## Facts

- The FDA adopted a cosmetic-labeling regulation governing use of the term “hypoallergenic,” codified at 21 C.F.R. § 700.100, through notice-and-comment rulemaking.
- The regulation allowed a “hypoallergenic” claim only if scientific testing showed adverse reactions to the manufacturer’s product occurred significantly less often than reactions to specified “reference products.”
- “Reference products” were similar-use competitive products in the same category that collectively accounted for at least 10% of the market.
- Cosmetic manufacturers (including Almay and Clinique) objected that compliance depended on competitors’ products, which could be reformulated or change market position, making compliance unpredictable and outside the manufacturer’s control.
- Industry commenters proposed an alternative “objective compliance” approach: an absolute, standardized testing method requiring a minimum low-irritancy profile rather than comparison to competitor products.
- The FDA relied substantially on consumer-perception evidence (including surveys) that consumers understand “hypoallergenic” to mean fewer adverse reactions than other products.
- The district court upheld the regulation and granted summary judgment to the government; the manufacturers appealed.

## Issues

1. Whether the FDA’s “hypoallergenic” regulation requiring comparison testing against competitor “reference products” was arbitrary, capricious, or not in accordance with law under APA § 706(2)(A).
2. Whether the FDA adequately explained why a competitor-based comparative testing regime was necessary and workable.
3. Whether the FDA failed to meaningfully consider and respond to a reasonable, standardized non-comparative alternative proposed during rulemaking.

## Decision

- The D.C. Circuit reversed the district court’s judgment.
- The court set aside the FDA regulation and remanded for further proceedings.
- The court held the comparison-testing scheme was arbitrary and capricious because it tied regulated parties’ compliance to unpredictable third-party conduct without adequate justification.
- The court found the FDA did not sufficiently address significant alternatives, including an absolute irritancy-based compliance method.
- The court concluded that consumer-perception evidence supporting a general comparative meaning did not justify the specific rigid mechanism the agency selected.

## Legal Principles

- Under APA § 706(2)(A), a reviewing court must set aside agency action that is arbitrary, capricious, or not in accordance with law.
- Informal rulemaking requires reasoned decision-making, including a rational connection between the record evidence and the specific regulatory mechanism adopted.
- An agency must seriously consider and explain rejection of significant, feasible alternatives raised in comments when those alternatives could meet regulatory objectives with fewer practical problems.
- A regulatory regime may be arbitrary when it makes a party’s legal compliance depend on changing actions of competitors or other third parties, absent a persuasive explanation for that design.

## Conclusion

The court invalidated the FDA’s “hypoallergenic” labeling rule because the agency did not justify a competitor-dependent comparison-testing requirement, did not adequately address workable alternatives, and failed to connect its evidence to the specific compliance structure it imposed.


Almay, Inc. v. Califano, 569 F.2d 674 (D.C. Cir. 1977)