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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, ladies and gentlemen.

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We have four cases on the calendar this morning.

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A case from the Court of International Trade, one from the PTAT, one from the Board of Contract Appeals, and one from the District Court.

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Great variety.

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Our first case is China Manufacturers Alliance versus United States, 20-1159.

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Mr. Toder.

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May it please the court.

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We respectfully request that the court reverse the Court of International Trade's decision that ordered the Department of Commerce to apply to the foreign producer Doublecoin, the rate that commerce had initially calculated based on Doublecoin's data.

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instead of the China-wide rate that commerce applied after DoubleCoin failed to establish its independence from Chinese government control.

[00:01:06] Speaker 01:
Mr. Turdor, as Judge Cleverger, I'd like to interrupt you if I could for just a second, basically an administrative law question.

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I'm looking at a joint appendage, page 177, which you must have in front of you.

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This is where the agency is responding to the challenge to its legal authority to a prerogative to DRC-wide rate in this case.

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Now it looks to me like the authority relied on is regulatory, basically the NMA regulation 351107B.

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Do you agree to that?

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Okay, so I'm looking at page 177 of the appendix.

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I see that there is a citation to that.

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It's the government's position in response to the challenge that there wasn't proper legal authority for the PRC rate.

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What I'm trying to do is it looks to me like the rationale that you're using there was the rationale that was invalidated in 2 and 1.

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Okay, so first we'll point to the citation to this court's SIGMA decision there in the Department of Commerce's explanation of authority where... Yes, I appreciate that.

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Secondarily... And the SUAN decision dealt with all that, as you know.

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Yes, and the SUAN decision, there were two decisions in SUAN Act.

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Uh, the court of international trade in this case relied upon the first case in doing and that found that commerce and not give an adequate explanation of the statutory basis under 1673 B C one B one upon remand in that case.

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Please continue your honor.

[00:03:04] Speaker 01:
Well, the problem I have, sir, is I feel in the same position.

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Judge Kelly was in when you first presented to them the argument that this was not

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a 351.107 rate but instead was a 1673D rate.

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What we were saying in Suwanan and what Commerce said in Suwanan upon remand and then was affirmed in Suwanan too as we discussed in our reply brief is that Commerce clarified that

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The 351.107 regulatory rate was a subset of individually investigated rate under 1673D C1D11.

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In this case, we asked for a remand, a voluntary remand from the court to apply the effect of this court's decision in diamond sawblades, but the court denied Commerce's remand request and

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instead ordered in position of the individually calculated rate in its second decision in this case.

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And so on and on, the Court of International Trade remanded for Commerce to give explanation on this issue.

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In this case, the Court didn't give Commerce a remand, so that's why that additional explanation does not appear in the record of this case.

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However, it is our position that it is an individually investigated rate

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And therefore... My point is just a pure administrative law question.

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It seems to me that what you were doing in this case through Ann hadn't happened yet.

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So you were relying on previous law where you had never asserted that it was a 1673 rate and that you're now asserting that in your reply brief.

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It seemed to me as if you were shifting ground.

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Uh, well, again, the context of that is that the court did not give commerce a remand, uh, either for explanation because, largely because we believe in the second opinion of the court.

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Right.

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And two and one invalidated, uh, that rationale and you didn't choose to appeal from that.

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It became a final judgment.

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Well, the court in two and one, uh, affirmed commerce's

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remand determination, which included the explanation that it was an individually investigated rate.

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And there was no appeal taken by either party after the remand and so on and on.

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So, so on and on, although it's a CIT decision, after remand affirmed Congress's reasoning for application of the countrywide rate as an individually investigated rate.

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And we think that the same rationale should apply here, although in this case... Is it your fair... You can't really be arguing that this notion that this is a subset of a 1673D rate.

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You can't argue that based on SIGMA or Transcom because 1673D was enacted after those cases.

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We would also, in our papers, rely upon Michael Storrs, AMS, Albemarle,

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Yang Tzu best pack in, I believe, at least one other case that was enacted after the enactment of the post-GATT version of the anti-drug statute in 1995.

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And in those cases, they speak... Thank you.

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I don't want to eat up any more of your argument.

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Thank you.

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And with respect to it being an individually investigated rate, as we said,

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The court did not order a remand as happened in Suanan for further clarification of that.

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It was our explanation that the court's reasoning was that the court concluded, although it found Suanan one persuasive, it found that as the basis of its holding, it's holding that because commerce not made an affirmative factual finding that there were other Chinese state-owned producers who made exports during the period of review is unnecessary for it to reach that question, although it

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called the statutory authority into question.

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And certainly, if the court were to look at that, we think the appropriate response would be either to affirm Congress's reasoning for the same reasons as ensuing on 2 or for remand for the same clarification given ensuing on 2.

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However, with respect to the basis for the court's opinion, with respect to the existence of other producers, to clarify the court and its previous question was referring to

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Congress's issues and decisions memorandum at page 177, as we noted in our brief at page 179, I believe, uh, commerce stated that there was no information in the record as to whether there were other producers who were state controlled, who made experts during the period of review.

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And therefore, because Council, this is Judge Lori.

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Isn't there just looking basically at the language, an inconsistency between a China-wide rate and an individually investigated rate?

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China-wide and individual seem to be opposites.

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First, Commerce gave the explanation and threw it on, which isn't in the record in this case for why it considered it to be an individually investigated rate.

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The basic reason was because Commerce applies the presumption of state control to all firms in a non-market economy, country, absence the rebuttal of that presumption, it investigated the entire state-owned entity

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as an individually investigated rate in the investigation and carry that rate forward to future reviews.

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So that's the basic explanation for why Commerce believed it to be an individually investigated rate.

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So it was not an individual investigation of a particular firm.

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In fact, Commerce found that Doublecoin's

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The data was part of the state-owned NDI and therefore incorporated into the state-owned RAKE for the purposes of this administrative review, but it did not review the entire scope of potential firms as it did in the investigation.

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In the investigation, Commerce sent out questionnaires, found, you know, that went to 94 different firms in which 36 didn't respond and therefore imposed the adverse China-wide rate in the investigation.

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Here, Congress didn't send out questionnaires to all those firms again.

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It's not obligated to in each successive review.

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And that's the factual distinction between this case and what the court was talking about in Diamond Sawblade, because in that case, it was the first administrative review, so they were reviewing all the firms that were investigated in the investigation over again.

[00:10:10] Speaker 01:
Dr. Turner or James Favringer again.

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In the administrative proceedings as well as in various court filings, you referred to having conditionally reviewed the PRC-wide entity.

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I don't understand what a conditional... I think in this proceeding, you said you conditionally reviewed the PRC-wide entity.

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Yes.

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What's a conditional review?

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Our understanding is it was similar to what happened in Diamond Sawblades, which is if there was a firm that was individually made a mandatory respondent that was found to be state controlled, Commerce incorporated that entity's data into its state-owned rate.

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And that procedure was discussed in Diamond Sawblades and was affirmed by this court.

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So the incorporation of the data is what the conditional review is?

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Right.

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So the initiation of the administrative reviews gave notice that the time-wide rate was under conditional review, meaning it could change based upon the results of data that was received during the review and gave opportunity to request a review of the entity as a whole.

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And no party requested a review of the entity as a whole, but commerce did make a change

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to the rate because it incorporated DoubleCoin's rate and averaged it with the pre-existing China-wide rate to come up with the 105% as opposed to 210% rate that it initially applied.

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What the court did in this case, the Court of International Trade did, was it said that the only state-owned China-wide rate that could conceivably be applied is based upon DoubleCoin's own data because commerce did not make an affirmative finding

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as to whether other state-controlled producers made exports during the period of review.

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We disagree with that because China Commerce was not under an obligation to reinvestigate the composition of the China-wide entity in each successive review.

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So that is our understanding what the condition means.

[00:12:28] Speaker 01:
My, my, my, my, my, Mr. Judge Clever, my take on your case, sir,

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was that if we're satisfied that there is sufficient proper legal authority for having promulgated the PRC-wide rate here, then diamond saw blades basically answered all the other questions.

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And that diamond saw blades can't be distinguished on the factual basis asserted by your adversaries.

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That is our understanding.

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And specifically with respect to diamond saw blades,

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The Court of International Trade and Doublecoin are arguing that, well, diamond saw blades, there was a finding that there were other state-owned producers during the period of review, and that distinguishes the case.

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That's the only distinguishing point that they could come up with.

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It would certainly be extremely unusual for diamond saw blades as well as all the other cases from Sigma forward that we cite to affirm commerce's imposition of rates for state-controlled

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entities with a statewide rate and all of a sudden discovered there is no authority to do so, that would certainly be extremely unusual and we don't think it's warranted.

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We think that the court in all of those cases understood the statutory basis for that and properly affirmed that.

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With respect to the factual distinction, we don't think that factual distinction will remain.

[00:13:54] Speaker 01:
Wait, wait, wait.

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You may be technical here.

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You've already admitted that.

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that because the statute was enacted after Sigma and TransCom, those cases aren't pertinent to your theory.

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Well, we don't think they... We think they are pertinent because... The statute that you rely on didn't exist at the time those cases were decided.

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Well, certainly Diamond Sawblades, for example, in 2017 cited, I believe, Sigma in the very footnote where it found that the Court of International Trade's first opinion in this case was not persuasive.

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So we think that certainly that the same reasoning does apply.

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And insofar as Sing and Transplant were enacted before the post-GATT changes to the statute, Michael Storrs, Diamond Sawblade, AMS, and the others were enacted afterwards.

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So we think that that is the court's position.

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And certainly the courts are disagreeing with the court's reasoning in the court's initial opinion in this case in Diamond Sawblade.

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Thank you, Council.

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We are well into the rebuttal time.

[00:15:01] Speaker 01:
Why don't we hear from the other side?

[00:15:05] Speaker 01:
Thank you, Your Honor.

[00:15:08] Speaker 01:
Mr. Durling.

[00:15:09] Speaker 00:
Yes, thank you, Your Honor.

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Can everyone hear me okay?

[00:15:13] Speaker 01:
Yes, we can.

[00:15:14] Speaker 01:
Please proceed.

[00:15:15] Speaker 00:
Great.

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May it please the court?

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At its core, this case is about whether there is any basis to conclude that the anti-dumping assessment rate applied to imports by CMA is in fact an individually investigated rate.

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the record of this case shows that it is not an investigated rate.

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Because the underlying anti-dumping order has been revoked, this case at this point only concerns the anti-dumping liability to be paid by a US importer, CMA, for specific import entries made during a specific review period.

[00:15:52] Speaker 01:
Now, Mr. Durley, aren't you in real trouble because of diamond saw blades, where we said,

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effective cooperation does not without more save it from a country-wide rate.

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And then in the footnote, we said this very case decision does not comply with our precedent.

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Your Honor, with all due respect, we don't think Diamond Saw Blades is a bar here.

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And let me explain why.

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When you wrote that footnote in Diamond Saw Blades, you were reacting to Judge Stan Seuss

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decision in CMA 1.

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And it's in CMA 2 that Judge Stansu very painstakingly goes through important distinctions between the record of that case and the record of this case.

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In particular, Judge Stansu stressed

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that in Diamond Saw Blades there were multiple, 21 other parts of the NME entity that were before the court, were part of the case, and for which there was no cooperation.

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And in fact, in footnote two of Diamond Saw Blades, this court took great pains to stress the presence of these 21 non-cooperating companies.

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So Judge Stansu noted the key difference in this case, which is that there were no other parts of the NME entity.

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The only part of the NME entity that was part of this review that had entries during this review period was the CMA imports from Doublecoin.

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And Judge Stansu took great pains to explain that Commerce had not directed any questions to the rest of the enemy entity.

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There was nothing at all.

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In fact, Judge Stansu also took great pains, and this is at page 33 of the flip-up version of his decision, he took great pains to note that in this case,

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In the decision memo in this case, at page 19, Commerce specifically found that there was no lack of cooperation from any of the other parts of the enemy entity.

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So you have a totally different factual record, and you have a totally new decision by Judge Stansu in CMA 2 that goes through systematically

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In a case where you have no lack of cooperation, he went through what record information was before commerce and what decision could be made about the assessment rate for these import entries given the information that was before commerce on this particular record.

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And he stressed, correctly, that given the statutory provision governing the use of facts available, Commerce's factual finding in this case that there was no lack of cooperation

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and no evidence in this case that there were even any other entities or entries at all.

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We don't know.

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Commerce makes a big deal in its reply brief about commerce isn't under any duty to investigate, but that kind of misses the point because at the end of the day, the question is what record information did commerce have for making its decision?

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We agree that commerce has discretion about how to frame its investigation.

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But commerce must then live with the consequences of its choices.

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Commerce cannot refuse to investigate whether there were any import entries by other parts of the NME entity.

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Commerce cannot refuse to seek any information from any other parts of the NME entity.

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Commerce can refuse to even seek to confirm whether in fact during this period of time there were

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Any other parts of the end of the entry.

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Instead, what we have here is commerce speculating reaching back almost a decade to old stale factual findings, which may or may not still be true.

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So no new investigation, no facts on the record here.

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Commerce then has to live with the consequences of having narrowly focused its investigation and has to make a decision that is consistent with the factual information that it actually did collect.

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Now this is particularly true in this case because in this case, the only entries we're talking about are those imported by CMA.

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The statute specifically requires commerce to determine an assessment rate, the dumping liability for these specific entries.

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That's 19 USC 1675 A1B.

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They have to determine the assessment for specific entries and what information do they have for making a determination about the proper dumping liability for these specific entries.

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It's not enough for commerce to mention in passing in its notice of initiation, mentioned in passing the NME entity.

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Indeed, it's commerce, both through its policies and how they were applied in this case, it's commerce that adopted policies to narrow its inquiries in administrative review to only those companies for which a review is requested,

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and for only those actual entries during the review period.

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There's no such thing as an unspecified portion of the NME entity in an administrative review like this case.

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The review can only happen, Your Honors, if there are actual import entries being made during the review period.

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And as Judge Stansu went through very systematically in CMA 2, with respect to this entity,

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imports by CMA from DoubleCoin, and these particular entries, the only information that Commerce had on the record that would comply with all of the statutory limitations is the information that Commerce collected and investigated and evaluated and verified for the CMA entries.

[00:22:47] Speaker 00:
So in our view, Judge Stansu was correct.

[00:22:50] Speaker 01:
Right.

[00:22:51] Speaker 01:
This is Judge Clovenger.

[00:22:53] Speaker 01:
The problem is that indeed an individually investigated rate was established for double coin CMA.

[00:23:01] Speaker 01:
But the problem is that CMA double coin is not possibly entitled to that rate because they failed to prove independence from the Chinese control.

[00:23:14] Speaker 01:
So we're just starting with that proposition.

[00:23:17] Speaker 01:
So your client is clearly not entitled to its 0.14 de minimis rating based on its individual investigation.

[00:23:28] Speaker 00:
No, no.

[00:23:28] Speaker 00:
Your Honor, if I could clarify, what Judge Stansu said was not that

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He was, he was imposing the individually investigated rate because CMA itself was cooperating and thus was entitled to the individually investigated rate.

[00:23:47] Speaker 00:
That wasn't Judge Stansu's premise at all.

[00:23:49] Speaker 00:
Judge Stansu correctly

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took this court's guidance from Diamond Sawblades and understood that he had to take a day given the failure to rebut the presumption and all of that.

[00:24:02] Speaker 00:
He basically said, okay, fine, failure to rebut the presumption on the fact of the case.

[00:24:09] Speaker 01:
I appreciate what you said.

[00:24:10] Speaker 01:
He basically, Judge Stansky was basically saying

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that he's not going to apply the PRC-wide rate to your client because your client cooperated.

[00:24:20] Speaker 01:
He thinks it's dirty pool to do an AFA rate on a cooperating party.

[00:24:27] Speaker 01:
Yeah, actually, Your Honor.

[00:24:28] Speaker 00:
And the problem, yeah, that's clearly what he was saying, right?

[00:24:32] Speaker 00:
Well, that's what he was saying in CMA 1, Your Honor, but that's not what he was saying in CMA 2, which is what's at issue here.

[00:24:41] Speaker 00:
In CMA2, he was not relying on the kind of unfairness of all of this.

[00:24:47] Speaker 00:
He took your guidance from Diamond Sawblades.

[00:24:50] Speaker 00:
Instead, he said, on this case, given the facts Commerce had in this case, what is a permissible PRC-wide rate?

[00:25:00] Speaker 00:
And he basically said, well, it can't be the carry-forward rate, because the carry-forward rate

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is hugely inflated by adverse facts available.

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And since commerce found in this case no lack of cooperation, it did not have a legal basis to impose an AFA rate

[00:25:24] Speaker 00:
for the PRC-wide entity, right?

[00:25:26] Speaker 00:
The whole premise behind the PRC-wide rate is this notion of failure of information, unspecified portions, missing information, lack of cooperation, basically a reason to impose

[00:25:41] Speaker 00:
the punitive rate, which in this case was more than 200% from the original investigation, a clearly punitive rate based on the lack of information, lack of cooperation.

[00:25:52] Speaker 00:
It was basically the petition alleged rate.

[00:25:55] Speaker 00:
It wasn't even based on anything involving any of the parties.

[00:25:58] Speaker 00:
So Judge Stansu said under the statute,

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Commerce is not allowed to use an AFA rate without some evidence that someone didn't cooperate.

[00:26:10] Speaker 00:
Someone failed to provide the information that had been requested, but in this case, there was no failure

[00:26:17] Speaker 00:
to provide information by any party, not by CMA, not by any other alleged parts of the NME entity, not by anyone.

[00:26:27] Speaker 00:
To the contrary, in this case, Commerce made a specific factual finding that all parts of the PRC-wide entity were, none of them were found to be non-cooperative.

[00:26:41] Speaker 00:
And that finding, commerce can't run away from that finding.

[00:26:45] Speaker 00:
Commerce tries to ignore the implication of that finding, but commerce can't run away from it.

[00:26:52] Speaker 00:
And that's the reason why Judge Stansu said you can't just pull forward this inflated adverse facts available rate.

[00:27:01] Speaker 00:
So we think this case can be decided based on the unique facts of this case.

[00:27:07] Speaker 00:
But, Your Honors, even if you were to find that you weren't persuaded by these fact-specific arguments, we would urge you to go back and address our other argument, which is the restriction on the ability to impose a third type of rate.

[00:27:26] Speaker 00:
Because with all due respect, we understand commerce's shift in position here.

[00:27:31] Speaker 00:
But in this case, commerce made an administrative determination that was grounded in its belief that it could impose this third rate.

[00:27:42] Speaker 00:
And in its briefing to Judge Stansu in the earlier stages of this case, it emphatically defended its right to impose a third extra statutory rate.

[00:27:56] Speaker 00:
We submit that it's not permissible under the statute, and the court should clarify that point.

[00:28:02] Speaker 00:
The judge should resolve this issue.

[00:28:04] Speaker 00:
I mean, the court should resolve this issue that is now being

[00:28:07] Speaker 00:
debated in case after case after case in the CIT and made clear that in every case, commerce has to make clear is the rate an investigated rate or an all others rate and most importantly, your honors, if it is an investigated rate, the facts have to show that an investigation actually took place and there has to be evidence on the record that the court can review

[00:28:35] Speaker 00:
in that particular proceeding that shows the investigation.

[00:28:41] Speaker 00:
For this case, the court doesn't need to address how much investigation is needed, because in this case, there was no investigation at all.

[00:28:51] Speaker 00:
And when there's no investigation at all, in our view, there cannot be an investigated rate.

[00:28:58] Speaker 00:
And in closing, Your Honors, that's the thought I would want to leave you with.

[00:29:02] Speaker 00:
In this case, the reason

[00:29:06] Speaker 00:
that this court should uphold Judge Stansu's decision and should not allow commerce to impose a punitive 100% dumping liability on these entries by CMA.

[00:29:20] Speaker 00:
The reason is that the uninvestigated parts of the NME entity in this case, they weren't part of this particular review.

[00:29:29] Speaker 00:
And your honors, these other entities, if they exist at all,

[00:29:34] Speaker 00:
can't answer questions that commerce never put to them.

[00:29:39] Speaker 00:
And that's the essential teaching of the statute and all of this court's decisions that apply the statute to limit commerce's discretion when using adverse facts available.

[00:29:51] Speaker 00:
Commerce has to ask questions, there has to be some refusal to answer the questions, and that is the predicate under the statute for imposing the punishment of an AFA rate.

[00:30:03] Speaker 00:
If there are no other questions from the court, I have concluded my argument.

[00:30:09] Speaker 01:
Thank you, Mr. Dirling.

[00:30:11] Speaker 01:
Mr. Todol, we'll give you your three minutes of rebuttal back.

[00:30:15] Speaker 02:
Thank you, Your Honor.

[00:30:19] Speaker 02:
With respect to investigation, there was an investigation.

[00:30:22] Speaker 02:
It was the original investigation where Commerce sent the questionnaires to the 94 firms.

[00:30:26] Speaker 02:
36 didn't respond.

[00:30:28] Speaker 02:
That was the reason for the

[00:30:30] Speaker 02:
adverse tax available rate from the investigation that was carried forward.

[00:30:34] Speaker 02:
That's the same procedure that this court affirmed in diamond saw blades.

[00:30:38] Speaker 02:
The only actual distinction that the Court of International Trade is relying upon, because this is a later review, Commerce did not go out and reinvestigate the composition of the PRC-wide rate in this particular review, but Commerce was not obligated to do so.

[00:30:54] Speaker 02:
There's nothing in the language individually investigated.

[00:30:58] Speaker 02:
in 1673 C1B1, one that would provide such a pointed instruction to commerce to go about it.

[00:31:07] Speaker 02:
This court noted in Diamond Sawblades and Albemarle in particular that although the statute does not specifically direct how commerce is to do investigations or reviews in the cases of non-market economy countries, nevertheless, it noted commerce's practice and has repeatedly affirmed commerce's application of that practice, including

[00:31:28] Speaker 02:
procedure that was followed in this case.

[00:31:31] Speaker 02:
Commerce did not make an affirmative finding that there were no other producers from the PRC during this period of review.

[00:31:36] Speaker 02:
Instead, as noted on page 179 of the record, it just said that there was no information as to sales and production from any other firms.

[00:31:47] Speaker 02:
Doublecoin argues that the lack of this reinvestigation means that Commerce would need to assume that there were no other such producers

[00:31:55] Speaker 02:
that the only state-controlled producer was DoubleCoin, but that's not how the review was conducted nor how it was required to be conducted.

[00:32:03] Speaker 02:
Commerce received specific requests for review for individual firms and then issued the request for those firms.

[00:32:13] Speaker 02:
DoubleCoin was chosen as a mandatory respondent, which is why its data was initially calculated but then not given its own rate because it did not rebut the presumption of state control.

[00:32:23] Speaker 02:
Nothing in the statute or regulations that the double coin is pointed to, or that the Court of International Trade pointed to, would compel Commerce to re-investigate the entirety of the PRC-wide entity in each successive review in order to be able to continue to apply the PRC-wide rate to firms that did not rebut the presumption of state control, the same procedure that this court affirmed in Diamond and

[00:32:54] Speaker 02:
For those reasons, we respectfully request that the court overturn the decision of the Court of International Trade and reinstate Congress's application of the 105% rate that it initially calculated for double coin using as the PRC wide rate.

[00:33:12] Speaker 02:
Thank you.

[00:33:13] Speaker 01:
Thank you.

[00:33:13] Speaker 01:
Thank you, counsel.

[00:33:14] Speaker 01:
We appreciate both arguments.

[00:33:16] Speaker 01:
The case is submitted.