CIT Dismisses Softwood Lumber Challenge in 2nd Hearing of Disbursement Claims

The Court of International Trade granted the U.S. Trade Representative’s motion to dismiss a challenge to the 2006 Softwood Lumber Agreement’s provision to distribute $500 million solely to members of the Coalition for Fair Lumber Imports (CFLI). The action was brought by non-CFLI members of the domestic softwood lumber industry.

(The 2006 Softwood Lumber Agreement between the U.S. and Canada, the third such agreement since 1986, required the U.S. to refund nearly $5 billion in antidumping and countervailing duties in exchange for Canada’s commitment to (i) impose export quotas and charges to limit exports of Canadian softwood lumber to the U.S., as well as (ii) distribute $1 billion from the returned cash deposits, including $500 million to members of the CFLI, $50 million to the binational industry council, and $450 million for “meritorious initiatives”.)

USTR’s Negotiations a “Political Question” that CIT Cannot Decide

With regard to plaintiffs’ claim that the USTR’s actions in negotiating the provision were contrary to law, CIT ruled that the USTR’s negotiation of the provision did not violate the relevant statute, and that the USTR’s negotiation of the provision constitutes a political question, properly decided by the Executive Branch as a matter of trade policy and foreign affairs. Therefore, CIT dismissed plaintiffs’ claim as a non-justiciable political question and for failure to state a claim.

Equal Protection Challenges Dismissed as USTR Actions were Rational

Plaintiffs’ claims that the provision violates the equal protection guarantee were similarly dismissed for failure to state a claim. CIT found, among other things, that the exclusive disbursement of the funds to the CFLI was rationally related to the USTR’s purpose of ending the undesirable trade practices of the Canadian softwood lumber industry.

Noting CFLI’s role as the primary representative of the domestic industry in the various proceedings at the time the agreement was negotiated, CIT said that, as part of the agreement was to settle the ongoing litigation, the USTR’s determination that a reasonable means of securing an agreement to terminate the lawsuits and proceedings was to compensate members of the CFLI was rationally related to the legitimate objective of curbing trade practices that were harming the domestic industry.

USTR Did Not Improperly Delegate Distribution of Funds

Finally, CIT ruled that, with respect to plaintiffs’ claim that the USTR impermissibly delegated the authority to distribute the $500 million in question, the plaintiffs did not identify an administrative authority that had been delegated, and dismissed the claim.

(This action was originally dismissed by CIT in 2009 because it found that plaintiffs’ claim was not in its jurisdiction. On appeal, the Court of Appeals for the Federal Circuit held that plaintiffs’ claims were within the jurisdiction of CIT and remanded. See ITT’s Online Archives 09060250 for summary of CIT’s original ruling, and 11070857 for summary of the CAFC’s reversal and remand.)

(Slip Op. 12-51, dated 04/19/12, Judge Eaton)