Slip Op. 06-27
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
:
LARRY CABANA, :
:
Plaintiff, :
:
v. : Court No. 04-00634
:
UNITED STATES SECRETARY OF AGRICULTURE, :
:
Defendant. :
________________________________________:
[Plaintiff’s motion for judgement upon the agency record is denied.
The United States Department of Agriculture’s negative
determination is affirmed. Case dismissed.]
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP
(William F. Marshall) for Larry Cabana, plaintiff.
Peter D. Keisler, Assistant Attorney General, David M. Cohen,
Director, Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (David S. Silverbrand); of counsel: Jeffrey Kahn, Office of
the General Counsel, United States Department of Agriculture, for
the United States Secretary of Agriculture, defendant.
February 28, 2006
OPINION
TSOUCALAS, Senior Judge: Plaintiff, Larry Cabana (“Cabana”)
moves pursuant to USCIT R. 56.1 for judgment upon the agency
record. Cabana contends that the United States Secretary of
Agriculture (“Secretary” or “Department”) erred in determining that
he was ineligible for certification to receive trade adjustment
Court No. 04-00634 Page 2
assistance (“TAA”) benefits. Specifically, Cabana asserts that he
is eligible for TAA certification because his net fishing income in
2002 was less than his 2001 net fishing income. The Department
responds that 19 U.S.C. § 2401e (c) grants the power to determine
“net farm income” to the Secretary, and the Secretary has
determined that Cabana’s “net farm income” did not decrease in
2002.
JURISDICTION
The Court has jurisdiction over this matter pursuant to 19
U.S.C. § 2395 (2000) amended by 19 U.S.C. § 2395 (Supp. II 2002).1
STANDARD OF REVIEW
The Court will uphold the Secretary’s determination unless it
is unsupported by substantial evidence on the record, or otherwise
not in accordance with law. See 19 U.S.C. § 2395(b); see also
1
Section 284(a) of the Trade Act of 1974 was amended,
effective August 6, 2002, and provided this Court with jurisdiction
over trade adjustment assistance matters brought by agricultural
commodity producers. See Trade Act of 2002, Pub. L. No. 107-210,
§ 142, 116 Stat. 953 (2002). The statute states that “an
agricultural commodity producer (as defined in section 2401(2) of
this title) aggrieved by a determination of the Secretary of
Agriculture under section 2401b . . . may, within sixty days after
notice of such determination, commence a civil action in the United
States Court of International Trade for review of such
determination.” 19 U.S.C. § 2395(a). Accordingly, the Court
“shall have jurisdiction to affirm the action of the Secretary of
Labor, the Secretary of Commerce, or the Secretary of Agriculture,
as the case may be, or to set such action aside, in whole or in
part.” 19 U.S.C. § 2395(c).
Court No. 04-00634 Page 3
Steen v. United States, 29 CIT ___, ___, 395 F. Supp. 2d 1345, 1347
(2005). Substantial evidence is “more than a mere scintilla. It
means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.” Universal Camera Corp. v. NLRB,
340 U.S. 474, 477 (1951) (quoting Consol. Edison Co. v. NLRB, 305
U.S. 197, 229 (1938)). Substantial evidence “is something less
than the weight of the evidence, and the possibility of drawing two
inconsistent conclusions from the [same] evidence does not prevent
an administrative agency’s finding from being supported by
substantial evidence.” Consolo v. Fed. Mar. Comm’n, 383 U.S. 607,
620 (1966) (citations omitted).
To determine whether the Secretary’s interpretation and
application of 19 U.S.C. §§ 2401-2401g is “in accordance with law,”
the Court must undertake the two-step analysis prescribed by
Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S.
837 (1984). Under the first step, the Court reviews the
Department’s construction of a statutory provision to determine
whether “Congress has directly spoken to the precise question at
issue.” Id. at 842. “To ascertain whether Congress had an
intention on the precise question at issue, [the Court] employ[s]
the ‘traditional tools of statutory construction.’” Timex V.I.,
Inc. v. United States, 157 F.3d 879, 882 (Fed. Cir. 1998) (citing
Chevron, 467 U.S. at 843 n.9). “The first and foremost ‘tool’ to
Court No. 04-00634 Page 4
be used is the statute’s text, giving it its plain meaning.
Because a statute’s text is Congress’ final expression of its
intent, if the text answers the question, that is the end of the
matter.” Id. (citations omitted). Beyond the statute’s text, the
tools of statutory construction “include the statute's structure,
canons of statutory construction, and legislative history.” Id.
(citations omitted); but see Floral Trade Council v. United States,
23 CIT 20, 22 n.6, 41 F. Supp. 2d 319, 323 n.6 (1999) (noting that
“not all rules of statutory construction rise to the level of a
canon”) (citation omitted).
If, after employing the first prong of Chevron, the Court
determines that the statute is silent or ambiguous with respect to
the specific issue, the question for the Court becomes whether the
Department's construction of the statute is permissible. See
Chevron, 467 U.S. at 843. Essentially, this is an inquiry into the
reasonableness of the Department's interpretation. See Fujitsu
Gen. Ltd. v. United States, 88 F.3d 1034, 1038 (Fed. Cir. 1996).
Provided the Department has acted rationally, the Court may not
substitute its judgment for the agency's. See Koyo Seiko Co. v.
United States, 36 F.3d 1565, 1570 (Fed. Cir. 1994) (holding that “a
court must defer to an agency's reasonable interpretation of a
statute even if the court might have preferred another”); see also
IPSCO, Inc. v. United States, 965 F.2d 1056, 1061 (Fed. Cir. 1992).
Court No. 04-00634 Page 5
The “Court will sustain the determination if it is reasonable and
supported by the record as a whole, including whatever fairly
detracts from the substantiality of the evidence.” Negev
Phosphates, Ltd. v. United States, 12 CIT 1074, 1077, 699 F. Supp.
938, 942 (1988) (citations omitted).
BACKGROUND
On October 28, 2003, the United States Department of
Agriculture certified a TAA petition filed by a group of salmon
fishermen from Alaska and the Puget Sound Salmon Commission of
Seattle, Washington. See Trade Adjustment Assistance for Farmers,
68 Fed. Reg. 62,766 (Nov. 6, 2003). This action involves the
November 5, 2004, denial of Cabana’s application to receive TAA
benefits based on the aforementioned certification. See Mem. Law
Supp. Pl.’s Mot. J. Upon Agency R., Rule 56.1 (“Cabana’s Mem.”) at
1; Def.’s Resp. Pl.’s Mot. J. Upon Agency R. (“Secretary’s Resp.”)
at 5. On December 14, 2004, the Court received Cabana’s letter
seeking judicial review of the Secretary’s negative determination.
See Administrative Record (“Admin. R.”) at 25. Subsequently, the
Secretary moved to dismiss for failure to state a claim, which the
Court denied in Cabana v. United States Sec’y of Agric., (“Cabana
I”) Slip Op. 05-93 (Aug. 1, 2005), of which familiarity is
presumed.
Court No. 04-00634 Page 6
Cabana concedes that his original request was denied because
his application for certification showed that his net farm income
in 2002 was more than that of 2001. See Cabana I, Slip Op. 05-93
at 4. Cabana contends that 19 U.S.C. § 2401e does not define the
term “net farm income.” See Cabana’s Mem. at 5-6. Cabana asserts,
however, that the Secretary’s definition of “net farm income” in 7
C.F.R. § 1580.102 is contrary to the statutory language. See id.
at 6. Cabana argues that if Congress intended to base eligibility
for TAA on income, then it would not have included the qualifying
term “farm income” in 19 U.S.C. § 2401e(a)(1)(C). See id. Cabana
maintains that the statutory language indicates Congress intended
to grant TAA benefits to agricultural producers whose income from
farming decreased because of competing imported agricultural
commodities. See id. at 3. Cabana states that although his total
adjusted gross income increased in 2002, his fishing income in 2001
and 2002 was $31,663 and $31,195, respectively. See id. at 6
(emphasis added). Cabana asserts that the increase in his adjusted
gross income in 2002 was a result of an increase in non-fishing
business income. See id. at 5. Therefore, Cabana argues that he
satisfies the decreased income requirement in 19 U.S.C. § 2401e and
thus is entitled to TAA benefits. See id. at 6.
The Secretary responds that its interpretation and application
of 19 U.S.C. § 2401e is in accordance with law, and is subject to
Court No. 04-00634 Page 7
the standard of review set forth in Chevron. See Secretary’s Resp.
at 7. Citing Chevron, the Secretary further argues that its
regulations define “net farm” and “net fishing” income pursuant to
19 U.S.C. § 2401e. See id. at 16. The Secretary stresses that its
regulations base net farming and fishing income on reported income
to the Internal Revenue Service (“IRS”). See id. at 14 (quoting 7
C.F.R. § 1580.102). Cabana’s IRS reported income indicates a
higher income in 2002 than in 2001. See Admin. R. at 17-18. As
such, the Secretary concludes that its determination that Cabana
does not qualify for TAA benefits is supported by substantial
evidence on the record. See Secretary’s Resp. at 17-18.
DISCUSSION
To receive TAA benefits, an applicant engaged in the business
of farming or fishing must report that “net farm income (as
determined by the Secretary [of Agriculture]) for the most recent
year is less than the producer’s net farm income for the latest
year in which no adjustment assistance was received by the producer
. . . .” 19 U.S.C. § 2401e(a)(1)(C) (Supp. II 2002). When
Congress has “explicitly left a gap for the agency to fill,” the
agency’s own regulations are “given controlling weight unless they
are arbitrary, capricious, or manifestly contrary to the statute.”
Chevron, 467 U.S. at 843-44. As Congress has made it clear in 19
U.S.C. § 2401e (a)(1)(C) that “net farm income” shall be determined
Court No. 04-00634 Page 8
by the Secretary, the statutory language precludes any need to go
beyond the plain meaning of the statute in order to discern
Congressional intent. See Steen, 29 CIT at ___, 395 F. Supp. 2d at
1349-50.
“Net farm” and “net fishing” incomes are used by the Secretary
to identify producers who have been harmed by import competition
for the purpose of determining TAA applications. See 19 U.S.C. §
2401e(a)(1). The Secretary has defined “net farm” and “net
fishing” income as follows in its regulations:
Net farm income means net farm profit or loss,
excluding payments under this part, reported
to the Internal Revenue Service for the tax
year that most closely corresponds with the
marketing year under consideration.
Net fishing income means net profit or loss,
excluding payments under this part, reported
to the Internal Revenue Service for the tax
year that most closely corresponds with the
marketing year under consideration.
7 C.F.R. § 1580.102 (Nov. 1, 2004).2 The Secretary implemented 19
U.S.C. § 2401e in accordance with Congressional intent. See
2
The Secretary enacted an amended version of 7 C.F.R. §
1580.102 on November 1, 2004. See Trade Adjustment Assistance for
Farmers, 69 Fed. Reg. 63,317 (Nov. 1, 2004). The amended
regulation applies here because the Secretary denied Cabana’s
application on November 5, 2004, and the Court received Cabana’s
letter seeking judicial review of the Secretary’s negative
determination on December 14, 2004. See Admin. R. at 22 & 25.
Court No. 04-00634 Page 9
generally Steen, 29 CIT at ___, 395 F. Supp. 2d at 1349-51
(discussing the legislative history of 19 U.S.C. §§ 2401-2401g).
“By defining ‘net farm income’ and ‘net fishing income’ as income
derived from both TAA-eligible and TAA-ineligible products, the
agency ensured that Congressional intent was realized —— that
relief would be limited to agricultural producers most in need of
assistance.” Id. at ___, 395 F. Supp. 2d at 1351. The Secretary
states that it denied TAA certification to Cabana because Cabana’s
“net fishing” income rose between 2001 and 2002, as Cabana himself
reported in Schedule C of his IRS tax returns. See Secretary’s
Resp. at 17-18; Admin. R. at 17-18.
Cabana argues that he satisfied the income requirements of 19
U.S.C. § 2401e as his “net fishing” income was lower in 2002 than
in 2001. See Cabana’s Mem. at 6. As support, Cabana points to a
letter drafted by his accountant. See Admin. R. at 26. The
letter, however, was dated November 19, 2004, more than thirty days
after the decision was made by the Department on October 5, 2004.
See Admin. R. at 22 & 26. The timing of the letter’s submission to
the Department does not alter the fact that the Secretary has the
Congressionally delegated authority to define the term “net farm
Court No. 04-00634 Page 10
income.”3 See 19 U.S.C. § 2401e. The Department’s definition of
“net farm” and “net fishing” income relies on information reported
to the IRS. See 7 C.F.R. § 1580.102. Cabana’s 2002 “net fishing”
income as declared on Schedule C of his IRS 1040 form was $37,331,
whereas his IRS declared fishing income for 2001 was $35,759,
almost two thousand dollars lower. See Admin. R. at 17-18. Cabana
did not have a “net fishing” income decline between 2001 and 2002.
See id. Thus, the Secretary correctly determined that Cabana is
ineligible to receive TAA benefits.
CONCLUSION
The Court finds that the Secretary’s determination to deny
Cabana’s application for certification for TAA benefits is
supported by substantial evidence on the record and is otherwise in
3
During oral arguments, Cabana stated that Congress had
intended TAA benefits to be remedial in nature. As such, Cabana
argues that discounting the letter simply due to its submission
date would not conform to Congress’s remedial aim. However, the
Secretary has not argued that the letter should be discounted
simply due to its date of submission. Rather, credence was not
given to the letter since it contained no information whatsoever as
to what Cabana viewed as being non-fishing income. Additionally,
the Court notes that the record is absent of any explanation as to
what Cabana meant by non-fishing income. Furthermore, the
Secretary has the authority to calculate net farm income. See 19
U.S.C. § 2401e. The Secretary relies on IRS reported information
when calculating net farm and net fishing income. See 7 C.F.R. §
1580.102.
Court No. 04-00634 Page 11
accordance with law. Accordingly, Cabana’s motion for judgement
upon the agency record is denied and the Secretary’s negative
determination is affirmed. Judgment will be entered accordingly.
/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: February 28, 2006
New York, New York