In June, the U.S. District Court for the Middle District of Florida made public an order that stayed a Food and Drug Administration (FDA) refuse to file (RTF) determination, finding that the FDA likely violated the Regulatory Flexibility Act (RFA) and the Administrative Procedure Act (APA) when it promulgated its 2021 PMTA rule based on a small-business certification that the court described as “facially false.” The RTF letter is stayed pending final judgment.

Background

Under the Tobacco Control Act, a manufacturer must obtain FDA premarket authorization before bringing a new tobacco product to market, generally by submitting a premarket tobacco product application (PMTA). In 2022, Congress extended FDA’s tobacco authority to synthetic nicotine products, which required manufacturers of such products to submit PMTAs in order to remain on the market.

Plaintiff Zest Brands LLC, the maker of ZEO Universe synthetic nicotine pouches, did so in 2022. On January 30, 2026, FDA issued an RTF letter concluding that the applications did not meet the filing requirements. An RTF determination ends FDA’s review without any substantive evaluation of the product, and this RTF letter by its terms prohibited the plaintiffs from continuing to sell their products.

The plaintiffs — Zest Brands LLC and C-Store Depot, Inc., a distributor of ZEO Universe nicotine pouches — sued FDA and the U.S. Department of Health and Human Services (HHS), challenging the process behind the rule on which the RTF determination rests.

The RFA requires an agency conducting notice-and-comment rulemaking either to prepare a regulatory flexibility analysis assessing the rule’s economic impact on small entities, or to certify, with a stated factual basis, that the rule will not have a significant economic impact on a substantial number of small entities.

FDA took the certification route, attributing any costs associated with preparing and submitting PMTAs to the 2016 Deeming Rule rather than to the PMTA rule itself. As the court recounted, however, the Deeming Rule’s regulatory impact analysis quantified PMTA preparation costs only for electronic nicotine delivery system (ENDS) and e-liquid products, and it stated that FDA was “unable to quantify the costs” for other novel tobacco products due to data limitations.  Moreover, neither the FDA’s Deeming Rule, nor the PMTA rule, ostensibly accounted for PMTA preparation costs for non-tobacco-derived nicotine products (e.g., synthetic nicotine products), which were not subject to FDA’s tobacco product authorities at the time.

The Court’s Ruling

The court held that the plaintiffs made a substantial showing that FDA’s RFA certification was neither “reasonable [nor] reasonably explained.” The court explained that a certification that is “facially false does not have the force of a certification”:  FDA certified that the required small-business cost assessment had been performed in the Deeming Rule when, by FDA’s own statements in that rule, no such assessment had been performed for novel products such as nicotine pouches.

The court also cited the plaintiffs’ expert testimony that a PMTA costs between $3 million and $13 million and that the expert was not aware of FDA ever accepting a PMTA that did not include a clinical study such as a randomized controlled trial. The court contrasted that testimony with the Deeming Rule’s statement that FDA did not expect PMTAs to include such trials.

The court rejected FDA’s argument that the 2022 synthetic nicotine legislation displaced the RFA’s requirements, finding that the legislation does not mention or allude to the APA.

The RTF letter is stayed pending final judgment, but the court stated that its order and findings “are limited to Plaintiffs only” and extend only to the PMTA rule’s application to the plaintiffs’ specific novel tobacco products. The order does not extend to ENDS, e-liquid, or other products subject to the rule. The court further stated that it was expressing no view on whether the plaintiffs’ products are appropriate for the protection of public health or whether the plaintiffs will ultimately be subject to a “PMTA-type rule.”  In addition, the stay of the RTF Letter does not alter the fact that the products at issue must first obtain FDA premarket authorization in order to be lawfully sold in the U.S., although it may, as a practical matter, make it less likely that FDA would bring an enforcement action against the products.

FDA has appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit, and that appeal remains pending.

Why It Matters

If the challenge is successful, there is a possibility that the court could provide some measure of relief from the FDA’s PMTA rule, at least as to small synthetic, nicotine pouch manufacturers, although that remains to be seen.  Small manufacturers of novel tobacco products that have received RTF determinations or other adverse actions premised on the 2021 PMTA rule may wish to evaluate the relevance of the court’s reasoning as it applies to their own business. We will continue to monitor this litigation as FDA’s appeal to the order proceeds in the Eleventh Circuit. 

If you have questions about the implications of this decision as it pertains to your business, or would like assistance evaluating your options, our team is happy to assist.