Yet again, the premium cigar industry has prevailed in federal court against the U.S. Food and Drug Administration (FDA). As we have previously discussed here and here, FDA appealed a federal district court decision vacating its rule (the Deeming Rule) subjecting premium cigars to the Federal Food, Drug, and Cosmetic Act, as amended by the Tobacco Control Act (TCA). On January 24, the U.S. Court of Appeals for the District of Columbia Circuit (the D.C. Circuit) issued an opinion agreeing[1] with (i) the district court’s ruling that FDA acted arbitrarily and capriciously when it sought to include premium cigars in its Deeming Rule and (ii) the district court’s vacatur of the Deeming Rule as applied to premium cigars, but it remanded the case to the district court to determine the appropriate definition of “premium cigar.” Now, the district court will reconsider the appropriate definition of “premium cigar,” which will ultimately determine the types of cigars that are not subject to the TCA and FDA’s Deeming Rule. In one potential setback for industry, the D.C. Circuit also stated that it understood the district court’s order as granting relief from user fees prospectively but that it does not read it as permitting the refunding of past user fee payments.
In affirming the district court’s finding that the Deeming Rule was arbitrary and capricious as to premium cigars, the D.C. Circuit noted that plaintiffs provided evidence that premium cigars are used less frequently and pose lower health risks than other types of cigars during the rulemaking process. In the final rule, however, FDA expressly stated that such evidence was not provided and did not exist. The D.C. Circuit emphasized that FDA’s rationale was factually incorrect, and that the agency did not examine the relevant data. Thus, the appeals court upheld the district court’s decision to vacate the Deeming Rule as applied to premium cigars.
With respect to question of remedy, however, the D.C. Circuit remanded the case to the district court to invite briefing from the parties on the appropriate definition of “premium cigars.” The court recognized that the district court crafted a definition of “premium cigar” based on a letter from FDA to another district court in another case and which departed from the definition FDA proposed in its notice of proposed rulemaking. Because the definition of “premium cigar” will ultimately determine which products are exempt from the TCA, the court concluded that the parties should have an opportunity to express their views on how that term should be defined before the district court issues a final order.
In affirming the district court’s decision to vacate the Deeming Rule as to premium cigars, the D.C. Circuit also found the district court’s decision would not disrupt the detailed user fee scheme that Congress imposed to fund FDA’s activities related to tobacco product regulation. Although courts disfavor the remedy of vacatur if it requires an agency to revise previous “settled transactions” like user fees, the D.C. Circuit determined that there were no such concerns with the district court’s order because the decision only prospectively prohibits the collection of user fees on “premium cigars” and would not require FDA to recalculate and reallocate prior user fee payments.
Notably, the D.C. Circuit recognized that neither its opinion nor a final order from the district court prohibits FDA from separately initiating a new rulemaking to define “premium cigar” or seek to once again deem premium cigars to be subject to the TCA.
The D.C. Circuit’s decision underscores the importance of thorough and evidence-based rulemaking by federal agencies, as well as the importance of interested stakeholders providing detailed public comments on proposed agency rules. Indeed, the ruling highlights the need for FDA to consider all relevant data and respond to empirical evidence from such comments when promulgating new regulations. We will continue to monitor the proceedings in the district court that will determine the definition of “premium cigar” and the scope of the Deeming Rule as to those products.
[1] https://www.tobaccolawblog.com/wp-content/uploads/sites/454/2025/01/2025-01-24-Cigar_Assc-v-FDA-No-23-5220.pdf