CIGAR ASSOCIATION OF AMERICA v. FDA: REPLY IN SUPPORT OF DEFENDANTS‘ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT, Dec 4, 2017

December 4, 2017 9:02 pm by Gene Borio

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EXCERPT:

The government has long required commercial disclosures related to consumer health and safety. Those interests explain and justify disclosures that are now ubiquitous, from “Drug Facts“ labels on over-the-counter drugs, to “Nutrition Facts“ labels on food, to country-of-origin labels on meat. In this case, Plaintiffs neither dispute that their cigar and pipe tobacco products pose significant risks to human health, nor deny that the warning labels at issue are entirely accurate. Those disclosures are fully consistent with the First Amendment, regardless of the test applied, as they are appropriately tailored in view of the significant risks at stake.

Plaintiffs‘ other claims also miss the mark. The agency‘s assessment of user fees simply tracks the plain text of the statute, and Plaintiffs offer no coherent alternative reading. Retailers who blend pipe tobacco meet the statutory definition of a tobacco product manufacturer, despite Plaintiffs‘ attempt to conjure an alternative definition from an inapplicable section of the statute. And given that pipes are undeniably fundamental to smoking pipe tobacco, they properly fall within the regulatory definition of a “component or part,“ which merits substantial deference under Chevron. The Court should grant summary judgment to Defendants.

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FULL TEXT:

Case 1:16-cv-01460-APM Document 80 Filed 12/04/17 Page 1 of 31

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

CIGAR ASSOCIATION OF AMERICA, et al.,

Plaintiffs,

v.

Civil Action No. 16-1460 (APM)

UNITED STATES FOOD AND DRUG ADMINISTRATION, et al.,

Defendants.

REPLY IN SUPPORT OF DEFENDANTS‘ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT

Case 1:16-cv-01460-APM Document 80 Filed 12/04/17 Page 2 of 31

TABLE OF CONTENTS

TABLE OF AUTHORITIES ……. iii

INTRODUCTION ………..1

ARGUMENT …………1

I. THE DEEMING RULE‘S HEALTH WARNING REQUIREMENTS ARE CONSISTENT WITH THE FIRST AMENDMENT AND THE TCA ……….1

A. The Health Warnings Are Consistent with the First Amendment ………….1

1. The Health Warnings Are Properly Analyzed under Zauderer …………1

2. The Health Warnings Are Rationally Related to the Government‘s Interest……..3

3. Even if Central Hudson Applies, the Health Warnings Withstand Review …….9

B. The Requirement to Submit a Plan for Rotating the Health Warnings Does Not Constitute a Prior Restraint …….14

C. The FDA Made the Requisite Statutory Findings Before Adopting the Health Warning Requirements ………16

II. THE FDA‘S ASSESSMENT OF USER FEES IS CONSISTENT WITH STATUTORY AUTHORITY ……..17

III. THE FDA REASONABLY INTERPRETED THE TCA TO TREAT BLENDING TOBACCO AS MANUFACTURING ………….20

IV. THE FDA PERMISSIBLY CONSIDERED PIPES TO BE “COMPONENTS“ OR “PARTS“ OF TOBACCO PRODUCTS ……..22

CONCLUSION …….25

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TABLE OF AUTHORITIES

Federal Cases

American Beverage Institute v. City and County of San Francisco,

871 F.3d 884 (9th Cir. 2017) ……….. 6

American Meat Institute v. U.S. Department of Agriculture,

760 F.3d 18 (D.C. Cir. 2014) (en banc) ………. 4, 5, 6, 9

Bad Frog Brewery v. N.Y. State Liquor Auth.,

134 F.3d 87 (2d Cir. 1998) ………… 13

Burgess v. United States,

553 U.S. 124 (2008) …….. 21

Business Roundtable v. SEC,

647 F.3d 1144 (D.C. Cir. 2005) ……….. 25

Capital Broad. Co. v. Acting Attorney Gen.,

405 U.S. 1000 (1972) …….. 7

Central Hudson Gas & Elec. Corp. v. Public Serv. Comm‘n of N.Y.,

447 U.S. 557 (1980) …….. passim

Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.,

467 U. S. 837, 866 (1984) ……… 20, 23, 24, 25

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

674 F.3d 509 (6th Cir. 2012) ………. 6, 7, 8

Fla. Bar v. Went For It, Inc.,

515 U.S. 618 (1995) ……… 11, 12

Hutchins v. Dist. of Columbia,

188 F.3d 531 (D.C. Cir. 1999) …………. 11

Lorillard Tobacco Co. v. Reilly,

533 U.S. 525 (2001) ………. 4

Nicopure Labs LLC v. FDA,

— F. Supp. 3d —, No. 16-878, 2017 WL 3130312 (D.D.C. July 21, 2017) ……. 23, 25

Nutritional Health Alliance v. Shalala,

144 F.3d 220 (2d Cir. 1998) ………. 15

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Pearson v. Shalala,

164 F.3d 650 (D.C. Cir. 1999) …….. 3

Pharm. Research & Mfrs. of Am. v. FTC,

790 F.3d 198, 207 (D.C. Cir. 2015) ………… 23

Posadas de P.R. Assocs. v. Tourism Co.,

478 U.S. 328 (1986) ………. 7

Public Citizen, Inc. v. La. Att‘y Disciplinary Bd.,

632 F.3d 212 (5th Cir. 2011) ……… 10

Pursuing Am.‘s Greatness v. FEC,

831 F.3d 500 (D.C. Cir. 2016) ……….. 2, 3

R.J. Reynolds Tobacco Co. v. FDA,

696 F.3d 1205 (D.C. Cir. 2012) ………. 4, 8, 11

Spirit Airlines, Inc. v. U.S. Dep‘t of Transp.,

687 F.3d 403 (D.C. Cir. 2012) …….. 3

United States v. Article of Drug Bacto-Unidisk,

394 U.S. 784 (1969) …….. 23

United States v. Gonzales,

520 U.S. 1 (1997) ………… 23

United States v. Sperry Corp.,

493 U.S. 52 (1989) ………. 19

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

471 U.S. 626 (1985). ……. passim

Federal Statutes and Regulations

5 U.S.C. ¤ 706 ……… 11, 16

7 U.S.C. ¤ 518d ……. 17, 18

15 U.S.C. ¤ 1333 …………. 9

15 U.S.C. ¤ 1335 …………. 7

21 C.F.R. ¤ 1143.5 …………. 2, 7

21 U.S.C. ¤ 321(rr)(1) ………. 23

21 U.S.C. ¤ 387 …….. 19, 21, 22

21 U.S.C. ¤ 387e ……….. 21

21 U.S.C. ¤ 387f ……….. 13

21 U.S.C. ¤ 387g ……….. 23

21 U.S.C. ¤ 387s …………. 17, 18, 20

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26 U.S.C. ¤ 52 …….. 18

26 U.S.C. ¤ 518d ……….. 18

26 U.S.C. ¤ 5702 ………… 17, 18

79 Fed. Reg. at 23,146 ……… 16

79 Fed. Reg. at 23,166 ……….. 3

81 Fed. Reg. at 28,711 ………. 19, 20

81 Fed. Reg. at 28,975 ……… 24

81 Fed. Reg. at 28,978 ……… 19

81 Fed. Reg. at 28,988 ……… 10

81 Fed. Reg. at 28,995 ……… 21

81 Fed. Reg. at 28,996 ……… 21

81 Fed. Reg. at 29,020 ……… 13

81 Fed. Reg. at 29,062 ……… 16

81 Fed. Reg. at 29,064 ……….. 3

81 Fed. Reg. at 29,072 ……… 15

81 Fed. Reg. at 29,073 ……… 15

Pub. L. No. 111-31, ¤ 3 …….. 24

Legislative Materials

155 Cong. Rec. H4367 (Apr. 1, 2009) …………. 20

155 Cong. Rec. H6626 (June 12, 2009) ……….. 20

155 Cong. Rec. S6010 (June 3, 2009) …………. 20

Other Authorities

World Health Organization‘s Framework Convention on Tobacco Control ………. 5, 8, 15

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INTRODUCTION

The government has long required commercial disclosures related to consumer health and safety. Those interests explain and justify disclosures that are now ubiquitous, from “Drug Facts“ labels on over-the-counter drugs, to “Nutrition Facts“ labels on food, to country-of-origin labels on meat. In this case, Plaintiffs neither dispute that their cigar and pipe tobacco products pose significant risks to human health, nor deny that the warning labels at issue are entirely accurate. Those disclosures are fully consistent with the First Amendment, regardless of the test applied, as they are appropriately tailored in view of the significant risks at stake.

Plaintiffs‘ other claims also miss the mark. The agency‘s assessment of user fees simply tracks the plain text of the statute, and Plaintiffs offer no coherent alternative reading. Retailers who blend pipe tobacco meet the statutory definition of a tobacco product manufacturer, despite Plaintiffs‘ attempt to conjure an alternative definition from an inapplicable section of the statute. And given that pipes are undeniably fundamental to smoking pipe tobacco, they properly fall within the regulatory definition of a “component or part,“ which merits substantial deference under Chevron. The Court should grant summary judgment to Defendants.

ARGUMENT

I. THE DEEMING RULE‘S HEALTH WARNING REQUIREMENTS ARE CONSISTENT WITH THE FIRST AMENDMENT AND THE TCA

A. The Health Warnings Are Consistent with the First Amendment

1. The Health Warnings Are Properly Analyzed under Zauderer

Plaintiffs do not dispute that cigars and pipe tobacco present significant health risks. Nor do they deny that the health warnings advising consumers of those risks are entirely accurate. Such disclosures are routinely analyzed under Zauderer, not Central Hudson, and Plaintiffs identify no case to the contrary.

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Although the D.C. Circuit has noted that there may be a point at which “the compulsion to speak becomes more like a speech restriction than a disclosure,“ Pursuing Am.‘s Greatness v. FEC, 831 F.3d 500, 507 n.3 (D.C. Cir. 2016), this case comes nowhere close to that undefined line. Here, as in Zauderer itself, the disclosures ban no speech: they do not “‘prevent [Plaintiffs] from conveying information to the public,‘“ but “only require[ them] to provide somewhat more information than they might otherwise be inclined to present.“ Id. at 507.

Plaintiffs claim that the warnings “clearly make[] the government the predominant speaker on cigar packages and advertising.“ Pls.‘ Reply 4. But the warnings cover only 30% of two panels of cigar boxes and 20% of advertisements, leaving the remaining 70% of those panels, the rest of cigar boxes, and 80% of advertising free for manufacturers to convey any message they wish. Plaintiffs nevertheless complain that the format of the warningsÑblack text on a white background, or white text on a black background, in at least 12-point font, 21 C.F.R. ¤ 1143.5(a)(2)Ñwill somehow “overtake“ their message. Pls.‘ Reply 5. But if the warnings were instead “seamlessly integrated into the package‘s color and design scheme,“ as Plaintiffs prefer, id., they would effectively be camouflaged. Although Plaintiffs colorfully suggest that tobacco stores will become a “menagerie of government speech“ where warnings are unnecessarily repeated, it is hardly an “assault on customers‘ senses“ to place a warning at “each cash register“ in “large retail stores“ with multiple checkout aisles, only one of which a consumer would pass through. Pls.‘ Br. 6 (emphasis in original). And while the warnings would appear on each product on a display shelf, that is little different from “Drug Facts“ labels required on drugs sold over the counter, or “Nutrition Facts“ labels required on food. To be sure, those disclosures do not necessarily appear on the front of product packagingÑbut unlike cigars

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and pipe tobacco, most over-the-counter drug and food products are not addictive and do not pose significant health risks when consumed as intended.

Regardless, Plaintiffs fail to explain how the health warnings prevent them from communicating anything at all. They vaguely refer to “manufacturers‘ and retailers‘ carefully sculpted message to their prospective customers,“ id. at 6, and the “subtle hues and intricate designs on a cigar box,“ id. at 7. But as for how the warnings actually “‘prevent [Plaintiffs] from conveying information to the public,‘“ Pursuing Am.‘s Greatness, 831 F.3d at 507, they are silent. The warnings ban no speech, and they are properly analyzed as disclosures under Zauderer.

2. The Health Warnings Are Rationally Related to the Government‘s Interest

The health warnings are readily sustained under Zauderer, as they are reasonably related to the government‘s asserted interests: to “help consumers better understand and appreciate the risks and characteristics of tobacco products“ and to help correct misperceptions about the newly deemed products. 81 Fed. Reg. at 29,064; 79 Fed. Reg. at 23,166. There is ample evidence that consumers misapprehend the grave health risks of cigars and pipe tobacco. And the record overwhelmingly shows that more prominent warnings are more likely to be seen and remembered by consumers.

a. Plaintiffs do not dispute that, in general, the government‘s “interest in ensuring the accuracy of consumer information in the marketplace“ is sufficient under Zauderer; indeed, such an interest “is substantial.“ Spirit Airlines, Inc. v. U.S. Dep‘t of Transp., 687 F.3d 403, 415 (D.C. Cir. 2012); see also Pearson v. Shalala, 164 F.3d 650, 656 (D.C. Cir. 1999) (the government “has a substantial interest in promoting the health, safety, and welfare of its citizens“); Defs.‘ Br. 23 & n.15. They claim, instead, that tobacco products are so unique among consumer products

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that “only“ an interest in “the reduction of underage use will suffice.“ Pls.‘ Reply 8. That is mistaken, and the cases they cite cannot bear the weight Plaintiffs place on them. In Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001), for example, the Court considered a Massachusetts law prohibiting the outdoor advertising of cigars within 1,000 feet of schools or playgrounds, which effectively barred advertising in 87 to 91% of the entire city of Boston. Id. at 536, 562. While Plaintiffs emphasize that the Court focused on whether the advertising ban was sufficiently related to the State‘s “substantial, and even compelling“ “interest in preventing underage tobacco use,“ id. at 564 (quoted in Pls.‘ Reply 8), that is unsurprising, as it was the only interest advanced by the State to defend the law, id. at 533Ð34, 564. Likewise, in R.J. Reynolds Tobacco Co. v. FDA, 696 F.3d 1205 (D.C. Cir. 2012), the court found that the “only explicitly asserted interest in either the Proposed or Final Rule is an interest in reducing smoking rates,“ id. at 1218, and thus would not accept “the government‘s attempt to reformulate its interest as purely informational,“ id. at 1221. But neither Lorillard nor R.J. Reynolds states, or even suggests, that “only“ an interest in reducing smoking rates (underage or otherwise) could qualify as substantial.

Plaintiffs‘ contention to the contrary is further undermined by the D.C. Circuit‘s en banc decision in American Meat Institute v. U.S. Department of Agriculture, 760 F.3d 18 (D.C. Cir.

2014) (en banc). While Plaintiffs argue that American Meat overruled only a “small and precise kernel“ of R.J. Reynolds, Pls.‘ Reply 9, there can be little doubt that the court embraced the position that the disclosure of health or other information about consumer products qualifies as a sufficient interest under Zauderer, with no requirement that the disclosure actually change consumer behavior. As the D.C. Circuit explained, although under “Central Hudson . . . [the Supreme Court] has commonly required evidence of a measure‘s effectiveness, . . . as the Court

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recognized in Zauderer, such evidentiary parsing is hardly necessary where the government uses a disclosure mandate to achieve a goal of informing consumers about a particular product trait, assuming of course that the reason for informing consumers qualifies as an adequate interest.“ Id. at 26. Indeed, in dissent, Judge BrownÑthe author of R.J. ReynoldsÑremarked on the breadth of this holding, which she understood to mean that “‘Zauderer . . . encompass[es]‘ factual and noncontroversial disclosure mandates aimed at providing more information to some consumers,“ and that a “reasonably crafted disclosure mandate . . . advances [the government‘s] interest in making the ‘purely factual and uncontroversial information‘ accessible to recipients.“ Id. at 37 (Brown, J., dissenting). If that is true in the context of meat labeling, it is difficult to see how it could not be true for tobacco products, given their inherent addictiveness and adverse health effects. The government‘s interest here is at least as weighty as the interest in American Meat, and it is more than sufficient.

b. The health warnings are reasonably related to that interest. As noted, this test requires no “evidentiary parsing“ of a “measure‘s effectiveness.“ American Meat, 760 F.3d at 26. Rather, under Zauderer, the “means-end fit is self-evidently satisfied“ by a “reasonably crafted mandate to disclose ‘purely factual and uncontroversial information‘ about attributes of the product or service being offered,“ “absent a showing that the disclosure is ‘unduly burdensome.‘“ Id. Here, there is no dispute that the health warnings are entirely factual and accurate, and they are eminently reasonable: indeed, at 30%, they are on the most conservative end of the international consensus embodied in the World Health Organization‘s Framework Convention on Tobacco Control, signed by the United States and ratified by 180 countries, which calls for rotating warnings that “should be 50% or more of the principal display areas but shall be no less than 30% of the principal display areas.“ WHO Framework Convention on

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Tobacco Control, art. 11.1(b) (2003), available at www.who.int/fctc/en; see Defs.‘ Br. 19Ð

20.

Plaintiffs are mistaken that the size of the health warnings renders them “unduly burdensome“Ña contention that this Court should follow the Sixth Circuit in rejecting. See Discount Tobacco City & Lottery, Inc. v. United States, 674 F.3d 509 (6th Cir. 2012), cert. denied sub nom. Am. Snuff Co. v. United States, 569 U.S. 946 (2013). Plaintiffs principally argue that “circuit decisions demonstrate that the warnings are too big to survive Zauderer,“ but they focus on just one: the Ninth Circuit‘s decision in American Beverage Institute v. City and County of San Francisco, 871 F.3d 884 (9th Cir.), petition for reh‘g & reh‘g en banc filed, Nos. 16-16072, 16-16073 (9th Cir. Oct. 17, 2017). Although they acknowledge that the court there found that the required disclosures (concerning the health effects of sugar-sweetened drinks) ran afoul of Zauderer because they were “‘not purely factual and uncontroversial,‘“ Pls.‘ Reply 22 (citation omitted), they argue that the disclosures independently failed Zauderer “for the simple reason that they were too large,“ id. at 21. But the Ninth Circuit‘s reasoning is not so easily disentangled. Size alone does not render a disclosure impermissible; rather, to violate Zauderer, it must be “‘unduly burdensome‘ in a way that ‘chill[s] protected speech.‘“ American Meat, 760 F.3d at 26. And in American Beverage, it was the disclosure‘s size plus its “deceptive“ nature, Am. Beverage, 871 F.3d at 895, that unduly burdened the plaintiffs‘ speech, because the manufacturers‘ need to “counter[] San Francisco‘s misleading message would leave them little room to communicate their intended message,“ turning advertisements into little more than “a vehicle for debate,“ id. at 897 (emphasis added). In any event, as the Ninth Circuit recognized, tobacco products are distinguishable from sugar-sweetened drinks given their “physiologically addictive qualities,“ id. at 897 n.11.

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Plaintiffs assert that the FDA has “ignor[ed] the Rule‘s effect on retailers,“ citing the supposed “burdens of . . . duplicative and overlapping warning[s].“ Pls.‘ Reply 23Ð24. But most of the requirements that they emphasize fall not on retailers, but on manufacturers. It is manufacturers who must include warnings on the product “box“ and any “branded picture[s] or fixture[s]“ displayed in the store. Id. at 23. Retailers, on the other hand, need only display warnings beside the register if they sell individual, unpackaged cigars, 21 C.F.R. ¤ 1143.5(a)(3), and on advertisements that they themselves create, so long as any manufacturer advertisements they post contain proper warnings, id. ¤ 1143.5(b)(2)Ð(3). As for radio spots, the Supreme Court sustained a complete ban for cigarettes in 1972, Capital Broad. Co. v. Acting Attorney Gen., 405 U.S. 1000 (1972), summarily aff‘g, 333 F. Supp. 582 (1971) (three-judge court), which Congress extended to little cigars the following year, 15 U.S.C. ¤ 1335, and the “less intrusive“ restriction here is little different from the disclosures routinely required on television advertisements for drugs. Cf. Posadas de P.R. Assocs. v. Tourism Co., 478 U.S. 328, 346 & n.10 (1986) (collecting laws regulating advertising of alcohol, tobacco, and gambling). Discount Tobacco rejected a similar First Amendment claim in the context of tobacco products, and it points the way here. There, the Sixth Circuit considered a provision of the TCA requiring manufacturers to “reserve a significant portion of their packagingÑthe top 50% of the front and back of cigarette packaging, 30% of the front and back of smokeless tobacco packaging, and 20% of tobacco advertising“Ñfor health warnings. 674 F.3d at 524. Congress required the warnings to include both text (such as “WARNING: Cigarettes are addictive“) and color graphics; it prescribed the text and directed the FDA to choose the graphics through rulemaking. Id. at 524, 526 & n.3. Weighing a facial challenge filed before the graphics had been selected, the Sixth Circuit applied Zauderer to reject a First Amendment challenge to both

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the textual and graphic aspects of the warnings. With respect to the size of the textual warnings, in particular, the court concluded that the “[p]laintiffs‘ . . . argument that the warnings are unduly burdensome because their size drowns out their speech is unpersuasive.“ Id. at 567 (op. of Stranch, J.). Relying principally on the WHO Framework Convention, it found that “[a]mple evidence supports the size requirement for the new warnings,“ and reasoned that the “[p]laintiffs have not shown that the remaining portions of their packages are insufficient for them to market their products.“ Id.; see also id. at 530Ð31 (op. of Clay, J.) (noting that Congress itself “found[] that larger warnings materially affect consumers‘ awareness of the health consequences of smoking and decisions regarding tobacco use,“ and concluding that the “[p]laintiffs have not shown that the remaining portions of their packaging are insufficient for them to place their brand names, logos, or other information“).

Try as they might, Plaintiffs cannot persuasively distinguish Discount Tobacco. They note that in R.J. Reynolds the D.C. Circuit later set aside the specific graphic warnings that the FDA promulgated for cigarettes in 2011. Pls.‘ Reply 25. But the D.C. Circuit did so under Central Hudson, finding the cigarette graphic warnings at issue there were “not . . . ‘purely factual and uncontroversial‘“ and thus not eligible for review under Zauderer; the court cast no such doubt, however, on the text or size of the cigarette warnings (which were, of course, even larger than the cigar warnings here). R.J. Reynolds, 696 F.3d at 1216. Those graphics are not at issue in this case. Plaintiffs think it “crucial“ that Discount Tobacco was a facial challenge, where it was not clear that warnings in “glaring“ “black-and-white“ text would disrupt the “subtle detailing and hues“ of their packaging. Pls.‘ Reply at 25. But it is difficult to imagine how the FDA could have settled on a more neutral scheme than black-on-white (or white-on- black) text in sans-serif font. 21 C.F.R. ¤ 1143.5(a)(2)(ii)Ð(iii). Plaintiffs argue that Discount

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Tobacco was principally concerned with cigarettes, which they say have a better-documented history of deception. Pls.‘ Reply 25Ð26. But that is irrelevant; it is settled that “Zauderer . . . reach[es] beyond problems of deception, sufficiently to encompass the disclosure mandates at issue here.“ American Meat, 760 F.3d at 20. Finally, Plaintiffs claim that Discount Tobacco concerned disclosures by manufacturers, but not retailers. Pls.‘ Reply at 26. But that is incorrect; the warnings in Discount Tobacco were also required to cover “20% of tobacco advertising,“ 674 F.3d at 524, and were challenged by both “manufacturers and retailers,“ id. at 554, because the requirements applied equally to retailers, 15 U.S.C. ¤ 1333(b)(1), (c)(4). Discount Tobacco is materially indistinguishable, and this Court should likewise sustain the health warnings under Zauderer.

3. Even if Central Hudson Applies, the Health Warnings Withstand Review

Even if the Court were to agree with Plaintiffs that the disclosures at issue cross some undefined line beyond which they must be considered restrictions on speech, they would survive review under Central Hudson. The health warnings directly and materially advance the government‘s interest in helping consumers understand the health consequences of using cigars and pipe tobacco, and in helping correct misperceptions about the risks of those products. Plaintiffs‘ arguments to the contrary are wrong at each turn.

a. The FDA found abundant evidence of an “unsubstantiated perception, especially among young people, that cigars are less hazardous than cigarettes.“ 81 Fed. Reg. at 29070. Plaintiffs do not dispute this, at least until the FTC consent decrees were signed in 2000. See Pls.‘ Reply 12. They contend, however, that the FDA has not shown that “consumers today do not understand the health risks of smoking cigars or pipe tobacco,“ asserting that some of the studies the agency pointed to are “stale.“ Id. (emphasis added). But comments received on the

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proposed deeming rule itself, in 2014, demonstrate that these misperceptions have persisted. For example, “some commenters questioned the accuracy of the addictiveness warning as applied to cigars, contending that cigar users do not always inhale.“ 81 Fed. Reg. at 28,988 (comment 11).

In fact, most cigar users inhale some smoke even if they do not intend to; regardless, because cigar smoke dissolves in saliva, “sufficient nicotine to create dependence“ is absorbed through the oral mucosa. Id.; see also id. at 29,069 (comment 264) (explaining that the same is true for “large“ or “premium“ cigars). Moreover, contrary to Plaintiffs‘ claims, the record contains a number of more recent studies showing that such misperceptions remain.1 There is no reason not to credit this evidence under Central Hudson, see, e.g., Public Citizen, Inc. v. La. Att‘y Disciplinary Bd., 632 F.3d 212, 224 (5th Cir. 2011) (defendant “satisfied Central Hudson“ with “two . . . surveys and three focus groups“), and, notably, Plaintiffs cite no evidence pointing in the other direction.

b. Plaintiffs next argue that the record lacks sufficient evidence to show that the health warnings would help “close th[is] gap“ in perception. Pls.‘ Reply 12. They do not deny that, in

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1 For instance, a 2013 study, based on 2010 survey data, “found that smokers of little cigars and cigarillos ‘were more likely to report perceiving the harm of little cigars, cigarillos, and cigars to be less than that of cigarettes‘ when compared to nonusers.“ 81 Fed. Reg. at 29,070 (citing Sterling et al. (2013) (AR 26,039)). A 2005 study, based on survey data from the spring and fall of 2001, found that 34.9% of high school cigar users thought “cigars are not as bad for you as cigarettes,“ compared to 9.1% of never-users. Soldz & Dorsey (2005) at 555 (AR 26,054). A 2006 study, based on 2004 survey data, found that 16.9% of college freshmen “incorrectly perceived [cigars] to be less harmful than regular cigarettes.“ Smith et al. (2006) at 979 (AR

7109). A 2004 study, based on interview data from the spring and summer of 2001, found that the “product of choice“ among youth ages 11Ð15 in two Florida counties was a “cigarillo . . . that contains between five and twelve times the nicotine of cigarettes,“ which users “tend not to recognize . . . as tobacco and believe t[o] contain no nicotine.“ Page & Evans (2003) at 64 (cited in Cullen et al. (2011) at 1955 n.15 (AR 7708) and Pls.‘ Reply 12 n.4, and attached hereto for reference). And a 2008 study based on 2005 focus group data found that the “belief that little cigars are not as addictive as cigarettes was widespread,“ and that “some participants believed little cigars were less harmful than cigarettes.“ Jolly (2008) at 4 (AR 7719).

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general, “[u]sers are more likely to recall warnings that are in a larger size and that appear on the front/major surfaces of the tobacco product package,“ as the FDA found. 81 Fed. Reg. at 29,989; see Defs.‘ Br. 19Ð20 (citing supporting studies). However, they fault the agency for “extrapolating from its experience with other [tobacco] products,“ such as cigarettes, and for not attempting to quantify “the size“ of the expected benefits. Id. at 13. Their demand for such evidence directly from cigar and pipe tobacco studies is misguided, particularly in the context of intermediate scrutiny under Central Hudson. As the Supreme Court has explained, the government 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 simply common sense.“ Fla. Bar v. Went For It, Inc., 515 U.S. 618, 628Ð29 (1995); see also Hutchins v. Dist. of Columbia, 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“). Thus, there is no warrant to ignore, for example, the studies of cigarette warning labels finding “no reason to doubt that the principles identified in this work could be applied to other tobacco products,“ such as cigars and pipe tobacco. Centre for Behavioral Research in Cancer (1992) at 6 (AR 18848).

On this score, Plaintiffs mistakenly assert that this Court should rely on the three extra- record declarations of their supposed “expert.“ Pls.‘ Reply at 15 & n.7. But as explained in R.J. Reynolds, even though this case raises constitutional claims, “[b]ecause [it] involves a challenge to final agency action, the Administrative Procedure Act governs our review of the record. See 5 U.S.C. ¤ 706(2)(B) (providing that the APA applies to allegations that the agency action is ‘contrary to constitutional right, power, privilege, or immunity‘).“ R.J. Reynolds, 696 F.3d at 1217Ð18 (emphasis added). If Plaintiffs believed there was insufficient recent evidence to

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support the rule at the time it was proposed, they should have submitted their expert‘s views during the public comment process.

c. Plaintiffs also miss the mark in arguing that the warning labels are not narrowly tailored. They begin with the curious assertion that the question “whether the ‘least restrictive means‘ test . . . applies to commercial speech“ is “the subject of substantial debate.“ Pls.‘ Reply

15. But the Supreme Court has unambiguously explained that “the ‘least restrictive means‘ test has no role in the commercial speech context,“ Fla. Bar, 515 U.S. at 632, and Plaintiffs cite no case to the contrary. Thus, all that is required is “a fit that is not necessarily perfect, but reasonable.“ Id. (citations omitted). The health warnings meet that test. Plaintiffs characterize the existing FTC warnings as an “obvious“ less restrictive alternative, and spill much ink criticizing the FDA for not conducting a “serious analysis“ of whether they were adequate. Pls.‘ Reply 16Ð17. But, as explained, misconceptions about the health risks of cigars have persisted despite those warnings, see supra at 9Ð10 & n.1, and nothing in Central Hudson requires the government to settle for a means that has been unable to “achieve the desired objective,“ Fla. Bar, 515 U.S. at 632. Also, the FTC warnings are required only on cigars made by the seven largest U.S. manufacturers, which in 2000 represented about 95% of the market, a percentage that has decreased significantly since. See PRIA 44Ð45 (AR 10,635Ð

36) (estimating that 56% of machine-made cigar UPCs and 18% of hand-rolled cigar UPCs carry FTC warnings); see also FRIA 109 & n.68 (AR 24,020) (estimating that, overall, 20% of cigar UPCs bear FTC warnings, a figure that is lower than the proportion of cigar units actually sold with warnings, because cigars made by smaller manufacturers not covered by the FTC consent decrees tend to have lower sales volume). And pipe tobacco, of course, is not covered by the FTC warning regime at all.

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The other less restrictive alternatives that Plaintiffs suggestÑ“raising the minimum legal age“ to buy tobacco products, strengthening “penalties for the sale of tobacco to minors,“ and addressing “social factors underlying underage tobacco use,“ Pls.‘ Reply 17Ñfare no better. These suggestions rest on the faulty assumption that the rule‘s purpose is to reduce “underage tobacco use,“ id., rather than to help inform consumers and correct misperceptionsÑa goal that extends equally to adults, and which these suggestions do nothing to advance in any event. Even if the agency had the authority to take these measures, but see, e.g., 21 U.S.C. ¤ 387f(d)(3) (barring FDA from raising the minimum age of sale), Central Hudson does not “require that the Government make progress on every front before it can make progress on any front.“ Bad Frog Brewery v. N.Y. State Liquor Auth., 134 F.3d 87, 100 (2d Cir. 1998) (cited in Pls.‘ Reply 17).

Plaintiffs next assert that “premium cigars“ are “distinct“ from other cigars because they are not flavored, not as attractive to youth, and thus particularly undeserving of health warnings. Pls.‘ Reply 18. But, again, Plaintiffs ignore the government‘s interest: to help inform consumers (including adults) and correct misperceptions about health risks. Because premium cigars are often made by smaller manufacturers, they are unlikely to bear FTC warnings, yet Plaintiffs cite no evidence that they are safer than other cigars. And contrary to Plaintiffs‘ assertion, the FDA expressly declined to create a carve-out for premium cigars, finding insufficient evidence at that time to support the notion that they present different health risks. 81 Fed. Reg. at 29,020. Indeed, because “the bulk of the established data on the health effects of cigar smoking is based on smokers of traditional, large cigars,“ that data is “applicable to the toxicity of premium cigars, given that they share the same characteristics and are generally smoked in similar ways.“ Id. While the agency has announced that it will take another look at that issue going forward, at the time of the deeming rule, it reasonably concluded that “there are no data indicating that premium

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cigar users are not susceptible to [the] health risks“ common to all cigars, id.Ñrisks that Plaintiffs do not dispute.

B. The Requirement to Submit a Plan for Rotating the Health Warnings Does Not Constitute a Prior Restraint

Equally mistaken is Plaintiffs‘ claim that the requirement to submit a proposed plan for rotating the required warnings 12 months before marketing a cigar product constitutes a prior restraint. That claim was not raised in the complaint, and it is not ripe for review. Regardless, even assuming the prior restraint doctrine applies, the estimated 12-month period for FDA review of rotation plans is reasonable in view of the government‘s interest in helping inform consumers and correct misperceptions about the health risks of cigar useÑa goal that rotating warnings substantially furthers.

Plaintiffs offer virtually no answer to the argument that they waived this claim by not raising it in the complaint. See Defs.‘ Br. 32Ð33. Their single-sentence response, buried in a footnote, is that “the Complaint challenges the Rule‘s warnings scheme as a whole, not just the actual warnings themselves, and plainly asserts claims under the First Amendment.“ Pls.‘ Reply 29 n.10. That is not enough. The complaint challenged the size of the warnings, but said nothing at all about their rotation, much less about a prior restraintÑone of several distinct species of First Amendment claims. Plaintiffs‘ complaint failed to fairly put Defendants on notice of this claim, and it was absent from their first summary judgment brief. ECF No. 22. Their attempt to raise it now should be rejected.

Moreover, the claim is not ripe, as any hardship to Plaintiffs is entirely speculative. Defs.‘ Br. 33Ð34. Plaintiffs hypothesize that the FDA may be unable to complete its review of proposed rotation plans before the August 2018 compliance deadline. But they offer no evidence to back up that prediction, and in the event of a backlog, the agency would consider a

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compliance policy “to ensure that cigar entities are not delayed“ from marketing their products. 81 Fed. Reg. at 29,073.

In any event, even assuming the prior restraint doctrine applies to commercial speechÑa point that is by no means clear, Defs.‘ Br. 34Ð35Ñit need only survive intermediate scrutiny under Central Hudson, see Pls.‘ Reply 27. The rotation plan requirement does so. Plaintiffs‘ argument that “the warning plan process has nothing to do with“ the government‘s “interest in better informing consumers“ is mistaken. Id. at 27Ð28. In fact, rotation “ensure[s] that the different health warning messages are reaching as many individuals as possible,“ 81 Fed. Reg. at 29,072, and the importance of this feature is widely recognized: the WHO Framework Convention calls for “rotating“ warnings; the Comprehensive Smokeless Tobacco Health Education Act requires the “rotation of warnings for smokeless tobacco products“; and “rotation of warning statements already occurs under the FTC consent decrees.“ Id. at 29,073.

Contrary to Plaintiffs‘ suggestion, the rotation plan requirement is also narrowly tailored. Plaintiffs propose that the agency conduct after-the-fact surveillance of cigar products to monitor compliance with the rotation requirement. But the reason for requiring approval is not to make things “cheaper or easier“ for the agency, as Plaintiffs intimate, Pls.‘ Reply 28, but to pave the way for manufacturers unfamiliar with rotation requirements to promptly comply, and to build in time to correct deficiencies before manufacturing and distribution begin and costs are sunk. See 81 Fed. Reg. at 29,072. In view of these concerns, the 12-month review period estimated here is “not more extensive than necessary.“ Central Hudson, 447 U.S. at 566; see also Nutritional Health Alliance v. Shalala, 144 F.3d 220, 228 (2d Cir. 1998) (rejecting prior restraint challenge to 540-day period for FDA premarket review of labeling claims).

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C. The FDA Made the Requisite Statutory Findings Before Adopting the Health Warning Requirements

Before adopting the health warning requirements, the FDA made the findings required by statute, as Defendants‘ opening brief explained. Defs.‘ Br. 37Ð39. Plaintiffs offer no sound reason to conclude otherwise. First, they argue that the FDA could not permissibly make the requisite findings in the proposed rule, but cite no authority for the proposition. Pls.‘ Reply 30. Regardless, they acknowledge that the final rule “referred back to the Proposed Rule,“ id. at 30 n.11 (citing 81 Fed. Reg. at 29,062), and, in any event, they point to no intervening evidence that they claim should have changed the agency‘s mind. Thus, even if this were error, it was harmless. See 5 U.S.C. ¤ 706 (“due account shall be taken of the rule of prejudicial error“). Second, Plaintiffs suggest that the FDA‘s findings were insufficiently specific. Pls.‘ Br. 30. But the agency based its conclusion on a number of factors, including the addictiveness of nicotine, the well-established adverse health effects of cigars and pipe tobacco, consumer confusion and misinformation, and the likelihood of cessation or uptake. See 79 Fed. Reg. at 23,146. While Plaintiffs may disagree with the agency‘s conclusions, they do not contend that it ignored a statutory factor. Third, Plaintiffs recycle an out-of-context quote from the FDA‘s regulatory impact analysis, which they imply shows that there is no evidence that warning labels on cigar or pipe tobacco are effective, Pls.‘ Reply 31, but which in fact refers to the unremarkable point that because the warnings are new to these products, their benefits cannot be precisely quantified, as Defendants have already explained at length, Defs.‘ Br. 39. Fourth, Plaintiffs erroneously argue that Defendants have failed to “contest[]“ various issues: Plaintiffs‘ cost-benefit analysis claim has been held in abeyance at their request, ECF No. 51, ¦ 5; ECF No. 68 at 4 n.3; the FTC warnings are addressed supra at 9Ð10 & n.1, 12; and premium cigars are addressed supra at 13Ð

14.

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II. THE FDA‘S ASSESSMENT OF USER FEES IS CONSISTENT WITH STATUTORY AUTHORITY

Plaintiffs concede that, by operation of statute, cigars and pipe tobacco must be assessed user fees. Their claim that the FDA arbitrarily declined to assess user fees on other newly deemed products, such as e-cigarettes, cannot be squared with the statutory text, and finds no support in its structure or purpose.

The statutory text is plain, as fully set forth in Defendants‘ opening brief. Defs.‘ Br. 41Ð

44. In short, Congress instructed the FDA to “assess user fees on, and collect such fees from, each manufacturer and importer of tobacco products“ subject to Chapter IX “in accordance with“ the requirements of Section 919. 21 U.S.C. ¤ 387s(a). Section 919 sets forth the total amount of user fees to be collected each year, id. ¤ 387s(b)(1), and provides that the total “shall“ be allocated among six classes of tobacco productsÑcigarettes, cigars, snuff, chewing tobacco, pipe tobacco, and roll-your-own tobaccoÑ“by the percentage determined under section 625(c) of [the Fair and Equitable Tobacco Reform Act (“FETRA“)] for each such class of product,“ id. ¤ 387s(b)(2)(B). And that section of FETRA, in turn, lists percentage allocations for the same six classes of tobacco products, which total 100%. 7 U.S.C. ¤ 518d(c)(1). Moreover, Section 919 further provides that allocations among manufacturers and importers within each class “shall be the percentage determined for purposes of allocations under subsections (e) through (h) of“ Section 625 of FETRA. 21 U.S.C. ¤ 387s(b)(4). FETRA, in turn, provides that this allocation is based on their “share of gross domestic volume,“ defined as the volume of tobacco products “removed“ and not exempt from excise taxes under the Internal Revenue Code (“IRC“). 7 U.S.C. ¤ 518d(a)(2), (e). The IRC, in turn, limits its definition of “removal“ to the same six classes of tobacco products. 26 U.S.C. ¤ 5702(c), (j).

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Plaintiffs focus on a single word in this interlocking statutory scheme, noting that Section 919 refers to assessing user fees on “each“ manufacturer and importer of tobacco products subject to Chapter IX. Pls.‘ Reply 34 (quoting 21 U.S.C. ¤ 387s(a)). But reading that word in isolation ignores Congress‘s instructionÑin the same sentenceÑto assess user fees “in accordance with“ the rest of Section 919, 21 U.S.C. ¤ 387s(a), and would effectively nullify the remainder of that section and the provisions of FETRA and the IRC that it incorporates.

Plaintiffs make no serious effort to explain how user fees could be assessed on e- cigarettes (or, for that matter, other newly deemed products) “in accordance with“ the statutory text. To begin, assessing user fees on an additional class of products would depart from the percentage allocations set forth in FETRA for the six listed classes. 7 U.S.C. ¤ 518d(c)(1). Even if that were possible, FETRA provides no standard to measure the share of “gross domestic volume“ of other classes of products. For one thing, that term is defined as the volume of tobacco products “removed“ and not exempt from federal excise taxes, 26 U.S.C. ¤ 518d(a)(2), but products outside the six listed classes cannot be “removed“ and are not currently subject to such taxes, see 26 U.S.C. ¤¤ 52, 5702(c), (j). For another, while FETRA sets forth parameters to measure volumeÑfor example, cigarettes are counted in sticks, snuff in poundsÑthose parameters are limited to the six listed classes. 7 U.S.C. ¤ 518d(g)(3). Thus, Plaintiffs‘ proposal that the agency adopt a “metric“ by which “20 cigarettes = 1 e-cigarette = 1 standard container of moist snuff = 4 large cigars“Ña suggestion in fact made by a commenter, not the agency, cf. Pls.‘ Reply 36Ð37 (quoting 81 Fed. Reg. at 28,712)Ñnot only lacks any grounding in the statutory text, but in fact directly contradicts it.2

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2 Similarly, while Plaintiffs deny that their reading “would require [the] imposition of user fees on repackers and relabelers,“ Pls.‘ Reply 36, they fail to explain why not: if the FDA used the

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Plaintiffs‘ fallback arguments concerning the statute‘s structure and purpose are misplaced, and in any event cannot overcome its plain text. They suggest, for example, that a “user fee“ is generally imposed in exchange for a service and is “not meant to benefit others.“ Pls.‘ Br. 34 (emphasis omitted). But the “[Supreme] Court has never held that the amount of a user fee must be precisely calibrated to the use that a party makes of Government services.“ United States v. Sperry Corp., 493 U.S. 52, 60Ð61 (1989). On the contrary, it has “recognized that when the Federal Government applies user charges to a large number of parties, it probably will charge a user more or less than it would under a perfect user-fee system.“ Id. Thus, while Plaintiffs correctly note that, under the statute, “tobacco products that are not subject to regulation do not have to pay ‘user fees,‘“ Pls.‘ Reply 34 (citing 21 U.S.C. ¤ 387s(b)(2)(B)(iii)), it does not follow that the statute requiresÑor even permitsÑthe FDA to “charge a user fee“ for every product it “‘deem[s]‘ . . . subject to regulation,“ as Plaintiffs erroneously contend, id.

Plaintiffs think it “anomalous“ that e-cigarettes should not share in the “responsib[ility] for paying for th[e] regulation,“ a “possibility“ they say “the legislative history suggests Congress had not even considered.“ Pls.‘ Reply 36. Indeed, they argue that the “allocation formula included all classes of tobacco products that were in existence at the time of enactment,“ so there is “no basis“ to argue that “Congress somehow foresaw and intended to exclude . . . classes of tobacco products that [the] FDA might later“ deem. Id. at 35. But e-cigarettes were available in the United States by “early 2007,“ 81 Fed. Reg. at 28,978, and Congress was well definition of “tobacco product manufacturer“ from 21 U.S.C. ¤ 387(20), as Plaintiffs suggest, it would have to include repackers and relabelers, which are not accounted for in FETRA because they do not “remove“ products under the IRC, 81 Fed. Reg. at 28,711. And Plaintiffs offer no response whatsoever to the various other absurdities generated by their reading of the statute. See Defs.‘ Br. 44.

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aware of them when it passed the TCA in 2009, see, e.g., 155 Cong. Rec. H6626 (June 12, 2009) (statement of Rep. Buyer) (“[I]n the marketplace right now, there are many different types of products. . . . [Y]ou have an electronic cigarette, whereby it‘s a nicotine delivery device.“).3 Nevertheless, it declined to include them in the statutory allocation formula. Equally mistaken is Plaintiffs‘ suggestion that, on the FDA‘s reading, the “regulatory scheme is no longer self- funding.“ Pls.‘ Reply 36. In fact, the “the total amount of user fees“ authorized for each fiscal year, 21 U.S.C. ¤ 387s(b)(1), is assessed regardless of how they are allocated, id. ¤ 387(b)(2).

Even if the agency‘s interpretation were not compelled by the statutory text, it is at least a reasonable one that warrants deference under Chevron. See 81 Fed. Reg. at 28,711Ð12 (setting forth reasons why, “even if“ the statute were “ambiguous,“ the “FDA would adopt the same interpretation of the statute in an exercise of its discretion“). Plaintiffs‘ suggestion to the contrary is meritless.

III. THE FDA REASONABLY INTERPRETED THE TCA TO TREAT TOBACCO BLENDERS AS MANUFACTURERS

Plaintiffs do not dispute that the FDA properly deemed pipe tobacco subject to Chapter IX of the FDCA. Nor do they deny that retailers who blend pipe tobacco meet the statutory definition of a “tobacco product manufacturer.“ Their claim, rather, is that a provision of Section 905, which concerns who must register with the FDA and submit a list of products, should be read to exclude retailers, and that that reading should apply not just to Section 905 but to the entirety of Chapter IX. They are wrong on both counts.

—–

3 See also 155 Cong. Rec. S6010 (June 3, 2009) (statement of Sen. Burr) (“Then we have a new category called electronic cigarettes . . . . It actually runs off a battery. It extracts the nicotine and delivers it into the system in a totally different way than the tobacco-heated cigarette.“); 155 Cong. Rec. H4367 (Apr. 1, 2009) (statement of Rep. Buyer) (“[T]he[re] are now . . . dissolvable tobacco products. . . . These are orbs or strips that you can lay on your tongue or a stick that‘s a little like an oversized toothpick that you can stick in your mouth.“).

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To begin, Plaintiffs‘ premiseÑthat Section 905 “carves“ out retailers from its scope, Pls.‘ Reply 18Ñis mistaken. See Defs.‘ Br. 49Ð50. Section 905 provides that the term “manufacture, preparation, compounding, or processing shall include“ certain activities “in furtherance of the distribution“ of the product from the place of manufacture to the person who makes final delivery or sale. 21 U.S.C. ¤ 387e(a)(1). The word “include“ is a term of expansion, not exclusion. See, e.g., Burgess v. United States, 553 U.S. 124, 131 n.3 (2008). Here, the term clarifies that certain distributors are covered by Section 905, but it does nothing to limit the meaning of “manufacture,“ much less exclude retailers. The term “retailer“ is separately defined for purposes of Chapter IX. Id. ¤ 387(14). If Congress had meant to exclude retailers for purposes of Section 905, it surely would have said so. Regardless, even if Plaintiffs‘ reading of Section 905 were correct, there would be no basis to apply it to the rest of Chapter IX. The provision of Section 905 on which Plaintiffs rely applies only in “this section,“ id. ¤ 387e(a), while the definition of “tobacco product manufacturer“ applies more generally “in this chapter,“ id. ¤ 387Ñthat is, all of Chapter IX.

Plaintiffs argue that there is little need for regulatory oversight of retailers who blend pipe tobacco because, they presume, blenders would use FDA-authorized tobacco products. Pls.‘ Br.

39. But that presumption may not be correct, and under Plaintiffs‘ reading of the statute, there would be no way for the FDA to know what, exactly, was in these “blends.“ Regardless, blending may “alter the chemical or perception properties of the new product (e.g., nicotine level, pH, smoothness, harshness, etc.),“ 81 Fed. Reg. at 28,996, and may also raise levels of HPHCs [harmful or potentially harmful constituents] in the product,“ id. at 28,995. Treating blenders as manufacturers closes what would be a loophole in the regulatory scheme by subjecting these blended products to oversight.

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Plaintiffs‘ claim that Defendants have “conceded,“ Pls.‘ Reply 40, that the FDA‘s interpretation “is unreasonable because it imposes a significant burden and expense on numerous small businesses“ in violation of the “the APA together with the Regulatory Flexibility Act,“ Pls.‘ Br. 46, is baffling. Plaintiffs themselves indicated that they were not pressing their APA/RFA claim at this time, ECF No. 51, ¦ 5, and the Court held it in abeyance, ECF No. 68 at 4 n.3.

At bottom, the definitions of manufacturer and retailer are not mutually exclusive. Tobacco blenders, even of already-authorized tobacco products, are “assembl[ing]“ and “process[ing]“ a new product by mixing, which meets the statutory definition of a “tobacco product manufacturer“ by any measure, 21 U.S.C. ¤ 387(20), regardless of where the blender is in the supply chain.

IV. THE FDA PERMISSIBLY CONSIDERED PIPES TO BE “COMPONENTS“ OR “PARTS“ OF TOBACCO PRODUCTS

Plaintiffs‘ claim that the FDA improperly considered pipes to be regulable as “components“ or “parts“ of tobacco products likewise fails. Pipes are undeniably fundamental to smoking pipe tobacco; without them, pipe tobacco cannot be used for its primary purpose. In arguing otherwise, Plaintiffs fail to grapple with the breadth of the statutory definition of “tobacco product,“ the deference owed to the agency‘s interpretation under Chevron, and the leading case addressing the deeming rule, Nicopure Labs, LLC v. FDAÑwhich they do not even acknowledge, much less distinguish.

Plaintiffs do not dispute that, under the TCA, it is not only things “made or derived from tobacco“ that are tobacco products, but also “any component, part, or accessory“ thereof, whether or not made or derived from tobacco, 21 U.S.C. ¤ 321(rr)(1)Ña provision that, like other parts of the FDCA, should be construed “as broad[ly] as its literal language indicates,“

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United States v. Article of Drug Bacto-Unidisk, 394 U.S. 784, 798 (1969); 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.‘“); Defs.‘ Br. 52Ð53. Nevertheless, they urge the Court to graft an extrastatutory limitation onto the term “component or part“Ñthat it must be physically “integrated with“ a tobacco product. Pls.‘ Reply 40. There is no basis to do so.

“To prevail on [their] Chevron Step One argument, [Plaintiffs have] to do better than concoct an interpretation purportedly based on the statute‘s context. [They] must show that the statute unambiguously forecloses the [agency‘s] interpretation.“ Pharm. Research & Mfrs. of Am. v. FTC, 790 F.3d 198, 207 (D.C. Cir. 2015). Here, Plaintiffs argue that “component“ should be read narrowly to mean “ingredient“ or “additive,“ which appear beside it in some provisions of the statute. Pls.‘ Reply 40. But that limitation is squarely refuted by other provisions of the statute, which make clear that “component“ has a much broader meaning, including, for example, the filter and paper of a cigarette. 21 U.S.C. ¤ 387g(a)(1)(A); Defs.‘ Br. 53. Plaintiffs respond that a cigarette‘s filter and paper are “consumed,“ while a pipe is not. Pls.‘ Reply 41. But that limitation is equally absent from the statutory text, which extends to “any“ component or part, and the FDA reasonably declined to add it. See Nicopure Labs LLC v. FDA, — F. Supp. 3d —, No. 16-878, 2017 WL 3130312, at *17 (D.D.C. July 21, 2017), appeal docketed, No. 175196 (D.C. Cir. Aug. 31, 2017) (“The fact that the components of a conventional cigarette may be physically connected to that item does not mean that the components of an entirely different sort of product must be.“). In Nicopure, the court rejected a virtually identical argument and upheld the agency‘s interpretation under Chevron step one, concluding that “the agency‘s interpretation is entirely consistent with the plain meaning of the statute.“ Id. at *16 (the “device

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plus the liquid are undeniably the two essential components of an open vaping system“). Plaintiffs offer no persuasive reason for this Court to chart a different course.

In any event, the FDA‘s interpretation of the term “component or part,“ which Congress left undefined, is entirely reasonable and merits deference under Chevron step two. Plaintiffs halfheartedly disagree, claiming that the agency did “no expert, scientific work“ to justify its interpretation. Pls.‘ Reply 40. Not so. In defining “component or part“ to include things intended or reasonably expected to “affect a product‘s performance, composition, constituents, or characteristics,“ 81 Fed. Reg. at 29,102, the FDA was attentive to Congress‘s intent that the agency have the authority to “address issues of particular concern to public health officials,“ “set national standards controlling the manufacture of tobacco products,“ and “regulate the levels of tar, nicotine, and other harmful components.“ Pub. L. No. 111-31, ¤ 3(2), (3), (5). As the agency explained, products that meet the definition of “component or part“ are expected to have an impact on public health, while “accessories,“ by contrast, “are expected to have little direct impact on the public health.“ 81 Fed. Reg. at 28,975. And while Plaintiffs suggest that pipes vary for aesthetic reasons, they do not deny the obvious fact that pipe design affects the “performance,“ “constituents,“ and “characteristics“ of pipe tobacco. For example, the size and shape of the bowl and air passage will affect the draw, and thus the rate of delivery of smokeÑ including nicotine, carcinogens, and other constituents. Likewise, some pipes have filters, see, e.g., AR 87,232, which, like cigarette filters, can affect taste, harshness, and the mixture of chemicals delivered to the user, see 21 U.S.C. ¤ 387d(a)(1) (requiring submission of health information about filters); Surgeon General‘s Report (2014) at 8 (AR 14,588) (noting suggestive evidence that ventilated filters in cigarettes increased the risk of adenocarcinoma).

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Perhaps recognizing the weakness of their statutory argument, Plaintiffs also contend that the FDA failed to adequately “consider and justify the economic burdens“ of the rule on the manufacturers of “artisan, handcrafted pipes,“ citing Business Roundtable v. SEC, 647 F.3d 1144 (D.C. Cir. 2005), and, in a footnote, “the RFA and the APA.“ Pls.‘ Reply 41Ð42 & n.16. But, like their argument concerning retailers who blend pipe tobacco, their APA/RFA claim regarding the “economic consequences“ of the rule, Compl. ¦ 117, has been held in abeyance, ECF No. 68 at 4 n.3. In any event, the agency fully discharged any such obligation here.4 In short, there is “no linguistic or statutory basis“ for Plaintiffs‘ contention that pipes are not regulable as components or parts of tobacco products. Nicopure, 2017 WL 3130312, at *18. Whether under Chevron step one or two, this claim should be rejected.

CONCLUSION

For the foregoing reasons, in addition to those set forth in Defendants‘ opening brief, summary judgment should be entered in favor of Defendants and against Plaintiffs on Counts II, III, VI, VII, VIII, and IX of the complaint.

Dated: December 4, 2017 Respectfully submitted,

Of counsel: BRETT A. SHUMATE

Deputy Assistant Attorney General

BRIAN R. STIMSON

Acting General Counsel JOEL McELVAIN

Food and Drug Division Assistant Branch Director

Office of General Counsel

U.S. Dep‘t of Health and Human Services /s/ Eric Beckenhauer

ERIC B. BECKENHAUER

REBECCA K. WOOD Trial Attorney

Chief Counsel U.S. Department of Justice

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4 Business Roundtable is in any event inapposite. There, the statute expressly required the SEC “to consider the effect of a new rule upon ‘efficiency, competition, and capital formation,‘“ id. at 1148 (quoting 15 U.S.C. ¤¤ 78c(f), 78w(a)(2), 80aÐ2(c))Ña “unique“ provision that imposes a “‘statutory obligation‘“ on the SEC “‘to determine as best it can the economic implications of the rule,‘“ 647 F.3d at 1148 (citation omitted). The text of the TCA says nothing comparable.

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Case 1:16-cv-01460-APM

Food and Drug Administration

Associate General Counsel

Food and Drug Division

PERHAM GORJI

Deputy Chief Counsel for Litigation

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

Document 80 Filed 12/04/17 Page 31 of 31

Civil Division, Federal Programs Branch

20 Massachusetts Ave. NW

Washington, DC 20530

Tel: (202) 514-3338

Fax: (202) 616-8470

E-mail: Eric.Beckenhauer@usdoj.go…

Counsel for Defendants

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