Environmental Law Case Study

15.2

FOOD AND DRUG ADMINISTRATION v. BROWN & WILLIAMSON TOBACCO CORPORATION

120 S. Ct. 1291 (2000)

O’CONNOR, J.: This case involves one of the most troubling public health problems facing our Nation today: the thousands of premature deaths that occur each year because of tobacco use. In 1996, the Food and Drug Administration (FDA), after having expressly disavowed any such authority since its inception, asserted jurisdiction to regulate tobacco products. The FDA concluded that nicotine is a “drug” within the meaning of the Food, Drug, and Cosmetic Act (FDCA or Act), and that cigarettes and smokeless tobacco are “combination products” that deliver nicotine to the body. Pursuant to this authority, it promulgated regulations intended to reduce tobacco consumption among children and adolescents. The agency believed that, because most tobacco consumers begin their use before reaching the age of 18, curbing tobacco use by minors could substantially reduce the prevalence of addiction in future generations and thus the incidence of tobacco-related death and disease.

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Regardless of how serious the problem an administrative agency seeks to address, however, it may not exercise its authority in a manner that is inconsistent with the administrative structure that Congress enacted into law. And although agencies are generally entitled to deference in the interpretation of statutes that they administer, a reviewing court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. In this case, we believe that Congress has clearly precluded the FDA from asserting jurisdiction to regulate tobacco products. Such authority is inconsistent with the intent that Congress has expressed in the FDCA’s overall regulatory scheme and in the tobacco specific legislation that it has enacted subsequent to the FDCA. In light of this clear intent, the FDA’s assertion of jurisdiction is impermissible.

The FDCA grants the FDA . . . the authority to regulate, among other items, “drugs” and “devices.” The Act defines “drug” to include “articles (other than food) intended to affect the structure or any function of the body.” It defines “device,” in part, as “an instrument, apparatus, implement, machine, contrivance, . . . or other similar or related article, including any component, part, or accessory, which is . . . intended to affect the structure or any function of the body.” The Act also grants the FDA the authority to regulate so-called “combination products,” which “constitute a combination of a drug, device, or biologic product.” The FDA has construed this provision as giving it the discretion to regulate combination products as drugs, as devices, or as both.

On August 11, 1995, the FDA published a proposed rule concerning the sale of cigarettes and smokeless tobacco to children and adolescents. . . . A public comment period followed, during which the FDA received over 700,000 submissions, more than “at any other time in its history on any other subject.”

On August 28, 1996, the FDA issued a final rule entitled “Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco to Protect Children and Adolescents.” The FDA determined that nicotine is a “drug” and that cigarettes and smokeless tobacco are “drug delivery devices,” and therefore it had jurisdiction under the FDCA to regulate tobacco products. . . .

Based on these findings, the FDA promulgated regulations concerning tobacco products’ promotion, labeling, and accessibility to children and adolescents. The access regulations prohibit the sale of cigarettes or smokeless tobacco to persons younger than 18; require retailers to verify through photo identification the age of all purchasers younger than 27; prohibit the sale of cigarettes in quantities smaller than 20; prohibit the distribution of free samples; and prohibit sales through self-service displays and vending machines except in adult-only locations. The promotion regulations require that any print advertising appear in a black-and-white, text-only format unless the publication in which it appears is read almost exclusively by adults; prohibit outdoor advertising within 1,000 feet of any public playground or school; prohibit the distribution of any promotional items, such as T-shirts or hats, bearing the manufacturer’s brand name; and prohibit a manufacturer from sponsoring any athletic, musical, artistic, or other social or cultural event using its brand name. . . .

Respondents, a group of tobacco manufacturers, retailers, and advertisers, filed suit . . . challenging the regulations. . . .

We granted the Government’s petition for certiorari to determine whether the FDA has authority under the FDCA to regulate tobacco products. . . .

A threshold issue is the appropriate framework for analyzing the FDA’s assertion of authority to regulate tobacco products. Because this case involves an administrative agency’s construction of a statute that it administers, our analysis is governed by Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 104 S. Ct. 2778 (1984). Under Chevron, a reviewing court must first ask “whether Congress has directly spoken to the precise question at issue.” If Congress has done so, the inquiry is at an end; the court “must give effect to the unambiguously expressed intent of Congress.” But if Congress has not specifically addressed the question, a reviewing court must respect the agency’s construction of the statute so long as it is permissible. Such deference is justified because the responsibilities for assessing the wisdom of such policy choices and resolving the struggle between competing views of the public interest are not judicial ones, and because of the agency’s greater familiarity with the ever-changing facts and circumstances surrounding the subjects regulated. . . .

Viewing the FDCA as a whole, it is evident that one of the Act’s core objectives is to ensure that any product regulated by the FDA is “safe” and “effective” for its intended use. This essential purpose pervades the FDCA. . . .

In its rulemaking proceeding, the FDA quite exhaustively documented that “tobacco products are unsafe,” “dangerous,” and “cause great pain and suffering from illness.” It found that the consumption of tobacco products “presents extraordinary health risks,” and that “tobacco use is the single leading cause of preventable death in the United States.” . . .

These findings logically imply that, if tobacco products were “devices” under the FDCA, the FDA would be required to remove them from the market. . . .

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Congress, however, has foreclosed the removal of tobacco products from the market. A provision of the United States Code currently in force states that “the marketing of tobacco constitutes one of the greatest basic industries of the United States with ramifying activities which directly affect interstate and foreign commerce at every point, and stable conditions therein are necessary to the general welfare:” 7 U.S.C. §1311(a). More importantly, Congress has directly addressed the problem of tobacco and health through legislation on six occasions since 1965. . . . Congress stopped well short of ordering a ban. Instead, it has generally regulated the labeling and advertisement of tobacco products, expressly providing that it is the policy of Congress that “commerce and the national economy may be . . . protected to the maximum extent consistent with” consumers “being adequately informed about any adverse health effects.” 15 U.S.C. §1331. Congress’ decisions to regulate labeling and advertising and to adopt the express policy of protecting “commerce and the national economy . . . to the maximum extent” reveal its intent that tobacco products remain on the market. Indeed the collective premise of these statutes is that cigarettes and smokeless tobacco will continue to be sold in the United States. A ban of tobacco products by the FDA would therefore plainly contradict congressional policy. . . .

[O]ur inquiry into whether Congress has directly spoken to the precise question at issue is shaped, at least in some measure, by the nature of the question presented. Deference under Chevron to an agency’s construction of a statute that it administers is premised on the theory that a statute’s ambiguity constitutes an implicit delegation from Congress to the agency to fill in the statutory gaps. In extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.

This is hardly an ordinary case. Contrary to its representations to Congress since 1914, the FDA has now asserted jurisdiction to regulate an industry constituting a significant portion of the American economy. In fact, the FDA contends that, were it to determine that tobacco products provide no “reasonable assurance of safety,” it would have the authority to ban cigarettes and smokeless tobacco entirely. Owing to its unique place in American history and society, tobacco has its own unique political history. Congress, for better or for worse, has created a distinct regulatory scheme for tobacco products, squarely rejected proposals to give the FDA jurisdiction over tobacco, and repeatedly acted to preclude any agency from exercising significant policymaking authority in the area. Given this history and the breadth of the authority that the FDA has asserted, we are obliged to defer not to the agency’s expansive construction of the statute, but to Congress’ consistent judgment to deny the FDA this power. . . .

Nonetheless, no matter how important, conspicuous, and controversial the issue, and regardless of how likely the public is to hold the Executive Branch politically accountable, an administrative agency’s power to regulate in the public interest must always be grounded in a valid grant of authority from Congress. . . . Reading the FDCA as a whole, as well as in conjunction with Congress’ subsequent tobacco-specific legislation, it is plain that Congress has not given the FDA the authority that it seeks to exercise here. For these reasons, the judgment of the Court of Appeals for the Fourth Circuit is

Affirmed.

KEY POINTS

•Although a core objective of the FDCA is to ensure that products regulated by the FDA are safe for their intended use, Congress has established policies for balancing the economic and health implications of tobacco products with more specific legislative enactments.

•This is a relatively rare case in which the Court cannot give deference to an administrative agency’s interpretation of the law it is responsible for administering. The Court noted that tobacco has a “unique political history.”

•An administrative agency’s ability to enforce laws through the executive branch must derive its authority from Congress. In this case, Congress has chosen to control tobacco products separately from other similar products within the FDA’s purview.

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In 2009, Congress passed and President Obama signed the Family Smoking Prevention and Tobacco Control Act. This legislation increased the FDA’s authority beyond that discussed in the preceding case. However, the FDA still cannot totally ban nicotine.

REVIEW OF ADJUDICATIONS: PROCEDURAL ASPECTS

Judicial review of agencies’ adjudications by its very nature is quite limited. Legislatures have delegated authority to agencies because of their expertise and knowledge, and courts usually exercise restraint and resolve doubtful issues in favor of an agency. For example, courts reviewing administrative interpretations of law do not always decide questions of law for themselves. It is not unusual for a court to accept an administrative interpretation of law as final if it is warranted in the record and has a rational basis in law. Administrative agencies are frequently called upon to interpret the statute governing an agency, and an agency’s construction is persuasive to courts.

Administrative agencies develop their own rules of procedure unless mandated otherwise by an act of the legislature. These procedures are far less formal than judicial procedures, because one of the functions of the administrative process is to decide issues expeditiously. To proceed expeditiously usually means, for example, that administrative agencies are not restricted by the strict rules of evidence used by courts. Such agencies cannot ignore all rules, but they can use some leeway. They cannot, for example, refuse to permit any cross-examination or unduly limit it. Because an agency “is frequently the accuser, the prosecutor, the judge and the jury,” it must remain alert to observe accepted standards of fairness. Reviewing courts are, therefore, alert to ensure that the true substance of a fair hearing is not denied to a party to an administrative hearing.

The principle that federal administrative agencies should be free to fashion their own rules of procedure and pursue methods of inquiry permitting them to discharge their duties grows out of the view that administrative agencies and administrators will be familiar with the industries they regulate. Thus, they will be in a better position than courts or legislative bodies to design procedural rules adapted to the peculiarities of the industry and the tasks of the agency involved.

In reviewing the procedures of administrative agencies, courts lack the authority to substitute their judgment or their own procedures for those of the agency. Judicial responsibility is limited to ensuring consistency with statutes and compliance with the demands of the Constitution for a fair hearing. The latter responsibility arises from the due process clause. Due process usually requires a hearing by an agency, but on occasion sanctions may be imposed prior to the hearing.

Don’t ignore what may appear to be a biased administrative hearing. Relying on courts to reverse the agency’s decision is a bad plan.

Your school likely has an administrative process for handling students’ grade appeals. You must follow this administrative procedure.

Two doctrines guide courts in the judicial review of agency adjudications:

•Exhaustion of remedies

•Primary jurisdiction

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Exhaustion of Remedies The doctrine of exhaustion of remedies is a court-created rule that limits when courts can review administrative decisions. Courts refuse to review administrative actions until a complaining party has exhausted all of the administrative remedies and procedures available to him or her for redress. Judicial review is available only for final actions by an agency. Preliminary orders such as a decision to file a complaint are not reviewable. Otherwise, the administrative system would be denied important opportunities to make a factual record, to exercise its discretion, or to apply its expertise in its decision making. Also, exhaustion allows an agency to discover and correct its own errors, and thus it helps to dispense with any reason for judicial review. Exhaustion clearly should be required in those cases involving an area of the agency’s expertise or specialization; it should require no unusual expense. It should also be required when the administrative remedy is just as likely as the judicial one to provide appropriate relief. The doctrine of exhaustion of remedies avoids the premature interruption of the administrative process.

This doctrine is not an absolute principle. Courts do allow parties to litigate prior to exhausting administrative remedies. Sidebar 15.5 provides explanation for exceptions to this administrative requirement.

sidebar 15.5

Exceptions to Requirement of Exhaustion

When there is nothing to be gained from the exhaustion of administrative remedies and when the harm from the continued existence of the administrative ruling is great, the courts have not been reluctant to discard this doctrine. This is especially true when very fundamental constitutional guarantees such as freedom of speech or press are involved or when the administrative remedy is likely to be inadequate.

Also, probably no court would insist upon exhaustion when the agency is clearly acting beyond its jurisdiction (because its action is not authorized by statute or the statute authorizing it is unconstitutional) or where it would result in irreparable injury (such as great expense) to the petitioner. Finally, an exception to the doctrine is fraud. If an agency is acting fraudulently, immediate access to the court is appropriate.

Primary Jurisdiction A doctrine similar to exhaustion of remedies is known as primary jurisdiction. Exhaustion applies when a claim must go in the first instance to an administrative agency alone. Primary jurisdiction applies when a claim is originally filed in the courts. It comes into play whenever enforcement of the claim requires the resolution of issues that, under a regulatory scheme, have been placed within the special competence of an administrative body. In such a case, the judicial process is suspended pending referral of such issues to the administrative body for its views. Primary jurisdiction ensures uniformity and consistency in dealing with matters entrusted to an administrative body. The doctrine is invoked when referral to the agency is preferable because of its specialized knowledge or expertise in dealing with the matter in controversy. Statutes such as those guaranteeing equal employment opportunity that create a private remedy for dollar damages sometimes require the parties to resort to an administrative agency as a condition precedent to filing suit. Some of these are federal statutes that require referral to state agencies. In these cases, referral must occur, but the right to sue is not limited by the results of the administrative decision.

A judge hearing a case involving a dispute over licensing requirements for a nuclear power plant likely would refer this case to the Nuclear Regulatory Commission (NRC).

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REVIEW OF FACTUAL DETERMINATIONS

When it reviews the findings of fact made by an administrative body, a court presumes them to be correct. A court of review examines the evidence by analyzing the record of the agency’s proceedings. It upholds the agency’s findings and conclusions on questions of fact if they are supported by substantial evidence in the record. In other words, the record must contain material evidence from which a reasonable person might reach the same conclusion as did the agency. If substantial evidence in support of the decision is present, the court will not disturb the agency’s findings, even though the court itself might have reached a different conclusion on the basis of other conflicting evidence also in the record. For example, the determination of credibility of the witnesses who testify in quasi-judicial proceedings is for the agency to determine and not the courts.

Courts do not (1) reweigh the evidence, (2) make independent determinations of fact, or (3) substitute their view of the evidence for that of the agency. However, courts do determine if there is substantial evidence to support the action taken. But in their examination of the evidence, all that is required is evidence sufficient to convince a reasonable mind to a fair degree of certainty. Thus, substantial evidence is that which a reasonable mind might accept as adequate to support the conclusion.

For the courts to exercise their function of limited review, an agency must provide a record that sets forth the reasons and basis for its decision. If this record shows that the agency did not examine all relevant data and that it ignored issues before it, a court may set aside the agency’s decision because such a decision is arbitrary and capricious. Agencies cannot assume their decisions. They must be based on evidence, and the record must support the decision.

concept summary

Judicial Review of Agency Decisions

1.Regardless of whether a party is challenging an agency’s rule making or adjudication, that party must have standing to sue.

2.To establish standing to sue, the challenger must show the reviewing court that the agency’s decision is subject to review and that the challenger is personally affected by the agency’s decision.

3.When the decision challenged involves the agency’s rule-making function, the court must determine if the agency’s authority was validly delegated.

4.If the delegation of authority is definite and limited, the court will decide if the agency has exceeded its authority. If the answer is no, the agency’s rule will be upheld.

5.When the decision challenged involves the agency’s adjudicatory function, the law requires the challenger to exhaust the available administrative remedies and the court to determine whether an agency should have primary jurisdiction.

6.The factual findings of an agency are presumed to be correct.

7.Courts are not permitted to substitute their personal views for the agency’s findings and conclusions if a reasonable person could reach the same result as the agency.

8.An agency’s expertise is entitled to great deference and will not be reversed unless it is clearly erroneous.

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