[00:00:00] Speaker 00: We will hear argument next in numbers 23-2163 and 2164, Guizhou against the United States. [00:00:12] Speaker 00: Mr. Khan. [00:00:14] Speaker 02: May it please the court? [00:00:15] Speaker 02: I'm Jordan Khan with Grunfeld Visitario representing Guizhou Tire Company and Aolis Tire. [00:00:22] Speaker 02: These are publicly traded Chinese tire producers and exporters. [00:00:27] Speaker 02: They reported to the Department of Commerce that they had minority government ownership by state-owned enterprises. [00:00:35] Speaker 02: GTC is a quarter owned by a state-owned enterprise, and AOLIS is less than half owned by state-owned enterprises. [00:00:44] Speaker 02: 49%. [00:00:44] Speaker 02: That's correct, 49%. [00:00:46] Speaker 02: Both of these companies, in this case, are challenging commerce's separate rate denial. [00:00:52] Speaker 02: in the seventh administrative review of the anti-dumping duty order on off-the-road tires, OTR, from China. [00:01:02] Speaker 02: GTC also challenges commerce to separate denial in the investigation of truck and bus tires from China. [00:01:09] Speaker 02: that was contemporaneously conducted with virtually the same administrative record. [00:01:14] Speaker 02: That's the next case on the docket. [00:01:16] Speaker 02: The third case on the docket, the third companion case, is the fifth administrative review of the dumping order on OTR from China. [00:01:26] Speaker 02: In that review, Commerce granted GTC a separate rate, but denied it for the majority SOE-owned double coin. [00:01:35] Speaker 02: In AR5, which you are about to hear later this morning, [00:01:39] Speaker 02: that tellingly juxtaposes with the cases that we are appealing. [00:01:44] Speaker 02: That was the prior time GTC was reviewed. [00:01:47] Speaker 02: GTC was not reviewed in the sixth administrative review. [00:01:51] Speaker 02: In the fifth review, Commerce granted its separate rate. [00:01:54] Speaker 02: It found GTC [00:01:56] Speaker 02: independent from government control. [00:01:58] Speaker 02: So what changed between the fifth and the seventh administrative reviews? [00:02:02] Speaker 04: I mean, the evidence changed. [00:02:03] Speaker 04: This is the way these reviews work, right? [00:02:05] Speaker 04: The record is separate in every case. [00:02:08] Speaker 04: Commerce determined in the one that's at issue here that the facts show that even though it's a minority government interest, they effectively control the board. [00:02:20] Speaker 04: And that board leads to the conclusion that they're de facto controlled. [00:02:26] Speaker 04: What's wrong with that conclusion, and why isn't there substantial evidence for it? [00:02:30] Speaker 02: Your Honor, Commerce moved the goalposts. [00:02:33] Speaker 02: As a matter of law, going back to SKF, Commerce can change its practice if it has sufficient reasons and an adequate explanation. [00:02:40] Speaker 02: Here, they moved the goalposts because [00:02:44] Speaker 02: What had changed was the record. [00:02:46] Speaker 02: The record is different. [00:02:47] Speaker 02: And we agree, of course, it's sui generis, but we had provided much more information. [00:02:52] Speaker 02: First off, the SOE ownership decreased from over a third to a quarter. [00:02:57] Speaker 02: The SOE entities ceased conducting performance reviews of GTC, which they did in five and not in seven. [00:03:03] Speaker 02: In AR5, when they were granted the separate rate, GTC just made all the standard separate rate certifications. [00:03:10] Speaker 04: Are you trying to argue that they're somehow, I know you're not arguing that they're a stop from changing, but that their reasoning is so inconsistent between five and seven that it's arbitrary and capricious or something like that? [00:03:21] Speaker 04: Yes, you are. [00:03:22] Speaker 04: The problem is if we accept [00:03:24] Speaker 04: the facts as they've argued them here, which is that despite the fact that it's minority ownership, it's still effectively government controlled. [00:03:34] Speaker 04: Because the people that show up at the shareholder meetings are all government entities. [00:03:39] Speaker 04: And nobody else has any voting power. [00:03:42] Speaker 04: And the one time that government entity got voted down, they had another meeting three months later and got their position through. [00:03:50] Speaker 04: Isn't that sufficient evidence to show de facto government control? [00:03:54] Speaker 02: No, your honor. [00:03:55] Speaker 02: Why not? [00:03:56] Speaker 04: Well, as an initial... I mean, let me start with the first proposition. [00:03:59] Speaker 04: Even if it's a minority of the shareholders, if the facts on the record show that that minority is never voted against, its proposals always go through, and so there's no real opposition or independence from that minority control, that alone should be enough for de facto control, right? [00:04:18] Speaker 02: Well, that's not what happened here. [00:04:20] Speaker 04: No, no, no. [00:04:20] Speaker 04: Answer the question, though. [00:04:21] Speaker 04: I'm asking a hypothetical now. [00:04:23] Speaker 04: If it's just a minority control, but they effectively have complete control, nobody will vote against them. [00:04:30] Speaker 04: They get to pick all the shareholders or the majority of the shareholders of the board. [00:04:35] Speaker 04: Even if they have picked less than the majority, the ones they pick always get their proposals through. [00:04:40] Speaker 04: Does that show de facto control? [00:04:41] Speaker 02: Well, I would say that as long as there still needs to be a nexus to production, commercial, or export decisions, and that's right out of Congress's new regulation. [00:04:51] Speaker 04: Well, let's set that aside because I think our Pirello decision kind of addresses that issue, and that's not the question I'm asking you. [00:04:58] Speaker 04: I'm trying to get at when can the government decide there's de facto control with a minority shareholder. [00:05:05] Speaker 04: And it seems to me that if the evidence is pretty clear that no matter what percentage you have, if it's 29 or 49 or whatever, if that shareholder, that government-owned shareholder, is exercising all control, even though there are some supposedly independent shareholders out there, that's enough. [00:05:26] Speaker 04: Well, again, we need to see actual control. [00:05:29] Speaker 04: Would you agree that's enough, hypothetically? [00:05:31] Speaker 02: If there was actual control over production and commercial, the day-to-day operations were controlled by the SOE. [00:05:39] Speaker 02: No matter the percentage, I would agree you're on. [00:05:41] Speaker 02: But we don't think that's the case here. [00:05:43] Speaker 04: And why isn't it when the people that actually come to vote, the shareholders that come to vote, are all the government shareholders? [00:05:51] Speaker 02: Well, again, Your Honor, I draw your attention to that May 2015. [00:05:56] Speaker 04: Sure, but that, in some ways, is your real problem. [00:05:59] Speaker 04: It's because they may have exercised some independence at the May meeting, but the only people entitled or that have enough of a percentage of shares to call a meeting are the government-owned entities. [00:06:11] Speaker 04: And when they didn't get the proposal through in May, they called another meeting three months later and did get it through. [00:06:17] Speaker 04: That seems to me to be the exact evidence of de facto government control. [00:06:23] Speaker 04: We somehow failed this time, so we're going to exercise our control, because we're the only one that can come to a meeting, and we're going to call meetings until we get our proposals through. [00:06:34] Speaker 02: That July meeting was perfectly compliant with legal requirements. [00:06:38] Speaker 02: To remind the court [00:06:39] Speaker 02: The Commerce Department initially found that that was a closed secret meeting. [00:06:44] Speaker 02: And they, on remand, they rectified that. [00:06:46] Speaker 02: If that had happened, if that had happened in secret, as Commerce initially found... Who cares if it's in secret or not? [00:06:52] Speaker 04: If they're the only ones that can control, can convene a meeting, and they're going to convene meetings to get their proposal voted for until they get what they want, then that seems to me de facto control. [00:07:05] Speaker 02: But Your Honor, we disagree that they're the only ones that can. [00:07:08] Speaker 02: There are smaller shareholders that can band together, that can request. [00:07:11] Speaker 04: But no single entity can do it, right? [00:07:14] Speaker 01: That's true. [00:07:14] Speaker 01: That's true. [00:07:15] Speaker 01: Yes, sir. [00:07:15] Speaker 01: Do I understand your argument, sir, to be that in a situation where there's minority government control, then actual control [00:07:24] Speaker 01: of the management as required as opposed to potential? [00:07:27] Speaker 02: Yes, Your Honor. [00:07:28] Speaker 01: And that is... I mean, I think that... I understood that to be your answer to all of Judge Hughes' questions. [00:07:34] Speaker 02: Yes, Your Honor. [00:07:35] Speaker 02: That is the standard that is in Commerce's new regulation that has been adopted by the Court of International Trade, and this Court addressed in DICTA in the Xi Jinping... Adopted by the Court of International Trade? [00:07:46] Speaker 01: I'm sorry? [00:07:47] Speaker 01: Adopted, that there has to be actual control as opposed to? [00:07:51] Speaker 02: Yes, the Anyong. [00:07:52] Speaker 02: There's a series of cases. [00:07:53] Speaker 01: And what about this case? [00:07:54] Speaker 01: In this case, we're submitting that be queried. [00:07:56] Speaker 01: Well, this case didn't say there has to be actual control. [00:07:59] Speaker 01: This case. [00:08:00] Speaker 01: Said there was potential control. [00:08:01] Speaker 02: Well, right, different judges of the CIT. [00:08:03] Speaker 02: There's a coalescence of CIT precedent recognizing this schism. [00:08:08] Speaker 02: In this case, the different CITs. [00:08:09] Speaker 01: I'm just trying to get it straight for what the question is that you're presenting in this court. [00:08:13] Speaker 01: Understood. [00:08:14] Speaker 01: If we disagree with you on that, [00:08:16] Speaker 01: on the notion that presumptive control doesn't count only actual, right? [00:08:22] Speaker 01: Understood. [00:08:23] Speaker 02: Right. [00:08:23] Speaker 02: That's right. [00:08:24] Speaker 02: Then you lose, right? [00:08:25] Speaker 02: Well, our case at this point depends on the Federal Circuit accepting our argument that in minority cases, there needs to be a demonstration of actual control over the operations and the- Actual control. [00:08:40] Speaker 02: That's right. [00:08:41] Speaker 02: Potential control is not enough. [00:08:43] Speaker 02: And this court did reference that in Zhejiang machinery, but it was dictated, because Zhejiang was a majority case. [00:08:49] Speaker 01: Before I leave this issue- And also arguing that commerce is not allowed in a minority control situation to turn the decision on a single one of the factors in the red? [00:08:59] Speaker 02: That's right. [00:09:01] Speaker 02: And we read the Pirelli case, and we understand that there was pushback on that point. [00:09:06] Speaker 02: the various factors. [00:09:08] Speaker 01: That said, we do think that there... You read Pirelli to stand for the proposition that commerce can make a decision in a minority case based on the third factor. [00:09:18] Speaker 04: That's right. [00:09:19] Speaker 04: That's right. [00:09:20] Speaker 04: That's a little more than push factors in it. [00:09:21] Speaker 04: I mean, we're bound by Pirelli. [00:09:25] Speaker 02: Well, Your Honor, if I could spend my time here... Well, Pirelli would answer two of the questions. [00:09:31] Speaker 01: One, whether or not they can do it on Prom 3 alone, and secondly, whether or not Prom 3 [00:09:36] Speaker 01: involved exports? [00:09:38] Speaker 01: Admittedly, yes. [00:09:40] Speaker 01: So those two arguments you're making are foreclosed by Corelli? [00:09:43] Speaker 02: Yes, we concede that- So one of your remaining arguments- Okay, so the first argument is what I started with, which is the arbitrary reversal of the separate rate between the fifth and seventh- They gave us an independent and five, they took it away, that's arbitrary, I appreciate that. [00:10:00] Speaker 02: Well, there's more than that. [00:10:01] Speaker 02: This is the Supreme Court at FCC versus Fox said that agencies need a more detailed justification. [00:10:07] Speaker 02: I mean, that's not the point. [00:10:08] Speaker 01: I'm just trying to cut through all of that. [00:10:12] Speaker 01: Understood. [00:10:12] Speaker 01: Talk to see exactly what the issues are that we have to decide. [00:10:16] Speaker 01: Two of them have been decided by Pirelli. [00:10:18] Speaker 01: The third one is it was arbitrary. [00:10:20] Speaker 01: They gave you independent wants. [00:10:22] Speaker 01: Nothing changed. [00:10:22] Speaker 01: They should give it to you again. [00:10:24] Speaker 02: And they should have a heightened explanation, because their separate denial rested upon factual findings. [00:10:31] Speaker 01: Well, that is tied to the same issue. [00:10:33] Speaker 02: We see this as being a distinct issue, this reversal. [00:10:36] Speaker 01: So it was an arbitrary interrogation. [00:10:37] Speaker 01: That's right. [00:10:37] Speaker 01: If they had a good reason to state, you wouldn't be making the argument. [00:10:40] Speaker 01: Understood. [00:10:40] Speaker 01: That's our second. [00:10:41] Speaker 01: So that's 3D argument. [00:10:42] Speaker 01: What's the fourth argument? [00:10:43] Speaker 02: OK. [00:10:43] Speaker 02: So let's talk about substantial evidence, as Judge Hughes wants to hear about. [00:10:47] Speaker 02: So in Corelli, there was the evidence that was. [00:10:52] Speaker 02: I just want to be clear. [00:10:55] Speaker 00: Where does this actual control versus potential control fit in? [00:11:00] Speaker 00: Is that something different from what Pirelli [00:11:05] Speaker 00: decided or what? [00:11:06] Speaker 02: OK, so Pirelli involved a minority share, but you didn't include the language that we think is important and we think still should be there about, quote, additional indicia, to deny separate rates, which we see as showing actual control. [00:11:22] Speaker 02: And that comes from? [00:11:23] Speaker 00: And by actual control, do you mean [00:11:26] Speaker 00: actual directives or the actual ability to force something, even if it never had to be exercised. [00:11:38] Speaker 02: In the words of commerce's regulation, to have control over production and commercial or export decisions. [00:11:45] Speaker 02: Now, I understand that the... I'm sorry. [00:11:48] Speaker 00: I thought the two adjectives, actual and potential, in front of the word control were meant to distinguish two different things. [00:11:56] Speaker 00: No? [00:11:58] Speaker 00: I thought what you just said was actual control means control over the production, whatever. [00:12:04] Speaker 00: Right, that's right. [00:12:04] Speaker 00: Is that actual or potential? [00:12:07] Speaker 02: No, potential control is they can pick the board members and so therefore they have a potential to control. [00:12:15] Speaker 02: But they are in a majority context. [00:12:17] Speaker 00: So it's the object of, I mean the linguistic object of control that you're [00:12:23] Speaker 00: that you're focusing on. [00:12:25] Speaker 00: One is to control the selection of the decision makers inside the company. [00:12:30] Speaker 00: The other is to control the particular decisions. [00:12:34] Speaker 00: That's rather a lot of what Pirelli was about. [00:12:39] Speaker 02: Well, okay, if I can talk about one of the things that Pirelli was about was about the substantial evidence, which we all know is the ultimate backstop about what commerce can do. [00:12:47] Speaker 02: And in that case, there was issues about the evidence being properly on the record. [00:12:52] Speaker 02: There was Italian law that I understand was not submitted here. [00:12:55] Speaker 02: Everything is on the record. [00:12:56] Speaker 02: And one of the points that Commerce hung their hat on that this court affirmed was the annual report of Corelli talking about control by the SOE. [00:13:04] Speaker 02: If you look at GTC's annual report, this is on APTX 2205-08. [00:13:10] Speaker 02: quote, the company completely separates from the SOE entity in personnel, assets, and finance. [00:13:16] Speaker 02: So we see this as a very important distinction. [00:13:19] Speaker 02: And another important distinction that we see involves overlapping management. [00:13:24] Speaker 02: So there was a key finding in Pirelli that it was the same individuals that were on the [00:13:29] Speaker 02: the SOE that were on the respondent. [00:13:33] Speaker 02: And from my perspective, even though that's a minority case, that is ultimately beholden. [00:13:38] Speaker 02: If you have the same individuals working on both of what's called overlapping management, here there's nothing like that. [00:13:44] Speaker 02: The GTC members do not have any position in the SOE or any other government agency. [00:13:49] Speaker 02: So this lack of overlapping management between GTC and the state-owned entity contrasts with that finding in Pirelli. [00:13:59] Speaker 02: From our perspective, that is a very critical distinction. [00:14:03] Speaker 02: So we think the record is more robust, and we think that the other evidence that is properly on the record is we have a statement from the SOE entity. [00:14:14] Speaker 02: We call it the SASAC clarification. [00:14:17] Speaker 02: This is ABPX 2769 to 70, where it confirmed, quote, confirmed [00:14:23] Speaker 02: that it does not have the authority to make decisions for GTC, end quote, does not have the right to make a decision. [00:14:28] Speaker 04: But if it has the power to appoint all the board of directors, [00:14:35] Speaker 04: And those people control the management. [00:14:38] Speaker 04: Isn't it a reasonable assumption that they are directing? [00:14:42] Speaker 04: I mean, isn't this what all of this has been about? [00:14:44] Speaker 04: And it's in Pirelli, too. [00:14:46] Speaker 04: Even if they have some kind of statement that says, we don't control the decisions, if you control and select the managers that make the decisions, you're effectively controlling the decisions. [00:14:59] Speaker 02: We submit that that proxy, that administrative shortcut, makes sense in a majority ownership context. [00:15:04] Speaker 02: But as the CIT has held, there needs to be. [00:15:08] Speaker 04: I don't understand this distinction. [00:15:10] Speaker 04: Because sure, in a majority-controlled situation, that's obvious. [00:15:16] Speaker 04: I mean, if you have the majority of the shareholders and you get to select the board, the board's going to be beholden to you. [00:15:22] Speaker 04: But that doesn't mean that can't happen in a minority-owned case, too. [00:15:27] Speaker 04: Because it may be that the government [00:15:31] Speaker 04: holds a minority block that's still effective in controlling. [00:15:35] Speaker 04: Isn't it the case here that the government-owned entity, and I hope I'm not getting into confidential stuff. [00:15:42] Speaker 04: I found this case overmarked. [00:15:44] Speaker 04: But if I start to, you can tell me, put your hand up. [00:15:47] Speaker 04: The government entity selected the board of directors here. [00:15:51] Speaker 04: There's no evidence that independent shareholders independently selected any directors, is there? [00:15:57] Speaker 02: Well, are you talking about the original board back in 2012 or that 2015, those two meetings in 2015? [00:16:03] Speaker 02: Well, what's the difference? [00:16:05] Speaker 02: Well, one is before the period, at a time when commerce recognized the separate rate. [00:16:10] Speaker 02: And that was when the majority of the board was appointed. [00:16:13] Speaker 02: Sure. [00:16:14] Speaker 02: But they still selected the board. [00:16:16] Speaker 04: And are those board people still there? [00:16:20] Speaker 04: I mean, what does it make, so the 2015, did somehow a group of independent shareholders get together as a block and elect independent directors of the board that have management control? [00:16:32] Speaker 02: No, but they blocked the SOEs' initial effort to do so. [00:16:37] Speaker 02: And we submit that that puts away the proxy and the presumption, and that means that it needs to be a tether. [00:16:44] Speaker 04: But that didn't last very long, though. [00:16:46] Speaker 04: It lasted three months. [00:16:47] Speaker 04: Why is, I don't understand why you're arguing that. [00:16:50] Speaker 04: That seems to disprove your point that they have any independent control because the one time they managed to do it, because somebody wasn't, didn't have their eye on the ball, it was quickly reversed. [00:17:02] Speaker 02: Well, I think it goes to show it could have been reversed again, that there's [00:17:05] Speaker 02: In other words, this concept, this construct of treating majority companies as, OK, the SOE can elect the board, and that is ultimately golden. [00:17:16] Speaker 02: That has been disproven here. [00:17:18] Speaker 02: And so the substantial evidence requires an additional indicia, more than just being able to vote. [00:17:24] Speaker 02: And we submit that that additional indicia is not on this record. [00:17:28] Speaker 02: I see that I'm into my rebuttal time. [00:17:32] Speaker 00: Thank you. [00:17:33] Speaker 01: On the confidentiality, I don't know how I'm supposed to understand what in your blue brief is confidential. [00:17:42] Speaker 01: I didn't understand how you chose to show us. [00:17:46] Speaker 01: Was it by bolding things? [00:17:48] Speaker 01: We use brackets, Your Honor. [00:17:50] Speaker 02: Square brackets. [00:17:51] Speaker 02: There's not much. [00:17:52] Speaker 02: If you look at the... They're hard to see, but if you squint... [00:18:01] Speaker 02: In the table of contents, there's a legend identifying which page it has. [00:18:05] Speaker 02: Thank you, Your Honor. [00:18:05] Speaker 02: Thank you. [00:18:09] Speaker 00: Yes, you can see me. [00:18:10] Speaker 03: Good morning, and may it please the Court. [00:18:13] Speaker 03: Pirelli controls. [00:18:14] Speaker 03: The facts in this case are pretty much on all fours. [00:18:17] Speaker 04: Don't we have to do a little bit more here? [00:18:19] Speaker 04: Because you did go the other way in the fifth review. [00:18:22] Speaker 04: And it seems like the structures and everything and even the board there was largely the same. [00:18:27] Speaker 04: If you've already found them to deserve a separate rate in the fifth review, don't you have to explain in a little bit more detail why we've changed our mind even though the facts are different or things like that? [00:18:42] Speaker 03: Well, the trial court in ATC, Advanced Technology, issued an opinion basically holding that if the shareholders, without really discussing whether it's the majority or minority, are able to select the board, then the reasonable inference that can be drawn from that is that the board selects the management and therefore has control over export activities. [00:19:05] Speaker 03: And Commerce amended its practice to comply with that trial court decision, which was never appealed. [00:19:11] Speaker 03: And then after that occurred, this court sustained that practice in Pirelli, going all the way back to Sigma and the earlier cases. [00:19:19] Speaker 00: I'm sorry. [00:19:20] Speaker 00: Can you relate that change to the A5, A7 difference? [00:19:24] Speaker 03: Well, in the intervening time, in about 2016, was when the ATC trial court decision came out. [00:19:30] Speaker 03: So it was shortly before the Commerce Department made the determinations at issue in this case. [00:19:36] Speaker 03: So Commerce. [00:19:37] Speaker 00: But after the A5 determination? [00:19:40] Speaker 03: It was after the A5 determination. [00:19:44] Speaker 03: But before this determination, I think this was A7, or AA. [00:19:50] Speaker 01: But Pirelli is, after all. [00:19:51] Speaker 03: But Pirelli is in February of this year. [00:19:55] Speaker 03: And so the court has since made abundantly clear what practice, or at least what commerce needs to do in non-market economy countries. [00:20:07] Speaker 03: And it's exactly what it did here. [00:20:09] Speaker 00: I think something is quite obvious to you that I need spelled out in greater detail. [00:20:17] Speaker 00: In A5, you said it was separate. [00:20:21] Speaker 03: Separate, right. [00:20:22] Speaker 00: Why was that no longer a valid conclusion to draw after the CIT made the decision about director control? [00:20:36] Speaker 03: Proceeding before this case, [00:20:38] Speaker 03: the Commerce Department did not draw the same, look with the same detail into board composition and draw that same inference as to whether control of the board would therefore translate into control of [00:20:55] Speaker 04: management activities such as exports the At the time of a five was it just commerce's position that if it was Majority government controlled and it was control and if it was minority it wasn't was it that simplistic? [00:21:12] Speaker 04: Yes, it was that simple and so [00:21:16] Speaker 04: Since that time, you've taken a more nuanced view and recognized that even minority control can be effectively controlled by evidence that shows they exercise their voting power and shares in a way that gives them de facto control over the board and thus the management. [00:21:38] Speaker 03: Right. [00:21:38] Speaker 03: And that's absolutely true. [00:21:39] Speaker 03: And that's exactly what Commerce did here. [00:21:41] Speaker 03: It did a deep dive into the record. [00:21:43] Speaker 03: It looked at the minutes of shareholder meetings in the years leading up to and the year during the period of review here. [00:21:50] Speaker 03: And the shareholder meetings that Judge Hughes discussed were very important to the agency's analysis. [00:21:57] Speaker 03: That's with respect to GTC. [00:22:00] Speaker 03: With respect to AOLAS, the other company, in addition to the 49% ownership, [00:22:08] Speaker 03: the largest shareholder, China Chem, in its own website stated that it controlled Aeolus. [00:22:16] Speaker 03: And so that was substantial evidence that certainly overcame any countervailing evidence that the plaintiffs tried to place on the record to meet their burden of persuasion. [00:22:29] Speaker 01: And Aeolus also previously had an independent [00:22:34] Speaker 03: I'm not sure about AOLAs. [00:22:36] Speaker 01: OK, but this is GTC we're talking about. [00:22:39] Speaker 03: GTC we're talking about, yes. [00:22:40] Speaker 03: OK, thank you. [00:22:44] Speaker 03: And also one thing that plaintiffs really cannot allege is that they have some sort of, once they receive a separate rate, that they have some sort of investment back to expectation or constitutional right to the same rate moving forward. [00:22:56] Speaker 03: Each record stands on its own. [00:22:59] Speaker 03: there was specific record evidence to each of these determinations. [00:23:05] Speaker 03: And in the next review, there might be countervailing evidence, and commerce might decide the other way. [00:23:11] Speaker 01: But that's- Well, in one of these cases, it shows that there are producers, exporters in China, who are minority cases that are satisfying the test. [00:23:21] Speaker 01: Yes, yes, commerce- There's a big note that says there are nine, and there's one- Yes. [00:23:27] Speaker 01: reviewed candidate who survived, right? [00:23:30] Speaker 03: Yes, and that's absolutely true. [00:23:31] Speaker 03: Not impossible. [00:23:35] Speaker 03: Most of our litigation involves separate rate companies as opposed to state-owned companies or state-controlled companies. [00:23:44] Speaker 03: For these reasons, we respectfully request support. [00:23:46] Speaker 01: In terms of how much of, apparently, how much work it did for this case, the other side seems to agree that its first argument, that it's impermissible to turn a case just on factor three, that was decided already. [00:24:00] Speaker 03: Yes. [00:24:00] Speaker 01: And secondly, whether or not article three deals with export, that whole problem, that's been decided. [00:24:07] Speaker 03: Right. [00:24:07] Speaker 01: So what's left? [00:24:09] Speaker 03: So what's left is their substantial evidence challenge. [00:24:11] Speaker 03: And there's substantial evidence on the record here, which is very similar to Pirelli. [00:24:15] Speaker 01: OK. [00:24:16] Speaker 01: And secondly, they also argue that, as was the argument that was made in Pirelli, that this process being used by commerce distorts the presumption, the way the presumption works. [00:24:28] Speaker 01: Correct? [00:24:28] Speaker 03: And I think the court in Pirelli rejected that contention, too. [00:24:33] Speaker 01: It doesn't really matter whether this is additional evidence, where it's coming in, the factors that are being considered to try to learn why it's possible that even though the control is minority, it still could affect the management. [00:24:49] Speaker 03: And for any Chinese company or from a non-market economy country, there's a presumption of state control. [00:24:57] Speaker 01: Regardless of how much ownership there is. [00:25:00] Speaker 03: So if there's no evidence one way or the other about control, then the agency assumes that it's owned and controlled by the government. [00:25:09] Speaker 03: Once a party presents some evidence indicating independence from state control, then they still maintain the burden of persuasion. [00:25:17] Speaker 03: And that's what Pirelli made abundantly clear. [00:25:20] Speaker 03: So it's an ordinary substantial evidence analysis. [00:25:23] Speaker 03: And here, you look at things like, [00:25:27] Speaker 03: the board's actual control of management, the fact that the board was controlled by the minority shareholder with GTC, the overlap between the boards and management, those sorts of things. [00:25:40] Speaker 03: That's the substantial evidence supporting a conclusion that the companies are state controlled. [00:25:50] Speaker 03: Thank you. [00:26:00] Speaker 02: May I proceed? [00:26:00] Speaker 02: Please. [00:26:01] Speaker 02: So to start with AOLIS, which is the 49% state-owned SOE, the Department of Justice just argued that Congress relied on website statements. [00:26:13] Speaker 02: But the Department of Commerce, in their second remand, they conceded that these web statements alone do not demonstrate control. [00:26:20] Speaker 02: That's at APPX 195. [00:26:22] Speaker 02: The critical evidence for the AOLIS is the rectification report. [00:26:28] Speaker 02: So what had happened was, [00:26:29] Speaker 02: there was some intertwining of accounting between the SOE and AOLIS before the period of review. [00:26:36] Speaker 02: And that was put on as ostensibly as evidence of intertwining. [00:26:40] Speaker 02: But we demonstrated that no, no, no, no, no, this has been completed. [00:26:44] Speaker 02: In other words, they have rectified the intertwined operations. [00:26:49] Speaker 02: And so there's no more. [00:26:51] Speaker 02: And so from our perspective, that is part of the substantial evidence showing [00:26:55] Speaker 02: that AOLIS is not state controlled. [00:26:57] Speaker 02: And Commerce initially ignored it, and then they read it, and they said, well, it's not enforceable, so it doesn't count. [00:27:04] Speaker 02: And we think AOLIS has carried its burden of persuasion by showing that it's entitled to a separate rate. [00:27:11] Speaker 02: As we agree, we [00:27:15] Speaker 02: Submit GTC did as well. [00:27:17] Speaker 02: I want to talk about the switch with GTC, because when you're litigating these things from one review to the next, it's very disconcerting to put on a small amount of evidence and get the separate rate, and then put on a mountain of evidence and get denied the separate rate. [00:27:33] Speaker 02: And we agree they have to do more. [00:27:35] Speaker 02: They need to justify what's going on. [00:27:37] Speaker 02: And what I just heard the government say is, well, there was a majority-owned case. [00:27:43] Speaker 02: And so, you know, that's why we changed. [00:27:46] Speaker 02: That was the Diamond Sawblades case. [00:27:49] Speaker 02: But that's not what happened, because the majority ownership issue was, you know, that was already implemented in AR-5, as you'll hear soon, Your Honor, is that that was the case where the majority ownership was, you know, automatic. [00:28:03] Speaker 02: separate denial. [00:28:04] Speaker 02: This we don't see. [00:28:07] Speaker 00: Let me see if I. This is my understanding of what I heard and just tell me if I'm wrong. [00:28:13] Speaker 00: It was always clear that majority ownership was enough to conclude control. [00:28:20] Speaker 00: What that doesn't answer is whether lack of majority ownership is never enough or sometimes can be enough when added to something else. [00:28:31] Speaker 00: I heard Mr. Tosini say that what changed was that before, I guess at the time of between A5 and A7, [00:28:41] Speaker 00: the CIT indicated and Commerce agreed that the question of majority ownership was no longer dispositive in [00:28:52] Speaker 00: one direction. [00:28:53] Speaker 00: It was always dispositive in one direction, but it was no longer dispositive in the other direction. [00:28:59] Speaker 00: More needed to be looked at. [00:29:01] Speaker 00: They hadn't looked at the other stuff in A5 and so gave a pass to GTC after they did look at it and no longer could give a pass. [00:29:13] Speaker 02: But your honor, we disagree with that characterization. [00:29:15] Speaker 02: That seems to be post hoc from counsel, because if you read the remands, what they're saying is the CIT in the Sawblades case, where there was a majority owned, that's what prompted this whole change. [00:29:27] Speaker 02: Now, our brief traces back the history here. [00:29:30] Speaker 02: Commerce used to give separate rates to wholly owned [00:29:32] Speaker 02: SOEs. [00:29:33] Speaker 02: And so it's never had, eventually over time, what we think in that Sawblades case was where they said, okay, majority is automatic denial. [00:29:41] Speaker 02: What we didn't see is this sort of nuanced approach to minority. [00:29:46] Speaker 02: Look, clearly that seems to have been developed, but when that happened between five and seven, between a company being reviewed one time to the next, that needs to be explained. [00:29:54] Speaker 02: That's why basic administrative law requires a heightened justification. [00:29:59] Speaker 00: Can I just? [00:30:02] Speaker 00: You do have, what, two more cases to argue this morning, right? [00:30:06] Speaker 02: Your Honor, I personally have one case. [00:30:08] Speaker 02: And if I can just make another wrap-up point, I'm prepared to see that the second case, the truck and bus tires, has no materially different facts. [00:30:17] Speaker 02: And it doesn't involve AOLUS. [00:30:19] Speaker 02: Then continue for a little bit. [00:30:21] Speaker 02: OK. [00:30:21] Speaker 01: And the second case is the GTC. [00:30:24] Speaker 01: That's right. [00:30:25] Speaker 01: So the GTC here is that there's nothing [00:30:29] Speaker 01: I mean, even the additional details are virtually, if not exactly the same, very close to it. [00:30:37] Speaker 04: It's just a different commerce decision in the second case. [00:30:40] Speaker 04: But still the same basic. [00:30:42] Speaker 04: Absolutely. [00:30:43] Speaker 04: So I take your point that even if [00:30:49] Speaker 04: commerce did have to explain why it changed from majority good, minority no good to its more nuanced view. [00:30:59] Speaker 04: Didn't it do that? [00:31:01] Speaker 04: I mean, it has its rationale, which is even minority-controlled entities [00:31:07] Speaker 04: can be de facto government controlled because they can exercise control over selecting the board of directors that then exercises control of management. [00:31:17] Speaker 04: Isn't that the justification? [00:31:18] Speaker 04: I mean, that justification, you're not disagreeing with that, right? [00:31:21] Speaker 04: That if the government entity can, despite being a minority odor, can elect all of the board of directors and that the board of directors chooses the management, that shows control. [00:31:35] Speaker 04: Well, there's two issues. [00:31:36] Speaker 04: One is they didn't. [00:31:37] Speaker 04: I'm not talking about the evidence in this case, but theoretically that that scenario would show de facto control, right? [00:31:44] Speaker 02: Well, again, we would want to see some nexus, some tethering to the operations, to the production commercial exports. [00:31:51] Speaker 02: That is in commerce is regulation. [00:31:53] Speaker 04: I mean, you're out on Pirelli on that. [00:31:57] Speaker 02: Understood. [00:31:58] Speaker 02: Well, OK. [00:31:59] Speaker 02: So. [00:32:00] Speaker 04: Okay so accepting that the even I'm just trying to get at the arbitrary and capricious okay where you say they needed to give some explanation and that the explanation they gave from five to seven that oh the law changed and now we can look at minority control a little bit more closely that that's not good enough. [00:32:18] Speaker 02: The law is not some justification it's a heightened justification that's from the Supreme Court and [00:32:24] Speaker 02: To me, this is... That's why. [00:32:26] Speaker 04: Isn't that a good justification? [00:32:28] Speaker 04: When they say, oh, well, we were applying a very kind of simplistic rule before, and now we recognize that it's a more complex problem. [00:32:36] Speaker 04: And so we're going to look at the underlying evidence in the minority situations more closely to see that even if there is minority, it's still de facto. [00:32:47] Speaker 02: Not, Your Honor, when that evidence goes so heavily in the other direction, when the state ownership [00:32:51] Speaker 02: Decreased by 10% when the same that's not answering my question because I'm not talking about the actual evidence I'm talking about whether that rationale is is good enough We submit that it's that Well, you can't separate the rationale from the substantial evidence [00:33:07] Speaker 04: But as a general matter... Well, let's just say I disagree with you on the substantial evidence. [00:33:12] Speaker 04: I think there is substantial evidence to support that rationale. [00:33:15] Speaker 04: Then is that rationale that was articulated sufficient to explain the change from five to seven? [00:33:22] Speaker 02: No, we don't think it's heightened. [00:33:23] Speaker 02: We think it's arbitrary to say, you've put on a mountain of information, and we're going to move the goalposts. [00:33:30] Speaker 02: We think this is a hallmark of arbitrary conduct. [00:33:33] Speaker 02: And just very quickly on the presumption, we would urge this court to [00:33:38] Speaker 02: revisit Pirelli because it does matter, right? [00:33:41] Speaker 02: So we have commerce here going on and on about how we didn't carry the presumption because we didn't prove the ultimate fact. [00:33:47] Speaker 02: We think that is inconsistent with the way that presumption should operate in law, and we would encourage the court to revisit that and reverse the CIT's ruling on the separate rate for both of these companies. [00:34:00] Speaker 00: Thank you. [00:34:00] Speaker 00: Thank you so much. [00:34:01] Speaker 00: Thanks to both counsel. [00:34:03] Speaker 00: I guess two cases are hereby submitted, or 21? [00:34:09] Speaker 00: Okay, so we will say that 2163 and 2165 are hereby submitted