Nicopure Labs, LLC v. Food & Drug Admin.

• Decision Date: 21 July 2017
• Docket Number: Civil Action No. 16–0878 (ABJ), Civil Action No. 16–1210 (ABJ)
• Parties: NICOPURE LABS, LLC, Plaintiff, v. FOOD AND DRUG ADMINISTRATION, et al., Defendants. Right to be Smoke–Free Coalition, et al., Plaintiffs, v. Food and Drug Administration, et al., Defendants.
• Court: U.S. District Court — District of Columbia

266 F.Supp.3d 360

NICOPURE LABS, LLC, Plaintiff,

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

Right to be Smoke–Free Coalition, et al., Plaintiffs,

v.Food and Drug Administration, et al., Defendants.

Civil Action No. 16–0878 (ABJ)

Civil Action No. 16–1210 (ABJ)

United States District Court, District of Columbia.

Signed July 21, 2017

Benjamin Conrad Block, Kevin F. King, Robert William Jacques, Covington & Burling LLP, Eric P. Gotting, Azim Chowdhury, Pro Hac Vice, Keller & Heckman, LLP, Washington, DC, for Plaintiffs.

Daniel K. Crane–Hirsch, Eric B. Beckenhauer, U.S. Department Of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

AMY BERMAN JACKSON, United States District Judge

An electronic cigarette, or "e-cigarette," is an electronic nicotine delivery device, comprised of a liquid, an atomizer or heating element that heats the liquid to create a vapor, and a battery that powers the heating element. Most liquids on the market contain nicotine.

On May 10, 2016, the Food and Drug Administration exercised its discretion to deem e-cigarettes to be "tobacco products" subject to the set of federal laws that govern the promotion and marketing of conventional cigarettes.¹ Plaintiff Nicopure Labs, LLC, which manufactures the devices and the liquids, then brought this action against the FDA, the Acting Commissioner of Food and Drugs, and the Secretary of Health and Human Services, challenging the rule that announced the decision.² Nicopure claims that the deeming decision exceeded the agency's statutory authority under the Food, Drug, and Cosmetic Act, 21 U.S.C. § 301, et seq. ("FDCA"), as amended by the Family Smoking Prevention & Tobacco Control Act, Pub. L. No. 111–31, 123 Stat. 1777 (2009) ("Tobacco Control Act" or "TCA"). Nicopure also contends that the deeming decision was arbitrary and capricious and should be set aside under the Administrative Procedure Act ("APA"), 5 U.S.C. § 706, and that several provisions of the Tobacco Control Act that now govern the vaping industry violate the company's First Amendment rights. Compl., Nicopure Labs, LLC v. FDA , 16–878 (ABJ) [Dkt. # 1] ("Nicopure Compl.").

In a separate action, the Right to be Smoke Free Coalition, American Vaping Association, Electronic Vaping Coalition of America, Georgia Smoke Free Association, Kentucky Vaping Retailers Association, Inc., Louisiana Vaping Association, Maryland Vaping Professionals, LLC, Ohio Vapor Association, Tennessee Smoke Free Association, and the New Jersey Retailers Coalition (collectively, "RSF"), filed their own challenge to the Deeming Rule on similar grounds. Compl., RSF v. FDA , 16–1210 (ABJ) [Dkt. # 1] ("RSF Compl."). The Court consolidated the two cases, Order (June 28, 2016) [Dkt. # 19], and both sides have filed motions for summary judgment.

After considering the record, the points and authorities set forth in the briefs submitted by both sides and the amici, and the arguments presented at a hearing on the motions, the Court will uphold the Deeming Rule.³

The Court wishes to reassure the many worried vapers who followed these proceedings closely that this case is not about banning the manufacture or sale of the devices. That is not what the Deeming Rule does or what it was intended to accomplish. In the Deeming Rule, the FDA simply announced that electronic cigarettes, or electronic nicotine delivery systems ("ENDS") would be subject to the same set of rules and regulations that Congress had already put in place for conventional cigarettes.

The Rule requires manufacturers to subject their products to review before marketing them, to tell the truth when making any claims about their health benefits, and to warn consumers about the dangers of nicotine when offering a means to deliver the substance to consumers. In short, the manufacturers of e-cigarettes are now required to tell the 30 million people who use the devices what is actually in the liquid being vaporized and inhaled.

This case does not pose the question—which is better left to the scientific community in any event—of whether e-cigarettes are more or less safe than traditional cigarettes. The Rule did not purport to take the choice to use e-cigarettes away from former smokers or other adult consumers; the issue is whether the FDA has the authority to require that the choice be an informed one.

In the 2009 Tobacco Control Act, Congress mandated that "tobacco products" would be regulated by the Secretary of HHS, and it stated that the provisions of the statute would apply not only to cigarettes, but to other tobacco products that the Secretary deemed to be subject to the law in the future. In the rule in question in this case, the FDA exercised its discretion under the Act to deem e-cigarettes to be tobacco products subject to regulation under the Federal Food, Drug, and Cosmetic Act and the Tobacco Control Act. The agency unquestionably had the power to do so; indeed, the plaintiffs who brought this lawsuit and submitted 235 pages of argument to the Court do not challenge that general proposition even though they maintain that the agency should have taken a different approach to the task.

In the first portion of the case, though, plaintiffs claim that the FDA exceeded the authority given to it by Congress because certain types of devices or liquids do not fall within the statutory definition of a tobacco product that may be deemed to be subject to the TCA. But that challenge is extremely narrow. The challenge to the FDA's authority is not about whether the FDA had the legal authority to regulate the "cigalikes"⁴ that comprise a large portion of the e-cigarette market—the plaintiffs in this case concede that the agency may regulate those products. And plaintiffs do not challenge whether the FDA had the legal authority to regulate "closed" vaping systems, which use e-liquid that comes in a disposable cartridge.

What plaintiffs do claim is that the agency exceeded its reach when it stated that the deeming rule also covers "open" vaping systems—those built with refillable cartridges that hold the liquid. Plaintiffs do not object to the regulation of all open system devices; they do not question the agency's power to regulate open vaping systems that are sold packaged together with liquid containing nicotine or tobacco flavor. What plaintiffs contend is that the agency could not lawfully undertake to regulate any open devices sold empty and on their own without any liquid, and that it had no authority to regulate e-liquids that do not contain nicotine. Nicopure Compl. ¶¶ 21, 34; RSF Compl. ¶¶ 43, 111–17. However, the FDA has plainly stated that the rule does not cover e-liquids that do not contain, or are not derived from, nicotine or tobacco, unless those liquids are reasonably intended to be used with nicotine-containing liquids.

The Court concludes that the agency acted within the scope of its statutory authority: it was legally permitted to regulate that category of liquids, and to consider a refillable electronic nicotine delivery system to be a "component" of a tobacco product and therefore subject to regulation.

Plaintiffs also ask the Court to find that it was arbitrary and capricious to subject electronic cigarette and liquid manufacturers to burdensome premarket review and labeling requirements, and that the cost-benefit analysis underlying the deeming decision was deficient. They also object to a number of the marketing restrictions triggered by the deeming decision on constitutional grounds.

It bears repeating that the provisions the plaintiffs find most objectionable were not crafted by the FDA as part of the Deeming Rule. Instead, they are requirements of the Tobacco Control Act that was enacted by Congress. Congress gave the FDA broad authority to deem new products to be "tobacco products" subject to that existing statutory regime, and the Court finds that it was not arbitrary and capricious for the agency to decide to take that action with respect to e-cigarettes.

This opinion will lay out the reasons for the Court's conclusions, and it will also explain why the new rules being applied to e-cigarettes do not violate the First or the Fifth Amendments to the Constitution, and why there was no requirement that the agency undertake the sort of formal cost-benefit analysis that plaintiffs claim was omitted here.

When all is said and done, the Court will grant the agency's cross-motion for summary judgment, and it will deny plaintiffs' motions for summary judgment.⁵

TABLE OF CONTENTS

BACKGROUND...370

I. Statutory Background—the Relevant Provisions of the Tobacco Control Act...370

A. The Deeming Provision and the Definition of "Tobacco Product"...372

B. Premarket Review...372

1. The Substantial Equivalence Pathway...372

2. The Premarket Review Process...373

C. Ban on Distribution of Free Samples...373

D. Ban on Modified Risk Statements...374

II. Regulatory Background...375

III. Factual & Procedural Background...377STANDARD OF REVIEW...379ANALYSIS...380

I. FDA did not exceed its statutory authority when it deemed both open system vaping devices and nicotine-free liquids to be "tobacco products."...380

A. The D.C. Circuit has not yet decided the issue...380

B. The FDA has the statutory authority to regulate open-system vaping devices...381

1. The FDA's characterization of an empty vaping device as a "component" of a tobacco product survives step one of the Chevron analysis...382

2. The FDA's interpretation is reasonable under Chevron step two...385

C. Plaintiffs have standing to challenge the application of the Rule to non-nicotine-based e-liquids, and their challenge is ripe, but the agency's interpretation passes muster under Chevron ...386

1. Plaintiffs have standing to challenge the application of the rulemaking to nicotine-free products because they manufacture those products...387

2. Plaintiffs' challenge to the regulation of nicotine-free products is ripe...388

3. The agency's interpretation of the definition of "tobacco product" to include certain

...