In the Matter of Resolute v. United States Department of Agriculture
Sept. 14, 2015 - Resolute Forest Products Inc. today announced that a U.S. federal court has ordered the U.S. Department of Agriculture (USDA) to try again to provide "a reasoned and coherent treatment" of its decision implementing an order to collect taxes on softwood lumber shipments in the United States. On September 9, 2015, the court granted part of Resolute's motion contesting the lawfulness of the USDA's "Softwood Lumber Checkoff" order imposing the tax. According to the court, the government's explanation of its decision to exclude certain softwood lumber manufacturers from paying or voting on the tax "strains credulity," and the USDA was either "hiding the ball" or else "ill informed" about the number of companies it had exempted. The court also reserved for another day Resolute's claims that the order violates the U.S. Constitution.
The USDA instituted a tax in 2012 on all shipments of softwood lumber in North America as part of a scheme proposed by the Binational Softwood Lumber Council, which was created under the now-expiring 2006 Softwood Lumber Agreement between Canada and the United States. Resolute objects to paying this tax, which it considers an unnecessary additional burden on international commerce.
A USDA Administrative Law Judge upheld the "Checkoff" tax initially, despite finding that materials prepared by the Blue Ribbon Commission to promote the Checkoff order in a referendum "contained statements that are wrong." Upon reviewing the Administrative Law Judge's decision, U.S. District Court Judge James Boasberg agreed with Resolute that the procedures creating the tax may have been defective, and remanded the agency's decision.
In reaching his decision, Judge Boasberg said that "Resolute is understandably upset by the agency's evasion" and that Defendants' interpretation of the law "is dubious for several reasons."
The USDA must now come up with answers to the questions posed by Judge Boasberg. Because the tax has been in place for years and is part of a complex administration, Judge Boasberg is permitting it to continue while waiting for answers. However, should USDA not come up with satisfactory answers, the court may be forced to terminate the tax, and require USDA to provide restitution to Resolute for all funds Resolute has been required to pay.
If Judge Boasberg finds the answers on possible statutory violations satisfactory, he then would have to address Resolute's complaint that the entire scheme is unconstitutional. Under U.S. practice, courts resolve statutory disputes before addressing constitutional claims. When complaining parties prevail in their statutory claims, the Court does not reach, and therefore does not rule on, constitutional claims. So far, Judge Boasberg has not addressed Resolute's claims that the entire tax scheme is unconstitutional because he agrees that it might be contrary to law.
Resolute Forest Products is a global leader in the forest products industry with a diverse range of products, including newsprint, specialty papers, market pulp and wood products. The company owns or operates some 40 pulp and paper mills and wood products facilities in the United States, Canada and South Korea, and power generation assets in Canada. To learn more, please visit: www.resolutefp.com
SOURCE: Resolute Forest Products Inc.