United States District Court, D. Columbia.
[Copyrighted Material Omitted]
RESOLUTE FOREST PRODUCTS, INC., Plaintiff: Andrew M.
Grossman, David B. Rivkin, Jr., Michael Steven Snarr, Elliot
J. Feldman, BAKER & HOSTETLER LLP, Washington, DC.
UNITED STATES DEPARTMENT OF AGRICULTURE, THOMAS J. VILSACK,
Defendants: David Michael Glass, LEAD ATTORNEY, U.S.
DEPARTMENT OF JUSTICE, Civil Division, Washington, DC.
E. BOASBERG, United States District Judge.
Out of timber so crooked as that from which man is made,
straight can be carved." So said Immanuel Kant about
humanity; so claims Plaintiff Resolute Forest Products about
the lawfulness of compulsory marketing programs developed by
private parties and overseen by the U.S. Department of
and 2011, Agricultural Marketing Service (AMS), housed within
the USDA, assisted members of the softwood-lumber industry in
establishing a budding Softwood Lumber Checkoff Order.
Checkoff orders are rooted in our nation's history of
government support for commodity producers who seek the
benefits of collective marketing and promotion. These orders
rake in mandatory assessments from all manufacturers and
importers of a given commodity. The Commodity Promotion,
Research and Information Act (the CPRIA), 7 U.S.C. §
§ 7411-7425, empowers many industries -- including the
softwood-lumber industry -- to work with the USDA to plant
the seeds for the cultivation of such collective-marketing
programs through the development and issuance of these
case of the Softwood Lumber Checkoff Order, however, Resolute
believes the rulemaking process was rotten to the core. In a
nutshell, it is unhappy with the manner in which assessments
have been determined. After protesting the Order before an
administrative law judge and appealing that judge's
denial, it brought suit before this tribunal. Resolute's
Complaint lumbers on at length about problems with the
agency's procedures, seemingly having an ax to grind with
every step in the promulgation of the Checkoff Order. It
raises numerous objections to the notice-and-comment
rulemaking process, the agency's deference to the
industry's Blue Ribbon Commission that put forward the
Order, and the referendum AMS held to obtain industry
approval. Plaintiff's claims ultimately branch out into
four constitutional challenges to the CPRIA and six
allegations of violations of the Administrative Procedure
Act. As to the latter category, Plaintiff assails the AMS for
mistakes made during the rulemaking process, some of which
stem from misstatements in the Federal Register and opaque
explanations for its seemingly questionable actions. Both
sides have now moved for summary judgment.
timber has been felled to produce the administrative record
that grew out of the ALJ's adjudication, including
hearing logs, Resolute's administrative appeal, and the
parties' briefs before this Court. Given that the parties
at times camouflage the issues with unclear briefing, the
Court was repeatedly forced to leaf through the
administrative record itself to find answers. Having now done
so, the Court concludes that Plaintiff has generally barked
up the wrong tree. Resolute's wooden understanding of the
agency's obligations largely does not mesh with the broad
discretion the USDA is granted to construct a permissible
-- and not Plaintiff -- are therefore entitled to summary
judgment on nearly every APA count. Yet on one issue Resolute
hits the nail on the head. Defendants fall short of providing
an adequate explanation for the threshold chosen to exempt
certain smaller industry players from the Order. While it
often goes against the grain to remand without vacatur, in
this instance that remedy is appropriate, so as not to
prematurely uproot an ongoing checkoff order. On one APA
count alone, then, the Court will deny Defendants' Motion
for Summary Judgment and remand to the USDA. Such an outcome
also obviates the need to rule on the constitutional
questions, which must lie dormant for another season.
aside, given the complexities of the administrative process
-- and the often picayune nature of Plaintiff's
grievances -- a contextual overview is necessary first. The
Court thus begins by briefly introducing the parties to this
lawsuit and then moves on to a longer explanation of the
CPRIA and the process through which the Softwood Lumber
Checkoff Order was developed and implemented. Caution, fair
reader, for into the administrative-lawmaking thicket we go.
Resolute Forest Products, Inc., is an American company
incorporated under the laws of Delaware, with significant
investments in the production of Canadian softwood lumber,
paper, and other forest products. See Compl., ¶ 18. Its
principal place of business is in Canada, where the majority
of its sawmills are located. See id. Plaintiff imports
softwood lumber into the United States and is thus subject to
assessment under the Softwood Lumber Checkoff Order. See Def.
MTD/MSJ at 2.
include the United States Department of Agriculture and its
Secretary, Tom Vilsack, who is sued in his official capacity.
See Compl., ¶ 20. The Secretary is charged with
administering checkoff orders under the CPRIA. See 7 U.S.C.
§ § 7411-25. Most of the Secretary's functions
under the CPRIA have been delegated to the Under Secretary of
Agriculture for Marketing and Regulatory Programs and then
further " sub-delegated" to the Administrator of
the Agricultural Marketing Service, which administers, among
other things, marketing orders. See Def. MTD/MSJ at 5. For
readability, the Court will here reference the Secretary, the
USDA, and AMS interchangeably.
The CPRIA and the Softwood Lumber Checkoff Program
has long regulated the promotion and sale of agricultural
commodities by enabling the federal government to coordinate
with industries to advance such promotional efforts. See
Avocados Plus Inc., v. Veneman, 370 F.3d 1243, 1245,
361 U.S. App.D.C. 519 (D.C. Cir. 2004). For most agricultural
commodities, limited product differentiation means that if
one producer promotes its commodity product, all producers
are likely to benefit, creating free-rider problems. See
William Connor Eldridge, United States v. United Foods:
United We Stand, Divided We Fall -- Arguing the
Constitutionality of Commodity Checkoff Programs, 56 Ark.
L.Rev. 147, 159 (2003). The CPRIA thus authorizes the
Secretary of Agriculture to establish " checkoff"
programs, which impose on domestic manufacturers and foreign
importers of an agricultural commodity a mandatory assessment
on the sale of that commodity.
programs funded by these checkoff orders can be famously
effective, producing well-known classics of American
advertising such as " Beef, it's what's for
dinner" and " Milk, it does a body good." See
Compl., ¶ 2. Among the agricultural commodities covered
under the CPRIA are " products of forestry," see 7
U.S.C. § 7412(1)(D), including softwood lumber, a term
the USDA uses to refer to certain " 'lumber and
products' manufactured from 'one of the botanical
groups of trees that have needle-like or scale-like leaves,
or conifers.'" Def. MTD/MSJ at 1. Softwood lumber is
used in the United States primarily in residential home
construction. See Softwood Lumber Research, Promotion,
Consumer Education and Industry Information Order, 76
Fed.Reg. 46,185, 46,186 (Aug. 2, 2011).
facing one of the " worst markets in history" in
the late aughts, in 2010
members of the softwood-lumber industry sought to benefit
from such a campaign. See Softwood Lumber Research,
Promotion, Consumer Education and Industry Information Order,
75 Fed.Reg. 61,002, 61,005 (Oct. 1, 2010). The CPRIA
authorizes the Secretary to issue an order in response to
requests by associations representing producers of a
particular commodity. See 7 U.S.C. § 7413(a)(1)(C).
Industry participation is critical: each checkoff order must
also establish an industry group that will carry out the
program. See id. § 7414(b)(1). In this case, it was the
Blue Ribbon Commission (BRC), composed of 21 softwood-lumber
chief-executive officers and business leaders, which
submitted the proposed Softwood Lumber Checkoff Order to AMS.
See Pl. Opp./MSJ at 6; 75 Fed.Reg. at 61,005. AMS modified
this proposed Order, then determined it was " consistent
with and would effectuate the purposes" of the CPRIA.
See id. at 61,016. Announcing its intention to implement the
Checkoff Order, AMS published a notice of proposed rulemaking
in the Federal Register. See id. at 61,002. The proposed
Order announced an initial assessment rate of $0.35 per
thousand board feet of softwood lumber shipped within or
imported into the United States. See id.
core of the dispute between the parties is the fact that the
Order does not apply to all softwood-lumber manufacturers and
importers. Under the CPRIA, the Secretary is authorized
" to exempt from the order any de minimis quantity of an
agricultural commodity otherwise covered by the order."
7 U.S.C. § 7415(a)(1). To this end, AMS stated that the
proposed Order would exempt from assessment all entities that
domestically ship or import less than 15 million board feet
per fiscal year. See 75 Fed.Reg. at 61,002. As we will see,
whether the 15 million-board-feet exemption was a " de
minimis quantity" under the CPRIA is central to the
resolution of the dispute.
the well-worn notice-and-comment-rulemaking playbook, AMS
invited interested parties to submit comments on the proposed
Order. See id. at 61,016. In a contemporaneous press release,
AMS stated that " [i]f a majority of those commenting
favored USDA moving forward" with the proposed Order,
" a referendum would need to be held," and a
majority of the voters by both number and volume would need
to support the program in order for AMS to implement it. See
USDA Seeks Comments on Establishing New Softwood Lumber
Research, Promotion, Consumer Education and Industry
Information Order, AMS 189-10 (Oct. 1, 2010) (Administrative
Record, AR2105). In response, AMS received 55 comments in
total, the majority of which it deemed supportive of the
proposed Order. See Softwood Lumber Research, Promotion,
Consumer Education and Industry Information Order, 76
Fed.Reg. 22,757, 22,770 (Apr. 22, 2011). Trees were not
spared during this process, as AMS responded in great detail
to these various comments. See id. at 22,770-75.
Resolute, nevertheless, argues that AMS's actions related
to the notice-and-comment process were in violation of the
APA, see Compl., ¶ ¶ 41-53, as discussed in more
the industry largely in favor of the proposed Order, AMS then
announced a referendum among all producers who would be
assessed under it. See 7 U.S.C. § 7417(a)(1) (" For
the purpose of ascertaining whether the persons to be covered
by an order favor the order going into effect, the order may
provide for the Secretary to conduct an initial referendum
among persons to be subject to an assessment . . . ." ).
AMS announced the procedures and timing of the referendum in
the Federal Register, and it noted that every non-exempt
softwood-lumber domestic manufacturer or importer was
eligible to vote. See 76 Fed.Reg. at 22,775. Resolute
contests the manner in which AMS conducted the referendum,
including its determination of which producers and importers
were eligible. See Compl., ¶ ¶ 69-74.
received a total of 173 completed ballots from the
referendum, 159 of which it deemed valid. See Administrative
Law Hearing, Witness Testimony of Sonia Jimenez, Director of
the Promotion and Economics Division of the Fruit and
Vegetable Program of the AMS at 319 (Jan. 28, 2013) (AR3316)
[hereinafter " Testimony of Sonia Jimenez" ]. Of
those 159 ballots returned, 107 favored the Order, see id.,
constituting 67 percent of those voting in the referendum and
" 80 percent of the volume represented in the
referendum." 76 Fed.Reg. at 46,185. The results of the
referendum encouraged AMS to move forward with the Order,
although not without protest from Resolute. AMS published the
final Order in the Federal Register in August of 2011.
See id. at 46,185-46,202.
response to AMS's implementation of the Order, Resolute
filed a petition with the USDA in accordance with the CPRIA
on October 28, 2011. See Compl., ¶ 81; 7 U.S.C. §
7418(a)(1)(A) (" A person subject to an order . . . may
file with the Secretary a petition . . . stating that the
order . . . is not established in accordance with law; . .
." ). Based on its 2010-calendar-year sales, Plaintiff
imported less than 15 million board feet during 2010 and was
thus ineligible to vote in the referendum. See In Re:
Resolute Forest Products Petitioner, No. 12-0040, 2014
WL 1993757, at *5-6 (U.S.D.A. Apr. 30, 2014). Resolute later
began to import more than 15 million board feet per year,
however, and has been paying assessments on imports above
that threshold since January 2012. See Pl. Rep. at 7.
Resolute ultimately amended its protest, including a litany
of constitutional challenges to the CPRIA, and these claims
are mirrored in the counts it brings before this Court. See
First Amended Petition to Terminate or Amend USDA's
Softwood Marketing Order (June 22, 2012) (AR0236).
first two adjudicative bites at the apple met with little
success. Administrative Law Judge Jill S. Clifton conducted a
four-day hearing on Resolute's petition from January
28-31, 2013, at the USDA in Washington, D.C. See Compl.,
¶ 89. Judge Clifton denied Resolute's petition,
affirming both the Softwood Lumber Checkoff Order and the
CPRIA. See In re: Resolute, 2014 WL 1993757, at *12.
Undeterred, Plaintiff then filed a timely appeal to the USDA
Judicial Officer on June 12, 2014. See Compl., ¶ 118.
Judicial Officer William G. Jenson denied Resolute's
appeal in a decision dated November 26, 2014. See In re:
Resolute Forest Products, Petitioner, No. 12-0040, 2014 WL
7534275 (U.S.D.A. Nov. 26, 2014).
now brings its case before this Court, seeking review of the
denial of its petition, as the CPRIA allows. See 7 U.S.C.
§ 7418(b)(1) (" The district court of the United
States . . . shall have jurisdiction to review the final
ruling on the petition . . . ." ). Among its
constitutional claims are that the CPRIA unconstitutionally
delegates executive and legislative authority to private
parties and violates the due-process rights of producers and
importers. As touched on above, Plaintiff also alleges APA
violations in nearly every action taken by AMS in the
development and application of the Checkoff Order. In
response, Defendants have now filed a Motion to Dismiss or,
in the Alternative, for Summary Judgment. Plaintiff responded
by filing a Cross-Motion for Summary Judgment.
typical case, summary judgment may be granted if " the
movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d
202 (1986); Holcomb v. Powell, 433 F.3d 889, 895,
369 U.S. App.D.C. 122 (D.C. Cir. 2006). A fact is "
material" if it is capable of affecting the substantive
outcome of the litigation. See Liberty Lobby, 477
U.S. at 248; Holcomb, 433 F.3d at 895. A dispute is "
genuine" if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party. See Scott
v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167
L.Ed.2d 686 (2007); Liberty Lobby, 477 U.S. at 248;
Holcomb, 433 F.3d at 895.
styled Motions for Summary Judgment, the pleadings in this
case more accurately seek the Court's review of an
administrative decision. Challenges under the CPRIA proceed
under the Administrative Procedure Act's familiar "
arbitrary and capricious" standard of review. See 7
U.S.C. § 7418(b)(1); 5 U.S.C. § 706(2)(A). Because
of the limited role federal courts play in reviewing such
administrative decisions, the typical Rule 56
summary-judgment standard does not apply to the parties'
dueling motions on Resolute's APA claims. See Sierra
Club v. Mainella, 459 F.Supp.2d 76, 89-90 (D.D.C. 2006).
Instead, in APA cases, " the function of the district
court is to determine whether or not . . . the evidence in
the administrative record permitted the agency to make the
decision it did." Id. (internal citations
omitted). Summary judgment thus serves as the mechanism for
deciding, as a matter of law, whether an agency action is
supported by the administrative record and is otherwise
consistent with the APA standard of review. See Bloch v.
Powell, 227 F.Supp.2d 25, 31 (D.D.C. 2002) (citing
Richards v. INS, 554 F.2d 1173, 1177, 180 U.S.
App.D.C. 314 (D.C. Cir. 1977)).
requires courts to " hold unlawful and set aside agency
action, findings, and conclusions" that are "
arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law." 5 U.S.C. § 706(2)(A).
Under this " narrow" standard of review -- which
appropriately encourages courts to defer to the agency's
expertise, see Motor Vehicle Mfrs. Ass'n of United
States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S.
29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983) -- an agency is
required to " examine the relevant data and articulate a
satisfactory explanation for its action including a rational
connection between the facts found and the choice made."
Id. (internal quotation marks omitted). " In
reviewing agency action under that standard, a court is not
to substitute its judgment for that of the agency,"
GameFly, Inc. v. Postal Regulatory Comm'n, 704
F.3d 145, 148, 403 U.S. App.D.C. 271 (D.C. Cir. 2013)
(citation and internal quotation marks omitted), nor to
" disturb the decision of an agency that has examine[d]
the relevant data and articulate[d] . . . a rational
connection between the facts found and the choice made."
Americans for Safe Access v. DEA, 706 F.3d 438, 449,
403 U.S. App.D.C. 388 (D.C. Cir. 2013) (internal quotation
marks and citation omitted). On the other hand, where the
agency has not provided a reasonable explanation for its
actions, " [t]he reviewing court should not attempt
itself to make up for such deficiencies: We may not supply a
reasoned basis for the agency's action that the agency
itself has not given." State Farm, 463 U.S. at 43 (1983)
(citation and internal quotation marks omitted). A court
should nevertheless " uphold a decision of less than
ideal clarity if the agency's path may reasonably be
discerned." Id. (quoting Bowman Transp.
Inc. v. Arkansas-Best Freight System, 419 U.S. 281, 286,
95 S.Ct. 438, 42 L.Ed.2d 447 (1974)).
Court begins, as it must, with standing. Once satisfied of
this jurisdictional prerequisite, it next considers
Plaintiff's APA claims. Determining that Resolute
prevails on one, the Court thereafter assesses the proper
remedy. It concludes with a brief discussion of the fate of
the constitutional questions raised herein.
threshold matter, Resolute must establish standing to pursue
its claims, which Defendants argue it cannot do. Article III
of the United States Constitution limits the jurisdiction of
the federal courts to resolving " Cases" and "
Controversies." U.S. CONST. art. III, § 2, cl. 1. A
party's standing " is an essential and unchanging
part of the case-or-controversy requirement of Article
III." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560,
112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). To maintain standing,
a plaintiff must, at a constitutional minimum, meet the
following criteria. First, it " must have suffered an
injury in fact -- an invasion of a legally-protected interest
which is (a) concrete and particularized . . . and (b) actual
or imminent, not conjectural or hypothetical . . . ."
Id. (citations and internal quotation marks
omitted). Second, " there must be a causal connection
between the injury and the conduct complained of -- the
injury has to be fairly . . . trace[able] to the challenged
action of the defendant, and not . . . th[e] result [of] the
independent action of some third party not before the
court." Id. (alterations in original) (citation
and internal quotation marks omitted). Third, " it must
be 'likely,' as opposed to merely
'speculative,' that the injury will be 'redressed
by a favorable decision.'" Id. at 561
(citation omitted). A " deficiency on any one of the
three prongs suffices to defeat standing." U.S.
Ecology, Inc. v. U.S. Dept. of Interior, 231 F.3d 20,
24, 343 U.S. App.D.C. 386 (D.C. Cir. 2000). In addition,
" a plaintiff must demonstrate standing for each claim
he seeks to press. . . ." DaimlerChrysler Corp. v. Cuno,
547 U.S. 332, 352, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006). In
the present case, Resolute brings four causes of action
alleging violations of the Constitution (Counts I-IV), as
well as six claims that the USDA violated the Administrative
Procedure Act (Counts V-X).
its causes of action, Resolute's injury-in-fact is
straightforward: it has been paying assessments under the
Order, which it claims is unlawful, since January 2012 -- at
this point, for over three and a half years. See Pl. Rep. at
7. Plaintiff's redressability threshold is similarly
satisfied, since a judgment voiding the Order would alleviate
Plaintiff's alleged injury. Defendants, however, raise
two central challenges to Plaintiff's satisfaction of the
causation factor. First, AMS contends that because the
referendum was technically optional -- the Secretary was not
required to conduct it before implementing the order -- it
cannot be said to have caused Plaintiff's injury. To
similar effect, Defendants relatedly maintain that because
the Secretary has discretion to cancel the Checkoff Order at
any time, Resolute cannot show that the operation of the
referendum " caused" its injury. Second, Defendants
assert that because ...