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Court Decision Affirms States� Role in Regulating and Banning Flavored Tobacco Product Sales

Patricial Molteni, Tobacco Staff Attorney

You can still get a 32-ounce cherry soda in New York City[1] but not a cherry-flavored cigar. In a decision handed down earlier this year, the United States Court of Appeals for the Second Circuit upheld New York City�s ordinance banning the sale of flavored tobacco products.[2] This decision provides the first federal appellate interpretation of the scope of a state or local government�s power to regulate tobacco product sales in light of the federal preemption provisions found in the Family Smoking Prevention and Tobacco Control Act, 21 U.S.C.A. §387 et seq. (�Tobacco Control Act� or �Act�). It also affirms the state�s historical exercise of its police powers to regulate tobacco products sold within its borders to protect the health of its citizens from the harm caused by smoking.

On June 22, 2009, President Obama signed the Tobacco Control Act into law. The Act gives the Food and Drug Administration (FDA) the authority to regulate the manufacture, distribution, and marketing of tobacco products to protect the public health. See 21 U.S.C. § 387 et seq. Tobacco products include cigarettes, cigars, roll-your-own, smokeless tobacco, and the like. Id. at 387a(b). The Act recognizes that nearly all new smokers will start using before they are 18 years old (the minimum legal age to buy tobacco products in most states), that they will become addicted before they have the maturity to understand the risks, and that a significant percentage of them will ultimately die prematurely from tobacco-related illnesses. Pub. L. No. 111-31, Div. A, § 2. At the same time, the Act recognizes that tobacco products, though inherently harmful, are legal for use by adults and that users are addicted to them. Id.

In balancing these conflicting considerations, the Act seeks to protect public health by, among other things, banning �characterizing� flavors[3] (except tobacco and menthol) in cigarettes, prohibiting advertising claims of �reduced harm� without pre-authorization by the FDA, and requiring graphic warning labels on tobacco product packaging, but, at the same time, the Act prohibits the FDA from banning outright all tobacco product sales and from reducing nicotine levels to zero. 21 U.S.C. § 387g(a)(1)(A), 387k, 387g(d)(3); 21 U.S.C. § 1333(d).

Despite the additional restrictions imposed on tobacco manufacturers by the Act and other public health laws, cigar smoking rates have increased significantly over the past 13 years even while cigarette rates have declined.[4] Particularly alarming is the appeal of cigars to kids�not the traditional, hand-rolled, standard-sized, large cigars, but the small ones, sometimes known as �filtered cigars.� These hybrid products have the same size, look, and shape as cigarettes and can be sold 20 to a pack but weigh just enough to be classified as �large cigars� for tax purposes.[5] Because they are classified as �large cigars� rather than cigarettes, they escape the Act�s ban on flavorings and are taxed at a much lower federal excise tax rate than cigarettes, making them much cheaper to consumers.[6] They are made in a variety of candy and fruit flavors such as chocolate, strawberry and cherry. The lower per-pack cost and the candy-like flavors are enticing to kids, who are more price-sensitive than adults and have not yet become accustomed to the taste of tobacco and menthol. [7]

Acknowledging the public health risks of flavored cigars and flavored smokeless products, the New York City Council passed an ordinance in 2009 banning the sale of nearly all flavored tobacco products within the city, except in tobacco bars (of which there are only eight). 17 N.Y.C. Admin. Code § 17-701. The ban does not apply to menthol, mint, or wintergreen flavoring but bans the sale of all other flavored, non-cigarette, tobacco products such as cigars, little cigars, and chewing tobacco and other smokeless products. Id. 17-713(b).

In response, U.S. Smokeless Tobacco Manufacturing Co. and U.S. Smokeless Tobacco Brands, Inc., who make chewing tobacco under brand names like Copenhagen, Skoal and Husky, sued New York City to enjoin the ordinance insofar as it applies to smokeless tobacco products. The plaintiff companies are owned by Altria Group, parent of Philip Morris USA, the largest cigarette manufacturer in the United States.

On Dec. 28, 2009, plaintiffs filed suit in U.S. District Court for the Southern District of New York. In their complaint, they argued that the Tobacco Control Act preempts New York City�s authority to enact a flavoring ban. Plaintiffs� position starts with the premise that the Act gives the federal government exclusive authority to set manufacturing standards for tobacco products. They assert that banning flavorings is a de facto manufacturing standard because it prohibits the sale of tobacco products made in certain way�i.e., with flavorings. They further reason that the Act allows for flavorings in non-cigarette products; therefore, the ordinance sets a manufacturing standard stricter than federal law and is, for that reason, preempted.

On March 23, 2010, Federal District Court Judge Colleen McMahon denied Plaintiffs� motion for a preliminary injunction[8] and on Nov. 15, 2011, granted summary judgment in favor of New York City.[9] In both opinions, Judge McMahon found that the Tobacco Control Act gives the federal government the exclusive power to regulate the manufacture and/or fabrication of tobacco products while reserving to the states their historical power to regulate the sale and distribution of such products more stringently than the federal floor.[10] The court further found that the City�s ordinance did not constitute a �manufacturing standard� because the Act provides numerous examples of such standards and nearly all of them relate to the actual production of the product at the factory and the ingredients and other component parts that make up the product�not the downstream sale of the finished good.[11]

The Second Circuit affirmed, adopting the same overall interpretation of the Act as the lower court. Like Judge McMahon, the Second Circuit, in making its decision, relied primarily on three provisions in the Act�the �Preservation Clause� § 387p(a)(1)), �the Preemption Clause� § 387p(a)(2)(A)), and the �Saving Clause� § 387p(a)(2)(B)). Reading these sections together, the court interpreted them as follows: (1) the Preservation Clause sets forth a broad preservation of authority for the states to set more stringent standards than the FDA under the Act �relating to or prohibiting the sale, distribution, possession, exposure to, access to, advertising and promotion of, or use of tobacco products by individuals of any age . . .�; (2) the Preemption Clause establishes an exception to this general rule by preempting the states from establishing different or additional standards than the FDA under the Act �relating to tobacco product standards, premarket review, adulteration, misbranding, labeling, registration, good manufacturing standards, or modified risk tobacco products�; and (3) the Saving Clause establishes an exception to the exception, explaining that the Preemption Clause �does not apply to requirements relating to the sale, distribution, possession, information reporting to the State, exposure to, access to, the advertising and promotion of, or use of, tobacco products by individuals of any age.�[12]

Moreover, like the lower court, the Second Circuit had no difficulty distinguishing between the manufacturing process and the sale of finished goods, holding that the Act �reserves regulation at the manufacturing stage exclusively to the federal government, but allows states and localities to continue to regulate sales and other consumer-related aspects of the industry in the absence of conflicting federal regulation.� [13]

With respect to Plaintiffs� position that the flavoring ban is a backdoor manufacturing standard, the Second Circuit declined to read the manufacturing standard language in the Preemption Clause so broadly. The court characterized Plaintiffs� position as �collap[sing] the distinction between sales and product regulations� and refused to adopt such an interpretation because it would make the language of the Preservation Clause, allowing states to �enact . . . and enforce any . . . measure . . . prohibiting the sale . . . of tobacco products,� superfluous.[14] It further clarified that an impermissible manufacturing standard�one subject to federal preemption�must be something more than an �incentive or motivator�; it �must require manufacturers to alter the construction, components, ingredients, additives, constituents. . . and properties of their products.�[15] Here, the court found that New York City�s ordinance simply did not direct manufacturers about which ingredients they could use in their products. Instead, its enforcement turned on whether the final product �imparts a distinguishable taste or aroma� or is marketed as having a flavor, regardless of its actual additives or other ingredients.[16]

The court concluded that New York City�s flavor ban was not preempted under the Tobacco Control Act and, equally important, interpreted the Act as preserving �for the states a robust role in regulating, and even banning, sales of tobacco products� through a broad reading of the Saving Clause and a narrow reading of the Preemption Clause.[17]

[1] In September 2012, the New York City Board of Health voted to adopt the �Portion Cup Rule,� which amended Article 81 of the NYC Health Code to prohibit New York City restaurants, movie theatres, stadiums, push carts, and other eateries from serving sugary drinks in sizes larger than 16 ounces. The purpose behind the �soda ban� was to address rising obesity rates among New York City residents. However, a New York state trial court and, later, the New York Appellate Division struck down the ban as unconstitutional. They found that in promulgating the regulation, the NYC Department of Health, an executive branch agency, exceeded its delegated authority to protect the public health and impermissibly intruded on the policy matters reserved for the legislative branch. Matter of New York Statewide Coalition of Hispanic Chambers of Commerce v. New York City Dept. of Health & Mental Hygiene, 2013 N.Y. App. Div. LEXIS 5423, 2013 NY Slip Op 5505 (N.Y. App. Div. 1st Dep't July 30, 2013), aff�g 2013 N.Y. Misc. LEXIS 1216, 2013 NY Slip Op 30609(U) (N.Y. Sup. Ct. Mar. 11, 2013).

[2] U.S. Smokeless Tobacco Mfg. Co. LLC v. City of New York, 708 F.3d 428 (2nd Cir. 2013).

[3] A characterizing flavor is essentially any constituent or additive that gives the cigarette or its smoke a flavor other than tobacco or menthol, such as strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry, or coffee.

[4] Ann Bloom, �The Rise of Cigars and Cigar-Smoking Harms,� Campaign for Tobacco-Free Kids, March 7, 2013, (�between 2000 and 2012 cigarette consumption declined by 34.1 percent while cigar consumption increased by 124 percent�) citing U.S. Alcohol and Tobacco Tax and Trade Bureau, Tobacco Statistics.

[5] American Cancer Society, "Who Smokes Cigars," last revised Jan. 17, 2013,

[6] Id.

[7] Id.; and Sabrinia Tavernise, �In All Favors, Cigars Draw in Young Smokers,� The New York Times, Aug. 17, 2013,

[8] U.S. Smokeless Tobacco Mfg. Co. LLC v. City of New York, 703 F. Supp. 2d 329 (S.D.N.Y. 2010) (denying preliminary injunction).

[9] U.S. Smokeless Tobacco Mfg. Co. LLC v. City of New York, 2011 U.S. Dist. LEXIS 133018 (S.D.N.Y. 2011) (granting summary judgment in favor of New York City).

[10] Id. at *15.

[11] Id. at *11 (referring to the theory that a sales ban equates to a manufacturing standard as �specious�).

[12] U.S. Smokeless Tobacco Mfg. Co. LLC, 708 F.3d at 431.

[13] Id. at 434.

[14] Id.

[15] Id. (internal quotations omitted).

[16] Id. at 435.

[17] Id. at 436.

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