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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 7, 2003 Decided March 26, 2004
No. 03-1008
PDK LABORATORIES INC.,
PETITIONER
v.
UNITED STATES DRUG ENFORCEMENT ADMINISTRATION,
RESPONDENT
On Petition for Review of an Order of the
United States Drug Enforcement Administration
Saul Pilchen argued the cause for petitioner. With him on
the briefs was Joseph L. Barloon.
Mark T. Quinlivan, Senior Trial Counsel, U.S. Department
of Justice, argued the cause for respondent. With him on the
brief was Roscoe C. Howard, Jr., U.S. Attorney.
Before: RANDOLPH and ROBERTS, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge RANDOLPH.
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
Opinion concurring in part and concurring in the judgment
filed by Circuit Judge ROBERTS.
RANDOLPH, Circuit Judge: Ephedrine is an active ingredi-
ent in over-the-counter medications for the treatment of
asthma and nasal congestion. Ephedrine is also used in the
illicit production of methamphetamine, a controlled substance.
The government regulates ephedrine pursuant to the Con-
trolled Substances Act, as amended by, inter alia, the Chemi-
cal Diversion and Trafficking Act of 1988, 21 U.S.C. § 801 et
seq. The Act lists 20 chemicals, including ephedrine, used in
the illicit production of controlled substances. 21 U.S.C.
§ 802(34). Companies and individuals wishing to import (or
to export, manufacture or distribute) any of these ‘‘List I
chemicals’’ must register with the Drug Enforcement Admin-
istration. 21 U.S.C. §§ 957(a), 822(a)(1)-(2). The ‘‘regulated
person’’ must notify DEA no later than 15 days before
bringing a listed chemical into the country. 21 U.S.C.
§ 971(a). DEA has the authority to forbid importation if ‘‘the
chemical may be diverted to the clandestine manufacture of a
controlled substance.’’ 21 U.S.C. § 971(c)(1). This petition
for judicial review challenges DEA’s interpretation of ‘‘the
chemical may be diverted’’ as it relates to the importation of
ephedrine.
I.
PDK Laboratories, at its New York facilities, manufactures
over-the-counter pharmaceuticals and vitamins, including pain
relievers, decongestants, diet aids and nutritional supple-
ments. Some of its products contain ephedrine in combina-
tion with other active ingredients. PDK purchases raw, bulk
ephedrine from foreign companies, combines the chemical
with other active agents, and produces a finished product in
tablet form, packaged in bottles or blister packs, all with
DEA’s permission. PDK currently sells only to wholesale
distributors, not to retailers or consumers, although in the
past it had a retail mail order business.
Producers of illicit methamphetamine prefer using pure
ephedrine. After the 1988 amendments to the Controlled
3
Substances Act imposed record keeping and other controls on
transactions involving pure ephedrine, criminals began substi-
tuting ‘‘single entity’’ ephedrine tablets – that is, tablets
containing ephedrine as the only active medicinal ingredient –
for pure ephedrine. When Congress amended the Act again
in 1993 to remove the record keeping exemption for single
entity ephedrine tablets, illicit methamphetamine producers
switched to pseudoephedrine and combination ephedrine
products, such as those PDK and its competitors produce. In
order to obtain large quantities of this product, criminals
shoplift the tablets from retail stores or, individually and in
groups, make multiple purchases of the tablets from different
stores – a process known in the drug trade as ‘‘smurfing.’’
PDK has cooperated with DEA in trying to prevent its
products from winding up in the hands of methamphetamine
producers. It has cut off sales to distributors suspected of
selling its drug products in bulk; ended its mail order busi-
ness; stopped shipping its products to California and Mis-
souri in response to the number of methamphetamine labora-
tories found in those states; monitored sales to determine if a
particular customer has been ordering an extraordinary quan-
tity of its drugs; imposed monthly quotas on its customers;
retained a former DEA official to review its compliance
program; and altered its packaging to make its over-the-
counter drugs less susceptible to illicit uses.
Two of PDK’s foreign suppliers of bulk ephedrine are
Indace, Inc. and Malladi, Inc., both of which are registered
with DEA as importers of chemicals listed in the Act. In-
dace, in late 2000, and Malladi, in early 2001, notified DEA
that they were about to ship ephedrine hydrochloride from
India to PDK in New York. Each shipment was to consist of
3000 kilograms of the chemical in powdered form. In both
instances DEA issued to the importer an ‘‘Order to Suspend
Shipment,’’ stating that it acted pursuant to § 971(c)(1) on the
basis of information indicating that ‘‘the listed chemical may
be diverted.’’ By this DEA did not mean that the shipments
would be hijacked or otherwise diverted from their intended
destination. DEA meant instead that after PDK’s finished
products reached the shelves of retail stores, someone might
4
buy (or steal) the ephedrine-containing pills and use them to
make methamphetamine. In support of its judgment that
‘‘the chemical may be diverted,’’ DEA described in the sus-
pension orders four instances in 1994 and 1995 when PDK, by
mail order, shipped large quantities of tablets containing
ephedrine to individuals, some of whom were later arrested
for manufacturing methamphetamine. The suspension orders
also stated that PDK had exported its finished products to
Canada without notifying DEA 15 days in advance, as the
statute and regulations required; and that PDK products
containing ephedrine and pseudoephedrine had been found at
methamphetamine laboratories and ‘‘dumpsites,’’ as reported
in ‘‘warning letters’’ DEA sent to PDK. (DEA sometimes
notifies manufacturers when their drug products are found at
methamphetamine laboratories; these ‘‘warning letters’’ do
not assign culpability to the manufacturer.)
PDK litigated the validity of the suspension orders before
an Administrative Law Judge. After an evidentiary hearing,
the ALJ ruled in PDK’s favor, finding that there was no
evidence that the shipments of ephedrine from Indace and
Malladi might have been diverted to illegal uses. As to
PDK’s finished products – the pills sold over the counter in
retail stores – the ALJ held that these were not ‘‘listed
chemical[s]’’ within § 971’s meaning even though they con-
tained ephedrine. In the alternative, the ALJ held that DEA
had not satisfied the ‘‘may be diverted’’ portion of § 971. The
ALJ’s reasoning was as follows. PDK is the largest manufac-
turer of generic List I chemical products sold in convenience
stores. In 1998, for instance, PDK distributed approximately
10 million bottles of its combination ephedrine product; in the
same year DEA warning letters indicated that 1,061 such
bottles – about .01 percent of the total PDK distributed – had
been seized at illicit sites. There was no evidence to show
whether other manufacturers of ephedrine products had a
lower or higher percentage. There was evidence that all
ephedrine-containing medications, from whichever manufac-
turer, ‘‘may be diverted’’ in this manner. Even if retail stores
limited a customer’s purchases of these drugs, individuals
5
could simply buy the drugs from many different stores or
steal them.
On DEA’s exceptions to the ALJ’s decision, the DEA
Deputy Administrator sustained the suspension orders, ruling
that § 971(c)(1)’s reference to ‘‘the chemical’’ encompassed
not only the chemical to be imported – here ephedrine – but
also products manufactured from the chemical. 67 Fed. Reg.
77,805, 77,806 (Dec. 19, 2002). In support of this interpreta-
tion, the Deputy Administrator invoked the definition of
‘‘regulated transaction’’ in 21 U.S.C. § 802(39)(A)(iv); the
opinion in United States v. Abdul Daas, 198 F.3d 1167, 1175
(9th Cir. 1999); and a 1993 House Committee Report. 67
Fed. Reg. at 77,806. In finding that PDK’s finished products
‘‘may be diverted,’’ the Deputy Administrator recited warning
letters given to PDK involving not only its combination
ephedrine products but also its pseudoephedrine drugs, and
other information contained in the suspension orders, but –
agreeing with the ALJ – decided that PDK had not violated
reporting requirements with respect to its mail order sales.
Id. at 77,808-09.
The Deputy Administrator also relied on PDK’s alleged
export violations. Id. at 77,809. In 1994 and 1995 PDK sold
ephedrine tablets to Sun Labs of Canada without notifying
DEA in advance. The Deputy Administrator concluded that
PDK thereby violated a regulation (21 C.F.R. § 1313.21)
requiring exporters to give DEA notice 15 days in advance of
each transaction in which a listed chemical is exported from
the United States. Although the ALJ found that PDK had
not exported the tablets, that it had sold the tablets and
transferred ownership to Sun Labs in New York, and that
there was no evidence the tablets were ever delivered to
Canada, the Deputy Director ruled that PDK had failed to
comply with the regulation because its president believed the
tablets would eventually be shipped to Canada. 67 Fed. Reg.
at 77,808.
The warning letters plus PDK’s export violations led the
Deputy Administrator, looking at what he called ‘‘the totality
of the circumstances,’’ to conclude that the suspension orders
6
should be sustained despite evidence that PDK had made
significant efforts to prevent its finished products from being
used illegally. Id. at 77,809.
II.
There is no doubt that PDK suffered an injury when the
shipments of ephedrine did not arrive; and that its injury
could be redressed if we found the DEA orders invalid.
While PDK thus has Article III standing to sue, see Simon v.
Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 38–39
(1976), DEA argues that the company lacks prudential stand-
ing.
In deciding whether a litigant has prudential standing, the
court must identify what interest the litigant seeks to vindi-
cate and then decide if that interest is ‘‘arguably within the
zone of interests to be protected or regulated by the statute,’’
Ass’n of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S.
150, 153 (1970). The test, which may be understood as a
gloss on the judicial review provision of the Administrative
Procedure Act (5 U.S.C. § 702), see Clarke v. Sec. Indus.
Ass’n, 479 U.S. 388, 400 n.16 (1987), is not demanding. See
Animal Legal Defense Fund, Inc. v. Glickman, 154 F.3d 426,
444 (D.C. Cir. 1998) (en banc). The court ‘‘should not in-
quire’’ whether Congress intended to benefit or regulate the
litigant. Nat’l Credit Union Admin. v. First Nat’l Bank, 522
U.S. 479, 488-89, 492 (1998). It is enough that the litigant’s
interest is ‘‘arguably’’ one regulated or protected by ‘‘the
statutory provision at issue,’’ id. at 492.
PDK’s interest was in buying ephedrine and using it to
manufacture drugs; the importers’ interest was in selling the
chemical to PDK. Although suspension orders are directed
to importers, § 971(c)(1) necessarily regulated the interests
not only of importers but also of their domestic customers.
The point is so obviously clear and so clearly obvious that it is
scarcely worth articulating – if an importer cannot ship a
listed chemical, the domestic customer cannot receive it.
PDK’s interests are thus arguably, indeed more than argu-
ably, within the zone of interests § 971(c)(1) regulates.
7
DEA’s Deputy Director made the point in a related context:
‘‘the party in interest in this proceeding is the manufacturer-
customer of the importer. It is the conduct of that party,
PDK, and its customers, and the fact that the product which
it manufactured and distributed ended up in clandestine drug
laboratories, that forms the basis of the Government’s conten-
tion that the ephedrine imported ‘may be diverted.’ ’’ 67 Fed.
Reg. at 77,806–07.
DEA argues against PDK’s prudential standing on the
basis of the following language from § 971(c)(2): ‘‘a regulated
person to whom an order applies under paragraph (1) is
entitled to an agency hearing on the record in accordance
with’’ the Administrative Procedure Act. According to DEA,
§ 971(c)(2) entitles only the importer – as ‘‘a regulated person
to whom [a suspension] order applies’’ – to an agency hearing
on the validity of the order. There is no formal DEA ruling
or regulation to this effect and the only judicial precedent on
point is Judge Kennedy’s decision, in an earlier phase of this
case, ordering DEA to provide PDK with a hearing. PDK
Labs Inc. v. Reno, 134 F. Supp. 2d 24, 31 (D.D.C. 2001). A
‘‘regulated person’’ is a ‘‘person who manufactures, distrib-
utes, imports, or exports a listed chemical, a tableting ma-
chine, or an encapsulating machineTTTT’’ 21 U.S.C.
§ 802(38). PDK is therefore ‘‘a regulated person.’’ Judge
Kennedy held that because the orders blocked shipments to
PDK, the company is also someone ‘‘to whom an order
applies,’’ a result he thought consistent with Yi Heng Enter-
prises Dev. Co., 64 Fed. Reg. 2234, 2235 (DEA Jan. 13, 1999)
(‘‘the statute provides the opportunity for a hearing to ‘a
regulated person to whom an order (suspending shipment)
applies,’ not necessarily the person to whom the order was
issued.’’). PDK Labs v. Reno, 134 F. Supp. 2d at 30.
DEA’s contrary argument – that under § 971(c)(2) only ‘‘ ‘a
regulated person to whom an order applies under paragraph
1’ is entitled to judicial review,’’ and that only importers fit
that description, Respondent’s Br. at 20 – is wrong for several
reasons. Very rarely has Congress withheld judicial review
from those who have suffered an Article III injury at the
hands of an administrative agency. See Bowen v. Michigan
8
Acad. of Family Physicians, 476 U.S. 667, 670-71 (1986).
Time and again the Supreme Court has emphasized that
there is a ‘‘strong presumption’’ in favor of judicial review, id.
at 670, 672 n.3, and that ‘‘only upon a showing of ‘clear and
convincing evidence’ of a contrary legislative intent should the
courts restrict access to judicial review.’’ Abbott Labs. v.
Gardner, 387 U.S. 136, 141 (1967); see, e.g., Gutierrez de
Martinez v. Lamagno, 515 U.S. 417, 424-25 (1995); Block v.
Community Nutrition Inst., 467 U.S. 340, 349 (1984). We do
not believe there is any such legislative intent here. Section
971(c)(2) is not itself a judicial review provision. It is instead
a provision dealing with hearings before the agency. See
Envirocare of Utah, Inc. v. Nuclear Regulatory Comm’n, 194
F.3d 72, 75-76 (D.C. Cir. 1999). One can envision a statutory
system in which only those who may participate in agency
proceedings are entitled to review in court. Id. The Su-
preme Court in Block so interpreted the Agricultural Market-
ing Agreement Act of 1937, 7 U.S.C. § 601 et seq., in holding
that consumers could not bring actions for judicial review of
the Agriculture Secretary’s milk marketing orders. 467 U.S.
at 347. But DEA concedes that even on its reading of
§ 971(c)(2), PDK could participate in an agency hearing
challenging a suspension order, so long as the importer
initiated the challenge (which neither Indace nor Malladi did).
Respondent’s Br. at 21. Furthermore, in Block the Court
discerned several reasons why Congress would not have
wanted consumers to bring judicial challenges to the market-
ing orders. 467 U.S. at 347-52. Here, it is hard to see any
cogent reason why Congress would give importers a right to
judicial review, but deny that right to their domestic custom-
ers who have as much to lose.
DEA tries to come up with such a reason: to avoid wasteful
proceedings as when a customer succeeds in getting a suspen-
sion order vacated but the importer then decides not to go
through with the deal. Respondent’s Br. at 21. DEA appar-
ently believes that the contractual arrangements between the
parties would permit the importer to back out. We have no
way of knowing if that is a customary way of doing this
business; and DEA has provided nothing to indicate that
9
Congress thought it was. There is another problem with
DEA’s rationale. Everyone agrees that importers have a
right to judicial review. Yet if the parties are free to cancel a
deal, as DEA assumes, there is a risk that the customer will
call it off after the importer wins in court and has the
suspension order set aside. In other words, DEA’s argument
offers no rational distinction between importers, who may
seek judicial review, and domestic customers, who DEA says
cannot. In addition, the Deputy Director’s ruling in PDK’s
case would preclude it from buying ephedrine from any
importer. On his view, the suspension order rests on what
may happen to the finished products after they leave PDK’s
facilities. No matter which importer sought to supply PDK,
a suspension order presumably would issue. A ruling against
the validity of the orders in this case, far from being an
academic exercise, therefore has practical future conse-
quences for PDK even if Indace or Malladi cancel their deals.
As to the judicial review provision of the Controlled Sub-
stances Act, 21 U.S.C. § 877, this gives no indication that
Congress meant to grant judicial review to importers but to
withhold it from their domestic customers. Section 877 mere-
ly provides, in familiar language, that ‘‘any person aggrieved’’
by a final DEA decision is entitled to judicial review in the
court of appeals. While statutory language and legislative
history may overcome the presumption in favor of judicial
review, see Block, 467 U.S. at 349, there is no language in
§ 877 and no legislative history DEA has cited that accom-
plishes that here. In view of the interpretation of statutes
applicable to other agencies containing language identical to
§ 877, we hold that if PDK has Article III standing, which no
one doubts, and if its interests are ‘‘arguably within the zone
of interests’’ § 971(c)(1) regulates, which we believe they are,
PDK is a ‘‘person aggrieved’’ within § 877’s meaning and is
entitled to prosecute its case in court. See, e.g., Director,
Office of Workers’ Comp. Programs v. Newport News Ship-
building & Dry Dock Co., 514 U.S. 122, 126-27 (1995); New
World Radio, Inc. v. FCC, 294 F.3d 164, 169 (D.C. Cir. 2002);
Louisiana Energy & Power Auth. v. FERC, 141 F.3d 364,
366 (D.C. Cir. 1998).
10
In holding that PDK has prudential standing, we have
avoided placing a judicial interpretation on § 971(c)(2), the
hearing provision. As we have said, DEA has not yet ren-
dered any formal interpretation of this provision. Compare
Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S.
519 (1977), with Envirocare of Utah, Inc. v. Nuclear Regula-
tory Comm’n, 194 F.3d at 75-76. There will be time enough
to consider whatever construction DEA ultimately places on
the provision. In the meantime, companies in PDK’s position
have prudential and Article III standing to challenge suspen-
sion orders, which themselves must contain ‘‘a statement of
the legal and factual basis’’ for the order, 21 U.S.C.
§ 971(c)(1). See Citizens to Preserve Overton Park v. Volpe,
401 U.S. 402 (1971).
III.
To repeat, § 971(c)(1) authorizes DEA to ‘‘order the sus-
pension of any importation TTT of a listed chemical TTT on the
ground that the chemical may be diverted to the clandestine
manufacture of a controlled substance.’’ The main interpre-
tive question in the case is whether, as the suspension orders
assume, ‘‘the chemical may be diverted’’ includes the prospect
that PDK’s ephedrine-containing pills in retail stores will be
sold to, or shoplifted by, people who will then use the pills to
produce methamphetamine.1 The Deputy Administrator con-
cluded that the statute plainly meant what the suspension
orders assumed. He reached this conclusion without men-
tioning any policy considerations or other matters within the
1 The concurring opinion severs ‘‘chemical’’ from ‘‘diverted,’’ and
then treats each word as if it should be construed in isolation. But
the correct approach is to take the language of § 971(c)(1) in its
entirety, rather than trying to construe each word separately. See,
e.g., Davis v. Michigan Dep’t of Treasury, 489 U.S. 803, 809-10
(1989); United States v. Morton, 467 U.S. 822, 828 (1984). It is
true that one must comprehend the words in a statute in order to
comprehend the statute, just as one must comprehend the letters in
a word in order to comprehend the word. But it is equally true
that one cannot understand a statute merely by understanding the
words in it.
11
agency’s expertise. Apparently for this reason, DEA neither
invokes Chevron v. NRDC, 467 U.S. 837, 843-45 (1984), nor
asks us to give any special deference to the Deputy Adminis-
trator’s judgment about the meaning of the provision. See,
e.g., Prill v. NLRB, 755 F.2d 941, 956-57 (D.C. Cir. 1985);
Alarm Indus. Communications Comm. v. FCC, 131 F.3d
1066, 1072 (D.C. Cir. 1997); Transitional Hosps. Corp. v.
Shalala, 222 F.3d 1019, 1028-29 (D.C. Cir. 2000); ITT Indus.,
Inc. v. NLRB, 251 F.3d 995, 1004 (D.C. Cir. 2001); Arizona v.
Thompson, 281 F.3d 248, 254 (D.C. Cir. 2002).
As one of his reasons for thinking the statute clear, the
Deputy Administrator cited ‘‘the legislative history of the
Chemical Diversion Control Act of 1993, Public Law 103-200,
§ 9, 107 Stat. 2333 (1993),’’ and stated that this legislation
was meant ‘‘to close the ‘loophole’ for those who divert
ephedrine drug products.’’ 67 Fed. Reg. at 77,806. Congress
enacted § 971(c)(1) in 1988, but the House Report the Deputy
Administrator cited came out five years later, in 1993. In all
cases, ‘‘the views of a subsequent Congress form a hazardous
basis for inferring the intent of an earlier one,’’ United States
v. Price, 361 U.S. 304, 313 (1960), and have ‘‘very little, if any,
significance.’’ Rainwater v. United States, 356 U.S. 590, 593
(1958). In this case, the ‘‘basis’’ is ‘‘hazardous’’ indeed.2 The
2 The concurring opinion, like the Deputy Administrator, relies
heavily on this legislation and its history, treating it as ‘‘significant’’
because it altered the definition in § 802(39) of ‘‘regulated transac-
tions.’’ Concurring op. at 7 & 10. But the 1993 amendments did
not amend the language at issue here. How the 1993 amendments
‘‘changed the reach’’ of § 971(1)(c), as the concurrence supposes (at
12 n.6), thus remains a mystery. Section 971(c)(1) did not give
DEA authority to suspend ‘‘regulated transactions.’’ The authority
Congress conferred in 1988 was and is limited to suspending
importations or exportations of listed chemicals. Such importations
and exportations are a subset of ‘‘regulated transactions’’ as
§ 802(39)(A) defines the term. To say that other regulated transac-
tions are included in § 971(c)(1) is simply to restate the question in
the case.
As to the 1996 legislation, which the concurrence also invokes, it
too did not alter § 971(c)(1) and neither the DEA Deputy Adminis-
12
‘‘loophole’’ mentioned in the House Report did not deal with
the importation of listed chemicals; it dealt instead with
domestic reporting and record keeping relating to finished
products. The Report explained the purpose of the legisla-
tion: ‘‘to provide authority to [DEA] to require that manufac-
turers of ephedrine products sold over-the-counter maintain
transaction records.’’ H.R. REP. NO. 103-379, pt. 1, at 5 (1993).
If this later statute and its history had any bearing on the
meaning of § 971(c)(1), it would tend to support PDK, not
DEA. The Chemical Diversion Control Act of 1993 drew a
distinction between, on the one hand, the finished product
and, on the other hand, the listed chemical. Thus, § 814(a)
provides that DEA may remove a‘‘drug or a group of drugs’’
containing ‘‘a listed chemical’’ from the exemption for report-
ing. 21 U.S.C. § 814(a). And § 814(e), which specifically
relates to ephedrine, gave DEA authority to reinstate the
exemption if it found that ‘‘the drug product’’ was ‘‘manufac-
tured and distributed in a manner that prevents diversion.’’
Id. § 814(e). One might say, therefore, that in the view of a
later Congress it is PDK’s ‘‘drug’’ or ‘‘drug product,’’ not the
‘‘listed chemical’’ mentioned in § 971(c)(1), that is being di-
verted. The same may be said of § 802(39)(A)(iv)(I)(aa), on
which the Deputy Administrator also relied. 67 Fed. Reg. at
77,806. This provision also resulted from the 1993 legislation
and it too speaks in terms of ‘‘the drug’’ containing ephedrine
rather than, as in § 971(c)(1), simply ‘‘a listed chemical’’ or
‘‘the chemical.’’
Current DEA regulations are to the same effect. The
regulations, in defining a ‘‘regulated transaction,’’ distinguish
between a ‘‘drug contain[ing] ephedrine’’ and ‘‘a listed chemi-
cal.’’ 21 C.F.R. § 1300.02(b)(28)(i)(D)(1). ‘‘The term combi-
nation ephedrine product means a drug product containing
ephedrineTTTT’’ 21 C.F.R. § 1300.02(b)(32). And when re-
ferring to the type of diversion the Deputy Administrator had
in mind in this case, the regulations speak not of the diversion
of the listed chemical, but of the diversion of ‘‘the drug or
trator, in his reasons for interpreting § 971(c)(1) to cover shipments
of bulk ephedrine, nor the government in its brief, relied on it.
13
group of drugs TTT to obtain the listed chemical for use in the
illicit production of a controlled substance,’’ 21 C.F.R.
§ 1300.02(b)(28)(i)(D)(1)(ii). The 1993 amendment uses the
identical language. 21 U.S.C. § 802(39)(A)(iv)(I)(bb).
The Deputy Administrator also thought that § 971(c)(1)’s
meaning was plain in light of the decision of the Ninth Circuit
in United States v. Daas, 198 F.3d 1167, 1175 (1999), which he
described as holding that the ‘‘plain meaning’’ of ‘‘listed
chemical’’ encompasses ephedrine contained in finished prod-
ucts. 67 Fed. Reg. at 77,806. Daas was a criminal case.
The defendant sold decongestants containing ephedrine to
convenience stores knowing the drugs would be used to
manufacture methamphetamine. The court sustained his
conviction for violating what is now 21 U.S.C. § 841(c)(2).
Section 841(c)(2) states that anyone who ‘‘possesses or distrib-
utes a listed chemical knowing, or having reasonable cause to
believe, that the listed chemical will be used to manufacture a
controlled substance’’ is guilty of an offense. In an analysis
the Deputy Administrator adopted, 67 Fed. Reg. at 77,806,
the court held that because ephedrine did not change its
chemical composition when mixed with other ingredients to
form decongestants, it was plain that the defendant was
distributing ‘‘a listed chemical’’ when he sold decongestants to
retail stores. 198 F.3d at 1174-75.
There is logic in the Ninth Circuit’s reasoning, and in the
Deputy Administrator’s reliance on the decision. When Con-
gress uses the same word in different parts of a statute, it
usually means the same thing. See Sullivan v. Stroop, 496
U.S. 478, 484 (1990); Energy Research Found. v. Defense
Nuclear Safety Bd., 917 F.2d 581, 583 (D.C. Cir. 1990). But
statutory interpretation is not just about logic. See Henry J.
Friendly, Mr. Justice Frankfurter and the Reading of Stat-
utes, in BENCHMARKS 213 (1967). The words of the statute
should be read in context, the statute’s place in ‘‘the overall
statutory scheme’’ should be considered, and the problem
Congress sought to solve should be taken into account.
Davis v. Michigan Dep’t of Treasury, 489 U.S. 803, 809
(1989). As to the last, we know that when § 971(c)(1) was
enacted in 1988, the problem Congress addressed – at least
14
with respect to ephedrine – was not the misuse of finished
products at the retail level. (Section 841(d)(2), the statute at
issue in Daas, was also part of the 1988 amendments.) The
problem instead was, as the Deputy Administrator stated in
his opinion here, the diversion of imported bulk ephedrine to
illegal uses. 67 Fed. Reg. at 77,807. It was only years later,
after amendments to provisions other than § 971(c)(1), that
the use of ephedrine-containing pills to make methamphet-
amine became widespread. This is at least some indication
that Congress, in § 971(c)(1), did ‘‘not directly address[ ] the
precise question at issue’’ in this case. Chevron, 467 U.S. at
843.
In saying this we recognize that the ‘‘fact that Congress
may not have foreseen all of the consequences of a statutory
enactment is not a sufficient reason for refusing to give effect
to its plain meaning.’’ Union Bank v. Wolas, 502 U.S. 151,
158 (1991). But we do not agree that the language of
§ 971(c)(1) plainly covers the diversion of finished products,
or drug products. That a statute is susceptible of one
construction does not render its meaning plain if it is also
susceptible of another, plausible construction, as we believe
this statute is. Section 971(c)(1) deals with importation (and
exportation) of listed chemicals. It does not regulate what a
drug manufacturer does with the chemical after receiving it;
other sections of the Act control that subject. When
§ 971(c)(1) states that DEA may stop the importation if ‘‘the
chemical may be diverted to the clandestine manufacture of a
controlled substance,’’ one might ask: ‘‘Diverted from what?’’
In context, a reading as plausible as the Deputy Administra-
tor’s is that Congress meant only to cover diversions during
importation. On this view, § 971(c)(1) would authorize sus-
pension orders only if the imported chemical might not reach
its intended destination – the legitimate, domestic manufac-
turer.3
3 The concurring opinion states that § 971(c)(1) ‘‘contains no
words of limitation.’’ Concurring op. at 3, 8. That of course
assumes the issue. If ‘‘the chemical may be diverted’’ means only
diversion of ephedrine away from the manufacturer during importa-
15
One other consideration deserves mention. The evidence
in this case showed that all ephedrine-containing pills, no
matter who manufactures them, may be used to make meth-
amphetamine, and that every company producing drugs con-
taining List I chemicals has had its products diverted from
the legitimate treatment of illnesses to illegal uses. It follows
that under the Deputy Administrator’s reading of § 971(c)(1),
DEA would have blanket authority to prevent the importation
of ephedrine to any domestic manufacturer. Indications are
that PDK could obtain bulk ephedrine only from overseas
suppliers. Yet no one doubts that Congress did not intend to
ban, or to give DEA the authority to ban, all sales of
ephedrine-containing drugs in retail stores. DEA itself has
acknowledged ‘‘Congress’ intent that public access to the
[ephedrine-containing] products at the retail level be protect-
edTTTT’’ 62 Fed. Reg. 52,253, 52,254 (DEA Oct. 7, 1997).
The Deputy Administrator attempted to avoid this problem
by relying on Mediplas Innovations, 67 Fed. Reg. 41,256
(DEA June 17, 2002), and its ‘‘totality of circumstances’’
analysis to define ‘‘may be diverted.’’ 67 Fed. Reg. at 77,807.
This kitchen-sink approach allows ‘‘consideration of the wid-
est possible range of relevant evidence,’’ without quantifying
the relative weight to be given to any particular consider-
ation. Mediplas Innovations, 67 Fed. Reg. at 41,261. DEA
may thus consider the quantity of a manufacturer’s drugs
identified in DEA warning letters without determining wheth-
er competing manufacturers, whose importations were not
suspended, had a comparable percentage of their products
diverted. DEA may also take into account the extent to
which the manufacturer has complied with DEA regulations
requiring timely filing of certain forms, id. at 41,262, its
efforts to cooperate with DEA, id. at 41,264, and other
tion, the statute does indeed contain words of limitation. The
dictionary definition of ‘‘divert’’ cited in the concurrence lends
further support to the plausibility of this interpretation. Concur-
ring op. at 4. We do not say that this is the only possible
interpretation of § 971(c)(1). Our point instead is that the statute’s
meaning is not as clear as the DEA Deputy Administrator made it
out to be.
16
matters. The wide range of factors DEA used in Mediplas,
and in this case, to give meaning to ‘‘the chemical may be
diverted’’ language of § 971(c)(1) seems hardly the stuff of
plain meaning.
In short, we do not agree that the meaning of § 971(c)(1) is
as plain as DEA says it is. It may be that here, as in other
cases, the strict dichotomy between clarity and ambiguity is
artificial, that what we have is a continuum, a probability of
meaning. In precisely those kinds of cases, it is incumbent
upon the agency not to rest simply on its parsing of the
statutory language.4 It must bring its experience and exper-
tise to bear in light of competing interests at stake. See
Chevron v. NRDC, 467 U.S. at 865-66. When it does so it is
entitled to deference, so long as its reading of the statute is
reasonable. But it has not done so here and at this stage it is
not for the court ‘‘to choose between competing meanings.’’
Alarm Indus. Communications Comm. v. FCC, 131 F.3d at
1072; see, e.g., Prill v. NLRB, 755 F.2d at 956-57; Transi-
tional Hosps. Corp. v. Shalala, 222 F.3d at 1028-29; ITT
Indus., Inc. v. NLRB, 251 F.3d at 1004; Arizona v. Thomp-
son, 281 F.3d at 254.
In trying to distinguish the Prill line of decisions, the
concurring opinion states that unlike those cases, here ‘‘[w]e
know how the agency would choose to interpret the statute’’
on remand. Concurring op. at 16. We know no such thing.
Yes, DEA did exercise discretion when it issued the order
here, but before doing so it necessarily had to decide what
§ 971(c)(1) meant. That is the issue the agency must recon-
sider on remand. In addition, it is important to remember
4 The concurring opinion assumes that the so-called Chevron
‘‘step 1’’ is limited to determining whether the statute has a plain
meaning. Concurring op. at 13. But in deciding whether Congress
directly addressed a particular issue (step 1), one may use ‘‘the
traditional tools of statutory construction.’’ 467 U.S. at 843 n.9;
see, e.g., Am. Bankers Ass’n v. Nat’l Credit Union, 271 F.3d 262,
271 (D.C. Cir. 2001). This is all the DEA Deputy Administrator
did, and it is all that we have done in examining the language and
context of § 971(c)(1).
17
that if we find that an agency’s stated rationale for its
decision is erroneous, we cannot sustain its action on some
other basis the agency did not mention. See SEC v. Chenery
Corp., 332 U.S. 194, 200 (1947). The law of this circuit
requires in those circumstances that we withhold Chevron
deference and remand to the agency so that it can fill in the
gap. As we held in Arizona v. Thompson, 281 F.3d at 254,
deference to an agency’s interpretation of a statute is not
appropriate when the agency wrongly ‘‘believes that interpre-
tation is compelled by Congress.’’ See, e.g., ITT Indus., Inc.
v. NLRB, 251 F.3d at 1004; Transitional Hosps. Corp. v.
Shalala, 222 F.3d at 1028-29; Alarm Indus. Communications
Comm. v. FCC, 131 F.3d at 1072.
Even if § 971(c)(1) plainly meant what DEA thought, we
would still have to vacate the Deputy Administrator’s decision
and remand the case.5 In applying his ‘‘totality of circum-
stances’’ approach to determining whether the listed chemical
may be diverted, the Deputy Administrator ruled that PDK
had violated an export notification regulation when it made
four deliveries of tablets containing ephedrine between 1994
and 1995 to Sun Labs of Canada in New York. 67 Fed. Reg.
at 77,807-08. The Deputy Administrator did not explain how
alleged export violations were relevant to determining wheth-
er PDK’s finished products might be used in methamphet-
amine laboratories. In any event, the Deputy Administrator
failed to distinguish, indeed did not mention, Alfred Khalily,
Inc., 64 Fed. Reg. 31,289 (DEA June 10, 1999), which held
that a company selling List I chemicals to a foreign buyer but
delivering the chemicals to the buyer in the United States
5 We do not understand the complaint in the concurring opinion
that we should have disposed of this case solely on this basis,
without saying anything about the Deputy Administrator’s interpre-
tation of § 971(c)(1). Giving several, separate reasons for reversing
and remanding is a time-honored, prudent mode of appellate juris-
prudence, see, e.g., Erie R.R. v. Tompkins, 304 U.S. 64, 72-73, 77-79
(1938); Kleppe v. Sierra Club, 427 U.S. 390, 403-06 (1976). So here.
DEA should have our opinion on the statutory construction issue so
that it may deal with that issue now, rather than later if PDK seeks
judicial review of DEA’s decision on remand.
18
‘‘was not responsible for filing any export documentation.’’
Id. at 31,293 n.2. Khalily could not have escaped the Deputy
Administrator’s attention; the ALJ had cited it in her opin-
ion. An agency may of course alter its positions over time,
but the ‘‘agency acts arbitrarily when it departs from its
precedent without giving any good reason.’’ Northern Cali-
fornia Power Agency v. FERC, 37 F.3d 1517, 1522 (D.C. Cir.
1994). DEA recognizes as much and confesses that the
Deputy Administrator erred in failing to reconcile his ruling
with Khalily. But, DEA continues, this is of no moment
because the result of the agency proceedings would not have
changed.
In administrative law, as in federal civil and criminal litiga-
tion, there is a harmless error rule: § 706 of the Administra-
tive Procedure Act, 5 U.S.C. § 706, instructs reviewing courts
to take ‘‘due account TTT of the rule of prejudicial error.’’ If
the agency’s mistake did not affect the outcome, if it did not
prejudice the petitioner, it would be senseless to vacate and
remand for reconsideration. But in this case we cannot say
that the Deputy Administrator’s error was of that sort. It is
entirely possible that, on remand, he will decide to adhere to
Khalily, in which event PDK will be exonerated from any
export violations. The Deputy Administrator stated that it
was ‘‘the totality of circumstances’’ that led him to sustain the
suspension orders, and four of the ‘‘circumstances’’ promi-
nently mentioned were PDK’s export violations. 67 Fed.
Reg. at 77,807. What weight he gave to those circumstances
(or any others) is impossible to discern. The decision uphold-
ing the suspension orders must therefore be set aside and the
case remanded.
So ordered.
1
ROBERTS, Circuit Judge, concurring in part and concurring
in the judgment:
I agree with the majority that PDK has standing to seek
review of DEA’s suspension order, and that the order must
be vacated because it relies, in significant part, upon a
conclusion that PDK violated certain export notification regu-
lations — a conclusion that contradicted relevant agency
precedent without explanation. This much is not terribly
controversial; DEA conceded its error and all but conceded
that this court should remand the decision on that basis. See
DEA Br. 59 (‘‘we acknowledge that, in such circumstances,
the ordinary practice would be a remand to the agency’’).
This is a sufficient ground for deciding this case, and the
cardinal principle of judicial restraint — if it is not necessary
to decide more, it is necessary not to decide more — counsels
us to go no further.
My brethren, however, are not content with this narrow
and effectively conceded basis for disposition, and instead
adopt an alternative ground of far broader significance, one
that precipitates disagreement among us but at the end of the
day leads to the same result — vacatur and remand to the
agency. I cannot go along for that gratuitous ride.
* * *
The majority’s alternative basis for remand sidesteps the
familiar Chevron analysis, see Chevron U.S.A. Inc. v. Natural
Resources Defense Council, 467 U.S. 837, 843–45 (1984),
substituting in its stead an argument in three parts: (1) the
Deputy Administrator thought the plain meaning of Section
971 gave him discretion to suspend importation in this case,
(2) Section 971 has no plain meaning but is in fact susceptible
of different interpretations on the question presented, and (3)
the case must therefore be sent back so that the Deputy
Administrator can decide which construction he thinks is
right (as opposed to compelled) and explain why.
This reasoning fails at each step, and each defect is fatal to
the majority’s analysis. First, Section 971(c)(1) is not ambig-
uous, and the Deputy Administrator’s interpretation in this
case is entirely consistent with the clearly expressed intent of
2
Congress. Second, the Deputy Administrator’s decision can-
not fairly be read as reflecting the view that he felt compelled
to read the statute as he did, as opposed to simply adopting
the construction that seemed most reasonable to him, and
explaining his reasons for that. Finally, even if Section 971
were ambiguous, and even if the Deputy Administrator erro-
neously rested his decision only on a plain reading of the
statute, a remand still would not be necessary. We know how
the agency would construe the statute, because its interpreta-
tion in this case was reached in the course of a purely
discretionary act. If the agency did not want to block this
importation, nothing in Section 971(c) required it to do so.
This is hardly a case — like those cited by the majority — in
which the agency felt it was forced to take the action it did,
based on an erroneous reading of the law.
1. I would uphold the agency’s interpretation of Section
971 under step one of Chevron. Congress has ‘‘directly
addressed the precise question at issue,’’ and the Deputy
Administrator’s position is entirely consistent with the ‘‘unam-
biguously expressed intent of Congress’’ on this subject.
Chevron, 467 U.S. at 843.
‘‘We turn first, as we must, to the language of the statute,
the most important manifestation of Congressional intent.’’
Public Citizen, Inc. v. U.S. Dep’t of Health & Human Servs.,
332 F.3d 654, 662 (D.C. Cir. 2003) (quotation omitted). The
language in question: ‘‘The Attorney General may order the
suspension of any importation or exportation of a listed
chemical TTT on the ground that the chemical may be diverted
to the clandestine manufacture of a controlled substance.’’ 21
U.S.C. § 971(c)(1). Ephedrine is a ‘‘listed chemical’’ under
the statute. See 21 U.S.C. § 802(34)(C); id. § 951(b) (apply-
ing definitions from Section 802 to Controlled Substances
Import and Export Act, 21 U.S.C. §§ 951–971). Thus, under
Section 971(c)(1), the Attorney General may order the sus-
pension of any importation of ephedrine on the ground that
the ephedrine, if imported, may be diverted to the clandestine
manufacture of a controlled substance. See 21 C.F.R.
§ 1313.41 (providing that DEA may suspend a shipment of a
3
listed chemical ‘‘based on evidence’’ that the chemical may be
diverted).
The statute contains no words of limitation. Any probabili-
ty of diversion of any amount of ephedrine is a sufficient
statutory basis for the invocation of the Attorney General’s
authority. This is, to be sure, an expansive delegation of
power. When faced with similarly broad grants of authority
to the Executive, we have noted that ‘‘the Supreme Court has
consistently instructed that statutes written in broad, sweep-
ing language should be given broad, sweeping application.’’
Consumer Elecs. Ass’n v. FCC, 347 F.3d 291, 298 (D.C. Cir.
2003). So here.
a. ‘‘Listed chemical.’’ The majority primarily takes issue
with the Deputy Administrator’s conclusion that the term
‘‘listed chemical’’ can include PDK’s over-the-counter drug
products containing ephedrine. See Maj. Op. at 10–14; 67
Fed. Reg. at 77,806. The majority explains that a drug
containing a listed chemical is not the same as a listed
chemical, and that the statute recognizes this distinction.
Fair enough. What the majority fails to acknowledge, howev-
er, is that it is not PDK’s ‘‘MaxBrand Mini Two–Way Action’’
product (obviously itself not a ‘‘listed chemical,’’ but a ‘‘chemi-
cal mixture,’’ see 21 U.S.C. § 802(40)) that is regularly divert-
ed to the manufacture of methamphetamine, but rather the 25
mg of ephedrine that each Mini Two–Way Action pill con-
tains.
Once it receives its bulk ephedrine, PDK combines the
ephedrine with the decongestant guaifenesin and binders to
form its Mini Two–Way Action pills. See PDK Br. 4.
Throughout this process, the chemical composition of the
ephedrine is unaltered. Illicit methamphetamine manufactur-
ers then purchase or steal Mini Two–Way Action, and break
the finished product back down into its component parts,
yielding exactly the same pure ephedrine that was imported
by PDK. See ALJ Op. ¶¶ 90–91. It is that imported ephed-
rine that is ‘‘diverted’’ — i.e., turned away from its intended
destination or use, see infra at 4–5 — to the manufacture of
methamphetamine. In this manner, it is the listed chemical
itself — ephedrine — that is diverted to methamphetamine
4
manufacturing. At the time of its ‘‘diversion,’’ the ephedrine
extracted from PDK Mini Two–Way Action is just as much a
listed chemical as when it was transported across the high
seas in bulk form. Thus, at least insofar as a listed chemical
is readily extractable from its finished drug product, the text
of Section 971(c) treats transactions (including a ‘‘diversion’’)
in that drug as transactions in the listed chemical it contains.
This interpretation comports with common sense. If a
methamphetamine manufacturer steals, for the purpose of
making methamphetamine, a bottle containing pure ephed-
rine, or pure ephedrine dissolved in water, or a bottle contain-
ing 50 ephedrine pills and 50 guaifenesin pills, we would not
hear an argument that he did not divert a listed chemical
because he also diverted a bottle, some water, or some
guaifenesin. The presence of packaging materials or other
extraneous items does not vitiate the existence of the listed
chemical. Here, a bottle of PDK Mini Two–Way Action
contains pills each consisting of 25 mg of ephedrine and 200
mg of guaifenesin and binders. For purposes of Section
971(c), the decongestant and the binders are extraneous
materials, no more relevant to the analysis than the bottles
and boxes in which the pills are packaged.
b. ‘‘May be diverted.’’ The majority also finds ambiguity
in the term ‘‘may be diverted.’’ I do not.
Although PDK did not object here or below to DEA’s
construction of the term ‘‘diverted,’’ the majority suggests
that, given the focus of Section 971 on imports and exports,
the term may only cover hijackings during the import or
export. See Maj. Op. at 14. Such a crabbed construction is
untenable. First, it conflicts with the plain meaning and
common usage of the verb. The Oxford English Dictionary
defines ‘‘divert’’ to mean ‘‘[t]o turn aside (a thing, as a stream,
etc.) from its (proper) direction or course; TTT to turn from
one destination or object to another.’’ IV OXFORD ENGLISH
DICTIONARY 888 (2d ed. 1989); see also BLACK’S LAW DICTIONARY
491 (7th ed. 1999) (defining ‘‘diversion’’ as ‘‘[a] deviation or
alteration from the natural course of things’’). That the term
5
is broad does not make it ambiguous. See Diamond v.
Chakrabarty, 447 U.S. 303, 315 (1980) (‘‘Broad general lan-
guage is not necessarily ambiguous when congressional objec-
tives require broad terms.’’). The majority asks ‘‘[d]iverted
from what?,’’ Maj. Op. at 14, but Congress did not choose to
limit the statute along any such lines.1
Moreover, the word ‘‘diversion’’ appears throughout both
the statute that initially enacted Section 971, the Chemical
Diversion and Trafficking Act of 1988 (CDTA), Pub. L. No.
100–690, §§ 6051 et seq., 102 Stat. 4181, 4312, and the statute
that expanded the CDTA’s reach to cover many finished drug
products containing ephedrine, the Domestic Chemical Diver-
sion Control Act of 1993 (DCDCA), Pub. L. No. 103–200, 107
Stat. 2333. There is, of course, a strong presumption that
‘‘identical words used in different parts of the same act are
intended to have the same meaning.’’ Sullivan v. Stroop, 496
U.S. 478, 484 (1990) (quotation omitted), and in no section of
either the CDTA or the DCDCA is the term ‘‘diversion’’ used
in the limited sense the majority speculates it might have
been used in Section 971.2
The majority also contends that the ‘‘totality of the circum-
stances’’ standard applied by DEA in explaining its decision
to suspend importation in this case, see 67 Fed. Reg. at
77,807; In re Mediplas Innovations, 67 Fed. Reg. 41,256,
1 The majority asserts that ‘‘[i]f ‘the chemical may be diverted’
means only diversion of ephedrine away from the manufacturer
during importation, the statute does indeed contain words of limita-
tion.’’ Maj. Op. at 14–15 n.3 (emphasis in original). No. The
majority can choose to read the words ‘‘away from the manufactur-
er during importation’’ into the statute, but it cannot claim that the
statute contains those words of limitation.
2 The majority says I err by considering ‘‘listed chemical’’ apart
from ‘‘may be diverted.’’ See Maj. Op. at 10 n.1. I took my cue, of
course, from Congress, which treated ‘‘listed chemical’’ as a sepa-
rately defined term in the statute. See 21 U.S.C. § 802(33)–(35).
And I do not see any significant difference between asking whether
a ‘‘listed chemical’’ ‘‘may be diverted’’ and whether a ‘‘listed chemi-
cal may be diverted.’’
6
41,262 (2002), ‘‘seems hardly the stuff of plain meaning.’’
Maj. Op. at 16. Noting that all ephedrine-containing drugs
are diverted to some extent, the majority complains that
DEA’s ‘‘kitchen-sink approach’’ could potentially permit DEA
to ban ephedrine-containing drugs altogether. Id. at 15–16.
This criticism confuses the grant of discretion with review for
abuse. There is nothing unusual about a statute granting an
agency broad discretion — plainly or otherwise — and the
agency developing standards that govern the exercise of that
discretion on a case-by-case basis, through adjudication rath-
er than rulemaking. See, e.g., INS v. Aguirre–Aguirre, 526
U.S. 415, 429 (1999); Chippewa & Flambeau Improvement
Co. v. FERC, 325 F.3d 353, 359 (D.C. Cir. 2003). Over time,
that will result in an effective and salutary narrowing of the
discretion enjoyed by the agency. See HENRY J. FRIENDLY,
More Definite Standards of Administrative Action: The
Need, in BENCHMARKS 86, 97 (1967) (‘‘[W]here the initial
standard is thus general, it is imperative that steps be taken
over the years to define and clarify it — to canalize the broad
stream into a number of narrower ones.’’). That process
hardly belies the original broad grant of discretion.
c. Legislative history. Although we have been instructed
not to ‘‘resort to legislative history to cloud a statutory text
that is clear,’’ Ratzlaf v. United States, 510 U.S. 135, 147–48
(1994); accord Air Transport Ass’n of Canada v. FAA, 323
F.3d 1093, 1096 (D.C. Cir. 2003) (‘‘ordinarily, we do not read
legislative history to create otherwise non-existent ambigui-
ties’’), the majority relies upon legislative history to such an
extent that a response seems in order. The majority’s main
point is that Congress was not concerned about diversion of
finished ephedrine-containing products in 1988, when Section
971 was enacted. See Maj. Op. at 11–12. Even if true, the
Supreme Court has held often enough that ‘‘the fact that a
statute can be applied in situations not expressly anticipated
by Congress does not demonstrate ambiguity. It demon-
strates breadth.’’ PGA Tour, Inc. v. Martin, 532 U.S. 661,
689 (2001) (internal quotation marks and citation omitted);
accord Consumer Elecs. Ass’n, 347 F.3d at 298.
7
Moreover, as the Deputy Administrator recognized — and
as will be demonstrated below — the history that is signifi-
cant is the history of the DCDCA and its sibling Comprehen-
sive Methamphetamine Control Act of 1996 (CMCA), Pub. L.
No. 104–237, 110 Stat. 3099, for those are the statutes that
broadened the ambit of the regulation of listed chemicals —
including under Section 971 — to cover drugs containing
ephedrine. As noted by the Deputy Administrator, that
legislative history clearly demonstrates that Congress was
very much concerned about the diversion of finished drug
products containing ephedrine. See H.R. REP. NO. 103–379, at
6 (1993) (‘‘This provision removes the exemption TTT for
drugs containing ephedrine TTT because these products are
being diverted in significant quantities for the illicit manufac-
ture of methamphetamine’’).
The majority also complains that the ‘‘loophole’’ cited by
the Deputy Administrator in his decision bears no relation-
ship to Section 971, because it dealt only with ‘‘reporting and
record keeping relating to finished products.’’ Maj. Op. at 12.
The majority is half right; the ‘‘loophole’’ in question did
concern reporting and record keeping requirements. Of
course, Section 971 is, first and foremost, a reporting require-
ment, and it is primarily the reporting that alerts the Attor-
ney General to an importation that might be suspended. See
21 U.S.C. § 971(a). More importantly, the Deputy Adminis-
trator cited two references in the committee report in discuss-
ing the ‘‘loophole,’’ see 67 Fed. Reg. at 77,806, and the
second — the one ignored by the majority — offered a more
detailed description of the problem in question. The second
reference was to the DEA Acting Administrator’s explanation
that ‘‘the so-called ‘legal drug exemption’ which currently
exempts drug products approved for marketing under the
Food, Drug and Cosmetic Act from the regulatory provisions
of our chemical control law’’ had become a ‘‘loophole,’’ ‘‘ex-
ploited by clandestine laboratory operators.’’ H.R. REP. NO.
103–379, at 8. It is that loophole that the DCDCA and
CMCA revoked for drugs containing ephedrine, see 21 U.S.C.
§ 802(39)(A)(iv)(I)(aa), but which the majority’s proffered
reading would restore for purposes of Section 971.
8
* * *
For all these reasons I would uphold the agency’s interpre-
tation of Section 971 under step one of Chevron. The broad
language unambiguously confers discretion to suspend the
importation at issue because the ephedrine in PDK’s products
may be diverted to methamphetamine production, and noth-
ing in the legislative history remotely suggests — let alone
compels — a narrower reading.
2. The majority, however, concludes that the statute is
ambiguous. But my colleagues refuse to proceed — as we
ordinarily would in such circumstances — to Chevron’s sec-
ond step, and ask whether the agency’s interpretation ‘‘is
based on a permissible construction of the statute.’’ Chevron,
467 U.S. at 843.3 Rather, they contend that a remand is
3 Not to chase down every rabbit spooked by the majority’s
alternative holding, but the fact that DEA did not, as the majority
notes, request ‘‘any special deference to the Deputy Administrator’s
judgment about the meaning of the provision,’’ Maj. Op. at 11,
would seem to be without consequence. DEA is clearly entitled to
Chevron deference — it has been delegated the authority both to
issue legislative rules and to engage in binding adjudications under
the statute, either of which triggers the applicability of Chevron.
See Thomas W. Merrill & Kristin E. Hickman, Chevron’s Domain,
89 GEO. L. J. 833, 900–01 (2001). We have never held that an
agency must mouth magic words before we will apply the deference
required by a congressional delegation of authority to the agency.
See Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 99 (1991)
(‘‘When an issue or claim is properly before the court, the court is
not limited to the particular legal theories advanced by the parties,
but rather retains the independent power to identify and apply the
proper construction of governing law.’’); ISI Int’l, Inc. v. Borden
Ladner Gervais LLP, 256 F.3d 548, 551 (7th Cir. 2001) (Easter-
brook, J.) (‘‘Federal courts are entitled to apply the right body of
law, whether the parties name it or not.’’). Moreover, DEA’s
reticence on this score is understandable. The terms at issue here
are more typically implicated in criminal prosecutions to which
Chevron does not apply. It is not difficult to see why DEA would
prefer not to invite a holding from this court that is predicated on a
conclusion that those terms are ambiguous.
9
required, citing Prill v. NLRB, 755 F.2d 941 (D.C. Cir. 1985),
and its progeny.
The Prill line of cases stands for the proposition that when
an agency reads a statute in a particular way based on the
erroneous belief that the reading was mandated by the stat-
ute (and thus the agency had no latitude to adopt a different
interpretation), the case will be remanded so that the agen-
cy — now freed from its confined view of its own discre-
tion — can reconsider its interpretation of the statute. See
Prill, 755 F.2d at 947–48, 950–53. Here, the majority claims
that ‘‘[t]he Deputy Administrator . . . thought that
§ 971(c)(1)’s meaning was plain,’’ Maj. Op. at 13; see also id.
at 10 (‘‘The Deputy Administrator concluded that the statute
plainly meant what the suspension orders assumed.’’); id. at
16 (‘‘we do not agree that the meaning of § 971(c)(1) is as
plain as DEA says it is’’); and that ‘‘[h]e reached this
conclusion without mentioning any policy considerations or
other matters within the agency’s expertise,’’ id. at 10–11; see
also id. at 16 (‘‘[I]t is incumbent upon the agency not to rest
simply on its parsing of the statutory language. It must
bring its experience and expertise to bear in light of compet-
ing interests at stake. TTT [I]t has not done so here.’’).
That is not how I read the Deputy Administrator’s decision.
There is nothing here to suggest that the Deputy Administra-
tor thought he was under Chevron step one as opposed to
step two, or that he thought of Chevron at all. Compare, e.g.,
Arizona v. Thompson, 281 F.3d 248, 254 (D.C. Cir. 2002) (‘‘In
Chevron terms, then, the agency has stopped at step one:
HHS believes that the statute clearly bars primary program
allocation, and that it is without discretion to reach another
result.’’). Contrary to the majority’s opinion, the Deputy
Administrator did not state that the meaning of the statute is
‘‘plain.’’ He also never used words like ‘‘unambiguous’’ or
other phrases evocative of Chevron step one, such as ‘‘directly
spoken to the precise question at issue.’’ Instead, he said the
critical language ‘‘must be construed’’ in light of other statu-
tory language he considered relevant, distinguished three
cases relied on by the ALJ, found ‘‘additional support’’ in a
court of appeals case interpreting a related criminal statute,
10
discussed a House Report, and rejected the ALJ’s policy
concern that the government’s view would create ‘‘strict
liability.’’ 67 Fed. Reg. at 77,806–07. Hardly the stuff of a
plain language reading.
The Deputy Administrator’s interpretation of Section 971
rested primarily on the theory that the scope of Section 971
must be understood in light of the term ‘‘regulated transac-
tion,’’ as defined in Section 802(39). See id. at 77,806; see
also 21 U.S.C. § 951(b). This was the lead-off argument he
made in defending his statutory reading.
It is a structural argument that leans heavily on the history
of the listed chemical statutes. The CDTA, of which Section
971 was a part, see CDTA § 6053, 102 Stat. at 4314, generally
widened the reach of the Nation’s drug laws to include
precursor chemicals — i.e., chemicals used to manufacture
controlled substances. In the section immediately following
that which enacted Section 971, the CDTA also amended
Section 802 of the Controlled Substances Act to provide
definitions for the terms ‘‘listed chemical,’’ ‘‘regulated per-
son,’’ and ‘‘regulated transaction.’’ See CDTA § 6054(3), 102
Stat. at 4316 (codified at 21 U.S.C. § 802(34), (38), (39)).
These terms have application not only in Section 971, but
throughout the CDTA and its amendments — that is, in all
the laws concerning the regulation of listed precursor chemi-
cals.
At the time of the enactment of Section 971 in 1988,
‘‘regulated transaction’’ included imports and exports of listed
chemicals — including ephedrine — but exempted ‘‘any trans-
action in a listed chemical that is contained in a drug that
may be marketed or distributed lawfully in the United States
under the Federal Food, Drug, and Cosmetic Act.’’ 21 U.S.C.
§ 802(39)(A)(iv) (1989). Similarly, Section 802(39)(A)(v) ex-
empted transactions ‘‘in a chemical mixture,’’ defined as ‘‘a
combination of two or more chemical substances, at least one
of which is not a [listed chemical].’’ Id. § 802(39)(A)(v), (40).
Thus, Section 802 specifically excluded all FDA-approved
drug products and all chemical mixtures from the definition of
‘‘regulated transaction,’’ and, concomitantly, from coverage
under the CDTA, including Section 971.
11
Illegal methamphetamine manufacturers soon exploited
this loophole. In 1993 and 1996, Congress responded by
adding exceptions to its exception for FDA-approved drugs,
effectively eliminating the exception for transactions in any
‘‘drug [that] contains ephedrine.’’ See DCDCA § 2(a)(6)(C),
107 Stat. at 2333–34 (removing exception for a drug contain-
ing ephedrine and ‘‘therapeutically insignificant quantities of
another active medicinal ingredient’’); CMCA § 401(a)(1), 110
Stat. at 3106–07 (codified as amended at 21 U.S.C.
§ 802(39)(A)(iv)(I)(aa)) (removing exception for any drug con-
taining ephedrine, regardless of whether it contained other
therapeutic ingredients).4 The DCDCA and the CMCA thus
eliminated any exception for ephedrine-containing drugs from
the definition of ‘‘regulated transaction.’’ Because only listed
chemical transactions qualify as ‘‘regulated transactions,’’ see
21 U.S.C. § 802(39)(A), the re-inclusion of transactions in
ephedrine-containing drugs reflects congressional intent that
transactions in those drugs be treated as transactions in
listed chemicals.5 As the Deputy Administrator explained in
expressly adopting the government’s reasoning along these
4The DCDCA also limited the exception for chemical mixtures to
those found by the Attorney General to be ‘‘formulated in such a
way that it cannot be easily used in the illicit production of a
controlled substance and that the listed chemical or chemicals
contained in the mixture cannot be readily recovered.’’ See
DCDCA § 2(a)(6)(D), 107 Stat. at 2334 (codified at 21 U.S.C.
§ 802(39)(A)(v)).
5 This structural argument also answers the majority’s contention
(Maj. Op. at 12) that Section 814(a)’s separate use of the terms
‘‘drug’’ and ‘‘listed chemical’’ demonstrates that drugs cannot be
treated as listed chemicals. Section 814(a) requires the Attorney
General to ‘‘remove from exemption under section 802(39)(A)(iv) TTT
a drug or group of drugs that the Attorney General finds is being
diverted to obtain a listed chemical.’’ 21 U.S.C. § 814(a); see also
id. § 802(39)(A)(iv)(I)(bb). The exemption referenced is the exemp-
tion from ‘‘regulated transaction’’ status for transactions ‘‘in a listed
chemical that is contained in a [FDA-approved] drug.’’ Id.
§ 802(39)(A)(iv). The fact that Congress, in Section 814(a), told the
Attorney General to revoke this exemption in certain circumstances
12
lines, ‘‘[t]hus a ‘regulated transaction’ includes any ephedrine
drug product as a ‘listed chemical.’ ’’ 67 Fed. Reg. at 77,806.6
means that, in the absence of such an exemption, transactions in
FDA-approved drugs containing listed chemicals can be treated as
regulated transactions — that is, transactions in listed chemicals.
See id. § 802(39)(A). The majority’s invocation of Section 814(e),
concerning the road to reinstatement of that exemption for ephed-
rine-containing drugs, only reinforces this point in a particularly
germane way.
6 The majority protests that the DCDCA is irrelevant because it
did not alter the language of Section 971(c)(1). See Maj. Op. at 11–
12 n.2. The language of Section 971(c)(1) was not changed, but the
meaning of that language was. The DCDCA — and the CMCA
after it — broadened the scope of the defined term ‘‘regulated
transaction’’ in Section 802 — a term that appears in the text of
Section 971(c)(1) — to include transactions in drugs containing
ephedrine. Section 971 applies to that class of ‘‘regulated transac-
tions’’ that are imports and exports, i.e., imports and exports of
listed chemicals; by specifying that ‘‘regulated transactions’’ include
transactions in drug products containing ephedrine, the DCDCA
and CMCA changed the reach of Section 971.
In faulting the Deputy Administrator’s reasoning along these
lines, the majority gives insufficient weight to the agency’s views on
how the statutes Congress entrusted to the agency to administer
should be read together. See, e.g., Natural Resources Defense
Council, Inc. v. EPA, 859 F.2d 156, 202 (D.C. Cir. 1988) (‘‘As the
agency charged with interpreting the complicated statutory provi-
sions that comprise the [Clean Water Act], EPA is entitled to
considerable deference in the interpretive process of making the
regulatory machinery work.’’). The majority’s suggested reading
would also lead to the incongruous result that DEA could reach
transactions involving drugs containing ephedrine as ‘‘regulated
transactions’’ under other provisions, but could not address those
same transactions through its Section 971 power, despite the lack of
any evidence that Congress wanted DEA to address such transac-
tions armed with only part of its usual arsenal. More fundamental-
ly, the majority’s objections to the Deputy Administrator’s analysis
sound in Chevron step one, when the whole point is that he was not
13
This is not a ‘‘plain language’’ argument, and the Deputy
Administrator did not say that it was.7 The agency here did
not just parse language; it applied its experience and exper-
tise administering the statutes entrusted to it by Congress to
resolve any question about the scope of Section 971 in light of
the evolving reach of the definitional provisions in Section
802 — which apply throughout the drug control laws —
concluding that this would most faithfully carry out the will of
Congress. See Chevron, 467 U.S. at 844 (deference appropri-
ate ‘‘whenever decision as to the meaning or reach of a
statute has involved reconciling conflicting policies, and a full
understanding of the force of the statutory policy in the given
situation has depended upon more than ordinary knowledge
respecting the matters subjected to agency regulations’’ (quo-
tation omitted)). DEA’s interpretation is a vivid example of
bringing agency ‘‘experience and expertise’’ to bear on statu-
tory construction of the sort that the majority describes as
wholly absent. See Maj. Op. at 10, 16.
The majority relies almost exclusively for its contrary view
on the paragraph in the Deputy Administrator’s ruling dis-
cussing the Ninth Circuit’s decision in United States v. Daas,
198 F.3d 1167, 1175 (1999). The Deputy Administrator began
the paragraph — which appears after his discussion of the
foregoing structural argument — by stating that Daas pro-
vided ‘‘additional support’’ for the government’s position. 67
Fed. Reg. at 77,806. He then noted:
undertaking to show that his reading of the statute was unambigu-
ously compelled. See infra at 13–16.
7 In the Proposed Final Order submitted with its exceptions to
the ALJ decision, the government sought to have the Deputy
Administrator rely on ‘‘[t]he plain language of this statutory provi-
sion’’ and conclude that ‘‘the statute’s plain meaning is clear.’’
Government’s Exceptions to Recommended Rulings, Findings of
Fact, Conclusions of Law, and Decision of the ALJ (Apr. 25, 2002),
App. A, at 5, 6. Although he adopted much of the government’s
Proposed Final Order, the Deputy Administrator did not accept
that language.
14
The Daas court stated: ‘‘The chemical matrix in which
ephedrine and pseudoephedrine are contained is irrele-
vant because they do not disappear, become different
chemicals, or become useless when combined with other
substances to make [finished products]. For the pur-
poses of § 841(d)(2), the other ingredients * * * function
solely as a carrier medium or packaging material facili-
tating the distribution of the listed chemical.’’ The court
concluded that ‘‘the plain meaning of ‘listed chemical’
encompasses the ephedrine and pseudoephedrine con-
tained in [finished products].’’ The Deputy Administra-
tor finds this analysis equally applicable to the instant
case.
Id. (citation omitted and alteration in original).
Two points about this paragraph: First, Daas was a crimi-
nal case; the Ninth Circuit was not there reviewing an
agency’s interpretation of ‘‘listed chemical.’’ Its use of the
phrase ‘‘plain meaning’’ obviously was not shorthand for a
Chevron determination that ‘‘Congress has directly spoken to
the precise question at issue.’’ Chevron, 467 U.S. at 842.
Second, the ‘‘analysis’’ that the Deputy Administrator found
applicable was the discussion of how the listed chemicals do
not change composition when combined with other ingredi-
ents. This is clear from the immediately preceding para-
graph of the Deputy Administrator’s decision, which distin-
guishes three cases relied on by the ALJ because they —
unlike Daas — did not analyze the ‘‘issue of chemical identi-
ty.’’ 67 Fed. Reg. at 77,806. The Ninth Circuit’s ‘‘plain
meaning’’ conclusion was just that — a conclusion, not ‘‘analy-
sis.’’ The Deputy Administrator’s partial reliance on Daas
for part of the interpretive question at issue here thus affords
no justification for the majority’s failure to follow normal
Chevron analysis.
15
In short, I am at a loss to understand how the majority can
fairly describe the Deputy Administrator’s decision as
‘‘rest[ing] simply on [his] parsing of the statutory language.’’
Maj. Op. at 16.8 In discussing his interpretation of the
statute, the Deputy Administrator examined the interplay
between Section 971 and the definition of ‘‘regulated transac-
tion’’ set out in Section 802, and the legislative history of the
statutes that amended that definition to include drugs con-
taining ephedrine. See 67 Fed. Reg. at 77,806. He dis-
cussed, in addition to the Ninth Circuit decision in Daas, four
other DEA decisions concerning suspensions of importations
under Section 971. See id. He considered legislative history
and weighed policy concerns about closing loopholes, on the
one hand, and about imposing ‘‘strict liability,’’ on the other.
See id. In sum, the Deputy Administrator’s decision looks to
be a quite ordinary construction of a statute over which the
agency has been given interpretive authority.
It emphatically is not like Alarm Industry Communica-
tions Committee v. FCC, 131 F.3d 1066 (D.C. Cir. 1997),
where, in interpreting a statutory term, the agency relied
only on Black’s Law Dictionary, and expressly concluded
that ‘‘the statutory language TTT is unambiguous and TTT the
plain meaning of the term requires that an ‘entity’ have an
independent legal existence.’’ 131 F.3d at 1068 (quoting In re
Ameritech, 12 F.C.C.R. 3855, 3859, ¶ 9 (1997)) (internal quota-
tion marks omitted). Nor is this case like Prill, where we
found ‘‘[t]he Board’s opinion clearly reveals that it considered
its adoption of a narrow test for ‘concerted activities’ TTT to
be mandated by the NLRA itself’’ and that the agency was
otherwise ‘‘without discretion to construe ‘concerted activi-
ties.’ ’’ 755 F.2d at 948. Transitional Hospitals Corpo-
8 In a footnote to the just-quoted passage, the majority states
that the Deputy Administrator ‘‘use[d] ‘the traditional tools of
statutory construction.’ ’’ Id. at 16 n.4 (quoting Chevron, 467 U.S.
at 843 n.9).
16
ration v. Shalala, 222 F.3d 1019 (D.C. Cir. 2000), and Arizona
v. Thompson are similarly inapposite. See Transitional
Hosps., 222 F.3d at 1029 (‘‘the notice TTT makes it quite clear
the Secretary did not believe she had the discretion to do
what the plaintiffs request’’); id. (‘‘ ‘We do not believe that the
statute permits us to extendTTTT’ ’’ (quoting Final Rule, 57
Fed. Reg. 39,800–01)); Arizona, 281 F.3d at 253 (‘‘[T]he
Action Transmittal declares that ‘the TANF legislation TTT
does not permit it being designated as the primary TTT
program.’ ’’ (quoting HHS Action Transmittal 98–2)). There
is nothing in the Deputy Administrator’s decision here that
even faintly approximates a confession of powerlessness simi-
lar to the ones in these cases.
3. Even if the statutory language were ambiguous, and
even if the Deputy Administrator did read it as plain, a Prill
remand would still not be required. I have no quarrel with
the basic proposition — expressed in Prill and the other
cases cited by the majority — that when an agency errone-
ously concludes that a statutory interpretation is required by
Congress, we should remand to give the agency an opportuni-
ty to interpret the statute in the first instance. That course
is consistent with principles of Chevron deference, and with
the respect due Congress’s delegation of interpretive authori-
ty to the agency. But this rule should not be extended
beyond its rationale.
The rationale that animates all Prill remands is real and
genuine doubt concerning what interpretation the agency
would choose if given the opportunity to apply ‘‘any permissi-
ble construction.’’ See, e.g., Prill, 755 F.2d at 956–67 (‘‘This is
not a case in which the ‘mistake of the administrative body is
one that clearly had no bearing on the procedure used or the
substance of decision reached.’ TTT [W]e cannot say that the
Board’s error in this case clearly had no bearing on the result
reached.’’) (quoting Massachusetts Trustees v. United States,
377 U.S. 235, 248 (1964)). Here, though, there is no such
open question. We know how the agency would choose to
interpret the statute because, unlike the situations in the
17
cases on which the majority relies, the agency reached its
interpretation in the course of a purely discretionary act, and
the substance of its preferred interpretation is implicit in the
decision to exercise that discretion.
In the cases cited by the majority, we were reviewing
proceedings initiated by members of the regulated community
demanding that the agency take corrective action required by
the invoked statute. Prill brought an unfair labor practice
complaint alleging that his termination was based on actions
protected as ‘‘concerted activity’’ under the National Labor
Relations Act. See Prill, 755 F.2d at 942. Alarm Industry
was initiated when an alarm monitoring trade association
moved the FCC for an order to show cause why Ameritech’s
acquisition of a corporation’s alarm monitoring assets did not
violate the Telecommunications Act. See 131 F.3d at 1068.
In Transitional Hospitals, a pair of long-term care hospitals
contended that certain Medicare reimbursement regulations
violated the governing statute. See 222 F.3d at 1022–23.
And in Arizona v. Thompson, six states challenged regula-
tions restricting the use of grants from the Department of
Health and Human Services. See 281 F.3d at 250. In each
case, the agency determined that the statute at issue unam-
biguously rendered it powerless to grant relief.
Not so here. The majority’s premise is only that DEA
believed that Congress compelled an interpretation of Section
971 that permits the agency to reach the diversion of ephed-
rine in finished drug products. Section 971(c)(1) is a permis-
sive grant of authority. The majority does not suggest that
DEA believed that Congress compelled an interpretation that
required it to suspend PDK’s imports. Here, DEA could
have — in an exercise of prosecutorial discretion — granted
PDK relief and vacated the orders to suspend shipment. But
DEA — in an exercise of that same prosecutorial discre-
tion — chose not to grant relief to PDK. That makes this
case very different from Prill and its progeny.
18
DEA wanted to suspend PDK’s imports. We know this
because it did suspend the imports. If it did not want to, the
agency had discretion to choose otherwise. Given its mani-
fest desire to suspend PDK’s imports, it is fanciful to suggest
that the agency — when presented on remand with an
opportunity to choose ‘‘any permissible construction’’ of Sec-
tion 971 — will choose an interpretation that diminishes its
discretion to an extent that places PDK’s imports beyond its
reach. Under these circumstances, I can find no reasonable
and genuine doubt that the agency — if, as the majority says,
it is truly free to choose among ‘‘any permissible construc-
tion,’’ i.e., any construction ‘‘not in conflict with the plain
language of the statute,’’ K Mart Corp. v. Cartier Inc., 486
U.S. 281, 292 (1988) — will elect a narrower, self-abnegating
interpretation.
In the absence of such doubt, a Prill remand outstrips its
rationale. ‘‘ ‘Chenery does not require that we convert judi-
cial review of agency action into a ping-pong game.’ ’’ Time,
Inc. v. U.S. Postal Serv., 667 F.2d 329, 335 (2d Cir. 1981)
(Friendly, J.) (quoting NLRB v. Wyman–Gordon Co., 394
U.S. 759, 766–67 n.6 (1969) (plurality opinion)); see Fisher v.
Bowen, 869 F.2d 1055, 1057 (7th Cir. 1989) (Posner, J.) (‘‘No
principle of administrative law or common sense requires us
to remand a case in quest of a perfect opinion unless there is
reason to believe that the remand might lead to a different
result.’’); Illinois v. ICC, 722 F.2d 1341, 1348 (7th Cir. 1983)
(Posner, J.) (‘‘Chenery does not require futile gestures.’’).
This is especially the case where, as here, we have the
Deputy Administrator’s informed explanation of the reason-
able grounds for his interpretation.
* * *
I end where I began — with regret that the majority feels
compelled to address far-reaching questions on which we
disagree, when they are wholly unnecessary to the disposition
of the case. As Justice Frankfurter once put it: ‘‘These are
perplexing questions. Their difficulty admonishes us to ob-
serve the wise limitations on our function and to confine
19
ourselves to deciding only what is necessary to the disposition
of the immediate case.’’ Whitehouse v. Illinois Central R.
Co., 349 U.S. 366, 372–73 (1955).