Lyle E. CRAKER, Petitioner, v. DRUG ENFORCEMENT ADMINISTRATION, Respondent.
No. 09-1220.
United States Court of Appeals, First Circuit.
April 15, 2013.
Mark T. Quinlivan, Assistant United States Attorney, with whom Carmen M. Ortiz, United States Attorney, was on brief, for respondent.
Before TORRUELLA, LIPEZ and HOWARD, Circuit Judges.
HOWARD, Circuit Judge.
Petitioner Lyle E. Craker, a professor at the University of Massachusetts, seeks review of an order from the Drug Enforce-
I. Statutory Landscape
In an effort to consolidate the nation‘s drug laws and increase federal enforcement capabilities, Congress enacted the Comprehensive Drug Abuse and Prevention and Control Act in 1970. See Gonzales v. Raich, 545 U.S. 1, 11-12, 125 S.Ct. 2195, 162 L.Ed.2d 1 (2005). Included within that Act was the Controlled Substances Act (“CSA“), “a comprehensive regime to combat the international and interstate traffic in illegal drugs.” Id. at 12, 125 S.Ct. 2195. While observing that many drugs within the purview of the CSA “have a useful and legitimate medical purpose and are necessary to maintain the health and general welfare of the American people,”
Consonant with these concerns, “Congress devised a closed regulatory scheme making it unlawful to manufacture, distribute, dispense, or possess any controlled substance except in a manner authorized by the CSA.” Raich, 545 U.S. at 13, 125 S.Ct. 2195 (citing
The manufacture of a schedule I substance is a criminal offense unless the manufacturer has registered with the Attorney General.
- (1) maintenance of effective controls against diversion of particular controlled substances and any controlled substance in schedule I or II compounded therefrom into other than legitimate medical, scientific, research, or industrial channels, by
limiting the importation and bulk manufacture of such controlled substances to a number of establishments which can produce an adequate and uninterrupted supply of these substances under adequately competitive conditions for legitimate medical, scientific, research, and industrial purposes; - (2) compliance with applicable State and local law;
- (3) promotion of technical advances in the art of manufacturing these substances and the development of new substances;
- (4) prior conviction record of applicant under Federal and State laws relating to the manufacture, distribution, or dispensation of such substances;
- (5) past experience in the manufacture of controlled substances, and the existence in the establishment of effective control against diversion;
- (6) such other factors as may be relevant to and consistent with the public health and safety.
Since 1968, the National Center for Natural Products Research (“NCNPR“) at the University of Mississippi has held the necessary registration and a government contract to grow marijuana for research purposes.4 Lyle E. Craker, 74 Fed. Reg. 2101, 2104 (Drug Enforcement Admin. Jan. 7, 2009) (Denial of Application) (“Craker II“). The contract is administered by the National Institute on Drug Abuse (“NIDA“), a component of the National Institutes of Health (“NIH“), which, in turn, is a component of the Department of Health and Human Services (“HHS“).
Among the “international treaties, conventions or protocols” referred to in section 823(a), the CSA implements the provisions of the Single Convention on Narcotic Drugs, 18 U.S.T. 1407 (“Single Convention“), in an effort “to establish effective control over international and domestic traffic in controlled substances.”
II. Adjudication of Dr. Craker‘s Application
Dr. Craker, a professor in the University of Massachusetts’ Department of Plant, Soil and Insect Sciences, applied to the DEA for registration to manufacture marijuana for clinical research in 2001. At the
In December 2004, a DEA official issued an order to show cause, proposing the denial of Dr. Craker‘s registration application.
In February 2007, the ALJ issued an eighty-seven page opinion, recommending that the DEA grant Dr. Craker‘s application. Craker I. The ALJ first concluded that the Single Convention was not a bar to Dr. Craker‘s registration, noting that it appeared that marijuana grown by the NCNPR or any other registrant for use in research would qualify as either “medicinal” or “special stocks” under the treaty, and thus not be prohibited by a government monopoly requirement. See Craker I at 82; Craker II, 74 Fed. Reg. at 2102.
The ALJ also found that Dr. Craker‘s application satisfied the “public interest” requirements of
The government‘s position with respect to Dr. Craker‘s application was and is that both the diversion and supply/competition criteria must be satisfied. Without resolving the issue, the ALJ considered both factors, concluding that Dr. Craker had adequately proven that there is minimal risk that any marijuana he cultivated would be diverted. With respect to supply, the ALJ found that NIDA-approved researchers had not experienced difficulty obtaining marijuana from NCNPR when it was needed. Nevertheless, the ALJ found the supply to be inadequate because NIDA refused to supply some researchers who held DEA registrations and approvals from HHS. Finally, the ALJ concluded that the competitive bidding process for renewing the single extant NIDA marijuana contract did not amount to “adequate competition” within the meaning of the statute.
After finding that Dr. Craker satisfied all but one of the remaining statutory factors—promotion of technical advances un-
In January 2009, the DEA Deputy Administrator (“Administrator“) rejected the ALJ‘s recommendation and denied Dr. Craker‘s application. Craker II, 74 Fed. Reg. at 2133. Turning first to the Single Convention, the Administrator concluded that Dr. Craker‘s application evinced an intent “to distribute marijuana outside the HHS system.”
The Administrator additionally rejected Dr. Craker‘s assertion that his plans fell within the Single Convention‘s “medicinal opium” exception both because marijuana currently has no accepted use in the United States,
Next, the Administrator found that granting Dr. Craker‘s application would not be within the public interest, as required by
The Administrator then concluded that the existing supply and quality of marijuana was adequate, observing that NIDA had been able to successfully supply research efforts and that the NIDA denials cited by Dr. Craker were not due to insufficient supply, but rather were due to lack of scientific merit.
In addressing the “adequately competitive conditions” criterion, the Administrator focused on cost, noting that NIDA provided marijuana either at cost (to privately-funded researchers) or for free (to HHS-funded researchers), at no profit to NIDA.
The Administrator next accepted the ALJ‘s recommendations concerning sections (2), (3) and (4) of 823(a), agreeing that Dr. Craker had adequately demonstrated that he would abide by applicable laws, that he had failed to demonstrate that his proposed activities would promote scientific advancements in the field, and that he had never been convicted of violating any controlled substance law.
The Administrator ultimately concluded that any one of three negative findings could provide a “compelling” basis to deny the application: conflict with the Single Convention; existing adequate supply and competition; and Mr. Doblin‘s conduct and involvement. Craker II, 74 Fed. Reg. at 2133. Concurrent with the denial, however, the Administrator also granted Dr. Craker fifteen days in which to file a motion for reconsideration to refute any facts of which the Administrator had taken official notice during the proceedings.
Availing himself of the opportunity, Dr. Craker filed a motion for reconsideration in January 2009. He also requested that the hearing be reopened for him to call additional witnesses. On February 9, 2009, the Administrator issued an order permitting further briefing and stating that she would decide on the basis of those submissions whether to grant Dr. Craker‘s request to reopen the administrative hearing or grant his request for reconsideration. In December 2010, the Administrator denied the request to reopen the hearing, but allowed Dr. Craker to further supplement the record and to raise new arguments. In August 2011, the Administrator denied the motion for reconsideration. Lyle E. Craker, Ph.D., 76 Fed. Reg. 51403, (Drug Enforcement Admin. Aug. 8, 2011) (order regarding officially noticed evidence and motion for reconsideration) (“Craker III“).
The Administrator rejected claims that Dr. Craker had made alleging political and institutional bias, as well as his argument that the FDA, rather than NIDA, should assess registration applications under
The final pieces of the background puzzle emerge from Dr. Craker‘s initial filing with us after the DEA issued Craker II.
III. Analysis
A. Jurisdiction
The government argues that we are without jurisdiction to address the merits of Dr. Craker‘s petition. Its jurisdictional theory starts with the fact that Congress has permitted judicial review only of “final” agency decisions.
The government relies on a rule, established by the D.C. Circuit and adopted by others, whereby a petition for review filed during the pendency of a motion for agency reconsideration is “incurably premature and in effect a nullity.” Gorman v. NTSB, 558 F.3d 580, 586 (D.C.Cir.2009) (internal quotation omitted); accord Council Tree Commc‘ns, Inc. v. FCC, 503 F.3d 284, 287 (3d Cir.2007). In the cases in which that rule has been applied, however, either the governing statute or the implementing regulations expressly provided for agency reconsideration. See, e.g., Council Tree, 503 F.3d at 286 (petition for reconsideration of FCC order pursuant to 47 C.F.R. § 1.106); Clifton Power Corp. v. FERC, 294 F.3d 108, 110 (D.C.Cir.2002) (motion for rehearing and reconsideration of FERC order pursuant to
We develop this bright line test to discourage the filing of petitions for review until after the agency completes the reconsideration process. If a party determines to seek reconsideration of an agency ruling, it is a pointless waste of judicial energy for the court to process any petition for review before the agency has acted on the request for reconsideration.
TeleSTAR, Inc. v. FCC, 888 F.2d 132, 134 (D.C.Cir.1989).
The D.C. Circuit has, however, declined to apply the rule where the motion for reconsideration was not timely filed. That is because, “at least where ... the agency does not consider the merits of the tardy request,” there is no “possibility that the order complained of will be modified in any way which renders judicial review unnecessary.” See Gorman, 558 F.3d at 587 (internal quotation omitted). Similarly, the possibility of concurrent jurisdiction and the judicial economy concerns that arise from it, while not wholly eliminated, are considerably diminished in cases, such as this one, in which reconsideration may or may not have been permitted in the agency‘s discretion. See Craker III, 76 Fed. Reg. at 51405 (explaining the decision to permit reconsideration as an “exercise of [the Administrator‘s] discretion“); see also City of Colo. Springs v. Solis, 589 F.3d 1121, 1131 (10th Cir.2009) (concluding that the rule announced in ICC v. Bhd. of Locomotive Eng‘rs, 482 U.S. 270, 284, 107 S.Ct. 2360, 96 L.Ed.2d 222 (1987), whereby the timely filing of a motion for administrative reconsideration renders the underlying order non-final for purposes of judicial review, “is not applicable in this case because the [agency] has not established a rehearing or reconsideration procedure for [the type of order at issue]“).
Moreover, such jurisdictional concerns are further alleviated here, because we suspended and then resumed consideration of a petition for review upon completion of the reconsideration process. As the Supreme Court has observed, “a stay is as much a refusal to exercise federal jurisdiction as a dismissal.” Moses H. Cone Mem. Hosp. v. Mercury Const. Corp., 460 U.S. 1, 28, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983); see also In re Graves, 69 F.3d 1147, 1151 (Fed.Cir.1995) (concluding that although the court “cannot exercise jurisdiction over the appeal before the [agency] enters its reconsideration decision,” its jurisdiction “was, in effect, suspended until the [agency] acted“); Northside Sanitary Landfill, Inc. v. Thomas, 804 F.2d 371, 379 (7th Cir.1986) (“Once our jurisdiction has been [timely] invoked by a petition for review, it makes little sense to require an amendment to the petition to preserve that jurisdiction only because the agency has ruled on the motion for reconsideration.“).
Given that, in the circumstances of this case, holding the petition in abeyance served equally the interests of judicial economy, we are not persuaded that we should impose a bright line test requiring
B. Chevron Analysis
In reviewing the Administrator‘s decision, we first address whether Congress has unambiguously spoken to the precise question that is at issue, Chevron, U.S.A. Inc. v. Natural Resources Defense Council Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1997). If it turns out that the statute is ambiguous, then Chevron deference must be afforded; the agency‘s interpretation of the statute will be upheld as long as it is “based on a permissible construction of the statute.” Id. at 843, 104 S.Ct. 2778. In the end, we may set aside the Administrator‘s decision if it is arbitrary, capricious, an abuse of discretion, not supported by substantial evidence, or otherwise not in accordance with the law. NLRB v. Reg‘l Home Care Servs., 237 F.3d 62, 71 (1st Cir.2001); see also
As previously noted, the Administrator rejected Dr. Craker‘s application both because it was inconsistent with the Single Convention and because it did not meet the “public interest” requirement of
In analyzing the CSA, the Administrator first compared Congress’ treatment of Schedule I and II substances in section 823(a)(1) with that of Schedule III, IV and V substances, as set forth in section 823(d). Notably, the two statutory sections contain identical public interest factors, except that in section (d)—which deals with substances that Congress regards as less dangerous—there is no reference as there is in section (a)(1) to “limiting supply” and “competitive conditions.” Unlike considerations with respect to less dangerous drugs, then, according to the Administrator, section 823(a)(1) explicitly sets out both Congress’ stated purpose (to maintain effec-
The Administrator also detailed the legislative history of the CSA to buttress her conclusion, observing that the CSA‘s predecessor, the Narcotics Manufacturing Act of 1960, called for the limitation of manufacturers to the smallest number that could produce an adequate, uninterrupted supply, without referencing competition.
The Administrator acknowledged that the 1960 Act, unlike the CSA, referred to allowing only “the smallest number of establishments that can produce an adequate and uninterrupted supply,” and that the CSA dropped the “smallest number” formulation. Nevertheless, she concluded that the CSA‘s continued use of the term “limiting” retained the concept of an upper limit on manufacturers as a consideration.
Finally, the Administrator cited Justice Department written testimony which noted the “primary objective” of “effective control” and that additional manufacturers could be licensed if the additional licenses do not significantly affect drug control.
1. Chevron Step One
At the outset, we reject each party‘s contention that section 823(a)(1) unambiguously supports its respective position. It is not clear from the text of the section whether, as Dr. Craker argues, limiting supply is allowed only where diversion is a concern, or, as the Administrator contends on appeal, the statute must be construed to require that limiting supply be the means by which effective controls against diversion are implemented. Indeed, as the Administrator observed, 74 Fed. Reg. 2127-32, and as the DEA concedes, the DEA itself has taken inconsistent positions on this question. Compare Noramco, 375 F.3d at 1153 (observing that the DEA argued in one registration (Johnson Matthey) that no analysis of competition is required), with id. at 1157 (noting that in a different registration (Penick) the DEA addressed competition and supply factors). As it does not appear that the statute either mandates or excludes either side‘s view, we turn to step two and resolve whether the administrator‘s interpretation is a reasonable one. We hold that it is.
2. Chevron Step Two
We conclude that the government‘s view prevails at Chevron‘s second step. Dr. Craker advances three reasons why this should not be the outcome. We address them in turn.
First, he argues that the court in Noramco squarely rejected the DEA‘s present view. But contrary to this assertion, the court in Noramco did not hold that section 823(a)(1) unambiguously required the DEA to forego consideration of supply and competition if it found no increased difficulty in controlling diversion. Instead, the court held that the statute did not
Dr. Craker next takes aim at the Administrator‘s assessment that section (a)(1) speaks to diversion on a “registrant-wide” scale, whereas section (a)(5) refers to an individual registrant. He argues that even if this dichotomy is permissible, the Administrator failed to demonstrate any diversion concern. We disagree, as the Administrator cited legislative history noting Congress’ recognition that the risk of diversion increases with the addition of new manufacturers. 74 Fed. Reg. at 2129.
Finally, Dr. Craker argues that the Administrator did not adequately explain why the DEA was changing its position from the one that it had advocated in Noramco. To the contrary, and as previously noted, Craker II contains a lengthy analysis of that very issue. 74 Fed. Reg. at 2127-33. “[P]ursuant to Chevron, an agency‘s change in precedent is not invalidating if the agency adequately explains its reasons. The agency‘s explanation must be accompanied by some reasoning that indicates that the shift is rational and, therefore, not arbitrary and capricious. This is not a difficult standard to meet.” River Street Donuts, LLC, 558 F.3d at 115 (internal citations and quotation marks omitted). Here, the Administrator addressed the agency‘s prior positions, including that taken in an opinion that was issued while the instant matter was pending before the DEA8—and explained that the interpretation now urged better effectuated the CSA. We find its reasoning sufficient.
Accordingly, we conclude that the Administrator‘s interpretation of
3. Administrator‘s Decision
Dr. Craker‘s final claim is that, even if the DEA is permitted to consider supply and competition, the Administrator erred because Dr. Craker demonstrated that both competition and supply are inadequate. On the contrary, the Administrator‘s findings are supported by the record.
a. Competition
Dr. Craker‘s argument with respect to competition is essentially that there cannot be “adequately competitive conditions” when there is only one manufacturer of marijuana. Invoking anti-trust doctrine, he asserts that a monopoly cannot constitute competition within the meaning of the statute.
The Administrator addressed competition through the lens of price, and observed that NIDA had provided marijuana manufactured by the University of Mississippi either at cost or free to researchers, and that Dr. Craker had made no showing of how he could provide it for less, especially when his associate Mr. Doblin acknowledged MAPS’ profit motive in its manufacturing enterprise. 74 Fed. Reg. at 2121. Additionally, the Administrator
We see nothing improper in the Administrator‘s approach. The statutory term “adequately competitive conditions” is not necessarily as narrow as the petitioner suggests. This is not an anti-trust case, and Dr. Craker does not point to any authority suggesting that anti-trust laws must guide the “adequacy of competition” inquiry or that price considerations must not. That the current regime may not be the most competitive situation possible does not render it “inadequate.”
b. Adequate and Uninterrupted Supply9
In finding that Dr. Craker failed to demonstrate that the current supply of marijuana was not adequate and uninterrupted, the Administrator observed that there were over 1000 kilograms of marijuana in NIDA possession, an amount which far exceeds present research demands and “any foreseeable” future demand.
IV. CONCLUSION
Because the Administrator‘s interpretation of the CSA is permissible and her findings are reasonable and supported by the evidence, the petition for review is denied.
HOWARD
CIRCUIT JUDGE