PHILIP MORRIS v. FDA: DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF THEIR MOTION TO DISMISS, OR IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT, AND IN OPPOSITION TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT, Dec. 8, 2015

December 13, 2015 5:13 pm by Gene Borio

The PDF is Here

EXCERPT:

Plaintiffs have filed a facial challenge to the guidance document, contending that FDA has misinterpreted the statute, acted arbitrarily in issuing the guidance, and, with respect to label changes, violated their First and Fifth Amendment rights.

As we show below, Plaintiffs may not obtain review of the guidance document. A guidance document provides notice to the public regarding the agency’s current thinking on matters of policy and statutory interpretation. It is not binding and does not determine rights or obligations or give rise to legal consequences. It therefore does not constitute final agency action under the Administrative Procedure Act. Plaintiffs also cannot show that they will suffer significant hardship if review is withheld. Thus, their facial challenge is not ripe, and the Complaint should be dismissed.

Even if this challenge were ripe, the government would be entitled to judgment as a matter of law. Plaintiffs’ procedural challenges to the guidance document fail because the guidance is not a substantive rule subject to notice and comment. Plaintiffs’ substantive challenges likewise fail because FDA’s reading of the statute harmonizes its text, structure, and purpose and represents a reasonable reading of the statutory language. Furthermore, the guidance does not implicate the First Amendment and, in any event, does not impose an unconstitutional restriction on commercial speech. It is also not unconstitutionally vague. Thus, it comports with the First and Fifth Amendments. Accordingly, the Court should deny Plaintiffs’ motion for summary judgment, and grant summary judgment to FDA.

END EXCERPT

FULL TEXT:

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PUBLIC COPY- SEALED MATERIAL REDACTED

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

PHILIP MORRIS USA INC., et al.,

Plaintiffs,

v.

UNITED STATES FOOD AND DRUG ADMINISTRATION, et al.,

Defendants.

Case No. 1:15-cv-01590

__________________________________________

DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF THEIR MOTION TO DISMISS, OR IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT, AND IN OPPOSITION TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

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TABLE OF CONTENTS

INTRODUCTION ……… 1

BACKGROUND ……… 2

A. Statutory Framework ……… 2

B. FDA’s Substantial Equivalence FAQ Guidance …….. 5

Label Changes ……… 7

Product Quantity Changes ………….. 8

STANDARD OF REVIEW ………… 9

I. PLAINTIFFS’ CLAIMS ARE NOT RIPE ……………. 12

II. PLAINTIFFS’ APA CHALLENGES SHOULD BE REJECTED ……………. 15

A. Plaintiffs’ Procedural Challenges to the Guidance Are Meritless ………………. 15

1. The Guidance Is Not a Substantive Rule ………. 15

2. FDA Did Not Fail to Explain Its Reasoning

or to Consider Reasonable Alternatives ………… 19

3. FDA Did Not Act Arbitrarily in Issuing the SE FAQ

Guidance Simply Because It Reconsidered Whether

a “Label” is “Part” of a Tobacco Product …….. 21

B. The Court Should Uphold FDA’s Interpretations of the Statute ……… 22

1. Label Changes …………… 22

a. The Definition of New Tobacco Product

Should Be Construed in Tandem with the

Substantial Equivalence Provisions ……………… 23

b. FDA’s Reading of Section 387j Is Supported

by Other Sections in the Statute, and It Furthers

the Purposes of the TCA ……….. 24

c. Plaintiffs’ Challenges to FDA’s Interpretation

Are Without Merit ……… 28

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2. Product Quantity ……….. 30

III. THE GUIDANCE DOES NOT VIOLATE THE FIRST AMENDMENT …………. 34

A. The Guidance Does Not Implicate the First Amendment ………………. 34

B. The Interpretation in the Guidance Does Not Impose an Unconstitutional

Restriction on Commercial Speech ……….. 35

C. The Prior Restraint Doctrine is Not Applicable to Commercial Speech ……… 40

IV. THE GUIDANCE IS NOT IMPERMISSIBLY VAGUE ……………. 43

CONCLUSION ………………. 45

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Table of Citations

Cases

Abbott Labs. v. Gardner, 387 U.S. 136 (1967) ……….. 13, 14

Alabama Education Association v. Chao, 455 F.3d 386 (D.C. Cir. 2006) ……….. 22

Am. Meat Inst. v. USDA, 760 F.3d 18 (D.C. Cir. 2014) ………….. 37

Am. Mining Cong. v. Mine Safety & Health Admin., 995 F.2d 1106 (D.C. Cir. 1993) ………….. 16

Am. Tort Reform Ass’n v. OSHA, 738 F.3d 387 (D.C. Cir. 2013) ……………. 13, 14

Anna Jaques Hosp. v. Sebelius, 583 F.3d 1 (D.C. Cir. 2009) ………………. 11

*Ass’n of Flight Attendants-CWA, AFL-CIO v. Huerta,

785 F.3d 710 (D.C. Cir. 2015) …….. 13, 16, 17, 18

Ass’n of Nat’l Advertisers v. Lundgren, 809 F. Supp. 747 (N.D. Cal. 1992) ……………… 43

Ass’n of Private Sector Colleges & Univs. v. Duncan, 681 F.3d 427 (D.C. Cir. 2012) …………… 41

Barnhart v. Walton, 535 U.S. 212, 218 (2002) …………….. 11

Bates v. State Bar of Az., 433 U.S. 350 (1977) ……………. 43

BBK Tobacco & Foods, LLP v. FDA, 672 F. Supp. 2d 969 (D. Ariz. 2009) ………… 20, 22

Bd. of Trs. of State Univ. of N.Y. v. Fox, 492 U.S. 469 (1989)………………. 35, 36, 37

Bennett v. Spear, 520 U.S. 154, 177-78 (1997) ……………. 13

Bristol-Myers Squibb Co. v. Shalala, 923 F. Supp. 212 (D.D.C. 1996) …………… 10

Bryant v. Rumsfeld, Civ. No. 04-1125 (CKK),

2007 U.S. Dist. LEXIS 97521*19 (D.D.C. Mar. 12, 2007) ……………… 35

Central Hudson Gas & Electric Corp. v. Public Service Comm’n, 447 U.S. 557 (1980).. 35, 36, 37

Chamber of Commerce of U.S. v. SEC, 412 F.3d 133, 145 (D.C. Cir. 2005) ……………… 21

Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) …….. 17, 18

CTIA – The Wireless Ass’n v. City of Berkeley, Cal., Civ. No. 15-2529 (EMC), 2015 U.S. Dist.

LEXIS 126071 (N.D. Cal. Sept. 21, 2015)…………………………………………………….35

Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971) ………….. 10

City of Littleton v. Z.J. Gifts D-4, LLC, 541 U.S. 774 (2004) …………….. 40

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City of Waukesha v. EPA, 320 F.3d 228 (D.C. Cir. 2003) ………. 21

Coleman v. Cmty. Trust Bank, 426 F.3d 719 (4th Cir. 2005) ……………… 35

Daniels v. Philip Morris USA, Inc., 552 U.S. 1257 (2008) ………. 41

Defenders of Wildlife v. Salazar, 842 F. Supp. 2d 181 (D.D.C. 2012) ……………. 20

Disc. Tobacco City & Lottery, Inc. v. United States, 674 F.3d 509 (6th Cir. 2012) ………….. 35, 41

FCC v. Fox Television Stations, Inc., 132 S. Ct. 2307 (2012) …………….. 43

Forsyth Cnty. v. Nationalist Movement, 505 U.S. 123 (1992) …………….. 40

Freedman v. Maryland, 380 U.S. 51 (1965) ……… 47

Friedman v. Rogers, 440 U.S. 1 (1979) ……………. 48

Graceway Pharms., LLC v. Sebelius, 783 F. Supp. 2d 104 (D.D.C. 2011) ……………. 10, 20

Grayned v. City of Rockford, 408 U.S. 104 (1972). ……… 43

Heller v. New York, 413 U.S. 483 (1973) ………… 40

Mylan Labs., Inc. v. Thompson, 389 F.3d 1272 (D.C. Cir. 2004 …………. 12

N.Y. Magazine v. Metro. Transp. Auth., 136 F.3d 123 (2d Cir. 1998) ……………. 40

Nat’l Med. Enters., Inc. v. Shalala, 43 F.3d 691 (D.C. Cir. 1995) ……….. 16

Nat’l Mining Ass’n v. McCarthy, 758 F.3d 243 (D.C. Cir. 2014) ……….. 16

Nat’l Park Hospitality Ass’n v. Dep’t of Interior, 538 U.S. 803 (2003) …………… 12

Nutritional Health Alliance v. Shalala, 144 F.3d 220 (2d Cir. 1998) ………………. 41

Pearson v. Shalala, 164 F.3d 650 (D.C. Cir. 1999) ……….. 41

Perez v. Mortgage Bankers Ass’n, 135 S. Ct. 1199 (2015) ……………. 16, 17

Prime Time Int’l Co. v. USDA, 753 F.3d 1339 (D.C. Cir. 2014 ………….. 11

Prof’s & Patients for Customized Care v. Shalala, 56 F.3d 592 (5th Cir. 1995) ………….. 19

Reed v. Town of Gilbert, 135 S. Ct. 2218 (2015) …………. 35

Reno v. ACLU, 521 U.S. 844, 874, 877 (1997) ………….. 43

Se. Promotions Ltd. v. Conrad, 420 U.S. 546 (1975) ………………. 40

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Skidmore v. Swift & Co., 323 U.S. 134 (1944) ……………. 12

Takhar v. Kessler, 76 F.3d 995 (9th Cir. 1996) ………. 15, 19

Teitel Film Corp. v. Cusak, 390 U.S. 139 (1968) …………. 40

U.S. Civil Serv. Comm’n v. Nat’l Ass’n of Letter Carriers, 413 U.S. 548 (1973) ……….. 45

United States et al. v. Philip Morris USA Inc., 449 F. Supp. 2d 1 (D.D.C. 2006) ………………. 7, 44

United States v. Article of Drug Designated B-Complex Cholinos Capsules,

362 F.2d 923 (3d Cir. 1966) …………….. 34

United States v. Cole, 84 F. Supp. 3d 1159 (D. Or. 2015) ……….. 34

United States v. Mead, 533 U.S. 218 (2001) ………….. 11, 12

United States v. Regenerative Sciences, LLC, 878 F. Supp. 2d 248 (D.D.C. 2012) …….. 35

Univ. of D.C. Faculty Ass’n/NEA v. D.C. Fin. Responsibility & Mgmt. Assistance Auth.,

163 F.3d 616 (D.C. Cir. 1998) ………….. 10

Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council,

425 U.S. 748 (1976) ……………… 40

Village of Hoffman Estates v. The Flipside, Hoffman Estates, Inc.,

455 U.S. 489 (1982) ……………… 44

Walter O. Boswell Mem’l Hosp. v. Heckler, 749 F.2d 788 (D.C. Cir. 1984) ……………… 20

Whitaker v. Thompson, 353 F.3d 947 (D.C. Cir. 2004) ……… 12, 34

Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio,

471 U.S. 626 (1985) ……………… 40

Statutes, Regulations and Laws

5 U.S.C. § 553 ………………. 16, 20, 21

5 U.S.C. § 702 ……… 9

5 U.S.C. § 706 ………………. 17

21 U.S.C. § 321 …………. 3, 29

21 U.S.C. § 331 …………….. 17

21 U.S.C. § 336 ……….. 14, 45

21 U.S.C. § 360c …………… 29

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21 U.S.C. § 371 …………….. 11, 13, 17

21 U.S.C. § 387 ………………. 8, 24, 44

21 U.S.C. § 387b ……….. 4, 13

21 U.S.C. § 387c ……….. 4, 13, 17, 28

21 U.S.C. § 387d ……… 24, 25

21 U.S.C. § 387e …….. passim

21 U.S.C. § 387g …………….. 3

21 U.S.C. § 387j ……… passim

21 U.S.C. § 387k …………… 32

21 C.F.R. § 10.115 …………….. passim

The Tobacco Control Act, Pub. L. No. 111-31 ………. passim

Other Authorities

Stuart Elliott, A New Camel Brand Is Dressed to the Nines, N.Y. Times, Feb. 15, 2007 (available at www.nytimes.com/2007/02/1…) …….. 7

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INTRODUCTION

Plaintiffs market tobacco products that, when used as intended, are “inherently dangerous” and lead to dependence, disease, and premature death.1 Following years of exhaustive investigation by Congress, the executive branch, and the courts detailing both the many and severe health hazards caused by tobacco use and the actions of the tobacco industry, Congress enacted the Family Smoking Prevention and Tobacco Control Act (“TCA”).2 Congress found that tobacco use is the leading “preventable cause of premature death in America,” causing more than “400,000 deaths” each year.3 Congress also determined that children’s use of tobacco “results in new generations of tobacco-dependent children and adults” and that previous efforts to “restrict advertising and marketing of tobacco products” had not sufficiently “curb[ed] use by adolescents.”4 Faced with what it termed a “public health crisis created by actions of the tobacco industry,” Congress concluded that it was necessary to enact “comprehensive restrictions on the sale, promotion, and distribution of” tobacco products.5

The TCA imposes many requirements on the tobacco industry. Among them is the requirement that all “new tobacco products” undergo premarket review by FDA to ensure certain statutory criteria are met prior to commercial distribution. In September 2015, FDA issued a guidance document setting forth the agency’s current thinking on whether and when a change to a tobacco product’s label or product quantity in the package renders that product a new tobacco product subject to premarket review. Plaintiffs have filed a facial challenge to the guidance

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1 The Tobacco Control Act, Pub. L. No. 111-31, 123 Stat. 1776 (codified at 21 U.S.C. §§ 387 et seq. and amending the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301 et seq. (FDCA)), § 2(1)-(3), & (13) (legislative findings).

2 Id. § 2 passim.

3 Id. § 2(13).

4 Id. § 2(1), (4) & (6).

5 Id. § 2(6), (7) & (29).

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document, contending that FDA has misinterpreted the statute, acted arbitrarily in issuing the guidance, and, with respect to label changes, violated their First and Fifth Amendment rights.

As we show below, Plaintiffs may not obtain review of the guidance document. A guidance document provides notice to the public regarding the agency’s current thinking on matters of policy and statutory interpretation. It is not binding and does not determine rights or obligations or give rise to legal consequences. It therefore does not constitute final agency action under the Administrative Procedure Act. Plaintiffs also cannot show that they will suffer significant hardship if review is withheld. Thus, their facial challenge is not ripe, and the Complaint should be dismissed.

Even if this challenge were ripe, the government would be entitled to judgment as a matter of law. Plaintiffs’ procedural challenges to the guidance document fail because the guidance is not a substantive rule subject to notice and comment. Plaintiffs’ substantive challenges likewise fail because FDA’s reading of the statute harmonizes its text, structure, and purpose and represents a reasonable reading of the statutory language. Furthermore, the guidance does not implicate the First Amendment and, in any event, does not impose an unconstitutional restriction on commercial speech. It is also not unconstitutionally vague. Thus, it comports with the First and Fifth Amendments. Accordingly, the Court should deny Plaintiffs’ motion for summary judgment, and grant summary judgment to FDA.

BACKGROUND

A. Statutory Framework

Finding that federal and state governments lacked sufficient “legal and regulatory authority and resources” to “address comprehensively the public health and societal problems caused by the use of tobacco products,” and that such comprehensive regulation would

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“significant[ly]” benefit the American people “in human and economic terms,” Congress enacted the TCA to provide FDA with robust authority to regulate tobacco products. TCA § 2(1), (7)&(12).

In the legislation, Congress imposed numerous regulatory requirements6 on manufacturers of regulated tobacco products.7 Of relevance here, the TCA requires manufacturers who wish to distribute “new tobacco products” to seek premarket review by FDA. A “new tobacco product” is a “tobacco product (including those products in test markets) that was not commercially marketed in the United States as of February 15, 2007,” or was the subject of “any modification (including a change in design, any component, any part, or any constituent, . . . or in the content, delivery or form of nicotine, or any other additive or ingredient)” after that date. 21 U.S.C. § 387j(a)(1)(A), (B). The TCA provides three possible pathways for authorization through premarket review: a premarket tobacco application (PMTA), a report demonstrating that the new tobacco product is substantially equivalent to a grandfathered product8 or a product previously found substantially equivalent, or a request for an exemption

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6The statute does not authorize FDA to ban the sale of, inter alia, “all cigarettes” or “all smokeless tobacco products” or to require that “nicotine yields” be reduced to zero. 21 U.S.C. § 387g(d)(3).

7 Tobacco product means “any product made or derived from tobacco that is intended for human consumption, including any component, part, or accessory of a tobacco product (except for raw materials other than tobacco used in manufacturing a component, part, or accessory of a tobacco product),” but excludes drugs, devices, or combination products. 21 U.S.C. § 321(rr).

8 Products that were marketed as of February 15, 2007 (known as “grandfathered” products) are not subject to premarket review. Moreover, understanding that it would take time for FDA to implement the new legislation, Congress separately addressed new tobacco products that were first marketed in the 21 months following enactment of the TCA in 2009. If a product was introduced after February 15, 2007 but prior to March 22, 2011, and the manufacturer submitted a substantial equivalence report to FDA by March 22, 2011, the statute allows the product to remain on the market indefinitely while its report is reviewed by FDA. These are known as “provisional” products. If FDA determines that a provisional product is not substantially equivalent, it must be removed from the market. 21 U.S.C. § 387j(a)(2)(B).

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from substantial equivalence. A new tobacco product is deemed to be adulterated and misbranded if it fails to have premarket authorization. Id. §§ 387b(6)(A), and 387c(a)(6).

PMTA. The default rule is that a new tobacco product must be the subject of a PMTA, and the product may not be marketed until FDA has issued an order authorizing its marketing. See 21 U.S.C. § 387j(a)(2). The statute directs FDA to deny a PMTA unless the manufacturer demonstrates, inter alia, that the marketing of the product is “appropriate for the protection of the public health.” Id. § 387j(c)(2), (4). The statute instructs FDA to make this determination “with respect to the risks and benefits to the population as a whole, including users and nonusers of tobacco products,” and to consider both the “increased or decreased likelihood that existing users of tobacco products will stop using such products” and the “increased or decreased likelihood that” nonusers “will start using such products.” Id. § 387j(c)(4).9

Substantial Equivalence. If a manufacturer proposes to commercially market a new tobacco product and believes that product is “substantially equivalent” to either a grandfathered product or to another tobacco product that FDA has already found to be substantially equivalent, the manufacturer can submit a report to FDA (known as a “substantial equivalence” or “SE” Report). 21 U.S.C. §§ 387e, 387j(a)(2)(A)(i). The SE Report must be submitted at least 90 days prior to introducing the new tobacco product into interstate commerce, id. § 387e(j)(1), and describe the basis for the manufacturer’s determination that the product is “substantially equivalent,” and is in compliance with the requirements of the TCA and any applicable tobacco product standard. Id. §§ 387e(j)(1)(A), 387j(a)(2)(A)(i), 387e(j)(1)(B). Congress authorized FDA to prescribe the form and manner of SE Reports, id. § 387e(j)(1), and the agency has issued

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9 FDA recently issued the first orders authorizing marketing of new tobacco products through the PMTA pathway. FDA Press Release, “FDA issues first product marketing orders through premarket tobacco application pathway,” (Nov. 10, 2015) (available at www.fda.gov/NewsEvents/ Newsroom/PressAnnouncements/ucm472026.htm).

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guidance on their contents. See AR 469-74 (Guidance, Section 905(j) Reports: Demonstrating Substantial Equivalence for Tobacco Products (Jan. 5, 2011)) (“SE Report Guidance”).

Substantial equivalence is established by showing that a product either has the “same characteristics” as a predicate product, or has “different characteristics,” but the information submitted demonstrates that it is not appropriate to regulate the new product under the PMTA pathway because its different characteristics do not cause the new product to “raise different questions of public health.” 21 U.S.C. § 387j(a)(3)(A). The statute defines “characteristics” broadly to cover all physical attributes of the product: “the materials, ingredients, design, composition, heating source, or other features of a tobacco product.” Id. § 387j(a)(3)(B). If FDA issues an order finding the product substantially equivalent, then the new tobacco product may be marketed without a PMTA order. Id. § 387j(a)(2).

Exemption from Substantial Equivalence. The TCA also authorizes FDA to exempt products from demonstrating that they are substantially equivalent to a predicate product if they are modified by adding or deleting a tobacco additive or increasing or decreasing the quantity of an existing tobacco additive. Id. § 387e(j)(3). The manufacturer can submit a request to FDA, and FDA may grant an exemption if the agency finds that the modification would be a “minor modification of a tobacco product that can be sold under [the] Act,” an SE Report is “not necessary to ensure that permitting the tobacco product to be marketed would be appropriate for protection of the public health,” and the “exemption is otherwise appropriate.” Id. § 387e(j)(3)(A)(i)-(iii); 21 C.F.R. Pt. 1107.

B. FDA’s Substantial Equivalence FAQ Guidance

In September 2011, FDA announced the availability of a draft guidance document to respond to questions the agency was receiving from manufacturers and stakeholders regarding

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whether and when certain types of changes render a tobacco product a new tobacco product subject to premarket review. AR 083; AR 478. FDA opened a docket and received comments on the draft guidance, pursuant to the agency’s good guidance practices regulations. See 21 C.F.R. § 10.115(g). After considering the comments received, on March 5, 2015, FDA issued a final guidance on many of the topics included in the September 2011 draft. AR 061-82; AR 546. The March 2015 guidance again invited submission of comments. AR 061; see also AR 546. In April 2015, Plaintiffs filed suit against FDA challenging the March 2015 guidance on statutory and constitutional grounds. See Complaint, Philip Morris USA Inc. v. FDA, Civ. No. 15-cv-544-APM (D.D.C.), Dkt No. 1. In May 2015, FDA announced that while the agency considered whether to issue a revised guidance, it would not “issue any warning letters or take steps to initiate any judicial or administrative adversarial proceedings for marketing a new tobacco product without the required premarket authorization” in circumstances “where the new tobacco product is a modification of an appropriate predicate product and the only modification made to the product is (1) a label change that creates a distinct product with identical characteristics to the predicate product; or (2) a change in product quantity . . . .” AR 040. Plaintiffs dismissed their first suit on June 2, 2015. Pls’ MSJ at 11.

On September 8, 2015, FDA issued the second edition of the final guidance, which is the guidance at issue here. AR 001-37; AR 551. The guidance, titled Demonstrating the Substantial Equivalence of a New Tobacco Product: Responses to Frequently Asked Questions (Edition 2), “describes FDA’s current thinking” regarding, among other things, changes to the product’s label and the product quantity in the package (hereafter, Guidance). The Guidance expressly states that it does “not establish legally enforceable responsibilities” and “should be viewed only as recommendations . . . .” AR 004; see also AR 552.

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Label Changes

Tobacco manufacturers have a long history of developing new brands and subbrands of their products and revising their product packaging in an effort to make their tobacco products more attractive to different segments of consumers, including adolescents.10 In some cases, they describe these products as “new” in their marketing materials.

In the Guidance, FDA explained that the agency interprets the TCA to require premarket review when a product label has been changed in a way that renders the product distinct from the predicate tobacco product. AR 007. That is, when consumers “perceive the product as ‘new’ by virtue of a new name or a distinctly different label,” the product is “new” under section 387j “because that product ‘was not commercially marketed in the United States as of February 15,

2007.’” AR 007. But, the agency explained, “a change to a logo, colors, or product descriptors, or other aspects of the label that is unlikely to lead consumers to believe that the product is different from the predicate would not result in a new tobacco product” and would not trigger the requirement in 21 U.S.C. § 387j. AR 010. Thus, for example, where a company introduces a new brand (e.g., Stanton Titanium Special Blend), it is a new tobacco product, even if the company’s existing brand (e.g., Stanton Blue Box) has the “same characteristics” as the new brand, because Stanton Titanium Special Blend “was not commercially marketed in the United

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10 See, e.g., Stuart Elliott, A New Camel Brand Is Dressed to the Nines, N.Y. Times, Feb. 15, 2007 (available at www.nytimes.com/2007/02/1… r=1&). See also United States et al. v. Philip Morris USA Inc., 449 F. Supp. 2d 1, 589-90 (D.D.C. 2006), aff’d in relevant part, 566 F.3d 1095 (D.C. Cir. 2009) (per curiam) (finding that Philip Morris conducted “extensive consumer research” to aid marketing campaigns appealing to youth); id. at 600 (reciting a Brown & Williamson strategy to “‘improve B&W’s position in attracting young male smokers by making as direct an appeal as possible in product, packaging and advertising to young males’”); id. at 626 (B&W document noting that “‘packaging will become more important if not the most important advertising vehicle” to make B&W products appeal to teenagers).

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States as of February 15, 2007.” AR 007. The agency also recommended that manufacturers look to the “definition of brand” in 21 U.S.C. § 387(2) “as analogous authority.” AR 009.

The Guidance also offered manufacturers the option of submitting a streamlined SE Report, rather than the full SE Report typically submitted to support substantial equivalence determinations. AR 006, 011. This “Same Characteristics SE Report” is intended to be “less burdensome” on manufacturers and be both “easier for industry to prepare and for FDA to review” than a full SE Report. AR 011.11 Manufacturers continue to have the option of submitting a full SE Report if they so choose. The Guidance at issue does not request or require manufacturers to submit copies of the product label as part of a Same Characteristics SE Report, AR 015, nor does the agency’s guidance on full SE Reports, AR 469-72. FDA explained that it would place the streamlined reports in a separate queue for review.

Product Quantity Changes

FDA’s Guidance explained that the agency interprets the definition of “new tobacco product” to include a product with a product quantity change in the package as compared to a predicate product. AR 018-19. Thus, if the manufacturer changes the “number of portioned parts per package” (e.g., changing from 24 cigarettes in a pack to 20) or the weight of the product (e.g., changing a smokeless tobacco product from 24 grams to 5 grams), the resulting product is a “new tobacco product” under section 387j(a)(1) because the “characteristics (e.g.,

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11 FDA recommended that this streamlined report include: (1) full identification of the new tobacco product (i.e., its manufacturer; unique name; product category (e.g., cigarette) and subcategory (e.g., conventional filtered); package size/count; if portioned, portion size; and package type); (2) full identification of the predicate; (3) a statement of whether the manufacturer intends to commercially distribute both the predicate and the new tobacco product; (4) an Environmental Assessment; (5) a Health Information Summary or a statement that the information will be made available upon request; (6) a statement of action taken to comply with any applicable tobacco product standard; and (7) a certification statement that the characteristics of the new tobacco product and the predicate product are the same. AR 013-14; AR 035-36. Compare AR 470-72 (SE Report Guidance) (discussing contents of full SE Report).

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amounts of ingredients, materials, other features, etc.) have changed.” AR 018. The agency explained, inter alia, that product quantity changes can affect initiation of tobacco use because “[s]maller product quantities may allow for increased product uptake due to lower barriers to trying the product” and cessation because higher quantities “can potentially reduce cessation behaviors and increase tobacco product use among current users.” AR 020.

The Guidance again offered manufacturers the option of submitting a “more limited and less burdensome” form of SE Report for changes to the product quantity in the package, provided that the “per weight composition, design features, heating source, and all other features are otherwise identical to the predicate tobacco product . . . .” AR 019, 021. This report is called a Product Quantity Change SE Report.12 As in the case of Same Characteristics SE Reports, manufacturers continue to have the option of submitting full SE Reports. The agency expects the review time for Product Quantity Change SE Reports to be “much less” than for full SE Reports, and has placed them in a separate queue for review. AR 024.

STANDARD OF REVIEW

Plaintiffs allege violations of the Administrative Procedure Act and the First and Fifth Amendments. The APA entitles “[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action . . . to judicial review thereof.” 5 U.S.C. § 702. However, courts may review only “final agency action for which there is no other adequate

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12 FDA recommended that the Product Quantity Change SE Report include: (1) full identification of the new product and the predicate product; (2) “scientific data demonstrating that the change in product quantity is not likely to alter consumer use behavior of the new product compared to the predicate product”; (3) a statement of whether the manufacturer intends to commercially distribute both the predicate and the new tobacco product, or just the new product; (4) an Environmental Assessment; (5) a Health Information Summary or a statement that the information will be made available upon request; (6) a statement of action taken to comply with any applicable tobacco product standard; and (7) a certification that the only modification made to the product is the product quantity. AR 022-23.

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remedy in a court.” Id. § 704. Under the APA, an agency decision shall not be set aside unless the court finds that the agency’s actions are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” “contrary to a constitutional right,” “in excess of statutory jurisdiction, authority, or limitations, or short of statutory right,” or “without observance of procedure required by law.” Id. § 706(2)(A)-(D). To determine whether an agency has acted within or outside the bounds of its authority, a reviewing court will look to the agency’s enabling statute. See, e.g., Univ. of D.C. Faculty Ass’n/NEA v. D.C. Fin. Responsibility & Mgmt. Assistance Auth., 163 F.3d 616, 620 (D.C. Cir. 1998).

The arbitrary and capricious standard of review in 5 U.S.C. § 706(2)(A) is highly deferential to the agency. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). Indeed, “[t]here is a presumption in favor of the validity of administrative action.” Bristol-Myers Squibb Co. v. Shalala, 923 F. Supp. 212, 216 (D.D.C. 1996) (citation omitted); see also Graceway Pharms., LLC v. Sebelius, 783 F. Supp. 2d 104, 111 (D.D.C. 2011). The reviewing court must consider whether the agency’s decision was based upon consideration of the relevant factors and whether there has been a clear error of judgment. Overton Park, 401 U.S. at 416. But “under this narrow scope of review, ‘[t]he court is not empowered to substitute its judgment for that of the agency.’” Bristol-Myers Squibb, 923 F. Supp. at 216 (quoting Overton Park, 401 U.S. at 416).

Plaintiffs challenge FDA’s interpretation of a statute that FDA is charged with implementing. The Supreme Court’s decision in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984), and its progeny set forth a two-step framework for reviewing an administrative agency’s interpretation of its statute. Under Chevron step 1: “First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent

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of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” Id. at 842-43. Chevron step 2 applies when Congress has not directly addressed the issue or has done so ambiguously. In that event, the Court must determine whether the agency’s construction is based on a permissible interpretation of the statute. See id. at 843; id. at 843-44 & n.11 (in case of ambiguity, the court must uphold the agency’s interpretation if its construction is permissible under the statute; a court need not conclude that the agency’s construction was the only one it permissibly could have adopted or even the reading the court would have reached); see also Barnhart v. Walton, 535 U.S. 212, 218 (2002); Anna Jaques Hosp. v. Sebelius, 583 F.3d 1, 5 (D.C. Cir. 2009).

An agency’s interpretation of its own statute is entitled to different degrees of judicial deference depending on the circumstances. United States v. Mead, 533 U.S. 218, 228 (2001). In the TCA, Congress charged FDA with the authority to implement its provisions. In accordance with 21 U.S.C. § 371(h) and FDA’s good guidance practices, see 21 C.F.R. § 10.115, the agency issued the Guidance in draft in September 2011 and opened a docket to receive comments. AR 083; AR 478. After carefully considering those comments, FDA issued a final guidance in March 2015. FDA again gave careful consideration to comments issued on the final guidance and issued a revised guidance in September 2015. Because the agency has been delegated authority to implement the TCA and because its interpretations of the statutory provisions at issue were reached through careful administrative processes, authorized by 21 U.S.C. § 371(h)(1)(C) and delineated under 21 C.F.R. §10.115, those interpretations are entitled to Chevron deference. See Prime Time Int’l Co. v. USDA, 753 F.3d 1339 (D.C. Cir. 2014) (“affording Chevron deference to agency actions that resolve ‘interstitial . . . legal question[s]’ related to an agency’s expertise regardless of whether the agency engaged in formal rulemaking”

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is “well-established”) (quoting Barnhart, 535 U.S. at 222); see, e.g., Mylan Labs., Inc. v. Thompson, 389 F.3d 1272, 1279-80, (D.C. Cir. 2004) (applying Chevron deference to FDA letter decision in informal adjudication).13

FDA’s interpretations are, at a minimum, entitled to deference under Skidmore v. Swift & Co., 323 U.S. 134, 139-40 (1944), under which courts give “considerable and in some cases decisive weight” to statutory interpretations “made in pursuance of official duty, [and] based upon more specialized experience and broader investigations and information” than a court is likely to have, provided that the administrative decision is carefully and thoughtfully made. Here, FDA’s interpretations involve a “highly detailed” regulatory scheme to which the agency has brought its “specialized experience” to bear through a careful administrative process. Mead, 533 U.S. at 235.

I. PLAINTIFFS’ CLAIMS ARE NOT RIPE

Plaintiffs’ pre-enforcement, facial challenges to the Guidance fail to present a concrete case or controversy ripe for judicial review because the Guidance does not represent final agency action and Plaintiffs have failed to demonstrate significant hardship. The ripeness doctrine is designed “to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties.” Nat’l Park Hospitality Ass’n v. Dep’t of Interior, 538 U.S. 803, 807-08 (2003). To determine whether a claim is ripe, courts consider

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13 The “canon of constitutional avoidance” should be employed to “trump Chevron” only where there is a “comparatively high likelihood of unconstitutionality, or at least some exceptional intricacy of constitutional doctrine.” Whitaker v. Thompson, 353 F.3d 947, 952 (D.C. Cir. 2004). As shown below, Plaintiffs’ claims do not present “serious constitutional difficulties.” See Pls’ MSJ at 17.

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the “fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.” Abbott Labs. v. Gardner, 387 U.S. 136, 148-49 (1967). Plaintiffs’ claims satisfy neither of those requirements.

Finality is an essential part of the fitness inquiry. See id. at 149. To qualify as “final” within the meaning of the APA, an action must meet two requirements: First, it “must mark the consummation of the agency’s decision-making process – it must not be of a merely tentative or interlocutory nature. . . . [S]econd, the action must be one by which rights or obligations have been determined, or from which legal consequences will flow.” Bennett v. Spear, 520 U.S. 154, 177-78 (1997) (internal citations and quotations omitted); see also Ass’n of Flight Attendants- CWA, AFL-CIO v. Huerta, 785 F.3d 710, 713 (D.C. Cir. 2015).

The Guidance is not final agency action. The Guidance does two things: First, it describes FDA’s “current thinking” regarding certain questions of statutory interpretation, and second, it provides manufacturers the option of submitting an abbreviated SE Report for certain products as an alternative to the standard and lengthier SE Report. See AR 004, 011, 021-22. The obligation to submit an SE Report, however, derives solely from the statute, not from the Guidance. See 21 U.S.C. §§ 387j, 387b(6)(A), 387c(a)(6). The Guidance “does not create or confer any rights for or on any person and does not operate to bind FDA or the public,” see 21 U.S.C. § 371(h); 21 C.F.R. § 10.115; AR 004. Accordingly, Plaintiffs have not shown that their challenge is fit for review at this time. See BBK Tobacco & Foods, LLP v. FDA, 672 F. Supp. 2d 969, 975 (D. Ariz. 2009) (guidance document interpreting TCA does not present a ripe controversy); see also Am. Tort Reform Ass’n v. OSHA, 738 F.3d 387, 395 (D.C. Cir. 2013) (“interpretative rules or statements of policy generally do not qualify” as final agency action

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“because they are not finally determinative of the issues or rights to which [they are] addressed.”) (internal quotation and citation omitted).

Plaintiffs also have failed to meet their burden of showing significant hardship from withholding consideration of their claims. Abbott Labs., 387 U.S. at 149. Ripeness concerns typically “arise[] in cases in which a regulated party faces the threat of future agency enforcement action.” Am. Tort, 738 F.3d at 396. Nothing in the Guidance creates such threat. In addition, under FDA regulatory enforcement policy, the agency ordinarily14 gives “individuals and firms an opportunity to voluntarily take appropriate” action to correct violations “prior to the initiation of enforcement action.” See Decl. of Ann Simoneau ¶ 4 (citing FDA Regulatory Procedures Manual, Ch. 10 § 10-2-3) (attached hereto as Exhibit 1); see also 21 U.S.C. § 336 (nothing in the FDCA shall be construed to require judicial enforcement where FDA believes that “the public interest will be adequately served by a suitable written notice or warning”). Here, to date, FDA has not pursued a single civil or criminal enforcement action related to distribution of a new tobacco product without premarket review, nor has FDA issued a Warning Letter to any of the Plaintiffs (or any other manufacturer) threatening an enforcement action related to any of the issues discussed in the Guidance. Simoneau Decl. ¶¶ 3&5. Whether FDA would seek to take enforcement action against any of the Plaintiffs or their products depends on facts that FDA has neither investigated nor considered.

Plaintiffs’ declarations do not establish significant hardship. [REDACTED–gb]

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14 Examples of situations in which the agency may not provide such notice include violations that are flagrant, intentional, or present a danger to health. Simoneau Decl. ¶ 4.

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[REDACTED–gb] The Guidance, however, recommends other options: a manufacturer could submit an abbreviated SE Report as described in the Guidance;15 or a manufacturer could come up with its own approach to satisfy statutory and regulatory requirements. AR 003. Alternatively, the manufacturers could move forward with the changes they wish to make without submitting any type of SE repo1i to the agency. Even if those changes render their products “new tobacco products,”they cannot claim an imminent risk of “substantial penalties,” given that FDA has not threatened any action against them. Thus, Plaintiffs’ alleged hardships are speculative, and their challenge should be dismissed as unripe. See BBK, 672 F. Supp. 2d at 976 (plaintiff could not demonstrate hardship where FDA had “not taken any specific action with respect to BBK or . . . its products-the FDA has not filed an enforcement action, the FDA has not sought civil or criminal remedies against BBK, nor has the FDA even sent BBK a warning letter concerning BBK’s products.”); cf. Takhar v. Kessler, 76 F.3d 995, 1002 (9th Cir. 1996) (plaintiff lacked injury for standing purposes when statute, not enforcement policy guidance, established legal requirement).

II. PLAINTIFFS’ APA CHALLENGES SHOULD BE REJECTED

A. Plaintiffs’ Procedural Challenges to the Guidance Are Meritless

1. The Guidance Is Not a Substantive Rule

Plaintiffs incorrectly assert that the Guidance is a “substantive rule” required to be issued through notice and comment. Under the APA, the publication of notice and opportunity for comment are only required for a limited subset of agency pronouncements. A legislative rule “establishes a standard of conduct which has the force of law,” and “imposes legally binding

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obligations . . . on regulated parties,” Ass’n of Flight, 785 F.3d at 716 (internal citations and quotations omitted). The APA mandates that such rules be issued through notice and comment. 5 U.S.C. § 553(b); Perez v. Mortgage Bankers Ass’n, 135 S. Ct. 1199, 1204 (2015).

Rulemaking is not necessary for “interpretive rules” or “general statements of policy.” 5 U.S.C. § 553(b)(3)(A) & (d); Perez, 135 S. Ct. at 1204. An interpretive rule is “‘issued by an agency to advise the public of the agency’s construction of the statutes and rules which it administers.’” Ass’n of Flight Attendants, 785 F.3d at 716 (quoting Perez, 135 S. Ct. at 1204); see also Nat’l Med. Enters., Inc. v. Shalala, 43 F.3d 691, 697 (D.C. Cir. 1995) (“interpretive rules are those that merely clarify or explain existing laws or regulations.”). Similarly, a policy statement “‘explains how the agency will enforce a statute or regulation . in other words, how it will exercise its broad enforcement discretion or permitting discretion under some extant statute or rule.’” Ass’n of Flight, 785 F.3d at 716 (quoting Nat’l Mining Ass’n v. McCarthy, 758 F.3d 243, 252 (D.C. Cir. 2014)). Moreover, an agency pronouncement does not become a substantive rule where, as here, it merely “supplies crisper and more detailed lines than the authority being interpreted.” Am. Mining Cong. v. Mine Safety & Health Admin., 995 F.2d 1106, 1112 (D.C. Cir. 1993).

Regardless of whether the Guidance is characterized as an interpretive rule or a policy statement,16 it is certainly not a substantive rule. See Ass’n of Flight, 785 F.3d at 716 (declining to decide whether FAA guidance was a policy statement or interpretive rule because the “main point” was that it “is not a legislative rule”). The “most important factor” in distinguishing substantive rules from policy statements and interpretive rules is “‘the actual legal effect (or lack thereof) of the agency action in question.’” Id. at 717 (quoting Nat’l Mining, 758 F.3d at 252).

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16 The Guidance both interprets the scope of “new tobacco product” and discusses FDA’s current thinking on the exercise enforcement discretion in certain situations. See AR 015-16, 025.

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If the agency action “narrowly limits administrative discretion” or “imposes new obligations on regulated parties” or “creates new rights,” then the agency action is a substantive rule. Id. But Congress has recognized that although FDA guidance documents “present the views of the Secretary on matters under the jurisdiction of [FDA],” they neither “create or confer any rights for or on any person” nor “bind[] . . . the Secretary . . . .” 21 U.S.C. § 371(h)(1)(A)&(B). FDA regulations similarly provide that guidance documents do not establish legally enforceable responsibilities. See 21 C.F.R. § 10.115(d).

Moreover, the factors courts consider in distinguishing substantive rules from policy statements and interpretive rules – i.e., the “language employed by the agency,” how the agency “characterized [the] purported guidance,” and “whether it was published in the Federal Register or the Code of Federal Regulations,” Ass’n of Flight, 785 F.3d at 717 – all weigh heavily against finding the Guidance to be a substantive rule. First, the obligation to seek premarket review for “new tobacco products” derives solely from the statute, not from the Guidance, which merely explains how FDA currently interprets the TCA with respect to, inter alia, certain label and product quantity changes. The issuance of the Guidance does not impose any new burdens on Plaintiffs: Both before and after issuance of the Guidance, manufacturers remain responsible for ensuring that they do not distribute new tobacco products without obtaining premarket review. See 21 U.S.C. §§ 331(a)&(k), 387b(6)(A), 387c(a)(6), 387j.17 Moreover, in any “adjudicatory process” alleging a violation of the TCA, the Guidance would “not [be] accorded” the weight of a substantive rule. Perez, 135 S. Ct. at 1203-04.

Second, the language employed by the agency and its characterization of the Guidance show that it is not a substantive rule. The Guidance expressly states that it “represents the

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17 As noted above, products subject to provisional SE Reports may remain on the market unless FDA issues an order finding the product to be not substantially equivalent. See note 8 supra.

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agency’s current thinking” but “does not establish any rights for any person and is not binding on FDA or the public.” AR 003; see also AR 551-52. The Guidance also recognizes that it does “not establish legally enforceable responsibilities” and that “use of the word should” in the Guidance “means that something is suggested or recommended, but not required.” AR 004 (emphasis added). It also states that manufacturers “can use an alternative approach if it satisfies the requirements of the applicable statutes . . . .” AR 003; AR 552. “The use of language like ‘may’ and ‘should’ instead of ‘shall’ or ‘must’ suggests that the provisions that follow are meant to be ‘precatory, not mandatory.’” See Ass’n of Flight, 785 F.3d at 718 (quotation omitted).

Third, although the agency announced the availability of the Guidance in the Federal Register, see AR 551-52, it did not publish the Guidance in the Federal Register or the Code of Federal Regulations.

Plaintiffs’ characterizations of the Guidance do not convert it to a substantive rule. First, Plaintiffs’ references throughout the brief to the Guidance as a “directive” do not alter the interpretative nature of that guidance. Second, Plaintiffs assert (Pls’ MSJ at 33) that the Guidance is “replete with mandatory language,” and cite AR 016 without identifying specific language. The “mandatory” language on that page simply paraphrases statutory requirements. See AR 016. Third, Plaintiffs’ argument (Pls’ MSJ 31-32) that the interim enforcement policy FDA announced in May 2015 “standing alone” establishes that the Guidance “imposes mandatory requirements” is unavailing. As discussed supra at 6, in May 2015, FDA re-issued the March 2015 iteration of the Guidance with a footnote describing the agency’s interim enforcement policy while considering further comments the agency had received. AR 040. Plaintiffs characterize this policy as FDA exercising its “discretion not to enforce” the Guidance – what they characterize as “the Directive’s requirements.” Pls’ MSJ at 33. But the interim

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policy is clear that it is related to enforcement of the statute (i.e., the premarket review provisions) while FDA was reconsidering its interpretation of those provisions.

Fourth, Plaintiffs’ contention (Pls’ MSJ at 34) that the Guidance “established specific compliance deadlines” is equally flawed. Again, the Guidance is clear that these are policies relating to “exercise [of] enforcement discretion” regarding the statutory prohibition on distribution “without a required marketing authorization” in particular circumstances. See AR

015. An agency may articulate its enforcement policy without notice and comment rulemaking. See, e.g., Prof’s & Patients for Customized Care v. Shalala, 56 F.3d 592 (5th Cir. 1995) (FDA’s compliance policy guide not a substantive rule); Cmty. Nutrition Inst. v. Young, 818 F.2d 943, 949 (D.C. Cir. 1987) (“Our holding today in no way indicates that agencies develop written guidelines to aid their exercise of discretion only at the peril of having a court transmogrify those guidelines into binding norms.”); see also Takhar v. Kessler, 76 F.3d 995, 1002 (9th Cir. 1996) (enforcement policy guidance was interpretive rule is not a substantive rule subject to notice and comment rulemaking requirements).

For all of these reasons, the Guidance is not a substantive rule that requires notice and comment rulemaking under the APA.

2. FDA Did Not Fail to Explain Its Reasoning or to Consider Reasonable Alternatives

Plaintiffs’ arguments (Pls’ MSJ at 25-28, 45) that FDA failed to provide a sufficient reason for, and to explain the reason it did not adopt “reasonable alternatives” to, its “labelchange” and “product-quantity” interpretations rest upon the same faulty premise as their notice and comment argument – i.e., that the Guidance is a substantive rule.

Plaintiffs first contend (Pls’ MSJ at 27) that FDA was required to “establish that the existing, congressionally mandated regulatory requirements are insufficient” before “creat[ing] a

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new premarket review requirement,” relying on Defenders of Wildlife v. Salazar, 842 F. Supp. 2d 181, 185-87 (D.D.C. 2012). There, the court held that the defendant agency acted arbitrarily in issuing regulations changing “a well established and long-standing procedure” where there was no evidence in the record to support the rationale the agency offered for either issuing the regulations or making the change. Id. at 186-87. Here, however, FDA did not change a longstanding procedure; instead, the agency simply issued a guidance document articulating how it interprets a recently enacted statute. In any event, as discussed infra at 22-27, 30-31, the Guidance does explain why the agency believes certain label and product quantity changes render the products “new” under the TCA, see AR 007-27. See also Graceway, 783 F. Supp. 2d at 111 (the requirement that the agency explain its result “is not particularly demanding” and “[n]othing more than a brief statement is necessary, so long as the agency explains why it chose to do what it did”) (internal citations and quotations omitted).

Plaintiffs have cited no authority establishing that interpreting a statutory provision through an interpretive rule like the Guidance requires the agency to make explicit its consideration of and reasons for rejecting alternative approaches to its statutory interpretation.18 In support of their claims, Plaintiffs rely entirely on cases involving the issuance of substantive rules through notice and comment rulemaking, for which the APA, 5 U.S.C. § 553(c), expressly requires an agency to articulate the basis and purpose of its rule following issuance of notice and consideration of comments received.19

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18 FDA’s good guidance practice regulations impose no such requirement. See 21 C.F.R. § 10.115(g)(iv)(A) (providing that, for Level I guidance, FDA will “[r]eview any comments received and prepare the final version of the guidance document that incorporates suggested changes, when appropriate,” but not requiring the agency to explain the reasoning for changes made or not made).

19 See Pls’ MSJ at 27 citing Walter O. Boswell Mem’l Hosp. v. Heckler, 749 F.2d 788, 797 (D.C. Cir. 1984) (court faulted the defendant agency for failing to consider an alternative approach to

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In any event, the agency did consider comments received, as evidenced by the revision to the agency’s interpretation of the statute (AR 005-06) discussed immediately below, as well as development of SE Reports tailored to situations where the new product has the same characteristics or product quantity changes. With respect to the latter, as discussed infra at 37-39, the agency reasonably concluded that the streamlined Same Characteristics and Product Quantity Change SE Reports (and creating separate review queues for such reports) would provide the best option for implementing the interpretation in a way that helps address the concerns noted in the comments while accomplishing the statute’s objectives. Moreover, as the Guidance explains, manufacturers can “use an alternative approach if it satisfies the requirements of the applicable statute and regulations.” AR 003.

3. FDA Did Not Act Arbitrarily in Issuing the SE FAQ Guidance Simply Because It Reconsidered Whether a “Label” is “Part” of a Tobacco Product

Having first objected that FDA failed to respond to comments (Pls’ MSJ at 28), Plaintiffs remarkably also complain that the agency did not sufficiently articulate its rationale for making a change that Plaintiffs asked for in their comments on the draft guidance.

FDA initially took the position that a “label” of a tobacco product is “part” of the product. See AR 087. Several commenters objected to that interpretation, including some of the plaintiffs. See, e.g., AR 164-67 (comments on draft guidance on behalf of Philip Morris and U.S. Smokeless Tobacco Co.). FDA considered the comments and agreed that the label is not

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the regulation it issued in the “basis and purpose” statement required for notice and comment rulemaking); Chamber of Commerce of U.S. v. SEC, 412 F.3d 133, 145 (D.C. Cir. 2005) (court objected to an agency’s failure to consider a proposed alternative to a substantive rule that it issued through notice and comment rulemaking); City of Waukesha v. EPA, 320 F.3d 228, 25758 (D.C. Cir. 2003) (D.C. Circuit explained need to “respond in a reasoned manner” to the comments “that raise significant problems” by reference to 5 U.S.C. § 553 in the context of notice and comment rulemaking).

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part of the tobacco product. The agency expressly acknowledged the change in interpretation in both the first and second editions of the final guidance. AR 005-06; AR 065.

Contrary to Plaintiffs’ assertion (Pls’ MSJ at 29) that the agency’s position has been “perpetually shifting,” on whether a new name of a tobacco product may render that product a new tobacco product subject to premarket review, the agency has consistently answered in the affirmative. AR 089-90 (draft guidance); AR 010 (Guidance at FAQ #3). The fact that the agency refined part of its statutory analysis between the draft and final versions of its Guidance in response to comments received, far from representing a basis for invalidating the Guidance, indicates that the Guidance reflects FDA’s serious consideration of the comments.20

B. The Court Should Uphold FDA’s Interpretations of the Statute

1. Label Changes

When a company modifies the label of a tobacco product in a way that renders it distinct from the predicate product – for example, by creating a new brand name – the resulting product is a “new tobacco product” because the new product was not commercially marketed in the United States as of February 15, 2007. AR 007. Although Plaintiffs interpret “new tobacco product” to encompass only changes to physical attributes, that reading is not compelled by the statutory language. FDA’s interpretation harmonizes the statute’s text, structure, and broad remedial purpose and should be upheld as a reasonable reading of the statute.

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20 Alabama Education Association v. Chao, 455 F.3d 386 (D.C. Cir. 2006), is inapposite. There, “[a]fter holding fast to one” interpretation of a statute for “more than 40 years,” the agency revised its regulation to adopt an “alternative interpretation” without adequately explaining the change. Id. at 388. Here, FDA is interpreting a statute enacted in 2009, offered a rationale in a 2011 draft guidance that was not implemented and then modified that rationale in 2015 based on comments received . which is entirely consistent with the purpose of issuing guidance documents of this nature in draft for comment.

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a. The Definition of New Tobacco Product Should Be Construed in Tandem with the Substantial Equivalence Provisions

“New tobacco product” and “substantial equivalence” are related concepts that are defined in the same section of the TCA. Under Section 387j(a)(2)(A), before a manufacturer can market a new tobacco product, it must submit a premarket tobacco application (PMTA) under section 387j, and FDA must issue an order pursuant to section 387j(c)(1)(A)(i) authorizing the product to be marketed. But section 387j also provides that a manufacturer is not required to submit a PMTA for a new tobacco product if the manufacturer submits an SE report under section 387e(j) and FDA issues an order finding the tobacco product to be (1) substantially equivalent to a grandfathered product and (2) in compliance with the requirements of the Act. Substantial equivalence is relevant only to new tobacco products. Thus, section 387j’s definition of “new tobacco product” must be read in light of that section’s definition of “substantial equivalence,” as well as the TCA’s structure and purpose.

The definition of “substantial equivalence” shows that Congress must have contemplated that there would be tobacco products that have the same physical attributes as predicate products but would nonetheless be “new tobacco products.” As discussed above, Congress provided two options for demonstrating substantial equivalence, one for when the “characteristics” of the new product and the predicate are the “same” and one when they are “different.” 21 U.S.C. § 387j(a)(3). Congress then defined “characteristics” to encompass seemingly all physical attributes of the product: “materials, ingredients, design, composition, heating source, or other features of a tobacco product.” Id. § 387j(a)(3)(B).

FDA reasonably interpreted “same characteristics” to mean that the new and predicate products must have identical physical attributes. AR 008. After all, the statute expressly provides that a new tobacco product and a predicate product can only have the “same

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characteristics,” if the two products have not only the same materials, same ingredients, same design, same composition, and same heating source, but also the same “other features.” 21

U.S.C. § 387j(a)(3)(A)(i)&(3)(B). A product with a new name or other label modification that renders the product distinct, but that has the same physical attributes as a predicate product, would fall into this category. AR 008. Accordingly, FDA has reasonably interpreted the statute in determining that a label change that makes the product distinct renders that product a “new tobacco product.”

b. FDA’s Reading of Section 387j Is Supported by Other Sections in the Statute, and It Furthers the Purposes of the TCA

FDA’s interpretation of section 387j conforms to and compliments Congress’ overall framework for effective FDA oversight over the tobacco product industry. The agency’s interpretation finds further support in the TCA’s requirements that manufacturers submit to FDA lists of the ingredients and harmful and potentially harmful constituents in each tobacco product and distinguish products by “brand and subbrand.” The TCA defines “brand” as “a variety of tobacco product distinguished by the tobacco used, tar content, nicotine content, flavoring used, size, filtration, packaging, logo, registered trademark, brand name, identifiable pattern of colors, or any combination of such attributes.” 21 U.S.C. § 387(2). Under section 387d, before introducing into interstate commerce a tobacco product that was “not on the market on the date of enactment” of the TCA, a manufacturer must report to FDA “by brand and by quantity in each brand and subbrand” a list of “all ingredients . . . added” to “each tobacco product” and a list of “all constituents” in each tobacco product that FDA has identified as “harmful or potentially harmful to health.” 21 U.S.C. §§ 387d(a)(1)&(3), 387d(c)(1). Thus, consistent with the agency’s interpretation of new tobacco product for the purposes of section 387j, changes to a

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product’s name, logo, and identifiable pattern of colors may create a distinct product that triggers ingredient and harmful constituent reporting requirements, and the ingredients and constituents are reported for each such distinct product.

FDA interprets section 387e(i)’s product listing requirement similarly to distinguish products by brand and sub-brand. Under that section, manufacturers must submit to FDA a list of all tobacco products that the manufacturer has introduced for commercial distribution, which is submitted as part of the manufacturer’s annual registration and must be updated twice each year with any changes. See 21 U.S.C. § 387e(i)(1)&(3). FDA issued guidance explaining the obligation to uniquely identify the product, including by the “brand/sub-brand or other commercial name.” AR 531 (FDA Guidance on Registration and Product Listing). Thus, if a firm is marketing Product A and then starts marketing Product B with a different name, logo, and identifiable pattern of colors such that it creates a distinct product, the firm would list both products, even if they are physically identical.

FDA’s interpretation of new tobacco product is further supported by certain similarities in the TCA’s listing, reporting, and substantial equivalence provisions. Under section 387e(i), a manufacturer must add a tobacco product to its product list if the product is “for commercial distribution” and is not yet listed. 21 U.S.C. § 387e(i). The manufacturer also must report ingredients and harmful or potentially harmful constituents for a product not on the market at the time of enactment of the TCA at least 90 days prior to the delivery for introduction into interstate commerce of that product. Id. § 387d(c)(1). Under section 387e(j), a manufacturer that “proposes to begin the introduction or delivery for introduction into interstate commerce for commercial distribution of a tobacco product” that is a new tobacco product shall submit an SE report to FDA “at least 90 days prior to making such introduction or delivery . . . .” 21 U.S.C.

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§ 387e(j)(1). FDA interpreted the similarity in these provisions to mean that “Congress contemplated that tobacco manufacturers who intended to introduce a tobacco product that was distinct from an earlier marketed product but had identical physical attributes would list the product, report on its ingredients and harmful or potentially harmful constituents, and submit an SE Report explaining that the product had the same characteristics as a predicate product.” AR

009. This reading harmonizes the relevant statutory provisions and is a reasonable construction of the statutory language.

FDA’s interpretation also furthers the purposes of the TCA. Congress provided FDA “with the authority to regulate tobacco products” for the “significant” benefit to the “American people” in both “human and economic terms.” TCA § 2(12). Congress recognized that “the tobacco industry should be subject to ongoing oversight,” id. § 2(8), and enacted the premarket review requirement to ensure that every time a tobacco company launches a new product, it must demonstrate to FDA that the new product satisfies one of three pathways before it is commercially distributed. See 21 U.S.C. § 387j.21 FDA’s interpretation furthers that mission because the submission of SE Reports helps FDA keep abreast of products in the marketplace so that the agency can properly evaluate whether all of the tobacco products on the market are in compliance with the statute and, for products that are distinct, enables the agency to confirm the new product meets premarket authorization requirements. AR 011. Otherwise, if FDA encounters a product that is distinct and does not have a premarket authorization, in many cases the agency would be unable to ascertain whether it is physically identical to some other product.

Contrary to Plaintiffs’ assertion (Pls’ MSJ at 23), substantial equivalence review of a product that has the “same characteristics” as a physically identical predicate would not be an

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21 Provisional products are not required to receive premarket authorization prior to distribution, as discussed supra at 3 n.8.

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“empty regulatory exercise.” If FDA receives a Same Characteristics SE Report for a new product, the agency can determine whether the manufacturer has identified an appropriate predicate22 and confirm, based on the manufacturer’s certification, that the two products do, in fact, have the same characteristics. See AR 011. The agency also can evaluate whether the remaining requirements of the substantial equivalence marketing pathway are met (i.e., the product is “in compliance with the requirements of [the FDCA]” and the manufacturer has taken action to comply with any applicable tobacco product standard). 21 U.S.C. § 387e(j)(1)(A)(i)&(B). Thus, the “same characteristics” review process for a physically identical product would further the purposes of the TCA.

By comparison, Plaintiffs’ cramped reading of “new tobacco product,” if adopted, would impair FDA’s ability to ensure that all new tobacco products undergo the requisite premarket review. Suppose, for example, a manufacturer begins to market a new brand of tobacco product, which is distinct from all of its other products and touted by the manufacturer as “New.” And suppose further that the manufacturer does not submit an SE Report (full or streamlined) to FDA because it believes the product is physically identical to a lawful predicate. Under Plaintiffs’ reading, FDA would have no means of knowing that the product is intended to be physically identical to a lawful predicate. Even if the agency could do so, it would have no reliable means of knowing whether the manufacturer’s belief that the characteristics are the same is correct. Other submissions by the manufacturer – a listing that includes the product name, as well as a list of its ingredients and harmful or potentially harmful constituents – do not convey the necessary information to discern whether the new brand of tobacco product has the same characteristics as

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22 For example, a manufacturer may mistakenly identify a product that is not eligible to serve as a predicate for its new product. An SE Report may compare a new product only to a product that was commercially marketed as of February 15, 2007, or to products previously determined to be substantially equivalent to a predicate tobacco product. 21 U.S.C. § 387e(j)(1)(A)(i).

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a lawful predicate (such as, all of the new product’s “characteristics” (e.g., materials, design, or composition), as well as information about the claimed predicate). Nor could FDA be expected to gather all of the necessary information through an inspection because the product’s manufacturing records likely would not identify the claimed predicate or compare the products. Thus, Plaintiffs’ interpretation of the statute would thwart what even they concede is a “central feature” of the TCA. (Pls’ MSJ at 4).

c. Plaintiffs’ Challenges to FDA’s Interpretation Are Without Merit

Plaintiffs offer several arguments to counter FDA’s statutory interpretation, none of which has merit. First, Plaintiffs assert (Pls’ MSJ at 30-31) that FDA’s interpretation of “new tobacco product” conflicts with 21 U.S.C. § 387c(b) because the agency is requiring prior approval of tobacco labels without issuing regulations. Plaintiffs are wrong because the Guidance does not request or require that manufacturers submit product labels for prior approval.

As discussed above, the Guidance offers manufacturers the opportunity to submit streamlined Same Characteristics SE Reports to demonstrate the substantial equivalence of products that are physically identical but have label changes that render them distinct products. Those reports do not request copies of the labeling for either the new or predicate products. AR 012-14, 035-36.23 The agency also addressed this issue in one of the Guidance’s FAQs: “Do I need to submit the product label as part of my Same Characteristics SE Report? Response: No. A manufacturer does not need to submit any product label as part of its Same Characteristics SE Report, and FDA does not require the preapproval of the product’s label before issuing an SE order.” AR 015 (emphasis added).

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23 Nor has FDA requested that labeling be submitted for full SE Reports. See AR 469-72.

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Second, Plaintiffs misread the statute (Pls’ MSJ at 24 n.4) when arguing that “same characteristics” cannot mean physically “identical” based on the similarity between the FDCA’s substantial equivalence provisions for medical devices and tobacco products. Under the FDCA, which the TCA amends, a device may be found substantially equivalent to a predicate device if it has the “same technological characteristics” or it has “different technological characteristics” but an additional standard is met. 21 U.S.C. § 360c(i)(1)(A) (emphasis added). “Different technological characteristics” means that, comparing the new device to the predicate, “there is a significant change in the materials, design, energy source, or other features . . . .” Id. § 360c(i)(1)(B) (emphasis added). When Congress adapted these device concepts to tobacco products in the TCA, it eliminated the modifier “technological” and did not replace it with any other modifier, thus requiring new and predicate tobacco products to have characteristics that are the “same” in every sense. See 21 U.S.C. § 387j(a)(3). Also, Congress deleted the adjective “significant” in adapting “different characteristics” to tobacco products in section 387j(a)(3)(A)(ii). Read together, these two modifications of the device provisions to tobacco products leave no doubt that Congress intended new and predicate tobacco products to be the same in more respects (i.e., identical) than is required for devices.

In addition, the modifications Congress made when it modeled certain provisions of the TCA after the device provisions of the FDCA must be considered in the context in which they were enacted. The types of products are, after all, fundamentally different in their purpose and societal value. Medical devices are, by definition, intended to be used in the “diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease in man or other animals.” 21 U.S.C. § 321(h). Tobacco products, when used as intended, cause dependence, disease, and premature death. TCA § 2(1), (3)&(13). Congress enacted the TCA

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to, among other things, establish FDA oversight over tobacco products and reduce dependence on tobacco, TCA § 3(2)&(9); id. § 2(8), (12)&(29), not to speed new brands of conventional tobacco products to market. Thus, Congress’ textual changes to the concept of substantial equivalence for tobacco products should be read as purposefully more exacting than their device counterparts.

Finally, there is nothing in the statutory language to support Plaintiffs’ assertion that the “same characteristics” prong permits a new product to be substantially equivalent to “a range of predicate products,” rather than “identical to any single prior product.” Pls’ MSJ at 23 (emphasis in original). Section 387j’s definition of “same characteristics” speaks only in the singular when describing the predicate product. 21 U.S.C. § 387j(a)(3)(A)&(A)(i) (the agency has found by order that the tobacco product “has the same characteristics as the predicate tobacco product.”) (emphasis added). Plaintiffs’ absurdly broad interpretation would permit a manufacturer to make a cigarette with the filter of Brand A, paper of Brand B, design of Brand C, and ingredients and composition of Brand D, and claim that it has the “same characteristics” as “the predicate” without having to show that such a product does not raise different questions of public health. Yet Congress plainly intended manufacturers of products with different characteristics to make such a showing before they can be found substantially equivalent. See id. § 387j(a)(3)(ii). Plaintiffs’ interpretation of “same characteristics” thus misses the mark.

For all of these reasons, the Court should defer to FDA’s reasonable interpretation of the statute with respect to changes to the product label that render a product distinct.

2. Product Quantity

FDA’s interpretation of “new tobacco product” with respect to changes in the product quantity in the package is consistent with the statutory language and furthers Congress’ purpose

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in enacting the TCA. FDA’s Guidance explained that the agency interprets the definition of “new tobacco product” to include a change in product quantity in the package. AR 018-19. Congress broadly defined “new tobacco product” to include, among other things, “any modification” of a tobacco product “where the modified product was commercially marketed in the United States after February 15, 2007.” 21 U.S.C. § 387j(a)(1)(B) (emphasis added). The change in product quantity in a package is a modification of the product under section 387j(a)(1). Thus, FDA explained that if the manufacturer changes the “number of portioned parts per package” (e.g., changing from 24 cigarettes in a pack to 20) or the weight of the product (e.g., changing a smokeless tobacco product from 24 grams to 5 grams), the resulting product is a “new tobacco product” under section 387j(a)(1) “because the characteristics (e.g., amounts of ingredients, materials, other features, etc.) have changed.” AR 018. FDA’s interpretation furthers the fundamental purposes of the TCA: to prevent initiation of tobacco use by children and adolescents and to reduce dependence on tobacco use. See TCA § 3(2)&(9).24 In the Guidance, the agency explained how changes in product quantity in the package may affect initiation of tobacco use among youth, because “[s]maller product quantities may allow for increased product uptake due to lower barriers to trying the product, are associated with lower product harm perceptions, and reduce product costs or increase product availability . . . .” AR

020. In addition, “[l]arger product quantities can potentially reduce cessation behaviors and

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24 Congress also found that “[v]irtually all new users of tobacco products are under the minimum legal age to purchase such products”; “[r]educing the use of tobacco by minors by 50 percent would prevent well over 10,000,000 of today’s children from becoming regular, daily smokers, saving over 3,000,000 of them from premature death due to tobacco-induced disease”; “[a]dvertising, marketing, and promotion of tobacco products have been especially directed to attract young persons to use of tobacco products”; and “[c]hildren, who tend to be more price sensitive than adults, are influenced by advertising and promotion practices that result in drastically reduced cigarette prices.” TCA § 2(4), (14), (15)&(24).

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increase tobacco product use among current users.” Id. Thus, quantity changes directly affect the death, disease, and dependence burden of tobacco use.

Significantly, Plaintiffs’ brief does not question FDA’s public health expertise on these issues or dispute that a change in product quantity may impact initiation and cessation. See Pls’ MSJ passim. Instead, Plaintiffs make three arguments regarding the construction of the statute, none of which has merit. First, Plaintiffs contend that a tobacco product “has the same characteristics no matter the quantity included in a particular package.” Pls’ MSJ at 44. But “same characteristics” is reasonably interpreted to mean physically identical (supra at 23-24), and a product that contains a different quantity in the package is not physically identical to its predicate because it does not have the same “amounts of ingredients, materials, [and] other features.” AR 017.

Plaintiffs’ next argument misreads the statute. In particular, Plaintiffs claim (Pls’ MSJ at

44) that it is inconsistent with the TCA’s “structure” for the Guidance to request information on whether a proposed product quantity change is likely to alter consumer use (AR 023), because Congress referred to submission of information on the “behavioral aspects of tobacco use” in PMTAs and applications for modified risk products, but not SE Reports. Pls’ MSJ at 44 (citing 21 U.S.C. §§ 387j(c), 387k(g)(2)). This argument fails because Congress broadly delegated to FDA the authority to specify what should be included in an SE Report and imposed no constraints on that delegation. 21 U.S.C. § 387e(j)(1) (“report to the Secretary (in such form and manner as the Secretary shall prescribe)”). Moreover, in evaluating substantial equivalence, Congress directed FDA to consider whether any “different characteristics” of a new tobacco product “raise different questions of public health” such that it should be regulated under the PMTA pathway. Id. § 387j(a)(3)(A)(ii). Given that Congress tasked FDA with reducing

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tobacco dependence and “promot[ing] cessation to reduce the disease risk” of tobacco, TCA § 3(2)&(9), FDA has consistently interpreted the “public health” questions that may need to be addressed to include potential impact on initiation and cessation. See, e.g., AR 473 (SE Report Guidance) (for products with different characteristics, FDA may request data comparing consumer perceptions with respect to new and predicate products that could affect initiation and cessation, etc.).25 In light of the well-documented purposes of the TCA, Plaintiffs’ suggestion that FDA cannot consider the potential impact on initiation and cessation of tobacco use as part of the “different questions of public health” determination is nonsensical.

Finally, Plaintiffs place too much weight on the narrow circumstances in which a manufacturer may distribute free samples. The TCA directed FDA to issue a final rule that, inter alia, bans the distribution of free samples of all tobacco products. TCA § 102. The statute carves out a narrow exception to that ban for “free samples of smokeless tobacco” if distributed in a “qualified adult-only facility,” but specifies that the samples cannot exceed a particular size if they are going to be removed from the facility. Id. § 102(d)(2)(D). Plaintiffs contend (Pls’ MSJ at 45) that “Congress gave no indication” that manufacturers would need to seek premarket review when they create for smokeless product samples so limited in size, and thus no product quantity change subjects any tobacco product to premarket review. We disagree.

There is nothing in the statutory text or legislative history to suggest that Congress intended this narrow exception – which is confined to one type of tobacco product in a specific location – to limit the scope of new tobacco product. Indeed, the TCA directed FDA to reissue, with certain modifications, several regulations that FDA had originally issued in 1996. The

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25 For the PMTA pathway, determining whether marketing a tobacco product is appropriate for the protection of “public health” includes consideration of increased or decreased likelihood that existing users will stop using such products and that nonusers will start using such products. See 21 U.S.C. § 387j(c)(2)(A), (c)(4).

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exception for samples pertains to one of those regulations. It would be absurd to suggest that a limited exception to a regulation originally developed by the agency was intended to govern the new framework for premarket review established by the TCA.26 This Court should decline Plaintiffs’ request to let the tail wag the dog on such an important public health issue. For all of these reasons, FDA’s interpretation of product quantity changes should be upheld.

II. THE GUIDANCE DOES NOT VIOLATE THE FIRST AMENDMENT

A. The Guidance Does Not Implicate the First Amendment

Contrary to Plaintiffs’ assertion (Pls’ MSJ at 35) that “label-change requirements” of the Guidance violate the First Amendment, the Guidance does not implicate the First Amendment. The Guidance does not require or request the submission of the tobacco product’s label for FDA review or restrict the content of any tobacco label. Instead, it describes FDA’s current thinking on when a change in a tobacco label may render the product a “new tobacco product.” Nothing in the First Amendment prohibits the government from using a person’s speech as evidence to establish whether it is distributing a particular type of product under the FDCA.

The D.C. Circuit has held, in the context of establishing product type under the FDCA, that the evidentiary use of speech is permissible under the First Amendment. Whitaker v. Thompson, 353 F.3d 947, 953 (D.C. Cir. 2004). In particular, the court held that it is “constitutionally permissible” for FDA to rely on product labeling to determine whether a product that might otherwise be a food or dietary supplement was in fact a drug. Id. See also, e.g., United States v. Article of Drug Designated B-Complex Cholinos Capsules, 362 F.2d 923, 927 (3d Cir. 1966); United States v. Cole, 84 F. Supp. 3d 1159, 1166 (D. Or. 2015); United

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26 Moreover, not every small size will be distributed as a free sample. Products for which the quantity is changed to meet TCA section 102(d)(2)(D)’s size limitation, when not distributed under section 102’s specific conditions, raise the same types of public health questions regarding initiation of tobacco use as other changes in product quantity.

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States v. Regenerative Sciences, LLC, 878 F. Supp. 2d 248, 255-56 (D.D.C. 2012), aff’d, 741 F.3d 1314 (D.C. Cir. 2014). But see Disc. Tobacco City & Lottery, Inc. v. United States, 674 F.3d 509, 534 (6th Cir. 2012). Similarly, here, a change in a product label may cause a tobacco product to be a new tobacco product, and such use of the product label as evidence does not offend the First Amendment.

B. The Interpretation in the Guidance Does Not Impose an Unconstitutional Restriction on Commercial Speech

Even if the holding of Whitaker were not dispositive of Plaintiffs’ First Amendment arguments, the interpretation on when a change in a tobacco label may render the product a “new tobacco product” is readily sustained under the framework established in Central Hudson Gas & Electric Corp. v. Public Service Comm’n, 447 U.S. 557 (1980), for review of restrictions on commercial speech.27 Commercial speech is not “at the First Amendment’s core,” and consequently it enjoys a more “‘limited measure of protection, commensurate with its subordinate position in the scale of First Amendment values . . . .’” Fla. Bar v. Went for It, Inc., 515 U.S. 618, 623 (1995) (quoting Bd. of Trs. of State Univ. of N.Y. v. Fox, 492 U.S. 469 (1989)); see also Central Hudson, 447 U.S. at 562-63 (“The Constitution accords a lesser protection to commercial

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27 Although Plaintiffs state in passing (Pls’ MSJ at 39) that “strict scrutiny” applies to restrictions on non-misleading commercial speech that are “speaker-based or content-based,” citing Reed v. Town of Gilbert, 135 S. Ct. 2218 (2015) (applying strict scrutiny to town sign code that imposed more stringent requirements on signs directing the public to a meeting of a nonprofit group than signs conveying other messages), they did not argue that strict scrutiny applies here. This Court therefore need not consider that issue. See Bryant v. Rumsfeld, Civ. No. 04-1125 (CKK), 2007 U.S. Dist. LEXIS 97521*19 (D.D.C. Mar. 12, 2007) (“arguments.posed in single sentences.are fatally underdeveloped.”); see also Coleman v. Cmty. Trust Bank, 426 F.3d 719, 729 n.8 (4th Cir. 2005) (“Bank twice alludes to this proposition, each time in a single sentence with no argument in favor of the position. Because the brief contains no argument supporting this claim, we do not consider it.”). In any event, Reed does not apply to commercial speech, which is the only type of speech at issue here. See, e.g., CTIA – The Wireless Ass’n v. City of Berkeley, Cal., Civ. No. 15-2529 (EMC), 2015 U.S. Dist. LEXIS 126071 *31-33 (N.D. Cal. Sept. 21,

2015).

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speech than to other constitutionally guaranteed expression.”). Under Central Hudson, if the commercial message is neither misleading nor related to unlawful activity, the government may impose restrictions that directly advance a substantial government interest and are no more extensive than is necessary to serve that interest. 447 U.S. at 566. That standard does not require the government to use “the least restrictive means” of regulation, but instead can achieve a “reasonable” fit by adopting regulations “in proportion to the interest served.” Bd. of Trs., 492 U.S. at 480.

Plaintiffs do not and cannot dispute that the government’s interests here are substantial. See Pls’ MSJ at 40. Because “tobacco use is the foremost preventable cause of premature death in America,” and the “actions of the tobacco industry” “created a public health crisis,” Congress determined that “the tobacco industry should be subject to ongoing oversight.” TCA § 2(8), (13) & (29). As Plaintiffs acknowledge (Pls’ MSJ at 4), a “central feature” of that “oversight” under the TCA is the requirement that “‘new tobacco products’ undergo a premarket review procedure similar to FDA’s processes for reviewing new drugs and medical devices.” See 21 U.S.C. § 387j.

Submission of Same Characteristics SE Reports to FDA for review directly and materially advances the agency’s interests in keeping abreast of tobacco products in the marketplace and in performing the agency’s premarket review function for new tobacco products. Eventual notice to FDA that a product is being marketed is not sufficient for FDA to effectively monitor these products. FDA needs premarket notice with sufficient information to determine the legal status of the product. As the Guidance explained: “[I]n the context of products that are distinct but have identical physical attributes, a [substantial equivalence] submission and a [substantial equivalence] order enable FDA to determine whether the product is lawfully on the market.” AR 011.

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The Guidance’s approach also satisfies the final prong of the Central Hudson framework. As noted, the government is not required to employ “the least restrictive means” of regulation. Bd. of Trs., 492 U.S. at 480. Instead, what is required is a “‘fit’ between the” government’s “ends and the means chosen to accomplish those ends, . a fit that is not necessarily perfect, but reasonable; that represents not necessarily the single best disposition but one whose scope is ‘in proportion to the interest served’; that employs not necessarily the least restrictive means but . . . a means narrowly tailored to achieve the desired objective.” Id. (internal citations omitted); accord Am. Meat Inst. v. USDA, 760 F.3d 18, 26 (D.C. Cir. 2014) (en banc) (“Notwithstanding the reference to ‘narrow tailoring,’ the Court has made clear that the government’s burden on the final Central Hudson factor is to show a ‘reasonable fit,’ or a ‘reasonable proportion,’ between means and ends.”) (internal citations omitted).

FDA took meaningful steps to minimize any burden on manufacturers. The agency determined the minimum contents for an SE Report for a product physically identical to its predicate and offered manufacturers the option of submitting just that information. See AR 011 14. Rather than asking manufacturers to submit all of the information recommended to be included in a full SE Report, the agency offered them the option to identify distinctions between the new product and its predicate and simply certify, under penalty of perjury, the absence of changes to the characteristics. AR 014.28 It also created a separate queue for review of Same Characteristics SE Reports, AR 014, and established performance goals of reviewing 70% such reports within 90 days in fiscal year 2016 and steadily increasing that percentage with time. See Declaration of David Ashley ¶ 2 (attached hereto as Exhibit 2). The Guidance’s approach

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28 Because the Guidance is merely guidance, the agency also made clear that manufacturers can use an “alternative approach if it satisfies the requirements of the applicable statutes and regulations.” AR 003.

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reflects a reasonable fit between means and ends that is narrowly tailored to achieve the purpose of premarket review.

Plaintiffs question the value of reviewing a Same Characteristics SE Report where the products are physically identical but “have simply been relabeled,” and assert that the Report “does not provide FDA with information necessary to fulfill its regulatory obligations under the [TCA].” Pls’ MSJ at 40. But if a manufacturer submits a Same Characteristics SE Report containing all of the information recommended in the Guidance (see supra at 8 n.11), the Report would enable the agency to determine whether the new and predicate products have the “same characteristics” because the submission would uniquely identify both products and include a certification that the two products do not have different characteristics (no change in materials, ingredients, design features, heating source, or any other features). AR 012-14.29 The Report also would contain other elements necessary for the agency to complete a substantial equivalence review to ensure the product meets the standard for issuance of an order under section 387j(a)(2)(A)(i), such as the Health Information Summary mandated by section 387j(a)(4) and a statement of actions taken to comply with any applicable tobacco product standard. See AR 013. Submission of these Reports thus directly and materially advances FDA’s interests in both keeping abreast of the products in the marketplace and receiving the

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29 As noted supra at note 24, FDA may, for example, determine that the cited predicate is not actually eligible to serve as a predicate. Moreover, through the submission, the agency may conclude that the characteristics of the products are actually “different,” (e.g., because the manufacturer opted to use an alternative certification that indicates the characteristics are not the same), which would require the manufacturer to submit additional information demonstrating that the new product “does not raise different questions of public health.” 21 U.S.C. § 387j(a)(3)(A)(ii). Neither of these regulatory determinations would be possible without the information contained in an SE Report.

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information needed to conduct premarket review to assess whether seemingly distinct products are in fact substantially equivalent. AR 011.

Plaintiffs’ contention that Same Characteristics SE Reports provide only “marginal informational benefit to the agency” in light of section 387e’s requirement that manufacturers “provide FDA with copies of materially altered product labels” is incorrect. See Pls’ MSJ at 40 (citing 21 U.S.C. § 387e(i)(1)(B), (3)(D)). Under Section 387e(i), manufacturers are required to update their list of commercially distributed products in June and December. While a manufacturer’s submission of an updated list could alert FDA to the existence of a new brand or subbrand, that would occur after (possibly up to six months after) the manufacturer commenced commercial distribution, which offers no substitute for premarket notification. Moreover, the product list submitted under section 387e(i) would not identify the supposed predicate for the new product, contain any information about whether the new product has the same characteristics as the unidentified predicate, or provide the remaining information needed for issuance of a substantial equivalence order.30 By comparison, all of that information should be contained in a Same Characteristics SE Report. Submission of such a Report, even one that is streamlined, therefore provides a material benefit to FDA and directly advances the agency’s interest in performing premarket review on new products.

Plaintiffs’ proposed “alternative” to submission of a Same Characteristics SE Report – i.e., requiring notice of “label changes without mandating review before implementation of those changes” (Pls’ MSJ at 40) – would not effectively achieve the government’s interest. The most obvious problem with this proposed alternative is that it reads “premarket” and “review” out of

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30 For example, if the distinct product is marketed as an additional and different brand/sub-brand, the labeling would be submitted as part of the listing for the newly-marketed product. This would not tell FDA that the two products have the same characteristics or anything else about their relationship.

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the statutory mandate of “premarket review” for new tobacco products. Thus, the proposed alternative fails to advance a major purpose of the statute of protecting the public health by requiring FDA review of new tobacco products before they enter the market.

C. The Prior Restraint Doctrine is Not Applicable to Commercial Speech

Plaintiffs’ claim that the Guidance constitutes an unconstitutional “prior restraint” of free speech fares no better. Plaintiffs contend that the Guidance is a presumptively invalid “prior restraint” that can only be sustained if it satisfies particular “procedural safeguards.” Pls’ MSJ at 35-37. This argument should be rejected because it relies on cases that do not involve purely commercial speech, the only type of speech at issue here.31

Plaintiffs fail to acknowledge that the Supreme Court has repeatedly questioned the applicability of traditional prior restraint doctrine to commercial speech. See Cent. Hudson, 447 U.S. at 571 n.13 (“commercial speech is such a sturdy brand of expression that traditional prior restraint doctrine may not apply to it”); Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, 425 U.S. 748, 771-72 n.24 (1976) (“[T]he greater objectivity and hardiness of commercial speech” “may also make inapplicable the prohibition against prior restraints.”) (internal citations omitted); see also Zauderer v. Office of Disciplinary Counsel of the Supreme

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31 See Pls’ MSJ at 35-37, citing Forsyth Cnty. v. Nationalist Movement, 505 U.S. 123 (1992) (ordinance permitted government administrator to vary the fee for assembling based on estimated cost of maintaining public order); Elrod v. Burns, 427 U.S. 347 (1976) (political patronage dismissals); Neb. Press Ass’n v. Stuart, 427 U.S. 539 (1976) (order restraining press from publishing accounts of confessions made by person accused of a crime); Se. Promotions Ltd. v. Conrad, 420 U.S. 546 (1975) (denial of application to use municipal facility for musical based on nudity and obscenity concerns); Heller v. New York, 413 U.S. 483 (1973) (conviction related to showing obscene film); Teitel Film Corp. v. Cusak, 390 U.S. 139, 141-42 (1968) (censorship statute for motion pictures displayed outdoors); Freedman v. Maryland, 380 U.S. 51 (1965) (motion picture censorship statute); City of Littleton v. Z.J. Gifts D-4, LLC, 541 U.S. 774, 781 (2004) ( “adult business” licensing ordinance); see also N.Y. Magazine v. Metro. Transp. Auth., 136 F.3d 123 (2d Cir. 1998) (affirming injunction to prevent metropolitan transportation authority from displaying advertisement that contained elements of commercial and political speech).

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Court of Ohio, 471 U.S. 626, 668 n.13 (1985) (Brennan, J., concurring in part) (“The Court previously has noted that . . . traditional prior restraint principles do not fully apply to commercial speech . . . .”); Friedman v. Rogers, 440 U.S. 1, 10 (1979) (attributes of commercial speech “‘may also make inapplicable the prohibition against prior restraints’”)(quoting Va. State Bd. of Pharmacy, 425 U.S. at 772 n.24).32

The Sixth Circuit recently rejected the argument that the regulatory scheme for modified risk tobacco products, which bars manufacturers from “making certain statements about tobacco products before receiving approval from the FDA,” is an unlawful prior restraint on speech. Disc. Tobacco City & Lottery, Inc. v. United States, 674 F.3d 509 (6th Cir. 2012), cert. denied sub nom. Daniels v. Philip Morris USA, Inc., 552 U.S. 1257 (2008). As here, the plaintiff tobacco companies “offer[ed] no authority to support the conclusion that this regulation of commercial speech requires the strict scrutiny and presumption of constitutional invalidity afforded to laws effecting a prior restraint on protected non-commercial speech.” Id. at 532. Thus, the Sixth Circuit concluded that the “commercial speech [was] properly analyzed under Central Hudson,” not under the prior restraint doctrine. Id. at 533.33

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32To our knowledge, the D.C. Circuit has not resolved this issue. See Pearson v. Shalala, 164 F.3d 650, 660 (D.C. Cir. 1999) (“we need not decide whether prior restraint analysis applies to commercial speech.”). But the D.C. Circuit has distinguished commercial and noncommercial speech in concluding that the overbreadth doctrine does not apply to commercial speech. See, e.g., Ass’n of Private Sector Colleges & Univs. v. Duncan, 681 F.3d 427, 456 (D.C. Cir. 2012).

33 In Nutritional Health Alliance v. Shalala, 144 F.3d 220, 227-28 (2d Cir. 1998), the court found that prior restraint “play[s] a role in evaluating the regulation of commercial speech.” Thus, when the court considered the argument that a 540-day period for FDA review of dietary- supplement claims was an unconstitutional prior restraint, it applied the same test “that the Supreme Court regularly applies to commercial speech,” asking “‘whether the regulation . . . is not more extensive than is necessary to serve [the asserted governmental] interest.’” Id. The court upheld the 540-day period “given the need to protect consumers before any harm occurs,” to “evaluate the evidence in support of labeling claims,” and to develop “a record on the matter so that a court can determine whether the regulated speech is . . . truthful and non-misleading.” Id.

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In any event, Plaintiffs assertion that FDA is imposing “indefinite prior restraint” on non- provisional products is unfounded. Plaintiffs’ reliance on “past practice” (Pls’ MSJ at 37) relates to FDA’s review of full SE Reports when the agency was first determining how to implement the statute and those determinations caused some delay. It does not relate to the streamlined Same Characteristics SE Reports that are reviewed in a separate queue under the Guidance. See Ashley Decl. ¶ 2. Moreover, although FDA guidance is not binding, the Administrative Procedure Act requires federal agencies to pass upon matters presented to them “within a reasonable time,” 5 U.S.C. § 555(b), and authorizes reviewing courts to “compel agency action unlawfully withheld or unreasonably delayed,” id. § 706(1). Plaintiffs’ Complaint presents a facial challenge, and Plaintiffs’ motion does not claim that any plaintiff has submitted a Same Characteristics SE Report that was the subject of agency delay. [REDACTED-gb] Thus, Plaintiffs’ prediction of untimely review of Same Characteristics SE Reports is pure speculation.

Moreover, Plaintiffs’ depiction (Pls’ MSJ at 39) of the review process as “unchecked regulatory control” is plainly inaccurate. The agency looks at the information uniquely identifying the new and predicate products and the manufacturer’s certification to determine whether the predicate is a valid predicate and the products have the same “characteristics,” a statutorily defined term. See 21 U.S.C. § 387j(a)(3)(B). The agency also considers whether other objective criteria for issuance of a substantial equivalence order have been met, such as whether the Report contains the Health Information Summary mandated by section 387j(a)(4)

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and a statement of actions taken to comply with any applicable tobacco product standard. See AR 013.

Accordingly, none of Plaintiffs’ First Amendment arguments have merit.

III. THE GUIDANCE IS NOT IMPERMISSIBLY VAGUE

Plaintiffs incorrectly assert that FDA’s statutory interpretation as described in the Guidance is impermissibly vague. A law is impermissibly vague if it does not give a “person of ordinary intelligence a reasonable opportunity to know what is prohibited . . . .” Grayned v. City of Rockford, 408 U.S. 104, 108 (1972).34 The Guidance is not impermissibly vague because it gives manufacturers reasonable35 opportunity to know how FDA interprets what the statute requires. Plaintiffs do not appear to argue that the Guidance is impermissibly vague in all respects. For example, they do not assert the Guidance is vague with respect to new brand names or products manufacturers tout as “new.” See Pls’ MSJ at 41-42; see also AR 007 (“For example, if Company A had been marketing Brand X and recently started to market both Brand

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34 Plaintiffs assert that “rigorous adherence to those requirements is necessary to ensure that ambiguity does not chill protected speech,” Pls’ MSJ at 41, but do not cite any cases addressing a facial challenge involving only commercial speech. See FCC v. Fox Television Stations, Inc., 132 S. Ct. 2307, 2317 (2012) (as applied challenge regarding indecency); Reno v. ACLU, 521 U.S. 844, 874, 877 (1997) (content-based regulation of non-commercial speech). Here only commercial speech is at issue. See Bates v. State Bar of Az., 433 U.S. 350 (1977) (although overbroad statutes may “chill protected speech,” advertising is “linked to commercial wellbeing” and will therefore not be “crushed by overbroad regulation.”); see, e.g., Ass’n of Nat’l Advertisers v. Lundgren, 809 F. Supp. 747, 761 (N.D. Cal. 1992) (“in reviewing a commercial speech prohibition for facial vagueness which imposes criminal sanctions the question is whether the law affords fair notice to a businessperson of ordinary intelligence as to what conduct is illegal.”).

35 Plaintiffs’ contention (Pls’ MSJ at 42) that alleged vagueness in the Guidance has “concrete consequences” again misapprehends the nature of the guidance document. The requirement to seek premarket review for new tobacco products derives from the statute. 21 U.S.C. § 387j. The Guidance reflects the agency’s interpretation of the statute and was issued to answer questions raised by industry, not to establish requirements. AR 003; 21 C.F.R. § 10.115(d). As a result, striking the Guidance would not further clarify the meaning of “new tobacco product.”

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X and Brand Y, Brand Y is a new tobacco product even if it has the same characteristics as Brand X because Brand Y “was not commercially marketed in the United States as of February 15, 2007.””).

Plaintiffs focus instead on whether changes in background color or logo render a product distinct, claiming that the examples offered in the Guidance fail to provide them with “meaningful direction.” Pls’ MSJ at 42. On this topic, the Guidance states:

FDA recommends that companies examine the definition of “brand” as analogous authority: “a variety of tobacco product distinguished by the tobacco used, tar content, nicotine content, flavoring used, size, filtration, packaging, logo, registered trademark, brand name, identifiable pattern of colors, or any combination of such attributes” (Section [387(2)]). Some types of changes to the label that might result in a distinct product are changes to logo, identifiable patterns of color, product descriptors, or any combination thereof. In determining whether such change is sufficient to result in distinct product, FDA intends to consider whether the label change would lead consumers to believe that the product is different from another tobacco product.

AR 009-10. The Guidance then provides a chart of examples. FDA’s Guidance provides fair notice, and manufacturers can exercise reasonable judgment in determining whether a color change creates a distinct product, just as they do in determining what types of label changes result in a new brand or subbrand for purposes of their other reporting requirements under the TCA. To the extent they are in doubt, they could conduct consumer testing to assess consumer perception,36 or contact the agency if they have questions about whether “certain modifications convert an existing product into a ‘new tobacco product . . . .” AR 030 at FAQ #31. See, e.g., Village of Hoffman Estates v. The Flipside, Hoffman Estates, Inc., 455 U.S. 489, 498 (as an enterprise subject to commercial regulation, a business “may have the ability to clarify the

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36 Indeed, it is well documented that Plaintiffs have conducted extensive consumer research in the past. See, e.g., Philip Morris, 449 F. Supp. 2d at 489-90, 584, 589-90, 610, ¶¶ 1409, 2201, 2207, 2245, 2258, 2270, 2276, 2295, 2298, 2303, 2309, 2310, 2328, 2338, 2340, 2341, 2342, 2405-2407, 2410, 2415, 2421, 2430, 2473, 2499, 2529, 2550, 2572, 2603, 2620, 2752, 2770, 2771, 2773, 2836, 2849, 2903, 2926, 2933 (showing extensive research by cigarette companies on consumer perceptions).

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meaning of the regulation by its own inquiry, or by resort to an administrative process.”); U.S. Civil Serv. Comm’n v. Nat’l Ass’n of Letter Carriers, 413 U.S. 548, 580 (1973) (“It is also important in this respect that the Commission has established a procedure by which an employee in doubt about the validity of a proposed course of conduct may seek and obtain advice from the Commission and thereby remove any doubt there may be as to the meaning of the law . . . .”).

In addition, Plaintiffs’ alleged fears of “severe penalties if they guess incorrectly” are overstated. See Pls’ MSJ at 42-43. As discussed supra at 14, FDA has not pursued a single civil or criminal enforcement action related to distribution of a new tobacco product without premarket review, has not issued a Warning Letter to any of the plaintiffs related to any issue in the Guidance, and, under the agency’s regulatory enforcement policy, ordinarily37 gives firms the opportunity to correct violations voluntarily “prior to the initiation of enforcement action.” See Simoneau Dec. ¶¶ 3-5. Moreover, in between the guidance and any enforcement action stands enforcement discretion – by both the FDA and the Department of Justice. The plaintiffs have put forth nothing – because there is nothing – to suggest that such enforcement discretion will be used in anything other than a measured, proper way.

For all of these reasons, Plaintiffs’ vagueness claim should be rejected.

CONCLUSION

For the reasons set forth above, Defendants’ Motion to Dismiss, or in the Alternative, for Summary Judgment should be granted, and Plaintiffs’ Motion for Summary Judgment should be denied.

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37 Examples of situations in which the agency may not provide such notice include violations that are flagrant, intentional, or present a danger to health. Simoneau Decl. ¶ 4. See also 21 U.S.C. § 336 (allowing for warnings in lieu of judicial enforcement concerning minor violations when the public interest will be adequately served).

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Respectfully submitted,

Of Counsel:

WILLIAM B. SCHULTZ

BENJAMIN C. MIZER

General Counsel

Principal Deputy Assistant Attorney General

ELIZABETH H. DICKINSON JONATHAN F. OLIN

Associate General Counsel Deputy Assistant Attorney General

Food and Drug Division

PERHAM GORJI

MICHAEL S. BLUME

Deputy Chief Counsel, Litigation

Director

Consumer Protection Branch

PAIGE H. TAYLOR

Senior Counsel

ANDREW E. CLARK

Food and Drug Division, OGC

Assistant Director

Office of the General Counsel

10903 New Hampshire Avenue

White Oak 32 Room 4380

/s/ James T. Nelson

Silver Spring, MD 20993-0002

JAMES T. NELSON

(301) 796-8720

Consumer Protection Branch

Civil Division

U.S. Department of Justice

P.O. Box 386

Washington, D.C. 20044

(202) 616-2376

james.nelson2@usdoj.gov

Dated: December 8, 2015

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