Craker v. Drug Enforcement Administratio
Filing
OPINION issued by Juan R. Torruella, Appellate Judge; Kermit V. Lipez, Appellate Judge and Jeffrey R. Howard, Appellate Judge. Published. [09-1220]
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Entry ID: 5726036
United States Court of Appeals
For the First Circuit
No. 09-1220
LYLE E. CRAKER,
Petitioner,
v.
DRUG ENFORCEMENT ADMINISTRATION,
Respondent.
PETITION FOR REVIEW OF AN ORDER OF THE
DRUG ENFORCEMENT ADMINISTRATION
Before
Torruella, Lipez and Howard,
Circuit Judges.
Theodore P. Metzler, with whom Eugene Gulland, Covington &
Burling LLP, M. Allen Hopper, ACLU Foundation of Northern
California, Sarah R. Wunsch and ACLU of Massachusetts were on
brief, for petitioner.
Mark T. Quinlivan, Assistant United States Attorney, with whom
Carmen M. Ortiz, United States Attorney, was on brief, for
respondent.
April 15, 2013
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HOWARD, Circuit Judge. Petitioner Lyle E. Craker, a
professor at the University of Massachusetts, seeks review of an
order from the Drug Enforcement Administration ("DEA") denying his
application for registration to cultivate marijuana for medical
research.
After review of the administrative record, we deny the
petition.
I.
Statutory Landscape
In an effort to consolidate the nation's drug laws and
increase federal enforcement capabilities, Congress enacted the
Comprehensive Drug Abuse and Prevention and Control Act in 1970.
See Gonzales v. Raich, 545 U.S. 1, 11-12 (2005).
that
Act
was
the
Controlled
Substances
Included within
Act
("CSA"),
"a
comprehensive regime to combat the international and interstate
traffic in illegal drugs."
Id. at 12.
While observing that many
drugs within the purview of the CSA "have a useful and legitimate
medical purpose and are necessary to maintain the health and
general welfare of the American people," 21 U.S.C. § 801(1),
Congress also determined that the health and welfare of Americans
were
detrimentally
affected
by
"[t]he
illegal
importation,
manufacture, distribution, and possession and improper use of
controlled substances."
Id. § 801(2).
Consonant with these concerns, "Congress devised a closed
regulatory scheme making it unlawful to manufacture, distribute,
dispense, or possess any controlled substance except in a manner
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authorized by the CSA."
Raich, 545 U.S. at 13 (citing 21 U.S.C.
§§ 841(a)(1), 844(a)).
Under this regime, controlled substances
were organized into five schedules, reflective of their accepted
medical uses, their potential for abuse, and their psychological
and physical effects.
Id. at 13-14; 21 U.S.C. § 812.
Congress
placed marijuana in schedule I, the most stringently controlled
group.
21 U.S.C. § 812(c).1
A schedule I drug "has a high
potential for abuse . . . [,] has no currently accepted medical use
in treatment in the United States[, and] . . . [lacks] accepted
safety for use . . . under medical supervision."
Id. § 812(b)(1).
The manufacture of a schedule I substance is a criminal
offense unless the manufacturer has registered with the Attorney
General.
Id. § 822(a)(1).2
The CSA provides that the Attorney
General3 "shall register an applicant to manufacture substances in
1
At the request of the Assistant Secretary of Health,
Education and Welfare (now Health and Human Services), marijuana
was originally classified under Schedule I on a preliminary basis,
pending the "completion of certain studies." Gonzales v. Raich,
545 U.S. 1, 14 (2005). The CSA allows for transfer of substances
to, from, or between schedules.
21 U.S.C. § 811.
Although
considerable efforts have been made to reschedule marijuana, it
remains a Schedule I substance. Raich, 545 U.S. at 14-15 n.23; see
also Americans for Safe Access v. Drug Enforcement Admin., 706 F.3d
438, 449-452 (D.C. Cir. 2013) (finding that DEA's denial of
rescheduling petition was not arbitrary or capricious).
2
The CSA also contains separate registration provisions
relating to "distributors" and "practitioners" that are not
implicated in this case.
3
The Attorney General has delegated registration authority to
the Administrator of the DEA. 28 C.F.R. § 0.100(b).
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schedule I or II if he determines that such registration is
consistent
with
the
public
interest
and
with
United
States
obligations under international treaties, conventions or protocols
in effect on May 1, 1971."
Id. § 823(a).
The "public interest"
determination must be based on the following statutory factors:
(1) maintenance of effective controls against
diversion of particular controlled substances
and any controlled substance in schedule I or
II compounded therefrom into other than
legitimate medical, scientific, research, or
industrial
channels,
by
limiting
the
importation and bulk manufacture of such
controlled
substances
to
a
number
of
establishments which can produce an adequate
and uninterrupted supply of these substances
under adequately competitive conditions for
legitimate medical, scientific, research, and
industrial purposes;
(2) compliance with applicable State and local
law;
(3) promotion of technical advances in the art
of manufacturing these substances and the
development of new substances;
(4) prior conviction record of applicant under
Federal and State laws relating to the
manufacture, distribution, or dispensation of
such substances;
(5) past experience in the manufacture of
controlled substances, and the existence in
the establishment of effective control against
diversion;
(6) such other factors as may be relevant to
and consistent with the public health and
safety.
Id. § 823(a)(1)-(6).
The applicant carries the burden of proof at
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any administrative hearing on a registration application.
21
C.F.R. § 1301.44(a).
Since 1968, the National Center for Natural Products
Research ("NCNPR") at the University of Mississippi has held the
necessary registration and a government contract to grow marijuana
for research purposes.4
Lyle E. Craker, 74 Fed. Reg. 2101, 2104
(Drug Enforcement Admin. Jan. 7, 2009) (Denial of Application)
("Craker II").
The contract is administered by the National
Institute on Drug Abuse ("NIDA"), a component of the National
Institutes of Health ("NIH"), which, in turn, is a component of the
Department of Health and Human Services("HHS").
Id.
The contract
is opened for competitive bidding every five years. Id.
The NCNPR
is the only entity registered by the DEA to manufacture marijuana.
Lyle E. Craker, Ph.D, No. 05-16 (Drug Enforcement Admin. Feb. 12,
2007) (opinion, recommended ruling and decision) ("Craker I").
Among
the
"international
treaties,
conventions
or
protocols" referred to in section 823(a), the CSA implements the
provisions of the Single Convention on Narcotic Drugs, 18 U.S.T.
1407 ("Single Convention"), in an effort "to establish effective
control over international and domestic traffic in controlled
substances."
21 U.S.C. § 801(7).
4
As relevant to this proceeding,
NCNPR's registration and contract incepted prior to the
enactment of the CSA. Lyle E. Craker, 74 Fed. Reg. 2101, 2104
(Drug Enforcement Admin. Jan. 7, 2009) (Denial of Application)
("Craker II").
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Article 28 of the Single Convention addresses cultivation of
marijuana -- referred to therein by its taxonomic genus, cannabis
-- with reference to "the system of controls as provided in article
23 respecting the control of the opium poppy." Pursuant to article
23,
any
signatory
nation
that
"permits
the
cultivation
of
[marijuana or opium]" must designate one or more agencies to:
license cultivators and designate where plants may be grown;
purchase and take physical possession of each year's crops; and
have the exclusive right of importing, exporting, wholesale trading
and maintaining stocks other than those held by manufacturers of
opium alkaloids, medicinal opium or opium preparations.
II.
Dr.
Adjudication of Dr. Craker's Application
Craker,
a
professor
in
the
University
of
Massachusetts' Department of Plant, Soil and Insect Sciences,
applied to the DEA for registration to manufacture marijuana for
clinical research in 2001.
At the DEA's request, he supplemented
his application in August 2002.
He stated that "a second source of
plant material is needed to facilitate privately funded [Food and
Drug Administration ("FDA")]-approved research into medical uses of
marijuana, ensuring a choice of sources and an adequate supply of
quality, research-grade marijuana for medicinal applications."
Craker II, 74 Fed. Reg. at 2107.
production
costs
would
be
Dr. Craker indicated that his
underwritten
by
a
grant
from
the
Multidisciplinary Association for Psychedelic Studies ("MAPS"), a
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non-profit, tax-exempt research and education organization seeking
to develop marijuana into an FDA-approved prescription medicine.
Id. at 2106.
In December 2004, a DEA official issued an order to show
cause,
proposing
application.
the
denial
of
Dr.
Craker's
registration
Id. at 2101; see 21 U.S.C § 824(c); 21 C.F.R.
§ 1301.37(a), (c).
The order first concluded that Dr. Craker's
registration "would not be consistent with the public interest as
that term is used in 21 U.S.C. § 823(a)."
at 2101.
Craker II, 74 Fed. Reg.
The order also concluded that registration would be
inconsistent with the United States' obligations under the Single
Convention.
Id.
Dr. Craker timely requested a hearing, see 21
C.F.R. § 1301.37(d), which was conducted by an administrative law
judge ("ALJ") over nine days in August and December 2005.
See
generally 21 C.F.R. § 1316.41-.67 (outlining hearing procedures).
In February 2007, the ALJ issued an eighty-seven page
opinion, recommending that the DEA grant Dr. Craker's application.
Craker I.
The ALJ first concluded that the Single Convention was
not a bar to Dr. Craker's registration, noting that it appeared
that marijuana grown by the NCNPR or any other registrant for use
in research would qualify as either "medicinal" or "special stocks"
under the treaty, and thus not be prohibited by a government
monopoly requirement.
See Craker I at 82; Craker II, 74 Fed. Reg.
at 2102.
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The
ALJ
also
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found
that
Date Filed: 04/15/2013
Dr.
Craker's
Entry ID: 5726036
application
satisfied the "public interest" requirements of 21 U.S.C. § 823(a).
The ALJ first noted a dispute that we will revisit:
whether, as
Dr.
conditions"
Craker
asserts,
the
"adequately
competitive
requirement of section 823(a)(1) must be disregarded if there has
been a finding that the applicant can maintain effective controls
against diversion.
Craker I at 85; Craker II, 74 Fed. Reg. at
2102-03; see Noramco of Del., Inc. v. Drug Enforcement Agency, 375
F.3d 1148,
position
1152-54,
that
1157
supply
n.8
and
(D.C.
Cir.
competition
2004)
can
be
(noting DEA's
disregarded
if
registration does not increase risk of diversion).
The government's position with respect to Dr. Craker's
application
was
and
is
that
both
the
supply/competition criteria must be satisfied.
diversion
and
Without resolving
the issue, the ALJ considered both factors, concluding that Dr.
Craker had adequately proven that there is minimal risk that any
marijuana he cultivated would be diverted. With respect to supply,
the ALJ found that NIDA-approved researchers had not experienced
difficulty obtaining marijuana from NCNPR when it was needed.
Nevertheless, the ALJ found the supply to be inadequate because
NIDA refused to supply some researchers who held DEA registrations
and approvals from HHS.
Finally, the ALJ concluded that the
competitive bidding process for renewing the single extant NIDA
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marijuana contract did not amount to "adequate competition" within
the meaning of the statute.
After finding that Dr. Craker satisfied all but one of
the remaining statutory factors -- promotion of technical advances
under section 832(a)(3) -- the ALJ recommended that his application
be granted.
In
January
2009,
the
DEA
Deputy
Administrator
("Administrator") rejected the ALJ's recommendation and denied Dr.
Craker's application.
Craker II, 74 Fed. Reg. at 2133.
Turning
first to the Single Convention, the Administrator concluded that
Dr. Craker's application evinced an intent "to distribute marijuana
outside the HHS system."
the
Administrator
noted
Id. at 2114.
that
one
In support of this finding,
of
Dr.
Craker's
putative
colleagues, MAPS president Rick Doblin, testified that "[w]hat
we're trying to do is get the [Public Health Service] and NIDA out
of the picture."
Id. at 2114-15.
Dr. Craker's intent, the
Administrator ruled, is to elide "the very Government monopoly over
the wholesale distribution of marijuana that the Single Convention
demands.
Thus, from the outset . . . [Dr. Craker]'s proposed
registration cannot be reconciled with United States obligations
under the treaty."
Id. at 2115.
The Administrator additionally rejected Dr. Craker's
assertion that his plans fell within the Single Convention's
"medicinal opium" exception both because marijuana currently has no
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accepted use in the United States, id. at 2116-17, and that even if
considered analogous to medicinal opium, Dr. Craker's proposal
would run afoul of the Single Convention's "central theme," that a
single national agency must control the distribution and production
of raw marijuana used for research.
Id. at 2117.
Next, the Administrator found that granting Dr. Craker's
application would not be within the public interest, as required by
21 U.S.C. § 823(a).
In so doing, the Administrator first agreed
with the ALJ that the DEA had inconsistently construed section
823(a)(1) in the past, at times calling for consideration of supply
and competition regardless of the potential for diversion and at
other
times
ignoring
adequacy
of
supply
effective diversion controls were in place.
lengthy
disquisition
on
the
issue,
and
competition
Id. at 2118.
id.
at
if
After a
2127-32,
the
Administrator determined that a registrant must prove both that
effective controls against diversion are in place and that supplies
and competition are inadequate.
Id. at 2133 ("The alternative
interpretation, though found to be permissible, . . . provides no
mechanism to prevent the proliferation of bulk suppliers . . .
beyond that necessary to adequately supply . . . these materials
under adequately competitive conditions. [This] heightens the risk
of oversupply, which, in turn increases the risk of diversion.").
The Administrator then concluded that the existing supply
and quality of marijuana was adequate, observing that NIDA had been
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able to successfully supply research efforts and that the NIDA
denials cited by Dr. Craker were not due to insufficient supply,
but rather were due to lack of scientific merit.
Id. at 2119.
The
Administrator further accepted the ALJ's finding that the existing
marijuana supply was of sufficient quality to meet the research
community's needs, id. at 2102, observing further that Dr. Craker's
opposing anecdotal evidence of shortcomings in taste, potency and
freshness
was
countered
by
evidence
of
researchers'
satisfaction" with marijuana received from NIDA.
"overall
Id. at 2120.
In addressing the "adequately competitive conditions"
criterion, the Administrator focused on cost, noting that NIDA
provided marijuana either at cost (to privately-funded researchers)
or for free (to HHS-funded researchers), at no profit to NIDA.
at 2121.
Id.
Thus, Dr. Craker could not claim that his entry into
manufacturing
would
lower
costs
to
researchers,
beyond
a
generalized reference to the idea that more competition would lead
to lower costs, a claim which itself was belied by the fact that,
as
MAPS's
president
Mr.
Doblin
noted,
MAPS's
affected by its own profit-making motivation.
costs
Id.
would be
As a final
consideration under section 823(a)(1), the Administrator accepted
the government's reasoning that the process by which the NIDA
marijuana contract was opened periodically for competitive bidding
helped to ensure adequate competition.
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The Administrator next accepted the ALJ's recommendations
concerning sections (2), (3) and (4) of 823(a), agreeing that Dr.
Craker
had
applicable
adequately
laws,
that
demonstrated
he had
failed
that
to
he
would
demonstrate
abide
by
that his
proposed activities would promote scientific advancements in the
field, and that he had never been convicted of violating any
controlled substance law. Id. at 2123-25. With respect to section
821(a)(5), the Administrator noted that while Dr. Craker had no
experience in the manufacture of controlled substances, he would
have satisfactory diversion control in place.
Id. at 2125-26.
Finally, the Administrator concluded that Mr. Doblin's admission
that he regularly smoked marijuana in violation of federal drug
laws and that he was to play a central role in the proposed
manufacturing operation was another factor weighing against Dr.
Craker's application.
Id. at 2126-27; 21 U.S.C. § 821(a)(6).
The Administrator ultimately concluded that any one of
three negative findings could provide a "compelling" basis to deny
the application:
conflict with the Single Convention; existing
adequate supply and competition; and Mr. Doblin's conduct and
involvement.
Craker II, 74 Fed. Reg. at 2133. Concurrent with the
denial, however, the Administrator also granted Dr. Craker fifteen
days in which to file a motion for reconsideration to refute any
facts of which the Administrator had taken official notice during
the proceedings.
Id. at 2108 n.24;
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see 21 C.F.R. § 1316.59(e).
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Availing himself of the opportunity, Dr. Craker filed a
motion for reconsideration in January 2009. He also requested that
the hearing be reopened for him to call additional witnesses.
On
February 9, 2009, the Administrator issued an order permitting
further briefing and stating that she would decide on the basis of
those submissions whether to grant Dr. Craker's request to reopen
the
administrative
reconsideration.
hearing
or
grant
his
request
for
In December 2010, the Administrator denied the
request to reopen the hearing, but allowed Dr. Craker to further
supplement the record and to raise new arguments.
In August 2011,
the Administrator denied the motion for reconsideration.
Lyle E.
Craker, Ph.D, 76 Fed. Reg. 51403, (Drug Enforcement Admin. Aug. 8,
2011) (order regarding officially noticed evidence and motion for
reconsideration) ("Craker III").
The Administrator rejected claims that Dr. Craker had
made alleging political and institutional bias, as well as his
argument that the FDA, rather than NIDA, should assess registration
applications under 21 U.S.C. § 823.
Administrator
also
reiterated
the
Id. at 51406-08.
finding
that
Dr.
The
Craker's
registration would be inconsistent with the Single Convention. Id.
at 51410. At the same time, the Administrator backed away somewhat
from the previous conclusion with respect to Mr. Doblin, observing
that some controls could conceivably be put into place to alleviate
concerns over his personal use of marijuana, but that the other
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grounds for denial of the application rendered analysis of that
issue unnecessary.
Id. at 51411-12.
The final pieces of the background puzzle emerge from Dr.
Craker's initial filing with us after the DEA issued Craker II.
February
13,
2009,
while
his
motion
for
reconsideration
On
was
pending, Dr. Craker filed a petition for review of Craker II in
this court, pursuant to 21 U.S.C. § 877.
At the same time, he
filed a motion to stay the appellate proceedings and hold them in
abeyance, which we granted on March 12, 2009, until such time as
the motion for reconsideration before the Administrator was acted
on. In his appellate motion, Dr. Craker indicated that the goal of
the motion was to preserve his appeal rights in the event that
Craker II was deemed to be a "final decision" within the meaning of
21 U.S.C. § 877, thus triggering the statute's 30-day deadline for
seeking judicial review.
notification
that
Craker
On August 24, 2011, after receiving
III
had
been issued,
we
lifted
the
abeyance and permitted the petition for review to proceed.
III.
A.
Analysis
Jurisdiction
The government argues that we are without jurisdiction to
address the merits of Dr. Craker's petition.
Its jurisdictional
theory starts with the fact that Congress has permitted judicial
review only of "final" agency decisions.
21 U.S.C. § 877; see also
John Doe, Inc. v. Drug Enforcement Admin., 484 F.3d 561, 565 (D.C.
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(final
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decision
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requirement
under
§
Entry ID: 5726036
877
is
jurisdictional in nature); Fry v. Drug Enforcement Admin., 353 F.3d
1041, 1044 (9th Cir. 2003); Nutt v. Drug Enforcement Admin., 916
F.2d 202, 203 (5th Cir. 1990) (same). The government's position is
that the only final decision is Craker III, from which Dr. Craker
did not seek review.
While the government acknowledges that Dr.
Craker did seek review of Craker II, it argues that the pendency of
the motion for agency reconsideration of that decision deprived the
order of finality, and thus us of jurisdiction.
The premature
petition for review, the government further contends, did not ripen
so as to vest us with jurisdiction once the agency issued its final
decision on reconsideration.
The government relies on a rule, established by the D.C.
Circuit and adopted by others, whereby a petition for review filed
during the pendency of a motion for agency reconsideration is
"incurably premature and in effect a nullity." Gorman v. NTSB, 558
F.3d 580, 586 (D.C. Cir. 2009) (internal quotation omitted);
accord Council Tree Commc'ns, Inc. v. FCC, 503 F.3d 284, 287 (3d
Cir. 2007).
however,
In the cases in which that rule has been applied,
either
the
governing
statute
or
the
implementing
regulations expressly provided for agency reconsideration.
e.g.,
Council
Tree
Commc'ns,
503
F.3d
at
286
(petition
See,
for
reconsideration of FCC order pursuant to 47 C.F.R. § 1.106);
Clifton Power Corp. v. FERC, 294 F.3d 108, 110 (D.C. Cir. 2002)
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(motion for rehearing and reconsideration of FERC order pursuant to
16 U.S.C. § 825(b)). No similar procedural guarantee existed here,
which is why Dr. Craker filed his protective petition with us.
Nevertheless, the government argues that the facts of this case
still
favor
applying
the
"incurably
premature"
rule.
The
Administrator expressly afforded Dr. Craker the opportunity to
refute the facts of which she had taken official notice by filing
a motion for reconsideration and, after Dr. Craker availed himself
of that opportunity and also sought broader reconsideration of the
order, permitted him to file supplemental briefing.
Accordingly,
the government argues, Dr. Craker's appeal was premature despite
the fact that neither the CSA nor DEA's implementing regulations
provide for a motion for reconsideration.5
It is not clear that even those courts that have adopted
the maturation rule would apply it here, where the opportunity
granted to the petitioner was limited to contesting facts of which
the agency had taken official notice, while broader reconsideration
of the factual and legal bases for the agency's final order
remained only, at the time of the filing of the petition for
review, a mere possibility.
See supra p. 13 (noting that the
Administrator's February 9, 2009 order withheld judgment on the
propriety
of
Dr.
Craker's
motion
5
for
reconsideration).
In
The parties do not dispute that motions for reconsideration
of DEA orders are not contemplated. We assume, without deciding,
the correctness of that position.
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concluding that, where a party's original petition for review of an
agency order was unripe, that party must file a new petition upon
disposition of its motion for reconsideration, the D.C. Circuit
explained:
We develop this bright line test to discourage the
filing of petitions for review until after the
agency completes the reconsideration process. If a
party determines to seek reconsideration of an
agency ruling, it is a pointless waste of judicial
energy for the court to process any petition for
review before the agency has acted on the request
for reconsideration.
TeleSTAR, Inc. v. FCC, 888 F.2d 132, 134 (D.C. Cir. 1989).
The D.C. Circuit has, however, declined to apply the rule
where the motion for reconsideration was not timely filed. That is
because, "at least where . . . the agency does not consider the
merits of the tardy request," there is no "possibility that the
order complained of will be modified in any way which renders
judicial
(internal
review
unnecessary."
quotation
omitted).
See
Gorman,
Similarly,
558
the
F.3d
at
possibility
587
of
concurrent jurisdiction and the judicial economy concerns that
arise from it, while not wholly eliminated, are considerably
diminished in cases, such as this one, in which reconsideration may
or may not have been permitted in the agency's discretion.
See
Craker III, 76 Fed. Reg. at 51405 (explaining the decision to
permit reconsideration as an "exercise of [the Administrator's]
discretion"); see also City of Colo. Springs v. Solis, 589 F.3d
1121, 1131 (10th Cir. 2009) (concluding that the rule announced in
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ICC v. Bhd. of Locomotive Eng'rs, 482 U.S. 270, 284 (1987), whereby
the timely filing of a motion for administrative reconsideration
renders the underlying order non-final for purposes of judicial
review, "is not applicable in this case because the [agency] has
not established a rehearing or reconsideration procedure for [the
type of order at issue]").
Moreover,
alleviated
here,
such
jurisdictional
because
we
concerns
suspended
and
are
then
further
resumed
consideration of a petition for review upon completion of the
reconsideration process.
As the Supreme Court has observed, "a
stay is as much a refusal to exercise federal jurisdiction as a
dismissal."
Moses H. Cone Mem. Hosp. v. Mecury Const. Corp., 460
U.S. 1, 28 (1983); see also In re Graves, 69 F.3d 1147, 1151 (Fed.
Cir. 1995) (concluding that although the court "cannot exercise
jurisdiction
over
reconsideration
the
appeal
decision,"
before
its
the
[agency]
jurisdiction
"was,
enters
in
its
effect,
suspended until the [agency] acted"); Northside Sanitary Landfill,
Inc. v. Thomas, 804 F.2d 371, 379 (7th Cir. 1986) ("Once our
jurisdiction has been [timely] invoked by a petition for review, it
makes little sense to require an amendment to the petition to
preserve that jurisdiction only because the agency has ruled on the
motion for reconsideration.").
Given that, in the circumstances of this case, holding
the petition in abeyance served equally the interests of judicial
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economy, we are not persuaded that we should impose a bright line
test requiring dismissal or amendment of a petition filed during
the pendency of a motion for reconsideration, at least where the
reconsideration process is ad hoc, as here.
We also hesitate to
apply such a rule retroactively in any event.
See TeleSTAR, Inc.,
888 F.2d at 134 (giving newly adopted "incurably premature" rule
prospective effect only); see generally Crowe v. Bolduc, 365 F.3d
86, 93 (1st Cir. 2004) (noting that in determining whether to give
a new rule prospective effect, we consider, among other factors,
whether "retroactive application give[s] rise to a substantial
inequity").
Accordingly, we conclude that we have jurisdiction to
consider Dr. Craker's petition for review and turn to the merits.6
B.
Chevron Analysis
In
reviewing
the
Administrator's
decision,
we first
address whether Congress has unambiguously spoken to the precise
question
that
is
at
issue,
Chevron,
U.S.A.
Inc.
v.
Natural
Resources Defense Council Inc., 467 U.S. 837, 842-43 (1997). If it
turns out that the statute is ambiguous, then Chevron deference
must be afforded; the agency's interpretation of the statute will
be upheld as long as it is "based on a permissible construction of
the statute."
Id. at 843.
In the end, we may set aside the
6
As previously noted, Dr. Craker is seeking review of Craker
II, the Administrator's original decision, and not Craker III, the
decision on reconsideration. Given our ultimate disposition, we
needn’t consider the agency’s order in Craker III.
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Administrator's decision if it is arbitrary, capricious, an abuse
of discretion, not supported by substantial evidence, or otherwise
not in accordance with the law.
NLRB v. Reg'l Home Care Servs.,
237 F.3d 62, 71 (1st Cir. 2001); see also 5 U.S.C. § 706(2)(A),
(E).
A decision is arbitrary and capricious "if the agency has
relied on factors which Congress has not intended it to consider,
entirely failed to consider an important aspect of the problem,
offered an explanation for its decision that runs counter to the
evidence before the agency, or is so implausible that it could not
be ascribed to a difference in view or the product of agency
expertise."
Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto.
Ins. Co., 463 U.S. 29, 43 (1983).
We may not substitute our
judgment for that of the agency, even if we disagree with its
conclusions. River Street Donuts, LLC v. Napolitano, 558 F.3d 111,
114 (1st Cir. 2009).
Here, to set the stage for the
Chevron
analysis, we engage in a more detailed review of the decision at
issue.
As
previously
noted,
the Administrator
rejected
Dr.
Craker's application both because it was inconsistent with the
Single Convention and because it did not meet the "public interest"
requirement of 21 U.S.C. § 823.
Because we resolve the matter
under section 823, we need not review the arguments relative to the
Single Convention, since failure to satisfy either is fatal to Dr.
Craker's claim.
21 U.S.C. § 823(a).
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In analyzing the CSA, the Administrator first compared
Congress' treatment of Schedule I and II substances in section
823(a)(1) with that of Schedule III, IV and V substances, as set
forth in section 823(d).
Notably, the two statutory sections
contain identical public interest factors, except that in section
(d) -- which deals with substances that Congress regards as less
dangerous -- there is no reference as there is in section (a)(1) to
"limiting
supply"
considerations
with
and
"competitive
respect
to
less
conditions."
dangerous
Unlike
drugs,
then,
according to the Administrator, section 823(a)(1) explicitly sets
out both Congress' stated purpose (to maintain effective controls
against diversion) and how it intends that the objective is to be
achieved (by limiting the number of manufacturers to that which can
produce an adequate and uninterrupted supply under adequately
competitive
prices).
Craker
II,
74
Fed.
Reg.
at
2118-23.
Moreover, the Administrator also found that section 823(a)(5)'s
mandate
to
consider
"the
existence
in
the
establishment
of
effective control against diversion" suggests that section (a)(1)'s
reference to diversion is directed toward preventing diversion by
limiting the number of manufacturers.
Id. at 2128.
The Administrator also detailed the legislative history
of the CSA to buttress her conclusion, observing that the CSA's
predecessor, the Narcotics Manufacturing Act of 1960, called for
the limitation of manufacturers to the smallest number that could
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produce an adequate, uninterrupted supply, without referencing
competition.
Id.
Thus, the Administrator concluded, in enacting
the CSA, Congress increased the potential number of approved
manufacturers
from
that
which
can
produce
an
adequate
and
uninterrupted supply to that which can do so under adequately
competitive conditions.
Id.
The Administrator acknowledged that the 1960 Act, unlike
the
CSA,
referred
to
allowing
only
"the
smallest
number
of
establishments that can produce an adequate and uninterrupted
supply,"
and
formulation.
that
the
CSA
dropped
the
"smallest
number"
Nevertheless, she concluded that the CSA's continued
use of the term "limiting" retained the concept of an upper limit
on manufacturers as a consideration.
Finally,
the
Administrator
Id. at 2128-29 n.105.
cited
Justice
Department
written testimony which noted the "primary objective" of "effective
control" and that additional manufacturers could be licensed if the
additional licenses do not significantly affect drug control.
Id. at 2129.
1.
Chevron Step One
At the outset, we reject each party's contention that
section 823(a)(1) unambiguously supports its respective position.
It is not clear from the text of the section whether, as Dr. Craker
argues, limiting supply is allowed only where diversion is a
concern, or, as the Administrator contends on appeal, the statute
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must be construed to require that limiting supply be the means by
which
effective
controls
against
diversion
are
implemented.
Indeed, as the Administrator observed, 74 Fed. Reg. 2127-32, and as
the DEA concedes, the DEA itself has taken inconsistent positions
on this question.
Compare Noramco, 375 F.3d at 1153 (observing
that the DEA argued in one registration (Johnson Matthey) that no
analysis of competition is required), with id. at 1157 (noting that
in a different registration (Penick) the DEA addressed competition
and supply factors). As it does not appear that the statute either
mandates or excludes either side's view, we turn to step two and
resolve whether the administrator's interpretation is a reasonable
one.
We hold that it is.
2.
Chevron Step Two
We
conclude
Chevron's second step.
that
the
government's
view
prevails
at
Dr. Craker advances three reasons why this
should not be the outcome.
We address them in turn.
First, he argues that the court in Noramco squarely
rejected the DEA's present view.
the
court
in
Noramco
did
But contrary to this assertion,
not
hold
that
section
823(a)(1)
unambiguously required the DEA to forego consideration of supply
and competition if it found no increased difficulty in controlling
diversion.
Instead, the court held that the statute did not
directly answer the question, but that the Agency's interpretation
of the statute -- that analysis of competition and supply was
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unnecessary -- was reasonable. Noramco, 375 F.3d at 1153; see also
Chevron, 467 U.S. at 843 n.11 ("The court need not conclude that
the agency construction was the only one it permissibly could have
adopted . . . or even the reading the court would have reached if
the question initially had arisen in a judicial proceeding.").7
Dr.
assessment
Craker
that
"registrant-wide"
next
section
scale,
individual registrant.
takes
aim
at
(a)(1)
speaks
whereas
section
the
to
Administrator's
diversion
(a)(5)
refers
on
a
to
an
He argues that even if this dichotomy is
permissible, the Administrator failed to demonstrate any diversion
concern.
We disagree, as the Administrator cited legislative
history noting Congress' recognition that the risk of diversion
increases with the addition of new manufacturers.
74 Fed. Reg. at
2129.
Finally, Dr. Craker argues that the Administrator did not
adequately explain why the DEA was changing its position from the
one that it had advocated in Noramco.
To the contrary, and as
previously noted, Craker II contains a lengthy analysis of that
very issue.
74 Fed. Reg. at 2127-33.
"[P]ursuant to Chevron, an
agency's change in precedent is not invalidating if the agency
adequately explains its reasons.
The agency's explanation must be
7
We note that Dr. Craker's brief truncates a quote from the
Noramco opinion to make it appear that the DEA's interpretation of
section 823(a)(1) is actually the court's holding of how the
statute must be read.
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accompanied by some reasoning that indicates that the shift is
rational and, therefore, not arbitrary and capricious. This is not
a difficult standard to meet."
River Street Donuts, LLC, 558 F.3d
at 115 (internal citations and quotation marks omitted). Here, the
Administrator addressed the agency's prior positions, including
that taken in an opinion that was issued while the instant matter
was
pending
before
the
DEA8
--
and
explained
interpretation now urged better effectuated the CSA.
that
the
We find its
reasoning sufficient.
Accordingly,
we
conclude
that
the
Administrator's
interpretation of 21 U.S.C. § 823(a)(1) is a reasonable one, to
which we defer.
3.
Administrator's Decision
Dr. Craker's final claim is that, even if the DEA is
permitted to consider supply and competition, the Administrator
erred because Dr. Craker demonstrated that both competition and
supply are inadequate.
On the contrary, the Administrator's
findings are supported by the record.
a.
Competition
Dr. Craker's argument with respect to competition is
essentially
that
there
cannot
be
"adequately
competitive
conditions" when there is only one manufacturer of marijuana.
8
See Penick Corp. v. Drug Enforcement Admin., 491 F.3d 483
(D.C. Cir. 2007).
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Invoking anti-trust doctrine, he asserts that a monopoly cannot
constitute competition within the meaning of the statute.
The Administrator addressed competition through the lens
of
price,
and
observed
that
NIDA
had
provided
marijuana
manufactured by the University of Mississippi either at cost or
free to researchers, and that Dr. Craker had made no showing of how
he could provide it for less, especially when his associate Mr.
Doblin
acknowledged
MAPS'
profit
motive
in
its
manufacturing
enterprise. 74 Fed. Reg. at 2121. Additionally, the Administrator
noted that Dr. Craker is free to bid on the contract when it comes
up for renewal.
Id.
We see nothing improper in the Administrator's approach.
The statutory term "adequately competitive conditions" is not
necessarily as narrow as the petitioner suggests.
This is not an
anti-trust case, and Dr. Craker does not point to any authority
suggesting
that
anti-trust
laws
must
guide
the
"adequacy
competition" inquiry or that price considerations must not.
of
That
the current regime may not be the most competitive situation
possible does not render it "inadequate."
b.
Adequate and Uninterrupted Supply9
In finding that Dr. Craker failed to demonstrate that the
current supply of marijuana was not adequate and uninterrupted, the
9
Dr. Craker does not renew on appeal his argument that the
current marijuana supply is lacking in quality.
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Administrator observed that there were over 1000 kilograms of
marijuana in NIDA possession, an amount which far exceeds present
research demands and "any foreseeable" future demand. Id. at 2119.
Dr. Craker does not dispute this finding, or that the current
amount is more than ninety times the amount he proposes to supply.
Id.
Instead, he argues that the adequacy of supply must not be
measured against NIDA-approved research, but by whether the supply
is adequate to supply projects approved by the FDA.
But even if we
were to accept his premise -- which we don't -- Dr. Craker fails to
demonstrate that the supply is inadequate for those needs, either.
He merely states that certain projects were rejected as "not bonafide" by NIDA, a claim which does not address the adequacy of
supply.
which
The fact that Dr. Craker disagrees with the method by
marijuana
research
is
approved
does
not
undermine
the
substantial evidence that supports the Administrator's conclusion
or render that conclusion arbitrary or capricious.
IV.
CONCLUSION
Because the Administrator's interpretation of the CSA is
permissible and her findings are reasonable and supported by the
evidence, the petition for review is denied.
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