Appendix — The Toilet Goods Association, Inc. v. John w.ga Rdner, Secretary of Health, Education, and Welfare

— — —U—ͤ— 6a

. —

N ‘

. 1 APPENDIX A

Unrrro Stur _— OF APPEALS

For THE SECOND *

No. 225--Beptenber Term, 1965

E

1 (Argued February. 25, 1966. Decided _ 13, .

Docket No. 30261

1 THE Tomer Goons Association, IN.; Anrra D’Focen,

N Inc.; Avon Propucts, INc.; BEAUTY CouNSELORS,

Inc.; Bonne BRL, INc.; Boursow, Inc.; CHARLES

~ OF THE Rrrz, IN.; CHESEBROUGH-PoND’s, INC.;

. Curistian Dior Perrumes Corp.; Ciamrot INcorpo-

* RATED; COLONIAL Dames Co., Lm.; Cory, Inc.; Fa-

BERGE Ixc.; - FRANCES DENNY, Ixo.; THE FULLER o

Bnusk Co.; TRR Gzorce W. ‘Ltrt Co, Ing; THE '

Poe GILLETTE Company; A. M. HANSEN, DOING BUSINESS

aS House or Hoiiywoop; HARPER MertHop, Inc.;

HELENA Rusinstun, Inc.; Hetene Cyrtis Inpus-

TRIES, Inc.; HEN: x/Haran/Hutcxines, Inc.; Hen-

BOLD LasoraTory, c.; JoHN H. BRECK,. INC. ;

— Kotmar Lasora INC.; ‘Laby ‘Lennox Com-

| PANY, Inc.; LEHN & FNR Propucts CoRPORATION ; .

: - ARNOLD * LEWIS, DOING BUSINESS 48 STUDIO Cos-

. METO Co.; Max Factor & Co.; MAYBELLINE’

_ MERLE Norman CosMETICS, Ino.; Jack B. ‘Nar

EROUTT, DOING. BUSINESS AS NETHERCUTT LABORA-

TORIES ; ‘NEUTROGENA _ Corr. ; . NUTRILITE Pnopvors,

| eee ae a,

r

— ; ne re ee ee eee

5 . . . * ? -

i 2a

1 Or 97 Company; Private LABEL. CosMETICS

Co., Inc.; _Purrran Cosmetics. Co.; Revion, Inc. ;

. Roux _Laporatories, Inc.; SHULTON, INC.; Ax D

YARDLEY OF LONDON, INC., PLAINTIFFS-APPELLEES

JoHN W. GARDNER, SECRETARY OF HEaLTH, Epvuca-

, TION, AND “WELFARE, AND JAMES L. Gopparp, Com-

MISSION ER OF Foop AND Dnvcs, DEFENDANTS-APPEL-

Before - WATERMAN, Moore re ‘FRIENDLY , Circuit

| —

APPEAL BY THE SECRETARY OF HEALTH, EDUCATION AND

WELFARE AVD THE COMMISSIONER OF FOOD AND DRUGS FROM

A ORDBR OF THE DISTRICT COURT FOR THE SOUTHERN 57s.

TRICT OF. NEW YORE, HAROLD R. TYLER, IR., JUDGE, DENYING 1

THEIR MOTIOX¥ TO DISMISS OR GRANT SUMMARY JUDGMENT IN

AN ACTION FOR A DECLARATION OF INVALIDITY OF FOUR FOOD

AND DRUG ADMINISTRATION REGULATIONS RELATING TO COLOR

ADDITIVES. AFFIRMED AS TO — 12 AND 8; —

48 TO COUNT A.

Aron S. Oki (Ronkirr M. Monanxrfab, UNITED

. States ATTORNEY For THE SouTHERN District. OF

New York; Jauss G. :GREILSHEIMER, ASSISTANT

_ Untrep ‘States ATTORNEY, OF * FOR DE-

FENDANTS-APPELLANTS

Epwarp J. Ross (BREED, Amporr 4 Mongax, ‘NEW

Tonk, N.Y.; STepHen-R. OF CounsEL), FOR

PLAINTIFFS APPELLEES 5

anger Cirouit Judge.

In July 1960, Congress added to the Federal Food,

, and Cosmetic Act a number of new provisions

; 1 as the Color Additive Amendments, 74 Stat.

397, 21 U.S.C. §§ 321-376. These were intended

2

b= 5

‘ “to authorize the use of suitable color additives

in or on foods, drugs, and cosmetics in accord-

5 regulations to be issued by the Secre-

f of Health, Education, and Welfare,

; peering the conditions, including maximum

lerance, under which such additives may be

safely. used. H. R. Rep. No. 1 86th Cong,

2d Sess, 1960. U.S. Gode Cong. & A

The Commissioner of Food and Drugs, to 3 * :

Secretary of Health, Education and Welfare has dele-

gated the Department’s functions under the Act, 22

F. Re 1051 (1957), 25 F. R. 8625 (1960), held rule-

making proceedings conforming to § 4 of the Admin-

istrative Procedure Act, 5 U.S.C. §-1003, and issued

Color Additive Regulations, 21 C. F. R. Part 8, effee-

tive, with certain exceptions, on June 22, 1963.

The following November the Toilet Goods Associa-

tion, a trade organization of cosmetic manufacturers

‘whose members allegedly represent 90% of annual

United States sales, and forty manufacturers and

distributors of cosmetics brought this action against

the Secretary and the Commissioner in the District

Court for the Southern District of New York for a

‘ declaratory judgment that four provisions of the Reg-

ulations exceeded the authority conferred by the

statute.. Jurisdiction was properly predicated on 28

U.S.C. §§ 1331 and 1337. See Smith v. Kansas City

Tittie & Trust Co, 255 U.S. 180 (1921). The'defend-

We thus do not reach the question whether 5; 10 of the Ad-

ministrative Procedure Act, 5 U.8 C. 8 1009, constitutes an

8 "| affirmative grant of jurisdiction with respect to the review of

federal administrative action, as the Supreme Court apparently

assumed in Rusk v. 1 367, 371-72 (1962). and we

recently did in Cappadora v. Cclebresse, — F. 9d —— ( a

Cir. 1966). But see Ove Gustavsson Contracting Co. v. Floete, .

278 F. 2d 912 (2 Cir.), cert. denied, 364 U.S. 894 (1960).

Simo. 28 U.S.C. §§ 1886-40 do not require jurisdictional

sas

n n

a ; é * ’ : | : : N

| A moved to dismiss or to strike certain portions

of the complaint on various grounds, among others

that the case was inappropriate for declaratory relief

and that the action was an unconsented suit against

the sovereign; plaintiffs cross-moved for summary

judgment. In November 1964 Judge Tyler denied

both motions in an opinion, 235 F. Supp. 648, relying ©

in part on Abbott Labs v. Celebrease, 228 F. Supp.

855 (D. Del. 1964), where the court had granted a

declaratory judgment invalidating labeling regula-

tions under the same statute. . A year later, when the

case was nearly ready for trial, the Secretary and

the Commissioner ‘renewed their motion to dismiss

on the two grounds stated, arguing that a different

conclusion on “the issue of justiciability was called

for by the Third Circuit’s reversal of the Abbott

Laboratories decision, 352 F. 2d 286 (1965) and the

District of Columbia Circuit’s recent holding that

declaratory relief was not availablé to challenge cer-

tain regulations adopted under the Tobacco Inspec-

tion Act, 7 U.S.C. §714(b), Danville. Tobacco Ass’n

v. Freeman, 351 F. 2d 832 (D.C. Cir. 1965). Judge

Tyler adhered to his determination but, at the de-

fendants request, made the necessary certification for

an application té prosecute an interlocutory appeal

under 28 UG. C. § 1292 (b); permission to appeal was

granted by a il of this court.

The first tw of the complaint charge that the

Regulations pres the authority conferred by the

statute in treating finished cosmetic products and all

diluents—unpigmented materials with which colors

are mixe. mixed as color additives subject to various re-

passport passport and citizenship matters, where none of these sections

is applicable and the jurisdictional amount sequined by 8 1331 is

not met. :

* Subsequent to the argument of this anid certioraxi was

granted, 34 U.S.L. Week 3294. (March 1, 1966) (No. 824).

— . .

5a

quirenients for testing and admini

The basic section of the Color Additive Amendments |

is § 706 of the Act, 21 U.S. CI § 376, which provides

that a,“color additive’? shall be deemed unsafe unless

it meets two conditions: The additive must be covered

by a „regulation,“ issued by.the Secretary on a find- .

wale * ing of suitability, which lists it for use either gen-

erally or under prescribed conditions; and it must

either come from a batch certified for such use by the

Secretary under appropriate regulations or have been

exempted from the certification requirement.

The term „color. additive,“ on which the controversy .

turns, is defined in 5 201 (t) (1), as a material which

(A) is a dye, pigment, or other substance made

-by a process of synthesis * * * or otherwise

derived * * * from a vegetable, animal, mineral,

or other source, and

(B) when added or applied. to a food, drug, or

cosmetic, or to the human body or any part

thereof, is capable (alone or through. reaction

—— * substance) of 8 color

3 ere

21 U.S.C. § 321(t) (1)

‘The Regulations of the Food and Drug Administration

(FDA) interpret the statutor definition of color

additive as oe “all diluents’’: and state further

5 oe A substance at, when applied to the human

body results in coloring, is a color additive,“

| — the function of coloring is purely inci-

„„ dental to its intended use, such as in the case of

5 deadorants. Lipstick, rouge, eye makeup

colors, and related cosmetics intended for

coloring the human body are “color additives.“

Reg. § 6.1(f).

This is subject to an exception, not heré important, for iin

additives covered by an exemption. for investigational use by

_— experts, 21 US. C. 8 376 0 (2) and (f). :

6a

4 The term “diluent” i is defined as:

any component of a color additive mixture that

is not of itself a color additive and has been

intentionally mixed therein to facilitate the

use of the in coloring. foods, drugs, or

cosmetics or in coloring the humay body. The

- _ .

—— RN re ee ee Uñ— — —— — . —Uä—

diluent may serve another functional purpose

in. the foods, drugs, or cosmeties, as for ex-

‘ample sw „ flavoring, emulsifying, or

stabilizing, or may be a functional component

of an article intended for coloring the human

Reg. § 8.1(m)

The manufacturers admit that the coloring 8 g

ent in a cosmetic is a lor. additive“ fully subject

to both listing and certification requirements ‘of § 706,

and that a diluent,“ in what they insist is the ac-

cepted definition of an inert substance used to dilute

. dyes and pigments, is subject to the Secretary’s. -

power to certify additives with safe diluents or with-

\ out diluents,” §706(c). . They complain, however,

5 the Regulations’ comprehensive. definition of

“eolor additive“ goes beyond the reach of the statute

in imposing both listidg ‘and certification require-

_ ments on finished products—like lipstick, nail polish,

eto. — and non-color ingredients that Were never in-

tended to be sjbject to premarketing clearance, and

on traditional diluents that were meant to be subject

only to certification as components: of - dyes: and

pigments.

The third count of the complaint abies to provi-

sions in the Regulations which attempt to subject hair

dye products to. p keting clearance in what is

alleged to be violation of the exemption recognized in

the statute. The Act as passed in 1938, in defining

“Sx ta .

a

cose cosmetics. that were deemed to be adulterated,

contained in §601(a) an explicit exemption for hair

This provision shall not apply to coal-tar hair

dye, the label of which bears the. following

legend conspicuously displayed thereon: “Cau-

tion—This product contains ingredients which

may cause skin irritation on certain individuals

and a preliminary test according to accompany-

ing directions shoufd first be made. This

. product must not be used for dyeing the) eye-

lashes or eyebrows; to do so many cause blind- 1

ness.“, and the labeling of which bears ade .

quate directions for such preliminary testing.

52 Stat. 1054 |

The exemption was carried forward in § 601(e) .

which declared that a cosmetic should be deemed

adulterated “If it is not a hair dye and it bears or

contains a coal-tar color other than one” from a certi-

fied hatch. When Congress revised the statute in the

1960 Amendments, it left §.601(a) as it was but modi-

fied § 601 (e) to read “If it is not a hair dye and it is,

or it bears or contains, a color additive which is un-

safe” within the meaning of § 706! a

The Regulations recognized the statutory exemp-

tion where proper labeling called for use of the patch

test but, armed with an expansive definition of “color

additive” in § 8.1 (f) which would on its face seem to

-include in a preparation for use on the hair any color-

ing ingredient as well as the finished product, pro-

ceeded to limit the exemption as follows:

The “‘hair dye” exemption in section 601 (a)

| of the act applies to those articles intended for

uses in altering’ the color of the hair and which

are, or which bear or contain, color additives

227-1816: ? n N

—

with the sensitization potentiol of causing skin

irritation, in certain individuals and possible

blindness when used for dyeing the eyelashes

or eyebrows. The exemption is permitted with

— condition — the label of any such article

9 1 —— y the statutory caution and |

* adequate ons for preliminary patch-test-

ing. If the poisonous or deleterious substance

in the “hair dye“ is one to which the caution

is inapplicable and for which patch-testing

provides no safeguard, the exemption does not

apply; nor does the exemption extend to poi-

~ sonous or deleterious diluents that may be in-

troduced as wetting agents, hair conditioners,

emulsifiers, or other components in a color

Shampoo, rinse, tint, or similar -dual-purpose

cosmeties that alter the color of the hair.

Reg. § 8(u)

The manufacturers claim that the Wan go

beyond the statute in several ways: Whereas the 1938

Act literally exempted from premarketing clearance

any coal-tar hair dye complying with the statutory —

condition of notice and the amendments did not pur-

port to effect any change, the Regulations grant ex-

emption only if the color additive in the hair dye sub-

stance is one whose irritating qualities would be de-

tected by a patch test; and, contrary to the longstand-.

ing interpretationin effect by regulation when the

amendments were adopted ‘—which applied the ex-

emption in its full scope to dual-purpose. hair prod-

nets like shampoos, rinses and tints with a coal-tar

coloring component, the Regulations seem to limit the

exemption to the coloring ingredient itself. 0

: + Reg. 8: 8 1.200 apparently defined the term “coal-tar hair dye”

im the §601(a) exemption to include “all articles containing

any coal-tar color.” This definition of hair dyes was déleted by

the Commissioner as superseded by § 8.1(u) of the Color Addi- -

3 28 F. R. 100688. (1988).

v /

Count 4 of the complaint attacks a section of the

Regulations, § 8.28(a)(4),. which states that wen

it appears to the Commissioner that a person has re-

fused to permit duly authorized employees of the

FDA “free access to all. manufacturing facilities,

. Processes, and formulae involved in the manufacture

pl eclor additives and intermediates from which such

oolor additives are derived,” he may suspend eertifi:

cation service to such person until adequate correc-

tive action is taken. The first sentence of .§ 704(a)

of the Aéff applicable to all goods, drugs, devices, or

cosmetics subject: thereto, authorizes the Secretary to

inspect any “factory, wareKouse, establishment, or

vehicle and all pertinent equipment, finished and un-

finished materials; containers, and labelling therein“;

the second sentence, dealing only with places where

prescription drugs are manufactured, processed or

held, provides for ‘inspection extending.“to all things

therein (including records, files, papers, processes,

controls, and facilities). The manufacturers say

the challenged regulation illegally extends to cos-

metics the broadened inspection authorized only for

Prescription drugs, and improperly subjects trade

“._.. seerets to exposure. . N 5

The expanded definition of color additives,” the

' narrowing of the hair dye exemption, and the al-

legedly compelled disclosure of ‘secret formulae and

processes impose, the manufacturers claim, burdens

not contemplated by the statute and. threaten. imme-

diate and irreparable injury. Even thoug}f coloring

ingredients have been properly pretested, listed: and

certified in compliance with the statutory clearance

8 scheme, the regulations require filing a separate list-

ing application for each finished produet, traditional

- diluent and non-eolor ingrédient, including those fot-

merly exempted under the hair. dye provision; each

1

tion; Reg. 5.8.51 (a). An affidavit * one —

N _ =

_ —

* 10

application must be accompanied by a $2,600. filing

fee, Reg. 5 8.50(c), and supported by extensive scien-

tific tests establishing suitability for intended use,

Reg. §8.4(c). Even after listing, every ingredient

and finished product: must come from a certified batch

unless the Secretary has granted an exemption; a

minimum fee of $100 is charged for each certifica-

turer claimed that the listing of its roduets

alone for' the issuance of regulations cn por 5

filing fees of $7,000,000: and testing costs of nearly

642,000 „000, and that certification fees for a single

year would unt to 750,000.“ Beyond such v

of-pocket. inereased hx substantial additional ex-

penses for record-keeping, compliance -with the chal-

lenged regulations, by requiring significant changes

in ‘established business practices and curtailing

distribution of new products, allegedly would cause

major and costly disruption of the cesmetic industry.

- Moreover, the disclosure of formulae and ‘processes

necessary to meet the new listing requirements and to

avoid loss of certification for refusing inspection

allegedly would result in misappropriation of trade

secrets and discourage research and development of

improved cosmetic products. !

Failure to comply with the challenged nen

could have serious consequences if they are valid.

Under § 601 of the Act, a cosmetic other than a hair

dye is deemed adulterated if. it is, or it bears or con-

tains, a color additive which is unsafe” within the

meaning, of §706(a). Projection-of any adulterated .

Very likely these figures are exaggerated since they take no:

account either of the FDA’s power to require information on

—— calla ot eeptig cheagntints wi.

AAG

. N *

8 ; ?

. injunction

and any adulterated article may be seized under §

under the statute, and are subject. te

entail criminal liability, §§ 301

ibited

The manufacturers say that, apart from all else, the-

publicity incident to criminal or civil proceedings

against them for failure to comply with the Regula- |

ay tions would be seriously detrimental in a highly com-

petitive industry which spends millions in cultivating

public good will and is dependent on: consumer confi-

dence in the integrity of its pr Muets.

The Secretary and the Commissioner respond that

the fears as to the dilemma posed by the tions *

are exaggerated. They insist that the N.

merely expound the manner in which they intend to

construe the. ents, that nothing has yet been

done to apply. provisions of which plaintiffs com-

plain, that ample opportunity to test the Regula- -

tions in. concrete fact situations is afforded by the

path for review spelled out in the statu If the

manufacturers will only comply with the li and

certification requirements, the FDA’s application of

the statute will, under §706(d), be subject to the

general administrative provisions on hearings and

review in § 701. Since the review authorized in

§706(d) is directed at decisions approving or dis-

’ approving listing and certification and §§ 701 (e) and

() are limited to review of other specifically enumer-

ated agency determinations, the contention is not that

the statutory provisions afford a direct path to review

of the regulations on listing requiréments;

it is 1 that furnish an indirect but neverthe-

less sufficient one ‘the manufacturers.ought to

~" have taken. The proper course, defendants say, is

for a manufacturer to petition for the listing of dilu-

122

ents and finished cosmetic products as color additives,

while protesting against the need for doing so and

conforming with the detailed requirements for filing

information only, to the extent he believes proper un-

der the statute; such a petition could be accompanied

by a request kor exemption from batch certification, .

again with appropriate protest and non-compliance

with the requirement of factual data to support the

application. Either the FDA would retreat from ap-

plying its announced interpretation of the statute and

grant the petition and the request for exemption, or

it would deny them. which event the road to a court

of appeals would be open under 55 701 (e) and (f).

ys 5 8 en

11 .

The serious — are whether direct challenge’

N ot the · Regulations by suit in a district court is im-

pliedly harred by the availability of review of listing

and certification denials in- a eourt of appeals, and

whether the controversy is appropriate for judicial

determination prior to application of ay Regulations

in a particular factual situation.

We are not persuaded that by providing a pro-

cedure fer review of certain administfative decisions

under the Food and Drug Act in the courts of appeals,

Congress meant to foreclose relief with respect to

have acted in excess of their authority an uncon-

We need not discuss in the text the surprising, contention

—— — _

senfed suit against the United States. The contrary\is clearly.

established by Philadelphia Co. v. Stimeon, 223 U.S. 606, 619-

20 (1912), see Stark v. Wickerd, 821 U.S. 288, 990 (1944), and

indeed follows i from Fe ports Young, 200 US. 128

(1908) ; law officers of Government ought not to take the

time of busy judges or of opposing parties by advancing an

argument 80 plainly foreclosed by Supreme Court decisions,

—

*.

0

other ageney action under the Administrative Pro-

18a

eedure Act 5 10, 5 U.S.C. § 1009, or the Declaratory

Judgement Act, 28. U. S. C. § 2201, in a ease where this

would otherwise be appropriate. The agency deter-

minations ‘specifically reviewable under § 701 (e) relate

to such technical subjects as chemical properties of

particular products and the formulation and appliea-

tion of safety standards for protecting public health;

in the to

substitution for any other rém provided by law.“

2

Congress naturally did not wis ceurts to consider

such matters without the benefit of the agency’s views

after an evidentiary hearing before it. Section 701,

however, also contemplated other less specialized ad-

ministrative action by authorizing, i in subsection (a),

the making of regulations for the efficient enforcement .

of the ry and it expressly declared. in subsection —

(f) that a provision for review of certain orders

of appeals was ip addition to and not in

21 U.S.. §371(£)(6): . The section as a whole does

not indicate to us any congressional intent either. to

insulate administrative action not covered by sub-

section (e) from challenge as in excess of statutory

authority, see Stark v: Wickard, 321 U.S. 288, 308-11

(1944); ef. Cappadora v. Celebrezze, 356 F. 2d 1, 5 „U:

. Cir. 1966), or to postpone immediate challenge to such

action where awaiting the issuances of adjudicative .

orders subject to statutory review would provide less

effective relief. Insofar as Abbott Labs. v. Cele-

The legislative history of the 1938 Act suggests that

gress had no intention of limiting teview of other action by

adopting a special procedure for the enumerated determinations. -

The House * referring to the savings clause in § 701

e tated :

There.is also wd a8 8 method to review a regulation

placed iat ger the Secretary whatever rights exist

tocinitiate a rica] proceeding in equity to enjoin the

a

—

14

brezze, 352 F. 2d 286, 289 (8 Cir. 1965), cert. granted,

. intimates otherwise, we are unwilling to follow it.

The question whether a plaintiff may obtain

judicial relief in cases like this has been variously -

. phrased as whether he has standing to challenge

- the administrative action as a person suffering legal

: ”* or “aggrieved’’ within the meaning of 5 10 of

the APA, whether the dispute is an actual contro-

versy within the. Declaratory Judgment Act, vr

whether it is sufficiently “‘ripe’’ for resolution by the

courts. See Jaffe, Judicial Control of Administra-

tive Action 395-98 (1965). In fact, the critical issue.

i sort of assistance on the

part of those subjected to such rules, see Columbia

United . 316 U.S.

a

——ů— — — — — —— tela — ——— p ARR Rh RE

15a

has gotten the slightest start.’ The problem i is not to

be solved, as the parties suggest, by applying some

readily procurable litmus paper which will determine

whetlier a controversy is justiciable“; what is re-

quired, as in the case of challenge to the constitution-

ality of a statute, is a reasoned evaluation of both

the appropriateness of the issues for decision by

courts and the hardship of denying judicial relief.

Joint. Anti-Fascist Refugee Comm. v. McGrath, 341

U.S. 123, 156 (1951) (Frankfurter, J., concurring); -

see q affe, supra, at 396, 423.

The appropriataness of passing judgment on the.

validity of an administrative regulation prior to its

application. to particualr facts depends on such fac-

tors as how far the rule represents the definitive posi-

tion of the agency. nd the extent to which thé

° ‘precision or scope. -Judicial determination might also

be deemed inappropriate where the controversy over

the rule did not present a legal issue that a court was

qualified to resolve without reference to factual de-

terminations more effectively made by the agency

familiar with day to day administration. See Jaffe,

supra, at 406. In this case, however, the Regulations

under attack were issued after a full hearing with

notice and by their terms represent the definitive

‘agency position on the reach of the statutory require-

ments for listing and certification of cosmetics, see

Columbia Broadcasting Sys., Inc. v., United States,

supra, 316 U.S. at 422; United States v. Storer Broad- -

casting Co., 351 U.S. 192, 198 (1956); to the extent

that they ‘purport. to apply premarketing require-

ments to broad categories like finished products —

and noncoloring ingredients and define the hair-dye

- exemption, they appear, prima facie, to be susceptible

of .reasoned comparison with the statutory mandate

without: inquiry into factual issues that ought to be

first véntilated before the agency. Indeed, it is mani-

fest that if the manufacturers adhere to their legal

position, pro forma, individual applications to the

FDA ‘for listing and certification would produce a

record no more, and very likely less, illuminating

than what the distriet court will develop at trial of

this action in which the great bulk of the industry

is represented and will be bound. The mere fact that

the procedure which the defendants suggest would

bring the issue directly to a court of appeals without

prior resort to a district court, while entitled to some

weight, is not controlling. As indicated earlier, the

statutory procedure for review of individual determi-

nations in the courts of appeals was not intended as

a means for challenging FDA rule-making of the

usual sort; as shown by the authorities discussed

below, the mere fact that pursuit of that course could

—— —— —

— a decision on legal i issues similar to _— here :

sought does not make its use mandatory

With respect to the other relevant 8 the

degree of hardship warranting declaratory relief,

although some older precedents suggest broadly that

an administrative ruling is not reviewable until and

unless it imposes an obligation or subjects the plain-

tiff to some civil or criminal liability, see, e. g., United

States v. Los Angeles & Salt Lake R. R., 273 U. S. 299,

309-10 (1927); Shannahan v. United States, 303 U. 8.

596, 599 (1938), there has been a growing recognition

that the timeliness of review depends on a broader

concept of the substantiality of present or immediate

harm. See 3 Davis, Administrative Law Treatise

_ § 2107 (1958). In Columbia Broadcasting Sys., Ino.

v. United States, 316 U.S. 407, 417-21 (1942), the

Supreme Court declared that. though a particular rule

does not of itself deny a license or directly impose

sanctions, | it may ‘nevertheless be reviewable if it

; establishes a general standard of conduct which by its

very promulgation demands conformity and poses, for

the plaintiff or others with whom ‘he must deal, the -

“alternatives of compliance or severe penalties of for-

feiture or disruption of business operations. In.

Frozen Food Express v. United States, 351 U. S. 40,

43.44 (1956), the Court recognized that an agéricy ©

order generally announcing the scope of administra- ~

tive regulation was subject to immediate frontal at-

tack, although opportunities for later challenge ‘were

sure to come from a-cease and desist order by the

ICC, see Eastern Texas Motor Lines v. Frozen Foo

“Express, 351 U.S. 49 (1956), or suit for an ‘injune-

tion by the agency or competitors.” And in United

If it be said that the carrier was subject, to liability for

criminal penalties even before a cease and desist order or ‘an

injunction, the same is true here, . - +

O N28

1

**

States v. Storer Broadcasting Co., 351 U. S. 192, 199-

200 (1956), declaratory rules setting limits on the

number of licenses to be granted for broadcasting sta-

tions under common ownership were held to be im-

mediately reviewable because they operated “to con-

trol the business affairs” of the plaintiff and made it

impossible to “cogently plan its present or future

operations” so long as their validity remained unde-

termined; direct challenge to the regulations. Was per-

mitted even though réview might have been obtained:

by provoking an adverse administrative order, see 351

U.S. at 208 (disse — opinion).” See also Flem-

‘ming v. Florida

* Eæch., 358 U.S. 153, 168

(1958).

We see little . in debating the point, much

discussed by the parties, whether the Regulations are

“interpretative” or legislative.“ Although that issue

V1 fact . FOC « dismissed the plaintiff's application for

an ad itions]-station on the basis of the new rules the very day

they were adopted, 351 U.S. at 197, but review of the par-

ticular decision Mus not. sought.

We recognize that in Storer review of the rule was in the

Court of Appeals for the District of Columbia, the same

tribuna] to which Storer would have gone for review of the

denial of an application; but the dissenters thought the ratich -

nl

lief in.a district court after the 60-day y Hendlition for, ek’

review by the Court of Appeals had expited, 351 8. 447210

((dissenting opinion of Hi J.). A more important differ-

entiating considtration may he that awaiting denial of a future

application may not have afforded a broadcaster who had

— epantieaib ainintniniabeaal sles — *

N b 19a |

would-have to be faced if the FDA had failed to com-

ply with the- rule-making procedures of $4 of the

APA because of a claim on its part that the Regula-

tions were merely “interpretative,” the interpretative

character of a regulation does not necessarily make it

unripe for review; we perceive no reason why a rule

whereby an agency subjects to regulation activities

contended. to be immune should be exempt from im-

mediate review becauge it purports to interpret t-

ute although it would not be if made in the exercise,

contended to be illegal, of a substantive rule-making

power. See Frozen Food Express v. United States,

supra; Jaffe, Judicial Control of Administrative Ac-

tion 405-07 (1965) ; and 1 Davis, Administrative Law

_ ‘Treatise § 5.03 (1965 Pocket Part), criticizing on this .

* . ground American President Lines, Ltd. v. FMC, 316

F. 2d 419 (D.C. Cir. 1963), on which defendants rely.

Neither do we think anything is to be gained by an

attempt at comprehensive review of · the decisions; the

many cases in this area are not truly reconcilable and

the law has been moving in the direction of greater

freedom of review, see Jaffe, supra, at 412-17 (which,

inter alia, eritieizes another decision relied on by de-

fendant, Heleo Prods. Co. v. McNutt, 137 F. 2d 681

(D.C. Cir. 1943)); and 3 Davis, Administrative Lax

Treatise §§ 21.06-21.08 (1958), We limit ourselves to

the two recent Court of Appeals decisions which ‘de-

. ... fendants most strongly urge upon us. 8

Danvuille Tobacco Ass’n v. Freeman, 351 F. 2d 832

(D.C. Cir, 1965), was a rather weak case for declara-

tory relief. ‘The plaintiffs there were neither threat- .

ened with penalties nor, like those in Frozen Food

and here, faced with the need of applying for licenses

to permit contirfiatida of an established business;

moreover, there: was no showing gliat the challenged

regulation was in fact preventing txpansion of their

of n N —

*

5

„the. i

a 1 : : 7 '

operations, since they had filed no applications aX”

petitions by other applicants had been denied on

© ‘grounds other than those attacked. Agreeing with the

defendants that Abbott Labs v. Celebrezze, 352 F. 2d

286 (3. Cir. 1965), cert. granted, is not distinguishable

on any satisfying basis, we must confess, with all re-

- spect, our inability to understand why the plaintiffs

there should be required to violate the challenged .

FDA regulation in order to raise the same legal issue

as to which the district court had granted declaratory

relief. Insofar as the Abbott decision rested on a neg-

tive implication from the limited -review provisions

‘Of the Food and Drug Act, we have we noted our

inability to 3 .

III.

In 8 the — considerations thus devel-

oped to · the previse issues here presented, we must _

bear ingnind that this appeal is not from a declara

tory. ju t but from the denial of a motion to dis- =

miss a complaint seeking oné. The issue on such an-

appeal is not whether the grant of a declaratory |

Judgment was in faet appropriate but whether it so

clearly would not be that dismissal in limine was re

— quired:

the counts of the e —

usion of ed products and color additives

and the alleged ctions of the hair-dye exemption, —

the appeal must fail, These Regulations appear to -

have an immediate impact on the industry, posing the

unacceptable alternatives of complying or of. incur-

ring possible forfeitures: and criminal liability, and N

Calling into question long standing practices of pre- ö 3

marketing testing and clearance. The issues framed

by the counts of the complaint addressed to these

ean — ä suitable for immedi-

*

21a 2

ate judicial resolution and the threatened harm suf.

ficiently great, that the district court properly ge"

elined to dismiss them. If the court should find 1

the issues are not susceptible of resolution without

detailed factual evidence that ought to be first sifted

by the agency, or that measures being taken by the

_ FDA for the listing and exemption from certification

of approval diluents have so reduced the hardship on

the plaintiffs as to make declaratory relief inappro-

Priate, it need not proceed to judgment. But, so far

as we can now see, the souner the industry's claims

as to the coverage of the Act in these respeets are de-

termined, the better for everybody. As said in Jaffe,

Judicial Review of Administrative Action 404 (1965),

“The public has an intérest in early implementation

of policy ; the regulated person has a legitimate inter-

est whether to plan or not to plan his operation.”

Moreover, the party disappointed by court decision

may wish to take the case to Congress. . |

. e fourth count of the complaint, relating to

agency inspection of formulae and processes, stands

differently. Here the challenged regulation, 68.28 (a)

(4), does not of itself demand compliance at the ex-

pense of penalties. A manufacturer who refuses ac-

cess to his trade secrets is not threatened with crim-

' inal liability or seizure; the regulation does not sug-

gest that such refusal will be deemed za “prohibited

act” under the statute, as it would be in the case of

prescription drugs. It simply warns the industry that

the Commissioner may—not that he inevitably will .

consider a refusal to permit such inspection a suffi-

cient cause for suspending certification. Moreover,

the next paragraph 88.29 (b), says that upon receipt

of notice of suspension, the person so notified may re-

quest a hearing upon the factual basis therefor. If -

after such: hearing the Commissionemshould adhere to

‘ * 8

1 ö . : *

0 0 ‘ * b

. a

8 *

8 I K % % · ·· / % ee a ee

his refusal to certify, M ee g

would seem available under §§706(d) and 701 (f); if

not, an action could be brought in the district court.

II this instance the possibility of unlawful - injury

to the plaintiffs is, on its face, too remote for declara- | .

tory relief. No one can nod say whether the Commis

sioner will ever make a demand for free access to

color additive processes or formulae, whether any

manufacturer will ever decline this, What the Com-

ii would do if so refused, and what result a

hearth would have. The fact that the Commission-

er’s proclamation , of the possible consequences of re-

fusal may induce manufacturers to be more mpliant |

than if he liad kept silent until an episode for

action.arose is riot a sufficient basis for declaratory

Belief. Moreover, it Ts impossible to see what declara-

tion a court could properly make. No one could rea-

sonably assert that circumstances warranting suspen-

sion of certification if a manufacturer refused to give :

the FDA information concerning processes. or for-

mulae could never arise; Congress failure to empower

the ageney to compel an inspection of processes of... -

formulae is not a mandate to grant certificates when

the publie cannot properly be protected otherwise.

Revitw of this Regulation should be on a case by case

- basis and with a factual record to assist in determin-

ing whether access to secret processes and formulae is

necessary and appropriate to performance of the tak

of effective premarketing elearance in a particular

instance—at least in the absence of experience *

ing consistent abusive tactiess. ö

The judgment with respect to Count 4 is reversed .

with i ions to grani the motion to dismiss; the

judgm ith respect to Counts 1, 2, and 3 is af

8 firmed, with further proceedings to be promptly taken

t in the district court in accordance with this opinion.

0

ArrN¹⁴ NB

Vi JUDGMENT OF THE CoURT oF APPEALS

Wetec SN For THE SH Crrcurr

*

At @ Stated Term of the United Btates Court of

Appeals, in and for the Sécond Circuit, held at the

United States Courthousé in the City of New York,

on the thirteenth day of April one thousand nine hun-

- dred and sixty-six. | N

Present: Hon. Sterry R. Waterman, Hon. Leonard

e. P. Moore, Hon. Henry J. Friendly, Cireuit Judges.

Tun Toner Goons AssoclaTION, INC., Er Al.,

AntHony J. Cerkerezze, SzcreTary oF HEALTH, Eb o-

mon AND WELFARE, AND GEoRGE P. Larniox, Com-

,MIISSIONER OF Foop aNnD DRuds, DEFENDANTS-

ee : (er. . 8

Appeal from the United States Distriet Court for

the Southern District of New York. a

This cause came on to be heard on the transcript of

record from the United States District Court for the

Southern District of New York, and was argued by

ON CONSIDERATION WHEREOF, it, is now -

hereby ordered, adjudged, and decreed that the order

of said Distriet Court be and it hereby is affirmed as

to the First, Second and Third Counts of the complaint.

oy, 3 3 5

It is further ordered that the order of said District

; Court be and it hereby is reversed as to the Fourth

Count of the complaint with instructiens to grant the

this court.

5 1 DANIEL Pusano,,

_ Clerk.

5

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Pers aie res ata

2

motion to dismiss in aceordanee with the of

2

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*

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8 — — —_— ee —

. ‘. N

part:

e

1

1. The Federal Deeclaratory J ulgment Le 20 28

0 1 O. 2201, provides, in pertinent part;

Creation of remedy

In a case of actual controversy within its

jurisdiction, except witk respect to Federal

— ry" court of the United States, upon the

ling of an appropriate. pleading, may declare

= rights = ae legal relations: of any in-

terested rtx seeking such declaration,

whether or 3 further relief is or — be

sought. * * # 8

Section 10 of the Administrative — A

60 Stat. 243, 5 U.S.C. 1009, * in **

Exedpt 80 a as a) a statutes. 1 judicial

review or (2) ageney action is by law: ‘committed.

to agency -discretion—

(a) Rieut or Review.—Any person’ siiffer- |

ing legal wrong because of any agency action,

or adversely affected or aggrieved by such ac-

tion, within the of any relevant — -

hall be entitled to ju * review thereof.

— AND VENUE oF Acrion.—The form 5

of probeeding for judicial review shall be any

pedal statutory review proceeding 8 to

„AI the subject matter im aby court specified by

v

__ statute or, in the absenée or inadequacy nee

any applicable form of legal action (ineludi

. . actions for declaratory judgmerits or writs o

Prchibitary or mandatory injunction or 4

eorpus) in any court of competent jurisdi

aaa * action shall be e to. iia ne

(ia)

i

4

26a

view in’ civil or criminal proceedings for jndi-

cial enforcement except to the extent that prior,’

adequate, and exclusive opportunity for — .

review is provided by law. 28

(e) REVIEWABLE —Every agency. action

made reviewable by statuts and every: final!

agency action for which there is no other ade-

quate remedy in any court shall be subject to A

„Judicial review. Any preliminary, procedural,

— intermediate ageney action or ruling not di-

reetly reviewable shall be subject to review

4 upon the review of the final ageney action. Ex-

L cept as otherwise expressly required by statute,

+ agency action duties shall be final for

the purposes of this subsection: whether’ or not

there has been presented or determined any ap-

plication for a declaratory order, for any form

‘ z reconsideration, or (unless the agency other ö

N wise requires by rule and p rovides that the a“-Ub

8 tion meanwhile shall be in — for an

8 appeal to superior agency a ;

: . Section 201 (t) (1) of the 1960 “Drug Additive

amendments to the Federal Food; Drug and Cos.

metic Act, 74 Stat. 397, 21 U.S. C. * prom OK

- Vides: ‘3

7 The term “eolor additive” means a material

98 is a dye, nt, or other substance

8 by a process of synthesis or si =

hee, or extracted, isolated, or othe Se eee

— with or without intermediate or ‘nal . ,

of identity, from 4 —— ne

or other source, * = ie

0 When added or 2 to a f

a ek Ce e ede 3

8 thereof, is. ca (alone or through 4 a

‘ei other ). of: imparting color

2 except ‘ha auch n does not iniude any

8 material W the 9 hy —

pstick, rouge, eye makeup colors, and re-

0 8

serve aother functional purpose in the foods,

‘drugs, or cosmetics, as for. example sweetening,

flavoring, emulsifying, or stabilizing, or. may be

a functional, component of an article intended

for coloring the human body. U *

21 C. F. R. 8.1 (u) provides: . a

The “hair dye’? exemption in section 601 (a)

of the act applies to those axticles intended for

use in “altering the color of the hair and which

gare, or which bear or contain, color additives

With the sensitization protential of causing skin

irritation in certain individuals and possible

blindness when used for dyeing the eyelashes |

or eyebrows. The exemption is permitted wit

the condition that the label of any such artiele

bear conspicuously. the statutory caution: and

- adequate ‘directions for preliminary patch-

— in the “hair dye“ is one to which the

caution is. inapplicable and for which. patch-

testing provides no safeguard, the exeniption

does not apply; nor does the exemption extend

to poisonous or deleterious diluents that may be

introduced as wetting agents, hair conditioners, .

. emulsifiers, or other components in a color sham-

rinse, tint, or similar dual-purposé cos-

, a that alter the color of the hair.

21 CFR. 8.28(a) (4). provides:

(a) When it appears to the Cohianiasioner

that a N has:

* 5 22 & * A vay ee

(4) ‘Refused to permit duly authorized em- 8

be of the Food and Drug Administration

access to all manufacturing facilities, proc-

and formulae involved in the manufac-

ture of color additives and intermediates from

which such color additives are derived; he may

immediately suspend certification service to

such n and may continue. Bes suspension

until * ä action been taken.

a ee, d K *

1 we 4 :

« ° 2 —

2.8. GOVERNMENT PRINTING OFFICE: 1966

—— —— —— in NB RN ont —ꝓ — —

2

Also, similar questions of “ripeness” and “justiciabil-

ity’? are involved in Abbott Laboratories v. Gardner,

in which this Court has granted certiorari, 383 U.S.

924, No. 39, this Term. In these circumstances,

while we believe that the court of appeals rendered

the correct decision on the question ‘presented by the

instant petition, we agree that it would be appro-

priate either to defer consideration of this petition /

until after the decision in Abbott Laboratories v.

Gardner. or to grant this petition and our cross-peti-

tion so that the Court may consider the issues pre-

sented in the Farying factual contexts.

sepia submitted. * 9 1

T Un0O00 MARSHALL,

. } . Solicitor General.

Aveust 1966. L ö

— Thbe challenged regulafjon provides that the Food and —_— ä — —

Commissioner may imm ly suspend certification service ~

of a color additive when the manufacturer has “[rJefused to

permit duly authorized employees of the Food and Drug

Administration free access to all manufacturing facilities,

processes, and formulae involved in the manufacturer of color

additives and intermediates from which such color additives

are derived” (21 C. F. R. 828 (4)). The court of appeals held

that review was premature since the regulation “simply warns

the industry that the Commissioner may—not that he inevit-

ably will — consider a refusal to permit such inspection a

sufficient cause for suspending certification” (360 F. 2d at 687)

And since a companion regulation (21 C.F.R. 8.28 (b)) provides

for an administrative hearing on the propriety of the withdrawal

’ of certification. Review may presumably be had in the court of

appeals if the commissioner were to insist upon withdrawing e

8 nn (Pet. App. A, pp. 1-21). ; 8

*

U.S. GOVERNMENT PRINTING OFFICE: 1906

* 4 1

o

— 9