The U.S. Court of Appeals for the Fifth Circuit vacated a Drug Enforcement Administration order revoking a Louisiana pharmacy's license to dispense controlled substances, ruling that the agency exceeded its authority by rewriting regulations while claiming to apply existing law.
In *Neumann's Pharmacy, L.L.C. v. Drug Enforcement Administration* (5th Cir. 2026), Circuit Judge Don R. Willett wrote for the court that while the DEA has broad authority to deregister pharmacies under the Controlled Substances Act, it cannot substitute different rules while professing to apply existing regulations.
"The DEA unquestionably has broad authority to deregister pharmacies and substantial discretion to shape policy within statutory bounds," Willett wrote. "But it may not say it is applying existing regulations while quietly rewriting them in practice."
The case involved DEA Agency No. FN4373293, in which the agency revoked Neumann's Pharmacy's registration based on what it claimed was the application of two federal regulations and Louisiana state law. However, the Fifth Circuit found that the DEA's interpretations could not be supported by the governing legal texts.
The three-judge panel, consisting of Chief Judge Elrod and Circuit Judges Richman and Willett, unanimously ruled to vacate the deregistration order and remand the case back to the agency for further proceedings.
The decision underscores the ongoing tension between federal drug enforcement efforts and the limits of agency authority. Under the Controlled Substances Act, the DEA plays what the court acknowledged as "a vital role in protecting the public from drug misuse and diversion." However, the court emphasized that federal courts have an equally important role in ensuring agencies adhere to statutory and regulatory constraints.
"When an agency claims to apply governing text but instead substitutes a different rule of decision, we do not defer—we set the action aside," Willett wrote, highlighting the court's rejection of typical agency deference when an agency misapplies the law.
The ruling represents a significant check on DEA enforcement practices, particularly regarding pharmacy registrations. Pharmacies must maintain DEA registrations to legally dispense controlled substances, making such registrations essential to their operations. The loss of a controlled substances registration can effectively shut down a pharmacy's ability to serve patients who require prescription medications.
While the opinion does not detail the specific regulations at issue or the nature of the alleged violations, the court's language suggests the DEA attempted to expand its interpretation of existing rules beyond their intended scope. This practice, sometimes referred to as "regulatory creep," occurs when agencies gradually expand their authority through increasingly broad interpretations of existing regulations.
The Fifth Circuit's decision fits within a broader pattern of federal courts scrutinizing agency actions more closely, particularly when agencies appear to exceed their statutory authority. Courts have increasingly required agencies to demonstrate clear statutory authorization for their actions, especially in cases involving significant economic or regulatory consequences.
For Neumann's Pharmacy, the ruling provides an opportunity to challenge the DEA's decision on remand. The agency will need to either justify its original decision under proper legal standards or potentially reach a different conclusion that comports with existing regulations and Louisiana law.
The case also has broader implications for other pharmacies facing similar DEA enforcement actions. The ruling suggests that courts will not automatically defer to agency interpretations when those interpretations appear to exceed regulatory bounds, potentially providing a defense for other pharmacies challenging DEA actions.
The Drug Enforcement Administration has faced increasing scrutiny over its enforcement practices in recent years, particularly regarding its role in addressing the opioid crisis while maintaining access to legitimate medical care. Courts have sometimes found that overly aggressive enforcement can interfere with the practice of medicine and patient access to necessary medications.
The Fifth Circuit's emphasis on textual interpretation reflects current judicial trends toward limiting agency discretion through closer examination of statutory and regulatory language. This approach requires agencies to demonstrate that their actions fall within the clear bounds of their delegated authority rather than relying on broad interpretations of ambiguous provisions.
Moving forward, the case will return to the DEA for reconsideration under the proper legal standards identified by the Fifth Circuit. The agency will need to determine whether its original concerns about Neumann's Pharmacy can be addressed through existing regulatory frameworks or whether different enforcement approaches are warranted.
The ruling serves as a reminder that while federal agencies possess significant enforcement authority, that authority must be exercised within the bounds established by Congress and existing regulations. Courts maintain their traditional role as guardians of legal limits on government power, even in areas of specialized agency expertise.