information and brain affirm correct your honor the lower court did send it back on remit and the agency came back with an explanation we submit that the explanation the agency proffered was inadequate  the reasons for that are two one is that in the government's response brief in a nutshell the government summarized what the agency's reasons were as making a factual finding that prevented it from using the methodology that it had  before that if the government comes then and just make some sort of shelling that the new data is accurate or reasonably accurate or not arbitrary isn't that all that it's required even if we agreed that it was a prior that we we submit that if the fox f c c decision doesn't change the way the court should look at this the agency needs to provide an adequate explanation of the supreme court's decision in the f c c case simply held that the agency doesn't have to provide an enhanced to scratch at it it's at the nation as to what is why it needed to change it or that the new computation that they're doing and not arbitrary out we believe your honor that the cases support the principle that the agency has to adequately explain the reasons for its departure from an established practice and that explanation must be adequate funder the are you also raising the second point to judge grocery we believe that the the explanation that the agency gave as the new methodology being more accurate is is not that the agency must show that there is a rational reason for changing its practice that maybe in the words of the supreme court and in f c c that the agency believed the practice to be more narrowing that hidden cost plus property it's not reasonable so repair market price or position your honor in this case is that the cost plus profit methodology that the agency applied for the first time in this proceeding up did not result in an accurate calculation of a surrogate market value and the reason for that in this case on the facts of this case is that when you look at the verified evidence of the value and physical properties of the three different inputs in question the methodology employed by the agency of using a financial statement for an entire company cover many many products in addition to the specific input that you question as as a basis to add a profit on top of the cost of production that methodology in this case on its facts yielded a surrogate market value that and so your argument is that while they can do it in general in this case using cost plus overall profit is not a reasonable or non arbitrary way of doing well  change their methodology i think they put changed their methodology the question is whether the change methodology survives an arbitrary capricious thing but we believe that the the the standard of review here is whether  stachel evidence on this record and we submit that it's not because the new methodology results in surrogate market value that is higher then what is undisputed to be the highest value you seem to be everything to me the only thing you pointed to in your brief that was problematic in terms of the point that judge dyke raised was that you look at the bottom line and cheaper product as is valued more highly and less cheap product but i didn't see any articulation i mean i think i completely would have a case if there was something fluff that about using the profit margin if this profit margin were based on fourteen thousand other products and all the other types of stuff then it would arguably not be inappropriate but i don't see really making the pressing that argument here oh here are the the profit margin used by the agency it's undisputed in the record was the overall profit margin of the supplier company and it's also undisputed that that supplier company has that as the financial statement shows and record produces and sells far more than the one particular input  who produced the information so the commission has to come accept the good of facts available but we can see in your honor that this supplier refused to supply the market value affirmation that that would be relevant market the supplier is not controlled by hubris or client and we had no power to compel the supplier to provide that information that is the situation that has been the case in this proceeding since the very beginning and every review up to this point so this is not a new situation for the agency but we are in the record and we're in the government points to two pages from the record that arguably deal with this the accurate figure in accuracy the use of this profit number given on the product they're producing or whatever but your honor we don't argue that the profit margin ratio the percentage calculated was inaccurate in and of itself it came from the financial statement no not that it was inaccurate with respect to the company but i guess that it was not reasonable to use that number for your prop that the basis for our position that it was not reasonable to use it for this input is the verified information profit margin to use with respect to this one individual product i'm trying to get at is what's your argument as to what's wrong with the government's methodology you identified one thing which you say the price of this one product based on the constructed price is out of whack as you say it's not consistent with the verified information about the relative value of these products and that verified information relates to the value of the of the three inputs not just the physical characteristics open in question the profit margin used it's an dispute it was a profit margin for the supplier company as a whole that may or may not be accurate in terms of reflecting correctly the profit on this particular may please the court who this is conceded that part of commerce possesses the authority to construct a market price in its major input will analysis but it but it is kind of odd isn't it to construct a market price by taking cost plus profit when the alternative under the statute is cost you would have thought maybe if congress wanted a cost plus profit to be an alternative they might have mentioned it instead it co will convert the congress was silent serving exactly how to derive these values and in fact what the congress wanted was for me your inputs to reflect what the cost would be between unaffiliated parties that in arm's length transactions and in this case there's really no  ambiguous body allowing the department of commerce to use the maximum of market price cost of production and and transfer price and in fact there are cases if a company is not profitable at all where the transfer price might be at the cost of production or the market price might be below the cost of production for that matter so the congress wasn't this is the point we were asking where profit margin and whether it really is and then you cited two pages in the appendix and i don't understand how either of them support the statement that there's a reasonable relationship between the production are pages one hundred eighty two and pages two hundred eighty two of the appendix two hundred two i mean two hundred two pardon me and in the non they are both on confidential documents there and they're fully reproduced in the non location and produces tear gas and then it also notes that the production of one other products q t a where the cut the supplier built a new plant for the production those are the only products mentioned in the general information of the company likewise if you go back to page one eighty two go that route that proves that the proper margin for both of those products that seriously may be rated for profit of its sales were with affiliated parties so in fact really this particular company plier was closely related to an integrated with its related companies and its whole purpose was for the production of various forms of cheap gas how do we know that we know that from this information on the record in the department of commerce his determination that the profit value was reasonably related to the production of this major input and that's the standard is that it just needs to be reasonable what would you agree that the rights of m p s calculated over a necessarily just dispositive factor so the record evidence here although it doesn't fit neatly into every doesn't fit exactly into what might be a a perfect into a perfect rubric of one product always being more expensive than another a third input being more expensive than the other two the standard here is reasonable this under the agency's facts available  would it reasonable to do this when the product usually has a lower price it was reasonable to do this because the supplier itself earn profits on the manufacture of the subjects major inputs and therefore to have a reasonable market price which would be the cost of producing the merchandise price plus the profit earned on the  merchandise the department of commerce exercised its gaveling authority in this case and did it in a completely neutral manner is it your view of the law that you have to prove it's more accurate what is here you will what you have to show in terms of let's assume you know you just continue to dispute it but let the we all conclude that with the departure prior practice what is your view of what you have to then come up with well under the fox vs f c c case what you need to do is support your determination with reason just like any other administrative determination all the only thing that might be different with respect to a change in practice would be that you have to acknowledge that you had a practice before and know that the agency needs to know that it believes that its new determination somehow is small the words used by the fox court were better but in this case more accurate then the previous way of doing things you think you have to show that it better or just that it also means you just have to show that it's reasonable when when the case being criteria that you're supposed to consider transfer price market price and cost of production and i guess you can get away with not considering one of just not be able and everybody agrees that not available but doesn't what you're using now circumstances you'll use cost reproduction under the new rule it seems as though you're never going to use cost or production because i believe to be cost of production plus or minus profit is not correct well if it's cost of production minus profit then you will use of production see cost production is higher than transfer price and higher than cost of production minus profit then you'd use cost of production is your major input value so you would use it under those circumstances the question is whether if there is if you're not provided with the market price the current congress has not provided to the market price does the agency have to pretend that one doesn't exist especially where that merchandise is sold on the open market in the producing company and there's actually interchangeable in the manufacturing process and that is record information that was provided by hubris when it asked commerce not to not to construct a value in that manner now was the only ground but they're not home manufacturing profit i mean it would seem to me that if one product generally had a lower price than the other that you would be suspicious of her surrogate price that ends up being higher supplier produced various grades of chair felt acid and that its gross profit margin on all of those grades was greater than the transfer price which would indicate that on average the market price that the price that that supplier transfer similar merchandise to on affiliated buyers was going to be higher so the part of commerce simply exercise authority to fill in the gap in the record because it is a need there was a market price and in fact there's i'm not sure that i understand  measure assuming that the you're going to construct a market price using the average proc right that's correct right so wrong in to approach to is more accurate with the approach you used in the past using the market price product because at least you are using the cost of production of the actual product and then adding a not for profit so you are more closely linked to the production of the major input itself likewise i just wish to add that the problem is you're not linked to the actual product when you use the profit figure because it's an average correct and that's under the facts the agency's fact available authority that those were the facts on the administrative record and so the question then becomes was it permissible was was that the use of that product that profit value supported by substantial evidence  tever the part of commerce exercise it's got filling authority you're not going to get exact values for the merchandise in question or for the variable in question the problem i have though with that on this rec it to not clear what kind of discrepancy where there's an enormous discrepancy or not or a minor discrepancy between the use of this product margin this particular product i don't know how we are supposed to figure that out well it's entirely permissible because this is what the department of commerce does when it constructs a value all the time it uses the company's profit even if the company you manufactures a number of other profits so it's  permissible methodology for the agency to calculate a value based upon the the record evidence before i would agree with you not that there are circumstances in which that profit margin if we knew would record would be w ineffective if you only produce five percent of the tick of a product and the profit margin is reflective of ninety five percent of what to deal with different products than you would be using the profit margin that would be reasonable  under a circumstance like that sure but remember it's also the respondents burden to create an accurate record before the agency is and the the plaintiff here to this never raised this argument before the court of international trade or before the court before the agency concerning the representativeness of the profit margin their primary argument their primaries thrust was that what the part of congress did was an impermissible change thank you your honor briefly say that first in the fireworks at c c case the supreme court made it clear that the agency in departing from established practice and changing its policy has to enunciate good reasons for the new policy that's very clear from the fruits of opinions and we submit that here there are not good reasons that is the methodology chosen for the first time doesn't bear a rational connection between that method in the facts on the record in this case and we cite to the supreme court cases requiring a rational connection to the methodology employed by the agency for the first time here does as we did argue in our reply brief in this case effectively nala fi the u representation by the government that commerce would deduct a loss from c o p and doing the benchmarking but what it means for a company that has a negative profit margin is that the c o p is the floor  comparison of markup marked up c o p plus profit but ultimately the essence of our argument before the court is the in accuracy of the methodology used on the record of this case we want to stress that here the three types of terror acid are verified as big quite different in quality in quite different in value the profit margin used in this surrogate market price was an average of all of them it