Qvd Food Co., Ltd. v. United States

Slip Op. 10-101

UNITED STATES COURT OF INTERNATIONAL TRADE

QVD FOOD CO., LTD.,

Plaintiff,

Before: Leo M. Gordon, Judge

v.

Consol. Court No. 09-00157

UNITED STATES,

Defendant.

[Administrative review results sustained.]

Dated: September 1, 2010

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP (Mark E. Pardo, Andrew

T. Schutz) for Plaintiff QVD Food Co., Ltd.

Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Franklin

E. White, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, U.S.

Department of Justice (Richard P. Schroeder); and Office of the Chief Counsel for

Import Administration, U.S. Department of Commerce (David W. Richardson), of

counsel, for Defendant United States.

Akin, Gump, Strauss, Hauer & Feld, LLP (Valerie A. Slater, Jarrod M. Goldfeder,

Nicole M. D’Avanzo, Natalya D. Dobrowolsky) for Defendant-Intervenors Catfish

Farmers of America, America's Catch, Consolidated Catfish Companies, LLC, d/b/a

Country Select Fish, Delta Pride Catfish Inc., Harvest Select Catfish Inc., Heartland

Catfish Company, Pride of the Pond, Simmons Farm Raised Catfish, Inc., and Southern

Pride Catfish Company, LLC.

OPINION

Gordon, Judge: This consolidated action involves an administrative review

conducted by the U.S. Department of Commerce (“Commerce”) of the antidumping duty

order covering certain frozen fish fillets from the Socialist Republic of Vietnam. See

Certain Frozen Fish Fillets from the Socialist Republic of Vietnam, 74 Fed. Reg. 11,349

(Dep’t of Commerce Mar. 17, 2009) (final results admin. review), as amended, Certain

Consol. Court No. 09-00157 Page 2

Frozen Fish Fillets from the Socialist Republic of Vietnam, 74 Fed. Reg. 17,816 (Dep't

of Commerce Apr. 17, 2009) (amend. final results admin. review) (“Final Results”); see

also Issues and Decision Memorandum for Certain Frozen Fish Fillets from the Socialist

Republic of Vietnam, A-552-801 (Mar. 9, 2009), available at

http://ia.ita.doc.gov/frn/summary/vietnam/E9-5744-1.pdf (last visited Sept. 1, 2010)

(“Decision Memorandum”).

Before the court are motions for judgment on the agency record filed by QVD

Food Co., Ltd. (“QVD”), and Catfish Farmers of America, and individual U.S. catfish

processors, America's Catch, Consolidated Catfish Companies, LLC, d/b/a Country

Select Fish, Delta Pride Catfish Inc., Harvest Select Catfish Inc., Heartland Catfish

Company, Pride of the Pond, Simmons Farm Raised Catfish, Inc., and Southern Pride

Catfish Company, LLC (collectively “Catfish Farmers”). The court has jurisdiction

pursuant to Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C.

§ 1516a(a)(2)(B)(iii) (2006),1 and 28 U.S.C. § 1581(c) (2006).

After the opening briefs were submitted, but before response briefs were filed,

the court ruled on several issues to help expedite the disposition of the action by

narrowing the focus of the litigation to issues that the court believed had sufficient merit

to warrant a response from the Defendant. See QVD Food Co. v. United States, No.

09-00157 (USCIT Feb. 16, 2010) (order). This opinion addresses the remaining issues,

which include: (1) QVD’s challenge to Commerce’s surrogate value selection of a

1

Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of

Title 19 of the U.S. Code, 2006 edition.

Consol. Court No. 09-00157 Page 3

Bangladeshi fish producer’s 2000-2001 financial statement to value whole live fish

rather than the same producer’s 2006-2007 financial statements; (2) Catfish Farmers’

challenge to Commerce’s surrogate value selection of Indonesian data for broken fish

fillets rather than Bangladeshi data; (3) QVD’s challenge to Commerce’s handling of

QVD’s freight expenses on a net weight basis, which differed from prior reviews in

which Commerce used QVD’s reported gross weight; and (4) QVD’s challenge to

Commerce’s alleged failure to make ministerial error corrections.

I. Standard of Review

For administrative reviews of antidumping duty orders, the court sustains

determinations, findings, or conclusions of the U.S. Department of Commerce

(“Commerce”) unless they are “unsupported by substantial evidence on the record, or

otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically,

when reviewing agency determinations, findings, or conclusions for substantial

evidence, the court assesses whether the agency action is reasonable given the record

as a whole. Nippon Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed. Cir.

2006). Substantial evidence has been described as “such relevant evidence as a

reasonable mind might accept as adequate to support a conclusion.” Dupont Teijin

Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol.

Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial evidence has also been

described as “something less than the weight of the evidence, and the possibility of

drawing two inconsistent conclusions from the evidence does not prevent an

administrative agency's finding from being supported by substantial evidence.” Consolo

Consol. Court No. 09-00157 Page 4

v. Fed. Mar. Comm'n, 383 U.S. 607, 620 (1966). Fundamentally, though, “substantial

evidence” is best understood as a word formula connoting reasonableness review.

3 Charles H. Koch, Jr., Administrative Law and Practice § 10.3[1] (2d. ed. 2009).

Therefore, when addressing a substantial evidence issue raised by a party, the court

analyzes whether the challenged agency action “was reasonable given the

circumstances presented by the whole record.” Edward D. Re, Bernard J. Babb, and

Susan M. Koplin, 8 West’s Fed. Forms, National Courts § 13342 (2d ed. 2009).

Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural

Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984), governs judicial review of

Commerce's interpretation of the antidumping statute. Dupont Teijin Films USA, LP v.

United States, 407 F.3d 1211, 1215 (Fed. Cir. 2005); Agro Dutch Indus. Ltd. v. United

States, 508 F.3d 1024, 1030 (Fed. Cir. 2007). “[S]tatutory interpretations articulated by

Commerce during its antidumping proceedings are entitled to judicial deference under

Chevron.” Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1382 (Fed.

Cir. 2001); see also Wheatland Tube Co. v. United States, 495 F.3d 1355, 1359 (Fed.

Cir. 2007) (“[W]e determine whether Commerce's statutory interpretation is entitled to

deference pursuant to Chevron.”).

II. Discussion

A. Surrogate Value Selection

When valuing the factors of production in a nonmarket economy proceeding,

Commerce must use the “best available information” in selecting surrogate data from

“one or more” surrogate market economy countries. 19 U.S.C. § 1677b(c)(1), (4).

Consol. Court No. 09-00157 Page 5

Commerce's regulations provide that surrogate values should “normally” be publicly

available and (other than labor costs) from a single surrogate country. 19 C.F.R.

§ 351.408(c) (2007). When making its surrogate value selections (and when comparing

and contrasting various data sets), Commerce considers “the quality, specificity, and

contemporaneity of the available values.” Certain Frozen Fish Fillets from the Socialist

Republic of Vietnam, 73 Fed. Reg. 52,015, 52,020 (Dep’t of Commerce Sept. 8, 2008)

(prelim. results admin. review) (“Preliminary Results”). Commerce prefers data that

reflects a broad market average, is publicly available, contemporaneous with the period

of review, specific to the input in question, and exclusive of taxes on exports. Certain

Pneumatic Off-the-Road Tires from the People’s Republic of China, 73 Fed. Reg.

40,485 (Dep’t of Commerce July 15, 2008) (final LTFV determ.) and accompanying

Issues and Decision Memorandum for Certain Pneumatic Off-the-Road Tires from the

People’s Republic of China, A-570-912 (July 7, 2008), cmt. 10 at 26, available at

http://ia.ita.doc.gov/frn/summary/PRC/E8-16156-1.pdf (last visited Sept. 1, 2010).

When reviewing substantial evidence issues involving Commerce’s selection of

the best available surrogate values, the court evaluates “whether a reasonable mind

could conclude that Commerce chose the best available information.” Goldlink Indus.

Co. v. United States, 30 CIT 616, 619, 431 F. Supp. 2d, 1323, 1327 (2006); see

also CITIC Trading Co. v. United States, 27 CIT 356, 366 (2003) (“while the standard of

review precludes the court from determining whether [Commerce’s] choice of surrogate

values was the best available on an absolute scale, the court may determine the

reasonableness of Commerce's selection of surrogate prices.”).

Consol. Court No. 09-00157 Page 6

1. Whole Live Fish

In the Preliminary Results Commerce used the 2006-2007 financial statements of

Bangladeshi fish producer, Gachihata Aquaculture Farms, Ltd. (“Gachihata”), to set a

surrogate value of 45 takas per kilogram for whole live pangas fish (a primary input for

the subject merchandise). Prelim. Surr. Val. Mem. at 4, PD 106.2 Commerce followed

this same approach in the immediately preceding administrative review. See Certain

Frozen Fish Fillets from the Socialist Republic of Vietnam, 73 Fed. Reg. 15,479 (Dep't

of Commerce Mar. 24, 2008) (final results admin. review), as amended, 73 Fed. Reg.

47,885 (Dep't of Commerce Aug. 15, 2008) (“Third Administrative Review”) and

accompanying Issues and Decision Memorandum for Certain Frozen Fish Fillets from

the Socialist Republic of Vietnam, A-552-801 (Mar. 17, 2008), cmt. 4 at 10-14, available

at http://ia.ita.doc.gov/frn/summary/vietnam/E8-5889-1.pdf (last visited Sept. 1, 2010)

(“Third Review Decision Memorandum”).

For the Final Results Commerce changed course and used Gachihata’s 2000-

2001 financial statements to derive the surrogate value for whole live fish (inflating the

2000-2001 prices to the period of review), ultimately valuing whole live fish at 97.89

takas per kilogram. Final Surr. Val. Mem. at 2, PD 137. QVD challenges this surrogate

value choice, arguing that the best available information to value whole live fish was the

pricing information contained in the more contemporaneous 2006-2007 Gachihata

financial statement that Commerce used in the Third Administrative Review. In

selecting the 2000-2001 financial statements, Commerce explained:

2

“PD__” refers to a document contained in the public administrative record.

Consol. Court No. 09-00157 Page 7

From the less-than-fair-value (“LTFV”) investigation through the

preliminary results of the third administrative review, the Department

valued the whole fish input based on the sales value contained within the

2000-2001 Gachihata financial statements. In the final results of the third

administrative review, the Department had both 2000-2001 and the 2006-

2007 Gachihata financial statements on the record and relied on price[s]

from the 2006-2007 Gachihata financial statements to value the whole fish

input. In the final results of this second new shipper and fourth

administrative reviews, we have the same two financial statements on the

record. However, the record of the instant review also contains the

Director’s Report for the 2006-2007 Gachihata financial statement in

addition to pangas fish pricing information from a paper submitted to the

United Nations Food and Agriculture Organization (“FAO”) regarding the

economics of aquaculture in Bangladesh. For these final results, we have

determined that the Gachihata 2000-2001 financial statement is the most

appropriate basis for calculating the whole fish input surrogate value.

Section 773(c)(1)(B) of the Act directs the Department to use “the best

available information” from the appropriate market-economy country to

value FOPs. In selecting the most appropriate surrogate values, the

Department considers several factors including whether the surrogate

value is: publicly available, contemporaneous with the POR, represents a

broad market average, chosen from an approved surrogate country, are

tax and duty-exclusive, and specific to the input. The Department’s

preference is to satisfy the breadth of the aforementioned selection

criteria. However, where all the criteria cannot be satisfied, the

Department will choose a surrogate value based on the best available

information on the record.

On February 3 and 10, 2009, the Department received the parties’ case

and rebuttal briefs, respectively, and on February 25, 2009, the

Department held public and closed hearings for the administrative and

new shipper reviews. In the briefs and during the hearings, parties

presented their concerns with using the 2000-2001 and the 2006-2007

Gachihata financial statements as the basis for calculating the whole fish

input surrogate value. Based on those presentations, the Department

found it appropriate to make one final research effort for other potential

whole fish surrogate values. On March 3, 2009, the Department placed on

the record of this review pangas fish pricing information from a paper

submitted to the United Nations FAO regarding the economics of

aquaculture in Bangladesh.

Consol. Court No. 09-00157 Page 8

However, after considering the parties’ March 5 comments on this new

data, we agree with Petitioners that additional time is necessary for both

the interested parties and the Department to consider the merits and

detailed information contained within the FAO report. Specifically, while

QVD argues that the FAO study is a high quality report that satisfies the

Department’s criteria for finding the best information available, Petitioners

raise several questions regarding the report, including the timing of the

data and supporting documentation. Therefore, we do not find it

appropriate to use the FAO report to calculate the whole fish input

surrogate value in these reviews. Notwithstanding this, we find that the

data contained within the FAO report is deserving of consideration in

future proceedings where the Department and interested parties have

sufficient time to fully consider the data gathering methods, pricing

information, etc. As such, we intend to place the FAO information on the

record of future and on-going proceedings so that it can be fully

considered as a potential basis for calculating the whole fish surrogate

value in those segments.

We agree with Petitioners that the 2006-2007 Gachihata financial

statements, in particular the Director’s Report, illustrate numerous

financial concerns that, when taken together, cast considerable doubt on

the reliability of using it as the basis for calculating a whole fish input

surrogate value (e.g., (a) the financial condition of the company had

continued to deteriorate from prior years, (b) the Bangladeshi Government

refused to provide financial assistance to overcome the company’s losses

despite Gachihata’s pleas, (c) the company defaulted on bank loans due

to cash flow, (d) the Bangladeshi SEC imposed penalties on the company

directors for securities violations, (e) production of the company was at all-

time lows because of shortage in working capital and operating losses).

Therefore, based on the concerns discussed above with the paper

submitted to the United Nations FAO that the Department has had

insufficient time to consider and concerns regarding the 2006-2007

Gachihata financial statements, we find that the 2000-2001 Gachihata

financial statement is the best available information on the record of this

review for calculating the whole fish surrogate value. While both financial

statements are publicly available and specific to the input in question, the

2000-2001 financial statement contains more reliable pricing data.

Although less contemporaneous that the 2006-2007 financial statement,

consistent with our practice, we will inflate the value to the POR.

Decision Memorandum at 9-10.

Consol. Court No. 09-00157 Page 9

QVD challenges Commerce’s choice of the surrogate data for whole live fish as

unreasonable given the available record information, arguing that the best available

information for this surrogate is not the 2000-2001 inflated data, but the more

contemporaneous 2006-2007 data. More specifically, QVD argues:

The record evidence in the instant case demonstrates that the price of

whole pangasius fish in Bangladesh steadily declined for the six years

between 2001 and 2007, as reflected by the whole fish price contained in

the Gachihata financial statements for this period:

2000/2001: 68 takas/Kg.

2001/2002: 50 takas/Kg.

2002/2003: 49.7 takas/Kg.

2003/2004: 48 takas/Kg.

2006/2007: 45 takas/Kg.

QVD’s Br. in Supp. of Pl.’s R. 56.2 Mot. for J. on Agency Rec. at 12 (“QVD Br.”). The

problem with this argument is that it does not fairly or accurately portray the record

evidence for whole live fish that Commerce had to choose from during the

administrative review. QVD’s argument ignores Commerce’s previous determination

that the whole live fish data in Gachihata’s 2001-2002, 2002-2003, and 2003-2004

financial statements were unreliable because “the independent auditor’s notes in those

statements called into question Gachihata’s internal control procedures and valuation of

biological assets.” Third Review Decision Memorandum at 13; see also Certain Frozen

Fish Fillets from the Socialist Republic of Vietman, 71 Fed. Reg. 14,170 (Dep’t of

Commerce Mar. 21, 2006) (final results of first admin. review) and accompanying Issues

and Decision Memorandum for the 1st Administrative Review of Certain Frozen Fish

Consol. Court No. 09-00157 Page 10

Fillets from the Socialist Republic of Vietnam, A-552-801 (Mar. 13, 2006), cmt. 3A at 13-

14, available at http://ia.ita.doc.gov/frn/summary/vietnam/E6-4070-1.pdf (last visited

Sept. 1, 2010) (finding unreliable Gachihata’s 2002-2003, 2003-2004 financial

statements).

Nobody argued that Commerce should use the 2001-2002, 2002-2003, 2003-

2004 data. It was understood to be unreliable. These considerations alter QVD’s

pricing table:

2000/2001: 68 takas/Kg.

2006/2007: 45 takas/Kg.

Commerce’s analysis focused on the two relevant options: the 2000-2001 and 2006-

2007 data. The 2000-2001 was reliable, but not contemporaneous. The 2006-2007

data was contemporaneous and had been used in the immediately prior review, but new

record information, the Director’s Report, cast a pall on the overall reliability of the 2006-

2007 financial statements. Once Commerce determined that the 2006-2007 Gachihata

financial statement was too unreliable from which to draw data, Commerce was left with

the 2000-2001 data.

QVD argues that Commerce wrongly focused on Gachihata’s poor financial

condition, which QVD maintains is irrelevant to the price of pangas because of an

auditor’s statement that the company’s books (and product sales) were market-based.

QVD Br. 18. This is a fair observation. The 2001-2002, 2002-2003, and 2003-2004

financial statements were rejected because they contained a caveat about suspect

internal control procedures and valuation of biological assets. The 2006-2007

Consol. Court No. 09-00157 Page 11

statements did not have this caveat. This was an important reason Commerce selected

the 2006-2007 data to derive the live fish surrogate values in the prior administrative

review. The instant administrative review, however, presented Commerce with new

evidence in the Director’s Report that was not on the record in the prior review. After

analyzing that evidence Commerce concluded that the 2006-2007 financial statements

were too unreliable as a whole to derive surrogate data.

The court has reviewed the Director’s Report. It portrays a very grim and

unsettling picture of Gachihata’s financial condition (see PD 78, Ex. 4), so much so that

the court, like Commerce, would have been leery about relying on it to derive any

surrogate data (and defend the reasonableness of that choice on judicial review). In

short, the court cannot fault or find unreasonable Commerce’s determination that

Gachihata’s 2006-2007 financial statements were too unreliable as a whole to derive

surrogate values.

In the court’s view, this is not a case in which the agency arbitrarily changed its

mind from one review to the next, but of Commerce reasonably reaching a different

result when confronted with an evolving administrative record, after wrestling with

competing considerations of contemporaneity on the one hand, and quality and

reliability on the other. Commerce knew that the 2000-2001 and 2006-2007 financial

statements presented imperfect alternatives, finding it “appropriate to make one final

research effort for other potential whole fish surrogate values.” Decision Memorandum

at 10. That effort uncovered additional information in the form of the UN FAO report,

but Commerce also acknowledged (with the deadline for the final results only days

Consol. Court No. 09-00157 Page 12

away) that there was insufficient time for Commerce and the parties to vet the new

information. Id. Commerce was left with a choice between imperfect alternatives.

Commerce exercised its prerogative to choose the best available information after

applying its selection criteria, and Commerce’s choice, as explained above, was

reasonable given the administrative record. The court must therefore sustain

Commerce’s surrogate value selection for whole live fish.

2. Broken Fish Fillets

QVD reported broken fish fillets, a fish byproduct, as a factor of production. See

QVD Sec. D Quest. Resp. at 4 and 18, PD 51. When calculating factors of production

for subject merchandise, Commerce typically allows an offset for the value of the by-

product. The record contained four potential surrogate values for the by-product of

broken fish fillets.

Commerce placed on the record the 2007 World Trade Atlas Indonesian data for

“Other Fish Meat of Marine Fish,” which indicated an average value of Indonesian

imports of broken fish fillets to be $2.34 per kilogram (170,827 kilograms for $400,552,

rounded). Prelim. Surr. Val. Mem. at 8 & Att. 9, PD 106. Catfish Farmers submitted the

2003 UN COMTRADE data for Bangladeshi imports (HTS 0304.90.100 “Fish Meat

Other Than Fillets”), which indicated a price of approximately $.25 per kilogram (372

kilograms of imports valued at $75 = $0.20), adjusted for inflation. See Catfish Farmers’

Surr. Val. Subm. at 4 & Exh. 4-5, PD 74. Catfish Farmers also suggested, as an

alternative, that Commerce select the 2003 World Trade Atlas Indonesian data used in

the Third Administrative Review. Catfish Farmers’ Admin. Case Br. at 32, PD 121.

Consol. Court No. 09-00157 Page 13

Finally, QVD proposed a valuation of $3.13 per kilogram, taken from 2007 UN

COMTRADE data for imports into Indonesia (“[f]ish meat & mince, except liver, roe &

fillets, frozen”). QVD Surr. Val. Subm. at 4 & Exh. 5 (showing $3.1326), PD 75.

For the preliminary results Commerce selected the Indonesian 2007 World Trade

Atlas data. Prel. Surr. Val. Mem. at 8, PD 106. Catfish Farmers challenged that

selection in its administrative case brief:

In the Preliminary Surrogate Value Memo, the Department stated

that it relied upon Indonesian import statistics from HS#0304.90.100,

"Other Fish Meat of Marine Fish," to derive a value for broken/trimmed fish

meat of $2.34 per kilogram. However, the price of broken meat used in

the Preliminary Results is so high that the Department cannot reasonably

consider it to be suitable for use. In particular, Petitioners placed on the

record the import data for broken meat from Bangladesh - the primary

surrogate country - showing that the price was only $0.25 per kilogram. In

other words, the price that the Department used from a secondary

surrogate country was nearly ten times greater than the value from the

primary surrogate country and the surrogate country from which it derived

the whole live fish price, underscoring the unreliability of the Indonesian

import price. Accordingly, the Department should use the Bangladeshi

price in the Final Results because it is more reasonable than the price

used in the Preliminary Results. Alternative [sic], the Department should

use the Indonesian import price used in the 3rd Review Final Results.

Catfish Farmers’ Admin. Case Br. at 31-32 (footnotes omitted). Catfish Farmers

therefore tried to persuade Commerce as a factual matter that the Bangladeshi

data was more reliable than the Indonesian data. The point heading in their brief

makes this clear—“The Department Should Use a More Reliable Price for Broken

Meat”. Catfish Farmers’ Admin. Case Br. at 31. Catfish Farmers even

suggested, as an alternative, that Commerce should use other Indonesian data.

In the Final Results Commerce reasonably addressed Catfish Farmer’s

Consol. Court No. 09-00157 Page 14

factual argument about the reliability of the Indonesian data:

Although Petitioners argue that the value of $2.34 per kilogram for broken

fillets is high, we find that it is appropriate given the similarity between it and

regular fish fillets. In the Section D Questionnaire Response (“SDQR”), QVD

refers to the byproduct as “broken fillets.” See SDQR at page 18 and

supplemental section D questionnaire response at exhibits SD 16, 17, and

19. No party has disputed that the broken fillets are anything other than

broken fillets. While broken fillets are not whole fillets, the Department finds

that they do not fall into the category of fish meat other than fillets. As the

Department finds the Indonesian data to be a more appropriate value to use

than that of other fish meat other than fillets. Because the Indonesian data is

contemporaneous with the POR, comes from a country that is economically

comparable to Vietnam, and represents a broader market average because

the value of sales from Indonesia is based on over $[4]00,000 in sales while

the Bangladeshi value is based on total sales value of $75, the Department

finds it to be the best information on the record. Moreover, the data source

from which we derive the broken fillets surrogate value is an updated value of

the same source used in the last review. The source value was from 2007,

updating the value used in the Fish 3rd AR Results which was from 2003.

Petitioners’ effort to discredit the reliability of the 2007 value in favor of

returning to the same source, but with values from 2003, is undermined by

the fact that the value comes from the same source; it is simply a more

contemporaneous value. Therefore, we will continue to use the Indonesian

import statistics value used in the Preliminary Results.

Decision Memorandum at 11-12.

In their briefs before the court, Catfish Farmers raise two brand new arguments

challenging Commerce’s surrogate value selection. First, Catfish Farmers invoke the

antidumping statute’s requirement that Commerce “utilize, to the extent possible,”

surrogate values from countries that are not only (1) economically comparable to

Vietnam, but that are also (2) “significant producers of comparable merchandise.” 19

U.S.C. § 1677b(c)(4). Catfish Farmers contend for the first time that Commerce never

determined Indonesia was a “significant producer of comparable merchandise,” and

Consol. Court No. 09-00157 Page 15

therefore, Commerce could not use any Indonesian data. Catfish Farmers’ Reply Br. at

1; Catfish Farmers’ Mem. In Supp. of R. 56.2 Mot. for J. on Agency Rec. at 17, 18

(“Catfish Farmers’ Br.”). This is a curious argument from a party that advocated using

Indonesian data in the administrative proceeding. See Catfish Farmers’ Admin. Case

Br. at 32 (“Alternative [sic], the Department should use the Indonesian import price . . .

.”). Catfish Farmers’ other new argument is that Commerce violated an alleged

administrative practice of using secondary surrogate country information only when

primary surrogate country data is “unavailable,” a condition Catfish Farmers allege was

not satisfied here. Catfish Farmers’ Br. at 17; Catfish Farmers’ Reply Br. at 2-3.

Problematically, Catfish Farmers failed to include these arguments in its

administrative case brief. As noted above, Catfish Farmers focused on a factual

argument about the reliability between the Bangladeshi and Indonesian data sets.

Catfish Farmers did not cite, mention, or discuss 19 U.S.C. § 1677b(c)(4) (which

governs surrogate values and countries), nor did Catfish Farmers cite, mention, or

discuss Commerce’s own rules (19 C.F.R. § 351.408(c)(2)) or any administrative

precedents addressing Commerce’s use of information from a country other than the

primary surrogate. Catfish Farmers’ Admin. Case Br. at 31-32. The time to do so was

in their administrative case brief because the issue of the lawfulness of utilizing

Indonesian data as opposed to Bangladeshi data (as violative of the statute, regulation,

or administrative practice) was squarely in play—Commerce used the Indonesian data

in the Preliminary Results. The excerpt from Catfish Farmers’ administrative case brief

makes clear that Catfish Farmers failed to properly raise and argue those legal issues

Consol. Court No. 09-00157 Page 16

before Commerce. See 19 C.F.R. § 351.309(c)(2) (“The case brief must present all

arguments that continue in the submitter’s view to be relevant to the Secretary’s final

determination or final results . . . .”).

When reviewing Commerce's antidumping determinations, the Court of

International Trade requires litigants to exhaust administrative remedies “where

appropriate.” 28 U.S.C. § 2637(d). “This form of non-jurisdictional exhaustion is

generally appropriate in the antidumping context because it allows the agency to apply

its expertise, rectify administrative mistakes, and compile a record adequate for judicial

review—advancing the twin purposes of protecting administrative agency authority and

promoting judicial efficiency.” Carpenter Tech. Corp. v. United States, 30 CIT 1373,

1374-75, 452 F. Supp. 2d 1344, 1346 (2006) (citing Woodford v. Ngo, 548 U.S. 81, 89

(2006)). By failing to raise their arguments about the legal standards governing

utilization of secondary surrogate country information at the administrative level, Catfish

Farmers deprived Commerce of the opportunity to address those issues and make a

“determination, finding, or conclusion.” 19 U.S.C. § 1516a(b)(1). As a result,

Commerce did not have the opportunity to “apply its expertise,” potentially “rectify

administrative mistakes,” or “compile a record adequate for judicial review.” Carpenter,

30 CIT at 1374-75, 452 F. Supp. 2d at 1346. Therefore, the court will not consider

Catfish Farmers’ new arguments regarding Commerce’s surrogate value selection for

broken fish fillets. Instead, the court will sustain Commerce’s decision.

B. QVD’s Freight Expense

In the Final Results Commerce acknowledged and corrected an error in its

Consol. Court No. 09-00157 Page 17

margin calculation for QVD. Catfish Farmers argued, and Commerce agreed, that

adjusting QVD’s constructed export price with a gross weight international movement

expense, when all other adjustments were made upon a net weight basis, distorted the

calculation. Decision Memorandum at 15-16.

Commerce offered the straightforward, common sense rationale “that there [was]

an inconsistent unit of measure that would generate a distortion if [Commerce]

deduct[ed] freight expenses from the unit price when these two components [were] not

on the same basis.” Decision Memorandum at 16, PD 136. Commerce further

explained that “[t]o correctly calculate the freight costs, [it] should deduct the freight

expenses based on a net-weight basis similar to the weight basis for the unit price and

the other price adjustments and movement expenses.” Id. Accordingly, Commerce

adjusted QVD’s international freight expenses to a consistent net-weight basis. Id.

QVD challenges Commerce’s correction, arguing that Commerce’s explanation is

a conclusory statement. QVD Br. at 29. The court disagrees. Commerce’s statement

that it would use freight expenses calculated on the same unit basis is not, as QVD

suggests, an unreasonable conclusory statement, but a simple, lucid, common sense

explanation for what appeared to be a necessary correction. The onus is on QVD to

explain to the court why Commerce’s correction fails to produce a more accurate

dumping margin than the prior method. This QVD has failed to do. Commerce’s

adjustment to QVD’s freight expenses must therefore be sustained.

C. Alleged Ministerial Errors

To compute the financial ratios for SG&A and overhead expenses for the factors-

Consol. Court No. 09-00157 Page 18

of-production, normal-value calculation, Commerce initially used the calculated average

financial ratios from the 2006-2007 financial statements of Apex Foods Ltd. (“Apex”)

and Gemini (“Gemini”). Prel. Surr. Val. Mem. at 10, PD 106. In response both Catfish

Farmers and QVD focused upon the issue of which financial statements should be used

to calculate the surrogate financial ratios. See Catfish Farmers’ Admin. Case Br. at 18-

31, PD 121; QVD Admin. Rebuttal Br. at 14-21, PD 122. Neither party argued that

adjustments should be made to the financial ratio calculations. In the Final Results

Commerce continued to use—as the surrogate values for the SG&A ratio and

overhead—the averages of the calculated ratios from the 2006-2007 financial

statements of Apex and Gemini. Final Surr. Val. Mem., Att. 1, PD 137.

After Commerce issued the Final Results, QVD for the first time claimed that

Commerce had made a ministerial error by allegedly failing to adjust the SG&A and

overhead financial ratios to exclude certain expenses—laboratory testing, sales

promotion, sales commissions, and bank charges—from the SG&A financial ratio

calculation, thereby allegedly double-counting them. QVD Minis. Error Alleg. at 4-7, PD

142. Commerce concluded that QVD’s allegation was not ministerial and denied the

claim. Analysis of Minis. Error Alleg. Mem. at 8, PD 145.

QVD challenges Commerce’s denial of the ministerial error allegation. QVD Br.

39. A ministerial error is “an error in addition, subtraction, or other arithmetic function,

clerical error resulting from inaccurate copying, duplication or the like, and any other

similar type of unintentional error which the Secretary considers ministerial.” 19 C.F.R.

§ 351.224(f). Importantly, Commerce included the disputed expenses in their

Consol. Court No. 09-00157 Page 19

respective ratios in the preliminary results and QVD raised no objections during the

administrative proceeding to cause Commerce to reconsider its calculation of these

ratios. See QVD’s Case and Rebuttal Briefs, PD 119; PD 122.

Commerce properly concluded that QVD’s claim regarding the surrogate financial

ratios was a substantive challenge to Commerce’s assignment of certain expenses to

the surrogate ratio calculations. There was nothing unintentional or inadvertent about

Commerce’s treatment of these expenses. A determination of whether such expenses

should or should not be included in the financial ratio expenses is a complex issue and

can involve, among other things, an analysis of whether there is sufficient record

evidence to demonstrate that the surrogate producer’s basis for the expense exactly

correlates with the NME producer basis for the expenses. See Shanghai Eswell Enter.

Co. v. United States, 31 CIT 1570, 1579-81 (2007), opinion after remand, 32 CIT ___,

___, (2008), 2008 WL 4921375, at *6 (Nov. 18, 2008), aff’d without opinion, 350 Fed.

Appx. 473 (Fed. Cir. 2009). Thus, although QVD suggests that these alleged “errors”

are ministerial, they are not. Accordingly, Commerce’s denial of QVD’s request for

ministerial error corrections must be sustained.

III. Conclusion

For all of the foregoing reasons, the court will enter judgment sustaining the Final

Results.

/s/ Leo M. Gordon

Judge Leo M. Gordon

Dated: September 1, 2010

New York, New York