Once again, the cigar industry has asked a federal court to vacate the U.S. Food & Drug Administration’s (FDA) deeming regulations against “premium” cigars.
Last week, attorneys for the plaintiffs—three cigar trade groups—in Cigar Association of America et al. v. United States Food and Drug Administration et al. submitted a request for summary judgement and permanent injunctive relief to the U.S. District Court for the District of Columbia.
It’s the latest in a nearly five-year court battle that started after FDA enacted the deeming regulations, the first time the agency introduced new regulations for cigars and various other tobacco products. This lawsuit has produced both wins and losses for the cigar industry. Directly, it is responsible for FDA’s requirements for warning labels being thrown out by a court and has also produced a variety of delays for various parts of the regulations.
The latest battle is over whether FDA acted properly when it decided to move forward with the regulations in regards to “premium” cigars. More specifically, whether the agency followed various rules in the time between when it announced it was considering the regulations—2014—and when it enacted the rules in 2016.
The roots of the plaintiff’s complaints start in 2014 when FDA announced it was planning on regulating additional tobacco products, including cigars. FDA published a document outlining its current thinking, what it was planning and questions the agency had. While much of what FDA was planning was clear, the agency said it was considering whether to evaluate “premium cigars” differently than some other products like e-cigarettes or hookah tobacco.
That led to two potential pathways: Option 1, where the agency would regulate all cigars the same; Option 2, where the agency would consider regulating premium cigars differently. Ultimately, it chose Option 1.
Last week’s filing is largely based around the evidence presented in 2014 and then again 2016—to justify its actions—as well as how it responded to the evidence that was submitted by citizens, companies and trade groups surrounding these questions. FDA—like all executive agencies—is required to not only make the public aware of what it is doing, but also allow these entities to submit comments as part of a federal rule known as the Administrative Procedure Act.
The filing from last week is summarized as four arguments:
- Whether FDA properly concluded that the use of premium cigars poses a health risk that warrants regulation.
- Whether FDA has evidence that underage users smoke premium cigars.
- Whether FDA improperly moved the goal posts regarding the health risks questions.
- Whether FDA performed a proper cost benefit analysis regarding the financial impacts of the regulations.
1. The FDA Arbitrarily Concluded That There Was No Evidence of “Different Patterns of Use of Premium Cigars” That “Might Result in Different or Decreased Health Risks.”
This argument revolves around two basic points: a. does FDA have evidence that the way people smoke cigars poses a health risk that justifies regulation; b. whether FDA selectively ignored certain data—including their own—when justifying that “premium cigars” pose a health risk.
In particular, the plaintiffs focus on studies by Catherine Corey—an epidemiologist at FDA—that the agency has referenced to advance its regulations. The recent court filing alleges FDA has also ignored those studies when the data has ran counter to the agency’s regulatory aims. Specifically, the plaintiffs argue that a 2014 study from Corey looked at data from the 2012-2013 National Adult Tobacco Survey (NATS) which found that only 3.3 percent of premium cigar users smoke cigars and daily and that 71.2 percent of premium cigar users surveyed only used the product “rarely.”
The plaintiffs argue that the 96.7 percent of premium cigar smokers who don’t smoke premium cigars daily are likely to be subject to no significant health risks because of an FDA-funded studied published in the Journal of the American Medical Association that found there was no statistically significant increase in mortality rates for cigar smokers who smoked up to two cigars per day. They further question that if only 3.3 percent of people are smoking one premium cigar per day, the number of people smoking two—the safe threshold from an increased mortality standpoint—would be much lower.
2. The FDA Arbitrarily Concluded That There Was a “Regulatory Problem” With Youth Premium Cigar Use.
The arguments made here are rather similar to the health claims: does FDA have enough evidence that children smoke premium cigars to justify regulation.
Here, the plaintiffs allege that FDA wrongly misrepresented the data. They argue that FDA said that a study indicated that “3.8 percent of youth aged 12 to 17 . . . identified certain premium cigars to be the brand they smoked most” and concludes that this study “provide[s] evidence that youth . . . are smoking premium cigars.”
That study—Preference for Flavoured Cigar Brands Among Youth, Young Adults and Adults in the USA—found that 3.8 percent of people surveyed between the ages of 12-17 who had smoked a cigar in the last 30 days “identified premium cigars to be the brand they smoked most often.”
The plaintiffs make three claims about this data: first, that the number of people who have smoked a cigar in the last 30 days saying they most frequently smoke premium cigars is not the same as how many people actually smoke premium cigars, or even how many people smoked premium cigars in the last 30 days.
Furthermore, the plaintiffs argue that only 3.3 percent of the people aged 12-17 that were surveyed smoked a cigar in the first place. What it actually equates to is:
- 37,090 people (ages 12-17) surveyed
- 1,224 of 37,090 people surveyed smoked a cigar in the last 30 days (3.3 percent)
- Of the 1,224 people who said they smoked a cigar in the last 30 days, 3.8 percent of them—47 people—identified premium cigars as the brand they smoke most often
The plaintiffs conclude that the actual number is 47 of 37,090 people—or 0.1 percent—could be identified as premium cigar smokers.
Finally, the plaintiffs argue that FDA ignored warnings from the authors of the study who pointed out that the data about premium cigars was not likely to be usable given the study was designed to look at flavored cigars which aren’t sold in the same places as premium cigars.
There are other claims made that youth access to premium cigars is likely minimal because they are typically sold in specialty cigar stores, the higher price points and the lack of flavorings and additives—FDA’s current definition of “premium” cigars excludes flavored cigars of any kind—make the products attractive to minors.
3. The FDA Arbitrarily and Capriciously Moved the Goal Posts and Failed to Explain How the Proposed Regulatory Scheme Would Solve Any Public Health Problem Presented by Premium Cigars.
This is uniquely specific argument regarding the language used by FDA in 2014 and 2016.
The plaintiffs argue:
In the Proposed Rule, the FDA asked whether premium cigars’ usage patterns result in “varying effects on public health” and whether those variations warranted a different regulatory approach. In the Final Rule, the FDA answered an entirely different question, whether premium cigar use could lead to any adverse health effects, without regard to the frequency or severity of those problems among premium cigar consumers. In doing so, the FDA never addressed whether the differences in premium cigar usage patterns or health effects would be addressed in the regulatory scheme. That was arbitrary. As this Court clearly has explained: “Once the FDA structured the Proposed Deeming Rule in this way, it became incumbent on the agency to address, if challenged, the propriety of subjecting a defined category of cigar product to a particular form of regulation, articulating with reasonable clarity its reasons for decision, and identifying the significance of the crucial facts.”
In the Proposed Rule, the FDA never suggested that the question was whether premium cigar use had any adverse health effects, but instead asked whether “different kind of cigars . . . may have . . . varying effects on public health, if there are differences in their effects on youth initiation, the frequency of their use by youth and young adults, and other factors.”
The “moving goal posts” argument is one that has already been recognized by the court as problematic for FDA, particularly because the agency has repeatedly concluded that “‘all cigars are harmful and potentially addictive.’”
For the plaintiffs, the logic is that FDA couldn’t produce any data that suggested that “premium” cigar use would lead to “varying effects on public health” so instead by 2016, the agency decided to argue that “premium” cigars posed some risk, not a quantifiable risk.
They argue that if the 2014 question had been whether “premium” cigars posed “any risk” it would have been irrelevant since FDA has repeatedly concluded that all cigars pose some risk.
Unfortunately for FDA, the courts have ruled that “any risk” is not enough. The plaintiffs cite a separate lawsuit filed by cigarette companies against FDA regarding an attempt to increase the size of warning labels. In that case, the same judge—Amit P. Mehta—ruled against the agency, concluding that just because the agency could prove that larger warning labels were more effective than smaller ones, it couldn’t prove it would have a justifiable effect.
As a part of the rulemaking, the FDA estimated that the new warnings would reduce U.S. smoking rates by a mere 0.088%, a number that was “‘in general not statistically distinguishable from zero.’” 696 F.3d at 1220 (citation omitted). According to the Court, it was arbitrary for the agency to impose such a massive regulatory burden to chase a small percentage of the population.
Judge Mehta has been critical of the agency’s data regarding “premium” cigars, which leads to a question as to what the threshold might need to be for him to invalidate the “premium” cigar regulations because of a lack of significant data showing the effectiveness of the regulations.
4. The FDA’s Assessment of the Costs and Benefits of Regulating Premium Cigars Was Arbitrary and Capricious Under the APA and Violated the Regulatory Flexibility Act.
As part of the 2016 regulations, FDA was required to produce economic impact studies about what the cost of the regulations would be for both the government and the industries that were being regulated.
Once again, the cigar industry is arguing that the agency’s data is problematic.
It cites specific examples where it says the agency failed to appropriately evaluate the economic impact. One obvious area where the agency was unable to produce accurate economic data is a requirement that cigars must be tested for harmful and potentially harmful constituents (HPHCs). The plaintiffs argue that even today—nearly five years later—it’s not clear whether the equipment and protocols for testing “premium” cigars exist. Given that the testing procedure may still not be possible, it’s unclear how FDA could have estimated the cost of the testing:
Even today, let alone in 2016, the HPHC testing technology and methodology is still in the most nascent stages of uncertain development for premium cigars and commenters estimated that it will cost tens, if not hundreds, of millions to develop and implement.
There other arguments made such as the fact that most “premium” cigar companies are smaller than cigarette companies and don’t have the same amount of resources to undergo testing. Furthermore, “premium” cigar companies oftentimes have far more products than cigarettes—the filing cites Rocky Patel as having as many as 3,500 different products—and as such would be subject to much greater costs for testing. It argues that FDA failed to account for the complexities of the “premium” cigar industry and as such produced a flawed economic impact study.
Once again, the question isn’t just whether FDA has the data, but also whether FDA can justify the negative effects it will have for the cigar industry in comparison to the potential positives for FDA:
An agency acts in an arbitrary and capricious fashion when the burdens of the regulatory scheme significantly outweigh the problem it seeks to redress and the benefits it seeks to provide. See Mich. v. EPA, 576 U.S. 743, 752-53 (2015) (reasoned decisionmaking “ordinarily requires paying attention to the advantages and the disadvantages” of regulation, and “[n]o regulation is ‘appropriate’ if it does significantly more harm than good”). Here there is no analysis of how the regulatory scheme would alleviate whatever negligible and poorly defined problem the FDA believes it found with premium cigars, much less of any proportionality between the proposed solutions and the alleged problem.
Currently, FDA’s substantial equivalence requirements for “premium cigars”—a subset of cigars that includes almost every cigar that is sold in a humidor with the exception of flavored cigars—are not being enforced while FDA conducts a review to see if it should create a more streamlined process for substantial equivalence. There is no established timeline about when that review might be completed.
If the plaintiffs gain injunctive relief, it could lead to a temporary or permanent stop of this set of regulations introduced in 2016, some of which—like user fees—remain in effect today.