[00:00:00] Speaker 04:
Our final case is 22-2000 Taizhou.

[00:00:04] Speaker 04:
Somebody better tell me how to say this one.

[00:00:08] Speaker 04:
Taizhou United versus United States.

[00:00:12] Speaker 04:
Please proceed Mr. Horgan.

[00:00:15] Speaker 01:
Good morning or perhaps

[00:00:19] Speaker 01:
May it please the court.

[00:00:21] Speaker 01:
First question to be addressed today in this case is whether the CIT properly allowed the Commerce Department to inject a post hoc rationalization to support a decision it had made eight years earlier.

[00:00:35] Speaker 01:
In this case, the remand determination proffered a new rationale to support the countervailing of glass subsidies.

[00:00:42] Speaker 01:
by suggesting that even though in its initial finding it found the glass was an input for the subject merchandise, on its remand it said, well, it's not an input.

[00:00:55] Speaker 01:
So it's really not an input, but it doesn't need to be.

[00:00:58] Speaker 01:
So this is the first time they made that determination.

[00:01:00] Speaker 01:
It's in the remand determination eight or nine years after their original decision.

[00:01:05] Speaker 01:
And the judge below affirmed that saying it was okay because the Commerce Department offered this new rationale instead of the Justice Department.

[00:01:14] Speaker 01:
Now, we all know now as a result of the Regents decision, which is discussed in our briefs, that the Supreme Court has rejected the notion that you can approve a post hoc rationale based on the fact that an agency did it rather than the Justice Department.

[00:01:28] Speaker 01:
It doesn't matter which entity offered this post hoc rationale.

[00:01:33] Speaker 01:
It still has to be.

[00:01:34] Speaker 01:
There has to be a reason to allow it.

[00:01:37] Speaker 01:
And in this case, there is none because there's no question that it was a post hoc rationale.

[00:01:42] Speaker 01:
The court below agreed with that.

[00:01:43] Speaker 01:
They just allowed the Commerce Department to do it.

[00:01:46] Speaker 03:
So just to level set, what is the specific rationale Commerce offered initially that was changed on remand?

[00:01:51] Speaker 03:
I just want to make sure I know

[00:01:52] Speaker 01:
In the initial determination to countervail glass subsidies, they said glass was an input for aluminum extrusions.

[00:02:01] Speaker 01:
And in the court below, after eight years, the court decided that no, it's not an input, that glass is not an input for aluminum extrusions, that aluminum extrusions are the subject merchandise.

[00:02:17] Speaker 01:
And therefore that determination violated the plain language of the order.

[00:02:21] Speaker 01:
On remand, commerce said, well, never mind.

[00:02:25] Speaker 01:
It's not.

[00:02:25] Speaker 01:
It's not an input.

[00:02:27] Speaker 01:
But it doesn't have to be.

[00:02:29] Speaker 04:
Well, let me ask a question.

[00:02:31] Speaker 04:
One of the government's arguments on appeal is that you forfeited the entire post hoc rationalization argument under regents because you didn't raise these legal arguments below.

[00:02:42] Speaker 04:
Did you have an opportunity to do that?

[00:02:44] Speaker 01:
We had an opportunity to raise the post hoc rationale argument.

[00:02:48] Speaker 01:
And we did.

[00:02:49] Speaker 01:
And the court addressed it in its decision.

[00:02:52] Speaker 01:
What the court surprised us with was it made, and no, this is not something that government argued.

[00:02:59] Speaker 01:
The court on its own decided it would approve the post-talk rationale based on the fact that it was commerce rather than justice.

[00:03:05] Speaker 01:
So we never had an opportunity to address that issue because the judge offered that reasoning in his opinion after we had completed the briefing on that issue.

[00:03:15] Speaker 01:
There was a subsequent rehearing, but only on other issues that the court had failed to decide initially.

[00:03:21] Speaker 01:
So we never had an opportunity below to address the post-hoc rationale argument being approved as a result of the Commerce Department issuing it rather than the Justice Department.

[00:03:33] Speaker 01:
But we did address the post-hoc rationale argument.

[00:03:35] Speaker 01:
We raised it.

[00:03:36] Speaker 01:
That's why the court addressed it below.

[00:03:39] Speaker 04:
Okay, well, since we're on this forfeit topic, let me just jump you ahead because the government also argues that you forfeited the upstream subsidies argument.

[00:03:48] Speaker 04:
Where in the record before commerce or the trial court did you make an argument that the analysis should have been performed under the upstream subsidy statute?

[00:03:57] Speaker 01:
We did not make an argument prior to the

[00:03:59] Speaker 01:
to the briefing in this court, that is true.

[00:04:02] Speaker 01:
But this is part of the same, it's support for the same argument that we had been making all along, that there has to be some sort of connection between the alleged glass subsidy, the alleged subsidy and the subject merchandise, that there's got to be some tying.

[00:04:18] Speaker 01:
So the upstream subsidy provision that we cited in the briefs here are just additional support for that argument.

[00:04:25] Speaker 01:
And it does show when Congress enacted the law, it intended to limit the notion that you could take things that were, take grants given to upstream producers and assess countervailing duties on the consumers of those items.

[00:04:41] Speaker 01:
And the statute makes it clear that it had to be an input in order to do that.

[00:04:45] Speaker 01:
And when Congress made its original determination that it was its input, that it was an input, then of course it would have been okay.

[00:04:52] Speaker 01:
But now we know that

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It's not an input based on the decision of the court below.

[00:04:58] Speaker 01:
So that's why it's appropriate to discuss it here, even though it hadn't been discussed below.

[00:05:02] Speaker 02:
What about the UANDA decision?

[00:05:05] Speaker 01:
The UANDA decision?

[00:05:07] Speaker 01:
There were one and two UANDA.

[00:05:09] Speaker 01:
And in that case, what the court held was that the aluminum extrusions embedded in curtain wall units did not qualify for two exclusions.

[00:05:19] Speaker 01:
So in the first one, it was an exclusion for finished goods.

[00:05:22] Speaker 01:
Second one, it was an exclusion for kits.

[00:05:26] Speaker 01:
But in this case, but the court never held that aluminum extrusions themselves were the product worthy subject merchandise rather than

[00:05:34] Speaker 01:
the aluminum extrusions embedded.

[00:05:37] Speaker 02:
Didn't that conclude that the original order covered glass?

[00:05:46] Speaker 01:
No, the original order did not cover glass.

[00:05:48] Speaker 01:
No one ever determined that.

[00:05:49] Speaker 01:
In fact, the language of the scope explicitly excludes non-aluminum extrusions items like glass.

[00:06:00] Speaker 01:
So no court or even the Commerce Department's ever hold a glass itself as a subject merchandise.

[00:06:07] Speaker 01:
So I think what we have to look at is when you look back at the Regents' decision, it says the basic rule is that an agency must defend the determination based on the reasons given when it acted.

[00:06:19] Speaker 01:
You can't count a red glass here because it's not an input.

[00:06:22] Speaker 01:
They've now determined that it's not an input.

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So if you can't countervail it as an input, then you can't countervail it at all.

[00:06:30] Speaker 01:
And that's the decision that this court should make.

[00:06:33] Speaker 01:
The second issue that we raised, if you get past this ad hoc, this post hoc reasoning argument, and you look at the merits of the decision, again, the court should not affirm because all goods provided at Jang Ho are countervailable under a CBD order on aluminum extrusions.

[00:06:50] Speaker 01:
In support of the notion that the DOC could countervail all goods,

[00:06:53] Speaker 01:
The government in its remand determinations postdoc rationale said anything that they get is counter-available.

[00:07:01] Speaker 01:
And what we've suggested is that if you look at the preamble to the regs that is cited by both the defendant and the interveners, that it says that the CBD regulations indicate that counter-available subsidies should include any goods that are provided at less than adequate remuneration to the producer of subject merchandise.

[00:07:23] Speaker 01:
And in our case, Zhang Hou is not a producer of glass, and it's not a producer of aluminum extrusions.

[00:07:31] Speaker 01:
It buys both items and assembles them to form a curtain wall.

[00:07:36] Speaker 01:
So that being the case, I mean, there's no real reason.

[00:07:39] Speaker 01:
It's outside the scope.

[00:07:41] Speaker 01:
The glass is outside the scope, as I just discussed.

[00:07:44] Speaker 01:
There's no basis for treating Zhang Hou as a producer of subject merchandise.

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So you can't countervail any subsidy it received.

[00:07:53] Speaker 01:
because it's not a producer of aluminum extrusions.

[00:07:57] Speaker 01:
And you only get to that if you first agree that they can offer this post-doc rationalization at all.

[00:08:03] Speaker 01:
I think the Supreme Court has made it clear that that's not allowable under these circumstances, where they're substituting a new writ rationale eight years after they made their original determination.

[00:08:14] Speaker 01:
Unless you have any questions, I'll keep the rest of it.

[00:08:18] Speaker 04:
We're running out of time.

[00:08:19] Speaker 04:
Mr. Edelstein, am I saying that right?

[00:08:21] Speaker 04:
How do I say it?

[00:08:22] Speaker 04:
it'll check your honor okay it'll check please proceed I have to step out for a sec but I'm gonna be right back but you can proceed I can actually hear that argument is piped in so please proceed you're sure your honor yep we can wait no okay good afternoon and may it please the court

[00:08:38] Speaker 05:
Jang Ho argues that commerce violated the law by countervailing upstream subsidies, but commerce did no such thing.

[00:08:46] Speaker 05:
Commerce stated there were no upstream subsidies at issue in this case.

[00:08:51] Speaker 05:
There was no allegation of an upstream subsidy and upstream subsidies were not part of commerce's analysis in this case.

[00:08:59] Speaker 05:
How did this come up?

[00:09:01] Speaker 05:
The trial court expressed a hypothetical concern about possible double counting.

[00:09:05] Speaker 05:
This was not an issue that was raised by Zheng Ho at any point during the proceeding.

[00:09:12] Speaker 03:
And I think opposing counsel even admitted in his earlier argument that he thought it was forfeited.

[00:09:17] Speaker 03:
You might not use those words, but I think you agreed with me.

[00:09:19] Speaker 05:
And there are waiver issues all over the place.

[00:09:21] Speaker 05:
I won't belabor them.

[00:09:23] Speaker 05:
This is twice waived by the failure to exhaust before commerce and the failure to develop this issue before the trial court.

[00:09:33] Speaker 03:
Do you agree that commerce offered a different rationale on remand?

[00:09:37] Speaker 05:
No, Your Honor.

[00:09:40] Speaker 05:
So if I could just unpack the post-rationalization issue.

[00:09:46] Speaker 05:
The argument is that in Commerce's tying analysis, there was a post hoc rationalization.

[00:09:52] Speaker 05:
But Commerce simply complied with the trial court's remand order.

[00:09:57] Speaker 05:
The agency conducted a new administrative proceeding on remand with a notice and comment process as part of that.

[00:10:07] Speaker 05:
And then the agency issued a new and final redetermination of the matter.

[00:10:12] Speaker 05:
And throughout that whole process, the rationale

[00:10:16] Speaker 05:
for Commerce's tying analysis never changed.

[00:10:20] Speaker 05:
Under that analysis for tying, the agency does not countervail a benefit if the evidence shows that the subsidy was tied to non-subject merchandise, evidence of tying to non-subject merchandise at the time of bestowal.

[00:10:44] Speaker 05:
And in the original determination,

[00:10:46] Speaker 05:
And in the redetermination, Commerce found that Zhang Ho's glass subsidies were not tied to non-subject merchandise.

[00:10:58] Speaker 05:
Not tied to non-subject merchandise.

[00:11:01] Speaker 05:
And the agency found no evidence to the contrary.

[00:11:07] Speaker 05:
It was Zhang Ho's burden to make whatever record of tying that it wished to do so.

[00:11:11] Speaker 05:
It put no evidence on the record in proceeding either

[00:11:15] Speaker 05:
Originally before commerce or during the remand, there's no evidence of tying.

[00:11:21] Speaker 05:
And it's unremarkable that commerce conducted a new administrative proceeding on remand and then issued a final redetermination of the tying issue.

[00:11:32] Speaker 03:
Following up on Judge Laurie's prior question to opposing counsel, can you address the Euanda case?

[00:11:38] Speaker 05:
Absolutely, Your Honor.

[00:11:42] Speaker 05:
That goes to the scope argument that has been made.

[00:11:47] Speaker 05:
And Zhengho's arguing essentially that aluminum extrusions are the subject merchandise.

[00:11:54] Speaker 05:
That's all there is.

[00:11:56] Speaker 05:
The scope of this order, this order in the record, it fills an entire page of the federal register.

[00:12:08] Speaker 05:
And it has spawned an extensive amount of litigation, including Uwanda one and two.

[00:12:15] Speaker 05:
And there in Uwanda, one, there's an entire section of that opinion.

[00:12:21] Speaker 05:
I believe the heading is something like, the scope includes curtain wall units.

[00:12:27] Speaker 05:
Those curtain wall units contain both glass and aluminum extrusions and are subject merchandise.

[00:12:35] Speaker 05:
This court has twice held that.

[00:12:36] Speaker 02:
So what does that do for our case here?

[00:12:39] Speaker 05:
Well, Jang Ho produces the same curtain wall units and was the same appellant in Uwanda, too.

[00:12:46] Speaker 05:
And consistent with those decisions, Commerce properly countervailed the subsidized glass that went into Jang Ho's curtain wall units, which are

[00:12:57] Speaker 05:
as this court has held twice, subject merchandise.

[00:13:01] Speaker 02:
Does that decide the case in conjunction with the waiver?

[00:13:09] Speaker 05:
Yes, Your Honor.

[00:13:10] Speaker 05:
If there's anything that was properly preserved and presented in this case, it's that narrow scope issue, which is squarely resolved by the court's prior Iwanda decisions.

[00:13:22] Speaker 05:
But if I could just expound on the

[00:13:24] Speaker 05:
The allegation of the post hoc rationalization, which, as I mentioned, is a bit of a red herring because the rationale didn't change.

[00:13:31] Speaker 05:
But it's important to recognize that commerce can always take the second of the two regents' options.

[00:13:40] Speaker 05:
And there's two options.

[00:13:42] Speaker 05:
On a remand, an agency can always either choose to expound on the reasons for its original decision,

[00:13:54] Speaker 05:
Or it can take the second option of issuing a new decision.

[00:13:59] Speaker 05:
And that's what commerce always does in these countervailing duty and anti-dumping duty cases.

[00:14:06] Speaker 05:
They're always taking that second door.

[00:14:10] Speaker 05:
They are issuing a new decision after notice and comment.

[00:14:15] Speaker 05:
They issue a draft redetermination to the parties.

[00:14:19] Speaker 05:
And then they

[00:14:21] Speaker 05:
receive comments upon it, and address those comments.

[00:14:24] Speaker 05:
And if at the end of that process, Commerce's decision changes what was in the final determination that was published in the Federal Register, they will publish an amended final if there's a change.

[00:14:40] Speaker 05:
There was no change here.

[00:14:42] Speaker 05:
And so there was nothing else to publish in that regard.

[00:14:46] Speaker 05:
But there was no change in Commerce's rationale

[00:14:51] Speaker 05:
And the region's doctrine does not support Zhang Ho's argument at all.

[00:14:58] Speaker 05:
Because the trial court properly sustained Congress's determinations in this case, the court should affirm.

[00:15:04] Speaker 05:
Thank you.

[00:15:06] Speaker 04:
Mr. Holt?

[00:15:08] Speaker 04:
OK.

[00:15:08] Speaker 04:
No, he gets to go next.

[00:15:10] Speaker 01:
Oh, excuse me.

[00:15:10] Speaker 04:
That's OK.

[00:15:12] Speaker 00:
May it please the court, Derek Holt on behalf of the defendant appellee, Aluminum Extrusion Spirit Trade Committee.

[00:15:20] Speaker 00:
I wanted to address one issue in my two minutes that I have, but opposing counsel waived the issue and they just admitted it.

[00:15:27] Speaker 00:
So I'll just go ahead and quickly go through it and just say that Congress properly countervailed the glass subsidy as an LTAR subsidy.

[00:15:36] Speaker 00:
There's no dispute that Zheng Ho purchased the glass from a government authority.

[00:15:42] Speaker 00:
The glass goes directly from a government authority to Zheng Ho.

[00:15:46] Speaker 00:
And the petitioners did not allege the subsidy as a upstream subsidy.

[00:15:52] Speaker 00:
We did not allege sand for LTAR.

[00:15:55] Speaker 00:
It was glass for LTAR, which is directly provided to Zheng Ho from a government entity.

[00:16:03] Speaker 00:
Then the second thing is that this whole argument about this upstream subsidy

[00:16:09] Speaker 00:
comes from Zhengho's essentially cherry picking information.

[00:16:13] Speaker 00:
If you go to appendix 90 of the joint appendix, you clearly see that the first sentence before Zhengho looks at the selective quote says, glass for use in certain groups of subject merchandise, including curtain wall units produced by entities like Zhengho, is produced

[00:16:39] Speaker 00:
and sold by state-owned enterprises and state-controlled entities in China at subsidized rates.

[00:16:46] Speaker 00:
That is exactly the argument that we made that the government is providing Zheng He a glass for a less than adequate remuneration.

[00:16:55] Speaker 00:
And with that, we respectfully request that the court affirm Congress' determination and that the CRT's opinion upholding it.

[00:17:02] Speaker 00:
Thank you.

[00:17:03] Speaker 04:
Thank you, Mr. Holt.

[00:17:05] Speaker 04:
Now you get to go, Mr. Horgan.

[00:17:07] Speaker 01:
Just to be precise, I think counsel for the government said, well, if you look at the scope, it kind of covers this stuff.

[00:17:15] Speaker 01:
But you have to actually read the scope.

[00:17:18] Speaker 01:
You have to look at that language.

[00:17:19] Speaker 01:
And remember the court below found that aluminum extrusions were within the scope and that curtain walls were not.

[00:17:26] Speaker 01:
So that's the law of the case.

[00:17:27] Speaker 01:
When you see the law of the case argument, they didn't appeal that decision.

[00:17:32] Speaker 01:
The law of the case is that the scope includes aluminum extrusions and not curtain walls.

[00:17:37] Speaker 01:
but not per se.

[00:17:39] Speaker 01:
And if you read the language, it supports that.

[00:17:42] Speaker 01:
Subject aluminum extrusions may be described at the time of importation as parts for final finished products that are assembled after importation, including but not limited to curtain walls.

[00:17:52] Speaker 01:
Such parts that otherwise meet the definition of aluminum extrusions are included in the scope.

[00:18:00] Speaker 03:
Are curtain walls distinct from curtain wall units?

[00:18:04] Speaker 01:
No, I'm using them interchangeably.

[00:18:06] Speaker 01:
A curtain wall is the entire structure that's in wraps a building.

[00:18:10] Speaker 01:
So that's a curtain wall.

[00:18:11] Speaker 01:
The curtain wall unit is one of the panels that's used to do that.

[00:18:16] Speaker 01:
It said the scope includes aluminum extrusion components that are attached to form sub-assemblies, which is what you wanted to help what the curtain walls were.

[00:18:26] Speaker 01:
They were sub-assemblies.

[00:18:28] Speaker 01:
But the scope does not include the non-aluminum extrusion components of sub-assemblies.

[00:18:33] Speaker 01:
And that's what the court below held.

[00:18:34] Speaker 01:
The plain language says it's these aluminum extrusions in the curtain walls.

[00:18:38] Speaker 01:
That's what's in the scope.

[00:18:40] Speaker 01:
It's not the curtain walls themselves because there are lots of other little parts that are in curtain walls or curtain wall units.

[00:18:46] Speaker 01:
And finally, I think the government, when it says, well, we can just make a new determination anytime, that's not what the Supreme Court said.

[00:18:54] Speaker 01:
The Supreme Court said the basic rule is that the court, excuse me,

[00:19:00] Speaker 01:
The basic rule here is clear.

[00:19:01] Speaker 01:
An agency must defend its actions based on the reasons it gave when it acted.

[00:19:07] Speaker 01:
So when it acted the first time, not when it acted the second or third time.

[00:19:11] Speaker 01:
And the court also said, we can't be forced to fight a moving target.

[00:19:16] Speaker 01:
So they can't change the rationale with every new remand determination.

[00:19:20] Speaker 01:
That's what the Supreme Court held.

[00:19:22] Speaker 01:
And I think that's what binds this court to make a decision that this post-doc rationale is not to be approved.

[00:19:28] Speaker 01:
Thank you, Your Honor.

[00:19:29] Speaker 04:
Thank both counsel, the case is taken under submission.