[Federal Register: August 28, 1996 (Volume 61, Number 168)]
[Rules and Regulations]               
[Page 44395-44445]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
 

[[Page 44395]]


_______________________________________________________________________

Part II





Department of Health and Human Services





_______________________________________________________________________



Food and Drug Administration



_______________________________________________________________________



21 CFR Part 801, et al.



Regulations Restricting the Sale and Distribution of Cigarettes and 
Smokeless Tobacco to Protect Children and Adolescents; Final Rule


[[Page 44396]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 801, 803, 804, 807, 820, and 897

[Docket No. 95N-0253]
RIN 0910-AA48

 
Regulations Restricting the Sale and Distribution of Cigarettes 
and Smokeless Tobacco to Protect Children and Adolescents

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA) is issuing regulations 
governing access to and promotion of nicotine-containing cigarettes and 
smokeless tobacco to children and adolescents.
    The regulations prohibit the sale of nicotine-containing cigarettes 
and smokeless tobacco to individuals under the age of 18; require 
manufacturers, distributors, and retailers to comply with certain 
conditions regarding the sale and distribution of these products; 
require retailers to verify a purchaser's age by photographic 
identification; prohibit all free samples and prohibit the sale of 
these products through vending machines and self-service displays 
except in facilities where individuals under the age of 18 are not 
present or permitted at any time; limit the advertising and labeling to 
which children and adolescents are exposed to a black-and-white, text-
only format; prohibit the sale or distribution of brand-identified 
promotional nontobacco items such as hats and tee shirts; prohibit 
sponsorship of sporting and other events, teams, and entries in a brand 
name of a tobacco product, but permit such sponsorship in a corporate 
name; and require manufacturers to provide intended use information on 
all cigarette and smokeless tobacco product labels and in cigarette 
advertising.
    These regulations will address the serious public health problems 
caused by cigarettes and smokeless tobacco products. They will reduce 
children's and adolescents' easy access to cigarettes and smokeless 
tobacco and will significantly decrease the amount of positive imagery 
that makes these products so appealing to that age group.

    The regulations are predicated on the agency's assertion of 
jurisdiction under the Federal Food, Drug, and Cosmetic Act over 
cigarettes and smokeless tobacco as delivery devices for nicotine, 
incorporated as part of the regulations for purposes of, and to 
facilitate, congressional review under the Small Business Regulatory 
Enforcement Fairness Act of 1996.

DATES: Effective date. The regulation is effective August 28, 1997, 
except that Sec. 897.14(a) and (b) are effective February 28, 1997 and 
Sec. 897.34(c) is effective February 28, 1998.
    Compliance dates. Manufacturers and distributors are required to 
comply with the requirements of 21 CFR parts 803 and 804 August 28, 
1997; manufacturers are required to comply with the requirements of 21 
CFR parts 807 and 820 February 28, 1998.

ADDRESSES: References listed in the footnotes of this document have 
been placed on public display at the Dockets Management Branch (HFA-
305), Food and Drug Administration, 12420 Parklawn Dr., rm. 1-23, 
Rockville, MD 20857, and may be seen by interested persons between 9 
a.m. and 4 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Nancy Yeates, Office of Policy (HF-
26), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 
20857, 301-827-0867.

SUPPLEMENTARY INFORMATION:
Preamble Outline
I. Introduction
    A. Purpose and Overview of the Rule
    B. Background
    C. Provisions of the Rule
II. Legal Authority
    A. Legal Principles Applicable to Combination Drug/Device 
Products
      1. The SMDA Recognized Combination Products for the First Time
      2. The SMDA Leaves to FDA's Discretion the Determination of 
Which Regulatory Authorities to Apply to Particular Combination 
Products
      3. Interpreting the SMDA to Allow the Agency to Determine 
Which Regulatory Scheme Best Serves the Public Health is Consistent 
With 50 Years of Case Law
      4. The Implementing Regulations and the Delegations of 
Authority Reflect FDA's Interpretation That Section 503(g) of the 
Act Authorizes the Agency to Determine the Appropriate Regulatory 
Authorities
      5. The Intercenter Agreements and Administrative Precedent 
Recognize That FDA May Determine Which Regulatory Authority to Apply 
to a Particular Product
    B. Cigarettes and Smokeless Tobacco Have Both a Drug and a 
Device Component and Are Therefore Combination Products
    C. FDA's Choice of Legal Authorities
      1. FDA Will Regulate Cigarettes and Smokeless Tobacco Under 
the Act's Device Authorities
      2. Cigarettes and Smokeless Tobacco Will be Subject to the 
Full Range of Device Authorities
      3. The Restricted Device Provision Authorizes FDA to Establish 
Access and Advertising Restrictions
      4. Application of Other Device Authorities
      5. FDA Will Classify Cigarettes and Smokeless Tobacco Under 
Section 513 of the Act
    D. The Fact That the Act's Drug Authorities Authorize the 
Imposition of Similar Restrictions Supports the Reasonableness of 
the Restrictions That the Agency Has Imposed
    E. Constitutional Issues Regarding Authority
      1. Separation of Powers
      2. Nondelegation Doctrine
III. Overview of Comments, Smoking Prevalence Rates Among Minors, 
Scope, Purpose, and Definitions
    A. Overview of Comments
    B. Smoking Prevalence Rates Among Minors
    C. Scope
    D. Purpose (Sec. 897.2)
    E. Definitions (Sec. 897.3)
IV. Access
    A. General Comments
    B. General Responsibilities of Manufacturers, Distributors, and 
Retailers (Sec. 897.10)
    C. Additional Responsibilities of Manufacturers (Sec. 897.12)
      1. Removal of Manufacturer-Supplied or Manufacturer-Owned 
Items That Do Not Comply With the Regulations
      2. Visual Inspections by a Manufacturer's Representative at 
Each Point of Sale
    D. Additional Responsibilities of Retailers (Sec. 897.14)
      1. Use of Photographic Identification to Verify Age
      2. Minimum Age
      3. Restrictions Against ``Impersonal'' Modes of Sale
      4. Restrictions Against the Sale of Individual Cigarettes
      5. Additional Comments
    E. Conditions of Manufacture, Sale, and Distribution 
(Sec. 897.16)
      1. Restrictions on Nontobacco Trade Names on Tobacco Products
      2. Minimum Package Size
      3. Maximum Package Size
      4. Impersonal Modes of Sale
V. Label
    A. Established Name (Sec. 897.24)
    B. Package Design
    C. Ingredient Labeling
    D. Labeling for Intended Use
    E. Adequate Directions for Use and Warnings Against Use (Section 
502(f) of the act)
    F. Package Inserts
VI. Advertising
    A. Subpart D--Restrictions on Advertising and Labeling of 
Tobacco Products
    B. The Need for Advertising Restrictions
      1. Advertising and Young People
      2. Advertising and Adults
    C. The Regulations Under the First Amendment
      1. Introduction

[[Page 44397]]

      2. The Central Hudson Test
      3. Is Cigarette and Smokeless Tobacco Advertising Misleading, 
or Does It Relate to Unlawful Activity?
      4. Is the Asserted Government Interest Substantial?
    D. Evidence Supporting FDA's Advertising Restrictions
      1. Introduction
      2. Do the Regulations Directly Advance the Governmental 
Interest Asserted?
      3. Is There Harm? Does Advertising Affect the Decision by 
Young People to Use Tobacco Products?
      4. Why Young People Use Tobacco and the Role of Advertising in 
That Process
      5. Has The Agency Met Its Burden?
      6. The Efficacy of the Restrictions; Empirical Evidence 
Concerning Advertising Restrictions
    E. Provisions of the Final Rule
      1. Are FDA's Regulations Narrowly Drawn?
      2. Section 897.30(a)--Permissible Forms of Labeling and 
Advertising
      3. Section 897.30(b)--Billboards
      4. Section 897.32(a)--Text-Only Format
      5. Section 897.32(a)--Definition of ``Adult Publication''
      6. Advertising--Sec. 897.32 Requirements for Disclosure of 
Important Information
      7. Section 897.34(a) and (b)--Promotions, Nontobacco Items, 
and Contests and Games of Chance
      8. Section 897.34(c)--Sponsorship of Events
      9. Proposed Sec. 897.36--False or Misleading Statements
    F. Additional First Amendment Issues
VII. Education Campaign
VIII. Additional Regulatory Requirements
IX. Implementation Dates
X. Relationship Between the Rule and Other Federal and State Laws
    A. The Federal Cigarette Labeling and Advertising Act
    B. The Comprehensive Smokeless Tobacco Health Education Act
    C. Conflict with Congressional Purpose Behind Current Regulatory 
Scheme for Tobacco Products
      1. The Cigarette Act and the Smokeless Act
      2. The PHS Act
    D. Occupation of the Field
    E. Preemption of State and Local Requirements Under Section 
521(a) of the Act
    F. Preemption of State Product Liability Claims Under Section 
521(a) of the Act
XI. Miscellaneous Constitutional Issues
    A. Takings Under the Fifth Amendment
      1. The Interests at Issue
      2. The Takings Analysis
      3. The Character of the Governmental Action
      4. The Economic Impact of the Governmental Action
      5. Interference with Reasonable Investment-backed Expectations
      6. Summary
    B. Substantive Due Process, Equal Protection, and Restrictions 
on Use of Trade Names
    C. Procedural Due Process Under the Fifth Amendment
XII. Procedural Issues
    A. Introduction
    B. Adequacy of the Record
      1. The Administrative Record
      2. The Agency's Use of Confidential Documents
      3. The Claim that FDA Relied on ``Unknown'' Undisclosed Data
      4. The Claim that FDA Failed to Include in the Record New Drug 
Application (NDA) Data on Which it Relied
      5. The Agency's Reliance in the Final Rulemaking on New 
Materials
    C. Adequacy of the Notice
      1. The Agency Provided Adequate Notice of the Key Legal and 
Factual Issues
      2. The Agency Provided a ``Reasoned Explanation'' for its 
Current Position
    D. Adequacy of the Comment Period
    E. Conclusion
XIII. Executive Orders
    A. Executive Order 12606: The Family
    B. Executive Order 12612: Federalism
    C. Executive Order 12630: Governmental Actions and Interference 
with Constitutionally Protected Property Rights
XIV. Environmental Impact
XV. Analysis of Impacts
    A. Introduction and Summary
    B. Statement of Need for Action
    C. Regulatory Benefits
      1. Prevalence-Based Studies
      2. FDA's Methodology
      3. Reduced Incidence of New Young Smokers
      4. Reduced Number of Adult Smokers
      5. Lives Saved
      6. Life-Years Saved
      7. Monetized Benefits of Reduced Tobacco Use
      8. Reduced Medical Costs
      9. Reduced Morbidity Costs
      10. Benefits of Reduced Mortality Rates
      11. Reduced Fire Costs
      12. Smokeless Tobacco
      13. Summary of Benefits
    D. Regulatory Costs
      1. Number of Affected Retail Establishments
      2. Removing Self-Service and Other Prohibited Retail Displays
      3. Label Changes
      4. Educational Program
      5. Restricted Advertising and Promotional Activities
      6. Training
      7. Access Restrictions
      8. I.D. Checks
      9. Vending Machines
      10. Readership Surveys
      11. Records and Reports
      12. Government Enforcement
      13. Comparison of Benefits to Cost
    E. Distributional Effects
      1. Tobacco Manufacturers and Distributors
      2. Tobacco Growers
      3. Vending Machine Operators
      4. Advertising Sector
      5. Retail Sector
      6. Other Private Sectors
      7. Excise Tax Revenues
    F. Small Business Impacts
    G. Other Alternatives
    H. Unfunded Mandates Reform Act of 1995
XVI. Paperwork Reduction Act of 1995
    A. Comments on the Paperwork Reduction Act Statement
    B. Information Collection Provisions in the Final Rule
XVII. Congressional Review
Codified Language

I. Introduction

A. Purpose and Overview of the Rule

    This rule establishes regulations restricting the sale and 
distribution of cigarettes and smokeless tobacco to children and 
adolescents, implementing FDA's determination that it has jurisdiction 
over these products under the Federal Food, Drug, and Cosmetic Act (the 
act). As described in ``Nicotine in Cigarettes and Smokeless Tobacco Is 
a Drug and These Products Are Nicotine Delivery Devices Under the 
Federal Food, Drug, and Cosmetic Act: Jurisdictional Determination'' 
(the 1996 Jurisdictional Determination), annexed hereto, FDA has 
determined that cigarettes and smokeless tobacco are intended to affect 
the structure or function of the body, within the meaning of the act's 
definitions of ``drug'' and ``device.'' The nicotine in cigarettes and 
smokeless tobacco is a ``drug,'' which produces significant 
pharmacological effects in consumers, including satisfaction of 
addiction, stimulation, sedation, and weight control. Cigarettes and 
smokeless tobacco are combination products consisting of the drug 
nicotine and device components intended to deliver nicotine to the 
body.
    FDA has chosen to regulate cigarettes and smokeless tobacco under 
the act's device authorities. This rule allows the continued marketing 
of these products, while employing measures to prevent future 
generations of Americans from becoming addicted to them. As discussed 
in section I.B. of this document, most people who use cigarettes and 
smokeless tobacco begin their use before the age of 18 and, therefore, 
before they fully understand the addictive nature and serious health 
risks of these products. Even though the sale of tobacco products to 
minors is illegal in 50 States, the tobacco industry has adopted 
extensive marketing campaigns which appeal to children and adolescents. 
Therefore, the rule effects measures that would both complement the 
existing State restrictions on access and prevent

[[Page 44398]]

tobacco companies from marketing their products to children and 
adolescents.
    In determining the best course of action, the agency considered the 
highly addictive nature of cigarettes and smokeless tobacco and the 
fact that these products have previously been lawfully marketed to 
millions of adult Americans. The agency has determined that the 
approach outlined in this document--restrictions to reduce the use of 
cigarettes and smokeless tobacco by individuals under the age of 18 
while leaving these products on the market for adults--is the available 
option that is the most consistent with both the act and the agency's 
mission to protect the public health.
    The agency intends to assist affected entities, including 
retailers, distributors, and manufacturers, in complying with the rule. 
The agency also will issue a small entities guide in easy to understand 
language. In addition, the agency will conduct workshops throughout the 
country to assist affected entities in complying with the rule.

B. Background

    Approximately 50 million Americans currently smoke cigarettes and 
another 6 million use smokeless tobacco. \1\ In the Federal Register of 
August 11, 1995 (60 FR 41314), FDA published a proposed rule entitled 
``Regulations Restricting the Sale and Distribution of Cigarettes and 
Smokeless Tobacco Products to Protect Children and Adolescents'' (the 
1995 proposed rule). As stated in the preamble to the 1995 proposed 
rule, tobacco use is the single leading cause of preventable death in 
the United States. \2\ More than 400,000 people die each year from 
tobacco-related illnesses, such as cancer, respiratory illnesses, and 
heart disease, often suffering long and painful deaths. \3\ Tobacco 
alone kills more people each year in the United States than acquired 
immunodeficiency syndrome (AIDS), car accidents, alcohol, homicides, 
illegal drugs, suicides, and fires, combined. \4\
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    \1\ ``National Household Survey on Drug Abuse: Population 
Estimate 1993, Department of Health and Human Services (DHHS), 
Public Health Service (PHS), Substance and Mental Health Services 
Administration (SAMHSA), Office of Applied Studies, Rockville, MD, 
Pub. No. (SMA) 94-3017, pp. 89 and 95, 1994.
    \2\ ``Cigarette Smoking--Attributable Mortality and Years of 
Potential Life Lost--United States, 1990,'' Mortality and Morbidity 
Weekly Report, (MMWR) CDC, DHHS, vol. 42, No. 33, pp. 645-649, 1993; 
Lynch, B. S., and R. J. Bonnie, editors, Growing Up Tobacco Free--
Preventing Nicotine Addiction in Children and Youths, Committee on 
Preventing Nicotine Addiction in Children and Youths, Division of 
Biobehavioral Sciences and Mental Disorders, Institute of Medicine, 
National Academy Press, Washington, DC, p.3, 1994, (hereinafter 
cited as ``IOM Report'').
    \3\ ``Cigarette Smoking--Attributable Mortality and Years of 
Potential Life Lost--United States, 1990,'' MMWR, CDC, DHHS, vol. 
42, No. 33, pp. 645-649, 1993.
    \4\ IOM Report, pp. 3-4.
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    Tobacco products have historically been legal and widely available 
in this country. It was only after millions of people became addicted 
to the nicotine in cigarettes and smokeless tobacco that health experts 
became fully aware of the extraordinary health risks involved in the 
consumption of these products. Consequently, tobacco use has become one 
of the most serious public health problems facing the United States 
today. Because of the grave health consequences of the use of tobacco 
products, some have argued that they should be removed from the market.
    However, a ban would have adverse health consequences and would not 
be likely to prevent individuals from gaining access to these products. 
Of the 50 million people who use cigarettes, 77 to 92 percent are 
addicted. \5\ Data suggest that almost as many smokeless tobacco users 
may be addicted. \6\ Adverse health consequences could result if these 
people were suddenly deprived of the nicotine these products deliver. 
As stated in the preamble to the 1995 proposed rule:
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    \5\ See authorities cited at 1996 Jurisdictional Determination, 
Section II(B)(2)(a).
    \6\ Id.
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    Because of the high addiction rates and the difficulties smokers 
experience when they attempt to quit, there may be adverse health 
consequences for many individuals if the products were to be 
withdrawn suddenly from the marketplace. Our current health care 
system and available pharmaceuticals may not be able to provide 
adequate or sufficiently safe treatment for such a precipitous 
withdrawal.
(60 FR 41314 at 41348)
A similar situation would exist for addicted smokeless tobacco users.
    It is probable also that a black market and smuggling would develop 
to supply addicted users with these products. As stated in the preamble 
to the 1995 proposed rule, and discussed further in section II.C.5. of 
this document, ``[t]he products that would be available through a black 
market could very well be more dangerous (e.g., cigarettes containing 
more tar or nicotine, or more toxic additives) than products currently 
on the market'' (60 FR 41314 at 41349). Thus, the agency has concluded 
that, while taking cigarettes and smokeless tobacco off the market 
could prevent some people from becoming addicted and reduce death and 
disease for others, the record does not establish that such a ban is 
the appropriate public health response under the act.
    To effectively address the death and disease caused by tobacco 
products, addiction to cigarettes and smokeless tobacco must be 
eliminated or substantially reduced. The evidence demonstrates that 
this can be achieved only by preventing children and adolescents from 
starting to use tobacco. Most people who suffer the adverse health 
consequences of using cigarettes and smokeless tobacco begin their use 
before they reach the age of 18, an age when they are not prepared for, 
or equipped to, make a decision that, for many, will have lifelong 
consequences. These young people do not fully understand the serious 
health risks of these products or do not believe that those risks apply 
to them. They are also very impressionable and therefore vulnerable to 
the sophisticated marketing techniques employed by the tobacco 
industry, techniques that associate the use of tobacco products with 
excitement, glamour, and independence. When cigarette and smokeless 
tobacco use by children and adolescents results in addiction, as it so 
often does, these youths lose their freedom to choose whether or not to 
use the products as adults.
    The facts on underage use confirm this pattern. As stated in the 
preamble to the 1995 proposed rule, approximately 3 million American 
adolescents currently smoke and an additional 1 million adolescent 
males use smokeless tobacco. \7\ Eighty-two percent of adults who ever 
smoked had their first cigarette before the age of 18, and more than 
half of them had already become regular smokers by that age. \8\ Among 
smokers ages 12 to 17 years, 70 percent already regret their decision 
to smoke and 66 percent say that they want to quit. \9\
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    \7\ ``Preventing Tobacco Use Among Young People: A Report of the 
Surgeon General,'' DHHS, PHS, CDC, National Center for Chronic 
Disease Prevention and Health Promotion, the Office on Smoking and 
Health (OSH), Atlanta, GA, p. 5, 1994, (hereinafter cited as ``1994 
SGR'').
    \8\ 1994 SGR, p. 65.
    \9\ ``Teen-Age Attitudes and Behavior Concerning Tobacco,'' The 
George H. Gallup International Institute, p. 54, September 1992.
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    Moreover, children and adolescents are beginning to smoke at 
younger ages than ever before. Despite a decline in smoking rates in 
most segments of the American adult population, the rates among 
children and adolescents have recently begun to rise. \10\ Data 
reported

[[Page 44399]]

in December 1995, after publication of the 1995 proposed rule, showed 
increases in 30-day prevalence rates of cigarette smoking for 4 
consecutive years for 8th- and 10th-graders, and 3 consecutive years 
for high school seniors. \11\ Daily use of cigarettes by 8th-, 10th-, 
and 12th-graders has also increased in each of the last 3 years. \12\ 
The percentage of 8th- and 10th-graders who reported smoking in the 30 
days before the survey had risen by one-third since 1991 to about 19 
percent and 28 percent, respectively. \13\ Similarly, the percentage of 
high school seniors saying that they had smoked in the 30 days before 
the survey had increased by more than one-fifth since 1991, to about 
33.5 percent or one in three. \14\
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    \10\ ``Cigarette Smoking Among Adults--United States, 1991,'' 
MMWR, DHHS, CDC, vol. 42, No. 12, pp. 230-233, 1993; Johnston, L. 
D., P. M. O'Malley, and J. G. Bachman, ``National Survey Results on 
Drug Use from the Monitoring the Future Study 1975-1993, vol. I: 
Secondary School Students,'' Rockville, MD, DHHS, PHS, National 
Institutes of Health (NIH), National Institute on Drug Abuse (NIDA), 
NIH Pub. No. 94-3809, pp. 9 and 19, 79, 80, and 101, 1994; ``Smoking 
Rates Climb Among American Teen-agers, Who Find Smoking Increasingly 
Acceptable and Seriously Underestimate the Risks,'' The University 
of Michigan News and Information Service, Table 1., July 17, 1995.
    \11\ ``Results from the 1995 Monitoring the Future Survey,'' 
National Institute on Drug Abuse Briefing for Donna E. Shalala, 
Ph.D., Secretary of Health and Human Services, December 13, 1995.
    \12\ Id.
    \13\ Id.
    \14\ Id.
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    An adolescent whose cigarette use continues into adulthood 
increases his or her risk of dying from cancer, cardiovascular disease, 
or lung disease. \15\ Moreover, the earlier a young person's smoking 
habit begins, the more likely he or she will become a heavy smoker and 
therefore suffer a greater risk of diseases caused by smoking. \16\ 
Approximately one out of every three young people who become regular 
smokers each day will die prematurely as a result. \17\
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    \15\ McGinnis, J. M., and W. H. Foege, ``Actual Causes of Death 
in the United States,'' Journal of the American Medical Association 
(JAMA), vol. 270, No. 18, pp. 2207-2212, 1993; ``Reducing Health 
Consequences of Smoking: 25 Years of Progress, A Report of the 
Surgeon General,'' DHHS, PHS, CDC, National Center for Chronic 
Disease Prevention and Health Promotion (NCCDPHP), OSH, DHHS Pub. 
No. 89-8411, p. 5, 1989, (hereinafter cited as ``1989 SGR''); See 
generally ``The Health Consequences of Smoking: Chronic Obstructive 
Lung Disease: A Report of the Surgeon General,'' DHHS, PHS, OSH, 
1984, (hereinafter cited as ``1984 SGR''); ``The Health Consequences 
of Smoking: Cardiovascular Disease--A Report of the Surgeon 
General,'' DHHS, PHS, OSH, 1983 (hereinafter cited as ``1983 SGR''); 
``The Health Consequences of Smoking: Cancer--A Report of the 
Surgeon General,'' DHHS, PHS, OSH, 1982, (hereinafter cited as 
``1982 SGR'').
    \16\ Taioli, E., and E. L. Wynder, ``Effect of the Age at Which 
Smoking Begins on Frequency of Smoking in Adulthood,'' The New 
England Journal of Medicine, vol. 325, No. 13, pp. 968-969, 1991; 
Escobedo, L. G., et al. ``Sports Participation, Age at Smoking 
Initiation, and the Risk of Smoking Among U.S. High School 
Students,'' JAMA, vol. 269, No. 11, pp. 1391-1395, 1993; see also 
1994 SGR, p. 65.
    \17\ Memorandum from Michael P. Eriksen (CDC) to Catherine 
Lorraine (FDA) August 7, 1995 and CDC Fact Sheet (based on J. P. 
Pierce, M. C. Fiore, T. E. Novotny, E. J. Hatziandreu, and R. M. 
Davis, ``Trends in Cigarette Smoking in the United States: 
Projections to the Year 2000,'' JAMA, vol. 261, pp. 61-65, 1989; 
Unpublished data from the 1986 National Mortality Followback Survey, 
CDC, OSH; Peto, R., A. D. Lopez, J. Boreham, M. Thun, and C. Heath, 
Jr., ``Mortality from Smoking in Developed Countries, 1950-2000: 
Indirect Estimates from National Vital Statistics,'' Oxford 
University Press, Oxford, 1994).
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    Similar problems exist with underage use of smokeless tobacco. As 
stated in the 1995 proposed rule, the market for smokeless tobacco has 
shifted dramatically toward young people since 1970 (60 FR 41314 at 
41317). School-based surveys in 1991 estimated that 19.2 percent of 9th 
to 12th-grade boys use smokeless tobacco. \18\ Among high school 
seniors who had ever tried smokeless tobacco, 73 percent did so by the 
9th grade. \19\
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    \18\ Kann, L., W. Warren, J. L. Collins, J. Ross, B. Collins, 
and L. J. Kolbe, ``Results from the National School-Based 1991 Youth 
Risk Behavior Survey and Progress Toward Achieving Related Health 
Objectives for the Nation,'' Public Health Reports, vol. 108, (Supp. 
1), pp. 47-54, 1993.
    \19\ 1994 SGR, p. 101.
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    As long as children and adolescents become addicted to cigarette 
and smokeless tobacco use in these numbers, there is little chance that 
society will be able reduce the toll of tobacco-related illnesses. If, 
however, the number of children and adolescents who begin tobacco use 
can be substantially diminished, tobacco-related illness can be 
correspondingly reduced because data suggest that anyone who does not 
begin smoking in childhood or adolescence is unlikely to ever begin. 
\20\
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    \20\ Id., pp. 5, 58, and 65-67.
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    On the basis of this evidence, the agency has determined that 
establishing restrictions to substantially reduce the number of 
children and adolescents who become addicted to cigarettes and 
smokeless tobacco best serves its public health obligations. Because 
such a small percentage of the U.S. population begins tobacco use after 
the age of 18, limiting the use of these products to the adult 
population would substantially reduce the principal source of new 
users. Thus, the appropriate emphasis is on reducing the use of tobacco 
products by children and adolescents.
    Evidence in the administrative record demonstrates that the most 
effective way to achieve such a reduction is by limiting the access to, 
and attractiveness of, cigarettes and smokeless tobacco to young 
people. FDA concludes that the act provides sufficient authority to 
issue regulations that, while leaving these products on the market for 
adult use, restrict access to and promotion of cigarettes and smokeless 
tobacco to those under 18 years of age.

C. Provisions of the Rule

    After considering numerous comments submitted in response to the 
1995 proposed rule, the agency is adopting the rule in modified form. 
New part 897 is being added to Title 21 of the Code of Federal 
Regulations and contains the regulations governing the labeling, 
advertising, sale, and distribution of cigarettes and smokeless tobacco 
to children and adolescents.
    FDA is regulating nicotine-containing cigarettes and smokeless 
tobacco as restricted devices within the meaning of the section 520(e) 
of the act (21 U.S.C. 360j(e)). While leaving these products on the 
market for adults, the final rule prohibits the sale of nicotine-
containing cigarettes and smokeless tobacco to individuals under the 
age of 18 and requires manufacturers, distributors, and retailers to 
comply with certain conditions regarding access to, and promotion of, 
these products. Among other things, the final rule requires retailers 
to verify a purchaser's age by photographic identification. It also 
prohibits all free samples and prohibits the sale of these products 
through vending machines and self-service displays except in facilities 
where individuals under the age of 18 are not present or permitted at 
any time. The rule also limits the advertising and labeling to which 
children and adolescents are exposed. The rule accomplishes this by 
generally restricting advertising to which children and adolescents are 
exposed to a black-and-white, text-only format. In addition, billboards 
and other outdoor advertising are prohibited within 1,000 feet of 
schools and public playgrounds. The rule also prohibits the sale or 
distribution of brand-identified promotional, nontobacco items such as 
hats and tee shirts. Furthermore, the rule prohibits sponsorship of 
sporting and other events, teams, and entries in a brand name of a 
tobacco product, but permits such sponsorship in a corporate name. This 
rule is intended to complement the regulations issued by SAMHSA 
implementing section 1926 of the Public Health Service Act (42 U.S.C. 
300x-26) regarding the sale and

[[Page 44400]]

distribution of tobacco products to individuals under the age of 18 
(the SAMHSA rule).
    In this document, FDA: (1) Presents its analysis of its authority 
to issue regulations that impose the enumerated restrictions on the 
sale and promotion of cigarettes and smokeless tobacco to those under 
the age of 18, while leaving cigarettes and smokeless tobacco on the 
market for adults; and (2) responds to comments on the proposed rule.

II. Legal Authority

    In the 1996 Jurisdictional Determination, annexed hereto, the Food 
and Drug Administration (FDA) \21\ has determined that cigarettes and 
smokeless tobacco are combination products consisting of a drug 
(nicotine) and device components intended to deliver nicotine to the 
body. The agency may regulate a drug/device combination product using 
the Federal Food, Drug, and Cosmetic Act's (the act's) drug 
authorities, device authorities, or both. The agency exercises its 
discretion to determine which authorities to apply in the regulation of 
combination products to provide the most effective protection to the 
public health. FDA has determined that tobacco products are most 
appropriately regulated under the device provisions of the act, 
including the restricted device authority in section 520(e) of the act 
(21 U.S.C. 360j(e)).
---------------------------------------------------------------------------

    \21\ The Secretary of the Department of Health and Human 
Services (DHHS) (the Secretary) has the authority to carry out 
functions under the act through the Commissioner of Food and Drugs 
(the Commissioner). (See section 903 of the act (21 U.S.C. 393); 21 
CFR 5.10 and 5.11.) Throughout this document, references to FDA 
include the Secretary and the Commissioner.
---------------------------------------------------------------------------

A. Legal Principles Applicable to Combination Drug/Device Products

    The agency's discretion to choose the appropriate regulatory tools 
under the act is based, in part, on the authority provided under the 
Safe Medical Devices Act of 1990 (the SMDA). FDA's interpretation, 
supported by the language of the statute and its legislative history, 
is embodied in the agency's implementing regulations codified at part 3 
(21 CFR part 3), the delegations of premarket approval authority to 
FDA's Center for Drug Evaluation and Research (CDER), Center for 
Devices and Radiological Health (CDRH), and Center for Biologics 
Evaluation and Research (CBER) that enable all three Centers to 
administer statutory authority for drugs, devices, and biologics (56 FR 
58758, November 21, 1991), and the ``intercenter agreements'' that 
guide the agency in allocating Center responsibility for various 
categories of combination products (56 FR 58760, November 21, 1991). In 
addition to the authority provided by the SMDA, the agency's discretion 
is also based on the principles recognized by the Supreme Court in 
cases such as United States v. An Article of Drug * * * Bacto-Unidisk, 
394 U.S. 784 (1969). In Bacto-Unidisk, for example, the Supreme Court 
upheld the agency's decision to regulate a diagnostic test kit under 
its drug authorities on the grounds that ``[i]t is enough for us that 
the expert agency charged with the enforcement of remedial legislation 
has determined that such regulation is desirable for the public health 
* * *.'' (Bacto-Unidisk 394 U.S. at 791-792.)
    The discussion that follows describes in more detail FDA's 
interpretation of the combination product provisions of the SMDA, the 
agency's understanding of combination products, and the way in which 
the agency has exercised its discretion in determining the most 
appropriate authorities to apply to regulate combination products.
1. The SMDA Recognized Combination Products for the First Time
    Congress enacted the SMDA's combination product provisions to 
recognize combination products as distinct entities subject to 
regulation under the act and to alleviate the difficulty the agency had 
experienced in regulating such products, especially those consisting of 
components of both a drug and a device. First, the SMDA explicitly 
recognized the existence of products that ``constitute a combination of 
a drug, device, or biological product'' (section 503(g)(1) of the act 
(21 U.S.C. 353(g)(1))). Second, the statute provided a mechanism for 
determining which agency component would be assigned the administrative 
responsibility of regulating a particular combination product (Id.).
    In accordance with its recognition of combination products, the 
SMDA changed the statutory definitions of ``drug'' and ``device'' at 
section 201(g) and (h) of the act (21 U.S.C. 321(g) and (h)). Before 
the enactment of the SMDA, section 201(g) of the act provided that a 
drug ``does not include devices or their components, parts, or 
accessories.'' The SMDA removed this language from the definition of 
``drug'' so that the terms ``drug'' and ``device'' were no longer 
mutually exclusive, thereby making it possible for a combination 
product consisting of both a drug and device to be regarded as an 
independent entity subject to regulation. The legislative history 
indicates that this definitional change was made ``to accommodate the 
principle of [combination products in] section 20'' (S. Rept. 101-513, 
101st Cong. 2d sess., at 30 (1990)). For the first time it was 
possible, as a legal matter, for a single product to have both drug and 
device components.
    The SMDA also permitted a wider range of products to meet the 
definition of a device. Prior to its amendment by the SMDA, section 
201(h) of the act defined a ``device'' as an instrument or other item 
that, among other things, ``does not achieve any of its principal 
intended purposes through chemical action within or on the body of man 
or other animals and which is not dependent upon being metabolized for 
the achievement of any of its principal intended purposes.'' The SMDA 
changed the phrase ``any of its principal intended purposes'' in the 
definition to read, ``its primary intended purposes.'' This change 
broadened the definition of device and allowed more products to be 
categorized as devices.
2. The SMDA Leaves to FDA's Discretion the Determination of Which 
Regulatory Authorities to Apply to Particular Combination Products
    Having recognized combination products, the SMDA also provided a 
clear mechanism for determining which agency component a particular 
combination product should be directed to for review. Under the SMDA, 
the agency must:
    [d]etermine the primary mode of action of the combination 
product. If the [agency] determines that the primary mode of action 
is that of--
    (A) a drug (other than a biological product), the persons 
charged with premarket review of drugs shall have primary 
jurisdiction,
    (B) a device, the persons charged with premarket review of 
devices shall have primary jurisdiction, or
    (C) a biological product, the persons charged with premarket 
review of biological products shall have primary jurisdiction.

(Section 503(g)(1) of the act)
    This section of the SMDA ``provide[d] the [agency] with firm ground 
rules to direct products promptly to that part of FDA responsible for 
reviewing the article that provides the primary mode of action of the 
combination product'' (S. Rept. 101-513, 101st Cong., 2d sess., 30 
(1990)).
    Although the SMDA provided a mechanism for determining which agency 
component, i.e., a Center, should review a particular combination 
product, the legislation left to FDA the discretion to decide which 
statutory authorities it would use in regulating a particular 
combination product. The

[[Page 44401]]

language of the SMDA makes this clear, as does the legislative history 
of the statute. Indeed, an earlier version of the bill, S. 3006, would 
arguably have removed this discretion by requiring the agency to 
regulate a product based only on its Center assignment. Thus, for 
example, if the primary mode of action were that of a drug, the product 
would be subject to regulation by CDER under the act's drug 
authorities. The earlier version's language, which Congress chose to 
strike from the final enactment, provided in relevant part:
    The [agency] shall require only one market clearance route for 
an article that constitutes a combination of a device, drug, or 
biological product. If the [agency] determines that the primary mode 
of action of the combination article is that of--
    (A) a drug (other than a biological product), neither the 
combination article nor any part of the article shall be treated as 
a device or as a biological product for market clearance purposes;
    (B) a device, neither the combination article nor any part of 
the article shall be treated as a drug or a biological product for 
market clearance purposes; or
    (C) a biological product, neither the combination article nor 
any part of the article shall be treated as a drug or a device for 
market clearance purposes.

(136 Congressional Record, S.12493, 101st Cong., 2d sess., August 4, 
1990)
    The omission of this language from the statute indicates that while 
Congress considered dictating which regulatory authority must be 
applied to particular combination products, and knew how to craft 
language to accomplish such a result, Congress ultimately chose to rely 
on FDA's expertise in determining the most appropriate regulatory tools 
needed to ensure the safety and effectiveness of the combination 
products that it regulates.
    Moreover, Congress enacted language that recognizes that the agency 
may choose the appropriate regulatory authority for a particular 
combination product. Section 503(g)(2) of the act provides that nothing 
``shall prevent the [Agency] from using any agency resources of the 
Food and Drug Administration necessary to ensure adequate review of the 
safety, effectiveness, or substantial equivalence of an article.'' 
Since the enactment of the SMDA, the agency has interpreted the phrase 
``any agency resources'' to include administrative resources and all 
applicable statutory authorities. See Drug/Device Intercenter 
Agreement, p. 2, contemporaneous interpretation that:
    [u]nder the provisions of the Safe Medical Devices Act of 1990 
and regulations promulgated to implement the combination product 
provisions of the Act, [the Center for Drug Evaluation and Research] 
and [the Center for Devices and Radiological Health] each may use 
both the drug and device provisions of the Federal Food, Drug, and 
Cosmetic Act as appropriate to regulate a combination product.

(See 21 CFR Part 3).
    (See also 56 FR 58754 at 58759, November 21, 1991 (FDA amending its 
procedural regulations at part 5 by adding delegations of authority 
relating to the premarket review of combination products to state that 
those specified officials in CBER, CDRH, or CDER ``who currently hold 
delegated premarket approval authority for biologics, devices, or 
drugs, respectively, are hereby delegated all the authorities necessary 
for premarket approval of any product that is a biologic, a device, or 
a drug, or any combination of two or more of these products: * * *'' 
(21 CFR 5.33).) Thus, when a combination product, a single entity, 
consists of a component that may be regulated as a drug, the act's drug 
provisions and device provisions are ``resources'' available to the 
agency for regulating the product.

    (1) One comment disputed the agency's interpretation of section 
503(g)(2) of the act, stating that the language of section 503(g)(2) 
can be construed to mean only ``people, laboratories, and other agency 
support. The term `Agency resources' does not mean `legal authorities' 
as FDA would like to believe.''
    FDA disagrees with this comment. The agency notes that there is 
nothing in the statute itself or the legislative history that suggests 
any reason that the expansive phrase ``any FDA resources'' should be 
narrowly interpreted given the important public health benefit 
(``ensuring an adequate premarket review'') that is the goal of this 
section of the SMDA. The agency's interpretation of this language is 
supported by the SMDA's legislative history, which is discussed more 
fully in section II.A.2. of this document. More importantly, as 
discussed previously, the agency has the discretion under the statute 
as enacted to choose the regulatory authorities most appropriate to the 
specific product at issue.
3. Interpreting the SMDA to Allow the Agency to Determine Which 
Regulatory Scheme Best Serves the Public Health is Consistent With 50 
Years of Case Law
    Construing the act as allowing the agency discretion to choose the 
most appropriate regulatory tools for a particular combination product 
is consistent with over 50 years of judicial precedent. The importance 
of interpreting the act in a manner that is consistent with the public 
health purposes of the act was recognized by the Supreme Court in 
United States v. Dotterweich, 320 U.S. 277 (1943). This case, decided 
shortly after substantial changes were made to expand the agency's 
authority by the 1938 act, addressed the breadth of the term ``person'' 
in determining who was subject to prosecution for violations of the 
act. The Court described the spirit in which the statute should be 
interpreted:
    By the Act of 1938, Congress extended the range of its control 
over illicit and noxious articles and stiffened the penalties for 
disobedience. The purposes of this legislation thus touch phases of 
the lives and health of people which, in the circumstances of modern 
industrialism, are largely beyond self-protection. Regard for these 
purposes should infuse construction of the legislation if it is to 
be treated as a working instrument of government and not merely as a 
collection of English words.

(Id. at 280)
    The approach in Dotterweich was followed by a number of cases in 
which FDA's interpretation of the statute, especially in the area of 
selecting how to regulate a product to achieve a public health purpose, 
has been granted deference and has been upheld. In United States v. An 
Article of Drug * * * Bacto-Unidisk, 394 U.S. 784 (1969), FDA's 
interpretation of the definition of the term ``drug'' and the 
applicability of the premarket review requirements were at issue. The 
Court upheld the agency's expansive interpretation of the definition of 
``drug'' to include a laboratory screening product, in large part 
because this interpretation resulted in greater protection of the 
public health by virtue of the premarket review that the product would 
be subject to as a drug. As the Court reasoned:
    It is enough for us that the expert agency charged with the 
enforcement of remedial legislation has determined that such 
regulation is desirable for the public health, for we are hardly 
qualified to second-guess the Secretary's medical judgment.

(Bacto-Unidisk, 394 U.S. at 791-792)
    The Court further stated:
    The historical expansion of the definition of drug, and the 
creation of a parallel concept of devices, clearly show, we think, 
that Congress fully intended that the Act's coverage be as broad as 
its literal language indicates--and equally clearly, broader than 
any strict medical definition might otherwise allow * * *. But we 
are all the more convinced that we must give effect to congressional 
intent in view of the well-accepted principle that remedial 
legislation such as the Food, Drug, and Cosmetic Act is

[[Page 44402]]

to be given a liberal construction consistent with the Act's 
overriding purpose to protect the public health, and specifically, 
Sec. 507's purpose to ensure that antibiotic products marketed serve 
the public with `efficacy' and `safety.'

(Id. at 798); (See also U.S. v. 25 Cases, More or Less, of An Article 
of a Device, * * * Sensor Pads, 942 F.2d 1179 (7th Cir. 1991) 
(upholding FDA's determination that a latex bag filled with a layer of 
silicone lubricant that was intended to aid women in self-examinations 
for early detection of breast cancer was a device, because, among other 
reasons, the court deferred to the agency's discretion to interpret its 
own statute based on the legislative history of the act and on the 
principles announced in Chevron U.S.A., Inc. v. Natural Resources 
Defense Council, Inc., 467 U.S. 837 (1984)); AMP, Inc. v. Gardner, 389 
F.2d 825, 830 (2d Cir.), cert. denied, sub nom. AMP, Inc. v. Cohen, 393 
U.S. 825 (1968) (upholding FDA's classification of appellant's product 
for tying off severed blood vessels as a drug because, in part, the 
court was reluctant to give a narrow construction to the act, 
``touching the public health as it does'').)
    These cases stand for two principles: (1) FDA's interpretations of 
its own statute should be given deference, and (2) the act should be 
interpreted expansively to achieve its primary purpose, protecting the 
public health. These principles support the agency's determinations, 
carefully made after applying its considerable scientific expertise to 
the evaluation of the evidence before it, that cigarettes and smokeless 
tobacco are drug delivery devices and that these combination products 
are most appropriately regulated using the device authorities of the 
act. The agency's decision regarding tobacco products is consistent 
with other determinations that the agency has made, which have been 
upheld and endorsed by the courts, to regulate products in the most 
reasonable manner that will result in the best protection of the public 
health.
4. The Implementing Regulations and the Delegations of Authority 
Reflect FDA's Interpretation That Section 503(g) of the Act Authorizes 
the Agency to Determine the Appropriate Regulatory Authorities
    FDA's implementing regulations and delegations of authority, 
adopted shortly after passage of the SMDA, reflect the agency's 
contemporaneous interpretation of section 503(g) of the act as 
authorizing the agency to apply the most appropriate regulatory 
authorities to any given combination product. In Sec. 3.2(e)(1), FDA 
defined a combination product to include, in relevant part:
    A product comprised of two or more regulated components, i.e., 
drug/device, biologic/device, drug/biologic, or drug/device/
biologic, that are physically, chemically, or otherwise combined or 
mixed and produced as a single entity[.]

    In a final rule that published in the Federal Register of November 
21, 1991 (56 FR 58754), the agency explained that ``the term 
combination product means a product comprised of two or more different 
regulated entities, e.g., drug, device, or biologic * * *'' or that are 
produced together as a single entity, packaged together, or used 
together to achieve the intended effect. Thus, the fact that a single 
product contains elements of two or more regulated entities does not 
change the regulatory status of the individual elements. Each 
``different regulated entit[y]'' of the combination continues to 
satisfy the criteria of its relevant statutory definition; that is, a 
drug component must satisfy the definition in section 201(g) of the 
act, and a device component must comply with the definition in section 
201(h) of the act. Because the elements of a combination product meet 
more than one jurisdictional definition, the agency may apply one or 
more sets of regulatory provisions to the product.
    In the same issue of the Federal Register in which the agency 
published the final regulations governing combination products, the 
agency published delegations of authority that allow the officials in 
CDER, CDRH, and CBER to utilize the premarket approval authorities for 
any product that is a drug, device, biologic, or any combination of two 
or more of these (56 FR 58758, November 21, 1991 (21 CFR 5.32)). These 
delegations allow the officials of one Center to conduct a premarket 
review of a product under another Center's regulatory authority, 
thereby making it possible, for example, for CDER to review a drug/
device combination product under the device authorities. While the 
combination product regulations created the procedure for making the 
proper Center assignment, the delegations were necessary in order for 
FDA to exercise its discretion to determine which regulatory authority 
is most appropriate and to make it possible to apply that authority to 
review a particular product. If the primary mode of action of a 
combination product having drug and device components resulted in the 
assignment of the product to CDER, for example, but the agency 
determined that the device component of the product presented the most 
important regulatory and scientific questions, the delegations make it 
possible for CDER officials to conduct the premarket review of the 
product under the device provisions of the act.
    The regulations and the delegations of authority constitute the 
agency's contemporaneous interpretation of section 503(g) of the act as 
granting the agency discretion to choose the premarket approval 
authority that provides the best public health protection. Such 
contemporaneous interpretations by an agency are entitled to 
considerable deference by the courts. (See Young v. Community Nutrition 
Institute, 476 U.S. 974 (1986).)
5. The Intercenter Agreements and Administrative Precedent Recognize 
That FDA May Determine Which Regulatory Authority to Apply to a 
Particular Product
    In addition to the regulations and delegations of authority 
implementing section 503(g) of the act, FDA has also adopted and made 
public three guidance documents, entitled ``Intercenter Agreements,'' 
that describe the agreements reached among the Centers about regulatory 
pathways for specified products or classes of products as of October 
31, 1991. (See Intercenter Agreement Between the Center for Biologics 
Evaluation and Research and the Center for Devices and Radiological 
Health; Intercenter Agreement Between the Center for Drug Evaluation 
and Research and the Center for Devices and Radiological Health (the 
Drug/Device Agreement); and Intercenter Agreement Between the Center 
for Drug Evaluation and Research and the Center for Biologics 
Evaluation and Research.)
    These documents detail which Center generally will have the lead 
responsibility for regulating particular types of products. The 
Intercenter Agreements also state which regulatory authority usually 
will be applied to specific products. For example, the Drug/Device 
Agreement provides that a device with the primary purpose of delivering 
or aiding in the delivery of a drug and distributed containing a drug 
(i.e., ``prefilled delivery system'') will be regulated by ``CDER using 
drug authorities and device authorities, as necessary'' (Drug/Device 
Agreement, p. 6). Examples given of such combination products include a 
nebulizer, prefilled syringe, and transdermal patch (Drug/Device 
Agreement, p. 6). The Drug/Device Agreement specifically provides that 
such combination products may be regulated under either the drug or

[[Page 44403]]

device authorities, whichever is more appropriate for a particular 
product. \22\
---------------------------------------------------------------------------

    \22\ A later section of the Drug/Device Agreement states that a 
``device containing a drug substance as a component with the primary 
purpose of the combination product being to fulfill a drug purpose 
is a combination product and will be regulated as a drug by CDER.'' 
While this is the approach that FDA will usually take with such 
products, the earlier language of the Drug/Device Agreement 
expressly recognizes that FDA may use its device authorities where 
appropriate, and as discussed in the text, there are several 
examples of this type of prefilled delivery system being regulated 
using the device authorities.
---------------------------------------------------------------------------

    FDA's implementation of the Intercenter Agreement reflects these 
understandings. For example, one drug delivery product that has been 
regulated under the device authorities under the Drug/Device Agreement 
is the prefilled, intravenous infusion pump, manufactured by two 
companies. These are pumps designed to be sold prefilled with a 
diluent, either a sodium chloride solution or a dextrose solution. FDA 
regulates the diluents in the pumps as drugs under section 201(g)(1)(B) 
of the act because they are intended for use in the treatment of 
disease. The pumps are combination products consisting of a device 
component, the pump, and a drug component, the diluent; and the 
product's purpose is to deliver the diluent to be mixed by the doctor 
or other health care provider attending the patient with another drug 
substance for infusion into the patient. These pumps prefilled with 
diluents are clearly ``a device containing a drug substance as a 
component with the primary purpose of the combination product being to 
fulfill a drug purpose'' that would be regulated as a drug according to 
the general principle stated in the Drug/Device Agreement (Drug/Device 
Agreement, p. 14). However, the agency exercised its discretion and 
determined that these drug delivery products should be regulated under 
the device authorities.
    The agency based its determination on the fact that the drugs that 
were delivered by the products, saline and dextrose, are two 
ingredients very commonly used in intravenous infusions about which the 
agency had a wealth of scientific information and thorough regulatory 
experience. The pumps, the device component of this combination, 
however, operated on novel design principles. Because the device 
components of these combination products were new and raised 
significant regulatory questions, the agency determined that the 
products would receive the most appropriate premarket review if the 
device authorities were applied.
    Another example of the agency's use of its discretion and its 
ability under the guidance in the Intercenter Agreements to make a 
sensible decision about product assignment is its decision regarding 
regulation of a catheter flush solution containing a blood-thinning 
drug and an antibiotic. The solution is intended as a flush solution to 
prevent the catheter (or tube) inserted into a patient's body from 
becoming clogged with blood and to prevent dangerous bacteria from 
growing in the catheter. Under the Drug/Device Agreement, this product 
would appear to fit into the category of a ``liquid * * * or other 
similar formulation intended only to serve as a component * * * to a 
device with a primary mode of action that is physical in nature [and] 
will be regulated as a device by CDRH'' (see Drug/Device Agreement, p. 
13). The agency did determine that the product's premarket review would 
be conducted under the device authorities, but it assigned the review 
responsibility to CDER. The decision to follow an approach different 
from the one generally suggested in the Drug/Device Agreement was based 
on the fact that the inclusion of the blood-thinning and anti-infective 
drugs in the flush solution represented an innovation in such solutions 
and raised important scientific and regulatory questions that were most 
properly reviewed by the scientists in CDER. Because CDER was assigned 
the lead, the sponsor of this product was informed that the clinical 
investigations of this product should proceed under the investigational 
drug provisions of the act (section 505(i) of the act (21 U.S.C. 
355(i)). This determination tailored the act's premarket review 
provisions, incorporating the most appropriate sections of both the 
drug and device authorities without being redundant, to the special 
features of this original product.
    The agency has thus in the past made its jurisdiction decisions by 
determining the most reasonable course of action to protect public 
health given the scientific questions presented by each product. FDA 
considers essential its ability to continue to assess the individual 
circumstances of particular products. This will allow the agency to 
respond to technological developments, expanded scientific 
understanding, or additional factual information concerning a specific 
product or class of products.

B. Cigarettes and Smokeless Tobacco Have Both a Drug and a Device 
Component and Are Therefore Combination Products

    As discussed in detail in the 1996 Jurisdictional Determination, 
the agency has concluded that the nicotine in cigarettes and smokeless 
tobacco is a drug within the meaning of section 201(g)(1)(C) of the 
act. The agency has also concluded that cigarettes and smokeless 
tobacco contain, in addition to the drug nicotine, delivery device 
components that deliver a controlled amount of nicotine to the body. 
Thus, cigarettes and smokeless tobacco are combination products that 
contain both a ``drug'' and a ``device.''
    The agency further concluded that processed loose cigarette 
tobacco, which is used by smokers who roll their own cigarettes, is a 
combination product.

C. FDA's Choice of Legal Authorities

1. FDA Will Regulate Cigarettes and Smokeless Tobacco Under the Act's 
Device Authorities
    Having established that cigarettes and smokeless tobacco are 
combination products consisting of both a drug component and device 
components, the agency has the discretion to choose whether it will 
regulate these products under the act's drug authorities, device 
authorities, or both if appropriate. Making this determination requires 
FDA to consider how the public health goals of the act can be best 
accomplished.
    The act's drug and device provisions have a common objective: To 
ensure the safety and effectiveness of regulated products. They also 
provide the agency with similar authorities to regulate drugs and 
devices. In certain ways, however, the device provisions offer FDA more 
flexibility. The Medical Device Amendments of 1976 (the Medical Device 
Amendments) were enacted nearly 40 years after the act itself. During 
that period of time, Congress observed FDA's efforts to regulate 
devices under the authority of the act, noting that the agency's 
authority over devices became increasingly inadequate as the nature of 
the devices on the market changed (H. Rept. 94-853, 94th Cong., 2d 
sess., 6-10 (1976)).
    In 1938 most of the devices in use were ``relatively simple items 
which applied basic scientific concepts * * *'' (H. Rept. 94-853, 6). 
However, by the time the Medical Device Amendments were enacted, the 
universe of device products had evolved from primarily simple products, 
such as tongue depressors and bandages, to include a

[[Page 44404]]

variety of scientifically and technologically sophisticated products, 
such as cardiac pacemakers, lasers, and magnetic resonance imaging 
equipment. This wide range of technology posed many more varied 
regulatory concerns than those posed by drugs, which as a group of 
products are less diverse in nature.
    Congress recognized the need for specific authority for devices 
that would take into account ``the great diversity among the various 
medical devices and their varying potentials for harm as well as their 
potential benefit to improved health'' (S. Rept. 94-33, 94th Cong., 1st 
sess., 10 (1975)). Thus, with the Medical Device Amendments, Congress 
enhanced FDA's authority to tailor regulatory controls, from an array 
of statutory tools, to fit the particular safety and effectiveness 
issues presented by individual devices.
    Because of this additional flexibility, the agency has determined 
that the device authorities provide the most appropriate basis for 
regulating cigarettes and smokeless tobacco. Because millions of 
Americans are addicted to cigarettes and smokeless tobacco, regulation 
of these products presents unique safety problems that require careful, 
tailored solutions. The Medical Device Amendments provide the agency 
with regulatory options that are well suited to the unique problems 
presented by cigarettes and smokeless tobacco.
    Although the agency has determined that the device authorities are 
the most appropriate authorities for regulating cigarettes and 
smokeless tobacco, the agency disagrees with the comments that suggest 
that the agency could not regulate cigarettes and smokeless tobacco as 
drugs. To the contrary, as discussed in section II.D. of this document, 
the agency could have used its drug authorities to implement similar 
types of controls on cigarettes and smokeless tobacco as it is imposing 
under the somewhat more flexible device authorities.
2. Cigarettes and Smokeless Tobacco Will be Subject to the Full Range 
of Device Authorities
    In regulating cigarettes and smokeless tobacco, FDA will follow the 
regulatory scheme created by Congress for devices. Because the universe 
of devices is extremely diverse, presenting a broad spectrum of safety 
and effectiveness issues, the Medical Device Amendments include a wide 
range of regulatory controls. Some of these controls, such as the 
adulteration and misbranding requirements, are applicable to all 
devices, while others, such as premarket approval and restrictions on 
sale, distribution, and use, are to be applied only where FDA concludes 
that they are necessary to provide reasonable assurance of safety and 
effectiveness for particular devices. The Medical Device Amendments are 
thus designed to allow the agency to regulate individual devices with 
controls that are tailored to address the safety and effectiveness 
problems raised by those devices.
    As devices, cigarettes and smokeless tobacco will be subject to all 
mandatory provisions of the act, except where exemption is permitted by 
statute and is appropriate for these products. In addition, cigarettes 
and smokeless tobacco will be subject to other discretionary provisions 
of the act that the agency has concluded are necessary to address the 
special safety issues posed by these products.
    The basic requirements of the act applicable to all devices 
include: Adulteration and misbranding provisions (sections 501 and 502 
of the act (21 U.S.C. 351 and 352)), labeling requirements (section 
502), establishment registration, device listing, and premarket 
notification (section 510 (21 U.S.C. 360)), recordkeeping and reporting 
requirements (section 519 (21 U.S.C. 360i)), and good manufacturing 
practice (GMP) requirements (section 520(f)). As described in more 
detail in section II.C.4. of this document, FDA intends to apply these 
requirements, where appropriate, to cigarettes and smokeless tobacco at 
a future time. In addition, the act requires the agency to classify 
devices into one of three classes. Depending on the class into which a 
product is classified, additional regulatory requirements may apply: 
Class I (general controls), class II (special controls), and class III 
(premarket approval). As described in more detail in section II.C.5. of 
this document, as the act contemplates, FDA intends to classify 
cigarettes and smokeless tobacco at a future time, and will impose any 
additional requirements that apply as a result of their classification.
    The agency has determined that the safety of cigarettes and 
smokeless tobacco cannot be assured without restrictions on the sale, 
distribution, and use of these products to children and adolescents. 
Accordingly, FDA is imposing restrictions under the authority granted 
in section 520(e) of the act.
    (2) Several comments argued that the regulatory requirements 
proposed by FDA for cigarettes and smokeless tobacco distort the 
regulatory scheme for devices established by Congress. These comments 
contended that FDA has: (1) Selectively applied the provisions of the 
Medical Device Amendments; (2) inappropriately relied on section 520(e) 
of the act (restrictions on sale, distribution, or use) while ignoring 
other mandatory provisions of the act, such as classification; and (3) 
determined that cigarettes and smokeless tobacco are unsafe and yet 
failed to invoke provisions of the act that, according to the comments, 
require the agency to remove them from the market.
    FDA disagrees with these comments. As already described, FDA 
intends to apply to cigarettes and smokeless tobacco all of the 
mandatory provisions of the Medical Device Amendments. Thus, FDA is 
neither selectively applying the provisions of the act nor ignoring 
mandatory provisions.
    Although FDA intends to impose on cigarettes and smokeless tobacco 
all requirements applicable to devices, the act does not provide that 
these requirements should all be imposed immediately. Classification 
serves the purpose of identifying which devices need to be subject to 
special controls (class II) or premarket approval (class III) in 
addition to the general controls applicable to all devices. 
Classification requires FDA to institute a separate rulemaking 
proceeding. The act does not require the agency to classify a device 
before general controls become applicable to it. Rather, the general 
controls provisions of the act apply to all devices both before and 
after classification and irrespective of the class into which a device 
is ultimately classified. Because the classification process involves 
many steps and can take years to complete, FDA does not ordinarily 
complete the classification process before regulating the device under 
its general controls.
    Moreover, the statute contains no requirement that the agency 
complete a classification rulemaking before invoking the general 
controls that apply to all devices. For example, each of the literally 
thousands of medical devices that have been classified by rulemaking 
under section 513 of the act (21 U.S.C. 360c) were subject to the 
general controls of the statute--such as the provisions on 
adulteration, misbranding, registration, investigational device 
controls, and GMP--in advance of the completion of the classification 
rulemaking proceedings. (See, e.g., Contact Lens

[[Page 44405]]

Mfrs. Association v. FDA, 766 F.2d 592, 603 (D.C. Cir. 1985), cert. 
denied 474 U.S. 1062 (1986).) Indeed, in some cases, the general 
controls provisions were applicable to marketed devices for many years 
before completion of classification.
    Consistent with the agency's practice, FDA has made a decision to 
apply the general controls provisions of the act to cigarettes and 
smokeless tobacco, including restrictions on their distribution, sale, 
and use under section 520(e) of the act, before classifying cigarettes 
and smokeless tobacco. As described in section II.C.5. of this 
document, FDA will, in a future rulemaking, classify cigarettes and 
smokeless tobacco in accordance with the procedures in section 513 of 
the act. In the meantime, the general controls will apply.
    FDA also disagrees that the act requires the agency to remove 
cigarettes and smokeless tobacco from the market. As described in the 
preamble to the 1995 proposed rule (60 FR 41314), although cigarettes 
and smokeless tobacco pose very grave risks, the agency cannot conclude 
that removing them from the market would most effectively meet the 
statutory goal of providing reasonable assurance of safety and 
effectiveness. Because millions of Americans are addicted to cigarettes 
and smokeless tobacco, the consequences of their removal from the 
market, as discussed in greater detail in section II.C.5. of this 
document, would include adverse health effects from sudden withdrawal, 
the likely development of a black market, and the possibility that the 
products that would be available through a black market would pose 
greater risks than those currently on the market. None of the statutory 
sections cited by the comments require the agency to remove products 
from the market where the agency concludes that such action would be 
contrary to the public health. Here, FDA has determined that the unique 
safety issues presented by highly addictive and long-marketed products 
like cigarettes and smokeless tobacco can most effectively be addressed 
by actions to prevent new users from becoming addicted to these 
devices.
    In section II.C.3. of this document, FDA discusses its authority to 
impose restrictions on sale, distribution, and use to prevent children 
and adolescents from becoming addicted to cigarettes and smokeless 
tobacco. In section II.C.4 of this document, FDA discusses imposition 
of other general controls, and, in section II.C.5 of this document, FDA 
discusses classification of cigarettes and smokeless tobacco.
3. The Restricted Device Provision Authorizes FDA to Establish Access 
and Advertising Restrictions
    Congress provided FDA with authority to prevent the use of a device 
by those not competent to use it safely in the restricted device 
provision (section 520(e) of the act). Specifically, section 520(e) of 
the act states in part:
    (1) The [agency] may by regulation require that a device be 
restricted to sale, distribution, or use--
    (A) only upon the written or oral authorization of a 
practitioner licensed by law to administer or use such device, or
    (B) upon such other conditions as the [agency] may prescribe in 
such regulation, if, because of its potentiality for harmful effect 
or the collateral measures necessary to its use, the [agency] 
determines that there cannot otherwise be reasonable assurance of 
its safety and effectiveness.
    Section 520(e) is one of the act's ``general controls'' (see 
section 513(a)(1)(A) of the act). As a general control, section 520(e) 
of the act can be used by FDA to regulate any class of device (section 
513(a) of the act). Because its applicability does not depend upon the 
outcome of the classification process, 520(e) of the act--like the 
other general controls--can be used by FDA to regulate a device prior 
to the classification of the device.
    In applying section 520(e) of the act to restrict the sale, 
distribution, or use of a device, FDA must find that without the 
restriction ``there cannot otherwise be reasonable assurance of its 
safety and effectiveness.'' This provision requires FDA to find that 
the restrictions in section 520(e) of the act are necessary to assure 
the safety and effectiveness of the device, but FDA does not have to 
find that the restrictions are sufficient to assure safety and 
effectiveness. During the classification process, FDA determines 
whether additional controls beyond section 520(e) of the act and the 
other general controls applicable to all devices are needed to assure 
the safety and effectiveness of the device.
    The restricted device provision in section 520(e) of the act 
authorizes FDA to adopt regulations that ensure that children and 
adolescents, who by State law are not competent to use cigarettes and 
smokeless tobacco, will not be able to obtain them. In particular, FDA 
has determined that section 520(e) of the act authorizes the access and 
advertising restrictions in the final rule because without these 
restrictions ``there cannot otherwise be reasonable assurance of * * * 
safety * * *.''
    As described more fully later in this section of this document, the 
agency's use of section 520(e) of the act in this rule is consistent 
with the plain language of section 520(e), the legislative history, and 
the agency's prior use of section 520(e) in, for example, restricting 
the sale, distribution, and use of hearing aids (42 FR 9285, February 
15, 1977, as amended at 47 FR 9397 through 9398, March 5, 1982).
    As discussed in section II.C.5. of this document, the agency 
intends to classify cigarettes and smokeless tobacco under the 
procedures contained in section 513 of the act. The classification 
process is the time at which the agency determines what degree of 
regulation is necessary to provide a ``reasonable assurance of safety 
and effectiveness'' for a particular product, such as tobacco products. 
However, the act does not specify the timing of the application of 
device authorities, and the agency is therefore able to issue 
restrictions under section 520(e) of the act prior to initiating the 
classification process. The agency also did so in its regulation of 
hearing aids. In 1977, FDA adopted regulations under section 520(e) of 
the act containing restrictions on the sale, distribution, and use of 
hearing aids (42 FR 9285, February 15, 1977, as amended at 47 FR 9397 
and 9398, March 5, 1982), but did not classify these products until 
1986 (51 FR 40378 at 40389, November 6, 1986).
    FDA is following a similar course here. The agency has determined 
that unless measures are taken now to prohibit the sale and promotion 
of these products to young people under the age of 18, there cannot 
otherwise be reasonable assurance of safety. Therefore, FDA is acting 
under section 520(e) of the act to restrict the sale, distribution, and 
use of cigarettes and smokeless tobacco.
    a. The restricted device provision authorizes FDA to prevent access 
to persons who cannot use a device safely or effectively. Section 
520(e) of the act is in part the device counterpart to section 503(b), 
the act's prescription drug provision. Section 503(b)(1) of the act, 
for instance, authorizes FDA to restrict access to potentially 
dangerous drugs by requiring that they be dispensed ``only upon a * * * 
prescription of a practitioner licensed by law to administer such a 
drug * * *.'' Similarly, section 520(e)(1)(A) of the act authorizes FDA 
to restrict access to potentially dangerous medical devices ``only upon 
the * * * authorization of a practitioner licensed

[[Page 44406]]

by law to administer or use such device * * *.''
    The restricted device provision, however, is significantly broader 
than the prescription drug provision. Not only may FDA restrict sale, 
distribution and use by prescription, but it may do so upon ``such 
other conditions as [it] may prescribe in such regulation'' (section 
520(e)(1)(B) of the act (emphasis added)). There is no counterpart to 
this ``other conditions'' authority in the prescription drug 
provisions.
    Section 520(e) of the act was designed to deal with the risks that 
are created by improper use of a device. The legislative history of the 
Medical Device Amendments specifically states that section 520(e) of 
the act was intended to ``supersede[ ]'' and ``add[ ]'' to the 
prescription authority derived from section 503(b) of the act (H. Rept. 
94-853, 94th Cong. 2d sess., 24-25 (1976)). This confirms that Congress 
intended to give FDA broad authority to restrict access to potentially 
dangerous devices. (See also ``Medical Device Regulation: The FDA's 
Neglected Child,'' Report of the Subcommittee on Oversight and 
Investigations, House Committee on Energy and Commerce, 98th Cong., 1st 
sess., 31 (1985).)
    Congress' use of the phrase ``could include'' indicates that this 
discussion was intended to be illustrative rather than exhaustive. The 
examples of possible restrictions described in the legislative history 
demonstrate that Congress intended to give the agency authority to 
restrict access to devices in a variety of ways, depending upon the 
type of risk posed by the device and the measures needed to ensure that 
the device is not used inappropriately. In short, the legislative 
history supports the statutory language and establishes that Congress 
intended FDA's authority to restrict the sale, distribution, and use of 
devices ``upon such other conditions as the [agency] may prescribe'' to 
be a flexible authority that allows FDA to tailor restrictions on sale, 
distribution, and use according to the circumstances posed by the 
device being regulated.
    b. The restricted device provision also authorizes FDA to restrict 
promotional activities that encourage uses that are inconsistent with 
the regulatory scheme. Section 520(e) of the act is a broad grant of 
authority. The Secretary, and by delegation FDA, is authorized to 
restrict the sale, distribution, or use of a device ``upon such other 
conditions as the [agency] may prescribe in such regulation.'' This 
broad grant of authority covers all aspects of the sale of a device, 
including the offer of sale.
    How a device is sold involves many elements. It involves not only 
the circumstances surrounding the exchange of money for the device, but 
also whether the device must be sold only on the authorization of a 
practitioner, whether age limits on users are appropriately 
established, and how the device is represented to potential users. It 
is in the latter regard that advertising plays a role and may be 
restricted under section 520(e) of the act.
    The Supreme Court cases on commercial speech recognize that a 
State's interest in regulating sales extends to advertising promoting 
the sale. In Edenfield v. Fane, 507 U.S. 761, 767 (1993), the Supreme 
Court said that commercial transactions are ``linked inextricably'' 
with the commercial speech that proposes the transaction, and that the 
State's interest in regulating the underlying transaction may give it a 
concomitant interest in the expression itself. Likewise, under section 
520(e) of the act, the sale of a device is ``linked inextricably'' to 
the advertising that promotes the sale, giving FDA concomitant 
authority to impose necessary restrictions on the advertising.
    FDA's regulation of hearing aids exemplifies this aspect of section 
520(e) of the act. One of the most important purposes of the 
restrictions on sale, distribution, and use imposed on hearing aids was 
to respond to widespread inappropriate promotion of hearing aids to 
consumers for whom the devices are not effective (see 41 FR 16756 at 
16757 (April 21, 1976)). In that regulation, in addition to restricting 
sales to persons who had been medically evaluated for hearing aids, FDA 
relied upon section 520(e) of the act to require that an instructional 
brochure be distributed to each prospective hearing aid user. These 
brochures described the adverse reactions and side effects associated 
with hearing aids and encouraged prospective users to seek medical 
evaluations. The distribution of the brochure was required as a means 
of ensuring that advertising for hearing aids did not inappropriately 
induce persons who had not been medically evaluated to purchase the 
hearing aids.
    The agency's authority to use section 520(e) of the act to restrict 
advertising is especially strong when limits on advertising are 
necessary to ensure that advertising does not undermine the conditions 
on sale, distribution, or use that the agency adopts under section 
520(e). The agency should not be--and under section 520(e) of the act 
is not--powerless to prevent advertising that encourages sales that the 
agency has barred under section 520(e). Rather, the agency may use its 
authority to impose ``such other conditions as the [agency] may 
prescribe'' to restrict advertising that directly undercuts the 
agency's restrictions on sale, distribution, and use.
    c. The restricted device provision authorizes FDA's restrictions on 
youth access and on advertising designed to make cigarettes and 
smokeless tobacco appealing to youth. The restricted device provision 
authorizes the restrictions on youth access and on advertising in this 
final rule. Section 520(e) of the act contemplates these types of 
restrictions on sale and distribution. Moreover, they are necessary if 
FDA ever were to be able to find that there is a reasonable assurance 
of the safety of cigarettes and smokeless tobacco under the act. As 
section 520(e) of the act provides, without these restrictions ``there 
cannot otherwise be reasonable assurance of safety and effectiveness.''
    The provisions in the final rule that restrict the access of minors 
to cigarettes and smokeless tobacco are clearly restrictions on ``sale, 
distribution, or use'' of a device within the meaning of section 520(e) 
of the act. FDA's access restrictions are designed to ensure that 
children and adolescents are unable to have access to cigarettes and 
smokeless tobacco. These restrictions directly limit the sale of 
cigarettes and smokeless tobacco by, for instance, banning the sale of 
these products to persons under 18. They also directly limit the 
distribution of cigarettes and smokeless tobacco by, for instance, 
banning the distribution of free samples. Hence, these access 
restrictions are within the plain language of section 520(e) of the 
act.
    The advertising restrictions in the final rule are also among the 
types of restriction that section 520(e) of the act authorizes. As in 
the case of the restrictions imposed on hearing aids, the advertising 
restrictions are designed to address inappropriate promotion of 
cigarettes and smokeless tobacco to individuals for whom the 
potentiality for harm is particularly great. The advertising 
restrictions are necessary to prevent advertising by the manufacturers 
of cigarettes and smokeless tobacco from undercutting the access 
restrictions. The effectiveness of the restrictions on youth access

[[Page 44407]]

would be substantially diminished if the manufacturers were free to 
entice children and adolescents to circumvent the access restrictions. 
In this circumstance, restrictions on advertising are properly treated 
as restrictions on ``sale, distribution, or use'' within the meaning of 
section 520(e) of the act.
    The final requirement of section 520(e) of the act is that the 
agency establish that without the restrictions on the device ``there 
cannot otherwise be reasonable assurance of its safety and 
effectiveness.'' This requirement is plainly met in the case of the 
access and advertising restrictions for cigarettes and smokeless 
tobacco. Without effective restrictions on sale and distribution of 
cigarettes and smokeless tobacco to children and adolescents under 18, 
young people will continue to become addicted to these products and, 
once addicted, will as adults continue to use them in spite of their 
potential for harmful effects. As stated in section I.B. of this 
document, the earlier tobacco use begins, the greater the risk of 
disease caused by, or associated with, the use of these products. Thus, 
there can be no doubt that without the access and advertising 
restrictions imposed in this final rule, no finding that there is a 
reasonable assurance of safety for cigarettes and smokeless tobacco 
would be possible.
    Although FDA finds that the restrictions under section 520(e) of 
the act are necessary for providing a reasonable assurance of safety, 
FDA is not required under section 520(e) of the act to show that the 
restrictions are sufficient by themselves to provide a reasonable 
assurance of safety or effectiveness. Under section 520(e) of the act, 
all that FDA must establish is that without the section 520(e) 
restrictions, the device could not be found to be safe.
    It is in the classification process--not in the application of 
section 520(e) of the act--that FDA must determine what controls are 
necessary if the agency is to find that there is a reasonable assurance 
that a device is safe and effective for its intended use. As discussed 
in section II.C.5. of this document, FDA intends to classify cigarettes 
and smokeless tobacco in a future rulemaking.
    d. Response to other comments. FDA received several comments on 
whether section 520(e) of the act authorizes restrictions on youth 
access and advertising. Most of the comments were from tobacco trade 
associations, tobacco companies, and advertisers, arguing that section 
520(e) of the act does not provide authority for either the access or 
advertising restrictions. A comment from a public interest group, 
however, fully supported FDA's reliance on section 520(e). FDA also 
received a large number of comments from a broad cross-section of the 
public that expressed support for, or opposition to, the proposed 
restrictions without delving into the legal issues analyzed in the 1995 
proposed rule.
    (3) One comment said that FDA uses the term ``conditions'' in 
section 520(e)(1)(B) of the act to mean any regulatory imposition that 
the agency believes would bring about an improvement in safety in some 
way related to the device in question. The comment argued that FDA has 
used this term in such an overinclusive way that it would authorize FDA 
to impose many of the requirements that Congress imposed in other 
provisions of the act. For example, the comment argued that under FDA's 
interpretation it could require premarket approval of a device with a 
potentiality for harmful effect as a ``condition'' on the ``sale, 
distribution, or use'' of the device, on the theory that without 
premarket approval it would be impossible for there to be ``reasonable 
assurance of its safety.''
    FDA disagrees with this comment. FDA's interpretation of section 
520(e) of the act does not create any redundancy with the other 
provisions of the Medical Device Amendments. Most of the general 
controls authorized under the act, and the major thrust of the 
provisions on performance standards and premarket approval, are geared 
toward ensuring that finished devices, when ready for use, will be free 
from defects and will provide a reasonable assurance of safety and 
effectiveness for their labeled use. Restrictions under section 520(e) 
of the act, on the other hand, are imposed because the device's 
``potentiality for harmful effect or the collateral measures necessary 
to its use,'' and the determination that, without such restrictions, 
there cannot otherwise be a reasonable assurance of safety and 
effectiveness. The restrictions under section 520(e) of the act on 
cigarettes and smokeless tobacco focus on those who may not purchase 
and use these products rather than on those who will be using the 
products. Without successful restrictions on sale, distribution, and 
use of cigarettes and smokeless tobacco to children and adolescents 
under 18, there will never be reasonable assurance of the safety of 
these products because they would continue to be available to these 
young people, who, by State law, are not competent to use them.
    (4) With regard to access, industry comments contended that FDA's 
authority under the provisions of the act relating to restricted 
devices was intended to be no broader than its prescription drug 
authority and, accordingly, could not extend to restrictions such as 
those in the 1995 proposed rule.
    FDA disagrees with this view and believes that it is unsupported by 
the clear language of the act and the legislative history (see H. Rept. 
94-853, 94th Cong., 2d. sess., 24-25 (1976)). Had Congress meant for 
the authority granted FDA under section 520(e) of the act to be no 
broader than the authority granted in section 503(b)(1) of the act to 
limit drugs to prescription use, it could simply have amended section 
503(b)(1) of the act to add ``or device'' after ``drug'' each time the 
term is used. Indeed, as discussed in Becton, Dickinson and Company v. 
Food and Drug Administration, 589 F.2d 1175 (2d Cir. 1978) that 
approach was the one used in early versions of the legislation that 
became the 1976 amendments but was abandoned in favor of the broader 
``restricted device'' approach that has been a part of the law for 20 
years. The plain language of the enacted provision contains no 
limitation on the types of restrictions that can be imposed and 
certainly is not limited by its terms to restriction to prescription 
use. Moreover, as previously discussed, the legislative history 
specifically states that the agency's authority under section 520(e) of 
the act is broader than its authority under the prescription drug 
provisions (H. Rept. 94-853, 94th Cong., 2d sess., 24-25, 1976).
    (5) An industry comment contended that ``FDA uses what is merely 
the medical device version of prescription drug status as the sole 
legal justification for an elaborate system of controls far broader and 
more intrusive than is authorized even for true medical devices.''
    As discussed in section II.C.3. of this document, FDA's restricted 
device authority is significantly broader than suggested by this 
comment. Given the potentiality for harm from cigarettes and smokeless 
tobacco, FDA has ample authority to impose the conditions on their 
sale, distribution, and use that it is adopting.
    As is the case with other medical devices, cigarettes and smokeless 
tobacco are subject to those regulatory controls that are appropriate 
for medical devices generally (e.g., registration, labeling, and 
inspection), along with those tailored to the product in question

[[Page 44408]]

and the risks that it presents (access restrictions and advertising 
controls). Thus, FDA is treating cigarettes and smokeless tobacco in a 
manner that is consistent with how it treats other medical devices.
    (6) Turning to the advertising restrictions, several comments 
argued that section 520(e) of the act authorizes only restrictions on 
``sale, distribution, or use,'' and that it does not include the words 
``offer for sale.'' These comments pointed out that Congress used the 
words ``offer for sale'' elsewhere in the act (sections 301(m) and (o) 
(21 U.S.C. 331(m) and (o)) and 503(c)), and they therefore drew the 
inference that if Congress had intended section 520(e) of the act to 
authorize restrictions on how medical devices are offered for sale, it 
would have made this fact explicit.
    FDA is not persuaded by this argument. In each of the instances 
cited in the comments where Congress has included the phrase ``offer 
for sale'' in the act, it was defining a prohibited act, that is, an 
act whose commission would violate the statute, in which the 
prohibition focused, at least in part, on the sale of a food, drug, or 
device. By including the phrase ``offered for sale'' in these 
provisions, Congress sought to ensure that the statutory objective of 
preventing the actual sale of products where advertising or labeling 
does not meet the statutory requirement would be met by including 
products merely ``offered for sale'' within the statute's coverage. The 
agency notes that, similarly, the words ``offered for sale'' appear in 
section 502(q) of the act, the provision that the agency would use to 
enforce section 520(e) of the act. Thus, Congress did in fact include 
``offer for sale'' in the scope of conduct regulated under section 
520(e) of the act and its enforcement clause, section 502(q). The 
comment's argument, however, misses the significance of section 520(e) 
of the act.
    As discussed in section II.C.3. of this document, the authority to 
restrict the ``sale, distribution, or use'' of a device includes the 
authority to restrict the circumstances surrounding the sale and 
distribution of the device, including the device's advertising. The use 
of section 520(e) of the act to restrict advertising is particularly 
appropriate when the advertising restrictions are necessary to ensure 
that access restrictions issued under section 520(e) of the act are not 
undermined by a manufacturer's advertising. Here, FDA is restricting 
the sale of cigarettes and smokeless tobacco because of their potential 
harmful effects on individuals who start using them before the age of 
18 and who lack the competency to decide to do so. FDA has determined, 
as explained in sections VI.B. and D. of this document, that how 
cigarettes and smokeless tobacco are advertised plays a material role 
in the decision of children and adolescents under 18 to purchase and 
use these products. Thus, if the restrictions on how cigarettes are 
sold, distributed, and used that FDA is adopting under section 520(e) 
of the act are to be effective, they must include restrictions on how 
cigarettes and smokeless tobacco are advertised.
    (7) The comments also argued that section 520(e) of the act on its 
face says nothing about advertising. Thus, according to these comments, 
FDA's authority to regulate the advertising of restricted devices is 
limited by section 502(q)(1) of the act, which prohibits false or 
misleading advertising, and section 502(r) of the act, which prescribes 
certain statements in the advertising for these devices. One comment 
implied that FDA's interpretation of section 520(e)(1) of the act had 
rendered section 502(q)(1) and (r) of the act superfluous.
    FDA is not persuaded by these comments. The interpretation of 
section 520(e) of the act that FDA has adopted in this proceeding would 
not render either section 502(q)(1) or (r) of the act inoperative or 
superfluous. These sections impose requirements on advertising of the 
permissible sale, distribution, and use of restricted devices. They set 
out conditions on advertising to which manufacturers must adhere in 
offering these devices for sale. Section 520(e) of the act, on the 
other hand, is the means by which FDA demarcates permissible and 
nonpermissible conditions of sale, distribution, and use of these 
devices. In so doing, as has been explained in response to the previous 
comments, FDA may by regulation impose limits on advertising that it 
finds are necessary to ensure that advertising is not used to undermine 
the conditions on sale, distribution, or use that the agency adopts. 
This is what Secs. 897.30, 897.32(a), and 897.34, the regulations that 
set out the restrictions on advertising, are designed to accomplish. In 
fact, section 502(q)(1) of the act reinforces this authority because 
any advertisement that promotes the sale of a device for a use that is 
inconsistent with a restriction established by FDA would be false and 
misleading because it would represent that the device is appropriate 
for that use, which would not be the case.
    Thus, Congress clearly intended section 502(q)(1) and (r) of the 
act and any restrictions that FDA adopts under section 520(e) of the 
act to be complementary. This intent is further evidenced by the fact 
that section 502(q)(2) of the act provides that a restricted device is 
misbranded if it is sold, distributed, or used in violation of 
regulations prescribed under section 520(e) of the act. Section 
502(q)(2) of the act thus complements sections 502(q)(1) and (r) of the 
act, which, as previously explained, address different aspects of the 
regulation of restricted devices than does section 520(e) of the act.
    FDA's interpretation of section 520(e) of the act accordingly does 
not render either section 502(q)(1) or (r) of the act superfluous. 
Rather, the three provisions support and reinforce each other.
    (8) An additional argument advanced by two tobacco trade 
associations was that the interpretation of section 520(e)(1)(B) of the 
act, which authorizes FDA to restrict the sale of a device upon such 
``other conditions'' as it deems necessary, is governed and limited by 
the rule of ejusdem generis. This rule of statutory construction 
provides that, where general words follow an enumeration of persons or 
things of a particular and specific meaning, such general words are not 
to be construed in their widest extent but are to be held as applying 
to only persons or things of the same general kind or class as those 
specifically mentioned. Thus, the comment argued that here, ejusdem 
generis limits the scope of ``other conditions'' in section 
520(e)(1)(B) of the act to restrictions similar in nature to the 
restriction to prescription use in section 520(e)(1)(A) of the act. The 
comment argued that it would be totally inconsistent with the rule of 
ejusdem generis to expand the scope of ``other conditions'' to include 
a provision as dissimilar to a prescription requirement as a 
restriction on advertising. FDA does not agree that ejusdem generis is 
controlling, or that it has any application here. In Norfolk & Western 
v. American Train Dispatchers Ass'n, the Supreme Court held that this 
canon does not control ``when the whole context dictates a different 
conclusion'' (499 U.S. 117, 129 (1991)). The context involving section 
520(e) of the act does not support the application of ejusdem generis 
to it. There is no indication that Congress thought that it was 
providing a list of similar measures in section 520(e)(1)(A) and 
(e)(1)(B) of the act. In fact, the face of the act is to the contrary. 
After specifying one means of restricting

[[Page 44409]]

the sale, distribution, and use of a device, Congress granted the 
Secretary broad authority to impose ``such other conditions as [she] 
may prescribe in such regulation.'' Congress, rather than limiting the 
Secretary's options, left it to the Secretary to decide what conditions 
are necessary for a particular device. Nor does the legislative history 
support the comments. As stated in section II.C.3.a. of this document, 
Congress intended section 520(e) of the act to add to the agency's 
authority beyond providing for use by prescription only (H. Rept. 94-
853, 94th Cong., 2d sess., 24-25 (1976)).
    Moreover, the ``or'' connecting section 520(e)(1)(A) of the act 
with section 520(e)(1)(B) is properly read here as disjunctive rather 
than conjunctive. (See Garcia v. United States, 469 U.S. 70, 73 
(1984).) Section 520(e) of the act is intended to authorize such 
conditions on the sale, distribution, or use of a device as are 
necessary to ensure that the device is not improperly used and without 
which a reasonable assurance of its safety and effectiveness cannot be 
provided. There is no basis on the face of the act or in the 
legislative history to conclude that Congress was trying to limit the 
conditions that FDA could impose to achieve that end (other than the 
admonition not to base a physician restriction on board certification).
    (9) One comment argued that the interpretation of section 520(e) of 
the act that FDA is advancing in this proceeding is contrary to the 
interpretation that the agency offered in imposing restrictions on 
hearing aids in 1977. The comment pointed out that FDA stated at that 
time: ``The Commissioner notes, however, that the [Act] regulates the 
safety * * * of the [device] itself'' (42 FR 9286 at 9287, February 15, 
1977). The comment asserted that, for this reason, FDA concluded that 
it could not prescribe competency standards for hearing health 
professionals, fix the price of hearing aids, or control the 
promotional practices of hearing aid dispensers, all matters that were 
being handled by the Federal Trade Commission (FTC) (42 FR 9286 at 
9287). The comment argued that, for the same reasons, FDA may not, 
under section 520(e) of the act, regulate attire, contests, or athletic 
or cultural events.
    FDA does not agree that the hearing aid proceeding provides any 
support for the view that the agency has been inconsistent in its 
interpretation of section 520(e) of the act. In that proceeding, FDA 
was aware that FTC had developed a proposed trade regulation rule that 
included a prohibition of certain selling techniques (42 FR 9286 at 
9287). FDA said that it was avoiding any duplication of effort with 
FTC. Thus, it was not necessary for FDA to consider the extent of its 
authority to specifically regulate selling techniques of hearing aid 
dispensers.
    Contrary to the comment's assertion, this proceeding is consistent 
with the hearing aid proceeding. Although FDA did not duplicate FTC's 
effort and directly regulate selling techniques, FDA imposed various 
restrictions that were tailored to restrict inappropriate promotion of 
hearing aids including requiring a medical evaluation before purchase 
and distribution of a user instructional brochure. In the case of 
cigarettes and smokeless tobacco, FDA is imposing restrictions that are 
tailored to promotion of tobacco products to ensure that advertising 
does not induce the use of cigarettes and smokeless tobacco by children 
and adolescents under 18.
    (10) Finally, several comments argued that FDA lacks statutory 
authority for the advertising restrictions that it is imposing. Some of 
these comments sought to analogize this rulemaking to American 
Pharmaceutical Ass'n v. Weinberger, 377 F. Supp. 824, 831 (D.D.C. 
1974), aff'd sub nom. American Pharmaceutical Ass'n v. Mathews, 530 
F.2d 1054 (D.C. Cir. 1976) (per curiam). That case involved an attempt 
by FDA to limit the distribution of methadone to certain designated 
facilities under the drug authorities of the act. The court held that 
the statutory drug authority did not authorize the agency to impose 
these limitations on the distribution of methadone, even though 
methadone posed unique problems of medical judgement, law enforcement, 
and public policy.
    FDA regards the American Pharmaceutical Ass'n case as a 
questionable precedent. The case predates both the Supreme Court's 
decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, 
467 U.S. 837 (1984), and the Medical Device Amendments. In Chevron, the 
Court stated that ``considerable weight should be accorded to an 
executive department's construction of a statutory scheme it is 
entrusted to administer * * *'' (467 U.S. at 844). Moreover, when 
Congress enacted section 520(e) of the act, one of its objectives was 
to provide FDA with precisely the kind of authority over medical 
devices that the court found that the agency did not have over drugs in 
American Pharmaceutical Ass'n. Thus, FDA now has explicit authority 
under section 520(e) of the act to impose conditions on the sale, 
distribution, and use of a medical device to prevent its misuse, 
including the access and advertising restrictions in the final rule. 
FDA is imposing controls on the sale of cigarettes and smokeless 
tobacco to ensure that individuals under 18 will not be able to 
purchase them. Further, to ensure that these controls on sale, 
distribution, and use are not undermined, FDA has found that they must 
include restrictions on how these products are advertised, so that 
individuals under 18 are not encouraged to purchase or use them. These 
actions are consistent with the language and purpose of section 520(e) 
of the act.
4. Application of Other Device Authorities
    As described in section II.C.2. of this document, FDA intends to 
follow its normal course and apply the ``general controls'' provisions 
of the Medical Device Amendments to cigarettes and smokeless tobacco 
pending classification of these products. The general controls 
authorized by the Medical Device Amendments include adulteration and 
misbranding (sections 501 and 502 of the act), establishment 
registration, device listing, and premarket notification (section 510), 
labeling requirements (section 502), recordkeeping and reporting 
requirements (section 519), and GMP (sections 501 and 520(f)).
    (11) Tobacco industry comments claimed that FDA had ignored a 
number of mandatory provisions of the act applicable to devices, 
``presumably because they again recognize that those provisions would 
mean the prohibition of tobacco sales.'' The comments also asserted 
that FDA had picked and chosen among statutory provisions and had 
misinterpreted Heckler v. Chaney, 470 U.S. 821 (1985), as authorizing 
this selective regulatory approach. These comments also argued that FDA 
had ignored section 520(a) of the act, which provides that the 
adulteration, misbranding, and records and reports requirements are 
applicable to devices until the applicability of these requirements is 
changed by an action under the classification, premarket approval, 
standard-setting, or investigational device provisions of the act.
    The agency disagrees with these comments. FDA is applying to 
cigarettes and smokeless tobacco the general controls applicable to all 
devices.
    In the following discussion, the agency elaborates on the 
applicability of the general controls provisions to

[[Page 44410]]

cigarettes and smokeless tobacco, and on matters the agency has 
reconsidered in response to comments (the applicability of labeling 
requirements to cigarettes and smokeless tobacco is discussed in 
sections V. and VI. of this document). Overall, FDA believes that it 
has developed a regulatory system for cigarettes and smokeless tobacco 
that is consistent with the statutory scheme and the record of this 
rulemaking.
    a. Adulteration and misbranding. Cigarettes and smokeless tobacco 
will be subject to the adulteration and misbranding provisions in 
sections 501 and 502 of the act, and the implementing regulations, with 
one exception that is permitted by statute. Section 502(f) of the act 
authorizes the agency to grant exemptions from section 502(f)(1) of the 
act under certain circumstances. As described in section V.E. of this 
document, FDA has determined that an exemption from section 502(f)(1) 
of the act is appropriate for cigarettes and smokeless tobacco. In 
addition, section VI.E.6. of this document also contains a more 
detailed description of the applicability of specific labeling 
requirements to cigarettes and smokeless tobacco.
    The adulteration and misbranding provisions are largely self-
executing and do not require the agency to impose requirements by 
regulation.
    b. Device registration and listing. Section 510 of the act and part 
807 (21 CFR part 807) of the regulations require that device 
manufacturers and importers register their establishments with the 
agency. Every year an annual registration form is sent to all 
registered establishments to be completed and returned to the agency 
(Sec. 807.22(a)). Any significant changes of information to the 
original must be reported to FDA within 30 days of the change 
(Sec. 807.26).
    Manufacturers are also required to list their devices that are in 
commercial distribution in the United States (part 807). Foreign 
manufacturers may, but are not required to, register (Sec. 807.40). 
However, they are required to list their devices (Sec. 807.40(b)). 
Manufacturers are required to update their listing if there are 
significant changes to listing information.
    Manufacturers of cigarettes and smokeless tobacco will be subject 
to the establishment registration and device listing requirements in 
section 510 of the act and part 807 of FDA's regulations. The 
application of these provisions to cigarettes and smokeless tobacco 
derives from their status under the device provisions of the act and 
does not require rulemaking by the agency.
    Section 510(k) of the act requires submission of a premarket 
notification to the agency whenever a manufacturer markets a device for 
the first time, whenever there is a major change in the intended use of 
an already marketed device, or whenever an already marketed device is 
to be modified in a way that could significantly alter its safety or 
effectiveness (Sec. 807.81). The device may not be commercially 
distributed unless the agency issues an order finding the device 
substantially equivalent to one or more predicate devices already 
legally marketed in the United States for which premarket approval is 
not required (section 513(i) of the act (Sec. 807.100), or unless the 
agency approves a premarket approval application for a device subject 
to an approval requirement under section 515 of the act (21 U.S.C. 
360(e)). Substantial equivalence means that a device has the same 
intended use and the same technological characteristics as the 
predicate device; or has the same technological characteristics, but it 
can be demonstrated that the device is as safe and effective as the 
predicate device and does not raise different questions regarding 
safety and effectiveness (section 513(i) of the act). The premarket 
notification submission must include either a summary of the safety and 
effectiveness information upon which a substantial equivalence 
determination may be based, or state that safety and effectiveness data 
will be made available to anyone upon request (section 513(i)(3)(A) of 
the act (21 U.S.C. 360c(i)(3)(A)), and Secs. 807.87(h) and 807.92).
    c. Records and reports. Section 519 of the act contains several 
requirements relating to the keeping of records and making of reports 
on devices. In addition to implementing the specific requirements of 
the act, the agency has used its authority under section 519 of the act 
to issue several regulations. As nicotine delivery devices, which are 
drug-device combination products that FDA is regulating under its 
device authorities, cigarettes and smokeless tobacco are subject to the 
requirements of section 519 of the act and the implementing regulations 
unless otherwise exempted.
    Section 519(a) of the act requires manufacturers, importers, and 
distributors of devices to establish and maintain records, and make 
reports and other information available to the agency, to ensure that a 
device is not adulterated or misbranded and to otherwise ensure its 
safety and effectiveness. Similarly, section 519(b) of the act requires 
medical device user facilities to make reports to device manufacturers 
and the agency when they become aware of information suggesting that a 
device has caused or contributed to a death, serious injury, or serious 
illness. Under this authority, the agency has issued part 803 (21 CFR 
part 803), on medical device reporting, and part 804 (21 CFR part 804), 
on medical device distributor reporting (the MDR requirements). These 
regulations were recently amended by a final rule published in the 
Federal Register of December 11, 1995 (60 FR 63578) (the 1995 reporting 
requirements final rule), reflecting changes in the reporting 
requirements of section 519 of the act that were mandated by the SMDA 
and the Medical Device Amendments of 1992.
    The 1995 proposed rule would have amended parts 803 and 804 to 
exempt cigarettes and smokeless tobacco from the MDR requirements. 
These proposed exemptions were based on the fact that ``the adverse 
health effects attributable to cigarettes and smokeless tobacco 
products are extensive and well-documented'' (60 FR 41314 at 41342). 
The agency stated that it did not anticipate any real benefit in 
requiring manufacturers and distributors of these products to report 
such information (Id.).
    (12) The agency received several comments criticizing this proposed 
exemption. One comment from a trade association stated that, although 
it disagreed with the agency's classification of cigarettes as medical 
devices, the agency had no authority to exempt manufacturers from this 
reporting requirement. This trade association also stated that, because 
the agency has concluded that cigarettes are not safe for individual 
users, this exemption cannot be reconciled with the standard under 
section 519(c) of the act for exempting this product. (Section 
519(c)(3) of the act provides for exemptions upon a finding that 
compliance with recordkeeping and reporting is not necessary to ensure 
that a device is not adulterated or misbranded or to otherwise ensure 
its safety and effectiveness.) Another trade association claimed that 
the agency did not follow the proper exemption procedures under the 
act. A trade association also noted that the agency did not propose to 
require such user facility reports for cigarettes and also noted that 
such reports are not ``suitable'' for cigarettes.

[[Page 44411]]

    In view of these comments, the agency has reconsidered its 
tentative position regarding the application of the MDR requirements in 
parts 803 and 804. The adverse health effects attributable to these 
products are extensive and well-documented. As a result, the cost of 
processing the enormously high volume of MDR reports related to the use 
of cigarettes and smokeless tobacco would likely be prohibitive in 
light of the small benefit to be gained from reports documenting 
adverse health effects already known to the agency.
    Nevertheless, there would be a benefit to receiving information 
regarding adverse events that are not well-documented and thus, not 
well-known or anticipated. Therefore, the agency has determined that it 
will require MDR reporting in certain limited circumstances, and is 
amending Secs. 803.19 and 804.25 of its regulations to make this clear.
    In the preamble to the 1995 reporting requirements final rule, the 
agency clarified that it may grant a written exemption, variance, or 
alternative to some or all of the MDR requirements ``when it determines 
compliance with all MDR requirements is not necessary to protect the 
public health'' (60 FR 63578 at 63592). The agency cited, as an example 
for an appropriate exemption, devices for which ``adverse events that 
are known and well documented, are occurring at a normal rate, and do 
not justify the initiation of remedial action * * *'' (Id.).
    To limit the volume of reports that could otherwise be required, 
the agency is modifying the MDR requirements for adverse events 
relating to tobacco. The agency has added Sec. 803.19(f) to the 
regulation's ``Exemption, variances, and alternative reporting 
requirements'' section in order to limit the medical device reports 
concerning cigarettes and smokeless tobacco; specifically, new 
paragraph (f) requires reports from manufacturers only for those 
adverse events related to contamination, a change in any ingredient or 
any manufacturing process, or any serious adverse event that is not 
well-known or well-documented by the scientific community.
    The agency notes that user facilities are not likely to have direct 
knowledge of even these limited adverse events required to be reported 
by manufacturers. Therefore, the agency is adding Sec. 897.19(g) to 
exempt user facilities from the MDR requirements relating to cigarettes 
and smokeless tobacco.
    For similar reasons, FDA is also modifying the MDR requirements for 
distributors of cigarettes and smokeless tobacco. Because distributors 
handle these products, break open cartons, and even affix the tax 
stamp, the agency believes that distributors could be responsible for, 
or aware of, contamination of these products. The agency does not 
believe, however, that distributors are likely to have direct knowledge 
of any change in ingredient or manufacturing process or any serious 
adverse event that is not well-known or well-documented by the 
scientific community. Therefore, the agency is limiting the MDR 
requirements for distributors to require reports concerning cigarettes 
and smokeless tobacco only for adverse events relating to 
contamination.
    The agency notes that it has granted similar variances in the past 
for circumstances that justify modifications to the MDR requirements 
and has issued guidance that establishes criteria for modified 
reporting. Examples where reporting has been modified include events 
involving health care professionals being stuck by needles and certain 
events involving defibrillators. These modifications were made in order 
to clarify which events would provide valuable information to the 
agency given the inherently risky circumstances surrounding the use of 
these devices. A variance from the MDR requirements has also been 
granted to the manufacturers of breast implants in order to limit the 
frequency of reports for events already known to the agency.
    (13) Industry comments also questioned why FDA had not proposed to 
apply device tracking and premarket surveillance provisions to 
cigarettes and smokeless tobacco. Section 519(e) of the act, governing 
device tracking, applies only to products that are permanently 
implantable, life-sustaining or life-supporting, or have been 
designated by the agency to be tracked. Cigarettes and smokeless 
tobacco do not fall within the first two categories, and the agency has 
not designated them for tracking.
    For the reasons cited in the previous discussion of 519(e) of the 
act, postmarket surveillance will not be required unless, at a future 
date, the agency specifically designates these products under section 
522 of the act (21 U.S.C. 360l).
    Section 519(f) of the act, which requires FDA to issue regulations 
to require reports on device removals and corrections, will apply to 
manufacturers, importers, and distributors of cigarettes and smokeless 
tobacco. To implement section 519(f) of the act, FDA issued a proposed 
rule in the Federal Register of March 23, 1994 (59 FR 13828), that 
would require manufacturers, importers, and distributors of devices to 
report promptly to FDA any corrections or removals of a device 
undertaken to reduce a risk to health posed by the device or to remedy 
a violation of the act caused by the device which may present a risk to 
health. The agency expects that the final rule will publish in 1996. 
This rule will apply to removals and corrections of medical devices 
including cigarettes and smokeless tobacco.
    d. GMP. In the preamble to the 1995 proposed rule, FDA specifically 
recognized that the GMP regulations may be appropriate for tobacco 
products (60 FR 41314 at 41352). In this final rule, FDA is requiring 
that the manufacturers of cigarettes and smokeless tobacco comply with 
GMP regulations in part 820 (21 CFR part 820), which the agency is 
currently revising. (See 58 FR 61952, November 11, 1993.) Application 
of GMP's to cigarettes and smokeless tobacco will assist the tobacco 
industry in avoiding such situations as the recall of Marlboros in 1995 
because of a contamination mishap in processing and, in such cases, may 
advance public health by reducing to some degree the overall risk 
associated with these products.
    (14) A comment from a tobacco trade association urged that FDA 
provide ample time for compliance with GMP and requested a 2-year 
period for compliance.
    FDA recognizes that manufacturers will need an adequate amount of 
time to comply with GMP requirements and is accepting the suggestion in 
the comment by adopting a 2-year period for compliance. The tobacco 
industry already has a sophisticated approach to quality control with 
the production of their products. Thus, much of what is required to 
meet the requirements of part 820 appears to be in place already, and 
therefore, 2 years should be a sufficient time for compliance.
    (15) In response to comments from tobacco distributors expressing 
concern about present or future applicability of the GMP regulations, 
FDA advises that it is exempting distributors from part 820. The agency 
has decided to amend part 820 by adding a new Sec. 820.1(f) to exempt 
distributors from the requirement of complying with GMP regulations 
because it has concluded that compliance with GMP requirements

[[Page 44412]]

by distributors is not necessary to assure that these devices will be 
safe and effective or otherwise in compliance with the act.
5. FDA Will Classify Cigarettes and Smokeless Tobacco Under Section 513 
of the Act
    In addition to applying the general device authorities previously 
described to cigarettes and smokeless tobacco, the agency will classify 
cigarettes and smokeless tobacco under section 513 of the act. The 
agency relies on classification to determine what level of control of 
the device is required to provide a reasonable assurance of safety and 
effectiveness. For devices classified into class I, general controls 
(sections 501, 502, 510, 516, 518, 519, and 520 of the act (21 U.S.C. 
351, 352, 360, 360f, 360h, 360i, and 360j, respectively)) are 
sufficient to provide a reasonable assurance of safety and 
effectiveness. For devices classified into class II, special controls 
(such as performance standards under section 514 of the act (21 U.S.C. 
360d)) are needed in addition to the general controls to provide a 
reasonable assurance of safety and effectiveness. For devices 
classified into class III (premarket approval), neither general nor 
special controls are sufficient to provide a reasonable assurance of 
safety and effectiveness, without the added safeguard of premarket 
approval. Therefore, these devices are subject to ``premarket 
approval'' under section 515 of the act.
    The process of classification is an important component of device 
regulation, but it includes numerous procedural steps and thus cannot 
be part of this final rule. Under section 513 of the act, FDA is 
required to convene or use a classification panel, which should consist 
of experts who ``possess skill in the use of, or experience in the 
development, manufacture, or utilization of,'' the device and who 
provide ``adequately diversified expertise in such fields as clinical 
and administrative medicine, engineering, biological and physical 
sciences, and other related professions'' (section 513(b)(2) of the 
act). The classification panel is required to ``provide an opportunity 
for interested persons to submit data and views on the classification'' 
and, after consideration of these data and views, to submit to FDA its 
``recommendation for the classification of the device'' (section 
513(c)(1) and (c)(2) of the act). Upon receipt of the panel 
recommendation, FDA must publish in the Federal Register ``the panel's 
recommendation and a proposed regulation classifying such device'' and 
provide interested persons ``an opportunity to submit comments on such 
recommendation and the proposed regulation'' (section 513(d) of the 
act). After reviewing the comments, FDA must classify the device ``by 
regulation'' (Id.).
    As required by section 513 of the act, FDA will, in a future 
rulemaking, classify cigarettes and smokeless tobacco in accordance 
with the procedures in section 513 of the act. Without prejudging that 
proceeding, the agency recognizes that it will involve consideration of 
both the known risks of tobacco products and the public health concerns 
that could be raised by withdrawal from the market of cigarettes and 
smokeless tobacco to which many adults are addicted. Moreover, the 
agency's restrictions on access and advertising in this final rule, 
which are carefully designed to help prevent young people from becoming 
addicted, will need to be factored in as well.
    Consistent with the statute and the agency's normal practice, 
however, FDA is not postponing regulation of cigarettes and smokeless 
tobacco under its general authorities pending classification. Such a 
postponement would serve no useful purpose, because the general 
authorities will be applicable to cigarettes and smokeless tobacco 
regardless of the outcome of the classification proceeding. To the 
contrary, postponing application of FDA's general authorities would 
have adverse consequences for public health because, during the several 
years that it may require to complete classification, the applicability 
of the controls put in place by this final rule, as well as the 
registration, GMP, and other general controls discussed in this 
document, would be delayed with respect to cigarettes and smokeless 
tobacco. During this period, millions of children and adolescents would 
be likely to use cigarettes and smokeless tobacco for the first time 
and, in the absence of FDA regulation under its general authorities, 
become addicted to these dangerous products.
    The tobacco industry argues that FDA cannot classify cigarettes and 
smokeless tobacco because, given ``FDA's view of the health effects'' 
of cigarettes and smokeless tobacco, classification would inevitably 
lead to a ban of the products. According to the industry, FDA cannot 
classify cigarettes under class I or class II because neither the 
general nor the special controls will provide what FDA will regard as a 
reasonable assurance of safety, leaving FDA with only one option: To 
classify cigarettes and smokeless tobacco under class III. According to 
the industry, classifying cigarettes and smokeless tobacco under class 
III would lead to a ban of cigarettes and smokeless tobacco because FDA 
cannot grant premarket approval of a class III device until it is 
satisfied that there is reasonable assurance that the device is safe. 
The tobacco industry argues that the inability of FDA to classify 
cigarettes and smokeless tobacco without triggering a ban of the 
products demonstrates that the act was never intended to apply to 
cigarettes and smokeless tobacco.
    It would not be appropriate for FDA to make a final determination 
at this time as to whether the application of all appropriate 
regulatory controls identified in a classification proceeding would 
result in a reasonable assurance of safety and effectiveness for 
cigarettes and smokeless tobacco for any users. This determination must 
await completion of the classification process and of any regulatory 
steps identified in the classification process (section 513 of the 
act). Nonetheless, it seems clear that the best public health result is 
one that prevents access to tobacco products by children and 
adolescents while allowing their continued availability for adults. 
Moreover, the agency disagrees with industry comments that argue that 
it does not have the authority to permit the sale of tobacco products 
to adults because the agency has found that tobacco products are 
unsafe.
    In considering this issue, the agency reiterates that tobacco 
products are dangerous. As discussed more fully in section I. of this 
document and in the preamble to the 1995 proposed rule, cigarettes and 
smokeless tobacco cause great pain and suffering from illness, such as 
cancer, respiratory illnesses, and heart disease. More than 400,000 
people die each year as a result of tobacco use. \23\
---------------------------------------------------------------------------

    \23\ ``Cigarette Smoking-Attributable Mortality and Years of 
Potential Life Lost--United States, 1990,'' MMWR, CDC, vol. 42, No. 
33, pp. 645-649, 1993.
---------------------------------------------------------------------------

    If the act required that the agency limit its consideration to the 
risks of tobacco products, then it could not find that there is a 
reasonable assurance of safety. To the contrary, tobacco products are 
unsafe, as that term is conventionally understood. However, as 
reflected in the act and in judicial decisions, the determination as to 
whether there is a ``reasonable assurance of safety'' involves 
consideration of not only the risks presented by a product but also any 
of the countervailing effects of use of that product, including the 
consequences of

[[Page 44413]]

not permitting the product to be marketed. Thus, section 513(a)(2)(C) 
of the act declares that, with respect to safety and effectiveness, the 
agency must ``weigh[] any probable benefit to health from the use of 
the device against any probable risk of injury or illness from such use 
(see also 21 CFR 860.7(d)(1)). According to the legislative history of 
the Medical Device Amendments, ``[the reasonable assurance of safety 
standard] is predicated upon the recognition that no regulatory 
mechanism can guarantee that a product will never cause injury'' 
because ``[r]egulation cannot eliminate all risks but rather must 
eliminate those risks which are unreasonable in relation to the 
benefits derived'' (H. Rept. 94-853, 94th Cong., 2d sess., 16, 17 
(1976); see also United States v. Rutherford, 442 U.S. 544, 555 
(1979)).
    An example of the balancing of risks of using a product against the 
risks of not using a product can be found in the agency's approval of a 
number of drugs used in the treatment of various cancers. These drugs 
are highly toxic to patients who receive them, and in approving these 
drugs for chemotherapy, FDA balances the seriousness of the diseases 
these drugs were intended to treat against the drugs' toxicity. In 
cases where the risks of not treating the cancer outweighed the risks 
of the drugs, FDA has approved these products.
    Similarly, in the case of tobacco products, the agency must weigh 
the risks of leaving cigarettes and smokeless tobacco on the market 
against the risks of removing these products from the market. For 
children and adolescents, the serious health consequences of using 
tobacco products support an approach designed to reduce their use, as 
all 50 States and many of the tobacco companies themselves recognize. 
It is also relevant that many children who use tobacco products are in 
the period of initiation and are not addicted, and thus a prohibition 
of the sale and promotion to this segment of the population will 
effectively reduce their use of tobacco products. Although some 
children and adolescents are addicted to tobacco products, the agency 
has concluded that the approach that most effectively takes into 
account the health of young people is one that prohibits the sale and 
promotion of tobacco products to children and adolescents under 18 
years of age.
    The issue is more difficult with respect to adults, particularly 
adults who are addicted to cigarettes and other tobacco products. There 
are approximately 50 million Americans who currently smoke and another 
6 million who use smokeless tobacco. \24\ It is particularly relevant 
that 77 to 92 percent of all smokers are addicted \25\ and that a 
substantial number of all users of smokeless tobacco are addicted. \26\
---------------------------------------------------------------------------

    \24\ ``National Household Survey on Drug Abuse: Population 
Estimate 1993,'' DHHS, PHS, SAMHSA, Office of Applied Studies, 
Rockville, MD, Pub. No. (SMA) 94-3017, pp. 89 and 95, 1994.
    \25\ 1996 Jurisdictional Determination, section II(B)(2)(a).
    \26\ Id.
---------------------------------------------------------------------------

    The agency believes that these factors must be considered when 
developing a regulatory scheme that achieves the best public health 
result for these products. The sudden withdrawal from the market of 
products to which so many millions of people are addicted would be 
dangerous. First, there could be significant health risks to many of 
these individuals. Second, it is possible that our health care system 
would be overwhelmed by the treatment demands that these people would 
create, and it is unlikely that the pharmaceuticals available could 
successfully treat the withdrawal symptoms of many tobacco users. 
Third, the agency also believes that, given the strength of the 
addiction and the resulting difficulty of quitting tobacco use, a black 
market and smuggling would develop to supply smokers with these 
products. \27\ It also seems likely that any black market products 
would be even more dangerous than those currently marketed, in that 
they could contain even higher levels of tar, nicotine, and toxic 
additives. \28\
---------------------------------------------------------------------------

    \27\ That a black market and smuggling will occur can be 
predicted by examining the current situation with illegal drugs in 
the United States and past experience with prohibition of respect to 
alcoholic beverages. In both situations, individuals continued using 
the products. Moreover, in the case of cigarettes, even increased 
cost due to tax disparities can lead to smuggling and black markets. 
S. Rept. 95-962, 95th Cong., 2d Sess., (June 28, 1978); Joossens, 
L., and M. Raw, ``Smuggling and Cross Border Shopping of Tobacco in 
Europe,'' British Medical Journal, vol. 310, May 27, 1995.
    \28\ Such has been the case with illegally produced alcohol. See 
``Elevated Blood Lead Levels Associated with Illicitly Distilled 
Alcohol--Alabama, 1990-1991,'' MMWR, CDC, DHHS, vol. 41, No. 17, pp. 
294-295, 1992; Pegues, D. A., B. J. Hughes, C. H., Woernle, 
``Elevated Blood Lead Levels Associated with Illegally Distilled 
Alcohol,'' Archives of Internal Medicine, vol. 153, pp. 1501-1504, 
1993.
---------------------------------------------------------------------------

    Whether individuals who use these products have an opportunity to 
make an informed choice is also relevant. Most individuals who use 
these products begin as children and adolescents, at an age when they 
are not prepared for or equipped to make a decision that for many will 
have lifelong consequences.
    In contrast, adults generally have the capacity to make informed 
decisions. In the case of cigarette and smokeless tobacco, very few 
adults who have not used tobacco as children and adolescents choose to 
use these products as adults. \29\ Unfortunately, for the many 
individuals who have become addicted, their capacity to choose whether 
to use cigarettes or smokeless tobacco in large measure no longer 
exists. Thus, the agency must take their addiction into consideration 
when developing its regulatory scheme.
---------------------------------------------------------------------------

    \29\ 1994 SGR, pp. 5, 58, and 65-67.
---------------------------------------------------------------------------

    Serious health consequences follow both from the option of leaving 
tobacco products on the market and from the option of banning tobacco 
products. However, on balance, an approach that prohibits the sale and 
promotion of cigarettes and smokeless tobacco to children and 
adolescents, while permitting the sale to adults seems most 
appropriate. It is consistent with the statutory standard of reasonable 
assurance of safety and is more effective in achieving public health 
goals than a ban on all tobacco products. Therefore, FDA is adopting 
this approach in this final rule.
    There is also a basis for finding that these products are 
``effective'' for adults who are addicted to tobacco products because 
such products sustain with great efficacy the individual's continued 
need for the active ingredient nicotine. Tobacco products are effective 
for preventing withdrawal symptoms in individuals addicted to nicotine 
in much the same way that methadone is effective in preventing 
withdrawal.
    Section 516 of the act supports this analysis. Section 516 of the 
act is the provision that gives the agency the authority to ban medical 
devices. Under that provision, the agency ``may'' ban a device if it 
finds that the device presents ``an unreasonable and substantial risk 
of illness or injury.'' There are two elements of discretion which 
plainly allow the agency to leave these products on the market--the 
word ``may'' which applies to the entire banned device authority; and 
the standard of ``unreasonable * * * risk of illness or injury,'' which 
gives the agency ample discretion to balance the unique circumstances 
surrounding this product.

[[Page 44414]]

D. The Fact That the Act's Drug Authorities Authorize the Imposition of 
Similar Restrictions Supports the Reasonableness of the Restrictions 
That the Agency Has Imposed

    (16) At least one tobacco industry comment argued that the agency's 
proposed access and advertising restrictions were an affront to 
``common sense''--i.e., that the types of restrictions the agency had 
proposed, under the device provisions of the act, went well beyond what 
the plain language of the act could be read to support. The agency, 
however, could have chosen to impose similar restrictions using the 
act's drug authorities. As this section demonstrates, the agency has 
restricted the marketing of a number of drug products, using the 
adulteration, misbranding, and marketing provisions governing drug 
products. That similar restrictions can be invoked under either the 
act's device authorities or under the act's drug authorities supports 
the reasonableness of restrictions adopted in the final rule.
    As discussed in the 1995 proposed rule and in sections II.A. and B. 
of this document, cigarettes and smokeless tobacco are drug delivery 
systems--i.e., they combine a drug component and a device component in 
a single combination product (60 FR 41314 at 41347 through 41349). As 
such, cigarettes and smokeless tobacco are subject to regulation under 
the device provisions of the act, the drug provisions of the act, or a 
combination of the two. The agency has determined that it should use 
the act's device authority to regulate these products because the 
device provisions of the act offer the agency greater regulatory 
flexibility than do the drug provisions of the act (see section II.B. 
of this document and the 1995 proposed rule at 60 FR 41314 at 41347 
through 41349). However, if there were no device component to 
cigarettes and smokeless tobacco, or if the agency had chosen to 
regulate these combination products under the act's drug authorities, 
the agency nevertheless could have limited the access to and 
advertising of these products in order to protect children and 
adolescents.
    Although the agency's authority to impose access restrictions on a 
drug product is not as explicit as it is under the device provisions of 
the act (see section 520(e) of the act authorizing controls over the 
``sale, distribution, or use'' of a device to protect against a 
potentially harmful or unsafe use), the agency has in fact drawn from 
several statutory sources to achieve some of the same regulatory 
results for a drug. The agency routinely imposes restrictions to 
protect against unsafe uses of drug products--even where those uses are 
otherwise unlawful, wholly irrational, or in contravention of express 
warnings. From the time of the product's development and manufacture 
through its retail sale, the agency is authorized to ensure that drug 
products are neither unsafe, misbranded, nor adulterated. (See sections 
201(n), 301, 501, 502, 503 and 505 of the act; United States v. 
Sullivan, 332 U.S. 689, 696 (1948) (Congress intended ``to safeguard 
the consumer by applying the Act to articles from the moment of their 
introduction into interstate commerce all the way to the moment of 
their delivery to the ultimate consumer'').)
    Consistent with this broad grant of authority, Congress also 
authorized the agency to issue regulations for the ``efficient 
enforcement'' of the act, such as regulations that set forth the 
conditions under which a drug must be marketed to ensure that it will 
not be deemed violative of the act (see section 701(a) of the act (21 
U.S.C. 371); United States v. Nova Scotia Food Products Corp., 568 F.2d 
240, 246 (2d Cir. 1977); and Pharmaceutical Manufacturers Association 
v. FDA, 484 F. Supp. 1179, 1183 (D. Del. 1980) (FDA has broad authority 
to issue drug regulations reasonably related to the public health 
purposes of the act, so long as the regulations further congressional 
objectives evidenced elsewhere in the act)).
    With this authority, the agency has imposed restrictions on the 
advertising, labeling, and packaging of drug products, as well as 
restrictions on access to drug products, without which the products 
could not be lawfully marketed. For example, the agency has used its 
authority to ensure that drug products are not adulterated to require 
special packaging requirements for over-the-counter (OTC) drugs, to 
protect against product tampering (see 47 FR 50442 at 50447, November 
5, 1982); Sec. 211.132 (21 CFR 211.132)). Thus, the agency has imposed 
industry-wide packaging requirements to protect against product 
contamination as well as unintended, unsafe uses of drug products. 
(Compare Sec. 897.14(d) (prohibiting retailers from breaking open 
cigarette and smokeless tobacco packages to sell loose cigarettes or 
smokeless tobacco).)
    Similarly, the agency has authority to control carefully the 
package size of drug products to protect persons who fail to follow the 
directions from taking a lethal dose of the product (see 60 FR 52474 at 
52491, 52502, and 52503, October 6, 1995, and Sec. 355.20 (21 CFR 
355.20) (final monograph setting package size limitations on OTC 
anticaries drugs to prevent individuals from ingesting an acutely toxic 
dose)). (Compare Sec. 897.16(b) (setting minimum package size for 
cigarettes).)
    Along the same lines, the agency has used its authority to ensure 
that drugs are not misbranded to restrict the marketing of certain drug 
products where consumers simply were unable or unwilling to heed the 
warnings on these products. In some instances, the agency has banned 
altogether the marketing of persistently misused drug products. (See, 
e.g., 47 FR 41716 at 41719, September 21, 1982 (camphorated oil 
products deemed misbranded because, despite label warnings, consumers 
continued to misuse the product); 47 FR 34636, August 10, 1982 
(proposing withdrawal of all drugs containing phenacetin because of 
persistent abuse, and associated health risks, despite label warnings 
contained on those products).) In other instances, the agency has 
restricted the product to prescription use. (See, e.g., Sec. 250.12 (21 
CFR 250.12) (requiring prescription dispensing of OTC stramonium 
preparations because, despite package warnings, young people continued 
to abuse and misuse them); Sec. 250.100 (21 CFR 250.100) (switching 
amyl nitrite inhalant from OTC to prescription dispensing because of 
persistent off-label use and abuse); see also 60 FR 38643, July 27, 
1995 (proposing to restrict ephedrine drug products to prescription 
marketing because of the illicit use of OTC ephedrine in the 
manufacture of certain controlled substances).)
    Finally, the agency has approved drug products with strict limits 
on distribution, to ensure that the drug will be safe for use under the 
conditions, prescribed, recommended, or suggested in the product's 
labeling. For example, the drug Clozaril<Register> (clozapine), used in 
the treatment of schizophrenia, can cause the onset of a potentially 
fatal blood condition, agranulocytosis. However, early detection of 
agranulocytosis through routine blood testing can substantially reduce 
the risk of death. FDA, therefore, approved the drug with labeling that 
provides that the drug is available ``only through a distribution 
system that ensures weekly [white blood cell] testing prior to delivery 
of the next week's supply of

[[Page 44415]]

medication.'' \30\ This labeling was intended to ensure that 
Clozaril<Register> would not continue to be administered to those for 
whom it presents an unreasonable risk of harm. The marketing of 
Clozaril<Register> in contravention of the labeling would result in the 
product being deemed misbranded and subject to regulatory action. More 
recently, the agency issued regulations authorizing generally 
restrictions on the distribution of drug products in instances where 
``a drug product shown to be effective can be safely used only if 
distribution or use is restricted * * *'' (see Sec. 314.520 (21 CFR 
314.520)). (Compare Sec. 897.16 (setting conditions on the manufacture, 
sale, and distribution of cigarettes and smokeless tobacco); 
Sec. 897.14(b)(1) (requiring retailers to verify the consumer's age to 
ensure that the product will not be used by minors) Sec. 897.16(c)(1) 
(prohibiting use of self-service displays at retail establishments).) 
\31\
---------------------------------------------------------------------------

    \30\ Clozaril<Register> (clozapine tablets) product labeling, 
Sandoz Pharmaceuticals, March 1994, in Physician's Desk Reference, 
50th edition, p. 2252, 1996.
    \31\ ``The Federal Food, Drug, and Cosmetic Act provides 
authority for FDA to restrict the conditions for use, including the 
channels of distribution and use, of any drug, or withdraw approval 
of an NDA, if a drug cannot otherwise safely be used'' (H. Rept. No. 
93-884, 93d Cong., 2d Sess., p.4, 1974, reprinted in U.S. Cong. & 
Admin. News, pp. 3029-3032). But see American Pharmaceutical Ass'n 
v. Weinberger, 377 F.Supp. 824, 829 (D.D.C. 1974) (striking down an 
FDA regulation restricting the distribution of methadone), aff'd per 
curiam sub nom. American Pharmaceutical Ass'n v. Mathews, 530 F.2d 
1054 (D.C. Cir. 1976). The American Pharmaceutical Ass'n case, 
however, was decided before the emergence of cases such as Chevron 
U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 
(1984), in which the Court signaled the importance of deferring to 
an agency's interpretation of its own statute, provided the 
interpretation is sufficiently rational. The case also involved some 
unique circumstances: the agency had withdrawn approval of the NDA 
for the drug (methadone), but nevertheless permitted the drug to be 
marketed under a regulation to certain treatment programs and 
pharmacies. Also, because methadone is a controlled substance within 
the provisions of the Controlled Substances Act, the district court 
concluded that issues regarding restrictions on the distribution of 
the drug were more properly within the jurisdiction of the 
Department of Justice than FDA. In most other instances, however, 
where a drug is not subject to the Controlled Substances Act, and 
where certain marketing restrictions are necessary to ensure that 
the drug will be used safely and effectively, under the conditions 
contemplated in a new drug application, the American Pharmaceutical 
Ass'n case is distinguishable.
---------------------------------------------------------------------------

    These examples illustrate how the agency has interpreted sections 
501, 502, 503, and 505 of the act (in conjunction with sections 201(n), 
301, and 701(a) of the act) as authorizing an array of controls to 
prevent unsafe uses of drug products. The minimum age requirement for 
cigarettes and smokeless tobacco (see Sec. 897.14(a)), and the controls 
on packaging (see Secs. 897.14(d) and 897.16(b) and (d)), vending 
machine sales (see Secs. 897.14(b) and 897.16(c)), and self-service 
displays (see Secs. 897.14(c) and 897.16(c)), follow this same path. 
Without these restrictions, cigarettes and smokeless tobacco as drug 
products could be deemed misbranded or adulterated drug products and 
could present too great a safety risk to be marketed at all.
    The final rule also regulates the advertising used to promote 
cigarettes and smokeless tobacco (see Secs. 897.30, 897.32, and 
897.34). While the act's device provisions provide the most direct and 
extensive basis for regulating the advertising of these products (see 
section VI. of this document), the drug provisions of the act also 
would have allowed the agency to regulate the advertising of these 
products.
    Whether a drug is marketed on a prescription basis or OTC, the 
agency has authority to prohibit advertising that promotes the product 
for a use for which it would be unapproved or misbranded (see sections 
201(n), 301, 502, and 505 of the act; see also Sec. 201.128 (21 CFR 
201.128) (advertising of a drug product may be used to establish that 
the product is being marketed for a use for which it is neither labeled 
nor approved)). Though the agency generally will defer to FTC with 
respect to the advertising of OTC drugs (see Food and Drug 
Administration and Federal Trade Commission Memorandum of Understanding 
(36 FR 18539, September 16, 1971)), the agency retains authority to 
take action against an OTC drug that is promoted for an unapproved use. 
(See Sec. 330.1(d) (21 CFR 330.1(d)) (for an OTC drug to be generally 
recognized as safe and effective, and not misbranded, the advertising 
for the drug must not prescribe, recommend, or suggest its use under 
conditions not stated in the labeling); see, e.g., Sec. 310.519 (21CFR 
310.519) (prohibiting the marketing of any OTC drug that is ``labeled, 
represented, or promoted as an OTC daytime sedative (or any similar or 
related indication)''.)
    The agency also has authority to require that a drug product not be 
advertised in a manner that would undercut or counteract the product's 
labeling, including label-based warnings. (See McNeilab, Inc. v. 
Heckler, Food Drug Cosm. L. Rep. (CCH 1985) (Transfer Binder) 
para.38,317, p. 39, 787 (D.D.C. 1985) (while FDA ``cannot rely on 
advertising to make safe [an OTC] drug which is deemed too dangerous to 
be sold with label warnings alone,'' it would be ``proper for the 
agency * * * to ensure that ads do not undercut otherwise sufficient 
labeling''); see also 57 FR 13234 at 13237, April 15, 1992 (preamble to 
Accelerated Approval Regulations discussing requirement of submission 
of promotional materials to ensure that the drugs approved under this 
section will not be put to inappropriate or unsafe uses).) And, 
irrespective of whether a drug is marketed OTC or by prescription, the 
agency has authority to prohibit the distribution of ``false or 
misleading'' product ``labeling'' (see section 502(a) of the act).
    Last, had the agency chosen to use the act's drug authorities to 
regulate these products, one possible means of limiting their access 
would have been to require some form of prescription dispensing. In 
that case, the agency's authority to regulate the advertising of 
cigarettes and smokeless tobacco would be extensive (see section 502(n) 
of the act; Sec. 202.1 (21 CFR 202.1); Sec. 314.81(b)(3)(i) (21 CFR 
314.81(b)(3)(i))). The agency, for example, has discretion under the 
act to regulate both the presentation and format of prescription drug 
advertising. According to the House Conference Report on section 502(n) 
of the act, Congress contemplated that:
    [I]n administering the requirement contained in the conference 
substitute that advertisements contain brief summaries of side 
effects, etc., the Secretary under the conference substitute has 
sufficient discretion to exercise due regard to the size of the 
advertisement, the need for protecting the public health, and the 
conditions for which the drug is offered in the advertisement.
(Report of the Committee of Conference, H. Conf. Rept. 2526, 87th Cong. 
2d sess., (Oct. 3, 1962) reprinted in 1962 U.S. Code Cong. and Admin. 
News 2927, 2934 (emphasis added).)
Further, the agency may take action against a prescription drug 
advertisement to the extent it lacks ``fair balance'' or is otherwise 
``false or misleading'' (see sections 201(n), 502(a), and (n) of the 
act; Sec. 202.1 (21 CFR 202.1)). Thus, had the agency chosen to 
regulate these products as prescription drugs, the agency's existing 
prescription drug advertising regulations themselves would require 
significant changes to the content and format of the tobacco industry's 
advertising campaigns.
    The final concern--had the agency regulated these products as 
drugs--is whether cigarettes and smokeless tobacco could continue to be 
marketed to adults. As discussed in greater detail

[[Page 44416]]

in section II.C.5. of this document, there are compelling public health 
reasons for permitting the continued marketing of these products to 
adults. The same rationale would apply had these products been 
regulated as drugs. As is the case with respect to devices, there is a 
basis for concluding that an approach that prohibits the sale and 
promotion of cigarettes and smokeless tobacco to children and 
adolescents, yet allows these products to continue to be marketed to 
adults who are addicted to these products, could be found to be 
consistent with the statutory standard of ``safe'' and ``effective'' 
under section 505 of the act for these products.
    It is, of course, essential to this analysis that the agency's 
youth access restrictions in new part 897 be implemented. These 
restrictions are necessary to help ensure that the most alarming safety 
issue associated with these products will have been contained. Absent 
these restrictions, the risks associated with the continued marketing 
of these products, even to adults, may be overwhelming. The close issue 
of whether the public health is better served by allowing adults to 
continue to use these products, such that the agency could find that 
cigarettes and smokeless tobacco are ``safe'' and ``effective,'' 
depends heavily on the agency's ability to prevent the most alarming 
use of these products, namely, use by substantial numbers of children.
    Moreover, the approach of allowing the continued marketing of these 
products to adults, so long as youth access is carefully controlled, 
would be consistent with the agency's inherent discretion to take 
enforcement action against some uses of a drug product, but not others. 
Such an exercise of discretion would be unreviewable (Heckler v. 
Chaney, 470 U.S. 821 (1985)). \32\
---------------------------------------------------------------------------

    \32\ See Cutler v. Hayes, 818 F.2d 879, 893 (D.C. Cir. 1987) 
(``The FDC act imposes no clear duty upon FDA to bring enforcement 
proceedings to effectuate either the safety or the efficacy 
requirements of the Act''); Schering Corp. v. Heckler, 779 F.2d 683, 
686 (D.C. Cir. 1985) (FDA's agreement not to take enforcement action 
against an unapproved product for a period of 18 months was 
unreviewable); see also Cutler v. Kennedy, 475 F.Supp. 838, 856 
(D.D.C. 1979) (while FDA may not formally authorize the sale of 
drugs that it has found do not comply with the safety and 
effectiveness provisions of the act, the agency may use its 
enforcement discretion not to move against these unapproved drug 
products).
---------------------------------------------------------------------------

    In resolving that there is a presumption against judicial review of 
agency determinations not to take enforcement action, the Chaney Court 
reasoned that an agency's nonenforcement policy generally involves a 
complex weighing of factors ``peculiarly'' within the agency's 
expertise. (Id. at 831). These factors include, ``whether agency 
resources are best spent on this violation or another,'' ``whether the 
agency has enough resources to undertake the action at all,'' and 
``whether the particular enforcement action requested best fits the 
agency's overall policies.'' (Id. at 831-832).
    A decision by the agency to focus its resources on youth access to 
cigarettes and smokeless tobacco involves the same ``ordering of 
priorities''--i.e., the same balancing of agency-specific factors--on 
which the rule crafted in Chaney rests. Thus, were the agency to 
enforce the act only with respect to the promotion and sale of these 
products to children and adolescents, such a decision would enjoy the 
full force of the Chaney Court's presumption of nonreviewability. \33\
---------------------------------------------------------------------------

    \33\ In a number of other contexts, the agency has declined to 
take enforcement action against particular uses of unapproved drug 
products. Indeed, the agency has on occasion set forth detailed 
guidelines outlining the conditions under which it will, as a 
general matter, refrain from taking regulatory action. (See, e.g., 
FDA Compliance Policy Guide, (CPG) 7132b.15 (stating that pending 
completion of the OTC Drug Review, FDA generally will not take 
regulatory action against unapproved or misbranded OTC drugs prior 
to completion of a final monograph); CPG 7125.06 (setting conditions 
exempting extra-label use of new animal drugs from regulatory 
action); Regulatory Procedures Manual 9-71 (setting conditions under 
which FDA generally will permit the import of small quantities of 
unapproved drugs for personal use which are not available 
domestically).)
---------------------------------------------------------------------------

    Thus, while the agency finds that cigarettes and smokeless tobacco 
are more appropriately regulated as restricted devices, as the 
discussion in section II.C. of this document demonstrates, the agency 
could have crafted a serviceable regulatory scheme for these products 
under the drug provisions of the act. Contrary to the comments that 
have argued that the act is inherently unfit for regulation of these 
products, or that the agency's proposed restrictions exceeded the 
common sense boundaries of the act, both the device provisions and the 
drug provisions of the act provide sound authority for controlling the 
access to and promotion of these drug delivery devices.

E. Constitutional Issues Regarding Authority

1. Separation of Powers
    The doctrine of Separation of Powers refers to the distribution 
under the Constitution of the Federal Government's powers among the 
legislative, executive, and judicial branches. In particular, under 
this scheme only Congress has the constitutional authority to make law.
    (17) Numerous comments by industry, media, and retailer trade 
associations and by State legislators and individuals argued that FDA's 
assertion of jurisdiction over tobacco products supersedes Congress' 
legislative judgment, and, some argued, therefore violates the doctrine 
of Separation of Powers. The comments contended that Congress has 
provided statutory authority over tobacco products to the Executive 
Branch only under the statutes that it has enacted that expressly apply 
to tobacco products, such as the Comprehensive Smokeless Tobacco Health 
and Education Act (the Smokeless Act) (15 U.S.C. 4401 et seq.) and the 
Federal Cigarette Labeling and Advertising Act (the Cigarette Act) (15 
U.S.C. 1331 et seq.) and not at all under the act. The comments cited 
the history of proposals in Congress further to regulate tobacco 
products, none of which came to fruition, as evidence that Congress has 
exercised its legislative will not to act further on tobacco 
regulation.
    The agency does not agree that the rule violates the Separation of 
Powers Doctrine. The relevant legal standards are set out in Youngstown 
Sheet and Tube Co. v. Sawyer, 343 U.S. 579 (1952), and Chrysler Corp. 
v. Brown, 441 U.S. 281 (1979), which are cited in the comments. Justice 
Black's opinion for the Court in Youngstown stands for the proposition 
that the Executive Branch may not act unless authorized by the 
Constitution or by statute to do so. In particular, lacking 
Constitutional authority, the Executive Branch may act only under the 
aegis of a statute passed by Congress under its ``law making power'' 
(see Youngstown, 343 U.S. at 585-586, 589).
    Executive Branch agencies frequently act by rulemaking. In 
Chrysler, the Supreme Court considered the prerequisite for an agency's 
``legislative'' or ``substantive'' rules to have the ``force and effect 
of law'' (see Chrysler, 441 U.S. at 301-302). ``The legislative power 
of the United States is vested in the Congress, and the exercise of 
quasi-legislative authority by governmental departments and agencies 
must be rooted in a grant of such power by the Congress and subject to 
limitations which that body imposes'' (Id. at 302). Therefore, for 
legislative rules to have the ``force and effect of law,'' they must be 
``reasonably within the contemplation of [the statutory] grant of 
authority'' (Id. at 306). The ``thread''

[[Page 44417]]

between the regulations and the statute relied upon may not be ``so 
strained that it would do violence to established principles of 
separation of powers to denominate the[] particular regulations 
`legislative' and credit them with the `binding effect of law''' (Id. 
at 307-308).
    This is not to say that any grant of legislative authority to a 
Federal agency by Congress must be specific before regulations 
promulgated pursuant to it can be binding on courts in a manner akin 
to statutes. What is important is that the reviewing court 
reasonably be able to conclude that the grant of authority 
contemplates the regulations issued.
(Id. at 308.)
Youngstown therefore requires that FDA act under a statutory grant by 
Congress, while Chrysler demands a ``nexus between [FDA's] regulations 
and some delegation of the requisite legislative authority by 
Congress'' (see Chrysler, 441 U.S. at 304).
    As discussed elsewhere in this document, Congress exercised its 
lawmaking power to provide FDA with the authority to regulate any 
product that is a drug or device as defined in section 201 of the act. 
The evidence cited in both the 1995 Jurisdictional Analysis and the 
1996 Jurisdictional Determination annexed hereto demonstrates that 
cigarettes and smokeless tobacco meet the statutory definitions of drug 
and device. FDA may therefore act to regulate tobacco products, and in 
doing so, it is acting ``pursuant to an express or implied 
authorization of Congress,'' and the executive branch's ``authority is 
at its maximum * * *'' (see Youngstown, 343 U.S. at 635 (Jackson, J., 
concurring)). Moreover, Chrysler does not require that the act 
specifically refer to tobacco products, as the comments suggested (see 
Chrysler, 441 U.S. at 308). In fact, most products regulated by FDA are 
not specifically referred to in the act. In addition, as discussed in 
sections X.A. and X.B. of this document, neither the Smokeless Act nor 
the Cigarette Act precludes regulation under the act of cigarettes and 
smokeless tobacco as drug delivery devices. FDA's assertion of 
jurisdiction over cigarettes and smokeless tobacco is therefore 
reasonably contemplated by the laws as enacted by Congress. 
Consequently, in regulating tobacco products under the act, FDA is not 
asserting the lawmaking power reserved by the Constitution to Congress.
2. Nondelegation Doctrine
    The Nondelegation Doctrine, broadly speaking, imposes constraints 
on Congress' authority to delegate to others the legislative power 
vested in it by the Constitution.
    (18) While maintaining that Congress has not granted FDA the 
authority to regulate tobacco products, an industry comment argued that 
FDA seeks to assume authority that, under the Nondelegation Doctrine, 
Congress could not have delegated to the Executive Branch. In 
particular, the comment argued that the act requires FDA to approve a 
new drug as safe and effective, or to ban it, and to classify a device 
into one of three categories in which it will be required to meet 
conditions that ensure that it is safe and effective. Because FDA 
proposed to do neither with respect to nicotine and cigarettes and 
smokeless tobacco, the comment contended, the agency is free to choose 
any course it wishes; and had Congress delegated to FDA such unlimited 
authority, it would have violated the Nondelegation Doctrine. The 
comment can also be read to suggest that, if FDA has the flexibility to 
regulate medical devices, and in particular tobacco products, as it 
proposed, then Congress provided the agency without a standard, that 
is, with too much discretion.
    The agency disagrees with this comment. The act, while vesting FDA 
with broad discretion to regulate foods, drugs, and devices, does so by 
precisely defining the agency's jurisdictional ambit in section 201 of 
the act and by establishing a range of requirements and enforcement 
provisions--for example, in sections 301, 302, 303, 304, 501, 502, 505, 
510, 513, 514, 515, 516, 517, 518, 519, 520, and 701 of the act (21 
U.S.C. 331, 332, 333, 334, 351, 352, 355, 360, 360c, 360d, 360e, 360f, 
360g, 360h, 360i, 360j, and 371 respectively)--for it to pursue when, 
in its discretion, Heckler v. Chaney, 470 U.S. 821 (1985), it has found 
the operative facts established by Congress. The act therefore involves 
no delegation of Congress' legislative power that violates the 
Nondelegation Doctrine, as the courts have repeatedly held. (See, e.g., 
United States v. Shreveport Grain and Elevator Co., 287 U.S. 77, 85 
(1932); United States v. Garfinkel, 29 F.3d 451, 457-59 (8th Cir. 
1994); White v. United States, 395 F.2d 5, 9-10 (1st Cir.), cert. 
denied, 393 U.S. 928 (1968)); United States v. 62 Packages, More or 
Less, of Marmola Prescription Tablets, 48 F. Supp. 878, 884 (W.D. Wis. 
1943), aff'd, 142 F.2d 107 (7th Cir.), cert. denied, 323 U.S. 731 
(1944).)
    The Supreme Court has only infrequently invalidated a congressional 
delegation to the Executive Branch. (See, e.g., Panama Refining Co. v. 
Ryan, 293 U.S. 388, 418 (1935) (holding statute authorizing the 
President to prohibit interstate shipment of ``hot oil'' determined by 
State law or regulation to be ``excess'' to be unconstitutional 
delegation because ``Congress left the matter to the President without 
standard or rule, to be dealt with as he pleased''); Schechter Poultry 
Corp. v. United States, 295 U.S. 495, 541-542 (1935) (reversing 
convictions for violations of code of conduct for poultry suppliers 
because ``the discretion of the President in approving or prescribing 
[such] codes, and thus enacting laws for the government of trade and 
industry throughout the country, is virtually unfettered'').)
    More recently, the courts have applied the Nondelegation Doctrine 
to reach, or require from an agency, a narrow interpretation of a 
statutory provision that would otherwise be too broad a delegation. 
(See, e.g., Industrial Union Dep't., AFL-CIO v. American Petroleum 
Inst., 448 U.S. 607, 646 (1980); International Union, UAW v. OSHA, 37 
F.3d 665, 668-69 (D.C. Cir. 1994); International Union, UAW v. OSHA, 
938 F.2d 1310, 1316-17 (D.C. Cir. 1991).)
    Unlike the statutes under review in Panama Refining and Schechter, 
the act sets standards for FDA to follow. The agency need not narrowly 
interpret the act to avoid an otherwise over-broad delegation, and 
courts have repeatedly directed that the act be construed liberally in 
light of its public health purpose (see sections I.B. and II.A. of this 
document). The agency's rulemaking with respect to tobacco products is 
a legitimate application of those standards to the facts before the 
agency. The agency therefore concludes that neither the act nor this 
rulemaking violates the Nondelegation Doctrine.

III. Overview of Comments, Smoking Prevalence Rates Among Minors, 
Scope, Purpose, and Definitions

A. Overview of Comments

    From the time the 1995 proposed rule was published on August 11, 
1995 (60 FR 41314), until January 2, 1996, the Food and Drug 
Administration (FDA) accepted public comments. This comment period was 
the opportunity for the public to speak to FDA about the matter of 
regulating nicotine-containing tobacco products. On March 18, 1996, the 
agency reopened the comment period for 30 days to make additional 
information relevant to this rulemaking available for public comment.

[[Page 44418]]

    The 1995 proposed rule generated more responses than the agency had 
received at any other time in its history on any other subject. 
Altogether, the agency received more than 700,000 pieces of mail, 
representing the views of nearly 1 million individuals. Most of the 
submissions were form letters or post cards. The agency identified more 
than 500 different types of form letters. \34\ Others were petitions 
with sometimes hundreds of signatures. More than 95,000 submissions 
expressed individual comments on the 1995 proposed rule, including more 
than 35,000 from children who were overwhelmingly supportive. The 
individual comments included one from an industry trade association 
which delivered a single submission of some 45,000 pages on the last 
day of the announced comment period.
---------------------------------------------------------------------------

    \34\ Opponents and proponents of the rule organized letter-
writing campaigns. One, a massive tobacco company-orchestrated 
campaign, generated some 300,000 pieces of mail--nearly half of all 
of the mail received by the agency on this topic.
---------------------------------------------------------------------------

    As may be expected, comments differed sharply on the overarching 
issues of whether FDA should regulate cigarettes and smokeless tobacco, 
and whether the 1995 proposed rule would have the desired effect of 
reducing the availability and attractiveness of these products to 
children and adolescents.
    Several Government officials commented, including U.S. Senators and 
Congressmen, other Federal agencies, State governors and legislators, 
and law enforcement officials. Comments came from every corner of the 
country. FDA heard from smokers who could not understand why the 
Government was meddling in their lives, and from smokers who 
desperately wanted to quit, but could not. It heard from employers and 
employees in the affected industries, including tobacco farmers, 
wholesalers, cigarette manufacturers, and even laborers with the lowest 
paying jobs who feared that they might lose the only jobs they know. 
The agency even heard from school children who wanted to be protected 
from tobacco. ``It is not fair,'' wrote one 13-year-old, ``that the 
tobacco companies try to get kids to use tobacco.''
    Although many of the comments were addressed to specific portions 
of the tobacco regulation proposal, tens of thousands of letters 
commented in general. Thousands of general comments supported the rule. 
Some, like this one, came from surprising sources: ``I support 
regulations restricting the sale, advertising, promotion and 
distribution of cigarettes and chewing tobacco. I grow tobacco, but I 
know it is wrong to sell death. I really feel sorry for people who are 
'hooked' on nicotine.'' Other supporting comments came from more 
traditional sources, especially the medical and public health 
communities. One letter from a coalition of medical associations that 
was addressed to President Clinton said: ``We, the undersigned 125 
organizations, representing more than 18 million members and 
volunteers, urge your strong support for Food and Drug Administration 
actions to protect children and teenagers from tobacco.''
    Many expressed strong overall opposition to the rule. One comment 
said: ``I am taking the time to write this letter to express my 
overwhelming dissatisfaction with the action of the FDA in trying to 
rewrite the Constitution and take control of the Tobacco Industry.''
    Although many comments opposed FDA's regulation of tobacco 
products, there was nearly unanimous agreement--even from the tobacco 
companies and smokers--that children under the age of 18 should not be 
using nicotine-containing products, either cigarettes or smokeless 
tobacco. A few children, however, did write that, even if tobacco use 
is unhealthy, it should still be their choice, even if they are younger 
than 18. The agency received thousands of general comments about the 
addictive and harmful consequences of tobacco use, and they called on 
the agency to act.
    A summary of the general issues reflected in the thousands of 
comments, and the agency's responses, follows:
    (1) The agency received several thousand comments stating that FDA 
should focus on the products it already regulates. In addition, many 
comments said that FDA should not expand its responsibilities because 
the agency's resources already are inadequate. Others stated that the 
regulation of tobacco is a responsibility that Congress has reserved 
for itself.
    In contrast, many supporters of the 1995 proposed rule argued that 
it was appropriate for FDA to take action on this issue. One woman 
wrote: ``As the Federal agency designed to protect consumers from 
harmful consumer products, FDA clearly has both the right and the 
responsibility to take these actions against the most serious health 
threat to our young people.''
    The regulation of drugs and medical devices sold through interstate 
commerce is central to FDA's established role. Based on recently 
available information, as stated in section II. and in the 1996 
Jurisdictional Determination annexed hereto, FDA has determined that 
nicotine is an addictive drug, and that cigarettes and smokeless 
tobacco are drug delivery devices, which are combination products under 
section 503(g) of the Federal Food, Drug, and Cosmetic Act (the act) 
(21 U.S.C. 353(g)). As such, these products fall within the traditional 
scope of FDA's jurisdiction. Therefore, by regulating these products, 
FDA is carrying out its traditional role.
    (2) FDA received thousands of comments about how smoking was an 
issue of free choice for adults. Most of the comments focused either on 
the ideological issue of freedom to choose anything, even something 
dangerous, or on related economic issues, such as the freedom to 
receive discount or specialty tobacco products by mail. Many comments 
said the Government must not attempt to regulate human behavior, 
especially for adults, even when there are health consequences. Letters 
like this were typical: ``As individuals we too have been promised the 
freedom of choice and this should continue to be. I don't want the 
government regulating my personal freedoms.''
    Supporters of the rule countered that because nicotine addiction is 
a pediatric disease, the choice to start smoking is not being made by 
adults, but by adolescents who constitute a most vulnerable population. 
Because they are not yet mature individuals, they are not really 
expressing a free choice, the comments said. In addition, supporters of 
the rule stated that adolescents, who are so impressionable, are being 
manipulated by the tobacco companies, especially through advertising, 
and therefore, are actually being denied a free choice. Instead, the 
comments urged that adolescents not be allowed to choose something 
addictive that may damage their health or shorten their lives.
    FDA believes that adults should continue to have the freedom to 
choose whether or not they will use tobacco products. However, because 
nicotine is addictive, the choice of continuing to smoke, or use 
smokeless tobacco, may not be truly voluntary. Because abundant 
evidence shows that nicotine is addictive and that children are not 
equipped to make a mature choice about using tobacco products, the 
agency believes children under age 18 must be protected from this 
addictive substance.
    (3) Numerous comments, many from adult smokers, expressed the fear 
that FDA's true goal is a total ban of all

[[Page 44419]]

tobacco products. Some asserted that the 1995 proposed rule is a 
prelude to prohibition. One woman wrote: ``The most insidious insight 
into this proposed regulatory act is the Federal Government's thinly 
veiled motive of the eventual prohibition of tobacco sales in the 
United States to appease a small minority of fanatical anti-smoking 
zealots.''
    FDA strongly disagrees with these comments and reiterates that it 
has no intention of banning cigarettes and smokeless tobacco. FDA is 
aware that at least one tobacco manufacturer, in letters sent to its 
customers encouraging them to submit comments opposing the rule, 
claimed that the ``real agenda is Backdoor Prohibition of all tobacco 
products.'' These allegations are baseless and ignore statements made 
by the President and FDA to the contrary. For example, when the 
President announced the proposed FDA regulations on August 10, 1995, 
one reporter asked whether an outright ban would be more logical than a 
``regulatory partial step.'' The President replied:
    I think it would be wrong to ban cigarettes outright because, 
number one, it's not illegal for adults to use them * * * tens of 
millions of adults do use them. And I think it would be as 
ineffective as prohibition was. But I do think to focus on our 
children is the right thing to do.

(Transcript, ``Press Conference by the President,'' dated August 10, 
1995)
The preamble to the 1995 proposed rule expressed a similar view that 
removing cigarettes and smokeless tobacco from the market would not be 
in the best interest of public health (60 FR 41314 at 41348 and 41349).
    Rather than instituting prohibition, the agency's rule will inhibit 
the spread of smoking behavior from one generation to the next. As a 
result, fewer and fewer adolescents will become addicted to nicotine-
containing products. As current smokers either quit or die, the total 
number of smokers will gradually decline as they are replaced by fewer 
and fewer new smokers. The agency wants to reassure those who fear that 
FDA is taking the first steps that would lead inexorably to a ban on 
the sale of these products to those 18 and over that FDA will not ban 
these products for adults. Thus, any claim that the rule is a prelude 
to or would lead to prohibition is totally without merit.
    (4) FDA received many comments from politicians, industry 
representatives, and private citizens who argued that the agency does 
not need to regulate tobacco because the product is already highly 
regulated. Many comments observed that all 50 States have passed their 
own laws prohibiting the sale of tobacco products to minors younger 
than 18. Comments on existing State enforcement programs primarily came 
from those opposed to FDA's proposed regulation, including legislators 
from more than a dozen States. These comments claimed that this should 
remain a State matter, that State laws are either sufficient or 
superior to the 1995 proposed rule, that State officials, unlike FDA, 
are responsive to the concerns of State citizens, and that States and 
private groups are more responsible and effective than a Federal 
agency. Comments like this were common: ``Many states have strict 
restrictions on tobacco sales to minors already and in my State 
(Maryland) these regulations are being enforced with great success.''
    Many supporters of the 1995 proposed rule, however, pointed out 
that State rules generally have failed to stop minors from purchasing 
tobacco products. One individual wrote: ``I currently live in a State 
where there is absolutely no enforcement of the laws banning sales of 
tobacco to minors,'' and numerous other comments referred to specific 
instances in which they said State laws were not observed. A joint 
letter sent by attorney generals from 25 States, as well as Guam and 
Puerto Rico, welcomed the 1995 proposed rule, saying:
    Although every State bans the sale of tobacco to minors, studies 
show that children have easy access to tobacco. * * * We believe the 
proposed rule, which emphasizes reducing access and limiting the 
appeal of tobacco products to children, should be a crucial 
component of a national effort by Federal, State and local officials 
to help our youngest generation of Americans avoid suffering 
preventable disease and premature death from the use of tobacco 
products.
    Many comments stated that the tobacco industry has in place 
guidelines to prevent the sale of tobacco products to minors. Said one 
comment: ``I fail to see why the government is so quick to dismiss 
voluntary action on the part of the industry.'' Other comments 
recommended that voluntary education programs aimed at retailers, or, 
more specifically, at retail sales clerks, would be sufficient. These 
educational programs would either be based on voluntary efforts by the 
affected industries or in-house, employee training programs.
    Supporters of the rule, however, expressed widespread distrust of 
the industry and of its promise to use voluntary programs to prevent 
minors from smoking. One woman wrote: ``Thirty years of experience in 
compromising with the tobacco industry has proven that the industry can 
not be trusted. After the release of the Surgeon General's report in 
1964, the tobacco industry promised to abide by a voluntary advertising 
code, but the code was quickly ignored after the threat of government 
regulation had passed.'' Another comment said: ``When tobacco companies 
fear government regulation, they often adopt voluntarily the 
restrictions the government is considering. However, there is no 
penalty for violating a voluntary guideline. The tobacco industry has a 
track record that speaks for itself. Please don't play the tobacco 
industry's game!''
    The agency believes that the comments opposing the rule on the 
basis that the States already have restrictions have misinterpreted its 
scope and application. FDA, under the act, regulates human and animal 
drug products, certain foods, and devices that are, or have been in 
interstate commerce. The fact that these products move across State 
lines makes their regulation a Federal matter.
    Other statutes and regulations provide further evidence that 
tobacco regulation is not reserved to States. The Federal Cigarette 
Labeling and Advertising Act (15 U.S.C. 1331 et seq.) (Cigarette Act) 
and the Comprehensive Smokeless Tobacco Health Education Act (15 U.S.C. 
4401 et seq.) (Smokeless Act), among other things, place federally-
required statements and warnings on cigarettes and smokeless tobacco 
and require manufacturers to submit reports to the Federal Government. 
These products are also subject to Federal taxes (see, e.g., 26 U.S.C. 
5701) and Federal, rather than State, laws and regulations intended to 
guard against contraband cigarettes (see 18 U.S.C. 2341 et seq.; 27 CFR 
part 296, subpart F). Thus, tobacco regulation is clearly both a 
Federal and State matter.
    FDA also disagrees with those comments suggesting that States and 
private groups may be more responsible or efficient than FDA or that 
FDA may not be as responsive to citizens' concerns. Federal regulation 
of these products has several significant advantages over State or 
private group oversight alone; for example, the rule establishes 
minimum, national standards for the sale and distribution of these 
products whereas State or private group efforts may be limited to a 
specific locality or to group members. FDA's regulations also create 
enforceable obligations whereas private

[[Page 44420]]

group efforts, voluntary codes, and industry policies do not.
    FDA notes that this regulation does not necessarily preclude States 
from enforcing their own laws. In fact, under section 1926 of the 
Public Health Service Act (the PHS Act) (42 U.S.C. 300x-26), States are 
expected to enact and to enforce laws to prohibit any manufacturer, 
retailer, or distributor of tobacco products from selling or 
distributing such products to any individual under age 18.
    Moreover, States may choose to regulate areas that are not 
addressed in this rule and not authorized by the act, such as requiring 
licenses for retailers. FDA agrees with the comments from State 
attorneys general that effective regulation of cigarettes and smokeless 
tobacco, in order to protect children and adolescents, will involve 
cooperation and joint efforts by Federal and State officials and FDA's 
rule will enhance, rather than hinder, State tobacco control efforts.
    Moreover, States are not precluded from taking action in areas that 
are addressed in this rule. Although some of these requirements may be 
preempted, the State may petition the agency for an exemption from the 
act's preemptive effect under section 521(b) of the act (21 U.S.C. 
360k(b)). A more detailed discussion of preemption can be found in 
section X. of this document.
    Finally, regarding the comments questioning FDA's response to State 
or citizen concerns, mechanisms do exist for States and individual 
citizens to seek regulatory action or changes by FDA. FDA regulations 
permit any person to petition the agency to request an action (such as 
issuance, amendment, or revocation of a rule), to reconsider an action, 
or to stay an administrative action (see Secs. 10.30, 10.33, and 10.35 
(21 CFR 10.30, 10.33, and 10.35)). Less formal mechanisms for 
communicating with FDA, such as letters or meetings, exist as well.
    (5) Many comments opposing this rule argued that the tobacco 
industry already is intensely regulated, and that more regulation is 
unneeded and unjustified. One person wrote: ``As you know the tobacco 
industry is already one of the most heavily regulated industries in the 
United States. Current laws would accomplish the stated objective of 
the proposed FDA regulations.'' Others disagreed: ``I believe that the 
tobacco industry has a long, sorry, and cynical record * * *. It is an 
industry that greatly deserves to be regulated further.''
    While it is true that production of tobacco products is regulated, 
and the industry is heavily taxed, virtually none of these measures is 
aimed at the product's impact on the health of the individuals using 
them or on public health. FDA regulation of tobacco products is 
intended to have a completely different effect than any of the rules 
that currently applies to the tobacco industry. The agency's regulatory 
effort will attempt to reduce the number of young people who smoke or 
use tobacco products, consistent with FDA's mission to protect public 
health by existing laws.
    (6) Many comments objected to the 1995 proposed rule, stating that 
cigarettes and smokeless tobacco are legal products and should be 
treated like any other legal consumer product.
    FDA believes that the comments misunderstand the regulatory basis 
for the rulemaking. FDA has determined that these products contain both 
a drug and device component as defined in section 201(g) and (h) of the 
act (21 U.S.C. 321(g) and (h)), respectively, because the products, and 
the nicotine in the products, are intended to affect the structure and 
function of the body. The agency has further determined that these 
products should be regulated as devices. Thus, the issue is not merely 
whether the products themselves have been legally marketed, but how 
they may be most appropriately regulated to protect the public health, 
given their status under the act and potential to do harm.
    (7) Some comments suggested that if the Government begins 
regulating tobacco, it will soon regulate many other consumer products 
that are now legal, but judged to be harmful to health, including 
alcohol and caffeine. They expressed fear that, once FDA begins to 
regulate one consumer product, it will be obligated to regulate others. 
Said one man: ``The FDA thinks it is being sly by defining cigarettes 
as `nicotine delivery devices.' A shot glass must then be described as 
a device for alcohol consumption. A coffee mug must be a device for 
caffeine consumption. Will the FDA be regulating my morning coffee by 
restricting the size of my cup?'' Some supporters of the proposed rule 
said that FDA should regulate some of the other consumer products 
associated with medical disorders. Wrote one: ``Bud frogs are no 
different than Joe Camel.''
    FDA strongly disagrees with these comments and believes that the 
concerns they express are misplaced. In no way does the agency's 
regulation of cigarettes and smokeless tobacco as nicotine delivery 
devices justify or require the regulation of coffee cups and shot 
glasses.
    First, the agency notes that currently it regulates both caffeine 
and alcohol under the authority of the act. Caffeine naturally occurs 
in coffee, tea, and other foods. It is also used as an ingredient in 
soft drinks. The act defines ``food'' as ``articles used for food or 
drink for man or other animals'' (section 201(f)(1) of the act (21 
U.S.C. 321(f)(1))). When caffeine naturally occurs in products that are 
foods, such as coffee, or when caffeine is used in soft drink products 
in accordance with section 402 of the act (21 U.S.C. 342), the product 
is a ``food'' under section 201(f)(1) of the act and thus explicitly 
excepted from the definition of ``drug'' in section 201(g)(1)(C) (21 
U.S.C. 321(g)(1)(C)). Caffeine used in soft drinks in accordance with 
section 402 of the act is appropriately regulated as a food under 
201(f)(1) of the act. Caffeine is also used as an active ingredient in 
several products regulated as drugs by the agency, including over-the-
counter stimulants, internal analgesics and menstrual discomfort relief 
products.
    Likewise, alcohol is used as an ingredient in products regulated as 
drugs under the act, including over-the-counter cough and cold 
preparations. There is no evidence to suggest that the agency's current 
regulation of these substances is inappropriate or inadequate to 
protect the public health. Therefore, there is no factual or scientific 
basis for the agency to change the manner in which these substances are 
now being regulated.
    FDA's attention was drawn to tobacco rather than caffeine and 
alcohol because of certain fundamental differences among the 
substances. Nicotine is a highly addictive drug. As discussed in 
section I.B. of this document, studies estimate that as many as 92 
percent of all smokers are addicted to the nicotine in cigarettes. 
There is no evidence that either caffeine or alcohol pose this kind of 
health problem. Moreover, cigarettes and smokeless tobacco are 
dangerous products that are associated with lung cancer, heart disease, 
and many other serious illnesses and conditions.
    Yet these factors only served to draw FDA's attention to the 
tobacco problem. What ultimately separates caffeine and alcohol from 
nicotine and tobacco products is that caffeine and alcohol are 
currently being appropriately regulated as foods or drugs based on 
their intended use. Nicotine and tobacco products, on the other hand, 
are drugs

[[Page 44421]]

and medical devices, respectively, that, in large measure, are not 
being appropriately regulated. FDA is moving to correct this situation, 
and the public health will undoubtedly benefit as a result.
    (8) Several comments argued that it is the responsibility of 
parents and teachers, not the Federal government, to educate young 
people about cigarette and smokeless tobacco use. Some comments feared 
that FDA's effort to reduce the use of nicotine-containing cigarettes 
and smokeless tobacco by youth might interfere with the relationship 
between parents and their children. Many comments voiced the argument 
that this rule is a sign of big Government getting in the way of 
parents educating their children. One comment stated, ``This is 
obviously a case of misplaced priorities * * *. The battle will really 
be won on the home front. Parental guidance will go a long way in 
curbing underage smoking.''
    Other parents, however, were grateful for any assistance they could 
get to help protect their children from nicotine addiction. One person 
said: ``The parents cannot do it all alone.'' Furthermore, most parents 
who submitted comments stated that a strong national approach to 
reducing these products' accessibility and appeal would reinforce 
messages that their children get at home. One comment stated, ``While I 
am in no way an advocate of government in my life, this to me is a 
totally different circumstance * * * children should not be expected to 
make these choices.'' One comment from a middle school student said, 
``Giving school age children the opportunity to purchase things that 
will endanger them is inexcusable.''
    The agency recognizes the unique role that parents and teachers 
have in educating young people and has no intention of intervening in 
that relationship. Rather, FDA expects the rule to complement parental 
and educational efforts by reducing the availability and appeal of 
tobacco products. The preamble to the 1995 proposed rule contained 
ample evidence as to how these products are easily accessible to and 
appeal to young people and how a comprehensive approach, aimed at 
reducing both access and appeal, will be more effective than an 
educational approach alone. Educating young people about health risks 
may deter some young people from trying cigarettes and smokeless 
tobacco, but educating them and simultaneously reducing their ability 
to acquire the products, as well as reducing the appeal of the products 
themselves, will prevent more young people from using the products.
    FDA also emphasizes that cigarettes and smokeless tobacco are 
combination drug-device products that are subject to regulation under 
the act. Consequently, the rule properly addresses issues relating to 
the sale, distribution, and use of these products by children and 
adolescents. The rule does not adversely affect a parent's or teacher's 
ability to discuss cigarette and smokeless tobacco use with young 
people.
    (9) Comments suggested that, for some, illegal drugs and crime 
evoke stronger emotions than tobacco use. Many comments stated that the 
Government, although not FDA specifically, should spend more of its 
resources on fighting crime instead of trying to regulate a legal 
product such as tobacco. One of the form letters stated it this way: 
``Federal dollars would be much better spent addressing inner-city 
violence, illegal drug sales, and this country's deteriorating 
education system.''
    FDA's authority is defined by the act. FDA lacks the authority to 
help with other social ills such as crime and illicit drug sales.
    (10) One comment urged FDA to institute policies that would 
facilitate ``whistleblowing.'' The comment said that FDA should 
encourage tobacco company employees to disclose allegedly illegal or 
dishonest practices.
    Any person, regardless of the industry that employs that person, 
can provide records and information to FDA for law enforcement purposes 
with the assurance that his or her identity, and the information and 
records that he or she provides, will not be publicly disclosed. 
Current Federal statutes and FDA regulations already protect records or 
information compiled for law enforcement purposes from public 
disclosure. For example, the Freedom of Information Act exempts law 
enforcement records and information from public disclosure. FDA's 
regulations governing public disclosure elaborate on this exemption, 
stating, among other things, that the agency may withhold from public 
disclosure records or information compiled for law enforcement purposes 
to the extent that disclosure of such records or information could 
reasonably be expected to disclose the identity of a confidential 
source and information furnished by a confidential source in the case 
of a record compiled by FDA or any other criminal law enforcement 
authority in the course of a criminal investigation (Sec. 20.64 (21 CFR 
20.64(a))).

B. Smoking Prevalence Rates Among Minors

    The agency received some comments stressing the importance of 
accurately measuring youth consumption of tobacco products, reiterating 
the problem of growing use among young people, and stressing the need 
to curb such growth to improve health and to reduce the tremendous 
health care costs attributable to tobacco-related illnesses. However, 
several disputed the statistics FDA cited on the number of youth 
smokers and challenged the data sources used. These comments are 
discussed below.
    (11) One comment objected to FDA's description of smoking as a 
``pediatric problem,'' arguing that ``TAPS II [Teenage Attitude and 
Practice Survey II] demonstrates that smoking in any meaningful sense 
is a phenomenon that occurs in the later teenage years, not in the pre-
teen or early teen years.'' It further charged that the agency's use of 
the term ``pediatric'' is intended to serve ``emotive and/or political 
purposes, not to describe the problem of underage smoking in scientific 
or medical terms.''
    A comment from a public health association, however, cited the TAPS 
II survey as showing that ``the average teen smoker initiates smoking 
at age 13, and becomes a regular smoker by age 14.5.'' It also referred 
to the Center for Disease Control and Prevention (CDC's) 1992 Youth 
Risk Behavior Survey, which showed ``similar patterns of early 
initiation rates, with smoking initiation rates rising rapidly between 
10 and 14 years of age.''
    The agency maintains its position that smoking is a pediatric 
disease. It agrees with the comment citing TAPS II and Youth Risk 
Behavior Survey data showing that the average teen smoker begins 
smoking in the early teens or even preteens, rather than later years.
    Furthermore, the American Academy of Pediatrics' Council on Child 
and Adolescent Health states that the purview of pediatrics includes 
the physical and psychosocial growth, development, and health of the 
individual beginning before birth through early adulthood, and that 
``[t]he responsibility of pediatrics may therefore begin with the fetus 
and continue through 21 years of age.'' This definition of pediatrics 
obviously includes the age group FDA has targeted to reduce smoking.
    (12) One comment from the tobacco industry charged that FDA's 
assertion

[[Page 44422]]

that smoking has increased among 8th- and 10th-grade students ignored 
CDC's TAPS II data showing that the incidence of underage smoking 
declined between 1989 and 1993. TAPS II, the comment maintained, showed 
that ``[a]lthough total smoking in the interview sample [1993] has 
increased as minors have aged since 1989, comparing the results for 
minors of a given age indicates that the incidence of underage smoking 
declined between the two surveys'' and that ``between the two surveys 
both daily smoking and any smoking in the past 30 days declined among 
minors.''
    The introduction to TAPS II stated that its prevalence findings 
were comparable to or lower than those of other national surveys. It 
explained that the survey method used in TAPS II, computer-assisted 
telephone interviews, had several limitations that may have led to the 
lower estimates. For example, young people may be fearful of disclosing 
smoking behavior if a parent is present in the room during the 
telephone interview. Further, telephone interviews do not afford the 
same opportunity for building a rapport between the interviewer and the 
respondent as do in-person interviews. As a result, young people being 
interviewed in this manner may be less likely to disclose their real 
smoking behavior. For these reasons, the introduction stated, 
``prevalence estimates from TAPS II may be lower than they would have 
been had the entire TAPS I cohort been successfully reinterviewed and 
therefore, should be interpreted with caution.'' \35\
---------------------------------------------------------------------------

    \35\ ``1993 Teenage Attitudes and Practices Survey, Public Use 
DataTape,'' CDC, OSH, p. 3, 1993 (unpublished data).
---------------------------------------------------------------------------

    (13) One comment challenged FDA's claim that 3,000 young people 
become new smokers every day. The comment maintained that ``the study 
from which the `3,000 per day' number was derived did not refer to 
children at all,'' but to smokers ``aged 20 years old'' (Pierce et al., 
1989) (emphasis from original). \36\
---------------------------------------------------------------------------

    \36\ Pierce, J. P., M. C. Fiore, T. E. Novotny, E. J. 
Hatziandreu, and R. M. Davis, ``Trends in Cigarette Smoking in 
United States: Projections to the Year 2000,'' JAMA, vol. 261, pp. 
61-65, January 6, 1989.
---------------------------------------------------------------------------

    The agency agrees that the study surveyed individuals who were 20-
years-old, although the agency referred to these individuals in 
essentially the same terms used by the authors of the study--``young 
persons.''
    Any potential confusion is mitigated by the fact that subsequent 
surveys indicate that the vast majority of 20-year-olds begin smoking 
at a younger age. For example, according to the Combined National 
Health Interview Surveys for 1987 to 1988, 92 percent of 20-year-old 
smokers started smoking by age 18. Taking into account the comment and 
these data, the agency believes that it is accurate to state that 
approximately 3,000 young people begin to smoke each day, regardless of 
whether young people is defined as under 18, or 20 years and under, 
although the agency would note that of the 3,000 young people who begin 
smoking each day, 2,722 are under age 18.

C. Scope

    Proposed Sec. 897.1(a) would have stated that ``[t]his part is 
intended to establish the conditions under which cigarettes and 
smokeless tobacco products that contain or deliver nicotine, because of 
their potential for harmful effect, shall be sold, distributed, or used 
under the restricted devices provisions of the Federal Food, Drug, and 
Cosmetic Act.'' Proposed Sec. 897.1(b) would have stated that 
``[r]eferences in this part to regulatory sections to the Code of 
Federal Regulations are to chapter I of Title 21, unless otherwise 
noted.'' The final rule is being amended to explicitly state that 
failure to comply with any applicable provision would render the 
product misbranded.
    The preamble to the 1995 proposed rule stated that ``[t]he proposed 
rule would not apply to pipe tobacco or to cigars because the agency 
does not currently have sufficient evidence that these products are 
drug delivery devices under the act'' (60 FR 41314 at 41322). The 
preamble stated that ``FDA has focused its investigation of its 
authority over tobacco products on cigarettes and smokeless tobacco 
products, and not on pipe tobacco or cigars, because young people 
predominantly use cigarettes and smokeless tobacco products'' (Id.).
    (14) A comment opposing this provision stated that FDA does not 
have authority to regulate cigarettes under the restricted device (or 
any other) provision of the act.
    The agency disagrees. A full discussion of the agency's authority 
can be found in section II. of this document.
    (15) Several comments supported the provision. Some comments 
recommended that the scope of the rule should also apply to adult 
smokers. One comment stated that:
    [I]t is evident from the FDCA [the Federal Food, Drug, and 
Cosmetic Act] that the FDA has clear and unambiguous authority to 
regulate and restrict the sale of the subject products not only to 
minors but also to adults, who suffer equally from the mortality and 
morbidity effects of the toxic components of cigarette smoke and 
tobacco.
    As discussed in section I.B. of this document, the agency believes 
that, on balance, it is better for cigarettes and smokeless tobacco to 
remain available for use by adults.
    (16) Several comments urged that the scope should be expanded to 
include all nicotine containing products, including cigars and pipes. 
Another comment expressed concern that the sale and use of big cigars 
and pipe tobacco by youth may be increasing, and therefore recommended 
that FDA expand the scope ``to include all presently marketed nicotine 
delivery devices,'' or to ``include regular monitoring of youth's use 
of these products, and should that use increase, provide a means to 
extend the FDA's rulings to include those products.''
    Another comment stated that since ``federal regulations often take 
seven to ten years to enact and enforce, it is essential that the 
regulation be written pro-actively to adequately address the problem at 
the outset.'' The comment stated that ``[i]t is therefore, important to 
write regulations to protect the public from all `nicotine delivery 
devices' that in the future, might be placed in something other than 
tobacco'' because ``[a]ny product containing the addictive substance of 
nicotine has a future market because of its addictive nature.''
    Finally, this comment asserted that FDA should broaden the scope of 
the rule to include all products that deliver nicotine, because the 
comment stated that smoking mothers are at greatest risk for 
reproductive hazards, such as low birth weight babies. The comment 
stated that ``[c]onsidering that over 50% of births are unplanned, and 
that people believe they can always quit smoking, it is too late to 
avoid damage by smoking mothers by the time they realize they are 
pregnant.''
    The preamble to the 1995 proposed rule stated that ``[t]he proposed 
rule would not apply to pipe tobacco or to cigars because the agency 
does not currently have sufficient evidence that these products are 
drug delivery devices under the act'' (60 FR 41314 at 41322). The 
preamble stated that ``FDA has focused its investigation of its 
authority over tobacco products on cigarettes and smokeless tobacco, 
and not on pipe tobacco or cigars, because young people predominantly 
use cigarettes and smokeless tobacco products'' (60 FR 41314 at 41322).
    The agency advises that, at this time, there is insufficient 
evidence of cigar or pipe tobacco use by children and

[[Page 44423]]

adolescents to support the inclusion of cigar, pipe tobacco, or ``all 
presently marketed nicotine delivery devices'' within the scope of the 
final rule (section III.E. of this document).
    In response to the comment stating that the agency should monitor 
youths' use of products such as cigars or pipe tobacco, and that the 
agency should provide a means to ``extend FDA's rulings to include 
these products,'' the agency advises that, as stated in the 1995 
proposed rule, the objective of the final rule is to meet the goal of 
the report ``Healthy People 2000,'' by reducing roughly by half 
children's and adolescents' use of tobacco products. The agency is not 
asserting jurisdiction over pipes and cigars at this time because it 
does not have sufficient evidence that these products satisfy the 
definitions of drug and device in the act. However, the agency will 
consider any additional evidence that becomes available, including any 
new evidence that these products meet the statutory definitions as well 
as evidence that indicates that cigars and pipe tobacco are used 
significantly by young people.
    FDA also disagrees with the comment claiming that Federal 
regulations take 7 to 10 years to enact and enforce. While it may be 
true that rulemaking, in general, can be a time-consuming task, the 
agency can and has taken prompt action to issue rules with significant 
public health implications. For example, the proposed rule for this 
final rule appeared in the Federal Register of August 11, 1995 (60 FR 
41314). (See also 56 FR 60366 et al., November 27, 1991, and 58 FR 2066 
et al., January 6, 1993 (15 months to issue Nutrition Labeling and 
Education Act regulations); 60 FR 5530, January 27, 1995, and 60 FR 
63372, December 8, 1995 (11 months to issue regulations to facilitate 
communications between FDA and State and foreign governments in order 
to enhance regulatory cooperation).) If it is necessary to amend this 
regulation, the agency will also be able to do so expeditiously.
    The agency agrees with the comment stating that smoking mothers are 
at risk for certain reproductive hazards. FDA has chosen to tailor its 
regulation to address only children and adolescents. However, other 
agencies within the Department of Health and Human Services (DHHS) have 
programs that currently address tobacco use by persons of all ages.
    FDA, on its own initiative, has revised Sec. 897.1 to simplify and 
to clarify the scope of the rule. As revised, Sec. 897.1(a) states that 
part 897 ``sets out the restrictions under the Federal Food, Drug, and 
Cosmetic Act (the act) on the sale, distribution, and use of cigarettes 
and smokeless tobacco that contain nicotine.'' This sentence is 
comparable to proposed Sec. 897.1(a), but more accurate because the 
1995 proposed rule only referred to FDA's restricted device authority. 
FDA has also added a new Sec. 891.1(b) stating that ``[t]he failure to 
comply with any applicable provision in this part in the sale, 
distribution, and use of cigarettes and smokeless tobacco renders the 
product misbranded under the act.'' This sentence is intended to remind 
parties that violations of a regulation for a restricted device and 
other actions relating to the sale of a device may cause a device to be 
``misbranded'' under the act. Proposed Sec. 897.1(b), which would have 
stated that regulatory references are to title 21 of the Code of 
Federal Regulations, has been renumbered as Sec. 891.1(c) in the final 
rule and has not been changed.

D. Purpose (Sec. 897.2)

    Proposed Sec. 897.2(a) would have stated that:
    [t]he purpose of this part is to establish conditions for the 
sale, distribution, and use of cigarettes and smokeless tobacco 
products in order to: * * * [r]educe the number of people under 18 
years of age who become addicted to nicotine, thus avoiding the 
life-threatening consequences associated with tobacco use and to 
provide important information regarding the use of these products to 
users * * *.
The agency has modified the final rule to provide information regarding 
the use of these products only to users; it has deleted potential users 
because the final rule no longer includes an education program for 
young people. Proposed Sec. 897.2(b) stated that this part of the 
provision is intended to ``[p]rovide important information regarding 
the use of these products to users and potential users.'' The agency's 
response to more specific comments follows.
    The preamble to the 1995 proposed rule stated that the proposed 
rule would reduce ``the appeal of and access to cigarettes and 
smokeless tobacco products by persons under 18 years of age,'' but 
``would preserve access to cigarettes and smokeless tobacco products by 
persons 18 years of age and older'' (60 FR 41314 at 41322).
    This rule is designed to complement the regulations (sometimes 
referred to as ``the Synar regulations'') issued by the Substance Abuse 
and Mental Health Services Administration (SAMHSA) (the SAMHSA rule) 
implementing section 1926 of the PHS Act regarding the sale and 
distribution of tobacco products to individuals under the age of 18. 
The SAMHSA rule contains standards for determining State compliance 
with section 1926 relating to the enactment and enforcement of State 
laws prohibiting the sale and distribution of tobacco products to 
individuals under the age of 18. Both sets of regulations are designed 
to help address the serious public health problem caused by young 
people's use of nicotine-containing tobacco products. By approaching 
this pediatric disease from different perspectives, these regulations 
together will help achieve the Administration's goal of reducing the 
number of young people who use tobacco products by 50 percent.
    (17) One comment opposing this provision stated that ``it will have 
little effect on tobacco use by young people, is beyond FDA'S statutory 
authority, is unjustified as a matter of policy, and would violate the 
Constitution.''
    The agency believes that the comment opposing this provision 
misinterprets Sec. 897.2. This particular provision merely states the 
purpose of the entire rule and is not intended, in and of itself, to 
impose any new restrictions. The agency disagrees that the entire rule 
will have little effect on tobacco use by young people; that it is 
beyond the agency's statutory authority; that it is unjustified as a 
matter of policy; and that it violates the Constitution. All of these 
issues are discussed in detail elsewhere in this document.
    (18) Several comments supported the provision, stating that a 
national policy is essential because State laws are ineffective and 
inconsistent.
    The agency agrees with these comments and advises that the final 
rule complements the existing efforts by States to enforce restrictions 
on young people's access to cigarettes and smokeless tobacco. As stated 
in the comments, all States currently have laws prohibiting the sale of 
tobacco products to minors. Section 1926 of the PHS Act creates an 
incentive for the States to reduce the unlawful sales of tobacco 
products to young people by ``requiring States to have in effect laws 
which prohibit the sale of tobacco products to minors as a condition of 
receipt of substance abuse grants.'' This rule would only preempt 
individual State requirements that are different from or in addition to 
these regulations (see section 521(a) of the act (21 U.S.C. 360k(a))). 
Thus, a State restriction on the sale of cigarettes and smokeless 
tobacco to individuals under the age of 18 will continue to be enforced 
by the State. (See preemption discussion,

[[Page 44424]]

section X. of this document.) While the agency expects the State laws 
to reduce smoking among young people, those laws unlike FDA's rule, 
only reduce access and not the appeal of smoking to young people. Thus, 
the agency believes that the rule will help States achieve their goals 
under the substance abuse programs.
    (19) One comment supporting the provision stated that although the 
focus of the rule should be on children, ``the needs of adult smokers 
should not be abandoned.'' Another comment stated that:
    Cigarettes and smokeless tobacco products are nicotine delivery 
devices and they regularly cause addiction in their users. Because 
addiction often leads to serious illness and death, it is important 
to reduce the number of people under 18 years of age who become 
addicted to nicotine. Similarly, it is important to provide accurate 
information about the use of these products to users and to 
potential users.
    The agency appreciates the comment's suggestion, but advises that, 
for reasons explained in section I.B. of this document, the final rule 
focuses principally on children and adolescents.
    FDA, on its own initiative, has revised Sec. 897.2 to state that 
the purpose of part 897 is ``to establish restrictions on the sale, 
distribution, and use of cigarettes and smokeless tobacco in order to 
reduce the number of children and adolescents who use these products, 
and to reduce the life-threatening consequences associated with tobacco 
use.'' FDA believes this revision is a simpler and more accurate 
statement of the rule's purpose.

E. Definitions (Sec. 897.3)

    Proposed Sec. 897.3 would have contained definitions for the terms 
``cigarette,'' ``cigarette tobacco,'' ``distributor,'' 
``manufacturer,'' ``nicotine,'' ``package,'' ``point of sale,'' 
``retailer,'' and ``smokeless tobacco.'' The agency received several 
comments on the definition section of the proposal, regarding either 
the specific definitions provided or requesting definitions for 
additional terms. In response to the comments, the agency has clarified 
several terms, including ``distributor'' and ``retailer,'' and has 
modified the term ``cigarette'' to exclude little cigars.
    Proposed Sec. 897.3(a)(3) would have provided a definition of 
``cigarette'' which included the following language, modeled after the 
definition of ``little cigar'' contained in the Cigarette act:
    (a) Cigarette means * * *
    (3) [a]ny roll of tobacco wrapped in leaf tobacco or any 
substance containing tobacco * * * and as to which 1,000 units weigh 
not more that 3 pounds.
    (20) Several comments supported the inclusion of ``little cigars'' 
in the definition of ``cigarette'' and suggested that the definition be 
broadened to include other tobacco products as well. These comments 
argued that all tobacco, including ``snuff,'' chewing tobacco, cigars, 
and pipes, should be regulated in the same manner as cigarettes, as 
these products are also nicotine delivery systems. These comments 
further stated that there is evidence to show that cigar smoking is 
becoming increasingly popular among young adults and adolescents.
    In contrast, several comments from industry indicated that little 
cigars are unique products which should not be regulated as cigarettes. 
One comment stated that the agency has no studies to support the 
inclusion of little cigars in the rule. Moreover, the U.S. Treasury 
Department's Bureau of Alcohol, Tobacco and Firearms (BATF) submitted a 
comment opposing the inclusion of little cigars in the ``cigarette'' 
definition, as this would require little cigars to be labeled and 
advertised as a cigarette under the FDA regulations, but taxed and 
labeled as a ``cigar,'' under the Internal Revenue regulations enforced 
by BATF.
    The agency has decided, based upon the comments and the record of 
this proceeding, not to include little cigars in the definition of 
``cigarettes'' for the purposes of the regulation. The differences 
between little cigars and cigarettes are significant--the products are 
easily distinguishable, taxed at different levels, and marketed to 
different consumers. Moreover, little cigars are neither advertised 
extensively nor sold in vending machines. Most importantly, the agency 
is not currently aware of sufficient evidence of use of little cigars 
by children or adolescents to support inclusion of such products in the 
rule. Therefore, FDA has deleted little cigars from the definition of 
``cigarette'' in Sec. 897.3(a). Moreover, FDA will continue to 
coordinate definitions with BATF as appropriate.
    Additionally, FDA has deleted ``components, accessories, or parts'' 
from Sec. 897.3(a). The reference to ``components, accessories, or 
parts'' was unnecessary because the statutory definition of ``device'' 
includes ``any component, part, or accessory.''
    Proposed Sec. 897.3(b) would have defined ``cigarette tobacco'' as 
``any loose tobacco that contains or delivers nicotine and is intended 
for use by consumers in a cigarette.'' The proposed definition also 
would have stated that ``[u]nless otherwise stated, the requirements 
pertaining to cigarettes shall also apply to cigarette tobacco.''
    (21) One comment by manufacturers of ``roll-your-own'' (RYO) 
cigarette tobacco argued that the inclusion of RYO cigarette tobacco 
under the 1995 proposed rule was arbitrary and capricious, as the 
agency had no factual information about RYO's composition, marketing, 
and usage. This comment also asserted that there is no evidence of RYO 
tobacco usage by minors.
    The agency disagrees that the inclusion of cigarette tobacco in the 
rule is arbitrary and capricious. RYO tobacco is nothing less than 
cigarettes that have not yet been assembled. Unquestionably, RYO 
cigarettes contain tobacco and are smoked. The comment did not 
challenge the agency's proposed finding that the smoke from RYO 
cigarettes is inhaled, that the RYO tobacco is processed, and that RYO 
cigarettes deliver nicotine. Unlike ``little cigars,'' discussed in 
paragraph 1 of this section of the document, the agency believes that 
there is no significant difference in the composition of RYO tobacco or 
in the reason consumers use it (to deliver nicotine) from cigarettes. 
The agency believes that, because a RYO cigarette is fundamentally the 
same product as a commercially manufactured cigarette posing the same 
risks, it should be subject to the restrictions in this rule in order 
to protect the public health.
    Furthermore, it is important to include RYO tobacco because to 
exclude it would provide a simple and obvious way to avoid the 
restrictions in this regulation. If such an exception existed, 
cigarettes could be packaged and sold in such a way as to be considered 
RYO products. Tobacco companies would then be free to sell these 
products using all the marketing and promotion techniques currently 
used for cigarettes, techniques that are particularly successful with 
young people. An exception so broad would quickly undermine the entire 
purpose of the rule. Additionally, FDA has made a minor change to 
Sec. 897.3(b) to have ``cigarette tobacco'' mean ``any product that 
consists of loose tobacco * * *.'' The addition of the words ``any 
product'' is intended to make Sec. 897.3(b) conform with the format 
used for other definitions.
    (22) In proposed Sec. 897.3(c), ``distributor'' would have been 
defined as ``any person who furthers the marketing of cigarettes or 
smokeless tobacco products * * * from the

[[Page 44425]]

original place of manufacture to the person who makes final delivery or 
sale to the ultimate user, but who does not repackage or otherwise 
change the container, wrapper, or labeling of the * * * products.''
    Several comments stated that the definition of ``distributor'' is 
vague and over broad, because:
    [P]ersons `who further the marketing of cigarettes or smokeless 
tobacco' [may include] literally everyone involved in the 
production, shipping, advertising, or promotion of cigarettes. Such 
`distributors' could thus include, for example, cigarette 
manufacturers and their employees; truckers and shipping clerks 
involved in the physical movement of the product; advertising 
agencies; people involved in promotional activities and the 
manufacture of promotional materials; retailers and their employees; 
and conceivably even individuals who `deliver' cigarettes to social 
acquaintances or family members as `ultimate users.' Including such 
persons and entities within the definition of `distributor' would, 
in turn, render them `responsible,' * * * for ensuring that the 
cigarettes the `marketing' of which they `further' comply with `all 
applicable requirements' of part 897.
    (23) One comment suggested that an individual advocating a 
particular brand of cigarette would fall within the definition of 
``distributor.''
    The agency recognizes the concerns expressed about the proposed 
definition of ``distributor.'' Therefore, based upon the comments 
received, the agency has determined that the definition should be 
modified to clarify the term. The definition of ``distributor'' has 
been modified to mean ``any person who furthers the distribution of 
cigarettes or smokeless tobacco, whether domestic or imported, at any 
point from the original place of manufacture to the person who sells or 
distributes the product to individuals for personal consumption.'' The 
term does not include persons who do not manufacture, fabricate, 
assemble, process, or label a finished cigarette or smokeless tobacco 
product, and does not repackage or otherwise change the container, 
wrapper, or labeling of the cigarette or smokeless tobacco product, 
because such persons would be ``manufacturers'' under Sec. 897.3(d).
    Under this modified definition, one who manufactures cigarettes or 
smokeless tobacco is not considered a distributor, but is subject to 
the requirements applicable to manufacturers (see Sec. 897.3(d), 
definition of ``manufacturer''). Similarly, one who ``sells or 
distributes the product to individuals for personal consumption'' is 
not a distributor, but is subject to the requirements applicable to 
retailers (see Sec. 897.3(h), definition of ``retailer''). Furthermore, 
the modified definition clearly does not apply to advertising agencies. 
Although advertising agencies may be said to further the ``marketing'' 
of a product they advertise, they do not further the ``distribution'' 
of that product. As for truckers and other carriers, section 703 of the 
act only requires ``carriers engaged in interstate commerce'' and 
persons receiving or holding devices in interstate commerce to provide 
access to records showing the devices' movement or holding in 
interstate commerce. Thus, such carriers would not be subject to the 
requirements applicable to distributors under this part.
    (24) Proposed Sec. 897.3(d) would have defined ``manufacturer,'' in 
part, ``as any person, including any repacker and/or relabeler, who 
manufactures, fabricates, assembles, processes, or labels a finished 
cigarette or smokeless tobacco product.'' One comment suggested that 
this definition be modified to exclude foreign manufacturers and 
manufacturers of products that make up less than 1 percent of the total 
U.S. cigarette market.
    The agency disagrees that foreign manufacturers and ``small'' 
manufacturers should be excluded from the definition. A company that 
manufactures a small amount of a product is, nevertheless, a 
manufacturer. Thus, small manufacturers and foreign manufacturers of 
products marketed in the United States are included in the definition 
of ``manufacturer'' and are subject to the provisions of this rule. 
Furthermore, as discussed in more detail later, FDA regulates devices 
as a class without making exceptions for small market share.
    Additionally, FDA, on its own initiative, has deleted the part of 
the definition which would have stated that a ``manufacturer'' ``does 
not include any person who only distributes finished cigarettes or 
smokeless tobacco products.'' FDA believes this text was unnecessary 
given the definition of ``distributor'' in Sec. 897.3(c).
    Proposed Sec. 897.3(e) would have defined ``nicotine'' by its 
chemical formula, 3-(1-Methyl-2-pyrolidinyl) pyridine, and would have 
included any salt or complex of nicotine. FDA did not receive any 
comments that would warrant a change to Sec. 897.3(e), and has 
finalized this definition without change.
    Proposed Sec. 897.3(f) would have defined ``package'' as a pack, 
box, carton, or container of any kind in which cigarettes or smokeless 
tobacco are offered for sale, sold, or otherwise distributed to 
consumers.
    FDA did not receive any comments that would warrant a change to 
Sec. 897.3(f) but has, on its own initiative, deleted the word 
``products'' from ``smokeless tobacco products'' to correspond to 
similar changes throughout the rule.
    (25) Proposed Sec. 897.3(g) would have defined ``point of sale'' to 
mean ``any location at which a consumer can purchase or otherwise 
obtain cigarettes or smokeless tobacco products for personal 
consumption.'' One comment stated that this definition is 
unconstitutionally vague and over broad, because ``a person can 
`obtain' cigarettes from a social acquaintance or family member * * * 
in any number of * * * settings.'' The comment suggested that ``point 
of sale'' be limited to ``commercial establishments where tobacco 
products are sold in arm's-length commercial transactions.''
    The agency agrees that obtaining a cigarette from a social 
acquaintance or family member should not render the venue of this 
``transaction'' a ``point of sale.'' However, the agency does not 
believe that the definition of ``point of sale'' is vague or overly 
broad, or that it needs to be modified. The definition, as proposed, 
makes it clear that ``point of sale'' does not contemplate venues where 
cigarettes are lent or offered to social acquaintances or family 
members. The definition in Sec. 897.3(d) refers to the ``location at 
which a consumer can purchase or otherwise obtain'' the product 
(emphasis added). The term ``consumer,'' means ``a person who buys 
goods or services for personal needs and not for resale or to use in 
the production of other goods for resale.'' \37\ Thus, in its normal 
use, the term ``consumer'' implies a commercial relationship and 
precludes the possibility that, for example, the act of providing a 
cigarette to a travel partner would render the vehicle in which both 
are traveling the ``point of sale'' for that product.
---------------------------------------------------------------------------

    \37\ Webster's New World Dictionary, edited by V. Neufeldt, 
Third College Edition, Prentice Hall, New York, p. 299, 1991.
---------------------------------------------------------------------------

    (26) Proposed Sec. 897.3(h) would have defined ``retailer'' to mean 
``any person who sells or distributes cigarettes or smokeless tobacco 
products to individuals for personal consumption.'' One comment stated 
that this definition is unconstitutionally vague and over broad, 
because a ``manufacturer or wholesaler that `distributes' complimentary 
cigarettes to its employees, or to guests at a private function, would 
be a `retailer,' as would

[[Page 44426]]

be any individual who gives any other individual a cigarette.''
    The agency agrees that, although the intended meaning of the term 
is clear, a ``person who * * * distributes * * * [a product] to 
individuals for personal consumption'' may include transactions that 
the agency does not intend to regulate (i.e., noncommercial 
transactions). Therefore, the definition is modified to mean ``any 
person who sells cigarettes or smokeless tobacco to individuals for 
personal consumption.''
    Additionally, under Sec. 897.3(h) as revised, a retailer can be any 
person ``who operates a facility where vending machines and self-
service displays are permitted under this part.'' This change 
complements a change to Sec. 897.16(c) which permits vending machines 
and self-service displays in facilities where no person under age 18 is 
present, or permitted to enter, at any time. The agency addresses 
Sec. 897.16(c) in greater detail below.
    Proposed Sec. 897.3(i) would have defined smokeless tobacco as 
``any cut, ground, powdered, or leaf tobacco that contains or delivers 
nicotine and that is intended to be placed in the oral cavity.''
    FDA did not receive any comments that would warrant a change to 
Sec. 897.3(i). However, FDA has revised the definition to refer to 
``any product that consists of cut, ground, powdered, or leaf tobacco * 
* *.'' The agency made this change because the words ``smokeless 
tobacco'' are often understood as meaning a ``smokeless tobacco 
product'' or products. Additionally, elsewhere in this rule, FDA has 
replaced ``smokeless tobacco product'' with ``smokeless tobacco.''
    (27) Several comments requested definitions for additional terms. 
Specifically, one comment requested that ``advertising'' be defined to 
distinguish between trade and consumer advertising; several comments 
requested that ``vending machine'' be defined to exempt machines which 
dispense cigarettes to cashiers, machines that dispense individual 
cigarettes, or machines that scan a driver's license or age of majority 
card before dispensing cigarettes; and several comments requested that 
``playground'' be defined for clarity.
    The agency disagrees that additional definitions are necessary for 
the terms ``advertising'' and ``vending machine.'' However, the agency 
has clarified the use of those terms in the relevant sections of the 
preamble. The agency has determined that a definition for the term 
``playground'' is necessary, and has added some examples to 
Sec. 897.30. A discussion of the comments regarding the definition of 
``playground'' can be found in section VI. of this document.

IV. Access

    Subpart B of part 897 (now retitled as ``Prohibition of Sale and 
Distribution to Persons Younger than 18 Years of Age'') contains the 
restrictions on access to cigarettes and smokeless tobacco by 
individuals under the age of 18. This subpart, by imposing restrictions 
on manufacturers, distributors, and retailers, is intended to ensure 
that children and adolescents cannot purchase these products.
    In support of proposed subpart B, the preamble to the 1995 proposed 
rule cited studies showing that the majority of junior high and high 
school students--from 67 percent of 9th grade students in a 1990 survey 
to 94 percent of junior high and high school students in a 1986 
survey--believed that purchasing cigarettes and smokeless tobacco was 
easy (60 FR 41314 at 41322, August 11, 1995). Other studies supported 
that belief. As noted in the preamble to the 1995 proposed rule, the 
1994 Surgeon General's Report entitled ``Preventing Use Among Young 
People: A Report of the Surgeon General'' (the 1994 SGR) examined 13 
studies of over-the-counter (OTC) sales and determined that 
approximately 67 percent of minors are able to purchase cigarettes 
illegally. The 1994 SGR examined nine studies and found that the 
weighted average rate of illegal sales to children and adolescents from 
vending machines was 88 percent. \38\
---------------------------------------------------------------------------

    \38\ 1994 SGR, p. 249.
---------------------------------------------------------------------------

    Significant numbers of children and adolescents successfully 
purchased smokeless tobacco as well, with the success rate ranging from 
30 percent for junior high school students to 62 percent for senior 
high school students (60 FR 41314 at 41322). Ninety percent of 
smokeless tobacco users in junior high and high school in a 1986 survey 
said they bought their own smokeless tobacco (60 FR 41314 at 41322).
    Studies indicate that a comprehensive approach to reducing young 
people's access to cigarettes and smokeless tobacco would be more 
effective than relying primarily on retailer education programs about 
the need to prevent sales to underage persons. For example, the 
preamble to the 1995 proposed rule cited a comprehensive community 
intervention in Woodridge, IL, involving retailer licensing, regular 
compliance checks, and penalties for merchant violations. The Woodridge 
program reduced illegal sales from 70 percent to less than 5 percent 
almost 2 years later (60 FR 41314 at 41322). Rates of both 
experimentation and regular smoking decreased more than 50 percent 
among seventh and eighth grade students (60 FR 41314 at 41322).
    In contrast, another study cited in the 1995 proposed rule 
indicated that retailer education programs, alone, may have limited 
utility. In the study, retailers received informational packages on 
preventing illegal sales to young people, yet despite these 
informational packages, young people were able to buy cigarettes in 73 
percent of the stores that received these informational packages, and, 
after a comprehensive retailer educational program was conducted, 
illegal sales were still found to occur in 68 percent of the stores (60 
FR 41314 at 41322). When the program began issuing citations to 
violative establishments, the illegal sales rate dropped to 31 percent 
(Id.). This study, as well as other studies reviewed by the agency in 
the 1995 proposed rule and made available for public comment and 
review, led the Food and Drug Administration (FDA) to draft a 
comprehensive proposal to reduce young people's access to cigarettes 
and smokeless tobacco and to make explicit the responsibility of 
manufacturers, distributors, and retailers to prevent cigarette and 
smokeless tobacco product sales to persons under 18 years of age.
    Subpart B to part 897 consists of four provisions. Section 897.10 
establishes the general responsibilities of manufacturers, 
distributors, and retailers to ensure that the cigarettes and smokeless 
tobacco that they manufacture, label, advertise, package, distribute, 
sell, or otherwise hold for sale comply with the requirements in this 
subpart. The agency made one minor change to this provision, to change 
``smokeless tobacco products'' to ``smokeless tobacco.''
    Section 897.12 sets forth additional responsibilities of 
manufacturers. Proposed Sec. 897.12(a) would have required 
manufacturers to remove from point of sale all violative self-service 
displays, advertising, labeling, and other manufacturer-supplied or 
manufacturer-owned items. In response to comments from manufacturers 
and sales representatives objecting to their responsibility for items 
not owned by them, the agency has amended this provision to require 
manufacturers only to remove from point of sale all violative self-
service displays, advertising,

[[Page 44427]]

labeling, and other items owned by the manufacturer.
    Proposed Sec. 897.12(b) would have required manufacturers' 
representatives who visit a point of sale in the normal course of 
business to visually inspect and ensure that products are labeled, 
advertised, and distributed in accordance with this subpart. In 
response to comments questioning the need for and operation of this 
requirement, FDA has deleted this provision.
    Section 897.14 sets forth additional responsibilities of retailers. 
Many of the comments supported the requirements to verify age and to 
ban the sale of single cigarettes. Comments were divided on the 
requirement for a direct transaction. The comments opposing the 1995 
proposed rule were taken into account in the modifications to the final 
rule.
    The final rule contains a new Sec. 897.14(a), which states that no 
retailer may sell cigarettes or smokeless tobacco to any person younger 
than 18 years of age. This new paragraph codifies a concept that was 
implicit in the 1995 proposed rule.
    Proposed Sec. 897.14(a) (now renumbered as Sec. 897.14(b)) would 
have required that the retailer or an employee of the retailer verify 
by means of photographic identification showing the bearer's date of 
birth that no purchaser is younger than 18 years of age. In response to 
changes made to Sec. 897.16 regarding mail-order and vending machine 
sales and self-service displays in facilities inaccessible to children 
and adolescents, the final rule excepts the requirements for proof of 
age under these limited circumstances. New Sec. 897.14(b)(2) eliminates 
the verification requirement for consumers 26 years of age or older.
    Proposed Sec. 897.14(b) (now numbered as Sec. 897.14(c)) would have 
required that cigarettes or smokeless tobacco be provided to the 
purchaser by the retailer or an employee of the retailer, without the 
assistance of an electronic or mechanical device, such as a vending 
machine. The final provision has been modified to reflect changes made 
to Sec. 897.16 permitting vending machines and self-service displays in 
certain limited circumstances and to correspond more closely to the 
requirements in Sec. 897.16(c)(1).
    Proposed Sec. 897.14(c) (now renumbered as Sec. 897.14(d)) would 
have prohibited the retailer or an employee from opening any cigarette 
or smokeless tobacco package to sell or distribute individual 
cigarettes or any quantity of the product that is smaller than the 
quantity in the unopened products. In order to clarify the intent of 
this provision, the final rule prohibits retailers from breaking or 
otherwise opening ``any cigarette or smokeless tobacco product package 
to sell or distribute individual cigarettes or a number of unpackaged 
cigarettes that is smaller than the quantity in the minimum cigarette 
package size defined in Sec. 897.16(b), or any quantity of cigarette 
tobacco or smokeless tobacco that is smaller than the smallest package 
distributed by the manufacturer for individual consumer use.''
    The final rule also adds Sec. 897.14(e) to clarify that each 
retailer is responsible for removing all violative self-service 
displays, advertising, labeling, and other items located in the 
retailer's establishment or for bringing those items into compliance 
with the requirements in this rule. This provision complements 
Sec. 897.12 which requires manufacturers to remove manufacturer-owned, 
violative items from retail establishments.
    Section 897.16 establishes the conditions of manufacture, sale, and 
distribution. Proposed Sec. 897.16(a) would have prohibited the use of 
a trade or brand name for a nontobacco product as the trade or brand 
name for a tobacco product ``except for tobacco products on which a 
trade or brand name of nontobacco product was in use on January 1, 
1995.'' The only change to Sec. 897.16(a) has been to clarify the 
agency's intent by amending the language to restrict manufacturers to 
those product names ``whose trade or brand name was on both a tobacco 
product and a nontobacco product that were sold in the United States on 
January 1, 1995.''
    Section 897.16(b) would have established a minimum package size of 
20 for cigarettes. The final rule was amended only to provide a very 
limited exception consistent with the changes made to 
Sec. 897.16(c)(2)(ii), discussed below.
    Proposed Sec. 897.16(c) would have prohibited vending machines, 
self-service displays, mail-order sales, and other ``impersonal'' modes 
of sale and required direct, face-to-face exchanges between retailers 
and consumers. In response to comments criticizing the restrictions as 
inconveniencing adults, the agency has amended this section. The final 
rule allows mail-order sales (except for mail-order redemption of 
coupons and the distribution of free samples through the mail). The 
final rule also allows vending machines (even those selling packaged, 
single cigarettes), and self-service displays (merchandisers) in 
facilities that are inaccessible to persons under the age of 18.
    Proposed Sec. 897.16(d) would have prohibited manufacturers, 
distributors, and retailers from distributing any free samples of 
cigarettes or smokeless tobacco. FDA made one minor change to this 
provision, changing the words ``manufacturers, distributors, and 
retailers may not distribute'' to ``no manufacturer, distributor, or 
retailer may distribute'' free samples.
    The final rule adds a new Sec. 897.16(e) to prohibit manufacturers, 
distributors, and retailers from selling, distributing, or causing to 
be sold or distributed cigarettes or smokeless tobacco with advertising 
or labeling that does not comply with the rule's advertising and 
labeling requirements. This provision is intended to clarify that the 
rule's advertising and labeling requirements are conditions on the 
sale, distribution, and use of these products.

A. General Comments

    The agency received many general comments both in support of and in 
opposition to proposed subpart B of part 897. Comments supporting the 
1995 proposed rule often stated that the rule, if finalized, would help 
prevent young people from obtaining or using cigarettes and smokeless 
tobacco and would eventually lead to a healthier population and lower 
health care costs. The agency also received comments from attorneys 
general of more than 25 States concluding that, overall, the 1995 
proposed rule ``should be a crucial component of a national effort by 
Federal, State, and local officials to help our youngest generation of 
Americans avoid suffering preventable disease and premature death from 
the use of tobacco products.''
    Comments opposing the 1995 proposed rule, in general, asserted that 
FDA regulation was unnecessary or unauthorized or that the proposed 
requirements would be ineffective. The following is an analysis of and 
response to these general comments.
    (1) Several comments stated that the 1995 proposed rule violates 
the Commerce Clause of the Constitution. The comments argued that there 
is no equivalent to a congressional finding that the regulated activity 
at issue--the sale of tobacco products to children and adolescents--
affects interstate commerce, nor is the regulation reasonably adapted 
to an end permitted by the Constitution. They argued that the 
regulation of tobacco products by

[[Page 44428]]

the Federal Government is impermissible based on United States v. 
Lopez, 115 S.Ct. 1624 (1995) (Congress lacked power under Commerce 
Clause to criminalize possession of a gun within 1,000 feet of a 
school).
    The agency disagrees with these comments. The Constitution gives 
Congress the power ``[t]o regulate Commerce with foreign Nations, and 
among the several States, and with the Indian Tribes.'' Under the 
Commerce Clause, Congress may ``regulate those activities having a 
substantial relationship to interstate commerce, i.e., those activities 
that substantially affect interstate commerce'' (Lopez, 115 S.Ct. at 
1629-30 (citation omitted)). The Supreme Court has consistently held 
that Congress acted within its powers under the Commerce Clause when it 
enacted and subsequently amended the Federal Food, Drug, and Cosmetic 
Act (the act). (See United States v. Sullivan, 332 U.S. 689, 697-98 
(1948); United States v. Walsh, 331 U.S. 432, 437-38 (1947); Weeks v. 
United States, 245 U.S. 618, 622 (1918); Seven Cases of Eckman's 
Alternative v. United States, 239 U.S. 510, 514-15 (1916); McDermott v. 
Wisconsin, 228 U.S. 115, 128 (1913); Hipolite Egg Co. v. United States, 
220 U.S. 45, 58 (1911).) Regulation of tobacco products is a legitimate 
exercise of FDA's authority under the act to regulate drugs and devices 
and is therefore within the scope of Congress' power under the Commerce 
Clause.
    The Supreme Court's recent opinion in Lopez does not affect this 
analysis. As the Court noted, ``[t]he possession of a gun in a local 
school zone is in no sense an economic activity that might, through 
repetition elsewhere, substantially affect any sort of interstate 
commerce.'' (See Lopez, 115 S.Ct. at 1634; see also Id. at 1640 
(Kennedy, J., concurring) (``[H]ere neither the actors nor their 
conduct have a commercial character, and neither the purposes nor the 
design of the statute have an evident commercial nexus.'').)
    By contrast, this tobacco regulation affects conduct that is 
distinctly commercial in character. In particular, the access 
restrictions--the national minimum age for purchase of tobacco products 
and the restrictions on hand-to-hand sales, sales from opened packages, 
package size, vending machine sales, and self-service displays--all 
involve actors (manufacturers, vendors, and consumers) and conduct (the 
marketing, sale, and purchase of products that are themselves in 
interstate commerce) that are quintessentially commercial (see, e.g., 
Katzenbach v. McClung, 379 U.S. 294, 298-304 (1964) (under the Commerce 
Clause, Congress may regulate activities of restaurants that serve 
food, a substantial portion of which has moved in interstate 
commerce)). In addition, the purpose and design of the regulation--to 
deter this commercial activity directed at persons under the age of 18 
in order to reduce addiction to the nicotine in these products--has the 
requisite commercial nexus. (See, e.g., Heart of Atlanta Hotel, Inc. v. 
United States, 379 U.S. 241 (1964); Perez v. United States, 402 U.S. 
146 (1971).) Moreover, because youths alone purchase an estimated $1.26 
billion of tobacco products annually, the regulated activity--sales of 
tobacco products--substantially affects interstate commerce. \39\
---------------------------------------------------------------------------

    \39\ DiFranza, J. R., and J. B. Tye, ``Who Profits from Tobacco 
Sales to Children?'' JAMA, vol. 263, No. 20, pp. 2784-2787, 1990.
---------------------------------------------------------------------------

    As noted, tobacco products are in interstate commerce as defined in 
section 201(b) of the act (21 U.S.C. 321(b)). Cigarettes manufactured 
in the United States include myriad components that are in interstate 
commerce. For example, American-type blended cigarettes contain 
oriental tobacco imported from Greece, Turkey, Russia, Yugoslavia, or 
Bulgaria, and they may also contain imported flue-cured tobacco from, 
for example, Zimbabwe or Brazil. In addition, they contain other 
tobacco and tobacco products, filters, paper, ammonia, sugars, 
humectant, licorice, and cocoa, among nearly 600 other possible 
ingredients. (See generally Brown, C. L., The Design of Cigarettes, 
Hoechst Celanese Corp., Charlotte, NC (3d ed. 1990); ``Ingredients 
Added to Tobacco in the Manufacture of Cigarettes by the Six Major 
American Cigarette Companies,'' (April 12, 1994)). Similarly, smokeless 
tobacco is made from tobacco grown in Pennsylvania and Wisconsin or in 
Kentucky and Tennessee and contains other ingredients from a list of 
over 560, such as sugar, molasses, and licorice, which are in 
interstate commerce. (See The Health Consequences of Using Smokeless 
Tobacco: A Report of the Advisory Committee to the Surgeon General, 
DHHS, PHS, p. 5, 1986; ``Smokeless Tobacco Ingredient List as of April 
4, 1994, attached to letter of May 3, 1994, from Stuart M. Pape to the 
Hon. Henry A. Waxman and the Hon. Thomas J. Bliley, Jr.)
    (2) The comments also suggested that Congress' Commerce Clause 
powers do not allow imposition of a national minimum age for the 
purchase of tobacco products.
    The agency disagrees. The cases cited in these comments, South 
Dakota v. Dole, 483 U.S. 203 (1987) and Oregon v. Mitchell, 400 U.S. 
112 (1970), do not address the Commerce Clause, and there is no case 
law suggesting that an agency may not impose regulations on commerce 
based on the age of people involved, under a statute passed pursuant to 
Congress' Commerce Clause power, and in particular that an agency may 
not set a national minimum age for sales of cigarettes and smokeless 
tobacco in order to reduce the risks of addiction and to health 
associated with their use by individuals under age 18. In fact, under 
its authority to regulate commerce, Congress may exclude from 
interstate commerce goods produced by children workers, United States 
v. Darby, 312 U.S. 100, 115-17 (1941) (overruling Hammer v. Dagenhart, 
247 U.S. 251 (1918), which held that Congress lacked power to exclude 
products of child labor from interstate commerce), and criminalize, for 
example, the transportation in interstate commerce of pornography 
involving children (18 U.S.C. 2251 through 2259), or the sale of 
firearms and ammunition to individuals under the age of 18 (18 U.S.C. 
922(b)(l)).
    Moreover, ```[t]he authority of the Federal government over 
interstate commerce does not differ' * * * `in extent or character from 
that retained by the states over intrastate commerce.''' (See Heart of 
Atlanta Hotel, 379 U.S. at 260 (quoting United States v. Rock Royal Co-
op., Inc., 307 U.S. 533, 569-70 (1939)).) States may set a minimum age 
for sales of cigarettes and smokeless tobacco, and these products are 
in interstate commerce (and as devices, are presumed under section 709 
of the act to be in interstate commerce for the purpose of jurisdiction 
under the act). Thus, it follows that the Federal Government may 
establish a national minimum age for sales of tobacco products.
    In summary, the imposition of a national minimum age for purchase 
of tobacco products and restrictions on hand-to-hand sales, sales from 
opened packages, package size, vending machine sales, and self-service 
displays is within Congress' authority under the Commerce Clause.
    (3) Several comments argued that the regulation's imposition of a 
national minimum age for purchase of tobacco products and its 
restrictions on impersonal sales, sales from opened packages, package 
size, vending

[[Page 44429]]

machine sales, and self-service displays violate the Tenth Amendment to 
the Constitution. In particular, the comments argued that the 
regulation of tobacco products and decisions about eligibility and 
maturity are traditionally State functions, and that this fact required 
Congress to have made it unmistakably clear by statute that it intended 
FDA to regulate tobacco products.
    The agency believes that this regulation does not violate the Tenth 
Amendment. The Tenth Amendment provides that ``[t]he powers not 
delegated to the United States by the Constitution, nor prohibited by 
it to the States, are reserved to the States respectively, or to the 
people.'' It follows that, ``[i]f a power is delegated to Congress in 
the Constitution, the Tenth Amendment expressly disclaims any 
reservation of that power to the States.'' (See New York v. United 
States, 505 U.S. 144, 156.) Because FDA is acting under the act, which 
Congress enacted under its Commerce Clause authority, there is no Tenth 
Amendment violation.
    FDA disagrees that regulation of tobacco sales or decisions about 
eligibility and maturity are traditional State functions. Even if they 
were, however, that fact would not implicate the Tenth Amendment. ``As 
long as it is acting within the powers granted it under the 
Constitution, * * * Congress may legislate in areas traditionally 
regulated by the States'' (Gregory v. Ashcroft, 501 U.S. 452, 460 
(1991)). Because the agency is acting to regulate cigarette and 
smokeless tobacco sales in order to eliminate the health risks of those 
products, and is doing so under a statute passed under Congress' 
Commerce Clause power, these provisions do not violate the Tenth 
Amendment.
    Further, Congress need not make its intention to regulate in such 
areas ``unmistakably clear in the language of [a] statute,'' Will v. 
Michigan Dept. of State Police, 491 U.S. 58, 65 (1989) (quotations 
omitted), as suggested in the comments. This requirement only applies 
to Federal statutes that ``go[] beyond an area traditionally regulated 
by the States'' to affect ``decision[s] of the most fundamental sort 
for a sovereign entity,'' Gregory, 501 U.S. 460, because such statutes 
``alter the usual constitutional balance between the States and the 
Federal Government,'' Will, 491 U.S. 65 (quotations omitted); see also 
Seminole Tribe of Florida v. Florida, 116 S.Ct. 1114, 1123-1132 (1996) 
(holding that, even if Congress, acting under the Commerce Clause, 
makes its intention to subject unconsenting States to Federal suits by 
private parties absolutely clear, the Eleventh Amendment bars such 
suits). Regulation of the sale of cigarettes and smokeless tobacco does 
not fundamentally affect the States' prerogatives under the 
Constitution (such as abrogating the States' sovereign immunity), and 
so Congress need not have made it unmistakably clear by statute that it 
intended FDA to regulate their sale.
    In summary, the agency is imposing a national minimum age for 
purchase of tobacco products and restrictions on impersonal sales, 
sales from opened packages, package size, vending machine sales, and 
self-service displays in order to eliminate the health risks to young 
people associated with products in interstate commerce. These 
provisions therefore do not violate the Tenth Amendment.
    (4) A comment from an industry trade association stated that the 
Ninth Amendment to the Constitution is a ``barrier to federal laws that 
would restrict freedom of adults as well as others to use tobacco 
products.'' Several comments from adults expressed similar arguments 
regarding an adult's ``freedom'' to purchase or use tobacco products.
    The agency disagrees that its imposition of a national minimum age 
for purchase of tobacco products and its restrictions on hand-to-hand 
sales, sales from opened packages, package size, vending machine sales, 
and self-service displays impinge on unenumerated rights protected by 
the Ninth Amendment.
    The Ninth Amendment provides that ``[t]he enumeration in the 
Constitution, of certain rights, shall not be construed to deny or 
disparage others retained by the people.'' Although not a source of 
rights itself, the Ninth Amendment nevertheless ``show[s] the existence 
of other fundamental personal rights'' and that `liberty' protected by 
the Fifth * * * Amendment[] from infringement by the Federal Government 
* * * is not restricted to rights specifically mentioned in the first 
eight amendments.'' Griswold v. Connecticut, 381 U.S. 479, 493 (1965) 
(Goldberg, J. concurring).
    The final rule regulates commercial transactions involving tobacco 
products to limit young people's access to them. Young people do not 
have an unenumerated, fundamental right protected by the Constitution 
to have commercial access to tobacco products. (See Bowers v. Hardwick, 
478 U.S. 186, 190 (1986).) Nor does the agency believe that it is 
merely a specific manifestation of a broader right, Id. at 199 
(Blackmun, J., dissenting), whether styled as the right to privacy, 
Griswold, 381 U.S. at 484-485, or to be let alone, Olmstead v. United 
States, 277 U.S. 438, 478 (1928) (Brandeis, J., dissenting), or to 
individual autonomy, Carey v. Population Services Int'l, 431 U.S. 678, 
687 (1977).
    In particular, the right to privacy does not protect commercial 
access to tobacco products for young people, because restricting sales 
of addicting tobacco products to young people ``is within the area of 
governmental interest in protecting public health.'' (See Rutherford v. 
United States, 616 F.2d 455, 457 (10th Cir.), (right to privacy does 
not include access to laetrile) cert. denied, 449 U.S. 937 (1980); see 
also Carnohan v. United States, 616 F.2d 1120, 1122 (9th Cir. 1980) 
(``Constitutional rights of privacy and personal liberty do not give 
individuals the right to obtain laetrile free of the lawful exercise of 
government police power''); United States v. Horsley, 519 F.2d 1264, 
1265 (5th Cir. 1975), (holding that right of privacy does not protect 
possession of marijuana with intent to distribute) cert. denied, 424 
U.S. 944 (1976); United States v. Kiffer, 477 F.2d 349, 352 (2d Cir.) 
(same), cert. denied, 414 U.S. 831 (1973).) The agency therefore 
concludes that this rule does not abridge an unenumerated, fundamental 
right reserved to the people by the Ninth Amendment to the 
Constitution.
    (5) Several comments suggested that comprehensive regulations were 
unnecessary. Instead, these comments advocated training programs for 
retailers and, more specifically, for retail sales clerks. These 
training programs would be based either on voluntary efforts by the 
affected industries or on in-house, employee training programs. A few 
comments argued that any regulations to restrict access to cigarettes 
and smokeless tobacco would be futile because young people ``would get 
the products anyway.''
    The agency disagrees with these comments. The preamble to the 1995 
proposed rule indicated that informational or training programs, alone 
or without any enforcement mechanisms, have limited success (60 FR 
41314 at 41322). Given the health risks caused by or associated with 
these products and the evidence that current, voluntary restrictions on 
youth access are ineffective, FDA believes that it

[[Page 44430]]

needs to develop an effective, mandatory program under the act to 
restrict young people's access to cigarettes and smokeless tobacco. The 
agency cannot and should not abdicate its public health 
responsibilities in deference to voluntary efforts to inform employees 
or other parties on the sale and distribution of these products, given 
the evidence cited in the preamble to the 1995 proposed rule that such 
programs must be bolstered by government sanctions and measures like 
those in subpart B of part 897 in order to be effective.
    (6) Other comments, particularly those submitted by a few State 
legislators, claimed that States should be free to allocate their 
resources as they wished so that, if a State decided not to address a 
particular issue, such as access to tobacco products, that decision 
would be within the State's purview.
    In contrast, comments submitted by State and local public health 
officials were unanimous in recommending strong Federal leadership in 
reducing young people's access to cigarettes and smokeless tobacco.
    The agency believes that the comments opposing the rule 
misinterpret the rule's scope and application. The rule does not 
require States to enforce any provision, nor does it require States to 
allocate resources in any manner. FDA will enforce the rule as it does 
any other rule, by using FDA's own resources or, where appropriate and 
with cooperation from State officials, by ``commissioning'' State 
officials to perform specific functions on the agency's behalf. FDA is 
authorized, under section 702(a) of the act (21 U.S.C. 372), to conduct 
examinations and investigations through any health, food, or drug 
officer or employee of any State, territory, or political subdivision 
commissioned as an officer of DHHS. In most cases, a commissioned State 
or local government official is authorized to perform one or more of 
the following functions: (1) Conduct examinations, inspections, and 
investigations under the act; (2) collect and obtain samples; (3) copy 
and verify records; and (4) receive and review official FDA documents. 
\40\ The scope of the official's authority depends on his or her 
qualifications, and the commissioning process involves active and 
voluntary participation by States in identifying suitable candidates 
for commissioning and establishing the scope of the commissioned 
official's duties.
---------------------------------------------------------------------------

    \40\ FDA Regulatory Procedures Manual, DHHS, PHS, Office of 
Regulatory Affairs, Office of Enforcement, Division of Compliance 
Policy, Chapter 3, p. 45, August 1995.
---------------------------------------------------------------------------

    (7) A few comments claimed that the rule would create friction 
between States and the Federal Government because, according to these 
comments, FDA would be interfering in State affairs. Some comments also 
claimed that the rule would make State efforts less effective because 
State regulatory or police agencies would defer to FDA.
    In contrast, as noted above, several State attorneys general 
expressed a different view, stating that the rule would strengthen 
State efforts to reduce cigarette and smokeless tobacco use among young 
people.
    The agency respectfully disagrees with those comments that claim 
FDA will be interfering in State affairs or that the rule will create 
friction or undermine the effectiveness of State officials. The agency 
has a history of cooperative relations with State regulatory officials. 
For example, as mentioned earlier, section 702(a) of the act authorizes 
FDA to commission State officials to perform specific functions on 
FDA's behalf. FDA also works with State officials in implementing 
statutes such as the Prescription Drug Marketing Act of 1987, the 
Nutrition Labeling and Education Act of 1990, and the Mammography 
Quality Standards Act of 1992. Given this history of cooperation 
between FDA and State regulatory agencies, FDA does not agree that the 
rule will create friction between FDA and State authorities or 
undermine the effectiveness of State officials.
    (8) Many comments argued that the 1995 proposed rule would restrict 
an adult's ability to purchase or select cigarettes and smokeless 
tobacco. Several asserted that regulations would be ineffective because 
young people would obtain cigarettes and smokeless tobacco anyway. 
Hence, these comments would eliminate all provisions intended to reduce 
a young person's access to these products.
    In contrast, many comments supported the rule, stating that it 
would reduce a young person's easy access to and opportunity for early 
experimentation with cigarettes and smokeless tobacco, help reduce the 
use of those products by young people, and prevent young people from 
suffering adverse health effects associated with using these products.
    The agency agrees that the rule may have an incidental effect on an 
adult's ability to purchase cigarettes or smokeless tobacco, but FDA 
emphasizes that the rule's benefits far outweigh any inconvenience to 
adults. FDA has narrowly focused the rule to address those activities 
and practices that are especially appealing to, or used by, young 
people and to preserve, to the fullest extent practicable, an adult's 
ability to purchase these products. Any inconvenience to adults should 
be slight. For example, although the final rule eliminates self-service 
displays for cigarette packages in facilities that are accessible to 
young people, the limited amount of time spent in requesting and 
receiving a cigarette pack from a retail clerk should not result in 
hardship on adults. The agency has also amended the rule, as discussed 
in section IV.E. of this document to retain specific modes of sale that 
are restricted to--or used almost exclusively by--adults. These 
amendments respond to comments from adult consumers and retailers that 
young people cannot or do not use certain modes of sale and so those 
modes of sale should remain available to adults.
    (9) Several comments argued that the 1995 proposed rule 
``intruded'' on private life or ``discriminated'' against adult 
cigarette and smokeless tobacco users.
    In contrast, other comments agreed that FDA has jurisdiction over 
cigarettes and smokeless tobacco and that the rule was an appropriate 
exercise of FDA's authority and properly focused on curtailing access 
by young people. Several comments suggested amending the rule to add 
restrictions for adults, to ban smoking, or to provide information to 
help all smokers to stop smoking.
    As stated earlier, the agency has drafted the rule as narrowly as 
possible to restrict the sale and distribution of these products to 
children and adolescents, while preserving adults' ability to purchase 
the products.
    As for extending the rule to include adults or to ban smoking, FDA 
declines to adopt the comments' suggestion. As discussed in section 
III.A. of this document, the President, and the agency in its preamble 
to the 1995 proposed rule, have stated that removing cigarettes and 
smokeless tobacco from the market would not be in the best interests of 
the public health. The agency adheres to this position.
    (10) Many comments urged FDA to refrain from rulemaking and instead 
rely on voluntary, manufacturer-developed or retailer-developed 
programs, such as ``Action Against Access,'' ``It's the Law,'' and ``We 
Card,'' to prevent sales to young people. Some would require retailers 
and their employees to be trained to comply with existing State and 
local laws. Several large retail

[[Page 44431]]

chains described the programs they already have in place.
    Other comments expressed skepticism about such programs and, 
therefore, strongly supported FDA's rulemaking activities.
    The agency declines to rely solely on voluntary, manufacturer- or 
retailer-developed programs to prevent sales to young people. The 
agency is regulating cigarettes and smokeless tobacco as devices under 
the act. Voluntary programs cannot serve as a substitute for such 
regulation and do not provide many of the safeguards that the act 
provides.
    As for retailer programs to train employees not to sell cigarette 
and smokeless tobacco to young people, FDA believes that such training 
efforts will help retailers comply with their obligations under 
Sec. 897.14. However, retailer training programs, alone, will not be as 
effective as the rule's comprehensive approach because such training 
would not affect certain activities (such as free samples and 
advertising) that are used by or appeal to young people.
    Similarly, voluntary, manufacturer-developed programs are not 
sufficient to prevent sales to young people. Such programs purport to 
deter young people from using cigarettes or smokeless tobacco until 
they reach legal age, but often omit retail activities or impose no 
sanctions if a voluntary code or provision is violated. For example, 
one comment supported the rule, in part, because a retailer gave the 
author, when he was 15 years old, and other children free cigarettes. A 
manufacturer-developed program might not be effective at curtailing 
such practices by retailers, whereas the rule bars distribution of free 
samples by manufacturers, distributors, and retailers.
    (11) One comment suggested amending the rule to include 
advertisers.
    FDA declines to amend the rule as suggested by the comment. The 
agency's authority attaches to the product and those responsible for 
its manufacture, distribution, or sale in interstate commerce. 
Advertisers do not have control over the products and presumably act at 
the direction of manufacturers, distributors, and retailers. If an 
advertisement violated the requirements of this part, the agency would 
hold the appropriate manufacturer, distributor, or retailer responsible 
for the violative advertisement.
    (12) One comment argued that cigarettes should be sold by 
prescription only. Other comments opposing the rule predicted that the 
agency would require prescriptions.
    The agency declines to amend the rule to require prescriptions. 
Such a requirement would unduly affect adults and retailers and, FDA 
expects that the more narrowly tailored provisions in subpart B of part 
897 will adequately restrict young people's access to these products.
    (13) One comment criticized the 1995 proposed rule for not 
restricting where cigarettes and smokeless tobacco may be sold. The 
comment said that pharmacies and health care facilities often sell 
these products and that such sales undermine the credibility of health 
warnings related to these products. The comment suggested that FDA 
prohibit ``inappropriate places'' from selling these products.
    FDA declines to amend the rule as suggested by the comment. The 
agency has no information or criteria that would permit it to determine 
whether certain places or types of establishments are not 
``appropriate'' for selling cigarettes and smokeless tobacco.

B. General Responsibilities of Manufacturers, Distributors, and 
Retailers (Sec. 897.10)

    Proposed Sec. 897.10 would have required each manufacturer, 
distributor, and retailer to be responsible for ensuring that the 
cigarettes or smokeless tobacco that it ``manufactures, labels, 
advertises, packages, distributes, sells, or otherwise holds for sale'' 
comply with the requirements in part 897. FDA proposed this provision 
setting forth these general responsibilities as part of the agency's 
comprehensive program to reduce young people's access to cigarettes and 
smokeless tobacco. Through this provision FDA intended to ensure that 
these products, from the time of their manufacture to the time of their 
purchase, comply with part 897 and that manufacturers, distributors, 
and retailers appreciate their roles, and carry out their legal 
responsibilities to reduce the accessibility and appeal of these 
products to young people. The final rule retains Sec. 897.10 without 
any significant changes.
    (14) Many comments interpreted proposed Sec. 897.10 as imposing 
strict liability on manufacturers, distributors, and retailers. 
Generally, these comments interpreted the 1995 proposed rule as making 
a party responsible for violations committed by another party, even if 
the former was unaware that the violation had been committed by the 
latter. Some comments asserted that the agency cannot impose such 
vicarious liability, under these comments' interpretation of United 
States v. Dotterweich, 320 U.S. 277 (1943), and United States v. Park, 
421 U.S. 658 (1975). One comment acknowledged that proposed 
Sec. 897.10, when read literally, would not hold parties responsible 
for acts committed by other parties, but nevertheless claimed that, 
despite such language, FDA would hold manufacturers, distributors, and 
retailers liable for any action committed by any party.
    The agency believes that the comments have misinterpreted 
Sec. 897.10. Section 897.10 holds manufacturers, distributors, and 
retailers responsible for their own actions; it does not require any 
party to ensure that another party complied with the regulations, nor 
does it hold a party responsible criminally or civilly for actions that 
it did not commit or about which it had no responsibility under the act 
and no knowledge. This is the most logical and straightforward 
interpretation of Sec. 897.10, and, as stated earlier, the provision 
states that ``each manufacturer, distributor, and retailer is 
responsible for ensuring that the cigarettes and smokeless tobacco it 
manufactures, labels, advertises, packages * * * comply with all 
applicable requirements under this part'' (emphasis added). The word 
``it'' refers to the individual manufacturer, distributor, or retailer, 
while the word ``applicable'' signifies that a party, depending on the 
circumstances, is subject only to those requirements for which that 
party is responsible. This issue is discussed in greater detail later 
in this section of the document.
    In determining which party may be responsible for a regulatory 
violation, FDA will examine where and when the violation occurred. For 
example, Sec. 897.14(d), among other things, prohibits retailers from 
opening any cigarette package and selling individual cigarettes. If a 
retailer, on its own initiative, opened a package and sold single 
cigarettes, without the knowledge of a manufacturer or distributor, 
only the retailer would be responsible because only the retailer 
engaged in actions that violated the requirements in this part. 
However, if the manufacturer or distributor supplied single cigarettes 
to the retailer--contrary to Sec. 897.16(b) which establishes a minimum 
package size for cigarettes--and the retailer sold the single 
cigarettes, or if the manufacturer or distributor knew or had reason to 
know that the retailer sold

[[Page 44432]]

single cigarettes and continued to provide cigarettes to the retailer, 
the manufacturer or distributor, as well as the retailer, would be 
subject to regulatory action. The manufacturer or distributor would 
have violated Sec. 897.16(b) and assisted in violating Sec. 897.14(d), 
while the retailer would be in violation of Sec. 897.14(d). In sum, 
each manufacturer, distributor, and retailer is responsible for 
ensuring that its products (whether it manufactures, labels, 
advertises, packages, distributes, sells, or otherwise holds them for 
sale) comply with all requirements applicable to it and its products. 
As such, Sec. 897.10 does not create the problems that the comments 
suggested it does.
    (15) Several comments objected to proposed Sec. 897.10 because it 
would have each manufacturer, distributor, and retailer responsible for 
ensuring compliance with the regulatory requirements in part 897. These 
comments interpreted the provision as having the affected industries, 
rather than Federal or State Governments, determine compliance. One 
comment also asserted that the imposition of such responsibility on 
private persons is a violation of the Due Process Clause of the Fifth 
Amendment, which prevents unreasonable delegations of governmental 
authority. Several comments added that manufacturers, distributors, and 
retailers should not ``spy'' on each other to ensure compliance. One 
comment said that the rule would create a ``hidden enforcement tax.''
    FDA believes that the comments objecting to Sec. 897.10 have 
misinterpreted its application. Section 897.10 does not make 
manufacturers, distributors, or retailers solely responsible for 
ensuring compliance with the regulations nor does it alter or affect 
any Federal or State enforcement mechanism. Section 897.10 is intended 
to remind manufacturers, distributors, and retailers that they are 
responsible for complying with the regulations that are applicable to 
them. FDA remains primarily responsible, as it does for most FDA 
regulations, for determining whether parties comply with the 
regulations. States, of course, remain free to enforce applicable State 
laws relating to these products.
    (16) One comment asserted that proposed Sec. 897.10 would impose 
vicarious liability in violation of the Eighth Amendment's Excessive 
Fines Clause.
    As previously discussed, Sec. 897.10 does not impose the sort of 
vicarious liability on manufacturers or distributors that the comments 
suggested it does. The Excessive Fines Clause of the Eighth Amendment 
states that ``excessive fines [shall not be] imposed.'' Here, neither 
Sec. 897.10 nor any other provision of the final rule imposes an 
excessive fine or any fine at all. Moreover, whether a fine is 
excessive in a particular case requires a close analysis of the facts 
of that case. (See, e.g., United States v. One Parcel Property Located 
at 427 and 429 Hall Street, Montgomery, Montgomery County, Alabama, 74 
F.3d 1165, 1170-73 (11th Cir. 1996) (adopting and applying 
proportionality test to in rem civil forfeiture); United States v. 
Chandler, 36 F.3d 358, 365-66 (4th Cir. 1994) (adopting and applying 
three-part instrumentality test to in rem civil forfeiture) cert. 
denied, 115 S.Ct. 1792 (1995).)
    (17) A few comments implied that manufacturers should be excluded 
from Sec. 897.10, stating that retailers, rather than manufacturers, 
should be responsible for preventing sales to young people.
    The agency declines to amend the rule to exclude manufacturers. The 
preamble to the 1995 proposed rule demonstrated how certain practices 
by manufacturers, such as the distribution of free samples, offer young 
people easy and inexpensive access to cigarettes and smokeless tobacco. 
(See 60 FR 41314 at 41326 (free samples).) FDA received several 
comments that reinforced these views, such as comments from a 12-year 
old recounting how his classmate acquired free cigarettes from a 
manufacturer, and a mother whose 14-year old daughter and friends 
attributed their cigarette use to free samples obtained from 
manufacturers. Thus, manufacturers play a critical role in making 
cigarettes and smokeless tobacco accessible and appealing to young 
people.
    In addition, because cigarettes and smokeless tobacco are products 
subject to the act, regulation of these products properly follows them 
from the time of their manufacture to their sale to the consumer. 
Focusing solely on the sale of these products to consumers would 
deprive the agency of any ability to address problems that may exist at 
the manufacturer or distributor level. For example, if products were 
incorrectly packaged or labeled, a rule that concentrated solely on 
retail sales might permit FDA to restrict sales of those products, but 
might not permit FDA to require the manufacturer to package or label 
those products correctly.
    (18) Two comments would amend the rule to exempt manufacturers that 
had 1 or 2 percent of the cigarette or smokeless tobacco product 
market. One comment came from an association of specialty tobacco 
companies that either manufacture or import specialty cigarettes and 
other tobacco products. The comment claimed that specialty cigarettes 
account for a very small fraction (approximately 400 million 
cigarettes) of the total cigarettes market, are sold at higher retail 
prices compared to domestic cigarettes (from $1.75 for 10 Indonesian 
cigarettes to $4.00 for 20 German cigarettes), and are sold in shops 
that young people normally do not frequent. The comment also stated 
that the rule would have an adverse effect on foreign products 
(particularly products in packages containing less than 20 cigarettes), 
that the companies had little control over foreign manufacturers, and 
that companies would go out of business or be adversely affected by the 
rule. The comment sought an exemption either for firms or brands that 
have 1 percent or less of the total cigarette market in the United 
States. The comment explained that an exemption would be equitable 
because, the comment asserted, there is no evidence that speciality 
cigarettes contribute to underage smoking, and would also be consistent 
with an exemption granted by the Federal Trade Commission (FTC) for 
rotating cigarette label warnings and regulations by the U.S. 
Department of Agriculture (USDA) defining a ``domestic manufacturer of 
cigarettes'' for assessing payments under the Agricultural Adjustment 
Act of 1938.
    The other comment came from a firm whose sales focused primarily on 
smokeless tobacco, with the remainder devoted to cigars and ``smoking 
tobaccos.'' The company said that it had approximately 1 percent of the 
smokeless tobacco market and is the sixth largest smokeless tobacco 
product manufacturer. The comment sought an exemption for companies 
with market shares under 2 percent because it claimed the rule would 
``sound the death knell'' for small, family-owned businesses.
    Both comments indicated that 80 to 90 percent of their sales 
occurred through the mail.
    The agency declines to accept the comments' suggestions to create 
an exemption based solely on market share. The agency believes that 
subjecting similar or identical products to the same statutory and 
regulatory standards is both practical and fair to manufacturers

[[Page 44433]]

and consumers. A consumer should be able to expect that similar or 
identical products made by different manufacturers will be regulated in 
the same fashion. Similarly, manufacturers will not be unfairly 
advantaged or disadvantaged if they are all subject to the same 
statutory and regulatory requirements. For example, the final rule 
prohibits the distribution of free samples. This restriction applies 
regardless of a manufacturer's market share and, aside from eliminating 
a free source of cigarettes and smokeless tobacco that people use, also 
treats manufacturers equally.
    FDA is not persuaded by one comment's suggestion that an exemption 
would be consistent with actions taken by other agencies. FTC's 
exemption is based on statutory language at 15 U.S.C. 1333(c)(2)(A)(i) 
and is limited to changes in the label rotation sequence; in other 
words, the exemption does not relieve the manufacturer from placing 
warning statements on its packages. USDA's regulation pertaining to 
``domestic'' manufacturers is based on statutory language at 7 U.S.C. 
1301(b)(17) as part of the Agricultural Adjustment Act of 1938 that was 
designed, among other things, to create an incentive for domestic 
manufacturers to use domestic tobacco leaf. Thus, neither the FTC nor 
USDA statutes or regulations were intended to relieve foreign products 
from substantive requirements or to regulate foreign manufacturers.
    As for the comments' assertions that their products are either not 
used by or accessible to young people, the agency has amended the rule 
to permit specific modes of sale, including mail order sales, that 
young people cannot or do not use. The agency did not amend the rule, 
however, to exclude cigarettes and smokeless tobacco or brands that 
young people do not appear to use or purchase. It would be 
inappropriate to exempt a particular brand or specialty product simply 
because a manufacturer claims young people do not purchase that 
product. (The agency also notes that the $1.75 price charged for 10 
Indonesian cigarettes is lower than the price charged for some domestic 
brands and creating an exemption for a low cost cigarette product in a 
``kiddie pack'' size would be contrary to the rule's purpose.)
    Additionally, FDA traditionally classifies, as a group, device 
products that are sufficiently similar so that they can be considered 
the same type of device for purposes of applying the regulatory 
controls in the act (see Sec. 860.3(i) (21 CFR 860.3(i)) (definition of 
``generic type of device''), using the cumulative evidence from several 
manufacturers. Reclassification of one product of a particular type 
results in the reclassification of the entire group. (See 42 FR 46028, 
September 13, 1977; and 43 FR 32988 July 28, 1978.) The alternative 
would require FDA to classify individually each manufacturer's device, 
and to undertake the classification process whenever a new manufacturer 
marketed a product within an already identified device type. Thus, FDA 
applies the same regulatory requirements to all devices within an 
identified device type that are substantially equivalent to one 
another. This approach is necessary to provide similar regulatory 
treatment for essentially identical products of different manufacturers 
and distributors (42 FR 46028 at 46031; and 43 FR 32988 at 32989).
    Additionally, assuming that the rule effectively restricts a young 
person's access to cigarettes and smokeless tobacco, it is reasonable 
to assume that a young person would turn to alternative products, such 
as foreign cigarettes that the comment would exempt. Consequently, the 
agency declines to exempt products with small market shares from the 
rule.
    (19) FDA received several comments from wholesalers or distributors 
arguing that they should be exempt from the 1995 proposed rule, 
particularly proposed Sec. 897.10, because they are unable to affect 
the actions of manufacturers and retailers. Several comments asserted 
that wholesalers and distributors are ``merely a conduit'' for 
transferring products from manufacturers to retailers and have small 
staffs that would be unable to comply with all requirements in part 
897. According to these comments, a wholesaler or distributor would 
either have to hire additional staff to ensure that products complied 
with all applicable requirements or be without sufficient staff to 
ensure that all products supplied to all retailers complied with the 
regulations. Several comments added that requiring wholesalers and 
distributors to maintain records, submit reports to FDA, and be subject 
to inspection by FDA would waste the wholesaler's or distributor's 
resources and provide FDA with little or no useful information. A 
minority expressed confusion as to their obligations if they relabel 
cigarettes or smokeless tobacco.
    The agency believes that the comments misinterpret Sec. 897.10. The 
provision states that a distributor would be responsible for ensuring 
that the cigarettes or smokeless tobacco that it manufactures, labels, 
advertises, packages, distributes, sells, or otherwise holds for sale 
complies with all applicable requirements. For example, the reporting 
requirement in proposed Sec. 897.40 was directed at manufacturers. 
Consequently, distributors would not have been required to submit 
reports to FDA under Sec. 897.40. (Moreover, as discussed in section 
VIII. of this document, FDA has deleted Sec. 897.40 and exempted 
distributors from the registration and listing requirements in part 
807. Distributors are, however, subject to other reporting 
requirements, such as medical device distributor reports under part 
804.) However, if a distributor acts in a manner that is outside the 
definition of distributor in Sec. 897.3, it may alter its regulatory 
status and become subject to other provisions in this part. For 
example, a distributor who relabels cigarettes would, for those 
relabeled products, become a ``manufacturer'' under this rule and be 
subject to those provisions pertaining to manufacturers. Section 897.3 
defines a manufacturer, in part, as any person, including any repacker 
and/or relabeler, who manufactures, fabricates, assembles, processes, 
or labels finished cigarettes or smokeless tobacco.
    (20) Several comments would exempt distributors from the rule 
because, the comments claimed, the 1995 proposed rule set forth little 
or no evidence to justify regulating distributors.
    FDA declines to exempt distributors from the rule. The agency 
reiterates that it is regulating cigarettes and smokeless tobacco under 
its drug and device authority, and that, as it does for other FDA 
regulated products, FDA's rule follows the products from the time of 
their manufacture to the time of their sale. Wholesale or distribution 
operations must be included in any effective regulatory system because 
products can be contaminated, diverted into illegal channels, or 
otherwise adulterated or misbranded at the wholesale or distribution 
level just as they can at the manufacturing and retail levels.
    (21) Many comments asserted that, rather than impose 
responsibilities on manufacturers and distributors, FDA should limit 
the rule to requiring that retailers verify the age of persons 
purchasing cigarettes and smokeless tobacco. These comments claimed 
that no other regulatory provisions would be necessary if retailers, or 
their sales clerks, verified the purchaser's age.

[[Page 44434]]

    FDA declines to exclude manufacturers and distributors from the 
rule. As stated earlier in section IV.B. of this document, cigarettes 
and smokeless tobacco are products subject to regulation under the act, 
and, as a result, the rule follows the products from the time of their 
manufacture, through storage and distribution, to product sale at the 
consumer level. Excluding manufacturers and distributors would 
compromise FDA's ability to ensure that these products are not 
accessible or appealing to young people. Manufacturers engage in 
activities, such as advertising, labeling, and distributing samples, 
that make cigarettes and smokeless tobacco accessible and/or appealing 
to young people. Distributors channel products from manufacturers to 
retailers, and so the rule includes distributors to ensure, among other 
things, that the products do not become adulterated or misbranded while 
held by distributors.
    (22) FDA received many comments from retailers stating that FDA 
regulation was unnecessary because retailers train their staffs to 
request proof of age or have taken other steps to prevent sales to 
young people.
    The preamble to the 1995 proposed rule provided reasons for not 
relying on retailer training programs alone. The preamble to the 1995 
proposed rule cited a report by 26 State attorneys general stating that 
industry training films and retailers' programs have not, on their own, 
prevented illegal sales to young people and that, in some retail 
sectors, high employee turnover rates complicated training efforts (60 
FR 41314 at 41323). The preamble to the 1995 proposed rule also cited 
studies showing that significant numbers of young people are not asked 
to verify their age when purchasing cigarettes or smokeless tobacco and 
that, in some cases, retail clerks even encouraged the young person's 
purchase by suggesting cheaper brands or offering to make up the 
difference in the purchase price if the young person lacked sufficient 
funds (60 FR 41314 at 41323). FDA received some comments that further 
illustrated the ease with which young people can purchase these 
products; for example, one comment reflected on the author's own 
practice, at age 11, of purchasing cigarettes by saying ``They are for 
my Mom.'' Thus, while training retail clerks to request proof of age 
should help curtail a young person's access to cigarettes and smokeless 
tobacco, the reports and studies cited in the 1995 proposed rule, as 
well as the personal experiences reflected in some comments, suggest 
that additional measures are necessary to reduce a young person's 
access to these products.
    (23) Several comments from retailers claimed that the 1995 proposed 
rule violated their ``right'' to sell products or arrange their stores 
in any manner they wished. Many comments added that, if retailers are 
subject to the rule, many retailers will lose sales and fees associated 
with cigarettes and smokeless tobacco and could be forced to fire 
staff. One comment further stated that this would actually harm young 
people because the retailer would fire its newest staff, and such staff 
employees are usually young people. Conversely, some comments claimed 
that, in order to comply with the rule, retailers would be obliged to 
hire additional staff.
    In contrast, FDA received two comments denying that retailers would 
lose slotting or promotional fees. (Some manufacturers pay retailers to 
display their products (often referred to as ``slotting fees'') in a 
specific fashion or to display signs or other materials provided by the 
manufacturer.) One comment, based on experience in an area in northern 
California where self-service displays were prohibited, stated that 
retailers did not suffer significant economic losses after the displays 
were banned. Another comment opined that manufacturers would still have 
an incentive to offer slotting fees or allowances to retailers to 
ensure advantageous placement of their products behind the counter.
    FDA disagrees with the comments asserting an unrestricted ``right'' 
to sell products. Section 520(e) of the act (21 U.S.C. 360j(e)) states, 
in part, that the agency may require that a device be restricted to 
sale, distribution, or use upon such conditions as the agency may 
prescribe by regulation. Because FDA has determined that these products 
should be regulated as restricted devices, the act authorizes FDA to 
impose controls on their sale and distribution. The agency further 
notes that, in addition to restrictions authorized under the act, other 
consumer products are sold subject to various restrictions. For 
example, under 23 U.S.C. 158(a)(1), the ``national minimum drinking 
age'' is 21 years, and the Secretary of Transportation is authorized to 
withhold certain highway funds from States that have a lower minimum 
age. Federal law expressly prevents licensed importers, manufacturers, 
dealers, and collectors from selling firearms and ammunition to any 
individual that the licensee knows or has reasonable cause to believe 
to be under 18 years old (except in specific, limited cases), or, if 
the firearm is not a shotgun or rifle, prohibits sales to individuals 
under 21 years of age (18 U.S.C. 922(b)).
    Thus, there is no unfettered or unrestricted ``right'' to sell 
consumer products. Instead, products are often sold subject to 
conditions or restrictions, including those based on age, that are 
designed to protect the integrity of the product, to protect users or 
other members of the public, or to prevent the product from reaching 
certain groups of people.
    FDA also disagrees with those comments predicting that the rule 
will result in lower sales and fees and compel retailers to lay off 
staff. Insofar as retailers are concerned, the rule does not affect 
sales to adults. It is intended to eliminate illegal sales to young 
people. Thus, for a retailer to assert that the rule will reduce its 
sales revenue so much as to require staff reductions, illegal sales 
would necessarily have to play a significant role in funding staff 
positions.
    With respect to fees, the agency cannot determine whether 
manufacturers will discontinue paying slotting fees or other allowances 
to retailers as a result of the rule. The preamble to the 1995 proposed 
rule did estimate that industry promotional allowances totaled 
approximately $1.6 billion in 1993, or $2,600 per retailer if the sum 
is evenly distributed among the estimated 600,000 retail outlets (60 FR 
41314 at 41369). FDA does note, however, that some comments supported 
the agency's position that retailers will not suffer significant 
economic losses. One study cited in the preamble to the 1995 proposed 
rule stated that, ``in the absence of advertising and promotion outlets 
* * * the cigarette industry may be expected to provide greater 
incentives to retailers to provide more and better shelf space for 
their brands in order to provide availability to the buyer in the 
store'' (60 FR 41314 at 41369). Thus, while some manufacturers might 
stop paying slotting fees, others might continue paying those fees or 
even increase the fees to obtain favorable placement of their products 
behind the counter.
    Furthermore, as described in greater detail in section IV.E.4.b. of 
this document, FDA has amended the rule to permit self-service displays 
(or, more specifically, merchandisers) in facilities that are 
inaccessible to young people.
    As for those comments stating that retailers would have to hire 
additional staff, it is possible that some retailers

[[Page 44435]]

who have relied on modes of sale that the rule will now prohibit or 
restrict may need to hire additional staff. For example, if a retailer 
derived a substantial portion of its revenue from vending machines and 
those machines would not be available under the rule, the retailer 
might decide to hire staff in order to continue selling cigarettes or 
smokeless tobacco. However, the comments did not provide sufficient 
information to enable FDA to determine the number of retailers who 
might be affected or the extent to which they might be affected.
    (24) A few comments challenged the validity of the 1995 proposed 
rule because it did not impose responsibilities on young people who 
purchase cigarettes and smokeless tobacco. These comments claimed that 
omitting young people from the rule, while requiring retailers to 
comply, was unfair, arbitrary, and capricious. One comment stated, 
``any effective public policy to restrict sales of tobacco products to 
minors must go beyond the discouragement of promotion, advertising and 
merchandising to minors. It must be accompanied by realistic penalties 
for minors who purchase and possess cigarettes and for adults who 
purchase for them.''
    It would be inappropriate for FDA to amend the rule to impose 
penalties or sanctions on young people who purchase or possess 
cigarettes or smokeless tobacco or adults who purchase such products 
for young people. The main focus of the act is on the introduction, 
shipment, holding, and sale of goods in interstate commerce. Thus, the 
actions of minors who purchase cigarettes and smokeless tobacco are 
appropriately a matter for State or local law.
    (25) One comment stated that FDA should prohibit young people under 
18 years of age from selling tobacco products.
    The agency declines to amend the rule to place age restrictions on 
those who sell these products. FDA has little evidence to suggest that 
manufacturers', distributors', or retailers' young employees play a 
significant role in making cigarettes and smokeless tobacco accessible 
or appealing to young people. Although some evidence indicates that, in 
certain settings, a young employee might be less likely to check age or 
to challenge his or her peers (as in situations where the young 
employee distributed free samples (60 FR 41314 at 41326)), other 
provisions in this subpart, such as the elimination of free samples, 
should reduce the need to place age restrictions on employees.
    The agency does note, however, that in response to comments 
requesting that vending machines and self-service displays be permitted 
in ``adult-only'' facilities, FDA has amended the final rule to allow 
vending machines and self-service displays in facilities that are 
totally inaccessible to people under 18 and employ no persons below age 
18. This is to ensure that an ``adults-only'' facility is truly 
restricted to adults rather than to create an age restriction on 
sellers. These changes to the rule are described in greater detail 
elsewhere in this document.
    The agency is aware that several local governments have statutes or 
regulations that establish minimum age requirements for persons who 
sell tobacco products. Because this rule does not contain a minimum age 
requirement for persons who sell these products, those statutes or 
regulations are not preempted. The rule's preemptive effect on other 
State or local statutes or regulations and federalism issues are 
discussed elsewhere in this document.
    (26) Several comments suggested that, instead of issuing 
regulations, the Federal Government should transfer funds to States for 
use in preventing cigarette and smokeless tobacco sales to young 
people.
    FDA must decline to accept the comments' suggestion. Federal 
funding of State prevention efforts is beyond the scope of the rule. 
The agency does intend to work with State officials and cooperate in 
enforcement activities where appropriate and to the extent that its 
resources permit.
    (27) Several comments suggested that FDA amend the rule so that the 
restrictions on the sale and distribution of cigarettes and smokeless 
tobacco do not apply to locations where young people do not enter or 
where entry is restricted, such as bars, liquor stores, factories, and 
prisons.
    After consideration of these comments, the agency has amended the 
rule to allow certain retail practices to continue because those 
practices are not used by young people or are inaccessible to them. For 
example, the final rule permits mail-order sales to occur because the 
evidence does not establish that young people use mail-order sales to 
acquire these products. The final rule also permits vending machines 
and self-service displays (merchandisers only) to be used in locations 
where young people cannot enter, such as locations where proof of age 
is required in order to enter the premises or facilities that employ 
only adults. These changes are described in detail in the discussion of 
Sec. 897.16 and elsewhere in this document.

C. Additional Responsibilities of Manufacturers (Sec. 897.12)

1. Removal of Manufacturer-Supplied or Manufacturer-Owned Items That Do 
Not Comply With the Regulations
    Proposed Sec. 897.12(a) would have required manufacturers, in 
addition to their other obligations under part 897, to remove, from 
each point of sale, ``all self-service displays, advertising, labeling, 
and other manufacturer-supplied or manufacturer-owned items'' that do 
not comply with the requirements in part 897. In response to comments, 
the agency has amended the final rule to require the manufacturer to 
remove only those violative items that the manufacturer owns.
    (28) Many comments, including comments from manufacturers' sales 
representatives and retailers, strongly objected to this provision, 
particularly as it would apply to self-service displays. In general, 
the comments claimed that retailers, rather than manufacturers, own the 
self-service displays. The comments also expressed concern that 
manufacturers' representatives or retailers' employees might be 
physically harmed if a manufacturer's representative attempted to 
remove a self-service display from a retailer. Several comments also 
interpreted proposed Sec. 897.12(a) as requiring a manufacturer's sales 
representative to remove self-service displays supplied by another 
manufacturer; these comments said removing a competitor's self-service 
display would be unethical and could result in the sales representative 
being barred from reentering the retail establishment in the future.
    In contrast, a few comments supported proposed Sec. 897.12(a) 
because manufacturers provide the displays to retailers and visit 
retailers often. One comment added that the burden of removing displays 
should not rest on retailers alone, but added that retailers should 
remain ultimately responsible for displays they use or have on site. 
This comment suggested that retailers be responsible for removing 
displays if the manufacturer fails to do so.
    The agency agrees, in part, with the comments critical of the 
proposed provision and has amended Sec. 897.12 to clarify that a 
manufacturer is responsible for removing all self-service displays 
(which the final rule also clarifies as referring to merchandisers),

[[Page 44436]]

advertising, labeling, and other items that it owns that do not comply 
with the requirements in part 897. FDA has also amended Sec. 897.14 to 
clarify the obligation of retailers with respect to all other violative 
items in the retailer's establishment. These changes should eliminate 
potential conflicts between manufacturers' sales representatives and 
retailers.
    Additionally, Sec. 897.12 requires a manufacturer to be responsible 
only for the removal of the items it owns. The agency does not expect 
manufacturers to remove items owned by another manufacturer, but 
encourages manufacturers to inform another manufacturer and FDA if 
another manufacturer's items violate the requirements in part 897. 
However, the agency advises manufacturers who know or have reason to 
know that a distributor or retailer is misbranding that manufacturer's 
products, or causing its products to violate these regulations or the 
act, to take action, such as discontinuing sales, incentives, and 
supplies, to halt the violation. Manufacturers might be held liable for 
subsequent violations by the distributor or retailer, if the 
manufacturer knew or should have known about the violation and 
continued to supply its product to such parties.
    Liability, both criminal and civil, under the act is very broad. 
Section 301 of the act (21 U.S.C. 331) prohibits certain acts ``and the 
causing thereof.'' United States v. Dotterweich, 320 U.S. 277 (1943), 
and United States v. Park, 421 U.S. 658 (1975) elaborate on the meaning 
of ``causing'' in section 301 of the act (see Park, 421 U.S. at 673). 
These cases stand for the proposition that a corporate official can be 
held criminally liable as having caused the corporation's violations of 
the act of which he had no knowledge, so long as he stood in a 
``responsible relationship'' to the violations (Id. at 672).
    Under the act, ``all who * * * have * * * a responsible share in 
the furtherance of the transaction which the statute outlaws'' have 
caused the violation and are subject to civil and criminal liability 
(Dotterweich, 320 U.S. at 284). Indeed, a corporate employee and the 
corporation itself can have a responsible share in the furtherance of a 
violation of the act committed by another corporation or a person who 
is not an employee of the corporation. (See, e.g., United States v. 
Parfait Powder Puff Co., 163 F.2d 1008, 1009-10 (7th Cir. 1947) 
(holding defendant corporation criminally liable for violations 
committed without its knowledge by second corporation that defendant 
had contracted with to manufacture, package, and distribute its 
cosmetic product), cert. denied, 332 U.S. 851 (1948); United States v. 
Articles of Drug, 601 F. Supp. 392 (D. Neb. 1984) (enjoining drug 
distributor that induced its customers to pass off its drugs as 
controlled substances), aff'd in part, rev'd in part on other grounds, 
825 F.2d 1238 (8th Cir. 1987); cf. Inwood Lab., Inc. v. Ives Lab., 
Inc., 456 U.S. 844, 853-54 (1982) (manufacturer or distributor who 
``intentionally induces another'' to violate trademark law or who 
``continues to supply its product to one whom it knows or has reason to 
know'' will violate trademark law is itself responsible for 
violation).) And it is a ``settled doctrine[] of criminal law'' (Park, 
421 U.S. at 669) that a person who knows or has reason to know that 
goods that he sells will be used unlawfully may be criminally liable as 
aider and abettor under 18 U.S.C. 2; Bacon v. United States, 127 F.2d 
985, 987 (10th Cir. 1942) (discussing former 18 U.S.C. 550, precursor 
to 18 U.S.C. 2(a))).
    For example, a manufacturer or distributor that continues to supply 
its product to a retailer whom it knows or has reason to know sells 
cigarettes or smokeless tobacco to young people (or who breaks open 
packages and sells single cigarettes) might be liable for subsequent 
violations by that retailer. Likewise, a manufacturer who paid a 
retailer a fee for the retailer to use an illegal self-service display 
in a store might be liable for the retailer's violation.
    These examples are, however, only by way of illustration because, 
as the Supreme Court stated in Dotterweich, ``[t]o attempt a formula 
embracing the variety of conduct whereby persons may responsibly 
contribute in furthering a transaction forbidden by an Act of Congress 
* * * would be mischievous futility'' (320 U.S. at 285). It added that, 
``[i]n such matters the good sense of prosecutors, the wise guidance of 
trial judges, and the ultimate judgment of juries must be trusted'' 
(Id.).
    (29) One comment challenged FDA's authority to require 
manufacturers to remove items that fail to comply with the regulations. 
The comment explained that FDA, rather than manufacturers, is 
responsible for compliance activities and a manufacturer's 
representative is not deputized or authorized to act on the agency's 
behalf. The comment added that sales representatives are not trained to 
perform investigative or law enforcement functions and, unlike 
Government employees, would not enjoy the same legal protections 
accorded to the agency's inspectors. The comment also argued that FDA 
lacks authority to require manufacturers, or any other party, to remove 
any materials that would violate the regulations. The comment asserted 
that the agency has no general recall authority and that the recall 
authority in the act for devices requires the agency to find that a 
reasonable probability of serious adverse health consequences or death 
exists and, when exercising that recall authority, to provide an 
opportunity for a hearing. Thus, according to the comment, the 1995 
proposed rule is deficient because it makes no findings and fails to 
provide for a hearing.
    The agency believes that the comment misinterprets the provision. 
Section 897.12 would not ``deputize'' manufacturers' representatives 
nor confer any official responsibility on them. FDA intends to enforce 
the act and regulations itself and, where appropriate, will consider 
commissioning State officials, under its authority in section 702(a) of 
the act, to perform specific functions on FDA's behalf. Section 702(a) 
of the act does not extend to commissioning private parties, and the 
agency has no intention of commissioning manufacturers' 
representatives.
    FDA also disagrees with the comment's claim that FDA has no 
authority to require manufacturers to remove materials that violate FDA 
regulations. FDA is issuing this provision, as well as part 897 
generally, under its authority under section 520(e) of the act, which 
expressly declares, in part, that the agency may, by regulation, 
require that a device be restricted to sale, distribution, or use 
``upon such other conditions as the Secretary may prescribe in such 
regulation.'' Section 897.12, as amended, is a logical and necessary 
complement to the restrictions on the devices' sale, distribution, and 
use because it requires the manufacturer to assume responsibility for 
removing items that it owns that do not comply with the restrictions. 
Furthermore, as the Supreme Court stated in United States v. Park, 421 
U.S. 658, 672 (1975), ``the act imposes not only a positive duty to 
seek out and remedy violations when they occur but also, and primarily, 
a duty to implement measures that will insure that violations will not 
occur.''
    The comment's argument with respect to the agency's recall 
authority is also misplaced. Section 897.12 applies in situations where 
a manufacturer knows,

[[Page 44437]]

either acting on its own or on the basis of information supplied to it, 
that one of its items does not comply with the regulations. Knowing 
that the item does not comply with the requirements in part 897, the 
manufacturer is then obligated to remove the violative item. Notice of 
an opportunity for a hearing or other due process considerations 
associated with recalls under section 518 of the act (21 U.S.C. 360h) 
are inapplicable because the manufacturer, rather than the government, 
would be the principal party during this process, using information it 
has to act on its own items. In any case, section 518 of the act 
applies to the recall of a device, not its advertising.
    FDA fully expects manufacturers to comply with Sec. 897.12. For 
example, if the manufacturer provided advertising that used colors and 
photographs, contrary to Sec. 897.32, which requires black and white 
text only, the manufacturer is deemed to know that the advertising does 
not comply with Sec. 897.32 and should remove that advertising. In this 
situation, where the manufacturer's advertising clearly does not comply 
with the regulations, requiring FDA to provide notice and an 
opportunity for a hearing (as the comment would apparently require) 
would simply waste FDA's and the manufacturer's resources.
    FDA will take regulatory action against manufacturers who fail to 
comply with this provision or any other applicable provision. The 
nature of the regulatory action will depend, in large part, on the 
violation, but could range from issuance of a warning letter, to an 
injunction under section 302 of the act (21 U.S.C. 332), the imposition 
of civil penalties, criminal fines, and/or imprisonment under section 
303 of the act (21 U.S.C. 333), and seizures under section 304 of the 
act (21 U.S.C. 334).
2. Visual Inspections by a Manufacturer's Representative at Each Point 
of Sale
    Proposed Sec. 897.12(b) would have required a manufacturer's 
representatives to visually inspect each point of sale that they visit 
during the normal course of business to ensure that cigarettes and 
smokeless tobacco are ``labeled, advertised, and distributed in 
accordance with this part.'' The preamble to the 1995 proposed rule 
indicated that manufacturers keep extremely detailed records about each 
retailer and that some records noted whether the retailer should be 
visited weekly, biweekly, etc. and noted the types of displays in the 
retailer's establishment (60 FR 41314 at 41323). The preamble to the 
1995 proposed rule also stated that this provision would not impose a 
new responsibility or burden on companies that did not visit retailers 
as part of their ordinary business practice and, for those 
manufacturers that would be expected to comply, estimated that these 
visual inspections would take no more than 2 to 3 minutes per visit (60 
FR 41314 at 41323 and 41365). Based on the comments received in 
response to this proposal, the agency has deleted Sec. 897.12(b) from 
the final rule.
    (30) Several comments opposed proposed Sec. 897.12(b). One comment 
argued that proposed Sec. 897.12(b) is unconstitutional because it 
would hold manufacturers vicariously liable for the acts of others in 
violation of the Due Process Clause, and would violate Article I, 
Section 8 of the Constitution, which implicitly reserves to States the 
authority to raise militias. One comment asserted that the number of 
manufacturers' representatives varies among manufacturers and that 
there are too many retail establishments for those representatives to 
inspect. The comment added that any inspection would require more than 
3 minutes to be effective, so that conducting inspections at each 
retailer would be labor intensive and costly. Another comment, 
notwithstanding the statement in the preamble to the 1995 proposed rule 
that the provision applied only to those firms that visit retailers in 
the ordinary course of business, asserted that its entire staff would 
be too small to visit all the retailers that it services. A small 
number of comments added that such responsibilities would, in effect, 
constitute a hidden ``tax'' on manufacturers.
    Other comments, many submitted by sales representatives, objected 
to proposed Sec. 897.12(b), stating that the representatives have no 
power over a retailer's actions and cannot take any adverse action, 
such as discontinuing supplies, to retailers who sell cigarettes and 
smokeless tobacco to young people. Some comments explained that, even 
if a sales representative could ask a distributor to stop supplying 
certain retailers, the retailer could simply switch distributors and 
continue to obtain products. Other comments argued that the 
responsibility to prevent sales to young people rests solely with the 
retailer.
    In contrast, several comments supported proposed Sec. 897.12(b) 
because sales representatives frequently visit retailers or because 
manufacturers deliver materials, such as self-service displays and 
promotional materials, to retailers. One comment even suggested 
amending the rule to require manufacturers to enter into contracts with 
retailers and distributors to comply with FDA regulations and to state 
that failure to comply would result in termination of the retailer's or 
distributor's ability to obtain the manufacturer's cigarettes or 
smokeless tobacco.
    After consideration of the comments, the agency has removed 
Sec. 897.12(b). FDA intends to examine this matter further and to 
develop a guidance describing how manufacturers may be able to assist 
retailers to comply with this subpart. Possible options might include 
methods suggested by the comments, such as contractual agreements 
between retailers and manufacturers including provisions on compliance 
and the consequences of noncompliance.

D. Additional Responsibilities of Retailers (Sec. 897.14)

    Proposed Sec. 897.14 would have established additional 
responsibilities for retailers, stating that ``[i]n addition to the 
other requirements under this part, each retailer is responsible for 
ensuring that all sales of cigarettes and smokeless tobacco to any 
person (other than a distributor or retailer)'' comply with specific, 
listed requirements.
    FDA, on its own initiative, has amended Sec. 897.14 to delete the 
parenthetical text referring to a distributor or retailer because the 
evidence does not establish that retailers sell these products to such 
parties, and if a retailer did sell these products to a distributor or 
retailer, the retailer would be acting as a ``distributor'' as defined 
in Sec. 897.3(c).
    FDA, also on its own initiative, has amended Sec. 897.14 to add a 
new paragraph (a) stating that, as one of the listed requirements, 
``[n]o retailer may sell cigarettes or smokeless tobacco to any person 
younger than 18 years of age'' and has renumbered proposed 
Sec. 897.14(a) through (c) accordingly. The new paragraph codifies a 
concept that was present throughout the 1995 proposed rule, namely that 
retailers are not to sell cigarettes or smokeless tobacco to young 
people under 18 years of age.
1. Use of Photographic Identification to Verify Age
    Under proposed Sec. 897.14(a) (now renumbered as Sec. 897.14(b)), 
each retailer, or an employee of the retailer,

[[Page 44438]]

would have been required to verify, by means of photographic 
identification containing the bearer's date of birth, that no person 
purchasing or intending to purchase cigarettes or smokeless tobacco is 
younger than 18 years of age.
     The preamble to the 1995 proposed rule explained that studies 
indicate that young people who purchase cigarettes and smokeless 
tobacco from stores are often not asked to verify their age. For 
example, one study found that 67 percent of young people, whose mean 
age was 15 years, were asked no questions when they attempted to 
purchase cigarettes. In some cases, retail clerks even encouraged 
purchases by young people, suggesting less expensive brands or offering 
to make up the difference if he or she lacked sufficient funds (60 FR 
41314 at 41323). The preamble to the 1995 proposed rule also noted that 
requiring proof of age to purchase cigarettes and smokeless tobacco 
could reduce cigarette and smokeless tobacco use among young people (60 
FR 41314 at 41323). Consequently, the 1995 proposed rule would have 
required retailers to verify that persons who intend to purchase 
cigarettes or smokeless tobacco are legally entitled to do so.
    The preamble to the 1995 proposed rule also indicated that a 
driver's license or college identification card would be acceptable 
forms of photographic identification, but the agency invited comment on 
whether the final rule should contain more specific requirements on the 
types of identification (60 FR 41314 at 41323).
    FDA received many comments supporting a proof of age requirement. 
These comments came from law enforcement entities, drug abuse 
prevention groups, health care professionals, medical societies, public 
health organizations, and even some adult smokers who agreed that a 
proof of age requirement will reduce young people's access to 
cigarettes and smokeless tobacco. One comment from a coalition of State 
attorneys general said there ``are many teenagers who look much older 
than they are, who can obtain tobacco products quite easily. When they 
are required to show age verification, they will not be mistaken for an 
older age. Therefore, they will not be permitted to acquire tobacco 
products.'' Another comment from a State public health department 
reported that, based on data analyzed from the State's own experience, 
illegal tobacco purchases occur less than 5 percent of the time when 
the retailer checks a photographic identification card to verify age, 
as opposed to a 95 percent illegal sales rate when no photographic 
identification card is checked.
    In response to comments and changes to Sec. 897.16 regarding mail 
order and vending machine sales and self-service displays in facilities 
that are inaccessible to children and adolescents, the final rule 
excepts the proof of age requirement under these limited circumstances.
    (31) Several comments objected to making retailers responsible for 
their employees' actions. These comments asserted that an employee's 
failure to verify a potential purchaser's age or an employee's error 
should not subject the retailer to any regulatory action. A few 
comments faulted the 1995 proposed rule for not holding sales clerks 
responsible or argued that the rule would be ineffective because it 
would not alter a sales clerk's behavior.
    In contrast, many comments supported the requirements that hold 
retailers responsible for preventing illegal sales. Indeed, one comment 
suggested that there should be ``significant penalt[ies] for sales to 
persons under 18, including the loss of the opportunity to sell tobacco 
* * *.'' Another comment stated that the rule should contain penalties 
for illegal tobacco sales.
    The agency declines to amend the rule to relieve retailers from 
responsibility. Retailers, in general, are responsible for the acts of 
their employees. (See United States v. Park, 421 U.S. 658, 672 (1975).) 
Relieving retailers from responsibility for their employees' actions 
would only invite abuse because retailers could continue to sell 
products to young people and, if caught making such sales, could blame 
their employees without suffering any adverse consequences themselves. 
To reflect its position that retailers are generally responsible for 
their employees' actions, FDA has amended Sec. 897.14 to remove all 
references to ``an employee of the retailer.'' Thus, Sec. 897.14 now 
refers to a ``retailer'' and makes no distinction for the retailer's 
employees.
    As for the comment claiming the rule contains no penalties for 
illegal tobacco sales, the agency believes that the comment 
misunderstands how the rule will operate. In general, FDA regulations 
implement and interpret the agency's statutory obligations under the 
act, including various criminal and civil penalties. Thus, a regulation 
need not specify what penalties are attached to a violation because the 
act provides this information.
    FDA has, however, amended proposed Sec. 897.14(a) (now renumbered 
as Sec. 897.14(b)) to state that, ``[e]xcept as otherwise provided in 
Sec. 897.16(c)(2)(i) and in paragraph (a)(2) of this section,'' a 
retailer shall ensure compliance with the prohibition against sales to 
persons under 18 by verifying the purchaser's age. FDA made this 
amendment to correspond with the prohibition, in Sec. 897.14(a), 
against sales to persons under 18 and because, as discussed in greater 
detail below, the final rule permits sales from vending machines and 
self-service merchandisers that are inaccessible to young people and 
permits mail-order sales. These modes of sale are either secure from 
access by young people (by requiring age verification upon entrance to 
the facility) or not used by them. The exception for paragraph (a)(2) 
complements another change to Sec. 897.14 (discussed in greater detail 
below) to not require proof of age from persons over the age of 26.
    FDA has also amended Sec. 897.14(b) to delete the words ``intending 
to purchase.'' The requirement that retailers verify the age of persons 
``purchasing the product'' sufficiently accomplishes the provision's 
goal of reducing illegal sales.
    (32) Several comments supported the use of identification cards to 
verify the purchaser's age. Some comments, responding to a question in 
the preamble to the 1995 proposed rule asking whether the rule should 
specify the types of identification that would comply with a proof-of-
age requirement, advocated using identification cards, passports, or 
other official documents establishing the bearer's age issued by 
States, the Federal Government, or foreign governments. One comment 
recommended that States develop a uniform coding system for 
identification cards to permit retailers to read or to scan 
identification cards quickly to verify a purchaser's age. Other 
comments advised against the use of college or school identification 
cards; the comments noted that colleges and schools have little 
incentive to design their identification cards to be sufficiently 
tamper-proof.
    In contrast, one comment stated that the agency should not ask for 
comment on the type of identification card to require, arguing that the 
``degree of micromanagement implied by the Agency's invitation for such 
comment underscores the inappropriateness of federal action in this 
area.''
    FDA recognizes the comments' concern. However, the final rule does

[[Page 44439]]

not require a uniform coding system or a Federal, State, or local 
government identification card.
    (33) FDA received several comments that addressed when a retailer 
should inspect a purchaser's photographic identification card. One 
comment interpreted the provision as requiring retailers to inspect 
visually the photographic identification card of every purchaser, and 
said that this would be unreasonable. The same comment contended that 
retailers and their employees should be required to demand proof of age 
only from prospective purchasers who do not appear to be over 18; this 
was the standard employed in Everett, WA, which was cited in the 
preamble to the 1995 proposed rule.
    In contrast, other comments supported age verification for all 
tobacco sales. Some comments from retailers indicated that some 
retailers check identification cards for all tobacco sales, while many 
comments submitted by retailers stated that they check identification 
cards to verify the age of purchasers who appear to be ``underage.'' 
Other comments suggested that the regulation require visual inspection 
of photographic identification cards for purchasers who appear to be 
younger than 21, 25, 26, or 30 years of age. Such a requirement 
appeared to be independently selected to ensure that the purchaser met 
the age requirement in the particular jurisdiction.
    Contrary to the comment that interpreted the rule as requiring 
proof of age in all transactions, the 1995 proposed rule would have 
given retailers some flexibility in deciding when to demand proof of 
age. The preamble to the 1995 proposed rule cited studies and reports 
demonstrating that few retailers request proof of age from young people 
attempting to purchase cigarettes or smokeless tobacco (60 FR 41314 at 
41323). Consequently, proposed Sec. 897.14(a) (now renumbered as 
Sec. 897.14(b)) would have required retailers to verify that 
prospective purchasers are of legal age, and the preamble to the 1995 
proposed rule suggested that retailers request proof of age from anyone 
who does not appear to be at least 26 years old (60 FR 41314 at 41323). 
This suggestion was similar to a recommendation made in a report by 26 
State attorneys general. The agency anticipated, for example, that 
requiring proof of age from a senior citizen would be unnecessary, but 
strongly recommended requiring proof of age from an individual who 
appears youthful.
    However, due to concerns that, despite the language in the preamble 
to the 1995 proposed rule, the rule would require age verification in 
all cases, the agency has amended the rule to except from the age 
verification requirement individuals who are over 26 years old. The 
agency declines to amend the rule to require age verification if the 
purchaser appears to be 21, 25, 26, or 30 years old. Determining a 
person's age by his or her physical appearance alone is a subjective 
determination, and so requiring age verification if a person ``looked'' 
like he or she was a particular age would be difficult to administer 
and to enforce. By requiring age verification if a purchaser is 26 
years old or younger, regardless of his or her appearance, the retailer 
foregoes age verification at its own risk.
    The agency notes that using the higher age of 26 as the threshold 
for requiring proof of age should increase the likelihood that illegal 
sales to young people will not occur. Using a lower age, such as 18 
(which is used in some States) or 21, as the threshold for requiring 
proof of age may enable some young people to purchase cigarettes and 
smokeless tobacco, and, as a result, cause a retailer to be in 
violation of this subpart.
    (34) Many comments, particularly comments from retailers, supported 
the requirement for age verification but added that the requirement 
should be voluntary. Others said that State law or regulations 
requiring age verification are adequate, and that, as a result, FDA 
regulation is unnecessary. Other comments claimed FDA regulation would 
add ``red tape and paperwork'' that would not reduce young people's 
access to cigarettes and smokeless tobacco and would instead ``come at 
great cost to taxpayers.''
    On the other hand, State attorneys general and other State and 
local enforcement authorities commented that the Federal regulations 
requiring age verification by inspection of photographic identification 
card will complement and enhance their enforcement abilities.
    FDA declines to delete an age verification requirement from the 
rule. The preamble to the 1995 proposed rule cited studies and reports 
to show that young people are often able to purchase cigarettes and 
smokeless tobacco without showing proof of age (60 FR 41314 at 41323). 
In one case, the young people were able to purchase cigarettes even 
when they admitted that they were under the legal age (60 FR 41314 at 
41323). These studies and reports suggest that the final rule must 
require retailers to demand proof of age because voluntary efforts are 
ineffective.
    As for deferring to State laws and regulations, FDA believes that 
State efforts to require proof of age, and retailer compliance with 
such efforts, should increase and become more effective due to section 
1926 of the PHS Act. This provision requires States to enact and to 
enforce laws prohibiting manufacturers, retailers, or distributors of 
tobacco products from selling or distributing such products to persons 
under age 18 in order to receive substance abuse prevention and 
treatment block grants. However, State laws may differ, and so the 
final rule requires retailers to verify the age of purchasers. This 
will establish a uniform, national requirement regarding proof of age 
and is consistent with the assertion of Federal authority over these 
products under the act.
    (35) Many comments pointed out that there is no penalty for parents 
who allow underage children to smoke.
    FDA believes that the vast majority of adults and parents do not 
purchase tobacco products for young people. Parental actions are also 
beyond the scope of FDA's authority. However, it should be noted that 
parental consent to a young person's purchase of cigarettes and 
smokeless tobacco cannot override the requirements in Sec. 897.14(a) 
prohibiting sales to anyone under 18 and in Sec. 897.14(b) that each 
purchase is subject to age verification. Thus, under this rule, a 
retailer must refuse to sell cigarettes or smokeless tobacco to any 
young person who claims that he or she has ``permission'' to purchase 
such products for himself or herself or for an adult.
    (36) One comment contended that the photographic identification 
card requirement is invalid because it exceeds FDA's authority under 
section 520(e) of the act because it does not purport to provide 
reasonable assurance of the safety and effectiveness of cigarettes.
    FDA disagrees with the comment. Section 520(e) of the act 
authorizes the agency to establish, by regulation, conditions 
restricting the sale, distribution, or use of a device if, because of 
the device's potentiality for harmful effect or the collateral measures 
necessary to its use, the agency determines that there cannot be a 
reasonable assurance of the device's safety or effectiveness. A 
photographic identification card requirement is a

[[Page 44440]]

condition of sale for these products and a collateral measure that is 
necessary to the requirement that the products are not sold to anyone 
under the age of 18.
    (37) One comment contended that proposed Sec. 897.14(a) (now 
renumbered as Sec. 897.14(b)) is precluded by section 1926 of the PHS 
Act. The comment stated that this law established Congress' intent to 
allow States to enact necessary programs to keep tobacco products out 
of the hands of young people as a condition for receiving block grant 
funding. According to the comment, there is no single best approach, 
and the FDA proposal prevents States from emulating the successful 
approach used in Woodridge, IL. The comment stated that FDA may not 
preempt State laws without making a showing of clear and manifest 
congressional intent to authorize its preemption of those State laws.
    The agency disagrees with the comment. The preemption issues 
related to this rule (as well as the rule's relationship to the 
regulations issued by the Substance Abuse and Mental Health Services 
Administration (SAMHSA) implementing section 1926 of the PHS Act 
regarding the sale and distribution of tobacco products to individuals 
under the age of 18 (the SAMHSA rule) are discussed in great detail in 
section X. of this document.
2. Minimum Age
    Proposed Sec. 897.14(a)(now renumbered as Sec. 897.14(b)), would 
have required retailers to verify that persons buying cigarettes or 
smokeless tobacco were not younger than 18 years of age. FDA received 
many comments supporting a Federal minimum age to purchase cigarettes 
and smokeless tobacco. Some comments suggested that enforcement of this 
provision would be as effective as advertising limitations in 
controlling underage smoking. In supporting the proposal, comments 
noted that while most teenage smokers do not plan to be smokers 5 years 
after they begin smoking, less than 10 percent of teenagers are able to 
quit within 5 years of starting. Moreover, like their adult 
counterparts, 70 percent of high school seniors who smoke would like to 
stop smoking completely. Some comments noted that the average age at 
which teenage smokers first tried their first cigarette is 13 or 14 
years, and by age 18, many teens are smoking daily and smoking at a 
rate very near the adult rate. Health-care professionals (nurses, 
physicians, dentists, public health officials, etc.) as a group were 
very supportive of a Federal minimum age limit of at least 18.
    (38) A major American medical association suggested amending 
Sec. 897.14(a) (now renumbered as Sec. 897.14(b)) to raise the minimum 
age of sale to 21. It noted that one State, Pennsylvania, has set 21 as 
the minimum age for the purchase of cigarettes, and argued that prior 
to enactment of the national standard of age 21 for alcohol purchase, 
many States had laws that allowed purchase at age 18, but subsequently 
changed to 21 without hardship.
    Other comments advocated raising the minimum age to 19 years. 
Several comments explained that many high school students are 18 years 
old; thus, if FDA increased the minimum age to 19 years, it would be 
less likely that an underage high school student would be able to 
purchase or obtain cigarettes or smokeless tobacco, because raising the 
age to 19 would eliminate from the high school environment peers who 
are legally able to obtain nicotine-containing tobacco products. In 
addition, the agency received a considerable number of comments from 
students, teachers, and even adult smokers, urging the agency to raise 
the legal age to purchase cigarettes to 21, to be consistent with the 
legal age to purchase alcohol. Indeed, many comments assumed that the 
legal age was already 21 and urged the agency to retain this age limit.
    In contrast, other comments supporting 18 as the minimum age for 
purchasing cigarettes and smokeless tobacco argued that, because most 
States already established 18 as the minimum age, FDA regulations did 
not need to establish a minimum age. A few comments, mostly from young 
people, asked FDA to lower the legal age for purchasing cigarettes to 
below 18 years of age.
    In order to make its decision on the appropriate minimum age, the 
agency weighed a variety of factors including evidence on the onset of 
nicotine addiction and the history underlying the age of majority. 
FDA's goal is to prevent underage use of tobacco in order to preclude 
as many new cases of nicotine addiction as possible. The agency 
considered minimum ages from 18 to 21, because individuals are 
generally viewed as reaching adulthood in this age range. The agency 
faced the question: At which age in this range are most individuals 
able to make an informed decision to begin using a product that the 
overwhelming majority of individuals will not be able to stop using, 
even though using the product is likely to lead to severe disability 
and premature death?
    The agency began by reviewing key data sources on the onset and 
course of nicotine addiction. The National Household Surveys on Drug 
Abuse sought to determine the age when individuals first tried a 
cigarette and the age when individuals first started smoking daily--an 
important measure of the progression toward addiction. The survey asked 
questions of 30 to 39 year olds who had ever smoked daily. The average 
age of first trying a cigarette was 14.5 years. \41\ Eighty-two percent 
had tried a cigarette before 18, 89 percent before 19, 91 percent 
before 20, and 98 percent before 25. \42\ Daily smoking began slightly 
later. Fifty-three percent began smoking daily before 18, 71 percent 
before 19, 77 percent before 20, and 95 percent before 25. \43\
---------------------------------------------------------------------------

    \41\ 1994 SGR, p. 67.
    \42\ Id., p. 65.
    \43\ Id.
---------------------------------------------------------------------------

    The agency reviewed the history underlying the theory of majority 
and the concept of adults making informed choices. Majority is defined 
in Black's Law Dictionary as ``the age at which, by law, a person is 
capable of being legally responsible for all his or her acts * * *, and 
is entitled to the management of his or her own affairs and to the 
enjoyment of civic rights. * * *'' \44\ The 26th Amendment to the 
United States Constitution provides those 18 years and above with the 
right to vote. Prior to the adoption of the 26th Amendment in 1971, the 
age of majority in almost every State was 21. Each State has the power 
to set its own age of majority and since enactment of the 26th 
Amendment most States have lowered the age of majority from 21 to 18.
---------------------------------------------------------------------------

    \44\ Black's Law Dictionary, edited by M. A. Black, West 
Publishing Co., St. Paul, MN, p. 955, 1990.
---------------------------------------------------------------------------

    The agency reviewed the reasons why Congress chose 18 as the 
appropriate age to vote. According to a Senate report on lowering the 
voter age, the 21 year age was believed to be derived by historical 
accident. Eighteen-year olds bore many adult citizens' responsibilities 
such as the ability to marry and raise a family, and serve in the 
military. A lower voting age was seen as benefiting society by bringing 
into the American political system the idealism, concern, and energy of 
young people. (See ``Lowering the Voting Age to 18,'' S. Rept. 92-96, 
92d Cong., 1st sess., p. 5, March 8, 1971.)
    While the justifications do not necessarily support establishing a 
minimum age of 18 for tobacco

[[Page 44441]]

products, the agency declines to raise the minimum age for several 
reasons. First, as stated in the preamble to the 1995 proposed rule, 
all States prohibit the sale of tobacco products to persons under the 
age of 18; currently only four States prohibit cigarette sales to 
persons over 18 (60 FR 41314 at 41315). Consequently, setting a 
national minimum age of 18 is consistent with most States. Second, 
selecting 18 as the minimum age is consistent with the age Congress 
established under section 1926 of the PHS Act, which conditions a 
State's receipt of substance abuse grants on State laws to prohibit any 
manufacturer, retailer, or distributor of tobacco products from selling 
or distributing such products to any individual under the age of 18.
    FDA also declines to amend the rule to eliminate a Federal minimum 
age and instead rely on existing State laws. Establishing 18 as the 
national minimum age will strengthen State and local enforcement, as 
discussed earlier.
    FDA also declines to amend the rule to reduce the minimum age. 
Reducing the minimum age would undermine existing State laws and the 
rule's effectiveness because it would, in essence, circumvent statutory 
and regulatory protections by letting more young people purchase these 
products. Reducing the minimum age would also be contrary to the 
evidence cited in the preamble to the 1995 proposed rule, which shows 
that half of adults start smoking daily before age 18.
    FDA does plan to monitor closely the incidence of new cases of 
nicotine addiction. If the evidence indicates that the number of new 
cases of nicotine addiction does not significantly decline, consistent 
with the agency's stated goal of a 50 percent reduction, but rather are 
merely delayed a year or two, FDA will consider whether increasing the 
minimum age for purchase of nicotine-containing tobacco products would 
further the goal of the rule.
3. Restrictions Against ``Impersonal'' Modes of Sale
    Proposed Sec. 897.14(b) (now renumbered as Sec. 897.14(c)) would 
have required the retailer or an employee of the retailer to provide 
cigarettes or smokeless tobacco to a purchaser ``without the assistance 
of any electronic or mechanical device (such as a vending machine or 
remote-operated machine).'' The preamble to the 1995 proposed rule 
stated that this provision would have the practical effect of making 
access to cigarettes and smokeless tobacco more difficult for young 
people (60 FR 41314 at 41324). In response to comments, the agency has 
amended Sec. 897.14(c) to allow for the use of certain impersonal modes 
of sale, such as vending machines and self service displays 
(merchandisers only), in facilities which are inaccessible to 
individuals under the age of 18 at any time. Additionally, as stated in 
section IV.D.1. of this document, FDA has deleted the reference to ``an 
employee of the retailer'' because retailers are generally responsible 
for their employees' actions and has revised the text to correspond 
more closely with Sec. 897.16(c).
    (39) Several comments objected to proposed Sec. 897.14(b). One 
comment asserted that proposed Sec. 897.14(b) (now renumbered as 
Sec. 897.14(c)) was unjustified, and arbitrary and capricious because 
it would apply to locations where young people are not permitted to 
enter and, in places where they can enter, would be unnecessary if 
retailers required proof of age from prospective cigarette and 
smokeless tobacco purchasers. The comment stated that less restrictive 
alternatives, such as increased supervision over self-service displays, 
exist. The comment further argued that FDA lacked support for this 
provision, stating that, regardless of how tobacco products are sold 
over-the-counter, the key party in the transaction is the cashier. 
According to the comment, requiring retail clerks to comply with 
applicable minimum age laws should be sufficient to prevent illegal 
sales to young people, thereby making the proposed provision 
unnecessary. The comment, therefore, stated that the evidence did not 
support a rule that would preclude State and local governments from 
relying on ``less drastic controls.''
    In contrast, many comments agreed that this provision would reduce 
a young person's access to cigarettes and smokeless tobacco because it 
would require potential purchasers to interact with retailers or would 
discourage young people from purchasing these products because they 
would have to interact with a retailer and provide proof of age. One 
comment stated that the regulations establish a code of conduct for 
merchants, ensuring that they take practical steps to prevent illegal 
sales of tobacco products to young people. One comment stated that 
face-to-face transactions are the only way to assure that 
identification of under-age customers is checked.
    FDA disagrees, in part, with the comments that oppose this 
provision. FDA declines to amend the rule to rely on alternative 
measures such as increased supervision of displays or proof of age 
alone. The preamble to the 1995 proposed rule cited reports and studies 
showing that young people can easily use impersonal modes of sale 
despite restrictions on their placement or the installation of devices 
to prevent illegal sales. For example, for self-service displays, the 
Institute of Medicine (IOM) Report Growing Up Tobacco Free, Preventing 
Nicotine Addiction in Children and Youths (1994) referred to surveys in 
two communities that found over 40 percent of daily smokers in grade 
school shoplifted cigarettes (60 FR 41314 at 41325). For vending 
machines, the preamble to the 1995 proposed rule cited several studies 
and reports showing that young people were able to purchase 
cigarettes--despite laws restricting the placement of those machines, 
or requiring the machines to have a locking device to prevent sales to 
young people (60 FR 41314 at 41324 through 41325).
    FDA also found that relying solely on retailers to verify the 
purchaser's age had limited effect on reducing young people's access to 
cigarettes and smokeless tobacco; retail clerks rarely asked young 
people to verify their age or even assisted in completing a purchase. 
Some retail sectors also suffered from high employee turnover rates 
that undermined the effectiveness of retailer programs to prevent 
illegal sales (60 FR 41314 at 41323). Consequently, the agency believes 
that the most effective approach towards reducing young people's access 
to cigarettes and smokeless tobacco is a sufficiently comprehensive set 
of access restrictions to prohibit most impersonal modes of sale, 
require retailers to verify the consumer's age, and make young people's 
access to these products more difficult.
    The agency also reminds parties that these products are restricted 
devices because of their potentiality for harmful effect. The final 
rule contains restrictions that the agency believes are necessary in 
order to reduce the number of children and adolescents who use and 
become addicted to these products. Relying solely on retail clerks to 
verify age, increasing supervision over displays, or deferring to other 
less restrictive alternatives would not, in comparison to the rule's 
comprehensive approach, be sufficient to achieve that goal.
    With respect to locations that are entirely inaccessible to young 
people, however, the agency has amended

[[Page 44442]]

Sec. 897.16 to permit certain modes of sale, such as vending machines 
and self-service displays (merchandisers only), in facilities where 
young people are not present, or permitted to enter, at any time. These 
modes of sale do not involve hand-to-hand transactions between the 
retailer and the purchaser. Consequently, FDA has made a corresponding 
amendment to Sec. 897.14(c) to require retailers to personally provide 
cigarettes or smokeless tobacco to purchasers ``[e]xcept as otherwise 
provided in Sec. 897.16(c)(2)(ii) and revised the text to correspond 
more closely with the language in Sec. 897.16(c)(1).'' The amendments 
to Sec. 897.16 are discussed in greater detail below.
    (40) A few comments questioned the need for proposed Sec. 897.14(b) 
(now renumbered as Sec. 897.14(c)). These comments said that the rule 
would not prompt retailers to verify a prospective purchaser's age 
because retailers who sell cigarettes and smokeless tobacco to minors 
are already in violation of State laws.
    FDA disagrees with the comments' assertion. FDA's enforcement 
authority and the range of sanctions under the act should give 
retailers additional incentives to verify proof of age. Hence, FDA 
believes that the weight of Federal law and these regulations will 
prompt retailers to pay more attention to the consumer's age. By way of 
analogy, the United States enjoys a very high rate of compliance with 
prescription drug restrictions in part because a violation of the 
prescription requirement is actionable under Federal law. Similarly, 
section 1926 of the PHS Act gives States, as a condition for receiving 
a block grant for the prevention and treatment of substance abuse, 
further incentive to ensure that illegal tobacco sales to young people 
do not occur and that the illegal sales rate steadily decreases from 50 
percent in fiscal year 1994 (or fiscal year 1995 for some States) to 20 
percent 4 years later. States must also conduct annually a reasonable 
number of random, unannounced inspections to ensure compliance with 
State law (see 61 FR 1492 at 1508, January 19, 1996). Section 1926 of 
the PHS Act and its implementing regulations should also prompt States 
to devote more attention to compliance efforts to prevent illegal sales 
to young people and, through the requirement for random, unannounced 
inspections, make retailers more aware of the need to verify the 
consumer's age.
4. Restrictions Against the Sale of Individual Cigarettes
    Proposed Sec. 897.14(c) (now renumbered as Sec. 897.14(d)) would 
have prohibited the retailer or an employee of the retailer from 
breaking or otherwise opening any cigarette package or smokeless 
tobacco product to sell or distribute individual cigarettes or any 
quantity of cigarette tobacco or of a smokeless tobacco that is smaller 
than the quantity in the unopened product. In response to comments and 
for other reasons discussed below, the agency has amended 
Sec. 897.14(d) to prohibit retailers from breaking or otherwise opening 
``any cigarette or smokeless tobacco package to sell or distribute 
individual cigarettes or a number of unpackaged cigarettes that is 
smaller than the quantity in the minimum cigarette package size defined 
in Sec. 897.16(b), or any quantity of cigarette tobacco or smokeless 
tobacco that is smaller than the smallest package distributed by the 
manufacturer for individual consumer use.'' Additionally, as stated in 
section IV.D.1. of this document, FDA has deleted the reference to ``an 
employee of the retailer'' because the retailer is generally 
responsible for its employee's actions.
    (41) Several comments opposed proposed Sec. 897.14(c) (now 
renumbered as Sec. 897.14(d)) in conjunction with proposed Sec. 897.10 
(which would establish general responsibilities for manufacturers, 
distributors, and retailers). The comments said it would be 
unreasonable to expect retailers to inspect all packages to assure 
compliance with minimum package requirement, as well as other 
requirements, and yet retailers would face significant penalties if 
they failed to comply. Other comments asked whether retailers would be 
held liable for opening shipping packages consisting of individual 
cigarette packages or cartons and selling the individual packages or 
cartons.
    The comments misinterpreted the proposed provision. Section 
897.14(d) does not require retailers to police minimum package 
requirements, but rather expressly states that the retailer shall not 
break or otherwise open any cigarette or smokeless tobacco package to 
sell or distribute individual cigarettes or number of cigarettes or any 
quantity of cigarettes or smokeless tobacco that is smaller than the 
quantity in the unopened package. The confusion may have stemmed from 
the definition of ``package.'' Section 897.3(f) defines ``package'' as 
a ``pack, box, carton, or other container * * * in which cigarettes or 
smokeless tobacco are offered for sale, sold, or otherwise distributed 
to consumers.'' The provision, therefore, focuses on two distinct 
actions: (1) The retailer breaks or opens a cigarette package or 
smokeless tobacco product; and (2) the retailer sells or distributes a 
portion of the cigarette package or smokeless tobacco product to a 
consumer.
    A literal reading of proposed Secs. 897.3(f) and 897.14(d) together 
would prohibit a retailer from opening a carton of cigarettes to sell a 
single package of 20 cigarettes. The agency did not intend to prohibit 
retailers from opening shipped quantities or bundles of cigarette 
packages or cartons or smokeless tobacco in order to break that 
shipment down into ordinary packages, cartons, or other standard 
product units. The agency has amended Sec. 897.14(d), to eliminate this 
unintended effect. The new language clarifies that retailers may open 
shipping boxes or cigarette cartons to sell a pack of cigarettes or a 
smokeless tobacco package. Additionally, FDA has modified the 
introduction to Sec. 897.14(d), changing ``the retailer shall not'' 
break or open any cigarette or smokeless tobacco package to ``no 
retailer may'' break or open any package. This change is intended to 
simplify the text and does not alter a retailer's obligations under 
Sec. 897.14(d).
    (42) One comment from a company opposed a restriction on the sale 
of single cigarettes because it had made a substantial investment 
developing a vending machine that would sell single cigarettes that 
complied with applicable labeling and tax laws. The comment added that 
its machines are located in areas that are frequented by or limited to 
adults and that there is a market for adults who wish to smoke only 
occasionally.
    The restriction against the sale of single cigarettes pertained to 
single cigarettes that are removed from cigarette packages or cartons 
and sold on an individual basis. Thus, the product described by the 
comment, a prepackaged single cigarette that complies with all 
applicable labeling and tax laws, does not appear to correspond to what 
is commonly known as a ``loosie.'' As for selling a packaged single 
cigarette in a vending machine, the final rule permits vending machines 
to be used in certain locations that are entirely inaccessible to young 
people. This comment, and corresponding amendments to the rule, are 
discussed in greater detail in section IV.E.4.a. of this document.

[[Page 44443]]

    (43) A small number of comments opposed any restriction on the sale 
of single cigarettes, stating that such a restriction would make 
purchases by adults more difficult or could actually work to the 
detriment of adults who are trying to reduce their cigarette 
consumption by purchasing single cigarettes.
    Most comments, however, supported a prohibition against the sale of 
single cigarettes. In general, they agreed that eliminating single 
cigarettes would make cigarette purchases more expensive for young 
people and, as a result, less likely. A number of State attorneys 
general stated that this provision, in conjunction with others, would 
assist States in enforcing compliance with State laws. A few comments 
noted reports of single cigarette sales occurring within their State or 
jurisdiction; one stated that ``the problem of loosies is a very old 
story within the inner city,'' while another even claimed seeing young 
people wait in line for free samples of single cigarettes.
    The agency declines to amend the rule to exclude single cigarettes. 
The preamble to the 1995 proposed rule cited evidence that a 
significant number of retailers are willing to sell single cigarettes 
to young people and are sometimes more inclined to sell single 
cigarettes to young people than to adults (60 FR 41314 at 41324). The 
comments supporting the rule reinforce the notion that single 
cigarettes appeal to young people.
    While FDA is sensitive to the fact that adults who wish to quit 
smoking may wish to purchase single cigarettes to reduce smoking, on 
balance, the agency believes that the benefits of eliminating single 
cigarette sales to young people outweighs any possible detriment to 
adults.
5. Additional Comments
    (44) Several comments suggested that FDA license retailers and 
impose fines or other sanctions on retailers who sell cigarettes and 
smokeless tobacco to young people.
    The agency declines to amend the rule to create a licensing system. 
FDA notes that SAMHSA confronted similar comments when it proposed 
rules to implement section 1926 of the PHS Act and elected not to 
require a licensing system (61 FR 1492 at 1495). The preamble to the 
SAMHSA rule indicated that States could use a licensing system to 
identify retail outlets and enforce State laws, with licensure fees and 
civil penalties funding the States' random, unannounced inspections and 
covering administrative and enforcement costs (61 FR 1492 at 1495). FDA 
concurs with the SAMHSA analysis and, because licensure would be a 
State matter, will refrain from establishing a licensing system for 
retailers.
    As for fines and other sanctions, no amendment to the rule is 
necessary. The act already establishes fines and other sanctions for 
parties who violate the act. For example, any restricted device that is 
sold, distributed, or used in violation of regulations for that 
restricted device is misbranded under section 502(q) of the act (21 
U.S.C. 352(q)), and section 301(a) of the act prohibits the 
introduction or delivery for introduction into interstate commerce of a 
misbranded device. (Section 709 of the act creates a presumption that 
all devices are in interstate commerce and section 304 allows seizure 
of adulterated or misbranded devices even in the absence of interstate 
commerce.) Among other things, section 301(b) of the act prohibits the 
misbranding of a device in interstate commerce, while section 301(c) of 
the act prohibits the receipt in interstate commerce of any misbranded 
device. Additionally, any person who violates section 301 of the act is 
subject to injunctions under section 302 of the act and civil 
penalties, fines and imprisonment under section 303 of the act, while 
section 304 of the act authorizes seizure actions against misbranded 
devices themselves without any need for proof of interstate commerce.
    (45) One comment argued that retailers should be required to keep 
cigarette products from public view.
    FDA declines to amend the rule as suggested by the comment. The 
agency believes that concealing these products from view would not 
significantly enhance the restrictions against access by young people 
and would instead unduly impair an adult's ability to determine what 
products and brands a retailer is selling as well as the retailer's 
ability to sell those products.
    (46) One comment stated that Sec. 897.14 can only be enforced by 
routine compliance checks using underage agents. The comment suggested 
that FDA negotiate with States to receive information on violations of 
State laws and to use that information against retailers who fail to 
comply with Sec. 897.14.
    FDA intends to cooperate with State governments to curtail illegal 
sales of cigarettes and smokeless tobacco to young people. 
Additionally, as stated earlier in this document, FDA is authorized to 
commission State officials to perform certain functions on behalf of 
the agency. FDA may consider commissioning State officials, where 
appropriate, if commissioned State officials would help ensure 
compliance with these regulations.
    (47) One comment would amend Sec. 897.14 to refer to ``purchasing'' 
and ``obtaining'' cigarettes or smokeless tobacco. The comment said 
this would prevent young people from attempting to obtain cigarettes or 
smokeless tobacco from retailers by claiming to act with a parent's 
permission or on behalf of a parent or adult.
    The agency declines to amend the rule as suggested by the comment. 
As written, Sec. 897.14 prohibits retailers from selling cigarettes or 
smokeless tobacco to anyone under 18 and also requires retailers to 
verify the purchaser's age. These provisions do not make any 
distinction or exception as to whether the person purchasing the 
products claims to be purchasing the products for an adult. In other 
words, even if a young person claimed to have a parent's permission or 
to be purchasing these products for an adult, Sec. 897.14(a) still 
prohibits retailers from selling cigarettes or smokeless tobacco to 
that young person, and Sec. 897.14(b) requires the retailer to verify 
the purchaser's age.
    (48) As mentioned earlier in the discussion for Sec. 897.10, FDA 
has amended the final rule to create a new Sec. 897.14(e) to require 
each retailer to remove or bring into compliance all self-service 
displays, advertising, labeling, and other items at the retailer's 
establishment if those items do not comply with the requirements under 
this part. This amendment became necessary because comments from 
manufacturers and retailers claimed that retailers owned the self-
service displays or that, once the manufacturer's representative gives 
an item to a retailer, the item becomes the retailer's property. 
Consequently, Sec. 897.14(e) requires retailers to remove or otherwise 
bring into compliance items at the retailer's establishment if those 
items do not comply with this subpart. This provision essentially gives 
retailers three options with respect to an item that violates the 
requirements in this rule: (1) If the item belongs to a manufacturer, 
the retailer could ask the manufacturer to remove the item, consistent 
with the manufacturer's obligations under Sec. 897.12; (2) the retailer 
could convert the item to another use or alter the item to make it 
comply with the regulations; or (3) the retailer could remove the item.

[[Page 44444]]

E. Conditions of Manufacture, Sale, and Distribution (Sec. 897.16)

1. Restrictions on Nontobacco Trade Names on Tobacco Products
    Proposed Sec. 897.16 would have established several important 
restrictions or conditions on the sale of cigarettes and smokeless 
tobacco. Proposed Sec. 897.16(a) would have prohibited the use of a 
trade or brand name for a nontobacco product as the trade or brand name 
for a tobacco product ``except for tobacco products on which a trade or 
brand name of nontobacco product was in use on January 1, 1995.'' For 
example, Harley Davidson cigarettes would be ``grandfathered'' under 
this provision. The preamble to the 1995 proposed rule stated that the 
provision would be necessary to prevent the industry from circumventing 
the purpose behind the rule (60 FR 41314 at 41324) by benefitting from 
the promotion of the nontobacco items in ways that appeal to young 
people. FDA noted, however, that several cigarette brands already used 
trade names that are normally associated with nontobacco products and 
would exempt those brands from Sec. 897.16. The final regulation 
remains essentially the same, but clarifies the agency's intent by 
amending the language to limit the exception to those product names 
``whose trade or brand name was on both a tobacco product and a 
nontobacco product that were sold in the United States on January 1, 
1995.''
    (49) FDA received few comments on this provision. The comments 
asserted that the 1995 proposed rule would effect takings compensable 
under the Fifth Amendment.
    The agency disagrees with these comments. The final rule does not 
violate the Fifth Amendment. This issue is discussed in greater detail 
in section XI. of this document.
    (50) Several comments on the use of nontobacco trade names on 
tobacco products would delete proposed Sec. 897.16(a), arguing that the 
provision will have no effect on cigarette or smokeless tobacco use by 
young people, and that businesses should be free to decide how to 
advertise or sell their products. One comment challenged the agency's 
authority to regulate nontobacco trade names, stating that the act only 
permits the agency to take action against names that are false and 
misleading. According to this comment, a nontobacco trade name that 
appeals to young people does not become subject to the act. The comment 
further charged that FDA has no evidence to support a conclusion that a 
tobacco product bearing a nontobacco trade name would be especially 
appealing to young people; the comment explained that the brands 
mentioned by FDA in the preamble to the 1995 proposed rule--Harley-
Davidson, Cartier, and Yves St. Laurent's Ritz cigarettes--either have 
very small market shares or are not sold in the United States.
    In contrast, one comment said Sec. 897.16(a) is ``essential to 
avoid the same problems that occur with `image' advertising.'' The 
comment explained that tobacco manufacturers have used nontobacco trade 
names on tobacco products to give the tobacco products an ``instant 
image.''
    The point of this provision, like the restrictions on advertising, 
is to ensure that the restrictions on sale and distribution to children 
and adolescents are not undermined by how the product is presented to 
the public. As detailed in subpart D of part 897, FDA is restricting 
the way cigarette and smokeless tobacco are advertised in order to 
eliminate those elements that resonate most strongly with the needs of 
those under 18 to establish an appropriate image and to create a sense 
of acceptance and belonging. The use of nontobacco trade names has 
particular appeal in the former regard. If a firm could use a popular 
nontobacco product trade name and put it on a tobacco product, the firm 
could attempt to exploit the imagery or consumer identification 
attached to the nontobacco product to make the tobacco appeal to young 
people.
    For example, young people might purchase a particular nontobacco 
product that they perceive as symbolizing the adult sophistication or 
sex appeal of its users; they might also be inclined to purchase 
cigarettes bearing the same trade name if they perceive that the 
cigarettes will enhance their lifestyles in the same manner. Section 
897.16(a), therefore, eliminates a potential loophole in the 
advertising and labeling provisions.
    FDA also disagrees with the comment challenging FDA's authority. 
Section 897.16(a) is authorized under section 520(e) of the act which 
permits FDA to restrict, by regulation, the sale, distribution, or use 
of certain devices. Prohibiting firms from adopting nontobacco product 
names that appeal to young people is a restriction on the product's 
``sale.'' The comment's suggestion that FDA cannot rely on section 
502(a) of the act reveals a misunderstanding of FDA's position. FDA 
predicated its action on section 520(e) of the act and therefore it is 
not necessary to address the relevance of section 502(a).
    FDA is not persuaded that small market shares for cigarette 
products bearing nontobacco trade names undermines the need for 
Sec. 897.16(a). The preamble to the 1995 proposed rule demonstrated 
that young people use the most heavily advertised brands and that they 
can purchase cigarettes and smokeless tobacco easily (60 FR 41314 at 
41323 through 41326, and 41332). The brands cited in the preamble, 
Harley-Davidson, Cartier, and Yves St. Laurent's Ritz, are not among 
the most heavily advertised brands, and, according to the comment, two 
(Cartier and Ritz) are not sold in the United States. Thus, there is no 
reason to expect these brands to be especially appealing to or 
purchased by young people in the United States today. However, if the 
other provisions in this rule are effective, some manufacturers might 
try altering their advertising or marketing strategy in order to 
generate product appeal; Sec. 897.16(a) thus eliminates this 
potentially significant avenue for making a product appeal to young 
people.
    (51) A few comments noted that the provision did not elaborate on 
what constitutes a ``trade or brand name for a nontobacco product.'' 
One comment interpreted the terms as including any nontobacco product 
trade name used anywhere in the world and, as a result, argued that the 
provision would impose an impossible burden on manufacturers to conduct 
trademark searches. The comment added that manufacturers would not be 
able to conduct trade or brand names searches with certainty (because 
the 1995 proposed rule did not confine itself to registered trademarks) 
and manufacturers would be subject to regulatory action even if they 
unknowingly used a trade or brand name for a nontobacco product.
    In contrast, another comment noted that a brand name directory 
published by the Tobacco Merchants Association of the United States 
lists numerous brand names for both nontobacco and tobacco products. 
The comment suggested that there are a greater number of cigarette 
products whose brand names were the same as brand names for nontobacco 
products than the three brands that FDA identified in the preamble to 
the 1995 proposed rule. The comment suggested that FDA amend the rule 
to limit eligible brand name ``tie-ins'' to those relating to both 
tobacco products and to nontobacco products

[[Page 44445]]

sold in the United States as of January 1, 1995.
    FDA agrees, in part, with the comments. It would be unreasonable 
for the regulation to encompass all possible nontobacco product trade 
names, regardless of their nationality or whether the trade name was a 
registered trademark. Neither FDA nor manufacturers would be able to 
ensure that a name was not used elsewhere. FDA intended that proposed 
Sec. 897.16(a) would apply to trade names in use in the United States, 
and that the exception for nontobacco product trade names would apply 
only to product trade names that were in use on both tobacco and 
nontobacco products as of January 1, 1995. Consequently, to clarify the 
rule, FDA has amended Sec. 897.16(a) to restrict manufacturers to use 
of those product names that were used on both nontobacco and tobacco 
products in the United States as of January 1, 1995.
    (52) One comment would amend Sec. 897.16(a) to state that, in 
addition to being on the market as of January 1, 1995, the cigarette 
brand had to have generated sales of at least 500 million cigarettes or 
500 million grams of cigarette or smokeless tobacco in 1994. The 
comment explained that this amendment would eliminate a ``loophole'' 
because a product with ``nominal sales volume could open up large 
marketing holes for all sorts of product names.''
    FDA declines to amend the provision as suggested by the comment. 
The final rule, as amended, prohibits manufacturers from using a 
nontobacco product trade or brand name as the trade or brand name for a 
cigarette or smokeless tobacco product. The sole exception is for 
tobacco products whose trade or brand name was on both nontobacco and 
tobacco products sold in the United States as of January 1, 1995. FDA 
will construe this exception narrowly such that the trade or brand name 
on the nontobacco product must be the same. For example, if the trade 
name for a nontobacco product was ``Old Time Country Store,'' a 
cigarette product called ``Old Time'' would not qualify for the 
exception because the name is not identical to that for the nontobacco 
product.
    (53) FDA, on its own initiative, has amended Sec. 897.16(a) to 
replace the word ``may'' with ``shall.'' This amendment is intended to 
reinforce the notion that, except as otherwise provided in 
Sec. 897.16(a), manufacturers are prohibited from using a trade or 
brand name of a nontobacco product as the trade or brand name for a 
cigarette or smokeless tobacco product.
2. Minimum Package Size
    Proposed Sec. 897.16(b) would have made 20 cigarettes the minimum 
package size for cigarettes. The preamble to the 1995 proposed rule 
explained that FDA selected 20 as the minimum number of cigarettes 
because most cigarette packs in the United States contain 20 cigarettes 
and that establishing a minimum package size would preclude firms from 
manufacturing so-called ``kiddie packs.'' The preamble to the 1995 
proposed rule explained that ``kiddie packs'' usually contain a small 
number of cigarettes, are easier to conceal, and are less expensive 
than full-sized packs. The preamble to the 1995 proposed rule also 
noted that, based on studies or reports in other countries, significant 
numbers of children purchase ``kiddie packs'' (60 FR 41314 at 41324). 
Thus, by establishing a minimum package size, the 1995 proposed rule 
would have essentially eliminated the manufacture, distribution, and 
sale of ``kiddie packs.'' The final rule provides a narrow exception to 
the minimum package size in response to a comment on vending machines 
that sell certain packaged, single cigarettes.
    (54) Several comments opposed creating any minimum package size. A 
minority disputed that the rule would be effective, stating that young 
people will get cigarettes anyway or will simply begin purchasing full-
sized packs. One comment, submitted on behalf of specialty tobacco 
companies, suggested exempting specialty tobacco products from the 
rule. The comment explained that many specialty tobacco products are 
produced in package sizes smaller than 20 cigarettes, ranging from 8 to 
18 cigarettes, but that young people do not purchase specialty tobacco 
products. Consequently, the comment sought an exemption for specialty 
tobacco products or for products with a very small market share. One 
comment asserted that small package sizes reduce smoking by adults 
while another comment would amend the rule to lower the minimum size to 
10 cigarettes; neither comment offered any evidence to support their 
assertions.
    In contrast, many comments supported proposed Sec. 897.16(b). The 
comments indicated that eliminating ``kiddie packs'' is ``essential to 
protect youth'' and described ``kiddie packs'' as an ``obvious come-on 
that would appeal to kids.'' Other comments said the provision would 
reduce underage purchases because children would not be able to afford 
full-sized packs as easily or as quickly as they might afford ``kiddie 
packs.''
    The final rule retains 20 cigarettes as the minimum package size. 
The agency disagrees that this provision will be ineffective. The 
provisions in this subpart are designed to: (1) Make young people's 
access to cigarettes and smokeless tobacco more difficult by 
restricting specific modes of access to these products that young 
people use, and (2) make purchases by young people more difficult (by 
requiring proof of age, and other methods) and more expensive (by 
eliminating free samples and ``kiddie packs'').
    Additionally, while some tobacco products, specifically the 
specialty tobacco products, may have been sold in smaller sizes, the 
benefits of eliminating ``kiddie packs,'' namely eliminating a product 
size that is relatively inexpensive and appealing to young people, 
outweigh any inconvenience to adults.
    FDA also declines to create an exemption based on market share or 
claims that young people do not use a particular type of cigarette; 
such exemptions would not treat manufacturers equally, would depart 
from FDA's traditional approach of regulating devices as a class (see 
section IV.B. of this document), and would be impractical because a 
firm's compliance with the rule could vary depending on fluctuations in 
market share and use by young people. Moreover, even a small percentage 
of a market, such as 1 or 2 percent, could translate into a large 
number of Americans; for example, 2 percent of the approximately 50 
million Americans who smoke would represent 1 million people. Two 
percent of the approximately 3 million children under age 18 who are 
regular smokers would represent 60,000 young people.
    Furthermore, FDA declines to make 10 cigarettes the minimum package 
size. The comment did not offer any justification for the lower figure, 
and the agency believes that a smaller package size would be 
counterproductive because a 10-cigarette minimum size would be 
tantamount to making a ``kiddie pack'' the minimum package size for 
cigarettes.
    (55) One comment supported the provision, but suggested that FDA 
amend the rule to prevent the development of ``mini'' cigarettes or 
``short smokes.'' The comment said such products contain less tobacco 
so that they can be sold at a lower price.


[[Continued on page 44446]]