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PUBLIC CITIZEN v. FTC

May 20, 1988

PUBLIC CITIZEN, et al., Plaintiffs,
v.
FEDERAL TRADE COMMISSION, Defendant



The opinion of the court was delivered by: JACKSON

 THOMAS PENFIELD JACKSON, U.S. District Judge

 Alarmed at the growing popularity of "smokeless tobacco" (snuff and chewing tobacco), especially among young people, in February of 1986, Congress enacted the Comprehensive Smokeless Tobacco Health Education Act, 15 U.S.C. § 4401 et seq., (hereinafter "the Act" or "Smokeless Tobacco Act"). Scientific awareness of the health hazards associated with smokeless tobacco had risen in tandem with its use, and Congress undertook to discourage its consumption by undertaking to acquaint prospective consumers with its dangers. Requiring the vendors of the products themselves to publicize its pathogenic properties was a significant element of the campaign.

 Drawing upon experience with an earlier statute respecting the marketing of cigarettes, *fn1" by the Act Congress prohibited radio and television advertising of smokeless tobacco products altogether. 15 U.S.C. § 4402(f). All other advertising of them, and all packaging in which they are sold, must carry one of three statutorily mandated "warning" labels, 15 U.S.C. § 4402(a)(1) - (2), and the Federal Trade Commission ("FTC") was directed to formulate regulations governing the manner in which the warning labels must be displayed. Id., § 4402(b)-(c). *fn2" In July, 1986, the FTC published its notice of proposed rulemaking, and, on November 4, 1986, issued its final regulations, to take effect February 27, 1987. 16 C.F.R. § 307 (1987).

 Plaintiffs Public Citizen, joined by the American Cancer Society, the American Heart Association, the American Lung Association, and the Public Health Association, take issue with a provision of those regulations which purports to exempt from the Act's requirement that advertising for smokeless tobacco products bear warning labels, inter alia, "utilitarian objects for personal use, such as pens, pencils, clothing, or sporting goods." 16 C.F.R. § 307.4(b). Plaintiffs sue the defendant FTC for declaratory and injunctive relief, pursuant to the Administrative Procedure Act, 5 U.S.C. § 706(2)(A), alleging that the exemption is contrary to law, because the FTC is without power to grant such an exemption under the Act. Alternatively, they say, the exemption is arbitrary and capricious. For either reason or both, they pray that the Court direct the FTC to amend the regulations to delete the exemption. The FTC responds that it does possess authority to grant the exemption, and that the exemption is rational.

 The issues thus being simply matters of statutory construction and a squaring of the regulations with the legislative purpose, both parties submit the case on cross-motions for summary judgment. For the following reasons, the Court will grant the motion of the plaintiffs, deny the motion of the defendant FTC, and will order the relief prayed.

 I.

 As a general proposition, of course, a federal agency's interpretation of the powers entrusted to it by a statute it has been charged with enforcing is entitled to considerable deference. Federal Election Commission v. Democratic Senatorial Campaign Committee, 454 U.S. 27, 37, 70 L. Ed. 2d 23, 102 S. Ct. 38 (1981). Nevertheless, the courts are the final arbiters of statutory construction, and it is their "clear duty" to reject an agency's interpretation of a statute if it is inconsistent with the statutory mandate or frustrates the congressional policy underlying the statute. Securities and Exchange Commission v. Sloan, 436 U.S. 103, 117-19, 56 L. Ed. 2d 148, 98 S. Ct. 1702 (1978). When a court reviews an agency's construction of a statute which it administers, it first must ask whether Congress has "directly spoken to the precise question at issue." If it has, and its intent is clear, "that is the end of the matter." Both court and agency "must give effect to the unambiguously expressed intent of Congress." Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837, 842-43, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984). And "the starting point for interpreting a statute is the language of the statute itself." Consumer Product Safety Comm'n. v. GTE Sylvania, 447 U.S. 102, 108, 64 L. Ed. 2d 766, 100 S. Ct. 2051 (1980).

 The Smokeless Tobacco Act declares it to be unlawful to manufacture, package, or import for sale or distribution within the United States any smokeless tobacco product unless its package bears one of three warning labels:

 
"WARNING: THIS PRODUCT MAY CAUSE MOUTH CANCER
 
WARNING: THIS PRODUCT MAY CAUSE GUM DISEASE AND TOOTH LOSS
 
WARNING: THIS PRODUCT IS NOT A SAFE ALTERNATIVE To CIGARETTES."

 15 U.S.C. § 4402(a)(1). The paragraph immediately following then declares it to be also unlawful for any manufacturer, packager, or importer of smokeless tobacco products

 
. . . to advertise or cause to be advertised (other than through the use of outdoor billboard advertising) within the United States any smokeless tobacco product unless the advertising bears, in accordance with the requirements of ...

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