Court Opinion

ID: 2971181
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:30:25.031589+00
Date Added: 2024-06-11T11:43:34.361754
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
                Pursuant to Sixth Circuit Rule 206                       2        Coalition for Gov’t Procurement, et al. No. 01-2231
        ELECTRONIC CITATION: 2004 FED App. 0101P (6th Cir.)                       v. Federal Prison Industries, Inc., et al.
                    File Name: 04a0101p.06
                                                                                              _________________
UNITED STATES COURT OF APPEALS                                                                     COUNSEL
                  FOR THE SIXTH CIRCUIT                                  ARGUED: Stephen M. Ryan, MANATT, PHELPS &
                    _________________                                    PHILLIPS, Washington, D.C., for Appellants. Charles R.
                                                                         Gross, UNITED STATES ATTORNEY, Grand Rapids,
COALITION FOR GOVERNMENT X                                               Michigan, for Appellees. ON BRIEF: Stephen M. Ryan,
PROCUREMENT , et al.,             -                                      Michael T. Brown, MANATT, PHELPS & PHILLIPS,
          Plaintiffs-Appellants, -                                       Washington, D.C., for Appellants. Charles R. Gross,
                                  -   No. 01-2231                        UNITED STATES ATTORNEY, Grand Rapids, Michigan,
                                  -                                      for Appellees. David T. Ralston, Jr., HOPKINS & SUTTER,
              v.                   >                                     Washington, D.C., Philip A. Nacke, FOLEY & LARDNER,
                                  ,
                                  -                                      Washington, D.C., for Amicus Curiae.
FEDERAL PRISON INDUSTRIES, -
                                                                           ECONOMUS, D. J., delivered the opinion of the court, in
INC., et al.,                     -                                      which GILMAN, J., joined. GIBBONS, J., concurred in the
         Defendants-Appellees. -                                         judgment only.
                                  -
                                 N                                                            _________________
       Appeal from the United States District Court
  for the Western District of Michigan at Grand Rapids.                                           OPINION
No. 99-00919—Robert Holmes Bell, Chief District Judge.                                        _________________

                   Argued: February 6, 2003                                  PETER C. ECONOMUS, District Judge.

              Decided and Filed: April 12, 2004                              I.    OVERVIEW

        Before: GILMAN and GIBBONS, Circuit Judges;                        This appeal draws the court into the longstanding conflict
                 ECONOMUS, District Judge.*                              between the government’s policy of employing federal
                                                                         inmates in the manufacture of goods and the challenges faced
                                                                         by the private industries compelled to compete with inmate-
                                                                         produced wares. Nearly seven decades ago, the United States
                                                                         Supreme Court addressed the “evil” posed by “the sale of
                                                                         convict-made goods in competition with the products of free
                                                                         labor,” and opined, “[F]ree labor, properly compensated,
                                                                         cannot compete successfully with the enforced and unpaid or
    *
     The Honorable Peter C. Economus, United States District Judge for   underpaid convict labor of the prison.” Whitfield v. Ohio, 297
the Northern District of Ohio, sitting by designation.

                                  1
No. 01-2231       Coalition for Gov’t Procurement, et al.              3    4       Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                        v. Federal Prison Industries, Inc., et al.

U.S. 431, 439 (1936). Since Whitfield, the debate over the                  Constitution, U.S. CONST . amend. V.3 The Coalition asserts
use of inmate labor largely has been reserved for the                       that UNICOR violated the foregoing provisions from 1991-
policymakers operating in the other branches of government.                 1995 when it significantly expanded its production of office
The role of the courts has been limited to examining whether                furniture without initiating the public notice and comment
the terms and conditions of inmate employment comply with                   procedures required by section4 4122. The Coalition further
constitutional and statutory standards. See generally Hope v.               asserts that the Board violated the organic statute and the
Pelzer, 536 U.S. 730 (2002) (examining liability of prison                  APA when it authorized UNICOR’s 1995-1996 requests to
officials pursuant to 42 U.S.C. § 1983 where said officials                 significantly expand production of office furniture. Finally,
disciplined an inmate for refusal to work on a “chain-gang”);               the Coalition contends that UNICOR’s direct dealings with
Richardson v. McKnight, 521 U.S. 399, 405-06 (1999)                         private manufacturers and purchasers of office furniture
(acknowledging that privately-operated prisons may be held                  violate the organic statute and the APA.
liable for injuries suffered by inmates employed on “chain
gangs” and “work-farms”). This appeal requires, however,                      As the issues raised in this appeal are matters of first
that the court re-enter the conflict and examine whether the                impression among the courts of appeals, we begin our
agency charged by Congress to manage inmate labor --                        analysis with an extensive examination of the statutory and
Federal Prison Industries, Inc. – has acted within its                      regulatory framework governing UNICOR’s operations. We
administrative authority.                                                   thereafter address the specific assignments of error.

  Specifically, the appellants-plaintiffs, the Coalition for
Government Procurement (“CGP”) – a non-profit trade
association representing manufacturers of office furniture --
and several CGP members,1 appeal the district court’s award
of summary judgment in favor of Federal Prison Industries,
Inc. (“FPI” or “UNICOR”),2 and its Board of Directors (the
“Board”), in this action brought pursuant to UNICOR’s
organic statute, 18 U.S.C. §§ 4121-4129 (2003), the judicial
                                                                                3
review provisions of the Administrative Procedures Act                            The district court also awarded summary judgme nt to the appellees-
(“APA”), 5 U.S.C. §§ 701-706, and the Just Compensation                     defenda nts, Steve B. Schwalb (“Schwalb”), and the United States
Clause of the Fifth Amendment to the United States                          Attorney General. Schw alb is U NIC OR ’s Assistant Director and Chief
                                                                            Operating Officer charged with supervising UNICO R’s day-to-day
                                                                            operations. The Co alition brought suit against Schwalb in his official
                                                                            capacity. It is well-settled that “[a] suit against a public emp loyee in his
    1
                                                                            or her official capacity is a suit against the agency itself.” Mitchell v.
      Herman Miller, Inc. (“Herman Miller”), Haworth, Inc. (“Haworth”),     Chapman, 343 F.3d 811, 822 (6th Cir. 2003). Accordingly, the
and Knoll, Inc. (“Knoll”). For ease of reference, the term “Coalition” as   Coalition’s claims against Schwalb are actually claims against UNICOR.
used throughout this Opinion shall refer collectively to CGP and the        Similarly, the Coalition’s official-capacity claims asserted against the
individual app ellants-plaintiffs.                                          Attorney G eneral are claims against the United S tates.

    2                                                                           4
     “UNICOR” is the commercial or “trade” name of Federal Prison                All references to the term “section” are to that of title 18 of the
Industries, Inc. See 29 C .F.R. § 345 .11(a) (20 03).                       United States Code, unless otherwise noted.
No. 01-2231           Coalition for Gov’t Procurement, et al.                      5    6       Coalition for Gov’t Procurement, et al. No. 01-2231
                      v. Federal Prison Industries, Inc., et al.                                v. Federal Prison Industries, Inc., et al.

   II. BACKGROUND                                                                         As the use of inmate-labor increased throughout the
                                                                                        nineteenth and early-twentieth centuries, so too did the cries
      A. The Historical Underpinnings of UNICOR’s                                       from the private enterprises, trade associations and labor
         Organic Statute                                                                unions that viewed such programs as threats to free markets
                                                                                        and employment. State legislatures responded by enacting
  In the words of one leading scholar, “The history of the                              measures limiting the scope of inmate-manufactured products.
prison is in large measure a history of prison labor.”5 While                           See, e.g., Whitfield, 297 U.S. at 435-440 (examining an Ohio
the issues underlying the instant appeal are steeped in this                            statute barring the sale of inmate goods manufactured outside
lengthy history, we narrow our focus to the historical events                           of the state of Ohio). Similarly, Congress enacted a series of
giving rise to UNICOR.                                                                  measures designed to curtail the interstate sale of inmate-
                                                                                        produced goods.9
           1.      Early Congressional Responses to Inmate-
                   Labor Programs                                                         Notwithstanding the apparent hostility exhibited by the
                                                                                        federal government to the states’ use of inmate labor,
   The emergence of the penitentiary system at the end of the                           Congress promoted inmate-labor programs within the federal
eighteenth century resulted in the states taking custody of
large and restless inmate populations whose ward placed
considerable pressures on state treasuries.6 The states
responded with efforts designed to reduce “idle hands” among
the inmates while promoting the self-sufficiency of the                                 the prison with materials and supervisors, and ultimately distributed the
penitentiary.7 Central to these efforts were inmate-labor                               finished product. Id. However, the state retained control and custody of
                                                                                        inmate laborers. Id. The piece-price system was a hybrid of the contract
programs.8                                                                              system, in that employers paid a stipulated price for each finished good
                                                                                        rather than paying daily wages. Id. The fourth -- the state-use system --
                                                                                        enabled the state to contro l the manufacture of products that, in turn, were
     5                                                                                  purchased by governm ent age ncies. Id.
      Stephen P. G arvey, Freeing Prisoners’ Labor, 50 STAN . L. R EV .
339, 342 (199 8). Prof. Garvey’s article presents an insightful analysis of
                                                                                            9
inmate labor.                                                                                 The Hawes-Cooper Act, ch. 79, 45 Stat. 1084, divested inmate-
                                                                                        manufactured goods of their interstate character thereby subjecting such
     6                                                                                  goods to strict state regulatio n. See Hawes-Coop er Ac t, ch. 79, 45 Stat.
         See id. at 340-70.
                                                                                        1084 (1929). The Ashurst-Sumners Act, ch. 412, 49 Stat. 494, enacted by
     7                                                                                  Congress in 1935, made it a federal crime to knowingly transport inmate-
         See id.                                                                        manufactured goods into a state that prohibited their sale. See Ashurst-
     8
                                                                                        Sumners Act, ch. 412, 49 Stat. 494 (1935 ). Congress passed the Walsh-
       State operated inmate-labor programs generally fell within four                  Healey Act, ch. 881, 49 Stat. 2036, in 1937 , that prevented the contracting
classifications -- lease, contract, piece-price, and state-use. See gen erally          out of inmate labor for use in federal government contracts. See W alsh-
T H E O X F OR D H ISTORY OF THE P R IS O N : T HE P RACTICE OF P U N IS H M E N T IN   Healey Act, ch. 881, § 1(d), 49 Stat. 2036, 2037 (1937) (codified as
W ESTERN S OCIETY (Norval Morris et al. eds., 1997 ); D A V ID J. R OTHMAN ,            amended at 41 U.S.C. §§ 35-45 ). Furthermore , Congress amended the
T H E D IS C O VE R Y O F T H E A S Y LU M 82-85 (1971). The lease system placed        Ashurst-Sumners Act in 1 940 to fede rally pro scribe the interstate
inmates under the control of private-sector enterprises that compensated                transportation and sale of inmate-made goods irrespective of state law.
the state for the prisoners’ services. Id. Under the contract-system, the               See Act of Oct. 14, 1940, ch. 872, 54 Stat. 1132 (codified as amended at
private-sector contracted with the state for labor on a d aily basis, provided          18 U.S.C. §§ 1761-17 62).
No. 01-2231     Coalition for Gov’t Procurement, et al.        7    8      Coalition for Gov’t Procurement, et al. No. 01-2231
                v. Federal Prison Industries, Inc., et al.                 v. Federal Prison Industries, Inc., et al.

penitentiary system. For instance, Congress authorized the          providing that, “The several Federal departments and
Attorney General in 1918                                            independent establishments and all other Government
                                                                    institutions of the United States shall purchase at not to
  to establish, equip, maintain, and operate at the United          exceed current market prices, such products of the industries
  States Penitentiary in Atlanta, Georgia, a factory or             herein authorized to be carried on their requirements and as
  factories for the manufacture of cotton fabrics to supply         may be available.” Act of May 27, 1930, ch. 340 § 7, 46 Stat.
  the requirements of the War and Navy Departments, the             at 392.
  Shipping Corporation, cotton duck suitable for tents and
  other army purposes and canvas for mail sacks and for                Congress did not, however, authorize the unfettered use of
  the manufacture of mail sacks and other similar mail-             inmate labor. It directed the Attorney General to establish
  carrying equipment for the use of the United States               only those industries “as [would] give the inmates a
  Government.                                                       maximum opportunity to acquire a knowledge and skill in
                                                                    trades and occupations which w[ould] provide them with a
Act of July 10, 1918, ch. 144, § 1, 40 Stat. 896, 896.              means of earning a livelihood upon release.” Act of May 27,
Similarly, Congress authorized a factory to be constructed at       1930, ch. 340 § 7, 46 Stat. at 392. Similarly, while the 1930
the Leavenworth, Kansas federal penitentiary for the                Act “provide[d] employment for all physically fit inmates,”
“manufacture of shoes, brooms, and brushes.” Act of April 3,        it did so only in such “diversified forms as [would] reduce to
1924, ch. 81, 43 Stat. 33, 44-45.                                   a minimum competition with private industry or free labor.”
                                                                    Act of May 27, 1930, ch. 340 § 1, 46 Stat. at 391. Moreover,
   Congress thereafter expanded the use of inmate labor to all      Congress explicitly directed that inmate-manufactured
federal penitentiaries. See Act of May 27, 1930, ch. 340 §1,        products were “not for sale to the public in competition with
46 Stat. 391, 391 (hereinafter the “1930 Act”) (“[T]he              private enterprise.” Act of May 27, 1930, ch. 340 § 3, 46
Attorney General shall provide employment for all physically        Stat. at 391.
fit inmates in the United States penal and correctional
institutions.”). Congress expressly authorized the use of                    2.   The Creation of UNICOR
inmate labor in two areas. First, the Attorney General was “to
make available the services of United States prisoners” for            Four years later, Congress charged the President “to create
use by federal agencies and departments in the “construction        a body corporate of the District of Columbia to be known as
or repairing roads . . . ; clearing, maintaining, and reforesting   ‘Federal Prison Industries.’” Act of June 23, 1934, ch. 736
public lands; building levees; and for constructing or              § 1, 48 Stat. 1211, 1211 (hereinafter the “1934 legislation”).10
repairing any public ways or works.” Act of May 27, 1930,           The 1934 legislation otherwise mirrored the 1930 Act with
ch. 340 § 2, 46 Stat. at 391. Secondly, the Attorney General
was “to establish such industries as w[ould] produce articles
and commodities for consumption in the United States penal              10
                                                                            The President was “to transfer to [UNICOR] the duty of
and correctional institutions or for sale to the departments and    determining in what manner and to what extent industrial operations shall
independent establishments of the Federal Government.” Act          be carried on in the Federal penal and correctional institutions,” as well
of May 27, 1930, ch. 340 § 3, 46 Stat. at 391. The 1930 Act         as to transfer “any part or all of the other powers or duties [then] vested
                                                                    in the Attorney General” relating to inmate labor. Act of June 23, 1934,
also created a limited market for inmate-produced wares             ch. 73 6 § 3 , 48 S tat. at 1211.
No. 01-2231       Coalition for Gov’t Procurement, et al.                9    10     Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                         v. Federal Prison Industries, Inc., et al.

one significant addition: the creation of a board of directors                Exec. Order No. 6917 ¶ 3. It further provided, “The heads of
(the “board”). Congress directed the President to appoint a                   the several executive departments, independent
five-member board of directors, with industry, labor,                         establishments and Government owned and Government
agriculture, retailers / consumers, and the Attorney General                  controlled corporations shall cooperate with [UNICOR] in
each represented by one member. See Act of June 23, 1934,                     carrying out its duties and shall purchase, at not to exceed
ch. 736 § 2, 48 Stat. at 1211. While Congress vested                          current market prices, the products or services of [UNICOR],
UNICOR with broad discretion to manage inmate-operations,                     to the extent required by law.” Exec. Order No. 6917 ¶ 9.
it empowered the board with the authority to balance such
operations with the need to protect private industries. See Act                    B. UNICOR’s Organic Statute
of June 23, 1934, ch. 736 § 3, 48 Stat. at 1211 (“It shall be the
duty of the board of directors to diversify so far as practicable                       1.   18 U.S.C. §§ 4121-4129
prison industrial operations and so operate the prison shops
that no single private industry shall be forced to bear an undue                 Congress incorporated the provisions of the 1930 Act, the
burden of competition from the products of the prison                         1934 legislation and the Executive Order as part of the
workshops.”).                                                                 enactment of Title 18 of the United States Code.12 See Act of
                                                                              June 25, 1948, Pub. L. No. 80-722, 62 Stat. 683, 851. With
   On December 11, 1934, President Franklin D. Roosevelt                      limited exception, the current version of UNICOR’s organic
issued Executive Order 6917 (the “Executive Order”), see                      statute maintains its historical underpinnings.
(J.A. 983),11 creating UNICOR and appointing the board.
The Executive Order expressly provided:                                         Title 18 of the United States Code, section 4121,
                                                                              establishes UNICOR as a “government corporation of the
  [UNICOR] shall have power to determine in what                              District of Columbia . . . administered by a Board of six
  manner and to what extent industrial operations shall be                    directors, appointed by the President to serve at the will of the
  carried on in the several penal and correctional                            President without compensation.13 18 U.S.C. § 4121 (2003).
  institutions of the United States and shall, so far as
  practicable, so diversify prison industrial operations that
  no single private industry shall be forced to bear an
  undue burden of competition with the products of prison
  workshops. It shall also have power to do all things it is
  authorized to do by said Act of June 23, 1934, and all
  things incident to or necessary or proper in the exercise
  of its functions.                                                                12
                                                                                     The Eightieth Congress’s 1948 revision of the federal criminal
                                                                              code is the statutory foreru nner o f UN ICO R’s organic statute. See Act of
                                                                              June 25, 1 948 , Pub . L. No . 80-7 22, 6 2 Stat. at 851 .

    11                                                                             13
        Section 744 of the 1940 ed ition of the United States Code was the            Congress expanded the board in 1948 to include a representative
first codification of the Executive O rder. See 18 U.S.C. § 744 (1940). See   from the Secretary of Defense. See Act of June 29, 1948, Pub. Law. No.
also Garza v. Miller, 688 F.2d 480 , 485 (7th C ir. 198 2).                   821 , § 3, 62 Stat. 110 0, 11 00.
No. 01-2231        Coalition for Gov’t Procurement, et al.                 11     12    Coalition for Gov’t Procurement, et al. No. 01-2231
                   v. Federal Prison Industries, Inc., et al.                           v. Federal Prison Industries, Inc., et al.

Section 4122 (a)14 vests UNICOR with broad discretion to                          18 U.S.C. § 4122 (b)(1).15
manage inmate operations, providing, in pertinent part:
                                                                                    Section 4123 of the organic statute mirrors the 1930 Act in
    [UNICOR] shall determine in what manner and to                                that only those “forms of employment shall be provided as
  what extent industrial operations shall be carried on in                        will give inmates . . . a maximum opportunity to acquire a
  Federal penal and correctional institutions for the                             knowledge and skill in trades and occupations which will
  production of commodities for consumption in such                               provide them with a means of earning a livelihood upon
  institutions or for sale to the departments or agencies of                      release.” 18 U.S.C. § 4123. The section further limits
  the United States, but not for sale to the public in                            UNICOR’s operations so as to “not curtail the production of
  competition with private enterprise.                                            any existing arsenal naval yard or other Government
                                                                                  workshop.” 18 U.S.C. § 4123.
18 U.S.C. § 4122 (a).
                                                                                    Section 4124 (a)16 enshrines the mandatory obligation of
  Section 4122(b)(1) delineates the duties of the board.                          federal agencies and departments to purchase, “at not to
Similar to the 1934 legislation, this subsection provides:                        exceed current market prices, such products [manufactured by
                                                                                  UNICOR] as meet their requirements and may be available.”
    Its board of directors shall provide employment for the                       18 U.S.C. § 4124 (a). Subsection (b) creates a dispute
  greatest number of those inmates in the United States                           resolution process whereby any “[d]isputes as to the price
  penal and correctional institutions who are eligible to                         quality, character, or suitability of [UNICOR] products shall
  work as is reasonably possible, diversify, so far as                            be arbitrated by a board consisting of the Attorney General,
  practicable, prison industrial operations and so operate                        the Administrator of General Services, and the President, or
  the prison shops that no single private industry shall be
  forced to bear an undue burden of competition from the
  products of the prison workshops, and to reduce to a
  minimum competition with private industry or free labor.
                                                                                       15
                                                                                          During the 19 88 amendme nt process discussed infra, Congress
                                                                                  amended the earlier statute’s reference from “all physically fit inmates,”
                                                                                  to “the greatest number of those inmates . . . who are eligible to work as
                                                                                  is reasonably possible.” Com pare Act of June 25, 1948, Pub. L. No. 80-
    14                                                                            722, 62 Stat. at 851 with 18 U .S.C. § 412 2 (b)(1).
       Congress did not divide the 194 8 version of section 412 2 into
subse ctions. With minor modification, the current versions o f section                16
4122 (a) and (b)(1) are identical to the 194 8 version of 412 2. Com pare                 As with section 412 2, Congress did not divide the 1948 version of
Act of June 25, 1948, Pub. L. No. 80-722, 62 Stat. at 851 with 18 U.S.C.          section 412 4 into su bsections. W ith minor modification, the current
§ 4122 (a), (b)(1). Subsections (c), (d) and (e) to the current version of        versions of section 4124 (a) and (b) are identical to the former 4124.
section 4122 were enacted as p art of the 194 8-19 49 amendme nts                 Com pare Act of June 25, 1948, Pub. L. No. 80-722, 62 Stat. at 851 with
address ing inmates held by the Department of Defense and the                     18 U.S.C. § 4124 (a), (b). Added in 1990, subsection (c) of the current
Commissioner of the District of Co lumbia. See Act of June 29, 1948, ch.          section 4124 prescrib es the manner in which Fede ral agencies and
719 §§ 1 -2, 62 Stat. 110 0, 11 00; A ct of M ay 11, 194 8, ch. 2 76, 6 2 Stat.   dep artments must report purchases of UN ICO R’s prod ucts, see 18 U.S.C.
230. These subsections are immaterial to our analysis. The remaining              § 4124 (c), while subsection (d) requires UNICOR to publish a catalog of
subsections found in the current version of 4122 are discussed infra.             its prod ucts, see 18 U.S.C. § 41 24 (d).
No. 01-2231       Coalition for Gov’t Procurement, et al.             13     14      Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                         v. Federal Prison Industries, Inc., et al.

their representatives.”17 18 U.S.C. § 4124 (b). The decisions                          2.    The 1988 Amendments and the
of the dispute resolution board are “final and binding on all                                Comprehensive Advanced Review Process
parties.” Id.                                                                                (“CARP”)
  The current version of Section 4125, as in the 1930 Act,                      Guided by its organic statute, UNICOR operated for
empowers the Attorney General                                                decades below the legislative radar. The 1980's witnessed,
                                                                             however, a dramatic rise in the number of inmates confined
  to make available to the heads of the several departments,                 to federal institutions.18 UNICOR therefore expanded its
  the services of United States prisoners under terms,                       operations in order to provide employment “for the greatest
  conditions, and rates mutually agreed upon, for                            number of those inmates . . . who [were] eligible to work as
  construction or repairing roads, clearing, maintaining,                    [] reasonably possible.” 18 U.S.C. § 4122(b)(1). Echoing the
  and reforesting public lands; building levees, and                         cries of a century earlier, this increased utilization of inmate
  constructing or repairing any public ways or works                         labor drew calls from private industries seeking to curtail
  financed wholly or in major part by funds appropriated                     UNICOR’s operations.
  by Congress.
                                                                                Congress responded in 1988 by passing a series of
18 U.S.C. § 4125 (a).                                                        amendments to UNICOR’s organic statute. See Anti-Drug
                                                                             Abuse Act of 1988, 100 Pub. L. No. 690, §§ 7093- 7096, 102
   The remaining provisions of the organic statute address                   Stat. 4181, 4411-14. Pertinent to the instant appeal, the
UNICOR’s financial and reporting requirements. Section                       amendments to section 4122 mandated that UNICOR
4126 requires UNICOR to place “monies” generated by its                      “conduct its operations so as to produce products on an
operations into the Treasury of the United States, see 18                    economic basis, but avoid capturing more than a reasonable
U.S.C. § 4126 (a), and establishes accounting procedures                     share of the market among Federal departments, agencies, and
relating to UNICOR’s operations, see 18 U.S.C. § 4126 (b)-                   institutions for any specific product.” See Anti-Drug Abuse
(f). Section 4127 requires the board to submit an annual                     Act of 1988, 100 Pub. L. No. 690, § 7096, 102 Stat. at 4413
report to Congress detailing UNICOR’s operations.                            (codified at 18 U.S.C. § 4122(b)(2)). Additionally, the
                                                                             amended section 4122 directed UNICOR to “concentrate on
                                                                             providing to the Federal Government only those products
                                                                             which permit employment of the greatest number of those
                                                                             inmates who are eligible to work as is reasonably possible.”
                                                                             Id. Furthermore, Congress instructed UNICOR to “diversify
                                                                             its products so that its sales are distributed among its
    17                                                                       industries as broadly as possible.” See Anti-Drug Abuse Act
       The 194 8 version of section 412 4 provided that the dispute
resolution board was to be comprised of the “Comptroller General of the
United States, the Director of the Bureau of Federal Supply, Department
of Treasury, and the Director o f the Bureau of the B udge t, or their            18
representatives.” See Act of June 25, 1948, Pub. L. No. 80-7 22, 6 2 Stat.           See A L FR E D B L UM S T EIN & A L LE N J. B ECK , P O P U LA T IO N G ROWTH
at 851. The section has been amended over the years to account for           IN U.S. P R IS O N S , 1980-1996, 26 P R IS O N S : C R IM E A N D J USTICE – A REVIEW
changes within federal dep artments and agencies.                            OF R E S EA R C H 17 (199 9).
No. 01-2231       Coalition for Gov’t Procurement, et al.               15     16     Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                          v. Federal Prison Industries, Inc., et al.

of 1988, 100 Pub. L. No. 690, § 7096, 102 Stat. at 4413                        Anti-Drug Abuse Act of 1988, 100 Pub. L. No. 690, § 7096,
(codified at 18 U.S.C. § 4122(b)(3)).                                          102 Stat. at 4414 (codified at 18 U.S.C. § 4122(b)(4)(A)).
                                                                               The CARP further required UNICOR to publicize the
  The most sweeping provisions of the 1988 legislation were                    proposal within the affected sector, provide the
those limiting UNICOR’s discretion to increase production                      Comprehensive Impact Study to the public, and solicit
levels. Congress required that “[a]ny decision by [UNICOR]                     comments from the affected sector. See Anti-Drug Abuse Act
to produce a new product or to significantly expand the                        of 1988, 100 Pub. L. No. 690, § 7096, 102 Stat. at 4414
production of an existing product be made by the board.” See                   (codified at 18 U.S.C. § 4122(b)(4)(B)-(D)). Congress also
Anti-Drug Abuse Act of 1988, 100 Pub. L. No. 690, § 7096,                      afforded interested industry representatives with “a reasonable
102 Stat. at 4413 (codified at 18 U.S.C. § 4122(b)(4)).                        opportunity” to present comments directly to the board. See
Congress further required UNICOR and the board to initiate                     Anti-Drug Abuse Act of 1988, 100 Pub. L. No. 690, § 7096,
a notice and comment procedure prior to entering a new                         102 Stat. at 4414 (codified at 18 U.S.C. § 4122(b)(4)(D)).
product area or significantly expanding UNICOR’s existing                      The last stage of the CARP directed UNICOR to publicize the
operations. See Anti-Drug Abuse Act of 1988, 100 Pub. L.                       board’s final decision “in a publication designed to most
No. 690, § 7096, 102 Stat. at 4414 (codified at 18 U.S.C.                      effectively provide notice to potentially affected private
§ 4122(b)(4)-(5)).                                                             vendors” of the affected product. See Anti-Drug Abuse Act
                                                                               of 1988, 100 Pub. L. No. 690, § 7096, 102 Stat. at 4414
  Congress’s newly minted notice and comment procedure --                      (codified at 18 U.S.C. § 4122(b)(5)).
the comprehensive advanced review process (“CARP”)--
required the board to receive and consider a written analysis                          3.    The Guidelines
prepared by UNICOR detailing any proposed “significant
expansion’s”19 potential impact on the private sector (the                       Notwithstanding Congress’s detailed attention to the
“Comprehensive Impact Study” or “market study”)20. See                         CARP, the 1988 amendments did not define the term
                                                                               “significantly expand.” Therefore, on December 4, 1989,
                                                                               UNICOR published an interim definition of the term in
    19                                                                         Commerce Business Daily (“CBD”). See (J.A., 179-81, 434-
       W e limit our analysis to the provisions o f the organic statute
pertaining to “significant expansion,” as those are the issues raised by the   36, 667-669, 1097 ¶ 4, 1484 ¶ 36). Representatives from
parties to the instant app eal.                                                private industry -- including CGP -- provided comments
    20
                                                                               regarding the interim definition. See (J.A., 1008-1024, 1813-
       Congress required that the Comprehensive Impact Study provide,          15).
at the minimum , information regarding:

    (i) the number of vendors currently meeting the requirements of
    the Federal Governm ent for the product;                                        (iv) the pro jected growth in the Federal Government demand for
    (ii) the proportion of the Federal Government market for the                    the product; and
    product currently served by sma ll businesses, small                            (v) the pro jected ability of the Federal G overnment market to
    disadvantaged businesses, or businesses operating in labor                      sustain both Fed eral Prison Ind ustries and private ven dors.
    surplus areas;
    (iii) the size of the Federal Government and non-Federal                   See Anti-Drug Abuse Act of 1988, 100 Pub. L. No. 69 0, § 7 096 , 102 Stat.
    Go vernm ent markets for the pro duct;                                     at 4414 (codified at 18 U.S.C. § 41 22(b)(4)(A)(i)-(v)).
No. 01-2231     Coalition for Gov’t Procurement, et al.         17     18    Coalition for Gov’t Procurement, et al. No. 01-2231
                v. Federal Prison Industries, Inc., et al.                   v. Federal Prison Industries, Inc., et al.

   On January 2, 1991, UNICOR published its final definition             5% - Less than 10 %                         3%, provided it does not
of “significant expansion.” See (J.A., 182-84, 437-38, 670-71,                                                       cause FPI’s market share
1097 ¶ 5, 1639 ¶ 36). The final definition established a two-                                                        to exceed 10%
tiered approach (the “Guidelines”) for identifying whether a
planned increase in production required the initiation of the            10% - Less than 15%                         2% provided it does not
CARP. The first tier directed UNICOR to monitor “proposed                                                            cause FPI’s market share
production increases . . . as part of [its] annual planning                                                          to exceed 15%
cycle,” under the two scenarios where a significant expansion
could arise:                                                             15% - Less than 20%                         1.5% provided it does not
                                                                                                                     cause FPI’s market share
    1. The specific product will be produced at a new                                                                to exceed 20%
    factory and not offset by a corresponding reduction in
    production at another location; or                                   20% - Less than 25%                         1% provided it does not
                                                                                                                     cause FPI’s market share
    2. The specific product will be produced at an existing                                                          to exceed 25%
    factory or factories, and will be accompanied by at
    least a 10% increase in capacity resulting from                      Over 25%                                    Any increase in market
    expanding any of the following three inputs of                                                                   share would be deemed
    production: a) Plant size; b) Equipment capacity; c)                                                             “significant”
    Inmate employment.
                                                                       (J.A., 182-84, 437-38, 670-71, 1098 ¶ 8, 1485 ¶ 8.)
(J.A., 11-12, 182-84, 437-38, 670-71, 1097 ¶ 6, 1484-85 ¶ 6.)
                                                                            C. The Board’s Significant Expansion Decisions
   Where either of the above scenarios occurred, the second
tier of the Guidelines required UNICOR to examine the                    Following the promulgation of the Guidelines, UNICOR
federal government market for the specific product and                 pursued a policy of maintaining a relatively low market share
develop an estimate of FPI’s current and projected market              in new product areas, rather than significantly expanding its
share. See (J.A.,182-84, 437-38, 670-71, 1098 ¶ 7, 1485 ¶ 7).          existing operations. See (J.A., 351-52). Federal inmate
The Guidelines required UNICOR to pursue the CARP when                 populations continued, however, to increase throughout the
its current market share position exceeded its “allowable              early 1990's.21 This increase compelled UNICOR to shift its
market share” in accordance with the following sliding scale:          policy and request that the appellee-defendant, Board,
                                                                       authorize several significant expansions. See (J.A., 351-52).
  UN ICO R’s Current Mrkt. Share    Allow able Mrkt. Share Incre ase

  0% - Less than 5 %                Any increase, provided it
                                    does not cause FPI’s
                                    market share to exceed 5%
                                                                            21
                                                                                 See B L UM S T EIN & B ECK , supra at 17.
No. 01-2231       Coalition for Gov’t Procurement, et al.             19    20   Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                     v. Federal Prison Industries, Inc., et al.

         1.   UNICOR’s Significant Expansion of Dorm &                      data . . . is adequately collected.” (J.A., 1341.) With respect
              Quarters Furniture Production                                 to the second recommendation, the White Paper noted, “Over
                                                                            the past year, formal direction has been given and a number
   UNICOR first proposed to significantly expand its                        of steps have been taken, to correct this deficiency.” (J.A.,
production of dorm and quarters furniture (“D & Q furniture”)               1341.)
from approximately $20 million in annual sales in 1995 to
$35 million in annual sales by the year 2000 (hereinafter the                 On March 8, 1996, the Board partially authorized
“D & Q furniture expansion”). See Quarters Furniture Mfrs.                  UNICOR’s proposed significant expansion of D & Q
Ass’n v. Federal Prison Indus., No. 95-2237 (D. D.C. Mem.                   furniture. See QFMA, at 6. In its decision, the Board
Opinion filed Aug. 28, 1998) (hereinafter “QFMA”) at 6.                     acknowledged the violations chronicled in the White Paper.
Shortly after presenting the proposal to the Board, UNICOR                  Id. The Board determined, however, that it would have
discovered several irregularities regarding its past compliance             approved these expansions had UNICOR presented the
with the Guidelines. Id. The Board responded by ordering an                 proposals in a timely manner. See QFMA, at 7. It further
internal investigation to determine the extent of these                     determined that UNICOR’s then-current market share, the
irregularities. Id.                                                         limited non-federal market for D & Q furniture, and the
                                                                            industry’s domination by small businesses, required a lesser
   On January 26, 1996, UNICOR issued a “White Paper”                       expansion than that sought by UNICOR. See QFMA, at 8-9.
detailing its historical production of D & Q furniture. See                 Accordingly, the Board approved a significant expansion to
(J.A., 1330-1341). The White Paper identified three                         $26 million in annual sales by the year 2000, rather than the
occasions throughout 1991-1993 where UNICOR was                             $35 million requested by UNICOR. See QFMA, at 8-9.
obliged, but failed, to initiate the CARP.22 UNICOR
explained that its failure to comply with the Guidelines was
the result of the inherent difficulties in monitoring inmate
employment levels, plant size, and equipment capacity, as
well as interpretative difficulties with the definition of
significant expansion. See (J.A., 1339-41). The White Paper
offered two recommendations. First, it advised that, “The
definition of Significant Expansions needs to be reviewed,
with input from the private sector, to make sure it is fair, clear
and practical in its application.” (J.A., 1341.) Secondly,
“[W]hatever factors are chosen as indicators of significant
expansion, mechanisms must be put in place so that necessary

    22
        The three instances were, as follows: (1) when FCI Sheridan began
manufacturing D & Q furniture in 1991; (2) when production increased
between 1991 and 1992; and (3) when production inc reased in 19 93. See
(J.A., 1334-1339).
No. 01-2231       Coalition for Gov’t Procurement, et al.               21     22     Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                          v. Federal Prison Industries, Inc., et al.

         2.   UNICOR’s Significant Expansion of Systems                        fifteen percent in 1995 to approximately twenty-four percent
              Furniture Production                                             in 2000. See (J.A., 203). As the Systems Furniture
                                                                               Expansion triggered each tier of the Guidelines, the Board
  UNICOR meanwhile proposed to significantly expand its                        initiated the CARP.
production of Office Furniture.23 Specifically, UNICOR
proposed to expand its existing systems furniture production                     UNICOR accordingly prepared a Comprehensive Impact
from $70.5 million in annual sales in 1995 to $150 million in                  Study regarding the potential impact of the Systems Furniture
annual sales by the year 2000 (hereinafter the “Systems                        Expansion on the private sector (the “Systems Impact
Furniture Expansion”). See (J.A., 203, 1102 ¶ 50).                             Study”). See (J.A., 200-49). It placed notice of the Systems
UNICOR’s initial estimates indicated that the Systems                          Furniture Expansion in the CBD, see (J.A., 198-99, 1101¶¶
Furniture Expansion would increase inmate employment by                        37-39), and mailed notice to various vendors and trade
approximately eighty-six percent.24       See (J.A., 225).                     associations, including Herman Miller, see (J.A., 185-95,
UNICOR further estimated that the proposed expansion                           1101 ¶ 38).
would require the activation of a new systems furniture
factory.25 See (J.A., 225). The market share analysis                            UNICOR thereafter provided the Systems Impact Study to
indicated that the Systems Furniture Expansion would                           requesting entities and received various comments. See (J.A.,
increase UNICOR’s federal market share from approximately                      249-69, 337-40, 1101 ¶¶ 41-42). CGP requested that the
                                                                               Board hold a public hearing on the proposed significant
                                                                               expansion.26 See (J.A., 251-69, 336-37).
    23
        The term “Office Furniture” refers to the class of goods at issue in     The Board held a public hearing on December 7, 1995
this app eal. Included in Office Furniture are three sub-classes of goo ds:    where representatives from several trade associations – CGP,
(1) systems furniture; (2) office seating furniture; and (3) office case       the Business Products Industry Association (“BPIA”),27 and
good s. Systems furniture are products that typically fit or attach together
to form multiple workstations such as panel systems, desking systems, as
                                                                               the Business and Institutional Furniture Manufacturer’s
well as filing, storage, and shelving com ponents. See (J.A., 1476 ¶ 1).       Association (“BIFMA”)28 – presented a coordinated
Office seating furniture are prod ucts such as office chairs, task chairs,
stools, sofas, and modular seating. See (J.A., 1477 ¶ 2). Office case
goods are products typically associated with an individual user and                 26
include desks, crede nzas, corner unit work surfaces, desk extensions, and           In preparation for the hearing, UNICOR issued a final version of
storage units. See (J.A., 1477 ¶ 3).                                           the Systems Impact Study in October, 1995 (the “Final Systems Impact
                                                                               Study”) that, inter alia, incorp orated and addressed the comments
    24                                                                         submitted by the private-sector. See (J.A., 287-3 35); see also (J.A., 270-
       UNICOR determined that its systems furniture operations
employed 940 inmates in 199 5. See (J.A., 225). UN ICOR ’s preliminary         86).
projections revealed that the proposed expansion required an additional             27
810 emp loyees. See (J.A., 225).                                                     BP IA is a trade association representing 175 office furniture
                                                                               manufacture rs and 625 office furniture dealers. See (J.A., 372).
    25
      UNICOR proposed to close its system furniture factory at FPC                  28
Duluth and tra nsfer those 10 7 inmate jobs to a newly constructed factory             B IFM A is a nonprofit trade association consisting of over 250
at FCC Coleman. See (J.A., 225). It estimated that the factory at FCC          manufacturers of business, office and institutional furniture and their
Coleman wou ld employ 6 00 inmates. See (J.A., 225).                           supp liers. See (J.A., 583).
No. 01-2231    Coalition for Gov’t Procurement, et al.      23    24    Coalition for Gov’t Procurement, et al. No. 01-2231
               v. Federal Prison Industries, Inc., et al.               v. Federal Prison Industries, Inc., et al.

opposition to the proposed significant expansion. See (J.A.,        (4) UNICOR’s alternative methods to address increased
346-419).                                                               inmate populations (i.e., subcontracting, vertical
                                                                        integration, recycling, and sales to charitable
  On February 6, 1996, the Board authorized the Systems                 organizations) failed to achieve UNICOR’s statutory
Furniture Expansion. See (J.A., 420-22). The Board                      mandate to employ the maximum number of
determined:                                                             inmates. See (J.A., 422).
  FPI has proposed that the corporation increase                    The Board authorized annual sales in the amount of $130
  production of systems and ADP furniture to $150 million         million by the year 2000, rather than the $150 million
  annually by FY 2000. After analyzing the material               requested by UNICOR. See (J.A.,420-21). It “encouraged
  submitted, and reviewing the testimony heard on this            FPI to pursue partnerships with members of the systems and
  matter, it is the finding of the Board of Directors that a      ADP furniture industry in the effort to lessen FPI’s impact on
  somewhat reduced expansion is appropriate and would             the private sector.” (J.A., 422). The Board explained: “Since
  not result in FPI capturing more than a reasonable share        [we have] determined that an FPI sales level less than
  of the market or constitute an undue burden on the              requested is appropriate, [we] do[] so with the expectation
  systems and ADP furniture industry.                             that resulting partnerships should be substantial, in order to
                                                                  absorb significant FPI employment.” (J.A., 422.)
(J.A.,420). With regard to its further judgment that “the sales
levels authorized . . . [would] not place an undue burden upon              3.   UNICOR’s Significant Expansion of Office
the systems and ADP furniture industry nor free labor,” (J.A.,                   Seating Furniture Production and the
421), the Board emphasized four factors:                                         Board’s Retroactive Authorization of the
                                                                                 1991-1992 Unauthorized Expansions
  (1) The majority of the firms in the industry were “not
      heavily involved in the Federal market for systems            UNICOR further proposed to expand office seating
      and ADP furniture” (J.A., 421.) Indeed, “[f]or most         furniture production from $54.4 million in annual sales in
      of the companies listed on the GSA schedules for            1995 to $110 million in annual sales by 2001 (the “Office
      systems and ADP furniture, less than 4% of their            Seating Expansion”). See (J.A., 470). UNICOR’s initial
      total sales [went] to the Federal government.” (J.A.,       estimates indicated that the Office Seating Expansion would
      421.)                                                       increase inmate employment between eighty-five to one
                                                                  hundred percent.29 See (J.A., 496). UNICOR further
  (2) The total domestic market for systems furniture was         estimated that the proposed expansion would require the
      large and projected to grow throughout the
      expansion thereby offsetting UNICOR’s increased
      sales. See (J.A., 421).
  (3) The industry was dominated by a small number of                  29
                                                                         UNICOR determined that its office seating furniture processes
      large firms. See (J.A., 421-22).                            employed 790 inmates in 1995. See (J.A., 496). UNICO R’s preliminary
                                                                  projections revealed that the proposed expansion required an additional
                                                                  600 -800 emp loyees. See (J.A., 496).
No. 01-2231       Coalition for Gov’t Procurement, et al.              25     26    Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                        v. Federal Prison Industries, Inc., et al.

activation of three new office seating furniture factories.30                 indicating its expected decline in market share during 1991.31
See (J.A., 496). Pursuant to the Guidelines, UNICOR                           See (J.A., 514).
conducted a market share analysis indicating that the Office
Seating Expansion would increase UNICOR’s federal market                        With respect to the 1992 increase in inmate employment,
share from approximately twenty-one percent in 1995 to                        UNICOR conceded that the increase, coupled with its
approximately thirty-four percent in 2001. See (J.A., 496).                   expected market share of 10.89%, required the initiation of
Consequently, the Board initiated the CARP.                                   the CARP. See (J.A., 476). UNICOR repeated the
                                                                              explanation that it failed to “track the level of inmate
  UNICOR prepared a Comprehensive Impact Study                                employees for each product.” (J.A., 476.) It reasoned,
regarding the potential impact of the Office Seating                          however, that “It [was] likely that had an examination of
Expansion on the private sector (the “Office Seating Impact                   FPI’s [office] seating production taken place, FPI would have
Study”). See (J.A., 467-526). While preparing the Office                      initiated the guidelines process at this time.” (J.A., 476.)
Seating Impact Study, UNICOR again discovered that it                         Therefore, “[i]n light of the fact that FPI failed to initiate the
failed to comply with the Guidelines, this time in 1991 and                   industry involvement guidelines process in response to its
1992. See (J.A., 470, 475-76, 1497 ¶¶ 106-08). Specifically,                  expansion of production in FY 1992,” (J.A., 477), UNICOR
inmate employment levels increased more than ten percent in                   requested the Board to “[R]atify the Corporation’s expansion
each year, but UNICOR did not conduct a market share                          of office seating during that time, taking into consideration
analysis. UNICOR explained its failure in regard to the 1991                  the relevant data for that point in time,” (J.A., 477).
increase:
                                                                                UNICOR then pursued all of the relevant procedures under
  [A]t the time, FPI focused most of its guidelines [sic]                     the CARP for the purposes of obtaining: (1) the Board’s
  vigilance and analysis on the opening of new factories,                     ratification of the 1991 and 1992 expansions; and (2) the
  and did not maintain an accurate tracking of inmates                        Board’s authorization of the proposed Office Seating
  employed producing office seating. Furthermore, it was                      Expansion. See (J.A., 439-567, 1107 ¶¶ 91-92). CGP and
  the belief of FPI staff that the corporation’s share of the                 Knoll received versions of the Office Seating Impact Study,
  Federal market for office furniture was decreasing, due                     see (J.A., 527-28, 531); however, they declined to respond
  to a sharp increase in Federal procurements. Thus, the                      with any comments. BIFMA, a member of the CGP’s board
  public involvement guideline process [the CARP] would                       of directors, provided extensive written comments, as well as
  not be required since there was no growth in FPI’s                          requested a hearing. See (J.A., 553-54, 561-63, 1108 ¶¶ 98-
  market share.                                                               99); (App. to Br. of Defs.-Appellees).
(J.A., 476.) In support of this explanation, UNICOR attached                   In July, 1996, the Board held a public hearing regarding the
to the Office Seating Impact Study a chart from 1990                          Office Seating Expansion.           See (J.A., 572-646).

    30                                                                             31
        UN ICOR estimated that the Office Seating Expansion required the             The chart indicated that UNICO R had an estimated 10.06% market
activation of factories at FCI Beckley, FCI Edgefield, and FCI Victorville.   share in 1990 and an expected market share of 8.86% in 199 1. See (J.A.,
See (J.A., 496).                                                              514 ).
No. 01-2231    Coalition for Gov’t Procurement, et al.      27    28     Coalition for Gov’t Procurement, et al. No. 01-2231
               v. Federal Prison Industries, Inc., et al.                v. Federal Prison Industries, Inc., et al.

Representatives from, inter alia, BIFMA, Herman Miller,             Turning to the proposed Office Seating Expansion, the
Haworth, and Knoll attended the hearing and jointly presented     Board authorized the proposal, resting its decision on four
statements in opposition to the proposed significant              bases: (1) the federal office seating market was slightly over
expansion. See (J.A., 572-646, 1108 ¶¶ 101-103).                  $1 billion, rather than the smaller figure advanced by BIFMA;
                                                                  (2) the federal market was projected to expand during the
  In September, 1996, the Board issued its decision:              pertinent period, thereby minimizing UNICOR’s increased
(1) retroactively ratifying the 1991-1992 unauthorized            market share; (3) the domestic office seating market was
expansions; and (2) authorizing the proposed Office Seating       expected to expand, thereby increasing sales for the private
Expansion. See (J.A., 654-59). With respect to the                sector manufacturers; and (4) UNICOR’s proposed expansion
unauthorized expansions, the Board reasoned:                      would not affect private-sector employment as the impact of
                                                                  UNICOR’s expansion would be dispersed throughout
    In connection with another earlier instance of                numerous manufacturers in the industry. See (J.A., 657-58).
  unauthorized expansion, the Board has undertaken a
  review of expansion in all FPI product lines since                        4.   UNICOR’s Significant Expansion of Office
  implementation of the guidelines, being conducted by                           Case Goods Production
  independent auditors.
                                                                     UNICOR also proposed to significantly expand its
    ....                                                          production of office case goods from $30.3 million in annual
                                                                  sales in 1995 to $80 million in annual sales by 2001 (the
     The question, now, however, is how to deal with this         “Office Case Goods Expansion”). See (J.A., 681). Similar to
  situation in the context of office seating. Any analysis        the prior proposed expansions of systems furniture and office
  and decision must begin with FPI’s statute, which               seating, UNICOR projected that the Office Goods Expansion
  provides that FPI should have no unreasonable share of          would result in an approximately fifty percent increase in
  the market, and should not unduly impact on any single          inmate employment and require the activation of three new
  private industry. Any remedial action will be predicated        factories.32 See (J.A., 703). UNICOR further projected that
  on what extent, if any, the statute has been violated in        its market share would increase from approximately thirteen
  these two very important aspects.                               percent in 1995 to approximately thirty percent in 2001. See
                                                                  (J.A., 703). Therefore, the Board initiated the CARP.
(J.A., 655.) The Board accordingly examined UNICOR’s
federal market share from1990-1994, as well as the private          UNICOR prepared a Comprehensive Impact Study
sector sales of office seating. The Board concluded, “[B]ased     regarding the potential impact of the Office Case Goods
on market performance since 1991 the industry has not been        Expansion on the private sector (the “Office Case Goods
adversely affected, and that UNICOR’s market share is
reasonable. The Board therefore approves FPI’s request to
ratify its sales levels achieved, subsequent to and as a result
                                                                       32
of is expanded capacity during 1991 and 1992.” (J.A. 656.)               UNICOR estimated that the Office Case Goods Exp ansion wou ld
                                                                  employ an additional 500-750 inmates and require the activation of
                                                                  factories at Forrest City, A R, a high security prison in the mid -Atlantic
                                                                  region, as well as at a future site. See (J.A., 703).
No. 01-2231       Coalition for Gov’t Procurement, et al.              29     30    Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                        v. Federal Prison Industries, Inc., et al.

Impact Study”). See (J.A., 678-722). UNICOR proceeded                              D. Quarters Furniture Mfrs. Ass’n v. Federal Prison
with the CARP, and the Coalition submitted comments on the                            Indus.
proposed expansion. See (J.A., 723-94, 1111 ¶¶ 139-40).
                                                                                Shortly following the Board’s 1996 significant expansions
  The Board held a hearing on October 8, 1996 whereby                         decisions, the Quarters Furniture Manufacturers’ Association
BIFMA and others presented statements in opposition to the                    (“QFMA”) – an industry association comprised of private
Office Case Goods Expansion. See (J. A. 796-890, 1111                         manufacturers of D & Q furniture – filed a complaint in the
¶ 142).                                                                       United States District Court for the District of Columbia
                                                                              challenging the D & Q furniture significant expansion. See
   On December 17, 1996, the Board issued its decision                        QFMA, at 1-27. Principally relying on the White Paper,
authorizing the Office Case Goods Expansion. See (J.A.,                       QFMA alleged that UNICOR and the Board violated the APA
891-896). The Board rested its decision on the projected                      by failing to initiate the CARP from 1992-1995. See QFMA,
growth of the federal market, as well as the projected growth                 at 2. QFMA alternatively alleged that in the event the
in the domestic market for sales of office case goods. The                    Guidelines allowed for such unauthorized expansions, the
Board acknowledged, however, the large discrepancy between                    Guidelines themselves violated section 4122 and the APA.
UNICOR’s estimate regarding the size of the federal market                    Id. QFMA’s complaint requested declaratory relief, as well
and the private-sector’s significantly lower estimate.33 See                  as an injunction “prohibiting the defendants from continuing
(J.A., 893). In an effort to account for the discrepancy, the                 to violate the statute, and directing [UNICOR] to return to
Board authorized less than UNICOR’s full expansion request                    appropriate levels of production.” Id.
– authorizing a growth to $70 million by 2001. See (J.A.,
892-93). Additionally, the Board directed UNICOR to                             UNICOR conceded that it violated the Guidelines during
convene an independent panel of experts to review its                         1992-1995, but asserted that “[T]he Board’s March 1996
methodology for calculating the federal market, and agreed to                 decision [authorizing the significant expansion of D & Q
consider any request to modify the expansion decision in the                  Furniture] superceded and effectively moot[ed] plaintiff’s
event the panel uncovered errors in UNICOR’s methodology.                     case.” See QFMA, at 10.
See (J.A., 893-96).
                                                                                The court partially concurred in UNICOR’s contention,
                                                                              opining that the failure on the part of QFMA to challenge
                                                                              UNICOR’s current production levels precluded equitable
                                                                              relief in the form of a “roll-back” of current production. See
                                                                              QFMA, at 12-13.          The court reasoned, however, that
                                                                              “[W]here the agency wholly fails to comply with its
                                                                              regulations, and provides no record for its decision, the court
                                                                              should conclude that the agency acted unlawfully, and should
                                                                              vacate the decision with a remand to the agency.” QFMA, at
    33                                                                        16 (citations omitted). The court then acknowledged that “[I]t
       The Board indicated that UNICOR estimated the size of the Federal      could order the Board to adjust the future levels of FPI’s
office ca se goods market at $2 21.3 million, wherea s the private industry
estimate pro jected a market of $169 .4 million. See (J. A., 893).
                                                                              production to return to the market that portion of the share
No. 01-2231    Coalition for Gov’t Procurement, et al.      31    32    Coalition for Gov’t Procurement, et al. No. 01-2231
               v. Federal Prison Industries, Inc., et al.               v. Federal Prison Industries, Inc., et al.

that the Board decides crossed the line from reasonable to        furniture34 violated the APA and organic statute (Count VIII).
unreasonable.” QFMA, at 12 (citation omitted). Accordingly,       The second claim alleged that UNICOR’s practice of selling
the court remanded the matter to the Board “with directions       Office Furniture directly to private subcontractors employed
that the Board must illicit [sic] comments with respect to the    on federal projects violated the express prohibition of section
increases in FY 1991 to 1995 . . . make specific findings as to   4121, as well as the APA (Count IX).
whether FPI obtained more than a reasonable share of the
market . . . and ascertain what percent of the share was            Following lengthy discovery, the parties filed cross-
unreasonable.” See QFMA, at 25.                                   motions for summary judgment. By order dated August 8,
                                                                  2001, the district granted the defendants’ motion in its
    E. The Underlying Action                                      entirety, while denying the Coalition’s motion. See 154 F.
                                                                  Supp. 2d at 1156.
   More than a year later, the Coalition filed the underlying
action challenging UNICOR’s significant expansions in               The instant appeal ensued.
Office Furniture production. See Coalition for Gov’t
Procurement v. Federal Prison Indus., 154 F. Supp. 2d 1140          III. STANDARD OF REVIEW
(W.D. Mich 2001). The complaint specifically alleged seven
classes of claims. The first class of claims (Counts I-III)         This Court reviews the grant of summary judgment de
alleged that UNICOR engaged in unauthorized significant           novo. See Brooks v. American Broadcasting Cos., 932 F.2d
expansions of systems furniture, office seating, and office       495, 500 (6th Cir. 1991). Summary judgment is proper “if the
case goods throughout 1991-1995 (hereinafter the                  pleadings, depositions, answers to interrogatories, and
“unauthorized significant expansions”) in violation of section    admissions on file, together with the affidavits, if any, show
4122 and the APA. The second class (Count IV) alleged that        that there is no genuine issue as to any material fact and that
the Board’s retroactive authorization of the 1991 and 1992        the moving party is entitled to a judgment as a matter of law.”
unauthorized expansions in office seating (hereinafter the        FED . R. CIV . P. 56 (c). When confronted with a properly
“retroactive authorization”) violated the APA and the organic     supported motion for summary judgment, the nonmoving
statute. The third class (Count V) sought relief arising from     party must set forth specific facts showing that there is a
the Board’s purported violations of the organic statute and the   genuine issue for trial. A genuine issue for trial exists “if the
APA in authorizing UNICOR’s 1995-1996 requests to
significantly expand its production of systems furniture,
office seating, and office case goods (hereinafter the “1996           34
significant expansion decisions”). The fourth class (Count                “Pass through” furniture was furniture sold by UNICO R that was
                                                                  manufactured by non-prison ers. UN ICO R ackno wledged its use of “pass
VI) presented a facial challenge to the Guidelines, whereas       through” furniture in rare circumstances where it accepted an order and
the fifth class (Count VII) alleged that UNICOR’s                 was unable to meet the federal agency’s delivery requirements because of
unauthorized significant expansions in 1991-1995 constituted      “fires, inmate, lockdowns, work stoppages, adverse weather including
a compensable taking in violation of the Fifth Amendment.         fog, tooling problems within an internal facto ry, or as a result of a
The final class of claims challenged two of UNICOR’s              customer accelerated due date.” (J.A., 1070.) In such cases, UNICOR
                                                                  purchased the pro duct from a private sector manu facturer with who m it
practices with respect to the private sector. The first alleged   had a prior contractual relationship, and then re-sold the product to the
that UNICOR’s practice of promoting “pass through”                federal agency. See (J.A., 1117 ).
No. 01-2231         Coalition for Gov’t Procurement, et al.                33   34    Coalition for Gov’t Procurement, et al. No. 01-2231
                    v. Federal Prison Industries, Inc., et al.                        v. Federal Prison Industries, Inc., et al.

evidence is such that a reasonable jury could return a verdict                  Council, Inc. v. Sec. & Exch. Comm’n, 606 F.2d 1031, 1045,
for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,                      1048-49 (D.C. Cir. 1979). While de novo, we tailor our
477 U.S. 242, 248 (1986).                                                       review to determine whether “statutorily prescribed
                                                                                procedures have been followed.” Id. at 1045.
  The Coalition advances its claims (with the exception of the
takings claim) pursuant to UNICOR’s organic statute and the                       IV. THE CLAIMS CHALLENGING THE
APA. It is well-settled that UNICOR’s organic statute does                            UNAUTHORIZED SIGNIFICANT
not authorize a private right of action. See Galvan v. Fed.                           EXPANSIONS, THE 1996 SIGNIFICANT
Prison Indus., 199 F.3d 461, 465 (D.C. Cir. 1999) (“Congress                          EXPANSION DECISIONS, AND THE
purposefully kept FPI out of the commercial world and                                 BOARD’S RETROACTIVE AUTHORIZATION
limited its exposure to the courts.”). However, the APA
provides for judicial review of agency action.35 See 5 U.S.C.                     The Coalition’s first three classes of claims – those
§§ 701-706.                                                                     challenging the unauthorized significant expansions, the 1996
                                                                                significant expansion decisions, and the Board’s retroactive
   When reviewing an administrative agency’s final decision                     authorization (hereinafter collectively, the significant
under the APA, we review the district court’s summary                           expansion claims) – share common issues of fact and law.36
judgment decision de novo, while reviewing the agency’s                         Accordingly, we initially address these claims in their
decision under the arbitrary and capricious standard. See                       entirety.
Sierra Club v. Slater, 120 F.3d 623, 632 (6th Cir. 1997)
(citation omitted). Thus, the agency’s decision will be set
aside “only if it is arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with the law.” Slater, 120
F.3d at 632 (citations omitted). Alternatively, when the issue
is whether the agency followed the requisite legal procedure,
our review is limited, but exacting. See Natural Res. Def.

    35
         Section 70 2 of the APA provides, in pertinent part:

    A person suffering legal wrong because of agency action, or
    adversely affected or aggrieved by agency action within the
    meaning of a relevant statute, is entitled to judicial review
    thereof. An action in a court of the United States seeking relief                36
    other than money damages and stating a claim that an agency or                      The Coalition’s facial challenge to the Guidelines (Count VI) also
    an officer or employee thereof acted or failed to act in an official        shares commo n issues of fact and law with the significant expansion
    capacity or under color of legal authority shall not be dismissed           claims. The district court determined, however, that U NIC OR ’s
    nor relief therein be denied on the ground that it is against the           promulgation of new guidelines in 1997 effectively mooted Count VI.
    United States or that the United States is an ind ispensable party.         See 154 F. Sup p. 2d at 1152. Cf. Product De velopment and Prod uction:
                                                                                Pub lic Involvement Procedures, 62 F ED . R EG . 11 46 5 (M ar. 12, 1997).
    5 U.S.C. § 702 .                                                            The Co alition does not appeal this determinatio n.
No. 01-2231       Coalition for Gov’t Procurement, et al.            35     36   Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                     v. Federal Prison Industries, Inc., et al.

     A. Jurisdictional and Procedural Challenges                            Scientology of California v. United States, 506 U.S. 9, 12
                                                                            (1992) (quotation omitted).
         1.   Mootness
                                                                               Amicus asserts that the significant expansion claims are
  The defendants, through amicus curiae, Correctional                       moot because UNICOR has completed the challenged activity
Vendors Association (“CVA”),37 assert that the significant                  -- that is, all of the alleged unlawful increases in production
expansion claims are moot. We review questions of mootness                  have occurred and the sales have been consummated.
de novo. See Craft v. United States, 233 F.3d 358, 373 (6th                 However, completion of activity is not the hallmark of
Cir. 2000). The heavy burden of demonstrating mootness                      mootness. Rather, a case is moot only where no effective
rests on the party claiming mootness. See Friends of the                    relief for the alleged violation can be given. See McPherson,
Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 119 F.3d at 458.
167, 189 (2000).
                                                                              The mootness question therefore turns on whether this court
   Article III of the United States Constitution vests this court           can award the Coalition “any effectual relief.” Church of
with jurisdiction to address actual cases and controversies.                Scientology, 506 U.S. at 12. Our analysis begins with an
See U.S. CONST . art. III, § 2. Under the “case or controversy”             examination of the relief requested.
requirement, we lack authority to issue a decision that does
not affect the rights of the litigants. See Southwest                         Amicus construes the relief sought by the Coalition as
Williamson County Cmty. Assoc. v. Slater, 243 F.3d 270, 276                 follows: (1) a declaration that the defendants violated section
(6th Cir. 2001). Indeed, we have a “continuing obligation” to               4122 and the APA by repeatedly failing to initiate CARP
enquire whether there is a present controversy as to which                  during 1991-1995; (2) a declaration that the Board’s 1996
effective relief can be granted. Id. at 276 (citing McPherson               significant expansion decisions violated the organic statute
v. Mich. High Sch. Athletic Ass’n, Inc., 119 F.3d 453, 458                  and the APA; (3) an order rescinding the 1996 significant
(6th Cir.1997)).                                                            expansion decisions; and (4) a declaration that the Board’s
                                                                            retroactive authorization violated the organic statute and the
   “‘The test for mootness is whether the relief sought would,              APA. See (Br. of Amicus Curiae Correctional Vendors Ass’n
if granted, make a difference to the legal interests of the                 Supporting Appellee and Dismissal at 5-6).
parties.’” Bowman v. Corr. Corp. of Am, 350 F.3d 537, 550
(6th Cir. 2003) (quoting McPherson, 119 F.3d at 458). An                       The Coalition’s multiple requests for declaratory relief
appeal becomes moot if events have taken place during the                   warrant caution. We previously have recognized that
pendency of the appeal that make it “impossible for the court               declaratory judgment actions often require courts to face the
to grant any effectual relief whatever . . . .” Church of                   difficult task of distinguishing “between actual controversies
                                                                            and attempts to obtain advisory opinions on the basis of
                                                                            hypothetical controversies.” Kardules v. City of Columbus,
    37
                                                                            95 F.3d 1335, 1343-44 (6th Cir. 1996) (citation omitted); see
      CVA is a non-p rofit trade association incorporated in W ashington,   also Brennan v. Rhodes, 423 F.2d 706, 706-07 (6th Cir. 1970)
D.C. that represents over twenty-five ven dors who sell products to         (stating that the Declaratory Judgment Act, 28 U.S.C.
UNICOR. More than ha lf of CV A’s me mbe rs pro vide U NIC OR with          §§ 2201-2202,“does not broaden the jurisdiction granted to
components used in the manufacture of Office Furniture.
No. 01-2231     Coalition for Gov’t Procurement, et al.        37    38   Coalition for Gov’t Procurement, et al. No. 01-2231
                v. Federal Prison Industries, Inc., et al.                v. Federal Prison Industries, Inc., et al.

the federal courts by the Constitution and statutes enacted          decisions . . . were arbitrary and capricious for three reasons.
pursuant thereto,” and that, consequently, “there still must be      First, the Board failed to consider the fundamental question
a case or controversy before a federal court can assume              of whether FPI’s previously expanded Office Furniture
jurisdiction and reach the merits of a [declaratory judgment         production complied with its Guidelines and was
action]”). Thus, the Supreme Court has held that when                appropriate.”); (Br. of Amicus Curiae Correctional Vendors
considering the potential mootness of a claim for declaratory        Ass’n Supporting Appellee and Dismissal at 5) (“Plaintiffs
relief, “the question is ‘whether the facts alleged, under all the   posit that the earlier purported unauthorized significant
circumstances, show that there is a substantial controversy,         expansions taint these subsequent expansions.”); see also 154
between parties having adverse legal interests, of sufficient        F. Supp. 2d at 1151 (“Plaintiffs also argue that the Board’s
immediacy and reality to warrant the issuance of a declaratory       decision on future increases failed to consider whether the
judgment.’” Super Tire Eng’g Co. v. McCorkle, 416 U.S. 115,          then current production levels during 1996 were even legal.”).
122 (1974) (quoting Maryland Cas. Co. v. Pacific Coal & Oil          As it is undisputed that the Board has authorized UNICOR’s
Co., 312 U.S. 270, 275 (1941)).                                      current production levels through the 1996 significant
                                                                     expansion decisions, see (J.A., 1198-1202), and the 1996
  The potential mootness of the claims challenging the               decisions, in turn, rest on UNICOR’s allegedly unlawful
  unauthorized significant expansions                                production throughout 1991-1995, claims challenging the
                                                                     unauthorized significant expansions potentially impact
   At first blush, the Coalition’s request for an order declaring    UNICOR’s current production levels. The Coalition
that UNICOR engaged in unauthorized significant expansions           transforms potential into an immediate reality by requesting
during 1991-1995 appears to lack the “sufficient immediacy           this court to issue an order (1)“directing FPI to roll back
and reality” necessary to escape the mootness doctrine.              production to the levels authorized before the violations
Standing alone, an order from this court declaring that              occurred”; (2) “giv[ing] back those sales FPI unlawfully
UNICOR violated the organic statute and, or, the APA nearly          took”; or (3) “capping FPI’s production at current levels and
a decade ago, would have little, if any, impact on the current       requiring FPI’s Board to fully account for the agency’s past
legal interests of the parties. See City of Los Angeles v.           violations before undertaking future expansion proceedings.”
Lyons, 461 U.S. 95 (1983); cf. Reeve Aleutian Airways, Inc.          (Reply Br. of Pls.-Appellants at 27.)
v. United States, 889 F.2d 1139, 1142 (D.C. Cir. 1989) (“Past
exposure to illegal conduct fails to establish a present               The proposed relief sought demonstrates that the Coalition
controversy . . . without a showing of present adverse               seeks more than a declaration that UNICOR unlawfully and
effects.”).                                                          significantly expanded from 1991-1995. The Coalition has
                                                                     argued throughout the litigation that the unauthorized
  A more searching review of the record reveals, however,            significant expansions resulted in its loss of $450 million in
that the Coalition has forged the requisite link between             sales. See, e.g., (J.A., 28, 1410-11). As a remedy for this
UNICOR’s past practices and the current interests of the             purported loss, the Coalition persistently has sought an order
parties. Specifically, the Coalition contends that the Board         restoring the lost sales to the current market -- a result the
predicated the 1996 significant expansion decisions on data          Coalition terms an “equitable volume sales replacement
reflecting UNICOR’s purportedly unlawful production from
1991-1995. See (Br. of Pls.-Appellants at 53) (“The 1996
No. 01-2231       Coalition for Gov’t Procurement, et al.              39     40    Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                        v. Federal Prison Industries, Inc., et al.

remedy,” see (J.A., 1471).38 While amicus interprets this                     Northwest Envtl. Def. Ctr. v. Gordon, 849 F.2d 1241, 1245
requested relief as relating exclusively to the takings claim                 (9th Cir. 1988) (determining that claims asserted against
discussed infra, the Coalition conclusively has demonstrated                  federal agencies alleging that the agencies unlawfully
that its “equitable volume sales replacement remedy” pertains                 authorized the overfishing of coho salmon during the 1986
to the unauthorized significant expansion claims.                             season were not moot because the court could award
                                                                              awarding injunctive relief in the form of “higher escapement
   Having discerned the thrust of the relief requested, we must               provisions and lower quotas in 1989”).
now consider whether this court has the authority to award
such relief. It is well-established that federal courts possess                 We conclude, therefore, that this court has the broad
broad discretion to fashion equitable remedies. See United                    discretionary authority to award relief in a manner akin to the
States v. R.W. Meyer, Inc., 932 F.2d 568, 572-73 (6th Cir.                    “equitable volume sales replacement remedy” proposed by
1991) (observing the “principle of equity that the chancellor                 the Coalition. We neither must determine at this stage of the
has broad discretion to frame a decree”). It also is established              proceedings whether the Coalition ultimately is entitled to
that we may craft declaratory and injunctive relief designed                  such relief, nor must we define the specific parameters of the
to preclude a federal agency from acting in contravention of                  relief. As we repeatedly have stated, the determinative factor
its statutory and regulatory authority. See Howard v. Pierce,                 in the mootness inquiry is whether the court possesses the
738 F.2d 722, 730 (6th Cir. 1984) (holding that the court may                 authority to afford the Coalition any effectual relief. Because
award declaratory and injunctive relief in order to ensure that               the response to this query is in the affirmative, the Coalition’s
the Department of Housing and Urban Development adopted                       claims challenging the unauthorized significant expansions
regulations consistent with its enabling statute). Furthermore,               present actual cases or controversies.
the court may require an agency to modify its current or
future practices in order to account for past violations of its                 The potential mootness of the claim challenging the 1996
statutes or regulations. See Charter Township of Huron,                       significant expansion decisions
Michigan v. City of Dearborn, Michigan, 997 F.2d 1168,1175
(acknowledging the court’s authority to issue an injunction                     The Coalition’s claim challenging the 1996 significant
requiring the agency to conduct an environmental assessment                   expansion decisions also presents a justiciable case or
notwithstanding the implementation of the completed action);                  controversy. As discussed supra, the production levels
                                                                              approved by the Board in 1996 are manifested in UNICOR’s
                                                                              current production levels. It follows a fortiori that in the
    38
                                                                              event the Board authorized the 1996 significant expansions in
        For example, the complaint requested “injunctive relief to stop FPI   contravention of the organic statute and the APA, any
from continuing its violation of the Constitution, the AP A, FP I’s organic   equitable remedy for these violations necessarily would
statute, and its own regulations, and directing FPI to return to the
competitive market sales equal to in excess of $450 million, the amount       impact UNICOR’s current production levels.
inapp ropriately taken.” (J.A., 27-2 8.) Similarly, the Coalition requested
in its motion for sum mary judgm ent that the “[c]ourt, at this time, order     Amicus attempts to escape this result by emphasizing that
FPI to reduce its planned Office Furniture sales volume, from FY 2002         the Coalition’s complaint did not request the “equitable
through FY 2004 or any other period the [c]ourt deems reasonable, that        volume sales replacement remedy” in regard to the 1996
FPI Office Furniture sales in FY 19 90 through FY 1 995 exceed ed the         significant expansion decisions. See (Br. of Amicus Curiae
appropriate FY 1 989 levels.” (J.A., 1474.)
No. 01-2231       Coalition for Gov’t Procurement, et al.               41     42   Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                        v. Federal Prison Industries, Inc., et al.

Correctional Vendors Ass’n Supporting Appellee and                               The potential mootness of the claim challenging the
Dismissal at 5). Indeed, the complaint requested: (1) a                        retroactive authorization
declaration that the 1996 significant expansion decisions
violated the organic statute and the APA; and (2) an                             Our conclusions as to the justiciable nature of the
injunction rescinding those decisions. Amicus contends that                    unauthorized significant expansion and 1996 significant
because the sales authorized by the 1996 significant                           expansion claims apply with equal force to the claim
expansion have been completed, any proposed recission of                       challenging the Board’s retroactive authorization. Simply, in
such sales is beyond this court’s authority. See (Br. of                       the event we determine that the Board lacked the authority to
Amicus Curiae Correctional Vendors Ass’n Supporting                            retroactively authorize a significant expansion occurring in
Appellee and Dismissal at 17) (“Rescinding already                             1991-1992, the inescapable conclusion is that UNICOR
accomplished expansions and consummated sales is not                           engaged in unauthorized significant expansions during those
feasible.”) (Citation omitted).                                                years. The potential remedy for the Board’s unlawful conduct
                                                                               would be the “equitable sales volume replacement remedy”
  While it is beyond cavil that the Coalition initially                        suitable for all other unauthorized significant expansions
requested a recission of the 1996 significant expansion                        during the 1991-1995 period. Therefore, the Coalition’s
decisions, the manner of relief requested before the district                  claim challenging the retroactive authorization is not moot.
court, while relevant, is not determinative in examining
whether the claim is moot on appeal.39 Rather, the                                    2.   Issue Exhaustion
dispositive issue is whether this court possesses the authority
to award any effectual relief. Church of Scientology, 506                         Notwithstanding the existence of justiciable cases or
U.S. at 12. The foregoing analysis reveals that the court has                  controversies, the defendants assert that the administrative
the authority to order a “roll-back” or “capping” of                           waiver doctrine bars judicial review of the unauthorized
UNICOR’s production. We may draw on this remedy in the                         significant expansion and the retroactive authorization claims.
event the Board unlawfully authorized the 1996 significant                     The administrative waiver doctrine, commonly referred to as
expansions that, in turn, impacted UNICOR’s current                            issue exhaustion, provides that it is inappropriate for courts
production levels. Accordingly, the Coalition’s claim                          reviewing agency decisions to consider arguments not raised
challenging the 1996 significant expansion presents a                          before the administrative agency involved. See United States
justiciable case or controversy.                                               v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952)
                                                                               (“Simple fairness . . . requires as a general rule that courts
                                                                               should not topple over administrative decisions unless the
                                                                               administrative body not only has erred but has erred against
                                                                               objection made at the time appropriate under its practice.”);
                                                                               see also Michigan Dep’t of Envtl. Quality v. Browner, 230
F.3d 181, 183 n.1 (6th Cir. 2000) (concluding that issues not
    39
                                                                               raised during the agency’s notice and comment period were
       In any even t, the Co alition requested that the district court grant   waived for purposes of appellate review); Cellnet
“any other such relief as necessary to establish a status quo in Federal       Communications, Inc. v. FCC, 149 F.3d 429, 442 (6th Cir.
Office Furniture sales and ensure that FPI no longer engages in illegal
practices.” (J.A., 1411.)
                                                                               1998) (ruling that the plaintiff’s claim for judicial review was
No. 01-2231     Coalition for Gov’t Procurement, et al.        43    44    Coalition for Gov’t Procurement, et al. No. 01-2231
                v. Federal Prison Industries, Inc., et al.                 v. Federal Prison Industries, Inc., et al.

barred because it had not followed the Environmental                 United States Court of Appeals for the Fifth Circuit thereafter
Protection Agency’s administrative review procedures).               declined to address arguments that the petitioner had not
Courts decline to consider issues not raised before an agency        raised in her request for review by the Appeals Council. See
because to do otherwise would “deprive the [agency] of an            200 F.3d 229, 230 (5th Cir. 1998). The Supreme Court
opportunity to consider the matter, make its ruling, and state       reversed, holding that the inquisitorial nature of the Social
the reasons for its action.” Unemployment Comp. Comm’n v.            Security proceedings precluded the application of an issue
Aragon, 329 U.S. 143, 155 (1946).                                    exhaustion requirement. See Sims, 530 U.S. at 112.
  The district court determined that the Coalition waived the           In reaching its decision, the Court identified three scenarios
unauthorized significant expansion and the retroactive               giving rise to issue exhaustion. First, the Court observed that
authorization claims because it did not raise these challenges       issue exhaustion requirements are “largely creatures of
during the hearings before the Board. The district court             statute,” and determined that a party’s failure to comply with
opined:                                                              a statutorily-imposed issue exhaustion requirement precluded
                                                                     the assertion of federal jurisdiction. Sims, 530 U.S. at 107
  Procedural objections like those Plaintiffs bring in this          (citing Woelke & Romero Framing, Inc. v. NLRB, 456 U.S.
  case are precisely the type of issues appropriately raised         645 (1982)). The Court alternatively observed that an
  before the Board during its comment period, and thus               agency’s regulations may impose the issue exhaustion
  subject to waiver if not raised.                                   requirement. See Sims, 530 U.S. at 108. “And when
                                                                     regulations do so, courts reviewing agency action regularly
  The Board of FPI provided an opportunity for Plaintiffs            ensure against the bypassing of that requirement by refusing
  and other interested parties to raise the issue of                 to consider unexhausted issues.” Id.
  procedural violations during three separate meetings of
  the Board during 1996. Plaintiffs were not only aware of              The Court went on to recognize a third scenario -- a
  the proceedings, but were aware of the issues to be raised         judicially-imposed issue exhaustion requirement – which it
  at the hearings, and fully participated in the hearings.           analogized “to the rule that appellate courts will not consider
                                                                     arguments not raised before trial courts.” Sims, 530 U.S. at
154 F. Supp. 2d at 1147 (citations omitted).                         108-09. The Court reasoned that the degree to which such an
                                                                     analogy applies depends on whether the particular
  Notably, the district court did not rely on Sims v. Apfel, 530     administrative proceeding is similar to traditional litigation --
U.S. 103 (2000), where the Supreme Court set forth the               that is, whether the proceeding before the administrative
contours of the issue exhaustion doctrine. The Court                 agency is sufficiently “adversarial,” as opposed to
specifically confronted a scenario where the Social Security         “inquisitorial.” Sims, 530 U.S. at 109-110 (“[T]he desirability
Administration (“SSA”) denied the petitioner’s claims for            of a court imposing a requirement of issue exhaustion
benefits, and the petitioner sought review before the Social         depends on the degree to which the analogy to normal
Security Appeals Council (“Appeals Council”). See Sims,              adversarial litigation applies in a particular administrative
530 U.S. at 105. The Appeals Council denied review, and the          proceeding.”) (Citations omitted). Therefore, where no
petitioner filed suit in district court, which rejected all of the   statutory or regulatory requirement exists, a judicially-
petitioner’s claims. See Sims, 530 U.S. at 105-06. The               imposed requirement of issue exhaustion is based on the
No. 01-2231        Coalition for Gov’t Procurement, et al.                45     46    Coalition for Gov’t Procurement, et al. No. 01-2231
                   v. Federal Prison Industries, Inc., et al.                          v. Federal Prison Industries, Inc., et al.

extent to which the particular administrative proceeding is 530 U.S. at 111 (citing Richardson v. Perales, 402 U.S. 389,
analogous to “normal adversarial litigation.” Sims, 530 U.S.                     400-01(1971)). The plurality further emphasized that no
at 109.                                                                          representative went before the ALJ on behalf of the Social
                                                                                 Security Commissioner to oppose the claim for benefits, and
  In considering whether the district court properly imposed                     there was “no indication that the Commissioner oppose[d]
an issue exhaustion requirement in the case sub judice, we                       claimants before the Appeals Council.” Id. The plurality also
initially observe that such a requirement exists in neither                      noted that the agency’s regulations expressly directed the
UNICOR’s organic statute nor its regulations. Accordingly,                       Appeals Council to conduct the review process “in an
this court must determine whether the significant expansion                      informal and non-adversarial manner.” Id. (citing 20 C.F.R.
hearings before the Board were sufficiently adversarial as to                    § 404.900(b)). Indeed, the parties were permitted, but were
warrant the imposition of an issue exhaustion requirement.                       not required, to file briefs with the Appeals Council. See
                                                                                 Sims, 530 U.S. at 113-14 (O’Connor, J., concurring) (citing
  While no court has addressed the precise issue at bar, we                      20 C.F.R. § 404.975). The form on which the claimant
observe that the Sims plurality40 found several factors                          requested review of her case provided only three lines for the
relevant in determining that the Social Security proceedings                     claimant to state the details of her request for review. See
possessed an inquisitorial character. The plurality gave great                   Sims, 530 U.S. at 112 (citing 20 C.F.R. § 422.205(a)). An
weight to the responsibility vested in the Administrative Law                    accompanying notice stated that the form should only take ten
Judge (“ALJ”) and the Appeals Council -- rather than the                         minutes for the claimant to complete.41 Id. Finally, the
claimant -- for investigating the facts and developing                           Appeals Council possessed the authority to review any new
arguments both for and against granting benefits. See Sims,                      material evidence outside of the record promulgated by the
                                                                                 parties, and its plenary power vested it with authority to
                                                                                 review cases without the applicant’s approval. See Sims, 530
    40
        The Court unanimously agreed in the aspects of Justice T hom as’s        U.S. at 111 (citing 20 C.F.R. § 404.976(a)). The co-existence
majo rity decision delineating the issue exhaustion doctrine. See Sims, 530      of the foregoing factors – the broad investigatory authority
U.S. at 115-16 (Breyer, J., d issenting) (“[The ma jority] points out that the   vested to the decision-maker, the unilateral nature of the
ordinary waiver rule as applied to administrative agencies ‘is an analogy
to the rule that appellate court will not consider arguments not raised          proceedings, and the express informality of the administrative
before trial courts.’ And the plurality argues that the agency proceedings       process -- led the plurality to conclude that “[T]he general
here at issue, unlike those before trial courts, are not adversarial             rule of issue exhaustion makes little sense in this particular
proceedings. Although I agree with both propositions, I do not see how           context.” See Sims, 530 U.S. at 112 (quotation and citation
they lead to the plurality’s conclusions.”) (Citations omitted). The Court       omitted).
reached different conclusions in the applicatio n of the d octrine to Social
Security proceedings at issue. Com pare Sims, 530 U.S. at 113
(O’Connor, J., concurring) (“I write separately because, in my view, the           In contrast, this court has identified, albeit in a different
agency’s failure to notify claimants of an issue exhaustion requirement in       context, the relevant factors when considering whether a
this context is a sufficient basis for our decision.”) with 530 U.S. at 118-
19 (Breyer, J., d issenting) (“Th e Social Security Ad ministratio n says that
it does not apply its waiver rule where the claimant is not represented.              41
And I ca nnot say it is ‘arbitrary capricious, or an ab use of discretion,’ to         This fact led Justice O’Connor to conclude that the Ap peals
app ly the waiver rule when a claimant was represented before the App eals       Council discouraged parties from providing reasons and proceeded
Council, as was petitioner, by an attorney.”) (Citations om itted).              without them. See Sims, 530 U.S. at 113-14 (O ’Connor, J., concurring).
No. 01-2231       Coalition for Gov’t Procurement, et al.             47     48    Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                       v. Federal Prison Industries, Inc., et al.

proceeding is sufficiently adversarial. In Detroit Free Press                submit post-hearing briefs. See Delta Found., 303 F.3d at
v. Ashcroft, 303 F.3d 681 (6th Cir. 2002), a panel of this court             561 (citations omitted). The court concluded, “[U]nlike the
held that “[a] deportation proceeding, although                              SSA proceedings in which the Appeals Council itself, and not
administrative, is an adversarial, adjudicative process.”                    the claimant, ha[d] the responsibility for identifying the
Detroit Free Press, 303 F.3d at 696. The panel emphasized                    claims and developing arguments, the parties appear before
that “[c]onsistent with the adversarial nature of judicial                   the DAB as adversaries, charged with presenting their
proceedings, a deportation proceeding is commenced with a                    arguments and supporting witnesses and effectively
‘Notice to Appear,’ a charging document or complaint-like                    discrediting opposing parties through cross-examination.”
pleading which vests jurisdiction with the immigration                       See Delta Found., 303 F.3d at 561-62.
court.”42 Detroit Free Press, 303 F.3d at 698 (citations
omitted). Additionally, an evidentiary standard governed the                   With these principles in mind, we find that the Board’s
deportation proceedings (i.e., the government was required to                significant expansion hearings do not give rise to an issue
prove its allegations by clear and convincing evidence), and                 exhaustion requirement. As with the proceedings before the
the agency’s decision was to be predicated on “reasonable,                   Appeals Council, the rules governing the significant
substantial, and probative evidence.” See Detroit Free Press,                expansion hearings vest full fact-finding authority with the
303 F.3d at 698 (citations omitted). Furthermore, all                        Board. For example, the rules provide:
interested parties had the right to appear and be heard during
the deportation proceedings, and the presiding immigration                       The record before the Board is limited to the market
judge maintained an impartial role. See Detroit Free Press,                    study, comments and materials submitted in response to
303 F.3d at 698-99 (citations omitted).                                        the market study (including the trade association’s
                                                                               comments), corporate management recommendations,
  Similarly, the United States Court of Appeals for the Fifth                  and material submitted by commenters in response to
Circuit placed similar emphasis on procedural elements in                      corporate management’s recommendations. No new
determining that proceedings before the Health and Human                       documentation or arguments from commenters will be
Services Departmental Appeals Board (“DAB”) were of a                          received or heard at the presentation that have not been
sufficient adversarial character to require exhaustion of issues.              submitted in compliance with these rules, unless
See Delta Found., Inc. v. United States, 303 F.3d 551, 561-62                  permitted by the Board.
(5th Cir. 2002). In reaching its conclusion, the Fifth Circuit
found four factors relevant: (1) the aggrieved party and the                      ....
agency’s representative appeared before the DAB; (2) each
party participated in developing an appeal file; (3) each party                  The Board members may direct questions to a
could make oral presentations, submit briefs, and cross-                       commenter to elicit further information, and may request
examine witnesses; and (4) each party was afforded leave to                    that additional material be provided for the record.
                                                                             (J.A., 176-77, 431-432, 664-65.) The Board has explained its
    42
                                                                             fact-finding role as follows:
       The “Notice to Appear” provided notice to the non-citizen of the
charges asserted and was served in acco rdance w ith applicable rules. See
Detroit Free Press, 303 F.3d at 698 (citatio ns om itted).
No. 01-2231    Coalition for Gov’t Procurement, et al.       49    50     Coalition for Gov’t Procurement, et al. No. 01-2231
               v. Federal Prison Industries, Inc., et al.                 v. Federal Prison Industries, Inc., et al.

    The process is that upon hearing your [private                           3.   Laches
  industry’s] information here, we’ll take everything that
  you have to say. If there is something that is not clear, if       The defendants nevertheless assert that the equitable
  there’s a comment which you make that doesn’t jive with          doctrine of laches precludes judicial review of the Coalition’s
  the record as we know it, or is new information that we          significant expansion claims.43
  are hearing for the first time, then what we will do
  following this hearing is to ask [UNICOR] to provide us            “Laches is the ‘negligent and unintentional failure to
  more information or go outside [UNICOR] to gather                protect one’s rights.’” Nartron Corp. v. STMicroelectronics,
  information ourselves.                                           305 F.3d 397, 408 (6th Cir. 2002) (quoting Elvis Presley
                                                                   Enter., Inc. v. Elvisly Yours, Inc., 936 F.2d 889, 894 (6th Cir.
(J.A., 577.)                                                       1991)). “Laches consists of two elements: (1) unreasonable
                                                                   delay in asserting one’s rights; and (2) a resulting prejudice to
   Furthermore, the Board has the exclusive authority to           the defending party.” Brown-Graves Co. v. Central States,
solicit information and question the “commenters.” In the          Southeast & Southwest Areas Pension Fund, 206 F.3d 680,
words of the Board’s chairman during the Office Case Goods         684 (6th Cir. 2000).
hearing, “[This] is not a process that is a give-and -take where
you ask questions of the board and we’re in a position to             With respect to the first element, there is a strong
respond. What we basically do here is listen to your               presumption that a plaintiff’s delay in bringing suit is
presentation and then consider that material, plus all the         reasonable as long as the analogous statute of limitations has
material that is on the record, and make a decision.” (J.A.,       not lapsed. See Herman Miller, Inc. v. Palazzetti Imp. & Ex.,
803.) The broad discretion vested in the Board is of particular    Inc., 270 F.3d 298, 321 (6th Cir. 2001) (citing Tandy Corp. v.
import in that UNICOR does not present any proposal to the         Malone & Hyde, Inc., 769 F.2d 362, 365-66 (6th Cir. 1985)).
Board during the hearings. The significant expansion               “Only rarely should laches bar a case before the analogous
hearings are limited to presentations made by “commenters,”        statute has run.” Tandy Corp., 769 F.2d at 366.
not including the agency, and there lacks any cross-
examination, counter-arguments, or any type of discussion            It is undisputed that the six-year statute of limitations for
that reasonably can be defined as “adversarial.” Therefore,        bringing civil actions against the United States governs this
the significant expansion hearings bear the hallmarks of           action. See 28 U.S.C. § 2401(a) (“Every civil action
inquisitorial proceedings in that the Board dominates the fact-    commenced against the United States shall be barred unless
finding process and the agency is not present during the           the complaint is filed within six years after the right of action
proceedings.      Consequently, the Board’s significant
expansion hearings are not adversarial and do not warrant a
judicially-imposed issue exhaustion requirement.                        43
                                                                           The defendant raised the laches defense in the ir Answer and fully
                                                                   briefed the issue on summary judgment. See (J.A., 160, 940-47). The
  Accordingly, the district court erred in determining that the    district court did no t address the issu e given its finding with respect to
Coalition waived judicial review of the unauthorized               issue exhaustion. See 154 F. Supp. 2d at 1151. W e may consider,
significant expansion and the retroactive authorization claims.    however, this issue as p art of our de novo review. See Abercrombie &
                                                                   Fitch Stores, Inc. v. Am. Eagle Outfitters, Inc., 280 F.3d 61 9, 629 (6th Cir.
                                                                   200 2).
No. 01-2231       Coalition for Gov’t Procurement, et al.             51     52   Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                      v. Federal Prison Industries, Inc., et al.

first accrues.”). It is further undisputed that the statute of               Furniture production. The defendants’ laches defense
limitations commenced upon the Board’s issuance of the 1996                  therefore fails as a matter of law.
significant expansion decisions.44 Accordingly, the earliest
date upon which the limitations period expired was February                       B. The Coalition’s Unauthorized Significant
6, 2002 -- six years following the issuance of the Board’s                           Expansion Claims
system furniture significant expansion decision.
                                                                                Having traversed the jurisdictional and procedural
  The Coalition filed its complaint well within the limitations              hinterlands, we arrive at the substantive allegations presented
period; therefore, a strong presumption arises that the claims               in the unauthorized significant expansion claims. The
were filed within a reasonable time. In an attempt to                        Coalition alleges that “From 1991-1995, [UNICOR]
overcome this presumption, the defendants direct the court to                repeatedly violated its statute by significantly expanding
the close ties between CGP and QMFA during the litigation                    Office Furniture production without prior Board review and
challenging the D & Q furniture significant expansion. The                   approval.” See (Br. of Pls.-Appellants at 12). It further
defendants emphasize that CGP partially incurred the expense                 alleges that UNICOR “[R]epeatedly violated the Guidelines
of the QFMA litigation. See (Br. of the Defs.- Appellees at                  by failing to undertake the required data collection internal
41-42); (J.A., 1004). Apparently, the defendants suggest that                analysis.” See (Br. of Pls.-Appellants at 12).
CGP had a concomitant obligation to file an action at the time
of the QFMA litigation          challenging the significant                     As a threshold matter, we note that UNICOR cannot escape
expansions of Office Furniture.                                              liability by asserting that the Guidelines establish a higher
                                                                             standard than that imposed by Congress in section 4122. It is
   Even considering CGP’s role, if any, in the QFMA                          a fundamental tenet of administrative law that “an executive
litigation, the defendants fail to overcome the strong                       agency must be rigorously held to the standards by which it
presumption of reasonable delay. See, e.g., (J.A., 1004). The                professes its action to be judged.” Vitarelli v. Seaton, 359
defendants fail to acknowledge that several Coalition                        U.S. 535, 546 (1959) (Frankfurter, J., concurring in part and
members, including Knoll, did not manufacture D & Q                          dissenting in part). Thus, “it is incumbent upon agencies to
furniture and were unaware of the QFMA litigation. See                       follow their own procedures . . . even where the internal
(J.A., 1585 ¶¶ 9, 12,15). Of greater pertinence, the Coalition               procedures are possibly more rigorous than otherwise would
contends that it was the factual information produced through                be required.” Morton v. Ruiz, 415 U.S. 199, 235 (1974)
the QFMA litigation that alerted it that UNICOR’s                            (citations omitted); see also Vitarelli, 359 U.S. at 546-47
purportedly unlawful activities extended to Office Furniture.                (Frankfurter, J., concurring in part and dissenting in part)
Accordingly, the Coalition cannot be said to have                            (“[I]f [agency action] is based on a defined procedure, even
unreasonably delayed in filing suit as it was unaware of                     though generous beyond the requirements that bind such
UNICOR’s potentially unlawful activities in regard to Office                 agency, that procedure must be scrupulously observed . . . .
                                                                             He that takes the procedural sword shall perish with that
                                                                             sword.”).
    44
       The defendants argued before the district court that claims arising    The unauthorized significant expansion claims arise from
before November 24, 1993 were barred as a matter of law. See (J.A.,          UNICOR’s purported violations of the Guidelines.
945 ). The defendants have aban doned the argum ent on appeal.
No. 01-2231    Coalition for Gov’t Procurement, et al.      53    54   Coalition for Gov’t Procurement, et al. No. 01-2231
               v. Federal Prison Industries, Inc., et al.              v. Federal Prison Industries, Inc., et al.

Specifically, the Coalition avers that UNICOR violated the        asserting error to demonstrate prejudice from the error.” Air
Guidelines on eighty-two occasions throughout 1991-1995.          Canada v. Dep’t of Trans., 148 F.3d 1142, 1156 (D.C. Cir.
See (J.A., 1422). However, the record reveals that the vast       1998).
majority of these violations are the cumulative and annual
effects of ten core violations. We consider the core violations     The Coalition is unable to demonstrate prejudice arising
seriatim.                                                         from the opening of the systems furniture factory at FCI
                                                                  Schuykill. Simply, had UNICOR conducted the market share
       1.   The purported core violations occurring in            analysis in 1991 (when the Board authorized the opening of
            UNICOR’s systems furniture production                 the Schuykill factory), UNICOR would have discovered an
            during 1991-1995                                      increase within the allowable market share from 10.8% to
                                                                  11.6%. See (J.A., 926, 1099 ¶¶ 18, 20). UNICOR therefore
  The Coalition contends that two core violations occurred        was not required to initiate the CARP and no discernible
during UNICOR’s production of systems furniture from              prejudice was sustained by the Coalition as a result of
1991-1995. The first violation occurred in 1991 when the          UNICOR’s violation of the Guidelines.
Board authorized the start-up of a new systems furniture
factory to be located at FCI Schuykill without performing the       We need not draw on the prejudicial error rule in
requisite market share analysis. See (J.A., 912-13).              addressing the second purported core violation arising from
                                                                  UNICOR’s production of systems furniture. Similar to the
  UNICOR concedes that it was required to perform the             claim challenging the opening of the Schuykill factory, the
market share analysis. See (J.A., 1100 ¶ 25, 1266-67, 1492        Coalition alleges that the Board’s 1994 authorization of a new
¶¶ 77-78, 1643 ¶¶ 77-78). UNICOR asserts, however, that it        systems furniture factory at FCC Coleman violated the
was not required to initiate the CARP because a subsequent        Guidelines because UNICOR neither conducted the market
review of market share revealed an allowable increase from        share analysis nor initiated the CARP.
10.8% in 1991 to 11.60% in 1992. See (J.A., 926, 1100 ¶¶
18, 20).                                                            The district court rejected this claim, concluding:
   The plain text of the APA supports UNICOR’s position.            It is true that FPI’s increase in market share from 9.6%
The APA instructs reviewing courts to take “due account . . .       [in 1994] to 14.3% [in 1995] was over the [G]uidelines
of the rule of prejudicial error.” 5 U.S.C. § 706. “[T]his          limit, even taking into account the prior years’ market
court applies a prejudicial error rule to APA cases, such that      shares. The trigger prong, however, is not satisfied.
a mistake that has no bearing on the ultimate decision or           Plaintiffs rely upon the fact that FPI was planning on
causes no prejudice shall not be the basis for reversing an         increased capacity in a new factory at the Federal
agency’s determination.” Slater, 120 F.3d at 637 (citation          Corrections Facility in Coleman to satisfy the trigger
omitted). The rule eliminates the necessity of remand               requirement. That factory was not activated until
following judicial review when the error that the agency has        February of 1996. No offsetting reduction in capacity,
made was not prejudicial and did not impinge on fundamental         therefore, was necessary in FY 1994, and consequently
rights. See N.Y. Pub. Interest Research Group v. Whitman,           the trigger prong was not met. When the Coleman
321 F.3d 316, 333 (2d Cir. 2003). It “requires the party            factory was activated, FPI was under the increased
No. 01-2231      Coalition for Gov’t Procurement, et al.           55     56     Coalition for Gov’t Procurement, et al. No. 01-2231
                 v. Federal Prison Industries, Inc., et al.                      v. Federal Prison Industries, Inc., et al.

  production levels approved by the Board on February 6,                  Board authorized an increase in employment levels from 888
  1996. Therefore, there was no unauthorized increase in                  employees in 1992 to 983 employees in 1993; (2) when the
  systems furniture.                                                      Board authorized the activation of new factories at FCI
                                                                          Seagoville and FCI Three Rivers in 1991; (3) when the Board
154 F. Supp. 2d at 1148.45                                                authorized the activation of new factories at FCI Bastrop and
                                                                          FCI Florence in 1993; and (4) when the D & Q furniture
  The record supports the district court’s well-reasoned                  factory at USP Leavenworth manufactured a special order of
conclusion. While UNICOR initially intended to commence                   office seating furniture in 1995.
production at FCC Coleman in June, 1995, it continually
delayed opening the factory until 1996.46 As indicated supra,                The district court correctly rejected these claims, again
the Systems Impact Study included the activation of FCC                   relying on its analysis that in each instance the Coalition had
Coleman among the proposals ultimately approved by the                    failed to demonstrate that each tier of the Guidelines had been
Board. See (J.A., 225). As the 1995 Systems Furniture                     triggered. See 154 F. Supp. 2d at 1148-49.
Expansion disclosed the planned activation of FCC Coleman,
UNICOR opened the Coleman factory in accordance with the                     For example, UNICOR offset the $44,545 in 1995 sales at
Guidelines and section 4122.                                              the Leavenworth factory with a corresponding decrease of
                                                                          $1.8 million in sales at four factories.47 Therefore, the first
         2.   The purported core violations occurring in                  tier of the Guidelines was not triggered in 1995. UNICOR
              UNICOR’s office seating furniture                           also offset the opening of office seating factories at FCI
              production during 1991-1995                                 Bastrop and FCI Florence in 1993 with decreases in
                                                                          production at five factories.48         Notwithstanding this
  A similar fate befalls the four core violations occurring               diminished capacity, UNICOR actually increased its sales in
within UNICOR’s office seating furniture production during                1993 by $48,788 from the previous year. However,
1991-1995. The Coalition alleges that UNICOR failed to                    UNICOR’s operating plan for 1993 estimated a $14 million
conduct the requisite market share analysis: (1) when the

                                                                               47
    45
                                                                                  UNICOR ceased production at the Texarkana factory and reduced
        Notwithstanding its holding in regard to issue exhaustion, the    production at its factories in Bastrop, Marianna and T hree R ivers. See
district court went on to consider the substantive allegations of the     (J.A., 512).
unauthorized significant expansion claims. See 154 F. Supp. 2d at 1147-
51.                                                                            48
                                                                                 The Bastrop and Florence factories produced approximately $3
    46
                                                                          million in aggregates sales in 1993 and approximately $1 2 million in
      UNICOR’s FY 1994 Operating Plan indicated an expected               aggregate sales in 199 4. See (J.A., 512). UNICOR decreased production
June,1995 “Activation Date” for the systems furniture factory at FCC      in 1993 at its Allenwood, La Tuna, Sheridan, Tallahassee and Three
Coleman. See (J.A., 902-03). The 1995 Operating Plan indicated a          Rivers office seating factories by an aggregated $ 4.9 million in sa les. See
Decemb er, 1995 Activation D ate. See (J.A., 905-11). The Systems         (J.A., 512). UNICOR continued to decrease production at those five
Impact Study discussed in detail the transfer of equipment from the       factories in 199 4, as we ll as decreased production at its Ashland,
Duluth systems furniture factory to the new factory at FCC Coleman, to    Marianna, and Texarkana factories, for a com bined decrease of $14
be opened in 1 996 . See (J.A., 225).                                     million in sales. See (J.A., 512).
No. 01-2231       Coalition for Gov’t Procurement, et al.            57     58   Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                     v. Federal Prison Industries, Inc., et al.

decrease from 1992 sales. Because the Guidelines required                         3.   The purported core violation occurring in
UNICOR to review only “proposed production increases,”                                 UNICOR’s office case goods furniture
UNICOR was not required to perform the market share                                    production during 1991-1995
analysis. See (J.A., 1646 ¶ 108). Similarly, despite
UNICOR’s planned increase in inmate employment from 888                       The seventh alleged core violation arose during UNICOR’s
employees in 1992 to 983 employees in 1993, see (J.A., 900,                 production of office case goods during 1991-1992. During
1497 ¶ 108, 1646 ¶ 108), UNICOR was not required to                         this period, the number of inmates employed in the
conduct the market share analysis because of the planned                    production of office case goods increased from 1,066 in 1991
decrease in its 1993 production.49 Therefore, the opening of                to 1,358 in 1992. See (J.A., 774, 1110 ¶¶ 117, 120).
the new factories and the increases in employment in 1993                   Meanwhile, UNICOR’s share of the federal market increased
did not trigger the first tier Guidelines. Thus, UNICOR was                 from 12.9% to 15.2%. See (J.A., 1504 ¶ 147, 1651 ¶ 147).
not required to conduct a market share analysis.
                                                                              Faced with this apparent unauthorized significant
  UNICOR’s activation of new factories at FCI Seagoville                    expansion, the district court concluded:
and FCI Three Rivers in 1991, furthermore, did not result in
prejudice to the Coalition. As with the authorization of the                     The office case goods increase in FY 1992 was not a
Schuykill systems furniture factory in 1991, the activation of                significant increase. Between FY 1991 and 1992 there
the Seagonville and Three Rivers office seating factories did                 was an inmate employment increase of over 10% (the
not cause UNICOR to exceed its allowable market share. As                     trigger), and an increase in market share of 2.3%. These
discussed in the Office Seating Impact Study, UNICOR                          increases would normally be considered a significant
estimated it having a 8.86% market share in 1991 – a planned                  increase. Plaintiffs fail to consider, however, that the
decrease from its 10.06% market share in 1990. See (J.A.,                     [G]uidelines also require that “the prior three years of
514). While UNICOR’s actual market share increased from                       production will be reviewed, to ensure that usual and/or
13.99% in 1990 to 14.6% in 1991, see (J.A., 1500 ¶¶ 124-25,                   abnormal fluctuations are taken into account and
1649 ¶¶ 124-25), this actual increase fell within the allowable               normalized.” Inmate employment was 1,243 in 1990,
market share. Accordingly, UNICOR was not required to                         1,066 in 1991, and 1,358 in 1992. By 1995, inmate
initiate the CARP.                                                            employment was 1,462. Taking the prior years into
                                                                              account, the Court finds that the spike in 1992 in inmate
                                                                              employment was a result of a low point of employment
                                                                              in 1991 rather than a significant increase by itself.
154 F. Supp. 2d at 1148-49 (citation omitted).
                                                                              The Coalition does not specifically challenge the district
                                                                            court’s conclusion on appeal, and we find the reasoning of the
    49
                                                                            district court well-supported by the facts and law.
        In any event, UNICOR actually decreased by 110 the number of        Accordingly, no violation occurred with respect to
employees employed in the production o f office seating during 19 93. See
(J.A., 1 106 ¶ 77).
No. 01-2231    Coalition for Gov’t Procurement, et al.      59    60    Coalition for Gov’t Procurement, et al. No. 01-2231
               v. Federal Prison Industries, Inc., et al.               v. Federal Prison Industries, Inc., et al.

UNICOR’s production of office case good furniture from            “[f]or the most part, [UNICOR] ha[d] made minimal
1991-1995.                                                        purchases of additional production equipment,” (J.A., 1338).
                                                                  While it is recognized that the White Paper examined
       4.   The core violation arising from UNICOR’s              UNICOR’s production of D & Q furniture, rather than Office
            failure “to undertake the required data               Furniture, the conclusions remain pertinent because a
            collection internal analysis.”                        significant number of factories that produced D & Q furniture
                                                                  also produced Office Furniture.50
  The Coalition attempts to salvage the unauthorized
significant expansion claims by relying on UNICOR’s failure          The record further demonstrates that prejudice did not
to collect data regarding plant size and equipment capacity       result from UNICOR’s failure to track plant size and
throughout 1991-1995. UNICOR concedes that it did not             equipment capacity. Specifically, the foregoing analysis
collect information regarding plant size and equipment            reveals that, in this case, the Coalition suffered prejudice only
capacity as required by the Guidelines. It nevertheless asserts   where plant size or equipment capacity exceeded a ten percent
that the deficient data collection did not result in any          increase and UNICOR’s market share increased beyond the
prejudice to the Coalition.                                       allowable threshold. The Coalition’s claims necessarily are
                                                                  limited to the four occasions during 1991-1995 where
  While we do not readily concur in an agency’s failure to        UNICOR’s market share increased beyond the allowable
adhere to its own promulgated procedures, the limited facts of    limits: (1) the 1995 increase in systems furniture production
this case compel the conclusion that there is a lack of any       from a 9.6% market share in 1994 to a 14.3% share in 1995;
prejudice suffered by the Coalition as a result of UNICOR’s       (2) the 1992 increase in office seating production from a
omissions. The Coalition has not presented any supporting         14.6% market share in 1991 to a 18.5% share in 1992; (3) the
evidence from which an inference can be drawn that either         1993 increase in office seating production from the 18.5%
plant size or equipment capacity increased beyond the ten         market share in 1992 to a 20.5% share in 1993; and (4) the
percent threshold in any given year. We acknowledge that the      1992 increase in office case goods production from a 12.9%
Guidelines place an affirmative duty on UNICOR to produce         market share in 1991 to a 15.2% share in 1992.
such evidence and that the agency should bear the
consequences of not generating the requisite data. However,         However, these four increases in Office Furniture
we cannot turn a blind eye to the uncontroverted and              production are attributable to identifiable factors other than
overwhelming evidence in the record demonstrating that the        increases in plant size or equipment capacity. For instance,
Coalition did not sustain any prejudice as a result of            the parties acknowledge that the 1992 increases in office
UNICOR’s violations.                                              seating and office case goods production derive from
  For example, the White Paper examined UNICOR’s failure
to monitor plant size and equipment capacity and presented
                                                                       50
several conclusions indicating that UNICOR did not expand                The White Paper indicated: “[I]n most instances, the factories
these inputs of production beyond the ten percent threshold.      produced other lines in addition to D & Q. As a result, the same
Indeed, the White Paper concluded that “[T]he amount of           production space used to manufacture D & Q furniture was also used to
production space [] decreased by over 40%,” (J.A., 1335), and     produce FP I’s Centurion office furniture line or FPI’s metal racking and
                                                                  shelving, depending on the factory.” (J.A., 1335.)
No. 01-2231      Coalition for Gov’t Procurement, et al.             61    62    Coalition for Gov’t Procurement, et al. No. 01-2231
                 v. Federal Prison Industries, Inc., et al.                      v. Federal Prison Industries, Inc., et al.

dramatic increases in inmate employment during that year.51                     C. The Claim Challenging               the    Retroactive
Similarly, the 1995 market share increase in systems furniture                     Authorization
was the result of a decrease in the size of the federal market
and a dramatic drop in production in 1994.52 Consequently,                   The claim challenging the Board’s retroactive authorization
UNICOR’s systems furniture production was at abnormally                    parallels the foregoing claims in that the Coalition asserts that
depressed levels in 1994, which in turn, exacerbated the data              UNICOR significantly expanded its production of office
for 1995. With respect to the 1993 increases in office seating,            seating furniture in 1991 and 1992 without initiating the
assuming arguendo that an inference could be gleaned from                  CARP (the ninth and tenth core violations). The Coalition
the record that equipment capacity or plant size increased by              goes on to assert that the Board lacked the authority to
ten percent or more during that year, as discussed supra, the              retroactively authorize these purported significant expansions.
planned decrease in production rendered the Guidelines
inapplicable.                                                                Addressing the first issue – whether UNICOR significantly
                                                                           expanded its production of office seating furniture in 1991
   The lack of any evidence proffered by the Coalition, the                and 1992 – the foregoing analysis reveals that the 1991
direct evidence found in the White Paper showing that neither              expansion was not significant under the Guidelines. While
equipment capacity nor plant size increased from 1991-1995,                inmate employment increased more than ten percent,
and the uncontroverted evidence demonstrating that increases               UNICOR estimated it having a 8.86% market share in 1991
in UNICOR’s production were caused by other factors, all                   – a planned decrease from its 10.06% market share in 1990.
compel the finding that the Coalition suffered no prejudice as             See (J.A., 514). UNICOR’s actual market share increased
a result of UNICOR’s failure to collect data regarding plant               from 13.99% in 1990 to 14.6% in 1991. See (J.A., 1500
and equipment capacity. Thus, the unauthorized significant                 ¶¶ 124-25, 1649 ¶¶ 124-25). This actual increase also fell
expansion claims fail as a matter of law.                                  within the allowable market share. Accordingly, UNICOR
                                                                           was not required to initiate the CARP prior to expanding its
                                                                           production of office seating in 1991.
                                                                             UNICOR did concede in the Office Seating Impact Study
                                                                           that it significantly expanded its production of office seating
                                                                           furniture in 1992. See (J.A., 476-77). The issue before the
                                                                           Court, therefore, is whether the Board possessed the authority
    51                                                                     to retroactively authorize the 1992 significant expansion.
       Inmate employment in office seating production increased from
739 employees in 1991 to a high of 888 during 1992. See (J.A., 1105-06
17 74,77). Additionally, the “spike” in the number of inmates producing      Our analysis is governed by the familiar standards
office case good s was the result of abnormally low levels of employment   established in Chevron U.S.A. Inc. v. Natural Resources
in 1991. See 154 F. Supp. 2d at 1148-49.                                   Defense Council, Inc., 467 U.S. 837 (1984). Under Chevron,
    52
                                                                           we first determine “whether Congress has directly spoken to
       The federal systems market declined from a record high of $4 52.2   the precise question at issue,” id. at 842; if it has not, we
million in 199 3 to $ 433 .6 in 19 94. See (J.A., 208). Meanwhile,         enquire “whether the agency’s answer is based on a
UN ICO R’s production decreased from $52,601,756 in sales in 1993 to       permissible construction of the statute,” id. at 843.
$41 ,424 ,737 in 199 4. See (J.A., 1100 1126 , 28).
No. 01-2231        Coalition for Gov’t Procurement, et al.                 63     64    Coalition for Gov’t Procurement, et al. No. 01-2231
                   v. Federal Prison Industries, Inc., et al.                           v. Federal Prison Industries, Inc., et al.

   The plain text of the organic statute is unequivocally                         remanded the matter to the Board “with directions that the
prospective in nature. For instance, section 4122 requires the                    Board must illicit [sic] comments with respect to the increases
initiation of the CARP “[b]efore the board of directors makes                     in FY 1991 to 1995 . . . make specific findings as to whether
a final decision.” 18 U.S.C. § 4122(b)(4). Furthermore, the                       FPI obtained more than a reasonable share of the market . . .
section repeatedly refers to “plans” and “proposals” for                          and ascertain what percent of the share was unreasonable.”
significant expansions. 18 U.S.C. § 4122(b)(4)(B), (C). A                         See QFMA, at 25.
construction of the statute that allows for retroactive
authorization renders nugatory these multiple provisions                            It is well-settled that when an agency makes an error of law
delineating the prospective application of the CARP. Thus,                        in its administrative proceedings, a reviewing court should
it is with little hesitation that we determine that the Board                     remand the case to the agency so that the agency may take
lacks the authority to retroactively authorize prior significant                  further action consistent with the correct legal standards. See
expansions.53                                                                     South Prairie Constr. Co. v. Local No. 627, Int’l Union of
                                                                                  Operating Eng’rs, 425 U.S. 800, 806 (1976) (per curiam).
 As a remedy for the unlawful significant expansion, the                          However, an exception to this general rule exists where it is
Coalition urges this court to adopt the approach utilized in                      “crystal-clear [that the] Board error renders a remand an
QFMA.54 As discussed supra, the district court in that case                       unnecessary formality.” NLRB v. Food Store Employees
                                                                                  Union, 417 U.S. 1, 8 (1974).

    53                                                                              A critical distinction exists between QFMA and the case at
        W e pause to no te that the p rejud icial erro r rule of the APA is
inapp licable to UNICOR and the Board’s violation of section 412 2. As
                                                                                  bar that renders a remand “an unnecessary formality.” In
the United States Co urt of Appe als for the Seco nd C ircuit recen tly           QFMA, the district court emphasized that the Board had not
observed, “The rule of p rejud icial erro r inform s our re view of an agency’s   provided prior notice of its intent to retroactively authorize
adherence to its statute and regulations; it has never b een used to              the significant expansions in D & Q furniture production. See
introduce discretion into actions mad e mandatory by C ongress.”                  QFMA, at 17 (“[I]t appears . . . that the 1996 notice,
Whitman, 321 F.3d at 334.
                                                                                  comment, and approval by the Board solicited information
    54                                                                            and comments on future production levels, not the prior
        As discussed during our analysis of the mootness question supra,
the Coalition requested the equitable volume sales replacement remedy
                                                                                  production levels.”). This lack of notice led the district court
and declaratory relief in relation to the retroactive authorization claims.       to conclude:
W ith respect to declaratory relief, it is acknowledged that UNICO R and
the Board violated section 4122 by not initiating the CARP prior to the               [T]o the extent the [d]efendants rely on the White
1992 significant expansion in office seating. However, for the reasons              Paper and the March 1996 decision in support of their
discussed supra, the request for declaratory relief is moot. We further             earlier decisions, these documents are nothing more than
conclude that the retroactive authorization claim does not fall within the
well-defined “capable of repetition, yet evading review” exception to the
moo tness doctrine. See Suster v. M arshall, 149 F.3d 523, 527 (6th Cir.
1998). This exception applies where “(1) the challenged action [is] in its        necessarily is too short in d uration “to be fully litigated prior to
duration too short to be fully litigated prior to cessation or expiration, and    cessation.” Id. However, the underlying facts of this appeal do not
(2) there [is] a reasonable expectation that the same com plaining party          support the conclusion that the C oalition will likely be subjec t to this
[will] be subject to the same action again.” Spencer v. Kemna, 523 U.S.           same action again. Our analysis focuses, therefore, on the equitable
1, 17 (1998) (quotation omitted).             Retroactive decision-making         volum e sale replace ment remedy.
No. 01-2231    Coalition for Gov’t Procurement, et al.      65   66   Coalition for Gov’t Procurement, et al. No. 01-2231
               v. Federal Prison Industries, Inc., et al.             v. Federal Prison Industries, Inc., et al.

  post hoc rationalizations for their earlier decisions . . .         Plaintiffs had proper notice of the Board’s intent to
  The difficulty with relying on post hoc decisions is that        consider retroactive approval of the significant increases
  it ignores the fact that the agency may not have made the        in office seating production, as well as an opportunity to
  same decision had it received timely comments . . .              comment at that administrative hearing. Therefore the
  Furthermore, as noted above, it is not clear from the            Board was within its authority to consider and decided
  record whether [p]laintiff was notified in 1995-1996 that        the issue and in so doing did not violate the
  the Board, in 1996, would be considering the past                Administrative Procedures Act.
  violations, and would entertain comments regarding the
  past violations. In the absence of evidence supporting 154 F. Supp. 2d at 1150-51 (citations omitted).
  the decision at the time it was made, the court must
  conclude that the decision was issued without observance          While we disagree with the district court’s conclusion that
  of proper procedures, and therefore violated the APA.          the “Board was within its authority” to retroactively authorize
                                                                 the 1992 significant expansion for the reasons previously
QFMA, at 18 (citations and footnote omitted).                    discussed, the notice provided to the Coalition, as well as the
                                                                 manner in which the Board authorized the prior significant
  In contrast, it is uncontroverted in the instant case that     expansion, weigh strongly against remanding this matter to
UNICOR disclosed the 1992 (as well as the purported 1991)        the Board. Were we to remand the matter in accordance with
significant expansions and publically requested the Board for    QFMA, we would likely do so with instructions to “illicit [sic]
retroactive authorization. The private sector responded by       comments” with respect to the 1992 significant expansions,
providing comments to UNICOR and testimony to the Board          “to make specific findings as to whether [UNICOR] obtained
that expressly recognized UNICOR’s request for retroactive       more than a reasonable share of the market” during 1992, and
authorization. See (J.A., 544, 562, 588, 1107 ¶¶ 99-100).        to “ascertain what percent of the share was unreasonable.”
Relying on this notice, the court below reasoned:                See QFMA, at 25. However, the Board has complied with
                                                                 these potential instructions. The Office Seating Impact Study
     This [c]ourt adopts the reasoning of [QFMA] but             solicited comments, the private sector responded, and the
  comes to a different finding in the present case because       Board engaged in an analysis of the relevant factors
  the record indicates that Plaintiffs were given adequate       concluding, “[B]ased on market performance since 1991 the
  notice that the Board would consider approving the past        industry has not been adversely affected, and that UNICOR’s
  significant increases in office seating production. The        market share is reasonable. The Board therefore approves
  office seating impact study made available to the public       FPI’s request to ratify its sales levels achieved, subsequent to
  in advance of the Board’s 1996 decision clearly                and as a result of its expanded capacity during 1991 and
  identified the expansion problems experience in 1991           1992.” (J.A. 656.) Hence, it is “crystal-clear” that a remand
  and 1992 with office seating. For both 1991 and 1992,          to the Board would do little more than duplicate processes
  the report states that increases in production should have     already undertaken. Food Store Employees Union, 417 U.S.
  triggered “an analysis of market share”to determine the        at 8.
  necessity of initiating the guidelines process.
                                                                   Moreover, the facts of the instant appeal preclude our
    ....                                                         awarding of the equitable sales volume replacement remedy.
No. 01-2231        Coalition for Gov’t Procurement, et al.                67     68   Coalition for Gov’t Procurement, et al. No. 01-2231
                   v. Federal Prison Industries, Inc., et al.                         v. Federal Prison Industries, Inc., et al.

The Coalition has not provided any evidence to support its                         Furniture production complied with its Guidelines and
purported $450 million in lost sales. It follows that the                          was appropriate. Second, the determinations that FPI’s
Coalition has not presented any evidence addressing only                           seating and case goods production did not take an
those sales lost as a result of the 1992 significant expansion                     unreasonable share of the Federal markets for these
in office seating. Furthermore, a remand to the district court                     products were based on a flawed and inaccurate market
for a damages hearing would likely confound, rather than                           share methodology. Third, the decisions followed
clarify the matter, in light of the Coalition’s failure to present                 improper ex parte communications to which the private
any evidence of “injury” during the office seating furniture                       sector had no opportunity to address or rebut.
expansion hearings. The Coalition did not present any
evidence of lost sales during the 1996 expansion hearings.55                      See (Br. of Pls.-Appellants at 53-54).
 The Coalition likewise has not presented any verifiable
evidence of lost sales during these proceedings. Therefore, it                     The APA establishes a scheme of “reasoned
would be an impermissible exercise in speculation for this                       decisionmaking.” Motor Vehicle Mfrs. Ass’n of United
court to order the requested relief.                                             States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 52
                                                                                 (1983). “Not only must an agency’s decreed result be within
  Accordingly, we determine that the Board lacked the                            the scope of its lawful authority, but the process by which it
authority to retroactively authorize UNICOR’s 1992                               reaches that result must be logical and rational.” Allentown
significant expansions of office seating furniture production.                   Mack Sales and Service, Inc. v. National Labor Relations Bd.,
We further determine that a remand to the board is                               522 U.S. 359, 374 (1998).
unnecessary. Moreover, the Coalition has not advanced
sufficient evidence demonstrating an entitlement to its                             An agency’s decision will be set aside “only if it is
equitable volume sales replacement remedy.                                       arbitrary, capricious, an abuse of discretion, or otherwise not
                                                                                 in accordance with the law.” Slater, 120 F.3d at 632
     D. The Claim Challenging the Board’s 1996                                   (citations omitted). This arbitrary or capricious standard is
        Expansion Decisions                                                      the least demanding review of an administrative action. See
                                                                                 Davis v. Kentucky Fin. Cos. Ret. Plan, 887 F.2d 689, 693 (6th
  The Coalitions relies on three factors allegedly                               Cir. 1989). It requires the party challenging the agency’s
demonstrating the “arbitrary and capricious” nature of the                       action to “show that the action had no rational basis or that it
Board’s 1996 expansion decisions:                                                involved a clear and prejudicial violation of applicable
                                                                                 statutes or regulations.” McDonald Welding v. Webb, 829
    First, the Board failed to consider the fundamental                          F.2d 593, 595 (6th Cir. 1987). If there is any evidence to
  question of whether FPI’s previously expanded Office                           support the agency’s decision, the agency’s determination is
                                                                                 not arbitrary or capricious. See Oakland County Bd. of
                                                                                 Com’'rs v. U.S. Dep’t of Labor, 853 F.2d 439, 442 (6th Cir.
    55
       W e clarify that the Coalition did not waive its request for relief by    1998).
failing to presen t such evidence to the Bo ard. Th e omission o f such
evide nce in 1 996 , howe ver, is relevant to the issue as to whether there is     However, deferential judicial review under the APA does
sufficient evidence for us to award the equitable volumes sales                  not relieve the agency of its obligation to develop an
replacement rem edy.
No. 01-2231    Coalition for Gov’t Procurement, et al.        69   70   Coalition for Gov’t Procurement, et al. No. 01-2231
               v. Federal Prison Industries, Inc., et al.               v. Federal Prison Industries, Inc., et al.

evidentiary basis for its findings. To the contrary, the APA       two sources of data relating to the size of the federal market:
reinforces this obligation.       See, e.g., Motor Vehicle         (1) the General Services Administration Federal Supply
Manufacturers Ass’n, 463 U.S. at 43 (“[T]he agency must            Schedules (“FSS”); and (2) the Federal Procurement Data
examine the relevant data and articulate a satisfactory            Center (“FPDC”). The FSS provided data for all federal
explanation for its action including a rational connection         government purchases except those relating to the Department
between the facts found and the choice made.”) (quotation          of Defense, the United States Postal Service, the legislative
omitted); Securities & Exchange Comm’n v. Chenery Corp.,           and judiciary branches, credit card purchases and special
318 U.S. 80, 94 (1943) (“The orderly function of the process       orders. The FPDC maintained similar data, except that it did
of review requires that the grounds upon which the                 not account for purchases less than $25,000.
administrative agency acted are clearly disclosed and
adequately sustained.”).                                             UNICOR utilized the FSS in the Final Systems Impact
                                                                   Study’s calculation of the federal market, noting “It is
  The Coalition’s three challenges to the 1996 expansion           difficult to determine the exact amount of Federal systems
decisions fall short of demonstrating arbitrary and capricious     furniture buys from private vendors not captured by the
decision-making on the part of the Board. As a threshold           [FSS].” (J.A., 294.) The Coalition does not challenge
matter, the Coalition’s claim that the Board failed to consider    UNICOR’s use of the FSS. Rather, the Coalition objects to
UNICOR’s past production levels is factually inaccurate. As        UNICOR’s use of the FPDC data in the impact studies
the district court correctly determined:                           relating to office seating and office case good furniture.
                                                                   Specifically, the Coalition alleges that UNICOR made several
    Plaintiffs also argue that the Board’s decision on future      adjustments to account for the sales not captured by the FPDC
  increases failed to consider whether the then current            data that, in turn, exaggerated the size of the federal market.
  production levels during 1996 were even legal. The
  record does not support Plaintiffs’ contention. The                 The Coalition fails to acknowledge that UNICOR ceased its
  Board itself recognized that certain increases had               use of the FSS data because representatives from GSA would
  occurred without prior Board approval, and carefully             not verify the accuracy of the data. See (J.A., 1296, 1512
  considered those increases and the context in which they         ¶ 189, 1654 ¶ 190, 1684 ¶ 189). The Coalition further fails to
  occurred before deciding that those increases did not            acknowledge that the Board recognized the potential for
  violate FPI’s governing statutes . . . Here, it is impossible    difficulties in calculating the federal market and convened a
  to conclude from the evidence that the Board failed              panel of independent experts to review its methodology as
  “entirely” to consider the problem of whether past               part of the office case goods decision. See (J.A., 892-93).
  increases exceeded the mandate of FPI because it                 The independent panel of experts – the Methodology Review
  specifically addressed those increases in its 1996 hearing.      Panel – approved of UNICOR’s methodology. See (J.A.,
                                                                   918) (“It is the consensus of the Methodology Review Panel
154 F. Supp. 2d 1150-51.                                            that the basic methodology used by FPI to estimate Federal
                                                                   procurements is reasonable.”).
  Additionally, the Coalition’s assault on the methodology
utilized by the Board in calculating the federal market ignores      Consequently, the Coalition’s challenge to the methodology
several key facts. During the period in question, there were       utilized by UNICOR to determine the size of the federal
No. 01-2231    Coalition for Gov’t Procurement, et al.      71   72     Coalition for Gov’t Procurement, et al. No. 01-2231
               v. Federal Prison Industries, Inc., et al.               v. Federal Prison Industries, Inc., et al.

market does not suggest that evidence is lacking to support      interpretation of ‘longstanding’ duration,” Barnhart v.
the Board’s decision. Rather, it is a disagreement between the   Walton, 535 U.S. 212, 220 (2002) (quoting North Haven Bd.
parties as to the ideal manner in which to calculate data that   of Ed. v. Bell, 456 U.S. 512, 522, n. 12 (1982)), recognizing
is not otherwise readily obtainable. In such circumstances,      that the agency’s practices rest on “‘a body of experience and
principles of deference to agency decision-making require        informed judgment to which courts and litigants may properly
that we uphold the approach utilized by the Board. See           resort for guidance,’” Bragdon v. Abbott, 524 U.S. 624, 642
Marsh v. Oregon Natural Resources Council, 490 U.S. 360,         (1998) (quoting Skidmore v. Swift & Co., 323 U.S. 134, 139-
378 (1989) (holding that “an agency must have discretion to      140 (1944)).
rely on the reasonable opinions of its own qualified experts
even if, as an original matter, a court might find contrary        It is reasonable to construe the organic statute as
views more persuasive.”).                                        encouraging communications between the Board and
                                                                 UNICOR.       Section 4121 provides: “‘Federal Prison
   In a final attempt to demonstrate the arbitrary and           Industries’, a government corporation of the District of
capricious nature of the 1996 expansion decisions, the           Columbia, shall be administered by a board of six directors,
Coalition alleges that the Board engaged in ex parte             appointed by the President to serve at the will of the President
communications with UNICOR’s staff prior to, and                 without compensation.” 18 U.S.C. § 4121. “Administer” is
immediately following, the expansion hearings. UNICOR            “[t]o manage or conduct . . . [or] to take charge of a business.”
readily admits that the Board requested information from         BLACK’S LAW DICTIONARY 44 (6th Ed. 1990). While the
UNICOR’s staff that extended beyond that provided in the         organic statute subsequently segregates the duties of
comprehensive impact studies, and that the Board directed the    UNICOR and the Board, section 4121 demonstrates the inter-
staff to memorialize the Board’s final significant expansion     relationship between the entities. Simply, the Board could
decisions in writing. UNICOR contends, however, that this        not “take charge” of UNICOR without engaging in
interaction between it and the Board was consistent with the     communications with its staff.
organic statute.
                                                                    Furthermore, the Coalition’s assertion that section 4122,
  UNICOR and the Board’s interpretation of section 4122 as       and more specifically the CARP, prescribe the exclusive
permitting ex parte communications is entitled to deference      process in which the Board and UNICOR may communicate
to the extent that its is reasonable. See Washington State       is wholly devoid of merit.56 The statute provides no such
Dept. of Social and Health Servs. v. Guardianship Estate of
Keffeler, 537 U.S. 371, 385 (2003) (holding that cogent
“administrative interpretations . . . not [the] products of           56
                                                                        Before the district court, the Coalition relied on 5 U.S.C. 557(d)(1)
formal rulemaking . . .warrant respect”); Christensen v.         as the basis for its ex pa rte argum ent. Section 557(d)(1) is a broad
Harris County, 529 U.S. 576, 587 (2000) (“Interpretations        provision that pro hibits any ex pa rte comm unications relevant to the
such as those in . . . policy statements, agency manuals, and    merits of an agency proceeding between “any member of the body
enforcement guidelines, all of which lack the force of law --    comprising the agency” or any agency employee who “is or may
do not warrant Chevron-style deference.”); accord, United        reaso nably be expected to be involved in the decisional process” and any
                                                                 “interested person outside the agency.” 5 U .S.C. § 557 (d)(1 )(A)-(B ). The
States v. Mead Corp., 533 U.S. 218, 234 (2001). We               purpo se of the ex pa rte communications prohibition is to ensure that
“normally accord particular deference to an agency               “agency decisions required to be made on a public record are not
No. 01-2231       Coalition for Gov’t Procurement, et al.              73     74    Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                        v. Federal Prison Industries, Inc., et al.

limiting language. Rather, the text of the organic statute                      V. THE JUST COMPENSATION CLAUSE CLAIM
compels the conclusion that Congress envisioned close
interaction between the Board and UNICOR’s staff.                               The Coalition “constitutionalizes” its unauthorized
Moreover, Congress established the Board as one serving                       significant expansion claims by asserting that UNICOR’s
“without compensation” and without staff. It therefore is                     increased production during 1991-1995 constituted a “taking”
reasonable to construe the statute as authorizing                             pursuant to the Just Compensation Clause of the Fifth
communications, even ex parte communications, between the                     Amendment to the United States Constitution. The Just
Board and UNICOR’s staff.                                                     Compensation Clause does not prohibit the public taking of
                                                                              private property, but only taking “without just compensation.”
   We cannot find that the Board’s 1996 expansion decisions                   U.S. CONST . amend. V. The aim of the Clause is to prevent
were “arbitrary capricious or otherwise not in accordance with                the government “from forcing some people alone to bear
law.” Slater, 120 F.3d at 632 (citations omitted). Indeed, we                 public burdens which, in all fairness and justice, should be
find the administrative record lengthy, detailed, and                         borne by the public as a whole.” Armstrong v. United States,
demonstrative of careful evaluation on the part of Board.                     364 U.S. 40, 49 (1960). A party challenging governmental
Contrary to the assertions advanced by the Coalition, the                     action as an unconstitutional taking bears a substantial
Board did not passively authorize UNICOR’s significant                        burden. See Eastern Enter.v. Apfel, 524 U.S. 498, 523
expansion requests. The Board demonstrated a willingness to                   (1998)(citation omitted).
authorize lower expansions than that requested when the
evidence adduced required such reductions. Furthermore,                            A. Jurisdiction
when the Coalition challenged UNICOR’s data (i.e. in the
office case goods context), the Board convened a panel to                       As a threshold matter, UNICOR raises sovereign immunity
evaluate the data and agreed to alter its decision if further                 as a bar to the Coalition’s takings claim. Long-standing
information came to light. Thus, the Coalition’s claim                        authority suggests that a suit against UNICOR is essentially
challenging the 1996 significant expansions decision fails as                 a suit against the United States. See Galvan v. Fed. Prison
a matter of law. Accordingly, the Court therefore cannot hold                 Indus.,199 F.3d 461, 463-64 (D.C. Cir. 1999); Sprouse v. Fed.
that the Board’s decisions were arbitrary and capricious.                     Prison Indus., 480 F.2d 1, 4-5 (5th Cir. 1973). On the basis
                                                                              of this authority, UNICOR asserts that it generally is immune
                                                                              from suit unless it otherwise consents to be sued. See United
                                                                              States v. Sherwood, 312 U.S. 584, 586 (1941).
                                                                                 The Coalition alleges that the APA expressly waives
                                                                              UNICOR’s purported sovereign immunity. The APA’s
                                                                              waiver of sovereign immunity applies to “an action in a court
influenced by private, off-the-record co mmunications from those              of the United States seeking relief other than money
perso nally interested in the outcom e.” Raz Inland Navigation Co. v.         damages.” 5 U.S.C. § 702. In addition, the APA provides
Interstate Com merce Co mm ’n, 625 F.2d 258, 260 (9th Cir. 1980)              that judicial review of agency action is available only “if there
(quotation omitted). H owever, it applies to only co mmunicatio n with        is no other adequate remedy in a court.” 5 U.S.C. § 704.
persons “outside of the agency”; therefore , it is patently inapplicable to
the case at bar.
No. 01-2231       Coalition for Gov’t Procurement, et al.              75     76     Coalition for Gov’t Procurement, et al. No. 01-2231
                  v. Federal Prison Industries, Inc., et al.                         v. Federal Prison Industries, Inc., et al.

   UNICOR contends that the APA’s waiver is inapplicable to                   UNICOR in the Court of Federal Claims on jurisdictional
the case at bar because the Coalition’s claim for $450 million                grounds. Id. at 1335. Applying the non-appropriated funds
in lost sales is monetary in nature. UNICOR further contends                  doctrine (“NAFI”),58 the court examined UNICOR’s organic
that jurisdiction over this case properly rests in the Court of               statute and determined:
Federal Claims.
                                                                                [UNICOR] does not operate with appropriated funds. It
  The Tucker Act, 28 U.S.C. § 1491(a)(1), vests the Court of                    is a self-sufficient corporation whose funds are derived
Federal Claims with exclusive jurisdiction to render judgment                   primarily from its product sales, and it receives no
upon any claim against the United States for money damages                      congressional appropriations . . . . [UNICOR] repaid its
exceeding $10,000 that “is founded either upon the                              initial funding soon after its inception in 1934 and has
Constitution, or any Act of Congress or any regulation of an                    never received any appropriations from Congress since
executive department, or upon any express or implied contract                   that time.
with the United States, or for liquidated or unliquidated
damages in cases not sounding in tort.” Id. It is well-                         ....
established that “[r]egardless of the nature of relief sought,
the availability of the Tucker Act remedy renders premature                     In light of [UNICOR’s] enabling legislation and
any takings claim in federal district court.”57 Eastern Enter.,                 legislative history, we conclude that Congress has clearly
524 U.S. at 521 (quotation omitted). Thus, a claim for just                     expressed its intention that [UNICOR’s] funds are to be
compensation asserted against the United States must be                         segregated from the general federal revenues, thereby
brought to the Federal Court of Claims in the first instance,                   providing a “firm indication” that it intended to absolve
unless Congress has otherwise withdrawn the Tucker Act                          appropriated funds from liability for [UNICOR’s]
grant of jurisdiction. See Eastern Enter., 524 U.S. at 520; see                 actions. Accordingly, we agree with the Court of Federal
also United States v. Causby, 328 U.S. 256, 267 (1946) (“[I]f                   Claims’ conclusion that [UNICOR] is a NAFI for which
there is a taking, the claim ‘is founded upon the Constitution’
within the meaning of the Tucker Act.”). Consequently, we
initially must consider whether the Tucker Act’s monetary                          58
                                                                                     The NAF I is triggered by the fact that judgments rendered by the
remedy is available to the Coalition.                                         Court of Federal Claims “shall be paid out of any general appropriation.”
                                                                              28 U.S.C. § 2517.
  In Core Concepts of Fl. v. United States, 327 F.3d 1331
(Fed. Cir. 2003), the Court of Appeals for the Federal Circuit                     [The Court of Federal Claims’]Tucker Act jurisdiction may not
affirmed the dismissal of a Tucker Act suit brought against                        be invoked with respect to transactions that “involve agencies
                                                                                   where the statutory authority for the ac tivities [in suit]
                                                                                   specifically limited liability or expenditures to non appropriated
                                                                                   funds.” In other words, the existence of the court’s jurisdiction
    57
                                                                                   under the T ucker Act m ust be confined to cases in which
        An exception to the “presumption of Tucker Act availability”               appropriated funds can be obligated.
exists where the challenged regulation requires a “direct transfer of funds
mandated by the Government.” Eastern Enter., 524 U.S. at 521. In such          Furash & Co. v. United States, 46 Fed. Cl. 518, 520 (2000), aff’d, 252
an instance, the aggrieved party may seek im med iate equitable relief in     F.3d 1336 (Fed. Cir. 2001) (quoting L’Enfant Plaza Prop., Inc. v. United
the district court. Id.                                                       States, 668 F.2d 121 1, 12 12 (Cl. Ct. 1 982 ).
No. 01-2231     Coalition for Gov’t Procurement, et al.        77    78   Coalition for Gov’t Procurement, et al. No. 01-2231
                v. Federal Prison Industries, Inc., et al.                v. Federal Prison Industries, Inc., et al.

  the United States is not financially answerable in that            “prime objective” is simply to obtain money from the federal
  court.                                                             government, the case belongs in federal claims court. Id.
Id. at 1335, 1337. The NAFI exception therefore precludes              However, as we repeatedly have stated supra, the Coalition
the Coalition from asserting Tucker Act claims against               seeks equitable, rather than monetary, relief in the form of a
UNICOR in the Court of Federal Claims. Moreover, there is            roll-back, capping, or future adjustment of UNICOR’s
a substantial question as to whether a suit against UNICOR is        production. Notwithstanding the patently equitable nature of
essentially a suit against the United States for sovereign           the requested relief, UNICOR attempts to characterize this
immunity purposes, as funds from the federal treasury are not        relief as seeking money from the U.S. Treasury. Specifically,
implicated in the event a judgment is rendered against               UNICOR argues that in the event this court were to order the
UNICOR. See Aaron v. United States, 51 Fed. Cl. 690, 694             equitable volume sales replacement remedy, federal agencies
n.2 (Fed. Cl. 2002) (“Both courts held that the suits                and departments would be compelled to purchase Office
essentially were against the United States and that the United       Furniture from the private sector. Such purchases, UNICOR
States had not, insofar as relevant there, waived sovereign          argues, necessarily draw on the federal treasury.
immunity. The issue in those decisions was not the one
resolved here [the NAFI] . . . we view the relevant language            This court has rejected a similar argument, reasoning, “‘The
as dicta, and, in any event believe it to be inaccurate.”) (citing   fact that a judicial remedy may require one party to pay
Sprouse, 480 F.2d 1 and Galvan, 199 F.3d at 463); see also           money damages to another is not sufficient reason to
Zhen Hua-Gao v. Jenifer, 185 F.3d 548, 554 (6th Cir. 1999)           characterize the relief as ‘money damages’.’” Veda, 111 F.3d
(“The general rule is that a suit is against the sovereign if the    at 40 (quoting Bowen v. Mass., 487 U.S. 879, 893 (1988)).
judgment sought would expend itself on the public treasury           We likewise decline to construe the requested relief as
or domain, or interfere with the public administration, or if        seeking monetary damages; therefore, the district court
the effect of the judgment would be to restrain the                  properly asserted its jurisdiction over the Coalition’s takings
Government from acting, or to compel it to act.”).                   claim.

  We decline to resolve the conflicting authority as to                   B. Regulatory Takings
whether UNICOR is entitled to sovereign immunity. It is
sufficient for our purposes here that the Coalition could not          The United States Court of Appeals for the Federal Circuit,
advance its claim in the Court of Federal Claims.                    which has extensive expertise in federal-takings law in light
                                                                     of its specialized jurisdiction, has developed a two-part test
  Furthermore, we do not concur in UNICOR’s                          “to evaluate claims that a governmental action constitutes a
characterization of the relief sought by the Coalition. We           taking of private property without just compensation.”
acknowledge that a party cannot circumvent the Tucker Act            Maritrans Inc. v. United States, 342 F.3d 1344, 1352 (Fed.
“by suing solely for declaratory or injunctive relief in a case      Cir. 2003) (citing M & J Coal Co. v. United States, 47 F.3d
where such relief is tantamount to a judgment for money              1148, 1153-54 (Fed Cir. 1995)). First, the court must
damages.” Veda v.United States Dep’t of the Air Force, 111           examine whether the claimant has established a cognizable
F.3d 37, 39 (6th Cir. 1997). Where the complaining party’s           “property interest” for the purposes of the Just Compensation
                                                                     Clause. Id.; accord, Raceway Park, Inc. v. Ohio, 356 F.3d
No. 01-2231     Coalition for Gov’t Procurement, et al.        79    80     Coalition for Gov’t Procurement, et al. No. 01-2231
                v. Federal Prison Industries, Inc., et al.                  v. Federal Prison Industries, Inc., et al.

677 (6th Cir. 2004) (“[T]here is no taking if there is no private      However, as discussed throughout this opinion, several
property in the first place.”). Secondly, where a cognizable         provisions of UNICOR’s organic statute ensure that
property interest is implicated, the court must consider             UNICOR’s operation do not “undu[ly] burden” a single
whether a taking occurred. Id.                                       private industry, 18 U.S.C. § 4122(b)(1), nor “capture more
                                                                     than a reasonable share of the [federal] market,” 18 U.S.C. §
  With respect to the first step, the Constitution neither           4122(b)(2). Furthermore, federal agencies and departments
creates nor defines the scope of property interests                  may request waiver approval from UNICOR to purchase
compensable under the Just Compensation Clause. See Bd. of           products other than UNICOR items in the event they deem
Regents of State Colleges. v. Roth, 408 U.S. 564, 577 (1972).        that their specific product and, or reasonable delivery
Rather, “existing rules and understandings” and “background          requirements cannot be met. See 48 C.F.R. § 8.605. Where
principles” derived from an independent source, such as state,       UNICOR grants the waiver request, the federal agency or
federal, or common law, define the dimensions of the                 department may purchase the product from a private sector
requisite property rights for purposes of establishing a             manufacturer through GSA’s FSS program, or undertake a
cognizable taking. Lucas v. S. C. Coastal Council, 505 U.S.          competitive process governed by federal procurement laws.59
1003, 1030 (1992).                                                   See generally 10 U.S.C. §§ 2302-2332; 41 U.S.C. §§ 5-707.
                                                                     Relying on these provisions, the Coalition asserts: “Federal
   The Coalition asserts that UNICOR’s “unauthorized                 law and regulations including the Competition in Contracting
expansions diminished Plaintiffs’ collective property right in       Act and the Federal Acquisition Regulations establish that
the competitive Federal Government Office Furniture                  private sector Office Furniture manufacturers have the right
market.” (Br. of Pls.-Appellants at 61.) Federal government          to compete for Federal Office Furniture procurements. [The
procurements of Office Furniture are governed by UNICOR’s            Coalition is] listed on the GSA schedule as approved to sell
organic statute and the Federal Acquisition Regulations              Office Furniture to the Federal government . . . .” (Br. of Pls.-
(“FAR”), 48 C.F.R. §§ 8.000 - 9905.506 (2003). Several               Appellants at 61.)
provisions of the FAR mandate that federal agencies and
departments purchase products from UNICOR. See, e.g., 48               It is well-settled that “[t]he possibility of obtaining work
C.F.R. § 8.002(a)(1)(iii) (2003) (“[A]gencies shall satisfy          from a listing in the [FSS] schedule has real business value,
requirements for supplies or services from . . . Federal Prison      even if there [is] no guarantee of obtaining a certain amount
Industries, Inc.”); 48 C.F.R. § 8.602(a) (“Agencies shall            of work.” See ACE-Fed.Reporters, Inc. v. Barram, 226 F.3d
purchase required supplies . . . made in Federal Penal and           1329, 1331 (Fed. Cir. 2000); see also Locke v. United States,
Correctional Institutions . . . .”). Additionally, section 4124(a)   283 F.2d 521, 523 (Ct. Cl. 1960) (“We cannot believe that in
requires “Federal departments and agencies and all other             this instance plaintiff bargained merely to have his name
Government institutions of the United States [to] purchase at
not to exceed current market prices, such products”
manufactured by UNICOR “as meet their requirements and                    59
may be available.” 18 U.S.C. § 4124(a). Indeed, UNICOR                      If UNICO R denies the request, the agency or department may
is a “mandatory source of supply”of Office Furniture for             appeal the decision through UN ICO R’s O mbu dsman. See 48 C.F.R.
                                                                     § 8.605; (J.A., 165). In the event this appeal is denied, the federal agency
federal agencies and departments. See (Br. of Pls. -                 or department may appeal to decision to the dispute resolution board
Appellants at 5, 9); (Br. of Defs. - Appellees at 4).                pursuant to sectio n 4124(b). See also 48 C.F.R. § 8.605 (c); (J.A., 165).
No. 01-2231    Coalition for Gov’t Procurement, et al.      81    82   Coalition for Gov’t Procurement, et al. No. 01-2231
               v. Federal Prison Industries, Inc., et al.              v. Federal Prison Industries, Inc., et al.

printed in the supply schedule. It appears more important that    impact of the regulation on the claimant; (2) the extent to
being in the schedule created a reasonable probability that       which the regulation has interfered with distinct investment-
business would be obtained.”). Therefore, in this context, the    backed expectations; and (3) the character of the
Coalition has a property right in competing for Office            governmental action. Raceway Park, Inc., 356 F.3d at 677
Furniture sales to federal agencies. This property right is       (citing Connolly v. Pension Benefit Gty. Corp., 475 U.S. 211,
limited, however, to those sales not captured by UNICOR’s         224 (1986)); see also Pa. Central Transp. Co. v. City of New
mandatory preference either through the limitations present in    York, 438 U.S. 104, 124 (1978).
UNICOR’s organic statute, or those sales expressly waived by
UNICOR.                                                             The United States Court of Appeals for the District of
                                                                  Columbia Circuit has explained the Penn Central factors in
  Having established the Coalition’s property right, the          detail:
second tier of review requires an examination as to whether
UNICOR’s activities constituted a compensable taking.               The meaning of the three factors identified in Penn
While compensable takings generally occur as a result of a          Central has been amplified by the Court, both in Penn
physical invasion or confiscation, where “a regulation goes         Central and in later cases. The regulation’s economic
too far it will be recognized as a taking.” Pa. Coal Co. v.         effect upon the claimant may be measured in several
Mahon, 260 U.S. 393, 415 (1922). “Real property, tangible           different ways. See Hodel v. Irving, 481 U.S. 704, 714
property, and intangible property, all may be the subject of        (1987) (looking to the market value of a property);
takings claims.” Maritrans Inc., 342 F.3d at 1352 (citing           Keystone Bituminous Coal Ass’n v. DeBenedictis, 480
Lucas, 505 U.S. at 1015; Andrus v. Allard, 444 U.S. 51, 65 U.S. 470, 495-96 (1987) (looking to whether the
(1984); and Ruckelshaus v. Monsanto Co., 467 U.S. 986,              regulation makes property owner’s coal operation
1003-04 (1984)).                                                    “commercially impracticable”); Andrus, 444 U.S. at 66
                                                                    (looking to the possibility of other economic use besides
   Regulatory takings law incorporates both a “categorical          sale, which was prohibited by the challenged regulation);
taking,” where a regulation deprives property of all value, and     Penn Central Transp. Co., 438 U.S. at 136 (focusing on
a “non-categorical” taking, where property is deprived of           the ability to earn a reasonable rate of return). A
some, but not all of its economic value, as a result of             reasonable investment-backed expectation “must be
government regulation. See Anderson v. Charter Township             more than a ‘unilateral expectation or an abstract need.’”
of Ypsilanti, 266 F.3d 487, 493 (6th Cir. 2001) (citing Lucas,      Ruckelshaus, 467 U.S. at 1005-06 (1984) (quoting
505 U.S. at 1019 n.8). “In the categorical-taking case, once        Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S.
it is proven that a regulation has deprived the land of all         155, 161(1980)). Claimants cannot establish a takings
economic value, compensation is automatically required              claim “simply by showing that they have been denied the
under the Fifth Amendment.” Anderson 266 F.3d at 493                ability to exploit a property interest that they heretofore
(citing Lucas, 505 U.S. at 1015).                                   had believed was available for development.” Penn
                                                                    Central Transp. Co., 438 U.S. at 130. And the character
  Where, as here, the party alleges the presence of a non-          of the governmental action depends both on whether the
categorical taking, the court employs an “ad hoc, factual           government has legitimized a physical occupation of the
inquiry,” into three significant factors: (1) the economic          property, see Loretto v. Teleprompter Manhattan CATV
No. 01-2231    Coalition for Gov’t Procurement, et al.        83   84    Coalition for Gov’t Procurement, et al. No. 01-2231
               v. Federal Prison Industries, Inc., et al.                v. Federal Prison Industries, Inc., et al.

  Corp., 458 U.S. 419, 434-35 (1982), and whether the                without giving the affected private sector vendors who
  regulation has a legitimate public purpose, see Keystone           sell to the Federal government certain due process rights.
  Bituminous Coal Ass’n, 480 U.S. at 485. Finally, under
  all three of these factors, the effect of the regulation must    (J.A., 1456.) Beyond recognizing that its reasonable
  be measured on the “parcel as a whole.” See Penn                 investment-backed expectation is dependent on UNICOR’s
  Central Transp. Co., 438 U.S. at 130-31.                         production of Office Furniture for any given year, the
                                                                   Coalition further recognizes the legitimacy of UNICOR’s
Dist. Intown Prop. Ltd. P’ship v. D.C., 198 F.3d 874, 879          conduct – the production of Office Furniture for the purposes
(D.C. Cir. 1999) (internal citations modified).                    of employing inmates. Indeed, the lone dispute concerning
                                                                   UNICOR’s conduct during 1991-1995 is that UNICOR did
  When viewed through the lens of Penn Central, a myriad           not initiate the CARP prior to expanding production. Such
of deficiencies in the Coalition’s takings claim come into         claims sound in due process, rather than takings law. The
focus. While the Coalition has asserted that UNICOR’s              Coalition concedes such by stating:
production during 1991-1995 resulted in $450 million in lost
sales, it has failed to provide any supporting evidence for this     Count 7 . . . alleges that by significantly increasing its
assertion. In addition, it is axiomatic that the Coalition’s         production of Office Furniture from FY 1990-1995,
investment-backed expectations are limited by UNICOR’s               without undertaking the statutorily required due process
exercise of its mandatory source of supply. As the Coalition         procedures outlined in their organic statute, FPI’s illegal
acknowledges:                                                        expansion of Office Furniture Production, FPI
                                                                     effectuated a regulatory taking in violation of the due
    While it may change from year to year, there is a fixed          process clause of the Fifth Amendment to the United
  amount of Office Furniture that the Federal Government             States Constitution.
  will purchase at any given time. Within this fixed market
  of Federal Office Furniture procurements is FPI’s                (J.A. 1457) (internal errors in original).
  mandatory source preferences. Regardless of how much
  Office Furniture Defendant FPI produces in Federal                 We therefore agree that summary judgment was properly
  penal and correction institutions, the Federal Government        awarded to UNICOR with respect to the takings claim
  must buy every stick of it before it can purchase Office         because the Coalition has failed to establish the three Penn
  Furniture made by the [Coalition].                               Central factors: (1) that it lost $450 million in sales as a result
                                                                   of UNICOR’s increased production; (2) that it had any strong
(J.A., 1456.) This acknowledgment crystalizes the deficiency       investment backed expectations in light of UNICOR’s
of the Coalition’s takings claim. The Coalition continued:         mandatory source of supply; and (3) that its interests
                                                                   prevailed over of the legitimate interests of the federal
    Concerned about the impact this regime could have on           government in employing federal inmates.
  private manufacturers . . . Congress amended FPI’s
  statute to ensure that it does not take more than a
  reasonable share of the Federal Office Furniture market
No. 01-2231     Coalition for Gov’t Procurement, et al.          85    86    Coalition for Gov’t Procurement, et al. No. 01-2231
                v. Federal Prison Industries, Inc., et al.                   v. Federal Prison Industries, Inc., et al.

  VI. THE PASS-THROUGH FURNITURE CLAIM                                 matter to the district court with instruction to vacate its award
                                                                       of summary judgment on Count XIII of the complaint
  Prior to oral argument, UNICOR filed notice with the court           addressing UNICOR’s “pass-through” furniture practice.
indicating that the Board “adopted a resolution directing that
[UNICOR] cease using the ‘pass-through’ practice.” (Letter               VII. UNICOR’S ENFORCEMENT                          OF     ITS
from Assistant U.S. Attorney Charles R. Gross, filed Nov. 18,                 MANDATORY SOURCE
2002.) The notice asserted that as UNICOR had “voluntarily
ceased use of the [pass-through] practice,” the issue was                 The Coalition’s final claim challenges UNICOR’s practice
moot. Id.                                                              of selling Office Furniture directly to private sector
                                                                       contractors employed on federal projects. In such instances,
  During oral argument, counsel for the Coalition agreed that          the private sector contractor has entered into a contract to
the “pass-through” furniture claim was moot, but requested             construct a federal facility that includes the installation of
that the court vacate the district court’s decision in that            Office Furniture. Occasionally, the private sector contractor
regard.                                                                will attempt to procure the Office Furniture from a private
                                                                       manufacturer instead of UNICOR. When UNICOR becomes
   Whether any opinion should be vacated on the basis of               aware of the scenario, it attempts to enforce its mandatory
mootness is an equitable question. See U.S. Bancorp Mortg.             source of supply in three ways: (1) provide the federal agency
Co. v. Bonner Mall P’ship, 513 U.S. 18, 26 (1994). When a              or department with a waiver; (2) provide the Office Furniture
civil case becomes moot pending appellate adjudication, “the           directly to the federal agency or department that, in turn, will
established practice . . . in the federal system . . . is to reverse   provide it to the private sector contractor; or (3) sell the
or vacate the judgment below and remand with a direction to            furniture directly to the private sector contractor for
dismiss.” United States v. Munsingwear, Inc., 340 U.S. 36,             installation within the federal facility. See (Br. of Defs.-
39 (1950). Vacatur “clears the path for future relitigation” by        Appellees at 8); (J.A., 1217-19, 1226b-h). The Coalition
eliminating a judgment the appellant could not oppose on               alleges that this third option violates UNICOR’s express
direct review. Id. at 40. “Vacatur is in order when mootness           prohibition against selling goods “to the public in competition
occurs through happenstance -- circumstances not attributable          with private enterprise.” 18 U.S.C. § 4122 (a).
to the parties -- or, relevant here, the ‘unilateral action of the
party who prevailed in the lower court.’” Arizonans for                     1.   Standing
Offical English v. Ariz., 520 U.S. 43, 71-72 (quoting U.S.
Bancorp Mortgage Co., 513 U.S. at 23). “[W]here mootness                 The district court held that the Coalition lacked standing to
results from settlement, however, the losing party has                 challenge UNICOR’s practice because the Coalition “must
voluntarily forfeited his right legal remedy by the ordinary           show an actual or threatened harm beyond an imagined
processes of appeal or certiorari, thereby surrendering his            possibility of harm in order to have standing. Here, none of
claim to the equitable remedy of vacatur.” U.S. Bancorp                the Plaintiffs [were] able to allege any kind of personal
Mortgage Co., 513 U.S. at 25.                                          injury-in-fact.” 154 F. Supp. 2d at 1155.

 Based upon this authority and the unilateral action of the              Failure to establish standing is a jurisdictional defect. See
Board, this claim has become moot. We therefore remand the             Lewis v. Casey, 518 U.S. 343, 349 n.1 (1996). To satisfy the
No. 01-2231      Coalition for Gov’t Procurement, et al.          87    88    Coalition for Gov’t Procurement, et al. No. 01-2231
                 v. Federal Prison Industries, Inc., et al.                   v. Federal Prison Industries, Inc., et al.

requirements of Article III standing, “a plaintiff must,                  During oral argument, counsel for the Coalition disagreed
generally speaking, demonstrate that he has suffered ‘injury            that the claim was moot, alleging that its claim extended
in fact,’ that the injury is ‘fairly traceable’ to the actions of the   beyond the DOD context.
defendants, and that the injury will likely be redressed by a
favorable decision.” Bennett v. Spear, 520 U.S. 154, 162                  We agree. It is undisputed that UNICOR enforces its
(1997) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555,            mandatory source of supply on all private sector contractors
560-61 (1992)).                                                         employed on federal projects where the agency has not
                                                                        received a waiver. A plain reading of the newly enacted
  In the instant matter, the district court failed to give              legislation, as well as the implementing regulations,
appropriate consideration to the affidavit provided by Knoll’s          demonstrate that they limit UNICOR’s practice solely in the
Vice President for Government Sales. See (J.A., 1583-88).               context of DOD projects. See Defense Federal Acquisition
The affidavit demonstrated four identifiable occasions where            Regulation Supplement; Competition Requirements for
Knoll had been requested by general contractors employed in             Purchases From a Required Source, 68 F.R. 64559 (Nov. 14,
the construction of federal facilities to submit proposals for          2003). Consequently, the claim is not moot.
the sale of Office Furniture; it had incurred substantial
expense in preparing its proposals; UNICOR subsequently                      3.   UNICOR’s Practice
enforced its mandatory source of supply on the general
contractor; and the general contractor ultimately purchased                As UNICOR enforces its mandatory source of supply on an
Office Furniture from UNICOR, rather than Knoll. See (J.A.,             ad hoc basis, see (J.A., 1225), we afford a pale of deference
1586-88). On at least one occasion, the general contractor              to its statutory and regulatory interpretations only to the
“advised Knoll, Inc. that [it] would have ordered systems               extent they are reasonable. See Washington State Dept. of
furniture from Knoll, Inc. had they not been forced to procure          Social and Health Servs., 537 U.S. at 385. Notwithstanding
systems furniture from [UNICOR].”               (J.A., 1587).           the district court’s conclusion as to standing, it went on to
Accordingly, Knoll had standing to challenge UNICOR’s                   find UNICOR’s practice reasonable, opining
practice.
                                                                             Congress has declared that federal agencies are
     2.   Mootness                                                        required to purchase FPI products unless they procure a
                                                                          waiver from FPI. As Defendants and common sense
  Prior to oral argument, UNICOR filed another notice with                demonstrate, the actual purchaser is not the contractor,
the court, this time indicating that Congress had enacted                 but the federal agency for whom the contractor is
legislation, Pub. L. No. 107-314, 116 Stat. 2458 (2002), that             constructing a facility. To allow a federal agency to
mooted the Coalition’s claim. See (Letter from Assistant U.S.             escape the legal requirement of obtaining a waiver or
Attorney Charles R. Gross, filed Feb. 3, 2003.) The notice                purchasing furniture from FPI simply by purchasing
indicated that the legislation provided that private sector               furniture produced in the private sector using a
contractors employed on projects for the Department of                    subcontractor as a middle-man would subvert the will of
Defense (“DOD”)were “permitted, but [] not required, to                   Congress. Moreover, when FPI engages in this practice,
purchase products or services from UNICOR.” Id.                           it is not selling goods to the private sector because title
                                                                          for those goods passes directly to the federal agency for
No. 01-2231    Coalition for Gov’t Procurement, et al.      89
               v. Federal Prison Industries, Inc., et al.

  whom the facility is being constructed. Therefore, FPI’s
  practice of requiring private contractors to purchase FPI
  furniture as part of a turn-key facility construction does
  not violate FPI's governing statutes.
154 F. Supp. 2d at 1155-56.
  The district court’s straightforward response to the issue at
bar is directly on target. The plain language of section
4122(a) prohibits sales “to the public,” but only “in
competition with private enterprise.” 18 U.S.C. § 4122 (a).
As discussed in the context of the Coalition’s takings claim,
the public competes for the federal Office Furniture market
only to the extent UNICOR is not a mandatory source of
supply. Therefore, a sale to a private sector contractor as a
means to enforce its statutory and regulatory mandatory
source of supply for federal agencies and departments
necessarily falls within UNICOR’s authority. As the district
court definitively stated, “common sense” demonstrates that
the actual purchaser in this context is the federal agency or
department.
  The Court recognizes the potential for abuse with
UNICOR’s practice, although no actual improprieties have
been demonstrated in case sub judice. The Coalition’s
remedy rests not with the courts, but with the legislature.
  VIII. CONCLUSION
  For the foregoing reasons, we AFFIRM the order of the
district court, except those provisions concerning Count VIII
of the complaint (the “Pass-Through Furniture” claim). With
respect to Count VIII, we REMAND the matter to the district
court with instructions to VACATE its decision consistent
with our Opinion.