Thomas v. Union Carbide Agricultural Products Co

• Decision Date: 01 July 1985
• Docket Number: No. 84-497,84-497
• Parties: Lee M. THOMAS, Administrator, United States Environmental Protection Agency, Appellant, v. UNION CARBIDE AGRICULTURAL PRODUCTS CO. et al
• Court: U.S. Supreme Court

473 U.S. 568

105 S.Ct. 3325

87 L.Ed.2d 409

Lee M. THOMAS, Administrator, United States Environmental Protection Agency, Appellant,

v UNION CARBIDE AGRICULTURAL PRODUCTS CO. et al.

No. 84-497.

Argued March 26, 1985.

Decided July 1, 1985.

Syllabus

The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) requires manufacturers of pesticides, as a precondition for registering a pesticide, to submit research data to the Environmental Protection Agency (EPA) concerning the product's health, safety, and environmental effects, and authorizes EPA to use previously submitted data in considering an application for registration of a similar product by another registrant ("follow-on" registrant). Section 3(c)(1)(D)(ii) of FIFRA authorizes EPA to consider certain previously submitted data only if the "follow-on" registrant has offered to compensate the original registrant for use of the data, and provides for binding arbitration if the registrants fail to agree on compensation. The arbitrator's decision is subject to judicial review only for "fraud, misrepresentation, or other misconduct." Appellees, firms engaged in the development and marketing of chemicals used to manufacture pesticides, instituted proceedings in Federal District Court to challenge, inter alia, the constitutionality of the arbitration provisions on the ground that they violate Article III of the Constitution by allocating to arbitrators the functions of judicial officers and by limiting review by an Article III court. Appellees alleged that EPA had considered their research data in support of other registration applications, that one of the appellees (Stauffer Co.) had invoked the arbitration provisions of § 3(c)(1)(D)(ii) against a "follow-on" registrant, and that the arbitration award fell short of the compensation to which Stauffer Co. was entitled. The District Court held that the claims challenging the arbitration provisions were ripe for decision, and that those provisions violated Article III.

Held:

1. Appellees' Article III claims demonstrate sufficient ripeness to establish a concrete case or controversy. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 104 S.Ct. 2862, 81 L.Ed.2d 815 distinguished. Appellees have an independent right to adjudication of their compensation claims in a constitutionally proper forum; their claim does not depend on the outcome of a given arbitration. It is sufficient for purposes of a claim under Article III challenging a tribunal's jurisdiction that the claimant demonstrate it has been or inev- itably will be subjected to an exercise of such unconstitutional jurisdiction. In addition, the issue here is purely legal, and will not be clarified by further factual development. Appellees have standing to contest EPA's issuance of "follow-on" registrations pursuant to what they contend is an unconstitutional statutory provision. Pp. 579-582.

2. Article III does not prohibit Congress from selecting binding arbitration with only limited judicial review as the mechanism for resolving disputes among participants in FIFRA's pesticide registration scheme. Pp. 582-593.

(a) The Constitution does not require every federal question arising under the federal law to be tried in an Article III court before a judge enjoying life tenure and protection against salary reduction. Congress is not barred from acting pursuant to its Article I powers to vest decisionmaking authority in tribunals that lack the attributes of Article III courts. Pp. 582-584.

(b) Any right to compensation from "follow-on" registrants under § 3(c)(1)(D)(ii) for EPA's use of data arises under FIFRA and does not depend on or replace a right to such compensation under state law. Thus, the holding in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 that Congress may not vest in a non-Article III court the power to adjudicate a traditional contract action arising under state law, without the litigants' consent, and subject only to ordinary appellate review—is not controlling here. Nor do this Court's decisions support appellees' contentions that Article III adjudication or review is required because FIFRA confers a "private right" to compensation (as distinguished from a "public right"), or that the right to an Article III forum is absolute unless the Federal Government is a party of record. Pp. 584-586.

(c) Practical attention to substance rather than doctrinaire reliance on formal categories should inform application of Article III. Crowell v. Benson, 285 U.S. 22, 52 S.Ct. 285, 76 L.Ed. 598. If the identity of the parties alone determined the requirements of Article III, under appellees' theory the constitutionality of many quasi-adjudicative activities carried on by administrative agencies involving claims between individuals would be thrown into doubt. In essence, the "public rights" doctrine reflects simply a pragmatic understanding that when Congress selects a quasi-judicial method of resolving matters that could be conclusively determined by the Executive and Legislative Branches, the danger of encroaching on the judicial powers is reduced. Pp. 586-589.

(d) Several aspects of FIFRA establish that the arbitration scheme adopted by Congress does not contravene Article III. The right created by FIFRA as to use of a registrant's data to support a "follow-on" registration is not a purely "private" right, but bears many of the charac- teristics of a "public" right. Congress has the power, under Article I, to authorize an agency administering a complex regulatory scheme to allocate costs and benefits among voluntary participants in the program without providing an Article III adjudication. The arbitration scheme is necessary as a pragmatic solution to the difficult problem of spreading the costs of generating adequate information regarding the safety, health, and environmental impact of a potentially dangerous product. Additionally, the scheme contains its own sanctions and subjects no unwilling defendant to judicial enforcement power. Given the nature of the right at issue and the concerns motivating Congress, the arbitration system does not threaten the independent role of the judiciary in the constitutional scheme. In the circumstances, the limited Article III review of the arbitration proceeding preserves the appropriate exercise of the judicial function. Pp. 589-593.

3. Appellees' alternative Article I claim that FIFRA's standard for compensation is so vague as to be an unconstitutional delegation of legislative powers was neither adequately briefed nor argued to this Court and was not fully litigated before the District Court. Therefore, the issue is left open for determination on remand. P. 593.

Reversed and remanded.

Lawrence Gerald Wallace, Washington, D.C., for appellant.

Kenneth Ward Weinstein, Washington, D.C., for appellees.

Justice O'CONNOR delivered the opinion of the Court.

This case requires the Court to revisit the data-consideration provision of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), 61 Stat. 163, as amended, 7 U.S.C. § 136 et seq., which was considered last Term in Ruckelshaus v. Monsanto Co., 467 U.S. 986, 104 S.Ct. 2862, 81 L.Ed.2d 815 (1984). Monsanto examined whether FIFRA's data-consideration provision effects an uncompensated taking in violation of the Fifth Amendment. In this case we address whether Article III of the Constitution prohibits Congress from selecting binding arbitration with only limited judicial review as the mechanism for resolving disputes among participants in FIFRA's pesticide registration scheme. We conclude it does not and reverse the judgment below.

I

The Court's opinion in Monsanto details the development of FIFRA from the licensing and labeling statute enacted in 1947 to the comprehensive regulatory statute of the present. This case, like Monsanto, concerns the most recent amendment to FIFRA, the Federal Pesticide Act of 1978, 92 Stat. 819 (1978 Act), which sought to correct problems created by the Federal Environmental Pesticide Control Act of 1972, 86 Stat. 973 (1972 Act), itself a major revision of prior law. See Ruckelshaus v. Monsanto Co., supra, at 991-992, 104 S.Ct., at 2866-2867.

A.

As a precondition for registration of a pesticide, manufacturers must submit research data to the Environmental Protection Agency (EPA) concerning the product's health, safety, and environmental effects. The 1972 Act established data-sharing provisions intended to streamline pesticide registration procedures, increase competition, and avoid unnecessary duplication of data-generation costs. S.Rep. No. 92-838, pp. 72-73 (1972) (1972 S.Rep.), U.S.Code Cong. & Admin.News 1972, p. 3993. Some evidence suggests that before 1972 data submitted by one registrant had "as a matter of practice but without statutory authority, been considered by the Administrator to support the registration of the same or a similar product by another registrant." Ruckelshaus v. Monsanto Co., supra, at 1009, n. 14, 104 S.Ct., at 2876, n. 14. Such registrations were colloquially known as "me too" or "follow-on" registrations. Section 3(c)(1)(D) of the 1972 Act provided statutory authority for the use of previously submitted data as well as a scheme for sharing the costs of data generation.

"In effect, the provision instituted a mandatory data-licensing scheme. The amount of compensation was to be negotiated by the parties, or, in the event negotiations failed, was to be determined by the EPA, subject to judicial review upon instigation of the original data submitter. The scope of the 1972 data-consideration provision, however, was limited, for any data designated as 'trade secrets or commercial or financial information' . . . could not be considered at all by EPA to support another registration unless the original submitter consented." Ruckelshaus v. Monsanto Co., supra, at 992-993, 104 S.Ct., at 2867.

Congress enacted the original data-compensation...