The opinion
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 22-56014
Plaintiff-Appellant, D.C. No.
v. 5:18-cv-01005-
JGB-KK
CALIFORNIA STEM CELL
TREATMENT CENTER, INC., a
California corporation; CELL OPINION
SURGICAL NETWORK
CORPORATION, a California
corporation; ELLIOTT B. LANDER,
M.D., individual; MARK BERMAN,
M.D., individual,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Jesus G. Bernal, District Judge, Presiding
Argued and Submitted February 7, 2024
Pasadena, California
Filed September 27, 2024
Before: Kim McLane Wardlaw, Michelle T. Friedland, and
Jennifer Sung, Circuit Judges.
2 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
Judge Friedland delivered the opinion of the Court as to
Parts I, II, III.A, and III.B, in which Judge Wardlaw and
Judge Sung joined. Judge Sung delivered the opinion of the
Court as to Part III.C, in which Judge Wardlaw joined. Judge
Friedland filed a concurring opinion in the result as to Part
III.C.
SUMMARY*
Food, Drug, and Cosmetic Act
The panel reversed the district court’s judgment
following a bench trial in favor of Defendants, doctors who
create and administer a stem cell mixture called stromal
vascular fraction (“SVF”), in the Food and Drug
Administration’s action alleging that Defendants were
violating the Food, Drug, and Cosmetic Act (“FDCA”) by
improperly manufacturing and labeling SVF.
Under the FDCA, 21 U.S.C. § 301 et seq., the FDA is
tasked with ensuring that “drugs” are safe and effective.
Under the FDCA and the Public Health Service Act, 42
U.S.C. § 201 et seq., the FDA also regulates human cells,
tissues, and cellular and tissue-based products, abbreviated
as “HCT/Ps.”
In Part III.B of the opinion, the panel held that
Defendants’ SVF constitutes a “drug” under the FDCA
based on the plain text of the statute.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 3
In Part III.C of the opinion, the panel rejected
Defendants’ argument that even if SVF is a “drug,” their
same-day SVF treatment for patients is completely exempt
from FDA regulation under the “same surgical procedure”
exception (“SSP exception”), which applies to “an
establishment that removes HCT/P’s from an individual and
implants such HCT/P’s into the same individual during the
same surgical procedure.” 21 C.F.R. § 1271.15(b). Because
the text of the HCT/P regulations does not provide a clear
answer to the meaning of the SSP exception, the panel
examined the SSP exception’s context and structure and
resolved the seeming textual ambiguity in the FDA’s favor.
The SSP exception applies to a procedure only if the
removed HCT/P and the implanted HCT/P are the same. For
Defendants’ SVF procedure, the removed HCT/P is the fat
tissue, not the cells targeted for implantation. Because the
SVF procedure removes fat tissue but implants SVF, the
procedure is not exempt from regulation under the SSP
exception.
Concurring in the result of Part III.C, Judge Friedland
agreed with the majority’s conclusion that Defendants’
same-day version of the SVF treatment did not fall under the
SSP exception, but she would arrive at this conclusion for a
different reason. After examining the HCT/P regulations’
text, structure, purpose, and history, she would hold that the
SSP exception is genuinely ambiguous, and that the court
owes Auer deference to the FDA’s reasonable interpretation
of the SSP exception such that Defendants’ treatments do not
fall under the SSP exception.
4 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
COUNSEL
Adam C. Jed (argued) and Daniel Tenny, Appellate Staff
Attorneys, Civil Division, United States Department of
Justice, Washington, D.C.; E. Martin Estrada, United States
Attorney, United States Department of Justice, Washington,
D.C.; Brian M. Boynton, Principal Deputy Assistant
Attorney General, United States Department of Justice,
Washington, D.C.; Natalie Sanders, Senior Trial Attorney,
Office of Consumer Litigation, United States Department of
Justice, Washington, D.C.; Michael Shane, Associate Chief
Counsel for Enforcement, Food and Drug Administration;
Shannon Singleton, Acting Deputy Chief Counsel for
Litigation, Food and Drug Administration; Perham Gorji,
Deputy Chief Counsel for Litigation, Food and Drug
Administration; Mark Raza, Chief Counsel, Food and Drug
Administration; Samuel R. Bagenstos, General Counsel,
Department of Health and Human Services; for Plaintiff-
Appellant.
Nathaniel P. Garrett (argued) and Alyxandra N. Vernon,
Jones Day, San Francisco, California; Celeste M. Brecht and
Ramanda R. Luper, Jones Day, Los Angeles, California;
Matthew M. Gurvitz, Willkie Farr & Gallagher LLP, Los
Angeles, California; for Defendants-Appellees.
Christopher J. Cox, Hogan Lovells US LLP, Redwood City,
California, for Amicus Curiae International Society for Stem
Cell Research and the International Society for Cell and
Gene Therapy.
Christina Sandefur and Timothy Sandefur, Scharf-Norton
Center for Constitutional Litigation at the Goldwater
Institute, Phoenix, Arizona, for Amicus Curiae Goldwater
Institute.
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 5
Andrew L. Schlafly, Attorney at Law, Far Hills, New Jersey,
for Amicus Curiae Association of American Physicians and
Surgeons.
Christopher James, The James Law Group LLC, Portland,
Oregon, for Amicus Curiae Race MD.
OPINION
FRIEDLAND, Circuit Judge:
This case requires us to decide whether the Food and
Drug Administration can regulate certain stem cell mixtures
advertised as treatments for a host of medical conditions.
Defendants are doctors who create such a mixture by
removing fat tissue from a patient and breaking it down to
concentrate the portion containing stem cells. The result is
a mixture of stem cells, other types of cells, and cell debris
called stromal vascular fraction (“SVF”), which they then
administer to the patient. For example, Defendants inject
SVF directly into a patient’s knee to treat osteoarthritis. In
recent years, clinics offering similar stem cell mixtures have
proliferated despite concerns over whether such treatments
are safe and effective.
After inspecting Defendants’ two clinics, the FDA
brought this lawsuit, claiming various violations of the
Federal Food, Drug, and Cosmetic Act. Defendants argue
that their SVF is not a “drug” within the meaning of the Act
and that, even if it is, some of their uses of SVF fall under an
exception from FDA regulation for certain surgical
procedures. We reject both arguments. Accordingly, we
reverse the district court’s entry of judgment in favor of
Defendants.
6 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
I.
A.
Defendants are two California-licensed physicians and
the entities they co-founded: the California Stem Cell
Treatment Center and the Cell Surgical Network. The
California Stem Cell Treatment Center operates two clinics
in Beverly Hills and Rancho Mirage. At those clinics, as part
of what they call “patient-funded investigational research,”
Defendants offer stem cell treatments to “[p]atients who are
looking for non-surgical alternatives to their degenerative
disorders.” Defendants advertise that they have “technology
to produce a solution rich with your own stem cells” that
they say can alleviate dozens of medical conditions,
including Alzheimer’s, arthritis, asthma, cancer, macular
degeneration, multiple sclerosis, heart problems, pulmonary
problems, Crohn’s, Parkinson’s, and erectile dysfunction.
The treatments are not covered by insurance, so patients pay
out of pocket. A single treatment typically costs $8,900, and
a twelve-treatment option costs $41,500. Defendants have
treated thousands of patients.
Through the Cell Surgical Network, Defendants also
operate a network for “physicians who want[] to bring
regenerative medicine into their own practices.” Affiliates
agree to follow Defendants’ treatment protocol and pricing
guidelines; share “research data”; and purchase Defendants’
equipment for isolating cells, called the “Time Machine,” for
about $30,000.
The substance that Defendants produce is called
“stromal vascular fraction,” or “SVF.” SVF is “a liquified
mixture of cells and cell debris” derived from fat tissue. Fat
tissue, which looks a bit like honeycomb when magnified, is
a connective tissue primarily made up of fat cells. Fat tissue
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 7
also comprises many other types of cells, including
mesenchymal stem cells. Most of the cells are embedded in
an “extracellular matrix,” a structure made partly of collagen
fibers that holds the cells in place. Fat tissue also contains
interspersed blood vessels.
Defendants derive SVF from fat tissue using a multi-step
process. First, after administering local anesthesia to a
patient, Defendants use liposuction to remove fat tissue. The
retrieved tissue is then centrifuged (spun at high speed) to
separate and remove blood and anesthesia. The next step is
called “enzymatic digestion.” An enzyme blend is added to
the tissue, and during a thirty-minute incubation period, the
enzymes break down the extracellular matrix (the tissue’s
structural components). During this period, cells detach
from the matrix and become free-floating. Through another
round of centrifugation, the fat cells, which made up the bulk
of the tissue, are removed and discarded. What is left is
repeatedly flushed with a solution to wash away as much of
the enzyme blend as possible and centrifuged to concentrate
the remaining cells. The resulting “slurry” is pushed through
a filter to remove the broken-down structural components.
The end result, SVF, is a concentrated mixture of many types
of cells, including stem cells, and cell debris. Defendants
administer it in a variety of ways, including by injection,
intravenous drip, and inhalation.
That entire process is sometimes done on one day: The
patient undergoes liposuction, waits for the tissue to be
processed, and receives SVF all during one visit. But in the
“expanded” version, the collected tissue is not processed
onsite. Instead, the tissue is sent to a cell bank for processing
and the cells are replicated (“expanded”) for later use in the
same patient.
8 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
B.
In 2017, the FDA inspected the California Stem Cell
Treatment Center clinics. The inspectors concluded that the
clinics were manufacturing and administering unapproved
drug products. They found violations of the FDA’s
manufacturing requirements and a lack of proper
documentation of adverse health events related to the clinics’
SVF treatments.
In 2018, the FDA filed this lawsuit and sought injunctive
relief, alleging that Defendants were violating the Food,
Drug, and Cosmetic Act by improperly manufacturing and
labeling SVF. After a seven-day bench trial, the district
court entered judgment in favor of Defendants, holding that
Defendants’ treatments were not subject to FDA regulation.
The district court held that Defendants’ SVF is not a “drug”
under federal law, reasoning that “Defendants are engaged
in the practice of medicine, not the manufacture of
pharmaceuticals.” The court also alternatively held, as to the
same-day procedure, that Defendants’ use of SVF falls
within an exception to regulation for certain surgical
procedures. That holding was based on the court’s factual
finding that the cells in the same-day SVF “are not altered,
chemically or biologically” and that the procedure “does not
create any new material or introduce any foreign article” into
the body. The FDA timely appealed.
II.
We review a district court’s conclusions of law de novo
and its findings of fact for clear error. Yu v. Idaho State
Univ., 15 F.4th 1236, 1241-42 (9th Cir. 2021).
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 9
III.
A.
Under the Food, Drug, and Cosmetic Act (“FDCA”), 21
U.S.C. § 301 et seq., the FDA is tasked with ensuring that
“drugs” are safe and effective, as part of its mission to
protect public health. FDA v. Brown & Williamson Tobacco
Corp., 529 U.S. 120, 133-34 (2000) (citing 21 U.S.C.
§ 393(b)(2)); see also Wyeth v. Levine, 555 U.S. 555, 574
(2009) (“Congress enacted the FDCA to bolster consumer
protection against harmful products.”).
The FDCA requires all new drugs to receive premarket
approval from the FDA, which in turn requires drug
manufacturers to demonstrate each drug’s safety and
efficacy through clinical trials. See Wyeth, 555 U.S. at 566;
Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193,
196 (2005) (citing 21 U.S.C. § 355). The FDCA also
prohibits any act while a drug is being “held for sale . . . after
shipment in interstate commerce” that results in the drug
being “adulterated or misbranded.”1 21 U.S.C. § 331(k). As
relevant here, a drug is “adulterated” if it is manufactured or
handled without contaminant controls or does not conform
to standards of quality, strength, and purity. Id. § 351. And
a drug is “misbranded” if it lacks adequate directions for use
or bears false or misleading labeling. Id. § 352.
Under the FDCA and the Public Health Service Act
(“PHSA”), 42 U.S.C. § 201 et seq., the FDA also regulates
1
The phrase “held for sale” applies to physicians “engaged in the
business of providing medical services in exchange for payment.”
United States v. Kaplan, 836 F.3d 1199, 1210 (9th Cir. 2016). “[T]he
‘shipment in interstate commerce’ requirement is satisfied even when
only an ingredient is transported interstate.” Baker v. United States, 932
F.2d 813, 814 (9th Cir. 1991).
10 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
“human cells, tissues, and cellular and tissue-based
products,” abbreviated as “HCT/Ps.” 21 C.F.R. § 1271.1(a);
Human Cells, Tissues, and Cellular and Tissue-Based
Products; Establishment Registration and Listing, 66 Fed.
Reg. 5447, 5449 (Jan. 19, 2001). HCT/Ps are defined as
“articles containing or consisting of human cells or tissues
that are intended for implantation, transplantation, infusion,
or transfer into a human recipient.” 21 C.F.R. § 1271.3(d).
FDA regulations give as examples bone, ligament, skin,
cornea, stem cells derived from blood, and reproductive
tissue. Id.
The FDA has a “tiered, risk-based approach” to
regulating HCT/Ps. 66 Fed. Reg. at 5448. That approach
employs a hierarchy of oversight—full, limited, or no
oversight—based on the FDA’s assessment of the types of
health risks posed by different categories of HCT/Ps.
HCT/Ps at the top of the hierarchy are fully regulated as
“drugs” under the FDCA, and/or as “biological products”
under the PHSA, and are thus subject to premarket approval.
21 C.F.R. § 1271.20. HCT/Ps that meet certain criteria, such
as being only “minimally manipulated,” fall in the middle of
the hierarchy and need only comply with regulations aimed
at preventing the spread of infectious disease promulgated
under the PHSA. See id. § 1271.10; 66 Fed. Reg. at 5449.
Finally, HCT/Ps at the bottom of the hierarchy are not
subject to any FDA oversight, even if they would otherwise
be regulated as drugs under the FDCA.2 21 C.F.R.
§ 1271.15. As relevant to this case, the bottom category
includes HCT/Ps that are removed from and implanted into
2
The FDA treats HCT/Ps falling in the bottom category as excepted from
all FDA regulation even though the text refers only to being excused
from the requirements in “this part.” See 21 C.F.R. § 1271.15(b).
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 11
the same patient during the same surgical procedure. Id.
§ 1271.15(b).
B.
The parties first dispute whether Defendants’ SVF
constitutes a “drug” under the FDCA. Based on the plain
text of the statute, we agree with the FDA that Defendants’
SVF is a drug.
“[T]he word ‘drug’ is a term of art for the purposes of
the [FDCA].” United States v. Article of Drug, Bacto-
Unidisk, 394 U.S. 784, 793 (1969). “Drug[s]” are defined in
the Act as “articles intended for use in the diagnosis, cure,
mitigation, treatment, or prevention of disease,” or “intended
to affect the structure or any function of the body.” Id. at
789 (quoting 21 U.S.C. § 321(g)(1)). An “article” is just a
general term for “a particular thing.” Samsung Elecs. Co. v.
Apple Inc., 580 U.S. 53, 59 (2016) (quoting J. Stormonth, A
Dictionary of the English Language 53 (1885)). Defendants
administer a particular thing—a liquified concentrate of cells
and cell debris. And they do so with the undisputed intent,
as reflected in their marketing, to treat a long list of diseases
and to affect structures of the body, such as to regenerate
cartilage.
Considering a similar stem cell treatment in United
States v. Regenerative Sciences, LLC, 741 F.3d 1314 (D.C.
Cir. 2014), the D.C. Circuit likewise held that the “plain
language” of the FDCA compelled the conclusion that the
stem cell mixture in that case was a “drug” under the FDCA.
Id. at 1319. There, doctors extracted bone marrow or fluid
from joints, isolated and cultured stem cells, combined the
cells with an antibiotic to prevent bacterial contamination,
and reinjected the mixture to treat orthopedic conditions. Id.
at 1318. Although Defendants’ treatment here does not
12 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
involve an antibiotic and does not always involve culturing,
the D.C. Circuit’s holding that the mixture in its case was a
“drug” did not hinge on those aspects of the treatment. See
id. at 1319. The court simply reasoned that the FDCA’s
“wide-ranging definition[] clearly appl[ied] to the Mixture,
an article derived mainly from human tissue and intended to
treat orthopedic diseases and to affect musculoskeletal
function.”3 Id.
Defendants do not seem to dispute that the “admittedly
capacious” language of the FDCA, read literally,
encompasses their treatments. Instead, they assert that the
definition should not be read literally because its breadth is
intolerable. But the Supreme Court has instructed that it is
error to “refuse[] to apply the [FDCA’s] language as
written,” holding that “Congress fully intended that the Act’s
coverage be as broad as its literal language indicates—and
equally clearly, broader than any strict medical definition
might otherwise allow.” Bacto-Unidisk, 394 U.S. at 798.
The Court explained that “remedial legislation such as the
[FDCA] is to be given a liberal construction consistent with
the Act’s overriding purpose to protect the public health.”
Id.
Defendants conjure purportedly “absurd” results of a
broad interpretation of “drugs,” painting a picture of doctors
having to pause during a vein graft to measure the vein’s
3
The D.C. Circuit in Regenerative Sciences also held that the stem cell
mixture was a “biological product” under the PHSA. 741 F.3d at 1319
(citing 42 U.S.C. § 262(i)(1)). We are not presented in this appeal with
the question whether Defendants’ SVF falls under the PHSA, and the
FDA has made no arguments based on the PHSA’s definition of a
biological product. But we note that a product can be both a drug under
the FDCA and a biological product under the PHSA. See id. at 1319 &
n.1; see also 42 U.S.C. § 262(j); 21 U.S.C. § 353(g)(1)(A).
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 13
active ingredients or adhere a drug label. But “[t]he scope
of the offense which Congress defined [in the FDCA] is not
to be judicially narrowed as applied to drugs by envisioning
extreme possible applications.” United States v. Sullivan,
332 U.S. 689, 694 (1948). And the FDA has flexibility to
tailor its specific requirements upon approval of a new drug.4
Id. at 695; see also, e.g., 21 U.S.C. § 352(e)(1)(B), (f)
(explaining that exemptions from labeling requirements may
be established). Hypothesized extreme applications of
specific requirements are not a reason to infer that
Defendants’ SVF is not a “drug” under the FDCA.
Defendants next argue that this interpretation of “drugs”
would impermissibly intrude upon the practice of medicine,
which is regulated by the states. But in United States v.
Kaplan, 836 F.3d 1199 (9th Cir. 2016), we rejected
essentially the same argument. There, we held that a doctor
could be criminally prosecuted under the FDCA for reusing
in biopsies a “needle guide” that was intended for single use
only. Id. at 1208-11. We explained that “[t]hough the
regulation of the practice of medicine is delegated to the
states, when a physician misuses medical devices and
threatens public health, the physician may run afoul of the
[FDCA].” Id. at 1203; see also United States v. 9/1 Kg.
Containers, More or Less, of an Article of Drug for
Veterinary Use, 854 F.2d 173, 176 (7th Cir. 1988) (“To
regulate drugs is to be ‘involved’ in the ‘practice of the
healing arts.’”); United States v. Evers, 643 F.2d 1043, 1048
(5th Cir. 1981) (“Of course, while the [FDCA] was not
4
Indeed, the FDA has used its flexibility with respect to other autologous
(i.e., same-patient) stem cell treatments that have gone through the
FDA’s approval process for biological products. See, e.g., FDA,
ZYNTEGLO, https://www.fda.gov/
vaccines-blood-biologics/zynteglo.
14 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
intended to regulate the practice of medicine, it was
obviously intended to control the availability of drugs for
prescribing by physicians.”).
Kaplan also invoked the D.C. Circuit’s decision in
Regenerative Sciences, which rejected an argument that “the
FDA was improperly attempting to regulate the practice of
medicine by regulating the stem cell procedure.” Kaplan,
836 F.3d at 1210 (describing Regenerative Scis., 741 F.3d at
1319). The D.C. Circuit reasoned that the FDA’s focus was
the stem cell mixture, not the doctor’s performance of any
procedure. Regenerative Scis., 741 F.3d at 1319. The court
noted that the FDCA’s regulatory scheme clearly applies to
doctors—evidenced by the fact that the Act has specific
carve-outs for doctors that “would be unnecessary if the
FDCA did not otherwise regulate the distribution of drugs
by licensed physicians.” Id. at 1319-20. And the court
observed that narrowing the scope of the FDCA “by
classifying the distribution of drugs by doctors as the
practice of medicine” would “create an enormous gap in the
FDCA’s coverage.” Id. at 1320. Adopting the reasoning of
Regenerative Sciences, we explained in Kaplan that the
defendant doctor’s practice-of-medicine arguments were
“wide of the mark.” 836 F.3d at 1210 (quoting Regenerative
Scis., 741 F.3d at 1319). Kaplan forecloses Defendants’
similar argument here.
As a final effort to resist the FDA’s interpretation,
Defendants invoke the major questions doctrine, which,
when it applies, requires an agency to “point to ‘clear
congressional authorization’ for the power [the agency]
claims.” West Virginia v. EPA, 597 U.S. 697, 723 (2022)
(quoting Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 324
(2014)). But this is far from the sort of “extraordinary
case[]” that would give us “‘reason to hesitate before
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 15
concluding that Congress’ meant to confer such authority.”
Id. at 721 (quoting Brown & Williamson Tobacco Corp., 529
U.S. at 159). The FDA is not asserting authority over
surgery as a general category. Rather, it is asserting
authority over doctors’ creation or use of products that fall
within Congress’s definition of “drugs.” That is unlike the
situations in which the major questions doctrine has been
applied.
First, this case does not present a matter of extreme
“economic and political significance.” Id. (quoting Brown
& Williamson Tobacco Corp., 529 U.S. at 160); cf. id. at
724-25 (reasoning that carbon emission standards were
meant to “substantially restructure the American energy
market”); Biden v. Nebraska, 143 S. Ct. 2355, 2373 (2023)
(noting that the significance of the student loan forgiveness
program was “staggering by any measure,” with an
economic impact amounting to “nearly one-third of the
Government’s $1.7 trillion in annual discretionary
spending”); Ala. Ass’n of Realtors v. Dep’t of Health &
Hum. Servs., 594 U.S. 758, 764 (2021) (per curiam)
(describing the “sheer scope” of an eviction moratorium,
which covered at least 80% of the country).
Second, the FDA’s regulation of human cell and tissue
products does not represent a sudden assertion or
“transformative expansion” of authority. West Virginia, 597
U.S. at 724 (quoting Util. Air., 573 U.S. at 324). The FDA’s
assertion of power rests on key provisions of the FDCA, not
a rarely used “gap filler.” Id. And the FDA’s regulation of
human cell and tissue products is longstanding. As early as
1993, the FDA was regulating “somatic cell therapy
products,” including “autologous” cell therapies (i.e.,
therapies using a patient’s own cells), as “drugs” under the
FDCA. Application of Current Statutory Authorities to
16 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
Human Somatic Cell Therapy Products and Gene Therapy
Products, 58 Fed. Reg. 53248, 53249 (Oct. 14, 1993). In
1997, the FDA proposed its current “unified approach to the
regulation of both traditional and new [human cellular and
tissue-based] products.” FDA, Proposed Approach to
Regulation of Cellular and Tissue-Based Products 6 (Feb.
28, 1997) (“Proposed Approach”); 66 Fed. Reg. at 5447-69
(finalizing the rule in 2001).
Third, unlike in the only Supreme Court case addressing
the major questions doctrine in the context of the FDCA,
there is no mismatch between Defendants’ SVF and the
statutory scheme. In Brown & Williamson Tobacco Corp.,
the Court held that the FDA did not have authority over
tobacco products. 529 U.S. at 161. The Court reasoned that
faithful application of the FDCA—which requires that the
FDA balance a product’s therapeutic benefits against the risk
of harm—would require an outright ban on tobacco products
because they cannot safely be used for any therapeutic
benefit. Id. at 141-43. But a ban would have contradicted
Congress’s clear intent in tobacco-specific legislation to
permit the sale of tobacco products. Id. at 143. Thus, “there
is no room for tobacco products within the FDCA’s
regulatory scheme.” Id. Here, by contrast, SVF fits
comfortably within the FDCA because it is sold and
administered to patients for therapeutic purposes, and there
is no reason to think that Congress intended it to be outside
the FDCA’s scope. In fact, recent legislation suggests that
Congress presupposes that the FDA regulates stem cell
therapies. See 21st Century Cures Act, Pub. L. No. 114-255,
§ 3033, 130 Stat. 1033, 1101-03 (2016) (codified as
amended at 21 U.S.C. § 356) (amending a section of the
FDCA to create an expedited review process for
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 17
“regenerative advanced therapies,” including “cell therapy”
and “human cell and tissue products”).
Consistent with the Supreme Court’s instruction that the
FDCA’s definition of “drug” is “as broad as its literal
language indicates,” Bacto-Unidisk, 394 U.S. at 798, we
hold that Defendants’ SVF is a “drug.”
* * *
Part III.C:
SUNG, Circuit Judge, with whom WARDLAW, Circuit
Judge, joins:
C.
Defendants argue that even if their SVF is a “drug,” their
same-day SVF treatment is completely exempt from FDA
regulation under what is called the “same surgical
procedure” exception (“SSP exception”).5 The SSP
exception applies to “an establishment that removes
HCT/P’s from an individual and implants such HCT/P’s into
the same individual during the same surgical procedure.” 21
C.F.R. § 1271.15(b). The FDA maintains that the SSP
exception does not apply to Defendants’ same-day SVF
treatment. On appeal, the parties do not dispute the facts
about the same-day SVF treatment. Rather, they offer
competing interpretations of the SSP exception. For the
reasons explained below, we conclude that the FDA’s
interpretation is correct, and we hold that Defendants’ same-
5
Defendants do not challenge the district court’s conclusion that their
use of SVF in the “expanded” version of the treatment, which involves
shipping the tissue to a cell bank and culturing cells, does not fall under
the SSP exception.
18 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
day version of the SVF treatment does not qualify for the
SSP exception.
1.
“If [a] regulation is unambiguous and ‘there is only one
reasonable construction of [the] regulation,’ then we” simply
apply that meaning. Mountain Cmtys. for Fire Safety v.
Elliott, 25 F.4th 667, 675 (9th Cir. 2022) (quoting Kisor v.
Wilkie, 588 U.S. 558, 575 (2019)). If the text seems to have
more than one plausible meaning, then we must try to
resolve the ambiguity by “carefully consider[ing] the text,
structure, history, and purpose of [the] regulation.” Kisor,
588 U.S. at 575 (internal quotation marks and citation
omitted). If, after “exhaust[ing] all the ‘traditional tools’ of
construction,” we determine that “the interpretive question
still has no single right answer,” then we consider whether
the agency’s interpretation is reasonable, and if so, whether
it is entitled to deference under Auer v. Robbins, 519 U.S.
452 (1997). Id. at 575–76. But, in many cases, our tools of
construction will resolve the seeming ambiguity “out of the
box, without resort to Auer deference.” Id. at 575.
2.
Again, the SSP exception applies to: “[A]n
establishment that removes HCT/P’s from an individual and
implants such HCT/P’s into the same individual during the
same surgical procedure.” 21 C.F.R. § 1271.15(b).
“HCT/Ps” are defined as “articles containing or consisting
of human cells or tissues that are intended for implantation,
transplantation, infusion, or transfer into a human recipient.”
Id. § 1271.3(d).
The FDA and Defendants agree on several important
points. First, they agree that the SSP exception applies to a
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 19
procedure only if the removed HCT/P and the implanted
HCT/P are “the same.” Second, they agree that fat tissue is
an HCT/P, and that the SVF procedure removes fat tissue,
but implants SVF. Third, they agree that Defendants subject
the removed fat tissue to significant processing to produce
SVF. Fourth, they agree that fat tissue and SVF are not the
same. In the FDA’s view, all this adds up to an easy case:
Because fat tissue and SVF are not the same, the SSP
exception does not apply to the SVF procedure.
But, Defendants point out (and the FDA does not
dispute) that the cells they extract from the fat tissue are also,
by definition, HCT/Ps. Consequently, the SVF procedure
can be characterized as removing two different kinds of
HCT/Ps: the fat tissue and the cells within the fat tissue.
When determining whether a procedure removes and
implants the same HCT/Ps, Defendants argue that the SSP
exception requires us to compare the implanted HCT/P with
the HCT/P that was “the target of the removal, rather than
the largest system removed.” Under that interpretation of
the SSP exception, the SVF procedure removes and implants
the same HCT/Ps because it targets the cells within fat tissue
for removal and implants those cells. And, under that
interpretation, the SVF procedure removes and implants the
same HCT/Ps even though Defendants subject the removed
fat tissue to significant processing to extract and isolate the
targeted cells. In Defendants’ view, the SSP exception
applies no matter how much processing the removed tissue
undergoes, so long as the extracted cells are implanted in the
same surgical procedure.6
6
It is undisputed that Defendants’ same-day treatment involves the same
patient and the “same surgical procedure” as required for the SSP
exception.
20 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
The FDA maintains that the SSP exception requires us to
view the removed HCT/P as a whole, before it has
undergone any significant processing. Under that
interpretation, the HCT/P removed by the SVF procedure is
the fat tissue, not the cells.
Thus, the parties’ interpretive dispute boils down to the
following question: When determining whether the removed
and implanted HCT/Ps are the same, which removed HCT/P
is the correct comparator? Do we consider the HCT/P that
was removed as a whole, before any significant processing?
Or only the portion of the removed HCT/P that will be
implanted, even if extensive processing is needed to extract
that portion from the whole?
Each party argues that its interpretation is compelled by
the regulation’s text. The FDA focuses on the word “such,”
which is used to refer back to something already
mentioned—an antecedent. Such, Black’s Law Dictionary
(12th ed. 2024) (defining “such” as “[t]hat or those; having
just been mentioned”). Therefore, the phrase “removes
HCT/P’s from an individual and implants such HCT/P’s into
the same individual” means that, to fall under the SSP
exception, the HCT/P implanted must be the same HCT/P
removed. But, as discussed above, Defendants concede that
the removed and implanted HCT/P must be the same, and
instead argue that the implanted SVF should be compared to
the cells within the removed tissue, not the tissue as a whole.
The term “such” does not tell us which comparator to use.
For their part, Defendants focus on the regulatory
definition of HCT/Ps. Recall that the FDA defines HCT/Ps
as “articles containing or consisting of human cells or tissues
that are intended for implantation, transplantation, infusion,
or transfer into a human recipient.” 21 C.F.R. § 1271.3(d).
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 21
Defendants first argue that the definition signals that the
focus in the SSP exception should be on the article that the
doctor “intend[s] for implantation”—here, the cells. But the
HCT/P definition includes an article that “contain[s]” the
cells that are intended for implantation. And here, the
removed fat tissue contains the cells that are intended for
implantation. Thus, even if the doctor’s intent is relevant,
the fat tissue could still be the correct comparator.
Defendants next argue that the FDA’s focus on the
largest system removed would render part of the HCT/P
definition superfluous. The definition refers to “cells or
tissues,” and Defendants argue that cells can generally only
be removed from the body within tissue or other larger
systems. It is true that isolated cells would rarely fall under
the SSP exception as interpreted by the FDA. But rarely
does not mean never. As the FDA points out, at least one
type of cell can be removed in isolation,7 and the regulation
addresses an area of evolving science. Moreover, the HCT/P
definition does not apply solely to the SSP exception—it
applies across numerous provisions regulating cells or cell-
based products. Id. § 1271.3 (establishing definitions that
apply across 21 C.F.R. pt. 1271); see also, e.g., id.
§ 1271.145 (providing that HCT/Ps must be stored “in a way
that prevents the introduction, transmission, or spread of
communicable diseases”). Thus, even if the inclusion of
“cells” in the definition of “HCT/P” served no purpose in the
context of the SSP exception, the word “cells” would not be
superfluous in the context of those other provisions.
In sum, neither party’s textual arguments fully resolve
the interpretive dispute. Although the FDA’s reading is
7
The FDA’s expert testified that she was aware of one type of cell that
can be removed in isolation: an ovocyte, or egg cell.
22 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
more straightforward and consistent with the SSP
exception’s plain text, Defendants’ reading is plausible. So,
we consider the SSP exception’s context and structure.
The SSP exception is part of a broader framework that
regulates the “manufacture” of HCT/Ps. “Manufacture
means, but is not limited to, any or all steps in the recovery,
processing, storage, labeling, packaging, or distribution of
any human cell or tissue . . . .” Id. § 1271.3(e). As noted
above, this framework establishes three tiers of regulation
for HCT/Ps: 1) full regulation; 2) limited exemption from
regulation; and 3) complete exemption from regulation.
HCT/Ps are subject to full regulation unless they qualify for
an exception. Id. § 1271.20. To qualify for limited
exemption from regulation, an HCT/P must meet the criteria
set out in § 1271.10(a); in relevant part, the HCT/P cannot
be more than “minimally manipulated.”8 There are several
ways to qualify for complete exemption, including by
meeting the requirements for the SSP exception at issue here.
See id. § 1271.15.9
The FDA points out that when an HCT/P is more than
“minimally manipulated,” it is subject to full regulation.
Thus, the FDA argues, the SSP exception should not be
interpreted as completely exempting procedures that involve
substantial manipulation of HCT/Ps. Defendants, however,
8
HCT/Ps in this category must also be “intended for homologous use
only,” meaning the HCT/P must perform the “same basic function” when
reimplanted; must “not involve the combination of the cells or tissues
with another article;” and must “not have a systemic effect” (with some
additional nuances to those requirements). 21 C.F.R.
§§ 1271.10(a)(2)-(4), 1271.3(c).
9
Defendants do not dispute that they manufacture HCT/Ps; they argue
only that they qualify for the SSP exception.
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 23
point out that the limited exemption expressly incorporates
the minimal manipulation requirement, see 21 C.F.R.
§ 1271.10(a), but the SSP exception does not, see id.
§ 1271.15(b). That omission, Defendants argue, implies that
a surgical procedure can qualify for the SSP exception
regardless of how much an HCT/P is manipulated. That is,
a surgical procedure could “alter the relevant biological
characteristics”10 of the cells or tissues that are implanted
and still qualify for the SSP exception.11 In Defendants’
view, “it is not strange at all that some procedures would be
exempted under the SSP exception, even if they would not
qualify for the [limited] minimal manipulation exemption”
provided for under § 1271.10(a), because the limited
exemption is “available to establishments that transfer
HCT/Ps from one donor to a different recipient,” while the
SSP exemption is available only to establishments that
remove HCT/Ps and implant them back into the same
patient.
In our view, the FDA’s understanding of the regulatory
framework makes more sense: The tiered structure more
strongly implies that a surgical procedure cannot qualify for
the SSP exception if it involves more than minimal
manipulation of HCT/Ps. But, even assuming the FDA is
right about that point, the SVF procedure could still qualify
for the SSP exception—if the correct comparator is the cells,
not the fat tissue. That’s because the regulations define
“minimal manipulation” differently for structural tissue
(which includes fat tissue), see id. § 1271.3(f)(1), and cells
10
21 C.F.R. § 1271.3(f) (defining minimal manipulation).
11
Although Defendants maintain that the SVF procedure does not
biologically alter the stromal vascular cells targeted for implantation,
under their interpretation of the SSP exception, that fact is irrelevant.
24 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
or nonstructural tissues, see id. § 1271.3(f)(2). For fat tissue,
minimal manipulation means “processing that does not alter
the original relevant characteristics of the tissue relating to
the tissue’s utility for reconstruction, repair, or
replacement.” Id. § 1271.3(f)(1). But for cells, minimal
manipulation means “processing that does not alter the
relevant biological characteristics of cells.” Id.
§ 1271.3(f)(2). It is undisputed that Defendants’ SVF
procedure significantly alters the removed fat tissue to
produce the implanted SVF. But, the district court
specifically found that the procedure does not biologically
alter the cells that Defendants extract from the fat tissue, and
the FDA has not challenged that finding on appeal. Thus, if
the targeted cells are the correct comparator, as Defendants
argue, then the SVF procedure does not involve more than
minimal manipulation.
All this means that we still need to figure out whether the
correct comparator is the removed HCT/P as a whole or only
the portion targeted for removal. Because neither the SSP
exception nor the related regulations expressly answer that
question, we turn to the regulations’ purpose and history.
When the FDA first proposed the HCT/P regulatory
framework, it explained that, “[i]n the past, most human
tissue used in medicine was comprised of such body
components as skin, bone, corneas, and heart valves that
were transplanted for replacement purposes, and semen and
ova implanted for reproductive purposes.” Proposed
Approach at 8. And, the “FDA’s regulation of the
conventional tissues used for replacement purposes ha[d]
focused on preventing the transmission of communicable
disease . . . .” Id. However, “[i]n recent years, scientists
ha[d] developed innovative methods of manipulating and
using human cells and tissues for therapeutic uses,” and the
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 25
FDA identified several public health and regulatory
concerns associated with the use of such products. Id. at 9.
Thus, the FDA proposed regulating cells and tissues “with a
tiered approach based on risk and the necessity for FDA
review.” Id.
A chief purpose of the regulations would be “ensuring
that clinical safety and effectiveness is demonstrated for
tissues that are highly processed.” Id. at 6. The FDA stated
its intent to “require that cells and tissues be handled
according to procedures designed to prevent contamination
and to preserve tissue function and integrity.” Id. at 6-7. The
FDA explained, “Improper handling can alter or destroy the
integrity or function of cells or tissues. Improper handling
also can allow cells or tissues to become contaminated (e.g.,
bacterial contamination during collection, processing,
storage, or transplantation, or cross contamination from
other contaminated tissues).” Id. at 15.
In this context, the FDA also stated that it “would not
assert any regulatory control over cells or tissues that are
removed from a patient and transplanted back into that
patient during a single surgical procedure,” because “[t]he
communicable disease risks, as well as safety and
effectiveness risks, would generally be no different from
those typically associated with surgery.” Id. at 12.12 The
12
Defendants argue that their interpretation of the SSP exception is
supported by the FDA’s statement that “[a]utologous use of cells and
tissues harvested and transplanted in a single surgical procedure would
be subject to no FDA oversight.” Proposed Approach at 15 (emphasis
added). They assert that the FDA must have known that cells generally
cannot be removed from the body in isolation, so the FDA must have
intended for the SSP exception to cover procedures that process tissue to
extract cells. Because that assertion is unfounded, Defendants’ argument
26 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
FDA identified “skin or vein grafts” as examples of surgical
procedures that would qualify for complete exemption from
regulation. Id. at 20.
Consistent with the FDA’s proposal, the final rule
established “a tiered, risk-based regulatory scheme that . . .
tailor[s] the degree of scrutiny afforded to different HCT/P’s
to the risks associated with each of them.” See 66 Fed. Reg.
at 5464. The SSP exception is at the bottom tier: procedures
covered by the SSP exception are completely exempt from
regulation. This means that covered procedures should
involve relatively low risk—risk no greater than that
typically associated with conventional surgery. And,
because processing HCT/Ps introduces risk, covered
procedures should not involve significant processing.
Defendants’ interpretation of the SSP exception conflicts
with the HCT/P regulations’ structure and purposes. Under
their interpretation, the SSP exception would exempt
surgical procedures that subject HCT/Ps to substantial
processing, even if such processing introduces risk far
greater than that associated with conventional surgery.
HCT/Ps could be subjected to any number of processing
steps to isolate, extract, or potentially even recombine its
subcomponents (perhaps in ways currently unimaginable)
with no FDA oversight, so long as those subcomponents
is unpersuasive. As noted above, egg cells can be removed in isolation,
and the FDA was anticipating scientific advances when it proposed the
HCT/P regulations. See id. at 8 (discussing implantation of ova for
reproductive purposes); id. at 27 (discussing intent to balance protecting
public health with encouraging research and innovation).
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 27
came from the same person and were removed and
implanted on the same day.13
The FDA’s interpretation is more consistent with the
SSP exception’s plain meaning. And it is the only
interpretation that makes sense in light of the HCT/P
regulations’ tiered, risk-based framework, and its purpose
and history. The seeming textual ambiguity is resolved in
the FDA’s favor.14 When determining whether a surgical
procedure “removes HCT/P’s and implants such HCT/P’s,”
the removed HCT/P must be viewed as a whole, before any
significant processing. For Defendants’ SVF procedure, the
removed HCT/P is the fat tissue, not the cells targeted for
implantation. Because the SVF procedure removes fat tissue
but implants SVF, the procedure is not exempt from
regulation under the SSP exception.
* * *
We REVERSE and REMAND for further
proceedings.15
13
In an exceedingly similar case regarding “body-fat derived stem cell
therapy,” the Eleventh Circuit agreed with the FDA that, to qualify for
the SSP exception, “‘such HCT/Ps’ must be in their original form (rather
than subjected to extensive processing).” United States v. US Stem Cell
Clinic, LLC, 998 F.3d 1302, 1305, 1310 (11th Cir. 2021) (“hold[ing] the
same surgical procedure exception unambiguously does not apply”). We
agree with the Eleventh Circuit’s reasoning and conclusion.
14
Because no genuine ambiguity remains, we do not need to decide
whether the FDA’s interpretation is entitled to Auer deference.
15
Defendants shall bear all costs of appeal. See Fed. R. App. P. 39(a)(3).
28 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
FRIEDLAND, Circuit Judge, concurring in the result of part
III.C:
I agree with the majority’s conclusion that Defendants’
same-day version of the SVF treatment does not fall under
the SSP exception, but I would arrive at this conclusion for
a different reason. I believe that the SSP exception provision
is ambiguous, and that we owe deference to the FDA’s
interpretation of it.
1.
When the meaning of a regulation is in doubt, “we must
‘look to the administrative construction of the regulation.’”
Goffney v. Becerra, 995 F.3d 737, 744 (9th Cir. 2021)
(quoting Bowles v. Seminole Rock & Sand Co., 325 U.S. 410,
413-14 (1945)). The practice of deferring to agency
interpretations of ambiguous regulations is commonly
known as Auer deference. Id. (citing Auer v. Robbins, 519
U.S. 452 (1997)).
An agency is entitled to Auer deference only when the
regulation in question is “genuinely ambiguous,” meaning
that it is “susceptible to more than one reasonable reading.”
Kisor v. Wilkie, 588 U.S. 558, 566, 573 (2019). In cabining
the scope of Auer deference, the Supreme Court has
cautioned that we “cannot wave the ambiguity flag just
because [we] found the regulation impenetrable on first
read.” Id. at 575. Instead, we must first “exhaust all the
traditional tools of construction” by examining the “text,
structure, history, and purpose of a regulation.” Id.
(quotation marks omitted). “[O]nly when that legal toolkit
is empty and the interpretive question still has no single right
answer” can we consider deferring to an agency’s reasonable
interpretation. Id. at 575-76. Before deferring, we must also
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 29
confirm that “the interpretation is the agency’s authoritative
or official position, the interpretation in some way implicates
the agency’s substantive expertise, and the agency’s reading
of its rule reflects the agency’s fair and considered
judgment.” Nat’l Parks Conservation Ass’n v. FERC, 6
F.4th 1044, 1050-51 (9th Cir. 2021) (citing Kisor, 588 U.S.
at 574-79).
2.
As to the text of the HCT/P regulations, I agree with the
majority’s thoughtful analysis, which concludes that the text
does not provide a clear answer to the interpretive dispute.
My analysis diverges from the majority’s only when we turn
to the purpose and history of the HCT/P regulations.
Although the majority concludes that the regulations’
purpose and history support the FDA’s interpretation, I
believe that evidence cuts both ways, leaving the SSP
exception genuinely ambiguous.
The FDA’s reading of the SSP exception, focusing on
the tissue removed from the body rather than only the
targeted cells within that tissue, appears to be consistent with
the purpose of the HCT/P regulations. In its 1997 proposal
for the current regulatory approach, the FDA stated it was
concerned with the “clinical safety and effectiveness . . . [of]
tissues that are highly processed” and the risk that processing
and/or improper handling could result in contamination or
damage to tissue or cell function and integrity. FDA,
Proposed Approach to Regulation of Cellular and Tissue-
Based Products 6, 7 (1997) (“Proposed Approach”); see
also id. at 9 (listing overarching public health concerns).
The FDA’s concern with contamination and safety,
particularly when an HCT/P is processed and manipulated,
is consistent with requiring an HCT/P to be in its “original
30 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
form” as it was in the body for it to be excepted from
regulation. FDA, Same Surgical Procedure Exception
Under 21 CFR 1271.15(b): Questions and Answers
Regarding the Scope of the Exception 5 (2017).
But other statements by the FDA in the leadup to the
promulgation of the HCT/P regulations support Defendants’
argument that the SSP exception was always meant to
capture targeted cells. For example, the FDA stated that
“[a]utologous use of cells and tissues harvested and
transplanted in a single surgical procedure would be subject
to no FDA oversight.” Proposed Approach at 15 (emphasis
added). Defendants point out that the FDA must have
known that cells generally cannot be removed from the body
in isolation, so some processing would be required.1
Additionally, the FDA’s Proposed Approach indicated
that certain amounts of cell and tissue processing could
occur without there being a concerning amount of
manipulation. Within the context of creating a regulatory
framework to prevent “product contamination” and loss of
“product integrity and function” in the processing of
HCT/Ps, the FDA identified example procedures that it
considered “minimal manipulation.” Id. at tbl. 1; id. at 16.
These included “extraction or separation of cells from
structural tissue, in which the remaining structural tissue’s
characteristics relating to carrying out reconstruction and/or
repair were unaltered,” and “selection of stem cells from
1
Although the FDA was aware that one type of cell—egg cells, or
oocytes—can be removed in isolation, it likely was not referring to egg
cells in the context of the SSP exception. Egg cells generally would not
be removed and then implanted in the same person during a single
surgical procedure. In vitro fertilization, for example, cannot be
accomplished within a single surgical procedure.
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 31
amongst lymphocytes and mature cells of other lineages.”
Id. at 16, 18. Compared to Defendants’ same-day SVF
procedure, these example procedures seem to present
comparable levels of complexity and risk for contamination
or damage to product function and integrity. In contrast, the
FDA identified procedures such as cell “expansion,
encapsulation, activation, or genetic modification,” as
involving concerning amounts of manipulation. Id. at 17-
18; Establishment Registration and Listing for
Manufacturer of Human Cellular and Tissue-Based
Products, 63 Fed. Reg. 26744, 26748 (May 14, 1998)
(same). Particularly given the district court’s factual finding
that the targeted cells are not altered by Defendants’ same-
day SVF procedure, the distinctions in levels of
manipulation discussed in the Proposed Approach suggest
that the procedure does not trigger the FDA’s core regulatory
concerns, supporting Defendants’ interpretation of the SSP
exception.
Because the HCT/P regulations’ text, structure, purpose,
and history do not determine whether we should view the
relevant antecedent HCT/P as the targeted cells or the whole
system removed from the body, I believe our “legal toolkit
is empty and the interpretive question still has no single right
answer.” Kisor, 588 U.S. at 575. I view the SSP exception
as genuinely ambiguous because both the FDA’s and
Defendants’ interpretations are reasonable.2
2
I recognize that in a similar case, the Eleventh Circuit agreed with the
FDA’s interpretation of the SSP exception and concluded that the
exception was unambiguous. See United States v. US Stem Cell Clinic,
LLC, 998 F.3d 1302, 1308-10 (11th Cir. 2021). Although I agree with
parts of the Eleventh Circuit’s analysis, for the reasons explained I do
not agree that the tools of interpretation lock in the FDA’s reading as the
only reasonable one.
32 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
3.
Because I conclude that the SSP is ambiguous, I now
discuss the remaining criteria for deferring to an agency’s
interpretation of a regulation and explain why they lead me
to ultimately agree with the majority that the FDA’s
interpretation prevails.
First, there is no doubt that the FDA’s interpretation is
the agency’s “‘authoritative’ or ‘official position.’” Id. at
577 (quoting United States v. Mead Corp., 533 U.S. 218,
257-59, 258 n.6 (2001) (Scalia, J., dissenting)). The
Supreme Court in Kisor explained that an “authoritative”
interpretation is one “actually made by the agency . . . rather
than any more ad hoc statement not reflecting the agency’s
views.” Id. The FDA’s interpretation of the SSP exception
comes from an official guidance document, drafted and
finalized “consistent with FDA’s good guidance practices
regulation.” Same Surgical Procedure Exception: Questions
and Answers Regarding the Scope of the Exception;
Guidance for Industry; Availability, 82 Fed. Reg. 54289,
54290 (Nov. 17, 2017) (citing 21 C.F.R. § 10.115(a)). That
regulation states that such guidance documents “describe the
agency’s interpretation of or policy on a regulatory issue”
and “represent the agency’s current thinking.” 21 C.F.R.
§ 10.115(b)(1), (d)(3). The FDA’s interpretation of the SSP
exception thus “emanate[s] from those actors, using those
vehicles, understood to make authoritative policy in the
relevant context.”3 Kisor, 588 U.S. at 577.
3
Contrary to Defendants’ assertions, an agency interpretation need not
establish legally enforceable responsibilities to be sufficiently
authoritative for Auer deference purposes. See, e.g., Auer, 519 U.S. at
462 (deferring to an amicus brief).
USA V. CALIFORNIA STEM CELL TREATMENT CTR. 33
The FDA’s interpretation also implicates its substantive
expertise in protecting public health by assessing and
addressing risks. See, e.g., 21 U.S.C. § 393. The HCT/P
framework is a “complex and highly technical regulatory
program” that reflects such risk assessments. Kisor, 588
U.S. at 572 (quoting Thomas Jefferson Univ. v. Shalala, 512
U.S. 504, 512 (1994)). Courts are not in a good position to
assess which protocols, procedures, or uses of human cell
and tissue products pose health risks warranting regulation.
The interpretive issue in this case certainly does not “fall
more naturally into a judge’s bailiwick.” Id. at 578.
Finally, the FDA’s reading of the SSP exception reflects
“fair and considered judgment” and does not present unfair
surprise. Id. at 579 (quoting Christopher v. SmithKline
Beecham Corp., 567 U.S. 142, 155 (2012)). The FDA has
taken the position that fat-derived SVF does not fall within
the SSP exception since at least 2014, when it first issued
draft guidance in response to “numerous inquiries regarding
HCT/Ps manufactured from [fat] tissues.” FDA, Human
Cells, Tissues, and Cellular and Tissue-Based Products
(HCT/Ps) From Adipose Tissue: Regulatory Considerations
2, 7-8 (2014); Human Cells, Tissues, and Cellular and
Tissue-Based Products From Adipose Tissue: Regulatory
Considerations; Draft Guidance for Industry; Availability,
79 Fed. Reg. 77414 (Dec. 24, 2014) (announcing draft
availability). Indeed, Defendants admitted that they were
aware that one of their affiliates received a warning letter
from the FDA in 2015 stating that their use of fat-derived
SVF violated the FDCA. Based on that history, the FDA’s
current interpretation is not merely a “convenient litigating
position.” Kisor, 588 U.S. at 579 (quoting Christopher, 567
U.S. at 155).
34 USA V. CALIFORNIA STEM CELL TREATMENT CTR.
***
Because I conclude that the SSP exception is ambiguous,
the FDA’s interpretation is reasonable, and all the remaining
criteria for Auer deference are satisfied, I would defer to the
FDA’s interpretation. Under that interpretation, the
antecedent HCT/P here is the removed fat tissue, and the
SVF implanted is not “such HCT/P.” Thus, I agree with the
majority that Defendants’ treatments do not fall under the
SSP exception.