By Timothy S. Donahue
Top Takeaways:
- Vape businesses argue the FDA illegally minimized PMTA rule costs, and the case now heads to the industry-friendly Fifth Circuit.
- Previous decisions from the court have sided with vape companies challenging FDA actions.
- A ruling against the FDA could force a reassessment of PMTA requirements, reducing burdens on small manufacturers.
A coalition of small vaping companies is appealing to the U.S. Court of Appeals for the Fifth Circuit, arguing the U.S. Food and Drug Administration illegally certified its 2021 premarket tobacco product application (PMTA) rule as having no significant economic impact on small businesses.
In their filings, plaintiffs Kealani Distribution and Carolina Vapor Mill contend the FDA violated the Regulatory Flexibility Act (RFA) by failing to reassess the costs of its detailed PMTA Final Rule. The rule, finalized in 2021, codified specific requirements for reports, testing, and documentation that applicants must submit to keep vaping products on the U.S. market.
The businesses argue these details substantially increased costs compared to the FDA’s original 2016 Deeming Rule estimates, which were based on vague, preliminary PMTA expectations.
The plaintiffs highlighted that the Small Business Administration’s Office of Advocacy previously warned the FDA in 2019 that it had not properly analyzed the burden of PMTA costs on small manufacturers. The FDA, the plaintiffs claim, ignored those concerns and declined to consider less burdensome alternatives.
“This case is fundamentally about whether an agency can skirt its legal obligation to assess the real costs of its actions on small businesses,” the appellants argued in court documents, emphasizing the challenges small vape companies face under the PMTA regime.
FDA Won Round One
In February, the U.S. District Court for the Eastern District of Texas ruled in favor of the FDA, finding the agency complied with the RFA by publishing its certification and relying on existing cost estimates. The district court deemed the plaintiffs’ challenge to be a factual dispute outside the scope of procedural requirements under the RFA.
But now the industry again focuses on the Fifth Circuit, which has earned a reputation for scrutinizing FDA actions affecting vapor companies.
For example, the Fifth Circuit ruled in Wages and White Lion Investments LLC v. FDA that the FDA acted arbitrarily in rejecting certain PMTAs for flavored vaping products without adequate explanation, remanding the applications for reconsideration. The court emphasized the agency’s duty to offer clear, reasoned decisions, reinforcing the need for regulatory fairness.
Similarly, in Big Time Vapes Inc. v. FDA, while the Fifth Circuit ultimately upheld the constitutionality of the Tobacco Control Act, judges acknowledged the disproportionate challenges that PMTA requirements posed for small vape businesses, highlighting the agency’s heavy-handed approach.
If the Fifth Circuit sides with the plaintiffs, it could force the FDA to reassess the economic impact of the PMTA rule and possibly consider less burdensome alternatives, as mandated by the RFA. This could reduce compliance costs, extend deadlines, or introduce streamlined pathways for small manufacturers.
FDA’s Defiant Defense
The FDA maintains it sufficiently analyzed the PMTA rule’s incremental costs in its 2021 regulatory impact analysis and argues that the majority of compliance costs stem directly from statutory requirements under the Tobacco Control Act, not the agency’s regulations.
Plaintiffs counter that the FDA’s refusal to conduct a new cost assessment or consider alternatives, especially after finalizing detailed PMTA requirements, violates Congress’s intent to protect small entities from unduly burdensome federal rules.
A decision from the Fifth Circuit is expected later this year. Should the court reverse the lower ruling, it would mark a significant win for small vaping businesses.
