## Facts

- MD Pharmaceuticals, Inc. was a registered bulk manufacturer of methylphenidate, a Schedule II controlled substance.
- Mallinckrodt Chemical, Inc. sought DEA registration to enter the market as a bulk methylphenidate manufacturer and filed two applications that DEA set for evidentiary hearings.
- While those applications were pending, DEA amended its regulations so existing manufacturers could submit comments on a competitor’s application but no longer had a right to their own evidentiary hearing on that application.
- On the effective date of the amended regulations, Mallinckrodt withdrew the two pending applications and simultaneously filed a third application subject to the amended procedural rules.
- DEA permitted withdrawal of the first two applications, terminated the related hearings, and later granted Mallinckrodt’s third application and issued a certificate of registration.
- MD petitioned for review, challenging (1) permission to withdraw the first two applications, (2) termination of the hearings, and (3) the final grant of registration on the third application.

## Issues

1. Whether MD had Article III and statutory (zone-of-interests) standing to seek judicial review of DEA’s actions approving a competitor’s registration.
2. Whether DEA acted unlawfully or arbitrarily and capriciously in allowing withdrawal of the first two applications and terminating the associated hearings after a regulatory change.
3. Whether DEA’s grant of registration on the third application was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law under the APA.

## Decision

- The court held MD had standing based on competitive injury from increased market competition, with causation and redressability satisfied.
- The court upheld DEA’s acceptance of Mallinckrodt’s withdrawals and termination of the hearings, finding no statutory bar and no continuing controversy once the applications were withdrawn.
- The court upheld DEA’s grant of the third application, concluding DEA considered the relevant statutory factors and provided a rational explanation supported by the record.
- The petition for review was denied in full.

## Legal Principles

- Competitive injury from a new entrant authorized by agency action can constitute injury-in-fact for Article III standing; vacatur of the authorization can satisfy redressability.
- A regulated incumbent’s interests may fall within the zone of interests of a statute when the statute and regulatory scheme directly regulate the incumbent and contemplate its participation in the administrative process.
- An agency may allow an applicant to withdraw an application and may terminate related adjudicatory proceedings when the application is no longer pending and the governing statute does not require continued adjudication.
- Parties generally have no vested right in procedural rules that are later amended; absent statutory entitlement, prior procedural advantages do not survive a lawful regulatory change.
- Under APA arbitrary-and-capricious review, a court does not reweigh policy judgments committed to the agency; it assesses whether the agency considered relevant factors and articulated a reasoned explanation connected to the record.

## Conclusion

The D.C. Circuit recognized an incumbent manufacturer’s standing to challenge DEA approval of a competitor but held DEA acted within its discretion and the APA in accepting application withdrawals, ending hearings under superseded procedures, and granting a Schedule II manufacturing registration based on reasoned consideration of statutory criteria.


MD Pharmaceuticals, Inc. v. Drug Enf't Admin., 133 F.3d 8 (D.C. Cir. 1998)