[00:00:00] Speaker 04:
Your argument and appeal number 22-1525, Pasco versus the United States.

[00:00:13] Speaker 04:
Mr. DeFranchesco, whenever you're ready.

[00:00:20] Speaker 03:
Go ahead.

[00:00:21] Speaker 03:
Good morning, Your Honors.

[00:00:22] Speaker 03:
May it please the Court, I'm Robert DeFranchesco on behalf of Plaintiff Appellant Newport Corporation.

[00:00:27] Speaker 03:
This case addresses the Commerce Department's remand determination pursuant to this Court's holding in Pasco v. US.

[00:00:34] Speaker 03:
In Pasco, the Court held that a proper analysis of adequate remuneration under any tier of Commerce's rules requires determining whether the price paid by a respondent for an input reflects the fair market value of the input.

[00:00:48] Speaker 03:
The Court instructed Commerce in that case to examine the actual cost of producing the electricity and compare it back to the price the respondent paid for that electricity.

[00:00:57] Speaker 03:
Commerce's remand determination in this case is unlawful and unsupported by substantial evidence because it did neither of these two things.

[00:01:03] Speaker 01:
As a housekeeping matter, are we allowed to speak about some things in respect to kind of the timing of purchases?

[00:01:13] Speaker 01:
I notice that in some instances, certain things were highlighted in some briefs as confidential and other instances were not.

[00:01:20] Speaker 01:
And so I just want to know kind of the parameters of how freely we can speak today.

[00:01:25] Speaker 03:
Well, certainly.

[00:01:26] Speaker 03:
I wouldn't want to violate the administrative protective order at commerce.

[00:01:30] Speaker 03:
I think we can talk generally about purchasing electricity on peak, off peak, mid peak.

[00:01:37] Speaker 03:
Some of that was confidential and I'd actually like to walk your honors through some of that in a minute.

[00:01:42] Speaker 03:
I think we can talk about that publicly, how much is purchased and the prices they're purchased at.

[00:01:48] Speaker 03:
Probably not.

[00:01:51] Speaker 03:
So this court remanded Commerce's determination in the original investigation for failing to base its analysis on the actual cost of generating electricity and supplying that electricity and instead relied on a transfer price, a distorted government set price between government affiliates.

[00:02:11] Speaker 03:
First, Commerce has still not considered the actual cost of generating the electricity in this case as the court directed it to.

[00:02:20] Speaker 03:
The court directed it specifically, and I'm going to quote from the opinion here, it found that it's implausible that Commerce adequately investigated Korea's prevailing market conditions for electricity without a thorough understanding of the costs associated with generating and acquiring that electricity.

[00:02:35] Speaker 03:
That's at 1377 in the Posco case.

[00:02:37] Speaker 03:
In that same section, the court went on to state that faulting Commerce, because it did not consider the costs associated with the generators themselves,

[00:02:46] Speaker 03:
did not request information regarding KPX's cost of electricity in generation, such as variable fuel costs, the price for construction and maintenance costs, and the standard of electricity generation on a unit basis and fixed costs.

[00:03:00] Speaker 03:
Commerce still has not requested any of that information.

[00:03:04] Speaker 03:
Yes, Your Honor.

[00:03:06] Speaker 04:
When your case got remanded in light of POSCO 4, did you request that the record be reopened?

[00:03:13] Speaker 03:
Your honor, Commerce took the remand back, reissued its determination without allowing parties to submit new information.

[00:03:23] Speaker 03:
We did request in the briefing that we pointed out that you didn't comply.

[00:03:28] Speaker 04:
Well, I'm just trying to understand.

[00:03:30] Speaker 04:
Did you make a request?

[00:03:32] Speaker 03:
Can you please reopen the record so that we can... Procedurally, typically the way these remands work at Commerce, when they go back, Commerce will either on its own reopen the record

[00:03:43] Speaker 03:
or they'll make a redetermination.

[00:03:45] Speaker 03:
When they made the redetermination, they allowed parties to comment on that redetermination, which is where we said, you haven't complied.

[00:03:52] Speaker 03:
You should have reopened the record.

[00:03:53] Speaker 04:
I guess what I'm trying to, oh, you said you should have reopened the record.

[00:03:58] Speaker 03:
I'll have to check to confirm that, but I believe we did in our briefing.

[00:04:01] Speaker 03:
All right.

[00:04:01] Speaker 03:
I'll be interested in seeing that.

[00:04:03] Speaker 03:
Certainly.

[00:04:05] Speaker 03:
Second, commerce has not determined whether the price is actually paid

[00:04:11] Speaker 03:
by the respondents reflected that fair value.

[00:04:14] Speaker 03:
In its remand results, Commerce determined that the prices charged to the respondent by KEPCO more than fully covered its costs.

[00:04:22] Speaker 03:
that characterization is simply wrong, and it's not supported by substantial... Well, there was a lot of analysis that happened on remand.

[00:04:29] Speaker 04:
They went back and looked at all the pricing of... Well, they looked at all those subsidiaries that sold the electricity tube KEPCO, and they concluded through the 20F form that, in fact,

[00:04:45] Speaker 04:
All of those subsidiaries were profitable and paying out dividends during the relevant period of investigation.

[00:04:53] Speaker 04:
So we know that there wasn't any kind of below market sales to Kepco that could have allowed Kepco to forward on such below market prices to POSCO.

[00:05:09] Speaker 03:
With all due respect, your honor, that's not the analysis.

[00:05:12] Speaker 04:
The statute requires- Well, it's part of the analysis, though.

[00:05:15] Speaker 04:
There's certainly nothing wrong in doing that.

[00:05:17] Speaker 04:
In fact, that was one of the key things that commerce was required to go back and look at, right?

[00:05:24] Speaker 04:
What was going on at the KPX level?

[00:05:27] Speaker 03:
Right.

[00:05:27] Speaker 03:
And they never did that.

[00:05:28] Speaker 03:
They never requested actual costs from the generators.

[00:05:31] Speaker 03:
They never requested information from KPX.

[00:05:33] Speaker 04:
Well, I guess what I'm wondering is what's wrong with relying on

[00:05:37] Speaker 04:
the data that was available, which included the 20F form, which clearly showed that all of these different subsidiaries were in fact operating at a profit and in fact issuing dividends.

[00:05:51] Speaker 04:
So we know that at least at that level, they weren't selling below market.

[00:05:58] Speaker 03:
So with all due respect, Your Honor, that is a cost to the government analysis, which is not

[00:06:04] Speaker 03:
Under the statute, what's required is whether there's a benefit to the recipient.

[00:06:08] Speaker 03:
The fact that the government may generally be profitable, the government authority, it doesn't say anything about whether the government, when it sells that electricity to the respondent, is selling that electricity above or below cost.

[00:06:21] Speaker 03:
And if I may, if I could walk you through some of the documents here.

[00:06:24] Speaker 04:
I guess what I'm trying to understand is at the KPX level, what is it that you had expected commerce to do more in light of what we said in the Pasco for a remit?

[00:06:37] Speaker 03:
They should have got the actual cost of generating the electricity at the time it was sold to the respondents.

[00:06:43] Speaker 03:
And they never did that.

[00:06:44] Speaker 04:
Well, generated by whom?

[00:06:46] Speaker 04:
By all those subsidiaries?

[00:06:49] Speaker 04:
You want the actual electricity that POSCO ultimately used, you want to trace it all the way back to the KPX level subsidiaries and see how much it costs those subsidiaries to make that very quantum of electricity that POSCO ultimately used?

[00:07:07] Speaker 04:
That seems so unrealistically granular, it doesn't make any sense.

[00:07:12] Speaker 03:
So the way the KPX system works is on an hourly basis, they understand what each of the generators are producing the electricity at and selling it into the system, and they reimburse those generators at a certain price.

[00:07:26] Speaker 03:
And then some quantum of that price flows to KEPCO.

[00:07:31] Speaker 03:
KEPCO then sets its electricity pricing to the respondent.

[00:07:35] Speaker 03:
So you would have to know at the time the respondent was purchasing the energy, whether it's mid-peak, off-peak, on-peak, what was the actual cost of that electricity that they were buying.

[00:07:47] Speaker 03:
And they've reported that in the record here.

[00:07:50] Speaker 03:
And if I might, Your Honor, I think those will be clearer if I walk through it.

[00:07:55] Speaker 03:
So at appendix page 8528, again, this is a transfer price.

[00:08:02] Speaker 03:
This is not the actual generator's cost.

[00:08:04] Speaker 03:
And this was already on the record previously.

[00:08:07] Speaker 03:
But what the government is saying is, under the standard that the tariff schedule that the steel producers are in, which is the industrial standard B, they identify the per unit cost for all of the electricity that were sold to all of the customers in that class, of which PASCO is a member.

[00:08:26] Speaker 03:
And they said, well, those prices generally recovered costs.

[00:08:30] Speaker 03:
But if you flip over to what PASCO actually purchased,

[00:08:33] Speaker 03:
which is in appendix 4032, which identifies the three classes that we were just discussing, where it's off-peak, on-peak, and mid-peak.

[00:08:43] Speaker 03:
And you average all of those prices together.

[00:08:46] Speaker 03:
It has the per unit price that they were charged and the amount of electricity they consumed that is substantially lower than that price that we just discussed, which means the prices that they're purchasing the electricity at, the vast majority, when they're buying it, they're buying it below cost.

[00:09:03] Speaker 03:
They're buying it below Kepco's cost, and that's not counting.

[00:09:06] Speaker 04:
Just so I understand, to go with your argument is to say that Kepco can't do on-peak, mid-peak, off-peak pricing schedules?

[00:09:21] Speaker 03:
No, it can.

[00:09:22] Speaker 03:
It just has to price that electricity.

[00:09:24] Speaker 04:
OK, so the off-peak has to be cost recovery.

[00:09:30] Speaker 04:
I'm trying to understand your view.

[00:09:33] Speaker 04:
The error in their industrial classification for the tariff schedule for this electricity needs for every single price point, off peak, on peak, each one of those has to be post-recovery.

[00:09:53] Speaker 03:
For the electricity that was produced at the time it was sold.

[00:09:57] Speaker 03:
So for example, if you're buying off peak, you may be buying from generators

[00:10:00] Speaker 03:
nuclear generators mostly.

[00:10:02] Speaker 03:
They have a different cost structure.

[00:10:04] Speaker 03:
Those are sold into the KPX.

[00:10:06] Speaker 03:
The KPX identifies those at the time that's being produced and when it's being sold.

[00:10:12] Speaker 03:
And they can identify that and they should identify that.

[00:10:15] Speaker 04:
I'm wondering, as a general matter, off peak means the demand is much lower than on peak periods.

[00:10:25] Speaker 04:
So why wouldn't it just be normal market principles to be able

[00:10:31] Speaker 04:
to attract a little more demand during off peak, super low demand time periods by offering a lower price, maybe even lower than true cost recovery because you're trying to recover something during that off peak time period compared to the, you know, high peak period.

[00:10:50] Speaker 03:
Certainly, but the adequate remuneration standard in the statute requires an examination of whether the input that I'm purchasing

[00:10:57] Speaker 03:
recovered costs.

[00:10:58] Speaker 03:
And here, the overwhelming amount of the electricity purchased didn't recover costs for that specific respondent, for these specific respondents.

[00:11:06] Speaker 04:
But for the overall industrial classification, it did recover costs.

[00:11:10] Speaker 03:
Right, which means they were recovering costs to other companies that are not, maybe not steel companies.

[00:11:16] Speaker 03:
There's a whole group of other companies that are in that classification, which doesn't answer the statutory question about the benefit to the respondent.

[00:11:25] Speaker 03:
In this scenario, the benefit to the respondent was significant.

[00:11:28] Speaker 03:
And even in the 20 F's that your honor was referring to, if you look at, it's 15.7, which is appendix tab 15711, in that 20 F, it identifies the general unit price in a wand per kilowatt per generator.

[00:11:49] Speaker 03:
And the average is 82, that's as public so I can say this publicly, is about 82 wand per kilowatt.

[00:11:55] Speaker 03:
Again, going back to that table I just discussed,

[00:11:57] Speaker 03:
Averaging all of that together, it's far below that price.

[00:12:00] Speaker 03:
So whichever way you slice it, the data on the record shows that the overwhelming majority of the electricity purchased here is purchased below cost.

[00:12:11] Speaker 03:
And we still, to this day, don't have the actual cost of generating the electricity at the time it was purchased.

[00:12:19] Speaker 04:
You're into your rebuttal.

[00:12:20] Speaker 04:
Do you want to save it, or do you have other points you want to make?

[00:12:23] Speaker 03:
I do, Your Honor, if I can reserve the rest of my time.

[00:12:25] Speaker 03:
OK, very good.

[00:12:26] Speaker 03:
Thank you.

[00:12:27] Speaker 03:
from the government.

[00:12:38] Speaker 00:
I'd like to start where my friend left off in the weeds on the cost comparisons.

[00:12:47] Speaker 00:
What's important to understand here is that the cost comparisons that Newport is making now are not actually related to what Commerce found are the prevailing market conditions that are reflected in Capco's tariff amounts.

[00:13:01] Speaker 00:
So the comparisons that are being made here are a comparison between off-peak electricity use, which is reflective of the cost of maintaining an electricity grid, and comparing them to the average of costs to produce electricity.

[00:13:19] Speaker 00:
So that's apples and oranges.

[00:13:20] Speaker 00:
That's not an appropriate way to assess.

[00:13:22] Speaker 04:
Was there a finding by Commerce that during off-peak periods, whatever the off-peak price is,

[00:13:30] Speaker 04:
is doing cost recovery for the costs of generating electricity during the off-peak period.

[00:13:36] Speaker 04:
So what commerce... I understand that commerce didn't make that specific

[00:13:40] Speaker 00:
Well, it's incorporated in what Commerce did find about KEPCO's tariff schedule, and I'd like to highlight three different elements of those findings.

[00:13:51] Speaker 00:
In Exhibit E15, that's the tariff schedule for 2015, and it reflects a lot of different, what Commerce found were prevailing market conditions, such as voltage, electricity demand, peak versus off-peak being one of those.

[00:14:04] Speaker 00:
And Commerce then explained in theory how not only is TEPCO required by law to recover its costs, but Commerce explained in theory, based on the government of Korea's questionnaire responses, how those costs and demand translates into each different piece.

[00:14:24] Speaker 00:
And a snapshot of that is at 6001 of the appendix.

[00:14:29] Speaker 00:
You can see how it's a very detailed cost analysis and an assessment of demand.

[00:14:35] Speaker 04:
Yes.

[00:14:38] Speaker 00:
And some of that is confidential.

[00:14:40] Speaker 00:
That's just a snapshot.

[00:14:42] Speaker 00:
And then Commerce also explained the broader theory at the remand re-determination, page 23268.

[00:14:51] Speaker 04:
Well, is there something specific you want me to look at?

[00:14:55] Speaker 00:
Well, I'm listing these as this is how the cap code tariff schedule costs were assessed, and then not only did Commerce determine that those costs were, that the actual costs and projected costs were how the tariff schedule was created,

[00:15:13] Speaker 00:
But at E16, which is what Mr. DiFrancisco was referencing at A528, that's the 2014 delineation of the cost recovery analysis showing that KEPCO not only recovered costs,

[00:15:29] Speaker 00:
but also a return on investment.

[00:15:32] Speaker 04:
Is that the 2014 cost data?

[00:15:34] Speaker 00:
That's the 2014 cost data, which Commerce found was probative based on the decrease in fuel prices and the relatively stable electricity demand for 2015.

[00:15:43] Speaker 04:
But as I understand it, it was establishing that there was cost recovery plus some return for the industrial classification as a whole, not when you break it down into

[00:15:56] Speaker 04:
subtypes within that overall classification category.

[00:16:00] Speaker 04:
Is that correct?

[00:16:01] Speaker 00:
That's right, Your Honor, but I would push back on the notion that commerce is, that, for example, this course decision in Nucor requires commerce to engage in a certain specific level of granularity specific to off-peak versus on-peak.

[00:16:14] Speaker 00:
Commerce reasonably found that those considerations are conditions of purchase or sale consistent with the statutory scheme.

[00:16:21] Speaker 00:
They are consistent with

[00:16:23] Speaker 00:
with the regulation for a Tier 3 analysis like this one where there is no in-country benchmark price.

[00:16:29] Speaker 00:
There is no worldwide benchmark price.

[00:16:31] Speaker 00:
What this court highlighted in its 2019 decision in new court is that to be sure, commerce can't engage in a preferentiality, a pure preferentiality test of price discrimination alone.

[00:16:42] Speaker 00:
It has to consider market principles.

[00:16:46] Speaker 00:
The court made clear that commerce still retains a great deal of discretion in how to apply the statute and engage in cost recovery.

[00:16:54] Speaker 00:
And that's what commerce did here.

[00:16:56] Speaker 02:
So hypothetically, if KEPCO made a business decision to sell off peak at the low cost and

[00:17:05] Speaker 02:
Costco made a business decision that it could also run its operations to buy mostly at off-peak, so it would also be buying reduced at below cost.

[00:17:14] Speaker 02:
But nevertheless, if you look at Kepco's total power sales, there was cost recovery.

[00:17:23] Speaker 02:
Is that, in your view, not counter-available?

[00:17:26] Speaker 02:
Because the whole system has actual cost recovery, even if the off-peak doesn't.

[00:17:35] Speaker 00:
So I think the question is whether as a whole there is cost recovery.

[00:17:42] Speaker 00:
And I would point out that in some subsequent proceedings, there's been specific arguments made raising the question and exhausting the question before commerce of getting really into the nitty-gritty question.

[00:17:53] Speaker 00:
And in those cases, commerce has gone the extra step and delineated how the costs that are actually paid by the respondents

[00:18:03] Speaker 00:
enable cost recovery.

[00:18:05] Speaker 00:
That sort of nitty gritty argument really wasn't made here.

[00:18:08] Speaker 00:
What the issues that have been at play throughout this case have been, has commerce applied?

[00:18:12] Speaker 02:
Is that the argument that I think Judge Chen suggested that even if you're pricing low peak, off peak power at below cost,

[00:18:23] Speaker 02:
if it encourages people to buy it, you're still getting some cost recovery rather than not selling it at all.

[00:18:30] Speaker 00:
That's right.

[00:18:31] Speaker 00:
And that's consistent with the nature of maintaining an electricity grid where, for example, nuclear producers have to produce all the time.

[00:18:38] Speaker 00:
So if purchasers aren't purchasing during off-peak times, that's just electricity that's been wasted.

[00:18:45] Speaker 00:
So I think exactly as Your Honor was pointing out, there are incentives market-based and market-based principles

[00:18:52] Speaker 00:
that support encouraging companies like large users of electricity to use electricity during those off-peak times.

[00:19:01] Speaker 01:
What is your best support for saying you don't have to get as granular as opposing counsel contends you need to get here?

[00:19:07] Speaker 00:
So I think twofold.

[00:19:08] Speaker 00:
One is the decision in Nucor, which highlighted that although commerce can't engage in a pure price discrimination analysis, commerce retains a large range of potential choices, and the two-step analysis that was ultimately sustained in Nucor is quite similar to the one here.

[00:19:23] Speaker 00:
I said that this one

[00:19:23] Speaker 00:
based on the guidance from POSCO also has the added element of the generation cost, which have already been discussed here today and indeed is supported by the record.

[00:19:33] Speaker 00:
So to the extent that there's critique about commerce didn't do the cost analysis in exactly this way or that way, the statute just says that commerce has to

[00:19:43] Speaker 00:
consider whether this is being provided at less than adequate remuneration based on prevailing market conditions.

[00:19:48] Speaker 00:
Commerce has done that.

[00:19:49] Speaker 00:
The regulations for a tier three analysis is, again, it's not one where we have clear benchmarks based on market prices in country or worldwide.

[00:19:58] Speaker 00:
Commerce has discretion how to do the cost recovery analysis.

[00:20:01] Speaker 00:
And the court in New Court also highlighted that this is the area of utilities.

[00:20:06] Speaker 00:
This is not a particularly novel issue.

[00:20:09] Speaker 00:
You see this throughout the law, not just in commerce, but across the board.

[00:20:13] Speaker 00:
And so a cost recovery type analysis is appropriate.

[00:20:18] Speaker 00:
There's no need to go in and figure out, well, when you're incentivizing off-peak use, are you specifically recovering costs then?

[00:20:29] Speaker 00:
Because there's a lot of market-based rationales that may implicate why it would make sense for KEPCO to do that, to maintain the electricity grid.

[00:20:37] Speaker 04:
Commerce didn't quite say all that, though, in its remand.

[00:20:40] Speaker 04:
Redetermination, right?

[00:20:42] Speaker 04:
What you're saying now about, let's look holistically.

[00:20:45] Speaker 04:
We've got a problem here off peak versus on peak.

[00:20:49] Speaker 04:
You know, there's a price differential there.

[00:20:51] Speaker 04:
On the one hand, one could imagine that the on peak pricing is subsidizing the off peak pricing because, you know, you're not really recovering costs for those off peak uses.

[00:21:05] Speaker 04:
And you got to make that up somewhere.

[00:21:06] Speaker 04:
So we're going to make that up on the on peak.

[00:21:09] Speaker 04:
purchasers, and we're going to put it on their backs.

[00:21:12] Speaker 04:
But at the same time, one could imagine that Kepko reasonably was trying to incentivize people to purchase Offpeak, and so this is how they have to do it in order to get anybody to come out and use it during Offpeak.

[00:21:31] Speaker 04:
Commerce didn't say any of that.

[00:21:33] Speaker 00:
Well, I would push back on that a bit, because what Commerce explained is its cost recovery analysis is looking to cost recovery as a whole.

[00:21:42] Speaker 00:
And it explained that the tariff schedule in Exhibit 15 was reflecting market-based principles.

[00:21:50] Speaker 00:
So maybe there is a lot worked into that.

[00:21:52] Speaker 00:
And I would also highlight that, looking back at the Commerce highlighted the arguments that were made to it on remand.

[00:21:59] Speaker 00:
That's all incorporated in the remand determination.

[00:22:02] Speaker 04:
But they knew this argument.

[00:22:04] Speaker 04:
the purchases by Costco were at this discounted rate during the off-peak periods, and so therefore there's some kind of subsidy lurking in there.

[00:22:16] Speaker 00:
The important thing from commerce's perspective is this two-step analysis that was sustained by this court in Nucor.

[00:22:26] Speaker 00:
The purpose for the remand was really to address the generation consideration and also KPX, which I could briefly address if that would be helpful.

[00:22:35] Speaker 00:
But this issue about

[00:22:39] Speaker 00:
off peak versus on peak has been at issue in these cases, this court in Nucor sustained the two-step analysis and didn't require the type of granularity that Nucor is now contending is necessary.

[00:22:51] Speaker 00:
It wasn't required.

[00:22:56] Speaker 00:
It would be logistically challenging in some ways.

[00:22:58] Speaker 00:
The six KEPCO subsidiaries produce about 80% of electricity, but there's also a lot of private entities that produce electricity and whose electricity is purchased by KPX and through KPX to KEPCO.

[00:23:17] Speaker 00:
So, you know, Commerce engaged in an appropriate cost recovery analysis, and that's really it when it comes to the question of has Commerce complied with the statute?

[00:23:28] Speaker 00:
Has Commerce complied with the guidance in Nucor and Pasco?

[00:23:31] Speaker 00:
Has Commerce complied with its regulations?

[00:23:34] Speaker 04:
The answer to all those questions... I think Commerce on remand reopened the record to go get the 2015 cost data.

[00:23:40] Speaker 04:
I mean, that would be the best data available instead of having to try to

[00:23:45] Speaker 04:
twist itself into a pretzel and cobble together data from other years in order to try to figure out what actually was the 2015 cost data.

[00:23:56] Speaker 00:
Yeah, and I hear that, your honor.

[00:23:58] Speaker 00:
However, the question on review is, was there substantial evidence in the record that supports what Commerce did find?

[00:24:05] Speaker 00:
And the answer to that is yes.

[00:24:07] Speaker 00:
The decision of whether to reopen the record is a discretionary one for Commerce to decide.

[00:24:12] Speaker 00:
Again, the key piece coming down the court's guidance from POSCO was addressing generation.

[00:24:19] Speaker 00:
That was the focus.

[00:24:21] Speaker 00:
Commerce was able to very, as the court has acknowledged, to look at items already in the investigation record.

[00:24:29] Speaker 00:
That was appropriately what Commerce was focused on.

[00:24:31] Speaker 04:
Did the new court urge Commerce to open the record to go get the 2015 cost data?

[00:24:39] Speaker 00:
In reading the remand, they did argue that there was no POI, period of investigation, specific cost data.

[00:24:47] Speaker 00:
Your understanding here right now, I couldn't say whether or not they specifically asked to reopen.

[00:24:54] Speaker 00:
They did raise the argument about the period of information, but Commerce reasonably looked at the 2014 data.

[00:24:59] Speaker 00:
look to the other information in the record about why the 2014 data is probative of the year 2015 and made a determination on that basis.

[00:25:10] Speaker 00:
I see I only have a few minutes left.

[00:25:12] Speaker 00:
I'd like to very briefly address one issue to do with KPX that

[00:25:17] Speaker 00:
that I think is important.

[00:25:19] Speaker 00:
Coming from the reply brief, there's still this argument that commerce erred by even referencing an upstream subsidy type analysis.

[00:25:28] Speaker 00:
In fact, it was this court in Pasco, page 1377, where the court in saying that commerce didn't adequately consider any benefit being conferred from KPX to KEPCO,

[00:25:42] Speaker 00:
cited the upstream subsidy statute which is 1677-1 and the portion of the Statement of Administrative Action

[00:25:50] Speaker 00:
which also references the upstream allegation.

[00:25:53] Speaker 00:
And that makes sense because KPX is not contributing anything to POSCO.

[00:25:57] Speaker 00:
The question is, has KPX, through its pricing of electricity, conferred a competitive benefit to KEPCO that then has a downstream benefit?

[00:26:06] Speaker 00:
And that's an upstream subsidy type analysis.

[00:26:08] Speaker 00:
So I just wanted to clarify that that analysis originated in this course decision in POSCO.

[00:26:18] Speaker 00:
If there are no further questions, respect the request that you affirmed.

[00:26:22] Speaker 04:
All right.

[00:26:22] Speaker 04:
Thank you, Ms.

[00:26:22] Speaker 04:
Vaughn.

[00:26:30] Speaker 03:
Thank you, Your Honors.

[00:26:30] Speaker 03:
There are a few points I'd like to hit.

[00:26:33] Speaker 03:
And going specifically first back to the questions about off-peak, on-peak, and where is that in the record, it's not.

[00:26:39] Speaker 01:
Can you also answer the question of whether or not you actually made the request to reopen the record?

[00:26:45] Speaker 03:
Certainly.

[00:26:45] Speaker 03:
We went back and looked.

[00:26:47] Speaker 03:
did not find a formal letter requesting reopening the record.

[00:26:51] Speaker 03:
We did argue that the methodology in our comments was incorrect and didn't comply with the court's order.

[00:26:58] Speaker 03:
But we did not formally request that they reopen the record, which is, frankly, on remand, you don't normally file comments before commerce opens its record up for comment after it issues its remand determination.

[00:27:11] Speaker 03:
So it would have been unusual that a party does that anyway.

[00:27:16] Speaker 03:
But going back to your honor's questions about off-peak, on-peak, all of that is post-hoc.

[00:27:21] Speaker 03:
Commerce didn't analyze any of that in its determination.

[00:27:24] Speaker 03:
It didn't request any of that information.

[00:27:25] Speaker 03:
It didn't request that information from KPX.

[00:27:28] Speaker 03:
Comments about generators and why they might sell at certain periods of time.

[00:27:34] Speaker 03:
The cost evaluation committee at KPX collects the actual cost at the hour the energy is generated from the generator.

[00:27:41] Speaker 03:
They have that information.

[00:27:43] Speaker 03:
None of it's on this record.

[00:27:46] Speaker 03:
Going back to the analysis about, well, Tier 3 allows us to do this holistic analysis of benefit, and we don't have to go back to what the recipient actually purchased.

[00:27:56] Speaker 03:
That's Commerce's regulations that has no bearing at all on the statute.

[00:27:59] Speaker 03:
The statute doesn't make a distinction between Tier 1, Tier 2, Tier 3.

[00:28:03] Speaker 03:
The statute simply talks about less than adequate remuneration, and when you're calculating that benefit, it has to be calculated based on the benefit to the recipient.

[00:28:14] Speaker 03:
Commerce's tier one and tier two doesn't make any sort of is specific.

[00:28:19] Speaker 03:
It goes directly to what did the recipient pay?

[00:28:22] Speaker 03:
In tier three, they often do the same thing.

[00:28:24] Speaker 03:
They just didn't do it in this case.

[00:28:26] Speaker 04:
Just going back to something that I've raised earlier, it's the consequence of going with your argument that Kepko's

[00:28:39] Speaker 04:
Tariff schedule is flawed and KEPCO has to redo its tariff schedule for basically the entire electricity market of Korea.

[00:28:52] Speaker 04:
in order to ensure that those Korean companies that actually end up exporting goods to the United States, those companies are buying their electricity above cost at all times, on peak, off peak, et cetera.

[00:29:08] Speaker 04:
Is that fair to say that's the consequence of

[00:29:11] Speaker 04:
going with your argument?

[00:29:12] Speaker 03:
I think for the specific tariff schedule as it relates to the industrial tariff schedule that they're purchasing.

[00:29:17] Speaker 04:
It's the entire schedule for the entire country, for the entire electricity market.

[00:29:23] Speaker 03:
Well, no, no.

[00:29:25] Speaker 03:
The tariff schedule we're talking about, that both ourselves and the government are talking about, is the schedule specific to the industrial users.

[00:29:31] Speaker 04:
The industrial classification.

[00:29:32] Speaker 03:
For that specific classification.

[00:29:36] Speaker 03:
I think they would have to adjust the tariff schedule to reflect that.

[00:29:40] Speaker 03:
They said themselves, and in this investigation, they only revisit this tariff schedule once a year.

[00:29:47] Speaker 03:
And it's based on costs that they anticipate.

[00:29:51] Speaker 02:
Wait, can I just?

[00:29:53] Speaker 02:
Are you saying that if CAPCO decides, as a matter of smart business principles, that it wants to encourage the use of off-market electricity to promote the power grid, particularly these nuclear energy suppliers, that it can't sell below cost, otherwise it's counter-available?

[00:30:16] Speaker 03:
we're actually confusing.

[00:30:18] Speaker 02:
No, no, no, answer that.

[00:30:19] Speaker 02:
That's a hypothetical.

[00:30:21] Speaker 02:
Yes, you may have disagreements here, but it seems to me that if a country and an electricity supplier determines we have high peak demand, we have mid-peak demand, and we have low peak demand, and in order to make our power grid more efficient, we're going to sell low peak

[00:30:40] Speaker 02:
below cost because at least we recover something and we're going to sell high peak way above cost and overall, hypothetically, they recover costs for all of it.

[00:30:52] Speaker 02:
Is that not permissible under our counter railing duty laws?

[00:30:55] Speaker 03:
It would have to be examined as the specificity analysis.

[00:30:59] Speaker 03:
What we're talking about now is the degree to which the subsidy is specific.

[00:31:04] Speaker 02:
You mean you have to go back and look to see exactly.

[00:31:07] Speaker 02:
My hypothetical assumed that they're selling below the cost that the generators are doing.

[00:31:12] Speaker 02:
But nevertheless, as a whole, KEPCO wants to do this because it improves the power grid efficiency, whatever.

[00:31:19] Speaker 02:
You're saying they can't do that.

[00:31:20] Speaker 03:
No, I'm saying a subsidy analysis multiple parts.

[00:31:25] Speaker 03:
Was it a financial contribution?

[00:31:26] Speaker 02:
Let's just assume hypothetically that's what happened here, and that there's evidence in the record to support that.

[00:31:33] Speaker 02:
Is that sufficient to support commerce's determination here?

[00:31:38] Speaker 03:
No, I think you would have to examine the degree to which, when they decide to sell below cost, and when they're making that decision, who's buying?

[00:31:48] Speaker 03:
How many companies are buying?

[00:31:51] Speaker 03:
If we're only talking about steel mills that are buying at that time, then the decision to make that decision about selling below cost means

[00:32:02] Speaker 03:
Well, there's only one consumer, and one or two consumers that are making those purchases.

[00:32:06] Speaker 03:
So that decision, while there may be some commercial aspect to it, is really a decision to benefit those consumers, which is an element of specificity, which is not a benefit analysis.

[00:32:17] Speaker 03:
A benefit analysis should simply be, what was the price that the respondent purchased the electricity at, and what did it cost?

[00:32:24] Speaker 03:
And if there's a delta, there's a benefit.

[00:32:26] Speaker 03:
Then we'll examine specificity, as your honor mentioned.

[00:32:30] Speaker 03:
And the decision about who's buying when you're selling will influence that decision.

[00:32:36] Speaker 03:
And if it's only steel producers, then it's specific.

[00:32:41] Speaker 04:
We don't have anything in the record about who's buying in the industrial classification off peak.

[00:32:47] Speaker 03:
We do not.

[00:32:47] Speaker 03:
Because this issue, Your Honor, focuses solely on the benefit determination.

[00:32:51] Speaker 03:
It does not address specificity as we were just discussing.

[00:32:58] Speaker ?:
OK.

[00:32:58] Speaker 03:
Thank you.

[00:32:59] Speaker 03:
I see my time is up.

[00:33:00] Speaker 03:
Thank you, Your Honors.

[00:33:02] Speaker 03:
The case is submitted.