two thousand and eleven twelve thirty seven mr thompson good morning your honour's this appeal involves the commerce department choice of surrogate value sources to calculate normal value for purposes of determining the antidumping margins applicable to chinese pencil exports the case rises from the commerce department to two thousand and six two thousand and seven administrators review of the antidumping duty board or the court of international trade rejected is surrogate valuation choices for two factors of production wooden slats and writing course and the domestic industry has appealed the decision on those two points he believes that the court of international trade recent decision the question is whether congress recent decision is supported by substantial have well your honor we don't believe that this case involves commerce acknowledging that the court of international trade was correct we are objecting to whether she has a nice light of the language in there where they seem to say that the this is the preferred way of doing it that you are looking for the data is consistent with mart in to the court of international trade the decision reads as though they think this is the right thing to do well the court of international trade told congress that it cannot rely upon the information that was presented in a different light a point in the original determination so congress is decision when it talks about the best available information that is based on a truncated record congress was told you cannot look at the underlying data that you first applied because there was no competing data for them to take into consideration so that was in effect the only game in town the record was closed the court had said don't look at the information that you previously relied upon so congress had to go back and make a determination basically on that one set of data that it had previously rejected just saying congress didn't change its mind it was just acting and there was rove that is  commerce certainly had no choice and to address that information that that remained after the court had had said that the original information was inappropriate w correct oh i think what you're referring to there your honor is referencing commerces determination that in the original anti dumping investigation the choice had been between  types of water so commerce did have an iranian statement in the in the final results which the court pointed out however our view is that this is stated by commerce is completely beside the point because the the department has the discretion regard lists of the fact that different information may have been presented to it in the review then in the original explain why well because the the determination on appeal is the court international trades conclusion that congress department committed error in its original determination by using the basswood lumber in instead of the on the indian stationary data so the only opportunity we have to challenge that decision that was  an interim decision that we could not appeal directly to the court our only opportunity is to challenge it through this appeal once the comments but you agree the commerce on the rim and said well we've thought about  national credit was right our first decision was wrong and now we're going to follow the court of international trade decision because we think that's the right way to do it that's the way we should have done in the first place you know i disagree says that if they said that you wouldn't have a case right oh i disagree that we wouldn't have a case because first as i said before the record on remit was different then the record in the original review but event but they're entitled to change their policy if they change their decision is move the the one you have to challenge the most recent thomas decision where he said that this is our decision and we don't care what the program national sides well your honor if we were to challenge most recent decisions we wouldn't have  challenge it on that they chose the only was a lack in substantial evidence or whatever but the only evidence after the court had it taken else the basswood number data was what was before congress at that point that that's not really a says we've looked at this again and we think we were wrong in the first time we've changed her mind we think that in fact we should use the slack day to day in this quarter be there from paper and pencil publication we think that's the right way to do it and we're doing this not under compulsion but because we think it's the right thing to do you wouldn't have a case well why would comers be doing that except for what we believe is the error in the original we just need to use them in the absence of these hypothetical determine substantial evidence in the congress to investors and it's the latter you run or you take the court of international trades discussion into account but the issue on appeal is whether the original commerce determination was supported by substantial evidence and otherwise in accordance with law and so this of course is the first opportunity that we've had and that's because in that review that decision was filed and because we were settled or into that decision yes  had no opportunity to fill it until the yes you're on it ok so so this first argument applies only to the first review to well to the administrative review yes the one that led to the initial at issue the choices were between a zero publication that said south american basque with lumber prices which we supported and a information derived from an interview in an indian newspaper  on flat prices in india or what what were reported to be slashed prices so as between the two there really wasn't a basket category basket category rose with the second under review which was the pencil course where we took the position and commerce originally agreed that the indian import data covering pencil course that's the maybe six or nine twenty tariff provision that that provided the best available information to value chinese pencil cords the court disagreed and once again said the information determination of the court of international trade short of taking an interlocutory appeal which as you know is a very difficult task it is to await a final judgment of the lower court wasn't true but we've said that if the second decision to determine whether it's commerce is current position that that they reached in a on a dispassionate matter one would be if they take a voluntary review or if they fight the case in the court international trade or whatever the lower court may be the second would be is this commerce decision based on the same rather not hear or find here not sure i mean has significance i mean makes it seem as though they don't  determination but there was really nothing nothing left to fight about there until we got to this court the court having said thomas don't take into account the southern information we one thing and you know to your earlier question now would be one thing if headed by a voluntary remand or at the to actually court say here we have the same information that was before us in the original review and you know what we've changed our minds but they didn't hear the court basically board members of the panel i think i can i am probably the best suited just to sort of follow up on where you have left it with with mr thompson i was i was interested by  the decision in the second remand have on first well let let me let me explain how i believe the congress department's reaction to that remit germination ought to be viewed by the court number one is judge very quick to point out they're not here maybe they don't care maybe they don't care because they specifically did what the court said to do right away no ifs ands or buts about if they did what the judges are what the judge asked them to do they did not do what you have i'm sure become familiar with them doing and what they did indoor best for example of a case of some significance in the last year or so before let me ask you again what with the second dorcas in door best the commerce department got to remember they were told something and they said no and then they got another remand and they said no they made their point known to the court that they disagreed with this and worse going to stick to our guns it wasn't until the third time that they acquiesced and said effectively under protest ok we're doing this but we'll see if the federal circuit so if we have to reverse the view only the second commerce decision well we're reviewing the second timers decisions or so i think i think that judge doug was correct in saying that there is indeed an avenue and was an avenue for the petitioner to pursue the substantial evidence was easy the answer is that when the agency teaches its mind sometimes that lutes is in a room court decisions no longer has any significance of the agency has changed its mind the question is whether and this case you can see has changed  what effect does that have on a first review i mean did you go back and say oh gee we changed their mind so let's call going back to the first review and redo that case well that's exactly what they did they said you know what we should use this slide a we should use these core values for completely different core inputs and they calculated new margins not only for the two companies that were directly involved in the case but for the third plaintiff and so i guess compelled to refer to the to the lower courts reference to both the defendant in the defendant intervenors at the court of international trade position here as peculiar indeed how can you say and i'm going have a lot of time here so i might as well mention to the court that i i asked petitioners appellants counsel if i could use a visual display i did not request the court in advance the clerk's office told me that that was sort of not not a problem but before i do anything i'd like to make certain that you that you don't take issue with my pulling out a very small visual device b items a part of their record you can do without them ok well i mean so let's talk about what we're here about we're here about whether or not the commerce department is accurately calculating the margin of these companies who produce pencils and in producing pencils they don't buy a lumber and they don't process lumber and convert it into a sla in the decision says china first produce flats we were looking for a value for slats freestar and another company not involved any longer produced their own slabs and so we need to find lumber sorry lo values lot of values and lumber values were both an issue in that original case and why does longer become an issue because congress would often use some basket category of many different kinds of woods and we argued twenty years ago or seventeen years ago you know if you're going to go off in and use lumber to get down to this little piece a wood then let's be a little more specific here and we've got some basswood values from the u s source that we located we looked around the world you can't find anything lindenwood is somewhat unique to china i think parts of europe in the u s so  we didn't have a whole lot of choices people don't trade in slats regularly and certainly not an item in any harmonized tariff schedule anywhere so we were forced to say if you're going to be looking at oil at lumber let's at least try to be specific here and that's where the whole lumber basswood lindenwood thing came up seventeen years ago but now fast forward it's two thousand and eight and we're looking at two thousand and six two seven review guess what unfortunately it was after the preliminary determination which the commerce department used the basswood values and did this goofy calculation that they do they that use that in their preliminary we under the regs parties have an additional forty days then or twenty days to submit surrogate value data we happened to locate in that time period the article that i department issued their original determination is that how given the fact that they look first and foremost to product specificity in determining which factor of production and while we're at it we're going to manipulate it and go through this hypothetical conversion process of which there's really no legitimate information on the record to support to come up with a piece of lumber that's been converted into a slab it's it's comical and the same thing can be said of course there's information on the record to demonstrate that the trade in course the kind of course that are advertised commercial products you walk into a stationary shop you can buy a gross of pencils in a box or you can buy a gross of mechanical pencil leds or special kinds for different purposes in small packages that are very expensive that's on the record some of them show that really leds as much as five dollars at the retail level i understand but the point is we're talking about and quite frankly i would welcome any any questions from the court the you know the factor of production here wasn't what flags they used lumber they decided they were wrong since that time in two subs reviews at least while the c i t case was ongoing they decided to use the paper in stationary data riemann determination it was only looking at the paper and stationery information the court of international trade had told commerce you cannot take into account the basswood lumber information that was on the previous record and you cannot take into account the indian import data for of course so the court had said had constrained the information that congress could take into a same information and subsequent reviews when they were under a court order to do so well you run it in subsequent reviews the domestic industry hasn't participated so we have not presented the basswood data or the indian import data in those reviews so if you will if you will the only game in town for those reviews is dependent stationary data so presented with a different record congress has reached a different conclusion but that's very different  was completely different in those other cases because the information that we presented in the challenge for review was not before commerce in those subsequent reviews so it's a different factual scenario they had no what the choice  it's relying on those data the same as in the remit and determination when the court of international trade had said to congress do not use that that information so in that respect commerce is a valuation wasn't one in which it went back and said well you know on second thought weighing the two we're going to go the other way it was one where the court had literally put a thumb on the scales if you will and said only use it's information and that's very different than the in a scenario where the agency has gone back and reconsidered on the whole record so of with that if you have any more questions i'll be happy to address them otherwise thank you very much