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

130 F. Supp. 3d 81, 2015 U.S. Dist. LEXIS 126087, 2015 WL 5501830
CourtDistrict Court, District of Columbia
DecidedSeptember 9, 2015
DocketCivil Action No. 14-2103 (JEB)
StatusPublished
Cited by9 cases

This text of 130 F. Supp. 3d 81 (Resolute Forest Products, Inc. v. U.S. Department of Agriculture) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Resolute Forest Products, Inc. v. U.S. Department of Agriculture, 130 F. Supp. 3d 81, 2015 U.S. Dist. LEXIS 126087, 2015 WL 5501830 (D.D.C. 2015).

Opinion

MEMORANDUM OPINION

JAMES E. BOASBERG, United States District Judge

“Out of,timber so crooked as that from which man is made, nothing entirely [85]*85straight can be carved.” So said Immanuel Kant about humanity; so elaims Plaintiff Resolute Forest Products about the lawfulness of compulsory marketing programs developed by private parties and overseen by the Ü.S. Department of Agriculture.

In 2010 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 devélopment and issuance of these orders.

In the 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 ah 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 rule-making 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. Plaintiffs 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.

Much 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 checkoff order.

Defendants — 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.

[86]*86I. Background

Puns aside, given the complexities of the administrative process — and the often picayune nature of Plaintiffs 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.

A. Parties

Plaintiff 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.

Defendants 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.

• B. The CPRIA and the 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. See Avocados Plus, Inc., v. Veneman, 370 F.3d 1243, 1245 (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.

Marketing 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.

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130 F. Supp. 3d 81, 2015 U.S. Dist. LEXIS 126087, 2015 WL 5501830, Counsel Stack Legal Research, https://law.counselstack.com/opinion/resolute-forest-products-inc-v-us-department-of-agriculture-dcd-2015.