Thomas N. Bulleit, Jr., Public-Private Partnerships in Biomedical Research; Resolving Conflicts of Interest Arising Under the Federal Technology Transfer Act of 1986, 4 J.L. & Health 1 (1989/1990).
In 1991, the Environmental Monitoring Systems Laboratory - Cincinnati ("EMSL-CI") of the Office of Research and Development of the Environmental Protection Agency ("EPA") entered into five CRADAs with industrial organizations pursuant to the FTTA. These CRADAs were designed to continue the efforts of EMSL-CI in distributing reference materials
to government and private organizations for calibration of analytical instruments. In its amended complaint, plaintiff objects to the CRADAs awarded to NSI Environmental Solutions, Inc. ("NSI"), Ultra Scientific and SPEX Industries.
Prior to 1991, EPA ran several programs for the production and distribution of reference materials. Two of these programs were the Repository for Toxic and Hazardous Materials ("RTHM") and the Pesticides Repository. The RTHM materials were solutions of a single organic compound in a solvent. The Pesticides Repository materials were "neat" materials, that is, an undissolved sample of the material. The materials for both the RTHM and Pesticide Repository were produced under a competitive contract between NSI and EPA from approximately 1984 through 1990.
In its amended complaint plaintiff challenges the CRADAs in a number of ways. First, plaintiff contends that the terms of the CRADA with NSI permit the transfer to and distribution by NSI of RTHM inventory prepared under the competitive contract as well as new samples of the same material as were produced under the competitive contract using the same technology as was previously used. Plaintiff contends that this arrangement is essentially a scheme to market government property and since it does not involve research or development it violates the essential purpose of the FTTA as well as the Advertising Act, 41 U.S.C. § 5, the Government Contracts Act, 41 U.S.C. § 35 et seq., the Competition in Contracting Act, 41 U.S.C. § 251 et seq., the Federal Acquisition Regulations, 48 C.F.R. § 1 and the Federal Property Management Regulations, 41 C.F.R. § 101-45.300 et seq. Further, plaintiff alleges that, in violation of the FTTA which forbids Government funding under a CRADA, 15 U.S.C. § 3710a(d), the defendants have continued to pay NSI under the terms of the competitive contract for stability studies and other maintenance of the RTHM inventory. Plaintiff also alleges that permitting NSI to sell the RTHM inventory which was prepared under the competitive contract was an indirect means of providing government funding, again, in violation of the FTTA. Plaintiff's allegations against the SPEX and Ulta CRADAs are similar, although not identical, to those against NSI. For the purposes of this motion we need not detail the distinctions between the claims against each of the defendants.
For a period of time prior to the granting of the CRADAs, the American Association for Laboratory Accreditation ("A2LA"), a private organization, had been developing specifications for reference standards with the EPA Office of Solid Waste Management and EMSL-CI . Plaintiff received accreditation by A2LA and was thereafter permitted to label its products as "A2LA Certified." Plaintiff contends that in order to obtain and maintain its accreditation by A2LA it was and is required to submit to rigorous testing by independent laboratories, inspections by A2LA and obtain reference testing of all lots of materials produced as "A2LA Certified."
On June 18, 1991 EMSL-CI entered into a Memorandum of Understanding ("MOU") with A2LA in which EMSL-CI and A2LA agreed that the certification programs run by each party to the MOU would contain equivalent technical specifications. These specifications were later finalized in documents known as the Specifications for Synthetic Reference Materials ("RM-02 Specs") and the Specifications for Neat Reference Materials ("RM-01 Specs"). Plaintiff alleges that the MOU commits the EPA to allowing the use of the words "EPA Certified" to be applied to reference materials which meet the same technical specifications as "A2LA Certified" standards. Yet, plaintiff contends, EPA allows NSI, Ultra and SPEX to label RTHM and Pesticides materials as "EPA Certified" even though they were not produced according to the RM-01 or RM-02 Specs.
A court may grant a motion to dismiss in accordance with Fed.R.Civ.P. 12(b)(6) if it appears beyond a doubt that the plaintiff can prove no set of facts to support the relief requested. Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Pennsylvania ex rel. Zimmerman v. Pepsico, Inc., 836 F.2d 173, 179 (3d Cir. 1988). In deciding a motion to dismiss, the court must accept as true all well plead factual allegations of the non-moving party, and must view all inferences in the light most favorable to that party. H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249-50, 106 L. Ed. 2d 195, 109 S. Ct. 2893 (1989); Rocks v. Philadelphia, 868 F.2d 644, 645 (3d Cir. 1989).
In support of their motion to dismiss, defendants advance essentially three arguments. First, defendants contend that plaintiff does not have standing to challenge any action taken by the EPA or EMSL-CI because it is not within the "zone of interest" to be protected or regulated by the statute in question. Second, defendants contend that because plaintiff is not a party to the Memorandum of Understanding between EMSL-CI and A2LA, it does not have standing to contend that it has been violated. Lastly, defendants argue that plaintiff is not entitled to judicial review because the matter has been committed to agency discretion. In the alternative, defendants argue that this court's review should be restricted to the administrative record.
The statutory basis for plaintiff's standing to challenge the CRADAs is the Administrative Procedures Act ("APA") which provides:
A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.
5 U.S.C. § 702.
In order to have standing to challenge agency action the plaintiff must show not only the elements necessary under Article III § 2 of the Constitution,
but he must also satisfy the requirements of what is known as prudential standing which denies standing as a matter of judicial prudence rather than Constitutional restraint. 13 Wright, Miller & Cooper, Federal Practice and Procedure § 3531.7. Under the APA, in order to have prudential standing the plaintiff must show that his interests are arguably within the zone of interests intended to be protected by the statute or constitutional provision on which the claim is based. Specter v. Garrett, 971 F.2d 936, 942 (3d Cir. 1992) citing Association of Data Processing Service Orgs. Inc. v. Camp, 397 U.S. 150, 90 S. Ct. 827, 829-30, 25 L. Ed. 2d 184 (1970). Although there is a presumption provided by § 702 that Congress intended agency action to be subject to judicial review, Clarke v. Securities Industry Ass'n, 479 U.S. 388, 107 S. Ct. 750, 755 & 757, 93 L. Ed. 2d 757 (1987), that presumption may be overcome by express statutory language, the statute's legislative history, its objectives or the legislative scheme as a whole. Block v. Community Nutrition Institute, 467 U.S. 340, 104 S. Ct. 2450, 2456-57, 81 L. Ed. 2d 270 (1984); Specter v. Garrett, 971 F.2d 936, 956 (3d Cir. 1992) (Alito, J. concurring in part and dissenting in part). Further-more, when considering the issue of standing under § 702 of the APA, the statute which must be examined is "the statute whose violation is the gravamen of the complaint." Lujan v. National Wildlife Federation, 497 U.S. 871, 110 S. Ct. 3177, 3187, 111 L. Ed. 2d 695 (1990); see also Air Courier Conference v. American Postal Workers Union, 498 U.S. 517, 111 S. Ct. 913, 920, 112 L. Ed. 2d 1125 (1991); District 2, Marine Engineers Beneficial Association v. Burnley, 936 F.2d 284, 286 (6th Cir. 1991). Indeed, as a result of this additional standing requirement, not all those who are injured by wrongful agency action are permitted to sue to redress that injury. North Shore Gas, Co. v. E.P.A., 930 F.2d 1239, 1242 (7th Cir. 1991).
In the case at hand, plaintiff claims that its injuries stem primarily from its position as a competitor of NSI, Ultra and SPEX for the production, distribution and sale of reference, neat and inorganic materials. Relying upon the language in Clarke, which suggests that the zone of interest test permits that standing be determined by examination of any statute upon which plaintiff relies for relief, plaintiff urges this court to look toward the federal procurement laws to determine plaintiff's standing. 107 S. Ct. at 758. However, as explained in the subsequent Supreme Court decision Air Courier Conference, Clarke merely permits the courts to look beyond the statute which is the focus of the complaint in order to better understand the overall purpose of that statute. Air Courier Conference, 111 S. Ct. at 920. In short, plaintiff's complaint alleges that the CRADAs at issue in this case are violative of the FTTA and therefore the agency action should have been subject to the competitive bidding process as outlined in the federal procurement laws. Plaintiff's complaint rests upon the FTTA and the means by which the EPA awarded these CRADAs thereunder. Thus, our analysis must turn to whether a competitor such as plaintiff is arguably within the zone of interest intended to be protected by the Federal Technology Transfer Act.
After a careful review of the language of the FTTA, its purpose and its legislative history, we conclude that although plaintiff may have been injured in fact it is not a party that was meant to fall within the Act's ambit of protection and, therefore, plaintiff lacks standing to bring this action.
Although plaintiff challenges the CRADAs which by definition are primarily concerned with research and development, the CRADAs are merely a means of implementing the FTTA. Thus, our review begins with the origins of the Act. The impetus for this Act was Congressional concern that although the Federal laboratories possess vast resources and superior scientific expertise and develop a large number of inventions, only five percent of the Federally owned patents were ever utilized. New Technologies on Economic Competitiveness: Hearings before the Subcomm. on Science, Technology and Space, 99th Cong., 1st Sess. 3 (1985) (statement of Senator Hollings); S. Rep. No 283, supra. (Report of Sen. Danforth) (in 1986 the federal laboratories employed one-sixth of the nation's scientists and engineers and produced over 28,000 patents yet only approximately five per cent of those patents were ever utilized).
The FTTA was passed to further the intent of the Stevenson-Wydler Technology Innovation Act of 1980 (Pub.L. 96-480) which made the "transfer of Federal Technology to industry, States, and localities a national policy and duty of each laboratory." S. Rep. No. 283 supra. at 3; see also S. Rep. No. 283 supra. at 5 (FTTA intended to "improve the technology transfer provisions of the Stevenson-Wydler Act . . . by bringing them into conformity with actual practice."). Despite the passage of the Stevenson-Wydler Act, Federal laboratories still refrained from entering into cooperative agreements with industry because of organizational and legal restraints. The Stevenson-Wydler Innovation Act; Report to the President and Congress from the Secretary of Commerce ; February 1984, p. 24 quoted in S. Rep. No. 283 supra. at 4; Vol. 131 Cong. Rec. 35823 (daily ed. Dec. 10, 1985) (statement of Cong. Marilyn Lloyd). Senator Danforth, as Chairman of the Committee on Commerce, Science and Transportation, stated that
The Bill would amend the Stevenson-Wydler Technology Innovation Act of 1980 and would establish a number of procedures to encourage the development of technologies by labor-atories owned or operated by the federal government, to facilitate the transfer of such technologies to the public, and to promote cooperation between those laboratories.