SCOTUS Will Decide Whether the FDA's 'Regulatory Switcheroos' on Vaping Were 'Arbitrary and Capricious'

The 5th Circuit ruled that the agency violated the Administrative Procedure Act when it rejected applications from manufacturers of flavored nicotine e-liquids.


Last January, the U.S. Court of Appeals for the 5th Circuit held that the Food and Drug Administration (FDA) had acted "arbitrarily and capriciously," in violation of the Administrative Procedure Act, when it refused to allow the marketing of flavored nicotine e-liquids made by two companies. On Tuesday, the U.S. Supreme Court agreed to review that decision. The case highlights the maddeningly unfair process by which the FDA enforced its judgment that vaping products in flavors other than tobacco and menthol are ipso facto intolerable, even though former smokers prefer those options.

"Over several years," 5th Circuit Judge Andrew Oldham wrote for the majority in Wages and White Lion Investments v. FDA, the agency "sent manufacturers of flavored e-cigarette products on a wild goose chase." The agency initially said "manufacturers' marketing plans would be 'critical' to the success of their applications." It "promulgated hundreds of pages of guidance documents, hosted public meetings, and posted formal presentations to its website—all with the (false) promise that a flavored-product manufacturer could, at least in theory, satisfy FDA's instructions." Manufacturers "dutifully spent untold millions conforming their behavior and their applications to FDA's say-so."

All that effort was for naught. "Months after receiving hundreds of thousands of applications predicated on its instructions," Oldham noted, the FDA "turned around, pretended it never gave anyone any instructions about anything, imposed new testing requirements without any notice, and denied all one million flavored e-cigarette applications for failing to predict the agency's volte face. Worse, after telling manufacturers that their marketing plans were 'critical' to their applications, the FDA candidly admitted that it did not read a single word of the one million plans. Then the FDA denied that its voluminous guidance documents and years-long instructional processes meant anything."

Under the Family Smoking Prevention and Tobacco Control Act of 2009, the FDA is charged with determining whether approval of a nicotine product is "appropriate for the protection of the public health." The agency is supposed to take into account "the risks and benefits to the population as a whole, including users and nonusers." That, in turn, entails considering "the increased or decreased likelihood that existing users of tobacco products will stop using such products," as well as "the increased or decreased likelihood that those who do not use tobacco products will start using such products."

That collectivist calculus, which requires debatable predictions and consideration of risks and benefits with no instructions about how to measure or weigh them, gives the FDA a great deal of discretion in deciding what sort of evidence manufacturers must present. The FDA not only took full advantage of that discretion; it said it was exercising it in a particular way, then changed its mind after manufacturers did what it told them to do. At that point, it was too late for them to comply with the FDA's newly revealed requirements.

In applying the Tobacco Control Act's "public health" standard to vaping products, the FDA sees one major benefit and one major risk. It concedes that smokers can dramatically reduce their health risks by switching to vaping. But it worries that certain flavors could encourage underage use because they are especially appealing to minors. In practice, that has meant rejecting nearly every "premarket" application from vaping companies. So far the FDA has approved just 27 products, and the only flavors to pass muster are tobacco and menthol.

To enforce its de facto ban on other flavors, Oldham noted, the FDA resorted to "regulatory switcheroos," contradicting its own guidance to the industry. Although it initially emphasized the importance of marketing plans aimed at preventing underage use, it ended up ignoring the detailed information that companies submitted. Although it initially indicated that product-specific clinical studies and long-term research would not be necessary, it later cited the lack of such evidence as a flaw that automatically doomed applications. And although it initially said it was mainly concerned about readily concealable, cartridge-based products favored by teenagers, it also rejected every application for the e-liquids used in refillable devices.

The e-liquid manufacturers Triton Distribution and Vapetasia thought the FDA's "regulatory switcheroos" were manifestly arbitrary and capricious, and the 5th Circuit agreed. The appeals court ruled that the agency had violated four venerable principles of administrative law.

First, "an agency cannot invent post hoc justifications for its decision in court and outside the administrative record." Second, "an agency must provide fair notice before it deprives a citizen of property." Third, "when an agency changes its position, it must display awareness of the change and explain it." And fourth, "even when an agency acknowledges and explains a change in its position, it cannot fault a regulated entity for relying in good faith on the previous one."

The FDA's rejection of the Triton and Vapetasia applications "were arbitrary and capricious," Oldham concluded. "The agency did not give manufacturers fair notice of the rules; the agency did not acknowledge or explain its change in position; the agency ignored reasonable and serious reliance interests that manufacturers had in the [pre-denial] guidance; and the agency tried to cover up its mistakes with post hoc justifications at oral argument. The contrary views expressed by some of our sister circuits do not address our principal concerns with FDA's decisionmaking. We therefore hold the agency acted unlawfully."

As Oldham indicated, several appeals courts have taken a contrary position, although in 2022 the 11th Circuit agreed that the FDA's refusal to consider the marketing plans it had asked manufacturers to submit was arbitrary and capricious. Depending on how the Supreme Court resolves this circuit split, it could force the FDA to reconsider applications from companies like Triton and Vapetasia. But the ultimate result could be the same.

The FDA "argues that its capriciousness should be forgiven as harmless because the agency promises to deny petitioners' applications even if we remand to make the agency follow the law," Oldham noted. He said the appeals court nevertheless expected that the FDA "will give petitioners the benefit of a full and fair regulatory proceeding on remand, notwithstanding its prior promises to reject their applications no matter what." That expectation of fairness seems unrealistic, given the wide authority granted by the Tobacco Control Act, the vague standard it prescribes, and the FDA's determination to stop adults from buying the vaping products they prefer.