FDA “Comparative Efficacy” PMTA Requirement Is a Substantive Rule Requiring APA Notice-and-Comment

3.1 Precedents Cited

A. The ENDS/PMTA “comparative efficacy” line: what was foreclosed, and what was left open

• FDA v. Wages & White Lion Invs., L.L.C., 604 U.S. 542 (2025) (“Wages”)
  The panel treated Wages as foreclosing petitioners’ arguments that FDA unlawfully changed position about what evidence is required in PMTAs for non-tobacco flavored vapes (fruit/candy/dessert). The Supreme Court described FDA’s approach as a “comparative-efficacy requirement” and emphasized the inherently comparative nature of the APPH judgment.

  Critically, the panel relied on Wages for what it did not decide: Wages explicitly noted that other notice-and-comment challenges were not before it and expressed no view on their merits. The Fifth Circuit treated this as an invitation to reach the APA procedural issue reserved in Wages.

• Wages and White Lion Invs., L.L.C. v. FDA, 90 F.4th 357 (5th Cir. 2024) (en banc)
  Mentioned chiefly as the Fifth Circuit decision reversed by the Supreme Court in Wages. The panel referenced the en banc court’s suggestion about notice-and-comment as still “convincing” depending on how Wages is read, but it grounded its holding in existing Fifth Circuit APA doctrine and the carve-outs recognized in Wages and VDX Distro.

• VDX Distro, Inc. v. FDA, 179 F.4th 3 56, 3 60 (5th Cir. 2026)
  This precedent foreclosed the argument that the comparative efficacy standard is a “tobacco product standard” under the TCA requiring the TCA’s own notice-and-comment path. Importantly, VDX Distro expressly reserved an APA-based notice-and-comment claim—precisely the path the panel adopted here (“Today, it turns out, is ‘another day.’”).

• R.J. Reynolds Vapor Co. v. FDA, 65 F.4th 182 (5 th Cir. 2023)
  This is the doctrinal engine of the decision. The panel emphasized that R.J. Reynolds had (i) identified the comparative efficacy approach as a binding standard reflected in internal memoranda and (ii) concluded it was “not a close call” that FDA violated APA notice-and-comment procedures by adopting a substantive rule. Although Wages abrogated R.J. Reynolds on “change-in-position,” the panel held R.J. Reynolds’s characterization of the comparative efficacy standard as a substantive rule survived and bound the panel.

B. APA “substantive rule” doctrine and binding-effect tests

• Texas v. EEOC, 933 F.3d 433 (5th Cir. 2019) (quoting Syncor Int'l Corp. v. Shalala, 127 F.3d 90 (D.C. Cir. 1997))
  Provided the Fifth Circuit’s framework: a rule is substantive when it binds the agency to one course of action and prospectively affects broad, unspecified classes—triggering APA notice-and-comment and due process concerns.

• Texas v. United States, 809 F.3d 134 (5th Cir. 2015)
  Supplied the two-part binding-effect lens—whether the action imposes rights/obligations and whether it genuinely leaves decisionmakers free to exercise discretion—and the instruction to look past the agency’s label to practical effect.

• City of Arlington v. FCC, 668 F.3d 229 (5th Cir. 2012) (citing MacLean v. DHS, 543 F.3d 1145 (9th Cir. 2008))
  Supported the principle that “de facto rulemaking” via actions of general future effect may require notice-and-comment.

• Phillips Petroleum Co. v. Johnson, 22 F.3d 616 (5th Cir. 1994)
  Reinforced that courts look to what the agency does “in fact,” not what it calls its action.

C. Adjudication vs rulemaking (and the limits of Chenery II)

• SEC v. Chenery Corp., 332 U.S. 194, 202-03 (1947) (Chenery II)
  FDA invoked Chenery II’s principle that agencies may develop standards through adjudication absent congressional constraint. The panel responded by applying Chenery II’s own rationales (unforeseeability; lack of experience; specialized variability) against FDA: youth-risk and flavored ENDS were foreseeable; FDA now has extensive experience; and the agency’s alleged uniform “check-box” application belied case-specific variability.

• NLRB v. Bell Aerospace Co. Div. of Textron, Inc., 416 U.S. 267 (1974)
  The panel used Bell Aerospace to distinguish legitimate adjudicative policymaking (with a “full opportunity to be heard” in formal NLRB proceedings) from FDA’s use of informal MDOs that offered manufacturers no comparable procedural participation regarding a generally applicable evidentiary requirement.

• United States v. Mead Corp., 533 U.S. 218 (2001)
  Quoted for the proposition that Congress contemplates action “with the effect of law” when it provides relatively formal procedure; the panel used this to support its view that substantive, binding standards cannot be promulgated through “one-off” informal adjudications lacking procedural rigor.

• Brown-Forman Corp. v. NLRB, 169 F.4th 646 (6th Cir. 2026)
  Persuasive authority reinforcing a limitation: adjudication-derived standards should be rooted in case-specific facts and used to resolve the parties’ dispute, not to issue rigid rules of general applicability derived from institutional experience.

• Neustar, Inc. v. FCC, 857 F.3d 886 (D.C. Cir. 2017)
  Used as contrast: selecting a specific administrator via order lacks legislative-rule features; by implication, imposing a general evidentiary burden across PMTAs does.

D. Venue and remedial backdrop

• FDA v. R.J. Reynolds Vapor Co., 606 U.S. 226 (2025)
  Recognized that retailers can be injured by MDOs, supporting standing/injury. The Supreme Court had reserved whether each joint petitioner must independently establish venue; the Fifth Circuit resolved that question under its own venue precedents.

• Trump v. CASA, 606 U.S. 831 (2025)
  FDA invoked CASA to argue remedial limits (analogizing to limiting relief to plaintiffs). The panel distinguished CASA as addressing “universal injunctions” and “virtual representation,” while NicQuid was an actually present party seeking APA vacatur/remand.

• National Association of Private Fund Managers v. SEC, 103 F.4th 1097 (5th Cir. 2024) and Global Van Lines, Inc. v. ICC, 691 F.2d 773 (5th Cir. 1982)
  Controlled the venue outcome: where one petitioner is properly venued, the joint petition may proceed in the circuit.

• Acheson Hotels, LLC v. Laufer, 601 U.S. 1 (2023) (Jackson, J., concurring) and Salazar v. Buono, 559 U.S. 700 (2010)
  Cited in discussion of vacatur as an equitable remedy under 5 U.S.C. § 706(2), situating the court’s chosen relief within an equity-inflected remedial conception.

E. Supporting “reasoned decisionmaking,” fair notice, and due process themes

• Michigan v. EPA, 576 U.S. 743 (2015) (quoting Allentown Mack Sales & Serv., Inc. v. NLRB, 522 U.S. 359 (1998)): “reasoned decisionmaking.”
• Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012): regulated parties must have fair warning before adverse action.
• Ohio v. EPA, 603 U.S. 279 (2024), Mathews v. Eldridge, 424 U.S. 319 (1976), Board of Regents of State Colls. v. Roth, 408 U.S. 564 (1972): procedural fairness/due process resonance (though the holding rests on APA procedure).
• Tearney v. NTSB, 868 F.2d 1451 (5th Cir. 1989): invoked by FDA on foreseeability; the panel’s holding ultimately turned on binding/prospective effect rather than surprise alone.
• Biestek v. Berryhill, 587 U.S. 97 (2019): referenced in the record-support discussion about whether “Sweet Leaf” could be treated as a characterized (non-tobacco) product.

3.2 Legal Reasoning

A. The statutory and regulatory setting (TCA APPH and PMTA licensing)

The court began from the TCA’s licensing structure: marketing “new tobacco products” requires FDA authorization; FDA “shall deny” a PMTA unless APPH is shown (21 U.S.C. § 387j(c)(2)(A)). APPH requires population-level balancing that explicitly includes initiation risk and cessation likelihood (21 U.S.C. § 387j(c)(4)) and demands “valid scientific evidence” sufficient to evaluate the product (21 U.S.C. § 387j(c)(5)).

The comparative-efficacy concept—comparing flavored products to tobacco-flavored products (which FDA views as lower youth-risk)—fits inside this comparative APPH frame. But the question here was not whether such comparisons are permissible in principle; it was whether FDA may enforce a broadly binding evidentiary requirement without APA notice-and-comment.

B. What the court treated as decided (and not decided) by Wages and VDX Distro

The panel treated as foreclosed:

• “change-in-position” and fair-notice arguments for fruit/candy/dessert flavored products (Wages); and
• the claim that the comparative efficacy standard is a TCA-defined “tobacco product standard” requiring the TCA’s specific notice-and-comment route (VDX Distro).

The panel treated as reserved and open:

• whether the comparative efficacy approach is a substantive rule under the APA requiring notice-and-comment; and
• how FDA may permissibly proceed procedurally (rulemaking; rethinking; or other proceedings consistent with the opinion).

C. The “substantive rule” determination: binding effect + broad prospective application

Applying Fifth Circuit doctrine, the panel held the comparative efficacy standard is substantive because it:

1. Affects broad classes of unspecified individuals prospectively. The court emphasized scale: FDA allegedly issued MDOs for over 1.2 million flavored ENDS, having received applications for more than six million products while authorizing only a small number. For the panel, that magnitude reinforced that FDA was not merely deciding individual cases but applying a standard with general future effect.

2. Binds the agency and removes reviewer discretion. The panel relied on internal memoranda (including the late-filed October 25, 2022 memos by Brian A. King and Benjamin Apelberg) and the prior account in R.J. Reynolds of a “check-box” approach focused on whether an RCT or longitudinal cohort study was included. The MDO itself also reflected the comparative-evidence demand by faulting the PMTA for lacking robust evidence comparing flavored to tobacco-flavored products on switching/reduction outcomes.

3. Imposes a practical obligation. The panel described the standard as imposing a novel obligation on PMTA applicants to produce RCTs (or similarly robust comparative evidence), functioning as a gatekeeping requirement rather than an open-ended evaluative factor.

On these features, the panel concluded the standard is not a mere “policy statement” or “interpretive rule” but a binding legislative-type norm that must go through APA notice-and-comment.

D. Why “adjudication vs rulemaking” discretion did not save FDA

The panel’s analysis had two layers:

• (1) Chenery II’s rationales did not fit. The court read SEC v. Chenery Corp., 332 U.S. 194, 202-03 (1947) (Chenery II) as justifying adjudication when problems are unforeseen, when the agency lacks experience, or when problems are too specialized and varying for a general rule. The Fifth Circuit reasoned flavored-ends youth risk is central and foreseeable; FDA is highly experienced after millions of applications; and the uniformity of application undermines any claim of case-specific variability.

• (2) Informal adjudication is an especially poor vehicle for promulgating binding rules. The opinion drew a sharp contrast between formal adjudication (with hearing-type safeguards) and FDA’s informal PMTA denials. The court reasoned that allowing substantive rules to be created through informal adjudication would gut APA rulemaking safeguards, and it invoked United States v. Mead Corp., 533 U.S. 218 (2001) and NLRB v. Bell Aerospace Co. Div. of Textron, Inc., 416 U.S. 267 (1974) to tie “force of law” to procedural formality and to the opportunity to be heard.

E. Remedy and remand posture

Having found a procedural violation, the court granted review, vacated the MDO, and remanded. It directed FDA to either rethink the rule, re-adopt it consistent with APA notice-and-comment (emphasizing the procedure’s “information-forcing” role), or take other appropriate proceedings consistent with the opinion—without dictating substantive outcomes.

3.3 Impact

A. Immediate operational consequences for FDA PMTA practice (within the Fifth Circuit and beyond)

The decision’s immediate effect is to invalidate the challenged MDO and require FDA to revisit its approach on remand. More broadly, it intensifies pressure on FDA to choose a procedurally durable path if it wishes to apply comparative-evidence demands uniformly—most naturally, APA notice-and-comment rulemaking (or a procedurally robust alternative consistent with the opinion).

B. Litigation effects: reframing the ENDS wars around procedure

Post-Wages, substantive “change-in-position” attacks are harder for many flavored products. This opinion re-centers the battlefield on administrative procedure: whether FDA can effectively “standardize” PMTA evidentiary burdens through internal memoranda and mass adjudication.

C. Potential for broader administrative-law spillover

The panel’s reasoning is not ENDS-specific. It reinforces a Fifth Circuit theme (seen in cases like Texas v. United States and Texas v. EEOC) that courts will look to practical binding effect and mass prospective application, and will treat “guidance-by-adjudication” as de facto rulemaking when it functions like a rule.

D. What the opinion leaves unresolved

• Whether FDA’s APPH merits determinations for menthol, tobacco-flavored, or zero-nicotine products were arbitrary and capricious (the court declined to reach that).
• What the final, procedurally valid comparative-evidence framework will look like after notice-and-comment (if FDA proceeds that way).
• The precise remedial scope questions that CASA has stirred in other contexts (the court treated vacatur/remand here as appropriate for actually present parties).