315 F. Supp. 3d 143
D.C. Cir.2018Background
- In 2016 the FDA promulgated the "Deeming Rule," bringing cigars, pipe tobacco, e-cigarettes, and related products within the TCA's regulatory scheme, and promulgated a companion "User Fee Rule" assessing user fees on cigar and pipe-tobacco manufacturers/importers.
- Plaintiffs (three cigar trade associations/retail groups) challenged multiple aspects of both rules; the court limited its review to: health-warning requirements; selective user-fee assessment (excluding e-cigarettes); treating in‑store pipe‑tobacco blenders as "manufacturers" subject to 21 U.S.C. § 387e; and classification of pipes as regulated "components."
- The Deeming Rule required six rotating textual warnings on cigar packaging (30% of two principal display panels) and advertisements (20% area), larger than prior FTC consent-order warnings; the FDA also deemed "components or parts" (including pipes) but not "accessories."
- The User Fee Rule required cigar and pipe-tobacco domestic manufacturers/importers to submit data and be assessed fees under a FETRA-derived allocation scheme; FDA declined to assess fees on e-cigarettes, citing statutory limits.
- Procedurally, parties cross‑moved for partial summary judgment and Plaintiffs sought a preliminary injunction on the warnings; the court consolidated briefing and deferred some claims pending further FDA rulemaking on premium cigars.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Deeming Rule health‑warning mandates under TCA/APA | FDA failed to make required §387f(d)(1) findings and did not justify departing from FTC warnings; analysis arbitrary | FDA made public‑health findings, relied on evidence and international standards, and reasonably adopted larger warnings | Upheld: FDA satisfied TCA and APA requirements |
| First Amendment challenge to warning disclosures | Large, prominent warnings "crowd out" commercial speech; prior‑restraint via mandatory rotation plan | Warnings are factual, uncontroversial disclosures; Zauderer applies and requirements are reasonable, not unduly burdensome | Upheld under Zauderer; prior‑restraint claim not considered (not pleaded) |
| User Fee Rule: excluding e‑cigarettes from fees | Selective assessment is unauthorized, creates unfair "free rider," and is an unconstitutional economic classification | Statutory text and cross‑references to FETRA limit fees to enumerated classes (including cigars/pipe tobacco); FDA interpretation reasonable | Upheld: statutory scheme compels or permits fee allocation only among listed classes; no tax or Fifth Amendment violation |
| Treating retail in‑store pipe‑tobacco blenders as "manufacturers" under §387e | Retail blenders are not manufacturers; §387e text limits obligations to manufacturers distinct from final sellers | FDA treated blending as falling within manufacturer definition and applied §387(20) definitions | Vacated & remanded: FDA relied on §387(20) improperly; remand required for reasoned agency determination |
| Classification of pipes as "components or parts" (vs accessories) | "Component" means an integrated ingredient/constituent; pipes are separate vessels, so should be accessories | FDA’s definitions reasonably encompass devices (pipes) that alter performance/are used for consumption | Upheld: designation as components is permissible and not arbitrary |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (establishing the two‑step framework for judicial review of agency statutory interpretation)
- Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29 (agencies must provide reasoned explanations; arbitrary-and-capricious standard)
- Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (lesser First Amendment scrutiny for compelled factual, uncontroversial commercial disclosures)
- Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (intermediate scrutiny test for commercial speech restrictions)
- RJ Reynolds Tobacco Co. v. FDA, 696 F.3d 1205 (D.C. Cir.) (limits on graphic warnings; discussion of informational vs. anti‑consumption interests)
- American Meat Institute v. USDA, 760 F.3d 18 (D.C. Cir.) (application of Zauderer to commercial disclosure rules)
- United States v. Sperry Corp., 493 U.S. 52 (user‑fee characterization and rationality of fee assessments)
- Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (regulation of tobacco advertising; government interest in preventing youth tobacco use)