Tobacco Regulation, Litigation and Legislation
This year has begun where 2011 left off, with the FDA considering additional tobacco regulations; the industry, including NATO, litigating and filing more lawsuits to protect the right to advertise and sell legal tobacco products; and local and state governments introducing legislation in an attempt to further restrict and tax tobacco products.
The FDA has a number of current and pending regulations that affect retailers. First, the FDA is required to issue “standards” listing the elements for an approved retail clerk-training program. If a retailer’s training program meets these as-yet-undisclosed “standards,” then that retailer will be subject to a lower fine if an employee violates one of the tobacco regulations. While Congress required the FDA to compile these standards, the FDA has not set a date by which these training standards will be issued.
At the same time, as of Feb. 1, the FDA has contracted with 38 states to conduct retail compliance inspections. Many of these states have completed the first round of compliance inspections, and follow-up compliance checks are being conducted on those retailers that did not pass the first inspection. As of Jan. 31, the FDA had issued 29 civil penalty complaints seeking fines from retailers ranging from $250 up to $5,000 for additional violations of the agency’s tobacco regulations.
Second, last August, the FDA published a notice to seek approval of a form for the public and other stakeholders (e.g., anti-tobacco organizations) to file reports of possible retail violations of the tobacco regulations. Specifically, the FDA is proposing that the public be allowed to submit a report of a possible retail violation using the Internet, over the telephone, with a smartphone or by mailing in a completed report form. This may allow the public and anti-tobacco groups to target retailers and submit inaccurate or false reports. The FDA is now reviewing public comments about the violation form and must decide whether to proceed with the proposal.
Third, in April 2011, the FDA issued a letter stating that the agency will consider proposing regulations for electronic cigarettes as well as other tobacco products including cigars and pipe tobacco. In the April letter, the FDA stated that only certain regulations may be extended to cigars and pipe tobacco, including manufacturer registration, product listing, ingredient listing, good manufacturing practice requirements, user fees for certain products and premarket review standards for new products. To date, the FDA has not issued any proposed regulations for e-cigarettes, cigars or pipe tobacco.
Fourth, there are now two lawsuits filed against the FDA’s graphic-image cigarette warning labels. In the most recent lawsuit filed by tobacco manufacturers, the manufacturers argue that the graphic images are emotionally shocking and the government cannot compel them to deliver a nonfactual message to the public. In short, the manufacturers are suing because the graphic warning labels are forcing them to use these graphic pictures to “speak” to their customers and urge them not to purchase cigarettes when they would not otherwise do so if they had a choice.
On Nov. 7, the federal judge hearing the manufacturer’s lawsuit issued a decision granting a temporary injunction against the FDA requiring these graphic warning labels. The judge ruled that the manufacturers likely will win the lawsuit because the FDA is forcing manufacturers to deliver a shocking and nonfactual message through the use of the graphic images, and this represents unconstitutional compelled speech. In late November, the FDA appealed this decision to the U.S. Circuit Court of Appeals.
This ongoing litigation means that the Sept. 22, 2012, effective date to have the graphic health warnings printed on cigarette packages, cartons and advertisements will be delayed for an undetermined amount of time.
Finally, the FDA Center for Tobacco Products was provided a report in March 2010 on the use of menthol in cigarettes by the Tobacco Product Scientific Advisory Committee (TPSAC). The TPSAC was created as a mandate under the FDA tobacco regulatory law to gather scientific evidence and review specific tobacco-related issues including menthol in cigarettes. The TPSAC is composed of 12 members, with nine individuals from the scientific and health communities and the other three from tobacco manufacturers. After the TPSAC submitted its report and the three industry members filed their own industry viewpoint report, the FDA conducted a review of all the available evidence on menthol. From this review, the FDA Center for Tobacco Products wrote a new report on menthol in cigarettes, which is currently being evaluated by scientists on a peer review basis. Once the peer reviews are submitted to the FDA, the agency will consider any appropriate changes to its report on menthol and then publish the report along with the peer reviews for further public comment prior to any formal regulations being implemented.
In 2009, the American Recovery and Reinvestment Act was passed by Congress and signed into law by President Obama. That law included $245 million in federal taxpayer money to be disbursed to states, counties and cities by the Centers for Disease Control (CDC) during 2011 and 2012 to fund local efforts to restrict tobacco advertising and promotion; restrict the sale of certain cigar package sizes; ban the sale of tobacco in various kinds of retail stores; outlaw the sale of flavored tobacco products; and place more restrictions on smoking in public.
The CDC could disburse additional federal stimulus grants of up to $205 million during 2013, 2014 and 2015. As a result of this funding, there has been and will continue to be a major emphasis by state and local governments on adopting these kinds of restrictions on tobacco products.
There are numerous examples of local tobacco restrictions being considered in the past year, but several stand out because of the kind of restrictions being acted upon. In April 2011, the Worcester, Mass., city council adopted the most restrictive ordinance, banning all outdoor tobacco advertisements and any in-store advertisements that can be seen from a school, a park or a street. NATO informed city officials that the advertising ban was unconstitutional. However, the city council proceeded to adopt the ordinance, and NATO, along with R.J. Reynolds Tobacco Co., Philip Morris USA and Lorillard Tobacco Co., have sued the City of Worcester.
In Philadelphia, the city’s board of health proposed requiring a graphic health warning poster next to each register in stores that sell tobacco products. This is virtually the same regulation proposed by the New York City Board of Health in 2009 that was overturned by a federal judge in December 2010. The Philadelphia Board of Health received $10 million in stimulus grants to support, in part, passage of this graphic sign ordinance. NATO informed the Philadelphia Board of Health that the ordinance violates the free-speech protections of the First Amendment of the U.S. Constitution and is virtually identical to the New York City ordinance that was found to be unconstitutional by a federal judge. Further consideration of the proposed ordinance has been postponed until later this year.
On Jan. 5, 2012, the city council in Providence, R.I., adopted two separate ordinances, with one prohibiting both the redemption of tobacco product coupons and banning promotional priced tobacco products such as a buy-one-get-one free offer, and the second ordinance prohibiting the sale of most flavored cigars, smokeless tobacco and pipe tobacco. On Feb. 13, NATO, the Cigar Association of America, Lorillard Tobacco Co., R.J. Reynolds Tobacco Co., American Snuff Co., Philip Morris USA Inc., U.S. Smokeless Tobacco Manufacturing Co. LLC, U.S. Smokeless Tobacco Brands Inc. and John Middleton Co. filed a lawsuit against the City of Providence seeking a temporary and permanent injunction against the implementation of the ordinances.
The Providence city attorney has agreed to stay the enforcement of the two tobacco ordinances adopted by the city council until July 30, 2012, to allow the plaintiffs to file the necessary legal documents for a motion to seek a temporary injunction against the enforcement of the ordinance.
Last year, 19 state legislatures considered bills to increase cigarette and/or tobacco excise taxes, but only Connecticut and Vermont passed tax increases into law. This year, cigarette or tobacco tax increases are being proposed by governors or introduced as legislation in Alabama, Florida, Georgia, Hawaii, Maryland, Minnesota, Missouri , Nebraska, New Hampshire, New Mexico, New York, Ohio, Rhode Island, Virginia, West Virginia and Washington. With state legislative sessions continuing through late spring or early summer, other states may also consider cigarette and tobacco tax increases.