RFA § 605(b) Certification Upheld: FDA May Rely on Deeming Rule Cost Baseline for the Final PMTA Rule

I. Introduction

Kealani Distribution, L.L.C. v. FDA (5th Cir. Feb. 26, 2026) involves a challenge by seven small-business e-liquid manufacturers and a trade association (collectively, “Appellants”) to the FDA’s Premarket Tobacco Product Applications and Recordkeeping Requirements final rule (the “Final PMTA Rule,” 86 Fed. Reg. 55,300 (Oct. 5, 2021)).

The dispute was not over the Tobacco Control Act’s (“TCA”) substantive requirement that certain “new tobacco products” obtain FDA authorization, but over the FDA’s compliance with the Regulatory Flexibility Act (“RFA”), particularly whether FDA properly certified under 5 U.S.C. § 605(b) that the Final PMTA Rule would not have “a significant economic impact on a substantial number of small entities.”

Appellants argued the certification was arbitrary and capricious because FDA (i) relied on cost analysis performed for the 2016 Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act rule (the “Deeming Rule,” 81 Fed. Reg. 28,973 (May 10, 2016)), and (ii) failed to consider less burdensome alternatives to PMTA “health risk investigations” content requirements. The Fifth Circuit affirmed summary judgment for FDA.

II. Summary of the Opinion

The Fifth Circuit held that FDA complied with the RFA when promulgating the Final PMTA Rule. The court emphasized:

  • FDA could treat the largest PMTA-related compliance costs as attributable to the Deeming Rule, because the Deeming Rule is what subjected ENDS products to the TCA’s PMTA regime in the first place.
  • Appellants’ key premise—that FDA could regulate away statutory PMTA content obligations—failed because the “full reports” requirement is imposed by Congress in 21 U.S.C. § 387j(b)(1)(A), and an agency cannot create regulatory exceptions to clear statutory commands.
  • To the extent Appellants contested FDA’s economic attribution and predictions, that challenge largely targeted the substance of FDA’s factual judgments, which the court treated as beyond the narrow, procedural focus of RFA review.
  • Even so, the record showed FDA discussed alternatives (including reliance on published literature/bridging and “valid scientific evidence”) in the Deeming Rule and preserved flexibility in the Final PMTA Rule.

III. Analysis

A. Precedents Cited

  • Alenco Communications, Inc. v. F.C.C., 201 F.3d 608 (5th Cir. 2000): The Fifth Circuit anchored its RFA framework here, reiterating that the RFA is procedural and judicial review asks only whether the agency made a “reasonable, good-faith effort” to comply. This case supplied the lens through which Appellants’ objections were assessed: the court looked for procedural adequacy rather than re-litigating policy and economic forecasting.
  • Associated Fisheries, Inc. v. Daley, 127 F.3d 104 (1st Cir. 1997): Quoted through Alenco for the “reasonable, good-faith” formulation, reinforcing deferential review.
  • Aeronautical Repair Station Ass'n, Inc. v. F.A.A., 494 F.3d 161 (D.C. Cir. 2007) and Nat'l Tel. Coop. Ass'n v. F.C.C., 563 F.3d 536 (D.C. Cir. 2009): Cited to underscore that the RFA “imposes no substantive constraint” and instead requires agencies to “state, summarize, and describe” specified topics—again supporting the Fifth Circuit’s reluctance to turn the RFA into a vehicle for merits review of the underlying regulatory program.
  • Federal Communications Commission v. Prometheus Radio Project, 592 U.S. 414 (2021): Used to describe the APA’s arbitrary-and-capricious standard as requiring action that is “reasonable and reasonably explained,” and to emphasize courts keep agencies within a “zone of reasonableness,” especially when agencies predict economic effects.
  • Motor Vehicle Mfrs. Ass'n, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983): Provided the classic “relevant factors” formulation; the Fifth Circuit treated small-business impacts as a relevant factor via the RFA, but still applied deferential review.
  • Council for Urological Interests v. Burwell, 790 F.3d 212 (D.C. Cir. 2015): Cited for the proposition that once procedural requirements of an RFA certification are met, review is “highly deferential” regarding substance—supporting FDA against Appellants’ attempt to reframe factual/economic disagreements as RFA violations.
  • Djie v. Garland, 39 F.4th 280 (5th Cir. 2022): Supplied the statutory-supremacy principle that a regulation is invalid if it “attempts to carve out an exception from a clear statutory requirement.” This was central to rejecting Appellants’ theory that FDA could lessen the statutory “full reports” obligation by regulatory choice.
  • Bidi Vapor LLC v. U.S. Food and Drug Administration, 134 F.4th 1282 (11th Cir. 2025): Cited to reinforce that the applicant bears the burden to show marketing is “appropriate for the protection of the public health.”
  • Nicopure Labs, LLC v. FDA, 266 F. Supp. 3d 360 (D.D.C. 2017): Referenced as prior litigation upholding FDA’s RFA compliance regarding the Deeming Rule’s regulatory impact analysis and PMTA cost estimates, providing contextual support for FDA’s use of that analysis as a baseline.
  • Forsyth v. Barr, 19 F.3d 1527 (5th Cir. 1994) and Schnell v. State Farm Lloyds, 98 F.4th150 (5th Cir. 2024): Used to police appellate briefing requirements; the court treated Appellants’ “expanded categories/detail” claim as forfeited due to lack of specific citations and developed argument, illustrating that RFA challenges must be record-grounded.
  • Bruckner Truck Sales, Inc. v. Guzman, 148 F.4th 341 (5th Cir. 2025): Provided the de novo standard for reviewing summary judgment.

B. Legal Reasoning

  1. Statutory architecture drove the cost attribution.

    The court treated the Deeming Rule as the legal event that extended the TCA’s PMTA premarket authorization regime to ENDS and their components. Because the TCA itself requires PMTAs for “new tobacco products,” the biggest economic burden—preparing an application capable of satisfying the “appropriate for the protection of the public health” standard—logically flows from the Deeming Rule’s extension of that statutory regime to Appellants’ products, not from the Final PMTA Rule’s procedural/format clarifications.

    On that premise, FDA’s approach was reasonable: the Deeming Rule’s analysis captured the major PMTA compliance costs, while the Final PMTA Rule was assessed as adding largely incremental, relatively small annualized costs (the opinion notes FDA’s estimate of approximately $2,000 for many small entities) and potential efficiencies.

  2. The “full reports” requirement is congressional, not discretionary.

    Appellants framed the problem as FDA imposing expensive “health risk investigations” demands. The court responded that 21 U.S.C. § 387j(b)(1)(A) mandates that a PMTA “shall contain ... full reports” of health-risk investigations known (or reasonably knowable) to the applicant. That requirement cannot be diluted by regulation. Invoking Djie v. Garland, the court rejected any requested regulatory “alternative” that would effectively dispense with what Congress required.

    Importantly, the court distinguished between (i) FDA’s discretion to decide what evidence is sufficient in a particular application (including reliance on “valid scientific evidence” rather than “well-controlled investigations” when appropriate), and (ii) FDA’s lack of power to nullify the statutory obligation to submit full reports of known investigations.

  3. RFA review remained procedural and deferential.

    Appellants attacked FDA’s “factual basis” by disputing FDA’s accounting and attribution of costs between the Deeming Rule and Final PMTA Rule. The court treated much of this as a challenge to the substance of FDA’s economic predictions. Citing the RFA’s procedural nature (via Alenco Communications, Inc. v. F.C.C. and D.C. Circuit authority), the Fifth Circuit focused on whether FDA provided a certification with a factual basis and whether the agency acted within a “zone of reasonableness” (via Federal Communications Commission v. Prometheus Radio Project).

  4. Alternatives were addressed in the record in any event.

    Appellants also argued FDA failed to consider less burdensome alternatives (invoking the idea that FDA could rely on its own studies or public information). The court noted that FDA was not required to conduct the full § 604 final regulatory flexibility analysis if it properly certified under § 605(b). Nevertheless, the court found the administrative record reflected meaningful consideration of flexibility and alternatives:

    • In the Deeming Rule, FDA addressed comments about costly clinical studies and explained when PMTAs might be supported by an “established body of evidence” without new studies, and that FDA could consider published literature and “valid scientific evidence.”
    • In the Final PMTA Rule, FDA declined to mandate specific study lists for every application and expressly preserved applicant flexibility through bridging, published literature, and other approaches—while reiterating statutory “full reports” requirements.

C. Impact

  • Strengthened defensibility of “baseline attribution” in staged regulatory programs. Agencies that adopt an earlier rule imposing the main compliance obligation, followed by a later rule clarifying procedures or submission mechanics, may cite this decision to justify using the earlier rule’s economic analysis as the baseline for an RFA § 605(b) certification—so long as the later rule is reasonably characterized as incremental.
  • Constrains RFA suits that seek to re-litigate statutory burdens. The opinion underscores that RFA litigation cannot force an agency to “consider alternatives” that would contradict Congress’s chosen means (here, the PMTA content obligation in § 387j(b)(1)(A)). This limits the strategic use of the RFA as a backdoor attack on statutory policy choices.
  • Encourages precision in administrative-record challenges. The court’s forfeiture discussion (lack of citations, undeveloped comparisons between lengthy rules) signals that regulated entities must identify concrete provisions and record evidence showing incremental burdens, rather than relying on generalized assertions that a later rule “expanded” requirements.
  • For small ENDS businesses, the ruling channels challenges away from RFA procedure and toward other vehicles. If the practical complaint is that the PMTA regime is too costly, this opinion suggests the RFA is a weak tool unless plaintiffs can show a genuine procedural failure in certification or analysis. Substantive objections may need to be framed under other APA theories (within the limits of the statute) or pursued legislatively.

IV. Complex Concepts Simplified

PMTA (Premarket Tobacco Product Application)
A manufacturer’s submission seeking FDA authorization to market a “new tobacco product.” Under the TCA, FDA must deny the application unless the applicant shows marketing the product is “appropriate for the protection of the public health.”
Deeming Rule
The 2016 FDA rule that “deemed” additional products—like ENDS/vapor products—to be “tobacco products” under the TCA, thereby subjecting them to the PMTA regime.
RFA § 605(b) certification
A procedural mechanism allowing an agency to avoid preparing a full regulatory flexibility analysis if it certifies (with a factual basis) that a rule will not have a “significant economic impact on a substantial number of small entities.”
Arbitrary-and-capricious review
A deferential APA standard asking whether the agency acted reasonably, considered relevant factors, and reasonably explained its decision. It does not authorize courts to substitute their policy or economic predictions for the agency’s.
“Valid scientific evidence,” “well-controlled investigations,” and “bridging”
The TCA contemplates that FDA sometimes may rely on evidence other than new clinical trials if it is sufficient to evaluate a product. “Bridging” generally refers to using existing studies or data to support conclusions about a product (often with some link showing comparability), rather than conducting entirely new studies.

V. Conclusion

Kealani Distribution v. FDA reinforces three practical rules for RFA challenges to complex regulatory schemes: (1) RFA compliance is primarily procedural and reviewed deferentially; (2) an agency may reasonably treat major compliance costs as stemming from the rule that first subjects entities to a statutory regime, using that rule’s analysis as a baseline for later, incremental rules; and (3) plaintiffs cannot use the RFA to force agencies to adopt “alternatives” that would contradict clear statutory requirements—especially where the agency has already acknowledged and preserved evidentiary flexibility consistent with the statute.