The D.C. Circuit ended the month of August with a host of opinions on administrative law as well as arbitration and criminal law and criminal procedure. These included a case about generic drugs that involved judicial review under Loper Bright Enterprises v. Raimondo as well as two cases concluding that but-for causation is the default under federal statutes that do not specify a causation rule.

Norwich Pharmaceuticals, Inc. v. Kennedy

In the Food, Drug, and Cosmetic Act (FDCA), Congress enacted a policy designed to increase competition and lower consumer drug prices by incentivizing generic manufacturers to bring generics into the prescription drug market. A generic drug manufacturer faces the risk that the brand-name manufacturer will sue it for patent infringement. If a generic manufacturer wins the patent infringement suit, then not only it, but subsequent generic manufacturers get a victory because they “might avoid patent litigation entirely.” To incentivize generic manufacturers to be the first mover, Congress created a 180-day period of marketing exclusivity for the first company to submit a complete application to market a generic version of the drug. Because, however, Congress also recognized the possibility that a brand name manufacturer and a generic manufacturer would collude to delay the marketing of generic drugs, it also enacted forfeiture provisions under which the first-mover generic manufacturer forfeits the 180-day exclusivity window. 

Norwich Pharmaceuticals wanted to market a generic version of the drug rifaximin, which is used to treat irritable bowel syndrome with diarrhea among other conditions. The FDA concluded that its application met the standard requirements for final approval but that another generic drug manufacturer, Actavis, had a right to the 180-day period of marketing exclusivity. Norwich sued and argued that the FDA acted arbitrarily and contrary to law in concluding that Actavis had not forfeited its exclusivity period.

Writing for the panel, Judge Garcia concluded that the FDA was partly right and partly wrong. The agency was correct that Actavis had not failed to the market its generic drug. One ground for forfeiture of the exclusivity period is a “failure to market” the generic. Exercising its independent judgment under Loper Bright Enterprises v. Raimondo, the D.C. Circuit concluded that the FDA was correct to read the “statutory phrase ‘a certification qualifying the first applicant for the 180-day exclusivity period’ . . . to encompass each of the Paragraph IV certifications ‘contain[ed] and lawfully maintain[ed]’ in the first applicant’s [abbreviated new drug application, an application that generic manufacturers use to piggy-back on the safety and efficacy evidence of the brand-name manufacturer].” On that reading, Actavis had not failed to market the drug because a triggering event had not occurred for each of the relevant patents.

The FDA, however, applied the wrong causation standard when it concluded that another forfeiture provision did not apply. This second provision says that an applicant’s “failure to obtain tentative approval” from the FDA is grounds for forfeiture. There is a 30-month deadline under this provision. Actavis did not get tentative approval within that window. But the FDA said that this missed deadline did not matter because the agency’s own policy guidance was a cause. In reaching this conclusion, the FDA said that it was not applying a but-for causation rule. Judge Garcia ruled that this was a mistake because Congress’s use of the phrase “caused by” should be read to incorporate a but-for causation rule from the common law. There are other causation rules in the common law, such as a multiple sufficient causes rule, but the but-for causation rule was the default. Even though the FDA had reasonable policy arguments for why the but-for causation rule was a poor fit and would unnecessarily present “additional complexities,” the court would “not defer to agency interpretations of statutes,” as per Loper Bright. 

SGCI Holdings III LLC v. FCC

Judge Wilkins wrote for a unanimous panel that affirmed the dismissal of constitutional and common law claims alleging that FCC officials and various private individuals racially discriminated against the owners of SGCI holdings in connection with a proposed merger that would have resulted in the transfer of an FCC license. The FCC’s approval was required for the merger. The agreement specified that it would expire if the FCC did not approve it within 450 days. The agency did not approve the proposed merger within that window and the agreement expired. The claim for prospective relief against the FCC officials failed on standing grounds under the Lyons rule requiring a showing of “a substantial risk of future injury.” The conspiracy and civil rights claims against the private defendants were justiciable but they failed on the merits under the Iqbal pleading rule. While the claimants “characterized [various] comments as evincing a preference for Black owners over Asian owners, . . . that is not supported by any of the objectors’ comments in the record when reviewed in context.” The court concluded that “all the comments Appellants point to in their complaint are not racist or xenophobic, but instead, are related to concerns regarding the structure and financing of Standard General and the merger at large.”

Slash Creek Waterworks, Inc. v. Lutnick

The fate of the South Atlantic red snapper, or, at least, the fate of the Amendment 43 rule about red snappers, hung in the balance. The National Marine Fisheries Service’s Amendment 43 to the South Atlantic Snapper-Grouper Fishery Management Plan established an annual catch limit that did not “restrict ‘dead discards’—fish that die after being caught and thrown back.” Commercial fishers and buyers sued and argued that Amendment 43 would not prevent overfishing, which the authorizing statute required the Service to do. 

Writing for the panel, Chief Judge Srinivasan held that the D.C. Circuit’s decision in A.P. Bell Fish Co. v. Raimondo controlled the case. The Service argued that it had adopted a new amendment, called Amendment 59, which purportedly mooted the case. Not so, Chief Judge Srinivasan explained, “[b]ecause Amendment 59 injures appellants in fundamentally the same way as did Amendment 43.” If there was a problem with 43, it was still there with 59. But, as it turns out, there wasn’t a problem: Both of the challengers’ statutory arguments were “foreclosed by A.P. Bell,” a case about fishing of red grouper. What was good policy for the red grouper, it turned out, was good for the red snapper.

Center for Biological Diversity v. EPA

In an opinion by Chief Judge Srinivasan, the D.C. Circuit dispensed with a petition for review of the EPA’s 2024 rule on national ambient air quality standards for nitrogen oxides and sulfur oxides. It concluded that the EPA reasonably concluded that it did not need to consult with the Fish and Wildlife Service or the National Marine Fisheries Service, given the agency’s conclusion that the 2024 rule would not “affect” species or habitats protected by the Endangered Species Act. The D.C. Circuit applied a but-for causation rule in reviewing this conclusion. 

The FERC Cases

FERC prevailed in two unrelated cases about natural gas pipeline facilities. In For a Better Bayou v. FERC, the D.C. Circuit deferred to the Commission’s technical determinations, while in East Tennessee Group v. FERC, it concluded that the Commission had not deprived the petitioners of due process because they “had a ‘meaningful opportunity to challenge’ the evidence that they tardily received.” In the East Tennessee case, the court explained that while agencies do not “have carte blanche to delay the dissemination of documents relevant to a proceeding to interested parties until after the order has been issued,” the petitioners had failed to show “how the delay in disclosure caused any actual prejudice to their challenge.”

Beyond Administrative Law

The D.C. Circuit also decided a case about mandatory arbitration and criminal law and criminal procedure.