Air Transp. Ass'n of Am., Inc. v. U.S. Dep't of Agric.
Docket: Civil Action No. 16-919 (RMC)
Court: Court of Appeals for the D.C. Circuit; July 17, 2018; Federal Appellate Court
The United States District Court, under Judge Rosemary M. Collyer, reviewed a challenge from the Air Transport Association of America, Inc. and the International Air Transport Association against a Final Rule from the Animal and Plant Health Inspection Service (APHIS) regarding fees for inspecting international aircraft for pests, which included a reserve fee. The Court found issues with the reserve portion of the Final Rule and remanded it to APHIS for further rulemaking, without vacating the rule. The Plaintiffs sought to have this remand reconsidered, requesting a timeline for APHIS's rulemaking and to certify a question for immediate interlocutory appeal regarding potential violations of the Administrative Procedure Act (APA) in the application of fees to passenger aircraft without clarifying inconsistencies. The Court determined that the remand without vacatur was appropriate, imposed a deadline for periodic status reports, and declined to certify the issue for interlocutory appeal. The background provided detailed APHIS’s authority for inspections and the legislative framework allowing for user fees, including the Food, Agriculture, Conservation, and Trade Act and subsequent amendments. APHIS aimed to adjust fees to sustain the Agricultural Quarantine Inspection (AQI) program, which had seen adjustments in passenger and commercial aircraft fees in the 2015 Final Rule, prompting the Plaintiffs' legal action alleging multiple APA violations.
The Court denied the Plaintiffs' motion for summary judgment on Counts I, II, and IV but granted it for Count III, determining that APHIS violated the FACT Act by maintaining a reserve fund beyond its statutory authority, which expired in 2002 under 21 U.S.C. 136a(a)(1)(C). The Court ruled that reliance on expired statutory language was unreasonable, labeling it arbitrary and capricious, and remanded to APHIS for further consideration and potential rulemaking. Plaintiffs subsequently filed a motion under Rule 54(b) to amend the Court's order, seeking to (1) vacate the reserve portion of the Final Rule upon remand; (2) require APHIS to respond to the remand by publishing a new or amended rule by August 31, 2018, with status reports every 90 days; and (3) certify for interlocutory appeal the compliance of APHIS's commercial aircraft fee application with APA requirements, citing inconsistencies in agency reports. The motion is ready for decision. Rule 54(b) allows revision of non-final orders, and the Court may reconsider based on misunderstandings, errors, or significant changes in law or facts. The Plaintiffs' request to vacate the reserve portion of the Final Rule upon remand is supported by the APA, which mandates courts to set aside actions deemed arbitrary or capricious, although vacatur is not always required for inadequately supported rules. The Court has discretion to remand without vacating an agency's rule if the failure is due to lack of reasoned decision-making or other arbitrary and capricious grounds.
The district court has discretion to remand a rule with or without vacatur if it identifies deficiencies in an agency's reasoning. The decision on whether to vacate an agency's unreasonable action during remand hinges on two factors: the seriousness of the deficiencies and the potential disruptive consequences of an interim change. If the deficiencies are significant enough to cast doubt on the agency's decision, remand without vacatur may be appropriate, with the second factor being less critical in that scenario. A serious likelihood that the agency can substantiate its decision on remand can negate the need for vacatur.
In this case, plaintiffs argue that APHIS’s reliance on expired statutory authority to assess a reserve fee constitutes a serious flaw. They assert that even if APHIS finds valid authority elsewhere, it will need to make substantial methodological changes, significantly altering the reserve portion of the Final Rule. They claim that vacating this reserve would minimally disrupt the AQI program. Conversely, APHIS contends that it has a serious possibility of justifying the reserve fee on remand due to a mere citation error, and that vacatur would cause significant disruption and potential harm.
The court previously granted summary judgment to the plaintiffs on Count III, noting that APHIS improperly cited the FACT Act for maintaining a reserve account, which APHIS acknowledged. Although APHIS later attempted to justify the account under a different section of the FACT Act, the court did not validate this new justification as it was not part of the original rulemaking. Plaintiffs argue that the cited statute cannot support APHIS's intended justification for the reserve, but consider this claim premature at this stage.
APHIS has demonstrated that it is conceivable it can provide a reasoned explanation for its statutory authority to charge a reserve fee upon remand. The plaintiffs' assertion of a "fundamental flaw" in the Final Rule, based on an admitted error, is overstated. A fundamental flaw exists when an agency's rationale is so inadequate that it hinders judicial review, particularly due to a failure to engage in required notice and public comment, which typically necessitates vacatur of the rule. Although APHIS's reliance on expired authority was unreasonable, it does not constitute a fundamental flaw, as the agency claims there is alternative statutory support for the reserve fee. The potential disruption to the AQI program from vacatur is legally irrelevant; the likelihood of APHIS justifying the rule is high enough to avoid vacatur. APHIS raises concerns that vacatur could harm environmental safety and have negative economic effects, justifying remand without vacatur to preserve environmental values. Cases involving fee collection are suitable for this approach, and APHIS believes it has a significant chance of explaining its authority on remand, warranting further rulemaking without vacatur.
Additionally, the plaintiffs request a schedule for APHIS to complete notice and comment rulemaking, proposing a deadline of August 31, 2018. APHIS argues this timeline is unrealistic, and while the Court understands the plaintiffs' concern about potential delays in rulemaking, it acknowledges the lengthy nature of formal processes. Consequently, the Court mandates that APHIS complete the notice and comment rulemaking within 18 months from the issuance of the accompanying Order, with status reports required every 90 days.
Plaintiffs request the Court to certify for interlocutory appeal the issue of whether APHIS's application of the commercial aircraft fee to passenger aircraft aligns with the Administrative Procedure Act (APA), citing inconsistencies in the Grant Thornton report and the Final Rule, and APHIS's lack of explanation for these discrepancies. They argue that immediate review is warranted due to: (1) a controlling legal question regarding the Court's finding that the agency's failure to clarify inconsistencies was not a fatal flaw; (2) significant disagreement within the D.C. Circuit on whether agencies can justify discrepancies in post-hoc litigation not addressed in rulemaking; and (3) the potential for this resolution to advance the case and enhance efficiency.
In contrast, APHIS contends that no grounds exist for interlocutory appeal because: (1) the question lacks controlling legal significance since a Circuit reversal would only impact one APA claim without altering the relief granted; (2) the decision adheres to judicial precedent, respecting agency discretion; and (3) the issue has been definitively resolved for this litigation, making consolidated appeals more efficient.
Certification for interlocutory appeal under 28 U.S.C. 1292(b) requires the presence of a controlling legal question with substantial grounds for differing opinions, and an immediate appeal that could materially advance litigation termination. The burden of proof lies with the party seeking certification, which is typically reserved for exceptional circumstances. Establishing a substantial ground for difference of opinion often involves a lack of precedent or conflicting decisions across jurisdictions. Discontent with a court ruling does not suffice to demonstrate such grounds.
A controlling question of law is one that, if decided incorrectly, would necessitate reversal or significantly affect litigation, potentially conserving judicial resources. The resolution does not have to terminate the action but can involve procedural determinations that impact the case. Immediate appeals can advance litigation if they prevent unnecessary expenses from a potentially reversed ruling. However, certifying an untimely appeal could delay regulatory processes and increase costs for all parties involved. The Court concluded that the Plaintiffs did not demonstrate exceptional circumstances to warrant immediate appellate review. Consequently, the Court denied the motion for immediate review and partially granted the motion to amend, ordering APHIS to complete its notice and comment rulemaking within 18 months and to provide status reports every 90 days. An accompanying Order was issued alongside this Memorandum Opinion.
