[00:00:00] Speaker 02:
Our second case this morning is the Marasana S.P.A.

[00:00:06] Speaker 02:
versus United States, 2023-2060.

[00:00:12] Speaker 02:
Mr. Craven, when you are ready.

[00:00:15] Speaker 04:
Good morning, Your Honors.

[00:00:17] Speaker 04:
May it please the Court?

[00:00:18] Speaker 04:
My name is David Craven.

[00:00:20] Speaker 04:
I'm with Craven Trade Law, and I'm here today on behalf of L'Hommel, Isana S.P.A., and Val di Grano di Flavio Pagani.

[00:00:29] Speaker 04:
And we're here to talk about, ultimately, accuracy during the course of an anti-dumping duty investigation.

[00:00:38] Speaker 04:
And all of the issues involved here ultimately relate to the question of model match.

[00:00:43] Speaker 04:
And model match ultimately drives many anti-dumping duty cases because the key here is you want to compare Toyotas to Toyotas and Rolls Royces to Rolls Royces.

[00:00:56] Speaker 04:
And so it's very important in model match to avoid a comparison where you have Rolls Royce and Toyota.

[00:01:02] Speaker 04:
Both automobiles being compared because they're very different on price levels.

[00:01:08] Speaker 04:
Now, the first thing I'd like to mention is the elephant in the room, and that's the light or bright decision overturning Chevron deference.

[00:01:17] Speaker 04:
We're not going to talk about that in great detail today, unless you wish, because it is ultimately a relatively straightforward case.

[00:01:24] Speaker 04:
But in this case, as you would note from the filings of the government, almost all of their decisions say, we win because we have deference, and they're citing the Chevron deference and other deference that relates to Chevron deference.

[00:01:38] Speaker 04:
So we think that that alone might very well justify returning this to the CIT, to have the CIT consider the actual issues in light of the fact that decision making has now been passed on in some ways.

[00:01:53] Speaker 01:
So aren't they, like, for the rounding up argument that you have, they're relying on commercially significant.

[00:02:01] Speaker 01:
And with respect to the US, the difference between the Italian and the US conversion,

[00:02:07] Speaker 01:
They are relying on transparency and also maybe CIT-added community significance.

[00:02:17] Speaker 01:
So I'm not sure we need to talk about deference, because I don't think they're just saying, primarily they're not just saying, defer to us.

[00:02:25] Speaker 01:
Our rule has been around forever.

[00:02:26] Speaker 01:
It's great.

[00:02:27] Speaker 04:
I think in some ways they are doing that because they are saying here, we have already made these decisions.

[00:02:36] Speaker 01:
You're just making sure we know that they can't rely on that.

[00:02:38] Speaker 01:
That's right.

[00:02:39] Speaker 04:
Okay.

[00:02:40] Speaker 04:
That's right.

[00:02:40] Speaker 04:
But let's talk about some of these things.

[00:02:42] Speaker 04:
The first thing is this Fagerstone case, stainless, which says that accuracy is really the most important

[00:02:49] Speaker 03:
I'm sorry to jump in on you there.

[00:02:54] Speaker 03:
You were talking about a case.

[00:02:55] Speaker 03:
I don't want to break up your train of thought.

[00:02:57] Speaker 03:
But I do have one question.

[00:03:00] Speaker 03:
As I understand your brief, you don't challenge the use of labeling.

[00:03:07] Speaker 03:
What you're saying is there should be, for purposes of anti-dumping, there should be an adjustment done by commerce.

[00:03:16] Speaker 03:
Correct.

[00:03:16] Speaker 03:
With respect to what's on there.

[00:03:18] Speaker 03:
You're not saying the labeling should be changed.

[00:03:21] Speaker 03:
You're saying that commerce should go through this adjustment that you advocate in your brief.

[00:03:26] Speaker 03:
Well, I think you are.

[00:03:27] Speaker 03:
That partially is because... Am I right in understanding your argument?

[00:03:32] Speaker 04:
Yes, you are.

[00:03:32] Speaker 04:
Because the labeling issue, using labeling, had been the fight of the earlier fight.

[00:03:38] Speaker 04:
And so we had conceded at the time that commerce, through its discretion, had decided that labeling was the appropriate

[00:03:46] Speaker 04:
method for determining.

[00:03:47] Speaker 04:
So our response was, okay, if you're going to use labeling, you have to still engage properly in unit conversion.

[00:03:54] Speaker 04:
Because the labeling itself is inaccurate if you don't take into account the unit conversion.

[00:04:01] Speaker 04:
There's a significant difference, and it's commercially significant, between the U.S.

[00:04:07] Speaker 04:
standard of 6.25, I believe it's pronounced, Kegedal units.

[00:04:12] Speaker 04:
program of protein versus the Italian standard of 5.7.

[00:04:16] Speaker 02:
Well, that's a question of fact, isn't it?

[00:04:19] Speaker 04:
Well, but I think no one disagrees that that isn't the fact.

[00:04:23] Speaker 01:
The government has agreed with you that there are inconsistencies or inaccuracies brought in as a result of both rounding and the difference in conversion.

[00:04:37] Speaker 01:
but they say that they are not commercially significant.

[00:04:40] Speaker 04:
They say they're not commercially significant, yet their determination as to what is high quality and low quality, they're taking with a hundredth of a percent of protein.

[00:04:50] Speaker 01:
So in other words, your view is that the pasta, I have this correct, that the protein is a proxy for the greater quality of the semolina wheat.

[00:05:01] Speaker 01:
Yes, that is.

[00:05:02] Speaker 01:
And they say that the semolina wheat

[00:05:04] Speaker 01:
is commercially significant, the amount of it, the quality, the grade of it, excuse me.

[00:05:08] Speaker 04:
But part of the problem, of course, is that you end up comparing identical product under different categories.

[00:05:17] Speaker 01:
So just to make sure I understand, I have the context.

[00:05:21] Speaker 01:
Sure.

[00:05:21] Speaker 01:
OK.

[00:05:21] Speaker 01:
So you do this market match so that you then can figure out what is the like foreign product to the product at issue.

[00:05:31] Speaker 04:
The example would be, I am selling you a pound of spaghetti in the United States.

[00:05:38] Speaker 04:
The United States uses a 56-gram serving size.

[00:05:43] Speaker 04:
The rounding means that it's eight grams of protein per serving, which rounds to exactly 12.5 percent, which means it is standard, I'm sorry, it is a premium quality pasta.

[00:05:58] Speaker 04:
In Italy, they use a hundred gram serving size.

[00:06:01] Speaker 04:
So our same reporting is that a lower grade pasta in Italy, also using a different

[00:06:10] Speaker 01:
protein content ends up being 11.5% protein.

[00:06:32] Speaker 01:
what the foreign-like product is that corresponds to the U.S.

[00:06:35] Speaker 01:
product that you're looking at to determine whether dumping is a crime, right?

[00:06:39] Speaker 04:
What it does is it enables you, you have to categorize every product and match similar products to similar products.

[00:06:46] Speaker 04:
Not identical.

[00:06:48] Speaker 04:
I can see that you will have situations where you will have similar product that will be matched to similar product.

[00:06:55] Speaker 04:
And it categorizes each group into a different pool, and you compare each pool

[00:07:01] Speaker 04:
So my standard-grade spaghetti is compared to my standard-grade spaghetti in both the home and US markets.

[00:07:08] Speaker 04:
And my premium spaghetti is compared to my premium spaghetti in the home and US markets.

[00:07:13] Speaker 04:
But when the model match doesn't work, you end up comparing premium spaghetti sold

[00:07:22] Speaker 04:
in the U.S.

[00:07:23] Speaker 04:
market.

[00:07:24] Speaker 04:
Sorry, Standard Spaghetti sold its premium because of the model match.

[00:07:27] Speaker 04:
Compared to High Price Spaghetti in Italy, it creates an artificial dumping margin.

[00:07:32] Speaker 04:
Because you're not comparing it to the exact same thing.

[00:07:35] Speaker 04:
And if a company makes two identical packages of pasta, because of this model match methodology, one is going to be in standard, and the other is going to be in special.

[00:07:46] Speaker 02:
Council, this methodology's been in place for, what, at least 12 years?

[00:07:51] Speaker 02:
You've got an expert agency taking the position to maintain it, and an expert corp affirming that.

[00:08:00] Speaker 02:
Why?

[00:08:01] Speaker 02:
should we overturn all that just because it doesn't fit your client's needs?

[00:08:08] Speaker 04:
It's not just my client's needs, Your Honor.

[00:08:10] Speaker 04:
I think it's the basic concept of accuracy.

[00:08:14] Speaker 04:
And this has been a subject of fighting.

[00:08:15] Speaker 04:
There have been numerous different approaches taken to try to figure out how to do model matching.

[00:08:22] Speaker 02:
This is a relatively recent... Do we have any amicus briefs here?

[00:08:25] Speaker 01:
No, we do not.

[00:08:26] Speaker 01:
What is the standard you have to satisfy?

[00:08:29] Speaker 04:
It's a substantial evidence standard, I think.

[00:08:31] Speaker 01:
That's right.

[00:08:32] Speaker 01:
So we have to see whether there's substantial evidence that there's not compelling reasons to revise the model match methodology, right?

[00:08:39] Speaker 01:
And you would say there is substantial evidence.

[00:08:41] Speaker 03:
Absolutely.

[00:08:42] Speaker 03:
Mr. Quinn, as I understand it, the nub of your argument is without doing the adjusting, I'll call it, that you present in your brief, the pasta is inaccurately

[00:08:57] Speaker 03:
bumped up into the higher standard, premium.

[00:09:01] Speaker 03:
That's the number of what you're saying.

[00:09:03] Speaker 03:
That's right.

[00:09:04] Speaker 04:
The more critical part of this, I think the biggest point is you have identical product in the home market and the US market.

[00:09:14] Speaker 04:
Literally, the only difference is the package.

[00:09:17] Speaker 04:
And you're going to tell me that they're classified differently.

[00:09:21] Speaker 04:
because of the fact that the Commerce Department doesn't believe that you should do unit conversion.

[00:09:28] Speaker 01:
Can I ask you another question?

[00:09:29] Speaker 01:
Yes, ma'am.

[00:09:29] Speaker 01:
I want to really get to the reasons that are provided by the government for why it's OK to have these mismatches.

[00:09:38] Speaker 01:
Sure.

[00:09:38] Speaker 01:
And one of the reasons they say is transparency.

[00:09:41] Speaker 01:
What is your first call?

[00:09:44] Speaker 01:
Do you know where the transparency requirement comes from?

[00:09:46] Speaker 01:
Is that statutory, regulatory, or something that commerce is striving to do?

[00:09:50] Speaker 04:
I believe it's something commerce is striving to do.

[00:09:52] Speaker 04:
And furthermore, I think, again, accuracy has to trump transparency.

[00:09:57] Speaker 04:
But in any event,

[00:10:00] Speaker 04:
It is still relatively.

[00:10:01] Speaker 01:
Does accuracy come from the statute itself that used the language?

[00:10:04] Speaker 04:
It comes from practice, I think, Your Honor.

[00:10:06] Speaker 01:
Or is it from the language identical in the statute?

[00:10:09] Speaker 04:
Well, I think it also comes up just from the practice.

[00:10:12] Speaker 04:
Because that's always what you're striving for, is to have accurate calculations.

[00:10:17] Speaker 04:
This court has held that accuracy is important.

[00:10:20] Speaker 01:
OK, I interrupted you.

[00:10:20] Speaker 01:
You were going to address transparency.

[00:10:22] Speaker 04:
But I think the answer is, it's still perfectly transparent.

[00:10:26] Speaker 04:
If I take a package and I, if I see a thermometer on the street corner and the thermometer says 35 degrees and it's really cold, it's really hot in Washington DC, then I know transparently that that thermometer is in centigrade, Celsius.

[00:10:47] Speaker 04:
The same way that when I look at it personally, I don't necessarily... You're saying people can do the conversion and... People can do the conversion and it's not hidden.

[00:10:55] Speaker 04:
It's a very... It's in the CFR.

[00:10:57] Speaker 01:
Well, what about the rounding up?

[00:10:59] Speaker 01:
That's a little different.

[00:11:00] Speaker 04:
I mean, it's not a big margin, but as you said, these margins matter, so... Well, but it's... The answer is the rounding up is for the convenience of the customer, but it also doesn't...

[00:11:15] Speaker 04:
It is commercially significant for determining quality of the product.

[00:11:20] Speaker 04:
In terms of calculating your diet, the difference between 11% protein and 12.5% protein probably doesn't affect your diet.

[00:11:32] Speaker 01:
But what about, I was just, again, I mean, I think you've got me at least on the point that there are differences.

[00:11:39] Speaker 01:
I'm trying to think about the transparency point.

[00:11:41] Speaker 01:
So think about the transparency point with respect to rounding up

[00:11:45] Speaker 01:
Do I understand correctly that the producers, the pasta, are providing this data anyway?

[00:11:55] Speaker 01:
It's not like commerce is going to the store and grabbing all the boxes, right?

[00:11:58] Speaker 01:
Correct.

[00:11:59] Speaker 04:
I'm sorry, Joanna, I am in my rebuttal time, but I would be happy to continue if you wish.

[00:12:02] Speaker 02:
I think you probably should answer the question.

[00:12:05] Speaker 04:
Sure.

[00:12:05] Speaker 04:
I'm sorry, please.

[00:12:06] Speaker 04:
Your question was that no, commerce is not going to the store.

[00:12:09] Speaker 04:
We are reporting it.

[00:12:11] Speaker 04:
And before the change was made, we used to report the actual protein content.

[00:12:15] Speaker 04:
And again, we're not asking for... I'm also not sure how transparency should affect the calculation of the dumping margin.

[00:12:23] Speaker 04:
Because ultimately, commerce's decision is not based on what the customer thinks.

[00:12:28] Speaker 04:
It's what's the actual product.

[00:12:30] Speaker 03:
What is the actual physical makeup of the product that they're examining and comparing apples to oranges?

[00:12:36] Speaker 03:
And you're saying that information is provided by the producers?

[00:12:39] Speaker 04:
can be provided in the prior reviews we used to provide.

[00:12:43] Speaker 01:
Yeah, but the producers are still providing what's on the box.

[00:12:46] Speaker 01:
Sure.

[00:12:46] Speaker 01:
Even under the current system.

[00:12:47] Speaker 04:
Absolutely.

[00:12:48] Speaker 04:
Yes.

[00:12:49] Speaker 04:
Thank you.

[00:12:50] Speaker 04:
I'd like to save my last two minutes, please.

[00:12:52] Speaker 04:
We will do that.

[00:12:53] Speaker 04:
Thank you, Your Honor.

[00:13:03] Speaker 02:
Good morning, Ms.

[00:13:04] Speaker 02:
Perry.

[00:13:05] Speaker 05:
Good morning.

[00:13:07] Speaker 05:
May it please the court

[00:13:09] Speaker 05:
The trial court correctly sustained Commerce's decision not to adjust its model matching methodology as reasonable, and this court should affirm.

[00:13:16] Speaker 05:
I'd like to just briefly start by addressing Chevron, as Mr. Craven did as well, and Loper-Brite, of course.

[00:13:23] Speaker 05:
And I think for a few different reasons, Loper-Brite doesn't fundamentally change anything about this case or the court's analysis in this case.

[00:13:30] Speaker 05:
The critical standards of Clay, of course, here are

[00:13:33] Speaker 05:
commerce requires compelling reasons to switch from its model matching methodology and that commerce can treat

[00:13:41] Speaker 05:
slightly different products is identical, so long as those differences are not commercially significant.

[00:13:46] Speaker 05:
Neither of those standards should be called into question by the Supreme Court's decision in Loeb or Breit.

[00:13:57] Speaker 05:
I'm happy to answer any further questions on Chevron on Loeb or Breit.

[00:14:00] Speaker 05:
Otherwise, I can move directly to the substance of Commerz's decision.

[00:14:05] Speaker 01:
Do you agree that Commerz selected

[00:14:08] Speaker 01:
the protein percentage to determine light goods because protein percentage is a proxy for the quality level of the semolina in the pasta.

[00:14:18] Speaker 05:
Yes, Commerce did select protein content as a proxy for semolina, I think about 15 years ago, and it explained its reasons for switching from trying to directly value semolina to valuing protein, and then the reason for using nutrition labeling instead of using companies' internal data regarding protein.

[00:14:41] Speaker 05:
protein content as a proxy for semolina is one of the physical characteristics that commerce uses to determine the condom to compare foreign-like products.

[00:14:50] Speaker 01:
So you agree that the grade of semolina, commerce said the grade of semolina is commercially significant?

[00:14:58] Speaker 01:
It's the same document from 2009.

[00:15:02] Speaker 01:
And they specifically say the grade of semolina is commercially significant.

[00:15:07] Speaker 01:
And they also say that protein approximates the grade of semolina.

[00:15:13] Speaker 05:
I do have my notes here about that one, but I don't have the semolina being commercially significant.

[00:15:25] Speaker 05:
A2610.

[00:15:29] Speaker 03:
It's pretty handy having that tablet there.

[00:15:31] Speaker 05:
It is, except it can be a little bit harder to scroll, unfortunately.

[00:15:36] Speaker 05:
I apologize for that.

[00:15:39] Speaker 05:
Sorry, while I scroll through this.

[00:15:43] Speaker 01:
It is around the middle of the page, and if you'd like, I can read it to you.

[00:15:47] Speaker 01:
Thank you, Your Honor.

[00:15:47] Speaker 01:
I apologize.

[00:15:48] Speaker 01:
It's all right.

[00:15:49] Speaker 01:
It says, we found the physical difference existent at the cost of the highest grade semolina is materially more than that of the lowest grade.

[00:15:55] Speaker 01:
We found that these quality differences reflected in semolina costs and pasta prices.

[00:16:00] Speaker 01:
We found that they are commercially significant and appropriate criterion for product matching.

[00:16:09] Speaker 05:
you know, without access to the full context right now, that certainly that differences in semolina quality can be commercially significant, but I don't think that that means that commerce's decision to say that when we are reporting protein content based on the nutrition package label and any slight differences that might occur from the differences in the FDA rounding standards and the nitrogen content multiplier,

[00:16:34] Speaker 05:
aren't commercially significant and again commerce explained why those differences aren't commercially significant and now that commerce is using the nutrition label and you know Mr. Craven even said that he's not contesting commerce's decision to rely on that nutrition label

[00:16:50] Speaker 05:
then it's so important that commerce made that determination, and the trial court sustained that there was nothing on the record demonstrating that any such differences caused by FDA rounding or nitrogen content multipliers are commercially significant.

[00:17:06] Speaker 01:
What was commerce?

[00:17:06] Speaker 01:
You said commerce explained why those differences aren't commercially significant.

[00:17:10] Speaker 01:
Yes.

[00:17:11] Speaker 01:
What was commerce's explanation?

[00:17:13] Speaker 01:
I think it was that customers looked at the box and see the protein percentage.

[00:17:17] Speaker 05:
Yes, they're not commercially significant because as commerce said, yes, customers of pasta and not just the ultimate customer, but intermediaries of customers and sellers and buyers at various points along the way are going to rely on the protein content of the finished package.

[00:17:33] Speaker 01:
What evidence is there of that?

[00:17:35] Speaker 01:
And also, what case law is there that you have that says that that's how you determine whether something's commercially significant is by looking at

[00:17:43] Speaker 01:
what customers are looking at on the box, for example.

[00:17:46] Speaker 05:
I don't think that, you know, commerce cited to a specific case other than Pescatomar is, which just has the general standard of commercial significance, but I think that commerce is reasoning for the fact that customers are going to rely on the protein content published on the package rather than this internal information.

[00:18:04] Speaker 05:
It's because, you know, commerce made the determination that

[00:18:08] Speaker 05:
customers of this pasta wouldn't probably even know this information about FDA rounding or nitrogen content multipliers.

[00:18:15] Speaker 05:
This is not common knowledge to anyone.

[00:18:18] Speaker 01:
What about the fact that the grade of the semolina is said to like provide different greater qualities of the pasta, which then puts it in the premium bucket?

[00:18:26] Speaker 01:
And there's a line that's being drawn at 12.5.

[00:18:30] Speaker 01:
Yes.

[00:18:30] Speaker 01:
Right?

[00:18:31] Speaker 01:
And it's whether it's premium or whether it's not as good.

[00:18:33] Speaker 01:
There's like multiple different qualities to this higher-grade semolina pasta that are describing this very same document.

[00:18:41] Speaker 01:
And so when sometimes a product, because of the difference, because of rounding, is then characterized as being premium instead of what it would be characterized as standard in Italy,

[00:18:55] Speaker 01:
Why isn't that commercially significant?

[00:18:58] Speaker 01:
Because when commerce itself chose the dividing line and said that the quality of the semolina matters.

[00:19:05] Speaker 05:
Well, I think, for one, it's commercially significant, because as the trial court said, there's simply no evidence, no actual evidence in the record that appellants have pointed to to conclude that these differences in nitrogen multiplier and rounding rules would end up mattering in the workplace, because it's not what seller is in the workplace.

[00:19:26] Speaker 05:
In the workplace?

[00:19:27] Speaker 05:
I said workplace.

[00:19:28] Speaker 05:
I meant marketplace.

[00:19:29] Speaker 05:
I apologize.

[00:19:30] Speaker 01:
But commerce themselves have said it matters.

[00:19:35] Speaker 01:
In this document, commerce chose a dividing line and said that this, we're relying on these four different commodities exchanges to pick this dividing line.

[00:19:45] Speaker 01:
And this is the difference, however it measures, the difference between quality pasta, I mean, sorry, they're all quality, I guess, but standard pasta and premium pasta.

[00:19:55] Speaker 01:
So how can we say it's not commercially significant to have mathematical inaccuracies in determining whether one falls in this bucket or that bucket?

[00:20:03] Speaker 05:
Again, because as Kamar said, its determination of commercial significance is whether this is going to matter to customers in the marketplace.

[00:20:12] Speaker 01:
And where's the case law to support that?

[00:20:14] Speaker 05:
I don't think that there was any specific case law that was pointed to, except for Pescaramara's.

[00:20:21] Speaker 01:
Can you answer one other question, which is, do I remember correctly that when we're talking about saying, hey, it doesn't matter if there's physical differences,

[00:20:30] Speaker 01:
we can just say it's commercially insignificant.

[00:20:32] Speaker 01:
Before we get to that, it's only under the case law that it has to be minor physical differences, right?

[00:20:39] Speaker 05:
I do believe that under Pascara-Marez, it is minor physical differences.

[00:20:43] Speaker 01:
So there's a presumption that these differences are minor?

[00:20:46] Speaker 05:
No, I think what Pascara-Marez says is that- I know.

[00:20:49] Speaker 01:
In this case, in order to get to, just to make sure I understand,

[00:20:54] Speaker 01:
hinged and say commerce's methodology is okay because it's not commercially significant.

[00:20:59] Speaker 01:
We have to also determine that there are differences that are created by these mathematical, erroneous math, is that those differences are minor.

[00:21:14] Speaker 05:
I think the decision of whether to construe those differences as minor is tied to being commercially significant.

[00:21:21] Speaker 05:
I read Pascara Maras to basically say that if the differences are not found to be commercially significant, then they'd be sufficiently minor to be able to be construed as minor.

[00:21:32] Speaker 01:
That's a little sturdier.

[00:21:33] Speaker 01:
I read it as saying, and quoting, despite the existence of minor differences in physical characteristics, if those minor differences are not commercially significant, then products can still be considered

[00:21:44] Speaker 01:
identical.

[00:21:46] Speaker 01:
Do you agree with that statement of the law?

[00:21:50] Speaker 05:
Yes, I do see that in Pescara Mara's that it says, despite the existence of minor differences, if these minor differences are not commercially significant.

[00:22:00] Speaker 05:
But I would also say in Pescara Mara's that

[00:22:06] Speaker 05:
I think that one thing that supports commerce's decision as far as the specifics in Piscola-Meyers is that in that case, commerce found that the difference in, I think, super premium grade salmon and premium grade salmon was not commercially significant because it's not a commercially recognized separate grade of salmon in the marketplace.

[00:22:23] Speaker 01:
And so I think that in that... Is it commercially recognized, distinguishing?

[00:22:30] Speaker 01:
You're relying on commerce, you're relying on

[00:22:35] Speaker 01:
data from four commodities exchanges in Italy that distinguish between the quality of the pasta based on 12.5% protein.

[00:22:43] Speaker 05:
Yes, but we're not only talking about the 12.5% protein, we're talking about whether those small differences that are caused by the FDA rounding standards and the nitrogen content multiplier, it's whether those differences are commercially significant.

[00:22:56] Speaker 05:
And I would say that, like in Pascale Amaro's, there's no evidence that there's a commercial recognition of any of those differences between the FDA rounding standards and the nitrogen content multipliers.

[00:23:09] Speaker 05:
there's no evidence and no explanation of how those such differences are recognized by consumers in the marketplace, then I would say that commerce did make a reasoned decision that Appalance did not present any evidence that it was commercially significant.

[00:23:24] Speaker 03:
So I understand.

[00:23:27] Speaker 03:
Your position is you accept, I guess, the calculations that are set forth in the

[00:23:35] Speaker 03:
the appellant's brief here at page 17, showing how this calculation moves the pasta into the premium level.

[00:23:46] Speaker 03:
Correct?

[00:23:46] Speaker 03:
But you're saying that doesn't matter because the consumer isn't aware of it.

[00:23:52] Speaker 05:
Well, I'm saying that I think we accept it with a caveat, which is to say we accept that there are FDA-rounding standards that, you know, if somebody has an internal grade of protein content of 6.51, then it would be coded as a 7.

[00:24:08] Speaker 05:
versus 6.49 being coded as a 6.

[00:24:11] Speaker 05:
And we also accept that there's a difference in the nitrogen content multiplier between the US and Italy.

[00:24:17] Speaker 05:
I think what we don't necessarily accept, and I think what's not supported by the record, is that this actually does affect the pasta in any real way.

[00:24:25] Speaker 05:
Appellants have spent a lot of time putting together charts saying, if this happens, if there's a pasta that's truly 6.51,

[00:24:33] Speaker 05:
Then the FDA will require it to be made a 7, and then because of that, it will be graded as a 13.5 versus a 12.5.

[00:24:41] Speaker 05:
But again, as with commercial significance, there's no actual evidence on the record that this happens.

[00:24:46] Speaker 05:
And given that La Milasana hasn't actually presented evidence that this happens, I think commerce is certainly reasonable in finding that that's not a compelling reason to modify its model match methodology.

[00:24:58] Speaker 05:
especially in light of the fact that commerce also thinks it's not commercially significant and also has a good reason for having switched away from using companies' internal data.

[00:25:09] Speaker 01:
Are there other areas where Congress has to rely on companies' internal data in doing its mile match?

[00:25:19] Speaker 05:
I'm not sure off the top of my head.

[00:25:22] Speaker 05:
I mean, I know, obviously, commerce has to rely on books and records when doing accounting and certain numbers in determining anti-dumping and countervailing duty margins.

[00:25:33] Speaker 05:
But I think what's important here is not just that commerce generally doesn't want to rely on respondents' books and records.

[00:25:41] Speaker 05:
I don't think that's something that commerce has said as a general matter.

[00:25:44] Speaker 01:
Sure.

[00:25:47] Speaker 01:
In this case, we all can agree.

[00:25:51] Speaker 01:
Commerce isn't going out and grabbing boxes and looking at data.

[00:25:55] Speaker 01:
That data is being provided.

[00:25:57] Speaker 05:
Yes.

[00:25:58] Speaker 05:
And Commerce is trusting that the nutrition label data is being provided accurately by the respondents.

[00:26:06] Speaker 05:
But I think it's important that in the 2009 administrative review where it switched from using company-specific information to

[00:26:14] Speaker 05:
nutrition label information, that commerce found that specifically with regard to that issue, it found that using company-specific information resulted in reporting inconsistencies between respondents and inaccuracies in determining the foreign-like products.

[00:26:30] Speaker 01:
Sure, but that's not it for us today, right?

[00:26:33] Speaker 01:
I mean, but can I ask you, where does the transparency requirement cited by the government come from?

[00:26:39] Speaker 01:
Is that statutory, regulatory, or practice?

[00:26:43] Speaker 05:
It's definitely practice.

[00:26:46] Speaker 05:
That's, you know, been mentioned by commerce for, I think, over a decade in this particular realm of model matching methodology.

[00:26:54] Speaker 05:
And I do think it was sanctioned by the child.

[00:26:56] Speaker 05:
Is it in statute or is it in regulations?

[00:26:59] Speaker 05:
I'm not aware of their being in regulations, and I know that commerce has referenced, you know, that they have a statutory responsibility for transparency and consistency.

[00:27:08] Speaker 01:
I can't find a single statute that supports that.

[00:27:10] Speaker 01:
That's why I'm asking, and I really appreciate you answering.

[00:27:12] Speaker 01:
I have a lot of questions today.

[00:27:13] Speaker 01:
I appreciate all your answers.

[00:27:15] Speaker 05:
No, I completely understand, and I admittedly looked as well, and I don't think there's a specific statutory

[00:27:21] Speaker 05:
requirement that for model matching, again, specifically that commerce tries to ensure transparency and consistency.

[00:27:28] Speaker 05:
I do think that the SAA does have language sort of generally talking about commerce's responsibilities in terms of insurance transparency and consistency, but I haven't found any specific language relating to the statutory requirements for model matching or

[00:27:44] Speaker 05:
determining a foreign-like product.

[00:27:46] Speaker 05:
But I do want to point out that, you know, at least the trial court has found, so there is at least some case law supporting commerce's practice in this area, that commerce, you know, can make that a priority to favor transparency and consistency.

[00:28:01] Speaker 05:
And I think it said that.

[00:28:02] Speaker 01:
So as it doesn't conflict with some other more

[00:28:05] Speaker 01:
binding with some other higher level of law, like a statute, right?

[00:28:09] Speaker 05:
Sure.

[00:28:09] Speaker 05:
But I do think that, I mean, yes, as long as there's no express conflict.

[00:28:12] Speaker 05:
But to the extent that commerce has to weigh transparency and consistency against other factors, then that, I do think, is where commerce does have a lot of discretion to do so.

[00:28:23] Speaker 01:
And I don't think anything about that.

[00:28:24] Speaker 01:
I have another question.

[00:28:25] Speaker 01:
You're going to run out of time.

[00:28:26] Speaker 01:
Oh, yes.

[00:28:27] Speaker 01:
So for transparency, for the conversion,

[00:28:32] Speaker 01:
Why can't that still be transparent?

[00:28:34] Speaker 01:
Because the math can be determined.

[00:28:36] Speaker 01:
I mean, you know.

[00:28:37] Speaker 05:
Well, so one thing that puzzled me is that Ramalasana says that it's not asking to use the company's internal data.

[00:28:45] Speaker 05:
It's simply asking for some sort of mathematical adjustment to account for these FDA rounding standards and the multiplier.

[00:28:51] Speaker 05:
But I don't believe that Ramalasana has actually suggested a way to commerce in which that could be done.

[00:28:57] Speaker 01:
So set aside rounding for a minute.

[00:28:59] Speaker 01:
And just the difference in conversion

[00:29:01] Speaker 01:
and how we go from nitrogen units to protein percentage.

[00:29:04] Speaker 01:
There's a different calculation or weight used.

[00:29:10] Speaker 01:
I think one uses 0.56 and one uses 0.65 or something like that.

[00:29:15] Speaker 01:
Now, we both know that somebody smart can come up with an algorithm for conversion there.

[00:29:21] Speaker 01:
I'm sure somebody could do that at commerce.

[00:29:26] Speaker 01:
I mean, it's like going from Fahrenheit to Celsius.

[00:29:29] Speaker 01:
So that could be done.

[00:29:30] Speaker 01:
Do you agree?

[00:29:31] Speaker 05:
Yes, I don't think that commerce ever disputed that that could be done, but I think it decided that there wasn't a compelling reason to do it.

[00:29:41] Speaker 05:
I get it.

[00:29:41] Speaker 05:
And then now rounding up might be a little different.

[00:29:44] Speaker 05:
I think that was actually the last point I was going to make, which is that I don't see how you could adjust for the FDA rounding standards without going to that company-specific information that commerce is trying to avoid.

[00:29:55] Speaker 01:
They have to provide it anyway.

[00:29:57] Speaker 01:
They have to provide what's on the box.

[00:29:59] Speaker 01:
It could say, oh, it's 6.5.

[00:30:00] Speaker 01:
Five, one, seven.

[00:30:02] Speaker 05:
Well, the problem is what's on the box is the rounded amount.

[00:30:07] Speaker 05:
And that's what Commerce wants to rely on, because it's consistent across all respondents and across all pastas.

[00:30:14] Speaker 05:
And Commerce doesn't want to rely.

[00:30:17] Speaker 05:
And in 2009, Commerce made the decision that it didn't want to rely on company-specific data, because there were- That was just when they were coming in with company-specific information on the quality or grade of the wheat they were using.

[00:30:27] Speaker 01:
I'm not not just still let's be honest I mean determining the protein percentage and whether you take something and you say instead of it being seven it's going to be seven point one or seven point four nine or six point five one that that data is just going to be provided

[00:30:43] Speaker 01:
I think the problem is that commerce found, and it explained it, so it explained this in the... The commerce isn't going and looking at everyone's box, so they're relying on companies to provide what's on their box anyway.

[00:30:54] Speaker 05:
Sure, and I think there's a difference between relying on companies to provide what's on that box, which is publicly available, industry-wide, and is just out there for public consumption, versus company internal data, where commerce has reason to think that there's inaccuracies in how

[00:31:09] Speaker 05:
companies report that protein content.

[00:31:11] Speaker 05:
And it made that, it had that discussion in AR-22, in the Gigi Zara case that was before the trial court, but not before here, that in that case, the respondents actually suggested, not just for Semolina, but for protein content, that commerce could rely on the company's internal data.

[00:31:30] Speaker 05:
And commerce explained why

[00:31:31] Speaker 05:
there were inaccuracies and inconsistencies in reporting for that too, so not just in the 2009 decision where they were switching model matching methodologies.

[00:31:57] Speaker 04:
Thank you, Your Honors.

[00:31:58] Speaker 04:
I just have a couple of points I'd like to raise.

[00:32:00] Speaker 04:
The first is the Pascual Amare's case.

[00:32:03] Speaker 04:
It doesn't stand for the proposition that I think they're saying, well, that they're standing for the proposition that identical merchandise can be treated dissimilarly is not what Pascual Amare stands for.

[00:32:16] Speaker 04:
It stands for the proposition that similar merchandise can be treated as identical.

[00:32:20] Speaker 04:
We don't disagree with that proposition.

[00:32:22] Speaker 04:
That's not what we have here.

[00:32:24] Speaker 04:
Here we have the case of identical merchandise potentially being treated dissimilarly, which is a completely different issue.

[00:32:32] Speaker 03:
Mr. Graham, what is your response to Ms.

[00:32:34] Speaker 03:
Bay's argument that commerce reasonably has a disinclination to rely on the company's specific information?

[00:32:43] Speaker 03:
Well, they verify.

[00:32:44] Speaker 04:
And if you provide information which turns out to be inaccurate, you fail verification and you get hit with adverse facts available.

[00:32:53] Speaker 04:
How do you verify?

[00:32:55] Speaker 04:
They send a team over to Italy

[00:32:59] Speaker 04:
And they go through the records of the company and they spend a week going through lab tests, whatever they want to go through.

[00:33:05] Speaker 04:
It's an incredibly complex, it's essentially a tax audit for a week of two or three Commerce Department employees going through the records of a company.

[00:33:14] Speaker 01:
And they do that even with the rounding?

[00:33:17] Speaker 04:
They can choose to verify whatever they choose to verify.

[00:33:21] Speaker 04:
They might not choose to verify protein content.

[00:33:24] Speaker 04:
And remember, protein content is not what the customer in the U.S.

[00:33:27] Speaker 04:
is looking for to decide if a product is a

[00:33:31] Speaker 04:
special pasta or standard pasta.

[00:33:34] Speaker 04:
They're ultimately looking at the entire package.

[00:33:36] Speaker 04:
It's just that for purposes of commerce's analysis, they decided to use 12.5 as a shorthand for the breakpoint between special and standard.

[00:33:47] Speaker 04:
That doesn't mean that the customer is going to use 12.5 as the breakpoint.

[00:33:52] Speaker 04:
Customers

[00:33:55] Speaker 04:
to say, this is special, this is standard, which is why using the company-specific adjustments to the eight would work.

[00:34:03] Speaker 04:
Because ultimately, yes, the transparency is there from what's on the package label.

[00:34:09] Speaker 04:
But ultimately, that's not really why it's standard or special.

[00:34:14] Speaker 04:
And again, we go back to, is it commercially significant?

[00:34:18] Speaker 04:
I think there was a lot of discussion, I think Your Honor had in her colloquy, of how this

[00:34:26] Speaker 04:
how the difference between the different grades of wheat is significant.

[00:34:30] Speaker 04:
And I see my time is up, and I thank your honors very much, and I submit this matter to the court.

[00:34:37] Speaker 02:
Thank you to both counsels.

[00:34:38] Speaker 02:
The case is submitted.

[00:34:40] Speaker 02:
That concludes today's argument.