Court Opinion

ID: 820159
Source: CourtListenerOpinion
Date Created: 2013-02-10 19:36:43.242555+00
Date Added: 2024-06-11T15:23:22.646068
License: Public Domain

Slip Op. 12- 51

                  UNITED STATES COURT OF INTERNATIONAL TRADE

_________________________________________
                                          :
ALMOND BROS. LUMBER CO.                   :
et al.                                    :
                                          :
                  Plaintiffs,             :                  Judge: Richard K. Eaton
                                          :
      v.                                  :                  Court No. 08-00036
                                          :
                                          :
UNITED STATES and RON KIRK,               :
UNITED STATES TRADE                       :
REPRESENTATIVE                            :
                  Defendants.             :
                                          :
_________________________________________ :

                                            OPINION

[Defendants’ motion to dismiss granted.]

                                                                            Dated: April 19, 2012

        Saltman & Stevens, P.C. (Alan I. Saltman, Ruth G. Tiger, and Marisol Rojo ) for
plaintiffs.

        Michael F. Hertz, Deputy Assistant Attorney General; Jeanne E. Davidson, Director,
Franklin E. White, Jr., Assistant Director, United States Department of Justice, Commercial
Litigation Branch, Civil Division (David S. Silverbrand ); Office of the General Counsel, United
States Trade Representative (J. Daniel Stirk ); United States Customs and Border Protection
(Andrew Jones), for defendants.

       Eaton, Judge: Before the court, following remand from the United States Court of

Appeals for the Federal Circuit, is the motion to dismiss of defendants the United States and the

United States Trade Representative (the “USTR”) (collectively, “defendants” or the

“Government”).
Court No. 08-00036                                                                          Page 2

       Plaintiffs’ claims arise out of the 2006 Softwood Lumber Agreement between the

governments of the United States and Canada, which was executed to settle ongoing disputes

over the cross-border softwood lumber trade. See Softwood Lumber Agreement Between the

Government of Canada and the Government of the United States of America, U.S.-Can., Sept.

12, 2006, available at http://www.ustr.gov/webfm_send/3254 (last visited April 2, 2012) (“SLA”

or the “Agreement”). Plaintiffs, members of the domestic softwood lumber industry, challenge a

term in the SLA that requires the Canadian Government to distribute $500 million only to those

U.S. lumber producers that were members of the Coalition for Fair Lumber Imports (the

“Coalition”). Plaintiffs are not members of the Coalition.

       In Almond Bros. Lumber Co. et al. v. United States, 33 CIT __, Slip Op. 09-48 (May 30,

2009) (“Almond Bros. I”), in response to the defendants’ motion, the court determined that it

lacked jurisdiction to hear plaintiffs’ claims under 28 U.S.C. § 1581(i) (2006), and dismissed this

action. On appeal, the Federal Circuit reversed and held that plaintiffs’ claims were within this

Court’s jurisdiction under section 1581(i), and remanded the case. Almond Bros. Lumber Co. v.

United States, 651 F.3d 1343 (Fed. Cir. 2011). The court now considers the remaining grounds

in defendants’ motion to dismiss. In doing so, it holds that: (1) Count II of the Second Amended

Complaint (the “Complaint”) raises a non-justiciable political question; (2) the Complaint as a

whole fails to state claims for which relief can be granted; and (3) defendants’ motion to dismiss

is granted.
Court No. 08-00036                                                                             Page 3

                                              BACKGROUND

         The United States and Canada have been engaged in a dispute over the export practices

of the Canadian softwood lumber industry for nearly three decades. The background of that

conflict is set forth in this court’s opinion in Almond Bros. I, as well as in the Federal Circuit’s

opinion in this case. See Almond Bros. I, 33 CIT at __, Slip. Op. 09-48 at 2-6; Almond Bros.,

651 F.3d at 1344-48. The 2006 Softwood Lumber Agreement, the third such agreement between

the United States and Canada since 1986,1 is eighty-eight pages long and contains a number of

provisions intended to settle the dispute and end litigation then pending in multiple forums,

including this Court, North American Free Trade Agreement tribunals, and the World Trade

Organization.

         The litigation settled by the SLA arose from the Department of Commerce’s

determinations, in May 2002, that Canadian softwood lumber was (1) unlawfully subsidized and

(2) being sold in the United States at less than fair value. See Certain Softwood Lumber

Products from Canada, 67 Fed. Reg. 36,070 (Dep’t of Commerce May 22, 2002) (notice of

amended final determination and notice of countervailing duty order); Certain Softwood Lumber

Products from Canada, 67 Fed. Reg. 36,068 (Dep’t of Commerce May 22, 2002) (notice of

amended final determination of sales at less than fair value and antidumping duty order).

         The SLA was negotiated on behalf of the United States by the Office of the USTR, 2

which is primarily responsible for developing international trade policy and negotiating

1
  In 1986, the countries entered into a Memorandum of Understanding (“MOU”) to settle a
countervailing duty investigation initiated in response to complaints by the Coalition. In 1996, a
softwood lumber agreement was executed, settling extensive litigation that followed the
termination of the MOU.
2
    The USTR at the time of the negotiation and entry into force of the SLA was Susan Schwab.
Court No. 08-00036                                                                           Page 4

international trade agreements.3 See 19 U.S.C. §§ 2171, 2411 (2006). The Agreement generally

resolved the softwood lumber conflict and its attendant lawsuits by requiring the United States to

refund nearly $5 billion in antidumping and countervailing duty deposits collected on Canadian

softwood lumber imports on or after May 22, 2002, and to refrain from imposing any further

import measures on Canadian softwood lumber during the period that the SLA remained in

force. SLA, arts. III-V. In addition, the Government and the private litigants, including the

Executive Committee of the Coalition, consented to dismissal of all pending lawsuits and

proceedings resulting from the softwood lumber trade dispute. SLA, annex 2A.

       In exchange, Canada’s primary commitment was to impose certain “Export Measures” on

its softwood lumber products to correct the trade practices that the United States found unfair.

These measures limit the volume of lumber exports from certain Canadian regions on a monthly

basis and/or impose a charge on those exports. See SLA, art. VII. Specifically, pursuant to

article VII of the Agreement, each softwood lumber producing Region4 in Canada has the option

of imposing a charge or a combination of a charge and quota on softwood lumber products

produced in the Region. SLA, art. VII, ¶ 1. Under “Option A,” Canadian producers are required

to pay Canada an “Export Charge,” which is calculated as a percentage of the export price of the

product. SLA art. VII, ¶ 3. The charge percentage increases as the export price decreases and,

thus, is designed to discourage the exportation of softwood lumber into the United States at low

prices. “Option B” is a hybrid of export quotas and charges. Exporters are subject to a monthly

3
  Pursuant to 19 U.S.C. § 2171, the USTR was established within the Executive Office of the
President and has “primary responsibility for developing, and for coordinating the
implementation of, United States international trade policy, . . . and shall be the chief
representative of the United States for . . .international trade negotiations.” 19 U.S.C. §
2171(c)(1)(A), (C).
4
 “Region” is defined as “one of the following: Alberta, the B.C. interior, the B.C. Coast,
Manitoba, Ontario, Saskatchewan, or Quebec.” SLA art. XXI, ¶45.
Court No. 08-00036                                                                               Page 5

quota limiting the number of units that can be exported to the United States to a percentage of

“Expected U.S. Consumption” during each month. SLA, annex 7D. The quota percentage

decreases as export price decreases, thereby limiting low-priced Canadian exports capable of

competing with U.S. products. In addition, these exports are also subject to an “Export Charge”

tied to the export price of the merchandise, albeit at lower rates than those charged under Option

A. SLA, art. VII, ¶ 4.

       Canada further agreed to distribute $1 billion from the returned cash deposits “in the

following amounts: $US 500 million to the members of the Coalition for Fair Lumber Imports,

$US 50 million to the binational industry council, and $US 450 million for meritorious

initiatives.” SLA, annex 2C, ¶ 5. The binational council was to be formed of “interested Persons

in Canada and the United States,” and its objectives include “strengthening the North American

lumber industry by increasing the market for its products” and “building stronger cross-border

partnerships and trust at all levels of the industry.” SLA, annex 13. The “meritorious initiatives”

include expenditures to promote undertakings in the United States related to, among other things,

“educational and charitable causes in timber-reliant communities,” “low income housing and

disaster relief,” and “educational and public interest projects addressing . . . forest management.”

See SLA art. XIII(A), ¶ 2.

       Plaintiffs do not object to the SLA terms providing for Export Measures or the payment

of funds to finance the meritorious initiatives or the binational council. Their claims arise,

instead, solely from the requirement that Canada pay $500 million to the Coalition members,

rather than to all members of the domestic softwood lumber industry (the “Distribution Term”).

See SLA, annex 2C. According to plaintiffs, “[d]efendants’ actions improperly singled out some

companies within the domestic softwood lumber industry for preferential treatment and provided
Court No. 08-00036                                                                            Page 6

little or no benefit to the majority of domestic softwood lumber companies that were adversely

affected by illegal dumping and subsidies of Canadian softwood lumber.” Complaint ¶ 83.

                                          DISCUSSION

       In the Complaint, plaintiffs assert three claims5 arising from the Distribution Term of the

SLA: (1) Count II alleges that defendants acted arbitrarily and contrary to law, in violation of

the Administrative Procedures Act (the “APA”), 5 U.S.C. § 706(2) (2006), by negotiating a

provision in the SLA that obligates Canada to make payment to members of the Coalition to the

exclusion of other domestic softwood lumber producers; (2) Count III alleges that defendants

violated the equal protection guarantee of the Fifth Amendment Due Process Clause by not

requiring Canada to make payments to all members of the domestic softwood lumber industry;

and (3) Count IV alleges that defendants impermissibly delegated to the Coalition their authority

to determine how Canada’s payments would be disbursed.

       Defendants move to dismiss these claims for lack of subject matter jurisdiction, pursuant

to USCIT R. 12(b)(1), on the grounds that they present non-justiciable political questions.

Alternatively, defendants move to dismiss the Complaint in its entirety, pursuant to USCIT R.

12(b)(5), contending that, with respect to each count, the Complaint fails to state a claim for

which relief can be granted.

5
  There were originally four Counts in the Complaint. On October 14, 2008, pursuant to a
stipulation, the Court dismissed Count I of the Complaint, which sought relief under the
Continued Dumping Subsidy Offset Act, 19 U.S.C. § 1671 et seq. (the “Byrd Amendment”).
The Byrd Amendment, which required the U.S. government to distribute the duties collected on
dumped or illegally-subsidized merchandise to members of the affected domestic industry, did
not apply to imports covered by NAFTA. See Canadian Lumber Trade Alliance v. United
States, 517 F.3d 1319 (Fed. Cir. 2008). This Byrd Amendment was repealed by the Deficit
Reduction Act of 2005, Pub. L. 109-171, § 7601(b), 120 Stat. 4, 154 (Feb. 8, 2006).
Court No. 08-00036                                                                             Page 7

   I. Whether Plaintiffs’ Claims Are Barred By the Political Question Doctrine

       A. Political Question Doctrine

       The political question doctrine is a product of the constitutional separation of powers, and

bars the courts from reviewing the substance of policy decisions that the Constitution commits to

the discretion of the legislative or executive branches of government. See Baker v. Carr, 369

U.S. 186, 211 (1962) (“[I]t is the relationship between the judiciary and the coordinate branches

of the Federal Government, . . . which gives rise to the ‘political question’ [doctrine].”); Totes-

Isotoner Corp. v. United States, 594 F.3d 1346, 1352 (Fed. Cir. 2010) (“The political question

doctrine excludes certain disputes from judicial determination where the subject matter of the

dispute is exclusively assigned to the political branches or where such branches are better-suited

than the judicial branch to resolve the matter.”).

       The doctrine is one of justiciability, which recognizes that “[t]he Judiciary is particularly

ill suited to make such decisions, as ‘courts are fundamentally underequipped to formulate

national policies or develop standards for matters not legal in nature.’” Japan Whaling Assoc. v.

Am. Cetacean Soc’y, 478 U.S. 221, 230 (1986) (citations omitted). The justiciability of

plaintiffs’ claims concerns the court’s subject matter jurisdiction. Schlesinger v. Reservists

Comm. to Stop the War, 418 U.S. 208, 215-16 (1974).

       In Baker v. Carr, the Supreme Court identified six criteria to be considered in

determining whether a case presents a non-justiciable political question.

       Prominent on the surface of any case held to involve a political question is found
       [1.] a textually demonstrable constitutional commitment of the issue to a
       coordinate political department; or [2.] a lack of judicially discoverable and
       manageable standards for resolving it; or [3.] the impossibility of deciding
       without an initial policy determination of a kind clearly for nonjudicial discretion;
       or [4.] the impossibility of a court’s undertaking independent resolution without
       expressing lack of the respect due coordinate branches of government; or [5.] an
       unusual need for unquestioning adherence to a political decision already made; or
Court No. 08-00036                                                                             Page 8

        [6.] the potentiality of embarrassment from multifarious pronouncements by
        various departments on one question.

369 U.S. at 217.

        Importantly, satisfaction of any one of these criterion is sufficient to preclude judicial

review. Id.; Samish Indian Nation v. United States, 419 F.3d 1355, 1372 (Fed. Cir. 2005)

(“Under the political question doctrine any one criterion is both necessary and sufficient.”).

When deciding whether a political question is presented, courts must make a “discriminating

inquiry into the precise facts and posture of the particular case,” Baker, 369 U.S. at 217, because

application of the doctrine must be determined by a “case-by-case inquiry.” Id. at 211; see also

Kwan v. United States, 272 F.3d 1360, 1364 (Fed. Cir. 2001) (“The [political question] doctrine

requires careful case-by-case analysis.”).

        “Not every matter touching on politics,” however, “is a political question.” Japan

Whaling, 478 U.S. at 229. In fulfilling its constitutional role, the Judiciary has the authority to

interpret legal texts, such as statutes and treaties, and to determine if the coordinate branches

have complied with constitutional and statutory procedures, or have otherwise acted within their

constitutional or statutory authority. Id. at 231 (“[U]nder the Constitution, one of the Judiciary’s

characteristic roles is to interpret statutes, and we cannot shirk this responsibility merely because

our decision may have significant political overtones.”); Imm. & Naturalization Serv. v. Chadha,

462 U.S. 919, 943 (1983) (“Resolution of litigation challenging the constitutional authority of

one of the three branches cannot be evaded by courts because the issues have political

implications in the sense urged by Congress. . . . ‘[C]ourts cannot reject as ‘no law suit’ a bona

fide controversy as to whether some action denominated ‘political’ exceeds constitutional

authority.’”).
Court No. 08-00036                                                                               Page 9

        In keeping with their responsibility to interpret statutes, challenges to the procedures

followed by the political branches in arriving at otherwise discretionary decisions “are within the

proper supervision of the federal courts.” Sneaker Circus, Inc. v. Carter, 566 F.2d 396, 402 (2d

Cir. 1977) (“It is important to recognize, however, that [Plaintiff] does not . . . challenge the

substance of the trade agreements. Were it to do so, we would be unable to consider the case on

its merits, for it would then be nonjusticiable . . . . [Plaintiff], rather, challenges the procedures

employed by the Executive in concluding these agreements . . . .”); Bancoult v. McNamara, 445

F.3d 427, 435 (D.C. Cir. 2007) (noting that “a challenge to an agency’s implementation of a

policy statement was justiciable, as the plaintiffs did ‘not seek to litigate the political and social

wisdom’ of the policy”) (citations omitted).

        B. Count II Presents a Political Question

        In Count II of the Complaint, plaintiffs’ claim that defendants’ actions in negotiating the

Distribution Term were “arbitrary, capricious, and an abuse of discretion or otherwise not in

accordance with law, in excess of statutory jurisdiction, authority or limitations or short of

statutory right” in violation of the APA. Complaint ¶ 84; see also 5 U.S.C § 706(2). In support

of this claim, plaintiffs maintain that defendants’ failure to “require the Government of Canada

to distribute any of the money in question on a pro-rata basis to all 240+ members of the

domestic softwood lumber industry that were adversely affected by illegal dumping and

subsidies” was contrary to their “substantial responsibility to protect domestic industries from the

adverse effects of unfair trade practices such as the dumping of goods on U.S. markets . . . and

the subsidization of industries by foreign governments.” Complaint ¶¶ 81, 79.

        Plaintiffs do not identify in their Complaint the statutory provisions containing the

“substantial responsibilities” they allege defendants contravened in negotiating the SLA. In their
Court No. 08-00036                                                                         Page 10

briefing, however, they contend that the USTR failed to comply with 19 U.S.C. § 2411(c)(4), 6

which provides, in relevant part, that “[a]ny trade agreement [addressing unfair trade practices]

shall provide compensatory trade benefits that benefit the economic sector which includes the

domestic industry that would benefit from the elimination of the act.” Plaintiffs contend that

section 2411(c)(4) requires that

       where, as here, the USTR is aware of any act, policy or practice of a foreign
       country that is unreasonable or discriminatory and burdens or restricts United
       States commerce . . . [the USTR] is authorized, if not mandated, to enter into a
       binding agreement (like the SLA) with the offending foreign government wherein
       that government agrees to (i) stop or phase out the practice or policy, (ii)
       eliminate the burden on United States commerce created by the practice and (iii)
       provide compensatory trade benefits to the entire economic sector (including the
       adversely affected industry) that would benefit from the elimination of the
       practice.

Pls.’ Opp. to Defs.’ Mot. to Dismiss, dated June 13, 2008 (“Pls.’ June 2008 Opp.”) 24-25.

       Specifically, plaintiffs maintain that the Distribution Term’s requirement that Canada

disburse funds “only to those domestic softwood lumber producers that were also members of

[the Coalition] rather than to all adversely affected domestic softwood lumber producers, let

alone to ‘the entire economic sector’ that would benefit from eliminating the dumping and

subsidization of Canadian softwood lumber, was not in accordance with 19 U.S.C. § 2411(c).”

Pls.’ June 2008 Opp. 25. In making their case, plaintiffs contend that the statutory phrase

“benefit the economic sector which includes the domestic industry that would benefit from the

elimination of the act, policy, or practice” requires that all domestic softwood lumber producers

receive “pro rata” compensation under the Distribution Term. Pls.’ June 2008 Opp. 24. That is,

plaintiffs assert that under section 2411(c) it was unlawful for the USTR to require “Canada to

distribute $500 million of the refunded money to only the approximately 100 domestic softwood

6
 In Almond Bros., 651 F.3d 1343, the Federal Circuit held that the USTR negotiated and
executed the SLA pursuant to 19 U.S.C. § 2411.
Court No. 08-00036                                                                            Page 11

lumber producers who were also members of a particular private organization rather than pro-

rata to all affected softwood lumber producers.” Pls.’ Dec. 2008 Opp. 6.

       Plaintiffs insist that Count II does not present a political question because they

       do not challenge the propriety of defendants requiring Canada to pay $500 million
       in compensation to adversely affected domestic softwood lumber producers.
       Rather, plaintiffs challenge the legality of the establishment by defendants of a
       requirement that an adversely affected domestic softwood lumber producer also
       be a member of a particular private organization in order to be eligible to receive
       any portion of those funds.

Pls.’ June 2008 Opp. 9. Plaintiffs, therefore, argue that the political question doctrine does not

bar the court from determining that the USTR unlawfully negotiated a term in the SLA that left

them out of the distribution of funds. Thus, for plaintiffs, their claims merely challenge the

“manner in which defendants chose to achieve a remedial purpose related to unfair international

trade practices, i.e., by requiring Canada to pay $500 million to only the adversely affected

domestic softwood lumber producers that were members of a particular private organization.”

Pls.’ Opp. to Defs.’ Mot. to Dismiss, dated December 19, 2008 (“Pls.’ Dec. 2008 Opp.”) 19.

       Defendants move to dismiss Count II, arguing that because the Constitution commits

matters of foreign trade to Congress and the President, and because the SLA was the result of

negotiations with Canada, plaintiffs’ challenge to the terms of that Agreement presents a non-

justiciable political question. The Government asserts that plaintiffs’ insistence that they are

only objecting to the procedure by which the SLA was entered into mischaracterizes their claim.

Rather, defendants insist that plaintiffs’ claim does not merely “involve issues of procedure,

application, or interpretation . . . , but raises broader issues that go to the substance of the SLA.”

Defs.’ Mem. in Supp. Mot. to Dismiss, dated October 26, 2008 (“Defs.’ Oct. 2008 Mem.”) 9.

According to defendants, although plaintiffs maintain that they only challenge the

implementation of the SLA, they are “essentially asking the Court to rule upon the legality of
Court No. 08-00036                                                                             Page 12

Canada’s agreement to disburse $500 million to certain recipients. Such a judgment would

effectively rule upon the legality of the Government’s foreign policy.” Defs.’ Rep. Mem. in

Supp. of Mot. to Dismiss, dated July 18, 2008 4-5.

       1. The USTR Was Not Prohibited from Negotiating the Distribution Term of the SLA

       In order to succeed in their efforts to place Count II outside of an analysis under the

political question doctrine, plaintiffs must demonstrate that the USTR was statutorily barred

from negotiating the Distribution Term. Sneaker Circus, 566 F.2d at 402. In attempting to

satisfy this burden, plaintiffs’ primary argument is that Count II challenges the procedures used

by the USTR in negotiating the SLA, not the substantive terms of the agreement itself. Thus,

Count II is premised on plaintiffs’ argument that 19 U.S.C. § 2411(c)(4) prohibited the USTR

from negotiating the Distribution Term because it did not provide for pro rata distribution of the

Canadian payments to the entire domestic industry.

       Section 2411 authorizes the USTR to take measures to “eliminate, or phase out” any “act,

policy, or practice of a foreign country [that] (i) violates, or is inconsistent with, the provisions

of, or otherwise denies benefits to the United States under, any trade agreement, or (ii) is

unjustifiable and burdens or restricts United States commerce.” 19 U.S.C. §2411(a), (c).

Subsection (c)(1)(D) further authorizes the USTR to enter into agreements that “eliminate any

burden or restriction on United States commerce resulting from such act, policy, or practice” and

“provide compensatory trade benefits that benefit the economic sector which includes the

domestic industry that would benefit from the elimination of the act, policy, or practice.” 19

U.S.C. § 2411(c)(1)(D), (c)(4). An agreement need not benefit the economic sector that includes

the affected industry, however, if “(A) the provision of such trade benefits is not feasible, or (B)
Court No. 08-00036                                                                             Page 13

trade benefits that benefit any other economic sector would be more satisfactory than such trade

benefits.” 19 U.S.C. § 2411(c)(4).

       Despite plaintiffs’ arguments to the contrary, section 2411 does not prohibit the USTR

from negotiating a provision such as the Distribution Term. As an initial matter, the language of

section 2411(c)(4) does not require that all members of an affected domestic industry profit

proportionately from each compensatory trade benefit bargained for in an international

agreement such as the SLA. In fact, this subsection does not appear to require that the softwood

lumber industry receive any benefit at all from the SLA. Rather, the benefit is to be directed to

the much more encompassing “economic sector” that includes the affected industry.7 That is, a

clear reading of the language on which plaintiffs rely is that the words “shall provide

compensatory trade benefits that benefit the economic sector which includes the domestic

industry that would benefit from the elimination of the act” is to identify the economic sector to

which the benefit should be directed. Plaintiffs’ reading would require that the statute be

reworded, as they have done in their papers, to “provide compensatory trade benefits to the entire

economic sector (including the adversely affected industry).” Pls.’ June 2008 Opp. 24-25. Yet,

even if the statute were reworded as set forth in plaintiffs’ papers, it would still be silent with

respect to how any such benefit should be allocated to recipients within a particular economic

sector, or to members of the affected domestic industry within such sector. Put another way,

7
  Plaintiffs do not supply a definition for “economic sector” as used in section 2411(c). The
statutory language “the economic sector which includes the domestic industry” indicates,
however, that the “economic sector” is necessarily broader than the affected “domestic industry.”
19 U.S.C. § 2411(c)(4). Accordingly, at the very least, the economic sector encompassing the
domestic softwood lumber industry would include, not only lumber producers such as plaintiffs,
but all other participants throughout the supply and distribution chain, such as independent
loggers and truckers. Under plaintiffs’ construction of the statute, the USTR would have been
required to negotiate an agreement that obligated the Canadian Government to proportionately
compensate those other members of the economic sector, as well as plaintiffs.
Court No. 08-00036                                                                              Page 14

despite plaintiffs’ arguments to the contrary, the notion of pro-rata sharing is absent from the

statute.

           In addition, no argument can be made that section 2411(c)(4) requires that every term in

the SLA must benefit all of the softwood lumber producers in a particular way, let alone on a pro

rata basis. Indeed, plaintiffs do not object to the allocation of the benefits from the Export

Measures, or the payments for meritorious initiatives, or to the binational council. In order for

plaintiffs’ claim that the USTR was prohibited from negotiating the Distribution Term to be

credited, though, the court would have to find that section 2411(c)(4) requires the pro rata

distribution of benefits under the Distribution Term, but not under the SLA’s other provisions.

No reading of section 2411 demands this result.

           Further, the requirement that an international agreement benefit the economic sector that

includes the affected industry is not absolute. Rather, pursuant to section 2411(c)(4), an

international agreement need not benefit the sector encompassing the affected industry at all if

“the provision of such trade benefits is not feasible, or . . . trade benefits that benefit any other

economic sector would be more satisfactory than such trade benefits.” 19 U.S.C. § 2411(c)(4)

(emphasis added). The terms “feasible” and “satisfactory” are not defined by the statute. Nor

does the statute provide any objective criteria for determining whether it is “feasible” or

“satisfactory” to benefit a particular economic sector. Accordingly, the “manner in which

defendants chose to achieve a remedial purpose,” Pls.’ Dec. 2008 Opp. 19, was intended by

Congress to leave considerable discretion in the hands of the USTR.

           Based on the foregoing, the court finds that section 2411(c)(4) did not, in fact, prohibit

the USTR from negotiating the Distribution Term. Accordingly, because there is no valid

statutory challenge to the procedure by which the SLA was negotiated, Count II necessarily
Court No. 08-00036                                                                               Page 15

challenges the Agreement’s substance. Thus, plaintiffs’ contention that Count II is not subject to

the political question doctrine fails.

        2. Count II Presents a Political Question Because It Involves Matters for Which There is
           a Textually Demonstrable Commitment to the Political Branches

        Because Count II implicates the substance of the SLA, an examination of how it may be

affected by the political question doctrine is warranted. Plaintiffs’ claim in Count II is that the

Distribution Term is unlawful because it does not provide for the pro rata distribution of the

Canadian payments to all members of the softwood lumber industry. The court finds that,

applying the Baker v. Carr criteria, judicial consideration of Count II is barred by the political

question doctrine because there is a “textually demonstrable constitutional commitment” of

issues relating to international trade to the Congress and the Executive Branch. See Baker, 369

U.S. at 217. It is well established that the Constitution confers great power in the area of foreign

affairs, and foreign commerce and trade in particular, to the political branches. See, e.g., U.S.

Const. art. II, § 1, cl. 1, 2; § 3; art. I, § 8, cl. 3; Ojeten v. Cent. Leather Co., 246 U.S. 297, 302

(1918) (“The conduct of the foreign relations of our Government is committed by the

Constitution to the Executive and Legislative—‘the political’—Departments of the Government,

and the propriety of what may be done in the exercise of this political power is not subject to

judicial inquiry or decision.”); Made in the USA Found. v. United States, 242 F.3d 1300, 1313

(11th Cir. 2001) (“The Constitution confers a vast amount of power on the political branches of

the federal government in the area of foreign policy—particularly foreign commerce.”); Fed.-

Mogul Corp. v. United States, 63 F.3d 1572, 1581 (Fed. Cir. 1995) (“Trade policy is an

increasingly important aspect of foreign policy, an area in which the executive branch is
Court No. 08-00036                                                                              Page 16

traditionally accorded considerable deference.”).8 Plaintiffs do not dispute that this is the case,

acknowledging that “the Constitution commits the power to conduct foreign policy to the

Executive Branch and the power to regulate foreign commerce to the Legislative Branch.” See

Pls.’ June 2008 Mem. 15.

        Pursuant to 19 U.S.C. § 2171(c)(1)(A), the USTR has, inter alia, “primary responsibility

for developing, and for coordinating the implementation of, United States international trade

policy.” “[T]he USTR, a member of the Executive Office of the President, acts at the direction

of the President as his negotiating arm in international trade matters.” See Gilda Indus. v. United

States, 28 CIT 2001, 2006, 353 F. Supp. 2d 1364, 1369 (2004). In conformity with this

presidential delegation, Congress has authorized the USTR to “enter into binding agreements . . .

that commit . . . foreign countr[ies]” to cease any harmful and unfair trade activities, “subject to

the specific direction, if any, of the President . . . to obtain the elimination of such act, policy, or

practice.” 19 U.S.C. § 2411(a), (c)(1)(D).

        As plaintiffs recognize, taken together, sections 2171 and 2411 constitute a conferral of

discretionary authority to the USTR to identify and eliminate harmful foreign trade practices

through the negotiation and consummation of agreements such as the SLA. Pls.’ June 2008 Opp.

24 (acknowledging that “negotiating and entering into the SLA and, in doing so, requiring

Canada to make a compensatory payment to the adversely affected domestic industry was within

the scope of the USTR’s authority”). Considering the constitutional commitment of trade policy

8
  The President’s preeminent role in formulating foreign policy is further demonstrated by the
power to “make Treaties” (with the advice and consent of the Senate) and “appoint
Ambassadors, other public Ministers and Consuls,” U.S. Const. art. II, § 2, cl. 2, as well as the
role of “receiv[ing] Ambassadors and other public Ministers.” U.S. Const. art. II, § 3. Congress’
authority in the area of foreign policy is further embodied in its power to “declare War,” “to raise
and support Armies,” and “to provide and maintain a Navy,” U.S. Const., art. I, § 8, cl. 11-13. In
addition, the Senate’s advice and consent role in the treaty making process demonstrates the
Legislature’s role in formulating foreign policy. U.S. Const. art. II, § 2, cl. 2.
Court No. 08-00036                                                                            Page 17

formulation to the political branches, and the delegation of this authority to the USTR, the

substance of the specific provisions of the SLA at issue here, as negotiated by the USTR, present

a political question that lies beyond judicial scrutiny. That is, the USTR’s determination to agree

to terms that (1) restricted exports of softwood lumber from Canada, and (2) provided for various

payments including payment to members of the Coalition, concerned policy decisions for which

there is “a textually demonstrative constitutional commitment” to the Executive Branch. For this

reason alone, Count II falls within the political question doctrine and is non-justiciable. See

Samish Indian Nation, 419 F.3d at 1370.

       3. Count II Presents a Political Question Because There Are No Judicially Manageable
          Standards for Resolving This Claim

       In addition, Count II presents a political question because there is “a lack of judicially

discoverable and manageable standards for resolving” this claim as it concerns questions of trade

policy that “would require the court to make an initial policy determination of the kind clearly

for nonjudicial discretion.” Baker, 369 U.S. at 217. In reaching this finding, the court again

turns to 19 U.S.C. § 2411(c)(4).

       First, as previously discussed, the subsection’s only instruction with respect to trade

benefits negotiated under the SLA is that, if feasible, they be directed to “the economic sector

which includes the domestic industry that would benefit from the elimination of the act, policy,

or practice.” 19 U.S.C. § 2411(c)(4). The fact that section 2411(c)(4) contains no other

instruction as to how benefits are to be distributed demonstrates that this decision is left to the

USTR’s discretion. See Heckler v. Chaney, 470 U.S. 821, 835-36 (1985); Ctr. for Policy

Analysis on Trade & Health v. U.S. Trade Rep., 540 F.3d 940, 945 (9th Cir. 2008). Reference to

section 2411(a)(1) confirms this conclusion, as it grants the USTR authority to take all “[a]ctions
Court No. 08-00036                                                                             Page 18

. . . that are within the power of the President with respect to trade in any goods or services, or

with respect to any other area of pertinent relations with the foreign country.” As discussed

supra, under the Constitution, the Executive Branch is accorded “considerable deference” in

formulating foreign trade policy. See Fed. Mogul Corp., 63 F.3d at 1581.

       Second, as has been seen, there is no provision in the statute that requires every term of

an international agreement negotiated under its authority benefit all parts of an economic sector,

or that the benefits be distributed on a pro rata basis. That is, even if plaintiffs’ contention that

section 2411 requires that the SLA benefit the softwood lumber industry were accepted, there is

nothing in the statute to indicate that every provision of the Agreement must proportionately

benefit every participant in the industry. Rather, the determination of what benefits should be

conferred, and how to allocate them under an international agreement, is committed by the

President and Congress to the discretion of the USTR, subject only to further direction from the

President.9 See 19 U.S.C. § 2411(a).

       Next, as discussed, the requirement that an agreement negotiated pursuant to section 2411

benefit the economic sector that includes the affected industry is not absolute. Rather, the USTR

may enter into an agreement that does not benefit such sector if he determines that such a term is

9
  The legislative history of 19 U.S.C. § 2411 supports this conclusion. The original House Bill
would have required the USTR to “give preference in all cases to action on the same goods or
sector and, in any compensation agreement, to seek benefits from the foreign country in the same
goods or sector.” H.R. Rep. No. 100-576, at 560 (1988) (emphasis added). The Senate
amendment, on the other hand, required only “that any compensation agreement provide trade
benefits in the economic sector of which the U.S. domestic industry is a part, or in the economic
sector as closely related as possible to such economic sector.” Id. Ultimately, a conference
agreement was reached whereby “[t]he House recede[d], with an amendment that require[d]
compensation agreements to provide trade benefits in the same or a closely related economic
sector, unless such benefits are not feasible or benefits would be more satisfactory in another
sector.” H.R. Conf. Rep. 100-576, at 560-61 (emphasis added). Accordingly, the resulting
legislation provided great discretion to the USTR in determining the ultimate beneficiaries of
trade agreements remedying foreign unfair trade practices.
Court No. 08-00036                                                                            Page 19

“not feasible,” or a different term would be “more satisfactory.” See 19 U.S.C.               §

2411(c)(4). Whether one of these conditions has been met is not susceptible to objective

examination, but rather is dependent upon the value judgments of the USTR. See Keita v. United

States SBA, No. 07-cv-4958, 2010 U.S. Dist. LEXIS 9110, at *11 (E.D.N.Y. Feb. 3, 2010)

(“Here, the Court lacks guidance to adjudge the SBA’s exercise of its discretion because Keita

seeks review of the individual economic judgments that comprised the SBA’s decision that his

loans were not ‘necessary or appropriate.’”). Accordingly, “the vagueness of the term[s

themselves] indicate[s] to us that Congress did not intend traditional judicial review of the

Executive’s action taken pursuant to this statute.” Flynn v. Schultz, 748 F.2d 1186, 1193 (7th

Cir. 1984). Thus, Count II presents “a political question arising out of a statute that provides us

with no meaningful standards to apply.” Ctr. for Policy Analysis on Trade & Health, 540 F.3d at

945.

          4. Count II Presents a Political Question Because Prudential Considerations Counsel
             Against Judicial Intervention in This Case.

          Finally, prudential considerations counsel against judicial intervention of the type urged

by plaintiffs because of “the potentiality of embarrassment from multifarious pronouncements by

various departments on one question.” See Baker, 369 U.S. at 217. Here, plaintiffs ask the court

to alter the obligations of the Canadian Government under the SLA. To do so might well

undermine the confidence that Canada, and presumably other foreign trading partners, have in

the United States’ adherence to trade agreements executed by those with authority to act on its

behalf.

          International trade agreements are often the product of delicate negotiations, leading to a

quid pro quo exchange, in which both sides agree to make concessions. Judicial interference
Court No. 08-00036                                                                          Page 20

would disturb the balance struck through these negotiations, undermining their value as a

mutually-satisfactory means of achieving the ends of the foreign trade policy. See Footwear

Distribs. & Retailers of Am. v. United States, 18 CIT 391, 414, 852 F. Supp. 1078, 1096 (1994)

(“[C]ourts traditionally refrain from disturbing ‘the very delicate, plenary and exclusive power of

the President as the sole organ of the federal government in the field of foreign relations.’”

(quoting United States v. Curtiss-Wright Exp. Corp., 299 U.S. 304, 320 (1936))); see also

Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 386 (2000) (“‘[N]uances’ of the ‘foreign

policy of the United States . . . are much more in the province of the Executive Branch and

Congress than of this Court.’” (quoting Container Corp. of Am. v. Franchise Tax Bd., 463 U.S.

159, 196 (1983))); Antolok v. United States, 873 F.2d 369, 381 (D.C. Cir. 1989) (“[N]owhere

does the Constitution contemplate the participation by the third, non-political branch, that is the

Judiciary, in any fashion in the making of international agreements.”).

       The importance of international trade agreements to the implementation of the nation’s

trade policy, and the concomitant need to adhere to the terms of such agreements to protect the

reasonable expectations of our foreign trading partners, present “an unusual need for

unquestioning adherence to a political decision already made,” Baker, 369 U.S. at 217. Trojan

Techs., Inc. v. Pennsylvania, 916 F.2d 903, 914 (3d Cir. 1990) (noting that “a judicial redirection

of established foreign trade policy” would be “a quite inappropriate exercise of the judicial

power”); Made in the U.S.A., 242 F.3d at 1317 (“The [Supreme] Court has further observed that

‘federal uniformity is essential’ in the area of foreign commerce, and that ‘the Federal

Government must speak with one voice when regulating commercial relations with foreign

governments.’” (quoting Japan Line, Ltd. v. Cnty. of Los Angeles, 441 U.S. 434, 448 (1979);

Michelin Tire Corp. v. Wages, 423 U.S. 276, 285 (1976)) (internal citations omitted)). As noted,
Court No. 08-00036                                                                              Page 21

satisfaction of any one of the Baker v. Carr criteria is sufficient to warrant dismissal. See

Samish, 419 F.3d at 1372. Accordingly, prudential considerations further demonstrate that

Count II presents a non-justiciable political question and, thus, must be dismissed.

II.     Whether the Complaint Fails to State a Claim for Which Relief May Be Granted

        Defendants further contend that Counts II, III, and IV should be dismissed because each

fails to state a claim for which relief can be granted under USCIT R. 12(b)(5). For the reasons

stated below, the court agrees that, even if Count II did not present a non-justiciable political

question, along with Counts III and IV, it does not present claims for which relief can be granted.

        A. Standard of Review Under USCIT R. 12(b)(5)

        Pursuant to USCIT R. 12(b)(5), a party may move to dismiss a complaint for “failure to

state a claim upon which relief can be granted.” In evaluating a motion to dismiss under USCIT

R. 12(b)(5), the Court “must accept all well-pleaded facts as true and view them in the light most

favorable to the non-moving party.” United States v. Ford Motor Co., 497 F.3d 1331, 1336

(Fed. Cir. 2007). The plaintiff’s burden at this stage is not great as it need only plead the

requisite facts needed to present a valid claim for relief. USCIT R. 8(a)(2) (“A pleading that

states a claim for relief must contain . . . a short and plain statement of the claim showing that the

pleader is entitled to relief.”).

        Nevertheless, “when the allegations in a complaint, however true, could not raise a claim

of entitlement to relief, ‘this basic deficiency should . . . be exposed at the point of minimum

expenditure of time and money by the parties and the court.’” Bell Atlantic Corp. v. Twombly,

550 U.S. 544, 557 (2007) (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure §

1216, at 233-234 (3d ed. 2004)). Where a plaintiff has failed to put forth a “cognizable legal
Court No. 08-00036                                                                             Page 22

theory” under which it is entitled to relief, its complaint must be dismissed. See Vasu v. Tremont

Advisors, 129 F. Supp. 2d 113 (D. Conn. 2001) (“‘Under Rule 12(b)(6), a court may dismiss a

claim for either (1) the lack of a cognizable legal theory; or (2) the absence of factual assertions

to support a claim.’”) (citations omitted). That is, if the claimed source of a plaintiff’s right to

recover does not actually confer such a right, a complaint fails to state a claim for which relief

may be granted.

       B. Count II Fails to State a Claim for Which Relief Can Be Granted Under the APA

       As noted, the court has found that Count II is non-justiciable under the political question

doctrine. Were this not the case, Count II would still be dismissed. In Count II, plaintiffs assert

that the USTR’s negotiation of the Distribution Term was contrary to 19 U.S.C. § 2411(c)

because it did not provide for pro rata distribution of Canadian payments among all domestic

producers. See Pls.’ June 2008 Opp. 3-4; Pls.’ Dec. 2008 Opp. 6. Based on the proper

interpretation of section 2411(c), see supra, Count II fails to state a claim for which relief may be

granted under the APA.

       Pursuant to 5 U.S.C. § 701(a)(2), judicial review of agency action that is “committed to

agency discretion by law” is precluded. As the Supreme Court explained, pursuant to section

701(a)(2), “review is not to be had if the statute is drawn so that a court would have no

meaningful standard against which to judge the agency’s exercise of discretion. In such a case,

the statute (‘law’) can be taken to have ‘committed’ the decisionmaking to the agency’s

judgment absolutely.” Heckler, 470 U.S. at 830. As explained above, rather than setting forth

any discernible standard against which to measure whether the Distribution Term’s failure to

provide for a pro-rata distribution of benefits was lawful, section 2411 commits the negotiation
Court No. 08-00036                                                                           Page 23

of the manner in which the benefits were to be distributed under the SLA to the discretion of the

USTR. See Webster v. Doe, 486 U.S. 592, 596 (1988) (“We thus find that the language and

structure of § 102(c) indicate that Congress meant to commit individual employee discharges to

the Director’s discretion, and that § 701(a)(2) accordingly precludes judicial review of these

decisions under the APA.”).

       Therefore, plaintiffs’ claim that the USTR violated section 2411(c)(4) by negotiating the

Distribution Term must be dismissed. That subsection, as noted above, does not prohibit the

USTR from negotiating a term that directs payments to members of the Coalition. Indeed, all

that section 2411 requires is that international agreements benefit, to the extent “feasible” or

“satisfactory,” the “economic sector” that includes an affected industry. As has been seen, the

statute does not impose an obligation on the USTR to ensure that benefits under international

trade agreements are conferred on any particular industry, let alone that they be distributed

proportionately among all members of a particular industry. Because section 2411 leaves to the

discretion of the USTR the method of directing the distribution of trade benefits, the exact

provisions of the Distribution Term were “committed to agency discretion by law.” 5 U.S.C. §

702(a)(2); Webster, 486 U.S. at 596. Hence, Count II does not set forth a cognizable legal theory

under which plaintiffs could recover. See Heckler, 470 U.S. at 837.

       For these reasons, Count II of the Complaint fails to state a claim upon which relief may

be granted. See USCIT R. 12(b)(5).
Court No. 08-00036                                                                           Page 24

       C. Count III Fails to State a Claim for Which Relief Can be Granted

               1. Plaintiffs’ Equal Protection Claim (Count III) Does Not Present a Political
                  Question

       In Count III, plaintiffs challenge the constitutionality of the SLA under the equal

protection guarantee of the Fifth Amendment to the United States Constitution. Plaintiffs claim

that, by obligating Canada to disburse money to only some of the members of the domestic

softwood lumber industry, i.e., the Coalition members, the USTR deprived plaintiffs of their

right to equal protection of the law.10 Complaint ¶ 86. Specifically, plaintiffs contend that

“[d]efendants’ actions in requiring Canada to make distributions to only those adversely affected

domestic producers who were also members of the Coalition and not to all affected domestic

producers on its face violates” the constitutional requirement of equal protection of the laws “by

impermissibly discriminating between similarly situated producers and denying a benefit to

certain of those producers.” Complaint ¶ 88. For plaintiffs, “[t]here existed no legitimate

governmental purpose for defendants having discriminated among affected domestic producers

and denying plaintiffs a pro-rata portion of the amount that defendants required the Government

of Canada to distribute.” Complaint ¶ 89.

       As noted, plaintiffs challenges in Count II to the Distribution Term of the SLA present

political questions. When actions taken to negotiate the terms of an international agreement are

challenged as inconsistent with the Constitution, however, the political question doctrine is

inapplicable. See Japan Whaling, 478 U.S. at 230. This is because it is the judiciary’s role to

10
   There is no express “equal protection” guarantee in the Fifth Amendment. Nevertheless, as
the Supreme Court has explained, the Due Process requirement of the Fifth Amendment protects
against unjustifiable legislative classifications. “The Fifth Amendment . . . does not contain an
equal protection clause as does the Fourteenth Amendment which applies only to the states. But
the concepts of equal protection and due process, both stemming from our American ideal of
fairness, are not mutually exclusive. . . . [A]s this Court has recognized, discrimination may be so
unjustifiable as to be violative of due process.” Bolling v. Sharpe, 347 U.S. 497, 499 (1954).
Court No. 08-00036                                                                          Page 25

determine whether the coordinate branches have acted in accordance with the Constitution.

Marbury v. Madison, 5 U.S. 137, 177-78 (1803). Thus, it is well-established that “‘foreign

commitments’ cannot relieve the government of the obligation to ‘operate within the bounds laid

down by the Constitution,’ and that ‘the prohibition of the Constitution . . . cannot be nullified by

the Executive or by the Executive and Senate combined.’” Totes-Isotoner Corp., 594 F.3d at

1353 (quoting Made in the U.S.A., 242 F.3d at 1314). Hence, there is “little doubt that courts

have the authority—indeed, the duty—to invalidate international agreements which violate the

express terms of the Constitution.” Id.

               2.      Legal Framework for Equal Protection Claims

       Although not barred by the political question doctrine, plaintiffs’ equal protection claims

nonetheless fail to state a claim upon which relief can be granted. The equal protection of the

laws of the United States is guaranteed by the Fifth Amendment’s Due Process requirement,

Bolling v. Sharpe, 347 U.S. at 499, which prohibits the government from unjustifiably treating

similarly situated persons differently. If an administrative classification, however, “neither

burdens a fundamental right nor targets a suspect class,” it will be upheld “so long as it bears a

rational relation to some legitimate end.” Romer v. Evans, 517 U.S. 620, 631 (1996). Thus,

“[i]n areas of social and economic policy,” an executive classification “that neither proceeds

along suspect lines nor infringes fundamental constitutional rights must be upheld against equal

protection challenge if there is any reasonably conceivable state of facts that could provide a

rational basis for the classification.” Fed. Commc’n. Comm’n. v. Beach Commc’n. Inc., 508 U.S.

307, 314 (1993) (FCC).
Court No. 08-00036                                                                            Page 26

       “On rational-basis review, a classification . . . bear[s] a strong presumption of validity,

and those attacking the rationality of the . . . classification have the burden ‘to negative every

conceivable basis which might support it.’” FCC, 508 U.S. at 314-15 (quoting Lehnhausen v.

Lake Shore Auto Parts Co., 410 U.S. 356, 364 (1973)) (internal citation omitted); see Radio

Ass’n on Defending Airwave Rights v. U.S. Dep’t of Transp., 47 F.3d 794, 808-09 (1995) (noting

that equal protection challenges to administrative action are subject to the same standard).

Furthermore, “a legislature that creates these categories need not ‘actually articulate at any time

the purpose or rationale supporting its classification.’” Heller v. Doe, 509 U.S. 312, 320 (1993)

(citations omitted). Rather, if there exists any plausible circumstance under which the

classification would further a legitimate government objective, it will satisfy the rational basis

standard. Id.

       Plaintiffs do not argue that their equal protection claim is based on a suspect

classification or infringement of a fundamental right, but rather concede that their claim is

subject to rational basis scrutiny. Pls.’ June 2008 Opp. 35 (“Defendants, while asserting

generally that there was a rational basis for ‘negotiating the terms of the SLA,’ and settling

various legal disputes, fail to explain in any way how finding adversely affected softwood

lumber producers eligible to receive a portion of the $500 million on the basis of their

membership in a particular private organization bears any relationship with a legitimate public

purpose.”) (internal citations omitted)); Pls.’ December 2008 Opp. 27 (“No governmental goal or

objective was served by the method defendants used to distinguish between injured companies

that were entitled to compensation and those injured companies that were not.”).
Court No. 08-00036                                                                           Page 27

               3.      The Distribution Term Was Rationally Related to a Legitimate
                       Government Interest

       Any reading of the SLA demonstrates that requiring the disbursement of funds to the

members of the Coalition under the Distribution Term was rationally related to the legitimate

government purpose of ending the undesirable trade practices of the Canadian softwood lumber

industry, and to settle the ongoing litigation concerning the U.S.-Canadian softwood lumber

trade. SLA, annex 2A; Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)

(“[C]ourts must consider the complaint in its entirety, as well as other sources courts ordinarily

examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated

into the complaint by reference, and matters of which a court may take judicial notice.”).

       To accomplish its purpose, the Government reasonably took the Coalition into account.

The Coalition was the primary representative of the domestic industry in the various proceedings

that were ongoing when the SLA was negotiated. See SLA, annex 2A; Almond Bros., 651 F.3d

at 1352; Pls.’ June 2008 Opp. 30 n.13 (noting that the Coalition’s Executive Committee was the

petitioner in the underlying antidumping and countervailing duty disputes, and a party to

“various disputes concerning duties on Canadian softwood lumber products”). In exchange for

the disbursement of $500 million, counsel for the Coalition agreed to the dismissal of more than

twenty lawsuits and proceedings pending as of the date the SLA was signed. 11 SLA, annex 2B.

Because of the agreement to end that litigation, among other reasons, the Canadian Government

11
   Under its express terms, before the SLA could “enter into force,” at least 60% of the domestic
softwood lumber producers and at least one industry union, regardless of their membership in the
Coalition, were required to submit “no injury” letters certifying that the “SLA 2006 removes any
alleged material injury or threat of material injury [under the United States unfair trade laws] to
the U.S. softwood lumber industry from imports of Softwood Lumber Products from Canada.”
See SLA art. II, annex 5A. Accordingly, more than a nominal majority of the domestic
producers concluded that the benefits conferred upon the industry by the SLA were sufficient to
induce them to relinquish their rights to invoke the U.S. trade laws against Canadian producers.
Court No. 08-00036                                                                            Page 28

agreed to take measures to address the domestic industry’s complaints concerning Canadian

softwood lumber exports. SLA, Art. VI, VII.

       Thus, the USTR’s determination that a reasonable means of securing an agreement to

terminate the pending lawsuits and proceedings was to compensate members of the Coalition

was rationally related to the legitimate objective of curbing trade practices that were harming the

domestic industry, and obtaining other concessions and compensatory payments. See SLA, art.

VI, VII, annex 2C. As has been noted, plaintiffs were not parties to these lawsuits and

proceedings. Obtaining the consent of the Coalition by compensating its members for agreeing

to the dismissal provides a rational basis for preferring some domestic producers over others. In

other words, the reason why the members of the Coalition received the disbursement to the

exclusion of plaintiffs was because the Coalition relinquished its pending claims.

       Moreover, the SLA was, at least in part, the result of the Coalition’s efforts to protect the

rights of the domestic industry as a whole. The Coalition bore the time and expense of extensive

legal battles to address the practices of the Canadian industry, providing a sufficient rationale for

compensating its members to the exclusion of more passive members of the domestic lumber

industry, such as plaintiffs. As defendants note, “the [SLA] terminated at least 20 legal disputes

in various fora . . . . [T]he dismissal of many of these actions required the agreement of various

private interests, including all parties to the pending lawsuits. Thus, in order to resolve all of the

litigation and preserve order in the market, a comprehensive settlement was negotiated. All

parties in interest to the domestic litigation and intervenors as of right in the NAFTA disputes

were necessarily involved.” Defs.’ April 2008 Mem. 32 (internal citations omitted); SLA, annex

2A.
Court No. 08-00036                                                                             Page 29

       In addition, the Distribution Term is but one provision of the SLA. Canada’s agreement

under the SLA to curb its own industry’s practices by imposing the Export Measures, and

agreeing to fund the meritorious initiatives and the binational council, were negotiated to benefit

the entire domestic softwood lumber industry, including plaintiffs. Plaintiffs make no claim that

their equal protection rights were violated by the inclusion of these terms in the SLA.12 Here,

again, plaintiffs ask the court to dismember the SLA so that they can attack one part of the

agreement. Taken as a whole, however, the SLA appears to have been negotiated to benefit the

entire domestic softwood lumber industry.

       The court finds that the USTR’s actions in negotiating the Distribution Term do not

violate plaintiffs’ equal protection rights because they satisfy the rational basis test. That is, the

Coalition’s members received an additional benefit under the SLA because they agreed to

relinquish their rights under pending lawsuits, while the remainder of the benefits conferred by

Canada under the agreement were designed to benefit the entire domestic industry, including

plaintiffs. Where, as here, there are “‘plausible reasons’” for the alleged unequal treatment,

“‘our inquiry is at an end.’” FCC, 508 U.S. at 313-14 (citations omitted). Thus, Count III must

be dismissed. See USCIT R. 12(b)(5).

       D. Count IV Fails to State a Claim for Which Relief May be Granted

       In Count IV, plaintiffs allege that the “determination of exactly how this [$500 million]

compensatory payment by Canada should be divided among all adversely affected domestic

softwood lumber producers was a governmental function which could not legally be delegated to

non-governmental entities such as the members of the coalition.” Complaint ¶ 92. In their brief,

12
  In fact, plaintiffs acknowledge that these terms benefit the entire domestic softwood lumber
industry. See Pls.’ June 2008 Opp. 38 n.22.
Court No. 08-00036                                                                          Page 30

plaintiffs maintain that, “[t]he governmental function which defendants wrongly delegated was

the determination of exactly how the compensatory $500 million payment [the SLA] required

Canada to provide should be divided among adversely affected domestic softwood lumber

producers.” Pls.’ Dec. 2008 Opp. 27. Plaintiffs, thus, insist that the decision to favor Coalition

members over other softwood lumber producers was a government function because “19 U.S.C.

§ 2411 obligates the USTR to protect domestic industries from unfair foreign trade practices and

includes the obligation to . . . provide compensatory trade benefits to the economic sector which

includes the affected domestic industry.” Pls.’ Dec. 2008 Opp. 27-28.

       Defendants move to dismiss Count IV by stating that plaintiffs’ “complaint does not

provide any factual or legal basis for its claim of wrongful delegation of a Government

function.” Defs.’ Oct. 2008 Mem. 10. For defendants, the fact that plaintiffs “concede[] that ‘by

negotiating and entering into the SLA . . . defendants were acting in accordance with 19 U.S.C.

§§ 2171(c) & (d)’”13 demonstrates that they “cannot point to any provision of law which creates

a Government duty to distribute the money at issue and, thus, there can be no Government duty

to determine how much money should be distributed to whom.” Defs.’ Oct. 2008 Mem. 10

(quoting Pls.’ June 2008 Opp. 23). Thus, defendants argue that they were statutorily authorized

to enter into an agreement requiring Canada to make payments to Coalition members, and once

they lawfully imposed that obligation on Canada, there was no residual duty on the part of the

USTR to determine how much each Coalition member should receive.

       Although it is well established that “[d]elegations of administrative authority are suspect

when they are made to private parties, particularly to entities whose objectivity may be

13
  As noted above, plaintiffs concede that, in addition to complying with section 2171,
defendants also complied with section “2411, and other sections of the United States Code to
protect the domestic softwood lumber industry.” Pls.’ June 2008 Opp. 23.
Court No. 08-00036                                                                            Page 31

questioned on grounds of conflict of interest,” in order to state a claim based on an impermissible

delegation, plaintiffs must identify an administrative authority that has been delegated.14

Pistachio Grp. of Ass’n of Food Indus., Inc. v. United States, 11 CIT 668, 672, 671 F. Supp. 31,

35 (1987). Here, however, plaintiffs have failed to identify a governmental function that was

impermissibly delegated. Indeed, it is clear from the terms of the SLA that there was no such

delegation. Peer Bearing Co.-Changshan v. United States, 35 CIT __, __, Slip. Op. 11-125 at 4

(noting that in deciding a motion under USCIT R. 12(b)(5), the court “may consider documents

incorporated into the complaint, exhibits attached to the complaint, or matters of which the court

may take judicial notice”).

       The determination that the members of the Coalition alone should receive the $500

million in payments from Canada was reflected in the terms of the SLA. The USTR negotiated

the Distribution Term with Canada, and annex 2C of the SLA requires that the payment be made

to the members of the Coalition, to the exclusion of plaintiffs. Thus, the determination that some

domestic softwood lumber producers (i.e., Coalition members) were to receive payments from

Canada to the exclusion of others was not delegated because the Distribution Term was

negotiated and agreed to by the USTR herself. Accordingly, to the extent that Count IV is read

as an objection to the determination that the Coalition members should benefit under the SLA

and other producers should not, plaintiffs’ claim of an unlawful delegation is unconvincing.

       It is also possible, however, to read plaintiffs’ claim as alleging that defendants

impermissibly delegated to the Coalition the governmental function of allocating payments made

among the members of the Coalition. Thus, Count IV may be considered an allegation that, by

requiring the Canadian Government to disburse funds to the Coalition members without directing

14
  An agency’s impermissible delegation is unlawful and will be set aside under the APA. 5
U.S.C. § 706(a)(2).
Court No. 08-00036                                                                             Page 32

how those funds were to be allocated among them, the SLA delegated a governmental function

to the Coalition.

         Because, as discussed supra, plaintiffs are not entitled to share in this distribution, they

lack standing to challenge the allocation of those funds among members of the Coalition. Put

another way, having lawfully been excluded from the list of beneficiaries by the terms of the

SLA, plaintiffs cannot be injured by the putative wrongful delegation of authority to determine

just how the $500 million should be distributed among the Coalition members. Even assuming,

for the sake of argument, that the function of allocating payments among Coalition members was

a governmental function that was unlawfully delegated, such a finding would not provide

plaintiffs the right to receive payments under the Distribution Term. See Hoopa Valley Tribe v.

United States, 597 F.3d 1278, 1283-84 (Fed. Cir. 2010) (finding that plaintiffs lacked standing to

challenge the distribution of trust funds because “at the time [the Department of the Interior]

distributed the remainder [of the funds] to the Yorka Tribe, the [plaintiff] was not a beneficiary

of, and had no legally protected interest in” the trust). Even under this reading then, Count IV

fails.

         Accordingly, Count IV of the Complaint fails to state a claim for which relief can be

granted. See USCIT R. 12(b)(5).
Court No. 08-00036                                                                          Page 33

                                          CONCLUSION

       Because Count II of the Complaint is non-justiciable under the political question

doctrine, and because Counts II, III, and IV further fail to state claims for which relief may be

granted, plaintiffs’ Complaint is dismissed.

                                                                     /s/ Richard K. Eaton
                                                                         Richard K. Eaton
Dated: April 19, 2012
       New York, New York