Supreme Court Overturns Chevron Deference, a Likely Hit to FDA’s Tobacco Regulatory Authority

Earlier today, the Supreme Court overturned the Chevron deference, a move that is likely to limit the U.S. Food & Drug Administration’s (FDA) ability to regulate tobacco products, affecting both future regulations like bans on flavored cigars or limits on nicotine, as well as others that are already in effect.

Beyond cigars, today’s landmark decision could impact nearly every facet of American life, with both proponents and opponents of the decision characterizing it as one of the most consequential rulings of the Supreme Court in decades.

In its ruling, the court overturned the findings of Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., a 1984 ruling in which the court found when Congressional intent was ambiguous, courts must defer to an executive agency’s expertise when deciding cases. When passing laws, Congress typically limits the amount of minutia that is included. Executive agencies ranging from the IRS, FDA and the EPA to lesser-known ones like the Agricultural Marketing Service (AMS) take the laws passed by Congress and create more detailed rules. They must do so by following other laws, like the Administrative Procedure Act, and these actions are regularly subject to court challenges.

When those rules are challenged in courts, the Chevron deference created a two-part test to determine whether the agencies crafted those rules properly. The first was whether there was “an unambiguous expression of Congressional intent,” i.e., did Congress make its directions clear. If it did, then the agencies must follow what Congress said. If not, the second part of the test asked whether the agency created a “reasonable” interpretation of what Congress wrote. If it was deemed “reasonable,” courts were instructed to defer to the agency’s expertise, with the general idea being that the agency’s scientists and economists were better suited to decide this matter than a judge.

In the decades since Chevron was decided, the case has been cited in more than 17,000 lower court decisions and 70 previous Supreme Court decisions.

---

Today’s decision came about as part of two nearly identical cases: Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce. In both instances, the court’s conservative majority voted in favor of the move. (Because Justice Ketanji Brown Jackson had ruled on Loper as part of an appeals court, she was recused from ruling on Loper as a member of the Supreme Court.)

Both cases centered around fishermen and a federal rule aimed at preventing overfishing. A 1976 law required fishermen to have federal observers on board, while a 2020 regulation required the fishermen to pay $700 per day. The fishermen said that they were not opposed to the overfishing laws but argued that the law did not authorize the National Marine Fisheries Service to charge the $700 per day fee.

At oral arguments earlier this year, it became clear that Chevron was in serious jeopardy.

The conservative majority seemed unmoved by arguments from Solicitor General Elizabeth Prelogar. Pro-business groups have been opposed to Chevron for various reasons, including saying that the test made it difficult to win a case against executive agencies and that unelected executive agency officials shouldn’t be allowed to craft policies.

Now, that burden will turn to unelected federal judges, who “must exercise their independent judgment in deciding whether an agency has acted within its statutory authority,” according to Chief Justice John Roberts, who wrote the majority decision.

---

While some may feel that Chevron made it difficult to win cases against executive agencies, it was not impossible. One doesn’t need to look any further than the cigar industry’s lawsuit against the FDA: Cigar Association of America et al. v. United States Food and Drug Administration et al.

Last year, a federal judge ruled against the FDA in a lawsuit over the agency’s 2016 deeming regulations, which created the first meaningful federal regulations of cigars and other tobacco products. In his ruling, Judge Amit P. Mehta ruled in favor of the three cigar trade groups that filed the case, though not because of Chevron. Instead, he found that the FDA did not properly follow rules set out for the FDA and other executive agencies while drafting these regulations, specifically, that the agency didn’t respond to comments made about premium handmade cigars.

The Department of Justice, which represents the FDA in legal matters, has appealed. Oral arguments are expected to take place later this year.

“Today’s landmark decision abandoning Chevron deference will help the premium cigar industry in future challenges against government overregulation,” said Drew Neman, the fourth-generation owner of J.C. Newman who previously served as a clerk at the D.C. Court of Appeals, in a statement to halfwheel. “Until today, a federal judge had to defer to FDA’s views on premium cigars and interpretations of the Tobacco Control Act, even if a judge personally disagreed with them. Today’s ruling will give federal courts more discretion to step in and overrule FDA and other agencies when the actions they are taking are unfair.

While Mehta’s ruling was not due to Chevron, the case has been repeatedly mentioned in the lawsuit, which was filed in July 2016.

“Chevron deference has affected the premium cigar industry in the past,” explained Newman. “In a 2018 option, Judge Amit P. Mehta of the U.S. District Court for the District of Columbia acknowledged that it was unfair for FDA to charge user fees to premium cigars but not e-cigarettes, however, (he) explained that he had to defer to the agency’s interpretation.”

If Mehta’s ruling stands, user fees will not be charged to premium cigars.

---

Today’s decision to overturn Chevron opens up the door to many attacks on the FDA’s Center for Tobacco Products (CTP) and the regulations it has created since Congress passed the Family Smoking Prevention and Tobacco Control Act in 2009. With Chevron overturned, there will be many questions regarding whether the agency did, in fact, overstep Congressional intent with various regulations. It also will likely create major complications for future rules that the FDA has already proposed, such as bans on menthol cigarettes and flavored cigars, the introduction of nicotine limits, or requirements for tobacco manufacturing facilities.

For CTP, nowhere seems more ripe than the regulation of e-cigarettes and vaping products, which were in their infancy when the Tobacco Control Act was passed.

“For far too long, unelected bureaucrats at the FDA have been making up the law to suit their ulterior agenda and today the Supreme Court has thankfully put a stop to it once and for all,” said Allison Boughner, vp of the American Vapor Manufacturers Association, in a statement. “No longer will it be good enough for prohibitions in Congress to write vague, crayola language and then connive behind closed doors with FDA to impose arbitrary policies on the American public that could never withstand the light of day. Today’s ruling is a stirring rebuke of FDA and, we hope, with more soon to follow in pending cases.”

Given the federal court system’s rightward shift during the last decade, today’s decision will no doubt make it more difficult for FDA to win court cases, though for the last couple of decades, the federal government’s track record of winning lawsuits related to tobacco regulation has been, at best, spotty.

While today’s ruling provides much optimism for those opposed to regulation from these executive agencies, Roberts—both during oral arguments and in today’s decision—has argued that overturning Chevron isn’t as impactful as many believe.

“Courts have often declined to engage with the doctrine, saying it makes no difference. And as noted, we have avoided deferring under Chevron since 2016. That trend is nothing new; for decades, we have often declined to invoke Chevron even in those cases where it might appear to be applicable… At this point, all that remains of Chevron is a decaying husk with bold pretensions.”