Supreme Court to Decide Whether FDA’s ‘Regulatory Changes’ on Vaping Were ‘Arbitrary and Capricious’

Last January, the U.S. Court of Appeals for the Fifth Circuit ruled that the Food and Drug Administration (FDA) acted “arbitrarily and capriciously,” violating the Administrative Procedure Act, when it refused to allow flavored nicotine e-liquids made by two companies to be marketed. 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 ruling that vaping products with flavors other than tobacco and menthol were ipso facto intolerable, despite the fact that former smokers preferred those options.

“For several years,” 5th Circuit Judge Andrew Oldham wrote for the majority in Wages and White Lion Investments vs. FDAthe agency “sent flavored e-cigarette manufacturers on a pointless hunt.” The agency initially concluded that “the manufacturers’ marketing plans would be ‘critical’ to the success of their applications.” It “published hundreds of pages of guidance documents, held public meetings, and posted formal presentations on its website—all with the (false) promise that a flavored product manufacturer could, at least in theory, comply with FDA’s instructions.” The manufacturers “dutifully spent countless millions conforming their behavior and applications to FDA’s orders.”

All of these efforts were in vain. “Months after receiving hundreds of thousands of applications based on its instructions,” Oldham noted, the FDA “turned around, pretended it had never issued instructions to anyone about anything, imposed new testing requirements without any notice, and rejected all of one million applications for flavored e-cigarettes because it failed to anticipate what the agency would plot twist. Worse, after telling manufacturers that their marketing plans were “critical” to their applications, the FDA candidly admitted that it had not read a single word of the million plans. The FDA then denied that its extensive guidance documents and years of instructional processes meant anything.

Under the Family Smoking Prevention and Tobacco Control Act of 2009, the FDA is tasked with determining whether approval of a nicotine product is “appropriate to protect the public health.” The agency is to consider “the risks and benefits to the general population, including users and nonusers.” This, in turn, involves considering “the increased or decreased likelihood that current users of tobacco products will discontinue using such products” as well as “the increased or decreased likelihood that nonusers of tobacco products will begin using such products.”

This collectivist calculus, which requires questionable predictions and weighing risks and benefits without instructions on how to measure or weigh them, gives the FDA wide latitude to decide what kind of evidence manufacturers must present. The FDA not only took full advantage of that latitude; it claimed to use it in a certain way, then changed its mind after manufacturers did what it told them to. By 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 acknowledges that smokers can dramatically reduce their health risks by switching to vaping. But it worries that some flavors may encourage minors to use them because they are particularly appealing to minors. In practice, that has meant rejecting nearly every “premarket” application from vaping companies. The FDA has approved just 27 products so far, and the only flavors that have passed muster are tobacco and menthol.

To enforce its de facto ban on other flavors, Oldham noted, the FDA resorted to “regulatory subterfuge,” which contradicts its own industry guidelines. Although it initially emphasized the importance of marketing plans to prevent underage use, it ultimately ignored the detailed information that the companies provided. Although it initially indicated that clinical trials on specific products and long-term studies would not be necessary, it later cited the lack of such evidence as a flaw that automatically doomed the applications. And although it initially said it was primarily concerned about the easy-to-conceal cartridge-based products favored by teens, it also rejected all applications for e-liquids used in refillable devices.

E-liquid makers Triton Distribution and Vapetasia argued that the FDA’s “regulatory changes” were patently arbitrary and capricious, and the 5th Circuit agreed. The appeals court ruled that the agency had violated four venerable principles of administrative law.

First, “the agency cannot come up with after the fact reasons for its decision in court and outside the administrative record.” Second, “the agency must provide fair notice before depriving a citizen of property.” Third, “when an agency changes its position, it must demonstrate awareness of and explain the change.” And fourth, “even when an agency acknowledges and explains its change in position, it cannot fault a regulated entity for relying in good faith on its previous position.”

The FDA’s denial of the Triton and Vapetasia applications “was arbitrary and capricious,” Oldham concluded. “The agency failed to fairly inform the manufacturers of the regulations; the agency failed to acknowledge or explain the change in its position; the agency ignored the manufacturers’ legitimate and compelling interests in relying on the guidance (before denying it); and the agency attempted to conceal its errors.” after the fact reasoning in oral argument. The opposing views expressed by some of our sister circuits do not address our primary concerns about FDA’s decision-making. We therefore believe the agency acted unlawfully.”

As Oldham pointed out, several appellate courts have taken the opposite view, although in 2022, the 11th Circuit agreed that the FDA’s refusal to consider the marketing plans it asked manufacturers to submit was arbitrary and capricious. Depending on how the Supreme Court rules on this circuit split, it could force the FDA to reconsider applications from companies like Triton and Vapetasia. But the end result could be the same.

The FDA “claims that its whim should be excused as harmless because the agency promises to deny Petitioners’ applications even if we refer the case to force the agency to comply with the law,” Oldham noted. But he said the appeals court expected the FDA “to provide Petitioners with a full and fair regulatory process after the referral, despite earlier promises to deny their applications no matter what.” That expectation of fairness seems unrealistic given the broad authority granted by the Tobacco Control Act, the vague standards it prescribes, and the FDA’s determination to keep adults from buying their preferred vaping products.