Furie Operating Alaska, LLC v. U.S. Department of Homeland Security et al

Filing 114

ORDER granting 97 Motion to Compel; defs to file amended certified admin record w/i 42 days of this ord; brfing sched at dkt 96 is vacated; w/i 14 days of filing expanded certified record, gov to file mot to dismiss. Signed by Judge John W. Sedwick on 12/23/14. (PRR, COURT STAFF)

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UNITED STATES DISTRICT COURT

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DISTRICT OF ALASKA

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FURIE OPERATING ALASKA, LLC,

)
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Plaintiff,
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vs.
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U.S. DEPARTMENT OF HOMELAND )
SECURITY; SECRETARY OF
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HOMELAND SECURITY JANET
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NAPOLITANO, in her official
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capacity; U.S. CUSTOMS AND
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BORDER PROTECTION; and ACTING )
COMMISSIONER DAVID V. AGUILAR, )
in his official capacity,
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)
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Defendants.
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3:12-CV-00158 JWS
ORDER AND OPINION

[Re: Motion at docket 97]

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I. MOTION PRESENTED
At docket 97, plaintiff Furie Operating Alaska, LLC (“Plaintiff” or “Furie”) filed a

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motion to augment and compel completion of the administrative record. Its’ supporting

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memorandum is at docket 98, and its’ supporting exhibits are at dockets 100 through

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104. Defendants U.S. Department of Homeland Security (“DHS”), Secretary of

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Homeland Security Janet Napolitano (“Secretary”), U.S. Customs and Border Protection
(“CBP”), and CBP Commissioner Gil Kerlikowske (collectively, the “Government” or

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“Defendants”) respond at docket 109, raising new issues as to the reviewability of

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Furie’s Administrative Procedure Act (“APA”)1 claims. Furie replies at docket 113.

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II. BACKGROUND
Furie filed this lawsuit to challenge action by CBP, which determined that Furie

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should pay a $15 million penalty for transporting merchandise from Texas to Alaska via

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Vancouver, British Columbia, using a foreign vessel for a segment of the trip in violation

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of the Jones Act requirement that such transportation be accomplished using American

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vessels.2 Furie’s complaint pled four claims for relief under the APA: (1) the penalty

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imposed was unlawful, because the Spartan was not being transported as

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merchandise; (2) the Secretary failed to exercise independent judgment when she

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denied a wavier requested by Furie which was arbitrary, capricious, and an abuse of

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discretion; (3) the Secretary’s refusal to grant a waiver when her predecessor had done

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so was an unexplained action which was arbitrary, capricious, and an abuse of

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discretion; and (4) the Secretary’s refusal to mitigate the $15 million penalty was also

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arbitrary and capricious in light of her statements where she said the agency would

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come up with an equitable way to allow transportation. Furie’s complaint also pled two

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constitutional claims: (1) the $15 million penalty was unlawful and unenforceable

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because it constituted an excessive fine under the Eighth Amendment, and (2) the $15

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million penalty was unlawful and unenforceable because Defendants violated Furie’s

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due process rights.3 In addition to Furie’s claims, the lawsuit includes a counterclaim by

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Defendants alleging that “Furie’s transportation of the Spartan Rig from Texas to

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5 U.S.C. § 701 et seq.
46 U.S.C. § 55102(b).
Doc. 1.

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Alaska, in part by a non-coastwise qualified vessel, violated the Jones Act” 4 which

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entitles the United States to recover a $15 million penalty from Furie.5

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The Government filed an administrative record at docket 91. Furie subsequently

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filed the motion to compel, arguing the record does not include communications and

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documents relevant to all of Furie’s APA claims. It also filed exhibits of the materials it

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would like included in the record. These materials consist of communications and

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documents related to the Secretary’s denial of Furie’s Jones Act waiver request and the

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CBP’s refusal to mitigate the $15 million penalty.

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The Government filed a motion for an extension of time in which to respond to

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the motion to compel. It stated that it needed additional tim e “to review the motion,

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coordinate with the agency, and try to see if there might be agreement on some of the

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documents that Furie proposes to add to the adm inistrative record.”6 The request was

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granted. The Government then filed its response, but rather than provide the court with

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its position on the requested expansion of the record, the Government presents an

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entirely new argument: it asserts that Furie’s claims related to the waiver and mitigation

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decisions are not subject to APA review, and thus it did not need to produce an

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administrative record.

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Furie filed a reply at docket 113. In the reply, Furie argues that the Government

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is inappropriately attempting to force a judgment on the merits through a response to a

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motion to compel and that the Government had an opportunity to raise such dispositive

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issues in a motion to dismiss but did not do so. Furie asserts that the Government’s

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failure to address its substantive arguments about the expansion of the record should

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Doc. 38 at p. 57 ¶ 22.

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The parties are familiar with the details of their dispute not summarized above.
Readers who are not will find a much fuller recitation of the background facts in the order at
docket 71.
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Doc. 107 at p. 2.

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be considered a concession. Furie also provides a response to the Government’s

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reviewability arguments. The Government did not ask for a surreply or oral argument.

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III. DISCUSSION
The Court’s review of agency action under the APA is based on the “whole

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record” that was before the agency at the time the challenged decisions were made.7

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The whole record “is not necessarily those documents that the agency had compiled

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and submitted as the administrative record.”8 Instead, the record must include “all

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documents and materials directly or indirectly considered by agency decision-makers

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. . . .”9 Furie contends that the Government failed to provide materials that were both

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directly and indirectly considered by the Secretary and the CBP during their waiver and

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penalty mitigation decisions, which are the decisions Furie challenges in Counts II

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through IV. Its motion includes a detailed and persuasive discussion regarding what

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additional communications and documents should have been included in the record as

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to these claims. The Government chose not to provide the court with a clear position

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as to whether the communications and documents introduced by Furie in its’ motion

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were directly or indirectly considered by the agency. Instead, it simply asserted that it

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“reserves the right to provide briefing” to address the substance of Furie’s motion—that

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is, what should be included in the record—once the court determ ines whether the

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administrative decisions underlying Counts II-IV in Furie’s complaint, which are the

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counts challenging the Secretary’s decision regarding the Jones Act waiver and the

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CBP’s penalty mitigation decision, are reviewable in the first instance.10

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5 U.S.C. § 706.

Thompson v. U.S. Dep’t of Labor, 885 F.2d 551, 555 (9th Cir. 1989) (internal quotations
and citations omitted).

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Id.
Doc. 109 at p. 4.

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The Government has raised important issues about whether Counts II through IV

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of Furie’s complaint are reviewable under the APA. It asserts that the court’s subject

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matter jurisdiction “remains at issue.” However, at this juncture, the court’s subject

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matter jurisdiction is not at issue as there is no pending motion challenging such

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jurisdiction. The Government has not requested that these claims be dismissed; rather,

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it asks to be excused from providing a record. As such, Counts II-IV remain valid. As

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noted by Furie in its’ reply brief, the Government’s “arguments conflate the issues of

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reviewabiliity and the existence of an administrative record—indeed, whether Furie’s

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claims are reviewable has no bearing on Defendant’s obligation to file a record.”11 The

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Government had the opportunity to narrow the claims on such grounds earlier in the

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litigation but failed to do so. It now attempts to use its response to a procedural motion

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as a mechanism for advancing a decision on the merits. The court chooses not to

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proceed in this manner. The dispositive issues raised by the Government are better

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addressed separately in order to provide a chance for a full round of briefing and oral

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argument.

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Returning to the substantive issues in the motion to compel, the court concludes

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that Furie has demonstrated that the administrative record at docket 91 is incomplete.

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Indeed, the Government’s response brief failed to provide the court with an argument

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as to what should and should not be included in the record. W hile the Government

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attempts to reserve the right to provide an argument about the substance of the record

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at a later date, the response brief was the time to present such an argument and that

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time has passed. Further briefing on the matter will only delay resolution of the

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underlying claims.

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IV. CONCLUSION

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Based on the preceding discussion, Furie’s motion to augment and compel

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completion of the administrative record at docket 97 is GRANTED. Defendants are

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Doc. 113 at p. 6.

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directed to file an amended certified administrative record containing all documents

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considered, directly or indirectly, during the administrative proceedings challenged in

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Counts II through IV of Furie’s complaint, including the documents submitted by Furie

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as exhibits to the motion to compel, within 42 days of this order.

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The court would like to resolve any reviewability and subject matter jurisdiction

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issues prior to the merit briefing. Therefore, the briefing schedule ordered at docket 96

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is vacated. Within 14 days of filing the expanded certified record, the Government is

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directed to file a motion to dismiss based on the arguments presented in its’ response

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brief. A briefing schedule will be set as needed upon the resolution of that motion.

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DATED this 23rd day of December 2014.

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/s/ JOHN W. SEDWICK
SENIOR UNITED STATES DISTRICT JUDGE

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