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Syncor International Corp. v. Shalala

United States Court of Appeals, District of Columbia Circuit
127 F.3d 90, 326 U.S.App.D.C. 422 (1997)
ELI5:

Rule of Law:

An agency action that reverses a prior, definitive policy of non-regulation and imposes new, binding legal obligations, without purporting to interpret any specific statutory language, constitutes a substantive rule that must comply with the notice and comment requirements of the Administrative Procedure Act (APA).


Facts:

  • Positron Emission Tomography (PET) is a diagnostic method using radioactive pharmaceuticals (PET drugs) with very short half-lives.
  • Due to their short lifespan, PET drugs are compounded on-site by physicians and pharmacists in facilities known as nuclear pharmacies, often located near hospitals.
  • In 1984, the Food and Drug Administration (FDA) issued a 'Guideline' stating that nuclear pharmacies compounding radioactive drugs under a prescription were exempt from certain regulatory requirements of the Federal Food, Drug, and Cosmetic Act, including registration and new drug approval.
  • Syncor International Corporation and other appellants operate these nuclear pharmacies in accordance with the 1984 Guideline.
  • On February 25, 1995, the FDA published a document labeled a 'Notice' and 'guidance' which announced that PET radiopharmaceuticals 'should be regulated' under the Act.
  • This 1995 Notice mandated that PET drug producers comply with the Act's provisions on adulteration, misbranding, new drug applications, and establishment registration.
  • The 1995 Notice explicitly stated it superseded the 1984 Guideline that had previously exempted these activities from such regulation.

Procedural Posture:

  • Syncor International Corporation and others (Syncor) filed a lawsuit against the Food and Drug Administration (FDA) in the United States District Court.
  • Syncor's complaint challenged the FDA's 1995 publication, alleging it violated the APA's notice and comment requirements, among other claims.
  • The district court granted summary judgment in favor of the FDA, concluding the publication was an interpretative rule exempt from notice and comment.
  • Syncor, as the appellant, appealed the district court's judgment to the United States Court of Appeals for the D.C. Circuit; the FDA was the appellee.

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Issue:

Is the Food and Drug Administration's 1995 publication, which subjected PET drugs to comprehensive regulation for the first time by revoking a prior exemption, a substantive rule requiring notice and comment procedures under the Administrative Procedure Act?


Opinions:

Majority - Silberman

Yes. The FDA's 1995 publication is a substantive rule, not an interpretative one, because it modifies and adds to a legal norm using the agency's own authority rather than construing existing statutory language. The court distinguished between three types of agency actions: substantive rules, interpretative rules, and policy statements. A policy statement merely announces an agency's enforcement approach and is not binding. An interpretative rule construes language in a statute or regulation. In contrast, a substantive rule engages in lawmaking by creating new, binding legal norms. Here, the 1995 Notice did not interpret any specific statutory provision. Instead, it reversed a long-standing, definitive 1984 policy of non-regulation and imposed entirely new, mandatory legal duties on PET drug producers. This shift represents 'fundamentally new regulation,' not a mere change in interpretation or enforcement discretion, and therefore required notice and comment procedures under the APA.



Analysis:

This decision reinforces a crucial check on agency power by clarifying the line between substantive and interpretative rules under the Administrative Procedure Act. By rejecting the FDA's attempt to re-characterize a major policy reversal as mere 'guidance,' the court protects the public's right to participate in the rulemaking process. The ruling makes it more difficult for agencies to impose significant new regulatory burdens on industries without first providing public notice and considering stakeholder comments. It stands for the principle that a fundamental change in regulatory policy, especially one revoking a prior exemption, is quintessential lawmaking that cannot bypass APA requirements.

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