SEC sets record for highest whistleblower payout
E-cig firms steel for legal battle
Electronic cigarette companies are steeling for a legal brawl with the Obama administration over coming regulations they believe could wipe out the fast-growing industry.
The closely watched Food and Drug Administration (FDA) deeming rule, now under final review at the White House, would bring e-cigarettes as well as conventional cigars under the agency's jurisdiction.
Though the FDA has not made the language public, sources with knowledge of the rulemaking expect major changes in the final regulations, compared with a draft version released last year.
Yet one group claiming to have obtained a leaked copy says the FDA aims to leave intact the provision of most concern to industry groups: a mandate that any nicotine delivery devices that hit stores after Feb. 15, 2007, will have to apply retroactively for approval.
"That's a de facto ban," said Ray Story, CEO of the Tobacco Vapor Electronic Cigarette Association (TVECA).
The FDA has said it does not believe it has the authority to alter or amend the date, because it was set by statute in the Family Smoking Prevention and Tobacco Control Act that was signed into law by President Obama in 2009.
Industry groups argue the process would cost millions of dollars, making it prohibitively expensive for companies to keep their products on store shelves.
"I am all for logical and responsible regulation - not for the annihilation of the category," Story said, suggesting that the industry's products are less harmful than traditional cigarettes.
He began leaking what he says are pages from the final rule on the TVECA's website, starting with the table of contents. On Tuesday, he released the FDA's guidance on premarket tobacco product applications for e-cigarettes and vaping devices.
In a statement to The Hill Wednesday, FDA rep Michael Felberbaum said the FDA has not yet issued its final rule, so any documents are still in draft form.
"As a matter of policy, the FDA does not share draft documents with outside groups while they are under review and the FDA cannot provide any further comment," he said.
Story said the FDA's top regulator
has called, asking for him not to release the rest of the language, but said he
was trying to spur action among e-cigarette makers.
"If they know for sure they do not have a future ... they'll get motivated, call the White House, go to OMB and get proactive in demanding reliable, responsible regulation rather than this kill order," he said, referencing the Office of Management and Budget.
If that fails, Story said he's prepared to challenge the final rules in court.
"If anyone is feeling frisky, tell them to bring it on because our legal team is ready and willing," he said.
The TVECA isn't alone. Industry-backed Cigar Rights of America said it would also fight the rules in court.
"We'd have to," said the group's executive director, J. Glynn Loope.
If the table of contents the TVECA leaked is accurate, he said, the cigar industry would be regulated the same way the FDA is regulating other tobacco products.
When the rules were first proposed in April 2014, the FDA was weighing whether to exempt premium cigars from the regulations. The agency defined premium cigars as any handmade cigar without a tip or filter that costs $10 or more.
Loope was lobbying for that exemption.
"When they were debating the original Tobacco Control Act, every floor speech revolved around youth access and chemical addiction," he said. "We don't meet that criteria, which is why we think we should be exempt."
Premium cigars, Loope contends, don't carry the same type of health implications as other tobacco products: inhalation rates and nicotine absorption levels are different, so there's a lack of evidence to show they're as addictive, and they tend to be used more sporadically.
If cigars are regulated how e-cigs and other tobacco products are regulated, Loope said it will "decimate" the industry.
"To put a new cigarette or smokeless product on the market, you have to go through FDA's approval process," he said. "The thought of having to do that for every new cigar blend is absolutely ludicrous."
For testing alone, Loope estimates it will cost around $20,000 for each new cigar - and that's if testing is even possible.
"Some labs say the equipment doesn't even exist to test cigars," he said.
While the industry groups are basing plans of attack on what they've seen of the final rules so far, experts expect major changes from what was first proposed.
"There will be some surprises in the final rule, things people aren't anticipating," said Andrew Perraut of the San Francisco advisory firm Radiant Strategies and former staffer at the White House Office of Information and Regulatory Affairs.
Perraut, who reviewed the proposed rule before leaving office in August 2014, said there is more room for change in this rule than in any other he's worked on.
"I suspect we'll see the requirements may very well change because the state of the science is very different," he said, though he declined to elaborate.
To be sure, health groups like the American Lung Association and many Democratic lawmakers are calling upon the FDA to move aggressively to crack down on e-cigarettes - and they're wary that the industry pressure will sway regulators.
"The tobacco lobby has long had special access to government officials and if the documents they have are authentic, the American Lung Association is deeply troubled that they have been given a confidential interagency review document," Erika Sward, the group's assistance vice president of national advocacy, said in a statement to The Hill.
"We call on the White House to ensure that the tobacco industry does not succeed in weakening the final deeming regulation."