187 F. Supp. 3d 100
D.D.C.2016Background
- The Softwood Lumber Checkoff Order (administered by USDA/AMS under the CPRIA) imposed mandatory assessments on producers/importers who ship/import more than 15 million board feet (15mmbf) per year; AMS proposed the 15mmbf de minimis exemption based largely on a Blue Ribbon Commission (BRC) proposal.
- Resolute, which shipped less than 15mmbf in the referendum period (2010) and thus could not vote on the Order, later exceeded 15mmbf and was required to pay assessments beginning in 2012; it challenged the Order administratively and in federal court.
- The Court previously dismissed most APA claims but remanded without vacatur for USDA to explain its selection of the 15mmbf threshold and to identify underlying data sources.
- USDA supplied two remand memoranda (Barnes and Parrott) and exhibits largely relying on BRC materials and the Forest Service Profile reports; the Court found numerous discrepancies, data substitutions (production capacity vs. shipments; sawmills vs. business entities; 2007 vs. 2010), and computational errors.
- The Court concluded USDA failed to provide a reasoned, verifiable basis linking the stated criteria (free-rider effects, impact on small businesses, revenue sufficiency, total assessed/exempt quantities) to the 15mmbf choice, and held the promulgation arbitrary and capricious under the APA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether “de minimis quantity” permits USDA to choose any threshold | Resolute: USDA lacked lawful discretion to adopt arbitrary threshold and simply accepted BRC’s 15mmbf to hit revenue targets | USDA: Statute ambiguous; agency may use industry-specific factors (capacity, free riders, small-entity impact, funding) to set de minimis | Court: Chevron step two — statutory term ambiguous; the agency’s general multi-factor approach is permissible |
| Whether record supports choice of 15mmbf (data reliability) | Resolute: USDA’s record used faulty, inconsistent, and unsupported estimates (capacity vs shipments; wrong years; sawmills vs entities; arithmetic errors) | USDA: Relied on BRC, Profile reports, Random Lengths/FEA data and supplemented analysis on remand | Court: Held arbitrary and capricious — agency failed to show rational connection between facts and 15mmbf choice; data and explanations are contradictory and unreliable |
| Whether USDA considered impact on small businesses properly | Resolute: USDA misapplied RFA metrics, used 15mmbf without justifying departure from 25mmbf small-entity definition and lacked shipment-level data | USDA: Considered small-entity impact and relied on ALSC and Customs-derived estimates | Court: USDA’s small-entity analysis was unsupported and internally inconsistent; it mischaracterized sawmills as entities and lacked necessary data |
| Remedy / need to reach constitutional claims | Resolute: Also raised CPRIA delegation and due-process claims | USDA: Defended promulgation, asked court to uphold the rule | Court: Because the Order is arbitrary and capricious, court vacated/promulgation unlawful and did not reach constitutional questions (constitutional avoidance) |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary-judgment standard explained)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (agency must examine relevant data and provide rational connection between facts and decision)
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (two-step framework for reviewing agency statutory interpretation)
- City of Arlington v. FCC, 133 S. Ct. 1863 (agency deference principles and scope of review)
- Nat’l Treasury Employees Union v. Fed. Labor Relations Auth., 30 F.3d 1510 (D.C. Cir. 1994) (remand permitting agency to clarify rationale)
- Public Citizen v. FAA, 988 F.2d 186 (D.C. Cir. 1993) (agency must adequately explain result and supply record enabling judicial review)