Cigar Groups Ask Court to Vacate Deeming Rule for Premium Cigars

Since the cigar industry scored a major victory thanks to a ruling last July, there have been few updates in the Cigar Association of America et al. v. United States Food and Drug Administration et al., the nearly seven-year-old lawsuit filed by three cigar trade grounds against FDA’s deeming regulations.

Last week, Michael Edney—the lead attorney for the plaintiffs—submitted a brief to the court that argued that recent actions support the court vacating the deeming regulations for “premium cigars.” This would invalidate all parts of the deeming regulations for most cigars sold in a humidor and would require FDA to more or less restart the process of regulating these cigars.

All of this is a result of a July 2022 ruling from Judge Amit P. Mehta of the U.S. District Court for the District of Columbia, who ruled that FDA acted in an arbitrary and capricious manner when it failed to evaluate key evidence while it was drafting the finalized version of the rule. Like other executive agencies, FDA is subject to the Administrative Procedures Act (APA), rules that govern how agencies like FDA can make regulations like the deeming rules. As part of the APA, these agencies must notify the public when it intends to create new rules, give time for people, organizations and companies to submit comments to the rules and then respond to those comments before introducing a final rule.

In this case, Mehta found that FDA ignored a comment from Cigar Rights of America (CRA)—one of the three plaintiffs in this case—that argued that “premium cigars” were not used in the same manner as other types of cigars and therefore should be regulated differently:

The agency stated that, “despite our explicit requests,” commenters “did not include data indicating that premium cigar smokers are not subject to disease risk and addiction.” Id. at 29,024. It added that “there were no data provided to support the premise that there are different patterns of use of premium cigars and that these patterns result in lower health risks.” Id. at 29,020. With regard to youth consumption, the FDA observed that “studies indicate that [youth and young adults] are also using premium cigars.” Id. at 29,022. Ultimately, the agency “concluded that deeming all cigars, rather than a subset, more completely protects the public health.” Id. at 29,020.

Because this was an issue that took place as part of the rulemaking process, as opposed to an issue with a specific part of the finalized rule, Mehta’s ruling has thrown the entire rule as it relates to “premium cigars” in jeopardy.

Now, both sides are waiting for Mehta to rule about what happens next. There are two basic options:

• Vacating the Rule — This would mean that the 2016 deeming regulations would not apply to “premium cigars.” Because the deeming regulations are the foundation of FDA’s regulations for cigars, this would mean that both current and future regulations would not apply to “premium cigars” until FDA corrected the issue. FDA would have the opportunity to regulate “premium cigars” but it would need to start the process over—comment periods, etc.—from square one.
• Remanding Without Vacatur — This would mean that Mehta would instruct FDA to fix the error it made. It could mean the regulations would not apply to “premium cigars” while FDA fixes the issue though Mehta can choose how to apply those rules. If FDA fixed the issue(s) to Mehta’s liking, FDA could then move forward with enforcing the regulations for “premium cigars.”

The cigar industry would much prefer the first option, vacating the rule, because it would likely mean a longer period of time before FDA corrects the issue. It would also mean that when FDA fixes the issue, newer evidence could be introduced to further argue why “premium cigars” should not be regulated the same as all other tobacco products.

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In his brief to the court, Edney cited two different types of recent developments as reasons why vacating was the correct choice.

First, he mentioned FDA’s March 2023 announcement of plans to introduce rules that would regulate how the places where tobacco products are manufactured. This would mean that cigar factories—both domestically and internationally—would be subject to new rules that are primarily related to creating standards about how products are made, implementing plans to ensure those standards are adhered to and creating documentation that shows the procedures are being followed. It would also open the door for FDA to send inspectors to these factories.

Edney argued that this is another example of FDA trying to create a one-size-fits-all approach that is based on manufacturers of medicine and medical devices for tobacco companies. It’s not just that Edney thinks that these rules unfairly hurt premium cigar companies but also that he thinks that if these rules are enacted, it will lead to further litigation given that FDA cannot explain why these rules are necessary for “premium cigars”:

This Court, having had to deal with so many particular aspects of the regulatory scheme as applied to premium cigars and having had to correct the agency’s same unwillingness to acknowledge and deal with the different features of premium cigars, can surely predict the motion practice that will address this Rule if it is adopted. It will require this Court to address, again, the same error that started this whole exercise—throwing premium cigars into the same regulatory boat with all other tobacco products without explanation. Deeming Rule Opinion, ECF No. 268 at 5–6, 8, 14–15. What this makes plain is that withholding vacatur is the outcome that will be particularly disruptive, not only to the premium cigar industry but to the Court’s time and docket.

Of note, FDA’s announcement regarding this proposal indicated that it would let each facility create its own specific rules and the agency said it believes that a one-size-fits-all approach will not work.

Edney’s other argument is that a series of recent court decisions only reinforce his previous argument that vacating is the correct option because remanding without vacatur is an exception. He cites recent decisions that were issued after Mehta’s July ruling, including:

• Waterkeepers Chesapeake v. FERC
• Ky. Mun. Energy Agency v. FERC
• Dakota Rural Action v. United States Dep’t of Agric.
• Huisha-Huisha v. Mayorkas
• Data Mktg. P’ship, LP v. United States Dep’t of Labor
• 350 Montana v. Haaland
• Texas v. United States
• Dakota Rural Action v. United States Dep’t of Agric.

Mehta’s ruling will apply to cigars that are defined as “premium cigars,” a definition that is unlikely to include cigars that are flavored and made by machines. Cigars that do not meet this August 2020 working definition of “premium cigars” are subject to the deeming regulations.

Edney is listed as the attorney for CRA as well as the Premium Cigar Association (PCA). The third plaintiff is the Cigar Association of America (CAA). All three organizations are cigar trade groups.

There is no timeline for when Mehta might rule.