Center for Science in the Public Interest v. Department of Treasury

Decision Date05 August 1986
Docket Number85-6155,Nos. 85-6133,s. 85-6133
Citation797 F.2d 995,254 U.S.App.D.C. 328
Parties, 55 USLW 2122 CENTER FOR SCIENCE IN THE PUBLIC INTEREST, et al. v. DEPARTMENT OF the TREASURY, et al., Appellants, Distilled Spirits Council of the United States, Inc. CENTER FOR SCIENCE IN THE PUBLIC INTEREST, et al. v. DEPARTMENT OF the TREASURY, et al., Distilled Spirits Council of the United States, Inc., Appellant.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeals from the United States District Court for the District of Columbia (Civil Action No. 84-02079).

Marleigh D. Dover, Atty., Dept. of Justice, with whom Richard K. Willard, Asst. Atty. Gen., Dept. of Justice, Joseph E. diGenova, U.S. Atty. and John F. Cordes, Atty., Dept. of Justice, Washington, D.C., were on the brief for Department of the Treasury, et al., appellants in No. 85-6133 and appellees in No. 85-6155. Robert E. Kopp, Atty., Dept. of Justice, Washington, D.C., also entered an appearance for the Department of Treasury, et al.

Paul L. Friedman, with whom Lawrence B. Gotlieb, Washington, D.C., was on brief for Distilled Spirits Council of the United States, Inc., appellant in No. 85-6155 and appellee in No. 85-6133.

Bruce Silverglade, Washington, D.C., and Mitchell Zeller for Center for Science in the Public Interest, et al., appellees in Nos. 85-6133 and 85-6155.

John M. Studner, Washington, D.C., was on brief, for amicus curiae, New York State Consumer Protection Bd. in No. 85-6133 urging affirmance.

Before WALD, Chief Judge, GINSBURG, Circuit Judge, and RE, * Chief Judge, United States Court of International Trade.

Opinion for the Court filed by Chief Judge WALD.

WALD, Chief Judge:

For more than a decade, the Center for Science in the Public Interest ("CSPI") and the Bureau of Alcohol, Tobacco and Firearms ("BATF") have been sparring over the need to disclose ingredients on the labels of alcoholic beverages. BATF finally adopted an ingredient disclosure rule in 1980, but rescinded it in 1981; the recission was reversed by the District Court in 1983 but, after a round of legal maneuvers, BATF substantially rescinded the rule again later that year. Although we reject several of BATF's stated reasons for the second rescission, we conclude that the agency has nonetheless managed to bring itself within the confines of reasoned decisionmaking and has adequately, if minimally, explained its reversal. We therefore reverse the District Court's decision vacating BATF's 1983 rulemaking.

I. BACKGROUND

The Federal Alcohol Administration Act ("FAA Act"), 27 U.S.C. Sec. 205(e) (1982), authorizes the Secretary of the Treasury to promulgate such regulations:

(1) as will prohibit deception of the consumer with respect to such products or the quantity thereof and as will prohibit, irrespective of falsity, such statements ... as the Secretary of the Treasury finds to be likely to mislead the consumer; [and] (2) as will provide the consumer with adequate information as to the identity and quality of the products....

This authority, now exercised by BATF, was first invoked with respect to ingredient labeling in 1974. BATF proposed a broad labeling rule which would have required across-the-board listing of all ingredients in malt beverages, except incidental additives, in order of predominance. 39 Fed.Reg. 27,812 (1974); see also 40 Fed.Reg. 6349 (1975) (same for wine); 40 Fed.Reg. 6354 (1975) (same for distilled spirits). These proposals were withdrawn in 1975 after the agency concluded that the proposed regulations were, inter alia, excessively costly, potentially misleading as to the nutritional value of alcoholic beverages, and unnecessary because ingredient usage was already comprehensively regulated. 40 Fed.Reg. 52,613 (1975).

In 1979 BATF proposed what it characterized as a "partial ingredient labeling" rule. The proposal trimmed the costs of the 1974 approach in several ways: eliminating the requirement that ingredients be listed in order of predominance, clarifying the requirement that incidental additives not be listed, and permitting "shotgun" labeling of essential components--such as "grapes and/or grape juice"--to reduce the need for frequent label changes. 44 Fed.Reg. 6740, 6740-41 (1979).

After receiving comments on the proposed rule, designated ATF-66, BATF concluded that "the disclosure of ingredients used in the production of alcoholic beverages is of real value" and adopted the regulations substantially as proposed. 45 Fed.Reg. 40,538, 40,540 (1980). The agency acknowledged, however, that there were "uncertainties existing in the data underlying the health and consumer benefits," primarily with respect to the extent of allergic reactions to alcoholic beverage ingredients. Id. at 40,539-40. BATF made one major change in adopting ATF-66 in order to accommodate its goal of "minimizing costs to industry and consumers in meeting regulatory objectives," adding an "address label option" so that, when certain conditions were met, a company could simply provide its address on the label and send an ingredients listing to anyone who requested such information. Id. at 40,540-41.

Less than one year after adopting ATF-66, BATF proposed rescinding the rule on the ground that it did not accord with the mandate of Executive Order 12,291 to minimize the costs of regulation. 46 Fed.Reg. 24,962, 24,693 (1981). BATF's statement of reasons for rescinding the rule was brief and concluded that

the ingredient labeling regulations would result in increased costs to consumers and burdens on industry which are not commensurate with the benefits which might flow from the additional label information ... [and] would not result in an appreciable benefit to consumers when compared to the existing label information requirements and standards of identity.

46 Fed.Reg. 55,093, 55,094 (1981).

CSPI promptly challenged BATF's reversal, winning a district court order declaring the agency's action to be in violation of both the FAA Act and the Administrative Procedure Act. Center for Science in the Public Interest v. Department of the Treasury, 573 F.Supp. 1168, 1179 (D.D.C.1983) [hereinafter cited as CSPI I ]. The District Court concluded that the agency's virtually exclusive reliance on Executive Order 12,291 violated the FAA Act and that the agency had failed to state a permissible reason for the rescission, rejecting the agency's conclusions that the rule's costs exceeded its benefits and that existing regulations provided adequate information to consumers. Id. at 1174-78.

BATF appealed only from that portion of the District Court's order mandating implementation of ATF-66 within one year; the Wine Institute and Distilled Spirits Council of the United States ("DISCUS") appealed the remainder of the decision. Before the appeal could be heard, BATF proposed and finalized ATF-150, a new rulemaking substantially rescinding ATF-66. 48 Fed.Reg. 27,782 (1983) (proposed rule); 48 Fed.Reg. 45,459 (1983) (final rule). This court accordingly dismissed BATF's appeal of the mandatory effective date as moot. Center for Science in the Public Interest v. Regan, 727 F.2d 1161, 1164-65 (D.C.Cir.1984) [hereinafter cited as CSPI II ]. We refused, however, to vacate the remainder of the District Court's decision because review had been prevented by the deliberate action of the losing party and so CSPI "ought to be left in the same position as if no appeal had been taken." Id. at 1165-66.

In ATF-150, BATF rescinded the ingredient labeling rule because, inter alia, the information provided was not of interest to consumers and might mislead them, uncertainties existed as to potential health benefits, the rule's costs were substantial and not justified by the negligible benefits, existing regulations would generally be adequate to protect consumers, and the address label option would not provide the anticipated cost savings. 48 Fed.Reg. at 45,550-54. Instead, the agency adopted a case-by-case approach to requiring disclosure of ingredients shown to pose health problems and mandated disclosure of an artificial color, FD & C Yellow No. 5. Id. at 45,554-55. CSPI again challenged BATF's action and the District Court again concluded that BATF had failed to provide a reasoned explanation for its rescission. Center for Science in the Public Interest v. Department of the Treasury, No. 84-2079, slip op. at 10-12 (D.D.C. Oct. 30, 1985), reprinted in Joint Appendix ("J.A.") 584, 593-95 [hereinafter cited as CSPI III ].

II. STANDARD OF REVIEW

At the outset, we must reject two of CSPI's most strenuously advanced arguments. First, BATF has committed no error by undertaking a new rulemaking in response to the District Court's action in CSPI I. As we pointed out in CSPI II, "it is not improper for an agency to engage in new rulemaking to supersede defective rulemaking." 727 F.2d at 1164. 1 Second, BATF need not base its reversal on new evidence or changed circumstances. The Supreme Court has acknowledged that an agency may change its course "either with or without a change in circumstances." Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 57, 103 S.Ct. 2856, 2873, 77 L.Ed.2d 443 (1983).

An agency which chooses to reverse a previously held position must, however, supply a "reasoned analysis" of its decision. Id. Such an analysis should include an explanation for the reversal which is supported by the record and a discussion of what alternatives were considered and why they were rejected. International Ladies' Garment Workers' Union v. Donovan, 722 F.2d 795, 817-18 (D.C.Cir.1983). While reviewing courts start with a "presumption ... against changes in current policy that are not justified by the rulemaking record," State Farm, 463 U.S. at 42, 103 S.Ct. at 2866, an agency which "examine[s] the relevant data and articulate[s] a satisfactory explanation for its action," id. at 43, 103 S.Ct. at 2866, has met its...

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