Cabana v. U.S. Secretary of Agriculture

• Decision Date: 28 February 2006
• Docket Number: Slip Op. 06-27.,Court No. 04-00634.
• Citation: 427 F.Supp.2d 1232
• Parties: Larry CABANA, Plaintiff, v. UNITED STATES SECRETARY OF AGRICULTURE, Defendant.
• Court: U.S. Court of International Trade

427 F.Supp.2d 1232

Larry CABANA, Plaintiff, v. UNITED STATES SECRETARY OF AGRICULTURE, Defendant.

Slip Op. 06-27.

Court No. 04-00634.

United States Court of International Trade.

February 28, 2006.

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP (William F. Marshall) for Larry Cabana, plaintiff.

Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (David S. Silverbrand); Jeffrey Kahn, Office of the General Counsel, United States Department of Agriculture, for the United States Secretary of Agriculture, defendant, of counsel.

OPINION

TSOUCALAS, Senior Judge.

Plaintiff, Larry Cabana ("Cabana") moves pursuant to USCIT R. 56.1 for judgment upon the agency record. Cabana contends that the United States Secretary of Agriculture ("Secretary" or "Department") erred in determining that he was ineligible for certification to receive trade adjustment assistance ("TAA") benefits. Specifically, Cabana asserts that he is eligible for TAA certification because his net fishing income in 2002 was less than his 2001 net fishing income. The Department responds that 19 U.S.C. § 2401e (c) grants the power to determine "net farm income" to the Secretary, and the Secretary has determined that Cabana's "net farm income" did not decrease in 2002.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 19 U.S.C. § 2395 (2000) amended by 19 U.S.C. § 2395 (Supp. II 2002).¹

STANDARD OF REVIEW

The Court will uphold the Secretary's determination unless it is unsupported by substantial evidence on the record, or otherwise not in accordance with law. See 19 U.S.C. § 2395(b); see also Steen v. United States, 29 CIT ___, ___, 395 F.Supp.2d 1345, 1347 (2005). Substantial evidence is "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Carp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). Substantial evidence "is something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the [same] evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966) (citations omitted).

To determine whether the Secretary's interpretation and application of 19 U.S.C. §§ 2401-2401g is "in accordance with law," the Court must undertake the two-step analysis prescribed by Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Under the first step, the Court reviews the Department's construction of a statutory provision to determine whether "Congress has directly spoken to the precise question at issue." Id. at 842, 104 S.Ct. 2778. "To ascertain whether Congress had an intention on the precise question at' issue, [the Court] employ[s] the `traditional tools of statutory construction.'" Timex V.I., Inc. v. United States, 157 F.3d 879, 882 (Fed.Cir. 1998) (citing Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. 2778). "The first and foremost `tool' to be used is the statute's text, giving it its plain meaning. Because a statute's text is Congress' final expression of its intent, if the text answers the question, that is the end of the matter." Id. (citations omitted). Beyond the statute's text, the tools of statutory construction "include the statute's structure, canons of statutory construction, and legislative history." Id. (citations omitted); but see Floral Trade Council v. United States, 23 CIT 20, 22 n. 6, 41 F.Supp.2d 319, 323 n. 6 (1999) (noting that "not all rules of statutory construction rise to the level of a canon") (citation omitted).

If, after employing the first prong of Chevron, the Court determines that the statute is silent or ambiguous with respect to the specific issue, the question for the Court becomes whether the Department's construction of the statute is permissible. See Chevron, 467 U.S. at 843, 104 S.Ct. 2778. Essentially, this is an inquiry into the reasonableness of the Department's interpretation. See Fujitsu Gen. Ltd. v. United States, 88 F.3d 1034, 1038 (Fed.Cir. 1996). Provided the Department has acted rationally, the Court may not substitute its judgment for the agency's. See Koyo Seiko Co. v. United States, 36 F.3d 1565, 1570 (Fed.Cir. 1994) (holding that "a court must defer to an agency's reasonable interpretation of a statute even if the court might have preferred another"); see also IPSCO, Inc. v. United States, 965 F.2d 1056, 1061 (Fed.Cir. 1992). The "Court will sustain the determination if it is reasonable and supported by the record as a whole, including whatever fairly detracts from the substantiality of the evidence." Negev Phosphates, Ltd. v. United States, 12 CIT 1074, 1077, 699 F.Supp. 938, 942 (1988) (citations omitted).

BACKGROUND

On October 28, 2003, the United States Department of Agriculture certified a TAA petition filed by a group of salmon fishermen from Alaska and the Puget Sound Salmon Commission of Seattle, Washington. See Trade Adjustment Assistance for Farmers, 68 Fed.Reg. 62,766 (Nov. 6, 2003). This action involves the November 5, 2004, denial of Cabana's application to receive TAA benefits based on the aforementioned certification. See Mem. Law Supp. Pl.'s Mot. J. Upon Agency R., Rule 56.1 ("Cabana's Mem.") at 1; Def.'s Resp. Pl.'s Mot. J. Upon Agency R. ("Secretary's Resp.") at 5. On December 14, 2004, the Court received Cabana's letter seeking judicial review of the Secretary's negative determination. See Administrative Record ("Admin.R.") at 25. Subsequently, the Secretary moved to dismiss for failure to state a claim, which the Court denied in Cabana v. United States Sec'y of Agric., ("Cabana I"), 2005 WL 1806448 (CIT Aug. 1, 2005), of which familiarity is presumed.

Cabana concedes that his original request was denied because his application for certification showed that his net farm income in 2002 was more than that of 2001. See Cabana I, 2005 WL 1806448, *2. Cabana contends that 19 U.S.C. § 2401e does not define the term "net farm income." See Cabana's Mem. at 5-6. Cabana asserts, however, that the Secretary's definition of "net farm income" in 7 C.F.R. § 1580.102 is contrary to the statutory language. See id. at 6. Cabana argues that if Congress intended to base eligibility for TAA on income, then it would not have included the qualifying term "farm income" in 19 U.S.C. § 2401e(a)(1)(C). See id. Cabana maintains that the statutory language indicates Congress intended to grant TAA benefits to agricultural producers whose income from farming decreased because of competing imported agricultural commodities. See id. at 3. Cabana states that although his total adjusted gross income increased in 2002, his fishing income in 2001 and 2002 was $31,663 and $31,195, respectively. See id. at 6 (emphasis added). Cabana asserts that the increase in his adjusted gross income in 2002 was a result of an increase in non-fishing business income. See id. at 5. Therefore, Cabana argues that he satisfies the decreased income requirement in 19 U.S.C. § 2401e and thus is entitled to TAA benefits. See id. at 6.

The Secretary responds that its interpretation and application of 19 U.S.C. § 2401e is in accordance with law, and is subject to the standard of review set forth in Chevron. See Secretary's Resp. at 7 Citing Chevron, the Secretary further argues that its regulations define "net farm" and "net fishing" income pursuant to 19 U.S.C. § 2401e. See id. at 16. The Secretary stresses that its regulations base net farming and fishing income on reported income to the Internal Revenue Service ("IRS"). See id. at 14 (quoting 7 C.F.R. § 1580.102). Cabana's IRS reported income indicates a higher income in 2002 than in 2001. See Admin. R. at 17-18. As such, the Secretary concludes that its determination that Cabana does not qualify for TAA benefits is supported by substantial evidence on the record. See Secretary's Resp. at 17-18.

DISCUSSION

To receive TAA benefits, an applicant engaged in the business of farming or fishing must report that "net farm income (as determined by the Secretary [of Agriculture]) for the most recent year is less than the producer's net farm income for the latest year in which no adjustment assistance was received by the producer. . . ." 19 U.S.C. § 2401e(a)(1)(C) (Supp. II 2002). When Congress has "explicitly left a gap for the agency to fill," the agency's own regulations are "given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute." Chevron, 467 U.S. at 843-44, 104 S.Ct. 2778. As Congress has made it clear in 19 U.S.C. § 2401e (a)(1)(C) that "net farm income" shall be determined by the Secretary, the statutory language precludes any need to go beyond the plain meaning of the statute in order to discern Congressional intent. See Steen, 29 CIT at ___, 395 F.Supp.2d at 1349-50.

"Net farm" and "net fishing" incomes are used by the Secretary to identify producers who have been harmed by import competition for the purpose of determining TAA applications. See 19 U.S.C. § 2401e(a)(1). The Secretary has defined "net farm" and "net fishing" income as follows in its regulations:

Net farm income means net farm profit or loss, excluding payments under this part, reported to the Internal Revenue Service for the tax year that most closely corresponds with the marketing year under consideration.

Net fishing income means net profit or loss, excluding payments under this part, reported to the Internal Revenue Service for the tax year that most closely corresponds with the marketing year under consideration.

7 C.F.R. § 1580.102 (Nov. 1, 2004).² The Secretary implemented 19...