American Vanguard Corporation v. Jackson , 803 F. Supp. 2d 8 ( 2011 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
AMERICAN VANGUARD CORPORATION, )
)
Plaintiff, )
)
v. ) 10-cv-1459 (RCL)
)
LISA JACKSON, Administrator, United )
States Environmental Protection Agency, et al., )
)
Defendants. )
)
MEMORANDUM OPINION
I. INTRODUCTION
Last Autumn, the U.S. Environmental Protection Agency (“EPA” or the “Agency”)
issued a Stop Sale, Use or Removal Order (“SSURO”) to plaintiff American Vanguard
Corporation (“AMVAC”). The SSURO instructed AMVAC to cease the manufacture and
distribution of a pesticide marketed by the company to golf courses throughout the United States,
and mandated that the company destroy all remaining stockpiles of the product. EPA insists that
AMVAC was selling a pesticide that deviated from the formula registered with, and approved
by, the Agency. AMVAC, however, protests that EPA has known about the full chemical
composition of the pesticide since 1993, and has repeatedly approved the distribution of the
product in its current state. Wherever the truth lies, one fact is beyond dispute: the SSURO was
signed by Rosemarie A. Kelley, the Director of the Agency’s Waste and Chemical Enforcement
Division (“W&C Division”). AMVAC argues that Director Kelley lacks legal authority to issue
the SSURO, rendering the Agency’s action legally infirm. The Court agrees, and will therefore
vacate the SSURO and remand this matter to EPA for additional proceedings.
II. BACKGROUND
The Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA” or the “Act”), 7
U.S.C. §§ 136 et seq., governs the manufacture and sale of various potentially toxic agricultural
products by mandating that “no person . . . may distribute or sell to any person any pesticide that
is not registered.” Id. § 136a(a). Under the FIFRA, EPA is charged with maintaining and
enforcing a licensing scheme for all products that meet the statutory definition of “pesticide”
found in § 136(u) of the Act. Id. As part of this process, EPA regulations instruct that any entity
wishing to register a pesticide must furnish the Agency with certain information, including the
identification of any “[i]mpurities of toxicological significance associated with the active
ingredient.” 40 C.F.R. § 158.320(c).
AMVAC, a manufacturer and distributor of various agricultural products, markets a
pesticide product whose active ingredient is Technical Grade PCNB.1 The product—which has
been a registered pesticide under the FIFRA since October 9, 1985, P’s App. 108, Ex. 3 to
Motion for Summary Judgment, Oct. 15, 2010 [17-3]2—prevents the accumulation of “snow
mold,” and is sold primarily to golf courses for use on fairways and greens during the winter
months. Id. at 332. In 1993, AMVAC discovered that an impurity—referred to as Impurity
X3—is created during the manufacturing process for Technical Grade PCNB, and remains part of
the product sold by the company. Id. at 83. Both sides agree that AMVAC immediately
reported the presence of Impurity X to EPA, Answer ¶ 16, Oct. 26, 2010 [18]; at this point,
however, their stories diverge. According to AMVAC, EPA designated the information for a
1
PCNB is shorthand for the chemical compound pentachloronitrobenzene.
2
AMVAC has submitted an extensive appendix of material outside EPA’s official administrative record to
the Court, all of which is Bates stamped “AMVAC -----.” Citations to this record are to “P’s App.”
3
According to AMVAC, the identity of Impurity X constitutes confidential business information,
Complaint ¶ 27 n.2, Aug. 27, 2010 [1], and thus AMVAC uses the pseudonym “Impurity X” throughout its
briefings. Because EPA does not object to the use of a pseudonym at this time, Answer ¶ 27 n.1, Oct. 26, 2010 [18],
the Court will adhere to this adopted convention.
2
“routine non-expedited review,” P’s App. 112, and—over the next fifteen years—repeatedly
approved updates and amendments to the Technical Grade PCNB formula registered with the
Agency without ever questioning the omission of Impurity X from AMVAC’s submissions. Id.at 113–19. According to EPA, however, it was never aware that Impurity X was present in
manufactured Technical Grade PCNB in all instances, and only became aware of potential
problems with the composition of the product as marketed after the results of studies in both
Australia and Canada were made public in late 2009. But in whatever manner the parties arrived
at this point, the following is clear: On August 12, 2010, the Director of EPA’s W&C Division
sent an SSURO concerning Technical Grade PCNB to AMVAC. Id. at 68–74. The SSURO
instructs AMVAC to “cease the distribution, sale, or use of Technical Grade PCNB” and all
related products, and demands that the company “submit a written proposal for proper
disposition of all violative pesticide products.” Id. at 73. According to the SSURO, the presence
of Impurity X in tested samples of AMVAC’s Technical Grade PCNB products alerted EPA to
the possibility that the version of the pesticide sold publicly by AMVAC differs chemically from
the formula registered with the Agency, in violation of the FIFRA. Id. at 72.
Shortly after EPA issued the SSURO, AMVAC brought suit in this Court seeking a
temporary restraining order, preliminary injunction, and permanent injunction barring the
Agency from blocking AMVAC’s manufacture and distribution of Technical Grade PCNB.4
Motion for Preliminary Injunction and Temporary Restraining Order, Aug. 27, 2010 [2]. At a
hearing less than a week later, the Court denied AMVAC’s request for a TRO, Minute Entry,
Sep. 2, 2010, and the parties subsequently agreed to merge the preliminary injunction and merits
portions of this dispute. Status Report, Sep. 7, 2010 [11]. Following an agreed-upon schedule,
4
In addition to EPA, Lisa Jackson is also named as a defendant in her official capacity as the Administrator
of the Agency.
3
AMVAC moved for summary judgment, Motion for Summary Judgment, Oct. 15, 2010 [17]
(“P’s Mtn.”), arguing that EPA’s decision to issue the SSURO was inconsistent with the FIFRA,
contrary to various requirements set forth in the Administrative Procedure Act (“APA”), and in
violation of AMVAC’s Fifth Amendment due process rights. Id. EPA subsequently cross-
moved for judgment, Cross-Motion for Summary Judgment, Nov. 10, 2010 [23],5 and the
competing motions were fully briefed by the end of 2010.6 For the reasons set forth below, the
Court finds that EPA’s issuance of the SSURO is contrary to law in violation of the APA, and
therefore vacates the SSURO and remands this matter to the Agency.
III. DISCUSSION
A basic prerequisite to any act by a federal agency is that the agency possesses actual
legal authority to undertake such action. FDA v. Brown & Williamson Tobacco Corp., 529 U.S.
120, 132–33 (2000). As a general matter, this authority often comes via a federal statute that
delegates certain legislative and executive functions to the agency. But the requirement that the
actor possess legal authority also trickles down to particular agency officials: “When a statute
delegates authority to a federal officer or agency, subdelegation to a subordinate federal officer
or agency is presumptively permissible.” U.S. Telecom Ass’n v. FCC, 359 F.3d 554, 565 (D.C.
Cir. 2004). A necessary corollary to this principle is that the particular official acting on behalf
of the agency must have been delegated the authority to act; otherwise such agency action is
invalid. Ctr. for Auto Safety & Pub. Citizen, Inc. v. Nat’l Highway Traffic Safety Admin., 452
F.3d 798, 810 (D.C. Cir. 2005); Flav-O-Rich, Inc. v. NLRB, 531 F.2d 358, 363 (6th Cir. 1976);
5
In addition to the merits dispute, EPA also moves to strike certain documents submitted by AMVAC in
support of its motion for summary judgment. Motion to Strike, Nov. 10, 2010 [24]. In response, AMVAC moves
the Court to consider extra-record evidence or, in the alternative, to supplement the administrative record. Motion to
Consider Extra-Record Evidence, Nov. 29, 2010 [26]. Because the resolution reached by the Court today does not
turn on any of the documents disputed by the parties, the Court will deny both motions as moot.
6
This case was transferred by consent from Judge Roberts to Chief Judge Lamberth in May of this year.
Reassignment of a Civil Case, May 5, 2011 [43].
4
Pa. Mun. Auths. Ass’n v. Horinko, 292 F. Supp. 2d 95, 104 (D.D.C. 2003); see also Hazardous
Waste Treatment Council v. Reilly, 938 F.3d 1390, 1394 (D.C. Cir. 1991) (holding that agency
action is final—and thus has legal effect—only if taken by officials possessing properly
delegated authority). Thus, a court may uphold agency action only where the record establishes
that the official who took such action was authorized to do so. See, e.g., East Hartford v. Harris,
648 F.2d 4, 6 (D.C. Cir. 1980); Globe, Inc. v. Fed. Home Loan Bank Bd., 471 F. Supp. 1103,
1104–06 (D.D.C. 1979); Marimont v. Califano, 464 F. Supp. 1220, 1223 n.5 (D.D.C. 1979).
And these principles hold true for any federal statute, including the FIFRA.7 See Pac. Constr.
Co. v. Branch, 428 F.Supp.2d 727, 728 (D. Guam 1976) (denying local entity authority to
enforce terms of FIFRA absent proper delegation by EPA Administrator under 7 U.S.C. § 136t).
AMVAC argues that the official who signed the SSURO—in this instance, the Director
of the W&C Division—did not possess properly delegated authority, rendering the agency’s
action invalid. P’s Mtn. 29 n.20. To support this contention, AMVAC submits an internal EPA
memorandum in which the Assistant Administrator for Enforcement and Compliance Assurance
delegates authority under the FIFRA—including the power to issue SSUROs—to the Director of
the Toxics and Pesticides Enforcement Division (“T&P Division”). P’s App. 132. Perhaps
owing to the relegation of this argument to a brief footnote in a 44-page brief, EPA did not
respond to AMVAC’s position concerning Director Kelley’s authority to issue the SSURO at
issue—an omission that naturally led the company to expand the argument on reply, and to insist
that EPA waived any objection to vacating the SSURO. Reply in Support of Motion for
Summary Judgment 44–45, Nov. 29, 2010 [27]. EPA—conceding that it may have “misjudged”
the importance of this issue, Reply in Support of Cross-Motion for Summary Judgment 12–13,
7
The FIFRA provides: “All authority vested in the Administrator by virtue of the provisions of this
subchapter may with like force and effect be executed by such employees of the [EPA] as the Administrator may
designate for the purpose.” 7 U.S.C. § 136t(a).
5
Dec. 17, 2010 [31] (“Cross-Mtn. Reply”)—finally addresses the matter of delegation in its own
reply brief, submitting three documents which, according to the Agency, permit the Court to
trace the power to issue SSUROs from the EPA Administrator to the Director of the W&C
Division. Id. at 13. In light of this new evidence, AMVAC submits—without objection from the
Agency—a surreply on the delegation question. Surreply in Support of Motion for Summary
Judgment 2–4, Feb. 23, 2011 [37]. In its surreply, AMVAC makes three arguments: first, EPA
waived any opportunity to respond to the delegation argument, id. at 2–4; second, two of the
documents submitted by the Agency are not official agency materials and thus not subject to
judicial notice, id. at 5–6; and third, the three documents submitted do not, as a factual matter,
establish that the Director of the W&C Division properly possesses authority under the FIFRA to
issue the SSURO giving rise to this suit. Id.
The first two of these arguments may be disposed of easily. While it is true that an
argument not raised by a party in the next available briefing is generally waived, it is equally true
that the animating purpose of this principle is the inability of the opposing party to respond to
such arguments. See EDF, Inc. v. Costle, 657 F.2d 275, 284 n.32 (D.C. Cir. 1981) (expressing
concern that failure to strike new arguments would leave defendants without “a full and fair
opportunity to adequately respond to [the] later arguments”). But in this instance EPA consented
to the surreply, and thus AMVAC cannot be heard to complain that it did not have a genuine
chance to address the record of delegation set forth by EPA on reply. See Wultz v. Islamic
Republic of Iran, 755 F. Supp. 2d 1, 37 (D.D.C. 2010) (noting that filing of surreply “effectively
negated the policy reasons for not allowing consideration of the new argument”). And as for
AMVAC’s second argument, while the Court may not be capable of taking judicial notice of
some documents submitted by EPA, the relevant standard on summary judgment is not whether a
6
particular document is subject to judicial notice, but rather whether it is capable of being
converted into admissible evidence. Fed. R. Civ. P. 56. In this instance, EPA submits internal
documents that can presumably be authenticated if necessary and therefore constitute admissible
evidence of any delegation of authority within the Agency. Wolf v. CIA, 473 F.3d 370, 375 n.5
(2007). Having disposed of AMVAC’s two procedural objections, the Court now turns to the
merits of this dispute.
The question at the heart of this debate—whether the evidence submitted by EPA
establishes that the Director of the W&C Division possesses the authority necessary under the
FIFRA to issue the SSURO, P’s Mtn. at 29 n.20—is no small matter. As one district court
observed, “once a regulation has been issued delegating power from one officer to a subordinate,
the former may not thereafter invoke the delegated power himself, at least not as long as the
regulation remains in effect.” Black v. Snow, 272 F. Supp. 2d 21, 26 (D.D.C. 2003); see also
C&W Fish Co. v. Fox, 931 F.2d 1556, 1560 (D.C. Cir. 1991) (rejecting agency’s arguments that
authority is inherently retained in official that delegates such authority to subordinate). This
principle follows naturally from the well-established rule that “regulations validly prescribed by
a government administrator are binding upon him as well as the citizen.” Service v. Dulles, 354
U.S. 363, 372 (1957) (describing Supreme Court’s earlier holding in Accardi v. Shaughnessy,
347 U.S. 260 (1954); emphasis added); see also Black, 272 F. Supp. 2d at 26 n.5 (“This doctrine
both derives from and embodies the general principle that agencies are obligated to follow their
own regulations.”) (citing Parson v. Dep’t of Air Force, 707 F.2d 1406, 1413 n.13 (D.C. Cir.
1983)). Thus where an agency official delegates authority to a subordinate, the official binds
himself by such delegation and may not exercise such powers absent express retention of them.
Cf. C&W Fish Co., 931 F.2d at 1559–60 (relying on express reservation of authority to permit
7
intervening action by higher-ranking agency official). As a result, the fact that Congress
generally gave EPA the authority to monitor and enforce compliance with the FIFRA does not
absolve the Agency of its obligation to ensure that the official responsible for issuance of an
SSURO properly possesses the statutory right to take such action. Absent evidence of such
authority, issuance of the SSURO is not “in accordance with law” under the APA, 5 U.S.C. §
706(2)(A), and is therefore invalid.
EPA submits three documents to support its contention that the Director of the W&C
Division possesses authority to issue SSUROs under the FIFRA. The first document, dated May
11, 1994 and included in EPA’s Delegations Manual, authorizes “Regional Administrators and
[the] Assistant Administrator for Enforcement and Compliance Assurance” to “issue stop sale,
use, or removal orders as provided in the [FIFRA].” Ex. A to Cross-Mtn. Reply, Dec. 17, 2010
[31-1]. The second document, which AMVAC also submitted, is an EPA memorandum dated
August 2, 1994 and titled “Redelegation of Stop Sale, Use or Removal Order Authority.” Ex. B
to Cross-Mtn. Reply, Dec. 17, 2010 [31-2]. According to this memorandum, the Assistant
Administrator for Enforcement and Compliance Assurance redelegated the power to issue
SSUROs under the FIFRA to the Director of the T&P Division. Id. EPA’s final submission is
not a single document, but rather a collection of internal memoranda and forms detailing a
merger of several Divisions within the Agency. See generally Ex. C to Cross-Mtn. Reply, Dec.
17, 2010 [31-3] (“Merger Docs”). The Functional Statement included in these records states that
the realignment created the W&C Division, which is made up of three Branches—the Waste
Enforcement Branch, the Pesticides and Tanks Branch (formerly the T&P Division), and the
Chemical Risk and Reporting Branch—each of which was previously an independent Division.
Id. at 11–13. According to EPA, the responsibilities of the Director of the T&P Division,
8
including authority under the FIFRA, were transferred to the Director of the new W&C
Division—who signed the SSURO—as a result of the realignment. Cross-Mtn. Reply at 13.
Having reviewed these records, the Court finds nothing in the documents submitted by
EPA to establish any transfer of FIFRA-related authority to the Director of the W&C Division.
Though some overlap between the former Divisions existed before the merger, the documents
make clear that primary authority for enforcement of the FIFRA rested with the T&P Division.
Merger Docs at 4 (noting that T&P Division “negotiat[ed] the settlement of a highly political
FIFRA case”). And the merger itself was apparently not intended to consolidate the functions of
each separate division into a single entity; instead, the plan was to “combin[e] some functions . . .
and potential[ly] steamlin[e] certain functions.” Id. at 2 (emphasis added); see also id. at 5(same).8 This intention is confirmed by the structural result of the merger—specifically, the
realignment did not abolish the three separate Divisions and create a new one, but instead merely
reorganized the department so that three formerly-independent Divisions are now three separate
Branches or Subdivisions within the single W&C Division. Id. at 13. In light of this
restructuring, the Court finds no evidence that the Director of the Pesticides and Tanks Branch—
who possessed properly delegated authority to enforce the FIFRA as Director of the T&P
Division—does not retain such authority post-merger. Indeed, the description of the three new
Branches specifies that the Pesticides and Tanks Branch will “focus[] on all FIFRA . . . civil
enforcement issues, including any enforcement response and civil penalty policies.” Id. at 11.
And last, but certainly not least, contrary to EPA’s unsupported assertions, the plain language of
the Reorganization Proposal unequivocally states that the merger will not affect any “Delegations
of Authority, Orders or Manuals.” Id. at 6.
8
The documents specify neither which functions were combined as part of the single W&C Division, nor
which functions remain with each individual Branch.
9
These deficiencies in the delegation record submitted by EPA are fatal. Once authority
has been delegated to a certain agency official to take a particular action under a statute, only that
official may take such action. Supra. And the fact that the person who authorized the SSURO in
this case is the superior of the official who properly possesses authority to act under the FIFRA
is immaterial. In Service v. Dulles, for example, the Supreme Court rejected the Secretary of
State’s attempt to overturn the judgment reached by the Deputy Under Secretary concerning a
foreign service officer, as authority to adjudicate such cases was delegated to the Deputy Under
Secretary and—by the plain terms of the delegation—“the Secretary bound himself not to act at
all in cases such as this.” 354 U.S. at 386–87. In this instance, the Court has no doubt that a
reorganization of departments within EPA occurred; yet the Court finds no evidence that, as a
result of that reorganization, delegated powers changed hands. Simply put, as long as the August
1994 delegation to the Director of the T&P Division remains valid, the Assistant Administrator
for Enforcement and Compliance Assurance responsible for that delegation has “‘denied himself
the authority to exercise the discretion delegated to the [Toxics and Pesticides Division] even
though the original authority was his.’” Black, 272 F. Supp. 2d at 26 (quoting Nixon v. United
States, 418 U.S. 613, 695–96 (1974)). The Court therefore concludes that the SSURO was
illegally issued, and will vacate the Order and remand this dispute to EPA for any further
proceedings that the Agency deems necessary.
IV. CONCLUSION
Having reviewed the parties’ extensive briefs concerning the validity of the SSURO at
issue in this case, the Court is loathe to dismiss this action on what may appear to be a minor
procedural issue, particularly where—as here—several significant and substantive legal disputes
remain. In doing so, however, the Court is reminded that federal agencies, though absent from
10
the Constitution, possess tremendous executive and legislative authority in our system of
government, and it is therefore incumbent upon courts to ensure that such agencies follow the
law, as well as their own rules and regulations. Though the FIFRA grants EPA the power to
issue the SSURO in this case,9 the Agency—having decided that this authority should rest with
the Director of the T&P Division—must adhere to its earlier determination. And to the extent
EPA desires that this power rest instead with the Director of the W&C Division, “the agency is
free to change its regulations with the proper procedures.” GTE Int’l Inc. v. Hunter, 649 F.
Supp. 139, 147 (D.P.R. 1986). But in this instance, where—at least according to AMVAC—the
Agency’s decision to issue the SSURO has permanently erased more than $20 million in annual
business, the Court will not stand idly by and permit significant action undertaken by an official
who is not legally authorized to take it.
A separate Order and Judgment consistent with these findings shall issue this date.
Signed by Royce C. Lamberth, Chief Judge, on August 17, 2011.
9
This statement assumes, of course, that the issuance of the SSURO is not otherwise infirm for the
numerous reasons briefed by the parties but not reached by the Court in today’s opinion.
11