[00:00:04] Speaker 03:
Number 232413, also carbon-activated tangent against United States.

[00:00:13] Speaker 00:
Good morning, Your Honors.

[00:00:14] Speaker 00:
May it please the Court?

[00:00:16] Speaker 00:
This next appeal involves the 13th administrative review of the anti-dumping order on certain activated carbon, that is AR13.

[00:00:24] Speaker 00:
Here, the appellants challenged Commerce's selection of several surrogate values for factors of production, including carbonized materials, which you just discussed,

[00:00:34] Speaker 00:
hydrochloric acid, as well as the selection of financial statements for calculating surrogate financial ratios.

[00:00:40] Speaker 00:
In the interest of time, I'd like to focus on just these three, although I'm happy to answer any questions about arguments on the other issues.

[00:00:48] Speaker 00:
So first, I'd briefly like to address carbonized materials.

[00:00:52] Speaker 00:
Like in AR12, Commerce was presented with a choice between the Malaysia import data

[00:00:57] Speaker 00:
under the broader heading that covers wood, charcoal, and coconut shell versus the narrower heading that only covers coconut shell.

[00:01:06] Speaker 00:
Unlike in AR12, here we have findings and evidence about the comparability of coconut shell versus wood charcoal to the input that the respondents actually used, which again was coal-based carbonized material.

[00:01:20] Speaker 00:
Commerce found that the evidence ultimately pointed to similarities between coal and coconut shell and not wood-based charcoal.

[00:01:29] Speaker 00:
Commerce cited purported differences in the activation process, again, citing the ITC report.

[00:01:34] Speaker 00:
However, as we explained in our argument earlier, we submit Commerce misconstrues that footnote in the ITC report.

[00:01:42] Speaker 00:
The footnote does not say that wood-based charcoal cannot be used to produce steam-activated

[00:01:49] Speaker 00:
carbon and it does not support that inference.

[00:01:52] Speaker 04:
Have you put any evidence into the record that suggests wood-based charcoal could be also steam activated?

[00:02:02] Speaker 00:
Well, it's in the scope language, Your Honor.

[00:02:04] Speaker 04:
The scope explicitly covers... Well, I know you have an argument about the scope, but I'm just wondering, is there any evidence?

[00:02:12] Speaker 00:
I'm not aware, Your Honor, that there was any evidence specifically on

[00:02:16] Speaker 00:
that carbon activated or its suppliers used wood based.

[00:02:20] Speaker 00:
I believe that one of the other respondents had a supplier that used bamboo, which seems to be a type of wood, but may not be actually covered under that broader category.

[00:02:32] Speaker 04:
And also used steam activation?

[00:02:34] Speaker 04:
Correct.

[00:02:36] Speaker 00:
But that was not for subject merchandise.

[00:02:39] Speaker 00:
It was just mentioned in their purchase history.

[00:02:44] Speaker 00:
Commerce also found that coconut shell and coal-based carbonized material both have a substantial amount of micropore surface area.

[00:02:52] Speaker 00:
And based on this, they found the weight of the evidence supported the selection of coconut shell.

[00:02:57] Speaker 00:
We submit that Commerce selectively quoted from the record, particularly we direct the court's attention to APPX 04077, which is a chart that the respondents submitted comparing coconut shell, coal-based, and wood charcoal

[00:03:13] Speaker 00:
And in terms of porosity, which is the factor that commerce cited, coconut shell is described as having more micropores.

[00:03:24] Speaker 00:
Coal-based carbonized material and wood charcoal are both described as having more mesopores, which would be a larger pore size.

[00:03:31] Speaker 00:
And there was another exhibit that was attached to the same submission.

[00:03:35] Speaker 00:
This is at APPX 04118 and 4119.

[00:03:41] Speaker 00:
which is an article that talks about the differences between the three.

[00:03:44] Speaker 03:
What are those pages again?

[00:03:46] Speaker 00:
Sure, it's 04118 and 04119.

[00:03:50] Speaker 00:
And Commerce cited one sentence as stating that charcoal-activated carbon filtration has substantial micropore surface area.

[00:04:00] Speaker 00:
However, the immediately preceding text actually contrasts

[00:04:05] Speaker 00:
coal-based charcoal with coconut shell, suggesting there are differences.

[00:04:10] Speaker 00:
And then later it goes on to describe coal-based charcoal as some kinds of coal-based charcoal as having larger pore diameter that is suitable for removing large weight compounds, which is similar to wood-based charcoal.

[00:04:24] Speaker 00:
So here again, respondents argued that evidence describes overlap and similarities as well as differences, and that the three products are really on a continuum.

[00:04:34] Speaker 00:
We submit commerce selectively quoted from one sentence and disregarded the broader context.

[00:04:41] Speaker 00:
And therefore, it's just being unsupported.

[00:04:42] Speaker 03:
Do you think it would make Congress's choice unreasonable if there were a continuum and it just decided where it was going to draw the line, as opposed to saying whether it's a continuum and the entirety of the continuum?

[00:05:00] Speaker 00:
I think Commerce specifically said that they disagreed that coal-based was in the middle ground.

[00:05:07] Speaker 00:
And they only found that there were similarities with coconut shell and disregarded the evidence of similarities with wood charcoal.

[00:05:13] Speaker 00:
So it wasn't even really a balancing of the evidence on both sides.

[00:05:18] Speaker 00:
And that's why we believe a remand is necessary for further explanation on that issue.

[00:05:22] Speaker 00:
The second issue I would like to address is Commerce's surrogate value selection for hydrochloric acid.

[00:05:28] Speaker 00:
Commerce's reasoning, this is at APPX 07932 to 07933.

[00:05:37] Speaker 00:
Commerce selected Malaysian import data for a subheading that covers hydrogen chloride.

[00:05:43] Speaker 00:
And the respondents had argued instead that Commerce should use Brazilian import data for a more specific subheading that covers hydrogen chloride in aqueous solution, which is hydrochloric acid.

[00:05:54] Speaker 00:
And Commerce's decision turned on

[00:05:57] Speaker 00:
Whether there was evidence the respondent, Carbon Activated, had used an aqueous solution in their production of subject merchandise, Commerce stated, and this is at the top of 07933, the evidence on the record only demonstrates the purity level for a portion of the total quantity of HCL used in production.

[00:06:17] Speaker 00:
We submit Commerce's decision is unlawful because Carbon Activated clearly reported in its supplemental Section D questionnaire response

[00:06:25] Speaker 00:
that its supplier used aqueous hydrogen chloride.

[00:06:30] Speaker 00:
And the relevant sentence was actually quoted in the respondent's case brief.

[00:06:34] Speaker 00:
That is that APPX07672, their supplier name, which is confidential, reported that its hydrochloric acid, scientific formula is HCl, is an aqueous solution of acid.

[00:06:47] Speaker 00:
And its concentration is, and then it provides a range, which is also confidential.

[00:06:52] Speaker 00:
And as supporting documentation,

[00:06:54] Speaker 00:
Carbon Activated provided these test reports, which show the concentration levels of the HCL that its supplier used in one month of the POR.

[00:07:04] Speaker 00:
And that is the exhibit that is at APPX 04049 to 04051.

[00:07:10] Speaker 00:
And Commerce never told Carbon Activated that its response was deficient or that it needed to provide additional documentation.

[00:07:18] Speaker 00:
The lower court held it was reasonable,

[00:07:22] Speaker 00:
for Commerce to require parties to demonstrate the purity for all of their purchases of hydrochloric acid or hydrogen chloride.

[00:07:30] Speaker 00:
But Commerce never required Carbon Activated to do that.

[00:07:33] Speaker 00:
They never told Carbon Activated that their narrative response did not sufficiently demonstrate the input purchased was aqueous hydrogen chloride.

[00:07:43] Speaker 03:
And the particular evidence that you recited

[00:07:50] Speaker 03:
does or does not indicate how much of carbon-activated's overall input of this sort is in aqueous form, just that here is one input supplier that at least once supplied in that form?

[00:08:08] Speaker 00:
So the question from Commerce in that first supplemental section D questionnaire was

[00:08:13] Speaker 00:
Please identify the type of input purchased.

[00:08:17] Speaker 00:
The narrative response said, our supplier purchases aqueous, hydrogen chloride.

[00:08:23] Speaker 00:
And here is supporting documentation.

[00:08:25] Speaker 00:
And the supporting documentation was test results for one month of the POR.

[00:08:30] Speaker 00:
And Commerce never came back to them and said, please provide test results for covering the entire POR.

[00:08:35] Speaker 00:
They never said, we have a reason to believe you were purchasing something other than aqueous.

[00:08:41] Speaker 00:
So that's where the record stood.

[00:08:42] Speaker 00:
And Commerce did, in fact, issue a supplemental questionnaire on Section D, but they didn't ask anything about hydrogen chloride or what type of hydrogen chloride was actually purchased.

[00:08:54] Speaker 00:
The lower court also had a sentence in their opinion stating that the evidence that carbon activated submitted fails to establish that the substance reported in the test results constitutes aqueous HCl.

[00:09:10] Speaker 00:
And while the test reports indicate the concentration, it doesn't explain that the only contaminant diluting its purity was water.

[00:09:19] Speaker 00:
We submit the lower court misunderstood the use of purity and concentration in this context.

[00:09:25] Speaker 00:
What the test reports showed was a concentration less than 100%, where 100% is pure hydrogen chloride.

[00:09:32] Speaker 00:
It's not hydrochloric acid.

[00:09:35] Speaker 00:
And so anything with less than 100% hydrogen chloride is a solution.

[00:09:39] Speaker 00:
And whether there are contaminants is not relevant to the question of whether it's an aqueous solution or pure.

[00:09:46] Speaker 03:
What was the page site again for the question to which the answer you gave was an answer?

[00:09:53] Speaker 00:
Yes, Your Honor.

[00:09:55] Speaker 00:
The response is quoted in their case brief at APPX 07672.

[00:10:02] Speaker 00:
Unfortunately, I don't think the questionnaire, that age of the questionnaire, is in the joint economics.

[00:10:08] Speaker 00:
So all we have is the next.

[00:10:10] Speaker 03:
That feels important.

[00:10:12] Speaker 03:
If the question was, tell us about everything, and you gave an answer, then, presumptively, it was about everything.

[00:10:20] Speaker 03:
But if we don't have the question, the inference is harder to draw.

[00:10:26] Speaker 00:
Yes, Your Honor.

[00:10:28] Speaker 00:
I do think it's clear from the case brief where they do quote the questionnaire response, and they say in their case brief that what we were asked to report was the type of hydrogen chloride, and here's what we said.

[00:10:42] Speaker 00:
So finally, the third issue I'd like to address was commerce's selection of the financial statements for calculating surrogate financial ratios.

[00:10:49] Speaker 00:
Here, commerce selected financial statements for two Malaysian companies, Century Chemical and Bravo Green.

[00:10:56] Speaker 00:
The respondents had argued that commerce should instead use the financial statement for one or more Romanian companies because the Malaysian financial statements did not disaggregate certain categories of costs.

[00:11:09] Speaker 00:
And specifically, neither of them had separate line items for raw material labor or energy.

[00:11:15] Speaker 00:
Commerce gave two reasons for rejecting respondents' argument.

[00:11:18] Speaker 00:
First, Commerce found that only Malaysia is a significant producer of comparable merchandise, because it was the only potential surrogate country that is a net exporter.

[00:11:28] Speaker 00:
Second, Commerce found that, despite the lack of disaggregations, acknowledged the lack of disaggregation, but nonetheless found it was still possible to calculate surrogate financial ratios.

[00:11:39] Speaker 00:
Resimit Commerce's reasoning is contrary to law and unsupported by the record evidence.

[00:11:44] Speaker 00:
The law requires that commerce is to value factors of production from one or more potential surrogate countries at a level of economic development comparable to the non-market country that are also significant producers of comparable merchandise.

[00:12:00] Speaker 00:
Lower courts have repeatedly projected an interpretation of significant producer that's based solely on evidence of net exports.

[00:12:09] Speaker 00:
That's in Jacobi Carbons from the CIT in 2018.

[00:12:13] Speaker 00:
as well as in 2019.

[00:12:16] Speaker 00:
So Commerce's narrow focus on just this one criteria, that Malaysia was the only net exporter, is contrary to law.

[00:12:23] Speaker 00:
Our friends argue that those two Jacobi cases are an opposite because Commerce also cited the fact there were two financial statements from Malaysia, while the Romanian financial statement was for a company that produced products other than activated carbon.

[00:12:37] Speaker 00:
However, the lower court also rejected

[00:12:39] Speaker 00:
This type of analysis that was in carbon-activated, and the citation is 503F3D1278, as contrary to commerce's practice not to evaluate the extent to which a country is a significant producer against the comparative production of other potential surrogate countries.

[00:12:57] Speaker 00:
So the mere fact that there were two Malaysian financial statements which both described production of activated carbon

[00:13:04] Speaker 00:
versus a Romanian financial statement that described activated carbon plus other products is not enough evidence to conclude that only Malaysia is a significant producer of comparable merchandise.

[00:13:18] Speaker 04:
Finally, the Malaysian producers, there was evidence that this carbon was their primary product that they manufactured, whereas for the Romanian, it was

[00:13:32] Speaker 04:
perhaps an ancillary product that the Romanian company produced.

[00:13:36] Speaker 04:
Is that right?

[00:13:37] Speaker 00:
That's correct.

[00:13:38] Speaker 00:
But the lower court was faced with a very similar factual record and concluded that just the simple fact that you have companies that mostly produce or even exclusively produce activated carbon doesn't necessarily mean that that country is the only country that qualifies as a significant producer.

[00:13:58] Speaker 04:
My understanding of commerce and the trade court's opinions was they were stacking different little factors weighing in favor of Malaysia.

[00:14:09] Speaker 04:
Two financial statements.

[00:14:11] Speaker 04:
Of these two financial statements, these companies primarily produced this activated carbon, and then Malaysia was the only company that was a net exporter, et cetera.

[00:14:22] Speaker 04:
There was a stack of different factors that all collectively

[00:14:27] Speaker 04:
leaned more towards Malaysia than anywhere else.

[00:14:31] Speaker 00:
That's correct, Your Honor.

[00:14:32] Speaker 00:
But again, the lower court has been clear that net exports per se is not evidence of significant production.

[00:14:40] Speaker 00:
And Commerce's policy bulletin

[00:14:44] Speaker 00:
instructs commerce not to rely on a comparison of production levels in the potential surrogate countries.

[00:14:50] Speaker 04:
There was a chart somewhere in the briefing that showed just the actual unit number of production from all these different countries.

[00:15:02] Speaker 04:
And Malaysia's raw unit production just looked way bigger than any other of the five countries.

[00:15:10] Speaker 04:
Should that matter?

[00:15:13] Speaker 04:
Do you know what I'm talking about?

[00:15:14] Speaker 00:
Offhand, unfortunately, your honor, I don't recall that chart.

[00:15:17] Speaker 04:
But I would submit that in other cases, where the- I think it's in one of the red reads.

[00:15:24] Speaker 00:
Yeah.

[00:15:24] Speaker 00:
OK.

[00:15:24] Speaker 00:
Well, anyway.

[00:15:24] Speaker 04:
Let's assume for the moment that there's a chart that shows, just for that particular year, Malaysia's production, just in terms of numbers and quantity, far outstripped any of the other candidate countries.

[00:15:40] Speaker 00:
Yes, Your Honor.

[00:15:41] Speaker 00:
And I think the lower court's decision in carbon activated recognized that the policy bulletin specifically says that commerce will not compare relative production levels between the surrogate countries.

[00:15:52] Speaker 00:
So they're supposed to rely on some other evidence.

[00:15:55] Speaker 00:
And just finally, very quickly, I see I'm about to get into my rebuttal time.

[00:15:58] Speaker 03:
You're past it.

[00:16:00] Speaker 00:
Oh, I'm past it.

[00:16:01] Speaker 00:
Apologies.

[00:16:02] Speaker 00:
Well, if you'll permit me, just one final point.

[00:16:07] Speaker 00:
Commerce is finding that they can nonetheless calculate financial ratios using the Century Chemical and Bravo statements is not supported.

[00:16:14] Speaker 00:
For example, the Bravo Green statement only reported cost of sales and operating expenses with no further breakdown of what is in these categories.

[00:16:24] Speaker 00:
Commerce is found in other cases.

[00:16:26] Speaker 00:
where there is not any detailed breakdown of the line items that are normally reflected in the factors, including labor, energy, raw materials, even transportation, that it's not able to calculate financial ratios because it could result in arbitrarily inflating them.

[00:16:45] Speaker 00:
So we cited with a brief site tapered roller bearings from China and citric acid from China.

[00:16:51] Speaker 00:
That's at APPX0728 to 0729.

[00:16:54] Speaker 00:
And I would just direct the court's attention to those pieces.

[00:16:57] Speaker 00:
Thank you.

[00:16:57] Speaker 04:
Thank you.

[00:16:58] Speaker 04:
It's on page 13 of your book.

[00:17:17] Speaker 02:
Good afternoon, your honors.

[00:17:19] Speaker 02:
May it please the court.

[00:17:21] Speaker 02:
And in the first instance, I'll say that we respectfully request that the commerce be affirmed on all the different issues raised by appellants, but I'll address my remarks to the three they focused on today.

[00:17:30] Speaker 02:
Maybe the place to start is at that chart that Judge Chen brought up.

[00:17:36] Speaker 02:
Another place one can look at those numbers, which may be equally or more convenient, is appendix

[00:17:41] Speaker 02:
7919 note 217 that's in commerce's determination it lists all of the the both the import and export amounts for each country involved there and You know, I think it's worthwhile to say the numbers out loud right Malaysia You think it's easier to read a footnote?

[00:18:01] Speaker 02:
No No, but I do think it's it's a it's set out just in one easy place.

[00:18:06] Speaker 02:
I

[00:18:06] Speaker 02:
I like the chart.

[00:18:08] Speaker 02:
Fair enough.

[00:18:09] Speaker 02:
Fair enough.

[00:18:09] Speaker 02:
Well, I have the numbers, so I'm not looking at either as we're speaking now.

[00:18:13] Speaker 02:
But look, Malaysia, it's not close, right, both in terms of the raw numbers and net exporter.

[00:18:21] Speaker 02:
Malaysia imported 10 million and exported 20 million kilograms

[00:18:27] Speaker 02:
activated carbon.

[00:18:29] Speaker 02:
Romania exported a much, much lower number.

[00:18:36] Speaker 02:
Not 20 million, 20,000 kilograms.

[00:18:40] Speaker 02:
One one thousandth of the amount that Malaysia exported.

[00:18:46] Speaker 02:
And although appellants are right that commerce's practice is not to compare countries versus country, it's obviously a big difference.

[00:18:54] Speaker 02:
But more importantly, unlike Malaysia, which exported twice as much activated carbon as it imported, so it's a net exporter, Romania, not only did it have like this small, pitiful amount of carbon that it exported, but it wasn't close in terms of net exporter.

[00:19:10] Speaker 02:
They were

[00:19:11] Speaker 02:
exporting one tenth the amount of carbon that they were imported.

[00:19:14] Speaker 02:
20,000 exported, 2 million imported.

[00:19:18] Speaker 03:
And what's the underlying logical, simple-minded logical reason why the net export or volume makes a difference in overall reliability or something?

[00:19:32] Speaker 02:
Because the legislative history of the 1988 Omnibus Trade Act that

[00:19:38] Speaker 02:
initiated this provision, which is cited in our briefs.

[00:19:42] Speaker 02:
It's House Report Number 100-576, F590, which is also cited in Commerce's policy bulletin that is part of the briefing as well.

[00:19:54] Speaker 02:
That report says explicitly that a significant producer shall include anyone who's a net exporter of

[00:20:03] Speaker 02:
carbon.

[00:20:04] Speaker 02:
So Congress, in promulgating the statute, didn't define significant producer in any way, shape, or form.

[00:20:10] Speaker 02:
Commerce has its long-standing policy, but Congress was very explicit about net exporter in the accompanying legislative history.

[00:20:18] Speaker 02:
It said it shall be.

[00:20:21] Speaker 02:
So that's not the only way you could be a significant producer, but it's one way, and it's one significant thing Commerce looks at.

[00:20:28] Speaker 02:
I think the important issue here is that

[00:20:30] Speaker 02:
commerce didn't just stop at this net.

[00:20:32] Speaker 02:
Contrary to the characterization, commerce didn't just stop at this net export issue but went on to look at the data and decided that the Romanian and the Russian, similar Russian data that the appellants were proffering was just not very good data because the companies were not activated carbon companies.

[00:20:51] Speaker 02:
They mostly were in other businesses.

[00:20:55] Speaker 02:
The Romanian company, Roam Carbon, its principal business was

[00:20:58] Speaker 02:
polyethylene, polypropylene, polyvinylchlorine, polystyrene.

[00:21:04] Speaker 02:
I mean, it goes on.

[00:21:05] Speaker 02:
But consistent with the fact that Romania didn't actually export very much activated carbon, their business was primarily other things other than activated carbon.

[00:21:16] Speaker 04:
They had more granular financial data, right?

[00:21:20] Speaker 04:
yes I mean in the sense that their their financial data in that way it can make it more reliable to figure out how to do the

[00:21:32] Speaker 02:
Generally not.

[00:21:34] Speaker 02:
I don't think the briefing touched on this, but there's plenty of jurisprudence from the courts on this issue saying the data can be as great as you want it to be, but if it's not specific to the input in question, then it's really not great data.

[00:21:50] Speaker 02:
And I think that's the issue.

[00:21:52] Speaker 02:
The previous litigation that counsel referred to was a previous case, I think

[00:22:01] Speaker 02:
10th or 11th review, originally Commerce looked at the Malaysian data and said, you know, we're not able to break this out.

[00:22:10] Speaker 02:
And so there was discussion about whether you could use the Roman carbon data and whether Romania could still qualify as a decent enough producer based on its production in those years.

[00:22:20] Speaker 02:
More recently, and this goes back to both the previous review in which this issue was appealed, but they declined to appeal it to this court,

[00:22:28] Speaker 02:
The trial court affirmed us.

[00:22:30] Speaker 02:
And in this case, Commerce looked at these financial statements and said that they are sufficiently detailed.

[00:22:36] Speaker 02:
Because they break out overhead from other costs, we are able to disaggregate material, labor, and energy.

[00:22:47] Speaker 02:
I'm sorry, they break out depreciation from other overhead costs.

[00:22:50] Speaker 02:
We're able to sufficiently make the calculation we need, even if these aren't the best financial statements we've ever used, and we prefer the specificity of actual activated carbon producers who also, when it comes to significant producer,

[00:23:06] Speaker 02:
Also, it meets other surrogate country criteria, specifically the fact that it's from the primary surrogate country, that they can use more than one contemporaneous with time periods.

[00:23:18] Speaker 02:
All those reasons led to this result.

[00:23:21] Speaker 04:
Can you get to the hydrochloric acid?

[00:23:24] Speaker 02:
Sure.

[00:23:26] Speaker 02:
On the hydrochloric acid, I think that there has not been much discussion in the briefing about the underlying questionnaire response that counsel refers to.

[00:23:36] Speaker 02:
And this is a theme that flows through a lot of the claims in this case.

[00:23:40] Speaker 02:
The issue is that they disagree with a factual finding that commerce made and the trial court upheld.

[00:23:46] Speaker 02:
Commerce made a factual finding that

[00:23:48] Speaker 02:
that there wasn't enough evidence on the record to convince Commerce that the appellants use only aqueous hydrochloric acid.

[00:23:59] Speaker 02:
That's the finding that Commerce made.

[00:24:01] Speaker 02:
The trial court agreed that Commerce's finding was reasonable.

[00:24:05] Speaker 02:
They are disagreeing with that.

[00:24:06] Speaker 02:
It's not this court's role to second-guess Commerce's factual finding.

[00:24:11] Speaker 02:
The issue in this case is that they had put a couple, it's really a couple pages on the record that, as counsel acknowledged, covers one month of its, it's kind of a sketchy document.

[00:24:24] Speaker 02:
It's poorly translated.

[00:24:27] Speaker 02:
It has some percentages on it that indicate for one month the percentage of hydrochloric acid that the supplier used may have been less than 100% pure.

[00:24:36] Speaker 03:
Is that document in the joint?

[00:24:37] Speaker 02:
That document, that document is it.

[00:24:40] Speaker 02:
That's the same one that they referred to.

[00:24:42] Speaker 02:
It's APVX 4048, 4051.

[00:24:48] Speaker 02:
Commerce found that document insufficient to warrant a finding, like a full finding, that the only type of hydrochloric acid that carbon-activated tangent used was aqueous hydrochloric acid.

[00:25:10] Speaker 02:
And do something that would be a pretty big departure, right?

[00:25:13] Speaker 03:
Was there a translated version of this in the record?

[00:25:16] Speaker 02:
That is it.

[00:25:18] Speaker 02:
Which speaks to the issues I was talking about.

[00:25:23] Speaker 04:
We should have done better in Chinese school.

[00:25:27] Speaker 02:
So the other thing is, again, the Malaysian data meet all of commerce's criteria.

[00:25:35] Speaker 02:
They're from the primary surrogate country.

[00:25:38] Speaker 02:
They're publicly available.

[00:25:40] Speaker 02:
It's a good data set.

[00:25:43] Speaker 02:
It's contemporaneous, all those things.

[00:25:45] Speaker 02:
What the appellants want commerce to do is not only use this Brazilian data, which is not from the primary surrogate country,

[00:25:54] Speaker 02:
And, you know, Commerce articulated some issues in its discussion at 79, 32, 33 with problems with the Brazilian data.

[00:26:05] Speaker 02:
I mean, one I want to highlight is that the Brazilian data and the Malaysian data are done on two different shipping bases.

[00:26:12] Speaker 02:
The Brazilian data is FOB, which Commerce generally doesn't like to use, and the Malaysian data is CIF.

[00:26:18] Speaker 02:
Which, without getting too far in the weeds, because I want to get to the last issue as well.

[00:26:22] Speaker 03:
I know what Applebee stands for.

[00:26:23] Speaker 03:
What does CIF stand for?

[00:26:24] Speaker 02:
Cost and freight.

[00:26:26] Speaker 02:
And so you'll see there's a whole section of their brief where they say, oh, don't add money to our, don't add costs to our data, because this was all shipped over land between Brazil and Argentina and something like that.

[00:26:38] Speaker 02:
Not a good analogy for what's going on with imports and exports to an island, a partially island nation like Malaysia.

[00:26:46] Speaker 02:
So commerce decided the Brazil data was a bad data set.

[00:26:50] Speaker 02:
They hadn't proved that they just use aqueous and that's why commerce ended up where it ended up.

[00:26:54] Speaker 02:
On the carbon, I did a couple really important points I want to make here.

[00:26:57] Speaker 02:
First of all, I'm constrained to disagree with my colleague that these two reviews are the first instance where commerce made this choice between the category that it did use and the six-digit category that they proffer.

[00:27:12] Speaker 02:
uh... in the last review the a eleven proceeding which ended up before this court for that which the site is twenty twenty three westlaw three one six six one eight eight if one goes to add at the end of star three right before it switches over page to star four you'll see this course discussion about why commerce chose malaysia over romania in that case and the whole issue was that commerce wanted to use this specific coconut based

[00:27:38] Speaker 02:
surrogate value as opposed to the same six-digit basket category in Romania that they were advocating now.

[00:27:46] Speaker 02:
And you won't find it in the circuit decision.

[00:27:49] Speaker 02:
You have to go to the underlying trial court decision.

[00:27:52] Speaker 02:
In that case, Carbon Activated was saying, well, we don't use coconut.

[00:27:55] Speaker 02:
We only use coal.

[00:27:56] Speaker 02:
The other party used coconut.

[00:27:58] Speaker 02:
And the court kind of said, look, commerce has been using this for a long time.

[00:28:03] Speaker 02:
And one party uses coconut.

[00:28:07] Speaker 02:
you know, Congress's determination was reasonable.

[00:28:09] Speaker 02:
More importantly, the Council said that Congress relied on the same ITC report.

[00:28:15] Speaker 02:
That is not accurate.

[00:28:16] Speaker 02:
There is very specific and more robust evidence on the record of this case that Cole and two things that

[00:28:23] Speaker 02:
coal and coconut are steam and wood is chemical.

[00:28:27] Speaker 02:
And particularly, there's an article that the respondents themselves put on the record at page 4071 and 4072.

[00:28:36] Speaker 02:
And I'll try to read it.

[00:28:37] Speaker 02:
The type is really small.

[00:28:38] Speaker 02:
But it says the same thing, but more directly.

[00:28:42] Speaker 02:
And steam is widely used process because it is generally used to activate both coconut and coal-based carbon.

[00:28:53] Speaker 02:
The next page, they talk about wood.

[00:28:55] Speaker 02:
It's the opposite.

[00:28:57] Speaker 02:
Chemical activation is generally used for the production

[00:29:01] Speaker 02:
uh... activated carbon from sawdust wood repeats let's say that that's one reason why there's more direct evidence on it on on this case that also indicates the commerce wasn't wrong in the in the previous review either uh... also uh... and uh... hopefully is less when i'll make your honors there's also uh...

[00:29:21] Speaker 02:
direct evidence that Coal and coconut were similar whereas wood and coal were less similar There were two bases for this one is the activation process which we already went over Excuse me That's it page 4071 But the other one is that they had some properties that were more similar and this has to go to the filtration and pores right coal and coconut and

[00:29:47] Speaker 02:
Both have, although different concentrations, they both have what are called micropores.

[00:29:52] Speaker 02:
Coconut has the most micropores.

[00:29:54] Speaker 02:
Coal has fewer micropores but still has micropores and therefore has a similar level of filtration.

[00:30:00] Speaker 02:
Wood doesn't really have micropores.

[00:30:04] Speaker 02:
It has something called mesopores and macropores.

[00:30:07] Speaker 02:
In other words, the pores that are made based on the material and the type of chemical activation process.

[00:30:13] Speaker 02:
They're bigger.

[00:30:13] Speaker 02:
It doesn't use the same type of filtration.

[00:30:16] Speaker 02:
It's not suitable for the same type of uses.

[00:30:18] Speaker 02:
And so, Congress actually made that qualitative determination.

[00:30:21] Speaker 02:
There is the chart that appellants referred to, but other commerce looked at the surrounding information and other information in those articles that I think are more specific than the chart.

[00:30:32] Speaker 02:
At 4118 and 4119 of the record and 4093 of the record, I think the documents speak for themselves, but they basically, despite the chart being a little fuzzy on this,

[00:30:43] Speaker 02:
The articles themselves make it clear, or at least Commerce made a finding, and it's a reasonable finding, that coconut and coal more similar because they're both in the micropore world and have a certain type of filtration, and coconut, I'm sorry, coal and wood less similar because they're in the, wood is in the macropore and mesopore world, which is a less similar type of filtration.

[00:31:06] Speaker 02:
Coal may be in between the two, but it's closer to the coconut than the wood.

[00:31:11] Speaker 03:
I think we should hear from you.

[00:31:12] Speaker 02:
Thank you.

[00:31:13] Speaker 03:
Thank you.

[00:31:20] Speaker 01:
May it please the court?

[00:31:21] Speaker 01:
Government counsel has covered the arguments in our briefing and that I intended to make today with respect to why the substantial evidence on the record supports commerce's determination.

[00:31:31] Speaker 01:
I'd like to respond to an argument from appellants counsel that I'm fairly certain I'm hearing for the first time today, which is that for the hydrochloric acid issue, commerce was obligated to issue some sort of deficiency questionnaire that it did not issue.

[00:31:44] Speaker 01:
So there's a specific legal provision that governs

[00:31:47] Speaker 01:
Commerce's action here, it's 19 USC 1677MD, and it requires that with respect to questionnaire responses, before applying the facts available provision, Commerce is obligated to identify any deficiency that it sees in a questionnaire response and to issue a supplemental response and allow a party to cure that deficiency.

[00:32:08] Speaker 01:
First, that argument is waived.

[00:32:10] Speaker 01:
I've not seen or heard of it before in this case.

[00:32:13] Speaker 01:
And I took a quick look at the appellant's opening brief and reply brief.

[00:32:17] Speaker 01:
And their table of authorities does not cite that legal provision.

[00:32:22] Speaker 01:
It doesn't matter in a sense anyway, because that provision does not apply in the surrogate value context.

[00:32:27] Speaker 01:
This precise issue came up in the AR-11 appeal that was before this court.

[00:32:31] Speaker 01:
The court issued a non-precedential decision.

[00:32:34] Speaker 01:
But in that decision at footnote two,

[00:32:36] Speaker 01:
The court discusses this exact argument that in the context of surrogate values, there was some obligation to offer the respondent a chance to submit a supplemental questionnaire on the issue.

[00:32:49] Speaker 01:
And the court squarely says section 1677MD applies to findings based on data provided in response to a request from Commerce and not to findings based on data voluntarily submitted

[00:33:02] Speaker 01:
on a respondent's own initiative as occurred here.

[00:33:05] Speaker 03:
I thought Ms.

[00:33:06] Speaker 03:
Hartman said that the hydrochloric acid, the aqueous version, was in response to a questionnaire, a part D or something of a questionnaire.

[00:33:22] Speaker 01:
It was in their questionnaire response.

[00:33:24] Speaker 01:
But the issue of how that product is valued as a surrogate value, that question does not fall under the umbrella of 1677M.

[00:33:33] Speaker 01:
And that's what this court said in the AR11 decision.

[00:33:37] Speaker 03:
Since I don't have it in front of me, and it's new, and I get all of that, I'm trying to understand

[00:33:42] Speaker 03:
Why?

[00:33:43] Speaker 03:
I don't remember the language of 1677MD.

[00:33:48] Speaker 03:
What you identified as the reason the precedent or the earlier decision gave for it not being applicable to a surrogate value was that it was not in response to a question, that this one is in response to a question.

[00:34:04] Speaker 01:
So the legal provision applies when in response to a questionnaire, the Commerce Department identifies a deficiency in that response.

[00:34:14] Speaker 01:
And before the department can then go apply facts available or adverse facts available, it needs to provide that company at least one opportunity to cure that deficiency.

[00:34:23] Speaker 01:
So that applies in the facts available context.

[00:34:26] Speaker 01:
That's what 1677MD applies to.

[00:34:29] Speaker 01:
It does not apply here where commerce is simply looking at what respondents have put on the record and saying, okay, what's the best surrogate value that matches what they're reporting here?

[00:34:40] Speaker 01:
Commerce is under no legal obligation to go back to a respondent and say, hmm, this test report is two pages.

[00:34:47] Speaker 01:
It's not fully translated.

[00:34:49] Speaker 01:
It covers only part of the POR period of review.

[00:34:54] Speaker 01:
you need to give us something that's more appropriate so we can determine the appropriate surrogate value.

[00:34:59] Speaker 01:
That is not what the statute says.

[00:35:01] Speaker 01:
And again, that legal provision has not been cited in a balance briefing.

[00:35:05] Speaker 01:
So that issue is waived.

[00:35:08] Speaker 01:
And in any case, if you look at the court's opinion in AR 11 and footnote 2, it squarely says that that legal provision does not apply in the surrogate value context anyway.

[00:35:18] Speaker 01:
Thank you.

[00:35:19] Speaker 01:
Thank you.

[00:35:27] Speaker 00:
Your Honor, I'll just briefly address a few of the points we just heard.

[00:35:30] Speaker 00:
First, just to clarify, we're not arguing that commerce applied facts available or that the legal provision on facts available is relevant to this case.

[00:35:38] Speaker 00:
We're simply responding to the lower court's statement in its decision that it was reasonable for commerce to require parties to demonstrate the purity level for all purchased HCL, and pointing out that commerce never required that.

[00:35:52] Speaker 00:
Commerce asked in a questionnaire response, what type of input do you purchase?

[00:35:55] Speaker 00:
The response was aqueous, and here is one month of supporting documentation.

[00:36:00] Speaker 00:
And Commerce never asked any follow-up or required them to report for the full POR.

[00:36:04] Speaker 00:
So that is all we are arguing about, the questionnaire response for hydrochloric acid.

[00:36:09] Speaker 00:
Second, I'd just like to point out, I believe our friends argued that the evidence on this record supports the reasonableness of Commerce's decision in the prior review, or that evidence was not on the prior review.

[00:36:22] Speaker 00:
That is, postdoc justification for Commerce's decision in the prior case.

[00:36:26] Speaker 00:
And we ask the court to properly not take that into consideration in issuing its decision regarding the previous review.

[00:36:36] Speaker 00:
Also point out that in referencing this chart of the various types of feedstock for activated carbon, our friends repeated what Commerce said, which is that the chart describes

[00:36:51] Speaker 00:
coconut shell charcoal and coal-based carbonized material as having micropores.

[00:36:56] Speaker 00:
And they're trying to distinguish wood-based charcoal as having mesopores or macropores.

[00:37:04] Speaker 00:
What the chart actually says is that coconut shell charcoal is described as having more micropores than

[00:37:13] Speaker 00:
coal-based and wood charcoal are described as having more mesocorps.

[00:37:18] Speaker 00:
So again, the same description.

[00:37:21] Speaker 00:
Our friends chose not to point that out to the court.

[00:37:24] Speaker 00:
And lastly, very quickly, if I may, on the financial statement issue, just to clarify the lack of disaggregation, our friends said that one of the financial statements, I think they're referring to the Bravo Green statement, includes a breakout of overhead expenses

[00:37:41] Speaker 00:
It actually just itemized depreciation.

[00:37:44] Speaker 00:
So what Commerce did was they treated all of cost of sales as raw materials, all of operating expenses as SG&A, which yielded an SG&A ratio of 29%, and then just two categories of depreciation as manufacturing overhead.

[00:37:59] Speaker 00:
And we submit that in prior cases, based on that type of record, Commerce has found it is not able to calculate accurate financial ratios.

[00:38:07] Speaker 00:
Thank you.

[00:38:09] Speaker 03:
Thanks to all council cases submitted.

[00:38:12] Speaker 03:
That concludes our business for the day.

[00:38:13] Speaker 03:
We will stand in recess.