The opinion of the court was delivered by: Reggie B. Walton United States District Judge
AMENDED MEMORANDUM OPINION*fn1
The plaintiffs are challenging the defendants' interpretation of § 163 of the Federal Agricultural Improvement and Reform Act of 1996, Pub. L. No. 104-127, 110 Stat. 935 ("FAIR Act" or "1996 Act"), as amended by § 1401(c)(2) of the Farm Security and Rural Investment Act of 2002, Pub. L. No. 107-171, 116 Stat. 187 ("FSRI Act" or "2002 Act"), and codified as amended at 7 U.S.C. § 7283, as applied to loans made by the Commodity Credit Corporation ("CCC") to sugar producers. Amended Complaint for Declaratory Judgment, Restitution and Injunctive Relief ("Compl.") ¶¶ 1-6. Currently before this Court are (1) the Defendants' Motion to Dismiss ("Defs.' Mot.") and (2) the Plaintiffs' Motion for Summary Judgment and Opposition to Defendants' Motion to Dismiss ("Pls.' Opp'n"). For the following reasons, this Court grants the plaintiffs' motion for summary judgment and denies in part the defendants' motion to dismiss.
Beginning in the 1940s and continuing to the present, Congress has provided loan assistance to farmers to "support" the prices of agriculture commodities.*fn2 See Agricultural Act of 1949, Pub. L. No. 81-438, 63 Stat. 1051; Defendants' Statement of Points and Authorities in Support of Her Motion to Dismiss ("Defs.' Mem.") at 2-3. The United States Department of Agriculture ("USDA"), through the CCC, makes these loans to, among others, sugar producers in order to support a set level of pricing for sugar. See 7 U.S.C. §§ 7272, 7991(a). In 1988,*fn3 the CCC promulgated a regulation that established a uniform policy for assessing interest on such loans. The regulation provided that the interest rate that the CCC would charge on agricultural loans would be the same rate the United States Treasury charged the CCC to borrow the funds to finance the loans, which was the formula in effect on October 1, 1995. See 7 C.F.R. § 1405.1 (1989). This regulation, which has since been amended, was promulgated based upon the CCC's interpretation of 15 U.S.C. §§ 714b(l) and 714c(a), (d), provisions which list the general and specific powers of the CCC. Defs.' Mem. at 4-5. Under § 714b(l), the CCC "[m]ay make such loans and advances of its funds as are necessary in the conduct of its business." And pursuant to § 714c, the CCC is required to "[s]upport the prices of agricultural commodities through loans, purchases, payments, and other operations" and "[r]emove and dispose of or aid in the removal or disposition of surplus agricultural commodities." 15 U.S.C. § 714c(a), (d).
However, in 1996, Congress passed the FAIR Act. Under this Act, Congress mandated that the CCC set interest rates for loans, including loans to sugar producers, at a rate equal to the rate it cost the CCC to borrow the funds from the United States Treasury, plus an additional 100 basis points, or one percent. 7 U.S.C. § 7283(a); 1996 Act § 163. The provision specifically stated: "Notwithstanding any other provision of law, the monthly Commodity Credit Corporation interest rate applicable to loans provided for agricultural commodities by the Corporation shall be 100 basis points greater than the rate determined under the applicable interest rate formula in effect on October 1, 1995." 7 U.S.C. § 7283(a). The CCC amended its regulations to reflect this Congressionally mandated change. See 7 C.F.R. § 1405.1 (1997).
In 2002, Congress again amended the loan program with the adoption of the FSRI Act. The 2002 Act added the following subsection to 7 U.S.C. § 7283: "(b) Sugar -- For purposes of this section, raw cane sugar, refined beet sugar, and in-process sugar eligible for a loan under section 7272 of this title shall not be considered an agricultural commodity." 7 U.S.C. § 7283(b) (emphasis added). The 2002 Act did not alter subsection (a) of § 7283, which requires that 100 basis points be added to the interest rate on the loans, nor did the 2002 Act alter the ability of sugar producers to secure agricultural commodity loans under 7 U.S.C. § 7272 (discussing loan program for sugar). The amendment simply exempted sugar from the 100 basis point requirement. The 2002 Act also added the following, a no net cost provision, to 7 U.S.C. § 7272:
(g)(1) IN GENERAL - Subject to subsection (e)(3), to the maximum extent practicable, the Secretary shall operate the [loan] program established under this section at no cost to the Federal Government by avoiding the forfeiture of sugar to the Commodity Credit Corporation. 7 U.S.C. § 7272(g)(1).
Despite this most recent amendment of § 7283(b), the CCC and the USDA have concluded that the legislation did not mandate a new interest formula for sugar, but merely lifted the requirement of the 100 basis point premium, and thus they could charge whatever interest rate they deemed appropriate. The CCC published its reasoning in the Federal Register:
The 2002 Act eliminates the requirement that CCC add 1 percentage point to the interest rate as calculated by the procedure in place in 1996 but does not establish a sugar loan interest rate. CCC has decided to use the rates required for other commodity loans. 67 Fed. Reg. 54,927 (Aug. 26, 2002). Based upon this reasoning, the CCC has continued to charge an additional one percent interest point on sugar loans.
II. The Parties' Arguments
The plaintiffs have filed a four count complaint challenging the defendants' continued assessment of an additional one percent interest point on sugar loans despite the 2002 Act. Specifically, the plaintiffs allege that the defendants' actions (1) violate the express terms of the 2002 Act; (2) are arbitrary, capricious, and an abuse of discretion under the Administrative Procedure Act, 5 U.S.C. § 706(2)(A); (3) have resulted in the United States being unjustly enriched; and (4) amount to an unconstitutional tax. Compl. ¶¶ 48, 51, 61, 67. Thus, the plaintiffs seek (1) a declaratory judgment that the defendants' actions violate the 2002 Act and the Constitution; (2) an injunction prohibiting the defendants from continuing to charge the additional one percent interest point on sugar loans; and (3) an order directing the defendants to pay restitution to the plaintiffs in an amount equal to the amount the defendants have been unjustly enriched through the collection of the additional one percent interest assessment. Compl. ¶¶ A., B., C.
The defendants have moved to dismiss the amended complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Specifically, the defendants argue that the plaintiffs' Administrative Procedure Act ("APA") claim must fail because there is no ambiguity in the statute at issue. Defs.' Mem. at 11. The defendants note that the 2002 Act removed sugar from the definition of "agricultural commodity," which they opine left the CCC free of any requirement to use a particular formula for setting interest rates on sugar loans. Id. at 11-12. Thus, the defendants posit that the CCC has the authority to charge whatever interest rate it deems appropriate so long as the interest rate is consistent with the CCC's general and specific powers listed in 15 U.S.C. §§ 714b(j), (k); 714c(a), (d). Id. Therefore, the defendants contend that this Court must give deference to the agency's decision as required by Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984). Id. at 14. The defendants further argue that the additional one percentage point interest fee is not a tax under the Constitution as the plaintiffs contend, but rather, is a permissible fee associated with the loan process. Id. at 14-17. Finally, the defendants assert that the plaintiffs' claim of unjust enrichment cannot survive their motion to dismiss because (1) the plaintiffs do not assert that the loan agreement has been breached and (2) the government is shielded from recovery on this claim by the doctrine of sovereign immunity. Id. at 17-18.
The plaintiffs have moved for summary judgment pursuant to Rule 56(a). Pls.' Opp'n at 23. The plaintiffs contend that the CCC's interpretation of the 2002 Act is contrary to the plain language of the Act and should, therefore, not be given Chevron deference. Id. at 25. The plaintiffs opine that Congress placed the sugar exemption in the same statutory provision that mandates the additional one percent interest charge in order to specifically exempt sugar from that additional one percent requirement, thereby reducing the interest rate charged on sugar loans. Id. The plaintiffs argue that this reading is supported by the plain language of the statute and application of basic cannons of statutory construction. Id. at 26. The plaintiffs further argue that the legislative history supports their reading of the statute. Id. at 26-27. They also state that the additional one percent interest charge is an unconstitutional tax because it is a payment that "is arbitrary and was created solely for a public purpose." Id. at 37. Finally, the plaintiffs posit that the CCC is being unjustly enriched by the assessment because it has illegally collected payments from the plaintiffs. Id. at 39. Therefore, the plaintiffs claim that they are entitled to restitution in an amount equal to the amount the CCC has been unjustly enriched. Id. at 39-40.
(A) Motion to Dismiss Under ...