WILLIAM D. RUCKELSHAUS, ADMINISTRATOR, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, APPELLANT V. UNION CARBIDE AGRICULTURAL PRODUCTS CO., ET AL. No. 83-1564 In the Supreme Court of the United States October Term, 1983 ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK JURISDICTIONAL STATEMENT PARTIES TO THE PROCEEDING In addition to those named in the caption, the parties are: Abbott Laboratories, Ciba-Geigy Corporation, E. I. duPont De Nemours Company, Rhone-Poulenc, Inc., Rohm and Haas Company, Uniroyal, Inc., Zoecon Corporation, Stauffer Chemical Corporation, FMC Corporation, and Velsicol Chemical Corporation. The following companies, originally parties to this action, were dismissed prior to final judgment: Ralston Purina Company, Salisbury Laboratories, Inc., Sandoz, Inc. and Upjohn Company. TABLE OF CONTENTS Opinion below Jurisdiction Constitutional and statutory provisions involved Statement The questions presented are substantial Conclusion Appendix OPINION BELOW The opinion of the district court (App., infra, 1a-14a) is reported at 571 F. Supp. 117. JURISDICTION The judgment of the district court (App., infra, 15a-16a) was entered on November 30, 1983. The Administrator of the Environmental Protection Agency filed a notice of appeal to this Court on December 21, 1983 (App., infra, 17a-18a). On February 13, 1984, Justice Marshall extended the time for docketing the appeal to March 20, 1984. The jurisdiction of this Court is invoked under 28 U.S.C. 1252. CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED Article III, Section 1, of the United States Constitution and the relevant portions of the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. 136 et seq., are reprinted in App., infra, 19a-22a. QUESTIONS PRESENTED l. Whether a constitutional challenge to the data compensation and arbitration scheme of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), 7 U.S.C. 136a(c)(D)(ii), was ripe for review in the absence of an allegation or showing that any of the plaintiffs had participated in and were harmed by an arbitration under the statute. 2. Whether, if we assume the issue is ripe, FIFRA'S data compensation and arbitration provisions violate Article III of the United States Constitution because the awards made by the arbitrators selected under the statute are subject to review by an Article III court only on a showing of "fraud, misrepresentation or other misconduct," 7 U.S.C. 136a(c)(1)(D)(ii). 3. Whether, if we assume the issue is ripe and these provisions violate Article III, the plaintiffs were entitled to a judgment invalidating the entire scheme for consideration of previously submitted data rather than a judgment striking the limitation on judicial review. STATEMENT 1. The court below declared unconstitutional a key provision of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), 7 U.S.C. 136 et seq., the federal legislation regulating the marketing and use of pesticides. /1/ Under FIFRA, persons seeking to market a pesticide product in the United States first must obtain a registration from the Environmental Protection Agency (EPA). 7 U.S.C. 136a(a). Before issuing the registration, the Administrator of EPA must determine, inter alia, that the pesticide's use will not cause unreasonable adverse effects on the environment, taking into account the benefits as well as the risks to humans or the environment. 7 U.S.C. 136(bb), 136a(c)(5)(C)-(D). The Administrator bases this determination, in part, on test data submitted or cited by the applicant for registration, data that generally include information on the chemical nature and structure of the pesticide as well as test results on the potential dangers of the product. Section 3(c)(1)(D) of FIFRA permits EPA to consider certain categories of health and safety data submitted by one applicant in support of the application of another company. 7 U.S.C. 136a(c)(1)(D). That Section also provides that the later applicant, in order to cite the data, must offer to compensate the original submitter; if the parties cannot agree on the amount of compensation, either may initiate binding arbitration proceedings. The decision of the arbitrator may be reviewed only upon a showing of "fraud, misrepresentation, or other misconduct" (ibid.). In the Federal Pesticide Act of 1978, Pub. L. No. 95-396, 92 Stat. 819 (1978 Amendments), Congress modified FIFRA'S registration scheme /2/ in order to promote competition and to eliminate needless duplicative testing. Under the 1978 Amendments, applicants are granted a 10-year period of exclusive use for data on new active ingredients contained in pesticides registered after September 30, 1978. Section 3(c)(1)(D)(i), 7 U.S.C. 136a(c)(1)(D)(i). All other data submitted after December 31, 1969, may be cited and considered in support of another application for 15 years following the original submission if the applicant offers to compensate the original submitter. Section 3(c)(1)(D)(ii), 7 U.S.C. 136a(c) (1)(D)(ii). Data that do not qualify for either the 10-year period of exclusive use or the 15-year period of compensation may be considered by EPA without limitation. Section 3(c)(1)(D)(iii), 7 U.S.C. 136a(c)(1)(D)(iii). Congress also modified the compensation provisions, changing significantly EPA'S role in the scheme. Unlike the prior statutory regimen, in which EPA decided the amount and terms of compensation when the data submitter and the subsequent applicant could not agree; the revised statute provides that either party may initiate arbitration proceedings by asking the Federal Mediation and Conciliation Service to designate an arbitrator. Section 3(c)(1)(D)(ii), 7 U.S.C. 136(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.). /3/ 2. Several large pesticide firms brought this action in 1976 in the United States District Court for the Southern District of New York, challenging the constitutionality of the disclosure provisions of FIFRA, as amended in 1972 and 1975. Following the 1978 Amendments, appellees amended their complaint to allege that both the data consideration and data disclosure provisions took their property in violation of the Fifth Amendment and deprived them of their property without due process of law. The district court granted appellees' motion for a preliminary injunction with respect to all data submitted prior to the enactment of the 1978 Amendments. Amchem Products, Inc. v. Costle, 481 F. Supp. 195 (S.D.N.Y. 1979). The Second Circuit reversed, however, concluding that appellees had failed to show a likelihood of success on the merits, and this Court denied a petition for a writ of certiorari. Union Carbide Agricultural Products Co. v. Costle, 632 F.2d 1014 (1980), cert. denied, 450 U.S. 996 (1981). Following that round of litigation, appellees stipulated to dismissal with prejudice of their taking claims and their due process claims as to the data consideration provisions. Thus, two contentions remained: (1) that the disclosure provisions, as applied to data submitted prior to 1978, violated due process, and (2) that the arbitration and compensation provisions were an unconstitutional delegation of legislative authority. After this Court's decision in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982), appellees maintained 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. The district court granted appellees' motion for summary judgment on their Article III claim (App., infra, 15a). /4/ 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 harm from the results of a specific arbitration (App., infra, 10a n.2). In the court's view, there was no advantage in delaying resolution of the issue; the mere "statutory compulsion to seek relief through arbitration" was sufficient to create a concrete case or controversy (id. at 11a n.2). On the merits, the court agreed with appellees' contention (id. at 13a) that the arbitration scheme "impermissibly intrudes on areas of decisionmaking constitutionally entrusted to the judiciary," relying on this Court's decision in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., supra. Because the statute barred Article III courts from reviewing the arbitrator's decision except for "fraud, misrepresentation, or other misconduct," there was, in the court's view, an "absolute assignment of power" to the arbitrators that violated Article III (App., infra, 13a). On the basis of this holding, the district court entered a broad injunction (App., infra, 15a-16a). Rather than striking down merely the limitation on judicial review of the arbitrator's decision, the court declared the entire compensation and arbitration scheme unconstitutional (ibid.). Further, the court enjoined the Administrator 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)," save when the original data submitter consents to the use of such data (ibid.). As a result, the effect of this order is to invalidate all of Section 3(c)(1)(D)(ii), providing for the consideration of data in the 15-year period following their submission. THE QUESTIONS PRESENTED ARE SUBSTANTIAL The district court has enjoined enforcement of a key provision of FIFRA that effectuates Congress's express intent that the pesticide registration program become more efficient and that competition in the industry be increased. Because the court apparently viewed the arbitration procedures as an integral part of the data consideration provisions, the judgment prevents EPA from granting registrations based on previously submitted data without the permission of the firm that submitted the data. It thus invalidates the heart of the comprehensive scheme created by Congress in its effort to weigh the need for increased competition and the need for innovation in the pesticide industry. The injunction here is nearly as broad as that entered in Monsanto. Here, as in Monsanto, if the decision is allowed to stand, Congress's desire to encourage competition in the pesticide industry and avoid unnecessary duplication of testing will be thwarted. All the issues presented here are also under consideration in Monsanto. In that case, we have appealed from a district court judgment declaring that FIFRA'S data disclosure and consideration provisions take Monsanto's property in violation of the Fifth Amendment (83-196 J.S. App. 41a). The district court in Monsanto also held that the compensation and arbitration scheme violated Article III (id. at 34a-35a, 41a). The decision below is no more correct than the opinion under review in Monsanto. First, the court erroneously held that the challenge to the arbitration scheme was ripe for review, despite the fact that no concrete case involving the results of an arbitration was presented. Second, the district court's decision on the merits ignores this Court's decisions approving the use of mandatory arbitration schemes that afford limited judicial review. Third, the relief is far broader than the holding required, and has the effect of invalidating not only the arbitration provisions, but also a critical part of the overall regulatory scheme. Consequently, this case should be held pending the decision in Monsanto and disposed of in accordance with that decision. l. The challenge to the constitutionality of the arbitration and compensation scheme was premature since none of the appellees alleged or established that it had been injured by an actual arbitration under the statute. In these circumstances, 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 Environmental 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 has a concrete effect on 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). To determine if a question is ripe for review, the Court must considlr the "fitness of the issues for judicial decision" and weigh that consideration against "the hardship to the parties of withholding court consideration." Abbott Laboratories v. Gardner, 387 U.S. at 149. In this case, the asserted claims of unconstitutionality are premature in the absence of a specific arbitration award to review. The statute itself inflicts no harm on the plaintiffs, and the likelihood of injury is wholly speculative at present since appellees would suffer concrete injury only after a series of discrete, independent events. First, a company must apply for a registration based on data submitted by one of the appellees and compensable under Section 3(c)(1)(D). Next, EPA must decide to grant the registration, the company must offer to compensate the data submitter, the parties must disagree, and arbitration must be initiated and completed with an award. At any stage, the appellees' statutory right to compensation may not mature or may be fully satisfied. No immediate injury is caused by enactment of the statute; the many possible contingencies show that the claimed injury is entirely speculative. See Toilet Goods Association v. Gardner, 387 U.S. at 163-164. /5/ Precisely the same considerations led this Court to dismiss as premature a similar attack on a statutory requirement for binding arbitration in Babbitt v. United Farm Workers Nat'l Union, 442 U.S. 289, 304-305 (1979). In that case, an Arizona statute required binding arbitration of a labor dispute between farm workers and agricultural employers if there was a strike and if the employer responded by obtaining a temporary restraining order enjoining the strike. This provision was alleged to violate due process and the constitutional right to a jury trial. The Court held that so long as there was a possibility of settling such disputes through negotiation and without the need to invoke the challenged arbitration procedures, "any ruling on the compulsory arbitration provision would be wholly advisory." 442 U.S. at 305. In addition, there is no hardship in withholding judicial review at this time. If and when any of the appellees receives an award that, in its view, is inadequate and illegal, the company may bring an action to challenge the award and present its constitutional claims in that proceeding. /6/ Precisely the same issue is presented in Monsanto. There, as here, the plaintiff had not alleged any injury from a specific arbitration. Thus, the government argued (83-196 Gov't Br., at 44-47) that the questions were premature and Monsanto has conceded in its brief that they were not ripe for review (83-196 Monsanto Br., at 40 n.56). No different result should obtain here. 2. Even if this claim were ripe for review, the district court erred on the merits. Binding arbitration of statutorily created entitlements does not offend any requirement of procedural due process. Hardware Dealers Mutual Fire Insurance Co. v. Glidden Co., 284 U.S. 151, 157-158 (1931) (state statute mandating arbitration of the amount of loss under insurance policy). See Crane v. Hahlo, 258 U.S. 142 (1922) (damage awards for municipal construction work reviewable only for jurisdictional defects, fraud, or willful misconduct). See also Andrews v. Louisville & N.R.R., 406 U.S. 320 (1972); Switchmen's Union v. National Mediation Board, 320 U.S. 297 (1943); Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d ;123 (3rd Cir. 1969); Edwards v. St Louis-S.F.R.R., 361 F.2d 946 (7th Cir. 1966). 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, 320 U.S. at 300-301, 303. Moreover, this Court's recent decision in 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 (id. at 81-86); the challenged provisions of FIFRA deal only witp a statutorily-created right of recent vintage. Indeed, the plurality in Northern Pipeline reaffirmed Congress's constitutional althority 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. 3. Finally, even if the statutory provision had correctly been found to violate Article III, that conclusion would not justify enjoining the operation of Section 3(c)(1) (D)(ii) in its entirety. On the contrary, the only appropriate relief would be to strike down the limitation on review by an Article III court, since there can be no doubt that the scheme would be constitutional so long as full judicial review was available. See Northern Pipeline, 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). The district court's apparent conclusion that the limitation on judicial review was integral to the operation of the data consideration, compensation and arbitration scheme cannot be sustained. Whether a statute or any of its provisions should be viewed as inseparable is a matter of Congressional intent. 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. The statute provides that the invalidity of "any provision * * * or the 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 previously-submitted data and to provide a compensation mechanism for that use of the data, is not dependent on the limitation on judicial review, and there is nothing in the legislative history to suggest that Congress would have failed to enact the provision without such a limitation. The district court, therefore, failed to fulfill its duty "to save and not to destroy" the remaining portions of the statute. Tilton v. Richardson, 403 U.S. at 684, (quoting NLRB v. Jones & Laughlin Steel Corp;, 301 U.S. 1, 30 (1937)). CONCLUSION This case should be held pending the decision in Ruckelshaus v. Monsanto Co., No. 83-196, and disposed of in accordance with that decision. Respectfully submitted. REX E. LEE Solicitor General ANTHONY C. LIOTTA Acting Assistant Attorney General LAWRENCE G. WALLACE Deputy Solicitor General JERROLD J. GANZFRIED Assistant to the Solicitor General ANNE S. ALMY JOHN A. BRYSON Attorneys A. JAMES BARNES General Counsel EDWARD C. GRAY MARCIA E. MULKEY ROBERT S. MCLAUGHLIN Attorneys Environmental Protection Agency MARCH 1984 /1/ A similar challenge to this statute is currently pending in this Court in Ruckelshaus v. Monsanto Co., No. 83-196 (argued Feb. 27, 1984). /2/ The prior statutory history is discussed in our brief in Monsanto (at 3-11) No. 83-196. A copy of that brief is being served on counsel for appellees. /3/ Section 3(c)(1)(D)(ii) also provides for sanctions for 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 (7 U.S.C. 136(c)(1)(D) (ii)). /4/ The court rejected appellees' due process claim against the retroactive application of the disclosure provisions (App., infra, 9a). /5/ One of the appellees, Stauffer Chemical Corporation, had, by the time of decision below, in fact been a party to an arbitration under the statute. The arbitrator awarded to Stauffer not only a share of the data development costs but also compensation based on the subsequent registrant's product sales. But there was no allegation in the present case that Stauffe had been injured by the arbitration process nor did the complaint here seek review of the award. Rather, the other party to the arbitration, PPG Industries, has attacked that award as excessive and has claimed that Section 3(c)(1)(D) is unconstitutional under the Due Process Clause, the Taking Clause and Article III. PPG Industries, Inc. v. Stauffer Chemical Co., Civil Action No. 83-1941 (D.D.C. filed July 7, 1983). Stauffer Chemical Corporation, an appellee in the instant case, has counterclaimed in that action for enforcement of the award, and has cross-claimed in the alternative against EPA as a defendant for a declaration that the statute violates Article III and the Fifth Amendment. /6/ As noted above, see note 5, supra, one such proceeding is currently pending in the United States District Court for the District of Columbia. It was not brought by Stauffer, an appellee here, but by the losing party in the arbitration, PPG Industries. APPENDIX