Professionals and Patients for Customized Care v. Shalala

United States Court of Appeals for the Fifth Circuit · 1995 · Administrative Law

Administrative LawAPA rulemakingnotice-and-commentFDA enforcement guidanceAPAsubstantive ruleinterpretative rulepolicy statement

Facts

In 1992 the FDA issued Compliance Policy Guide 7132.16 to address pharmacies that it believed were manufacturing drugs under the guise of traditional compounding. The guide stated that the FDA might initiate enforcement actions when a pharmacy's activities resembled manufacturing and listed nine factors the agency would consider, while also saying the list was not exhaustive and enforcement remained discretionary. The FDA issued the guide without notice and comment because it viewed the document as internal guidance for identifying suspect pharmacies. P2C2, representing pharmacists and related entities, challenged the guide after some members were told their activities looked like drug manufacturing and were therefore subject to manufacturer regulations.

Issue

Whether FDA Compliance Policy Guide 7132.16 was a substantive rule requiring APA notice-and-comment procedures, or instead an exempt interpretative rule or general statement of policy. More specifically, the question was whether the guide created binding norms or so constrained FDA discretion that it functioned as a substantive rule.

Rule

Under the APA, notice and comment is not required for interpretative rules or general statements of policy, but is required for substantive rules. A pronouncement is substantive if it establishes a binding norm, imposes rights or obligations, or so narrowly constricts agency discretion that application becomes essentially mechanical; by contrast, a policy statement or interpretative rule leaves the agency free to exercise discretion in individual cases, does not have the force of law, and merely announces factors the agency will consider or clarifies existing law rather than changing it.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

The Federal Device Safety Bureau issues a document titled "Enforcement Policy for Custom Sensor Labs" to its field offices in Dallas. The document says the bureau "may, in the exercise of enforcement discretion," bring actions against labs whose conduct raises concerns associated with manufacturing, lists seven factors the bureau "will consider," and states the list is not exhaustive and other facts may matter in a particular case.

If affected labs challenge the document for lack of notice and comment, which is the strongest argument that the document is exempt from APA notice-and-comment requirements?

Explanation. Under the majority opinion, the key inquiry is whether the pronouncement establishes a binding norm or so constricts discretion that application becomes mechanical. A document using discretionary language, announcing factors the agency will consider, and expressly preserving case-by-case judgment is a general statement of policy or interpretative rule rather than a substantive rule. Agency audience and label are relevant but not conclusive.