[00:00:02] Speaker 00: Case number 16-5073, Animal Legal Defense Fund, Inc. [00:00:06] Speaker 00: at L, Appellates vs. Secretary, United States Department of Agriculture at L. Ms. [00:00:11] Speaker 00: Wilson for the Appellates, Mr. Simon for the Appellees. [00:00:48] Speaker 05: awesome. [00:01:00] Speaker 01: Thank you, Chief Judge Garland. [00:01:02] Speaker 01: And may it please the court, my name is Stephanie Wilson, and I represent the plaintiff appellants, Tracy and Lisa Keel, and the Animal Legal Defense Fund. [00:01:10] Speaker 01: The key question before this court is whether the USDA, in administering Animal Welfare Act licenses, may rubber stamp the renewal application of the applicant when it knows from its own record of citations that the applicant facility is operating in blatant violation of the law. [00:01:27] Speaker 01: The plain language of the act, Your Honors, answers this question where in 2133 it provides that the Secretary shall issue licenses to dealers and exhibitors upon application therefore in such form and manners he may prescribe and upon payment of such fee established pursuant to 2153, provided that no such license shall be issued. [00:01:48] Speaker 03: And you think it's clear that issue includes renewal, right? [00:01:54] Speaker 01: Yes, Your Honor, because in this provision, Congress directly and completely addressed the scope of the authority for the USDA when engaging in a specific administrative function, licensing. [00:02:05] Speaker 01: The title of this section is Licensing of Dealers and Exhibitors. [00:02:09] Speaker 01: Congress chose to oppose a specific set of constraints when the USDA exercises that authority. [00:02:15] Speaker 01: First, the USDA must issue licenses. [00:02:18] Speaker 01: but may prescribe the form and manner of them. [00:02:20] Speaker 01: Second, it must require a form and payment of fees, but no such license shall be issued until the dealer or exhibitor shall have demonstrated that his facilities comply with the standards promulgated under this act. [00:02:33] Speaker 01: In this specific statutory directive, Congress defined [00:02:37] Speaker 01: the USDA's function of licensing entities under the Animal Welfare Act. [00:02:41] Speaker 01: As the USDA has chosen an exercise of its authority to prescribe the form and manner of licenses to issue licenses that expire annually and require renewal, it cannot pick and choose which statutory provisions to comply with. [00:02:57] Speaker 03: Is the renewal the same as an issue? [00:02:59] Speaker 03: Your argument has to, if we don't agree with you there, we go to Chevron 2, and that's a tougher argument for you to make. [00:03:07] Speaker 03: I mean, my understanding is that you say you win at Chevron 1 because it's clear that the renewal of a license is part of the issuing of a license. [00:03:19] Speaker 01: I respectfully disagree Judge Griffith, because I think the USDA's argument to that point only begs the question of where its authority to renew a license or to create a renewal license comes from in the first place. [00:03:32] Speaker 01: Nobody disputes, Your Honor, that a renewal license is a form of a license. [00:03:37] Speaker 01: The only authority that it has to license at all in the act comes from section 2133. [00:03:43] Speaker 01: And the agency itself recognizes this, because the form- But is it issuing a license when it renews a license? [00:03:48] Speaker 01: I think so, Your Honor, and here's why. [00:03:50] Speaker 03: It's clear? [00:03:50] Speaker 03: I mean, there's no ambiguity about that? [00:03:53] Speaker 01: I think the practical reality of what the renewal scheme does actually follows 2133, except for the proviso. [00:04:00] Speaker 01: Now, the application form itself for renewal, which appears at the appendix at 384, that's in the record of this case, cites to 2133 in the upper right-hand corner of the application, and says that no license will be issued unless the applicant has demonstrated compliance. [00:04:15] Speaker 01: So the renewal scheme here, [00:04:17] Speaker 01: essentially follows 2133, where first, it issues a new physical license every year, which you can see at page 386 of the Joint Appendix, and the expiration date is stated on the license itself. [00:04:31] Speaker 01: Second, it requires an application form, which I just said cites to 2133 of its authority. [00:04:37] Speaker 01: Third, upon renewal, the USDA requires fees for which section 2133 and 2153 are its only authority in the statute. [00:04:45] Speaker 01: And those both say that the agency shall charge fees upon when a license is issued. [00:04:52] Speaker 01: And fourth, Your Honor, the agency itself recognizes that it has authority to deny a renewal application, particularly in section 2.1e of its regulations. [00:05:02] Speaker 03: If USDA determined that compliance could be demonstrated by a certificate, which at one time they did. [00:05:09] Speaker 03: I mean, they changed their view. [00:05:10] Speaker 03: But if they determined that compliance could be demonstrated on renewal, [00:05:16] Speaker 03: by an owner certifying that he or she was in compliance. [00:05:21] Speaker 03: That would be sufficient under the statute, wouldn't it? [00:05:23] Speaker 01: Again, Judge Ruth, I have to respectfully disagree with that because when the USDA promulgated the certification requirement, and that's in the 95 final rulemaking at 60 FR 1393, excuse me, 13894, it said specifically that the certification is not an alternative means of ascertaining compliance or a substitute for inspections. [00:05:46] Speaker 01: This certification has no effect on the provisions of regulation 2.3, which has always, since 1967, required that each applicant for a license demonstrate. [00:05:56] Speaker 03: No, but I'm saying, what if they reverse course and went back to the way they had viewed this originally and said, you can demonstrate compliance on renewal with a certification, that would be sufficient under the statute, wouldn't it? [00:06:13] Speaker 01: I have two points in response to that, Your Honor. [00:06:15] Speaker 01: The first is that they would have to do that through rulemaking, and they would have to provide good policy reasons for why that furthers the statute. [00:06:22] Speaker 01: Second of all, they would have to address how it is then when, as this case clearly shows, it has already made the determination that the facility is not in compliance when it has cited [00:06:33] Speaker 01: the statute, where there's a citation of it for violations, including, as we alleged in the complaint, leading up to and at the time that it received the renewal application, how that certification could overcome the agency's own determination of noncompliance, which it does in its inspections, in citing the agency. [00:06:55] Speaker 01: And as this case also shows, in its own internal assessments of the facility, as we allege in the complaint, the USDA officials here have known since at least 2006 that this facility is in chronic noncompliance with the act and that it cannot and will not comply. [00:07:12] Speaker 01: So I'm not sure on the facts of this case how a certification could overcome that. [00:07:19] Speaker 03: I wasn't talking about the facts of the case. [00:07:20] Speaker 03: I was trying to explore the meaning of the statute, the way the regulations work, and what power Congress gave to the USDA on this issue. [00:07:31] Speaker 01: Well, first, it defines it. [00:07:33] Speaker 01: As I said, it defines its licensing. [00:07:34] Speaker 01: Power. [00:07:35] Speaker 01: It defines its licensing function, and the three specific [00:07:39] Speaker 01: requirements that the agency must comply with. [00:07:44] Speaker 01: And then separately, it delegates authority, I think this is in 2146, that the agency must use investigations and inspections to determine compliance, the statute which it does. [00:07:56] Speaker 03: So again, Your Honor, I think... That's not the exclusive means of determining compliance though, inspection, is it? [00:08:03] Speaker 01: I mean, it's just one... And investigations, Your Honor. [00:08:06] Speaker 03: Section 2146 says... So you think the statute precludes the USDA from relying upon certification for compliance? [00:08:16] Speaker 01: relying exclusively, Your Honor, where it has own internal record knowledge through its routine inspections, through unannounced inspections, when it has cited the facility. [00:08:27] Speaker 01: I think so, Your Honor. [00:08:27] Speaker 01: I think it would have to, if it went through this rulemaking that your question asked about, it would have to provide good reasons for why it could rely solely on a certification and why it has changed its mind. [00:08:47] Speaker 05: Can I ask about this argument? [00:08:50] Speaker 05: If we're going to make this a Chevron 1 argument about meeting of 2133, how can it be limited to cases where the agency knows [00:09:02] Speaker 05: that there's a violation. [00:09:04] Speaker 05: It doesn't say anything about that in that section. [00:09:06] Speaker 05: It says no. [00:09:07] Speaker 05: If we read it, if we read issue to include renewals, no such license shall be issued until the dealer or exhibitor shall have demonstrated that its facilities comply. [00:09:19] Speaker 05: So if we read it your way, doesn't that mean that in every one of the [00:09:24] Speaker 05: I don't know, 3,000 or whatever number of cases per year in which renewal comes up, that it'll be necessary to actually demonstrate, not just certify? [00:09:34] Speaker 01: Not necessarily, Your Excellency, because the way that the agency knows is because it has been inspecting the facility and it has... Well, it hasn't inspected every facility during the year, right? [00:09:47] Speaker 05: That's not likely. [00:09:48] Speaker 05: These are random inspections. [00:09:49] Speaker 05: They certainly don't cover all. [00:09:51] Speaker 05: How many zoos are there? [00:09:52] Speaker 05: 3,000, something like that? [00:09:53] Speaker 01: It doesn't. [00:09:54] Speaker 01: So I think it depends where. [00:09:55] Speaker 01: So where there are chronic violators like the cricket. [00:09:58] Speaker 05: Imagine there was no inspection and they don't know anything about that particular zoo the last year. [00:10:05] Speaker 05: What has to happen under your view? [00:10:07] Speaker 01: I think, Your Honor, if it has no red flag knowledge in its own record of the facility, I think it could determine that it has demonstrated compliance. [00:10:16] Speaker 05: But where it has... Under your view, this statute, this section, governs, and it requires a demonstration. [00:10:24] Speaker 05: It's not a demonstration to have nothing. [00:10:26] Speaker 05: What's the demonstration? [00:10:28] Speaker 01: But I think, Your Honor, the most obvious way would, of course, the USDA would go out and it would inspect the facility. [00:10:35] Speaker 05: Yes, so is the implication of accepting your argument that the USDA would have to go out every year or whatever, how long is the license good for? [00:10:45] Speaker 01: One year. [00:10:45] Speaker 05: Every year would have to go out and inspect all 3,000 facilities. [00:10:49] Speaker 01: No, not necessarily, Your Honor, because I think that apart from a certification, it could require other evidence. [00:10:57] Speaker 01: It could look at all the evidence that a facility could provide. [00:11:01] Speaker 01: It has decided that a mere certification or a mere affidavit is not enough, but it could decide that if the facility provides additional documentation or evidence, that [00:11:13] Speaker 01: That could be enough. [00:11:15] Speaker 01: And Your Honor, the agency decided to issue licenses that expire after one year. [00:11:21] Speaker 05: They didn't have to do that. [00:11:24] Speaker 05: How about this? [00:11:24] Speaker 05: How about if they had a regulation that said licenses don't expire ever unless you fail to pay a fee? [00:11:34] Speaker 05: Would you have an argument? [00:11:36] Speaker 01: I think that would be much harder, Your Honor, but whereas here it has issued... I understand, but when we say much harder, does that mean you would lose if they did it that way? [00:11:44] Speaker 05: Or you would think of another argument later, or what do you think it means? [00:11:47] Speaker 01: I think it would depend. [00:11:48] Speaker 01: I mean, is the USDA still requiring fees every year? [00:11:53] Speaker 05: Because it's... Yeah, I said unless. [00:11:56] Speaker 05: So in other words, it does not expire unless they don't pay the fee. [00:12:03] Speaker 01: I think so, because the charging, if it wants to charge fees every year, it has to, under 2133, it has to issue licenses. [00:12:13] Speaker 05: Why is that? [00:12:15] Speaker 05: Is there any, their only ability to require fees is for issuance? [00:12:24] Speaker 05: They can't have any kind of maintenance fee or anything else? [00:12:27] Speaker 05: They can't have a continuing fee required in order to maintain your license. [00:12:36] Speaker 01: I think, Your Honor, that 2133 and 2153 specify that the USJ's authority to charge a fee depends on its issuance of a license. [00:12:48] Speaker 05: What is there that indicates that the word issue includes reissue? [00:12:58] Speaker 01: I think the fact of what the agency actually does, as I noted, actually sends out a physical license, it's renewal application, cites to 2133 of the statute, and it is- But that goes to the agency's interpretation. [00:13:11] Speaker 05: I thought your first position was, this is absolutely clear on the face of the statute, so it wouldn't matter what the agency actually does. [00:13:18] Speaker 01: Okay, I understand your question. [00:13:21] Speaker 05: So looking at Chevron 1 here for the moment, why do we know that issue includes reissue, which is what's going on here? [00:13:29] Speaker 01: Because Your Honor, the question on Chevron is what authority does the agency have, what are its bounds, and what scriptures must it comply with when it exercises that authority? [00:13:41] Speaker 01: Congress, when enacting 2133, prescribed the entire scope of the agency's licensing authority. [00:13:48] Speaker 01: So unless it's acting under 2133 in its authority to prescribe the form and manner, [00:13:53] Speaker 01: of the license, it actually doesn't have authority at all to create what it calls a renewal license. [00:14:00] Speaker 01: And I'll point out, Your Honor, that the USDA doesn't actually even respond to this argument at all in its brief. [00:14:06] Speaker 05: What about the past tense use of shall have demonstrated? [00:14:10] Speaker 05: So the initial license issuance requires a demonstration. [00:14:15] Speaker 05: Why can't that sentence be read? [00:14:17] Speaker 05: No such license shall be issued until the dealer shall have demonstrated, and the dealer did demonstrate that the first time, and not being required to continually demonstrate. [00:14:27] Speaker 05: Why is that not an ambiguity in this section? [00:14:33] Speaker 01: that provided that clearly ties it to the shall issue licenses. [00:14:40] Speaker 01: Furthermore, the overarching purpose of the statute in the statement of purpose in 2131 is to ensure the humane care and treatment of the animals and as I think as this complaint and as the amicus briefs clearly demonstrate that the USDA's current interpretation that demonstration of compliance is only required on the first license but not the second or third or [00:15:01] Speaker 01: or 10, clearly undermines the purpose of the statute to ensure the humane care and treatment of animals. [00:15:08] Speaker 01: So I think that it's clear in 2.133 that the shall have demonstrated is tied to the issuance of a license, regardless of the form and manner. [00:15:16] Speaker 05: And I know we're over it, but if you were driven to the Chevron 2 question of whether this is reasonable, why is it unreasonable to have a license system where the initial license requires some kind of proof of qualification? [00:15:31] Speaker 05: The subsequent ones are issued upon a fee. [00:15:35] Speaker 05: And then if there's a violation, or if they find a violation, they separately go after the violator. [00:15:40] Speaker 05: Why is that an unreasonable position? [00:15:42] Speaker 01: Well, our answer to the share run two question, Your Honor, is that the agency first has to put that in a legislative rule that satisfies state farm. [00:15:50] Speaker 05: I want you to assume. [00:15:52] Speaker 05: I'm only asking for the reasonableness, not for the need sort of issue. [00:15:56] Speaker 05: So assuming that's their argument, what's unreasonable about it? [00:16:00] Speaker 01: I think because it's it's authority in as I said in section 21 it would be not reasonable for the reason I said first I think you know it's it's authority is constrained but if you disagree with that. [00:16:10] Speaker 01: It's contrary to the statute, as I just stated, for the reasons just explained in this complaint, as I think this case makes clear, where you have a chronic violator that just routinely gets new licenses to continue to operate every year. [00:16:27] Speaker 01: And I think also it goes to the point that Judge Griffith was asking about earlier with the certification, where the USDA will just accept certifications of compliance, which [00:16:39] Speaker 01: are to be demonstrably false. [00:16:42] Speaker 01: Your Honor. [00:16:43] Speaker 03: Well, it doesn't seem to me to be an unreasonable scheme to say, OK, because of our limited resources, first time around, we're going to inspect and make certain everything's OK. [00:16:52] Speaker 03: Now you have your license. [00:16:54] Speaker 03: Subsequent years, we're going to have you certify that you're in compliance. [00:16:59] Speaker 03: And then we're going to also have this enforcement mechanism where we're going to drop in on you from time to time. [00:17:03] Speaker 03: We're going to respond to complaints from citizens to see if, in fact, you are in compliance. [00:17:08] Speaker 03: What's unreasonable about that interpretation? [00:17:13] Speaker 01: Because, Your Honor, it allows facilities that are chronic violators to go on year after year. [00:17:18] Speaker 01: No, it doesn't. [00:17:19] Speaker 03: People can raise complaints. [00:17:21] Speaker 03: People can report to them. [00:17:23] Speaker 03: They drop in occasionally to see you. [00:17:24] Speaker 03: It doesn't need to be that way. [00:17:27] Speaker 03: It seems to me you're quarreling with the enforcement mechanism that USDA has chosen. [00:17:32] Speaker 03: But in terms of the scheme, the regulatory scheme that's set up under this broad language of the statute, it's hard for me to say that that's unreasonable. [00:17:43] Speaker 01: Well, first of all, Your Honor, we're not quarreling with the enforcement mechanism. [00:17:46] Speaker 01: Our argument has always been what the statute affirmatively requires at the outset for the license. [00:17:50] Speaker 01: But even if I do concede your point... Right, and again, we're all agreed with that, right? [00:17:53] Speaker 03: At the outset, it requires a demonstration of compliance. [00:17:57] Speaker 03: And the question, to me, still the statutory question is, is that what happens on renewal? [00:18:03] Speaker 03: Is it the same inquiry that you make [00:18:07] Speaker 03: on the issuing of the initial application or is there more leeway given to the agency? [00:18:12] Speaker 03: To me that's the interesting statutory question. [00:18:15] Speaker 01: Even if I must concede that point, Your Honor, this case is not a Chevron case because, as we explained, the regulatory history is all over the place, especially in 1989. [00:18:24] Speaker 03: I'm sorry, what do you mean it's not a Chevron case? [00:18:28] Speaker 03: What do you mean? [00:18:28] Speaker 01: Because no deference is due unless the agency has explained its position in a rulemaking. [00:18:34] Speaker 01: It can't point to anywhere in the regulatory history where it demonstrates any awareness that it's interpreting the statute. [00:18:40] Speaker 01: Furthermore, in the 1989 [00:18:42] Speaker 01: rulemaking, the agency clearly says that 2.3a, a demonstration of compliance on regulations, applies at renewal. [00:18:51] Speaker 01: So if it's changed its mind about that, it also has to do that in a rulemaking that satisfies State Farm. [00:18:57] Speaker 01: It simply has not done that there. [00:18:58] Speaker 01: So even if you get to step two, you still must remand this case under Encino Motor Parts. [00:19:05] Speaker 02: Is your position that you cannot demonstrate, assume you're right on issuance, that no matter what, when the agency gives a license, whether it's renewal initially, it's an issuance. [00:19:19] Speaker 02: So there's a question about demonstration. [00:19:21] Speaker 02: Can you demonstrate as required by the statute by certification if there's no smoking gun? [00:19:29] Speaker 02: In other words, this case, [00:19:32] Speaker 02: What's interesting in your side is that there is a smoking gun here. [00:19:35] Speaker 02: The agency apparently knows this is a non-compliant applicant. [00:19:40] Speaker 02: But can the agency under the statute reasonably say, we'll allow demonstration by certification? [00:19:50] Speaker 02: Where there's no apparent issue. [00:19:53] Speaker 01: I think only, Your Honor, if it explains that position in a rulemaking. [00:19:59] Speaker 01: I think your question identifies the narrowness of the ruling in this case is where the agency has smoking gun evidence. [00:20:07] Speaker 01: It has red flag evidence, which is I think particularly clear on the facts of this case. [00:20:12] Speaker 01: It cannot, the facility cannot demonstrate compliance. [00:20:16] Speaker 01: It has already made the determination that the facility is not at compliance. [00:20:22] Speaker 02: I'm asking, would your arguments be the same if this was a totally clean applicant? [00:20:31] Speaker 02: There was no smoking gun whatsoever, and you came in and said what? [00:20:37] Speaker 02: that there was a renewal. [00:20:39] Speaker 02: There was an issuance of a license pursuant to a renewal request. [00:20:43] Speaker 02: Assume you're right on issuance. [00:20:44] Speaker 02: I don't see how they possibly prevail on that, but that's my opinion. [00:20:49] Speaker 02: It's an issuance of a license. [00:20:50] Speaker 02: But the question is, what do they have to demonstrate? [00:20:53] Speaker 02: And let's assume you're in here now arguing nothing's wrong. [00:20:57] Speaker 02: This has been a noteworthy suit keeper and has never had a problem. [00:21:03] Speaker 02: Would you have some challenge that you can make on it? [00:21:06] Speaker 01: I think, well, the whole point is, Your Honor, is that plaintiffs withstanding can challenge licensing decisions of agencies. [00:21:13] Speaker 02: I understand, but what I'm asking, what would your challenge be in that case, if that's the only case, if that's the case we're looking at? [00:21:21] Speaker 01: We would have to argue that the licensing decision in that case was arbitrary and capricious. [00:21:30] Speaker 01: Because why? [00:21:30] Speaker 01: Because we thought it was not in compliance. [00:21:32] Speaker 01: But I agree, it would be a much harder case if the USDA's own record of that facility. [00:21:37] Speaker 01: So it has, when it receives the application, it has before it. [00:21:42] Speaker 02: A certification that was still clean. [00:21:46] Speaker 01: Not only that, but also the initial license application, the history of past inspections. [00:21:51] Speaker 01: And so if there's nothing in that to give the agency any pause as to demonstration of compliance, it can say that the facility has demonstrated compliance. [00:22:00] Speaker 02: So certification can, as a statutory matter, be enough to demonstrate compliance to justify the issuance of the license, right? [00:22:10] Speaker 01: I think that was actually the argument that the USDA made in prior litigation. [00:22:15] Speaker 01: It has flipped its statutory argument. [00:22:18] Speaker 01: I think it would be, as the questioning has raised, I think I would have a much harder case if that's what the agency was saying. [00:22:25] Speaker 01: To be clear, the agency currently does not think that certification is the same thing. [00:22:31] Speaker 01: as compliant. [00:22:32] Speaker 01: So it would have to, if it changed its, it says that in the rulemaking and as we point out in our reply brief at pages 20 to 21, it's actually said that in subsequent litigation. [00:22:42] Speaker 01: So I think, you know, to answer your question, Judge, I would want to be able to participate, like any member of the public participate in noticing comment rulemaking on that point and explain why I don't think a certification is enough. [00:22:53] Speaker 02: Do parties outside of the regulated parties seek enforcement under the statutory scheme? [00:22:58] Speaker 01: As far as I know, they can only just submit complaints. [00:23:04] Speaker 01: There's no citizen suit or anything like that. [00:23:06] Speaker 02: You can initiate an enforcement. [00:23:08] Speaker 01: No, Your Honor. [00:23:09] Speaker 01: And just as the agency itself recognizes, simply denying the application is not the same thing as a revocation. [00:23:18] Speaker 01: That was another error below, that a revocation is not the same thing. [00:23:22] Speaker 01: The consequences are much more severe. [00:23:24] Speaker 01: They're entirely different from simply denying an application and allowing the license to expire by its own terms. [00:23:31] Speaker 01: So if there are no further questions, Your Honor, thank you. [00:23:35] Speaker 05: Thank you. [00:23:39] Speaker 04: May I please the court, Jeremy Simon, for the appellee. [00:23:42] Speaker 04: We've talked a lot about what I will call the beginning point in the statute, section 2133, which talks about the issuance in the first instance of a license. [00:23:53] Speaker 04: It doesn't say issuance in the first instance. [00:23:56] Speaker 04: Yes, Your Honor. [00:23:56] Speaker 04: It says, but my point is the beginning. [00:23:58] Speaker 02: It says issue licenses. [00:23:59] Speaker 02: It's a ludicrous, I'm speaking only for me, but it's better that you understand my position so you can respond to it if you're so inclined. [00:24:07] Speaker 02: It seems to me utterly ludicrous to say that merely because you're at a moment of renewal, this isn't an issuance of a license. [00:24:15] Speaker 02: That's absurd. [00:24:16] Speaker 02: The person cannot continue in business unless a license is given again. [00:24:22] Speaker 02: under the scheme. [00:24:23] Speaker 02: You're issuing a license. [00:24:25] Speaker 02: Well, I'd like to talk about the statutory. [00:24:26] Speaker 02: And your own form understands that, whether at the beginning or at renewal. [00:24:34] Speaker 02: They've got to get a license. [00:24:36] Speaker 02: I don't care whether it's renewal or starting, they've got to get a license. [00:24:39] Speaker 02: And if they do what they're required to do, you'll issue it. [00:24:43] Speaker 02: So you're in 2133. [00:24:44] Speaker 02: The question is, what is 2133 otherwise required? [00:24:48] Speaker 02: Well, Your Honor. [00:24:49] Speaker 02: I mean, if your whole argument is issuance, [00:24:52] Speaker 02: doesn't cover this case, it seems to me you should lose enlightening speed. [00:24:58] Speaker 02: Because that makes no sense. [00:24:59] Speaker 02: You are issuing a license in this case. [00:25:01] Speaker 02: There's got to be more to it than that. [00:25:03] Speaker 04: Well, so there's the other point in this statute, Section 2149. [00:25:09] Speaker 04: which talks about revocation of a license. [00:25:12] Speaker 04: And the license under section 2149 can only be revoked if due process protections are satisfied and if there is actually a determination that the licensee is not in compliance. [00:25:26] Speaker 02: What does that have to do with whether you're going to issue a license? [00:25:29] Speaker 02: We're not talking about whether you're going to revoke someone's license. [00:25:32] Speaker 02: We're talking about whether you're going to issue a license, whether at the beginning or renewal. [00:25:35] Speaker 04: Well, the only time the statute contemplates that a license can end is through revocation. [00:25:42] Speaker 02: The statute ends at the end of its period. [00:25:45] Speaker 04: But there's nothing, Your Honor, in the statute. [00:25:47] Speaker 02: Wait, wait, wait. [00:25:47] Speaker 02: Let me make sure we're together. [00:25:49] Speaker 02: At the end of the period of my license, it ends unless I renew it, right? [00:25:55] Speaker 02: It's gone. [00:25:56] Speaker 02: It ends. [00:25:57] Speaker 02: I don't have a license. [00:25:58] Speaker 02: My license says it goes until X period. [00:26:01] Speaker 02: And then it's over. [00:26:02] Speaker 04: But that's a regulatory contract, right? [00:26:04] Speaker 04: That would be correct. [00:26:05] Speaker 04: But if you look at the statutory language, the statute just says issuance. [00:26:10] Speaker 04: It doesn't say renewal. [00:26:11] Speaker 02: No, no, no, wait, wait, wait, wait. [00:26:12] Speaker 02: The license is over. [00:26:15] Speaker 02: If it's not renewed, it ends. [00:26:19] Speaker 02: It's not about revocation and whether I'm entitled to due process. [00:26:22] Speaker 02: I didn't renew it, so I don't have it anymore. [00:26:25] Speaker 04: With all due respect, I believe you're talking about the regulatory scheme. [00:26:27] Speaker 04: I'm trying to focus on the statutory language. [00:26:30] Speaker 04: The statute doesn't say that a license once issued expires at any time. [00:26:35] Speaker 04: It doesn't reference renewal. [00:26:37] Speaker 04: It doesn't say that the issued license has any particular duration. [00:26:41] Speaker 02: Do you think the statute gives you the authority to say licenses will only extend for one year? [00:26:45] Speaker 02: I believe the statute gives the agency the authority to say that. [00:26:52] Speaker 04: I believe the statute leaves as an ambiguity and allows for the agency. [00:26:56] Speaker 02: Do you think the statute gives the agency the authority to say one year or a year and a half or whatever? [00:27:02] Speaker 02: Yes? [00:27:03] Speaker 04: I believe it does give the agency, which is to promulgate the regulation, which it has, that the license remains valid and effective unless it expires [00:27:14] Speaker 04: from non-renewal and for other reasons. [00:27:16] Speaker 04: But the question is, in terms of the statutory language, it just uses the term issue. [00:27:21] Speaker 04: It doesn't say anything about the term or duration of the license once issued. [00:27:25] Speaker 02: No, but it says you have the authority to set the term. [00:27:28] Speaker 02: Exactly. [00:27:28] Speaker 02: So as a statutory matter, you would set the term, pursuant to your authority. [00:27:31] Speaker 02: The term is one year. [00:27:33] Speaker 02: If they don't renew after a year or 16 months or whatever you set, they don't have a license, right? [00:27:38] Speaker 02: Yeah, but if we're in Chevron 2 now, I believe today. [00:27:40] Speaker 02: No, no, no, no, no. [00:27:40] Speaker 02: They don't have a license, right? [00:27:43] Speaker 04: It expires onto the regulatory structure after one day. [00:27:46] Speaker 02: No, no, statutorily endorsed regulatory structure. [00:27:49] Speaker 04: But nothing mandated by the statute. [00:27:52] Speaker 02: You understand, but you say, I have the authority to do this, so it's a statutorily endorsed structure. [00:27:57] Speaker 02: It ended. [00:27:58] Speaker 02: They're now standing there with nothing. [00:28:02] Speaker 02: The only way they can keep going is if you issue them something. [00:28:07] Speaker 02: Well, I think if you look at the... Why don't you tell me what demonstrate means? [00:28:12] Speaker 02: I don't want to use all the time. [00:28:14] Speaker 02: The issuance argument makes no sense to me, and the fact that you can revoke someone's license, someone who has a license that hasn't expired, it seems to me as a normal, it has nothing to do with this case. [00:28:25] Speaker 02: So what does demonstrate mean, and how does it come into play? [00:28:29] Speaker 04: Well, Your Honor, the demonstrate is a statutory term and is not defined further as to how a licensee must demonstrate compliance. [00:28:40] Speaker 04: So that is up to the agency within its delegate group. [00:28:44] Speaker 02: It means how someone who wants to get a license must demonstrate. [00:28:48] Speaker 04: So the agency has promulgated a regulatory scheme where if you want a license at the threshold, you need to demonstrate through inspections. [00:28:59] Speaker 04: Where does it say at the threshold? [00:29:03] Speaker 03: In the regulatory... The statute doesn't say it, the threshold, right? [00:29:07] Speaker 04: No, the statute doesn't. [00:29:08] Speaker 04: I thought we were talking about the regulations talk about, specifically, initial licensees. [00:29:13] Speaker 04: It is 2.3b of the regulation says an initial licensee must demonstrate compliance through an inspection before a license will issue. [00:29:24] Speaker 04: So, very clearly stated, for an initial license, the demonstration of compliance is through inspection. [00:29:32] Speaker 03: The history of this, remind me the history, there was an earlier time when the view of the agency was that you could demonstrate compliance by certification. [00:29:44] Speaker 03: Is that correct? [00:29:45] Speaker 03: Am I right on that? [00:29:45] Speaker 03: But then changed its view later to say you could not demonstrate compliance by certification that you were in compliance. [00:29:52] Speaker 03: Am I remembering the history right or wrong? [00:29:54] Speaker 04: I believe that there's always been an inspection requirement at the outset. [00:29:57] Speaker 03: No, I'm talking about the certification of compliance. [00:29:59] Speaker 04: Well, the certification of compliance has evolved, but I believe... And it used to be sufficient, and now it's not. [00:30:07] Speaker 03: Is that the idea? [00:30:08] Speaker 03: For the initial application. [00:30:11] Speaker 04: I'm not sure, my understanding was that for the initial application there would be an inspection to demonstrate compliance. [00:30:19] Speaker 04: But even if you go back to 1967, you still see under the renewal, which I think is section 2.8 of that regulation, that [00:30:31] Speaker 04: that the license once issued is valid and effective unless it expires by failure to make a payment and submit the report. [00:30:40] Speaker 04: That is fundamentally still the same scheme that is in play here. [00:30:45] Speaker 03: And for the agency to- When you say make the report, that's the certification that you're in compliance. [00:30:52] Speaker 04: Is that right? [00:30:52] Speaker 04: Well, so presently, what you have is an application form that has the certification and the report sort of combined in one. [00:31:01] Speaker 04: But if the agency were allowed to promulgate a regulation that allowed the agency to deem, after a license has been issued, to deem a licensee not in compliance, without due process, and end their license, then they would be in violation of section 2149 of the statute. [00:31:26] Speaker 02: Wait, wait, wait, wait. [00:31:26] Speaker 02: No, no, I'm totally lost. [00:31:28] Speaker 02: Deem. [00:31:30] Speaker 02: We're looking for a new license. [00:31:31] Speaker 02: That's this case. [00:31:33] Speaker 02: We have someone who had a license, and now pursuant to your lawful regulatory authority, it's about to expire. [00:31:42] Speaker 02: So if you want to keep going, you've got to get a new one. [00:31:44] Speaker 02: And if you do whatever it is we're going to require you to do, then we'll issue it. [00:31:49] Speaker 02: So you're not revoking anything. [00:31:51] Speaker 02: You keep going to there. [00:31:52] Speaker 02: It's not about revocation. [00:31:53] Speaker 02: It's about what you need to do to get the next license. [00:31:58] Speaker 04: But that's the administrative scheme that's been put in place. [00:32:00] Speaker 04: The appellant here is arguing that there needs to be an assessment [00:32:05] Speaker 04: of whether they are satisfying the standards. [00:32:09] Speaker 04: And that assessment comes under 2149, the enforcement authority. [00:32:12] Speaker 04: That's only if you have a license to be revoked. [00:32:16] Speaker 04: But you still have a license before it's renewed. [00:32:18] Speaker 04: It's not expired yet. [00:32:20] Speaker 04: If you're going through the renewal process, your license has not yet expired. [00:32:25] Speaker 02: So you still have a license. [00:32:26] Speaker 02: That can't be the basis of your argument, is if we do it quickly enough, we'll avoid the requirements of the statute? [00:32:31] Speaker 04: No, but I believe your question is assuming that the license has it. [00:32:35] Speaker 02: My question is this. [00:32:35] Speaker 02: It's simple. [00:32:36] Speaker 02: The only reason to renew is because you're going to need a new license. [00:32:41] Speaker 02: So the agency has got to give me this new license. [00:32:44] Speaker 02: And your form points to 2133. [00:32:48] Speaker 02: Now, you may have some argument under demonstration and what you can ask for at the point of renewal as this thing was from initial. [00:32:55] Speaker 02: And I'm trying to figure out what it is. [00:32:57] Speaker 02: The real problem here is you have someone who is demonstrably in violation of the statute. [00:33:04] Speaker 02: It's not doing what the regulations in the statute anticipate, and yet you're issuing that operator a license. [00:33:11] Speaker 02: And the question here is, how can you do that? [00:33:15] Speaker 04: I think we are... Your Honor, I would like to answer that question, but I would like to first be very clear that I believe under the statute, under Section 2133, [00:33:27] Speaker 04: The term issue, from a statutory language standpoint, does not impose any duration to that license. [00:33:36] Speaker 05: And I take it your position is that it does not include reissue. [00:33:39] Speaker 05: Is that right? [00:33:40] Speaker 04: Correct. [00:33:43] Speaker 04: Yes, the issue means that the license comes into force, and the license remains in force. [00:33:51] Speaker 02: Until? [00:33:51] Speaker 04: Well, under the statute, it could remain in force indefinitely. [00:33:54] Speaker 02: It doesn't matter what it could. [00:33:56] Speaker 02: You're acting in pursuant to lawfully adopted regulations, which you said, no, it just doesn't keep going. [00:34:02] Speaker 02: We stop it at a certain point. [00:34:04] Speaker 04: Right, but that means we're now in the realm of Chevron, too, because there is an ambiguity, at very least in the statute, that allows us to make that regulatory judgment. [00:34:14] Speaker 02: With respect to demonstration, maybe. [00:34:16] Speaker 02: That has nothing to do with issuance. [00:34:17] Speaker 02: And with respect to duration. [00:34:19] Speaker 02: Yeah, no one's quibbling on the duration. [00:34:23] Speaker 02: I don't think we are. [00:34:24] Speaker 02: We all agree. [00:34:24] Speaker 02: You can limit it to a year, two years, whatever. [00:34:27] Speaker 02: That's not the issue in this case. [00:34:29] Speaker 02: So we're accepting the fact that it's about to end and you're about to issue something again. [00:34:35] Speaker 02: And the question is, on what terms? [00:34:38] Speaker 02: And I'm still trying to figure this out. [00:34:41] Speaker 02: Let me just give you my question one more time. [00:34:45] Speaker 02: You're at the point where, except my view, what you're proposing to do is issue again another license to the same person. [00:34:54] Speaker 02: Under that? [00:34:55] Speaker 02: Okay, except that. [00:34:57] Speaker 02: Now it says they have to demonstrate something in order to be able to have a license issued. [00:35:03] Speaker 02: And are you saying even when you know you have a non-compliant applicant, you can still issue that non-compliant applicant [00:35:16] Speaker 02: license at renewal. [00:35:18] Speaker 04: I'm saying that because under the statutory scheme there is a separate enforcement mechanism that affords due process protections to someone who is already an existing license. [00:35:29] Speaker 02: You know when the due process comes into play? [00:35:32] Speaker 02: When you have the property interest which is the license. [00:35:35] Speaker 02: If a person has the license [00:35:38] Speaker 02: to be taken away, they get the due process protections. [00:35:42] Speaker 02: We're talking about getting the license. [00:35:45] Speaker 05: Does this have something to do with the meaning of whether you know something? [00:35:50] Speaker 05: The closest scheme I personally know about, and not in this particular example, is driver's licenses. [00:36:00] Speaker 05: You take a driver's test in the beginning. [00:36:03] Speaker 05: for your first license. [00:36:05] Speaker 05: And when it expires, you normally don't have to take another driver's test. [00:36:10] Speaker 05: In fact, maybe you never have to take another actual behind the wheel test. [00:36:15] Speaker 05: Even though your driver's license is renewed and you get a new license with a new picture and everything else. [00:36:21] Speaker 05: And the state's position is that if you are a violator, do bad things, then we'll take it away. [00:36:30] Speaker 05: have to get a hearing before a judge. [00:36:32] Speaker 05: But in the meanwhile, we're going to keep reissuing. [00:36:35] Speaker 05: All you have to do is, I don't know, maybe pass an additional eye test, or maybe after, in some number of years, you don't have to do anything other than pay. [00:36:41] Speaker 05: That's, I take it, your understanding of what this scheme is. [00:36:44] Speaker 04: Yes, I think that's a very happy now. [00:36:46] Speaker 05: Now, if the police had ticketed the driver for speeding, I don't know, 100 times, but the driver is contesting this before a court, and it hasn't yet been contested, [00:37:00] Speaker 05: I take it that the Motor Vehicle Administration's position is, well, it's not yet demonstrated that we know, and so they don't prohibit the renewal of the license. [00:37:10] Speaker 05: They wait until the court decides the case and then take it away. [00:37:13] Speaker 05: Is that how you understand the scheme? [00:37:16] Speaker 05: Yes, Your Honor. [00:37:20] Speaker 04: I think also, as the 11th Circuit found in identifying or addressing the exact same issue, that the interpretation that appellants advance of the term issue under section 2133 is at odds with the section 2149 provision which we've discussed. [00:37:40] Speaker 04: And I think that is yet another reason why issue should be recognized to be [00:37:46] Speaker 04: At the very least, an ambiguity that affords the agency the discretion to adopt this administrative renewal, purely administrative renewal scheme under Chevron. [00:37:58] Speaker 02: Why are you running from them? [00:38:00] Speaker 02: I'm just curious, and then I'll stop. [00:38:02] Speaker 02: Why are you running from arguing that demonstration is the ambiguity? [00:38:09] Speaker 02: Why? [00:38:09] Speaker 02: Because you've never had notice of comment rulemaking to explain it? [00:38:12] Speaker 02: Because that's obviously there. [00:38:16] Speaker 02: to go after and say, that's the claw fire. [00:38:19] Speaker 02: Yeah, assume these are all issuances, but how we do demonstration may vary depending upon the circumstances. [00:38:25] Speaker 04: No, no, Your Honor, that's correct. [00:38:27] Speaker 04: I mean, I'm not running from that. [00:38:28] Speaker 04: I just think the way this was briefed is that the plaintiff has focused, the appellant, I'm sorry, has focused from the outset on the term issuance and on what... Yeah, but you bought right into it. [00:38:39] Speaker 02: I mean, that's what I don't understand, that you played that game and you stayed with it and it seemed to me an absurd argument. [00:38:47] Speaker 02: when demonstration is the fight. [00:38:49] Speaker 04: Well, Your Honor, if you believe demonstration is the fight, I will absolutely state we are not running away from that. [00:38:56] Speaker 04: I think that in certainly a reasonable way to proceed to allow the certification to satisfy whatever demonstration requirement there may be. [00:39:05] Speaker 02: Even when there's a smoking gun? [00:39:07] Speaker 04: Well, I don't know that the record here shows there's a smoking gum, but I would say that I keep turning back to the point that [00:39:15] Speaker 04: the agency that there is an existing licensee, just like in the example Judge Garland brought up, has some interest that's recognized by Section 2149. [00:39:28] Speaker 04: Section 2149 would not afford due process protections to a licensee if there was not some interest in that licensee. [00:39:33] Speaker 02: But Judge Garland's hypothetical also included a situation where the agency says, we're not knowing how. [00:39:38] Speaker 02: We're not issuing anything until this case has been resolved. [00:39:41] Speaker 02: Then you can come back. [00:39:42] Speaker 04: As I understood his hypothetical, it was. [00:39:44] Speaker 04: That was the last part of his hypothetical. [00:39:46] Speaker 04: My understanding was that, in fact, they do renew upon payment unless there's been a court finding of a violation. [00:39:52] Speaker 02: Well, he was saying if there's a pending court, then they will not issue. [00:39:57] Speaker 04: But I may have misunderstood you. [00:39:59] Speaker 04: You don't want that part of the defendant, right? [00:40:01] Speaker 05: I think you got that hypothetical correctly. [00:40:04] Speaker 05: All right, other further questions? [00:40:06] Speaker 05: All right, well. [00:40:08] Speaker 05: I think no doubt you're out of time, but we'll give you another two minutes. [00:40:13] Speaker 05: Could you think about the hypothetical I was giving and why this isn't like the driver's license point? [00:40:24] Speaker 05: My hypothetical, at least intended and perhaps not articulated, was that normally they do renew licenses until there's an actual finding by a court. [00:40:37] Speaker 05: Why isn't this like that? [00:40:38] Speaker 01: Well, first, just quickly, and I just want to say, all of these new schemes are something that would have to come out in a new notice in common, rulemaking, and that the agency justifies how it's consistent with the statute. [00:40:49] Speaker 01: I thought a lot about you. [00:40:49] Speaker 05: Well, this is, as I understand, this is their scheme. [00:40:53] Speaker 05: That is, they continue to renew. [00:40:55] Speaker 05: And this is a scheme you're challenging, right? [00:40:57] Speaker 05: That they continue to renew even though [00:41:00] Speaker 05: a ticket has been given or if you think this is not like a traffic ticket you can tell me why but there's been a complaint or a finding or whatever form USDA does but it hasn't yet been adjudicated against them with respect right now and with respect to the current status of their facility and so under those circumstances they're not going to do anything until [00:41:29] Speaker 05: the court, or whatever it is, resolves their complaint, which I take as pending now. [00:41:34] Speaker 05: And in that case, they'll revoke just like a driver's license would be revoked. [00:41:38] Speaker 01: Okay, I promise I won't get to your driver's license. [00:41:42] Speaker 01: Our point on Chairman Tu is that the scheme that it will renew has never been articulated in a legislative role. [00:41:47] Speaker 01: Now with the driver's licenses, I think the difference is where you have certain violations, my understanding of driver's licenses is if you have a certain number of tickets or if you commit a certain infraction like driving under the influence, your license [00:42:05] Speaker 01: will be revoked. [00:42:06] Speaker 01: That is the protection for implementing these driving safety laws. [00:42:12] Speaker 01: That's actually not really the case in the AWI. [00:42:16] Speaker 01: As this case demonstrates, you can have these really egregious violators where no enforcement action comes. [00:42:22] Speaker 01: But the license ends, and the statute, unlike your driver's license, Congress by statute has said that you must demonstrate these things. [00:42:31] Speaker 01: You must do these things in order to get [00:42:33] Speaker 01: your next license, and Congress has struck the balance in that regard, Your Honor, and the agency's policy, Your Honor, to the contrary, simply violates the statute. [00:42:45] Speaker 02: Your answer on the motor vehicle is that there is an additional qualifier here that apparently the motor vehicle statute doesn't have. [00:42:51] Speaker 02: You have to demonstrate something for the next [00:42:53] Speaker 02: for the next issuance, whereas a motor vehicle is just automatically given. [00:42:57] Speaker 01: That's absolutely correct, Judge. [00:42:59] Speaker 02: Any other questions? [00:43:00] Speaker 01: We ask you to reverse the amendment. [00:43:02] Speaker 01: Thank you. [00:43:02] Speaker 05: We'll take the matter under submission.