Thomas v. Union Carbide Agricultural Products Co.

473 U.S. 568, 105 S. Ct. 3325, 87 L. Ed. 2d 409, 1985 U.S. LEXIS 121, 53 U.S.L.W. 5057, 15 Envtl. L. Rep. (Envtl. Law Inst.) 20698, 22 ERC (BNA) 2033
CourtSupreme Court of the United States
DecidedJuly 1, 1985
Docket84-497
StatusPublished
Cited by1,194 cases

This text of 473 U.S. 568 (Thomas v. Union Carbide Agricultural Products Co.) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thomas v. Union Carbide Agricultural Products Co., 473 U.S. 568, 105 S. Ct. 3325, 87 L. Ed. 2d 409, 1985 U.S. LEXIS 121, 53 U.S.L.W. 5057, 15 Envtl. L. Rep. (Envtl. Law Inst.) 20698, 22 ERC (BNA) 2033 (1985).

Opinions

[571]*571Justice O’Connor

delivered the opinion of the Court.

This case requires the Court to revisit the data-consideration provision of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), 61 Stat. 163, as amended, 7 U. S. C. §136 et seq., which was considered last Term in Ruckelshaus v. Monsanto Co., 467 U. S. 986 (1984). Monsanto examined whether FIFRA’s data-consideration provision effects an uncompensated taking in violation of the Fifth Amendment. In this case we address whether Article III of the Constitution prohibits Congress from selecting binding arbitration with only limited judicial review as the mechanism for resolving disputes among participants in FIFRA’s pesticide registration scheme. We conclude it does not and reverse the judgment below.

H-i

The Court’s opinion in Monsanto details the development of FIFRA from the licensing and labeling statute enacted in 1947 to the comprehensive regulatory statute of the present. This case, like Monsanto, concerns the most recent amendment to FIFRA, the Federal Pesticide Act of 1978, 92 Stat. 819 (1978 Act), which sought to correct problems created by the Federal Environmental Pesticide Control Act of 1972, 86 Stat. 973 (1972 Act), itself a major revision of prior law. See Ruckelshaus v. Monsanto Co., supra, at 991-992.

A

As a precondition for registration of a pesticide, manufacturers must submit research data to the Environmental Protection Agency (EPA) concerning the product’s health, safety, and environmental effects. The 1972 Act established data-sharing provisions intended to streamline pesticide registration procedures, increase competition, and avoid unnecessary duplication of data-generation costs. S. Rep. No. 92-838, pp. 72-73 (1972) (1972 S. Rep.). Some evidence suggests that before 1972 data submitted by one registrant [572]*572had “as a matter of practice but without statutory authority, been considered by the Administrator to support the registration of the same or a similar product by another registrant.” Ruckelshaus v. Monsanto Co., supra, at 1009, n. 14. Such registrations were colloquially known as “me too” or “follow-on” registrations. Section 3(c)(1)(D) of the 1972 Act provided statutory authority for the use of previously submitted data as well as a scheme for sharing the costs of data generation.

“In effect, the provision instituted a mandatory data-licensing scheme. The amount of compensation was to be negotiated by the parties, or, in the event negotiations failed, was to be determined by the EPA, subject to judicial review upon instigation of the original data submitter. The scope of the 1972 data-consideration provision, however, was limited, for any data designated as ‘trade secrets or commercial or financial information’ . . . could not be considered at all by EPA to support another registration unless the original submitter consented.” Ruckelshaus v. Monsanto Co., supra, at 992-993.

Congress enacted the original data-compensation provision in 1972 because it believed “recognizing a limited proprietary interest” in data submitted to support pesticide registrations would provide an added incentive beyond statutory patent protection for research and development of new pesticides. H. R. Rep. No. 95-663, pp. 17-18 (1977); S. Rep. No. 95-334, pp. 7, 34-40 (1977) (1977 S. Rep.). The data submitters, however, contended that basic health, safety, and environmental data essential to registration of a competing pesticide qualified for protection as a trade secret. With EPA bogged down in cataloging data and the pesticide industry embroiled in litigation over what types of data could legitimately be designated “trade secrets,’’ new pesticide registrations “ground to a virtual halt.” Id., at 3.

[573]*573The 1978 amendments were a response to the “logjam of litigation that resulted from controversies over data compensation and trade secret protection.” Ibid. Congress viewed data-sharing as essential to the registration scheme, id., at 7, but concluded EPA must be relieved of the task of valuation because disputes regarding the compensation scheme had “for all practical purposes, tied up their registration process” and “[EPA] lacked the expertise necessary to establish the proper amount of compensation.” 123 Cong. Rec. 25709 (1977) (statement of Sen. Leahy, floor manager of S. 1678). Legislators and the Agency agreed that “[dieter-mining the amount and terms of such compensation are matters that do not require active government involvement [and] compensation payable should be determined to the fullest extent practicable, within the private sector.” Id., at 25710.

Against this background, Congress in 1978 amended § 3(c)(1)(D) and § 10(b) to clarify that the trade secret exemption from the data-consideration provision did not extend to health, safety, and environmental data. In addition, the 1978 amendments granted data submitters a 10-year period of exclusive use for data submitted after September 30,1978, during which time the data may not be cited without the original submitter’s permission. § 3(c)(l)(D)(i).

Regarding compensation for use of data not protected by the 10-year exclusive use provision, the amendment substituted for the EPA Administrator’s determination of the appropriate compensation a system of negotiation and binding arbitration to resolve compensation disputes among registrants. Section 3(c)(l)(D)(ii) authorizes EPA to consider data already in its files in support of a new registration, permit, or new use, but “only if the applicant has made an offer to compensate the original data submitter.” If the applicant and data submitter fail to agree, either may invoke binding arbitration. The arbitrator’s decision is subject to judicial review only for “fraud, misrepresentation, or other [574]*574misconduct.” Ibid,.1 The statute contains its own sanctions. Should an applicant or data submitter fail to comply with the scheme, the Administrator is required to cancel the [575]*575new registration or to consider the data without compensation to the original submitter. The Administrator may also issue orders regarding sale or use of existing pesticide stocks. Ibid.

The concept of retaining statutory compensation but substituting binding arbitration for valuation of data by EPA emerged as a compromise. This approach was developed by representatives of the major chemical manufacturers, who sought to retain the controversial compensation provision, in discussions with industry groups representing follow-on registrants, whose attempts to register pesticides had been roadblocked by litigation since 1972. Hearings on Extending and Amending FIFRA before the Subcommittee on Department Investigations, Oversight, and Research of the House Committee on Agriculture, 95th Cong., 1st Sess., 522-523 (1977) (testimony of Robert Alikonis, General Counsel to Pesticide Formulators Association).

B

Appellees are 13 large firms engaged in the development and marketing of chemicals used to manufacture pesticides. [576]*576Each has in the past submitted data to EPA in support of registrations of various pesticides.

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Bluebook (online)
473 U.S. 568, 105 S. Ct. 3325, 87 L. Ed. 2d 409, 1985 U.S. LEXIS 121, 53 U.S.L.W. 5057, 15 Envtl. L. Rep. (Envtl. Law Inst.) 20698, 22 ERC (BNA) 2033, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thomas-v-union-carbide-agricultural-products-co-scotus-1985.