D.C. Appeals Court Casts Doubt Over FDA’s “Premium Cigar” Appeal

“The problem here wasn’t that the District Court found that you lacked statutory authority to regulate premium cigars, it was a breakdown in the rule-making process,” asked one judge. “And we have your arguments about that. I’m just assuming if those aren’t accepted, you’re talking about all these harms like it’s an in or out thing, but it’s not permanent, is it? There’s nothing that stops you from doing the rule-making again that would be consistent with what the district court’s concerns were.”

Lindsey Powell, the Department of Justice attorney arguing on behalf of the U.S. Food & Drug Administration (FDA), conceded, “that’s absolutely true.”

You can watch the hearing here, it is the first hearing in the video and lasts roughly one hour.

This morning, Powell and Michael Edney, the attorney representing three cigar trade organizations, answered questions from a three-judge panel of the U.S. Court of Appeals for the District of Columbia. It was the latest chapter of Cigar Association of America et al. v. United States Food and Drug Administration et al., a federal lawsuit filed in 2016 by the Cigar Association of America, Cigar Rights of America and the Premium Cigar Association. In July 2022, a federal court in Washington, D.C. delivered a major victory for the cigar industry, finding that failed to properly evaluate comments submitted to the agency prior to the enacting of the 2016 deeming regulation. This meant that cigars that meet the definition of “premium cigars”—large handmade cigars that are not flavored—were no longer subject to FDA’s deeming regulations, such as testing requirements, user fees and a ban on giving away those cigars for retail promotions or charitable donations.

Last August, Judge Amit P. Mehta of the U.S. District Court for the District of Columbia, who has heard the case since it was filed in the summer of 2016, opted to vacate the rule, meaning that the FDA’s deeming regulations couldn’t apply to “premium cigars.”

The DOJ, which represents the FDA in legal matters, appealed that decision. Today, Sept. 13, was the day for oral arguments in front of Patricia Millett (an Obama appointee), Florence Y. Pan (a Biden appointee) and A. Raymond Randolph (a George H.W. Bush appointee).

These hearings see the judges ask the attorneys questions. The questions can come from any of the three judges, and oftentimes, there’s not a methodical timeline, meaning the questions can jump from topic to topic quite frantically. Like in the Supreme Court, observers of appeals courts oftentimes suggest that the questions—and the skepticism associated with them—can show how a judge might rule.

If that is true, it seems likely the premium cigar industry will win this appeal.

Even Randolph, who asked considerably fewer questions than Millett and Pan, seemed far friendlier to Edney’s arguments than the FDA’s; at one point, Randolph may have summarized Edney’s arguments more succinctly than anyone else has. While Edney got bogged down trying to parse some of the differences in data regarding whether premium cigars posed specific health risks, it’s possible that won’t matter. Based on the questions, there didn’t seem to be much, if any, doubt that the FDA did not adequately respond to the data surrounding premium cigar usage and the potential health impacts.

Since 2020, the government has had a tough time convincing judges that FDA did. And as evidenced by the aforementioned quoted question, if the appeals court finds that FDA didn’t act properly when it made the rule, it’s unlikely the rest of this will matter much at all, especially given that the appeals court is being asked to find that a different federal judge erred in his decision.

In 2014, the agency announced its proposed rule to regulate a variety of tobacco products, including cigars. As part of a legally required process, it asked the public for input on the rules. One question specifically dealt with premium cigars. The agency said it had heard from some that premium cigars—large, expensive and not flavored cigars—are different than the more popular mass-market cigars. Not only that, it wondered whether there was any data to suggest that the cigars were used differently or had different effects. This was all part of a question of whether the agency should regulate these larger “premium cigars” differently than other cigars. It asked for people’s thoughts and, more specifically, any evidence on the matter.

When the final rule was announced in May 2016, the FDA shut the door on regulating “premium cigars” differently, saying that there was no evidence that “premium cigars” were used differently or produced different health risks.

Unfortunately for the FDA, the CRA—one of the plaintiffs—submitted a comment that indicated that most people who smoke premium cigars smoke infrequently and that data suggests that smoking two premium cigars per day didn’t increase the all-cause mortality rate compared to the average American.

Powell tried to focus on what would happen—or is happening—in a world where the deeming rule does not apply to premium cigars. She argued that it’s an on/off switch and that vacating the rule for premium cigars would give consumers the impression that these cigars were safe, would mean that the federal Tobacco 21 age requirement wouldn’t apply, and that people could give out free cigars. At one point, this line of arguing produced a reply from one judge who commented, “it just seems to me that the things you are saying we should be worried about probably are not really worrisome. No one is handing out $10 cigars as samples…”

While it’s unclear to know what each individual judge is thinking, the totality of the words said between the three would suggest that they think FDA should simply restart the process to regulate “premium cigars,” but this time, responding to the data that is submitted to the agency. That thinking would suggest the most likely outcome is that Mehta’s ruling will stand and the cigar industry will be victorious.

Towards the end of both Powell’s and Edney’s allotted times, the judges asked questions about what would happen to the user fees that had already been paid by cigar companies. These fees, which have been roughly 5-10 cents per cigar, are paid to the FDA to cover the costs of the regulation. It’s a convoluted system, as the fees were created by Congress and the total amount FDA receives each year is a specific number that is then divided up by some of the products that are regulated. At stake was whether the fees that cigar companies have already paid could be refunded.

In contrast to the rest of the hearing, when both Edney and Powell were ready to cite specific evidence or statements, both attorneys were hesitant to make declarative statements on the user fee refunds, with Edney saying that it was probably for a different court to decide and Powell unwilling to explicitly say that any company has asked for a refund due to the litigation.

There is no timeline for when the judges’ decision will be announced.

Charlie Minato

I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I have written about the cigar industry for more than a decade, covering everything from product launches to regulation to M&A. In addition, I handle a lot of the behind-the-scenes stuff here at halfwheel. I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.