[00:00:00] Speaker 02:
Number 21, 10-09, Honda Electric against the United States.

[00:00:05] Speaker 02:
Mr. Kindler.

[00:00:07] Speaker 03:
Thank you, Your Honor.

[00:00:09] Speaker 03:
May it please the Court.

[00:00:10] Speaker 03:
Your Honors, this is a case about the Commerce Department simplistically refusing to verify information.

[00:00:17] Speaker 03:
Its entire decision and legal defense rests on the misplaced and conclusory determination that Hyundai's costs were unverifiable

[00:00:28] Speaker 03:
and thus that total adverse facts available or AFA was justified.

[00:00:34] Speaker 03:
It made this determination despite failing to point to any inaccuracy with Hyundai's costs that would make them unverifiable.

[00:00:43] Speaker 04:
Counselor, this is Judge Raina.

[00:00:46] Speaker 04:
Now it seems to me just based on the record that commerce gave Hyundai three different opportunities to provide the information it was seeking and that it was explicitly

[00:00:57] Speaker 04:
seeking information that was detailed enough for it to be able to perform its dump and margin calculations.

[00:01:06] Speaker 04:
And this was a project-specific and then cost-specific information it was seeking.

[00:01:14] Speaker 04:
And the information that EO provided was not project-specific or cost-specific.

[00:01:21] Speaker 04:
It was more general or aggregate information.

[00:01:26] Speaker 04:
So what's your response to that?

[00:01:30] Speaker 04:
You did get three different opportunities.

[00:01:32] Speaker 04:
I mean, if commerce is satisfied with the information you gain or where they should have been, any response to the initial questionnaire responsive, why would they have given you three more supplemental questionnaire seeking and reminding you that they needed more detailed information?

[00:01:49] Speaker 03:
Thank you, Jadrena, for that question.

[00:01:51] Speaker 03:
I have a few responses to that.

[00:01:53] Speaker 03:
First, with respect to the government's notion that there were three opportunities, and that refers to the initial questionnaire and then two subsequent supplemental questionnaires.

[00:02:03] Speaker 03:
We would respectfully contest that there were three opportunities.

[00:02:06] Speaker 03:
What these were were three successive requests, as Your Honor notes, each one requesting more information than the previous request.

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And in response to each of those requests,

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Hyundai provided the information that the Commerce Department requested.

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It provided the itemizations that it requested.

[00:02:24] Speaker 03:
It provided the part-specific and cost-specific tracing information that the Department requested.

[00:02:30] Speaker 03:
And I'll be happy to get into that in additional detail further in my argument.

[00:02:34] Speaker 04:
But the kind of top line issue here is that the Commerce Department... Did you actually provide the detailed cost information that Commerce is seeking?

[00:02:44] Speaker 03:
Yes, Your Honor, we did.

[00:02:46] Speaker 03:
And we would point the court to Attachment 2 SD1 in response to the second supplemental questionnaire.

[00:02:52] Speaker 03:
The description of that is an appendix 27,356, in which Hyundai described the six categories of costs accounting for the total adjustments, and then the worksheets and supporting materials starting at 27,369, which is the details of adjustment worksheet, and then 27,370, the details of shift of material worksheet,

[00:03:12] Speaker 03:
the last lines of which to the prior worksheet all reconciled and provided the project-specific itemizations.

[00:03:19] Speaker 03:
Your Honor can refer to the specific project numbers in those worksheets that show the itemizations and the cost training.

[00:03:26] Speaker 04:
OK, I see that.

[00:03:27] Speaker 04:
But in those very same supplemental questionnaires, they asked you to provide in detail how you're able to identify and quantify the costs that were misrecorded in your standard accounting

[00:03:41] Speaker 04:
procedures also asked the total breakdown of direct material cost by material type, not a project specific breakdown of direct material cost.

[00:03:55] Speaker 04:
Well, you know, no one is saying, I certainly don't believe that you didn't give any information or maybe even attempt to respond, but you didn't provide the information that commerce received.

[00:04:10] Speaker 03:
Well, your honor, I would point you then if you continue looking at attachment to SD one, you can see at appendix 27370 again there are specific part descriptions there with amounts with material code.

[00:04:22] Speaker 03:
And the shifted from and shifted to project and and it's our view that this is indeed responsive to commerce and request for the itemization for the details.

[00:04:31] Speaker 03:
to the degree that the Commerce Department raised additional issues in its final determination or the same government.

[00:04:38] Speaker 04:
Did you ever provide a complete cost breakdown for each reported home market in US Shell?

[00:04:46] Speaker 03:
I believe, yes, Your Honor, that we did.

[00:04:47] Speaker 03:
If you look at that, the sales were by project-specific costs, breakdowns by silicon steel and other materials, the six categories on the details of adjustment worksheets that you see at the top there,

[00:05:01] Speaker 03:
the silicon steel cost, the other material cost, material cost incurred after the year of COGS reconciliation, recalculated scrap, recalculated fixed overhead, and the total adjustment.

[00:05:13] Speaker 04:
And that is... You provided that information based on each distinct project?

[00:05:20] Speaker 03:
Yes, Your Honor.

[00:05:21] Speaker 04:
You'll see that on the last... It seems to me that the information you provided was just aggregate cost differences.

[00:05:28] Speaker 04:
You did not trace costs as it shifted from one project to another.

[00:05:34] Speaker 04:
And you almost acknowledge that in your responses.

[00:05:38] Speaker 03:
Well, if you look at the left-hand side of that table we're talking about, at appendix 27369, you'll see the transformer project number and then SEQ.

[00:05:47] Speaker 03:
That refers to each individual home market sale.

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And then on the subsequent worksheet, you've got the shifted from project and the shifted to project.

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So we would

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assert that we did provide for each project, for each sale, what it was shifted from and what it was shifted to.

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And then you've got the description of the individual parts there, as well as the cost categories.

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And this is, again, at 27369 to 27370.

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The main issue, however, we would assert, Your Honor, and all of Your Honors, is that the department took this information and then claimed that it was unverifiable.

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And that's the real issue here because both the issue of verifiability and the application of adverse facts available are subject to rigorous requirements which the Commerce Department disregarded and consequently violated.

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So turning first to the question of verifiability.

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Here, Commerce did schedule a verification yet canceled it at the last minute when announcing its preliminary results, claiming that Hyundai's costs were not verifiable.

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It then reiterated that in its final results.

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But that finding is untenable, because a finding of unverifiability is subject to the substantial evidence standard.

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And the Court of International Trade has held that, quote, refusal to subject certain factual information to a verification procedure is not the equivalent of a valid finding that such information cannot be verified under the statute.

[00:07:16] Speaker 03:
Rather, commerce must make an effort and reasonably show that the information cannot, in fact, be verified.

[00:07:23] Speaker 04:
And just to be clear here, verifiable doesn't mean... How can it do that if it believes that you did not respond to them and provide the information that they requested?

[00:07:35] Speaker 03:
By holding a verification, Your Honor, and that's exactly what Commerce didn't do here.

[00:07:39] Speaker 04:
I mean, why would they do that?

[00:07:41] Speaker 04:
If they're looking at the questionnaire responses and they do not contain the information that Commerce requested, why would they go and verify that?

[00:07:53] Speaker 03:
Well, that's where this case is so vexing, particularly when you compare it to the prior original investigation and second administrative review, in which commerce verified the exact same cost recording methods, both with respect to the cost reconciliation and with respect to Hyundai's part-specific cost tracing.

[00:08:13] Speaker 03:
There is no difference, even though there may be difference in the actual costs and actual facts, which Hyundai does not contest.

[00:08:20] Speaker 03:
There is no difference in the cost reporting methodology used by Hyundai and the documents that Hyundai provided on the record in those two prior... Wouldn't you agree that verification is basically a reconciliation process?

[00:08:36] Speaker 03:
In part, yes, Your Honor.

[00:08:37] Speaker 03:
It's a reconciliation and a spot checking process.

[00:08:40] Speaker 04:
Okay.

[00:08:40] Speaker 04:
How can you reconcile data if you don't have the data that

[00:08:45] Speaker 04:
that you requested or that you require in order to move on and undertake a dump and analysis?

[00:08:53] Speaker 03:
Because the Hyundai did submit the data in question.

[00:08:57] Speaker 03:
It submitted it here.

[00:08:58] Speaker 03:
It submitted in those prior reviews.

[00:09:00] Speaker 03:
And the documents that it provided gave a roadmap in terms of spot checking and reconciling, as your honor notes, that specific data.

[00:09:10] Speaker 03:
Here, the difference is that

[00:09:11] Speaker 03:
Commerce had more information than it had in any of those other prior reviews.

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It then disregarded it.

[00:09:17] Speaker 03:
It claimed that Hyundai did not submit what it asked for when, in fact, it had.

[00:09:21] Speaker 03:
And then it simplistically cast it all aside as being unverifiable, something that is subject to the substantial evidence standard and that Commerce must, in fact... To your argument, the thing that bothers me the most about what occurred here

[00:09:37] Speaker 04:
is Commerce's viewpoint of manipulation, that Hyundai was involved in some sort of scheme here.

[00:09:45] Speaker 04:
But Commerce does say that they basically that Hyundai was keeping two sets of books, one based for profit and the other one was your actual cost.

[00:09:57] Speaker 04:
Is that correct?

[00:10:00] Speaker 03:
Your Honor, yes, it is correct.

[00:10:01] Speaker 03:
What Hyundai engages in is a policy of shifting costs to and from projects to maintain profitability across projects.

[00:10:07] Speaker 03:
That has been the same in every administrative review and in the original investigation.

[00:10:13] Speaker 03:
The Department of Commerce verified that very system twice.

[00:10:16] Speaker 03:
There is no material difference between the system that Commerce previously verified and the system that Commerce claims is at issue here, and which, as Your Honor notes, they used the word manipulated over 20 times in the original decision.

[00:10:30] Speaker 03:
It's simply this casting aside, this deeming of unverifiability, which it has not demonstrated in fact.

[00:10:36] Speaker 03:
And indeed, it was the same Department of Commerce staff that verified Hyundai's cost information in the original investigation and in the POR 2 verification, yet suddenly in the fifth administrative review here in POR 5 said that it was unverifiable.

[00:10:54] Speaker 03:
There is nothing to account for that change aside from the Commerce Department's simple declaration, a conclusory declaration that Hyundai's costs were unverifiable.

[00:11:07] Speaker 03:
Thus, when we consider the significant evidence on record, the verification procedures that the Commerce Department was able to conduct in the original investigation and in POR 2, it is clear that the Commerce Department's declaration of unverifiability cannot stand.

[00:11:23] Speaker 03:
Likewise, this is the case with the Commerce Department's application of total AFA.

[00:11:28] Speaker 03:
Now, the cost reporting issues underlying Commerce's application of AFA are complex.

[00:11:33] Speaker 03:
and we have limited time to address them all.

[00:11:35] Speaker 03:
I'm going to focus on a few key issues and otherwise refer the court to pages 34 to 51 of our initial brief and 11 to 30 of our reply brief.

[00:11:43] Speaker 03:
First, with respect to the cost reconciliation, the Commerce Department claims that Hyundai did not break out the merchandise not under consideration or non-MUC into separate categories nor provide details of these categories.

[00:11:56] Speaker 03:
Both of these assertions are false.

[00:11:58] Speaker 03:
The record demonstrates that Hyundai broke out the costs from these non-MUC into nine distinct categories

[00:12:03] Speaker 03:
and provided the requisite details.

[00:12:05] Speaker 03:
To the degree the department wanted other details or different details, the onus was on it to make that clear in its deficiency notice.

[00:12:13] Speaker 03:
It did not do so.

[00:12:14] Speaker 03:
With respect to Hyundai's part-specific cost tracing, the department continued to insist and the government continues to insist before the court that Hyundai did not itemize and only provided sample information

[00:12:27] Speaker 03:
We discussed that earlier this morning, Your Honors, and we would point the court to our briefs in which we discussed how the sample the government claims is much more than that.

[00:12:37] Speaker 03:
And then finally, with respect to an adverse inference, this court has made clear that commerce may only apply an adverse inference in the circumstances in which it is reasonable for commerce to expect more forthcoming responses.

[00:12:49] Speaker 03:
Here, given the extensive and detailed explanations of worksheets, source materials, and two prior successful verifications

[00:12:57] Speaker 03:
covering identical cost reporting methodologies, it would be unreasonable to expect anything more forthcoming.

[00:13:04] Speaker 03:
Accordingly, the court should reverse and remand Congress's decision, and I yield the rest of my time to rebuttal.

[00:13:09] Speaker 03:
Thank you, Your Honors.

[00:13:11] Speaker 02:
Okay.

[00:13:12] Speaker 02:
Any more questions for counsel at the moment?

[00:13:16] Speaker 02:
All right.

[00:13:16] Speaker 02:
Thank you.

[00:13:18] Speaker 02:
We will hear from the government.

[00:13:22] Speaker 01:
Thank you, Your Honor.

[00:13:23] Speaker 01:
Thank you, Your Honor, and may it please the court.

[00:13:25] Speaker 01:
This court should affirm Commerce's determination to apply total adverse facts available to Hyundai because, as Judge Raina's questions indicated, Hyundai failed to respond to the questionnaires that Commerce asked.

[00:13:37] Speaker 01:
I think as an initial matter, we should talk just briefly about the manipulation of the books and records.

[00:13:41] Speaker 01:
As we noted on our brief, it is

[00:13:44] Speaker 01:
Hyundai's right to keep its books and records in the way it desires to.

[00:13:48] Speaker 01:
However, if it's going to engage in this process with commerce, it needs to be able to accurately point to the cost of production.

[00:13:55] Speaker 01:
It is not contested here that the actual books that the reported books and records of Hyundai cannot be relied upon by commerce.

[00:14:02] Speaker 02:
Well, let me ask you, let me interrupt you with this failed to respond.

[00:14:07] Speaker 02:
We say that the responses were extensive, and I gather it's not disputed.

[00:14:13] Speaker 02:
that they responded in at least as much detail and apparently more detail than in the prior reviews.

[00:14:22] Speaker 01:
And so where is the failure to response?

[00:14:31] Speaker 01:
several pages or several paragraphs dedicated to it, essentially saying that commerce is not required to rely on information just because it's accepted out of prior verification.

[00:14:41] Speaker 01:
Specifically to the court's question about failure to respond, I will just read the court some questions that were asked of Hyundai and the responses they provided.

[00:14:48] Speaker 01:
The initial questionnaire asked for per unit cost of production information for each condom.

[00:14:54] Speaker 01:
And, of course, in large power transformers like we're dealing with here, each control number would be an individual project, because these are complex and tailored projects.

[00:15:03] Speaker 01:
Provide worksheets reconciling the total cost per unit.

[00:15:07] Speaker 01:
Identify and quantify differences between reporting methodology and describe the level of product specificity.

[00:15:13] Speaker 01:
The responses that Commerce got, it determined, were not sufficient.

[00:15:16] Speaker 01:
And so in the first supplemental questionnaire, and this question appears on page 16748, it again asks,

[00:15:22] Speaker 01:
For each reported home market and U.S.

[00:15:25] Speaker 01:
sales, provide the total cost recorded in the SAP, which is the manipulated version of the book, the total cost recorded to the actual DOC department, and then an itemization of materials and related costs making up the difference.

[00:15:36] Speaker 01:
In response to that, Hyundai provided a yearly total direct cost breakdown, but not actually broken out by project number, by actual specific column number.

[00:15:45] Speaker 01:
They provided a monthly total direct cost number broken out by project number, but not actually broken out by material.

[00:15:52] Speaker 01:
And then they provided project specific costs for March 2016, which as noted in our brief, was not actually a period within the period of review.

[00:15:59] Speaker 01:
It was a month outside of the period of review where they did provide actual specific costs, direct material costs by project number.

[00:16:07] Speaker 01:
I'll note that direct materials are only one of six categories of costs that go into making a large power transformer, but there was some response there.

[00:16:14] Speaker 01:
Commerce made it very clear in its second questionnaire that it did not consider that to be responsive.

[00:16:19] Speaker 01:
Its second supplemental questionnaire

[00:16:21] Speaker 01:
specifically said, you did not provide a response to question nine, which is the question I was just quoting from, for each reported home market in U.S.

[00:16:29] Speaker 01:
sale, and it again requested that same information.

[00:16:31] Speaker 01:
And that question is specifically on appendix page 25049.

[00:16:35] Speaker 01:
And that is where we got the responses about this.

[00:16:40] Speaker 04:
Counselor, a couple of questions here.

[00:16:42] Speaker 04:
How does all this translate into manipulation and the statements that Commerce has that it just seems that Hyundai was involved in seeking to hide things from Commerce where, as you know, they may have a, their accounting system may be set up or it is set up in a certain way.

[00:17:04] Speaker 04:
They may have provided you answers to your questions.

[00:17:08] Speaker 04:
based on their accounting system.

[00:17:12] Speaker 04:
I don't know if the statute requires that a respondent provide the information exactly the way that commerce wants.

[00:17:26] Speaker 04:
It seems to me that the requirement is that they make an honest effort to provide the information that they do have

[00:17:35] Speaker 04:
and as much as possible in the type of setting that commerce seeks.

[00:17:44] Speaker 01:
Yes, Your Honor, that's absolutely true.

[00:17:45] Speaker 01:
But commerce also, as the court held in Nipon Steel in 2007, the statute does not condone inadequate record keeping.

[00:17:52] Speaker 01:
With regard to manipulation, commerce did not make an indetermination that there was any intent here or there was a desire of Hyundai to not fully report its costs.

[00:18:00] Speaker 01:
As the court knows, there is no requirement of a finding of intent in order to make a determination of adverse facts available.

[00:18:05] Speaker 01:
But commerce did not make a determination that the manipulation was improper in any way.

[00:18:09] Speaker 01:
And again, as we said in our brief, if Hyundai likes to keep their books in this way and likes to keep a more consistent profit across projects, that is completely their right.

[00:18:19] Speaker 04:
It's really hard to read commerce's determination and not walk away that commerce is accusing Hyundai of manipulating its data of intent.

[00:18:29] Speaker 04:
It acted with an intent to deceive you.

[00:18:31] Speaker 04:
And I kind of don't buy that.

[00:18:34] Speaker 01:
I don't necessarily believe that that was the determination made by Commerce.

[00:18:40] Speaker 01:
And again, Hyundai never argued that they did not, that the actual reported cost of production were, their actual like audited books and records were something that they could, that Commerce could rely on.

[00:18:52] Speaker 01:
And that's typically what, for example, a verification, Commerce would receive the audited books and records and all the information that it asked.

[00:18:59] Speaker 01:
And then Commerce plans its verification out.

[00:19:01] Speaker 01:
It determines which system it's going to check.

[00:19:03] Speaker 01:
It will do kind of a spot check where, for example, here, if they had given project-specific costs for 200 projects, let's say, Congress might select two or three of those out and ask to see the underlying... That's what verification is for.

[00:19:17] Speaker 04:
You go down and you verify the information they gave you against the questions you're asking.

[00:19:23] Speaker 04:
Right, Your Honor, but here... And that's where the answer comes out, whether there's been some sort of manipulation or not of data, you know?

[00:19:32] Speaker 04:
without commerce going down to

[00:19:45] Speaker 01:
those audited books and records that a typical company would typically indicate actually reflect their cost of production, Hyundai did not do that here.

[00:19:53] Speaker 01:
Again, there was not a finding that that was improper on Hyundai's part.

[00:19:56] Speaker 01:
It was just that Commerce could not rely on their audited books and records because Hyundai conceded that they internally shift costs among projects in order to keep this more consistent profit level.

[00:20:06] Speaker 01:
And so as Commerce noted, I'm here in the verification or in the IDM on page

[00:20:15] Speaker 01:
28307 of the IDM, it says, as outlined in detail, Hyundai's failure to provide crucial and fundamental data requested by commerce was the basis of our decision not to verify.

[00:20:25] Speaker 01:
Hyundai did not provide a complete explanation of how its actual cost could be derived from its distorted books and records, and therefore it could not verify that information.

[00:20:33] Speaker 01:
And that was the fundamental problem here, that Commerce never actually received an idea, a project-specific reconciliation that explained for, hypothetically, Project 123 reported cost of $1,000.

[00:20:48] Speaker 01:
Again, this is just a hypothetical example.

[00:20:51] Speaker 01:
That cost, where those costs were shifted to and from, what that cost

[00:20:55] Speaker 01:
if that cost actually represents the actual cost of production of that LPT, if there were costs shifted to or from that project, from another project, and where those costs all came from.

[00:21:04] Speaker 01:
That was the information that Commerce was asking from Hyundai, and that was the project-specific reconciliation that it never received.

[00:21:10] Speaker 04:
And with regard to other categories of costs, for example, the... When you have a situation where Commerce has a series of rolling questionnaires and asking for

[00:21:23] Speaker 04:
Maybe the same information but in a different way, a different format.

[00:21:28] Speaker 04:
And these are coming one after another.

[00:21:29] Speaker 04:
Then it butts up to verification.

[00:21:33] Speaker 04:
It seems to me that why don't you verify and try to reconcile the information that you do have that they have provided before you say that verification failed?

[00:21:49] Speaker 04:
Here you're taking the position that we don't even have to verify as opposed to we went down there, these books did not reconcile, the information was not at the degree of specificity that we sought and therefore they failed verification and therefore we're going to apply other facts.

[00:22:09] Speaker 01:
Yes, Your Honor, Commerce made the determination and we believe this determination is supported by substantial evidence that because of the wholesale failure of Hyundai to respond fully to the questions that Commerce had asked it,

[00:22:19] Speaker 01:
It did not have the information that it required on the record in order to conduct a verification.

[00:22:23] Speaker 01:
And with regards to this idea that Commerce had previously verified the information, as an initial matter, I think that's mildly misleading.

[00:22:30] Speaker 01:
Commerce did conduct verification in the third and fourth administrative review.

[00:22:34] Speaker 01:
But Hyundai was assigned total address facts available in both of those reviews.

[00:22:38] Speaker 01:
And so while Commerce did not make the affirmative determination to cancel that verification, it was not a finding that these books were perfectly fine and they can rely on everything.

[00:22:46] Speaker 01:
And those determinations were based on reporting of home marketing, U.S.

[00:22:49] Speaker 01:
sales, and various parts of production.

[00:22:52] Speaker 01:
And as Commerce also explained in the IBM and the cost memo, these are complicated projects.

[00:22:57] Speaker 01:
We are in a fifth administrative review here, so it's the sixth time Commerce is looking at it.

[00:23:00] Speaker 01:
And it came to understand during this round of responses in the narrative that it previously believed that the cost manipulation was segregated to certain parts of the books and therefore it would be much, certain parts of the books as reported could be verified or could be relied upon.

[00:23:15] Speaker 01:
Commerce came to understand in this firm, excuse me, in this

[00:23:20] Speaker 01:
administrative review that that was not accurate, that actually the entirety of the books cost to be shifted from any project and there was no portion of the individual books the commerce felt that it could rely on.

[00:23:34] Speaker 04:
That's a pretty major decision.

[00:23:35] Speaker 04:
Why did you make that decision in the context of verification?

[00:23:39] Speaker 04:
I mean that's what verification is for.

[00:23:42] Speaker 01:
Respectfully, Your Honor, Commerce does not use verification to figure out books and records for the first time.

[00:23:47] Speaker 01:
Parties provide books and records.

[00:23:49] Speaker 04:
I'm not saying that.

[00:23:51] Speaker 04:
I'm talking about reconciliation.

[00:23:54] Speaker 01:
Yes, but they never actually provided the reconciliation to begin with, Your Honor.

[00:23:58] Speaker 01:
And this would be something like the spreadsheet that, the details of Justin's spreadsheet that opposing counsel was asking the court to look at.

[00:24:04] Speaker 01:
Some of those dark material spreadsheets, Commerce actually did determine that that was the kind of information that it was asking for.

[00:24:10] Speaker 01:
direct material shifting, and it says, you know, project number 123, project number ABC, and they were shifted from, you know, project one to project two.

[00:24:19] Speaker 01:
That is the kind of reconciliation information that Congress would typically receive ahead of time and then verify when it gets, it never actually receives the reconciliation.

[00:24:28] Speaker 04:
or could not have commerce at verification requested and sought set down with them and say, okay, now give me a project by project breakdown.

[00:24:37] Speaker 04:
You've given me, we received your aggregated data here.

[00:24:41] Speaker 04:
This is verification.

[00:24:42] Speaker 04:
I want you now to break it down project by project.

[00:24:46] Speaker 01:
That's not the purpose of verification from commerce's perspective and we believe that's consistent with the statute and regulations.

[00:24:54] Speaker 01:
specifically 1677ME3 says that commerce is not required to consider information that is so incomplete that it cannot serve as the basis for reaching the applicable determination.

[00:25:04] Speaker 01:
And again, the books that were provided here were these cost of production that by Hyundai's own admission, and this is again not a finding of intent, but just uncontested facts on the record, the reported cost of production did not necessarily tie to the actual cost of production of these projects.

[00:25:20] Speaker 01:
And so because commerce has to totally disregard the records that it would normally rely on, it asked these series of questions, asking Hyundai to provide on a project by project basis, showing where the costs started, where the costs were transferred from, and marry all of that up for commerce so that it could see that reconciliation.

[00:25:38] Speaker 01:
Had it provided that full reconciliation, then commerce may have conducted, could have conducted potentially verification to say, okay, thank you, we received the verification, we received the cost reconciliation, we'd like to,

[00:25:49] Speaker 01:
see these three randomly sampled projects, and we'd like to see, you know, the documentation showing that that shift occurred.

[00:25:56] Speaker 01:
That's the way very quickly it would have occurred in this instance.

[00:25:59] Speaker 01:
And I see that my time is exhausted, and so unless there are any other questions from the court, we would ask that the court affirm Congress's determination to apply total AFA here.

[00:26:09] Speaker 02:
Anything else for Ms.

[00:26:10] Speaker 02:
Christian Yack?

[00:26:13] Speaker 02:
Oh, Ms.

[00:26:13] Speaker 02:
Brewer, you have a couple of minutes.

[00:26:15] Speaker 02:
Any new points you wish to raise?

[00:26:19] Speaker 00:
Thank you, Your Honor.

[00:26:19] Speaker 00:
Yes, may it please the court.

[00:26:21] Speaker 00:
The confidential record in this case undermines the arguments that Hyundai makes publicly, both in its brief and in particular its reply brief, as well as here today.

[00:26:30] Speaker 00:
Commerce issued a confidential cost memorandum as part of the final results that details the numerous reasons why Hyundai's arguments, particularly with respect to its reporting of itemized differences between the cost that it shifted, fail, and why the reported costs are unreconciled and unreliable.

[00:26:47] Speaker 00:
And it also demonstrates why there's such a disparity in the reported costs that verification was not possible.

[00:26:55] Speaker 00:
And most notably, Hyundai's briefs both before this court and the trial court largely ignored the specific findings that Commerce made in the confidential cost memorandum, which is the chief document that reflects the confidential information on the record that Commerce relied upon.

[00:27:10] Speaker 00:
And without discussing the actual confidential information in that memorandum,

[00:27:13] Speaker 00:
I'd like to just direct the court to two sections of that memo that Hyundai fails to address and that undermine its arguments.

[00:27:23] Speaker 00:
First, Hyundai claimed in its reply brief at pages 22 to 27 that with respect to silicon steel costs and other categories for which costs were shifted, that it provided processing reports and engineering documents to support its reported silicon steel costs.

[00:27:40] Speaker 00:
Yet, if you look at the pages of the Joint Appendix 28290 through 28292, there's an extensive discussion about this reporting.

[00:27:53] Speaker 00:
Commerce addresses these precise claims confidentially and explains why, in detail, Hyundai's reported silicon steel cost could not be reconciled or traced to the alleged supporting documentation about it provided.

[00:28:06] Speaker 00:
And to respond to Hyundai's point regarding verification, if you look at that confidential discussion, it's quite clear and Commerce discusses specifically why the reporting was so problematic that it could not conduct a verification and that verification was not an appropriate way to reconcile those disparate costs.

[00:28:26] Speaker 00:
Again, Hyundai does not address these detailed confidential findings.

[00:28:30] Speaker 00:
Second, for the other four categories for which Hyundai admitted shifting costs,

[00:28:34] Speaker 00:
which are included in the document at appendix page 27369 that we've been discussing.

[00:28:40] Speaker 00:
Again, in the confidential memorandum, Commerce addresses each of those categories one by one and explains why Hyundai's reported costs do not add up.

[00:28:50] Speaker 00:
Again, Hyundai sort of glosses over these arguments in its public brief, but it fails to address the confidential data and the confidential numbers that Commerce relied upon, which are very compelling.

[00:29:03] Speaker 00:
And again, even if you look at the public version of Hyundai's reported cost for these categories, Joint Appendix page 27369, it shows that Hyundai simply reported a recalculated or add back cost for these categories without any detailed demonstration of how those adjustments were calculated to reverse the initial shifting of costs with the exception of the single page that follows that Council for Hyundai pointed out.

[00:29:29] Speaker 00:
I appreciate the court's time today.

[00:29:31] Speaker 00:
I'm happy to answer any questions from the panel.

[00:29:35] Speaker 02:
Are there any questions for Ms.

[00:29:36] Speaker 02:
Brewer?

[00:29:38] Speaker 02:
All right, thank you.

[00:29:39] Speaker 02:
Mr. Kendler, you have rebuttal time.

[00:29:41] Speaker 03:
Thank you, Your Honor.

[00:29:44] Speaker 03:
Two quick points on rebuttal.

[00:29:45] Speaker 03:
First, the government has still failed to point to any evidence of inaccuracy or error in Hyundai's costs that would make them unverifiable.

[00:29:54] Speaker 03:
Its finding of unverifiability is based on the determination that Hyundai's costs were manipulated, a term that it used over 20 times in its determination, as many times in its brief before this court, and about half a dozen times I heard during the argument today.

[00:30:09] Speaker 03:
But the fact that Hyundai shifts costs between projects, which it has recognized to commerce time and again, is not at issue.

[00:30:17] Speaker 03:
And the nefarious undertones alleged by the government are not warranted.

[00:30:21] Speaker 03:
Hyundai's practice has been the same since the original investigation.

[00:30:24] Speaker 03:
The Commerce Department has repeatedly verified it.

[00:30:28] Speaker 03:
They've done so using the costs and documents provided by Hyundai over the course of those reviews at verification.

[00:30:35] Speaker 03:
There was more information on the record in this review than there was in the prior, the second administrative review or the original investigation.

[00:30:44] Speaker 04:
Councilor, weren't Commerce's request for data more specific and requesting more detail than in prior reviews?

[00:30:53] Speaker 03:
Yes, and we continue to maintain that Hyundai provided the requested detail to the degree that the department requested it.

[00:31:00] Speaker 03:
If, for example, as Ms.

[00:31:01] Speaker 03:
Brewer suggests, the government had made requests for other or more detailed information... Look at attachment 2SD-1.

[00:31:09] Speaker 04:
It's at Appendix 27367.

[00:31:11] Speaker 04:
Certainly.

[00:31:12] Speaker 03:
Okay, and this is... I'll give you one moment to just bring it up.

[00:31:18] Speaker 04:
Okay.

[00:31:24] Speaker 04:
This is in response to Commerce's request for more specific data.

[00:31:30] Speaker 03:
Yes, Your Honor.

[00:31:32] Speaker 04:
And wouldn't you agree that that attachment provides a specific cost shifting for single projects or single project?

[00:31:42] Speaker 03:
Yes, I would, Your Honor.

[00:31:43] Speaker 03:
There are project numbers on the left, quantities of LPPs, and so forth.

[00:31:47] Speaker 04:
And Commerce wanted and sought a project-by-project breakdown.

[00:31:53] Speaker 03:
Yes, and this is project-by-project.

[00:31:56] Speaker 04:
You're saying that the data that I'm looking at on this attachment is a project-by-project breakdown of the specific cost of cost shifting between the projects.

[00:32:07] Speaker 03:
Yes.

[00:32:09] Speaker 03:
May I proceed, Your Honor?

[00:32:10] Speaker 03:
Yes.

[00:32:10] Speaker 03:
Please proceed.

[00:32:12] Speaker 03:
Thank you, Judge Newman.

[00:32:13] Speaker 03:
You see on the left there, there's project number.

[00:32:16] Speaker 03:
So that is line-by-line, project-by-project.

[00:32:18] Speaker 03:
And then this is to be read in conjunction with the subsequent worksheet

[00:32:23] Speaker 03:
27,368, 369, and 370.

[00:32:25] Speaker 03:
And then thereafter, we have a bill of material that was provided voluntarily by Hyundai.

[00:32:33] Speaker 03:
And that's what the government continues to refer to as a sample.

[00:32:37] Speaker 03:
That's a mischaracterization.

[00:32:38] Speaker 03:
The government never requested this bill of material.

[00:32:41] Speaker 03:
Hyundai provided it voluntarily to expand upon the itemizations, the project-specific itemizations that were on the record, and indeed,

[00:32:50] Speaker 03:
there were bills of material already on the record covering 18 total large power transformers.

[00:32:56] Speaker 03:
And that's where the kind of fundamental problem with the government's argument is here and with the Commerce Department's determination is that there was more information on the record than in the previous two segments of the proceeding where the department successfully verified Hyundai's costs.

[00:33:11] Speaker 03:
It simply doesn't make sense that now, armed with more information than ever before,

[00:33:16] Speaker 03:
the department could suddenly wake up, the same department officials could suddenly wake up and say it was unverifiable.

[00:33:23] Speaker 03:
And indeed, that goes to Ms.

[00:33:24] Speaker 03:
Brewer's point, for example, where she discussed the silicon steel processing report.

[00:33:29] Speaker 03:
The verification reports from the prior two verifications that appendix 24,932 and 24,979, albeit that latter one is partially redacted, but they specifically show how at verification,

[00:33:43] Speaker 03:
The Commerce Department used the very same silicon steel processing reports that the confidential cost memorandum in this review suddenly and supposedly exposes all the problems for.

[00:33:55] Speaker 03:
That's the problem here.

[00:33:57] Speaker 03:
And this goes to my second point that I wanted to make on rebuttal.

[00:34:00] Speaker 03:
Commerce verified Hyundai's costs twice before using additional corroborative information collected at verification.

[00:34:07] Speaker 03:
Corroborative is the key point because the Commerce Department has a practice upheld by the courts

[00:34:13] Speaker 03:
that where new information is presented at verification, the Commerce Department will accept it where it corroborates, clarifies, or supports information already on the record.

[00:34:25] Speaker 03:
That's what Commerce did at the prior verifications, and it's what it could have done here as well.

[00:34:29] Speaker 04:
Well, that's all that's true, but that's not your problem.

[00:34:33] Speaker 04:
Your problem is that you haven't got to verification.

[00:34:36] Speaker 04:
And it could be that Commerce did wake up.

[00:34:39] Speaker 04:
after doing some reviews for a period of years, maybe they did wake up and say, hey, we need to look at this more closely and let's seek more detailed cost information.

[00:34:50] Speaker 04:
And that's what they did.

[00:34:54] Speaker 04:
And if that's the case, if it is, as you say, you know, the commerce woke up, if that's the case, then you should have woken up also and said, wait a minute, this case is being treated differently than prior reviews.

[00:35:07] Speaker 04:
They're asking for more data.

[00:35:09] Speaker 04:
They're asking for different data, more specific data.

[00:35:13] Speaker 04:
Something's afoot.

[00:35:15] Speaker 04:
But you didn't do that, which you like.

[00:35:19] Speaker 03:
Well, I would respectfully disagree, Your Honor.

[00:35:22] Speaker 03:
I would say we were awake and alert.

[00:35:24] Speaker 03:
We provided all the information requested.

[00:35:26] Speaker 03:
And the key point here is the verifiability, right?

[00:35:30] Speaker 03:
Because commerce, after we gave them everything that they requested,

[00:35:33] Speaker 03:
Commerce didn't say we've looked at this and we've determined for reasons one, two, and three that it is unverifiable.

[00:35:39] Speaker 03:
They canceled the verification.

[00:35:41] Speaker 03:
They refused to come to the verification that they'd done twice before with less information and successfully verified it.

[00:35:48] Speaker 03:
And then suddenly said it was unverifiable.

[00:35:52] Speaker 03:
That's where the inconsistency is.

[00:35:54] Speaker 03:
They had more information than ever before.

[00:35:56] Speaker 03:
We, again, we can test the view that we did not give them what was asked for.

[00:35:59] Speaker 03:
We gave them what was asked for and then some.

[00:36:02] Speaker 03:
And they looked at all of it, the same people who had verified it twice before, the same people looked at it and said, now, all of a sudden, it's unverifiable.

[00:36:12] Speaker 03:
And under the statute, the Court of International Trade has held that you cannot make that finding.

[00:36:17] Speaker 03:
A refusal to conduct verification is, quote, not the equivalent of a valid finding that such information cannot be verified under the statute.

[00:36:27] Speaker 03:
That's exactly what commerce did here.

[00:36:28] Speaker 03:
It refused to verify or engage with the submitted evidence.

[00:36:33] Speaker 03:
It made a conclusory declaration of unverifiability.

[00:36:37] Speaker 03:
And to be clear, the dictionary definition of unverifiable means incapable of being verified, incapable of demonstrating the accuracy or truth of something.

[00:36:46] Speaker 03:
We know, we know from the original investigation and from POR2 that that is not true.

[00:36:52] Speaker 03:
We know that this information is verifiable, and that is exactly why this decision cannot stand.

[00:36:58] Speaker 03:
Unless there are any further questions, thank you, Your Honors.

[00:37:02] Speaker 02:
Any more questions for Mr. Kendler?

[00:37:06] Speaker 02:
Hearing none, with thanks to all counsel, the case is taken under submission.