this is standard stuff. The judge wants you to contact the AUSA handling your case and let him know that by 8/15/2007 both of you are supposed to submit discovery plan. If your AUSA agrees to work on such a plan, most likely he won't, natsena had uploaded a sample discovery document. Use it and ask the right questions that will help your case.
In all possibility AUSA will decline discovery and will let u know that he will file an answer together with or seperately a Motion-to-dismiss. Then you'll have to inform the judge that discovery is not possible.
Discovery is a phase where plaintiff and defendant can exchange information that'll help them decide the case without a trial. If discovery doesn't happen the case goes to trial automatically.
other experienced Wormers correct me if I'm wrong.
You are right, with some additional clarifications (the following is from Wikipedia):
"The early stages of the lawsuit may involve discovery, which is the ordered exchange of evidence and statements between the parties based on what they each expect to argue during the actual trial. Discovery is meant to eliminate surprises and clarify what the lawsuit is about, and perhaps to make a party realize they should settle or drop the claim, all before wasting court resources. At this point the parties may also engage in pretrial motion filing in order to exclude or include particular legal or factual issues before trial, by blocking the other party from presenting a particular witness or arguing a particular legal theory.
At the close of discovery, the parties may pick a jury and then have a trial by jury. Or, the case may proceed as a bench trial heard only by the judge, if the parties waive a jury trial, or if the right to a jury trial is not guaranteed for their particular claim (such as those under equity in the U.S.) or for any lawsuits within their jurisdiction."
In my interpretation the judge can order discovery even if the defendants don't agree with a discovery plan. I saw cases, when the judge ordered USCIS to produce the full A file of Plaintiff and not even arguing that some parts are classified didn't stop the discovery. The judge simply ordered an in camera view (under seal) presentation of the classified part (this means that Plaintiff or his/her counsel didn't have access to the classified document; this was presented only to the judge).