Oral argument — Craker v. DEA

The next case today is Dr. Lyle E. Kraker v. The United States Drug Enforcement Administration et al. Appeal number 21-1055 and Scottsdale Research Institute v. The United States Drug Enforcement Agency et al. Appeal number 21-1323 Attorney Pennington, please introduce yourself for the record and proceed with your argument. Good morning, Your Honor. Shane Pennington for petitioners. I'd like to reserve two minutes for rebuttal, if I may. Yes, you may. Thank you, Your Honor. May it please the Court. Petitioners challenge a DEA final rule that was designed to expand the number of growers of marijuana to improve research at the federal level. And I'd like to make three points regarding why we contend this Court should set aside that final rule. First, DEA may not use the APA's notice and comment process to convert a policy developed and finalized in secret by OLC years earlier into a binding legislative rule. Second, DEA's attempt to limit the term medical medicinal cannabis under an international treaty, the Single Convention, to cannabis-derived drugs that FDA has approved for interstate marketing in the United States, undermines this Court's holding in Grinspoon that DEA could not impose a similar restriction on the term currently accepted medical use under Section 811 of the Controlled Substances Act. And third, the final rule is arbitrary and capricious because it purports to change a longstanding DEA policy, one that had been in place for over half a century, without giving the requisite explanation required under the Administrative Procedure Act and settled precedent including cases like Encino Motorcars and Fox VFCC. And so, I'll go back to the first point. And the issue here with the OLC opinion, what I'd like to address is that we are not saying that in every case where OLC advises an agency, that the agency is required to publish, you know, its opinion in the Federal Register or make it part of the record and so forth. What we are saying is that whereas here, the OLC opinion has been adopted by the Executive Branch which is the working law and authoritative construction of a provision of law that has an effect on the public, that the public has a right to know what that opinion says. And that's especially important in a case like this one where DEA purported to adopt the OLC's opinion but we didn't know what exactly DEA was adopting OLC's interpretation versus what was DEA's interpretation. Counsel, I may have misunderstood the facts but I thought that there was a general statement of the reason why the agency was now reviewing the matter which included the thrust to review it for consistency with the treaty and other matters. And that in the course of this, the agency did disclose the OLC letter. So I understood your argument not to be in the broad terms that you've articulated it but that the agency, when it issued its original notice, had to at that point refer to and provide a copy of the OLC decision. Is that correct? Yes, Your Honor. My point is simply that it's because of the way that this particular case was handled. I'm sorry, I don't understand. Why, when the essence of OLC's concerns is articulated in the notice which I would think would be preferable because it is a somewhat broader statement that allows more public comment on more issues. Why is it that that notice fails to meet the requirements of the APA? Thank you, Your Honor. The reason is that DEA purported to be bound by the OLC's opinion and it disclaimed any discretion to consider alternative views. Excuse me? There would be no point in engaging in this notice and comment rule period, were that true? And that's our point. So if you look at 85… So you're saying this was all a sham? Well, DEA did say that it would have discretion on certain details including, you know, how it balanced the 823A factors and how it used its funding authority under the CSA, but it immediately said that… Let me ask you this. If your argument… You analogize it to HBO case and things like that where you say there's some feature that's driving the agency decision that the public's not being allowed to know when the comment's going on. And so how can the public really comment? Here the feature isn't some scientific study that they did that they're not revealing. It's the fact that they're legally bound by the Department of Justice to come to a conclusion. They're not telling people that. So you have no way of getting at that aspect of the decision. That's what I'm saying. Let's say all that's persuasive. The fact is the OLC opinion was disclosed in the course of the rulemaking and it wasn't disclosed on the last day. So I would have thought… Is your position that if they disclosed it even a day after the notice the whole rulemaking has to go out the window even though they have 89 days to comment on it? Let me answer your question directly but I'd really like to hit another point. No, I want you just to answer the question that I just asked you about prejudice. Sure. So the problem is that it's not the timing. No one had a chance to review this document. DEA posted it on the website but it didn't include it in the record. Aren't there any record comments about it? Only ours, Your Honor, as far as I'm aware. But how did you do it? We had to litigate, Your Honor. We had to sue the federal government under FOIA. Once you got it during the comment period, once you had it was it not part of the record? Was it not available to the public to comment? It was not. It was published on DOJ's website. But the folks who had already begun using the comment period to develop their comments… I guess I'm just… Was it part of the rulemaking record or not? No, Your Honor. It was not. And if I could add one other point… Excuse me. If it was posted on the website and available to the public how can you say it isn't part of the record? I understood that the record would be where you go to regulations.gov where the government has directed you in the notice of proposed rulemaking and it has all the documents… Suppose they had published the OLC opinion prior to the notice going out. Would you have the position that that publication of it would render the whole rulemaking invalid unless they stuck it in the Federal Register? I'm sorry. Could you repeat that, Your Honor? They published the OLC opinion upon issuance on the DOJ website. They then issue a notice of proposed rulemaking. They make reference in the notice of proposed rulemaking to the consideration of the legal questions but they don't reference the OLC opinion and the OLC opinion is not put in the Federal Register. Is your position that the whole rulemaking has to be thrown out? Necessarily in that case, Your Honor, because at least everyone… So that's because you don't require it to be in the Federal Register as long as it's publicly available, correct? I'm not saying that it needs to be in the Federal Register, Your Honor. Then my question stands. If it was available the day after the notice would you still say the rulemaking should be thrown out? Yes, Your Honor, because just like in the cases… But if it was available the day before, you would say it would not be thrown out? If it was… Our only point is that… I don't want to dodge your question but I just don't think it depends on, you know, which day the… Well, I'm just trying to figure it out. If it was published before the notice of proposed rulemaking goes out do you have to throw out the rulemaking? Yes. Wait, no. No, Your Honor, you would not. Okay, if it's published the day after the rulemaking goes out the notice of proposed rulemaking goes out do you have to throw out the rulemaking? Not necessarily, Your Honor, because it's a meaningful… Okay, so then why do you have to throw it out here when it was published some days after the notice was published but not on the last day and when there were still weeks to comment on it and when some people did comment on it? Why wouldn't we just say there's no prejudice? Only one party was able to comment on it. That was us. After we sued the federal government… Excuse me, what do you mean was able to? There's a difference between only one party commented and only one party was able to. Are you saying this website information was available only to your client? No, Your Honor, but no one else had noticed. The government directed everyone to a notice of proposed rulemaking. They put it in the federal register. They told them these are where the relevant documents are. The OLC opinion was not there. There was no link to the OLC opinion and if you look at the OLC opinion it doesn't address the reasons that DEA gave in 2009 and 2011 for its different interpretation of the treaty. So the disclosure of the OLC opinion isn't what you needed to have disclosed then? Your Honor, we just needed to know what the basis for the rule was and so did the rest of the public and frankly so did Congress because Congress was asking DEA repeatedly for the reason for all of this delay and that reason was there since June 6, 2018 and it was this OLC opinion and there's nothing wrong with that in theory but the problem is that the public needs to have notice of that. The government gave everyone 60 days as the reasonable period for notice and comment but no one had this until much after that because of the suit. You have reserved two minutes. Judge Lynch, I had a question. Yes, please proceed. Your medicinal marijuana argument, your textual argument, medicinal opium is defined as opium which has undergone the processes necessary to adapt it for medical use. If we use that parallel structure and consider medicinal marijuana that has undergone the processes necessary to adapt it for medicinal use, what does that phrase mean? Undergone the processes necessary to adapt it for medicinal use and why couldn't it be the FDA approval process? The first reason that it can't be the FDA approval process is because this court said that currently accepted medical use can't mean just the FDA approval process. The second reason is that the FDA approval process has to do with interstate marketing not drug use. Even if we assume that it's the federal and FDA standards that we're looking at, we pointed out in our briefs that there are other medicinal uses like expanded access, for example, and under the Controlled Substances Act currently accepted medical use with severe restrictions and each of those fit just as well under the medicinal use language as they would and should have. The court is refusing to acknowledge those. Thank you. You have your two minutes later. Attorney Pennington, at this time, if you could mute your camera and your audio and Attorney Aguilar if you could introduce yourself on the record to begin. May it please the court, Daniel Aguilar for the federal respondents. So following up on the colloquy I wanted to flag at the outset that the OLC opinion was only directed at two questions. Whether DEA had to fulfill two particular obligations under the single convention whether it needed to purchase and take possession of all lawfully grown marijuana and whether it needed to have exclusive control over the export import and wholesale trading of that marijuana. The OLC opinion said we think the best interpretation of the treaty and the Controlled Substances Act is that DEA has to fulfill those functions. Now as far as the proposed rule explained and you can find this at pages 85 Federal Register 16293-94 DEA walked through the Controlled Substances Act it cited the statutory authority for its rulemaking it explained the structure of the single convention and in footnote 6 these functions the single convention directs to be performed by one government agency if permitted by the constitution here the constitution permits it so our legal understanding is that we're going to perform these functions laid out we're going to set up a system for purchasing lawfully grown marijuana and for maintaining exclusive control over its movement in interstate commerce. And I think that under what the APA requires as far as providing the opportunity to the public to meaningfully comment on an agency's legal authority the proposed rule here spelled all of that out and as this court noted in its questions to the extent the question was well was there potentially even assuming that there was error here which we don't think is the case was there any prejudice and for the reasons that we've been walking through the information request was filed and suit brought in court that was settled it was made public on the website there was an opportunity for people to comment and when those commenters said we think that your understanding here is mistaken DEA addressed those in the final rule as we pointed out at page 10 of our brief and it's notable that in their merits brief here petitioners don't take issue with the best reading of both the Controlled Substances Act and the treaty Can I just understand two things about the notice issue One are you making a no prejudice argument or not I think the APA directs that under 5 U.S.C. 706 that the court needs to take due account of prejudicial error and so I think that at the outset it's harmful about this both because the proposed rule explained all of this and as the court's been noting the OLC opinion has been made public And then the second piece of it is I take it you're maybe implicit in what you're saying if I'm following is insofar as the OLC opinion was directed at issues the resolution of which would affect the content of the final rule the OLC opinion would render inherently rulemaking about the legal authority that was noticed kabuki theater because unlike say a scientific study which no one could comment on the legal analysis by OLC is just legal analysis if new legal analysis came in nothing would preclude DEA from revisiting that and then seeking review of the OLC opinion and getting a change in the legal authority that DOJ would recognize and taking a new legal position whereas with respect to a scientific study the problem is if you don't disclose that they just never can comment on the thing that is actually driving the decisions that's the notion I think that's fair and correct your honor there seems to be a pretty bright line distinction in the case law between a failure to disclose facts or underlying reasons for a rule as opposed to just failing to disclose the legal authority for that rule if the agency had cited a completely inapplicable statute I think the only thing that's a little tricky here is I think what they're getting at is that it's one thing when an agency on its own is just talking about its own legal authority I think their concern is when the agency is directed by DOJ pursuant to an executive order to follow binding opinion by OLC the agency isn't really free in the way it might look like it is when it's just saying it's free to the public to be clear here the statutory authority exercised by both the DEA and OLC is vested in the Attorney General and so to the extent that if the Attorney General on the first day of his term said hand me the single convention I'm concerned about this and says I don't think this is the correct way to do it I think there's ample notice provided here for the public to comment and indeed go ahead and go ahead and go ahead and go ahead and go ahead and go ahead and and beyond that I know we also talked about the definition of medicinal cannabis just to be clear there there I know the petitioners are relying on this court decision in Greenspoon and there the statute says does it have any accepted medical use in the United States and the court said for that kind of a question there are reasons why you don't necessarily need to look to FDA's decision but here it's not a question of whether or not there is any factual development for accepted medical use instead the sole question about medicinal cannabis is is it the kind of crop that is going to be outside of DEA's exclusive system of control for foreign and interstate commerce and DEA explained in its final rule you know we think that that's entirely appropriate to look to this system by which the federal government controls interstate and foreign commerce would recognize medical products and there that makes sense to look to FDA's legally marketing authority for that one commenter who said not citing the expanded access program I don't believe that's in any of the comments submitted but one commenter said we think is it even safe is it even effective and there DEA noted in the final rule look we're not expanding the definition to include investigational new drugs those might eventually be approved for medical uses and therefore be approved for legal marketing in interstate commerce but we're going to wait until it reaches that point we want this both to be something that can move in interstate commerce and have a clean delineation of what is the medicinal product here that's the easiest way for us to make sure we're controlling the appropriate things that we need to control and not controlling the things that aren't required for us to do so and for all those reasons we think the rule here is adequately explained and consistent with the APA unless the court has any questions I had just two textual questions one is just to follow up on Judge Chiara's question to your opponent about whether the reference to processes in the convention can be understood as a reference not just to organic processes or scientific processes but to legal and regulatory processes I don't think that there is anything that bars that understanding in the text as we said the text is trying to be adapted from another part of the single convention but in the part that it's being adapted from is processes they are fairly read to be referring to regulatory processes I'm not sure your honor and the agency didn't address that in its analysis of the question then the second question is in the circumstance with the agency issued the rule here it's issuing the rule pursuant to the statute correct? that's correct your honor the authority that the statute gives the agency to issue the rule as I read it doesn't refer to the phrase medicinal cannabis at all it just authorizes them to issue rules that ensure that the regulatory process is consistent with the requirements of the single convention correct? correct so if that's the text that the agency had to construe would it be fair to read the agency's reference to medicinal cannabis as simply a clarifying gloss on why the regulations it's promulgating are quote consistent with the single convention given that as a whole the single convention doesn't require you to make available for manufacture medicinal cannabis that your regulatory agencies would bar from being sold I think that's correct your honor because the single convention says you don't necessarily need to have exclusive control over medicinal cannabis but it also doesn't prohibit the agency from doing so so I think that's appropriate it's DEA's understanding of how best to implement and make sure that it's actions are consistent with both the single and the single convention thank you your honors I believe I have two minutes you do thank you your honor I'd like to make a couple of quick points about the OLC opinion issue so the first one is we can all agree that this changed a long-standing policy and we all agree that when an agency wants to change a long-standing policy it needs to acknowledge that it's doing so and it needs to address the reasons why this policy the new one is better than the old one here if you want to know DEA's reasons for the old policy you can look at the OLC policy and look we're aware about these two parts of the treaty responsibility that NIDA is handling that we're not handling but there are statutes regulations and appropriations measures that require us to do it this way and if you look at the notice of proposed rule making and the OLC policy it needs to explain why this policy is better than the one before. Second Mr. Pennington you opened by saying this went to your notice issue. I understand you to be arguing now your third point that you made in your introduction which is the explanation is inadequate. Am I correct? Yes your honor. We raised it this way in our briefing as well. This problem caused several issues. The second thing I wanted to get to is that the APA requires a notice when the federal government directs the make a single notice. Then the public has a right to expect and anticipate that that's where it will find all of the relevant documents. And you would think that the one that actually binds the government and dictates its position on a matter that is changing policy after 50 years that they would at least direct them there. What would you have said to the agency that you didn't say to the agency had the agency included the OLC opinion in its original notice? Thank you. That's a great question. We would have suggested several alternative arrangements. We didn't have time to get to. Second, we would have hit this medicinal cannabis point a lot harder because in the OLC footnote 10, you'll see that contrary to the government's brief in this case, their OLC links medicinal use directly to currently in place. We would have raised that as a problem. Finally, we would have said, look, you raised these other reasons for this policy in 2009 and 2011. Please address those. Here's why we don't think that your interpretation is correct. We didn't have the full 60 days. Most commenters didn't even know because the key document wasn't where the government directed them to look. If I could go briefly to the medicinal cannabis point, if they narrow it this way, when Congress is considering legislation about medicinal marijuana, when the government maybe opens that up, if this only phase three clinical trials, period, that's the only thing that counts as medicinal marijuana, it will upset legislation that we otherwise know. Mr. Pennington, you're anticipating a problem that might be presented in future legislation and future litigation, but this is time for that. Pennington, you're be presented and future litigation, but this is not the time for that. Mr. Pennington, you're anticipating a problem that might be presented in future litigation.