United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 8, 2005 Decided February 7, 2006
No. 05-5067
HOLLY SUGAR CORPORATION, ET AL.,
APPELLEES
v.
MICHAEL JOHANNS, IN HIS OFFICIAL CAPACITY AS SECRETARY
OF AGRICULTURE AND AS CHAIRMAN OF THE COMMODITY
CREDIT CORPORATION,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 03cv01739)
Alan Burch, Assistant U.S. Attorney, U.S. Attorney’s
Office, argued the cause for appellant. With him on the briefs
were Kenneth L. Wainstein, U.S. Attorney, and Michael J. Ryan,
Assistant U.S. Attorney. R. Craig Lawrence, Assistant U.S.
Attorney, entered an appearance.
Dale E. McNiel argued the cause for appellee. With him on
the brief was Erik S. Jaffe.
Before: TATEL, GARLAND, and GRIFFITH, Circuit Judges.
2
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: Appellees, a group of sugar
processors, receive sugar loans from the federal government.
Until 1996, interest rates for all agricultural commodity loans,
including sugar, were set by regulations promulgated by the
agency charged with administering the loans, the Commodity
Credit Corporation (CCC). In that year, however, Congress set
the rate by statute, increasing it by one percentage point over the
regulatory rate. Six years later, in 2002, Congress exempted
sugar from the statutory rate, but the CCC kept the rate the
same. Believing that the 2002 statute required a lower interest
rate, the sugar processors filed suit, and the district court ordered
the CCC to reduce the rate. We reverse. Nothing in the 2002
statute sets an interest rate. Instead, it merely restores the
CCC’s rate-setting authority.
I.
The Commodity Credit Corporation runs the nation’s “sugar
program.” 7 U.S.C. § 7272 (creating sugar program), id.
§ 7991(a) (assigning it to the CCC). Federal loans to sugar
processors form the core of this program. For example, the
statute provides that “[t]he Secretary shall make loans available
to processors of domestically grown sugarcane at a rate equal to
18 cents per pound for raw cane sugar.” Id. § 7272(a); see also
id. § 7272(b) (analogous language for refined beet sugar with
rate at “22.9 cents per pound”). Secured by sugar produced by
the processors, these loans are nonrecourse, id. § 7272(e)(1),
meaning that if the processors default, the government’s only
remedy is to foreclose on the sugar. See 7 C.F.R. § 1435.105(b).
Thus, if the price of raw cane sugar falls below 18 cents per
pound, the processors simply default on the loan, in essence
selling their sugar to the government.
3
For many years, the statute remained silent on the interest
rate for these loans, and the CCC set the interest rate for each
loan individually. In 1988, a CCC regulation set a uniform rate
for all agricultural loans at “the rate of interest charged by the
U.S. Treasury for funds borrowed by CCC.” Price Support
Loans and Purchases, Production Adjustment Programs, and
Other Operations, 53 Fed. Reg. 47,658, 47,659 (Nov. 25, 1988)
(codified as amended at 7 C.F.R. § 1405.1). The CCC issued
this regulation under its statutory authority to “make such loans
. . . as are necessary in the conduct of its business,” 15 U.S.C.
§ 714b(l), and to “[s]upport the prices of agricultural
commodities through loans, purchases, payments, and other
operations,” id. § 714c(a).
So things remained until the Federal Agriculture
Improvement and Reform Act of 1996 (FAIR) which, for the
first time, set the interest rate by statute:
Notwithstanding any other provision of law, the
monthly Commodity Credit Corporation interest rate
applicable to loans provided for agricultural
commodities by the Corporation shall be 100 basis
points greater than the rate determined under the
applicable interest rate formula in effect on October 1,
1995.
Federal Agriculture Improvement and Reform Act of 1996, Pub.
L. No. 104-127, § 163, 110 Stat. 888, 935 (codified as amended
at 7 U.S.C. § 7283(a)). Because the “applicable interest rate
formula” was the Treasury rate, the 1996 legislation effectively
set the interest rate at one percentage point above the Treasury
rate. The CCC amended its regulations to reflect this change.
Implementation of the Farm Program Provisions of the 1996
Farm Bill, 61 Fed. Reg. 37,544, 37,575 (July 18, 1996) (codified
at 7 C.F.R. § 1405.1).
4
Up to this point, sugar loans carried the same interest rate
as all other agricultural loans. But Congress changed that in
2002 by appending the following language to section 7283, the
section that set the interest rate:
For purposes of this section [i.e., section 7283], raw
cane sugar, refined beet sugar, and in-process sugar
eligible for a loan . . . shall not be considered an
agricultural commodity.
Farm Security and Rural Investment Act of 2002, Pub. L. No.
107-171, § 1401(c)(2), 116 Stat. 134, 187 (codified at 7 U.S.C.
§ 7283(b)). The 2002 Act also required the CCC to promulgate
implementing regulations, which it exempted from the
Administrative Procedure Act’s notice and comment provisions.
Id. § 1601(c), 116 Stat. at 211-12 (codified at 7 U.S.C.
§ 7991(c)).
The sugar processors expected the interest rate, once freed
of the statutory requirement to exceed the Treasury rate, to
return to its pre-1996 level. The CCC’s response to the 2002
Act therefore must have come as quite a surprise. “The 2002
Act,” the CCC explained, “eliminates the requirement that CCC
add 1 percentage point to the interest rate as calculated by the
procedure in place in 1996 but does not establish a sugar loan
interest rate. CCC has decided to use the rates required for other
commodity loans.” 2002 Farm Security and Rural Investment
Act of 2002 Sugar Programs and Farm Facility Storage Loan
Program, 67 Fed. Reg. 54,926, 54,927 (Aug. 26, 2002). Having
decided the interest rate for sugar should remain at one
percentage point above the Treasury rate, the CCC made no
change to its interest rate regulation.
Seventeen sugar processors then filed suit in U.S. District
Court, arguing that the 2002 Act required the CCC to lower the
5
sugar interest rate. They sought declaratory relief and an
injunction prohibiting the CCC from imposing an interest rate
other than the Treasury rate as well as restitution for interest
they had already paid in excess of the Treasury rate. The district
court granted their motion for summary judgment, explaining
that the CCC’s interpretation would render the 2002 Act
“meaningless” or “superfluous,” and ordered declaratory and
injunctive relief. Holly Sugar Corp. v. Veneman, 335 F. Supp.
2d 100, 107 (D.D.C. 2004), modified, 355 F. Supp. 2d 181
(D.D.C. 2005). Although the district court initially denied
restitution, 335 F. Supp. 2d at 108-10, it later changed its mind,
355 F. Supp. 2d at 190-96. The CCC now appeals, challenging
both the district court’s interpretation of the CCC’s statutory
mandate and its restitution award. We review the district court’s
grant of summary judgment de novo. Dunaway v. Int’l Bhd. of
Teamsters, 310 F.3d 758, 761 (D.C. Cir. 2002).
II.
As all parties agree, we consider the CCC’s interpretation
of a statute it administers under the two-part test of Chevron
U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S.
837 (1984). We ask first “whether Congress has directly spoken
to the precise question at issue.” Id. at 842. If it has, we end our
inquiry, giving “effect to the unambiguously expressed intent of
Congress.” Id. at 843. In determining whether a statutory
provision speaks directly to the question before us, we consider
it in context. FDA v. Brown & Williamson Tobacco Corp., 529
U.S. 120, 132-33 (2000). In addition, we must “exhaust the
‘traditional tools of statutory construction.’” Natural Res. Def.
Council, Inc. v. Browner, 57 F.3d 1122, 1125 (D.C. Cir. 1995)
(quoting Chevron, 467 U.S. at 843 n.9). If, having conducted
this analysis, we still find the statute silent or ambiguous on the
issue before us, we move on to Chevron’s second step, asking
“whether the agency’s answer is based on a permissible
construction of the statute.” Chevron, 467 U.S. at 843.
6
Here, the parties dispute the meaning of the 2002 Act’s
provision exempting sugar from the statutory interest rate.
According to the CCC, this provision restored the rate-setting
authority it held before the 1996 Act first imposed a statutory
rate. The sugar processors contend that the provision restored
the interest rate in effect before the 1996 Act, and that the CCC
therefore has no authority to deviate from the Treasury rate.
Our analysis, of course, begins with the statute’s language.
Subsection (a), the portion of the statute enacted in 1996, sets an
interest rate for all agricultural commodities. Subsection (b), the
portion of the statute added in 2002, exempts sugar from that
generic interest rate. On their face, then, the two sections
together have no effect on sugar loans—subsection (b) exempts
sugar from subsection (a), the only provision that sets an interest
rate. It thus appears that the rate-setting authority for sugar has
reverted to the CCC under its authority to “make . . . loans.”
The processors insist that notwithstanding the statute’s
language, the CCC must impose the Treasury rate. Like the
district court, the processors find significance in the fact that
Congress enacted subsections (a) and (b) sequentially rather than
simultaneously. They label subsection (a)’s enactment the
“Interest Surcharge Act,” see Appellees’ Br. 3, and then
conclude that through subsection (b) Congress exempted sugar
from the “interest surcharge,” thereby expressing its intent to
restore the interest rate to its pre-1996 level. But “Interest
Surcharge Act” is the processors’ label, not Congress’s, and the
1996 Act could just as easily be called the “Statutory Interest
Rate Act” or even the “Strip the CCC of Authority Act.”
Exempting sugar from a provision described either of these two
ways would restore the CCC’s discretion, not the pre-1996
interest rate.
7
We also disagree with the district court’s conclusion that the
CCC’s interpretation renders the 2002 Act “meaningless,” Holly
Sugar, 355 F. Supp. 2d at 188, or “superfluous,” id. at 189.
Under the CCC’s interpretation, the agency has now regained its
authority to set the sugar interest rate, authority it was given
only when Congress passed the 2002 Act and which it lacks for
all other agricultural commodities.
The processors also rely on the provision’s legislative
history. They emphasize most heavily a Senate report’s
statement that the 2002 Act “reduces the CCC interest rate on
sugar loans by 100 basis points.” S. Rep. No. 107-117, at 100
(2001). The House report, however, is far more equivocal. It
explains that the provision “reduces the CCC interest rate on
price support loans” without specifying how much. H.R. Rep.
No. 107-191, pt. 1, at 89 (2001). The conference report gives
the processors even less support. Mirroring the statute’s
language, that report states that the Act “makes section 163 of
the FAIR Act inapplicable to sugar.” H.R. Rep. No. 107-424, at
447 (2002) (Conf. Rep.). Taken together, these reports fall far
short of the “extraordinary circumstances” in which a statute’s
unambiguous language might not control. United States v.
Braxtonbrown-Smith, 278 F.3d 1348, 1352 (D.C. Cir. 2002)
(quoting Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469,
474 (1992)). Indeed, of the three reports, only the Senate’s
gives any inkling that Congress may have had a particular
interest rate in mind, and the conference report—to which we
ordinarily ascribe the most weight, see Moore v. District of
Columbia, 907 F.2d 165, 175 (D.C. Cir. 1990) (en banc) (“[the]
conference committee report is the most persuasive evidence of
congressional intent after [the] statutory text itself” (internal
quotation marks omitted))—gives no indication whatsoever that
Congress intended to restore the pre-1996 rate.
8
In short, contrary to the processors’ argument, the statute
sets no interest rate for sugar. Instead, it sets an interest rate for
all other commodities and specifically exempts sugar. By
removing sugar from the statutory rate, “Congress has directly
spoken to the precise question” of how the rate should be set,
namely, by the CCC. Chevron, 467 U.S. at 842. Thus agreeing
with the CCC that Congress unambiguously gave it discretion
over the sugar interest rate, we end our Chevron analysis at step
one.
III.
Because we disagree with the district court’s reasoning, we
must consider the processors’ claim that even if the CCC has
authority to set the rate, such authority does not extend to
imposing an interest rate above the Treasury rate. See EEOC v.
Aramark Corp., Inc., 208 F.3d 266, 268 (D.C. Cir. 2000)
(“[B]ecause we review the district court’s judgment, not its
reasoning, we may affirm on any ground properly raised.”). The
processors advance three arguments in support of this claim,
none persuasive.
The processors first argue that the CCC has never before
charged more than its estimated cost of borrowing, i.e., the
Treasury rate. True enough, but that doesn’t mean the CCC
lacks authority to do so. Whether it has such authority turns on
the meaning of the statutes we have been discussing, not the
agency’s past practices.
Next, the processors argue that the CCC has no explicit
power to charge interest, and that its implied power to do so
must be limited to furtherance of congressional policy.
Accordingly, the processors assert, the rate decision falls outside
the CCC’s authority because charging an interest rate higher
than the cost of borrowing creates a windfall for the CCC, a
result that is inconsistent with the policies associated with
9
running a subsidy program. As the CCC points out, however,
Congress mandated such an interest rate for six years and
continues to mandate it for all other agricultural commodities,
so it is hard to see how the CCC’s rate conflicts with the
program’s goals.
Finally, the processors contend that the rate cannot be
defended as a form of user fee. But because the rate is an
interest rate, not a fee, this argument is irrelevant.
One last point. The processors nowhere argue that the
CCC, in lumping sugar in with other agricultural commodities,
acted arbitrarily and capriciously. Instead, they challenge only
the agency’s authority to set such a rate, not its decision to do
so. To be sure, they describe the agency’s explanation as
“deficient, to say the least,” Appellees’ Br. 19, but they make
this point only in support of their argument that the resulting
interest rate “is plainly not an outcome that Congress would
have sanctioned,” id. at 20 (emphasis added). As the processors
make no claim that the agency’s selection of a particular interest
rate was arbitrary and capricious, we need not address that
possibility. See Gen. Instrument Corp. v. FCC, 213 F.3d 724,
732 (D.C. Cir. 2000) (distinguishing between Chevron argument
and argument that “even assuming the statute did not foreclose
the [agency’s] policy, it was nevertheless unreasonable”).
Because the 2002 Act granted the CCC authority to set the
interest rate for sugar, we reverse the district court’s judgment.
Our conclusion that the CCC acted within its discretion
eliminates any need to consider the district court’s restitution
order.
So ordered.