Independent Cosmetic Manufacturers & Distributors, Inc. v. United States Department of Health, Education & Welfare

574 F.2d 553, 187 U.S. App. D.C. 342

• Court: Court of Appeals for the D.C. Circuit
• Decided: February 13, 1978
• Docket: Nos. 75-1845, 76-1007
• Status: Published

Opinions

Opinion for the court filed by Circuit Judge ROBB.

Dissenting opinion filed by Circuit Judge WILKEY.

ROBB, Circuit Judge:

Independent Cosmetic Manufacturers and Distributors, Incorporated (ICMAD) challenges a regulation promulgated by the Food and Drug Administration. The regulation requires that all packaged cosmetics be identified by labels listing their ingredients. ICMAD challenged the regulation on two fronts. First, ICMAD sought declaratory and injunctive relief in the District Court. The District Court dismissed the suit for want of jurisdiction and ICMAD appeals. ICMAD’s second front is a petition in this court for direct review of the regulation.

We affirm the District Court’s holding that it lacked jurisdiction, for jurisdiction lies exclusively in the court of appeals. In exercising our jurisdiction, however, we decline to set aside the regulation. We turn first to the jurisdictional issue.

JURISDICTION OF THE DISTRICT COURT

The regulation may be challenged by petition to an appropriate United States Court of Appeals. 15 U.S.C. § 1455(a); 21 U.S.C. § 371(f). The statute does not specify whether district courts may exercise concurrent jurisdiction when an independent source of jurisdiction can be found. IC-MAD asserts, however, that the trial court had concurrent jurisdiction by virtue of a savings clause in the statute, 21 U.S.C. § 371(f)(6). That clause provides:

The remedies provided for in this subsection [review in the court of appeals] shall be in addition to and not in substitution for any other remedies provided by law.

We think jurisdiction in this case is governed by our decision in Nader v. Volpe, 151 U.S.App.D.C. 90, 466 F.2d 261 (1972). In that case we considered a similar review provision of the National Traffic Motor Vehicle Safety Act, with an almost identical savings clause. See 15 U.S.C. § 1394(a). We concluded that when Congress has specified a procedure for judicial review of administrative action, that procedure is the exclusive means of review unless, because of some extraordinary circumstances, the procedure fails to provide an adequate remedy. 151 U.S.App.D.C. at 100, 466 F.2d at 271. Those extraordinary circumstances, we noted, were “instances of agency action which is ultra vires or damaging beyond the capability of the statutory procedure to repair.” Id.

Although ICMAD contends that the Commissioner’s action in this case is ultra vires, we disagree. As our opinion in Nader v. Volpe makes clear, a party urging jurisdiction based on ultra vires action must show a patent violation of agency authority. Compare 151 U.S.App.D.C. at 100 & n. 66, 466 F.2d at 271 & n. 66, with 151 U.S.App.D.C. at 95 & n. 30, 466 F.2d at 266 & n. 30. ICMAD argues that the agency disregarded 21 U.S.C. § 371(e)(3) in failing to hold a hearing “as soon as practicable” after objections were filed regarding certain parts of the regulation promulgated on October 17, 1973. The objections — none of which came from ICMAD — asserted that exemptions to labeling and alternative means of compliance should be permitted. Instead of immediately convening a hearing the Commissioner began negotiations with the objectors. This informal procedure was, at least in part, invited by the objectors.¹ The negotiations resulted in the amendment of the regulation on March 3, 1975 (40 Fed.Reg. 8918), after which the objections were withdrawn and the need for a hearing obviated. 40 Fed.Reg. 23460 (1975). We need not determine whether upon closer scrutiny this informal procedure fully comported with the statute; it is sufficient that we decide that in these circumstances the failure to hold a hearing was not a patent violation of agency authority. Nor are any of the lesser irregularities alleged by ICMAD so patently defective as to warrant district court jurisdiction.

Our conclusion is consistent with settled principles of law² and the legislative history of the Food and Drug Act.³ ICMAD contends, however, that the legislative history as set out in Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), is contrary to our conclusion and that the Court’s holding there controls this case. We disagree. The Supreme Court in the Abbott Laboratories case noted that Congress intended in enacting the savings clause to preserve, not concurrent jurisdiction, but equitable remedies available when no adequate remedy at law exists. See id. at 142-43, 87 S.Ct. 1507. The Supreme Court did uphold district court jurisdiction in that case, for no special statutory review provisions applied to the challenged regulations, id. at 141, 87 S.Ct. 1507, and hence there was no adequate remedy at law. Nader v. Volpe, 151 U.S.App.D.C. at 100 n. 68, 466 F.2d at 271 n. 68 (distinguishing Abbott Laboratories v. Gardner on this basis). Indeed, the Supreme Court said in the Abbott Laboratories- opinion, “when the special provisions [for review] apply, presumably they must b.e used and a court would not grant injunctive or declaratory judgment relief unless the appropriate administrative procedure is exhausted.” Id. at 146, 87 S.Ct. at 1514; see Katzenbach v. McClung, 379 U.S. 294, 296, 85 S.Ct. 377, 13 L.Ed.2d 290 (1964). Here those special procedures for review do apply and as we noted in Nader v. Volpe:

The District Court had but limited jurisdiction of the case at the outset — for the purpose of taking a peek to see whether it had jurisdiction of the subject matter by virtue of exceptional circumstances. When it found no such circumstances it rightly dismissed the action for lack of subject-matter jurisdiction.

151 U.S.App.D.C. at 101, 466 F.2d at 272.

That exclusive jurisdiction lies in the courts of appeals is further demonstrated by the scheme of the Act. Finding concurrent jurisdiction under some general jurisdictional mandate, such as federal question jurisdiction, would permit ICMAD to bypass the 90-day time limit that Congress imposed on petitions to review challenged regulations. See 21 U.S.C. § 371(f)(1). That is precisely what ICMAD seeks to do here; for as we demonstrate later, a major portion of ICMAD’s petition for direct review in this court is untimely.⁴

PETITION FOR REVIEW

In its petition to this court ICMAD challenges the Commissioner’s regulation in two respects. First, on several different theories ICMAD argues that the substance of the original regulation contravenes the Fair Packaging and Labeling Act (F.P.L. A.). See Petitioner’s Brief in 75-1845 at p. 3. Second, ICMAD contends that the procedure followed by the Commissioner in promulgating amendments to the regulation was deficient. Id. Because ICMAD’s challenge to the original regulation is untimely and because ICMAD has not been prejudiced by the procedure followed in adopting the amendments, we deny its petition.

ICMAD argues that the cosmetic ingredient labeling regulation violates the F.P.L.A. because: section 1454 of the Act mandates that the Commissioner promulgate labeling regulations on a commodity-by-commodity, not a cosmetic-wide, basis; that the Commissioner, contrary to section 1454(c), made no determination that the regulation was necessary to prevent deception and to facilitate comparisons;⁵ that contrary to section 1454(c)(3) the regulation requires divulgence of trade secrets; and that while section 1454(c)(3) requires labeling of only certain ingredients, the regulation requires labeling of all ingredients. See Petitioner’s Brief at 13-23.

ICMAD’s attack challenges the original regulation, which was published in final form in the Federal Register on October 17, 1973 (38 Fed.Reg. 28912).⁶ Section 371(f)(1) of the Food and Drug Act requires that petitions for review of an FDA order be filed within 90 days from the date the order issues, and ICMAD’s petition for review in 1975 clearly falls outside that 90-day boundary. Nor can ICMAD’s challenge be deemed timely filed as an attack on the amendments promulgated in 1975. The amendments merely provided narrow exemptions to labeling and alternate means of compliance applicable in limited circumstances.⁷ A comparison of the original regulation and the amendments makes clear that the amendments did not change the substance or thrust of the original regulation. See 40 Fed.Reg. 8918-24 (1975); note 6, supra. The attack on the original regulation is therefore untimely.

ICMAD’s procedural attack must also fail. ICMAD urges that because of alleged irregularities in amending the regulation, it was foreclosed from challenging the basic regulation. We believe however that if any irregularity occurred, ICMAD was not prejudiced thereby and hence no basis exists for setting aside the original regulation.

A brief review of the history of the challenged regulation is helpful in analyzing ICMAD’s procedural contention. The regulation was promulgated on October 17,1973. 38 Fed.Reg. 28912. Within the 30-day period' permitted by the statute, several parties objected to certain parts of the regulation and requested a hearing. See 21 U.S.C. § 371(e)(2). ICMAD neither objected nor requested a hearing during this 30-day period; ⁸ and those parties objecting merely sought narrow exemptions and alternate compliance methods. See 40 Fed.Reg. 8918-21 (1975). The objections stayed the effectiveness of the parts of the regulation objected to, but only those parts. See 21 U.S.C. § 371(e)(2). And, as we have said, any party seeking to challenge the other parts in the courts had only ninety days from the date of the order to file its petition. This ICMAD also failed to do. At the close of the 30-day period for objecting, the Commission began negotiations with the objectors. As a result the objections were withdrawn and no hearing was held. Apparently because of these negotiations, the Commissioner did not publish a notice of what parts of the regulation were stayed until sixteen months after the objections were filed, although the Act requires notice as soon as practicable after the close of the 30-day period for objecting. See id.

ICMAD contends that this procedure precluded it from contesting the original regulation. It argues, more specifically, that it was denied a hearing to contest the legality of labeling when the Commissioner failed to hold a hearing on the timely filed objections. As we have pointed out, even if a hearing was required, the purpose of the hearing would only have been to consider and receive evidence on the objections, which raised issues unrelated to ICMAD’s claims here. Thus, the absence of a hearing did not prejudice ICMAD in its challenge to the basic regulation and therefore that cannot be a basis for overturning the regulation. See Braniff Airways, Inc. v. CAB, 126 U.S.App.D.C. 399, 413, 379 F.2d 453, 465 (1967).

Similarly, ICMAD’s challenge to labeling could not have been prejudiced by the Commissioner’s failure on July 25, 1974 and March 3, 1975 to publish the proposed amendments.⁹ Those amendments, we have noted, provided exemptions and alternate means of compliance, an approach that ICMAD apparently endorses.¹⁰ The amendments had nothing to do with the claims that ICMAD now makes before this court. Moreover, the alleged omissions occurred well after the requirement of labeling had become final and ICMAD had lost its right to object and petition for review.

ICMAD’s most forceful procedural argument is that it was prejudiced by the Commissioner’s failure to publish promptly a notice of stay. 21 U.S.C. § 371(e)(2) mandates that “as soon as practicable” a notice shall be published “specifying those parts of the order which have been stayed by the filing of objections . . . .” The Commissioner filed no notice of stay until some 16 months after objections had been filed. 40 Fed.Reg. 8918 (1975). ICMAD contends that had a notice of stay been filed, it would have known that no one had objected to the concept of labeling and accordingly it might have filed a timely petition for review.

We cannot agree however that ICMAD was prejudiced. The statute does not make publication of a notice of stay a prerequisite for seeking judicial review. Rather, the statute clearly specifies that a petition for review must follow within ninety days of the order. 21 U.S.C. § 371(f)(1). ICMAD does not, and could not, contend that the lack of a notice misled it into believing that its challenge had somehow been mooted by objections.¹¹ No prejudice is thus apparent. Indeed, what ICMAD actually seeks is to have us amend section 371(f) to extend the time for filing a petition for review until after publication of a notice of stay. This is a legislative task which we decline.

CONCLUSION

We affirm in No. 76-1007 the District Court’s dismissal for lack of jurisdiction. Jurisdiction in this case lies exclusively in the court of appeals. We deny, in No. 75-1845, ICMAD’s petition for review. The challenge to the substance of the 1973 regulation is untimely; the attack on the procedure followed in amending that regulation fails because no prejudice has been shown.

So Ordered.

1 . The Cosmetic, Toiletry and Fragrance Association (CTFA) was the major party objecting to the parts of the regulation. CTFA included with its objection a proposed amendment to the regulation and stated that if adopted the amendment would remove the basis for its objections and the need for a hearing. Letter from CTFA to the Dept, of HEW, Nov. 16, 1973. In addition, CTFA subsequently wrote the Commissioner reiterating that adoption of the proposed amendments was intended to be an alternative to holding a hearing on CTFA’s objections. Letter from CTFA to the Associate Commissioner for Compliance, FDA, May 15, 1974.

2 . “[I]t is well settled that bifurcated jurisdiction between District Court and Court of Appeals over identical litigation is not favored.” Oljato Chapter of Navajo Tribe v. Train, 169 U.S.App.D.C. 195, 201, 515 F.2d 654, 660 (1975). And, as we noted in Investment Company Institute v. Board of Governors, 551 F.2d 1270, 1279-80 (1977):

Indeed, an impressive line of authority supports the . . . proposition that, even where Congress has not expressly conferred exclusive jurisdiction, a special review statute vesting jurisdiction in a particular court cuts off other courts’ original jurisdiction in all cases covered by the special statute. See, e. g., Macauley v. Waterman S. S. Corp., 327 U.S. 540, 543-545 [66 S.Ct. 712, 90 L.Ed. 839] (1946); E. I. duPont de Nemours & Co. v. Train, 528 F.2d 1136, 1137 & n. 1, 1142 (4th Cir. 1975), [aff'd in part 430 U.S. 112, 97 S.Ct. 965, 51 L.Ed.2d 204 (1977)]; UMC Industries, Inc. v. Seaborg, 439 F.2d 953, 955 (9th Cir. 1971); United States v. Southern Ry. Co., 380 F.2d 49, 53-54 (5th Cir. 1967)

To this line of authority supporting our position must be added our opinion in the Investment Company case, as well as recent circuit opinions in Virginia Electric and Power Co. v. Costle, 566 F.2d 446 (4th Cir. 1977), and U. S. Steel Corp. v. Train, 556 F.2d 822, 837 (7th Cir. 1977).

3 .See note 4, infra.

4 . Moreover, the comprehensiveness of our review power is evinced by the statutory review provision permitting the administrative record to be supplemented upon petition to the courts of appeals. Section 371(f)(2) of the statute, regarding petitions for review to the courts of appeals, provides:

If the petitioner applies to the court for leave to adduce additional evidence, and shows to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the proceeding before the Secretary, the court may order such additional evidence (and evidence in rebuttal thereof) to be taken before the Secretary, and to be adduced upon the hearing, in such manner and upon such terms and conditions as to the court may seem proper. The Secretary may modify his findings as to the facts, or make new findings, by reason of the additional evidence so taken, and he shall file such modified or new findings, and his recommendation, if any, for the modification or setting aside of his original order, with the return of such additional evidence.

21 U.S.C. § 371(f)(2) [emphasis added]. Thus, the Act clearly envisions that the courts of appeals should have jurisdiction of cases in which the administrative record is deficient.

The dissent reads the quoted statutory provision, however, to reach the conclusion that when the record is inadequate, trial before the District Court is mandated. Dissent at 358 of 187 U.S.App.D.C., at 569 of 574 F.2d. We disagree. The dissent’s conclusion disregards the clear import of section 371(f)(2). Further, subjecting tne Commissioner's regulations to a trial de novo in the District Court would be inimical to the aim of Congress in enacting section 371(f). Indeed, several congressmen urged that the statute provide for trial de novo in the district courts, but the idea was rejected for fear that harassing suits in that forum would “hamstring” the Commissioner. Abbott Laboratories v. Gardner, 387 U.S. 136, 143, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967); compare 83 Cong.Rec. 7779, 7785-86, 7789 (1938) with H.R.Rep.No.2139, 75th Cong., 3d Sess. 10-13 (1938). Instead, review in the courts of appeals was adopted as “a method of reviewing agency factual determinations.” Abbott Laboratories v. Gardner, 387 U.S. 136, 143, 87 S.Ct. 1507, 1512, 18 L.Ed.2d 681 [emphasis in original]. To order a trial de novo in the District Court would therefore appear to violate Congress’ intent as well as to ignore section 371(f)(2). See Investment Company Institute v. Board of Governors, 179 U.S.App.D.C. 311, 320, 551 F.2d 1270, 1279 (1977).

ICMAD’s challenges here appear not to be based on any factual dispute but are premised on the Commissioner’s exceeding his authority under the statutes. See ICMAD’s complaint at 7-9, J.A. at 8-10; Brief of Petitioner ICMAD at 12-21. These challenges are outlined in that portion of our opinion discussing ICMAD’s petition for review.

The dissent appears to say that a factual issue was raised by ICMAD’s contention that the Commissioner made no determination that the regulation was necessary to prevent the deception of consumers or to facilitate value comparisons. ICMAD’s argument however is, as stated in its brief, a nonfactual one:

It is beyond dispute that the Commissioner failed to make the statutory finding that the ingredient labeling regulation is necessary to prevent deception or to facilitate value comparisons. Instead, he stated in conclusory language that ingredient labeling “can be meaningful” in preventing consumer deception and that ingredient identity “is one important criterion of a product’s value. . . ” (38 Fed.Reg. 28912 (Oct. 17, 1973)). That a regulation “can be meaningful,” or that ingredient identity is an “important criterion of a product’s value” does not demonstrate that uniform cosmetic ingredient labeling is “necessary” to prevent deception or facilitate value comparisons. Since there has been no finding of necessity, the regulation must be held unlawful as contrary to § 1454(c) of the FPLA.

Appellant ICMAD’s Brief in No. 76-1007 at 28-29; see Petitioner ICMAD’s Brief in No. 75-1845 at 13-15.

Indeed, as the dissent notes, the Commissioner does not contend before this court that he compiled a record in making the necessary determination; rather, the Commissioner argues that the determination was made and that the Act does not require a completed administrative record unless a party timely objects to the determination, which no party did. Respondents’ Brief at 9-11. Thus, the only question regarding the record is the purely legal one of whether the Commissioner was correct in not compiling a record.

We note for clarification that the statute supports the Commissioner’s reasoning. The Act requires that the Commissioner make findings of fact, which are to be based on substantial evidence, only after a public hearing has been held, 21 U.S.C. § 371(e)(3), and the Act mandates a public hearing only after a party objects to an order-and requests a hearing, id. (2), (3). Moreover, the scope of the hearing is to consider only issues raised by the objections, id. (3), and thus the record and findings must relate to only those issues. ICMAD made no timely request, and the requests by others for a hearing on matters unrelated to ICMAD’s claims here were withdrawn. Nor does the absence of an administrative record imply that this court is an improper forum for review; were the issue properly presented, we could review the Commissioner’s basis for determining that the regulation was necessary. See Mobil Oil Corp. v. FPC, 152 U.S.App.D.C. 119, 469 F.2d 130 (1972); Kennecott Copper Corp. v. EPA, 149 U.S.App.D.C. 231, 462 F.2d 846 (1972); see also City of Chicago v. FPC, 147 U.S.App.D.C. 312, 322 n. 45, 458 F.2d 731, 741 n. 45 (1971).

5 . See note 4, supra.

6 . The dissent poses the -questions, “Where, When, and from What judicial review should take place.” We decide in the first part of this opinion that as to “Where”, the proper forum is the courts of appeals. With respect to “When”, the statute compels that the request for review be within 90 days of the date of the order that adversely affects the petitioning party. The “What” in this case is the October 17, 1973 order, which promulgated the basic regu- ' lation.

The dissent asserts, however, that the order of October 17, 1973 served primarily only as an expression of the Commissioner’s view on comments received regarding the regulation and as an opportunity to invite formal objections and requests for hearing. Dissent at 352 of 187 U.S.App.D.C., at 563 of 574 F.2d. Because, the order invited formal objections and hearing requests, the dissent surmises that “the form and content of the regulation were still very much open to discussion and debate.”

The dissent in elaborating the effect of the October 17, 1973 order, however, ignores its principal function: to promulgate in final form the earlier proposed regulation. Thus, after discussing the comments received on the proposal, the Commissioner announced:

The Commissioner concludes that all cosmetic labeling ordered after March 31, 1974, and all cosmetic products labeled after March 31, 1975, shall comply with this regulation. This will, within reasonable limits, allow industry time to exhaust current inventories, redesign labeling, and obtain new labeling.

Therefore, pursuant to provisions of the Fair Packaging and Labeling Act (secs. 5(c), 6(a), 80 Stat. 1298, 1299; 15 U.S.C. 1454, 1455) and the Federal Food, Drug, and Cosmetic Act (sec. 701(e), 52 Stat. 1055-1056, as amended; 21 U.S.C. 371(e)), and under authority delegated to the Commissioner (21 CFR 2.120), Part 1 is amended by adding the following new section:

* * * * * *

38 Fed.Reg. 28913. This pronouncement was followed by a statement of the regulation in the form customarily used by agencies when promulgating regulations in the Federal Register.

Furthermore, the Commissioner’s inclusion in the order of a statement of the parties’ rights to object and request a hearing does not suggest that the order was not appealable. The Act permits review of an order acting upon a proposed regulation that has been publicized and commented on. 21 U.S.C. § 371(f)(1). The October 17, 1973 order was such an order. ICMAD could therefore petition for review of this order, or alternatively, it could object to the order and seek a hearing. 21 U.S.C. •§ 371(e)(2). Therefore, inclusion of a statement of this right, granted by statute, should not make an otherwise appealable final order something else.

Nor do we believe that the subsequent amendments so altered the character of the original regulation that the regulation must be deemed not to have been in final form until after promulgation of the amendments. While the dissent appears to measure the effect of the amendments on the regulation spatially, we believe a less quantitative gauge is required. Our reading of the two sections shows that the amendments only granted limited exemptions and alternate means of compliance and thus they did not alter the fundamental character of the original regulation, which went into effect October 17, 1973. For example, the first section of the amendments permits manufacturers a slight variance from the requirement in the basic regulation that ingredients be listed in descending order of predominance. It permits grouping without respect to predominance of color additives and of ingredients, other than color additives, which are present at a concentration of not more than one percent. 40 Fed. Reg. 8922 (1975).

7 . See note 6, supra.

8 . Therefore, contrary to the implication of the dissent, ICMAD was not denied the opportunity for a hearing on its challenge to the basic regulation; rather, ICMAD waived its statutory right to such a hearing by failing to make a timely request.

9 . On July 25, 1974 the Commissioner, instead of publishing the proposed amendments, gave public notice that a tentative revised final order reflecting the proposal was available. 39 Fed. Reg. 27181. The notice also invited comment by interested parties. On March 3, 1975 the Commissioner published the amendments in final form. 40 Fed.Reg. 8918.

10 . By letter of April 1, 1975 ICMAD commented on the amendments. Except for contesting the original regulation, an attack the Commissioner found untimely (40 Fed.Reg. 23158, 23159 (1975)), ICMAD principally argued for additional exemptions and alternate means of compliance. As the Commissioner concluded, this argument properly should be styled a request for further amendments and not an objection to the present amendments. 40 Fed.Reg. 23159.

11 .In fact, the Commissioner adopted many of the proposals advanced by the objectors, see 40 Fed.Reg. 8918-21 (1975), and had the Commissioner adopted all the objectors’ proposals, see id., it is difficult to understand how that would have mooted any of ICMAD’s contentions.