This week, the Ninth Circuit tackles two issues of regulatory interpretation, addressing the Federal Aviation Administration’s rules governing challenges to “no hazard” determinations and the Food and Drug Administration’s rules governing protein-content claims.
The Court holds that the Federal Aviation Administration’s failure to notify an interested party of a comment period for a study violated the agency’s regulations as interpreted by the agency.
The panel: Judges Gould, Rawlinson, and Bress, with Judge Gould writing the opinion and Judge Bress concurring.
Key highlight: “A federal agency, like the FAA, is obliged to abide by the regulations it promulgates, including its own internal operating procedures. This is especially true where a prescribed procedure is intended to protect the interests of a party before the agency. Stated another way, it is absolutely essential that responsible federal agencies must follow their own binding procedures. The powers that federal regulatory agencies have to act within their regulatory spheres of responsibility are necessarily constrained and corralled by the agency’s own procedures.” (Internal quotation marks, alterations, and citations omitted).
Background: Pursuant to FAA regulations, non-party Terra-Gen Development Company gave the FAA notice of its planned wind turbine development. The FAA conducted an aeronautical study to determine whether the turbines posed a hazard to air navigation and opened an associated notice and comment period. FAA Order 7400.2 provides that “[a]ll known aviation interested persons and groups,” “other organizations that demonstrate a specific aeronautical interest through subscription to notifications,” and “[a]s appropriate,” organizations that “may become involved in specific aeronautical cases, must be included in the notice distribution” for a planned study. While the FAA did not send notice to Backcountry, a local nonprofit, Backcountry nevertheless commented on the project.
In July 2020, the FAA issued a “no hazard” determination. Backcountry petitioned for discretionary review, and the FAA granted the petition in part. The FAA ordered the “no hazard” determination rescinded and that a new comment period be initiated. Backcountry did not receive notice during this second comment period, and it did not comment.
In August 2021, the FAA reissued its “no hazard” determination. Backcountry again petitioned for review. The FAA’s regulations provide that those who “have a substantive aeronautical comment on the proposal but were not given an opportunity to state it” are eligible to petition for review of a “no hazard” determination. Backcountry maintained it fit within this category. The FAA rejected Backcountry’s petition as invalid solely because Backcountry had not commented during the second comment period.
Result: The Ninth Circuit vacated and remanded, holding that the FAA’s rejection of Backcountry’s petition was arbitrary and capricious. The majority explained that FAA regulations state that when “the FAA needs additional information, it may circulate a study to interested parties for comment.” The FAA had interpreted this regulation in Order 7400.2, which directs the agency to personally notify “interested parties” in most cases. The majority concluded this was a reasonable interpretation of the regulations, including the term “circulate.” The panel also concluded Backcountry was an “interested party” because it had previously petitioned the FAA for discretionary review. This conclusion was supported by Order 7400.2, which defines “interested parties” to include an organization that “may become involved in specific aeronautical cases.” Accordingly, under the FAA’s own interpretation of its regulations, it was required to personally notify Backcountry of the second public-comment period—and it had failed to do so.
The Court concluded that Backcountry was substantially prejudiced by the FAA’s error. The Court explained that “[i]n cases where an agency committed a procedural error that precluded an interested party from engaging with an administrative action,” the “determination of prejudice must focus on the process as well as the result to give meaning to statutory and regulatory procedural requirements.” Here, the purpose of the regulatory comment period was the interactive process itself—not the final result of the FAA’s determination. The Court remanded for consideration of an argument the FAA raised for the first time on appeal: that Backcountry was not eligible to petition for review under the third category of 14 C.F.R. § 77.37 because it did not have a substantive (i.e., new) comment.
Judge Bress concurred in the judgment. He agreed with the majority opinion’s result but believed its reasoning “exceeds what is needed to resolve this case” in three respects. First, he opined that the majority unnecessarily afforded the FAA Auer deference regarding the agency’s interpretation of its regulations in FAA Order 7400.2. In Judge Bress’s view, this was unnecessary because the agency did not dispute it needed to comply with Order 7400.2. Second, Judge Bress would have decided the prejudice issue on narrower grounds: that the record left “substantial doubt” as to “whether the FAA’s decision would have been the same if not for its failure to provide notice.” He expressed his view that, contrary to the majority’s suggestion, denial of right to public comment is not invariably prejudicial. Third, he objected to the “majority’s comments about climate change,” which he believed “have no legal relevance to the technical procedural arcana that we deal with in this case.”
The Court holds that food product labels advertising the total amount of protein per serving are consistent with FDA regulations.
The panel: Judges S. R. Thomas, Christen, and Bress, with Judge Christen writing the opinion.
Key highlight: “Reading section 101.13(i)(3) to authorize quantitative protein claims based on the nitrogen method, so long as the NFP also displays a PDCAAS-corrected percent daily value figure, reconciles the overall labeling regime and gives meaning to all the relevant regulatory provisions, including the trigger provision.”
Background: Different types of protein have different nutritional values. If a product makes a protein-content claim on its front label, then the FDA’s so-called “trigger provision” requires manufacturers to account for differences in nutritional value in the product’s nutrition facts panel (or “NFP”) when identifying the “percent daily value” of protein contained in a serving. While 20 grams of a high-quality protein might, for example, be 40% of an individual’s recommended daily intake, 20 grams of a lower-quality protein might constitute only 30% (a reduced percentage known as the “PDCAAS-corrected percent daily value figure”).
Two sets of plaintiffs sought to bring putative class actions against Kashi and Kellogg, advancing state-law claims. They alleged that by stating the amount of protein per serving on their front labels, defendants’ products “overstate the products’ protein content and imply that all of the protein contained in the products is usable by the human body.” The district court granted the defendants’ motion to dismiss, concluding that because defendants had complied with the FDA’s regulations, plaintiffs’ claims were preempted.
Result: The Ninth Circuit affirmed. First, the Court rejected the plaintiffs’ argument that defendants’ front labels were misleading, and violated FDA regulations, because defendants had relied on the so-called “nitrogen” method in calculating the total amount of protein contained. As the Court explained, specific FDA regulations expressly authorized defendants to use this nitrogen method when making protein-content claims on the products’ front labels. The defendants’ statements adhering to that regulation therefore could not be “false or misleading” under a more general FDA regulation, 21 C.F.R. § 101.13(c).
Next, the Court likewise rejected plaintiffs’ contention that the font-label protein statements were misleading “because they imply that consumers will ‘receive all the nutritional and dietary benefits’ of the specified quantity of protein.” The Court distinguished decisions holding that a defendant cannot rely on a product’s back label to clarify a misleading statement on the front label, explaining that the regulations applicable here clearly contemplated that a manufacturer need account for a protein’s lower nutritional value only in the back label’s NFP. Observing that “[t]he text and structure of the FDA regulations demonstrate that Defendants’ protein claims could be misleading if they did not accurately state the quantity of protein (according to the analytical methodology prescribed in section 101.9(c)(7)) or the products did not display the quality-adjusted percent daily value in the NFP,” the Court held that plaintiffs had not made any such allegations. Finally, the Court addressed certain FDA guidance documents, explaining that, while unnecessary to consider, they confirmed the Court’s reading of the regulations.