SUMMARIZING JUDICIAL REVIEW OF ORDERS UNDER 10 The case reported herewith was instituted in a United States court under section 701 (f) of the Federal Food, Drug, and Cosmetic Act. Published by direction of the Federal Security Administrator. PAUL B. DUNBAR, Commissioner of Food and Drugs. 10. Canned oysters. Willapoint Oysters, Inc., v. Oscar R. Ewing, Administrator, and J. Donald Kingsley, Acting Administrator, Federal Security Agency. Petition to circuit court of appeals for review of orders promulgating regulations fixing and establishing a definition and standard of identity and a standard of fill of container for canned oysters. Petition granted in part and denied in part. Certiorari denied by Supreme Court. On May 22 and September 12, 1948, Willapoint Oysters, Inc., filed in the United States Court of Appeals for the Ninth Circuit, petitions for judicial review of orders of the Administrator of the Federal Security Agency, dated, respectively, March 10, 1948, and August 3, 1948, establishing a definition and standard of identity and a standard of fill of container for canned oysters. The principal issues were whether the requirement of the standard that the No. 1 EO can shall contain at least 612 ounces of oyster meat should apply to Western oysters, and whether Western oysters should be identified as "Pacific Oysters" on the can labels. The court dismissed the petition with respect to the standard of fill of container, but set aside the requirement of the standard of identity that the cans be labeled as "Pacific Oysters" and handed down the following opinion: BONE, Circuit Judge. This matter is before us on a petition for judicial review of two so-called "Final Orders" of the Federal Security Agency, hereafter referred to as Agency, prescribing and establishing standards of identity and a standard of fill of containers for canned oysters. The First Final Order was issued March 10, 1948, by Respondent Ewing, Federal Security Administrator, hereafter referred to as Administrator, and published in Federal Register March 13, 1948 (13 F. R. 1337-1339). The Second Final Order was issued August 3, 1948, by Respondent Kingsley, Acting Federal Security Administrator, and published in Federal Register August 12, 1948 (13 F. R. 4663-4664). These orders, which purport to establish regulations of general applicability, will be referred to as the First and Second Orders. Petitioner, a Pacific Coast packer of canned oysters, filed with this court its petition for judicial review of the First Order and in this petition sought injunctive relief against enforcement of the order of March 10th and an order remanding the proceedings to the Administrator to take further evidence respecting its method of "blanching" oysters which it used in its commercial canning operations. It was represented to this court that this "blanching" method of treating canned oysters had been "commercially developed" subsequent to the close of the record upon which the Administrator based his First Order of March 10th. 880933-50 49 UNIVERSITY OF MICHIGAN Being persuaded, on the record before us, that the showing made by petitioner presented reasonable and just ground for granting the petition for remand, this court on June 8, 1948, ordered that the proceeding be remanded to the Administrator with directions to take such additional evidence (and evidence in rebuttal thereof) as petitioner should offer relative to the new process it employed to pack "blanched" oysters, the hearing to be held within 30 days of the date of the order, on reasonable notice to petitioner. We further ordered that after considering such additional evidence, the Administrator might modify his findings as to the facts or make new findings by reason of the additional evidence taken, and file with this court such new or modified findings, together with his recommendations, if any, for the modification or setting aside of his original (First) order along with the return of such "additional evidence." (21 U. S. C. A. Section 371 (f).) The Administrator conformed to this mandate and pursuant thereto a further hearing was timely held on July 7 to 12, 1948, before a presiding officer designated by respondent Ewing. Thereafter and on August 3, 1948, respondent Kingsley, as Acting Administrator, signed the so-called "Second Order" by which relief was again denied to petitioner. New (supplementary) findings on the new evidence adduced at the hearing ordered by this court were reported back to this court, the supplementary findings being made by Kingsley during the absence from duty of the Administrator. Thereafter petitioner caused the entire record upon which both orders had been made to be presented to this court for consideration, review and determination of the validity of both orders and the findings and conclusions upon which they rest. Both Final Orders were promulgated under the provisions of the Federal Food, Drug, and Cosmetic Act (21 U. S. C. A. Section 341) and they establish and promulgate new "definitions and standards of identity," and new "standards of fill," for canned oysters. As to the matter of "fill," the orders require that all oyster packers shall conform to a standard under which the "drained weight" of all species of oysters packed in all sizes of cans shall be not less than 59% of the water capacity of the can. As respects standards of identity, the orders require that petitioner's product shall be labeled "Pacific Oysters." (The requirement of a 59% "fill" means that the can (see footnote 3) shall contain approximately 61⁄2 ounces of oyster meat at the time it reaches the consumer. See calculations on weight of oysters and water capacity, infra.) The foregoing requirements are challenged on this review as "unlawful" under each of five enumerated legal standards set by the Administrative Procedure Act (5 U. S. C. A. Section 1009 (e)). The specific contentions are set forth at a later point.1 The real substance of petitioner's challenge appears to be epitomized in its contention that compliance with the two orders would (a) compel the Western type of oyster to be henceforth only identified as "Pacific Oysters" while the Southern type of oyster would enjoy the name "Oysters"; (b) destroy a longcontinued use on its labels of the generic term "Oysters" and thereby transfer to Southern oyster canners the exclusive use and good will of that term and (c) destroy petitioner's "quality pack" by requiring an excessive quantity of its (larger) Western oysters to be crammed into a can with resultant discoloration, disfiguration, distortion and breakage. In order that the numerous contentions of petitioner be brought into proper perspective we are obliged to refer to previous and formal steps taken by the Administrator to establish regulations covering certain practices in the oyster canning industry. Specifically, these activities of the Administrator relate to formal regulatory proceedings before him in 1944. The order and regulations resulting from the 1944 proceedings are discussed more fully infra. The record on this review also contains data and arguments offered by petitioner relating to certain official declarations and actions antedating the 1944 regulatory proceedings before the Administrator, and these are thought by petitioner to support its position here. 1 Jurisdiction to review the aforesaid orders is conferred by the Food, Drug, and Cosmetic Act (21 U. S. C. A. Section 371 (f)). The term "Agency" means the Federal Security Agency (21 U. S. C. A. Section 321 (c)). The term "Administrator" means the Federal Security Administrator (21 U. S. C. A. Section 321 (d)). See also historical notes to Sections 321 and 392 of Title 21. A fair consideration of these pre-1944 matters and the argument based on them persuades us (so far as a fill of container standard is concerned) that the subsequent proceedings had before the Administrator in 1944, and the regulations formally and lawfully adopted and promulgated as a result thereof (9 F. R. 14008; 21 C. F. R. 1944 Supp. Sec. 36.6) rob these earlier proceedings of the legal significance petitioner attaches to them. At the 1944 hearing the issue squarely presented (and made the subject of important regulations) dealt directly and specifically with a formal proposal to establish a fill of container standard for canned oysters. Such a standard was duly and lawfully established by the regula• tions promulgated as a result of this hearing, and it may be noted that a change in such a standard is also one of the basic issues before us on this review.2 (See later references to the 1944 hearing.) In reliance upon these so-called "antecedent proceedings" petitioner contends that in using a 5-ounce fill in the No. 1 EO can3 oyster canners were "following" a so-called "advisory announcement" issued by the Bureau of Chemistry in the Department of Agriculture in February, 1914. This "announcement" recited that "pending further investigation" the weights agreed on by a meeting of canners held in Washington in 1912 would be regarded by the Board as satisfactorily fulfilling the requirements of Food Inspection Decision No. 144.* It appears to be petitioner's position that these early pronouncements (applicable to departmental policy of the period when they were promulgated) in some manner conferred upon oyster canners a valuable and continuing "right" to use a 5-ounce fill in the No. 1 can, and that this right was destroyed by the order of 1948 here reviewed. If this is petitioner's position we are unable to agree with it. To follow this reasoning would require us to ignore the compelling legal effect of the subsequent 1944 regulatory order, which we think was lawfully adopted. Whatever the force and effect of these former pronouncements of departmental policy it is certain that the field of regulation they purported to occupy was, under statutory authority, completely pre-empted and occupied by the above-mentioned regulations adopted in the 1944 proceedings. The most that can be said of these older "announcements" is that they possess (so far as this hearing is concerned) only historical interest. Subsequent and sweeping statutory changes of vital and compelling significance, and later adoption of new administrative regulations under these statutory changes, completely devitalized these old pronouncements of policy. We cannot view them as having an effect that even remotely touches the issues posed on this review. The record shows that petitioner was not canning oysters in 1944 (for reasons later stated) as a consequence of which its business operations were not affected by the 1944 regulations which established a standard of fill. Due to this situation it contented itself with entering a formal appearance at the 1944 hearing apparently for the sole purpose of filing (as it did) a challenge to the sufficiency of the evidence there adduced. The so-called "Southern (oyster canning) Industry" did not appear at the 1944 hearing, and petitioner represents to us that "Western packers could not challenge" the 1944 regulatory order (although they alone had protested) because they were not "adversely affected" within the jurisdictional requirements of 21 U. S. C. A. Section 371 (f) (1), (Food, Drug, and Cosmetic Act). The 1944 order was published by the Administrator in the Federal Register, November 25, 1944, 9 F. R. 14008-9, the preamble of the order reciting that it was promulgated under his authority as head of the Food and Drug Administration of his Agency. The order further recites that the statutory authority of the Administrator to promulgate the said order derives from 21 U. S. C. A. Sections 341, 343 (h) (2) and Section 371, the Reorganization Act of 1939 (53 2 The 1944 regulation was silent regarding the character of labels to be placed on cans. of oysters. The question of labels for cans, and requirements respecting them, was first dealt with in formal proceedings before the Administrator in 1947, resulting in the First Order of March 10, 1948, which is here challenged. 8 This can measures 21116 by 4 inches. At this time the Bureau of Chemistry had charge of the administration of the Food and Drugs Act of 1906. The Bureau had a Board of Food and Drug Inspection which, in 1912, had issued Decision No. 144. One provision of Decision 144 recited that "canned foods * * will be deemed adulterated if they are found to contain water, brine, syrup, sauce, or similar substances in excess of the amount necessary for their proper preparation and sterilization." See references in footnote 1. Stat. 561 f. f., 5 U. S. C. A. secs. 133-133v) and Reorganization Plans No. 1 (53 Stat. 1423) and No. 4 (54 Stat. 1234). There is no doubt in our minds that the 1944 proceeding before the Administrator lawfully established and promulgated regulations applicable to a standard of fill to be observed in the oyster canning industry. Concluding, as we do, that the 1944 regulations were valid, it follows that they continued to be effective and applicable to the business of oyster canning until modified or superseded by subsequent legislation and/or subsequent regulations adopted in compliance with duly ordained standards of administrative procedure. With this view of the law as a basis we consider certain other facts and circumstances alluded to in petitioner's brief which it asserts also have a material bearing on the issue before us. These matters are also associated with aspects of the history of regulation of the oyster canning industry. Before 1942 canners of oysters in all areas of the United States filled the No. 1 EO can (the one in principal use) to yield a "drained" or "cut-out" weight of 5 ounces of oysters. By December 1942, war conditions were such that tin plate was in short supply. In that month a war agency, the War Production Board, issued a "conservation order" (Order M-81) which effectively denied tin plate to oyster canners except where the cans (No. 1 EO) were filled to yield at least 72 ounces of oysters. The basis of the WPB conservation order was that the shortage of supply created a "wastage" of tin plate if the 5 ounce fill was continued. This order was a "war measure." Western (Pacific Coast) oyster canners had been canning oysters since 1928 but upon issuance of the above noted "conservation order" elected to cease canning operations and hence they did not secure tin plate during the so-called "war years.' They did not resume canning operations until April 1946, at which time they again used (in the No. 1 can) the 5 ounce fill of the pre-war period. At this time (April 1946) Atlantic and Gulf oyster canners were marketing their oysters with a 71⁄2 ounce fill in the No. 1 can. Petitioner refers in its brief to the testimony of a witness for the Food and Drug Administration (at the July 10, 1947, hearing, which resulted in the First Order) that because of this condition "violent complaints" were received by his department from "the Southern industry" then using the 71⁄2 ounce fill. The length of the 1944 order and its ready accessibility to interested persons makes unnecessary a recital of its terms. It is sufficient to point out that a department witness testified at the 1947 hearing which resulted in the First Order (March 10, 1948) in the instant case, that the 1944 order of the Administrator established a "fill of container" for canned oysters of a certain (small) size and (it) was inapplicable to large sized oysters, that is to Pacific Coast oysters." This witness stated that the evidence introduced in the 1944 hearing was insufficient to establish what constituted a proper fill for canned Pacific oysters; that since that time (1944) such evidence has become available. In his testimony appears reference to "investigations made as early as 1940" which did not result in action on such investigations. It was to reach both questions-"standards of identity" and a "standard of fill" of containers-that the 1947 hearing was held. THE 1947 HEARING For the reasons stated above we are persuaded that when the Administrator decided to call the 1947 hearing, his authority to adopt new regulations was not circumscribed by the past events above noted, nor was his program of contemplated action complicated by the necessity of resolving doubts concerning the validity of any of these past departmental rulings, regulations or any of the past "advisory" opinions purporting to establish rules or regulations of general applicability in the oyster canning industry." By reason of this fact the Admin 5 The 1944 order and the proceedings from which it resulted clearly indicate that Pacific type oysters were not brought within the scope of the order or the regulations it prescribed. These regulations (36.6) were limited in their application to oysters weighing less than 1/2 ounce. The 1948 order also clearly indicates that the 1944 order did not include a requirement of fill covering the drained weight of oysters of "large size," i. e., Pacific oysters. 6 While the 1944 proceedings before the Administrator superseded all of these and spelled out a wholly new set of rules which were intended to and did completely occupy and dominate the entire field of regulation, the order did omit the establishment of "standards of identity." istrator faced the 1947 proceedings possessed of full authority to make new regulations or modify existing ones, provided the evidence adduced at the hearing justified, and applicable law supported, the changes he elected to make in this particular field of Federal regulation. Under date of February 3, 1947, the Administrator issued a formal "Notice to Packers of Canned Oysters," in which he set forth a "Statement of General Policy or Interpretation" in which he announced the intention of the Agency to call a hearing as soon as practicable on proposals to adopt "definitions and standards of identity and standards of fill of container for all canned oysters." [Emphasis supplied.] This notice was duly published in the Federal Register of February 7, 1947. It was issued pursuant to Section 3 of the Administrative Procedure Act (5 U. S. C. A. Section 1002). Petitioner is aggrieved because the first advice it received of the above mentioned "Notice" was by its publication in the Federal Register. It criticizes the notice on the ground that its terms "would appear to indicate that petitioner * * * [was] in some manner violating the [Food and Drug] Act." This criticism is vague and on the face of the record is without merit. (See footnotes 5 and 6.) We find nothing in the record to indicate that petitioner was in any way prejudiced by the form and contents of the Notice, date of issuance and publication. Following the issuance and publication of the February 1947 notice, the Administrator took the next formal step in the execution of the program, suggested in this notice. On June 6, 1947, he published a "Notice of Hearing" which was to commence July 10, 1947, at Washington, D. C. (The First Order resulted from this hearing.) This formal notice of hearing was published and appears in 12 F. R. 3726. Petitioner criticizes this "Notice of Hearing" on the ground that it did not advise of any precise proposal to change the standard of fill, either by increasing or lowering the then existing standards, i. e., 5 ounces for large oysters and 71⁄2 ounces for small oysters, but left that figure blank "to be fixed on the basis of evidence taken at the hearing." The reference here is to language which discusses proposals to change the terms of the previously (1944) adopted regulations 36.6. Petitioner cites no authority nor do we find any which suggests the impropriety or invalidity of this sort of notice of hearing or the hearing held pursuant to it. The notice certainly indicated with blunt directness the intention of the Administrator to establish changes in the standard of fill, and in this important respect we find nothing in it which could have misled interested parties to their prejudice. It was phrased in such fashion that they could know exactly what issue they would confront at the hearing. An examination of the recitals in the first part of the notice reveals the purpose of the Administrator to take action on the standard of fill “upon application of a substantial portion of the industry," and "upon his own initiative," "and upon proposals of the Administrator," to fix, by regulations, a definition and standard of identity for canned oysters. That sort of definitive language made his purpose abundantly plain. Being convinced that the procedural steps leading to the 1947 hearing conform in all respects to statutory requirements we proceed to a consideration of that proceeding. If petitioner's charge of invalidity leveled at the First and Second Orders is sound in law, their infirmities must be disclosed by what occurred at that hearing and in the subsequent, and additional hearing of 1948 held pursuant to our order of remand. Preliminary to the inquiry into the 1947 proceedings we think that certain calculations will be helpful in viewing the effect of the regulations assailed in this proceeding. Pertinent references appear in the orders and regulations of 1944 and 1948 concerning the "water capacity" of containers (cans) used by oyster canners. The commonly used can (the No. 1) has a water capacity of approximately 11 ounces. The relationship of can capacity to the "fill" of oysters is established by the requirements set forth in the noted regulations. The terms "cut-out weight" and "drained weight" mean the net weight of oyster meat in the can when it reaches the ultimate consumer-in other words, the "fill" of the container. Assuming for approximate purposes the use of the standard 11 ounce can, the relationship of fill of oysters to can capacity would be as follows: a "drained weight" of 5 ounces of oyster meat would occupy 46% of the water capacity; |