United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued September 13, 2024           Decided January 24, 2025

                        No. 23-5220

          CIGAR ASSOCIATION OF AMERICA, ET AL.,
                       APPELLEES

                              v.

 UNITED STATES FOOD AND DRUG ADMINISTRATION, ET AL.,
                     APPELLANTS


        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:16-cv-01460)



    Lindsey Powell, Attorney, U.S. Department of Justice,
argued the cause for appellants. With her on the briefs were
Brian M. Boynton, Principal Deputy Assistant Attorney General,
Mark B. Stern, Attorney, Samuel R. Bagenstos, General
Counsel, Department of Health and Human Services, and Peter
Dickos, Associate Chief Counsel.

     William B. Schultz and Andrew N. Goldfarb were on the
brief for amici curiae Medical and Public Health Groups in
support of appellants.

     Michael J. Edney argued the cause for appellees. With him
on the brief were Brian T. Burgess and Andrew Kim.
                               2

   Michael Pepson was on the brief for amicus curiae
Americans for Prosperity Foundation in support of appellees.

    John J. Vecchione was on the brief for amicus curiae New
Civil Liberties Alliance in support of appellees.

     Jason S. Miyares, Attorney General, Office of the Attorney
General for the Commonwealth of Virginia, Erika L. Maley,
Solicitor General, Kevin M. Gallagher, Principal Deputy
Solicitor General, Steve Marshall, Attorney General, Office of
the Attorney General for the State of Alabama, Ashley Moody,
Attorney General, Office of the Attorney General for the State
of Florida, Theodore E. Rokita, Attorney General, Office of the
Attorney General for the State of Indiana, Brenna Bird, Attorney
General, Office of the Attorney General for the State of Iowa,
Russell Coleman, Attorney General, Office of the Attorney
General for the Commonwealth of Kentucky, Lynn Fitch,
Attorney General, Office of the Attorney General for the State
of Mississippi, Austin Knudsen, Attorney General, Office of the
Attorney General for the State of Montana, Alan Wilson,
Attorney General, Office of the Attorney General for the State
of South Carolina, and Ken Paxton, Attorney General, Office of
the Attorney General for the State of Texas, were on the brief
for amicus curiae the Commonwealth of Virginia and 9 other
States in support of appellees.

    Macy D. Hanson was on the brief for amicus curiae the
Heartland Institute in support of appellees.

    Before: MILLETT and PAN, Circuit Judges, and RANDOLPH,
Senior Circuit Judge.

Opinion for the court filed by Senior Circuit Judge RANDOLPH.

    RANDOLPH, Senior Circuit Judge: This is an appeal from
                               3

the judgment of the district court, Mehta, J., vacating a
regulation of the Food and Drug Administration to the extent it
applied to “premium” cigars. In so ruling, Judge Mehta agreed
with the plaintiffs—the Cigar Association of America, Cigar
Rights of America, and the Premium Cigar Association—that as
applied to this category of cigars, the FDA’s regulation was
arbitrary and capricious. See Cigar Ass’n of Am. v. FDA (Cigar
I), No. 16-cv-01460, 

 (D.D.C. July 5, 2022);
Cigar Ass’n of Am. v. FDA (Cigar II), No. 16-cv-01460, 

 (D.D.C. Aug. 9, 2023).

                               I.

     The FDA promulgated its regulation pursuant to the 2009
Family Smoking Prevention and Tobacco Control Act, 

 Stat. 1776. The Act applies “to all cigarettes,
cigarette tobacco, roll-your-own tobacco, and smokeless tobacco
and to any other tobacco products that the [FDA] by regulation
deems to be subject to” the Act. 21 U.S.C. § 387a(b). Those
tobacco products specified in the Act, or brought within its
coverage through an FDA regulation, are subject to
comprehensive restrictions on sales, promotions, and
distribution, including requirements of pre-market approval,
information disclosure, age limits for purchasers, health
warnings, and method-of-sale limitations. See id. §§ 387d(a)-
(b), 387f(d), 387j(a), 123 Stat. at 1784–1812. The Tobacco
Control Act, however, prohibited the FDA from promulgating
regulations banning cigarettes or any other tobacco products,
including cigars. Id. § 387g(d)(3).

     In 2014, the FDA issued a Notice of Proposed Rulemaking
in the exercise of its § 387a(b) so-called “deem[ing]” authority.
See Deeming Tobacco Products to Be Subject to the Federal
Food, Drug, and Cosmetic Act, 

 (Apr. 25,
2014). The FDA offered two options. Its first potential
                                  4

approach—dubbed “Option 1”—proposed bringing all tobacco
products within the agency’s regulatory authority under the
Tobacco Control Act. Id. at 23143. Its rulemaking notice
stated, however, that although “all cigars are harmful and
potentially addictive, it has been suggested that different kinds
of cigars may have the potential for varying effects on public
health . . . .” Id. The FDA therefore “proposed” a “second
option” of excluding “premium cigars” “from the scope of this
proposed rule.” Id. The notice proposed to define a “premium
cigar” under “Option 2” as a cigar that “(1) [i]s wrapped in
whole tobacco leaf; (2) contains a 100 percent leaf tobacco
binder; (3) contains primarily long filler tobacco; (4) is made by
combining manually the wrapper, filler, and binder; (5) has no
filter, tip, or non-tobacco mouthpiece and is capped by hand; (6)
has a retail price . . . of no less than $10 per cigar . . . ; (7) does
not have a characterizing flavor other than tobacco; and (8)
weighs more than 6 pounds per 1000 units.” Id. at 23150.

     Many commenters, including the plaintiffs in this case,
supported Option 2, arguing that premium cigars are smoked
less frequently than other cigars, leading to fewer adverse health
effects and a less pressing need for regulation. As relevant here,
these comments highlighted two pieces of data. See, e.g., J.A.
527–29. One was a 2014 study published in the Centers for
Disease Control’s “Morbidity and Mortality” bulletin. See
Catherine G. Corey et al., Little Filtered Cigar, Cigarillo, and
Premium Cigar Smoking Among Adults — United States,
2012–2013, 63 Morbidity & Mortality Weekly Rep. 650 (2014).
Analyzing the 2012–2013 National Adult Tobacco Survey of
60,192 American adults, this study—the “Corey” study—found
that only 3.3 percent of premium cigar smokers reported “every
day” use, while 25.6 percent reported “some day” use and 71.2
percent reported “rare[]” use. Id. at 650, 652. Second was a
1998 study by the National Cancer Institute termed “Monograph
No. 9.” See Nat’l Cancer Inst., Cigars: Health Effects and
                                 5

Trends Monograph No. 9 (1998). Monograph No. 9, as the
district court put it, “found no statistically significant difference
in the ‘all-cause’ mortality rate as between ‘neversmokers’ and
those who smoked no more than two cigars per day.” Cigar I,

, at *3. Commenters, in discussing these two
studies, stressed that the relatively infrequent use of premium
cigars (typically less than once per day) resulted in fewer or
lower health risks than usage of other tobacco products. See,
e.g., J.A. 523, 525, 527–29.

     The FDA finalized the rule two years later, selecting the
Option 1 regulatory approach covering all cigars without an
exemption for premium cigars. See Deeming Tobacco Products
to Be Subject to the Federal Food, Drug, and Cosmetic Act, 

, 29020 (May 10, 2016) (codified at 21 C.F.R.
pts. 1100, 1140, 1143). The FDA stated that it had conducted a
“thorough review of the comments and the scientific evidence”
and drew three principal conclusions: (1) “[a]ll cigars pose
serious negative health risks,” (2) the “available evidence” did
not support a carve-out for premium cigars, and (3) premium
cigars are used by youth. 

 To support the first and third
conclusions, the final Rule extensively discussed the health risks
of all cigars, citing statistics about the many Americans who
smoke cigars and the resulting medical consequences. See 

 at
29020–24.

     Regarding a potential distinction between premium cigars
and other cigars, the FDA lamented that, “despite [its] explicit
requests in the NPRM, the comments did not include data
indicating that premium cigar smokers [were] not subject to
disease risk and addiction.” Id. at 29024. Elsewhere, the Rule
stated that the “FDA specifically sought comment on how the
potential different patterns of use for premium cigars might
result in different or decreased health impacts, but no such
evidence was submitted.” Id. at 29022. The FDA reported
                                 6

several other times that there was “no data” about health
differences, id. at 29020, and that commenters “ha[d] not
substantiated their claims that the patterns of use for premium
cigars preclude[d] . . . negative health effects,” id. at 29027. The
FDA therefore discerned “no appropriate public health
justification to exclude premium cigars” from its Rule. Id. at
29020.

     In the district court, the plaintiffs contended—as relevant
here—that the Rule was arbitrary and capricious as applied to
premium cigars. The district court found that the FDA “did not
examine” the evidence the parties submitted, specifically
Monograph No. 9 and the Corey study. See Cigar I, 

, at *4. Even though commenters had “already drawn”
and “emphasized” a connection between those studies and the
FDA’s decision, id. at *5, the FDA simply repeated that all
cigars were dangerous. This was “nonresponsive, circular
reasoning,” according to the district court. Id. at *6. The FDA,
when it posed a choice between Option 1 and Option 2, “already
knew” that “premium cigars, like standard cigars, produce toxic
cigar smoke.” Id. Thus, because the agency had spoken “in
absolute terms that there [was] no evidence, it act[ed] arbitrarily
and capriciously when there [was] in fact pertinent record
evidence.” Id. at *7. Then, after additional briefing on
remedies, the district court vacated the Rule as applied to
premium cigars. See Cigar II, 

. Given the
“significance of the agency’s error,” the real possibility of FDA
reaching a different conclusion on remand in light of new
medical research, and the limited disruptive consequences of
vacatur, the district court declined to remand without vacating.
Id. at *4, *6. The court’s opinion adopted a definition for
“premium cigars” based on an FDA document from an earlier
phase of the litigation. See id. at *6 n.7.

                                II.
                                7


    The Administrative Procedure Act requires the “reviewing
court” to “hold unlawful and set aside agency action, findings,
and conclusions found to be . . . arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law.” 

.

     The FDA’s notice of proposed rulemaking asked a
straightforward question: Option 1 or Option 2? The final Rule
explained that the choice was driven by “public health
justification[s]”: do the “the patterns of premium cigar use
sufficiently reduce the health risks to warrant exclusion”? 81
Fed. Reg. at 29020. From the beginning of this rulemaking, the
FDA has taken as a given that “all cigars are harmful and
potentially addictive.” 79 Fed. Reg. at 23150. But the FDA also
acknowledged that there could be significant differences in the
degree of risk that premium cigars pose as compared to other
tobacco products. And so the proposed rulemaking notice
announced that the FDA would consider a premium-cigar carve-
out because “different kinds of cigars may have the potential for
varying effects on public health.” Id. at 23143. In short, while
the FDA believed that all cigars had some risks, premium cigars
might have lower risks “based on possible differences [from] . . .
frequency of use by youth or young adults.” Id. The FDA made
clear that it was “seeking comment on whether all cigars should
be subject to deeming . . . taking into account what is
appropriate to protect the public health.” Id. at 23150. The
agency thus narrowed the inquiry to the public health
differences among cigars.

     Plaintiffs provided evidence bearing directly on this
question, but in its final rulemaking the FDA expressly stated
that such evidence was not provided and did not exist. The
agency wrote that it had “specifically sought comment on how
the potential different patterns of use for premium cigars might
                                 8

result in different or decreased health impacts, but no such
evidence was submitted.” 81 Fed. Reg. at 29022. Similar
assertions were scattered throughout the Rule. For example, the
FDA stated that, “no data indicat[ed] that premium cigar users
are not susceptible to health risks,” id. at 29020, and “despite
our explicit requests in the NPRM, the comments did not
include data indicating that premium cigar smokers are not
subject to disease risk and addiction,” id. at 29024. Yet the
Corey study and Monograph No. 9 spoke to this precise
question: the Corey study found that all but 3 percent of
premium cigar users smoke fewer than one per day, and
Monograph No. 9 found that smoking a cigar once or twice per
day has no statistically significant impact on “all-cause”
mortality. Taken together, those two data points provided
evidence that premium cigar use poses a less urgent public
health risk than that associated with any other tobacco product,
including standard cigars. And it bears repeating: the notice of
proposed rulemaking set up the central inquiry as whether
“different kinds of cigars may have the potential for varying
effects on public health.” 79 Fed. Reg. at 23143.1

    We agree with Judge Mehta that the FDA’s final Rule was

1
  While not central to how the parties argued this case, a different
study in the record, also by Dr. Corey, contained comparative data on
the average number of cigars smoked per day for different types of
cigars. This study found that the average premium cigar smoker
smoked 0.1 premium cigars per day. By contrast, the average smoker
of nonpremium cigars smoked 0.4 such cigars per day, the average
smoker of cigarillos smoked 0.3 per day, the average smoker of
filtered cigars smoked 1.6 per day, and the average smoker of
cigarettes smoked 10.1 per day. J.A. 151; Catherine G. Corey et al.,
U.S. Adult Cigar Smoking Patterns, Purchasing Behaviors, and
Reasons for Use According to Cigar Type: Findings from the
Population Assessment of Tobacco and Health (PATH) Study,
2013-2014, 20 Nicotine & Tobacco Rsch. 1457, 1461 (2018).
                                  9

arbitrary and capricious.

     First, the FDA’s rationale was factually incorrect. We have
held that “agency action is arbitrary and capricious if it rests
upon a factual premise that is unsupported by substantial
evidence.” Genuine Parts Co. v. EPA, 

 (D.C.
Cir. 2018) (quoting Ctr. for Auto Safety v. Fed. Highway
Admin., 

 (D.C. Cir. 1992)). The FDA’s
explanation for its rejection of Option 2 in the final Rule rested
on a false factual premise, as discussed above. That in itself
constituted arbitrary agency action. See, e.g., County of Los
Angeles v. Shalala, 

, 1021 (D.C. Cir. 1999).

     Second, even if the FDA had said nothing about the
supposed lack of evidence, its analysis of the choice between
Option 1 and Option 2 shows that it did not “examine the
relevant data,” a defect rendering its action “arbitrary” within
the meaning of APA section 706.2 See Motor Vehicle Mfrs.
Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 

 (1983); see also, e.g., Env’t Health Tr. v. FCC, 

 (D.C. Cir. 2021); Viasat, Inc. v. FCC, 

 (D.C. Cir. 2022); Home Box Off., Inc. v. FCC, 

,
35 n.58 (D.C. Cir. 1977).3 In some cases, the relevance of the
unexamined “data” might be debatable. But not here. As we
have discussed, the FDA’s notice of proposed rulemaking

2
  While the FDA did describe elements of the Corey study and
Monograph No. 9 when summarizing the comments it had received,
the agency failed to respond to those studies’ implications. Grappling
with relevant data requires more than a mere recitation of unfavorable
evidence without further explanation.
3
  Plaintiffs also argue that the FDA’s discussion of youth usage of
premium cigars was arbitrary and capricious. But the district court
declined to reach that issue, see Cigar I, 

, at *8, and
we decline to do so as well.
                                 10

placed this sort of evidence at the heart of its inquiry.4

                                III.

     This brings us to the question of remedy. Section 706 of the
APA states that when the reviewing court finds “arbitrary”
agency action, the court “shall . . . set aside” that agency action.
See 

. Even so, precedents of our court have
sanctioned the “exceptional remedy” of remand without vacatur
in “limited circumstances,” Am. Great Lakes Ports Ass’n v.
Schultz, 

, 518–19 (D.C. Cir. 2020), and “only if an
agency’s error is ‘curable.’” Bridgeport Hosp. v. Becerra, 

 (D.C. Cir. 2024) (quoting U.S. Sugar Corp. v.
EPA, 

 (D.C. Cir. 2016)).5 Under Allied-
Signal, Inc. v. U.S. Nuclear Regulatory Commission, 

 (D.C. Cir. 1993), the decision to vacate turns on two factors:
the “seriousness of the [agency action’s] deficiencies” and the
“disruptive consequences” of vacatur. 

 at 150 (quoting Int’l
Union, United Mine Workers of Am. v. Fed. Mine Safety &
Health Admin., 

, 9667 (D.C. Cir. 1990)). Pursuant
to circuit precedent, Judge Mehta’s decision to vacate the
contested portion of the final Rule must stand unless he abused
his discretion to decide the appropriate remedy for the FDA’s
unlawful action. See Great Lakes, 

.


4
  Before this court and in the district court, the FDA identified
problems with the Corey study and Monograph No. 9. But as the
district court determined, those points should have been made in the
rulemaking. See Cigar I, 

, at *4.
5
 As we noted in Bridgeport Hospital, “[t]he conflict between 

(2)(A)’s command and our creation of remand without vacatur
has been noted in more than one separate opinion.” 

n.5. But since vacatur is the appropriate remedy here, we need not
reach that question.
                               11

     The final Rule’s deficiencies are serious. “In the past we
have not hesitated to vacate a rule when the agency has not
responded to empirical data or to an argument inconsistent with
its conclusion.” Comcast Corp. v. FCC, 

 (D.C. Cir.
2009). And in dicta, we have suggested that a court “must
vacate a decision that ‘entirely failed to consider an important
aspect of the problem.’” SecurityPoint Holdings, Inc. v. TSA,

 (D.C. Cir. 2017) (emphasis added) (quoting
State Farm, 

). This case is a textbook example:
the FDA did not respond to data speaking to the rulemaking’s
central question regarding the treatment of premium cigars.

     As to the potential disruptive consequences of vacatur, the
FDA cites the same parade of harms that it cited before the
district court—i.e., the importance of age requirements, sample
restrictions, vending machine prohibitions, and mislabeling rules
to protect the public. The district court, however, carefully
explained why the FDA’s fears are overblown or
unsubstantiated, see Cigar II, 

, at *5, and the
FDA gives us no reason to disturb the district court’s reasoned
conclusion.

     The FDA also raises the prospect of a disruption to the
“detailed user fee scheme” that Congress imposed to fund
tobacco regulation. Cigar Ass’n of Am. v. FDA, 

(D.C. Cir. 2021) (describing the statutory framework). As
relevant here, the user fee system uses a statutorily defined
formula to allocate the FDA’s costs among each type of tobacco
product; the manufacturers of each type of product then bear
their allocated share. 

 (citing 21 U.S.C. § 387s). As this
scheme has been in place for seven years, the FDA worries that
a vacatur order might necessitate the recalculation and
reallocation of seven years worth of user fee payments.

    In the past, we have often remanded without vacating in the
                               12

context of complex payment or fee schemes. For example, in
American Great Lakes, vacatur could have required “attempting
to recoup and redistribute funds that changed hands years ago in
numerous separate transactions.” 

. We
emphasized that the “precise amount of each refund” was
“unclear,” rendering vacatur an “invitation to chaos.” 

 (final
excerpt quoting Sugar Cane Growers v. Veneman, 

 (D.C. Cir. 2002)). Thus, “a quintessential disruptive
consequence arises” when vacatur would require “unravel[ing]”
and “disrupt[ing] settled transactions.” 

 Likewise, in Allied-
Signal, we emphasized that if vacatur required an agency to
refund user fees to some parties but left it unable to recover
those fees in a future rulemaking, remand without vacatur was
appropriate. 

.

     Contrary to the FDA’s contention, however, the presence of
a user fee system in itself does not automatically require remand
without vacatur. American Great Lakes and Allied-Signal
indicate that when vacating would disturb “settled transactions,”
this is a factor in favor of remand without vacating. Here, this
is a factor we need not consider. We read the district court’s
relief as applying only prospectively, without requiring an
unwinding of past transactions.

     In short, the district court did not abuse its discretion in
vacating the FDA’s Rule as applied to premium cigars, provided
that the relief does not permit refunding past user fee payments.

                              IV.

     One issue remains. The “FDA did not settle on a definition
[of ‘premium cigars’] . . . because it decided to regulate all
cigars under Option 1.” Cigar Ass’n of Am. v. FDA, 

, 280 (D.D.C. 2020). The district court therefore
took it upon itself to define “premium cigars,” “[f]or purposes
                                  13

of this ruling,” using an eight-part definition. See Cigar II, 

, at *6 n.7. This definition departed somewhat
from the FDA’s proposal in its notice of proposed rulemaking.
Compare 

, with 79 Fed. Reg. at 23150
(NPRM). For example, the district court’s version eliminated
the $10 price requirement, but it added a requirement that only
tobacco, water, and vegetable gum could be used as ingredients.
In addition, the district court’s version included a few wording
changes, specifying that the long filler tobacco requirement be
measured by weight, generalizing the requirement that the cigar
be “capped by hand” and “combin[ed] manually” to simply
being “handmade or hand rolled,” and changing the no “tip”
requirement to “no nontobacco tip.”

     How did this definition come about? Its provenance traces
back to a letter from the FDA to a different district court in a
different case. But, suffice it to say, the FDA never formally
defined the category of “premium cigars.”6 And so the FDA


6
  More specifically, the district court adopted the definition used by a
previous 2020 decision in this case. See Cigar II, 

,
at *6 n.7 (citing Cigar Ass’n, 480 F. Supp. 3d at 281). That 2020
decision drew from a litigation notice filed on August 6, 2020. See id.
(citing Notice of Filing, Cigar Ass’n, 

 (D.D.C.
Aug. 6, 2020), ECF No. 209 at 3–4). The notice alerted the court
below to a letter filed with the District of Maryland in a different
challenge to the “Deeming Rule.” The FDA’s letter to the Maryland
federal district court informed that court of a proposed agency
guidance document on premium cigars—and that proposed guidance
document contained the definition at issue. See Letter, Am. Academy
of Pediatrics v. FDA, No. 18-cv-00883 (D. Md. Aug. 5, 2020), ECF
No. 188. But the 2020 decision in this case was handed down before
the District of Maryland could rule on the request, and the FDA later
withdrew its proposed guidance document as moot. See Notice of
Decision and Withdrawal of Motion, Am. Academy of Pediatrics, No.
18-cv-008833 (D. Md. Aug. 20, 2020), ECF. No. 192 at 1. As far as
                               14

complains that the district court’s remedy usurped the FDA’s
role.

    This is somewhat concerning because defining “premium
cigars” was, or should have been, an issue in the rulemaking.
But we recognize that the district court’s determination that the
FDA acted irrationally made it necessary to define “premium
cigars” with some precision.

     The rulemaking notice requested comment on the originally
proposed definition, posing five questions about its specific
elements. See 79 Fed. Reg. at 23150 (“We ask for comments
. . . on the following questions regarding this issue: Is this
proposed definition of ‘covered cigar’ appropriate . . . ?”); see
also id. (requesting comments on the ingredient, price, and
weight prongs). The FDA also asked whether an additional
restriction based on production rate should be added. Id.
Commenters weighed in with differing views, and the price
prong was a particular area of disagreement. See Cigar Ass’n,
480 F. Supp. 3d at 280–81 (summarizing comments). Indeed,
the three plaintiffs here disagreed with each other: Cigar Rights
of America and the Premium Cigar Association supported the
version the district court ultimately used; the Cigar Association
of America opposed it. Id.

     Unlike many cases in which the remedial question is
distinct from the merits question—for instance, when a
successful as-applied challenge leads a court to limit the
applicability of a rule without affecting its substance—the scope
of the remedy here poses the same question as the key merits
issue. The definition of “premium cigar” in the final vacatur


we can tell, the FDA never reissued the guidance containing the
“premium cigar” definition used here.
                              15

order will determine which products are exempted from the
Tobacco Control Act (pending any further rulemaking),
precisely the issue this rulemaking sought to determine. As we
have explained, the FDA set up a choice between Options 1 and
2, ignored the data supporting Option 2, and then chose Option
1. But the vacatur remedy incorporated a definition of
“premium cigar” that the FDA never formally adopted.

     Given the centrality of this issue, we think the parties
should have the opportunity to express their views before the
district court determines—in effect—the permissible scope of
the FDA’s existing rule. Accordingly, we reverse and remand
only so that the district court can invite briefing on the
appropriate definition of “premium cigars” before entering a
final order. Of course, the FDA may separately begin a new
rulemaking to redefine the “premium cigars” carve-out or it may
seek to regulate these products once again. But until then, and
with the understanding that vacatur will not permit revisiting
past user fee payments, we otherwise affirm the district court’s
well-reasoned opinion in full.

                                                    So ordered.