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Parties Involved:
Consumer Product Safety Commission
Appellee
The Reliable Automatic Sprinkler Co., Inc.
Appellant

Document Text:

Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify

the Clerk of any formal errors in order that corrections may be made

before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 14, 2003 Decided April 11, 2003

No. 02-5032

THE RELIABLE AUTOMATIC SPRINKLER CO., INC.,

APPELLANT

v.

CONSUMER PRODUCT SAFETY COMMISSION,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 01cv00025)

Stephen P. Murphy argued the cause for appellant. With

him on the briefs was Edward J. McAndrew.

Christine N. Kohl, Attorney, United States Department of

Justice, argued the cause for appellee. With her on the brief

were Roscoe C. Howard, Jr., United States Attorney, and

Douglas N. Letter, Attorney.

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

USCA Case #02-5032 Document #743522 Filed: 04/11/2003 Page 1 of 13
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Before: GINSBURG, Chief Judge, and EDWARDS and GARLAND,

Circuit Judges.

Opinion for the Court filed by Circuit Judge EDWARDS.

EDWARDS, Circuit Judge: This case arises from an investigation by appellee Consumer Product Safety Commission

(‘‘CPSC’’ or ‘‘the Commission’’) of automatic sprinkler heads

manufactured by appellant Reliable Automatic Sprinkler

Company (‘‘Reliable’’). Commission compliance officials informed Reliable that they intended to make a preliminary

determination that the sprinkler heads present a ‘‘substantial

product hazard’’ as defined by the Consumer Product Safety

Act (‘‘the Act’’), 15 U.S.C. § 2064(a). They also requested

Reliable to undertake voluntary corrective action to address

the alleged hazards associated with the sprinkler heads. In

response, Reliable filed suit against the Commission in the

District Court, seeking a declaratory judgment that the agency lacks statutory authority to regulate Reliable’s sprinkler

heads, because they are not ‘‘consumer products’’ as defined

by the Act, 15 U.S.C. § 2052(a)(1). The District Court granted the Commission’s motion to dismiss for lack of final agency

action.

On appeal, Reliable contends that the District Court erred

in finding no final agency action. Reliable argues that the

Commission has pursued its investigation against the company on the erroneous assumption that the disputed sprinkler

heads are ‘‘consumer products’’ under the Act. Thus, according to Reliable, the Commission has taken final agency action

in determining that Reliable’s sprinkler heads are ‘‘consumer

products’’ under the Act and in assuming jurisdiction to

regulate them. We reject these contentions.

The Act makes it clear that the Commission has no authority to coercively regulate products before first conducting a

formal, on-the-record adjudication. It is undisputed here that

the Commission has yet to issue a complaint; it has yet to

authorize or conduct a hearing; it has yet to determine

conclusively its jurisdiction to regulate; it has yet to determine whether the sprinkler heads present a ‘‘substantial

product hazard’’; and it has yet to issue any compliance

USCA Case #02-5032 Document #743522 Filed: 04/11/2003 Page 2 of 13
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orders against Reliable. CPSC has merely conducted an

investigation and issued a letter requesting voluntary compliance. This does not constitute final agency action and is

therefore unreviewable. Accordingly, we affirm the judgment of the District Court.

I. BACKGROUND

The Act, 15 U.S.C. § 2051 et seq., gives the Commission the

authority to conduct investigations on the safety of consumer

products. Id. § 2054(b). A principal responsibility of the

Commission is to determine ‘‘that a product distributed in

commerce presents a substantial product hazard and that

notification is required in order to adequately protect the

public from such substantial product hazard.’’ Id. § 2064(c).

If CPSC makes such a determination, it may order the

manufacturer, retailer, or distributor of the product to give

public notice of the defect, bring the product into compliance

with applicable safety standards, replace the product, or

refund the purchase price. See id. § 2064(c), (d). The

agency can make such a determination and issue a compliance

order only after affording interested persons an opportunity

for a hearing in accordance with the formal, on-the-record

adjudication requirements of the Administrative Procedure

Act (‘‘APA’’), 5 U.S.C. § 554. See 15 U.S.C. § 2064(c), (d), (f).

Prior to initiating the administrative proceedings required

under this statutory scheme, the Commission can ‘‘attempt to

protect the public from substantial product hazards by seeking TTT voluntary remedies,’’ such as ‘‘corrective action

plans,’’ in which a firm sets forth the remedial action it will

voluntarily undertake. 16 C.F.R. § 1115.20. A corrective

action plan explains, inter alia, how a firm will notify the

public of the hazard, and whether the firm will repair or

replace the product, or refund the purchase price. Id.

§ 1115.20(a). This voluntary corrective action ‘‘has no legally

binding effect.’’ Id. If the Commission is unable to obtain a

firm’s voluntary corrective action, it may file an administrative complaint, which initiates formal administrative proceedUSCA Case #02-5032 Document #743522 Filed: 04/11/2003 Page 3 of 13
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ings, see id. § 1025.11, including a trial-type hearing in accordance with the Commission’s rules. See id. § 1025.

Reliable is a manufacturer of automatic sprinkler heads

that are incorporated into automatic fire sprinkler systems

installed in commercial buildings. From 1973 to 1983, Reliable manufactured the ‘‘Model A Flush’’ sprinkler heads. In

1999, the Commission’s Office of Compliance began investigating these sprinkler heads to determine whether they

present a substantial product hazard. On September 11,

2000, Commission compliance officials informed Reliable by

letter that ‘‘it is the intention of the Compliance staff to make

the preliminary determination that these sprinklers present a

substantial product hazard, as defined by TTT 15 U.S.C.

§ 2064(a).’’ Letter from Jimmie L. Williams, Jr., Counsel for

Office of Compliance, CPSC, to Paul D. Derounian, Counsel

for Reliable (Sept. 11, 2000), reprinted in Joint Appendix

(‘‘JA’’) 27. But prior to making the preliminary determination, the officials requested Reliable to take ‘‘voluntary corrective action,’’ pursuant to 16 C.F.R. § 1115.20(a). Id.

To date, Reliable has not submitted a voluntary corrective

action plan. The Commission has not yet made a formal

determination that the sprinkler heads present a ‘‘substantial

product hazard,’’ or even filed an administrative complaint

initiating the administrative proceedings that would be required before the agency could make such a determination.

Indeed, the Commission has not as yet made a record determination that it has jurisdiction over Reliable’s sprinkler

heads. The Commission has brought administrative enforcement proceedings pursuant to 15 U.S.C. § 2064 against several other manufacturers of sprinkler heads, see CPSC Admin.

Compl. ¶ 1, JA 59; CPSC Admin. Compl. ¶ 1, JA 166, but

Reliable is not a party to those proceedings.

On January 9, 2001, Reliable filed the instant suit against

the Commission in the District Court, seeking a declaratory

judgment that Reliable’s sprinkler heads are not ‘‘consumer

products’’ within the meaning of the Act, 15 U.S.C.

§ 2052(a)(1), which defines ‘‘consumer product,’’ subject to

certain exceptions, as:

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any article, or component part thereof, produced or

distributed (i) for sale to a consumer for use in or

around a permanent or temporary household or

residence, a school, in recreation, or otherwise, or (ii)

for the personal use, consumption or enjoyment of a

consumer in or around a permanent or temporary

household or residence, a school, in recreation, or

otherwiseTTTT

Reliable contended that, because its sprinkler heads are not

consumer products within the meaning of the Act, the Commission lacked statutory authority to regulate Reliable’s

sprinkler heads. See Complaint for Declaratory Judgment,

JA 5, 9-10. The District Court granted the Commission’s

motion to dismiss for lack of subject matter jurisdiction

pursuant to FED. R. CIV. P. 12(b)(1). See Reliable Automatic

Sprinkler Co., Inc. v. CPSC, 173 F. Supp. 2d 41, 52 (D.D.C.

2001). Relying on FTC v. Standard Oil Co. of Cal., 449 U.S.

232, 243 (1980) (holding that the agency’s issuance of an

administrative complaint averring reason to believe that the

plaintiff was violating the law is not final agency action), the

District Court held that the Commission’s investigatory steps

did not rise to the level of final agency action within the

meaning of the APA. Reliable, 173 F. Supp. 2d at 52.

II. ANALYSIS

We review de novo the District Court’s grant of appellee’s

motion to dismiss. Weyrich v. New Republic, Inc., 235 F.3d

617, 623 (D.C. Cir. 2001).

Under the APA, ‘‘[a]gency action made reviewable by statute and final agency action for which there is no other

adequate remedy in a court are subject to judicial review.’’ 5

U.S.C. § 704. As a threshold matter, the parties raise the

issue of whether the District Court’s dismissal of the case

pursuant to FED. R. CIV. P. 12(b)(1) was improper, because, in

cases such as this one, in which judicial review is sought

under the APA rather than a particular statute prescribing

judicial review, the requirement of final agency action is not

jurisdictional under Califano v. Sanders, 430 U.S. 99, 107

(1977) (holding that ‘‘the APA does not afford an implied

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grant of subject-matter jurisdiction permitting federal judicial

review of agency action’’). We need not dwell on this issue,

for it raises a question of no significance in this case. If there

was no final agency action here, there is no doubt that

appellant would lack a cause of action under the APA.

Therefore, even though there was no basis for dismissal

under Rule 12(b)(1), we may properly affirm the District

Court’s judgment pursuant to Rule 12(b)(6). See EEOC v. St.

Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir.

1997).

Having disposed of the threshold issue, we turn now to the

question of finality. The District Court’s authority to review

the conduct of an administrative agency is limited to cases

challenging ‘‘final agency action.’’ 5 U.S.C. § 704. An agency action is deemed final if it is ‘‘ ‘definitive’ ’’ and has a

‘‘ ‘direct and immediate TTT effect on the day-to-day business’ ’’ of the party challenging the agency action. Standard

Oil, 449 U.S. at 239 (quoting Abbott Labs. v. Gardner, 387

U.S. 136 (1967)). Final agency action ‘‘mark[s] the consummation of the agency’s decisionmaking process’’ and is ‘‘one

by which rights or obligations have been determined, or from

which legal consequences will flow.’’ Bennett v. Spear, 520

U.S. 154, 178 (1997) (internal quotation marks and citations

omitted). Agency action is considered final to the extent that

it imposes an obligation, denies a right, or fixes some legal

relationship. Role Models Am., Inc. v. White, 317 F.3d 327,

331-32 (D.C. Cir. 2003).

Reliable acknowledges that there has been no final agency

action with respect to the question whether Reliable’s sprinkler heads present a substantial product hazard. Nevertheless, Reliable seeks judicial review of the Commission’s regulatory jurisdiction. Reliable contends that its sprinkler heads

are not ‘‘consumer products’’ under the Act, and that the

Commission therefore lacks statutory authority to regulate

Reliable’s sprinkler heads. Reliable argues that, because this

is a challenge to the agency’s statutory authority to regulate,

rather than to the substance of any substantial hazard determination, the agency’s pre-enforcement actions are sufficientUSCA Case #02-5032 Document #743522 Filed: 04/11/2003 Page 6 of 13
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ly final to warrant judicial review of the agency’s jurisdiction

at this stage. We reject this line of reasoning.

The agency’s conduct thus far amounts to an investigation

of appellant’s sprinkler heads, a statement of the agency’s

intention to make a preliminary determination that the sprinkler heads present a substantial product hazard, and a request for voluntary corrective action. These agency activities

do not constitute final agency action within the meaning of

the APA, 5 U.S.C. § 704. Certainly the agency’s investigation assumes for now that it has jurisdiction to regulate the

sprinkler heads. But the agency has not yet made any

determination or issued any order imposing any obligation on

Reliable, denying any right of Reliable, or fixing any legal

relationship. See Role Models, 317 F.3d at 331-32. The Act

and the agency’s regulations clearly prescribe a scheme

whereby the agency must hold a formal, on-the-record adjudication before it can make any determination that is legally

binding. Here, the agency has not yet taken the steps

required under the statutory and regulatory scheme for its

actions to have any legal consequences. In the event that the

agency should decide to pursue enforcement action against

Reliable, the agency must, in the course of the formal adjudication, afford Reliable the opportunity to convince the agency

that the term ‘‘consumer product’’ does not include Reliable’s

sprinkler heads and that the agency therefore lacks jurisdiction to regulate them. But to date, the agency has not even

filed an administrative complaint against Reliable.

The leading Supreme Court case on final agency action,

Standard Oil, held that even the filing of an administrative

complaint does not constitute final agency action. See Standard Oil, 449 U.S. at 243. It follows that the Commission’s

actions here, which are merely investigatory and clearly fall

short of filing an administrative complaint, are not final

agency action. No legal consequences flow from the agency’s

conduct to date, for there has been no order compelling

Reliable to do anything. To be sure, there may be practical

consequences, namely the choice Reliable faces between voluntary compliance with the agency’s request for corrective

action and the prospect of having to defend itself in an

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administrative hearing should the agency actually decide to

pursue enforcement. But the request for voluntary compliance clearly has no legally binding effect. 16 C.F.R.

§ 1115.20(a). And, as the Supreme Court stated in Standard

Oil, the burden of responding to charges in an administrative

enforcement hearing ‘‘is different in kind and legal effect

from the burdens attending what heretofore has been considered to be final agency action.’’ Standard Oil, 449 U.S. at

242. See also Ticor Title Ins. Co. v. FTC, 814 F.2d 731, 742

(D.C. Cir. 1987) (Edwards, J.) (‘‘[T]he litigant’s interest in not

being forced to defend itself in an allegedly unauthorized

proceeding TTT is far less weighty than the court’s interest in

conserving its judicial resources and discouraging the flouting

of administrative procedures.’’). These consequences attach

to any parties who are the subjects of Government investigations and believe that the relevant law does not apply to

them. If the Government brings an enforcement proceeding,

such parties may defend themselves on the ground that the

agency lacks jurisdiction, but they may not preemptively

challenge the Government’s jurisdiction before the Government has taken any action to enforce the law against them.

See Standard Oil, 449 U.S. at 243 (‘‘Judicial review TTT

should not be a means of turning prosecutor into defendant

before adjudication concludes.’’).

The reason to preclude such interlocutory challenges to

agency jurisdiction inheres in the purpose of the final agency

action rule. ‘‘The interest in postponing review is powerful

when the agency position is tentative. Judicial review at that

stage improperly intrudes into the agency’s decisionmaking

process. It also squanders judicial resources since the challenging party still enjoys an opportunity to convince the

agency to change its mind.’’ Ciba-Geigy Corp. v. EPA, 801

F.2d 430, 436 (D.C. Cir. 1986) (citations omitted). Reliable is

mistaken in its claim that a special rule applies when a

litigant challenges the agency’s authority to regulate rather

than the merits of an agency’s act of regulation. The policy

undergirding the finality requirement ‘‘is no less applicable to

piecemeal appeals on issues of statutory authority than to

piecemeal appeals on other points.’’ Aluminum Co. of Am. v.

USCA Case #02-5032 Document #743522 Filed: 04/11/2003 Page 8 of 13
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United States, 790 F.2d 938, 942 (D.C. Cir. 1986). So long as

Reliable retains the opportunity to convince the agency that it

lacks jurisdiction over Reliable’s sprinkler heads, it makes no

sense for a court to intervene. It conserves both judicial and

administrative resources to allow the required agency deliberative process to take place before judicial review is undertaken.

Reliable points out that the Commission has already

brought administrative proceedings against several other

manufacturers of automatic sprinkler heads and taken the

position in those proceedings that sprinkler heads are ‘‘consumer products.’’ But in all but one of those cases, only

administrative complaints were issued, putting them squarely

within the Standard Oil realm. And in the one case in which

an ALJ actually rendered an opinion resolving a manufacturer’s jurisdictional objection, the Commission never passed on

the issue because the case was settled. In short, the Commission itself has never considered the issue raised by Reliable, neither in this case nor any other. Moreover, it does

not follow from the fact that the CPSC has brought administrative proceedings against other manufacturers that the

agency will use its resources to proceed against Reliable.

The agency’s letter to Reliable merely stated an ‘‘intention of

the Compliance staff to make the preliminary determination

that these sprinklers present a substantial product hazard.’’

Letter from Williams to Derounian, JA 27. We do not know

whether the agency will bring administrative enforcement

proceedings against Reliable. Cf. Am. Tel. & Tel. Co. v.

EEOC, 270 F.3d 973, 976 (D.C. Cir. 2001) (finding no final

agency action where it was unclear whether the agency had

decided to sue the plaintiff). If the agency does decide to

pursue a complaint, Reliable will be afforded a hearing in

which it will have ample opportunity to convince the agency

against the assertion of regulatory jurisdiction and create a

record for judicial review should that later be deemed necessary. And a hearing before the Commission will not be an

idle gesture, because the agency has made it clear that the

interpretation of ‘‘consumer product’’ with respect to sprinUSCA Case #02-5032 Document #743522 Filed: 04/11/2003 Page 9 of 13
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kler heads remains to be determined. See Appellee’s Br. 17,

24, 26.

Relying on three pre-enforcement cases in which agency

action was determined to be sufficiently final to allow for

judicial review, Ciba-Geigy; Atlantic Richfield Co. v. U.S.

Dep’t of Energy, 769 F.2d 771 (D.C. Cir. 1985) (‘‘ARCO’’);

and Athlone Industries, Inc. v. CPSC, 707 F.2d 1485 (D.C.

Cir. 1983), Reliable argues that we should interpret Standard

Oil narrowly here, and find that the agency’s actions in this

case are also sufficiently final to warrant judicial review. We

reject this invitation, because the cases cited by Reliable do

not support review here.

In Ciba-Geigy, the Environmental Protection Agency

(‘‘EPA’’) imposed a deadline for labeling changes for a registered pesticide without affording registrants the notice and

hearing procedures set forth in the statute. When an affected party sought judicial review, this court concluded that the

letters that EPA sent to the plaintiff

unequivocally stated EPA’s position on the question

whether registrants were entitled to a cancellation

hearing before labeling changes could be required.

Not only did the statement of position admit of no

ambiguity, but it gave no indication that it was

subject to further agency consideration or possible

modification. The letter emphatically required

Ciba-Geigy’s ‘‘immediate compliance.’’

Ciba-Geigy, 801 F.2d at 436-37 (footnote and citations omitted). In the instant case, however, there has been no unequivocal statement of the agency’s position on the meaning

of ‘‘consumer product’’ or on the agency’s jurisdiction over

Reliable’s sprinklers. The agency has requested voluntary

corrective action, but has not ordered Reliable to comply.

What is more, in Ciba-Geigy, the agency denied the plaintiff

any opportunity to be heard; whereas here, a hearing will

take place in due course should the Commission decide to

pursue enforcement against Reliable.

Reliable’s further argument on the basis of Ciba-Geigy

that, in this case, a ‘‘series of agency pronouncements,’’ 801

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F.2d at 436 n.7, can make out final agency action is misplaced.

Although we so held in Ciba-Geigy and in Barrick Goldstrike

Mines, Inc. v. Browner, 215 F.3d 45, 49 (D.C. Cir. 2000)

(holding that ‘‘a preamble plus a guidance plus an enforcement letter from EPA could crystallize an agency position

into final agency action within APA § 704’s meaning’’), neither of those cases involved a situation in which, as here, the

agency is required by statute to bring an administrative

proceeding before it may make any legally binding determination. Here, the agency has not yet done that which the

statutory scheme requires for its conduct to constitute final

agency action.

In Athlone, plaintiff sued to enjoin the assessment of civil

penalties in an administrative proceeding that the Commission had initiated, on the ground that the agency lacked the

statutory authority to proceed administratively. In holding

that the plaintiff did not have to exhaust the prescribed

administrative remedies before gaining judicial review of the

agency’s statutory authority, this court emphasized ‘‘the purely legal nature of the issue presented,’’ which required ‘‘[n]o

factual development or application of agency expertise.’’ Athlone, 707 F.2d at 1489. We also emphasized the ‘‘likely

futility of further resort to’’ administrative proceedings, since

it was ‘‘highly unlikely that the Commission would change its

position if the case were remanded to it.’’ Id. In the instant

case, by contrast, the question whether the statutory term

‘‘consumer product’’ includes Reliable’s sprinkler heads is not

a purely legal one, since the application of the statutory term

to the sprinkler heads would clearly involve the resolution of

factual issues and the creation of a record. And agency

expertise may be relevant to the question whether sprinkler

heads are ‘‘consumer products.’’

Although appellant claims that it is highly unlikely that the

agency will change its position and that resort to the agency’s

adjudicatory proceeding would be futile, nothing in the record

indicates that the outcome of a hearing, where Reliable will

have the opportunity to present its arguments to the agency,

is preordained. Appellant argues that the Commission’s adUSCA Case #02-5032 Document #743522 Filed: 04/11/2003 Page 11 of 13
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ministrative proceedings against other sprinkler manufacturers establish that the agency has taken a definitive position as

to its jurisdiction over automatic sprinkler heads in general.

But as the District Court reasoned, Reliable ‘‘may be able to

persuade an administrative law judge that the manner in

which its sprinklers are produced and marketed, and the

locations in which [they] are installed, demonstrate that they

are not ‘consumer products.’ ’’ Reliable, 173 F. Supp. 2d at

51 (citation omitted).

Finally, in ARCO, which applied Athlone, this court held

that the doctrines of exhaustion and ripeness did not bar a

challenge to the Department of Energy’s authority to adjudicate remedial orders and impose discovery sanctions in such

proceedings. Again, the question of the agency’s statutory

authority was a strictly legal issue for which factual development and agency expertise were unnecessary, and resort to

the agency would have been futile, because the agency ‘‘structured its regulatory processes on the premise that it has

power to act in an adjudicatory capacity.’’ ARCO, 769 F.2d

at 782. In addition, ARCO was ‘‘faced with the dilemma of

having to [choose] between complying with allegedly ultra

vires discovery orders – and thus revealing materials that

otherwise would remain confidential – and flouting the orders

and facing the consequences should the Department ultimately be found to have had the power to issue the orders.’’ Id. at

783-84.

Reliable’s dilemma of having to choose between voluntary

corrective action or defending itself in an administrative

proceeding, should the agency decide to bring one, is not

analogous to the plaintiffs’ dilemma in ARCO. The discovery

orders in ARCO were legally binding orders, whereas here,

there is no order, only the possibility of Reliable having to

defend itself at an enforcement hearing if Reliable does not

undertake certain voluntary action, and if the agency decides

to proceed against it.

III. CONCLUSION

We affirm the judgment of the District Court. The Commission’s activities to date do not constitute final agency

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action. We therefore dismiss this action pursuant to FED. R.

CIV. P. 12(b)(6), because appellant has failed to state a cause

of action.

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