Arent v. Shalala

WALD, Circuit Judge,

concurring in the judgment:

While I agree with the panel’s conclusion that the Food and Drug Administration’s (“FDA”) rule is justifiable, I would resolve the case under the Chevron step two challenge which was presented by the parties and addressed by the trial court, rather than grounding our decision on a different facet of Administrative Procedure Act (“APA”) review.

To begin with, I do not believe that the Chevron challenge was “mistake[n],” Majority opinion (“Maj. op.”) at 615, and deserves to be ignored. The panel opinion says that because the statute explicitly authorizes the agency to promulgate regulations defining substantial compliance, “[t]he only issue here is whether the FDA’s discharge of that authority was reasonable.” Maj. op. at 616. The majority then maintains that the reasonableness inquiry “falls within the province of traditional arbitrary and capricious review,” thereby rendering Chevron inapplicable. Id. I do not think that reasoning holds true in all cases, and specifically not in this case.

Chevron allocates power to interpret statutes among the branches of government by creating a presumption that agencies, rather than the courts, are the preferred institution for filling in statutory gaps. 1 Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 , 104 S.Ct. 2778 , 81 L.Ed.2d 694 (1984). The first step of Chevron is straightforward; if the statutory language is clear, it controls. The second step, where in my view the majority goes astray, entrusts agencies with authority to interpret statutory ambiguities, provided they do so in a manner that is reasonable and consistent with the language and purposes of the statute. See, e.g., Rettig v. Pension Benefit Guar. Corp., 744 F.2d 133, 151 (D.C.Cir.1984). By contrast, garden-variety APA review under § 706 focuses more heavily on the agency’s decisionmaking process; to survive arbitrary and capricious review, “the agency must examine the relevant data and articulate a satisfactory explanation for its action, including a rational connection between the facts found and the choice made.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 , 103 S.Ct. 2856, 2866 , 77 L.Ed.2d 443 (1983) (explaining scope of review under 5 U.S.C. § 706 (2)(A)) (citation and internal quotation omitted).

*620 Given these differences in the central concerns behind the two analytic frameworks, there are certainly situations where a challenge to an agency’s regulation will fall squarely within one rubric, rather than the other. See Continental Air Lines v. Dep’t of Transp., 843 F.2d 1444 , 1452 (D.C.Cir.1988) (discussing differences between arbitrary/capricious review and review of agency interpretation of statutory ambiguity). For example, we might invalidate an agency’s decision under Chevron as inconsistent with its statutory mandate, even though we do not believe the decision reflects an arbitrary policy choice. Such a result might occur when we believe the agency’s course of action to be the most appropriate and effective means of achieving a goal, but determine that Congress has selected a different — albeit, in our eyes, less propitious — path. Conversely, we might determine that although not barred by statute, an agency’s action is arbitrary and capricious because the agency has not considered certain relevant factors or articulated any rationale for its choice. 2 Or, along similar lines, we might find a regulation arbitrary and capricious, while deciding that Chevron is inapplicable because Congress’ delegation to the agency is so broad as to be virtually unreviewable. 3

But I agree with the panel that despite these distinctions, the Chevron and State Farm frameworks often do overlap. Compare Chevron, 467 U.S. at 844 , 104 S.Ct. at 2782 (where congressional delegation is express, court must defer to agency’s regulations “unless they are arbitrary, capricious, or manifestly contrary to the statute”) with APA, 5 U.S.C. § 706 (2)(A) (1988) (reviewing court must set aside agency action that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law”). Because both standards require the reviewing court to ask whether the agency has considered all of the factors made relevant by the statute, this court has often found the State Farm line of eases relevant to a Chevron step two analysis. See, e.g., American Fed. of Labor & Cong. of Indus. Org. v. Brock, 835 F.2d 912 , 917 (D.C.Cir.1987).

The case before us arguably falls within this area of overlap. In reviewing the FDA’s regulations, our task was to determine whether the agency rationally considered the factors set forth in the NLEA when it defined “substantial compliance.” Accordingly, I would not argue that State Farm is altogether irrelevant to our analysis, but given the scope and function of Chevron step two analysis, neither would I find State Farm applicable to the exclusion of Chevron, as the majority does. Petitioners’ appeal ultimately does stand or fall on whether the FDA heeded Congress’ admonitions that it may not find “substantial compliance” if “a significant number of retailers” have failed to comply, and that it must consider “[t]he size of the retailers and the portion of the market served by retailers in compliance with the guidelines” when making this determination. 21 U.S.C. § 343 (q)(4)(B)(ii) (1988). This language is sufficiently concrete to permit review of whether the agency’s interpretation is reasonable and consistent with Congress’ purpose in enacting the NLEA. In fact, I believe it well within the bounds of typical Chevron step two analysis, which is why the majority’s opinion troubles me somewhat. If this case falls totally outside Chevron, many other cases marching under its banner must be similarly exiled. The majority’s unequivocal rejection of the Chevron analytic framework utilized by the parties and the trial court in this case provides no clues as to the boundary lines for Chevron and APA review.

Finally, I worry that second-guessing the parties and counsel on the primary analytic *621 mode for their challenges 4 causes unnecessary confusion and uncertainty among administrative law practitioners. I think a court should refrain from reframing or abandoning the issues raised by the parties unless their formulations are frivolous or misconceived. Otherwise we are posing the questions, and then answering them ourselves without help from counsel. Generally, courts ought to stick closely to the issues raised and the arguments made by counsel, and I would have done so here by resolving this case under the Chevron mode of analysis. Had I done so, I would have arrived at the same result as the majority on basically the same grounds as the district court, and for that reason, I concur in the judgment.

. Although the majority contends that "Chevron is principally concerned with whether an agency has authority to act under a statute,” Maj. op. at 615, I think Chevron requires a reviewing court to ask a somewhat different question: whether an agency’s specific course of action is permitted by statute. It is possible that a statute might grant an agency authority to act in some fashion, but not in the particular manner it has chosen. Petitioners argue that the case before us presents just this problem. They do not question the FDA's authority to promulgate regulations defining substantial compliance, but argue that the specific compliance standard selected by the agency (60% of retailers satisfying a 90% individual compliance standard) was not permitted by the Nutrition Labeling and Education Act's ("NLEA”) requirement that "a significant number of retailers” comply with the labeling guidelines.

. In several cases, this court has analyzed challenges based on Chevron and State Farm in separate and distinct inquiries. See, e.g., National Recycling Coalition, Inc. v. Browner, 984 F.2d 1243, 1250-52 (D.C.Cir.1993); Solite Corp. v. United States EPA, 952 F.2d 473, 482-88 (D.C.Cir.1991); City of Kansas City, Mo. v. HUD, 923 F.2d 188, 191-94 (D.C.Cir.1991).

. This type of case is rare, though; this court has found that phrases as broad as "public interest" constrain agency authority enough to permit Chevron step two review. See, e.g., American Postal Workers Union v. United States Postal Serv., 891 F.2d 304, 313 (D.C.Cir.1989) ("In our view, Chevron reasonableness review of an agency's interpretation of a 'public interest' standard is not empty rhetoric; it is intended to have a limiting effect on the range of agency discretion.”), rev'd on other grounds sub nom. Air Courier Conference v. American Postal Workers Union, 498 U.S. 517 , 111 S.Ct. 913 , 112 L.Ed.2d 1125 (1991).

. The majority contends that it is appropriate to resolve this case under State Farm arbitrary and capricious review because the parties raised this issue in their briefs and in the proceedings below. Maj. op. at 615 n. 4. I am inclined to disagree with this characterization. Although the majority correctly asserts that the parties and the trial court occasionally used the words "arbitrary and capricious” and cited to State Farm, I read these references as made in the context of a Chevron step two analysis. See, e.g., Brief for Appellants at 20-39 (arguing that FDA regulation violates statutory directive, but contending that typical Chevron deference is unwarranted because FDA did not rely on agency expertise in promulgating regulation); Brief for Appellees at 23 (arguing that trial court's ruling should be upheld because "court below properly employed a 'Chevron II' analysis”), 26 (FDA regulations “are not arbitrary, capricious, or contrary to the NLEA”), 29 (60% compliance is "rational [and] consistent with the NLEA”), 39 (90% individual compliance standard is "rational [and] consistent with the NLEA”); Arent v. Shalala, 866 F.Supp. 6, 13-14 (D.D.C.1994) ("Chevron ... provides the analytical framework which the Court must use to review an agency’s construction of a statute .... The Court ... will uphold [the regulations] unless those regulations are arbitrary, capricious or manifestly contrary to the NLEA.”). Certainly at no point was the suggestion made by either party that this court abandon the Chevron framework for State Farm arbitrary and capricious review.