Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-96-05371/USCOURTS-caDC-96-05371-0/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 September 11, 1997 Decided October 28, 1997

No. 96-5371

SYNCOR INTERNATIONAL CORPORATION, ET AL.,

APPELLANTS

v.

DONNA E. SHALALA,

SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL.,

APPELLEES

Appeal from the United States District Court 

for the District of Columbia 

(95cv1627)

Alvin J. Lorman argued the cause for appellants, with 

whom Gregory R. Firehock was on the briefs.

Jay I. Bratt, Attorney, United States Department of Justice, argued the cause for appellees, with whom Frank W. 

Hunger, Assistant Attorney General, and Eric H. Holder, Jr.,

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U.S. Attorney at the time the briefs were filed, were on the 

brief.

Before: SILBERMAN, ROGERS and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge: Appellants Syncor International 

Corporation, American College of Nuclear Physicians, Society 

of Nuclear Medicine, and American Pharmaceutical Association (collectively, Syncor) appeal the district court's decision 

that FDA's 1995 "Notice," entitled "Regulation of Positron 

Emission Tomography Radiopharmaceutical Drug Products; 

Guidance; Public Workshop," was a "non-substantive" rule 

not subject to notice and comment rulemaking. We reverse.

I.

Positron emission tomography (PET) is a diagnostic imaging method that uses a subset of radioactive pharmaceuticals, 

called PET drugs, to determine biochemistry, physiology, 

anatomy, and pathology within various body organs and 

tissues by measuring the concentration of radioactivity in a 

targeted area of the body. The active component of PET 

drugs is a positron-emitting isotope.1 This component has a 

short half-life, so the drug remains effective for only brief 

periods of time. As a consequence, PET drugs are not 

manufactured by pharmaceutical companies; instead, they 

are prepared by physicians and pharmacists operating accelerators in facilities known as nuclear pharmacies, which most 

often are part of major teaching hospitals or their adjacent 

universities, and always are located very near to the place 

where the PET drug will be administered to patients. These 

nuclear pharmacists compound the isotope with a chemical 

__________

1 Positrons are positively charged subatomic particles with the 

same mass and magnitude of charge as electrons, and are regarded 

as the antiparticle of negatively charged electrons because the two 

mutually annihilate each other when brought together. Isotopes 

are atoms of a certain element with an atypical number of neutrons 

in their nuclei. An isotope is positron-emitting when it is neutron 

deficient.

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solution called a substrate. The substrate is used to carry 

the isotope to the targeted organ or tissue, and the precise 

solution used depends on the targeted area. For example, a 

nuclear pharmacist might combine an isotope with a glucose 

substrate if the brain was being targeted, since the brain is 

an area of high glucose uptake. In part for this reason, PET 

drugs are compounded pursuant to a prescription.

On February 25, 1995, FDA announced that PET radiopharmaceuticals "should be regulated" under the drug provisions of the Federal Food, Drug, and Cosmetic Act.2

In this 

publication, labeled a "Notice," and referred to alternatively 

in its text as "guidance" and a "policy statement," FDA 

indicated that it would require PET "radiopharmaceutical 

manufacturers" to comply with the adulteration provision of 

§ 501(a)(2)(B) of the Act (drugs are considered adulterated 

unless manufactured in conformance with current good manufacturing practices); the misbranding provision of § 502 of 

the Act (drugs are considered misbranded if the product 

labeling is false or misleading, if the drug is dangerous to 

health when used as suggested in the labeling, or if the 

labeling fails to include certain required information); the 

new drug provision of § 505 of the Act (new drugs must be 

the subject of approved new drug applications or abbreviated 

new drug applications before marketing); and the registration and listing provisions of § 510 of the Act (drug establishment must register with FDA, and file a list of all drugs that 

it makes or processes). See Regulation of Positron Emission 

Tomography Radiopharmaceutical Drug Products; Guidance; 

Public Workshop, 60 Fed. Reg. 10594, 10595 (1995).

FDA indicated that its 1995 publication was to supersede 

its prior 1984 publicationwhich had been directed at all 

nuclear pharmacies, not just those compounding PET radiopharmaceuticalsentitled "Nuclear Pharmacy Guideline; 

Criteria for Determining When to Register as a Drug Establishment." The 1984 Guideline had unequivocally stated that 

nuclear pharmacists who operated an accelerator to produce 

__________

2 The drug provisions of the Federal Food, Drug, and Cosmetic 

Act are codified at 21 U.S.C. § 351 et seq. (1994). 

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radioactive drugs to be dispensed under a prescription

which precisely describes the process by which nuclear pharmacies compound PET radiopharmaceuticalswere not required to register under § 510 of the Act. The Guideline also 

indicated that if a nuclear pharmacist was not required to 

register, that other of the Act's requirements, including the 

new drug provision and compliance with current good manufacturing practices, would not apply.

Syncor filed suit in the district court challenging FDA's 

1995 publication. Syncor brought three claims, alleging that: 

(1) FDA lacked jurisdiction over PET drugs under the new 

drug provision of § 505 of the Act, which requires premarket 

approval for drugs introduced or delivered for introduction 

into interstate commerce, because PET drugs do not move in 

interstate commerce; 3(2) FDA violated the Tenth Amendment to the United States Constitution by regulating pharma-

__________

3 Elaborating its statutory argument, Syncor claims that FDA's 

theory for why it can subject nuclear pharmacies compounding PET 

radiopharmaceuticals to the new drug provision of § 505 of the 

Actthat if any ingredient of a compounded pharmaceutical has 

moved in interstate commerce, the finished compound is itself 

introduced or delivered for introduction into interstate commerce

renders all compounding activities by pharmacists subject to § 505's 

requirements. That result, according to Syncor, is also contrary to 

§ 510(g)(1) of the Act, which specifically exempts pharmacies in 

compliance with "applicable local laws regulating the practice of 

pharmacy" and "regularly engaged in dispensing prescription 

drugs, upon prescriptions of [licenced] practitioners," from the 

registration and drug listing requirements of § 510 and the inspection provisions of § 704(a). See 21 U.S.C. § 360(g)(1) (1994). And, 

although pharmacists are not specifically exempt from other provisions of the Act, FDA has largely pursued a "hands-off" approach 

towards pharmacists that meet the requirements of the § 510(g)(1) 

exemption from registration, listing, and inspection. Syncor suggests that if FDA may define "the scope of the regular course of the 

practice of the profession of pharmacy" so as not to include PET 

compounding activities, that it may do so for all pharmacists' 

compounding activities, whether nuclear or not, effectively circumventing the statutory exemption. FDA's not entirely satisfactory 

response is that it will exercise its broad jurisdiction wisely.

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cies in the absence of clear congressional authorization to do 

so, since pharmacy is an area traditionally reserved for state 

regulation; and (3) FDA violated the Administrative Procedure Act's requirement that an agency engaged in rulemaking give notice of its proposed rulemaking to the public, 5 

U.S.C. § 553(b) (1994), and "give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments." 5 U.S.C. § 553(c) 

(1994). The district judge granted summary judgment in 

FDA's favor on all three claims. We consider the APA claim 

first since if notice and comment are required we think it 

prudent to defer deciding the other two issues which presumably would be explored in a future rulemaking.

II.

The APA exempts from notice and comment interpretative 

rules or general statements of policy. 5 U.S.C. § 553(b)(3)(A) 

(1994). Before the district court the FDA characterized its 

1995 publication as merely "guidance" (a general statement of 

policy). The district judge disagreed, concluding that it was a 

rule, but an interpretative one. Here, FDA concedes that the 

publication is a "rule," and adopts the district court's conclusion. Syncor still contends that the publication is a substantive regulation.

We have long recognized that it is quite difficult to distinguish between substantive and interpretative rules. See Paralyzed Veterans of Am. v. D.C. Arena L.P., 117 F.3d 579, 587 

(D.C. Cir. 1997); American Mining Congress v. Mine Safety 

& Health Admin., 995 F.2d 1106, 1108-09 (D.C. Cir. 1993); 

see also American Hosp. Ass'n v. Bowen, 834 F.2d 1037, 1045 

(D.C. Cir. 1987) ("spectrum between a clearly interpretive 

rule and a clearly substantive one is a hazy continuum"); 

General Motors Corp. v. Ruckelshaus, 742 F.2d 1561, 1565 

(D.C. Cir. 1984) (en banc) ("the distinction between legislative 

and interpretative rules is enshrouded in considerable smog") 

(citation omitted). Further confusing the matter is the tendency of courts and litigants to lump interpretative rules and 

policy statements together in contrast to substantive rules, a 

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tendency to which we have ourselves succumbed on occasion. 

See Community Nutrition Inst. v. Young, 818 F.2d 943, 946 

(D.C. Cir. 1987).4 That causes added confusion because interpretative rules and policy statements are quite different 

agency instruments. An agency policy statement does not 

seek to impose or elaborate or interpret a legal norm. It 

merely represents an agency position with respect to how it 

will treattypically enforcethe governing legal norm. By 

issuing a policy statement, an agency simply lets the public 

know its current enforcement or adjudicatory approach. The 

agency retains the discretion and the authority to change its 

positioneven abruptlyin any specific case because a 

change in its policy does not effect the legal norm. We thus 

have said that policy statements are binding on neither the 

public, see, e.g., Bechtel v. FCC, 10 F.3d 875, 878 (D.C. Cir. 

1993); Pacific Gas & Elec. Co. v. FPC, 506 F.2d 33, 38-39 

(D.C. Cir. 1974), nor the agency. See Vietnam Veterans of 

Am. v. Secretary of the Navy, 843 F.2d 528, 537-39 (D.C. Cir. 

1988). The primary distinction between a substantive rule

really any ruleand a general statement of policy, then, 

turns on whether an agency intends to bind itself to a 

particular legal position. See United States Tel. Ass'n v. 

FCC, 28 F.3d 1232, 1234 (D.C. Cir. 1994).

An interpretative rule, on the other hand, typically reflects 

an agency's construction of a statute that has been entrusted 

to the agency to administer. The legal norm is one that 

Congress has devised; the agency does not purport to modify 

__________

4 The majority in that case stated that it was considering the 

question of whether an FDA pronouncement setting forth "action 

levels" informing food producers of the permissible levels of aflatoxins in corn was a legislative rule or "nothing more than nonbinding 

statements of agency enforcement policy." Community Nutrition 

Inst., 818 F.2d at 946. But it also noted that FDA did not dispute 

that its publication was a rule. Id. at 945 n.2. And, the third 

judge, who concurred in part and dissented in part, characterized 

the question as whether FDA's action levels constituted a legislative 

or interpretative rule in a later case. See Alaska v. DOT, 868 F.2d 

441, 445 (D.C. Cir. 1989).

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that norm, in other words, to engage in lawmaking. To be 

sure, since an agency's interpretation of an ambiguous statute 

is entitled to judicial deference under Chevron,5it might be 

thought that the interpretative ruleparticularly if it changes 

a prior statutory interpretation as an agency may do without 

notice and commentis, in reality, a change in the legal 

norm. Still, in such a situation the agency does not claim to 

be exercising authority to itself make positive law. Instead, 

it is construing the product of congressional lawmaking 

"based on specific statutory provisions." See United Technologies Corp. v. EPA, 821 F.2d 714, 719 (D.C. Cir. 1987); see 

also Connecticut Dep't of Children and Youth Servs. v. HHS,

9 F.3d 981, 984 (D.C. Cir. 1993) (interpretative rule "purport[s] to define statutory terms"); National Latino Media 

Coalition v. FCC, 816 F.2d 785 (D.C. Cir. 1987). That is why 

we have said that "[t]he distinction between an interpretative 

rule and substantive rule ... likely turns on how tightly the 

agency's interpretation is drawn linguistically from the actual 

language of the statute." Paralyzed Veterans, 117 F.3d at 

588.6

We should note, in order to be complete (although this 

variation is not implicated in the case before us), that an 

interpretative rule can construe an agency's substantive regulation as well as a statute. See Paralyzed Veterans, 117 

F.3d at 586; American Mining Congress, 995 F.2d at 1107-

08. In that event, the interpretative rule is, in a sense, even 

more binding on the agency because its modification, unlike 

a modification of an interpretative rule construing a statute, 

will likely require a notice and comment procedure. Otherwise, the agency could evade its notice and comment obli-

__________

5 Chevron U.S.A. Inc. v. Natural Resources Defense Council, 

Inc., 467 U.S. 837 (1984).

6

"If the statute ... to be interpreted is itself very general, 

using terms like 'equitable' or 'fair,' and the 'interpretation' really 

provides all the guidance, then the latter will more likely be a 

substantive regulation," Paralyzed Veterans, 117 F.3d at 588, because then the agency's rule gives content to the legal norm in 

question.

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gation by "modifying" a substantive rule that was promulgated by notice and comment rulemaking. See Paralyzed 

Veterans, 117 F.3d at 586.

A substantive rule has characteristics of both the policy 

statement and the interpretative rule; it is certainly in part 

an exercise of policy, and it is a rule. But the crucial 

distinction between it and the other two techniques is that a 

substantive rule modifies or adds to a legal norm based on 

the agency's own authority. That authority flows from a 

congressional delegation to promulgate substantive rules, to 

engage in supplementary lawmaking. And, it is because the 

agency is engaged in lawmaking that the APA requires it to 

comply with notice and comment.

It is apparent to us, in light of the foregoing discussion, 

that FDA's 1995 publication is not an interpretative rule. It 

does not purport to construe any language in a relevant 

statute or regulation; it does not interpret anything. Instead, FDA's rule uses wording consistent only with the 

invocation of its general rulemaking authority to extend its 

regulatory reach. See American Mining Congress, 995 F.2d 

at 1112. The publication is entitled "Regulation of Positron 

Emission Tomography Radiopharmaceutical Drug Products." 

In the text, FDA explained that "as [PET] technology has 

advanced, questions have been raised about the most appropriate approach to regulation of PET radiopharmaceuticals." 

And then FDA stated, "[h]aving considered the available 

information, including that presented to the agency at the 

hearing and in written materials, FDA has concluded that 

radiopharmaceuticals should be regulated under the drug 

provisions of the Federal Food, Drug, and Cosmetic Act." 7

FDA made a careful, considered decision not to exercise 

the full extent of its regulatory authoritywhatever that may 

beover nuclear pharmacies in 1984. In its "Nuclear Phar-

__________

7 FDA did say that "facilities that manufacture PET radiopharmaceuticals are not exempt from registration under § 1A207.10 [21 

C.F.R. § 207.10 (1997)] because their activities do not fall within the 

scope of the regular course of the profession of pharmacy," but it 

does not claim that this statement made the rule interpretative.

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macy Guideline; Criteria for Determining When to Register 

as a Drug Establishment," it said that "the criteria for 

registration as a drug establishment for nuclear pharmacies 

should be the same as those for traditional pharmacies" 

under the pharmacy exemption of § 510(g)(1) of the Act. 

And, therefore, "in a situation where the nuclear pharmacy is 

operating within applicable local laws regulating the practice 

of pharmacy and only prepares and dispenses a radioactive 

drug upon receipt of a 'valid prescription,' the pharmacy 

exemption clearly applies." Persons who simply operated an 

accelerator in the course of compounding radioactive drugs to 

be dispensed under a prescription specifically were found not 

to be required to register.

Syncor tells us, and FDA does not dispute, that PET 

manufacturers today operate within applicable local laws governing pharmacy, and only prepare and dispense PET radiopharmaceuticals under a prescription, as they did in 1984. 

FDA does claim that PET technology has advanced and that 

PET has many more applications today than it did in 1984. 

And, after "[h]aving considered the available information," 

FDA has concluded, by way of its challenged rule, that PET 

manufacturers "should be regulated." Their activities

which clearly fell within the scope of the regular course of the 

practice of the profession of pharmacy in 1984are thought 

no longer to fall within that scope. This is not a change in 

interpretation or in enforcement policy, but rather, is fundamentally new regulation. The reasons FDA has advanced for 

its ruleadvancement in PET technology, the expansion of 

procedures in which PET is used, and the unique nature of 

PET radiopharmaceuticalsare exactly the sorts of changes 

in fact and circumstance which notice and comment rulemaking is meant to inform. Cf. Bechtel v. FCC, 957 F.2d 873, 881 

(D.C. Cir. 1992) (changes in factual and legal circumstances 

may impose upon an agency the obligation to reconsider 

settled policy or explain its failure to do so); American Horse 

Protection Ass'n v. Lyng, 812 F.2d 1, 5 (D.C. Cir. 1987) 

(rulemaking may be required on the basis of a radical change 

in the factual premises underlying a previous position).

The FDA nevertheless focuses on American Mining Congress, in which, recognizing that an agency often has an 

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option to proceed through adjudication, we warned against 

construing the interpretative rule exception to the APA's 

notice and comment provisions "so narrowly as to drive 

agencies into pure [adjudicatory] ad hoceryan ad hocery, 

moreover, that affords less notice, or less convenient notice, 

to affected parties." American Mining Congress, 995 F.2d at 

1112. Accordingly, we identified four factors, any one of 

which, if present, would identify a supposed interpretative 

rule as really legislative.8 The first of those factors, on which 

FDA concentrates, is whether in the absence of the rule there 

would not have been "an adequate legislative basis for enforcement action or other agency action to confer benefits or 

ensure the performance of duties," which is another way of 

asking whether the disputed rule really adds content to the 

governing legal norms.

The government contends that the rule in question qualifies 

as an interpretative rule, under that factor, because in the 

absence of its issuance the government could have proceeded 

to enforce regulatory requirements against manufacturers of 

PET drugs. In the past, pursuant to FDA's 1984 Guideline, 

those requirements were merely "deferred." The government does not clearly explain what it means by "deferred," 

but seems to suggest that it exercised enforcement discretion 

in not asserting regulatory authority over appellants until 

1995, and therefore simply is reversing that discretionary 

__________

8 The four factors are: "(1) whether in the absence of the rule 

there would not be an adequate legislative basis for enforcement 

action or other agency action to confer benefits or ensure the 

performance of duties, (2) whether the agency has published the 

rule in the Code of Federal Regulations, (3) whether the agency has 

explicitly invoked its general legislative authority, or (4) whether 

the rule effectively amends a prior legislative rule." American 

Mining Congress, 995 F.2d at 1112.

Within the three rules at issue in that case, the Mine Safety & 

Health Administration purported to be interpreting the term "diagnosis" as used in its own substantive regulation that had been 

adopted by notice and comment rulemaking. We note, however, 

that one or more of these rules might have been, at least in part, 

policy statements. See id. at 1108.

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decision. The obvious difficulty with the government's argument is that it is supportive of a claim that the rule was really 

a policy statementa claim which the government abandoned 

on appeal. As we have said, enforcement discretion is relevant in determining whether an agency intended to bind 

itself, and therefore, in determining whether a pronouncement is a legislative rule or a general statement of policy, but 

"tells one little about whether a rule is interpretive." American Mining Congress, 995 F.2d at 1111.

In any event, we think the government misreads American 

Mining Congress. We never suggested in that case that a 

rule that does not purport to interpret any language in a 

statute or regulation could be thought an interpretative rule.9

We do not have to decide, therefore, whether FDA could have 

succeeded in an enforcement proceeding against a nuclear 

pharmacy that was operating pursuant to the 1984 Guideline, 

under the secure impression that their activities were totally 

unregulated (although we find it hard to imagine the government facing a hospitable reception in any federal district 

court). We think it a kindness also to say that we doubt that 

the government would have done any better in this case to 

have relied on the policy statement exception on appeal. The 

1995 publication is as far removed from the typical policy 

statement as it is from an interpretative rule; it drew a 

boundary to the agency's regulatory reach.

Accordingly, we reverse and remand to the district court 

with instructions to enter summary judgment in Syncor's 

favor, and to vacate FDA's rule as not in accordance with law. 

The district court should also dismiss Syncor's substantive 

claims without prejudice.

__________

9

It should also be noted that this is not a situation in which the 

agency has the option to proceed to adopt its new regulatory 

extension through internal adjudication; it must seek enforcement 

in federal district court.

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