The fight against the FDA’s deeming regulations continues. Last week, the FDA filed a cross-motion for summary judgement in the combined Nicopure Labs/Right to be Smoke-Free Coalition lawsuit. Now the vapor industry plaintiffs have responded with a “joint memorandum in opposition” to the FDA’s motion. The new filing refutes the FDA’s claims point by point.
The lawsuits by the two plaintiffs — Nicopure Labs (maker of Halo E-Liquid), and the E-Vapor Coalition, an alliance of 11 vaping advocacy groups, led by the Right to be Smoke-Free Coalition — were combined in the US District Court for Washington, DC, by Judge Amy Berman Jackson.
This response was drafted jointly by the two legal teams, in response to the FDA motion which addressed both plaintiffs’ claims. The vapor groups’ argument is based on four major points. We’ll look briefly at each. (Note: I tried to choose representative text from each section, but these are complicated arguments. To get a complete picture, you really need to read the entire document.)
A. Products neither made nor derived from tobacco are not “tobacco products”
The vapor industry plaintiffs write, “FDA says that Congress did not intend to ‘exempt open-system e-cigarettes from this comprehensive regulatory scheme, simply because their e-liquid cartridges or tanks are refillable.’ But the issue is not whether a product is refillable. Under the TCA [Tobacco Control Act], the question is whether the product is made or derived from tobacco. An open-system vaping device, at least when sold without a nicotine-containing e-liquid, is neither made nor derived from tobacco. Nor are any of the product’s components or parts.”
The Nicopure/R2B Smoke-Free attorneys contend that the FDA must narrowly read the TCA’s authorization for the FDA to deem products containing nicotine “made or derived from tobacco.” The FDA’s deeming rule claims authority over any product that could be used to consume nicotine, whether that product contains nicotine at the time of sale or not.
“FDA’s attempt to exert control over these non-tobacco-containing products by classifying them as ‘components’ or ‘parts’ of a tobacco product is not filling a statutory gap, it is attempting to exercise authority that Congress has not granted.”
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. Indeed, under FDA’s Rule, the agency could “deem” ice cream subject to the TCA, on the theory that it is reasonably expected that some people mix ice cream with tobacco essence to make tobacco-flavored ice cream. FDA could likewise “deem”
tupperware, on the ground that people may be expected to store e-liquids in the containers.
The FDA wants to regulate vapor products that don’t contain nicotine — like devices and zero-nicotine e-liquids — based on their “intended use.” This is how things like batteries, software, and wick and wire, can be considered “tobacco products.” Any product that could be used to vape nicotine, says the FDA, should be considered a tobacco product.
“The Rule purports to grant FDA license to decide whether a non-tobacco, non-nicotine containing product is a ‘tobacco product’ under a ‘totality of the circumstances’ test regarding what FDA thinks the product is ‘intended or reasonably expected’ to do. But, in stark contrast to the drug and device provisions of the FDCA [Federal Food, Drug and Cosmetic Act — the larger federal regulation that contains the Tobacco Control Act], as FDA itself acknowledges, Congress did not define tobacco products in the TCA by their intended use.”
The FDA claims that Nicopure can’t challenge the regulation of zero-nicotine e-liquids because the the dispute isn’t “ripe.” That means that since the rule hasn’t yet been applied (regarding zero-nicotine e-liquid) that Nicopure doesn’t have standing to dispute it. Nicopure responds that being forced to proceed with sales under threat of a possible “enforcement action” is a sufficient circumstance to give Nicopure standing to challenge the rule.
The FDA also claims that the ruling in the Sottera decision — the court ruled against the FDA’s attempt to regulate e-cigarettes as unlicensed drug delivery devices — reinforces its authority to regulate vapor products. The plaintiffs counter that the decision came before the deeming rule, “so the D.C. Circuit [Court] cannot have held that FDA’s extension of authority over non-tobacco, non-nicotine containing products was appropriate. Furthermore, the product at issue in Sottera was an e-cigarette that contained liquid nicotine in the mouthpiece.” Sottera is now known as NJoy.
2. The Deeming Rule’s Regulation of Vaping Devices and E-Liquids Fails “Hard Look” APA Review
A. The Deeming Rule is not exempt from judicial review, but rather is subject to “hard look” scrutiny under the APA
The Administrative Procedure Act (APA) “governs internal procedures of administrative agencies,” according to EPIC.org. The FDA contends that the deeming rule is exempt from APA review because FDA was granted authority to regulate tobacco products by Congress, and thus given discretion to choose how it does so. The plaintiffs counter that ” Courts have repeatedly held that APA review applies even when statutes use ‘deeming’ language.” They also note that “FDA does not cite a single case in which a court held that the content of a legislative rule is ‘committed to agency discretion.'”
B. The Deeming Rule fails APA review because it is internally inconsistent and contrary to the public health
“FDA seeks to justify the Deeming Rule on the ground that it will protect public health, despite repeatedly acknowledging that FDA does ‘not currently have sufficient data … to determine what effects e-cigarettes have on the public health,'” write the plaintiffs. “FDA seeks to sidestep its admissions by arguing that, regardless of vaping’s health effects, ‘regulation of [vaping products] will still benefit public health.’”
“FDA cannot escape this inherent and fundamental inconsistency by arguing for deference.
The Rule presents (repeatedly), FDA’s judgment that FDA does not know ‘what effects e-
cigarettes have on the public health.’ Having admitted that its scientific conclusion is that FDA does not know the public health effects of vaping, FDA cannot simultaneously argue for deference to its scientific expertise that regulation would benefit the public health.”
“Notwithstanding this evidence before it, FDA argues in its brief that there ‘is no evidence
that consumers would abandon e-cigarettes because of some reduction in product diversity.’ But that cannot be correct under a regime in which over 95 percent of the market will soon vanish, and FDA has already conceded the point by acknowledging that the Rule will result in ‘consumer costs for users of [vaping products] due to loss of product variety or higher prices.'”
“The Deeming Rule also frustrates the TCA’s purposes by cutting off innovation in the vaping market. As of the Rule’s August 8, 2016 effective date, new vaping products may be marketed only after FDA considers and approves a corresponding pre-market tobacco product application (“PMTA”). Given that FDA has approved only one PMTA since the TCA was enacted, that process will take years to complete. The upshot is that manufacturers cannot improve the safety of their products without first pulling them off the market for an extended period, and are barred from offering new products that pose reduced health risks. The crushing burden of PMTA review, in turn, provides a powerful disincentive for innovation into even safer vaping products.”
C. FDA failed to consider reasonable alternatives
The plaintiffs argue that the FDA could have collected data to prove whether vapor products represent a public health risk before imposing a regulatory regime that will destroy small businesses and send many vapers back to smoking. They could also have considered other approaches, such as the European Union’s.
“FDA justified the Deeming Rule on the ground that it will advance the public health,” they write, “so it has no choice but to explain how the Rule does so. Performing the sort of data collection advocated by Plaintiffs, which FDA could do without ‘deeming’ vaping products and subjecting them to the crushing burden of the PMTA process, would have enabled FDA to resolve that issue. FDA has no answer for this straightforward argument. ”
The plaintiffs note that the alternatives the FDA did consider would still have ignored the damage done to the small businesses bearing the brunt of the deeming rule. They remind the court that the Small Business Administration challenged the FDA on this point in its comments in 2014, and was ignored.
D. FDA failed to reconcile the Deeming Rule with the TCA’s structure
“In rejecting the various alternatives suggested by Plaintiffs and other commenters, FDA also fails to reconcile the significant impacts of the Deeming Rule on the vaping industry with the overall structure of the TCA. Contrary to FDA’s characterization of the statute, the TCA is not a one-sided affair aimed at eradicating tobacco use. Rather, Congress required the agency in addressing public health concerns to also ensure reasonable access to the marketplace for relatively safer tobacco products.”
“Moreover, even if the Deeming Rule does not result in a de facto ban, Congress clearly did not envision a scenario in which the vast majority of vaping products would be forced from the marketplace even before their respective manufacturers have had a meaningful chance to apply
for pre-market authorization. Left unaddressed by FDA in its opening brief is any acknowledgment that the agency must ‘continue to permit the sale of tobacco products to adults’ and that, along these lines, the statute provides ‘flexible enforcement authority’ regarding the development, introduction, and promotion of ‘less harmful tobacco products.’”
3. The Deeming Rule Is Invalid Because It Is Premised on an Arbitrary and Capricious Cost-Benefit Analysis
A. FDA’s arguments regarding Executive Orders are irrelevant
“FDA leads off by attacking a straw man,” the plaintiffs argue. “Although FDA goes on at length regarding the law governing judicial review of an agency’s compliance with Executive Orders 12866 and 13563, that body of law is irrelevant because none of Plaintiffs’ arguments rests on those Executive Orders (or any others, for that matter).”
B. FDA must consider costs and benefits when regulating under the TCA
The FDA claims it isn’t required to do a proper cost-benefit analysis on the deeming rule because the specific portion of the TCA that it invokes doesn’t refer to costs or use the word “appropriate.” However, the plaintiffs argue, “The Act plainly calls for costs to be taken into account by directing FDA to ‘impose appropriate regulatory controls on the tobacco industry.’”
“Contrary to FDA’s argument, the agency had a clear statutory duty to consider the Deeming
Rule’s costs and benefits. One of the TCA’s core purposes is ‘to impose appropriate
regulatory controls on the tobacco industry.’ As the Supreme Court made clear…'”‘appropriate” is the classic broad and all-encompassing term that naturally and traditionally includes consideration of all the relevant factors’—including whether a rule’s costs are justified by its benefits.”
C. FDA’s cost-benefit analysis is unreasonable and inadequately explained
“FDA failed to quantify the Deeming Rule’s benefits,” the plaintiffs write. “FDA insists that it was not required to do so because the Rule’s benefits are ‘too difficult to quantify or monetize.’ But as the D.C. Circuit has admonished several times, ‘an agency may not shirk a statutory responsibility simply because it may be difficult.'”
The plaintiffs argue that FDA’s analysis also “stacked the deck” by completely ignoring the huge costs the deeming rule would impose through “product and market exit.” That is, in their analysis, the FDA skipped right by the fact that at least 95 percent — by FDA’s own estimate — of the market would disappear. Nicopure and R2B Smoke-Free also argue that even if manufacturers could afford the cost of completing premarket tobacco applications (PMTA’s), it would be impossible to complete them before the August 8, 2018 deadline the FDA mandates.
“FDA brushes this concern off by asserting that it currently ‘plans’ to enforce the PMTA
requirement ‘only for finished tobacco products,’ rather than for all tobacco products, components,
and parts. But FDA’s ‘plans’ can change and are in any event irrelevant to the costs imposed by the Rule, which applies with full force to tobacco products, components, and parts—including (according to FDA) every heating coil, glass vial, software program, battery, and digital display included in a retail vaping product.”
“Thus, the APA’s requirement of reasoned decisionmaking dictates that FDA should at a minimum have explained why the benefits of regulating vaping products justify the associated costs.”
D. FDA violated the Regulatory Flexibility Act
The Regulatory Flexibility Act is supposed to ensure that federal agencies attempt to tailor regulations to account for the size of the businesses affected. The plaintiffs argue that the FDA’s “regulatory flexibility analysis fails to address in any manner the devastating impact that the Deeming Rule will have on the broader vaping industry—i.e., that virtually all manufacturers, as indicated by the agency’s own analysis, will be forced out of the market in two years.”
“Despite that Act’s clear mandate,” they write, “and despite the flaws in its initial analysis having been pointed out in detail by the Small Business Administration, FDA did not consider any significant alternatives in its final regulatory flexibility analysis, let alone options that would address whether the two-year PMTA compliance period for products already on the market is sufficient for manufacturers to conduct long-term clinical studies.”
4. The Deeming Rule Violates the First Amendment
A. The Deeming Rule’s regulation of vaping device and e-liquid samples violates the First Amendment
“FDA seeks to avoid First Amendment scrutiny of the sampling ban by arguing that sampling is not speech,” write the plaintiffs. “But FDA does not and cannot dispute that all courts addressing the issue have squarely held that sampling is protected speech under the First Amendment.”
“The Deeming Rule’s sampling ban is subject to heightened scrutiny under Sorrell because it ‘burdens disfavored speech by disfavored speakers’ and ‘seek[s] to keep people in the dark for what the government perceives to be their own good.’ FDA has banned a specific type of speech for a specific product category; FDA offers no explanation why the ban does not constitute a content-based restriction on that activity.”
“At no point—either in the Deeming Rule or in its brief—does FDA show that an outright sampling ban will further its goal of preventing or reducing vaping among minors. Instead, FDA simply reiterates the findings of a study on the effect that banning cigarette samples will have in curtailing smoking among minors in the middle of the 1990s, and then tries to connect that to the present day by postulating that sampling has been offered at large events that ‘appear to be youth-oriented.’
B. The Deeming Rule’s Restrictions on Truthful, Non-misleading Speech Violate the First Amendment
The “modified risk” provisions of the Tobacco Control Act prevent manufacturers of vapor products from making truthful claims about their products — including noting what is not in them — until the manufacturer can “prove that the product will (1) “significantly reduce harm and the risk of tobacco-related disease to individual tobacco users”; and (2) “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.”
The example Nicopure uses is the claim that their e-liquid does not contain peanuts. To state that fact, they would have to receive approval from the FDA as a modified risk product, after proving that their product benefits the whole public health. Not only is that ridiculous and impossible, it also has never happened. The FDA has never approved a modified risk tobacco product.
“At bottom, FDA’s arguments rest on the faulty premise that the tobacco and vaping industries warrant the same treatment with respect to the modified risk restrictions. FDA draws heavily on the tobacco industry’s ‘long history’ with ‘reduced risk’ tobacco products.”
“Unlike the traditional tobacco industry, nearly all vaping companies, including Nicopure, are small businesses. Indeed, as FDA concedes, the overwhelming majority of vaping products did not enter the U.S.market—and most vaping firms therefore did not exist—until after 2007….As a result, FDA has no basis to paint vaping manufacturers with the same broad brush as it does cigarette manufacturers and other ‘legacy’ tobacco businesses.”
“The Deeming Rule purports to regulate products outside the scope of FDA’s statutory authority,” the plaintiffs conclude. “Moreover, the Rule purports to subject Nicopure and the rest of the vaping industry to crushing regulation in the interest of the public health, while conceding that the Rule may produce no public health benefits at all. FDA compounded this improper approach by ignoring reasonable, more flexible alternatives to the “all-or-nothing” approach taken with respect to vaping products, and by failing to explain the choices made in the Rule. FDA also abdicated its obligation to conduct a reasoned cost-benefit analysis. And it has violated Plaintiffs’ First Amendment rights. This Court should hold unlawful and set aside the Deeming Rule’s regulation of vaping devices and e-liquids.”