John Doe, Inc. v. Drug Enforcement Administration

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 12, 2007 Decided April 27, 2007

No. 06-1270

JOHN DOE, INC.,

PETITIONER

v.

DRUG ENFORCEMENT ADMINISTRATION,

RESPONDENT

Consolidated with

06-5201

On Petition for Review of an Order of the

United States Drug Enforcement Agency

Samuel H. Israel argued the cause for petitioner/appellant.

With him on the briefs were Joseph P. Esposito and Terence J.

Lynam.

Alisa B. Klein, Attorney, U.S. Department of Justice, argued

the cause for respondent/appellees. With her on the brief were

Peter D. Keisler, Assistant Attorney General, Jeffrey A. Taylor,

U.S. Attorney, Mark B. Stern, Attorney, and Daniel Dormont,

Senior Attorney, Drug Enforcement Administration.

2

Before: GINSBURG, Chief Judge, and BROWN and

KAVANAUGH, Circuit Judges.

Opinion for the Court filed by Circuit Judge BROWN.

Brown, Circuit Judge: John Doe, Inc.1 seeks review of the

DEA’s denial of a permit to import for bioequivalency testing a

generic version of an FDA-approved drug. Doe challenges the

permit denial as contrary to law, arbitrary and capricious, and

violative of the Fifth Amendment to the United States Constitu-

tion. Doe further argues the district court erred in dismissing its

complaint for lack of jurisdiction. We conclude the district

court correctly determined exclusive jurisdiction over Doe’s

claims lies in the courts of appeals pursuant to 21 U.S.C. § 877.

We further conclude the DEA acted within its discretion in

denying Doe’s permit application. We accordingly affirm the

district court and deny Doe’s petition.

I

Doe, a drug manufacturer, hopes to market a generic

version of the drug Marinol — an FDA-approved drug contain-

ing the same active ingredient as marijuana and used to treat

nausea and loss of appetite in cancer and AIDS patients. To get

approval to market its generic alternative, Doe must successfully

complete “bioequivalency” studies, demonstrating to the FDA

that its drug is in all relevant aspects equivalent to Marinol. In

order to conduct the necessary bioequivalency testing, Doe

seeks to immediately import over half a million capsules of its

drug from its overseas manufacturing partner.

1

This case was filed under seal pursuant to Petitioner/Appellant’s

request. Accordingly, the Petitioner/Appellant is referred to as “John

Doe, Inc.” or “Doe” throughout this opinion.

3

Doe’s plans, however, have been stymied by the DEA.

Pursuant to the Controlled Substances Act (“CSA”), the DEA

regulates importation of “controlled substances.” 21 U.S.C.

§ 952.2 Under the CSA, controlled substances are categorized

into five schedules based on their potential for abuse or depend-

ence, their accepted medical use, and their accepted safety for

use under medical supervision. Schedule I is the most strin-

gently controlled, and schedule V the least. Id. § 812. Only

schedules I and III are at issue here. Schedule I substances are

subject to very strict controls because they have “no currently

accepted medical use in treatment in the United States,” have “a

lack of accepted safety for use . . . under medical supervision,”

and have “a high potential for abuse.” Id. § 812(b)(1). Schedule

III substances, in contrast, have “a currently accepted medical

use in treatment in the United States,” and less potential for

abuse. Id. § 812(b)(3). Controlled substances were initially

allocated to the various schedules by Congress when it first

enacted the CSA. Gettman v. DEA, 290 F.3d 430, 432 (D.C.

Cir. 2002). Thereafter, Congress assigned primary responsibil-

ity to the DEA to add or remove substances from the schedules,

or to transfer a drug or substance between schedules. Id. (citing

21 U.S.C. § 811(a)).

Dronabinol, the active ingredient in both Marinol and Doe’s

generic alternative, has been assigned to schedule I since

Congress first enacted the CSA in 1970. See CSA, Pub. L. No.

91-513, § 202, schedule I ¶ (c)(17), 84 Stat. 1236, 1249 (1970).

Dronabinol remains in schedule I today, with one notable

exception. The FDA, after extensive testing and research,

approved the drug Marinol — described as “[d]ronabinol

(synthetic) in sesame oil and encapsulated in a soft gelatin

capsule” — for treatment of nausea associated with cancer

2

The CSA grants regulatory authority to the Attorney General,

21 U.S.C. §§ 821, 871(b), who has in turn delegated that authority to

the Administrator of the DEA, 28 C.F.R. § 0.100(b).

4

patients and anorexia associated with weight loss in AIDS

patients. 51 Fed. Reg. 17,476, 17,478 (1986). As a result of this

FDA approval, the DEA eventually assigned “Dronabinol

(synthetic) in sesame oil and encapsulated in a soft gelatin

capsule in a U.S. Food and Drug Administration approved

product” to schedule III. 21 C.F.R. § 1308.13(g)(1) (emphasis

added); 64 Fed. Reg. 35,928 (1999). DEA was careful to stress,

however, that it was rescheduling dronabinol only “in a FDA

approved drug product.” 51 Fed. Reg. at 17,477. All other

“mixtures, compounds and preparations” containing dronabinol

“remain[ed] in Schedule I.” Id. In practical effect, only the

brand name drug Marinol was moved to schedule III.

When Doe applied for a permit to import its drug containing

dronabinol, it was registered with the DEA to import schedule

III, but not schedule I, substances. On February 28, 2006, Doe

applied for a permit to import 1,200 capsules of its drug to begin

equivalency testing. On its permit application, instead of using

the general DEA code number for dronabinol, Doe listed the

DEA code number for “Dronabinol (synthetic) in sesame oil and

encapsulated in a soft gelatin capsule in a U.S. Food and Drug

Administration approved product.” The DEA issued the permit,

and Doe imported the 1,200 capsules.

Shortly thereafter, Doe sought another permit to import

525,000 capsules of its drug, again using the DEA code number

for “Dronabinol . . . in a U.S. Food and Drug Administration

approved product.” This time, however, the large quantity

prompted further investigation by the DEA. When the DEA

learned that the substance Doe sought to import was not in fact

Marinol, the DEA denied Doe’s permit application. Because

Doe’s drug containing dronabinol has not been approved for

marketing by the FDA, the DEA classifies the drug as falling

within the general category of “dronabinol” in schedule I, not

schedule III’s narrow description of “[d]ronabinol . . . in a U.S.

5

Food and Drug Administration approved product.” 21 C.F.R.

§ 1308.13(g)(1) (emphasis added). Thus, Doe found itself in a

catch-22 of sorts: while it sought to import its drug under

schedule III so it could conduct testing necessary to obtain FDA

approval, the DEA’s interpretation of its regulatory provision

effectively prohibits importation of a drug containing dronabinol

under schedule III until the drug is FDA approved.

The DEA provided Doe written notice of its permit denial

on June 12, 2006. The letter advised that Doe could request an

agency hearing within thirty days. Doe opted not to pursue

further agency consideration, but instead sought immediate

redress from the courts.3 Because the law governing such

appeals is unsettled, Doe filed two actions — one in district

court, see John Doe, Inc. v. Gonzalez, No. 06-966, 2006 WL

1805685 (D.D.C. June 29, 2006), and one directly in this court.

On June 29, 2006, the district court dismissed Doe’s case

for lack of subject matter jurisdiction. In a lengthy and well-

reasoned opinion, the court considered whether the DEA’s

denial of Doe’s permit was sufficiently “final” to permit judicial

review under the Administrative Procedure Act (“APA”), see 5

U.S.C. § 704, and, even if sufficiently final, whether 21 U.S.C.

§ 877 nonetheless divests the district court of original jurisdic-

tion over Doe’s claims, see id. (locating original jurisdiction in

the courts of appeals over “[a]ll final determinations, findings,

and conclusions” of the DEA under the CSA). Ultimately, the

district court concluded it lacked jurisdiction. The court

reasoned that, at least insofar as Doe’s claims are concerned,

3

Because Doe chose to forgo its administrative remedies, the

agency’s decision became final thirty days after Doe’s receipt of the

DEA’s June 12, 2006 letter. See Letter from Joseph T. Rannazzisi,

Deputy Assistant Administrator, DEA Office of Diversion Control, to

John Doe, Inc. (June 12, 2006) (Administrative Record at 117)

(hereinafter June 12, 2006 Letter); 21 C.F.R. § 1312.44.

6

§ 877’s reference to “final determinations, findings, and conclu-

sions” encompasses the APA’s requirement of final agency

action. Thus, either the permit denial wasn’t sufficiently final

to confer jurisdiction under the APA, or, in the event it was

sufficiently final, proper recourse lay in the court of appeals

pursuant to § 877. Either way, the district court concluded it did

not have jurisdiction, and dismissed Doe’s complaint.

Doe appealed the dismissal. That case has been consoli-

dated with Doe’s petition seeking direct review in this court

under 21 U.S.C. § 877, and we address both here. While the

district court found it possible to resolve Doe’s case without

reaching a definitive conclusion on the issues of finality and the

scope of our exclusive direct-review jurisdiction under 21

U.S.C. § 877, we must decide both issues.

II

Doe continues to press the argument that the DEA’s denial

of Doe’s permit was not a “final determination[], finding[], [or]

conclusion[]” sufficient to trigger this court’s original jurisdic-

tion under 21 U.S.C. § 877. But if the permit denial wasn’t a

“final determination[]” under § 877, it may also fail to constitute

“final agency action” sufficient to comprise a claim under the

APA, 5 U.S.C. § 704, effectively denying Doe any judicial

review of its permit denial. Indeed, the district court expressed

serious reservations about this possible lack of finality.

Doe’s briefing addresses the finality question in a single

sentence in a footnote, declaring the district court’s concerns

about finality “now moot” because the DEA concedes its permit

denial constituted final agency action. Pet’r’s Br. 22 n.9.

Finality is not synonymous with jurisdiction. When judicial

review is sought under the APA, for example, the requirement

of “final agency action” is not jurisdictional. See Trudeau v.

7

Fed. Trade Comm’n, 456 F.3d 178, 183-84 (D.C. Cir. 2006);

Fund for Animals, Inc. v. U.S. Bureau of Land Mgmt., 460 F.3d

13, 18 n.4 (D.C. Cir. 2006). But when, as here, review is sought

under a specific statute prescribing finality as a prerequisite of

judicial review, it is. See, e.g., North Am. Catholic Educ.

Programming Found. v. FCC, 437 F.3d 1206, 1209 (D.C. Cir.

2006); Indep. Equip. Dealers Ass’n v. EPA, 372 F.3d 420, 426

(D.C. Cir. 2004); Molycorp, Inc. v. EPA, 197 F.3d 543, 545

(D.C. Cir. 1999). While a nonjurisdictional requirement may be

waived, Arbaugh v. Y & H Corp., 126 S. Ct. 1235, 1245 (2006),

because § 877’s “final decision” requirement is jurisdictional,

the parties’ agreement here as to finality does not settle the

issue. CTIA – The Wireless Ass’n v. FCC, 466 F.3d 105, 108

(D.C. Cir. 2006) (quoting Midwest Indep. Transmission Sys.

Operator, Inc. v. FERC, 388 F.3d 903, 908 (D.C. Cir. 2004)

(citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83,

94–95 (1998))).

To evaluate finality, this court applies a two-part test:

First, the action under review must mark the consummation

of the agency’s decisionmaking process — it must not be of

a merely tentative or interlocutory nature. Second, the

action must be one by which rights or obligations have been

determined, or from which legal consequences will flow.

Nat’l Ass’n of Home Builders v. Norton, 415 F.3d 8, 13 (D.C.

Cir. 2005) (citations and internal quotation marks omitted)

(summarizing the test articulated by the Supreme Court in

Bennett v. Spear, 520 U.S. 154, 177–78 (1997)).4

4

Both Norton and Bennett construe the APA’s requirement of

“final agency action.” 5 U.S.C. § 704 (emphasis added). Here we are

evaluating finality under 21 U.S.C. § 877’s limitation of review to a

“final decision” (emphasis added). We see no reason, however, that

the word “final” in § 877 should be interpreted differently than the

8

In Ciba-Geigy Corp. v. United States EPA, 801 F.2d 430

(D.C. Cir. 1986), a case pre-dating Bennett, we applied a

complementary analysis in a case presenting a finality question

similar to that presented here. In Ciba-Geigy, the EPA had

advised certain pesticide manufacturers of required labeling

changes in a series of letters. Id. at 432–33. The manufacturers

filed suit seeking a declaration that the EPA had failed to follow

the procedures required by law when changing labeling require-

ments. Id. at 433. The district court dismissed the suit for lack

of subject matter jurisdiction, concluding the agency had

“neither issued a final order . . . nor taken any other final action

which is reviewable by the Court.” Id. at 434 (citation and

internal quotation marks omitted).

Noting the Supreme Court’s instruction to “apply the

finality requirement in a ‘flexible’ and ‘pragmatic’ way,” this

court reversed on appeal. Id. at 435 (quoting Abbott Labs. v.

Gardner, 387 U.S. 136, 149–50 (1967)). In analyzing finality,

the court looked “primarily to whether the agency’s position is

‘definitive’ and whether it has a ‘“direct and immediate effect on

the day-to-day business”’ of the parties challenging the action.”

Id. at 436 (citations and alteration omitted). Explaining that the

EPA’s letters in Ciba-Geigy staked out the agency’s position

clearly and gave no indication the agency’s position was

“subject to further agency consideration or possible modifica-

tion,” id. at 437, the court determined the letters were final

agency action fit for judicial review, id. at 437-38.

Both Bennett and Ciba-Geigy firmly support a finding of

finality here. The DEA’s action in this case was not merely

word “final” in the APA. Cf. Indep. Equip. Dealers Ass’n, 372 F.3d

at 428 (construing the Clean Air Act’s “final action” term as

“synonymous with the term ‘final agency action’ as used in Section

704 of the APA”). Thus, the cases applying the finality aspect of the

APA guide us in construing finality under 21 U.S.C. § 877.

9

tentative, but rather definitive: the DEA affirmatively denied

Doe’s permit application. Moreover, the DEA candidly

acknowledged before the district court that its position would

not change in further administrative proceedings. See Defs.’

Opp’n at 18 (June 2, 2006) (noting that “[t]hrough [the adminis-

trative] process, Plaintiff would be informed again that [its]

April 18, 2006 application was denied because the product

Plaintiff sought to import is a schedule I controlled substance

that Plaintiff is not registered to handle”) (footnote omitted)

(citing Decl. of Matthew Strait, Chief of the DEA’s Quota and

United Nations Reporting Unit, attached as Ex. B to Defs.’

Opp’n (hereinafter Strait Decl.)). And the permit denial, which

became final thirty days after its issuance, clearly “determined”

Doe’s rights, Bennett, 520 U.S. at 178, establishing “legal

consequences” by prohibiting importation, id. Finally, the

permit denial had a “direct and immediate effect” on Doe’s

business by stopping in its tracks Doe’s plans to establish its

drug’s bioequivalency to Marinol. Ciba-Geigy, 801 F.2d at 436.

Moreover, this court has recognized that “[a]n agency’s past

characterization of its own action, while not decisive, is entitled

to respect in a finality analysis.” Nat’l Ass’n of Home Builders,

415 F.3d at 14. Here, the DEA agrees its decision denying

Doe’s permit is “final.” Resp’t’s Br. 23.

What arguably cuts against finality in this case is the lack

of a comprehensive administrative record to assist judicial

review. Because Doe opted to forgo further administrative

review of its permit denial, the administrative record is — as the

district court correctly observed — “largely devoid of an explicit

analysis by the DEA laying out its reasoning” for the permit

denial.

To allow the meager administrative record in this case to

undercut finality, however, would confuse jurisdictional finality

10

with prudential concerns over the fitness of issues for judicial

review. Finality, ripeness, and exhaustion of administrative

remedies are related, overlapping doctrines that are analytically

but not categorically distinct. Exhaustion focuses on the process

a litigant must follow; ripeness describes the fitness of issues for

judicial review; finality focuses on the conclusiveness of agency

action. “Ripeness and exhaustion are complementary doctrines

. . . designed to prevent unnecessary or untimely judicial

interference in the administrative process.” Ticor Title Ins. Co.

v. FTC, 814 F.2d 731, 735 (D.C. Cir. 1987) (opinion of Ed-

wards, J.) (internal quotation marks omitted) (quoting E.

GELLHORN & B. BOYER, ADMINISTRATIVE LAW AND PROCESS

316-17 (1981)). Those prudential doctrines respond to prag-

matic concerns about the relationship between courts and

agencies, including “the agency’s interest in crystallizing its

policy before that policy is subjected to judicial review” and

“the court’s interests in avoiding unnecessary adjudication and

in deciding issues in a concrete setting.” Id. (quoting Better

Gov’t Ass’n v. Dep’t of State, 780 F.2d 86, 92 (D.C. Cir. 1986)).

Thus, even if exhaustion, ripeness, and finality may be

difficult to distinguish in some contexts, they must be carefully

delineated when, as here, finality is a statutory jurisdictional

prerequisite rather than merely a precaution related to concrete-

ness and institutional capacity. An administrative order is final

for jurisdictional purposes when it “imposes an obligation,

denies a right or fixes some legal relationship as a consumma-

tion of the administrative process.” Am. Train Dispatchers

Ass’n v. ICC, 949 F.2d 413, 414 (D.C. Cir. 1991) (alterations

and internal quotation marks omitted) (quoting Chi. & S. Air

Lines v. Waterman S.S. Corp., 333 U.S. 103, 113 (1948)). As

this case illustrates, an agency may have reached that point and

generated only a sparse administrative record. Indeed, where

the disagreement is largely a matter of law, an extensive

administrative record may not be necessary for effective judicial

11

review. Where the record provides inadequate factual informa-

tion to resolve novel legal claims, the court can dismiss those

claims as unripe. But the fact that the administrative record is

not sufficient to resolve all questions does not mean the court is

deprived of jurisdiction to answer any question. The DEA

action here at issue is sufficiently final to confer jurisdiction.

III

Having concluded the DEA’s permit denial was sufficiently

final to permit judicial review, we must still decide where

jurisdiction properly lies — in the district court pursuant to the

APA, 5 U.S.C. § 704, or in this court pursuant to 21 U.S.C.

§ 877.

21 U.S.C. § 877 vests exclusive jurisdiction in the courts of

appeals over “[a]ll final determinations, findings, and conclu-

sions” of the DEA applying the CSA. Doe argues the district

court erred in dismissing its complaint for lack of subject matter

jurisdiction, because § 877 does not apply to the DEA’s permit

denial in this case. Instead, Doe argues, this case is reviewable

under the APA as “final agency action for which there is no

other adequate remedy in a court.” 5 U.S.C. § 704.

If Doe is correct, the permit denial must be “final agency

action” under § 704, but not a “final determination[], finding[],

[or] conclusion[]” under § 877. On the plain terms of the two

provisions, however, that assertion seems implausible. Perhaps

“agency action” encompasses more than “determinations,

findings, and conclusions,” but the permit denial at issue here

falls squarely within the plain meaning of “determination.” See

BLACK’S LAW DICTIONARY 480 (8th ed. 2004) (defining

“determination” as “[a] final decision by a court or administra-

tive agency”). Nonetheless, Doe correctly points out that, in a

few cases, district courts have exercised jurisdiction over some

12

DEA decisions implementing the CSA, concluding there is a

sphere of DEA activity that falls within the APA’s “final agency

action,” but outside § 877’s “final determinations, findings, and

conclusions.” See, e.g., PDK Labs Inc. v. Reno, 134 F. Supp. 2d

24 (D.D.C. 2001); Oregon v. Ashcroft, 192 F. Supp. 2d 1077 (D.

Or. 2002), vacated for lack of jurisdiction, 368 F.3d 1118, 1121

n.1 (9th Cir. 2004), aff’d, 546 U.S. 243 (2006). Doe argues the

reasoning in these cases, as well as in the Supreme Court’s

decision in McNary v. Haitian Refugee Center, Inc., 498 U.S.

479 (1991), supports the conclusion the permit denial here at

issue falls within that interstitial space.

Before addressing Doe’s argument, it is worth noting, as did

the district court below, that as a matter of practice almost all

cases challenging DEA decisions under the CSA have been filed

directly in the courts of appeals pursuant to 21 U.S.C. § 877.

See, e.g., Noramco of Del., Inc. v. DEA, 375 F.3d 1148, 1152

(D.C. Cir. 2004); Fry v. DEA, 353 F.3d 1041, 1042–44 (9th Cir.

2003); Humphreys v. DEA, 96 F.3d 658, 659–60 (3d Cir. 1996);

Alra Labs., Inc. v. DEA, 54 F.3d 450, 451 (7th Cir. 1995); Nutt

v. DEA, 916 F.2d 202, 203 (5th Cir. 1990); Reckitt & Colman,

Ltd. v. Adm’r, DEA, 788 F.2d 22, 23 (D.C. Cir. 1986). And, in

the one instance where a court of appeals has directly (albeit

summarily) addressed the scope of 21 U.S.C. § 877, it reversed

the district court’s prior assumption of jurisdiction, holding

§ 877 vested exclusive jurisdiction over the dispute in that case

in the court of appeals. See Oregon, 368 F.3d at 1120 & n.1.

And yet a few district courts discern some play in the joints

between “agency action” under the APA and DEA “deter-

minations, findings, and conclusions” under 21 U.S.C. § 877.

Those cases rely heavily on the Supreme Court’s decision in

McNary, which held that a narrow grant of individualized

review, vested exclusively in the courts of appeals, did not

preclude district court jurisdiction over a class action claiming

13

a pattern or practice of constitutional violations by the Immigra-

tion and Naturalization Service. 498 U.S. at 483-84. This case,

however, is dissimilar from McNary in at least two important

ways. First, 21 U.S.C. § 877’s exclusive jurisdiction provision

is much broader than the exclusive jurisdiction provision at issue

in McNary. See McNary, 498 U.S. at 486. Second, and more

important, the holding in McNary cannot be divorced from the

Court’s obvious concern that, absent district court review of the

McNary plaintiffs’ claims, meaningful judicial review would

have been entirely foreclosed. See McNary, 498 U.S. at 484

(“Were we to hold otherwise and instead require respondents to

avail themselves of the limited judicial review procedures set

forth in § 210(e) of the INA, meaningful judicial review of their

statutory and constitutional claims would be foreclosed.”); see

also id. at 488. That concern is wholly inapplicable here; Doe’s

claims are fully reviewable in this court by way of a § 877

petition.

We do not find the other reasons district courts have given

for exercising jurisdiction any more persuasive. First, the

opinions presume the applicability of 21 U.S.C. § 877 turns on

whether the DEA complied with the procedural requirements for

final agency “determinations, findings, and conclusions.” See,

e.g., PDK Labs, 134 F. Supp. 2d at 29;5 see also Novelty, Inc. v.

5

This court did review a later phase of the PDK Labs litigation,

see 362 F.3d 786, 792 (D.C. Cir. 2004), but did not comment on

whether the district court’s assertion of jurisdiction over the earlier

phase was proper. It appears the issue was not even properly before

this court in the later phase of the litigation. Id. In any event, this

court’s lack of comment cannot be construed as sanctioning the

district court’s earlier assertion of jurisdiction; “it is well settled that

cases in which jurisdiction is assumed sub silentio are not binding

authority for the proposition that jurisdiction exists.” Ticor Title Ins.

Co., 814 F.2d at 749 (opinion of Williams, J.) (citing Pennhurst State

Sch. & Hosp. v. Halderman, 465 U.S. 89, 119 (1984)).

14

Tandy, No. 1:04-cv-1502, 2006 WL 2375485, at *1 (S.D. Ind.

Aug. 15, 2006) (“Novelty argues that the letters amount in

substance to unilateral rulemaking, without notice and an

opportunity for affected parties to comment. . . . Plaintiff has

not challenged a final ‘determination,’ ‘finding,’ or ‘conclusion’

by the DEA after formal procedures that develop a record

suitable for judicial review, so 21 U.S.C. § 877 does not apply

. . . .” (emphasis added)). But this court’s jurisdiction under a

direct-review statute has never depended on agency compliance

with procedural requirements. To the contrary, we have

repeatedly invoked direct-review jurisdiction even where the

agency’s procedural lapses were blatant. See, e.g., CropLife Am.

v. EPA, 329 F.3d 876, 883–84 (D.C. Cir. 2003) (concluding the

agency had wholly failed “to follow notice and comment

procedures” required by law, yet rejecting the agency’s argu-

ment that the agency action at issue wasn’t a “regulation”

subject to the court’s direct-review jurisdiction); Appalachian

Power Co. v. EPA, 208 F.3d 1015, 1023, 1028 (D.C. Cir. 2000)

(likewise concluding that the agency had failed to comply with

the “rulemaking procedures” required by law, yet rejecting the

agency’s argument that the agency action at issue wasn’t subject

to the court’s direct-review jurisdiction). Thus, concluding 21

U.S.C. § 877’s applicability turns on the DEA’s compliance

with its procedural obligations is incompatible with this court’s

established practice.

Similarly, concern over the lack of a comprehensive

administrative record is not sufficient cause to narrow the scope

of 21 U.S.C. § 877, as some district courts have attempted. See

Oregon, 192 F. Supp. 2d at 1086; Novelty, 2006 WL 2375485,

at *2–9. We agree the possibility of an inadequate administra-

tive record is a troubling aspect of interpreting § 877 in accord

with the plain meaning of its broad terms. But this court

regularly reviews agency action with a limited or even non-

existent administrative record under direct-review statutes

15

analogous to 21 U.S.C. § 877. See, e.g., CropLife Am., 329 F.3d

at 883; Appalachian Power Co., 208 F.3d at 1020; Alaska Prof’l

Hunters Ass’n v. FAA, 177 F.3d 1030, 1036 (D.C. Cir. 1999).

Moreover, while in some cases an underdeveloped adminis-

trative record might prevent effective consideration of any legal

issue, this is not one of those cases. The limited administrative

record in this case establishes sufficient facts to squarely present

the critical legal issue. And, in future cases where an insuffi-

cient administrative record is crippling, a court of appeals

always has the option of either remanding to the agency for

further factual development or invoking the prudential doctrine

of ripeness. See Fla. Power & Light Co. v. Lorion, 470 U.S.

729, 744 (1985) (“[I]f the reviewing court simply cannot

evaluate the challenged agency action on the basis of the record

before it, the proper course, except in rare circumstances, is to

remand to the agency for additional investigation or explana-

tion.”); Ciba-Geigy, 801 F.2d at 435 (noting that in considering

ripeness a court evaluates, inter alia, “whether consideration of

that issue would benefit from a more concrete setting”).

As the district court here rightly cautioned, adopting Doe’s

narrow interpretation of § 877 encourages forum shopping and

encourages dissatisfied claimants to “jump the gun” by going

directly to the district court to develop their case instead of

exhausting their administrative remedies before the agency.

Moreover, it encourages “duplicative and potentially conflicting

review, and the delay and expense incidental thereto.”

Telecomms. Research & Action Ctr. v. FCC, 750 F.2d 70, 78

(D.C. Cir. 1984) (citation omitted); cf. Fla. Power & Light Co.,

470 U.S. at 745 (“Absent a firm indication that Congress

intended to locate initial APA review of agency action in the

district courts, we will not presume that Congress intended to

depart from the sound policy of placing initial APA review in

the courts of appeals.”).

16

The DEA’s denial of Doe’s permit is properly reviewable

in this court pursuant to 21 U.S.C. § 877.

IV

This court reviews the DEA’s interpretation of the CSA’s

provisions governing the scheduling of controlled substances

under Chevron’s familiar two-step analysis. See Gonzales v.

Oregon, 126 S. Ct. 904, 916–17 (2006). DEA’s interpretation

of its own scheduling regulations is controlling unless “plainly

erroneous or inconsistent with the regulation.” Universal City

Studios LLLP v. Peters, 402 F.3d 1238, 1242 (D.C. Cir. 2005)

(internal quotation marks omitted) (quoting Thomas Jefferson

Univ. v. Shalala, 512 U.S. 504, 512 (1994)). We review the

DEA’s rationale for denying Doe’s permit under the APA’s

familiar arbitrary and capricious standard. Morall v. DEA, 412

F.3d 165, 177 (D.C. Cir. 2005). In conducting our judicial

review, we focus on the administrative record that formed the

basis for the agency’s decision, unless “there was such a failure

to explain administrative action as to frustrate effective judicial

review.” Tripoli Rocketry Ass’n v. Bureau of Alcohol, Tobacco,

Firearms, & Explosives, 437 F.3d 75, 83 (D.C. Cir. 2006)

(citation and internal quotation marks omitted).

The DEA interprets its schedule III regulatory language —

“Dronabinol (synthetic) in sesame oil and encapsulated in a soft

gelatin capsule in a U.S. Food and Drug Administration ap-

proved product,” 21 C.F.R. § 1308.13(g)(1) — as not encom-

passing Doe’s dronabinol drug, because Doe’s drug is not FDA

“approved” for marketing. Doe argues this interpretation is

contrary to law, arbitrary and capricious, and violates the due

process clause of the Fifth Amendment. Doe’s argument rests

on two supposed parallels: (1) that Doe’s drug is essentially the

same as schedule III Marinol, and (2) that what the DEA did in

this case is essentially the same as what it attempted in

17

Grinspoon v. DEA, 828 F.2d 881 (1st Cir. 1987). We address

these key aspects of Doe’s argument in reverse order.

In Grinspoon, the DEA took the position that two of the

three findings necessary to place a drug on schedule I — i.e.,

that the drug has “no currently accepted medical use in treatment

in the United States” and “a lack of accepted safety for use . . .

under medical supervision,” 21 U.S.C. § 812(b)(1) — were

conclusively established by the drug’s lack of FDA marketing

approval. Grinspoon, 828 F.2d at 884. The First Circuit

disagreed, explaining that “it is plainly possible that a substance

may fail to obtain interstate marketing approval even if it has an

accepted medical use.” Id. at 887. The court vacated and

remanded the case with instructions that “the Administrator will

not be permitted to treat the absence of FDA interstate market-

ing approval as conclusive evidence that [the substance] has no

currently accepted medical use and lacks accepted safety for use

under medical supervision.” Id. at 891.

Doe contends the DEA has done effectively the same thing

here; that is, defined schedule III dronabinol so as “to exclude

any product that does not yet have specific FDA marketing

approval.” Pet’r’s Br. 15. But that is not what the DEA has

done. Quite the opposite, the regulation simply includes a

certain form of FDA “approved” dronabinol under schedule III;

it does not affirmatively “exclude” any drug from schedule III.

There is nothing in 21 C.F.R. § 1308.13(g)(1) that would pose

an obstacle to Doe petitioning to have its dronabinol drug placed

on schedule III.

Doe’s comparison to Grinspoon, therefore, is inapt. In

Grinspoon, the DEA equated the absence of FDA marketing

approval with a lack of currently accepted medical use for

purposes of placing a substance on schedule I and refusing to

schedule it less restrictively. Grinspoon, 828 F.2d at 884. Here

18

the DEA, in less restrictively scheduling a specific dronabinol

drug that is FDA-approved for marketing, has relied on FDA

approval in determining the specific drug has “a currently

accepted medical use in treatment in the United States.” 21

U.S.C. § 812(b)(3)(B). Whereas the absence of FDA marketing

approval may not be a reasonable proxy for a lack of currently

accepted medical use, the presence of FDA marketing approval

obviously is powerful evidence that a drug has currently

accepted medical use and accepted safety for use under medical

supervision. See Alliance for Cannabis Therapeutics v. DEA,

930 F.2d 936, 939–40 (D.C. Cir. 1991) (recognizing that

Grinspoon “never suggested the DEA Administrator was

foreclosed from incorporating and relying on those standards

employed by the FDA that are relevant to the pharmaceutical

qualities of the drug”). The fact that the DEA has apparently

accepted FDA marketing approval as one way to demonstrate

currently accepted medical use is not the equivalent of a broad

declaration saying FDA approval is the only way. As the DEA’s

counsel reiterated during oral argument, the DEA has not taken

the position that Doe is barred by 21 C.F.R. § 1308(g)(1) from

petitioning to have its dronabinol drug placed on schedule III,

nor has it taken the position that such rescheduling would be

contingent on FDA marketing approval. Rather, the DEA has

simply taken the position that for a dronabinol drug to qualify

for schedule III treatment under 21 C.F.R. § 1308.13(g)(1), the

drug must have FDA marketing approval.

The DEA’s interpretation of FDA “approval” in 21 C.F.R.

§ 1308.13(g)(1) therefore bars consideration of Doe’s drug

under that specific provision, but it does not bar Doe’s drug

from schedule III altogether. If Doe wishes to have schedule III

revised to include its drug, it can petition the DEA and offer

evidence that its drug meets the requirements for being placed

in that schedule. See 21 U.S.C. § 811(a); 21 C.F.R.

§ 1308.43(a). Instead, Doe invites this court to eliminate a

19

limitation on an already existing schedule III category, effec-

tively rescheduling Doe’s drug without it making the statutorily

required showing. We decline. See 21 U.S.C. § 812(b) (“[A]

drug or other substance may not be placed in any schedule

unless the findings required for such schedule are made with

respect to such drug or other substance.”).

Doe’s failed analogy to Grinspoon is not its only argument,

however. Doe also argues the DEA’s differential treatment of

its drug and Marinol under 21 C.F.R. § 1308.13(g)(1) is

arbitrary and capricious because its drug is “indisputably an

identical formulation to Marinol.” Pet’r’s Br. 17. Not surpris-

ingly, however, the DEA disputes the indisputable, calling

Doe’s claim “wishful thinking at best.” Resp’t’s Br. 18. More

important, we have scoured the record in vain, searching for

evidence Doe’s drug is in fact functionally equivalent to

Marinol. While the record is replete with Doe’s repeated and

forceful assertions that its drug is the same thing as Marinol,

Doe has not provided any evidence its drug is in all relevant

respects identical. Doe therefore hasn’t established — indeed,

hasn’t even attempted to establish — the factual predicate

necessary for this court to resolve the legal question Doe asks us

to resolve.

In one sense this is unsurprising. The whole reason Doe

seeks to import its drug is to perform bioequivalency testing

comparing its drug and Marinol. If equivalency was as

“undisput[ed]” as Doe asserts, it is unclear why this testing

would be necessary. Our best guess from the record, therefore,

is that functional equivalency is a factual issue that remains to

be determined. What that means for this case is that Doe has

asked this court to decide an abstract legal question, unrelated to

the actual established facts in this case. That we cannot do. Doe

simply has not “present[ed] the court with the concrete facts that

are necessary to an informed decision” on its equivalency claim,

20

and therefore that claim is not “ripe for adjudication.” Buckley

v. Valeo, 519 F.2d 821, 893 (D.C. Cir. 1975) (en banc) (per

curiam), rev’d in part on other grounds, 424 U.S. 1 (1976);

Ciba-Geigy, 801 F.2d at 434.

At oral argument, Doe’s counsel protested that it was never

asked to demonstrate its drug’s equivalency to Marinol. But

when the DEA first notified Doe of the permit denial, the DEA

specifically invited Doe to “submit a letter explaining the

Company’s plans in exact and precise detail . . . .” Strait Decl.

¶ 18. Doe opted not to respond. Id. ¶ 22. Shortly thereafter, the

DEA also advised Doe of its right to request a hearing challeng-

ing the permit denial. See June 12, 2006 Letter. Doe opted not

to exhaust its administrative remedies, seeking instead immedi-

ate redress in the courts. Doe was given ample opportunity to

demonstrate to the DEA that its drug was effectively the same

thing as Marinol, and thereby build a record that would present

this court with a ripe controversy.

In sum, we see nothing in 21 C.F.R. § 1308.13(g)(1) that is

contrary to the Controlled Substances Act. Nor is the DEA’s

interpretation limiting that specific provision to drugs with FDA

marketing approval plainly erroneous.6 It is inappropriately

restrictive for the DEA to say, as it did in Grinspoon, that FDA

approval is the only way to demonstrate a drug is safe and has

currently accepted medical use. But it is completely different

(and eminently reasonable) for the DEA to require an importer,

relying on functional equivalency as the basis for a drug’s safety

and current acceptance for medical use, to demonstrate that its

drug is actually equivalent.

6

Doe’s Fifth Amendment claim likewise fails. Doe has not

shown that the permit denial has changed its “formal legal status,” or

had the “broad effect of largely precluding” it from pursuing a

business. Kartseva v. Dep’t of State, 37 F.3d 1524, 1528 (D.C. Cir.

1994) (emphasis omitted).

21

***

Contrary to Doe’s assertion that the DEA’s interpretation of

21 C.F.R. § 1308.13(g)(1) leaves Doe with “requirements [that]

are impossible to satisfy,” Pet’r’s Reply Br. 7, Doe does have

options: (1) petitioning to have its dronabinol drug rescheduled,

or (2) obtaining schedule I registration. We are not, however,

unsympathetic to Doe’s predicament. The DEA’s interpretation

obviously does make it harder (and costlier) for Doe to obtain

final FDA approval to market its generic drug. As Doe has

pointed out, this result runs counter to Congress’s purpose

manifested in the so-called Hatch-Waxman Amendments, Pub.

L. No. 98-417, 98 Stat. 1585 (1984), “to make available more

low cost generic drugs.” Serono Labs., Inc. v. Shalala, 158 F.3d

1313, 1316 (D.C. Cir. 1998) (internal quotation marks omitted)

(quoting H.R. REP. NO. 98-857, pt. 1, at 14 (1984), as reprinted

in 1984 U.S.C.C.A.N. 2647, 2647). Imperfect or even unwise

regulations are not necessarily illegal, however. To the extent

the DEA’s interpretation is bad policy, that must be addressed

by the agency or Congress.

V

The petition for review is denied, and the judgment of the

district court is affirmed.

So ordered.