[00:00:02] Speaker 01:
The United States Court of Appeals for the Federal Circuit is now open and in session.

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God save the United States and this honorable court.

[00:00:12] Speaker 02:
Good morning.

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The first case for argument this morning is 19-2096, Arlantio, USA versus United States.

[00:00:22] Speaker 02:
Mr. Soberg, ready to hear from you.

[00:00:27] Speaker 00:
Good morning.

[00:00:27] Speaker 00:
May it please the court.

[00:00:30] Speaker 00:
Will Soberg on behalf of Negromax and INSA.

[00:00:33] Speaker 00:
With regard to my first issue, price effects and underselling, at the administrative stage, the commission found significant and widespread underselling while not considering certain domestic industry prices as according to the commission.

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Inclusion of those prices would not have significantly affected the underselling calculations.

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However, before the Court of International Trade, the commission took a contrary position.

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Excuse me.

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The commission first introduced east-west pricing behavior

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from the preliminary investigation in its CIT response brief as an affirmative defense to counter Negromax's argument in the impact section of its brief that Lyon's pricing behavior was a cause of the domestic industry's ills.

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East-West pricing behavior covers 77% of the final period of investigation.

[00:01:22] Speaker 04:
Mr. Shelbury, it's correct, is it not, that you didn't raise this issue about the East-West pricing data

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before the ITC, nor did you raise it in the CIT before oral argument.

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Am I correct about that?

[00:01:43] Speaker 00:
No, sir.

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You are correct that we did not raise it at the administrative stage.

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However, in footnote 132 of the commission's views, excuse me, 131 of the commission's views, the commission specifically says no inference can be made

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that the inclusion of certain domestic industry prices would have affected their underselling analysis.

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As before the CIT, the commission introduced the east-west pricing behavior.

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We responded to it in our response brief and at oral argument.

[00:02:20] Speaker 02:
Well, this is Judge Prost.

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Is that really the way it's supposed to work here?

[00:02:25] Speaker 02:
I mean, I'm a little, I have a little bit of reservation.

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Just be clear to me, because there were some confidential redactions.

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So you've mentioned East-West pricing.

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So I assume that's not confidential material.

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At least the reference to that statement is not confidential.

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Is that correct?

[00:02:45] Speaker 00:
Well, in footnote 131, the commission refers to certain domestic industry pricing.

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The information was not included.

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However, in footnote nine of the staff report, it says that East-West did not submit a questionnaire response.

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And I'm not quite certain how that responds to Judge Dyke's concerns or questions about waiver.

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Was it a yes to his

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a question about whether the first time you raised this was an oral argument before the commission, before the CIT?

[00:03:23] Speaker 00:
No, Your Honor.

[00:03:24] Speaker 00:
The first time I raised it was in our response brief, excuse me, in our reply brief to the commission's response when they introduced it.

[00:03:34] Speaker 04:
OK, but why isn't it a waiver because you didn't raise it before then?

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Well, according to this court,

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If an appellee raises an issue, a material issue in their response brief, fundamental fairness dictates that the appellant is allowed to reply.

[00:04:03] Speaker 04:
Well, let's assume for the moment that that excused your not raising it earlier before the CIT, but the whole purpose

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of the exhaustion doctrine is that you raised the issue before the agency so that the agency has a chance to address it.

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But here you did not raise it before the agency, right?

[00:04:25] Speaker 00:
That is correct, Your Honor.

[00:04:27] Speaker 00:
We did not.

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And the agency actually affirmatively discounted it so that it did not matter.

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However, before the CIT, they decided it did matter.

[00:04:42] Speaker 04:
Where did they say, where did they address this east-west data in the decision?

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Is that in footnote 132?

[00:04:52] Speaker 00:
It's in footnote 131, your honor.

[00:04:56] Speaker 04:
Footnote 131?

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Of the commission's views, that's correct.

[00:05:11] Speaker 04:
Yeah, but they basically say in any event, respondents do not argue that prices were so much lower than the other domestic producers' prices that inclusion of its pricing data would have significantly affected the underselling calculation.

[00:05:27] Speaker 00:
Exactly.

[00:05:28] Speaker 00:
They said that it wouldn't, and I show in my brief that it did, and it would.

[00:05:36] Speaker 04:
Well, your brief in the here.

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You're not talking about your brief before the ITC, right?

[00:05:47] Speaker 00:
But the CIT, Your Honor, we spoke about it in our response brief.

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And we also spoke about it at oral argument.

[00:05:57] Speaker 04:
But you did not speak about it before the ITC.

[00:06:01] Speaker 00:
Before the ITC, we did not, no, Your Honor.

[00:06:11] Speaker 02:
Why don't you continue with your argument, sir?

[00:06:14] Speaker 00:
Thank you.

[00:06:16] Speaker 00:
Well, East-West Pricing Behavior covers 77% of the final period of investigation, while the only inference that can be made to the remaining 23% is that East-West continued its pricing behavior because East-West was still in business.

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Including East-West Pricing Behavior and the Commission's underselling analysis changes the results, such that the Commission's underselling analysis was unsupported by substantial evidence.

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The commission's underselling analysis was also not in accordance with law because the commission offered an explanation that ran counter to the evidence before the agency, evidence that was introduced by the commission at the CIT.

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With regard to price effects and price depression suppression, prices of the domestic-like product ended the period of investigation higher than they started, regardless of whether east-west pricing behavior is included.

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To avoid that fact, the commission truncated the last quarter of the final period of investigation from its analysis.

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The commission's basis for so doing consisted of one sentence and a footnote characterizing conditions during that period as anomalous because the cost of raw materials spiked.

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That's footnote 132 of the commission's views.

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Such analysis is hardly fulsome given that the commission's entire price depression argument depended upon it.

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As such, that part of the commission's analysis was not in accordance with law.

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In its brief before this court, the commission amended its rationale to also include that the increase in price of the domestic product allegedly masked price depression, which begs the question of whether the commission now also considers increased prices an anomaly.

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The only way that monthly contract prices increase after the contracts are signed is if the price of butadiene and styrene increase

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during the year.

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The importance of law materials and ESPR contract prices cannot be understated.

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The Commission recognized such when it truncated the period of investigation for purposes of its price suppression analysis.

[00:08:18] Speaker 02:
But, you know, sir, I appreciate the arguments you're making and the ones you've made in your brief, and they're numerous.

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But we're under substantial evidence review here.

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And this is complicated stuff, and there's an enormous amount of material here to be analyzed.

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And it's a little difficult for us here at the appellate level to reevaluate everything that the commission did with respect to the importance and the weighing of the various factors.

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So I assume you appreciate that.

[00:08:52] Speaker 00:
I do.

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With respect, I'm trying to make it as clear as I possibly can.

[00:09:00] Speaker 02:
Well, clarity is not the issue.

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The difficulty is that there's a lot of evidence in the record.

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The commission considered it.

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We assume they considered all of it.

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They analyzed it in maybe not enough detail to your liking, but they did analyze all the factors and weigh all the factors.

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And it just seems to me that

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It's difficult here at the appellate level under substantial evidence review to start second-guessing them and re-evaluating the entire record.

[00:09:30] Speaker 00:
I understand, Your Honor.

[00:09:41] Speaker 00:
Shall I continue?

[00:09:42] Speaker 02:
Sure.

[00:09:43] Speaker 02:
Please.

[00:09:43] Speaker 02:
I'm sorry.

[00:09:44] Speaker 02:
Yes.

[00:09:44] Speaker 02:
Please continue.

[00:09:46] Speaker 00:
The ESBR prices rise and fall on the objective published price of raw materials.

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That ESBR prices increased when the price of raw materials increased in the last quarter of the period of investigation is a testament to that fact.

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It's hardly a surprise and certainly not anomalous.

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On one hand, the commission truncated the final period of investigation because the prices of raw materials drive ESBR prices.

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On the other hand, the commission found price depression in the truncated period because the convergency component drives the SPR prices, and cuts in that component allegedly depress the price of the domestic product in effective profitability.

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Those two positions cannot be reconciled, particularly when you consider the movements and the ratio of the cost of raw materials to total net sales.

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I refer the court to table 6-1 on appendix page 1594

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and urge the court to compare the change in that ratio between the first quarter of 2016 and the first quarter of 2017, which includes the commission's anomalous period, with the changes in the same ratio between 2014 and 2015 and 2015 and 2016.

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If the former change was anomalous, there could be no question that the latter two changes were likewise anomalous.

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If there's still a question of whether the price of subject imports caused the price of the domestic light product to fall,

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The court need only consider that for the truncated period advocated by the commission, the decrease in the cost of raw materials exactly equal to decrease in the price of domestic like product.

[00:11:25] Speaker 00:
Other than truncating the period of investigation, the commission's price depression argument boils down to some weekly reports issued by Lyon throughout the year that stated that the prices of subject imports were lower than Lyon's prices.

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In its brief, the commission extrapolated those reports to contract negotiations with purchasers, none of which identified subject imports as the source of the low prices.

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The commission in line would have this court believe that customers leveraged the domestic producers into lowering contract prices based on subject imports lower contract prices.

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That's impossible.

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Monthly contract prices are not known until immediately prior to or during the month of shipment.

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and are entirely dependent upon changes in the published monthly prices of butadiene styrene.

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The conversion fee component is fixed for the life of the contract.

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Lyon's weekly reports must pertain to the spot and not the contract market.

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Spot market prices were never at issue during the investigation.

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We'll hear today that low price subject imports forced the domestic industry to lower its contract conversion fees, thereby affecting industry profitability.

[00:12:38] Speaker 00:
But what's the source of those low prices?

[00:12:40] Speaker 00:
It can't be ESPR spot reports because those weekly reports only report prices for a week, not for the following year.

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It can't be the future monthly contract prices of ESPR because those prices are unknown during negotiations.

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There's simply no objective support in the record for ESPR purchasers and importers using only contract conversion fee component of subject imports and not that of the domestic product as leverage in contract negotiations.

[00:13:08] Speaker 00:
The commission and Lion's position that the price depression analysis must focus only on the fixed conversion fee component, presumably because that component affects profitability, is belied by Lion's own contract formula, see page 41 of our confidential brief.

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Given that prices ended the POI higher than they started or tracked exactly the fluctuations in the price of raw materials in the truncated POI, it's unreasonable that low price subject imports depress the price of the domestic light product.

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As such, the commission's price depression analysis is unsupported by substantial evidence.

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With regard to impact, although the domestic industry was in a poor condition, subject imports were not the cause of such condition.

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The commission's impact analysis was predicated on its underselling price depression analysis, including that subject imports were allegedly the cause of the domestic industry's poor condition.

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However, the commission's underselling and price depression analysis employed

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An erroneous methodology, in other words, a commission's impact analysis was based on a faulty premise.

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And set forth in our brief line in East-West were the cause of the domestic industry's poor condition, not subject to imports.

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East-West filed for bankruptcy at the end of the period of investigation after imposing its pricing behavior on the U.S.

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market for no less than 77% of the period of investigation.

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And we can only infer that East-West continued such behavior for the remaining 23% of the period.

[00:14:35] Speaker 00:
Lyon suffered from an admitted cost price squeeze due to the high relative increases in its cost of raw materials, a circumstance that the commission failed to address.

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Lyon also self-infected injury by applying damaging pricing behavior related to sales for which there was little or no competition from subject imports.

[00:14:54] Speaker 00:
Thank you, and I will save whatever time I have left for rebuttaling conclusions.

[00:14:59] Speaker 02:
All right.

[00:14:59] Speaker 02:
Thank you, sir.

[00:15:00] Speaker 02:
Ms.

[00:15:01] Speaker 02:
Dempsey?

[00:15:03] Speaker 03:
Thank you.

[00:15:03] Speaker 03:
May it please the court

[00:15:05] Speaker 03:
As the Court of International Trade properly found, the Commission's findings on price and impact, the only two issues that Negromax has challenged in this appeal, is supported by substantial evidence and is otherwise in accordance with law.

[00:15:18] Speaker 03:
In analyzing... Ms.

[00:15:20] Speaker 02:
Swensey, can I ask you... I'm sorry.

[00:15:21] Speaker 02:
This is Judge Prouse.

[00:15:22] Speaker 02:
Can I just interrupt you and ask you about one point that your friend raised in his pre-fitted argument?

[00:15:27] Speaker 02:
And you cite Nucor saying that for the proposition that the Commission has the discretion of picking the time periods here.

[00:15:35] Speaker 02:
But that case also emphasized the importance of including the most recent time period.

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And so why is the Commission's decision to exclude the first quarter of 2017, which is the most relevant recent time period, appropriate?

[00:15:55] Speaker 03:
Well, as the commission found, anomalous conditions existed during the first quarter of 2017 that directly impacted domestic prices.

[00:16:04] Speaker 03:
And because the commission's... High material costs?

[00:16:11] Speaker 03:
It was an anomalous spike in raw material costs.

[00:16:13] Speaker 03:
So what was happening with raw material costs, they were fluctuating and were declining.

[00:16:19] Speaker 03:
But in the first quarter of 2017, you see a dramatic spike.

[00:16:23] Speaker 03:
And given that the published prices of raw materials were directly tied to the variable component of the domestic industry's contract pricing formulas, this anomalous spike was directly responsible for the sharp spike in domestic prices.

[00:16:41] Speaker 03:
And given this anomalous condition, the commission was reasonable in focusing its analysis

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on a time period 2014 through 2016 when prices were in fact declining and otherwise were not impacted by this anomalous spike in raw material costs.

[00:17:00] Speaker 04:
But the 2017 data is not just for the domestic producers, right?

[00:17:04] Speaker 04:
It's comparative data between the domestic producers and the importers, no?

[00:17:11] Speaker 03:
Yeah, so that's for its comparative data with respect to underselling, but for price trends,

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which is what the commission uses in analyzing price depression, we want to look at whether anomalous conditions exist in the first instance that are impacting domestic prices before the commission even continues its analysis in determining whether subject imports were significantly depressing domestic prices.

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The commission was entirely reasonable

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in focusing its price depression analysis within this timeline.

[00:17:46] Speaker 04:
So wasn't the argument that the 2017 data should not only be used for price trends, but also for determining comparative price levels?

[00:17:58] Speaker 03:
That's correct.

[00:17:58] Speaker 03:
And the commission did use a first quarter 2017 data in its underselling analysis.

[00:18:05] Speaker 03:
It didn't use it for its price depression analysis.

[00:18:10] Speaker 03:
Moving back to price underselling, Nargamax insists that it did not waive this argument that the Commission should have included

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East-West pricing data that it submitted.

[00:18:29] Speaker 02:
Well, let's stay with Ms.

[00:18:30] Speaker 02:
Dempsey.

[00:18:30] Speaker 02:
Why don't we stay with the 2017 exclusion of that first quarter?

[00:18:34] Speaker 02:
It's true, is it not, that the only analysis that we have of the board in analyzing this matter, which seems like a pretty big deal, is the one footnote in its opinion at footnote 132, correct?

[00:18:50] Speaker 03:
That's correct.

[00:18:54] Speaker 02:
And what did they say here?

[00:18:55] Speaker 02:
So this is all relegated to a footnote.

[00:18:58] Speaker 02:
And what they say is there are now an anomalous condition during this quarter.

[00:19:04] Speaker 02:
And then they cite to what's this document they're citing to?

[00:19:11] Speaker 03:
It's the staff report.

[00:19:13] Speaker 02:
Okay.

[00:19:15] Speaker 03:
Yeah, so the staff report set out a table that showed the raw material costs.

[00:19:22] Speaker 03:
and how they were fluctuating and declining, and then you see a huge spike in raw material costs, and it sets forth the percentile increase.

[00:19:31] Speaker 03:
And that percentile increase is business proprietary information, but it was significant, and it was anomalous.

[00:19:40] Speaker 03:
But I'd also like to point out here that raw material costs only impacted the domestic industry's variable component and did not have anything to do with

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the domestic industry's fixed fee component, which covered the domestic industry's profits and other costs.

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And so while domestic prices may be impacted by raw material costs, this fails to explain the substantial cuts that were made to the fixed fee component of the domestic industry's contract pricing formulas.

[00:20:15] Speaker 03:
And as the record demonstrated,

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there was substantial evidence from purchasers informing the domestic industry of the low price subject imports, that its prices were too high compared to subject imports and requesting it to meet these lower subject import prices.

[00:20:33] Speaker 04:
Okay, but where do we find the use of the 2017 data in the underselling analysis?

[00:20:41] Speaker 04:
Because if I understand correctly, you're saying

[00:20:44] Speaker 04:
that the rejection of the first quarter of 2017 data was only in connection with the price trends analysis.

[00:20:51] Speaker 04:
And I can understand the argument that if those prices were distorted by high material costs, that might not be relevant.

[00:21:01] Speaker 04:
But where do they use the 2017 data for underselling?

[00:21:07] Speaker 03:
So the underselling analysis is on pages 31 and through 36.

[00:21:14] Speaker 03:
33 of the commission's final views.

[00:21:18] Speaker 03:
And you have, I'm sorry, do you have an appendix site for that?

[00:21:23] Speaker 02:
Sure, I apologize.

[00:21:24] Speaker 03:
Appendix number 1719 to 1721.

[00:21:27] Speaker 03:
And here, the commission explains how subject imports undersold the domestic-like products in 150 of 218 quarterly price comparisons, involving 85% of the quantity of import.

[00:21:46] Speaker 04:
How do I know that includes the 2017 data?

[00:21:50] Speaker 03:
Because of the quarterly 200, it's cited to the staff report which includes orders.

[00:22:03] Speaker 03:
If you look at 100 page, table 510 of the staff report.

[00:22:08] Speaker 03:
What page?

[00:22:30] Speaker 03:
It is, sorry, appendix number 1583.

[00:22:34] Speaker 03:
You'll see that this table is entitled instances of underselling, overselling January 2014 through March of 2017.

[00:22:49] Speaker 03:
And there's underselling in 150 out of 218 quarterly comparisons.

[00:23:02] Speaker 03:
So moving to, so in addition to these purchaser communications that were on the record exerting this pricing pressure on the domestic industry to reduce the fixed fee component of the contract pricing formulas, the record also demonstrated that during the contract negotiation process that purchasers would negotiate this fixed fee.

[00:23:25] Speaker 03:
And although Negramex argues that

[00:23:27] Speaker 03:
It was impossible for purchasers to negotiate a fixed fee because contracts were negotiated and signed a month prior to them taking into effect and that different purchaser or different suppliers use different links or different pricing formulas to different published prices of raw materials.

[00:23:49] Speaker 03:
These arguments are actually directly contradicted by the statements that respondents, including Negromax, made to the commission during the administrative proceedings below.

[00:23:58] Speaker 04:
Could we move to the fair to consider the East-West data, which put aside the waiver question, which we've covered at some length.

[00:24:09] Speaker 04:
But assume there wasn't a waiver.

[00:24:11] Speaker 04:
Why isn't that pertinent data?

[00:24:15] Speaker 03:
Well, because as the commission explained, the data that the commission actually collected from domestic producers and U.S.

[00:24:26] Speaker 03:
importers in the final phase of the investigation were representative.

[00:24:31] Speaker 03:
Specifically, they collected data from Lyon and Goodyear, which not only accounted for the majority of domestic production, but also accounted for the majority of shipments

[00:24:41] Speaker 03:
made during a period of investigation.

[00:24:43] Speaker 04:
OK, but I don't find that particularly convincing.

[00:24:46] Speaker 04:
When you have data for a third entity, which is a major player in the domestic market, it seems to me that you risk data manipulation by excluding it.

[00:25:01] Speaker 03:
Respectfully, we disagree, because first of all, there is no statutory basis for the commission

[00:25:08] Speaker 03:
to aggregate preliminary phase data with final phase data, nor did Negramech cite to any prior... It's the same data, right?

[00:25:18] Speaker 03:
It's not the same data.

[00:25:19] Speaker 03:
It's not because the final phase spanned a different time period and also collected data on different pricing products.

[00:25:28] Speaker 04:
Negramech itself, when it attempts to aggregate... It included data for East-West for 10 quarters.

[00:25:35] Speaker 04:
out of the 13 that were considered, right?

[00:25:37] Speaker 03:
Right, but also didn't collect data from East-West with respect to the last three quarters of the final period of investigation, which is, as Chief Judge Prost pointed out, the most recent time period.

[00:25:51] Speaker 03:
Moreover, there was a pricing product that was included in the final phase of the investigation, pricing product four, that was not included in the preliminary phase.

[00:26:01] Speaker 03:
And so in trying to aggregate the data itself in its opening brief, Negramex ignores a large amount of pricing data that was on the record of the final phase of the investigation.

[00:26:14] Speaker 03:
And here where the data collected was representative of the domestic industry, accounting for the majority of shipments of the domestic-like product, the commission was entirely reasonable

[00:26:29] Speaker 03:
in finding the data to be representative.

[00:26:37] Speaker 04:
Wow.

[00:26:38] Speaker 03:
Moving to impact.

[00:26:39] Speaker 04:
I'm skeptical about that.

[00:26:47] Speaker 03:
But even if one were to accept Negromax's argument and consider East-West data, the more reasonable analysis is to do what the Commission did in the final views, which is point to

[00:26:58] Speaker 03:
its preliminary phase underselling analysis.

[00:27:02] Speaker 03:
And in that phase, in the preliminary phase where the commission actually considered East-West pricing data within the context of the appropriate period of investigation and appropriate collection of pricing products, the commission found that subject imports still significantly undersold the domestic-like product in 70 out of 127 quarterly comparisons.

[00:27:31] Speaker 03:
Moving to impact, the commission found that due to the availability of low-price subject imports, and the domestic industry was forced to reduce prices, which caused its revenues to be lower than they otherwise had been.

[00:27:46] Speaker 03:
The domestic industry performance was poor throughout the period of investigation, with several of its trade and financial indicators suffering declines between 2013 to 2016.

[00:27:56] Speaker 03:
Based on the totality of the evidence, the commission reasonably

[00:28:00] Speaker 03:
concluded that subject imports had a significant adverse impact on the domestic industry.

[00:28:05] Speaker 03:
In conclusion, we respectfully request that this court uphold the Court of International Trade's decision sustaining the commission's final affirmative material injury determination.

[00:28:17] Speaker 02:
Thank you.

[00:28:18] Speaker 02:
Perfect timing.

[00:28:20] Speaker 02:
Mr. McGrath?

[00:28:22] Speaker 01:
Good morning.

[00:28:23] Speaker 01:
You've got two minutes.

[00:28:24] Speaker 01:
Good morning.

[00:28:25] Speaker 01:
Your Honors, may it please the Court, I'm Matthew McGrath arguing for defendant appellee Lyon Elastomers, which was also the petitioner in the underlying investigation.

[00:28:36] Speaker 01:
We're in agreement with all of the government's arguments, and I just wanted to make a couple of quick points.

[00:28:43] Speaker 01:
First, the appellant's

[00:28:45] Speaker 01:
understanding statutory requirements to make two separate inquiries is not quite clear.

[00:28:50] Speaker 01:
Underselling and price depression are two separate inquiries.

[00:28:53] Speaker 01:
The commission did just that, as two separate inquiries.

[00:28:56] Speaker 01:
For the underselling analysis, although EastWest did not submit a questionnaire response, the commission's final decision did comment on that company's prices, as Ms.

[00:29:05] Speaker 01:
Dempsey just pointed out, as reported during the preliminary investigation, observing the same trends for the industry.

[00:29:12] Speaker 01:
considerable resulting underselling by looked at as a whole.

[00:29:17] Speaker 01:
With respect to price depression and suppression, the commission has broad discretion to decide which data they deem most appropriate.

[00:29:24] Speaker 01:
In this case, we agree the anomalous conditions were an extremely high spike, unusual spike in raw material costs which had an impact on everybody's prices.

[00:29:35] Speaker 01:
Nonetheless, selected data used by the commission were representative of the domestic industry as a whole, as required by the statute.

[00:29:42] Speaker 01:
They're not required to look at individual company impacts.

[00:29:46] Speaker 01:
With respect to contract pricing, the commission identified that that pricing is partially tied to the cost of development.

[00:29:52] Speaker 04:
In order to determine whether data are representative, don't you have to compare

[00:29:58] Speaker 04:
the data other than the data that you've chosen to use so that you can make a conclusion that the data that you've chosen to use is in fact represented.

[00:30:07] Speaker 04:
If it varied a great deal from the other data that you're discarding, it wouldn't be represented, would it?

[00:30:15] Speaker 01:
Well, Your Honor, that's why this is important that they did point out

[00:30:20] Speaker 01:
uh... in footnote one thirty one that day they considered they did look at east-west information as submitted during the uh... preliminary investigation and found that the trends were the same uh... there was not uh... significantly different and at the end of the day they're still going to have to the average and weight averaging prices not looking at individual company to company uh... impacts but looking at the industry as a whole based on what they have in front of them as has been pointed out what they had uh...

[00:30:48] Speaker 01:
from, at least in the final, from the two companies that submitted, Lyon and Goodyear, they had the majority of the industry in that.

[00:30:56] Speaker 01:
And also, I believe, attempted to point out that for the one company they didn't have final information from, they took a look at the same trends for that company for the preliminaries, which they did have data from and found that the trends were the same.

[00:31:13] Speaker 01:
Secondly, I think it's important the commission identified that contract pricing is partially tied to cost of raw materials, but they also identified that this fixed conversion fee is a critical component of the contract which is not affected by raw material cost.

[00:31:28] Speaker 01:
So there's substantial evidence in the record that that critical pressure point for price competition is what is important and there was a significant amount of information.

[00:31:38] Speaker 01:
Finally, the appellant's interpretation of record evidence and pricing competition we believe is not correct.

[00:31:44] Speaker 01:
They conclude that purchasers leverage suppliers off of each other, but not that suppliers use the price of subject imports.

[00:31:51] Speaker 01:
The price of subject imports is leveraged.

[00:31:53] Speaker 01:
Yet in their brief to the commission, they admitted that purchasers could manipulate all suppliers to achieve desired prices during the contract negotiation process.

[00:32:02] Speaker 01:
So, it's seemingly implausible that furcacers did not use price of fungible subject imports as leverage.

[00:32:09] Speaker 01:
What else, what other leverage would there be?

[00:32:11] Speaker 01:
That is what the commission concluded.

[00:32:14] Speaker 02:
Okay.

[00:32:14] Speaker 02:
I think you've exceeded your time.

[00:32:16] Speaker 02:
Why don't we hear back from the appellant?

[00:32:19] Speaker 02:
Thank you.

[00:32:22] Speaker 00:
Thank you, Your Honor.

[00:32:23] Speaker 00:
A couple of points, four points in rebuttal, and then I'd like to say some conclusory remarks.

[00:32:30] Speaker 00:
As far as what the Council for the Commission stated that raw materials, other raw materials overhead and profit are all in the fixed fee component of a contract price, I refer you to Lyon's contract formula and I believe that's, we talk about that on page 31 of our confidential brief.

[00:33:04] Speaker 00:
Then also the commission and Lyon both do not talk about any objective purchasers saying that they had to or there's no information on the record supporting that objective purchasers reduce the prices.

[00:33:25] Speaker 00:
I mean use the low price of subject imports as leverage.

[00:33:29] Speaker 00:
They said it's an iterative process.

[00:33:32] Speaker 00:
You get subject imports, you get the domestic product, and you play the two both off each other.

[00:33:37] Speaker 00:
Nowhere in the record does it say that they use subject imports as a starting point.

[00:33:43] Speaker 00:
In fact, only one in 20 purchasers reported that they had to reduce prices due to low subject imports, and that purchaser was an affiliate of a US producer.

[00:33:58] Speaker 00:
And that information is on page 1589 of the appendix.

[00:34:07] Speaker 00:
Also, we talked about, the commission talked about the final three quarters and there's no information.

[00:34:14] Speaker 00:
Number one, as I said in my argument before, you have ten quarters of east-west pricing behavior.

[00:34:23] Speaker 00:
Those last three, you can only infer that east-west continued that pricing behavior.

[00:34:29] Speaker 00:
It's filed for bankruptcy at the end of the POI.

[00:34:33] Speaker 00:
As far as the pricing product that's missing from the preliminary from east-west, as we state, that product, well, I'll just leave it.

[00:34:48] Speaker 00:
It's confidential information, but that product really doesn't matter in the grand scheme of things.

[00:34:56] Speaker 00:
We've now heard from the Commission and Lions' arguments that prices of subject imports affected the price of the domestic-like product and adversely affected the condition of the domestic industry.

[00:35:06] Speaker 00:
However, those arguments do not change the facts, including the previously excluded facts or the law.

[00:35:12] Speaker 00:
Indeed, including East-West pricing behavior changes the Commission's underselling analysis, rendering it unsupported by substantial evidence.

[00:35:21] Speaker 00:
The commission's underselling analysis as admitted by the commission at the CIT was counter to the facts before the agency, rendering such analysis not in accordance with law.

[00:35:31] Speaker 00:
Even if this court considers subject imports underselling to be prevalent and does not consider east-west pricing behavior, this court in all text determined that if there are no effect on prices, underselling in and of itself is not dispositive.

[00:35:46] Speaker 00:
The commission's determining price depression by truncating the last quarter of its price depression analysis via one sentence and a footnote was not in accordance with law.

[00:35:57] Speaker 00:
However, if this court were to refer to the commission's methodology and only consider part of the period, the decrease in the price of the domestic-like product exactly equaled the decrease in the cost of raw materials.

[00:36:11] Speaker 00:
In considering the argument today, I urge the court to remember three facts.

[00:36:16] Speaker 00:
First,

[00:36:17] Speaker 00:
There's no objective support in the record that U.S.

[00:36:19] Speaker 00:
prices or U.S.

[00:36:20] Speaker 00:
domestic-like product conversion fees fell to meet those of subject imports.

[00:36:26] Speaker 00:
On page 1566, objective purchasers identified east, west, and line as the price leaders.

[00:36:33] Speaker 00:
The conversion fees of the domestic-like product decreased on contracts with purchasers that bought no subject imports.

[00:36:41] Speaker 00:
thereby demonstrating that reductions in conversion fees were not attributable to subject imports, as Appendix Page 1748 had Note 37.

[00:36:52] Speaker 00:
There were simply no price effects attributable to subject imports, with or without omitting the last quarter of the period of investigation, and with or without including east-west pricing behavior.

[00:37:06] Speaker 00:
Subject imports were not the cause of the industry's ills.

[00:37:09] Speaker 00:
East-West pricing behavior conducted throughout the period of investigation, its bankruptcy, and lion's pricing behavior and lion's cost price squeeze as detailed in that brief were, thereby rendering the commission's impact analysis unsupported by substantial evidence and otherwise not in accordance with law.

[00:37:28] Speaker 00:
Thank you very much.

[00:37:30] Speaker 02:
Thank you.

[00:37:31] Speaker 02:
We thank all parties and the case is submitted.