Lumber Rules Don’t Fly, Federal Judge Says

WASHINGTON (CN) - The Department of Agriculture failed to justify the amount of money it collects from U.S. lumber companies to support an industry marketing campaign, a federal judge ruled.

Resolute Forest Products sued the Department of Agriculture in December 2014, challenging its mandatory assessment on any domestic softwood-lumber manufacturer or foreign importer that ships more than 15 million board feet of lumber per year.

The check-off order was developed by private parties and is overseen by the Department of Agriculture under the Commodity Promotion, Research and Information Act.

The program set a threshold amount of lumber produced, after which an assessment of 35 cents per 1,000 board-feet shipped within or imported to the United States is to be collected.

The program was expected to generate $12.4 million to $19 million a year.

Resolute filed an administrative protest, which an administrative law judge rejected. So Resolute sued, raising four constitutional challenges to the check-off order and six alleged violations of the Administrative Procedures Act.

The court dismissed all but one of Resolute's challenges on a Sept. 9, 2015, and remanded the remaining APA claim to the Department of Agriculture for a "reasoned and coherent treatment of its decision to select 15mmbf per year as the threshold amount."

The parties filed cross-motions for summary judgment.

After remanding twice, U.S. District Judge James Boasberg found on May 17 that the Agriculture Department was unable to justify its assessment threshold.

"After all of the back and forth, the same question remains: Was the agency's selection of 15mmbf arbitrary and capricious in violation of the APA?" Boasberg wrote opinion. "Despite two remand opportunities, defendants have still not provided a reasonable explanation for selecting that quantity."

Boasberg said the Ag Department's attempts to clarify only raised more questions and that the information it provided could not be relied upon.

"Nearly every calculation upon which the agency relies has significant mismeasurements or inaccuracies, and many of the agency's explanations across its original rulemaking process, its briefings, and its two responses to the court's remand orders contradict one another," Boasberg wrote. "While the APA review does not demand perfection from an agency, the court here must ineluctably conclude that USDA's promulgation of the Checkoff Order was arbitrary and capricious."

Boasberg said that based on the "contradictory, conflicting and misstated estimates," the check-off order was "promulgated unlawfully."

He scheduled a status hearing for June 1, to "discuss the appropriate next steps concerning the remedies sought by plaintiff."

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