XP Vehicles, Inc. v. Dep't of Energy, Civil Action No. 13–cv–0037 (KBJ)

• Decision Date: 14 July 2015
• Docket Number: Civil Action No. 13–cv–0037 (KBJ)
• Citation: 118 F.Supp.3d 38
• Parties: XP Vehicles, Inc., et al., Plaintiffs, v. Department of Energy, et al., Defendants.
• Court: U.S. District Court — District of Columbia

118 F.Supp.3d 38

XP Vehicles, Inc., et al., Plaintiffs,

v.Department of Energy, et al., Defendants.

Civil Action No. 13–cv–0037 (KBJ)

United States District Court, District of Columbia.

Signed July 14, 2015

Daniel Zachary Epstein, Cause of Action, Reed D. Rubinstein, Dinsmore & Shohl LLP, Washington, DC, for Plaintiff.

Peter J. Phipps, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

KETANJI BROWN JACKSON, United States District Judge

Congress has authorized the Department of Energy ("the DOE") to offer direct financial support to the manufacturers of clean energy vehicles and related components. See 42 U.S.C. § 17013 (2012). In accordance with this statutory mandate, the DOE administers various loan programs, including the Advanced Technology Vehicle Manufacturing ("ATVM") Loan Program, which is designed to provide direct loans to manufacturers of energy-efficient vehicles. The DOE also administers the Section 1703 Loan Guarantee Program ("LG Program"), pursuant to which the agency guarantees loans for advanced technology projects that result in the avoidance or reduction of air pollutants. Plaintiff XP Vehicles, Inc. ("XPV") is a now-dissolved California-based corporation that applied to the DOE in November of 2008 for an ATVM loan for the manufacture of a light-weight, energy-efficient sport utility vehicle. XPV partnered with Plaintiff Limnia, Inc. ("Limnia"), a Delaware-based corporation that developed an energy storage system to power XPV's proposed vehicle. Limnia, too, applied to the DOE for loan assistance, seeking both an ATVM loan and an LG Program loan guarantee in February of 2009. The DOE denied both Plaintiffs' loan requests, and XPV and Limnia have now filed a seven-count complaint against the DOE, its Secretary Ernest Moniz in his official capacity, former Secretary of Energy Steven Chu in his individual capacity, and former Director of the ATVM Loan Program Lachlan Seward in his individual capacity (collectively, "Defendants"), alleging that the DOE's decisionmaking process with respect to these loan programs was infused with cronyism and political favoritismand that their applications were denied unfairly and arbitrarily.¹ In essence, Plaintiffs maintain that, instead of reviewing applications impartially and on the merits, Defendants used the ATVM Loan Program and LG Program to reward political patrons, in violation of the Constitution's due process and equal protection guarantees and in contravention of the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701 –706 (2012).

Before this Court at present are two motions to dismiss Plaintiffs' complaint: one from the DOE and Moniz ("the Official Capacity Defendants"), and one from Chu and Seward (the "Individual Capacity Defendants"). The Official Capacity Defendants make various threshold jurisdictional arguments, including sovereign immunity, lack of standing, and ripeness; on the merits, they argue both that XPV lacks the capacity to sue because it is a dissolved corporation and that Plaintiffs have failed to state a claim upon which relief can be granted. The Individual Capacity Defendants adopt the Official Capacity Defendants' dismissal arguments, and further argue that XPV's claims are barred by the statute of limitations; that no Bivens action exists for the alleged constitutional violations; and that, even if a remedy did exist, Chu and Seward are protected by qualified immunity.

As explained further below, this Court concludes that, although it does have jurisdiction over the claims Plaintiffs make in their complaint, all of XPV's claims and most of Limnia's claims must be dismissed in their entirety. XPV's claims against the Official Capacity Defendants must be dismissed because, as a dissolved corporation, XPV does not have the capacity to sue for injunctive relief, and XPV's claims against the Individual Capacity Defendants must be dismissed because no Bivens action exists that will permit XPV to recover monetary damages from those defendants. Limnia's constitutional claims fail in a similar fashion, both because there is no Bivens action and also because Limnia has not alleged facts that are sufficient to state a constitutional claim. But Limnia's two APA claims—which arise out of the denial of its ATVM loan application, on the one hand, and the processing of its LG Program application, on the other—survive the pending motions to dismiss because Limnia has adequately alleged that the DOE's denials of Limnia's ATVM Loan Program and LG Program applications were the result of arbitrary and capricious agency action in violation of the APA. Consequently, the Official Capacity Defendants' motion to dismiss will be GRANTED IN PART and DENIED IN PART , and the Individual Capacity Defendants' motion to dismiss will be GRANTED in full. A separate order consistent with this opinion will follow.

I. BACKGROUND

A. The DOE's Implementation Of The ATVM Loan Program And The LG Program

1. The ATVM Loan Program

In 2007, Congress enacted the Energy Independence and Security Act ("EISA"), Pub.L. 110–140, § 136, 121 Stat. 1492, 1514–16, with the express purpose of "mov[ing] the United States toward greater energy independence and security" and "increas[ing] the efficiency of products, buildings, and vehicles [.]" Id. at 1492. To this end, the EISA imposed heightened fuel economy standards, see id. § 102, and it also introduced several new financial assistance programs designed to further the objective of promoting the efficient use of energy resources, see, e.g., id. § 131 (providing grants to encourage the use of electric vehicles); id. § 135 (providing loan guarantees for the domestic manufacture of vehicle batteries). The Advanced Technology Vehicle Manufacturing Loan Program—referred to throughout this opinion as "the ATVM Loan Program"—was one of these initiatives. See id. § 136.

Under the ATVM Loan Program, the DOE provides a total of $25 billion in direct loans to the manufacturers of "advanced technology vehicles" and the "qualifying components" of such vehicles, so long as these manufacturers are engaged in certain eligible activities. 42 U.S.C. § 17013(d)(1).² The EISA specifies that ATVM loan applicants must submit applications to the Secretary of the DOE, and that upon receiving such loan applications, "[t]he Secretary shall select eligible projects" using criteria listed in the statute. Id. § 17013(d)(2)–(3). Specifically, by statute, a successful "award recipient"—

(A) is financially viable without the receipt of additional Federal funding associated with the proposed project;

(B) will provide sufficient information to the Secretary for the Secretary to ensure that the qualified investment is expended efficiently and effectively; and

(C) has met such other criteria as may be established and published by the Secretary.

42 U.S.C. § 17013(d)(3). Furthermore, under the DOE's implementing regulations, an ATVM loan applicant must be "[a]n automobile manufacturer that can demonstrate an improved fuel economy" or "[a] manufacturer of a qualifying component[,]" 10 C.F.R. § 611.100(a) (2015), and the regulations also require such applicants to provide, inter alia, a description of "the nature and scope of the proposed project[,]" which must include "key milestones and [the] location of the project" and a "detailed explanation of how the proposed project qualifies" for loan assistance, id. § 611.101.

The DOE has adopted a two-step procedure for evaluating ATVM loan applications. First, the agency engages in "eligibility screening"—i.e., it determines whether the application contains the required information; whether the applicant satisfies the eligibility criteria; and whether the terms of the requested loan comport with the applicable statutory requirements. Id. § 611.103(a). The regulations state in no uncertain terms that the DOE "can at any time reject an application, in whole or in part, that does not meet these [eligibility] requirements." Id. If the application survives eligibility screening, the DOE will then move on to the second stage of the application process, which consists of a substantive merits review of the application. Id. § 611.103(b). The regulations establish that this review will be based on factors such as the project's "technical merit" and whether the proposed loan conditions adequately protect the government investment by providing sufficient security, priority of lien position, and percentage of the project to be financed with the loan. Id.

Significantly, the regulations that govern the ATVM Loan Program also state that "[o]nly an Agreement executed by a duly authorized DOE Contracting Officer can contractually obligate the government to make a loan" under the program. Id. § 611.105(a). And the regulations make clear that the "DOE is not bound by oral representations made during the Application stage, or during any negotiation process." Id. § 611.105(b).

2. The LG Program

The Section 1703 Loan Guarantee Program was established as part of the Energy Policy Act of 2005. See Pub.L. No. 109–58, § 1701–04, 119 Stat. 594, 1117–22 (codified at 42 U.S.C. §§ 16511 –14). The statute is aimed at promoting new and improved technologies that "avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases[,]" 42 U.S.C. § 16513(a), and it authorizes the DOE to guarantee loans for certain environmentally-friendly, energy-efficient projects, id. Among the categories of projects that are specified as qualifying for this loan program are "[h]ydrogen fuel cell technology" and "production facilities for the manufacture of fuel efficient vehicles or parts of those vehicles, including electric drive vehicles [.]" Id. § 16513(b).

Like the regulations that govern the ATVM Loan Program, the LG Program regulations set out a comprehensive but non-exhaustive list of "information and materials" that must be submitted as part of an application, including "[a] description of how and to what measurable extent the...