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Eric Gotting serves as a partner in the firm’s litigation and environmental practice groups specializing in complex civil and appellate matters, as well as internal investigations and regulatory compliance. He focuses on a broad range of legal issues, including administrative law, agency enforcement actions, toxic torts, product liability, general business litigation, and regulatory compliance. He works with a diverse set of industries, including chemicals, plastics, pesticides, fuels/pipeline, food/packaging, consumer goods, telecommunications, and e-cigarettes/e-liquids. Mr. Gotting joined Keller and Heckman in 2011, and is a former Am Law 50 litigation partner and U.S. Department of Justice trial attorney.

Litigation and Regulatory Compliance Experience

Mr. Gotting has handled cases across the country, having tried matters to verdict and argued appeals before federal and state appellate courts. His experience includes class actions, mass tort litigation, administrative law, and agency proceedings. Between 1999 and 2004, Mr. Gotting took leave from private practice and served as a trial attorney with the U.S. Department of Justice’s Civil Division, Environmental Torts Section, where he defended the federal government in multimillion dollar toxic tort cases filed under the Federal Tort Claims Act.

Administrative Law

Mr. Gotting has litigated and counseled clients on challenges to federal and state statutes, regulations, and orders. His experience covers various constitutional and administrative law issues, including the Administrative Procedure Act (APA) and state equivalents, the Dormant Commerce Clause, the First Amendment, the Due Process Clause, federal preemption, and the Freedom of Information Act (FOIA). He also has filed amicus briefs in litigation involving significant regulatory issues facing a variety of industrial sectors. As part of recent efforts by Congress to reform the Toxic Substances Control Act (TSCA), Mr. Gotting provided chemical manufacturers with extensive advice regarding preemption issues and co-authored two American Bar Association “white papers” on federal/state relations.

Enforcement Actions, Internal Investigations, and Regulatory Compliance

Mr. Gotting has defended enforcement actions and provided regulatory compliance counseling in a number of areas, including chemical and pesticide control, hazardous waste, pipeline safety, the Clean Air Act, the Clean Water Act, occupational safety and health, Superfund cost-recovery actions, insurance coverage disputes, the Food, Drug and Cosmetic Act, and the Chemical Weapons Convention.

Mr. Gotting also has conducted extensive internal corporate investigations regarding potential regulatory compliance and litigation-related liabilities, including toxic torts, product liability, consumer fraud, and commercial contract disputes.

Recently, Mr. Gotting has advised clients on several emerging issues, including e-vapor products, nanotechnology, hydraulic fracturing, the Securities and Exchange Commission’s conflict minerals reporting rule, Green Chemistry laws, the regulation of genetically-modified organisms (GMOs), the Globally Harmonized System amendment to OSHA’s HazCom Standard, and coal ash.

Toxic Torts

Mr. Gotting has extensive experience litigating toxic tort cases involving claims of personal injuries and property damage from alleged exposures to materials such as volatile and semi-volatile compounds, specialty chemicals, pesticides, gasoline, radioactive waste, and heavy metals. He has defended claims involving the entire range of environmental media, including drinking water, soil, groundwater, and air contamination. He has worked with, and defended against, experts in numerous scientific and business-related fields, including toxicology, geochemistry, hydrogeology, structural engineering, neuropsychology, health physics, survey techniques, statistics, real estate appraisal, and environmental remediation.

Activities

Mr. Gotting currently serves on the firm’s Marketing Committee and Pro Bono Committee. He also served on the King Farm Citizen Assembly’s External Affairs Committee in 2005 through 2009. He has provided various pro bono legal services throughout his career, working with groups such as the Legal Counsel for the Elderly and serving as an appointed attorney in federal habeas cases.

On May 2, 2018, the U.S. Food and Drug Administration (FDA) filed its brief in response to Appellants Nicopure and Right to be Smoke-Free Coalition’s appeal in the lawsuit challenging aspects of the Tobacco Control Act (TCA) and the Deeming Rule now pending before the U.S. Court of Appeals for the D.C. Circuit. FDA’s brief was supported by amici briefs filed by several NGOs and public health groups (who recently dropped their motion to intervene as actual parties to the appeal). Appellants filed their reply brief on May 16, 2018. (Links to all the appeal briefs are below.)

Issues on Appeal

In their opening brief, which was supported by a number of amici (Washington Legal Foundation, NJOY, CASAA, the State of Iowa, and Clive Bates et al.), appellants argue that (1) FDA was obligated to consider a less burdensome Premarket Tobacco Product Application (PMTA) process for vapor products while still protecting the public health, (2) the Modified Risk Tobacco Product (MRTP) provision of the TCA as it is being applied to vapor products violates the First Amendment of the U.S. Constitution, and (3) the ban on free samples of vapor products also violates the First Amendment.  We summarize FDA’s response to the appeal, and appellants counter-arguments below.

The Premarket Tobacco Application (PMTA)

With respect to the PMTA, FDA predictably argues that, once deemed, vapor products are tobacco products subject to all the requirements in the TCA, including premarket review. According to the agency, FDA has no choice but to apply the statutory requirements established by Congress, and that the decision not to tailor such requirements for vapor products was not arbitrary and capricious. Appellants, however, counter that they are not actually seeking a complete exemption from the PMTA or the “population effects” (public health) standard, but rather are only arguing FDA either was required to, or arbitrarily and capriciously failed to, tailor how the vapor industry demonstrates compliance with this standard. Such tailoring is necessary because requiring randomized, controlled trials or long-term epidemiological studies for each e-liquid and device would, by FDA’s own admission, eliminate up to 97% of manufacturers and the vast majority of products on the market – which flies in the face of the TCA’s clear intent to ensure that adults continue to have access to less harmful tobacco products.

While FDA maintains it will consider this option on a case-by-case basis, that is simply not enough when entire categories of vapor products could be effectively banned before PMTAs are even submitted. FDA must allow vapor companies on an industry-wide basis to file PMTAs that rely on information and data alternatives to satisfy the public health standard without having to conduct prohibitively expensive, long-term studies for each product before submitting an application. At a minimum, it was arbitrary and capricious for FDA not to adopt this option or adequately consider it during the rulemaking.

Modified Risk Tobacco Product (MRTP) Claims

FDA argues that the requirement that the agency conduct a “premarket review” of modified risk tobacco products is not a regulation of commercial speech subject to First Amendment protection (just like FDA’s review of new drug products) and that, even if it were, the requirement is narrowly tailored to further the government’s substantial interest, as required to meet the “intermediate scrutiny” standard for government limitations on commercial speech. FDA points to Congress’s extensive findings concerning Big Tobacco’s long history of marketing light, mild and low tar cigarettes as safer than regular cigarettes, and the resulting public health consequences.

But appellants argue that modified risk designation of tobacco products does not rely on a manufacturer’s intent (unlike new drugs), and so MRTP claims are protected by the First Amendment. Moreover, FDA cites nothing in either the TCA or the administrative record showing that the agency gave any consideration, as the Administrative Procedure Act requires, to how plainly truthful claims about vapor products (e.g., “no tar,” “no combustible smoke,” “no ash,” “no diacetyl”), which are designed to help smokers move away from cigarettes, might actually be interpreted by consumers. Insisting that, because of Big Tobacco’s past indiscretions, it is the vapor industry’s duty – not the government’s – to demonstrate in the first instance that entirely truthful statements are not potentially misleading puts the cart-before-the-horse.

Free Sample Ban

FDA argues that the ban on the distribution of free vapor product samples (1) does not implicate the First Amendment because it is effectively a price regulation focused on conduct that regulates economic activity rather than expression and that, (2) even if the prohibition were viewed as a speech restriction, it would withstand review under the intermediate scrutiny standard because it is narrowly tailored to further the government’s substantial interest in preventing youth access to tobacco products.

But according to the Appellants, FDA’s position completely ignores the underlying purpose of the commercial speech doctrine, i.e., the free flow of commercial information through advertising, which warrants First Amendment protection so consumers can make intelligent and well-informed purchasing decisions. As Consumer Advocates for Smoke-Free Alternatives Association (CASAA) made clear in its amicus brief in support of the appellants, a substantial amount of information is furnished through free samples regarding e-liquid flavors and device performance that adult consumers require. Record evidence shows that when deciding whether to switch from significantly more harmful cigarettes, consumers must be able to understand how vapor products work, taste various flavors, and experience the sensation and performance levels of different devices. Samples are needed to convey this information – it is not enough for sellers to simply make representations through other channels, such as written materials or retailer demonstrations.

Moreover, requiring companies to charge a fee to sample products will limit the amount of information conveyed through sampling, whether because consumers are price sensitive, reluctant to spend money on an unfamiliar or novel product, or otherwise. Vapers engage in a routine and ongoing sampling process of multiple products as they switch from cigarettes. The act of constantly paying for each sample tested presents an unnecessary hurdle.

FDA also never acknowledges the Supreme Court’s test for determining whether the ability to distribute free samples possesses sufficient communicative elements (i.e., an intent to convey a particularized message) to bring the First Amendment into play. Rather, FDA asserts that it is only regulating conduct, turning a blind eye to the extensive record evidence that manufacturers and retailers not only offer free samples with the specific intent to convey important information to consumers, but also that consumers themselves understand testing free samples will help them make critical choices in the marketplace affecting their health and well-being.

Finally, FDA points to how cigarette manufacturers in the past failed in their efforts to limit youth access (and would distribute cigarettes at youth-oriented events like concerts), and argues that the exception in the TCA permitting free samples of smokeless tobacco in qualified-adult-only-facilities will not work for vapor products. But nowhere in FDA’s brief or the administrative record, according to appellants, is there any evidence – whether through studies, surveys, anecdotal reports, or otherwise – demonstrating that underage individuals are obtaining free samples of vapor products from venues or events only frequented by adults – e.g., vape shops, trade shows, and adult-oriented concerts. In fact, vast swaths of the vapor marketplace – primarily vape shops – are swept-up in the free sample ban when it is pure speculation and conjecture on FDA’s part to conclude that minors have easy access to samples through such channels. This approach is not permitted under the First Amendment.

Rather than a prophylactic ban on free vapor product samples, there are a number of non-speech related alternatives that FDA could implement to restrict youth access to free tobacco product samples, such as:

  1. prohibiting free samples at youth-oriented events;
  2. limiting free samples to adult-only, age-verified facilities where the sample must be used or consumed on-site so as to prevent removal and any access by the general public;
  3. aggressively enforcing minimum age requirements; and
  4. conducting education campaigns aimed at minors.

In short, FDA’s treatment of free vapor product samples fails to balance the government’s interest in preventing youth access with Congress’s stated goal of allowing adults continued access to less harmful tobacco products.

Links to all briefs:

Oral arguments will likely be scheduled in the Fall of 2018. We will keep you updated on the progress of the appeal.

The Right to be Smoke-Free Coalition and Nicopure Labs are represented in the appeal by Keller and Heckman LLP Partners Eric Gotting and Azim Chowdhury.

On February 20, 2018 several organizations filed amicus (“friend of the court”) briefs in support of Plaintiff-Appellants Nicopure Labs’ and the Right to be Smoke-Free Coalition’s appeal in the Deeming Rule challenge now pending in the U.S. Court of Appeals for the D.C. Circuit.

The Washington Legal Foundation (WLF) is a nonprofit, public-interest law firm and policy center dedicated to defending and promoting free enterprise, individual rights, limited government, and the rule of law. In particular, WLF has devoted substantial resources over the years to promoting the free-speech rights of consumers and merchants in the marketplace, appearing before many federal courts in raising First Amendment issues. WLF has actively litigated First Amendment limits on the Food and Drug Administration’s (FDA) authority to restrict manufacturer speech.  In its amicus brief, WLF argues that FDA’s regulation of the vapor industry unjustifiably restricts truthful, non-misleading speech in violation of the First Amendment. By requiring vapor product companies to obtain FDA’s preapproval of “modified risk” claims before communicating their products’ uncontested health and related benefits to prospective consumers, the Deeming Rule effectively bans legally protected speech. The Rule will also harm those members of the public trying to quit smoking, who have a right to receive truthful information about comparatively safer alternatives to combustible tobacco.  Download the full brief here.

NJOY develops, imports, and distributes e-cigarettes and other electronic nicotine delivery products, and is committed to helping adult smokers switch completely from combustible cigarettes to e-cigarettes.  Like WLF, NJOY’s amicus brief addresses the First Amendment issue, i.e., “a government-imposed gag order” that blocks NJOY from truthfully describing its products to consumers.  Specifically, NJOY argues that FDA’s MRTP preclearance requirement is an unconstitutional speech-licensing regime that silences e-cigarette manufacturers and perpetuates misinformation about the comparative health risks of e-cigarettes and combustible cigarettes, jeopardizing the health of millions of smokers. Download the full brief here.

The State of Iowa also filed an amicus brief because it felt “compelled to defend its strong interest in reducing the number of Iowans who smoke combustible tobacco products,” noting that Iowa advocates for a harm-reduction approach and that “the difference between combustible cigarettes and non-combustibles, like e-cigarettes, is dramatic”.  Iowa argues that the MRTP process places a roadblock in the path of public health advocates and frustrates harm-reduction objectives by requiring pre-market review of truthful, non-misleading modified risk claims – which are protected by the First Amendment.  While Iowa supports rules that require pre-market review of any modified risk claim offered for a combustible tobacco product, generalized modified risk claims for e-cigarettes are different because they are true – and the MRTP process undermines momentum towards critical harm reduction by effectively silencing them. Download the full brief here.

The Consumer Advocates for Smoke-free Alternatives Association (CASAA), a non-profit 501(c)(4) organization with an all-volunteer board and a grassroots membership, is dedicated to ensuring the availability of reduced harm alternatives to smoking and to providing smokers and non-smokers alike with honest information about those alternatives so that they can make informed choices.  CASAA submitted an amicus brief to provide helpful information to the Court about the importance of flavors and sampling in connection with consumers (a) receiving information about products and (b) making a successful transition from smoking to vaping.  The brief discusses the critical need for consumers to receive truthful information from manufacturers and retailers about the low-risk nature of vapor products.  Download the full brief here.

Last, but certainly not least, Clive Bates, Director of The Counterfactual and former Director of the UK’s primary anti-smoking non-profit Action on Smoking in Health, as well as additional public health advocates Philip Alcabes, Scott Ballin, Konstantinos Farsalinos, Bill Godshall, Jacques Le Houezec, Bernd Mayer, Jeff Nesbit, Joel Nitzkin, Riccardo Polosa, Sally L. Satel, Michael B. Siegel, Jeff Stier, and David Sweanor, submitted an amicus brief because of their concern that excessively burdensome or restrictive regulation of e-cigarettes by FDA will have unintended consequences, effectively protecting the combustible cigarette market, increasing smoking and causing harm to health. The authors argue that vaping is proving highly beneficial to the health of millions of American adults as a low-risk alternative to cigarette smoking – which has fallen rapidly and reached record lows since vaping was introduced.  FDA’s approach to regulating e-cigarettes failed to account for the likelihood of the risks of harmful unintended consequences arising from its own interventions in the e-cigarette market.  Indeed, the authors make clear that the costs of the current regulatory approach are likely to overwhelm the claimed benefits, and a failure to account for them undermines the Deeming Rule.  Download the full brief here.

FDA’s reply brief in the appeal is due by April 18, 2018. We will keep you updated on the progress of the appeal.

On February 12, 2018, Nicopure Labs, LLC and the Right to be Smoke-Free Coalition[i] (the Appellants) filed their opening brief in the appeal of last year’s decision from the U.S. District Court for the District of Columbia, which ruled in favor of FDA in the first lawsuit challenging aspects of the Tobacco Control Act (TCA) and the Food and Drug Administration’s (FDA’s) Deeming Rule as they are being applied to the vapor industry. In the brief, the Appellants respectfully disagree with the lower court’s conclusions and believe that both the law and the facts compel a different result.

Specifically, Appellants argue that (1) the Modified Risk Tobacco Product (MRTP) provision of the TCA, as well as the ban on free samples of vapor products, violate the First Amendment of the U.S. Constitution, and (2) FDA was obligated to consider a less burdensome Premarket Tobacco Product Application (PMTA) process for vapor products while still protecting the public health. We summarize these issues in turn below, and you can download the full brief here.

1. Modified Risk Claims and Free Sample Ban

The MRTP provision in Section 911 of the TCA prohibits vapor companies from, among other things, representing without FDA authorization that their products: (i) present a lower risk of disease or is less harmful than another tobacco product; or (ii) contain a reduced level of, or is free from, a substance, or that exposure to a substance is reduced or eliminated.  In other words, this means that vapor companies require explicit FDA approval to tell adult consumers, for example, that their products do not contain certain substances (“no diacetyl” or “no allergens”), that they are unlike more dangerous cigarettes because they have “no tar” or produce “no combusted smoke,” and they pose less health risk to individuals than smoking cigarettes (as FDA itself has publicly stated numerous times). Obtaining such MRTP authorization is an incredibly onerous and expensive process (which no company has been able to achieve yet) that requires applicants to demonstrate that their product will:

(i) significantly reduce harm and the risk of tobacco-related disease to individual users; and

(ii) benefit the health of the population as a whole taking into account both users of tobacco products and persons who do not currently use tobacco products.

21 USC § 387k(g)(1). As to the latter “population effects” prong of the standard, applicants must establish not only the relative health risks of the subject product, but also the potential impact the product will have on overall tobacco use initiation and cessation. 21 USC § 387k(g)(4).

In reality, this imposes a prophylactic ban on MRTP claims and violates the First Amendment because it effectively prohibits truthful, non-misleading statements by vapor companies that convey information needed by adult consumers to make informed purchasing decisions and switch away from cigarettes to less risky vapor products. The First Amendment protects the rights of consumers in the marketplace to obtain product-related information so they can make educated decisions.

But vapor companies cannot make these claims without prior FDA approval and, in all likelihood, will never be able to because the Agency has never approved a claim under the stringent and cost prohibitive MRTP standard. As such, and as detailed in the brief, the MRTP process fails to meet the “intermediate scrutiny” standard required when the government regulates commercial speech.  Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557 (1980).

Similarly, the free sample ban violates the First Amendment because it prohibits adult consumers from trying different vapor products and obtaining valuable information about a novel product category that will help them transition away from cigarettes. Sampling is an “expressive” act that is protected speech. As FDA conceded, sampling conveys information that allows consumers to make individualized choices and change their purchasing behavior. This is important where, as FDA also acknowledged, smokers may have a better chance of switching to vapor products if they can continually sample a variety of e-liquid flavors. Indeed, numerous consumer surveys and other data indicate that smokers rely heavily on flavor variability and the opportunity to try different e-liquids and devices when considering vaping as a substitute for deadly smoking. But, as set forth in the brief, neither Congress nor FDA demonstrated that the free sample ban survives intermediate scrutiny.

2. PMTA Process

Since the Deeming Rule took effect on August 8, 2016, the restrictions on vapor products have been even more onerous than combustible cigarettes, most of which are grandfathered and exempt from FDA’s premarket review requirements. While FDA’s announcement last year for a “comprehensive regulatory plan to shift trajectory of tobacco-related disease, death” acknowledged, among other things, the tobacco harm reduction potential of vapor products and extended the compliance policy deadline for PMTAs for pre-August 8, 2016 vapor products to August 8, 2022, the reality is that safety advances and innovation have been stifled, and the industry still faces effectively being banned in a few short years.

In this regard, it is critical to recognize that the TCA has an overarching goal of ensuring that adult smokers continue to have access to innovative, less risky tobacco products. Despite this, and even though the Agency acknowledged that forcing vapor products to complete a one-size-fits-all PMTA process would eliminate over 95% of manufacturers (along with product variety those companies supply), FDA failed to tailor the PMTA process to less risky vapor products.  Indeed, to date FDA has only approved one PMTA (which was not for a vapor product) and, as provided in the brief, Deeming Rule commenters submitted compelling evidence showing the PMTA will be time and cost prohibitive. FDA was obligated, therefore, not just to extend the filing deadlines, but to consider a less burdensome PMTA process for vapor products (e.g., one that does not require long-term, clinical or epidemiological studies for each vapor product) while still protecting the public health.

FDA’s reply brief is due by April 18, 2018. We will keep you updated on the progress of the appeal.

The Right to be Smoke-Free Coalition and Nicopure Labs are represented in the appeal by Keller and Heckman LLP Partners Eric Gotting and Azim Chowdhury. For more information on the lawsuit and to contribute to the appeal efforts, visit www.r2bsmokefree.org.

[i]  The Right to be Smoke-Free Coalition trade association members supporting the appeal include the American E-Liquid Manufacturing Standards Association (AEMSA), American Vaping Association (AVA), Georgia Smoke Free Association (GSFA), Kentucky Smoke Free Association (KYSFA), Louisiana Vaping Association (LAVA), Maryland Vape Professionals, LLC (MVP), New Jersey Vapor Retailers Association (NJVRA), Ohio Vapor Trade Association (OHVTA), Tennessee Smoke Free Association (TSFA), and the Shenzhen E-Vapor Industry Association (SEVIA).  For a full list of members see www.r2bsmokefree.org.

On August 30, 2017, the Right to be Smoke-Free (RSF) Coalition, a non-profit, industry-led trade association of vapor businesses dedicated to advocating for reasonable and responsible laws and regulations, joined Nicopure Labs LLC in appealing the recent decision in Nicopure Labs, LLC and Right to be Smoke-Free Coalition et al. v. Food and Drug Administration et al., Civ. No. 1:16-cv-0878-ABJ to the U.S. Court of Appeals for the District of Columbia.  The lawsuit challenges aspects of FDA’s Deeming Regulation and the Tobacco Control Act as they are being applied to the vapor industry.  The RSF Coalition respectfully disagrees with the conclusions reached by the lower court and believes that both the law and the facts compel a different result.

While FDA’s recent announcement acknowledging the tobacco harm reduction potential of vapor products and extending the compliance policy deadline for Premarket Tobacco Product Applications (PMTAs) for pre-August 8, 2016 vapor products to August 8, 2022 is welcome news, the RSF Coalition believes that there remains much worth fighting for on behalf of the industry – which still faces effectively being banned in a few short years.

“There is no greater risk to public health than traditional combustible tobacco use-related morbidity and mortality”, said Scott Eley, RSF Coalition Director and Co-Founder of coalition member, NicQuid. “We believe vapor products can help make tobacco-related death and disease part of America’s past and not it’s future. While we fully support all efforts to prevent access to vapor products to kids, we would hate to see a future where FDA’s overly burdensome regulatory approach prohibits access to these products by adult smokers looking for an alternative to their tobacco addiction.”

Since the Deeming Rule took effect on August 8, 2016, the restrictions on vapor products have been even more onerous than combustible cigarettes, most of which are grandfathered and exempt from FDA’s premarket review requirements. Among other things, vapor companies today cannot legally introduce new products, or improve the safety and quality of their existing products, without FDA PMTA authorization; distribute free samples to adults; or make truthful statements about the relative safety of their products.

The RSF Coalition and Nicopure Labs are being represented in the appeal by Keller and Heckman LLP Partners Eric Gotting and Azim Chowdhury. For more information on the lawsuit and to contribute to the RSF Coalition appeal efforts, visit www.r2bsmokefree.org.

Although we are still waiting for an official announcement, FDA’s Stakeholder Relations Office recently indicated that the Agency will be delaying enforcement of all future Deeming Regulation compliance deadlines set for May 10, 2017 or later, including those for manufacturer submission of cigar warning label plans, registration and listing, ingredient listing, health documents, substantial equivalence exemption requests, substantial equivalence applications, premarket tobacco product applications (PMTAs), and harmful and potentially harmful constituent (HPHC) reports. We understand that this does not apply to provisions of the Deeming Regulation where compliance deadlines already have passed, such as mandatory age and photo-ID checks to prevent illegal sales to minors.

The Stakeholder Relations Office further indicated that “this extension will allow new leadership at the FDA and the Department of Health and Human Services additional time to more fully consider issues raised by the final rule that are now the subject of multiple lawsuits in federal court”.

Click here to learn more about Keller and Heckman LLP’s lawsuit on behalf of the e-vapor industry currently pending before the U.S. District Court for the District of Columbia.

We will let you know as soon as FDA officially announces the new deadlines or issues new guidance.

Updated Compliance Deadlines Under Deeming Rule [Pending FDA Official Announcement]

Requirement
Deadline for Large-Scale Companies 
Deadline for Small-Scale Companies 
Registration of U.S. manufacturing establishments
 September 30, 2017
 September 30, 2017
Submission of List of Products manufactured in U.S. establishments
 September 30, 2017
 September 30, 2017
Health Document Submission
February 8, 2017
[Note: this deadline has passed]
 November 8, 2017
 Submission of Ingredients Listing Reports
November 8, 2017
 May 8, 2018
Premarket Tobacco Product Application (PMTA) for products on market on August 8, 2016
November 8, 2018
 November 8, 2018
Submission of Harmful and Potentially Harmful Constituents (HPHCs) Reports
November 8, 2019
 November 8, 2019

For more information on our tobacco and e-vapor practice, please contact Azim Chowdhury (+1 202.434.4230; chowdhury@khlaw.com) and visit www.khlaw.com/evapor. Follow Keller and Heckman Tobacco and E-Vapor partner Azim Chowdhury on Twitter

The U.S. Seventh Circuit Court of Appeals ruled in favor of the Right to be Smoke-Free Coalition holding that portions of Indiana’s E-Liquid Law are unconstitutional as applied to out-of-state manufacturers

On January 30, 2017, the U.S. Court of Appeals for the Seventh Circuit issued its decision in Legato Vapors LLC et al. v. David Cook et al., No. 16-3071, striking as unconstitutional portions of Indiana’s Vapor Pens and E-Liquid Act (the Act) as it applies to out-of-state manufacturers.

Among other things, the Act prohibited the sale of “unpermitted” e-liquid products used in refillable open-system e-vapor devices starting June 30, 2016. Actually obtaining a manufacturing permit from the Indiana Alcohol and Tobacco Commission (ATC), however, was effectively impossible for out-of-state companies for several reasons; most critically, e-liquid manufacturers were required to (1) build facilities compliant with the Indiana Commercial Kitchen Code and (2) contract with a qualified third-party security firm to provide certain specific services (such as 24/7 video surveillance). For a security firm to qualify under the law, however, it must have a certified Rolling Steel Fire Door Technician and an Architectural Hardware Consultant under its employ – certifications not common in the security industry. Moreover, those certified employees had to be hired by July 2015, preventing future security companies from ever being able to comply. Indeed, the ATC determined that only one security firm in the country, located in Lafayette, Indiana, qualified under the law.

In September 2015, the Right to be Smoke-Free Coalition (the Coalition), a trade association of e-vapor companies represented by Keller and Heckman Partners Eric Gotting and Azim Chowdhury, intervened in a lawsuit challenging the Act. Among other things, the Coalition argued that the Act violated the dormant Commerce Clause of the United States Constitution, which prohibits extraterritorial legislation, by regulating e-liquid manufacturing activities that occur completely outside of Indiana. After their motions for preliminary injunction and summary judgment were denied by the Southern District of Indiana, the Coalition and co-petitioners Legato Vapors LLC et al. appealed to the Seventh Circuit. Oral arguments were heard in Chicago on December 8, 2016 and the decision issued on January 30, 2017.

Ruling in the Coalition’s favor, the appellate Court declared that the “unprecedented” application of the Act’s security provisions, clean room (kitchen code) requirements, and audit provisions as they relate to facility design and production processes to out-of-state manufacturers was clearly extraterritorial and a violation of the dormant Commerce Clause. Indeed, the Court stated that “with almost two hundred years of precedents to consider, our review of prior dormant Commerce Clause decisions has not revealed a single appellate case permitting any direct regulation of out-of-state manufacturing processes and facilities comparable to the Indiana Act.” The Court also noted that the Act directly regulates production facilities and processes of out-of-state manufacturers and “thus wholly out-of-state transactions.” It also “poses the clear risk of multiple and inconsistent regulations that would unduly burden interstate commerce.”

The Circuit Court reversed the district court’s grant of summary judgment to Indiana and remanded the case to the district court to declare the challenged provisions unenforceable against out-of-state manufacturers and to enjoin their enforcement against the Coalition and co-petitioners.

Co-petitioners Legato Vapors, Rocky Mountain E Cigs and Derb E Cigs were represented by D. Epstein and James A. Tanford of Epstein Cohen Seif & Porter LLP, and J. Gregory Troutman of Troutman Law Office PLLC.

On July 25, 2016, Keller and Heckman LLP, on behalf of the Right to be Smoke Free Coalitionand ten national and state e-vapor industry trade associations (the “E-Vapor Coalition”), filed a Motion for Summary Judgement in a lawsuitchallenging parts of the Tobacco Control Act (TCA) and the Food and Drug Administration’s (FDA’s) recently published “Deeming Rule” which, effective August 8, 2016, captures most e-vapor products as regulated tobacco products under the TCA. To review the motion and supporting brief, click here.

The named Plaintiffs in the E-Vapor Coalition lawsuit are the Right to be Smoke Free Coalition, the American E-Liquid Manufacturing Standards Association (AEMSA), the American Vaping Association (AVA), the Electronic Vaping Coalition of America (EVCA), the Georgia Smoke Free Association (GSFA), the Kentucky Smoke Free Association (KFSA), the Louisiana Vaping Association (LAVA), Maryland Vape Professionals (MVP), the Ohio Vapor Trade Association (OHVTA), the New Jersey Vapor Retailers Coalition (NJVRC) and the Tennessee Smoke Free Association (TSFA). Also supporting the lawsuit are the Shenzhen E-Vapor Industry Association-USA (SEVIA-USA), the Smoke-Free Alternatives Trade Association (SFATA), the Consumer Advocates for Smoke-Free Alternatives Association (CASAA) and NOT Blowing Smoke (NBS).

The E-Vapor Coalition lawsuit, which was filed on June 20, 2016 in the U.S. District Court for the District of Columbia, was consolidated with the lawsuit filed earlier in the same court, Nicopure Labs v. FDA, No. 1:16-cv-878 (D.D.C. 2016), on June 28, 2016. Following consolidation, the parties agreed to a briefing schedule that allowedNicopure Labs to file its Motion for Summary Judgment on July 8, 2016, and the E-Vapor Coalition to file a separate summary judgment motion on its unique counts on July 25, 2016 (while incorporating by reference all of Nicopure Labs’ arguments). FDA has until August 16, 2016 – eight days after the Deeming Regulation becomes effective – to respond to both motions. All briefing will be completed by September 8, 2016, and oral arguments have been scheduled for October 19, 2016 at 10:00 AM ET in Washington, D.C.

In its Motion for Summary Judgment, the E-Vapor Coalition argues that FDA’s authority over tobacco products is not unfettered, but circumscribed by the statute’s underlying purposes – which strike a careful balance between various policy issues. Specifically, the statute provides that adults must have continued access to tobacco products (i.e., FDA cannot ban or virtually eliminate such products from the marketplace), while at the same time prohibiting access to such products by underage consumers. Along similar lines, the TCA requires FDA to regulate in a flexible manner so that relatively safer products can be developed and commercialized while more dangerous ones are kept off the market. Any effort by FDA to deem additional tobacco products under the TCA must reflect these compromises.

During the rulemaking, FDA repeatedly acknowledged that using e-vapor products likely presents far less risk than smoking cigarettes, and that individuals switching from combusted tobacco products to e-vapor products may significantly reduce their harm. The agency also recognized that the availability of e-vapor products could potentially lead to increased smoking cessation rates in this country and ultimately reduce tobacco-related disease and death – another one of the primary purposes of the TCA. These conclusions are consistent with scientific research, both in the United States and abroad, finding that e-vapor products are substantially less risky than combustible tobacco products. See, for example, Public Health England’s recent report finding that e-vapor products are 95% less harmful than traditional cigarettes, which was followed by the Royal College of Physicians’ ground breaking reportlauding the public health benefits of e-vapor products.

Nevertheless, FDA chose to regulate e-vapor products in a manner that is even more stringent than its regulation of cigarettes. Resulting in what will be a virtual ban on many (if not all) vaping product categories is FDA’s decision to force vaping product manufacturers into a Pre-Market Tobacco Application (“PMTA”) process that was actually designed to prevent the introduction of relatively more harmful tobacco products to the market. Accordingly, PMTAs require, inter alia, long-term clinical studies which, as FDA concedes, do not yet exist. These longitudinal studies must focus on population-level effects, such as the impact of each e-liquid or vaping device on overall smoking initiation or cessation rates.

FDA’s approach also effectively writes out of the TCA one of the pre-market authorization pathways – the Substantial Equivalence (“SE”) Report – that Congress intended for FDA to use in a more flexible exercise of enforcement authority so that relatively less risky products, like e-vapor products, remain on the market and are available to adult consumers so long as they do not raise different questions of public health compared to a predicate (grandfathered) product. The SE Report pathway, while also imposing substantial informational requirements on manufacturers, does not necessarily require long-term clinical studies and, as such, is not as burdensome in terms of time and financial resources as PMTAs. However, without any grandfathered products available for use as predicates, all e-vapor products introduced after February 15, 2007 are forced to go through the PMTA process, which the agency admits will eliminate, at a minimum, 97% of the industry.

With no way to avail themselves of the SE Report pathway, for each vaping product on the market on August 8, 2016, manufacturers will have to file a PMTA within a two-year compliance period (i.e., by August 2018). Vaping product manufacturers will not have sufficient time over the next two years to conduct such long-term clinical studies or have the financial resources to meet other PMTA informational requirements that, according to the agency, will likely reach into the millions of dollars for each product application. Moreover, any new e-vapor products intended to be introduced after the effective date of the rule will have to first obtain PMTA authorization – essentially freezing the market on August 8, 2016.

Thus, instead of tailoring the pre-market process based on the type of tobacco product involved, the agency unlawfully adopted a “one-size-fits-all” pre-market regime that ignores e-vapor products’ overall lower risk profile. The E-Vapor Coalition’s motion highlights several of the Deeming Rule’s short-comings, specifically:

  • FDA has applied a statutory February 15, 2007 grandfather date to e-vapor products that was intended for traditional tobacco products, like cigarettes. FDA was required under the statute to set a new grandfather date which would allow e-vapor products to take advantage of the more flexible SE pathway
  • FDA did not consider, as required under the Regulatory Flexibility Act (“RFA”), 5 U.S.C. §§ 601, et seq., any significant alternatives that, in the absence of a new grandfather date, would have allowed vaping product manufacturers sufficient time to develop the extensive information, including long-term clinical studies, necessary to successfully navigate the more stringent PMTA process. As it stands now, such data cannot be generated by the PMTA deadline of August 2018.
  • Even if FDA is correct in that it must apply the February 15, 2007 grandfather date to e-vapor products, this means that the TCA itself violates substantive due process and is unconstitutional. Under this scenario, there would be no rational relationship between the TCA’s underlying purposes and the means chosen by Congress to accomplish such goals. Indeed, as FDA conceded during the rulemaking, virtually all manufacturers will exit the vaping market, thus depriving adults of a relatively safer tobacco product and a chance to reduce or, better yet, quit their smoking habits.

Accordingly, the E-Vapor Coalition has requested the court grant it summary judgment and: (1) declare that the Deeming Rule exceeds FDA’s statutory authority, is arbitrary and capricious, or an abuse of discretion under the Administrative Procedure Act with respect to FDA’s failure to either establish a new grandfather date for all deemed e-vapor products or exercise its enforcement discretion in this regard; (2) set aside the Deeming Rule to the extent that FDA has applied the February 15, 2007 grandfather date to e-vapor products, and remand the rule to FDA so that the agency can set a new grandfather date for all deemed e-vapor products consistent with the Court’s decision; (3) remand the rule to FDA so that the agency can conduct a proper regulatory impact analysis that addresses the lack of long-term clinical data for e-vapor products; and/or (4) declare the rule unconstitutional to the extent that it applies the February 15, 2007 grandfather date to e-vapor products.

For more information on the lawsuit and updates, visit www.r2bsmokefree.org. To learn more about Keller and Heckman’s e-vapor practice, visit www.khlaw.com/evapor.

On behalf of the Right To Be Smoke Free Coalition and the entire e-vapor industry, yesterday Keller and Heckman LLP filed a Complaint in the U.S. District Court for the District of Columbia challenging portions of FDA’s Deeming Regulation and the Tobacco Control Act on various constitutional and administrative grounds. The named Plaintiffs in the lawsuit are:

Right To Be Smoke Free Coalition (RSF -www.r2bsmokefree.org)
American E-Liquid Manufacturing Standards Association (AEMSA – www.aemsa.org)
American Vaping Association (AVA -http://vaping.info/)
Electronic Vaping Coalition of America (EVCA – http://evapingcoalition.org/)
Georgia Smoke Free Association (GSFA -http://www.gasmokefree.org/)
Kentucky Vaping Retailers Association, Inc., d/b/a Kentucky Smoke Free Association (KSFA – http://www.kysmokefree.com/)
Louisiana Vaping Association (LAVA)
Maryland Vape Professionals, LLC (https://vape-professionals.myshopify.com/)
Ohio Vapor Trade Association (OHVTA -http://www.ohvta.org/)
New Jersey Vapor Retailers Coalition (NJVRC -http://www.njvaporcoalition.org/)
Tennessee Smoke Free Association (TSFA -http://tnsmokefree.org/)
Also supporting the lawsuit are the Shenzhen E-Vapor Industry Association USA (SEVIA-USA -www.seviausa.org), the Smoke-Free Alternatives Trade Association (SFATA – http://sfata.org/), the Consumer Advocates for Smoke-free Alternatives Association (CASAA – http://casaa.org/) and NOT Blowing Smoke (http://notblowingsmoke.org/).

In the Complaint, the Industry argues the following:

(1)    Count I – Violation of Administrative Procedure Act – Grandfather Date: FDA had the authority and the statutory duty to establish a new Grandfather Date for e-vapor products (defined as Electronic Nicotine Delivery Systems or ENDS) or apply its enforcement authority so that some ENDS manufacturers, including e-liquid companies, would have the opportunity to forego the Premarket Tobacco Application (PMTA) pathway and avail themselves of the option to submit Substantial Equivalence (SE) Reports. By not doing so, FDA violated the Administrative Procedures Act.

(2)    Count II – Violation of Administrative Procedure Act – Pre-market Authorization Process: FDA was obligated to consider the continuum of risk of tobacco products and exercise flexible enforcement authority mandated by Congress, instead of implementing a “one-size-fits-all” regulatory regime treating ENDS the same as cigarettes and other harmful products and forcing ENDS manufacturers into the PMTA process, which will all but ban the entire e-liquid and device categories. Accordingly, FDA’s application of the PMTA process to ENDS products violates the Administrative Procedures Act.

(3)    Count III – Violation of Due Process and Equal Protection Clauses – Tobacco Control Act: In the Tobacco Control Act, Congress made clear that different tobacco products present different risks and that FDA should exercise its enforcement authority in a flexible manner. But if, as FDA argues, the Agency is mandated to enforce a “one-size-fits-all” regime to all products, including less harmful ENDS, then Congress did not provide FDA with the necessary tools and regulatory flexibility to achieve the Tobacco Control Act’s stated goals, which include allowing newer and safer products to enter the market. As a result, the Tobacco Control Act is unconstitutional under the Due Process and Equal Protection Clauses.

(4)    Count IV – Violation of First Amendment and Administrative Procedure Act – Ban on Free Samples: FDA does not have a substantial interest in prohibiting access to free samples of ENDS products by adult consumers – including taste testing e-liquids in vape shops. The complete ban on free samples does not directly advance the government’s interests. There were more narrow options available to FDA to advance their stated interest in preventing youth access while still allowing vape shops and others to market using free samples. Accordingly, the total ban on free samples violates the First Amendment and the Administrative Procedures Act.

(5)    Count V – Violation of First Amendment and Administrative Procedure Act – Modified Risk Tobacco Products: The Modified Risk Tobacco Product (MRTP) provision of the Tobacco Control Act as applied to ENDS products – which do not produce smoke, combust e-liquid when used as intended, or produce aerosol that contains the harmful substances found in tobacco smoke – does not advance any purported government interests (which focus on traditional tobacco products), and captures commercial and non-commercial speech that is clearly not misleading (e.g., “smoke free” claims). By applying the MRTP provision and its extensive review process to ENDS products, FDA violated the Administrative Procedures Act and the prior restraint doctrine.

(6)    Count VI – Violation of Administrative Procedure Act – Definition of “Tobacco Product” and Application to ENDS: FDA considers a broad range of ENDS products to be regulated as tobacco products or “components or parts,” including, among other things, software that operates devices, batteries, displays, tanks, etc. FDA intends to regulate these products as tobacco products despite the fact that they do not contain tobacco, are not derived from tobacco and are not components and parts of an actual tobacco product. There is nothing in the legislative history of the Act, and FDA has provided no supporting rationale, for why these items should be regulated as tobacco products merely because they are used to consume the product. Accordingly, FDA’s application of the Tobacco Control Act’s definition of “tobacco product” to certain ENDS products is unreasonable and unlawful under the Administrative Procedures Act.

(7)    Count VII – Violation of Regulatory Flexibility Act – Unlawful Cost/Benefit Analysis: The Regulatory Flexibility Act requires administrative agencies to consider the effects of their regulatory actions on small business entities. FDA failed to consider significant alternatives, including, but not limited to, the impact of any compliance period on the ability of small entities to successfully navigate the PMTA process given that FDA concedes that there are no long-term clinical studies or other data necessary to support such applications. FDA only considered several, modest alternatives focused on discrete issues (i.e., labeling burdens). The Agency did not make a reasonable, good faith effort to consider alternatives that would have an overall impact on all small entities. In short, FDA substantially overestimates the benefits of the Deeming Rule and underestimates the costs. Accordingly, the Court should take corrective action, set aside and remand the Deeming Rule to FDA, and defer enforcement until the Agency complies with the Regulatory Flexibility Act.

(8)    Count VIII – Violation of Administrative Procedure Act – Unlawful Cost/Benefit Analysis:The Tobacco Control Act makes clear that FDA was required to adequately consider the costs and benefits of the Deeming Rule. As with the Regulatory Flexibility Act, FDA failed to consider regulatory alternatives, such as an extended compliance period, that would have significantly increased the chance that ENDS manufacturers would be able to comply with the PMTA process, thus avoiding what will be close to an effective ban on ENDS. The Agency also failed to properly estimate key factors necessary to an adequate cost/benefit analysis, including the number of entities and products affected, as well as the number of PMTA applications that will be filed. For many of these numbers, FDA did not adequately explain or support its conclusions. Again,FDA substantially overestimates the benefits of the Deeming Rule and underestimates the costs. As a result, FDA violated the Administrative Procedures Act and, therefore, the Deeming Rule must be remanded to the Agency so that a proper cost/benefit analysis may be conducted.

For more information on the lawsuit and updates, visit www.r2bsmokefree.org. To learn more about Keller and Heckman’s e-vapor practice, visit www.khlaw.com/evapor.