Case 1:16-cv-01460-APM Document 211 Filed 08/07/20 Page 1 of 7

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

CIGAR ASSOCIATION OF AMERICA, )

PREMIUM CIGAR ASSOCIATION, and )
CIGAR RIGHTS OF AMERICA, )
)
Plaintiffs, )
)
v. ) Civ. No. 1:16-cv-01460-APM
)
UNITED STATES FOOD AND DRUG )
ADMINISTRATION, )
UNITED STATES DEPARTMENT OF )
HEALTH AND HUMAN SERVICES, )
ALEX AZAR, in his official capacity )
as Secretary of Health and Human Services )
Office of the Secretary, and )
STEPHEN HAHN, M.D., )
in his official capacity )
as Commissioner of Food and Drugs, )
)
Defendants. )
_________________________________________ )

PLAINTIFFS’ RESPONSE TO DEFENDANTS’ NOTICE OF FILING

Plaintiffs Cigar Association of America, Premium Cigar Association, and Cigar Rights of

America respond to yesterday’s notice of potentially forthcoming guidance from the Food and

Drug Administration. ECF No. 209.

In the notice, the Government states that it is seeking approval from the United States

District Court for the District of Maryland potentially to issue guidance pertaining to premium

cigars. The Government says that the potential guidance would allow a certain class of premium

cigar manufacturers to apply to the FDA for deferral of the requirement to submit substantial

equivalence reports that otherwise would be due September 9, 2020. The notice does not say when

the guidance will be issued or whether the agency would grant any deferrals in advance of the

current September 9 deadline. It also repeatedly emphasizes that any deferral grant for a particular
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premium cigar manufacturer would be entirely discretionary. In sum, maybe guidance will be

issued before September 9th; maybe premium cigar manufacturers could apply for deferral; almost

certainly those deferrals would be under consideration as the submission deadline passes; and

maybe the FDA would grant the deferral requests. Of course, if any of these contingencies do not

come to pass, the post-2007 products of a premium cigar manufacturer that did not file substantial

equivalence reports by September 9th would be illegal and the business of that manufacturer would

be devastated. And the proposed guidance does nothing to deal with the thousands of cigar and

pipe tobacco products that fall outside the agency’s currently contemplated definition of premium

cigars.

Manufacturers of those products are still scrambling to prepare substantial equivalence

reports—in the dark about what those reports should contain—during a time when the global

COVID-19 pandemic is playing havoc with their operations and their employees’ ability to travel

in support of these activities. The potential guidance adds yet another layer of uncertainty that

emphasizes rather than diminishes the need for immediate relief from this Court.

This potential guidance is too little, too late, and should not affect this Court’s adjudication

of the claims against the Final Deeming Rule pending decision. The Final Deeming Rule is

flawed, and nothing in the announcement should affect the course of this case: This Court should

vacate and remand the Final Deeming Rule to the agency.

1. The Potential Guidance Does Nothing to Address the Agency’s Failure to Address in
the Final Deeming Rule Whether Sufficient Instructions Were in Place for Cigar and
Pipe Tobacco Substantial Equivalence Reports and Clear Legal Error in Setting the
Rule’s Effective Date.

The Government’s announcement of potential future guidance does absolutely nothing to

address Counts 11 and 13 of the amended complaint. In the Final Deeming Rule, the agency

arbitrarily set up a system where substantial equivalence reports could be due before the agency

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assessed whether it has provided sufficient instructions as to their content. The agency never made

this assessment regarding cigars, in stark contrast to the guidance it issued the same day as the

Final Deeming Rule regarding what e-cigarette manufacturers would have to submit to the FDA.

Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems, 81 Fed. Reg.

28,781 (May 10, 2016). And the agency explicitly has not finalized the form and manner rule that

Congress required before compliance. Compare Family Smoking Prevention and Tobacco

Control Act § 905(j)(1) (requiring that the “Secretary shall prescribe” the “form and manner” of

substantial equivalence reports) with § 905(i)(1) (permitting that the “Secretary may prescribe” the

“form and manner” of tobacco product listings) (emphases added); see also FDA, Guidance for

Industry: Section 905(j) Reports: Demonstrating Substantial Equivalence for Tobacco Products

(Jan. 5, 2011) at 1 (expressly stating that the 2011 guidance about cigarettes was no substitute for

the Section 905(j)(1) rule on the form and content of substantial equivalence reports, which the

agency stated it intended to release in the future).

All of this turned on a legal error, explicit in the Final Deeming Rule itself, regarding the

agency’s ability to adjust compliance dates once it had set an effective date. This misconception

justified the agency not assessing the sufficiency of instructions to cigar and pipe tobacco

manufacturers and the readiness of the industry for compliance with the substantial equivalence

requirement, as due dates could always be adjusted later. At a minimum, Section 905(j)(1) of the

Act made whether the content of substantial equivalence reports had been sufficiently explained

by the agency “an important aspect of the [regulatory] problem” that the agency needed to address

(or set forth a legally valid plan for addressing) in the Final Deeming Rule. Motor Vehicle Mfrs.

Ass’n of U.S. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983).

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The right result is to vacate the Final Deeming Rule—in particular its premarket review

requirements—and remand it to the agency so it may assess what instructions are necessary before

reports can reasonably be demanded from the industry and to set an effective date without laboring

under the agency’s manifest legal error. Nothing in the announcement addresses these problems.

2. The Potential Guidance Does Nothing to Address the Final Deeming Rule’s Arbitrary
Treatment of Premium Cigars.

Nor does the announcement affect Counts 12 and 14 of the amended complaint regarding

premium cigars. Those claims attacked the failure of the FDA to address its own request for

regulatory alternatives—adjustments to the regulatory scheme that should be made for premium

cigars—and comments responding to that request. Commenters provided the agency with

adjustments that could be made to the regulatory scheme if the agency chose to regulate premium

cigars, including proposals for exempting these special products from the substantial equivalence

process, while keeping these products subject to other regulatory requirements, or for a streamlined

substantial equivalence process for these products. See Act § 905(j)(3) (authorizing rules

exempting a class of minor changes—as any variation in a premium cigar would be—from having

to submit substantial equivalence reports), § 905(j)(1) (requiring, and certainly authorizing, the

FDA to specify what substantial equivalence reports must contain).

If anything, the August 5 notice of potential future guidance reinforces these claims. It

acknowledges that there is a huge misfit between an unaltered substantial equivalence process and

premium cigars. ECF No. 209 at 3-4. More importantly, it effectively concedes that there is not,

and really never has been, any regulatory purpose to pushing premium cigars through this process,

particularly in light of premium cigars not presenting any youth usage problem. Id.

The potential future deferral program is too late and does not solve any problem presented

to the Court in the amended complaint. At the very most, the announcement suggests that the

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agency might entertain requests from premium cigar manufacturers to defer their reports, which

the agency might grant at some point in the future (a point almost certain to be after the due date

for the reports). And the agency says it can decline or revoke a deferral as it wishes. This sets up

a scheme where the manufacturers either have to submit the substantial equivalence reports or

gamble their businesses and the livelihoods of their employees on some potential future act of

grace by the agency.

Premium cigar manufacturers should not be in this position. The Administrative Procedure

Act (“APA”) entitled them to a rulemaking process wherein the agency addressed, through

reasoned decision-making, “important aspect[s] of the [regulatory] problem” identified by the

agency in the Proposed Rule. State Farm, 463 U.S. at 43. Whether adjustments should be made

to the regulatory scheme for premium cigars, and whether and how “flexibility” in the premarket

review process should be invoked, were clearly among them. The agency never returned to those

issues in the Final Deeming Rule.

The APA also entitled manufacturers to an agency decision that addresses alternatives

presented in the comments. Sierra Club v. EPA, 863 F.3d 834, 838 (D.C. Cir. 2017). Here,

premium cigar manufacturers asked for an exemption from the substantial equivalence process and

for a streamlined process if substantial equivalence reports had to be submitted. But the agency

never addressed those requests, saying simply that premium cigars should be regulated generally

speaking and that the prospect of not regulating them at all is unattractive.

None of what the APA required happened. And the Final Deeming Rule was invalid from

the beginning as a result. The announcement of potential future guidance does not change the

Final Deeming Rule, nor does it change what substantively is required for premium cigars to pass

through premarket review. It does nothing to address the claims before the Court.

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No doubt, if the Government ever actually releases this guidance, they will argue that this

case is somehow not ready to be adjudicated. Like Goldilocks, the porridge is always too hot or

too cold for the Government; the claims are either too early or too late. The claims, however, are

clearly ripe. Nothing requires courts to wait on adjudicating a claim against a defective rule on

the hope that the agency might fix the defect later or to wait until the last minute before compliance

is absolutely, positively required in order to strike down a rule. See Chamber of Commerce of U.S.

v. Fed. Election Comm’n, 69 F.3d 600, 604 (D.C. Cir. 1995). The announced scheme is simply a

soup of uncertainty. It requires premium cigar manufacturers to wager their family businesses on

the prayer that the agency might say at some point, in response to a request, that the manufacturer

did not need to file a substantial equivalence report. And there is virtually no chance those

discretionary acts of grace will come from the agency before the September 9th cliff, from which

point products for which substantial equivalence reports were required but have not been submitted

will be illegal. The Proposed Rule asked key questions, the resolution of which was central to the

“reasoned decision-making” required for a valid rule, and the comments answered them.

Manufacturers are entitled to an agency decision in the Final Deeming Rule that addressed those

questions. The Court should vacate and remand the Final Deeming Rule to the agency so it may

get these issues right, before putting a regulatory mandate in place, as the Administrative

Procedure Act demands.

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Dated: August 7, 2020 Respectfully submitted,

/s/ Michael J. Edney

Michael J. Edney, DC Bar No. 492024
STEPTOE & JOHNSON LLP
1330 Connecticut Ave., NW
Washington, DC 20036
Telephone: (202) 429-3900
Fax: (202) 429-3901
medney@steptoe.com

Attorney for Plaintiffs Premium Cigar

Association and Cigar Rights of America

/s/ Mark S. Raffman

Mark S. Raffman, DC Bar No. 414578
Andrew Kim, DC Bar No. 1029348
GOODWIN PROCTER LLP
1900 N Street, NW
Washington, DC 20036
Telephone: (202) 346-4000
Fax: (202) 346-4444
mraffman@goodwinlaw.com
andrewkim@goodwinlaw.com

Attorneys for Plaintiff Cigar Association of

America