Supporting the small guy

The Cause of Action Institute (CoA Institute) on Tuesday filed an amicus curiae brief in support of a challenge to a new regulation that threatens small premium-cigar businesses in the US.

The CoA Institute filed its brief in support of the plaintiffs: the Cigar Association of America, the International Premium Cigar and Pipe Retailers Association, and Cigar Rights of America.

These groups have brought a lawsuit against the Food and Drug Administration challenging a new regulation with what the CoA Institute described as far-ranging, negative economic impacts on consumers and small businesses engaged in the premium cigar industry.

‘The new regulation finalized by FDA unfairly targets America’s smaller-scale cigar manufacturers, trampling on a proud American heritage and eliminating economic opportunity for many small businesses,’ the CoA Institute said in a press note.

“Common sense appears to be dead at the FDA,” Patrick Massari, assistant vice president at the CoA Institute was quoted as saying. “Inexplicably, the FDA ignored tens of thousands of comments from the premium cigar industry, Congress, local government, media, and the citizens of the United States, particularly those affected in ways large and small by FDA’s power grab. Under this new rule, the tradition of premium, hand-rolled cigars handed down by generations will turn into a corporate profit mill.”

‘In its brief, CoA Institute argues that FDA failed to conduct a legally sufficient cost-benefit analysis, as required by federal law and Executive Orders issued by President Clinton and President Obama,’ the press note said. ‘Specifically, President Clinton’s 1993 EO 12866 requires that “[e]ach agency shall tailor its regulations to impose the least burden on society, including individuals, businesses of differing sizes, and other entities (including small communities and governmental entities), consistent with obtaining the regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations. [emphasis added]’

‘The limited analysis FDA produced either omitted or glossed over several important costs:

• First, premium cigar prices will substantially increase for all consumers as a result of the rule;
• Second, the sheer compliance costs of FDA’s regulation will be so high that smaller, family-owned businesses will no longer be able to comply;
• Third, the resulting government-defined marketplace will cripple consumer choice and bar future innovation.

‘Many companies will likely have no choice but to sell out to larger corporations, which will then dominate the market as regulation-protected monopolies.

‘The FDA itself admits that it failed to do any analysis on consumer choice, saying: “We lack a baseline estimate of consumer valuation of tobacco product variety, making it impossible to estimate how consumers who continue to use tobacco products would value the potential loss of variety due to product exit under this final rule”. Instead, the FDA ignored this essential element of cost-benefit analysis by pretending that such data does not exist.

‘In its brief, CoA Institute calls on the Court to order FDA to reopen its cost-benefit analysis and to vacate and remand the final rule.’