00-5506. Request for Comments Concerning Regulations Implementing the Comprehensive Smokeless Tobacco Health Education Act of 1986

AGENCY:

Federal Trade Commission.

ACTION:

Request for public comments.

SUMMARY:

The Federal Trade Commission (the “Commission”) is requesting public comment on its regulations (“smokeless tobacco regulations” or “the regulations”) implementing the Comprehensive Smokeless Tobacco Health Education Act of 1986 (“Smokeless Tobacco Act”). The regulations set forth the manner in which smokeless tobacco manufacturers, importers, and packagers must display and rotate the three health warnings mandated by the Smokeless Tobacco Act. As part of its systematic review of all current Commission regulations and guides, the Commission is requesting comments about the overall costs and benefits of the regulations and their overall regulatory and economic impact. The Commission is also requesting comment on whether the regulations adequately implement the format and display requirements of the Smokeless Tobacco Act and for comment on several other issues relating to specific provisions of the regulations. All interested parties are hereby given notice of the opportunity to submit written data, views and arguments concerning the rule.

DATES:

Comments must be submitted on or before April 24, 2000.

ADDRESSES:

Written comments should be identified as “16 CFR Part 307” and sent to the Secretary, Federal Trade Commission, Room H-159, 600 Pennsylvania Avenue, N.W., Washington DC 20680. The Commission requests that the original comment be filed with five copies, if feasible. The Commission also requests, if possible, that the comments be submitted in electronic form on a computer disc. (Programs based on DOS or Windows are preferred. Files from other operating system should be submitted in ASCII test format.) The disc label should identify the commenter's name and the name and version of the word processing program used to create the document.

Alternatively, the Commission will accept comments submitted to the following E-Mail address: “[e-mail]”.

All comments will be placed on the public record and will be available for public inspection in accordance with the Freedom of Information Act, 5 U.S.C. § 552, and the Commission's Rules of Practice, 16 CFR 4.11, during normal business days from 8:30 a.m. to 5:00 p.m., at the Public Reference Room, Room H-130, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington DC 20580. In addition, comment will be placed on the Internet at the FTC web site: http://www.ftc.gov.

FOR FURTHER INFORMATION CONTACT:

Rosemary Rosso [phone], Division of Advertising Practices, Bureau of Consumer Protection, Federal Trade Commission, Washington, DC 20580, E-Mail (for questions or information only): [e-mail].

SUPPLEMENTARY INFORMATION:

The current request for comments on the smokeless tobacco regulations is part of the Commission's regulatory review program, which has been implemented to review regulations and guides periodically. The regulatory review program seeks information about the costs and benefits of the Commission's rules and guides and their regulatory and economic impact. The information obtained will assist the Commission in identifying rules and guides that warrant modification or rescission.

Simultaneous with the regulatory review, the Commission is also seeking public comments on whether the regulations adequately implement the format and display requirements of the Smokeless Tobacco Act and for comment on several other issues relating to specific provisions of the regulations.

A. Background Information

The Smokeless Tobacco Act was promulgated by Congress on February 27, 1986. The Act requires manufacturers, importers and packagers of smokeless tobacco products to display on a rotating basis one of the following healthy warning labels on product packages and in most advertisements:

WARNING: THIS PRODUCT MAY CAUSE MOUTH CANCER

WARNING: THIS PRODUCT MAY CAUSE GUM DISEASE AND TOOTH LOSS

WARNING: THIS PRODUCT IS NOT A SAFE ALTERNATIVE TO CIGARETTES

For packaging, the Act directs that these health warnings appear in a conspicuous and prominent place on the package and in a conspicuous format that is in conspicuous and legible type in contrast with all other printed material. For advertising, the Act directs that the warnings be displayed in a circle-and-arrow format in a conspicuous and prominent place and in conspicuous, legible type in contrast to all other printed materials.

The Act also directs the Commission to issue implementing regulations governing the format and display of the statutory health warnings on packaging and in most advertising for smokeless tobacco products.

On November 4, 1986, the Commission promulgated regulations specifying requirements as to the size, color, typeface, placement and rotation of those warnings, 51 FR 40015. For the most part, these provisions are set out as safe harbor provisions that state formats or displays that will be deemed to be in conformance with the Smokeless Tobacco Act rather than in terms of displays or formats that are required to conform. The Commission's regulations require manufacturers, importers and packagers to submit to the Commission for approval their plans for complying with the requirements for the display and periodic rotation of the three warnings.

The Commission amended its smokeless tobacco regulations on March 20, 1991, 56 FR 11662.^[1] The 1991 amendments added a requirement for display of the warnings on “utilitarian items,” that is items other than smokeless tobacco that are sold or given to consumers for their personal use that display the name, logo, or selling message of any smokeless tobacco product.^[2]

B. Issues for Comment

The Commission is currently conducting a periodic review of the smokeless tobacco regulations as part of its periodic review of all current Commission rules and guides. Accordingly, the Commission is requesting comments about the overall costs and benefits of the regulations and their overall regulatory and economic impact.

In addition, the Commission is seeking public comment on the adequacy of the smokeless tobacco regulations in implementing the format and display provisions of the Smokeless Tobacco Act.

1. Effectiveness of the Warning Requirements

For labels, the regulations currently require that the warnings be displayed in a conspicuous and prominent place on the label and provide examples of places on the label of different types of smokeless tobacco packages that will be deemed to be conspicuous and prominent. For advertising, the regulations currently require that the statutorily mandated circle-and-arrow warnings be in conspicuous and legible type in contrast with all other printed material and must appear in all capital letters in a circle-and-arrow format. The regulations provide examples of display formats that will be deemed to conform to these requirements.

The Commission is interested in public comment on the effectiveness of the existing regulations in meeting the statutory format and display requirements. In particular, the Commission would like to receive comment on any consumer research, studies or other data bearing on the effectiveness of the warning requirements.

2. Enforceability of the Warning Requirements

Many of the substantive provisions of the regulations are stated in terms of safe harbors, or displays that will be deemed to be in conformance with the Smokeless Tobacco Act, rather than as specific mandatory requirements. The Commission is seeking public comment on whether this safe harbor approach is sufficiently enforceable. In particular, the Commission is interested in public comment as to whether the safe harbor approach should be abandoned and if so, the costs and benefits of changing to an alternative approach.

3. Smokeless Tobacco Dispensers

Under the regulations as currently drafted, rectangular dispensers of individual packages of smokeless tobacco can display the label warning on any side of its packaging, provided that the dispenser can be sold in its entirety and the warning is the only printed or graphic matter on the side of the package where it appears. 16 CFR 307.6(a). It has recently come to the Commission's attention that this provision is being used to justify placement of the label warning on the back of dispensers commonly used as displays for the retail sale of individual packages of smokeless tobacco products. In this location, the warnings are not visible to the viewing public.

Accordingly, the Commission is seeking comment as to whether this provision of the Regulations should be revised to provide that any dispenser of individual smokeless tobacco packages that can be used as a retail display carry the label warning on its principal display panel.

4. Can Rolls

Section 307.6(b) of the regulations currently provides that can rolls wrapped for sale as a single unit display a warning in 12-point type if the warnings on the individual cans in the roll are not completely visible. The warnings on the individual cans typically would be in 71/2 point type under the current regulations. One manufacturer has taken the position that the larger 12-point type requirement does not apply to can rolls consisting of only two cans. The Commission is interested in public comment on whether this provision should be amended to make it clear that the provision for a larger warning applies to any can roll consisting of two or more cans that are wrapped for sale as one unit if the warnings on the individual cans are not completely visible.

C. Request for Comments

At this time, the Commission is seeking comment on various aspects of the smokeless tobacco regulations in conjunction with its regulatory review. Without limiting the scope of issues it is seeking comment on, the Commission is particularly interested in receiving comments on the questions that follow. Where commenters advocate changes to the regulations, please be specific in describing suggested changes. With respect to suggested changes to the regulations, please describe any potential costs and benefits such changes might have on industry and consumers. The Commission would also be interested in commenters providing any consumer research, studies or data that exist on issues raised in the questions.

1. Is there a continuing need for the regulations as currently promulgated?

(a) Since the regulations were issued, have changes in technology, industry structure or economic conditions affected the need for or effectiveness of the regulations?

(b) Do the regulations include provisions that are unnecessary?

(c) What are the aggregate costs or benefits of the regulations?

(d) Have the costs or benefits of the regulations dissipated over time?

2. What effect, if any, have the regulations had on smokeless tobacco purchasers, potential purchasers or the general public?

(a) What benefits have the regulations provided to smokeless tobacco purchasers, potential purchasers or the general public?

(b) What economic or other costs have the regulations imposed on smokeless tobacco purchasers, potential purchasers or the general public?

(c) What changes, if any, should be made to the regulations to increase the benefits to smokeless tobacco purchasers, potential purchasers or the general public?

(d) How would these changes affect the compliance costs the regulations impose on industry?

3. What impact, if any, have the regulations had on firms that must comply with it?

(a) What economic or other costs have the regulations imposed on industry or individual firms?

(b) What benefits have the regulations provided to the industry or to individual firms?

(c) What changes, if any, should be made to the regulations to minimize any burden or cost imposed on industry or individual firms?

(d) How would the changes affect the benefits provided by the regulations to smokeless tobacco purchasers, potential purchasers, the general public or industry?

4. Do the regulations overlap or conflict with any federal, state or local laws or regulations?

5. What significant burdens or costs, including costs of compliance, have the regulations imposed on small firms subject to their requirements?

(a) How do these burdens or costs differ from those imposed on larger firms subject to the regulations' requirements?

(b) What changes, if any, should be made to the regulations to reduce the burdens or costs imposed on small firms?

(c) How would these changes affect the benefits of the regulations?

(d) Would such changes adversely affect the competitive position of larger firms?

Section 307.6 Requirements for Disclosure on the Label

6. If the regulations are retained, are the size, color, typeface, or placement requirements sufficiently conspicuous and prominent within the meaning of section 3(b)(1) of the Smokeless Tobacco Act, 15 USC 4402(b)(1)? What evidence is there to show that the existing label disclosure requirements are or are not conspicuous or prominent or otherwise effective or ineffective?

Sections 307.7, 307.8 and 307.9 Requirements for Disclosure in Advertising

7. If the regulations are retained, are the size, color, typeface, or placement requirements sufficiently conspicuous and prominent within the meaning of section 3(b)(2) of the Smokeless Tobacco Act, 15 USC 4402(b)(2)? What evidence is there to show that the existing advertising disclosure requirements are or are not conspicuous or prominent or otherwise effective or ineffective?

Enforceability of the Regulations

8. Many of the substantive provisions of the regulations are stated in terms of safe harbors, or displays that will be deemed to be in conformance with the Smokeless Tobacco Act, rather than as specific mandatory requirements. Are the regulations in this form sufficiently enforceable? Does this make it more difficult to prove that displays that do not conform to the safe harbors are not sufficiently conspicuous to conform to the requirements of the Smokeless Tobacco Act? Should the safe harbor approach be abandoned?

Smokeless Tobacco Dispensers

9. Should the regulations be revised to provide that any dispenser of individual smokeless tobacco packages that can be used as a retail display carry the advertising warning on its principal display panel?

Can Rolls

10. Should the regulations be amended to provide that a can roll of individual smokeless tobacco packages can consist of as few as two cans?

11. Are there any other provisions of the regulations that need to be amended? If so, which provisions require change and how should they be changed?

12. What is the likely effect of any changes in the regulations suggested in response to questions 6 through 11 on costs, profitability, competitiveness, or employment in small business entities?

13. The Smokeless Tobacco Act requires that smokeless tobacco companies submit plans to the Commission specifying the method they will use to rotate, display, and distribute the required health warnings on their packaging and advertising. Making changes suggested in the regulations in response to questions 6 through 11 may require the smokeless tobacco companies to amend their plans for the display and rotation of the warning statements. What paperwork or other burdens would be imposed by any changes suggested in response to questions 6 through 11?

List of Subjects in 16 CFR Part 307

• Health warnings
• Smokeless tobacco
• Trade practices

Authority: 15 U.S.C. 1401-1410.

By direction of the Commission.

Donald S. Clark,

Secretary.

Footnotes

1.  The sections of the regulations that deal with technical requirements for rotation of the warnings also were amended several times, including on January 15, 1993, 58 FR 4874, and on August 30, 1996, 61 FR 45886.

In addition, the Commission currently has pending a rulemaking to determine whether it should amend its regulations to require rotational health warnings on sponsored racing vehicles and other event-related objects that display the brand name, logo or selling message of smokeless tobacco products. That rulemaking is on hold while Commission staff evaluate regulatory and industry changes that have taken place since this proceeding commenced.

2.  The regulations as originally promulgated by the Commission contained an exemption for utilitarian items. Subsequent litigation required the Commission to delete the exemption. Public Citizen v. FTC, 688 F. Supp. 667 (D.D.C. 1988), aff'd, 869 F.2d (D.C. Cir. 1989).