Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-09-05374/USCOURTS-caDC-09-05374-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 12, 2010 Decided June 25, 2010

No. 09-5374

JAMES L. SHERLEY, ET AL.,

APPELLANTS

v.

KATHLEEN SEBELIUS, IN HER OFFICIAL CAPACITY AS 

SECRETARY OF THE DEPARTMENT OF HEALTH AND HUMAN 

SERVICES, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:09-cv-01575-RCL)

Thomas G. Hungar argued the cause for appellants. With 

him on the briefs were Bradley J. Lingo, Ryan J. Watson,

Blaine H. Evanson, Samuel B. Casey, and Steven H. Aden.

Stephanie R. Marcus, Attorney, U.S. Department of 

Justice, argued the cause for appellees. On the brief were 

Mark B. Stern, Alisa B. Klein, and Abby C. Wright, Attorneys. 

R. Craig Lawrence, Assistant U.S. Attorney, entered an 

appearance.

USCA Case #09-5374 Document #1251802 Filed: 06/25/2010 Page 1 of 12
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Before: GINSBURG, BROWN, and KAVANAUGH, Circuit 

Judges.

Opinion for the Court filed by Circuit Judge GINSBURG.

GINSBURG, Circuit Judge: An array of variously situated 

plaintiffs sued the Department and the Secretary of Health 

and Human Services and the National Institutes of Health and 

its Director, challenging newly promulgated guidelines that 

authorize the NIH to fund more research projects involving 

human embryonic stem cells than it had previously done. The 

district court dismissed the suit for want of a plaintiff with 

standing and dismissed as moot the plaintiffs’ motion for a 

preliminary injunction. All the plaintiffs appeal those rulings, 

but they defend the standing of only two of their number, Drs. 

James Sherley and Theresa Deisher. 

We conclude the two Doctors have standing. Therefore, 

we reverse the order of the district court insofar as it 

dismissed their claims and we reinstate the motion for a 

preliminary injunction. 

I. Background

Because a stem cell can develop into any one of many 

specialized cells in the human body, it can be used in the 

treatment of a variety of diseases. There are two basic kinds 

of mammalian stem cells relevant to this case: embryonic 

stem cells (ESCs), which are found in human embryos, and 

adult stem cells (ASCs), which are found in the human body 

and in tissues discarded after birth. 

Scientists, often with financial support from the NIH, 

have done research involving ASCs for about 50 years. They 

have done research involving ESCs only since 1998, and the 

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NIH did not fund such research until 2001, when President 

Bush authorized it to do so subject to the limitation that only 

ESCs derived from then-extant stem cell lines be used.

In 2009 President Obama removed that limitation, 

directing the “Secretary of Health and Human Services ... 

through the Director of NIH, [to] support and conduct 

responsible, scientifically worthy human stem cell research, 

including human embryonic stem cell research, to the extent 

permitted by law” and to “issue new NIH guidance on such 

research that is consistent with this order.” Exec. Order No. 

13,505, 74 Fed. Reg. 10,667, 10,667 (Mar. 9, 2009). Pursuant 

to the resulting Guidelines for Human Stem Cell Research, 74 

Fed. Reg. 32170 (July 7, 2009), the NIH may now fund more 

projects involving ESCs than was previously possible.

The plaintiffs alleged the issuance of the Guidelines 

violated the Administrative Procedure Act because, among 

other reasons, the “promulgation and implementation of the 

Guidelines are not in accordance with law,” Compl. ¶ 67; see 

5 U.S.C. § 706(2)(A), to wit, the Dickey-Wicker Amendment, 

which the Congress has attached every year since 1996 to the 

Acts appropriating money for the DHHS and which prohibits 

federal funding of research in which a human embryo is to be 

harmed or destroyed, e.g., Omnibus Appropriations Act of 

2009, Pub. L. No. 111-8, div. F, Title V, § 509(a)(2), 123 Stat. 

524. The defendants moved to dismiss the case on the ground 

that none of the plaintiffs had standing to challenge the 

issuance of the Guidelines. Sherley v. Sebelius, 686 F. Supp. 

2d 1 (D.D.C. 2009).

The plaintiffs whose standing is at issue here are Drs. 

Sherley and Deisher, both of whom “specialize in adult stem 

cell research” and who, respectively, have received and plan 

to seek NIH grants for research involving ASCs. Id. at 3. 

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They claimed to have “competitor standing” because the 

Guidelines would “result in increased competition for limited 

federal funding and [would] thereby injure [their] ability to 

successfully compete for ... NIH stem cell research funds.” 

Id. at 4. The district court rejected that contention. First, 

relying upon Hardin v. Kentucky Utilities Co., 390 U.S. 1, 6 

(1968), the court reasoned that a party may assert competitor 

standing only when the “particular statutory provision ... 

invoked” reflects a purpose “to protect a competitive interest” 

and that the Doctors had not shown they had a protected 

interest in receiving research funds from the NIH. Sherley, 

686 F. Supp. 2d at 6. The court further concluded the cases 

upon which the Doctors relied established only that 

competitor standing applies to participants in “strictly 

regulated economic markets,” whereas the Doctors were 

“applicants for research grants.” Id. at 7. Finally, the court 

opined that even if the Doctors qualify as “competitors,” they 

would still lack standing because the “application process to 

receive NIH funding is [already] extremely competitive,” id., 

i.e., the additional competition made possible by the 

Guidelines would “not ‘almost surely cause [them] to lose’ 

funding,” id. (quoting El Paso Natural Gas Co. v. FERC, 50 

F.3d 23, 27 (D.C. Cir. 1995)).

The district court also held none of the other plaintiffs 

had standing. On appeal, those plaintiffs make no argument 

to the contrary, wherefore we take their lack of standing as 

conceded. See, e.g., Sitka Sound Seafoods, Inc. v. NLRB, 206 

F.3d 1175, 1181 (D.C. Cir. 2000) (argument not raised in 

opening brief on appeal is forfeited).

II. Analysis

In reviewing de novo the district court’s decision to 

dismiss this suit on the ground that the Doctors lack standing 

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to sue, Young Am.’s Found. v. Gates, 573 F.3d 797, 799 (D.C. 

Cir. 2009), we “accept[] as true all of the factual allegations 

contained in the complaint and draw[] all inferences in favor 

of the nonmoving party,” City of Harper Woods Employees’ 

Ret. Sys. v. Olver, 589 F.3d 1292, 1298 (D.C. Cir. 2009). The 

Doctors’ burden is to show they have standing not only under 

Article III of the Constitution of the United States but also 

under our doctrine of prudential standing. See Shays v. FEC, 

414 F.3d 76, 83 (D.C. Cir. 2005). 

A. Article III Standing

In order to establish their Article III standing, the Doctors 

must both identify an “injury in fact” that is “actual or 

imminent” and “fairly ... trace[able] to the challenged action 

of the defendant,” and show it is “likely, as opposed to merely 

speculative, that [their] injury will be redressed by a favorable 

decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 

(1992) (internal quotation marks omitted). The doctrine of 

competitor standing addresses the first requirement by 

recognizing that economic actors “suffer [an] injury in fact 

when agencies lift regulatory restrictions on their competitors 

or otherwise allow increased competition” against them. La. 

Energy & Power Auth. v. FERC, 141 F.3d 364, 367 (D.C. Cir. 

1998); accord New World Radio, Inc. v. FCC, 294 F.3d 164, 

172 (D.C. Cir. 2002) (“basic law of economics” that increased 

competition leads to actual injury); see also Canadian Lumber 

Trade Alliance v. United States, 517 F.3d 1319, 1332 (Fed. 

Cir. 2008) (doctrine of competitor standing “relies on 

economic logic to conclude that a plaintiff will likely suffer 

an injury-in-fact when the government acts in a way that 

increases competition or aids the plaintiff’s competitors”). 

The form of that injury may vary; for example, a seller facing 

increased competition may lose sales to rivals, or be forced to 

lower its price or to expend more resources to achieve the 

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same sales, all to the detriment of its bottom line. Because 

increased competition almost surely injures a seller in one 

form or another, he need not wait until “allegedly illegal 

transactions ... hurt [him] competitively” before challenging 

the regulatory (or, for that matter, the deregulatory) 

governmental decision that increases competition. La. 

Energy, 141 F.3d at 367. 

In considering whether the Doctors have Article III 

standing, we address only the question whether they allege a 

legally adequate injury-in-fact. That is the only element of 

constitutional standing upon which the parties focus, for it is 

clear the alleged injury is traceable to the Guidelines and 

redressable by the court. 

We do not agree with the district court’s suggestion that 

only a “participant[] in [a] strictly regulated economic 

market[]” may assert competitor standing. Sherley, 686 F. 

Supp. 2d at 7. We see no reason any one competing for a 

governmental benefit should not be able to assert competitor 

standing when the Government takes a step that benefits his 

rival and therefore injures him economically. In this vein, we 

have applied the doctrine of competitor standing to the 

political “market,” holding incumbent congressmen had 

standing to challenge new campaign finance regulations that 

made it easier for rival candidates to compete against them for 

election. Shays, 414 F.3d at 87. 

The district court also concluded the doctrine of 

competitor standing applies only where the “particular 

statutory provision ... invoked” reflects a purpose “to protect a 

competitive interest.” Sherley, 686 F. Supp. 2d at 6 (quoting 

Hardin, 390 U.S. at 6). The requirement of a protected 

competitive interest, however, “goes to the merits” of a 

plaintiff’s claim, not to his Article III standing. See Ass’n of 

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Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153 

(1970).

In order to bring themselves within the scope of the 

doctrine of competitor standing, the Doctors invoke our 

holding in Associated Gas Distributors v. FERC, 899 F.2d 

1250 (1990), and similar holdings in other cases, that 

plaintiffs may “establish their constitutional standing by 

showing that the challenged action authorizes allegedly illegal 

transactions that have the clear and immediate potential to 

compete with [their] own sales,” id. at 1259, and argue they 

are injured because “[a]s a result of the new Guidelines, 

[they] now face more competition for [NIH] research grants 

than they did before.” For context, we note it is uncontested 

that, at least in the short run, the amount of money available 

from NIH for research grants is fixed notwithstanding the 

greater range of stem cell research projects made eligible for 

funding by the Guidelines.

The Government has two responses. First, it maintains 

the Doctors have not shown “an increase in funding for 

embryonic stem cell research ... require[s] a diminution in 

funding for adult stem cell research.” To that we say: Nor 

need they do so. The Doctors need show only that they 

themselves will suffer some competitive injury, not that the 

NIH will spend less overall to fund projects involving ASCs.

Second, the Government argues the specific process by

which the NIH awards grants makes it “entirely conjectural” 

whether the Doctors will face increased competition for 

funding. Each funding cycle proceeds in two stages. In the 

first, a peer-review committee assigns a preliminary score to 

each grant application. Each application with a score above 

the median then goes to one or more of the 24 Institutes and 

Centers (ICs) at the NIH. Each such component has its own 

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budget and awards grants to projects that address its particular 

mission; for instance, the National Cancer Institute funds 

research relating to cancer. In the second stage of the process, 

each IC decides which grant applications to fund. 

The Government reasons that the Guidelines will not 

cause an increase in competition at the first stage because the 

NIH will always pass along to the ICs half the applications it 

receives. Therefore, each application, regardless how many 

there are, will still have a 50% chance of reaching the second 

stage of the process.

At the second stage, moreover, “it is ... entirely 

conjectural whether an application submitted by [one of the 

plaintiffs] would actually ‘compete’ with proposals involving 

[ESCs]” because the doctor’s project would both have to “be 

ranked low enough to fall below the [IC’s] funding capacity 

and be outranked by an [ESC] project.” In other words, 

according to the Government, there is no certainty that an 

application for research involving ESCs will arrive at an IC in 

the same funding cycle as an application from one of the 

Doctors; even if the two applications do compete in the same 

funding cycle, there is no guarantee the one for research 

involving ESCs will get funding that would otherwise have 

gone to one of the Doctors. This mere possibility of injury 

does not establish competitor standing, argues the 

Government, which, as did the district court, reads our cases 

to require that a plaintiff asserting competitor standing show a 

challenged agency action will “almost surely cause [him] to 

lose business.” El Paso, 50 F.3d at 27.

As the parties’ arguments demonstrate, our cases 

addressing competitor standing have articulated various 

formulations of the standard for determining whether a 

plaintiff asserting competitor standing has been injured. 

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Regardless how we have phrased the standard in any 

particular case, however, the basic requirement common to all 

our cases is that the complainant show an actual or imminent 

increase in competition, which increase we recognize will 

almost certainly cause an injury in fact. 

For instance, in Louisiana Energy, we held one seller of 

electric energy had standing to challenge a decision of the 

FERC that allowed a current competitor to sell energy at 

market-based rates. 141 F.3d at 366. We recognized the 

petitioner would “be injured by increased price competition” 

and that such injury was “imminent.” Id. at 367 (explaining 

“parties suffer constitutional injury in fact when agencies lift 

regulatory restrictions on their competitors or otherwise allow 

increased competition”). In contrast, in DEK Energy Co. v. 

FERC, we held the plaintiff, a supplier of natural gas in 

Northern California, did not have competitor standing to 

challenge a decision of the FERC that would have allowed 

another company to ship a quantity of natural gas to Oregon 

and to sell it at a lower price than that at which DEK could 

sell its gas. 248 F.3d 1192, 1196 (2001). Although increased 

competition from lower-priced gas would likely cause DEK 

“to lose business or drop its prices,” we concluded that 

increased competition was not imminent; there was only 

“some vague probability that any gas” sold by DEK’s 

competitor would “actually reach [the] market” in which DEK 

sold its gas. Id. (noting decision of the FERC will not “almost 

surely” cause DEK “to lose business”). 

The Doctors have met the basic requirement for 

competitor standing. This is not a situation like that in El 

Paso, in which it was uncertain whether a new seller would 

enter the market. 50 F.3d at 27. There can be no doubt the 

Guidelines will elicit an increase in the number of grant 

applications involving ESCs; indeed, the Government never 

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suggests otherwise. Because the Guidelines have intensified 

the competition for a share in a fixed amount of money, the 

plaintiffs will have to invest more time and resources to craft 

a successful grant application. That is an actual, here-andnow injury.

The Doctors will suffer an additional injury whenever a 

project involving ESCs receives funding that, but for the 

broadened eligibility in the Guidelines, would have gone to 

fund a project of theirs. They are more likely to lose funding 

to projects involving ESCs than are researchers who do not 

work with stem cells because ASCs and ESCs are substitutes 

in some uses. The Doctors illustrated this point in a postargument letter in which they report Dr. Sherley recently 

submitted a grant for a project in which ASCs will be used to 

create a surrogate for a human liver and suggest his “chief 

competitor” will be a company that “engages in similar 

research using [ESCs].” Although no one can say exactly 

how likely the Doctors are to lose funding to projects 

involving ESCs, having been put into competition with those 

projects, the Doctors face a substantial enough probability to 

deem the injury to them imminent. See, e.g., DEK Energy 

Co., 248 F.3d at 1195 (“substantial (if unquantifiable) 

probability of injury” shifts injury from “conjectural” to 

“imminent”). 

B. Prudential Standing

Parties “claiming standing under the APA must show ... 

their claims fall ‘arguably within the zone of interests to be 

protected or regulated by the statute in question.’” Shays, 414 

F.3d at 83 (quoting Nat’l Credit Union Admin. v. First Nat’l 

Bank & Trust Co., 522 U.S. 479, 488 (1998)). This 

requirement “is not meant to be especially demanding” and 

there “need be no indication of congressional purpose to 

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benefit the would-be plaintiff”; it excludes “only those parties 

whose interests are not consistent with the purposes of the 

statute in question.” Amgen, Inc. v. Smith, 357 F.3d 103, 

108–09 (D.C. Cir. 2004) (internal quotation marks omitted).

Here the parties disagree about whether the injury the 

Doctors assert lies within the zone of interests protected by 

the Dickey-Wicker Amendment. The Doctors argue that 

pursuit of their interests furthers the purposes of that 

Amendment, which they say are “to fund permissible 

research, such as the adult stem cell research for which [they] 

seek funding, and ... [to] provide[] that federal funds could not 

be used for [ESC] research.” The Government responds that 

the Amendment “was intended to protect [not] the financial 

interests of researchers engaging in adult stem cell research ... 

[but rather] society’s interest in not funding ‘research in 

which a human embryo ... [is] destroyed.”

We conclude the Doctors have prudential standing. The 

Dickey-Wicker Amendment clearly limits the funding of 

research involving human embryos. Because the Act can 

plausibly be interpreted to limit research involving ESCs, the 

Doctors’ interest in preventing the NIH from funding such 

research is not inconsistent with the purposes of the 

Amendment. Under the standard of Amgen, quoted above, 

that is all that matters.

III. Conclusion

We reverse the order of the district court dismissing the 

plaintiffs’ claims for lack of standing insofar as it applies to 

the Doctors and affirm that order in all other respects. As a 

result, we also reverse the order dismissing as moot the 

plaintiffs’ motion for a preliminary injunction.

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The Doctors ask us to consider the merits of their motion,

but it is not the usual practice of this court to grant a motion 

for a preliminary injunction that the district court denied 

without having considered its merits. “It falls to the district 

court in the first instance ... to balance the four factors [of the 

test for a preliminary injunction] in order to decide whether” 

the motion should be granted. Belbacha v. Bush, 520 F.3d 

452, 459 (D.C. Cir. 2008).

This matter is remanded to the district court for further 

proceedings consistent with the foregoing opinion.

So ordered. 

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