[00:00:00] Speaker 01: We are ready to proceed. [00:00:05] Speaker 01: Before I start the clock, though, Ms. [00:00:07] Speaker 01: Toholy, I don't know if you've heard my comments to prior counsel, but you've reserved five at the end. [00:00:17] Speaker 01: I'll interject if I hear the tone to just remind you. [00:00:24] Speaker 01: Between the government and New Corps, of course, you can split it up any way you want, but at the end of 15, you'll have to wrap up. [00:00:31] Speaker 01: Everybody clear? [00:00:34] Speaker 03: Yes, Your Honor. [00:00:35] Speaker 03: Thank you. [00:00:36] Speaker 01: Yes, Your Honor. [00:00:37] Speaker 01: Okay. [00:00:38] Speaker 03: Yes, Your Honor. [00:00:39] Speaker 01: Okay, swell. [00:00:40] Speaker 01: Ms. [00:00:41] Speaker 01: Doherty, let's get going. [00:00:43] Speaker 03: All right. [00:00:45] Speaker 03: Good morning, and may it please the court? [00:00:48] Speaker 03: This case is about whether Commerce's decision to resort to total adverse facts available [00:00:54] Speaker 03: A tool normally reserved for uncooperative respondents was a reasonable response to DSRO's inadvertent, fully corrected mistake. [00:01:03] Speaker 01: Ms. [00:01:04] Speaker 01: Duhaly, let's start right there. [00:01:07] Speaker 01: This is Judge Wallach. [00:01:11] Speaker 01: When DSRO submitted its revised cost database to Commerce, it characterized the changes as minor corrections. [00:01:22] Speaker 01: Nucor argues that an experienced respondent in anti-dumping proceedings, like DeSero knows, is well aware that the phrase minor corrections is a term of art, and that commerce has explained that they're not minor when they impact a large quantity of sales or have a significant impact on the margin. [00:01:45] Speaker 01: Do you agree minor correction is a term of art applicable here? [00:01:49] Speaker 03: No, Your Honor, we don't believe that the term minor correction, as New Court refers to it, is a term of art that's applicable in these circumstances. [00:01:59] Speaker 03: Minor correction is only a term of art in the narrow context of verification proceedings. [00:02:06] Speaker 01: Oh, really? [00:02:06] Speaker 01: And all of the... Is it your position... Yeah. [00:02:09] Speaker 01: Wait, wait, wait. [00:02:11] Speaker 01: It's your position that it's only applicable to on-site verification. [00:02:15] Speaker 01: Can you cite anything to support that? [00:02:20] Speaker 03: Well, the cases that Nucor refers this court to in its brief are all commerce decisions that relate to verification. [00:02:30] Speaker 03: So during an onsite verification, commerce personnel visit a... Wait, wait, wait. [00:02:38] Speaker 01: I didn't ask you what they cite. [00:02:42] Speaker 01: Has commerce ever drawn... Obviously, you're not going to cite me to anything. [00:02:46] Speaker 01: Has commerce ever drawn this distinction? [00:02:49] Speaker 01: between verification and unsolicited supplemental questionnaire responses? [00:02:57] Speaker 03: Commerce, no, they haven't specifically drawn this distinction, but it would make no sense for Commerce to apply. [00:03:05] Speaker 01: Is there a substantive difference between the two contexts? [00:03:11] Speaker 03: Yes, there is. [00:03:12] Speaker 03: So during the verification proceeding, Commerce has completed [00:03:17] Speaker 03: its fact-gathering phase of the review, and they're just looking to confirm that the data that respondent previously provided is accurate and as respondent says it is. [00:03:31] Speaker 03: So in that context, no new factual information. [00:03:36] Speaker 01: Ms. [00:03:37] Speaker 01: Dolly, that's not true. [00:03:38] Speaker 01: They haven't completed their fact-gathering. [00:03:42] Speaker 01: They can continue to gather facts. [00:03:44] Speaker 01: Is that not correct? [00:03:46] Speaker 03: Well, they can't accept new factual information is what I meant. [00:03:53] Speaker 03: So the question of whether or not something is a minor correction in the context of a verification relates to whether or not that information rises to the level of new factual information. [00:04:09] Speaker 01: Well, hang on then. [00:04:10] Speaker 01: Is it fair to characterize the changes in DSRO's [00:04:15] Speaker 01: substantially revised cost database as minor corrections? [00:04:21] Speaker 03: Yes. [00:04:22] Speaker 03: So DSRO, when it used the term minor correction, was referring to the nature of the error and what it had to do to correct its mistake. [00:04:34] Speaker 00: So to be clear. [00:04:39] Speaker 03: Right. [00:04:39] Speaker 03: But the total universe of costs [00:04:42] Speaker 03: that DSRO reported didn't change between the initial data set and the revised data set. [00:04:49] Speaker 03: The only thing that changed was the allocation of one specific type of cost, the steel scrap cost, to particular condom numbers. [00:04:58] Speaker 03: So in light of that, yes, DSRO reasonably believed that that was a minor correction. [00:05:04] Speaker 01: On page 37 of its red brief, [00:05:09] Speaker 01: New Court notes that before Commerce, were you DSROS counsel there? [00:05:19] Speaker 03: No, Your Honor, I was not DSROS counsel before Commerce. [00:05:23] Speaker 01: It notes that DSROS acknowledged that it did not initially provide Commerce with a complete explanation and that the one-sentence statement accompanying its substantial revisions to its cost databases, I'm quoting, [00:05:39] Speaker 01: was a more general answer or explanation. [00:05:43] Speaker 01: You didn't mention that concession in your brief. [00:05:47] Speaker 01: Why not? [00:05:50] Speaker 03: Yes. [00:05:51] Speaker 03: So if you look at the context of that statement, DSR's former counsel did not concede that DSR did not provide a complete explanation. [00:06:02] Speaker 03: Specifically, if you look at the transcript from that hearing, and I'm referring to appendix pages 5553 and 5554, it's clear that counsel's statement was a response to Nucor's arguments immediately prior that the July 2016 correction was unexplained. [00:06:24] Speaker 03: So DSRO's counsel at the time clarified that the initial submission in July 2016 [00:06:31] Speaker 03: was not entirely unexplained, but rather that that initial explanation was more general and that the additional explanation in the post-preliminary submission was, quote, complete. [00:06:45] Speaker 03: So in that context, it's clear that the term complete wasn't a concession that the initial response had been incomplete. [00:06:54] Speaker 03: It was used as a synonym for more details in that case. [00:07:00] Speaker 01: Okay. [00:07:01] Speaker 01: On page seven of its red brief, Nucor states that, quote, while you recognized that your revised cost database was unsupported by contemporaneous business documents and reconciliations, you chose instead to rely on the, quote, one-sentence explanation in your first supplemental questionnaire. [00:07:26] Speaker 01: Did you ever provide any contemporaneous business documents or reconciliations [00:07:31] Speaker 01: to support or explain your revised cost database and where are they in the record? [00:07:37] Speaker 03: So what DSRO provided was responsive to exactly what Commerce asked. [00:07:45] Speaker 03: And again, in the post-preliminary phase, Commerce asked DSRO for the first time to explain specifically why the cost associated with a particular condom number had changed [00:08:00] Speaker 03: and to provide a so-called CONUM cost buildup. [00:08:04] Speaker 03: So yes, DSR did provide that CONUM cost buildup, which linked the cost of that particular product code, that CONUM, back to its revised data set. [00:08:17] Speaker 03: And so that buildup, in other words, indicated that all of DSR's product-specific costs could be traced back to its Section D data set. [00:08:30] Speaker 01: On page five of the gray brief, you say that the record quote illustrates only the DSRO made an error in its cost database, voluntarily submitted a corrected database, and subsequently provided a full explanation of the nature of the corrections, as well as other supporting evidence, supporting information requested by commerce. [00:08:55] Speaker 01: How were DSRO's actions voluntary? [00:08:58] Speaker 01: when it didn't offer any meaningful explanation of its revised cost database until after Nucor brought the revisions to Commerce's attention? [00:09:10] Speaker 03: DSRO's actions were voluntary in the sense that Commerce has not provided any sort of guidance for when parties are supposed to submit corrections if they find them and how the parties are supposed to make those corrections. [00:09:28] Speaker 03: DSR in this case proactively... I'm sorry, Your Honor. [00:09:36] Speaker 01: I said, of course it is provided guidance. [00:09:38] Speaker 01: There are points at which you can no longer provide corrections. [00:09:44] Speaker 03: Yes, that's correct. [00:09:46] Speaker 03: But that has to do with how close the corrections are to the deadline for the preliminary results. [00:09:55] Speaker 03: In this case, DSRO's revisions were submitted months in advance of the preliminary results stage, and they were corrections to its own initial submissions. [00:10:06] Speaker 03: So DSRO, it acted proactively, and it took the initiative here to, as soon as it recognized this mistake, to correct the mistake and to provide commerce with all of the information that it needed [00:10:23] Speaker 03: to not only calculate DSRO's dumping margin, but if it wanted to, to review the significance of the revisions. [00:10:31] Speaker 03: So DSRO provided, for example, a list of the specific data fields that had changed so that Commerce could verify exactly what the revisions were. [00:10:42] Speaker 03: And Commerce, of course, had the initial cost database. [00:10:47] Speaker 01: Council, on page 30, I'm going to continue with this question. [00:10:53] Speaker 01: of its brief. [00:10:55] Speaker 01: The government asserts your argument that it was contrary to law for commerce to resort to facts available because the revised cost database was usable is waived because it was only raised before the CIT in a perfunctory manner. [00:11:13] Speaker 01: Where did you argue this point before the CIT in the record? [00:11:19] Speaker 03: So on that point I would [00:11:22] Speaker 03: I would direct this court to Diazaro's opening brief before the CIT. [00:11:32] Speaker 01: Yeah. [00:11:33] Speaker 01: Give me a page. [00:11:39] Speaker 03: Yes. [00:11:39] Speaker 03: One moment, Your Honor. [00:11:58] Speaker 03: So if we turn, it's at the very end of the appendix. [00:12:24] Speaker 01: Just give me a page size and we'll look at it. [00:12:27] Speaker 03: Okay. [00:12:31] Speaker 01: You want to do that in what responsive time you have left? [00:12:37] Speaker 03: Yes, Your Honor, of course. [00:12:39] Speaker 03: I'm happy to address this fully in the rebuttal phase. [00:12:43] Speaker 01: OK. [00:12:45] Speaker 01: I'm going to ask my brethren if they have any questions. [00:12:49] Speaker 01: Since this is the last case, we can be a little lax. [00:12:55] Speaker 03: No. [00:12:58] Speaker 01: OK. [00:12:59] Speaker 01: Then let's hear from the government. [00:13:04] Speaker 02: Thank you, Your Honor. [00:13:06] Speaker 02: On behalf of the United States, Commerce's determination to apply total adverse facts available here is supported by substantial evidence. [00:13:14] Speaker 02: The initial questionnaire from Commerce specifically asked the parties to provide their actual costs, and it also said that if the party did not track actual costs, it asked for a series of databases and information describing the way that the company actually tracked their costs. [00:13:31] Speaker 02: In response to that questionnaire, in February of 2016, DeSero stated on no fewer than four occasions in that questionnaire response that the cost database it was submitting were based on actual costs. [00:13:42] Speaker 02: And for the court's reference, that's appendix page 117, appendix page 148, appendix page 149, and appendix page 150. [00:13:50] Speaker 02: And in addition to indicating that it was providing actual costs, in response to the question about cost variances, if you don't track actual costs, [00:13:59] Speaker 02: Dicero responded, there is no need for us to answer this question. [00:14:02] Speaker 02: We are providing you actual costs. [00:14:04] Speaker 02: It wasn't until July of 2016, so several months later, that Dicero provided the updated cost of production database. [00:14:12] Speaker 02: The only explanation that Dicero accompanied with that database, as the court has noted, was three sentences, essentially saying that these are minor corrections made to the sales and cost database, and then two sentences saying we've corrected the assignment of steel scraps, [00:14:26] Speaker 02: and a statement about the fields that were impacted by this. [00:14:30] Speaker 02: That was the entirety of the response from DeSero. [00:14:34] Speaker 02: I think it bears noting that in response to another supplemental questionnaire, again, not specifically about this cost database, but something unrelated, DeSero in September of 2016 noted that Nucor had flagged the distinct differences between the two databases that had been submitted. [00:14:49] Speaker 02: and acknowledged that New Court's argument that they had failed to explain the scope of the differences. [00:14:55] Speaker 02: And in their response, essentially say, to the contrary, we did respond and then repeated just those same two sentences again. [00:15:03] Speaker 02: And that appears on Appendix Page 5501. [00:15:07] Speaker 02: Commerce issued a post-preliminary supplemental questionnaire right after the preliminary determination was issued in November of 2016. [00:15:15] Speaker 02: Then the response from DeSero was received on November 25th of that year, and there for the very first time, a full nine months after it had submitted its initial cost of production database, DeSero indicated that that initial database, notwithstanding the repeated statements that it was based on actual costs, was in fact based on planned costs, and that the secondary database was the one that was based on actual costs. [00:15:40] Speaker 02: And I'm quoting specifically here from the questionnaire response received by DeSero saying, [00:15:45] Speaker 02: quote, in other words, steel scrap costs are now based on actual, not planned production. [00:15:49] Speaker 02: And that language is in the appendix at page 915. [00:15:53] Speaker 02: Based on this information, Commerce determined that the cost of production database and the cost and value database could not be used. [00:15:59] Speaker 02: Contrary to the assertions made by DeSero in its opening and reply brief, [00:16:03] Speaker 02: Commerce's determination not to accept, not to use the information was not because it was deemed to be untimely, the database was submitted in July, but rather it was because once the actual scope of difference between the two databases was revealed for the very first time by DeSero, a full nine months after it had been received, Commerce determined that it could no longer rely on either of those databases and then made the second additional determination that DeSero by virtue of [00:16:31] Speaker 02: Evidently having at the very latest noticed the problems that this initial submission in July had failed to fully explain the difference between those until it had been given multiple opportunities to do so and then finally reveal them in November. [00:16:46] Speaker 02: And just to briefly touch on a couple points raised in Sarah's reply brief, there's an assertion that commerce, that the government and the trial court are relying on post-hoc statements of counsel as opposed to actual findings. [00:16:58] Speaker 02: made by Commerce with regard to a failure to actually cooperate and behave to the best of their ability. [00:17:05] Speaker 02: I would refer the court specifically to the IDM, which is in the appendix at page 1032 to 34, where Commerce did actually, in fact, make a specific finding that Cicero had, quote, significantly impeded the proceeding by failing to identify the scope of the initial error in the initial database and then not revealing the actual difference between the two databases until [00:17:26] Speaker 02: after the post preliminary had been issued. [00:17:32] Speaker 02: If there's no questions on that issue, I will briefly touch on the corroboration. [00:17:36] Speaker 02: So commerce selected in accordance with commerce's practice, it's selected from among the highest rates [00:17:46] Speaker 02: the highest rate alleged in the petition or in the highest weighted average calculated rate for any respondent in the investigation and selecting from adverse facts available. [00:17:54] Speaker 02: Here it's selected a 40% rate based on the petition in this matter. [00:17:59] Speaker 02: And this arrow was, and Commerce was given the opportunity to, on remand, to further substantiate the selection of this rate. [00:18:07] Speaker 02: And in the remand redetermination, Commerce placed significant information on the record underlying the rationality of its decision to use [00:18:15] Speaker 02: to use this information. [00:18:16] Speaker 02: Specifically, Commerce placed on the record... This is Judge Wallach. [00:18:24] Speaker 01: I do have a question for you. [00:18:26] Speaker 02: Certainly. [00:18:27] Speaker 01: Does Commerce use the term minor correction? [00:18:33] Speaker 02: They do, Your Honor. [00:18:35] Speaker 02: Yes. [00:18:35] Speaker 02: And Commerce did not necessarily make a finding with regard to it being a term of art or not. [00:18:41] Speaker 02: It is a term that is used in verification. [00:18:48] Speaker 02: It is also used in the context of responses. [00:18:51] Speaker 02: And again, Commerce did note the use of that term and found that it was part of the reason for applying [00:18:57] Speaker 02: not because it's a term of art that they had technically used incorrectly, but rather by explaining the updated database in July by just saying it's minor and providing two sentences explaining the differences. [00:19:11] Speaker 02: It had not allowed commerce to appreciate the scope of the changes and had not afforded commerce an opportunity to further dig into the changes between the databases. [00:19:21] Speaker 02: Okay. [00:19:22] Speaker 02: But it is certainly a term commerce uses. [00:19:24] Speaker 01: Thank you. [00:19:26] Speaker 02: And so with regard to the corroboration, Commerce placed all of the information from the petition on the record. [00:19:32] Speaker 02: In addition, Commerce placed a memorandum to file where talking about how Commerce had interviewed the actual market researcher who had obtained the home market price quotes that were contained in the actual petition, in addition to ex parte memorandum to file in which Commerce is interrogating the information that had been placed on the record by the petitioner, discussing questions regarding affidavits and the foreign market research that was actually contained into supplement. [00:19:56] Speaker 02: In addition to all of this information that was placed on the record, Commerce also took a look at DeSero's transaction-specific margins from the immediately preceding review and determined that a non-insignificant portion of them were, and I can't use the number, unfortunately, Your Honor, because of CPI, but a non-insignificant portion of them were either at or significantly several times higher than the 40% rate that Commerce had determined. [00:20:25] Speaker 02: And this is in accordance with statute 1677-E, E2 specifically contemplates that the petition can be a source for adverse tax available rates. [00:20:35] Speaker 02: 1677-EC says the commerce must corroborate it, but says that it must be corroborated to the extent practicable. [00:20:41] Speaker 02: So we would submit that the corroboration that is placed on the record by commerce, in addition, the step of comparing the selected rate to the tarot's margin [00:20:51] Speaker 02: margins on specific transactions in the immediately proceeding review more than meets the requirements of the statute. [00:20:58] Speaker 02: Unless there are any questions from the panel, I will yield the remainder of my time and request that the court sustain the trial court's determination. [00:21:08] Speaker 02: Thank you. [00:21:10] Speaker 01: Thank you, counsel. [00:21:13] Speaker 01: Mr. Holt. [00:21:17] Speaker 00: Good morning, Your Honor. [00:21:19] Speaker 00: Good morning, Your Honor. [00:21:20] Speaker 00: May it please the Court? [00:21:21] Speaker 00: I'm Derek Holt on behalf of Newport Corporation. [00:21:25] Speaker 00: I would like to point the Court's attention to two issues related to Commerce's application of adverse emphasis. [00:21:33] Speaker 00: The first one is that while NEPA's best visibility standard does not require finding the motivation or intent, Commerce did find that DeSarro misrepresented and mischaracterized information that it provided to government agencies. [00:21:50] Speaker 00: And that's at the Appendix Page 1032 and 1033. [00:21:55] Speaker 00: So, you know, while DSRL attempted to downplay Commerce's actual findings, you have substantial evidence that DSRL misrepresented the magnitude of the changes made to its database and mischaracterized the changes made to its database as much. [00:22:14] Speaker 00: The second thing that I would like to point the Court's attention to is that [00:22:18] Speaker 00: there's substantial evidence that the adverse instances are warranted because DSRO wasn't forthcoming with this response. [00:22:29] Speaker 00: As the government explained, DSRO made substantial changes to the cost of the condom that comprised the overwhelming vast majority of its US sales. [00:22:42] Speaker 00: And the exact figures are confidential. [00:22:45] Speaker 00: But they're at new points briefed at page 28. [00:22:47] Speaker 00: When you look at those figures, you can see that the cost decline is significant. [00:22:55] Speaker 00: And it is undisputed that DSRO at all times knew the reason why it allocated a significant portion of its costs away from the condom in question. [00:23:08] Speaker 00: DSRO had at least two opportunities prior to the preliminary determination to explain why Congress made [00:23:15] Speaker 00: to explain to Congress why it made these changes, but chose not to do so. [00:23:21] Speaker 00: So if you want to look at whether DSR was forthcoming with its explanations, I say you don't have to look any further to DSR's former counsel who stated at Congress's hearing, when we explained the correction initially, we gave kind of a more general answer or explanation. [00:23:40] Speaker 00: What they had and what they said with those three sentences, [00:23:43] Speaker 00: was a general answer. [00:23:45] Speaker 00: It was not a full and a complete answer. [00:23:50] Speaker 00: Last thing I would just say is that substantial evidence shows that DSR was forthcoming, wasn't forthcoming with its explanation or why it made a change in the first place. [00:24:01] Speaker 00: And I'll ask the court to affirm Congress' determination and apply AFA and assign DSR a margin of 40.52%. [00:24:11] Speaker 00: Thank you. [00:24:13] Speaker 01: Thank you. [00:24:15] Speaker 01: And let's see. [00:24:19] Speaker 01: Mr. Hawley, you asked for rebuttal time, and I ate up all your time. [00:24:27] Speaker 01: So I'll give you a minute. [00:24:31] Speaker 03: Great. [00:24:32] Speaker 03: Thank you, Your Honor. [00:24:33] Speaker 03: And I did want to pick up and address a point regarding DSR's argument that because [00:24:42] Speaker 03: Because Commerce did use DSRS revisions in the preliminary results, it was obligated to explain why that data became unusable. [00:24:54] Speaker 03: And I do want to mention the statutory provision that creates this obligation for Commerce, and that is at 19 USC Section 1677M, Subsection D, [00:25:09] Speaker 03: And that requires Commerce, first of all, to promptly inform a person submitting a response with a deficiency as to the nature of the deficiency. [00:25:20] Speaker 03: But more importantly here, it instructs Commerce to, or in subsection E instructs Commerce that it shall not decline to consider information that's submitted as long as it meets [00:25:36] Speaker 03: certain applicable requirements, and one of those requirements is that the information can be used without undue difficulties. [00:25:43] Speaker 03: So to answer your question, if you look at DSRO's opening brief before the CIT, and this is at Appendix 5537 and 5538 specifically, it discusses [00:26:06] Speaker 03: It starts out by discussing, of course, that commerce found the specific reallocation of billet costs unreliable, but it doesn't really explain why that means that all of the data DSRO provided is unusable. [00:26:25] Speaker 03: And at the top of page 5538, DSRO argues, finally, given that commerce had no problem relying [00:26:35] Speaker 03: on the revisions to calculate a margin for the preliminary results, it is undisputed that the information may be used without undue difficulties. [00:26:44] Speaker 03: Commerce had no reason not to rely on this information and erred in refusing to do so. [00:26:49] Speaker 03: So what the government refers to as this usability argument is really related to Section 1677M and the requirement that [00:27:02] Speaker 03: Commerce consider information, even if there's some issues with it, provided the information cannot be used or can be used, I'm sorry, without undue difficulties. [00:27:18] Speaker 01: Yeah, is that it, Council? [00:27:21] Speaker 03: Yes. [00:27:22] Speaker 03: That's our argument. [00:27:23] Speaker 03: And again, it's a statutory argument. [00:27:25] Speaker 03: It's based in Commerce's obligations under 1677M. [00:27:31] Speaker 01: Okay. [00:27:32] Speaker 01: Thank you, Mr. Hawley. [00:27:34] Speaker 01: And I just comment as an aside that your argument reminds me of Prime Minister Churchill's naming in 1941, 1940 of Operation Wilfrid. [00:27:51] Speaker 01: You might look it up. [00:27:53] Speaker 01: It was named Wilfrid because it was so minor and inoffensive. [00:27:58] Speaker 01: That was a cartoon character who had those characteristics. [00:28:01] Speaker 01: Thank you. [00:28:01] Speaker 01: The matter will stand submitted. [00:28:04] Speaker 01: And that concludes cases for the day. [00:28:12] Speaker 02: The Honorable Court is adjourned until tomorrow morning at 10 a.m.