Court Opinion

ID: 2677710
Source: CourtListenerOpinion
Date Created: 2014-06-10 14:30:42.912903+00
Date Added: 2024-06-11T09:35:48.088247
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 6, 2014                   Decided June 10, 2014

                       No. 13-5200

          PRIME TIME INTERNATIONAL COMPANY,
                       APPELLANT

                            v.

UNITED STATES DEPARTMENT OF AGRICULTURE AND THOMAS
        J. VILSACK, SECRETARY OF AGRICULTURE,
                       APPELLEES

                Consolidated with 13-5204

       Appeals from the United States District Court
               for the District of Columbia
                   (No. 1:06-cv-01077)
                   (No. 1:12-cv-00910)

    Jerry Stouck argued the cause and filed the briefs for
appellant. Precious M. Gittens entered an appearance.

    Sydney A. Foster, Attorney, U.S. Department of Justice,
argued the cause for appellees. With her on the brief were
Stuart F. Delery, Assistant Attorney General, Ronald C.
Machen, Jr., U.S. Attorney, and Mark B. Stern, Attorney.
                              2
    Before: HENDERSON, ROGERS, and TATEL, Circuit
Judges.

    Opinion for the Court filed by Circuit Judge TATEL.

    TATEL, Circuit Judge: The Fair and Equitable Tobacco
Reform Act directs the U.S. Department of Agriculture to
fund a subsidy program for tobacco growers by imposing
monetary assessments on manufacturers of tobacco products.
In this case, one such manufacturer argues that USDA’s
method of calculating assessments for cigars violates the Act.
The district court disagreed, concluding that the Department’s
approach represented a reasonable interpretation of the Act.
We affirm.

                              I.
     Section 518d of the Fair and Equitable Tobacco Reform
Act (FETRA) requires USDA to impose monetary
assessments on tobacco product manufacturers and importers
pursuant to a three-step process. See 7 U.S.C. § 518d. First,
USDA must calculate the total monetary assessment needed
to fund the subsidy program. See id. § 518d(b)(1)–(2).
Second, the Department must apportion this amount among
six classes of tobacco products—cigarettes, cigars, snuff,
roll-your-own, chewing, and pipe—based, in part, on each
class’s share of the gross domestic volume of tobacco
products. See id. § 518d(c). Third, under subsection (e)—the
focus of this case—USDA must divide each class’s
assessment among the manufacturers and importers within
each class “on a pro rata basis . . . based on each
manufacturer’s and importer’s share of gross domestic
volume.” Id. § 518d(e)(1). Under subsections (f) and (g),
USDA “shall . . . determine[]” this amount based on the
manufacturer’s or importer’s “market share” of “the class of
tobacco product,” id. § 518d(f), which the Department “shall .
                               3
. . measure[] by[,] in the case of cigarettes and cigars, the
number of cigarettes and cigars; and[] in the case of the other
classes of tobacco products . . . in terms of number of
pounds,” id. § 518d(g)(3). In accordance with this three-step
process, USDA promulgated the so-called Per Stick Rule,
under which it calculates each cigar manufacturer’s
assessment based on the number of cigars—also known as
“sticks”—that the manufacturer puts into commerce. See 7
C.F.R. § 1463.7.

     Appellant Prime Time, a manufacturer of small cigars,
challenged the Per Stick Rule in district court, arguing that the
Rule’s equal treatment of small and large cigars violated
subsection (e)’s “pro rata basis” requirement. According to
Prime Time, subsection (e) requires the Department to
account for large and small cigars’ different tobacco volume
by subdividing the cigar assessment between large and small
cigar manufacturers and then allocating the assessment within
each subclass based on the number of cigars sold. The district
court dismissed the case, but in Prime Time International Co.
v. Vilsack, 599 F.3d 678 (D.C. Cir. 2010) (“Prime Time I”),
this court held, contrary to USDA’s position at the time, that
the Per Stick Rule was “not mandated by the plain text of
FETRA.” Id. at 683. Observing that the Act “does not appear
to be susceptible of only a single interpretation” and
recognizing that “USDA [did] not maintain that its
interpretation of FETRA [was] a permissible view of an
ambiguous statute entitled to deference under Chevron step
2,” we remanded to the district court with instructions to
return the issue to the Department for further proceedings. Id.

    USDA then solicited public comments on the question of
whether it should revisit the Per Stick Rule. After considering
the comments, it issued a “Determination” in which it
concluded that its calculation “methodology [was] the optimal
                               4
reading of FETRA” and accordingly declined to revise the
Rule. See Determination of the Administrator of the Farm
Services Agency and Executive Vice President of the
Commodity Credit Corporation Regarding the Current “Step
A” and “Step B” Assessment Methods in the Tobacco
Transition Payment Program at 20 (Nov. 16, 2011)
(“Determination”). USDA explained that the Rule implements
the statute’s language by interpreting subsection (e)(1) “to set
the general rule” and subsections (f) and (g) to “inform [it]
and direct [it] on how to implement the general rule of (e).”
Id. at 30. As to cigars in particular, the Department explained
that “the cigar class allocation is . . . properly allocated on a
‘pro rata’ basis among manufacturers and importers based on
each manufacturer’s or importer’s . . . proportion of the total
[number of] cigar sticks” moved into commerce. Id.

     Following several procedural developments not relevant
to the question before us, the issue returned to the district
court—now Judge Royce C. Lamberth—who upheld the Rule
as a reasonable interpretation of an ambiguous statute. Prime
Time again appeals.

                               II.
     This court hears many complex and difficult cases. This
is not one of them.

    Prime Time’s first argument—that Prime Time I barred
the Department from maintaining the Per Stick Rule on
remand—completely misreads that decision. As Judge
Lamberth explained, Prime Time I “remanded the case to
USDA so it could properly exercise agency expertise, and
took no position on whether the current per-stick rule could be
permissible under Chevron step 2.” Prime Time International
Co. v. Vilsack, 930 F. Supp. 2d 240, 251 (D.D.C. 2013); see
also Prime Time I, 599 F.3d at 683 (“For the purpose of this
                              5
appeal, the court need only observe that USDA’s present
interpretation is not mandated by the plain text of FETRA.”).
On remand, USDA did exactly what we asked of it, and the
only question now before us is whether the Per Stick Rule
represents a reasonable interpretation of the Act. See Chevron,
U.S.A., Inc. v. Natural Resource Defense Council, Inc., 467
U.S. 837, 843 (1984).

      Prime Time insists that USDA’s interpretation deserves
no Chevron deference because the Department’s justification
for maintaining the Per Stick Rule was “not developed in a
rulemaking proceeding but only in the course of this
litigation, to justify USDA’s litigation position.” Appellant’s
Br. 51. This argument ignores not one but two lines of this
court’s well-established case law: decisions affording
Chevron deference to agency actions that resolve “‘interstitial
. . . legal question[s]’” related to an agency’s expertise
regardless of whether the agency engaged in formal
rulemaking, e.g., Mylan Laboratories, Inc. v. Thompson, 389
F.3d 1272, 1279–80 (D.C. Cir. 2004) (quoting Barnhart v.
Walton, 535 U.S. 212, 222 (2002)), and cases deferring to
reasoned agency decisions made in response to remands, e.g.,
PDK Laboratories, Inc. v. Drug Enforcement Agency, 438
F.3d 1184, 1189 (D.C. Cir. 2006) (deferring to agency
position developed following remand). The only authority
cited by Prime Time, Bowen v. Georgetown University
Hospital, 488 U.S. 204, 212–13 (1988), bars deference to
statutory interpretations offered by appellate counsel for the
first time on appeal—hardly the situation we face here.

    We turn, then, to the heart of this case. Prime Time
contends that the Rule’s failure to “account for the differing
tobacco volumes between large and small cigars” ignores
subsection (e)’s “pro rata basis” requirement. Appellant’s Br.
29 (emphasis omitted). This is so, Prime Time tells us,
                               6
because the word volume means “‘the amount of space
occupied by a three-dimensional object or region of space,
expressed in cubic units’” and because subsection (e)
mandates a “pro rata” distribution based on each
manufacturer’s or importer’s “share of gross domestic
volume.” Id. (quoting THE AMERICAN HERITAGE DICTIONARY
1928 (4th ed. 2006)). This argument rests on a flawed
premise: that volume as used in subsection (e) must mean the
amount of tobacco in a tobacco product. As USDA points out,
however, “volume” also means “quantity.” And crucially for
our purposes, quantity can be measured in different units for
different products. For an example, we need look only to
subsection (g), which directs USDA to measure the “volume
of domestic sales” in sticks for cigarettes and cigars and in
pounds for the other tobacco product classes. See 7 U.S.C. §
518d(g). USDA’s decision to read the word “volume” in
subsection (e) as Congress used it in subsection (g) is entirely
reasonable and fully implements subsection (e)’s “pro rata
basis” requirement.

     Nor is USDA’s interpretation of the statutory term “share
of gross domestic volume” “internally inconsistent.”
Appellant’s Br. 46. According to Prime Time, USDA
interprets this phrase to have a “common metric”—i.e., not
sticks and pounds—when it divides the total assessment
among the six classes but maintains, contradictorily, that the
phrase lacks a common metric when it calculates each
manufacturer’s “share of gross domestic volume.” This
argument also rests on a false premise. USDA does not use a
common metric to calculate each class’s “share of gross
domestic volume.” Instead, as it explained in the
Determination, the Department first calculates each class’s
share of gross domestic volume without using a common
metric—“some [products] are measured by weight and others
by stick count”—and then, to determine the class assessments,
                               7
it “converts” these “different measures . . . into a common
metric.” Determination at 5 (emphasis added). In other words,
at both allocation stages USDA treats “share of gross
domestic volume” as lacking a common metric.

     Prime Time next claims that the Per Stick Rule violates
the canon against surplusage because under USDA’s
interpretation the Act would have the exact same meaning if
Congress had omitted subsection (e) entirely. As the
Department points out, however, subsection (e) does have a
function: it sets forth a general rule—assessments shall be pro
rata—and subsections (f) and (g) then explain how this rule
applies to each tobacco product class. Although subsection (e)
may have little independent operative effect, USDA’s
interpretation of subsection (e) as setting forth a general
requirement is perfectly reasonable. See Lamie v. U.S.
Trustee, 540 U.S. 526, 536 (2004) (noting that the “preference
for avoiding surplusage constructions is not absolute”).
“[S]ometimes Congress . . . drafts [statutory] provisions that
appear duplicative of others . . . simply, in Macbeth’s words,
to make assurance double sure.” Shook v. D.C. Financial
Responsibility & Management Assistance Authority, 132 F.3d
775, 782 (D.C. Cir. 1998).

    Lastly, Prime Time insists that its interpretation gives
more effect to subsection (e)’s pro rata basis limitation than
does USDA’s. Rejecting this argument and invoking a
fundamental principle of Chevron review, Judge Lamberth
explained that “[a]s long as the agency’s interpretation of . . .
ambiguous language is reasonable, it does not matter whether
Prime Time’s interpretation is ‘more’ reasonable.” Prime
Time, 930 F. Supp. 2d at 259 (citing National Cable &
Telecommunications Ass’n v. Brand X Internet Services, 545
U.S. 967, 980 (2005)). We have nothing to add.
                           8
                          III.
    Having considered and rejected Prime Time’s remaining
arguments, we affirm.

                                              So ordered.