Orton Motor, Inc. v. U.S. Dep't of Health & Human Servs. , 884 F.3d 1205 ( 2018 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 7, 2017 Decided March 20, 2018
No. 16-1299
ORTON MOTOR, INC., D/B/A ORTON’S BAGLEY,
PETITIONER
v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN
SERVICES,
RESPONDENT
On Petition for Review of an Order
of the Departmental Appeals Board of the
United States Department of Health and Human Services
Johanna Dennehy argued the cause for petitioner. With
her on the briefs were Michael J. Baratz and Molly Bruder Fox.
Megan Barbero, Attorney, U.S. Department of Justice,
argued the cause for respondent. With her on the brief were
Mark B. Stern and Alisa B. Klein, Attorneys, and AnnaMarie
Kempic, Deputy Chief Counsel for Litigation, United States
Food & Drug Administration.
Before: TATEL, GRIFFITH and WILKINS, Circuit Judges.
Opinion for the Court filed by Circuit Judge WILKINS.
2
WILKINS, Circuit Judge: Orton Motor, Inc. d/b/a Orton’s
Bagley (“Orton”) is a gas station and convenience store in
Bagley, Minnesota, that sells cigarettes and tobacco products,
among other sundries. The Food and Drug Administration
(“FDA”) levied civil money penalties in the amount of $500
against Orton following two inspections in which Orton sold
cigarettes to a minor without first checking identification to
verify age. As a policy, if a retailer fails an inspection for the
first time, the FDA’s Center for Tobacco Products (the
“Center”) charges all violations observed during that
inspection as a single violation. However, the Center charges
each separate violation of a regulation as a discrete violation
during subsequent failed inspections. Accordingly, the FDA
counted both the sale to a minor and the failure to verify age as
two separate violations on Orton’s second failed inspection and
assessed the maximum penalty of $500 for three violations
within a 24-month period under the civil money penalty
schedule.
Orton challenges this determination on two principal
grounds: that the Tobacco Control Act precludes the FDA’s
methodology of charging multiple violations in a single
inspection, and that the FDA violates the law by failing to
provide a process for retailers to challenge first violations
before the issuance of a warning letter. We find no merit in
either contention, and accordingly, we deny Orton’s petition.
I.
In 2009, Congress passed the Family Smoking Prevention
and Tobacco Control Act (“TCA”), which “g[ave] the FDA
broad regulatory authority over tobacco products, including,
for instance, authority to impose restrictions on their sale, and
on the advertising and promotion of such products . . . .”
Sottera, Inc. v. Food & Drug Admin., 627 F.3d 891, 898 (D.C.
3
Cir. 2010) (citations omitted). The FDA previously attempted
to regulate tobacco products under the Food, Drug, and
Cosmetic Act (“FDCA”) in 1996, but the Supreme Court
concluded in Food & Drug Administration v. Brown &
Williamson Tobacco Corp. that it lacked the authority to do so
based on “the FDCA’s overall regulatory scheme and [] the
tobacco-specific legislation that [Congress] ha[d] enacted
subsequent to the FDCA.” 529 U.S. 120, 125-26 (2000).
Congress passed the TCA to fill this gap, finding that “Federal
and State governments have lacked the legal and regulatory
authority and resources they need to address comprehensively
the public health and societal problems caused by the use of
tobacco products” and determining that “[i]t is in the public
interest for Congress to enact legislation that provides the Food
and Drug Administration with the authority to regulate tobacco
products and the advertising and promotion of such products.”
21 U.S.C. § 387 Note, Findings (7) & (12); Pub. L. No. 111-
31, 123 Stat. 1776 (June 22, 2009). The TCA incorporated this
authority to regulate tobacco into the existing regulatory
structure of the FDCA. Sottera, 627 F.3d at 894-95.
Relevant to this case, the TCA prohibits the “misbranding
of any . . . tobacco product . . . in interstate commerce,” 21
U.S.C. § 331(b), as well as “the doing of any [] act . . . [that]
results in [a tobacco product] being . . . misbranded.” Id.
§ 331(k). A tobacco product is “deemed to be misbranded” if
“it is sold or distributed in violation of regulations prescribed
under section 387f(d),” id. § 387c(a)(7)(B), which in turn
authorizes the Secretary of Health and Human Services to
“require restrictions on the sale and distribution of a tobacco
product” by regulation, as “appropriate for the protection of the
public health.” Id. § 387f(d). The regulations promulgated
pursuant to this section provide that:
4
(1) No retailer may sell cigarettes or smokeless
tobacco to any person younger than 18 years of
age;
(2) (i) Except [through mail-order and in locations
admitting only adults], each retailer must verify by
means of photographic identification containing
the bearer’s date of birth that no person purchasing
the product is younger than 18 years of age;
(ii) No such verification is required for any
person over the age of 26;
(3) Except as otherwise provided in [regulations
about self service], a retailer may sell cigarettes or
smokeless tobacco only in a direct, face-to-face
exchange without the assistance of any electronic
or mechanical device (such as a vending machine);
(4) No retailer may break or otherwise open any
cigarette or smokeless tobacco package to sell or
distribute individual cigarettes [or a quantity of
cigarettes or smokeless tobacco smaller than that
contained in a manufacturer-distributed package];
(5) Each retailer must [bring into compliance] all
self-service displays, advertising, labeling, and
other items, that are located in the retailer’s
establishment.
21 C.F.R. § 1140.14(a). Neither the statute nor the regulations
explicitly states how violations are to be counted.
The TCA created civil monetary penalties for violations
related to tobacco. Section 333 provides for civil money
penalties “in an amount not to exceed $15,000 for each such
violation, and not to exceed $1,000,000 for all such violations
adjudicated in a single proceeding,” with enhanced penalties
available for intentional violations. 21 U.S.C. § 333(f)(9).
Other provisions specify the penalty schedule applicable to
5
violations of the retailer-specific regulations. For a retailer
with an approved training program, the maximum penalties
are:
(I) in the case of the first violation, $0.00
together with the issuance of a warning letter
to the retailer;
(II) in the case of a second violation within a 12-
month period, $250;
(III) in the case of a third violation within a 24-
month period, $500;
(IV) in the case of a fourth violation within a 24-
month period, $2,000;
(V) in the case of a fifth violation within a 36-
month period, $5,000; and
(VI) in the case of a sixth or subsequent violation
within a 48-month period, $10,000 as
determined by the Secretary on a case-by-
case basis.
21 U.S.C. § 333 Note; Pub. L. No. 111-31, 123 Stat. 1776,
1839 (June 22, 2009).
The TCA requires the Secretary of Health and Human
Services to issue guidance regarding a variety of topics and
procedures for the assessment of violations and civil money
penalties. Codified at 21 U.S.C. § 333, these provisions direct
that the Secretary issue guidance:
(B) providing for timely and effective notice . . . to
the retailer of each alleged violation at a particular
retail outlet prior to conducting a followup
compliance check . . . .;
(C) providing for a hearing pursuant to the
procedures established through regulations of the
6
Food and Drug Administration for assessing civil
money penalties, including at a retailer’s request a
hearing by telephone or at the nearest regional or
field office of the Food and Drug Administration,
and providing for an expedited procedure for the
administrative appeal of an alleged violation;
(D) providing that a person may not be charged
with a violation at a particular retail outlet unless
the Secretary has provided notice to the retailer of
all previous violations at that outlet;
(E) establishing that civil money penalties for
multiple violations shall increase from one
violation to the next violation pursuant to [the
penalty schedule] within the time periods provided
for in such [schedule].
TCA § 103(q)(1); Pub. Law No. 111-31, 123 Stat. 1776, 1838-
39 (June 22, 2009).
The Center published two guidance documents explaining
its approach to enforcement of the tobacco retail regulations.
One was entitled “Civil Money Penalties and No-Tobacco-Sale
Orders for Tobacco Retailers” and the other offered
“Responses to FAQs” about the same. See Ctr. for Tobacco
Prods., Food & Drug Admin., U.S. Dep’t of Health & Human
Servs., Civil Money Penalties and No-Tobacco-Sale Orders for
Tobacco Retailers: Guidance for Industry (“CMP Guidance”)
(rev. Dec. 2016), available at www.fda.gov/Tobacco
Products/Labeling/RulesRegulationsGuidance/ucm447308.ht
m (last visited Mar. 19, 2018); Civil Money Penalties and No-
Tobacco-Sale Orders for Tobacco Retailers, Responses to
Frequently Asked Questions (“FAQs”) (rev. Dec. 2016),
available at www.fda.gov/TobaccoProducts/Labeling/
RulesRegulationsGuidance/ucm252810.htm (last visited Mar.
19, 2018). The guidance documents bear a banner announcing
7
that they are “not binding on FDA or the public.” See CMP
Guidance at 1; FAQs at 1. Substantively, the guidance sets
forth the Center’s approach to actions for civil money penalties.
The CMP Guidance provides significant detail about the
Center’s enforcement approach, including follow-up visits to
inspect retailers after violations. The Center’s “FAQ”
document explains the Center’s enforcement position of
counting multiple regulation violations on subsequent visits,
while “count[ing] only one regulation violation from the first
inspection.” See FAQs, Question 43 at 13 (“[The Center]
counts only one regulation violation from the first inspection at
a retail outlet, regardless of the number of regulation violations
that were noted and included in a Warning Letter. For any
subsequent inspections, [the Center] may count any or all
violations and its general policy is to count all of them
individually.”).
II.
The parties do not disagree about the facts underlying this
dispute. On July 10, 2013, an FDA inspector visited Orton and
observed that a minor was permitted to purchase cigarettes, in
violation of then-current 21 C.F.R. § 1140.14(a) (2010), and
that no one checked the minor’s identification before the
tobacco sale, in violation of 21 C.F.R. § 1140.14(b)(1) (2010).
The FDA issued a “Warning Letter” on August 15, 2013,
documenting these violations and concluding that they “cause
[Orton’s] cigarettes to be ‘misbranded’” under 21 U.S.C.
§ 387(c). See Letter from Ann Simoneau, Office of
Compliance and Enforcement, Center for Tobacco Products
(Aug. 15, 2013); Joint Appendix (“J.A.”) 1-3. Orton did not
challenge the issuance of the Warning Letter at that time.
On May 16, 2015, the FDA again inspected Orton and
documented the same violations for a second time: the sale of
8
tobacco products to a minor and that the minor’s purchase took
place without Orton checking the minor’s identification to
verify age. The Center brought an administrative complaint
against Orton on October 1, 2015, seeking civil money
penalties of $500. See Admin. Compl. For Civ. Money
Penalties, Ctr. for Tobacco Prods. v. Orton Motor, Inc. d/b/a
Orton’s Bagley, FDA Docket No. FDA-2015-H-3414 (Oct. 1,
2015); J.A. 4-8. This amount derives from the FDA’s
regulations at 21 C.F.R. § 17.2 (2014), which provided at the
time for a $500 maximum civil money penalty for “3
[Violations] within a 24 month period.” Id. at 2. Orton
answered the Complaint with a defense that the statute and
regulations “do not authorize [the agency] to impose multiple
violations as a result of one inspection” or “one transaction.”
See Answer to Admin. Compl., Ctr. for Tobacco Prods. v.
Orton Motor, Inc. d/b/a Orton’s Bagley, FDA Docket No.
FDA-2015-H-3414 at 3 (Oct. 30, 2015); J.A. 11-14. Orton
accordingly argued that the $500 penalty was impermissible
“because two violations were cited during one inspection” or
“one transaction.” Id. Orton sought a hearing before an
administrative law judge (“ALJ”). Id. at 1.
After a prehearing conference and cross-motions for
summary decision, ALJ Lewis Booker issued a Decision and
Order concluding that Orton “misbranded a tobacco product on
May 16, 2015, and will be sanctioned by a civil monetary
penalty of $0 and a judicial Warning Letter.” FDA Office of
Admin. Law Judges, Initial Decision and Order, Ctr. for
Tobacco Prods. v. Orton Motor, Inc. d/b/a Orton’s Bagley,
FDA Docket No. FDA-2015-H-3414 (Feb. 8, 2016); J.A. 26-
35. In short, ALJ Booker concluded that both the sale to a
minor and the failure to check identification resulted in
“misbranding” under a single statutory provision, and, as such,
constituted a single violation supporting civil money penalties.
ALJ Booker held that the July 10, 2013, and May 16, 2015,
9
incidents each constituted misbranding but, because they were
22 months apart, they triggered a $0 penalty. Id. at 5-6. The
ALJ issued his own Warning Letter based on the later violation.
Id. at 7.
The Center appealed to the Departmental Appeals Board
(the “Board”). In a decision on June 30, 2016, the Board
reversed the ALJ’s decision and reinstated the $500 penalty.
See Final Decision on Review of Administrative Law Judge
Decision, Ctr. for Tobacco Prods. v. Orton Motor, Inc. d/b/a
Orton’s Bagley, Docket No. A-16-56 (June 30, 2016); J.A. 40-
65. The Board reasoned that the agency was interpreting its
own regulations, justifying deference unless the agency’s
interpretation was contrary to the regulations’ unambiguous
meaning. Other portions of the statute demonstrated that
Congress “knew how to limit the number of violations for
multiple acts in the course of one transaction” as well as to limit
“how penalties may be applied,” including by imposing caps
where multiple violations are “adjudicated in a single
proceeding.” Id. at 11-12. The FDA’s guidance demonstrated
its approach to “distinct” violations, including that the FDA
would not count multiple violations in the first inspection, but
would do so in subsequent visits. Id. at 13-15, 20. The Board
further reasoned that the Center’s enforcement policy gave
effect to the statute’s notice provisions, including through its
guidance and the availability of hearings when civil money
penalties are imposed on the basis of prior enforcement. Id. at
18-19. The Board re-imposed the $500 penalty as authorized
under the schedule. Id. at 26. Orton petitioned for review.
III.
Orton argues that the $500 penalty imposed by the Board
should be set aside under the Administrate Procedure Act as
“not in accordance with law.” 5 U.S.C. § 706(2)(A). In
10
particular, Orton contends that the TCA does not permit the
Center’s practice of charging multiple violations arising from
a single inspection or transaction or the issuance of a warning
letter for a first violation, without a hearing. Orton’s petition
thus implicates the consistency between the FDA’s practices
and the TCA.
The deference afforded to an agency interpretation of a
statute “var[ies] with circumstances.” See United States v.
Mead Corp., 533 U.S. 218, 228 (2001). An interpretation
reached through a formal process, including adjudication, will
ordinarily be reviewed under Chevron. See id. at 230-31. In
this case, however, the interpretation that we now review did
not originally arise through an FDA adjudication: instead, the
Center expressed its position in guidance documents, upon
which the Board in turn relied during the civil money penalty
proceedings. Such “interpretations contained in policy
statements, agency manuals, and enforcement guidelines, all of
which lack the force of law [] do not warrant Chevron-style
deference,” and instead “are ‘entitled to respect’ . . . but only
to the extent that those interpretations have the ‘power to
persuade.’” Christensen v. Harris Cty., 529 U.S. 576, 587
(2000) (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140
(1944)). Orton purports to challenge both the Board decision
and the guidance documents themselves, but we need not
determine which form of the agency’s interpretation is Orton’s
primary target: it makes no difference in the result here, since
our conclusion does not require the valence of Chevron
deference.
Under Skidmore, the weight a court affords to an agency
interpretation “will depend upon the thoroughness evident in
its consideration, the validity of its reasoning, its consistency
with earlier and later pronouncements, and all those factors
which give it power to persuade, if lacking power to control.”
11
Skidmore, 323 U.S. at 140. Ultimately, a court will uphold an
agency determination under Skidmore if it is persuasive.
Christensen, 529 U.S. at 587. Evaluating the statute “in this
old-fashioned way,” Fed. Election Comm’n v. Craig for U.S.
Senate, 816 F.3d 829, 839 (D.C. Cir. 2016) (quotation marks
omitted), assessing its text and structure, we conclude that the
FDA’s interpretation is persuasive. “[W]e need not reach the
question of Chevron deference if the [agency] interpretation
satisfies the requirements for Skidmore deference.” Union
Neighbors United, Inc. v. Jewell, 831 F.3d 564, 580 (D.C. Cir.
2016) (citing Brown v. United States, 327 F.3d 1198, 1205
(D.C. Cir. 2003) (quotation marks omitted).
A.
Orton posits that the TCA precludes the charging of
multiple violations at one time based on certain procedural
aspects of the statute as well as the broader legislative context.
But the statute and the regulatory scheme support the agency’s
contrary conclusion, which has consistently informed its
enforcement practices.
As an initial matter, the statute provides plainly for the
imposition of civil penalties for violations of the tobacco
requirements. See 21 U.S.C. § 333(f)(9). Although the statute
does not expressly permit the charging of multiple violations
from a single inspection or transaction, the law provides the
FDA with the authority to impose civil penalties for any
violations committed, absent such a restriction. The FDA’s
position that its enforcement authority permits it to impose
penalties for each violation of the tobacco sale restrictions
arising during a single inspection or transaction is a persuasive
interpretation of the plain terms of the statute.
12
Orton argues that three procedural provisions combine to
curtail the FDA’s enforcement authority: the requirement of
“timely and effective notice . . . to the retailer of each alleged
violation at a particular retail outlet prior to conducting a
followup compliance check,” that the FDA enact regulations
establishing a hearing process and an “expedited procedure for
the administrative appeal of an alleged violation,” and that “a
person may not be charged with a violation at a particular retail
outlet unless the Secretary has provided notice to the retailer of
all previous violations at that outlet.” See TCA § 103(q). But
these provisions hardly demand the interpretation that Orton
advocates. Notice before a “followup compliance check”
refers to subsequent inspections – by the plain meaning of the
words, “compliance check” is an event of inspection, not the
incident of a violation. And “notice . . . of all previous
violations” does not mean that the Center may not charge
multiple violations, where the regulations support overlapping
as well as discrete-but-concurrent violations and where the
statute expressly contemplates the adjudication of multiple
violations in a single proceeding, as discussed below. Instead,
“all previous violations” must mean all violations previous to
those charged. This conclusion preserves the integrity of the
statutory scheme and reconciles the provisions within it. See
James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1093 (D.C. Cir.
1996) (noting the Court’s “obligation to interpret the statute’s
provisions in harmony with each other”); Nat’l Corn Growers
Ass’n v. EPA, 613 F.3d 266, 272 (D.C. Cir. 2010) (citing Brown
& Williamson Tobacco Corp. for the proposition that a “statute
must be interpreted as a ‘coherent regulatory scheme’ with ‘all
parts fit into a harmonious whole’”).
The structure of the regulations promulgated under Section
387f(d), as directed by 21 U.S.C. § 387c(a)(7)(B), also cuts
against Orton’s proposed interpretation. First, Orton’s position
would render regulations superfluous with respect to retailer
13
conduct toward underage tobacco purchasers. Generally
speaking, a retailer who sells a tobacco product to a minor, in
violation of 21 C.F.R. § 1140.14(a)(1), likely only would do so
without checking identification first, in violation of 21 C.F.R.
§ 1140.14(a)(2). Understanding these regulations as restricting
separate conduct and supporting separate violations gives
meaning to both age-related regulations in such circumstances.
The distinction between the groups of tobacco purchasers to
which the regulations relate further suggests that each of these
regulations has independent significance: the requirement that
a retailer verify age applies with respect to prospective tobacco
purchasers up to 26 years old, while the sales restriction relates
only to would-be purchasers under the age of 18. Accordingly,
the regulations punish violations of the age-verification
requirements for any purchaser under age 26, but the
punishment becomes more severe when the violation also
results in a minor being permitted to purchase tobacco – the
concern at the core of the age-related regulations. Moreover,
setting aside the overlap at issue here, it requires little
imagination to envision an inspection revealing multiple
violations of other sale restrictions. Perhaps a retailer sells a
loose cigarette to a 25-year-old, without checking
identification, violating 21 C.F.R. § 1140.14(a)(4) and (2). Or
maybe a store offers loose cigarettes in a self-service vending
machine, despite having no age restrictions on entry to that
location, violating 21 C.F.R. § 1140.14(a)(4) and (3). If the
statute counted single and multiple violations identically for
purposes of the civil money penalties that may attach, the
incentive for retailers to comply with each of the regulations
would diminish.
When examining the varied, potentially overlapping
conduct covered by these regulations, it merits note that the
regulations themselves have a special history. Ordinarily,
reliance on regulations to interpret the authorizing statute
14
would be misplaced. See Decker v. Nw. Envtl. Def. Ctr., 568
U.S. 597, 609 (2013) (“[R]egulations, in order to be valid, must
be consistent with the statute under which they are
promulgated.” (quoting United States v. Larionoff, 431 U.S.
864, 873 (1977)). But the regulations at issue here are unique
because Congress in the TCA directed the agency to
promulgate “identical” regulations to those promulgated by the
Secretary of Health and Human Services in 1996, which were
part of the prior regulatory regime that the Supreme Court
struck down in Brown & Williamson. See 21 U.S.C.
§ 387a-1(a)(2). Cf. Regulations Restricting the Sale and
Distribution of Cigarettes and Smokeless Tobacco to Protect
Children and Adolescents, 61 Fed. Reg. 44,396-01, § 897.14
(Aug. 28, 1996). Evidently, Congress legislated with these
restrictions in mind. See Merrill Lynch, Pierce, Fenner &
Smith, Inc. v. Curran, 456 U.S. 353, 381-82 & n.66 (1982) (“re-
enact[ing] a statute without change” or “incorporating sections
of a prior law” demonstrate congressional intent to “le[ave]
intact” contemporary interpretations); cf. Pub. Citizen, Inc. v.
U.S. Dep’t of Health & Human Servs., 332 F.3d 654, 669 (D.C.
Cir. 2003) (declining to rely on congressional ratification
canon of interpretation where “no formal regulation addressed
the question”). With these regulations in place at the direction
of Congress, the statute is easily understood to permit multiple
violations where multiple regulations were breached.
Structural characteristics of the statute confirm the
strength of the FDA’s interpretation and provide further reason
to find it persuasive. The TCA recognizes the adjudication of
multiple violations within a single proceeding where it caps
civil money penalty liability for tobacco control “for all such
violations adjudicated in a single proceeding.” 21 U.S.C.
§ 333(f)(9). The reference to “violations” in the plural form
demonstrates that a single proceeding may involve the
simultaneous adjudication of more than one violation.
15
Orton asserts that the inclusion of this language in the
section governing tobacco civil money penalties generally, but
not within the provisions setting forth the specific procedures
for retailers, indicates Congress’s intention that multiple
violations be adjudicated in discrete proceedings in the latter.
Pet’r’s Br. 31-32. However, as Orton concedes in the Reply,
§ 333(f)(9) by its plain terms applies to retailers as well as to
any other entity doing business regulated by the TCA. Pet’r’s
Reply Br. 10. Moreover, there is no conflict between
§ 333(f)(9) and the specific procedures for civil money
penalties against retailers – as noted above, the statute is
otherwise silent as to whether multiple violations may be
charged at once. It makes little sense that Congress would
provide generally for the adjudication of multiple tobacco
control violations in a single proceeding, but carve out retailers
from that provision implicitly through a series of other
procedures – without ever stating such an intention expressly.
Nothing in the retailer provisions demands such a reading of
the statute taken as a whole.
In contrast to the contorted exception that Orton would
have us imply with respect to tobacco retailers, Congress
clearly precluded the agency from finding multiple violations
in a single transaction in other portions of the FDCA. In
particular, the FDCA provides that “multiple convictions of
one or more persons arising out of the same event or
transaction, or a related series of events or transactions, shall
be considered as one violation” for the purpose of calculating
civil money penalties with respect to violations of certain
prescription drug sampling restrictions. 21 U.S.C. § 333(b)(2).
The absence of such a limitation in the provisions governing
tobacco violations suggests that multiple violations can arise
from a single inspection or transaction, based on the
presumption that “[w]here Congress includes particular
16
language in one section of a statute but omits it in another
section of the same Act . . . Congress acts intentionally and
purposely in the disparate inclusion or exclusion.” Russello v.
United States, 464 U.S. 16, 23 (1983) (citation omitted).
This principle holds true despite the enactment of the
FDCA provisions at different times. Courts presume that
Congress legislates against the backdrop of existing statutes.
See, e.g., Goodyear Atomic Corp. v. Miller, 486 U.S. 174, 185
(1988) (courts “presume that Congress is knowledgeable about
existing law pertinent to the legislation it enacts”); Jerman v.
Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573,
590 (2010). While that presumption “may be overcome by
specific language that is a reliable indicator of congressional
intent,” Arkansas Dairy Co-op Ass’n, Inc. v. U.S. Dep’t of Agr.,
573 F.3d 815, 829 (D.C. Cir. 2009) (citation omitted), the TCA
included no such clear language distinguishing the new tobacco
provisions from the rest of the FDCA into which they were
incorporated. Assuming, as we must, that Congress understood
the statutory framework into which it legislated the TCA, the
explicit preclusion of multiple violations based on a single
event of improper prescription drug sampling provides further
persuasive force in favor of the FDA’s position that the tobacco
restrictions contain no such charging limitation.
We finally note that the Skidmore inquiry “consider[s]
whether the agency has applied its position with consistency”
as a factor in persuasion. Fed. Express Corp. v. Holowecki,
552 U.S. 389, 399 (2008). While not dispositive, variation in
an agency’s interpretation will “count against” its
persuasiveness. See Landmark Legal Found. v. IRS, 267 F.3d
1132, 1137 (D.C. Cir. 2001). Here, the Center’s position shows
no irregularity. To the contrary, the FDA guidance documents
upon which the Board relied have been operative since 2013,
without change to the Center’s violation-counting
17
methodology. That the FDA has interpreted the statute
consistently buttresses our determination that its reading merits
our respect.
Accordingly, we deny Orton’s petition with respect to its
first argument that the FDA’s methodology of counting
violations is improper.
B.
We now turn to Orton’s argument that the FDA violated
the TCA by not providing a process to challenge an alleged first
violation prior to issuance of a warning letter. As described
above, the TCA directed the Secretary to issue guidance
“providing for a hearing pursuant to the procedures established
through regulations of the Food and Drug Administration for
assessing civil money penalties.” TCA § 103(q)(1)(C). The
FDA’s regulations detail extensive procedures governing such
hearings. However, the FDA treats first violations as falling
outside of these civil money penalty procedures, as the penalty
is $0.00 and a warning letter. Orton argues that this omission
violates the TCA and Orton’s procedural due process rights.
We disagree. The consequences from a first violation
alone do not trigger notice and hearing requirements, either
under the TCA or principles of procedural due process. The
TCA requires such procedures only for the assessment of civil
money penalties, and no such penalty attaches to a first
violation. TCA § 103(q)(1)(C). While the notice requirement
attaches to any alleged violation, see id. § 103(q)(1)(B), it is
undisputed that Orton received a warning letter providing
notice of the violations found during the first inspection. Orton
does not explain why the warning letter itself is not sufficient
notice.
18
Moreover, this Court has rejected the idea that an FDA
warning letter itself is a consequence subject to judicial review.
In Holistic Candlers & Consumers Association v. Food & Drug
Administration, we explained that FDA warning letters, while
potentially significant as bases for later enforcement, are not
subject to review where “no legal consequences flow from the
agency’s conduct to [that point].” 664 F.3d 940, 944-45 (D.C.
Cir. 2012) (citation omitted). The lack of legal consequences
distinguishes an FDA warning letter in this context from an
agency letter representing final agency action. Cf. Rhea Lana,
Inc. v. Dep’t of Labor, 824 F.3d 1023, 1030 (D.C. Cir. 2016)
(warning letter carries legal consequences where its issuance is
“dispositive” of notice and establishes “willfulness” in a later
proceeding); Ciba-Geigy Corp. v. EPA, 801 F.2d 430, 436-37
(D.C. Cir. 1986) (concluding that an EPA letter constituted
reviewable agency action where it stated agency policy that
certain products would be considered misbranded and the
company would face cancellation of its registration). Because
the warning letter issued to Orton does not determine Orton’s
rights or obligations or carry other legal consequences, the
FDA’s lack of a hearing procedure by which Orton could
challenge the first violation is not unlawful.
As for Orton’s constitutional claims, due process is
required only where government action threatens a deprivation
of life, liberty, or property. But Orton has failed to show that
the mere issuance of a warning letter, absent further
enforcement action, effects any such deprivation.
“[R]eputation alone, apart from some more tangible interests
such as employment, is [n]either ‘liberty’ [n]or ‘property’ by
itself sufficient to invoke the procedural protection of the Due
Process Clause.” Paul v. Davis, 424 U.S. 693, 701 (1976); see
Trifax Corp. v. Dist. of Columbia 314 F.3d 641, 643-44 (D.C.
Cir. 2003). Orton has not alleged any such tangible effect here.
See Trifax, 314 F.3d at 644.
19
Critically, a retailer has an opportunity to challenge the
issuance of a first violation upon the later assessment of civil
money penalties. During oral argument, counsel for the FDA
clarified that a retailer can challenge the facts underlying a first
violation during the adjudication of a subsequent violation: if
a first violation is disproved, it will not be counted against a
retailer. Oral Arg. at 24:17-28; 31:51-32:07. This is important
because a first violation becomes legally significant when civil
money penalties are assessed for violations identified during a
subsequent failed inspection. At that point, the amount of
penalty assessed moves up the civil money penalty schedule,
based on the foundation of the first violation. As the first
violation affects the amount of penalty assessed later, the
concrete consequence of the first violation arises at that point.
The FDA adjudication of the subsequent violation thus
provides a meaningful opportunity for a retailer to be heard
regarding the underlying first violation, at the time that the first
violation carries legally significant effects. Due process
requires nothing more, and for this reason, we reject Orton’s
second basis for its petition.
* * *
For the foregoing reasons, we deny Orton’s petition.