Cigar Ass'n of Am. v. U.S. Food & Drug Admin.
Cigar Ass'n of Am. v. U.S. Food & Drug Admin.
Opinion of the Court
I. INTRODUCTION
On May 10, 2016, the U.S. Food and Drug Administration ("FDA") published a final rule "deeming" cigars, pipe tobacco, and certain other products (e.g., e-cigarettes) subject to the federal Food, Drug, and Cosmetic Act ("FD & C Act"),
Plaintiffs in this case are three non-profit associations that represent cigar manufacturers, importers, distributors, suppliers, and consumers, as well as premium cigar and tobacco retail shops. They brought this action in July 2016 against the FDA and its Commissioner, and the U.S. Department of Health and Human Services ("HHS") and its Secretary (collectively, "Defendants"), challenging the Deeming Rule and the User Fee Rule on a host of grounds.
For the reasons set forth below, the court grants in part and denies in part the parties' cross-motions for partial summary judgment and denies Plaintiffs' motion for a preliminary injunction as moot. The Deeming Rule's health warning requirements are upheld in all respects, as is the User Fee Rule in its entirety. The court also affirms the agency's classification of pipes as "components or parts" of tobacco products under the TCA. The court, however, concludes that Defendants' rationale for subjecting retailers who blend pipe tobacco in-store to the requirements of 21 U.S.C. § 387e is arbitrary and capricious and therefore remands that issue to the FDA for further consideration.
II. BACKGROUND
A. Statutory Background
In 2009, Congress enacted the TCA to "provide authority to the [FDA] to regulate tobacco products under the [FD & C Act] by recognizing it as the primary Federal regulatory authority with respect to the manufacture, marketing, and distribution of tobacco products," and "to authorize the [FDA] to set national standards controlling the manufacture of tobacco products and the identity, public disclosure, and amount of ingredients used in such products," among other purposes. Family Smoking Prevention and Tobacco Control Act, Pub. L. No. 111-31, § 3,
In light of those findings, the TCA authorized the Secretary of Health and Human Services to regulate the manufacture, distribution, and marketing of tobacco products. TCA § 901, codified at 21 U.S.C. § 387a (entitled "FDA authority over tobacco products"). The legislation immediately subjected "all cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco" to a panoply of statutory and regulatory requirements, and also reserved future application of the TCA to "any other tobacco products that the Secretary [of Health and Human Services] by regulation deems to be subject to this chapter." 21 U.S.C. § 387a(b) (emphasis added). Congress defined "tobacco product" to mean "any product made or derived from tobacco that is intended for human consumption, including any component, part, or accessory of a tobacco product (except for raw materials other than tobacco used in manufacturing a component, part, or accessory of a tobacco product)."
B. Regulatory Background
1. The Cigar Product
Federal regulations define "cigar" to mean any "roll of tobacco that is wrapped in leaf tobacco or any substance containing tobacco" that is "not a cigarette."
Within the category of traditional cigars are a sub-category known as "premium cigars." See
2. The Existing FTC Health Warning Statements Regime
Long before the FDA's action in 2016, cigar products already were subject to some federal regulation. More than a decade earlier, in 2000, in settlements with the Federal Trade Commission ("FTC"), the seven largest U.S. cigar companies agreed to include warnings about significant adverse health risks on their packaging and advertisements. See, e.g. , Decision & Order, In the Matter of Swedish Match N. Am., Inc. , Docket No. C-3970,
Pursuant to the consent orders, which remain in effect today, the covered cigar *152companies must display one of the five following health warning statements "clearly and conspicuously" on their advertising and packaging:
SURGEON GENERAL WARNING: Cigar Smoking Can Cause Cancers Of The Mouth And Throat, Even If You Do Not Inhale.
SURGEON GENERAL WARNING: Cigar Smoking Can Cause Lung Cancer And Heart Disease.
SURGEON GENERAL WARNING: Tobacco Use Increases The Risk Of Infertility, Stillbirth And Low Birth Weight.
SURGEON GENERAL WARNING: Cigars Are Not A Safe Alternative To Cigarettes.
SURGEON GENERAL WARNING: Tobacco Smoke Increases The Risk Of Lung Cancer And Heart Disease, Even In Nonsmokers.
See Decision & Order, In the Matter of Swedish Match N. Am., Inc. ,
Additionally, the FTC consent orders require the health warnings to appear on visual advertisements in a set-off, rectangular box to ensure that the warnings are readily visible and conspicuous. Id. at *5-8. For audio advertisements, the health warning statement must be delivered so that an ordinary consumer can hear and comprehend it. Id. at *8-9. Cigar companies also were required to submit for FTC approval, in advance of the consent orders' effective date, a plan for the rotation and display of the health warnings on cigar packages and advertisements. Id. at *11-12.
3. FDA Rules
a. The Deeming Rule
i. Proposed Rule
In the years following Congress's enactment of the TCA, cigar products were free from FDA regulation because cigars were not expressly listed in the Act's definition of "tobacco product." A harbinger of change arrived in the spring of 2014. 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. See 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 ,
[A]ny cigar as defined in this part, except a cigar that: (1) Is wrapped in whole tobacco leaf; (2) contains a 100 percent leaf tobacco binder; (3) contains primarily long filler tobacco; (4) is made by combining manually the wrapper, filler, *153and binder; (5) has no filter, tip, or non-tobacco mouthpiece and is capped by hand; (6) has a retail price (after any discounts or coupons) of no less than $10 per cigar (adjusted, as necessary, every 2 years, effective July 1st, to account for any increases in the price of tobacco products since the last price adjustment); (7) does not have a characterizing flavor other than tobacco; and (8) weighs more than 6 pounds per 1000 units.
The FDA sought comment on both options. Its purpose was "to determine whether all cigars should be subject to deeming and what provisions of the proposed rule may be appropriate or not appropriate for different kinds of cigars," as well as to determine the "relative merits of Option 1 versus Option 2, taking into account what is appropriate for the public health, including possible benefits to the public health or possible negative public health consequences of adopting one Option or the other."
ii. Final Rule
a. Health warning requirements
The FDA selected Option 1 and promulgated the final Deeming Rule on May 10, 2016, thus deeming all categories of cigars, including those referred to as "premium cigars," to be subject to the TCA. See Final Rule Deeming 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 ,
Under the Deeming Rule as originally announced, the newly deemed products would be subject to comparable TCA provisions and regulatory requirements to which cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco were already subject.
(1) Enforcement action against products determined to be adulterated or misbranded (other than enforcement actions based on lack of a marketing authorization during an applicable compliance period);
*154(2) Required submission of ingredient listing and reporting of [harmful and potentially harmful constituents];
(3) Required registration of tobacco product manufacturing establishments and product listing;
(4) Prohibition against sale and distribution of products with modified risk descriptors (e.g., "light," "low," and "mild" descriptors) and claims unless FDA issues an order authorizing their marketing;
(5) Prohibition on the distribution of free samples; and
(6) Premarket review applications and approvals.
And there is more. The Deeming Rule also sets out comprehensive warning statement requirements, for both cigar product packaging and advertisements. By August 10, 2018, cigar product packages must display one of the six following health warning statements:
(i) WARNING: Cigar smoking can cause cancers of the mouth and throat, even if you do not inhale.
(ii) WARNING: Cigar smoking can cause lung cancer and heart disease.
(iii) WARNING: Cigars are not a safe alternative to cigarettes.
(iv) WARNING: Tobacco smoke increases the risk of lung cancer and heart disease, even in nonsmokers.
(v)(A) WARNING: Cigar use while pregnant can harm you and your baby.3 ...
(vi) WARNING: This product contains nicotine. Nicotine is an addictive chemical.
The Deeming Rule also specifies the placement and size of the required health warnings. With respect to packaging, each warning statement must "appear directly on the package" and must be "located in a conspicuous and prominent place on the two principal display panels of the package," comprising "at least 30 percent of each of the principal display panels."
*155These size mandates are more demanding than the size requirements under the FTC consent orders. According to Plaintiffs, the required package warnings are 195 to 237 percent larger on any one panel than under the FTC warnings scheme. And, when the Deeming Rule's additional requirement to cover a second display panel is included, Plaintiffs assert that the FDA's mandate covers approximately 390 to 475 percent more of a package's surface area than is required under the FTC's consent orders.
b. Related deemed products
In addition to cigars, pipe tobacco, and e-cigarettes, the Deeming Rule also deemed the "components or parts" of those newly deemed products to be subject to the TCA. The FDA defines the statutory term "component or part" to mean:
[A]ny software or assembly of materials intended or reasonably expected: (1) [t]o alter or affect the tobacco product's performance, composition, constituents, or characteristics; or (2) [t]o be used with or for the human consumption of a tobacco product. Component or part excludes anything that is an accessory of a tobacco product.
Although it had the authority to do so, the FDA did not deem "accessories" of the newly deemed tobacco products subject to the TCA. The agency reasoned that "accessories, unlike components or parts, are expected to have little direct impact on the public health."
b. The User Fee Rule
To fund the regulation of tobacco products under the TCA, Congress requires the FDA to "assess user fees on, and collect fees from, each manufacturer and importer of tobacco products subject to this subchapter." See 21 U.S.C. § 387s. The user fees "are available only for the purpose of paying the costs of the activities of the [FDA] related to the regulation *156of tobacco products under ... the [TCA]."
When it promulgated the final Deeming Rule, the FDA simultaneously issued the User Fee Rule. Under that Rule, the FDA announced its intention to collect information from domestic manufacturers and importers of cigars and pipe tobacco in order to calculate the amount of user fees to be collected from these entities. See Requirements for the Submission of Data Needed To Calculate User Fees for Domestic Manufacturers and Importers of Cigars and Pipe Tobacco ,
Notably, the User Fee Rule excluded from coverage other newly deemed products, such as e-cigarettes. The FDA explained that it lacked the statutory authority to impose user fees on any newly deemed products other than cigars and pipe tobacco. See id. at 28,711 -12.
c. FDA's July 2017 Announcement of a "New Comprehensive Plan"
The presidential election of 2016 ushered in change to the FDA's approach to the Deeming Rule. On July 28, 2017, the FDA announced a "new comprehensive plan" for regulating tobacco products and nicotine. See Pls.' Mot. for Partial Summ. J., ECF No. 62 [hereinafter Pls.' Mot.], Ex. D, ECF No. 62-4 [hereinafter FDA Press Release]. In accordance with the plan, the FDA delayed implementation of some provisions of the Deeming Rule, but allowed others to go into effect. For instance, the agency extended until August 8, 2021, the compliance period for tobacco manufacturers to submit applications for newly deemed products that were on the market as of August 8, 2016. See Joint Status Report (dated Sept. 5, 2017), ECF No. 51 [hereinafter Sept. 5, 2017 JSR], ¶ 3; FDA Press Release. The health warning requirements, on the other hand, were left undisturbed.
The FDA also announced its intention to issue Advance Notices of Proposed Rulemaking ("ANPRM"). The contemplated rulemaking included a focus on the previous issue of whether to regulate premium cigars. An ANPRM, the FDA stated, would seek public comment on "the patterns of use and resulting public health impacts from premium cigars, which were included in the FDA's 2016 rule." FDA Press Release. Commenting on the FDA's "new comprehensive plan," Mitch Zeller, Director of the FDA's Center for Tobacco Products, explained: "Public input on these complex issues will help ensure the agency has the proper science-based policies in place to meaningfully reduce the harms caused by tobacco use." Id.
d. Recent Regulatory Developments
In December 2017, the FDA formally announced its intention to initiate a rulemaking process focused on the question of premium cigars. See " Premium Cigars; Request for Scientific Information," Agency Rule List-Fall 2017: Department of Health and Human Services , Unified Agenda of Regulatory and Deregulatory Actions, OIRA, https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201710=&RIN=0910-AH88. The FDA observed that while it had received comments in response to the Proposed Deeming Rule "claiming that the health risks *157associated with cigar use generally, or with the use of premium cigars in particular were not significant because of the way such products are used," these comments ultimately failed to provide an adequate scientific basis for excluding those products from regulation. Id. The FDA therefore announced its intention to issue an ANPRM to request scientific information "that might support" exempting premium cigars from regulation or regulating them in a manner different from other cigars. Id.
The agency issued the ANPRM in late March 2018. See Defs.' Notice of Publication of ANPRM, ECF No. 91. It explained that in light of "the ongoing interest from many parties and sectors, such as industry and Members of Congress, in the regulatory status of premium cigars," the purpose of the ANPRM is "to request relevant new and different information, data, and analysis not submitted in response to FDA's proposed deeming rule ... that could inform FDA's regulation of premium cigars." See Regulation of Premium Cigars ,
C. Procedural Background
The Cigar Association of America, the International Premium Cigar and Pipe Retailers Association, and Cigar Rights of America (collectively, "Plaintiffs") filed suit in this court, seeking declaratory, injunctive, and other relief from the Deeming Rule and challenging the legality of the User Fee Rule.
After Defendants filed their Answer, Plaintiffs filed an initial motion for summary judgment on February 13, 2017. Thereafter, the newly installed FDA administration signaled an openness to evaluating the agency's approach to aspects of the Deeming Rule. The parties accordingly requested multiple extensions of the briefing deadlines in order "to allow new leadership personnel at [HHS] to more fully consider the issues raised in [the] case and determine how best to proceed." Joint Mot. to Amend Scheduling Order (dated May 1, 2017), ECF No. 34, at 1. The court granted the requests, resulting in over four months of extensions. After the FDA's July 2017 announcement of its new comprehensive plan for the regulation of tobacco products, the parties sought one final 30-day extension of the briefing schedule. Joint Mot. to Amend Scheduling Order (dated Aug. 1, 2017), ECF No. 40, at 2-3. The court also granted this motion. Minute Order Aug. 7, 2017.
In a Joint Status Report dated September 5, 2017, the parties explained that, as a result of the FDA's announcement, they had agreed to defer resolution of certain of Plaintiffs' challenges to the Deeming Rule. Specifically, the parties agreed that Plaintiffs' challenges relating to the premarket review process, the FDA's decision to deem premium cigars subject to regulation, and the agency's cost-benefit analysis underlying the Deeming Rule-claims asserted in Counts I, IV, and V of Plaintiffs' Complaint-"should await the further regulatory action that the FDA has announced it intends to pursue, because those announced regulatory actions may materially change the regulatory scheme *158underlying these claims." Sept. 5, 2017 JSR at 2. The court agreed to defer resolution of those issues.
Other challenged aspects of the Rules remain unaffected by the agency's July 2017 announcement,
In addition, Plaintiffs moved for a preliminary injunction on their challenge to the Deeming Rule's health warnings mandates. See Pls.' Mot. for Prelim. Inj., ECF No. 61. The parties consented to consolidating the motion for preliminary relief with briefing on the merits. See Fed. R. Civ. P. 65(a)(2) ; Order Setting Summ. J. Schedule (dated Sept. 19, 2017), ECF No. 57.
III. LEGAL STANDARD
When reviewing an agency action under the APA, "summary judgment is the mechanism for deciding whether as a matter of law an agency action is supported by the administrative record and is otherwise consistent with the APA standard of review." Louisiana v. Salazar ,
In reviewing an agency's interpretation of a statute it is charged with administering, courts apply the familiar two-step framework outlined in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. ,
"In some circumstances, there is an overlap in the analysis required pursuant to Chevron Step Two[ ] and that required under the arbitrary and capricious standard" of the APA. EchoStar Satellite LLC v. FCC ,
IV. DISCUSSION
A. Health Warning Requirements
Plaintiffs' primary challenge is to the Deeming Rule's health warning requirements, which they assert violate the First Amendment, the TCA, and the APA. The court first assesses whether the Deeming Rule's health warning requirements run afoul of the TCA and the APA, and then turns to consider their constitutionality.
1. TCA and APA
Plaintiffs' TCA and APA challenges to the Deeming Rule's health warning requirements are two-fold. First, they assert that the agency failed to make the findings required by the TCA, 21 U.S.C. § 387f(d)(1), to justify the warning requirements. And second, Plaintiffs contend that the agency violated the APA because it failed to explain why the existing FTC warning scheme was inadequate, opting instead to crowd out and restrict manufacturers' ability to communicate with consumers by imposing a requirement to cover 30 percent of two panels of a cigar box and 20 percent of any advertisement with warnings. The court rejects these arguments.
As to their first argument, Plaintiffs claim that the FDA made "no determination at all about the warnings' effect on decreasing cigar or pipe tobacco use," and thus failed to adhere to the statutory mandate provided by 21 U.S.C. § 387f(d)(1). Pls.' Mot. at 34. In pertinent part, that section of the TCA authorizes the FDA to "impose restrictions on the advertising and promotion of a tobacco product" "if the [agency] determines that such regulation would be appropriate for the protection of the public health." 21 U.S.C. § 387f(d)(1). The agency's finding *160"shall be determined with respect to the risks and benefits to the population as a whole, including users and nonusers of the tobacco product," and must take into account: "(A) the increased or decreased likelihood that existing users of tobacco products will stop using such products; and (B) the increased or decreased likelihood that those who do not use tobacco products will start using such products."
Plaintiffs' contention is unavailing: The agency did make the required statutory findings. The FDA first connected the Deeming Rule as a whole to the public health standard, stating that it "believes that the sale and distribution restrictions the Agency is proposing," including the "health warning requirements," "meet the public health standard set forth in" 21 U.S.C. § 387f(d)(1).
The FDA also made findings specific to the importance and efficacy of the health warnings. Under sections titled "Effectiveness of Warnings" and "Proposed Addictiveness Warning" in the Proposed Deeming Rule, the agency observed: (1) "The use of tobacco packages to help consumers better understand and appreciate tobacco-related health risks has a number of advantages"; (2) "Requiring health warnings in advertisements similarly is an important means of helping consumers better understand and appreciate the health consequences of tobacco use"; (3) "FDA believes that the proposed warnings will be effective in helping consumers better understand and appreciate critical information"; (4) "Research has shown that using the largest possible lettering can increase warning effectiveness and increasing font size aids communication"; (5) "The content of the proposed messages also indicates that they should help consumers understand and appreciate the health risks"; and (6) "The absence of a health warning requirement *161for other tobacco products could reinforce the existing false sense of security that youth have about the safety of those products."
Notwithstanding what is plain on the record, Plaintiffs contend that these findings are insufficient for a host of reasons. First, Plaintiffs fault the FDA for making the statutorily required findings only in the Proposed Deeming Rule, and not the final version. Pls.' Reply in Supp. of Pls.' Mots. for a Prelim. Inj. & Partial Summ. J., ECF No. 78 [hereinafter Pls.' Reply], at 30. But that is incorrect. Not only does the final rule expressly incorporate the findings from the Proposed Deeming Rule, see 81 Fed. Reg. at 29,062, but the agency also responded to comments questioning the need and efficacy of warning requirements, and it rejected those views, see id. at 29,063. Accordingly, the agency's findings are adequately reflected in the record after the public had the opportunity of notice and comment.
Second, Plaintiffs assert that FDA "merely mouths the words of the statute, eschews any serious analysis, and hedges its language." Pls.' Reply at 30. But that contention also is misplaced, as both the Proposed Deeming Rule and the final Deeming Rule contain multiple pages devoted to "the effects of larger health warnings on cigars and pipe tobacco," which Plaintiffs claim is lacking, id. See 81 Fed. Reg. at 28,982, 28,988 -89, 29,060-73;
Next, Plaintiffs assert that FDA itself conceded the lack of connection between the required health warnings and the likelihood of reducing cigar and pipe tobacco use, when it admitted that "there has not yet been extensive research regarding the effectiveness of health warnings on tobacco products other than cigarettes."
In any event, the relative absence of such studies is not fatal. "It is not infrequent that the available data does not settle a regulatory issue and the agency must then exercise its judgment in moving from the facts and probabilities on the record to a policy conclusion." State Farm ,
Finally, Plaintiffs maintain that the "agency cannot seriously contend ... that quantitative data was beyond its grasp," as it "had sixteen years and an entire nation's worth of data to examine the efficacy of the FTC warnings." Pls.' Reply at 31. Plaintiffs, however, have identified no requirement, statutory or otherwise, that compelled the FDA to undertake such studies to make the findings required by 21 U.S.C. § 387f(d)(1). Cf. Am. Wildlands v. Kempthorne ,
Plaintiffs' APA challenge to the warning requirements suffers the same fate. To the extent Plaintiffs suggest that the warnings mandate violates the APA because the agency failed to make the requisite findings under 21 U.S.C. § 387f(d)(1), the court rejects the argument for the reasons already stated. Plaintiffs offer two other arguments under the APA. First, they assert that the Deeming Rule's health warning requirements are arbitrary and capricious because the agency failed to consider, as an alternative, adopting the existing FTC scheme already in place for much of the cigar industry, which would have been less costly and less burdensome to integrate. And, second, they argue that the warning requirements placed on the cigar industry are disproportionately more onerous than those placed on the cigarette industry, even though the FDA has determined that cigarettes occupy "the most dangerous end of the risk continuum." Pls.' Mot. at 36. Neither argument is convincing.
As to Plaintiffs' first argument, the court takes issue with the notion that the "baseline" for warning statements on cigar packaging and advertising begins with the FTC warning scheme. Plaintiffs cite no case requiring one agency to use as its starting point restrictions adopted by another agency, especially when the other agency's restrictions arose not from rulemaking but from a consent agreement with the regulated parties and, importantly, do not cover all regulated products. In that respect, this case differs materially from State Farm , relied upon by Plaintiffs. There, the agency failed to consider, without explanation, an alternative regulatory approach, which the agency itself previously had endorsed as a way of achieving regulatory objectives. See State Farm ,
In developing its own cigar warnings regime, the FDA was well within its discretion to look elsewhere. Primarily, the FDA considered the congressional mandates of the TCA itself and the World Health Organization Framework Convention on Tobacco Control ("FCTC"), to which the United States is a signatory.
*163The Deeming Rule's warning scheme is comparable to both. Under the TCA, Congress established for smokeless tobacco warning sizes of at least 30 percent of the packaging's two principal panels, and at least 20 percent of the area for each advertisement.
Plaintiffs' additional contention that the cigar warning regime is disproportionately more demanding than the required scheme for cigarettes, and therefore arbitrary and capricious, also is not well taken. The congressionally mandated sizes of warnings for cigarette packaging is actually greater than for cigar products. See
In sum, because the Deeming Rule's health warning requirements satisfy the TCA and the APA, the court continues on to consider Plaintiffs' constitutional challenges.
2. First Amendment Challenges
Count VII of Plaintiffs' Complaint alleges that the Deeming Rule's health warning and advertising disclosure requirements violate the First Amendment. Compl. ¶¶ 142-48. In their partial summary judgment motion, Plaintiffs assert that the Rule's warnings scheme violates the First Amendment for two reasons: (1) increasing the size of the new health warnings unconstitutionally restricts speech by "crowding out" manufacturers' and retailers' ability to communicate with consumers, and (2) requiring manufacturers and retailers to submit a warning rotation plan to the FDA before they can communicate with consumers constitutes an unconstitutional prior restraint on speech. Pls.' Mot. at 16. The court rejects the first contention as without *164merit, and does not reach the second because Plaintiffs did not raise a prior-restraint claim in their Complaint.
a. Commercial Speech
Plaintiffs' challenge to the Deeming Rule's warning requirements presents the following issue: Whether a warning statement of the size required by the FDA-comprising 30 percent of the principal panels of a cigar product package and 20 percent of a cigar product advertisement-infringes Plaintiffs' commercial speech rights under the First Amendment. Plaintiffs assert that the Deeming Rule is unconstitutional because it unjustifiably and dramatically increases the size of health warnings already required by the FTC consent orders on cigar packages and advertisements, thereby crowding out and restricting the space available to manufacturers and retailers to communicate with consumers. Defendants counter that the Deeming Rule does not restrict the speech of cigar manufacturers or retailers, but instead merely requires Plaintiffs to make accurate health-related disclosures reasonably aimed at "help[ing] consumers better understand and appreciate the risks and characteristics of tobacco products," and does not otherwise impose an undue burden, and thus falls well within the limits of the First Amendment. See Defs.' Cross-Mot. at 19 (quoting 81 Fed. Reg. at 28,981 ).
As a threshold matter, the parties agree that the warning requirements imposed by the Deeming Rule impact only commercial speech, that is, "expression related solely to the economic interests of the speaker and its audience." Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n of New York ,
The parties' threshold dispute instead centers on, if not strict scrutiny, then which constitutional test to apply. Plaintiffs maintain that the warning requirements should be assessed under the intermediate scrutiny standard set forth in Central Hudson , the case that typically governs "First Amendment questions arising in the arena of commercial speech." See United States v. Philip Morris USA Inc. ,
Defendants, on the other hand, argue that the Deeming Rule's warning requirements should be analyzed under the more "relaxed standard of review" set forth in Zauderer v. Office of Disciplinary Counsel . Zauderer applies "when the government uses a disclosure mandate to *165achieve a goal of informing consumers about a particular product trait," provided "that the reason for informing consumers qualifies as an adequate interest." AMI ,
Zauderer 's more relaxed standard recognizes that there are "material differences between disclosure requirements and outright prohibitions on speech," which, in the commercial speech context, warrant corresponding levels of scrutiny.
i. The Applicable Constitutional Test
The challenged provisions of the Deeming Rule require disclosures, but not every disclosure regime is subject to Zauderer 's reasonableness standard. Zauderer applies only to disclosures of "purely factual and uncontroversial information about the good or service being offered." AMI ,
Though the D.C. Circuit has been less than clear in "defin[ing] [the] terms ['purely factual' and 'uncontroversial'] precisely," see Nat'l Ass'n of Mfrs. v. SEC (NAM ),
Moving on, the determination of whether these "purely factual" warning statements are "uncontroversial" poses a different inquiry than mere factual accuracy. See NAM ,
Although Plaintiffs do not dispute that the Deeming Rule requires display of only "purely factual and uncontroversial information," and thus do not challenge the "criteria triggering the application of Zauderer ," AMI ,
The court is unpersuaded. The court has had the benefit of viewing samples of cigar packaging integrating the mandatory warning statements. It may be true, as Plaintiffs contend, that the Deeming Rule's requirements demand "large[r] and stark[er]" warnings on packaging than those required under FTC consent orders, Pls.' Reply at 5, and that the FDA's regime compels use of a larger percentage of advertisements, see id. at 6. But even so, cigar manufacturers and retailers retain sufficient space in which to communicate their messaging: 70 percent of cigar packages and 80 percent of advertisements remain unencumbered and available for speech. Simply put, the Deeming Rule does not impose the "type of restriction-an outright ban on advertising ...-[that] would properly be analyzed under the heightened Central Hudson standard of scrutiny." See *167Dwyer v. Cappell ,
Plaintiffs offer no convincing case law to persuade the court otherwise. Plaintiffs' citation to Dwyer v. Cappell , does not advance their cause. See Pls.' Mot. at 18; Pls.' Reply at 5; cf. Transcript of Oral Arg. Hr'g, ECF No. 85 [hereinafter Hr'g Tr.], at 9-10 (Plaintiffs' counsel admitting that there is no case that applies Central Hudson to a disclosure requirement). There, the New Jersey Supreme Court approved an attorney guideline prohibiting attorneys from advertising using complimentary quotations from judicial opinions, unless the full text of the judicial opinion appeared in full. Dwyer ,
Having concluded that Zauderer 's test is the correct one to apply in this case, the court now turns to assess whether the Deeming Rule's health warning statement requirements withstand scrutiny under that decision.
ii. Application of Zauderer
Under Zauderer , a "purely factual" and "uncontroversial" disclosure requirement satisfies the First Amendment so long as it is (1) "reasonably related" to the government's interest and (2) not "unjustified or unduly burdensome."
a. Defendants have identified a substantial government interest.
In applying Zauderer , the court's first task is to assess the adequacy of the government interest motivating the health warning requirements scheme. See AMI ,
The conclusion that the FDA's stated interest qualifies as "substantial" is well-rooted in precedent. In Rubin v. Coors Brewing Co. , the Court considered whether a ban on placing alcohol content on beer labels violated brewers' commercial speech rights.
The reasoning of AMI is also instructive. There, the D.C. Circuit recognized as substantial the government's interest in country-of-origin labeling on meat cuts based on a number of factors: the "context and long history" of such disclosures; the consumer interest in extending such labeling to food products; and the "individual health concerns and market impacts that *169could arise in the event of a food-borne illness outbreak."
Notwithstanding the foregoing legal landscape, Plaintiffs vigorously assert that the FDA's stated interest in informing the public about the adverse health consequences associated with tobacco use, "standing alone," does not constitute a substantial government interest. Pls.' Mot. at 19; Pls.' Reply at 20-21. Citing the Supreme Court's decision in Lorillard Tobacco Co. v. Reilly ,
Plaintiffs alternatively maintain that the asserted government interest here merely aims to improve "information" and "consumer understanding," Pls.' Mot. at 20; Pls.' Reply at 9, and therefore is disqualified as a substantial government interest by the D.C. Circuit's decision in RJ Reynolds and the Second Circuit's reasoning in International Dairy Foods Ass'n v. Amestoy ,
In RJ Reynolds , the D.C. Circuit held that an FDA rule requiring cigarette packages to bear certain graphic warnings violated the First Amendment.
The interest asserted by the agency in the Deeming Rule does not suffer from the same defect. Here, the FDA's stated interest is in actually communicating health risks to the public, not "effectively" communicating them, as in RJ Reynolds . That distinction is critical. The FDA's stated interest in this case is a decidedly an objective one: To provide accurate information and to correct documented, widespread misperceptions about the health risks of cigar use. See, e.g. , A.R. 7708. Therefore, the concern that the court in RJ Reynolds expressed-that an indeterminate interest in "effective communication" would allow the government to define its goal however it saw fit,
Nor is the interest asserted by the FDA anything like the interest rejected as insufficient in International Dairy Foods . There, the only government interest offered to sustain a Vermont law requiring dairy manufacturers to label milk from cows treated with a growth hormone was a "strong consumer interest and the public's 'right to know.' " Int'l Dairy Foods ,
b. The Deeming Rule's warning requirements are reasonably related to the government's substantial interest .
Having established that the interest identified by the government to sustain the Deeming Rule is substantial, the court moves on to consider whether the warning requirements are "reasonably related" to the government's interest.
Unlike Central Hudson 's intermediate scrutiny-where the commercial speech restriction would have to be shown to "directly and materially advance the asserted governmental interest," see Lorillard ,
In view of the record evidence, academic studies, see, e.g. , A.R. 5144-50, 5290-99, 18745-55, 18756-64, and international consensus, 81 Fed. Reg. at 28,988 -89-all supporting the commonsense notion that "[u]sers are more likely to recall warnings that are a larger size and that appear on the front/major surfaces of the tobacco product package," id. at 28,989 -the court concludes that the size, format, and other design features of the warning statements are reasonably related to the government's goal of providing accurate information about, and curing misperceptions regarding, the health consequences of cigar use. Stated simply, providing accurate warnings about the health risks of cigar use in a size, format, and manner that consumers *172will readily notice and retain satisfies the "means-end fit" requirement under Zauderer. See AMI ,
c. The Deeming Rule's warning requirements are not "unduly burdensome."
Finally, the court considers whether the Deeming Rule's warning requirements are so "[u]njustified or unduly burdensome" as to "chill[ ] protected speech." See Milavetz ,
Plaintiffs claim that the size of the mandated warnings will drown out their speech. To that end, they cite a number of decisions from other circuits striking down commercial speech disclosures that were too burdensome to be constitutional. But those cases are simply not like this one. For example, in Entertainment Software Ass'n v. Blagojevich ,
Tillman v. Miller ,
This case differs from others cited by Plaintiffs in another critical respect: The disclosures required by the Deeming Rule are not so lengthy or cumbersome as to effectively rule out speech or "nullify" the message meant to be communicated. Requirements that an attorney include the full text of a judicial opinion on a law firm website instead of quoting excerpts of that opinion, see Dwyer ,
So, to sum up the foregoing analysis: Because the warning statements are factual and uncontroversial disclosures aimed at informing the public about the risks of cigar and pipe tobacco use and at correcting the public's misperceptions about such products' use, and because the Rule does not impose these requirements in an "unjustified or unduly burdensome" manner, the Rule is constitutional under Zauderer .
b. Prior Restraint
Plaintiffs also challenge the warnings scheme as an unconstitutional prior restraint on speech because it impermissibly compels manufacturers and retailers "wishing to speak with consumers" to submit a warnings rotation plan to the FDA in advance and wait for the FDA's approval before they can so speak. Pls.' Mot. at 16. The court does not reach this challenge, however, because Plaintiffs failed to raise it in their Complaint. And, despite the court's suggestion at oral argument, Hr'g Tr. at 31, Plaintiffs have not filed a motion to amend the Complaint to add a prior restraint claim.
"It is well established that a party may not amend its complaint or broaden its claims through summary judgment briefing." District of Columbia v. Barrie ,
Plaintiffs' Complaint, even generously read, does not contain a challenge to the Deeming Rule's warning plan submission requirement as an unconstitutional prior restraint on speech. Count VII of Plaintiffs' Complaint-styled as "Violation of the First Amendment to the U.S. Constitution: The Final Rule's Warning Label Requirements Impermissibly Restrict Free Speech"-consists of allegations that pertain solely to Plaintiffs' claim that the warning label and advertising disclosure requirements infringe Plaintiffs' First Amendment commercial speech rights. See Compl. at 35-36. Nowhere in the Complaint do Plaintiffs mention the warning plan submission requirement, nor do the words "prior restraint" or something similar appear. Moreover, although the Complaint generally requests "a declaration that FDA's Final Rule establishing warning label requirements for cigars violates the First Amendment to the U.S. Constitution and should be set aside," Compl. ¶ 148, the specific relief sought is tied to the Deeming Rule's warning statement requirements: (1) vacatur of the Final Rule under the APA "for imposing warning label formats on cigars in excess of the FTC Consent Decree's requirements without justification"; and (2) a declaration that the Final Rule "imposing warning label format requirements on cigars in excess of those contained in FTC Consent Decree[s] violate the First Amendment," see
Finally, and perhaps most tellingly, Plaintiffs did not brief a prior restraint claim when they filed their initial motion for summary judgment. In that motion, filed before the parties agreed to narrow *175the issues for partial summary judgment briefing, Plaintiffs moved for judgment as to all claims asserted in their Complaint. See generally Pls.' Mot. for Summ. J., ECF No. 22; cf. Pls.' Mot. at 13 (describing their initial motion for summary judgment as "exhaustive" and relating to "all claims"). Nowhere, however, does that motion assert that the Deeming Rule's rotation-plan submission requirement constitutes an unconstitutional prior restraint on speech. Plaintiffs' silence in their initial dispositive motion is strong evidence that they themselves did not understand their Complaint to contain a prior restraint challenge.
Accordingly, as Plaintiffs do not sufficiently raise an unconstitutional prior restraint challenge in their pleading, the court does not reach that question.
c. The FDA's announced rulemaking concerning premium cigars
Although the court holds that the Deeming Rule's health warning mandates do not violate the APA, the TCA, or the First Amendment, the court cannot let pass without comment what it "deems" to be a grossly unfair exercise of agency authority. The health warning requirements have an effective date of August 10, 2018. In the lead up to that date, the cigar industry has expended millions of dollars in designing and creating new, conforming packaging-a fact that the FDA does not contest. However, months before the effective date's arrival, the FDA issued an ANPRM, "seeking comments, data, results or other information that may inform regulatory actions FDA might take with respect to premium cigars."
The court's displeasure with the FDA's handling of the status of premium cigars, no doubt, provides little consolation to the industry. But the court can do no more. Its hands are tied by both the law and the posture of the case.
There is nothing inherently unlawful about an agency's decision to reconsider the wisdom of a regulation, even before it goes into effect. An agency is free to change its mind about an existing policy, "either with or without a change in circumstances."
*176State Farm ,
The court's power to act is limited in yet another way. The present posture of this case does not offer a basis on which to enjoin enforcement of the Deeming Rule's warning requirements during the pendency of the FDA's newly announced rulemaking process. The court already has rejected Plaintiffs' statutory and constitutional challenges to the warning requirements, so the court has found no violation to be remedied. Additionally, Plaintiffs agreed to defer litigating their claim under the APA that the FDA's decision not to adopt "Option Two," i.e., the option that would have excluded premium cigars from regulation, was itself arbitrary and capricious (Count V). See Joint Status Report (dated Sept. 8, 2017), ECF No. 53, ¶ 4. Therefore, there is no claim presently before the court that contests the agency's basis for subjecting premium cigars to regulation in the first instance.
Nor have Plaintiffs made a different challenge, namely to the FDA's refusal to stay the warnings requirement as to premium cigars during the pendency of the present rulemaking process. See Pls.' Resp. to Defs.' Notice of Publication of ANPRM, ECF No. 92, at 1 (expressing surprise that the decision to issue the ANPRM "was not accompanied by voluntary stay of enforcement of the mandated warnings provision"); cf. Clean Air Council v. Pruitt ,
In the end, even if fundamental fairness strongly favors a stay for premium cigars during the just-initiated rulemaking process, regrettably neither the law nor the posture of this case allows for such judicial relief.
B. User Fee Rule
When the FDA promulgated the Deeming Rule, it contemporaneously promulgated the User Fee Rule pursuant to its authority under the TCA. See 21 U.S.C. § 387s(b)(iii) ("[N]o user fees shall be assessed on a class of tobacco products unless such class of tobacco products is listed in section 387a(b) of this title or is deemed by the Secretary in a regulation under section 387a(b) of this title[.]" (emphasis added) ). Plaintiffs do not challenge the FDA's decision to assess user fees on domestic manufacturers and importers of cigars and pipe tobacco in order to fund the FDA's regulation of tobacco products. Instead, they challenge the FDA's decision not to assess user fees on e-cigarettes, another newly deemed tobacco product. According to Plaintiffs, this "selective implementation of a user fee" is unlawful for three reasons. Pls.' Mot. at 40. First, they assert that the FDA incorrectly concluded that it did not have statutory authority to impose user fees on e-cigarettes under the TCA. Second, they argue that charging only some newly deemed products impermissibly imposes a "tax," rather than a user fee. Finally, Plaintiffs contend that the selective imposition of the User Fee Rule violates the Fifth Amendment of the U.S. Constitution.
The court concludes that the FDA's decision not to impose the User Fee Rule on e-cigarettes is compelled by statute and, even if the statute were ambiguous or silent, is a reasonable interpretation of the TCA deserving of deference. Additionally, the court rejects Plaintiffs' characterization of the user fee as a "tax," along with Plaintiffs' contention that imposing the User Fee Rule only on some newly "deemed" products violates the Fifth Amendment. Plaintiffs' challenge to the User Fee Rule therefore fails.
1. ChevronAnalysis
The question whether the FDA's decision to impose user fees on cigars and pipe tobacco but not e-cigarettes is consistent with the TCA requires analysis under Chevron 's two-step framework.
a. Step One
At step one of Chevron , the court asks if Congress has spoken directly to the precise question at issue-here, whether the FDA can assess user fees on only some of the newly deemed tobacco products-by employing "traditional tools of statutory construction," including "examination of the statute's text, legislative history, and structure, as well as its purpose." Bell Atl. Tel. Co. v. FCC ,
The TCA provides that the FDA "shall in accordance with [ 21 U.S.C. § 387s ] assess user fees on, and collect such fees from, each manufacturer and importer of *178tobacco product subject to [subchapter IX]." 21 U.S.C. § 387s(a). "[E]ach manufacturer and importer of tobacco product" subject to subchapter IX includes the original classes of tobacco products listed in § 387a(b).
Plaintiffs' step one argument relies on their reading of Section 387s(a), which requires FDA to assess user fees on "each manufacturer and importer of tobacco products subject to this subchapter." 21 U.S.C. § 387s(a) (emphasis added). Plaintiffs read the term "each" to mean that Congress intended that all deemed products are subject to user fees, not just those listed in Section 387s(b)(2)(B), e.g., cigars and pipe tobacco. Plaintiffs also point to another clause, Section 387s(b)(2)(B)(iii), which provides that "no user fees shall be assessed on a class of tobacco products" other than those listed in section 387a(b) -the originally regulated "cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco," plus those deemed by the FDA to be subject to subchapter IX. Taken together, Plaintiffs contend, those sections compel the interpretation that all products so deemed, including e-cigarettes, must be assessed user fees.
Plaintiffs' interpretation cannot, however, be squared with a plain reading of the statute. Section 387s(a) provides that user fees must be assessed "in accordance with this section ." See
Stifled by the statutory text, Plaintiffs resort to policy arguments to support their reading. They contend that Congress could not have intended to allow newly deemed tobacco products, like e-cigarettes, to become a free rider in funding the TCA's regulatory scheme. As Plaintiffs put it: "There is no provision in the statute for regulating a class of tobacco products and requiring other classes of products to pay the necessary costs of such regulation." Pls.' Reply at 34. That argument is not without some force. After all, it does seem unfair that a newly deemed product increasingly used among youth and adults alike does not have to pay its fair share. See generally Nicopure Labs, LLC v. FDA ,
In sum, the statute plainly provides that if one day deemed to be "tobacco products" by the FDA, "cigars" and "pipe tobacco" "shall" be subject to user fees to fund the statutory scheme. 21 U.S.C. § 387s(b)(2)(B). The text, however, contains no such mandate with regard to e-cigarettes, despite evidence that Congress was aware of their existence at the time it passed the TCA. See Defs.' Reply in Supp. of Cross-Mot., ECF No. 80, at 20 (citing 155 Cong. Rec. H6626 (June 12, 2009) ). The statutory text could be no clearer: The *180agency was compelled to assess user fees only on the six classes of tobacco products enumerated in the statute.
b. Step Two
In the court's view, the plain text of the TCA mandates the assessment of user fees only on those enumerated classes of tobacco products. But, even assuming that the plain text of the TCA does not unambiguously compel the FDA's interpretation, and proceeding to Chevron 's second step, the court holds, for the reasons stated above, that the FDA has offered in the User Fee Rule a "reasonable explanation of how its interpretation serves the statute's objectives." Nat'l Ass'n of Broads. v. FCC ,
When promulgating the final User Fee Rule, the FDA addressed public comments asserting that the agency was required by statute to assess fees on all deemed tobacco products, including those outside the six classes. 81 Fed. Reg. at 28,709 -14. In its responses, the FDA explained its belief that assessing user fees on classes of tobacco products beyond the six listed in the TCA and FETRA was prohibited by the text of the statute, but also explained that even if the statute were silent or ambiguous, its interpretation was a reasonable one. Id. at 28,711 -12. Moreover, in response to comments arguing that the FDA abandon the tax-based methodology from FETRA altogether, or even adopt a metric proposed by the public, the FDA explained that it was interpreting the text to prohibit the assessment of user fees on any class of tobacco products beyond the six listed in the TCA in part because:
[I]t is reasonable to conclude that Congress did not intend FDA to develop a new system that departs from the methodology mandated by FETRA. Any such system would necessarily be subjective, especially relative to the system Congress established for the enumerated six classes. As such, FDA's interpretation is a reasonable construction of the [TCA].
Id. at 28,712. In light of the FDA's reasonable-and in the court's view, compelled-interpretation of the statute, the court concludes that the User Fee Rule is entitled to deference.
2. The User Fees Are Not a "Tax"
Plaintiffs' assertion that the uneven application of the User Fee Rule imposes a "tax" on the tobacco products assessed is readily dismissed. The court understands Plaintiffs to argue that, by excepting e-cigarette makers from paying a user fee, the FDA is not imposing on other tobacco products a "user fee," as that term is commonly understood, but instead a "tax," which the FDA does not have the authority to impose. According to Plaintiffs, a "user fee" is: "(1) predicated on a voluntary act by a payer; (2) paid for a specific service or benefit, including the 'benefit' of regulation; and (3) not meant for the benefit of others." Pls.' Mot. at 42 (citing Nat'l Cable Television Ass'n, Inc. v. United States ,
The court disagrees. In light of the court's conclusion above that Congress expressly intended that only the six classes of tobacco products enumerated in the statute be assessed user fees to pay for the FDA's regulation of tobacco products, the *181User Fee Rule does no more than that commanded by Congress. No general definition of "user fee" can compel the agency to do otherwise. That Congress chose not to include a mechanism to re-calculate the pro rata share formula to take account of newly deemed products, like e-cigarettes, does not turn the user fee into a "tax." Cf. United States v. Sperry Corp. ,
3. The User Fee Rule Does Not Violate the Fifth Amendment
Characterizing the User Fee Rule as "naked economic favoritism," Plaintiffs lodge a constitutional challenge to the Rule under the equal protection component of the Due Process Clause of the Fifth Amendment. Pls.' Mot. at 43. Applying rational-basis review to the economic classification challenged here, as Plaintiffs concede is appropriate, see Sperry Corp. ,
Applying rational-basis review, the User Fee Rule is constitutionally valid if "there is a plausible policy reason for the classification, the legislative facts on which the classification is apparently based rationally may have been considered to be true by the governmental decisionmaker, and the relationship of the classification to its goal is not so attenuated as to render the distinction arbitrary or irrational." Armour v. City of Indianapolis ,
The Supreme Court's decision in United States v. Sperry Corp. is on point. There, the Court upheld the constitutionality of a statute requiring the Federal Reserve Bank of New York to deduct and pay into the U.S. Treasury a percentage of any award made by the Iran-U.S. Claims Tribunal in favor an American claimant.
As in Sperry , there are a number of rational reasons that could explain why Congress opted to limit the FDA to assessing user fees on the enumerated six classes of tobacco products. For example, Congress reasonably could have determined that novel, newly deemed products, like e-cigarettes, were unlikely to overcome the market shares of the traditional enumerated products, and so it left for another day the question of how to account for a novel newly deemed product if it gained sufficient market share. Or, Congress could have decided that incorporating the FETRA scheme-and its readily available data-was the best way to assess user fees, as manufacturers and importers *182already were providing information and paying fees pursuant to FETRA. The court therefore can discern rational interests served by the TCA's user fee scheme.
Although Plaintiffs invite the court to second-guess Congress's determination to assess user fees only on six classes of tobacco products, rational-basis review "is not a license for courts to judge the wisdom, fairness, or logic of legislative choices." FCC v. Beach Commc'ns, Inc. ,
C. Designation of Retail Establishments That Blend Pipe Tobacco as "Manufacturers" Subject to 21 U.S.C. § 387e
Plaintiffs next challenge the Deeming Rule's designation of tobacco retailers who blend pipe tobacco in-store as "manufacturers" within the scope of 21 U.S.C. § 387e.
In Plaintiffs' view, subjecting these "mom-and-pop retailers" to the same requirements intended for manufacturers is contrary to the plain text of Section 387e and violates the APA. Additionally, even if the statutory text were ambiguous, they argue, the agency's interpretation is an unreasonable one.
1. ChevronStep One
At the first step of Chevron , the court must consider whether Congress has "directly spoken" to the precise question at issue. Here, that question is whether retailers who blend pipe tobacco are, in fact, "engaged in the manufacture, preparation, compounding, or processing of a tobacco product" and thus subject to the regulatory requirements of 21 U.S.C. § 387e. See Chevron ,
To prevail on their Chevron argument at the first step, Plaintiffs must show that the statute unambiguously forecloses the agency's interpretation. Pharm. Research & Mfrs. of Am. v. FTC ,
As required, the court begins with the statutory text. In pertinent part, 21 U.S.C. § 387e provides that its terms apply to "every person who owns or operates any establishment in any State engaged in the manufacture, preparation, compounding, or processing of a tobacco product."
The term "manufacture, preparation, compounding, or processing" shall include repackaging or otherwise changing the container, wrapper, or labeling of any tobacco product package in furtherance of the distribution of the tobacco product from the original place of manufacture to the person who makes final delivery or sale to the ultimate consumer or user .
According to Plaintiffs, a retail pipe tobacco blender is not a "manufacturer"; instead, a retail blender "simply tak[es] two end-use, FDA-approved products and perform[s] a service that consumers themselves could do on their own." Pls.' Mot. at 44. Plaintiffs also contend that because the text of Section 387e distinguishes the manufacturer from "the person who makes final delivery or sale to the ultimate consumer or user," then any retailer who blends pipe tobacco cannot be the person who "manufacture[s], prepar[es], compound[s], or process[es]." See Pls.' Reply at 38-39. Thus, Plaintiffs conclude, Section 387e's textual reference to a "person who makes final delivery or sale to the ultimate consumer or user" dictates the conclusion that a retailer, typically the entity which makes the final delivery or sale of a tobacco product to the ultimate consumer or user, cannot be subject to the same requirements as a "manufacturer." See
For its part, the FDA defends its action by pointing to the definition of "tobacco product manufacturer" under
Starting with Plaintiffs' arguments, the court finds them unpersuasive. The court *184agrees with Defendants that Plaintiffs incorrectly read Section 387e to exclude any and all retailers from its reach. A person's designation as a "retailer" does not preclude application of Section 387e ; instead, the focus of the statutory text is on the activity that the person undertakes. If a person in fact "engage[s] in the manufacture, preparation, compounding, or processing of a tobacco product," then he or she is covered by the plain terms of the provision. It matters not, for purposes of Section 387e, whether that establishment is also a retailer. Indeed, crediting Plaintiffs' reading would-as Defendants point out-lead to the absurd conclusion that an establishment could undertake the full manufacture of a tobacco product, but not be subject to Section 387e, as long as it was the entity that made the final sale to the ultimate consumer. The statutory text cannot bear such a result.
At the same time, the court cannot accept the agency's interpretation of Section 387e because its reliance on the general definition of "tobacco product manufacturer" to interpret that section is misplaced. Section 387e does not incorporate, as Defendants seem to assert, Section 387(20)'s definition of "tobacco product manufacturer." To the contrary, all of Section 387e's requirements are triggered upon a person "first engaging in the manufacture, preparation, compounding, or processing of a tobacco product," which action compels the person to register with the FDA. 21 U.S.C. § 387e(c) ; see
It may be that the act of blending pipe tobacco does constitute the "manufacture, preparation, compounding, or processing of a tobacco product," but the agency neither makes that argument here nor did it make it during the rulemaking process. Cf. 81 Fed. Reg. at 29,049 ("All entities that meet the definition of 'tobacco product manufacturer' in [ Section 387(20) ] of the [TCA], including retail establishments that blend pipe tobacco, are subject to and must comply with all applicable statutory and regulatory requirements for tobacco product manufacturers."). The court cannot now independently analyze that issue. See State Farm ,
2. ChevronStep Two and Remedy
Having concluded that the agency's reasoning was misguided, the court quickly disposes of Defendants' contention that the agency's interpretation is entitled to deference at Chevron 's second step. When, as *185here, "an agency incorrectly concludes that Congress mandated a particular regulatory interpretation of a statute-and the agency therefore stops itself at Chevron step one-this court will vacate and remand." Noble Energy, Inc. v. Salazar ,
D. Pipes as "Components or Parts"
At last, the court turns to Plaintiffs' challenge to the FDA's designation of pipes as "components or parts" of a tobacco product subject to regulation under the TCA, as opposed to "accessories" not subject to the Act. Compl. ¶¶ 115-60. The court concludes that the agency's designation of pipes as "components," rather than "accessories," is not foreclosed by the statutory text, and defers to the agency's interpretation as the product of "reasoned analysis." State Farm ,
As amended by the TCA, the FD & C Act defines a "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 (except for raw materials other than tobacco used in manufacturing a component, part, or accessory of a tobacco product).
In making these distinctions, the FDA filled in definitional gaps left by Congress. The agency defined "component or part"
any software or assembly of materials intended or reasonably expected: (1) [t]o alter or affect the tobacco product's performance, composition, constituents or characteristics; or (2) to be used with or for the human consumption of a tobacco product. The term excludes anything that is an accessory of a tobacco product.
any product that is intended or reasonably expected to be used with or for the human consumption of a tobacco product;
*186does not contain tobacco and is not made or derived from tobacco; and meets either of the following: (1) [i]s not intended or reasonably expected to affect or alter the performance, composition, constituents, or characteristics of a tobacco product or (2) is intended or reasonably expected to affect or maintain the performance, composition, constituents, or characteristics of a tobacco product but (i) solely controls moisture and/or temperature of a stored product or (ii) solely provides an external heat source to initiate but not maintain combustion of a tobacco product.
Id. at 29,015. The agency concluded in the final Deeming Rule that "[b]oth e-cigarettes and pipes meet" the definition of "components or parts." 81 Fed. Reg. at 29,042. It also provided, by way of contrast, a list of products meeting the definition of "accessories," to include "ashtrays, spittoons, hookah tongs, cigar clips and stands, and pipe pouches," as well as "humidors or refrigerators that solely control the moisture and/or temperature of a stored product and conventional matches and lighters that solely provide an external heat source to initiate but not maintain combustion of a tobacco product." Id. at 28,975.
Plaintiffs challenge the agency's statutory analysis. Relying on a dictionary definition of "component" to mean an "ingredient" or "constituent part," Plaintiffs maintain that "[a] pipe is not a constituent part or ingredient of a product made or derived from tobacco , and therefore is not subject to regulation as a tobacco product under the TCA." Pls.' Mot. at 47. Plaintiffs insist that to qualify as a component the object must be "integrated with a product made of tobacco," and, because a pipe is merely a vessel for pipe tobacco, a pipe is simply not a "component." Id. at 48. Moreover, even if the statutory term "component" were ambiguous, Plaintiffs say that FDA's classification of pipes as components, rather than unregulated "accessories," is not a reasonable one entitled to deference because there is no record evidence to suggest that pipes do in fact "have ... direct impact on the public health," rendering the FDA's designation arbitrary and capricious under the APA. See 81 Fed. Reg. at 29,102.
1. ChevronStep One
The court begins, as always, with the statutory text. See Sebelius v. Cloer ,
*187Taking these dictionary definitions together, treating a "pipe" as a "component or part" of a tobacco product is not foreclosed by the statutory text. If "component," in this context, is taken to mean that which is "essential" or critical to the consumption of a tobacco product, then a pipe fits the definition. Neither the pipe nor the pipe tobacco has any independent use or function apart from the other, and Plaintiffs do not assert otherwise. Only when used together do the two create a consumable tobacco product, which is of course the object of regulation under the TCA. None of the definitions of the key terms requires the material regulated to be "integrated" into the tobacco product, as Plaintiffs contend. To the contrary, the word "part" includes in its definition those elements used to make up a whole, "whether actually separate from the rest or not." See Part, Oxford English Dictionary, 3d ed. (2005).
This is the same conclusion the court reached in Nicopure . There, when assessing the agency's decision to regulate empty vaping devices in the Deeming Rule, the court reasoned that the device satisfied the plain meaning of a "component" because, "just as an empty fountain pen is obviously a 'component' of an ink pen ... even when the ink is sold separately," an empty vaping device is a "component" of an electronic nicotine delivery system. Nicopure ,
To further bolster their argument at Chevron step one, Plaintiffs note that the undefined term "component" appears in other provisions of the statute as a bedfellow for terms like "additive" and "ingredient," which Plaintiffs again take to mean that a component must be integrated with a product made of tobacco. Pls.' Mot. at 47 (citing 21 U.S.C. § 387g(a)(3)(B)(ii), 387g(a)(4)(B)(i), 387j(b)(1)(B) ). But even if Plaintiffs are right that "additives" and "ingredients" suggest some degree of "integration" into the tobacco product, that reading does not foreclose a pipe from fitting the bill. For instance, as Defendants point out, with respect to cigarettes, the TCA uses the term "component" to include elements segregable from the tobacco itself but necessary to consume the cigarette tobacco, such as filters and paper. See 21 U.S.C. § 387g(a)(1)(A). The fact that, as Defendants assert, such components are consumed while smoking, while a pipe is not, is not a limitation on the term "component" found in the statute. Reading any such limitation into the TCA would be at odds with the statute's use of the term "any" to modify "component,"
Accordingly, the court finds that the agency's conclusion that a "pipe" is a "component or part" subject to regulation is not foreclosed by the statutory text and therefore survives Chevron step one review. See Nicopure ,
2. ChevronStep Two and Arbitrary and Capricious Review
Having rejected Plaintiffs' argument at Chevron 's first step, the court turns to consider whether the agency's interpretation of the TCA is a permissible one. Assessing Plaintiffs' statutory and *188APA challenge to FDA's interpretation under the overlapping Chevron step two and "arbitrary and capricious" framework, the court holds that the FDA did not act unreasonably in designating "pipes" as "components or parts" subject to regulation.
Plaintiffs argue that, even if the statutory text is ambiguous, the FDA's interpretation is nonetheless an unreasonable one because "[t]here is nothing in the record to suggest that pipe architecture is being manipulated to make tobacco more addictive or dangerous and have any other direct effect on public health," thus compelling the conclusion that a pipe is an "accessory," rather than a "component or part" of a tobacco product. Pls.' Mot. at 48. To that end, Plaintiffs assert that differentiation among pipes is merely for aesthetic reasons, citing public comments to the Proposed Deeming Rule contending that "while [pipes] enable the smoking of tobacco, they present no independent potential harm."
Plaintiffs' argument is unavailing. For starters, Plaintiffs do not take issue with the definition of "component or part" that the FDA applied to pipes. Plaintiffs do not dispel Defendants' argument that pipe design-the size and shape of the bowl, as well as the inclusion of filters-would in fact be "reasonably expected" to alter or affect the "performance," "constituents," and "characteristics" of pipe tobacco. See 81 Fed. Reg. at 29,102. Moreover, Plaintiffs also do not explain how pipes are not "to be used with or for the human consumption of a tobacco product." Id. at 29,041 -42. Thus, the agency's conclusion that a pipe meets the definition of "component or part" is a reasonable one.
Also bolstering the agency's interpretation is a comparison of pipes against objects that qualify as non-regulated "accessories." Observing the agency's provided examples of "accessories," it is clear that pipes are wholly unlike "ashtrays, spittoons, [or] hookah tongs," that do nothing to affect the "performance, composition, constituents, or characteristics of a tobacco product," or "conventional matches and lighters that solely provide an external heat source to initiate but not maintain combustion of a tobacco product." Id. at 28,975. Rather, pipes are "fundamental" to the delivery and consumption of pipe tobacco. See Nicopure ,
In the alternative, Plaintiffs argue for the first time in their reply brief that the agency's failure to contend with whether to regulate all "components," or not to regulate all "accessories," instead of subsets of each, violates the APA. Plaintiffs did not, however, raise this argument in their initial Motion. See generally Pls.' Mot. The court will adhere to the "well-settled prudential doctrine that courts generally will not entertain new arguments first raised in a reply," and therefore declines to consider Plaintiffs' belated challenge. Aleutian Pribilof Islands Ass'n v. Kempthorne ,
Accordingly, the court holds that FDA's interpretation of the term "component" to encompass a pipe is not "arbitrary and capricious in substance," Judulang ,
V. CONCLUSION AND ORDER
For the reasons set forth above, Plaintiffs' Motion for Partial Summary Judgment is granted in part and denied in part, Plaintiffs' Motion for Preliminary Injunction is denied as moot, and Defendants'
*189Cross-Motion for Partial Summary Judgment is granted in part and denied in part, as follows:
1. The Deeming Rule's health warning requirements comport with the TCA and the APA (Count VI) and do not violate the First Amendment (Count VII).
2. The User Fee Rule (Counts II and III) is upheld in its entirety.
3. The process by which the agency designated tobacco retailers who blend pipe tobacco in-store as subject to the requirements of 21 U.S.C. § 387e violates the APA (Count VIII). The court remands this issue to the agency for further proceedings consistent with this Memorandum Opinion.
4. The agency's designation of pipes as "components" of a tobacco product does not violate the APA (Count IX).
No later than June 11, 2018, the parties shall submit a Joint Status Report recommending how to proceed with the remaining, unresolved claims.
Hereinafter, for ease of reference, the court refers to the FD & C Act, as amended by the TCA, as the "TCA."
Pursuant to Federal Rule of Civil Procedure 25(d), Alex M. Azar II, Secretary of Health and Human Services, and Dr. Scott Gottlieb, Commissioner of Food and Drugs, are substituted for their predecessors in office.
This warning statement can be replaced with an optional alternative warning stating, "SURGEON GENERAL WARNING: Tobacco Use Increases the Risk of Infertility, Stillbirth and Low Birth Weight."
The Deeming Rule imposes similar warning requirements on pipe tobacco packaging and advertisements. 81 Fed. Reg. at 29,060. Pursuant to
Citations to the Administrative Record can be found in the three-volume Joint Appendix, see ECF Nos. 81, 81-1, 81-2.
Plaintiffs also make several arguments under the APA regarding the FDA's alleged failure to properly consider the costs of regulation. See Pls.' Mot. at 35; Pls.' Reply at 31. As Plaintiffs have not fully developed those arguments, they are better left to consider with Plaintiffs' claim that the FDA failed to carry out a proper cost-benefit analysis in violation of the Regulatory Flexibility Act and the Unfunded Mandates Reform Act of 1995 (Count IV). That claim is not-per the parties' agreement-before the court.
Plaintiffs suggest only half-heartedly that the Zauderer standard does not apply because the analysis in Zauderer is limited to compelled disclosures designed to prevent the deception of consumers. Pls.' Mot. at 28 n.7. But, as they concede, this limited view of Zauderer was rejected by the en banc D.C. Circuit in AMI. See
The D.C. Circuit in AMI overruled RJ Reynolds to the extent that it "may be read as ... limiting Zauderer to cases in which the government points to an interest in correcting deception." AMI ,
Plaintiffs have attached to their briefing three declarations of Cecil R. Reynolds, Ph.D. in order to undermine the FDA's record evidence. See Pls.' Mot., Attach. 27, ECF No. 62-27; Pls.' Mot., Attach. 30, ECF No. 62-30; Pls.' Reply, Attach. 8, ECF No. 78-8; see also Pls.' Reply at 15 n.7. Under the APA, "review is to be based on the full administrative record that was before the [agency] at the time [it] made [its] decision." Am. Wildlands ,
Any suggestion by Plaintiffs that the Deeming Rule's application to advertisements beyond print and visual advertisements is "unduly burdensome"-including radio or broadcast advertisements-is premature. The FDA explained in the Deeming Rule that it "intends to provide guidance on how to comply with the health warning requirements on unique types of media" and clarified that the formatting requirements of
Plaintiffs also rely on American Beverage Ass'n v. City and County of San Francisco ,
For example, for fiscal year 2017, the "total amount of user fees authorized to be assessed and collected" is $635,000,000, and for fiscal year 2018, is $672,000,000. 21 U.S.C. § 387s(b)(1)(I)-(K).
FETRA allocates assessments among classes of tobacco products as follows: (1) 96.331 percent for cigarette manufacturers and importers; (2) 2.783 percent for cigar manufacturers and importers; (3) 0.539 percent for snuff manufacturers and importers; (4) 0.171 percent for roll-your-own tobacco manufacturers and importers; (5) 0.111 percent for chewing tobacco manufacturers and importers; and (6) 0.066 percent for pipe tobacco manufacturers and importers. 7 U.S.C. § 518d(c)(1)(A)-(F).
The term "gross domestic volume" means the volume of tobacco products "removed" and not exempt from excise taxes under the Internal Revenue Code. 7 U.S.C. § 518d(a)(2).
Plaintiffs suggest that the FDA could use product equivalencies to assist in calculating user fees for e-cigarettes, asserting that "FDA itself identified metrics in its response to comments." Pls.' Reply at 36. But FDA only repeated a metric suggested by a commenter, and rejected the use of any metric as contrary to the TCA. See 81 Fed. Reg. at 28,712.
At oral argument, Plaintiffs clarified that their argument with respect to blenders of pipe tobacco is that the FDA has wrongly subjected them to the requirements of Section 387e. See Hr'g Tr. at 75-76. The court, therefore, does not take up the broader argument that Plaintiffs seemed to be making in their briefing that blenders do not satisfy the definition of "tobacco product manufacturers" set forth in the TCA's definitions section. See Pls.' Mot. at 44-45; Pls.' Reply at 38-39.
Plaintiffs alternatively suggest that the FDA's interpretation is unreasonable because the FDA failed to reasonably explain the impact of the rule on small businesses as required by the Regulatory Flexibility Act ("RFA"),
The agency acknowledged that "component" and "part" are distinct terms in the TCA, but explained that it would use the terms interchangeably "for purposes of [the] final [Deeming Rule]." 81 Fed. Reg. at 29,042. The FDA reserved the possibility that it would clarify the distinctions between the terms in the future. Id.
To the extent that Plaintiffs alternatively challenge the agency's action as violative of the RFA, see Pls.' Mot. at 48-49, a claim currently held in abeyance, see Mem. Op., ECF No. 68, at 4 n.3, the court declines to consider this argument.
Reference
- Full Case Name
- CIGAR ASSOCIATION OF AMERICA v. U.S. FOOD AND DRUG ADMINISTRATION
- Cited By
- 5 cases
- Status
- Published