[00:00:00] Speaker 03:
today is 21-1988, Vicenten versus United States.

[00:00:06] Speaker 03:
Mr. Spack, please proceed.

[00:00:25] Speaker 01:
Good morning, Your Honors.

[00:00:27] Speaker 01:
My name is Greg Spack.

[00:00:28] Speaker 01:
May it please the Court?

[00:00:29] Speaker 01:
I'm from the law firm of White and Case, and I'm here on behalf of LDC Argentina and its US affiliate.

[00:00:36] Speaker 01:
With me today is my colleague Jessica Lynn.

[00:00:40] Speaker 01:
This appeal involves two adjustments in an anti-dumping calculation.

[00:00:45] Speaker 01:
And it's an adjustment to both sides of the equation.

[00:00:48] Speaker 01:
on the US side, which I'll refer to as export price, the Commerce Department took the price negotiated between the parties and reflected on the commercial invoices and then reduced it for what it considered to be an embedded value of something called a RIN, which we'll get into.

[00:01:07] Speaker 01:
On the other side of the equation, the normal value calculation, and here it's important to remember that normal value was based on the producer's cost.

[00:01:16] Speaker 01:
In the normal value side... Mostly.

[00:01:19] Speaker 02:
Mostly on the producers' costs.

[00:01:23] Speaker 02:
The soybeans were not, in fact, that were used, were a surrogate value.

[00:01:28] Speaker 01:
The concept was that it was a cost-based normal value, Your Honor, yes.

[00:01:32] Speaker 01:
But as we'll talk about, they take that out and replace it with something that they consider to be non-distorted.

[00:01:38] Speaker 01:
So as a result of these two adjustments, one on each side, we get a 60% dumping margin.

[00:01:44] Speaker 01:
Had the Commerce Department used the prices reflected in the negotiation and reflected on the invoice and used the producer's cost, we would have a 0% dumping margin.

[00:01:56] Speaker 01:
So these two adjustments matter.

[00:01:59] Speaker 01:
I'd like to spend some time on each then.

[00:02:02] Speaker 01:
First, the adjustment to the export price for the RIN.

[00:02:06] Speaker 01:
So this issue arises because biodiesel in the United States has a different value than it would have in many other parts of the world.

[00:02:15] Speaker 01:
The market just values it as more.

[00:02:19] Speaker 01:
And why is that?

[00:02:20] Speaker 01:
It's because Congress created a value in the market.

[00:02:24] Speaker 01:
It created, through the Renewable Fuels Act, an obligation for so-called obligated parties.

[00:02:31] Speaker 04:
Can I just get to what is troubling me about this adjustment?

[00:02:37] Speaker 04:
And let's just assume that it actually, the RIN does have a separate value.

[00:02:43] Speaker 04:
And it's severable.

[00:02:45] Speaker 04:
And we can determine what it is.

[00:02:46] Speaker 04:
I know you disagree with all of that.

[00:02:48] Speaker 04:
But if that's the case, is your view that commerce doesn't have the legal authority under its current statutory and regulatory scheme to make that adjustment?

[00:02:59] Speaker 01:
It's my view that they need to follow the statute, and the statute says that they have to use the price that's used between the parties and reflected between the parties.

[00:03:10] Speaker 04:
The point here, Your Honor, is that... I'm not sure that's answering my question though, because if we assume that the rent has a value,

[00:03:19] Speaker 04:
then that means that it's a separate value apart from the biodiesel.

[00:03:26] Speaker 04:
And so the biodiesel in your home market has a price.

[00:03:32] Speaker 04:
We can assume it has the same, even for the purposes of this argument, we can assume it has the exact same price than you were selling in the US market.

[00:03:42] Speaker 04:
It also includes this additional value of the rent in the US market.

[00:03:48] Speaker 04:
So to do the apples for apples comparison, you've got to get rid of that rent.

[00:03:51] Speaker 04:
That's commerce's position.

[00:03:55] Speaker 04:
That makes sense at a high level, given what we know what you do in the anti-dumping context is that's the value you're trying to get this apples for apples.

[00:04:03] Speaker 04:
But what I'm having a hard time figuring out is exactly where that authority can be located in the statute or the price adjustment regulation.

[00:04:13] Speaker 01:
Yeah, we don't think it's there.

[00:04:16] Speaker 01:
Because again, the statute defines export price as the price for which the product is first sold.

[00:04:25] Speaker 01:
And that means, as this Court has said, it's very clear what sell means and what are the initiatives of selling.

[00:04:31] Speaker 02:
I would say, Your Honor... I'm sorry, can I just... I took the Commerce's principal position to be incredibly simple.

[00:04:39] Speaker 02:
The subject merchandise is biodiesel.

[00:04:42] Speaker 02:
What you sold and included in your price was a dual product, biodiesel plus something of nifty value to your purchaser, this thing that EPA is going to give them a chip that they can cash in or sell to somebody else.

[00:04:56] Speaker 02:
And so what they need to do is to figure out what price you actually sold only one piece of it at, the biodiesel.

[00:05:05] Speaker 02:
And on the evidence here, they could

[00:05:08] Speaker 02:
say, and they say there is substantial evidence to say we're going to value the chit at the market price for the chit, nothing else.

[00:05:16] Speaker 01:
Your honor, if that were correct, if LDC were really selling two things, what would those two things be?

[00:05:22] Speaker 01:
They'd be a rim, and they'd be some sort of biodiesel that doesn't generate the rim.

[00:05:28] Speaker 01:
If we're going to disaggregate it and say there are two things, we can't just talk about the RIN and then say that it's biodiesel.

[00:05:34] Speaker 01:
It also includes the RIN.

[00:05:36] Speaker 01:
And the point is that LDC never exports to the United States biodiesel that doesn't generate a RIN.

[00:05:43] Speaker 01:
It only produces and exports the biodiesel that the market recognizes as having this additional value because of it.

[00:05:51] Speaker 02:
I guess what I'm wondering about is why this isn't essentially a factual issue on which

[00:05:57] Speaker 02:
You simply did not establish enough evidence to make commerce's determination unreasonable that, in fact, you built into the dollar value price of this dual product the entirety of the market value of the rents.

[00:06:27] Speaker 02:
Thank you, Your Honor.

[00:06:28] Speaker 02:
And you could have.

[00:06:29] Speaker 02:
And maybe in the next case, you can.

[00:06:31] Speaker 02:
But that here, you didn't.

[00:06:34] Speaker 01:
I respectfully disagree, because there's only one piece of evidence we have, which is the value that's reflected on the invoice.

[00:06:44] Speaker 01:
It's not as if the companies have any kind of accounting value for the RIN.

[00:06:49] Speaker 01:
They in Argentina don't generate a RIN.

[00:06:53] Speaker 01:
They can only produce and export biodiesel.

[00:06:56] Speaker 01:
They do it a certain way, right?

[00:06:58] Speaker 01:
Right.

[00:06:58] Speaker 04:
They do it in a way that makes it eligible for the RIN.

[00:07:01] Speaker 04:
So it's not like you're just, this is happenstance.

[00:07:04] Speaker 04:
You're doing it intentionally.

[00:07:05] Speaker 04:
You're producing it in a way that makes it eligible for the RIN.

[00:07:09] Speaker 04:
So when you're selling it, you're not just selling generic biodiesel that you could sell anywhere.

[00:07:14] Speaker 04:
You're selling RIN eligible biodiesel because you understand that the American market wants it sold that way.

[00:07:21] Speaker 01:
You're absolutely right, Your Honor.

[00:07:23] Speaker 01:
And getting back to your apples-to-apples comparison, that's why we think what the statute really tells you to do in this case.

[00:07:29] Speaker 04:
Wait, wait, but again, the apples-to-apples.

[00:07:32] Speaker 04:
If you sold that same product in the Argentinian market, the rent has no value.

[00:07:41] Speaker 04:
The only, right, it doesn't.

[00:07:44] Speaker 04:
There is no, because you don't have that.

[00:07:46] Speaker 04:
So the biodiesel fuel doesn't include that added value of the rent.

[00:07:50] Speaker 04:
So why isn't it the case that under the regime here that Congress gets to deduct the value of the rent to make that apples per apples comparison?

[00:08:02] Speaker 04:
I mean, economically, it just makes sense.

[00:08:05] Speaker 04:
Right.

[00:08:05] Speaker 04:
I mean, if you sell something in the United States for a hundred and they're getting a tax credit of $20, but you sell it at a different price, it may look like you're not dumping because in Argentina you don't have that value, but because of the tax credit, you are dumping.

[00:08:24] Speaker 04:
Why can't they legally address that under the statute and the price adjustment regulation?

[00:08:29] Speaker 01:
Well, the price adjustment regulation, first of all, talks about a change in price, a change that's agreed between, I think, implicitly.

[00:08:37] Speaker 04:
Well, OK, I get that.

[00:08:38] Speaker 04:
I have some issues with that, too, which I'll be asking your friends on the other side about.

[00:08:42] Speaker 04:
But why isn't the basic statutory regime, which talks about adjusting for the product sold, and the product sold here

[00:08:50] Speaker 04:
There are two different products, aren't there?

[00:08:53] Speaker 04:
There's the US product, which is the biodiesel and the ren.

[00:08:58] Speaker 04:
In the Argentinian market, it would just be the biodiesel.

[00:09:02] Speaker 01:
And in a normal case, where you had two different products, what would commerce do?

[00:09:06] Speaker 01:
It would compare the prices as sold, and it would make a difference in merchandise adjustment.

[00:09:12] Speaker 01:
That is, the difference in the cost to produce the two different products, right?

[00:09:17] Speaker 01:
And that's what we are saying.

[00:09:18] Speaker 01:
If you wanted apples to apples comparison,

[00:09:20] Speaker 01:
especially since your normal value is based on cost, then take the value for what it is in the United States as agreed between the buyer and seller

[00:09:31] Speaker 01:
And go ahead and make an adjustment for those additional costs that were required.

[00:09:36] Speaker 04:
But is the adjustments limited just to cost of production, or is it limited to other things?

[00:09:44] Speaker 04:
Because I mean, I assume you're not disputing that the rent has some economic value, and it could mass dumping.

[00:09:52] Speaker 01:
Well, I mean, I'm not.

[00:09:54] Speaker 01:
I can see that it has value.

[00:09:56] Speaker 01:
It has a value because it can be traded in a different market.

[00:10:00] Speaker 01:
Could it mask dumping?

[00:10:03] Speaker 01:
I would say what it means is that the market

[00:10:09] Speaker 01:
gives the biodiesel a higher value because of the value that's created only in this market.

[00:10:15] Speaker 04:
So you could sell that biodiesel in the United States at a price that appears to not be below whole market value because the RIN adds additional value.

[00:10:25] Speaker 04:
But if you were actually comparing just the pure cost of the biodiesel without the RIN, it would be dumping.

[00:10:33] Speaker 01:
I don't see it that way, Your Honor.

[00:10:37] Speaker 01:
I understand the economic argument.

[00:10:40] Speaker 01:
But remember.

[00:10:40] Speaker 01:
What's wrong with that?

[00:10:42] Speaker 04:
The price in Argentina is $100.

[00:10:44] Speaker 04:
And you sell it for $110 in the US.

[00:10:50] Speaker 04:
That looks like you're not dumping, because you're selling it above home value.

[00:10:56] Speaker 04:
But if you're selling it for one hundred ten dollars in the U.S.

[00:10:59] Speaker 04:
because the U.S.

[00:11:00] Speaker 04:
customer is going to get a thirty dollar tax credit and they know it and you've manufactured that price then isn't it really you're selling it eighty dollars and you are dumping.

[00:11:10] Speaker 01:
Now again I think one of the other things we have to be careful here you are respectfully is that.

[00:11:15] Speaker 01:
LDC never gets this tax credit or this benefit from selling the rent.

[00:11:20] Speaker 04:
All it does is it sells No, but you get the benefit of pricing the product in a certain way because your American market will Notice that it's going to get it I mean that has to be true because if you didn't care about the credit you wouldn't be manufacturing it in a way that was eligible for the credit and

[00:11:38] Speaker 01:
Well, I manufacture it in a way to access the market.

[00:11:43] Speaker 01:
And so if the market values were significant enough to give me an economic incentive to do it, I would.

[00:11:49] Speaker 01:
Can I ask you this?

[00:11:54] Speaker 04:
that the price adjustment regulation is just talking about something else.

[00:11:58] Speaker 04:
Can we still find that the statute itself is sufficient to do this?

[00:12:02] Speaker 04:
I think commerce makes a theory that what we're looking at, they're separating out this as a separate product.

[00:12:09] Speaker 04:
So when they're making the adjustment is, I know you disagree with all of that.

[00:12:13] Speaker 04:
But is that a way to look at the statute as a source of authority without getting to the regulation?

[00:12:19] Speaker 04:
Or do we have to determine that the regulation, even though it seems to deal with something different, is sufficiently broad to cover it?

[00:12:27] Speaker 01:
Again, we believe that the statute is pretty clear in terms of what the price is, the price of the product.

[00:12:35] Speaker 01:
I would say that the product happens to be enhanced because of this feature.

[00:12:40] Speaker 04:
Thank you.

[00:12:40] Speaker 04:
You're into your rebuttable time.

[00:12:42] Speaker 04:
But before you move on, can I just ask you about the second issue?

[00:12:46] Speaker 04:
Yes, you're on.

[00:12:47] Speaker 04:
If we determine that commerce is shown with substantial evidence that there's no double counting here, do we have to get into any of this messy legal argument about whether Congress can do a double remedy for countervailing duties and anti-dumping duties?

[00:13:02] Speaker 04:
I mean, if there's no double remedy, what makes the difference?

[00:13:05] Speaker 04:
I know you disagree with that, too.

[00:13:08] Speaker 04:
But let's just assume the substantial evidence supports commerce's assertion.

[00:13:13] Speaker 04:
Then we don't have to reach any of those legal issues, do we?

[00:13:16] Speaker 01:
If you were to find that there is no double remedy, then we don't have an argument, I would say, under that.

[00:13:22] Speaker 02:
On that, I think this is relevant.

[00:13:28] Speaker 02:
either for purposes of annual reviews, as this goes forward, assuming that you stay under an anti-docking order, or even, I don't know, has there been a liquidation of the period of review here?

[00:13:42] Speaker 01:
There have been no imports since, remember, because you had the two

[00:13:46] Speaker 02:
dumping you had dumping and countervailing duties of a hundred and forty percent so you shut down trade but assuming that you brought something in and there was the next the annual review 1675 or something could you would you

[00:14:05] Speaker 02:
Would you be entitled to put on more evidence than you did in this proceeding about whether there was, in fact, a pass-through so that the question of whether the existence or not of pass-through matters as a matter of law might be useful to decide?

[00:14:28] Speaker 02:
Maybe not necessary, but useful because it would affect whether a different factual record

[00:14:35] Speaker 02:
could produce a different legal conclusion.

[00:14:39] Speaker 01:
Your Honor, if there were a review, then I assume we'd have the opportunity to provide all the evidence necessary.

[00:14:45] Speaker 01:
Again, we believe that the evidence, because of the nature of normal value in this case, we can see the impact of the subsidy.

[00:14:55] Speaker 01:
It's in exactly the same depressed cost

[00:14:58] Speaker 01:
of the soybeans that the county railing duty corrects for.

[00:15:02] Speaker 02:
You said you concede it?

[00:15:05] Speaker 01:
I can see it.

[00:15:06] Speaker 01:
You can see it.

[00:15:07] Speaker 01:
We can see it.

[00:15:07] Speaker 01:
I'm sorry.

[00:15:08] Speaker 01:
We can see it for that reason.

[00:15:09] Speaker 01:
So we don't need to look at the US price, which was one of our problems with the whole pass-through analysis.

[00:15:15] Speaker 01:
So with that, I'd like to reserve a little bit of time.

[00:15:16] Speaker 03:
We don't have any rebuttal time, but I'll restore some of it.

[00:15:19] Speaker 03:
Don't worry.

[00:15:19] Speaker 03:
OK, thank you.

[00:15:20] Speaker 03:
Mr. Kirkland?

[00:15:23] Speaker 03:
Is it the remote emphasis?

[00:15:25] Speaker 03:
Yes.

[00:15:30] Speaker 05:
Am I set to go or?

[00:15:33] Speaker 03:
Yep, please proceed.

[00:15:35] Speaker 05:
Thank you, Laura.

[00:15:39] Speaker 05:
Good morning, Your Honors, and may it be easy for you.

[00:15:43] Speaker 05:
So many issues before the court does boil down to an issue of civil fairness, consistent with the statute's fundamental directive in commerce to perform a fair comparison between normal value and extra price.

[00:15:57] Speaker 05:
an entity that disinterested in these proceedings as a congressional researcher, striking down is that RINs are a combined with their own separate value, and the record shows, and in fact was noted in this, ubiquitous awareness about RIN values in the industry.

[00:16:15] Speaker 05:
Hence, the invoice price or the reported price that LBC is reporting to Congress includes not one, not one different price of biotech, as counsel suggests, but two different components.

[00:16:28] Speaker 05:
Council can I just ask you I mean

[00:16:48] Speaker 04:
I don't have any real doubt that there's any economic impact of the rents.

[00:16:53] Speaker 04:
There certainly is.

[00:16:54] Speaker 04:
This seems like a very unusual circumstance, because usually when we're talking about price adjustments, we're talking about things that are agreed to as an adjustment between the buyer and the seller, and not adjustments that occur due to the home countries

[00:17:13] Speaker 04:
environmental laws and so the price adjustment regulation in particular doesn't seem particularly pertinent to that and it seems a stretch to rely on that and I guess my question is do you think the underlying statute is good enough or is this just an area that Congress never thought to cover and that if we want to cover

[00:17:35] Speaker 04:
environmental subsidies, then it has to be, you know, a more explicit statutory authorization than the definitions of export price and constructed export price.

[00:17:49] Speaker 05:
Yes, Your Honor.

[00:17:50] Speaker 05:
I think the statute itself is good enough because it refers to the price at which the subject merchandise is first sold, and that has long been interpreted to require Congress to look at the starting price for the subject merchandise.

[00:18:02] Speaker 05:
not simply the reporting price.

[00:18:05] Speaker 05:
I mean, it is well understood in this area of law that Congress makes all kinds of adjustments to the reported price, or I guess you could say invoice price, in order to arrive at a starting price so the subject would be met.

[00:18:18] Speaker 05:
But I would be remiss, Your Honor, if I did not say that the price adjustment regulations also very much

[00:18:25] Speaker 05:
covered this situation.

[00:18:27] Speaker 05:
And that is because the price adjustment regulation itself, this is 19 CRR 351, 102, subsection B, 38, refers to a change in the price part, again, to the subject merchandise for the part of the product not relevant here, such as a discount rebate or other adjustment.

[00:18:47] Speaker 05:
That was a 2016 amendment that we'll get to shortly.

[00:18:49] Speaker 05:
And it goes on to say that,

[00:18:51] Speaker 05:
that it's anything that, quote, reflects, that is reflected in the purchaser's net outlay.

[00:18:58] Speaker 05:
So that very much matches up with your honor's example of the tax you made, for example, very publicly with our money.

[00:19:08] Speaker 05:
This is precisely something that is ultimately affecting the purchaser's net outlay.

[00:19:12] Speaker 05:
And when Congress amended this regulation in 2016, it did so explicitly and if clear,

[00:19:19] Speaker 05:
that I think in the spirit that they cannot possibly recognize all the type of situations that might lie if it could be to a price adjustment, the type of thing that affects the purviews of that net outlay.

[00:19:32] Speaker 05:
And therefore, not only can there be more other adjusted language, I mean that in 2016,

[00:19:39] Speaker 05:
But made very clear, and now I'm looking at the modification of price adjustments from that amendment, which is an 81 federal register, 15604.

[00:19:47] Speaker 05:
A price adjustment is not just limited to just some sort of remakes, but encompasses other adjustments as well.

[00:19:55] Speaker 05:
So there was an explicit recognition when commerce made this amendment in 2016 that it wanted to clarify, I mean, there are just so many different types of adjustments that may be

[00:20:09] Speaker 05:
you know, that may affect the purchaser's net outlay.

[00:20:12] Speaker 05:
Commerce can't anticipate them all.

[00:20:13] Speaker 05:
But in various contexts, this board has recognized that these type of terminations, these type of regulations, it comes up in the scope context all the time.

[00:20:22] Speaker 05:
Right, the scope context is that the commerce side has to define the scope in broad terms, but you can't possibly anticipate all the goods or situation that might come up.

[00:20:30] Speaker 05:
And I would state, Your Honor, that the same type of issue is going on here.

[00:20:34] Speaker 05:
And Commerce, you made it explicit that it was

[00:20:38] Speaker 05:
putting out a broad regulation that handle a broad transformation.

[00:20:42] Speaker 05:
And you see that come up in a case study.

[00:20:44] Speaker 05:
Well, I mean, that's my

[00:21:08] Speaker 04:
My issue here is that this just seems so unique because it it's not an adjustment that's made by either you know, the the seller or the purchaser or any kind of Agreement between the the two of them.

[00:21:23] Speaker 04:
It's it's an adjustment that's caused by the

[00:21:26] Speaker 04:
you know, a separate foreign, you know, the whole market country.

[00:21:31] Speaker 04:
And is there any kind of analogous case or anything like that?

[00:21:34] Speaker 04:
It seems like every single adjustment, shipping costs, rebates, they're all things that are controlled by the seller in some sense, or negotiated between the seller and the purchaser.

[00:21:46] Speaker 04:
And this just isn't that.

[00:21:48] Speaker 05:
Well, I think in the first instance, it's a factual matter.

[00:21:51] Speaker 05:
We would take issue with LBC's characterization that this isn't negotiated at all.

[00:21:56] Speaker 05:
We pay the purchase from the seller.

[00:21:58] Speaker 05:
But I think the record's pretty clear that this is all over the contract documentation and even the offer or counter-offer.

[00:22:05] Speaker 05:
I mean, it's all specifying that these have to include ribs that

[00:22:12] Speaker 04:
So your view is that even though it's not set out separately, it's clear that because of the way this is produced and the requirements for it to comply with the RIN requirements that it's understood that what they're selling is not just biodiesel, but biodiesel that's eligible for the RIN credit.

[00:22:37] Speaker 04:
And those two have separate economic value.

[00:22:43] Speaker 05:
That's right.

[00:22:44] Speaker 05:
And I'm going to cite out some records of places where you can see this, Your Honor.

[00:22:48] Speaker 05:
I'm thinking of Congress's explanation of 1894 to 1945, a record where they said, 1894 is enough, the right to serve isn't, and it's embedded here.

[00:22:57] Speaker 05:
It's an upper adjustment.

[00:22:58] Speaker 05:
It's already included in the recorded price, because they are selling two things.

[00:23:03] Speaker 05:
And then there's also documentation.

[00:23:05] Speaker 05:
I'm not sure that the contracts themselves are in the record, but I would point you, Your Honors,

[00:23:12] Speaker 05:
to page 24607 of the record, which is the other correspondence verification report, as well as the submission that's at page 248-58-59 and note 19 of the record.

[00:23:26] Speaker 05:
And these are all places where the record discusses how it's included in a contract documentation.

[00:23:32] Speaker 05:
I mean, it would be a terrible rule for this court to set to tell exporters that as long as you don't discuss it explicitly in the invoice,

[00:23:42] Speaker 02:
Suppose you suppose you suppose LDC had you know a hundred dollar price for some number of units in in Argentina

[00:24:03] Speaker 02:
And, um, it's sold to the U S importer, the first, uh, you know, unaffiliated purchaser at a hundred dollars did not up the price at all, not a cent, um, not withstanding the fact that it's U S buyer gets this extra value from the EPA.

[00:24:22] Speaker 02:
Let's, let's call it.

[00:24:24] Speaker 02:
Um, what would, what would happen?

[00:24:28] Speaker 05:
I think that's the precise scenario for the scenario that Judge Hughes was laying out earlier, where it's effectively masking something.

[00:24:35] Speaker 05:
And that's what's going on here.

[00:24:36] Speaker 02:
So I'm sorry.

[00:24:37] Speaker 02:
I'm sorry.

[00:24:38] Speaker 02:
So that on that theory, whether the US, the export price from, in that scenario from LDC, had embedded in it a value for the US customer wouldn't matter at all.

[00:24:55] Speaker 02:
Because on that theory, the US customer is paying dollars or whatever to LDC at exactly the same price that LDC is selling in Argentina.

[00:25:12] Speaker 02:
But it gets this nifty extra benefit.

[00:25:18] Speaker 02:
Aren't those two fairly dramatically different rules?

[00:25:26] Speaker 05:
I think those are two very different rules in the two countries in what necessitates the price adjustment.

[00:25:32] Speaker 05:
Because according to record evidence here, what they are not buying is biodiesel for $100 in the United States.

[00:25:39] Speaker 05:
But they're actually buying biodiesel for $80 and a ring for $10 or $20, whatever the number is.

[00:25:47] Speaker 02:
Can I also ask this and just help me understand this so so the the US customer that generate that is the first sale To unaffiliated party is somebody who wants to use the fuel.

[00:26:03] Speaker 02:
Is that presumably right?

[00:26:07] Speaker 02:
Maybe not use it somebody who wants the fuel in hand

[00:26:12] Speaker 05:
Here's what I guess I'm trying to understand.

[00:26:18] Speaker 02:
Who are the competitors of LDC, the domestic competitors?

[00:26:23] Speaker 02:
A domestic producer of biodiesel, as I understand it, itself gets the chit from EPA.

[00:26:32] Speaker 02:
Right?

[00:26:34] Speaker 02:
Its customers are presumably the same customers for whom LDC, the foreign producer, is competing.

[00:26:43] Speaker 02:
And yet those seem to be radically different situations because the customer, when buying from the foreign company,

[00:26:52] Speaker 02:
is the one that gets the money, whereas the customer, when buying from the domestic producer, doesn't get the RIN, doesn't get anything, any RIN of value.

[00:27:04] Speaker 02:
There seems to kind of, I'm trying to understand the economics and whether this has something to do with

[00:27:10] Speaker 02:
with the economics in terms of what this statute is all about, about protecting domestics against a certain kind of behavior from the foreign company.

[00:27:24] Speaker 05:
So I understand, Your Honor, that the focus of the Eddie Duckling statute is on the basic comparison between the normal value and the export price.

[00:27:36] Speaker 05:
I'm not

[00:27:38] Speaker 05:
At a gut level, I'm doubtful that there is an issue there in terms of what the domestics do versus what aren't.

[00:27:45] Speaker 05:
But that's ultimately not the company analysis.

[00:27:48] Speaker 05:
The statute directs commerce to determine whether they're selling it here cheaper than they're selling it in that room in front of you.

[00:27:57] Speaker 05:
And the adding of the ring into it, even when the customers all say that we recognize that the line is $100,

[00:28:04] Speaker 05:
$10 is actually the value of the rate.

[00:28:09] Speaker 02:
OK, let me just turn back a little bit to what I guess I'm trying to focus on.

[00:28:15] Speaker 02:
If LDC is selling in Argentina $100, and that's its exact economic cost, and now it turns around and sells for $100, the same stuff in the US,

[00:28:28] Speaker 02:
And you haven't, so that there hasn't been anything added at all, not anything added to the price for the product.

[00:28:39] Speaker 02:
Do you or do you not say that the fact that the customer gets some tax credit from the US government or the RIN makes that hundred dollar price somehow too high?

[00:28:57] Speaker 02:
without any of the evidence that you pointed to about embedding this extra value.

[00:29:04] Speaker 05:
Right.

[00:29:05] Speaker 05:
We would say that the $100 price would be too low, again, because they are really not paying $100 for the buyer.

[00:29:14] Speaker 05:
They're paying less than that.

[00:29:16] Speaker 05:
And that is consistent.

[00:29:17] Speaker 05:
It is certainly not uncommon for dumping to be people making sales below their cost in the United States.

[00:29:24] Speaker 02:
I'm sorry, so the hundred dollars is too low meaning You're gonna up the up the export price.

[00:29:35] Speaker 05:
That's not gonna help

[00:29:50] Speaker 05:
because they're not just selling the subject merchandise.

[00:29:53] Speaker 05:
They're selling the subject merchandise plus a separate commodity with a well-known public value that brokers are publishing with the value of that commodity.

[00:30:03] Speaker 05:
And so they're not actually selling the biodiesel for $100.

[00:30:06] Speaker 05:
They're selling

[00:30:08] Speaker 05:
Mr. Kerland, you've used up all your time and all of Mr. Gatlin's time.

[00:30:24] Speaker 03:
So let me allow Mr. Gatlin to have two minutes, please.

[00:30:31] Speaker 00:
May I please the court?

[00:30:32] Speaker 00:
My name is Miles Gatlin.

[00:30:34] Speaker 00:
of Cassidy Levy-Kent, representing the National Wide Diesel Board Fair Trade Coalition.

[00:30:39] Speaker 00:
I appreciate you allowing me a couple minutes of time here.

[00:30:44] Speaker 00:
Just to maybe close a thought on the RINs issue here, Judge, Toronto, you mentioned, isn't it so

[00:30:54] Speaker 00:
Isn't it simple or straightforward to Mr. Speck here?

[00:30:59] Speaker 00:
Two products.

[00:31:00] Speaker 00:
The key here in terms of the two products, and Judge Hughes, you referenced two different products as well.

[00:31:06] Speaker 00:
And that is the reality here.

[00:31:07] Speaker 00:
There are two different products, two different items of value that were covered by the invoice price here.

[00:31:14] Speaker 00:
And the key under the statute and the regulation is that one of those items is non-subject merchandise.

[00:31:22] Speaker 00:
The scope of this order of the investigation

[00:31:24] Speaker 00:
covered biodiesel, a fuel.

[00:31:27] Speaker 00:
There is no reference in the scope to RINs, and the record is clear that RINs have a separate value.

[00:31:33] Speaker 00:
They're a separate commodity.

[00:31:35] Speaker 00:
They are not subject to merchandise.

[00:31:37] Speaker 00:
And therefore, under the statute alone, commerce would not only have the authority

[00:31:41] Speaker 00:
but should be required to exclude the value of the non-subject item.

[00:31:45] Speaker 00:
The regulations permit that as well and link up to the statute perfectly by referencing subject merchandise.

[00:31:52] Speaker 00:
I'll turn to, and there's- Can I ask just one question?

[00:31:55] Speaker 02:
Of course.

[00:31:57] Speaker 02:
One of the things that I've had a little bit of trouble understanding

[00:32:04] Speaker 02:
and even formulating.

[00:32:05] Speaker 02:
But it's not clear to me that on the domestic side of what Mr. Svatt called the equation, not the normal value in home country, but in the US side, the word that's used is not value.

[00:32:18] Speaker 02:
It's price.

[00:32:20] Speaker 02:
Why does it matter in terms of the price being that the customer has a pretty great extra value from making that purchase provided by a third party?

[00:32:34] Speaker 00:
I refer back to the statutory language of subject merchandise.

[00:32:38] Speaker 00:
It's not just any price.

[00:32:40] Speaker 00:
It's the price of the subject merchandise.

[00:32:43] Speaker 00:
And here, RIN value, RINs are a distinct commodity as recognized by the Congress.

[00:32:49] Speaker 00:
So if I may, just for a moment.

[00:32:52] Speaker 02:
Can I ask you one thing about the other question?

[00:32:55] Speaker 02:
Please.

[00:32:55] Speaker 02:
And I don't think anybody has made anything of this, but this is in terms of the pass-through and the facts.

[00:33:01] Speaker 02:
When I look at, this is appendix page 34.

[00:33:04] Speaker 02:
This is on some page or other of the commerce redetermination from November 12, 2020.

[00:33:15] Speaker 02:
Oddly enough, the original page numbers were stripped out of the documents, so it's impossible to follow.

[00:33:20] Speaker 02:
But on page 34 of the appendix, the first full paragraph, two-thirds of the way down, as the record demonstrates, LDC and Vicenten price their US shipments in a manner designed to compete with, parenthesis, or undercut US prices for petrol, diesel, and biodiesel.

[00:33:40] Speaker 02:
And I guess what that, nobody made anything of this, but this is, it seemed to me pretty central to what Commerce said on this issue

[00:33:50] Speaker 02:
pass through that LDC here is in some way using a market price of heating oil or something like that under it says something like base our prices on or contracts that base on

[00:34:09] Speaker 02:
If the concern of the anti-dumping laws here is underpricing, undercutting, I would guess that the contracts that LDC has about using the heating oil say we won't charge more than that, but don't prohibit it from charging less than that.

[00:34:29] Speaker 02:
And if that's possible, then how do we know there's no pass-through?

[00:34:33] Speaker 00:
Well, really what the statute, Your Honor, speaks to is when it talks about

[00:34:39] Speaker 00:
under pricing, it's pricing relevant to normal value, the US price compared to normal value.

[00:34:48] Speaker 02:
is that there was this subsidy from the government of Argentina with respect to soybean prices.

[00:34:55] Speaker 02:
And we're imposing a countervailing duty on that.

[00:34:58] Speaker 02:
And the question is, what does LDC do with that subsidy?

[00:35:03] Speaker 02:
Does it show up in a too low price, export price, in the US?

[00:35:09] Speaker 02:
And Commerce said, no, it doesn't.

[00:35:11] Speaker 02:
And that's because,

[00:35:13] Speaker 02:
LDC says we're going to use this market value of heating oil on certain exchanges or something as a basis for the price.

[00:35:21] Speaker 02:
But if what those contracts say is we won't charge more than that, that doesn't imply LDC is not charging less than that, i.e.

[00:35:30] Speaker 02:
undercut, in which case it would pass through.

[00:35:33] Speaker 00:
But Commerce's pass-through analysis is focused on the US price.

[00:35:39] Speaker 00:
Frankly, any language on undercutting or overpricing would be irrelevant to the pass-through analysis.

[00:35:46] Speaker 00:
Because what Commerce is looking at in its pass-through analysis is whether there is a link, a relationship, between LDC's cost of production or respondents' cost of production in the home market

[00:35:59] Speaker 00:
and the US prices at which it sells.

[00:36:02] Speaker 00:
And there, the record is filled with evidence, both from LDCs and the other mandatory respondents' comments at verification and their sales documentation, that their prices in the US market are not tied to their cost of production, but rather to a reference price in the United States on whether it's heating oil, which is diesel fuel, the NYMEX pricing,

[00:36:26] Speaker 00:
or soil oil futures in the United States under the Chicago Board of Trade Index, nothing to do with the cost in the home market.

[00:36:37] Speaker 00:
And that is corroborated by the other evidence.

[00:36:40] Speaker 04:
Is that just a failure proof?

[00:36:41] Speaker 04:
Because it seems really hard, just as a matter of economics, to think that if they're getting this huge subsidy on soybean production, that's not somehow

[00:36:54] Speaker 04:
Factoring into the price I get the commerce found that that wasn't here and that there may be substantial evidence to support that But it certainly doesn't seem to make a lot of sense in terms of like just common sense of how pricing would work Well how they're pricing their products I think it just depends on the market and their own company decisions commerce

[00:37:17] Speaker 00:
It's not as if commerce was cobbling together a theory here.

[00:37:20] Speaker 00:
Their determination was based on LDC's own statements at verification of how they priced their products and corroborated by further evidence in the record from ITC reports and testimony in the record.

[00:37:36] Speaker 00:
We would submit that commerce's adjustment here was lawful.

[00:37:41] Speaker 00:
If I could add one word on the legal.

[00:37:44] Speaker 03:
No, Mr. Gatlin, you're way over your time.

[00:37:46] Speaker 03:
You can't add any more.

[00:37:47] Speaker 00:
Yes, Your Honor.

[00:37:47] Speaker 00:
Thank you.

[00:37:48] Speaker 00:
Thank you very much.

[00:37:57] Speaker 01:
Thank you, Your Honor.

[00:37:57] Speaker 01:
Can I ask how much time I have, more or less?

[00:38:00] Speaker 03:
How about we'll say give you a whole five minutes?

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

[00:38:02] Speaker 01:
He went over by so much.

[00:38:03] Speaker 01:
Thank you very much, Your Honor.

[00:38:05] Speaker 01:
I'm frankly astounded at this subject merchandise argument.

[00:38:10] Speaker 01:
This scope was very clear from the beginning of the case.

[00:38:13] Speaker 01:
They filed a petition on biodiesel.

[00:38:14] Speaker 01:
Biodiesel sold in the United States.

[00:38:17] Speaker 01:
Biodiesel sold in the United States, as they know very well, generates rins.

[00:38:22] Speaker 01:
So there's no question about there being two different pieces of merchandise here.

[00:38:28] Speaker 01:
It is the biodiesel that they included in their petition for which commerce sought information.

[00:38:35] Speaker 01:
So it is not true that the petition separates and somehow says, we're only going, this case is only about biodiesels, but not the kind that generates rinse.

[00:38:47] Speaker 01:
So they knew what the subject merchandise is biodiesel, including the biodiesel that generates rinse, which is what is sold in the United States.

[00:38:55] Speaker 01:
So I think that's a very, and I get to this, I know your honors are bothered by the fact that there's some value, there's some economic value.

[00:39:05] Speaker 01:
Products often have a different value in one market than they do in the other because of perception.

[00:39:11] Speaker 01:
I happen to be Italian, and I love Italian cheeses.

[00:39:14] Speaker 01:
I'll pay more for Italian cheeses here than Italians will.

[00:39:18] Speaker 01:
And we'll do that because I perceive that it has a higher value.

[00:39:21] Speaker 01:
But that doesn't mean when there's a dumping case against Italian cheeses that somehow the Commerce Department has to say, well, wait a minute.

[00:39:28] Speaker 01:
This guy is assigning more value to it.

[00:39:30] Speaker 01:
So I've got to somehow do a price adjustment to get back

[00:39:34] Speaker 01:
what the cheese should cost.

[00:39:37] Speaker 01:
The same thing we could talk about product alterations, product features.

[00:39:41] Speaker 01:
We use the example in our brief about a refrigerator case.

[00:39:45] Speaker 01:
Refrigerators come in with all sorts of different bells and whistles these days, computer screens, everything else.

[00:39:53] Speaker 01:
What does commerce do in those cases?

[00:39:54] Speaker 01:
They compare the merchandise.

[00:39:56] Speaker 01:
And if there is a difference in the feature, they make the merchandise of sale adjustment based on cost.

[00:40:05] Speaker 01:
And that's what the statute would require them to do if they wanted to do something in this case.

[00:40:11] Speaker 01:
Now, Your Honor's asked also, is the statute enough?

[00:40:15] Speaker 01:
Do they really need the price adjustment regulation?

[00:40:19] Speaker 01:
I'd say the statute is not enough, because the statute doesn't have a catch-all phrase that says, and any other adjustment that you might think is embedded in the price.

[00:40:29] Speaker 01:
The statute says,

[00:40:30] Speaker 01:
export price means and constructed export price means the price at which the product is first sold.

[00:40:36] Speaker 01:
And it allows for adjustments by saying with additions in this sense and reductions in this.

[00:40:44] Speaker 01:
And there's nothing like what commerce has done here.

[00:40:47] Speaker 01:
So the statute is not enough, which is why Judge Kelly sent it back twice to get an explanation of where they were getting this authority to, or she sent it back once, where they were getting their authority to adjust the value or the price.

[00:41:02] Speaker 01:
And the answer was, well, it's this price adjustment because a price adjustment regulation says, I can account for other things.

[00:41:10] Speaker 01:
But I think Judge Hughes' questions are appropriate in the sense that,

[00:41:16] Speaker 01:
That's not what that regulation is about.

[00:41:18] Speaker 01:
That's about when the buyer and the seller agree that there ought to be some modification through a rebate, through a discount.

[00:41:26] Speaker 01:
The Kohler example that the government uses is perfect.

[00:41:29] Speaker 04:
Does the rebate or the discount have to come from the seller, though?

[00:41:37] Speaker 01:
It could be just negotiated between the parties.

[00:41:40] Speaker 01:
No, no.

[00:41:41] Speaker 04:
I mean, in this case, you could view the American tax credit as a built-in rebate.

[00:41:49] Speaker 04:
And so when you're selling it to the US customer, you're selling it knowing that they're going to get a rebate.

[00:41:57] Speaker 01:
Well, if I may, Your Honor.

[00:42:00] Speaker 01:
Look, if that were the case and somehow it said that everybody gets a rebate,

[00:42:07] Speaker 01:
You know, maybe we could dress this up as a rebate.

[00:42:10] Speaker 01:
But that's not the case here, right?

[00:42:12] Speaker 01:
And remember, it's very important.

[00:42:13] Speaker 04:
Wait, I don't understand that.

[00:42:14] Speaker 04:
Are you saying that some of your sales into the US aren't rent eligible?

[00:42:20] Speaker 01:
What I mean by that, Your Honor, is that a buyer and seller may, some may not need rents, right?

[00:42:27] Speaker 01:
Some of the purchasers here, and this goes to the questions earlier, some may have all the rents they need.

[00:42:32] Speaker 01:
Right.

[00:42:32] Speaker 01:
And they, and so it's not as if there is one market value for a RIN that applies in every transaction.

[00:42:38] Speaker 01:
If I'm a buyer and I don't need any RINs, I'm going to pay less for the biodiesel because I don't need it.

[00:42:44] Speaker 04:
I don't think I don't want to go down this road, but if they don't need the RIN, can't they sell it?

[00:42:50] Speaker 01:
They could at a different price.

[00:42:53] Speaker 01:
So what's happening, though?

[00:42:55] Speaker 01:
But that could also affect the price at which they're purchasing the biodiesel.

[00:42:59] Speaker 01:
And I think that's the essence of the problem here.

[00:43:02] Speaker 01:
Commerce is really taking a spot market price for RINs and looking at individual transactions for all these sales and saying, you know what?

[00:43:11] Speaker 01:
We need to adjust this.

[00:43:12] Speaker 01:
And we don't think they can.

[00:43:13] Speaker 01:
And with that, I think our time is up.

[00:43:15] Speaker 03:
Thank you, Mr. Speck.

[00:43:16] Speaker 03:
We thank both counsel.

[00:43:17] Speaker 03:
This case is taken under submission.