Furie Operating Alaska, LLC v. U.S. Department of Homeland Security et al

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UNITED STATES DISTRICT COURT
DISTRICT OF ALASKA
FURIE OPERATING ALASKA, LLC, )
)
Plaintiff, ) 3:12-CV-00158 JWS
)
vs. ) ORDER AND OPINION
)
U.S. DEPARTMENT OF HOMELAND )
SECURITY; SECRETARY OF )
HOMELAND SECURITY JANET ) [Re: Motion at docket 97]
NAPOLITANO, in her official )
capacity; U.S. CUSTOMS AND )
BORDER PROTECTION; and ACTING )
COMMISSIONER DAVID V. AGUILAR, )
in his official capacity, )
)
)
Defendants. )
)
I. MOTION PRESENTED
At docket 97, plaintiff Furie Operating Alaska, LLC (“Plaintiff” or “Furie”) filed a
motion to augment and compel completion of the administrative record. Its’ supporting
memorandum is at docket 98, and its’ supporting exhibits are at dockets 100 through
104. Defendants U.S. Department of Homeland Security (“DHS”), Secretary of
Homeland Security Janet Napolitano (“Secretary”), U.S. Customs and Border Protection
(“CBP”), and CBP Commissioner Gil Kerlikowske (collectively, the “Government” or
Case 3:12-cv-00158-JWS Document 114 Filed 12/23/14 Page 1 of 6

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“Defendants”) respond at docket 109, raising new issues as to the reviewability of
Furie’s Administrative Procedure Act (“APA”)1 claims. Furie replies at docket 113.
II. BACKGROUND
Furie filed this lawsuit to challenge action by CBP, which determined that Furie
should pay a $15 million penalty for transporting merchandise from Texas to Alaska via
Vancouver, British Columbia, using a foreign vessel for a segment of the trip in violation
of the Jones Act requirement that such transportation be accomplished using American
vessels.2 Furie’s complaint pled four claims for relief under the APA: (1) the penalty
imposed was unlawful, because the Spartan was not being transported as
merchandise; (2) the Secretary failed to exercise independent judgment when she
denied a wavier requested by Furie which was arbitrary, capricious, and an abuse of
discretion; (3) the Secretary’s refusal to grant a waiver when her predecessor had done
so was an unexplained action which was arbitrary, capricious, and an abuse of
discretion; and (4) the Secretary’s refusal to mitigate the $15 million penalty was also
arbitrary and capricious in light of her statements where she said the agency would
come up with an equitable way to allow transportation. Furie’s complaint also pled two
constitutional claims: (1) the $15 million penalty was unlawful and unenforceable
because it constituted an excessive fine under the Eighth Amendment, and (2) the $15
million penalty was unlawful and unenforceable because Defendants violated Furie’s
due process rights.3 In addition to Furie’s claims, the lawsuit includes a counterclaim by
Defendants alleging that “Furie’s transportation of the Spartan Rig from Texas to
15 U.S.C. § 701 et seq.
246 U.S.C. § 55102(b).
3Doc. 1.
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Alaska, in part by a non-coastwise qualified vessel, violated the Jones Act”4 which
entitles the United States to recover a $15 million penalty from Furie.5
The Government filed an administrative record at docket 91. Furie subsequently
filed the motion to compel, arguing the record does not include communications and
documents relevant to all of Furie’s APA claims. It also filed exhibits of the materials it
would like included in the record. These materials consist of communications and
documents related to the Secretary’s denial of Furie’s Jones Act waiver request and the
CBP’s refusal to mitigate the $15 million penalty.
The Government filed a motion for an extension of time in which to respond to
the motion to compel. It stated that it needed additional tim e “to review the motion,
coordinate with the agency, and try to see if there might be agreement on some of the
documents that Furie proposes to add to the adm inistrative record.”6 The request was
granted. The Government then filed its response, but rather than provide the court with
its position on the requested expansion of the record, the Government presents an
entirely new argument: it asserts that Furie’s claims related to the waiver and mitigation
decisions are not subject to APA review, and thus it did not need to produce an
administrative record.
Furie filed a reply at docket 113. In the reply, Furie argues that the Government
is inappropriately attempting to force a judgment on the merits through a response to a
motion to compel and that the Government had an opportunity to raise such dispositive
issues in a motion to dismiss but did not do so. Furie asserts that the Government’s
failure to address its substantive arguments about the expansion of the record should
4Doc. 38 at p. 57 ¶ 22.
5The parties are familiar with the details of their dispute not summarized above.
Readers who are not will find a much fuller recitation of the background facts in the order at
docket 71.
6Doc. 107 at p. 2.
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be considered a concession. Furie also provides a response to the Government’s
reviewability arguments. The Government did not ask for a surreply or oral argument.
III. DISCUSSION
The Court’s review of agency action under the APA is based on the “whole
record” that was before the agency at the time the challenged decisions were made.7
The whole record “is not necessarily those documents that the agency had compiled
and submitted as the administrative record.”8 Instead, the record must include “all
documents and materials directly or indirectly considered by agency decision-makers
. . . .”9 Furie contends that the Government failed to provide materials that were both
directly and indirectly considered by the Secretary and the CBP during their waiver and
penalty mitigation decisions, which are the decisions Furie challenges in Counts II
through IV. Its motion includes a detailed and persuasive discussion regarding what
additional communications and documents should have been included in the record as
to these claims. The Government chose not to provide the court with a clear position
as to whether the communications and documents introduced by Furie in its’ motion
were directly or indirectly considered by the agency. Instead, it simply asserted that it
“reserves the right to provide briefing” to address the substance of Furie’s motion—that
is, what should be included in the record—once the court determ ines whether the
administrative decisions underlying Counts II-IV in Furie’s complaint, which are the
counts challenging the Secretary’s decision regarding the Jones Act waiver and the
CBP’s penalty mitigation decision, are reviewable in the first instance.10
75 U.S.C. § 706.
8Thompson v. U.S. Dep’t of Labor, 885 F.2d 551, 555 (9th Cir. 1989) (internal quotations
and citations omitted).
9Id.
10Doc. 109 at p. 4.
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The Government has raised important issues about whether Counts II through IV
of Furie’s complaint are reviewable under the APA. It asserts that the court’s subject
matter jurisdiction “remains at issue.” However, at this juncture, the court’s subject
matter jurisdiction is not at issue as there is no pending motion challenging such
jurisdiction. The Government has not requested that these claims be dismissed; rather,
it asks to be excused from providing a record. As such, Counts II-IV remain valid. As
noted by Furie in its’ reply brief, the Government’s “arguments conflate the issues of
reviewabiliity and the existence of an administrative record—indeed, whether Furie’s
claims are reviewable has no bearing on Defendant’s obligation to file a record.”11 The
Government had the opportunity to narrow the claims on such grounds earlier in the
litigation but failed to do so. It now attempts to use its response to a procedural motion
as a mechanism for advancing a decision on the merits. The court chooses not to
proceed in this manner. The dispositive issues raised by the Government are better
addressed separately in order to provide a chance for a full round of briefing and oral
argument.
Returning to the substantive issues in the motion to compel, the court concludes
that Furie has demonstrated that the administrative record at docket 91 is incomplete.
Indeed, the Government’s response brief failed to provide the court with an argument
as to what should and should not be included in the record. W hile the Government
attempts to reserve the right to provide an argument about the substance of the record
at a later date, the response brief was the time to present such an argument and that
time has passed. Further briefing on the matter will only delay resolution of the
underlying claims.
IV. CONCLUSION
Based on the preceding discussion, Furie’s motion to augment and compel
completion of the administrative record at docket 97 is GRANTED. Defendants are
11Doc. 113 at p. 6.
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directed to file an amended certified administrative record containing all documents
considered, directly or indirectly, during the administrative proceedings challenged in
Counts II through IV of Furie’s complaint, including the documents submitted by Furie
as exhibits to the motion to compel, within 42 days of this order.
The court would like to resolve any reviewability and subject matter jurisdiction
issues prior to the merit briefing. Therefore, the briefing schedule ordered at docket 96
is vacated. Within 14 days of filing the expanded certified record, the Government is
directed to file a motion to dismiss based on the arguments presented in its’ response
brief. A briefing schedule will be set as needed upon the resolution of that motion.
DATED this 23rd day of December 2014.
/s/ JOHN W. SEDWICK
SENIOR UNITED STATES DISTRICT JUDGE
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