2nd UPDATE:Judge:FDA Has No Authority Over Electronic Cigarettes

A U.S. judge said the U.S. Food and Drug Administration doesn't have authority to regulate electronic cigarettes, dealing a blow to the agency's efforts to regulate tobacco products as drugs or devices.

In a 32-page opinion, U.S. District Judge Richard J. Leon sided with electronic-cigarette makers Smoking Everywhere Inc. and NJoy in finding that the FDA has no authority to regulate the products and can't stop them from entering the country.

"This case appears to be yet another example of FDA's aggressive efforts to regulate recreational tobacco products as drugs or devices," Leon said in his ruling. He added the FDA's "tenacious drive to maximize its regulatory power has resulted in its advocacy of an interpretation of the relevant law that I find, at first blush, to be unreasonable and unacceptable."

Representatives of the FDA weren't immediately available for comment.

The FDA has seized shipments of electronic cigarettes, which look and taste like cigarettes but don't contain tar, amid concerns the products were being marketed as safer alternatives to traditional tobacco. The FDA asserted its power by saying the electronic cigarettes were essentially drugs or devices that were being imported without FDA approval.

Electronic cigarettes are battery-powered tubes that contain an atomizer, a battery and a cartridge filled with liquid nicotine. Florida-based Smoking Everywhere, one of the largest makers of electronic cigarettes, had challenged the FDA's authority to regulate the products. The company has imported and sold more than 600,000 units of electronic cigarettes, according to the judge's opinion.

Ray Story, a vice president for the company, said the opinion is a "big big big victory for us." He said when in 2008 the FDA stopped shipments of the products into the U.S. it put a "damper" on the company's business.

Smoking Everywhere has sold about one million of the cigarettes in the U.S., he said. He declined to provide a dollar amount for the sales, saying the company was in the process of compiling figures.

Electronic cigarettes are facing challenges from attorneys general in California and New Jersey amid reports from the FDA that the products contain cancer-causing chemicals. Story said that electronic cigarettes are "less harmful" than traditional cigarettes. The products don't contain tar and don't produce smoke.

The opinion comes a week after a district-court judge in Kentucky largely ruled in favor of the FDA by saying the agency can restrict tobacco advertising. In that case, tobacco giants such as Reynolds American Inc. (RAI) and Lorillard Inc. (LO) said the FDA restrictions on tobacco ads infringes on their First Amendment rights.

-By Jared A. Favole, Dow Jones Newswires; 202-862-9207; jared.favole@dowjones.com

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