CREEKSTONE FARMS PREMIUM BEEF, L.L.C., Appellee/Cross-Appellant v. DEPARTMENT OF AGRICULTURE and Edward T. Schaeffer, Secretary of Agriculture, Appellants/Cross-Appellees.
Nos. 07-5173, 07-5199.
United States Court of Appeals, District of Columbia Circuit.
Argued May 9, 2008. Decided Aug. 29, 2008.
539 F.3d 492
Russell S. Frye argued the cause for the appellee/cross-appellant. Peter C. Choharis entered an appearance.
Before: SENTELLE, Chief Judge, HENDERSON and ROGERS, Circuit Judges.
Opinion for the court filed by Circuit Judge HENDERSON.
Concurring opinion filed by Circuit Judge ROGERS.
Dissenting opinion filed by Chief Judge SENTELLE.
Creekstone Farms Premium Beef, LLC (Creekstone) raises and slaughters for sale Black Angus cattle. In December 2003, many countries began to ban or severely limit importation of U.S. beef because bovine spongiform encephalopathy (BSE)—“mad cow disease“—had been found in one cow in Washington State. See U.S. Dep‘t of Agric., Publ‘n No. LDP-M-143-01, An Economic Chronology of Bovine Spongiform Encephalopathy in North America 4 (2006) (Economic Chronology). To counter the fears of beef importers as well as domestic consumers, Creekstone developed a plan to test for BSE each of the approximately 300,000 cattle it slaughters each year. Declaration of John D. Stewart ¶ 6 (July 13, 2006) (Stewart Decl.). The United States Department of Agriculture (USDA), however, asserting authority under the Virus-Serum-Toxin Act,
I.
A. Statutory/Regulatory Background
The Congress enacted VSTA in 1913 following reports that farmers were being sold ineffective anti-hog cholera serum. See Agriculture Appropriation Bill: Hearings Before the Senate Comm. on Agric., 62d Cong. 23-24 (1913) (testimony of A.M. Farrington, Asst. Chief, Bureau of Animal Indus., USDA). The Act makes it “unlawful ... to prepare, sell, barter, or exchange ... or to ship or deliver for shipment ... any worthless, contaminated, dangerous, or harmful virus, serum, toxin, or analogous product intended for use in the treatment of domestic animals.”
B. Bovine Spongiform Encephalopathy
BSE is an invariably fatal neurological disease that causes degeneration of the cow‘s central nervous system. See Bovine Spongiform Encephalopathy, 70 Fed.Reg. 460, 461 (Jan. 4, 2005). BSE is believed to be caused by a type of protein called a “prion.” Declaration of Lisa A. Ferguson ¶ 3 (Sept. 20, 2006) (Ferguson Decl.). Prions exist naturally in the nerve cells of many animals and are believed to help
BSE was first diagnosed in the United Kingdom in 1986. Id. ¶ 4. Since then, more than 189,000 confirmed cases of BSE in cattle worldwide have been reported. Id. While almost all of the cases (95%) have occurred in the United Kingdom, BSE has been found in cattle raised in at least twenty-five other countries. Id. In 1989, USDA banned the importation of ruminant products from countries with known BSE-infected cattle. See
There are several types of BSE tests available; the most common—and the one at issue here—is the immunoassay, or “rapid,” BSE test.3 See CX-3, at 89-91. The rapid BSE test, however, has limitations. It can detect abnormal prions only if they exist in a relatively high concentra-
Following the discovery of the first BSE-infected cow in Washington State, several major beef importing countries, including Japan, South Korea and Mexico (at the time three of the four largest importers), banned the importation of U.S. beef. Economic Chronology 4. Some countries have since resumed importing U.S. beef; however, Japan and South Korea have done so only intermittently and subject to restrictions. See Supplemental Declaration of John D. Stewart ¶ 5 (Oct. 31, 2006).
C. Creekstone‘s Response to Market Loss
Creekstone claims to have suffered $200,000 per day in lost revenue as a result of the diminished export market. Stewart Decl. ¶ 17. Moreover, in markets where U.S. beef is available, Creekstone contends that consumer fears about BSE have diminished its sales. See id. ¶¶ 4, 5 (discussing market surveys in Japan and U.S.). To allay the concerns of consumers and importers, in 2004 Creekstone made a “business decision” to perform the rapid BSE test on each cow it slaughters. Compl. ¶ 20. Creekstone sought to purchase rapid BSE test kits from Bio-Rad Laboratories, Inc. (Bio-Rad).4 Bio-Rad informed Creekstone, however, that it could not sell Creekstone the kits without USDA authorization. On February 19, 2004, and in several later communications, Creekstone requested USDA permission to purchase the test kits. Id. ¶ 21. USDA denied Creekstone‘s requests. On March 17, 2004, USDA‘s Center for Veterinary Biologics issued Notice No. 04-08, ordering that the “[s]ale and use” of all BSE test kits be restricted to USDA-approved laboratories only. See USDA, Ctr. For Veterinary Biologics Notice No. 04-08 (Mar. 17, 2004). The Notice also declared that the “distribution and use” of all BSE test kits was to be under the “supervision or control of USDA.” Id.5 Accordingly, Bio-Rad‘s import permit authorizes it to sell BSE test kits to USDA-approved laboratories only. U.S. Veterinary Prod. Permit No. 624, Bio-Rad Labs., at 2 (Mar. 4, 2005). USDA memorialized its decision to deny Creekstone permission to purchase rapid BSE test kits from Bio-Rad in a June 1, 2004 letter, concluding that “allowing a company to use a BSE test in a
On March 23, 2006, Creekstone filed a three-count complaint in the district court. Count I claimed, inter alia, that because VSTA “provides no authorization at all for restrictions on the use of products,” USDA‘s regulation purporting to regulate the use of biological products is ultra vires. Compl. ¶ 32 (emphasis added). Count I also claimed that USDA‘s definition of “treatment” contained in regulation section 101.2 goes “beyond the scope of the rulemaking authority granted to USDA in the VSTA.” Id. ¶ 31. Count II challenged USDA‘s regulation of BSE testing because it “[is] not used in the treatment of domestic animals and do[es] not ‘act primarily through the direct stimulation, supplementation, enhancement or modulation of the immune system or immune response,’ as required by
The parties filed cross-motions for summary judgment on Counts I and II of Creekstone‘s complaint. On March 29, 2007, the district court granted summary judgment to USDA on Count I and to Creekstone on Count II. The court first rejected Creekstone‘s argument that USDA lacked the authority to regulate the “use” of products under section 154 of the Act. 517 F.Supp.2d at 13 (“Creekstone contends that USDA‘s ‘use’ regulation exceeds its authority to regulate ‘preparation, sale, barter, exchange, or shipment,’ but Creekstone‘s reading of the statute is too narrow.“). The court also upheld USDA‘s broad interpretation of “treatment” in sections 151-155 of the Act. Id. at 15-16. On Count II, however, the court concluded that USDA cannot regulate BSE testing because it cannot be used in the treatment of domestic animals. Id. at 16. The court reasoned that, because there is no known cure for BSE and because testing can be done only post-mortem, rapid BSE test kits are not used for “treatment” as that term is defined in
II.
We review de novo the district court‘s grant of summary judgment. Nat‘l Mining Ass‘n v. Kempthorne, 512 F.3d 702, 707 (D.C.Cir.2008). We affirm a grant of summary judgment only if “there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.”
A. Count I
1. USDA‘s “use” regulations8
We first address the question whether USDA can regulate the use of biological products under VSTA. VSTA authorizes USDA to promulgate regulations under two circumstances set forth in
Ordinarily, we review an agency‘s interpretation of a statute that it administers under Chevron. We first ask “whether Congress has directly spoken to the precise question at issue.” Id. at 842. If so, “that is the end of the matter” and we “must give effect to the unambiguously expressed intent of Congress.” Id. at 842-43. However, if “the statute is silent or ambiguous with respect to the specific issue,” we move to the second step and must defer to the agency‘s interpretation as long as it is “based on a permissible construction of the statute.” Id. at 843. In this case, however, we agree with Creekstone that Chevron does not apply to the “otherwise to carry out” language because that language was not added to the statute until 1985, see Food Security Act of 1985, Pub.L. No. 99-198, § 1768(b), 99 Stat. 1354, 1654 (1985)—almost ten years after USDA promulgated the predecessor of section 102.5(d). See Deletion of Special Licenses, 41 Fed.Reg. 44,358, 44,359 (Oct. 8, 1976). USDA may not reasonably rely on statutory language that did not exist when it first adopted its regulation. See Pub. Citizen, Inc. v. U.S. Dep‘t of Health & Human Servs., 332 F.3d 654, 659 (D.C.Cir.2003) (applying Skidmore deference to regulation promulgated before amendment of statute). As the district court correctly noted, however, even without Chevron deference, USDA‘s “use” regulations nonetheless “remain[] entitled to a ‘degree of deference’ under Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89
Under Skidmore, “[t]he weight [accorded to an administrative judgment] in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” United States v. Mead Corp., 533 U.S. 218, 228 (2001) (quoting Skidmore, 323 U.S. at 140) (second alteration in Mead); see Am. Fed‘n of Gov‘t Employees v. Veneman, 284 F.3d 125, 129 (D.C.Cir.2002) (under Skidmore “USDA‘s view ... constitutes ‘a body of experience and informed judgment’ to which we may properly resort for guidance” (quoting Skidmore, 323 U.S. at 140)). USDA‘s promulgation of section 102.5(d) satisfies Skidmore‘s standard.
As previously noted, section 102.5(d) provides that, once the APHIS Administrator “determines that the protection of domestic animals or the public health, interest, or safety, or both, necessitates restrictions on the use of a product, the product shall be subject to such additional restrictions as are prescribed on the license,” including “limits on the distribution of the product.”
Creekstone also challenges USDA‘s interpretation of section 104.1. Section 104.1 provides that “[n]o biological product shall be brought into the United States unless a permit has been issued for such product” by the Administrator.
We are not persuaded by Creekstone‘s arguments to the contrary. Creekstone first invokes the expressio unius est exclusio alterius canon of statutory construction to assert that the omission of “use” from VSTA‘s provisions precludes USDA from promulgating a “use” regulation. With a statute like VSTA, however, which contains broad language authorizing the agency to promulgate regulations necessary to “carry out” the statute, we believe the doctrine has minimal, if any, application. See Cheney R.R. v. ICC, 902 F.2d 66, 69 (D.C.Cir.1990) (“Whatever its general force, we think [expressio unius] an especially feeble helper in an administrative setting, where Congress is presumed to have left to reasonable agency discretion questions that it has not directly resolved.“); Tex. Rural Legal Aid, Inc. v. Legal Servs. Corp., 940 F.2d 685, 694 (D.C.Cir.1991) (“Whatever its usefulness in other circumstances ... this canon has little force in the administrative setting.“); see also NLRB v. Beverly Enters.-Mass., 174 F.3d 13, 32 (1st Cir.1999); Ragsdale v. Wolverine World Wide, Inc., 535 U.S. 81, 97, 102 (2002) (O‘Connor, J., dissenting) (arguing that ”expressio unius ought to have some-what reduced force in th[e] context” of statute authorizing agency to “prescribe such regulations as are necessary to carry out’ the Act” (quoting
Nevertheless, Creekstone argues that section 154‘s “otherwise to carry out” language cannot support the “use” regulations because, as previously noted, the “otherwise to carry out” language was not added to section 154 until almost ten years after USDA first asserted the authority to regulate the “use” of biological products. As the district court correctly noted, however, the argument “cuts both ways.” 517 F.Supp.2d at 13 n. 6. Because section 102.5(d) was already in effect when the Congress amended VSTA in 1985, it had the opportunity to alter the regulation but did not do so. See Doris Day Animal League v. Veneman, 315 F.3d 297, 300 (D.C.Cir.2003) (“[W]hen Congress revisits a statute giving rise to a longstanding administrative interpretation without pertinent change, the congressional failure to revise or repeal the agency‘s interpretation is persuasive evidence that the interpretation is the one intended by Congress.” (quoting Commodity Futures Trading Comm‘n v. Schor, 478 U.S. 833, 846 (1986))). But Creekstone asserts that the 1985 amendment does not satisfy the requirements of the legislative reenactment doctrine because the “application of the legislative reenactment doctrine requires a showing of both congressional awareness and express congressional approval of an administrative interpretation if it is to be viewed as statutorily mandated.” Gen. Am. Transp. Corp. v. ICC, 872 F.2d 1048, 1053 (D.C.Cir.1989) (quotation omitted). Even assuming the 1985 amendment does not satisfy the legislative reenactment doctrine, however, the Congress‘s 1985 decision to leave section 102.5(d) undisturbed is “persuasive evidence” that it is consistent with congressional intent. See NLRB v. Bell Aerospace Co. Div. of Textron, Inc., 416 U.S. 267, 274-75 (1974) (“[A] court may accord great weight to the longstanding interpretation placed on a statute by an agency charged with its administra-
Creekstone also argues that VSTA‘s legislative history demonstrates that the Congress intended to regulate manufacturers and importers of biological products, not users like Creekstone. Creekstone cites the 1913 testimony of A.M. Farrington, Assistant Chief of the Bureau of Animal Industry, before the House Committee on Agriculture, to the effect that VSTA was meant to allow USDA to regulate the preparation and marketing of biological products. See Agriculture Appropriation Bill: Hearings Before the Senate Comm. on Agric., 62d Cong. 23-24 (1913). We are not persuaded. The legislative history of VSTA is “extremely sparse,” Animal Health Inst. v. USDA, 487 F.Supp. 376, 378 (D.Colo.1980), and the history that does exist does not conclusively support either interpretation. See, e.g., S.Rep. No. 62-1288, at 2 (1913) (VSTA is intended “to control[] use [] by preventing the interstate shipment[] of dangerous drugs.” (emphasis added)). In any event, whether a “use” regulation was contemplated by the Congress in 1913, we believe the Congress subsequently endorsed the same in 1985.
Finally, Creekstone argues that the Agricultural Bioterrorism Protection Act of 2002 (ABPA)11 supports its claim that VSTA does not authorize a “use” regulation. ABPA gives the Secretary authority to regulate “each biological agent and each toxin that [he] determines has the potential to pose a severe threat to animal or plant health.”
2. USDA‘s regulation of diagnostic testing
In Count I Creekstone also argues that USDA lacks the authority to regulate
B. Count II
In Count II, Creekstone challenges USDA‘s regulation of the rapid BSE test kit because, again, it is not used in the “treatment” of domestic animals. Compl. ¶ 40. The district court agreed, reasoning that “[e]ven if USDA is correct that diagnosis in general is an inherent and crucial aspect of treatment,” USDA cannot consider BSE testing diagnostic because “[t]here is no known treatment or cure for BSE ... and BSE test kits are used only on animals that are dead.” 517 F.Supp.2d at 16 (citation omitted) (emphasis in original). We disagree. As already noted, section 101.2 defines “treatment” as “the prevention, diagnosis, management, or cure of diseases of animals.”
Creekstone counters that USDA‘s position here is inconsistent with its earlier statements about BSE testing. It claims that USDA acknowledged in a 2005 rulemaking that BSE testing of cattle at slaughter is not “meaningful in the context of ... animal health” and that surveillance testing for BSE “is not a [disease] mitigation measure.” Importation of Whole Cuts of Boneless Beef from Japan, 70 Fed.Reg. 73,905, 73,914 (Dec. 14, 2005). The statement comes from a USDA rulemaking setting forth various conditions for importing Japanese beef into the United States. Id. In response to a comment urging “a man-
To sum up, we conclude that section 102.5(d),
For the foregoing reasons, the district court‘s grant of summary judgment to USDA on Count I is affirmed, its grant of summary judgment to Creekstone on Count II is reversed and the case is remanded for further proceedings consistent with this opinion.
So ordered.
ROGERS, Circuit Judge, concurring:
I join in affirming the grant of summary judgment to the Agriculture Department and reversing the grant of summary judgment to Creekstone Farms. However, I do so on the ground that the Department‘s interpretation of
Though I respect my colleagues’ careful analysis of the application of the Chevron doctrine to the governing statutes in this case, in my view the Department of Agriculture‘s interpretation of those statutes does not survive Chevron Step 2. I will grant the existence of some ambiguity (no doubt intended by Congress) in the Virus-Serum-Toxin Act,
First, the VSTA covers “any ... virus, serum, toxin, or analogous product....”
Finally, I find myself unable to join the conclusion in Judge Henderson‘s opinion that the language in
In short, I would affirm the district court‘s grant of summary judgment on Count II and reverse its denial on Count I. I would further note that Count III of this action will return to the district court for application of the arbitrary and capricious standard. It seems that the Department‘s fear is that Creekstone‘s use of the test kits would enable it to provide buyers with a false assurance that the cattle from which its beef is obtained are free of Bovine Spongiform Encephalopathy. However, as I read the record, all Creekstone hopes to do is assure foreign buyers that the beef is as well-tested as would be the case with beef produced in the home countries of those buyers. I will be interested in learning later whether this interdiction by the Department can survive the arbitrary and capricious test that will govern the district court‘s review of that additional count.