Air Transport Association of America, Inc. v. U.S. Department of Agriculture ( 2018 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
__________________________________
)
AIR TRANSPORT ASSOCIATION )
OF AMERICA, INC. d/b/a )
AIRLINES FOR AMERICA, et al., )
)
Plaintiffs, )
)
v. )
) Civil Action No. 16-919 (RMC)
UNITED STATES DEPARTMENT )
OF AGRICULTURE, et al., )
)
Defendants. )
_________________________________ )
OPINION
The Agriculture Quarantine Inspection program is an essential part of the nation’s
efforts to secure its plants and animals from pests and diseases that are not native to the territory
of the United States. The Animal and Plant Health Inspection Service (APHIS), an agency
within the Department of Agriculture, works with Customs and Border Protection (CBP), an
agency within the Department of Homeland Security (DHS), to inspect all persons and vessels
entering the United States. In 1990, Congress ordered APHIS to charge its costs for the required
inspections to the applicable classes of users; since then, APHIS has proposed various rules
concerning fees for different user classes. In 2015, APHIS adopted a rule which set a new fee
structure. Under that rule, international airline passengers are charged a Passenger Fee of $3.96
(reduced from $5) and international commercial aircraft are charged a Commercial Aircraft Fee
of $225 (increased from $70.75). The Air Transport Association of America, Inc. and the
International Air Transport Association (collectively, Plaintiffs) challenge the validity of the
rule. They argue that it is inconsistent with the governing statutory provisions and violates the
Administrative Procedure Act (APA), 5 U.S.C. § 500 et seq. (2012).
1
Having studied the parties’ briefs, oral arguments, and the entire record, the Court
finds that (1) Plaintiffs’ claims are not time-barred; (2) APHIS’s actions were consistent with the
governing statute in charging both an air passenger fee and commercial aircraft fee to passenger
aircraft; (3) APHIS has not unlawfully engaged in cross-subsidization; (4) APHIS and Grant
Thornton, LLP reasonably relied on the fiscal year (FY) 2010 and 2011 data; and (5) Plaintiffs
were not harmed by the withholding of some data during the notice and comment period. The
Court also finds that after FY02, the governing statute no longer permitted APHIS to set fees in
order to maintain a reasonable balance, which APHIS used to fund its reserve account. Thus, the
Court will deny Defendants’ motion to dismiss, grant summary judgment to Defendants on
Counts I, II, and IV, and grant summary judgment in favor of Plaintiffs on Count III and remand
this part of the rulemaking for further consideration and possible rulemaking by APHIS.
I. BACKGROUND
APHIS has been inspecting “persons and vessels entering the customs territory of
the United States for possible infection or infestation with pests and diseases that threaten the
resident flora and fauna” of the United States for over a century. Defs.’ Mem. of P. & A. in
Supp. of Their Mot. to Dismiss and for Summ. J. and in Opp’n to Pls.’ Mot. for Summ. J.
(APHIS Opp’n) [Dkt. 24-1] at 1; see also Plant Protection Act, 7 U.S.C. § 7701 et seq. (2010); 7
C.F.R. § 330.105. The inspections are conducted through the Agricultural Quarantine Inspection
(AQI) program. Prior to the enactment of the Food, Agriculture, Conservation, and Trade
(FACT) Act of 1990, Pub. L. No. 101-624, § 2509, 104 Stat. 3359, 4069-70 (1990) (current
version at 21 U.S.C. § 136a (2013)), the costs of AQI were covered by annual appropriations to
the Department of Agriculture.
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However, in 1990, Congress enacted the FACT Act, which “authorizes [APHIS]
to collect user fees for certain agricultural quarantine and inspection (AQI) services.” Final Rule
at AR229.1 Because the terms of the statute have changed over time, and are integral to the
current dispute, the Court details the legislative history. As originally enacted, the FACT Act
provided that
The Secretary of Agriculture . . . may prescribe and collect fees to
cover the cost of providing agricultural quarantine and inspection
services in connection with the arrival at a port in the customs
territory of the United States, or the preclearance or preinspection at
a site outside the customs territory of the United States, of a
commercial vessel, commercial aircraft, commercial truck, or
railroad car.
§ 2509(a)(1). The FACT Act was first amended in 1990 to add “international passengers” as a
class of persons responsible for paying an AQI fee. See Omnibus Budget Reconciliation Act of
1990, Pub. L. No. 101-508, § 1203, 104 Stat. 1388, 1388-11 (1990). The original FACT Act
required the Secretary to set and adjust the fees:
to reflect the cost to the Secretary in administering such subsection,
in carrying out the activities at ports in customs territory of the
United States and preclearance and preinspection sites outside the
customs territory of the United States in connection with the
provision of agricultural quarantine inspection services, and in
maintaining a reasonable balance in the Account.
§ 2509(a)(4).
Congress further amended the FACT Act in 1991. As relevant, the 1991
amendment specified that inspection fees may only be collected in an amount commensurate
with the costs of inspection for each class of persons or entities paying the fees. See Food,
1
The Administrative Record is located on the Electronic Case Filing (ECF) system at docket
numbers 30 and 31.
3
Agriculture, Conservation, and Trade Act Amendments of 1991, Pub. L. No. 102-237, § 1015,
105 Stat 1818, 1902 (1991).
Fees, including fees from international airline passengers and
commercial aircraft operators, may only be collected to the extent
that the Secretary reasonably estimates that the amount of the fees
are commensurate with the costs of agricultural quarantine and
inspection services with respect to the class of persons or entities
paying the fees. The costs of such services with respect to
passengers as a class includes the costs of related inspections of the
aircraft.
Id. § 1015(a)(1)(D) (emphasis added). The meaning of the highlighted sentence is strongly
disputed here. In response, APHIS set initial fees in 1991 and 1992; for international air
passengers the fee was $2.00 and for commercial aircraft the fee was $76.75. See 56 Fed. Reg.
14837, 14845 (April 12, 1991) (setting $2 international air passenger fee); 57 Fed. Reg. 755, 769
(Jan. 9, 1992) (setting $76.75 commercial aircraft fee).
A. 1996 Amendment
The FACT Act was amended again as part of the Federal Agriculture
Improvement and Reform Act of 1996. See Pub. L. No. 104-127, § 917, 110 Stat. 888, 1187-88
(1996) (codified at 21 U.S.C. § 136a (2013)). That amendment created a temporary Agricultural
Quarantine Inspection User Fee Account in the Department of the Treasury where, for FY96
through FY02, “all of the fees collected under this subsection and late payment penalties and
interest charges collected” as part of AQI were held. 21 U.S.C. § 136a(a)(5)(A) (1996). After
FY02, the balance in the Treasury account was to be “credited to the Department of Agriculture
accounts that incur the costs associated with the provision of agricultural quarantine and
inspection services and the administration of this subsection.” Id. § 136a(a)(6). In addition to
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creating a temporary account to hold AQI fees, the 1996 amendment revised the section
describing the authorized fees.
(1) Fees authorized
The Secretary of Agriculture may prescribe and collect fees
sufficient—
(A) to cover the cost of providing agricultural quarantine and
inspection services in connection with the arrival at a port in the
customs territory of the United States, or the preclearance or
preinspection at a site outside the customs territory of the United
States, of an international passenger, commercial vessel,
commercial aircraft, commercial truck, or railroad car;
(B) to cover the cost of administering this subsection; and
(C) through fiscal year 2002, to maintain a reasonable balance
in the Agricultural Quarantine Inspection User Fee Account
established under paragraph (5).
Id. § 136a(a) (emphasis added). As before, the meaning and relevance of the emphasized
sentences are hotly contested.
B. Regulatory History
From the time it set the first inspection fees in 1991, APHIS has indicated that the
costs covered by the AQI fee were intended to include “the total cost of delivery costs, program
support costs, and agency-level support costs, as well as funding the reserve.” APHIS Opp’n at
8 (citing 56 Fed. Reg. 8148, 8151 (Feb. 27, 1991)). Described as a “reasonable balance,” the
reserve was designed to cover three months’ average operating costs for the AQI program, see
1992 Interim Rule at AR71769, and was necessary because fees were (and are) remitted in
arrears and the agency needed to be prepared to handle emergencies or unexpected volumes. See
56 Fed. Reg. at 8151. As APHIS explained most recently:
The reserve fund ensures that AQI program operations can continue
without interruption when service volumes fluctuate due to
economic conditions or other circumstances and CBP and APHIS
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are able to adjust their activity to account for the changed economic
conditions.
Proposed Rule at AR18. Until this litigation, no user has challenged funding the reserve.
Between FY92 and FY96, the overall cost of the AQI program went from
$85,922,000 to a projected $127,027,001. See 62 Fed. Reg. 3823, 3823 (Jan. 27, 1997). At that
point, APHIS recognized that the requirements of notice-and-comment rulemaking to reset fees
was causing user fees to “lag behind the level of current costs.” Id. at 3824. In response, APHIS
set a schedule of increasing fees for FY97 through FY 2002. See 62 Fed. Reg. 39747, 39747-48,
39754 (July 24, 1997). This effort was not fully successful and APHIS further amended the fee
schedule in 1999 to cover increasing costs. See 64 Fed. Reg. 43103, 43103 (Aug. 9, 1999).
The attack of September 11, 2001 on the World Trade Center in New York City
caused a major decline in international passenger and cargo traffic into the United States.
Another result of the attack was increased security concerns that required increased inspections.
See 69 Fed. Reg. 71660, 71660-61 (Dec. 9, 2004). As part of the response to September 11,
Congress passed the Homeland Security Act of 2002, which “transferred AQI inspections from
the U.S. Department of Agriculture (USDA) to the Department of Homeland Security (DHS) and
left certain other AQI responsibilities at USDA.” May 2006 GAO Rep. at AR69965. Thereafter,
and continuing to the present, CBP conducts all port-of-entry inspections (sea, land, and air) and
APHIS provides scientific guidance, training, pest identification, risk analysis, and other related
services. See id. at AR69965 (“In March 2003, more than 1,800 agriculture specialists within
USDA’s Animal and Plant Health Inspection Service (APHIS) became DHS Customs and
Border Protection (CBP) employees, while USDA retained responsibility for AQI activities such
as setting inspection policy, providing training, and collecting user fees.”). AQI fees collected
by APHIS are now shared with CBP to cover the costs of that agency’s services. In addition,
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CBP receives annual appropriated funds to cover the costs of inspection services where a fee is
not collected. See Final Rule at AR253. APHIS issued an interim rule in 2004, raising fees to
address the increased costs that followed after September 11. See May 2006 GAO Rep. at
AR69998.
The number of international passengers and goods has again increased since 2004,
although there was a slight downturn associated with the 2008 recession. See AQI Q&A at
AR116; Stakeholder Webinar Tr. at AR171. During this period, APHIS has experienced
significant fee shortfalls. Stakeholder Webinar Tr. at AR172, 177.
C. GAO and OIG Investigations
The AQI program has been the subject of numerous Government Accountability
Office (GAO) and DHS Office of Inspector General (OIG) investigations and studies since CBP
became primarily responsible for conducting the inspections in 2003. GAO focused on
monitoring the success of the transition from a purely APHIS-run program to the combined
APHIS/CBP program. GAO first issued a report in May 2006, finding that CBP was
understaffed, failed to develop an adequate way to evaluate performance, and lacked sufficient
data on the cost of the AQI program to determine appropriate AQI fees. See May 2006 GAO
Rep. at AR69965, 69970-73, 69999. A February 2007 OIG audit further identified issues with
CBP data systems, which resulted in incomplete data and an inability to set AQI fees accurately.
See Feb. 2007 OIG Rep. at AR70744-48. In September 2007, a GAO report addressed the
challenges faced by CBP in administering three separate international air passenger inspections,
which are funded by three separate statutes. See Sept. 2007 GAO Rep. at AR70039 (explaining
that CBP is responsible for customs, immigration, and agricultural inspections of incoming
international passengers). A February 2008 GAO study again found that CBP lacked sufficient
data to track the actual cost of each type of inspection for each type of user class. See Feb. 2008
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GAO Rep. at AR70129-30. In September 2012, the GAO conducted further review and again
found significant data reliability issues and inherent data limitations associated with the AQI
program. See Sept. 2012 GAO Rep. at AR70267-68, 70277-80. Finally, in March 2013, GAO
noted a significant difference between costs and fees collected and recommended increasing AQI
fees. See March 2013 GAO Rep. at AR70568, 70579-84.
D. Current Rulemaking
Despite repeated attempts to adjust fees, as of the rulemaking in 2014-2015
APHIS was still not recovering enough fees to cover the costs of AQI inspections.
The AQI fees have not been adjusted since FY 2010 and do not
reflect the current cost of providing AQI services. As a result, U.S.
Customs and Border Protection (CBP) of the Department of
Homeland Security, which collaborates with APHIS in
providing . . . AQI services . . . , has relied more heavily on its
appropriated funds to provide AQI services that are not paid for by
AQI revenue or to cover the cost of services for which the current
fee revenue is insufficient.
Final Rule at AR230. This time, APHIS retained Grant Thornton LLP, an international audit,
tax, and advisory firm, to develop a model that calculated the appropriate fee for each user class
based on the actual costs associated with inspecting that user class. Grant Thornton used an
“activity-based costing (ABC) methodology” to determine the appropriate fee for each user class
based on the specific costs that were attributed to inspections for that class. May 2012 Grant
Thornton Rep. at AR636. The accountants first assigned all associated AQI costs to a specific
activity and then matched each activity to a corresponding class of persons or entities. March
2012 Grant Thornton Rep. at AR442. Despite flaws in the data, Grant Thornton used what was
available from FY10 and FY11 to conduct its analysis.
APHIS submitted a proposed new rule for notice and comment on April 25, 2014.
Hundreds of comments were received over the next 90 days, see Final Rule at AR230, and
8
APHIS issued the Final Rule (Final Rule or Rule) on October 29, 2015, which decreased the air
passenger fee to $3.96 (from $5) and increased the commercial aircraft fee to $225 (from
$70.75). See Final Rule at AR229-60. The related regulation has long defined “commercial
aircraft” as “[a]ny aircraft used to transport persons or property for compensation or hire.” 7
C.F.R. § 354.3(a).
Plaintiffs submitted comments objecting to the proposed rule and questioning “the
application of the commercial aircraft fee to passenger aircraft, the rounding up of fees to fund
the AQI reserve, and the nature and quality of the information published in the rulemaking
docket.” APHIS Opp’n at 16 (citing Comments of Airlines for America at AR71133-49). After
the Rule was published, on May 13, 2016, Plaintiffs filed suit. The Complaint advances four
alleged violations of the APA:
Count I: The Rule violates the FACT Act’s prohibition against
duplicative commercial aircraft fees;
Count II: The Rule violates the FACT Act’s prohibition on cross-
subsidization of fees among user classes;
Count III: The Rule maintains a reserve, in violation of the FACT
Act removal of APHIS’s authority to maintain a reserve after 2002;
and
Count IV: The Rule was adopted without reasoned decision-making
due to unreliable data and data which was withheld from
commenters.
Compl. [Dkt. 1] at 36, 37, 39, 40. Defendants answered on July 18, 2016. See Answer [Dkt.
15]. Plaintiffs moved for summary judgment on all claims on March 15, 2017. See Mem. of
Law in Supp. of Pls.’ Mot. for Summ. J. [Dkt. 20-1] (Pls.’ Mot.). Defendants opposed and filed
a combined cross motion for summary judgment and motion to dismiss Counts I and III as time
barred on May 8, 2017. APHIS Opp’n. Plaintiffs filed a consolidated reply and opposition on
June 29, 2017, see Pls.’ Consol. Opp’n to Defs.’ Cross-Mot. for Summ. J. and Reply Br. in Supp.
9
of Pls.’ Mot. for Summ. J. [Dkt. 26] (Pls.’ Opp’n), and Defendants replied. See Defs.’ Reply
Mem. in Supp. of Their Mot. to Dismiss and for Summ. J. [Dkt. 28] (APHIS Reply). The Court
conducted oral argument on March 13, 2018. The motions are ripe for review.
II. LEGAL STANDARD
A. Motion to Dismiss – Statute of Limitations
An affirmative defense that claims are barred by a statute of limitations may be
asserted in a Rule 12(b)(6) motion “when the facts that give rise to the defense are clear from the
face of the complaint.” Smith-Haynie v. District of Columbia, 155 F.3d 575, 578 (D.C. Cir.
1998). A court may only rule on a statute of limitations defense under Rule 12(b)(6) when the
face of the complaint conclusively shows that it is time-barred. See Performance Contracting,
Inc. v. Rapid Response Constr., Inc., 267 F.R.D. 422, 425 (D.D.C. 2010) (citing Smith-Haynie,
155 F.3d at 578); see also Lewis v. Bayh, 577 F. Supp. 2d 47, 51 (D.D.C. 2008); Turner v. Afro-
American Newspaper Co., 572 F. Supp. 2d 71, 72 (D.D.C. 2008).
B. Motion for Summary Judgment – Fed. R. Civ. P. 56
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall
be granted “if the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); accord Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). “In a case involving review of a final agency
action under the Administrative Procedure Act, however, the standard set forth in Rule 56[ ] does
not apply because of the limited role of a court in reviewing the administrative record.” Sierra
Club v. Mainella, 459 F. Supp. 2d 76, 89 (D.D.C. 2006) (internal citation omitted), appeal
dismissed, Nos. 06-5419 & 07-5004, 2007 WL 1125716 (D.C. Cir. Mar. 30, 2007); see also
Charter Operators of Alaska v. Blank, 844 F. Supp. 2d 122, 126-27 (D.D.C. 2012); Buckingham
v. Mabus, 772 F. Supp. 2d 295, 300 (D.D.C. 2011). Under the APA, the agency’s role is to
10
resolve factual issues to reach a decision supported by the administrative record, while “‘the
function of the district court is to determine whether or not as a matter of law the evidence in the
administrative record permitted the agency to make the decision it did.’” Sierra Club, 459 F.
Supp. 2d at 90 (quoting Occidental Eng’g Co. v. INS, 753 F.2d 766, 769-70 (9th Cir. 1985)).
“Summary judgment thus serves as the mechanism for deciding, as a matter of law, whether the
agency action is supported by the administrative record and otherwise consistent with the APA
standard of review.” Id. (citing Richards v. INS, 554 F.2d 1173, 1177 & n.28 (D.C. Cir. 1977)).
C. Administrative Procedure Act
The APA, requires courts to review agency actions and determine if they are
arbitrary, capricious, or not in accord with the law. 5 U.S.C. § 706(2)(A); see also Tourus
Records, Inc. v. DEA, 259 F.3d 731, 736 (D.C. Cir. 2001). Its basic legal tenets are longstanding
and clear. In determining whether an action was arbitrary and capricious, a reviewing court
“must consider whether the [agency’s] decision was based on a consideration of the relevant
factors and whether there has been a clear error of judgment.” Marsh v. Or. Nat. Res. Council,
490 U.S. 360, 378 (1989) (internal quotation marks and citation omitted). At a minimum, the
agency must have considered relevant data and articulated an explanation establishing a “rational
connection between the facts found and the choice made.” Bowen v. Am. Hosp. Ass’n, 476 U.S.
610, 626 (1986) (internal quotation marks and citation omitted); see also Pub. Citizen, Inc. v.
FAA, 988 F.2d 186, 197 (D.C. Cir. 1993) (“The requirement that agency action not be arbitrary
or capricious includes a requirement that the agency adequately explain its result.”).
An agency action usually is arbitrary or capricious if:
the agency has relied on factors which Congress has not intended it
to consider, entirely failed to consider an important aspect of the
problem, offered an explanation for its decision that runs counter to
the evidence before the agency, or is so implausible that it could not
11
be ascribed to a difference in view or the product of agency
expertise.
Motor Vehicle Mfrs. Ass’n of U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). As
the Supreme Court has explained, “[t]he scope of review under the ‘arbitrary and capricious’
standard is narrow and a court is not to substitute its judgment for that of the agency.” Id.Rather, agency action is normally “entitled to a presumption of regularity.” Citizens to Pres.
Overton Park, Inc. v. Volpe, 401 U.S. 402, 415 (1971), abrogated on other grounds by Califano
v. Sanders, 430 U.S. 99 (1977).
D. Jurisdiction and Venue
The Court has federal question jurisdiction, see 28 U.S.C. § 1331; 5 U.S.C. § 500et seq., because this lawsuit arises under a federal statute. Venue is proper because Plaintiffs and
the Department of Agriculture, APHIS’s parent agency, reside in the District of Columbia and a
substantial part of the events at issue occurred in the District. See 28 U.S.C. § 1391(e)(1); see
also Dehaemers v. Wynne, 522 F. Supp. 2d 240, 248 (D.D.C. 2007); Hunter v. Johanns, 517 F.
Supp. 2d 340, 344 (D.D.C. 2007).
III. ANALYSIS
A. Motion to Dismiss
Defendants begin by moving to dismiss Counts I and III, pertaining to duplicative
charges and the legality of the reserve account respectively, as time-barred. Defendants argue
that its fee division between passengers and aircraft and its maintenance of a reserve account are
both long standing and that Plaintiffs did not complain about either within six years of their
origination, which is required to bring civil actions against the United States. See 28 U.S.C.
§ 2401(a). Specifically, Defendants argue that the final agency action that resulted in separate
fees for passengers and commercial aircraft occurred in 1992, almost 25 years ago, and APHIS
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has included a funding for a reserve in its fee calculations since an interim rule in 2002 which
was finalized in 2003. Defendants contend that the 2015 rulemaking never considered or
addressed either established principle and therefore did not reopen them for new objections or
restart the statute of limitations.
Not surprisingly, Plaintiffs disagree. They argue that the Rule represented new
agency action and they can object to all parts of it, even if some portions were not revised or re-
evaluated in 2015.
It is clear that any challenge to a final agency action must be made within 6 years.
See 28 U.S.C. § 2401(a). When a pre-existing rule or policy is challenged, the “re-opening
doctrine” governs whether it is reviewable. “[W]here an agency’s actions show that it has not
merely republished an existing rule in order to propose minor changes to it, but has reconsidered
the rule and decided to keep it in effect, challenges to the rule are in order.” Public Citizen v.
Nuclear Regulatory Comm’n, 901 F.2d 147, 150 (D.C. Cir. 1990). To determine whether an
agency reconsidered a rule, a court
look[s] to the entire context of the rulemaking including all relevant
proposals and reactions of the agency to determine whether an issue
was in fact reopened. If in proposing a rule the agency uses
language that can reasonably be read as an invitation to comment on
portions the agency does not explicitly propose to change, or if in
responding to comments the agency uses language that shows that it
did in fact reconsider an issue, a renewed challenge to the underlying
rule or policy will be allowed.
Id. However, a commenter cannot force an agency to reopen an issue by offering an unsolicited
comment and getting a response. “[A]n agency does not reopen a rulemaking or policy
determination ‘merely by responding to an unsolicited comment by reaffirming its prior
position,’” CTIA v. FCC, 466 F.3d 105, 110 (D.C. Cir. 2006) (quoting Kennecott Utah Copper
Corp. v. Dep’t of Interior, 88 F.3d 1191, 1213 (D.C. Cir. 1996)), or “by responding to a
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comment that addresses a settled aspect of some matter, even if the agency had solicited
comments on unsettled aspects of the same matter.” Kennecott, 88 F.3d at 1213.
In its initial report, Grant Thornton explained that it was retained to “conduct a
comprehensive fee review to determine the full cost of AQI services, identify potential changes
to the fee structure, and recommend new fees.” Oct. 2011 Grant Thornton Rep. at AR414; see
also Proposed Rule at AR10 (“APHIS recently conducted a comprehensive fee review to
determine the current cost of specific AQI services supported by these fees.”); Sept. 2012 GAO
Rep. at AR70277 (“In October 2010, APHIS hired a contractor to conduct a comprehensive fee
review to determine the full cost of AQI services, identify potential changes to the fee structure,
and recommend new fees.”). Consistent with these statements, the 2014-2015 AQI rulemaking
was not simply a change in fee amounts, but constituted a wholesale re-evaluation of the system
used to evaluate costs and determine fees, with the introduction of a new methodology. Grant
Thornton evaluated the entire structure of the AQI fee system and made recommendations for
significant changes in an effort to recoup the actual costs of the services provided to each user
class. For example, Grant Thornton recommended ending the AQI fee cap for maritime vessels
and railcars, see May 2012 Grant Thornton Rep. at AR639-640, and appeared to recommend
moving from a fee system under which passengers paid a fee and the aircraft on which they flew
paid a separate commercial fee, to a fee system under which passengers paid a fee that covered
their plane and only strictly-cargo aircraft paid a commercial fee. Compare March 2012 Grant
Thornton Rep. at AR498 (chart identifying the pre-2015 fee scheme and including inspection of
passenger aircraft with commercial aircraft fee) with id. at AR501-502 (Grant Thornton
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proposals that included passenger aircraft inspection in the passenger (Air Pax) fee).2 These
charts show that so-called “duplicative charges” (“passenger fee” and “commercial aircraft fee”
levied on all passenger aircraft) were considered during the APHIS rulemaking. There is thus no
time bar to Plaintiffs’ arguments about duplicative fees.
Evaluation of whether the authority to fund a reserve account was “re-opened” by
the 2015 rulemaking proves more difficult. APHIS argues that it did not reopen any aspect of
the reserve account in the 2015 rulemaking; therefore, Plaintiffs’ reserve claim is untimely and
should be dismissed. Although APHIS publically stated that the purpose of the rulemaking was
a “comprehensive fee review,” Grant Thornton did not appear to re-examine the need or reasons
for a reserve account. To the contrary, one of the explicit calculations by Grant Thornton
addressed the appropriate amount to fund the reserve and how to include it in the fees, but not
whether it should be continued. See Oct. 2011 Grant Thornton Rep. at AR416-17 (“The next
step was to determine what the reserve component of the total costs should be. This amount was
based on an estimate of the reserve . . . required to run the operations of the AQI program for 3
months or 25% of the year. APHIS decided to build this reserve over three years, thus achieving
the desired amount by FY2007.”); see also Proposed Rule at AR10 (“The proposed adjustments
will also allow us to maintain the AQI reserve account.”).
The Court, however, evaluates “the entire context of the rulemaking” and finds
that APHIS was not “merely republish[ing] an existing rule” with minor changes, but instead
conducted an extensive review of the prior rule as a whole. Public Citizen, 901 F.2d at 150. The
fact that Grant Thornton did not specifically question the existence of a reserve account does not
2
The Court recognizes this recommendation, and the data upon which it rests, is contested by the
parties and discusses that challenge infra at section III.B.
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diminish the comprehensive nature of the 2015 rulemaking. Although the question is a close
one, the Court finds Plaintiffs’ reserve claim timely and will deny Defendants’ motion to
dismiss.
B. Duplicative Commercial Aircraft Fee
At the heart of their case, Plaintiffs argue that APHIS’s “decision to impose a
separate commercial aircraft inspection fee for arriving passenger flights on top of the individual
air passenger fee directly violates the plain language of the FACT Act” and contradicts the
conclusions of APHIS’s economic expert, Grant Thornton. Pls.’ Mot. at 19-20. Plaintiffs
identify multiple concerns based on the FACT Act: (1) the statute directs that “[t]he costs of the
services with respect to passengers as a class includes the costs of related inspections of the
aircraft or other vehicle,” 21 U.S.C. § 136a(a)(2), which APHIS allegedly ignored; (2) consistent
with the FACT Act, Grant Thornton recommended AQI fees of $4 per inbound air passenger and
$225 per inbound commercial aircraft and, in that calculation, defined “commercial aircraft” as
those airplanes carrying only cargo, which APHIS ignored; and (3) APHIS does not adequately
support its decision to charge both a passenger fee and a commercial aircraft fee on the same
flight. Plaintiffs identify three alleged inadequacies in APHIS’s explanation: (1) APHIS failed
to justify treating air and sea passengers differently; (2) APHIS wrongly concluded that AQI
inspection of passenger aircraft can be divided into “passenger” inspections and “cargo”
inspections; and (3) APHIS offered no justification for treating small passenger aircraft
differently from large passenger aircraft.
APHIS responds that the passenger fee and commercial aircraft fee are not
duplicative because the passenger fee covers aircraft inspections that are related to passenger
flight, i.e., the interior where passengers are located, associated waste and garbage, and
passenger luggage, while the aircraft fee covers the remaining costs of inspecting the exterior of
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the aircraft, its cargo, and cargo hold. APHIS acknowledges that the costs may not be equal
between inspecting a cargo-only aircraft and inspecting the cargo and hold of a plane that also
carries passengers. APHIS explains the dichotomy by noting that it was required to determine a
fee structure that charged each class of users for the services provided and that would be readily
understood and predictable for the international air transport industry and its employees. In its
consideration, APHIS weighed its need to administer a clear fee structure against the probability
that some passenger-and-cargo aircraft may pay more than the strict costs of the services related
to the inspection of any individual flight; it determined that the administrative problems and
costs inherent in operating and auditing a fee schedule specific to each unpredictable variation of
passenger-only, passenger-and-cargo, and cargo-only aircraft outweighed the harm in
overcharging some customers.
As to Plaintiffs’ argument that Grant Thornton intended the “commercial aircraft”
fee to be charged to cargo-only commercial aircraft, APHIS doubts the weight of the
accountants’ statements in their report. More critically, the agency argues Grant Thornton
calculated the “commercial aircraft” fee by dividing the total costs into the total number of
international passenger and cargo aircraft, not the number of cargo-only aircraft. Therefore,
APHIS insists, despite any contrary language in Grant Thornton’s reports, it is appropriately
charging the $225 commercial aircraft fee to both passenger and cargo-only aircraft.
1. Division of costs in the FACT Act – What does the statute intend?
Whether APHIS may charge both a “passenger fee” to those passengers aboard an
international flight and a “commercial aircraft” fee to the airline for AQI inspection services is
dependent on the meaning of the term “related” in 21 U.S.C. § 136a(a)(2). Plaintiffs argue the
passenger fee must cover the totality of costs related to inspecting the vehicle (truck, bus, ship,
17
airplane, etc.) in which they arrive, while APHIS argues that passengers are only required to pay
for those AQI inspections that are related to their presence in that vehicle.
The FACT Act permits the Secretary to “prescribe and collect fees” to cover the
cost of AQI services related to the arrival in the United States of an “international passenger,
commercial vessel, commercial aircraft, commercial truck, or railroad car.” 21 U.S.C.
§ 136a(a)(1)(A). The statute provides no definition of “commercial aircraft” but APHIS has
defined it to include “[a]ny aircraft used to transport persons or property for compensation or
hire.” 7 C.F.R. § 354.3(a). When setting fees, the Act requires the Secretary to “ensure that the
amount of the fees is commensurate with the costs of agricultural quarantine and inspection
services with respect to the class of persons or entities paying the fees,” and that “[t]he costs of
the services with respect to passengers as a class includes the costs of related inspections of the
aircraft or other vehicle.” 21 U.S.C. § 136a(a)(2) (emphasis added); see also March 2013 GAO
Rep. at AR70587 (“APHIS’s authority permits it to charge all passengers for the cost of
inspecting both passengers and the vehicle in which they arrive.”).
When reviewing an agency’s interpretation of its enabling statute and the laws it
administers, courts are guided by “the principles of Chevron U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 . . . (1984).” Mount Royal Joint Venture v. Kempthorne,
477 F.3d 745, 754 (D.C. Cir. 2007). Chevron established a two-step inquiry to guide the
analysis. The initial question is whether “Congress has directly spoken to the precise question at
issue.” Chevron, 467 U.S. at 842. If so, then “that is the end of the matter” because both courts
and agencies “must give effect to the unambiguously expressed intent of Congress.” Id. at 842-
43. To decide whether Congress has addressed the precise question at issue, a reviewing court
applies “‘the traditional tools of statutory construction.’” Fin. Planning Ass’n v. SEC, 482 F.3d
18481, 487 (D.C. Cir. 2007) (quoting Chevron, 467 U.S. at 843 n.9). It analyzes “the text,
structure, and the overall statutory scheme, as well as the problem Congress sought to solve.” Id.(citing PDK Labs. Inc. v. DEA, 362 F.3d 786, 796 (D.C. Cir. 2004); Sierra Club v. EPA, 294
F.3d 155, 161 (D.C. Cir. 2002)). When the statute is clear, the text controls and no deference is
extended to an agency’s interpretation in conflict with the text. Chase Bank USA, N.A. v.
McCoy, 562 U.S. 195, 210-11 (2011).
If the statute is ambiguous or silent on an issue, a court proceeds to the second
step of the Chevron analysis and determines whether the agency’s interpretation is based on a
permissible construction of the statute. Chevron, 467 U.S. at 843; see also Sherley v. Sebelius,
644 F.3d 388, 393-95 (D.C. Cir. 2011). Under Chevron Step 2 a court determines the level of
deference due to the agency’s interpretation of the law it administers. See Mount Royal Joint
Venture, 477 F.3d at 754. Where an “agency enunciates its interpretation through notice-and-
comment rule-making or formal adjudication, [courts] give the agency’s interpretation Chevron
deference.” Id. at 754 (citing United States v. Mead Corp., 533 U.S. 218, 230-31 (2001)). That
is, an agency’s interpretation that is permissible and reasonable receives controlling weight, id.,“even if the agency’s reading differs from what the court believes is the best statutory
interpretation,” see Nat. Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967,
980 (2005). An interpretation is permissible and reasonable if it is not arbitrary, capricious, or
manifestly contrary to the statute. Mount Royal Joint Venture, 477 F.3d at 754. Such broad
deference is particularly warranted when the regulation at issue “concerns a complex and highly
technical regulatory program.” Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994)
(internal quotation marks and citation omitted).
19
The FACT Act states that passenger fees must include “the costs of related
inspections of the aircraft or other vehicle.” 21 U.S.C. § 136a(a)(2). Plaintiffs want the Court to
read “related inspections” to mean all inspections of the vehicle, which would render aircraft
passengers, but not the airline, fully responsible for the cost of all inspections of the aircraft in
which they arrived. However, Plaintiffs’ interpretation of the statute gives no meaning to the
word “related.” If Congress intended passengers to pay in whole for the inspection of the aircraft
in which they arrived, the statute would say that passenger fees must include “the costs of
inspections of the aircraft . . . .” By inserting “related” and using it to modify “inspections,”
Congress specified that passengers are responsible only for the cost of inspecting their persons,
belongings, and areas related to their presence on the flight, i.e., such things as the passenger
cabin and cabin waste and garbage. To give effect to the statute’s limiting language, “related
inspections” must be read as referring to inspections of persons, things, and areas that are related
to passengers but nothing more. Thus, when CBP inspects the passenger area of an aircraft,
passengers must be charged its cost but when CBP inspects cargo (i.e., non-passenger baggage)
or non-passenger areas of the aircraft such as the cargo hold and exterior, the cost is unrelated to
passengers and cannot be charged to them.
Plaintiffs stress that less than 50% of arriving international passenger aircraft
carries cargo and, therefore, those passenger-only flights do not require cargo-related AQI
services and should not be charged a commercial aircraft fee. APHIS explained, however, that
even if a passenger aircraft does not have cargo onboard when it enters the United States, it
might well have carried cargo at some earlier point before entering the United States and AQI
inspection is necessary to ensure that an invasive species or other contaminant was not dislodged
from the cargo prior to entry. The example cited at oral argument was a passenger aircraft that
20
flew from Egypt to Paris and then Paris to New York; even if the aircraft carried no cargo on the
Paris-New York leg, it could have carried cargo from Egypt to Paris and picked up a
contaminant. Therefore, CBP must conduct AQI on the entire aircraft, not just the passengers
and their luggage. See Agency Analysis of Proposed Rule at AR40 (“All commercial aircraft,
including international air passenger carriers, air cargo carriers, and air courier carriers, are
subject to inspection and the commercial aircraft user fee.”); Agency Analysis of Final Rule at
AR287 (same); Final Rule at AR236 (“All arriving international commercial flights are subject
to the commercial airline clearance fee and inspection.”).
For the foregoing reasons, the Court finds the statute unambiguously permits
APHIS to charge both a “passenger fee” and a “commercial aircraft” fee for AQI services to
inbound passenger airplanes. It need go no further in its Chevron analysis. See Chevron, 467
U.S. at 842-43. If, however, the statute were deemed ambiguous, the Court also finds that the
interpretation used by APHIS is reasonable and permissible under Chevron Step 2.
2. Grant Thornton’s analysis and proposed fees – What constitutes a commercial
aircraft?
Plaintiffs argue further that even if two fees are permitted under the statute, the
fees proposed by Grant Thornton, and adopted by APHIS, were calculated to charge a
commercial aircraft fee only to cargo aircraft and not to passenger aircraft. By this reckoning, a
commercial aircraft fee imposed on passenger aircraft is unnecessary to recoup costs and is
therefore inconsistent with the statute and APA.
APHIS contracted with Grant Thornton to conduct a wholesale evaluation and
review of the AQI fee program and to propose changes to the fee structure. The draft and final
reports issued by Grant Thornton indicate that the accountants understood that passenger fees
“should include the cost of related inspections of the aircraft or other vehicle.” May 2012 Grant
21Thornton Rep. at AR630. Grant Thornton also clearly recognized that the existing AQI fees had
charged a “commercial aircraft” fee to both passenger and cargo aircraft. See March 2012 Grant
Thornton Rep. at AR498 (chart identifying the pre-2015 fee scheme and indicating that the
commercial aircraft fee was charged for inspection of passenger aircraft).
When Grant Thornton proposed decreasing the air passenger fee and increasing
the commercial aircraft fee, its report appeared to indicate that the air passenger fee covered
inspecting the entirety of an aircraft that carried passengers while the commercial aircraft fee was
limited to cargo-only aircraft. See May 2012 Grant Thornton Rep. at AR638 (stating “revised air
passenger fee includes the cost of inspecting passenger aircraft”); id. (stating the commercial
aircraft fee “now applies only to cargo aircraft because the cost of inspecting passenger aircraft is
included in the air passenger fee”); see also March 2012 Grant Thornton Rep. at AR501-502
(Grant Thornton proposals stated passenger aircraft inspection was included in passenger fee);
id. at AR484 (Grant Thornton differentiating between passenger and cargo-only aircraft when
assigning the costs of specific CBP activities to different users). Understandably, based on the
language in Grant Thornton’s report, Plaintiffs argue that the $225 commercial aircraft fee
should only be charged to cargo aircraft.
APHIS agrees the language used by Grant Thornton may suggest that Grant
Thornton intended the commercial aircraft fee to cover only cargo aircraft. However, APHIS
delves into the data actually used by Grant Thornton, and published in the Federal Register, to
show that the Grant Thornton calculation of the commercial aircraft fee included both passenger
and cargo aircraft. In other words, whatever the drafter of the Grant Thornton report thought, the
people with the green eyeshades who did the actual calculation of the “commercial aircraft” fee
divided the total cost of aircraft inspections by 800,000+ inbound aircraft per year to determine
22
the commercial aircraft fee, that is, $225. The number of inbound flights per year used in this
calculation necessarily was the estimate for the number of passenger and cargo aircraft
combined, not merely cargo aircraft. Compare May 2012 Grant Thornton Rep. at AR638 (chart
noting that Commercial Air (Cargo only) has a volume of 819,000, or over 800,000 aircraft) with
March 2012 Grant Thornton Rep. at AR599-600 (listing the total number of commercial aircraft
at just over 517,000 and total number of cargo aircraft at just under 140,000); see also Final Rule
at AR237 (estimating in Table 4 the total number of commercial aircraft as 657,427 in FY10,
700,644 in FY11, and 719,251 in FY12). Because Grant Thornton used the projected total
number of passenger and cargo aircraft to determine the per-aircraft fee, it is evident that the
recommended fee was commensurate with the costs associated with inspections of all
commercial aircraft despite contrary statements in the report.
Recognizing that the commercial aircraft fee of $225 was derived by dividing the
total number of incoming passenger and cargo aircraft into the projected total inspection costs,
APHIS reasonably determined that the fee should be charged to both. In reaching this
conclusion, the Court finds that it is the agency’s decisions in the Rule which ultimately govern,
not the confusions in the consultant’s report.
3. The Final Rule – Does APHIS adequately explain its rulemaking?
Plaintiffs next argue that even if the FACT Act permits APHIS to charge both a
passenger fee and a commercial aircraft fee for AQI services, APHIS has acted arbitrarily and
capriciously in adopting a commercial aircraft fee of $225 without proper explanation. Plaintiffs
raise three specific issues: (1) APHIS sets passenger fees for cruise ship passengers to cover the
entirety of its inspections of the ships, unlike air passenger fees; (2) it is unreasonable to divide
AQI inspections of passenger aircraft between passengers and cargo; and (3) APHIS fails to
address or explain why small and large passenger aircraft are treated differently. Plaintiffs
23
complain that APHIS failed to consider all relevant data and failed to establish a “rational
connection between the facts found and the choice made.” Bowen, 476 U.S. at 626; see also
Pub. Citizen, 988 F.2d at 197 (stating that agencies must adequately explain the results of
rulemaking).
Are air passengers treated differently than sea passengers?
The 2015 Rule added a new fee for passengers entering the United States on a
cruise ship and deleted the requirement that cruise ships pay the commercial vessel fee
applicable to other ships. See Final Rule at AR230, AR238, AR250. APHIS tracked its
authority to charge a specific fee to passengers on cruise ships to the FACT Act’s inclusion of
“international passengers” and explained that it derived from the unique nature of cruise ships,
which are designed exclusively for passenger activities and not cargo. See id. at AR250. As a
result, APHIS determined that the passenger fee for passengers on cruise ships should cover all
costs associated with AQI inspections of passengers and the ship.
Plaintiffs argue that the same treatment should be extended to air passengers, so
that air passengers pay the entire costs of inspecting passengers and aircraft. APHIS responds
that the two passenger fees are similar because in both instances the cost of AQI services for
passengers as a class includes the cost of related inspections of the aircraft or other vehicle. See
Final Rule at AR 250 (“Based on our ABC analysis, we determined that the air passenger fee is
not adequate to recover all the costs we incur in inspecting both passengers and aircraft, while
the sea passenger fee is adequate to recover the costs we incur in inspecting both passengers and
cruise ships.”); see also Proposed Rule at AR10. However, in the case of aircraft, the costs of
inspections related to the passengers’ presence are not all of the AQI costs associated with a
passenger aircraft (see discussion in section III.B.3.b). For cruise ships, on the other hand, the
24
sea passenger fee covers all inspections of the vessel itself because all of the inspections are
deemed to be related to the presence of cruise passengers on the ship.
The Court finds that APHIS reasonably determined that cruise ships do not carry
cargo so that all associated inspection costs are properly attributable to the passengers, while
passenger aircraft may or may not carry cargo and, therefore, the cost of AQI related to the
aircraft itself is not exclusively attributable to the passengers. APHIS explained its conclusions
and did not act arbitrarily and capriciously by setting inspections fees for cruise passengers and
air passengers as it did.
Are the fees for passengers and commercial aircraft covering the same
AQI inspections?
The Proposed Rule explains what inspections are covered by the air passenger fee
and what is covered by the commercial aircraft fee to justify charging passenger aircraft both
fees. Air passenger inspections include:
prearrival analysis of incoming passengers and screening arriving
air passengers for agricultural products by CBP Agriculture
Specialists and CBP Officers; inspection of passenger baggage
using CBP agriculture canines and specialized non-intrusive
inspection equipment; inspecting the interior of the passenger
aircraft; monitoring the storage and removal of regulated
international garbage from the aircraft to ensure consistency with all
regulatory requirements; safeguarding and appropriately disposing
of any seized or abandoned prohibited agricultural products; and
identifying pests found on prohibited agricultural products brought
into the country by air passengers.
Proposed Rule at AR15; see also Agency Analysis of Proposed Rule at AR39 (“International air
passenger inspections include the passengers, their baggage, and the passenger areas of the
aircraft (e.g., ensuring garbage compliance).”). The commercial aircraft fee includes:
reviewing manifests and documentation accompanying incoming
cargo; targeting higher risk cargo for inspection or clearance;
inspecting various types of agricultural and agricultural-related
commodities, international mail, expedited courier packages,
25
containers, compliant wood packaging material, and packing
materials to screen for the presence of plant pests and contaminants,
compliance with regulations, and determining entry status;
inspecting the aircraft hold or exterior for contaminants, pests, or
invasive species; monitoring the storage and removal of regulated
international garbage from the aircraft to ensure consistency with all
regulatory requirements; identifying pests found during inspection;
and safeguarding shipments pending [Plant Protection and
Quarantine] PPQ determination for treatment or final disposition.
Proposed Rule at AR15. These descriptions reasonably separate costs so that passengers pay
only for searching passenger-related areas, such as the cabin and the baggage area, while the
airline pays for inspections of other areas of the plane, such as the cargo and cargo hold and the
exterior of the aircraft. The Final Rule directly addressed comments about the potential for
duplicative fees: “We do not agree with the suggestion by the commenters that we are double
charging or violating the FACT Act by imposing both an aircraft fee and an air passenger fee,
since the respective fees cover different costs.” Final Rule at AR250 (repeating the lists of
separate costs for passenger and aircraft inspections included in the Proposed Rule and quoted
above); see also id. at AR234 (“APHIS can include the cost of inspecting commercial aircraft
that carry passengers in the international air passenger user fee if those costs directly relate to
passenger baggage or regulated garbage. APHIS does not include the cost of inspecting cargo or
the cargo hold area of the plane in the passenger fees. The commercial aircraft user fee pays the
costs of inspecting the aircraft itself, cargo inspection, the cargo hold, and the costs of
monitoring aircraft disinfection.”); Agency Analysis of Final Rule at AR284-85 (“International
air passenger inspections include the passengers, their baggage, and the passenger areas of the
aircraft.”);.
Plaintiffs challenge the agency’s ability to divide inspection costs between
passenger-related areas and the remainder of the aircraft, specifically noting the overlap between
the “baggage area” and the “cargo hold.” Despite Plaintiffs’ argument that APHIS cannot
26
adequately separate the relevant costs, it is evident from Grant Thornton’s analysis, the
statements in the Final Rule, and APHIS’s history of setting air passenger and commercial
aircraft fees, that the agency has long set separate fees to cover the particular costs associated
with each user class and that inspections related to passengers require different AQI services than
inspections of aircraft. APHIS explained the difference as long ago as its 1992 Rulemaking
when faced with a similar challenge, noting that:
[p]assengers pose a different risk of bringing foreign diseases and
pests into the United States than do the aircraft and cargo it carries.
For example, passengers may have walked through dirt infested with
parasites, or they may be carrying infested fruits or vegetables or
infected meat on their person or in their baggage. Aircraft may be
infested with a pest which has escaped from infested cargo. Aircraft
or cargo may need to be fumigated or disinfected. Also, passengers
are responsible for themselves and their baggage; the airline is
responsible for the aircraft and the cargo. For all these reasons,
passengers and their baggage must be inspected separately and in a
different manner than the aircraft and its cargo.
57 Fed. Reg. 755, 763-64 (Jan. 9, 1992). In every rulemaking since 1992, APHIS has made the
same distinctions in fees, by which it charged passengers for their related searches and charged
the commercial aircraft fee for the remainder. Plaintiffs point to no specific flaws in Grant
Thornton’s ABC analysis and do not dispute the agency’s long practice. The Court finds no
reason to doubt the sufficiency of Grant Thornton’s analysis or APHIS’s explanation that
different types of inspections are conducted for passenger-related costs and commercial aircraft
costs. As indicated above, the differences are required by the statute and have been reasonably
explained.
Is it reasonable for APHIS to treat small and large passenger aircraft
differently?
Finally, Plaintiffs contend that APHIS acted in an arbitrary and capricious manner
by treating small passenger aircraft differently from large passenger aircraft in the Rule and not
27
charging small aircraft the commercial aircraft fee unless they actually carry relevant materials.
APHIS maintains that its treatment of small aircraft is consistent with other inspection regimes
by the federal government and is reasonable. See Final Rule at AR236 (“APHIS maintains the
64-seat plane size distinction in harmony with CBP and other U.S. Government agencies with
jurisdiction over civil aviation.”).
“Under [7 C.F.R.] § 354.3(e)(2)(iv), all passenger aircraft originating in any
country that have 64 or fewer seats and that do not carry certain regulated articles are exempt
from paying the aircraft AQI user fee.” Id. While the initial 1992 Rule included an exemption
for aircraft with 30 seats or less, on March 17, 1993, APHIS expanded that exemption to aircraft
with 64 or fewer seats, see 58 Fed. Reg. 14305, 14305 (March 17, 1993), recognizing that those
aircraft “require little or no inspection.” Id. However if a small aircraft is carrying “[f]resh
fruits, fresh vegetables, plants, unprocessed plant products, cotton or covers, sugarcane, or fresh
or processed meats,” or offers a “meal service other than beverages and prepackaged snacks”
that contains “meats derived from ruminants, swine, or poultry or fresh fruits and fresh
vegetables,” then a small aircraft will require AQI inspection and will be charged the commercial
aircraft fee. 7 C.F.R. § 354.3(e)(2)(iv).
Plaintiffs argue that the same distinction can be applied to large passenger
aircraft. However, Plaintiffs do not dispute that a large passenger aircraft might not have cargo
when it arrives in the United States, but may have carried cargo on a prior leg of its trip and
thereby contain contaminants. It is, therefore, not unreasonable for APHIS to require inspections
unrelated to passengers for large passenger aircraft on all inbound flights but not all smaller
aircraft.
28
APHIS contends that the exemption for small aircraft is consistent with the intent
and instructions of the FACT Act to charge users only for the actual services they receive.
Under this command, because small aircraft do not require the same AQI services as large
aircraft, they are properly exempted from a mandatory inspection payment for all flights.
Additionally, APHIS notes the complexity and administrative inconvenience of developing a
range of commercial aircraft fees to distinguish between small and large aircraft, passenger and
cargo aircraft, and passenger aircraft with or without cargo on a specific inbound leg; it argues
such a regime would be unnecessarily burdensome and is not required by the FACT Act. See
Final Rule at AR236 (“APHIS and CBP save resources and costs by not having to design a
process for administering a complex fee structure. This helps to keep the fee costs to the payer
as low as possible. . . . [I]t would be administratively burdensome to charge and audit a
multitude of fees for the many different types of commercial aircraft and their cargo that enter
the United States.”).
The Court finds the continuation of APHIS’s long-standing decision to exempt
small passenger aircraft from automatic commercial airline inspection fees on all flights was
fully detailed by APHIS and is not arbitrary or capricious or in violation of the FACT Act.
4. Conclusion
Despite some clear inconsistencies in understanding and the language used by
Grant Thornton and APHIS itself in the Rule, the Court finds APHIS used Grant Thornton’s
ABC analysis (which combined passenger and cargo aircraft) to set fees commensurate to the
costs associated with the air passenger user class and the commercial aircraft user class.
Summary judgment will be granted in favor of APHIS on Count I.
29
C. Reserve Account
Plaintiffs argue that APHIS violates the express language of the FACT Act by
using a portion of the AQI fees to fund a “reserve account” since the authority to do so was
expressly revoked by Congress after FY02. APHIS responds that the cited language, from the
1996 amendment to the FACT Act, did not revoke the agency’s ability to fund a reserve after
FY02, but only specified that the reserve was to be maintained in a Treasury account from FY96
to FY02 as APHIS transitioned from appropriated funding for AQI inspections to a fully self-
supporting funding module, after which Agriculture would maintain the fund in its own
accounts. APHIS also argues that if the Court finds the FACT Act ambiguous with respect its
authority to fund a reserve account after FY02, it should defer to the agency’s interpretation
under Chevron. See 467 U.S. at 842-43.
As established in 1990, the FACT ACT stated:
The Secretary shall adjust the amount of the fees to be assessed
under this subsection to reflect the cost to the Secretary in
administering such subsection, in carrying out the activities at ports
in customs territory of the United States and preclearance and
preinspection site outside the customs territory of the United States
in connection with the provision of agricultural quarantine
inspection services, and in maintaining a reasonable balance in the
Account.
§ 2509(a)(4). The most recent relevant amendment to the FACT Act was enacted in 1996 and
amended the fee authorization to state:
(1) Fees authorized
The Secretary of Agriculture may prescribe and collect fees
sufficient—
(A) to cover the cost of providing agricultural quarantine and
inspection services in connection with the arrival at a port in the
customs territory of the United States, or the preclearance or
preinspection at a site outside the customs territory of the United
30
States, of an international passenger, commercial vessel,
commercial aircraft, commercial truck, or railroad car;
(B) to cover the cost of administering this subsection; and
(C) through fiscal year 2002, to maintain a reasonable balance
in the Agricultural Quarantine Inspection User Fee Account
established under paragraph (5).
21 U.S.C. § 136a(a). Paragraph (a)(5) described the account created at the Treasury:
(5) Agricultural Quarantine Inspection User Fee Account.
(A) Establishment. There is established in the Treasury of the
United States a fund, to be known as the “Agricultural Quarantine
Inspection User Fee Account”, which shall contain all of the fees
collected under this subsection and late payment penalties and
interest charges collected under paragraph (4) through fiscal year
2002.
(B) Use of Account. For each of fiscal years 1996 through 2002,
funds in the Agricultural Quarantine Inspection User Fee Account
shall be available, in such amounts as are provided in advance in
appropriations Acts, to cover the costs associated with the provision
of agricultural quarantine and inspection services and the
administration of this subsection. Amounts made available under
this subparagraph shall be available until expended.
(C) Excess Fees. Fees and other amounts collected under this
subsection in any of fiscal years 1996 through 2002 in excess of
$100,000,000 shall be available for the purposes specified in
subparagraph (B) until expended, without further appropriation.
Id. § 136a(a)(5). The pertinent question is whether the 1996 amendment prohibits APHIS from
collecting fees to maintain a reasonable balance, or fund a reserve, after FY02.
1. Where does APHIS base its authority to fund a reserve account?
When APHIS first established the AQI user fees in 1991, it responded to
comments questioning its authority to set fees to cover AQI service costs, administration costs,
and a reserve fund. APHIS stated that it “included administrative costs and a reserve fund in [its]
cost calculations” because the 1990 FACT ACT “provide[d] that [it] may recover the cost of
administering the user fee program through the fees collected. . . . [and] also allowed for a
31
‘reasonable’ balance in the AQI user fee account.” 56 Fed. Reg. 14837, 14841-42 (April 12,
1991). Since the 1996 amendment and the inception of the AQI fee system, APHIS has based its
authority to fund the reserve account on the language in the statute authorizing the Secretary to
collect fees to maintain a reasonable balance. In the current rulemaking, APHIS continued its
reliance on the “reasonable balance” language located at § 136a(a)(1)(C). See Final Rule at
AR229 (stating that “user fees should recover the costs of: . . . [m]aintaining a reasonable
balance, also referred to by APHIS as a ‘reserve’”). Only during this litigation did APHIS
concede that after 2002 the express statutory authority in § 136a(a)(1)(C) to fund a reserve
account had expired; in its Supplementary Response, APHIS now justifies funding the reserve as
part of the cost of “administering the user fee program” under § 136a(a)(1)(B). Defs.’ Supp.
Resp. Pursuant to Court Order (Defs.’ Suppl. Resp.) [Dkt. 32] at 2.
The APA requires an agency to provide its authority and reasoning during
rulemaking and a court may only affirm a new rule based on the reasoning provided at the time.
See Nat’l Fuel Gas Supply Corp. v. FERC, 468 F.3d 831, 839 (D.C. Cir. 2006) (“[T]he grounds
upon which the agency acted in exercising its powers [must be] those upon which its action can
be sustained.”); see also SEC v. Chenery Corp., 318 U.S. 80, 95 (1943) (“We merely hold that an
administrative order cannot be upheld unless the grounds upon which the agency acted in
exercising its powers were those upon which its action can be sustained.”). Based on the
Chenery doctrine, APHIS’s reserve fee may only be sustained if it is authorized by the
“reasonable balance” language in § 136a(a)(1)(C), because that is the ground upon which APHIS
relied in the rulemaking that set a fee amount for a reserve. Therefore, the Court does not
evaluate or rule on the agency’s current argument that it has authority to fund a reserve under
§ 136a(a)(1)(B).
32
2. Is the FACT Act language ambiguous?
Since the original FACT Act in 1990, APHIS has had authority to collect fees to
cover AQI services. The statute identified three categories of costs that the AQI fees were to
cover: (1) administration of the subsection, (2) costs in carrying out the AQI activities, and (3)
maintenance of a reasonable balance in the account. See § 2509. The phrase “maintain a
reasonable balance” was understood to authorize APHIS to create a reserve fund. In 1996, the
FACT Act was amended to create a true user fee account that was held by the Department of the
Treasury until after FY02. The new amendment established a user fee account at Treasury until
after FY02 and described how it was to be used:
(B) Use of account. For each of fiscal years 1996 through 2002,
funds in the Agricultural Quarantine Inspection User Fee Account
shall be available, in such amounts as are provided in advance in
appropriations Acts, to cover the costs associated with the provision
of agricultural quarantine and inspection services and the
administration of this subsection. Amounts made available under
this subparagraph shall be available until expended.
21 U.S.C. § 136a(a)(5). At the end of FY02, the funds were to be transferred to the Department
of Agriculture:
After September 30, 2002, the unobligated balance in the
Agricultural Quarantine Inspection User Fee Account and fees and
other amounts collected under this subsection shall be created to the
Department of Agriculture accounts that incur the costs associated
with the provision of agricultural quarantine and inspection services
and the administration of this subsection. The fees and other
amounts shall remain available to the Secretary until expended
without fiscal year limitation.
Id. § 136a(a)(6).
The 1996 amendment also changed the statute’s language pertaining to fees the
Secretary was authorized to collect. Compare § 2509(a)(4) (“maintaining a reasonable balance
in the Account”) with 21 U.S.C. § 136a(a)(1)(C) (permitting fees to be set “through fiscal year
33
2002, to maintain a reasonable balance in the Agricultural Quarantine Inspection User Fee
Account established under paragraph (5)”).
APHIS originally argued here that the time limit set in § 136a(a)(1)(C) was meant
only to refer to the department that held the reserve account, i.e., Treasury in FY96-FY02 and
Agriculture after the transition period. Now, in its written response to a question posed at oral
argument, APHIS concedes that the specific language in the 1996 amendment that referenced
maintenance of a reasonable balance expired after FY02. See Defs.’ Suppl. Resp. at 2 (“As part
of [the 1996 amendment], the FACT Act removed the language in the statute that the Secretary
‘shall adjust the amount of fees . . . to reflect the cost to the Secretary . . . in maintaining a
reasonable balance in the’ account.”). The Court agrees that § 136a(a)(1)(C) does not give
APHIS current authority to charge user classes to maintain a reserve account.
APHIS may set AQI fees to maintain a reasonable balance only if it provides a
reasonable interpretation of the statute that provides that authority.3 In the 2014-15 rulemaking,
APHIS relied on the “reasonable balance” allowance in § 136a(a)(1)(C), but that expired after
FY02. Whether there is authority to be found elsewhere, reliance on expired statutory language
was unreasonable and therefore arbitrary and capricious. The Court will grant summary
judgment to Plaintiffs on Count III and remand this part of the rulemaking for further
consideration and possible rulemaking by APHIS.
3
A March 2006 GAO Report did not expressly identify maintenance of a reasonable balance as
an authorized fee. See March 2006 GAO Rep. at AR69981 (“The FACT Act authorizes user fees
for (1) providing AQI services for the conveyances, cargo, and passengers listed above; (2)
providing preclearance or preinspection at a site outside the customs territory of the United
States to international airline passengers, commercial vessels, commercial trucks, commercial
railroad cars, and commercial aircraft; and (3) administering the AQI user-fee programs.”).
34
D. Cross-Subsidization
Plaintiffs also argue that the Rule expressly violates the FACT Act requirement
that the fee charged must be commensurate with the costs of the services provided to each
particular class of persons or vessels. In this challenge, Plaintiffs make two contentions. First,
they argue that APHIS uses the fees charged to commercial passenger aircraft to cross-subsidize
services provided to other classes of vessels. Plaintiffs specifically challenge the fact that some
classes of vessels are charged no AQI fee, but still receive AQI services upon entering the United
States (i.e. bus passengers, rail passengers, and private vehicles). Plaintiffs also contend that
APHIS’s maintenance of a single reserve fund leads to cross-subsidization and is a direct
violation of the statute. APHIS responds that the Rule specifically addressed the issue of cross-
subsidization and that the agency’s use of the ABC methodology to determine the AQI fees was
intended to avoid any class of users paying for inspections of another class. APHIS explains that
the ABC methodology resulted in fees directly linked to the costs attributable to each user class
and inspection of the users that are not charged AQI fees is funded exclusively through CBP
appropriations. APHIS further argues that a single reserve account is appropriate as long as the
reserve is funded through proportional contributions from each user class, which is why APHIS
applies a 3% surcharge to each user class to fund the reserve.
The FACT Act requires the Secretary to “ensure that the amount of the fees is
commensurate with the costs of agricultural quarantine and inspection services with respect to
the class of persons or entities paying the fee.” 21 U.S.C. § 136a(a)(2). The ABC method used
by Grant Thornton and APHIS to set AQI fees in the 2015 rulemaking required linking expenses
or costs borne by APHIS and CBP to each individual user class, regardless of whether a fee
would ultimately be charged. For example, Grant Thornton attributed costs to rail and bus
passengers, but an AQI fee was not ultimately assigned to those users. See May 2012 Grant
35Thornton Rep. at AR642 (“Fees do not recover costs for other passenger classes (bus and rail).
These costs would be covered by CBP’s appropriation, as currently done.”). Grant Thornton and
APHIS explained that the goal in setting the AQI fee was to make it “commensurate with the
costs with respect to the class of persons or entities paying the fees. This [was] intended to avoid
cross-subsidization of AQI services.” Id. at AR630; see also Proposed Rule at AR10. The AQI
fees were not intended to cover every cost associated with inspections of all user classes, because
APHIS recognized that some user classes are funded through CBP appropriations. See March
2013 GAO Rep. at AR70579 (“APHIS has chosen not to charge some classes of passengers, and
the collections of the AQI program as a whole do not equal total identified program costs.”).
Plaintiffs cite Kevin Shea, APHIS Administrator, who spoke at an AQI
Stakeholder Webinar on January 13, 2015; Mr. Shea stated that APHIS was not going to
promulgate an interim rule that would lower the air passenger fee from $5 to $4 because APHIS
“could not operate this program if that revenue was immediately taken away.” Stakeholder
Webinar at AR194. Plaintiffs use this quote to argue that APHIS knew it was cross-subsidizing
other user classes with the high fees from air passengers. The Court finds that Administer Shea’s
statement is somewhat ambiguous but could be read to admit that the pre-2015 fees resulted in
cross-subsidization. However, such a conclusion does not imply or prove that there was an error
in calculating AQI fees in the 2015 Rule. To the contrary, Administer Shea’s comment can be
understood as saying that a revision to the fee structure was necessary to bring the system into
compliance with the requirement that fees be commensurate with the costs of inspection for each
user class. Altering just the passenger fee, before bringing all fees to the new rates determined
through ABC analysis, would logically lead to a shortfall in revenue.
36
The Court rejects Plaintiffs argument that APHIS improperly cross-subsidizes
costs by using AQI fees from one user class to pay for inspections of users not charged AQI fees.
It is clear from the record, and APHIS’s repeated explanations during notice and comment, see
Final Rule at AR229-31, 233, 238, that AQI fees were set using the ABC analysis and that
services provided to those users not charged an AQI fee are funded through normal CBP
appropriations.
Separately, Plaintiffs’ argue that the way APHIS uses money in the reserve
account violates the prohibition on cross-subsidization. Plaintiffs focus on § 136a(a)(6), which
states that the fees should be stored in “Department of Agriculture accounts,” and contend that
the reference to multiple “accounts” requires APHIS to establish separate reserve accounts for
each user class. APHIS rejects this analysis and notes that the proceeds of all fees were once
lawfully held in a single consolidated account at Treasury, which indicates that Congress did not
intend the “commensurate” requirement to extend to the ultimate use of reserve funds.
The FACT Act states that APHIS must ensure that the amount of the fees charged
is commensurate with the costs of the particular user class, but does not specify that APHIS may
only use fees collected from one user class on inspections of that user class. Section 136a(a)(2)
of the Act instructs the Secretary on how to set the fees, not how to use the money once it has
been acquired. See 21 U.S.C. § 136a(a)(2) (“In setting the fees under paragraph (1), the
Secretary shall ensure that the amount of the fees is commensurate with the costs of agricultural
quarantine and inspection services with respect to the class of persons or entities paying the
fees.”). GAO has commented on the flexibility provided to APHIS to use fees as it deemed
necessary as long as they are set “commensurate with the costs of services with respect to a
particular pathway.” March 2013 GAO Rep. at AR70579 (“Once revenue is earned from one
37
pathway, however, it may be spent on any AQI-related program cost.”). The 2015 rulemaking
clearly stated that fees were set separately for each user class. See Final Rule at AR229. The
reserve account is funded by a proportional percentage increase in the fee charged to all user
classes. See id. at AR234 (“To fund the reserve, the[] base fees are increased by 3.5 percent.”).
Proportional funding is consistent with the commensurate requirement in the Act. The Court,
therefore, finds that APHIS’s maintenance and use of the reserve fund as a single account does
not violate the FACT Act and will grant summary judgment in favor of the agency on Count II.
E. Lack of Meaningful Opportunity to Comment
Finally, Plaintiffs challenge the procedures of the 2015 rulemaking, alleging that
APHIS failed to disclose the data underlying its decisions to alter the AQI fees until after the
Rule was issued, and that APHIS relied on unreliable data in setting the fees in the 2015 Rule.
1. Did APHIS Fail to Provide the Underlying Data?
Plaintiffs argue that by failing to provide the data upon which Grant Thornton
relied in its fee model, APHIS “prevented stakeholders and the public from evaluating the
agency’s fee-setting process” and providing meaningful comments on the results. Pls.’ Mot. at
36-37. APHIS counters that Plaintiffs raised all of the same complaints and concerns in their
comments to the proposed rule, when the underlying data was not available, as they do in this
litigation, when the underlying data is available. Therefore, it contends, Plaintiffs were not
deprived of a meaningful opportunity to comment and APHIS did not violate the APA.
The APA requires an agency to provide the public with a meaningful opportunity
to comment on a proposed rule and “offer reasoned responses to significant comments.” Shands
Jacksonville Med. Ctr. v. Burwell, 139 F. Supp. 3d 240, 261 (D.D.C. 2015); see also Dist. Hosp.
Partners, L.P. v. Burwell, 786 F.3d 46, 56-57 (D.C. Cir. 2015). An agency is also required to
“examine the relevant data and articulate a satisfactory explanation for its action.” Dist. Hosp.
38
Partners, 786 F.3d at 56-57. In order to satisfy the requirement that the public be provided a
meaningful opportunity to comment, an agency must “identify and make available technical
studies and data that it has employed” in developing a proposed rule. Connecticut Light &
Power Co. v. Nuclear Regulatory Comm’n, 673 F.2d 525, 530 (D.C. Cir. 1982); see also Time
Warner Entm’t Co. v. FCC, 240 F.3d 1126, 1140 (D.C. Cir. 2001) (“[A]n agency cannot rest a
rule on data that, in critical degree, is known only to the agency.”).
APHIS and Grant Thornton explained the process for determining the relevant
fees for each user fee as ABC.
ABC uses a two-step methodology to assign an organization’s costs
to its work activities and then to its related outputs. . . .
In the first step of ABC, we assigned costs to activities using
resource drivers, which typically represent a cause-and-effect
relationship to establish how much of a resource is consumed by
each activity. . . .
In the second step, we assigned APHIS and CBP activity costs to
the outputs produced by performing the activities.
Proposed Rule at AR12. Plaintiffs (and other commenters) complained that “because the cost
data provided by APHIS did not provide specifics regarding the calculation of the individual user
class fees, the validity of the cost calculations overall is questionable” and “the lack of
transparency unfairly inhibits [the] industry’s ability to respond knowledgeably” to the proposed
rule. Final Rule at AR230. In response to such comments, APHIS provided a website link
where applicable data was located and provided more cost information by user class in the text of
the final rule. See id. Plaintiffs argue, however, that the data provided with the proposed rule
and at the website did not include the lengthier report drafted by Grant Thornton on March 30,
2012, see March 2012 Grant Thornton Rep. at AR432-AR624, or the User Fee Modeling Data
39
utilized by Grant Thornton to conduct the ABC analysis. See User Fee Modeling Data at
AR656-AR69963.
It is undisputed that the March 2012 Grant Thornton Report and User Fee
Modeling Data were not provided to the public during the rulemaking, however, Plaintiffs have
failed to demonstrate harm from that fact. APHIS argues, and the Court agrees, that Plaintiffs
have not raised significantly different arguments or objections to the Rule after acquiring the
data, therefore nullifying any argument that they were deprived of a meaningful opportunity to
comment during the rulemaking period. Additionally, the only harm Plaintiffs identified at oral
argument was the harm of being subject to an AQI fee that they believed was improper under the
statute, but that harm is not particular to the data issue and is fully addressed by the arguments
above which challenge numerous alleged infirmities in the Rule. The Court finds that although
some data was not publicized during rulemaking, Plaintiffs have not shown any way in which
they were prevented from engaging in meaningful notice and comment or would have changed
their position during the rulemaking.
2. Was the data used to determine fees fatally flawed?
Plaintiffs also take issue with the data used by Grant Thornton and APHIS to
determine AQI fees, arguing (1) the accountants improperly relied on a single year’s data and (2)
the workload and labor data were highly unreliable. APHIS responds that an agency’s judgment
about what data to use should receive an extreme degree of deference because agencies are
“afforded wide latitude to determine whether particular data may be relied upon.” APHIS Opp’n
at 39. In responding to Plaintiffs’ specific arguments, APHIS states that (1) data from FY10 and
FY11 were used to set the revised AQI fees, and (2) APHIS acted reasonably in relying on the
workload and labor data available to it.
40
Agencies must often conduct analyses with imperfect data and can only be
expected to do the best they can with the information available to them. See, e.g., Motor Vehicle
Mfrs. Ass’n, 463 U.S. at 52 (“It is not infrequent that the available data do not settle a regulatory
issue and the agency must then exercise its judgment in moving from the facts and probabilities
on the record to a policy conclusion.”); Natural Res. Def. Council, Inc. v. EPA, 529 F.3d 1077,
1085 (D.C. Cir. 2008) (describing the agency’s efforts to evaluate health risks caused by certain
industrial chemicals despite “gaps in the data” by backfilling certain data points with
“environmentally protective defaults”). The Court recognizes that an agency cannot be faulted
for using the data available to it to the best of its ability, but must evaluate why limited data was
available.
The lack of adequate record-keeping by CBP has been thoroughly documented by
GAO and the DHS OIG and is not in dispute. See March 2006 GAO Rep. at AR69965 (noting
that “because of weaknesses in the design of CBP’s new financial management system, CBP was
unable to provide APHIS with information on the actual costs of the AQI program by user-fee
type—for example, fees paid by international air passengers”); id. at AR69999 (“Although CBP
provided detailed cost information by activity and user-fee type to APHIS for fiscal year 2004,
CBP provided only estimated cost information for fiscal year 2005 because of a weakness in the
design of the agency’s new financial management system.”); Feb 2007 OIG Report at AR70745
(indicating the data system used to track agricultural inspection activities “continues to be a
problem at CBP”); Feb 2008 GAO Rep. at AR70129 (“In the case of the AQI, customs, and
immigration vessel and sea passenger fees, the agencies and Congress lack information on the
total costs of the combined inspections, and therefore do not know whether fee collections cover
the costs of the consolidated inspection program.”); Sept 2012 GAO Rep. at AR70278-80
41
(indicating that, although improvement had been made to the data collection system, CBP still
had issues with accurate data collection, including with data input inconsistencies between ports
and lack of adequate review by managers); id. at AR70290 (“[T]he agencies may not have
sufficient information on which to base key decisions to support the AQI program because the
data the two agencies are collecting and using for managing the program may not be reliable.”);
March 2013 GAO Rep. at AR70578 (stating “data quality is an ongoing issue with AQI data
systems”); id. at AR70580 (“CBP does not capture all time spent on agriculture activities in its
Cost Management Information System (CMIS)—the system in which CBP tracks its activities
and determines personnel costs. Both to accurately set AQI fee rates to recover program costs
and to allocate fee revenues between APHIS and CBP proportionate with each agency’s program
costs, CBP must accurately track its expenses related to the AQI program.”); id. at AR70581
(“[A]t 31 ports and other locations, CBP did not charge any primary inspection time to
agriculture-related CMIS codes for all or a portion of fiscal year 2012, which means that AQI
costs at these ports are being understated.”).
Although CBP continues to suffer from data challenges in tracking AQI services
by user class, improvements have been made since the original GAO report in March 2006, and
CBP continues to work to implement an adequate system to track inspection costs. In September
2012 the GAO reported on improvements to CBP’s data system and noted that:
CBP added agriculture-specific activity codes to its financial
management system, which, according to CBP officials, allows CBP
to provide APHIS with actual costs related to user fees. In addition,
CBP issued guidance to clarify how employees should account for
activities that are simultaneously related to immigration, customs,
and agriculture activities so that this information could be tracked
for the purpose of collecting AQI user fees. According to APHIS
and CBP officials, the new activity codes and guidance allow CBP
to accurately report its costs by user fee type to APHIS and ensure
financial accountability for funds allocated to AQI user fees.
42
Sept 2012 GAO Rep. at AR70267-68. GAO also noted that, despite the continuing issues with
data collection, CBP and APHIS must use the data available to set user fees. See March 2013
GAO Rep. at AR70578 (“Office of Management and Budget Circular A-25 states that when
reviewing user fees, full cost should be determined or estimated using the best available records
of the agency, and new cost accounting systems do not need to be established solely for the
purpose of rate-setting. The contractor also solicited input from stakeholders as part of the fee
review process, a practice consistent with our User Fee Design Guide.”).
Regardless of any continued inadequacies in the CBP data for different types of
AQI inspections, APHIS was required to set fees commensurate with the costs associated with
providing AQI services to each user class. To satisfy that requirement, APHIS enlisted Grant
Thornton to conduct an activity-based costing analysis using the best data it had available, data
from FY10 and FY11. Although Plaintiffs argue that the data was insufficient and should not
have been used to calculate the fees, they offer no alternative and provide no reason to believe
data from other fiscal years would have been more reliable. The Court finds that APHIS used its
judgment to determine that data from FY10 and FY11 were the best available and sufficient to
calculate AQI fees and that judgment should be given significant deference. See Final Rule at
AR241-42 (“APHIS and CBP identified the correct data to use in the model and eliminated the
identified inconsistencies. Issues such as these in a very large operation are continuous in nature
as the activities change, new systems become available, priorities change, or new demands for
information arise. The data is relevant and it is part of official government systems. APHIS and
CBP are continually working together to enhance data collection.”); see also Oct. 2011 Grant
Thornton Rep. at AR421 (“The workload (output) data received from both agencies is considered
43
to be reasonably accurate.”). For the foregoing reason, the Court will grant summary judgment
to the agency on Count IV.
IV. CONCLUSION
For the foregoing reasons, the Court will deny Defendants’ motion to dismiss,
grant summary judgment to Defendants on Counts One I, II, and IV, and grant summary
judgment in favor of Plaintiffs on Count III. Rulemaking will be remanded to APHIS for
reconsideration of its authority to charge a surcharge for a reserve account. A memorializing
Order accompanies this Opinion.
Date: March 28, 2018 /s/
ROSEMARY M. COLLYER
United States District Judge
44