Andaman Seafood Co., Ltd. v. United States

Slip Op. 11-46

UNITED STATES COURT OF INTERNATIONAL TRADE
____________________________________
:
ANDAMAN SEAFOOD CO., LTD. et al. :
:
Plaintiffs, :
: Before: WALLACH, Judge
v. : Court No.: 08-00330
:
UNITED STATES, : PUBLIC VERSION
:
Defendant, :
:
and :
:
AD HOC SHRIMP TRADE ACTION :
COMMITEE, :
:
Defendant-Intervenor. :
____________________________________:

[Commerce’s Final Results of Redetermination Pursuant to Court Remand are AFFIRMED.]

Dated: April 26, 2011

White & Case LLP (Jay C. Campbell) for Plaintiffs 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., and Rubicon Resources, LLC.

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
(Stephen C. Tosini) for Defendant United States.

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

Wallach, Judge:

I
INTRODUCTION

This action comes before the court on the U.S. Department of Commerce’s

(“Commerce”) Final Results of Redetermination Pursuant to Court Remand (“Remand Results”).

Commerce issued these Remand Results after the court granted the request of Defendant United

States (“Defendant”) for remand of Certain Frozen Warmwater Shrimp From Thailand: Final

Results and Final Partial Rescission of Antidumping Duty Administrative Review, 73 Fed. Reg.

50,933 (August 29, 2008) (“Final Results”).1 During remand Commerce determined that

Plaintiffs 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., and Rubicon

Resources, LLC (collectively “Rubicon Group” or “Plaintiffs”) should be granted a constructed

export price (“CEP”) offset. Defendant-Intervenor Ad Hoc Shrimp Trade Action Committee

(“Ad Hoc” or “Defendant-Intervenor”) now challenges Commerce’s grant of a CEP offset to

Plaintiffs. Defendant-Intervenor’s Comments on Final Results of Redetermination Pursuant to

Court Remand (“Defendant-Intervenor’s Comments”); see Remand Results. This court has

jurisdiction pursuant 28 U.S.C. § 1581(c). Commerce’s redetermination is supported by

substantial evidence and otherwise in accordance with law.

1
Ad Hoc Shrimp Trade Action Comm. v. United States, 675 F. Supp. 2d 1287 (CIT 2009) (denying Ad Hoc’s
Motion for Judgment on the Agency Record, granting Defendant’s request for a voluntary remand to revisit the
Rubicon Group’s entitlement to a constructed export price offset, and otherwise sustaining Commerce’s
determination).

2 
 II
BACKGROUND

In February 2007, Ad Hoc requested an antidumping review of sales in the United States

by numerous Thai shrimp producers of certain frozen warmwater shrimp. Notice of Initiation of

Administrative Reviews of the Antidumping Orders on Certain Frozen Warmwater Shrimp from

Brazil, Ecuador, India and Thailand, 72 Fed. Reg. 17,100, 17,101 (April 6, 2007). Commerce in

April 2007 initiated the review of an antidumping order covering 142 companies for the period

of review from February 1, 2006 through January 31, 2007. Id. at 17,100-10. Commerce’s

selection of producers/exporters for review included the Rubicon Group. Certain Frozen

Warmwater Shrimp From Thailand: Preliminary Results and Preliminary Partial Rescission of

Antidumping Duty Administrative Review, 73 Fed. Reg. 12,088, 12,088-89 (March 6, 2008).

In August 2008, Commerce rendered its final determination for the administrative review

of the subject antidumping duty order. Final Results, 73 Fed. Reg. 50,933. Commerce

determined that the Rubicon Group was not entitled to a CEP offset. Memorandum from

Stephen J. Claeys, Deputy Assistant Secretary for Import Administration, to David M. Spooner,

Assistant Secretary for Import Administration, Issues and Decision Memorandum for the

Antidumping Duty Administrative Review on Certain Frozen Warmwater Shrimp from Thailand

– February 1, 2006, through January 31, 2007 (August 25, 2008) (“AD Memo”), Public Record

(“PR”) 512 at 12-17 (cmt. 5).2

Ad Hoc initiated the current litigation in September 2008, contesting numerous

Commerce actions in the process that led to the Final Results. See Ad Hoc Shrimp Trade Action

2
Citations to the Public Record refer to the administrative record filed in Plaintiffs’ original challenge to the Final
Results, not the record filed by Commerce concurrent with the Remand Results, unless otherwise noted.

3 
Comm. v. United States, 675 F. Supp. 2d 1287, 1296 (CIT 2009). The Rubicon Group separately

initiated litigation challenging the refusal of Commerce to grant a CEP offset. Id. In March 2009

the court granted Defendant’s motion to consolidate these cases. Id. On December 29, 2009, the

court denied Ad Hoc’s Motion for Judgment on the Agency Record and granted Defendant’s

request for voluntary remand to address whether to grant a CEP offset to the Rubicon Group. Id.

at 1312-13.3 On April 29, 2010, the court granted Defendant’s motion to sever the cases. April

29, 2010 Order (Doc. No. 29).

On May 7, 2010, Commerce issued its draft results of the redetermination, deciding that

the Rubicon Group is entitled to a CEP offset for the review and recalculating the Rubicon

Group’s rate accordingly. Draft Results of Redetermination Pursuant to Court Remand (“Draft

Results”). After receiving comments and rebuttal comments from both the Rubicon Group and

Ad Hoc, Commerce issued its Remand Results determining that, upon reconsideration, the

Rubicon Group is entitled to a CEP offset for the review and maintaining the same rate for the

Rubicon Group that was recalculated for the Draft Results. Remand Results. Plaintiffs support

Commerce’s redetermination. See Plaintiffs’ Comments on the United States Department of

Commerce’s Final Results of Redetermination on Remand (“Plaintiffs’ Comments”). Defendant-

Intervenor challenges Commerce’s redetermination. See Defendant-Intervenor’s Comments;

Defendant-Intervenor’s Reply Regarding Final Results of Redetermination Pursuant to Court

Remand (“Defendant-Intervenor’s Reply”).

3
For a more comprehensive overview of the underlying litigation, see Ad Hoc, 675 F. Supp. 2d at 1292-97.

4 
 III
STANDARD OF REVIEW

The court will hold unlawful a determination by Commerce resulting from an

administrative review of an antidumping duty order if that determination is “unsupported by

substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. §

1516a(b)(1)(B)(i); see 19 U.S.C. § 1516a(a)(2)(B)(iii).

“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.” Aimcor v. United States,

154 F.3d 1375, 1378 (Fed. Cir. 1998) (quoting Matsushita Elec. Indus. Co. v. United States, 750

F.2d 927, 933 (Fed. Cir. 1984)). “[T]he 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, 86 S. Ct. 1018, 16 L.

Ed. 2d 131 (1966).

This inquiry must consider “the record as a whole, including evidence that supports as

well as evidence that ‘fairly detracts from the substantiality of the evidence.’” Huaiyin Foreign

Trade Corp. (30) v. United States, 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Atl. Sugar, Ltd.

v. United States, 744 F.2d 1556, 1562 (Fed. Cir. 1984)). While contradictory evidence is

considered, “the substantial evidence test does not require that there be an absence of evidence

detracting from the agency’s conclusion, nor is there an absence of substantial evidence simply

because the reviewing court would have reached a different conclusion based on the same

record.” Cleo Inc. v. United States, 501 F.3d 1291, 1296 (Fed. Cir. 2007) (citing Universal

Camera Corp. v. NLRB, 340 U.S. 474, 487-88, 71 S. Ct. 456, 95 L. Ed. 456 (1951)).

5 
 To determine whether Commerce’s interpretation and application of an antidumping

statute at issue is otherwise “in accordance with law,” the court must conduct the two-step

analysis articulated by the Supreme Court in Chevron U.S.A., Inc. v. Natural Res. Def. Council,

Inc., 467 U.S. 837, 842-43, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984). Under the first step of the

Chevron analysis, the court must ascertain “whether Congress has directly spoken to the precise

question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as

well as the agency, must give effect to the unambiguously expressed intent of Congress.”

Wheatland Tube Co. v. United States, 495 F.3d 1355, 1359 (Fed. Cir. 2007) (quoting Chevron,

467 U.S. at 842-43).

The court reaches the second step of the Chevron analysis only “if the statute is silent or

ambiguous with respect to the specific issue.” Id. (quoting Chevron, 467 U.S. at 843). Under this

second step, the court must evaluate whether Commerce’s interpretation “is based on a

permissible construction of the statute.” Chevron, 467 U.S. at 843. The agency’s construction

need not be the only reasonable interpretation or even the most reasonable interpretation. Zenith

Radio Corp. v. United States, 437 U.S. 443, 450, 98 S. Ct. 2441, 57 L. Ed. 2d 337 (1978). The

court must defer to Commerce’s reasonable interpretation of a statute even if it might have

adopted another interpretation had the question first arisen in a judicial proceeding. Id. With

regards to an agency’s shift in policy:

[I]f the agency adequately explains the reasons for a reversal of
policy, change is not invalidating, since the whole point of
Chevron is to leave the discretion provided by the ambiguities of a
statute with the implementing agency. An initial agency
interpretation is not instantly carved in stone. On the contrary, the
agency . . . must consider varying interpretations and the wisdom
of its policy on a continuing basis, for example, in response to
changed factual circumstances, or a change in administrations.

6 
 That is no doubt why in Chevron itself, this Court deferred to an
agency interpretation that was a recent reversal of agency policy.

Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 981-82, 125 S. Ct.

2688, 162 L. Ed. 2d 820 (2005) (internal quotations and citations omitted).

IV
DISCUSSION

Defendant-Intervenor presents two issues in challenging Commerce’s Remand Results.4

For the reasons stated below, (1) Commerce’s grant of a CEP offset to Plaintiffs and (2)

Commerce’s treatment of Plaintiffs’ indirect selling expense (“ISE”) ratios are supported by

substantial evidence and otherwise in accordance with law.

A
Legal Framework

Commerce is responsible for determining if goods are sold or likely to be sold at less than

fair value (“LTFV”), i.e., if dumping is occurring. 19 U.S.C. §§ 1675(a), 1677(1), (34).

Antidumping duties are assessed if Commerce determines the normal value (“NV”)5 exceeds the

4
The court is mindful that similar issues were considered in Pakfood Pub. Co. v. United States, 724 F. Supp. 2d
1327 (CIT 2010), which sustained the final results of Commerce’s third administrative review concerning these
parties and these issues.

5
Normal value is the price charged for the subject merchandise in its home market, the price changed in an
appropriate third country market, or the cost of production of the subject merchandise. 19 U.S.C. §
1677b(a)(1)(B)(i)-(ii), (a)(4).

7 
export price (“EP”)6 or the constructed export price (“CEP”);7 if so, Commerce levies

antidumping duties in the amount of the difference between the two. 19 U.S.C. §§ 1675(a)(1),

1677(35)(A). In order to compare fairly, Commerce is directed to account for certain differences

between the level of trade (“LOT”) of foreign activities on which NV is based and the LOT of

U.S. transactions on which EP or CEP is based, provided that the difference in LOTs “has an

effect on price comparability.” 19 C.F.R. § 351.412(b); see 19 U.S.C. § 1677b(a)(7)(A).8

A LOT adjustment is not available if “[d]espite the fact that a person has cooperated to

the best of its ability, the data available do not provide an appropriate basis to determine . . .

whether the difference in [LOT] affects price comparability.” 19 C.F.R. § 351.412(f)(1)(iii). In

this case, a CEP offset shall be granted if Commerce determines the NV is at a more advanced

LOT than the CEP. See 19 C.F.R. § 351.412(f); 19 U.S.C. § 1677b(a)(7)(B).

In order to receive a CEP offset, the foreign producer or exporter must supply evidence

that “the functions performed by the sellers at the same [LOT] in the U.S. and foreign markets

are similar, and that different selling activities are actually performed at the allegedly different

levels of trade.” Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Rep.

6
Export price “means the price at which the subject merchandise is first sold (or agreed to be sold) before the date
of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated
purchaser in the United States or to an unaffiliated purchaser for exportation to the United States.” 19 U.S.C. §
1677a(a).

7
Constructed export price “means the price at which the subject merchandise is first sold (or agreed to be sold) in
the United States before or after the date of importation by or for the account of the producer or exporter of such
merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or
exporter.” 19 U.S.C. § 1677a(b).

8
Commerce’s regulations provide that “[t]he Secretary will determine that sales are made at different [LOTs] if they
are made at different marketing stages (or their equivalent). Substantial differences in selling activities are a
necessary, but not sufficient, condition for determining that there is a difference in the stage of marketing. Some
overlap in selling activities will not preclude a determination that two sales are at different stages of marketing.” 19
C.F.R § 351.412(c)(2).

8 
No. 103-316 (1994) (“SAA”) at 829, reprinted in 1994 U.S.C.C.A.N. 4040, 4168.9 Commerce

then must analyze “the selling functions to determine if [LOTs] identified by a party are

meaningful[;] [i]n situations where some differences in selling activities are associated with

different sales, whether that difference amounts to a difference in the [LOTs] [is] evaluated in the

context of the seller’s whole scheme of marketing.” Pakfood Pub. Co. v. United States, 724 F.

Supp. 2d 1327, 1339 (CIT 2010) (brackets in original) (quoting Antidumping Duties;

Countervailing Duties, 62 Fed. Reg. 27,296, 27,371 (May 19, 1997)). When a CEP offset is

granted, the NV is “reduced by the amount of indirect selling expenses incurred in the country in

which normal value is determined on sales of the foreign like product but not more than the

amount of such expenses for which a deduction is made under section 1677a(d)(1)(D) of this

title.” Alloy Piping Prods. v. United States, Slip Op. 2009-29, 2009 Ct. Intl. Trade LEXIS 21 at

*15-16 (CIT Apr. 14, 2009) (quoting 19 U.S.C. § 1677b(a)(7)(B)).10

9
The Uruguay Round Agreements Act approved the new World Trade Organization Agreement, and the agreements
annexed thereto, “resulting from the Uruguay Round of multilateral trade negotiations [conducted] under the
auspices of the General Agreement on Tariffs and Trade.” 19 U.S.C. § 3511(a)(1). The SAA, which was submitted
to and approved by Congress, see 19 U.S.C. § 3511(a)(2), is “an authoritative expression by the United States
concerning the interpretation and application of the Uruguay Round Agreements and [the Uruguay Round
Agreements] Act in any judicial proceeding in which a question arises concerning such interpretation or
application.” 19 U.S.C. § 3512(d).

10
“Typically, the Department allocates indirect selling expenses by multiplying the price of each sale by the ratio of
total indirect selling expenses to total sales revenue (the indirect selling expense ratio). Nevertheless, the
Department may accept other allocation methodologies provided they do not result in inaccuracies or distortions and
are based on data which can be verified.” Memorandum from Holly A. Kuga, Acting Deputy Assistant Secretary,
Group II Import Administration, to Bernard T. Carreau, fulfilling the duties of Assistant Secretary for Import
Administration, Issues and Decision Memorandum for the Antidumping Duty Administrative Review on Stainless
Steel Wire Rod from Spain - March 05, 1998 through August 31, 1999 at cmt. 2 (internal citations omitted),
appended to Stainless Steel Wire Rod from Spain; Final Results of Antidumping Duty Administrative Review, 66
Fed. Reg. 10,988 (February 21, 2001). For further discussion of CEP offsets, see Alloy Piping Prods. Inc. v. United
States, Slip Op. 2009-29, 2009 Ct. Intl. Trade LEXIS 21, *13-16 (CIT Apr. 14, 2009); Pakfood, 724 F. Supp. at
1338-40.

9 
 B
Commerce’s Grant Of A CEP Offset To The Rubicon Group’s NV Is Supported By
Substantial Evidence And Otherwise In Accordance With Law

In its redetermination, Commerce concluded that it “did not fully take into account all of

the information on the record when [it was] conducting the administrative review of the 2006-

2007 period.” Remand Results at 3.11 Unlike in the LTFV determination and in the original

proceedings in the second administrative review, in the redetermination Commerce found that

“there are substantial differences in the selling functions between sales to Canada and sales to the

United States, that it is reasonable to conclude that the sales to Canada were made at a more

advanced LOT than the CEP sales, and that a CEP offset adjustment to the Rubicon Group’s NV

is appropriate.” Id.12 Specifically, Commerce found:

[O]n their sales to Canada, the Thai packers performed the
following selling functions: sales forecasting; market research;
sales promotion; advertising; participation in trade shows;
inventory maintenance; order input/processing; freight and
delivery arrangements; visits, calls and correspondence to
customers; development of new packaging and new markets (with
customer); packing; and after-sales services.

Id.13 In contrast, Commerce found that “[t]he only selling functions that the Thai packers

performed for CEP sales were inventory maintenance, order input/processing, freight and

11
The Rubicon Group was not selected for individual examination in the first administrative review of this dumping
determination. See Certain Frozen Warmwater Shrimp From Thailand: Preliminary Results and Partial Rescission of
Antidumping Duty Administrative Review, 72 Fed. Reg. 10,669, 10,670 (March 9, 2007).

12
Commerce had previously “determined that the Rubicon Group’s aggregate volume of home market sales of the
foreign like product was insufficient to permit a proper comparison with U.S. sales of the subject merchandise.
Therefore, [Commerce] used the Rubicon Group’s sales to Canada as the basis for comparison-market sales.”
Remand Results at 2 n.2.

13
“The following companies in the Rubicon Group produced subject merchandise during the [period of review] and
are collectively referred to as the ‘Thai packers’: Andaman Seafood Co., Ltd., Chanthaburi Seafoods Co., Ltd.,
Chanthaburi Frozen Food Co., Ltd., Phatthana Seafood Co., Ltd., Phatthana Frozen Food Co., Ltd., Thailand Fishery
Cold Storage Public Co., Ltd., and Thai International Seafoods Co., Ltd.” Remand Results at 3 n.3.

10 
delivery arrangements, and packing.” Id.

Commerce notes that it based its decision on answers provided by the Rubicon Group to

Commerce’s questionnaires and additional information provided by the Rubicon Group in the

original proceedings in the second administrative review. See Remand Results at 4, 9 (“For

example . . . the Rubicon Group’s November 28, 2007, supplemental questionnaire response at

Exhibits ABC-6 - ABC-11 contains numerous emails between certain Thai packers and their

customers showing performance of various selling activities for the Thai packers’ direct sales to

Canada.”). Commerce found that structurally the Thai packers would have had no need to and

did not provide a high level of service for Rubicon Resources, an affiliated reseller located in the

United States; Commerce states that “[a]ccording to the Thai packers, Rubicon Resources was

required to purchase from [the Thai packers] because [Rubicon Resources] was created for the

purpose of marketing and distributing their seafood products in the United States,” i.e., Rubicon

Resources was created to perform such work as “sales forecasting and market research.” Id. at 4.

Commerce also argues that “because the facts have changed since the LTFV investigation,14 and

the record contains adequate evidence that the selling activities are now substantially different, it

is reasonable to draw a different conclusion in this remand redetermination.” Id. at 9.15

Ad Hoc contests Commerce’s finding that “the Thai packers performed significantly

more selling functions for Canadian sales than they provided for CEP sales to the United States

and . . . that these additional selling activities are significant.” Defendant-Intervenor’s Comments
14
Commerce notes that “since the time of the LTFV investigation, Rubicon Resources began selling to Canada via
its sales office located in the United States.” Remand Results at 9.

15
Note, however, that Commerce in the original proceedings in the second administrative review had characterized
the evidence of the record differently, asserting that the Rubicon Group had “provided very little detail concerning
the activities performed by the Thai packers for sales to Rubicon Resources and no evidence of these activities.” AD
Memo at 16 (cmt. 5).

11 
at 2. Ad Hoc does not contest that “the Thai packers performed a high level of service for the

Rubicon Group’s direct sales to Canada” but does contest the sufficiency of the record as to the

level of service provided by the Thai packers for Rubicon Resources relating to CEP sales in the

United States. Id. at 3. Ad Hoc argues Commerce’s conclusion in this regard is “not based on

record evidence” and is in fact contradicted by the findings in the LTFV investigation. Id. at 3-

7.16

Commerce’s grant of a CEP offset to the Rubicon Group is supported by substantial

evidence. Commerce determined that there was sufficient evidence in this record to conclude

“there are substantial differences in the selling functions between the sales to Canada and sales to

the United States” and that “the sales to Canada were made at a more advanced LOT than the

CEP sales.” Remand Results at 3; see 19 C.F.R. § 351.412(f).17 Commerce based this

determination on the answers provided by the Rubicon Group to Commerce’s questionnaires,18 a

structural overview of Rubicon Resources, and changed circumstances since the LTFV

16
In its comments to Commerce on the draft results of the redetermination, Ad Hoc summarizes its position, noting:
“The Rubicon Group does not now point to evidence on the record previously overlooked by [Commerce] that
demonstrates that the Thai packers did not continue to perform the same selling activities for CEP sales to Rubicon
Resources as those found in the original [LTFV] investigation; instead, the respondent emphasizes the selling
activities performed by Rubicon Resources and asserts that any evidence regarding such activities must also be
construed as evidence that the Thai packers did not perform similar activities.” Letter from Picard, Kentz & Rowe,
LLP to Gary F. Locke, Secretary of Commerce, Remand Redetermination in the Second Administrative Review of
the Antidumping Duty Order of Certain Frozen Warmwater Shrimp from Thailand: Rebuttal Comments Regarding
Draft Results of Redetermination Pursuant to Court Remand (May 21, 2010), Remand PR 3 at 4.

17
With regards to Ad Hoc’s argument that Commerce “improperly reversed the burden imposed on the parties,”
Defendant-Intervenor’s Reply at 4, Defendant correctly asserts that no such shift occurred; “[r]ather, Rubicon Group
requested a constructed export price offset and provided evidence to support this request,” Defendant’s Response to
Ad Hoc’s Remand Comments (“Defendant’s Response”) at 6.

18
Rubicon Group’s responses to Commerce’s questionnaires are record evidence that supports the determination.
See ArcelorMittal USA Inc. v. United States, Slip Op. 2008-52, 2008 Ct. Intl. Trade LEXIS 62 at *37 (May 15,
2008) (holding that Commerce had sufficient information to determine a CEP offset was warranted and was
reasonable in relying on “the extensive information [in the form of questionnaire responses] provided by defendant-
intervenors concerning their selling functions in the Korean and United States markets.”).

12 
investigation. See Remand Results at 4, 9.19 The amount of information provided in this review

is in contrast to that provided in the LTFV investigation, where the Rubicon Group reported

almost identical selling functions for both Canadian sales and sales to the Rubicon Group’s U.S.

affiliate. Memorandum from Barbara E. Tillman, Acting Deputy Assistant Secretary for Import

Administration, to James J. Jochum, Assistant Secretary for Import Administration, Issues and

Decision Memorandum for the Antidumping Duty Investigation of Certain Frozen and Canned

Warmwater Shrimp from Thailand (December 23, 2004) (“LTFV Memo”) at 20-21 (cmt. 5),

appended to Notice of Final Determination of Sales at Less Than Fair Value and Negative Final

Determination of Critical Circumstances: Certain Frozen and Canned Warmwater Shrimp From

Thailand, 69 Fed. Reg. 76,918 (December 23, 2004).20 Here, the Rubicon Group provided

sufficient information concerning its selling functions in the Canadian and United States markets

19
This is similar to the information provided to Commerce in the third administrative review where, as here,
Commerce determined to grant the Rubicon Group a CEP offset and where, as here, such grant was upheld by this
court. Pakfood, 724 F. Supp. 2d at 1344-45 (“[R]elying on the [antidumping duty] statute and the SAA, and
explaining that [Commerce’s] LOT analysis involves a comparison of the respondent’s selling functions for its
various channels of distribution, [Commerce] concluded, on the record of the third review, that the Thai packers
provided many more selling functions for Canadian sales than they provided for CEP sales, thus making the
Canadian LOT more advanced than the CEP LOT.”) (internal quotations omitted).

20
Note, however, that in the LTFV investigation, Commerce “acknowledge[d]” the “Rubicon Group provide[d] sales
forecasting/market research for sales to Canada and direct U.S. sales, but not for sales to its U.S. affiliate” but
found this difference to be insignificant. LTFV Memo at 21.

13 
for Commerce to grant a CEP offset based on the record before it.21

C
Commerce’s Treatment Of The Rubicon Group’s ISE Ratios Is Supported By Substantial
Evidence And Otherwise In Accordance With Law

Ad Hoc further contends that Commerce’s grant of a CEP offset to the Rubicon Group in

this review is not supported by substantial evidence because Commerce should have given more

weight to the Rubicon Group’s reported ISE ratios as part of the LOT analysis. See Defendant-

Intervenor’s Comments at 7-11. Ad Hoc argues that Commerce has “developed a practice of

looking at objective criteria [i.e., ISE ratios] as a check on respondent’s assertions,” which

Commerce did in the original LTFV investigation but did not do in this redetermination. Id. at 7,

10; see supra note 10.

Defendant replies there is no established practice for turning to selling expenses as part of

a LOT analysis whereas there is an established practice for focusing on selling activities, and that

while there are limited circumstances when Commerce does turn to ISE ratios as part of its

analysis (such as in the original investigation in this case), here “Commerce was able to make a

21
Defendant-Intervenor asserts that some of Commerce’s conclusions about the Thai packers’ selling activities are
belied by previous conclusions made by Commerce in the LTFV investigation and in the original proceedings in the
second administrative review. Defendant-Intervenor’s Comments at 4 (“Commerce’s acceptance of the Rubicon
Group’s assertions [concerning Thai packers’ activities regarding CEP sales] contradicts the agency’s findings in the
Final Results.”). Commerce determined that “there is no evidence on the record of the 2006-2007 administrative
review that the Thai packers are providing [sales forecasting] to Rubicon Resources.” Remand Results at 10. More
generally, Defendant correctly points out that “Commerce relies only upon record evidence adduced during the
relevant segment of proceedings.” Defendant’s Response at 6 (citing 19 U.S.C. § 1516a(b)(2); Allegheny Ludlum
Corp. v. United States, 346 F.3d 1368 (Fed. Cir. 2003); erroneously citing USCIT R. 73.3 instead of USCIT R. 72.2);
see also Pakfood, 724 F. Supp. 2d at 1343 (holding that the prior LTFV investigation and administrative review are
not controlling and the question is “whether this determination was adequately explained and supported by
substantial evidence on the record”) (emphasis added). The record in this matter encompasses the remand
proceedings as well as the original proceedings in the second administrative review; the court’s inquiry focuses on
“the record as a whole, including evidence that supports as well as evidence that fairly detracts from the
substantiality of the evidence.” Huaiyin Foreign Trade Corp., 322 F.3d at 1374 (internal citations omitted).
Commerce explained its reasoning for granting a CEP offset in this redetermination and not in the original LTFV
investigation or the original proceedings in the second administrative review, noting overlooked information in the
original proceedings in the second administrative review along with new information provided and changed
circumstances since the LTFV investigation. See Remand Results 3-4.

14 
determination based upon evidence of selling functions alone.” Defendant’s Response to Ad

Hoc’s Remand Comments (“Defendant’s Response”) at 6-9. Defendant also argues that ISE

ratios in this case are not useful in that they were not reported on the same basis as the selling

activities; therefore, “there would be no way to make a valid comparison.” Id. at 8.

Defendant is correct that it was within Commerce’s discretion to focus on selling

activities, not expenses, in a LOT analysis; this focus is supported by statute and department

practice and is affirmed by the court. See supra Part IV. A; 19 U.S.C. § 1677b(a)(7)(A) (directing

Commerce to make a LOT adjustment “if the difference in [LOT]—(i) involves the performance

of different selling activities; and (ii) is demonstrated to affect price comparability”) (emphasis

added); SAA at 829 (defining “a difference in the level of trade” as “a difference between the

actual functions performed by the sellers at the different levels of trade in the two markets . . .”);

Remand Redetermination at 5 (“Although [Commerce] does in limited circumstances consider

selling expenses in its LOT analysis, it does not consider them as a substitute for an analysis of

the selling activities themselves.”);22 Pakfood, 724 F. Supp. 2d at 1347 n.41; Alloy Piping, 2009

Ct. Intl. Trade LEXIS 21 at *20 (“If Commerce, or this Court, in reviewing an administrative

determination, were to narrow the focus of its LOT analysis to selling expenses, it could act

contrary to law and cause misleading results. Expenses do not necessarily translate directly into

22
In support, the Remand Redetermination cites Memorandum from Richard W. Moreland, Deputy Assistant
Secretary, Import Administration, Group I, to Faryar Shirzad, Assistant Secretary for Import Administration, Issues
and Decision Memo for the Antidumping Duty Investigation of Stainless Steel Bar from Italy, Final Determination
at cmt. 37, appended to Notice of Final Determination of Sales at Less than Fair Value: Stainless Steel Bar from
Italy, 67 Fed. Reg. 3,155 (January 23, 2002) and Memorandum from Stephen J. Claeys, Deputy Assistant Secretary
for Antidumping and Countervailing Duty Operations, to Ronald K. Lorentzen, Acting Assistant Secretary for
Import Administration, Issues and Decision Memorandum for the Final Results of Antidumping Duty Administrative
Review of Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan at cmt. 3, appended to Certain Stainless Steel
Butt-Weld Pipe Fittings from Taiwan: Final Results and Final Rescission in Part of Antidumping Duty
Administrative Review, 74 Fed. Reg. 1,174 (January 12, 2009).

15 
activities, nor do they capture the intensity of the activities. Moreover, expenses related to

several selling activities may fall under a single expense field.”)). Additionally, Commerce is

correct that “selling expenses do not translate directly into selling activities, nor do they always

capture the degree to which the activities are performed.” Remand Results at 5; see Defendant’s

Response at 7 (citing Alloy Piping, 2010 Ct. Intl. Trade LEXIS 21 at *20; Prodotti Alimentari

Meridionali, S.R.L. v. United States, 26 CIT 749, 754 (2002);23 SAA at 829; 19 U.S.C. §

1677b(a)(7)(A); 19 C.F.R. § 351.412(c)(2)).

Plaintiffs have failed to show that Commerce has an established practice of relying on

ISE ratios. “Although the agency has in the past used a respondent’s ISE ratios to corroborate its

analysis of selling functions, there are numerous subsequent instances where [Commerce] has

not considered a respondent’s selling expenses as part of its LOT analysis at all, and [the

petitioner] has not pointed the court to, and the court is not aware of, any precedent where, rather

than corroborating [Commerce’s] conclusions with regard to a respondent’s selling functions, the

respondent’s expenses have been used to reverse those conclusions.” Pakfood, 724 F Supp. 2d at

1347. 24 Additionally, Commerce has articulated in this redetermination why using the Rubicon

Group’s ISE ratios would be inappropriate. See Remand Results at 5; see also Defendant’s
23
The holding in Prodotti supports the holding here in that, for both cases, the petitioners did not adequately
“explain[] how the [LOT] analysis adversely affected the margin.” Prodotti, 26 CIT at 754. However, Prodotti does
not stand for the position alleged by Defendant, i.e., that this case supports the position that indirect selling expenses
should not be used in a LOT analysis. See Defendant’s Response at 7 (stating that Prodotti “express[es] concern
with purely quantitative analysis in determining whether level of trade differences exist”). The method criticized by
the court in Prodotti is the same method adopted by Commerce in this case and urged as correct by Defendant, see
id.; if anything, the dicta in Prodotti supports the use of indirect selling expenses. See Prodotti, 26 CIT at 754
(questioning “the usefulness of this quantitative analysis for any purpose,” in reference to Commerce’s comparison
of selling activities without regard to expenses).

24
Plaintiffs candidly stated in oral argument, with regards to Pakfood, that they “don’t dispute the holding in that
case . . . . The reasoning in that case points out that . . . [an ISE ratio analysis has] never been used to reverse a
determination that’s been made based on analysis of selling functions.” March 17, 2011 Oral Argument at 11:06:00-
11:06:14.

16 
Response at 8 (“Specifically, Rubicon Group’s selling activities were reported upon a market-

specific and subject-specific basis, but most of the indirect selling expenses were allocated

equally between sales to unaffiliated customers and sales to Rubicon Resources, because

Rubicon Group could not find a practicable way to report them otherwise.”).

Commerce was within its discretion to focus on selling activities to make its

determination; therefore Commerce’s treatment of the Rubicon Group’s ISE ratios is supported

by substantial evidence and in accordance with law.

V
CONCLUSION

For the above stated reasons, Commerce’s redetermination in Final Results of

Redetermination Pursuant to Court Remand is AFFIRMED.

__/s/ Evan J. Wallach____
Evan J. Wallach, Judge

Dated: April 26, 2011
New York, New York

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