Pacific Legal Foundation v. Goyan

• Decision Date: 27 November 1981
• Docket Number: No. 80-1854,80-1854
• Parties: PACIFIC LEGAL FOUNDATION, Appellant, v. Jere E. GOYAN, in his official capacity as Commissioner of the Food and Drug Administration, Appellee. Public Citizen Litigation Group, Amicus Curiae.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1221

664 F.2d 1221

62 A.L.R.Fed. 834

PACIFIC LEGAL FOUNDATION, Appellant, v. Jere E. GOYAN, in his official capacity as Commissioner of the Food and Drug Administration, Appellee Public Citizen Litigation Group, Amicus Curiae.

No. 80-1854.

United States Court of Appeals Fourth Circuit.

Argued June 4, 1981.

Decided Nov. 27, 1981.

Eileen B. White, Washington, D. C. (Raymond M. Momboisse, Pac. Legal Foundation, Washington, D. C., Ronald A. Zumbrun, Pac. Legal Foundation, Sacramento, Cal., on brief), for appellant.

Bruce N. Bagni, Civ. Div., Dept. of Justice, Washington, D. C. (Thomas S. Martin, Acting Asst. Atty. Gen., Washington, D. C., Russell T. Baker, Jr., U. S. Atty., Baltimore, Md. Leonard Schaitman, Civ. Div., Dept. of Justice, Washington, D. C., on brief), for appellee.

Frederic Townsend, Alan B. Morrison, Washington, D. C., on brief for amicus curiae Public Citizen.

Before WIDENER and MURNAGHAN, Circuit Judges, and BRITT, District Judge. ^*

BRITT, District Judge.

Plaintiff, a non-profit corporation, filed this action on 3 December 1979 in the District Court of Maryland, seeking declaratory and injunctive relief prohibiting implementation of a regulation of the Food and Drug Administration (FDA). The regulation was established to provide "payment from agency funds of reimbursement for reasonable attorneys' fees, expert witness fees, the expenses of clerical services, travel, studies, demonstrations, and other reasonable and necessary costs of participation incurred by a participant ... in an agency proceeding ... that results in a hearing ...." ¹ Both parties filed motions for summary judgment and defendant filed a motion to dismiss based on plaintiff's lack of standing to maintain the action. The District Court determined that plaintiff did have standing to sue and denied the motion to dismiss. Finding no dispute as to the facts, the District Court decided the legal questions presented in favor of defendant and allowed his motion for summary judgment. Plaintiff appealed.

FACTUAL BACKGROUND

On 25 August 1976 the FDA issued an advance notice ² of proposed rulemaking announcing its consideration of the rule here in question as a pilot program. The expressed purpose of the program is "... to determine whether the process of administrative decision-making will be enhanced by reimbursing participants whose participation in agency proceedings contributes or can reasonably be expected to contribute to a full and fair determination of the issue, but who would otherwise be unable to participate effectively." ³

Plaintiff corporation, whose offices are in California, engages in research, study and litigation in matters affecting the public interest, such as participating in proceedings before public agencies, including the FDA. It filed comments with the FDA opposing the adoption of the proposed regulations on the ground that the expenditure of the funds necessary to implement the proposal had not been approved by the Congress.

Relying in part on a decision of the Comptroller General ⁴ that it did have authority under existing law for such expenditures, the FDA issued its proposed rule on 17 April 1979. ⁵ The final rule was published on 12 October 1979 and $250,000 was allocated by the FDA for the program.

The decision as to who will receive reimbursement is made by an Evaluation Board consisting of FDA officials. ⁶ In deciding who should receive reimbursement, the Board is required to consider (1) the value of each applicant's contribution to a full and fair determination of the issues in the proceedings; (2) whether the applicant represents a significant interest that would not otherwise be adequately represented; (3) whether the applicant can competently represent the interest it advocates; and (4) whether the applicant has available sufficient resources to participate effectively in the proceeding without FDA compensation. ⁷ Reimbursement is limited to the rate paid by the FDA to its expert witnesses, attorneys, consultants, or other employees performing similar services. ⁸

QUESTIONS FOR REVIEW

Whether plaintiff has standing to maintain this action and whether defendant has authority to spend public funds to reimburse qualified participants in its proceedings are the issues this Court has to decide. For the reasons hereafter set forth, we agree with the District Court that plaintiff has standing but disagree with the conclusion that defendant has authority to reimburse and, therefore, reverse.

I. STANDING

Only the complaint and certain exhibits were before the District Court upon its decision on the cross-motions for summary judgment. That being true:

For purposes of ruling on a motion to dismiss for want of standing, both the trial and reviewing courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party.

Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 2206, 45 L.Ed.2d 343 (1975).

Plaintiff alleged in its complaint:

PLF engages in research, study, and litigation in matters affecting the public interest. PLF has over 9,000 supporters and contributors from all areas of the country, who as citizens and taxpayers have a substantial interest in seeing that federal monies are expended only as mandated by Congress....

PLF frequently participates in FDA proceedings and stands to be injured by the implementation of the public participation funding program. Reimbursement cannot be provided without unduly delaying agency proceedings since the officer presiding over applications for reimbursement has discretion to delay proceedings for an indeterminate period of time. PLF, once it has committed itself to a proceeding, will be devoting its limited resources to that proceeding to the detriment of other issues necessitating its representation in the public interest.

PLF will necessarily have to expend more resources in order to be certain that the public interest is represented equally as well as the special interest representatives seeking reimbursement who claim to represent "the public," but who are unable to raise money from that "public" to support participation in FDA proceedings.

Additionally, PLF alleges that it is an "interested person" as defined in Title 21 C.F.R. 10.3(12) (1979) and thus specifically has standing to obtain judicial review of the FDA's "final action" under Title 21 C.F.R. 10.45(d)(1) (ii) (1979).

Justice Powell in Warth, 422 U.S. at 498, 95 S.Ct. at 2205, set forth the following general principles with regard to standing:

In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues. This inquiry involves both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise.... In both dimensions it is founded in concern about the proper-and properly limited-role of the courts in a democratic society....

In its constitutional dimension, standing imports justiciability: whether the plaintiff has made out a "case or controversy" between himself and the defendant within the meaning of Art. III. This is the threshold question in every federal case, determining the power of the court to entertain the suit. As an aspect of justiciability, the standing question is whether the plaintiff has "alleged such a personal stake in the outcome of the controversy" as to warrant his invocation of federal-court jurisdiction and to justify exercise of the court's remedial powers on his behalf.

Since plaintiff has participated in FDA proceedings in the past we agree with the conclusion of the District Court that "... if it is to maintain its institutional presence in these proceedings it is quite possible that it will suffer increased costs as a result of the new reimbursement procedures." Pacific Legal Foundation v. Goyan, 500 F.Supp. 770, 773 (D.Md.1980). We find that plaintiff has alleged the requisite "direct injury" to give it standing because of the increased time and expense necessary for it to monitor not only proposals by the FDA and comments thereto, but also proposals by applicants for reimbursement under the program here in question. It would seem only natural for plaintiff to increase its vigilance and efforts if defendant's proposed program is a success because the greater the number of direct views that are presented the more plaintiff will need to counter or support these views. We are unpersuaded by defendant's contention that while it may be that PLF will choose to expend more time and funds in order to counter heretofore absent opposing opinions, that is a decision to be made by PLF. This begs the question as plaintiff's motive for being interested in FDA proceedings is not relevant to the question of standing.

Finding sufficient direct injury to sustain plaintiff's standing, we deem it unnecessary to determine whether plaintiff's contention that it has statutory standing is correct.

II. DEFENDANT'S AUTHORITY TO REIMBURSE

It is undisputed that Congress has not specifically authorized the program here in question. The FDA contends, however, that it has the implied power to expend the funds necessary to carry out the proposal. The FDA's reasoning, adopted by the District Court, is that since it has broad regulatory powers under the Act and since "(a)s part of its regulation of the many products subject to its jurisdiction, the FDA is often required to hold hearings and to base its decisions concerning the products it regulates solely on the record developed in those hearings," it had the power to establish this program "to ... enhance the efficiency and quality of its administrative proceedings by providing for a greater diversity of views." Id. at 774. Appellants contend that no such implied authority can be found and that, instead, such expenditures are prohibited by 31 U.S.C. §§ 665(a) ⁹ and 628. ¹⁰ Resolution of this issue turns on an examination of both the...