XP Vehicles, Inc. v. United States Department of Energy

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

)
XP VEHICLES, INC., et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 13-cv-37 (KBJ)
)
THE UNITED STATES DEPARTMENT )
OF ENERGY, et al., )
)
Defendants. )
)

MEMORANDUM OPINION AND ORDER

On July 14, 2015, this Court dismissed the majority of the claims in this matter

but permitted certain Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701 –06,

claims to proceed. Subsequently, Defendants filed a motion for voluntary remand. (See

Defs.’ Mot. for Voluntary Remand (“Defs.’ Mot.”), ECF No. 44; Defs.’ Mem.

Supporting Defs.’ Mot. (“Defs.’ Mem.”), ECF No. 44 -1.) That motion is now ripe, and

it be will GRANTED for the reasons explained below.

I. BACKGROUND

This Court’s Memorandum Opinion regarding Defendants’ motions to dismiss

the complaint (issued July 14, 2015) recounts the factual background of this case in

detail. See generally XP Vehicles, Inc. v. Dep’t of Energy, No. 13-cv-37, 2015 WL

4249167 (D.D.C. July 14, 2015). For present purposes, only the following facts are

relevant. In 2009, Plaintiffs XP Vehicles, Inc. (“XPV”) and Limnia, Inc. (“Limnia”)

submitted applications for loan assistance under two United Sta tes Department of
Energy (“DOE”) programs. Those programs—the Advanced Technology Vehicle

Manufacturing (“ATVM”) Loan Program and the Section 1703 Loan Guarantee

Program (“LG Program”)—permit the DOE to offer loans and “direct financial support

to the manufacturers of clean energy vehicles and related components.” Id. at *1. After

the DOE denied Plaintiffs’ applications, Plaintiffs sued the DOE, its Secretary in his

official capacity, and two former high-level DOE administrators in their individual

capacities, claiming that the DOE violated several constitutional provisions and the

APA because the denials had been based on impermissible political cronyism rather

than impartial review. See id.

As mentioned, this Court dismissed the majority of Plaintiffs’ claims for a

variety of reasons not pertinent here; however, it also concluded that the claims

Plaintiff Limnia had brought under the APA stemming from the DOE’s allegedly

arbitrary and capricious denial of its ATVM and LG Program applications survived the

government’s motion to dismiss for failure to state a claim. See id. at *25–27.

Defendants subsequently filed an answer to Limnia’s surviving claims, and then filed

the motion for voluntary remand of the case to the agency due to changed circumstances

and considerations of judicial efficiency that is before this Court at present. (See Defs.’

Mem. at 5.) 1 Limnia filed a brief in opposition to Defendants’ motion for a voluntary

remand, asserting that Defendants failed to admit fault or point to intervening events in

support of the remand request, and that remanding the matter to the agency under the

circumstances presented here would deprive Limnia of benefits to which it might be

entitled if the Court permitted the case to proceed and ultimately ruled in Limnia’s

1
Page-number citations to the documents the parties have filed refer to the page numbers that the
Court’s electronic filing system automatically assigns.

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favor. (See Pl.’s Mem. in Opp’n to Defs.’ Mot. (“Pl.’s Opp’n”), ECF No. 45, at 1.)

Defendants filed a reply brief (see Defs.’ Reply in Supp. of Defs.’ Mot. (“Defs.’

Reply”), ECF No. 47), and this Court held a hearing on Defendants’ ripe remand motion

on December 15, 2015.

II. APPLICABLE LEGAL STANDARDS

When a plaintiff files a complaint challenging agency action, a federal court has

the discretion to grant the agency’s motion for a voluntary remand of the matter in

order to permit the agency to reconsider its decision, even before any judicial

consideration of the merits. See Code v. McHugh, No. 15-cv-31, 2015 WL 6154381, at

*3 (D.D.C. Oct. 19, 2015). Agencies typically seek to justify such remand requests by

expressing doubt about the propriety of their initial action—for example, agencies

sometimes point to “new evidence [that became] available after an agency’s original

decision was rendered” or highlight “intervening events outside of the agency’s control

[that] may affect the validity of an agency’s actions.” Carpenters Indus. Council v.

Salazar, 734 F. Supp. 2d 126, 132 (D.D.C. 2010) (internal quotation marks and

citations omitted). But it is also well established that, “[e]ven in the absence of new

evidence or an intervening event, . . . courts retain the discretion to remand an agency

decision when an agency has raised substantial and legitimate concerns in support of

remand.” Id. (internal quotation marks and citation omitted); see also SKF USA Inc. v.

United States, 254 F.3d 1022, 1029 (Fed. Cir. 2001) (observing that “even if there are

no intervening events, the agency may request a remand (without confessing error) in

order to reconsider its previous position”); Code, 2015 WL 6154381, at *3 (same).

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 Judges in this district have deployed a three-pronged framework to guide the

exercise of their discretion in this circumstance; this inquiry asks: (1) whether

defendants have “identified substantial and legitimate concerns in support of a

voluntary remand,” (2) whether voluntary remand “would conserve the Court’s and the

parties’ time and resources,” and (3) whether voluntary remand would cause “undue

prejudice to [plaintiff.]” FBME Bank Ltd. v. Lew, No. 15-cv-1270, 2015 WL 6854416,

at *2 (D.D.C. Nov. 6, 2015) (internal quotation marks and citations omitted). These

factors lead the court to assess various aspects of the agency’s explanation for the

remand request and the impact that granting such a request would have on the plaintiff

and the judicial process—considerations that go beyond whether or not the defendant

“directly confess[es] error[.]” Id. at *2; see, e.g., id. (finding that remanding to permit

the agency to address the potential inadequacies in its notice-and-comment process,

among other things, promotes “judicial economy”); id. at *4 (rejecting plaintiffs’

argument that voluntary remand would prejudice them because it would deprive them of

a claimed “entitle[ment] to vacatur” associated with a victory on the merits). Thus,

even when an agency refuses to admit fault, cases in this district hold that it is entirely

appropriate for the court to grant the agency’s voluntary remand request. See Code,

2015 WL 6154381, at *3 (citing SKF USA, 254 F.3d at 1029).

III. DISCUSSION

In requesting that this matter be remanded to the DOE for reconsideration,

Defendants have not conceded any error, nor have they identified new evidence or other

intervening events that bear on the remand inquiry. Instead, Defendants say that a

voluntary remand is justified due to changed circumstances and the need to preserve

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scarce judicial resources. (See Defs.’ Mem. at 5 (“[I]n light of the passage of time

since the filing of this Complaint, and the fact that Limnia remains free to submit new

applications to the agency at any time, Defendants believe that it would constitute a

waste of judicial and party resources to litigate the merits of [Limnia’s] two remaining

claims.”).) Defendants emphasize that it has been six years since Limnia first

submitted its application materials for agency review, and that new agency officials are

currently ready, willing, and able to perform an unbiased review of Limnia’s ATVM

and LG applications (which will necessarily include updated information regarding

Limnia’s technology), and Defendants argue that, indeed, such a result is all that

Limnia would be entitled to if it prevailed in the instant action. Limnia disagrees; in

essence, it asserts that an admission of fault or a recognition that the agency’s prior

determination might have been politically motivated is the price the agency must pay

for having the case remanded to it, and, in any event, the agency has not provided (and

cannot provide) any assurance that the proposed new application review will be

unbiased. (See Pl.’s Opp’n at 3–4.) Limnia also maintains that returning the case to the

agency without judicial review would effectively deprive Limnia of the opportunity to

receive a condemnatory statement from the Court regarding the agency’s prior review

of its applications—a result that, according to Limnia, it would be entitled to as the

victor in this action. (See id. at 6–7.)

Boiled to bare essence, it is clear that the parties’ dispute with respect to

Defendants’ motion to remand is over whether Defendants’ reasons for requesting

remand are substantial and legitimate and whether voluntary remand would prejudice

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Limnia. All things considered, and for the following reasons, this Court believes

Defendants have the better of the argument.

A. Substantial And Legitimate Reasons Support Voluntary Remand

The DOE has provided several good reasons for requesting that this case be

remanded. First among them is the fact that Limnia’s technology has likely “advanced”

over the past six years (which is, in and of itself, a relevant changed circumstance) and

that remanding the case to the agency “will afford Limnia the opportunity to reapply to

DOE’s loan programs and update its loan applications with any new information about

its project.” (Defs.’ Mem. at 6.) In this regard, it is significant that the DOE

“continues to operate the ATVM Loan Program” at present (id. at 7), and that the

instant motion for remand commits the agency to finishing the initial eligibility phase

with respect to any substantially complete application that Limnia submits after remand

“within 90 days of receipt of Limnia’s submission” (id. at 13), compared to the

“months, if not years, of th[e] Court’s and the parties’ time and resources” that would

be spent if the Court does not remand the matter—resources that will be consumed by

“litigation [that] will continue through summary judgment, decision, and potential

appeals” (id.). Furthermore, and perhaps most important, Defendants make a

convincing argument that the costly and time-consuming litigation pathway and the

requested voluntary remand route both lead to the same result under the circumstances

presented here: that is, if Limnia is victorious at the end of the day with respect to the

instant lawsuit, “the Court would remand the case to DOE for its reconsideratio n of the

application[s,]” which is “the same relief that [Limnia] could obtain sooner if voluntary

remand were granted.” (Id.; see also id. at 5 (“Defendants believe that it would

constitute a waste of judicial and party resources to litigate the merits o f the two

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remaining claims.”).) It appears that such considerations have factored into the court’s

analysis in other recent cases decided in this district, see, e.g., FBME Bank, 2015 WL

6854416, at *2, and this Court finds them to be significant concerns with respect to the

motion for voluntary remand in this case as well.

Undaunted, Limnia insists that voluntary remand is authorized “only” in three

circumstances—to wit: when “new evidence becomes available after an agency’s

original decision was rendered” or “intervening events outside of the agency’s control

may affect the validity of the agency’s actions” or “an agency has raised substantial and

legitimate concerns in support of remand” (Pl.’s Opp’n at 2–3 (internal quotation marks

and citation omitted))—and it is crystal clear that Limnia believes that, in the absence

of new evidence or intervening events, the only legitimate basis for voluntary remand is

the agency’s acknowledgment of past error, or in this case, impermissible favoritism

(see id. at 4 (“Absent a merits decision or an admission of error and favoritism, the

government’s arguments should fail and this case should move forward.”) ). But there is

nothing in this Circuit’s precedent that establishes that the agency must confess error in

order to have the opportunity to revisit its prior determination . Indeed, as explained

above, while it is common for an agency to cast doubt on the challenged act in order to

support its request for remand, courts have found remand appropriate where the agency

stops short of falling on its sword in this manner. See, e.g., Am. Forest Res. Council v.

Ashe, 946 F. Supp. 2d 1, 40 (D.D.C. 2013); see also Code, 2015 WL 6154381, at *3

(observing that “voluntary remand may be appropriate where an ‘agency requests a

remand (without confessing error) in order to reconsider its previous position ’”

(quoting SKF USA, 254 F.3d at 1029)).

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 This is apparently so because, at bottom, what really matters when an agency

requests a voluntary remand of a case in order “to reconsider its previous position” is

whether the agency is genuinely willing to revisit the challenged determination. See

SKF USA, 254 F.3d at 1029 (explaining that a voluntary remand request without a

confession of error “may be refused if the agency’s request is frivolous or in bad

faith”). To be sure, an agency can provide such assurance directly—e.g., by admitting

that its prior determination was erroneous or by pointing to new evidence or intervening

events that could cause the agency to change its mind about its prior course of action—

but indicia of the agency’s intention to conduct a good-faith ‘do over’ with respect to

its prior determination can come in many forms, which is undoubtedly why granting a

remand motion is a discretionary judgment call by the court and also why courts have

not required agencies to make any particular showing in order to justify a request for a

voluntary remand. Indeed, when an agency asks for a matter to be remanded, far from

persisting in an unabated march to the merits, courts have long preferred that agencies

be “allow[ed] . . . to cure their own mistakes rather than wasting the courts’ and the

parties’ resources[,]” Ethyl Corp. v. Browner, 989 F.2d 522, 524 (D.C. Cir. 1993), and

an agency’s refusal to admit the error of its (prior) ways poses no obstacle to its

reaching the right result when the matter is returned for its review. See, e.g., FBME

Bank, 2015 WL 6854416, at *2 (observing that, under the circumstances presented,

“[t]he Court—and the parties . . . have no way of knowing whether [the agency] will

ultimately reach the same result on remand”). Thus, it would seem that unless the

agency’s request for a voluntary remand without a confession of error is a litigation

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tactic employed to avoid judicial review and/or that the requested remand would be an

exercise in futility, the requested remand should be permitted.

This Court discerns nothing inappropriate about the reasons that the DOE

provides for the voluntary remand that is being requested here. As noted, Defendants

maintain that considerations of efficiency and the conservation of resources support

remanding this matter to permit the DOE to conduct proceedings that will provide

Limnia with the unbiased review of its application materials that Limnia claims was not

provided when the agency undertook to consider its application in 2009. The agency

points out that the reviewing officials whose prior lenses were allegedly tainted by

impermissible political cronyism have left the DOE, and this Court sees no obvious

reason to believe that the DOE would not provide Limnia with a good-faith

reconsideration of its renewed and updated application materials, performed “consistent

with correct legal standards[,]” FBME Bank, 2015 WL 6854416, at *2 (internal

quotation marks and citation omitted), notwithstanding the agency’s present

unwillingness to admit that the prior review was improper. See CTIA-The Wireless

Ass’n v. FCC, 530 F.3d 984, 989 (D.C. Cir. 2008) (noting that there is a legal

presumption that agency officials “discharge their duties in good faith” (citation

omitted)). It also makes eminent sense to try to avoid a situation in which these parties

could spend considerable time and money litigating the issue of whether or not

Limnia’s initial loan applications received an unbiased review, when, in any event,

Limnia’s remedy, if it were successful, would be to require the agency to review the

applications again in an unbiased fashion—i.e., precisely what is being offered by the

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agency now. Thus, in this Court’s view and taken as a whole, Defendants have

articulated substantial and legitimate reasons to support the remand request.

B. A Remand Would Conserve Judicial And Party Resources Without
Prejudicing Plaintiffs

It cannot seriously be disputed that the resources of the parties and this Court

would be conserved if this matter was remanded to the agency in lieu of starting down

the path of litigation on the question of whether impermissible political cronyism was at

work when Limnia’s loan applications were reviewed nearly six years ago. See FBME

Bank, 2015 WL 6854416, at *2. Moreover, because voluntary remand will not

prejudice Limnia, as explained momentarily, consuming litigation resources on these

matters makes even less sense.

On the prejudice question, it must be remembered that Limnia cannot get

monetary damages from the agency defendants even if it prevails on the remaining APA

claims. See Emory v. United Air Lines, Inc., 720 F.3d 915, 921 (D.C. Cir. 2013).

Furthermore, in APA cases, a district court “act[s] as an appellate tribunal[,]” Flaherty

v. Pritzker, 17 F. Supp. 3d 52, 57 (D.D.C. 2014) (internal quotation marks and citation

omitted), and is thus only (with narrow exceptions not argued or relevant here)

authorized to “set aside” the challenged agency conduct and remand the matter to the

agency, see 5 U.S.C. § 706(2), which then decides how best to proceed. See Bennett v.

Donovan, 703 F.3d 582, 589 (D.C. Cir. 2013) (observing that when a party prevails on a

request that a court “set aside an unlawful agency action , . . . it is the prerogative of the

agency to decide in the first instance how best to provide relief” (citation omitted)).

This means that plaintiffs who bring APA actions are typically requesting that the court

nullify the agency’s wrongful decision or act, and while a court might make

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condemnatory statements in the service of explaining its order setting aside an agency’s

determination or conduct if the plaintiff is successful, it is the “set aside” order itself

that is the plaintiff’s remedy, not the Court’s explanation of it .

This follows from the well-understood distinction between a district court’s

order entering judgment and the memorandum opinion that provides the court’s

justification for the order. See Sea-Land Serv., Inc. v. Dep’t of Transp., 137 F.3d 640,

647 (D.C. Cir. 1998) (“Appellate courts ‘review[] judgments, not statements in

opinions[,]’” (quoting California v. Rooney, 483 U.S. 307, 311 (1987) (first alteration

in original))). If this case proceeded and Limnia won a judgment setting aside the

challenged decision, it could not appeal “simply to challenge [this] [C]ourt’s

reasoning[,]” id. (citation omitted), and this reality fatally undermines Limnia’s

contention that it is prejudiced if it loses the chance to obtain a stern rebuke from this

Court in the form of a harsh opinion. Moreover, this Court discerns no difference

between the unbiased review of Limnia’s loan applications that the Court would order

to remedy the established APA violation if Limnia prevailed in this lawsuit, on the one

hand, and the review that the agency is offering pursuant to its request for voluntary

remand, on the other (see Defs.’ Mem. at 6 (pledging to “reconsider” Limnia’s

applications on voluntary remand)), and this is especially so given that, either way, “[i]t

is the prerogative of the agency to decide in the first instance how best to provide

relief.” Bennett, 703 F.3d at 589 (citation omitted). Thus, Limnia is mistaken to insist

that remanding this case to the DOE to permit the agency to conduct the promised

unbiased review of Limnia’s loan applications “would short -circuit Limnia’s statutory

11
remedies under the [APA]” (see Pl.’s Opp’n at 1) or otherwise “violate[] Limnia’s

statutory rights” (id. at 6).

The Court is also unmoved by Limnia’s repeated suggestion that the Court has

the statutory authority to fashion a more expansive remedy than a mere set-aside order

in certain APA cases and thus that granting voluntary remand here would “curtail or

eviscerate Limnia’s right to full relief under the APA[.]” (Id. at 1.) It appears that

Limnia reads the statutes and case law to establish that the Court can go beyond setting

aside the agency’s decision and remanding the case to the agency when a plaintiff

successfully proves that the challenged agency determination was tainted by

“inappropriate political interference in discretionary decision -making” (id. at 6

(citations omitted)); under these circumstances, Limnia says, the Court can issue a

special remand order in which, in addition to setting aside the agency’s decision, it also

“instruct[s] for a determination on the merits by a disinterested decision -maker[,]” (id.;

see also id. at 7 (emphasizing that “when politics infects a decision, the remedy is

remand to an unbiased appeals board or administrative law judge” (emphasis added)).

There are at least two problems with the argument that a voluntary remand of the

instant matter to the DOE would deprive Limnia of this benefit. First, the cases do not

support the contention that a prevailing plaintiff in this type of APA case is entitled to

some sort of special “detailed” order. Of course, it is not surprising that a court that

finds that an agency has violated the APA by rendering a politically tainted decision

might note, in the course of explaining its remand, that the agency should comply with

the APA by “render[ing] a politically untainted decision.” Aera Energy LLC v. Salazar,

642 F.3d 212, 224 (D.C. Cir. 2011). But, as just noted, the explanation of an order

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must be distinguished from the order itself; at any rate, such language simply evinces

the application of a broad “follow the law” principle to the unique facts of a case where

the deviation from that principle was a politically tainted decision . See id. (declining

“to stand in the agency’s shoes and take over its decision making function” and instead

“direct[ing] the agency to use the traditional administrati ve tools at its disposal to

render a politically untainted decision” in a case involving political impropriety).

Second, and largely for the reasons just noted, Limnia fails utterly to explain

how it would possibly be prejudiced by the DOE’s offer to use the tools at its disposal

to conduct such an unbiased review now, voluntarily and of its own accord. It is not at

all obvious that receiving a scolding opinion regarding the sins of reviewing officers

who have since left the agency (under circumstances in which monetary damages for

the alleged past transgressions are not permitted) has any independent value to Limnia,

nor would such an opinion necessarily guide the agency’s course in the future, as it only

involves the unremarkable truism that political pressure may not “shape[], in whole or

in part, the judgment of the ultimate agency decisionmaker.” Id. at 220. And if what

Limnia is actually trying to express with its prejudice argument is its concern that a

voluntary remand will “prevent[] this [C]ourt from ensuring that the Defendants carry

out their statutory responsibilities” with respect to any future review of Limnia’s

materials (Pl.’s Opp’n at 7 (emphasis added)), that problem is easily solved: this Court

can—and will—exercise its discretion to remand the matter to the agency while

retaining jurisdiction over this matter, in order to ensure that the remand proceedings

will be conducted in accordance with the law. See, e.g., FBME Bank, 2015 WL

6854416, at *3–4; see infra Part III.C.

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 In short, Limnia has not provided any fully formed reason why a voluntary

remand of this matter to the DOE would harm it in any way, and this Court perceives

none. 2 Therefore, the prejudice factor, too, weighs in favor of voluntary remand. 3

C. This Court Will Stay The Instant Matter And Retain Jurisdiction
Over It

As noted, district courts have the authority to stay court proceedings and retain

jurisdiction over cases even when an agency’s request for a voluntary remand is

granted. See FBME Bank, 2015 WL 6854416, at *4; Code, 2015 WL 6154381, at *1, 5.

While this is not always done, courts have exercised their discretion to do so when, for

example, the court wishes to ensure that a voluntary remand will not, in fact, prejudice

the non-movant, see FBME Bank, 2015 WL 6854416, at *3–4, or when the interest in an

expeditious and compact resolution of the matter is particularly weighty, cf. Castañeda-

Castillo v. Holder, 638 F.3d 354, 363–64, 367 (1st Cir. 2011) (observing need for an

“expeditious and final resolution” of claims that had been “ping-ponging around for

over eighteen years”).

This Court finds that retaining jurisdiction over Limnia’s APA claims is

appropriate here in light of the allegations Limnia has made and the agency’s

2
To the extent that Limnia maintains that it would be prejudiced because it would not be entitled to
attorneys’ fees if the case is voluntarily remanded ( see Pl.’s Opp’n at 7; see also id. at 2), this argument
is cursory and entirely undeveloped, and it is well established that “perfunctory and undeveloped
arguments, and arguments that are unsupported by pertinent authority, are deemed waived[,]” Johnson
v. Panetta, 953 F. Supp. 2d 244, 250 (D.D.C. 2013) (citation s omitted). Thus, this Court expresses no
opinion regarding the merits of Limnia’s bald attorn eys’ fees contention.
3
Indeed, far from being prejudiced, it is at least conceivable that Limnia will get more of a benefit
from the Court’s grant of the pending motion to remand than it would if this case proceeded through the
litigation process, because the DOE has represented that, on remand, it will employ its “best efforts” to
complete the first round of determinations associated with Limnia’s applications within ninety days of
receipt of a complete application (see Decl. of Dong Kim, ECF No. 44 -2, ¶¶ 2–3), and it is not at all
clear that such favorable circumstances would necessarily arise as a result of a court order at the
conclusion of a full round of litigation.

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representations about its intended conduct on remand. Furthermore, as addressed

below, this Court intends to exercise its authority to maintain a supervisory role by

ordering the parties to provide periodic status reports in this matter.

IV. ORDER

Although Defendants do not admit that the DOE’s prior review of Limnia’s loan

applications was faulty, they have identified “substantial and legitimate” concerns that

support voluntary remand—namely, the fact that the parties and this Court would

otherwise consume scarce resources to litigate issues regarding the propriety of the

agency’s prior review of Limnia’s loan applications , when, given the change of

reviewing officials, the intervention of time, and any updated information that Limnia

can provide, a good-faith and unbiased reconsideration of Limnia’s application is

possible at present, if the case is remanded to the agency. There is nothing in the

record that suggests that the DOE’s request is a litigation tactic made in bad faith;

moreover, it appears that remanding this case to the agency would not prejudice Limnia,

whose remedy under the APA is the same unbiased review of Limnia’s loan application

packages that the government is offering to undertake if the case is remanded.

Therefore, and for all these reasons, it is hereby

ORDERED that Defendants’ [44] Motion for Voluntary Remand of this matter

to the agency is GRANTED. The agency shall review Limnia’s renewed loan

applications, if Limnia chooses to submit any, in accordance with the represe ntations

made in its motion. It is

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 FURTHER ORDERED that the instant case will be STAYED pending

completion of the agency’s proceedings on remand, and that the parties shall submit

joint status reports to the Court every 90 days from the date of this Order until

completion of the remand proceedings.

DATE: January 15, 2016 Ketanji Brown Jackson
KETANJI BROWN JACKSON
United States District Judge

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