As was the case last week, decisions are starting to flow at the pace you might expect for a court trying to wrap up (most of) its cases by end of summer. The D.C. Circuit handed down 5 decisions this week, which as a group illustrate how hard it can be to overturn agency action. Before we get to the decisions, though, more news on the personnel front in what has already been a year of substantial change: Judge Judith Rogers announced at the end of last week that she would take senior status, after nearly 30 years of active service on the D.C. Circuit.
Turning to this week’s opinions, one that may be of interest to anyone who practices in areas involving state-federal partnerships in licensing/permits is City of Salisbury, NC v. FERC, No. 20-1238 (D.C. Cir. June 10, 2022) (Katsas, J.). The case involved whether FERC had reasonably interpreted and implemented a state condition imposed on the licensing of a hydroelectric dam. FERC asked the court to defer to its interpretation of the licensing condition, but the court was “not so sure that deference is appropriate here, because state-imposed conditions under the Clean Water Act raise distinctive deference questions.” Slip op. at 6. “Given th[e] assignment of substantive authority to the states,” the court was “reluctant to vest in FERC the interpretive authority to resolve ambiguities in water-quality certifications as it thinks best.” Id. In the end, the court reserved the question, because it agreed with FERC’s interpretation. But the decision points to reasons to deny deference in analogous circumstances. The remainder of the opinion is a useful illustration of the “last antecedent” canon (in interpreting the licensing condition) and a straightforward application of the arbitrary-and-capricious standard in holding that FERC reasonably decided a dam operator’s plan would protect the ability of the petitioner city’s pumping station to operate during flooding.
Two other decisions illustrate how deferential review of agency action can be, implicitly or explicitly. In Oceana, Inc. v. Raimondo, No. 21-5120 (D.C. Cir. June 7, 2022) (Randolph, J.), the court rejected a claim that the National Marine Fisheries Service had violated a governing statute by failing to adopt stricter regulations or accountability measures to reduce “bycatch” of the dusky shark. (Bycatch, in general terms, refers to fish which are not targeted by commercial fisheries but incidentally harvested and not kept). Although the court made no express mention of arbitrary-and-capricious review, it applied something like it and rejected Oceana’s claims. Along the way, the panel took umbrage at “an all-too-familiar mode of appellate brief writing,” that “wastes space plucking quotations from our court’s opinions and stringing them together without analysis.” Slip op. at 13. The court explained that it did not need reminding that it “does not ‘rubber-stamp’ agency action, that we do not ‘accept bare conclusory allegations as fact,’ and that we do not defer to ‘unsupported suppositions.’” Id. In fact, it reassured the litigants that “we have never used or even owned a rubber stamp.” Appellate brief writers take note!
A third case exemplifies one of the most difficult standards of review known to the law (from a plaintiff perspective), which governs review of agency denials of petitions for rulemaking. It is “extremely limited and highly deferential,” Massachusetts v. EPA, 549 U.S. 497, 527-28 (2007), requiring a “plain error of law or a fundamental change in the factual premises previously considered by the agency.” Nat’l Customs Brokers & Forwarders Ass’n of Am., Inc. v. United States, 883 F.2d 93, 97 (D.C. Cir. 1989). In McAfee v. FDA, No. 21-5170 (D.C. Cir. June 10, 2022) (Pillard, J.), the court applied that deferential standard to deny a petition for review by a farmer who sells unpasteurized butter. He had asked the FDA to revoke its “decades-old rule under the Public Health Service Act (PHSA) that bars the interstate sale of raw [(unpasteurized)] butter,” slip op. at 2, on the ground that it conflicts with the Food, Drug, and Cosmetic Act, which defines butter without expressly requiring pasteurization and does not permit the FDA to set any other “standard of identity” for butter. The D.C. Circuit affirmed the district court’s dismissal in a straightforward opinion finding no legal conflict between the statutes, given “the distinct roles of the food-naming and public-health provisions.” Slip op. at 7.
The last two cases for the week were filed by the hemp industry and illustrate how carefully litigants must sometimes thread the needle to obtain review on the merits (or, as it happened, not). The factual background is described in Hemp Industries Association v. DEA, No. 21-5111 (D.C. Cir. June 10, 2022), authored by Judge Henderson and joined by Judges Rogers and Silberman. In short, Congress altered DEA’s authority to regulate hemp in 2018, defining hemp as certain material with less than .3% THC (the main psychoactive compound in marijuana). In 2020, the DEA issued an interim final rule implementing the statutory change. From the hemp industry’s perspective, however, the rule’s language regarding hemp’s less-than-.3%-THC requirement left “understandable confusion,” slip op. at 7, because hemp-extract production starts with plant material that is less than .3% THC, and ends with a product that is less than .3% THC, but along the way produces waste products that exceed .3% THC. The hemp industry filed two separate lawsuits challenging what they perceived as DEA’s attempt to use the waste products to assert regulatory authority over hemp products beyond what the statute allowed.
The industry did not succeed in obtaining review on the merits in either case. Why? In the suit filed in district court, they explained the waste by-product issue and how, in their view, the DEA’s rule conflicted with the statute. But rules under the Controlled Substance Act can be challenged only in petitions for review filed directly in a court of appeals. 21 U.S.C. § 877. So the district court dismissed the action and the D.C. Circuit affirmed, finding unavailing plaintiffs’ attempts to frame their claims as something other than a challenge to the final rule (among other reasons for dismissal). Clearly aware of § 877, however, the industry had also filed a petition for review in the D.C. Circuit. But that petition did not specifically mention the waste products. It was heard by the same panel and dismissed in for lack of standing (with Judge Silberman writing), in part because Petitioners did not explain their “claim that the regulation increases DEA authority over what the statute contemplates.” See Hemp Industries Ass’n v. DEA, No. 20-1376, at 4 (D.C. Cir. June 10, 2022). The panel noted the waste-product issue raised in the other case but said it was not raised in the petition “perhaps in an attempt to preserve their characterization of that [district court] suit as not challenging the interim final rule.” Slip op. at 4 n.4. It is not uncommon for litigants to file both an APA suit in district court and a petition for review when they face some uncertainty as to where their claims should properly be filed, but these cases provide a cautionary tale of how that approach can be fraught with peril, with an end result that the claims were not formally addressed on the merits in either forum.