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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.

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Good morning.

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The first case before the court today is 192381 Star Pipe Products versus the United States.

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It is a decision that has been appealed from the Court of International Trade.

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Ms.

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Mohan, with your three minutes reserved,

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Are you prepared to begin?

[00:00:31] Speaker 04:
Yes, I am prepared.

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Thank you.

[00:00:33] Speaker 02:
You may begin.

[00:00:34] Speaker 04:
Thank you.

[00:00:35] Speaker 04:
Good morning, Your Honors.

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May it please the court?

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There are two issues on appeal in this case.

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The first is the merits of commerce's scope ruling using the mixed media analysis under Mid-Continent.

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And the second is whether Starpipe's arguments concerning retroactive assessment of duties are moot.

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I plan on first addressing the merits of commerce's scope ruling and then going on to the issue of mootness,

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unless Your Honors would prefer that I start the other way around.

[00:01:03] Speaker 02:
No, I think that's fine.

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Okay, thank you.

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The products at issue in this case are the steel threaded rod components and star pipes joint restraint kits.

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These kits are not a mere aggregation of disparate items packaged together.

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Each of the components in the kit interacts and fits with the other to create a unique article of commerce.

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These products are used in the water and wastewater industries to connect and secure pipes and bolt together pipe joints.

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The products in these products, the castings, are the essential components of the kits, both by weight and by value.

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And the other products, the bolts, the nuts, the washers, and the steel threaded rod component, are auxiliary hardware incidental to the casting.

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Councilman, this is for Drayna.

[00:01:50] Speaker 04:
Yes.

[00:01:51] Speaker 00:
Yes, I have a question.

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I'd like to direct your argument to the following.

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Is it your position that under mid-continent now, in that case, that commerce failed to apply the K2 factors and that it should have?

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That is correct.

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And did it first have to assess whether prior scope rulings had consistently applied the K2 factors?

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So the prior scope rulings, the K2 factors, and the HTS that were used, these were all criteria that were outlined under step two of Mid-Continent.

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So all of these were things that

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Commerce, when issuing a final scope ruling, should have considered all of these criteria.

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Those prior scope rulings that were discussed in Star Pipe's scope ruling request and in the briefs before this court and then the trial court, in all of those prior scope rulings, Commerce did get to a K-2 analysis.

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And we think, in addition, that is also why, in this case, in addition to the Mid-Continent Guidance, Commerce should have gone to the K-2 analysis.

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So are you saying that it is required in every case?

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I am saying that in this case, which involves a mixed media product, it is required because Commerce in its final scope ruling and its IDM memo, it stated that it was going to be using the Mid-Continent guidance in making its mixed media analysis.

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That's my question.

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Do you believe Mid-Continent mandates

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a K-2 analysis in every mixed media case?

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I believe that it is one of the criteria that Mid-Continent says that commerce should look at when overcoming the presumption of whether a component is within scope of an order when it's included as part of a mixed media item.

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This is Judge Chen.

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This is Judge Chen.

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Did Mid-Continent say commerce should look at those K-2 factors or did it say it may consider those K-2 factors?

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So mid-conscience said that in overcoming the presumption, commerce must look at published prior guidance.

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And then one of the things it said was it may look at... Ms.

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Mohan, did it say it must look at those published guidance or did it say it must if the published guidance is clear and provides clarity in some kind of

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generally applicable criteria or bright line rule.

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That was my understanding.

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And my understanding was Mid-Continent went further and said these prior scope rulings lack clarity.

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I'm quoting from 1305 of Mid-Continent.

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Another problem with these prior scope rulings is that they lack clarity.

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And then it went further and said in Walgreens, we observed that prior mixed media scope rulings

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Commerce has eschewed developing any, quote, formal definitions, quote, generally applicable criteria, or, quote, bright line rules for conducting mixed media inquiries, and has instead relied on, quote, ad hoc determinations, citing to Walgreen.

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And in Walgreen, my understanding is that Walgreen itself

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urged that the K2 factors or K2 criteria was necessary and required to consider them in a mixed media analysis.

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And Commerce did not do that there, but we ended up affirming the scope ruling and saying, no, the K2 criteria is not required because the pencil scope rulings that were being relied on by Walgreen just don't have sufficient clarity.

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So can you help me through this because I'm just trying to read these two opinions and to me they reject in my view any position that these pencil scope rulings provide some kind of clear guidance on how to handle mixed media cases and so therefore as I understand these opinions they say

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these pencil rulings don't provide that kind of clear guidance.

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And now we're hearing from mid-continent that to overcome the presumption that components such as these steel threaded rod components in these kits are outside of the order, we need to see something that's clear in pre-existing published guidance.

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And as I understand these two opinions, they take away

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from you the reliance on the pencil scope rulings as being that clear pre-existing generally applicable guidance.

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So help me understand, where am I on the wrong track here?

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So one thing that the court said in Mid-Continent, well, it said all of the things that you just read out.

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It also did say, though, that these prior scope rulings do establish that there exists in some circumstances an implicit mixed media exception.

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And then it went in the absence, even in the absence of explicit language in the final order, as Walgreens confirmed.

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That's on that same page 1305.

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Right.

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And then it went further and said, however, they provide only limited guidance regarding the scope of that exception or any circumstances in which it may be applied.

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It's consistent with the idea that they don't provide clear guidance.

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But if you read further down in that paragraph, it then did say that on remand, commerce may attempt to draw an ascertainable standard from these rulings.

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So my reading of this is that the court did not entirely foreclose the possibility that there was an ascertainable standard.

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It's just that it pushed it back to commerce.

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and said, Commerce, you need to come up with the ascertainable standard that needs to be applied here and take a look at these prior scope rulings to see if there is one.

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And one thing, if you read those prior scope rulings, at a minimum, even if it's not definitive, those prior scope rulings, at a very minimum, show that there is no presumption that components of mixed media items are in scope one.

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At a minimum, they show that commerce needed to look at a K-2 analysis to make its decision.

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In all of those prior scope rulings, commerce went to K-2.

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And that's important, especially in these cases, because mixed media cases are sort of inherently ambiguous.

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I mean, in Mid-Continent, this court noted, you know, it noted that it said on page 1305, 1306, we finally note that commerce's problems are largely self-inflicted.

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Because in the past, commerce has given low priority to an approach that should receive the highest priority, providing coherent and consistent guidance to regulated parties.

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So here, you know, there is no guidance for, you know, commerce has not come up with any other guidance besides the continent guidance for evaluating mixed media products.

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Ms.

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Mohan, this is Judge Chenigan.

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Are you familiar with a federal register notice that came out last month where Commerce has proposed a new amendment and creating a K-3 set of criteria for media analysis?

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Yes, I am familiar with that.

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Okay, I just wanted to check.

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This is Judge Raina.

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I want to take us back to the language of the

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regulations that apply in this process, especially 351.225K2.

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Now, I understand that to say that when the above criteria, meaning the K1 criteria, are not dispositive, then the secretary will further consider the K2 factors.

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Now, I think that that's what the regulation says, and the way I understand this case,

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is that here there's nothing in the K1 factors that expressly address mixed media, so the K1 factors were not dispositive.

[00:10:32] Speaker 04:
That is correct.

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That is correct, yes.

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Okay, so I think here's where we come down to the rub.

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And so K1 is not dispositive.

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So does that mean that commerce must

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in accordance with its own regulation consider the K2 factors.

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That is correct and especially that was true in this case because Commerce did implicitly acknowledge that the order and the K1 factors were not enough here by initiating a formal scope ruling.

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It actually initiated the formal scope ruling under 351.225E which says

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that if the secretary finds that whether a product is included within the scope of the... It initiated the council, it initiated the scope ruling, but then commerce turned around and said it wasn't necessary to go beyond K-1.

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And it pointed to, well, first it started with the fact that of course, even you conceded that in the absence of the kit, these products would be within the scope of the order.

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And then it pointed to the fact that the original scope ruling

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specifically referenced products that can be used in WaterWorks applications, which is exactly the purpose of these kits, right?

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That is the purpose of those kits, but what the language that was included in the petition and the ITC's report was referred only to the steel threaded rod could be used for

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joint restraint kits or systems.

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It did not say that those joint restraint kits or systems that come in with a distinction.

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It didn't address whether those joint restraint kits or systems were within the scope of the order, just that it could be used for that purpose.

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So at a minimum, we think that the K-1 factors here were silent.

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And the fact that COBRS initiated formal scope ruling under that regulation 0.225E, although it did ultimately make its decision on K-1,

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There was an implicit acknowledgement by initiating that it couldn't do so because you go to K2 when it cannot be determined based solely on the application and the descriptions of the merchandise referred to in paragraph K1 of this section.

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So there's an implicit acknowledgement by initiating the case that you're supposed to go to K2 and that's particularly here where the prior published guidance, which is these prior scope rulings, all of them went to K2.

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So at a minimum we think, and also StarPipe presented evidence under the K2 factor.

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So under substantial evidence, the substantial evidence standard, Commerce should have looked at that evidence in making its determination.

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I see that I'm getting into my rebuttal.

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Do you want to say a few words before you sit down about your other issue?

[00:13:20] Speaker 04:
Yes, thank you very much.

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The other issue here is whether StarPipe's claims concerning retroactive assessment of duties

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are moot because the entries have liquidated.

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And very simply, they are not moot because these entries are live due to a prior disclosure that was filed in this case.

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Based on the regulations and the court's decisions on United Steel and Fasteners and in Suncreen, the law is very clear that if customs has not previously suspended liquidation, duties may only apply from the date of initiation.

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In this case, it's a matter of

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It's on the record and the government has acknowledged that the entries were never suspended.

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And as I just mentioned, Commerce did initiate a scope ruling in this case.

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What's your response to the government's argument that you waived at this point?

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So there was no waiver because this issue came up for the first time on oral argument at the trial court.

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It was an issue that the trial court decided to respond to.

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The government never briefed it.

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There was no briefing on this issue below.

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So it only came up, it's come up, the briefing has happened for the first time before this court because the trial court decided this on its own motion.

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But because of this prior disclosure, if StarPipe does not get a ruling on retroactivity by virtue of its prior disclosure, it's then facing this choice of whether to pay duties when it's not supposed to under the regulation and USS and SunCream, but then risking the benefit.

[00:15:05] Speaker 01:
Yes.

[00:15:06] Speaker 01:
I just want to make sure I understand your position.

[00:15:10] Speaker 01:
Are you saying that,

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If we were to entertain your argument and read the order as being limited to duties on all imports after the initiation of the scope and inquiry and the scope of the order doesn't cover pre-initiated imports, are you saying that at that point you would be relieved of having to worry about ever

[00:15:41] Speaker 01:
having customs come after you for duties on pre-initiation imports?

[00:15:47] Speaker 01:
Or wouldn't it be true that they still would have that option just as they would in any other situation in which, after a scope ruling, post-initiated imports are assigned duties?

[00:16:03] Speaker 04:
Yes, so post-initiation duties

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You know, if we lose on the merits, post-initiation duties would be subject to duties.

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But that issue here is whether the pre-initiation entries are subject to duties.

[00:16:20] Speaker 01:
Right.

[00:16:21] Speaker 01:
Did you understand my question?

[00:16:22] Speaker 01:
It was a little convoluted.

[00:16:24] Speaker 01:
Do you understand what I'm asking?

[00:16:26] Speaker 04:
I thought I did, but if you could restate it, I'm happy to make sure I'm... Okay.

[00:16:30] Speaker 01:
Yeah, okay.

[00:16:30] Speaker 01:
One more time.

[00:16:32] Speaker 01:
Let's say we give you what you want and read the order and say, of course the order.

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only relates to imports after the initiation of the scope and query.

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For purposes of what's going on here in this proceeding, in this appeal, we're only talking that order only goes to imports after the initiation.

[00:16:53] Speaker 01:
Okay?

[00:16:53] Speaker 01:
Okay.

[00:16:54] Speaker 01:
Are you saying then that if we were to do that interpretation, then you would never have to worry anymore about customs coming after you for

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duties for pre-initiated imports, pre-initiation imports?

[00:17:14] Speaker 04:
They would be barred somehow?

[00:17:17] Speaker 04:
Well, yes.

[00:17:18] Speaker 01:
Because I thought there was a statutory framework that gives customs the potential possibility, regardless of how we construe this particular order, to go after you for duties for pre-initiation imports.

[00:17:37] Speaker 04:
Well, I guess there could be a 592 action, I suppose, but because of L3, if we get a ruling on retroactivity here, there should be no duties as a matter of law on pre-initiation entries.

[00:17:56] Speaker 01:
Unless they do a 592 proceeding.

[00:18:00] Speaker 04:
No, I believe even in that case.

[00:18:04] Speaker 04:
L3 says, in this case, there was no suspension of liquidation.

[00:18:09] Speaker 04:
And under L3, under USNF, and under Suncream, because of the importance that those cases said regarding the notice that's needed to give to importers about whether their products are in scope, the duties really could only be effective prospectively after the date of initiation if we get a ruling on retroactivity here in our favor.

[00:18:38] Speaker 04:
Okay.

[00:18:40] Speaker 02:
Okay, Counselor, you're way past your time.

[00:18:43] Speaker 02:
I'll give you a minute and a half for rebuttal.

[00:18:45] Speaker 04:
Thank you very much.

[00:18:47] Speaker 02:
Okay.

[00:18:49] Speaker 02:
All right, Ms.

[00:18:49] Speaker 02:
McCarthy.

[00:18:51] Speaker 03:
Good morning.

[00:18:52] Speaker 03:
May it please the Court?

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If I could just start by clearing up some confusion and call a quay with Star Pipes Council.

[00:19:02] Speaker 03:
Just to be clear, Commerce's finding, which is in Joint Appendix, page 262,

[00:19:07] Speaker 03:
was clearly and ambiguously that the K-1 factors were dispositive.

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In 262, the department found a fact that because the department is able to make a determination based on Starpipe's application for scope ruling, the language of the scope of the order and the criteria set forth in 19 CFR 351.225 K-1, it is not necessary to examine the factors set forth in 19 CFR 351.225 K-2.

[00:19:37] Speaker 03:
And in our view, StarPipe has failed to establish that there's a lack of substantial evidence for commerce's finding that the K-1 factors were dispositive.

[00:19:49] Speaker 00:
Councilor, this is Judge Raina.

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Assuming that the K-1 factors were not found to be dispositive, then is commerce required to apply the K-2 factors at that point?

[00:20:02] Speaker 03:
Yes, under its regulation, Commerce, under a different set of facts, of course, that's not the set of facts we have here, but if Commerce were to have found that the K-1 factors were not dispositive, then under the regulation, it goes to K-2.

[00:20:16] Speaker 03:
And that is standard law.

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There are numerous cases in this circuit, in this court rather, holding that, you know, the standard application of Commerce's regulation.

[00:20:27] Speaker 03:
One of the points of dispute here is that

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Starpipe's position would be that this court admit continent nail, which was a decision issued in response to an appeal by us, by the government and by Target in that case, that the court somehow purported to rewrite the whole regulatory scheme and require a case to analysis in every instance.

[00:20:48] Speaker 03:
We do not, of course, I am not in any position to tell the court what it meant when it wrote the mid-continent nail decision.

[00:20:56] Speaker 03:
That is taking the unreasonable interpretation of the court guidance.

[00:21:01] Speaker 00:
Let's see if I understand this correctly because it seems to me that commerce did not find that the K-1 materials were expressly included or excluded mixed media items.

[00:21:14] Speaker 03:
I beg to differ, Your Honor.

[00:21:18] Speaker 00:
Again, within the mid-continent NAIL framework, and mid-continent was an unusual mixed media... The Commer seems to reach the point where it said that we've examined the K1 factors, and we still find that the order is silent as to inclusion or exclusion.

[00:21:35] Speaker 03:
Right, which is exactly the situation... I'm sorry.

[00:21:39] Speaker 00:
No, go ahead.

[00:21:40] Speaker 03:
That was exactly the situation in Mid-Continent Nail, which is why the court found... Okay, Mid-Continent Nail was an unusual, unlike Walgreen, in which Commerce applied a mixed media test and found that the subject merchandise was within scope.

[00:21:59] Speaker 00:
Now, in Walgreen... In Mid-Continent Nail... In Walgreen, they did find the K1 factors to be dispositive.

[00:22:06] Speaker 03:
Right, and provide it for inclusion.

[00:22:09] Speaker 03:
In mid-continent mail, mid-continent mail is a rare case in which commerce was using a mixed media analysis to remove, to exclude otherwise subject merchandise from the scope of the order.

[00:22:25] Speaker 03:
And the way commerce did that was by focusing on the toolkit rather than the nails themselves.

[00:22:30] Speaker 03:
And just as in here, there was no dispute in that case that the nails

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if imported alone would be subject to the scope of the order.

[00:22:39] Speaker 03:
Just as in this case, there's no question, there's no dispute that the still reddit thread, if imported on its own, would be within the scope of the order.

[00:22:47] Speaker 03:
And because the scope was silent as to mixed media, and because the K-1 factor, in this case, commerce relied on the

[00:22:56] Speaker 03:
on the ITC investigation showing that these components were used in a water work setting, that that alone established there was a presumption of inclusion, and that that presumption of inclusion applies.

[00:23:09] Speaker 03:
And if I could just go back to Starpipe's ever-shifting position, in its initial scope, in its initial scope-building request,

[00:23:21] Speaker 03:
On Appendix Page 54, Starpipe explicitly told Commerce that it regarded this court's decision in mid-continent mail to be wrongly decided.

[00:23:32] Speaker 03:
That's what it said on Appendix Page 54.

[00:23:35] Speaker 03:
It said that this court's decision was wrongly decided.

[00:23:39] Speaker 03:
And in fact, at Appendix Page 449, the Court of International Trade and Judge Barnett's practices to issue questions to counsel before

[00:23:49] Speaker 03:
oral argument.

[00:23:51] Speaker 03:
Question number five was, does Starpite still maintain that this court's decision in mid-continent, meaning your court's decision in mid-continent, is wrong?

[00:24:02] Speaker 03:
So, just to clarify, Starpite's original contention was that this court's decision was somehow not binding on the Court of National Trade, which is untenable.

[00:24:14] Speaker 03:
And so, by the time that it issued

[00:24:17] Speaker 03:
its comments in response to the initiation of the school, of the scope ruling inquiry, all of a sudden... Okay.

[00:24:27] Speaker 00:
All right.

[00:24:28] Speaker 00:
So, Council, let me ask you this question.

[00:24:32] Speaker 00:
So, in this case, a presumption that was reached was based on silence, right?

[00:24:37] Speaker 00:
I mean, basically... As in mid-continent now, yes.

[00:24:41] Speaker 03:
As in mid-continent now, yes.

[00:24:42] Speaker 00:
No, no.

[00:24:43] Speaker 00:
We're getting mid-continent.

[00:24:45] Speaker 00:
We arrived at a presumption because the K-1 factories were not dispositive, but yet they were silent as to inclusion.

[00:24:57] Speaker 03:
Your Honor, this is a negative inquiry.

[00:25:00] Speaker 03:
Again, I'm not reporting for that.

[00:25:02] Speaker 03:
The way we read this court's guidance in Mid-Condon was addressing a very real due process consideration that the court had identified with regard to notice to the importing community.

[00:25:15] Speaker 03:
The scope of the order in the continent now, as in this case, makes it very clear that these subject components are within the technical scope, and there's no dispute about that.

[00:25:24] Speaker 03:
And the K1 factors made it clear that these nails within a toolkit should be considered to be within scope.

[00:25:32] Speaker 03:
There's no exclusion.

[00:25:33] Speaker 03:
There's no reason.

[00:25:35] Speaker 03:
There's no notice to any importing, to anyone in the import community as to why these nails had to be thrown.

[00:25:43] Speaker 00:
There's no express exclusion, and there's no express inclusion.

[00:25:49] Speaker 03:
There's silence.

[00:25:50] Speaker 03:
No, there is an inclusion.

[00:25:52] Speaker 03:
Your Honor, OK, can I just back up, Your Honor?

[00:25:55] Speaker 03:
I'm sorry.

[00:25:57] Speaker 03:
Starpipe has no statutory rights for mixed media analysis.

[00:26:00] Speaker 03:
It has no regulatory rights for mixed media analysis.

[00:26:02] Speaker 03:
A mixed media analysis is something that commerce developed ad hoc as a way to improve the ministerability.

[00:26:10] Speaker 03:
Take, for instance,

[00:26:11] Speaker 03:
in the nail context.

[00:26:13] Speaker 03:
Those tiny little nails within the context of a toolkit were de minimis value and it was burdensome to impose anti-dumping duty orders

[00:26:22] Speaker 03:
on a diminutive amount of nails.

[00:26:25] Speaker 03:
And this court in Mid-Continent recognized the administrability concerns that commerce had.

[00:26:29] Speaker 03:
It said, it's too bad.

[00:26:31] Speaker 03:
You need to follow the law.

[00:26:32] Speaker 03:
You need to follow the plain language of your scope.

[00:26:34] Speaker 03:
And unless you can justify an exclusion here and overcome the presumption of inclusion, then you need to assess the duties on these nails.

[00:26:43] Speaker 03:
And that is how that litigation turned out.

[00:26:46] Speaker 00:
And this case is materially individual.

[00:26:50] Speaker 00:
Excuse me.

[00:26:51] Speaker 00:
Let me ask this to the government's position on this particular question.

[00:26:57] Speaker 00:
If the K-1 factors are not dispositive, is commerce required to undertake a K-2 inquiry?

[00:27:06] Speaker 03:
Yes.

[00:27:06] Speaker 03:
Under its regulation, if the K-1 factors are not dispositive, the commerce made a finding of fact that the K-1 factors are dispositive in this case.

[00:27:14] Speaker 00:
OK.

[00:27:15] Speaker 00:
So the answer is yes.

[00:27:18] Speaker 03:
Yes.

[00:27:19] Speaker 03:
It's another set of facts.

[00:27:20] Speaker 03:
I'm sorry to be so... No, I'm just asking... Yeah, no.

[00:27:27] Speaker 03:
I agree with you, Your Honor.

[00:27:28] Speaker 03:
The way the regulation operates, if the K-1 factors are not dispositive, then the regulation requires Commerce to consider the K-2 factors.

[00:27:37] Speaker 03:
But that is not what happens here.

[00:27:39] Speaker 00:
Commerce found that the K-1 factors should be... Is it necessary in order to consider the K-2 factors

[00:27:46] Speaker 00:
Is it necessary for there to be prior scope rulings that address K2 factors?

[00:27:55] Speaker 03:
Is it necessary in order for Commerce to do a K2 analysis?

[00:27:59] Speaker 03:
Yes.

[00:28:00] Speaker 00:
Is it just automatic?

[00:28:02] Speaker 00:
If K1 is not just positive, we move on to K2, or is there something in between there?

[00:28:11] Speaker 03:
Well, that's the normal operation, and not just mixed media cases, that all scope

[00:28:16] Speaker 03:
This court, as Your Honor may know, there's language in Meridian suggesting that this court has added a K-0, a step zero.

[00:28:29] Speaker 03:
There are three steps.

[00:28:30] Speaker 03:
The first, Congress, is to look at the scope of the order, the plain language of the scope of the order, and if that's dispositive

[00:28:38] Speaker 03:
then it moves to K-1.

[00:28:39] Speaker 03:
And then if K-1 isn't dispositive, then it moves to K-2.

[00:28:42] Speaker 03:
So that's the orderly operation of its regulation.

[00:28:46] Speaker 03:
But these mixed media cases are complicated here.

[00:28:50] Speaker 03:
And the late Judge Sakhal has really identified why I think it's an understatement to say they were very displeased with Congress's attempts to develop a mixed media test in MnConnetMail was because

[00:29:04] Speaker 03:
because he was concerned that depending on whether Commerce focused on the subject merchandise or whether they focused on the kit as a whole, it was outcome-determinant.

[00:29:15] Speaker 03:
So if Commerce decided to focus on the kit as a whole, it would be excluded every time.

[00:29:20] Speaker 03:
And he felt like there was no notice in the language of the order.

[00:29:23] Speaker 03:
There was no public notice that there was this sort of hidden exclusion

[00:29:30] Speaker 03:
embedded somewhere by looking at these factors.

[00:29:32] Speaker 03:
And that's why this court, we believe... Excuse me.

[00:29:38] Speaker 00:
It sounds to me that you read mid-continent as saying that anytime you have any silence, when you apply the K-1 factors, that that's dispositive.

[00:29:51] Speaker 03:
So, but I just want to be clear what we're talking about, a silence, we're talking about... Well, here the K-1 factors... The mixed media.

[00:30:00] Speaker 00:
Excuse me, the K-1 factors were found to be silent on mixed media.

[00:30:06] Speaker 03:
The K-1 factors were found to be... Yes, they were found on mixed media, which means that... They were found to be silent.

[00:30:13] Speaker 03:
The K-1 factors were... No, which means that... Your Honor, I'm sorry, I beg... I want to be very clear about this point.

[00:30:20] Speaker 03:
There's no question...

[00:30:21] Speaker 03:
that the steel reddish rod component of these joint reshapes are clearly within the scope of the ORT.

[00:30:29] Speaker 00:
No one is challenging that, and that's not what I'm asking.

[00:30:34] Speaker 00:
What I'm asking is that here, the K1 factors found that they're silent as to the mixed media.

[00:30:42] Speaker 03:
Which means that there's a presumption of inclusion.

[00:30:45] Speaker 00:
OK, so you agree.

[00:30:47] Speaker 00:
Do you agree, yes or no?

[00:30:48] Speaker 00:
Are the K1 factors silent as to mixed media?

[00:30:52] Speaker 03:
They do not mention mixed media specifically.

[00:30:56] Speaker 00:
The answer is yes, correct?

[00:31:00] Speaker 03:
They're silent in a dispositive way, yes.

[00:31:04] Speaker 00:
So that's my next question, and you've answered it.

[00:31:07] Speaker 00:
Anytime there's silence, you're saying that silence on mixed media, when you apply the K1 factors and you're silent on mixed media, that that silence is dispositiveness.

[00:31:19] Speaker 03:
Yes.

[00:31:19] Speaker 03:
I mean, the fact of the matter is... This is Judge Chen.

[00:31:27] Speaker 01:
Let me see if I can take a crack at this.

[00:31:32] Speaker 01:
In some ways, it feels like MidContinent uses K1 potentially twice in two different contexts.

[00:31:43] Speaker 01:
As I understood it, it first looked at the nails inside of that toolkit

[00:31:50] Speaker 01:
and tried to figure out were those, was there something ambiguous about the order as to those nails?

[00:31:57] Speaker 01:
And because the nails fit the description of the nails in the order, you know, under the standard look at the order, look at K1, there was nothing ambiguous and everyone agreed that the nails fell within the literal terms of the order.

[00:32:18] Speaker 01:
And then mid-continent does an interesting thing.

[00:32:20] Speaker 01:
So in the ordinary course of things, that would be the end of the inquiry, but for mixed media, mid-continent says, well, because it's part of this larger kit, let's also go back now to K1 and see if anything in that criteria, the petition, the investigation materials suggest that

[00:32:48] Speaker 01:
mixed media, nails inside of a mixed media set should be excluded.

[00:32:54] Speaker 01:
And then the answer to that question was no.

[00:32:57] Speaker 01:
And then Mid-Continent says, OK, so now there's a presumption.

[00:33:01] Speaker 01:
And the only way you can overcome the presumption is looking at published guidance that provides clear factors or a clear framework.

[00:33:15] Speaker 01:
And so it said, commerce, go back and see if there's anything you've got that shows pre-established clear guidance on how to deal with mixed media.

[00:33:26] Speaker 01:
I would overcome this presumption.

[00:33:28] Speaker 01:
Now, in a sense there, I guess what I'm trying to ask is, do you read Mid-Continent as kind of going back to K-1 and thinking about

[00:33:43] Speaker 01:
K1 a second time around for when it comes to mixed media?

[00:33:49] Speaker 03:
I think Your Honor has a point, and it could be looked at.

[00:33:54] Speaker 03:
But I want to be careful.

[00:33:56] Speaker 03:
I want to be clear, because I feel like I'm not being very clear, about the context of this.

[00:34:00] Speaker 03:
This was dispensation.

[00:34:02] Speaker 03:
Commerce had twice tried to use a mixed media test to exclude these nails from the scope of the order.

[00:34:09] Speaker 03:
And it was flatly rejected by Justice College twice.

[00:34:12] Speaker 03:
We appealed because Justice College said that Commerce didn't even have the authority to do this analysis at all.

[00:34:19] Speaker 03:
We succeeded on that issue.

[00:34:21] Speaker 03:
But then the court gave a special dispensation.

[00:34:23] Speaker 03:
It didn't require Commerce to do this because nothing requires Commerce to do a mixed media analysis.

[00:34:28] Speaker 03:
And the court said, you can look at this, you can look at that.

[00:34:32] Speaker 03:
You can look at the K-2 factors.

[00:34:34] Speaker 03:
On page 1305 of the continent, it says, we simply hope that commerce may attempt to develop such an interpretation using the sources we've identified.

[00:34:44] Speaker 03:
There's nothing mandatory about this.

[00:34:46] Speaker 03:
There's nothing that would require, there's simply no basis to say that there was some ironclad mandate that forced commerce to turn itself into a pretzel trying to divine a meaning from ad hoc rulings.

[00:35:01] Speaker 03:
by looking at K2 factors to create an exclusion for a subject merchandise that does not exist in the scope of the order.

[00:35:10] Speaker 03:
And at the very end, because counsel made a point of this, at the very end of 1305, this court chastised Commerce for not being clearer.

[00:35:22] Speaker 03:
And it says when you issue the orders upfront, you should be clearer.

[00:35:25] Speaker 03:
That's a very quite well-taken, but it was in the context of commerce trying repeatedly to exclude subject merchandise from the scope of the order through an immediate analysis.

[00:35:33] Speaker 01:
And the course is out.

[00:35:34] Speaker 01:
Ms.

[00:35:34] Speaker 01:
McCarthy, you're out of time, but I just really wanted to get quickly to the second issue of this case.

[00:35:39] Speaker 01:
Sure.

[00:35:41] Speaker 01:
Thank you.

[00:35:43] Speaker 01:
Is there any real debate here that the order doesn't include pre-initiation imports?

[00:35:52] Speaker 01:
I mean, don't you agree that the most reasonable reading and maybe the only reasonable reading is that it doesn't include pre-initiation imports?

[00:36:06] Speaker 03:
Yes, but no one's ever said that they have.

[00:36:08] Speaker 03:
From the time of the scope ruling, Starpipe asked Commerce for an advisory opinion that these would not be retroactively applied.

[00:36:20] Speaker 03:
There's nothing in the challenge liquidation instruction that in any way applies to these entries.

[00:36:26] Speaker 03:
The uncontested record of the facts in this case

[00:36:30] Speaker 03:
Appendix page 416 is that these entries were never suspended and therefore they were liquidated at zero rate.

[00:36:39] Speaker 03:
There's absolutely no harm for Starpipe here, which is why Judge Barnett properly declared the issue moot.

[00:36:48] Speaker 03:
And the notion that Starpipe had no idea that Judge Barnett had blindsided them, Judge Barnett raised the issue of the mootness issue

[00:36:56] Speaker 03:
On November 30th, 2018, where he asked the parties to identify the status of these entries and whether there was a mootness issue, the parties filed a joint status report in March of 2019.

[00:37:11] Speaker 03:
The court's questions explicitly raised the question of mootness on May 16th, 2019.

[00:37:17] Speaker 03:
And then there was an oral argument on May 22nd.

[00:37:20] Speaker 03:
2019, which was discussed at length.

[00:37:23] Speaker 03:
And then the CIT did not issue its decision until July.

[00:37:26] Speaker 03:
At no point, at no point during any, that's on.

[00:37:31] Speaker 01:
Ms.

[00:37:31] Speaker 01:
McCarthy, that's fine.

[00:37:32] Speaker 01:
I just wanted to clarify, because you didn't quite come out and say it in your red brief, that the government agrees that this order does not encompass and could not encompass pre-initiation imports.

[00:37:47] Speaker 01:
That's all.

[00:37:47] Speaker 03:
We've never said that.

[00:37:49] Speaker 03:
This is a, this is a, this is a, this is a non dispute.

[00:37:54] Speaker 03:
I can't, I'm hard to think of a case in which there's been less of an Article 3 case of controversy.

[00:38:00] Speaker 02:
Okay.

[00:38:00] Speaker 02:
Thank you, Ms.

[00:38:01] Speaker 02:
McCarthy.

[00:38:02] Speaker 02:
Ms.

[00:38:02] Speaker 02:
Mohan, given the fact that we allowed Ms.

[00:38:05] Speaker 02:
McCarthy to go over, I think at least as much as you did, I'll give you your full three minutes back.

[00:38:11] Speaker 04:
Thank you very much, Your Honor.

[00:38:13] Speaker 04:
Yes.

[00:38:13] Speaker 04:
Thank you very much, Your Honor.

[00:38:15] Speaker 04:
First, to rebut the points raised on the first argument regarding mid-continent.

[00:38:22] Speaker 04:
With regard to the government's argument that we said that mid-continent doesn't apply in our initial scope ruling, that is true.

[00:38:29] Speaker 04:
We made that statement in our initial scope ruling.

[00:38:32] Speaker 02:
Well, did you make the argument, Council, did you make the argument that mid-continent was wrongly decided?

[00:38:38] Speaker 04:
We made that statement, but we used the analytical framework in Mid-Continent, even in that initial scope ruling.

[00:38:44] Speaker 04:
And then when Commerce initiated the scope ruling, we dropped that position.

[00:38:48] Speaker 04:
And since that time, from the beginning of the scope ruling through the trial court's decisions and even before this court, we have followed the guidance and have agreed that Mid-Continent is the correct

[00:38:59] Speaker 02:
legal is binding and is a... Well, I don't understand in light of the decision in Mid-Continent how you can say that Mid-Continent mandates a K-2 analysis in every instance.

[00:39:16] Speaker 04:
So in this case, the framework of Mid-Continent... Well, first of all, unlike what the government said, Mid-Continent did not rewrite the regulatory framework.

[00:39:28] Speaker 04:
it used the existing K-1, K-2 regulatory framework and applied it to a mixed media case because it recognized that there was... Well, but you still didn't answer my question, counsel.

[00:39:36] Speaker 02:
My question is, I don't understand how you can read Mid-Continent to say that a K-2 analysis is required in every instance of a mixed media presentation or importation.

[00:39:53] Speaker 02:
It did not... Okay.

[00:39:55] Speaker 04:
Is that what your position is?

[00:39:56] Speaker 04:
That is our position.

[00:39:58] Speaker 04:
And what MidContinent did say is that commerce in applying the mixed media analysis needs to look at the prior published guidance.

[00:40:05] Speaker 04:
And the prior published guidance in this case, as cited in our scope request and in the brief, were these prior scope rulings in which in every one of those commerce went to K2.

[00:40:16] Speaker 04:
And in every single one of those commerce went to K2.

[00:40:19] Speaker 02:
So you're relying on the pencil cases.

[00:40:23] Speaker 04:
That's correct.

[00:40:25] Speaker 02:
In those cases, in every single instance... So your point is you agree that there was a presumption of inclusion based on the description of the product and even based on the description of the potential uses for that product, but you're saying you overcame that presumption because of the pencil cases.

[00:40:42] Speaker 02:
Is that right?

[00:40:44] Speaker 04:
not only because of the pencil cases, but we are saying that even if a presumption of inclusion has arisen because the K1 factors are silent and the order is silent, even under Midcontinent, when that presumption arises, you know, the government keeps kind of ending its analysis at that presumption, but that's not what Midcontinent said.

[00:41:01] Speaker 04:
Midcontinent said, okay, if there is a presumption, you can overcome it by the prior published guidance

[00:41:06] Speaker 04:
You can overcome it by looking at the K2 factors.

[00:41:08] Speaker 04:
You can overcome it looking at the HTS that was used.

[00:41:12] Speaker 04:
And we presented evidence under all of these that was not, that were not considered by commerce in its final decision memo.

[00:41:20] Speaker 04:
I'd also like to make this, may I make one just closing point regarding the second issue?

[00:41:27] Speaker 02:
Briefly, yes.

[00:41:29] Speaker 04:
Just very briefly, this is the opposite of an advisory issue.

[00:41:33] Speaker 04:
The fact that duties are not due on pre-initiation entries is settled.

[00:41:38] Speaker 04:
Duties both under the regulation and under SunPrem and USNF.

[00:41:44] Speaker 04:
And if we don't get a ruling on this issue in this case, then there is harm to StarPipe because it will either have to pay duties... Well, if it's settled, why do we have to address it?

[00:41:56] Speaker 04:
So the issue that needs to be addressed is whether this argument is moot because the entry is liquidated.

[00:42:02] Speaker 04:
And it is not moot.

[00:42:03] Speaker 04:
This is not an advisory opinion because there is a prior disclosure that has kept these entries live.

[00:42:08] Speaker 04:
And so AD duties are going to be due on those pre-initiation entries because we don't get rid of the issue.

[00:42:16] Speaker 02:
I understand.

[00:42:16] Speaker 02:
I understand.

[00:42:17] Speaker 02:
OK.

[00:42:17] Speaker 02:
Thank you very much, Your Honors.

[00:42:18] Speaker 02:
We need to move on.

[00:42:19] Speaker 04:
Thank you very much, Your Honors.

[00:42:22] Speaker 02:
OK.

[00:42:22] Speaker 02:
The case will be submitted.