NICOPURE LABS, LLC v. FOOD AND DRUG ADMINISTRATION et al
MEMORANDUM OPINION. Signed by Judge Amy Berman Jackson on 7/21/2017. (lcabj3)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
NICOPURE LABS, LLC,
Civil Action No. 16-0878 (ABJ)
FOOD AND DRUG
ADMINISTRATION, et al.,
RIGHT TO BE SMOKE-FREE
COALITION, et al.,
Civil Action No. 16-1210 (ABJ)
FOOD AND DRUG
ADMINISTRATION, et al.,
An electronic cigarette, or “e-cigarette,” is an electronic nicotine delivery device,
comprised of a liquid, an atomizer or heating element that heats the liquid to create a vapor, and a
battery that powers the heating element. Most liquids on the market contain nicotine.
On May 10, 2016, the Food and Drug Administration exercised its discretion to deem ecigarettes to be “tobacco products” subject to the set of federal laws that govern the promotion and
marketing of conventional cigarettes. 1 Plaintiff Nicopure Labs, LLC, which manufactures the
devices and the liquids, then brought this action against the FDA, the Acting Commissioner of
Food and Drugs, and the Secretary of Health and Human Services, challenging the rule that
announced the decision. 2 Nicopure claims that the deeming decision exceeded the agency’s
statutory authority under the Food, Drug, and Cosmetic Act, 21 U.S.C. § 301, et seq. (“FDCA”),
as amended by the Family Smoking Prevention & Tobacco Control Act, Pub. L. No. 111-31, 123
Stat. 1777 (2009) (“Tobacco Control Act” or “TCA”). Nicopure also contends that the deeming
decision was arbitrary and capricious and should be set aside under the Administrative Procedure
Act (“APA”), 5 U.S.C. § 706, and that several provisions of the Tobacco Control Act that now
govern the vaping industry violate the company’s First Amendment rights. Compl., Nicopure
Labs, LLC v. FDA, 16–878 (ABJ) [Dkt. # 1] (“Nicopure Compl.”).
In a separate action, the Right to be Smoke Free Coalition, American Vaping Association,
Electronic Vaping Coalition of America, Georgia Smoke Free Association, Kentucky Vaping
Retailers Association, Inc., Louisiana Vaping Association, Maryland Vaping Professionals, LLC,
Ohio Vapor Association, Tennessee Smoke Free Association, and the New Jersey Retailers
Coalition (collectively, “RSF”), filed their own challenge to the Deeming Rule on similar grounds.
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,” 81 Fed. Reg. 28,974 (May 10, 2016) (“Deeming Rule”). The Court will refer to these
products either as “e-cigarettes,” “electronic nicotine delivery systems,” or “ENDS.” The products
are known colloquially as “vaping” devices.
Nicopure’s complaint named the former Commissioner of Food and Drugs, Robert Califf,
and the former Secretary of Health and Human Services, Sylvia Matthews Burwell. Pursuant to
Federal Rule of Civil Procedure 25(d), their successors, Commissioner of Food and Drugs Scott
Gottlieb and Secretary of Health and Human Services Thomas E. Price have been automatically
substituted as defendants.
Compl., RSF v. FDA, 16–1210 (ABJ) [Dkt. # 1] (“RSF Compl.”). The Court consolidated the two
cases, Order (June 28, 2016) [Dkt. # 19], and both sides have filed motions for summary judgment.
After considering the record, the points and authorities set forth in the briefs submitted by both
sides and the amici, and the arguments presented at a hearing on the motions, the Court will uphold
the Deeming Rule. 3
The Court wishes to reassure the many worried vapers who followed these proceedings
closely that this case is not about banning the manufacture or sale of the devices. That is not what
the Deeming Rule does or what it was intended to accomplish. In the Deeming Rule, the FDA
simply announced that electronic cigarettes, or electronic nicotine delivery systems (“ENDS”)
would be subject to the same set of rules and regulations that Congress had already put in place
for conventional cigarettes.
On July 8, 2016, Nicopure filed its motion for summary judgment. Nicopure Labs, LLC’s
Mot. for Summ. J. [Dkt. # 20] (“Nicopure Mot.”); Mem. of P. & A. in Supp. of Nicopure’s Mot.
[Dkt. # 20-1] (“Nicopure Mem.”). RSF filed its motion for summary judgment on July 25, 2016,
joining in Nicopure’s arguments concerning the issues raised in both complaints, and focusing on
the issues unique to its motion. Pl. Trade Assocs.’ Mot. for Summ. J. [Dkt. # 21] (“RSF Mot.”);
Mem. of P. & A. in Supp. of RSF’s Mot. [Dkt. # 21-1] (“RSF Mem.”). The government filed an
opposition to both motions, as well as a cross-motion for summary judgment, on August 17, 2016.
Defs.’ Cross-Mot. for Summ. J. [Dkt. # 43] (“Defs.’ Cross-Mot.”); Mem. in Opp. to Pls.’ Mots.
for Summ. J. & in Supp. of Defs.’ Cross-Mot. [Dkt. # 43] (“Defs.’ Cross-Mem.”). Plaintiffs jointly
opposed the cross-motion and replied in support of their motions on August 26, 2016, Pls.’ Joint
Mem. in Opp. to Defs.’ Cross-Mot. & Reply in Supp. of Pls.’ Mots. for Summ. J. [Dkt. # 46]
(“Pls.’ Reply”), and defendants filed their cross-reply on September 9, 2016. Reply in Supp. of
Defs.’ Cross-Mot. [Dkt. # 48] (“Defs.’ Cross-Reply”). The Court also received amicus curiae
submissions from a number of groups in support of plaintiffs: Brief of Amicus Curiae SmokeFree Alternatives Trade Ass’n in Supp. of Pl.’s Mot. [Dkt. # 30]; Brief of Amicus Curiae the Nat’l
Center for Public Policy Research, and TechFreedom in Supp. of Pls. [Dkt. # 37]; Brief Amicus
Curiae of the Vape a Vet Project in Supp. of Pls. [Dkt. # 39]; Brief of Amici Curiae Clive Bates &
Fifteen Others in Supp. of Pls.’ Mot. [Dkt. # 41]. And it received an amicus curiae submission
from the Campaign for Tobacco-Free Kids and a number of other public health organizations in
support of defendants. Brief of Amici Curiae Public Health Orgs. in Supp. of Defs.’ Cross-Mot.
[Dkt. # 45]. The Court held a hearing on the cross-motions on October 11, 2016. Min. Entry (Oct.
11, 2016); Tr. of Mots. Hr’g [Dkt. # 50] (“Hr’g Tr.”).
The Rule requires manufacturers to subject their products to review before marketing them,
to tell the truth when making any claims about their health benefits, and to warn consumers about
the dangers of nicotine when offering a means to deliver the substance to consumers. In short, the
manufacturers of e-cigarettes are now required to tell the 30 million people who use the devices
what is actually in the liquid being vaporized and inhaled.
This case does not pose the question – which is better left to the scientific community in
any event – of whether e-cigarettes are more or less safe than traditional cigarettes. The Rule did
not purport to take the choice to use e-cigarettes away from former smokers or other adult
consumers; the issue is whether the FDA has the authority to require that the choice be an informed
In the 2009 Tobacco Control Act, Congress mandated that “tobacco products” would be
regulated by the Secretary of HHS, and it stated that the provisions of the statute would apply not
only to cigarettes, but to other tobacco products that the Secretary deemed to be subject to the law
in the future. In the rule in question in this case, the FDA exercised its discretion under the Act to
deem e-cigarettes to be tobacco products subject to regulation under the Federal Food, Drug, and
Cosmetic Act and the Tobacco Control Act. The agency unquestionably had the power to do so;
indeed, the plaintiffs who brought this lawsuit and submitted 235 pages of argument to the Court
do not challenge that general proposition even though they maintain that the agency should have
taken a different approach to the task.
In the first portion of the case, though, plaintiffs claim that the FDA exceeded the authority
given to it by Congress because certain types of devices or liquids do not fall within the statutory
definition of a tobacco product that may be deemed to be subject to the TCA. But that challenge
is extremely narrow. The challenge to the FDA’s authority is not about whether the FDA had the
legal authority to regulate the “cigalikes” 4 that comprise a large portion of the e-cigarette market
– the plaintiffs in this case concede that the agency may regulate those products. And plaintiffs do
not challenge whether the FDA had the legal authority to regulate “closed” vaping systems, which
use e-liquid that comes in a disposable cartridge.
What plaintiffs do claim is that the agency exceeded its reach when it stated that the
deeming rule also covers “open” vaping systems – those built with refillable cartridges that hold
the liquid. Plaintiffs do not object to the regulation of all open system devices; they do not question
the agency’s power to regulate open vaping systems that are sold packaged together with liquid
containing nicotine or tobacco flavor. What plaintiffs contend is that the agency could not lawfully
undertake to regulate any open devices sold empty and on their own without any liquid, and that
it had no authority to regulate e-liquids that do not contain nicotine. Nicopure Compl. ¶¶ 21, 34;
RSF Compl. ¶¶ 43, 111–17. However, the FDA has plainly stated that the rule does not cover eliquids that do not contain, or are not derived from, nicotine or tobacco, unless those liquids are
reasonably intended to be used with nicotine-containing liquids.
The Court concludes that the agency acted within the scope of its statutory authority: it
was legally permitted to regulate that category of liquids, and to consider a refillable electronic
nicotine delivery system to be a “component” of a tobacco product and therefore subject to
Plaintiffs also ask the Court to find that it was arbitrary and capricious to subject electronic
cigarette and liquid manufacturers to burdensome premarket review and labeling requirements,
The term “cigalikes” refers to e-cigarettes that are designed to look like a traditional
cigarette, with a small built-in cartridge containing pre-filled liquid. RSF Compl. ¶ 22. The parties
refer to these devices as “closed systems,” because the consumer cannot refill the liquid cartridge.
See id.; Nicopure Compl. ¶ 4.
and that the cost-benefit analysis underlying the deeming decision was deficient. They also object
to a number of the marketing restrictions triggered by the deeming decision on constitutional
It bears repeating that the provisions the plaintiffs find most objectionable were not crafted
by the FDA as part of the Deeming Rule. Instead, they are requirements of the Tobacco Control
Act that was enacted by Congress. Congress gave the FDA broad authority to deem new products
to be “tobacco products” subject to that existing statutory regime, and the Court finds that it was
not arbitrary and capricious for the agency to decide to take that action with respect to e-cigarettes.
This opinion will lay out the reasons for the Court’s conclusions, and it will also explain
why the new rules being applied to e-cigarettes do not violate the First or the Fifth Amendments
to the Constitution, and why there was no requirement that the agency undertake the sort of formal
cost-benefit analysis that plaintiffs claim was omitted here.
When all is said and done, the Court will grant the agency’s cross-motion for summary
judgment, and it will deny plaintiffs’ motions for summary judgment. 5
On June 8, 2017, the parties filed a joint notice alerting the Court that “the FDA has
announced that it is deferring enforcement of all future compliance deadlines under the Deeming
Rule for three months,” in order to give “new leadership personnel at the Department and Health
and Human Services and the FDA an opportunity to more fully consider the issues raised by the
deeming rule.” Joint Notice [Dkt. # 54]. While the Right to be Smoke Free Coalition believes
that the Court should withhold its decision on the pending cross-motions until the agency’s review
is complete, id. at 2, no party has moved to stay the action, and nothing in this opinion prohibits
the FDA from continuing to work with industry representatives to establish a mutually acceptable
schedule for the implementation of the Rule. This opinion will refer to the compliance deadlines
that are set out in the Rule itself, notwithstanding the fact that some of those deadlines have been
TABLE OF CONTENTS
BACKGROUND ........................................................................................................................... 9
Statutory Background – the Relevant Provisions of the Tobacco Control Act ............... 9
The Deeming Provision and the Definition of “Tobacco Product”..................... 11
Premarket Review ................................................................................................... 11
The Substantial Equivalence Pathway................................................................... 12
The Premarket Review Process .............................................................................. 13
Ban on Distribution of Free Samples ..................................................................... 14
Ban on Modified Risk Statements .......................................................................... 15
Regulatory Background ................................................................................................. 17
Factual & Procedural Background ............................................................................... 20
STANDARD OF REVIEW ........................................................................................................ 24
ANALYSIS .................................................................................................................................. 25
I. FDA did not exceed its statutory authority when it deemed both open system vaping
devices and nicotine-free liquids to be “tobacco products.” ................................................... 25
The D.C. Circuit has not yet decided the issue...................................................... 26
The FDA has the statutory authority to regulate open-system
vaping devices....................................................................................................................... 27
1. The FDA’s characterization of an empty vaping device as a “component” of a
tobacco product survives step one of the Chevron analysis......................................... 29
The FDA’s interpretation is reasonable under Chevron step two....................... 34
Plaintiffs have standing to challenge the application of the Rule to non-nicotinebased e-liquids, and their challenge is ripe, but the agency’s interpretation passes muster
under Chevron...................................................................................................................... 35
1. Plaintiffs have standing to challenge the application of the rulemaking to
nicotine-free products because they manufacture those products. ............................ 37
Plaintiffs’ challenge to the regulation of nicotine-free products is ripe.............. 38
3. The agency’s interpretation of the definition of “tobacco product” to include
certain non-nicotine-containing e-liquids meets the Chevron test.............................. 41
The FDA’s decision to deem e-cigarettes to be tobacco products comports
with the APA. .............................................................................................................................. 44
Legal Standard......................................................................................................... 45
The APA dispute is justiciable................................................................................ 45
The FDA’s decision to deem e-cigarettes to be tobacco products is reasonable and
supported by the record. ..................................................................................................... 48
Plaintiffs’ arguments that the Rule is arbitrary and capricious
are not persuasive. ............................................................................................................... 51
regulatory alternatives. ....................................................................................................... 53
The decision not to change the grandfather date for substantially equivalent
products is not arbitrary and capricious. .......................................................................... 56
FDA’s imposition of compliance deadlines was not arbitrary and
The Deeming Rule is not invalid due to any deficiencies in the
cost-benefit analysis. ................................................................................................................... 59
The agency was not required to do a cost-benefit analysis. ................................. 60
Even if Michigan v. EPA does apply, the agency complied with its
requirements. ....................................................................................................................... 62
The agency’s consideration of costs and benefits satisfied the APA. .................. 63
The agency complied with the purely procedural requirements of the Regulatory
Flexibility Act. ............................................................................................................................. 70
The Deeming Rule is not unconstitutional; RSF has abandoned its equal protection
claim, and its due process argument fails. ................................................................................ 72
The marketing restrictions in the Tobacco Control Act do not violate the First
Amendment. ................................................................................................................................ 74
Central Hudson has not been supplanted by Sorrell. ............................................ 76
The Tobacco Control Act’s ban on the distribution of free samples is
constitutional. ....................................................................................................................... 78
1. The Tobacco Control Act’s ban on the distribution of free samples regulates
conduct, not speech. ........................................................................................................ 78
2. Even if sampling is considered to be expression, plaintiffs concede that the
government has a substantial interest in eliminating youth access
to tobacco products. ........................................................................................................ 84
3. The FDA has sufficient evidence to show that the sampling ban directly and
materially advances the interest in eliminating youth access to
tobacco products. ............................................................................................................ 85
4. The ban on free samples is not more extensive than necessary to serve
FDA’s substantial interest.............................................................................................. 87
The regulation of modified-risk tobacco products satisfies the Central Hudson
test. ...................................................................................................................................... 89
CONCLUSION ........................................................................................................................... 93
Statutory Background – the Relevant Provisions of the Tobacco Control Act
The Tobacco Control Act was enacted in 2009. 6 Congress introduced the legislation by
setting out forty-nine findings related to the public health risks posed by the use of tobacco
products, and products containing nicotine in particular:
“A consensus exists within the scientific and medical communities that tobacco
products are inherently dangerous and cause cancer, heart disease, and other serious
adverse health effects,” TCA § 2(2);
“Nicotine is an addictive drug,” id. § 2(3);
“Tobacco is the foremost preventable cause of premature death in America,” id.
“It is in the public interest for Congress to adopt legislation to address the public
health crisis created by actions of the tobacco industry,” id. § 2(29);
The FDA has engaged in previous attempts to regulate the tobacco industry. In 1996, it
promulgated a rule that concluded that nicotine was a “drug” subject to the provisions of the
Federal Food, Drug, and Cosmetic Act. See 61 Fed. Reg. 44619 (1996). But the Supreme Court
rejected the agency’s interpretation in FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120
(2000). The Court concluded that, in determining that nicotine was a “drug,” the FDA had
exceeded its statutory authority, and the Court struck down the regulation. Id. at 125–26. In 2009,
Congress responded to the Court’s decision by passing the Tobacco Control Act.
Because the only known safe alternative to smoking is cessation, interventions
should target all smokers to help them quit completely,” id. § (2)(34).
In its findings, Congress emphasized the harms that arise when children use tobacco
products, and the associated dangers of tobacco-related marketing to minors:
“The use of tobacco products by the Nation’s children is a pediatric disease of
considerable proportions that results in new generations of tobacco-dependent
children and adults,” TCA § 2(1);
“Virtually all new users of tobacco products are under the minimum legal age to
purchase such products,” id. § 2(4);
“Tobacco advertising and marketing contribute significantly to the use of nicotinecontaining tobacco products by adolescents,” id. § 2(5);
“Because past efforts to restrict advertising and marketing of tobacco products have
failed adequately to curb tobacco use by adolescents, comprehensive restrictions
on the sale, promotion, and distribution of such products are needed,” id. § 2(6);
“Children, who tend to be more price sensitive than adults, are influenced by
advertising and promotion practices that result in drastically reduced cigarette
prices,” id. § 2(24).
Congress also made specific findings concerning the impact of what the statute calls
“modified risk statements” – manufacturers’ statements that certain products might reduce the
risks associated with nicotine or tobacco – including labels announcing that a tobacco product is
“low tar” or “light”:
“Unless tobacco products that purport to reduce the risks to the public of tobacco
use actually reduce such risks, those products can cause substantial harm to the
public health,” TCA § 2(37);
“The only way to effectively protect the public health from the dangers of
unsubstantiated modified risk tobacco products is to empower the Food and Drug
Administration to require that products that tobacco manufacturers sold or
distributed for risk reduction be reviewed in advance of marketing, and to require
that the evidence relied on to support claims be fully verified,” id. § 2(43).
Finally, the statute recognizes that the FDA:
[I]s a regulatory agency with the scientific experience to identify harmful
substances in products to which consumers are exposed, to design standards
to limit exposure to those substances, to evaluate scientific studies
supporting claims about the safety of products, and to evaluate the impact
of labels, labeling, and advertising on consumer behavior in order to reduce
the risk of harm and promote understanding of the impact of the product on
Id. § 2(44).
The Deeming Provision and the Definition of “Tobacco Product”
In light of those findings, Congress mandated in section 901 of the TCA that “[t]obacco
products . . . shall be regulated by the Secretary [of Health and Human Services].” TCA § 901,
codified at 21 U.S.C. § 387a. This unequivocal assignment of responsibility goes on to provide:
This chapter shall apply to all cigarettes, cigarette tobacco, roll-your-own
tobacco, and smokeless tobacco and to any other tobacco products that
the Secretary by regulation deems to be subject to this chapter.
Id., codified at 21 U.S.C. § 387a(b) (emphasis added).
Congress then amended the definitions section of the Federal Food, Drug, and Cosmetic
Act to define the term “tobacco product.” TCA § 101. For purposes of the TCA, a “tobacco
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).
21 U.S.C. 321(rr)(1). Neither the TCA nor the FDCA further defines the terms “component,”
“part,” or “accessory.”
In the TCA, Congress also imposes a number of regulatory requirements on all tobacco
products. First, the statute requires that all “new tobacco products” must receive FDA approval
before they may be introduced or delivered into interstate commerce. TCA § 910; 21 U.S.C.
§ 387j(a). The statute defines the term “new tobacco product” as “any tobacco product (including
those products in test markets) that was not commercially marketed in the United States as of
February 15, 2007.” Id. The law provides two main “pathways” to FDA approval: the less
onerous “substantial equivalence” pathway, and the more demanding “premarket review”
The Substantial Equivalence Pathway
One way to get a new tobacco product approved is to show that it is “substantially
equivalent” to an existing tobacco product. 21 U.S.C. § 387j. The existing or “predicate” product
to be used for comparison purposes must have been “commercially marketed . . . in the United
States as of February 15, 2007.” 21 U.S.C. § 387j(a)(2)(A)(i)(I).
To invoke the substantial equivalence or SE pathway, the sponsor of a new tobacco product
must file a report demonstrating that the product is substantially equivalent to a product that had
already been commercially marketed as of the February 2007 grandfather date. 21 U.S.C.
§ 387j(b). A new tobacco product is substantially equivalent to the predicate tobacco product if
has the same characteristics of the predicate tobacco product; or
has different characteristics and the information submitted [in the
substantial equivalence report] contains information . . . that
demonstrates that it is not appropriate to regulate the product
. . . because the product does not raise different questions of public
There is a third pathway – the “substantial equivalence exception” pathway, see 21 U.S.C.
§ 387j(a)(3)(A)(i)–(iii) – but that pathway is not implicated by the challenges brought in this case.
21 U.S.C. § 387j(a)(3)(A). 8 If the FDA concludes that the new tobacco product is substantially
equivalent to the predicate tobacco product under either provision, it must issue an order allowing
the product to be commercially marketed. 21 U.S.C. § 387j(c).
The Premarket Review Process
If a manufacturer of a new product cannot invoke the substantial equivalence pathway
– because there was no predicate product on the market as of February 15, 2007 – it must obtain
approval from FDA before it can market the product. See 21 U.S.C. 387j(a)(2). The sponsor of
the new tobacco product must submit a detailed application that includes: “full reports of all
information, published or known to, or which should reasonably be known to, the applicant,
concerning investigations which have been made to show the health risks of such tobacco product
and whether such tobacco product presents less risk than other tobacco products,” and “a full
statement of the components, ingredients, additives, and properties, and of the principle or
principles of operation, of such tobacco product.” 21 U.S.C. § 387j(b)(1). 9
The FDA must either approve or deny a premarket review application within 180 days. 21
U.S.C. § 387j(c)(1)(A). A denial may only be based on one of the four reasons set forth in the
statute: (1) the applicant has failed to show that the marketing of the product is appropriate for
public health; (2) the manufacturing, processing, or packing process does not conform to statutory
The term “characteristics” is defined by the TCA to mean “the materials, ingredients,
design, composition, heating source, or other features of a tobacco product.” 21 U.S.C.
Plaintiffs refer to these applications by the acronym “PMTA,” or “premarket tobacco
application.” See Nicopure Compl. ¶ 38; RSF Compl. ¶ 34. To avoid confusion, the Court will
refer to this process as “premarket review,” and it will not use the acronym.
requirements; (3) the label is false or misleading; or (4) the application does not conform with the
standards set for tobacco products in 21 U.S.C. § 387g. 21 U.S.C. § 387j(c)(2). 10
Ban on Distribution of Free Samples
In the TCA, Congress also specifically instructed the agency to regulate the distribution of
free samples of tobacco products. TCA § 102. The statute directed the Secretary of Health and
Human Services to reissue a 1996 final rule no sooner than 180 days after June 22, 2009, and it
required that the rule amend the Federal Register to provide that “no manufacturer, distributor, or
retailer may distribute or cause to be distributed any free samples of cigarettes, smokeless tobacco,
or other tobacco products (as that term is defined in section 201 of the [FDCA]).” 21 U.S.C.
§ 387a–1. Congress directed the agency to permit the distribution of free samples of smokeless
tobacco “in a qualified adult-only facility,” 11 but it also demanded that the agency develop clear
rules governing certain public events: no free samples of smokeless tobacco may be distributed
“at any football, basketball, baseball, soccer, or hockey event or any other sporting or
entertainment event determined by the Secretary to be covered by this subparagraph.” Id. § 387a–
The section of the TCA that provides standards for tobacco products indicates that the
Secretary of HHS “may adopt tobacco product standards” in addition to those set forth by statute
“if the Secretary finds that a tobacco product standard is appropriate for the protection of public
health,” and the statute provides factors for the Secretary to consider in making that determination.
21 U.S.C. § 387g(a)(3).
The statute defines “qualified adult-only facility” as “a facility or restricted area that”: (1)
requires appropriate authorities to check patrons’ photo ID and verify their dates of birth; (2) does
not sell, serve, or distribute alcohol; (3) is not located immediately across from a space used for
youth-oriented marketing; (4) is a temporary structure, operated for the purpose of distributing free
samples of smokeless tobacco; (5) is enclosed by a barrier; and (6) does not display any advertising
or brand names. 21 U.S.C. 387a–1(a)(2)(G).
The agency did as Congress required. On March 19, 2010, the FDA promulgated a rule
entitled “Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco
to Protect Children and Adolescents,” 75 Fed. Reg. 13,225-03 (Mar. 19, 2010). The rule, which
is now codified at 21 C.F.R. part 1140, contains the required language. See 21 C.F.R. § 1140.16.
Ban on Modified Risk Statements
As part of the regulatory regime imposed on tobacco products in the TCA, Congress also
addressed manufacturers’ attempts to market certain products as being less harmful to health than
other tobacco products. By amending section 911 of the FDCA, the TCA prohibits the introduction
of “any modified risk tobacco product” into interstate commerce unless that product has been precleared by the FDA. TCA § 101; 21 U.S.C. § 387k(a). A “modified risk tobacco product” is
defined first as “any tobacco product that is sold or distributed for use to reduce harm or the risk
of tobacco-related disease associated with commercially marketed tobacco products.” 21 U.S.C.
§ 387k(b)(1). Second, the definition applies to a product:
the label, labeling, or advertising of which represents explicitly or
implicitly that –
the tobacco product presents a lower risk of tobacco-related
disease or is less harmful than one or more other
commercially marketed tobacco products;
the tobacco product or its smoke contains a reduced level of
a substance or presents a reduced exposure to a substance; or
the tobacco product or its smoke does not contain or is free
of a substance;
the label, labeling, or advertising of which uses the descriptors
“light”, “mild”, or “low” or similar descriptors; or
the tobacco product manufacturer . . . has taken any action directed
to consumers through the media or otherwise, other than by means
of the tobacco product’ s label, labeling, or advertising . . . that
would be reasonably expected to result in consumers believing that
the tobacco product or its smoke may present a lower risk of disease
or is less harmful than one or more commercially marketed tobacco
products, or presents a reduced exposure to, or does not contain or
is free of, a substance or substances.
21 U.S.C. § 387k(b)(2)(A).
A manufacturer that intends to market a tobacco product with modified risk representations
must file an application with the Secretary of HHS demonstrating that any claims “relating to the
effect of the product on tobacco-related diseases and health-related conditions” are supported by
the scientific literature. 21 U.S.C. § 387k(d). An application may be granted “only if the Secretary
determines that the applicant has demonstrated that” the product will:
significantly reduce harm and the risk of tobacco-related disease to
individual tobacco users; and
benefit the health of the population as a whole taking into account
both users of tobacco products and persons who do not currently use
21 U.S.C. § 387k(g)(1).
There is an exception to that provision, “if the Secretary makes the finding required” by
subsection (g)(1), and makes several additional findings listed in subsection (g)(2), which requires
proof that an order granting the application would promote the public health, is limited to a claim
that a product “does not contain or is free of a substance or contains a reduced level of a substance,
or presents a reduced exposure to a substance in tobacco smoke,” “scientific evidence is not
available and . . . cannot be made available without conducting long-term epidemiological
studies,” and the available data “demonstrates that a measurable and substantial reduction in
morbidity or mortality among individual tobacco users is reasonably likely in subsequent studies.”
21 U.S.C. 387k(g)(2)(A). 12
The TCA contains other provisions that are important to the protection of public health,
such as requiring that tobacco products bear a warning about the addictive nature of the products,
see 21 U.S.C. § 387f(d)(1)–(2), and banning all flavored cigarettes, but those provisions are not
relevant to the issues in this lawsuit.
On May 10, 2016, the FDA exercised the authority Congress conferred upon it in 21 U.S.C.
§ 387a(b) to deem e-cigarettes (and other products not relevant to this opinion) to be “tobacco
products” subject to the TCA. Deeming Rule, 81 Fed. Reg. at 28,976 (“Products that meet the
statutory definition of ‘tobacco products’ include . . . ENDS (including e-cigarettes, e-hookah, ecigars, vape pens, advanced refillable personal vaporizers, and electronic pipes”). The statute
defines a “tobacco product” to include “any component, part, or accessory of a tobacco product,”
21 U.S.C. § 321(rr), but the agency made clear that it was regulating only components and parts
of the newly-deemed tobacco products, not their accessories. See Deeming Rule, 81 Fed. Reg. at
28,975. According to the FDA, the purpose of the Rule was twofold:
(1) To deem all products that meet the definition of “tobacco product” under
the law, except accessories of a newly deemed tobacco product, and subject
them to the tobacco control authorities in chapter IX of the [FDCA] and
FDA’s implementing regulations; and (2) to establish specific restrictions
that are appropriate for the protection of public health for the newly deemed
Id. The agency announced that the Rule would become effective ninety days after publication,
and that the “newly deemed products will become subject to the same [FDCA] provisions and
relevant regulatory requirements to which cigarettes . . . are subject.” Id. at 28,976.
So, as of August 8, 2016, the manufacturers of ENDS products have been subject to the
following two statutory provisions that govern cigarettes and other tobacco products:
The prohibition of the sale or distribution of products bearing “modified
risk” descriptors (such as “light,” “low,” or “mild”) and claims, without
FDA approval; and
The prohibition on the distribution of free samples.
The TCA would have also authorized the agency to impose the premarket review
requirement on manufacturers immediately, thereby halting sales until premarket applications
were approved. See 21 U.S.C. § 387b (finding that a tobacco product is adulterated if it is required
to have a premarket review order but does not have one); 21 U.S.C. § 331(a) (making it unlawful
to introduce an adulterated tobacco product into interstate commerce). But as part of the Deeming
Rule, the agency opted to implement the statutory requirement more gradually. The FDA
announced that all new tobacco products will be required to submit applications for premarket
authorization of their products through one of the pathways under a “staggered initial compliance
period . . . followed by continued compliance periods for FDA review:”
[M]anufacturers of all newly deemed, new tobacco products will have a
12-, 18- or 24-month initial compliance period in which to prepare
applications for marketing authorization, as well as a 12-month continued
compliance period after those dates in which to obtain authorization from
FDA (resulting in total compliance periods of 24, 30, or 36 months). After
the close of the continued compliance period, products will be subject to
enforcement unless they are grandfathered or are the subject of a marketing
Deeming Rule, 81 Fed. Reg. at 28,977–78. 13
As part of the Deeming Rule, the FDA defined the terms that Congress failed to define in
the TCA. The decision applies to “components” and “parts” of the newly deemed tobacco
products, and the agency defined “component or part” as “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.” Deeming Rule, 81 Fed. Reg. at 28,975. 14 The agency provided a
“nonexhaustive list of examples of components and parts used with electronic nicotine delivery
systems (ENDS) (including e-cigarettes):”
E-liquids; atomizers; batteries (with or without variable voltage);
cartomizers (atomizer plus replaceable fluid-filled cartridge); digital
According to the Deeming Rule, the compliance periods depend on the pathway selected:
A manufacturer that elects to submit a substantial equivalence report
must do so by February 8, 2018 – eighteen months after the Rule
A manufacturer submitting a premarket review application must do
so by August 8, 2018 – twenty-four months after the Rule became
Under either approach, FDA will continue the compliance period for
at least twelve months while the applications are considered, and, on
a case-by-case basis, FDA will defer enforcement further – to give
the agency the time it needs to review and determine whether to
grant the requests.
Deeming Rule, 81 Fed. Reg. at 28,977–78. As the Court explained above, those compliance
deadlines have since been extended by three months. See Joint Notice at 2.
While the Deeming Rule recognizes that the TCA uses the term “component” and “part”
as distinct terms, the agency decided “for purposes of this final rule,” to use “the terms
‘component’ and ‘part’ interchangeably and without emphasizing the distinction between the
terms.” Deeming Rule, 81 Fed. Reg. at 28,975. But the agency also noted that it may “clarify the
distinctions between ‘component’ and ‘part’ in the future.” Id.
display/lights to adjust settings; clearomisers, tank systems, flavors, vials
that contain e-liquid, and programmable software.
The agency added that its definition of “component or part . . . excludes anything that is an
accessory of a tobacco product,” and it defined the term “accessory” to mean:
any product that is intended or reasonably expected to be used with or for
the human consumption of a tobacco product; does 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. The agency explained that it was declining to regulate accessories of the newly-deemed
tobacco products because “accessories, unlike components or parts, are expected to have little
direct impact on the public health.” Id.
Factual & Procedural Background
An e-cigarette, or electronic nicotine delivery device, is a battery powered device that heats
an “e-liquid.” An individual uses an e-cigarette by inhaling a vapor through the mouthpiece of a
device that heats an “e-liquid,” producing a vapor which the user inhales through a mouthpiece.
Decl. of Jeffrey Stamler [Dkt. # 20-2] (“Stamler Decl.”) ¶ 3. There are two main types of ecigarettes on the market today: closed systems and open systems. Id. ¶ 8. In a closed system,
Plaintiffs complain that the FDA has defined “component or part” broadly enough to
encompass even batteries and software when they argue that the agency exceeded its authority.
See, e.g., Nicopure Mem. at 1, 10. But in the Deeming Rule, the agency specifically explained
that it intended “to limit enforcement of the premarket authorization provisions to finished tobacco
products,” “sealed in final packaging intended for consumer use.” Deeming Rule, 81 Fed. Reg. at
28,995. Therefore, as became clear during the hearing, plaintiffs’ claim is focused on the
application of the Deeming Rule to open system devices and nicotine-free liquids, and any
challenge to the application of the rule to batteries or other parts alone would be premature.
“the amount of liquid, flavor, and nicotine content (if any) is set by the manufacturer and cannot
be altered by the consumer.” Id. ¶ 9. Closed-system products are available in both a single-use,
disposable form – also known as a “cigalike” – and a “rechargeable” form, into which a user can
insert a “proprietary replacement cartridge” that contains the e-liquid. Id.; RSF Compl. ¶ 22. In
an open system, the device has a chamber or cartridge that can be refilled, and “the consumer
separately purchases e-liquid of his or her choosing.” Stamler Decl. ¶ 10. Consumers can purchase
e-liquid directly from a manufacturer, or they can go to a retail establishment called a “vape shop.”
Nicopure is a limited liability company based in Florida. Nicopure Compl. ¶ 9. It
“distributes battery-powered vaping devices under the Triton, Reactor, Tracer, and G6 brand
names.” Id. Triton, Reactor, and Tracer are all open-system devices, and G6 is a closed-system
device. Id. “Nicopure also manufactures and distributes nicotine-and-non-nicotine ‘e-liquid’
under the Halo and eVo brand names.” Id.
On May 10, 2016, Nicopure filed suit to challenge the legality of the Deeming Rule in four
respects. In Count I, Nicopure alleges that the FDA exceeded its statutory authority in violation
of sections 706(2)(A) and (C) of the APA when it enacted the Deeming Rule, because the Rule’s
“definition of ‘tobacco product’ and attendant proposed reach of its provisions is unambiguously
foreclosed by, and is an unreasonable construction of, the text of the [TCA].” Nicopure Compl.
¶ 34. At the hearing, Nicopure focused in particular on the Rule’s application to open system
devices and nicotine-free e-liquids. Hr’g Tr. at 13:14–14:15. But it also objects to the application
of the rule to “hundreds of products that are neither made nor derived from tobacco nor intended
There is evidence in the record that pen-like open-system devices are also frequently used
for the purpose of smoking marijuana. See AR 15,582, 20,956–57.
for human consumption,” such as “programmable software, batteries, digital display/lights, and
glass or plastic vials.” Nicopure Compl. ¶¶ 21, 26 (internal quotation marks and alterations
omitted). Notably, Nicopure does not argue that the FDA did not have the legal authority to deem
e-cigarettes to be tobacco products.
Nicopure’s Count II alleges that it was arbitrary and capricious for the FDA to enact a rule
that requires e-cigarette manufacturers to undergo premarket review. Nicopure Compl. ¶¶ 36–45.
The company maintains that the Deeming Rule “fails to come to grips with the extraordinary
burden this approval regime will have, both on manufacturers and on FDA itself,” id. ¶ 41, and
that the Rule “arbitrarily discounts the safety benefits offered by vaping devices and e-liquids.”
Id. ¶ 42. In Count III, Nicopure alleges that the FDA violated the APA in promulgating the Rule
because its cost-benefit analysis was deficient. It alleges that the FDA “overstates the Rule’s
benefits, fails to quantify the Rule’s benefits, understates the Rule’s tremendous costs, and
erroneously concludes that the Rule’s benefits outweigh its costs.” Id. ¶ 48. Finally, Count IV
brings two challenges under the First Amendment: that the restriction on modified-risk statements
prohibits manufacturers from making truthful and nonmisleading statements about their products,
and that the ban on the distribution of free samples violates Nicopure’s right to free speech. Id.
¶¶ 54–55. Nicopure requests that the Court vacate the Deeming Rule and declare it unlawful. Id.,
Relief Requested. 17
The Right to be Smoke Free plaintiffs filed their eight-count complaint about a month later,
on June 20, 2016. RSF Compl. The plaintiffs are “national and state-wide trade associations
representing the entire ENDS industry (i.e., manufacturers, distributors, and retailors).” Id. at 1.
The complaint also requested a preliminary injunction, but Nicopure never filed the
necessary motion, see Local Civil Rule 65.1, and it later abandoned its request for preliminary
relief. See Min. Entry (June 8, 2016).
In Count I, RSF asserts that the Deeming Rule is arbitrary and capricious because it did not
establish a new “Grandfather Date for ENDS products,” and because the agency failed to “apply
its enforcement authority so that some ENDS manufacturers, including e-liquid companies, would
have the opportunity to forego the [premarket review] pathway and avail themselves of the option
to submit SE Reports.” Id. ¶ 75. Count II alleges that the agency’s “application of the [premarket]
process to ENDS products violates the APA, and, thus, should be set aside as unlawful and
enjoined.” Id. ¶ 82. In Count III, RSF objects to the fact that the FDA, in implementing the TCA,
treated e-cigarettes in the same manner that it treats cigarettes, and it posits that this “one size fits
all” approach violates the due process and equal protection clauses of the Constitution. Id. ¶¶ 88–
89. Count IV alleges that the ban on free samples violates the First Amendment and the APA. Id.
In Count V, RSF alleges that the TCA’s modified risk provision requires
“manufacturers of tobacco products to secure FDA’s approval before making truthful, nonmisleading claims about their products,” in violation of the First Amendment and the APA. Id.
¶¶ 101–10. Count VI challenges the definition of “tobacco product” under the APA. Id. ¶¶ 111–
17. Count VII alleges that the FDA violated the Regulatory Flexibility Act, 5 U.S.C. § 601, et
seq., by failing to conduct an appropriate cost-benefit analysis. Id. ¶¶ 117–27. And Count VIII
alleges that the failure to conduct an appropriate cost-benefit analysis violates the APA. Id.
¶¶ 128–33. RSF requests a declaration that the Deeming Rule violates the APA, the Regulatory
Flexibility Act, and the First Amendment, and that that the Tobacco Control Act itself violates the
First Amendment, the Due Process Clause, and the Equal Protection Clause. Id., Request for
RSF also requested “[a] preliminary and permanent injunction,” but they, too, failed to
comply with Local Rule 65.1.
In light of the substantial overlap between the two sets of allegations, the Court
consolidated the cases. See Order (June 28, 2016) [Dkt. # 19].
STANDARD OF REVIEW
Summary judgment is appropriate when the pleadings and evidence show that “there
is no genuine dispute as to any material fact and [that] the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). However, in cases involving review of agency
action under the Administrative Procedure Act, Rule 56 does not apply due to the limited role
of a court in reviewing the administrative record. Select Specialty Hosp.-Akron, LLC v. Sebelius,
820 F. Supp. 2d 13, 21 (D.D.C. 2011). Under the APA, the agency’s role is to resolve factual
issues and arrive at a decision that is supported by the administrative record, and the court’s role
is to “determine whether or not as a matter of law the evidence in the administrative record
permitted the agency to make the decision it did.” Occidental Eng’g Co. v. INS, 753 F.2d 766,
769–70 (9th Cir. 1985), citing Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402,
415 (1971); see also Richards v. INS, 554 F.2d 1173, 1177 & n.28 (D.C. Cir. 1977).
In reviewing an agency’s interpretation of a statute, courts use the two-step analysis
outlined in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842–
43 (1984). Step one involves determining whether Congress has spoken directly to the precise
question at issue.
If it has, “the court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress,” and that is the end of the matter.
Treasury Emps. Union v. Fed. Labor Relations Auth., 392 F.3d 498, 500 (D.C. Cir. 2004). If the
statute is silent or ambiguous on the question, Chevron instructs the Court to go on to a second
step and determine “whether the agency’s answer is based on a permissible construction of
the statute.” Chevron, 467 U.S. at 843. An agency’s interpretation will warrant deference if
it is reasonable. Pauley v. BethEnergy Mines, Inc., 501 U.S. 680, 702 (1991).
FDA did not exceed its statutory authority when it deemed both open system vaping
devices and nicotine-free liquids to be “tobacco products.”
In Count I of Nicopure’s complaint, and in Count VI of the RSF complaint, plaintiffs
challenge FDA’s statutory authority to regulate two specific vaping products: open-system vaping
devices that do not contain any e-liquid, and e-liquids that do not contain nicotine or that are not
made or derived from tobacco. See Nicopure Compl. ¶¶ 33–34; RSF Compl. ¶¶ 111–17; Nicopure
Mem. at 9–14.
Congress mandated in the TCA that “tobacco products . . . shall be regulated by the
Secretary,” and it made clear that its mandate applied not only to “all cigarettes, cigarette tobacco,
roll your own tobacco, and smokeless tobacco,” but also to “any other tobacco products that the
Secretary by regulation deems to be subject” to its provisions. 21 U.S.C. § 387a. Congress defined
“tobacco product” to include:
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).
21 U.S.C. § 321(rr)(1) (emphasis added).
Nicopure argues that its “open-system vaping devices (and their constituent parts)” are not
“tobacco products” because they are “neither ‘made or derived from tobacco,’ nor intended for
human consumption[,]” and that Nicopure’s “non-nicotine containing e-liquids are not ‘made or
derived from tobacco.’” Nicopure Mem. at 9. 19 The FDA takes the position that all of these items
Throughout its pleadings in this case, Nicopure repeatedly quotes just a portion of the
statutory definition of “tobacco product” in this manner and omits the portion that includes any
“component, part, or accessory” of a tobacco product. See e.g., Nicopure Mem. at 1 (“Congress
expressly defined ‘tobacco product’ as a product made or derived from tobacco and intended for
human consumption. The majority of Nicopure’s products are neither.”). This leaves a misleading
impression and the deliberate excision undercuts the persuasive force of plaintiff’s arguments.
are “components” and “parts” of tobacco products and that therefore, they are covered by the
statutory definition. The Court finds that the FDA was well within its statutory authority to
regulate the narrow set of products at issue in this case.
The D.C. Circuit has not yet decided the issue.
At the outset, defendants argue that judgment should be entered in their favor because the
D.C. Circuit already ruled on the legality of the regulation of e-cigarettes in Sottera, Inc. v. FDA,
627 F.3d 891 (D.C. Cir. 2010). While it is true that the Court of Appeals addressed the issue of
the regulation of some electronic cigarettes in that opinion, it did not decide the precise issues
presented in this lawsuit.
The plaintiffs in Sottera manufactured what are referred to in this case as closed-system ecigarettes: the Court described the products at issue as “battery-powered products that allow users
to inhale nicotine vapor without fire, smoke, ash, or carbon monoxide” that were “[d]esigned to
look like a traditional cigarette.” Id. at 893. After the agency blocked the importation of plaintiffs’
products because they “appeared to be adulterated, misbranded, or unapproved drug-device
combinations under the FDCA,” plaintiffs sought a preliminary injunction, seeking a ruling that
their products could only be regulated under the TCA, and not under the FDCA. Id.
The D.C. Circuit held that while the “FDA cannot regulate customarily marketed tobacco
products under the FDCA’s drug/device provisions . . . it can regulate tobacco products marketed
for therapeutic purposes under those provisions, and . . . it can regulate customarily marketed
tobacco products under the [TCA].” Id. at 898. Thus, at the urging of the e-cigarette industry, the
Court recognized that “the FDA has authority under the [TCA] to regulate electronic cigarettes,
enabling it to mitigate or perhaps extinguish any harm to the public health.” Id.
While the decision is an important part of the legal backdrop of this case, the Sottera
Court’s rejection of the drug/device provisions of the FDCA as a basis to regulate e-cigarettes does
not answer the questions posed here: whether a particular category of ENDS products can be
regulated as “components or parts” of tobacco products. Defendants note that the only difference
between the products at issue in Sottera and the products sold by plaintiffs is the fact that plaintiffs
manufacture open-system vaping devices. Defs.’ Cross-Mem. at 24. And the agency suggests that
the Court should not be swayed by what it sees as a change in position by the industry:
Having insisted in Sottera that e-cigarettes are regulable as tobacco
products, manufacturers cannot now avoid that conclusion simply by
making their products refillable. Indeed, while the question presented in
Sottera was whether e-cigarettes should be regulated as drugs/devices or
instead as tobacco products, the choice Plaintiffs offer here is markedly
different: whether refillable e-cigarettes should be regulated as tobacco
products, or, as Plaintiffs urge, not at all.
Id. at 24–25. But plaintiffs have conceded that most ENDS products may be lawfully regulated
under the TCA, and notwithstanding Sottera, the Court must go on to utilize the Chevron analysis
to determine, as a matter of first impression, whether the agency has interpreted the statute
The FDA has the statutory authority to regulate open-system vaping devices.
The threshold determination – whether the agency’s reading of “component or part” to
include empty open vaping devices, or nicotine-free liquids sold separately, is consistent with the
TCA – turns on “whether Congress has directly spoken to the precise question at issue.” Chevron,
467 U.S. at 842.
The D.C. Circuit has explained:
Under the first step of Chevron, the reviewing court “must first exhaust the
traditional tools of statutory construction to determine whether Congress has
spoken to the precise question at issue.” The traditional tools include
examination of the statute’s text, legislative history, and structure, as well as
Bell Atl. Tel. Cos. v. FCC, 131 F.3d 1044, 1047 (D.C. Cir. 1997), quoting Nat. Res. Def. Council
v. Browner, 57 F.3d 1122, 1125 (D.C. Cir. 1995). The court is required to utilize these methods
to determine whether Congress has “unambiguously foreclosed the agency’s statutory
interpretation.” Catawba Cty. v. EPA, 571 F.3d 20, 35 (D.C. Cir. 2009).
Congress may have done so in one of two ways: either by prescribing a
precise course of conduct other than the one chosen by the agency, or by
granting the agency a range of interpretive discretion that the agency has
clearly exceeded . . . And if the agency has either violated Congress’s
precise instructions or exceeded the statute’s clear boundaries then, as
Chevron puts it, “that is the end of the matter” – the agency’s interpretation
Vill. of Barrington v. Surface Transp. Bd., 636 F.3d 650, 659–60 (D.C. Cir. 2011).
Starting with the text, it is true that Congress did not specifically define the words
“component” or “part” in the TCA. But “the absence of a statutory definition does not render a
word ambiguous.” Nat. Res. Def. Council v. EPA, 489 F.3d 1364, 1373 (D.C. Cir. 2007). In the
absence of an express statutory definition, courts are simply bound to give the terms used in the
statute their ordinary meaning. Petit v. U.S. Dep’t of Educ., 675 F.3d 769, 781 (D.C. Cir. 2012).
The burden is on the plaintiffs challenging the agency interpretation to “do more than offer a
reasonable, or even the best, interpretation” of the statute; plaintiffs must instead show “that the
statute unambiguously forecloses the agency’s interpretation.” Id., quoting Vill. of Barrington,
636 F.3d at 661. In other words, if a court determines “that statutory ambiguity has left the agency
with a range of possibilities and that the agency’s interpretation falls within that range, then the
agency will have survived Chevron step one.” Vill. of Barrington, 636 F.3d at 660.
The Court must therefore begin with the plain language of the TCA. Lindeen v. SEC, 825
F.3d 646, 653 (D.C. Cir. 2016), quoting Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730,
739 (1989). The statutory definition of a “tobacco product” authorizes the FDA to extend the
provisions of the TCA to cover:
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).
21 U.S.C. § 321(rr)(1).
In exercising its deeming authority to regulate e-cigarettes under the TCA, the FDA defined
the terms “component or part” together to mean: “any software or assembly of materials intended
or reasonably expected: (1) to 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.” Deeming Rule, 81 Fed. Reg. at 28,975. According to the FDA, applying this definition
means that the term “tobacco product” covers not only all-in-one electronic nicotine delivery
systems, but also empty open system devices and liquids sold separately, including nicotine-free
liquids intended to be mixed with nicotine-based liquids. Defs.’ Cross-Mem. at 25–40. Since the
agency justifies these two applications of the statute on different grounds, and it has raised
threshold jurisdictional issues with respect to the challenge to the regulation of e-liquids, this
opinion will address the agency’s authority to regulate the two challenged products separately.
The FDA’s characterization of an empty vaping device as a
“component” of a tobacco product survives step one of the Chevron
The FDA’s approach to empty vaping devices is not inconsistent with the ordinary meaning
of the terms “component” and “part” that are used in the statute, and therefore, it is not foreclosed
by the TCA. To shed light on the ordinary meaning of an undefined statutory term, the Court turns
to the dictionary. See, e.g., Taniguchi v. Kan Pac. Saipan, Ltd., 132 S. Ct. 1997, 2002 (2012).
The word “component” is defined in the Merriam Webster dictionary as “a constituent
part,” Component, Merriam-Webster Dictionary, http://www.merriam-webster.com/dictionary/
component, and the dictionary offers the example of stereo components. Id. Similarly, the Oxford
English Dictionary defines “component” to mean “[a] constituent element or part.” Oxford
English Dictionary, 2d ed. (1989).
The word “part” is defined by Merriam-Webster as “an
essential portion or integral element,” Part, Merriam-Webster Dictionary, http://www.merriamwebster.com/dictionary/part, and by the Oxford English Dictionary as “[a] piece or section of
something which together with another or others makes up the whole (whether actually separate
from the rest or not),” and as “[a]n essential element; an integral portion of a larger whole.” Oxford
English Dictionary, 3d ed. (2005). 20
The agency’s interpretation is entirely consistent with the plain meaning of the statute: the
device – which contains the heating element and the battery – and the liquid are the “components”
of an electronic nicotine delivery system just as an amplifier and a speaker are “components” of a
stereo system. And while a sophisticated audiophile might have some choices to make about what
to include in a sound system today, the device plus the liquid are undeniably the two essential
components of an open vaping system: a consumer cannot use a vaping device for its primary
The frequent appearance of the word “part” in the definition of “component” suggests that
is was entirely appropriate for the FDA to consider them in tandem.
purpose without adding the liquid, and there is nothing to do with the liquid without the device.
(Indeed, it might be fair to say that the device is the electronic nicotine delivery system.) 21
Putting aside the dictionary, a better analogy might be that just as an empty fountain pen is
obviously a “component” of an ink pen (or “writing system”), even when the ink is sold separately,
and it is no less of a pen than a cartridge pen that comes packaged together with several disposable
cartridges, so too the empty open device is a “component” of an electronic nicotine delivery
system, particularly since plaintiffs agree that the device would constitute a tobacco product if it
were simply packaged together with a few e-liquid cartridges. Hr’g Tr. at 14:22–15:5. There is
no logic to plaintiffs’ contention that the packaging should be dispositive, and the Court finds that
the physical separation of the liquid from the device at the point of sale is of no significance. Both
To supplement the textual analysis, the FDA seeks to draw support from the legislative
history of a related statute. It points out that when Congress authorized the Consumer Product
Safety Commission to require that liquid nicotine containers be child resistant in the Child Nicotine
Poisoning Prevention Act of 2015, Pub. L. No. 114-116, § 2(a), 130 Stat. 3 (2016), it expressly
recognized FDA’s authority to regulate e-cigarettes and their components, citing the FDCA, the
TCA, and the then-pending Notice of Proposed Rulemaking concerning vaping products:
Nothing in this Act shall be construed to limit or otherwise affect the
authority of the Secretary of Health and Human Services to regulate, issue
guidance, or take action regarding the manufacture, marketing, sale,
distribution, importation, or packaging, including child-resistant packaging,
of nicotine, liquid nicotine, liquid nicotine containers, electronic cigarettes,
electronic nicotine delivery systems or other similar products that contain
or dispense liquid nicotine, or any nicotine-related products . . .
See Defs.’ Cross-Mem. at 29–30, citing Child Nicotine Poisoning Prevention Act of 2015, Pub. L.
No. 114-116, § 2(b)(1), 130 Stat. 3 (2016). This provision in separate legislation does not provide
powerful evidence of what Congress had in mind when it enacted the TCA, but its
acknowledgement of the agency’s power to regulate not just liquid nicotine and electronic
cigarettes, but also nicotine delivery systems and “other similar products that contain or dispense”
nicotine suggests that the FDA’s reading of the statute is not inconsistent with Congressional
Plaintiffs attempt to avoid this plain reading of the text of the statutory definition by
pointing to the structure of the TCA.
They argue that because Congress used the term
“component” in other parts of the statute to “refer to items inseparable from the product made or
derived from tobacco,” and “not to refer to separate products not so made or derived,” the vaping
devices at issue here cannot be considered to be “components” or “parts.” Nicopure Mem. at 11,
citing Japan Whaling Ass’n v. Am. Cetacean Soc’y, 478 U.S. 221, 238–39 (1986) (“Without strong
evidence to the contrary,” the Supreme Court “doubt[s] that Congress intended the same phrase to
have significantly different meanings in two adjoining paragraphs of the same subsection”). In
other words, according to plaintiffs, any “component” or “part” referred to in the TCA must be
inseparable from the whole notwithstanding the ordinary definitions of the terms. But a review of
the statute does not bear this out.
Plaintiffs first point to 21 U.S.C. § 387(17), a provision that defines the term “smoke
constituent” to include “any chemical or chemical compound in mainstream or sidestream tobacco
smoke that either transfers from any component of the cigarette to the smoke or that is formed by
the combustion or heating of tobacco, additives, or other component of the tobacco product.”
Nicopure Mem. at 11. They also cite 21 U.S.C. § 387d(a), which requires manufacturers to list
“all ingredients . . . added by the manufacturer to the tobacco, paper, filter, or other part of each
tobacco product.” Id. And finally, plaintiffs rely on 21 U.S.C. § 387g(a)(1)(A), which prohibits
“a cigarette or any of its component parts (including the tobacco, filter, or paper)” from containing
flavors. Taking those portions of the statute together, plaintiffs argue that the context of the TCA
as a whole supports their argument that the terms “component or part” must mean a part physically
connected to the whole.
But “[t]o prevail on its Chevron Step One argument, [plaintiffs have] to do better than
concoct an interpretation purportedly based on the statute’s context. [Plaintiffs] ‘must show that
the statute unambiguously forecloses the [agency’s] interpretation.’” Pharm. Research & Mfrs. of
Am. v. FTC, 790 F.3d 198, 207 (D.C. Cir. 2015), quoting Vill. of Barrington, 636 F.3d at 661.
Plaintiffs “context” argument fails to meet that standard. The three provisions cited do not prove
plaintiffs’ point because none specifically defines the terms “component” or “part,” and each either
uses the terms in passing, or simply lists examples of what components of a particular type of
tobacco product might be. The fact that the components of a conventional cigarette may be
physically connected to that item does not mean that the components of an entirely different sort
of product must be.
Finally, the D.C. Circuit has directed reviewing courts to “exhaust the traditional tools of
statutory construction,” including examining a statute’s purpose, when they embark on the “search
for the plain meaning of the statute.” Bell Atl. Tel. Cos., 131 F.3d at 1047. Here, Congress
specified that the purpose of the TCA was to give the agency flexibility in regulating tobacco
products, and particularly those products that may be attractive to minors. The list of statutory
purposes set out in the legislation includes: “to ensure that the Food and Drug Administration has
the authority to address issues of particular concern to public health officials, especially the use of
tobacco by young people and dependence on tobacco;” “to provide new and flexible enforcement
authority to ensure that there is effective oversight of the tobacco industry’s efforts to develop,
introduce, and promote less harmful tobacco products;” and “to impose appropriate regulatory
controls on the tobacco industry.” TCA §§ 3(2), (4), (8). These unequivocal statements of the
intent behind the legislation support the Court’s finding that the agency’s commonsense
interpretation is not inconsistent with the statutory definition of a tobacco product. Thus, the Court
finds that the FDA’s conclusion that it has the authority to regulate open vaping systems, even if
they are empty and packaged alone, is not precluded by the statute and survives analysis under the
first step of the Chevron test.
The FDA’s interpretation is reasonable under Chevron step two.
In the court’s view, the ordinary terms “component” and “part” are not ambiguous, and the
FDA’s exercise of its deeming authority to cover the products at issue falls squarely within the
limits of the statute. But to the extent the statute is ambiguous, for all of the same reasons, the
agency’s interpretation “is based on a permissible construction of the statute,” Chevron, 467 U.S.
at 843, and therefore, it “merits judicial deference.” Bell Atl. Tel. Cos., 131 F.3d at 1047.
The Court should “defer to the agency’s permissible interpretation,” so long as “the agency
has offered a reasoned explanation for why it chose that interpretation.” Vill. of Barrington, 636
F.3d at 660. At Chevron step two, a court “may not disturb an agency rule unless it is ‘arbitrary
or capricious in substance, or manifestly contrary to the statute.’” Mayo Found. for Med. Educ. &
Research v. United States, 562 U.S. 44, 53 (2011), quoting Household Credit Servs., Inc. v.
Pfennig, 541 U.S. 232, 242 (2004).
There is no linguistic or statutory basis for plaintiffs’ contention that a component or part
may only be regulated if it is “physically part of a product containing tobacco (or material derived
from tobacco) when introduced into commerce.” Pls.’ Reply at 6; Nicopure Mem. at 10–12.
Plaintiffs do not dispute that a vaping device can be regulated as a tobacco product when it comes
all in one piece, or even in two pieces in one box. See Hr’g Tr. at 14:22–15:2 (“[Plaintiffs’
counsel]: If it’s sold in a kit with a nicotine-containing liquid, then that kit or that product that’s
being sold . . . would meet the definition of tobacco product because the product . . . includes the
e-liquids that’s got the nicotine derived from tobacco.”). But the definition of “tobacco product”
is not limited to products made or derived from tobacco since it specifically includes “components”
and “parts” of tobacco products. 21 U.S.C. § 321(rr)(1).
Plaintiffs object to the characterization of an empty ENDS device as a component on the
basis that those devices are “separate consumer product[s] that contain neither tobacco nor
anything derived from tobacco.” See Nicopure Mem. at 10. But an empty open vaping system is
not a generic consumer item with multiple potential functions, like a box or a bowl. The purpose
of those items might not be evident until the consumer chooses to use them in a certain way. But
an open-system vaping device is a unique item with a single function, and it is fundamental to the
vaping process: you can’t vape without it. Therefore, the FDA’s interpretation of the term
“component” to encompass an empty open system vaping device is based on a permissible
construction of the TCA. Chevron, 467 U.S. at 843.
The Court reaches the same conclusion with respect to plaintiffs’ challenge to the agency’s
treatment of e-liquids, but it must first address the jurisdictional questions raised by the defense.
Plaintiffs have standing to challenge the application of the Rule to nonnicotine-based e-liquids, and their challenge is ripe, but the agency’s
interpretation passes muster under Chevron.
Plaintiffs challenge that portion of the Rule that purports to cover e-liquids that do not
contain nicotine. In light of the definition of a tobacco product in section 321(rr)(1) of the TCA,
the agency acknowledged in the Deeming Rule that it did not have the power to regulate e-liquids
that are not made or derived from tobacco, or e-liquids that are not components or parts of a tobacco
product. See, e.g., Deeming Rule, 81 Fed. Reg. at 29,017. However, it stated its intention to
regulate the entire line of e-liquid cartridges, “including cartridges that include varying degrees of
nicotine or those that do not contain nicotine, if they meet the definition of component or part.”
Id. The FDA then advanced the position that an e-liquid without nicotine can be a “component”
of a tobacco product under the TCA, and therefore subject to FDA regulation, “if it is intended or
reasonably expected to be used with or for the human consumption of a tobacco product (e.g., with
liquid nicotine).” Id. 22 The Rule goes on to provide:
FDA is not bound by the manufacturer or distributor’s subjective claims of
intent. Rather, FDA can consider the totality of the circumstances,
including direct and circumstantial objective evidence, which encompasses
a variety of factors such as the circumstances surrounding the distribution
of the product or the context in which it is sold . . . and sales data.
Id. at 29,015.
Plaintiffs maintain that this aspect of the Rule contravenes the TCA, see Nicopure Mem.
at 13–14, and before addressing the merits, defendants briefly argue that the Court lacks
jurisdiction to hear this claim. They argue that plaintiffs lack standing because they have not
alleged sufficient facts to demonstrate that their liquids are subject to the Rule. Defs.’ Cross-Mem.
at 33–35. Defendants also maintain that the claim is not ripe; they point out that plaintiffs do not
yet know if the FDA will initiate enforcement proceedings against their non-nicotine-based eliquids, and that, in light of the agency’s stated intention to review nicotine-free e-liquids on a
“case-by-case” basis, any challenge to that aspect of the regulation should wait until the agency
initiates an enforcement proceeding. Id. at 35–37. Therefore, the Court must determine whether
it has jurisdiction before it may go on to assess whether the agency’s interpretation of the statute
As the agency explained at the hearing:
So the rule doesn’t purport to cover all nicotine-free e-liquids, it only
purports to cover them under certain circumstances, and those are when the
nicotine-free e-liquid is made or derived from tobacco. One example is a
tobacco-flavored e-liquid, regardless of its nicotine content. Another
example is if the nicotine-free e-liquid meets the definition of component
or part. And so one example of that that the FDA gave is nicotine-free eliquids that are intended to be mixed with liquid nicotine.
Hr’g Tr. at 30:15–31:7.
Plaintiffs have standing to challenge the application of the rulemaking
to nicotine-free products because they manufacture those products.
Article III of the Constitution restricts the power of the federal courts to hear only “Cases”
and “Controversies.” U.S. Const. art. III, § 2, cl. 1. A federal court is “forbidden . . . from acting
beyond its authority,” NetworkIP, LLC v. FCC, 548 F.3d 116, 120 (D.C. Cir. 2008), and a court
has “an affirmative obligation” to ensure that it has standing before reaching the merits of a dispute.
James Madison, Ltd. v. Ludwig, 82 F.3d 1085, 1092 (D.C. Cir. 1996), quoting Herbert v. Nat’l
Acad. of Scis., 974 F.2d 192, 196 (D.C. Cir. 1992).
“The doctrine of standing gives meaning to these constitutional limits by ‘identify[ing]
those disputes which are appropriately resolved through the judicial process.’” Susan B. Anthony
List v. Driehaus, 134 S. Ct. 2334, 2341 (2014) (alterations in original), quoting Lujan v. Defs. of
Wildlife, 504 U.S. 555, 560 (1992); see also Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138, 1146
(2013) (“‘One element of the case-or-controversy requirement’ is that plaintiffs ‘must establish
that they have standing to sue.’”), quoting Raines v. Byrd, 521 U.S. 811, 818 (1997). This
“doctrine limits the category of litigants empowered to maintain a lawsuit in federal court to seek
redress for a legal wrong.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).
“[T]he irreducible constitutional minimum of standing contains three elements.” Lujan,
504 U.S. at 560. First, the plaintiff must have suffered an “injury in fact,” or, in other words, “an
invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or
imminent.” Id. “Second, there must be a causal connection between the injury and the conduct
complained of,” or, said another way, the injury alleged must be “traceable to the challenged action
of the defendant.” Id. Third, it must be likely that “the injury will be redressed by a favorable
decision.” Id. at 561.
Defendants argue that plaintiffs have not alleged sufficient facts to show that the regulation
of nicotine-free liquids described in the Rule applies to their products, and that therefore, plaintiffs
have failed to allege they will suffer any actual or imminent harm. They complain that “plaintiffs
make no effort to explain how their nicotine-free e-liquids are manufactured, marketed, distributed,
or sold,” Defs.’ Cross-Mem. at 34, and that plaintiffs “make no showing that the nicotine-free eliquids they manufacture are . . . even subject to the deeming rule – by alleging, for example, that
those e-liquids are intended to be mixed with liquid nicotine.” Id. at 33.
Plaintiff Nicopure has supplied the Court with a declaration stating that it manufactures
approximately 160 different kinds of nicotine-free e-liquid, see Stamler Decl. ¶ 14, and therefore,
the Court finds that it has standing to challenge the agency’s decision to regulate these products as
part of the Rule. It is of little moment that plaintiffs have not specified whether their nicotine-free
liquids are or are not intended to be mixed with liquid nicotine, since the agency has already
specifically stated that it is not bound to take manufacturers at their word. Thus, under the terms
of the Rule, plaintiffs could be subject to enforcement proceedings if they do not submit their
nicotine-free e-liquids to the premarket review process. See 21 U.S.C. 387j(a)(2).
Plaintiffs’ challenge to the regulation of nicotine-free products is ripe.
The Court also finds that plaintiffs’ challenge to this aspect of the rule is ripe,
notwithstanding the agency’s assurances that, should plaintiffs violate the law, the agency would
assess whether enforcement was appropriate “after a ‘case-by-case’ review,” Defs.’ Cross-Mem.
at 36, quoting Deeming Rule, 81 Fed. Reg. at 29,032, which would “take into account ‘the totality
of the circumstances.’” Id., quoting 81 Fed. Reg. at 29,015.
“The ripeness doctrine generally deals with when a federal court can or should decide a
case. Part of the doctrine is subsumed into the Article III requirement of standing, which requires
a petitioner to allege inter alia an injury in fact that is ‘imminent’ or ‘certainly impending.’” Am.
Petrol. Inst. v. EPA, 683 F.3d 382, 386 (D.C. Cir. 2012). And “[e]ven if a case is ‘constitutionally
ripe,’ . . . there may also be ‘prudential reasons for refusing to exercise jurisdiction.’” Id., quoting
Nat’l Park Hosp. Ass’n v. Dep’t of Interior, 538 U.S. 803, 808 (2003). As the D.C. Circuit has
The fundamental purpose of the ripeness doctrine is “to prevent the courts,
through avoidance of premature adjudication, from entangling themselves
in abstract disagreements over administrative policies, and also to protect
the agencies from judicial interference until an administrative decision has
been formalized and its effects felt in a concrete way by the challenging
Sprint Corp. v. FCC, 331 F.3d 952, 957 (D.C. Cir. 2003), quoting Nat’l Park Hosp., 538 U.S. at
807–08. While the constitutional aspect of ripeness may involve the same impending injury-infact requirement that is necessary for standing, the prudential aspect of ripeness requires more: a
court must “balance ‘the fitness of the issues for judicial decision and the hardship to the parties
of withholding court consideration.’” Nat’l Treasury Emps. Union v. United States, 101 F.3d
1423, 1427–28 (D.C. Cir. 1996), quoting Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967), and
citing Duke Power Co. v. Carolina Envtl. Study Grp., Inc., 438 U.S. 59, 81–82 (1978). The fitness
of an issue for judicial decision depends on whether there are “contingent future events that may
not occur as anticipated, or indeed may not occur at all.” Thomas v. Union Carbide Agric. Prods.
Co., 473 U.S. 568, 580–81 (1985) (citations omitted).
In Abbott Laboratories, the Supreme Court considered two factors in evaluating whether a
pre-enforcement challenge was ripe for adjudication: First, it considered whether “the issue
tendered is a purely legal one,” and second, it asked whether the issue presented was a “final
agency action” under the APA. 387 U.S. at 149–50. “[P]urely legal claim[s]” are “presumptively
reviewable.” Nat’l Ass’n of Home Builders v. U.S. Army Corps of Eng’rs (“NAHB”), 417 F.3d
1272, 1282 (D.C. Cir. 2005), quoting Nat’l Mining Ass’n v. Fowler, 324 F.3d 752, 757 (D.C. Cir.
2003). And the D.C. Circuit has rejected the notion that a future exercise of agency discretion
makes a purely legal claim unripe. Id.
Defendants argue that plaintiffs do not know whether the FDA will ever initiate
enforcement proceedings against their non-nicotine-based e-liquids, and that in light of the
agency’s stated intention that it will review nicotine-free e-liquids on a “case-by-case” basis, any
challenge to that aspect of the regulation should wait until the agency decides to initiate an
enforcement proceeding. Defs.’ Cross-Mem. at 35–37.
But that line of reasoning has been rejected by binding D.C. Circuit precedent. In NAHB,
the plaintiffs challenged the issuance of certain permits by the Army Corps of Engineers under the
Clean Water Act. Id. at 1274. The Army Corps was authorized by statute to issue permits either
on a class-wide basis, or on a case-by-case basis. Id. The agency’s regulations required that a
“case-by-case” or “individual” permit be issued only after the agency completed a comprehensive
procedure, which included “site-specific documentation and analysis, public interest review,
public notice and comment, and, if necessary, a public hearing.” Id. at 1275. Plaintiffs challenged
the agency’s issuance of particular class-wide permits, and argued that the agency had exceeded
its statutory authority, and that it had acted in violation of the APA, when it issued certain
regulations surrounding those permits. Id. at 1277. The district court dismissed the case,
concluding that a plaintiff’s challenge was not a final agency action “until [his] individual permit
is rejected.” Id. at 1278.
But the Court of Appeals reversed the judgment of the district court, noting that the
question was better framed as a ripeness inquiry, and that the challenge was ripe for adjudication.
See id. at 1281. Plaintiffs, the Court of Appeals explained, were challenging the Army Corps’s
“statutory authority . . . and that the Corps failed to offer a reasoned basis for their [decision],” and
it held that those “purely legal” issues were ripe for adjudication. Id. at 1281–82. As to the Army
Corps’s argument that its decision was not “fit for review because their applicability to a given
activity remains within the Corps’[s] discretion,” the Court of Appeals replied, “[w]e have already
debunked this theory,” and it noted that just because “the Corps retains some measure of discretion
with respect to the [challenged decisions] does not make the [plaintiffs’] purely legal challenge
unripe.” Id. at 1282.
Plaintiffs here are in a similar posture to the plaintiffs in NAHB. The agency has indicated
that its enforcement activities against manufacturers who produce non-nicotine based e-liquids
will be undertaken on a case-by-case basis. Deeming Rule, 81 Fed. Reg. at 29,032. And while
defendants ask the Court to wait until the agency decides to enforce the statute on a manufacturer
of non-nicotine-based e-liquid, the Court can determine whether the statute authorizes the
regulation of those products in the first instance. The question in this case is not about whether
the regulation will apply to a particular nicotine-free e-liquid; the challenge is whether nicotinefree e-liquids can be regulated at all. There may very well be future litigation about whether the
agency’s case-by-case review was lawful – but that is not the challenge being brought in this case.
So the Court can determine under Chevron whether the nicotine-free e-liquids at issue are
subject to regulation.
The agency’s interpretation of the definition of “tobacco product” to
include certain non-nicotine-containing e-liquids meets the Chevron
Nicopure challenges whether the agency can lawfully regulate nicotine-free e-liquids. See
Nicopure Mem. at 9–14. Nicopure’s CEO has averred that 83% of the company’s products do
contain nicotine, Stamler Decl. ¶ 14, so the challenge relates to a relatively small percentage of the
liquids that Nicopure sells. The agency explains that the Deeming Rule only purports to regulate
nicotine-free e-liquids in three circumstances: (1) when e-liquids claiming to be nicotine-free
actually contain high levels of nicotine, Defs.’ Cross-Mem. at 37, quoting Deeming Rule, 81 Fed.
Reg. at 29,034; (2) when the e-liquid is tobacco flavored – because that flavor is “made or derived
from tobacco,” id., quoting Deeming Rule, 81 Fed. Reg. at 29,102; and (3) when the e-liquid is
reasonably expected to be mixed with liquid nicotine – because those liquids would be
“components or parts” of a tobacco product. Id., citing Deeming Rule, 81 Fed. Reg. at 29,017.
This approach comports with the statute.
There is no dispute in this case that e-liquids that are marketed as nicotine-free but that
actually contain nicotine, and e-liquids that are tobacco-flavored, are clearly and unambiguously
covered by the TCA’s definition of “tobacco product,” Chevron, 467 U.S. at 842, because both
are “made or derived from tobacco.” 21 U.S.C. § 321(rr)(1). 23 What Nicopure challenges is the
FDA’s authority to regulate those liquids that do not contain nicotine. 24
See Hr’g Tr. at 10:1–6 (conceding that plaintiffs are not challenging the agency’s authority
to regulate closed cartridge systems where the liquid in the system is nicotine that is made or
derived from tobacco); id. at 32:1–4 (not objecting to defendants’ argument that the agency can
regulate tobacco-flavored e-liquids).
While it may be true that some percentage of the Nicopure’s products are not tobacco based
and do not initially contain nicotine, see Stamler Decl. ¶ 6 (“Although some of Nicopure's e-liquid
products contain nicotine, others do not.”), any consumer who chooses to purchase a flavored
liquid online – including fruit or dessert flavored items with youthful appeal such as “grape vape”
or “cookie karma” – is immediately offered a choice to purchase the liquid at seven different levels
of nicotine content, ranging from 0 milligrams per milliliter to 24 milligrams per milliliter. See,
e.g., https://www.halocigs.com/e-liquid/premium-flavors/. So even e-liquids that do not “contain”
nicotine and sold with nicotine in them. Stamler avers that “of Nicopure’s approximately 950 eliquid SKU’s, 83% contain nicotine. The remaining e-liquid SKU’s do not contain nicotine and
are not made or derived from tobacco.” Stamler Decl. ¶ 14. But he does not specify what portion
of its sales ultimately involve that relatively small percentage of nicotine-free liquids, and of those,
which are sold to retail outlets where the nicotine can also be added, according to the users’
individual specifications. Indeed, the declaration makes clear that Nicopure’s open-system devices
are popular “because of their flexibility and options.” Id. ¶ 12.
The agency takes the position that it may lawfully regulate an e-liquid that does not contain
nicotine as a “component” of a tobacco product where the e-liquid “is intended or reasonably
expected to be used with or for the human consumption of a tobacco product (e.g., with liquid
nicotine).” Deeming Rule, 81 Fed. Reg. at 29,017. The Court must give the term “component”
its ordinary meaning, Petit, 675 F.3d at 781, and the burden is on the plaintiffs to show “that the
statute unambiguously forecloses the agency’s interpretation.” Id., quoting Vill. of Barrington,
636 F.3d at 661 (emphasis in original).
Plaintiffs advance the theory that because “Congress defined ‘tobacco product’ to mean a
product ‘made or derived from tobacco[,] FDA does not have license to extend that definition to
products not made or derived from tobacco, regardless of the circumstances.” Pls.’ Reply at 8.
But plaintiffs are ignoring the applicable half of the statutory definition. The agency is not relying
on a showing that nicotine-free e-liquids are “made or derived from tobacco” to justify its authority
to regulate them; it contends that a nicotine-free e-liquid is a “component” of a tobacco product
which is comprised of several components. Deeming Rule, 81 Fed. Reg. at 29,017.
This interpretation is not inconsistent with the TCA. The statutory definition of a regulable
“tobacco product” specifically includes any component of a tobacco product, 21 U.S.C. § 321(rr),
and if an ENDS device with nicotine or a tobacco derivative in it is, as plaintiffs acknowledge, a
tobacco product, then a nicotine-free liquid that gets added to the mix – to provide flavor or make
the inhalation experience less harsh – becomes a “component” of the tobacco product when it is
So because plaintiffs have not met their burden to show “that the statute unambiguously
forecloses the agency’s interpretation,” Vill. of Barrington, 636 F.3d at 661, the agency’s
interpretation can be upheld at Chevron step one. 25 And plaintiffs have not proffered any reasons
for why it would be an unreasonable interpretation at step two.
The FDA’s decision to deem e-cigarettes to be tobacco products comports with the
In Count II of Nicopure’s complaint, and in Count II of RSF’s complaint, plaintiffs allege
that the decision to subject companies to premarket review is arbitrary and capricious in violation
of the Administrative Procedure Act. Nicopure Compl. ¶¶ 35–45; RSF Compl. ¶¶ 76–82. And in
Count III of Nicopure’s complaint and Count VIII of RSF’s complaint, plaintiffs allege that the
agency’s cost-benefit analysis was unlawful because the agency failed to consider alternatives and
failed to adequately quantify the costs and the benefits of the Deeming Rule. Nicopure Compl.
¶¶ 46–51; RSF Compl. ¶¶ 128–33.
Plaintiffs find fault in many aspects of the regulatory regime. But the requirements that
plaintiffs claim are unreasonable flow automatically from the statute. Thus, the only issue to be
resolved is whether the final agency action – the decision to deem ENDS products to be subject to
the TCA – was arbitrary and capricious. The remainder of plaintiffs’ concerns are better directed
It is important to note at the outset that the decision to deem e-cigarettes to be tobacco
products will not ban e-cigarettes from the market. It will unquestionably subject the products to
heightened regulation, but the deeming decision does not – and could not – completely ban those
products from the market. The question before the Court, therefore, is whether it was reasonable
Plaintiffs observe that under the terms of the statute, the agency may only regulate nicotine
that is made or derived from tobacco, and that therefore, it cannot regulate products containing
synthetic nicotine. Hr’g Tr. at 10:7–13; 11:10–17. But neither plaintiff seems to manufacture
products that contain synthetic nicotine – nicotine that is made or derived in a laboratory or from
other non-tobacco sources. See id. at 35:3–15. So the Court does not need to reach the issue of
whether the agency may lawfully regulate e-liquids that contain synthetic nicotine.
for the agency to conclude that vaping should no longer be completely unregulated, given the
marked increase in use, the absence of any regulation of the products and manufacturers in the
market, and the potential for public harm given the known dangers of nicotine.
Under the Administrative Procedure Act, 5 U.S.C. § 701 et seq., the agency’s role
is to resolve factual issues and arrive at a decision that is supported by the administrative record,
and the court’s role is to “determine whether or not as a matter of law the evidence in the
administrative record permitted the agency to make the decision it did.” Occidental Eng’g
Co., 753 F.2d at 769–70, citing Overton Park, 401 U.S. at 415; see also Richards, 554 F.2d at
1177 & n.28.
A court must “hold unlawful and set aside agency action, findings, and
conclusions” that are “arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law,” 5 U.S.C. § 706(2)(A), in excess of statutory authority, id. § 706(2)(C), or
“without observance of procedure required by law,” id. § 706(2)(D). However, the scope of
review is narrow. Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co.,
463 U.S. 29, 43 (1983). The agency’s decision is presumed to be valid, see Overton Park, 401
U.S. at 415, and the court must not “substitute its judgment for that of the agency.” State Farm,
463 U.S. at 43. A court must be satisfied, though, that the agency has examined the relevant
data and articulated a satisfactory explanation for its action, “including a ‘rational connection
between the facts found and the choice made.’” Alpharma, Inc. v. Leavitt, 460 F.3d 1, 6 (D.C.
Cir. 2006), quoting State Farm, 463 U.S. at 43.
The APA dispute is justiciable.
While the APA allows for judicial review of agency decisions for “[a] person suffering
legal wrong because of agency action, or adversely affected or aggrieved by agency action within
the meaning of a relevant statute,” 5 U.S.C. § 702, agency action is unreviewable “to the extent
that . . . agency action is committed to agency discretion by law.” Id. § 701(a)(2). Judicial review
is foreclosed where the relevant statute is “drawn so that a court would have no meaningful
standard against which to judge the agency’s exercise of discretion.” Heckler v. Chaney, 470 U.S.
821, 830 (1985); see also Sierra Club v. Jackson, 648 F.3d 848, 855 (D.C. Cir. 2011); Steenholdt
v. FAA, 314 F.3d 633, 638 (D.C. Cir. 2003). The Supreme Court has cautioned that this exception
to the APA should be construed narrowly. See Webster v. Doe, 486 U.S. 592, 599 (1988)
(“[S]ubsection (a)(2) applies ‘in those rare instances where statutes are drawn in such broad terms
that in a given case there is no law to apply.’”), quoting Overton Park, 401 U.S. at 410; Barlow v.
Collins, 397 U.S. 159, 166 (1970) (“Preclusion of judicial review . . . is not lightly to be inferred.”).
The Court has recently cautioned that there is a “strong presumption” in favor of judicial review
of administrative action, Mach Mining, LLC v. EEOC, 135 S. Ct. 1645, 1651 (2015), quoting
Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 670 (1986), which can be rebutted
where a “statute’s language or structure demonstrates that Congress wanted an agency to police
its own conduct.” Id.
The agency argues that its decision to deem is so committed to agency discretion that it is
unreviewable. Defs.’ Cross-Mem. at 39–40. It points to the deeming provision of the TCA, id. at
39, which gives the Secretary of HHS the authority to apply the TCA’s provisions “to any other
tobacco products that the Secretary by regulation deems to be subject to [the TCA],” 21
U.S.C.§ 387a(b), and it argues that “Congress’s choice of the deferential word ‘deems’ and the
absence of any standard – beyond the requirement that the product meet the definition of a ‘tobacco
product’ – demonstrate that Congress committed the exercise of this authority to the agency’s
broad discretion.” Defs.’ Cross-Mem. at 39.
The government relies primarily on Webster v. Doe, 486 U.S. 592 (1998) for the
proposition that the Secretary’s decision to “deem” is committed to agency discretion. See Defs.’
Cross-Mem. at 7–8. In Webster, the Supreme Court reviewed a provision of the National Security
Act of 1947, which provided that the Director of the CIA “may, in his discretion, terminate the
employment of any officer or employee of the Agency whenever he shall deem such termination
necessary or advisable in the interests of the United States.” Webster, 486 U.S. at 594, quoting 50
U.S.C. § 403(c). The Court observed that Congress gave the CIA responsibility “to protect all
sources of intelligence information from disclosure,” and thus vested “extraordinary deference [in]
the Director.” Id. at 601. The Court concluded that because “[s]hort of permitting crossexamination of the Director concerning his views of the Nation’s security and whether the
discharged employee was inimical to those interests,” there was “no basis on which a reviewing
court could properly assess an Agency termination decision.” Id. at 600.
The D.C. Circuit disagreed with government’s reading of Webster in Marshall County
Health Care Authority v. Shalala, 988 F.3d 1221 (D.C. Cir. 1993). In Marshall County, the
government cited Webster for the proposition that it was the word “deem” in the National Security
Act in Webster that made the Director’s decision unreviewable. See id. at 1224. The Court of
Appeals rejected that argument; it explained that that lack of justiciability in Webster stemmed not
from the word “deem,” but rather from the phrase “advisable in the interests of the United States.”
Id. And it noted that in Webster, “[t]he statute, after all, dealt with national security – an area in
which the judiciary almost invariably defers to the executive branch.” Id.
In this case, when the Secretary exercised the authority to “deem” e-cigarettes to be tobacco
products, the agency was interpreting the statutory definition of “tobacco product.” So while it is
true that the statute did not provide standards for when and how the agency was to exercise its
discretion to deem, the Court concludes that the decision is reviewable.
However, the language of the deeming provision – with its use of the words “may” and
“deem,” is the kind of language that, even if judicial review is permitted, “fairly exudes deference.”
Webster, 486 U.S. at 600. And the Court of Appeals has reaffirmed that APA review in cases like
this one should be undertaken with deference. See Nuclear Energy Inst., Inc. v. EPA, 373 F.3d
1251, 1289 (D.C. Cir. 2004) (advising that when a court reviews an agency’s evaluation of
“scientific data within its technical expertise,” its review should be “extremely deferential”),
quoting Huls Am. Inc. v. Browner, 83 F.3d 445, 452 (D.C. Cir. 1996). Courts review scientific
judgments of the agency “not as the chemist, biologist, or statistician that [courts] are qualified
neither by training nor experience to be, but as a reviewing court exercising [its] narrowly defined
duty of holding agencies to certain minimal standards of rationality.” Ctr. for Biological Diversity
v. EPA, 749 F.3d 1079, 1087–88 (D.C. Cir. 2014) (quoting “[d]ecades of decisions” of the Court
of Appeals on scientific deference), quoting Ethyl Corp. v. EPA, 541 F.2d 1, 36 (D.C. Cir. 1976).
The Court’s APA review must therefore be undertaken with that deference in mind.
The FDA’s decision to deem e-cigarettes to be tobacco products is reasonable
and supported by the record.
The decision to deem e-cigarettes to be tobacco products is not arbitrary and capricious for
a number of reasons. First and foremost, nicotine is indisputably harmful. Deeming Rule, 81 Fed.
Reg. at 28,988 (describing nicotine as “one of the most addictive substances used by humans”).
There is evidence in the record that e-cigarettes “may deliver as much nicotine as other tobacco
products,” id. at 29,029, 29,031, and even when they deliver less amounts of nicotine, “lower levels
of nicotine . . . still have the potential to addict users.” Id. at 29,031.
Second, the agency explained that “adolescents appear to be particularly vulnerable to the
adverse effects of nicotine on the central nervous system,” and that nicotine may have lasting
effects on adolescent brain development. Id. at 29,029, 29,033. And the agency detailed the
“alarming” rise in e-cigarette use by middle and high school students. Id. at 29,028. In particular,
the agency cited data showing that “the rate of e-cigarette use” among high school students
“increased from 1.7 percent in 2011 to 7.7 percent in 2013, and 2.7 percent of high school students
who had never tried a cigarette indicated that they were considering using e-cigarettes in the next
year.” Id. While the agency acknowledged that “long-term studies are not yet available to
determine whether these youth and young adults are only experimenting with tobacco use,
becoming established ENDS users or dual users, or transitioning to combusted products,” it also
noted the absence of evidence that would enable it “to conclude that youth and young adults are
using ENDS as a means to quit smoking.” Id. The FDA also explained that “[r]esearchers noted
that some teens are more likely to use e-cigarettes prior to combustible tobacco products for several
reasons including the availability of e-cigarettes in flavors attractive to youth.” Id. at 28,985.
Moreover, the increase in adolescent users is not the entire story. Among adults, the use
of e-cigarettes has more than doubled between 2012 and 2014 – from 1.4 percent to 3.7 percent.
See AR 23,871, AR 15,666. And the agency found that:
[E]vidence from the most recent studies on ENDS use among young adults
and adults indicates that among adults who had never smoked cigarettes,
prevalence of ever e-cigarette use was highest among young adults aged 18
to 24 and decreased with increasing age. However, current cigarette
smokers and recent former smokers (i.e., those who quit smoking within the
past year) were more likely to use e-cigarettes than long-term former
smokers (i.e., those who quit smoking more than 1 year ago) and adults who
had never smoked. Current cigarette smokers who had tried to quit in the
past year were also more likely to use e-cigarettes than those who had not
tried to quit. It is noted that it cannot be determined by the research findings:
(1) Whether former cigarette smokers who now exclusively use e-cigarettes
would not have ceased smoking cigarettes regardless of e-cigarette use; and
(2) whether the e-cigarette use preceded quitting or the quitting occurred
first and then was followed by later e-cigarette use.
Deeming Rule, 81 Fed. Reg. at 28,985.
Furthermore, given the proliferation of these products, “[a]t present, there is significant
variability in the concentration of chemicals amongst products – including variability between
labeled content and concentration . . . and actual content and concentration.” Deeming Rule, 81
Fed. Reg. at 28,984. In other words, the manufacturers, if they remain unregulated, are free to
mislabel their products without consequence. See id. at 29,034; id. at 29,029 (“Absent a regulatory
standard, FDA acknowledges that it may not be possible to account for the wide variability of
concentrations of constituents in [e-cigarette] flavors.”). So the agency concluded that requiring
premarket review of e-cigarettes, and regulating modified-risk claims, would benefit public health.
In light of all of those findings, and in light of the deference that the Court must give the
agency on APA review, the Court finds that there is a rational relationship between the facts found
and the choice made. See Alpharma, 430 F.3d at 6. The Court’s conclusion is buttressed by these
Congressional findings in the TCA, which apply with equal force to the regulation of e-cigarettes:
“Nicotine is an addictive drug,” TCA § 2(3);
“Virtually all new users of tobacco products are under the minimum legal
age to purchase such products,” id. § 2(4);
“Tobacco advertising and marketing contribute significantly to the use of
nicotine-containing products by adolescents,” id. § 2(5);
“Because past efforts to restrict advertising and marketing of tobacco
products have failed adequately to curb tobacco use by adolescents,
comprehensive restrictions on the sale, promotion, and distribution of such
products are needed,” id. § 2(6);
“It is in the public interest for Congress to enact legislation that provides
the Food and Drug Administration with the authority to regulate tobacco
products and the advertising and promotion of such products,” id. § 2(12);
“It is essential that the Food and Drug Administration review products sold
or distributed for use to reduce risks or exposures associated with tobacco
products and that it be empowered to review any advertising and labeling
for such products,” id. § 2(36);
“It is also essential that manufacturers, prior to marketing such products, be
required to demonstrate that such products will meet a series of rigorous
criteria, and will benefit the health of the population as a whole, taking into
account both users of tobacco products and persons who do not currently
use tobacco products.” Id. 26
Plaintiffs’ arguments that the Rule is arbitrary and capricious are not
Plaintiffs argue that the decision to deem e-cigarettes to be tobacco products is arbitrary
and capricious because the Deeming Rule is “at war with itself regarding the rationale for
regulating vaping products;” it will “undermine the TCA’s core goal of reducing the deaths and
disease resulting from use of tobacco products;” and it “fails to consider numerous alternatives
that would avoid a ‘significant degree of product exit’ while still achieving Congress’s public-
The legislative history reflects that Congress was well aware of the advent of e-cigarettes
at the time that the TCA was passed. Defs.’ Cross-Mem. at 28 & n.9, citing 155 Cong. Rec. H6626
(June 12, 2009) (statement of Rep. Buyer) (“[I]n the marketplace right now, there are many
different types of products . . . [Y]ou have an electronic cigarette, whereby it’s a nicotine delivery
device.”), and 155 Cong. Rec. H4367 (Apr. 1, 2009) (statement of Rep. Buyer) (expressing
concern that “these new innovative types of nicotine delivery devices could not make their access
to the market.”); 155 Cong. Rec. S6010 (June 3, 2009) (statement of Sen. Burr) (“Then we have a
new category called electronic cigarettes . . . It actually runs off a battery. It extracts the nicotine
and delivers it into the system in a totally different way than the tobacco-headed cigarette.”).
Indeed, Senator Burr seemed to propose that all electronic cigarettes should be “grandfathered” in
to the SE pathway. 155 Cong. Rec. S6335–36 (June 9, 2009) (statement of Sen. Burr) (“There are
electronic cigarettes . . . and other products that have less risk. All those products in February
2007 were not in the marketplace. They are banned. They are eliminated. What are we asking
the FDA to do? We are asking them to grandfather three categories of products and let all adults
who choose to use a tobacco product choose from the most risky categories . . . Any claim – any
claim – that [the proposed TCA] reduces the cost of health care is only because we have
grandfathered in smokers who will die sooner, not that we have allowed them a pathway through
this bill to ever experience not only products that are currently on the marketplace that reduce the
risk from 100 percent to as little as 1 percent, but we have completely eliminated any additional
innovation in product in the future . . . .”). The fact that Congress passed the TCA in its current
form notwithstanding the concerns raised by Congressman Buyer and Senator Burr provides
further support for the conclusion that the Secretary’s decision to deem e-cigarettes to be tobacco
products, and therefore subject to premarket review, is reasonable and fully consistent with the
intent of the statute.
health objective.” Nicopure Mem. at 15–26. And RSF seems to argue that the decision to subject
e-cigarettes to the premarket review requirement is arbitrary and capricious because the agency
“offers no evidence or explanation as to how such manufacturers will be able to conduct the
necessary long-term clinical health studies, which FDA concedes do not exist, within the two year
compliance period.” RSF Compl. ¶ 79.
Once the Secretary of HHS made the decision to deem ENDS as tobacco products, the
requirement of premarket review is established by statute. So the question is not whether it is
arbitrary and capricious to make these plaintiffs comply with those requirements. The question is,
instead, whether it was reasonable for the agency to determine that it was appropriate to subject
ENDS products – the majority of which plaintiffs agree are covered by the statute – to the
regulatory regime that Congress specifically determined must be imposed on all tobacco products.
Nicopure also argues that the Deeming Rule ignores evidence “that vaping products are far
less risky than cigarettes.” Nicopure Mem. at 19 (emphasis in original). It states that the agency
has disregarded evidence that “inhalation of e-vapor ‘is of less risk to a user than the inhalation of
. . . smoke from combusted tobacco products,’ and that use of vaping products ‘is likely less
hazardous for an individual user than continued smoking of traditional cigarettes.’” Id., quoting
Deeming Rule, 81 Fed. Reg. at 29,033, 29,035. For that reason, Nicopure argues that the Rule is
“at war with itself.” Nicopure Mem. at 15–16. But this argument is not persuasive. Just because
there is evidence that e-cigarettes may be less risky than conventional cigarettes does not mean
that e-cigarettes are not risky at all, and the agency detailed its concerns about the addictive nature
and health risks of nicotine inhalation alone, particularly in adolescents. See Deeming Rule, 81
Fed. Reg. at 28,981 (“The Surgeon General has long recognized that the addictive nature of
tobacco products is due to the presence of highly addictive nicotine that can be absorbed into the
bloodstream.”); id. at 28,983–85 (“FDA noted in the [notice of proposed rulemaking] that many
public health benefits will flow from deeming tobacco products (including e-cigarettes and other
ENDS). Even if a category of products were to prove generally beneficial, individual products
within that category may raise concerns. For example, some products may be particularly
attractive to youth or deliver unexpected high levels of toxicants.”).
Moreover, the record before the agency included a substantial volume of comments
submitted by public health organizations such as the American Academy of Family Physicians,
the American Academy of Pediatrics, the Cancer Action Network, the American Heart
Association, the American Lung Association, and the American Psychological Association – all
of which urged the agency to “strengthen” and make “comprehensive” the proposed Deeming
Rule, in order to “prevent the manufacturers of tobacco products from designing and marketing
their products in ways that undercut the full potential of the Tobacco Control Act to achieve its
lifesaving objectives.” Comments of 24 Public Health Organizations to the Proposed Deeming
Rule (Dkt. No. FDA-214-N-0189) (Aug. 8, 2014) at 4; see also AR 145,543 (including the first
page of those comments). Given the deference that the Court gives to scientific judgments, Ctr.
for Biological Diversity, 749 F.3d at 1087–88, the Court finds that plaintiffs’ objections do not
overcome the agency’s scientific judgment that regulation of ENDS products under the TCA is in
the interest of public health.
As the D.C. Circuit has explained, agencies “ha[ve] wide discretion to determine where to
draw administrative lines,” ExxonMobil Gas Mktg. Co. v. FERC, 297 F.3d 1071, 1085 (D.C. Cir.
2002), quoting AT&T Corp. v. FCC, 220 F.3d 607, 627 (D.C. Cir. 2000), and courts “are generally
unwilling to review line-drawing performed by [the agency] unless a [challenger] can demonstrate
that the lines drawn . . . are patently unreasonable, having no relationship to the underlying
regulatory problem.” Id., quoting Cassell v. FCC, 154 F.3d 478, 485 (D.C. Cir. 1998). But
agencies must also consider “reasonable alternatives” as part of the requirement of “reasoned
decisionmaking.” See Am. Gas Ass’n v. FERC, 593 F.3d 14, 19 (D.C. Cir. 2010); see also State
Farm, 463 U.S. at 43 (requiring agencies to “articulate a satisfactory explanation for its action
including a rational connection between the facts found and the choice made.”).
Nicopure argues that the agency failed to “meaningfully” consider alternatives to the
premarket review requirement, including three options in particular. Nicopure Mem. at 21. First,
Nicopure contends that the agency should have waited to deem until the agency had “sufficient
data to reach a conclusion – one way or the other – regarding the health effects of vaping products
before choosing whether and how to regulate them.” Id. at 23 (emphasis in original). Second,
Nicopure contends that the agency should have adopted the European Union’s approach to
regulating vaping products, which includes many of the same requirements, but does not require
premarket review. Id. at 24. Third, Nicopure faults the agency for failing to consider “crafting a
streamlined [premarket review] process for products, such as vaporizers, that fall on the safer side
of the risk continuum.” Id.
The law is clear that plaintiffs are not entitled to the regulatory alternative that they prefer.
Rather, the Court must give appropriate deference to the expertise of the agency, and ensure that
the agency considered the alternatives proffered by the plaintiffs and rejected them for reasons that
And it bears repeating that premarket review is a creature of statute and not a new
regulatory requirement dreamed up and imposed on ENDS manufacturers by the FDA. The EU
model would subject manufacturers to disclosure, advertising, good manufacturing practices,
misbranding, and other requirements, but it would not require manufacturers to obtain premarket
review. See Nicopure Mem. at 24. Whatever one might think about the benefits of the EU
approach as a policy matter, a rule that adopted that approach would have been contrary to the
TCA, because the TCA requires that all tobacco products must undergo some kind of premarket
review. 21 U.S.C. § 387j(a). Plaintiffs argue that the agency could exercise enforcement
discretion – and that it exercised similar discretion in allowing for an extended compliance
schedule. See Pls.’ Reply at 18. There is certainly nothing in the statute or the Rule that would
bar the parties from engaging in constructive negotiations to establish a more manageable timeline.
But the fact that there may be reasons for the agency to be flexible when implementing the
premarket review requirements does not mean it was unreasonable for the agency to decline to
adopt the EU approach and eliminate premarket review altogether. See Deeming Rule, 81 Fed.
Reg. at 28,998.
Similarly, plaintiffs’ argument about a “streamlined” premarket review process,
see Nicopure Mem. at 24, finds little support in the TCA, and the agency appropriately rejected
that argument as well. See Deeming Rule, 81 Fed. Reg. at 28,998. As the agency concluded, “all
tobacco products going through the [premarket] pathway must meet all the requirements for a
premarket authorization in section 910 of the [FDCA] before FDA can issue such an
Finally, the agency did consider the suggestion that it should defer the deeming regulation
indefinitely, and it rejected it, finding that it did not have to “meet a particular public health
standard to deem tobacco products.” See Deeming Rule, 81 Fed. Reg. at 28,983. And it supported
its decision by setting out the public health benefits of the rule in great detail. Id. at 28,983–85.
The decision not to change the grandfather date for substantially equivalent
products is not arbitrary and capricious.
In Count I of the Right to be Smoke-Free complaint, plaintiffs complain that under the
Deeming Rule, no ENDS products will be able to utilize the substantial equivalence pathway for
approval, and this will “effectively ban ENDS products from the marketplace.” RSF Compl. ¶ 74.
RSF alleges: “FDA had the authority and statutory duty to either establish a new Grandfather Date
for ENDS products or apply its enforcement authority so that some ENDS manufacturers,
including e-liquid companies, would have the opportunity to forego the [premarket review]
pathway and avail themselves of the option to submit SE reports.” Id. ¶ 75. But here again, RSF’s
complaint about the impact of the grandfather date provision is better directed to Congress than
As the Court explained in the background section of this opinion, one way to get a new
tobacco product approved under the TCA is to show that it is “substantially equivalent” to an
existing tobacco product. 21 U.S.C. § 387j(a). This pathway is only available to existing or
“predicate” products that had been “commercially marketed . . . in the United States as of February
15, 2007.” 21 U.S.C. § 387j(a)(2)(A). So, to the extent that there were no “substantially
equivalent” ENDS products on the market as of that date, the substantial equivalence pathway
would not provide a pathway to seek approval of that product.
Thus, it was Congress that set the grandfather date in the TCA, and RSF has not pointed
the Court to any authority for the proposition that the agency can ignore a statutory command.
RSF argues that “[w]hen viewed in the TCA’s overall statutory context, it is apparent that Congress
did not intend for the February 15, 2007 grandfather date to be strictly applied to all categories of
deemed products.” RSF Mem. at 18. But “the starting point for interpreting a statute is the
language of the statute itself.” CPSC v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980). The statute
unambiguously points to a specific date – February 15, 2007 – and it contains no exceptions for
items deemed to be tobacco products in the future. 21 U.S.C. § 387j(a)(2)(A). 27 While the Court
is sympathetic to RSF’s policy argument that as new products come to market, the grandfather
date will become obsolete, see RSF Mem. at 18–19, the path forward is to seek an amendment to
the statute, which is already underway. Hr’g Tr. at 57:22–58:1 (“THE COURT: Isn’t your
problem with Congress and not the agency? And aren’t you already working on that right now?
[Counsel for RSF]: We are. There are two bills in front of Congress right now.”).
The statute is clear, and FDA had no power to change it. So RSF’s challenge to the
grandfather date fails.
FDA’s imposition of compliance deadlines was not arbitrary and capricious.
Under the terms of the Rule, a manufacturer who wishes to submit a premarket review
application must do so by August 8, 2018 – twenty-four months after the Rule became effective.
Deeming Rule, 81 Fed. Reg. at 28,978. After August 8, 2018, FDA will continue the compliance
period for at least twelve more months, and, on a case-by-case basis, it will defer enforcement
further to give the agency the time it needs to review and determine whether to grant the requests.
RSF alleges in Count II that the agency’s decision to establish a two-year compliance
period to comply with the premarket review requirement was arbitrary and capricious because
companies will not be able to complete the necessary applications in the required timeframe. RSF
Compl. ¶¶ 77–82. The Court finds that the agency reasonably balanced the competing comments
it received, from the view that FDA should “craft the [premarket review] process to acknowledge
This is true notwithstanding the legislative history that reveals that this very issue was
raised at the time the statute was under consideration. See footnote 25, supra, quoting 155 Cong.
Rec. S6335–36 (June 9, 2009) (statement of Sen. Burr).
the position of e-cigarettes on the continuum of nicotine-delivering products,” to the position that
the FDA should “impose strict regulations on the sale of e-cigarettes, including extensive
premarket review, to ensure that future generations are not burdened by nicotine addiction.”
Deeming Rule, 81 Fed. Reg. at 29,000.
The FDA explained:
Some comments expressed concern about the extended availability of
newly deemed, new tobacco products without scientific review. Others
provided additional data regarding youth and young adult use of flavored
tobacco products. In addition, other comments discussed the potential
public health benefits from the availability of certain flavored newly
deemed products . . . . Taking the diverse comments on these issues, as well
as the uncertainty regarding the positive or negative impact on public health
from products like ENDS, into account, FDA has decided to implement the
compliance policy with staggered initial compliance periods based on the
expected complexity of the applications, followed by continued compliance
periods for FDA review, such that our enforcement discretion will end
twelve months after each initial compliance period. Under the policy
described here for the staggered compliance periods, and while FDA is
conducting its review of marketing applications during the continued
compliance period, the Agency does not intend to take enforcement action
against products remaining on the market for failure to have a premarket
Id. at 29,010
While other approaches may have been reasonable as well, the Court is not persuaded that
the agency’s decisions about whether to impose a compliance period at all, and how long a period
would be necessary, are irrational given the range of viewpoints that had been presented during
the notice and comment period. See Alpharma, 460 F.3d at 6. Therefore, the Court concludes that
the agency’s imposition of a compliance period did not violate the APA.
RSF argues that if the Deeming Rule is not vacated, “FDA risks banning or nearly
eliminating the e-liquid and device categories from the market when the two year [premarket
review] compliance period expires.” RSF Mem. at 21. RSF is particularly concerned because
premarket review applications usually require long-term clinical studies, and those studies do not
currently exist. See id. at 25; see also Deeming Rule, 81 Fed. Reg. at 28,984, 29,028.
But the FDA specifically took that issue into consideration, and plaintiff’s concerns are
somewhat premature. The Deeming Rule recognizes that “in some cases, it may be possible for
an applicant to obtain a [premarket review] authorization order without conducting any new
nonclinical or clinical studies where there is an established body of evidence regarding the public
health impact of the product.” Deeming Rule, 81 Fed. Reg. at 28,997. And on the day that the
agency promulgated the Deeming Rule, it also issued a draft guidance on premarket review
applications. See Draft FDA Guidance for Industry, Premarket Tobacco Product Applications for
Electronic Nicotine Delivery Systems (May 2016), AR 28,350. The guidance recognizes that a
marketing authorization may issue “if there is an established body of evidence regarding the health
impact (individual or population) of [a] product or a similar product that can be adequately bridged
to [that] product, such as data from the published literature or government-sponsored databases.”
Id., AR 28,395–96.
The Deeming Rule is not invalid due to any deficiencies in the cost-benefit analysis.
In Count III of the Nicopure complaint and in Count VIII of the Right to be Smoke-Free
complaint, plaintiffs allege that the Deeming Rule violates the APA because the agency’s costbenefit analysis was insufficient. Nicopure Compl. ¶¶ 47–51; RSF Compl. ¶¶ 129–33. But the
agency was not required to undertake a cost-benefit analysis when it implemented the statutory
deeming provision. And even if “some” cost-benefit analysis was required, the agency did “some”
analysis in this case, and there is no legal authority for the proposition that the Court has the
authority to review it de novo as plaintiffs seem to be asking it to do. Because the balance struck
by the agency was reasonable, the Court finds that the cost-benefit analysis was adequate.
The agency was not required to do a cost-benefit analysis.
Plaintiffs point to the Supreme Court’s recent decision in Michigan v. EPA, 135 S. Ct. 2699
(2015) as support for their contention that the FDA was required to complete a cost-benefit analysis
before taking action under the deeming provision. See Nicopure Mem. at 26–27. But that decision,
which involved a statutory obligation to undertake the analysis, does not apply in this case.
The opinion in Michigan v. EPA concerned the provision of the Clean Air Act related to
electric utility steam generating units. 135 S. Ct. at 2705. In the Act, Congress directed the EPA
to conduct a study of the public health hazards related to emissions from these power-plants, and
it required the agency to regulate the emissions “if the Administrator finds such regulation is
appropriate and necessary after considering the results of the study.” 42 U.S.C. § 7412(n)(1)(A).
Faced with this mandatory language, the EPA determined “that cost [made] no difference to the
initial decision to regulate,” Michigan, 135 S. Ct. at 2706, and it read the Clean Air Act to preclude
the consideration of “any type of cost” as part of the decision of whether or not to regulate the
emissions. Id. at 2707 (emphasis in original).
However, the Supreme Court ruled that it was implicit in the use of the specific words
“appropriate and necessary” that some consideration of cost should be part of the analysis. Id. at
2707. Therefore, it concluded that “it was unreasonable for EPA to read § 7412(n)(1)(A) to mean
that cost is irrelevant to the initial decision to regulate power plants.” Id. at 2711.
Here the statutory provision at issue does not include the words that led the Supreme Court
in Michigan v. EPA to call for some assessment of costs as part of the decision that had been
delegated to the agency. The Tobacco Control Act mandates that tobacco products “shall” be
regulated by the Secretary, and it requires that its provisions be applied not only to conventional
cigarettes, but also to “any other tobacco products that the Secretary by regulation deems to be
subject to this chapter.” 21 U.S.C. § 387a(b). The statute does not limit the Secretary’s authority
to deem to when he finds it “appropriate and necessary” to do so. Therefore, plaintiffs can point
to no source for a requirement that costs be taken into account when the deeming power is
exercised, and Michigan v EPA is distinguishable. 28
Plaintiffs have scoured the rest of the statute, though, and they point to one of the ten stated
purposes of the TCA:
“to impose appropriate regulatory controls on the tobacco
industry.” Nicopure Mem. at 27, quoting TCA § 3(8). They argue that the use of the word
“appropriate” in the background section of the statute requires the agency to evaluate costs when
exercising its authority under the deeming provision. Id. But plaintiffs have not pointed to any
legal precedent that would authorize a court to add limits to a statutory provision that contains no
limits simply because the word “appropriate” can be found in another part of the legislation, much
less any case law that would imply statutory prerequisites from a general, introductory statement
of purpose. Michigan v. EPA certainly does not go that far. 29
Even if the plaintiffs were correct in their assertion that one should look to the introductory
sections of a statute to shed light on a clear statutory directive, a review of the entire set
Congressional findings that accompany the TCA reinforces the conclusion that the legislature did
Indeed, the Supreme Court observed that even when the words “appropriate and necessary”
do appear, “[t]here are undoubtedly settings in which the phrase . . . does not encompass cost,”
Michigan, 135 S. Ct. at 2711; there is nothing in the opinion that requires a cost-benefit analysis
when they do not appear.
Plaintiffs assert that Michigan v. EPA “forecloses” the defendant’s argument to this effect,
Pls.’ Reply at 24, but here they misread the decision again. In Michigan, the Supreme Court
rejected the EPA’s argument that since other parts of the Clean Air Act expressly mentioned cost,
one could not imply a cost-benefit analysis to be necessary in section 7412(n)(1)(A) in the absence
of an explicit requirement there. 135 S. Ct. at 2708–09. But the “appropriate and necessary”
language that was read to impose the requirement to consider costs was found in the very provision
of the Clean Air Act that was under review; the Court did not suggest that it could be imported
from some other general introductory statements found elsewhere in the statute.
not intend to circumscribe the agency’s authority. See, e.g., TCA § 2(12) (finding that “it is in the
public interest for Congress to enact legislation that provides the Food and Drug Administration
with the authority to regulate tobacco products and the advertising and promotion of such products.
The benefits to the American people from enacting such legislation would be significant in human
and economic terms”); id. § 2(36) (finding that the FDA’s authority to review modified-risk claims
and to require premarket review of tobacco products “will benefit the health of the population as
a whole”); id. § 2(44) (finding that the “Food and Drug Administration is a regulatory agency with
the scientific expertise to identify harmful substances in products to which consumers are
exposed,” and that the agency “routinely makes decisions about whether and how products may
be marketed in the United States”). Congress’s statements of purpose further emphasize the
breadth and legitimacy of the agency’s authority, and they weigh against plaintiffs’ attempt to read
hurdles into the deeming provision that are not supported by the text of the provision itself. See,
e.g., TCA § 3(1) (explaining that the purpose of the TCA is “to provide authority to the [FDA] to
regulate tobacco products under the [FDCA], by recognizing it as the primary Federal regulatory
authority with respect to the manufacture, marketing, and distribution of tobacco products”); id.
§ 3(3) (explaining that another purpose of the TCA is “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”). For all of these reasons, the Court finds that the
decision in Michigan v. EPA did not impose any requirement that the FDA assess the costs of
compliance before deeming e-cigarettes to be tobacco products.
Even if Michigan v. EPA does apply, the agency complied with its
Moreover, the problem in Michigan was that the agency failed to conduct any cost-benefit
analysis at all, and the Court concluded that the “appropriate and necessary” language gave rise to
a requirement to conduct some consideration of costs. Michigan, 135 S. Ct. at 2711 (holding that
it was “unreasonable for EPA to read § 7412(n)(1)(A) to mean that cost is irrelevant to the initial
decision to regulate power plants,” and requiring the agency to “consider cost – including, most
importantly, cost of compliance – before deciding whether regulation is appropriate and
necessary”). The Court made it quite clear that it did not read the statute to require a formal costbenefit analysis, and it underscored that it would not dictate what the assessment should consist
We need not and do not hold that the law unambiguously required the
Agency, when making this preliminary estimate, to conduct a formal costbenefit analysis in which each advantage and disadvantage is assigned a
monetary value. It will be up to the Agency to decide (as always, within
the limits of reasonable interpretation) how to account for cost.
Here, the administrative record reflects that the agency expressly considered both the
burdens the decision would impose on the vaping industry and the benefits to the public. See
Deeming Rule, 81 Fed. Reg. at 28,980. Thus, even if the agency was bound by the decision in
Michigan v. EPA to pay “some attention to cost,” 135 S. Ct. at 2707, that was done in this case,
and the decision cannot be overturned on that basis.
The agency’s consideration of costs and benefits satisfied the APA.
Plaintiffs contend that the Court should reject the outcome of the agency’s assessment of
costs and benefits under the APA. But the Supreme Court made it clear in that even when such an
analysis is required, the Court cannot review it de novo. See Michigan, 135 S. Ct. at 2711 (“It will
be up to the agency to decide (as always, within the limits of reasonable interpretation) how to
account for cost.”).
In situations where a cost-benefit analysis is required by the applicable statute, the Court
must analyze the agency’s decision making with deference. See Consumer Elecs. Ass’n v. FCC,
347 F.3d 291, 303 (D.C. Cir. 2003) (holding that the principle set forth in State Farm that “a court
is not to substitute its judgment for that of the agency” is “especially true when the agency is called
upon to weigh the costs and benefits of alternative policies”), quoting Ctr. for Auto Safety v. Peck,
751 F.2d 1336, 1342 (D.C. Cir. 1985); see also Am. Trucking Ass’ns, Inc. v. Fed. Motor Carrier
Safety Admin., 724 F.3d 243, 254 (D.C. Cir. 2013) (“It is not for us to undertake our own economic
study and substitute the Court’s views for those of the agency.”). When a court reviews a challenge
to an agency’s cost-benefit analysis, its role is limited to determining “whether the decision was
based on a consideration of the relevant factors and whether there has been a clear error of
judgment,” Ctr. for Auto Safety, 751 F.2d at 1342, quoting State Farm, 463 U.S. at 43, because
“[s]uch cost-benefit analyses epitomize the types of decisions that are most appropriately entrusted
to the expertise of an agency.” Id., quoting Office of Commc’n of United Church of Christ v. FCC,
707 F.2d 1413, 1440 (D.C. Cir. 1983). Thus, the plaintiffs must overcome a high threshold to
show error. Am. Trucking Ass’ns, 724 F.3d at 254, quoting NAHB, 682 F.3d at 1040. With that
deference in mind, the Court concludes that the balance the agency struck in this case was
The FDA prepared a Regulatory Impact Analysis which weighed the costs and benefits of
the Deeming Rule, see AR 23,912–24,067 (“RIA”). In the RIA, the agency described the benefits
of the Deeming Rule as “potentially coming from”:
premarket review, which will result in fewer harmful or addictive
products from reaching the market than would be the case in the
absence of the rule;
youth access restrictions and prohibitions on free samples, which
can be expected to constrain youth access to tobacco products and
curb rising uptake;
health warning statements, which will help consumers understand
and appreciate the risks of using tobacco products;
prohibitions against false or misleading claims and unsubstantiated
modified risk claims; and
other changes, such as FDA monitoring of product developments
and changes and required ingredient listings.
Id. at AR 23,978. While the agency conceded that it could not “quantify the benefits of the final
rule due to lack of information and substantial uncertainties associated with estimating its effects,”
it concluded that the rule was justified in light of those “welfare gains.” Id. It explained:
Asserting our authority over these tobacco products will also enable FDA
to take further regulatory action in the future as appropriate for the
protection of public health. These further regulatory actions would be
expected to yield benefits in turn. The rule will enable FDA to determine
the number of regulated entities, establish effective compliance programs,
and monitor the number and types of products that are being marketed to
the public. It will also authorize the agency to take enforcement action
against adulterated or misbranded products, reducing the potential public
health dangers of such products. By asserting authority over all products
that meet the statutory definition of tobacco product (except for accessories
of the newly deemed tobacco products), FDA will also be correcting any
possible misperception that, because certain tobacco products are not
regulated, they must be safe.
Id. at 23,973. While the agency conceded in the RIA that “[r]eliable evidence on the impacts of
. . . premarket review, and marketing restrictions on users of . . . ENDS does not, to our
knowledge, exist,” it concluded that the Deeming Rule was justified by “the welfare gains” of the
rule, which “would be equal to the value that affected individuals attribute to mechanisms that
better align consumption and production decisions with socially optimal patterns.” Id.
And as to costs, the agency began its assessment in the RIA by attempting to quantify the
number of affected entities. It found that “the baseline number of manufacturers and importers of
ENDS products is uncertain,” but it estimated that there were between 640 and 800 ENDS devices
on the market, and between 19,900 to 79,800 e-liquid mixtures on the market. RIA, AR 23,980,
23,989 (Table 6). In light of an industry survey that found that “[t]oo many companies are making
e-liquid in their kitchens/bathrooms,” the FDA concluded that “few if any of [those companies]
will continue to manufacture after this final rule takes effect,” and so it limited its analysis to “the
formal manufacturers in the market.” Id. at 23,980.
The agency identified three main potential costs: product consolidation, compliance, and
Product consolidation. Because “nearly all ENDS products will be subject
to premarket review,” the agency predicted “considerable product
consolidation and exit.” RIA, AR 23,989–90. It assumed that “54 percent
of delivery systems and somewhere between 50 and 87.5 percent of eliquids [would] not submit a marketing application and will exit the market
after the initial compliance period . . . ends.” RIA, AR 23,990. The agency
made the assumption that “90 percent of products seeking marketing
authorization will obtain marketing authorization,” which the agency
explained was “comparable to the high end of observed medical product
approval rates.” Id. at 23,990 & n.38. So, after the compliance period ends,
the agency anticipated that between 266 to 332 vaping devices, and between
900 to 1,800 e-liquids would remain on the market. Id. at 23,991 (Table 7).
But the agency also noted that the cost of product exit would be mitigated
by the increase in the “overall quality level of the products in the market
compared to the quality level that would otherwise prevail” without the
premarket review process. Id.
Compliance costs. The agency conceded that “[e]stimating expected costs
of submitting [premarket review applications] is made complicated not only
by the flexibility firms have to decide on how best to provide the
information in the [premarket review application], but also by the diversity
of products in the ENDS category.” RIA, AR 23,997. That difficulty
notwithstanding, the agency estimated that an initial premarket review
application – covering up to fifteen products per application – would cost
between $181,686 and $2,014,120 per application. Id. at 23,998 (Table
11a). And for delivery devices, the agency estimated a total cost of
$285,656 to $2,622,224 per application. Id. at 24,001–02 (Table 12a).
Given the number of participants in the market, the agency predicted a total
cost of complying with the premarket review requirements of between about
$164 million and $329 million for e-liquids, and between $131 million and
$164 million for delivery devices. Id. at 24,009 (Table 17).
Market adjustment. In light of the agency’s prediction of market
consolidation, another cost that the agency recognized was the cost of
“market adjustment,” such as the “friction costs” of displaced workers
looking for other jobs. RIA, AR 24,015. But because of the “considerable
uncertainties associated with predicting effects of the rule on business
decisions,” the agency concluded that it lacked “a basis for estimating the
costs of market adjustment here.” Id.
Taking all of those costs together, the agency estimated in the RIA the quantified and
unquantified costs of the Deeming Rule to the ENDS industry:
Quantified costs. The agency estimated that that the present value
of the quantified costs for ENDS products ranged from $507.6
million to $738.6 million. RIA, AR 24,025–26.
Unquantified costs. The agency did not quantify other costs, such
as “some consumer costs for users . . . due to loss of product variety
or higher prices,” “compliance costs for components and parts,” “the
cost of testing and reporting for harmful and potentially harmful
constituents,” “market adjustment (friction) costs,” “exit of
manufacturers,” and “the switch to pure retailing among retailers
such as vape shops who currently engage in manufacturing
activities.” Id. at AR 24,024.
The RIA measured the Deeming Rule’s potential value “by dividing its total costs by the
number of people expected to benefit from it.” Id. at AR 24,026–27. It explained that the basis
for this calculation is that it “measures what the rule’s expected beneficiaries would need to be
willing to pay on average for the rule in order for the benefits to equal the costs.” Id. at AR 24,027.
The RIA’s “primary estimate of the value of costs of this final rule, annualized over 20
years, is $66.4 million with a 3 percent discount rate and $77.1 million with a 7 percent discount
rate.” RIA, AR 24,027. And the agency cited data in the RIA showing approximately 34.9 million
users of newly-deemed tobacco products. Id. So the RIA concluded that the “break-even annual
willingness-to-pay for this rule . . . [is] approximately $2 per current user at both discount rates.”
Id. The agency noted, though, that the Deeming Rule also has an impact on non-users of tobacco
products, both from a deterrence perspective, and from a reduction in second-hand exposure. Id.
And the agency factored in the benefits to parents, to the extent that their children are deterred
from use. Id. While FDA could not quantify the numbers of people in those categories, it noted
that “the break-even annual willingness-to-pay would be even lower than the estimated $2 per
FDA incorporated the RIA’s analysis into the Deeming Rule. Deeming Rule, 81 Fed. Reg.
at 28,980–81. The agency concluded in the Rule that “[t]he direct benefits of making each of the
newly deemed tobacco products subject to the requirements of [the FDCA] are difficult to
quantify,” so it did not “predict the size of these benefits at this time.” Id. And the agency
summarized the quantified costs over a twenty year period in a table. Id. Based on that analysis,
the agency concluded that “the benefits of the final rule justify the costs.”
Among other effects, new products will be subject to an evaluation to ensure
they meet the appropriate public health standard for the pathway before they
can be marketed, labeling cannot contain misleading statements, and FDA
will be made aware of the ingredients in newly deemed tobacco products.
If, without the final rule, new products would pose substantially greater
health risks than those already on the market, the premarket requirements
made effective by this final rule would keep such products from appearing
on the market and worsening the health effects of tobacco product use.
Plaintiffs argue that “conducting a cost-benefit analysis is not the same as conducting a
reasoned cost-benefit analysis,” and they identify four reasons why the agency’s cost-benefit
analysis should be found to violate the APA. Nicopure Mem. at 27–32.
First, plaintiffs argue that in failing to quantify the benefits of the rule, the agency
“shirk[ed] a statutory responsibility simply because it [was] difficult.” Id. at 27–28, quoting
NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010). They posit that “[a]n agency cannot
realistically determine that a rule’s benefits justify its costs if it does not have at least a general
grasp of the rule’s benefits.” Id. at 28. While it is true that the agency concluded that the “direct
benefits [of the Deeming Rule] . . . are difficult to quantify” monetarily, it is disingenuous to argue
that the agency did not articulate “at least a general grasp of the rule’s benefits,” because the RIA
provided substantial detail on the benefits of the rule, and the reasons why quantification was not
possible. See RIA, AR 23,973–78. And, as noted above, there was no statutory duty to quantify
the benefits at all, and even if such a duty can be implied from a statutory provision that lacks any
requirement that the agency must find regulation to be “appropriate and necessary,” Michigan v.
EPA does not require that the benefits be quantified in any particular way when compared to the
Second, plaintiffs contend that the FDA “substantially understate[d] the Rule’s costs”
because its estimates on the costs of premarket review are “divorced from reality,” and because
the agency failed to quantify a number of impacts, such as the “market adjustment (friction) costs”
of lost revenues, job losses, and companies leaving the industry. Nicopure Mem. at 29–30, quoting
Deeming Rule, 81 Fed. Reg. at 29,075. But the Court is not empowered to “undertake [its] own
economic study and substitute the Court’s view for those of the agency.” Am. Trucking Ass’ns,
724 F.3d at 254. The agency acknowledged that the determination of the cost of premarket review
was difficult to quantify, but it nonetheless developed estimates. RIA, AR 23,997–24,002. It also
explained its assessment of why the market adjustment costs were not quantifiable: because of the
“considerable uncertainties associated with predicting effects of the rule on business decisions.”
Id. at 24,015.
Third, plaintiffs argue that “FDA loads the dice” because it excludes the unquantified costs
from its break-even analysis. Nicopure Mem. at 31. According to the agency, the break-even
analysis must, by design, include only the quantifiable costs, AR 24,026–27 (“Without being able
to quantify the rule’s benefits, a measure with which a rule’s potential value can be compared is
obtained by dividing its total costs by the number of people expected to benefit from it.”), and
Nicopure does not offer anything beyond its sharp language to explain why this approach is
Finally, plaintiffs argue that the Deeming Rule “fails to determine whether the cost of
regulating [ENDS] products is justified by the benefits associated with such regulation.” Nicopure
Mem. at 32. But there is no legal support for the proposition that every product or industry affected
by a rulemaking is entitled to a separate cost-benefit analysis. And while the Deeming Rule did
not directly weigh the costs of vaping against the benefits, it did separately address the costs to
each of the regulated product categories, including the overall costs to the vaping industry. See,
e.g., RIA, AR 24,025–26. Plaintiffs admit that they lack legal authority for their argument, Pls.’
Reply at 27, and they rely solely on the conclusory argument that the agency’s decision lacked
While plaintiffs would surely have assessed the various costs and benefits in a different
manner, the Court does not have the power to take up the agency’s analysis de novo. See Michigan,
135 S. Ct. at 2711. Given the agency’s careful assessment of the costs and benefits to the entire
ENDS industry, the Court finds that the agency considered the relevant factors and did not make
a “clear error of judgment” when it exercised its discretion to deem electronic cigarettes to be
tobacco products under the TCA and therefore subject to the statutory premarket review
requirements. Ctr. for Auto Safety, 751 F.2d at 1342.
The agency complied with the purely procedural requirements of the Regulatory
RSF alleges in Count VII that the agency violated the Regulatory Flexibility Act, as
amended by the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. § 601, et
seq., by failing to consider significant alternatives to the Deeming Rule, and by failing to
appropriately balance the costs and benefits of the Deeming Rule on small businesses. RSF
Compl. ¶¶ 119–27.
“The Regulatory Flexibility Act requires that agencies issuing rules under the
Administrative Procedure Act publish a final regulatory flexibility analysis.” Nat’l Tel. Coop.
Ass’n v. FCC, 563 F.3d 536, 540 (D.C. Cir. 2009), citing 5 U.S.C. § 604. As the Court of Appeals
Such an analysis must meet certain statutory requirements. It must state the
purpose of the relevant rule and the estimated number of small businesses
that the rule will affect, if such an estimate is available. In addition, each
analysis must summarize comments filed in response to the agency's initial
regulatory flexibility analysis, along with the agency's assessment of those
comments. Finally, each analysis must include “a description of the steps
the agency has taken to minimize the significant economic impact” that its
rule will have on small businesses, “including a statement of the factual,
policy, and legal reasons for selecting the alternative adopted in the final
rule and why each one of the other significant alternatives to the rule
considered by the agency which affect the impact on small entities was
Id., quoting 5 U.S.C. § 604(a)(6).
But the statute’s “requirements are ‘[p]urely procedural.’” Id., quoting U.S. Cellular Corp.
v. FCC, 254 F.3d 78, 88 (D.C. Cir. 2001). While the statute sets out “precise, specific steps an
agency must take,” Aeronautical Repair Station Ass’n, Inc. v. FAA, 494 F.3d 161, 178 (D.C. Cir.
2007), it “imposes no substantive constraint on agency decisionmaking.” Nat’l Tel. Coop. Ass’n,
563 F.3d at 540. The statute simply requires agencies to publish analyses that address specific
topics, and if it does so, it has complied with the Regulatory Flexibility Act. Id.
Here, the agency completed a Regulatory Impact Analysis which contains a discussion of
all of the required topics: The agency explained the purpose of the Deeming Rule. RIA, AR
23,969–73; see 5 U.S.C. § 604(a)(1). It responded to the comments to the initial regulatory
flexibility analysis. AR 23,918–69; see 5 U.S.C. § 604(a)(2)–(3). It estimated the number of small
businesses that the Deeming Rule would affect. AR 23,039–42; see 5 U.S.C. § 604(a)(4). It
described the reporting, recordkeeping, and compliance costs. AR 23,991–24,026; see 5 U.S.C.
§ 604(a)(5). And it discussed significant proposed alternatives. AR 24,033–38; see 5 U.S.C.
RSF argues that the agency violated the Regulatory Flexibility Act because it did not
consider any alternatives to the burdens of the premarket review process, such as extending the
two-year compliance period for premarket applications to be filed. RSF Mem. at 32–33. But the
agency did specifically respond to concerns raised about the two-year compliance period. See
Deeming Rule, 81 Fed. Reg. at 28,997–98 (explaining the agency’s response to comments – on
both sides of the issue – about the length of the compliance period). And even if an agency’s
explanation could be open to debate, the Regulatory Flexibility Act “requires nothing more than
that the agency file a [final Regulatory Flexibility Analysis] demonstrating a ‘reasonable, goodfaith effort to carry out [the statute]’s mandate.’” U.S. Cellular, 254 F.3d at 88, quoting Alenco
Commc’ns, Inc. v. FCC, 201 F.3d 608, 625 (5th Cir. 2000).
Because the agency complied with the procedural requirements of the Regulatory
Flexibility Act, judgment will be entered in favor of defendants on Count VII of RSF’s complaint.
The Deeming Rule is not unconstitutional; RSF has abandoned its equal protection
claim, and its due process argument fails.
Count III of the Right to be Smoke-Free complaint alleges that the TCA – not the Deeming
Rule – violates the equal protection clause and RSF’s right to substantive due process. RSF
Compl. ¶¶ 83–89. Since RSF has abandoned the equal protection argument, 30 only the due process
argument remains. The due process argument is premised on the allegation that Congress has
In its equal protection claim, RSF objected to the fact “FDA treats ENDS products the
same as traditional tobacco products,” even though “ENDS present a lower (and different) risk
profile than cigarettes.” RSF Compl. ¶ 88. RSF contended that its right to equal protection had
thereby been violated because “Congress has treated differently situated products in a similar
manner.” Id. This turns the equal protection clause on its head, but RSF abandoned the claim by
failing to mention it in their summary judgment papers. See Aera Energy LLC v. Salazar, 691 F.
Supp. 2d 25, 34 n.6 (D.D.C. 2010).
acted irrationally by declining to tailor the premarket review process to ENDS products. See id.
The Due Process Clause provides that “[n]o person shall be . . . deprived of life, liberty, or
property, without due process of law.” U.S. Const. amend. V. “The first inquiry in every due
process challenge is whether the plaintiff has been deprived of a protected interest in ‘property’ or
‘liberty.’” Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 59 (1999). Fundamental liberty
interests are those that “are, objectively, deeply rooted in this Nation’s history and tradition and
implicit in the concept of ordered liberty, such that neither liberty nor justice would exist if they
were sacrificed.” Washington v. Glucksberg, 521 U.S. 702, 720–21 (1997). For a law to
permissibly infringe on an individual’s fundamental liberty interest, it must be narrowly tailored
to serve a compelling government interest. Id. at 721. By contrast, when a law infringes on a
nonfundamental liberty interest, it will be upheld unless there is “no ‘rational relationship between
[the law] and some legitimate governmental purpose.’” Gordon v. Holder, 721 F.3d 638, 656
(D.C. Cir. 2013), quoting Am. Bus. Ass’n v. Rogoff, 649 F.3d 734, 742 (D.C. Cir. 2011).
It bears noting that RSF has not pointed to any fundamental right or liberty interest affected
by the TCA, see RSF Compl. ¶¶ 83–89; RSF Mem. at 38–40. But when one applies the rational
basis test that RSF concedes is appropriate, RSF Mem. at 38–39, the TCA passes muster.
RSF asks the Court to find that the TCA is unconstitutional because it creates a premarket
review system that plaintiff feels it will never be able to satisfy. RSF Mem. at 39–40. But 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., 508 U.S. 307, 315 (1993), and courts must uphold
legislation “[e]ven if the classification involved . . . is to some extent both underinclusive and
overinclusive.” Vance v. Bradley, 440 U.S. 93, 108 (1979). Here, a rational basis can be discerned
on the face of the TCA. See Gordon, 721 F.3d at 657 (“Although we are by no means restricted
to the stated reasons for passing a law in our search for a ‘rational basis,’ we need look no further
than the statute itself to discern three rational bases for the [law].”), quoting Beach Commc’ns, 508
U.S. at 315. Congress set forth a number of rational reasons for the premarket review requirement
in the purposes section of the TCA: “to authorize the Food and Drug Administration to set national
standards controlling the manufacture of tobacco products;” “to provide new and flexible
enforcement authority to ensure that there is effective oversight of the tobacco industry’s efforts
to develop, introduce, and promote less harmful tobacco products;” “to ensure that consumers are
better informed,” and “to impose appropriate regulatory controls on the tobacco industry.” TCA
§§ 3(3), (4), (6), (8).
Because the TCA has a rational basis, judgment will be entered for defendants on RSF’s
due process challenge.
The marketing restrictions in the Tobacco Control Act do not violate the First
In the Tobacco Control Act, Congress directed the FDA to promulgate regulations
restricting the distribution of free samples of tobacco products. TCA § 102. The statute also
amended the Food, Drug, and Cosmetic Act to require manufacturers to apply for approval before
they could market any tobacco product with a claim that it was “for use to reduce harm or the risk
of tobacco-related disease associated with commercially marketed tobacco products.” TCA § 101;
21 U.S.C. § 387k(b)(1). Nicopure and RSF allege that application of these statutory requirements
to the vaping industry violates the First Amendment.
Count IV of both the Nicopure and RSF complaints alleges that the ban on the distribution
of free samples of vaping devices or e-liquids is an unconstitutional restraint on the right to free
speech. Nicopure Compl. ¶ 55; RSF Compl. ¶¶ 93–100. Plaintiffs also allege – in Count IV of
the Nicopure complaint and Count V of the RSF complaint – that the TCA’s regulation of
“modified-risk” statements violates their First Amendment Rights. Nicopure Compl. ¶ 54; RSF
Compl. ¶¶ 102–10.
It is questionable whether the mere distribution of a product sample rises to the level of
constitutionally protected expression at all. But even if the claimed communicative element
inherent in this practice implicates the First Amendment, the Supreme Court has made it clear that
“when ‘speech’ and ‘nonspeech’ elements are combined in the same course of conduct, a
sufficiently important governmental interest in regulating the nonspeech element can justify
incidental limitations on First Amendment freedoms.” United States v. O'Brien, 391 U.S. 367,
376 (1968). Under the O’Brien test, “a government regulation is sufficiently justified if it is within
the constitutional power of the Government; if it furthers an important or substantial governmental
interest; if the governmental interest is unrelated to the suppression of free expression; and if the
incidental restriction on alleged First Amendment freedoms is no greater than is essential to the
furtherance of that interest.” Id. at 377. To be upheld, though, a regulation must leave open ample
alternative channels for communication. Clark v. Cmty. for Creative Non-Violence, 468 U.S. 288,
293 (1984); see also Edwards v. District of Columbia, 755 F.3d 996, 1002 (D.C. Cir. 2014).
Moreover, to the extent the TCA regulates speech directly, it is well established that “[t]he
constitution . . . accords a lesser protection to commercial speech than to other constitutionally
guaranteed expression.” Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n, 447 U.S. 557,
562–63 (1980), citing Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447, 456 (1978). In Central
Hudson, the Supreme Court established a four-part test for determining whether the regulation of
commercial speech violates the First Amendment; the court is required to ask: (1) is the expression
protected by the First Amendment? (2) is the asserted government interest substantial? (3) does
the regulation directly advance the governmental interest? and (4) is the regulation more extensive
than is necessary to serve that interest? Id. at 566. As the Ninth Circuit recently observed in Retail
Digital Network, LLC v. Prieto, No. 13-56069, 2017 WL 2562047, at *6 (9th Cir. June 14, 2017),
while the Supreme Court “has engaged in considerable debate about the contours of First
Amendment protection for commercial speech, and whether Central Hudson provides a sufficient
standard,” it has continued to utilize the Central Hudson framework in the commercial context.
For the reasons set forth below, the Court concludes that the distribution of free samples is
not protected speech, and that even if the act of handing out one’s product involves some
expression, the FDA’s restriction of this activity passes the O’Brien and Central Hudson tests. See
S.F. Arts & Athletics, Inc. v. U.S. Olympic Comm., 483 U.S. 522, 535–537, 537 n.16 (1987)
(evaluating a law under O’Brien and Central Hudson together because “their application . . . is
substantially similar”). The Court also concludes that the TCA’s regulation of modified risk
statements in this commercial setting satisfies Central Hudson. Both aspects of the statute, now
extended to electronic nicotine delivery systems by virtue of the Deeming Rule, directly advance
a substantial government interest, and neither is more extensive than necessary.
Central Hudson has not been supplanted by Sorrell.
Plaintiffs argue that in light of the Supreme Court’s decision in Sorrell v. IMS Health, 564
U.S. 552 (2011), the regulations under review must be subjected to the heightened scrutiny that
applies to content-based restrictions on speech. Nicopure Mem. at 34. But the Sorrell opinion did
not alter or replace the Central Hudson immediate scrutiny standard to be applied to commercial
speech, and indeed, the Court struck down the state statute involved by invoking the elements of
the Central Hudson test.
In Sorrell, the Supreme Court examined a Vermont law which restricted the sale,
disclosure, or use of prescriber-identifying information by pharmacies for marketing purposes, and
the disclosure of the information to drug manufacturers in particular. 564 U.S. at 558–59. At the
outset, the Court determined whether the law involved a restriction based on the content of the
communication or the identity of the speaker, and it determined, in that context, that a regulation
on the dissemination of information – that it could be provided to some but not others, and for
some purposes but not others – was a pure content-based restriction on speech that was subject to
heightened scrutiny under the First Amendment. Id. at 563–64. 31 But the Court did not go on to
specifically address the state’s argument that a lower standard should apply to a law that would
burden only commercial speech because it found that the statute could not even pass muster under
Central Hudson. “To sustain the targeted, content-based burden [that the Vermont law] imposes
on protected expression, the State must show at least that the statute directly advances a substantial
governmental interest and that the measure is drawn to achieve that interest.” Id. at 572; see also
id. at 571 (“[T]he outcome is the same whether a special commercial speech inquiry or a stricter
form of judicial scrutiny is applied.”). At no point, though, did the Court identify what a stricter
test would involve.
The D.C. Circuit has not yet addressed the question of whether Sorrell calls for a new
approach to regulations of commercial speech. But the other circuits that have considered the
question have all continued to apply the Central Hudson framework to commercial speech cases.
In Retail Digital Network, LLC v. Prieto, the Ninth Circuit reasoned that while “[i]n Sorrell, the
This means that if Sorrell has any bearing on this case, it would apply only to the contentbased rules concerning modified-risk claims and not to the ban on the dissemination of free
samples, which, if it involves speech at all, is a regulation that only incidentally burdens the
communicative aspect of the conduct being regulated.
Court entertained the potential application of a ‘stricter form of judicial scrutiny,’” it ultimately
assessed the statute in question under the Central Hudson standard, and it relied on cases applying
Central Hudson when it analyzed the critical third and fourth factors. 2017 WL 2562047, at *8.
The Ninth Circuit also observed that the Sorrell opinion reiterated the “core principle . . . that
commercial speech may be subject to greater regulation than non-commercial speech.” Id. at *9;
see also id. (“We are not alone in arriving at this conclusion. In commercial speech cases postSorrell, the Second, Fourth, Sixth, and Eighth Circuits similarly have, at bottom, continued to
apply Central Hudson.”). 32
So to the extent the Court finds that the TCA restricts commercial speech, it will apply the
Central Hudson test.
The Tobacco Control Act’s ban on the distribution of free samples is
The Tobacco Control Act’s ban on the distribution of free samples
regulates conduct, not speech.
The regulation of pure conduct does not ordinarily implicate First Amendment concerns.
While the Supreme Court “has applied First Amendment scrutiny to a statute regulating conduct
which has the incidental effect of burdening the expression of a particular political opinion,”
Arcara v. Cloud Books, Inc., 478 U.S. 697, 702 (1986), citing O’Brien, 391 U.S. at 367, the Court
has emphasized that this doctrine has boundaries.
Plaintiffs argue that other circuits have applied Sorrell to commercial speech, see Nicopure
Mem. at 34 n.21, but none of the decisions cited hold that Sorrell has replaced Central Hudson.
See, e.g., 1-800-411-Pain Referral Serv., LLC v. Otto, 744 F.3d 1045, 1055 (8th Cir. 2014) (“The
upshot is that when a court determines commercial speech restrictions are content- or speakerbased, it should then assess their constitutionality under Central Hudson.”); United States v.
Caronia, 703 F.3d 149, 164 (2d Cir. 2012) (“The [Sorrell] Court did not decide the level of
heightened scrutiny to be applied, that is, strict, intermediate, or some other form . . . .”, and
concluding that the government failed to justify a criminal prosecution “even under Central
Hudson’s less rigorous intermediate test”).
We cannot accept the view that an apparently limitless variety of conduct
can be labeled “speech” whenever the person engaging in the conduct
intends thereby to express an idea.
O’Brien, 391 U.S. at 376. With that in mind, the Court has observed that an activity affected by
a generally applicable governmental regulation must have “a significant expressive element” to
warrant First Amendment protection. Arcara, 478 U.S. at 706–07.
In Arcara, the district attorney brought an action under a New York public nuisance statute
to shut down an adult book store, alleging that the owners were aware that the solicitation of
prostitution and sexual activity were occurring openly on the premises. Id. at 698–99. The owners
of the store opposed the action on First Amendment grounds, arguing that the closure of the
establishment would interfere with their First Amendment right to sell books. Id. at 700. The New
York Court of Appeals held that it was necessary to analyze the regulation under the O’Brien test
because the closure order would impose an incidental burden on the owners’ bookselling activities.
Id. at 705. But the Supreme Court disagreed and distinguished the circumstances before it from
the symbolic draft card burning in O’Brien. It explained that the Court had subjected governmental
restrictions to scrutiny in the past “only where it was conduct with a significant expressive element
that drew the legal remedy in the first place, as in O’Brien, or where a statute based on a
nonexpressive activity has the inevitable effect of singling out those engaged in expressive
activity.” Id. at 706–07. It found that the legislation resulting in the closure of the store was
directed at conduct that had nothing to do with expression, and it was not moved by the fact that
the implementation of the provision could have “some conceivable burden” on First Amendment
Since Arcara, the D.C. Circuit has explained that a District of Columbia law imposing a
curfew on juveniles did not regulate expressive conduct at all, holding that while the curfew
restriction “regulates the activity of juveniles during nighttime hours[,] it does not, by its terms,
regulate expressive conduct.” Hutchins v. District of Columbia, 188 F.3d 531, 548 (D.C. Cir.
This case does not involve symbolic action undertaken to convey a political message, and
even any commercial message is entirely unstated. Plaintiffs argue that “sampling is essential to
educating consumers and obtaining immediate, spontaneous feedback from the market.” Pls.’
Reply at 33. But this does not suggest that distributing samples conveys any particular message.
Indeed, plaintiffs describe the activity in terms of its desired effect rather than its meaning:
“sampling is an effective means of communicating and encouraging consumers ‘to try different
and new . . . products, enabling them to learn about their own preferences and possibly change
their purchasing behavior as a result.’” Id., quoting AR 24,014. Plaintiffs add: “[i]nherent in
sampling is an intent to inform consumers about a product’s characteristics and quality.” Id. at 32.
But the fact that plaintiffs cannot even clearly articulate what implicit statement is allegedly being
made, and they can say no more than “inherent in sampling is an intent,” reveals that there is little
likelihood that the message will be clearly understood by others.
Even if the Court were to view the distribution of free samples as inherently expressive
– “try this!” – that limited message is not a “significant element” of the conduct being regulated.
All sellers of products are animated by the intent that first time customers will become aware of a
product’s quality or value and the hope that those consumers will continue to purchase the product
in the future. But courts have found that sale of products in general, and the sale of cigarettes in
particular, is not protected speech. See Phillip Morris USA, Inc. v. City & Cty. of San Fran., 345
F. App’x 276, 277 (9th Cir. 2009) (“Selling cigarettes isn’t [protected expressive activity] because
it doesn’t involve conduct with a ‘significant expressive element.’ It doesn’t even have ‘an
expressive component.”’), quoting Arcara, 478 U.S. at 701–02; Talk of the Town v. Dep’t of Fin.
& Bus. Servs., 343 F.3d 1063, 1069 (9th Cir. 2003). If “buy this!” is not expression, then handing
the merchandise out for free does not change the analysis.
The authorities plaintiffs cite do not require a different outcome. Plaintiffs rely on Discount
Tobacco City & Lottery, Inc. v. United States, 674 F.3d 509 (6th Cir. 2012), but the relevant portion
of that case involved a challenge to a multi-part marketing regulation that not only banned the
distribution of free samples, but also banned the distribution of non-tobacco items such as tote
bags bearing tobacco brand logos; prohibited “continuity programs” involving the provision of
free gifts in consideration for a tobacco purchase; and forbid prohibited tobacco companies from
sponsoring athletic, musical, and other events. Id. at 537–38. The plaintiffs in that case argued
that they were engaged in communication “reinforcing brand loyalty” and “encouraging switching
from competitors’ brands.” Id. at 538. While the Sixth Circuit concluded that the set of marketing
restrictions as a whole was “an attempt to regulate directly the communicative impact of the
conduct,” id. at 539, quoting Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 567 (2001), which
implicated the First Amendment, id., it dealt with the set of rules as a whole and did not specifically
find that the distribution of free samples alone had a significant expressive element.
Here, the sample ban is not part of a broader restriction on the marketing of e-cigarettes,33
and it is not aimed at whatever minimal “communicative impact” the distribution of e-cigarette
samples might have. Instead, it is focused on conduct – a means of distribution of e-cigarettes that
presents a particular risk of providing the product to underage users.
While the Tobacco Control Act is at issue in this case too, the Deeming Rule does not
impose the same restrictions as the TCA imposes. See Deeming Rule, 81 Fed. Reg. at 29,041
(“[A]t this time, only some of the restrictions in part 1140 . . . will apply to the newly deemed
products . . . . additional provisions in part 1140 (including . . . sale and distribution of nontobacco
items, and sponsorship of events) will not apply to the newly deemed products.”).
The second case plaintiff cites, Bailey v. Morales, 190 F.3d 320 (5th Cir. 1999), is not
binding in this Circuit, and it can be distinguished from the case at hand. Bailey concerned a
criminal statute that banned doctors from giving anything of value to prospective patients. Id. at
325. The Fifth Circuit held that giving something of value conveyed the following message: “hire
me, try my service,” id., and that the message was likely to be understood.
But this Court is not necessarily persuaded that this rises to the level of a constitutionally
protected “significant expressive element.” Also, Bailey involved the exchange of something of
value for a prospective customer’s business, which would typically result after a more explicit
conversation. That alone reduces the communicative aspect of the conduct. Rumsfeld v. Forum
for Academic & Institutional Rights, Inc., 547 U.S. 47, 66 (2006) (“The expressive component of
a law school’s actions is not created by the conduct itself but by the speech that accompanies it.
The fact that such explanatory speech is necessary is strong evidence that the conduct . . . is not so
inherently expressive that it warrants protection under O’Brien.”).
Finally, the Bailey regulation was designed to prohibit a quid pro quo, and that bargain (“If
you give me this, I will give you that”) was the mutually understood message the Fifth Circuit felt
obligated to protect. But the distribution of free samples does not communicate a request for
reciprocation, and there is no obvious common understanding of some meaning that has been
Plaintiff’s theory is further undermined by the line of cases holding that “price regulations
and other forms of direct economic regulation do not implicate First Amendment concerns.” Nat’l
Ass’n of Tobacco Outlets, Inc. v. City of Providence, 731 F.3d 71, 77 (1st Cir. 2013) (ban on
The third case plaintiff cites, Rockwood v. City of Burlington, 21 F. Supp. 2d 411, 420 (D.
Vt. 1998), found that free samples were speech covered by the First Amendment, but offered no
reasoning in support of that conclusion, and the Court does not find it to be persuasive.
tobacco-product coupons and multi-pack discounts are not speech or expressive conduct), citing
44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 507 (1996). At bottom, what the FDA sought
to regulate, at Congress’s direction, was the fact that the products would be free. Price regulations
have long been considered non-speech-related means of controlling product distribution. See
Thompson v. W. States Med. Ctr., 535 U.S. 357, 372 (2002) (holding that prohibiting pharmacists
from selling compound drugs at wholesale prices would be “non-speech-related”); see also 44
Liquormart, 517 U.S. at 507 (finding that a direct regulation requiring higher prices would not
involve any restriction on speech).
The government argues that if prohibiting sales at wholesale prices and banning coupons
are not restrictions on speech, then neither is a ban on free samples. Defs.’ Cross-Reply at 18–19.
While plaintiffs assert that free samples allow sellers to “inform consumers about a product’s
characteristics and quality,” Pls.’ Reply. at 32, and that they are an “effective means of
communicating and encouraging consumers ‘to try different and new . . . products,’” id. at 33,
quoting AR 24,014, coupons and promises of lower prices do the same. Plaintiffs note that the
price regulation cases “distinguish sampling as an activity and limit their holdings to price
regulation.” Id., citing Nat’l Ass’n of Tobacco Outlets, 731 F.3d at 78 n.7 (“We need not here
consider the persuasive value of [free sample cases because] they did not involve price regulation,
but rather the provision of free samples and promotional gifts.”). But the cases offer no persuasive
reason for drawing the distinction.
For these reasons, the Court concludes that the distribution of free samples is not
sufficiently expressive to constitute protected speech, and that the regulation promulgated by the
FDA in accordance with the instructions set forth in the TCA is a regulation of conduct, with, at
most, an incidental burden on commercial speech. This means that if the First Amendment applies
at all, O’Brien is the appropriate test.
The Supreme Court took this approach in Lorillard Tobacco Co. v. Reilly, 533 U.S. 525
(2001), when it applied O’Brien to a Massachusetts sales practices regulation because
“Massachusetts seeks to regulate the placement of tobacco products for reasons unrelated to the
communication of ideas.” Id. at 569. The Court held:
The means chosen by the State are narrowly tailored to prevent access to
tobacco products by minors, are unrelated to expression, and leave open
alternative avenues for vendors to convey information about products and
for would-be customers to inspect products before purchase.
Id. at 570. For the same reasons, the restrictions on distributing free samples withstand First
But even if one were to conclude that the ban is a regulation of speech, the legislation also
satisfies the Central Hudson factors.
Even if sampling is considered to be expression, plaintiffs concede that
the government has a substantial interest in eliminating youth access to
The Central Hudson test asks whether the expression that is being regulated is protected
by the First Amendment; whether the government has asserted a substantial interest in regulating
that expression; whether the regulation directly advances that governmental interest; and whether
the regulation is more extensive than necessary to serve that interest. 447 U.S. at 566. So if one
were to conclude that the first prong of the test has been met, the next issue to be addressed would
be whether the government has asserted a substantial interest to justify the restriction on speech.
The FDA asserts that it has a substantial interest in preventing children and adolescents
from gaining access to tobacco products. See Deeming Rule, 81 Fed. Reg. at 28,996. The Supreme
Court has recognized that the state has a substantial interest in preventing youth tobacco use.
Lorillard, 533 U.S. at 555, 564. And plaintiffs concede that the FDA has asserted a substantial
interest – to “eliminate a pathway for youth access to Tobacco products.” Nicopure Mem. at 36,
quoting Deeming Rule, 81 Fed. Reg. 28,973, 28,996. So this factor has been established.
The FDA has sufficient evidence to show that the sampling ban directly
and materially advances the interest in eliminating youth access to
The third Central Hudson question is whether the regulation directly and materially
advances the substantial governmental interest. Cent. Hudson, 447 U.S. at 566.
The government’s burden “is not satisfied by mere speculation or conjecture; rather, a
governmental body seeking to sustain a restriction on commercial speech must demonstrate that
the harms it recites are real and that its restriction will in fact alleviate them to a material degree.”
Greater New Orleans Broad. Ass’n v. United States, 527 U.S. 173, 188 (1999), quoting Edenfield
v. Fane, 507 U.S. 761, 770–71 (1993). So, “the regulation may not be sustained if it provides only
ineffective or remote support for the government’s purpose.” Id., quoting Cent. Hudson, 447 U.S.
The Supreme Court does not, however, “require that ‘empirical data come . . . accompanied
by a surfeit of background information,” and it has “permitted litigants to justify speech restrictions
by reference to studies and anecdotes pertaining to different locales altogether, or . . . to justify
restrictions based solely on history, consensus, and ‘simple common sense.’” Lorillard, 533 U.S.
at 555, quoting Florida Bar v. Went For It, Inc., 515 U.S. 618, 628 (1995). An agency may rely
on evidence generated by analogous situations “so long as whatever evidence the [agency] relies
upon is reasonably believed to be relevant to the problem the [regulation] addresses.” Hutchins,
188 F.3d at 569, quoting City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 51–52 (1986).
On this issue, the Sixth Circuit’s analysis in Discount Tobacco comes out strongly on the
side of the defendant. When the court was asked to evaluate a sampling ban on cigarettes, it
observed that the FDA had proven that free samples of cigarettes were an “easily accessible source
of the products to young people,” 674 F.3d at 541, quoting 61 Fed. Reg. 44,460, and “freely
obtainable, even with the tobacco industry’s ‘voluntary codes that supposedly restrict distribution
of free samples to underaged persons.’” Id., quoting 61 Fed. Reg. at 45,244–45 & nn.1206–08.
Consequently, the Sixth Circuit concluded that “[b]anning such practices embodie[d] a narrow fit
between the harm articulated and the restriction employed,” and that “the government’s position
regarding its ban on product sampling is perhaps its most easily supported.” Id.
The FDA seeks to ban the distribution of free samples of e-cigarettes because they are “a
pathway for youth to access tobacco products, which can help in reducing youth initiation.”
Deeming Rule, 81 Fed. Reg. at 28,986. It has produced substantial evidence that its free sample
ban will directly reduce access to vaping products by minors. The Deeming Rule noted that “[f]ree
samples give young people a risk-free and cost-free way to satisfy their curiosity about tobacco
products, and, when distributed at cultural or social events, may increase social pressure on young
people to accept and use the samples.” Id., quoting 60 Fed. Reg. 41314, 41326. The FDA also
pointed to anecdotal evidence of “extensive sampling of some newly deemed products in venues
that attract youth, including” venues with large audiences, music festivals, and motorsport events,
id., and cited a study by the Institute of Medicine of the National Academies, “Growing up
Tobacco Free: Preventing Nicotine Addiction in Children and Youths,” 1994, http://www.nap.edu/
catalog/4757.html, and a study by Senator Richard Durbin. Durbin, R., et. al., “Gateway to
Addiction? A Survey of Popular Electronic Cigarette Manufacturers and Targeted Marketing to
Youth,” April 14, 2014.
The Institute of Medicine study demonstrates that youth are more likely to experiment with
cigarettes when exposed to them via free samples, and the Durbin study demonstrates that youth
are very likely to be exposed to offers of free samples of e-cigarettes. Applying “simple common
sense,” Lorillard, 533 U.S. at 555, the Court finds that all of this evidence goes well beyond the
level of “conjecture and unproven belief.” See Nicopure Mem. at 36.
And Nicopure’s insistence that the FDA must show that minors in fact received e-cigarettes
as free samples at one of the events “calls for an absurd preciseness,” that is not necessary under
Central Hudson. Hutchins, 188 F.3d at 544 (rejecting the assertion that the District of Columbia
prove that its curfew resulted in a drop in juvenile arrests when it had relied on evidence from
other cities that curfews reduce arrests). Because the FDA has shown that free e-cigarette samples
will encourage youth initiation into use of electronic tobacco products, it has met its burden. 35
The ban on free samples is not more extensive than necessary to serve
FDA’s substantial interest.
Finally, Central Hudson requires that the regulation may not be more extensive than
necessary to serve the government’s interest. Cent. Hudson, 447 U.S. at 566. Central Hudson
“requires something short of a least-restrictive-means standard,” Bd. of Trs. v. Fox, 492 U.S. 469,
477 (1989), but the agency still bears the burden to demonstrate a “reasonable fit” between the
means chosen and the government interest pursued. Id. at 480; see also Am. Meat Inst. v. U.S.
This finding satisfies O’Brien as well. “An incidental burden on speech is no greater than
is essential, and therefore is permissible under O’Brien, so long as the neutral regulation promotes
a substantial governmental interest that would be achieved less effectively absent the regulation.”
Rumsfeld, 547 U.S. at 67, quoting United States v. Albertini, 472 U.S. 675, 689 (1985). “The issue
is not whether other means . . . might be adequate, id., and a regulation is not “invalid simply
because there is some imaginable alternative that might be less burdensome on speech.” Albertini,
472 U.S. at 689. Ultimately, this inquiry in this factor is the same as the “not more extensive than
necessary” requirement of Central Hudson. See S.F. Arts & Athletics, Inc., 483 U.S. at 537 n.16
(“Both [Central Hudson] and the test . . . under O’Brien require a balance between the
governmental interest and the magnitude of the speech restriction.”).
Dep’t of Agric., 760 F.3d 18, 26–27 (D.C. Cir. 2014) (en banc). The existence of “numerous and
obvious less-burdensome alternatives to the restriction on commercial speech” marshals against a
finding of a narrow tailoring, but the presence of “ample alternative channels for receipt” of the
relevant information weighs in its favor. Went For It, 515 U.S. at 632, 634. The Court does not
“require exhaustive evidence documenting the necessity” of one option over another, and it may
rely on an agency’s “reasonable, common sense determination” that the option chosen is
preferable. Nat’l Cable & Telecomms. Ass’n v. FCC, 555 F.3d 996, 1002 (D.C. Cir. 2009).
In Trans Union Corp. v. FTC, 267 F.3d 1138 (D.C. Cir. 2001), the D.C. Circuit upheld a
statute that allowed consumers to “opt out” of allowing telecommunication companies to sell their
credit information despite the existence of a “marginally less intrusive” option that would have
allowed them to “opt in,” because “a regulation is not . . . invalid simply because a court concludes
that the government’s interest could be adequately served by some less-speech-restrictive
alternative.” Id. at 1142, quoting Turner Broad. Sys., Inc. v. FCC, 520 U.S. 180, 217–18 (1997).
And the Supreme Court has held that the ability to advertise through telephone directories, legal
directories, newspapers, billboards, radio, television, and recorded messages accessible through
telephone were “ample alternative channels for receipt of information” sufficient to justify a
regulation on direct mail. Went For It, 515 U.S. at 634.
Plaintiffs assert that a ban on sampling is more extensive than necessary because “free
samples are ‘necessary to convince cigarette users to switch to’ vaping because ‘the products are
new.’” Nicopure Mem. at 37–38, quoting Deeming Rule, 81 Fed. Reg. at 29,054. Nicopure asserts
that less restrictive alternatives such as (1) “limiting of free samples to adults at qualified-adult
only facilities,” (2) “prohibiting samples from leaving store premises,” and (3) “prohibiting the
distribution of free samples at public events” would be sufficient. Id. at 38.
But the FDA permissibly rejected these alternatives. The agency asserts that it “does not
believe that it could achieve the same results by allowing samples of newly deemed products in
qualified adult-only facilities,” Deeming Rule, 81 Fed. Reg. at 28,986, and it points to previous
findings that free samples of cigarettes are easily accessible, even to elementary school children,
notwithstanding claimed industry efforts to restrict their distribution to underage persons. Defs.’
Cross-Mem. at 77, citing 61 Fed. Reg. 44,396, 44,460; see also Discount Tobacco, 674 F.3d at
Also, as the Supreme Court found in Went For It, there are “ample alternative channels”
for delivering information about e-cigarettes to an appropriate adult audience, such as by
discounting sample kits sold in stores to curious adults. See Went For It, 515 U.S. at 634. Plaintiffs
can also inform consumers via demonstrations, promotional literature, and other advertising.
So the Court concludes that a ban on free samples is not “substantially broader than
necessary to achieve the government’s interest” given the availability of other, less risky marketing
options for the vaping industry. Trans Union Corp., 267 F.3d at 1143. 36
In sum, the TCA’s placement of restrictions on the distribution of free samples of tobacco
products does not burden constitutionally protected speech, and if it does, it withstands scrutiny
under both the Central Hudson and O’Brien tests.
The regulation of modified-risk tobacco products satisfies the Central Hudson
The TCA requires manufacturers to obtain agency pre-approval before it introduces into
interstate commerce any tobacco product “which represents explicitly or implicitly” that it is “less
The requirement of “ample alternative channels for receipt of information” needed to
justify an incidental burden on speech under O’Brien is coextensive with the “not more extensive
than necessary” factor in Central Hudson. Went For It, 515 U.S. at 634.
harmful” than other tobacco products, that it “contains a reduced level of a substance or presents
a reduced exposure to a substance,” or that it “is free of a substance.” 21 U.S.C. § 387k. Plaintiffs
contend that the TCA violates the First Amendment as applied to them because it prohibits them
from making truthful and non-misleading claims about some of their products without agency preapproval. Nicopure Mem. at 39. And they argue that while the statute “in theory, only restricts
modified risk claims, in practice, it ‘effectively produce[s] a total ban,’” because the FDA has
never approved a modified risk tobacco product application. Id., quoting Lorillard, 533 U.S. at
Under Central Hudson, the Court must first “determine whether the expression is protected
by the First Amendment.” 447 U.S. at 566. “For commercial speech to come within that provision,
it at least must concern lawful activity and not be misleading.” Id. The TCA forbids manufacturers
from saying something – that their product is “free” of a substance, or that it is less harmful than
other tobacco products. See 21 U.S.C. § 387k. That is a clear restriction on truthful and nonmisleading speech, which is appropriately analyzed under Central Hudson. 37
The next question under Central Hudson is whether “the asserted governmental interest is
substantial.” Cent. Hudson, 447 U.S. at 566. The Deeming Rule states that the provision will
The government maintains that the Court need not review the “modified risk” provision
under Central Hudson at all because the provision is based on the premarket review for “new
drugs” as set forth in the Federal Food, Drug, and Cosmetic Act. Defs.’ Cross-Mem. at 78. The
D.C. Circuit has held that requiring premarket review of drugs based on their “intended use” is not
subject to First Amendment scrutiny because “the First Amendment allows ‘the evidentiary use of
speech to establish the elements of a crime or to prove motive or intent.’” Whitaker v. Thompson,
353 F.3d 947, 953 (D.C. Cir. 2004), quoting Wisconsin v. Mitchell, 508 U.S. 476, 489 (1993). So
the government argues that because “[t]he premarket review of tobacco products that purportedly
reduce health risks functions in the same way as the FDCA provision” upheld in Whitaker,
modified risk claims are not subject to First Amendment protection. Def.’s Cross-Mem. at 79.
But Whitaker is inapplicable and the analogy fails because the modified risk provision at issue here
does not turn on the question of the manufacturer’s “intended use.”
advance four governmental interests – “improv[ing]” and “protecting” public health, “prevent[ing]
the use of unsubstantiated modified risk claims, which may mislead consumers and lead them to
initiate tobacco product use or continue using tobacco when they would otherwise quit,”
“allow[ing] for better-informed consumers,” and “help[ing] to prevent the use of misleading
marketing targeted to youth populations.” Deeming Rule, 81 Fed. Reg. at 29,053; see also Defs.’
Cross-Mem. at 80 (asserting that the FDA has a substantial interest in “protecting public health
and preventing false and misleading tobacco industry claims about the relative health benefits of
its products.”), citing TCA §§ 2(36)–(37), (40).
With this, the FDA has articulated a substantial interest in regulating modified-risk claims.
See, e.g., Discount Tobacco, 674 F.3d at 535; TCA § 2(40) (“The dangers of products sold or
distributed as modified risk tobacco products that do not in fact reduce risk are so high that there
is a compelling governmental interest in ensuring that statements about modified risk tobacco
products are complete, accurate, and relate to the overall disease risk of the product.”); see also
Edenfield, 507 U.S. at 769 (finding a substantial government interest “in ensuring the accuracy of
commercial information in the marketplace”). 38
The third and fourth inquiries under Central Hudson are whether the regulation directly
advances the governmental interest, and whether the regulation is no more extensive than
necessary to serve that interest. Cent. Hudson, 447 U.S. at 566.
Plaintiffs insist that the “FDA’s argument rests on the faulty premise that the tobacco and
vapor industries warrant the same treatment with respect to the modified risk restrictions.” Pls.’
Reply at 41. But once again, that premise was built into the statute by Congress, TCA §§ 2(36),
(37), (43), and the need to protect the public from unsubstantiated health claims applies with equal
force no matter how the nicotine is being delivered.
In upholding the modified risk provisions against a First Amendment challenge, the Sixth
Circuit found that premarket review of modified risk claims was not more extensive than necessary
because “the government has made a reasonable determination that, in the context of a deadly and
highly addictive product, it would be a virtual impossibility to unring the bell of misinformation
after it has been rung.” Discount Tobacco, 674 F.3d at 537. That reasoning applies with equal
force to the regulation of e-cigarettes. 39
Plaintiffs assert that the modified risk regulation does not directly advance the
governmental interest because, to do so, the “FDA would have to show that the [modified risk
provision], by restricting truthful and non-misleading speech about the contents or characteristics
of using vaping products, somehow benefits the public health on a population-wide basis.”
Nicopure Mem. at 42. But as with many other aspects of their challenge, plaintiffs lack legal
authority for the standard they would have the Court impose. Plaintiffs also argue that the
regulation is more extensive than necessary because instead of infringing on plaintiffs’
constitutionally-protected interest in truthful and non-misleading speech, the FDA could have
“simply required disclaimers, such as that the statements: (i) are not approved by the FDA; (ii) do
not establish that the product is safer than any other tobacco product; or (iii) do not change the fact
that quitting nicotine products altogether is healthier than using vaping products.” Id. at 44. But
Congress expressly rejected plaintiffs’ argument that disclaimers would be adequate to achieve the
government’s interests. See TCA § 2(41) (“[C]onsumers have misinterpreted advertisements in
which one product is claimed to be less harmful than a comparable product, even in the presence
In response to comments about the constitutionality of the modified risk provision, the
agency relied upon Discount Tobacco’s holding that the modified risk provision “is sufficiently
tailored because it concerns only consumer-targeted speech about tobacco products’ health effects
or contents.” Deeming Rule, 81 Fed. Reg. at 28,987, citing Discount Tobacco, 674 F.3d at 534–
of disclosures and advisories intended to provide clarification.”); id. § 2(42) (“Permitting
manufacturers to make unsubstantiated statements concerning modified risk tobacco products,
whether express or implied, even if accompanied by disclaimers[,] would be detrimental to the
And in the end, notwithstanding plaintiffs’ rhetoric, this provision does not ban truthful
statements about health benefits or reduced risks; it simply requires that they be substantiated.40
So the Court agrees with the Sixth Circuit that the modified risk provision directly and materially
advances the government interests in preventing manufacturers from making false or misleading
claims about their products, and it passes muster under the First Amendment.
For all of those reasons, the Court will deny plaintiffs’ motions for summary judgment,
and it will grant the agency’s cross-motion for summary judgment. A separate order will issue.
AMY BERMAN JACKSON
United States District Judge
DATE: July 21, 2017
Furthermore, under 21 U.S.C. § 387k(g)(2)(A), the Secretary is specifically given
discretion to approve a label if “any aspect of the label, labeling, and advertising for such product
that would cause the tobacco product to be a modified risk tobacco product . . . is limited to an
explicit or implicit representation that such tobacco product or its smoke does not contain or is free
of a substance or contains a reduced level of a substance, or presents a reduced exposure to a
substance in tobacco smoke.”
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