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05/19/2017

Court of Appeals Rules Vehicle Tech Company Has Right to Pursue Relief After Unfair Treatment by DOE on Renewable Loans

Washington, D.C. – The U.S. Court of Appeals for the District of Columbia today reversed the District Court’s ruling, siding with Cause of Action Institute’s (CoA Institute) client, Limnia Inc., an advanced vehicle technology company that alleged it was unfairly passed over for a government-backed loan and loan guarantee through the Department of Energy’s (“DOE”) politically-driven  programs.

CoA Institute President and CEO John Vecchione: “We are very gratified for the Court’s decision. The Circuit saw things our client’s way. We look forward to further advancing this case upon remand. But this is an important precedent laying out the parameters of voluntary remand to an agency.”

CoA Institute filed a lawsuit in 2013 on behalf of Limnia Inc. after the Department of Energy (“DOE”) failed to give the company fair treatment and the honest opportunity to compete for a government-backed loan under the agency’s controversial loan guarantee program to build advanced technology vehicles and components.

In 2008 and 2009, Limnia submitted two loan applications for $15 million in funding through DOE’s Advanced Technology Vehicles Manufacturing (“ATVM”) program. Limnia specializes in the production of battery systems for electric cars and applied for funding to develop a new advanced vehicle energy storage system. The DOE rejected both of Limnia’s applications.

Limnia sued DOE in the District Court alleging that the rejection of its applications was unlawful under the Administrative Procedure Act. In its complaint, Limnia argued it was passed over in favor of politically-favored competitors, such as Tesla Motors Inc., which had close connections to the Obama administration. Tesla received hundreds of millions in loans from the ATVM in early 2010.

Before the District Court could decide Limnia’s case on the merits, however, DOE requested that the case be remanded back to the agency. The District Court granted DOE’s request, returning Limnia’s case to the agency and closing Limnia’s judicial action. In today’s opinion, the Court of Appeals found that the District Court’s decision functioned as a dismissal of Limnia’s claims and authorized further judicial proceedings.

Limnia Inc. Chairman and Vice President of Product Innovation Scott Douglas Redmond: “We fought this fight on behalf of everyone who is sick of cronyism and corruption in Washington DC and tired of having their tax dollars used against them by corrupt political insiders. This is part one of a victory, not only for our team, but for the average citizen who doesn’t want their tax dollars going to politically connected projects.”

The full opinion is available here
Visit our blog for analysis of the opinion and more information about the case here

For information regarding this press release, please contact Zachary Kurz, Director of Communications: zachary.kurz@causeofaction.org

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05/19/2017

D.C. Circuit Rules Department of Energy May Not Use “Voluntary” Remand to Evade Judicial Review

In a victory for Cause of Action Institute’s client Limnia, Inc., the Court of Appeals for the District of Columbia Circuit ruled today that a district court erred in allowing the Department of Energy (“DOE”) to use a so-called “voluntary” remand to evade judicial review of its denial of Limnia applications for a renewable energy loan and loan guarantee.

The agency attempted to escape review of its actions after Limnia had prevailed on a motion to dismiss its Administrative Procedure Act (“APA”) claim that DOE arbitrarily and capriciously rejected its applications because of political favoritism.  DOE sought a “voluntary” remand to send the case back to the agency, but instead of seeking remand to reconsider its initial decision to deny Limnia’s applications, DOE required (and the district court agreed) that Limnia must submit brand new applications and pay significantly higher application fees.  This was the agency’s downfall.

The Court of Appeals made clear that “a voluntary remand request made in response to a party’s APA challenge may be granted only when the agency intends to take further action with respect to the original agency decision on review.  Otherwise, a remand may instead function, as it did in this case, as a dismissal of a party’s claims.”

Because DOE refused to reconsider the original decision, the district court’s decision to “close the judicial action left Limnia stuck between a remand and a hard place: Without any means – judicial or administrative – to obtain review of the Department’s 2009 application decisions . . . .  As a result, the District Court’s voluntary remand order was a ‘remand’ in name only.  Limnia’s position was the same as if its case had been dismissed on the merits.”

The decision also addressed whether the district court’s remand order was a final appealable order.  The Court of Appeals held that it was because it marked the end of the district court’s consideration of the case and because Limnia would be unable to seek review of the denied applications if the remand were permitted.  See pages 9–12.

Limnia also had asked the Court of Appeals to clarify the standard of judicial review for district court grants of contested remand motions.  The parties agreed that the standard should be for an abuse of discretion, but the Court of Appeals had not previously ruled on that question.  In a footnote, the Court said that, “[e]ven assuming that the standard of review is abuse of discretion rather than de novo, a question we need not decide, we agree with Limnia that the District Court’s decision must be reversed.”  Although this does not definitively resolve the question, the Court effective said that even under the more lenient abuse-of-discretion standard, the district court erred.  That is, the question presented was not close enough that the district court would have been affirmed under abuse-of-discretion review but reversed if the Court of Appeals considered the issue de novo.

The case now returns to the district court for further proceedings.

The Court’s decision continues CoA Institute’s string of victories on important administrative law issues in front of the D.C. Circuit.  Other significant wins include:

CoA Institute President and CEO John Vecchione argued the case; on brief with him were Josh Schopf and James Valvo.

James Valvo is Counsel & Senior Policy Advisor at Cause of Action Institute and you can follow him on Twitter @JamesValvo.

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07/15/2015

Federal Judge Issues Landmark Ruling on Cronyism in Energy Loan Guarantee Program

Ruling marks the first time a court has allowed a claim under the Administrative Procedure Act on the basis of cronyism or political favoritism in federal discretionary spending.

In response to a legal complaint filed by Cause of Action (CoA), a federal judge has declared that U.S. Department of Energy discretionary spending tainted by alleged cronyism and political favoritism is subject to legal challenge.

Read the Opinion Here

Read the Order Here

Cause of Action represents XP Vehicles (XPV) and Limnia, two green energy companies that were denied loans and a loan guarantee in favor of politically-connected corporations.

XPV is a now-dissolved company that had applied for a loan under the DOE’s Advanced Technology Vehicle Manufacturing (ATVM) Loan Program in order to manufacture a lightweight, energy-efficient sport utility vehicle. XPV partnered with Limnia, a company that developed an energy storage system to power XPV’s proposed vehicle. Limnia had applied for an ATVM loan, as well as a loan under DOE’s Section 1703 Loan Guarantee Program (LGP).

The ATVM Loan Program is designed to provide direct loans to manufacturers of energy-efficient vehicles, while the LGP allows the agency to guarantee loans for advanced technology projects that result in the avoidance or reduction of air pollutants. This is the same program that awarded Solyndra $535 million in taxpayer funds.

During and after the loan application process, XPV and Limnia learned that these loan programs were being run for the benefit of politically-connected insiders.  For example, DOE provided application assistance to Tesla and Fisker that it refused to provide to XPV and Limnia (and others), and then large taxpayer-funded loans. A member of Tesla’s board, who was also a bundler during President Obama’s campaigns, was on a key DOE advisory board, and another bundler who was a Tesla investor and advisor had a primary role in the DOE’s Loan Program Office. In addition, individuals tied to Fisker had made large donations to the Obama campaign and other Democratic causes.  Also, there were emails suggesting that the DOE’s review of a loan applicant was sped up as a result of pressure from then-House Majority Leader Steny Hoyer; that the White House made an effort to encourage DOE to hasten review of another loan application; and that DOE bent its own rules to play favorites. CoA also relied upon two Government Accountability Office reports about these programs that highlighted the potential for abuse.

Judge Ketanji Brown Jackson on the United States District Court for the District of Columbia agreed with CoA, ruling that Limnia has adequately alleged that the DOE’s denials of Limnia’s ATVM Loan Program and LG Program applications were the result of arbitrary and capricious agency action in violation of the APA.

Judge Jackson has thereby allowed Limnia’s claims to proceed. This is significant because prior to this ruling, no court had ever held that cronyism or political favoritism could result in a grant or loan program being administered in an arbitrary and capricious manner.

Cause of Action Executive Director Dan Epstein issued the following statement on the ruling:

“When politicians and agencies allow companies to purchase government access, the basic foundation of our free market economy is compromised. For the first time, a federal district court has confirmed there is a legal remedy when cronyism influences federal administrative discretionary spending. This groundbreaking opinion establishes that the government owes everyone – not just Presidential campaign donors – a fair shake when awarding government funds. Judge Ketanji Brown Jackson’s common-sense judgment that government decisions tainted by cronyism and political favoritism are ‘arbitrary and capricious’ is a victory for individuals and businesses everywhere.”

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11/12/2014

DOE Follows the Rules After HARDI’s Strong Stand Against Overreach

FOR IMMEDIATE RELEASE                                                         CONTACT:      

November 12, 2014                                              Mary Beth Hutchins, 202-400-2721

DOE Follows the Rules After HARDI’s Strong Stand Against Overreach

COLUMBUS, OHIO – Because of a settlement between the Department of Energy (DOE), the Heating, Air-Conditioning & Refrigeration Distributors International (HARDI) and other stakeholders, DOE reissued a Request for Information (RFI) on energy efficiency standards for residential central air conditioners and gas furnaces on October 31, 2014.  DOE’s RFI, published in the Federal Register, seeks public comment on its authority to develop energy efficiency standards through a “Direct Final Rule.”

Thanks to the government oversight and accountability group Cause of Action, HARDI was able to effectively halt administrative abuse by forcing the DOE to reassess its rulemaking.  DOE arbitrarily attempted to set a rule driving up energy costs for consumers and businesses without following proper procedures to protect the public’s right to have input and comment. This settlement requires DOE to respect the rule of law and is a significant victory for consumers and businesses.

HARDI Executive Vice-President & Chief Operating Officer Talbot Gee said, “We have said from the start that we believed the processes which led to this rule, litigation and settlement were broken. We were pleased to have secured a commitment from DOE to assess this issue and are pleased that HARDI’s comments on the matter are a key component of the request and hopefully the basis for fixing this broken process.”

Cause of Action’s Executive Director Dan Epstein said, “When federal agencies substitute their own agendas for the rules protecting the public’s right to have notice and to comment on proposed regulatory action, then government accountability and transparency are lost. Therefore, this notice, the first step by the DOE since HARDI’s successful settlement, is a major victory for all Americans who value fair government. HARDI’s members took a firm stand, and it has paid off for both consumers and for businesses.”

About HARDI:

Heating, Air-Conditioning and Refrigeration Distributors International (HARDI) represents more than 460 wholesale companies and 300 manufacturing associates as well as nearly 140 manufacturer representatives. HARDI members represent an estimated 85 percent of the dollar value of the HVACR products sold through distribution.

About Cause of Action:

Cause of Action a nonprofit, nonpartisan government accountability organization that investigates, exposes, and fights job-killing federal government regulations, waste, fraud, and cronyism.  Cause of Action uses investigative, legal, and communications tools to educate the public on how transparency and accountability protects taxpayer interests and economic opportunity. For more information, visit www.causeofaction.org.

To schedule an interview with Cause of Action’s Executive Director Dan Epstein, contact Mary Beth Hutchins, mary.beth.hutchins@causeofaction.org

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04/24/2014

HARDI Settlement with DOE Approved by Court

Heating, Air-Conditioning and Refrigeration Distributors International (HARDI) announced today that the U.S. District Court of Appeals has approved a settlement in the long-running lawsuit regarding Regional Efficiency Standards for residential gas furnaces and central air-conditioners which were finalized by the Department of Energy (DOE) in October 2011.

The court stated, “The direct final rule, 76 Fed. Reg. 37408 (June 27, 2011), and notice of effective date, 76 Fed. Reg. 67037 (Oct. 31, 2011), as they relate to energy conservation standards for non-weatherized gas furnaces, including but not limited to the Department of Energy’s determination that such furnaces constitute a single class of products for purposes of 42 U.S.C. §§ 6295(q)(1)(B), 6295(o)(4), are hereby vacated and remanded to the Department of Energy for notice and comment rulemaking in accordance with the Energy Policy and Conservation Act.”

You can find the settlement agreement here and the court’s order here.

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03/11/2014

HARDI Announces Settlement with DOE in Regional Efficiency Standards Lawsuit

For Immediate Release

Contact:                                                                                                          

Whitney Neal, Digital Communications & PR Coordinator

wneal@hardinet.org

Jon Melchi, Director of Government Affairs

jmelchi@hardinet.org

 

HARDI Announces Settlement with DOE in Regional Efficiency Standards Lawsuit

Columbus, Ohio– Heating, Air-Conditioning and Refrigeration Distributors International (HARDI) announced today that it reached a settlement in the long-running lawsuit regarding Regional Efficiency Standards for residential gas furnaces and central air-conditioners which were finalized by the Department of Energy (DOE) in October 2011. Represented by government accountability group Cause of Action, HARDI agreed to a settlement, which would remand the efficiency standards for gas furnaces, forcing the DOE to restart the process for assessing efficiency standards and to do so in a more transparent manner.

The settlement, which will take effect upon judicial approval, signifies a victory for heating, ventilation, air-conditioning, and refrigeration distributors, who intervened in the lawsuit challenging the standards, citing DOE’s abuse of process in utilizing a regulatory procedure which ignored the input of distributors and other stakeholders.

Executive Director Dan Epstein of Cause of Action said:

“Due process in agency rulemaking exists to give all Americans a voice instead of merely relying upon the unelected elite.  The DOE effectively overruled the voices of American consumers and small businesses concerning energy efficiency standards, removing all accountability, which is why Cause of Action took up this case.  This settlement is a victory for thousands of businesses, consumers, and manufacturers as the DOE has agreed to a standard of transparency and accountability when creating new rules going forward.”

HARDI President Royce Henderson (Charles D. Jones Company) stated:

“Our goal from the start has been twofold. The first was to provide relief to our members who faced damages as a result of DOE’s actions. The second has been to fix the process, so this will never happen again. We believe this settlement accomplishes both goals to the greatest extent possible.”

Other terms of the settlement:

  • The increase and regionalization in the standards for central air-conditioners will remain, but the DOE has allowed for a “sell-through” period of 18-months and agreed to not-penalize HVACR distributors as part of the enforcement of the Regional Standard.
  • Additionally, the DOE has agreed to engage in a process to review the regulatory processes which established the regional efficiency standards.

The court document can be found here.

 

About HARDI:

Heating, Air-Conditioning and Refrigeration Distributors International (HARDI) represents more than 460 wholesale companies and 300 manufacturing associates as well as nearly 140 manufacturer representatives. HARDI members represent an estimated 85 percent of the dollar value of the HVACR products sold through distribution.

About Cause of Action:

Cause of Action a nonprofit, nonpartisan government accountability organization that investigates, exposes, and fights job-killing federal government regulations, waste, fraud, and cronyism.  Cause of Action, uses investigative, legal, and communications tools to educate the public on how transparency and accountability protects taxpayer interests and economic opportunity. For more information, visit www.causeofaction.org.

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11/5/2013

Related Documents: American Public Gas Association v. Department of Energy

The Department of Energy issued a rule that will drive up costs for distributors, installers, and consumers of heating and air conditioning products across the United States.  Refusing to acknowledge properly filed comments and concerns from HARDI, the Department of Energy issued new energy efficiency standards.  Cause of Action took up HARDI’s case in the U.S. Court of Appeals to hold the Department of Energy accountable for ignoring procedure and inflicting job-killing regulation on the heating and air industry.

United States Court of Appeals for the District of Columbia

Settlement Order (April 24, 2014)

Joint Brief of Intervenors Heating, Air-Conditioning & Refrigeration Distributors International (HARDI) and Air Conditioning Contractors of America (ACCA) in Support of Petitioner (January 28, 2014)

Brief for Petitioner American Public Gas Association (January 13, 2014)

Joint Response (September 18, 2013)

Joint Brief of Intervenors (May 29, 2013)

Motion to Intervene of the Heating, Air-Condition & Refrigeration Distributors International (“HARDI”) (January 20, 2013)

Court grants HARDI opportunity to challenge DOE decision-making (May 3, 2012)

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