good morning judge tom and members of the court my name is robert hogan and i represent the petitioners in this matter and with the permission of this court i'd like to address the merits of this case and it assists this court in a cheating the correct result relates to drug code seven three five zero for marijuana extract and there are four overarching principles in this case that have a bearing on the court's decision number one the issue of government overreach number t the plain language of the final rule itself number three staleness the five year period between the proposed rule and the final rule and number for your honour's the issue of intervening legislation there was a seismic shift in the united states cat cannabis policy in two thousand and fourteen with the enactment of the farm bill specifically section seven six zero six involving industrial h that seems to have created some confusion perhaps with the drug enforcement administration now the executive branch refuses to honor cataclysms yes and i ask a question maybe this is grossly over simplified is what may be a far more complicated case but doesn't this really boil down to the addition of a new tracking code that the da purports to an act in this rule in order to meet its treaty obligations to other countries around the world in order to determine what portion of the marijuana plant is being utilized for legitimate industrial purposes versus clandestine and at least under federal law illegal manufacturing or distribution of substances that contain high t h c content indeed your honor it is a four digit drug code but the practical what are you afraid of i guess that's really where i'm going with the question why is the end us three so concerned that if they fill out forms for d n a using this code telling the drug enforcement administration that they're making various products which are otherwise i think very useful what's the industry afraid like in hemp to this da from two thousand and four which involve similar drug code seven three seven zero in that context the drug code itself was written in a fashion that was far beyond the congressional authorization to the d a for definition of that particular purpose this drug not define marijuana extract as marijuana is defined under twenty one u s c eight zero two subsection sixteen but rather your honor it defines something that's cannabis extract it specifically talks about the genus can and that is not a controlled substance so what is the what are the petitioners afraid of we've seen this drug code utilized week after week since it's a nachman to seize to cause criminal in foresman against lawful operators who require no d n a registration you know give us one example of the police in north dakota are there other examples that are not referenced in either the record or your briefing yes your honor there number of examples by way of affidavit that were in fact attached to the reply brief examples of customs and border patrol using this literally on a weekly basis to suggest that this these products are in fact controlled substances when congress has rule making those or are you now adding additional information at the reply stage of the court of appeal for the first time the injury element was challenged in the response brief therefore we attached affidavit in response to that particular item raised by the da in our reply brief and there were a dozen affidavits detailing the injury and the practical impact and application of this four digit drug code you have any authority that permits us to expand the record and in this way because i'm not certain whether or not we can properly consider your honor i believe this goes to a standing issue standing in terms of the injury issue and i see no requirement under the law procedurally or otherwise that would limit the petitioners ability to suggest and respond frankly to a pointed challenge to standing and injury in this case and that's why those those affidavits ended up in i was very real injury that occurs by virtue of the application of this rule this rule on its face if you read the rule on its face it does not comply with the law it's unfair to the sister agencies of the a both at the state and federal level it's unfair to law enforcement to have this for digital code let me let me let me follow up on judge tom and dialogue with you it seems to me that your legal challenge through the administrative process is what you must do to have us contravene the rule but it seems to me what the industry is concerned about is that the stocks the members of the industry use to produce those products may become a scheduled substance because they contain some amount of cannabinoid i mean ice it seems to me that at the heart of the matter that's what you're quote unquote concerned about afraid of my right about that stocks based on the definition of marijuana which is limited however your honor the farm bill authorized the entire plant the entire plant so long as it's below point three percent to be utilized for these purposes this rule explicitly makes those products which are lawful congress has said that they're lawful it makes them controlled substances ok i understand that the clarification of the final rule however states that it wouldn't of the final rule would apply to portions of the plant with only quote trace amounts of cannabinoids so effectively it seems the d e a at the end of the day is aware of your concern and seems to have addressed it is it your position under your e p a challenge that even with that clarification of the final rule that the overriding procedural issues are so disturbing that we should nevertheless throw the rule out and have them start from scratch if at all the stem in the root of the problem is the final rule itself you honor with regard to the clarification again i go back to fundamental fairness not just to the petitioners but to sister agencies how can an agency such as customs such as the u s patent and trademark office and so forth and so on look at the rule which says one thing and then a clarification which i would note has no force and effect of law whatsoever and was not enacted as a legislative rule but rather simply a policy statement how can a agency look at both of those or do we give any kind of deference to that either under chevron or our or or any of the other presidents that talk about an agency with expertise in this area interpreting a regulation that  just adopted liken him to your honor no chevron deference deference should be afforded to the da here and it is a very simple reason why as you look at the chevron case the predicate is that there's ambiguity or lack of clarity in the law very clearly cannabis is not a controlled substance very clearly canal benoit's are not controlled substances but rather are subject to what's known as the source will the source of the dictates whether or not it's a legal or illegal substance because there's no ambiguity because those are clear precise statements which by the way this court has spoken to in two thousand and four and attempt to there is no deference afforded to the over brod and therefore is creating ambiguity in at least in the law enforcement community as to which products are cover so isn't there aren't really challenging the rules as being ambiguous here though the rules extremely clear the law that underlies the rule the law the law that congress has enacted which authorizes that the aid to enact certain provisions that is what's clear this rule does not follow that law the rule on its face is very clear the problem is it fundamentally does not follow any authority whatsoever granted to the da for the issuance of that rule i would note twenty one  f r thirteen zero eight point zero three specifically governs four digit drug codes and it says for you to enact a four digit drug code you must identify something that is an expressively controlled substance jenas cannabis is not and that's the fundamental flaw with the language the da can have a classification for marijuana extract so long as it follows the appropriate procedures but that must say something akin to marijuana extract code in order to meet those treaty obligations if the tracking code flowed from the congressional delegation of the law then sure but i would suggest that that is a bald sta without justification sure that's correct counsel because doesn't the treaty constitute an independent source of law that does not require congressional implementing legislation it establishes an obligation that the united states agrees to be bound by when we enter into the treaty it may or may not require ratification by congress but beyond that it is an independent source of was it not it is but the proper procedure pursuant to the n treaty was not followed here the attorney general has the authorization to schedule a new substance which by the way is precisely what this rule does it schedules things that congress had not previously scheduled and if the attorney general chose to do that in alleged compliance with its u n obligations there are specific findings and specific process is under twenty one u s c eleven one d that must be followed and that did not occur here yet ok you want to save about three minutes i do your thank you very please the court sarah carolyn behalf of the government judge tom and i think you put it just right when you describe this as just the addition of a new tracking code basically for administrative purposes this new identification number applies only to a subset of the substances that the a has always defined as marijuana which has always been a schedule one substance under the c s a and this is clear from the preamble to the rule d e h said that several times in the preamble in a few different ways da has since issued guidance as judge murphy pointed out which says in a few more ways that this this new tracking code does not apply to any substance that wasn't previously controlled da has said in this litigation i'm here telling you today that this does not apply to anything new and all of the statements are entitled to deference under our view rob if they're given controlling weight as d e s interpretation of its own regulation so is the difficulty here born of the fact that the marijuana plan that are clearly says gadgil the under control one schedule one of the controlled substances act but other parts of the plant have only trace amounts and are therefore useful for if i can use the term non hallucinogenic purposes in industrial uses and that this code is essentially trying to separate the whole lucena genic portions of the plant from being on portion so you're absolutely right your honor that the c s a treats different parts of the cannabis plant differently depending on which parts they are and i think it does track the sickly along the lines that you described but i want to be very clear that this code number applies only to the parts of the cannabis plant that are within the c s a definition of marijuana that are controlled it does not apply at all to the parts that congress exempted so i'm well well ok the nature of the problem as i understand it is that the stocks if you will contain trace amounts of the substances that are and those had been scheduled long ago in the c s a the rulemaking  proceeded as you have suggested here but the industry has this concern that given the way government operates arguments of overreach things of this nature the rule is not and cannot ever be clear because ultimately some enterprising be a f b i homeland security agent ice agent whatever the case may be could could could read the stocks as being subject to the schedule that's what i understand their concern is and i generally read that's basically my understanding as well but he has said expressly that it does not read gets no no ok that's very good now now here's my problem with that my problem with that is that can we extrapolate from the rule the general good faith of the federal agency who's going to be enforcing it or do the petitioners have a real point here that ok most d agents most council like ms carrol genuinely genuinely well intended people but there's confusion here such that somebody can seize a buncha ham from a manufacturer in whatever state and deem it to be scheduled and and  prosecute them if someone did that the remedy would be to challenge that seizure in whatever proceeding was appropriate and say hey you misunderstood federal law this is you know hemp that's exempt from c s a regulation and it was wrong for you to seize it and you could in fact rely on d e f statements in the preamble to statements in its guidance and that those would probably help you get a pretty long way if your substance really was exempt from the c s a you know there's an old ancient curse may you have that sounds like and i think that you know if something really was outside of c s a regulation either because it was from an exempt part of the cannabis plant or because it was truly within the four corners of the farm bill then someone would have a valid defense in an enforcement may there is no change here simply a clearer creation and what you're doing is outside the scope of what we and so last march da issued this public guidance document in response to questions that it had been receiving in which it stated very clearly that this does not apply to any new substances if something is exempt from the c s a this new code number does not apply to that and that's publicly available and of course you know any if a local law enforcement officer is confused about the regulation the officer can look at that clarification if you know one of petitioners members is confronted with some kind of problem they can rely on the clarification to establish that their activity is fine under federal law and that this regulation doesn't do anything new that substantive i would also note the petitioners failed to participate in any way of in the rule making proceeding which under basic principles of administrative law  sherry very not the candy maker no i don't think so or never know so i did reasonably did not interpret that bald statement which i think is something that people out in the world say a did not interpret that as a reference to you know parts of the cannabis plant and things like that this court stated in the universal health services case that the question is whether a party has read the stories the specific argument that's at issue and that is the it's just not practical from a judicial efficiency perspective to suggest that the individuals who are subject on a weekly basis to the use of this rule as somehow a defacto determination that these products are scheduled substances should have to defend each and every single suit when the source and the stem of the problem is this final rule and i do believe that the hemp two case is dispositive of this issue for the precise issues that were before this court because in that case it was drug code seven three seven zero and in that case it was attempted to be expanded to include t h c the only psychoactive can have annoyed by the way that it was present in nine marijuana sources and the court said no marijuana is a controlled substance if it comes from other parts of the plant or extending that the present day to an entire plant varieties so long as that t h c content is below point three percent of the farm bill then it's not a controlled substance and it also did the same thing as we see here your honour's and that is the genius cannabis is not a controlled substance so to take that to its logical conclusion take take it in an extract from the genus cannabis well that encompasses things that are legal and then you're saying a canal benoit must be present you're not illegal so you can have those things on the shelves of your grocery store right now your honour's and those things are being seized this makes hemp plastic hemp fuels on monday we saw a major injury is real and it's apparent because this rule and it's a leg ation that it somehow creates a scheduled substance from these materials is is really the issue now to sum things up your honor i would suggest very strongly as that and meekest brief suggests that there are exceptional circumstances for the waiver issue and the allegations and that this court should hold that the final rule is not in accordance with u s law it's an abuse of the d e a s rule making authority and