NICOPURE v FDA: REPLY IN SUPPORT OF DEFENDANTS’ CROSS-MOTION FOR SUMMARY JUDGMENT, Sep 9, 2016

September 11, 2016 9:46 am by Gene Borio

The PDF is Here

EXCERPT:

I. E-CIGARETTES—AND THEIR COMPONENTS AND PARTS—ARE PROPERLY REGULATED UNDER THE TOBACCO CONTROL ACT

II. THE FDA’S DEEMING AUTHORITY IS COMMITTED TO AGENCY DISCRETION, AND THE AGENCY’S EXERCISE OF THAT AUTHORITY WAS IN ANY EVENT REASONABLE

III. THERE IS NO BASIS TO SECOND-GUESS THE FDA’S DETERMINATION THAT THE BENEFITS OF THE DEEMING RULE JUSTIFY ITS COSTS

IV. THE FDA FULLY COMPLIED WITH THE REGULATORY FLEXIBILITY ACT

V. THE DEEMING RULE IS CONSISTENT WITH THE FIRST AMENDMENT

INTRODUCTION

Plaintiffs do not deny the many health risks of e-cigarettes—from nicotine addiction, to the inhalation of toxins and carcinogens, to the risk of explosion. Nor do they dispute that e- cigarette use has skyrocketed, particularly among youth. Nevertheless, while they may claim not to oppose “all” regulation of e-cigarettes, that is the obvious consequence of many of their arguments.

Plaintiffs’ rendering of the Tobacco Control Act (“TCA”) bears no relation to its text. Their reading of “tobacco product” to exclude open-system e-cigarettes writes the phrase “any component, part, or accessory” out of the statute. They think it irrelevant that the statute permits the FDA to subject tobacco products to the TCA as the agency “deems” fit. They seek APA review of a cost-benefit analysis that the statute does not require—and then not only cook the books, but ask the Court to examine only one side of the ledger. And they urge the Court to simply delete the statutory premarket review requirement—or at least to amend the grandfather date set by Congress—which would exempt as many as 800 e-cigarette devices and 8,000 e- liquids from premarket review entirely.

This is not the statute that Congress wrote. More than enough is already known about the health risks of e-cigarettes to warrant regulatory oversight. And Congress’s choice to ban free sampling and to require premarket review of “modified risk” products is fully consistent with binding precedent, and would in any event survive First Amendment scrutiny. Those provisions are reasonably tailored to protect the public—especially youth—from the harms of addictive products. The Court should not require the FDA to turn a blind eye to those risks.

. . .

Plaintiffs also argue that the addictive nature of their products is irrelevant because they have an interest in “communicating information” about “legal” products. But the addictive nature of e-cigarettes underscores the importance of verifying at the outset that they present a modified risk, rather than waiting until potentially misled consumers are thoroughly addicted to them. Premarket review protects those who would find it hard to stop using an addictive product upon learning that they were misled, and is thus an effective and narrowly tailored means of promoting government interests.

END EXCERPT

FULL TEXT:

Case 1:16-cv-00878-ABJ Document 48 Filed 09/09/16 Page 1 of 34

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

NICOPURE LABS, LLC,

Plaintiff,

v.

FOOD AND DRUG ADMINISTRATION, et al.,

Defendants.

Civil Action No. 16-878 (ABJ)

RIGHT TO BE SMOKE–FREE COALITION, et al.,

Plaintiffs,

v.

FOOD AND DRUG ADMINISTRATION, et al.,

Defendants.

Civil Action No. 16-1210 (ABJ)

REPLY IN SUPPORT OF DEFENDANTS’ CROSS-MOTION FOR SUMMARY JUDGMENT

Case 1:16-cv-00878-ABJ Document 48 Filed 09/09/16 Page 2 of 34

TABLE OF CONTENTS

TABLE OF AUTHORITIES …………… iv

INTRODUCTION ……………1

ARGUMENT …………..2

I. E-CIGARETTES—AND THEIR COMPONENTS AND PARTS—ARE PROPERLY REGULATED UNDER THE TOBACCO CONTROL ACT ………..2

A. The D.C. Circuit Has Squarely Held that the Tobacco Control Act Authorizes the FDA to Regulate E-Cigarettes …………2

B. E-Cigarettes Are Properly Considered Tobacco Products—or Components or Parts Thereof—Regardless of Whether their Tanks Are Refillable ………..3

C. “Nicotine-Free” E-Liquids May Qualify as Tobacco Products—or Components or Parts Thereof—But the Court Need Not Reach the Question ………..4

II. THE FDA’S DEEMING AUTHORITY IS COMMITTED TO AGENCY DISCRETION, AND THE AGENCY’S EXERCISE OF THAT AUTHORITY WAS IN ANY EVENT REASONABLE ……….5

A. The FDA’s Deeming Authority Is Committed to Agency Discretion …………5

B. The FDA Rationally Explained Its Rejection of Regulatory Alternatives …………..7

1. The Deeming Rule Rationally Advances the Statutory Purpose ……………..7

2. The FDA Rationally Explained Why It Rejected the Regulatory Alternatives that Plaintiffs Prefer ………..9

3. The Deeming Rule Is Fully Consistent with the Statutory Structure ………11

III. THERE IS NO BASIS TO SECOND-GUESS THE FDA’S DETERMINATION THAT THE BENEFITS OF THE DEEMING RULE JUSTIFY ITS COSTS ………..13

A. APA Review of an Agency’s Cost-Benefit Analysis under Executive Orders 12866 and 13563 is Precluded …………….13

B. The Tobacco Control Act Does Not Require the FDA to Conduct a Cost-Benefit Analysis when Exercising its Deeming Authority ………….14

C. The FDA in Any Event Properly Concluded that the Benefits of the Deeming Rule Justify Its Costs …………15

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IV. THE FDA FULLY COMPLIED WITH THE REGULATORY FLEXIBILITY ACT ……….17

V. THE DEEMING RULE IS CONSISTENT WITH THE FIRST AMENDMENT ……………..18

A. The Ban on Free Samples Comports with the First Amendment ……………..18

1. The Free Sample Ban Does Not Regulate Speech ……….18

2. If Viewed as a Regulation of Speech, the Free Sample Ban Would Survive First Amendment Scrutiny …………..19

B. Premarket Review of Modified Risk Tobacco Products Does Not Violate the First Amendment……….21

1. The MRTP Premarket Review Requirement’s Evidentiary Use of Speech Is Permissible Under Binding D.C. Circuit Precedent ………21

2. In Any Event, the MRTP Premarket Review Requirement Readily Withstands Scrutiny Under Central Hudson ………23

CONCLUSION ………25

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TABLE OF AUTHORITIES

Federal Cases

Air Transp. Ass’n of Am. v. FAA,

169 F.3d 1 (D.C. Cir. 1999) ……….. 14

Allied Local & Reg’l Mfrs. Caucus v. EPA,

215 F.3d 61 (D.C. Cir. 2000) ………… 10, 11

Am. Trucking Ass’ns, Inc. v. Fed. Motor Carrier Safety Admin.,

724 F.3d 243 (D.C. Cir. 2013) ……………. 16

Barlow v. Collins,

397 U.S. 159 (1970) ……………. 6

Beno v. Shalala,

30 F.3d 1057 (9th Cir. 1994) ………… 6

Catskill Mts. Chapter of Trout Unlimited, Inc. v. City of New York,

273 F.3d 481 (2d Cir. 2001) ……… 5, 6

Central Hudson Gas & Electric Corp. v. Public Service Commission,

447 U.S. 557 (1980) ………….. 20

Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc.,

467 U.S.837 (1984) …………….. 5

City of Portland v. EPA,

507 F.3d 706 (D.C. Cir. 2007) ……………. 15

Claybrook v. Slater,

111 F.3d 904 (D.C. Cir. 1997) ……… 6

Clinton Mem’l Hosp. v. Shalala,

10 F.3d 854 (D.C. Cir. 1993) ……… 11

Consumer Elecs. Ass’n v. FCC,

347 F.3d 291 (D.C. Cir. 2003) ……………. 16

Del. Dep’t of Natural Res. & Envtl. Control v. EPA,

785 F.3d 1 (D.C. Cir. 2015) ……….. 10

Discount Tobacco City & Lottery, Inc. v. United States,

674 F.3d 509 (6th Cir. 2012) ………… passim

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Florida Bar v. Went For It, Inc.,

515 U.S. 618 (1995) ………….. 21

Heckler v. Chaney,

470 U.S. 821 (1985) ………….. 11

Hutchins v. DC,

188 F.3d 531 (D.C. Cir. 1999) ……………. 20

Indus. & Fin. Markets Ass’n v. CFTC,

67 F. Supp. 3d 373 (D.D.C. 2014) ………. 16

King v. Burwell,

135 S. Ct. 2480 (2015) ………. 12

Marshall County Health Care Authority v. Shalala,

988 F.2d 1221 (D.C. Cir. 1993) ……………. 6

Michigan v. EPA,

135 S. Ct. 2699 (2015) …………. 15, 16

Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,

463 U.S. 29 (1983) ………. 10, 14

Nat’l Ass’n of Mfrs. v. SEC,

800 F.3d 518 (D.C. Cir. 2015) ……………. 20

Nat’l Ass’n of Tobacco Outlets v. City of New York,

27 F. Supp. 3d 415 (S.D.N.Y. 2014) ……………. 19

Nat’l Ass’n of Tobacco Outlets v. City of Providence, R.I.,

731 F.3d 71 (1st Cir. 2013) ………… 19

Nat’l Wildlife Fed’n v. Gorsuch,

693 F.2d 156 (D.C. Cir, 1982) ……………. 15

Pearson v. Shalala,

164 F.3d 650 (D.C. Cir. 1999) ……………. 23

Philip Morris USA Inc. v. FDA,

No. 15-1590, 2016 WL 4378970 (D.D.C. Aug. 16, 2016) ……….. 4

Reno v. Am. Civil Liberties Union,

521 U.S. 844 (1997) ………….. 21

Salt Inst. v. Thompson,

345 F. Supp. 2d 589 (E.D. Va. 2004) …………….. 6

v

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Sec. Indus. & Fin. Markets Ass’n v. CFTC,

67 F. Supp. 3d 373 (D.D.C. 2014) …………. 16, 24

Smoking Everywhere, Inc. v. FDA,

No. 09-771 (D.D.C.) …………… 2

Sorrell v. IMS Health Inc.,

564 U.S. 552 (2011) …………….. 19, 20

Sottera, Inc. v. FDA,

627 F.3d 891 (D.C. 2010) …………… 2, 8, 13

Steenholdt v. FAA,

314 F.3d 633 (D.C. Cir. 2003) ……… 6

Styrene Info. & Research Ctr., Inc. v. Sebelius,

944 F. Supp. 2d 71 (D.D.C. 2013) ………… 6

Thompson v. W. States Med. Ctr.,

545 U.S. 357 (2002) ………….. 19

U.S. Cellular Corp. v. FCC,

254 F.3d 78 (D.C. Cir. 2001) ……… 18

United States ex rel. Polansky v. Pfizer, Inc.,

822 F.3d 613 (2d Cir. 2016) ……….. 22

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

362 F.2d 923 (3d Cir. 1966) ……….. 23

United States v. Cole,

84 F. Supp. 3d 1159 (D. Or. 2015) ………. 23

United States v. General Nutrition, Inc.,

638 F. Supp. 556 (W.D.N.Y. 1986) …………….. 23

United States v. Gonzales,

520 U.S. 1 (1997) ……….. 3

United States v. Lane Labs-USA, Inc.,

324 F. Supp. 2d 547 (D.N.J. 2004) ……… 23

United States v. Lebeau,

No. 16-1289, 2016 WL 3619838 (7th Cir. July 5, 2016) ………… 23

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United States v. Livdahl,

459 F. Supp. 2d 1255 (S.D. Fla. 2005)…………. 23

United States v. Philip Morris USA, Inc.,

566 F.3d 1095 (D.C. Cir. 2009) ………….. 24

Walters v. Nat’l Ass’n of Radiation Survivors,

473 U.S. 305 (1985) ………….. 25

Washington Legal Found. v. Friedman,

13 F. Supp. 2d 51 (D.D.C. 1998) ………… 23

Whitaker v. Thompson,

353 F.3d 947 (D.C. Cir. 2004) ………. 22, 23

Federal Statutes

5 U.S.C. § 604(a)(2) ………. 17

5 U.S.C. § 701(a)(2) …………….. 6, 7

21 U.S.C. 387 …………. 6

21 U.S.C. § 387a(b) ………… 5, 11, 12, 15

21 U.S.C. § 387a(b), 387j(a) …………… 11

21 U.S.C. § 387i(a)(3)……………. 15

21 U.S.C. § 321(rr)(1) ………….. 3, 5

21 U.S.C. § 371(a) ………… 11

21 U.S.C. § 387g(d)(3) ……………. 5

21 U.S.C. § 387j ………… 9, 13

21 U.S.C. § 387k(a) ………. 22

21 U.S.C. § 387k(g)(1) ………….. 23

21 U.S.C. § 387l(a)(1)(B) ………. 14

21 U.S.C. § 387l(e) …………. 6

42 U.S.C. § 7412(n)(1)(A) ……… 15

Pub. L. No. 111-31, § 3(4) ………….. 9, 12

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Federal Regulations

81 Fed. Reg. 13,882 (2016) ……………. 16

81 Fed. Reg. 28,974 (2016) ……… passim

81 Fed. Reg. 29,398 (2016) ……………. 16

Legislative Materials

FDA Deeming Authority Clarification Act, H.R. 2058, 114th Cong. (2016) ………… 13

155 Cong. Rec. H4367 (Apr. 1, 2009) …………. 9, 12

Other Authorities

Black’s Law Dict. 814 (10th ed. 2009) ……………. 12

Cass R. Sunstein, The Limits of Quantification,

102 Calif. L. Rev. 1369 (2014) …………… 16

Executive Order 12866 ………….. 14

Executive Order 13563 ………….. 14

FDA, Draft Guidance for Industry, PMTAs for ENDS (May 2016) ……………. 13

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INTRODUCTION

Plaintiffs do not deny the many health risks of e-cigarettes—from nicotine addiction, to the inhalation of toxins and carcinogens, to the risk of explosion. Nor do they dispute that e- cigarette use has skyrocketed, particularly among youth. Nevertheless, while they may claim not to oppose “all” regulation of e-cigarettes, that is the obvious consequence of many of their arguments.

Plaintiffs’ rendering of the Tobacco Control Act (“TCA”) bears no relation to its text. Their reading of “tobacco product” to exclude open-system e-cigarettes writes the phrase “any component, part, or accessory” out of the statute. They think it irrelevant that the statute permits the FDA to subject tobacco products to the TCA as the agency “deems” fit. They seek APA review of a cost-benefit analysis that the statute does not require—and then not only cook the books, but ask the Court to examine only one side of the ledger. And they urge the Court to simply delete the statutory premarket review requirement—or at least to amend the grandfather date set by Congress—which would exempt as many as 800 e-cigarette devices and 8,000 e- liquids from premarket review entirely.

This is not the statute that Congress wrote. More than enough is already known about the health risks of e-cigarettes to warrant regulatory oversight. And Congress’s choice to ban free sampling and to require premarket review of “modified risk” products is fully consistent with binding precedent, and would in any event survive First Amendment scrutiny. Those provisions are reasonably tailored to protect the public—especially youth—from the harms of addictive products. The Court should not require the FDA to turn a blind eye to those risks.

1

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ARGUMENT

I. E-CIGARETTES—AND THEIR COMPONENTS AND PARTS—ARE PROPERLY REGULATED UNDER THE TOBACCO CONTROL ACT

A. The D.C. Circuit Has Squarely Held that the Tobacco Control Act Authorizes the FDA to Regulate E-Cigarettes

In Sottera, the D.C. Circuit held that “the FDA has authority under the Tobacco [Control] Act to regulate electronic cigarettes,” which it described as “battery-powered products that allow users to inhale nicotine vapor.” 627 F.3d at 893, 898; see Defs.’ Br. 23–25. Plaintiffs’ halfhearted, half-page argument that this Court need not heed Sottera is mistaken.

Plaintiffs’ first point—that “Sottera predates the [Deeming] Rule”—is irrelevant. Pls.’ Reply 9. Sottera plainly held that the FDA “has authority” to regulate e-cigarettes, 627 F.3d at 893; the deeming rule is merely an exercise of that authority. Plaintiffs’ attempts to dismiss Sottera’s holding as dicta fare no better. The D.C. Circuit’s conclusion that customarily marketed e-cigarettes could not be regulated under the FDCA’s drug/device provisions clearly hinged on its conclusion that they could be regulated under the TCA. Id.

Plaintiffs do not dispute that their e-cigarettes and those in Sottera share the same purpose—to “allow users to inhale nicotine vapor.” 627 F.3d at 893. They do not dispute that both have the same basic design—an e-liquid, an atomizer with a heating element, and a battery and electronics. Defs.’ Br. 8–9. They do not dispute that both function in the same way—when a user inhales, the atomizer vaporizes the e-liquid, which is inhaled as an aerosol. Id. They do not dispute that both are refillable—whether with proprietary replacement cartridges (in closed systems) or with any e-liquid (in open systems). Id. at 24.1 And they do not dispute that both are

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1 The e-cigarettes in Sottera had replaceable e-liquid cartridges. See Smoking Everywhere, Inc. v. FDA, No. 09-771 (D.D.C.), Complaint of Plaintiff Smoking Everywhere, Inc. ¶ 9 (Doc. No. 1) (the “cartridge is a disposable plastic container” of e-liquid), Complaint of Intervenor-Plaintiff Sottera, Inc. ¶ 15 (Doc. No. 22) (same).

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often jointly packaged with e-liquid, as in Nicopure’s own “starter packs.” Id. Thus, for all their talk of open and closed systems, Plaintiffs identify no meaningful difference between the two.

B. E-Cigarettes Are Properly Considered Tobacco Products—or Components or Parts Thereof—Regardless of Whether Their Tanks Are Refillable

Even if the Court were not constrained by Sottera, it should reject Plaintiffs’ claim that e- cigarettes with refillable tanks are exempt from regulation under the Tobacco Control Act. The statute broadly defines “tobacco product” to include not only products “made or derived from tobacco,” but also any “component, part, or accessory” thereof—whether or not made or derived from tobacco. 21 U.S.C. § 321(rr)(1); Defs.’ Br. 25–33. Congress left the terms “component, part, or accessory” undefined, and the FDA’s interpretation of them merits substantial deference under Chevron—a case that Plaintiffs relegate to a footnote. Pls.’ Reply 6 n.2.

Plaintiffs argue that, under the statute’s “express language,” the “FDA cannot regulate products that are not ‘made or derived from tobacco,’” full stop. Id. at 4 (quoting 21 U.S.C. § 321(rr)(1)). But Congress did not stop there, and instead added the phrase “including any component, part, or accessory,” intending that phrase to be read expansively. See United States v. Gonzales, 520 U.S. 1, 5 (1997) (“Read naturally, the word ‘any’ has an expansive meaning, that is, ‘one or some indiscriminately of whatever kind.’”). The Court should decline Plaintiffs’ invitation to read this phrase out of the statute.

Plaintiffs silently abandon their argument that the terms “‘component’ and ‘part’ must be read ‘to refer to items inseparable from the product made or derived from tobacco.’” Defs.’ Br. 30–31 (quoting Nicopure Br. 11). Their new argument—that “component” and “part” must be read “to refer to items that are physically part of a product containing tobacco . . . when introduced into commerce,” Pls.’ Reply 6 (emphasis added)—fares no better. These limitations are equally absent from the statutory text, which extends to “any” part, and the FDA reasonably

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declined to add them. Moreover, Nicopure does not dispute that it physically packages its open- system devices together with e-liquids containing nicotine, Defs.’ Br. 24 & n.7, so these devices are “components” or “parts” even under Plaintiffs’ new reading of the statute.

C. “Nicotine-Free” E-Liquids May Qualify as Tobacco Products—or Components or Parts Thereof—But the Court Need Not Reach the Question

There is no reason to reach Plaintiffs’ challenge to the deeming rule’s hypothetical application to “nicotine-free” e-liquids, and the Court should reject that claim for lack of standing or ripeness. Plaintiffs do not dispute that the only nicotine-free e-liquids covered by the rule are those that are made or derived from tobacco (such as tobacco-flavored varieties) or that otherwise meet the definition of “component” or “part” (such as those intended to be mixed with liquid nicotine). Defs.’ Br. 33–35. Yet they make no attempt to show—or even allege—that their nicotine-free e-liquids meet this definition, Pls.’ Reply 7, and thus lack standing.

Plaintiffs’ ripeness argument fails for similar reasons. In Philip Morris USA Inc. v. FDA, No. 15-1590, 2016 WL 4378970 (D.D.C. Aug. 16, 2016)—the only case they cite—the FDA neither challenged the plaintiffs’ standing nor disputed that the issue was “purely legal.” Id. at
*10. Here, by contrast, Plaintiffs have not shown that the rule even applies to their nicotine-free e-liquids—and could not without a fact-specific, “case-by-case” inquiry. 81 Fed. Reg. at 29,032; Defs.’ Br. 35–37. Thus, delaying review until there is some credible threat of enforcement would crystallize the issues for the Court while imposing no evident hardship on Plaintiffs.

Regardless, on the merits, Plaintiffs concede that the FDA may regulate at least two kinds of “nicotine-free” e-liquids—those that are tobacco flavored, and those falsely “claiming to be nicotine-free.” Defs.’ Br. 37–38; Pls.’ Reply 7–8 & n.5. They argue only that the TCA forecloses the FDA from defining a tobacco product’s “components” or “parts” by reference to their “intended” use. Pls.’ Reply 8. But the statute itself defines “tobacco product” by reference

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to “intended” use. 21 U.S.C. § 321(rr)(1) (“any product made or derived from tobacco that is intended for human consumption, including any component, part or accessory”) (emphasis added). It was hardly unreasonable for the agency to follow suit. See Chevron, 467 U.S. at 843.2

II. THE FDA’S DEEMING AUTHORITY IS COMMITTED TO AGENCY DISCRETION, AND THE AGENCY’S EXERCISE OF THAT AUTHORITY WAS IN ANY EVENT REASONABLE

A. The FDA’s Deeming Authority Is Committed to Agency Discretion

By authorizing the FDA to subject “any” tobacco product (aside from certain raw tobacco leaf) to the TCA as it “deems” fit, without articulating meaningful standards to cabin the agency’s discretion, 21 U.S.C. § 387a(b), Congress committed the deeming authority to agency discretion. Defs.’ Br. 39–40. Plaintiffs’ arguments to the contrary are unpersuasive.

First, Plaintiffs’ attempt to find meaningful standards for the Court to enforce in other provisions of the statute, Pls.’ Reply 10, merely proves the point: there are no such standards in the deeming provision. For example, while Plaintiffs cite section 907’s restriction on reducing nicotine yields to zero, that provision applies only to the issuance of “tobacco product standards,” 21 U.S.C. § 387g(d)(3), an authority distinct from deeming under section 901. Likewise, while they rely on section 912’s statement that, to “facilitate judicial review, a regulation . . . shall contain a statement of the reasons for [its] issuance,” they overlook that this requirement applies only to regulations “issued under section 387f, 387g, 387h, 387i, 387j, or 387p.” 21 U.S.C. § 387l(e). It does not apply to the deeming provision itself, codified at 21 U.S.C. § 387a—providing further confirmation that Congress did not intend the “reasons for the

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2 The FDA’s 2013 report to Congress is not to the contrary, Defs.’ Br. 32-33, and in any event cannot be considered the agency’s authoritative interpretation of the statute, in contrast to the notice-and-comment rulemaking at issue here. Catskill Mts. Chapter of Trout Unlimited, Inc. v. City of New York, 273 F.3d 481, 491 (2d Cir. 2001) (“presentations for Congress in reports and testimony” do not “come close to the sort of formal, binding articulation of an agency’s views” that would have the “force of law”).

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issuance” of a deeming regulation to be subject to “judicial review.” Id.

Second, it is not only “national security” or “enforcement” matters that may be committed to agency discretion. Pls.’ Reply 10–11 & n.9. The APA contains no such limitation. 5 U.S.C. § 701(a)(2). And the governing test focuses not on the subject matter, but on the statutory text: “Agency action is committed to discretion by law when ‘the statute is drawn so that a court would have no meaningful standard against which to judge the agency’s exercise of discretion.’” Steenholdt v. FAA, 314 F.3d 633, 638 (D.C. Cir. 2003). Courts have thus found matters committed to agency discretion in a broad variety of contexts.3 This case is no different.

Third, although courts sometimes review agency action despite Congress’s use of discretionary words like “deem,” in each case Plaintiffs cite, Congress also set forth meaningful standards to cabin the agency’s discretion. Pls.’ Reply 11. For example, in Marshall County Health Care Authority v. Shalala, 988 F.2d 1221 (D.C. Cir. 1993), the statute “provided a rather specific norm—the OMB model—to guide the Secretary’s judgment.” Id. at 1224.4 The deeming provision, by contrast, says nothing similar.

Fourth, Plaintiffs are mistaken to suggest that only adjudications—and not rulemakings or regulations—may be committed to agency discretion. Pls.’ Reply 11–12. In the APA, Congress precluded judicial review of “agency action” committed to agency discretion. 5 U.S.C. § 701(a)(2). It defined “agency action” to “include[] the whole or a part of an agency rule” like

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3 See, e.g., Claybrook v. Slater, 111 F.3d 904, 909 (D.C. Cir. 1997) (decision whether to adjourn a FACA meeting); Styrene Info. & Research Ctr., Inc. v. Sebelius, 944 F. Supp. 2d 71, 81 (D.D.C. 2013) (HHS’s “peer review” of potential carcinogens); Salt Inst. v. Thompson, 345 F. Supp. 2d 589, 602 (E.D. Va. 2004) (HHS’s compliance with Information Quality Act). 4 Likewise, in Beno v. Shalala, 30 F.3d 1057 (9th Cir. 1994), the statute “allow[ed] waivers only for the period and extent necessary to implement [certain] experimental projects.” Id. at 1067. And in Barlow v. Collins, 397 U.S. 159 (1970), the statute contained a particular term—“making a crop”—that the agency was not free to redefine at will. Id. at 165-66.

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the one issued here. Id. § 551(13). There is no reason that a rulemaking or regulation could not be committed to agency discretion, and tellingly, Plaintiffs cite no case so holding.

None of this is to say that no part of Plaintiffs’ case is reviewable. See, e.g., supra Part I (statutory authority); infra Part VI (First Amendment claims). But Congress left the deeming authority to the broad discretion of the FDA, and there are no “meaningful standards” by which the Court could second guess the agency’s expert judgment.

B. The FDA Rationally Explained Its Rejection of Regulatory Alternatives

Even if the deeming rule were subject to APA review, it would readily withstand scrutiny. The FDA rationally explained why it deemed e-cigarettes subject to the TCA and why it rejected the regulatory alternatives that Plaintiffs prefer.

1. The Deeming Rule Rationally Advances the Statutory Purpose

Plaintiffs’ primary argument—that the deeming rule is “internally inconsistent”—is an exercise in selective quotation. They repeatedly cite the FDA’s recognition that the overall effect of e-cigarettes on the public health is unknown. Pls.’ Reply 13. But they ignore the FDA’s explanation that whether e-cigarettes themselves “‘generally may be shown to have a net benefit on or harm to public health at the population level—and there have not yet been longterm studies to support either claim at this time—regulation of [them] will still benefit public health.’” Defs.’ Br. 41 (quoting 81 Fed. Reg. at 28,984). The FDA’s logic is indisputable, particularly since Plaintiffs contest none of its findings about the health risks of e-cigarettes, from nicotine addiction to the inhalation of various toxins. Id. at 11–16. That the FDA’s regulation of these risks could “enabl[e] it to mitigate or perhaps extinguish any harm to public health,” Sottera, 627 F.3d at 899, should not be doubted here.

Plaintiffs’ suggestion that “the Rule itself” calls these regulatory benefits into doubt is based on yet another selective quotation. They note that, in the RIA, the FDA stated that

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regulating e-cigarettes “could under some conditions yield negative health benefits.” Pls.’ Reply
13. But they fail to acknowledge at least three key ways in which the agency qualified this statement. First, the FDA explained that negative health benefits could result only if e-cigarettes were ultimately “proven safer than other tobacco products,” RIA 20, which has not been shown, 81 Fed. Reg. at 28,984. Second, this could happen only if e-cigarettes “are substitutes for other tobacco products,” rather than complements to them, RIA 20; PRIA 20–21, which is also unclear given the high rates of dual usage, Defs.’ Br. 17. Third, and critically, the FDA concluded that any negative welfare effects would be “[c]ounterbalanc[ed]” by the premarket review provisions, which “help[] ensure that new tobacco products are appropriate for the protection of the public health.” RIA 21. In this way, Plaintiffs’ argument essentially repackages their unreviewable cost-benefit analysis claim, but looks at only one side of the ledger.

Plaintiffs’ appeal to general principles of economics is likewise unavailing. In claiming that the deeming rule will necessarily lower supply, increase price, depress demand, and drive e- cigarette users back to smoking, harming the public health, Pls.’ Reply 14, Plaintiffs ignore or distort the characteristics of this particular market. First, they double down on the wildly inaccurate assertion that the FDA itself predicted that the rule would “eradicat[e] . . . over 95 percent of the market”—a claim that does not become true no matter how many times they repeat it. Id. at 14, 15, 19 n.17, 20. In fact, they concoct that figure only by counting thousands of vape shops that the FDA predicted would “convert to a pure retail model,” RIA 48, not be “forced out of business” altogether, Pls.’ Reply 19 n.17.5 Second, Plaintiffs ignore a key economic concept: elasticity of demand. The “elasticity of combusted cigarette consumption with respect to the

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5 The FDA estimated that there are 168 to 204 “manufacturers” of e-cigarettes and e-liquids; 3,500 to 7,000 vape shops that currently meet that definition because they mix together different e-liquids; and another 1,500 to 3,000 vape shops that do not. RIA 26.

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price of electronic cigarettes is quite low, 0.007,” which “indicates little or no response of current cigarette smoking to changes in the price of electronic cigarettes.” RIA 19. Thus, even Plaintiffs’ favored analyses show that any negative health effects would be “more than offset” by the rule’s benefits. Defs.’ Br. 42–43 (quoting AR 150,420–21). Again, however, Plaintiffs look at only one side of the balance sheet.6

Plaintiffs’ argument that the deeming rule “frustrates the TCA’s purposes by cutting off innovation” fares no better. Congress was well aware that requiring premarket review of “innovative types of nicotine delivery devices” would limit “their access to the market.” 155 Cong. Rec. H4367 (Apr. 1, 2009) (statement of Rep. Buyer). Yet it made premarket review a central feature of the statute, 21 U.S.C. § 387j, furthering its goal to ensure “effective oversight of the tobacco industry’s efforts to develop, introduce, and promote less harmful products,” Pub. L. No. 111-31, § 3(4). Further, Plaintiffs’ prediction that it “will take years” for the FDA to process premarket applications is unfounded. Pls.’ Reply 16. As of June 2016—the most recent data available—the FDA had fully resolved 12 of the 14 PMTAs it had received.7

2. The FDA Rationally Explained Why It Rejected the Regulatory Alternatives that Plaintiffs Prefer

The FDA also adequately explained why it rejected Plaintiffs’ preferred regulatory alternatives, which generally run counter to the statute’s text or would be inadequate substitutes for deeming. Defs.’ Br. 44–50. While Plaintiffs quibble with the governing standard, they do not dispute that courts do not “broadly require an agency to consider all policy alternatives.”

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6 Plaintiffs also improperly assume that a reduction in product variety necessarily results in an equivalent drop in total supply. In fact, there is a great deal of overlap among existing e- cigarette products, and while unpopular products may leave the market, the FDA expects “close substitutes to exist for discontinued products.” RIA 103.

7 See www.accessdata.fda.gov/sc… public& id=CTP-OS-total-PMTA-since-Program-Inception&fy=2016.

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Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 51 (1983) (emphasis added). Rather, the agency need only explain why it rejected “significant alternatives,” Allied Local & Reg’l Mfrs. Caucus v. EPA, 215 F.3d 61, 80 (D.C. Cir. 2000) (emphasis added), that would “achieve the same outcome,” Del. Dep’t of Natural Res. & Envtl. Control v. EPA, 785 F.3d 1, 17 (D.C. Cir. 2015) (emphasis added). The agency has amply done so here.

First, Plaintiffs repeat their request that the FDA collect more data before “choosing whether and how to regulate” e-cigarettes, but revise their rationale. Pls.’ Reply 17. They now concede that the statute does not require the FDA to find that e-cigarettes are a net harm to “public health” before deeming them—a standard that appears in several other provisions, but not the deeming authority—but dismiss the statute’s text as an “irrelevancy.” Id.; see Defs.’ Br.
45. Instead, they argue that more information is needed to reach a “reasoned decision.” But adolescent usage of e-cigarettes is skyrocketing—by 2014, they had overtaken conventional cigarettes as the most widely used tobacco product among youth. Defs.’ Br. 9. More than enough is already known about the health risks of e-cigarettes—ranging from nicotine addiction to the inhalation of toxic and carcinogenic chemicals—to warrant regulatory oversight. Id. at 11–15 (summarizing eight categories of health risks). Delay is hardly an “effective” alternative when those known risks can be addressed now. Clinton Mem’l Hosp. v. Shalala, 10 F.3d 854, 859 (D.C. Cir. 1993).8

Second, Plaintiffs insist that the FDA should have adopted the “E.U. approach” and simply disregarded the premarket review requirement. Pls.’ Reply 17–19. But the U.S. statute

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8 Equally inapt is Plaintiffs’ suggestion that the FDA obtain “ingredient listings and other data” by promulgating a regulation under its general rulemaking authority, rather than under its specific Tobacco Control Act authority. Pls.’ Reply 14 (citing 21 U.S.C. § 371(a)). Regardless of the scope of FDA’s general rulemaking authority, FDA can hardly be faulted for exercising its specific Tobacco Control Act authority here.

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plainly requires premarket review for all deemed products, Defs.’ Br. 46–47 (citing 21 U.S.C. §§ 387a(b), 387j(a)), and Plaintiffs offer no alternative reading of its text, Pls.’ Reply 18 n.14. It is hardly “puzzling” that the FDA would recognize this limit to its broad enforcement discretion. Pls.’ Reply 18. While a “decision not to prosecute or enforce” is “generally committed to agency discretion,” Heckler v. Chaney, 470 U.S. 821, 831–32 (1985), the agency is not free to selectively implement individual features of an integrated scheme enacted by Congress. Regardless, premarket review is a central feature of the statute, and simply waiving it would not be an “effective” way to protect the public health. Clinton Mem’l, 10 F.3d at 859.

Third, Plaintiffs complain that the “alternatives that FDA did . . . consider” would “not have provided relief to the small businesses hit hardest.” Pls.’ Reply 19 (emphasis added). But Plaintiffs do not specify how any other preferred measures are consistent with the TCA or how they would have been as “effective” as deeming. Clinton Mem’l, 10 F.3d at 859. If an alternative is not “significant” enough to be explained in Plaintiffs’ briefs, then an agency need not account for its rejection. Allied Local, 215 F.3d at 80.

3. The Deeming Rule Is Fully Consistent with the Statutory Structure

In a last gasp, Plaintiffs claim that deeming e-cigarettes is generally at odds with the overall statutory scheme. Pls.’ Reply 20–23. In short, they contend that Congress “required” the FDA to ensure “reasonable access to the marketplace for relatively safer tobacco products,” id. at 20—access they are allegedly denied because the grandfathering date is unfair and the premarket compliance period is too short.

This argument is deeply flawed, principally for the lack of any toehold in the statutory text. Congress sought to ensure “oversight of the tobacco industry’s efforts to develop, introduce, and promote less harmful tobacco products,” Pub. L. No. 111-31, § 3(4), and did so by requiring premarket review of “new” tobacco products entering the market “after February 15,

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2007.” Defs.’ Br. 46, 48–49 (citing 21 U.S.C. § 387a(b), 387j(a)). It was well aware that premarket review of “innovative” products would limit “their access to the market.” 155 Cong. Rec. H4367 (Apr. 1, 2009) (statement of Rep. Buyer). Nevertheless, it put the burden on manufacturers to show that new, allegedly safer products are appropriate for the “public health”—not on the FDA to show otherwise.

The FDA’s interpretation of the statute would be entitled to Chevron deference even if Plaintiffs had offered a plausible alternative, but they have not. Thus, this case bears no resemblance to King v. Burwell, 135 S. Ct. 2480 (2015), where the statutory “context and structure” compelled the Court to “depart from . . . the most natural reading” of an “ambiguous” phrase because, otherwise, the statute simply “would not work.” Id. at 2487, 2492, 2495; see Pls. Reply 8, 18 n.14. Here, there is nothing “ambiguous” about the statute’s text, which points in precisely the same direction as its purpose.

Plaintiffs’ suggestion that the FDA had a “statutory obligation” to “modif[y] the grandfather date” to allow newer products access to the market is mistaken. As Congress surely recognized, a grandfather clause by definition exempts older products from newer laws—not the other way around. See Black’s Law Dict. 814 (10th ed. 2009) (“grandfather” clause “creates an exemption from the law’s effect for something that existed before the law’s effective date”). Plaintiffs have long been on notice of the potential for e-cigarettes and related products to be regulated under the TCA—at least since Sottera was decided in 2010. If they wish to amend the grandfather date, their remedy is with Congress, where pending legislation would do just that. See FDA Deeming Authority Clarification Act, H.R. 2058, 114th Cong. (2016).

Plaintiffs’ remaining objections lack merit, as Defendants have already explained. In particular, their self-serving predictions that they will be unable to meet the August 2018 compliance date should be rejected. To establish that the marketing of a product is “appropriate

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for the protection of the public health,” 21 U.S.C. § 387j, many PMTAs for e-cigarettes and e- liquids will need to include clinical (i.e., human) data. But they do not necessarily need to include the rigorous sort of “randomized clinical trials” common to new drug applications, 81 Fed. Reg. at 29,092, or sometimes, any new data at all. In some cases, a “literature review” of existing research may be acceptable.9 In addition, to facilitate data sharing, the FDA plans to establish “public dockets” for common e-liquid ingredients, like propylene glycol, glycerin, and nicotine—the only ingredients that Nicopure identifies. Id. And manufacturers may rely on data in “master files” submitted by other companies, like their upstream suppliers of nicotine. Id. Nicopure “has been expecting this regulation,” “is familiar with its requirements,” and purports to have “put a strong emphasis on good manufacturing practices.”10 There is no reason to assume today that Nicopure cannot submit a PMTA two years from now—particularly when the denial of a PMTA is independently subject to judicial review. 21 U.S.C. § 387l(a)(1)(B).

III. THERE IS NO BASIS TO SECOND-GUESS THE FDA’S DETERMINATION THAT THE BENEFITS OF THE DEEMING RULE JUSTIFY ITS COSTS

A. APA Review of an Agency’s Cost-Benefit Analysis under Executive Orders 12866 and 13563 Is Precluded

Plaintiffs offer no meaningful response to Defendants’ argument that APA review of an agency’s cost-benefit analysis under Executive Orders 12866 and 13563 is precluded. Defs.’ Br. 50–52. They do not dispute that the FDA conducted a cost-benefit analysis not because the statute required one, but because Executive Orders 12866 and 13563 did. Id. at 50. And they do not dispute that courts in this district have uniformly rejected attempts to seek review of such cost-benefit analyses under the APA. Id. at 51–52 (citing cases). Plaintiffs’ attempt to obtain

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9 See, e.g., FDA, Draft Guidance for Industry, PMTAs for ENDS (May 2016), at www.fda. gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM499352.pdf.

10 www.nicopure.com/news/nic….

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APA review here is “nothing more than an indirect—and impermissible—attempt to enforce private rights under the [Executive] order[s]” that required that analysis in the first place. Air Transp. Ass’n of Am. v. FAA, 169 F.3d 1, 9 (D.C. Cir. 1999). Plaintiffs dismiss this argument as “irrelevant” only because they have no answer. Pls.’ Reply 23. The Court should not be fooled.

B. The Tobacco Control Act Does Not Require the FDA to Conduct a Cost- Benefit Analysis when Exercising Its Deeming Authority

Plaintiffs also do not dispute the basic principle that whether an agency’s cost-benefit analysis is reviewable under the APA depends on the text of the authorizing statute. See Defs.’ Br. 52–55. Nor do they dispute that the deeming provision itself is silent as to costs and benefits. Id. at 54–55. They argue, instead, that by using the word “appropriate” in one of the statute’s eight general purposes, Congress intended the FDA to conduct a cost-benefit analysis when exercising “any” authority in the statute, including the deeming authority. Nicopure Br. 27. That contention is at loggerheads with fundamental principles of statutory interpretation.

To begin, it disregards the careful textual approach that the Supreme Court has required. In Michigan v. EPA, 135 S. Ct. 2699 (2015), for example, the relevant provision stated that the EPA “shall” regulate power plant emissions “if [it] finds such regulation is appropriate and necessary,” “after considering the results of” “a study of the hazards to public health,” 42 U.S.C. § 7412(n)(1)(A). While the Court held that, “read naturally in [that] context,” the phrase “‘appropriate and necessary’ requires at least some attention to cost,” it made equally clear that “there are undoubtedly settings in which the phrase ‘appropriate and necessary’ does not encompass cost.” Michigan, 135 S. Ct. at 2707 (emphasis added). The key, it said, was to read the statutory terms “fairly and in context.” Id. at 2709. Plaintiffs’ supposedly “straightforward” analysis, Pls.’ Reply 24, utterly ignores that context. The linchpin of their argument—the word “appropriate”—does not even appear in the provision at issue, which instead uses the

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discretionary word “deem.” 21 U.S.C. § 387a(b).

Plaintiffs’ suggestion that the proper question is not whether the “specific provision” at issue requires a cost-benefit analysis, but instead whether “the TCA” writ large does, Pls.’ Reply 24, makes even less sense. They contend that Congress intended the FDA to conduct a cost- benefit analysis when exercising every authority in the entire statute. But “[c]aution is always advisable in relying on a general declaration of purpose to alter the apparent meaning of a specific provision.” Nat’l Wildlife Fed’n v. Gorsuch, 693 F.2d 156, 178 (D.C. Cir. 1982). That axiom is even more true here, given the violence that Plaintiffs’ reading would do to the rest of the statute—rendering redundant Congress’s explicit calls to consider costs in some provisions, see, e.g., 21 U.S.C. § 387i(a)(3), while absurdly requiring such analyses in others, see, e.g., id. §§ 387b (adulteration), 387c (misbranding). When Congress has wanted an agency “to undertake cost-benefit analysis,” it has generally “said so expressly.” City of Portland v. EPA, 507 F.3d 706, 712 (D.C. Cir. 2007). If Congress had meant to abandon that approach here—for not just a specific provision, but an entire statute—it would have spoken much more clearly.

C. The FDA in any Event Adequately Considered the Costs of the Deeming Rule

Even if the FDA were required by statute to consider the costs of the deeming rule, it adequately did so. Cf. Michigan, 135 S. Ct. at 2707 (requiring only “some attention to cost”). Plaintiffs ignore the Court’s “limited role” in evaluating cost-benefit analyses, Sec. Indus. & Fin. Markets Ass’n v. CFTC, 67 F. Supp. 3d 373, 430 (D.D.C. 2014), which “epitomize the types of decisions that are most appropriately entrusted to the expertise of an agency,” Consumer Elecs. Ass’n v. FCC, 347 F.3d 291, 304 (D.C. Cir. 2003). Plaintiffs’ “burden to show error is high,” Am. Trucking Ass’ns, Inc. v. Fed. Motor Carrier Safety Admin., 724 F.3d 243, 254 (D.C. Cir.
2013), and they cannot meet it here.

Plaintiffs continue to quibble with the FDA’s “break-even” analysis. Although the size

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of the rule’s benefits is currently impossible to predict, 81 Fed. Reg. at 28,981, Plaintiffs would have the agency quantify those benefits, presumably based on unsupported assumptions. But an agency is not required to engage in such guesswork when a break-even approach is a “standard principle[] of regulatory analysis,” RIA 11, endorsed by regulatory experts and OMB, and frequently used by other agencies.11 The FDA need not attempt to “measure the immeasurable,” Sec. Indus., 67 F. Supp. at 431, and the Court should not “undertake [its] own economic study and substitute [its] views for those of the agency,” Am. Trucking, 724 F.3d at 254. The FDA’s qualitative discussion of the rule’s benefits is sufficient, see RIA 62–68, 122–27, and its use of break-even analysis was eminently reasonable.

Plaintiffs next take issue with the FDA’s discussion of the deeming rule’s costs, preferring their estimates to the FDA’s. But, tellingly, they offer no response to the FDA’s criticism of their calculations, which made clear that their assumptions about the costs for e- liquids are unfounded. See Defs.’ Br. 57. Further, Plaintiffs remain in a counterfactual world where the FDA requires premarket authorization of all individual components, Pls.’ Reply 26, despite its explanation that it will “limit enforcement . . . to finished tobacco products” as packaged for consumers. 81 Fed. Reg. 28,995. The cost-benefit analysis would be of little practical use if it did not examine the rule as it will actually be implemented.

Finally, Plaintiffs argue that the FDA was required to separate out the costs and benefits of deeming e-cigarettes alone. Pls.’ Reply 27. But the statute contains no such demand, and Plaintiffs cite no precedent imposing one. The FDA conducted a thorough cost-benefit analysis, and there is no basis for the Court to impose unprecedented, extra-statutory requirements here.

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11 See Cass R. Sunstein, The Limits of Quantification, 102 Calif. L. Rev. 1369, 1385 (2014); OMB, Circular A–4 at 2 (2003); 81 Fed. Reg. 29,398, 29,426 (2016) (FinCEN rule strengthening due diligence requirements for financial institutions); 81 Fed. Reg. 13,882, 13,885 (2016) (Fed’l Hwy. Admin. rule setting performance standards for Highway Safety Improvement Program).

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IV. THE FDA FULLY COMPLIED WITH THE REGULATORY FLEXIBILITY ACT

The Regulatory Flexibility Act requires the agency to respond to “significant issues raised by the public comments,” and describe “why each one of the other significant alternatives to the rule considered by the agency which affect the impact on small entities was rejected.” 5 U.S.C. § 604(a)(2), (6). The FDA clearly complied with these purely procedural provisions, and Plaintiffs’ arguments to the contrary reveal only disagreement with the agency’s policy choices. Plaintiffs’ claim that the FDA “did not consider any significant alternatives” in its analysis is belied by section 3.G of the RIA, titled “Assessment of Regulatory Alternatives.” There, the FDA considered exempting premium cigars from regulation, extending the compliance period for labeling changes to 36 months, reducing the compliance period for labeling changes to 12 months, and not extending the premarket review compliance policy to new, flavored tobacco products. RIA § 3.G. Plaintiffs claim that these alternatives are not “significant” because two would have increased burdens, and extending the compliance period would result in only a small decrease. Pls.’ Reply 28. But the RFA does not define “significant alternatives” to include only those that would decrease burdens—indeed, the term is not defined at all. Certainly, extending the compliance period, which would reduce overall costs by $36– $137 million, qualifies as “significant.” RIA 123. The FDA chose a path that resulted in lesser burdens in some respects and greater burdens in others. It fully considered each alternative, see RIA § 3.G; 81 Fed. Reg. at 29,001, 29,010, 29,011, and the RFA requires nothing more.12

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12 The FDA also considered and responded to comments regarding the length of the compliance period and referred to the steps the agency took to enable manufacturers to comply with the deadlines. See 81 Fed. Reg. at 29,012–15; Defs.’ Br. 64. In selecting the compliance period, the agency balanced its interests in protecting the public health and providing sufficient time to allow manufacturers to comply, and undertook measures “to provide helpful feedback to industry to encourage more complete, streamlined submissions and reviews.” Id. at 29.012; see also id. at

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V. THE DEEMING RULE IS CONSISTENT WITH THE FIRST AMENDMENT

Plaintiffs’ two First Amendment challenges—to the ban on the distribution of free samples, and to the premarket review of “modified risk” tobacco products (“MRTP”)—also fail. Both are resolved by the reasoning in binding precedent, which Plaintiffs fail to distinguish. Regardless, even if scrutinized as commercial speech, the provisions are sufficiently tailored to further the government’s significant interest in protecting the public health.

A. The Ban on Free Samples Comports with the First Amendment

1. The Free Sample Ban Does Not Regulate Speech

The Supreme Court has consistently differentiated between “restrictions on protected expression,” which merit First Amendment protection, and “restrictions on economic activity” or other “nonexpressive conduct,” which do not implicate free speech concerns. Sorrell v. IMS Health Inc., 564 U.S. 552, 567 (2011). For example, courts have held that setting minimum prices, or banning discounts or coupons—all of which regulate tools aimed at persuading a consumer to try a product—do not implicate the First Amendment. See Thompson v. W. States Med. Ctr., 545 U.S. 357, 372 (2002) (price regulation).13

Plaintiffs contend that the provision of free samples falls into the category of “protected expression” because it allows sellers to “inform consumers about a product’s characteristics and 28,998–99. Plaintiffs’ allegation that these steps will be insufficient goes to the substance of the FDA’s conclusions and not its compliance with the RFA’s procedural requirements. See U.S. Cellular Corp. v. FCC, 254 F.3d 78, 88 (D.C. Cir. 2001).

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13 See also Nat’l Ass’n of Tobacco Outlets v. City of New York, 27 F. Supp. 3d 415, 419–21 (S.D.N.Y. 2014) (price regulation); Nat’l Ass’n of Tobacco Outlets v. City of Providence, R.I., 731 F.3d 71, 77–78 (1st Cir. 2013) (coupons and multipack discounts for tobacco products). Plaintiffs argue that the courts in these cases “explicitly distinguish sampling.” Pls.’ Reply 32. Rather than justifying the distinction, however, the courts noted that free samples were not at issue and thus declined to grapple with the Sixth Circuit’s reasoning in Discount Tobacco City & Lottery, Inc. v. United States, 674 F.3d 509 (6th Cir. 2012). See Nat’l Ass’n of Tobacco Outlets, 731 F.3d at 78 n.7; Nat’l Ass’n of Tobacco Outlets, 27 F. Supp. 3d 422 n.5 & 433.

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quality, in a way that is inimitable without actual purchase.” Pls.’ Reply 32. But such information comes from the consumer’s use of the product, not anything the manufacturer expresses—and certainly not the act of providing the sample. In offering samples, companies reveal only the desire for an outcome—that consumers will try the product. Were that sufficient to constitute expressive activity, then any distribution of a product (with or without price) would constitute speech. Plaintiffs thus fail to distinguish free samples from coupons or discounts, both of which aim to attract consumers to try a product in hopes that they will discover information about the “product’s characteristics and quality” that persuade them to use it again.

2. If Viewed as a Regulation of Speech, the Free Sample Ban Would Withstand First Amendment Scrutiny

Even if the free sample ban implicated the First Amendment, it would be a permissible regulation of commercial speech under Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980).

Plaintiffs’ argument that the Court should interpret Sorrell as upending the longstanding Central Hudson test and instead requiring heightened scrutiny, Pls.’ Reply 34–35, should be rejected for the reasons set forth in Defendants’ opening brief. Plaintiffs ignore that while Sorrell dealt with regulations imposed on speech based on “disagree[ment] with the message it conveys,” 564 U.S. at 566, the provisions at issue here are part of a broader scheme aimed at protecting consumers from harmful and addictive products. Defs.’ Br. 73–74.

The free sample ban is readily sustained under Central Hudson, as it furthers the government’s significant interests in reducing juvenile use of tobacco products and there is a “reasonable fit between means and ends.” Nat’l Ass’n of Mfrs. v. SEC, 800 F.3d 518, 555 (D.C. Cir. 2015). In banning free samples, the FDA relied on evidence from years of experience regulating tobacco products, and it reasonably applied that experience to e-cigarettes. Free

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samples of any product “encourage experimentation.” Inst. of Med. Rpt. (1994) at 216 (AR 18,579). And just like traditional tobacco companies, e-cigarette companies have consistently offered free samples in youth-oriented settings, like amusement parks, rock concerts, and sporting events. Durbin et al. (2014) at 10, 27 (AR 18,681, 18,698). Plaintiffs complain of a lack of evidence that those samples were targeted toward minors or actually fell into their hands, but the FDA is entitled to rely on its regulatory experience in analogous circumstances. See, e.g., Hutchins v. DC, 188 F.3d 531, 544 (D.C. Cir. 1999) (under intermediate First Amendment scrutiny, a city may rely on evidence from other cities that “is reasonably believed to be relevant to the problem”).14 Moreover, it is common sense that in crowded public spaces like stadiums and concert halls, where employees distributing samples (often young adults themselves) face “a dozen or more outstretched arms waiting (or grabbing) for samples,” minors can easily access the products by taking a sample themselves, “recruit[ing] an adult to obtain the sample on their behalf,” or by picking up a sample someone else has discarded. Inst. Med. Rpt. (1994) at 217 (AR 18,580). Thus, the free sample ban furthers the government’s interests by eliminating a tried-and-true means by which minors have accessed harmful and addictive products.

The free sample ban also provides a reasonable means-ends fit. Plaintiffs do not deny that the ban leaves them free to engage in a wide variety of promotional activities and advertising, including offering sampling kits to first-time users at a significant discount. Nor have Plaintiffs refuted the FDA’s conclusion that a narrower regulation would not be “at least as effective” in achieving its purposes. Reno v. Am. Civil Liberties Union, 521 U.S. 844, 874

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14 See also Florida Bar v. Went For It, Inc., 515 U.S. 618, 628–29 (1995) (litigants may “justify speech restrictions by reference to studies and anecdotes pertaining to different locales altogether, or even, in a case applying strict scrutiny . . . based solely on history, consensus, and simple common sense”); Discount Tobacco, 674 F.3d at 541 (noting “extensive documentation that free samples . . . are [an] ‘easily accessible source of these products to young people’”).

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(1997). Contrary to Plaintiffs’ claim, Pls.’ Reply 36, the FDA both considered and reasonably rejected alternatives based on its prior experience with free samples of tobacco products. 81 Fed. Reg. at 28,986, 29,003. Finally, Plaintiffs have no response to the FDA’s justified conclusion that the careful limitations on the amount of smokeless tobacco permitted for free samples at qualified adult-only facilities could not feasibly be applied to e-cigarettes. See 81 Fed. Reg. at 29,003. Thus, as the Sixth Circuit held, banning free samples “embodies a narrow fit between the harm articulated and the restriction employed.” Discount Tobacco, 674 F.3d at 541.

B. Premarket Review of Modified Risk Tobacco Products Does Not Violate the First Amendment

1. The MRTP Premarket Review Requirement’s Evidentiary Use of Speech Is Permissible under Binding D.C. Circuit Precedent

The MRTP premarket review requirement regulates “modified risk” tobacco products, which are defined based on whether they are “sold or distributed for use to reduce harm or risk of tobacco-related disease.” 21 U.S.C. § 387k(a), (b)(1). If the products meet that definition, the FDA reviews scientific evidence that the product will actually provide a lower risk of tobacco- related disease and will benefit the health of the population as a whole. Id. § 387k(g). The D.C. Circuit upheld the FDCA’s premarket review of “new drugs”—the provision on which this requirement was based—against the precise attacks Plaintiffs bring here, explaining that “the First Amendment allows ‘the evidentiary use of speech to . . . prove motive or intent.’” See Whitaker v. Thompson, 353 F.3d 947, 948 (D.C. Cir. 2004).

Plaintiffs’ citation of out-of-circuit precedent that they claim “caution[s]” against reliance on Whitaker is unavailing. Pls.’ Reply 38. Regardless of how other circuits might view the

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reasoning applied in Whitaker, it binds the Court here.15 Similarly irrelevant are the decisions Plaintiffs cite within this circuit that predate Whitaker and that do not, in any event, discuss the evidentiary speech argument upon which Whitaker relies.16 Plaintiffs also fail to mention the numerous courts that have come to the same conclusion as the D.C. Circuit. See, e.g., United States v. Lebeau, No. 16-1289, 2016 WL 3619838, at *3 (7th Cir. July 5, 2016).17

Plaintiffs next endeavor to distinguish the premarket review of MRTPs here from the premarket review of “new drugs” in Whitaker, contending that the MRTP provision is “not tailored” because it applies to claims that a product does not contain a substance. Pls.’ Reply 39. But this is a blatant attempt to import the very tailoring requirements from Central Hudson that Whitaker expressly refused to apply. 353 F.3d at 952. In any event, as the Sixth Circuit held in Discount Tobacco, products sold as being free of a certain substance are generally preferred “precisely because” consumers believe that they “confer health advantages over conventional

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15 The Sixth Circuit addressed the issue in only a perfunctory manner, introducing the parties’ arguments and then proceeding to state, “[w]e agree with Plaintiffs, and therefore proceed to the government’s alternative argument.” Discount Tobacco, 674 F.3d at 534. And Plaintiffs notably overlook the Second Circuit’s most recent pronouncement in United States ex rel. Polansky v. Pfizer, Inc., 822 F.3d 613, 615 n.2 (2d Cir. 2016), that “Caronia left open the government’s ability to prove misbranding on a theory that promotional speech provides evidence that a drug is intended for a use that is not included on the drug’s FDA-approved label.”

16 See Pearson v. Shalala, 164 F.3d 650, 659 (D.C. Cir. 1999) (applying Central Hudson where it was “undisputed[ly]” the applicable standard); Washington Legal Found. v. Friedman, 13 F. Supp. 2d 51, 59 (D.D.C. 1998) (addressing arguments differentiating speech and conduct, but not considering the evidentiary use of speech).

17 See also 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 States v. Livdahl, 459 F. Supp. 2d 1255, 1268 (S.D. Fla. 2005); United States v. Lane Labs-USA, Inc., 324 F. Supp. 2d 547, 579-80 (D.N.J. 2004); United States v. General Nutrition, Inc., 638 F. Supp. 556, 562 (W.D.N.Y. 1986).

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products.” 674 F.3d at 536.18 There is thus close accord between the provision’s definition of a modified risk tobacco product and the premarket review requirements imposed.

2. In Any Event, the MRTP Premarket Review Requirement Readily Withstands Review under Central Hudson

In any event, the MRTP premarket review requirement is also easily sustained under Central Hudson. Plaintiffs do not dispute the government’s substantial interests in protecting public health and preventing misleading claims about so-called “reduced-risk” products. The MRTP provision is reasonably tailored to advance those interests.

Plaintiffs’ argument to the contrary relies on illusory distinctions within the e-cigarette industry, and ignores that the market is dominated by the same “big tobacco” companies responsible for the misleading claims that led Congress to enact the TCA in the first place. See Adler at 22; Grana et al. (2013) at 72–73 (AR 21,015–16). Given the dominance of the same major companies, the history of their practices remains salient in the e-cigarette context. This is particularly true in view of the evidence that e-cigarette manufacturers are using the same marketing tools that proved so effective for the major tobacco companies and so harmful to the public health. Like traditional tobacco advertising, e-cigarette companies have employed tactics that appeal to youth, including the use of candy and dessert flavors, celebrity endorsements, and sponsored events. See Grana & Ling (2014) at 399–401 (AR 23,127–29). More importantly for purposes of the MRTP provision, e-cigarette companies frequently make health claims for which

—–

18 For example, consumers confronted with a peanut butter flavored e-liquid that purports to contain “no peanuts” could conclude that competing products contain allergenic peanut extracts and therefore that this product is safer. As Plaintiffs recognize, such a product would likely be subject to section 387k(g)(2), which is a pathway available to manufacturers who can show that, among other things, “the product as actually used exposes consumers to the specified reduced level of the substance,” 21 U.S.C. § 387k(g)(2)(B)(i), rather than requiring a showing that the product will “significantly reduce harm and the risk of tobacco-related disease to individual tobacco users,” Pls.’ Reply 39 (quoting 21 U.S.C. § 387k(g)(1)).

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they lack empirical support. See id. at 400 (AR 23,128).

Plaintiffs assert that there is “powerful evidence” that e-cigarettes are safer than cigarettes, but tobacco companies long made similar assertions regarding “low tar” cigarettes. See Philip Morris, 566 F.3d at 1107. Rather than accept piecemeal evidence of the kind Plaintiffs cite, Congress instructed the FDA to review products that purportedly reduce health risks to ensure that they “actually reduce such risks.” Legislative Finding 37.

That e-cigarettes may not present health risks identical to cigarettes in no way suggests that the FDA should permit their sale as reduced-risk products without substantiation of their alleged benefits—particularly given the dearth of evidence that they help smokers quit, and some evidence suggesting that they actually inhibit cessation. Defs.’ Br. 16. Indeed, Plaintiffs deny none of the health risks of e-cigarettes that the FDA identified, id. at 11–15—including that they can deliver toxic or carcinogenic chemicals, like nicotine, formaldehyde, and nickel, at levels higher than conventional cigarettes, id. at 13. While it is possible that some e-cigarettes, operated under some conditions, may be less dangerous to individual users than conventional cigarettes, Congress sought to require that such claims be proven, not assumed.

Plaintiffs contend that the FDA has failed to explain why a disclaimer would not be an effective alternative means of achieving its interests. But Congress itself made such a finding. Defs.’ Br. 84. It determined that “consumers have misinterpreted advertisements in which one product is claimed to be less harmful than a comparable product, even in the presence of disclosures and advisories intended to provide clarification.” Legislative Finding 41. Moreover, Congress concluded that “any unsubstantiated statements concerning modified risk tobacco products, whether express or implied, even if accompanied by disclaimers, would be detrimental to the public health.” Legislative Finding 42. “When Congress makes findings on essentially factual issues such as these, those findings are of course entitled to a great deal of deference.”

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Walters v. Nat’l Ass’n of Radiation Survivors, 473 U.S. 305, 331 n.12 (1985); see also Discount Tobacco, 674 U.S. at 537 (finding “no reason to upend—or intrude upon—Congress’ determination” that disclaimers for MRTPs would be insufficient). These broad findings apply to modified-risk e-cigarette products just as they do to traditional tobacco products.

Plaintiffs also argue that the addictive nature of their products is irrelevant because they have an interest in “communicating information” about “legal” products. Pls.’ Reply 43. But the addictive nature of e-cigarettes underscores the importance of verifying at the outset that they present a modified risk, rather than waiting until potentially misled consumers are thoroughly addicted to them. See Discount Tobacco, 674 F.3d at 537; Legislative Findings 36 & 37. Premarket review protects those who would find it hard to stop using an addictive product upon learning that they were misled, and is thus an effective and narrowly tailored means of promoting government interests.

CONCLUSION

For the foregoing reasons, the Court should grant Defendants’ cross-motion for summary judgment and deny Plaintiffs’ motions for summary judgment.

Dated: September 9, 2016 Respectfully submitted,

Of counsel: BENJAMIN C. MIZER

Principal Deputy Assistant Attorney General

DAVID J. HOROWITZ

Deputy General Counsel SHEILA LIEBER

Office of General Counsel Deputy Director

U.S. Dep’t of Health and Human Services

/s/ Eric Beckenhauer

ELIZABETH H. DICKINSON ERIC B. BECKENHAUER

Chief Counsel AIMEE W. BROWN

Trial Attorneys

PERHAM GORJI U.S. Department of Justice

Deputy Chief Counsel for Litigation Civil Division, Federal Programs Branch

20 Massachusetts Ave. NW

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Case 1:16-cv-00878-ABJ Document 48 Filed 09/09/16 Page 34 of 34

WENDY S. VICENTE

Senior Counsel

Office of the Chief Counsel

Food and Drug Administration

10903 New Hampshire Avenue

White Oak 31, Room 4562

Silver Spring, MD 20993-0002

Washington, DC 20530

Tel: (202) 514-3338

Fax: (202) 616-8470

E-mail: Eric.Beckenhauer@usdoj.go…

Counsel for Defendants

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