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XP Vehicles, Inc. v. The United States Department of Energy

United States District Court, District of Columbia

January 15, 2016

XP VEHICLES, INC., et al., Plaintiffs,
v.
THE UNITED STATES DEPARTMENT OF ENERGY, et al., Defendants.

MEMORANDUM OPINION AND ORDER

KETANJI BROWN JACKSON United States District Judge.

On July 14, 2015, this Court dismissed the majority of the claims in this matter but permitted certain Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701-06, claims to proceed. Subsequently, Defendants filed a motion for voluntary remand. (See Defs.’ Mot. for Voluntary Remand (“Defs.’ Mot.”), ECF No. 44; Defs.’ Mem. Supporting Defs.’ Mot. (“Defs.’ Mem.”), ECF No. 44-1.) That motion is now ripe, and it be will GRANTED for the reasons explained below.

I. BACKGROUND

This Court’s Memorandum Opinion regarding Defendants’ motions to dismiss the complaint (issued July 14, 2015) recounts the factual background of this case in detail. See generally XP Vehicles, Inc. v. Dep’t of Energy, No. 13-cv-37, 2015 WL 4249167 (D.D.C. July 14, 2015). For present purposes, only the following facts are relevant. In 2009, Plaintiffs XP Vehicles, Inc. (“XPV”) and Limnia, Inc. (“Limnia”) submitted applications for loan assistance under two United States Department of Energy (“DOE”) programs. Those programs-the Advanced Technology Vehicle Manufacturing (“ATVM”) Loan Program and the Section 1703 Loan Guarantee Program (“LG Program”)-permit the DOE to offer loans and “direct financial support to the manufacturers of clean energy vehicles and related components.” Id. at *1. After the DOE denied Plaintiffs’ applications, Plaintiffs sued the DOE, its Secretary in his official capacity, and two former high-level DOE administrators in their individual capacities, claiming that the DOE violated several constitutional provisions and the APA because the denials had been based on impermissible political cronyism rather than impartial review. See id.

As mentioned, this Court dismissed the majority of Plaintiffs’ claims for a variety of reasons not pertinent here; however, it also concluded that the claims Plaintiff Limnia had brought under the APA stemming from the DOE’s allegedly arbitrary and capricious denial of its ATVM and LG Program applications survived the government’s motion to dismiss for failure to state a claim. See Id. at *25-27. Defendants subsequently filed an answer to Limnia’s surviving claims, and then filed the motion for voluntary remand of the case to the agency due to changed circumstances and considerations of judicial efficiency that is before this Court at present. (See Defs.’ Mem. at 5.)[1] Limnia filed a brief in opposition to Defendants’ motion for a voluntary remand, asserting that Defendants failed to admit fault or point to intervening events in support of the remand request, and that remanding the matter to the agency under the circumstances presented here would deprive Limnia of benefits to which it might be entitled if the Court permitted the case to proceed and ultimately ruled in Limnia’s favor. (See Pl.’s Mem. in Opp’n to Defs.’ Mot. (“Pl.’s Opp’n”), ECF No. 45, at 1.) Defendants filed a reply brief (see Defs.’ Reply in Supp. of Defs.’ Mot. (“Defs.’ Reply”), ECF No. 47), and this Court held a hearing on Defendants’ ripe remand motion on December 15, 2015.

II. APPLICABLE LEGAL STANDARDS

When a plaintiff files a complaint challenging agency action, a federal court has the discretion to grant the agency’s motion for a voluntary remand of the matter in order to permit the agency to reconsider its decision, even before any judicial consideration of the merits. See Code v. McHugh, No. 15-cv-31, 2015 WL 6154381, at *3 (D.D.C. Oct. 19, 2015). Agencies typically seek to justify such remand requests by expressing doubt about the propriety of their initial action-for example, agencies sometimes point to “new evidence [that became] available after an agency’s original decision was rendered” or highlight “intervening events outside of the agency’s control [that] may affect the validity of an agency’s actions.” Carpenters Indus. Council v. Salazar, 734 F.Supp.2d 126, 132 (D.D.C. 2010) (internal quotation marks and citations omitted). But it is also well established that, “[e]ven in the absence of new evidence or an intervening event, . . . courts retain the discretion to remand an agency decision when an agency has raised substantial and legitimate concerns in support of remand.” Id. (internal quotation marks and citation omitted); see also SKF USA Inc. v. United States, 254 F.3d 1022, 1029 (Fed. Cir. 2001) (observing that “even if there are no intervening events, the agency may request a remand (without confessing error) in order to reconsider its previous position”); Code, 2015 WL 6154381, at *3 (same).

Judges in this district have deployed a three-pronged framework to guide the exercise of their discretion in this circumstance; this inquiry asks: (1) whether defendants have “identified substantial and legitimate concerns in support of a voluntary remand, ” (2) whether voluntary remand “would conserve the Court’s and the parties’ time and resources, ” and (3) whether voluntary remand would cause “undue prejudice to [plaintiff.]” FBME Bank Ltd. v. Lew, No. 15-cv-1270, 2015 WL 6854416, at *2 (D.D.C. Nov. 6, 2015) (internal quotation marks and citations omitted). These factors lead the court to assess various aspects of the agency’s explanation for the remand request and the impact that granting such a request would have on the plaintiff and the judicial process-considerations that go beyond whether or not the defendant “directly confess[es] error[.]” Id. at *2; see, e.g., id. (finding that remanding to permit the agency to address the potential inadequacies in its notice-and-comment process, among other things, promotes “judicial economy”); id. at *4 (rejecting plaintiffs’ argument that voluntary remand would prejudice them because it would deprive them of a claimed “entitle[ment] to vacatur” associated with a victory on the merits). Thus, even when an agency refuses to admit fault, cases in this district hold that it is entirely appropriate for the court to grant the agency’s voluntary remand request. See Code, 2015 WL 6154381, at *3 (citing SKF USA, 254 F.3d at 1029).

III. DISCUSSION

In requesting that this matter be remanded to the DOE for reconsideration, Defendants have not conceded any error, nor have they identified new evidence or other intervening events that bear on the remand inquiry. Instead, Defendants say that a voluntary remand is justified due to changed circumstances and the need to preserve scarce judicial resources. (See Defs.’ Mem. at 5 (“[I]n light of the passage of time since the filing of this Complaint, and the fact that Limnia remains free to submit new applications to the agency at any time, Defendants believe that it would constitute a waste of judicial and party resources to litigate the merits of [Limnia’s] two remaining claims.”).) Defendants emphasize that it has been six years since Limnia first submitted its application materials for agency review, and that new agency officials are currently ready, willing, and able to perform an unbiased review of Limnia’s ATVM and LG applications (which will necessarily include updated information regarding Limnia’s technology), and Defendants argue that, indeed, such a result is all that Limnia would be entitled to if it prevailed in the instant action. Limnia disagrees; in essence, it asserts that an admission of fault or a recognition that the agency’s prior determination might have been politically motivated is the price the agency must pay for having the case remanded to it, and, in any event, the agency has not provided (and cannot provide) any assurance that the proposed new application review will be unbiased. (See Pl.’s Opp’n at 3-4.) Limnia also maintains that returning the case to the agency without judicial review would effectively deprive Limnia of the opportunity to receive a condemnatory statement from the Court regarding the agency’s prior review of its applications-a result that, according to Limnia, it would be entitled to as the victor in this action. (See Id. at 6-7.)

Boiled to bare essence, it is clear that the parties’ dispute with respect to Defendants’ motion to remand is over whether Defendants’ reasons for requesting remand are substantial and legitimate and whether voluntary remand would prejudice Limnia. All things considered, and for the following reasons, this Court believes Defendants have the better of the argument.

A. Substantial And Legitimate Reasons Support Voluntary Remand

The DOE has provided several good reasons for requesting that this case be remanded. First among them is the fact that Limnia’s technology has likely “advanced” over the past six years (which is, in and of itself, a relevant changed circumstance) and that remanding the case to the agency “will afford Limnia the opportunity to reapply to DOE’s loan programs and update its loan applications with any new information about its project.” (Defs.’ Mem. at 6.) In this regard, it is significant that the DOE “continues to operate the ATVM Loan Program” at present (id. at 7), and that the instant motion for remand commits the agency to finishing the initial eligibility phase with respect to any substantially complete application that Limnia submits after remand “within 90 days of receipt of Limnia’s submission” (id. at 13), compared to the “months, if not years, of th[e] Court’s and the parties’ time and resources” that would be spent if the Court does not remand the matter-resources that will be consumed by “litigation [that] will continue through summary judgment, decision, and potential appeals” (id.). Furthermore, and perhaps most important, Defendants make a convincing argument that the costly and time-consuming litigation pathway and the requested voluntary remand route both lead to the same result under the circumstances presented here: that is, if Limnia is victorious at the end of the day with respect to the instant lawsuit, “the Court would remand the case to DOE for its reconsideration of the application[s, ]” which is “the same relief that [Limnia] could obtain sooner if voluntary remand were granted.” (Id.; see also Id. at 5 (“Defendants believe that it would constitute a waste of judicial and party resources to litigate the merits of the two remaining claims.”).) It appears that such considerations have factored into the court’s analysis in other recent cases decided in this district, see, e.g., FBME Bank, 2015 WL 6854416, at *2, and this Court finds them to be significant concerns with respect to the motion for voluntary remand in this case as well.

Undaunted, Limnia insists that voluntary remand is authorized “only” in three circumstances-to wit: when “new evidence becomes available after an agency’s original decision was rendered” or “intervening events outside of the agency’s control may affect the validity of the agency’s actions” or “an agency has raised substantial and legitimate concerns in support of remand” (Pl.’s Opp’n at 2-3 (internal quotation marks and citation omitted))-and it is crystal clear that Limnia believes that, in the absence of new evidence or intervening events, the only legitimate basis for voluntary remand is the agency’s acknowledgment of past error, or in this case, impermissible favoritism (see Id. at 4 (“Absent a merits decision or an admission of error and favoritism, the government’s arguments should fail and this case should move forward.”)). But there is nothing in this Circuit’s precedent that establishes that the agency must confess error in order to have the opportunity to revisit its prior determination. Indeed, as explained above, while it is common for an agency to cast doubt on the challenged act in order to support its request for remand, courts have found remand appropriate where the agency stops short of falling on its sword in this ...


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