                                     Slip Op. 12-19

               UNITED STATES COURT OF INTERNATIONAL TRADE

HIEP THANH SEAFOOD JOINT STOCK CO.,

                                  Plaintiff,
                                                   Before: Leo M. Gordon, Judge
      v.
                                                   Consol. Court No. 09-00270
UNITED STATES,

                                  Defendant.


[Remand results sustained.]

                                                               Dated: February 15, 2012

       Matthew J. McConkey, Jeffrey C. Lowe, Mayer Brown, LLP, of Washington, DC,
for Plaintiff Hiep Thanh Seafood Joint Stock Co.

       Richard P. Schroeder, Trial Attorney, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice of Washington, DC, for Defendant United States.
With him on the brief were 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 and David Richardson, Office of the Chief Counsel
for Import Administration, U.S. Department of Commerce.

       Valerie A. Slater, Jarrod M. Goldfeder, Nicole M. D’Avanzo, Natalya D.
Dobrowolsky Akin, Gump, Strauss, Hauer & Feld, LLP, of Washington, DC, 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 action involves the third new shipper 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.     Certain

Frozen Fish Fillets from the Socialist Republic of Vietnam, 74 Fed. Reg. 37,188 (Dep’t
Consol. Court No. 09-00270                                                       Page 2

of Commerce July 28, 2009) (amended final results admin. review) (“Final

Results”); see also Issues and Decision Memorandum, A-552-801 (June 15, 2009),

available at http://ia.ita.doc.gov/frn/summary/VIETNAM/E9-14607-1.pdf (last visited

Feb. 15, 2012) (“Decision Memorandum”). Before the court are the Final Results of

Redetermination (Sept. 30, 2011) (“2nd Remand Results”), ECF No. 68, filed by

Commerce pursuant to Hiep Thanh Seafood Joint Stock Co. v. United States, 35 CIT

___, 781 F. Supp. 2d 1366 (June 23, 2011) (“Hiep Thanh II”) (order remanding to

Commerce).    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). For the reasons set forth below, the court sustains the 2nd Remand

Results.

                                 Standard of Review

        When reviewing Commerce’s antidumping determinations under 19 U.S.C. §

1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c), the U.S. Court of International Trade

sustains Commerce‘s “determinations, findings, or conclusions” 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


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. 09-00270                                                       Page 3

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.” 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 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 § 9.24[1] (3d. ed. 2011). 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. 2010).

      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 v.

United States, 407 F.3d 1211, 1215 (Fed. Cir. 2005); Agro Dutch Indus. 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.
Consol. Court No. 09-00270                                                     Page 4

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

deference pursuant to Chevron.”).

                                    Background

      This case involves the proper treatment of sales of subject merchandise that

respondent/producer Hiep Thanh Seafood Joint Stock Co. (“Hiep Thanh”) made to an

unaffiliated Mexican customer, and delivered to a U.S port, at which point the Mexican

customer took title and then entered the merchandise for U.S. consumption. The issue

is whether these sales should be included within Hiep Thanh’s margin calculation as

part of Hiep Thanh’s U.S. sales database, or accounted for elsewhere within the new

shipper review. In the Final Results Commerce included the sales within Hiep Thanh’s

U.S. sales database. Decision Memorandum at cmt 5. Hiep Thanh then commenced

this action, arguing that Commerce erred because Heip Thanh had no knowledge,

actual or constructive, that those sales were destined for U.S. customers. Hiep Thanh

Seafood Joint Stock Co. v. United States, 34 CIT ___, ___, 752 F. Supp. 2d 1330, 1334

(Nov. 5, 2010) (“Hiep Thanh I”).       The court remanded the matter for further

consideration by Commerce because it was unclear from the Decision Memorandum

whether Commerce (1) applied its standard “knowledge test” to analyze the sales in

question, or (2) may have applied a different framework that did not depend on Hiep

Thanh's knowledge of the “ultimate destination” of the merchandise, but rather Hiep

Thanh's more limited knowledge that the merchandise was destined in some form for

the United States (as a shipment) coupled with actual consumption entries that Hiep

Thanh may not have known about. Id., 34 at ___, 752 F. Supp. 2d at 1335.
Consol. Court No. 09-00270                                                         Page 5

      In the first remand Commerce provided a more detailed explanation of its

decision to include the sales within Hiep Thanh’s U.S. sales database.          See Final

Results of Redetermination (Jan. 31, 2011) (“1st Remand Results”), ECF No. 53., filed

by Commerce pursuant to Hiep Thanh I. After reviewing the 1st Remand Results the

court again remanded the action to Commerce. Hiep Thanh II, 35 CIT at ___, 781 F.

Supp. 2d at 1374. Familiarity with prior administrative and judicial decisions in this

action is presumed.

                                      Discussion

      In the 2nd Remand Results Commerce reconsidered its application of its

“knowledge test”2 to determine whether to include the disputed sales within Hiep

Thanh’s U.S. sales database. Commerce simplified its approach:

      Upon reconsideration on remand, we determine that while the knowledge
      test is a framework that is of use in identifying the first party in a
      transaction chain with knowledge of U.S. destination where there are
      multiple entities involved in such chains prior to importation, the framework
      is one that does not fit the fact pattern in this case. In this case, prior to
      importation, there were only two entities involved in the sale of the subject
      merchandise, Hiep Thanh and the unaffiliated purchaser. As such, the
      Department determines that the disputed sales are in fact U.S. sales that
      belong in Hiep Thanh's margin calculation because Hiep Thanh made the
      sales for exportation to the United States, and they fall squarely within the
      purview of 19 U.S.C.§1677a(a). Application of the knowledge test is
      neither necessary nor appropriate in these circumstances.

2nd Remand Results at 4. Commerce further explained:

             Within the context of the facts of this case, the Department
      interprets "exportation to the United States" to mean any sale to an

2
 A full discussion of the “knowledge test” is provided in Hiep Thanh II, 35 CIT at ___,
781 F. Supp. 2d at 1371-74.
Consol. Court No. 09-00270                                                          Page 6

        unaffiliated party in which merchandise is to be delivered to a U.S.
        destination, regardless of whether any underlying paper work may indicate
        possible subsequent export to a third country. We believe that if a sale is
        made for delivery of merchandise to the United States (and record
        evidence clearly indicates that the disputed sales were made as such),
        there is a significant potential for it to enter the U.S. market for
        consumption (as discussed below, the sales in question did, in fact, enter
        the United States for consumption). If the Department were not to take this
        approach, it would place certain respondents in a position to exclude U.S.
        sales from reporting requirements by claiming them as sales to be shipped
        through the United States when, in reality, the merchandise is entered for
        consumption and thus enters the commerce of the United States subject
        to antidumping duties.

                While Hiep Thanh may have anticipated that the disputed sales
        were ultimately to be delivered to Mexico, via the United States, Hiep
        Thanh stated that these sales were made according to sales terms “X”
        indicating that the merchandise was delivered to the unaffiliated
        purchaser, Customer Z, at a U.S. destination, at which point transfer of
        title took place. Another unaffiliated company, Company Y, acted as the
        U.S. importer of record. These facts in their totality demonstrate that the
        merchandise was "for exportation to the United States" as the Department
        reasonably interprets the phrase under section 1677a(a) of the statute.

Id. at 6.

        Hiep Thanh, for its part, still maintains that the sales should be excluded from its

margin calculation.    Hiep Thanh argues that the disputed sales were made to a

“Mexican customer, as documented by all sales and shipping documents.” Hiep Thanh

Comments on 2nd Remand Results at 7 (emphasis in original), ECF No. 73. The issue

though is not whether the sales were made to a Mexican customer, but whether they

were for “exportation to the United States.” 19 U.S.C. § 1677a(a). For Hiep Thanh to

prevail (and obtain an order from the court directing Commerce to exclude the sales

from Hiep Thanh’s margin calculation), the administrative record must lead a

reasonable mind to draw one and only one conclusion: the sales were for exportation to
Consol. Court No. 09-00270                                                      Page 7

Mexico and not the United States. That conclusion, in turn, depends upon inferences to

be drawn from the available record evidence—inferences that must compete with direct

record evidence and other inferences (having perhaps an equal or better claim) that the

disputed sales were for exportation to the United States.

      To explain further, Hiep Thanh would like Commerce and the court to infer that

sales to a Mexican customer must be Mexican sales for exportation to Mexico. Hiep

Thanh, however, did not ship the disputed sales to Mexico. The bills of lading detail

shipment to a U.S. port, with no subsequent Mexican destination. See Confidential

Joint Appendix, Tab P3, Ex. 3, Attachs. B, C, & D, ECF No. 48. As Commerce noted,

title transferred in the United States.   2nd Remand Results at 6.    Contrary to Hiep

Thanh’s post hoc claims that the subject merchandise was supposed to be transported

“in-bond” to Mexico, Hiep Thanh Comments on 2nd Remand Results at 7, Hiep Thanh

shipped merchandise covered by an antidumping duty order to a U.S. port without any

arrangements for further transportation to Mexico, and without any qualification or

limitation against U.S. entry. See Confidential Joint Appendix, Tab P3, Ex. 3, Attachs.

B, C, & D, ECF No. 48. In short, Hiep Thanh delivered merchandise covered by an

antidumping duty order to a U.S. port, where title transferred to a Mexican customer,

who was free to, and did, distribute it in both the U.S. and Mexican markets. Such facts

make it difficult to accept Hiep Thanh’s hoped for inference that the disputed sales

(those entered for U.S. consumption) must have been for exportation to Mexico. A

reasonable mind reviewing this administrative record would not have to conclude that

the disputed sales were for exportation to Mexico.
Consol. Court No. 09-00270                                                          Page 8

         A fair criticism of the 2nd Remand Results is that Commerce’s interpretation of the

phrase “exportation to the United States” is not as rigorous as the court might prefer.

Commerce could have provided some definitional context to the term “exportation” by

(1) ascertaining its common or technical meaning, see generally NORMAN J. SINGER &

J.D. SHAMBIE SINGER, 2A SUTHERLAND STATUTORY CONSTRUCTION §§ 47:28, 47:29 (7th

ed. 2011); or (2) analyzing whether the definition of “exportation” used by U.S. Customs

and Border Protection, 19 C.F.R. § 101.1, provides any helpful guidance. Commerce

instead chose to define the term through application to the particular facts on the

administrative record.      2nd Remand Results at 6 (“These facts in their totality

demonstrate that the merchandise was ‘for exportation to the United States’ as the

Department reasonably interprets the phrase under section 1677a(a) of the statute.”).

Commerce also, however, did explain why mere delivery to a U.S. port (separate and

apart from a subsequent consumption entry), constitutes an “exportation”; otherwise,

certain respondents could “exclude U.S. sales from reporting requirements by claiming

them as sales to be shipped through the United States when, in reality, the merchandise

is entered for consumption and thus enters the commerce of the United States subject

to antidumping duties.” Id.

         In its comments on the 2nd Remand Results, Hiep Thanh chose not to proffer a

definition of the term “exportation.” Instead, Hiep Thanh argues that “Commerce may

not reasonably set aside the knowledge test and may not apply its new rule in this

case.”    Hiep Thanh Comments on 2nd Remand Results at 2.              Although the court

understands Hiep Thanh’s desire to have Commerce apply a standard (a particular
Consol. Court No. 09-00270                                                         Page 9

knowledge test) that would produce Hiep Thanh’s preferred result (exclusion of the

sales), the court cannot ignore the administrative law standards governing this case.

“Chevron contemplates administrative flexibility in the interpretation of silent or

ambiguous statutes,” Fujian Lianfu Forestry Co. v. United States, 33 CIT ___, ___, 638

F. Supp. 2d 1325, 1357 (2009), and “the statute does not specifically resolve whether

individual sales of subject merchandise should be included within a particular

respondent’s U.S. sales database.” Hiep Thanh II, 35 CIT at ___, 781 F. Supp. 2d at

1373. Commerce had before it a factual scenario it had not previously confronted. As

such, it had to “exercise its gap-filling discretion to derive a reasonable approach to the

problem.” Id.

       Hiep Thanh was the first to suggest that this case was “fairly simple.” Hiep

Thanh Comments on 1st Remand Results at 1, ECF No. 58. In the 2nd Remand Results

Commerce embraced that simplicity, abandoning the self-imposed complexity of the 1st

Remand Results. Commerce concluded that Hiep Thanh had sold subject merchandise

to an “unaffiliated purchaser for exportation to the United States.”         19 U.S.C. §

1677a(a).   That conclusion finds reasonable support in the administrative record

because, as explained above, Hiep Thanh made a direct shipment to the United States

without any arrangements for further transportation to Mexico, and without any

qualification or limitation against U.S. entry. Also included in Commerce’s determination

is a simple but clear policy objective to discourage respondents who deliver subject

merchandise directly to the United States from too easily excluding sales from their

margin calculations by pleading ignorance of subsequent consumption entries.
Consol. Court No. 09-00270                                                   Page 10

      Hiep Thanh has not supplied the court with a basis upon which to order

Commerce to exclude the disputed sales from Hiep Thanh’s database. The statute

does not mandate that they be excluded, and the administrative record does not require

that a reasonable mind should exclude them either. In sum, Commerce’s 2nd Remand

Results are (1) reasonable given the circumstances presented by the whole record

(supported by substantial evidence) and (2) in accordance with law. Judgment will be

entered accordingly.



                                                          /s/ Leo M. Gordon
                                                        Judge Leo M. Gordon

Dated: February 15, 2012
       New York, New York
