3 Part Assignment

  
PART 1:
  
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.
Page 460
 
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. . . .
Page 461
 
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.
Purpose of Assignment 
The purpose of this assignment is to discuss the reasons for regulatory agencies and ethical considerations regarding regulatory compliance. 
Assignment Steps 
Discuss Case 15.2 Food and Drug Administration v. Brown & Williamson Tobacco Corporationwith your Learning Team. This case is found in The Legal and Regulatory Environment of Business, pg. 459.
Develop a 100-word case study of the issues.
Cite a minimum of two peer-reviewed references. 
Format your paper consistent with APA guidelines. 
PART 2:
Purpose of Assignment 
The purpose of this assignment is to analyze the duties of administrative agencies and the ethics behind regulatory compliance requirements. 
Assignment Steps 
Scenario: Eric is an Assistant Vice President at marine paint manufacturing plant. One day, he accidentally discovers an email from his boss, the Vice President, to the President, notifying him of an internal study finding the paint leeches from the bottom of boats into the marine environment. The paint has been found to create birth defects in marine life. He also sees the President’s response email, in which he directs the Vice President to erase all evidence of the study and tell no one. The President also directs the Vice President to erase the email. Eric is concerned about the findings of the study, but he also fears losing his job.
Create a 350 word analysis with the following information:

Which administrative agency      governs regulatory compliance of the manufacturer?
What are the ethical concerns      regarding the President’s actions, and what do you believe Eric should do?

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Cite a minimum of two peer-reviewed references. 
Format your paper consistent with APA guidelines. 
PART 3:
QUICK QUESTIONS
1. The ethical reasons for having administrative agencies, and how they enforce their rules and regulations. (100 words)
2. The direct legal impact regulatory agencies have on business organizations. (100 words)
3. The standard of review of agency actions requires that the action is not “arbitrary or capricious.” Consider the action of state health officials in quarantining persons who may have been exposed to the Ebola virus with exhibiting any symptoms.  You may want to look at this article:  http://www.dispatch.com/content/stories/local/2014/11/01/ohio-adopts-mandatory-ebola-quarantine-for-exposed-workers.html.  Such quarantine deprives a person of their liberty.  Is the state’s action in this case enforceable?  What do you think? (100 words)
4. Consider this hypothetical case:
The state of Confusion enacted a statute requiring all trucks and towing trailers that use its highways to use a B-type truck hitch. This hitch is manufactured by only one manufacturer in Confusion. The result of this statute is that any trucker who wants to drive through Confusion must stop and have the new hitch installed, or drive around Confusion. The federal government has not made any attempt to regulate the truck hitches used on the nation’s highways. Tanya Trucker, who owns a trucking company in the state of Denial, is not happy about the additional expense this statute imposes on her business. She intends to file suit against Confusion to overturn the statute. (100 words)
· Is the Confusion statute constitutional? Discuss your legal reasoning.
· What provisions of the U.S. Constitution will be applied by a court to determine the statute’s validity?
· Is Tanya likely to prevail on her suit? Explain the reasons for your answer.
5. The concept of securities and the role of the Securities and Exchange Commission (SEC). (100 words)
6. How the Sarbanes-Oxley Act has affected the current business landscape. (100 words)
7.  Donna, a corporate director, sold 100 shares of stock in her corporation on June 1, 2007. The selling price was $10.50 a share. Two months later, after the corporation had announced substantial losses for the second quarter of the year, Donna purchased 100 shares of the corporation’s stock for $7.25 a share. Are there any problems with Donna’s sale and purchase? Explain. (100 words)
8. How environmental concerns create potential tort liability for business organizations? (100 words)
   

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