315 F.Supp.3d 143
D.D.C.2018Background
- In 2016 FDA promulgated the "Deeming Rule" to treat cigars, pipe tobacco, e‑cigarettes and related items as "tobacco products" under the TCA and adopted new health‑warning requirements for cigars and pipe tobacco.
- Contemporaneously FDA issued a "User Fee Rule" imposing user‑fee reporting/assessment on cigars and pipe tobacco manufacturers/importers but not on e‑cigarette makers, relying on the statutory allocation scheme.
- Plaintiffs (three cigar industry associations and retailers) sued, challenging: the health‑warning mandates (TCA/APA and First Amendment), the selective user‑fee application, FDA’s designation of in‑store pipe‑blenders as "manufacturers," and FDA’s classification of pipes as regulated "components."
- The court narrowed some challenges (certain claims deferred due to FDA’s announced further rulemaking on premium cigars) and consolidated briefing on the remaining issues; plaintiffs also sought a preliminary injunction against the warnings (denied as moot).
- District court upheld the warning requirements under the TCA, APA, and the First Amendment (applying Zauderer), upheld the User Fee Rule, affirmed that pipes are "components," but held FDA’s rationale for treating retail pipe‑blenders as subject to 21 U.S.C. § 387e was arbitrary and capricious and remanded that question to FDA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Deeming Rule health warnings under TCA/APA | FDA failed to make required §387f(d)(1) findings and failed to consider the FTC consent‑order warnings as an adequate, less burdensome alternative | FDA made population‑level public‑health findings, relied on evidence and analogies to other tobacco warnings and international standards; considered alternatives | Upheld: FDA satisfied TCA/APA; findings and explanation adequate under arbitrary‑and‑capricious review |
| First Amendment challenge to warnings (commercial speech) | Large size/format and rotation requirement "crowds out" industry speech; compelled warning‑plan approval is a prior restraint | Warnings are factual, uncontroversial disclosures aimed at correcting misperceptions and reasonably related to substantial government interest; prior‑restraint claim not pleaded | Upheld: applied Zauderer (disclosures), held warnings are constitutional; prior‑restraint not reached (not in complaint) |
| User Fee Rule excluding e‑cigarettes from fee allocation | Statute requires fees from “each” newly deemed tobacco product; excluding e‑cigs creates a subsidy and effectively a tax on others; violates APA and Fifth Amendment | TCA and incorporated FETRA percentages expressly allocate fees among six enumerated classes (which do not include e‑cigs); FDA reasonably interpreted and followed that statutory scheme | Upheld: Chevron step‑1 compelled FDA interpretation; even if ambiguous, reasonable at Chevron step‑2. Not a forbidden tax; rational‑basis review satisfied |
| Retailers who blend pipe tobacco treated as manufacturers subject to §387e | Retail blenders are merely retailers performing a service; §387e did not intend to reach such retailers; FDA failed to justify small‑business impacts | FDA relied on general definitional language for "tobacco product manufacturer" to include blenders | Vacated and remanded: FDA misapplied the statute (relied improperly on separate definitional provision); agency must reassess and explain whether in‑store blending triggers §387e requirements |
| Pipes designated as "components or parts" (vs. unregulated accessories) | "Component" implies an integrated ingredient or constituent of the tobacco product; a pipe is merely a vessel and not a component; no evidence pipes affect public health | "Component/part" can cover items intended or reasonably expected to affect performance/characteristics or used with/for consumption; pipes fit that definition and differ from innocuous accessories | Upheld: statutory text does not foreclose FDA interpretation; designation reasonable and not arbitrary or capricious |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (agencies’ statutory interpretations reviewed under two‑step framework)
- Motor Vehicle Manufacturers Ass'n v. State Farm, 463 U.S. 29 (arbitrary and capricious standard for agency rulemaking)
- Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (compelled factual, uncontroversial commercial disclosures reviewed for reasonableness)
- Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (intermediate scrutiny test for commercial speech)
- RJ Reynolds Tobacco Co. v. FDA, 696 F.3d 1205 (D.C. Cir. 2012) (limits on FDA's graphic cigarette‑warning mandates; evidentiary fit required under Central Hudson)
- United States v. Sperry Corp., 493 U.S. 52 (rational‑basis review upholds certain user‑fee arrangements)
- Nicopure Labs, LLC v. FDA, 266 F. Supp. 3d 360 (D.D.C. 2017) (district court treating delivery devices as components under the Deeming Rule)