Pakfood Pub. Co. Ltd. v. The United States .

• Decision Date: 01 September 2010
• Docket Number: Slip Op. 10-99.,Court No. 09-00430.
• Citation: 724 F.Supp.2d 1327
• Parties: PAKFOOD PUBLIC COMPANY LIMITED, et al., Plaintiffs, v. The UNITED STATES, et al., Defendants.
• Court: U.S. Court of International Trade

724 F.Supp.2d 1327

PAKFOOD PUBLIC COMPANY LIMITED, et al., Plaintiffs,

v.The UNITED STATES, et al., Defendants.

Slip Op. 10-99.

Court No. 09-00430.

United States Court of International Trade.

Sept. 1, 2010.

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Trade Pacific PLLC (Robert G. Gosselink and Jonathan M. Freed), for Plaintiffs and Defendant-Intervenors Pakfood Public Co., Ltd.; Asia Pacific (Thailand) Co., Ltd.; Chaophraya Cold Storage Co., Ltd.; Okeanos Co., Ltd.; Okeanos Food Co., Ltd.; and Takzin Samut Co., Ltd.

White & Case LLP (Walter J. Spak and Jay C. Campbell), Washington, DC, for Consolidated Plaintiffs and Defendant-Intervenors Andaman Seafood Co., Ltd.; Chanthaburi Frozen Food Co., Ltd.; Chanthaburi Seafoods Co., Ltd.; Phatthana Seafood Co., Ltd.; Phatthana Frozen Food Co., Ltd.; Thailand Fishery Cold Storage Public Co., Ltd.; Thai International Seafoods Co., Ltd.; Sea Wealth Frozen Food Co., Ltd.; and Rubicon Resources, LLC.

Akin Gump Strauss Hauer & Feld LLP (Warren E. Connelly and Jarrod M. Goldfeder), Washington, DC, for Consolidated Plaintiffs and Defendant-Intervenors Thai Union Frozen Products Public Co., Ltd. and Thai Union Seafood Co., Ltd.

Picard Kentz & Rowe LLP (Andrew W. Kentz and Nathaniel J. Maandig Rickard) for Consolidated Plaintiff and Defendant-Intervenor Ad Hoc Shrimp Trade Action Committee.

Stewart and Stewart (Geert M. De Prest and Elizabeth J. Drake), Washington, DC, and Leake & Andersson, LLP (Edward T. Hayes), New Orleans, WA, for Consolidated Plaintiff-Intervenor and Defendant-Intervenor The Domestic Processors.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director; Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Stephen C. Tosini), and, of counsel, Jonathan M. Zielinski, Attorney, Office of the Chief Counsel for Import Administration, Department of Commerce, for Defendant United States.

Before: Pogue, Judge.

OPINION

POGUE, Judge.

This consolidated action ¹ challenges four determinations made by the United States Department of Commerce (“Commerce” or the “Department”) in the final results of the third administrative review of an antidumping (“AD”) duty order on frozen warmwater shrimp from Thailand. ² Two of the four challenges come from Plaintiff Ad Hoc Shrimp Trade Action Committee (“AHSTAC”), and two come from the two mandatory respondents selected by the Department for individual examination in this review, the “Rubicon Group” ³ and “Pakfood” ⁴ (collectively the “Respondent Plaintiffs” ⁵ ).

Plaintiff AHSTAC contests: (I) the Department's exclusive reliance on “type 3” entry data ⁶ obtained from United States Customs and Border Protection (“CBP entry data”) in selecting respondents for individual examination in this review; and (II) Commerce's determination-underlying the agency's grant of a constructed export price (“CEP”) offset to Rubicon's normal value (“NV”)-that the level of trade (“LOT”) of Rubicon's CEP sales was less advanced than the LOT of its NV sales. The Respondent Plaintiffs in turn contest: (III) Commerce's refusal to accept Pakfood's contractual exchange rate data after the expiration of the Department's party-initiated submission deadline; and (IV) the Department's refusal to offset interest earned on long-term deposits, used to secure access to lines of credit, against the costs of production and constructed value of two of Rubicon's affiliates.

The court has jurisdiction over this matter pursuant to Section 516A(a)(2) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2) (2006) ⁷ and 28 U.S.C. § 1581(c).

As explained more fully below, the court concludes that (I) because the Department, without adequate explanation, treated this case materially differently from similarly situated proceedings, Commerce's exclusive reliance on CBP entry data in selecting the mandatory respondents for this review was arbitrary and not in accordance with law; (II) Commerce did not arbitrarily deviate from precedent in determining, on the record of this review, that the LOT of Rubicon's CEP sales was less advanced than the LOT of its NV sales, and the agency's LOT determination was supported by substantial evidence on the record of this review; (III) because Pakfood failed to exhaust its administrative remedies with respect to the issue of its contractual exchange rates, Pakfood failed to preserve this issue for review; and (IV) Commerce acted in accordance with its established practice in denying an interest offset to Rubicon for interest earned on long-term deposits, and the Department's determination to deny the offset was supported by substantial evidence.

Accordingly, the court remands to Commerce solely on the issue of the agency's methodology for selecting mandatory respondents in this review, and Plaintiffs' requests for judgment on the agency record with regard to the remaining three challenges at issue here are each denied. ⁸

STANDARD OF REVIEW

Where, as here, an action is brought under 19 U.S.C. § 1516a(a)(2) (providing a cause of action for, inter alia, challenges to final determinations by Commerce in administrative reviews of AD duty orders), “[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).

Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Consol. Edison Co. of N.Y. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938); Gallant Ocean (Thailand) Co. v. United States, 602 F.3d 1319, 1323 (Fed.Cir.2010) (same).

A determination, finding, or conclusion is not in accordance with law if, inter alia, it is arbitrary. See SKF USA Inc. v. United States, 263 F.3d 1369, 1378, 1382 (Fed.Cir.2001) (reviewing a challenge brought under 19 U.S.C. § 1516a(a)(2) and holding Commerce's determination to be not in accordance with law under 19 U.S.C. 1516a(b)(1)(B)(i) because “it is well-established that an agency action is arbitrary when the agency offers insufficient reasons for treating similar situations differently” (quotation and alteration marks and citation omitted)); Nat'l Fisheries Inst. v. United States, --- CIT ----, 637 F.Supp.2d 1270, 1282 (2009) (noting the court's holding that Commerce's decision was “arbitrary ... and therefore contrary to law”).

DISCUSSION

I. Commerce's Use of CBP Entry Data to Select Mandatory Respondents in this Review

A. Background

In its Notice of Initiation for the instant administrative review, ⁹ the Department announced that it would be exercising its discretion under 19 U.S.C. § 1677f-1(c)(2) to limit the number of respondents selected for individual investigation. See Notice of Initiation, 73 Fed.Reg. at 18,765. Relying solely on CBP entry data, the Department identified Pakfood and Rubicon as the two largest producers/exporters of the subject merchandise, and accordingly selected these entities as mandatory respondents in this review. See id.; Certain Frozen Warmwater Shrimp from Thailand, 74 Fed.Reg. 10,000, 10,001 (Dep't Commerce Mar. 9, 2009) (“Prelim.Results”) (unchanged in final results, see Final Results, 74 Fed.Reg. at 47,553); I & D Mem. Cmt. 2.

AHSTAC argues, inter alia, that Commerce's exclusive reliance on CBP entry data in selecting the mandatory respondents for this review was contrary to law because it is both inconsistent with prior practice (i.e. arbitrary and capricious ¹⁰ ) and an abuse of discretion. ¹¹ ( See Mem. of Law in Supp. of Pl. [AHSTAC]'s Rule 56.2 Mot. for J. on Agency R. (“AHSTAC's Br.”) 13.) In response, Commerce contends that it reasonably relied on CBP entry data in selecting the largest exporters/producers for individual examination, and that such reliance is not arbitrary or capricious because, “although [the Department] has relied upon [data from] quantity and value [“Q & V”] questionnaires in certain proceedings, ... Commerce's ‘current practice is to select respondents using CBP [entry] data.’ ” (Def.'s Opp'n to Pls.' Mots. for J. Upon Admin. R. (“Def.'s Br.”) 8 (quoting I & D Mem. Cmt. 2 at 9-10).)

B. Commerce's Exclusive Reliance on CBP Entry Data to Select Mandatory Respondents in this Review Was Arbitrary and Therefore Not in Accordance with Law.

Contrary to the Department's claims, Commerce does not employ a consistent practice, supported with adequate reasoning, for selecting mandatory respondents based on import volume, pursuant to 19 U.S.C. § 1677f-1(c)(2). While the Department has used CBP entry data to select mandatory respondents in some administrative reviews initiated prior to the review under consideration here, ¹² the Department has also continued the practice of selecting mandatory respondents on the basis of Q & V questionnaires. ¹³ Without explanation, Commerce continues to use Q & V questionnaires in some administrative proceedings-including reviews, such as the review under consideration in this case, of AD duty orders with at least two prior completed reviews ¹⁴ -and to use CBP entry data in others.

As AHSTAC correctly points out (AHSTAC's Br. 10), because CBP entry data do not contain information with respect to company affiliations, where the Department relies exclusively on such data, it is forced to use affiliation-related information obtained in the course of prior proceedings. ¹⁵ Such affiliation-related data may or may not remain accurate with regard the POR at issue. Unlike cases in which Commerce issues and verifies Q & V questionnaires, when the Department uses CBP entry data to select mandatory respondents, disclosure of accurate affiliation information for the relevant POR becomes discretionary for the producers/exporters. To the extent that producers/exporters see benefit in correcting outdated information, they may do so; to the...