Center for Environmental Health v. Vilsack

Background

Seven nonprofit organizations challenged the USDA’s withdrawal of the Organic Livestock and Poultry Practices Rule. The rule would have strengthened and standardized requirements concerning organic livestock and poultry, including access to indoor and outdoor spaces and animal-welfare practices. The USDA published the rule in January 2017, but delayed its effective date three times before withdrawing it in March 2018.

The USDA’s withdrawal relied partly on its view that the Organic Foods Production Act did not authorize broad animal-welfare regulations. It also relied on economic considerations, including alleged errors in the regulatory impact analysis, which is an agency’s analysis of a rule’s expected costs and benefits. During the litigation, the USDA determined that similar errors affected the withdrawal rule’s analysis. The Biden administration stated that it intended to conduct new rulemaking incorporating key elements of the original rule while correcting the errors.

The parties’ positions

The plaintiffs sought summary judgment, arguing that the withdrawal violated the Organic Foods Production Act and was arbitrary and capricious under the Administrative Procedure Act. The USDA sought voluntary remand, meaning that the court would return the matter to the agency for further consideration, without vacating the withdrawal rule. In the alternative, the USDA sought summary judgment.

The plaintiffs opposed remand and asked the court to vacate, or set aside, the withdrawal rule. They argued that uncertainty about a replacement rule and further delay would harm the purposes of the Organic Foods Production Act and allow inconsistent practices to continue. The USDA argued that vacatur would immediately put the original rule into effect even though its economic analysis was flawed, causing regulated entities to become immediately out of compliance and creating administrative disruption.

Court’s analysis

Judge Seeborg explained that courts generally grant an agency’s request for voluntary remand unless the request is frivolous or made in bad faith. The court found that the USDA had acknowledged errors in both economic analyses and had made clear that it intended to proceed with new rulemaking. Although the timing of a new rule was uncertain, the court found no bad faith or frivolity.

The court also considered whether remand would unduly prejudice the plaintiffs. It concluded that the plaintiffs’ concerns were not severe enough to justify denying remand. In the court’s view, immediately imposing a rule that the agency acknowledged was unsound could undermine trust in the organic label, rather than prevent the harm identified by the plaintiffs.

Vacatur

The court stated that it was unsettled whether a court may vacate an agency action before entering a final judgment on the merits. It therefore did not definitively resolve that legal question. Instead, the court held that vacatur would not be appropriate even if it were legally permitted.

Applying the two-part test used for vacatur, the court considered the seriousness of the agency’s errors and the disruptive consequences of temporarily changing the governing rule. The court acknowledged flaws in the withdrawal rule’s economic analysis and stated that at least one of the plaintiffs’ arbitrary-and-capricious arguments would likely succeed if the case proceeded to judgment. But it gave those deficiencies less weight because the agency had recognized them and was addressing them through new rulemaking.

The court emphasized that vacating the withdrawal would cause the original livestock rule to take effect immediately, even though that rule had a similarly flawed economic analysis and its compliance deadlines had passed. The result could be immediate noncompliance, companies scrambling to adjust, and wasted administrative resources. The court therefore granted remand without vacatur.

Disposition

The USDA’s motion for remand without vacatur was granted. The parties’ motions for summary judgment were denied as moot. The parties were ordered to file a status report within 180 days.