but also creating a price comparison that is wholly unrelated to the respondent in question. [00:06:43] Speaker 03: I guess I still don't understand your statutory interpretation argument. [00:06:47] Speaker 03: And I don't see what's wrong with the government's position that the whole market limitation only applies to the profit cap and not to any other reasonable method. [00:06:56] Speaker 03: But even putting that aside, your alternative argument seems to me, which is they shouldn't have looked at Russia and Argentina, which are selling basically the same products, [00:07:06] Speaker 03: They should have looked at slightly different products in Korea. [00:07:09] Speaker 03: We review that under what standard of review, Mr. Park? [00:07:12] Speaker 06: It's the same standard of review that the CIT looked at, Your Honor, which is the substantial evidence and contrary to law, Your Honor. [00:07:20] Speaker 03: And you think I should decide? [00:07:22] Speaker 03: that non-OCTG products was a closer analogy than the exact same products in Russia and Argentina, and you want me to flip-flop that on a standard review of substantial evidence? [00:07:35] Speaker 06: Yes, Your Honor. [00:07:36] Speaker 03: I know I knew that was your answer. [00:07:38] Speaker 03: I was hoping that you were understanding the inflection in my question. [00:07:41] Speaker 06: Yes, Your Honor. [00:07:42] Speaker 06: If I may address that point very specifically, first, again, we do believe, and our position is, that when you look at the three options, [00:07:51] Speaker 06: All three options require the home market, not just for the profit cap, Your Honor, but even for options one and two, which don't include the profit cap language. [00:07:59] Speaker 06: It is about profits in the foreign country. [00:08:02] Speaker 06: And the foreign country, Your Honor, is very specifically the home market. [00:08:06] Speaker 03: Nothing about any other reasonable method is limited to the home market. [00:08:10] Speaker 06: Yes, Your Honor, but it must be capped. [00:08:12] Speaker 06: So again, so the first two options, again, [00:08:16] Speaker 06: Roman 1 and little i and 2i already have the foreign country requirement in there. [00:08:22] Speaker 06: But let me just go through again. [00:08:23] Speaker 06: I'll read in full the third option. [00:08:27] Speaker 03: Yeah, I've got it in front of me. [00:08:28] Speaker 03: You don't need a reasonable goal. [00:08:29] Speaker 06: Yes, but it's a second part of that. [00:08:30] Speaker 06: So it says any other reasonable method, and it's except that provision. [00:08:35] Speaker 06: It's except that the amount allowed for profit may not exceed the amount normally realized by exporters or producers. [00:08:44] Speaker 06: other than the exporter-producer describing clause one, in connection with the sale for consumption in the foreign country. [00:08:51] Speaker 06: In other words, yes, you can use any other reasonable method, Your Honor, but it still must be capped by the home market experience. [00:08:59] Speaker 06: That has been commerce's interpretation throughout, even prior to this case, Your Honor. [00:09:04] Speaker 03: Do you want to save some of your rebuttal time? [00:09:05] Speaker 03: You've got only one minute left of rebuttal time. [00:09:07] Speaker 06: Yes, Your Honor. [00:09:09] Speaker 06: I will save the remaining time for rebuttal. [00:09:11] Speaker 03: Hosen? [00:09:12] Speaker 03: Am I saying Miss Hosen? [00:09:14] Speaker 03: Who? [00:09:15] Speaker 03: I don't know who's next. [00:09:18] Speaker 03: Am I saying your name right? [00:09:19] Speaker 03: I have going first Hardeeb Kaur Hosen. [00:09:26] Speaker 03: I'm not sure if I'm saying this name right. [00:09:28] Speaker 02: Yes. [00:09:29] Speaker 02: Your Honor, actually we're going to be responding to both of the appellants. [00:09:35] Speaker 02: So I think we can go last [00:09:37] Speaker 02: That's fine. [00:09:39] Speaker 03: It's just listed on my sheet wrong, maybe at check-in. [00:09:42] Speaker 03: You all didn't explain that, but come on up then, Mr. DeFrancisco. [00:09:44] Speaker 03: Thank you. [00:09:50] Speaker 05: Your Honor, Robert DeFrancisco from Wiley-Ryne on behalf of Cross Appellants Mavericks and U.S. [00:09:56] Speaker 05: Steel. [00:09:57] Speaker 05: Your Honor, we believe the lower court made two critical errors in its initial decision. [00:10:02] Speaker 05: First, it concluded that the department's acceptance of the Tenaris financial statement was prejudicial. [00:10:07] Speaker 05: And two, that it required the department to use fact-available profit cap. [00:10:13] Speaker 03: As a result of these two errors, we believe... And what's the standard of review that I need to review this one under? [00:10:18] Speaker 05: Certainly, Your Honor. [00:10:20] Speaker 05: With respect to whether it was prejudicial, with respect to accepting or not accepting the Tenaris profit cap, this court in PSC of ISMA said that absent constitutional considerations, a court will defer to the judgment of the agency regarding the development of the agency record. [00:10:38] Speaker 05: And this court went on in that case to discuss that this level of deference was necessary because the pursuit of what the court perceives to be the best or correct result would render judicial review totally unpredictable. [00:10:52] Speaker 05: So this is a much higher standard of review, a level of deference provided. [00:10:56] Speaker 03: You telling me it's much higher is lovely, but standards of review have names. [00:10:59] Speaker 03: They have names called abuse of discretion, substantial evidence, clear error, and de novo. [00:11:02] Speaker 03: Which one is this? [00:11:03] Speaker 05: We believe this is an abuse of discretion. [00:11:05] Speaker 05: here, and it's also contrary to the department's own regulations. [00:11:12] Speaker 05: And the CIT in this situation essentially spells that out in footnote 20 of the lower court's initial decision. [00:11:21] Speaker 05: The court says, this is a make or break issue, and commerce should do its utmost to be fair in such circumstances. [00:11:28] Speaker 05: We believe this wasn't prejudicial under the department's factual information regulations. [00:11:34] Speaker 05: respondents did have an opportunity to submit rebuttal information in the seven-day period that was allotted. [00:11:42] Speaker 05: And if they felt that that wasn't enough time, they could have asked for an extension. [00:11:46] Speaker 05: But they didn't do that. [00:11:48] Speaker 05: And the lower court going behind commerce and reinterpreting its factual information regulations was an error. [00:11:54] Speaker 05: The lower court analogized the situation to the department's factual information [00:11:59] Speaker 05: regulations with respect to non-market economies, which is not the case here. [00:12:02] Speaker 03: So the lower court concluded that the financial information that was submitted at the late stage in the proceeding was not to rebut, clarify, or correct questionnaire responses. [00:12:16] Speaker 03: It was further data. [00:12:19] Speaker 03: Correct? [00:12:19] Speaker 03: That's what the lower court concluded, the CIT. [00:12:22] Speaker 05: Your Honor, the lower court took issue with whether it was, in fact, to rebut [00:12:26] Speaker 05: and only addressed whether it was, in fact, to rebut. [00:12:29] Speaker 05: The lower court didn't address whether it clarified or corrected one. [00:12:32] Speaker 03: The lower court found that that evidence was not submitted consistent with 19 CFR section 3.51.301C1V, correct? [00:12:43] Speaker 05: Correct, Your Honor. [00:12:44] Speaker 03: And that section says that you can submit evidence to rebut, clarify, or correct, correct? [00:12:49] Speaker 05: Correct. [00:12:50] Speaker 03: OK. [00:12:50] Speaker 03: So the lower court found it was not consistent with [00:12:52] Speaker 03: the regulation that says you can only submit such evidence to rebut, clarify, or correct. [00:12:57] Speaker 05: It also found that by accepting it, it was prejudicial. [00:13:01] Speaker 05: But, Your Honor, it does rebut and it does clarify. [00:13:05] Speaker 03: It is new data that you had an opportunity to present earlier, chose not to, decided to present it later, and it's hard for me [00:13:14] Speaker 03: You know, you're really at an extreme disadvantage because the government hasn't come up here defending its first version of this either, have they? [00:13:21] Speaker 03: No, not at all. [00:13:22] Speaker 03: Nowhere in their brief did they defend the first decision that you're trying to defend. [00:13:26] Speaker 03: Instead, they're up here defending the second position. [00:13:30] Speaker 03: So doesn't that sort of make you just a little nervous? [00:13:34] Speaker 05: Well, Your Honor, in their remand decision, they did indicate that they were conducting a portion of it under protest, that they didn't agree with [00:13:42] Speaker 03: The government's interpretation. [00:13:45] Speaker 03: They could have appealed and said the first remand was improper, right? [00:13:48] Speaker 05: Yes, Your Honor. [00:13:49] Speaker 03: And they chose not to. [00:13:50] Speaker 03: Okay. [00:13:51] Speaker 03: And when they went back, it's not that they threw this evidence out, right? [00:13:55] Speaker 03: They didn't say, okay, well that evidence wasn't to rebut, clarify it, correct, therefore we can't consider it. [00:14:00] Speaker 03: That's not what happened, is it? [00:14:01] Speaker 05: They reopened the record and accepted new information. [00:14:05] Speaker 03: And so they considered the very evidence that you wanted them to consider in the first instance, along with some additional evidence at that point, correct? [00:14:12] Speaker 05: Correct, Your Honor. [00:14:13] Speaker 03: And they reached a new factual conclusion on the basis of all of that evidence. [00:14:17] Speaker 05: Correct, Your Honor. [00:14:18] Speaker 05: But the initial remand on that basis, we believe, was incorrect. [00:14:21] Speaker 05: There was no need to reopen the record. [00:14:23] Speaker 05: The information was properly on the record. [00:14:25] Speaker 05: And in fact, just to go back to your earlier question, Your Honor. [00:14:28] Speaker 03: I don't see what was wrong with what the CIT did. [00:14:30] Speaker 03: It doesn't seem to me that that new evidence was to rebut clarifier correct. [00:14:33] Speaker 05: I see no problem with what he did. [00:14:35] Speaker 05: The tenuous information that was on the record was put on the record actually before the prelim. [00:14:40] Speaker 05: The department considered it. [00:14:43] Speaker 05: a portion of it, a portion of the Tenaris financial statement was on the record, in its preliminary decision said it's still going to continue considering the profit information and the profit issue, issued a supplemental questionnaire in which it solicited more information with respect to profits and sales in Korea. [00:15:00] Speaker 05: And at that point, Maverick and US Steel put on a whole host of information that happened to also include that Tenaris financial statement, which went to addressing the degree to which sales [00:15:12] Speaker 05: in Korea of product that was not OCTG are reflective of profit rates for OCTG producers, what one would expect to earn a profit on sales of OCTG relative to other pipes, what was going on in Korea, and that Tenaris financial statement goes to all of those issues. [00:15:30] Speaker 05: It identifies what one would expect as a major producer of OCTG, the types of profits you ought to expect to earn, and what it should look like relative to these other types of products that they're selling. [00:15:44] Speaker 05: The other issue, Your Honor, as I mentioned earlier, is with regard to whether the department is required to apply a profit cap in this scenario. [00:15:54] Speaker 05: In the any other reasonable method, in a situation where we have here that there are no sales of the same general category of merchandise in Korea, neither the statute nor the SAA require commerce to apply a profit cap. [00:16:09] Speaker 05: And we don't believe applying a profit cap or forcing commerce to apply a profit cap in a fact available scenario is appropriate here and that their original decision was correct in that regard. [00:16:21] Speaker 05: In fact, the lower court in an earlier case called Duipong Corp recognized that the SAA approves commerce's no profit cap methodology for cases where no cap data is available at all, which is the situation we have here. [00:16:35] Speaker 05: There are no sales of the same general category of merchandise in Korea [00:16:39] Speaker 05: And therefore, it's not appropriate to apply a profit cap in that scenario. [00:16:44] Speaker 05: With that, I'd like to reserve the balance of my time from a bottle unless the court has any other questions. [00:16:48] Speaker 03: OK. [00:16:49] Speaker 03: Miss Joson? [00:16:51] Speaker 03: Did I get it right that time? [00:16:52] Speaker 03: Yes. [00:16:53] Speaker 03: Very good. [00:16:53] Speaker 03: Thank you, Your Honor. [00:16:54] Speaker 03: And you represent the government, right? [00:16:56] Speaker 03: Yes, that's correct. [00:16:56] Speaker 03: Just making sure I understand who everybody is. [00:16:58] Speaker 03: Yes. [00:16:58] Speaker 03: Go ahead. [00:16:59] Speaker 03: May I please report? [00:17:04] Speaker 03: Did I state all of the facts correctly? [00:17:06] Speaker 03: You heard my questions, meaning [00:17:08] Speaker 03: the facts related to the government's position on appeal. [00:17:10] Speaker 03: The government's position on appeal, as I understand it, is in defense of the second decision, which was affirmed by CIT and which is in front of us. [00:17:18] Speaker 03: But the government is not here today appealing and arguing that the first remand was improper. [00:17:23] Speaker 02: That's correct, Your Honor. [00:17:25] Speaker 02: And with regard to the issues that were before the trial code that we are defending and that should be affirmed by this court, the three issues are the CV profit, the affiliation, and Congress's decision not to apply adverse facts available. [00:17:38] Speaker 02: With respect to CV profit, I note that the statute. [00:17:42] Speaker 03: When you talk about adverse facts, the whole reason we're in an adverse facts arena at all is because the foreign producer didn't give the data that was necessary to make the calculations. [00:17:53] Speaker 02: That's correct. [00:17:54] Speaker 02: But commerce did not apply adverse facts here. [00:17:56] Speaker 02: And that was Maverick's. [00:17:57] Speaker 02: I understand. [00:17:58] Speaker 03: But that was the alternative that could have been possibly [00:18:03] Speaker 03: realized by commerce. [00:18:05] Speaker 03: That's correct. [00:18:05] Speaker 03: But commerce didn't do that. [00:18:06] Speaker 03: They went a different route, which resulted in probably, I would assume, I mean, because I've seen some of your adverse facts cases, and sometimes that number can be crazy high in terms of percentages. [00:18:16] Speaker 03: So I assume the numbers here were quite a bit lower than what adverse facts would have resulted in. [00:18:21] Speaker 02: Well, it would only have been, I mean, they were asking for partial adverse facts available call. [00:18:25] Speaker 02: So just with respect to the certain calculation issues for Hisco and Nexteal, [00:18:30] Speaker 02: Commerce found that they had the available information to make the calculations that and the the parties cooperated to the best of their ability and Submitting the information so that you know it wasn't an issue with respect to CV profit here under statutory preference alternative three It is not tied to the home market any other reasonable method is not tied to the home market [00:18:55] Speaker 01: The earlier preferences that are... Do you agree that the profit cap is tied to a whole market? [00:18:59] Speaker 01: That's correct. [00:19:00] Speaker 02: The profit cap would not be any other reasonable method. [00:19:04] Speaker 02: The profit cap sure is. [00:19:06] Speaker 02: And here, commerce was faced with the choice between having data, profit data that represented the market in consideration or data that represented the product under consideration. [00:19:17] Speaker 02: And in approximating next deal's profit, commerce reasonably determined that it was [00:19:24] Speaker 02: more akin to use the product at issue, OCTG. [00:19:28] Speaker 02: Given the premium nature of the product here, it makes sense. [00:19:31] Speaker 02: It makes economical sense. [00:19:33] Speaker 02: It's supported by the statute. [00:19:34] Speaker 02: And it's reasonable to say, you know what? [00:19:36] Speaker 02: We have these premium products here that are high end. [00:19:39] Speaker 02: We should be comparing other premium OCTG products in order to approximate the profit the next deal would have gained. [00:19:46] Speaker 03: So there's two different questions. [00:19:48] Speaker 03: Now, I'd like to go back to the statute one, though, because you seem to have moved into the [00:19:54] Speaker 03: use of Russian and Argentinian data on like products as opposed to non-OGCT product data from Korea. [00:20:00] Speaker 03: But I'd like to, if you don't mind, stick with the statute for a second. [00:20:03] Speaker 03: The question Judge Stoll asked about profit cap, you agree that if you're doing a profit cap analysis, you have to take into account consumption in the foreign country, correct? [00:20:15] Speaker 03: So that means within Korea in this case. [00:20:18] Speaker 02: Both foreign country and of the same general category. [00:20:21] Speaker 02: So again, it has to be tied to [00:20:22] Speaker 02: both the product and the home market. [00:20:24] Speaker 03: But the three little i says, the amounts incurred and realized for selling generally administrative expenses and for profits based on any reasonable method except that the amount allowed for profit may not exceed. [00:20:40] Speaker 03: And so that's where the profit cap section begins, right? [00:20:42] Speaker 03: That's correct. [00:20:43] Speaker 03: The accept that? [00:20:44] Speaker 03: Correct. [00:20:44] Speaker 03: Well, how come the accept that doesn't modify any other reasonable method? [00:20:47] Speaker 03: I mean, any method, any reasonable method you're going to use is going to have to involve profits. [00:20:52] Speaker 03: Because that's actually what you're trying to determine. [00:20:54] Speaker 03: You're trying to determine profits in order to assess dumping. [00:20:59] Speaker 03: And so why doesn't that accept that the amount, which then goes into amount for profit, may not exceed and ties it to foreign country consumption? [00:21:08] Speaker 03: I don't know. [00:21:08] Speaker 03: Why doesn't that get imported into any other reasonable method? [00:21:13] Speaker 03: Because no matter what reasonable method you're going to choose, it's going to involve a profit analysis. [00:21:17] Speaker 02: I think the SAE actually is very instructive here. [00:21:20] Speaker 02: The SAA has a quoting. [00:21:23] Speaker 02: It says, it gives commerce, when commerce cannot determine amounts, and I'm quoting, for profit under a profit cap under alternative three, it might have to apply alternative three on the basis of the facts available. [00:21:37] Speaker 02: Then it goes further to state, this ensures that commerce can use alternative three when it cannot calculate the profit normally realized by other companies on sales of the same general category of products. [00:21:49] Speaker 02: So even the SAA is recognizing that you know what, you might be in a situation where due to the absences of data on the record, commerce will not be able to have data that approximates both the same general category of the product and experience in the whole market. [00:22:07] Speaker 02: So that thing is very instructive and that's exactly what commerce had here. [00:22:12] Speaker 02: They had an absence of data. [00:22:14] Speaker 02: Parties had opportunities to submit data that would best reflect [00:22:18] Speaker 02: Nexteel's profit. [00:22:20] Speaker 02: And here, commerce reasonably chose, under any other reasonable method, that it was more important to choose data that represented the premium nature of the product at issue, rather than lower-end pipe products that do not reflect the same profit, do not reflect the same gain. [00:22:37] Speaker 02: So had Nexteel had a viable home market, although CTG in Korea, other producers [00:22:45] Speaker 02: Tenaris and TMK, their global sales of OCTG would better reflect that profit. [00:22:50] Speaker 03: As a statutory interpretation matter, is it the government's position that the SAA modified Three Little I? [00:22:58] Speaker 03: I mean, you see how I'm reading Three Little I, which is any other reasonable method except the amount for profit, blah, blah, blah, blah, blah, foreign consumption law. [00:23:09] Speaker 03: So is it that Three Little I [00:23:12] Speaker 03: is modified by SAA in circumstances where data is not available on the CAF is that I'm trying to understand as a matter of statutory interpretation. [00:23:21] Speaker 03: SAA, can you tell me what it is? [00:23:24] Speaker 03: It's like something we asked when we had these Uruguay rounds. [00:23:28] Speaker 03: Yes. [00:23:29] Speaker 03: Well, what is it? [00:23:30] Speaker 03: Is it a statute? [00:23:30] Speaker 02: It's congressional intent. [00:23:31] Speaker 02: It's basic legislative history. [00:23:34] Speaker 02: Is it a statute? [00:23:36] Speaker 02: No, it's legislative history. [00:23:37] Speaker 02: It's a statement of administrative action. [00:23:38] Speaker 02: So it's basically congressional intent in enacting the statute. [00:23:42] Speaker 03: I don't understand that. [00:23:43] Speaker 03: What does that mean? [00:23:43] Speaker 03: What is it? [00:23:44] Speaker 03: Is it like a Senate hearing thing? [00:23:49] Speaker 03: What is this SAA? [00:23:51] Speaker 02: It's basically the Congress, when they passed the statute, they're explaining. [00:23:57] Speaker 03: Not this statute with Three Little I. It was later. [00:23:58] Speaker 03: This SAA came out later in time. [00:24:00] Speaker 03: No, no. [00:24:01] Speaker 03: It's with the Uruguay agreement. [00:24:02] Speaker 03: It's with this statute. [00:24:03] Speaker 02: OK. [00:24:03] Speaker 03: So when Three Little I came out, [00:24:06] Speaker 02: The statement was simultaneous. [00:24:08] Speaker 02: Yes. [00:24:08] Speaker 02: So they're explaining what, and it's any other reasonable method. [00:24:13] Speaker 02: When you read that statutorily, there's no qualification versus the other. [00:24:18] Speaker 03: But let me ask about the essay, because I'm still a little confused. [00:24:20] Speaker 03: I know what a Senate report is, or I know what hearing statements are. [00:24:24] Speaker 03: So I'm just trying to understand. [00:24:26] Speaker 03: You've referred to it as legislative history. [00:24:28] Speaker 03: I'm not such a big fan. [00:24:30] Speaker 03: But I want to understand where it falls in the hierarchy, because there [00:24:35] Speaker 03: I would hope you would admit there's a hierarchy of legislative history, right? [00:24:37] Speaker 03: Like some legislative history, like a Senate report, even for those who like the idea of legislative history would be viewed as a stronger piece of legislative history than a random statement of a single Senator in a hearing. [00:24:47] Speaker 00: You understand? [00:24:48] Speaker 00: This is in the House report, right? [00:24:50] Speaker 01: Do I understand that correctly? [00:24:51] Speaker 02: Yes. [00:24:52] Speaker 02: To explain the hierarchy, I think it's, especially with these trade agreements acts and with this statute, courts, this court and this trial court have numerous times [00:25:05] Speaker 02: found the SAA to be instructive on understanding the statutory provisions here. [00:25:09] Speaker 02: So this is a statement by congressional intent that explains and further instructs on the statutory provisions. [00:25:17] Speaker 03: A statement by who? [00:25:19] Speaker 03: You say Congress, but Congress has two houses. [00:25:23] Speaker 03: Is this found in a Senate report? [00:25:24] Speaker 03: Is it found in a House report, as Judge Stoll suggested? [00:25:28] Speaker 03: Where is this? [00:25:29] Speaker 02: It's in the House report. [00:25:33] Speaker 02: It's part of the House report that's explaining. [00:25:35] Speaker 03: Does that mean the Senate did not endorse this statement then? [00:25:38] Speaker 03: Because a House report and a Senate report are two different documents. [00:25:41] Speaker 03: So when you say Congress, you may be being imprecise, right? [00:25:45] Speaker 03: These are statements outside of the statute. [00:25:47] Speaker 03: The statute's passed by both houses of Congress signed by the president. [00:25:50] Speaker 03: Things in the House report are only articulated by the House, right? [00:25:54] Speaker 03: Am I understanding legislative history correctly? [00:25:56] Speaker 02: Yes, Your Honor. [00:25:57] Speaker 03: Your Honor. [00:25:59] Speaker 03: So this SAA is basically a House report statement [00:26:03] Speaker 03: regarding the intent, at least as the House believed. [00:26:06] Speaker 02: That's my understanding, Your Honor. [00:26:09] Speaker 02: Yeah. [00:26:10] Speaker 02: Not very satisfying for me. [00:26:14] Speaker 02: And again, even in respect of the SAA, the statute, we believe, is clear in saying that any other reasonable method. [00:26:23] Speaker 02: There's a comma there. [00:26:24] Speaker 02: Yes, the profit cap. [00:26:25] Speaker 02: And courts have affirmed that interpretation where [00:26:28] Speaker 02: the profit cap is tied to the home market and to the same general category versus that any other reasonable method is not tied to the home market. [00:26:38] Speaker 02: So it's a reasonable interpretation. [00:26:40] Speaker 03: So I don't have to go outside the statute and I don't have to accept the SAA's articulation in order to get to the government's position? [00:26:47] Speaker 02: You do not. [00:26:48] Speaker 02: We believe the statute is clear and the courts have affirmed that interpretation and have [00:26:53] Speaker 02: found that any other reasonable method is not tied to the home market. [00:26:56] Speaker 00: What's your strongest case to support that proposition? [00:27:07] Speaker 03: By the way, my clerk has IM'd me, and I don't know if this is true, but he IM'd me that he seems to remember that the SAA was actually approved by an act of Congress, but he's checking now. [00:27:22] Speaker 03: You don't know. [00:27:23] Speaker 03: I need the government to tell me that. [00:27:26] Speaker 03: Because that's different, right? [00:27:27] Speaker 03: Then it's not just a House report. [00:27:29] Speaker 04: Then it's an act of Congress endorsing the language. [00:27:59] Speaker 02: Sorry, and I can get you that site in a minute. [00:28:14] Speaker 02: This is, it's the CIT court case is Guampong Corp. [00:28:19] Speaker 02: 163F sub second, which said, because alternative three does not advance a preference for home market data, [00:28:26] Speaker 02: Even though such data might exist, Commerce was free to use any other reasonable method to determine plaintiff's constructed value. [00:28:32] Speaker 02: There's also Tai-Ai-Mei frozen foods, which is at 477 F sub 2nd, 1332. [00:28:40] Speaker 02: In that case, the trial court rejected the argument that any other reasonable method under alternative three contains a geographical limitation to the home market. [00:28:51] Speaker 02: So those are the two cases that support our position that it's only tied, any other reasonable method is not tied to the home market experience. [00:29:01] Speaker 02: And then as far as the essay, I believe I can get you. [00:29:07] Speaker 02: I would have to double check. [00:29:08] Speaker 02: I'm not sure. [00:29:09] Speaker 02: I would have to double check with that. [00:29:10] Speaker 03: My clerk says it looks like section 101A of the Uruguay Round Agreement Act expressly adopted the SAA. [00:29:17] Speaker 03: See, that's different for me, right? [00:29:19] Speaker 03: Something in a House report, that's why I'm talking hierarchy, something in a House report doesn't necessarily represent the views of both Houses of Congress or the president when he passed it, but something that was actually expressly adopted as part of the statute itself was actually agreed to by everyone, including the president who signed it, much stronger. [00:29:37] Speaker 03: That's why it mattered to me. [00:29:39] Speaker 03: But don't worry. [00:29:40] Speaker 03: You don't need to submit it. [00:29:41] Speaker 03: We're going to figure out the answer to this on our own. [00:29:43] Speaker 03: This is not that complicated, and we can figure this part out. [00:29:45] Speaker 03: Thank you. [00:29:47] Speaker 03: Let's rebuttal time. [00:29:50] Speaker 03: I guess we'll have Mr. Park first. [00:29:58] Speaker 06: Thank you, Your Honor. [00:29:59] Speaker 06: I know I have very limited time available, so I'll just stick to a few key points. [00:30:04] Speaker 06: I do understand this court's your honor's interpretation and I do accept the division of the subparagraph three where the home market or foreign country experience is part of the profit cap language. [00:30:17] Speaker 06: I do understand what your honor was trying to say. [00:30:20] Speaker 06: As part of that issue, what we do want to point out in the remaining time available is that, again, there is a requirement for a profit cap as stated in the statutory language, and there [00:30:33] Speaker 06: commerce reversed course in the final determination where originally is part of its preliminary determination and part of past cases on this very same product, OCTG, it had determined that the same general category of products encompasses other products including line pipe and standard pipe and therefore it would have had an ability to calculate a profit cap had it kept its same interpretation of the same general category. [00:30:57] Speaker 06: Indeed, it even instructed the respondents that that was the same general category of merchandise [00:31:02] Speaker 06: as part of this case. [00:31:04] Speaker 06: In the final determination reverse course and created an impermissibly narrow interpretation where it limited the same general category of merchandise to down hole applications. [00:31:16] Speaker 06: No one argued for that. [00:31:17] Speaker 06: It came out in the final determination and that was inconsistent even with commerce's own simultaneous decision in the concurrent case of OCTG from Ukraine where commerce actually specifically said that the scope of the case itself is not limited [00:31:31] Speaker 06: to actual applications in oil and gas. [00:31:35] Speaker 06: It can include reject pipe. [00:31:36] Speaker 06: So in this particular case... Thank you, Mr. Park. [00:31:38] Speaker 03: You're way beyond your time. [00:31:39] Speaker 03: I was waiting for you to take a breath, but apparently you don't breathe. [00:31:42] Speaker 03: So let's hear from Mr. DeFrancisco. [00:31:45] Speaker 06: Thank you. [00:31:52] Speaker 05: Certainly. [00:31:52] Speaker 05: Thank you, Your Honor. [00:31:54] Speaker 05: Robert DeFrancisco. [00:31:55] Speaker 05: Just to quickly go back. [00:31:57] Speaker 05: The cases Mr. Park was referring to, in those cases the department did not wholly examine same general category of merchandise. [00:32:05] Speaker 05: It was something that the department looked at, they applied, but it wasn't examined the way it was examined in this case. [00:32:10] Speaker 05: There was a voluminous amount of information that was put on the record, both by Maverick and U.S. [00:32:16] Speaker 05: Steel and by the respondents, that they looked at and considered and addressed this issue of what that same general category of merchandise is. [00:32:23] Speaker 03: What in the world does that have to do with your appeal? [00:32:25] Speaker 05: In our appeal where we're talking about whether there should or shouldn't be a profit cap and what is in the same general category of merchandise. [00:32:33] Speaker 05: And in this situation, you don't have the same general category of merchandise sold in Korea. [00:32:40] Speaker 03: You have a right to rebuttal on your cross appeal. [00:32:43] Speaker 03: I thought your cross appeal was relevant to whether commerce erred in the first ruling. [00:32:49] Speaker 05: It is. [00:32:49] Speaker 03: Is any of what you're saying now relevant to whether commerce erred in the first ruling? [00:32:53] Speaker 05: Yes, because we believe, again, we had two issues. [00:32:56] Speaker 05: One was whether they accepted the, should have accepted the financial statement as prejudicial, and two, that there was no obligation to apply a profit cap. [00:33:04] Speaker 03: I'm sorry. [00:33:05] Speaker 03: Then please continue. [00:33:06] Speaker 03: I just wanted to make sure you weren't going outside the scope of what was fair, fairly within your review. [00:33:10] Speaker 03: No, no, Your Honor. [00:33:10] Speaker 03: Please continue. [00:33:11] Speaker 03: Thanks for explaining. [00:33:12] Speaker 05: On our second issue, going back to your statutory construction argument, [00:33:16] Speaker 05: If there are no sales of the same general category of merchandise in Korea, there is no obligation to apply a profit cap. [00:33:22] Speaker 05: And there are no sales of the same general category of merchandise in Korea because there are no oil wells and there is no oil drilling in Korea. [00:33:30] Speaker 05: And the way the department looked at the same general category was they looked at pipe that is of a quality that could go down hole, which would include the subject merchandise here, the casing and tubing that would go down a hole, but it would also include [00:33:45] Speaker 05: drill pipe, which is not subject merchandise, which also goes down hole. [00:33:49] Speaker 05: It would also include stainless steel pipe, which is not subject merchandise, which is also capable of going down hole. [00:33:56] Speaker 05: And the scope also includes things like limited service pipe, which is not necessarily certified to go down a hole, but can go down a hole, which is the type of pipe Mr. Park was referring to in the Ukrainian decision. [00:34:08] Speaker 05: So they limited this same general category of merchandise to something that is broader [00:34:12] Speaker 05: than the foreign-like product, which in this case is casing and tubing. [00:34:15] Speaker 05: And it also includes things that are capable of going down a hole. [00:34:20] Speaker 05: And that was how they limited their decision as to what's the same general category. [00:34:24] Speaker 05: And when you're in a situation where there is no same general category of merchandise, you have no obligation to apply a profit cap. [00:34:31] Speaker 05: You can't apply a profit cap because you have no information of which to construct the profit cap out of. [00:34:36] Speaker 05: Then there should be no obligation to [00:34:38] Speaker 05: force commerce to construct a profit cap with no information available to do that. [00:34:44] Speaker 05: That's all I have, Your Honor, unless you have questions. [00:34:47] Speaker 03: I thank all counsel. [00:34:47] Speaker 03: The case is taken under submission.