Catfish Farmers of Am. v. United States

2024 CIT 23

• Court: United States Court of International Trade
• Decided: February 26, 2024
• Docket: 20-00105
• Status: Published

Opinion

Slip Op. 24-23

UNITED STATES COURT OF INTERNATIONAL TRADE

Court No. 20-00105

CATFISH FARMERS OF AMERICA, et al., Plaintiffs, v. UNITED STATES, Defendant, and NTSF SEAFOODS JOINT STOCK COMPANY, Defendant-Intervenor.

Before: M. Miller Baker, Judge

OPINION

[The court partially sustains Commerce’s redetermi- nation and remands for further proceedings.]

Dated: February 26, 2024

Nazak Nikakhtar, Maureen E. Thorson, and Stephanie M. Bell, Wiley Rein LLP of Washington, DC, on the comments for Plaintiffs.

Brian M. Boynton, Principal Deputy Assistant Attor- ney General; Patricia M. McCarthy, Director; and Kara M. Westercamp, Trial Attorney, Commercial Lit- igation Branch, Civil Division, U.S. Department of Ct. No. 20-00105 Page 2

Justice of Washington, DC, on the comments for De- fendant. Of counsel on the comments was Hendricks Valenzuela, Office of the Chief Counsel for Trade En- forcement & Compliance, U.S. Department of Com- merce of Washington, DC.

Robert G. Gosselink and Jonathan M. Freed, Trade Pa- cific PLLC of Washington, DC, on the comments for Defendant-Intervenor.

Baker, Judge: This case returns after the court di- rected the Department of Commerce to reconsider (1) whether Indonesia is economically comparable to Vietnam; (2) the finding that Indian data are superior to Indonesia’s; (3) certain evidence submitted by Plain- tiffs Catfish Farmers of America and its individual members, and in light of that evidence, whether De- fendant-Intervenor NTSF Seafoods Joint Stock Com- pany accurately reported production information; (4) NTSF’s byproduct offset; and (5) evidence relating to moisture content. ECF 68, at 1–2. 1

On remand, Commerce largely stood its ground. Appx017420–017421. Catfish Farmers challenge those results. ECF 86, at 8. The government re- sponded, see ECF 84, and NTSF joined in those com- ments, see ECF 83. The court requested supplemental briefing, ECF 96, which the parties submitted, ECF 99

1 The court presumes the reader’s familiarity with its pre-

vious opinion, NTSF Seafoods Joint Stock Co. v. United States, Ct. Nos. 20-00104 and 20-00105, Slip Op. 22-38, 2022 WL 1375140 (CIT Apr. 25, 2022). Ct. No. 20-00105 Page 3

(plaintiffs), ECF 100 (government). The court again re- mands.

I

Catfish Farmers brought this suit under 19 U.S.C. §§ 1516a(a)(2)(A)(i)(I) and (a)(2)(B)(iii) to contest Com- merce’s final determination in the 15th administrative review of the applicable antidumping order. Subject- matter jurisdiction is conferred by 28 U.S.C. § 1581(c).

In actions brought under 19 U.S.C. § 1516a(a)(2), “[t]he court shall hold unlawful any determination, finding, or conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). The question is not whether the court would have reached the same decision on the same record—rather, it is whether the administrative record as a whole per- mits Commerce’s conclusion.

Substantial evidence has been defined as more than a mere scintilla, as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. To determine if substan- tial evidence exists, we review the record as a whole, including evidence that supports as well as evidence that fairly detracts from the sub- stantiality of the evidence.

Nippon Steel Corp. v. United States, 337 F.3d 1373, 1379 (Fed. Cir. 2003) (cleaned up). Ct. No. 20-00105 Page 4

II

Broadly speaking, the issues presented fall into two buckets: the selection of a primary surrogate country and how NTSF reported factors of production. The court addresses them in turn.

A

In determining costs of production in antidumping cases involving goods imported from a nonmarket- economy country, Commerce must use, “to the extent possible,” one or more market-economy countries (sur- rogates) that are “at a level of economic development comparable to that of the nonmarket economy coun- try.” 19 U.S.C. § 1677b(c)(4) (emphasis added). The court accordingly instructed the agency to “explain whether Indonesia is economically comparable to Vi- etnam using the same World Bank gross national in- come data used to identify India and the five other countries on the Department’s list of six countries at levels of comparable economic development.” ECF 68, at 1 (remand order).

Notwithstanding the court’s instruction, Commerce found Indonesia presumptively ineligible because it was not at the “same” level of economic development as Vietnam:

[D]espite the petitioners’ arguments that Indo- nesia represents a country at a comparable level of economic development as Vietnam, it was not at the same level of economic development and, Ct. No. 20-00105 Page 5

thus, did not present a scenario where Com- merce must afford that country the same consid- eration as others on the list of countries at the same level of economic development.

Appx017428 (emphasis in original; internal quotation marks and brackets omitted).

The statute, however, does not require a surrogate to be at the “same” level of economic development as the nonmarket-economy country where imports are produced. Instead, it only dictates that a surrogate have a “comparable” level of development, 19 U.S.C. § 1677b(c)(4), a somewhat broader standard, as it in- cludes the merely similar as well as the identical.

Indeed, the remand results themselves show that Commerce views “the same” as narrower and more se- lective than “comparable”:

Surrogate [candidates] that are not at the same level of economic development as the [nonmar- ket-economy] country, but still at a level of eco- nomic development comparable to the [nonmar- ket-economy] country, are selected only to the extent that data considerations outweigh level- of-economic development differences or signifi- cant producer considerations.

Appx017423 (emphasis added).

Commerce thus presumptively disqualifies coun- tries that are only “comparable” in favor of its own stricter criterion. But the statute requires the use of “one or more market economy countries that are . . . at Ct. No. 20-00105 Page 6

a level of economic development comparable to that of the nonmarket economy country.” 19 U.S.C. § 1677b(c)(4)(A) (emphasis added). A more demanding rule that excludes “comparable” countries is therefore not in accordance with law. The court remands again for the Department to apply the statutory standard— under protest, if necessary.

The court concluded that Commerce impermissibly used circular reasoning to find that “the Indian data were superior in part because ‘the Indonesian infor- mation is not from the primary surrogate country which we have selected in this case, India.’୻” Slip Op. 22-38, at 41, 2022 WL 1375140, at *14. On remand, the Department objects that “[t]his passage was not intended to suggest any inherent superiority of the In- dian data; rather, it reflects the standard application of Commerce’s sequential surrogate country selection process.” Appx017430.

The problem—as explained above—is that the De- partment went off the rails in its sequential selection process when it excluded Indonesia from consideration as a surrogate because that country was only at a com- parable (rather than the same) level of economic devel- opment. On remand, insofar as Commerce includes In- donesia on its candidate list because it is at a compa- rable level, the Department must evaluate the Indian data on its relative merits vis-à-vis Indonesian data. See Import Administration Policy Bulletin 04.1, Non- Market Economy Surrogate Country Selection Process Ct. No. 20-00105 Page 7

(Mar. 1, 2004), at 4 (“[I]f more than one country has survived the selection process to this point, the coun- try with the best factors data is selected as the primary surrogate country.”), ECF 73-2.

b

The court directed Commerce to explain its use of the Fishing Chimes study because it was unclear whether that study represented a “broad market aver- age.” Slip Op. 22-38, at 41–45, 2022 WL 1375140, at **14–15. The court observed that Fishing Chimes appeared to say that most of Andhra Pradesh’s 2 fish producers were not located in the districts on which the study focused. See id. at 43–44, 2022 WL 1375140, at *15 (“[H]ow can a study that relies on data from only those two districts represent a broad market average, absent data (which no party has cited) showing that those districts produced far more fish than anywhere else?”).

Commerce responded by block-quoting a paragraph from Fishing Chimes that, first, estimates that pan- gasius is being farmed “in more than 300 villages in West Godavari and Krishna districts”; second, states that the survey focused on those areas “as they are ma- jor producers”; and, third, clarified that “[o]ut of the 300 villages that the study covered, 46 of them are in these two districts.” Id. (quoting Appx13786). The De- partment concluded that “the study selected 54

2 Andhra Pradesh is an Indian state. Ct. No. 20-00105 Page 8

farmers from 46 villages, and the researchers explic- itly considered the representativeness of the data in selecting their survey sample.” Appx017435.

The quoted passage from Fishing Chimes does not support Commerce’s conclusion. While the study re- fers to pangasius farming in “more than 300 villages” in the two districts in question, it also says that only 46 of the 300 villages studied were located in those dis- tricts. By negative implication, that means the other 254 studied villages were not so located. This is the same problem the court identified when it first reman- ded, and the Department’s explanation fails to engage with it. The court again remands. 3

The court instructed the Department to reconsider its reliance on Fishing Chimes data as to fish feed. Id. at 46–47, 2022 WL 1375140, at **15–16. Commerce accordingly cited an article from a source called Un- dercurrent as substantiating that data. Appx017467. As Catfish Farmers do not dispute that finding, the court—putting aside its other concerns with Fishing Chimes—sustains the agency’s reliance on that study’s fish feed data.

3 Commerce also found that the Fishing Chimes data as to

fingerlings represent a “broad market average” based on “the reasons discussed above concerning the reliability of [that] data in general.” Appx017436. The court therefore remands the fingerlings finding because it assumes that the study represents a “broad market average”—a finding the court again remands for the reasons explained above. Ct. No. 20-00105 Page 9

iii

The court originally remanded Commerce’s use of Fishing Chimes as to the “whole live fish” input be- cause the agency’s entire finding was that “the Indian data for this input are in fact a broad market average, for the reasons discussed above.” Slip Op. 22-38, at 47, 2022 WL 1375140, at *16. The court understood the finding as a reference to the Department’s general dis- cussion of whether Fishing Chimes overall repre- sented a broad market average. Id.

Insofar as the court can discern, the remand results do not address this issue. The Department did state that the prices cited in Fishing Chimes were based on around 28 million kg of fish in 2017–18 and 14 million kg during the period of review, which is “a significant volume of fish.” Appx017465. Even so, it does not indi- cate anything as to a “broad market average” absent any discussion showing how those amounts compare to India’s overall pangasius production, so the court must remand again.

c

The court remanded Commerce’s valuation of labor inputs because the Department used 2006 Indian la- bor data despite Policy Bulletin 04.1 attaching signifi- cance to whether data are “contemporaneous” with the period of review. Slip Op. 22-38, at 48–49, 2022 WL 1375140, at *16. The court noted that the only argu- ment the government made to support the decision was “its irrelevant contention that Commerce chose the Indian data because India was the primary surro- gate country.” Id. Ct. No. 20-00105 Page 10

The Department responded that “the fact that the data are from India is relevant” because that country was the primary surrogate based on the “sequential” process. Appx017438–017439 (emphasis in original). To repeat: Commerce’s choice of India as the primary surrogate was contrary to law because the Department improperly excluded Indonesia from consideration.

And even if, on remand, Commerce lawfully con- cludes that Indonesia is not at a “comparable” level of economic development and therefore chooses India as the primary surrogate, it must address how it is rea- sonable to use Indian data from eleven years before the period of review when Policy Bulletin 04.1 requires the use of contemporaneous data when possible.

The second principal issue involves Catfish Farm- ers’ challenge to NTSF’s reporting of its factors of pro- duction. On remand, Commerce stood by its prior con- clusions. See Appx017440–017442 (whole live fish ra- tio and byproducts); Appx017442–017446 (moisture content).

The court remanded the whole live fish issue be- cause Catfish Farmers cited three reports in the record showing that around 3.2 kg of whole fish is required to yield 1 kg of product, but the court could “find no indi- cation that Commerce engaged with the reports [they] offered.” Slip Op. 22-38, at 62–64, 2022 WL 1375140, at **21–22. The remand order instructed the Depart- ment to address those reports and Catfish Farmers’ Ct. No. 20-00105 Page 11

argument of possible double counting of byproducts. Id. at 65 n.23, 2022 WL 1375140, at *22 n.23.

The Department responded that NTSF’s whole live fish figures are within the ranges seen in verification reports from yield tests Commerce performed during prior administrative reviews that are part of the rec- ord here. Appx017441. It also observed that “none of the companies verified in these earlier segments, or NTSF in this segment, had a whole fish to fillet ratio as high as the ratios proposed by” Catfish Farmers. Id. (emphasis in original). The agency found Catfish Farmers’ reports unpersuasive because it did not ei- ther take part in or observe the creation of those stud- ies. Appx017441–017442.

That Commerce did not participate in or observe the preparation of record evidence does not excuse its failure to address that material on its own merits. The court therefore remands again for the Department to explain why the studies proffered by Catfish Farmers are unconvincing or unreliable.

The other aspect of the “whole live fish” issue that the court remanded involved possible double counting. See Slip Op. 22-38, at 65 n.23, 2022 WL 1375140, at *22 n.23. Catfish Farmers now ask the court to re- mand again because the redetermination was “not con- sistent with the record.” ECF 99, at 9. For its part, the government requests a voluntary remand to allow Commerce “to re-evaluate whether potential double counting with NTSF’s factors of production reporting is present.” ECF 100, at 5. The court will do so. Ct. No. 20-00105 Page 12

The last issue is Catfish Farmers’ contention that NTSF overstated the amount of water and under- stated the volume of fish in its products. As to this dis- pute, the Department “failed to address both the rec- ord evidence contrary to its decision and the record ev- idence potentially supportive of its decision.” Slip Op. 22-38, at 69, 2022 WL 1375140, at *23. The court di- rected Commerce to address NTSF’s product labels and “studies and other documentation in the adminis- trative record.” Id. at 66, 2022 WL 1375140, at *22.

On remand, the Department stated that NTSF’s ev- idence included third-party inspection certificates re- lating to moisture content. It found that they “estab- lish that NTSF’s reported moisture did not exceed the stated maximum in the contract,” Appx017443, and that the test reports showed moisture levels within one percent of those the company reported, id.

Commerce then addressed Catfish Farmers’ evi- dence. The Department found that the product labels did not undermine NTSF’s reporting because the cus- tomer—not the company—specifies what information is printed on the label and nothing in the record shows how the customer determines what is to appear. Appx017444. Catfish Farmers object, arguing that the logic Commerce applied to the inspection reports— that they “came from an independent third party” hired by NTSF’s unaffiliated customers “and nothing on the record undermines the reliability of the party or the results obtained by its testing”—applies to the labels as well. ECF 86, at 46. Ct. No. 20-00105 Page 13

Commerce reasonably addressed the potential in- consistency. It found that while the inspection reports come from an independent facility that specializes in such testing, nothing in the record ties the customer labels to any testing protocols or shows that NTSF con- trols the labels’ contents. Appx017477. 4 The Depart- ment explained that the company and its customers rely on the independent testing, not the product labels, to confirm moisture content. Id. Thus, Commerce’s choice to rely on NTSF’s moisture content reporting is supported by substantial evidence. 5

4 The agency gave an example of two different calculations

that could both show a 30 percent solution of water. Appx017477–017478. “Accordingly, what is reflected in the label depends on how the customer defines ‘contains,’ and the accuracy of the information therein.” Appx017478. Be- cause the Department did not have “definitive evidence” showing how the customers calculated the percentage and what the labels meant by “contains,” it could not rely on the labels. Id. In contrast, the inspection certificates showed that the moisture content was under the maximum threshold and included actual results of testing consistent with the company’s reporting. Appx017478–017479. 5 The Department also found that other studies and docu-

mentation on the record were not necessarily reliable be- cause they may have been prepared using “different proce- dures and merchandise than those in this review.” Appx017445. Catfish Farmers do not challenge that find- ing. Ct. No. 20-00105 Page 14

* * *

For the foregoing reasons, the court sustains the re- determination in part and otherwise remands for fur- ther proceedings.

Dated: February 26, 2024 /s/ M. Miller Baker New York, NY Judge