FDA v. Wages and White Lion Investments, LLC
604 U.S. 542 (2025)
Rule of Law:
Under the Administrative Procedure Act, an agency's adjudicatory decision is not arbitrary and capricious if its applied standards are a consistent and natural outgrowth of its prior, albeit nonbinding, guidance, provided it did not overtly change its position without reasoned explanation. When an agency error is found, the APA's harmless-error rule requires courts to take due account of prejudicial error, which must be balanced with the Chenery remand rule, recognizing that remand is not always necessary if an error had no bearing on the substantive outcome.
Facts:
- Electronic nicotine delivery systems (e-cigarettes or vapes) rapidly gained popularity over 20 years, offering a potentially safer alternative to traditional cigarettes but carrying their own health risks and appealing to non-smokers, particularly youth, due to various flavors.
- The Family Smoking Prevention and Tobacco Control Act of 2009 (TCA) first gave the FDA broad jurisdiction to regulate tobacco products and prohibited manufacturers from marketing any 'new tobacco product' (not marketed before February 15, 2007) without FDA authorization.
- The TCA requires the FDA to deny a new tobacco product application unless the applicant demonstrates the product 'would be appropriate for the protection of the public health,' considering risks and benefits to the population as a whole, including the likelihood of existing users quitting and non-users starting.
- In 2016, the FDA deemed e-cigarettes 'tobacco products,' subjecting most to the TCA’s premarket-authorization regime, and after a series of delays, a federal district court imposed a September 9, 2020, deadline for applications.
- In the lead-up to the application deadline, the FDA issued various guidance documents concerning the types of scientific evidence required, the importance of cross-product comparisons, its enforcement priorities for device types, and the significance of manufacturers' marketing plans.
- Wages and White Lion Investments, LLC, and Vapetasia, LLC (respondents), manufacturers of flavored e-liquids for open-system e-cigarettes, submitted applications that included marketing plans and scientific literature reviews, but not randomized controlled trials or longitudinal cohort studies.
- The FDA denied respondents’ applications, concluding they had not provided sufficient scientific evidence to demonstrate their flavored products' public health benefits, particularly over tobacco-flavored products, and decided 'for the sake of efficiency' not to evaluate their marketing plans.
Procedural Posture:
- The Food and Drug Administration (FDA) denied the premarket tobacco product applications submitted by Wages and White Lion Investments, LLC, and Vapetasia, LLC.
- Respondents petitioned for judicial review of the FDA’s denial orders under the Administrative Procedure Act (APA) in the Fifth Circuit Court of Appeals.
- A motions panel of the Fifth Circuit initially granted a stay of respondents' marketing denial orders pending review.
- A divided merits panel of the Fifth Circuit ultimately denied respondents’ petitions.
- The Fifth Circuit, sitting en banc, reheard the case, granted respondents’ petitions for review, and remanded to the FDA, holding that the FDA had acted arbitrarily and capriciously in denying the applications.
- The FDA filed a petition for a writ of certiorari, which the Supreme Court of the United States granted.
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Issue:
Did the Food and Drug Administration act arbitrarily and capriciously under the Administrative Procedure Act by denying premarket tobacco product applications based on standards for scientific evidence, comparative efficacy, and device type that allegedly diverged from its prior guidance, and by failing to consider marketing plans that it previously deemed critical?
Opinions:
Majority - Alito, J.
No, the Food and Drug Administration did not act arbitrarily and capriciously under the Administrative Procedure Act by denying premarket tobacco product applications based on standards for scientific evidence, comparative efficacy, and device type, as these were consistent with its prior guidance; however, the Fifth Circuit erred in its application of the harmless-error rule regarding marketing plans. The Court applied the change-in-position doctrine, which requires an agency to provide a reasoned explanation and display awareness when changing existing policy, and to consider serious reliance interests. The FDA’s discretion under the TCA regarding 'valid scientific evidence' (§387j(c)(5)) meant its guidance, while not mandating specific studies like randomized controlled trials or longitudinal cohort studies, consistently emphasized the need for rigorous evidence, which respondents' applications lacked. The Court found the FDA's requirement for comparative efficacy (e.g., flavored vs. tobacco-flavored products) to be a 'natural consequence' and 'predictable outgrowth' of the TCA's comparative judgment framework and its guidance, which highlighted concerns about youth appeal of certain flavors. Similarly, the FDA’s treatment of device type was consistent, as its 2020 guidance, while prioritizing cartridge-based products, also warned against any products likely to promote use by minors. Even if a change occurred, the FDA offered 'good reasons' (youth shifting from flavored cartridge-based to flavored disposable products, suggesting flavor was the primary draw). An agency's enforcement priorities do not typically create 'serious reliance interests.' However, the Court agreed the FDA erred by not considering marketing plans it deemed 'critical.' The Fifth Circuit, relying on an overly broad reading of Calcutt v. FDIC, mistakenly held that APA errors are only harmless where the agency would be required to take the same action no matter what. The APA’s harmless-error rule (§706) requires courts to adapt the rule from ordinary civil cases, balancing it with the Chenery remand rule. Remand may not be necessary if an agency’s error 'had no bearing on the procedure used or the substance of [the] decision reached' (Massachusetts Trustees). The Court vacated and remanded for the Fifth Circuit to apply the proper harmless-error standard.
Concurring - Sotomayor, J.
The FDA acted appropriately in its denial of respondents’ applications. The FDA’s pre-denial guidance was not vague or uncertain, as suggested by the majority opinion, but rather reasonably offered manufacturers flexibility on evidence forms while consistently adhering to its statutory duty to approve only products 'appropriate for the protection of the public health' (§387j(c)(2)(A)). Given the well-documented risks of flavored e-cigarette products to youth, it should have been expected that applicants would need to submit rigorous scientific evidence demonstrating that their products' benefits would outweigh those risks.
Analysis:
This case significantly clarifies the bounds of arbitrary and capricious review, particularly regarding an agency's ability to evolve regulatory standards through adjudication without necessarily constituting a 'change-in-position' if the outcome is a logical outgrowth of prior guidance. It also provides crucial guidance on the application of the APA's harmless-error rule in administrative law, mandating a balanced approach with the Chenery remand rule and acknowledging exceptions where errors are non-prejudicial. Future cases will likely see a more nuanced assessment of agency errors, potentially reducing remands for non-substantive procedural flaws. For the FDA, the decision reinforces its authority to set a high bar for scientific evidence in premarket tobacco product applications, especially for flavored products, given the emphasis on public health protection and youth initiation concerns.
