Appearing pursuant to a Law Student Appearance Form, 1

authorized by USCIT Admin. Order No. 06-01, and consented to by

the court on April 20, 2007. 

Slip Op. 08-59

UNITED STATES COURT OF INTERNATIONAL TRADE

______________________________

:

T.W.R., Inc., :

:

Plaintiff, :

:

v. : Before: Richard K. Eaton, Judge

:

UNITED STATES : Court No. 05-00356

SECRETARY OF AGRICULTURE, :

:

Defendant. :

______________________________:

OPINION AND ORDER

[United States Department of Agriculture’s final determination

denying plaintiff’s application for trade adjustment assistance

remanded.]

Dated: May 28, 2008

Steven D. Schwinn and Clayton P. Solomon, for plaintiff. 1

Gregory G. Katsas, Acting Assistant Attorney General; Jeanne

E. Davidson, Director, Patricia M. McCarthy, Assistant Director,

Commercial Litigation Branch, Civil Division, United States

Department of Justice (Michael J. Dierberg), for defendant.

Eaton, Judge: This matter is before the court on the motion

of plaintiff T.W.R., Inc. for judgment upon the agency record

pursuant to USCIT Rule 56.1. By its motion, plaintiff challenges

the final determination of the United States Department of

Agriculture (the “Department”) denying its application, pursuant

to 19 U.S.C. § 2401e (2002), for cash benefits under the Trade

Adjustment Assistance for Farmers (“TAA”) program. See Mem.
Court No. 05-00356 Page 2

 Obtaining TAA for Farmers cash benefits is a two-step 2 

process. Under the first step, a group of agricultural commodity

producers or their authorized representative files a petition

seeking a certification making them eligible to apply for TAA

benefits. The Department, in turn, will grant the certification

if the petitioning group establishes that certain criteria have

been met. See 19 U.S.C. § 2401a(c). Under the second step,

individual commodity producers can apply for cash benefits if

(continued...)

Supp. Pl.’s Mot. J. Agency R. (“Pl.’s Br.”); Reconsideration Upon

Remand of the Application of T.W.R., Inc. (Dep’t of Agric. Dec.

14, 2006) (the “Negative Determination”). Jurisdiction lies

under 19 U.S.C. § 2395(c).

For the reasons set forth herein, the Department’s Negative

Determination is remanded.

BACKGROUND

Plaintiff is a family-owned shrimping company that has

operated its business off the Texas Gulf Coast since the early

1970s. Pl.’s Br. 2. According to plaintiff, from as early as

1984, its business has suffered because of declining shrimp

prices attributable to increased competition from imports. Pl.’s

Br. 3.

In October 2003, the Texas Shrimp Association (“TSA”) filed

a petition with the Department on behalf of Texas shrimp

producers for TAA certification pursuant to 19 U.S.C. § 2401a and

7 C.F.R. § 1580.201 (2003). See TAA for Farmers, 68 Fed. Reg.

60,078 (Dep’t of Agric. Oct. 21, 2003) (notice). On November 2
Court No. 05-00356 Page 3

(...continued)

they meet the requirements set forth in 19 U.S.C. § 2401e(a)(1).

19, 2003, the Department certified Texas shrimp producers as

eligible to apply for TAA cash benefits. See TAA for Farmers, 68

Fed. Reg. 65,239 (Dep’t of Agric. Nov. 19, 2003) (notice). The

certification was for a period of one year, with the possibility

of additional time upon qualifying in subsequent years. See 19

U.S.C. § 2401a(d). 

On November 30, 2004, the Department re-certified the TAA

petition for Texas shrimp producers, finding that average prices

during the “2003 marketing period (January-December 2003)” were

33.7 percent less than the average for the five-year base period

preceding the 2002 marketing year, i.e., 1997 through 2001. See

TAA for Farmers, 69 Fed. Reg. 69,582 (Dep’t of Agric. Nov. 30,

2004) (notice). 

In accordance with the statutory scheme, once the TSA

received its certification, plaintiff, as a certified Texas

shrimp producer, became eligible to apply for TAA cash benefits. 

See Pl.’s Br. 4; 19 U.S.C. § 2401e(a)(1). Plaintiff did not

apply for benefits under the original certification. It did,

however, apply on January 19, 2005 under the re-certification. 

See Application Dated Jan. 19, 2005 for TAA for Individual

Producers, of T.W.R., Inc., Admin. R. (“AR”) at 1; see also 7

C.F.R. § 1580.401(f) (stating that “[a]n eligible producer who
Court No. 05-00356 Page 4

 A “fiscal year” is defined as “[a]n accounting period of 3

12 consecutive months . . . [and] is often different from the

calendar year, [especially] for tax purposes.” Black’s Law

Dictionary 1646 (8th ed. 1990).

 Consistent with the Department’s usage: 4

(1) plaintiff’s year “2000 tax return” corresponds

with its fiscal year 2001, and covers the time

period October 1, 2000 through September 30, 2001;

(2) plaintiff’s year “2001 tax return” corresponds

with its fiscal year 2002, and covers the time

period October 1, 2001 through September 30, 2002;

and, 

(3) plaintiff’s year “2002 tax return” corresponds

with its fiscal year 2003, and covers the time

period October 1, 2002 through September 30, 2003.

Plaintiff’s year “2003 tax return” is not in the record, but the

court presumes, given plaintiff’s consistency through the years,

that this return would cover the time period October 1, 2003

through September 30, 2004, i.e., plaintiff’s fiscal year 2004.

did not apply for adjustment assistance in the initial year may

apply [upon a re-certification]”). 

In support of its application, plaintiff submitted financial

information to the Department, including its Form 1120 corporate

tax returns for 2002 and 2001, along with their attached

schedules and associated documents. See Def.’s Resp. Pl.’s Mot.

J. Agency R. (“Def.’s Resp.”) 4-5. Plaintiff filed its tax

returns on a fiscal year, rather than a calendar year basis. 3

Consequently, plaintiff’s 2001 tax return was based upon a 4

taxable year beginning October 1, 2001, and ending September 30,

2002, while plaintiff’s 2002 tax return was based upon a taxable
Court No. 05-00356 Page 5

year beginning October 1, 2002, and ending September 30, 2003. 

Def.’s Resp. 4-5. 

The Department denied plaintiff’s application in a letter

dated March 7, 2005, stating in pertinent part: 

You have been denied a TAA cash benefit

because you failed to meet the net income

requirement, in accordance with 7 CFR Part

1580.401(e). An applicant’s net income 

for 2003 must be less than their net income

for 2001.

Letter Dated Mar. 7, 2005 from Department to T.W.R., Inc., AR at

46. Thus, the Department based its determination on a comparison

of plaintiff’s net income in fiscal year 2003 and fiscal year

2001, and concluded that plaintiff’s net income did not decline

between those periods. See Pl.’s Br. 4-5.

Plaintiff sought judicial review of this determination by

filing a letter with the Court on May 6, 2005. Letter Dated May

6, 2005 from T.W.R., Inc. to Clerk of the Court, USCIT

(“Compl.”). The Clerk of the Court accepted plaintiff’s letter,

pursuant to USCIT Rule 5(e), “as fulfilling in principle the

requirements of the summons and complaint . . . .” Letter Dated

May 18, 2005 from Office of the Clerk, Donald C. Kaliebe, Case

Management Supervisor, to Ms. Pearlene Walls, at 1. In the

letter, plaintiff’s primary allegation was that the Department

improperly relied solely upon net income reported in its tax

returns to assess its net income. Thus, in plaintiff’s view, the
Court No. 05-00356 Page 6

 “Marketing year means the marketing season or year as 5

defined by National Agriculture Statistic Service (NASS), or a

specific period as proposed by the petitioners and certified by

the Administrator,” 7 C.F.R. § 1580.102, in this case January

2003 through December 2003. TAA for Farmers, 69 Fed. Reg. at

69,582.

Department should have looked beyond its tax returns, and

assessed all “accounting variables,” which, if considered, would

provide a more accurate representation of plaintiff’s net income.

See Compl. 2-3.

On May 10, 2006, the Department filed a motion for voluntary

remand because plaintiff’s “2000 tax return [covering the period

October 1, 2000 through September 30, 2001], rather than its 2001

tax return [covering the period October 1, 2001 through September

30, 2002], represented the tax year previous to that associated

with the most recent marketing year in the initial producer 5

petition.” Def.’s Resp. 6. Thus, the Department stated that it

had made its initial determination using incorrect tax periods. 

On June 2, 2006, the court granted the Department’s motion. See

T.W.R., Inc. v. United States Sec’y of Agric., Court No. 05-00356

(June 2, 2006) (order).

On October 31, 2006, plaintiff provided the Department with

its year 2000 tax return, along with “additional competent

evidence” of its net income during the period covered by its 2000

return and thus its 2001 fiscal year, i.e., October 1, 2000

through September 30, 2001. See Letter Dated Oct. 31, 2006 from
Court No. 05-00356 Page 7

T.W.R., Inc. to the Department (“Suppl. Letter”), Suppl. Admin.

R. (“SR”) at 2. The “additional competent evidence” consisted

of, among other things, balance sheets reflecting loans from

stockholders, invoices, and purchase orders. In its

correspondence, plaintiff reiterated its position, asking the

Department to consider the “many factors” that affect its net

income in making its determination. See Suppl. Letter, SR at 2.

On December 14, 2006, the Department denied plaintiff’s

application, again reasoning that plaintiff was unable to

demonstrate the requisite decline in net fishing income. See

Negative Determination at 1. The Department stated:

[T]he 2000 U.S. Corporation Income Tax Return

corresponding to marketing year 2001, and the

2002 U.S. Corporation Income Tax Return

corresponding to marketing year 2003, and

other supporting documents provided by

T.W.R., Inc., [demonstrate] that there was no

decline in the net fishing income from the

pre-adjustment year, 2001, to the most recent

year for which marketing data was available,

2003. The 2000 U.S. Corporation Income Tax

Return for the period October 1, 2000, ending

September 30, 2001, on line 30 shows taxable

income (income less deductions) as a loss of

. . . . The 2002 U.S. Corporation Income Tax

Return for the period October 1, 2002, ending

September 30, 2003, on line 30 shows taxable

income of . . . . Based on these returns,

the plaintiff was unable to demonstrate the

required decline in its net fishing income.

Even if the agency were to consider the other

supplemental documentation submitted by

T.W.R., Inc., it also does not support a

decline in T.W.R., Inc.’s net fishing income.
Court No. 05-00356 Page 8

Negative Determination at 1-2 (citations omitted).

Plaintiff then moved to remand this matter to the Department

for further consideration. See Pl.’s Br. 21. Plaintiff argues

that the Department’s denial of cash benefits was flawed because

the Department: (1) failed to review tax returns from consecutive

years and (2) failed to look beyond net income as reported in

plaintiff’s tax returns.

STANDARD OF REVIEW

The Department’s TAA eligibility determination should be

upheld if its factual findings are supported by substantial

evidence in the record and its legal determinations are in

accordance with law. See 19 U.S.C. § 2395(b); Truong v. United

States Sec’y of Agric., 31 CIT __, __, 484 F. Supp. 2d 1324, 1326

(2007)(citations omitted); Van Trinh v. United States Sec’y of

Agric., 29 CIT 1058, 1063, 395 F. Supp. 2d 1259, 1265 (2005). 

Substantial evidence is “more than a ‘mere scintilla,’ but

sufficient evidence to reasonably support a conclusion.” Viet Do

v. United States Sec’y of Agric., 30 CIT __, __, 427 F. Supp. 2d

1224, 1227 (2006) (citations omitted). The scope of review of

the Department’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). For “good cause shown,” the court may

remand a case to the Department to take further evidence and make
Court No. 05-00356 Page 9

 Under 19 U.S.C. § 2401e(a)(1), the statutory requirements 6

for an individual producer to receive benefits are as follows:

(A) The producer submits to the Secretary

sufficient information to establish the

amount of agricultural commodity covered by

the application filed under this subsection

that was produced by the producer in the most

recent year.

(B) The producer certifies that the producer

has not received cash benefits under any

provision of this subchapter other than this

part.

(C) The 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. . . .

[and the producer has met certain other

requirements with respect to seeking

information and technical assistance.]

new and modified findings. See 19 U.S.C. § 2395(b). 

DISCUSSION

I. Plaintiff’s Application for TAA Cash Benefits

A. Relevant Law

As noted, an individual agricultural commodity producer’s

receipt of TAA benefits is the result of a two-step process, only

the second of which is at issue here. Under the second step,

following group certification under 19 U.S.C. § 2401b, an

individual producer can apply for cash benefits “within 90 days 6

after the date on which the [Department] makes a determination
Court No. 05-00356 Page 10

 The Department’s regulations require that an individual 7

producer demonstrate that its “net . . . fishing income was less

than during the producer’s pre-adjustment year.” 7 C.F.R.

§ 1580.301(e)(4). Defendant’s regulations define “net fishing

income” as “net profit or loss, excluding payments under [19

U.S.C. §§ 2401- 2401g], 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. Defendant’s

regulations define “pre-adjustment year” as “the tax year

previous to that associated with the most recent marketing year

in the initial producer petition.” 7 C.F.R. § 1580.102. 

 Under 7 C.F.R. § 1580.301(e)(4), individual producers 8

must “certif[y] that net . . . fishing income was less than that

during the producer’s pre-adjustment year,” but the regulation

does not itself state which year’s income must be less than that

of the “pre-adjustment year.” The definition of “net fishing

income,” however, provides guidance. As noted, the Department

defines “net fishing income” as “net profit or loss, excluding

payments under [C.F.R. Part 1580], reported to the Internal

Revenue Service for the tax year that most closely corresponds

with the marketing year under consideration.” 7 C.F.R.

(continued...)

and issues a [group ]certification of eligibility.” See 19

U.S.C. § 2401e(a)(1).

In order to qualify for cash benefits, an individual

producer must establish, among others things, that its net income

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. 7

§ 2401e(a)(1)(C). With respect to establishing net income,

“because of the ex parte nature of the [TAA] certification

process, and the remedial purpose of the [TAA] program, [the

Department] is obligated to conduct [its] investigation with the

utmost regard for the interests of the petitioning workers.”

8
Court No. 05-00356 Page 11

(...continued)

§ 1580.102. “Marketing year” is defined as “the marketing season

or year as defined by National Agriculture Statistic Service

(NASS), or a specific period as proposed by the petitioners and

certified by the [Department].” Id.

See Van Trinh, 29 CIT at 1066, 395 F. Supp. 2d at 1267 (citations

omitted; second alteration added; emphasis in original).

B. The Department’s Use of Non-Consecutive Years

During the pendency of this action, this Court decided Dus &

Derrick, Inc. v. United States Secretary of Agriculture, 31 CIT

__, 469 F. Supp. 2d 1326 (2007) (“Dus & Derrick I”), and Dus &

Derrick, Inc. v. United States Secretary of Agriculture, 32 CIT

__, Slip Op. 08-19 (Feb. 6, 2008) (not reported in the Federal

Supplement) (“Dus & Derrick II”). Dus & Derrick I held:

[T]he court finds that the language

of the statute did not invite the

Department to devise an alternative

definition for the phrase “most

recent year.” For the court, that

phrase can only refer to the year

preceding that of the application. 

The statutory phrase “is less than”

clearly indicates that a comparison

is to be made between two years. 

Plaintiff was denied benefits based

on a comparison between 2003 as the

marketing year to 2001 as the

pre-adjustment year. A plain

reading of the statute, however,

demands that, for an application

made in 2005, net income for 2004

(the “most recent year”) must be

compared to that earned in 2003

(“the latest year in which no
Court No. 05-00356 Page 12

 In Dus & Derrick II, the Court found that 19 U.S.C. 9

§ 2401e(a)(1)(C) does not always require that consecutive years

be compared. When a producer has received benefits “in the year

. . . preceding the ‘most recent year,’ the statute directs the

comparison of non-consecutive years.” See Dus & Derrick II, 32

CIT at __, Slip Op. 08-19 at 3 n. 2. Here, plaintiff has at no

time received benefits. 

adjustment assistance was received

by the producer”).

31 CIT at __, 469 F. Supp. 2d at 1335 (footnote omitted). The

court will follow Dus & Derrick I and II when making its findings

in this case. 

Thus, as an initial matter, the court will not accord

Chevron deference to the Department’s interpretation of 19 U.S.C.

§ 2401e as applied to the facts presented here. For the court,

19 U.S.C. § 2401e(a)(1)(C) clearly directs that two consecutive

years should be compared when the producer has not previously

received TAA benefits. That is, the statute calls for a 9

comparison of “the most recent year” to plaintiff’s January 19,

2005 application, i.e., plaintiff’s fiscal year 2004, to “the

latest year in which no adjustment assistance was received” by

plaintiff, i.e., plaintiff’s fiscal year 2003. See 19 U.S.C.

§ 2401e(a)(1)(C). Under its regulations, the Department compared

plaintiff’s net income from fiscal year 2003, as “the tax year

that most closely corresponds with the marketing year under

consideration,” with its income from fiscal year 2001, as “the

tax year previous to that associated with the most recent year in
Court No. 05-00356 Page 13

 It is worth noting that, as in the Dus & Derrick cases, 10

the Department does not argue for the reasonableness of its

regulation based on the availability of information or efficiency

of administration. See Dus & Derrick II, 32 CIT at __, Slip Op.

08-19 at 16. 

the initial [group] producer petition.” See Def.’s Resp. 20-21. 

When a plain reading of the statute evinces Congress’s clear

intent, as it does here, then “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.” Chevron U.S.A.,

Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842–43

(1984).

It thus follows that the Department’s regulations, which do

not provide for a comparison of consecutive years here, cannot

apply to applicants in plaintiff’s circumstances, i.e., those

producers applying under re-certification, having not received

benefits under the original certification. Accordingly, the

court again finds that, under the facts presented here, the

Department’s regulations are an impermissible interpretation of

19 U.S.C. § 2401e(a)(1)(C) to the extent they require a

comparison of non-consecutive years. Because the court finds

that Congress’s intent manifested in 19 U.S.C. § 2401e(a)(1)(C)

is clear, this matter must be remanded for further

consideration. 

10

On remand, the Department is instructed to compare

plaintiff’s net income from “the most recent year” to plaintiff’s
Court No. 05-00356 Page 14

 Based upon plaintiff’s filing its tax returns on a 11

fiscal year basis and the Department, in turn, performing its net

income analysis using plaintiff’s fiscal years, this instruction

calls for the Department to compare plaintiff’s net income from

its 2002 tax return (covering October 2002 through September

2003) and 2003 tax return (covering October 2003 through

September 2004), along with other appropriate documentation

submitted by plaintiff. 

 In 2001 and 2002, plaintiff took on loans from 12

shareholders to pay outstanding expenses and “keep its boat on

the water.” Pl.’s Br. 3. It alleges:

[T]hese loans had a perverse effect on the

Plaintiff’s net income as reported on its

corporate tax returns over time: the loans

did not appear as “income” on the Plaintiff’s

corporate tax return[s], but the Plaintiff’s

expenses——which were financed by the

loans——appeared as losses. In short, the

loans were not credited toward income, but

they appeared as deductions.

Pl.’s Br. 3. Plaintiff’s business also faced other “losses,”

including officer and employee compensation, repairs, and

depreciation, which plaintiff claims varied significantly each

year as plaintiff’s business adjusted to declining shrimp prices. 

See Pl.’s Br. 3-4. Thus, plaintiff maintains that its net income

was “palpably declining,” but that this decline was not reflected

in its corporate tax returns. Pl.’s Br. 4.

application to “the latest year in which no adjustment assistance

was received” by plaintiff. 19 U.S.C. § 2401e(a)(1)(C). 11

Because the Department has not yet compared plaintiff’s net

fishing income for the appropriate years, the court will not

address the adequacy of the Department’s inquiry into plaintiff’s

net income as reflected in documents other than plaintiff’s tax

returns. The Department is reminded, however, that the United 12

States Court of Appeals for the Federal Circuit has stated that
Court No. 05-00356 Page 15

“the [Department’s] regulations make it reasonably clear that the

determination of . . . net fishing income is not to be made

solely on the basis of tax return information if other

information is relevant to determining the producer’s net income

from all . . . fishing sources.” Steen v. United States, 468

F.3d 1357, 1363 (2006); see also Durfey v. United States Sec’y of

Agric., 32 CIT __, Slip Op. 08-55 (May 22, 2008). 

CONCLUSION

Consistent with this Court’s Dus & Derrick decisions,

“[b]ecause the regulations at issue here govern situations other

than those presented by the facts of this case, the court will

not order their vacatur.” Dus & Derrick I, 31 CIT at __, 469 F.

Supp. 2d at 1338 (citing Allied-Signal, Inc. v. U.S. Nuclear

Regulatory Comm’n, 988 F.2d 146, 150-51 (D.C. Cir. 1993)). On

remand, the Department shall: (1) reconsider plaintiff’s

application in a manner consistent with this opinion, by

comparing plaintiff’s net fishing income from its 2003 fiscal

year (October 2002 through September 2003) to its net fishing

income from its 2004 fiscal year (October 2003 through September

2004); (2) inform plaintiff of the methodology by which it will

reconsider its application; (3) afford plaintiff the opportunity

to place on the record additional proof of its net income in
Court No. 05-00356 Page 16

 This provision provides: 13

(6) To comply with certifications in paragraph

(e)(4) of this section [regarding net

income], an applicant shall provide either--

(i) Supporting documentation from a

certified public accountant or

attorney, or

(ii) Relevant documentation and

other supporting financial data,

such as financial statements,

balance sheets, and reports

prepared for or provided to the

Internal Revenue Service or another

U.S. Government agency.

7 C.F.R. § 1580.301(e)(6).

accordance with 7 C.F.R. § 1580.301(e)(6); (4) fully examine 13

all information submitted by plaintiff in accordance with the

remedial nature of the TAA statute; and, (5) fully explain its

methodology and reasons for reaching its final determination with

respect to plaintiff’s application.

Remand results are due on or before August 26, 2008. 

Comments to the remand results are due on or before September 25,

2008. Replies to such comments are due October 9, 2008.

 /s/Richard K. Eaton 

Richard K. Eaton 

Dated: May 28, 2008

New York, New York