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

1. Introduction

In NicQuid, L.L.C. v. FDA, a consolidated set of petitions, multiple e-cigarette businesses (manufacturers and retailers) sought review of FDA marketing denial orders (“MDOs”) issued under the Family Smoking Prevention and Tobacco Control Act (“TCA”). The TCA requires FDA to deny a premarket tobacco product application (“PMTA”) unless the applicant shows the product is “appropriate for the protection of the public health” (“APPH”). A central practical question in ENDS (e-cigarette) cases is how FDA weighs (i) risks of youth initiation against (ii) potential cessation benefits for adult smokers.

The petitioners challenged FDA’s use of a “comparative-efficacy standard”—an approach effectively demanding product-specific evidence (often framed as needing an RCT, longitudinal cohort study, or equivalent) showing flavored products provide cessation benefits relative to tobacco-flavored products that pose lower youth-initiation risk. While prior Supreme Court and Fifth Circuit decisions had narrowed what remained contestable, this case squarely presented a question both courts had expressly left open: whether FDA could impose that standard through informal adjudication (case-by-case MDOs) without APA notice-and-comment rulemaking.

The panel (Smith, J.) also addressed a threshold venue dispute: whether a co-petitioner outside the Fifth Circuit could proceed in this circuit when a joint co-petitioner was properly venued here.

2. Summary of the Opinion

The Fifth Circuit granted review, vacated the MDOs, and remanded. It held:

  • Venue: Venue was proper for the joint petition in the Fifth Circuit because at least one co-petitioner (Wood Creek Vapory) had its principal place of business in the circuit, and the court’s precedent permitted that to carry venue for the joint petition. Trump v. CASA did not alter that conclusion because the case involved relief for actually present parties, not “universal injunctions.”
  • Merits (procedural): FDA’s “comparative-efficacy standard” is a substantive rule under Fifth Circuit administrative-law doctrine. Because it binds agency decisionmaking, applies prospectively to an unbounded class of parties, and functions as a de facto across-the-board requirement, it had to be adopted through APA notice-and-comment rulemaking rather than via informal adjudication (MDOs).
  • Scope: The court did not decide whether FDA was arbitrary and capricious in applying the standard to menthol, tobacco-flavored, or zero-nicotine products; it resolved the case on the APA procedure ground and remanded for FDA to reconsider, promulgate the standard via notice-and-comment, or pursue other proceedings consistent with the opinion.

3. Analysis

3.1. Precedents Cited

FDA v. Wages & White Lion Invs., L.L.C., 604 U.S. 542 (2025)

Wages largely foreclosed arguments that FDA unlawfully “changed position” (and thus acted arbitrarily or denied fair notice) when it evaluated flavored ENDS PMTAs using comparative comparisons and demanded stronger evidence of net public-health benefit for flavors attractive to youth. Critically, however, the Supreme Court expressly reserved whether FDA’s approach violated APA/TCA provisions requiring notice-and-comment. This opinion treats Wages as closing the door on certain arbitrariness/fair-notice theories (especially for sweet flavors), while reading its carveout as an “invitation” to address the APA rulemaking question.

Wages and White Lion Invs., L.L.C. v. FDA, 90 F.4th 357 (5th Cir. 2024) (en banc), rev’d

The Fifth Circuit’s earlier en banc view (later reversed) had been more skeptical of FDA’s procedural path. The present panel acknowledges that a reversed opinion’s reasoning is not binding, but notes that Wages did not resolve (and thus did not extinguish) the APA notice-and-comment issue now decided.

VDX Distro, Inc. v. FDA, 179 F.4th 356 (5th Cir. 2026)

VDX Distro held the comparative-efficacy standard is not a “tobacco product standard” under the TCA’s statutory definition (which would have triggered the TCA’s own notice-and-comment mechanisms). But it expressly reserved the distinct question of APA notice-and-comment. The present opinion relies on that reservation to decide the APA question on the merits, treating VDX Distro as non-foreclosing.

R.J. Reynolds Vapor Co. v. FDA, 65 F.4th 182 (5th Cir. 2023)

This is the keystone Fifth Circuit precedent for the panel’s holding. Although Wages abrogated aspects of R.J. Reynolds concerning “change-in-position,” the panel emphasizes that R.J. Reynolds’s conclusion that the comparative-efficacy approach operates as a substantive rule remained undisturbed and thus bound the panel. The opinion repeatedly returns to R.J. Reynolds’ characterization of FDA’s approach as “de facto rulemaking” that removed reviewer discretion and produced “check-box” denials.

Substantive-rule doctrine in the Fifth Circuit: Texas v. EEOC, Texas v. United States, City of Arlington v. FCC, Syncor Int'l Corp. v. Shalala, Phillips Petroleum Co. v. Johnson

The panel applies the circuit’s well-developed framework for distinguishing substantive rules from policy statements or interpretive rules: whether the agency intends to bind itself; whether the action has binding effect in practice; and whether it affects broad classes of unspecified individuals. Cases like Texas v. EEOC and Texas v. United States supply the “binding effect” tests; City of Arlington v. FCC and Syncor Int'l Corp. v. Shalala articulate how de facto rulemaking can trigger APA procedures regardless of label; Phillips Petroleum Co. v. Johnson supports looking to what the agency does “in fact,” not how it describes it.

Rulemaking vs adjudication: SEC v. Chenery Corp., 332 U.S. 194 (1947) (Chenery II); NLRB v. Bell Aerospace Co. Div. of Textron, Inc., 416 U.S. 267 (1974)

FDA invoked SEC v. Chenery Corp. for the broad proposition that agencies may develop standards through adjudication. The panel does not reject that principle in the abstract, but uses Chenery II’s own rationale (adjudication for unforeseen, specialized, or highly variable problems) to conclude it does not fit a mass, prospective, rigid requirement applied to millions of products. NLRB v. Bell Aerospace Co. Div. of Textron, Inc. is used to underscore that adjudication-based policymaking is more defensible when the procedure is sufficiently robust and party-hearing oriented—features the panel finds lacking in FDA’s informal PMTA denials.

Persuasive authority on limits of adjudication: Brown-Forman Corp. v. NLRB, 169 F.4th 646 (6th Cir. 2026)

The panel leans on Brown-Forman Corp. v. NLRB to reinforce a limiting principle: adjudication cannot be used to announce a rigid, generally applicable rule not derived from case-specific facts or necessary to resolve the parties’ dispute. This supports the conclusion that FDA’s approach is deductive, prospective policymaking—hallmarks of rulemaking, not adjudication.

Formality and “force of law”: United States v. Mead Corp., 533 U.S. 218 (2001)

Citing United States v. Mead Corp., the panel ties the “effect of law” to procedural formality: Congress generally contemplates actions with the force of law where procedures are relatively formal. This supports the panel’s skepticism that informal adjudication can legitimately generate binding, generally applicable substantive rules.

Informal adjudication contrasted: Neustar, Inc. v. FCC, 857 F.3d 886 (D.C. Cir. 2017)

The panel uses Neustar, Inc. v. FCC to distinguish permissible informal adjudication (choosing a particular administrator) from impermissible informal adjudication that functions like legislative rulemaking. In the panel’s view, FDA’s comparative-efficacy requirement falls on the legislative side of that line.

Venue and remedy: FDA v. R.J. Reynolds Vapor Co., 606 U.S. 226 (2025); Trump v. CASA, 606 U.S. 831 (2025); National Association of Private Fund Managers v. SEC, 103 F.4th 1097 (5th Cir. 2024); Global Van Lines, Inc. v. ICC, 691 F.2d 773 (5th Cir. 1982)

FDA v. R.J. Reynolds Vapor Co. confirmed that retailers can be injured by MDOs but reserved whether each joint petitioner must independently satisfy venue. The panel answers that question through circuit precedent—especially National Association of Private Fund Managers v. SEC and Global Van Lines, Inc. v. ICC—holding that venue is proper for joint petitioners when at least one is properly located in the circuit. It distinguishes Trump v. CASA as dealing with nonparty-reaching universal injunctions; vacatur/remand here is relief for parties before the court.

3.2. Legal Reasoning

  1. Issue narrowing: The panel treated several arguments as foreclosed: (i) arbitrariness/fair-notice “change-in-position” claims for many non-menthol flavored products under FDA v. Wages & White Lion Invs., L.L.C., and (ii) the TCA-specific “tobacco product standard” notice-and-comment theory under VDX Distro, Inc. v. FDA. That left the distinct APA procedural question.
  2. Venue confirmed for joint petitioners: Applying National Association of Private Fund Managers v. SEC and Global Van Lines, Inc. v. ICC, the panel held that Wood Creek Vapory’s Fifth Circuit location sufficed to anchor venue for its co-petitioner. It rejected FDA’s attempt to leverage Trump v. CASA to restrict relief, emphasizing that petitioners here were actual parties seeking APA-authorized vacatur and remand.
  3. Comparative-efficacy standard treated as a “substantive rule”:
    • General applicability / broad class: The panel emphasized the scale—over one million MDOs affecting millions of products—finding it implausible the denials reflected truly individualized adjudications.
    • Binding effect / loss of discretion: Internal memoranda (including the late-added Dr. King and Dr. Apelberg memos and reference to the rescinded 2021 memo) supported the inference that staff were effectively required to deny PMTAs lacking comparative-efficacy evidence, converting “guidance” into a binding norm.
    • Prospective policy developed “behind closed doors”: The court stressed that the standard was formulated as prospective policy and then deployed through adjudication, rather than developed inductively from case-specific facts in a way that adjudication is designed to accommodate.
  4. Chenery II discretion does not rescue a rigid, across-the-board policy: The court read SEC v. Chenery Corp. as supporting adjudication where issues are unforeseen, specialized, or too variable for general rules. FDA’s mass deployment of the standard undermined those rationales; the court concluded FDA had ample experience and had “rigidified” its approach into a “hard and fast” requirement.
  5. Informal adjudication is an improper vehicle for legislative-like rules: The opinion adds a structural point: even if adjudication can sometimes generate new principles, informal adjudication (here, licensing denials without trial-like process) cannot do the work of notice-and-comment rulemaking for a substantive, generally applicable standard. It invoked United States v. Mead Corp. and contrasted the procedural protections in NLRB v. Bell Aerospace Co. Div. of Textron, Inc..
  6. Remedy: The court vacated and remanded, directing FDA either to rethink the approach, re-adopt it through APA notice-and-comment (to allow the regulated community to participate), or pursue other proceedings consistent with the opinion.

3.3. Impact

  • Immediate effect on these MDOs: Vacatur and remand deprive the challenged denials of legal effect (as to these petitioners), forcing FDA to proceed again in a manner consistent with APA procedures.
  • Regulatory consequence for FDA’s ENDS program: The decision pressures FDA to choose: (i) conduct notice-and-comment rulemaking to formalize any comparative-efficacy evidentiary demand (including how it applies to menthol), (ii) loosen the rigidity and return to genuinely individualized adjudication, or (iii) reframe evidentiary expectations in a way that does not bind reviewers or operate as a de facto ban.
  • Litigation ripple effects: By explicitly deciding the question reserved in FDA v. Wages & White Lion Invs., L.L.C. and VDX Distro, Inc. v. FDA, the Fifth Circuit supplies a ready-made procedural theory for other challengers (especially in the Fifth Circuit) where the record suggests binding internal directives and uniform denials.
  • Administrative-law significance: The ruling strengthens Fifth Circuit doctrine on “de facto rulemaking” and binding-effect analysis, and it articulates an additional limitation: substantive rules cannot be smuggled into the system through informal adjudication. That framing may sharpen inter-circuit tensions, particularly if other circuits more readily allow broad policy development through informal adjudication.
  • Substantive public-health policy remains undecided: The opinion is procedural; it does not hold flavored ENDS must be authorized, nor does it reject comparative analysis as a scientific method. It holds only that a binding, generally applicable evidentiary requirement must be adopted through lawful APA procedures.

4. Complex Concepts Simplified

PMTA / MDO
A PMTA is an application to market a “new tobacco product.” An MDO is FDA’s denial of that application, which effectively blocks lawful marketing.
APPH (“appropriate for the protection of the public health”)
The TCA requires FDA to evaluate population-level risks and benefits, including youth initiation and adult cessation/switching effects.
Comparative-efficacy standard
FDA’s approach requiring evidence that a flavored product provides benefits (e.g., switching/cessation) that exceed those of lower-youth-risk tobacco-flavored products, often demanding robust comparative studies.
Notice-and-comment rulemaking (APA § 553)
The process agencies must use for substantive (legislative) rules: publish a proposal, take public comments, and respond before adopting a binding rule.
Substantive rule vs. guidance/policy statement
A substantive rule binds the public and the agency; a policy statement signals how the agency might exercise discretion but leaves genuine room for case-by-case judgment.
Informal vs. formal adjudication
Informal adjudication is agency decisionmaking without trial-type procedures. Formal adjudication has hearing rights and an evidentiary record akin to a trial. The court viewed informal adjudication as too procedurally thin to generate binding, generally applicable rules.
Vacatur and remand
The court “sets aside” the agency action and sends the matter back to the agency for further proceedings consistent with the opinion.
Universal injunctions (and Trump v. CASA)
Orders that prohibit enforcement against everyone, including nonparties. The panel distinguished its party-specific relief (vacatur/remand in a petition for review) from that concept.

5. Conclusion

NicQuid, L.L.C. v. FDA establishes a clear Fifth Circuit procedural rule for tobacco-product authorization disputes: if FDA’s “comparative-efficacy” approach operates as a binding, generally applicable evidentiary requirement—implemented uniformly across a vast field of applicants—it is a substantive rule that must be adopted through APA notice-and-comment, not through informal, closed-door policymaking later deployed in mass adjudications. The court’s remedy (vacatur and remand) leaves FDA free to pursue its public-health objectives, but only through procedures that allow affected parties to participate and that cabin agency policymaking within the APA’s rule-of-law framework.