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Limnia, Inc. v. U.S. Department of Energy

United States District Court, District of Columbia

September 28, 2018

LIMNIA, INC., Plaintiff,
U.S. DEPARTMENT OF ENERGY, et al., Defendants.



         In 2009, Plaintiff Limnia, Inc. (“Limnia” or “Plaintiff”), a manufacturer of battery systems for electric vehicles, applied for a loan from the Department of Energy (“DOE”) through a congressionally-authorized clean energy program known as the Loan Guarantee Program (“LG Program”). Limnia submitted its program application to DOE, but it did not transmit the application fee that DOE's regulations prescribed. See 10 C.F.R. § 609.6(b)(2) (2009). DOE summarily rejected Limnia's loan application on this basis, after which Limnia filed the instant lawsuit against DOE and its Secretary (collectively, “Defendants”) under the Administrative Procedure Act, 5 U.S.C. § 706, claiming that DOE had arbitrarily refused to honor a supposedly pre-existing oral agreement to waive the application fee (a waiver that DOE says did not occur), and that the agency had also failed to explain why it would not honor the oral fee waiver. (See Am. Compl., ECF No. 26, ¶¶ 167-71; Pl. Limnia, Inc.'s Opp'n to Defs.' Mot. for Partial Summ. J. & Cross-Mot. for Partial Summ. J. or for Disc. (“Pl.'s Mot.”), ECF No. 74, at 6.)[1] Limnia combined its claims against DOE with those of another disgruntled loan applicant; the gravamen of their complaint, which also included alleged violations of Limnia's constitutional rights to due process and equal protection, was that various determinations that DOE had made regarding the processing and merits of their loan applications were infected with political “cronyism” and demonstrated an abuse of power. (See, e.g., Am. Compl. ¶¶ 83-113.)

         As of July 21, 2016, this Court had (1) dismissed the other plaintiff and many of the complaint's claims; (2) voluntarily remanded Limnia's remaining APA claims back to the agency (over Limnia's objection) for reconsideration of Limnia's loan application; and (3) closed Limina's case due to its failure to resubmit its application materials to the agency pursuant to the voluntary remand. Limnia then appealed, and the D.C. Circuit determined that this Court's voluntary remand order was improper, and as relevant here, ordered this Court to “resolve Limnia's APA challenge to the apparently denied 2009 loan applications.” Limnia, Inc. v. U.S. Dep't of Energy, 857 F.3d 379, 388 (D.C. Cir. 2017). The panel suggested that this Court could avoid addressing the merits of Limnia's APA challenge by voluntarily remanding the matter to the agency, but only if the Court “first resolve[s] whether Limnia has to pay the application fee associated with the 2009 Loan Guarantee Program application, or whether that fee was waived by the Department.” Id. Of course, answering that question under the circumstances presented actually eliminates any prospect of a voluntary remand to the agency, because Limnia's APA challenge to DOE's treatment of its 2009 LG Program loan application is its assertion that DOE had arbitrarily refused to process Limnia's application in the absence of the application fee. (See Hr'g Tr. at 12:10-13 (“[O]ur position here, our perspective is we're here today only regarding denial of the fee waiver.”).) Consequently, on remand, this Court ordered the parties to brief the merits of Limnia's LG Program APA claim, and the parties proceeded to address the issue of whether and to what extent DOE acted arbitrarily and capriciously in requiring that Limnia pay the application fee associated with the 2009 LG Program application. (See Minute Order of November 22, 2017.)

         Before this Court at present are the parties' cross-motions for summary judgment on this issue. (See Mem. in Supp. of Defs.' Mot. for Partial Summ. J. (“Defs.' Mem.), ECF No. 72-1; Pl.'s Mot.) In its motion, DOE argues that the agency “reasonably decided to deny [Limnia's] LG Program application” because “Limnia did not pay the application fee” (Defs.' Mem. at 16), and it further maintains that the agency provided Limnia with an adequate explanation as to that decision, given that “[n]othing in the administrative record” suggests that DOE “agreed to specifically waive the application fee” with respect to Limnia's LG application (id. at 19). For its part, Limnia acknowledges that it “did not submit an application fee” (Pl.'s Mot. at 5), but it contends that DOE acted arbitrarily and capriciously in rejecting its application on this basis, because the agency had “failed” to “provide[] a reasoned explanation for its refusal to waive the application fee” (id. at 6), given that “[e]vidence in the record indicates that DOE consented to this waiver” (id. at 5). Limnia has also moved, in the alternative, “for limited discovery to supplement the record” if this Court finds “the administrative record insufficient to allow for judicial review.” (Id. at 13.)

         For the reasons explained below, Defendants' motion for partial summary judgment must be GRANTED, and Plaintiff's cross-motion for partial summary judgment must be DENIED.[2] In short, the instant record indisputably establishes that the steps that are necessary to waive Limnia's application fee for the LG Program under DOE regulations were never taken, and DOE had no obligation to honor an alleged oral waiver of the application fee, nor did it need to provide any explanation for its rejection of Limnia's application other than informing Limnia (accurately) that the mandatory application fee had not been remitted. Thus, DOE's rejection of Limnia's application was not arbitrary or capricious. Moreover, because discovery is generally disfavored in APA cases and is also entirely unnecessary for the resolution of the instant cross-motions, Limnia's alternative motion for discovery is denied. A separate Order consistent with this Memorandum Opinion will follow.

         I. BACKGROUND

         A. The Applicable LG Program Regulations

         In 2005, Congress passed the Energy Policy Act of 2005, Pub. L. No. 109-58, § 1701-04, 119 Stat. 594, 1117-22 (codified at 42 U.S.C. §§ 16511-14), with the goal of promoting new and improved technologies that “avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases[, ]” 42 U.S.C. § 16513(a)(1). To help make that goal a reality, Congress authorized DOE to “guarantee loans for certain environmentally-friendly, energy-efficient projects[, ]” XP Vehicles, Inc. v. Dep't of Energy, 118 F.Supp.3d 38, 48 (D.D.C. 2015), and specifically noted that “[p]roduction facilities for the manufacture of fuel efficient vehicles or parts of those vehicles, including electric drive vehicles and advanced diesel vehicles” would be eligible for support under the LG Program, see 42 U.S.C. § 16513(b)(8). Although federal statutes lay out the broad outlines and policy goals of the LG Program, Congress left it up to DOE to issue “final regulations” that provide details regarding how the agency would administer the LG Program. Id. § 16515(b). DOE promulgated its first version of those final regulations on October 23, 2007, and that version governed the administration of the LG Program as well as any applications that were submitted for processing through December 3, 2009. See 10 C.F.R. § 609 (2009).[3]

         As relevant here, the then-existing LG Program regulations laid out a framework for how DOE would accept, process, and approve applications for loan guarantees under the LG Program. This application process would begin with DOE's decision to issue a “solicitation” that informed the public that it was “invit[ing] the submission of Pre-Applications or Applictions for loan guarantees for Eligible Projects.” Id. § 609.3. In response to that solicitation, entities that wished to submit an application had to submit an assortment of “information and materials”-for example, “[a] completed Application form signed by an individual with full authority to bind the Applicant and the Project Sponsors[, ]” id. § 609.6(b)(1), and “[a] description of the nature and scope of the proposed project[, ]” id. § 609.6(b)(5)-and the entity was also required to arrange for “[p]ayment of the Application filing fee[, ]” id. § 609.6(b)(2). DOE's regulations further reemphasized the application fee requirement by stating specifically that DOE would “not consider any Application complete unless the Applicant has paid the [filing] Fee[.]” Id. § 609.6(c).

         Importantly, the regulatory scheme that DOE devised for applications to the LG Program also contained a provision that permitted deviations from the listed requirements under certain specified circumstances. See Id. § 609.18. Namely, DOE could “authorize deviations on an individual request basis . . . upon a finding that such deviation is essential to program objectives and the special circumstances stated in the request make such deviation clearly in the best interest of the Government.Id. (emphasis added). Furthermore, the deviation provision plainly states that “[a] recommendation for any deviation shall be submitted in writing to DOE[, ]” and that “[s]uch recommendation must include a supporting statement, which indicates briefly the nature of the deviation requested and the reasons in support thereof.” Id. (emphasis added).

         B. Limnia's LG Program Application

         In 2008, DOE issued a solicitation for applications to the LG Program related to “projects that employ innovative energy efficiency, renewable energy, and advanced transmission and distribution technologies[.]” (Joint Appendix (“J.A.”), ECF No. 78-1, at 1.) This solicitation described the application process for any interested applicants, and with respect to the required application fee, it specified that “[a]ll applicants must remit twenty-five percent (25%) of the application fee . . . upon submission of their applications to DOE.” (Id. at 3; see Id. at 4 (reemphasizing that “[t]he appropriate proportion of the application fee . . . must be submitted to the U.S. Department of the Treasury [] by the appropriate dates . . . Applicants are advised to make proper arrangements to assure that Treasury receives such fees on behalf of DOE”).)[4]

         In early February 2009, Limnia learned of the LG Program, but in its view, “the application fees were prohibitive.” (Id. at 12.)[5] Sometime thereafter, Limnia allegedly participated in “a conference call” with various DOE officials, and during that call, Limnia's representatives purportedly heard DOE Secretary Steven Chu “state[] his intention to waive the application fees” relating to the LG Program. (Id.) Having “understood that Mr. Chu was waving the application fees” (id.), Limnia submitted an LG Program application to DOE on February 17, 2009, without including the fee (id. at 6). In its application cover letter, Limnia specifically stated that it “understand[s] that Secretary Chu has changed the submission fee to be payable upon award[.]” (Id.; see also Id. at 8, 10.) A handwritten statement-“applic [sic] fee waived by secretary of DOE”-appears at the top of the copy of Limnia's cover letter contained within the administrative record. (Id. at 6.)

         After submitting its application, Limnia eventually received a phone call from one of DOE's employees, informing the company that it “did need to pay the” application fee, and that “[it] needed to wire money” to the Treasury Department by February 26, 2009 (id. at 12 (emphasis added)), which was the deadline specified in the solicitation for project proposals (id. at 3). However, according to Limnia, other DOE employees had orally represented that there was “some flexibility on the time to wire the money.” (Id. at 12.) Ultimately, the fee-related communications between Limnia and DOE broke down, and Limnia never submitted any part of the LG Program application fee to DOE or the Treasury Department. (See Id. at 9-10, 12.) DOE rejected Limnia's application to the LG Program for this reason; in an e-mail dated April 9, 2009, DOE Senior Investment Officer Daniel C. Tobin wrote: “I regret to inform you that due to non-remittance of the required application fee, your application will not be reviewed. The application has been deemed non-responsive. Please note that this letter does not prejudice you from applying under future solicitations[.]” (Id. at 8.)

         C. Procedural History

         DOE's rejection of Limnia's LG Program application gave rise, in part, to the instant litigation. In 2013, Limnia, alongside another plaintiff named XP Vehicles, filed a complaint in this Court against DOE and its Secretary. (See Compl., ECF No. 1.) Plaintiffs then amended the complaint to allege that both Limnia and XP Vehicles' applications for financial support under the LG Program and another program DOE administers (the Advanced Technology Vehicle Manufacturing (“ATVM”) Program) were “improperly denied[.]” (Am. Compl. ¶ 119.) Both plaintiffs claimed “due process[, ]” “equal protection[, ]” and APA violations (id. ¶¶ 121-71), maintaining that DOE's denials were “impermissibly infected with political pressure” (e.g., id. ¶ 169). This Court eventually dismissed all claims against the individual defendants in their official capacities (see Order, ECF No. 38, at 1); all of XP Vehicles' claims against DOE, see XP ...

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