[00:00:01] Speaker 01:
Before we start with our cases for today, I have the privilege of making a motion myself.

[00:00:09] Speaker 01:
Brian, will you stand up and come to the podium, please?

[00:00:15] Speaker 01:
I move the admission of Brian Weisenberg, who's a member of the bar and is in good standing with the highest court of California.

[00:00:22] Speaker 01:
I have knowledge of his credentials, and I'm satisfied he possesses the necessary qualification.

[00:00:27] Speaker 01:
So Brian has been my law clerk for the last 18 months, and I have the

[00:00:31] Speaker 01:
privilege of performing his wedding.

[00:00:33] Speaker 01:
I was going to say marrying him, but then I thought that might sound wrong.

[00:00:37] Speaker 01:
So I performed his wedding, which was a great joy.

[00:00:40] Speaker 01:
He's been a wonderful law clerk.

[00:00:42] Speaker 01:
I mean, he's going to go down.

[00:00:42] Speaker 01:
It's one of my favorite other three clerks pretending you didn't hear that.

[00:00:46] Speaker 01:
And if I say that you're swearing in, feel willing it gets real.

[00:00:50] Speaker 01:
So I'm really going to miss him.

[00:00:52] Speaker 01:
He's been a wonderful clerk.

[00:00:54] Speaker 01:
He is so incredibly hardworking, thorough, shockingly efficient.

[00:00:59] Speaker 01:
I have absolutely no question that he will be a productive, useful, and valuable member of our bar.

[00:01:06] Speaker 01:
So I would ask my two colleagues to vote on my motion, and I hope that it will be granted.

[00:01:14] Speaker 00:
Well, I've heard he's also an excellent karaoke singer, a fan of medieval times.

[00:01:21] Speaker 00:
And for those reasons, and for many others, I support the motion.

[00:01:26] Speaker 03:
It's so overwhelming.

[00:01:29] Speaker 03:
We should put the motion.

[00:01:30] Speaker 01:
So Brian Felicidades y Bienvenido Alvar.

[00:01:35] Speaker 02:
Please raise your right hand.

[00:01:40] Speaker 02:
You saw and will swear that you will comport yourself as an attorney and counselor

[00:01:54] Speaker 01:
Okay, on to our first case for today, 2017-2168.

[00:02:08] Speaker 04:
May it please the court.

[00:02:10] Speaker 04:
This case presents the question of whether the Department of Commerce has the authority to suspend liquidation back to the original date of suspension

[00:02:18] Speaker 04:
when the sources identified in K1 of the regulation are dispositive for the merchandising question.

[00:02:24] Speaker 04:
So you argue that this case is a case of first impression, correct?

[00:02:28] Speaker 04:
That's correct.

[00:02:29] Speaker 04:
And the trial court said as much in her opinion as well.

[00:02:32] Speaker 03:
Can you tell us why?

[00:02:34] Speaker 03:
Because the regulations seem to cover suspension of liquidation in various settings.

[00:02:39] Speaker 03:
And could you explain that why?

[00:02:41] Speaker 04:
Yes.

[00:02:42] Speaker 04:
I can start with the regulation and then talk about the AMS case.

[00:02:47] Speaker 04:
Yes.

[00:02:48] Speaker 04:
The regulation itself will look mainly at parts K and L. Part K tells us that initially the commerce looks to the language of the order, the anti-dumping order, and can then take the step of looking at what's under K1 of the regulation 351.225K1 and consider at that stage

[00:03:18] Speaker 04:
whether or not the underlying sources from the original investigation, the petition, the initial investigation, the determinations by the International Trade Commission and the Commerce Secretary, those sources that were and are available that relate back to that initial investigation.

[00:03:36] Speaker 04:
And if the K-1 sources are dispositive under L that has a certain ramification

[00:03:45] Speaker 04:
if the kid and with them on if the k one sources are not just positive you move into k two which is a more searching in a more through open-ended analysis and then this uh... that is that a formal inquiry scope inquiry at that point k two is uh... you must initiate a formal scope inquiry under k two is that what we have here it is not in trial court agreed that there was a need to go to k two uh...

[00:04:11] Speaker 04:
The K-1 sources were dispositive.

[00:04:13] Speaker 04:
The trial court sustained commerce in that regard.

[00:04:16] Speaker 04:
And under the section L of the regulation, we know that this final scope ruling was issued under part D of the regulation, which allows the secretary to issue final scope rulings based upon the K-1 sources and the order, unlike part E, which

[00:04:40] Speaker 04:
states when there is a ruling where further inquiry is warranted is the beginning of part E and it talks about the initiation of a scope inquiry.

[00:04:52] Speaker 04:
And so here we have a ruling under D which for suspension purposes when we look at suspension which is covered by part L of the regulation it's L3 that addresses part D and L3

[00:05:09] Speaker 04:
does address when there's a scope inquiry what would happen with suspension.

[00:05:14] Speaker 04:
It doesn't address what will happen if there is no scope inquiry.

[00:05:19] Speaker 04:
And as we've explained in our briefs, Commerce's reasonable position in our view is that in that circumstance when the order and the K-1 sources are dispositive, suspension, basically the view is that the merchandise has always been within the scope of the order.

[00:05:37] Speaker 04:
and that the order is not unclear in the way it was in the AMS case.

[00:05:42] Speaker 00:
What about the regulatory history that says that in circumstances analogous to this, at least as I read it, in circumstances analogous to this, because there hasn't been any collection of duties or anything up to that point, it's reasonable to think that

[00:06:04] Speaker 04:
it's unclear and that commerce itself doesn't or customs doesn't think that these goods are included because uh... there's been no suspension as of yet yes your honor uh... that that regulatory history if the best place to look at it in the briefs is page eighteen nineteen of the final reply brief united steel uh... just because in different sections of the different reason in the trial court's opinion there's snippets of it but uh... and page eighteen nineteen of the reply it's given more fulsome uh...

[00:06:33] Speaker 04:
It's a longer excerpt.

[00:06:34] Speaker 04:
And so that's page 18 and 19 of docket number 27.

[00:06:41] Speaker 04:
And on page 18, it starts with the regulatory history.

[00:06:49] Speaker 04:
And this has to do with paragraph L of the regulation, which has to do with suspension.

[00:06:55] Speaker 04:
And it starts with suspension of liquidation in connection with proposed paragraph L, a number of commenters.

[00:07:03] Speaker 04:
have urged that the department should suspend liquidation when it initiates a formal scope inquiry if liquidation has not already been suspended.

[00:07:12] Speaker 04:
And this suspension should apply to all unliquidated entries.

[00:07:15] Speaker 04:
So there was a proposal that even when there's a formal scope inquiry, all unliquidated entries, regardless of the timing, should be suspended.

[00:07:22] Speaker 04:
Obviously, Commerce rejected that proposal because we know if there's an initiation of a formal scope inquiry,

[00:07:29] Speaker 04:
You cannot suspend backwards.

[00:07:31] Speaker 04:
It's only perspective after the initiation of the scope inquiry.

[00:07:35] Speaker 04:
There's a different rule if there's suspension already in place.

[00:07:38] Speaker 04:
And that's when it's continuing.

[00:07:40] Speaker 04:
But this paragraph in the beginning tells us that there was this proposal that was rejected for unliquidated entries.

[00:07:49] Speaker 04:
And if you go down further into this language, and it's about nine lines up from the bottom,

[00:07:56] Speaker 04:
The sentence starts, formal initiation of a scope inquiry by the department represents nothing more than the finding by the department that it cannot resolve the issue on the basis of the plain language of the scope description or the clear history of the original investigation.

[00:08:11] Speaker 04:
And when you consider that commerce is focusing on the scope inquiry, and if you look at this whole passage, scope inquiry comes up at least four times.

[00:08:24] Speaker 04:
The notice issue that is being flagged by Commerce in this passage is in the context of when there's a scope inquiry.

[00:08:35] Speaker 04:
Because if the product is under the K-1 sources, the position of Commerce is that the order is clear.

[00:08:49] Speaker 04:
on for the purposes of notice because the K-1 sources all existed at the time of the investigation.

[00:08:55] Speaker 04:
The order is written.

[00:08:58] Speaker 03:
Here the order... So how do importers then have notice?

[00:09:03] Speaker 03:
Is it through the publication of the notice of initiation of an anti-dumping duty investigation that's made in the Federal Register?

[00:09:12] Speaker 04:
Yes, Your Honor.

[00:09:13] Speaker 04:
Ultimately, if you go back to when this anti-dumping order was entered on the Federal Register,

[00:09:19] Speaker 04:
And all the other related K1 sources are all publicly available.

[00:09:22] Speaker 04:
The investigation, the documents related to that investigation, and the determinations by the ITC.

[00:09:31] Speaker 04:
And they're discussed in the scope ruling aspect of this case.

[00:09:35] Speaker 04:
That's where we talk about those documents and grapple with why it's correct that the K1 sources are dispositive.

[00:09:47] Speaker 04:
The regulatory history, as both parties have argued, is seeking to strike a balance because there's the interest of the domestic industry on the one side and the importer and exporter on the other side.

[00:10:00] Speaker 04:
And for situations under K1, commerce determined that you didn't have the strong cutoff date for suspension that's only prospective.

[00:10:12] Speaker 04:
They didn't explicitly

[00:10:15] Speaker 04:
have such a cutoff for, as they do for K2.

[00:10:22] Speaker 04:
Because the K1 sources are available, there is notice.

[00:10:26] Speaker 03:
Then why didn't, why didn't Congress write into the regulations what happens in this type of situation where you don't have a formal inquiry and yet you have entries that have not been liquidated that are hanging out there and have been deemed to come within the scope of an anti-dumping duty order as a result of this

[00:10:45] Speaker 03:
application for a ruling.

[00:10:47] Speaker 04:
Your Honor, I wish I could give you a good answer to that question.

[00:10:50] Speaker 04:
We know that they didn't.

[00:10:52] Speaker 04:
We also know that in AMS, this court, said that in not every case, Congress will be allowed to do this retroactive suspension.

[00:11:04] Speaker 01:
But I'm infused.

[00:11:05] Speaker 01:
I agree completely with Judge Raina's question, and it's what's troubling me in this case.

[00:11:10] Speaker 01:
But to take it even a step further,

[00:11:12] Speaker 01:
Since the government has basically admitted that the regulation itself is silent on this point, why would you be entitled to our deference on this litigation posture adopted position?

[00:11:24] Speaker 04:
Well, it wasn't a litigation posture position.

[00:11:26] Speaker 04:
I mean, it was Congress's position in the scope ruling.

[00:11:29] Speaker 04:
They adopted this position at the administrative stage in resolving an administrative inquiry.

[00:11:36] Speaker 04:
So it's not sort of a late-arriving argument.

[00:11:40] Speaker 04:
It's part of their scope-rolling analysis.

[00:11:42] Speaker 01:
Why would you be entitled to our deference when you're not actually interpreting a regulation of your own, but rather supplementing it?

[00:11:51] Speaker 04:
We view it as an eminently reasonable interpretation of... Of what?

[00:11:56] Speaker 01:
Which words are you interpreting?

[00:11:59] Speaker 01:
in the context of the fact that the regulation is silent on this point.

[00:12:03] Speaker 01:
It is, Your Honor.

[00:12:06] Speaker 01:
The regulation is silent.

[00:12:07] Speaker 01:
I'm really perplexed as to how you're interpreting it.

[00:12:11] Speaker 04:
Taking into account that if the items had been suspended previously, then that would continue under the law.

[00:12:20] Speaker 04:
They weren't here.

[00:12:21] Speaker 04:
But as we explained in our briefs, customs

[00:12:27] Speaker 04:
is not the ultimate decider of whether or not a product is in scope.

[00:12:31] Speaker 04:
And so the question of whether something is suspended in the first instance when it hits the border shouldn't be dispositive one way or another of whether or not suspension can apply to that entry.

[00:12:45] Speaker 04:
The way commerce views it is when something hits the border, if it's not... So you don't actually have any answer to my question, you're just going to move on.

[00:12:51] Speaker 01:
I'm okay with that, but I just want to acknowledge what's happening.

[00:12:54] Speaker 04:
Go ahead.

[00:12:55] Speaker 04:
It's the context of the other parts of L, such as the suspension continues when it's already in place, that here we view that these items have always been within the scope of the order of persona to the K1 sources, and so they should be treated as if they were always in scope.

[00:13:11] Speaker 01:
So it's L?

[00:13:13] Speaker 01:
Those words in L is what you're interpreting here, and that's what gets our deference?

[00:13:19] Speaker 01:
What word in L is it?

[00:13:22] Speaker 04:
So in L, in more than one instance, because there's three, well, there's four subparts.

[00:13:27] Speaker 04:
But in one, two, and three, in each one of them, it says that if suspension has already occurred, it will continue.

[00:13:34] Speaker 04:
It didn't already occur here.

[00:13:37] Speaker 04:
That's what makes this case.

[00:13:40] Speaker 01:
So I'm not actually interpreting the words if suspension has already occurred?

[00:13:44] Speaker 04:
Exactly.

[00:13:45] Speaker 01:
OK, so you just told me what I'm not interpreting with your instruction.

[00:13:49] Speaker 01:
What am I?

[00:13:50] Speaker 01:
What are you interpreting with your instruction?

[00:13:54] Speaker 01:
I mean, our deference requires that you be interpreting your own regulation.

[00:13:57] Speaker 01:
If you would like to supplement that regulation because you failed to address some part, you can do that.

[00:14:02] Speaker 01:
There's a whole process for it.

[00:14:04] Speaker 01:
But it's not our deference.

[00:14:06] Speaker 04:
That's what you're asking for.

[00:14:09] Speaker 04:
submit that the interpretation here is consistent with and a reasonable approach.

[00:14:15] Speaker 04:
There is a gap in this.

[00:14:17] Speaker 00:
But do you have, just to answer the question, which is what language do you think you're specifically identifying as being the language that you're interpreting?

[00:14:30] Speaker 04:
In addition to the fact that suspension would continue if it had been suspended and that considering the fact that

[00:14:38] Speaker 04:
Customs isn't the ultimate, doesn't determine if something's in scope.

[00:14:42] Speaker 00:
So it's somewhat, whether or not customs... Looking at section, I guess it's L3.

[00:14:51] Speaker 00:
What language is it?

[00:14:53] Speaker 00:
Or is it the absence of language?

[00:14:57] Speaker 04:
And it can also be inferred, in our view, from the fact that in the instance of a formal scope ruling, then we know what the role is.

[00:15:07] Speaker 04:
And so by not explicitly addressing when there is no formal scope ruling.

[00:15:14] Speaker 04:
It's the opposite.

[00:15:16] Speaker 04:
It can be the opposite.

[00:15:18] Speaker 04:
It doesn't have to be the opposite.

[00:15:19] Speaker 03:
That's your problem there.

[00:15:21] Speaker 03:
I agree that we go to three.

[00:15:24] Speaker 03:
And it specifically refers to D. And that's just a ruling by application, the K1 ruling.

[00:15:35] Speaker 03:
Then it goes on to F4.

[00:15:36] Speaker 03:
It joins them together.

[00:15:38] Speaker 03:
It speaks about suspension liquidation under paragraph one, one, and one, two of the same section.

[00:15:46] Speaker 03:
Those go to the formal inquiry.

[00:15:49] Speaker 03:
And it says nothing else other than about what happens in a situation where you have a D situation and you have entries that are not liquidated.

[00:16:01] Speaker 03:
And your interpretation may be

[00:16:06] Speaker 03:
reasonable at some point, but where did you get it?

[00:16:11] Speaker 03:
On what basis?

[00:16:13] Speaker 03:
Your argument, your acknowledgement that this is silent, you stop there.

[00:16:18] Speaker 03:
You don't go on and argue that the secretary was wise enough to address formal inquiries and the fact that they do that and not address the application rulings, that that says something, but you don't do that.

[00:16:35] Speaker 03:
give us a basis for review.

[00:16:37] Speaker 03:
You don't base it on the statute, do you?

[00:16:39] Speaker 04:
No, that's another.

[00:16:41] Speaker 04:
I was just actually, that was my next point.

[00:16:43] Speaker 03:
I mean, perhaps you could have, but you didn't.

[00:16:46] Speaker 04:
We did in our briefs refer to the suspension provision in the statute, which is a 19 USC 1671 BD2, which in this case, we know that the initial suspension

[00:17:03] Speaker 04:
for the products that were being entered in scope.

[00:17:06] Speaker 01:
You said 19 USC 1671?

[00:17:09] Speaker 01:
That's not actually cited in your bullet brief.

[00:17:11] Speaker 01:
I'm on the citations page.

[00:17:12] Speaker 01:
I was going to figure out what page you made this argument on since you told Judge Rainey you did.

[00:17:16] Speaker 01:
But at least it's not in your table of authorities.

[00:17:19] Speaker 01:
OK, you actually have used all your time, all your rebuttal time, and you're beyond that.

[00:17:23] Speaker 01:
I need to hear from the other side.

[00:17:25] Speaker 01:
You can think about that and respond.

[00:17:26] Speaker 01:
I'll restore some rebuttal time.

[00:17:28] Speaker 04:
Thank you, Your Honor.

[00:17:28] Speaker 01:
Mr. Marshak?

[00:17:39] Speaker 02:
Yes, Your Honor, good morning.

[00:17:41] Speaker 02:
Since we've been talking about retroactivity, I guess I'd address that first before I talk about the merits.

[00:17:46] Speaker 02:
But there is a relationship between the two.

[00:17:49] Speaker 02:
And there, as Dr. Drainger was saying, L3 talks about this.

[00:17:54] Speaker 02:
So L3 talks about a situation when there's no formal scope inquiry.

[00:17:58] Speaker 02:
And there, then it talks about there's been no suspension of liquidation, and it talks about initiation.

[00:18:04] Speaker 02:
When it doesn't talk about where there's been no suspension of liquidation,

[00:18:08] Speaker 02:
And there's been no initiation.

[00:18:10] Speaker 02:
But when you look at the comments to the regulation, and you look at the end of the comments, and we think we are precisely in the comments to the regulation here, what Commerce said in our quote, it would be extremely unfair to importers and exporters to subject entries not already suspended

[00:18:28] Speaker 01:
the suspension of liquidation and possibly duty assessment with no prior notice and based on nothing more than a domestic entry party's... Oh, yeah, and then it goes on to say, because when liquidation has not been suspended, Customs, at least, and perhaps the department as well, have viewed this merchandise as not being used in the scope or are important, justified in relying on that view.

[00:18:44] Speaker 01:
At least, we've read the same things you've read, so move on.

[00:18:46] Speaker 01:
What else you got?

[00:18:47] Speaker 01:
I agree with you on that.

[00:18:48] Speaker 01:
Go ahead, Will.

[00:18:49] Speaker 02:
We have there, this is the perfect situation.

[00:18:51] Speaker 02:
We are here, Customs Center requests for information to our client.

[00:18:55] Speaker 02:
We were entering the merchandise in a provision that was not

[00:18:59] Speaker 03:
Listed in the order even though we know that's not dispositive, but we're 0.90 was not listed anywhere just to be clear I I don't agree with what you said because what you were reading you don't you skipped over the part where it says the recent Explanation for traction is speaking about a formal initiation of a scope inquiry The part that you read deals with a scope inquiry.

[00:19:21] Speaker 02:
That's not what we have here today What we have here today is a situation under D

[00:19:29] Speaker 02:
So it's under the regulations because... D is not a formal scope inquiry.

[00:19:36] Speaker 02:
Correct, Your Honor.

[00:19:37] Speaker 02:
But what D is, it's a formal scope, it's a final scope ruling.

[00:19:42] Speaker 03:
Yes, but it's not a scope inquiry.

[00:19:44] Speaker 03:
What you are reading here, just to be correct here, what you are reading deals with a formal scope inquiry.

[00:19:52] Speaker 02:
Yes, but if you look at the purpose of the regulations, it talks about the impact

[00:19:56] Speaker 02:
on the importer, something being very unfair to the importer.

[00:20:00] Speaker 03:
When you have a formal scope inquiry.

[00:20:04] Speaker 03:
And that's because what a formal scope inquiry does, does it not enlarge the anti-dumping duty order?

[00:20:13] Speaker 02:
No, Your Honor.

[00:20:14] Speaker 02:
I believe the purpose of scope is that the anti-dumping duty order always covered this merchandise.

[00:20:20] Speaker 02:
And that's when it falls within the scope.

[00:20:21] Speaker 02:
If you want to enlarge it, you're into anti-circumvention.

[00:20:24] Speaker 02:
But the idea of scope,

[00:20:26] Speaker 02:
is that this has always been within the scope, but it's always been within the scope, either under the plain meaning... It's a degree of clarification, correct?

[00:20:35] Speaker 02:
Yes, it's a degree of clarification.

[00:20:37] Speaker 03:
If it's K1, it's clear.

[00:20:40] Speaker 03:
And under K1, if the language is clear, then what unfair disadvantage was placed on the importer?

[00:20:48] Speaker 03:
The importer knew all along, it seems to me, that they had a problem here.

[00:20:53] Speaker 02:
No, Your Honor.

[00:20:54] Speaker 02:
The importer, in this case,

[00:20:56] Speaker 02:
Our importer did not know it had a problem.

[00:20:58] Speaker 02:
And it didn't know it had a problem because under the trade usage, helical spring lock washers did not include our importer's merchandise.

[00:21:06] Speaker 02:
Our importer saw helical spring lock washers.

[00:21:09] Speaker 02:
It's entering the merchandise in a provision that does not encompass helical spring lock washers.

[00:21:14] Speaker 02:
Custom agrees to allow it to continue entering.

[00:21:17] Speaker 02:
And when our client looks at the petition and looks at the ITC investigation,

[00:21:25] Speaker 03:
I find it difficult to understand, just from the record here, how any importer of any helical washers would not have been alerted at the initiation of this anti-dumping duty investigation that maybe they had a problem.

[00:21:41] Speaker 02:
Because these are not referred to in the trade as helical spring lock washers.

[00:21:45] Speaker 02:
Our client was buying this merchandise from petitioner, petitioner was not selling the merchandise as helical spring lock washers, and petitioners

[00:21:55] Speaker 02:
information and offer to our importer.

[00:21:57] Speaker 02:
It was not referred to as helical spring lock washers.

[00:22:00] Speaker 02:
Our importer and its trade information did not refer to this product as helical spring lock washers.

[00:22:07] Speaker 02:
Helical spring lock washers, if you look at petitioners, what was in the petition, the petitioner says all of the lock, all merchandise, all helical spring lock washers that we produce at our production facility, and that's the only production facility, are produced to asthma standards.

[00:22:23] Speaker 02:
Ours are not.

[00:22:24] Speaker 02:
petitioners said that all helical spring lock washers, all the helical spring lock washers that are produced is produced to asthma standards, that they're all trapezoidal.

[00:22:35] Speaker 02:
Ours are not trapezoidal.

[00:22:37] Speaker 02:
Those are not produced to asthma standards.

[00:22:39] Speaker 02:
It's really a different class of merchandise.

[00:22:43] Speaker 00:
Can I ask you an actual question?

[00:22:45] Speaker 00:
What is the difference in time frame that we're looking at here in terms of if we were to agree with the government, how much time are we talking about?

[00:22:55] Speaker 02:
We're not talking about that much time, Your Honor.

[00:22:59] Speaker 02:
We're talking about practically a discrete period where, because our entries were not being suspended, it's a discrete period that have captured entries where there's, because of the duty rate for China, the China-wide rate, there's a substantial amount of money involved.

[00:23:17] Speaker 02:
So it's a very short period of time.

[00:23:18] Speaker 00:
Of how much time?

[00:23:20] Speaker 02:
Do you know?

[00:23:22] Speaker 02:
Going back, I'm guessing about a year.

[00:23:25] Speaker 02:
I'm guessing that's what's in effect.

[00:23:28] Speaker 02:
Because as soon as, again, you know, it was practically, as soon as there was a problem, what our client did, even though the customs said you could continue to enter the merchandise, our client, you know, was prudent and stopped because they realized there was a problem.

[00:23:41] Speaker 02:
Before, our client had no idea there was a problem.

[00:23:44] Speaker 02:
And again, this gets into the merits and what's clear and what's dispositive.

[00:23:49] Speaker 02:
And we believe that what commerce did

[00:23:52] Speaker 02:
is when they said K1 was dispositive, they really ignored the information, a lot of the information that we placed on the record, showing it wasn't dispositive.

[00:24:02] Speaker 02:
Is it close?

[00:24:03] Speaker 02:
Yes.

[00:24:03] Speaker 02:
We're saying now we realize we probably, you know, we claim that we should win on K1, but we believe that K1 is relatively close.

[00:24:12] Speaker 02:
But when you look at the K1 factors, when you look at the petition, it's talking about asthma, it's talking about, continuously about trapezoidal, it's talking about asthma,

[00:24:22] Speaker 02:
is talking about what practitioner was making in the United States, and they were saying everything they're making is asthma trapezoidal.

[00:24:29] Speaker 02:
And our client is not, doesn't consider it's Merchandised Hedical Spring Lackwashers.

[00:24:36] Speaker 00:
But the scope order doesn't mention trapezoidal, right?

[00:24:40] Speaker 02:
The order doesn't mention trapezoidal, but when you go to the K-1 factors, and we believe there's federal circuit case law, the Patterson and the Sango case,

[00:24:51] Speaker 02:
that as to whether something is clear, you look at what's in the K1 factors, and you say, wait a second, the K1 factors talk about different specifications.

[00:25:01] Speaker 02:
Our specifications aren't mentioned.

[00:25:03] Speaker 02:
They talk about trade usage.

[00:25:06] Speaker 02:
So our client, they've been importing this product for a long time, and this is a case where they were really shocked.

[00:25:13] Speaker 02:
And customs basically agreed.

[00:25:16] Speaker 02:
Customs could have said, okay,

[00:25:19] Speaker 02:
You guys are totally wrong.

[00:25:20] Speaker 02:
I'm suspending liquidation, because it's clear.

[00:25:23] Speaker 02:
Customs agreed.

[00:25:24] Speaker 02:
It's not clear.

[00:25:25] Speaker 02:
And customs agreed to continue to enter, even though our client prudently did not, because customs knew this was something that had to go to commerce.

[00:25:34] Speaker 02:
And because of that, our client is being hit with retroactive duties.

[00:25:38] Speaker 02:
Now, the impact of retroactive duties on the importer, and I think that's what commerce was very, very concerned about when it wrote these regulations.

[00:25:47] Speaker 02:
They talked about an unfairness to the importer by assessing duties retroactively.

[00:25:52] Speaker 02:
When merchandise comes in in good faith and the importer isn't paying dumping duties, when you go retroactive, the petitioner isn't hurt, the merchandise is in the country, the harm has been done.

[00:26:03] Speaker 02:
The only thing it does, it injures, it has a tremendous retroactive monetary impact on an importer who has been

[00:26:13] Speaker 02:
exercise in good faith in bringing the merchandise in, and that's what the regulations was talking about.

[00:26:18] Speaker 02:
Extremely unfair to importers and exporters.

[00:26:22] Speaker 02:
Here, commerce may say it's dispositive, and we believe that's wrong because everything we put on the record shows it wasn't dispositive, but at the very least, it wasn't clear.

[00:26:36] Speaker 02:
Now, dispositive and clear are two different things.

[00:26:38] Speaker 02:
Something could be dispositive, where there's a lot of ambiguity, there's a lot of unclarity, but you come out at the end of the day, it's dispositive because it's 51%.

[00:26:47] Speaker 02:
Maybe commerce did that.

[00:26:49] Speaker 02:
But that doesn't mean it's clear.

[00:26:51] Speaker 02:
And when you look at AMS, you're talking about something that's clear, something that's not fair.

[00:26:56] Speaker 02:
And that's the purpose of the regulations.

[00:26:58] Speaker 02:
That's why the regulations struck this balance.

[00:27:06] Speaker 02:
It's just very, very important.

[00:27:08] Speaker 01:
I understand your point about the need to institute a scope inquiry.

[00:27:11] Speaker 01:
Are you also appealing whether substantial evidence supports commerce's finding that the washers are contained within the scope?

[00:27:20] Speaker 01:
Is that part of your appeal as well?

[00:27:21] Speaker 02:
Yes.

[00:27:22] Speaker 02:
Our appeal is that commerce... Why, though?

[00:27:26] Speaker 01:
Given that you admit that your washers are helical in their appearance and function and they fall within the literal language of the order, why would there

[00:27:35] Speaker 01:
her commerce distribution then not be supported by substantial evidence, which is a very deferential standard that we have to apply.

[00:27:42] Speaker 02:
We know that.

[00:27:42] Speaker 02:
But commerce, in its decision, it said the plain meaning of the order wasn't dispositive.

[00:27:48] Speaker 02:
They went beyond the plain language, certain helical spring lock washers, and commerce went into the K1 factors.

[00:27:56] Speaker 02:
And we believe you're required, and I think there's some case law saying, unless something is absolutely clear, you're required to go into the K1 factors.

[00:28:04] Speaker 02:
Commerce didn't say the scope of the order was clear, unambiguous.

[00:28:09] Speaker 02:
Commerce went and said, let's look at the K1 factors.

[00:28:13] Speaker 02:
And once Commerce went to the K1 factors, which we believe they're required to do, we believe that Commerce misinterpreted the K1 factors.

[00:28:22] Speaker 03:
So Commerce is required to go to the K1 factors in any type of scope ruling?

[00:28:26] Speaker 02:
Not necessarily.

[00:28:28] Speaker 02:
I think if the language of the order is crystal clear, if you have

[00:28:32] Speaker 02:
you know, crystal clear specifications, you know, the plain meaning controls.

[00:28:39] Speaker 02:
Or there could be some situation where the K-1 factors just, you know, undeniably support the plain language of the order.

[00:28:48] Speaker 02:
But we're not in that situation.

[00:28:50] Speaker 02:
When you look at the K-1 factors in this case, and you look at our brief, you look at our presentation to Commerce, you're going to see we looked at the petition carefully, we looked at the ITC carefully, we looked at trade usage carefully,

[00:29:02] Speaker 02:
And there's a lot of support for our client's position and our position that the term helical spring lock washers is a term of trade, not just take helical spring lock washers, but you take helical spring lock washers and that does not encompass our client's merchandise.

[00:29:21] Speaker 01:
You may be right if I had to know of a review, but I don't.

[00:29:25] Speaker 01:
That's a question of substantial evidence again.

[00:29:29] Speaker 01:
So you're saying we introduced evidence that's not your burden.

[00:29:32] Speaker 01:
Your burden is to overcome the substantial evidence on the other side.

[00:29:35] Speaker 02:
We believe we did.

[00:29:37] Speaker 02:
We believe that we submitted enough evidence as to, in the K-1 factors, if you look closely at the evidence we submitted, if you look closely as to what petitioner was saying about all of its lock washers.

[00:29:53] Speaker 02:
The evidence you submitted are K-2 factors.

[00:29:56] Speaker 02:
We believe we submitted K-1 factors when we submitted information.

[00:30:00] Speaker 03:
No, but the evidence you're talking about, you're arguing about today, those are K-2 factors.

[00:30:05] Speaker 03:
Trade usage, the term of art in the industry, channels of trade.

[00:30:10] Speaker 02:
The ArcelorMittal case talks about trade usage as being a K-1 factor.

[00:30:21] Speaker 02:
It doesn't go to K-2 if we're just talking about trade usage.

[00:30:26] Speaker 02:
the usage in the trade at that time, the term helical spring lock.

[00:30:30] Speaker 01:
Do you want to save your time for rebuttal?

[00:30:32] Speaker 02:
Yes, Your Honor.

[00:30:33] Speaker 01:
Very good.

[00:30:34] Speaker 01:
Mr. Snyder, I'll give you two minutes of rebuttal time.

[00:30:37] Speaker 04:
Thank you, Your Honor.

[00:30:39] Speaker 04:
As quick as I can.

[00:30:41] Speaker 04:
Just to go back to the statute, Your Honor, if you look at page eight of our reply brief, docket number 18, we do discuss the statute 1671BD2.

[00:30:50] Speaker 04:
We state that Commerce recently concluded that it has discretion

[00:30:56] Speaker 04:
to order the suspension of unliquidated entries that should have already been suspended in this circumstance.

[00:31:01] Speaker 04:
And citing that statute, it's in a couple other places in our reply brief on page 2 on a footnote and on page 18 as well.

[00:31:11] Speaker 04:
In terms of the AMS case, page 1344 of that decision, the last page of the decision,

[00:31:20] Speaker 04:
has very interesting language about the word clarity or clarify.

[00:31:24] Speaker 04:
Because AMS is all about whether or not the order is clear.

[00:31:27] Speaker 04:
And how is that word used in that decision is really what this case is about.

[00:31:31] Speaker 04:
How is this case different or similar to AMS?

[00:31:34] Speaker 04:
And in that case, first of all, this court looked to the regulations that apply when there's a scope ruling that is initiated.

[00:31:47] Speaker 04:
And how that commerce urges,

[00:31:49] Speaker 04:
when it did not initiate a formal scope ruling.

[00:31:51] Speaker 04:
That was Congress's error.

[00:31:52] Speaker 04:
And that's the language of the AMS decision.

[00:31:55] Speaker 04:
That holding doesn't apply here.

[00:31:56] Speaker 04:
Even the trial court here doesn't hold that we should have initiated a formal scope ruling.

[00:32:03] Speaker 04:
So AMS said in a situation when an order is unclear, you must initiate a formal scope ruling.

[00:32:10] Speaker 04:
And what it meant in that case, which had very different facts than this one, a substantial transformation analysis

[00:32:17] Speaker 04:
goods from another country to determine whether those goods should be treated as goods from China because they were processed and manufactured there, which is very different and more searching than just looking at the K1 sources, which is what occurred here.

[00:32:31] Speaker 04:
Also, in AMS, there's a case cited for the proposition that not every time commerce resolves a dispute, will it lead to this result that AMS led to.

[00:32:44] Speaker 04:
And that case is the high-end case, if I'm saying it correctly.

[00:32:48] Speaker 04:
And the parenthetical for that case that this court provided explained that in high end, the commerce clarified, provided a clarifying instruction for that case.

[00:33:01] Speaker 04:
And that wasn't, in that context of that case, that wasn't, that clarification wasn't.

[00:33:06] Speaker 01:
Mr. Snyder, you are way beyond the time, the extra time I gave you, and you're now reading me a parenthetical from our opinion.

[00:33:12] Speaker 01:
So I got to ask you to sit down and have Mr. Morchette stand up.

[00:33:19] Speaker 02:
First, just to get to AMS.

[00:33:22] Speaker 02:
We believe when you look at AMS, Your Honor, AMS talks about clarity.

[00:33:25] Speaker 02:
It doesn't talk about substantial transformation being different from a regular scope.

[00:33:30] Speaker 02:
And it talks about a situation where it doesn't fall precisely within the regulations when the order is not clear.

[00:33:37] Speaker 02:
And we believe the order here is not clear on its face.

[00:33:43] Speaker 02:
And it's not clear on its face.

[00:33:44] Speaker 02:
And customs recognize it's not clear on its face.

[00:33:46] Speaker 02:
And our client shouldn't be

[00:33:48] Speaker 02:
believed it was not, in good faith, believed it was not clear on its face.

[00:33:52] Speaker 02:
And the Court of International Trade also recognized that the order was not clear on its face.

[00:33:58] Speaker 03:
And when it's not clear on its face... Counsel, you were pointing the Court's attention to the unfairness that unfairness to the importer's argument that you had.

[00:34:09] Speaker 03:
AMS addresses that.

[00:34:11] Speaker 03:
It also addresses what happens in the sense to hold otherwise

[00:34:15] Speaker 03:
would permit importers to potentially avoid paying anti-dumping duties on past imports by asserting unmeritorious claims that the products fall without the scope.

[00:34:25] Speaker 03:
Importers, as is Judge Lora in that case, importers cannot circumvent anti-dumping orders by contending that their products are outside the scope of existing orders when such products are clear to their scope.

[00:34:38] Speaker 02:
I totally agree with that.

[00:34:40] Speaker 02:
But in our case, the facts are totally different.

[00:34:44] Speaker 02:
Scope of the order was not clear.

[00:34:46] Speaker 03:
The scope of the order is clear.

[00:34:47] Speaker 03:
I know you say it's not, but commerce found that the scope of the order was clear.

[00:34:54] Speaker 03:
OK, so hold on.

[00:34:57] Speaker 03:
So if the scope of the order is clear, that means that importers will put on notice as to the particular entries that, if anything, that perhaps they have a potential problem.

[00:35:07] Speaker 03:
There's entries out there that were not liquidated.

[00:35:12] Speaker 03:
Don't you agree that under

[00:35:14] Speaker 03:
Let's say that the scope determination was correct.

[00:35:17] Speaker 03:
Don't you agree that to allow those entries into the country without paying the anti-dumping duties where you have a clear scope order would be harmful to the domestic industry?

[00:35:30] Speaker 02:
The entries have come in.

[00:35:31] Speaker 02:
The entries have been sold.

[00:35:32] Speaker 02:
Domestic industry was already injured.

[00:35:35] Speaker 02:
The fact that you're going to penalize an employer by retroactively assessing duty on something.

[00:35:41] Speaker 02:
The anti-dumping law seeks to prevent that.

[00:35:45] Speaker 02:
Right, but the importer here, and I think that Judge Chilgrove's recognized that the order was not clear on its face.

[00:35:54] Speaker 02:
The importer was acting in good faith.

[00:35:57] Speaker 02:
And when you look at the analysis, I mean, we're saying that's what the court determined, but that's not what commerce determined.

[00:36:05] Speaker 03:
Commerce determined that we were looking at commerce's determination.

[00:36:11] Speaker 02:
Again, commerce determined that the K1 factors were dispositive.

[00:36:15] Speaker 02:
But that doesn't mean the K1 factors are clear in the sense that an importer should recognize that the K1 factors are clear.

[00:36:23] Speaker 02:
That's precisely what it means.

[00:36:27] Speaker 02:
I don't believe so, your honor, because the commerce, we believe commerce's decision was wrong.

[00:36:33] Speaker 02:
But if an importer is bringing in merchandise and the importer is not selling that merchandise, it's a helical spring lock washer.

[00:36:41] Speaker 02:
And the domestic producer is not selling that merchandise, it's a helical spring lock washer.

[00:36:46] Speaker 02:
A lot of information on the record that that merchandise is not a helical spring lock washer as discussed in the petition.

[00:36:55] Speaker 02:
It's a very, at the least, we believe we're right, but it's a very close case.

[00:37:00] Speaker 02:
And that's not clarity.

[00:37:02] Speaker 02:
Customs, you could say it's clear, but in no way do we believe that there's clarity here as to what the scope of the order says.

[00:37:09] Speaker 01:
Okay, thank you, Mr. Marschak.

[00:37:10] Speaker 01:
I think we have your argument.

[00:37:11] Speaker 01:
The case is taken under submission.

[00:37:13] Speaker 01:
We can move on.