Xp Vehicles, Inc. v. U.S. Department of Energy ( 2018 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
LIMNIA, INC., )
)
Plaintiff, )
)
v. ) No. 1:13-cv-37 (KBJ)
)
U.S. DEPARTMENT OF ENERGY, et )
al., )
)
Defendants. )
)
MEMORANDUM OPINION
In 2009, Plaintiff Limnia, Inc. (“Limnia” or “Plaintiff”), a manufacturer of
battery systems for electric vehicles, applied for a loan from the Department of Energy
(“DOE”) through a congressionally-authorized clean energy program known as the
Loan Guarantee Program (“LG Program”). Limnia submitted its program application to
DOE, but it did not transmit the application fee that DOE’s regulations prescribed. See
10 C.F.R. § 609.6(b)(2) (2009). DOE summarily rejected Limnia’s loan application on
this basis, after which Limnia filed the instant lawsuit against DOE and its Secretary
(collectively, “Defendants”) under the Administrative Procedure Act, 5 U.S.C. § 706,
claiming that DOE had arbitrarily refused to honor a supposedly pre-existing oral
agreement to waive the application fee (a waiver that DOE says did not occur), and that
the agency had also failed to explain why it would not honor the oral fee waiver. (See
Am. Compl., ECF No. 26, ¶¶ 167–71; Pl. Limnia, Inc.’s Opp’n to Defs.’ Mot. for
Partial Summ. J. & Cross-Mot. for Partial Summ. J. or for Disc. (“Pl.’s Mot.”), ECF No.
74, at 6.) 1 Limnia combined its claims against DOE with those of another disgruntled
loan applicant; the gravamen of their complaint, which also included alleged violations
of Limnia’s constitutional rights to due process and equal protection, was that various
determinations that DOE had made regarding the processing and merits of their loan
applications were infected with political “cronyism” and demonstrated an abuse of
power. (See, e.g., Am. Compl. ¶¶ 83–113.)
As of July 21, 2016, this Court had (1) dismissed the other plaintiff and many of
the complaint’s claims; (2) voluntarily remanded Limnia’s remaining APA claims back
to the agency (over Limnia’s objection) for reconsideration of Limnia’s loan
application; and (3) closed Limina’s case due to its failure to resubmit its application
materials to the agency pursuant to the voluntary remand. Limnia then appealed, and
the D.C. Circuit determined that this Court’s voluntary remand order was improper, and
as relevant here, ordered this Court to “resolve Limnia’s APA challenge to the
apparently denied 2009 loan applications.” Limnia, Inc. v. U.S. Dep’t of Energy, 857
F.3d 379, 388 (D.C. Cir. 2017). The panel suggested that this Court could avoid
addressing the merits of Limnia’s APA challenge by voluntarily remanding the matter
to the agency, but only if the Court “first resolve[s] whether Limnia has to pay the
application fee associated with the 2009 Loan Guarantee Program application, or
whether that fee was waived by the Department.” Id. Of course, answering that
question under the circumstances presented actually eliminates any prospect of a
voluntary remand to the agency, because Limnia’s APA challenge to DOE’s treatment
1
Page-number citations to the documents that the parties have filed refer to the page numbers that the
Court’s electronic filing system automatically assigns.
2
of its 2009 LG Program loan application is its assertion that DOE had arbitrarily
refused to process Limnia’s application in the absence of the application fee. (See Hr’g
Tr. at 12:10–13 (“[O]ur position here, our perspective is we’re here today only
regarding denial of the fee waiver.”).) Consequently, on remand, this Court ordered the
parties to brief the merits of Limnia’s LG Program APA claim, and the parties
proceeded to address the issue of whether and to what extent DOE acted arbitrarily and
capriciously in requiring that Limnia pay the application fee associated with the 2009
LG Program application. (See Minute Order of November 22, 2017.)
Before this Court at present are the parties’ cross-motions for summary judgment
on this issue. (See Mem. in Supp. of Defs.’ Mot. for Partial Summ. J. (“Defs.’ Mem.),
ECF No. 72-1; Pl.’s Mot.) In its motion, DOE argues that the agency “reasonably
decided to deny [Limnia’s] LG Program application” because “Limnia did not pay the
application fee” (Defs.’ Mem. at 16), and it further maintains that the agency provided
Limnia with an adequate explanation as to that decision, given that “[n]othing in the
administrative record” suggests that DOE “agreed to specifically waive the application
fee” with respect to Limnia’s LG application (id. at 19). For its part, Limnia
acknowledges that it “did not submit an application fee” (Pl.’s Mot. at 5), but it
contends that DOE acted arbitrarily and capriciously in rejecting its application on this
basis, because the agency had “failed” to “provide[] a reasoned explanation for its
refusal to waive the application fee” (id. at 6), given that “[e]vidence in the record
indicates that DOE consented to this waiver” (id. at 5). Limnia has also moved, in the
alternative, “for limited discovery to supplement the record” if this Court finds “the
administrative record insufficient to allow for judicial review.” ( Id. at 13.)
3
For the reasons explained below, Defendants’ motion for partial summary
judgment must be GRANTED, and Plaintiff’s cross-motion for partial summary
judgment must be DENIED. 2 In short, the instant record indisputably establishes that
the steps that are necessary to waive Limnia’s application fee for the LG Program under
DOE regulations were never taken, and DOE had no obligation to honor an alleged oral
waiver of the application fee, nor did it need to provide any explanation for its rejection
of Limnia’s application other than informing Limnia (accurately) that the mandatory
application fee had not been remitted. Thus, DOE’s rejection of Limnia’s application
was not arbitrary or capricious. Moreover, because discovery is generally disfavored in
APA cases and is also entirely unnecessary for the resolution of the instant cross-
motions, Limnia’s alternative motion for discovery is denied. A separate Order
consistent with this Memorandum Opinion will follow.
I. BACKGROUND
A. The Applicable LG Program Regulations
In 2005, Congress passed the Energy Policy Act of 2005, Pub. L. No. 109-58,
§ 1701–04, 119 Stat. 594, 1117–22 (codified at 42 U.S.C. §§ 16511–14), with the goal
of promoting new and improved technologies that “avoid, reduce, or sequester air
pollutants or anthropogenic emissions of greenhouse gases[,]” 42 U.S.C. § 16513(a)(1).
To help make that goal a reality, Congress authorized DOE to “guarantee loans for
certain environmentally-friendly, energy-efficient projects[,]” XP Vehicles, Inc. v.
Dep’t of Energy, 118 F. Supp. 3d 38, 48 (D.D.C. 2015), and specifically noted that
2
The parties have styled their summary judgment motions as “partial” cross -motions because Limnia’s
complaint contains claims regarding another loan application that DOE denied on its merits, and that
portion of this case has been successfully voluntarily remanded to the agency. (See Minute Order of
August 7, 2017.).
4
“[p]roduction facilities for the manufacture of fuel efficient vehicles or parts of those
vehicles, including electric drive vehicles and advanced diesel vehicles” would be
eligible for support under the LG Program, see 42 U.S.C. § 16513(b)(8). Although
federal statutes lay out the broad outlines and policy goals of the LG Program, Congress
left it up to DOE to issue “final regulations” that provide details regarding how the
agency would administer the LG Program. Id. § 16515(b). DOE promulgated its first
version of those final regulations on October 23, 2007, and that version governed the
administration of the LG Program as well as any applications that were submitted for
processing through December 3, 2009. See 10 C.F.R. § 609 (2009). 3
As relevant here, the then-existing LG Program regulations laid out a framework
for how DOE would accept, process, and approve applications for loan guarantees under
the LG Program. This application process would begin with DOE’s decision to issue a
“solicitation” that informed the public that it was “invit[ing] the submission of Pre-
Applications or Applictions for loan guarantees for Eligible Projects.” Id. § 609.3. In
response to that solicitation, entities that wished to submit an application had to submit
an assortment of “information and materials”—for example, “[a] completed Application
form signed by an individual with full authority to bind the Applicant and the Project
Sponsors[,]” id. § 609.6(b)(1), and “[a] description of the nature and scope of the
proposed project[,]” id. § 609.6(b)(5)—and the entity was also required to arrange for
“[p]ayment of the Application filing fee[,]” id. § 609.6(b)(2). DOE’s regulations
further reemphasized the application fee requirement by stating specifically that DOE
3
This first iteration of the LG Program’s regulations applies to the instant dispute. Thus, subsequent
citations to Part 609 of Title 10 of the Code of Fe deral Regulations within this Memorandum Opinion
reference the version of these regulations that was in force prior to December 4, 2009, unless otherwise
noted.
5
would “not consider any Application complete unless the Applicant has paid the [filing]
Fee[.]” Id. § 609.6(c).
Importantly, the regulatory scheme that DOE devised for applications to the LG
Program also contained a provision that permitted deviations from the listed
requirements under certain specified circumstances. See id. § 609.18. Namely, DOE
could “authorize deviations on an individual request basis . . . upon a finding that such
deviation is essential to program objectives and the special circumstances stated in the
request make such deviation clearly in the best interest of the Government .” Id.
(emphasis added). Furthermore, the deviation provision plainly states that “[a]
recommendation for any deviation shall be submitted in writing to DOE[,]” and that
“[s]uch recommendation must include a supporting statement, which indicates briefly
the nature of the deviation requested and the reasons in support thereof. ” Id. (emphasis
added).
B. Limnia’s LG Program Application
In 2008, DOE issued a solicitation for applications to the LG Program related to
“projects that employ innovative energy efficiency, renewable energy, and advance d
transmission and distribution technologies[.]” (Joint Appendix (“J.A.”), ECF No. 78-1,
at 1.) This solicitation described the application process for any interested applicants,
and with respect to the required application fee, it specified that “[a]ll applicants must
remit twenty-five percent (25%) of the application fee . . . upon submission of their
applications to DOE.” (Id. at 3; see id. at 4 (reemphasizing that “[t]he appropriate
proportion of the application fee . . . must be submitted to the U.S. Department of the
Treasury [] by the appropriate dates . . . Applicants are advised to make proper
6
arrangements to assure that Treasury receives such fees on behalf of DOE”).) 4
In early February 2009, Limnia learned of the LG Program, but in its view, “the
application fees were prohibitive.” (Id. at 12.) 5 Sometime thereafter, Limnia allegedly
participated in “a conference call” with various DOE officials, and during that call,
Limnia’s representatives purportedly heard DOE Secretary Steven Chu “state[] his
intention to waive the application fees” relating to the LG Program. (Id.) Having
“understood that Mr. Chu was waving the application fees ” (id.), Limnia submitted an
LG Program application to DOE on February 17, 2009, without including the fee (id. at
6). In its application cover letter, Limnia specifically stated that it “understand[s] that
Secretary Chu has changed the submission fee to be payable upon award [.]” (Id.; see
also id. at 8, 10.) A handwritten statement—“applic [sic] fee waived by secretary of
DOE”—appears at the top of the copy of Limnia’s cover letter contained within the
administrative record. (Id. at 6.)
After submitting its application, Limnia eventually received a phone call from
one of DOE’s employees, informing the company that it “did need to pay the”
application fee, and that “[it] needed to wire money” to the Treasury Department by
February 26, 2009 (id. at 12 (emphasis added)), which was the deadline specified in the
solicitation for project proposals (id. at 3). However, according to Limnia, other DOE
4
The instant record does not reveal exactly what fee Limnia was expected to submit alongside its
application to the LG Program. This uncertainty is primarily due to the fact that the amount of the LG
Program application fee depended on the size of the loan guarantee that an applicant sought from DOE
(see J.A. at 5), and the record does not specify the magnitude of the loan guarantee that Limnia sought.
In general, it appears that the fee that was to accompany applications in response to the solicitation at
issue here was between $18,750 and $31,250. (Id.)
5
The administrative record in this case is mainly comprised of a series of emails between Limnia’s
management and DOE officials. (See id. at 6–25.) This Court has necessarily relied chiefly upon these
emails in discussing the factual circumstances related to DOE’s rejection of Limnia’s LG Program
application.
7
employees had orally represented that there was “some flexibility on the time to wire
the money.” (Id. at 12.) Ultimately, the fee-related communications between Limnia
and DOE broke down, and Limnia never submitted any part of the LG Program
application fee to DOE or the Treasury Department. (See id. at 9–10, 12.) DOE
rejected Limnia’s application to the LG Program for this reason; in an e-mail dated
April 9, 2009, DOE Senior Investment Officer Daniel C. Tobin wrote: “I regret to
inform you that due to non-remittance of the required application fee, your application
will not be reviewed. The application has been deemed non -responsive. Please note
that this letter does not prejudice you from applying under future solicitations[.]” (Id.
at 8.)
C. Procedural History
DOE’s rejection of Limnia’s LG Program application gave rise, in part, to the
instant litigation. In 2013, Limnia, alongside another plaintiff named XP Vehicles,
filed a complaint in this Court against DOE and its Secretary. (See Compl., ECF No.
1.) Plaintiffs then amended the complaint to allege that both Limnia and XP Vehicles’
applications for financial support under the LG Program and another program DOE
administers (the Advanced Technology Vehicle Manufacturing (“ATVM”) Program)
were “improperly denied[.]” (Am. Compl. ¶ 119.) Both plaintiffs claimed “due
process[,]” “equal protection[,]” and APA violations (id. ¶¶ 121–71), maintaining that
DOE’s denials were “impermissibly infected with political pressure” (e.g., id. ¶ 169).
This Court eventually dismissed all claims against the individual defendants in their
official capacities (see Order, ECF No. 38, at 1); all of XP Vehicles’ claims against
DOE, see XP Vehicles, 118 F. Supp. 3d at 65–72; and all of Limnia’s constitutional
claims against DOE, see id. at 72–78. Thus, the scope of the case was reduced to the
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two APA claims Limnia brought against DOE for its denial of Limnia’s applications to
the LG and ATVM Programs.
DOE then filed a motion for voluntary remand, which this Court granted . See XP
Vehicles, Inc. v. U.S. Dep’t of Energy, 156 F. Supp. 3d 185, 186 (D.D.C. 2016). (See
also Order, ECF No. 56, at 1 (closing the case).) Limnia appealed the order remanding
the case to DOE, and the D.C. Circuit reversed the grant of voluntary remand because
DOE had suggested that it did not “intend[] to take further action with respect to the
original agency decision on review.” Limnia, 857 F.3d at 385–87 (emphasis in
original). The court of appeals did not reach the merits of Limnia’s APA claims ;
instead, it instructed this Court to “resolve Limnia’s APA challenge[s] to the apparently
denied 2009 loan applications” on remand, id. at 388, but also left open the possibility
that this Court could effect a proper voluntary remand of the matter to the agency, if the
agency committed itself to “reconsider[ing] th[e] 2009 loan applications” and if the
Court “first” resolved what the Circuit perceived to be the threshold question of
“whether Limnia has to pay the application fee associated with the 2009 Loan
Guarantee Program application, or whether that fee was waived by the Department[,]”
id.
With the case once again before this Court, DOE represented that it was
genuinely willing to reconsider on voluntary remand the 2009 version of Limnia’s
application with respect to the ATVM Program, and as a result, this Court remanded
that portion of this case to DOE and stayed any consideration of Limnia’s claims
regarding that application while DOE reconsidered its prior decision . (See Minute
Order of August 7, 2017.) As to the dispute surrounding DOE’s rejection of Limnia’s
9
application to the LG Program—the merits of which relate simply and solely to whether
or not DOE acted arbitrarily and capriciously when it insisted that Limnia pay the
application fee under the circumstances alleged—the parties agreed to move ahead with
summary judgment briefing and proceeded to file cross-motions for summary judgment.
(See Defs.’ Mem.; Pl.’s Mot.)
In its motion for summary judgment, DOE argues that it made the rational
decision to reject Limnia’s LG Program application in light of Limnia’s undisputed
failure to pay the required application fee, and it maintains further that the agency
provided an adequate explanation to Limnia regarding the d enial of Limnia’s
application. (See Defs.’ Mem. at 6–8 (referencing DOE’s email to Limnia dated April
9, 2009).) For its part, Limnia vigorously contends that, by virtue of Secretary Chu’s
oral comments, DOE did, in fact, grant Limnia a fee waiver, and because DOE did not
explain why it rescinded that fee waiver in the April 9, 2009 email, DOE did not
provide a sufficiently thorough and reasoned explanation for rejecting Limnia’s
application for support under the LG Program. (See Pl.’s Mot. at 5.) In the alternative,
Limnia has requested that this Court provide it with the chance to supplement the
administrative record by engaging in discovery to allow Limnia “to determine the
Department of Energy’s reason for refusing to honor the fee waiver.” ( Id. at 15.)
The parties’ cross-motions are now fully briefed (see Reply in Supp. of Defs.’
Mot. for Partial Summ. J. & Opp’n to Pl.’s Cross-Mot. for Partial Summ. J. or for
Discovery (“Defs.’ Reply”), ECF No. 75; Limnia’s Reply in Supp. of its Cross -Mot. for
Partial Summ. J. or for Disc. (“Pl.’s Reply”), ECF No. 77), and this Court heard oral
arguments from both parties at a motion hearing on July 12, 2018.
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II. LEGAL STANDARDS
A. Summary Judgment In APA Cases
The Federal Rules of Civil Procedure require a court to grant summary judgment
“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). However, in
an APA case, that summary judgment standard “does not apply because of the limited
role of a court in reviewing the administrative record.” Standing Rock Sioux Tribe v.
U.S. Army Corps of Eng’rs, 301 F. Supp. 3d 50, 58 (D.D.C. 2018) (internal quotation
marks and citation omitted). Indeed, in the APA context, “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 v.
Mainella, 459 F. Supp. 2d 76, 90 (D.D.C. 2006) (internal quotation marks and citation
omitted). Consequently, “[t]he entire case on review is a question of law, and only a
question of law[,]” Marshall Cty. Health Care Auth. v. Shalala, 988 F.2d 1221, 1226
(D.C. Cir. 1993), and a court must limit its review to the “administrative record” and
the facts and reasons contained therein to determine whether the agency’s action was
“consistent with the [relevant] APA standard of review[,]” Ho-Chunk, Inc. v. Sessions,
253 F. Supp. 3d 303, 307 (D.D.C. 2017) (first alteration in original) (internal quotation
marks and citation omitted); see also Caiola v. Carroll, 851 F.2d 395, 398 (D.C. Cir.
1988).
B. Arbitrary And Capricious Review
Under the APA, any person “adversely affected or aggrieved by agency action”
has the right to seek “judicial review” of that agency action, 5 U.S.C. § 702, so long as
the agency has taken “final agency action for which there is no other adequate remedy
11
in a court[,]” id. § 704. The “reviewing court shall . . . hold unlawful and set aside
agency action, findings, and conclusions found to be arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law[.]” Id. § 706(2)(A). This is a
“narrow” standard of review, and as such, the court is prevented from “substitut[ing] its
judgment for that of the agency.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm
Mut. Auto. Ins., 463 U.S. 29, 43 (1983).
Boiled to bare essence, the arbitrary and capricious review standard “requires
that an agency’s decision be reasonable and reasonably explained.” Nw. Corp. v. Fed.
Energy Regulatory Comm’n, 884 F.3d 1176, 1179 (D.C. Cir. 2018). An agency’s action
must therefore “be upheld as long as the [agency] considered the relevant factors and
articulated a rational connection between the facts found and the choice made.” Am.
Rivers v. Fed. Energy Regulatory Comm’n, 895 F.3d 32, 45 (D.C. Cir. 2018) (internal
quotation marks and citation omitted); see also ACA Int’l v. Fed. Commc’ns Comm’n,
885 F.3d 687, 695 (D.C. Cir. 2018) (“Arbitrary-and-capricious review includes assuring
that the agency engaged in reasoned decisionmaking.” (internal quotation marks and
citation omitted)). Examples of arbitrary and capricious agency action include
instances where “the agency [] 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 be ascribed to a difference in view or the product of
agency expertise.” State Farm, 463 U.S. at 43. Moreover, and importantly, one of “the
most elementary precepts of administrative law” holds that “an agency has no choice
but to provide a reasoned explanation for its actions[.]” Policy & Research LLC v. U.S.
12
Dep’t of Health & Human Servs., 313 F. Supp. 3d 62, 83 (D.D.C. 2018) (citation
omitted), appeal filed, No. 18-5190 (D.C. Cir. June 15, 2018). Thus, an agency must
provide a “clear enough” explanation of its actions “that its path may reasonably be
discerned.” Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2125 (2016) (internal
citations and quotation marks omitted).
III. ANALYSIS
It is indisputable that the regulations governing DOE’s LG Program required
applicants to remit an application fee before the agency would review the merits of a
given application, see 10 C.F.R. § 609.6(b)(2), (c), and it is equally indisputable that
Limnia did not pay that mandatory fee when it submitted its 2009 LG Program
application to DOE (see J.A. at 12, 20; see also Pl.’s Reply at 2 (“Limnia does not
dispute that it did not pay the fee.”)). Furthermore, there can be no doubt that DOE
provided an explanation for its rejection of Limnia’s application; the record plainly
demonstrates that, on April 9, 2009, DOE informed Limnia in writing that its
“application will not be reviewed” and that the agency was taking this non-action “due
to non-remittance of the required application fee[.]” (J.A. at 8.) Thus, what remains to
be resolved with respect to Limnia’s contention that DOE acted arbitrarily and
capriciously in rejecting Limnia’s application is whether DOE’s decision, and its
explanation, were reasonable responses under the circumstances presented.
For the reasons explained below, it is clear to this Court that DOE acted entirely
rationally when it refused to process Limnia’s LG Program application, because DOE
had not, in fact, granted Limnia any fee waiver, and having not approved any deviation
from the mandatory fee requirement, DOE had no obligation to provide reasons why the
13
agency had refused to honor the nonexistent waiver. Put another way, Limnia has
conjured up a purported obligation of the agency (to waive the fee) that has not been
established, and its motion strangely contends that DOE’s refusal to comply with this
unestablished duty, as well as DOE’s failure to explain this refusal, is irrational agency
action in violation of the APA. Limnia’s contentions are meritless.
A. DOE Never Waived The Application Fee For Limnia’s LG Program
Application
Both parties recognize that the issue of whether DOE acted arbitrarily and
capriciously by rejecting Limnia’s LG Program application turns entirely upon whether
DOE ever granted Limnia a fee waiver for its application. (See, e.g., Defs.’ Reply at 11
(“Plaintiff must first point to evidence suggesting that the agency in fact agreed to
waive the fee in the first place[.]”); Pl.’s Mot. at 8 (beginning with the contention that
“[t]he administrative record provides evidence . . . that the application fee had been
waived”).) That is, if DOE granted Limnia a valid fee waiver, then the agency’s sudden
change of course without providing “a well-reasoned explanation for its decision” to do
so would constitute arbitrary and capricious action for APA purposes. Policy &
Research, 313 F. Supp. 3d at 67. On the other hand, if DOE did not grant Limnia a fee
waiver, then its rejection of Limnia’s application was plainly well-founded and there
was nothing to explain—i.e., there would have been no change in agency policy with
respect to Limnia’s application, and DOE’s April 9th statement sufficently articulates
that Limnia’s failure to submit the mandatory application fee was the factor that
precipitated DOE’s rejection of Limnia’s LG Program application. See Safari Club
Int’l v. Zinke, 878 F.3d 316, 331 (D.C. Cir. 2017).
Even the most cursory review of the applicable regulations and undisputed facts
14
in the administrative record clearly reveals that DOE never authorized the fee waiver
that Limnia says it was entitled to with respect to the LG Program application at issue
in this case. As explained above, the regulations that were in force at the time that
Limnia submitted its application to participate in the LG Program mandated that
applicants pay any “filing fee” that an open solicitation required when their application
to the LG Program was submitted, 10 C.F.R. § 609.6(b)(2), and permitted deviation
from such program requirements only under specified circumstances. Before any
deviation from DOE’s regulations could take place, an applicant had to submit a w ritten
recommendation that DOE deviate from its protocols, including a supporting statement
describing the nature of the deviation and the justifications for that deviation. See id.§ 609.18. Upon receiving such a request, DOE would often consult with other agencies,
see id., and in order to authorize the requested deviation, DOE was required to make “a
finding” that such deviation was “essential to program objectives” and would be “in the
best interest of the Government[,]” id. Thus, a deviation from the LG Program
application requirements (such as the prescribed fee) was by no means an entitlement,
nor could it be whimsically granted by an oral representation; rather, under the express
terms of the applicable regulations, a deviation required a written request and
justification by the applicant and approval from DOE based on specified findings. See
id.
None of the mandated steps for deviating from the fee requirement occurred in
the instant case. Limnia never provided “[a] recommendation . . . in writing to DOE”
regarding a deviation, nor did it submit to DOE any “supporting statement” that
described the “nature of the deviation requested and the reasons in support thereof[.]”
15
Id. The administrative record also lacks any “finding” by DOE that waiving the fee for
Limnia’s application to the LG Program would prove “essential to program objectives”
or that “special circumstances” in this case made such a request in the best interest of
the federal government. Id.; see also Black’s Law Dictionary 749 (10th ed. 2014)
(defining a “finding” or “finding of fact” in relevant part as “[a] determination by a
judge, jury, or administrative agency of a fact supported by the evidence in the
record”). There is no dispute that, despite the clear requirements for deviation that are
spelled out in the regulations, neither Limnia nor DOE took any of the prerequisite
steps to authorize a deviation (and thus a fee waiver) for Limnia’s application to the LG
Program.
Limnia adamantly asserts that DOE should be deemed to have waived the fee
with respect to its LG Program application nevertheless. In this regard, Limnia points
to various record documents that it says establish that the agency had deviated from the
application fee requirement, but none of those documents demonstrates that the steps
that are indisputably necessary to secure a waiver under DOE regulations were taken.
For example, Limnia maintains that it participated in a conference call during which
Secretary Chu “stated his intention to waive the application fees” (J.A. at 12; see also
Pl.’s Mot. at 9), which Limnia says is confirmed by the typed statement in Limnia’s
own application cover letter to the effect that “Secretary Chu has changed the
submission fee to be payable upon award” (Pl.’s Mot. at 9 (quoting J.A. at 6)). At
most, this evidence represents Limnia’s own (potentially mistaken) understanding of the
status of the fee requirement; it neither amounts to an applicant “recommendation” that
the fee be waived, 10 C.F.R. § 609.18, nor provides the requisi te “statement” in support
16
of that deviation, id. Limnia’s cover-letter representation also falls far short of being a
“finding” by DOE, id., and in the absence of any indication within the deviation rule
that the Secretary has discretion to dispense with the deviation requirements, an ipse
dixit regarding a waiver (even one that was purportedly announced by the Secretary
himself) is manifestly insufficient.
The purported fee waiver also cannot rest upon the e-mail from one of Limnia’s
associates to staff members at DOE, stating that DOE’s denial of Limnia’s application
for non-remittance of the required fee was “not in keeping with the discussion that was
held . . . regarding the DOE’s review of Limnia’s submission prior to its requirement
for fee submission.” (Pl.’s Mot. at 9 (quoting J.A. at 17).) Again, while it appears
quite clear from this email that Limnia believed that it had been excused from the
application-fee requirement, such a belief does not make it so. And a statement from a
Limnia associate articulating Limnia’s understanding of a discussion that Limnia
allegedly had with the agency about its mistaken belief that there was an authorized
deviation from the fee requirement does not satisfy the regulations ’ clear deviation
“prescription.”
Limnia’s other alleged smoking gun regarding DOE ’s grant of a fee waiver—the
handwritten notation on Limnia’s application cover letter stating “Appli. [sic] Fee
waived by Secretary DOE” (id. (quoting J.A. at 6))—is similarly unavailing. To begin
with, it is entirely unclear who made this notation. Limnia speculates that “someone at
DOE read the typewritten statement that [the] Secretary [] had waived the application
fee, circled Limnia’s telephone number, called Limnia, and during that call[,] made the
handwritten notation that Secretary Chu had waived the fee.” (Id.) The notation itself
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does not plainly establish that this chain of events actually occurred in the manner than
Limnia articulates, but even so, this handwritten note merely reflects that someone
somehow said the fee had been waived, and is not reasonably construed to be a
“finding” regarding the fee waiver, much less the required finding that such a waiver
would prove “essential” to the LG Program’s objectives or that it is in the best interests
of the federal government under the deviation rules. ( See J.A. at 6, 12, 17.)
The best that Limnia can do to support its fee-waiver position is to note that
“[t]he cover letter of its application states that Limnia ‘understands that Secretary Chu
has changed the submission fee to be payable upon award[,]’” (Pl.’s Mot. at 12 (quoting
J.A. 6)), and to insist that Limnia thereby successfully submitted to DOE “a
determination by the Secretary in his discretion to undertake a deviation” ( id. (quoting
10 C.F.R. § 609.16 (2018)); see also Pl.’s Reply at 4–5). There are multiple flaws with
this argument, not the least of which is that Limnia’s own statement is, quite plainly,
not a determination by the Secretary. See 10 C.F.R. § 609.16(a)(2) (2018). But it
suffices here to point out that, in any event, Limnia’s argument in this regard relies on a
new version of DOE’s regulations—i.e., one that was not in effect at the time of the
determination at issue in this case. It may well be true that today DOE can deviate from
its regulations if (1) an Applicant submits to DOE “a determination by the Secretary in
his discretion to undertake a deviation[,]” id. § 609.16(a)(1)(iii) (2018), and (2) there
exists “[a] finding by the Secretary that such deviation supports program objectives and
the special circumstances stated in the request make such deviation clearly in the best
interest of the Government[,]” id. § 609.16(a)(2) (2018), but such was not the case
under the regulations that were in force at the time DOE denied Limnia’s LG Program
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application (see n.3, supra). Instead, and as explained above, the then-existing
deviation regulation required a written recommendation regarding any proposed
deviation; a statement in support of that deviation; and a finding by the Secretary that
such a deviation served both the objectives of the LG Program and the interests of the
federal government. See 10 C.F.R. § 609.18 (2009). Limnia’s statement in its cover
letter that it “understands that Secretary Chu has changed the submission fee to be
payable upon award” does not satisfy these requirements.
B. DOE’s Rejection Of Limnia’s LG Program Application Was Reasonable
And Sufficiently Explained
Because DOE did not waive the fee for Limnia’s application to the LG Program,
there can be no question that DOE’s treatment of Limnia’s application was entirely
appropriate under the APA. Consistent with the regulations’ statement that “DOE will
not consider any Application complete unless the Applicant has paid the [application
fee],” id. § 609.6(c), DOE refused to process Limnia’s application because Limnia
failed to remit the fee (see J.A. at 8). This was a perfectly rational choice under the
circumstances, see Morton v. Ruiz, 415 U.S. 199, 235 (1974) (“Where the rights of
individuals are affected, it is incumbent upon agencies to follow their own
procedures.”); Damus v. Nielsen, 313 F. Supp. 3d 317, 335 (D.D.C. 2018) (“[E]ven in
areas of expansive discretion, agencies must follow their own existing valid
regulations.” (internal quotation marks and citation omitted)). And, indeed, it is only
conceivably arbitrary action by DOE if one assumes, as Limnia does, that DOE granted
Limnia a fee waiver despite the fact that the agency’s deviation regulations were not
followed.
Thus, by stating simply that Limnia’s application was rejected “due to non-
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remittance of the required application fee” (J.A. at 8), DOE unquestionably
“articulate[d] a satisfactory explanation for its action[,]” State Farm, 463 U.S. at 30;
see, e.g., Vernal Enters., Inc. v. Fed. Commc’ns Comm’n, 355 F.3d 650, 661 (D.C. Cir.
2004) (approving a denial of a refund request where that denial accorded with the
agency’s internal fee-refund policy and where “the Commission’s order . . .
“explain[ed] why the fee-refund policy . . . required denial of Vernal’s request”).
Furthermore, DOE’s explanation for its rejection of Limnia’s application had the added
benefit of being entirely true. Cf. New England Power Generators Ass’n, Inc. v. Fed.
Energy Regulatory Comm’n, 879 F.3d 1192, 1200–01 (concluding that, because the
agency ‘s decision was supported by the record evidence and reasonably ex plained, the
agency did not act arbitrarily or capriciously).
C. Limnia’s Discovery Request Is Baseless
Apparently sensing the meritless nature of its current fee -waiver contentions,
Limnia has requested that, as an alternative to granting it summary judgment , this Court
should authorize “limited discovery to determine the Department of Energy’s reason for
refusing to honor the fee waiver[.]” (Pl.’s Mot. at 15.) Unfortunately for Limnia, this
request fares no better than its underlying claim.
It is well established that, to seek discovery in the context of an APA case, the
plaintiff must make “a significant showing . . . that [the plaintiff] will find material in
the agency’s possession indicative of bad faith or an incomplete reco rd[.]” Air Transp.
Ass’n of Am., Inc. v. Nat’l Mediation Bd., 663 F.3d at 487–88. But, here, Limnia has
offered nothing more than rank speculation about DOE’s motives based on Limnia’s
own (unproven) assumption that the agency actually conferred a fee wa iver through
Secretary’s Chu’s comments and then inexplicably rescinded it . (See Pl.’s Mot. at 16
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(“Defendants are the only party with access to the information regarding DOE ’s true
reason for refusing to honor its fee waiver; the administrative record contains no
contemporaneous evidence on this point.”).) Limnia’s mistaken belief that the agency
had granted it a fee waiver, however earnest, is an insufficient basis upon which to
conclude that Limnia should be allowed to explore why the administrative record makes
no mention of the agency’s fee-waiver obligation, and this is especially so when the
most obvious reason for the lack of record evidence regarding any fee waiver is that no
such waiver exists. What is more, if there is any bad faith to be found, this Court
concludes that it is most likely manifest in Limnia’s own decision to pursue its
frivolous contention that DOE somehow arbitrarily abandoned a commitment to process
Limnia’s LG application sans the mandatory fee.
Thus, far from demonstrating that discovery is warranted, Limnia’ s request for
further factfinding merely exposes the extremely thin reed upon which Limnia’s claim
of arbitrary and capricious action rests.
IV. CONCLUSION
DOE’s regulations plainly required Limnia to submit an application fee alongside
its application for an LG Program loan, and neither Limnia nor DOE undertook any of
the steps that the regulations require in order to effect a waiver of that application-fee
mandate. This Court finds that DOE never granted Limnia a fee waiver, and thus, the
agency did not act arbitrarily and capriciously when it refused to process Limnia’s
application for failing to remit the required fee or when i t explained that it was
rejecting Limnia’s application “due to non-remittance of the required application fee[.]”
(J.A. at 8.) As a result, and as set forth in the accompanying Order, DOE’s motion for
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partial summary judgment must be GRANTED, and Limnia’s cross-motion for partial
summary judgment must be DENIED. And with the exception of DOE’s pending
review of Limnia’s ATVM application on voluntarily remand, this matter is now over;
no discovery is warranted or authorized.
DATE: September 28, 2018 Ketanji Brown Jackson
KETANJI BROWN JACKSON
United States District Judge
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