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Resolute Forest Products, Inc. v. U.S. Department of Agriculture

United States District Court, District of Columbia

November 30, 2016

RESOLUTE FOREST PRODUCTS, INC., Plaintiff,
v.
U.S. DEPARTMENT OF AGRICULTURE, et al., Defendants.

          MEMORANDUM OPINION

          JAMES E. BOASBERG United States District Judge.

         After three Opinions, the Court has finally chopped this case all the way down to its stump. All that remains is the determination of a remedy. Yet just as the roots of the tree are often tricky to yank out, such is the predicament here. This dispute involves Defendant U.S. Department of Agriculture's so-called Softwood Lumber Checkoff Order, which authorized its Softwood Lumber Board to collect assessments from lumber companies and then to spend those funds on marketing efforts on behalf of the softwood-lumber industry as a whole. Plaintiff Resolute Forest Products, Inc., which was assessed some $1.1 million since the Order went into effect in 2011, challenged the Department's Order as unlawfully promulgated. This Court ultimately agreed. See Resolute Forest Prods., Inc. v. U.S. Dep't of Agric. (Resolute III), No. 14-2103, 2016 WL 2885869 (D.D.C. May 17, 2016).

         Resolute now asks for its money back. That simple request, however, is laden with complicated questions of sovereign immunity, the statutory authority for relief, and considerations of equity. Following a status hearing, submissions on the remedies question, and supplemental Court-ordered briefing, the Court ultimately determines that a full refund of the illegal assessments is indeed due.

         I. Background

         Prior Opinions have mostly set the backdrop for the latest spat between Resolute and the Department of Agriculture as well as its Secretary, Tom Vilsack (the two of which the Court will refer to jointly as Defendant). See Resolute III, 2016 WL 2885869, at *1-3; Resolute Forest Prods., Inc. v. U.S. Dep't of Agric. (Resolute II), No. 14-2103, 2016 WL 1714312, at *1 (D.D.C. Feb. 2, 2016); Resolute Forest Prods., Inc. v. U.S. Dep't of Agric. (Resolute I), 130 F.Supp.3d 81, 86-88 (D.D.C. 2015). Even so, because none of those dispositions focused on remedial issues, the Court sketches in a few added details.

         A. The CPRIA and Softwood Lumber Checkoff Program

         “Congress has long regulated the promotion and sale of agricultural commodities by enabling the federal government to coordinate with industries to advance such promotional efforts.” Resolute I, 130 F.Supp.3d at 86. Everything from kiwifruit to popcorn is subject to federal marketing orders. See 7 U.S.C. §§ 7461-7491.

         At issue here is softwood lumber. For that product, the Commodity Promotion, Research, and Information Act of 1996 (CPRIA), id. §§ 7411-7425, empowers the Secretary to issue an order that creates an industry-led board and allows that board to collect assessments from lumber companies so that it can engage in marketing campaigns for the industry as a whole. See id. §§ 7413(a), 7414(b), (c)(1); Resolute I, 130 F.Supp.3d at 87. To protect small-volume lumber distributors and minimize administrative costs, the Secretary may specify in that order that a “de minimis quantity of an agricultural commodity” produced annually by each company is exempt from these fees. See 7 U.S.C. § 7415(a)(1).

         In the present case, the Secretary's Softwood Lumber Checkoff Order - promulgated in 2011 following notice-and-comment rulemaking - did precisely these things. First, the Checkoff Order established the Softwood Lumber Board to carry out lumber-promotion activities. See Softwood Lumber Research, Promotion, Consumer Education and Industry Information Order, 76 Fed. Reg. 46, 185 (Aug. 2, 2011). Next, to fund those activities, the Checkoff Order required industry members that trafficked in more than a de minimis quantity of softwood lumber - specifically, 15 million board feet (15mmbf) per fiscal year - to pay assessments to the Board. See Resolute I, 130 F.Supp.3d at 87; see also 7 U.S.C. § 7415(a)(1). Those members producing less are exempt from such fees.

         As certain as taxes are, few are keen to pay the toll. Suspecting as much, the CPRIA provides a legal mechanism for companies to object to a checkoff order. Relevant here, the Act allows disgruntled members to bring administrative, and then judicial, challenges to an order.

         The statute provides, first, for administrative relief:

A person subject to an order issued under this subchapter may file with the Secretary a petition -
(A) stating that the order, any provision of the order, or any obligation imposed in connection with the order, is not established in accordance with law; and
(B) requesting a modification of the order or an exemption from the order.

Id. § 7418(a)(1). Once the Secretary rules on the petition, federal district courts then have “jurisdiction to review the final ruling on the petition of the person.” Id. § 7418(b)(1). If the order is unlawful, however, courts have a choice of remedies:

If the court determines that the ruling is not in accordance with law, the court shall remand the matter to the Secretary with directions -
(A) to make such ruling as the court determines to be in accordance with law; or
(B) to take such further action as, in the opinion of the court, the law requires.

Id. § 7418(b)(3).

         B. Resolute&# ...


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