Cigar Ass'n of Am. v. U.S. Food & Drug Admin.

• Decision Date: 19 August 2020
• Docket Number: Case No. 1:16-cv-01460 (APM)
• Citation: 480 F.Supp.3d 256
• Parties: CIGAR ASSOCIATION OF AMERICA, et al., Plaintiffs, v. U.S. FOOD AND DRUG ADMINISTRATION, et al., Defendants.
• Court: U.S. District Court — District of Columbia

480 F.Supp.3d 256

CIGAR ASSOCIATION OF AMERICA, et al., Plaintiffs,

v.U.S. FOOD AND DRUG ADMINISTRATION, et al., Defendants.

Case No. 1:16-cv-01460 (APM)

United States District Court, District of Columbia.

Signed August 19, 2020

Mark S. Raffman, Andrew Kim, Mark A. Heller, Goodwin Procter LLP, Michael James Edney, Steptoe & Johnson LLP, Washington, DC, for Plaintiff Cigar Association of America.

Mark S. Raffman, Andrew Kim, Mark A. Heller, Goodwin Procter LLP, Michael James Edney, Steptoe & Johnson LLP, Washington, DC, Ryan E. Meltzer, Pro Hac Vice, Norton Rose Fulbright US LLP, Austin, TX, for Plaintiff Cigar Rights of America.

Michael James Edney, Steptoe & Johnson LLP, Washington, DC, for Plaintiff Premium Cigar Association.

Eric B. Beckenhauer, Garrett Joseph Coyle, U.S. Department of Justice, Washington, DC, for Defendants United States Food and Drug Administration, United States Department of Health and Human Services, Alex M. Azar, II.

Garrett Joseph Coyle, U.S. Department of Justice, Washington, DC, for Defendant Stephen Hahn.

MEMORANDUM OPINION AND ORDER

Amit P. Mehta, United States District Judge

I. INTRODUCTION

This matter comes before the court once more on a challenge to aspects of the United States Food and Drug Administration's ("FDA") proposed regulation of pipe tobacco and cigar products, including the category of product known as premium cigars. On May 10, 2016, the FDA published a final rule "deeming" cigars, pipe tobacco, and certain other products (e.g., e-cigarettes) subject to the federal Family Smoking Prevention and Tobacco Control Act of 2009. The FDA's "Final Deeming Rule" subjects these newly deemed products to comparable statutory and regulatory requirements already imposed on cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco. In a previous opinion, this court addressed, among other things, the Deeming Rule's imposition of health warnings on cigar product packaging and advertising (a decision since reversed by the D.C. Circuit) and the imposition of a user fee on manufacturers and importers of cigar and pipe tobacco products. In this opinion, the court considers six challenges stemming from the FDA's implementation and imminent enforcement of the requirement that manufacturers of new tobacco products covered by the Act obtain premarket authorization from the FDA before marketing their products.

For the reasons set forth below, the court grants in part and denies in part Plaintiffs’ Motion for Partial Summary Judgment, denies as moot Plaintiffs’ Motion for a Preliminary Injunction, and grants in part and denies in part Defendants’ Cross-Motion for Partial Summary Judgment. In issuing the Final Deeming Rule, the FDA arbitrarily failed to address commenters’ requests for a streamlined substantial equivalence process for premium cigars undergoing premarket review. Accordingly, the court remands the Final Deeming Rule for the limited purpose of considering that issue anew and enjoins enforcement of the premarket review requirements against premium cigars during that time. In all other respects, however, Defendants’ actions were lawful, reasonable, and adequately explained.

II. BACKGROUND

A. Statutory Background

In 2009, Congress enacted the Family Smoking Prevention and Tobacco Control Act ("TCA") to "provide authority to the [FDA] to regulate tobacco products ... by recognizing it as the primary Federal regulatory authority with respect to the manufacture, marketing, and distribution of tobacco products," among other purposes. Pub. L. No. 111-31, § 3, 123 Stat. 1776, 1781–82 (2009). The legislation immediately subjected "all cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco" to a panoply of statutory and regulatory requirements, and also reserved future application of the TCA to "any other tobacco products that the Secretary [of Health and Human Services] by regulation deems to be subject to this chapter." 21 U.S.C. § 387a(b) (emphasis added).

A central feature of the TCA is its " ‘comprehensive restrictions on the sale, promotion, and distribution’ of tobacco products." Nicopure Labs, LLC v. FDA , 944 F.3d 267, 272 (D.C. Cir. 2019) (quoting § 2(6), 123 Stat. at 1777). The TCA therefore requires tobacco product manufacturers to obtain premarket authorization before introducing a "new tobacco product" into interstate commerce. 21 U.S.C. § 387j(a)(1)–(2). A "tobacco product" is "new" if it was not commercially marketed in the United States on or before February 15, 2007, or if it was modified after that date. Id. § 387j(a)(1)(A)–(B). By contrast, products already on the market on that date are "grandfathered" and not subject to premarket review. Nicopure , 944 F.3d at 271.

The TCA establishes three pathways for manufacturers of new tobacco products to seek premarket authorization. Under the substantial equivalence pathway that most cigar and pipe tobacco manufacturers are expected to use, a manufacturer can submit a report to the FDA showing that its product is "substantially equivalent" to either (a) a product that was marketed on or before February 15, 2007, or (b) a product that has already been found to be substantially equivalent to such a grandfathered product. 21 U.S.C. §§ 387e(j)(1), 387j(a)(2)(A). The report must show that the product either has the "same characteristics"—that is, "materials, ingredients, design, composition, heating source, [and] other features"—as the predicate product, or has "different characteristics" but "does not raise different questions of public health." Id. § 387j(a)(3)(A), (B). In addition to these statutory requirements, the report must conform to "such form and manner as the [FDA] shall prescribe." Id. § 387e(j)(1). In order for a product to qualify under the substantial equivalence pathway, the FDA must "issue[ ] an order" finding that the product is substantially equivalent to a qualifying product and is in compliance with Chapter IX of the TCA. Id. § 387j(a)(2)(A)(i).

Alternatively, if the FDA concludes that a new tobacco product has been modified in only a "minor" respect from a product that is already permissibly marketed under the TCA, the agency may "exempt" the modified product from "the requirements of this subsection relating to the demonstration that a tobacco product is substantially equivalent" to another approved product. 21 U.S.C. §§ 387j(a)(2)(A)(ii), 387e(j)(3) ; see also Nicopure , 944 F.3d at 276 n.3. If neither the substantial equivalence nor the "minor modification" exemption pathways are available, the manufacturer must submit a premarket tobacco application ("PMTA"), which requires significantly more information and is therefore most costly and burdensome. See 21 U.S.C. § 387j(a), (b) ; Nicopure , 944 F.3d at 276 n.3.

Failure to obtain premarket authorization via an appropriate pathway can carry serious consequences. A tobacco product marketed without appropriate authorization is considered "adulterated" and "misbranded." 21 U.S.C. §§ 387b(6), 387c(a)(6). The FDA can initiate a civil action to enjoin illegal conduct or seize the adulterated and misbranded products, id. §§ 332, 334, or it may seek criminal penalties, id. § 333.

B. Regulatory Background

1. Proposed Deeming Rule

On April 25, 2014, the FDA issued a proposed rule that would "deem" cigars, pipe tobacco, and e-cigarettes to be subject to the TCA. See 79 Fed. Reg. 23,142 (Apr. 25, 2014) ("Proposed Deeming Rule"). In the Proposed Deeming Rule, the FDA proposed two options which "would provide two alternatives for the scope of the deeming provisions and, consequently, the application of the additional specific provisions." Id. at 23,143. Under Option 1, the FDA would deem nearly all products meeting the statutory definition of "tobacco product"—including cigars and pipe tobacco—to be subject to the TCA. Id. Under Option 2, the FDA would deem "only a subset of cigars" and "exclude from the scope of [the] proposed rule certain cigars that we refer to as ‘premium cigars.’ " Id. To effectuate this carve-out, Option 2 proposed a definition of "premium cigar" as:

[A] cigar that: (1) Is wrapped in whole tobacco leaf; (2) contains a 100 percent leaf tobacco binder; (3) contains primarily long filler tobacco; (4) is made by combining manually the wrapper, filler, and binder; (5) has no filter, tip, or non-tobacco mouthpiece and is capped by hand; (6) has a retail price (after any discounts or coupons) of no less than $10 per cigar (adjusted, as necessary, every 2 years, effective July 1st, to account for any increases in the price of tobacco products since the last price adjustment); (7) does not have a characterizing flavor other than tobacco; and (8) weighs more than 6 pounds per 1000 units.

Id. at 23,150. In explaining why it had proposed an option that might treat premium cigars differently, the FDA stated that "it has been suggested that different kinds of cigars may have the potential for varying effects on public health, based on possible differences in their effects on dual use [with other tobacco products], youth initiation and frequency of use by youth and young adults." Id. at 23,143. "Accordingly," the agency said, it "is seeking comment on these options to determine whether all cigars should be subject to deeming and what provisions of the proposed ruled may be appropriate or not appropriate for different kinds of cigars." Id.

In addition, regarding premarket review, the FDA sought comment on "what FDA actions or regulatory approaches, if any, should be taken for proposed deemed tobacco products that are ‘new tobacco products,’ " and whether the agency should "consider a different compliance policy for proposed deemed tobacco products that cannot, as a practical matter, use the [substantial equivalence] pathway." Id. at 23,174 –76.

2. Final Deeming Rule

The FDA selected Option 1 and promulgated the final Deeming Rule on May 10, 2016, thus deeming all categories of cigars, including "premium cigars," to be subject to the TCA. Se...