CIGAR ASSOCIATION OF AMERICA, ET AL., APPELLANTS v. UNITED STATES FOOD AND DRUG ADMINISTRATION, ET AL., APPELLEES
No. 20-5266
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Decided July 20, 2021
Argued May 7, 2021
Appeal from the United States District Court for the District of Columbia (No. 1:16-cv-01460)
Michael J. Edney argued the cause for appellants. With him on the briefs were Shannen W. Coffin, Mark S. Raffman, and Andrew Kim.
Lindsey Powell, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General, Mark B. Stern and Alisa B. Klein, Attorneys, and Annamarie Kempic, Deputy Chief Counsel for Litigation Food and Drug Division, Department of Health and Human Services.
Andrew N. Goldfarb and William B. Schultz were on the brief for amici curiae Public Health Groups in support of appellees.
Before: ROGERS, TATEL and WALKER, Circuit Judges.
Opinion for the Court by Circuit Judge ROGERS.
Concurring Opinion by Circuit Judge WALKER.
I.
The Family Smoking Prevention and Tobacco Control Act,
In May 2016, FDA promulgated a rule deeming all products that meet the Tobacco Control Act‘s definition of “tobacco product,” including any “component” and “part” but excluding any “accessory” of those products, to be subject to the Tоbacco Control Act. Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products, 81 Fed. Reg. 28,974, 28,975 (May 10, 2016) (codified at
“The Deeming Rule subjects newly regulated tobacco products, including cigars and pipe tobacco, to requirements akin to those previously imposed by statute on cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco.” Cigar Ass‘n of Am., 964 F.3d at 60. One such requirement is premarket review by FDA before the introduction into interstate commerce of any “new tobacco product,” defined as a tobacco product that “was not commercially marketed in the United States as of February 15, 2007” or that was modified after that date.
To allow manufacturers time to prepare premarket review applications, in the preamble to the Deeming Rule, FDA
On the same day that it issued the Deeming Rule, FDA promulgated a separate rule addressing the assessment of user fees for manufacturеrs and importers of cigars and pipe tobacco. See Requirements for the Submission of Data Needed to Calculate User Fees for Domestic Manufacturers and Importers of Cigars and Pipe Tobacco, 81 Fed. Reg. 28,707 (May 10, 2016) (codified at
Appellants, thrеe non-profit trade associations representing cigar and pipe tobacco manufacturers, importers, distributors, suppliers, and consumers, filed a lawsuit challenging the Deeming Rule and the User Fees Rule in the district court in July 2016. FDA announced in July 2017 that it intended to make regulatory changes that might affect certain of appellants’ claims. See Cigar Ass‘n of Am. v. FDA, 315 F. Supp. 3d 143, 158 (D.D.C. 2018). Appellants have since “sought resolution of their claims piecemeal.” Cigar Ass‘n of Am. v. FDA, 480 F. Supp. 3d 256, 265 (D.D.C. 2020). The present appeal concerns only the district court‘s grant of summary judgment to FDA on five of appellants’ Administrative Procedure Act (“APA“) challenges to the Deeming Rule concerning its implementation of the Tobacco Control Act‘s premarket review requirements, underlying cost-benefit analysis, and classification of a pipe as a “component or part” of a tobacco product subject to regulation under the Tobacco Control Act, as well as appellants’ APA challenge to the User Fees Rule. See Cigar Ass‘n of Am. v. FDA, 480 F. Supp. 3d at 266–77; Cigar Ass‘n of Am., 315 F. Supp. 3d at 177-82, 185–88.
II.
The court must uphold agency action under the APA unless it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
A. The Deeming Rule
1. Appellants first challenge FDA‘s failure to provide instructions about the form and manner of substantial equivalence reports specific to cigars and pipe tobacco. They emphasize that the Tobacco Control Act provides that manufacturers shall “at least 90 days prior to making such introduction or delivery, report to the
The court need not decide whether
Furthermore, the court need not consider appellants’ contention that FDA acted arbitrarily and capriciously by inadequately considering “whether instructions needed to be in place before substantial equivalence reports were due,” Appellants Br. 20–21, because appellants “forfeited” it by failing to raise it before the district court, Cigar Ass‘n of Am., 480 F. Supp. 3d at 274; see District of Columbia v. Air Florida, Inc., 750 F.2d 1077, 1084 (D.C. Cir. 1984).
2. Appellants next contend that the Deeming Rule is arbitrary and capricious because FDA premised the Rule‘s effective date and due date for substantial equivalence reports on the faulty assumption that it “could set an initial due date for substantial equivalence reports and defer evaluation of the instructions provided for those reports, as it could always adjust the due date later.” Appellants Br. 28. They highlight that in the preamble to the Deeming Rule, FDA repeatedly stated that “[a]gency compliance/enforcement policies are not subject to the requirements that govern notice-and-comment rulemaking.” Id. at 27 (quoting 81 Fed. Reg. at 28,977, 29,010). Yet appellants note that, contrary to FDA‘s statements, the district court for the District of Maryland held in litigation relating to the Deeming Rule that “any change in the due date had to go through notice-and-comment rulеmaking” and that “FDA‘s selection of an effective date anchored whatever discretion FDA might have to set a later due date for substantial equivalence reports.” Id. at 28–29 (citing Am. Acad. of Pediatrics v. FDA, 379 F. Supp. 3d 461, 470, 492 (D. Md. 2019)).
This contention fails on its own terms. Even assuming FDA misconceived the law, appellants fail to show that FDA set the Rule‘s effective date and due date for substantial equivalence reports “based on” those misconceptions. Phillips Petroleum Co. v. FERC, 792 F.2d 1165, 1171 (D.C. Cir. 1986).
They point to nothing in the Deeming Rule itself or the rulemaking record showing that those misconceptions “drove the FDA‘s approach to addressing its obligations under [
3. Also meritless is appellants’ contention that FDA arbitrarily concluded that it lacked authority under the Tobacco Control Act to alter the statutory grandfather date for cigars and pipe tobacco. See id. at 31–40. None of the provisions identified by appellants grant FDA authority to alter that date.
4. Further, there is no merit to appellants’ сontention that FDA‘s cost-benefit analysis in its Final Regulatory Impact Analysis was arbitrary or capricious. See FDA, Final Regulatory Impact Analysis, Final Regulatory Flexibility Analysis, Unfunded Mandates Reform Act Analysis, Docket No. FDA-2014-N-0189 (May 10, 2016) (“Reg. Impact“). Notwithstanding the absence of a statutory duty, “when an agency decides to rely on a cost-benefit analysis as part of its rulemaking,” that analysis may be reviewable under the APA. Nat‘l Ass‘n of Home Builders v. EPA, 682 F.3d 1032, 1040 (D.C. Cir. 2012). Nevertheless, because the court reviews cost-benefit analyses “deferentially,” appellants “burden to show error is high.” Id. (internal citations omitted).
The court need not decide the non-jurisdictional issue of whether FDA‘s cost-benefit analysis was reviewable. See Friends of Animals v. Bernhardt, 961 F.3d 1197, 1207 (D.C. Cir. 2020). Assuming the analysis was reviewable, appellants fail to meet their burden. Appellants’ principal contention is that FDA failed to analyze the specific costs and benefits of subjecting cigars and pipe tobacco to the Tobacco Control Act‘s premarket review requirements. See Appellants Br. 41–42. According to appellants, in contrast to its detailed analysis of the benefits of subjecting e-cigarettes to premarket review, FDA “never even tried to describe in any detail, much less put a number on, the benefits of premarket review for cigars and pipe tobacco.” Id. at 42. But appellants cite no authority for the proposition that FDA needed to consider the benefits of premarket review specifically for each industry or product affected by the Deeming Rule. Nor, contrary to appellants’ suggestion, does the purpose of the Deeming Rule compel that FDA‘s cost-benefit analysis take a particular form. See id. Further, although appellants do not dispute thаt FDA separately quantified the costs of subjecting cigars and pipe tobacco to substantial equivalence review, see, e.g., Reg. Impact at 95–96, they complain in passing about “FDA‘s arbitrary treatment of the costs of the [premarket review] process,” Appellants Br. 43. Their conclusory objections to FDA‘s approach to calculating costs do not overcome our deferential review of such agency calculations. See Nat‘l Ass‘n of Home Builders, 682 F.3d at 1040.
5. Challenging a different aspect of the Deeming Rule, appellants object to FDA‘s classification of a pipe as a “component or part” of a tobacco product subject to the Tobacco Control Act, rather than an “accessory” not subject to the Act. To determine whether FDA‘s interpretation accords with the Tobacco Control Act,
Therefore, the court “begin[s] with the language employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose.” Engine Mfrs. Ass‘n v. S. Coast Air Quality Mgmt. Dist., 541 U.S. 246, 252 (2004) (internal citation omitted). The Tobacco Control Act defines “tobacco product” as “any product made or derived from tobacco that is intended for human consumption, including any component, part, or accessory of a tobacco product.”
In appellants’ view, a “component’ must be ‘of a tobacco product’ in the sense of being integrated into such a product.” Appellants Br. 45. Because a pipe “exist[s] separаte from the tobacco product being consumed” and is not “integrated into a single product,” appellants maintain that a pipe cannot be a “component.” Id. The Tobacco Control Act‘s text does not, however, unambiguously support appellants’ interpretation. Neither
At Chevron step two, the court defers to the agency‘s permissible interpretation “only if the agency has offered a reasoned explanation for why it chose that interpretation.” Vill. of Barrington, Ill. v. Surface Transp. Bd., 636 F.3d 650, 660 (D.C. Cir. 2011). “The analysis of disputed agency action under Chevron Step Two and arbitrary and capricious review is often ‘the same, because under Chevron step two, [the court asks] whether an agency interpretation is arbitrary or capricious in
Appellants do not contest that a pipe meets the Deeming Rule‘s definition of “component or part.” Nor do they offer any additional arguments at Chevron step two as to why that definition is impermissible under the Tobacco Control Act or lacks a reasonable explanation by FDA. Rather, appellants contend that FDA arbitrary and capriciously failed to explain how “pipes themselves have any direct effect on public health” and how “a mere container would meaningfully affect any health consequences аssociated with the tobacco placed in it.” Appellants Br. 46. This contention is unavailing. The Deeming Rule‘s definition of “component or part” does not require FDA to identify a product‘s health effects in order to classify it as a “component or part,” see 81 Fed. Reg. at 28,975, and appellants cite no authority for imposing that requirement. Therefore, FDA‘s classification of a pipe as a “component or part” is not arbitrary or capricious and survives Chevron step two.
B. The User Fees Rule
Appellants contend that FDA arbitrarily assessed user fees for manufacturers аnd importers of cigars and pipe tobacco but not of other newly deemed tobacco products like e-cigarettes.
See Appellants Br. 47–53. They maintain that FDA incorrectly concluded that the Tobacco Control Act precluded it from imposing user fees on e-cigarettes. See id. at 47. As before, the court reviews FDA‘s interpretation under the Chevron two-step framework. See Chevron, 467 U.S. at 842–43.
Here, the Tobacco Control Act provides that FDA “shall in accordance with this section assess user fees on, and collect such fees from, each manufacturer and impоrter of tobacco products subject to this subchapter.”
Notwithstanding Congress’ detailed user fee scheme, appellants maintain that nothing in the Tobacco Control Act‘s text precludes the assessment of user fees on non-enumerated classes of tobacco products, like e-cigarettes. See Appellants Br. 48. In their view, by addressing the assessment of user fees for only six enumerated classеs of tobacco products, Congress left a gap for FDA to determine how to assess user fees for non-enumerated classes of tobacco products. See id. at 49–50. Yet by mandating that FDA look to FETRA to determine the “applicable percentage” of
To the extent appellants contend that the Tobacco Control Act‘s text is ambiguous because it directs FDA to assess user fees on “each manufacturer and importer of tobacco products subject to this subchapter,” including e-cigarettes, they appear to ignore the statutory limitation imposed by Congress. Appellants Br. 48 (quoting
Nor does appellants’ invocation of the structure and purpose of the statutory scheme. User fees “are the only funds authorized to be made available for tobacco regulation activities.”
Even if the Tobacco Control Act were ambiguous about whether FDA may impose user fees on non-enumerated classes of tobacco products, FDA reasonably explained, in the alternative, that it “would adopt the same interpretation of the statute in an exercise of its discretion.” 81 Fed. Reg. at 28,711. Agencies may “employ bright-line rules for reasons of administrative convenience, so long as those rules . . . are reasonably explained.” Emily‘s List v. FEC, 581 F.3d 1, 22 n.20 (D.C. Cir. 2009). Here, FDA explained why imposing user fees on non-enumerated classes of tobacco products would require “fashion[ing] an entirely novel framework for determining class percentage allocations and allocations within each class of tobacco product.” 81 Fed. Reg. at 28,712. This explanation survives our “highly deferential” review at Chevron step two. Vill. of Barrington, Ill., 636 F.3d at 667.
Accordingly, we affirm the grant of summary judgment to FDA on appellants’ current challenges to the Deeming Rule and the User Fees Rule.
WALKER, Circuit Judge, concurring: I agree with the Court that the Food and Drug Administration had the statutory authority to classify a smoking pipe as a “component” or “part” of a tobacco product.