For the first time, the federal government is proposing cutting the nicotine level in cigarettes so they aren't so addictive.

U.S. Food and Drug Administration chief Scott Gottlieb on Friday directed the agency's staff to develop new regulations on nicotine. The FDA has had the power since 2009 to regulate nicotine levels but hasn't done so. Stocks of cigarette makers plunged after the announcement.

Gottlieb also said the FDA is giving e-cigarette makers four more years to comply with a review of products already on the market. The agency needs to concentrate on nicotine regulation and not be...