Court Opinion

ID: 9381762
Source: CourtListenerOpinion
Date Created: 2023-03-23 18:00:34.719917+00
Date Added: 2024-06-11T17:17:34.425745
License: Public Domain

United States Court of Appeals
             for the Fifth Circuit                               United States Court of Appeals
                                                                          Fifth Circuit

                            ____________                                FILED
                                                                  March 23, 2023
                             No. 23-60037                          Lyle W. Cayce
                            ____________                                Clerk

R.J. Reynolds Vapor Company; RJR Vapor Company,
L.L.C.; Avail Vapor Texas, L.L.C.; Mississippi Petroleum
Marketers and Convenience Stores Association,

                                                                 Petitioners,

                                   versus

Food & Drug Administration; Robert Califf, in his official
capacity as Commissioner of the United States Food & Drug Administration;
United States Department of Health and Human
Services; Xavier Becerra, in his official capacity as Secretary of the
United States Department of Health and Human Services,

                                                               Respondents,

                         consolidated with
                           _____________

                              No. 23-60128
                            _____________

R.J. Reynolds Vapor Company; RJR Vapor Company,
L.L.C.; Avail Vapor Texas, L.L.C.; Mississippi Petroleum
Marketers and Convenience Stores Association,

                                                                 Petitioners,

                                   versus
United States Food & Drug Administration; Robert M.
Califf, Commissioner of Food and Drugs; United States
Department of Health and Human Services; Xavier
Becerra, Secretary, U.S. Department of Health and Human Services,

                                                               Respondents.
               ______________________________

               Appeal from the Food & Drug Administration
                 Agency Nos. PM0000637, PM0000713,
                         PM0000554, PM0000561
               ______________________________

Before King, Jones, and Smith, Circuit Judges.
Edith H. Jones, Circuit Judge:
       The Food and Drug Administration denied petitioners’ application to
market menthol-flavored e-cigarettes. Petitioners seek a stay pending review
of the denial order on the merits. We grant the stay.
                            I. Background
       This court has become quite familiar with the legal and regulatory
framework underpinning this case. See Big Time Vapes, Inc. v. FDA, 963 F.3d
436, 437 (5th Cir. 2020); Wages & White Lion Invs. v. FDA, 16 F.4th 1130 5th
Cir. 2021) (stay order); Wages & White Lion Invs. v. FDA, 41 F.4th 427 (5th
Cir. 2022) (merits decision), vacated 58 F.4th 233 (5th Cir. 2023). And the
material facts resemble those in Wages & White Lion, with some notable
differences.
       The Food and Drug Administration (“FDA”) has been regulating
tobacco products since 2009 under the Family Smoking Prevention and
Tobacco Control Act (“TCA”). Pub. L. No. 111-31, 123 Stat. 1776 (2009)
(codified at 21 U.S.C. § 387, et seq.). And since 2016, the FDA has been in

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the business of regulating e-cigarettes, 1 including those containing no tobacco
flavoring. See 81 Fed. Reg. 28,974, 28,976 (May 10, 2016). In order to
continue marketing e-cigarettes, manufacturers must submit to the FDA a
premarket tobacco product application (“PMTA”). 21 U.S.C. § 387j.
        In June 2019, the FDA issued a “how-to” guide for submitting
e-cigarette PMTAs.            FDA, Guidance for Industry, Premarket Tobacco
Applications for Electronic Nicotine Delivery Systems (June 2019) (“PMTA
Guidance”), https://bit.ly/2R5TyYj. In it, the agency stated that it “does
not expect that applicants will need to conduct long-term studies to support
an application.” Id. at 13. The Proposed and Final Rules repeated this
expectation.          See Premarket Tobacco Product Applications and
Recordkeeping Requirements, 86 Fed. Reg. 55,300, 55,387 (October 4,
2021); 84 Fed. Reg. 50,566, 50,619 (Sept. 25, 2019).                    The FDA also
recommended that applicants use “products that consumers are most likely
to consider[] interchangeable” when submitting “comparative health risk
data.” PMTA Guidance at 13.
        With this guidance in mind, Petitioner R.J. Reynolds Vapor Company
(“RJRV”) submitted a PMTA for its menthol-flavored Vuse Vibe e-cigarette
on March 31, 2020, 2 well ahead of the September 9, 2020, deadline. See
21 U.S.C. § 387j; Wages, 16 F.4th at 1135. On December 18, 2020, the FDA
sent RJRV a deficiency letter regarding several other pending PMTAs for
RJRV’s flavored ENDS. The FDA instructed RJRV to “provide evidence to
demonstrate that the use of these flavored products (other than menthol)

        _____________________
        1
            Known more technically as electronic nicotine delivery systems (“ENDS”).
        2
           Vuse Vibe is a cartridge-based, closed system e-cigarette, which is distinct from
“open system” and disposable e-cigarettes. In contrast, the products at issue in Wages &
White Lion are flavored liquids used in “open system” e-cigarettes. 41 F.4th at 443 n.1
(Jones, J., dissenting).

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increases the likelihood of complete switching among adult smokers relative
to tobacco or menthol-flavored products.” (emphasis added). Because this
advice expressly excluded its menthol-flavored products, RJRV did not
supplement its menthol Vuse Vibe PMTA. 3
       Over two years later, on January 24, 2023, the FDA denied RJRV’s
PMTA in a marketing denial order (“Denial Order”). A stated basis for the
denial was that RJRV’s long-term studies “were not brand- or product-
specific,” and, as such, “did not demonstrate that [RJRV’s] menthol-
flavored new products are more likely to promote complete switching or
significant cigarette reduction compared to tobacco-flavored products.”
Additionally, the FDA stated that the “marketing restrictions and other
mitigation measures that [RJRV] proposed cannot mitigate . . . risks to youth
sufficiently.” RJRV petitioned the FDA for a stay, which was denied. RJRV
and three other companies then petitioned this court for review and moved
to stay the Denial Order. 4 We granted an administrative stay, and now we
enter a full stay pending resolution of RJRV’s petition on the merits.
                                  II. Discussion
       As a preliminary matter, venue is proper in this circuit because a
petitioner has its “principal place of business” here. 5                     21 U.S.C.
§ 387l(a)(1)(B).       Also, because it is undisputed that “at least one”
petitioner—namely, RJRV—has standing, Article III’s case-or-controversy

       _____________________
       3
           RJRV’s application for Vuse Vibe already spanned over 150,000 pages.
       4
         The FDA also denied a PMTA for menthol Vuse Ciro. Petitioners no longer sell
that product, and so do not seek a stay as to the denial of its marketing application.
       5
          Petitioner Mississippi Petroleum Marketers and Convenience Stores Association
is incorporated in and has its principal place of business in Mississippi.

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requirement is satisfied. Town of Chester v. Laroe Estates, Inc., 581 U.S. 433,
439, 137 S. Ct. 1645, 1651 (2017).
       The “issuance of a stay is left to the court’s discretion.” Nken v.
Holder, 556 U.S. 418, 433, 129 S. Ct. 1749, 1760 (2009). Our judgment is
“guided by sound legal principles” that “have been distilled into
consideration of four factors: (1) whether the stay applicant has made a strong
showing that he is likely to succeed on the merits; (2) whether the applicant
will be irreparably injured absent a stay; (3) whether issuance of the stay will
substantially injure the other parties interested in the proceeding; and
(4) where the public interest lies.” Id. at 434, 129 S. Ct. at 1761 (internal
quotation marks omitted). “The first two factors . . . are the most critical.”
Id.
       RJRV has made the strong showing of its likely success on the merits,
irreparable injury, and the balance of harms and public interest weigh in favor
of granting the stay. Thus, RJRV has met its “burden of showing that the
circumstances justify an exercise of [our] discretion.” Id.
                          A. Likelihood of success
       The FDA’s order is reviewed under the Administrative Procedure
Act’s (“APA”) “arbitrary and capricious” standard, 5 U.S.C. § 706(2)(A),
and will pass muster so long as it is “reasonable and reasonably explained.”
FCC v. Prometheus Radio Project, 141 S. Ct. 1150, 1158 (2021). To begin with,
this means an “agency must defend its actions based on the reasons it gave
when it acted”; we will not let the agency cut corners by entertaining post hoc
rationalizations. DHS v. Regents of the Univ. of Cal., 140 S. Ct. 1891, 1909
(2020). Further, when an agency changes course, it must take into account
“serious reliance interests” its “longstanding policies may have
engendered” along with “alternatives that are within the ambit of the
existing policy.” Id. at 1913 (internal quotation marks omitted and alterations

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adopted). 6 Additionally, failure to consider “relevant factors” will render
“an agency’s decreed result” unlawful. Michigan v. EPA, 576 U.S. 743, 750,
135 S. Ct. 2699, 2706 (2015). The above requirements ensure that an agency
has engaged in “reasoned decisionmaking.” Id.
        Specifically, RJRV demonstrates that the FDA failed to reasonably
consider the company’s legitimate reliance interests concerning the need for
longitudinal studies and marketing plans; failed to consider relevant
evidence, inter alia, that youthful users do not like menthol-flavored
e-cigarettes; and has created a de facto rule banning all non-tobacco-flavored
e-cigarettes without following APA notice and comment requirements.
        1. Legitimate reliance interests
        The FDA did not reasonably consider RJRV’s legitimate reliance
interests before changing its position on the types of comparative studies and
marketing plans critical to a compliant and complete PMTA. Dealing with
administrative agencies is all too often a complicated and expensive game,
and players like RJRV “are entitled to know the rules.” Alaska Prof’l Hunters
Ass’n v. FFA, 177 F.3d 1030, 1035 (D.C. Cir. 1999), abrogated on other grounds
by Perez v. Mortg. Bankers Ass’n, 575 U.S. 92, 135 S. Ct. 1199 (2015). To keep
things fair, agencies must give notice of conduct the agency “prohibits or
requires” and cannot “surprise” a party by penalizing it for “good-faith
reliance” on the agency’s prior positions. Christopher v. Smithkline Beecham
Corp., 567 U.S. 142, 156–57, 132 S. Ct. 2156, 2167–68 (2012). At a bare
minimum, “[w]hen an agency changes its existing position, it . . . must at
least display awareness that it is changing position and show that there are

        _____________________
        6
         Colloquially, this is known as the “surprise switcheroo” doctrine. Azar v. Allina
Health Servs., 139 S. Ct. 1804, 1810 (2019); Env’t Integrity Project v. EPA, 425 F.3d 992, 996
(D.C. Cir. 2005).

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good reasons for the new policy.” Encino Motorcars, LLC v. Navarro,
579 U.S. 211, 136 S. Ct. 2117, 2125–26 (2016). It follows that “unexplained
inconsistency in agency policy is a reason for holding an [action] to be an
arbitrary and capricious change from agency practice.” Id. at 2126 (internal
quotation marks omitted).
       The FDA inexplicably switched its position on menthol-flavored
e-cigarettes in at least two crucial ways.       First, before the application
deadline, the FDA represented that long-term studies were likely
unnecessary and that applicants had discretion to use “products that
consumers are most likely to consider[] interchangeable” when submitting
“comparative health risk data.” PMTA Guidance at 13. The FDA then
notified RJRV directly that for its “flavored products (other than menthol),”
it should submit evidence that those products “increase[d] the likelihood of
complete switching among adult smokers relative to tobacco or menthol-
flavored products.” (emphasis added) The FDA never told RJRV that
similar evidence would be required for its menthol Vuse Vibe PMTA. RJRV
relied upon these representations when crafting its PMTAs and
supplemental filings.
       Despite its representations, the FDA’s subsequent Denial Order
stated that RJRV’s “studies were not brand- or product-specific, and thus
did not demonstrate that [RJRV’s] menthol-flavored new products are more
likely to promote complete switching or significant cigarette reduction
compared to tobacco-flavored products.”             In the same vein, the
accompanying Technical Project Lead (“TPL”) faulted RJRV’s studies for
failing to “assess the impact of menthol-flavored ENDS . . . on cigarette
smoking switching behavior” or “complete switching or significant cigarette
reduction over time.” (emphasis added) And again, nearly parroting FDA’s
earlier instruction, the TPL stated that RJRV “did not submit evidence from
a [randomized controlled trial] or cohort study showing that its menthol-

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flavored ENDS provide an added benefit to adult smokers in terms of
complete switching or significant cigarette reduction over tobacco-flavored
ENDS.” In other words, the FDA’s prior representations were that RJRV
need not submit long-term studies showing that its menthol-flavored e-
cigarette was more likely than a tobacco-flavored e-cigarette to cause smokers
to quit. Yet the lack of that evidence became the very basis on which the FDA
denied RJRV’s application.
        The FDA’s second unexplained switch was from the policy on
marketing plans it announced in its April 2020 Final Guidance (“2020
Guidance”). 7       The 2020 Guidance enumerated “adequate measures”
manufactures could take “to prevent minors’ access” to ENDS products.
FDA, Enforcement Priorities for Electronic Nicotine Delivery Systems (Revised):
Guidance for Industry, 21–22, https://bit.ly/3ZPRkPx.                    These included:
(1) age-verification barriers for retail websites; (2) enforcement monitoring
programs with retailers; (3) a limit on the number of ENDS that can be
purchased at once or over a period of time; and (4) a mystery shopper
program. Id. at 22. The guidance also listed common ways manufacturers
improperly target minors, such as advertising with “social media
influencers,” “popular children’s characters,” and kid-friendly “cartoon or
animated characters.” Id. at 26–27. RJRV’s proposed marketing plan
accounted specifically for these and many more measures.
        The FDA changed positions on this front as well, cursorily stating in
its Denial Order that RJRV’s “marketing restrictions and other mitigation
measures” were insufficient. Remarkably, the TPL recounted the same

        _____________________
        7
          See 85 Fed. Reg. ¶ 23,973 (Apr. 30, 2020). The 2020 Guidance revised an earlier
edition, published in January 2020, in which the FDA first described the marketing
restrictions manufacturers could implement to restrict youth use. Enforcement Priorities for
Electronic Nicotine Delivery Systems: Guidance for Industry, 85 Fed. Reg. ¶ 720 (Jan. 7, 2020).

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“restrictions on advertising and promotion” and “restrictions on sales
access” that the FDA had earlier hailed as “adequate measures,” but
concluded that none of them actually worked to a sufficient degree. In fact,
the only measures described as potentially effective were “age-gating
technologies that require user identification by fingerprint or other biometric
parameters in order to unlock and use a tobacco product or geo-fencing
technologies.”      These extreme measures were not listed in the 2020
Guidance. The TPL concluded that “only the most stringent mitigation
measures could provide sufficient assurance” against the risks to youth from
flavored ENDS.
       The FDA’s Denial Order wholly failed to explain both of these “about
face” maneuvers. Of course, the FDA could have formally changed its
requirements, but it did not. Regents, 140 S. Ct. at 1914 (“Making that
difficult decision was the agency’s job, but the agency failed to do it.”).
These “unexplained” and “inconsistent” positions are likely arbitrary and
capricious. See Encino Motorcars, 579 U.S. at 222, 136 S. Ct. at 2126.
       The FDA’s disregard for the principles of fair notice and
consideration of reliance interests is exacerbated by its failure to consider
alternatives to denial. When an agency changes course, as the FDA did here,
it must take into account “alternatives that are within the ambit of the
existing policy.”     Regents, 140 S. Ct. at 1913 (internal quotation marks
omitted and alterations adopted). For example, the FDA could have invited
RJRV to submit supplemental filings to shore up its menthol Vuse Vibe
application, as it had done for RJRV’s non-tobacco-flavored e-cigarette
PMTAs. Apparently, the FDA accepted as many as 13 amendments for
RJRV’s other applications.      FDA, TPL Review of PMTA, PM0000491,
PM0000492 11–14 (Dec. 4, 2018), https://tinyurl.com/2p83ymvb.             The
FDA gave RJRV no such opportunity for its menthol PMTA.

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       2. Failure to consider relevant factors
       The FDA did not adequately address RJRV’s evidence that
substantial health benefits would accrue to adult and youth cigarette smokers
alike who switched to menthol Vuse, while popularity among youth would
remain low overall. For example, RJRV’s application contained studies that
“switching from smoking to use of menthol Vuse Vibe substantially reduces
toxicant exposure in a manner similar to smoking abstinence.” RJRV also
submitted evidence of low popularity among youth relative to other flavored
ENDS.
       This evidence was overlooked even though it comports with the
FDA’s own findings published at the time RJRV filed its PMTA. In its 2020
Guidance, in response to the concern over a growing level of youth vaping,
the FDA cited evidence that “youth use of menthol-flavored products is not
as high as that for mint- and fruit-flavored products,” id. at 15, and that
“youth overwhelmingly prefer certain flavors . . . such as fruit, mint, and
candy,” id. at 24. Specifically, a survey of 8th, 10th, and 12th graders found
that mango, mint, and fruit were the most popular flavors, together
accounting for 75% of responses, while menthol and tobacco ranked among
the least popular with between 2% and 6% each. Id. Further, the guidance
noted menthol’s unique status as “the only characterizing flavor available in
cigarettes.” Id. at 23.
       This is where the plot thickens. Internal memoranda circulated
among the FDA’s Center for Tobacco Products (“CTP”) and CTP’s Office
of Science (“OS”) emerged in December 2022. See Alex Norcia, Memos
Show FDA Overruled Science-Office Call to OK Menthol Vapes, Filter
Magazine (Dec. 14, 2022) (“Norcia”), https://bit.ly/3JjjcVi. These reveal
that OS, well into reviewing a PMTA for a menthol-flavored e-cigarette,
recommended in late 2021 that the PMTA be granted because benefits to

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smokers likely outweighed the “known risks to youth from the marketing of
the products.” Then in July 2022, a new CTP director appeared on the scene
and told OS that “the approach to menthol-flavored ENDS should be the
same as for other flavored ENDS, i.e., the products could be found
[appropriate for the protection of the public health] only if the evidence
showed that the benefits of the menthol-flavored ENDS were greater than
tobacco-flavored ENDS, which pose lower risk to youth.” OS then changed
its position. These memoranda are strong evidence that CTP developed and
internally circulated new criteria for evaluating PMTAs for menthol-flavored
ENDS in Summer 2022, long after RJRV had filed its application.
       When rejecting RJRV’s evidence in the Denial Order, the FDA
brushed over its prior statements about the low popularity of menthol-
flavored e-cigarettes among youth and substantial benefits for cigarette
smokers who make the switch. Because its “new policy rest[ed] upon factual
findings that contradict those which underlay its prior policy,” the FDA had
to provide “a more detailed justification.” FCC v. Fox Television Stations,
Inc., 556 U.S. 502, 515, 129 S. Ct. 1800, 1811 (2009). It did not do so. This
sudden turnabout further reinforces that the Order is likely arbitrary,
capricious, or otherwise unlawful.
       3. “Tobacco product standard”
       RJRV has adduced evidence that the FDA has effectively banned all
non-tobacco-flavored e-cigarettes, pursuant to its new and secret heightened
evidentiary standard, without affording affected persons any notice or the
opportunity for public comment. There is no dispute that the TCA requires
the FDA to abide by notice-and-comment rulemaking procedures before

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establishing a “tobacco product standard.” 8              21 U.S.C. § 387g(c)–(d).
Similarly, it is clear that a ban on all but tobacco-flavored e-cigarettes would
constitute a “tobacco product standard.”              See id. § 387g(a)(1)(A); id.
§ 387g(a)(2); id. § 387g(a)(3). The FDA admits that it “has yet to grant” a
single application to market non-tobacco-flavored e-cigarettes. This means
it has denied over 355,000 such applications, which amount to 99% of all
timely-filed PMTAs. FDA, Press Release, FDA Denies Marketing to Two
Vuse Menthol E-Cigarette Products (Jan. 24, 2023), https://bit.ly/3YRYWzB;
Jim McDonald, FDA Denies PMTAs for 300,000 More Flavored E-Liquids,
Vaping 360 (Sept. 3, 2021), https://bit.ly/3Fu08SS. Cf. FDA, Premarket
Tobacco      Product     Marketing       Granted       Orders      (Feb. 7,     2023),
https://bit.ly/3lbNEIV. The only question, then, is whether the FDA has
instituted a de facto ban on non-tobacco-flavored e-cigarettes. If so, then it
has violated the APA by failing to provide those regulated with notice or an
opportunity for public comment.
       The alleged ban stems in part from the “Fatal Flaw” memorandum.
It is common knowledge that by Summer 2021, the FDA unexpectedly found
itself inundated with millions of PMTAs.                To speed up application
processing, the agency circulated an internal memorandum providing a new
“standard of evidence” for some PMTAs for flavored e-cigarettes. The
standard should sound familiar: PMTAs now require evidence from a
randomized controlled trial or long-term study, along with “strong evidence
that the flavored products have an added benefit relative to that of tobacco-
flavored ENDS in facilitating smokers completely switching away from or
       _____________________
       8
          Some argue Congress impermissibly delegated authority to the FDA in violation
of the “major questions” doctrine by permitting the agency to determine what constitutes
a new “tobacco product.” See, e.g., En Banc Brief for 38 Nat’l and State Elec. Nicotine
Delivery Sys. Prod. Advoc. Ass’ns as Amici Curiae Supporting Petitioners, Wages & White
Lion Invs. v. FDA (No. 21-60766) at 20–24. We do not consider that argument here.

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significantly reducing their smoking.” 9 FDA, PMTA Review: Evidence to
Demonstrate Benefit of Flavored ENDS to Adult Smokers (Aug. 17, 2021); see
also Timothy Donahue, Lawsuits Focus on FDA’s ‘Fatal Flaw’ Review for
PMTAs, Vapor Voice (Nov. 19, 2021), https://bit.ly/3lil0Wt (linking to
“fatal flaw” memoranda); Alex Norcia, FDA Memos Reveals Its “Fatal Flaw”
Rejection     plan     for    Flavored      Vapes,      Filter    (Nov.       3,    2021),
https://bit.ly/3mY6T9m. Every PMTA that did not include the requisite
new evidence was denied. The result: not a single PMTA for non-tobacco-
flavored e-cigarettes has been granted. 10
        We thus must consider whether this heightened evidentiary standard
may avoid the APA’s notice-and-comment requirements because the Fatal
Flaw memo and its progeny were general statements of policy rather than
substantive rules. This question “turns on whether an agency intends to bind
itself to a particular legal position.” Texas v. EEOC, 933 F.3d 433, 441 (5th
Cir. 2019) (quoting Syncor Int’l Corp. v. Shalala, 127 F.3d 90, 94 (D.C. Cir.
1997)). An action is binding “if it appears on its face to be binding,” “is
applied by the agency in a way that indicates it is binding,” or “retracts an
agency’s discretion to adopt a different view of the law.” Id. at 441–42

        _____________________
        9
          The dissenting judge in the now-vacated Wages & White Lion merits opinion
noted that although the Fatal Flaw memo was rescinded at the end of August 2021, “its
approach appears to have been followed in a check-box ‘scientific review’ form that
indicated only whether a PMTA included a randomized controlled trial or longitudinal
cohort study.” Wages, 41 F.4th at 444 (Jones, J. dissenting). The deficiency letter FDA
sent RJRV in 2021 and the internal memoranda between CTP and OS are additional
evidence that this standard remained in full effect for all non-tobacco-flavored e-cigarette
PMTAs.
        10
           It is worth noting that when this standard was expanded to menthol-flavored e-
cigarette PMTAs, OS employees expressed their concern to CTP that the standard would
“result in the removal of all ENDS from the U.S. market except for tobacco-flavored
ENDS.” See memo attached in Norcia at 3. n.3 (FDA-LOGICTECHNOLOGY-000171).
They had good foresight.

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(internal quotation marks omitted and alteration adopted).         Further, a
substantive rule “affects the rights of broad classes of unspecified
individuals.” City of Arlington v. FCC, 668 F.3d 229, 242 (5th Cir. 2012); see
also id. (citing MacLean v. DHS, 543 F.3d 1145, 1161 (9th Cir. 2008) (agency
action constituting “de facto rulemaking” “may require a notice and
comment period”)); Gen. Elec. Co. v. EPA, 290 F.3d 377, 381–85 (D.C. Cir.
2002 (an EPA guidance document was a legislative rule that should have been
issued following notice and an opportunity for public comment).
       We conclude that the Fatal Flaw memo’s heightened evidentiary
standard “bears all the hallmarks” of a substantive rule. City of Arlington,
668 F.3d at 242. First, the memo is binding on its face by mandating that
applications contain “the necessary type of studies.” Second, it has been
applied in a way that indicates it is binding; indeed, the subsequent, myriad
Denial Orders refer to the same deficiencies identified as “fatal” in the
memo. Third, it took away the FDA reviewers’ former discretion to consider
individual PMTAs solely on their merits and instead requires a cursory, box-
checking review. Finally, it affected the rights of literally hundreds of
thousands of applicants whose PMTAs were denied. This is not a close call.
See Iowa League of Cities v. EPA, 711 F.3d 844, 872–76 (8th Cir. 2013)
(vacating two letters sent by the EPA to Senator Charles Grassley as
containing new legislative rules without satisfying notice and comment
procedures); Safari Club Int’l v. Zinke, 878 F.3d 316, 333–34 (D.C. Cir. 2017)
(setting aside a press release issued by the U.S. Fish and Wildlife Service for
creating an industry ban without going through notice and comment);
Batterton v. Marshall, 648 F.2d 694, 710 (D.C. Cir. 1980) (holding unlawful a
new methodology for collecting and computing unemployment statistics
never published or announced by the Department of Labor).
       In sum, the FDA has articulated reasons to be concerned about youth
vaping. But “[r]egardless of how serious the problem an administrative

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agency seeks to address, . . . it may not exercise its authority ‘in a manner that
is inconsistent with the administrative structure that Congress enacted into
law.’” FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 125,
120 S. Ct. 1291, 1297 (2000) (holding that Congress had not yet empowered
the FDA to regulate tobacco products). Here, RJRV is likely to show that the
FDA has instituted a de facto ban on non-tobacco-flavored e-cigarettes
without going through notice-and-comment. Such action would be held
unlawful and set aside as promulgated “without observance of procedures
required by law.” 5 U.S.C. § 706(2)(D). 11
                               B. Irreparable injury
        RJRV submits allegations, unchallenged by FDA, that because of the
Order, it will incur substantial financial losses in annual revenue as well as
reputational harm. It will also have to pay a hefty sum to remove the product
from the market and subsequently dispose of it. “[S]ubstantial financial
injury” may be “sufficient to show irreparable injury,” especially when there
is “no guarantee of eventual recovery.” Texas v. EPA, 829 F.3d 405, 433 (5th
Cir. 2016); Alabama Ass’n of Realtors v. HHS, 141 S. Ct. 2485, 2489 (2015).
Further, “complying with a regulation later held invalid almost always
produces irreparable harm of nonrecoverable compliance costs.” Texas v.
EPA, 829 F.3d at 433. There is no suggestion, for instance, that RJRV could
        _____________________
        11
           The Seventh and Eleventh Circuits granted motions to stay FDA Denial Orders
for other non-tobacco flavored e-cigarette PMTAs. See Gripum LLC v. FDA, No. 21-2840,
2021 WL 8874972 (7th Cir. Nov. 4, 2021); Bidi Vapor LLC v. FDA, 47 F.4th 1191 (11th Cir.
2022). The Sixth Circuit has denied a motion to stay. Breeze Smoke, LLC v. FDA, 18 F.4th
499 (6th Cir. 2021). And this court granted a motion to stay in Wages, 16 F.4th 1130.
        Ruling on the merits, court decisions have denied e-cigarette manufacturers’
petitions for review. See Avail Vapor, LLC v. FDA, 55 F.4th 409 (4th Cir. 2022); Liquid
Labs LLC v. FDA, 52 F.4th 533 (3d Cir. 2022); Gripum, LLC v. FDA, 47 F.4th 553 (7th
Cir. 2022); Prohibition Juice Co. v. FDA, 45 F.4th 8 (D.C. Cir. 2022). Those decisions are
unpersuasive on the facts before us.

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                                   23-60037
                               c/w No. 23-60128

overcome the FDA’s sovereign immunity to recover costs. See Wages,
16 F.4th at 1142. Given RJRV’s uncontested allegations and legal arguments,
we conclude that it has met its burden of showing irreparable harm if denied
a stay pending appeal. “Thus, the two most critical factors favor granting a
stay.” Id. at 1143.
                  C. Balance of harms and public interest
       “[T]he maintenance of the status quo is an important consideration
in granting a stay.” Barber v. Bryant, 833 F.3d 510, 511 (5th Cir. 2016). Here,
RJRV’s menthol Vuse Vibe has been lawfully sold for almost seven years,
three of which the FDA spent reviewing its application. RJRV contends that
a “a small delay of this one denial order will not harm FDA.” The FDA does
not argue otherwise. “Given the great likelihood that [RJRV] will ultimately
succeed on the merits,” we agree that this factor favors a stay. Texas
Democratic Party v. Abbott, 961 F.3d 389, 412 (5th Cir. 2020).
       It is of highest public importance that federal agencies follow the law.
See Texas v. Biden, 10 F.4th 538, 559 (5th Cir. 2021) (per curiam). The FDA
argues that we should defer to “Congress’s policy choice” “that it is in the
public interest to prohibit the marketing of a new tobacco product until FDA
finds that it will produce, on balance, a benefit to the public health.” This
argument is obviously colored by the FDA’s view of the merits. “But our
system does not permit agencies to act unlawfully even in pursuit of desirable
ends.” Alabama Ass’n of Realtors, 141 S. Ct. at 2490. In sum, “there is
generally no public interest in the perpetuation of unlawful agency action,”
Texas v. Biden, 10 F.4th at 560. And there is no evidence that “Congress’s
policy choice” included an exemption from mandatory federal administrative
procedures.

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                                 23-60037
                             c/w No. 23-60128

                          III. Conclusion
      All four factors favor granting a stay pending appeal. RJRV has easily
met its burden. For the foregoing reasons, RJRV’s motion for a stay pending
review of its petition is GRANTED.

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