UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


JAMES V HURSON ASSOC

v.

GLICKMAN, DAN


99-5305a

D.C. Cir. 2000


*	*	*


Sentelle, Circuit Judge: James V. Hurson Associates  appeals from a
District Court judgment upholding a United  States Department of
Agriculture ("USDA") rule that con- trols the manner in which the
agency receives requests for  the approval of food labeling. Appellant
contends that the  USDA violated the Administrative Procedure Act
("APA"), 5  U.S.C. s 551 et seq. (1994), by promulgating that rule
without  first engaging in notice-and-comment rulemaking. It also 
claims that the District Court erred in denying its motion to  amend
its complaint to include claims that the USDA's new  rule both is
arbitrary and capricious and violates the Consti- tution's Interstate


We hold that the District Court properly concluded that  USDA was not
required to engage in notice-and-comment  rulemaking, since its new
rule falls within the APA's proce- dural-rules exception. We also
conclude that the court erred  in refusing to allow Appellant to amend
its complaint to  include an arbitrary-and-capricious claim and a
Commerce- Clause claim, as it had an absolute right to do so until the
 USDA filed a responsive pleading. We therefore remand  with
instructions that Appellant be permitted to amend its  complaint to
include its arbitrary-and-capricious claim. We  do not, however,
remand with respect to Appellant's Com- merce-Clause claim, because we
conclude that it would not be  able to survive a motion to dismiss.


I. BACKGROUND


Appellee Daniel Glickman is the Secretary of the USDA,  another
appellee in this case (collectively, "USDA"). The  USDA's Food Safety
Inspection Service ("FSIS") is charged  with reviewing the labels
affixed to certain commercial food  products to ensure that they are
truthful, not misleading, and 


otherwise comply with relevant regulations. Until recently, a 
commercial food producer could seek approval of a proposed  label in
several ways: by mailing its application, by personal- ly visiting the
FSIS, or by hiring courier/expediter firms  whose employees would meet
with FSIS representatives dur- ing office hours. The latter method,
colloquially known as  "face-to-face," enabled producers to secure
instant approval of  their labels, whereas other methods could take
days or even  weeks. See Meat, Poultry, and Egg Products Labeling Re-
view Process; Elimination of Appointments With Label Cour-
ier/Expediting Firms, 63 Fed. Reg. 40,010, 40,011 (1998)  [hereinafter
elimination of face-to-face].


On July 27, 1998, the USDA announced its intention to do  away with
"routine, daily, time-set, face-to-face appointments  with
courier/expediting firms," although FSIS employees  would be available
for irregular meetings with industry repre- sentatives to discuss
novel issues and provide regulatory  guidance. Id. at 40,010. The USDA
cited four reasons for  its elimination of face-to-face review: (1)
FSIS's need for  more time to evaluate labeling involving complex
issues; (2)  FSIS's need for more time for consultation internally and
 with other agencies; (3) the food industry's declining need for 
immediate label approval; and (4) the unfairness of face-to- face to
food producers who submit by mail rather than  through
courier/expediter firms. See id. at 40,011.


On September 2, 1998, Hurson, a courier/expediter firm the  livelihood
of which was threatened by the USDA's new rule,  filed a motion for a
temporary restraining order against the  agency in the United States
District Court for the District of  Columbia. In its initial
complaint, Hurson alleged only that  USDA had violated the APA by
abolishing face-to-face with- out engaging in notice-and-comment
rulemaking. That stat- ute obliges agencies to publish in the Federal
Register notice  of a proposed rulemaking and to give interested
parties the  opportunity to submit comments. See 5 U.S.C. s 553(b),
(c)  (1994). USDA did not submit an answer, and simply moved  to
dismiss. With the consent of both parties, the District  Court
regarded Hurson's motion for injunctive relief and  USDA's motion to
dismiss as motions for summary judgment.


After the parties had fully briefed the notice-and-comment  issue, but
before the court had ruled on their cross-motions  for summary
judgment, Hurson submitted an amended com- plaint (or, in the
alternative, a motion seeking leave to amend  its complaint). Hurson
proposed to add new allegations that  the USDA's elimination of
face-to-face both was "arbitrary  and capricious" in violation of the
APA and violated the  Constitution's Commerce Clause. The District
Court denied  Hurson's motion as untimely, citing "the fact that
Plaintiff  waited to amend his [sic] complaint until after full
briefing of  dispositive motions." Having disposed of Hurson's
substan- tive objections to USDA's elimination of face-to-face, the 
District Court concluded that the agency's new rule was a  procedural
one. It was, therefore, exempt from the APA's  notice-and-comment


This appeal followed.


II. DISCUSSION


A. Notice and Comment


Although federal agencies ordinarily must provide the pub- lic with
notice of a proposed rule and the opportunity to  submit comments on
it, see 5 U.S.C. s 553, the APA makes an  exception for, among others,
"rules of agency organization,  procedure, or practice." Id. s
553(b)(A). This Court has  stressed that the " 'critical feature' " of
a rule that satisfies  the so-called "procedural exception 'is that it
covers agency  actions that do not themselves alter the rights or
interests of  parties, although it may alter the manner in which the
parties  present themselves or their viewpoints to the agency.' "  JEM
Broad. Co. v. FCC, 22 F.3d 320, 326 (D.C. Cir. 1994)  (quoting
Batterton v. Marshall, 648 F.2d 694, 707 (D.C. Cir.  1980)).


Hence in JEM, we concluded that the Federal Communica- tion
Commission's new "hard look" rules--under which the  Commission
summarily would dismiss any flawed license ap- plication without
allowing the applicant to correct its error,  see id. at 322-23--were
procedural ones. "The critical fact 


here," we emphasized, "is that the 'hard look' rules did not  change
the substantive standards by which the FCC evalu- ates license
applications, e.g., financial qualifications, pro- posed programming,
and transmitter location." Id. at 327.  That the hard-look rules
employed the same substantive  criteria as their predecessors, we
concluded, was "fatal to  JEM's claim." Id.; accord National
Whistleblower Ctr. v.  Nuclear Regulatory Comm'n, 208 F.3d 256, 262
(D.C. Cir.  2000) ("The disputed agency action in this case merely
altered  a standard for the enforcement of filing deadlines; it did
not  purport to regulate or limit the Center's substantive rights."), 
petition for cert. filed, 69 U.S.L.W. 3234 (U.S. Sept. 13, 2000)  (No.


The USDA's decision to eliminate face-to-face review is the  very sort
of procedural measure the JEM Court had in mind,  for, by its very
terms, the rule "will not change the present  system of labeling
review," even though the "new procedure  will eliminate routine,
daily, time-set, face-to-face appoint- ments with courier/expediting
firms." Elimination of Face- to-Face, 63 Fed. Reg. at 40,010. The
agency's abolition of  face-to-face did not alter the substantive
criteria by which it  would approve or deny proposed labels; it simply
changed  the procedures it would follow in applying those substantive 


Because the rule is procedural on its face--which Hurson  concedes, see
Appellant's Reply Brief at 1 ("USDA devotes  the argument to showing
that the challenged rule does not  change the substantive criteria for
evaluating labels. But  appellant Hurson does not contend
otherwise.")--appellant  attempts to characterize it as effectively
substantive by point- ing to its putatively severe consequences and
its origins in a  "substantive value judgment." Neither effort is


Hurson introduces some evidence that the elimination of  face-to-face
approvals will burden food producers. (It also  introduces evidence
suggesting that the rule would devastate  the courier/expediter
industry, but the burden to couriers/ex- pediters--which are not
regulated parties under the rules--is  irrelevant.) Hurson repeatedly
argues that food producers  need to have their labels approved in
"minutes and hours," 


not, as it suspects will be the case under the USDA's new  rule, after
waiting for "days, weeks, even months." Appel- lant's Brief at 24. It
also cites the 180 objections to the new  rule lodged by entities
representing the food industry, which,  it proposes, illustrate that
food processors regard speedy  approval as "an essential cog in their
output mechanism." Id.  at 25.


Hurson's allegation that the elimination of face-to-face will  produce
a significant burden may or may not be empirically  true. As an
initial matter, we question whether the food  processing industry
truly regards the USDA's new rule as  especially burdensome. After
all, this challenge is brought  not by a food processor, but by a
courier/expediter firm.  Still, the District Court, as it was required
to do on a motion  for summary judgment, properly viewed all factual
inferences  in favor of Hurson. Cf. Fed. R. Civ. P. 56(c); Taylor v.
FDIC,  132 F.3d 753, 762 (D.C. Cir. 1997).


But even if the USDA's elimination of face-to-face did  impose a
substantial burden on food processors, that burden  would not convert
the rule into a substantive one that trig- gers the APA's
notice-and-comment requirement. Appellant  has cited no case in which
this Court has required notice-and- comment rulemaking for an
especially burdensome procedur- al rule. Nor could it, for we
recognize that "the impact of a  rule has no bearing on whether it is
legislative or interpreta- tive...." American Postal Workers Union v.
United States  Postal Serv., 707 F.2d 548, 560 (D.C. Cir. 1983);
accord  Cabais v. Egger, 690 F.2d 234, 237 (D.C. Cir. 1982) ("Simply 
because agency action has substantial impact does not mean  it is
subject to notice and comment if it is otherwise expressly  exempt
under the APA."). Indeed, "interpretative rules may  have a
substantial impact on the rights of individuals."  American Postal
Workers, 707 F.2d at 560. The same is true  of procedural rules. We
conclude, therefore, that an other- wise-procedural rule does not
become a substantive one, for  notice-and-comment purposes, simply


Hurson's second argument--that notice-and-comment rule- making is
required given the rule's origin in a "substantive  value
judgment"--is equally unavailing. The USDA's deci- sion to eliminate
face-to-face does, as Hurson alleges, encode  the substantive value
judgment that the new label-approval  procedures will more readily
promote its already-existing  goals of fairness and efficiency. But
the fact that the agen- cy's decision was based on a value judgment
about procedural  efficiency does not convert the resulting rule into
a substan- tive one. All decisions, to the extent that they derive
from  reasons, necessarily are based on the value judgment that the 
chosen option is better, in some relevant way, than its alter-
natives. We have, therefore, consistently recognized that  " 'agency
housekeeping rules often embody a judgment about  what mechanics and
processes are most efficient.' This does  not convert a procedural
rule into a substantive one." Na- tional Whistleblower, 208 F.3d at


Finally, Hurson proposes that this Court is bound by our  prior holding
in National Association of Home Health Agen- cies v. Schweiker, 690
F.2d 932 (D.C. Cir. 1982), to conclude  that the USDA could eliminate
face-to-face only through  notice-and-comment rulemaking. In that
case, we found that  the Department of Health and Human Services was
required  to engage in notice-and-comment rulemaking when it elimi-
nated Medicare claimants' right to seek reimbursement di- rectly from
the agency's Secretary, and now required them to  submit their claims
to regional intermediaries. See id. at  949-50.


Home Health Agencies is distinguishable. Unlike the rule  challenged in
that case, which both eliminated claimants'  access to the HHS
Secretary and transferred his authority to  issue reimbursements to
other agency employees, the  USDA's rule does not change the agency
personnel who will  be responsible for reviewing proposed labels.
Rather, "[t]he  labeling review staff will continue to receive and
approve  labels," even though they will no longer do so in
face-to-face  meetings. Elimination of Face-to-Face, 63 Fed. Reg. at 
40,010. The crucial element of Home Health Agencies is not 


whether one has "face time" with agency staff members, but  which
staffers have decisionmaking authority. Home Health  Agencies is thus
consistent with our holding here, for the  same USDA staffers who
reviewed labels under face-to-face  continue to review labels after
that procedure's abolition.


Because the USDA's decision to eliminate face-to-face label  review was
a "rule[ ] of agency organization, procedure, or  practice," 5 U.S.C.
s 553(b)(A), we hold that the agency was  not required to do so
through notice-and-comment rulemak- ing.


B. Amended Complaint


On November 10, 1998, Hurson attempted to amend its  complaint to
supplement its notice-and-comment claim with  allegations that the
USDA's elimination of face-to-face both is  arbitrary and capricious
and violates the Constitution's Com- merce Clause. The District Court
disallowed the amend- ment, citing the fact that Hurson had not filed
its motion until  after the parties had fully briefed their
cross-motions for  summary judgment. USDA now proposes that the
District  Court's refusal was within its discretion, and cites our
pro- nouncement that, when a plaintiff seeks to amend "more than  a
year after the filing of [its] initial complaint and after 
dispositive motions had been filed and opposed," denying its  motion
"does not appear to be an abuse of discretion."  Wilderness Soc'y v.
Griles, 824 F.2d 4, 19 (D.C. Cir. 1987).  We conclude that, while the
decision whether to permit  amendments ordinarily "is left to the
discretion of the district  court," Gaubert v. Federal Home Loan Bank
Bd., 863 F.2d  59, 69 (D.C. Cir. 1988), the District Court here erred
because  Hurson was entitled to amend its complaint as a matter of 


The Federal Rules of Civil Procedure guarantee a plaintiff  an absolute
right to amend its complaint once at any time  before the defendant
has filed a responsive pleading. See  Fed. R. Civ. P. 15(a) ("A party
may amend the party's  pleading once as a matter of course at any time
before a  responsive pleading is served...."). In this case, the USDA 
filed no answer, but only a motion to dismiss. We have  repeatedly
clarified that a motion to dismiss is not a respon-


sive pleading for the purposes of Rule 15. See, e.g., Confeder- ate
Memorial Ass'n v. Hines, 995 F.2d 295, 299 (D.C. Cir.  1993) ("As a
motion to dismiss is not ordinarily considered a  'responsive
pleading' ... under Rule 15(a), appellants could  have amended their
complaint as of right prior to the court's  decision on the motions."
(citation omitted)); accord, Bowden  v. United States, 176 F.3d 552,
555 (D.C. Cir. 1999) ("At the  time Bowden sought to amend, the
government had filed only  a motion to dismiss or in the alternative
for summary judg- ment, which is not considered a responsive
pleading."). Be- cause Hurson therefore was entitled as a matter of
right to  amend its complaint, it was error for the District Court to 
refuse to consider its added claims.


But not all such errors require a remand. See Bowden, 176  F.3d at 555
("Though erroneous, the district court's denial of  Bowden's motion to
amend does not require a new trial.").  Rather, we recognize that a
district court need not be made  to reconsider an amended complaint
that fails to state a claim  upon which relief could be granted, or
that would otherwise  fail as a matter of law. In other words, no
remand is  necessary if the amended complaint would not survive a 
motion to dismiss under Federal Rule of Civil Procedure  12(b)(6).
Thus, in Confederate Memorial, we declined to  remand because the
plaintiff's amended complaint "fail[ed] to  state a civil RICO claim"
in that it failed to allege two  essential elements: "the existence of
an enterprise" and "that  appellants suffered injury." Confederate
Memorial, 995 F.2d  at 299, 300. And in Bowden, we likewise refused to
remand  for a new trial based on the plaintiff's amended complaint, 
which added demands for fees, compensatory damages, and a  jury trial,
because the plaintiff was "not a prevailing party  entitled to
attorneys' fees or compensatory damages" and  "had no right to trial
by jury." Bowden, 176 F.3d at 555, 556.


As was true in Confederate Memorial, Hurson's Com- merce-Clause claim
would fail as a matter of law, because it  fails to allege the claim's
essential elements. In order to  articulate a cognizable
Commerce-Clause challenge, a plaintiff  must allege, at a minimum,
that Congress has regulated an  activity that falls within none of the
following three catego-


ries: (1) the channels of interstate commerce; (2) the instru-
mentalities of interstate commerce; or (3) activities that have  a
substantial relation to interstate commerce. See United  States v.
Lopez, 514 U.S. 549, 558-59 (1995). Hurson's com- plaint neither
contains nor even suggests any such allegation.


In fact, what Hurson styles as a Commerce-Clause claim is  unlike any
Commerce-Clause claim this Court has ever en- countered. Hurson does
not allege that the statutes authoriz- ing the USDA to regulate food
labels exceed the scope of  Congress's authority under the Commerce
Clause. (Nor  could it, if it wishes to remain in business, for if
Congress  lacks the authority to regulate labeling, there is no need
for  courier/expediter firms.) Instead, it alleges that the USDA's 
elimination of face-to-face transgresses the Commerce Clause  because
it imposes an undue burden on interstate commerce.  See Appellant's
Brief at 31-34. Hurson's argument, in es- sence, is that the federal
government may exercise its Com- merce-Clause powers only in ways that
promote the free flow  of interstate commerce. No court has ever
recognized any  such claim for relief, nor do we now. Therefore, we do
not  remand Hurson's Commerce-Clause claim as it would not  withstand
a motion to dismiss in any event.


Hurson's arbitrary-and-capricious claim is a different mat- ter. A
plaintiff can state a claim that an agency's action was  "arbitrary,
capricious, an abuse of discretion, or otherwise not  in accordance
with law," 5 U.S.C. s 706(2)(A) (1994), in a  number of ways. Those
include alleging that the agency  failed to articulate an adequate
explanation for its new policy,  see, e.g., AT&T v. FCC, 974 F.2d
1351, 1355 (D.C. Cir. 1992),  and that it failed to consider factors
made relevant by Con- gress, see, e.g., Motor Vehicle Mfrs. Ass'n v.
State Farm Mut.  Auto. Ins. Co., 463 U.S. 29, 43 (1983).


It seems to this Court that Hurson's arbitrary-and- capricious claim is
exceptionally weak. We harbor grave  doubts that it would be able to
prevail on remand. Still, it 


appears that Hurson has alleged all the elements necessary to  state a
claim. In its amended complaint, it argued that:


The reasons for the challenged action, as stated by  Defendants in the
notice, are patently pretextual, implau- sible, counter to the
attendant facts, and show a failure to  consider important factors;
and thus the defendants'  decision reflected by the Notice is
arbitrary, capricious  and clearly erroneous.


Amended Complaint at 6. Whatever its substantive flaws,  Hurson's
arbitrary-and-capricious claim would survive a  12(b)(6) motion to
dismiss. If USDA did, in fact, fail to  proffer an adequate
explanation for its decision to eliminate  face-to-face, or if it did
in fact fail to consider factors deemed  relevant by Congress, a court
could conclude that the agency  acted arbitrarily and capriciously.


Because Hurson had an absolute right to add an arbitrary-
and-capricious claim to its complaint, we therefore have no 
alternative but to remand with instructions that it be permit- ted to
amend its complaint to include that claim. The Court  would have the
USDA realize that it could have avoided this  additional stage of
litigation by doing no more than filing an  answer, or other


In sum, the District Court erred in declining to allow  Hurson to amend
its complaint to allege that the USDA's  elimination of face-to-face
violates the Commerce Clause and  is arbitrary and capricious, because
Hurson was entitled to  amend its complaint as a matter of right.
Although the  Commerce-Clause claim would not survive a motion to dis-
miss, and therefore need not be remanded, Hurson alleges  the
necessary elements of an arbitrary-and-capricious claim.  Hurson must,
therefore, be permitted to amend its complaint  to include the latter


III. CONCLUSION


We affirm the District Court's grant of summary judgment  on Hurson's
notice-and-comment claim. We also affirm its  denial of Hurson's
motion to amend its complaint to include a 


Commerce-Clause claim. We reverse the District Court's  denial of
Hurson's motion to include an arbitrary-and- capricious claim in its
complaint, and remand for further  proceedings.


It is so ordered.