WILLIAM D. RUCKELSHAUS, ADMINISTRATOR, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, APPELLANT v. UNION CARBIDE AGRICULTURAL PRODUCTS, CO., INC., ET AL. No. A-178 In The Supreme Court Of The United States October Term, 1984 Application For A Stay Of The Judgment Of The United States District Court For The Southern District Of New York Pending Disposition Of Direct Appeal Application For A Stay Of The Judgment Of The United States District Court For The Southern District Of New York Pending Disposition Of Direct Appeal Pursuant to Rules 43 and 44 of the Rules of this Court and the All Writs Act, 28 U.S.C. 1651, the Solicitor General, on behalf of William D. Ruckelshaus, Administrator of the United States Environmental Protection Agency (EPA), applies for a stay pending appeal to this Court of the judgment entered in this case by the United States District Court for the Southern District of New York on August 7, 1984, and amended by that court on September 4, 1984. /1/ This case was before the Court last Term (No. 83-1564). On July 2, 1984, the Court vacated the judgment and remanded the case for reconsideration by the district court in light of this Court's decision in Ruckelshaus v. Monsanto Co., No. 83-196 (June 26, 1984). On remand, the court below reentered its judgment declaring an Act of Congress unconstitutional. The statute at issue is Section 3(c)(1)(D)(ii), 7 U.S.C. 136a(e)(1)(D)(ii), a critical provision of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), that provides for arbitration to determine the amount of compensation due the submitters of pesticide data when those data are relied on by other applicants. The district court held that the statute violates Article III because it bars courts from reviewing arbitrators' decisions except in instances of "fraud, misrepresentation, or other misconduct" (571 F. Supp. at 124). In directing relief, the court entered an injunction far broader than its holding warranted. While the constitutional defect the court found would be cured merely by striking the limitation on judicial review, the court instead declared the entire compensation and arbitration scheme unconstitutional, and enjoined EPA from "permitting or implementing any use of data where the submitter's compensation is to be determined under the said section 3(c)(1)(D)" unless the original data submitter consents to the use of such data (Appendix C). The Solicitor General has authorized a direct appeal to this Court, and the government's notice of appeal was filed on September 6, 1984. A stay is needed so that the statute can remain in effect pending the disposition of the Administrator's direct appeal to this Court under 28 U.S.C. 1252. 1. The structure and purpose of Section 3(c)(1)(D) of FIFRA, as amended in 1978, are discussed in detail in Monsanto. Slip op. 5-7. The changes to Section 3(c)(1)(D) made by the Federal Pesticide Act of 1978, Pub. L. No. 95-396, 92 Stat. 819, were designed to eliminate needless duplicative research, and to promote competition by removing undesired barriers to market entry. Monsanto, slip op. 26. To provide extra incentives for continued innovative research, data submitted on new active ingredients in pesticides first registered after the date of the 1978 amendments are afforded "exclusive use" protection for a period of ten years after the registration is granted, i.e., other applicants cannot rely on such data without the original submitter's consent. Section 3(c)(1)(D)(i). Under the 1978 amendments, all other data are made available for any applicant to cite in support of his application, without the original submitter's permission, although data submitted after 1969 may be cited only if the applicant complies with the requirements of the compensation provisions of Section 3(c)(1)(D)(ii). The 1978 amendments further modified the mandatory data licensing and compensation provision of FIFRA to alter significantly the means by which compensation disputes would be resolved. Under the prior statute, EPA was assigned the role of deciding the terms and amount of compensation when an original data submitter and a later applicant could not agree. Under the 1978 amendments, either party may initiate arbitration proceedings by asking the Federal Mediation and Conciliation Service to designate an arbitrator. Section 3(c)(1)(D)(ii). The statute further provides that the "findings and determination of the arbitrator shall be final and conclusive" and not subject to judicial review "except for fraud, misrepresentation, or other misconduct by one of the parties to the arbitration or the arbitrator" (ibid.). /2/ 2. Several large pesticide firms brought this action in 1976 challenging provisions of FIFRA, as amended in 1972 and 1975. Following the 1978 amendments, plaintiffs challenged the constitutionality of both the data consideration and data disclosure provisions, alleging the statute violated the Fifth Amendment's Taking and Due Process Clauses. A preliminary injunction preventing use or disclosure of data submitted prior to the 1978 amendments was reversed by the Second Circuit because plaintiffs had failed to show a likelihood of success on the merits. Union Carbide Agricultural Products v. Costle, 632 F.2d 1014 (1980), cert. denied, 450 U.S. 996 (1981). Thereafter, plaintiffs stipulated to dismissal of all claims except a due process challenge to the disclosure of data submitted prior to 1978 and a claim that the arbitration and compensation provisions were an unconstitutional delegation of legislative power. Following this Court's decision in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982), plaintiffs added a claim that the arbitration and compensation scheme violated Article III of the United States Constitution because the statute impermissibly assigned judicial functions to the arbitrators and limited judicial review. In 1983, the district court entered summary judgment in favor of plaintiffs on their Article III claims (App. C). /3/ The court first rejected the government's contention that any challenge to the compensation and arbitration scheme was not ripe for review until a party had suffered concrete injury from the results of a specific arbitration (571 F. Supp. at 123, n.2). In the court's view, there was no "profit" in delaying resolution of the issue; the mere "statutory compulsion to seek relief through arbitration" was found sufficient to create a concrete case or controversy. Ibid. The court held that the dispositive factor in determining the Article III issue was that the arbitration procedure "commits to arbitrators the power to resolve valuation issues utterly without judicial review" and further held that "this absolute assignment of power to arbitrators is an impermissible intrusion on the judiciary." Id. at 124. On the basis of this holding, the district court entered a broad injunction. Rather than striking down only the limitation on judicial review, the court enjoined the entire statutory mechanism for mandatory data licensing and compensation for post-1969 data. In effect, the injunction created a right to exclusive use of data submitted after 1969 by all pesticide registration applicants. The government appealed the 1983 judgment directly to this Court (No. 83-1564) pursuant to 28 U.S.C. 1252 and urged the Court to dispose of the case in accordance with the anticipated decision in Monsanto, where the same issues were presented. 83-1564 J.S. 6-13. In Monsanto, the Court held the same Article III issue was not ripe because the company had not participated in and been injured by an arbitration. Slip op. 30-31. 3. On remand following the decision in Monsanto, plaintiffs amended their complaint and filed motions for reentry of judgment and for a preliminary injunction. The amended complaint alleged that one of the plaintiffs, Stauffer Chemical Company, had submitted data to EPA in support of registrations for pesticides containing butylate; that EPA had considered those data without Stauffer's consent in granting a registration to PPG Industries, Inc., for a pesticide containing the same active ingredient; that Stauffer had invoked the arbitration provisions of FIFRA against PPG; and that the arbitration panel made an award on June 28, 1983, in an amount less than Stauffer had demanded. Amended Complaint for Declaratory and Injunctive Relief, filed July 16, 1984. The amended complaint, however, did not request that the award be modified or set aside, nor did it allege any legal defects in the award, other than the previous claim that the procedure for reaching the award was unconstitutional. /4/ The only requested relief was prospective, i.e., that the statutory provisions be declared unconstitutional and that EPA be enjoined from implementing the data consideration scheme under which compensation is to be determined by arbitration (ibid.). The district court concluded that "under the amended complaint the issue (was) ripe as to data submitted by plaintiff Stauffer Chemical Company post-1978 as to which there has been an award by an arbitrator" and that there was no basis for changing its earlier decision (App. A at 1). On August 16, 1984, the government filed a motion in the district court, asking for a stay of the judgment in its entirety, pending direct appeal to this Court pursuant to 28 U.S.C. 1252, or in the alternative for a stay of the judgment except insofar as the judgment applies to data submitted by the Stauffer Chemical Company, the only plaintiff as to which the district court had made a finding that the issues were ripe for adjudication. On September 4, 1984, the district court denied the Administrator's motion for stay of the judgment below (Appendix D, infra). 4. Rules 43 and 44 of the Rules of this Court, and the All Writs Act, 28 U.S.C. 1651, authorize this Court or any Justice to stay a district court judgment pending a direct appeal under 28 U.S.C. 1252. See, e.g., Rostker v. Goldberg, 488 U.S. 1306 (1980) (Brennan, Circuit Justice); Graves v. Barnes, 405 U.S. 1201, 1203 (1972) (Powell, Circuit Justice). In considering applications for such a stay, the Court weighs: (1) whether there is a "reasonable probability" that four Justices would vote to note probable jurisdiction; (2) whether there is a "fair prospect" that a majority of the Court would conclude that the decision below was in error; (3) whether irreparable harm is likely to occur absent a stay; and (4) the balance of the equities, including the relative harm to the applicant, the respondent, and the public interest. Rostker v. Goldberg, supra. See also Graves v. Barnes, supra; Republican State Central Committee v. Ripon Society, Inc., 409 U.S. 1222, 1227 (1972). Since the court below has declared a significant portion of a federal statute unconstitutional, echoing its previous judgment -- that this Court vacated on July 2, 1984 -- this case clearly satisfies the first criterion. For the reasons explained below, application of the remaining criteria supports the issuance of a stay. a. Probability of success on the merits. The district court's decision is incorrect and the government is likely to prevail on appeal. The decision below does not adhere to the rule that "legislative acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality * * *." Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1979). /5/ The district court's opinion is inconsistent with this Court's holding in Monsanto that this same issue is not presently justiciable (slip op. 31), is contrary to decisions of this Court upholding binding arbitrations for statutorily created entitlements, and in any event ignores this Court's precedents regarding the severability of statutory provisions. (1). Contrary to the district court's conclusion, plaintiffs' constitutional challenge to the arbitration and compensation scheme does not present a justiciable case or controversy. When this case was before the Court last Term none of the parties had alleged or established that it had been injured by an actual arbitration under the statute. In those circumstances, as the Court held in Monsanto, the issue was not ripe for review. Ripeness is a threshold element of Article III's requirement of a case or controversy, see Duke Power Co. v. Carolina Environment Study Group, Inc., 438 U.S. 59, 81 (1978); Regional Rail Reorganization Act Cases, 419 U.S. 102, 138 (1974). Accordingly, federal courts are without jurisdiction to adjudicate hypothetical disagreements or abstract claims before action has been taken that causes concrete injury to an aggrieved party. Abbott Laboratories v. Gardner, 387 U.S. 136, 148-149 (1967); Toilet Goods Association v. Gardner, 387 U.S. 158, 164 (1967). Nothing that has transpired since this Court vacated the earlier judgment has materially changed the situation. The belated allegation that Stauffer, alone among the plaintiffs, had been a party to an arbitration, does not create a case or controversy. Stauffer has not asserted that the award was inadequate or inconsistent with the substantive or procedural requirements of the statute, nor has it asked any court to review, increase, or set aside the award. Indeed, plaintiffs informed the district court that they "do not challenge the result of any arbitration, nor does the adjudication of plaintiffs' claims depend in any manner on the outcome of an arbitration." Memorandum in Support of Plaintiffs' Motion for Reentry of Judgment, July 16, 1984, at 6. Most tellingly, in a pending action brought by PPG for review of the award, see note 4, supra, Stauffer has counterclaimed for enforcement of that very arbitration award and, in the alternative, has counterclaimed for damages from PPG in the amount of the arbitration award in the event the statutory compensation scheme is invalidated. To satisfy Article III's requirement of a case or controversy, a party must show that it has suffered (or is threatened by) an actual injury and that the requested relief would redress the claimed injury. Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 472 (1982); Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. at 72-73, 81. This requirement serves to define the judiciary's role in the allocation of powers among the three branches of government (Valley Forge, 454 U.S. at 473-474), and "to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions." Duke Power Co., 438 U.S. at 72 (quoting Baker v. Carr, 369 U.S. 186, 204 (1962)). So long as Stauffer has no quarrel with the substance of the arbitration award -- and so long as it requests no relief that would increase the award -- it clearly has not suffered an injury of the sort that would make its claim in this case justiciable. /6/ When and if Stauffer seeks judicial review of an arbitrator's decision it may have a justiciable case and controversy -- not before. /7/ (ii). Even if plaintiffs' claim were presently justiciable, the district court erred on the merits. Contrary to the district court's holding, FIFRA does not offend Article III by assigning the resolution of a compensation dispute to an arbitrator whose decision is subject to limited judicial review. This Court has upheld laws that "withdr(e)w judicial review of administrative determinations in numerous cases involving the statutory rights of private parties." South Carolina v. Katzenbach, 383 U.S. 301, 333 (1966). See Switchmen's Union v. National Mediation Board, supra, 320 U-S. at 300-301, 302. Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982), is not to the contrary. The vice of the 1978 Bankruptcy Act was the assignment to the bankruptcy courts of the authority to adjudicate traditional common law rights (458 U.S. at 81-86); the challenged provisions of FIFRA deal only with a statutorily-created right of recent vintage. Indeed, the plurality in Northern Pipeline reaffirmed Congress's constitutional authority to proceed in this manner (458 U.S. at 83 (footnote omitted)): (W)hen Congress creates a statutory right, it clearly has the discretion, in defining that right, to create presumptions, or assign burdens of proof, or prescribe remedies; it may also provide that persons seeking to vindicate that right must do so before particularized tribunals created to perform the specialized adjudicative tasks related to that right. Thus, the court below erred in relying on Northern Pipeline to strike down the arbitration provision. (iii). Finally, even if the district court had correctly found that the statutory provision violates Article III, that conclusion would not justify enjoining the operation of Section 3(c)(1)(D)(ii) in its entirety. The only appropriate relief in that event would be to strike down the limitation on review, since there can be no doubt that the scheme would be constitutional so long as judicial review can be obtained in an Article III court. See Northern Pipeline, supra, 458 U.S. at 83; Crowell v. Benson, 285 U.S. 22, 50 (1932). See also United States v. Raddatz, 447 U.S. 667, 682-683 (1980); St Joseph Stock Yards Co. v. United States, 298 U.S. 38, 53 (1936). /8/ The district court's apparent conclusion that the limitation on judicial review is integral to FIFRA's data consideration, compensation and arbitration provisions cannot be sustained. Whether a statute or any of its provisions should be viewed as inseparable is a matter of congressional intent. INS v. Chadha, No. 80-1832 (June 23, 1983), slip op. 10-11; Buckley v. Valeo, 424 U.S. 1, 108-109 (1976); Tilton v. Richardson, 403 U.S. 672, 682-684 (1971); Electric Bond & Share Co. v. SEC, 303 U.S. 419, 434 (1938). Here Congress has plainly spoken, since FIFRA provides that the invalidity of "any provision * * * or application thereof * * * shall not affect other provisions or applications" (7 U.S.C. 136x). The achievement of the primary purpose of Section 3(c)(1)(D)(ii), to permit consideration of data without the original submitter's permission and to provide a compensation mechanism for that use of the data, is not dependent on the limitation on judicial review. Where, as here, "what remains after severance 'is fully operative as a law,'" a provision will be "presumed severable." INS v. Chadha, supra, slip op. 13, quoting Champlin Refining Co. v. Corporation Commission, 286 U.S. 210, 234 (1932). Moreover, there is nothing in the legislative history to suggest that Congress would have failed to enact the provision without such a limitation, and therefore nothing to overcome the presumption of severability. Accordingly, the district court failed to fulfill its duty "to save and not to destroy" the remaining portions of the statute. Tilton v. Richardson, supra, 403 U.S. at 684, quoting NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 30 (1937). b. Irreparable harm and balancing of the equities. (i). The injunction entered by the district court will cause irreparable harm to the government, to the members of the regulated pesticide industry upon whom the burden of data requirements will fall, and to the public on whose behalf Congress acted to facilitate market entry of new pesticide products. If the injunction remains in effect during review of the case by this Court, the congressional scheme will again be thwarted. Since 1978, three separate injunctions in this case alone, as well as the injunction in Monsanto, have frustrated EPA's efforts to implement the statute. This repeated interference with the will of Congress is itself an injury to the functioning of our governmental system: "any time a State is enjoined by a court from effectuating statutes enacted by representatives of its people, it suffers a form of irreparable injury." New Motor Vehicle Board of California v. Orrin W. Fox Co., 434 U.S. 1345, 1351 (1977) (Rehnquist, Circuit Justice). There is no way to remedy such a loss after the government ultimately prevails. Furthermore, the government suffers a significant and irretrievable loss when scarce administrative resources are drained from other pressing needs in order to cope with the disruption created by an injunction like the one entered below. Very real and irreparable harm will be suffered by applicants and registrants who are not parties to this litigation if the lower court injunction remains in effect through the next several months. Some applicants will not be able to enter the market. /9/ Some registrants may even be forced to give up existing registrations if they cannot obtain permission to cite recently-submitted data to satisfy conditions of their registrations imposed pursuant to Section 3(c)(7)(A) or (B), 7 U.S.C. 136a(c)(7)(A), (B). This Court has found that the data consideration provision of FIFRA was designed by Congress to streamline the registration process so as to make new end use products available to consumers more quickly, Monsanto, slip op. 26. Because the costly duplication of government-mandated research is also very time consuming, the operation of Section 3(c)(1)(D) during this appeal is essential to prevent the barriers to market entry that Congress wished to remove. /10/ (ii). In contrast, plaintiffs would suffer no irreparable harm should the injunction be stayed. The only harm plaintiffs asserted to the district court is the possibility that they will not obtain the statutory compensation for the use of their data while the case is under review by this Court. In other words, the "harm" to appellees is that the congressional effort to confer an economic benefit upon them may not succeed because of a constitutional infirmity. That harm can occur, however, only if this Court invalidates the compensation scheme in a way that prevents plaintiffs from either invoking FIFRA's compensation remedy or employing other remedies to obtain damages from appropriate parties. That highly speculative possibility is not likely to occur. Should plaintiffs succeed in demonstrating that the provision for mandatory arbitration with limited judicial review violates Article III, they would not necessarily suffer any injury, much less irreparable harm. As we have shown, simply striking the limitation on judicial review would fully cure any possible constitutional infirmity; in that event, the statute remains capable of providing the required compensation. It is apparent, therefore, that the plaintiffs can make no credible claim of irreparable injury. /11/ CONCLUSION For the reasons stated above, the district court's judgment enjoining operation of Section 3(c)(1)(D) should be stayed pending appeal. /12/ Respectfully submitted. REX E. LEE Solicitor General SEPTEMBER 1984 /1/ The district court judgment and order of August 7, 1984, is attached to this application as Appendix A. The district court's Supplemental Findings of Fact, Conclusions of Law, and Order, dated September 4, 1984, is attached as Exhibit B. The prior opinion of the district court is reported at 571 F. Supp. 117. The unreported order effectuating the prior opinion is attached as Appendix C. /2/ Section 3(c)(1)(D)(ii) also provides for sanctions against parties who do not cooperate with the arbitration scheme. If an applicant fails to comply with the terms of a compensation agreement or an arbitration award, its registration is subject to cancellation; if a data submitter fails to participate or otherwise comply, it forfeits its right to compensation. /3/ The due process claim was rejected and the delegation claim was not reached by the court. /4/ In fact, review of the award is being sought, not by Stauffer, but by PPG (which is not a party to the instant case). In PPG Industries, Inc. v. Stauffer Chemical Co., et al., Civil Action No. 83-1941 (D.D.C. filed July 7, 1983), PPG's complaint asks that the award be set aside as excessive. PPG claims alternatively that Section 3(c)(1)(D) is unconstitutional under the Due Process Clause, the Taking Clause and Article III. Stauffer has not challenged the award as being inadequate; indeed, it has counterclaimed for enforcement of the award. In the alternative, Stauffer has cross-claimed against EPA for a declaration that the statute violates Article III and counterclaimed against PPG for cancellation of PPG's registration and for damages in the amount of the award in the event the statutory compensation scheme is invalidated. /5/ The "presumption of constitutionality" which is accorded a federal statute also weighs heavily in favor of permitting the statute to remain in effect pending a final decision on the merits by this Court. Marshall v. Barlow's, Inc., 429 U.S. 1347 (1977) (Rehnquist, Circuit Justice); Schweiker v. McClure, 452 U.S. 1301 (1981) (Rehnquist, Circuit Justice). /6/ This Court held in Monsanto (slip op. 31; emphasis added) that "(t)he operation of the arbitration provisions affects only (the data submitter's) ability to vindicate its statutory right to obtain compensation from a subsequent applicant." /7/ Nor is any different result compelled by Stauffer's claim that it is aggrieved by the requirement of seeking vindication of its compensation right in a non-Article III forum. This claim of injury merely speculates about some possible future harm, and is barely more than an abstract allegation that the Constitution will be violated. As in Valley Forge, supra, such a claim is not sufficient, for it is Stauffer's burden "to identify any personal injury suffered by (it) as a consequence of the alleged constitutional error * * * ." 454 U.S. at 485 (emphasis in original). Finally, the district court found ripeness only as to Stauffer and not as to the other appellees. Those parties' only claim to injury was the possibility that they would be forced to go through an arbitration; this Court's decision in Monsanto holds that this threatened injury is not sufficient to create a case or controversy. /8/ If the review limitations alone were stricken, district courts would have jurisdiction under 28 U.S.C. 1331 to review arbitration decisions. That too, however, is a question not ripe for adjudication until district court review of a particular arbitration award is sought. /9/ Persons who seek to register agricultural pesticides for sale and use in the 1985 growing season will need to obtain EPA approval no later than early 1985. Most agricultural pesticides are designed for use in the spring or early summer. And before a product can be used, the registrant must of course manufacture, package, label and distribute it. /10/ EPA recently promulgated a final rule providing procedures for implementing the data licensing and data compensation provisions of Section 3(c)(1)(D). 49 Fed. Reg. 30884-30908 (August 1, 1984). That rule becomes effective upon completion of the 60-day statutory congressional review period. 7 U.S.C. 136w(a)(4). During the pendency of the Monsanto injunction, EPA implemented the data requirements aspects of registration through interim procedures under which applicants could establish that they had permission to cite any previously submitted data on which they rely. Pesticide Registration Notice 83-4 (and 83-4A). See 48 Fed. Reg. 32012 (July 13, 1983). If the injunction is stayed, EPA will immediately modify those interim procedures to permit applicants to establish either that they have permission to cite previously submitted data or that they have made a proper offer to pay for data compensation under Section 3(c)(1)(D). Accordingly, EPA will promptly implement the enjoined provision if the stay is granted. /11/ This consideration fully distinguishes Justice Blackmun's decision to deny the government's stay application in Monsanto. Ruckelshaus v. Monsanto Co., A-1066 (July 27, 1983). There, Monsanto presented a claim that data it had submitted were trade secrets; Justice Blackmun concluded that a stay would permit disclosure and licensing of such information, thereby breaching irrevocably any protection Monsanto had enjoyed. Here, however, the question is not whether trade secret protection will be lost, but whether plaintiffs will be prevented from recovering compensation or damages if they prevail on the merits. /12/ Alternatively, should this Court determine that plaintiff Stauffer is entitled to injunctive relief, the injunction should be limited to Stauffer alone and should be stayed in all other respects. Only Stauffer has been found by the district court (erroneously, in our view) to have met the ripeness criterion established by this Court in Monsanto. The many other data submitters who will benefit from the injunction are no differently situated than Monsanto, whose Article III claim was held by this Court to be premature because of the absence of a challenge by Monsanto to a specific arbitration award. No different result should govern the availability of relief to other data submitters who have never been involved in an arbitration, even if the district court is correct in its determination that Stauffer has presented a justiciable controversy. See Marshall v. Barlow's, supra, 429 U.S. at 1348. APPENDIX