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

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
___________________________________
)
AIR TRANSPORT ASSOCIATION )
OF AMERICA, INC. d/b/a )
AIRLINES FOR AMERICA, et al., )
)
Plaintiffs, )
) Civil Action No. 16-919 (RMC)
v. )
)
UNITED STATES DERPARTMENT )
OF AGRICULTURE, et al., )
)
Defendants. )
___________________________________ )
MEMORANDUM OPINION
The Air Transport Association of America, Inc. and the International Air
Transport Association challenged a Final Rule issued by the Animal and Plant Health Inspection
Service (APHIS) within the United States Department of Agriculture. The Final Rule set fees for
checking international aircraft for unwanted pests, including an additional amount for a
“reserve.” The Court agreed that the adoption of the Final Rule as to the reserve was
problematic and remanded that portion of the Final Rule to APHIS for further rulemaking. Now
the Plaintiffs move to reconsider the Court’s order, particularly the remand of the reserve portion
of the Final Rule without vacatur. They also ask the Court to impose a schedule for further
rulemaking by the agency and ask that the Court certify part of its opinion for interlocutory
review. Specifically, Plaintiffs ask the Court to certify for immediate review the question of
whether APHIS violated the Administrative Procedure Act when it determined to apply the fee
for commercial aircraft to passenger aircraft without explaining inconsistencies in the
rulemaking record.
The Court finds that: (1) the reserve portion of the Final Rule is properly
remanded without vacatur; (2) a deadline and schedule for periodic status reports shall be
imposed; and (3) certification for interlocutory appeal is not warranted. Thus, the Court will
grant in part and deny in part Plaintiffs’ motion to amend the March 28, 2018 Order.
I. BACKGROUND
The facts were discussed in detail in the Court’s March 28, 2018 Opinion in this
case, and will only be repeated to the extent that they are relevant to the pending motion. See Air
Transp. Ass’n of Am., Inc. v. USDA, 303 F. Supp. 3d 28, 33-38 (D.D.C. 2018). In short,
Congress granted APHIS the authority to inspect “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.” Air Transp. Ass’n, 303 F. Supp. 3d at 33; see also Plant
Protection Act, 7 U.S.C. § 7701, et seq. (2010); 7 C.F.R. § 330.105. Congress enacted the Food,
Agriculture, Conservation, and Trade Act (FACT Act) in 1990, “authoriz[ing] APHIS to collect
user fees for certain agricultural quarantine and inspection (AQI) services.” Air Transp. Ass’n,
303 F. Supp. 3d at 34. When the FACT Act was amended as part of the Federal Agricultural
Improvement Act of 1996, Congress revised the section describing the authorized fees and
created a temporary Agricultural Quarantine Inspection User Fee Account in the Department of
Treasury. See Pub. L. No. 104-127, § 917, 110 Stat. 888, 1187-88 (1996) (codified at 21 U.S.C.
§ 136a (2013)). Under § 136a(a)(1)(C), the Secretary of Agriculture was authorized to assess
fees to “maintain a reasonable balance in the Agricultural Quarantine Inspection User Fee
Account” for FY96 through FY02. 21 U.S.C.
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§ 136a(a)(1)(C). APHIS has explained that “[t]he reserve fund ensures that AQI program
operations continue without interruption when service volumes fluctuate due to economic
conditions or other circumstances.” Air Transp. Ass’n, 303 F. Supp. 3d at 35.
On April 25, 2014, APHIS submitted a proposed new rule for notice and
comment as part of an ongoing attempt to adjust fees to cover the costs of the AQI program. See
id. at 37. The October 29, 2015 Final Rule decreased the air passenger fee to $3.96 and
increased the commercial aircraft fee to $225. See id. Plaintiffs objected to the Final Rule and
filed their Complaint on May 14, 2016, alleging four Administrative Procedure Act (APA), 5
U.S.C. § 500, et seq. (2012), violations. See 5 U.S.C. § 706(2)(A); Air Transp. Ass’n, 303 F.
Supp. 3d at 37-38.
The Court denied Plaintiffs’ motion for summary judgment as to Counts I, II, and
IV, see Air Transp. Ass’n, 303 F. Supp. 3d at 57; and granted Plaintiffs’ motion as to Count III,
agreeing that APHIS violated the FACT Act by maintaining a reserve fund after the expiration of
its statutory authority in 2002 under § 136a(a)(1)(C). See id. at 51-52. The Court concluded that
“[w]hether there is authority to be found elsewhere, reliance on expired statutory language was
unreasonable and therefore arbitrary and capricious,” and remanded to the agency for “further
consideration and possible rulemaking by APHIS.” Id. at 52.
Plaintiffs now move under Rule 54(b) to amend the Court’s order to:
(1) Remand with vacatur the reserve portion of the Final Rule;
(2) Require APHIS to respond to the Court’s remand Order by
publishing a new or amended rule for public notice and
comment, or by taking other action, by August 31, 2018, and to
require status reports from the parties every 90 days during the
course of the remand period; and
(3) Certify for interlocutory appeal under 28 U.S.C. § 1292(b)
whether APHIS’s application of the commercial aircraft fee to
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passenger aircraft satisfies the requirements of the APA given
the inconsistencies in the agency’s expert report from Grant
Thornton and the Final Rule and APHIS’s failure to explain
these discrepancies in the rulemaking.
See Pls.’ Mot. to Amend Order (Mot.) [Dkt. 38] at 1. The motion is ripe for decision.1
II. LEGAL STANDARD
Federal Rule of Civil Procedure 54(b) governs a court’s reconsideration of non-
final, or interlocutory, orders. See Murphy v. Exec. Office for U.S. Att’ys, 11 F. Supp. 3d 7, 8
(D.D.C. 2014), aff’d, 789 F.3d 204 (D.C. Cir. 2015). An order granting a motion for summary
judgment in part is an interlocutory order. Cuban v. SEC, 795 F. Supp. 2d 43, 48 (D.D.C. 2011)
(“Court action that terminates fewer than all claims in a case is considered interlocutory.”)
(citing Langevine v. District of Columbia, 106 F.3d 1018, 1023 (D.C. Cir. 1997)). Rule 54(b)
provides that an interlocutory order “may be revised at any time before the entry of a judgment
adjudicating all the claims and all the parties’ rights and liabilities.” Fed. R. Civ. P. 54(b).
A motion for reconsideration under Rule 54(b) may be granted “as justice
requires.” United States v. Dynamic Visions, Inc., 321 F.R.D. 14, 17 (D.D.C. 2017)
(quoting Singh v. George Washington Univ., 383 F. Supp. 2d 99, 101 (D.D.C. 2005)). A court
may consider whether it “patently misunderstood a party, made a decision beyond the adversarial
issues presented to the court, made an error in failing to consider controlling decisions or data, or
whether a controlling or significant change in the law or facts has occurred since the submission
of the issue to the Court.” Id. (internal quotation marks and citations omitted).
1
See Defs.’ Opp’n to Pls.’ Mot. to Amend Order (Opp’n) [Dkt. 39]; Pls.’ Reply Mem. of Law in
Supp. of Pls.’ Mot. to Amend (Reply) [Dkt. 40].
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III. ANALYSIS
A. Remand of Reserve Portion of Final Rule
Plaintiffs move to amend the March 28, 2018 Order so that the reserve portion of
the Final Rule is vacated upon remand. The APA requires that the reviewing court “hold
unlawful and set aside agency action, findings, and conclusions found to be—(A) arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2).
“An inadequately supported rule, however, need not necessarily be vacated.” Allied-Signal, Inc.
v. U.S. Nuclear Regulatory Comm’n, 988 F.2d 146, 150 (D.C. Cir. 1993); see also Heartland
Reg’l Med. Ctr. v. Sebelius, 566 F.3d 193, 199 (D.C. Cir. 2009) (“[V]acatur need not be the
remedy for an invalidly adopted rule.”). In fact, this Circuit has “commonly remanded without
vacating an agency’s rule or order where the failure lay in lack of reasoned decisionmaking, but
also where the order was otherwise arbitrary and capricious.” Int’l Union, United Mine Workers
of Am. v. Fed. Mine Safety and Health Admin., 920 F.2d 960, 966-67 (D.C. Cir. 1990) (citations
omitted); see also Checkosky v. SEC, 23 F.3d 452, 465 (D.C. Cir. 1994) (Silberman, J., separate
opinion) (noting that “[e]ven after condemning an agency action as arbitrary and capricious, we
have recognized our remedial discretion not to vacate the agency decision”).
The district court exercises its discretion to remand a rule with or without vacatur
once it has found deficiencies in an agency’s reasoning. See, e.g., Advocates for Highway and
Auto Safety v. Fed. Motor Carrier Safety Admin., 429 F.3d 1136, 1151 (D.C. Cir. 2005) (“While
unsupported agency action normally warrants vacatur, this court is not without discretion.”)
(citations omitted). Whether a court should vacate an unreasonable agency action on remand, or
not, depends on: (1) “the seriousness of the order’s deficiencies (and thus the extent of doubt
whether the agency chose correctly)” and (2) “the disruptive consequences of an interim change
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that may itself be changed.” Allied-Signal, 988 F.2d at 150-51 (quoting Int’l Union, 920 F.2d at
967).
If the first prong of the Allied-Signal analysis supports remand without vacatur,
the second prong is “only barely relevant.” Standing Rock Sioux Tribe v. U.S. Army Corps of
Eng’rs, 282 F. Supp. 3d 91, 108 (D.D.C. 2017) (quoting Fox Television Stations, Inc. v. FCC,
280 F.3d 1027, 1049 (D.C. Cir. 2002), opinion modified on reh’g, 293 F.3d 537 (D.C. Cir.
2002)). If there is “at least a serious possibility that the [agency] will be able to substantiate its
decision on remand,” then vacatur is not necessary. Allied-Signal, 988 F.2d at 151; see also In re
Core Commc’ns, Inc., 531 F.3d 849, 861 (D.C. Cir. 2008) (declining to vacate rule when there
was a “non-trivial likelihood” that the agency had a valid legal basis for it).
Plaintiffs argue that the seriousness of the deficiencies of the Final Rule satisfy
the first prong of Allied-Signal because APHIS relied on expired statutory authority in assessing
the reserve fee, giving rise to a “fundamental procedural flaw.” See Mem. of Law in Supp. of
Pls.’ Mot. to Amend Order Filed Mar. 28, 2018 (Mem.) [Dkt. 38-1] at 6. They add that even if
APHIS can successfully locate the requisite authority elsewhere in the statute, it will still have to
make material changes in its methodology for calculating the reserve fee, which will
unrecognizably change the reserve portion of the Final Rule. See Reply at 5. Plaintiffs further
maintain that vacating the reserve will cause only minimal disruption to the AQI program. See
Mem. at 6-7.
APHIS responds that there is a “serious possibility” it will be able to substantiate
the reserve fee on remand because it did not exceed its statutory authority, but only made a
citation error. See Opp’n at 2-3. Additionally, APHIS emphasizes that vacatur would cause
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serious disruption to the AQI program and risk “biological and economic harm for the United
States.” See id. at 3.
“When an agency may be able readily to cure a defect in its explanation of a
decision, the first factor in Allied-Signal counsels remand without vacatur.” Heartland, 566 F.3d
at 198. Defendants submit that “there is, at a minimum, a ‘serious possibility’ that APHIS will
be able to provide statutory justification for the reserve fund portion of the 2015 rule on
remand.” Opp’n at 4.
In granting summary judgment to Plaintiffs on Count III, the Court noted that the
section of the FACT Act cited in the rulemaking to authorize maintenance of a reserve account
was improper—and APHIS conceded the point. Air Transp. Ass’n, 303 F. Supp. 3d at 51-52.
While APHIS attempted in its briefing to justify the reserve account through § 136a(a)(1)(B) of
the FACT Act, the Court did not decide whether its argument was correct because that was the
not the justification in the rulemaking. See id. at 50-52. Plaintiffs now contend that the text of
§ 136a(a)(1)(B) cannot support the construction APHIS intends to give it, in order to justify the
reserve, but that argument is premature. All that is necessary at this point is that APHIS has
adequately shown that it is “conceivable” that on remand it can “develop a reasoned explanation”
of its statutory authority for charging a reserve fee. Allied-Signal, 988 F.2d at 151.
Plaintiffs’ argument that APHIS made a “fundamental flaw” in propounding the
Final Rule puts too much weight on the admitted error in these circumstances. A fundamental
flaw has been found “when an agency’s explanation of the basis and purpose of its rule is so
inadequate that the reviewing court cannot evaluate it.” Heartland, 566 F.3d at 199 (“Failure to
provide the required notice and to invite public comment . . . is a fundamental flaw that
‘normally’ requires vacatur of the rule.”); see also Mendoza v. Perez, 72 F. Supp. 3d 168, 175
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(D.D.C. 2014) (holding that the “failure of the Federal Defendants to engage in notice and
comment is a fundamental procedural flaw”). While APHIS acted unreasonably when it relied
on expired statutory authority to justify the reserve fee, such a deficiency in these circumstances
does not rise to the level of a “fundamental flaw” in which APHIS would have ‘“little or no
prospect’ of curing the defect in the rule.” Heartland, 566 F.3d at 197 (quoting Ill. Pub.
Telecomms. Ass’n v. FCC, 123 F.3d 693, 693-94 (D.C. Cir. 1997)). Rather, the agency
represents that there is support for its authority to set a reserve fee elsewhere in the statute.
The disruption to the AQI program that might occur if the portion of the Final
Rule setting a reserve fee were vacated is legally irrelevant: “though the disruptive
consequences of vacatur might not be great, the probability that the [agency] will be able to
justify retaining the [Rule] is sufficiently high that vacatur of the Rule is not appropriate.” Fox,
280 F.3d at 1049. Conversely, APHIS raises legitimate concerns that vacatur could compromise
environmental safety and lead to negative economic consequences. See Opp’n at 7-9; see also
Declaration of Osama El-Lissy [Dkt. 39-1] ¶ 12; North Carolina v. EPA, 550 F.3d 1176, 1178
(D.C. Cir. 2008) (noting remand without vacatur is appropriate if it is necessary to “temporarily
preserve the environmental values” covered by the rule itself); Resolute Forest Prods., Inc. v.
USDA, 130 F. Supp. 3d 81, 105 (D.D.C. 2015) (“Cases that involve fee collection or payment
distribution, moreover, are particularly appropriate for remand without vacatur. This is
especially true in the case of agency collection of fees, including those involving the Department
of Agriculture.”) (internal quotation marks and citation omitted).
APHIS has represented that there is a “significant possibility” that it will be able
to explain its authority to collect a reserve fee on remand, which is sufficient for the Court to
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remand for further rulemaking without vacatur. See Williston Basin Interstate Pipeline Co. v.
FERC, 519 F.3d 497, 504 (D.C. Cir. 2008).
B. Schedule for New or Amended Rule
Plaintiffs further move to amend the March 28, 2018 Order to set a schedule for
APHIS to complete notice and comment rulemaking. Plaintiffs ask the Court to order that a new
or amended rule be published for public notice and comment by August 31, 2018 and that the
parties submit status reports every 90 days. APHIS protests that such a rapid schedule for formal
rulemaking is unrealistic.
The Court well appreciates Plaintiffs’ concern that “the agency, if unchecked, may take
years to promulgate a new proposed rule or take other action.” Mem. at 8; see also Nat. Res.
Def. Council v. EPA, 489 F.3d 1250, 1264 (D.C. Cir. 2007) (Randolph, J., concurring) (“A
remand-only disposition is, in effect, an indefinite stay of the effectiveness of the court’s
decision and agencies naturally treat it as such.”). However, the Court also recognizes that
formal rulemaking is a time-consuming process and August 31, 2018 is an unrealistic deadline.
Therefore, the Court will require APHIS to complete notice and comment rulemaking no later
than 18 months from the date of the Order issued contemporaneously with this Memorandum
Opinion. APHIS will also be ordered to submit status reports every 90 days.
C. Certification for Interlocutory Appeal
Plaintiffs also ask the Court to certify for interlocutory review the question of
“whether APHIS’s application of the commercial aircraft fee to passenger aircraft satisfies the
requirements of the APA given the inconsistencies in the Grant Thornton report and the Final
Rule and APHIS’s failure to explain these discrepancies in the rulemaking.” See Mot. at 1
(citing 28 U.S.C. § 1292(b)). Immediate review is appropriate, according to Plaintiffs, because:
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(1) there is a controlling question of law in the Court’s finding that the agency’s failure to
explain the inconsistencies in its expert consultant’s report was not an incurable deficiency; (2)
there is a significant difference of opinion within the D.C. Circuit as to whether an agency may
explain discrepancies in post-hoc litigation that were not explained in rulemaking; and (3)
resolution of this issue would materially advance this case and promote efficiency.
APHIS responds that there is no basis for an interlocutory appeal: (1) there is no
controlling question of law because a reversal by the Circuit would resolve only one APA claim
in plaintiffs’ favor and would not necessarily change the relief already ordered; (2) the decision
does not conflict with judicial precedent as it gives the proper deference to the agency’s
decision-making; and (3) for purposes of this litigation, the issue has been conclusively decided
and consolidating all appeals would be more efficient.
A district court may certify an order for interlocutory appeal if it concludes that it
“involves a controlling question of law as to which there is substantial ground for difference of
opinion and that an immediate appeal from the order may materially advance the ultimate
termination of the litigation.” 28 U.S.C. § 1292(b). “A party seeking certification pursuant to
§ 1292(b) must meet a high standard to overcome the ‘strong congressional policy against
piecemeal reviews, and against obstructing or impeding an ongoing judicial proceeding by
interlocutory appeals.”’ Judicial Watch, Inc. v. Nat. Energy Policy Dev. Group, 233 F. Supp. 2d
16, 20 (D.D.C. 2002) (quoting United States v. Nixon, 418 U.S. 683, 690 (1974)).
The party requesting certification has the burden of establishing all three elements
under § 1292(b). See APCC Servs., Inc. v. Sprint Commc’ns Co., 297 F. Supp. 2d 90, 95 (D.D.C.
2003). As such, “the law is clear that certification under § 1292(b) is reserved for truly
exceptional cases.” In re Vitamins Antitrust Litig., No. 99-197, 2000 WL 673936, at *2 (D.D.C.
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Jan. 27, 2000) (citing Tolson v. United States, 732 F.2d 998, 1002 (D.C. Cir. 1984) (“Section
1292(b) is meant to be applied in relatively few situations and should not be read as a significant
incursion on the traditional federal policy against piecemeal appeals.”)); see also Philipp v. Fed.
Republic of Ger., 253 F. Supp. 3d 84, 88 (D.D.C. 2017) (certifying for interlocutory appeal on
issue of whether party had sovereign immunity and was outside the court’s jurisdiction); Al
Maqaleh v. Gates, 620 F. Supp. 2d 51, 55-56 (D.D.C. 2009) (certifying for interlocutory appeal
on issue of subject-matter jurisdiction).
“The threshold for establishing the substantial ground for difference of opinion
with respect to a controlling question of law . . . is a high one.” Judicial Watch, 233 F. Supp. 2d
at 19 (internal quotations omitted). “A substantial ground for difference of opinion is often
established by a dearth of precedent within the controlling jurisdiction and conflicting decisions
in other circuits.” APCC Servs., 297 F. Supp. 2d at 97. While Plaintiffs disagree with the
Court’s ruling as to the significance of the inconsistencies between the Grant Thornton report
and the explanation of the commercial aircraft fee in the Final Rule, “mere disagreement, even if
vehement, with a court’s ruling does not establish a ‘substantial ground for difference of opinion’
sufficient to satisfy the statutory requirements for interlocutory appeal.” Vitamins Antitrust
Litig., 2000 WL 673936, at *3 (quoting First Am. Corp. v. Al-Nahyan, 948 F. Supp. 1107, 1116
(D.D.C. 1996)).
“[A] controlling question of law is one that would require reversal if decided
incorrectly or that could materially affect the course of litigation with resulting savings of the
court’s or the parties’ resources.” Judicial Watch, 233 F. Supp. 2d at 19 (quoting Vitamins
Antitrust Litig., 2000 WL 673936, at *2). However, “[t]he resolution of an issue need not
necessarily terminate an action in order to be controlling, but instead may involve a procedural
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determination that may significantly impact the action.” APCC Servs., 297 F. Supp. 2d at 96
(citations and internal quotations omitted).
An immediate appeal would materially advance the disposition of the litigation if
it would “conserve judicial resources and spare the parties from possibly needless expense” if the
Court’s ruling was reversed. Id. at 100 (citing Lemery v. Ford Motor Co., 244 F. Supp. 2d 720,
728 (S.D. Tex. 2002)). If the Court were to certify an untimely appeal in this case, however, it
would delay APHIS’s promulgation of a new or revised rule and cause all parties, including the
regulated industry, to incur greater expense.
The Court finds that Plaintiffs have failed to meet their burden of “showing that
exceptional circumstances justify a departure from the basic policy of postponing appellate
review until after the entry of final judgment.” Judicial Watch, 233 F. Supp. 2d at 20 (quoting
Virtual Def. and Dev. Int’l, Inc. v. Republic of Moldova, 133 F. Supp. 2d 9, 22 (D.D.C. 2001)).
The Court will deny Plaintiffs’ motion to certify for immediate review.
IV. CONCLUSION
For the foregoing reasons, the Court will grant in part and deny in part Plaintiffs’
Motion to Amend, Dkt. 38. The Court will order APHIS to complete notice and comment
rulemaking in no more than 18 months from the date of the Order in this case, i.e., no later than
January 2020, and require status reports every 90 days. A memorializing Order accompanies this
Memorandum Opinion.
Date: July 17, 2018 /s/
ROSEMARY M. COLLYER
United States District Judge
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