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Matched Legal Cases: ['§ 136', '§ 3', '§ 10', '§ 136', '§ 136', '§ 136', '§ 3', '§ 136', '§ 3', '§ 136', '§ 162', '§ 553', '§ 553', '§ 553']

| Mobay Chemical Corp. v. Gorsuch
argued: April 28, 1982.
MOBAY CHEMICAL CORPORATION, APPELLANT IN 81-2190 AND 81-2191v.ANNE M. GORSUCH, ADMINISTRATOR ENVIRONMENTAL PROTECTION AGENCY, APPELLEE; PENNWALT CORPORATION, APPELLANT IN 81-2469 V. ANNE M. GORSUCH, ADMINISTRATOR ENVIRONMENTAL PROTECTION AGENCY, APPELLEE
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA. D.C. Civil Nos. 79-0591 and 81-0373. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA. D.C. Civil No. 80-2400
Before: Aldisert, Weis and Becker, Circuit Judges
Three cases have been consolidated here. In the suit brought in the Eastern District of Pennsylvania, Pennwalt Corporation challenged the constitutionality of the 1978 amendments to FIFRA, 7 U.S.C. § 136 et seq., but the district court granted summary judgment in favor of the EPA. Mobay Chemical Corporation mounted a similar attack in the Western District of Pennsylvania, and questioned certain implementing regulations promulgated in 1979 by the EPA. After trial, the district court upheld the statute and regulations. Mobay Chemical Corp. v. Costle, 517 F.Supp. 254 (W.D. Pa. 1981). In a separate action, the court modified an injunction against the EPA entered in Mobay Chemical Corp. v. Costle, 447 F.Supp. 811 (W.D. Mo. 1978), before the 1978 amendments were enacted and before the case had been transferred to Pennsylvania. Because the 1978 legislation authorized what the Missouri court had enjoined, the injunction was modified to reflect the statutory changes. Mobay Chemical Corporation v. Costle, 517 F.Supp. 252 (W.D. Pa. 1981).
As amended by the Federal Environmental Pesticide Control Act of 1972, FIFRA permitted applicants to designate portions of their data as trade secrets and prohibited the EPA from disclosing this information. Section 10(a) & (b), Pub. L. No. 92-516, 86 Stat. 973 (1972). In addition, the statute was changed so that data submitted in support of an application could not be considered by the agency in support of a subsequent application, unless two conditions were met. First, the later applicant had to compensate the original submitter for use of the data, and second, the original submitter did not designate the data as trade secrets. § 3(c)(1)(D). The 1975 amendments to this section further limited the protection against use of information to data submitted on or after January 1, 1970. Act of Nov. 28, 1975, Pub. L. No. 94-140, 89 Stat. 755 (1975).
The Federal Pesticide Act of 1978 removed the trade secret protection over test data provided by § 10(b) of the earlier legislation. Pub. L. No. 95-396, 92 Stat. 819 (1978). Applicants were granted a 10-year period of exclusive use for information about new chemicals contained in pesticides registered after September 30, 1978. Section 3(c)(1)(D)(i), 7 U.S.C. § 136a(c)(1)(D)(i). But the EPA may, without the permission of the original applicant, use data presented after December 31, 1969, which is not entitled to exclusive use, in support of another application for 15 years following the original submission. In this event, the later applicant must offer to compensate the original submitter. Section 3(c)(1)(D)(ii), 7 U.S.C. § 136a(c)(1)(D)(ii). If the parties cannot agree on the amount of compensation, either may initiate binding arbitration proceedings. Id. No limitation exists on the EPA's use of data that does not qualify for either the 10-year period of exclusive use or the 15-year period of compensation. Section 3(c)(1)(D)(iii), 7 U.S.C. § 136a(c)(1)(D)(iii).
We have reviewed the statutory amendments only briefly because the challenges made to the constitutionality of the use provisions mirror the contentions advanced in Chevron Chemical Co. v. Costle, 641 F.2d 104 (3d Cir.), cert. denied, 452 U.S. 961, 69 L. Ed. 2d 972, 101 S. Ct. 3110 (1981). There, we reviewed at length the legislative history of the amendments and their predecessors, and analyzed the claims of property deprivation. We rejected the constitutional challenges, concluding that, in the "use" context, applicants do not have a property interest in data submitted to the EPA beyond that conferred by FIFRA itself
As a panel, we are bound by Chevron. United States Court of Appeals for the Third Circuit, Internal Operating Procedures Ch. VIIIC (1980). Moreover, the arguments advanced in this appeal fail to convince us that Chevron should be reconsidered by the court en banc. We therefore reiterate that an applicant does not have a property interest in data submitted to the EPA that would prevent the agency from using the information in considering other requests for registration. Since there is no protected property interest as against use of the data, we also reject the contention, as we did in Chevron, that the compulsory arbitration provision deprives the original submitters of the right to a judicial determination of just compensation. For the same reason, we will also uphold the action of the court for the Western District of Pennsylvania modifying the injunction against the EPA to reflect the changes made FIFRA's use provisions by the 1978 amendments.*fn1
In Corn Products Refining Co. v. Eddy, 249 U.S. 427, 63 L. Ed. 689, 39 S. Ct. 325 (1919), the Supreme Court had no difficulty in rejecting a taking challenge to a statute requiring disclosure of the confidential formula of a food product. After observing that the purpose of the law was to prevent adulteration and misbranding that might mislead purchasers as to the wholesomeness of the product, the Court said:
"It is too plain for argument that a manufacturer or vendor has no constitutional right to sell goods without giving to the purchaser fair information of what it is that is being sold. The right of a manufacturer to maintain secrecy as to his compounds and processes must be held subject to the right of the State, in the exercise of its police power and in promotion of fair dealing, to require that the nature of the product be fairly set forth."
249 U.S. at 431-32. See also National Fertilizer Association v. Bradley, 301 U.S. 178, 81 L. Ed. 990, 57 S. Ct. 748 (1937). The same principle requires us to reject Pennwalt's and Mobay's attacks on FIFRA's disclosure provision as well.
Mobay's final constitutional challenge is that FIFRA § 3(g), 7 U.S.C. § 136a(g), which directs the EPA to re-register all pesticides "in the most expeditious manner practicable," deprives the company of its right to compensation for data that other applicants relied on in obtaining twenty-three previous registrations. In Mobay Chemical Corp. v. Costle, 447 F.Supp. 811 (W.D. Mo. 1978), the Missouri district court decided that the EPA violated the data compensation requirements of the 1972 amendments by failing to require other companies to compensate Mobay for the use of its data. The court refused to declare the registrations invalid, however, because Mobay would be compensated upon re-registration. At the time the Missouri court decided the case, the statute provided that re-registration was to be completed by October 21, 1977. The 1978 amendments removed this deadline, and Mobay asserts that this change is an uncompensated taking.
In addition to the constitutional challenges to FIFRA made by both appellants, Mobay attacks certain regulations adopted by the EPA. This assault has two phases -- lack of conformity to the enabling statute, and failure to observe the rulemaking requirements set out in the Administrative Procedure Act.
As part of its program to implement the 1978 amendments, the EPA adopted a policy of generally granting only "conditional registrations" under FIFRA § 3(c)(7), 7 U.S.C. § 136a(c)(7). 40 C.F.R. § 162.7(d) and (e). The agency wanted to use a new approach, known as the "generic standards system," in considering registration and re-registration. 44 Fed. Reg. 76311-12 (Dec. 26, 1979). Under this system, the EPA intends to develop standards for each group of pesticide products containing the same active ingredient. Completion of the generic standards process is expected to take at least 10 years. In the meantime, only conditional registrations will be granted.
At one stage of the proceedings in the district court, the EPA conceded that it shared Mobay's interpretation of the statute.*fn2 At other times in the district court, however, and on appeal, the agency has taken the position that the "cite all" regulations are consistent with FIFRA. On these occasions, the EPA views the phrase "if requested by the Administrator" that appears in the subsection as authorizing it to demand cumulative rather than alternative methods of support. The district judge agreed that the regulations are supported by this reading of the statute.
Congress enacted the 1978 FIFRA amendments on September 30, 1978. The EPA published proposed data compensation rules on June 20, 1977, based on the provisions of the then-current statute and on the agency's then-current policies. 42 Fed. Reg. 31284. As the agency admits, however, the 1978 amendments "drastically altered" the compensation portions of the Act. 44 Fed. Reg. 27945 (May 11, 1979).
On July 25, 1978, the EPA published an Advance Notice of Interim Final and Proposed Rulemaking (ANPR) for the conditional registration program, and solicited comments. It included a suggestion that commenters might also wish to address compensation for the use of data. 43 Fed. Reg. 32154-55. On October 6, 1978, the EPA circulated working drafts of the conditional registration and data compensation regulations to over 2500 interested groups, agencies, and organizations. See 44 Fed. Reg. 27932-33. Then, on October 10, 1978, the agency published a notice of open public meetings to be held in Washington, D.C. during the next month to solicit comments on the conditional registration of pesticides as well as on data review and compensation. 43 Fed. Reg. 46555.
On May 11, 1979, the EPA promulgated the present conditional registration regulations as interim final rules, and the data compensation regulations as final rules. 44 Fed. Reg. 27932, 27945. Both sets of regulations were made effective immediately.
The EPA recognized that the data compensation regulations "differ significantly" from those proposed in June 1977. 44 Fed. Reg. 27950-51. Nevertheless, it invoked the "good cause" exception to the APA's notice-and-comment requirements on the grounds that reproposal would be "contrary to the public interest" because of the long delay it would cause in resuming the registration program. 5 U.S.C. § 553(b)(B). The EPA justified its action by noting that a working draft was circulated in October and public meetings were held in November 1978, and said it would revise the regulations to the extent appropriate, as judged by its experience and by comments received. Finally, the agency found that these same reasons constituted "good cause" for making the regulations effective immediately, instead of observing the 30-day period between publication and effective date that is otherwise required. 5 U.S.C. § 553(d)(3).
The EPA decided not to publish the conditional registration regulations in proposed form because the ANPR, the circulated working draft, and the public meetings had already provided "considerable opportunity for public comment." 44 Fed. Reg. 27933. Publication of a general notice of proposed rule making is not necessary when the "persons subject thereto . . . otherwise have actual notice. . . ." 5 U.S.C. § 553(b). The agency again asserted a compelling public interest in resuming the registration program as quickly as possible as a reason for making the regulations effective immediately.
We still adhere to this view of the matter today, and hold that the agency did not establish good cause to excuse compliance with the APA. As we said in Sharon Steel, "provision of prior notice and comment allows effective participation in the rulemaking process while the decisionmaker is still receptive to information and argument." 597 F.2d at 381. Suggestions from informed sources are especially valuable when, as here, the agency must implement a complex and technical statute.
In evaluating whether the July 25, 1978 ANPR gave sufficient actual notice for the EPA to dispense with the usual APA procedures, "the adequacy of the notice must be tested by determining whether it would fairly apprise interested persons of the 'subjects and issues' before the Agency." American Iron & Steel Institute v. EPA, 568 F.2d at 293. Inspection of the ANPR shows that it falls short of this standard. It states that "the regulations will address the registration of pesticide products on a conditional basis, that is, contingent upon the later submission of certain data normally required prior to registration," and adds that "the regulations will specifically discuss . . . the procedures and conditions under which conditional registrations will be granted." 43 Fed. Reg. 32155. Plainly, these generalities are insufficient to alert interested parties to the full extent of the "conditional only" program actually envisioned by the EPA. Consequently, we do not agree with the district court's conclusion that good cause for waiver of the APA has been demonstrated.