COMPASSION OVER KILLING, a nonprofit organization; Animal Legal Defense Fund, a non-profit organization; Elizabeth Barrett; Andrea Bock; Linda Calbreath; Jason Canada; Jeri Opalk; Humberto Retana, Plaintiffs-Appellants, v. U.S. FOOD & DRUG ADMINISTRATION; Margaret Hamburg, M.D., Commissioner; Agriculture Marketing Service; David R. Shipman, Administrator; Food Safety and Inspection Service; Alfred V. Almanza, Administrator; Federal Trade Commission; Edith Ramirez, Chairwoman, Defendants-Appellees.
No. 15-15107
United States Court of Appeals, Ninth Circuit.
February 27, 2017
849 F.3d 849
Argued and Submitted December 14, 2016, San Francisco, California
III.
In an opinion published concurrently with this order, we resolved a separate question of whether our court has jurisdiction to review the district court‘s decision to strike the class allegations. All other further proceedings in this case are stayed pending receipt of the answer to the certified question or notification by the Oregon Supreme Court that it declines to answer the certified question. The parties shall notify this court within ten days after the Oregon Supreme Court accepts or rejects certification. In the event that the Oregon Supreme Court accepts certification, the parties shall file a joint status report with this court six months after the date of acceptance and every six months thereafter, or within ten days of the Oregon Supreme Court‘s decision, whichever is earlier.
The Clerk shall file a certified copy of this order with the Oregon Supreme Court under
IT IS SO ORDERED.
Jeffrey E. Sandberg (argued) and Mark B. Stern, Attorneys, Appellate Staff; Brian Stretch, Acting United States Attorney; Benjamin C. Mizer, Principal Deputy Assistant Attorney General; Civil Division, United States Department of Justice, Washington, D.C.; for Defendants-Appellees.
Before: MICHAEL DALY HAWKINS, MARSHA S. BERZON, and MARY H. MURGUIA, Circuit Judges.
OPINION
MURGUIA, Circuit Judge:
Plaintiffs Compassion Over Killing, the Animal Legal Defense Fund, and six individual egg consumers submitted rulemaking petitions to Defendants U.S. Food and Drug Administration (“FDA“), Federal Trade Commission (“FTC“), Agricultural Marketing Service (“AMS“), and Food Safety and Inspection Service (“FSIS“), requesting that each agency promulgate regulations that would require all egg cartons to identify the conditions in which the egg-laying hens were kept during production. Each agency denied Plaintiffs’ rulemaking petition. Plaintiffs initiated the underlying lawsuit claiming that each agency had acted arbitrarily and capriciously in dismissing their rulemaking petitions. The district court concluded that Defendants had each acted reasonably in denying Plaintiffs’ petitions and granted summary judgment in favor of Defendants. We have jurisdiction pursuant to
Plaintiffs submitted similar rulemaking petitions to the FDA, FTC, AMS, and FSIS requesting that each agency “take regulatory action to revise the current labeling requirements for eggs at
Each agency denied Plaintiffs’ petition for rulemaking. The FSIS and AMS explained that they could not promulgate the proposed regulations because they lacked the authority to take the requested action. The FTC explained that, based on the information Plaintiffs provided in the petition, it could not conclude that current egg-labeling practices were either “unfair or deceptive.” The FTC also concluded that the petition had not sufficiently demonstrated that any misleading practice was “prevalent,” as statutorily required for rulemaking. Lastly, the FTC explained that the agency‘s resources would be better used by combating any potentially deceptive practices through individual enforcement actions, rather than by promulgating new regulations.
The FDA denied Plaintiffs’ request for rulemaking because it determined that Plaintiffs had failed to show that current egg labels omitted a “material” fact by not indicating the living conditions of the egg-laying hens. The FDA specifically explained that it could not determine that this information was material because Plaintiffs had not provided persuasive evidence that eggs from caged hens are either less nutritious or more likely to be contaminated with Salmonella than eggs from uncaged hens. The FDA also explained that consumer interest in the hens’ living conditions, alone, is insufficient to establish that egg-production methods are a material fact that would permit the FDA to issue the requested regulations. Lastly, the FDA stated that it declined to promulgate the proposed labeling regulations because it could bring individual enforcement actions against any misbranded eggs, and “it would choose to use its limited resources on rulemakings of higher priority, such as those that are of greatest public health significance or are statutorily-mandated.”
Plaintiffs filed this lawsuit, alleging that the FSIS, AMS, FTC, and FDA had each acted arbitrarily and capriciously in dismissing their rulemaking petitions. Plaintiffs moved for summary judgment, and Defendants filed a cross-motion for summary judgment, arguing that each agency had acted reasonably in denying Plaintiffs’
II.
This Court reviews challenges to final agency action decided on summary judgment de novo and pursuant to Section 706 of the Administrative Procedure Act (“APA“). Turtle Island Restoration Network v. Nat‘l Marine Fisheries Serv., 340 F.3d 969, 973 (9th Cir. 2003). The APA requires the Court to “hold unlawful and set aside agency action, findings, and conclusions found to be . . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
A.
Plaintiffs argue that the FSIS acted arbitrarily and capriciously by denying their rulemaking petition based on the agency‘s conclusion that it lacks the authority to promulgate the proposed regulations. Plaintiffs specifically argue that the FSIS has the authority to regulate the labeling of shell eggs under the Egg Products Inspection Act (“EPIA“),
The FSIS correctly concluded that it lacks the authority to promulgate Plaintiffs’ proposed labeling regulations for shell eggs. The EPIA expressly distinguishes between the terms “egg products” and “eggs,” and grants broad authority to the FSIS to regulate the labeling only of “egg products.” See
B.
Plaintiffs also argue that the AMS acted arbitrarily and capriciously in denying their rulemaking petition based on the agency‘s conclusion that it lacks the authority to promulgate mandatory labeling regulations. Plaintiffs maintain that the AMS has the authority to issue their proposed regulations under the Agricultural Marketing Act of 1946 (“AMA“),
The AMS correctly concluded that it lacks the authority to promulgate mandatory labeling requirements for shell eggs. The relevant grant of authority in the AMA only authorizes the AMS “[t]o develop and improve standards of quality, con-
C.
Plaintiffs argue that the FTC acted arbitrarily and capriciously by denying their rulemaking petition without completing an appropriately substantive analysis of the petition. Plaintiffs also argue that, because the FTC did not appropriately review the rulemaking petition, the agency should not be permitted to exercise its discretion to address any misleading egg labeling through ad hoc enforcement actions.
The Federal Trade Commission Act (“FTCA“),
In its letter denying Plaintiffs’ petition, the FTC explained that it could not conclude that the potentially unfair or deceptive labeling practices Plaintiffs challenge are “prevalent” as that term is used in the FTCA. The FTC specifically concluded, and Plaintiffs do not dispute, that the agency has not issued any cease-and-desist orders concerning the egg-labeling practices identified in their petition. The FTC also reasonably concluded that Plaintiffs had submitted insufficient evidence to establish that any potentially unfair or deceptive egg-labeling practices were “widespread.” While Plaintiffs submitted isolated examples of potentially misleading egg labels and survey evidence concerning consumer confusion over the word “natural,” Plaintiffs have not identified any evidence submitted to the FTC tending to indicate that such practices were sufficiently widespread to justify promulgating their proposed regulations. In light of the limited evidence before the FTC showing any “prevalent” unfair or deceptive practices, the FTC‘s decision to deny Plaintiffs’ petition on this basis was reasonable. See Massachusetts, 549 U.S. at 533 (requiring a “reasonable explanation as to why [an agency] cannot or will not exercise its discretion” to decline rulemaking).
The FTC also reasonably denied Plaintiffs’ rulemaking petition based on its discretion to combat any potentially misleading egg labeling through ad hoc enforcement proceedings. See SEC v. Chenery Corp., 332 U.S. 194, 203 (1947)
D.
Plaintiffs argue that the FDA acted arbitrarily and capriciously in denying their rulemaking petition because the agency failed to consider their claims that egg cartons are widely misbranded not only because their labels omit material information, but also because current labeling practices affirmatively misrepresent the nature of the hens’ living conditions. Plaintiffs also argue that the FDA improperly rejected their scientific evidence that the egg-laying hens’ living conditions increase the risk of Salmonella-contamination and negatively affect the nutritional value of the eggs. Lastly, Plaintiffs contend that because the FDA failed to appropriately review their petition, the agency should not be permitted to summarily exercise its discretion to prioritize other agency goals in order to avoid addressing Plaintiffs’ request for rulemaking.
The Federal Food, Drug, and Cosmetic Act (“FDCA“),
To the extent Plaintiffs’ petition argued that egg production methods were an omitted material fact that required disclosure because the hens’ living conditions affect the likelihood of Salmonella-contamination or the nutritional value of the eggs, the FDA explained that Plaintiffs had provided insufficient reliable scientific evidence to support these claims. While Plaintiffs dispute the FDA‘s decision to reject their scientific evidence, the Court will not second guess the FDA‘s conclusion that these studies were insufficiently reliable, largely because they failed to control for relevant variables. See N. Plains Res. Council, Inc. v. Surface Transp. Bd., 668 F.3d 1067, 1075 (9th Cir. 2011) (“A court generally must be ‘at its most deferential’ when reviewing scientific judgments and technical analyses within the agency‘s expertise.” (quoting Balt. Gas & Elec. Co. v. Nat. Res. Def. Council, Inc., 462 U.S. 87, 103 (1983))).
To the extent Plaintiffs’ petition argued that egg-production methods were an omitted material fact that required disclosure in light of misleading affirmative representations that appear on egg cartons,
The decision to take enforcement action against misbranded eggs on a case-by-case basis, as opposed to promulgating regulations that would apply to all egg producers, is left to the broad discretion of the FDA. See Chenery Corp., 332 U.S. at 203. Similarly, the agency‘s decision to prioritize other projects is entitled to great deference by a reviewing court. See Massachusetts, 549 U.S. at 527; see also In re Barr Labs., Inc., 930 F.2d 72, 76 (D.C. Cir. 1991) (“[W]e have no basis for reordering [the FDA‘s] priorities. The agency is in a unique—and authoritative—position to view its projects as a whole, estimate the prospects for each, and allocate its resources in the optimal way.“).
We note, however, that such broad discretion should not be construed as providing a blanket exception to APA review in any matter involving the allocation of agency resources. See WWHT, Inc. v. F.C.C., 656 F.2d 807, 814 (D.C. Cir. 1981) (“[W]e reject the suggestion that agency denials of requests for rulemaking are exempt from judicial review.“). In denying a petition for rulemaking, an agency must, at a minimum, clearly indicate that it has considered the potential problem identified in the petition and provide a “reasonable explanation as to why it cannot or will not exercise its discretion” to initiate rulemaking. Massachusetts, 549 U.S. at 533; Ctr. for Biological Diversity v. U.S. Fish & Wildlife Serv., 807 F.3d 1031, 1042-43 (9th Cir. 2015) (stating that an agency action is considered “arbitrary and capricious” if the agency has “entirely failed to consider an important aspect of the problem” (quoting Pac. Coast Fed‘n of Fishermen‘s Ass‘ns v. Nat‘l Marine Fisheries Serv., 265 F.3d 1028, 1034 (9th Cir. 2001))).
Here, the FDA‘s explanation for denying Plaintiffs’ rulemaking petition barely meets this low burden. The FDA could have better addressed Plaintiffs’ evidence of misleading representations that appear on egg cartons to demonstrate that the agency fully appreciated one of the primary bases for Plaintiffs’ rulemaking petition—that information concerning egg-laying hens’ living conditions is necessary in order to correct the affirmative representations that frequently appear on egg labels and convey misleading information. The FDA‘s denial letter, however, reflects that the agency did consider Plaintiffs’ evidence of affirmative misrepresentations that appear on egg labels but ultimately decided that individual enforcement actions would be preferable to promulgating the proposed regulations. Because the FDA is generally free to choose its procedural mode of administration and prioritize agency goals, we see no reason to remand the matter to the FDA to reconsider Plaintiffs’ petition in this case.
III.
For the reasons stated above, the FSIS, AMS, FTC, and FDA each acted reasonably in denying Plaintiffs’ rulemaking petitions. Accordingly, we affirm the district court‘s grant of summary judgment to Defendants.
AFFIRMED.