Health Law Daily Premium cigar ‘Deeming Rule’ found to be unlawful
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Wednesday, February 5, 2020

Premium cigar ‘Deeming Rule’ found to be unlawful

By Jeffrey H. Brochin, J.D.

FDA’s subjecting of premium cigars to warnings requirements found to be arbitrary and capricious in violation of the APA because the agency failed to provide a reasoned explanation for their action.

A federal district court in the District of Columbia has ruled that the FDA’s "Deeming Rule" that included premium cigars in the definition of "tobacco product" for the purposes of warnings requirements, was arbitrary and capricious in violation of the Administrative Procedures Act (APA). Although the agency solicited comments from the cigar industry before issuing their final rule, they failed to take into consideration use statistics and demographics and did not provide a reasoned explanation for their action as mandated by the APA (Cigar Association of America v. U.S. Food and Drug Administration, February 3, 2020, Mehta, A.).

Tobacco Control Act. In 2009, Congress enacted the Family Smoking Prevention and Tobacco Control Act (TCA) to empower the FDA to regulate and set national standards regarding the manufacturing, marketing, and distribution of tobacco products. Through the Act, Congress acknowledged the inherent dangerousness of tobacco products and nicotine and the strong public interest in regulating tobacco products and their advertising and promotion. Congress also expressed its interest in reducing youth tobacco use, particularly in light of judicial findings that major U.S. tobacco companies specifically targeted and marketed their products to youth. However, the Act did not include cigars in the definition of ‘tobacco products.’

Proposed Deeming Rule. The unregulated status of cigars came into question when, on April 25, 2014, the FDA issued a proposed rule that would make, or "deem," cigars, pipe tobacco, and e-cigarettes subject to the TCA. As a "deemed" product, cigars would become subject to a host of regulatory requirements comparable to those imposed on cigarettes and other tobacco products. The FDA did not, however, immediately announce an intention to deem all cigar products as tobacco products. Instead, in the proposed Deeming Rule, the FDA offered two alternatives for the scope of the deeming provisions and, consequently, the application of the additional specific provisions: under Option 1, the FDA would deem all types of cigars meeting the statutory definition of "tobacco product"—including premium cigars—to be subject to the TCA, and, under Option 2, the FDA would deem only a subset of cigars and exclude from the scope of the proposed rule certain cigars referred to as "premium cigars."

Comment and final rule. The FDA sought public comment on the relative merits of Option 1 versus Option 2, and it aimed to determine whether all cigars should be subject to deeming and what provisions of the proposed rule might be appropriate or not appropriate for different kinds of cigars. Numerous members of the public submitted comments on the proposed Deeming Rule, and among the reasons offered as to why premium cigars should be exempt from the definition were the fact that the premium cigar consumers are different from the typical tobacco consumer, and therefore, the same concerns attendant to cigarette and other tobacco product use—namely youth initiation and nicotine addiction—were not present with premium cigars.

Notwithstanding the receipt of such comments and statistics purportedly backing up those claims, on May 10, 2016, the FDA promulgated the final Deeming Rule adopting Option 1 thereby deeming all categories of cigars, including premium cigars, to be subject to the TCA.

APA challenge. An industry trade group challenged the Deeming Rule on, among other grounds, that it violated the APA: they asserted that the FDA’s adoption of the warnings requirement for premium cigars was not the product of reasoned decision-making and was thereby arbitrary and capricious and in violation of the requirements of the APA.

The court agreed with the trade association, noting that one of the basic procedural requirements of administrative rulemaking is that an agency must give adequate reasons for its decisions, and therefore must examine the relevant data and articulate a satisfactory explanation for its action including a "rational connection between the facts found and the choice made." Although an agency need not address every comment made during the notice and comment period, it must respond in a reasoned manner to those that raise significant problems.

Insufficient explanation. The FDA’s extension of warning labels to premium cigars was insufficiently explained in light of comments arguing that the labels were particularly ill-suited to premium cigars. The agency failed to supply a reasoned explanation to substantiate applying health warnings to premium cigar products because the warnings themselves were factually unfounded for such products. Also, the agency did not adequately justify the need for health warnings for premium cigars because premium cigar consumers already knew the risks of regular use. In support of both arguments, commenters to the Proposed Rule presented evidence supporting that premium cigars have different usage patterns than other cigar and tobacco products, and that they are almost never used by youth, but rather by older, higher income, and better educated consumers.

For purposes of the instant case, the FDA had to explain not only why it deemed premium cigars but also why health warnings for premium cigar packaging and advertising were appropriate, and this they failed to do. For the foregoing reasons, the court ruled that the Deeming Rule was unlawful, and imposed the remedy of vacatur.

The case is No. 1:16-cv-01460-APM.

Attorneys: Mark S. Raffman (Goodwin Procter LLP) and Michael James Edney (Steptoe & Johnson LLP) for Cigar Association of America and Cigar Rights of America. Michael James Edney (Steptoe & Johnson LLP) for Premium Cigar Association. Eric B. Beckenhauer, U.S. Department of Justice, for U.S. Food and Drug Administration and U.S. Department of Health and Human Services.

Companies: Cigar Association of America; Cigar Rights of America; U.S. Food and Drug Administration; U.S. Department of Health and Human Services

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