Nor-Am Agricultural Products, Inc. v. Hardin

• Decision Date: 09 November 1970
• Docket Number: No. 18478.,18478.
• Citation: 435 F.2d 1151
• Parties: NOR-AM AGRICULTURAL PRODUCTS, INC. and Morton International, Inc., Plaintiffs-Appellees, v. Clifford M. HARDIN, Secretary of Agriculture, G. W. Irving, Jr., Administrator Agricultural Research Service and Harry W. Hays, Director Pesticides Regulation Division, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

435 F.2d 1151 (1970)

NOR-AM AGRICULTURAL PRODUCTS, INC. and Morton International, Inc., Plaintiffs-Appellees, v. Clifford M. HARDIN, Secretary of Agriculture, G. W. Irving, Jr., Administrator Agricultural Research Service and Harry W. Hays, Director Pesticides Regulation Division, Defendants-Appellants.

No. 18478.

United States Court of Appeals, Seventh Circuit.

November 9, 1970.

Howard S. Epstein, Dept. of Justice, Washington, D. C., William J. Bauer, U. S. Atty., Chicago, Ill., for defendants-appellants; Harold M. Carter, Director, Regulatory Division, Raymond W. Fullerton, Atty., Regulatory Division, Office of the General Counsel, Dept. of Agriculture, Washington, D. C., of counsel.

Holland C. Capper, Chicago, Ill., for plaintiffs-appellees; Robert B. Gerrie, James H. Ryan, Geoffrey G. Gilbert, McBride, Baker, Wienke & Schlosser, Chicago, Ill., of counsel.

Before SWYGERT, Chief Judge, and KILEY, FAIRCHILD, CUMMINGS, KERNER and PELL, Circuit Judges.

CUMMINGS, Circuit Judge.

This is an appeal from a preliminary injunction granted by the district court which effectually restrains the Secretary of Agriculture and other personnel of the Department of Agriculture from continuing the suspension of the registration of 17 Panogenic compounds as "economic poisons" under the Federal Insecticide, Fungicide and Rodenticide Act. 7 U.S.C. § 135 et seq. A three-judge panel of this Court, one judge dissenting, upheld the preliminary injunction. 435 F.2d 1133. Subsequently, the Government's petition for a rehearing en banc was granted.

Plaintiff Morton International, Inc. manufactures seventeen types of cyano (methylmercuri) guanadine known as Panogens. Plaintiff Nor-Am Agricultural Products, Inc. distributes Morton's Panogens. These mercury compounds are used as fungicides in treating seeds intended for planting. They were duly registered as "economic poisons" with the Secretary of Agriculture, as required by Section 4(a) of the Federal Insecticide, Fungicide and Rodenticide Act. 7 U.S.C. § 135b(a).

Pursuant to Section 4(c) of the Act (7 U.S.C. § 135b(c)), on February 18, 1970, the Department of Agriculture telegraphed plaintiff Nor-Am that its Panogen registrations had been suspended "in view of the recent accident involving the ingestion of pork from hog feed seed treated with cyano (methylmercuri) guanadine." On the same date, Dr. Harry W. Hays, Director of the Pesticides Regulation Division of the Agricultural Research Service, sent a letter to Nor-Am more fully explaining the Department's action. That letter indicated that the registration of the 17 Panogens was suspended "to prevent an imminent hazard to the public from the use of cyano (methylmercuri) guanadine as a seed treatment." The letter referred to three New Mexico children who had been hospitalized in a comatose condition because they had eaten pork from hogs fed screenings and sweepings from seed previously treated with a fungicide product containing cyano (methylmercuri) guanadine. The letter added that the Panogen labels were inadequate to prevent the treated seed screenings and sweepings from being fed to hogs. Dr. Hays further said that other incidents had been reported showing that mercury treated seed screenings and sweepings had been fed to livestock or "disposed of in a manner that results in wildlife feeding on them." Finally, the letter noted that the ingestion of cyano (methylmercuri) guanadine reportedly caused irreversible injury to the central nervous system.

On March 27, 1970, the Director of Science and Education in the office of the Secretary again wrote Nor-Am. This letter elaborated the reasons for the emergency suspension:

"The action * * * was based on the fact that the directions for use and precautionary statements have failed to prevent treated seed from being used as feed. Recent reports also indicate that birds feeding on treated seed have significant levels of mercury in their tissues.

"In view of the insidious nature of alkyl mercury poisoning and the irreversible injury to the central nervous system, we firmly believe that this class of compounds should be discontinued for seed treatment. To allow new stocks to enter channels of trade would increase the risk of injury to man and other vertebrate animals."

On March 9, 1970, the registrations of similar products of other manufacturers were suspended. The suspensions prevent the shipment of these products until their registration is again permitted. Plaintiffs and the other distributors and manufacturer were not, however, required to recall existing stocks from their customers.

Administrative review of the Secretary's order was initiated on March 27, 1970, when Nor-Am requested an expedited administrative hearing as provided by Section 4(c) of the Act.¹ Instead of awaiting such a hearing, however, plaintiffs filed this suit on April 9, 1970, and quickly sought a preliminary injunction. Thereupon defendants moved to dismiss the proceeding. They claimed that the district court lacked jurisdiction to review the suspension order in advance of the hearing established by the statute; that plaintiffs had not exhausted the administrative procedures established by the Act; that the Secretary's order was a non-reviewable, discretionary act; and that the Secretary had not acted arbitrarily or capriciously. This motion was supported by an affidavit of Dr. Hays describing two specific instances of contamination of meat resulting from the consumption of mercury-treated seed by swine or cattle.² The affidavit noted action taken by Sweden in November 1965 to restrict the use of alkyl mercury as a result of studies indicating contamination of fish. Dr. Hays further cited an available publication describing numerous reports of accidents associated with the use of mercury in treating seeds.³ He averred that alkyl mercury can produce permanent damage to the central nervous system, and that there are no known effective antidotes for chronic poisoning by that substance. Finally, as additional support for the emergency action, the affidavit stated that the Advisory Center on Toxicology, National Academy of Sciences, had expressed the opinion in March 1970 that all alkyl mercury compounds should be considered alike in terms of their toxicological properties, and that on February 27, 1970, the Public Health Service of the Department of Health, Education, and Welfare had recommended the cancellation of organo mercury compounds for seed treatment because of the hazard associated with their use.

At the hearing on the motion for the preliminary injunction, two Nor-Am employees and the general manager of a seed improvement association testified that Panogen products had been marketed for 20 years as a very useful fungicide seed treatment. Nothing as economical or efficacious is available as a satisfactory substitute for liquid methyl-mercury seed treatment products. Plaintiffs added a red dye to their products in order to prevent misuse of treated seed as human or animal feed. Warning labels were also prepared by plaintiffs for use on their products and on the treated seed containers. Plaintiffs' witnesses knew of no "permanent" injuries caused by Panogens.

Dr. Hays testified that when the February 18th suspension telegram was sent, to his knowledge the only permanent human injuries resulting from the use of Panogens were to the three Alamogordo, New Mexico, children. Twelve of the 14 hogs fed the treated seed near Alamogordo died. He stated that alkyl mercury compounds have a propensity to accumulate in the central nervous tissues, particularly in the brain. Such effects have not only been reported in laboratory animals but observed in pheasants, quail and other wildlife. The scientific community has discovered no effective antidote for alkyl mercury compounds. High levels of mercury have been found in the tissues of pheasants and quail in California and Ohio. He considered alkyl mercury substances used for the treatment of seed as imminently hazardous to the public because they "can be ingested by wildlife, or inadvertently used by domestic animals, or ingested by man." There is an inadequate degree of control in preventing treated seed from getting into feed or food, as evidenced by the number of grain seizure actions taken in the past by the Food and Drug Administration after finding such treated seed in grain. He felt that such treated seeds involve an undue risk to the public and that labels are inadequate to prevent any accidental misuse.

After the hearing, the district judge found that the court had jurisdiction over the subject matter of the dispute pursuant to the provisions of 28 U.S.C. § 1331, 28 U.S.C. § 1337, 28 U.S.C. §§ 2201-2202, Section 10 of the Administrative Procedure Act, 5 U.S.C. §§ 701-706, and the "general equity powers of this Court." The district judge also determined that unless preliminary injunctive relief were granted, plaintiffs would suffer irreparable harm for which they had no adequate administrative or legal remedy, although they were "likely to prevail on the merits." The judge further concluded that preliminary relief was "consistent with the public interest." Accordingly, he held the suspension of the Panogen registrations to have been arbitrary, capricious, and contrary to law, and defendants were enjoined from taking action against plaintiffs or the Panogens in reliance on the suspension order. Defendants were also ordered to give notice that the Panogens may again be distributed and sold in interstate commerce. Finally, the preliminary injunction permitted defendants to issue notices of cancellation of the registrations of these "economic poisons" effective only after the public hearing permitted by Section 4(c) of the Act.⁴ Upon consideration of this cause by the entire Court, we are of the opinion that the district court lacked power to grant this relief because the plaintiffs have not exhausted their administrative remedy.

The fundamental...