Tobacco Documents Online

x great constitutional import and effect would be relegated by default to administrators who, under our system of government are not endowed with authority to decide them." Rahel, 389 U.S, at 276 (Brennan, J., concurring in the result) (emphasis added, citation omitted). FDA's decision to regulate tobacco to achieve the goals of "Healthy People 2000"' is one that FDA simply did not have the authority to make. The sheer number of comments received in response to FDA's Proposed Rule"' the contentiousness of the current litigaticm, and the bald fact that tobacco products are manifestly marketable to a profitable proportion of American citizens, attests to the fact that a sizeable segment of the United States population has a stake in national tobacco policy. FDA's perception that out nation's tobacco policy has failed to promote what is best for the American people's health may indicate that direct congressional legislation has been ineffective or inefficient in addressing problems related to the use of tobacco products. But the failure of Congress to establish or implement a forceful national policy is not a legal ground for the extra-democratic exercise of power being flexed here by FDA. Acquiescetrce to administrative action in this case would amount to sanctioning a system in which our governmem is made up of one branch--the executive--whose intentions may be unimpeachable, but whose practices are nonetheless unsuited to a democratic republic. )nFerieral7rade t:'ommi.ti"eion r. Ruberaid ('o., 343 U.S. 470 (1952), Justice Jackson, in dissent, exclaimed: ~ The comments %ere so numerous that the Final Rule consumed 'r27 pages of the Fecleral Register. and the FDA addressed matters rant;mt; far outside of its a.penise. including the namielegation doctrmc. federal preempuon doctrinc. the First Amendment, and the Frfth Amendment's TakinBs Clause- 61 Fed: Reg- 44,396-4i,311i (1990) . a The rise of administrative bodies probably has been the most significant legal trend of the last century and perhaps more values today are affected by their decisions than by those of all the courts, review of administrative decisions apart. They also have begun to have important consequences on personal rights. They have become a veritable fourth branch of the Government, which has deranged our three-branchlepaltheories...i hrcderal 7'rarJL C irmmi.esion, 343 t).S. at 487. While Justice Jackson decried the rise of the administrative state, administrative agencies are a fact of modern life. And what keeps administrative agencies from devolving into Justice Jackson's distrusted "fourth branch" are the checks placed upon agency power by the actions of the three constitutionally sanctioned branches: agency power is limited by legislative delegations, executive discretion, andjudicial review. In short, administrative agencies do not upset our three-branch system precisely because they can be maintained within the constitutional system of checks and balances. But FDA's unprecedented foray into the area of tobacco regulation upsets this balance. FDA's decision amounts to one of eslaltli.shhrg national tobacco policy, rather than merely applying it through a valid legislative delegation. The task of establishing national policy on a matter as politically and economically charged as tobacco is not one that can be assumed by an executive agency in isolation. Rather it is a task that properly belongs in Congress. The principle that authority granted by the legislature must be limited by adequate standards serves two primary functions vital to preserving the separation of powers required by the Constitution. First, it insures that the fnnn'amental /yolicy decisions in onr aocicq. GV Z. Y2Hq

iv TABLE OF AUTHORITIES Caae.+ A.l-.A. Schechter Ponhry ('ar/wrarir»t r. (lnited Stare.x, 295 U.S. 495 (1935) . , ... • ........ . . . 18,24 Addison v. Hnlly Hill wrttit Prna4ictx, 322 U.S. 607(1944) ................................. 18 Arizrn,a v. ('alifarnia, 373 U.S. 546 (1963) . . • . . . . . . _ 9-10 Babhitt r. Sweet Home l'hapter of ('rtmmmtities , fur a (ireater Ure/,~wt, 515 U. S. 687 (1995) . . . , . . , . . I 73owen v. Georgetown (btiver.ci(v Na.sy,rital, 488 U.S.204(1988) .. ..... ................ 18 l3ruwn & Williamson 16haccr ('atY)_ r. I•lxirl cC llnrgAdmhtis•tratiun, 153 F.3d 153 (4th C;ir. 1998) . . . ........ . . . . . . 2, 12-13, 20-21, 23 f3rnwu-I•itrman I)i.s•Nllers l brp. ic Mathews, 435 F. Supp. 5(w'.CI'. Ky. 1976) 14-15, 17, 19 ('herrwn, 1LS.A., lnc. r. Natnral lies»urces Defenw ( bmK•il, IIH•., 467 U.S. 837 (1984) ....... . . . . . . . 1, 3, 11-12, 16-17 ( iovnc+ Beahm, btc•. v. (hmed StaXes f:rxocf arrd l)nrg Admini.ctralltm, 966 F. Supp.. 1374 (M.p N.C. 1997) .. . ..... . . . . . . . . . 2 1laris v. (hrited Stares, 495 U.S. 472 (1990) ... . . .... 22 llnlr r• l/nrrcd bYerlwnrkerx uf America, 494 U.S. 26(1990) 17 I rJernl Ataratmv ('rmrmt-c.wun r_ b'ecvram l.itrea; lnc , 411 U S 726 (1973) _ 19 ?~2t2828 v TABLE OF AUTHOltIT1ES-Can4inued 474 U.S. 121 (1985) ... Page Nederal7'rade (`ammis.cion v. Ruberoid, ('o., 343 U.S. 470 (1952) . . . . . . . ... . ....... . . . 8-9 Flruxl r. Kuhn, 407 U.S. 258 (1972) ... . . . . • ...... 23-24 General Electric ('a. v. (iilben, 429 U.S. 125(1976) ...............................22-23 (iauJ 5amaritan .llaspilal v. Shalala, 508 U.S.402(1993) .......................... 22 /N.S i•. ( irrdoza-F'rntseca, 480 U, S, 421 (1987) ........ 17 Indastrial Uniott Delrcrrtment, AFL-(70 r• Ameriean Petrrtlenm ]nstitute, 448 U.S. 607 (1980)..•. _ .._.......•............•....3-4,10 Mortrm r. Mancwri, 417 U.S. 535 (1974) ............ 14 Natioaxal Labor Relatirm.s Board v. Nrrnon, 380 U.S. 278 (1965) ....... .............. ..•.. IB National Mining As:aviatinn r. 1/nited Statex Army ('arps t)fF,ttgineers, 145 F.3d 1399 (D.C. Cir. 1998) . . . . . . . . . • . ............... . 1, 19 Sectrrities anrll%schange C'ammi.wrm r• Shtnn, 436 U.S.103(1978) .................. ....... 20 Siicial b"ecvrri(y Barrrc! tc Nieratka, 327 U. S. 358(1946) ............................ .... 18 (htitetlStates r• Alabama G. S.F2. ('ta., )42U-S.615(1892) ............ .. 22 (hureJState,e r. Riverside 13uyview Homes, htc., Page (htirerl Stale.s r. 1(ohel, 389 U.S. 258 (1967) .. 4,8

20 to regulate "drugs" or "devicese' would result in an unmanageable and inconsistent federal regulatory system in which congressional policies established under its tobacco- specific kgisLatiwt could be undermined or contradicted by FDA policy. This is a result that the Chevrrm doctrine was specifically designed to discourage. This Court's "clear duty in such a situation is to reject the administrative interpretation of the statute." ecnriNex mx! F:rclxvrw ('rrmmissiavr u Shra,,, 436 U.S, 103, 119 (1978). 2. Even If the GAevr»n Doctrine Required This Court to Defer to an Ageecy's Iletcrain.timt of Itf Own Jurisdietion.llefkrence Is Not Owed to an Agency's Change ot Position W here the Change Is Unreasnn.bk One factor to be considered in giving weight to an admittistrative ruling is'"the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control" SEC. t: Mat, 436 U.5. at 117-18 (citations omitted). FDA's current rule governing the sale and advertising of tobacco produetslacksthese factors which suggest judicial deference. In fact, administrative taw principles favor FDA's prior position. In particular, the recent vintage of FDA's new jurisdictional determination renders its current arguments regarding interpre- tation of its statutory delegation unpersuasive. As mentioned above, Congress gave FDA jurisdiction over "dn,gs" and "devic.e" in the Pure Food and Drugs Act of 1906 and the Food, Drug and Cosmetic Act of 1938. From 1914 until 1996, the FDA affirmatively denied jurisdiction over tobacco products, Brr»v„ rC Williamso,r, 153 F.3d at 168. The Act's definition of "dnrg," which has remained relatively unchanged through the years, includes "anicles (other than 21 food) ialended rn qfjecr the structure or any function of the body of man or other animals." 21 U.9_C. § 32 t(gx l)(C). The Act's definition of"device" includes a"contrivance ... intended to affect the structure of any function of the twdy." 21 U,5.C. § 321(h)(3). As noted by the Court below, FDA derived its former stance partly from the txliefthat these terms, particularly given the phrase "intended to affect," did not include articles such as cigarettes so long as they were "marketed without health claims." llrawa & Williamwor, 153 F.3d at 169 (citation omitted)_ In addition, the agency concluded that jurisdiction over tobacco was inconsistent with congressional intent. Id. Now, however, FDA has changed its position. It claims that, in order for an article to be classified as a "drug" or "device' it is not necessary that the marketer make any specific health-related claims for the article. Brief for the Petitioners at 19 Instead, it is enough that the marketer "knows" that its product will have a particular effect: tobacco manufacturers market their products with claims that they will provide "satisfaction," a "code-word" for the pharmacological effects of nicotine. /d. This startlingly recent change in the agency's position should not be countenanced by this Court. Legislative delegations are not unlimited grants of power that can be stretched and compressed at the whim of an agency or as the winds of political sensibilities shift. If any delegation was made by Congress to FDA to regulate tobacco products, that delegation had to have occurred in 1906 or 1938. It is rather a late date for FDA to suddenly discover that those earlier Congresses granted it extraordinarily broad powers that it has heretofore overlooked. This is not to say that an agency is always obliged to adhere to one interpretation of a statute This Court has acknowledged that ~srGtrZt7G$

2 STATEMENT OF THE CASE On August 28, 1996, the Food and Drug Administration (FDA) published a final rule in the Federal Register, "Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco to Protect Children and Adolescents," 61 Fed. Reg. 44,395 (1996). Subsequently, the Respondents filed this suit challenging FDA's exercise of jurisdiction over tobacco products. The United States District Court for the Middle District of North Carolina rejected the challenge, finding that Congress did not intend "to withhold from FDA" the authority to regulate tobacco, t'nv+re tleahm. Inc, v. Clnired 57ates!•ixt;1 curd 1.7rugAahmhdsrratir>rt, 966 F. Supp. 1374, 1387 (M.D. N.C. 1997). The United States Court of Appeals for the Fourth Circuit reversed. Brymir & William.wxr 74hacca Corp. v, I•'rxxl & Drug Adminisiraiiun, 153 F.3d 155 (4th Cir. 1998) The Fourth Circuit's opinion was based on two rationales. First, notwithstanding the provisions of the Food, Drug and Cosmetic Act (Act) defining "drugs" and "devices," FDA's regulation was inconsistent with the Act as a whole. Because FDA did not and could not comply with the statutory mandates of the Act in its treatment of tobacco, Congress could not have intended that Act, or FDA's administration of it, to apply to tobacco products- Second, FDA's assertion of jurisdiction could not be meshed with congressional intent as to the Act, or with the regulatory scheme created by Congress through statutes directed specifically at tobacco products. FDA petitioned for a writ of certiorari to resolve this important question, which this Court granted. SUMMARY OF ARGUMENT As FDA and its Amici ably illustrate, the importance of national tobacco policy is difficult to understate. The produc- tion. sale, and export of tobacco products has significant impacts on our national economy and on the health of American citizens, But it is the very significance of the issue that Vb2'n2828 3 demonstrates that national tobacco policy properly belongs in the open halls of a democratically elected Congress. FDA's intetjection of itself into this issue of broad national policy intrudes into an area Congress reserved to itself FDA's role is limited to the application of congressional policy; it has no power to establish it, FDA's decision to recast the contours of its own jurisdiction under an existing federal statute is entitled to no deference. FDA's arguments to the contrary not only rely upon a crabbed interpretation of this Court's decision in t'hevrrm, U.S.A„ Irrc, v. NaJural 11e.cources Ucferase Council, brc„ 467 U.S. 837, but also utterly ignore this Court's repeated pronouncements that an agency's determination of its own juris- diction is not entitled to deference, particularly where, as here, the agency redrafts its jurisdiction in a way that upsets long- settled agency practice without sufficient reason. ARGUMENT 1 THE SIGNIFICANT ECONOMIC AND PUBLIC HEALTH IMPACTS OF TOBACCO DEMONSTRATE, BY THEMSELVES, THAT TOBACCO REGULATION IS A MATTER OF NATIONAL POLICY THAT MUST BE ESTABLISHED BY CONGRESS, NOT THROUGH THE UNILATERAL DECISION OF FDA As comprehensively demonstrated by FDA, national tobacco policy plays a major role in the economic life and physiological welfare of United States citizens. Consequently, the issue in this case is not, as FDA would have it, whether tobacco products are "drugs" or devices" within the meaning of the Food, Drug and Cosmetic Act. 21 U-S.C. 301, ei .+eq. The issue in this case is whether national policy on a matter of such obvious public importance ought to be dictated by FDA, or should instead emanate from Congess, "the governmental body

16 ic Act, under these circumstances, means that did not recognize a need to exclude tobacco products A's jurisdiction because it was generally understood that the Act did not give FDA jurisdiction over them. B. Even If the Tcruu "flrag" or "puwke" Within Food, Drup and Costnetlc Act Wera Ambiguau, the Chevron f)octriowt Ilrw`s Not Necessarily Erutitlo FDA to 17kfiusc the Linaits of fts Own Jurisdiction 1, CAerron I/oes not Apply ta Every Agency fletaruiustion As explained above, Chevrr.vr dealt with a relatively narrow agency determiuation, specifically, whether the statutory term "stationary source" could reasonably be interpreted by EPA to include an entire plant for the purposes of establishing regulatory permit standards. But not all agency interpretations of statutes they are charged with adrninistering have the same narrow policy implications that were at stake in C'hevrcw. There, several factors militated in favor of a policy of deference. First, the best means by which to regulate emissions sources was a matter that EpA, given its experience and expertise, could resolve better than Congress, particularly for the purpose of establishing a workable and enforceable regulatory scheme. Deference is owed particularly where "the statutory policy in the given situation has depended upon more than ordinary knowledge „ respecting the matters subjected to the agency ` regulations." Cherrr»r, 467 U.S. at 844 (citation omitted). Second, requiring judicial deference to the agency's determination in that context, rather than allowing the various state and federal courts to interpret statutory language anew, advanced the overall federal goal of establishing consistent national standards upon which individuals and states could justifiably rely. See, Kenneth Culp b.~a2 b2 2 2 9 17 Davis and Richard J. Pierce, Jr., Admnustrarive Lcm• "1'reati•se, Vol. 1§ 3.4, at 116-18 (3rd ed. 1994). As the Court in Chevron explained, In these cases, the Administrator's interpretation represents a reasonable accommodation of manifestly competing interests and is entitled to deference; the regulatory scheme is technical and complex, the agency considered the matter in a detailed and reasoned fashion, and the decision involves reconciling conflicting policies. thevrrrn, 467 U.S. at 865. Here, these factors which made 1'Mevran's doctrine of deference compelling ate absent. The question of whether tobacco is a"drug" or "device" is not a question on which FDA can bring some special knowledge not within the sphere of Congress' own expertise. Furthe. FDA has not reached its conclusion in a detailed or reasoned fashion, nor has its policy decision dispelled policy conflicts. Instead, FDA's decision has served to exacerbate such conllicts- See, e.},•., L3rown-Ebrrnan Uistillers, 435 F. Supp. at 14. Despite the cautionary language in C7uwrr,n, it is not always obvious under what circumstances ('hevron's deferential standard should apply. See, e.g., INS v. 1'ardra:a-I•iazseca, 480 U.S. 421 (1987); Dole v. l/niteclSteelworker.e q/Americu, 494 U.S. 26 (1990) (pn both cases, justices disagreed as to the applicability of Chevrrnr deference to an administrative agency detemtination. ). Deference is most suited to those situations in which the agency's determinations relate to matters that fall within an agency's particular expertise or where statutory ambiguities unmistakably manifest Congress' intent that the agency resolve policy questions within a narrow set of parameters. It is inappropriate where deference would result in an inconsistent and unworkable federal regulatory scheme Here, if substantial deference were given to FDA's deter- minations of its own jurisdiction, the result would be'"delegation

22 "(a]n administrative agency is not disqualified from changing its mind" . . . [But] "[a]n agency interpretation af a relevant provision which conflicts with the agency's earlier interpretation is 'entitled to considerably less deference' than a consistently held agency view." GoarlScmtariu»+Hrx"ial tc Shalala, SOB U.S. 402, 417 (1493) (citations omitted). An agency's change in position opens the door to a more expanded and skeptical inquiry by this Coun and, in particular, this Court should dis/avar changes which result in upsetting long-settled expectations: It is a settled doctrine of this court that in case of ambiguity the judicial department will lean in favor of a construction given to a statute by the department charged with the execution of such statute, and, if such construction be acted upon for a number of years, will look with disfavor upon any sudden change. Ibrited Slares v. Alabama G.S.R. ('u., 142 U.5. 615, 621 (1892), Thus, what is entitled to deference here is not the agency's current interpretation of '"drugs" and "devices," but FDA's prior construction of the Act, acted upon for a number of years, maintaining that these terms exclude tobacco products. The agency's former intaprr:.tation not only reflects the agency's contemporaneous construction of its enabling statute, it is a construction that the agency adhered to for 82 years. See Alabama G.S.R. Cb., 142 U.S. at 621; UwMs t~ (htired Srates, 495 U.$. 472, 484 (1990) ("[W]e give an agency's interpre- tations and practices considerable weight where they involve the contemporaneous construction of a statute and where they have been in long use.") Nee also "ieueral Electric Cn. v. Gilbert, 429 U.S- 125, 142 (1976) (Conrt rejected agency interpretation where'"[i]t is not a contemporaneous interpretation of Title Vll, 23 since it was first promulgated eight years sfter the enactment of that Title.") Further, the agency's prior interpretation was not simply a by-product ofagency inaction or silence. On the contrary, the FDA repeatedly and specifically asserted that it lacked jurisdiction over tobacco products, Brown & William,wNr, 153 F.3d at 168-70. What is mote, this agency position was conveyed to Congress, id. at 170, As this Court has stated: Although we are chary of attributing significance to Congress' failure to act, a refusal by Congress to overrule an agency's construction of legislation is at least some evidence of the reasonableness of that construction, particularly where the administrative construction has been brought to Congress' attention through legislation specifically designed to supplant Riversiofe l3a,wiew Homes, 474 U.S. at 137 (citations omitted). See alu) Zahcr v. Aller+. 396 U.5. 168, 192 (1969) (Agency interpretation "carries most weight when the administrators ..y directly made known their views to Congress in Committee hearings,"). Congressional silence in the face of FDA's long- hald and vocal position that it lacked authority over tobacco can be cited, with considerable justification, for the proposition that Congress acquiesced in FDA's prior assertions that it lacked authority to regulate tobacco. Principles of administrative law do not grant FDA the freedom to interpret afresh the Food, Drug and Cosmetic Act as though Congress had enacted the law yesterday. Whatever may have been the merits of interpreting "drug" or "device" to include tobacco products in 1906 or 1938, the day is lona past when the agency could have justified its current rule under ordinary principles of deference As this Court recognized in Noxaal r. Kahn, 407 U S. 258 (1972), when it refused to apply anti-trust law to professional baseball despite its express holding V9LC{y2828

18 tunning riot,"--Congreas abdicating its responsibility to resolve an important question of national policy and the judiciary sanctioning a"rovitt)3 commission." A.L.A. SchechterPrnrltrv Corporation v. (lniled States, 295 U.S. 495, 551, 553 (1935) (Cardozo, J., concurring). [W]here, as here, the review is not of a question of fact, but of a judgmettt as to the proper balance to be struck between twttflicting interests, "(t)he deference owed to an expert tribunal cannot be allowed to slip into a judicial inertia which results in the unauth- orized assumption by an agency of major policy decisions properly made by Congress," National Labor Relations Brrard tt Brown, 380 U.S. 278, 292 (1965) (citation otnitted). "It is axiomatic that an administrative agency's power to promulgate legislative regulations is limited to the authority delegated by Congress." Brnven v. Georgetown (britrrcityHaSnital, 4881J.S. 204, 208 (1988). This Court has emphasized that "[ajn agency may not finally decide the limits of its statutory power. That is a judicial fttnction." 1i,Gial Secsriry t3rnard v. Nieralku, 327 U.S. 358, 369 (1946). Thus, [tihe detetmittation of the extent of authority given to a delegated agency by Congress is not lei'tfior tlrv rlecisiort of him hr whom authoriry is vesred. Aridisrar vi hlally Hill Fruit Prrrirrcis, 322 U.S. 607, 616 (1944) (emphasis addtxl). The judicial policy of not deferring to agency determi- nations of their own jurisdiction is sound. Administrative agencies must operate "canalized within banks that keep it from overtlowing," A.L.A. Schechter Punltr,y, 295 U.S. at 551 (Cardozo, J, concurring), and those "canals" are constructed by Conttress, not the agency itself If an agency were capable of reconfiguring the contours of its jurisdictional canals at will, the enabling legislation would be rendered meaningless-- 19 congressional enactments would serve as nothing more than midwives to independent governing bodies. Thus, while it is appropriate to defer to agency determinations of matters which Congress has unequivocally placed into the hands of an administrative agency (as was the case in ('hevrnn), the determination of an agency's jurisdictional limits must remain a judicial question, lest the agency "bootstrap itself into an area in which it has no jurisdiction by repeatedly violating its statutory mandate." l•'edera! Maritime ('ammi,wriun v. Seairaiit l,irtes, bx•., 411 U-S. 726, 745 (1973).' [T)he scope of the FDA's authority does not rest on its assertion of authority but on the actual jurisdiction conferred upon it by Congress through legislative enactment, as construed by the Courts. Browm-Formait Distillers ('cirp., 435 F. Supp. at 1'7. Because, ultimately, the question is one of judicial, rather than agency, interpretation of statutes, (`hevrorr deference does not apply. instead, this Court's role is to examine whether ('c,ngre.cv conferred authority on FDA to regulate tobacco, regardless of FDA's assertions. Given the history of FDA's administration of the Act and Congress' enactment of laws specifically regulating tobacco products, the implications of reading a power to regulate tobacco into FDA's relatively vague statutory mandate ' llnhed S9nie.r v. Xiver.ridc lfnyviru• Nam¢.r. Ine.. 474 U.S. 121. 123 (1985), is not contrarr' authority_ That case was a challengc to an as- applied assertion ofjurisdiction over wetlands ad,jacent to navigable watcrs. This Court found that whether the particular waters in question parably bound up with 'waters' of the United States" AS a matter within thc agcncios''"technical cxpenisc," ltiver.siJe l3qtvieN. 474 U.5S at 134. But the Court specitically stated that its holding did not address nll of the agencies' assextions of jurisdiction under the Act. ldd at 131 n 8 See t InneJ Stare.r v. Wdsnn" 133 F.3d 251 (4th Cir. 1 y97). and National Mining A.rxaciatian v. llnifed .4ince.e Armr ('orryc o/'Enkineers. I45 F 3d 1399 (cases holding that jurisdictional rules . adopted bN EPA and Corps under Clean Water Act were nlcra vires) 8