Wooten v. United States, Secretary of Agriculture

Slip Op. 06-101

UNITED STATES COURT OF INTERNATIONAL TRADE

____________________________________
:
HENRY H. WOOTEN, III :
:
Plaintiff, :
: Before: WALLACH, Judge
v. : Court No.: 05-00208
:
UNITED STATES, SECRETARY OF :
AGRICULTURE, :
:
Defendant. :
____________________________________:

[Defendant’s Motion to Dismiss is Granted and Plaintiff’s Motion for Summary Judgment is
Denied.]

Dated: July 6, 2006

Miller & Chevalier Chartered, (Daniel P. Wendt, and Elizabeth Puskar) for Plaintiff.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; Patricia M. McCarthy,
Assistant Director; Delfa Castillo, Trial Attorney, U.S. Department of Justice, Civil Division,
Commercial Litigation Branch; and Jeffrey Kahn, Attorney-Advisor, Office of the General
Counsel, International Affairs & Commodity Programs Division, U.S. Department of
Agriculture, of Counsel, for Defendant.

OPINION

Wallach, Judge:

I
Introduction

This matter comes before the court on Defendant’s Motion to Dismiss (“Defendant’s

Motion”) filed on January 18, 2006, and Plaintiff’s Motion for Judgment Upon Agency Record

(“Plaintiff’s Motion”) filed on February 22, 2006. Plaintiff has failed to establish the facts
necessary to warrant his eligibility for trade adjustment assistance benefits. Defendant’s Motion

is granted and Plaintiff’s Motion is denied. This court has jurisdiction pursuant to 19 U.S.C. §

2395 (2004).

II
Background

On November 25, 2003, the Foreign Agriculture Service (“FAS”) approved the Catfish

Farmers of America’s petition for certification for eligibility for trade adjustment assistance for

catfish producers in the states of Alabama, Arkansas, Florida, Georgia, Idaho, Illinois, Kansas,

Kentucky, Louisiana, Mississippi, Missouri, Nevada, North Carolina, Ohio, Oklahoma, South

Carolina, Texas, and Utah. See Trade Adjustment Assistance for Farmers, 68 Fed. Reg. 66,072

(Nov. 25, 2003). On January 23, 2004, Plaintiff Henry Wooten, a catfish farmer from Arkansas,

submitted his application for TAA benefits and also attended the requisite training required under

the TAA program. Plaintiff’s Opposition at 3. The U.S. Department of Agriculture (“Defendant”

or “Agriculture”) denied Plaintiff’s application for trade adjustment assistance (“TAA”) because

his net fishing income did not decline from 2001 to 2002. Specifically, Agriculture found that

since Plaintiff’s fishing enterprise lost less money in 2002 than in 2001 he was ineligible for

TAA benefits. Defendant’s Motion at 6-7. Plaintiff filed a Summons and Complaint challenging

Defendant’s determination.

III
Arguments

Defendant argues that Plaintiff has failed to state a claim upon which relief may be

granted and that this matter should be dismissed. Defendant says that Plaintiff has not alleged

facts sufficient to warrant eligibility for TAA benefits because Plaintiff’s net fishing income did

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not decline in 2002 as compared to 2001 as required by the statute.

Plaintiff argues that Agriculture’s regulations are arbitrary and capricious because they do

not give discretion to Agriculture to distribute TAA benefits to those fisherman that are

experiencing economic hardship although they did not suffer a decline in net fishing income.

Plaintiff also claims that Agriculture has unreasonably defined net farm income to include net

farm loss contrary to Congressional intent.

IV
Applicable Legal Standard

A
Motion to Dismiss

When reviewing a motion to dismiss, a court must decide whether all factual allegations

taken as true and construed in the light most favorable to the plaintiff are sufficient to state a

legal claim. See Degussa Canada Ltd. v. United States, 889 F. Supp. 1543, 1545 (CIT 1995)

(citing Halperin Shipping Co., v. United States, 13 CIT 465, 466 (1989)). Dismissal of a

complaint is appropriate when it appears that plaintiff can prove no set of facts which would

entitle him to legal or equitable relief. See Constant v. Advanced Micro-Devices, Inc., 848 F.2d

1560, 1565 (Fed. Cir. 1988) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

B
Motion for Summary Judgment

This court has jurisdiction to affirm or remand the actions of the Secretary of Agriculture

“in whole or in part.” 19 U.S.C. § 2395(c) (2004). The Department of Agriculture’s

determination regarding certification of eligibility for TAA will be upheld if it is supported by

substantial evidence and otherwise in accordance with law. 19 U.S.C. § 2395(b); see Van Trinh

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v. U.S. Sec’y of Agric., 395 F. Supp. 2d 1259, 1265 (CIT 2005); see also Former Employees of

Swiss Indus. Abrasives v. United States, 17 CIT 945, 947, 830 F. Supp. 637, 639 (1993).

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 Corp. v.

NLRB, 340 U.S. 474, 477 (1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229

(1938)). Courts have found that 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 (1966) (citations omitted). The

scope of review of the agency’s actions is limited to the administrative record. Defenders of

Wildlife v. Hogarth, 25 CIT 1309, 1315, 177 F. Supp. 2d 1336, 1342-43 (2001). In addition, the

Administrative Procedures Act (“APA”) provides that agency determinations shall be held

invalid if they are arbitrary, capricious, an abuse of discretion, or otherwise not in accordance

with law. 5 U.S.C. § 706 (2004).

V
Discussion

A
Plaintiff Has Not Stated a Claim Upon Which Relief May be Granted

Defendant claims that since Plaintiff did not have a decrease in net farm income from

2001 to 2002, Plaintiff’s Amended Complaint does not allege facts sufficient to warrant

eligibility for TAA benefits and consequently fails to state a claim upon which relief may be

granted. Defendant’s Motion at 9. Specifically, Defendant argues that Plaintiff never submitted

verifiable net fishing income during the application review period and only provided the requisite

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documentation after the court granted his motion to supplement the record. Id. at 10. Defendant

further asserts that Plaintiff’s income documentation indicates that he did not suffer a larger loss

in 2002 than he did in 2001, and accordingly failed to qualify for TAA benefits. Id. at 10-11;

Defendant’s Reply at 1. Since, Plaintiff failed to provide proof of his qualification for TAA cash

payments, Defendant argues that Plaintiff’s Amended Complaint does not state a claim upon

which relief can be granted and thus should be dismissed. Id. at 15. Furthermore, Defendant

requests that if the court does not grant its motion to dismiss, that it affirm Agriculture’s

determination denying Plaintiff’s application for TAA benefits. Defendant’s Response at 1.

Plaintiff asserts that although he suffered a larger loss in fishing income in 2001 as

compared to 2002, he is still enduring economic hardship and should qualify for TAA benefits.

Plaintiff’s Motion at 1-2. Plaintiff admits, however, that “under Agriculture’s regulations

implementing the TAA for Farmers program and the current administrative record, as

supplemented, Mr. Wooten cannot show that his net farm income (as defined by regulation to

included net farm losses) in 2002 was less than his net farm income in 2001.” Id. at 5.

The TAA statute at 19 U.S.C. § 2401e(a)(1) articulates the basic qualifying requirements

which must be met by petitioners prior to receiving TAA benefits. One of the primary conditions

for the grant of TAA is that “[t]he producer’s net farm income (as determined by the Secretary)

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 under this part.” 19 U.S.C. § 2401e(a)(1)(C).

Agriculture’s regulations define “net fishing income” as “net profit or loss, excluding payments .

. . 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. Agriculture’s regulations require a

5
producer to submit a certification that “net farm or fishing income was less than during the

producer’s pre-adjustment year.” 7 C.F.R. § 1580.301(e)(4).

In this instance, Plaintiff originally failed to provide the required certification but was

permitted to supplement the record during the course of this litigation. See Wooten v. United

States Sec’y of Agric., Slip Op. 06-14, 414 F. Supp. 2d 1313 (CIT 2006). As Defendant

correctly asserts, Plaintiff, despite that supplementation, still fails to demonstrate that his income

declined between 2001 and 2002. Plaintiff himself admits that he cannot demonstrate that his net

fishing income (using the current definition to include net fishing losses) was less in 2002 than in

2001. Plaintiff’s Response at 5. In fact, his reported net loss was ($86,470) in 2002, as compared

to a net loss in 2001 of ($125,671), an actual increase in income of $39,201. Plaintiff’s Response

at 2. Taking all the allegations in Plaintiff’s Amended Complaint in the light most favorable to

him, he continues to be ineligible for TAA cash benefits pursuant to 19 U.S.C. § 2401e because

there was no decrease in income between 2001 and 2002. Degussa Canada Ltd., 889 F. Supp. at

1545. As a result, unless Defendant’s application of the statute is not in accordance with law,

this matter must be dismissed for failure to state a claim upon which relief may be granted.

B
The Department of Agriculture’s Definition of Net Fishing Income is in Accordance with
Law

Plaintiff argues that Agriculture’s definition of net farm income is arbitrary, capricious,

and contrary to Congressional intent. Plaintiff’s Motion at 1, 5. Plaintiff asserts that under

Agriculture’s current definition of net farm income, his income in 2002 is “deemed to be greater”

than his income in 2001 because “his net farm losses were smaller in 2002 than in 2001.” Id. at 6.

Plaintiff contends that Agriculture should set net fishing income to zero in those cases when a

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fisherman has net losses in consecutive years, and also waive the requirement that he must certify

that his net fishing income was less than during the pre-adjustment year. Id. at 6-7. According to

Plaintiff, failure to modify the definition and certification requirements is contrary to Congress’

intent to provide TAA allowances to farmers in adversely affected industries. Id. at 7.

Defendant argues that given the standard of review articulated by the Supreme Court in

Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984), and Congress’

specific grant of authority to Agriculture to define net fishing income, Agriculture’s regulation

and its determinations made thereof are in accordance with law. Defendant’s Response at 5-6.

Defendant further counters that if Plaintiff’s interpretation of net fishing income is adopted by

Agriculture, then it would actually preclude him from receiving benefits because if a producer’s

“income was deemed zero in both years, there would be no reduction in income between the two

years.” Defendant’s Reply at 5-6 (emphasis in original). Finally, Defendant asserts that because

Congress left the definition of net fishing income solely to the discretion of the Secretary of

Agriculture, its decision to include net profit or loss in the definition is also in accordance with

Congressional intent. Defendant’s Response at 16-17.

In determining whether or not an agency properly interpreted and implemented a statute,

courts undertake the two-step analysis prescribed by Chevron. The first step in this analysis is

whether Congress has directly spoken on the issue in the text of the statute applying the canons

of statutory construction and examining the legislative history accompanying the statute. Id. at

842; see also Floral Trade Council v. United States, 23 CIT 20, 22 n. 6, 41 F. Supp. 2d 319, 323

n. 6 (1999). If the statute is silent or ambiguous, then the court takes the second step and

examines whether or not the agency’s interpretation is permissible. Id. at 843. A permissible

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interpretation of the statute is one that is reasonable and rational. See Fujitsu Gen. Ltd. v. United

States, 88 F.3d 1034, 1038 (Fed. Cir. 1996); see also Steen v. United States, 395 F. Supp. 2d

1345, 1349 (CIT 2005). However, the court may not substitute its judgment for that of 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”).

In this matter, Agriculture’s definition of “net fishing income” is reasonable and

Congressional intent is clear. Congress clearly stated in 19 U.S.C. § 2401e(a)(1)(C) that “net

farm income” shall be determined by the Secretary, precluding any need to go beyond the plain

meaning of the statute to discern Congressional intent. See Steen 395 F. Supp.2d at 1349-50.

Congress intended to give Defendant considerable discretion on this issue; that discretion has

been reasonably and rationally exercised. The terms “net farm” and “net fishing” income are

used by the Secretary of Agriculture to identify those producers who have been harmed by import

competition for the specific purpose of determining who is eligible for TAA benefits. See 19

U.S.C. § 2401e(a)(1). The Secretary 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 (2004). The definitions are in accordance with Congressional intent. See

8
generally Steen, 395 F. Supp.2d at 1349-51 (discussing the legislative history of 19 U.S.C. §§

2401a - 2401e).

This court has stated in Viet Do v. U.S. Sec’y of Ag., 427 F. Supp. 2d 1224 (CIT 2006),

Cabana v. U.S. Sec’y of Agric., 427 F. Supp. 2d 1232 (CIT 2006), and Steen v. United States,

395 F. Supp.2d 1345 (CIT 2005), that the definition of “net farm” and “net fishing” income is in

accordance with the statutory language of 19 U.S.C. § 2401e. Plaintiff here urges an

interpretation of the statute that would define “net fishing income” to not include net fishing

losses (and instead set “net fishing income” to zero in instances where a fisherman has net losses.

Plaintiff’s Motion at 6. Agriculture’s regulations permissibly construe the statutory language

granting the Secretary the authority to define “net farm” and “net fishing” income and were

promulgated following formal notice and comment procedures.1 See Chevron 467 U.S. at 843;

1
The Foreign Agricultural Service (“FAS”) proposed “Part 1580 - Trade Adjustment
Assistance for Farmers,” a rule to implement the Chapter 6 of Title II of the Trade Act of 1974,
as amended by the Trade Act of 2002. Trade Adjustment Assistance for Farmers, 68 Fed. Reg.
39,478 (July 2, 2003). Under the proposed rule, a group of agricultural commodity producers
could petition the FAS for TAA. Id. at 39,479. If the FAS Administrator determined that “the
national average price in the most recent marketing year for the commodity produced by the
group is equal to or less than 80 percent of the average of the national average prices in the
preceding 5 marketing years and [whether] increases in imports of that commodity contributed
importantly to the decline in price,” it would certify the group as eligible for TAA. Id. Upon
certification, individual producers of the certified commodity could petition the FSA to receive
basic information and technical assistance, and subject to additional eligibility requirements, cash
payments. Id. The additional eligibility requirements included a “certification that [the individual
producers’] net farm income is less than that for the latest year in which no adjustment assistance
was received.” Id. at 39,481 (quoting proposed 7 C.F.R. § 1580.301(e)(4)).

After inviting comments on the proposed rule, the final rule addressed respondents’ comment
regarding the net income requirement. Trade Adjustment Assistance for Farmers, 68 Fed. Reg.
50,048 (August 20, 2003). Three respondents were concerned that “producers managing
diversified farms might not qualify for adjustment assistance payments due to higher earnings
from sales of other commodities.” Id. at 50,049. The FAS countered that TAA's purpose was
limited to providing assistance to those producers facing “economic hardship.” Id. Furthermore,

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see Steen, 395 F. Supp.2d at 1350.

In this case, although the application of the regulation to Mr. Wooten results in denial of

TAA benefits to Mr. Wooten, the determination itself does not violate the applicable statute or

regulations. As a result, Defendant’s determination that Plaintiff does not qualify to TAA

benefits pursuant to 19 U.S.C. § 2401e is in accordance with law and supported by substantial

evidence.

V

Conclusion

For the reasons stated above, Defendant’s Motion is granted and Plaintiff’s Motion is

denied.

____/s/ Evan J. Wallach___
Evan J. Wallach, Judge

Date: July 6, 2006
New York, New York

the FAS emphasized that the TAA payments would be excluded from consideration when it
determined whether a producer was eligible in subsequent qualifying years. Id. After
consideration of respondents’ comments, FAS continued to define net farm and fishing income
as overall income, that is, the income derived from all of an individual producer’s catch. To
date, the FAS has not published an amendment that changes this definition. See, e.g., Trade
Adjustment Assistance for Farmers, 68 Fed. Reg. 62,731 (November 6, 2003).

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