UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-146

Before the Court in Southern Cross Seafoods, LLC v. United States and National Marine Fisheries Service, Court No. 22-00299, Slip Op. 23-146 (October 5, 2023) was Plaintiff’s motion to supplement the administrative record for certain document categories that plaintiff alleges are missing from the administrative record. The issue turned on whether the absence of certain documents from the administrative record rendered the administrative record before the court incomplete. The Government opposed plaintiff’s motion because the National Marine Fisheries Service (“NMFS”) did not directly or indirectly rely on the categories of documents requested by plaintiff, the documents requested were not in possession of NMFS and they were pre-decisional or privileged and not properly part of the administrative record.

Plaintiff’s motion proceeded defendants’ motion to dismiss plaintiff’s complaint concerning the denial of its preapproval application for imports of Patagonian toothfish harvested from the Food and Agricultural Organization of the United Nations Statistical Subarea 48.3 in the South Georgia fishery in the Atlantic Ocean north of Antarctica. Plaintiff sought declaratory judgment against the agency’s denial of future applications for preapproval of its imports of toothfish from this region due to a lack of a conservation measure in force for the Convention on the Conservation of Antarctic Marine Living Resource. Plaintiff also challenged the actions of the NMFS under the Administrative Procedure Act (“APA”), 5 U.S.C. §706(2). In their motion to dismiss, defendants argued that plaintiff’s action did not arise out of a law providing for an “embargo” or other “quantitative restriction” under 28 U.S.C. §1581(i) and that, the Court lacks subject matter jurisdiction because the district courts have exclusive jurisdiction pursuant to 16 U.S.C. §2440.

The court’s review of the supplementation of the record was pursuant to the Administrative Procedure Act, 5 U.S.C. §706 which states that a court “review[s] the whole record or those parts of it cited by a party . . . .” The “whole record” for an APA action under 5 U.S.C. §706 has been defined by the Supreme court as “the full administrative record that was before the Secretary at the time he made his decision.” Id. at 3-4. . This includes “all materials that might have influenced the agency’s decision. . . .” Id. at 4. Moreover, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) has identified three narrow instances in which supplementation of an administrative record may be appropriate before reaching the merits of an APA challenge to agency action: “(1) if the agency ‘deliberately or negligently excluded documents that may have been adverse to its decision,’ (2) if background information was needed ‘to determine whether the agency considered all the relevant factors,’ or (3) if the ‘agency failed to explain administrative action so as to frustrate judicial review[.]’” Id.

The CIT’s standard for this motion to complete the administrative record was that “a party must do more than simply allege that the record is incomplete. Rather, a party must provide the [c]ourt with reasonable, non-speculative grounds to believe that materials considered in the decision-making process are not included in the record.” Id. at 6.

Plaintiff’s position was that the court should order defendants to complete the record the administrative record did not include certain documents that directly or indirectly needed to be considered by NMFS decision makers when it decided to deny Southern Cross’s application for pre-approval to import frozen toothfish. Plaintiff asserted that the supplemental requested documents referenced by documents already included in the administrative record and thus the NMFS considered them directly or indirectly by the NMFS in its decision. On the other hand, defendants argued that plaintiff’s position would create a situation in which an administrative record would never be considered complete. Defendants argued that they included documents that formed part of the administrative record and that all other documents requested by plaintiff were either (1) documents not directly or indirectly relied on by NMFS in its decision making, (2) documents not in possession of NMFS, or (3) pre-decisional or privileged documents that would not properly form part of the administrative record.

For each of the document categories (six categories in total), the court examined whether plaintiff established “reasonable, non-speculative grounds to believe that materials considered in the decision-making process [were] not included in the record.” Id. at 8. In its conclusion, the court denied plaintiff’s motion to supplement the record as to five of the six categories of documents offered by plaintiff and ordered defendants to file an explanation of their position concerning Document Category 2.

The court denied plaintiff’s motion with respect to Document Category 1, which consisted of one single document requested by plaintiff, because the court deemed this document to be satisfied by defendants’ response to plaintiff’s motion to supplement. Document Categories 3, 4, and 6 related to a letter of December 17, 2021 from Alexa Cole of NOAA to Constance Arvis of the U.S. Department of State, stating that “NMFS has determined that the importation of [toothfish from subarea 48.3] . . . would be prohibited . . . until such time that CCAMLR adopts a conservation measure to set catch limits for that area.” Id. at 11-12. Category 3 included the documents or notes leading up to the email from Alex Cole to Constance Arvis, which which plaintiff alleged to be directly or indirectly considered by NMFS decision makers in its denial of Southern Cross’s application. Document Category 4, consisting of “any communications between the State Department, the NMFS, and other CCAMLR member Commissioners informing them of the NMFS decision to prohibit the importation of toothfish caught in Subarea 48.3. Category 5, concerned “initial exchanges between representatives of the State Department and other delegations (namely the European Union and the U.K.) regarding fishing in Subarea 48.3, which defendants alleged they had no possession over. Lastly, Category 6 consisted of communications from non-governmental organizations and other governments regarding whether the importation of tooth fish from Subarea 48.3.

In sum, the court concluded that defendants’ supplemental attachments in the form of the Declaration of Janet Coit and documents attached as supplements to the administrative record fulfill plaintiff’s motion to supplement the administrative record with respect to Document Categories 1 and 6; that Defendants provided adequate explanation for the absence of documents in the administrative record comprising Categories 3 through 5; and that Plaintiff has not demonstrated that the agency acted in bad faith and plaintiff has not demonstrated improper behavior in the agency’s compilation of an administrative record.

Document Category 2 consisted of two types of documents: (1) any information or supporting communications to indicate how the NMFS obtained the outside legal opinions included in the administrative record” and (2) “any information or supporting communications identifying who authored the legal opinion titled ‘Legal Opinion in relation to the toothfish fishing licenses granted by the Government of South Georgia for the 2022 season in the 48.3 area of CCMALR.’” With respect to the first type, defendants argued that such legal opinions were unsolicited and thus no reasonable basis existed to conclude that those were relied upon by NMFS decision makers making these documents improper for the administrative record. With respect to the second type defendants submit an additional document consistent with plaintiff’s request. The court found that defendants had not sufficiently explained the inconsistency of the NMFS having in fact included the Legal Opinion at issue in the administrative record while alleging that it did not consider directly or indirectly any outside legal opinions in rendering its decision. Additionally, the court found defendants have not sufficiently explained why the “unsolicited” nature of the external legal opinions necessarily equated to NMFS disregarding the unsolicited legal opinions in its decision making. Thus, the court ordered defendants to explain the inconsistencies.

Slip Op. 23-156

Before the Court in Am. Mfrs. of Multilayered Wood Flooring v. United States, Court No. 20-03948, Slip Op. 23-156 (October 30, 2023) was United State Department of Commerce’s final results of redetermination pursuant to the court’s remand order. Plaintiff American Manufacturers of Multilayered Wood Flooring and Defendant-Intervenor Jiangsu Guyu International Trading Co., Ltd. (the only mandatory respondent that was a party to this action) each filed comments indicating that they do not contest the Final Results of Redetermination Pursuant to Court Remand (ECF No. 81-1). No other party filed comments and the judgment was entered sustaining the remand results.

Previously, Plaintiff challenged Commerce’s selection of the surrogate value for glue, as well as its calculation of the surrogate financial ratio for manufacturing overhead and the surrogate hourly labor value in the final results of the seventh administrative review of the antidumping duty order on multilayered wood flooring from China. The court found that Commerce’s selection of the surrogate value for the glue input was supported by substantial evidence. However, it also found that neither the calculation of the surrogate financial ratio for manufacturing overhead nor the calculation of the surrogate hourly labor value was supported by substantial evidence. The court further found that Commerce had failed to explain the source of the numbers used to calculate the hourly labor value and “did not provide a reasonable explanation, supported by substantial evidence, for rejecting Plaintiff’s proposed data.” Id. at 4.

For the manufacturing overhead ratio, the Court also previously found that Commerce had not explained why it did not place in the numerator the whole amount of indirect production expenses identified in the surrogate financial statement. The Court remanded for Commerce to either place this whole amount in the numerator or explain why it chose not to do so, and, if Commerce chose the latter option, to “state why other categories of overhead normally placed in the numerator were not placed in the numerator here.” Id. 3. The court had also remanded for Commerce to “reconsider the Labor Rate Policy’s use in this case,” and, if it continued to use it, to “explain its source and the reason why it is reasonable to use it here, including how it would be more specific for use in Romania than the source provided by Plaintiff.” Id. at 4.

On August 24, 2023, Commerce issued its Remand Results wherein it recalculated the manufacturing overhead ratio using the amount for indirect production expenses identified in the surrogate financial statement in the numerator of the ratio. However, concluding that this amount included energy costs, Commerce subtracted energy costs from the indirect production expenses and placed them in the denominator, which included direct expenses, i.e., materials, labor, and energy. To substantiate the source of the numbers used in its Labor Rate Policy, Commerce placed on the record data from the International Labor Organization (“ILO”) based on which Commerce concluded that there are 24 working days per month, 8 hours per day, and 5.5 days per week for workers in ILO member nations, including the surrogate country, Romania. To calculate the surrogate hourly labor value, Commerce used ILO data that Plaintiff placed on the record reflecting the hours actually worked per week in Romania, from which it calculated an amount for the hours actually worked per month. Commerce divided the undisputed monthly average net earnings in Romania for employees that manufacture wood products by the hours worked per month to reach the surrogate hourly labor value.

The Court sustained Commerce remand determinations. Pursuant to 19 U.S.C. §1516a(b)(1)(B)(i), unless Commerce’s determination is “unsupported by substantial evidence on the record, or otherwise not in accordance with law,” a court will uphold the administrative decision. Here, the CIT found that Commerce’s calculation of the manufacturing overhead ratio complies with the Court’s remand order because it used the amount for indirect production expenses in the numerator of the ratio and stated its reasons for subtracting energy costs from this amount and placing them in the denominator. Judge Eaton, citing Dorbest Ltd. v. United States, 30 CIT 1671, 1715 n.36, 462 F. Supp. 2d 1262, 1301 n.36 (2006), concluded that this calculation was reasonable because energy costs are normally included in the denominator.

Moreover, he concluded that Commerce reasonably used the Romanian ILO data to calculate the surrogate hourly labor value because this data reflects hours actually worked in the surrogate country. Commerce substantiated the source of the numbers contained in its Labor Rate Policy by placing on the record the ILO data and demonstrating how it calculated each of the numbers.

Therefore, the Court found that Commerce’s uncontested Remand Results comply with the court’s remand order and are supported by substantial evidence and entered judgment accordingly.