Animal Legal Defense Fund v. Sonny Perdue

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 4, 2017 Decided September 29, 2017

No. 16-5073

ANIMAL LEGAL DEFENSE FUND, INC., ET AL.,
APPELLANTS

v.

SONNY PERDUE, SECRETARY, UNITED STATES DEPARTMENT
OF AGRICULTURE AND ROBERT GIBBENS, WESTERN REGIONAL
DIRECTOR, ANIMAL AND PLANT HEALTH INSPECTION SERVICE,
UNITED STATES DEPARTMENT OF AGRICULTURE,
APPELLEES

Appeal from the United States District Court
for the District of Columbia
(No. 1:14-cv-01462)

Stefanie Wilson argued the cause and filed the briefs for
appellants. Katherine A. Meyer entered an appearance.

Delcianna J. Winders was on the brief for amicus curiae
Delcianna J. Winders in support of plaintiffs-appellants.

Anna E. Frostic was on the brief for amici curiae The
Humane Society of the United States and The Fund for
Animals in support of plaintiffs-appellants.
 2
Jeremy S. Simon, Assistant U.S. Attorney, argued the
cause for appellees. With him on the brief was R. Craig
Lawrence, Assistant U.S. Attorney.

Before: GARLAND, Chief Judge, GRIFFITH, Circuit Judge,
and EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge
EDWARDS.

Opinion concurring in part and concurring in the judgment
filed by Circuit Judge GRIFFITH.

EDWARDS, Senior Circuit Judge: The Animal Welfare Act
(“AWA” or “Act”) charges the United States Department of
Agriculture (“USDA”) with administering a licensing scheme
for animal exhibitors, including zoos. 7 U.S.C. § 2133 (2012).
The Act directs the Secretary of Agriculture (“Secretary”) to
promulgate regulations governing minimum animal housing
and care standards, id. § 2143, and also to issue licenses to
entities and individuals seeking to engage in exhibition
activities, id. § 2133. Although the Act leaves many regulatory
details to the agency’s discretion, it specifies that “no license
shall be issued until the dealer or exhibitor shall have
demonstrated that his facilities comply with the standards
promulgated by the Secretary.” Id.

USDA has bifurcated its approach to licensing: For initial
license applications, an applicant must agree to comply with
the agency’s prescribed standards and regulations, pay an
application fee, keep its facilities available for agency
inspection, and pass an agency compliance inspection of its
facilities before the license may be issued. 9 C.F.R. §§ 2.1-
2.12. For license renewals, an applicant must submit an annual
report, pay the appropriate application fee, certify compliance
 3
and agree to continue to comply with agency standards and
regulations, id., and agree to keep its facilities available for
inspection by the agency “to ascertain the applicant’s
compliance with the standards and regulations,” id. § 2.3(a).
The agency treats the renewal procedure as administrative –
that is, if the requirements are met, the agency will issue a
license renewal. Id. § 2.2(b). Separately, USDA conducts
random inspections of licensed facilities as part of its
enforcement regime. See id. § 2.126. Violations discovered
during these inspections may lead to license revocation or
suspension, following notice and an opportunity for a hearing.
Id. § 2.12; 7 U.S.C. § 2149.

Tom and Pamela Sellner own and operate the Cricket
Hollow Zoo in Manchester, Iowa. USDA granted their initial
license application in 1994, and it has renewed their license
each year since. Appellants Tracey and Lisa Kuehl, along with
the Animal Legal Defense Fund (“ALDF”), a non-profit animal
rights organization, brought suit against the agency challenging
its most recent renewal of the Sellners’ license. Appellants
alleged that, at the time of the renewal, the agency was aware
that Cricket Hollow was in violation of numerous animal
welfare requirements under the Act and its implementing
regulations. Accordingly, they argued, the agency’s decision to
renew the Sellners’ license was contrary to AWA’s
requirement that “no . . . license shall be issued until the . . .
exhibitor shall have demonstrated that his facilities comply
with the standards promulgated by the Secretary.” 7 U.S.C.
§ 2133. They also asserted that the agency’s reliance on the
Sellners’ self-certification of compliance as part of its renewal
determination, despite having knowledge that the certification
was false, was arbitrary and capricious in violation of the
Administrative Procedure Act (“APA”).
 4
The District Court dismissed the case, concluding that
USDA’s license renewal regulations constituted a permissible
interpretation of the Act. ALDF v. Vilsack, 169 F. Supp. 3d 6
(D.D.C. 2016). Finding that the challenged license renewal was
issued in accordance with those regulations, the court held that
none of the challenges in the complaint could succeed. Id. at
20. The Kuehls and ALDF appealed the District Court’s
decision to this court. We find that AWA’s compliance
demonstration requirement does not unambiguously preclude
USDA’s license renewal scheme and that the scheme is not
facially unreasonable. Accordingly, for the reasons set forth
below, we affirm the judgment of the District Court on the
statutory claim. However, we vacate the District Court’s order
granting the Government’s motion to dismiss Appellants’
arbitrary and capricious claim, and remand the case to the
District Court with instructions to remand the record to the
agency for further proceedings consistent with this opinion.

I. BACKGROUND

A. Statutory and Regulatory Background

Congress enacted the Animal Welfare Act in 1966 to
ensure the humane treatment of animals used in medical
research. Pub. L. 89-544, 80 Stat. 350 (Aug. 24, 1966); see also
7 U.S.C. § 2131. In 1970, Congress amended the Act to cover
animal “exhibitors,” a category that includes zoos. Pub. L. 91-
579, 84 Stat. 1560-61 (Dec. 24, 1970); see also 7 U.S.C.
§ 2132(h). The Act authorizes the Secretary of Agriculture to
“promulgate standards to govern the humane handling, care,
treatment, and transportation of animals by . . . exhibitors,”
including minimum standards addressing the animals’
“handling, housing, feeding, watering, sanitation, ventilation,
shelter . . . , adequate veterinary care, . . . [and] for a physical
 5
environment adequate to promote the psychological well-being
of primates.” 7 U.S.C. § 2143(a).

In order to ensure compliance with those standards, the Act
prohibits an individual from exhibiting animals “unless and
until” he or she has “obtained a license from the Secretary and
such license shall not have been suspended or revoked.” Id.
§ 2134. The Act delegates to the Secretary authority to
prescribe the “form and manner” by which an exhibitor must
apply for a license, “[p]rovided[] [t]hat no such license shall be
issued until the . . . exhibitor shall have demonstrated that his
facilities comply with the standards promulgated by the
Secretary pursuant to section 2143 of [the AWA].” Id. § 2133
(emphasis omitted).

The Act also grants the agency enforcement authority. “If
the Secretary has reason to believe that any person licensed as
a[n] . . . exhibitor . . . has violated or is violating any provision
of [the Act], or any of the rules or regulations or standards
promulgated by the Secretary [t]hereunder, he may suspend
such person’s license temporarily . . . .” Id. § 2149(a). “[A]fter
notice and opportunity for hearing,” the Secretary “may
suspend for such additional period as he may specify, or revoke
such license, if such violation is determined to have occurred.”
Id. The Secretary may also impose civil and criminal penalties.
Id. § 2149(b), (d).

Finally, the Secretary may “promulgate such rules,
regulations, and orders as he may deem necessary in order to
effectuate the purposes of [the statute].” Id. § 2151.

The Secretary has delegated his responsibilities under the
Act to the Administrator of the Animal and Plant Health
Inspection Service (“APHIS”). See Animal Welfare;
Inspection, Licensing, and Procurement of Animals, 69 Fed.
 6
Reg. 42089, 42089 (July 14, 2004) (to be codified at 9 C.F.R.
pts. 1, 2). Pursuant to that authority, APHIS has adopted a
comprehensive scheme of animal welfare requirements
applicable to licensees. See 9 C.F.R. §§ 3.1-3.142 (2017).
These include general and species-specific requirements, such
as providing potable water daily, id. § 3.55, keeping enclosures
reasonably free of waste and regularly sanitized, id. § 3.1,
removing feces and food waste daily, id. § 3.11, and addressing
social needs of primates to “promote [their] psychological
well-being,” id. § 3.81.

The agency has also promulgated a series of regulations
governing the granting, renewal, and revocation of animal
exhibition licenses. Since 1989, the implementing regulations
have distinguished between applications for an initial license
and those for annual license renewal. In their present form, the
regulations direct that an applicant for an initial license must
(1) “acknowledge receipt of the regulations and standards and
agree to comply with them by signing the application form,”
id. § 2.2(a); (2) submit the appropriate fee, id. § 2.6; and (3) “be
inspected by APHIS and demonstrate compliance with the
regulations and standards . . . before APHIS will issue a
license,” id. § 2.3(b). By contrast, an applicant for a license
renewal must (1) pay the annual fee before expiration of the
license, id. § 2.1(d)(1); (2) self-certify “by signing the
application form that to the best of the applicant’s knowledge
and belief, he or she is in compliance with the regulations and
standards and agrees to continue to comply with [the same],”
id. § 2.2(b); and (3) submit an annual report detailing the
number of animals owned, held, or exhibited at his or her
facility, id. § 2.7. Both types of applicants “must make his or
her animals, premises, facilities, vehicles, equipment, other
premises, and records available for inspection during business
hours and at other times mutually agreeable to the applicant and
APHIS.” Id. § 2.3(a). “A license will be issued to any
 7
applicant” that has met the relevant regulatory requirements
and has paid the application and license fees. Id. § 2.1(c).

B. Factual and Procedural Background

Tom and Pamela Sellner first applied for an animal
exhibition license over twenty years ago. At the time, the
couple operated a small “mobile zoo” that included only a few
animals. See Kuehl v. Sellner, 161 F. Supp. 3d 678, 690 (N.D.
Iowa 2016). USDA granted the application and issued a license
for Cricket Hollow Zoo on May 27, 1994. Appellees’ Br. 16.
The Sellners have since complied with the administrative
license renewal requirements at every anniversary of the
license’s issuance. USDA has, in turn, granted their renewal
applications each year. Id. The Sellners’ 2015 license renewal
application indicates that the Zoo now houses approximately
193 animals. 2015 License Renewal Application, reprinted in
Appendix (“App.”) 384.

Sisters Tracey and Lisa Kuehl are Iowa residents.
Supplemental Complaint (“Supp. Compl.”) ¶¶ 13-14, 24,
reprinted in App. 46, 50. They allege that they visited Cricket
Hollow Zoo on several occasions between 2012 and 2013. Id.
¶¶ 13-30, App. 46-51. Both sisters claim that they experienced
distress and anguish as a result of witnessing animals in what
they felt were inhumane and harmful conditions. Id. Tracey
Kuehl asserts that she observed animals in enclosures that had
“standing water and accumulating excrement,” and that “a lion
was repeatedly ramming itself against the cage wall,” which
she interpreted as a sign of obvious psychological distress. Id.
¶ 15, App. 47. She later learned that three Meishan piglets had
died in their enclosure and that their bodies had not been
removed before the facility was opened to the public. Id. ¶¶ 18-
19, App. 48. Lisa Kuehl similarly alleges that she witnessed
animals in isolated confinement and in cages that lacked
 8
drinking water. Id. ¶¶ 25-28, App. 50-51. She asserts that she
observed “lions and wolves covered with flies . . . [which] filled
up the interior of the animals’ ears,” as well as a baby baboon
who was “separated from the other animals and being
continuously handled by humans.” Id. ¶¶ 25, 27, App. 50.

The Kuehls met with several state public officials and
organizations to share their concerns about the Zoo. Id. ¶¶ 19-
20, 26, App. 48-50. Tracey Kuehl repeatedly wrote to USDA
about the conditions of the animals’ enclosures. Id. In 2014,
she wrote a letter asking that the agency “carefully review the
consistent poor record of compliance [with AWA standards]
and not renew [the Zoo’s] license to exhibit the animals to the
public.” Id. ¶ 20, App. 49.

The Kuehls also assert that USDA officials had knowledge,
apart from their letters, of Cricket Hollow’s failure to comply
with certain AWA regulations and standards. Appellants’ Br.
3-5; see also Appellees’ Br. 16-17. Appellants allege that
agency inspectors have repeatedly reported that the animals
lacked adequate veterinary care, and that “[t]here are not
enough employees to clean [the Zoo] to meet appropriate
husbandry standards . . . [or] provide for the health and well-
being of the animals.” Supp. Compl. ¶¶ 99-129, App. 63-68.
They assert that USDA has sent official warnings to the
Sellners for these “numerous non-compliances,” id. ¶ 117,
App. 66, and the USDA regional director has concluded that “it
is clear that there is a chronic management problem” at the Zoo,
id. ¶ 108, App. 64. Nonetheless, the agency granted the
Sellners’ license renewal application in May of 2014. Id. ¶ 81,
App. 59.

Upon learning of the agency’s 2014 renewal decision, the
Kuehls and ALDF filed this action against the Secretary in the
District Court on August 25, 2014. The original complaint
 9
alleged that USDA’s decision to renew the Zoo’s license in
2014 violated the Act because the Sellners had not
“demonstrated that [their] facilities comply” with the requisite
animal welfare provisions of the Act or its regulations, which
Appellants claim AWA § 2133 requires before a renewal may
be issued. Complaint ¶¶ 123-28, ALDF, 169 F. Supp. 3d 6
(D.D.C. 2016) (Dkt. No. 1). In the alternative, the complaint
asserted that the agency’s reliance on the Sellners’ self-
certification of compliance in connection with the renewal
decision was arbitrary and capricious in violation of the
Administrative Procedure Act (“APA”), 5 U.S.C. § 706(2)(A).
Id.

In 2015, USDA again renewed the Zoo’s license, and
Appellants filed a supplemental complaint on July 17, 2015,
challenging the 2015 renewal and the Zoo’s “pattern and
practice” of renewing Cricket Hollow Zoo’s license despite
knowing that the Zoo is not in compliance with AWA
regulations and standards. Supp. Compl. ¶¶ 131-36, App. 68-
69.

On July 28, 2015, USDA moved to dismiss the suit under
Federal Rule of Civil Procedure 12(b)(6) for failure to state a
claim. Appellants opposed that motion.

When USDA produced its administrative record to the
District Court, it included only the Sellners’ renewal
application, annual report, and evidence of payment of the
renewal fee. While the Government’s motion to dismiss was
pending, Appellants moved for the court to compel inclusion
of additional administrative documents related to the Cricket
Hollow Zoo which they alleged were in the agency’s records,
including inspection reports indicating that the Zoo was out of
compliance with AWA standards. The agency opposed the
motion, claiming that it did not rely on those records in making
 10
its renewal decision and that they were properly excluded from
the record on review. On June 23, 2015, the District Court
denied Appellants’ motion. ALDF v. Vilsack, 110 F. Supp. 3d
157, 161-62 (D.D.C. 2015).

On March 24, 2016, the District Court granted USDA’s
motion to dismiss the complaint. ALDF, 169 F. Supp. 3d at 20.
The court first concluded that the AWA is ambiguous as to
whether “issu[ance of] a license” encompassed renewals. Id. at
13-15. It then accepted the interpretation put forth by
Government counsel that § 2133 applies only to initial license
applications. Id. at 16-19. Determining that the agency had
“exercised its expertise to craft a reasonable license renewal
scheme,” id. at 19 (quoting ALDF v. USDA, 789 F.3d 1206,
1225 (11th Cir. 2015)), the court concluded that “under the
Chevron doctrine, the Court need not say any more in order to
conclude that the 2015 renewal of the Cricket Hollow Zoo’s
license was not unlawful” under the AWA. Id.

The District Court also rejected Appellants’ arbitrary and
capricious claim. It held that there was “no basis . . . to conclude
that the licensing decision was arbitrary and capricious or an
abuse of discretion” because it was undisputed that the Sellners
satisfied the administrative criteria for license renewal, and the
regulatory framework afforded no discretion to the agency in
implementing the renewal process. Id. Finally, the court held
that Appellants’ “pattern and practice” claim necessarily failed
as a result of its determination that the regulatory scheme was
consistent with both the AWA and APA. Id. This appeal
followed.

As of July 30, 2015, USDA had filed an administrative
complaint against the Zoo and commenced a formal
investigation into its substantive violations of the Act.
 11
Appellees’ Br. 17. That investigation is pending before the
agency. Id.

II. ANALYSIS

A. Standard of Review

We review de novo the District Court’s dismissal for failure
to state a claim upon which relief may be granted under Federal
Rule of Civil Procedure 12(b)(6). See Gilvin v. Fire, 259 F.3d
749, 756 (D.C. Cir. 2001). In doing so, “we must treat the
complaint’s factual allegations as true, must grant plaintiff the
benefit of all reasonable inferences from the facts alleged, and
may uphold the dismissal only if it appears beyond doubt that
the plaintiff can prove no set of facts in support of his claim
which would entitle him to relief.” Id. (internal quotation marks
omitted).

The APA requires that we “hold unlawful and set aside
agency action” that is “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” 5 U.S.C.
§ 706(2)(A). We review USDA’s interpretation of the AWA
under the familiar standard established in Chevron U.S.A. Inc.
v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). See ALDF
v. Glickman, 204 F.3d 229, 233 (D.C. Cir. 2000). Under the
Chevron framework,

an agency’s power to regulate “is limited to the
scope of the authority Congress has delegated to
it.” Am. Library Ass’n v. FCC, 406 F.3d 689, 698
(D.C. Cir. 2005). Pursuant to Chevron Step One,
if the intent of Congress is clear, the reviewing
court must give effect to that unambiguously
expressed intent. If Congress has not directly
addressed the precise question at issue, the
 12
reviewing court proceeds to Chevron Step Two.
Under Step Two, “[i]f Congress has explicitly
left a gap for the agency to fill, there is an express
delegation of authority to the agency to elucidate
a specific provision of the statute by regulation.
Such legislative regulations are given controlling
weight unless they are . . . manifestly contrary to
the statute.” Chevron, 467 U.S. at 843-44. Where
a “legislative delegation to an agency on a
particular question is implicit rather than
explicit,” the reviewing court must uphold any
“reasonable interpretation made by the
administrator of [that] agency.” Id. at 844. But
deference to an agency’s interpretation of its
enabling statute “is due only when the agency
acts pursuant to delegated authority.” Am.
Library Ass’n, 406 F.3d at 699.

EDWARDS, ELLIOT, & LEVY, FEDERAL STANDARDS OF REVIEW
166-67 (2d ed. 2013).

We also review the agency’s exercise of its delegated
authority under the traditional “arbitrary and capricious”
standard. Agency action is arbitrary and capricious “if the
agency has relied on factors which Congress has not intended
it to consider, entirely failed to consider an important aspect of
the problem, [or] offered an explanation for its decision that
runs counter to the evidence before the agency.” Motor Vehicle
Mfrs. Ass’n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43
(1983). The court’s task in evaluating agency action under this
standard is to ensure that “the process by which [the agency]
reache[d] [its] result [was] logical and rational.” Michigan v.
EPA, 135 S. Ct. 2699, 2706 (2015) (quoting Allentown Mack
Sales & Serv., Inc. v. NLRB, 522 U.S. 359, 374 (1998)). In
doing so, however, the court must “not . . . substitute its [own]
 13
judgment for that of the agency.” State Farm, 463 U.S. at 43.
The court will ordinarily uphold an agency’s decision so long
as the agency “examine[d] the relevant data and articulate[d] a
satisfactory explanation for its action[,] including a rational
connection between the facts found and the choice made.” Id.
(internal quotation marks omitted).

Finally, we review the “[D]istrict [C]ourt’s refusal to
supplement the administrative record for abuse of discretion.”
Am. Wildlands v. Kempthorne, 530 F.3d 991, 1002 (D.C. Cir.
2008). “When reviewing agency action under the APA, we
review ‘the whole record or those parts of it cited by a party.’”
Id. (quoting 5 U.S.C. § 706). The administrative record
typically consists of “the order involved; any findings or
reports on which it is based; and the pleadings, evidence, and
other parts of the proceedings before the agency.” FED. R. APP.
P. 16(a). We allow parties to supplement the record only when
they are able to “demonstrate unusual circumstances justifying
a departure from this general rule.” Am. Wildlands, 530 F.3d at
1002 (internal quotation marks omitted). “We have recognized
such circumstances in at least three instances: (1) ‘[T]he
agency deliberately or negligently excluded documents that
may have been adverse to its decision’; (2) ‘the [D]istrict
[C]ourt needed to supplement the record with ‘background
information’ in order to determine whether the agency
considered all of the relevant factors’; or (3) ‘the agency failed
to explain administrative action so as to frustrate judicial
review.’” Id. (quoting James Madison Ltd. by Hecht v. Ludwig,
82 F.3d 1085, 1095 (D.C. Cir. 1996)).
 14
B. The Statutory Claim

1. USDA’s Interpretation of the Statute

The central question presented in this appeal is whether
APHIS’ renewal of the Sellners’ license was contrary to § 2133
of the Act. That provision states, in relevant part, that:

The Secretary shall issue licenses to dealers and
exhibitors upon application therefor in such form
and manner as he may prescribe and upon
payment of such fee established pursuant to 2153
of this title: Provided, That no such license shall
be issued until the dealer or exhibitor shall have
demonstrated that his facilities comply with the
standards promulgated by the Secretary pursuant
to section 2143 of this title.

7 U.S.C. § 2133. Appellants argue that, because the renewal of
a license involves issuance of a license, an exhibitor must have
“demonstrated that his facilities comply” with AWA standards
in order to be eligible for a license renewal. Because USDA’s
regulations do not require an on-site “inspection” (and the
agency did not conduct one) to determine that Cricket Hollow
Zoo had returned to compliance before renewing its license in
2015, Appellants claim that the renewal violated the statute.
The parties consequently spent much time in their briefs and at
oral argument debating whether a license is “issued” when it is
renewed.

On this point, Appellants argue that “issue” unambiguously
encompasses license renewal. Appellants’ Br. 32. In their view,
a renewal is merely a “form and manner” of application for a
license. Id. at 33. It thus falls under § 2133 and is subject to the
same restrictions that apply to initial license grants under that
 15
provision. Id. at 32. In particular, Appellants argue that § 2133
mandates that the agency withhold a license’s renewal until the
applicant affirmatively demonstrates compliance with the
regulations and standards. Id. at 26-27. The fact that the agency
was aware at the time it granted the 2015 renewal that the
Sellners were not in compliance, Appellants claim, indicates
that the decision to grant the renewal necessarily violated the
Act. Id. They further contend that the agency’s automatic
renewal scheme violates both the statutory text and the intent
behind the AWA. Id. at 27.

In addition, Appellants contend that the agency should not
prevail even if the court considers “issue” to be ambiguous. Id.
at 39. They note that the Secretary has never issued a regulation
through notice-and-comment rulemaking stating that renewal
of a license does not involve the issuance of a license and so is
not governed by § 2133. Id. at 40. Rather, they argue that this
position was first articulated in a declaration the Government
submitted in the course of unrelated litigation in 2013. Id.
(citing Dr. Elizabeth Goldentyer Declaration (March 24, 2013),
Ray v. Vilsack, No. 5:12-CV-212-BO, 2014 WL 3721357
(E.D.N.C. July 24, 2014)), reprinted in App. 258. Appellants
point to earlier iterations of USDA’s regulations that they claim
“explicitly disavowed” the position that license renewal
applicants need not demonstrate compliance with the
regulations and standards. Id. at 41-42 (quoting Notice of
Proposed Rulemaking, Animal Welfare Regulations, 54 Fed.
Reg. 10835, 10840 (March 15, 1989); Animal Welfare;
Licensing and Records, 60 Fed. Reg. 13893, 13894 (March 15,
1995)). Therefore, according to Appellants, this interpretation
of the statute is merely a “post hoc litigation position” that is
not entitled to Chevron deference. Id. at 39, 44-45 (quoting
Gerber v. Norton, 294 F.3d 173, 184 (D.C. Cir. 2002)).
 16

In response, USDA argues that the statute “is silent as to
the need for license renewal and any requirements for
renewal.” Appellees’ Br. 24 (capitalization and emphasis
omitted). As a result, the agency asserts, the court should defer
to its reasonable interpretation that no “demonstration”
requirement is applicable to renewal applications. Id. at 22.
The Government relies on the Eleventh Circuit’s analysis of
the definition of “issue” in a similar case, arguing that its plain
meaning “does not necessarily include ‘renew.’” Id. at 26
(quoting ALDF, 789 F.3d at 1216). It urges the court to adopt
the Eleventh Circuit’s position that “[n]o license is given out
during the renewal process” and that “Congress has [not]
spoken to the precise question” of whether § 2133 governs
renewals. Id.; see also People for the Ethical Treatment
of Animals v. USDA, 861 F.3d 502, 509 (4th Cir. 2017).

Yet, neither in its briefs nor at oral argument was agency
counsel able to identify anything in the agency’s regulations to
support this position. Indeed, at oral argument, counsel
appeared to concede that the Government developed its
interpretation of “issue” in response to Appellants’ briefing,
rather than through rulemaking or any other agency
proceeding. See Tr. of Oral Argument at 35-36.

The “issue” debate thus confuses the question before the
court. The AWA implementing regulations make it clear that
the agency interprets the statute not to require an existing
licensee to satisfy the same requirements that an applicant for
an initial license must satisfy in order to have its license
renewed. See 9 C.F.R. §§ 2.1-2.3. Nothing in the agency’s
regulations suggests that USDA interprets § 2133 as not
applying to renewals, or even that it believes renewal
applicants need not demonstrate compliance with the
regulations and standards in order to qualify for a renewal
license. Rather, USDA’s position since at least 1989 has been
 17
that it has broad authority, conferred under the AWA, to fill
any gaps in the statute by implementing an administrative
renewal scheme that imposes different requirements on
existing licensees than apply to initial license applicants.

In support of this view, the agency’s regulations state:

Application for license renewal. APHIS will
renew a license after the applicant certifies by
signing the application form that, to the best of
the applicant’s knowledge and belief, he or she is
in compliance with the regulations and standards
and agrees to continue to comply with the
regulations and standards. APHIS will supply a
copy of the applicable regulations and standards
to the applicant upon request.

9 C.F.R. § 2.2(b).

Each applicant must demonstrate that his or her
premises and any animals, facilities, vehicles,
equipment, or other premises used or intended
for use in the business comply with the
regulations and standards set forth in parts 2 and
3 of this subchapter. Each applicant for an initial
license or license renewal must make his or her
animals, premises, facilities, vehicles,
equipment, other premises, and records available
for inspection during business hours and at other
times mutually agreeable to the applicant and
APHIS, to ascertain the applicant’s compliance
with the standards and regulations.

Id. § 2.3(a).
 18
Each applicant for an initial license must be
inspected by APHIS and demonstrate
compliance with the regulations and standards, as
required in paragraph (a) of this section, before
APHIS will issue a license. . . .

Id. § 2.3(b). See Appellees’ Br. 11-12, 37-39. It is clear from
the foregoing provisions that the agency treats applicants for
initial licenses and applicants for license renewals differently.
It is also noteworthy that neither these regulatory provisions
nor any others to which the parties point purport to define
“issue” in § 2133 of the Act.

The Government’s attention to the “issue” debate is thus
merely a tangent. Rather, the heart of the Government’s
argument is that “the statute is silent as to whether an existing
licensee must satisfy the same requirements, or any
requirements at all, to have its license renewed.” Appellees’
Br. 3. The Government is explicit in contending that “the
USDA’s administrative regulatory renewal scheme is based
upon a permissible construction of the AWA.” Id. at 31
(capitalization and emphasis omitted). This entire argument
rests on the cited agency regulations, which themselves focus
on what an applicant must “demonstrate” in order to qualify for
either an initial license or a renewal. Id. at 31-38. A careful
review of the regulatory history of the licensing scheme makes
this clear.

In 1987, USDA published in the Federal Register a
proposal to amend its licensing regulations. Notice of Proposed
Rulemaking, Animal Welfare Regulations, 52 Fed. Reg.
10,298 (Mar. 31, 1987). In 1989, the agency issued a second
notice of proposed rulemaking, in which it proposed a revision
that would “require that each applicant for a license or renewal
of a license must demonstrate compliance with the regulations
 19
and standards.” 54 Fed. Reg. 10,840 (emphasis added). The
notice also clarified “that licenses are valid and effective if
renewed each year and have not been terminated, suspended,
or revoked” in order to “avoid any misconception that every
license automatically terminates at the end of its 1-year term
and that each year an applicant must follow the procedure
applicable to obtaining an initial license.” Id. at 10,841.
Pursuant to this regulatory initiative, the agency proposed
several revisions to clarify that different requirements for
demonstrating compliance apply to license renewals and initial
license applications. See, e.g., id. at 10,838 (“We have made
conforming changes throughout Subpart A to differentiate
between new license applications and license renewals.”); id.
at 10,842 (revising proposed annual reporting requirement to
apply only to license renewal applications).

The Final Rule promulgated in 1989 was consistent with
the proposal. See Animal Welfare, 54 Fed. Reg. 36,123, 36,149
(Aug. 31, 1989). The subsection of the regulation entitled
“Demonstration of compliance with standards and regulations”
addressed and distinguished between the requirements for both
initial license and renewal applicants. Id. Section 2.3 stated that
“[e]ach applicant” – whether for an initial license or a license
renewal – “must demonstrate that his or her premises and any
animals, facilities, vehicles, equipment, or other premises used
or intended for use in the business comply” with the Act and
regulations. Id. The hurdles each type of applicant was required
to overcome in order to make this statutorily required showing
were not identical, however. Both types of applicants were
required to “make his or her animals, premises, facilities,
vehicles, equipment, other premises, and records available for
inspection,” but only applicants for an initial license had to
demonstrate compliance through an actual inspection before a
license could be granted. Id.
 20
In 1995, USDA promulgated a Final Rule amending the
regulations to impose an additional self-certification
requirement on applicants for license renewal. See 60 Fed. Reg.
13,893. The stated purpose of this amendment was to “help
ensure that applicants for license renewal are in compliance
with the regulations . . . , thus promoting compliance with the
Animal Welfare Act.” Id.

Finally, in 2004, the agency expressly rejected commenter
suggestions to “add[] criteria for renewal of licenses” such that
“no license should be renewed unless the facility was inspected
and found compliant just prior to the renewal date.” 69 Fed.
Reg. 42,094. The agency determined that “[i]t is unrealistic and
counterproductive to make license renewal contingent on not
having any citations.” Id. The Final Rule also clarified that so
long as a license renewal applicant met the requirements set
forth in sections 2.2, 2.3, and 2.7, the agency would reissue the
license. Id. In other words, if the applicant submitted an annual
report, paid the appropriate application fee, certified
compliance and agreed to continue to comply with agency
standards and regulations, and agreed to keep the facility
available for inspection by the agency, the applicant would be
deemed to have complied with the requirements for issuing a
renewal license – including the compliance demonstration
requirement.

There is no language in any proposed or final rule, or in the
regulations themselves, to suggest either that license renewal
applicants are not required to make any demonstration of
compliance, or that license renewal applicants must
demonstrate compliance above and beyond the stated
requirements of self-certification and availability for
inspection as a condition precedent to renewing a license.
 21
The regulations say nothing about the meaning of the term
“issue” under 7 U.S.C. § 2133 and do not suggest that USDA
has ever interpreted that section not to encompass license
renewal. We accordingly need not consider that interpretation.
Courts do not apply Chevron deference “to agency litigating
positions that are wholly unsupported by regulations, rulings,
or administrative practice.” Bowen v. Georgetown Univ. Hosp.,
488 U.S. 204, 212 (1988); see also City of Kansas City v. Dep’t
of Housing & Urban Dev., 923 F.2d 188, 192 (D.C. Cir. 1991)
(“That counsel advances a particular statutory interpretation
during the course of trial does not confer upon that
interpretation any special legitimacy. Deference under
Chevron . . . can be accorded only to a judgment of the agency
itself.”); Church of Scientology of Cal. v. I.R.S., 792 F.2d 153,
165 (D.C. Cir. 1986) (en banc) (Silberman, J., concurring)
(“Courts have rejected as inadequate agency counsel’s
articulation of a statutory interpretation when that
interpretation has been inconsistent with a prior administrative
construction[,] when the record evidence before the court
demonstrates no link between counsel’s interpretation and
administrative practice[,] or when agency counsel’s
interpretation is revealed as no more than a current litigating
position.” (internal citations and quotation marks omitted)).

We will instead focus our analysis on the agency’s
consistent interpretation, clearly evidenced by the regulatory
history, that the AWA leaves to the Secretary’s discretion how
to handle license renewals, and that as part of that discretion,
the Secretary may determine the appropriate means of
demonstrating compliance with the regulations and standards
applicable to licensed entities. This is consistent with USDA’s
core contention on appeal that its administrative renewal
scheme is a permissible interpretation of the Act, necessary to
fill the gaps left open by Congress’ decision not to address
renewal specifically. See Appellees’ Br. 31. The Government
 22
confirmed at oral argument that its renewal scheme embodies
a permissible interpretation of § 2133’s “demonstrate”
requirement. See Tr. of Oral Argument at 36. And the
Government has previously defended its renewal scheme on
exactly this basis, explicitly arguing that “demonstrate” is
ambiguous and that its interpretation survives scrutiny under
Chevron. See USDA Reply Br. at 4, Ray v. Vilsack, 5:12-CV-
212-BO (E.D.N.C. Jan. 22, 2013) (No. 24) (“[S]tep one of
Chevron weighs in favor of the agency’s authority to construe
this statute and determine the means of demonstrating
compliance with the AWA. The renewal approval process . . .
satisfies step two of Chevron.”). It is this interpretation – which
is consistent with the agency’s established regulations and
administrative practice – that the court must evaluate to
determine whether the renewal scheme is permissible under the
statute. After all, “an agency’s action must be upheld, if at all,
on the basis articulated by the agency itself.” State Farm, 463
U.S. at 50 (citing SEC v. Chenery Corp., 332 U.S. 194, 196
(1947)).

2. Chevron Analysis

Appellants contend that USDA’s renewal of Cricket
Hollow Zoo’s license “even when the agency kn[ew] the
facility [was] operating in violation of the AWA and regulatory
standards, violates the plain language of” the statutory
requirement that no license may be issued until the exhibitor
“shall have demonstrated that his facilities comply with the
standards promulgated by the Secretary.” Appellants’ Br. 26-
27 (quoting 7 U.S.C. § 2133). Appellants appear to concede
that the agency granted the renewal only after the Sellners
complied with the renewal requirements set forth in the agency
regulations. Because the decision to renew the Cricket Hollow
Zoo license was consistent with the regulations, Appellants’
challenge to this specific renewal, and to the agency’s alleged
 23
“pattern and practice of rubber-stamping license renewal
applications,” is a challenge to the legality of the regulations
themselves. We thus must determine whether the agency’s
administrative renewal scheme is “unambiguously foreclosed”
by the statute. Village of Barrington v. Surface Transp. Bd.,
636 F.3d 650, 659 (D.C. Cir. 2011) (quotation mark omitted).

We begin, of course, with the statutory text. Maslenjak v.
United States, 137 S. Ct. 1918, 1924 (2017). The word
“renewal” never appears in the AWA. Instead, the statute
provides that “[t]he Secretary shall issue licenses to dealers and
exhibitors upon application therefor in such form and manner
as he may prescribe . . . .” 7 U.S.C. § 2133. The statute limits
this explicit grant of discretion: issuance of a license must be
conditioned “upon payment of such fee” as the Secretary shall
establish, and on the exhibitor’s “hav[ing] demonstrated that
his facilities comply with the standards promulgated by the
Secretary.” Id. As the Government has emphasized, the statute
does not set forth any length of time that a license should
remain valid. Its only discussion of a license ending pertains to
the possibility of revocation or suspension. See id. § 2149. The
statute thus neither provides expressly for a renewal process,
nor expressly sets forth standards that must govern the renewal
process specifically.

Appellants contend, however, that a renewal plainly
constitutes “issuance of a license” under § 2133 and that the
process for granting renewals therefore must comply with the
standards set out above. They assert that USDA’s
administrative renewal scheme is unlawful because, by
permitting renewal even when the agency has reason to know
the facility is operating in violation of the AWA and regulatory
standards, it flouts the compliance demonstration requirement.
The Act does not define “demonstrate,” and Appellants have
not pointed us to any statutory provision that would appear to
 24
give additional content to the term. Appellants nonetheless
assert that a demonstration of compliance cannot possibly be
accomplished when the entity to whom the demonstration must
be made is already aware of non-compliance, whether due to
prior inspections or public reports. See Appellants’ Br. 26-27.

Had Congress required that before issuing a license, the
agency must find that the applicant is actually in compliance,
Appellants’ interpretation would be on strong footing. But
Congress required merely a demonstration. And “demonstrate”
may mean “to show,” not “to be.” See BLACK’S LAW
DICTIONARY 432 (6th ed. 1990) (“[t]o show . . . by operation,
reasoning, or evidence”). This definition comports with the
ordinary usage of the term. It is common for a teacher to say
that a student has demonstrated proficiency on an English
exam, regardless of whether the student has actually mastered
the rules of grammar. Similarly, one might be designated as
having demonstrated compliance with applicable guidelines
because he or she has met some minimum standard that an
evaluating entity has set.

This latter meaning is consistent with the common legal use
of “demonstrate.” Statutes and regulations frequently require
an entity to demonstrate something by meeting certain criteria
or going through a process that either Congress or an agency
has deemed indicative. See, e.g., Clean Air Act, 42 U.S.C.
§ 7511d(e) (2012) (exempting from sanctions those ozone
nonattainment areas that “can demonstrate, consistent with
guidance issued by the Administrator, that attainment in the
area is prevented because of ozone . . . transported from other
areas”); EPA National Emission Standards for Hazardous Air
Pollutant Emissions for Polyvinyl Chloride & Copolymers
Production, 40 C.F.R. § 63.11896(c) (2012) (directing that
sources wishing to make process changes “must demonstrate
continuous compliance” with emissions and work practice
 25
standards “according to the procedures and frequency” set out
in separate regulations).

So too with § 2133. It is difficult to imagine how the agency
could administer the provision’s compliance demonstration
requirement without establishing some procedure that license
applicants must follow to make an appropriate showing. By
declining to set forth the requirements of that demonstration
procedure, Congress effectively delegated this authority to
USDA. This is precisely the type of statutory gap-filling that
“involves difficult policy choices that agencies are better
equipped to make than courts,” and to which federal courts
must defer, so long as the agency’s construction is reasonable.
Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs.,
545 U.S. 967, 980 (2005) (citing Chevron, 467 U.S. at 865-66).

Having concluded that Congress has implicitly delegated
the authority to establish the procedure for demonstrating
compliance to USDA, we must next ask, at Chevron Step Two,
whether the process the agency developed to fill the statutory
gap is consistent with the statute. That is, we may uphold the
renewal scheme only if the agency reasonably determined that
the renewal procedures fulfill the statutory demonstration
requirement. See id.

USDA asserts that its renewal scheme balances the AWA’s
“dual, but sometimes competing, goals of protecting both the
animals and the businesses that exhibit them.” Appellees’ Br.
33. The agency has explained that it would be too burdensome
to require more from applicants in the context of license
renewals than the regulations currently demand. See 69 Fed.
Reg. 42,094. Specifically, USDA contends it would be
“unrealistic” to make renewal contingent on licensees having
no citations whatsoever. Id.
 26
In other words, the agency has concluded that self-
certification and availability for inspection are sufficient to
demonstrate compliance in a license renewal. The agency has
never said that self-certification alone is positive proof of
compliance. Rather, the agency’s regulations and the
regulatory history make clear that self-certification and
availability for inspection are enough, in the context of
renewal, to satisfy the demonstration requirement because a
renewal involves an applicant who has already survived a
compliance inspection when the agency initially granted its
license. To put it simply, the agency has concluded that (1) the
initial inspection that was necessary to secure the initial license,
plus (2) the self-certification of continued compliance, plus
(3) availability for inspection at and beyond the time of renewal
are enough to satisfy the statute. Considered in the context of
the enforcement authority provided for elsewhere in the statute,
and the attendant procedural protections afforded to license-
holders in revocation and suspension proceedings under
§ 2149, we find that the agency’s administrative renewal
scheme embodies a reasonable interpretation of the statutory
demonstration requirement.

In light of our determination that the agency’s renewal
scheme is consistent with the demonstration requirement in
§ 2133, we need not reach the “issue” issue. Regardless of
whether “issue” encompasses renewal, the agency’s scheme
complies with the statute. As the Government has argued
before us and before the District Court, the Secretary has
consistently said that what an applicant must demonstrate when
seeking the issuance of an initial license is different from what
an applicant must demonstrate in order to qualify for the
issuance of a renewal; and for a renewal, all that is required is
that the applicant self-certify and make his or her premises
available for inspection. The Government asserts that this
scheme is consistent with the Act, and we agree. Because the
 27
agency’s decision to renew the Cricket Hollow Zoo license was
made in compliance with that regulatory scheme, it was not
inconsistent with the Act.

C. The Arbitrary and Capricious Claim

Appellants also contend that, even if USDA’s regulatory
renewal scheme is generally consistent with the statute, the
District Court erred in rejecting their claim that the agency’s
reliance on the Sellners’ self-certification of compliance was
arbitrary and capricious in violation of the APA. See
Appellants’ Br. 48.

To support this claim, they assert, inter alia, that “[f]rom
December 16, 2013 to August 15, 2016, APHIS documented
77 violations at [Cricket Hollow Zoo] over the course of 14
inspections.” Appellants’ Br. 22 (citing APHIS, Inspection
Reports, available at https://acis.aphis.edc.usda.gov
/ords/f?p=116:203:0::NO (search Certificate Number 42-C-
0084)). They allege that one such inspection occurred on the
same day in 2015 that APHIS renewed Cricket Hollow Zoo’s
license, and resulted in eleven violations, including one
“direct” violation and numerous repeat violations. Id. (citing
APHIS Inspection Report 147151639230365 (May 27, 2015),
reprinted in App. 387-92). Appellants also detail their own
first-hand accounts in the record in order to highlight the
deplorable conditions in which Cricket Hollow Zoo’s animals
must live and the “chronic noncompliance recognized by
APHIS’s own officials.” Id. at 22-23 (citing Compl. ¶ 112,
reprinted in App. 65).

Appellants also allege that Tracey Kuehl sent a letter to
USDA on April 28, 2014, expressing concerns about the Zoo’s
noncompliance and requesting that the agency not renew the
Zoo’s license. The Administrator of APHIS, Kevin Shea,
 28
responded on May 23, 2014, indicating that the agency would
continue to renew the Zoo’s license, although APHIS had
recently opened an official investigation into the Zoo’s
mistreatment of animals. Id. at 24.

In Appellants view, these allegations demonstrate that the
agency had reason to know at the time it renewed the Cricket
Hollow Zoo license that the Sellners were out of compliance
with the regulations and standards. They argue that the
agency’s action in renewing the license was therefore arbitrary
and capricious because the agency had information showing
that the Sellners’ practices violated the regulations. In other
words, Appellants assert that we are facing a “smoking gun”
case in which the agency actually knows with certainty that the
exhibitor’s self-certification that it is “in compliance with all
regulations and standards in 9 CFR, Subpart A, Parts 1, 2, and
3,” APHIS Application for License Form 7003, reprinted in
App. 384, is false. They claim it is arbitrary and capricious to
nonetheless rely on the form as a demonstration of compliance
in these circumstances.

USDA first responds that Appellants’ arbitrary and
capricious claim must fail because the reliance on the self-
certification was consistent with the regulations, and the
regulations are consistent with the statute. See Appellees’ Br.
42-43. The District Court relied on a similar line of analysis
when it dismissed Appellants’ claim. ALDF, 169 F. Supp. 3d
at 19 (concluding that the licensing decision cannot be arbitrary
and capricious because the regulatory framework was
consistent with the Act and affords the agency no discretion to
refuse to rely on a self-certification form). The agency next
argues that its reliance on the self-certification process,
regardless of whether it knows that the licensee is failing to
comply with AWA standards, is reasonable because the agency
retains discretionary enforcement authority to suspend or
 29
revoke the licensee’s license under § 2149. Appellees’ Br. at
43.

As an initial matter, both USDA and the District Court are
incorrect that the arbitrary and capricious claim must fail solely
because the agency prevailed on the AWA claim. Agency
action may be consistent with the agency’s authorizing statute
and yet arbitrary and capricious under the APA. See, e.g.,
Humane Soc’y of the U.S. v. Zinke, No. 15-5041, 2017 WL
3254932, at *10 (D.C. Cir. Aug. 1, 2017). The court’s inquiry
on the latter point depends not solely on the agency’s legal
authority, but instead on the agency’s ability to demonstrate
that it engaged in reasoned decisionmaking. See State Farm,
463 U.S. at 52. The mere fact that a regulatory scheme is
generally consistent with the agency’s authorizing statute does
not shield each agency action taken under the scheme from
arbitrary and capricious review.

The agency’s second argument, at least as currently
articulated, is insufficient as well. USDA explained its decision
to renew the Sellners’ license as being based on the Sellners’
compliance with the regulatory renewal requirements: filing an
annual report, the application fee, availability for inspection,
and the self-certification of compliance. But, as explained
above, an agency’s decision is arbitrary and capricious when
its “explanation for its decision . . . runs counter to the
evidence before the agency.” Id. at 43. According to
Appellants’ allegations, USDA knew that the Sellners were
grossly and consistently out of compliance with AWA
standards. In basing its explanation for the renewal decision in
part on the basis of the Sellners’ self-certification, the agency’s
explanation for its decision runs counter to the evidence
allegedly before it. “Reliance on facts that an agency knows are
false at the time it relies on them is the essence of arbitrary and
capricious decisionmaking.” Mo. Pub. Serv. Comm’n v. FERC,
 30
337 F.3d 1066, 1075 (D.C. Cir. 2003). The agency has not
explained how its retention of authority to enforce the
standards through an enforcement proceeding on its own
indicates that the agency acted rationally when relying on the
self-certification form.

Neither does the agency’s assertion that withholding
renewals for any citation would be unrealistic provide an
adequate justification in the “smoking gun” case. According to
Appellants’ allegations, Cricket Hollow Zoo did not merely
have a few citations. They allege that USDA had a consistent
record of the Zoo’s chronic noncompliance, and that the agency
had no reason to suspect that anything had changed at the time
of the renewal. In fact, Appellants claim that an inspection that
took place on the same day that the 2015 renewal issued
resulted in the agency finding a number of serious violations.
See Appellants’ Br. 22 (citing APHIS Inspection Report
147151639230365 (May 27, 2015), reprinted in App. 387-92).

Finally, the fact that the agency has now taken enforcement
action against the Sellners does not moot Appellants’ arbitrary
and capricious claim. The Cricket Hollow Zoo continues to
operate as a USDA-licensed animal exhibition. A decision that
the agency’s renewal scheme or its grant of the Sellners’ 2015
license renewal application is invalid under the APA would
alter that state of affairs in a manner likely to remedy, at least
in part, Appellants’ injuries. So long as that is the case, the
controversy before the court remains live. See Knox v. Serv.
Emps. Int’l Union, Local 1000, 132 S. Ct. 2277, 2287 (2012)
(“A case becomes moot only when it is impossible for a court
to grant any effectual relief whatever to the prevailing party.”
(internal quotation marks omitted)).

We hold that, on this record, the District Court erred in
granting the Government’s motion to dismiss Appellants’
 31
arbitrary and capricious claim. We therefore vacate that
judgment and remand the case to the District Court with
instructions to remand the record to the agency. “Where we
‘cannot evaluate the challenged agency action on the basis of
the record before [us], the proper course . . . is to remand to the
agency for additional investigation or explanation.’” CSI
Aviation Servs., Inc. v. U.S. Dep’t of Transp., 637 F.3d 408,
416 (D.C. Cir. 2011) (quoting Fla. Power & Light Co. v.
Lorion, 470 U.S. 729, 744 (1985)). On remand, the agency
must, at a minimum, explain how its reliance on the self-
certification scheme in this allegedly “smoking gun” case did
not constitute arbitrary and capricious action. The agency may
revisit its decision to renew the disputed license. And, of
course, the agency may opt to take appropriate action to amend
its regulatory scheme.

Should the agency choose to reissue its license renewal
decision or to maintain its position that it may rely on a license
renewal applicant’s self-certification to demonstrate
compliance, even when it has concrete evidence that the
applicant is routinely and currently out of compliance with
AWA standards, the District Court may not uphold that action
unless it finds that USDA acted rationally and engaged in
reasoned decisionmaking. As part of this inquiry, the District
Court should reconsider its decision denying Appellants’
motion to supplement the administrative record. In order to
analyze the agency’s rationale for relying on the self-
certification scheme in an allegedly “smoking gun” case such
as this, the court must have access to other records the agency
had in its possession at the time of its decision. The court may
compel the agency to include such “background information”
if it finds it necessary to review those documents “in order to
determine whether the agency considered all of the relevant
factors” when making its decision. Am. Wildlands, 530 F.3d at
1002 (internal quotation marks omitted).
 32

III. CONCLUSION

For the reasons set forth above, we affirm the judgment of
the District Court on the statutory claim. We vacate the District
Court’s order granting the Government’s motion to dismiss
Appellants’ arbitrary and capricious claim, and remand the
case to the District Court with instructions to remand the record
to the agency for further proceedings consistent with this
opinion.

So ordered.
 GRIFFITH, Circuit Judge, concurring in part and concurring
in the judgment: I concur in the opinion of the majority except
as to the reasoning in Section II.B. The analysis of the district
court and the arguments of the parties focused almost entirely
on whether a license renewal by the agency is “issued” under
7 U.S.C. § 2133. Although I agree with the majority that the
agency’s scheme for renewing licenses is permissible under the
Animal Welfare Act, 7 U.S.C. § 2131 et seq., I am more
comfortable resting that determination upon the question that
has driven this litigation.

The Act is silent, or at least ambiguous, as to what process
(if any) is required for license renewals. As other courts have
recognized, the plain meaning of “issue” does not necessarily
include renewals. See People for the Ethical Treatment of
Animals v. USDA, 861 F.3d 502, 509 (4th Cir. 2017); Animal
Legal Def. Fund v. USDA, 789 F.3d 1206, 1216 (11th Cir.
2015). Nothing in the statute instructs the agency to require a
renewal process at all. Even so, USDA has established a
regulatory scheme for license renewals, but that scheme
requires only the filing of an application, the payment of a fee,
and self-certification of compliance with agency standards. See
9 C.F.R. §§ 2.1(d), 2.2(b), 2.5-2.7. We typically defer to an
agency’s interpretation of the statute it administers so long as
the statute is “silent or ambiguous with respect to the specific
issue” and the interpretation is “reasonable.” Chevron, U.S.A.,
Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842-45
(1984).

USDA argues that “issue” is ambiguous and the agency
has interpreted the term to exclude renewals. As it explains, a
license is “issued” only when first granted. After that, the same
license is continued through an annual administrative process.
The agency actually added language to its licensing regulations
“necessary to avoid any misconception that every license
automatically terminates at the end of its 1-year term.” Animal
 2
Welfare Regulations, 54 Fed. Reg. 10,835, 10,841 (Mar. 15,
1989).

In my view, it is perfectly reasonable for the agency to
establish an administrative renewal scheme and allocate its
limited resources elsewhere. Massachusetts v. EPA, 549 U.S.
497, 527 (2007) (“[A]n agency has broad discretion to choose
how best to marshal its limited resources and personnel to carry
out its delegated responsibilities.”). This allows the agency to
focus on initial license applications and unannounced
inspections. Animal Welfare; Inspection, Licensing, and
Procurement of Animals, 69 Fed. Reg. 42,089, 42,094 (July 14,
2004); see also Animal Legal Def. Fund, 789 F.3d at 1224
(finding that the renewal scheme reasonably balanced
Congress’s “conflicting policy interests” of licensee due
process rights and animal health and welfare). We should defer
to the agency’s judgment. See Chevron, 467 U.S. at 844
(“[C]onsiderable weight should be accorded to an executive
department’s construction of a statutory scheme it is entrusted
to administer, and the principle of deference to administrative
interpretations.”).

The majority sidesteps the meaning of “issue” because, in
its view, the explanation the agency has advanced in this case
is nothing more than a post-hoc litigation strategy. According
to the majority, the agency has never actually interpreted the
term and therefore is not entitled to deference. “The regulations
say nothing about the meaning of the term ‘issue’ under 7
U.S.C. § 2133 and do not suggest that USDA has ever
interpreted that section not to encompass license renewal.”
Maj. Op. at 21.

I read the agency regulations differently. When the Act
first became law, the renewal process the agency created
required only the paying of a fee and the filing of revenue
 3
receipts. Laboratory Animal Welfare, 32 Fed. Reg. 3270, 3271
(Feb. 24, 1967). No demonstration of compliance was required.
That was called for in an entirely separate section of the
regulations related to the “[i]ssuance of licenses.” Id. The
regulation of renewals came four sections later. See id.

The majority notes a later revision to the regulations
requiring that “each applicant for a license or renewal of a
license must demonstrate compliance with the regulations and
standards.” Maj. Op. at 18-19 (emphasis in majority opinion)
(quoting 54 Fed. Reg. at 10,840). But this revision also
removed “before a license will be issued” from the same
provision on the ground that it was incongruent with renewals.
54 Fed. Reg. at 10,840; see Animal Welfare, 54 Fed. Reg.
36,123, 36,149 (Aug. 31, 1989). The clear implication is that
the agency never understood “issue” to include renewals.

I would join our sister circuits and defer to USDA’s
considered judgment that a renewal is not “issued” under
§ 2133, and that its renewal scheme is therefore a permissible
interpretation of the Act. See People for the Ethical Treatment
of Animals, 861 F.3d at 508-12; Animal Legal Def. Fund, 789
F.3d at 1215-25. Because the majority is clear that its analysis
does not “reach the ‘issue’ issue,” Maj. Op. at 26, there is
nothing in the opinion that prevents the agency from
interpreting “issue” as it has in its arguments to us.