UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
filed: March 20, 1991.
HANOVER POTATO PRODUCTS, INC., NATIONAL COALITION OF FRESH POTATO PROCESSORS, ENDICO POTATOES, INC., PRE-PEELED POTATO CO., INC.,
LOUIS SULLIVAN, M.D., SECRETARY OF HEALTH AND HUMAN SERVICES, JAMES S. BENSON, ACTING COMMISSIONER OF FOOD AND DRUGS, APPELLANTS
On appeal from the United States District Court for the Middle District of Pennsylvania; D.C. No. 1:CV-90-0746.
Sloviter and Mansmann, Circuit Judges, and Sarokin, District Judge*fn*
Opinion OF THE COURT
The issue before the court is whether the Food and Drug Administration's final rule barring the sale of "fresh" potatoes treated with sulfites should be invalidated because large portions of the administrative record upon which the FDA based its decision were not available for public review during the notice and comment rulemaking period.
Factual and Procedural Background
The decision to impose a regulatory ban on the use of sulfites to preserve fresh potatoes*fn1 grew out of an FDA inquiry into health and safety problems caused by the use of sulfites as food preservatives. In 1985 the Federation of American Societies for Experimental Biology issued an FDA-commissioned report stating that use of sulfites on fresh fruits, vegetables, and potato products had posed serious health risks to approximately one million sulfite-sensitive individuals. In the same year, an FDA ad hoc advisory committee reached a similar conclusion and recommended that the FDA prohibit the use of sulfites on fresh potatoes and raw fruits and vegetables. The FDA also analyzed sulfite-related consumer complaints and its own follow-up reports. Based upon this information, the FDA concluded that "a consensus no longer exists among qualified experts that this use of sulfiting agents is safe." 52 Fed. Reg. 9826 (Mar. 15, 1990).
In 1986 the FDA adopted a regulation requiring the labels on packaged and labeled foods containing detectable amounts of sulfites to indicate the presence of sulfites. Also in 1986 the FDA revoked the "Generally Recognized As Safe" (GRAS) status of unpackaged fruits and vegetables (not including potatoes) that are sold raw or presented to the consumer as fresh, such as in a restaurant or at a salad bar.
In 1987, the FDA determined to extend its regulatory ban to the fresh potato industry. On December 10, 1987, the FDA, acting pursuant to its notice and comment rulemaking authority, announced in the Federal Register a proposed regulation revoking the GRAS status of fresh potatoes containing sulfites and banning the use of sulfiting agents on fresh potatoes. The FDA concluded that a ban was necessary in that there was no established safe minimum sulfite level, and the danger that restaurant and food-service patrons would unknowingly consume sulfite-treated fresh potatoes could not be addressed adequately by reliance on written warnings or those warnings which might be communicated by restaurant personnel. The ban was scheduled to take effect on April 16, 1990.
In accordance with 21 C.F.R. 10.40(c)(2), which requires that in a notice and comment rulemaking proceeding, the decision of the Commissioner "will be based solely upon the administrative record,"*fn2 the FDA, in its notice announcing the proposed regulation, indicated that the documents relevant to the determination to ban the use of sulfites on fresh potatoes were on file with the FDA's Dockets Management Branch. 52 Fed. Reg. 46968, 46970 (Dec. 10, 1987).*fn3
The plaintiffs, the National Coalition of Fresh Potato Processors, which includes approximately 100 potato processing companies, and three of its individual members, participated in the notice and comment process; each individual plaintiff submitted citizen petitions and the coalition, on behalf of its members, submitted comments. It is undisputed that during the notice and comment period, none of the plaintiffs visited the Dockets Management Branch in order to examine the administrative record said to have been compiled by and relied on by the FDA in promulgating the rule banning sulfites in the processing of fresh potatoes.
On April 11, 1990, the plaintiffs filed suit for declaratory judgment and injunctive and mandatory relief in the United States District Court for the Middle District of Pennsylvania, challenging the proposed sulfite ban and seeking a temporary restraining order preventing the ban from taking effect.
The plaintiffs' primary challenges to the regulation centered upon allegations that the ban on the use of sulfites to preserve fresh potatoes was unfair in that the use of sulfites in processing other types of potatoes and in other products, such as shrimp, was unaffected. The plaintiffs also alleged that the sulfite ban was based upon unreasonable and unsupported assumptions concerning the behavior of consumers, especially those who know themselves to be sulfite-sensitive and was based, too, upon the conclusion, not rationally supported by the record, that there were a number of viable sulfite alternatives. Other challenges to the proposed ban included allegations that the FDA had ignored citizen petitions filed with the agency and had violated its own regulations in failing to respond to these petitions, that public health risks would be created by the use of sulfite alternatives, that the FDA had failed to issue or rule upon a request for a mandatory stay of the ban, and that the agency had failed to take into account the fact that the ban would "destroy" the fresh potato industry. The plaintiffs alleged that, in light of these factors, the FDA's adoption of the final regulation was "arbitrary, capricious, otherwise not in accordance with law, and without observance of procedure required by law, in violation of the [Administrative Procedure Act], 5 U.S.C. § 706. . . ."*fn4
Finally, the plaintiffs challenged the FDA's failure to consider the plaintiffs' petition for reconsideration, asking that the agency repeal the final rule or permit the use of sulfites at a reduced level. The plaintiffs noted in the complaint that they had "submitted this petition [for reconsideration] notwithstanding the fact that the plaintiffs had been unable to obtain from the FDA a complete copy of the administrative record. When the petition was submitted, FDA had provided only 46 of 83 volumes of the record and . . . the entire record has still not been provided." The FDA's failure to grant the petition for reconsideration was also alleged to violate 5 U.S.C. § 706.
On April 13, 1990, the district court issued a temporary restraining order enjoining the FDA from enforcing the sulfite ban until April 25, 1990, when a hearing on the motion for preliminary injunction was scheduled to take place. On May 1, 1990, the district court issued a memorandum and order vacating the temporary restraining order and denying the plaintiffs' motion for a preliminary injunction. The court concluded that the FDA "has complied with the prescribed administrative procedures for promulgating a regulation which prohibits its future use.
On May 2, 1990, the plaintiffs filed a motion seeking reconsideration of the May 1 order vacating the temporary restraining order and denying the motion for preliminary injunction. The plaintiffs argued that they could not find support for the sulfite ban in the 83 volume administrative record. The plaintiffs also filed a notice of deposition seeking to examine the FDA regarding the "procedures, analyses, and records used to promulgate FDA's final rule. . . ." The FDA opposed discovery on the ground that all of the information sought was already available in the "administrative record upon which FDA based its action." A protective order was requested and granted.
On May 17, 1990, the complexion of this case changed when, in a response to the plaintiffs' motion for reconsideration, the FDA asserted that "the administrative record is still being assembled" and that "[a] number of documents that form part of the [administrative] record . . . were on file at FDA's Center for Food Safety and Applied Nutrition."
In a May 24, 1990 order, the district court ordered the FDA to assemble the "true" administrative record and to reference those portions of the record containing (1) evidence regarding the danger of botulism linked with certain sulfite alternatives; (2) the scientific data relied upon by the FDA linking health threats to sulfite-treated fresh potatoes; and (3) evidence upon which the FDA relied in formulating its conclusions as to the behavior of sulfite-sensitive individuals. The plaintiffs' challenge to the fresh potato rule was based on these three categories of evidence.
The FDA ultimately certified 42 volumes of documents which it identified as the administrative record. The court-requested references were made. After reviewing the "true" record, the plaintiffs calculated that 63 percent of the documents contained in the 42 volumes were not contained in the original 83 volume record on file with the FDA's Dockets Management Branch and that 91 percent of the referenced documents alleged by the plaintiffs to be crucial to their challenge had not been made available at Dockets Management.*fn5
On June 21, 1990, the district court issued an order stating that it intended to grant summary judgment sua sponte in favor of the plaintiffs. "[The FDA] has failed to adequately rebut or explain its gross disregard of the filing requirements . . . . Given the unrefuted statistics presented by plaintiffs . . . . the agency acted arbitrarily and capriciously in adopting [the] regulation when a large percentage of its supporting evidence was not on file." Hanover Potato Products, Inc. v. Sullivan, C.A. No. 1:CV-90-0746, slip op. at 4-5 (June 21, 1990). Following additional briefing, on August 3, 1990, the district court granted summary judgment sua sponte to the plaintiffs. This appeal followed.
In order to assess the plaintiffs' argument that the FDA's action should be set aside as arbitrary and capricious under 5 U.S.C. § 706 of the APA, it is necessary that we re-examine the text of the relevant regulations applicable to the FDA's informal rulemaking procedure. The parties agree that the district court's determination in this case is reviewable de novo by this court.
The Code of Federal Regulations effectuates the Administrative Procedure Act's procedural requirements for rulemaking by providing that the FDA must conduct notice and comment rulemaking before publishing regulations. 21 C.F.R. § 10.40(b). The regulations further provide that the agency must place the record upon which it bases its decision on public display for review and comment during the rulemaking period. The agency is required to place copies of the materials upon which it relies at the Dockets Management Branch or provide a full list of references which are made part of the docket file on the matter in the Office of the Dockets Management Branch. 21 C.F.R. § 10.40(b)(1)(vii), (g)(3). A regulation by the agency "will be based solely upon the administrative record." 21 C.F.R. § 10.40(c)(2). Under Supreme Court doctrine, the FDA is required to follow its own regulations. Morton v. Ruiz, 415 U.S. 199, 235 (1974).*fn6
In the instant case, defendant argues that it fulfilled the requirements of the regulation. The debate between the parties is focused upon the meaning of the term "administrative record." As we have noted, administrative record is defined in 21 C.F.R. § 10.40(g) as encompassing "the proposed rule published in the Federal Register, including all information identified or filed by the Commissioner with the Dockets Management Branch on the proposal." Defendant argues that it "identified" the documents sufficiently to satisfy the requirements of the regulation by discussing the documents omitted from the public file in the preamble to the proposed rule. See 52 Fed. Reg. 4,6970-72 (Dec. 10, 1987).
Defendant contends that the agency's interpretation of its own rule should be given deference. Even if the regulation is interpreted to allow for the identification rather than display of documents in the public record, however, the FDA did not sufficiently identify the documents. Although the FDA's notice did state that the FDA received "complaints from approximately 1,400 consumers who reported adverse responses after eating food known or suspected to contain sulfiting agents," 52 Fed. Reg. 46970 (Dec. 10, 1987), it did not identify each such complaint or the follow-up letters anywhere in the public record, and did not inform the public that they were retained in non-public offices. The public had no way of knowing where to find the documents, or even of their existence.
The FDA also calls the court's attention to the agency statement in 1978 that
While most documents [on which the Commissioner relies to support the agency's decision] would be filed in the hearing clerk's office, the definition is intended to permit the inclusion in the administrative record of documents that are in the possession of the agency but which for some reason (e.g., inadvertence, . . . ) may not have routinely been included in the file on the matter in the office of the hearing clerk.
43 Fed. Reg. 51966-67 (Nov. 7, 1978). This statement acknowledges that "most" of the documents should be on public file; here, 63% of the documents were omitted. Further, as the district court found, this omission cannot be excused as mere "inadvertence." See Hanover Potato Products, Inc. v. Sullivan, C.A.No. 1:CV-90-0746, slip. op. at 5 (M.D. Pa. Aug. 3, 1990). Thus, there was ample basis for the district court to have concluded that the FDA failed to meet the requirements of the rule.*fn7
Having established that the FDA failed to comply with its own regulation in promulgating the sulfite ban, we next address the issue of remedy. While it conceded that a large portion of the administrative record underlying the sulfite ban was not available for public inspection, the FDA argues that the district court erred in automatically invalidating the rule. The agency contends that because no representative of plaintiffs sought to inspect the omitted documentation during the comment period, or to inspect even that documentation which was publicly available, the plaintiffs could not have been misled by the incomplete record and, therefore, could not have been harmed.
In view of the unique facts of this case, the FDA suggests that we adopt a remedy less drastic than complete invalidation of the sulfite ban. In order both to protect the public safety and to accommodate the plaintiffs' concerns regarding the omitted material, the FDA has offered to have the validity of the sulfite ban tested against the limited record which was made available to the public. The court will accept that proffer. Accordingly, we will remand this case to the district court for a determination of the validity of defendant's final rule on the basis of only those documents placed on public display at FDA's Dockets Management Branch by the close of the notice and comment period.
In accepting the FDA's proffer and remanding for an evaluation of the rule based upon the portions of the administrative record that were publicly available, the court does not intend to condone the agency's failure to make the entire record available for public inspection. By availing itself of FDA's suggestion, the court appropriately restricts the agency to the public record and simultaneously eradicates any prejudice to the plaintiff.
Both the statute and the regulations provide the public with the opportunity to review, comment upon, and if appropriate challenge the evidentiary basis for a proposed agency rule. To fail to provide the public with access to the underlying information is to defeat the very purpose of the prescribed procedure.
In addition to this strong public policy in favor of agency disclosure in rulemaking proceedings, there is an equally strong public policy of protecting the public health. To require the agency to commence the administrative procedure anew would greatly delay its final determination; to permit it to proceed based solely upon the public record will serve to expedite the proceeding, eliminate any prejudice which may exist, and protect the public health, if it is ultimately found to need protecting.
For the foregoing reasons, the district court's order will be vacated and remanded for further proceedings consistent with this opinion.