Air Transp. Ass'n of Am., Inc. v. U.S. Dep't of Agric.

• Decision Date: 26 March 2021
• Docket Number: Civil Action No. 16-0919 (PLF)
• Parties: AIR TRANSPORT ASSOCIATION OF AMERICA, INC., et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF AGRICULTURE, et al., Defendants.
• Court: United States District Courts. United States District Court (Columbia)

AIR TRANSPORT ASSOCIATION OF AMERICA, INC., et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF AGRICULTURE, et al., Defendants.

Civil Action No. 16-0919 (PLF)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

March 26, 2021

OPINION

This case involves a challenge to a final interpretive rule issued by the Animal and Plant Health Inspection Service concerning its provision of Agricultural, Quarantine, and Inspection services. Plaintiffs Air Transport Association of America, Inc., and International Air Transport Association (collectively, "plaintiffs") brought suit challenging the final interpretive rule. Before the Court are plaintiffs' motion for summary judgment challenging the final interpretive rule, and defendants' cross-motion for summary judgment defending the rule.¹ Upon careful consideration of the parties' filings, the relevant legal authorities, the arguments of counsel at the January 25, 2021 motions hearing, and the entire record in this case, the Court willgrant defendants' motion for summary judgment and deny plaintiffs' motion for summary judgment.²

I. BACKGROUND

This case concerns a rulemaking by the Animal and Plant Health Inspection Service ("APHIS" or "the agency"), a federal agency within the United States Department of Agriculture ("USDA").³ APHIS is tasked with "ensuring the free flow of agricultural trade by keeping U.S. agricultural industries free from pests and diseases." Imports & Exports, U.S. DEP'T OF AGRIC. ANIMAL & PLANT HEALTH INSPECTION SERV. (Oct. 20, 2015), https://www.aphis.usda.gov/aphis/ourfocus/importexport. APHIS carries out this work, in part, through the Agricultural Quarantine Inspection ("AQI") program. See Air Transport Ass'n of Am., Inc. v. U.S. Dep't of Agriculture ("Air Transport I"), 303 F. Supp. 3d 28, 33 (D.D.C. 2018). Through the AQI program, APHIS - along with Customs and Border Protection - inspects persons and vessels entering the United States for "possible infection orinfestation with pests and diseases that threaten the resident flora and fauna." Id. (citations omitted).

A. Statutory History

The AQI program was originally funded exclusively by annual appropriations to the USDA. Air Transport I, 303 F. Supp. 3d at 34. In 1990, however, Congress enacted the Food, Agricultural, Conservation and Trade Act ("FACT Act") of 1990, Pub. L. No. 101-624, § 2509, 104 Stat. 3359, 4069-70 (1990) (current version at 21 U.S.C. § 136a (2020)). As originally enacted, the FACT Act read:

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), 104 Stat. at 4069. It further required the Secretary of Agriculture 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), 104 Stat. at 4070. These provisions authorized APHIS to collect user fees to fund the AQI program, Air Transport I, 303 F. Supp. 3d at 34, and required that the fees be set to reflect current costs.

Since it first began setting inspection fees in 1991, APHIS has indicated that AQI user fees would cover a variety of costs, including delivery costs, program support costs, and the cost to maintain a reserve fund. See Air Transport I, 303 F. Supp. 3d at 35. The reserve fundwas "designed to cover three months' average operating costs for the AQI program." Id. Although the AQI program had transitioned to a user-fee program with the enactment of the FACT Act, this three-month reserve was necessary because those user fees were only remitted to the USDA on a quarterly basis, subject to the congressional appropriations process. H.R. REP. NO. 104-462, at 54. Without the reserve, the agency would be unprepared "to handle emergencies or unexpected volumes." Air Transport I, 303 F. Supp. 3d at 35.

The FACT Act has been amended several times, including as part of the Federal Agricultural Improvement and Reform Act of 1996, Pub. L. No. 104-127 § 917, 110 Stat. 888, 1187-88. The purpose of the 1996 amendment was to transition the AQI program from being funded by an account subject to congressional appropriations to being funded by a true user-fee system. See Air Transport I, 303 F. Supp. 3d at 51; see also Pl. Mem. at 6; Def. Mem. at 6. As amended, the FACT Act created a temporary AQI User Fee Account in the Treasury Department:

(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 inexcess of $100,000,000 shall be available for the purposes specified in subparagraph (B) until expended, without further appropriation.

21 U.S.C. § 136a(a)(5). The amended act further stated that

[a]fter 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 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. The fees and other amounts shall remain available to the Secretary until expended without fiscal year limitation.

21 U.S.C. §136a(a)(6).

In addition to creating this temporary account to hold AQI fees, the 1996 amendment revised the section describing the purposes for which fees may be collected. See Air Transport I, 303 F. Supp. 3d at 35. The Act now states:

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 [21 U.S.C. § 136a(a)(5)].

21 U.S.C. § 136a(a)(1). This authority to collect fees is limited by the next subsection, which states that in setting fees, "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 ofpersons or entities paying the fees. The costs of the services with respect to passengers as a class includes the costs of related inspections of the aircraft or other vehicle." Id. at § 136a(a)(2).⁴

B. Procedural History

In 2012, APHIS determined that the user fees it had been charging were inadequate to meet the costs of providing AQI services. Air Transport I, 303 F. Supp. 3d at 37. It therefore retained Grant Thornton LLP, an international audit, tax, and advisory firm, 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." Grant Thornton, AQI FEE SCHEDULE ASSESSMENT AND ALTERNATIVES (May 21, 2012), at AR629.⁵ Based in part on Grant Thornton's calculations, APHIS adopted a final rule in 2015 that set new AQI fees of $3.96 (reduced from $5) per passenger and $225 (increased from $70.75) per international commercial aircraft. Air Transport I, 303 F. Supp. 3d at 37. According to APHIS, the fees were intended, in part, to cover the cost of maintaining a reserve. See User Fees for Agricultural Quarantine and Inspection Services, 79 Fed. Reg. 22,895, 22,898 (Apr. 25, 2014) (to be codified at 7 C.F.R. pt. 354).

In 2016, plaintiffs filed a complaint in this Court seeking declaratory and injunctive relief and alleging four violations of the Administrative Procedure Act ("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's removal of APHIS's authority to maintain a reserve after 2002.

Count IV: The Rule was adopted without reasoned decision-making due to unreliable data and data which was withheld from commenters.

Air Transport I, 303 F. Supp. 3d at 37 (citing Compl. at 36, 37, 39, 40). The case was assigned to Judge Rosemary Collyer. The parties filed cross-motions for summary judgment, and after hearing oral argument, Judge Collyer granted summary judgment for APHIS on Counts I, II, and IV and summary judgment for plaintiffs on Count III. Air Transport I, 303 F. Supp. 3d at 33. With...