American Frozen Food Institute v. Mathews, Civ. A. No. 74-354.

• Decision Date: 30 March 1976
• Docket Number: Civ. A. No. 74-354.
• Citation: 413 F. Supp. 548
• Parties: AMERICAN FROZEN FOOD INSTITUTE, Plaintiff, v. F. David MATHEWS and Alexander M. Schmidt, Defendants.
• Court: U.S. District Court — District of Columbia

413 F. Supp. 548

AMERICAN FROZEN FOOD INSTITUTE, Plaintiff, v. F. David MATHEWS and Alexander M. Schmidt, Defendants.

Civ. A. No. 74-354.

United States District Court, District of Columbia.

March 30, 1976.

COPYRIGHT MATERIAL OMITTED

Edward Brown Williams, Jan Edward Williams, Washington, D. C., for plaintiff.

Richard Merrill, H.E.W., Peter Schaumber, Asst. U. S. Atty., Washington, D. C., for defendants.

MEMORANDUM AND OPINION

AUBREY E. ROBINSON, Jr., District Judge.

By this action Plaintiff American Frozen Food Institute (AFFI) challenges the innovative attempt by the Food and Drug Administration (FDA) to regulate labeling in certain areas of the food industry through establishing "common and usual names" for nonstandardized foods. AFFI contends that two recent rulings from FDA which establish common and usual names for seafood cocktails and frozen heat and serve dinners must be set aside by this Court on the grounds that they were promulgated in a manner excessive of agency authority, establish an unlawful presumption, violate the First Amendment and are arbitrary and capricious without sufficient support in the record. Reduced to its bare essentials, this case presents important questions concerning the scope of FDA authority under the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 301, et seq. (the Act) to regulate the food industry. For reasons explained below, the Court concludes that the FDA acted within its statutory authority and that the defendants are entitled to summary judgment.

The terms of art which are known in the food industry and to which the Court refers throughout this discussion are derived from the Act. A brief overview of the statutory scheme is thus helpful to an understanding of Plaintiff's threshold and most perplexing argument regarding the scope of FDA authority. Section 401 of the Act¹ gives the FDA authority to establish "definitions and standards of identity" for foods. Regulations establishing these standards are promulgated through a "rulemaking on the record" procedure as set forth in Section 701(e)(1) of the Act.² The regulation which results from this procedure is, in essence, a "recipe" for the standardized food; it defines the composition of a food, prescribes mandatory as well as optional ingredients and establishes amounts or relative proportions of ingredients.

The status of a food as standardized or nonstandardized also effects certain labeling requirements. If a food is standardized, Section 403(g) of the Act³ requires that its label bear the name specified in the definition and standard of identity. If the food is nonstandardized, its label must bear the name of its "common or usual name, if any there be." Section 403(i).⁴ Presumably, if a food is neither standardized nor one for which a common and usual name is known, it may bear any name its manufacturer wishes, providing it does not violate any provision of the Act. Only optional ingredients are listed on a label of a standardized food whereas all ingredients must be set forth on the label of a nonstandardized food.⁵

The regulations challenged by this action deal with nonstandardized foods. FDA has established common and usual names for certain of these foods under its general rulemaking authority, Section 701(a) of the Act.⁶ The regulations were prompted by a concern expressed by the White House Conference of Food Nutrition and Health, regarding the lack of informative food labeling. In the Federal Register for June 22, 1972, the FDA Commissioner proposed the procedure which is challenged herein. In the proposal the Commissioner agreed with the Conference recommendation that uniform common and usual names should be established which would "accurately reflect the reasonable expectations of consumers." In addition, the Commissioner indicated his intention to adopt the recommendation of the Conference to require disclosure on the label of the amount of characterizing ingredient where such was relevant to value of the product.⁷ The obvious objective was to provide to consumers sufficient information on the labels of food products so that reasoned and informed shopping decisions could be made.

The general regulation which resulted provided:

(a) The common or usual name of a food, which may be a coined term, shall accurately identify or describe in as simple and direct terms as possible, the basic nature of the food or its characterizing properties or ingredients. The name shall be uniform among all identical or similar products and may not be confusingly similar to the name of any other food that is not reasonably encompassed with the same name. 21 C.F.R. § 102.2.

Subsequently, the FDA established, inter alia, common and usual names for frozen heat and serve dinners and for seafood cocktails. These specific provisions are challenged by this action and are set forth and discussed infra.

The Plaintiff contends that FDA lacks authority to create common and usual names through substantive rulemaking and is limited to only recognizing already established common and usual names in the course of a Section 701 proceeding establishing a definition and standard of identity. In the alternative, AFFI contends that even if FDA has authority to establish common and usual names through its general rulemaking authority, these two specific regulations exceed that authority. Plaintiff challenges the common or usual name for frozen heat and serve dinners on the grounds that the name is actually a definition and standard because it includes a listing of components. And AFFI challenges the common and usual name for seafood cocktail on the grounds that this regulation requires disclosure of the percentage of the seafood ingredient or ingredients on the label. Plaintiff cites significant legislative history to support its contention that the seafood cocktail regulation as currently worded exceeds agency authority.

Although the briefs in this matter seem to weave rather randomly throughout this threshold point, the Court has crystallized the following three questions which require consideration for resolution of AFFI's initial contention challenging FDA's authority to promulgate these regulations pursuant to its general rulemaking authority:

First, whether FDA has authority to implement the Act by establishing common and usual names under its general rulemaking authority set forth in Section 701(a). Secondly, whether the common and usual name for frozen heat and serve dinners is actually a definition and standard of identity promulgated in a procedurally defective manner. Thirdly, whether the FDA has authority to establish percentage of ingredient labeling requirements as part of a common and usual name, as in the case of the seafood cocktail regulation challenged herein. The Court will deal with these questions seriatim.

The first inquiry presents the perplexing question concerning the scope of FDA authority under the general rulemaking provision of its governing statute. By establishing common and usual names for nonstandardized foods, FDA purports to be implementing Section 403(i) of the Act, set forth below, which requires that nonstandardized foods bear their common and usual names if such exist.⁸

Whether FDA has the authority to implement this section by rulemaking must be determined by examining "the scope of authority granted the agency in light of the statutory language and background." National Petroleum Refiners Assoc. v. FTC, 157 U.S.App.D.C. 83, 482 F.2d 672, at 674 (1973). Under the general rulemaking provision of the governing statute set forth at 21 U.S.C. § 371(a), FDA is authorized to "promulgate regulations for the efficient enforcement of the Act." Plaintiff contends that despite the broad mandate reflected by this provision, FDA is restricted to two methods for establishing common and usual names. AFFI's position is that FDA can either recognize an already established common and usual name in the context of a Section 701 proceeding (establishing a definition and standard of identity) or may bring a judicial action pursuant to the sanctions set forth in 21 U.S.C. §§ 331-334 for violations of the Act, during which the Court can recognize the common and usual names of a particular food. Plaintiff does not dispute the fact that regulations issued under Section 701(a) have the force and effect of law providing they are within statutory authority of the agency and are factually supported in the record.⁹ Rather, AFFI firmly asserts that FDA lacks the requisite authority under the Act to create common and usual names under its general rulemaking powers.

The Court is not persuaded that the Act should be read so narrowly. Plaintiff's first argument ignores significant case law which by analogy supports the FDA's authority to proceed by substantive rulemaking in this case. The cases are legion in which Courts have recognized the preference of substantive rulemaking by an agency over the time consuming and often unfair process of case by case adjudication. Weinberger v. Bentex Pharmaceuticals, Inc., 412 U.S. 645, 653, 93 S.Ct. 2488, 2494, 37 L.Ed.2d 235, 241-242 (1973); Permian Basin Area Rate Cases, 390 U.S. 747, 780, 88 S.Ct. 1344, 1366, 20 L.Ed.2d 312, 343 (1968); Federal Power Comm's v. Texaco, 377 U.S. 33, 44, 84 S.Ct. 1105, 1112, 12 L.Ed.2d 112, 119 (1964); National Petroleum Refiners Ass'n v. FTC, 157 U.S.App.D.C. 83, 482 F.2d 672, 680 (173); National Indus. Traffic League v. U. S., 396 F.Supp. 456, 459 (D.D. C.1975). The Court finds the reasoning of these cases persuasive in the present context. In addition, to construe the governing statute as not permitting implementation of a substantive section by rulemaking would constitute the "crabbed, inhospitable construction of a broad rulemaking authority" condemned in National Petroleum Refiners, supra.

In National Nutritional Foods Ass'n v. Weinberger, 512 F.2d 688 (2nd Cir. 1975) the Court was presented with an argument which was significantly similar...