[Federal Register: August 28, 1996 (Rules and Regulations)]
[Page 44496-44546]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[[pp. 44496-44546]] Regulations Restricting the Sale and Distribution of Cigarettes
and Smokeless Tobacco to Protect Children and Adolescents
[[Continued from page 44495]]
[[Page 44496]]
E. Provisions of the Final Rule
    FDA selected each of the restrictions that it included in the 1995
proposed rule based on its tentative view that the particular
restriction is necessary to providing a comprehensive response to the
appeal of tobacco advertising to young people. Each proposed
restriction was intended to address an aspect of this advertising that
contributes to its appeal. The agency tentatively concluded that,
together, these restrictions will ensure that advertising is not used
to undermine the access restrictions that FDA proposed and thus will
help to protect the health of children and adolescents under the age of
18.
    In this section of the document, FDA will respond to comments on
each element of this comprehensive approach, including comments on
whether the regulations are legally supportable. A key question about
the agency's approach is whether there is a reasonable fit between the
agency's interest and the means that it has chosen to accomplish it;
that is, between the agency's interest and the specific restrictions
that it proposed. This inquiry involves consideration of the
restrictions under the third and final prong of Central Hudson.
    FDA will first consider comments that raised general concerns about
its approach under the third prong of Central Hudson. It will then
consider comments that raised concerns about specific restrictions
under this aspect of Central Hudson as part of its discussion of the
comments on each restriction.
1. Are FDA's Regulations Narrowly Drawn?
    In the preamble to the 1995 proposed rule, FDA stated that the
regulations that it was proposing met the final prong of the Central
Hudson test (60 FR 41314 at 41355). In Central Hudson, the Supreme
Court stated that the First Amendment mandates that speech restrictions
be ``narrowly drawn.'' The Court continued:
     The regulatory technique may extend only as far as the interest
it serves. The State cannot regulate speech that poses no danger to
the asserted State interest, * * * nor can it completely suppress
information when narrower restrictions on expression would serve its
interest as well.
(447 U.S. at 565, n.7) FDA pointed out, however, that: ``The Supreme
Court has made it clear that this prong does not require a `least
restrictive means test,' but rather that there be a `reasonable fit'
between the government's regulation and the substantial governmental
interest sought to be served'' (Board of Trustees of State University
of New York v. Fox, 492 U.S. 469, 480 (1989); (60 FR 41314 at 41355).
    (23) This statement by FDA provoked a significant amount of
comment. Several comments said that FDA had mischaracterized its
burden. These comments argued that Fox did not dilute the Central
Hudson analysis, and that any restriction on commercial speech must be
narrowly tailored. One comment pointed out that, in Rubin v. Coors, the
Supreme Court made no mention of reasonable fit. The comment stated
that in Rubin v. Coors, the Supreme Court said that Central Hudson
requires that a valid restriction be no more extensive than necessary
to serve the governmental interest (115 S.Ct. at 1591). Finally, one
comment said that FDA was arguing that courts have applied a rational
basis standard to restrictions on commercial speech, but the comment
stated that FDA was wrong because courts have rejected this notion.
    In response to these comments, FDA has carefully evaluated the
relevant case law. The agency does not agree that it mischaracterized
its burden in the 1995 proposed rule.
    It is true that in Rubin v. Coors the Supreme Court found that the
challenged statutory provision violated the First Amendment's
protection of commercial speech, at least in part, because it was more
extensive than necessary (115 S.Ct. at 1594). However, the Court also
stated that its inquiry under the last two steps of Central Hudson
involves ``a consideration of the 'fit' between the legislature's ends
and the means chosen to accomplish those ends'' (Id. at 1391 (quoting
Posadas De Puerto Rico Associates v. Tourism Co. of Puerto Rico, 478
U.S. at 341); (See also 44 Liquormart, Inc. v. Rhode Island, 116 S.Ct.
at 1510 (``As a result, even under the less than strict standard that
generally applies in commercial speech cases, the state has failed to
establish a reasonable fit between its abridgment of speech and its
temperance goal.'')).
    Moreover, the Court's statement in Rubin v. Coors that a
restriction on commercial speech must be no broader than necessary,
which was cited by a comment, must be read in light of the Court's
discussion of this requirement in Board of Trustees of State University
of New York v. Fox, 492 U.S. at 476-481. In Fox, the Supreme Court
concluded from its consideration of how this phrase has been used in
its case law and in the related case law on time, place, and manner
restrictions, that what is required, exactly as the agency said in the
1995 proposed rule, is a fit between the Government's ends and the
means chosen to accomplish those ends that is not necessarily perfect
but reasonable (492 U.S. at 480). The Supreme Court reiterated this
point in Florida Bar v. Went For It, Inc., 115 S.Ct. at 2380 (citations
omitted):
     With respect to this prong, the differences between commercial
speech and noncommercial speech are manifest. In Fox, we made clear
that the ``least restrictive means'' test has no role in the
commercial speech context * * * ``What our decisions require,''
instead, ``is a `fit' between the legislature's ends and the means
chosen to accomplish those ends,'' a fit that is not necessarily
perfect, but reasonable; that represents not necessarily the single
best disposition but one whose scope is `in proportion to the
interest served' that employs not necessarily the least restrictive
means but * * * a means narrowly tailored to achieve the desired
objective.
    Thus, FDA did not mischaracterize its burden in the 1995 proposed
rule. Moreover, in any event, FDA has narrowly tailored its provisions.
    Before turning to the question of whether there is a reasonable fit
between FDA's interest in the health of children and the restrictions
that FDA proposed on tobacco advertising, the agency wishes to make
clear that, contrary to the claim of one comment, it recognizes that
courts have not equated the reasonable fit test with rational basis
review. (See, e.g., Florida Bar v. Went For It, Inc.) FDA recognizes
that the reasonable fit test requires that the Government goal be
substantial, and that the cost of achieving that goal be carefully
calculated. (See Board of Trustees of State University of New York v.
Fox, 492 U.S. at 480.) It also recognizes that this test requires that
the agency consider whether there are less burdensome alternatives to
restrictions on speech.
    Having already established that its goal is substantial (see
section VI.C.4. of this document), FDA will consider the issues of the
costs of the restrictions and alternatives to these restrictions in its
analysis of the comments that follows.
    (24) Several comments argued that the restrictions on cigarette and
smokeless tobacco advertising that FDA proposed are not narrowly
tailored. One comment said that the premise of the narrow tailoring
requirement is that commercial speech is valuable, and that it may only
be restricted when it is necessary to do so. Other comments argued that
restrictions on speech must attack only problem speech, and that FDA
had failed to prove that this is what the proposed restrictions did.
These
[[Page 44497]]
comments stated that FDA's proposed restrictions are more extensive
than necessary to achieve the agency's asserted interest, particularly
because the agency had failed to show that the advertising restrictions
will have any effect on underage smoking. Some comments argued that the
restrictions that FDA proposed were tantamount to a ban because they
will prevent the advertiser's message from reaching consumers.
    Other comments disagreed. These comments said that FDA's proposed
action is narrowly tailored. They argued that FDA had steered clear of
imposing a categorical ban on tobacco advertising, or even broad
prophylactic rules. One comment said that tailored prohibitions,
instead of all-out bans, are important signposts indicating a measured
response.
    FDA disagrees with the comments that claimed that the restrictions
were not narrowly tailored. The agency recognizes, as the Supreme Court
said in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 646
(1985), that it has the burden of distinguishing the harmless from the
harmful. FDA has met this burden.
    The restrictions that FDA is adopting are not like those in Central
Hudson, which, even though the Public Service Commission's interest was
limited to energy conservation, reached all promotional advertising,
regardless of the impact of the touted service on energy use. (See 447
U.S. at 570.) Rather, FDA's restrictions are carefully crafted to focus
on those media and aspects of advertising that children are routinely
exposed to and that the available evidence shows has the greatest
effect on youngsters, while leaving the informational aspects of
advertising largely untouched. FDA is not banning outdoor advertising;
it is restricting it so that it does not unavoidably confront children
when they play. It is not banning print advertising. It is restricting
the use of images and color, which are particularly appealing to
children, in publications that have a large number of young readers
under the age of 18 and in other forms of advertising to which children
are routinely exposed but permitting unrestricted advertising in adult
publications and adult venues. It is restricting cigarette and
smokeless tobacco companies' use of brand names and product
identifications in sponsored events, but again in a way that reflects
the agency's concern about children and adolescents under the age of
18. That is, it is permitting companies to sponsor in the corporate
name in order to engender good will, but preventing them from using the
brand specific attractive imagery that is influential with young
people. Finally, it is prohibiting the use of branded promotional items
because it is the young who find particular value in these items. In
each of these respects, the agency has gone no further than it has
found, based on the evidence, is necessary to meet its ends. (See
Dunagin v. City of Oxford, Miss., 718 F.2d at 751.)
    Under the restrictions that FDA is adopting, firms will remain free
to disseminate advertising that performs all the informational
functions that are protected by the First Amendment. They will be able
to disseminate information on what they are selling, for what reason,
and at what price. (See Virginia State Board of Pharmacy v. Virginia
Citizens Consumer Council, 425 U.S. 748, 765 (1976); Bates v. State Bar
of Arizona, 433 U.S. 350, 364 (1977).) Thus, the situation here is
analogous to that in Friedman v. Rogers, 440 U.S. 1 (1979), where the
Supreme Court found that a restriction on the use of optometrical trade
names had only an incidental effect on the content of commercial
speech. The Court said that ``the factual information associated with
trade names may be communicated freely and explicitly to the public''
(440 U.S. at 16). So, here, any information that firms wish to
communicate to adults may still be communicated by use of words.
Indeed, the tobacco industry has used text-only advertising
successfully in the past. \196\
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    \196\ As discussed more fully elsewhere, advertising for low-tar
products is generally more reliant on text than on imagery.
---------------------------------------------------------------------------
    It may be true, as some of the comments state and as the agency
recognized above, that it will be more difficult for adult consumers to
find cigarette and smokeless tobacco advertising without images and
color, but willingness to search for information is one of the things
that adults will do when they need information about price, quality, or
product performance. Moreover, as discussed above, adult tobacco users
are particularly interested in information on price, ``safer''
cigarettes, and new products, information that can be freely conveyed
under FDA's regulations.
    (25) The effect of the proposed restrictions on cigarette and
smokeless tobacco product manufacturers' ability to communicate with
adults was the subject of a number of comments. These comments argued
that the proposed restrictions would not only preclude speech that may
be perceived by young people, it would preclude speech that would be
received by adults. The restrictions, these comments asserted, would
deprive adults, who are legally entitled to smoke, of their right to
the free flow of relevant commercial information. Other comments,
relying on several cases, said that the First Amendment does not
countenance wholesale censorship of speech for adults under the guise
of protecting children. Many comments, for example, quoted a statement
from Butler v. State of Michigan, 352 U.S. 380, 383 (1957) (``Surely,
this is to burn the house to roast the pig.'') in support of this
point. One comment said that FDA's purpose of reducing tobacco use by
minors cannot support massive censorship between tobacco advertisers
and adults.
    One comment, however, argued that FDA's proposed restrictions are
narrowly tailored to the specific types of advertising that are most
effective with children. This comment said that these restrictions
permit companies to continue marketing practices that do not appeal to
children.
    FDA has considered the concerns expressed in the comments. First,
FDA does not agree that its interest is limited. As discussed above,
the agency's interest is compelling. Nonetheless, the agency has tried
very hard to tailor the restrictions on advertising in this final rule
to focus them in order to limit the appeal of advertising to the young
and ensure that the restrictions on access to cigarettes and smokeless
tobacco will not be undermined, while at the same time, minimizing
their effect on adults. Given this approach, FDA's restrictions differ
significantly from those struck down in Butler v. State of Michigan,
where the Court overturned conviction of a bookseller for selling a
book to adults that contained some portions that might be objectionable
to young people. In that case, the Supreme Court stated:
     We have before us legislation not reasonably restricted to the
evil with which it is said to deal. The incidence of this enactment
is to reduce the adult population of Michigan to only what is fit
for children.
(352 U.S. at 383)
    This statement clearly does not describe the situation under the
restrictions FDA is adopting. Except for limits on images and colors,
the restrictions that FDA is adopting do not limit what cigarette and
smokeless tobacco manufacturers, distributors, or retailers may say. As
stated above, they are free to put into words any nondeceptive message
that they would have communicated by color or image.
[[Page 44498]]
FDA's restrictions, as one comment stated, restrict only those
advertising techniques that have the most appeal. Thus, contrary to the
situation in Butler v. Michigan, these restrictions are reasonably
restricted to the harms they are intended to address.
    Nor are the restrictions that FDA is imposing like the one struck
down in Bolger v. Youngs Drug Products Corp., 463 U.S. 60 (1983), which
was cited by several comments. In that case, a Federal statute
prohibited the mailing of unsolicited advertisements for
contraceptives. The Postal Service sought to justify this restriction
as aiding parents' efforts to discuss birth control with their
children. While the Court found this interest to be substantial, it
found the restriction to be more extensive than the Constitution
permits (463 U.S. at 73). The Supreme Court struck down the
restrictions, stating: ``The level of discourse reaching the mailbox
simply cannot be limited to that which would be suitable for a
sandbox'' (Id. at 74). It is in this respect that FDA's restrictions
differ from those in Bolger. While FDA may limit the type of color or
imagery, or the use of noncommunicative media, i.e., hats, FDA's
restrictions do not limit the types of information that can be
disseminated, except within 1,000 feet of schools and playgrounds.
    (26) Other comments cited Sable Communications v. FCC, 492 U.S. 115
(1989), in which the Supreme Court struck down an outright ban on
indecent as well as obscene interstate commercial telephone messages.
This case is not relevant here because FDA is not imposing an outright
ban on cigarette and smokeless tobacco advertising, \197\ and because
in contrast to Congress's failure to make findings that would justify
the ban in Sable, FDA is fully explaining the basis for each of the
restrictions that it is adopting here.
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    \197\ The Court specifically distinguished FCC v. Pacifica
Foundation, 438 U.S. 726 (1978), because that case did not involve a
total ban on broadcasting indecent material. The Court pointed out
that the FCC rule in that case sought to channel the indecent
material to times of the day when children most likely would not be
exposed to it (Sable Communications v. FCC, 492 U.S. at 127). FDA's
intention here is to impose a similar type of focused and tailored
restriction on tobacco advertising to limit the appeal of such
advertising to children.
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    Other comments cited Erznoznik v. City of Jacksonville, 422 U.S.
205 (1975), in which the Supreme Court struck down an ordinance that,
to protect minors, made it illegal to exhibit a motion picture visible
from public streets in which female buttocks and bare breasts were
shown. In doing so, the Supreme Court stated that: ``Speech * * *
cannot be suppressed solely to protect the young from ideas or images
that a legislative body thinks unsuitable for them'' (422 U.S. at 213).
    Again, however, FDA is imposing restrictions on the manner and, to
a limited extent, places in which cigarettes and smokeless tobacco are
advertised, not content restrictions. Moreover, FDA is restricting
commercial speech, which, as stated in section VI.C.1. of this
document, is subject to a subordinate position in the scale of First
Amendment values to the noncommercial expressions involved in
Erznoznik. Thus, this case has no application here.
    (27) Finally, a few comments cited Project 80's, Inc. v. City of
Pocatello, 942 F.2d 635 (9th Cir. 1991), a case in which the U.S. Court
of Appeals for the Ninth Circuit struck down ordinances that prohibited
door-to-door solicitation because they restricted both wanted and
unwanted solicitations. (See 942 F.2d at 638-639.) The municipalities
sought to defend these ordinances on the grounds that they did not
prohibit in-home sales. However, the court said that residents who
wanted to receive unwanted solicitors had to post a ``Solicitors
Welcome'' sign, and that the Government's imposition of affirmative
obligations on the residents' First Amendment rights to receive speech
is not permissible (Id. at 639).
    Presumably, the comments cited this case as evidence that FDA's
restrictions on tobacco advertising sweep too broadly because they
affect the rights of both minors and adults to receive speech. Again,
however, the case is distinguishable. Under FDA's restrictions, adults
will be able to continue to receive tobacco advertising without any
obligation to take any affirmative steps. They will have to look a
little harder because, to advance FDA's interest in protecting the
health of minors, advertisements will generally not have images or
color, and such advertising will not be around schools or playgrounds.
However, the advertising should otherwise continue to be available in
newspapers, magazines, and billboards and appear unrestricted in adult
publications and venues. There is no indication in Project '80, Inc. v.
City of Pocatello, that the Ninth Circuit would find in such
restrictions an undue burden under the First Amendment.
    This review of the case law shows that FDA's effort to tailor the
restrictions that it is adopting for cigarette and smokeless tobacco
advertising that clearly distinguishes them from the governmental
efforts to protect minors that have been struck down as sweeping too
broadly and as impinging on the rights of adults. Under FDA's
restrictions, there will still be a free flow of information to adults
and not massive censorship as some comments allege. Thus, these
comments do not provide a basis to conclude that FDA's restrictions
fail the third prong of the Central Hudson test.
    (28) Several comments pointed out that the Supreme Court has stated
on several occasions that regulations that disregard numerous and
obvious less restrictive and more precise means of achieving the
government's asserted objectives are not narrowly tailored. These
comments suggested that there are several less restrictive alternatives
to the restrictions on advertising that FDA had proposed. One
alternative pointed to by the comments was better enforcement of laws
prohibiting sales to minors. The comments pointed out that Congress
passed legislation as part of the Alcohol, Drug Abuse, and Mental
Health Administration (ADAMHA) Reorganization Act of 1992, that
prohibits DHHS from providing block grants for the prevention and
treatment of substance abuse unless the State prohibits the sale and
distribution of tobacco products to persons under 18. The comments said
that FDA should give this new law a chance to work before imposing
restrictions on speech, particularly in light of the fact that DHHS
itself said in its 1995 proposed rule to implement this new law that
``[e]liminating virtually all sales [of tobacco products] to minors
does not even present particularly difficult enforcement problems''
(see 58 FR 45156 at 45165, August 26, 1993).
    The other alternative, according to the comments, that exists to
the restrictions is an educational campaign that is sponsored either by
the Government or that is provided through voluntary counter speech by
the tobacco industry.
    The agency recognizes that the various opinions by the Justices in
44 Liquormart reiterate the need to consider nonspeech restrictions.
Justice Stevens, speaking for himself and Justices Kennedy, Ginsburg,
and Souter stated that the legislature ``cannot satisfy the requirement
that its restriction on speech be no more extensive than necessary,''
given that alternative forms of regulation, such as taxation or limits
on purchases that did not involve restrictions on speech, could achieve
the goal of promoting temperance as well as, or better, than,
[[Page 44499]]
its ban. Moreover, Justice O'Connor in a concurrence, joined by the
Chief Justice, and Justices Souter and Breyer stated:
     The availability of less burdensome alternatives to reach the
stated goal signals that the fit between the legislature's ends and
the means chosen to accomplish those ends may be too imprecise to
withstand First Amendment scrutiny.
(116 S.Ct. at 1521)
    (29) One comment, however, argued that, for two reasons, there is
no plausible claim that FDA has disregarded reasonable alternatives.
First, the comment pointed out that the Federal Government has engaged
in an incremental effort for 30 years to strike the appropriate balance
in regulating the sale of tobacco products. This effort was successful
in bringing down overall smoking rates, but youth smoking rates
remained stable during the 1980's and have recently begun to rise.
Because previous measures have failed, the comment said, it was now
appropriate for FDA to take stricter action to reduce the use of
tobacco products by minors. Second, the comment noted that a lack of
narrow tailoring often manifests itself in a restraint that is either
grossly underinclusive or overinclusive. The comment said that FDA had
been neither here.
    In Florida Bar v. Went For It, Inc., 115 S.Ct. at 2380, the Supreme
Court made clear that the question whether a restriction on commercial
speech is reasonably well-tailored turns, at least in part, on the
existence of ``numerous and obvious less burdensome alternatives to
restrictions on commercial speech * * *.'' (See 115 S.Ct. at 2380
(citing Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 418 n.13
(1993)).) FDA has considered the alternatives suggested by the comments
and finds that none of them is an appropriate alternative to the
restrictions that FDA is adopting.
    First, the Government has engaged in a 30-year effort to eliminate
young people's access to and use of tobacco products. The industry,
through its voluntary code and various education programs, has
professed to be part of the solution. However, tobacco can be easily
obtained by young people (between 516 million and 947 million packs of
cigarettes sold illegally per year to children (1992-1993) (60 FR 41314
at 41315)). Moreover, although adult smoking rates have declined
dramatically since the publication of the first Surgeon General's
Report in 1964 (from over 42.4 percent in 1965 to 25 percent in 1993)
(60 FR 41314 at 41317), young people's smoking rates failed to decline
during the decade of the 1980's and began to rise in 1991. Between 1991
and 1995, the proportion of 8th and 10th graders who reported smoking
in the 30 days before the survey had risen by one-third, to about 19
percent and 28 percent, respectively. Smoking among high school seniors
had increased by more than one-fifth since 1992, with 33.5 percent
saying that they had smoked in the 30 days before the survey. \198\
Thus, past efforts involving age restrictions and warning messages on
packages and advertising have not been sufficient to reduce the demand
for tobacco by young people. The restrictions on advertising are
designed to affect the demand.
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    \198\ ``Teen Smoking, Marijuana Use Increase Sharply, Study
Shows; HHS Sees Alarming `Culturewide' Change in Progress,'' The
Washington Times, p. A2, December 16, 1995; quoting from ``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.
---------------------------------------------------------------------------
    Second, the agency proposed a sufficiently comprehensive set of
regulatory restrictions to address the problem of tobacco use by young
people, to wit: (1) Provisions that restrict and prevent sales of
tobacco products to young people; (2) provisions that reduce the appeal
of tobacco products for young people that is created by advertising and
promotions; and (3) a program to provide educational messages for young
people to help them resist tobacco use. Thus, the agency has not relied
solely on regulations that have an impact upon the speech of the
tobacco industry but has included provisions to address the activity
itself.
    Third, while it is true that better enforcement of laws restricting
sales to minors is complementary to FDA's approach, it does not
eliminate the need for this action. As DHHS recognized in its final
rule implementing the ADAMHA Reorganization Act of 1992, DHHS's action
under that statute and FDA's regulations both address the need to
reduce minors' access to tobacco products. FDA's action, however, in
addition to reducing access, attempts, through the restrictions on
advertising, to reduce ``the powerful appeal of tobacco products to
children and adolescents'' (61 FR 1492, January 19, 1996). \199\
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    \199\ It is true that in its August 25, 1993, proposal (58 FR
45156), DHHS stated, as the comments say, that eliminating virtually
all sales to minors does not present particularly difficult
enforcement problems. This statement did not imply, however, that
achieving this goal would be easy, nor did it reflect consideration
of what ancillary measures would be useful to help to achieve this
goal. It was, rather, a statement of DHHS' view that this goal could
be achieved.
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    Advertising, as explained in sections VI.B. and VI.D. of this
document, plays a role in the decision of children and adolescents to
use cigarettes and smokeless tobacco. As long as advertising continues
to play that role, young people will be motivated to obtain access to
tobacco products and to attempt to circumvent any access restrictions.
Thus, the restrictions on speech are necessary to prevent advertising
from undermining FDA's proposed restrictions on access. First, the
agency notes that the voluntary educational campaigns conducted by
tobacco companies have not been effective in reducing underage tobacco
use. This fact is evidenced by the increase in prevalence of tobacco
use among young people. (See, e.g., 60 FR 41314 at 41315.) Second, the
agency finds that any educational campaign is likely to be undermined
if the young people to whom it is aimed continue to be the target of
advertising that fosters the perception that experimentation with
tobacco by young people is expected and accepted.
    The U.S. Court of Appeals for the Fifth Circuit considered a
suggestion similar to that of an educational campaign in Dunagin v.
City of Oxford, Miss. and found it not to be an alternative to
restrictions on advertising:
     We do not believe that a less restrictive time, place, and
manner restriction, such as a disclaimer warning of the dangers of
alcohol, would be effective. The state's concern is not that the
public is unaware of the dangers of alcohol * * * The concern
instead is that advertising will unduly promote alcohol consumption
despite known dangers.
(See 718 F.2d at 751; see also Posadas de Puerto Rico Ass'n v. Tourism
Co. of Puerto Rico, 478 U.S. at 344.) This is exactly FDA's concern
about the effect of advertising on underage tobacco use, and why an
educational campaign, which may complement advertising restrictions, is
not an alternative to them.
    Thus, the agency concludes that there are no less burdensome
alternatives to restrictions on advertising. In this respect, this
proceeding is distinguishable from that considered in Rubin v. Coors,
which was cited by a number of the comments. In Rubin v. Coors, the
Supreme Court pointed to the fact that the respondent cited several
options that could advance the Government's asserted interest in a
manner less intrusive to respondent's First Amendment rights than the
[[Page 44500]]
statutory provision the Government had adopted (115 S.Ct. at 1593).
\200\ Here, as in section VI.E. of this document, there are none
believed to be nearly as effective.
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    \200\ One alternative that the respondents in Rubin v. Coors
advanced was prohibiting marketing efforts emphasizing high alcohol
strength (115 S.Ct. at 1593.) What FDA is doing here is analogous to
that alternative. It is restricting marketing efforts that have
particular appeal to the young.
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    In U.S. v. Edge Broadcasting Co., 509 U.S. 418, 430 (1993), the
Supreme Court said that ``the requirement of narrow tailoring is met if
`the * * * regulation promotes a substantial Government interest that
would be achieved less effectively absent the regulation,' provided
that it did not burden substantially more speech than necessary to
further the government's legitimate interests.''
    FDA's restrictions on cigarette and smokeless tobacco advertising
clearly meet this test. FDA's restrictions directly and materially
advance its compelling interest in the health of children and
adolescents under the age of 18. The discussion of the lack of less
restrictive alternatives demonstrates that the agency's goals would be
achieved less effectively in the absence of these restrictions.
Finally, as the discussion on narrow tailoring and in the review of the
comments on each of the regulations on advertising that follows makes
clear, FDA is restricting only those aspects of advertising that have
particular appeal to the young. Thus, the agency has crafted the
advertising provisions with specificity to allow unrestricted
advertising in those venues that are not seen by or used by children
and adolescents. Accordingly, publications with adult readership and
adult establishments may have unlimited print advertising. Moreover,
companies are free to offer nontobacco items and events in their
corporate names or unbranded. Companies, thus, can reward adult usage
by providing these incentives but may not do so in a format (with brand
identification and imagery) which is appealing to young people.
    However, the agency has been unable to determine additional areas
for unrestricted advertising. Thus, other than adult establishments,
such as bars, there are no areas at other retail establishments that
are not visible to young people. Billboards are ubiquitous and
accessible to all ages. Nontobacco items can be restricted to
dissemination to adults, but they would still serve as walking
billboards. Finally, there are no adult only sponsored events--children
are at the events or watching them on television. As described more
fully in section VI.E.8. of this document, in the case of auto racing,
attendance by young people is on the rise.
2. Section 897.30(a)--Permissible Forms of Labeling and Advertising
    Proposed Sec. 897.30(a) would have established the scope of
permissible forms of labeling and advertising for cigarettes and
smokeless tobacco. Proposed Sec. 897.30(a)(1) would have defined
permissible forms of advertising as newspapers, magazines, periodicals,
or other publications (whether periodic or limited distribution);
billboards, posters, placards; and nonpoint of sale promotional
material (including direct mail). Proposed Sec. 897.30(a)(2) would have
defined permissible forms of labeling as point of sale promotional
material; audio and/or video formats delivered at a point of sale; and
entries and teams in sponsored events.
    In response to the comments, FDA has revised Sec. 897.30(a) so that
it no longer distinguishes between advertising and labeling, deletes
teams and entries as permissible advertising, describes the procedure
that FDA will follow when it is informed by advertisers of their intent
to advertise in a medium not listed in the regulation.
    In addition, the first sentence of Sec. 897.30(a), which states
that this subpart does not apply to cigarette or smokeless tobacco
product package labels, has been redesignated as Sec. 897.30(c).
    (30) Several comments were received addressing the issue of
permissible advertising outlets. Comments from the tobacco and
advertising industries opposed the 1995 proposed rule. These comments
criticized the 1995 proposed rule for not defining the term
``advertising'' and called the 1995 proposed rule unprecedented in the
scope of its limitations on the forms of media, a violation of the
First Amendment, a violation of the Administrative Procedure Act (APA),
and beyond FDA's statutory authority. Supporters of the 1995 proposed
rule, including health and public interest groups, stated that it is a
reasonable measure given the effect of advertising on children and that
it provides manufacturers with a wide variety of means for
communicating with their customers. Some supporting comments urged that
the prohibition of certain media, such as the Internet, be stated
explicitly.
    Several comments from the tobacco industry expressed concern that
FDA did not define the term ``advertising'' ``because Sec. 897.30(a)(1)
would limit the media in which cigarettes may be `advertised,' the
definition of `advertising' as used by FDA is crucial; yet the term is
not defined in the proposed regulations.''
    Moreover, they expressed concern that the definition was so
sweeping that it could literally ``include reports to shareholders or
potential shareholders; communications among manufacturers,
wholesalers, distributors, and retailers; or even communications to the
news media insofar as they might be deemed a 'commercial use.'''
    Other comments requested that the agency clarify the definition to
ban product placements in movies and commercials shown in movie
theaters. Several comments stated that Sec. 897.30 should be extended
to include tobacco product packages to reduce the means of a child
expressing affinity with the image associated with a particular brand.
One comment recommended tombstone packaging without an identifiable
logo.
    The agency carefully considered whether it should attempt to define
the term ``advertising'' more explicitly than it did. ``Advertising''
as a term is constantly evolving, as new media and new techniques of
marketing emerge. Although its boundaries are understood (and were
provided in the preamble to the 1995 proposed rule), there is no one
accepted definition. FTC is the Federal agency with general
responsibility for regulating most consumer advertising. Yet neither
FTC nor any of its rules define the general term ``advertising.'' The
agency agrees with the approach taken by FTC and continues to believe
that the term ``advertising'' should not be defined any more
specifically. Thus, FDA finds that the description of advertising in
the preamble to the 1995 proposed rule is appropriate:
     Labeling and advertising are used throughout this subpart to
include all commercial uses of the brand name of a product (alone or
in conjunction with other words), logo, symbol, motto, selling
message, or any other indicia of product identification similar or
identical to that used for any brand of cigarette or smokeless
tobacco product. However, labeling and advertising would exclude
package labels, which would be covered under proposed subpart C.
(60 FR 41314 at 41334)
    The agency also agrees with comments that state that it must
provide some context for the application of so open ended a definition.
For example, comments contended that ``commercial use'' could be
interpreted to include such items as trade advertising (communication
between
[[Page 44501]]
manufacturers, wholesalers, distributors, and retailers), shareholder
reports, and possibly even communications with the news media. This was
not FDA's intent. This rule is a consumer based regulation; it is not
the intention of FDA to include purely business related communications.
Thus, noncommercial uses would not be affected. These would include
such uses as unpaid press statements, signs on factories noting
locations, business cards, and stockholder reports. While many of these
uses would be ordinary and necessary business expenses, they would not
be commercial uses in the context of the rule's restrictions on tobacco
advertising affecting minors' tobacco use.
    Furthermore, the preamble to the 1995 proposed rule explained that
the agency intends to permit advertising with imagery and color in
publications that are read primarily by adults. For that reason, under
Sec. 897.32(a), advertisements in publications (whether periodic or
limited distribution) with primarily adult readership are not
restricted to a text-only format. Trade advertising in trade press
publications and trade show publications, trade catalogs, price sheets,
and other publications for wholesalers, distributors, and retailers
that will not be seen by consumers, including minors, are unaffected by
the rule.
    Also, the agency does not believe that the term ``advertising''
needs to be defined to clarify what is not a permissible advertising
outlet. The 1995 proposed rule clearly specifies what advertising
outlets are included within the regulation's coverage. However, the
agency has been persuaded to make more clear its procedures for new or
uncovered media. These procedures are described in this section.
    The agency does not agree with comments that the rule needs to be
clarified regarding infomercials or advertorials (program length
commercials). Television infomercials are not allowed under the
statutory broadcast ban, and magazine advertorials would be treated
like any other magazine advertising. The agency recognizes that
commercial advertising messages (videos) shown in a movie theater are
not addressed by the 1995 proposed rule. If this becomes a desired
medium, the companies would need to notify FDA 30 days prior to using a
new medium. Finally, product placements in movies, music videos, and
television, if not placed at the expense of a tobacco manufacturer,
distributor, or retailer, would not be affected by this rule. The
agency does not intend to regulate a film producer's artistic
expression--i.e., what the producer chooses to display in movies.
    The agency has decided not to include restrictions on tobacco
product packaging. The agency has attempted to narrowly tailor this
rule and therefore has not included packaging restrictions at this
time.
    (31) Several comments from the advertising industry expressed
concern that the wording of Sec. 897.30(a)(1) would ban all advertising
for tobacco products that is not expressly permitted. If so, the
comment states, the rule would be arbitrary and capricious because the
agency did not present evidence that these unnamed advertising
techniques influence young people. Another comment pointed out that the
channels available to tobacco companies for communicating with adults
already have been severely restricted by Congress' ban on television
and radio advertising.
    In contrast, comments from organizations of health professionals
and a public interest group supported the scope of permissible
advertising. One specific comment stated that, ``The media listed in
Sec. 897.30 provide manufacturers with a wide variety of means for
communicating with their customers.''
    The agency has determined that the scope of the permissible outlets
for tobacco advertising in the 1995 proposed rule is reasonable. The
permissible forms are the known current forums for tobacco labeling and
advertising and account for the vast majority of advertising
expenditures. While the format of much of current tobacco advertising
is being restricted to a text-only format, almost all of the current
media outlets being used for tobacco advertising will still be
permissible. Legal users will continue to be able to receive
information about cigarettes and smokeless tobacco, in a text-only
format in most cases, in virtually all the same media currently used
for tobacco advertising. Moreover, if an advertiser intends to use a
new media outlet not included in the list of permissible advertising,
its responsibility is to notify FDA and provide the agency with
information about the media and the extent to which the advertising is
seen by young people. FDA will review any submission and make a
determination whether provisions of the final regulation provide
sufficient information for the advertiser to know how to disseminate
its advertising or whether the regulations need to be amended.
Advertising in any new media will be subject to the text-only format
requirement if it is a medium used by young people. Therefore, FDA has
created a new Sec. 897.30(a)(2) to reflect this new process.
    The agency believes this approach is reasonable and is fully
consistent with its statutory authority and with the First Amendment.
In Central Hudson Gas & Electric Co., 447 U.S. at 571, n.13, the
Supreme Court suggested that the Public Service Commission might
consider a system of previewing advertising campaigns to ensure that
they will not defeat conservation policy. The Court pointed out that
``commercial speech is such a sturdy brand of expression that
traditional prior restraint doctrine may not apply to it'' (Id.). Given
the agency's significant interest in ensuring that the restrictions on
access that it is imposing are not undermined, FDA finds that the
requirement that firms consult with it before using a new advertising
medium is a limited means of regulating commercial expression that is
likely to vindicate FDA's public health interests. This approach will
not prohibit the tobacco industry from advertising in new media but
will protect young people by giving the agency an opportunity to review
the problems presented by a new media and to design new regulations or
adapt current ones.
    (32) One comment from a public interest group concerned with
electronic media urged FDA to explicitly prohibit tobacco advertising
over the Internet, Worldwide Web, and other on-line services and
interactive media. The comment stated that children and adolescents are
increasingly using on-line services with up to 4 million Americans
under age 18 using, or with access to, on-line services. The comment
stated further that the interactive nature of the on-line services
gives advertisements numerous advantages over traditional print
advertisements. The comment emphasized that a ban on tobacco
advertising over these media is necessary because the text-only format
would not be as effective in reducing the appeal of tobacco advertising
to minors given the interactive nature of these media.
    One comment from an organization of health professionals stated
that one tobacco company advertises its mail-order business through a
Web site on the Internet and offers links to other tobacco-related
sites. The comment wondered why this type of advertisement was not
banned by FCC
[[Page 44502]]
since the Internet operates over telephone lines, a form of electronic
media that is regulated by FCC and from which cigarette advertising is
banned.
    A few comments dealt with on-line advertising and recommended that
the rule should limit format to black text on a plain background,
require advertisers to demonstrate that significant numbers of children
do not access ad sites, require use of any available blocking
technology, and define ``conspicuous'' and ``prominent'' as they
pertain to interactive media.
    Some of these comments have suggested that advertising of tobacco
products in on-line media should be banned under the Federal Cigarette
Labeling and Advertising Act's (the Cigarette Act) (15 U.S.C. 1331) and
the Comprehensive Smokeless Tobacco Health Education Act of 1996's (the
Smokeless Act) (15 U.S.C. 4401) prohibition of advertising on any media
subject to the jurisdiction of FCC. The agency leaves the issue of
jurisdiction and the applicability of the broadcast ban to the
Department of Justice, which has the appropriate jurisdiction over the
Cigarette Act, and to FTC, which has along with the Department of
Justice jurisdiction over the Smokeless Act. Were these agencies not to
take action and were, tobacco advertising to continue in on-line media,
then FDA is available to meet with advertisers regarding their
responsibility under the final rule.
    The agency recognizes the growing importance and use of on-line
media and the Internet for communications of all sorts, including
tobacco sales and advertising. On-line media are not included within
the list of permissible outlets for tobacco advertising because the
agency does not have sufficient information on the technology to
include regulations in the final rule. However, advertisers interested
in advertising on the Internet should notify the agency, after the rule
is final, and provide the agency with sufficient information about use
by young people so that the agency can make a proper determination.
This notification is for discussion purposes only, and is not in any
way intended to imply, or create a need for, prior approval.
    The agency recognizes the concern expressed by one comment that a
text-only format, without additional requirements, may not be as
effective in protecting young people from on-line advertising as it
would be for print advertising because of the interactive nature of on-
line media. The agency would consider the unique qualities of on-line
media and the Internet in evaluating any requests to use these media.
Any other statement about specific requirements for this new media or
any other media would constitute speculation at this point. \201\
---------------------------------------------------------------------------
    \201\ In addition to the substantive changes, the following
changes in language have been made: (1) Deletion of ``only'' in
Sec. 897.30(a)(1); (2) substitution of (a)(2) for (b) in 897.30; and
(3) deletion of ``and'' before ``in point of sale'' in
Sec. 897.30(a)(1).
---------------------------------------------------------------------------
    Section 897.30(a)(1) provides a comprehensive listing of the
permissible forms of advertising and labeling. The evidence that FDA
has gathered in this proceeding establishes the need for and importance
of such a comprehensive listing. In addition to the general evidence
and support provided by expert opinion, advertising theory, studies and
surveys, empirical studies, anecdotal evidence, industry statements,
and two consensus reports (the IOM Report and the 1994 SGR) described
in section VI.D.5. of this document, FDA has found specific support for
a comprehensive listing in:
    Empirical Studies--Various economic and econometric studies of
international and cross-country data show that restrictions on
advertising and promotional activities can result in a decline in
tobacco use (see section VI.D.6.a. of this document).
    Country Experience--The experience of countries, such as Norway and
Finland, shows that comprehensive advertising restrictions can
positively affect the smoking rates of young people over time (see
section VI.D.6.a. of this document).
    Advertising Theory--Each separate advertising media plays a
critical role in shaping young people's beliefs about tobacco use, and
ultimately their use of tobacco products (see sections VI.D.3.a.
through VI.D.3.e. of this document). Therefore, regulation of
advertising must address each type of media. As will be described in
the following sections of the regulation, the restrictions on each
media are necessary to reduce the appeal of tobacco for young people
and to prevent unrestricted tobacco advertising from undermining the
regulation's access provisions. Moreover, as international experience
indicates (see section VI.D.6. of this document), when regulations that
are not comprehensive are implemented, tobacco money can migrate to
unregulated advertising venues (e.g., if publications are prohibited,
money expended on sponsorship will increase) and can undermine the
force of the regulation. Thus, in order to be effective, restrictions
must be as comprehensive as possible.
    Based on all of the foregoing, FDA concludes that the comprehensive
listing of permissible advertising in Sec. 897.30(a)(1) will directly
and materially advance the agency's efforts to reduce consumption of
tobacco products by children and adolescents under the age of 18.
3. Section 897.30(b)--Billboards
    The agency proposed in Sec. 897.30(b) to prohibit outdoor
advertising, including but not limited to billboards, posters, or
placards, placed within 1,000 feet of any public playground or
playground in a public park, elementary school, or secondary school.
FDA proposed this provision because these are places where children and
adolescents spend a great deal of time and should therefore be free of
advertising for these products. The agency tentatively concluded that
this was a reasonable restriction and noted that the cigarette
industry's voluntary ``Cigarette Advertising and Promotion Code,'' (the
Code) revised in 1990, contains a similar provision concerning schools
and playgrounds (60 FR 41314 at 41334 through 41335).
    (33) FDA received over 2,500 comments concerning this part of the
1995 proposed rule. Comments opposing this measure pointed out that the
tobacco industry has established a voluntary code similar to the
proposed provision with which advertisers already comply, and that
therefore, there is no reason to make this measure mandatory. These
comments also stated that outdoor advertising does not target children
and adolescents, and that parents, siblings, and friends have a much
greater influence than billboards and posters on a young person's
desire to start smoking. Further, they stated that there is no evidence
that this measure would reduce any teenager's desire to smoke.
    Most comments supported this provision, stating that children and
adolescents should not be subjected to visual images promoting tobacco
use around those areas where they attend school or play. The comments
argued that children and adolescents want to be like the attractive
models in the advertising, and, thus, the advertisements directly
influence them to start using tobacco.
    In the Federal Register of March 20, 1996 (61 FR 11349), the agency
reopened the comment period for the August 1995 proposed rule to place
on the public record a memorandum that provided further explanation of
the
[[Page 44503]]
agency's proposal to ban outdoor advertising within 1,000 feet of
schools and playgrounds. The document provided an additional 30 days in
which to comment on this new information. The memorandum stated that
the agency was aware of the industry's voluntary 500-foot ban on
advertising from schools and playgrounds but also that it was
cognizant, based on the experience of its employees, that billboards
can loom large in the sight of children and adolescents at that
distance and thus would be able to capture their attention. The agency
also noted that 1,000 feet is about 3 blocks and that signage kept that
far away from schools and playgrounds would not loom as large, if it
would be visible at all. Moreover, the 1,000 feet will protect children
as they travel to and from these locations.
    In response to the comments, FDA has modified the provision to
clarify the coverage of the provision. Thus, the final rule states that
the 1,000-foot area is to be measured from the perimeter of the
playground or school. Moreover, a definition of playground is included
as well as an indication that the relevant area of a playground in a
larger public park is limited to the play area itself. Section
897.30(b) reads:
    No outdoor advertising for cigarettes or smokeless tobacco,
including billboards, posters, or placards, may be placed within
1,000 feet of the perimeter of any public playground or playground
area in a public park (e.g., a public park with equipment such as
swings and seesaws, baseball diamonds, or basketball courts),
elementary school, or secondary school.
    (34) Several comments asked FDA to define what is meant by the term
``playground.'' The comments stated that the term could be construed to
include literally any place of outdoor recreation where children may
play (i.e., a paved parking lot, a tennis court, or a city park), even
places used primarily by persons 18 years of age or older. One of the
comments noted that the industry code refers to ``children's
playgrounds'' (i.e., playgrounds designed primarily for use by
children), but that Sec. 897.30(b) refers to ``any playground.''
    Some comments suggested that the term ``playground'' should include
the playgrounds of city parks, recreation facilities, theme parks
(e.g., Disneyland), and national parks.
    The agency agrees that it needs to clarify what is meant by the
term ``playground.'' A typical dictionary definition of ``playground''
states that it is: (1) An outdoor area set aside for recreation and
play, especially one having equipment such as seesaws and swings; or
(2) a field or area of unrestricted activity. The intent of the
proposal was not to preclude outdoor advertising within 1,000 feet of
any area that would fall under this broad definition, but to preclude
cigarette and smokeless tobacco advertising around those areas where
children and adolescents are likely to spend a lot of time. Clearly,
areas around schools with equipment such as swings and seesaws are
areas where children are likely to play. Public parks for family
recreational purposes with play equipment, and facilities for
activities such as baseball or basketball are also areas where children
and adolescents are likely to be present for hours at a time.
    However, private enterprises, such as theme parks and recreational
facilities, are not necessarily intended only for children and
adolescents. Those that are, may require the presence of an adult for
entry. There are usually entrance fees or required purchases for use of
these areas. In addition, children and adolescents may not be present
in these areas on any regular basis (e.g., an annual visit to a theme
park). Therefore, the agency will not include these areas in the
regulation. Moreover, because all outdoor advertising must be in black
and white text, the agency sees no need to extend the prohibition
beyond elementary and secondary schools and public playgrounds at this
time.
    The concern expressed that a decision by private parties to build a
playground could destroy the value of a billboard sign should no longer
exist. Because the agency is limiting its definition of playground to
those publicly owned playgrounds, any interested party could object to
the establishment of the playground.
    FDA is modifying Sec. 897.30(b) to state that outdoor advertising
is prohibited within 1,000 feet of the perimeter of any public
playground or playground area in a public park (e.g., areas with
equipment such as swings and seesaws, baseball diamonds, basketball
courts), elementary school or secondary school. The agency concludes
that this modification in Sec. 897.30(b) is adequate to clarify the
term ``playground,'' and that a more specific definition for
``playground'' is not necessary at this time.
    The agency notes that the definition makes clear that, when an area
is set aside for a playground within a public park, the 1,000 feet is
measured from the perimeter of the play area and not from the larger
park.
    (35) Several comments contended that the regulation should specify
that the 1,000-foot rule should be measured from the perimeter of the
property to avoid confusion. One comment asked that the provision be
more clear as to what types of schools would be included within the
definition.
    The agency agrees with the first comment. The intent of the 1995
proposed rule was that the distance would be measured from the
perimeter of the school or playground. Any other measurement could
defeat the purpose of the regulation. For example, measuring from the
edge of a building or from the center of a playground could allow
outdoor advertising to be placed closer to the perimeter where children
may be assembled or playing. In addition, for large schools or
playgrounds, the outdoor advertising could feasibly be near the
perimeter of the school or playground if the distance is measured from
somewhere other than the perimeter. Therefore, to clarify the intent of
the provision, FDA is modifying Sec. 897.30(b) to state that no outdoor
advertising may be placed within 1,000 feet of the perimeter of any
playground, elementary school, or secondary school.
    However, the agency does not believe that it needs to provide a
definition of elementary and secondary schools, as those terms, as
commonly used, include all such schools (kindergarten through 12th
grade) whether public, private, or parochial.
    (36) One comment stated that the tobacco industry Code of
Advertising Practices (the Code) applies to outdoor advertising on
billboards, and that Sec. 897.30(b) applies to all outdoor signage,
including signage on the exterior of retail establishments that sell
tobacco, and conceivably even to advertising on buses, taxis, and other
vehicles that might venture within the 1,000-foot zone.
    Another comment stated that FDA should consider regulations that
eliminate tobacco advertising via traveling vans and trailers because
trailers and vans are mobile billboards and can be strategically placed
to gain maximum exposure among young people.
    FDA agrees that Sec. 897.30(b) applies to more forms of advertising
media than does the tobacco industry code (i.e., all outdoor
advertising, not just billboards). FDA's regulation restricts all
outdoor advertising of tobacco products, including, but not limited to,
billboards, posters, and placards. However, the intent and purpose of
Sec. 897.30(b) is not
[[Page 44504]]
to prohibit signage on taxis and buses that are not located in, but may
pass through, the school or play zone. Such signage is usually
temporary or transient and does not present the same concern of a
permanent sign.
    (37) Several comments questioned the factual basis for the proposed
ban on outdoor advertising of cigarettes and smokeless tobacco within
1,000 feet of schools and playgrounds and stated that ``employee''
experience is not a sufficient basis. One comment argued that FDA
should give little weight to employee experience in light of the fact
that cigarette manufacturers submitted expert testimony that children
and adolescents pay relatively little attention to billboard
advertising at any distance. In addition, some comments argued that
FDA's analysis related solely to billboards, and that it had presented
no evidence or analysis justifying a ban on store signage. Finally,
several comments stated that the agency failed to take into account the
``visibility'' of the outdoor advertising. These comments suggested
that any regulation must take into account whether obstructions exist
(e.g., trees, winding roads, signage placed facing away from the
prohibited area).
    The agency disagrees that it has not provided an adequate basis for
its proposed regulation. In addition to the analysis provided by the
agency in its March 20, 1996, Federal Register document, the agency
received two comments during the comment period with evidence regarding
this issue. A professor of biophysics and optometry stated that he
believed that there was a rational and quantitative basis for deciding
on a given distance if that distance was to be based on the visibility
of words on a billboard. Specifically, he stated that children and
adolescents typically have 20/15 visual acuity. Therefore, it is
possible, using a mathematical formula using a right-angled triangle
and the definition of the tangent trigonometric function to compute the
distance at which words are visible. He computed the distances from
which it would be possible to see both words 1 foot high and 2 feet
high. In addition, he computed the distances for a ``normal'' visual
acuity of 20/20. If one were to average these numbers, the result would
be approximately 1,200 feet, which could be rounded to 1,000 feet.
                                Table 1a.
------------------------------------------------------------------------
                           1-foot high letters      2-foot high letters
------------------------------------------------------------------------
20/15 vision             917 feet                 1,833 feet
20/20 vision             687.8 feet               1,376
------------------------------------------------------------------------
    (38) Another comment reminded the agency that two separate laws
passed by Congress had provided for a 1,000-foot zone around schools as
a means to protect youngsters from dangerous and unsafe behavior. The
Controlled Substances Act (21 U.S.C. 860) provides additional penalties
for anyone distributing or manufacturing drugs within 1,000 feet of
schools, playgrounds, and universities, and 18 U.S.C. 922 prohibited
possession of a firearm within 1,000 feet of schools. \202\ Moreover,
the comment contained scores of pictures of advertising billboards and
signs within 500 and 1,000 feet of school and playgrounds as well as
statements by children indicating that the signs are ubiquitous and
attractive. The pictures and statements may only be anecdotal evidence
of the proliferation of tobacco advertising near schools and
playgrounds, but the number of children who provided pictures in such a
short period of time indicates that the problem of advertising in
proximity to schools and playgrounds is not isolated.
---------------------------------------------------------------------------
    \202\ Although this statute was overturned in United States v.
Lopez, 115 S.Ct. 1624 (1995), as inappropriate under the Commerce
Clause, the congressional determination that 1,000 feet was an
appropriate distance was not disturbed.
---------------------------------------------------------------------------
    Moreover, the agency also disagrees that it has no basis for
including other outdoor signage, including signs on stores, in the
regulation. The agency provided evidence in the administrative record
and comments refer to evidence, \203\ which showed that in a test area,
those stores within 1,000 feet of schools had a significantly greater
percentage of windows covered with tobacco signs than those further
away. Moreover, the two RJR memoranda by sales representatives,
described in section VI.D.3.d. of this document, mention the importance
of supplying stores near high schools with ``young adult'' material.
---------------------------------------------------------------------------
    \203\ Rogers, T., E. C. Teighey, E. M. Tencoti, J. L. Butler,
and L. Weiner, ``Community Mobilization to Reduce Point-of-Purchase
Advertising of Tobacco,'' Health Education Quarterly, 1995, in
press.
---------------------------------------------------------------------------
    This provides sufficient support for the agency's concern with
signage on stores near schools. Young people are more likely to
frequent stores near schools, especially older adolescents, and these
venues should therefore be free of advertising for tobacco products.
    The agency also finds that it cannot address the comments' concerns
with obstructions. It would not be possible to qualify a regulation to
account for the fact that trees may obstruct a sign when they are in
full bloom but not in winter, or that children may be able to see
signage as streets wind or that face away from the school or playground
as they walk to and from school. The line that the agency has drawn is
narrowly tailored (see Board of Trustees of State University of New
York v. Fox 492 U.S. at 480) and consistent with how a standard needs
to be crafted for it to be enforceable.
    Finally, FDA finds that the expert testimony referred to in the
industry comment that indicates that young people do not pay attention
to billboards is contradicted by other evidence in the record. The
Roper Starch study mentioned in section VI.D.3.d. of this document,
submitted by RJR, reported that 51 percent of 10 to 17 year olds
surveyed reported that they had seen or heard of Joe Camel from a
billboard advertisement. For this reason, FDA is not accepting the
suggestion in the comment.
    (39) A number of comments from the tobacco and outdoor advertising
industries stated that the tobacco industry had adopted a code in 1990,
which encouraged all billboard companies to establish and manage a
program to prohibit alcohol and tobacco advertisements within 500 feet
of places of worship and primary and secondary schools. They noted that
over 16,000 billboards nationwide have been voluntarily identified as
``off limits'' for these categories of advertising. As a consequence,
the comments asserted that Government action is unnecessary.
    One of the comments stated that the fact that members of an
industry have elected to submit to a code of advertising practices does
not make it reasonable for the government to impose mandatory
advertising restrictions backed by criminal sanctions. It stated that
private parties may voluntarily take actions that the Constitution
forbids the Government to mandate. The comment argued that few
industries would risk any self-regulation if their decision to do so
might establish a predicate for even greater Federal regulation.
    Conversely, several comments raised concerns about the voluntary
code and cited numerous examples of violations that continued after the
sponsors and the billboard companies had been informed of the
violations. One
[[Page 44505]]
comment stated that a survey found that in California tobacco
advertising is more prevalent at stores within 1,000 feet of schools
than at stores farther from schools. The comment asserted that
statewide findings also revealed that there is more exterior store
advertising in areas where at least 30 percent of the neighborhood is
18 years old or younger, and that the advertisements are placed near
the candy or at a child's eye view (3 feet or below).
    The agency is aware that the Code of Advertising Practices has not
been uniformly observed, as several comments pointed out. Moreover, the
industry code is significantly less inclusive than the proposed
regulation as it covers only billboard advertising and not other forms
of outdoor advertising such as posters and placards. These other forms
are likely to be placed near retail establishments and in some cases,
according to comments, have appeared on school fences. The agency finds
that all outdoor advertising must be included in the regulation in
order to provide comprehensive coverage. There is little difference
between a billboard and a large poster to a child. Both are
advertisements, and both are visible, so that children see them as they
go to and from school and play.
    In addition, the Code prohibits outdoor advertising only within 500
feet of schools, an area only a block or a block and a half from the
school (there are 10 to 12 city blocks to a mile). One block will not
provide sufficient protection as it would not cover the areas where
many children congregate with their friends. Moreover, a child's vision
does not stop at one block from school. A prohibition of 1,000 feet
will ensure the absence of signs for 2 to 3 blocks from a school or
playground which can be seen from these locations where children spend
a significant amount of time each day. (Several comments stated that
FDA had misused its math to calculate block distances in its March 20,
1996, Federal Register document (61 FR 11349).) If the misstatement
caused any confusion, the agency regrets it but does not believe that
the one-half block difference undermined the rationale.)
    (40) One series of comments supported FDA's 1995 proposal, stating
that the restriction on billboards near schools should not be
compromised, nor the distance reduced.
    A number of comments argued that the proposed regulation did not go
far enough. One comment recommended excluding outdoor tobacco
advertising from neighborhoods where children live. Another comment
stated the belief that the ban on billboards should be at least double
the proposed 1,000 feet from schools, while others argued that outdoor
advertising should be prohibited completely.
    These comments stressed the importance of billboards and other
outdoor advertising in creating cigarette brand awareness among
children. For example, one comment discussed the results of a survey
conducted for Advertising Age, which showed that 46 percent of children
8 to 13 years old said they most often saw cigarette advertising on
billboards, outpacing magazines. It stated that 34 percent of children
14 to 18 years old cited billboards as the predominant advertising
medium for tobacco products. \204\ The comment stated further that all
billboards, regardless of placement, are seen by significant numbers of
children, therefore, it clearly makes sense that, as a means to protect
children from tobacco advertising, such advertisements should be
prohibited from billboards and other outdoor advertisements. The
comment emphasized its point by quoting from the billboard industry's
own marketing material (``Outdoor: It's not a medium, it's a large''),
``You can't zap it. You can't ignore it * * * It asks little time, but
leaves a long impression.'' The comment stated that the same
publication notes, ``Outdoor is right up there. Day and night. Lurking.
Waiting for another ambush.''
---------------------------------------------------------------------------
    \204\ Levin, G., ``Poll Shows Camel Ads are Effective With Kids;
Preteens Best Recognize Brand,'' Advertising Age, p. 12, April 27,
1992.
---------------------------------------------------------------------------
    One tobacco company presented evidence of the effectiveness of
billboards in bringing tobacco advertising to children. RJR, in its
comment on the 1995 proposed rule, as stated in section VI.D.3.d. of
this document, attached a study conducted for it to test children's
recognition of advertising characters and slogans (Roper Starch study).
This study involved 1,117 children 10 to 17 years of age, with 86
percent of them recognizing Joe Camel using aided and unaided recall.
When asked where they had seen Joe Camel, 51 percent said on
billboards. \205\ That amount of recall shows that billboards represent
a very effective advertising medium and belies the industry's assertion
that billboards are not an effective source of advertising information
for children.
---------------------------------------------------------------------------
    \205\ ``Advertising Character and Slogan Survey,'' pp. 10, 22.
---------------------------------------------------------------------------
    Finally, one comment from a public interest group warned that, the
more complex a rule is, the more difficult enforcement becomes. It
stated that spacing limitations, such as the proposed 1,000-foot zone
around schools, begs a series of questions, for example: How is that
distance measured, from what point to what point. It stated that these
questions would make it virtually impossible for citizens to play an
active role in enforcing this rule. The comment stated that without
citizen participation, billboard control is extremely difficult, and
that this situation has, in fact, contributed to the industry's
disregard for local and State billboard control laws.
    The agency finds that the comments, as well as the evidence spelled
out in the 1995 proposal, have provided ample support to establish that
outdoor advertising has a significant impact on children and
adolescents. While the comments have presented significant evidence in
support of a ban on all outdoor advertising, the agency is not
convinced that a ban or a restriction on tobacco advertising of more
than 1,000 feet would be appropriate. As discussed elsewhere in this
document, the agency is requiring that all permissible outdoor
advertising be in a black and white, text-only, format. Therefore, some
of the concerns raised by the comments requesting a complete ban on
outdoor tobacco advertising or of expanding the ban are addressed by
that provision. Moreover, the agency's regulations are an attempt to
balance the rights of adults to receive information about a legal
product with its desire to protect children from the unavoidable appeal
of advertising. Thus, although the line could be drawn elsewhere, the
agency finds that the 1,000 feet limitation should ensure adequate
protection from visible advertising where children spend a significant
amount of time but will permit adults to get information.
    (41) One comment stated that FDA's action violated the APA because
the agency offered no evidence in support of its claim that children
spend a great deal of time in areas as far as 1,000 feet from the
places specified in Sec. 897.30(b). It added that the justification for
text-only advertising undercuts FDA's justification for its 1,000-foot
ban.
    Another comment stated that although tobacco product advertising is
disseminated through a broad spectrum of media, outdoor advertising is
the only such medium that is subject to additional specific
prohibitions under the 1995 proposed rule beyond the
[[Page 44506]]
prohibitions applicable to all tobacco product advertising. It stated
that the record does not contain evidence that would establish either
that these prohibited outdoor advertising signs are viewed more often
by minors than other advertising media, or that outdoor advertising in
general has a greater impact on minors than other media. There is
nothing, the comments argued, that indicates that the mandatory content
restrictions and affirmative disclosure requirements imposed by the
proposal would be less effective in outdoor advertising of tobacco
products than when such an advertisement is placed in a rock and roll
magazine, or in an exempt publication with 1 million adolescent
readers.
    One of the comments stated that because the text-only requirement
itself is intended to render the advertising unattractive to young
people, the additional ``protection'' offered by the 1,000-foot rule
would be wholly gratuitous.
    Several comments argued that there is no proof that this additional
area of ban will reduce any teenager's desire to use tobacco: a desire
that has withstood the ban of TV and radio advertisements and a massive
educational program. The comment stated that the 1,000-foot rule seems
particularly gratuitous in view of the fact that it would ban
advertising that FDA, by virtue of its proposed text-only requirement,
already has stripped of the features FDA deems make it appealing to
young people.
    FDA disagrees with these comments. The agency's bases for the text-
only requirement for billboards and for the 1,000-foot ban are
reasonable and supportable, and they are not in conflict. The text-only
format requirement will reduce the appeal of cigarette and smokeless
tobacco product advertising to persons younger than 18 years of age
without affecting the information conveyed to adults (60 FR 41314 at
41335). It is an attempt to narrowly tailor the restriction by
balancing the need to restrict advertising's appeal to children with
the preservation of the informational function of advertising for
adults.
    The prohibition on outdoor advertising within 1,000 feet of schools
and playgrounds is designed to address a different problem. The concern
is not the appeal of the advertising. If the problem were only appeal,
the 1,000-foot restriction would not be necessary because the text-only
requirement would eliminate this concern. The concern is the nature of
billboards themselves. Billboards near schools and playgrounds ensure
that children are exposed to their messages for a prolonged period of
time. As the Supreme Court recognized in Packer Corp. v. Utah, 285 U.S.
105, 110 (1934), billboards are seen without the exercise of choice or
volition, and viewers have the message thrust upon them by all the arts
and devices that skill can produce. This is particularly true of
billboards that are readily visible (i.e., within 1,000 feet) when
children play or study at a playground or school, places where by
design children spend a lot of time, or when children walk to and from
a school or playground. Confronted daily and unavoidably with the
advertised message, even in text-only, a child gets a sense of
familiarity, normalcy and acceptability of the message and the product
that is advertised.
    (42) Several comments stated that placing a circle with a radius of
1,000 feet drawn from the perimeter of each school and playground would
establish a ``forbidden zone'' that would be at least 2,000 feet in
diameter (i.e., over one-third of a mile). They stated that in many
communities, this would be tantamount to a de facto ban, for there
would be virtually no outdoor location that could escape the rule's
prohibition.
    Several comments pointed out that even if advertisers wanted to
disseminate advertisements on billboards that complied with the FDA
proposal, there would be virtually no locations where such outdoor
advertising signs could be located in some cities. They submitted
results of computer assisted surveys of nine cities showing the areas
where outdoor advertising of tobacco products would be allowed under
the 1995 proposal. The survey showed that outdoor tobacco advertising
would be prohibited in 94 percent and 78 percent of the respective land
mass of Manhattan and Boston under the proposal. The comment stated
that this range approximates the high and low percentages that could be
anticipated in other metropolitan areas in the United States. Moreover,
when it correlated the data collected from the study and other data
regarding the actual location of billboards, the comment found that,
even under the most expansive view, not a single billboard in Manhattan
(including the commercial corridor of Times Square), and no more than
24 actual billboard locations in the entire city of Boston, would be
permitted to display tobacco advertisements.
    The comment stated further that even if the rule permits a few
locations where tobacco advertising would be allowed in a given
municipality, there is no commercial utility in a limited number of
outdoor advertising signs where the location of the advertisement is
dictated by the 1,000-foot rule, rather than by market demographics and
vehicle circulation. According to the comments, these latter factors
are what actually control billboard placement. It concluded that, as a
practical matter, FDA's proposed outdoor advertising restrictions would
eliminate billboards as a medium for tobacco advertising even in those
jurisdictions where a small number of such signs theoretically would be
available.
    FDA has carefully considered the possibility that its restrictions
effectively outlaw outdoor advertising in most urban areas. The agency
has concluded, however, that if this situation comes to pass, it would
be a consequence of the density of population in cities. FDA's intent
in adopting Sec. 897.30(b) is to restrict the accessible and intrusive
communication of information about cigarettes and smokeless tobacco to
children and adolescents at school and at play. It was not to provide
for distances that would have the effect of banning outdoor signs from
urban areas. By limiting the restriction to 1,000 feet, FDA has tried
to make it no more extensive than necessary to achieve its intended
end. FDA has considered the cost of its restriction but concludes that
a narrower restriction would not adequately advance its purpose of
protecting young people from unavoidable advertising in settings in
which they are essentially a captive audience.
    The 1,000-foot restriction on outdoor advertising will serve to
remove what has been shown is an effective means for tobacco companies
to communicate with young people in a direct and unavoidable manner.
Eliminating such billboards will thus mean eliminating a means by which
the industry has influenced young people to engage in tobacco use
behavior. Therefore, the agency concludes that Sec. 897.30(b) is a
necessary part of its effort to reduce underage use of tobacco
products.
    Several comments from the tobacco industry and from retailers
pointed out that Sec. 897.30(b) would prevent retail establishments
within the 1,000-foot zone from informing potential customers that
tobacco (or particular brands thereof) are available for purchase
therein and at what prices. These comments stated that this restriction
not only would hurt the retailers but would increase, in turn, the
[[Page 44507]]
search costs for adult smokers. The comments stated that retailers in
the small slivers of a city in which outdoor advertising would continue
to be permitted would be afforded an unfair competitive advantage.
    One comment added that convenience stores located within 1,000 feet
of a school or playground would not even be able to put a small black
on white placard on top of a gas pump that merely indicates the price
of tobacco, but that a billboard across the street and located a little
over 1,000 feet away from the same school or playground could carry the
brand name of a tobacco product in black letters as tall as the store's
front door. The comment urged FDA to recognize this distinction.
    The agency acknowledges that some retailers may be prohibited from
placing advertising concerning tobacco products on or around their
retail establishments, while others, perhaps just across the street,
can. Any minimum distance that the agency establishes will preclude
some retailers from outdoor advertising at their retail establishments
but not others. However, FDA has determined that it is necessary to
keep outdoor advertising away from areas where children are likely to
congregate daily.
    FDA notes that the Supreme Court cases that have considered
restrictions on speech have recognized that such restrictions may not
be perfectly tailored, see, e.g., Board of Trustees of State University
of NY v. Fox, 492 U.S. at 479. Thus, while in a few instances there may
be inequities created by the line FDA has drawn, because there is a
reasonable fit, as explained in section VI.E.1. of this document,
between FDA's ends and the restrictions that it is adopting, these
minor problems do not doom FDA's rule (Id. at 480).
    FDA's prohibition on signage on stores within 1,000 feet of schools
and playgrounds will advance the agency's interest in protecting the
health of children. Several of the studies submitted with comments
showed that there is more signage in and around stores near schools and
playgrounds than in stores generally. The ban on outdoor advertising
within 1,000 feet of schools and playgrounds will ensure that signage
near schools will be removed and thus minimize any sense of familiarity
that would develop.
    Thus, even though the agency has carefully considered these
comments, it concludes that it is appropriate to establish a minimum
distance from schools and playgrounds within which all outdoor
advertising is prohibited.
    (43) A number of comments argued that the prohibition on tobacco
billboards within 1,000 feet of schools violates the Commerce Clause as
recently interpreted by the Supreme Court in United States v. Lopez,
115 S.Ct. 1624 (1995). In Lopez, the Supreme Court held that Congress
lacked the power under the Commerce Clause to criminalize the
possession of a gun within 1,000 feet of a school. One comment argued
that the Congress's commerce power only permits it to regulate, for
example, the interstate transit of advertisements, but that once the
advertisement is within a state, it is private property and not subject
to regulation under the Commerce Clause.
     The agency disagrees. Under the Commerce Clause, Congress may
``regulate those activities having a substantial relation to interstate
commerce, * * *, i.e., those activities that substantially affect
interstate commerce.'' (See Lopez, 115 S.Ct. at 1629-30 (citation
omitted).) As the Supreme Court noted in Lopez, ``the 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'' (Id. at 1634; see also id. at 1640 (Kennedy, J.,
concurring)). As all advertising is inherently commercial in that it
proposes a sale, the placement of tobacco billboards in a local school
zone is economic activity that does substantially affect interstate
commerce because it affects the demand for tobacco and smokeless
tobacco. That the advertisements are private property after
transportation in interstate commerce does not alter this analysis.
Indeed, ``[a]ctivities conducted within State lines do not by this fact
alone escape the sweep of the Commerce Clause. Interstate commerce may
be dependent upon them.'' (See United States v. Rock Royal Co-op.,
Inc., 307 U.S. 533, 569 (1939); see also Wickard v. Filburn, 317 U.S.
111, 127-28 (1942) (holding that, under Commerce Clause, Congress could
control farmer's production of wheat for home consumption because
cumulative effect of such consumption by many farmers might alter
supply and demand in interstate wheat market).) As such, regulation of
the placement of billboards advertising tobacco products does not
violate the Commerce Clause. \206\
---------------------------------------------------------------------------
    \206\ Moreover, cigarettes and smokeless tobacco products are
nicotine delivery devices. Congress plainly provided for medical
devices to be federally regulated as indicated by the provision
allowing seizure of devices without proof of interstate shipment
(section 304 of the act) (21 U.S.C. 334)) and by a presumption that
devices are in interstate commerce (section 709 of the act (21
U.S.C. 379)).
---------------------------------------------------------------------------
    (44) A number of comments argued that Sec. 897.30(b) would violate
the First Amendment. These comments argued that, given the requirement
for black text-only on a white background, the restriction on
billboards within 1,000 feet of schools and playgrounds would not
directly and materially advance a substantial government interest. The
comments also argued that the billboard restriction could not be
considered to be narrowly tailored. One comment from a public interest
group, however, argued that FDA's proposal is fully constitutional
because it is much more limited than the restrictions on billboards
upheld in Penn Advertising v. Mayor and City Council of Baltimore, 63
F.3d 1318 (4th Cir. 1995) vacated, remanded 64 U.S.L.W. 3868 (U.S. July
1, 1996), and Metromedia, Inc. v. San Diego, 453 U.S. 490 (1981). The
comment pointed out that in Metromedia, Inc., the Supreme Court held
that the City's interest in traffic safety and aesthetics were
sufficient to justify a ban on commercial outdoor advertising (453 U.S.
at 551, n. 23). Here, the comment said, the interest that FDA has
asserted is more weighty.
    FDA disagrees with the comments that argued that Sec. 897.30(b)
violates the First Amendment. As explained, this restriction does
advance FDA's interest beyond what is accomplished by the text-only
restriction. As explained in sections VI.B. and VI.D. of this document,
the regular exposure of children to tobacco advertising, even in text-
only form, builds a sense of familiarity and acceptability that,
reports and studies say, contributes materially to the decisions of
young people to experiment with and use tobacco products. Thus
restrictions that eliminate such exposure will eliminate one factor
that contributes to the process by which children and adolescents
decide to smoke or use smokeless tobacco and, consequently, will
directly advance FDA's interest.
    Moreover, the restriction that FDA is adopting is narrowly tailored
to advance its interest. FDA's concern is with the advertising that can
be seen from schools and playgrounds, the place at which children and
adolescents spend a significant amount of time each day. Three blocks
or 1,000 feet is about the distance at which signs are readily visible.
Thus, FDA has restricted outdoor advertising within this distance of
schools and playgrounds.
[[Page 44508]]
    The result of FDA's restriction is that children will not be
confronted with tobacco advertising as they study and play, and thus
there will be a corresponding reduction in the ability of tobacco
advertisers to create the impression of acceptance and familiarity that
is influential with youngsters. Consequently, there is a reasonable fit
between FDA's interest in protecting the health of children and the
restriction on outdoor advertising that it is adopting (see City of
Cincinnati v. Discovery Network, Inc., 507 U.S. at 416; Board of
Trustees of State University of New York v. Fox, 492 U.S. at 480).
    Thus, FDA concludes that, in fashioning the restriction on
billboards, it has fully met its obligations under the First Amendment.
    In summary, FDA finds that Sec. 897.30(b) will contribute in a
direct and material way to reducing underage tobacco use. The evidence
establishes that billboards are one of the most effective forms of
advertising for young people, and that their elimination near schools
and playgrounds will directly and materially advance FDA's goals.
    Studies--A Roper Starch survey submitted by R. J. Reynolds found
that billboards were the most mentioned source of information about Joe
Camel for children (see section VI.D.3.d. of this document), and a
study conducted for Advertising Age (April 27, 1992) discussed in this
section showed that 46 percent of children 8 to 13 and 34 percent of
children 14 to 18 said that billboards are a predominant form of
advertising for tobacco.
    Advertising Theory--Billboards near schools and playgrounds give
the child a sense of familiarity, normalcy, and acceptability of the
message on the product. Therefore, regulation of the format and even
the location of some billboards and other outdoor signs within 1,000
feet of a school or playground, is essential. As discussed in this
section, comments submitted in this rulemaking include photographs that
evidence the intrusive effect of billboards and signage around schools
and playgrounds.
    Evidence of Children's Visual Range--Data provided by a professor
of biophysics and optometry, detailed in this section, support a
finding that 1,000 feet is an appropriate distance to remove signage
that would be visible and readable to students.
    Congressional Finding--As detailed in this section, Congress
mandated a 1,000 foot drug free zone around schools and playgrounds
(Controlled Substances Act (21 U.S.C. 860)) as an appropriate area in
which to protect young people from drug dealing near schools and
playgrounds.
    Finally, the agency has tailored the ban as narrowly as possible by
defining playgrounds narrowly and, as noted above, by restricting the
area of the ban to that consistent with children's visual range.
4. Section 897.32(a)--Text-Only Format
    Under proposed Sec. 897.32(a), cigarette and smokeless tobacco
product labeling and advertising, as described in Sec. 897.30(a) and
(b), would be required to use black text on a white background and
nothing else. The agency tentatively concluded that this text-only
requirement would reduce the appeal of cigarette and smokeless tobacco
product labeling and advertising to persons younger than 18 years of
age and preserve advertising's informative aspects--that is, to provide
useful information to consumers legally able to purchase these
products.
    In response to comments, the agency has decided to permit another
exception to the requirement that all permissible advertising appear in
text-only. Thus, it has created an exception for advertising in adult
facilities that meet the criteria of Sec. 897.16(c)(2)(ii) provided the
advertising is affixed to the wall or fixture in the facility and is
not visible from outside the facility. FDA has added this provision, as
paragraph (a)(1) of Sec. 897.32 and renumbered the exception for adult
publications as Sec. 897.32(a)(2)(i) and (a)(2)(ii).
    Several comments suggested that FDA should provide an appropriate
definition of ``text-only'' for permissible audio and video
advertising, specifically static black text on a white background with
no music or sounds. Therefore, proposed Sec. 897.32 has been revised in
consideration of comments received. A new Sec. 897.32(b) has been added
to provide guidance for audio/video advertising. Proposed
Sec. 897.32(b) has been redesignated as (c), and proposed
Sec. 897.32(c) and (d) have been eliminated. New Sec. 897.32(b) has
been added to provide explicit format requirements for one form of
permissible advertising that had been left out of the proposed
regulation. \207\
---------------------------------------------------------------------------
    \207\ In addition to the substantive changes made to
Sec. 897.32, the following changes in language have been made: (1)
Addition of ``Except as provided.* * * section,'' to Sec. 897.32(a);
(2) addition of ``any'' to Sec. 897.32(a); (3) amended language in
Sec. 897.32(a)(2) starting with ``any publication'' and ending with
``an adult publication'' and, in the last sentence, ``an adult
publication,''; (4) two changes to Sec. 897.32(a)(2)(i) ``younger
than 18 years of age'' and ``15 percent or less''; and (5) deletion
of ``labeling'' from Sec. 897.32(c).
---------------------------------------------------------------------------
    Many comments were received specifically addressing the text-only
proposal. That children and adolescents should not use tobacco products
was the one point of agreement among them. However, many comments from
adult smokers and nonsmokers, retailers, tobacco farmers, elected
officials, and the tobacco, advertising, newspaper, and magazine
industries strongly objected to the text-only requirement. Their major
objections were that: (1) Cigarette advertising does not cause young
people to start smoking; (2) the proposed advertising restrictions
would violate the First Amendment; and (3) the restrictions would have
the effect of a virtual ban on cigarette advertising. Some comments
expressed the concern or suspicion that FDA was using this proposal,
ostensibly directed at minors, as a pretext to try to ban cigarette
advertising generally.
    In contrast, nearly three-quarters of the comments--mostly from
parents, teenagers, public health officials, teachers, doctors, public
interest groups, medical organizations, and some individuals in the
advertising business--supported the proposal for text-only
advertisements. The major reason presented for their support was the
need to eliminate the appeal for tobacco that the advertising creates
among children and adolescents. Some supporters urged even stronger
action such as a total ban on all tobacco advertising. Some comments
expressed the opinion that even though the proposed regulations may
also affect adults, any resulting reductions in smoking by adults would
not necessarily be bad.
    (45) A number of comments questioned the validity of the evidence
cited by FDA as support for the proposal. Many of these comments came
from groups representing the tobacco, advertising, and publishing
industries. These comments argued that there is no evidence that
advertising with color and images encourages use of tobacco by minors
or that advertising converts nonsmokers or nonchewers into smokers or
chewers. Moreover, these other comments argued that there is no
evidence that limiting advertisements to text-only is essential to
reduce youth smoking and that there is no evidence that black and white
text will reduce underage smoking.
    In contrast, a number of supportive comments stated that the
evidence cited by FDA, as well as studies published
[[Page 44509]]
since the proposal, demonstrate the special susceptibility of children
and adolescents to pictures, cartoons, photographs, other graphic
images and colors.
    Specifically, many comments observed that the appearance of Joe
Camel in traditional advertising forums (magazines, billboards)
attracts children and adolescents. One child wrote that his father gave
him two sports magazines. ``There were eight smoking ads in them * * *
the last one had two pictures of Joe Camel smoking. This can attract
kids to start smoking.''
    Studies cited in the preamble to the 1995 proposed rule and in
section IV.B. of this document, demonstrate the impact that images and
colors, cartoons, and pictures and other graphic material have on
children and adolescents. This does not mean that the same
characteristics of advertising do not appeal to or affect adults.
However, the effect of these techniques on children and adolescents is
magnified because of their usual level of involvement in advertising as
in everything else. \208\ As detailed more fully in section VI.B. of
this document, children and adolescents respond to stimuli that
interest them, and that provides them with information that is
important. Young people do not have the information processing skills
that adults possess, and as a result more often than not, the
information that is relevant to them comes in the form of images and
colors rather than with a lot of words. This fact provides an
explanation why 86 percent of children and adolescents smoke the three
most heavily advertised brands (all are promoted with attractive
imagery), even though they are generally price sensitive. \209\ Adults
buy generic products for price reasons or low tar brands for health
concerns. \210\ Advertising's colorful images are not as relevant to
them as cost. Given these factors, FDA finds that the text-only
requirement will significantly reduce the appeal of cigarette and
smokeless tobacco advertising to young people and reduce its influence
on them.
---------------------------------------------------------------------------
    \208\ One such study tested the effect of different forms of
advertising on children and found that they preferred pictures to
text-only. (See Huang, P. P., D. Burton, H. L'Howe, and D. M. Sosin,
``Black-White Differences in Appeal of Cigarette Advertisements
Among Adolescents,'' Tobacco Control, vol. 1, pp. 249-255; 1992.)
    \209\ ``Changes in the Cigarette Brand Preferences of Adolescent
Smokers--United States, 1989-1993,'' in MMWR, CDC, DHHS, vol. 43,
pp. 577-581, 1994.
    \210\ Teinowitz, I., ``Add RJR to List of Cig Price Cuts,''
Advertising Age, pp. 3, 46, April 26, 1993.
---------------------------------------------------------------------------
    (46) Many comments, especially from the magazine, newspaper,
advertising, and tobacco industries, stated that the proposal will
operate as a virtual ban on most types of cigarette and smokeless
tobacco advertisements. These comments argued that the text-only format
requirement will eliminate tobacco companies' ability to attract the
attention of potential customers and to convey brand messages and will
render advertising invisible to adults. Therefore, tobacco advertisers
would be far less likely to advertise in the text-only format. Also,
not having a clear standard for when the text-only requirement applies
(see also definition of adult publication) will cause tobacco
advertisers to avoid more publications than may be necessary to ensure
that they do not violate the rule. Many of these comments also argued
that advertising would become ineffective. One comment said that
advertising that passes unnoticed amounts to no advertising at all.
This comment also asserted that, as a result of the text-only proposal,
no viable alternative channels of communication would exist.
    Comments from the tobacco and advertising industry suggested that
the advertising industry would suffer revenue, profit, and job losses
as a result of the text-only format; employees involved in graphics
arts would especially be affected; and suppliers providing services and
products to advertising agencies would also be adversely affected.
    A number of comments supporting the proposal recommended a total
ban on all tobacco advertising. Many comments stated that a ban on all
tobacco advertising and marketing would be reasonable because the
tobacco industry will use any available loopholes to market tobacco
products and will test any partial ban.
    Tobacco companies will be able to continue advertising in most of
the same forums in a text-only format. Advertising with colors,
pictures, and graphics will still be allowed in adult publications.
Tobacco advertisers will still be able to convey information to adults
about taste, price, and product development using text-only
advertising. Many current advertisements for low tar cigarettes rely
heavily on text formats.
    The agency is not limiting fonts, font styles, or size of type
because it believes that the tobacco industry and its advertising firms
can use their creativity with a variety of print formats to produce
text-only advertising that will effectively communicate their messages,
including brand messages, to adults. However, the agency is also
convinced that print advertising, no matter how creative, will not be
able to provide the attractive imagery that young people look for in
advertising to explain the importance of a product to them, e.g., what
to wear, whom to hang out with, how to look cool (see discussion of the
importance of color and imagery in the introduction to this section).
    Moreover, although the restriction to text-only advertisements may
tend to solidify market position, it will not give any one company new
competitive advantage over another since all companies must play by the
same rules. Thus, the economic impact of the rule on the advertising
business will be mitigated by a shifting of resources to create new
advertising in compliance with the rule and to advertising for other
businesses (see section XV. of this document entitled ``Analysis of
Impacts'' for more information).
    The agency does not support a total ban on all tobacco advertising
as was suggested by a number of comments. The agency has been able to
tailor the restrictions that it is adopting, by requirements such as
the text-only advertisements requirement, to eliminate the appeal of
tobacco advertising for children and adolescents while still allowing a
means for companies to communicate with adult tobacco users. The use of
text-only will mean that there can be continued advertising that is
less likely to attract young people but that can convey information to
adults.
    (47) Several comments stated that limiting point of sale
advertising to text-only would effectively ban point of sale
advertising and impair retailers' ability to market tobacco products to
adult customers.
    Many comments noted the places one sees (and placement of) Joe
Camel at point of sale, the nature of the items on which his image
appears, and his ubiquitousness in and around stores, as evidence of
the intent of at least one tobacco company to try to attract young
people. A physician commented that he:
    recently was returning from an evening [of] helping to care for
[a] patient who was dying of emphysema [a lung ailment caused by
cigarette smoking]. I decided to stop at a convenience store * * * I
was confronted with no less than 14 advertisements for cigarettes.
From the Camel Joe sign beckoning in the parking lot * * * a
customer is bombarded with ads urging them to buy cigarettes.
    Another comment stated that ``advertisements on convenience store
doors are placed well below adult eye-level and features such popular
advertising cartoons as Joe and
[[Page 44510]]
Josephine Camel. It seems counter-intuitive to assume that such
advertising is intended for adults.'' Another comment stated, ``Tobacco
companies say they do not want to entice our children to smoke, then
why are Joe Camel ads above the candy counters?'' One comment noted
that at a major retailer near the commenter's neighborhood, Joe Camel
posters are right behind an exhibit of pogs, a popular children's
collectible toy.
    Manufacturers and retailers are not prohibited from promoting
tobacco products at the retail level. Adult consumers looking for price
and product information about cigarettes and smokeless tobacco will be
able to find that information by searching even without the images to
attract them. Text-only point of sale advertising, like magazines or
billboards, will be effective in communicating this information. Thus,
FDA is not banning point of sale advertising.
    While text-only point of sale advertising can be effective with
adults, it will have less allure and be less appealing to children and
adolescents. Children and adolescents, who are less willing to process
print information in a leisurely setting (such as reading a magazine),
will not find textual material appealing in the momentary time setting
of a retail purchase.
    (48) A comment from an advertising industry association stated
that:
     * * * FDA's prohibition on all direct mail promotion of tobacco
products except for ``tombstone'' messages * * * is even more
onerous than that imposed on publications, since at least some
publications will be permitted to carry non-tombstone advertising.
The disparate treatment of direct mail exposes the real purpose of
the FDA to censor messages to adults, because that medium by
definition can be addressed to a specific audience, i.e., adults,
with little risk of inadvertent viewing by minors.
This comment also noted that this form of direct advertising is not
insignificant to the industry and given the small likelihood of youth
access to it, should not be severely restricted. The comment noted that
total industry spending on direct mail advertising was $33 million in
1993.
    Some comments from mail-order firms noted that the text-only
requirement would adversely affect catalogs for tobacco and related
products, making them less appealing and less effective for marketing
to adult smokers. One comment from the owner of a small (55 employees)
tobacco products manufacturing business said the text-only requirement
for its catalog, along with several other aspects of the 1995 proposed
rule, would destroy his business:
    It offends me as a good American running a clean, honest
business that a cadre of bureaucrats in Washington, DC would propose
a rule that could ruin my life's work. FDA has given no more thought
to the impact on my business than I might give to swatting a
mosquito.
    A supportive comment stated that the tobacco industry has made
increasing use of direct mail promotions, including contests,
questionnaires, coupons, offers, and even birthday cards. It stated
that no company can be certain its mailing lists do not include minors.
In a 1993 survey of 12 to 17 year olds, 7.6 percent indicated they had
received mail personally addressed to them from a tobacco company. This
could project out to 1.6 million persons aged 12 to 17. This comment
noted that a major tobacco company sent free packs of cigarettes to
people on its mailing list as a holiday present ``from the Camel
family'' and has not changed its practice despite the fact that as many
as 1.6 million 12 to 17 year olds could be on tobacco company mailing
lists.
    Direct mail is a high involvement medium, that is, it requires the
recipient to study the text in order to get the central message. In
those circumstances, text-only can be effective with recipients who
have an interest in the offer. There is less of a need to attract a
consumer's attention with a direct mail promotion, including a catalog,
than with a point of sale or magazine advertisement. A consumer opening
a direct mail promotion he/she is interested in is in a high-
involvement mode and is prepared to read the enclosed material and
catalog. Although the material may be more easily ignored, current
tobacco users who want to buy by direct mail can get the information
from textual material.
    Mailings in text-only to current customers and to other adult
smokers are permitted under the rule. On the other hand, if a direct
mail promotion or catalog is seen by a child, the text-only format
would make it much less appealing and less interesting. This is
especially important since there is evidence that as many as 1.6
million children aged 12 to 17 receive direct mail tobacco promotions.
Thus, text-only direct mail is important to accomplish the purpose of
this rulemaking. Moreover, contrary to being censorship, as some
comments stated, the text-only format for direct mail will allow
advertisers to send adults an encyclopedia of information about any
aspect of smoking or tobacco products while protecting children from
the effects of advertising.
    Although direct mail catalog advertising will be less interesting,
sales should only be minimally affected. As the final rule does not
include a prohibition on mail-order sales, the only restriction will be
the text-only format. In addition, this should be less of an impediment
than a total ban to small mail order company owners such as the
commenter.
    This compromise represents the agency's attempt to narrowly tailor
its rule. Based on comments received from the industry, most mail-order
customers purchase tobacco products for price, convenience, and
uniqueness and to stockpile a long term supply. The agency believes
that creative and effective advertising for adults can be designed in
the text-only format for catalogs, especially for catalogs targeted to
consumers purchasing tobacco products for these reasons. Therefore, FDA
is not exempting direct mail promotion of tobacco products from the
text-only requirement.
    (49) One comment suggested that FDA create an exception for direct
mail similar to that for publications. The comment said that direct
marketers can target mailings so that children and adolescents are
protected to, at the very least, the same degree that the regulations
provide for the publishing industry.
    FDA has considered this request but finds that it cannot grant it.
The agency based the threshold for publications on the ground that
publications with youth readership of less than 15 percent are not of
interest to young people and thus would be unlikely to be read by them.
The same cannot be said of direct mail advertisements that come
addressed with the child's name on it. (As explained in this section,
surveys show that a significant portion of tobacco direct mail
advertising is sent directly to individuals under the age of 18.) The
appearance of the child's name in the address will cause the child to
look at the advertisement and thus will cause the message to be thrust
on the child in a manner similar to messages on billboards or point of
purchase (see Packer Corp. v. Utah, 285 U.S. 105, 110 (1934)). Thus,
direct mail advertising is more similar in nature to billboards and
point of purchase advertising than are publications. Consequently, as
with the former types of advertising, FDA has concluded that to reduce
the appeal of direct mail advertising to those youngsters who view it,
it is appropriate
[[Page 44511]]
to require that this type of advertising be in the text-only format.
    (50) A few comments said that in the same way the agency attempted
to carve out an exception for publications with primarily adult
readers, it should permit a similar exception for advertising in bars,
clubs, etc., with customers over 21 years of age.
    The agency agrees with these comments. The agency recognizes the
need to precisely tailor its regulations and thus, has created an
exception for advertising in adult only (18 years of age and older)
facilities permitted to sell tobacco products from vending machines and
self-service under Sec. 897.16(c)(2)(ii). These facilities, which are
required to ensure that no one under the age of 18 is present, or
permitted to enter, the facility at any time, may display permissible
advertising, i.e., with color and imagery, provided that the
advertising is not visible from outside the facility and is affixed to
a wall or fixture within the facility. These conditions will ensure
that the advertising does not become a surrogate for outdoor
advertising and is not carried from the facility.
    (51) The agency received some comments from opponents and
supporters of the 1995 proposed rule that stated that this provision
might be counterproductive and result in increased demand for
cigarettes and smokeless tobacco by minors. One comment from an
association of advertising agencies stated that a reduction in spending
on cigarette advertising, resulting from the proposal, could make
cigarettes less expensive and increase demand for these products. In
contrast, another comment from a tobacco company stated that reduced
competition due to the text-only restrictions could lead to price
increases for some brands which would harm the adult purchasers of
those brands.
    Some comments stated that the health warnings in cigarette
advertising would become less effective in the proposed text-only
format. This consequence could result in fewer people giving up smoking
because of information in the health warnings. Some comments argued
that the text-only format might actually attract more attention from
minors because these advertisements would be so different from most
advertising.
    The agency finds that, on balance, the evidence does not support a
conclusion that the text-only requirement will be counterproductive.
This finding is based in part on the contradictory comments regarding
the price of cigarettes. Some comments from the advertising industry
argued that tobacco companies would use the savings from doing less
advertising to reduce the price of cigarettes, which would increase
demand especially among young people who are price sensitive. Other
comments from the tobacco industry argued that the requirement would
reduce competition, which could lead to higher prices for adult
consumers. This conflict points out the speculative, and therefore
unconvincing, nature of the claims that the restrictions will be
counterproductive.
    Also, despite concerns expressed by the tobacco industry and others
that the text-only format would make the Surgeon General's health
warning less effective, there is evidence from the focus groups
conducted by the agency that this warning is not very effective with
young people now. \211\ The text-only format will not interfere with
the ability of the Surgeon General's warning to warn adults of the
health hazards of smoking. This format will, however, reduce the appeal
to young people that advertising creates and therefore will lessen the
need for the warning for young people.
---------------------------------------------------------------------------
    \211\ Focus group report in administrative record, December 1,
1995, 60 FR 61670.
---------------------------------------------------------------------------
    The agency has considered the concern of some comments that the
text-only format will be so unlike most advertising that young people
will be attracted to it. Whatever attraction the novelty has for young
people, the agency has concluded that it should be less than the
attraction of the current imagery in tobacco advertising.
    (52) A number of comments, especially from the tobacco industry,
expressed concern about the 1995 proposed rule's adverse impact on
competition. Many comments stated that advertising is critical to
competition, brand choice, and product innovation. Comments from the
tobacco industry stated that the primary purposes of its advertising
are to promote brand competition and to maintain brand loyalty. Many of
these comments argued that the text-only format would stamp out
competition and freeze market shares. Some comments also stated that
the 1995 proposed rule would serve as a barrier to new and improved
products and product innovation, especially to products like lower tar
cigarettes.
    Although all firms will be subject to the same rules, some firms
may still gain an advantage by dominant market position or by being
more creative in their text-only advertising or more effective in their
placement of advertising. Tobacco companies will still be able to
advertise in virtually all the same forums they use now, but companies
may gain competitive advantages by developing new marketing techniques
aimed at adults that are within the rules. All industries have to adapt
to changing competitive circumstances, whether caused by government
regulations, demanded by the public, self-imposed as in professional
sports, affected by international competition and changing
technologies, or in reaction to changes in consumer preferences.
Creative companies can succeed by adapting better than their
competitors within the new framework.
    Additionally, these advertising restrictions could make it more
difficult for a new competitive tobacco company to be formed and to
enter the market. But, there are much greater barriers to entry for a
new firm in terms of the nature of the tobacco business, capital
requirements, and the existing large firms already in the business.
Nevertheless, to the extent that the regulations do produce
anticompetitive effects, these are outweighed by the public health
benefits of the rule.
    Finally, information on new products and on product innovations
need not be ``stamped out.'' This kind of information can be conveyed
in the text-only format. One example of a new product that the tobacco
industry claims might not have been developed if this rule had been in
effect is the low tar cigarette. Yet advertising for low tar brands
tends to use much more text than regular brands because the information
is factual and specific. Therefore, the agency continues to find the
text-only requirement to be an appropriately tailored remedy.
    (53) Comments offered differing views on the function of
advertising. Some stated that imagery is necessary to attract and hold
the attention of adult smokers in order to convey useful information
about the product and to effectively differentiate brands, while others
saw images as being too appealing to children. These latter comments
argued that FDA's rule is seeking to regulate only the presentation of
the advertising that attracts children (the imagery), not its content.
    One small business owner said the proposed ban on imagery would
make established advertising logos with pictures worthless, not just
for the major tobacco companies but also for small firms in tobacco
related businesses. Others stated that the 1995 proposed
[[Page 44512]]
rule is not strong enough. One comment said that FDA is mistaken in
asserting that the black and white text format removes imagery and
emotive content from the advertisement. It said that the regulation
should also limit the type styles, font sizes, and shapes of borders
and letters.
    The agency continues to believe that it has created an
appropriately tailored remedy. The tobacco and advertising industries
argue that FDA's ban on imagery and color is overinclusive and not
narrowly tailored. FDA disagrees, however. The restriction on the use
of images and color preserves informational advertising because of its
utility to adults while eliminating the aspects of advertising that are
most attractive to young people. The agency is regulating only the
manner in which advertising is presented, not the information contained
in it. Also, the agency is allowing imagery in advertising in adult
publications.
    There is undoubtedly an impact on businesses that have established
logos, pictures, and other graphics associated with their businesses or
products. However, all businesses are subject to the same requirements,
and thus no one business should receive any competitive advantage.
    The agency does not agree with comments recommending restrictions
on type styles, fonts, etc. Such a restriction on advertising is, given
the currently available evidence, more restrictive than necessary.
Text-only advertising should be sufficient to reduce the appeal of
advertising based on imagery to children and adolescents, however
creatively the text is displayed. The agency concludes that the
elimination of imagery and color directly and materially advances its
interest in protecting the health of young people by making tobacco
advertising much less appealing to them and, therefore, it makes it
less likely that they will be influenced to use tobacco products.
    (54) Several comments requested that FDA provide specific
regulation for audio and video formats. Specifically, the comments
requested that audio be confined to a text-only format appropriate for
audio (words) unaccompanied by music or sound and that video be limited
to black text on a white background only. Restrictions, such as these,
the comments continued, would apply the spirit of the text-only format
to these media. Finally, one comment expressed the concern that without
these restrictions, tobacco companies might create and disseminate
music tapes, similar to one distributed by RJR with music by ``The Hard
Pack.'' This would, the comment stated, provide aural imagery for young
people.
    The agency agrees that it should provide more specific guidance for
permissible audio and video media and that this guidance should be a
logical application of the text-only requirement. Therefore, the agency
has amended Sec. 897.32 to add a new paragraph (b), which requires
text-only black and white text in video advertising, which should be
static, and text-only, no music, in audio advertisements.
    (55) Several comments challenged FDA's proposal to limit most
advertising to the use of the text-only, black print on white
background format on the grounds that this limitation would violate the
First Amendment. These comments relied most heavily on three cases:
Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), in
which the Supreme Court struck down a restriction on the use of
pictures in attorney advertising; Shapero v. Kentucky Bar Association,
486 U.S. 466 (1988), in which the Supreme Court held that the State may
not restrict lawyer solicitations to those least likely to be read by
the recipient; and In re R. M. J., 455 U.S. 191 (1984), a case in which
the Court struck down a requirement that lawyers use a fixed format in
their advertising. One comment, however, argued that FDA's restriction
is fully consistent with the First Amendment.
    In Zauderer v. Office of Disciplinary Counsel, 471 U.S. at 647, the
Supreme Court said that ``the burden is on the State to present a
substantial governmental interest justifying the restriction * * * and
to demonstrate that the restriction vindicates that interest through
[narrowly tailored] means.'' \212\ FDA will apply this test here.
---------------------------------------------------------------------------
    \212\ Zauderer actually states ``* * * through the least
restrictive available means.'' However, in Board of Trustees of
State University of N.Y. v. Fox, 492 U.S. at 479-481, the Court
clarified this phrase as requiring narrowly tailored means.
---------------------------------------------------------------------------
    As explained in section VI.C.4. of this document, FDA has not
merely a substantial, but a compelling, interest in the health of
minors. It is this interest that led it to propose the restriction on
the use of images and color in cigarette and smokeless tobacco
advertising.
    Several comments argued, however, that the restriction on images
and color do not further FDA's interest. These comments argued that
there is no evidence that the use of color and images in advertising
increases tobacco use among young people.
    FDA has fully addressed this assertion. The available evidence
demonstrates that pictures and colors have particular appeal to
children and adolescents under 18 years of age, and that they are more
important to underage individuals than other aspects of the
advertisement. \213\ Young people pay attention to peripheral cues in
an advertisement, such as the models that appear in them, color, and
scenery, and it is these components that tobacco advertisers use to
create the images that are so important to people under the age of 18.
Thus, the restriction on images and colors will have a particular
effect on the appeal of advertisements to young people and make these
advertisements a significantly less effective means of communicating to
this group.
---------------------------------------------------------------------------
    \213\ See, e.g., Petty, R. E., and J. T. Cacioppo, Communication
and Persuasion: Central and Peripheral Routes to Attitude Change,
Springer-Verlag, New York, 1986.
---------------------------------------------------------------------------
    (56) Several comments also argued that FDA's restriction on the use
of colors and images is not narrowly tailored, pointing to the fact
that the agency proposed to eliminate the use of all visual images and
graphic designs in cigarette and smokeless tobacco advertisements.
    These comments misinterpret the rule. FDA has not restricted all
use of color and images. FDA has provided that these mechanisms may
continue to be used in publications with primarily adult readership and
in adult-only establishments. The agency has endeavored to restrict as
little speech as possible. FDA has found, however, that it could not
limit the appeal of cigarette and smokeless tobacco advertising to the
young if it did not restrict the use of image and color.
    Each of the cases relied upon by the comments is fundamentally
distinguishable from the current situation. In each of these cases, the
body seeking to restrict the advertising in question failed to present
any evidence that the restriction was addressing an actual harm (see
Zauderer, 471 U.S. at 648-649; Shapero, 486 U.S. at 479-80; (see also
Florida Bar v. Went For It, Inc., 115 S.Ct. at 2378 (``Finally, the
State in Shapero assembled no evidence attempting to demonstrate any
actual harm caused by targeted direct mail.''); In re R. M. J., 455
U.S. at 206). Here, in contrast, the record fully establishes the
reality of the harm, and that FDA's interest will be directly and
materially advanced by the
[[Page 44513]]
restriction on colors and images. For these reasons, FDA finds no merit
to these comments.
    In summary, FDA finds that the evidence amassed during this
investigation and provided by comments provides ample support for its
requirement that all forms of advertising that children see and are
exposed to can have an effect upon their attitudes about tobacco use.
    The empirical studies and surveys, expert opinion, anecdotal
evidence, industry statements, and consensus report described in
section VI.D.5. of this document implicate advertising as an important
source of information for young people's attitudes about, and use of,
tobacco products. This evidence shows that any regulation that hopes to
be successful must be comprehensive and include some type of
restriction upon all forms of advertising and promotions. FDA's
regulation provides restrictions that will contribute directly and
materially to that end but that are tailored as narrowly as possible.
Except in the limited case of outdoor advertising within 1,000 feet of
schools, no informational advertising will be disturbed. However, those
aspects of advertising that have particular appeal to young people will
be banned.
    Color and Imagery--Color and imagery are necessary ingredients for
advertising in conditions of ``low involvement,'' such as occurs when
skimming a magazine or seeing a billboard (see sections VI.B.1.b. and
VI.B.1 c. of this document).
    FDA's restriction will eliminate the color and imagery but will
permit information to be communicated. This requirement is as important
for in-store advertising, billboards, and direct mail, as it is for
traditional publications. As discussed in this section, young people
get their information and product imagery from all these sources: (1)
Point of sale advertising confronts young people when they go to make a
purchase. The imagery is as large as life and presents the child with
an enticement at the time when purchase is immediately available. It
can as effectively impart information to adults with words. (2) Direct
mail can frequently wind up in the hands of a young person or be
addressed personally to the child or adolescent. One study found that
7.6 percent of children 12 to 17 years questioned had received mail
personally addressed to them from a tobacco company (1.6 million
teens).
    Billboards--Billboards provide a major source of information about
tobacco for young people. One study published in Advertising Age (April
27, 1992), found that 46 percent of children 8 to 13 years old and 34
percent of children 14 to 18 cited billboards as the predominant
advertising medium for tobacco products (see section VI.E.3. of this
document). The Starch Survey conducted for R.J. Reynolds found that 51
percent of children 10 to 17 who recognized Joe Camel as a tobacco
mascot, reported seeing him on billboards (see section VI.D.3.d. of
this document).
    Cross-Country and International Studies--Studies described evidence
that regulations that are stringent and comprehensive will have a
greater impact on overall tobacco use and young people's use than
weaker or less comprehensive ones (see section VI.D.6.a. of this
document). The text-only requirement, while not as stringent as a ban,
will accomplish its purpose while preserving the informational function
of advertising.
    Finally, the regulation is narrowly tailored. It permits adult
publications and adult locations to display advertising with images and
colors. The agency has attempted to define these venues with as much
precision as possible but recognizes that there may be some
difficulties in application. It, therefore, has made it clear that it
will work with the industry to try to establish as clear rules as
possible. In-store, outdoor, and direct mail advertising do not lend
themselves to such tailoring. Nonetheless, the agency is confident that
adults seeking information about products can be adequately informed at
time of purchase or by mail order catalogue using text-only.
5. Section 897.32(a)--Definition of ``Adult Publication''
    The preamble to the 1995 proposed rule explained that the agency
was interested in permitting advertising in publications that are read
primarily by adults to continue to use imagery and color. For that
reason, under proposed Sec. 897.32(a), advertisements in publications
with primarily adult readership would not be restricted to a text-only
format. The agency proposed to define such publications as those: (1)
Whose readers age 18 or older constitute 85 percent or more of the
publication's total readership, \214\ or (2) that are read by fewer
than 2 million people under the age of 18, whichever method ensures the
fewest young readers. The agency defined the readership of a
publication as the total number of people that read any given copy of
that publication and stated in the preamble that it should be measured
according to industry standards and, at a minimum, by asking a
nationally projectable survey of people what publications they read or
looked at during any given time. The preamble to the 1995 proposed rule
noted that a reader is one who said that he or she read the last issue
of a publication. The 1995 proposed rule provided that before
disseminating advertising containing images and colors, it would be the
company's obligation to establish that the publication meets the
criteria for a primarily adult readership.
---------------------------------------------------------------------------
    \214\ This portion of the definition was edited in the final
rule to make the two provisions parallel. Thus, Sec. 897.32(a)(2)(i)
now reads, ``whose readers younger than 18 years of age constitute
15 percent or less of the total readership as measured by competent
and reliable survey evidence.''
---------------------------------------------------------------------------
    Numerous comments were received by the agency regarding the
exception from the text-only requirement for adult publications and the
definition of an adult publication. Comments from the newspaper,
magazine, and advertising industries were particularly critical of the
readership thresholds chosen for the definition of an adult publication
and were especially concerned about whether there would be any reliable
and practical way to determine readership levels for most publications.
Many comments from individuals who supported the text-only requirement
saw this exception as a possible loophole for the tobacco industry to
escape the text-only restrictions.
    In a notice published in the Federal Register of March 20, 1996 (61
FR 11349), the agency reopened the comment period to place on the
public record a memorandum that provided further explanation of the
agency's proposal to exempt publications with primarily adult
readership from the text-only requirement. The document provided an
additional 30 days to comment on this new information. The memorandum
stated that the agency had selected the 85 percent per 2-million
threshold based on the public perception that certain magazines are
likely to be of interest to young people under the age of 18. The
agency extrapolated from the readership percentages for those
publications to the proposed threshold levels. Data supporting this
line had been placed in the administrative record for the proposed rule
(vol. 105, document 1550) and additional readership data was
[[Page 44514]]
provided during the comment period. The agency noted additionally that
at some point the number of underage readers is so great that the
publication can no longer be considered to be of no interest to those
under 18, regardless of the percentage of the readership. The agency
selected 2,000,000 as that level. \215\
---------------------------------------------------------------------------
    \215\ See section XV. of this document, Analysis of Impacts, for
a discussion of publications that would be affected.
---------------------------------------------------------------------------
    (57) Some comments objected to the proposed readership thresholds,
calling them arbitrary and stating that FDA provided no basis, no
rational justification, and no evidence for them. One tobacco industry
comment stated that it used an FTC methodology based on readership and
the number of pages of advertising to conclude that magazines with
greater readership by minors tend to have less cigarette advertising
than other publications.
    Some comments also objected to the 2 million minor readers
threshold because it would subject some adult-oriented magazines to the
tombstone format even though their percentage of minor readers is very
low. One comment cited the following examples and readership figures:
People Magazine (3,020,000 minors: 7.8 percent of all readers) and
Better Homes and Gardens (2,042,000 minors: 5.5 percent of all
readers); Time (1,972,000 minors; 7.66 percent of all readers) and
Newsweek (1,911,000 minors; 8.01 percent of all readers) are also close
to the threshold. In addition, some comments suggested that FDA's
explanation that 2,000,000 is a large number is not adequate basis for
regulation.
    Some comments stated that the proposed thresholds were unfair to
the up to 85 percent, or more in some cases, of a publication's readers
who were adults. ``Such a regulation is inconsistent with the principle
that the government may not 'reduce the adult population * * * to
reading only what is fit for children.'''
    In contrast, comments supporting the proposal stated that just
because the line (i.e., thresholds) could be drawn differently was not
important as long as FDA can rationally explain why it drew the line
where it did. One comment suggested that FDA should require the text-
only format in the 10 most read magazines by young people in addition
to the present proposal. Some comments recommended requiring the text-
only format for advertisements in all publications.
    One comment stated that no tobacco advertising, even text-only,
should be allowed whatsoever in publications with youth readership, and
adult publications should have text-only tobacco advertisements. This
comment also said that the agency should monitor this exception to
ensure that tobacco companies don't increase advertising in national
adult publications that are widely read by the entire family including
children and adolescents and to be wary of tobacco companies creating
their own adult publications saturated with tobacco advertising.
    Other comments supporting the proposal stated that some degree of
overinclusiveness is acceptable and expected because of the
difficulties in fine-tuning any regulation. Other comments saw any
exception for any publications as a potential loophole that could be
used by tobacco companies to continue using imagery in advertising.
They said that experience in other countries with tobacco advertising
restrictions showed that ``the tobacco industry used all of its
creativity to manipulate the system to take advantage of whatever
opportunities were still available to reach their target audience,
particularly young, impressionable individuals.''
    The comments received, especially from the magazine and newspaper
industries, made clear that both defining an adult publication and
determining whether a particular publication meets the definition are
difficult issues. However, while these comments were helpful in
pointing out the difficulty of defining an adult publication, they did
not offer any realistic alternative definition in terms of a
readership-by-minors threshold. Because of the concern about tobacco
use by children and adolescents, which was voiced by virtually all
comments pro or con, the agency believes it has sufficient evidence to
justify a text-only requirement. However, the agency's concern is with
advertising that affects minors and with tailoring the restrictions in
this final rule to burden as little speech as possible. Therefore, FDA
concludes that an exception from the text-only requirement for
publications that are read primarily by adults is still reasonable and
feasible.
    The agency has decided to retain the exception for adult
publications and to retain the readership thresholds in this final
rule. The 15 percent young readers threshold is reasonable based on
readership data submitted with comments. The 15 percent threshold would
require text-only advertising in the following sports and racing
magazines: Sports Illustrated (18 percent), Car and Driver (18.3
percent), Motor Trend (22.1), and Road & Track (20.6 percent) and in
the following general circulation magazines: Rolling Stone (18.5
percent), Vogue (18 percent), Mademoiselle (19.7 percent), and Glamour
(17.1 percent). \216\ The agency's judgment is based on common public
perception that these are the types of magazines that young people
under the age of 18 will find of interest and read. Thus, based on
public perceptions and inductively given the nature of the magazines
involved, FDA finds a 15 percent cut-off to be appropriate.
---------------------------------------------------------------------------
    \216\ Barents Group, LLC, citing Publishers Information Bureau
and Mediamark Research, Inc., pp. 53-54.
---------------------------------------------------------------------------
    The 2 million number is justified based upon the agency's concern
for young people. The agency finds that at some point, the number of
underage readers is so great that the magazine can no longer be
considered to not be of interest to children and adolescents under 18
years of age. This threshold would require text-only advertising in a
publication like People, where the percentage of readers who are minors
is only 7.8 percent, but where the number of readers under 18 years of
age is 3,020,000. Publications like Time, Newsweek, Family Circle, and
Popular Mechanics, however, would not be subject to the text-only
format under either threshold; based on how these publications are
affected, FDA concludes that, on balance, the thresholds are
reasonable. \217\ The agency's concern is not with the ``intended''
audience of the publication because there is no magic curtain between
the interests of young adults and adolescents. The agency's concern is
to protect children from the appeal of advertising that they cannot
avoid. Fifteen percent youth readership or 2 million young readers
narrowly addresses this concern.
---------------------------------------------------------------------------
    \217\ Id.
---------------------------------------------------------------------------
    The agency does not agree with comments that the rule should be
made more restrictive by, for example, allowing only text-only
advertising in adult publications and no advertising at all in other
publications. The text-only format will reduce the appeal of tobacco
advertising to young people while allowing communication of important
information to adults. The agency will continue to monitor the effect
on young people of text-only advertising as well as the exception
created for adult publications and will consider taking any additional
action that is appropriate.
[[Page 44515]]
    Finally, the agency finds no basis to the comments' concern that
the regulations will reduce the reading level of adults to those of
children. The agency has crafted the exception for adult publications
specifically to minimize the effect of the regulations on adults.
Moreover, text-only, or the absence of color and imagery, will have
significantly less impact on adults than on young people. As discussed
more fully in the introduction to this section, adults generally have
more capacity to engage in high involvement search than do young
people. Furthermore, full information will be available to them in the
text format. The First Amendment demands no more.
    (58) Several comments recognized that FDA made the March 20, 1996,
Federal Register document and the associated data in the record
publicly available to meet its obligation under the APA to provide
interested parties with an opportunity to comment meaningfully on the
proposed rule. These comments stated, however, that one of the
memoranda, dated March 11, 1996, placed on the public record by the
Federal Register document makes clear that FDA had readership numbers
in mind when it developed the proposal, but that the agency had failed
to disclose those numbers to the public. The comments said that these
numbers are neither reflected in the memorandum added to the record in
the March 20, 1996, Federal Register document nor the administrative
record that FDA has made publicly available. The comments said that the
memorandum in question refers to readership numbers that were in
comments submitted by the tobacco industry, and thus these numbers
could not have been the numbers that FDA considered in developing its
proposal. The comments said that FDA's failure to disclose this
information rendered the proceeding arbitrary and capricious.
    These comments are in error. FDA placed the information that it
relied upon in developing the tentative 15-percent threshold on public
display at approximately the time that it published the proposed rule.
The data appear at pages 95T030074-75 of the administrative record
(vol. 105, number 1550). (The numbers are similar but not identical to
those supplied by the industry.) As one comment pointed out, in
Connecticut Light and Power Co. v. Nuclear Reg Com'n., 673 F.2d 525,
530 (D.C. Cir.), cert. denied 459 U.S. 835 (1982), the United States
Court of Appeals for the District of Columbia Circuit stated, ``In
order to allow for useful criticism, it is especially important for the
agency to identify and make available technical studies and data that
it has employed in reaching the decisions to propose particular
rules.'' The agency fully complied with this expectation by including
the data that it had reviewed in the material that it made publicly
available. Thus, the agency finds the claims in the comments summarized
here to be without any basis in fact.
    (59) Several comments asserted that the memorandum added to the
record in the March 20, 1996, Federal Register document did not provide
a reasoned explanation for the threshold that FDA had proposed. Several
comments argued that there is no principle in, or discernible from, the
memorandum that leads to the choice of 15 percent, as opposed to 49
percent, as the ceiling for the percentage of underage readers a
publication could have and still be considered primarily adult. One
comment said that FDA's reasoning was circular. Other comments said
that FDA had pointed to no facts in the March 20, 1996, Federal
Register document or the attendant memorandum that supports its
judgment. These comments stated that FDA merely applied an arbitrarily
chosen 15 percent figure to readership data and concluded that it had
hit the right number. Some comments questioned why a publication with
84 percent adult readership was problematic, while a publication with
86 percent adult readership was not. Of all the comments that
criticized FDA's proposed threshold, only one provided any alternative.
This comment cited the tobacco industry's voluntary Cigarette
Advertising and Promotion Code, Advertising 1(a), which prohibits
advertising in publications directed primarily to those under 21 years
of age.
    In contrast to the foregoing comments, which were from the tobacco
and advertising industries, a comment from a coalition of groups
concerned about smoking and health stated that the agency's tentative
judgment was unbiased, reasonable, and narrowly tailored to meet FDA's
stated goal of limiting the specific forms of advertising that have the
greatest impact on children to those publications that do not have a
regular heavy readership of children.
    FDA has carefully reviewed these comments. Based on this review,
FDA first considered whether its March 20, 1996, Federal Register
document and the memorandum added to the record under that notice had
adequately explained the basis for the proposed threshold.
    The legislative history of the APA states that agency notice must
be sufficient to fairly apprise interested parties of the issues
involved, so that they may present responsive data or arguments thereto
(S. Doc. 248, 79th Cong., 2d sess. 200 (1946)). The notice must
disclose in detail the thinking that has animated the form of the
proposed rule and the data on which that rule is based. (See Home Box
Office, Inc. v. FCC, 567 F.2d 9 (D.C. Cir. 1977).) In Connecticut Light
& Power v. Nuclear Reg. Com'n, 673 F.2d at 530, the court held that a
notice of proposed rulemaking should provide an accurate picture of the
agency's reasoning, so that interested persons may comment meaningfully
on the proposed rule.
    The March 20, 1996, Federal Register document and the associated
data in the record clearly meet this standard. As stated in this
section, FDA made clear that its tentative judgment was based on a
review of available data (from Simons Market Research) on the
readership profiles of various publications. By dividing the
publications based on whether, in the FDA employees' experience, the
publications were publicly perceived as being of interest to minors or
not and then examining readership information on each publication, FDA
employees found that the publications that were viewed as being of
interest to young people had readerships that included individuals
under the age of 18 at a level of 15 percent or higher. FDA also found
that the information on additional publications that it received during
the comment period produced results that were consistent with the
pattern that emerged from its initial review. \218\
---------------------------------------------------------------------------
    \218\ See memorandum of March 11, 1996, added to the
administrative record in the March 20, 1996, Federal Register.
---------------------------------------------------------------------------
    Thus, FDA's reasoning is not circular. FDA based the threshold on
its tentative finding, from the work that its employees had done, that
the publications viewed as of interest to young people had readerships
that were more than 15 percent under 18. Significantly, while the
comments of the tobacco and advertising industry disagreed with the
basis for the proposed threshold in various ways, none presented any
data showing that publications with a youth readership of 15 percent or
more are not viewed by consumers as of interest to young people.
    It is important to keep in mind that the purpose of the threshold
is to ensure
[[Page 44516]]
that no more speech than necessary is burdened by FDA's restriction on
advertising. Given that FDA wants to ensure that its restriction is as
narrowly tailored as possible, in response to the criticisms in the
comments, FDA considered whether there was a more appropriate basis on
which to craft the restriction. Unfortunately, the comments criticizing
the proposal were not helpful. The only suggested alternative to the
proposed threshold that they put forward was the provision in the Code.
This provision is inadequate on its face, however, because it is based
on a minimum age of 21, rather than 18, which is the minimum provided
in the laws of all the States and section 1926 of the PHS Act.
Moreover, the comment that suggested this alternative gave no
indication of how the age group to which a publication is primarily
directed would be determined.
    As a matter of common sense, FDA focused on the percentage of
readers under the age of 18 in the general population and on comparing
that percentage to the percentage of readers under 18 years of age for
a particular publication. Certain conclusions can logically be drawn on
the basis of such a comparison. If the percentage of young readers of a
publication is greater than the percentage of young people in the
general population, the publication can be viewed as having particular
appeal to young readers. A publication with a youth readership
percentage that is approximately equal to the percentage of young
people in the general population can be viewed as one of general
appeal, including appeal to young readers. A publication with a lower
percentage of young readers than in the general population, however,
would obviously be one of limited appeal to young people, and thus one
that could appropriately be considered of interest primarily to adults.
    Given the logic of this approach, FDA turned to the U.S. census.
What the agency found is that young people between the ages of 5 and 17
constitute approximately 15 percent of the U.S. population. \219\ Since
this percentage is the same as the one that FDA used in developing the
proposal, this approach fully supports the approach that FDA proposed.
(Although 5 and 6 year olds may not be reading magazines, utilizing
this age group builds in a margin for error.) It ratifies the judgments
that FDA employees made in arriving at the proposed threshold.
---------------------------------------------------------------------------
    \219\ U.S. Bureau of the Census, Population Paper Listing 21,
1994.
---------------------------------------------------------------------------
    Some may assert that it is mere coincidence that the two approaches
produce the same result. FDA disagrees. The congruence of the two
approaches, the FDA employee anecdotal search and the use of the census
data, is attributable to the basic validity of the premise underlying
FDA's initial approach. Magazines have reputations as to the audiences
to which they appeal, and those reputations are generally earned based
on the nature of their contents. Thus, contrary to the assertions in
some of the comments, the 15 percent threshold is well-supported and
appropriate.
    As for the question as to why a publication with 84 percent adult
readership would be problematic, while a publication with 86 percent
adult readership would not, the agency turns to the case law on narrow
tailoring, which is, as stated in section VI.E. of this document, what
this exercise is about. In Board of Trustees of State University of
N.Y. v. Fox, the Supreme Court stated:
    In sum, while we have insisted that ``the free flow of
commercial information is valuable enough to justify would-be
regulators the costs of distinguishing * * * the harmless from the
harmful,'' * * * we have not gone so far as to impose upon them the
burden of demonstrating that the distinguishment is 100% complete,
or that the manner of restriction is absolutely the least severe
that will achieve the desired end. What our decisions require is a
``fit between the legislature's ends and the means to accomplish
those ends,'' * * * --a fit that is not necessarily perfect but
reasonable * * *.
(492 U.S. at 480 (citations omitted))
    FDA has done its best to distinguish publications that are likely
to be read by children and adolescents from those that are not. FDA
finds that, if its restriction on advertising is to be meaningful, it
must be based on a line that is enforceable. While only 2 percentage
points separate a publication with 84 percent adult readership from one
with 86 percent (although those 2 percentage points can mean a
difference of tens of thousands of youngsters), the underrepresentation
of underage readers in the readership of the latter publication
establishes its limited appeal to young readers, and thus that it is
less likely to be read by them.
    For the foregoing reasons, FDA is adopting the 15-percent
threshold.
    (60) Comments from an association of magazine publishers and others
expressed a number of concerns about the adequacy of current data for
determining whether a publication met the definition of an adult
publication. Some comments said that current data and methodology to
determine youth readership, while adequate for marketing purposes, are
totally inadequate to justify their use as measuring devices for the
imposition of criminal or civil liability on the exercise of First
Amendment rights. These comments noted that the vast majority of
magazines do not subscribe to either adult or youth surveys. Two
comments stated that only about 2 percent of all magazines participate
in the two major adult audience surveys. One comment stated that
participation in the youth readership surveys, Simmons's STARS and
MediaMark Research Inc.'s (MRI's) TEENMARK, is even more limited, just
over one-half of one percent of all magazines.
    One comment noted that to comply with the 1995 proposed rule,
publications must identify readers of all ages but that current
audience measurement systems do not provide this comprehensive coverage
especially for readers younger than 12 years of age. Another comment
noted that since the survey organizations do not survey individuals on
college campuses, in the armed services, or in institutional settings,
adult readership would be underestimated. Several comments noted the
difficulty in determining readership data for any one issue of a
magazine. Another comment noted that multi-issue advertisements would
be a problem for publications right around the threshold if the
publication crosses back and forth.
    Several comments noted that the survey organizations would have to
make substantial methodological changes to the surveys to meet the 1995
proposed rule's standard. One comment said that some problems would
include adding magazines to the surveys, and dealing with unreliable
results. Another comment asked who would decide the research design for
the surveys since different research methodologies could be competent
and reliable yet result in different conclusions. Another comment said
that it could be prohibitively expensive to increase audience samples
to create a legally enforceable standard, and that changes to audience
measurement procedures could undermine the usefulness of the surveys
for their designed marketing information purpose.
    One supporting comment from an association of addiction specialists
stated that ``the agency should require the industry to monitor with
surveys of ad recall (correlated with tobacco use
[[Page 44517]]
and intention to use patterns) among the population under age 18 years
to help the agency understand the extent to which image-based messages
continue to reach the young.''
    One comment pointed out that it would be virtually impossible to
determine a legally enforceable standard for the 15 percent youth
readership threshold since there is substantial variation in audience
estimates between survey organizations and over time. Several comments
noted that FDA's definition of a reader is not consistent with the
definition used by Simmons and MRI.
    Some comments suggested that a more realistic measure of who reads
a publication would be who subscribes to it. Other comments opposed
this alternative stating that the key criteria should be regular
readership, not paid subscribers. One comment said that ``[t]his
alteration of the proposed exemption would destroy the intent and
purpose of the advertising limitation.''
    Several comments said that the proposal would violate due process
by punishing publishers or advertisers who are unable to determine
whether their conduct violates the law because the survey data are not
sufficiently comprehensive and reliable. Several comments, including
one from an association of newspaper publishers, expressed concern
about who would determine readership. One comment asked whether a
newspaper would be subject to criminal liability based on readership
data it supplies, and whether the responsibility for ascertaining
whether a publication qualifies as an adult publication would be on
those running the advertisements.
    The agency recognizes the limitations of current readership data
and the difficulties of using current readership surveys to meet the
requirements of this rule. However, the agency concludes that the
exception from the text-only format for adult publications is feasible
as well as reasonable. First of all, the burden of proof for
determining youth readership is placed by the rule on the tobacco
company doing the advertising, not on the publication or the
advertising agency. Under Sec. 897.32(a)(2), the tobacco company will
need to be able to demonstrate that a publication in which it is
running an advertisement with images and colors meets the definition of
an adult publication. Therefore, only the tobacco company will be
subject to any penalties for improperly placing advertisements, even if
it used data provided by the publication as part of its determination.
    Second, either of the two methodologies can be used to measure
readership. In addition, the agency has modified Sec. 897.32(a)(1) and
(a)(2) to make clear that any other competent and reliable private
sector survey evidence may be used. A tobacco company may use one of
the two major customary and reasonable readership surveys (such as MRI
and Simmons). The agency does not believe that there is only one
acceptable methodology. The agency is willing to accept the standard
methodology currently used by MRI and Simmons as evidence. Moreover,
the agency is willing to use the age range of 12 to 17, which appears
to be the current standard for defining youth, in determining youth
readership.
    If a particular publication is not currently covered by one of the
major surveys, it is the tobacco company's responsibility to develop
the readership data necessary to justify a decision to advertise in
that publication. The company could request a survey by one of the
major survey firms, or it could develop an acceptable alternative. In
either case, the agency will be available to work with the company. The
company will always have the alternative to advertise in any
publication in the text-only format.
    The agency also acknowledges the difficulty in determining the
youth readership for any particular issue of a publication. Thus, data
from a survey for the most recent issues of a publication can serve as
proof of readership for comparable upcoming issues unless a particular
upcoming issue is being targeted at younger readers. The survey
schedule used by the major survey organizations would be acceptable to
the agency. A tobacco company could utilize a more frequent survey
schedule if it believed the readership had changed in its favor. A
rolling average of a certain number of issues could be used, for
example, to determine youth readership. The problem of multi-issue
contracts for advertising could be solved by a survey for a comparable
period of time (e.g., winter months) preceding the contract.
    The agency is willing to accept the definitions of a reader that
are customarily used by the major survey organizations. The agency does
not agree that using subscribers to a publication in lieu of readers is
a better measure. Many children who read a publication will not be
listed as subscribers (for example, Sports Illustrated has a youth
readership of 18 to 20 percent but a youth subscriber rate of only 6.5
or 7 percent). \220\ Also, adults are more likely to subscribe for
their families, thereby creating an underestimation of youth exposure.
---------------------------------------------------------------------------
    \220\ Interview on ``The News Hour With Jim Lehrer,'' Public
Broadcasting Systems, May 16, 1996.
---------------------------------------------------------------------------
    (61) Several comments assumed that the purpose of the March 20,
1996, Federal Register document was to justify the restriction on
advertising format that the agency had proposed for other than adult-
oriented publications. These comments argued that explaining how the
agency arrived at the 15 percent and 2 million readership thresholds
does not approach the factual justification necessary to restrict First
Amendment freedoms.
    Other comments asserted that FDA's assumption that certain
magazines were of interest to those under 18, as the starting point in
arriving at the 15 percent threshold, shows that the limits were
content based. These comments argued that basing restrictions on
content violated the First Amendment.
    The comments misunderstood FDA's purpose in proposing, and in
adopting, the 15 percent and 2 million under 18 readership thresholds
and of the memoranda added to the public record in the March 20, 1996,
Federal Register document that indicated how the agency tentatively
arrived at those thresholds. As discussed in section VI.D. of this
document, the evidence in this proceeding establishes the effect of
cigarette and smokeless tobacco advertising on those under 18 years of
age. This evidence fully justifies FDA's decision to restrict the
advertising for these products.
    However, in imposing such a restriction on commercial speech, FDA
has an obligation to ensure that the restriction is no more broad than
necessary to serve the agency's substantial interests (Board of
Trustees of State University of N.Y. v. Fox, 492 U.S. at 476). The
purpose of the memorandum was to document FDA's efforts to tailor the
restriction to ensure that it did not restrict advertising in those
publications that were not likely to be read by children or adolescents
and thus were not likely to have an effect on the group that FDA is
trying to protect. Consequently, contrary to the claims of the first
group of comments, the agency's goal in the memorandum was not to
justify a restriction on First Amendment freedoms but to explain how it
sought to ensure, and why its tentative decision was that, the limits
it proposed to place on the coverage of the
[[Page 44518]]
restriction are reasonable (see Id. at 480).
    On the other hand, other comments that opposed FDA's proposed
restriction on format said that the threshold would have different
impacts on similar publications. One comment provided the following
examples of publications that would be considered ``youth oriented'' or
primarily adult under the 15 percent threshold (the comment argued that
the effects of the 2 million readership threshold were not relevant to
the rationality of the 15 percent threshold):
                   Table 1b.--Examples of Publications
------------------------------------------------------------------------
                                              Primarily Adult Oriented
        Youth Oriented Publications                 Publications
------------------------------------------------------------------------
Popular Science...........................  Popular Mechanics
Soap Opera Weekly.........................  Soap Opera Digest
Outdoor Life..............................  Field and Stream
Cable Guide...............................  TV Guide
Mademoiselle..............................  Cosmopolitan
------------------------------------------------------------------------
    The positions taken by these comments makes clear that the
thresholds were not content based. If the thresholds were content
based, then publications that have similar content would be subject to
the same restriction. They are not. The reason they are not is that
FDA's goal in arriving at the thresholds was to ensure that cigarette
and smokeless tobacco advertisements that are likely to be seen by
children and adolescents are the kinds of advertisements that are
likely to appeal to them. The agency's only way of judging the
likelihood that an advertisement that appears in a publication will be
seen by those under the age of 18 is by considering the readership
profile of that publication. Thus, the agency has tailored the
threshold to either reflect the percentage of readership that are under
18 years of age or to ensure that publications with an extensive youth
readership are covered.
    The comments that complained about the differing impact of FDA's
threshold on similar publications, given the purpose of the threshold,
serve to underline its significance. The information submitted by the
comments shows that there are significant differences in the readership
of similar publications and thus in the likelihood that the material
contained in these publications will be seen by young people. The
treatment of publications under the agency's restriction reflects the
latter fact, not the former.
    Popular Science magazine has a readership that is 6 percent more
youthful than Popular Mechanics; Soap Opera Weekly has a 3 percent more
youthful readership than Soap Opera Digest; and there is a 9 percent
bigger youth audience for Outdoor Life than for Field and Stream. These
differences are not minor or meaningless and demonstrate that, although
the 15 percent threshold is not perfect, it will serve, as it was
designed to, protect those under 18. TV Guide and Cosmopolitan are not
excluded although, as mass distribution magazines the percentage of
young readers is less than 15 percent, because they attract over 2
million young readers--a number of young people too large to ignore.
\221\
---------------------------------------------------------------------------
    \221\ Barents Group, LLC, citing Publishing Information Bureau
and Mediamark Research, Inc., pp. 53-54.
---------------------------------------------------------------------------
    (62) Many comments, especially from the magazine and newspaper
industries, expressed concerns about the impact of this proposal on
their way of doing business. One comment stated that the proposed text-
only format would provide financial disincentives for magazines and
newspapers to attract young readers, especially if the publication were
near the borderline of being required to use the text-only format. This
comment suggested that the provision would affect editorial and content
decisions regarding young readers.
    Some comments noted that newspapers have been struggling to attract
young readers raised on television, but that success in doing this
might cause the loss of significant tobacco advertising revenue. One
newspaper industry association comment stated that the rule would
discourage newspaper programs promoting youth reading and literacy.
Some comments stated that the loss of advertising revenue could cause
publications to decrease content and increase prices. Some comments
thought the result of these effects of the rule would be losses in jobs
in the newspaper and magazine industries.
    The agency is not sure what impact the exception for adult
publications will have on incentives for magazines and newspapers to
attract young readers, on editorial content, and on youth literacy
programs. The comments that raised these issues mostly speculated about
these effects and did not provide any data as to how many of the
thousands of newspapers and magazines in the United States carry
tobacco advertising, or on what portion of their total advertising
revenue comes from tobacco companies. Many business factors affect a
publication's decisions regarding its target audience and editorial
content, and these are likely to change for a variety of reasons. Those
publications affected by this regulation will have to adjust just as
they would if a major advertiser reduced its advertising. Under the
rule, all publications could still accept text-only advertising. The
cigarette and smokeless tobacco industries are capable of designing
their advertising to be attractive to adult readers (see section
VI.E.4. of this document). Thus, it seems as likely that the effects of
the rule in these areas will be minimal and will be far outweighed by
the overall benefits of reducing youth smoking. The effect of the rule
on prices and jobs in the magazine and newspaper industries is
addressed in the section on the economic impact of the rule.
    (63) Several comments argued that FDA's restrictions on the format
of advertising, and the standard that it proposed for deciding whether
a publication has a predominantly adult readership, interfere with the
rights of newspapers and magazines to decide what to print. One comment
said that some publications will not want to give up revenue from
tobacco advertising. Therefore, the comment continued, these
publications will base decisions about editorial content on how
appealing a particular story would be to readers under the age of 18.
Because of the impact of the restrictions on editorial content, the
comment concluded, they should be subject to strict scrutiny rather
than the more limited scrutiny given to commercial speech.
    FDA finds no merit to this argument. A similar argument was made in
Pittsburgh Press Co. v. Pittsburgh Com'n on Human Relations, 413 U.S.
376 (1973). The newspaper company in that case, which involved a First
Amendment challenge to a municipal ordinance that prohibited a
newspaper from carrying gender-designated advertising for nonexempt job
opportunities, argued that the focus of the case must be on the
exercise of editorial judgment by the newspaper rather than on the
commercial nature of the ads in question.
    The Supreme Court rejected this argument. The Court said that under
some circumstances, at least, a newspaper's editorial judgments in
connection with an advertisement take on the character of the
advertisement. In those cases, ``[t]he scope of the newspaper's First
Amendment protection may be affected by the content of the
advertisement''
[[Page 44519]]
(Pittsburgh Press Co., 413 U.S. at 386). The Court said that, at least
under some circumstances, a commercial advertisement remains commercial
in the hands of the media (Id. at 387). The Court found that nothing
about the decision to accept a commercial advertisement for placement
in a gender-designated column lifts the newspaper's actions from the
category of commercial speech. The Court said that the ad was in
practical effect a commercial statement (Id. at 387-88; see also United
States v. Hunter, 459 F.2d 205, 212 (4th Cir. 1972) (``But it has been
held that a newspaper will not be insulated from the otherwise valid
regulation of economic activity merely because it also engages in
constitutionally protected dissemination of ideas'')).
    Here, the question that is raised is whether or not a publication
will decide to put itself in a position of being able to accept an
advertisement that is particularly appealing to individuals under 18
years of age or not. Nothing about this judgment distinguishes it from
the commercial speech itself. Because nothing about FDA's restrictions
would prevent the publication from carrying a cigarette or smokeless
tobacco advertisement no matter what judgment the publication makes,
essentially the editorial judgment comes down to the question of what
will be the format of the advertisement that it will carry. This
judgment clearly comes within the category of commercial speech, and
FDA has fully justified its regulation of commercial speech under the
Central Hudson test.
6. Advertising--Sec. 897.32 Requirements for Disclosure of Important
Information
    a. Established name and intended use--Sec. 897.32(c). Proposed
Sec. 897.32(b) (now renumbered as Sec. 897.32(c)) provided that each
manufacturer, distributor, and retailer (of tobacco and smokeless
tobacco) advertising or causing to be advertised, disseminating or
causing to be disseminated, advertising, but not labeling, permitted
under Sec. 897.30(a), shall include, as provided in section 502(r) of
the act, the product's established name and a statement of its intended
use as follows: ``Tobacco--A Nicotine Delivery Device,'' ``Cigarette
Tobacco--A Nicotine-Delivery Device,'' or ``Loose Leaf Chewing
Tobacco,'' ``Plug Chewing Tobacco,'' ``Twist Chewing Tobacco,'' ``Moist
Snuff'' or ``Dry Snuff,'' whichever is appropriate for the product,
followed by the words ``A Nicotine-Delivery Device.''
    The preamble to the 1995 proposed rule explained that section
502(r)(1) of the act requires, for any restricted device, that all
advertising or other descriptive printed material contain a true
statement of the device's established name. Under section 502(r)(2) of
the act, a restricted device is misbranded unless all advertising
contains ``a brief statement of the intended uses of the device.'' The
agency explained in the preamble to the 1995 proposed rule that it is
necessary to require that the product's established name and intended
uses be placed on all advertising, under section 520(e) of the act, as
a measure that affirmatively identifies the products to persons reading
the advertising (the other brief statement requirements under section
502(r)(2) of the act are discussed in section IV.E.6.b. of this
document).
    The agency did not receive any comments on the ``established name''
provision and has thus codified the provision in the final rule as
Sec. 897.32(c). The agency has modified the ``intended use'' provision
in this final rule to require that cigarette and smokeless tobacco
advertising contain the statement ``A Nicotine-Delivery Device for
Persons 18 or Older.'' For clarity, the agency has referenced subpart D
generally rather than Sec. 897.30(a) specifically. As stated in the
1995 proposed rule, the established name requirement applies to both
tobacco and smokeless tobacco.
    (64) Several comments opposed the proposed ``intended use''
provision. One tobacco industry comment stated that FDA's proposal is
not authorized under section 502(r) of the act because: (1) The
``intended use'' of tobacco products is for smoking taste and pleasure,
not a ``nicotine delivery device;'' (2) the ``intended use'' provision
of the act does not require that manufacturers list all information
related to all purposes for which a drug is intended; and (3) FDA is
not free to prescribe an ``intended use'' of its own invention. The
comment also argued that FDA's statement, which communicates only that
a cigarette yields nicotine, is not a statement of ``intended use'' and
is of no value to consumers who obtain more complete nicotine
information that cigarette manufacturers already provide in
advertising.
    The agency disagrees with the comments stating that it is not free
to prescribe an intended use. As discussed in this section, the agency
is required by section 502(r)(2) of the act to require a brief
statement of intended use for all restricted devices.
    Additionally, it is within FDA's primary jurisdiction and expertise
to determine a device's intended use. FDA has decades of experience
evaluating the intended uses of FDA-regulated products, including
restricted devices, prescription and over-the-counter drugs, biological
products, and dietary supplements through its review and approval
process for those products.
    As described in the 1996 Jurisdictional Determination annexed
hereto, the available evidence demonstrates that manufacturers intend
to affect the structure and function of the body by delivering
pharmacologically active doses of nicotine to the consumer. Although
the agency proposed that the intended use include the language
``Nicotine Delivery Device,'' the agency has determined, based on the
comments received, that a more accurate statement of the intended use
would provide more value to consumers. Because cigarettes and smokeless
tobacco products can legally be sold only to those persons 18 years of
age and older, the agency believes the intended use statement should
reflect the target population for which the product is intended. Often,
the intended use statement for a drug or device includes the patient
population by whom the product may be used. Accordingly, the intended
use statement has been revised to require the following language on all
advertisements for cigarette and smokeless tobacco: ``A Nicotine-
Delivery Device For Persons 18 or Older.''
    b. Section 897.32(d) Brief statement. Proposed Sec. 897.32(c) and
(d) would have required that each manufacturer, distributor, and
retailer of cigarettes include in all advertising, but not labeling, a
brief statement, printed in black text on a white background that was
readable, clear, conspicuous, prominent, and contiguous to the Surgeon
General's warning. Because the Smokeless Act preempts other statements
about tobacco use and health in advertising, the 1995 proposed rule
stated that the provision only applied to cigarettes (and not smokeless
tobacco). The 1995 proposed rule provided one brief statement as an
example (``ABOUT 1 OUT OF 3 KIDS WHO BECOME SMOKERS WILL DIE FROM THEIR
SMOKING'') (60 FR 41314 at 41338). The agency requested comment on what
other information should be included in the brief statements concerning
relevant
[[Page 44520]]
warnings, precautions, side effects, and contraindications and on how
best to ensure that the statement will be clear, conspicuous, and
prominently displayed. The agency also requested comment on whether it
should require a listing of the component parts or ingredients of these
restricted devices.
    The preamble to the 1995 proposed rule explained that the agency
was proposing to require this brief statement under section 502(r)(2)
of the act. The preamble stated that the act specifically excludes
labeling from the requirements in section 502(r) of the act. The 1995
proposed rule stated that the agency would specify the design, content,
and format of the brief statements, in part based on focus groups with
young people, to ensure that the information would be communicated
effectively to young people.
    The agency received numerous comments on this brief statement, and
about half of the comments supported the provision and half opposed it.
Most of the comments that supported the brief statement requirement
recommended other information to be included in the brief statement,
and offered suggestions on how best to ensure that the statement will
be clear, conspicuous, and prominently displayed.
    During the comment period, FDA performed extensive focus group
testing on the brief statement to evaluate the content and various
formats for the brief statement to determine if the information would
be communicated effectively to young people. Those results were placed
on the public record and made available for comment, 1 month prior to
the close of the comment period. FDA received a few comments on the
focus group results from the tobacco industry and concerned
individuals.
    The final rule does not specify a particular statement to be placed
in all cigarette advertisements, as proposed in Sec. 897.32(c), nor
does it require the brief statement to be targeted to young people.
Rather, the agency has concluded that the current Surgeon General's
warnings contain important health information, concerning the risks
related to the use of cigarettes, of the sort required under section
502(r) of the act and, consequently, has decided not to require a
specific, different statement. Specifically, the Surgeon General's
warnings currently required to be included in cigarette advertisements
and on cigarette packages contain the following information: Cigarettes
cause lung cancer, heart disease and emphysema, may complicate
pregnancies, and contain carbon monoxide; smoking by pregnant women may
result in fetal injury, premature birth and low birth weight; and
quitting reduces serious risks.
    The agency has also considered the fact that there is a heightened
public awareness by adults of the addictiveness of cigarettes, as well
as the serious health effects that can result from their use. Much of
this awareness stems from: (1) The publicity of the numerous Surgeon
General's reports that have issued in the last few decades, (2) the
campaigns supported by health groups and State and local governments,
as well as (3) the attention generated by the agency's investigation of
these products.
    Under the current circumstances, the agency has determined that the
current Surgeon General's warnings, which must be in virtually all
advertisements, contain the type of important health information
required under section 502(r) of the act. Accordingly, the agency has
determined that advertisements that contain the current Surgeon
General's warnings meet section 502(r) of the act.
    Finally, because the agency has determined that the Surgeon
General's warnings are adequate, and those warnings must be displayed
in a format prescribed by law, there is no longer any need for proposed
Sec. 897.32(d), which required that the brief statement be readable,
clear, conspicuous, prominent, and contiguous to the Surgeon General's
warning.
    (65) One comment argued that the proposed warning requirement for
tobacco is not a warning, nor is it part of a brief statement, as those
terms are used in section 502(r) of the act. The comment stated that
because FDA proposes to allow tobacco to be marketed as devices subject
only to general controls, one of which is the brief statement
provision, then the ``brief statement'' must be capable of providing,
with other general controls, ``reasonable assurance of the safety and
effectiveness'' of tobacco under the act. The comment argued that
because FDA regards tobacco as having ``dangerous health consequences''
(60 FR 41314 at 41349), and does not believe that tobacco can be ``safe
and effective'' for anyone, then FDA's proposed ``brief statement''
provision is not within the scope of the act. The comment stated that
the only warning that is consistent with FDA's view would be one that
warned against anyone using the device at all.
    The comment miscomprehends the purpose of the brief statement,
which is to provide information about the risks and benefits regarding
the product. This provision is not intended to serve, on its own, as a
mechanism to provide reasonable assurance of safety for these products.
    (66) One comment argued that even if FDA could validly require a
brief statement for tobacco as an exercise of its statutory authority,
the imposition of a warning requirement as part of the brief statement
is invalid because advertisements for tobacco are already required to
bear the Surgeon General's warning under 15 U.S.C. 1333(a)(2) and
(a)(3). In addition, the comment stated that FDA is not authorized to
require that the information be presented ``in a lurid fashion to
achieve an ulterior purpose'' or as ``a threat intended to scare
people,'' and that the warning information is meant only for the
purposes of enabling the physician or patient to make a rational risk/
benefit judgment.
    Another comment argued that the contention that the Surgeon
General's warning is ``ineffective'' is without merit. The agency
agrees that the current Surgeon General's warnings contain the type of
important health information that advertisements must contain under
section 502(r)(2) of the act. Accordingly, the agency has determined
that advertisements that contain the current Surgeon General's warnings
sufficiently meet the brief statement requirement of the act.
    (67) One comment stated that the brief statement provision would
``cause so much visual clutter in tobacco advertising as to render
effective communication nearly impossible.''
    Another comment stated that FDA will be unable to justify the
economic burdens on communication with adults that are created by the
brief statement requirement because, in order to include all the
mandated statements, advertisers would be required to purchase
additional space and thus would have to reduce, because of budgetary
pressures, the number of advertisements they could place.
    Because the agency has determined that the current Surgeon
General's warnings will be sufficient as a brief statement, the issue
raised by these comments is no longer pertinent.
    (68) Several comments which supported the 1995 proposed rule
suggested alternative statements and submitted recommended language for
the brief statement. Many comments suggested specific types of
information
[[Page 44521]]
for inclusion in the brief statement. Several comments provided
recommendations on how the statement could be ``clear and
conspicuous.'' One comment stated that messages must be carefully
pretested on members of the target audience to ensure that labels: (1)
Attract attention; (2) are personally relevant; and (3) do not elicit
psychological reactance, i.e., behaviors directly counter to those
desired due to irritation, rebellion, or misinterpretation. The comment
recommended that messages be varied periodically to ensure that they
remain attention-getting and pertinent.
    Several comments recommended that the rule be more specific in what
is meant by ``readable, clear, conspicuous, prominent'' by giving
either a detailed set of format specifications of the lettering and
background or by giving a set of performance criteria. One comment
enclosed an unpublished review on warnings, which recommended that
warnings should attract attention of the target audience by using high
contrast and color; separating warnings from other information;
considering size (relative to other information in the display) and
location (since people tend to scan left to right and top to bottom
warnings should be located near the top or to the left, depending on
the overall design of the display); and by using signal words to
capture attention, such as ``CAUTION,'' OR ``WARNING,'' pictorials,
rotational warnings to avoid habituation, and auditory warnings. In
addition, the review stated that warnings should describe the hazard,
without ``overwarning,'' and describe the nature of the injury, illness
or property damage that could result from the hazard. The review
recommended that written warnings should be organized with an attention
getting icon and signal word at the top, then hazard information, then
instructions. Finally, the review recommended that warnings should
instruct about appropriate and inappropriate behaviors, motivate people
to comply, be as brief as possible, and should last and be available as
long as needed.
    One comment recommended that the relevant warnings, precautions,
side effects, and contraindications be in a language understandable and
appealing to even the youngest potential tobacco user. Several comments
recommended that a minimum size should be required, expressed as a
percentage of the advertisement (e.g., 25 percent of the
advertisement). Several comments recommended that a border be placed
around the brief statement and suggested other graphic enhancements to
make the information in the brief statement more noticeable.
    The agency recognizes that there are several ways to communicate
the requirement for ``relevant warnings, precautions, side effects, and
contraindications'' set forth in section 502(r) of the act. In this
case, however, the agency has determined that the current Surgeon
General's warnings are sufficient as at least one way of complying with
section 502(r) of the act. In addition, the agency appreciates the
numerous suggestions on how to make the brief statement readable,
clear, conspicuous, and prominent. However, since no additional
information will be required at this time, and the format for the
Surgeon General's warnings is determined by law, the agency has deleted
proposed Sec. 897.32(d).
    (69) One comment stated that FDA's attempt to gather information
through the focus group studies about adolescents' perceptions of the
adequacy of the Surgeon General's warnings for use in designing its own
additional warning underscores the direct conflict between the
Cigarette Act and the proposed regulation.
    This comment has misinterpreted the purpose and the results of the
focus group testing. FDA's focus groups were intended to explore how
adolescents perceive various messages. The Surgeon General's warnings,
as well as other warnings, were tested with the focus groups merely to
serve as a basis for reactions to messages that currently exist in the
public domain.
    (70) FDA received few comments concerning the focus group results.
In general, these comments questioned the validity and usefulness of
focus groups. Further, some comments asserted that the warnings
preferred by the young people in the focus groups may have unintended
consequences.
    As discussed in this section, the focus groups tested a variety of
specific brief statements that were intended to be directed towards
young people. However, the agency has decided that the final rule will
not specify a particular brief statement, but will accept the current
Surgeon General's warnings as sufficient. Moreover, section 502(r) of
the act does not require that the brief statement be directed to young
people, but rather that it provide ``a brief statement of the intended
uses of the device and relevant warnings, precautions, side effects,
and contraindications.'' This function is adequately filled by the
intended use statements required by Sec. 897.32(c) and the Surgeon
General's warnings. Thus, because the final rule is not based on the
focus group results, the agency need not address the previous comments
concerning the focus group results.
7. Section 897.34(a) and (b)--Promotions, Nontobacco Items, and
Contests and Games of Chance
    The agency proposed in Sec. 897.34(a) to prohibit the sale or
distribution of all nontobacco items that are identified with a
cigarette or smokeless tobacco product brand name or other identifying
characteristic. FDA stated in the 1995 proposal that this requirement
is intended to reach such items as tee shirts, caps, and sporting goods
and other items bearing tobacco brand names or other indicia of product
identification (60 FR 41314 at 41336).
    As discussed in the preamble to the 1995 proposed rule (60 FR 41314
at 41336), a Gallup survey found that about one-half of adolescent
smokers, and one-quarter of all nonsmokers, own at least one
promotional item. The IOM found that this form of advertising is
particularly effective with young people. Young people have relatively
little disposable income, so promotions are appealing because they
represent a means of ``getting something for nothing.'' In many cases,
the items--tee shirts, caps, and sporting goods--are particularly
attractive to young people. Some items, when used or worn by young
people, also create a new advertising medium--the ``walking
billboard''--which can come into schools or other locations where
advertising is usually prohibited (60 FR 41314 at 41336). Moreover,
this form of advertising has grown in importance over the last 20
years. The portion of annual expenditures of the cigarette industry
devoted to these promotions rose from 2.1 percent in 1975 to 8.5
percent in 1980. \222\
---------------------------------------------------------------------------
    \222\ IOM Report, p. 109.
---------------------------------------------------------------------------
    On the basis of the evidence before it, the agency tentatively
concluded that the ban on nontobacco items was necessary to eliminate
the something-for-nothing appeal of these items, as well as to prevent
wearers or users of these items from becoming image-laden walking
advertisements.
    FDA proposed in Sec. 897.34(b) to prohibit all proof of purchase
transactions of nontobacco items as well as all lotteries, contests,
and games of chance associated with a tobacco purchase. The agency
stated that, because contests and lotteries are
[[Page 44522]]
usually conducted through the mail, it was not able to devise
regulations that would reduce a young person's access to contests or
lotteries.
    (71) FDA received a substantial number of comments concerning the
1995 proposed rule to prohibit these promotional activities. Comments
opposing these provisions argued that tobacco companies should be
allowed to advertise in a fair manner however they wish. Many comments
from individuals stated that they like the ``freebies.'' They contended
that the agency does not have authority to regulate the clothes people
wear or to ban contests and promotional activities that are only
available to adults. A number of comments from individuals stated that
what they did with their lives was their business.
    Comments also objected to the agency's proposed ban on contests and
games of chance. These comments stated that existing laws and
regulations already provide a sufficient regulatory framework.
    The majority of comments, however, supported these provisions and
stated that children and adolescents should not be ``walking
billboards.'' Moreover, these comments argued that even though young
people cannot participate in the contests, they can easily get caught
up in the excitement of promotional activities. Comments declared that
prohibiting tobacco product-related gifts, items, contests, and games
of chance will break the enticing connection between sports and tobacco
use.
    The agency agrees with the comments that said that existing laws
and regulations of lotteries, contests, and games of chance are
sufficient. First, there appears to be little evidence about these
practices and young people's participation in them. Secondly, current
laws prohibit all games of chance and the like that are advertised on a
product label or that are conditioned on the sale of the product.
Therefore, participation, if any, by minors is not necessarily related
to a purchase. Third, any promotional material associated with the
advertising of the games, which is of primary concern, will be required
to appear in text-only format. Therefore, the agency has modified this
section to delete the ban on these practices. In addition, the agency
has modified Sec. 897.34(a) to clarify that responsibility for
complying with this provision rests with the manufacturer and the
distributor of imported tobacco, but not other distributors or
retailers.
    (72) Comments differed on whether proposed Sec. 897.34(a) is beyond
FDA's authority under the act. The comments addressed a number and
variety of legal issues. One comment stated that FDA has no authority
to ban the items and services covered by Sec. 897.34(a). It stated that
items and services (e.g., travel agencies) bearing indicia of tobacco
product identification are not foods, drugs, cosmetics, or devices as
defined in the act and, therefore, are outside the agency's
jurisdiction.
    Another comment stated that nontobacco items cannot be regulated as
advertising in the way FDA proposes because: (a) The 1995 proposed rule
extends to goods and services provided to product users in connection
with cigarette purchases, most of which are not displayed or
disseminated to the general public, and thus do not constitute
advertising (see Marcyan v. Nissen Corp., 578 F. Supp. 485, 507 (N.D.
Ind. 1982), aff'd sub nom. Marcyan v. Marcy Gymnasium Equip. Co., 725
F.2d 687 (7th Cir. 1983)); and (b) many of the types of items covered
by Sec. 897.34(a) are promotional items but not advertising (e.g., a
logo-bearing mug given away or sold by a manufacturer is not an
advertisement).
    One comment, which favored the provision, provided support for the
classification of promotional items as advertising. The comment
referenced Public Citizen v. FTC, 869 F.2d 1541 at 1556 (D.C. Cir.
1989), in which the U.S. Court of Appeals for the D.C. Circuit held
that the Smokeless Act requirement that ``advertisements'' carry health
warnings ``plainly covers utilitarian items [nontobacco items] that are
distributed for promotional purposes.'' FTC defined utilitarian objects
as items that are sold or given or caused to be sold or given by any
manufacturer, packager, or importer to consumers for their personal use
and that display the brand name, logo, or selling message of any
tobacco product (16 CFR 307.3n). FDA's interpretation of what is
covered by Sec. 897.34(a) and (b) is consistent with this definition.
The comment also stated that as a result of that court case, FTC's
smokeless tobacco rules now require that utilitarian items promoting
smokeless tobacco bear specific health warnings required of all
smokeless tobacco advertising (16 CFR 307.9). \223\
---------------------------------------------------------------------------
    \223\ The FTC comment also indicated that although nontobacco
items are ``advertising'' under the Smokeless Act, a different
legislative history exempts these items from the Cigarette Act. The
comment stated that the definition of advertising under the
Cigarette Act is understood to exempt utilitarian items because of
legislative history expressly stating Congress's intent to preserve
the arrangement under consent agreements entered into by the tobacco
industry in 1972 and 1981 (Public Citizen, 869 F.2d at 1555).
---------------------------------------------------------------------------
    Another comment pointed out that the Public Citizen case provides
ample legal precedent not only for the conclusion that promotional
materials are advertising, but also that they have a direct impact on a
minor's tobacco use. The court, relying on evidence compiled by the
FTC, found that ``in the case of adolescents, utilitarian items might
be among the most effective forms of promotion'' (869 F.2d at 1549 n.
15). In addition, the lower court provided an additional rationale for
restriction based upon the items' longevity and durability.
    [P]rinted advertising is customarily quickly read (if at all)
and discarded (as, of course, are product packages) by typical
consumers. ``Utilitarian objects,'' on the other hand * * * are
retained, precisely because they continue to have utility. They are
also likely to be made of durable substances: fabric, plastic,
glass, or metal. They may be around for years. And each use of them
brings a new reminder of the sponsor and his product * * *
(688 F. Supp. 667, 680 (D.D.C. 1988), aff'd, 869 F.2d 1541 (D.C. Cir.
1989))
    The agency finds that the reasoning in the Public Citizen case is
persuasive and compels the conclusion that branded nontobacco items are
advertising. It also finds that young people acquire and use these
products.
    Moreover, the agency finds nothing in the Marcyan v. Nissan Corp.
case is to the contrary. In relevant parts, that case involved an
endorsement that appeared in the front of a users' manual. The court
held that this endorsement did not constitute ``advertising'' because
it is not ``distributed to the general public for the purpose of
promoting plaintiffs' products: it is a user's manual and is provided
to a purchaser of the defendants' equipment together with the equipment
in order to describe its proper use'' (578 F.2d at 507). Promotional
items are distributed or sold to the general public. They are festooned
with the product's brand name or identification, and they are intended
to remind the user and others who see the item about the product. As
the court in Public Citizen found, ``each use of them brings a new
reminder of the sponsor and his product'' (688 F. Supp. at 670).
Therefore, the comments' suggestion that these advertising items are
beyond FDA's jurisdiction is plainly wrong.
    (73) One comment, which had argued that promotional items were not
drugs or devices nor were they advertising, objected as well to FDA's
alternative
[[Page 44523]]
categorization of these items as labeling. The comment stated that
nontobacco items could constitute ``labeling'' only if there were a
``textual relationship'' between them and the product (Kordel v. United
States, 335 U.S. 345, 350 (1948)). The comment argued further that
items that provide no more substantive information than a brand name,
logo, or recognizable color or pattern of colors simply do not explain
the use of the product, and therefore do not constitute labeling. The
comment concluded that if the items are not advertising or labeling,
FDA would not have authority to take the actions required by this
provision.
    The agency agrees that these promotional items are neither devices
nor drugs; however, this fact is not relevant to the agency's authority
to proscribe their use. As explained earlier in this document, FDA has
authority to impose restrictions on the access to and promotion of
devices under section 520(e) of the act, and this authority provides
the basis for restrictions on advertising, including those that FDA is
imposing on promotional items. FDA also derives authority for these
restrictions from section 502 of the act. Likewise, it is not relevant
in this instance whether the items are described as advertising or
labeling. The agency has the authority to restrict them because they
promote the use of restricted devices, cigarettes and smokeless
tobacco, by young people and thus undercut the restrictions on access
to these products that FDA has imposed. Therefore, FDA has authority to
regulate how these promotional items are used by manufacturers,
distributors, and retailers of the restricted devices.
    (74) Many comments challenged FDA's evidentiary basis for this
provision. Those opposing the provision made the point that promotional
items do not cause young people to use tobacco, and that banning them
will not reduce tobacco use. These comments fall into two categories:
Those that rely on theoretical or policy arguments and those that
provide or criticize studies or other evidence.
    a. Theoretical or policy considerations. Several comments argued
generally that it is well-documented that the significant factors
associated with regular underage tobacco use are peer pressure and
smoking by friends, older siblings and parents. They noted that FDA
cited no evidence that the use of a tobacco trademark on a nontobacco
product, such as a lighter or jacket, has any impact on underage
tobacco consumption, or that its removal will reduce youth tobacco use.
Consequently, they argue, banning the use of tobacco brand names on
nontobacco products will fail to achieve FDA's goal of curbing teen
smoking.
    One comment maintained that people, including those under age 18,
do not wear these items in order to advertise anything or to be
``walking billboards.'' Rather, according to this comment, they wear
them to make a public statement, because they find the items
aesthetically pleasing, or for other reasons. Moreover, the comment
argued, FDA has no authority to regulate the attire of adults, school
students, or anyone else.
    In addition, the comment argued, the goal of these programs is to
reinforce brand loyalty among existing customers. Their purpose is to
expand market share among existing smokers, not to induce nonsmokers to
start smoking. These programs are, by their very nature, aimed at
people who already are smokers, that is, the merchandise is provided
only to consumers who have accumulated and submitted significant
numbers of proofs of purchase. No one would be persuaded to start
smoking by a cents-off coupon or by the offer of a free cigarette
lighter, but a smoker might be tempted by the offer. The comment argued
that in the hard fought battles for market share among cigarette
companies, discounts and premiums represent a way to promote and retain
brand loyalty and to weaken loyalty to competitors' brands.
    Some comments bolstered their arguments with a citation to the
decision of the Supreme Court of Canada, which, they claimed,
invalidated a similar ban. The Canadian court concluded that there was
no direct or indirect evidence of any causal connection between the
objective of decreasing tobacco consumption and the absolute
prohibition on the use of a tobacco trademark on articles other than
tobacco products. These comments argued that FDA should follow the
Canadian judgment (see section VI.D.3.f. of this document for a
complete discussion of this case).
    On the other hand, one comment stated that U.S. and international
experience provide substantial support for a ban. It stated that in the
United States, nontobacco items were heavily used by RJR to market its
Camel tobacco to young people.
    In addition, one comment that supported FDA's action stated that
young people participate to a marked extent in tobacco company
promotions. It noted that these promotions all use attractive imagery
and prizes that are intrinsically interesting to adolescents. Other
comments stated that these promotions are particularly effective with
young people, who have less disposable income. The items are a way for
young people to get something for nothing and provide added incentive
for young people to purchase tobacco products. One comment that
supported this provision stated that these items can become ``walking
billboards,'' that can come into schools and other places where tobacco
advertising is generally prohibited.
    Another comment stated that the ban serves as an important
corollary to the advertising restrictions, specifically, it argued that
the impact of removing tobacco product advertisements from minors'
magazines would surely be reduced if minors themselves continued
wearing the advertisements on their heads and bodies. The comment
asserted that there is a correlation between participation in a
promotion and susceptibility to tobacco use.
    b. Studies and evidence. One comment referenced a new study \224\
that found that participation in tobacco company promotions by 12 to 17
year olds is more predictive of susceptibility to use tobacco products
than smoking by those close to the individual. The measure of
``participation'' was the possession of a catalog, the ownership of any
promotional item, or the saving of coupons that could be redeemed for
promotional items. The study found that catalog ownership was the most
common form of participation in tobacco company promotions.
---------------------------------------------------------------------------
    \224\ Evans, N., et al., ``Influence of Tobacco Marketing and
Exposure to Smokers on Adolescent Susceptibility to Smoking,''
Journal of the National Cancer Institute, vol. 87, pp. 1538-1545,
1995.
---------------------------------------------------------------------------
    A comment that opposed this provision argued that FDA had cited no
credible studies that demonstrate either that these items are
especially appealing to young people, or that possessing these items
causes young people to start smoking or to smoke more. It stated that
although FDA relied on a study by Dr. John Slade \225\ that reported
that there is an association between participating in promotions and a
person's susceptibility to tobacco use, FDA did not describe the study
thoroughly. The comment stated that the notion of susceptibility is
itself problematic. It stated that even if this study is taken at face
value, it does not support FDA's conclusions. While the study reported
that 83.5 percent of
[[Page 44524]]
respondents age 12 to 17 were aware of at least one tobacco company
promotion, it also reported that only 10.6 percent of respondents owned
a nontobacco promotional item. These numbers, the comment asserted, do
not support the theory that nontobacco items are appealing to youth or
have a discernible impact on youth smoking rates.
---------------------------------------------------------------------------
    \225\ Slade, J., et al., ``Teenagers Participate in Tobacco
Promotions,'' presented at the 9th World Conference on Tobacco and
Health, October 10-14, 1994.
---------------------------------------------------------------------------
    Moreover, the comment took exception with Dr. Slade's finding that
25.6 percent of 12 to 13 year olds and 42.7 percent of 16 to 17 year
olds participate in promotional programs such as Camel Cash or Marlboro
miles. The comment stated:
    the reason for these apparently high percentages is clear from
the most cursory analysis of the data * * * [I]n this supposedly
random survey, fully 45.7 percent of the households of 12-13 year
olds interviewed had someone at home who smoked (37.9 percent in
households of 16-17 year olds), and yet, in reality only 25 percent
of the American public--half the rate of the population relied upon
by Dr. Slade--smoke. [Thus], the unrepresentative sample population
Dr. Slade employed created a significant bias, which distorts the
results of this survey and renders them entirely unreliable.
    Finally, one comment stated that the primary basis for the
provision appeared to be data \226\ that allegedly show that 44 percent
of teenage smokers and 27 percent of teenage nonsmokers have received
nontobacco promotional items. The comment stated that the study is
irrelevant because it drew no conclusion as to the significance of the
number, nor did it indicate how the teenagers received the items.
---------------------------------------------------------------------------
    \226\ ``Teenage Attitudes and Behavior Concerning Tobacco--
Report of the Findings,'' the George H. Gallup International
Institute, Princeton, NJ, p. 59, September 1992.
---------------------------------------------------------------------------
    In response, the agency concludes that the evidence presents a
compelling case to prohibit the sale and distribution of all nontobacco
items that are identified with a cigarette or smokeless tobacco product
brand name or other identifying characteristic. The evidence
establishes that these nontobacco items are readily available to young
people and are attractive and appealing to them with as many as 40 to
50 percent of young smokers having at least one item (60 FR 41314 at
41336). The imagery and the item itself create a badge product for the
young person and permit him/her the means to portray identification.
    FDA has shown that tobacco advertising plays out over many media,
and that any media can effectively carry the advertising message.
Moreover, the agency recognizes that the tobacco industry has exploited
loopholes in partial bans of advertising to move its imagery to
different media. When advertising has been banned or severely
restricted, the attractive imagery can be and has been replicated on
nontobacco items that go anywhere, are seen everywhere, and are
permanent, durable, and unavoidable. By transferring the imagery to
nontobacco items, the companies have ``thwarted'' the attempts to
reduce the appeal of tobacco products to children.
    In addition, items, unlike advertisements in publications and on
billboards, have little informational value. They exist solely to
entertain, and to provide a badge that, as the Tobacco Institute
asserted, allows the wearer to make a statement about his ``social
group'' for all to see. But because tobacco is not a normal consumer
product, it should not be treated like a frivolity. Advertising that
seeks to increase a person's identification with and enjoyment of an
addictive deadly habit has the ability, particularly among young
people, to undermine the restriction on access that FDA is imposing.
For these reasons, the agency continues to find sufficient evidence to
support a ban on these items.
    Finally, regarding the unpublished paper by Dr. Slade, the comment
has confused the household smoking rate with the overall population
smoking rate. The smoking rate per household can be as high as twice
the overall adult smoking rate. For example, if the smoking rate for
adults were 25 percent and assuming two adults per household and only
one of the pair smokes, then the household smoking rate could be as
high as double that of the individual rate. Therefore the range of
possible household smoking rates would be 25 percent to 50 percent,
with 44 percent being quite plausible.
    Lastly, the comments that state that peer pressure and smoking by
friends and family are significant factors in influencing a young
person's tobacco use, rather than promotional items, fail to recognize
that if a young person is influenced by what a peer says about tobacco
use, he or she will also likely be influenced by that same peer wearing
a tobacco promotional item.
    (75) One comment from a small smokeless tobacco company expressed
concern because much of the packaging used for its products also bears
its corporate logo. Moreover, several of its brand names include words
in its corporate logo. Thus, the comment argues that FDA might find
that its corporate logo is an ``indicium of product identification''
covered by the restrictions in Sec. 897.34. The comment stated that
promotional items are a small but important part of its advertising and
promotional activity, and these items allow its customers to feel like
a part of an extended family. It would be unfair, the comment argued,
as well as harmful to the company, if FDA were to determine that a
corporate logo may not be used on promotional items.
    One comment stated that the total merchandising and ban in
Sec. 897.34(a) is unreasonably broad in scope. It stated that it
virtually limits all merchandising, because all colors or patterns of
colors are associated with some brand or another of tobacco product.
The comment stated that the proposed regulation is so confusingly vague
that one could argue that a ``distributor'' would be prohibited from
using the color red in any event for any product category, brand, or
corporation because Marlboro brand tobacco products utilize the color
red.
    Another comment stated that because the definitions of
``cigarette'' and ``smokeless tobacco product'' are limited to tobacco
products with nicotine, the agency should consider the possibility that
a tobacco company could market a nicotine-free brand extension of a
cigarette or a smokeless tobacco product and advertise this product
free of restrictions. The comment stated that the advertising for such
a product could have carryover value for the nicotine containing
versions of the product thereby undermining the intent of the
regulations.
    The agency agrees that it needs to clarify the scope of
Sec. 897.34(a). The regulation covers any item with indicia of the
brand identity. If the corporate logo is not an indicium of a brand
identity, its use would not be prohibited in nontobacco labeling or
advertising. On the other hand, if a corporate logo includes an
identifiable brand name or image, it must comply with the restrictions.
Any other position would permit a company to evade the intent of this
regulation by using a corporate logo to continue to display brand
imagery. For example, RJR may continue to sell or distribute hats and
tee shirts with the name ``R. J. Reynolds'' on them, but not the name
``Camel.'' Nor can it put the Camel inside the Reynolds logo. The
agency, therefore, has amended Sec. 897.34(a) to state that the indicia
of product identification cannot be identical or similar to, or
identifiable
[[Page 44525]]
with those used ``for any brand of ciagarettes or smokeless tobacco''.
    In addition, it is not the agency's intention to ban the use of
registered or recognizable colors for all advertising. Only the owner
or user of the brand identification is prohibited from using that color
or pattern of colors in a manner so as to advertise tobacco or
smokeless tobacco. For example, Philip Morris would be prohibited from
using the distinctive red, black, and white pattern of colors which
identify Marlboro, but neither RJR nor Joe's Garage would be prohibited
by the regulations from using those colors.
    Finally, in response to the last comment, the agency has restricted
the coverage of this regulation to promotions of cigarettes and
smokeless tobacco products containing nicotine. It has no evidence
justifying a broader coverage of the regulation to nicotine-free
products at this time. However, a company could not give a nontobacco
product (a nicotine free product) a tobacco brand name. This is exactly
what this section of the final rule forbids.
    (76) Several comments argued that Sec. 897.34(a) constituted a
restriction on symbolic expression that cannot be characterized as
commercial speech. The comments argued that these items do not propose
a commercial transaction. One comment argued that in Cohen v.
California, 403 U.S. 15 (1971), the Supreme Court recognized that
otherwise objectionable words worn on a jacket are fully protected
speech.
    FDA finds no merit to these comments. Section 897.34(a) on its face
is limited only to manufacturers and to distributors of imported
cigarettes or smokeless tobacco. It does not limit the rights of
individuals to express themselves by wearing an article of clothing
that bears a picture of a cigarette or a logo. \227\ What it does limit
is the ability of manufacturers and some distributors of tobacco and
smokeless tobacco to do what is the essence of commercial speech--to
take actions to call public attention to the products whose logo the
items bear, so as to arouse a desire to buy those products. (See Public
Citizen v. FTC, 869 F.2d at 1554.) Because this is what the nontobacco
items that are the subject of Sec. 897.34(a) are designed to do, they
share all the characteristics of the pamphlets that the Supreme Court
in Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 66-67 (1983),
found to be commercial speech. Consequently, FDA may regulate the
nontobacco items as commercial speech, as long as its regulation passes
muster under the Central Hudson test (see 463 U.S. at 68).
---------------------------------------------------------------------------
    \227\ The fact that individuals would be free to make their own
articles of clothing with brand names of tobacco products on them
does not make the regulations fatally underinclusive. (See U.S. v.
Edge Broadcasting Co., 509 U.S. 434 (``Accordingly, the Government
may be said to advance its purpose by substantially reducing lottery
advertising, even where it is not wholly eradicated.'').)
---------------------------------------------------------------------------
    (77) Some comments challenged the constitutionality of the
prohibition on the use of a cigarette or smokeless tobacco brand logo
on nontobacco products under the Central Hudson test. The comments
argued that the prohibition does not directly advance FDA's interest
because the prohibition is unrelated to the goal of protecting
children. The comments also argued that the prohibition is not narrowly
tailored because it is not limited to children and not limited to
products that are particularly attractive to children.
    Several comments disagreed and argued that the prohibition is a
constitutionally permissible restriction on speech. One of these
comments pointed to the finding in the IOM's Report Growing Up Tobacco
Free of the effectiveness of this type of advertising with young
people. The comment said that FDA would therefore be justified in
prohibiting its use.
    FDA has carefully considered these comments. The agency concludes
that the prohibition on the use of a cigarette or smokeless tobacco
brand logo on nontobacco items is a permissible restriction under the
First Amendment.
    First, this restriction will directly advance FDA's interest in
protecting the health of people under 18 years of age. In Public
Citizen v. FTC, 869 F.2d at 1549 n. 15, the Court of Appeals for the
D.C. Circuit recognized that the nontobacco ``utilitarian items might
be among the most effective forms of promotion with respect to
adolescents.'' This judgment is consistent with much of the other
evidence in the administrative record. A 1992 Gallup survey found that
44 percent of all adolescent smokers and 27 percent of adolescent
nonsmokers owned at least one promotional item from a tobacco company.
\228\ Testing by RJR in 1988 found that nontobacco items performed best
among young adults. \229\
---------------------------------------------------------------------------
    \228\ ``Teenage Attitudes and Behavior Concerning Tobacco--
Report of the Findings,'' The George H. Gallup International
Institute, Princeton, NJ, pp. 17, 59, September 1992.
    \229\ Bolger, M. R., Marketing Research Report, entitled Camel
``Big Idea'' Focus Groups-Round II, September 21, 1988.
---------------------------------------------------------------------------
    The IOM Report pointed out that the ubiquity of nontobacco items
conveys the impression that tobacco use is the norm. \230\ As stated in
section VI.D.3.c. of this document, this impression, that tobacco use
is widespread and accepted, fosters experimentation with tobacco and
smokeless tobacco by young people. This fact led the IOM to recommend
that the use of tobacco product logos on nontobacco items be
prohibited. \231\ The IOM said that this and several other related
steps (including requiring the use of the text-only format) were
necessary to eliminate those features of advertising that tend to
encourage tobacco use by children and youths.
---------------------------------------------------------------------------
    \230\ IOM Report, p. 110.
    \231\ Id., p. 133.
---------------------------------------------------------------------------
    Thus, the prohibition on the use of these logos will directly
advance FDA's interest. The IOM's recommendation provides significant
evidence of this fact.
    Second, even though FDA is prohibiting the use of brand logos on
nontobacco items, this restriction meets the requirement of narrow
tailoring. The Supreme Court has held that a ban may satisfy this
requirement if the agency's judgment is that it is ``perhaps the only
effective approach'' (Board of Trustees of the State of N.Y. v. Fox,
492 U.S. at 479). In this case, FDA has determined that a ban of these
items is necessary for several reasons. The appeal of something for
nothing items for youngsters is great, and the extent of the appeal
makes it virtually impossible to distinguish among items, as suggested
by one comment. As the IOM pointed out, these items, when worn or used
by children, are capable of penetrating areas of a child's world that
might be off-limits to other forms of advertising. \232\ Because they
penetrate the young persons' world, they are very effective in creating
the sense that tobacco use is widely accepted, which, as stated in
section VI.D.3.c. of this document, is extremely important to children
and adolescents. These items act like a badge that marks an individual
as a member of a group, another attribute that makes them particularly
attractive for young people. There is no way to limit the distribution
of these items to adults only. The industry claims that it already is
taking sufficient action to ensure that only adults get these items
\233\ but as the evidence
[[Page 44526]]
indicates, a substantial number of young people have them. As noted in
this section, almost one-half of young smokers and one-quarter of
nonsmokers have one or more items. Moreover, even were items to be
distributed to adults only, this would not prevent the wearers from
becoming walking advertisements that would continue to display the
attractive imagery.
---------------------------------------------------------------------------
    \232\ Id., p. 110.
    \233\ The Cigarette Advertising and Promotion Code, subscribed
to by the major cigarette manufacturers, contains three provisions
that address the necessity of preventing anyone under the age of 21
from getting promotional items.
---------------------------------------------------------------------------
    For all these reasons, FDA finds that all nontobacco items that
bear cigarette or smokeless tobacco brand logos are capable of playing
a significant role in a young person's decision to engage in tobacco
use. Because no distinction among these products is apparent, and no
way of limiting their availability to adults is possible, FDA finds
that the most direct and effective means of controlling their appeal to
adolescents and children under the age of 18 is to prohibit
manufacturers, distributors, and retailers of tobacco products from
distributing or selling them.
    (78) One comment opposed Sec. 897.34(a) because the comment argued
that the provision would impose restrictions on an otherwise lawful use
of trademarks. It stated that Sec. 897.34(a) would prohibit the right
of any trademark owner to use a trademark for the sole reason that the
trademark is used by another party on tobacco products. The comment
stated that Sec. 897.34(a) also would prevent large distributors and
retailers, who handle a wide variety of both tobacco and nontobacco
products, from distributing or selling any product which happened to
bear the same or similar mark as that used on a tobacco product. The
comment stated that, for example, grocery markets could not stock or
sell Beechnut baby food or chewing gum because Beechnut also is used as
a trademark for chewing tobacco even though the manufacturers are two
different companies with the same name. It stated that the Lanham Act
(15 U.S.C. 1051 (1996)) would, and in fact does, permit such
identically branded products to coexist in the marketplace because of
the absence of any likelihood that these products would be associated
or confused with each other.
    FDA recognizes that Sec. 897.34(a) as proposed created unintended
confusion and therefore will amend the provision to clarify the
agency's meaning. Changes have been made that are intended to clarify
Sec. 897.34(a) so that retailers and distributors of domestic tobacco
products are not included, thus avoiding the problem identified with
the comment and making it possible for grocers to sell Beechnut baby
food and Beechnut tobacco products.
    (79) Several comments stated that Sec. 897.34(a) would unlawfully
constrain the separate and distinct activity of trademark
diversification in connection with products that are unrelated to the
marketing of tobacco products by cigarette manufacturers. One comment
contended that general bans on the licensing of brand logos pertaining
to tobacco products are incompatible with long-established principles
of international trademark law. The comment asserted that the use of
such trademarks in a nontobacco context is not an indirect means of
advertising or promoting tobacco products. The comment stated further
that it is an increasingly common practice in many industries to ``spin
off'' new products by marketing them under a trademark that has
acquired some cachet or represents quality. It stated that such
licensed products are not marketed in an effort to sell the ``root''
product, rather, the trademark has some ``detachable'' qualities that
help build demand for the licensed goods. It stated that the same is
true of marketing a nontobacco product under the trademark of a tobacco
product.
    FDA cannot agree with the comments' claims. While the agency
recognizes that the use of these trademarks on hats and tee shirts
promotes the underlying tobacco product by continuing the extensive
imaging in these venues. Moreover, as the court in Public Citizen, 869
F.2d at 1549, n. 15, recognized, branded nontobacco items might be the
most effective type of promotion to young people. Therefore, failure to
include this form of advertising and promotion in the regulation, would
weaken considerably FDA's efforts to reduce the appeal of these
products to young people under 18, and would undermine the agency's
access restrictions.
    The agency also disagrees with the comment's suggestion that
Sec. 897.34(a) effects a taking (or deprivation of a property right) by
prohibiting the use of tobacco trademarks to market nontobacco
products. Section 897.34(a) clearly relates to commercial speech and
the comment is merely attempting to cloak commercial messages with the
issues of registrability and value of well-known trademarks. As
discussed in section XI. of this document, the agency has determined
that this regulation does not effect a taking compensable under the
Fifth Amendment.
    One comment that supported FDA's proposal stated that smokeless
tobacco makers circumvent the FTC regulation that covers the use of
brand names of smokeless tobacco products on promotional items such as
caps and tee-shirts. For instance, rather than stop making such items,
U.S. Tobacco has registered Skoal Bandit Racing, Skoal--Copenhagen Pro
Rodeo, and Skoal Music as service marks and places these names on many
of the items it offers the public, thereby evading FTC's regulation.
The comment stated that this experience demonstrates the need for
regulations of this sort to be comprehensive.
    The comment stated further that there may be other relatively easy
ways around Sec. 897.34(a). It stated that if the rights to a brand
name were transferred to an entity that was not a manufacturer,
distributor, or retailer that this separate entity could then license
back the use of the brand name to the tobacco company and proceed to
market, license, distribute, or sell other goods and services using
that same brand name. The comment stated that one way to close this
loophole would be to require manufacturers to own the trademarks and
the rights to all associated symbols for each brand they produce.
    FDA disagrees with these comments and believes that the concerns
expressed are misplaced. Section 897.34(a) prohibits all use of the
Skoal brand name on nontobacco items, whether used alone, i.e.,
``SKOAL,'' or with other words, such as ``Skoal Racing Bandit.'' In
addition, the provision forbids not just the use of the brand name,
logo, etc. by the manufacturer but also the marketing, licensing,
distributing, selling of them, or the causing of any of those
activities; thus, effectively preventing the type of license-transfer
arrangement described in the comment.
    (80) Several comments stated that FDA cannot ban contests and
lotteries under section 520(e) of the act, because they are not
devices. Moreover, the comments stated that existing laws and
regulations provide adequate protection and to the extent that the
participation of minors in these activities is a problem the States
already have ample power to regulate them.
    In addition, a comment stated that FDA offered no evidence, or
citation to studies, that contests, lotteries, or games involving
tobacco products have particular appeal to adolescents. Moreover, the
comment stated, that any inability to quantify participation by youth
does not mean that the agency
[[Page 44527]]
can ban an entire form of promotion to adults.
    One comment pointed out that, by law, customers wishing to
participate in games of chance or similar promotional activities must
be adults. The comment stated that banning such activity bears no
relationship to achieving FDA's stated purpose. The sole effect of
FDA's ban would be to unjustly impair the relationship between tobacco
manufacturers, retailers, and their adult customers.
    One comment stated that the agency should not prohibit all use of
contests or games of chance by the tobacco industry because regulations
already exist and are enforced by the Bureau of Alcohol, Tobacco, and
Firearms (BATF).
    Another comment stated that the proposed rule misunderstands the
nature of such activities, misrepresents the appeal of promotions, and
assumes without proof that promotions induce young people to smoke. It
stated that promotional activities are not undertaken to encourage
people, young or old, to smoke, but rather to introduce existing
smokers to the brand being promoted and to provide them with incentives
to choose that brand over others. Moreover, participation in such games
is expressly limited to smokers who are 21 years of age or older.
    Conversely, one comment provided support for the 1995 proposed
rule. It stated that, while it is unlikely that anyone under 18 years
of age actually has ever received any of the major prizes or offers
from the give-aways, the award of prizes is not the point of these
marketing tools. It stated that the consumer's participation in the
fantasy of the prize in association with the brand being promoted is
the reason these contests are used.
    FDA has been persuaded by the comments to modify Sec. 897.34(b)
regarding lotteries and games of chance in connection with nontobacco
items. Federal law already prohibits ``any certificate, coupon, or
other device purporting to be or to represent a ticket, chance, share,
or an interest in, or dependent on, the event of a lottery to be
contained in, attached to, or stamped, marked, written, or printed on
any package of tobacco products'' (26 U.S.C. 5723(C)). BATF has issued
regulations enforcing this provision (27 CFR 270.311).
    In addition, although no Federal agency has issued specific
restrictions on games of chance and lotteries in connection with
advertising of tobacco products, Federal and State law prohibit games,
contests, and lotteries if based on product purchase (18 U.S.C. 1302-
1307, 1341 (1995)). Given these existing Federal requirements, the
agency has concluded that there is no need to add FDA regulations.
Therefore, Sec. 897.34(b) has been modified to delete the provision
concerning lotteries and games of chance but to continue to the
prohibition of gifts and proof of purchase acquisitions.
    It must be understood, however, that advertising for games,
lotteries, or contests may not contain any indicia of product
identification other than black text on a white background, since the
advertisement for a contest in the name of a tobacco brand, or
identifiable as a tobacco brand, is restricted to text-only format as
required in Sec. 897.32(a). The agency points out that, as part of the
review of the regulation that it plans to undertake in 2 years, FDA
intends to consider the effect of games of chance and lotteries on
young people and determine whether additional regulations are
necessary.
    Based on the evidence amassed during its investigation, and the
surveys described in the preamble to the 1995 proposed rule (60 FR
41314 at 41336) and submitted during the comment period, FDA has
concluded that nontobacco items (identified with a tobacco brand),
either sold, given away, or provided for proof of purchase are an
instrumental form of advertising in affecting young people's attitudes
towards and use of tobacco. Moreover, banning this form of advertising
is essential to reduce tobacco consumption by young people. This form
of advertising has grown in importance over the last 20 years. As
discussed in this section, expenditures rose from 2.1 percent in 1975
to 8.5 percent in 1980 (60 FR 41314).
    Studies--A Gallup survey found that about one-half of young smokers
and one quarter of all non-smokers, own at least one promotional item
(60 FR 41314 at 41336). Another study, detailed more fully in this
section, found that participation in tobacco company promotions (owning
an item, collecting coupons for gifts, or having a catalogue) by 12 to
17 year olds is more predictive of susceptibility to use of tobacco
products than smoking by those close to the individual. Another study,
by Slade, found that 25.6 percent of 12 to 13 year olds and 42.7
percent of 16 to 17 year olds participate in promotional programs such
as Camel Cash and Marlboro miles (60 FR 41314 at 41336).
    Evidence Provided by Industry Members--Two separate studies done
for R.J. Reynolds, and described in this section, found that tee shirts
were a significant source of information about tobacco for some young
people and that these items performed best among young people.
    A ban on this type of advertising will prevent the ``something for
nothing appeal'' of give aways and proofs of purchase and will
eliminate the walking billboard, who can enter schools and other
locations where advertising is inappropriate. Thus, FDA concludes that
the restriction it is adopting on this type of promotional material
will directly advance FDA's efforts to substantially reduce consumption
of tobacco products by children and adolescents under 18.
8. Section 897.34(c)--Sponsorship of Events
    Proposed Sec. 897.34(c) provided that ``no manufacturer,
distributor, or retailer shall sponsor or cause to be sponsored any
athletic, musical, artistic or other social or cultural event, in the
brand name, logo, motto, selling message, recognizable color or pattern
of colors, or any other indicia of a product identification similar or
identical to those used for tobacco or smokeless tobacco products.''
Proposed Sec. 897.34(c) would have permitted a manufacturer,
distributor, or retailer to sponsor or cause to be sponsored any
athletic, musical, artistic or other social or cultural event in the
name of the corporation that manufactures the tobacco product, provided
that both the registered corporate name and the corporation were in
existence before January 1, 1995.
    The preamble to the 1995 proposed rule explained that sponsorship
by cigarette and smokeless tobacco companies associates tobacco use
with exciting, glamorous, or fun events such as car racing and rodeos,
and provides an opportunity for ``embedded advertising'' that actively
creates a ``friendly familiarity'' between tobacco and sports
enthusiasts, many of whom are children and adolescents. The preamble to
the 1995 proposed rule cited several studies that demonstrate the
impact of sponsorship on consumer attitudes (60 FR 41314 at 41337
through 41338). The proposed restriction was intended to break the link
between tobacco company-sponsored events and use of tobacco and reduce
the ``friendly familiarity'' that sponsorship generates for a brand.
    (81) FDA received a substantial number of comments concerning the
agency's 1995 proposal on sponsorship, including comments submitted by
the
[[Page 44528]]
tobacco industry, motorsport industry, advertising agencies, adult
smokers, medical professionals, public interest groups, and racecar
drivers. Approximately 300,000 individuals submitted a form letter that
was produced by 1 tobacco manufacturer. The form letter inaccurately
referred to the 1995 proposal as a ``ban on tobacco sponsorship of
events including concerts, State fairs and consumer promotions''
whereas the agency proposed to permit tobacco company sponsorship of
all events to continue as long as they are in the corporate name. Other
comments submitted by the tobacco industry, adult smokers, and
motorsport industry strongly objected to the provision. In contrast,
those comments submitted by public interest groups, medical
professionals, and some racecar drivers strongly supported the
provision.
    In response to comments, the agency has modified this provision to
prohibit all sponsored entries and teams using the brand name in
addition to the prohibitions that were proposed. Moreover, the final
rule clarifies that the corporate entity that can sponsor events, teams
and entries must not only be registered but that the registration must
be in active use in the United States, and the corporate name cannot
include any indicia of product identification ``that are identical or
similar to, or identifiable with, those used for any brand of
cigarettes or smokeless tobacco.''
    (82) Several comments addressed the issue of whether young people
attend, or even see, sponsorship events. Some comments opposed the
provision, arguing that sponsored events (such as motorsport events and
seniors golf tournaments) are created for and attended by adult
smokers, and that there is no credible evidence that these events are
targeted at, created for, attended by, or even seen by significant
numbers of children and adolescents. One comment stated that ``contrary
to FDA's assertions,'' the industry takes special steps to ensure that
material distributed at events is not attractive to minors. One comment
stated that ``[r]ecent industry studies demonstrate that the
overwhelming majority of fans at motorsports events are adults,'' and
that ``for example, 97 percent of NASCAR Winston Cup Series race
attendees are 18 years of age and older [and] [m]ore than 90 percent of
NHRA Winston Drag Racing Series attendees are 21 years old and older.''
The underlying studies were not, however, cited or attached to the
comment.
     One comment added that motorsport events are not seen by
``significant'' numbers of children under the print media standard
proposed by FDA (i.e., the ``15 percent/2 million benchmark''). The
comment argued that:
    [o]n the one hand, the agency concedes that image advertising is
permissible in publications with a primarily adult readership
because ``the effect of such advertising on young people would be
nominal,'' but on the other hand, it attempts to measure the impact
of cigarette brand sponsorships * * * by using statistics on the
viewing audience of sponsored motorsport events without recognizing
that these figures demonstrate the fact that the vast majority of
viewers of such events are adults.
The comment stated that:
    [I]n fact, the 64.05 million underage viewers of the 354
motorsport broadcasts studied represents only 7 percent of the total
viewing audience of these broadcasts. This averages out to 180,806
underage viewers per event. These figures are far below the 15
percent and two million readership benchmarks that are permitted for
image advertising in print media.
    * * *
    The comment also stated that FDA made no attempt to measure the
percentage of adolescents in the live gate of sponsored events, and
that industry estimates indicate that the overwhelming percentage of
fans attending motorsport events are adults.
    One comment stated that the price of a typical ticket to a stock
car race event is expensive enough to preclude adults from taking their
children to events and to preclude children themselves from attending
these events.
    Other comments supported the provision, stating that tennis
tournaments, sports car, motorcycle and powerboat racing, and rodeos
all are aimed at sports enthusiasts, many of whom are children or
teenagers, and that rock concerts and country music festivals are
``magnets'' for adolescents.
    One comment stated that:
    [it] is also no coincidence that when the tobacco industry
sponsors events where the audience is almost entirely educated
adults, the sponsorship is in the name of the corporation (i.e., art
exhibits, modern dance companies), but when the event fits the
psychological image the tobacco industry needs to attract
adolescents, the sponsorship is in the name of the brand most likely
to appeal to those children (Virginia Slims, Marlboro, Winston,
Skoal Bandit).
    The agency, which acknowledges the comments' reports on the number
of young people at events, did not receive any data to support or
refute these numbers. However, recent reports in the press indicate
that the number of young people attending these events may be growing.
    In NASCAR we found a great kids' business. I was astounded by
their information, statistics and demographics regarding kids. [Fred
Siebert, president of Hanna-Barbera, Inc., explaining why the
company is sponsoring a cartoon race car to appear in NASCAR races
emblazoned with Fred Flintstone and other cartoons on the hood.]
After reviewing the 1995 NASCAR season, we concluded that a sizable
number of attendees at NASCAR events were families with kids ages 6-
11. Yet we felt NASCAR was not specifically serving that audience.
[Gary Bechtel, owner Diamond Ridge Motorsports, who will field a
NASCAR car and team named Cartoon Network Wacky Racing.] \234\
---------------------------------------------------------------------------
    \234\ ``Diamond Ridge Motorsports and Hanna-Barbera, Inc., to
form Wacky Racing Team Changing Face of NASCAR; Deal Launches
Cartoon Network Consumer Branding Initiative,'' Business Wire,
November 10, 1995.
---------------------------------------------------------------------------
    * * * * *
    We looked at NASCAR and saw how quickly it was growing
nationally and the fact that so many families go to the races it
seemed like a natural fit. \235\
---------------------------------------------------------------------------
    \235\ ``Automobile Racing's Widening Appeal Gets the Flintstones
in Sponsor Table,'' The Times Union, p. B11, March 30, 1996.
---------------------------------------------------------------------------
Moreover, the agency finds that 64.05 million underage viewers (or
180,806 underage viewers per event) is clearly not ``insignificant.''
As discussed in the preamble to the 1995 proposed rule, the ``Sponsor's
Report,'' which estimated the value of all product exposure for most
U.S. automobile races, found that 354 motorsport broadcasts ``had a
total viewing audience of 915 million people, of whom 64 million were
children and adolescents.'' The preamble to the 1995 proposed rule
stated: ``the impact of sponsoring televised events such as these
automobile races is perhaps most apparent when one realizes that over
10 million people attended these events, while 90 times that number
viewed them on television'' (60 FR 41314 at 41337). In addition, recent
news accounts indicate that televising of races has increased both in
volume and diversity. For example, television can often support three
major races in 1 day. The two cable ESPN channels had 150 hours of auto
racing programming in May, 1996, including 95 hours of live races, time
trials, qualifying and practice laps. \236\
---------------------------------------------------------------------------
    \236\ Moore, S., ``Ladies and Gentlemen, Start Your
Televisions,'' Washington Post, May 26, 1996.
---------------------------------------------------------------------------
    The effect of sponsored events on the young people who attend or
see these events is enormous. Advertising affects young people's
opinion of tobacco products, first, by creating attractive and exciting
images that can serve as a ``badge'' or identification, second, by
utilizing multiple and prolonged exposure in a variety of media,
thereby
[[Page 44529]]
creating an impression of prevalence and normalcy about tobacco use,
and finally, by associating the product with varied positive events and
images. The sponsorship of events by tobacco companies uniquely
achieves all three objectives. Sponsorship creates an association
between the exciting, glamorous or fun event with the sponsoring
entity. Whether at the live gate, or on television, young people will
repeatedly see and begin to associate the event, which they are
enjoying, with the imagery and appeal of the product. All of the
attendant concerns of hero worship of the sports figures and
glamorization of the product by identification with the event are
present, whether there are thousands or hundreds of thousands of young
people in attendance. Race car drivers are extremely popular with young
people and often are looked up to as heroes. According to one promoter
of NASCAR properties, ``We've found that boys look to NASCAR drivers
the same way they do to heroes, such as firemen, policemen,
professional fighters, or astronauts.'' \237\
---------------------------------------------------------------------------
    \237\ Williams, S., ``NASCAR Races into Kid's Licensing,
National Association for Stockcar Auto Racing Seeking Promotional
Appeal and Other Products,'' Children's Business, vol. 9, No. 7, p.
28, July 1, 1994.
---------------------------------------------------------------------------
    Furthermore, sponsorship events present a prolonged period of time
in which to expose the audience, including young people, to the
imagery. Sponsorship events do not provide people with a momentary
glimpse at the imagery, but from 1 to 2 or 3 hours of constant
attractive imagery. The audience has more than enough time to associate
the images of the sporting event or the concert with the product.
    The agency agrees that there may be some events (such as seniors
golf tournaments) that are primarily attended by adult audiences. The
agency also does not claim that all sponsorship events are attended
primarily by young people, but that the exposure (which includes
television broadcasts) of young people to sponsored events is
substantial. Even if a small percentage of young people attend certain
sponsorship events, the amount of television exposure that young people
receive is substantial.
    In addition, the agency recognizes that numbers or percentages of
the audience less than 18 may be lower than the threshold established
for ``adult'' publications. However, the type of exposure in these two
media are dramatically different. Young people reading or flipping
through a magazine may momentarily glance at advertisements if they are
interesting or eye-catching, and as a result, the exposure, if any, to
one particular advertisement may be brief (the average time spent
viewing an advertisement is about 9 seconds \238\). However, young
people who attend sponsorship events or view them on television are
unavoidably bombarded with posters, signs, hats, t-shirts, cars, and
the like, linked with a fun, exciting, or glamorous event that they
enjoy for a prolonged period of time. Often, celebrities participating
in these events are wearing clothes and hats bearing the brand name and
attractive imagery, and young people come to associate athletes who
they admire with tobacco products. The amount of time viewed and the
positive association with the event are incalculable as persuasive
messages. Thus, the agency rejects the idea of setting a minimum
attendance threshold for brand name advertising.
---------------------------------------------------------------------------
    \238\ Fischer, P., J. Richards, and E. Berman, ``Recall and Eye
Tracking Study of Adolescents Viewing Tobacco Advertisements,''
JAMA, vol. 261, pp. 84-89, 1989.
---------------------------------------------------------------------------
    (83) FDA received many comments addressing its use of the concept
of ``friendly familiarity'' in connection with tobacco sponsorship of
events. Several comments stated that FDA misunderstood the theory,
\239\ arguing that sponsorships and promotions do not cause young
people to smoke, and that FDA has failed to meet its burden of
demonstrating that a ban of such activities will result in any decrease
in underage smoking. In fact, according to this comment, the studies
demonstrate that young people are most familiar with the brands of
tobacco that are most heavily advertised.
---------------------------------------------------------------------------
    \239\ The comment stated that ``[t]he need to establish a
`friendly familiarity' with a brand name is not about deciding to
smoke * * * nor about deciding to use a commodity at all--the
decision to make a category purchase within a mature product
category is ALREADY made before advertising affects the brand choice
within the category.''
---------------------------------------------------------------------------
    One comment asserted that since motorsport advertising and
promotion comprises a small percentage of overall tobacco advertising
(on the order of 4 or 5 percent of total tobacco advertising), there is
little support for the conclusion that tobacco sponsorship of
motorsports has any significant effect on the rate of youth smoking.
    One comment from a 26-year old ex-smoker (who began smoking at age
10, and smoked for 13 years) and NASCAR racing fan stated:
    [M]y favorite driver is sponsored by a beer company. I don't
drink and I'm not going to start because my favorite driver has that
sponsor. However- if I DID drink already, I may switch brands to
support my driver. All the advertising in the world will not sway me
(or most-intelligent people) to do something I wouldn't do anyway.
    In contrast, several comments labeled the 1995 proposed rule a
``reasonable measure'' and stated that ``the evidence cited by FDA in
support of this proposal is substantial and entirely consistent with
the best available evidence.'' One comment supported FDA's sponsorship
restrictions because sponsorship heightens product visibility, molds
consumer attitudes, links the product with a particular lifestyle, and
thus increases sales.
    One comment commended FDA for drawing a ``reasonable line--one that
allows tobacco companies to continue to sponsor events and therefore to
reap the corporate good will that flows from sponsorship, but compels
the companies to jettison the hard-sell message that now typifies these
events.''
    Several comments stated that the events sponsored by tobacco
companies have a direct and powerful impact on young people because
they are fun, exciting, and glamorous, and events such as tennis
tournaments (Virginia Slims), sports car (NASCAR), motorcycles and
powerboat racing, rodeos, rock concerts, and country music festivals
are aimed at sports and music enthusiasts, including children or
teenagers. The comment stated that when minors view these events,
either in-person or on the television, they are: ``inundated with
images of the brandname or product logo (which are pasted on uniforms,
vehicles, signs and virtually every surface imaginable), creating a
direct and compelling association between the product and an enjoyable
event.''
    The comment stated that children and young adults are particularly
vulnerable to this sort of product advertising, because adolescence is
the time of life during which identities are shaped. The comment
further stated that there is ample evidence that demonstrates that the
sponsorship of events leads to strong associations between the event
and the brandname, that in turn influences the purchasing decisions of
minors.
    One comment stated that Virginia Slims' sponsorship of tennis was
vital to the image advertising Philip Morris used to sell Virginia
Slims tobacco to adolescent girls, and that Marlboro sponsorship of
racing events is no less effective with adolescent boys. The comment
stated that sports sponsorship has a secondary impact because ``[the
athletes who participate in the sponsored event, whether they be race
[[Page 44530]]
car drivers or tennis players, become walking advertisements and role
models.'' The comment stated that ``[a]s reflected by the Industry's
own Code, everyone agrees that athletes should not endorse tobacco
products because of her potential impact on children, but being a
spokesperson for the Virginia Slims Tennis Tournament, NASCAR racing,
etcetera is no less effective.''
    The agency finds that the evidence regarding the effect of
advertising and sponsorship on children's smoking behavior is
persuasive and more than sufficient to justify this regulation. The
preamble to the 1995 proposed rule described the available evidence and
explained why the agency is regulating sponsored events. The evidence
demonstrates that sponsorship of sporting events by tobacco companies
can lead young people to associate brand names with certain life styles
or activities and can affect their purchasing decisions (60 FR 41314 at
41336 through 41338). The industry, in its comments, has questioned the
relevance of the evidence but has failed to demonstrate that FDA's
tentative views were wrong (the industry's criticisms of the individual
studies are described below).
    Sponsorship events actively create an association between tobacco
and event enthusiasts. People under the age of 18 are still forming
attitudes and beliefs about tobacco use, see smoking and smokeless
tobacco use as a coping mechanism, a gauge of maturity, a way to enter
a new peer group, or as a means to display independence (60 FR 41314 at
41329). This final rule is intended to break the link between tobacco
brand-sponsored events and images and use of tobacco by young people.
In addition, the tobacco industry itself has recognized the
vulnerability of young people to advertising featuring sports heroes
and other celebrities. In its 1994 Code, the cigarette industry
promised that ``No sports or celebrity testimonials shall be used or
those of others who would have special appeal to persons under 21 years
of age.'' \240\ The impact of tobacco's association with the race
driver, the car, or the event is no less powerful and no less
persuasive.
---------------------------------------------------------------------------
    \240\ Cigarette Advertising and Promotion Code, 1990.
---------------------------------------------------------------------------
    Finally, although motorsport advertising comprises only a small
percent of overall tobacco advertising, its effect, like that of
magazines, or hats and tee shirts, is cumulative. Each separate
advertising venue, in and of itself, does not produce the entire
effect. However, taken together, the effect of each advertising
exposure is magnified beyond each discrete exposure, to create the
impression that cigarette and smokeless tobacco use is widespread and
widely accepted. These impressions, as stated in section IV.D.3.c. of
this document, are very influential to children and adolescents.
    (84) Several comments criticized in detail the studies relied on by
FDA to show the effect that sponsorship has on young people.
    One comment stated that the studies relied on by FDA (40 FR 41331
and 41332) do not provide scientifically valid support for the
conclusion that there is a causal relationship between the promotional
and sponsorship activities banned under Sec. 897.34(c) and the problem
of underage smoking.
    The agency proposed to regulate sponsored events based upon its
tentative finding that the best evidence supported such regulation.
Although the comments argued that the studies are inadequate, the
comments offered no new evidence to suggest that the conclusions are
invalid.
    (85) One comment argued that although the conclusion reached by an
unpublished paper by John Slade \241\ is that 7 percent of the viewing
audiences for NASCAR races are youths, the NASCAR Demographics brochure
states that ``NASCAR records of the age of persons who attend
motorsport events show that only 3 percent are youths.'' The comment
stated that this does not constitute a principled basis for outlawing
tobacco company sponsorship of these races even if every other
assumption FDA makes about the impact of event sponsorship were true.
---------------------------------------------------------------------------
    \241\ 60 FR 41314 at 41337, n. 225; citing Slade, J., ``Tobacco
Product Advertising During Motorsports Broadcasts: A Quantitative
Assessment,'' presentation at the 9th World Conference on Tobacco
and Health, October 10-14, 1994.
---------------------------------------------------------------------------
    The agency disagrees with the comments on the paper by Dr. Slade.
Slade's paper established that these events are attended by and seen by
a large number of young people. The study measured its stated
objective, it establishes the important fact that children are being
unavoidably exposed over and over again to attractive and appealing
images associated with tobacco products at NASCAR events. The study
establishes that young people are present at events where a popular
sport is associated with tobacco on signs, cars, people, etc.
    The agency also disagrees with the comment that suggested that the
price of tickets to motorsport events was sufficiently high to preclude
adults from taking their children to see them. In fact, some motorsport
events allow children to attend free of charge or offer discount
tickets for children. \242\
---------------------------------------------------------------------------
    \242\ See, e.g., Rosewater, A., ``Retirement is no Drag for
Prudhomme,'' Plain Dealer, p. 7D, June 4, 1996; ``Fun Book 96/ This
Spectator Sport: Easy Over,'' Newsday, p. 80, May 19, 1996;
Schmiedel, M., ``Motor Sports World Motorcycle Trials in Exeter Next
Weekend,'' The Providence Journal-Bulletin, p. 13D, May 19, 1996.
---------------------------------------------------------------------------
    (86) One comment stated that the study performed by Aitken, et al.
\243\ (the Aitken study) did not attempt to gauge whether exposure to
tobacco-sponsored events or teams engendered favorable feelings for
tobacco products in the surveyed young people and stated that the study
only addressed the effect of factors such as sex, age, and
socioeconomic status on awareness of cigarette sponsorships. The
comment also stated that the Aitken study did not test the effect of
sponsorship activities in this country, and that FDA ignores the fact
that tobacco companies sponsor a wider variety of more popular sports
in the United Kingdom, such as ``snooker, cricket and darts.'' Finally,
the comment accused FDA of ``selective reading,'' citing FDA's omission
of a statement made by the authors when discussing past studies that
even though minors may be aware of the sponsorships, ``[t]his of course
does not mean that cigarette advertising plays a part in inducing
children to start smoking.'' The comment also criticized the author of
the study for stating that even though very few of the primary
schoolchildren named John Player Special or Marlboro as being
associated with racing, ``[t]his suggests that linkages or associations
between brand names (or their visual cues) and exciting sports are
often unconscious, or at the very least, not readily retrieved by
consciousness (Aitken et al., p. 209).'' The comment claims ``[t]hat
astonishingly biased hypothesis was not tested by any questions that
attempted to probe the ``unconscious'' or the ``consciousness'' of the
interviewees.''
---------------------------------------------------------------------------
    \243\ 60 FR 41314 at 41337, n. 226; citing Aitken, P. P., D. S.
Leathar, and S. I. Squair, ``Children's Awareness of Cigarette Brand
Sponsorship of Sports and Games in the UK,'' Health Education
Research, Theory and Practice, vol. 1, pp. 203-211, 1986.
---------------------------------------------------------------------------
    The agency disagrees with the comment's criticism of the Aitken
study. This study conducted in the United Kingdom demonstrated that
primary schoolchildren who said that they intended to smoke when they
were older tended to be more favorably disposed to cigarette
advertising. Moreover, Aitken's comment that this
[[Page 44531]]
study did not mean that advertising plays a part in inducing children
to start smoking`` is an accurate statement of the study. The purpose
of the study was to examine the effect of sponsorship on children's
awareness of tobacco sponsorship and brand name identification with
that sport, not on their smoking behavior. This fact is not a flaw but
a description of the study design and the study's limitations. The
study, however, is quite useful in showing the effect of sponsored
events on young people's awareness of brands.
    In addition, the comment selectively quoted a portion of the Aitken
study (regarding linkages), while ignoring the reason the statement was
made. The author of the study made this statement in the context of the
finding that whereas only 9 percent of the primary schoolchildren named
John Player Special or Marlboro as sponsoring or being associated with
racing cars, 47 percent of primary schoolchildren chose John Player
Special or Marlboro as being liked by ``someone who likes excitement
and fast racing cars.'' The authors also found that linkages or
associations between cigarette brand names (or their visual cues) and
exciting sponsored sports can be elicited by simple advertisements,
even among children who do not have a critical awareness of the purpose
of commercial sponsorship. This type of linkage is the primary issue,
rather than whether such information is ``conscious'' or
``unconscious'' in nature.
    (87) One comment stated that the study performed by Ledworth \244\
(the Ledworth study), which found that even a fairly brief exposure to
tobacco sponsored sporting events on television may increase children's
brand awareness, failed to control for other sources of information
that could result in brand awareness (i.e., if a family member smokes),
and that even the author of the study stated that further investigation
needed to be done to determine whether tobacco sports sponsorship
persuades children to smoke. The comment also stated that FDA cannot
extrapolate the study results to the United States because the study
was based on foreign sponsorship and viewership practices, which differ
significantly from those in this country. The comment stated that the
differences are highlighted by the fact that 74 percent of the surveyed
children watched at least part of the snooker match, and that the child
viewership of NASCAR is ``* * * significantly more limited, at most,
even by Slade's number, to 7 percent.''
---------------------------------------------------------------------------
    \244\ 60 FR 41314 at 41338, n. 227; citing Ledworth, F., ``Does
Tobacco Sports Sponsorship on Television Act as Advertising to
Children,'' Health Education Journal, vol. 43, no. 4, 1984.
---------------------------------------------------------------------------
    The agency disagrees with the comment's criticism of the Ledworth
study. The Ledworth study demonstrates the power of association between
an event and brand awareness among young people. The study is evidence
of the important link formed by that association.
    (88) One comment stated that the study performed by Hock et al.
\245\ (the Hock study), which showed that nonsmoking boys who saw a
tobacco sponsorship advertisement had a diminished concern that tobacco
hurt sports performance, ``has no real relevance to the issue of event
sponsorship and suffers from obvious, significant methodological
flaws.'' The comment explained that the video viewed by one of the
groups contained an advertisement promoting a cigarette company's
sponsorship of a sporting event and thus reports the effect of a
particular advertisement, not the effects of the types of sponsorships
at issue here. The comment also stated that American tobacco companies
are not permitted to advertise sponsorships in this fashion under 15
U.S.C. 1335 (the television advertising ban). The comment argued that
the portion of the conclusion quoted by FDA overstates the results of
the flawed research because the authors themselves emphasized that
``nonsmokers''' general attitudes to smoking were not significantly
affected by exposure to sponsorship events. Finally, the comment argued
that, among the group of smokers, the authors reported that exposure to
the sponsorship advertisement did not affect the smokers' brand
choices, and that the authors cautioned that ``these findings do not,
in themselves, constitute a case for legislation.''
---------------------------------------------------------------------------
    \245\ Hock, J., P. Gendall, and M. Stockdale, ``Some Effects of
Tobacco Sponsorship Advertisements on Young Males,'' International
Journal of Advertising, vol. 12, pp. 25-35, January 1993.
---------------------------------------------------------------------------
    The agency disagrees with the comment's criticism of the Hock
study. Although the advertisement used in the Hock study may have been
different than advertisements that appear in the United States, and
only a single advertisement was tested, these factors alone do not
render the author's conclusions invalid. Again, most importantly, the
study provides evidence that brand sponsorship produces awareness of
the product and the brand in young viewers. The agency also disagrees
with the comment's assertion that FDA overstated the findings of the
study. The agency specifically acknowledged in the preamble to the 1995
proposed rule that exposure to the particular advertisement did not
affect overall attitudes toward smoking (60 FR 41314 at 41338).
    Moreover, the agency disagrees with the comment regarding brand
preferences of smokers. As the study authors noted, the study primarily
focused on nonsmokers. Thus, the fact that there were few smokers in
the study makes it more difficult to find significant effects on
smokers. In addition, the authors note more than once that the effects
of sponsorship appear to be primarily on nonsmokers.
    The important point of this study and the others cited by the
agency is that sponsorship of events helps create a positive
association between the event and the tobacco company. The child
relates the event to the product and this contributes to the perception
that tobacco use is acceptable and not dangerous. This attitude helps
an environment that fosters experimentation with tobacco products.
    Finally, the comment asserted that FDA's reliance on the two-page
memorandum from Nigel Gray \246\ is ``not only disingenuous, but
demonstrates that FDA has not evaluated the data on which it purports
to rely.'' The comment stated that ``the statistics cited in this study
lack any explanation or support.'' The comment also states that ``[the
conclusions stated in the memorandum are at odds with those in the
studies by Aitken and Hock cited by FDA.'' The comment stated that the
author cited a ``Western Australian survey'' that found that 65 percent
of 10 to 11 year olds surveyed believed that tobacco sponsorship of
sports is advertising for tobacco, whereas the Aitken study ``found
that only 4 percent of 10 to 11 year olds identified advertising as a
component of sports sponsorships by tobacco companies.'' The comment
also argued that the study by Hock found no effect of the sponsorship
advertisement on brand choice, whereas the memorandum by Gray revealed
that sponsorship did effect brand choice.
---------------------------------------------------------------------------
    \246\ 60 FR 41314 at 41338, n. 228; citing memorandum from Gray,
N., (Anti-Cancer Council of Victoria), to all members of the Federal
Parliament, December 15, 1989.
---------------------------------------------------------------------------
    The agency recognizes that there are problems with the two-page
memorandum from Nigel Gray because the data on which it was based have
not been made available. Therefore, the
[[Page 44532]]
agency has placed no weight on its findings and does not rely on it in
the final rule.
    On the other hand, the memorandum cannot be used to diminish the
usefulness of the other studies that have been cited. A careful reading
of the data presented by the Aitken study reveals that indeed 17
percent of 10 to 11 year olds identified advertising as a component of
sports sponsorship by tobacco companies. While it is true, as the
comment indicated, that 4 percent mentioned only the advertising
component, the comment has overlooked the fact that an additional 13
percent of 10 to 11 year olds mentioned both advertising and economic
components.
    In summary, these studies provide ample support that brand name
sports sponsorship produces, for young people, memorable associations
between the sport and the tobacco product and brand name. As shown in
section VI.B.1. of this document, young people pay attention to and
rely on peripheral cues such as the color and the imagery of
advertising for some of their information about products. Tobacco
sponsorship creates powerful images of fun and excitement to add to
that ``information'' mix.
    (89) FDA had proposed that entries, such as racing cars, or events
or teams that participate in events be permitted to display a brand
name in a black and white text only format. Thus, although the Skoal
500 would be prohibited, the Skoal Bandit racing car could participate
in a race event.
    Several comments supported the provision's requirement for teams
and entries but recommended that the agency go further to restrict
labeling on entries and teams in sponsored events. One comment, which
was submitted by a ``participant in motorsport events,'' stated that
``even when the Marlboro name, for example, is removed from a racing
car body, the distinctive color scheme still sends the Marlboro
message, loud and clear.''
    One comment stated that ``under the rationale applied to the
regulation on event sponsorship, * * * FDA would be justified in
restricting tobacco companies from entry and team sponsorship.'' The
comment recommended that FDA ``limit the scope of the terms `entries'
and 'sponsored events,' for the breadth of possible entries and
possible events is enormous.'' The comment stated that for instance,
professional sporting events such as football, basketball, baseball,
and hockey games, should be excluded from `sponsored events,' so that
tobacco product brand names cannot be used as the name of a
professional sports team.'' The comment stated that the term
``entries'' is ambiguous because, for example, a race car competing in
a sponsored race would qualify as an ``entry'' under the proposed rule,
``but would the Company X Choir be considered an `entry' when it
appears in a sponsored concert?''
    The agency has carefully considered the comments and has decided to
delete ``entries and teams in sponsored events'' from the list of
permissible advertising media in Sec. 897.30(a) and to specifically
include teams and entries within the scope of the ban on sponsored
events. The agency is persuaded that sponsored teams and entries, such
as cars: (1) Create the same associations with sports figures and other
``heroes,'' (2) create a linkage between a tobacco product and an
enjoyable and exciting event when they appear as part of an event, (3)
are displayed for a significant period of time. They have the same
potential to create images and influence children and adolescents as
does sponsorship of events, and (4) are able to leave the event and be
seen at fairs and malls and other places frequented by young people.
    The agency appreciates the comment's suggestions that color and
imagery are as problematic as the brand name but advises that the
comment has misinterpreted the 1995 proposed rule. Proposed
Sec. 897.34(c) stated that sponsorship would be prohibited in ``the
brand name, logo, motto, selling message, recognizable color or pattern
of colors, or any other indicia of a product identification similar or
identical to those used for tobacco or smokeless tobacco products.''
Thus, a car sponsored by Philip Morris may not be named after the
Marlboro brand nor be painted in the distinctive tri-color pattern.
    (90) Some comments addressed the issue of whether sponsorship is
advertising. One comment argued that the International Events Group's
(IEG) ``IEG Complete Guide to Sponsorship'' states that sponsorship is
not advertising, and that the guide explains that advertising involves
the delivery of messages about specific product attributes, while
sponsorship merely shapes the consumer's image of the brand. Moreover,
to the extent the IEG is identifying sponsorship as advertising, the
comment asserted that the IEG guide is a publication by an organization
that depends on sponsored events for its existence, and is not in the
business of conducting objective, statistically sound studies on the
effects of sponsorship. Thus, the comment asserted, FDA has not cited
any scientific study supporting the theory that sponsorship is
advertising.
    The comment argued that the position that sponsorship and
advertising are one and the same is inconsistent with pronouncements
from Congress and from the FTC. The comment argued that both Congress
and the FTC have recognized that advertising includes messages about
product attributes or appealing visual imagery, and the use of a brand
name to identify an event includes neither. The comment asserted that
``nothing in the [FTC]'s findings suggests a rationale that would apply
to the mere display of a logo, trademark, or other product identifier
when divorced from a selling message.'' The comment asserted that
Congress has never classified sponsorship of events using brand names
as advertising, and that the few times it has addressed this issue,
Congress has issued laws that distinguish advertising from other forms
of promotion that do not have the same impact as advertising.
    The comment referred to an FTC order In the Matter of Lorillard
Tobacco, 80 FTC 455, 457 (1972), which the comment argues defines
``advertising'' to include only those practices that typically contain
a selling message; and United States v. R.J. Reynolds Tobacco Company,
No. 76-Civ-814 (JMC) (SDNY 1981), which the comment argued confirms the
Government's view that the selling message in advertising, not the mere
display of a logo, was the focus of its concern.
    In addition, the comment argued that another Federal agency agrees
with this interpretation. The comment stated that the FCC, expressly
permits ``logos or logograms'' as long as such announcements do not
contain ``comparative or qualitative descriptions, price information,
calls to action, or inducements to buy, sell, rent or lease.''
    In contrast, some comments supported the assertion that sponsorship
is very effective advertising. One comment included in its appendices
the transcript of an ABC News Day One story broadcast August 10, 1995,
that reported on the commercial value of sponsorship. The comment also
included a recent story in Winston Cup Scene (October 19, 1995) which
describes the advertising value that sponsors expect to receive from
their sponsorships.
[[Page 44533]]
    Contrary to the comments cited, the FTC asserted, in its comment,
that sponsorship is advertising, citing its 1992 consent order
involving the Pinkerton Tobacco Co., (Consent Order) C-3364 (1992).
    The comment also stated that in 1995, the Department of Justice
announced consent decrees resolving allegations that Philip Morris,
Inc., and the owners of Madison Square Garden in New York City violated
the Cigarette Act's ban prohibiting advertising for tobacco on
television and other media regulated by FCC through the display of
cigarette brand names and logos at live sporting events that were
broadcast on television (United States v. Madison Square Garden, L. P.,
No. 95-2228 (S.D.N.Y., April 7, 1995); United States v. Philip Morris,
Inc., No. 95-1077 (D.D.C. June 6, 1995)). The consent decrees prohibit
Philip Morris and Madison Square Garden from placing cigarette
advertising in places regularly in the camera's focus where they might
be seen on television.
    The agency finds that sponsorship is advertising within the scope
of this regulation. The claim by the comments that the Lorillard and
Reynolds Tobacco consent orders demonstrate that the FTC does not find
sponsorship to be advertising is incorrect. The two cited cases are
consent orders that did not provide a definition of advertising but
limited the coverage of the consent order to the specific types of
advertising mentioned in the order. The two orders clearly excluded
categories of obvious advertising from the coverage of the order (see,
e.g., point of sale advertisements less than 36 square inches).
    Although the agency acknowledges that the ``IEG Complete Guide to
Sponsorship'' (IEG guide) states that sponsorship is not advertising,
IEG is creating a semantical distinction between one form of
advertising (traditional media advertising) from other types of
advertising (e.g., promotional items, sponsorship). The IEG guide
states that ``[w]hat sponsorship generally accomplishes better
[emphasis added] than advertising is establishing qualitative
attributes, such as shaping consumers' image of a brand, increasing
favorability ratings, and generating awareness.'' In addition, the IEG
guide states that sponsorship is more effective than advertising in
increasing ``propensity to purchase.'' This latter description of
sponsorship falls within the courts definition of advertising in Public
Citizen v. FTC, 869 F.2d at 1554, as ``any action to call attention to
a product so as to arouse a desire to buy.''
    The agency finds for all these reasons that sponsorship can be
regulated as advertising under the act.
    (91) Several comments argued that FDA does not have the authority
to restrict sponsorship events. One comment stated that FDA has no
authority to regulate cigarette advertising to ``break the link''
between sponsored events and use of tobacco, and reduce the ``friendly
familiarity'' that sponsorships generate among young people. The
comment stated that FDA can prohibit only false or misleading
restricted device advertising and cannot prohibit advertising that
simply links a name to a product. One comment stated that it is
difficult to understand how the sponsorship of the IndyCar Marlboro 500
or the National Hot Rod Association Winston Drag Racing Series,
promotional activities that would be prohibited under the 1995 proposed
rule, involve the ``misbranding'' of tobacco products.
    Several comments addressed the issue of whether FDA's proposed ban
on brand name sponsorship violates the First Amendment. Several
comments argued that the proposed restrictions on advertising and
promotional activities are overly broad and violate the First Amendment
because the 1995 proposed rule would prohibit virtually all forms of
tobacco sponsorship and advertising at motorsport events, and FDA made
no attempt to limit the restrictions to advertisements directed at
minors. One comment argued that the provision would not directly and
materially advance the government's interest, because there is no
reasonable basis for asserting that sponsorship causes youth tobacco
use. The comment stated that FDA did not attempt to differentiate
between those events that attract children and adolescents and those
that attract adults. Thus, according to the comment, a ban on tobacco
sponsorship of an event that few or no children or adolescents attend
will not directly and materially advance a reduction in underage
tobacco use.
    In contrast, one comment which supported the provision stated that
sponsored events have a direct and powerful impact on young people, and
thus there is a ``reasonable fit'' under the final two prongs of the
Central Hudson test. The comment argued that the 1995 proposed rule is
narrowly tailored because ``FDA has selected the approach that best
effectuates its goal of reducing tobacco consumption by minors, without
needlessly restricting the industry's ability to sponsor events and
garner the good will that flows from such sponsorship.''
    FDA concludes that sponsorship of events and sponsored teams and
events is an advertising medium that is effective in influencing young
people's decision to engage in smoking behavior and tobacco use.
    As explained in this section, the agency has authority to restrict
advertising of restricted devices like tobacco and smokeless tobacco
under sections 520(e) and 502(q) of the act. As the studies described
in this section \247\ demonstrate, sponsorship associates the
advertised brand with the event and thus shapes the image of the brand
and the individual's image of tobacco use. Sponsorship of rodeos and
car racing, for example, associates the product with events where risks
are high but socially approved and are taken by individuals who brave
the odds. \248\ This type of situation fits in very well with the image
concerns of adolescent males described in section VI.D.4.a. of this
document.
---------------------------------------------------------------------------
    \247\ See e.g., Aitken, P. P., D. S. Leathar, and S. I. Squair,
``Children's Awareness of Cigarette Brand Sponsorship of Sports and
Games in the U.K.,'' Health Education Research, vol. 1, pp. 203-211,
1986.
    \248\ IOM Report, p. 112.
---------------------------------------------------------------------------
    Youths who attend the sponsored event are directly and unavoidably
confronted with messages for the sponsoring product. This exposure
creates a sense of familiarity and acceptance similar to that created
by billboards near schools and playgrounds.
    In addition, the sponsored events are televised. As a result of
this fact, through mention of the sponsor and camera shots that pan the
place where the event is held, awareness of the brand is created, along
with the associations described above.
    Given these factors, a restriction on sponsorship will be effective
in limiting the influences on children and adolescents to use tobacco
products and thus in protecting their health. Moreover, there is a
reasonable fit between the restriction and FDA's interest. The
restriction focuses on the use of the brand because of the association
between the brand and tobacco use. \249\ By building associations with
the brand, sponsorship and the advertising displayed at the event
creates a desirable image for young people that contributes to a
positive feeling about the product that sponsors
[[Page 44534]]
the event. This positive image not only provides a brand that the young
person might select but also adds to the young person's positive
feelings about using the product. It is the creation of this
association that FDA will prevent by restricting sponsorship.
---------------------------------------------------------------------------
    \249\ Hock, J., P. Gendall, and M. Stockdale, ``Some Effects of
Tobacco Sponsorship Advertisements on Young Males,'' International
Journal of Advertising, vol. 12, No. 1, January 1993.
---------------------------------------------------------------------------
    FDA is not aware of any way to limit the restriction to events that
are attended by young people. However, FDA has no desire to restrict
manufacturers' abilities to contribute to the community by sponsoring
athletic, cultural, or other events. Thus, the agency has narrowly
tailored the restriction on sponsorship to use of brand identification
because it presents the harm that FDA is trying to eliminate. For these
reasons, FDA concludes that its restrictions on sponsorship are
consistent with its legal authority and with the First Amendment.
    (92) Several comments (including one from a participant in
motorsport events) argued that allowing tobacco companies to place
brand names and logos at highly visible locations during broadcast
sporting events has afforded tobacco companies the opportunity to
circumvent the Cigarette Act, which prohibited broadcast advertising of
cigarettes. One comment stated that tobacco companies receive millions
of dollars of free brand name television and radio exposure during
these events and use messages in these advertisements that are
particularly effective with children. One comment stated that ``the
degree to which sponsoring events gives tobacco companies television
time is staggering,'' and ``[j]ust in the televising of the Indiana 500
[sic], Marlboro received almost 3\1/2\ hours of television exposure and
146 mentions of its brand name.'' The comment cited cases where
Congress and the courts have already recognized and upheld the
importance and the constitutionality of keeping tobacco advertising off
the airwaves (Capital Broadcasting Co. v. Mitchell, 333 F. Supp. 582
(D.D.C. 1971), aff'd sub nom. Capital Broadcasting Co. v. Acting
Attorney General, 405 U.S. 1000 (1972)), and concluded that a reviewing
court would likely sustain the provision regarding event sponsorship
simply because it has become a pervasive tool used by the tobacco
industry to evade the restriction on television advertising.
    The agency finds that there is adequate support for its ban on
brand name sponsorship of events. As stated in the preamble to the 1995
proposed rule and in response to an earlier comment, ``[t]he amount and
financial value of television exposure gained by a firm can be
substantial.'' The preamble to the 1995 proposed rule cited two studies
which discussed the impact of sponsoring televised events and concluded
that:
    [t]he impact of sponsoring televised events such as these
automobile races is perhaps most apparent when one realizes that
over 10 million people attended these events, while 90 times that
number viewed them on television.
(60 FR 41314 at 41337)
    By restricting brand name sponsorship of events, the final rule
will eliminate those brand name sponsored events that continue to
permit tobacco product brand names to appear on television.
    (93) Several comments expressed concern that the 1995 proposed rule
was not sufficiently inclusive; specifically, it did not prohibit the
incorporation of an event in a brand name by someone other than the
tobacco company and did not explicitly ban the use of the name of a
foreign tobacco company in U.S. sport events. Some comments stated that
restricting sponsorship of entertainment and sporting events to
corporate name only for corporate sponsors that had been in existence
prior to January 1, 1995, ``leaves open many shadow entities
incorporated under tobacco brand names because tobacco transnationals
have been creating these front groups for years to escape promotion
restrictions in other countries.''
    One comment stated that Canada, after it had banned brand name
sponsorship, found that industry used new ``corporations'' such as
Camel Racing PLC to continue sponsoring in a brand name. Thus, the
comments recommended that the regulation ensure that corporate
sponsorship of events be allowed only if the corporate name is the name
of the manufacturing entity and that the name has no similarity to a
brand name of any of that manufacturer's tobacco products.
    Several comments expressed concern about a recent trend among U.S.
manufacturers to develop brands that are made by a corporate entity.
For example, one comment stated that RJR has developed a series of
brands with an art deco style of pack design and is selling them
through a wholly owned subsidiary named Moonlight Tobacco.
    Another comment stated that Philip Morris has been test marketing a
brand called ``Dave's,'' which it produces through a boutique company
named ``Dave's Tobacco Company.'' These comments stated that the agency
should amend the 1995 proposed rule to prohibit any corporate name or
logo that had a brand name or product identification within it.
    Finally, a comment stated that there are many other existing brand
names that are also corporate names, such as ``Rothmans'' and
``Sampoerna'' (a brand of clove cigarette (Kretek) imported from
Indonesia) that are manufactured overseas. This comment argued that
non-U.S. corporate names must also be included in the final rules
proscription.
    The agency recognizes the concern expressed by the comments. As
stated in the preamble to the 1995 proposed rule, the requirement that
the corporation be in existence on January 1, 1995, is intended to
prevent manufacturers from circumventing this restriction by
incorporating separately each brand that they manufacture for use in
sponsorship (60 FR 41314 at 41336). The comments have suggested that
manufacturers may circumvent this restriction by the use of shadow
entities, many of which have already been incorporated under tobacco
brand names in other countries (or have been incorporated as events).
The agency agrees that the proposed restrictions do not prevent this
type of circumvention.
    Thus, in response to the comments' suggestions, the agency has
modified the proposed regulations to reflect that the registered
corporate name and corporation must have been in existence and
registered in the United States and have been in active use in this
country before January 1, 1995. Thus, FDA has modified Sec. 897.34(c)
to state: ``Nothing in this paragraph prevents a manufacturer,
distributor, or retailer from sponsoring or causing to be sponsored any
athletic, musical, artistic, or other social or cultural event, or team
or entry, in the name of the corporation which manufactures the tobacco
product, provided that both the corporate name and the corporation were
registered, and in use in the United States prior to January 1, 1995, *
* *.'' This provision makes clear that manufacturers are free to
sponsor events in their corporate name but contains language that will
prevent the type of circumvention of the restriction that was posited
by the comments.
    The agency also agrees with the comments that suggest that
manufacturers may also attempt to circumvent this restriction by
placing within the corporate name or logo elements of brand
identification such as names (Smokin' Joe), colors (the tricolor
decoration), etc. Tobacco products can be promoted using more than just
the brand name. In fact, the name may be less important than the
attractive
[[Page 44535]]
imagery, recognizable colors and patterns of colors (Marlboro),
characters and heroes (Joe Camel racecar drivers) all of which provide
the user with a desired image. A yellow motorcross bike with a head of
a Camel conveys the image of Joe Camel without the name of the product.
Therefore, it is necessary in order to break the link between the event
and the product to restrict the images in addition to the name. Thus,
FDA has modified Sec. 897.34(c) so that it concludes with the following
statement:
    ``* * * and that the corporate name does not include any brand
name (alone or in conjunction with any other word), logo, symbol,
motto, selling message, recognizable color or pattern of colors, or
any other indicia of product identification identical or similar to,
or identifiable with, those used for any brand of cigarettes or
smokeless tobacco products.
    The agency also recognizes that at some time in the future,
corporate entities may be formed to sell tobacco products, which are
new to the tobacco business and in no way associated with current
manufacturers. Should those entities desire to sponsor events, they
would be precluded by the language of Sec. 897.34(c) from doing so. The
agency envisions that such entities could petition the agency, under 21
CFR part 10, for an exemption from this provision.
    (94) One comment stated that FDA's proposed ban on brand-name
sponsorship is an unjustified limitation on the right of private
individuals to select their own sponsors.
    This comment has misinterpreted the 1995 proposed rule. The rule
does not limit the ``right'' of private individuals to select sponsors.
Individuals are free to select any sponsor they choose. The rule,
however, prohibits the event from including any brand name, logo,
symbols, motto, selling message, or any other indicia of product
identification similar or identical to those used for any brand of
cigarette or smokeless tobacco. However, the final rule does not
prevent corporate sponsors that were in existence and registered in the
United States before January 1, 1995, from advertising in their
registered corporate names.
    (95) Several comments stated that sponsorship restrictions would
have a negative impact on sports events. Approximately 300,000 copies
of one form letter were submitted as comments. All included the
statement: ``I am 21 years of age or older and oppose the new
regulations proposed by the Food and Drug Administration (Docket No.
95N-0253) that would prohibit tobacco company sponsorship of
entertainment and sporting events.'' The form letter also stated that
``If FDA gets control of tobacco and bans tobacco sponsorships, ticket
prices could rise as well. And there might be fewer events. All this
adds up to consumers being the big losers.''
    One comment stated ``I oppose any attempt by President or FDA to
deny RJR the right to sponsor the Winston Cup Racing Series!'' One
comment stated ``[b]y banning the sponsorship of NASCAR, the races
won't get any money, and if they have to stop racing, that will make me
mad, and I am too old to be getting mad--75 years [old].''
    One comment stated that because of the potential loss of economic
support, many events will not be viable if cigarette company
sponsorship is no longer available. Several comments argued that FDA's
proposed ban on sponsorship, promotional programs, and contests would
eliminate events enjoyed primarily by adults. One comment stated that
``[w]e believe that we and millions of other middle class fans like us,
will no longer be able to afford the NASCAR we love.'' One comment
stated that the provision ``will adversely affect the economy of the
tobacco industry and that affects many people in many States, not just
the racing industry and communities.''
    One comment stated that the loss of sponsorship revenue to race
track owners, operators, and promoters would negatively affect the
motorsports industry because racing fans will suffer in the form of
increased ticket prices or decreased services at motorsports events,
and increased ticket prices will decrease attendance at race events,
forcing racetrack operators to cut jobs and other employee benefits,
further depressing the economies of hundreds of communities around the
nation. The comment also stated that since motorsports injects hundreds
of millions of dollars into local and regional economies, particularly
in rural and suburban communities that have been the hardest hit by
recession and job losses, FDA's proposed regulation would have a
substantial impact on local and regional economies across the country
and hurt the future of motorsports.
    In contrast, one comment that supported the proposal was from a
``dedicated car racer,'' and stated that ``the truth is that car racing
will do just fine without tying its wonderful image to the interest of
the cancer promoters.'' The comment stated that:
    in Europe where racing cars run without any cigarette
advertising whatsoever, people camp out for days trying to get into
the events, and that the recent Formula One European Grand Prix was
run in cold miserable, weather with packed stands and not a single
cigarette logo in sight.
    The comment stated that ``I hope [FDA] will look out for the rest
of us and stand firm in favor of a ban on tobacco advertising at all
sporting events.''
    One comment stated that ``many of the millions of dollars spent on
these promotions are available to the cigarette industry only because
3,000 children start smoking each day,'' and ``[t]his situation can be
viewed as an industry demanding a bounty of 3,000 lives per day in
exchange for its financial support of the sports, music, and other
entertainment appealing to children and youth.''
    One comment stated that:
    the abundance of other sponsors indicates that auto racing would
not fail if tobacco products are not allowed to be event sponsors
and if teams sponsored by tobacco products are restricted to black
and white uniform and car designs. Similar fears were expressed when
cigarette commercials were banned from electronic media, but they
proved groundless.
    The comment stated that sponsors do not make a sport such as auto
racing or rodeo popular because auto racing and rodeo are ``compelling,
popular spectator sports in their own right.'' The comment stated that
``popular sports attract sponsors who want to advertise.'' The comment
stated that ``[t]he Olympics would remain a premier sporting event
without Coca-Cola or Kodak'' and ``NASCAR stock car racing is among the
most popular spectator sports to thrive.'' The comment stated that
``the audience is not there because of tobacco: tobacco is there
because of the audience.''
    The agency advises that the concerns expressed by some of these
comments have misinterpreted the rule. The rule does not ``prohibit
tobacco company sponsorship of entertainment and sporting events'' or
``ban tobacco sponsorships, promotional programs, and contests.'' The
rule prohibits a sponsored event from being identified with a cigarette
or smokeless tobacco product brand name or any other cigarette or
smokeless tobacco brand identifying characteristic. All athletic,
musical, artistic, or other social or cultural events would be
permitted to be sponsored in the name of the tobacco company as long as
the other conditions in Sec. 897.34(c) are met.
    In addition, the tobacco industry accounts for only 4 percent of
all sponsored events. This rule does not prohibit the other 96 percent
of
[[Page 44536]]
nontobacco forms of sponsorship (60 FR 41314 at 41337). Thus, even if
the restriction on sponsorship of tobacco products resulted in a
decrease of tobacco company sponsored events, the events will still
exist through the support of the nontobacco forms of sponsorship. The
agency agrees with the comment that ``auto racing would not fail if
tobacco products are not allowed to be event sponsors.'' Thus,
restricting tobacco product brand name sponsorship clearly will not
``ban all sponsorship events.''
    Finally, recent news stories quote persons knowledgeable about car
racing saying racing would survive without tobacco sponsorship, for
example, one quote: ``If this happened 10 years ago, it would have been
crushing to the racing industry. Now people are lining up to take
Winston's place.'' \250\
---------------------------------------------------------------------------
    \250\ Quoting Ardy Arani, a director of the Atlanta-based
Championship Group, a sports marketing agency in Jacobsen, G.,
``Mass Merchandisers Jostle With Tobacco Companies to Cash in on the
Auto Racing Craze,'' The New York Times, p. D71, February 21, 1996.
---------------------------------------------------------------------------
    In conclusion, FDA finds that sponsorship of events (such as car
races, tennis matches, and rodeos) and entries in those events (race
cars and drivers, tennis players) can have a profound effect on young
people's attitude about and use of tobacco by providing multiple and
prolonged exposure to the brand name and logo in a variety of media,
thereby creating an impression of prevalence and normalcy about tobacco
use (see section VI.D.3.c. of this document), by associating the
product with varied positive events, images, and heroes, and by
creating attractive and exciting images that can serve as a ``badge''
or an identification (see section VI.D.4.a. of this document). The
industry itself recognizes the concern that sports figures as endorsers
can create problems of hero worship and emulation; its Code promises
not to employ sports or celebrity testimonials or those of others ``who
would have special appeal to persons under 21 years of age.''
Sponsorship creates no less of an association than an endorsement.
Moreover, FDA finds that restrictions on sponsorship identified with a
tobacco brand are necessary to reduce tobacco use by young people.
These findings are based on studies and recent reports that the number
of young people who attend these events or see them on television is
significant and growing.
    Studies--Four different studies, one each by Slade, Aitken,
Ledworth, and Hock (60 FR 41314 at 41337 and 41338) and described
further in this section, provide evidence that sponsored events of all
types are attended, and seen on television, by a substantial number of
young people, and that the effect of the exposure is to increase brand
awareness and association between the brand and the event. This
attitude contributes to a sense of friendly familiarity about tobacco
use and a perception that tobacco use is acceptable and common place.
    Surveys on attendance and TV audience, described further in this
section, establish that attendance by children at events and viewership
by children and adolescents on television are significant. The preamble
to the proposed rule used the number 64 million as an annual
approximation of underage viewers of motorsport events in addition to
those at the event (60 FR 41314 at 41337). In addition, newspaper
articles detailed in this section describe the increasing importance of
young people to sponsored events as a growing part of the live
audience. Moreover, although less data is available on other types of
sponsored events, comments received by the agency in response to the
proposed rule, and described further in this section, state that many
children and teenagers watch tennis, motorcycle and powerboat racing,
and rodeos on television and attend and watch on television rock
concerts and country music festivals.
    Finally, the agency has tailored the restriction narrowly. The
agency recognizes the importance of corporate sponsorship in
engendering goodwill for a company with its customers and in providing
support to sports, the arts, and music. Therefore, the agency has
crafted the regulation to not interfere with this aspect of sponsorship
but has merely denied the companies the right to use brand and product
identification, which are most appealing to young people.
9. Proposed Sec. 897.36--False or Misleading Statements
    The agency proposed in Sec. 897.36 that labeling or advertising of
any cigarette or smokeless tobacco product:
    is false or misleading if the labeling or advertising contains
any express or implied false, deceptive, or misleading statement,
omits important information, lacks fair balance, or lacks
substantial evidence to support any claims made of the product.
This provision would have explicitly implemented sections 201(n),
501(a) (21 U.S.C. 351), and 502(q)(1) of the act. Section 897.36 was
meant to be illustrative rather than exhaustive.
    The agency stated in the 1995 proposed rule that its regulations
concerning prescription drug advertising provide great specificity as
to what constitutes violative advertising (part 202 (21 CFR part 202))
but that this same degree of specificity is not practical in the case
of a widely used consumer product like tobacco because the advertising
for it contains an unlimited variety of claims that make categorization
difficult. Therefore, the agency tentatively concluded that it would
provide general guidance for the types of advertising claims that will
be considered violative, rather than to attempt to identify every
possible type of false and misleading claim (60 FR 41314 at 41339 and
41340).
    (96) Several comments objected to various portions of the
definition, for example the phrases ``omits important information'' and
``lacks fair balance.'' They asserted that the phrases expand the
definition of what constitutes ``misleading'' advertising, are
subjective, and make compliance burdensome because the phrases are not
defined. Moreover, the comment complained that neither ``fair balance''
nor ``substantial evidence'' were appropriately included in the
definition of false and misleading.
    Additionally, the comments argued that laws regarding false and
misleading advertising are well established, and that false and
misleading advertising is subject to the jurisdiction of the FTC. The
comment stated that it was, therefore, inappropriate for FDA to
establish vague and overreaching parameters of ``unfair and deceptive''
advertising.
    One comment stated that what ``information'' is important is
undefined. It stated that there is always information that someone may
consider ``important'' (e.g., price, availability, freshness, taste
research), and that it would be unreasonable to allow FDA, or any
regulatory organization or entity, to review tobacco advertising in the
capacity of determining information that should have been included.
This comment argued that the legal precedent defining deceptive
advertising is already established and should not be changed by FDA.
    One comment stated that by introducing the word ``important'' into
the proposed standard for misbranding of tobacco, FDA has impermissibly
gone beyond the ``materiality'' test for misbranding set forth by
Congress in section 201(n) of the act, acted arbitrarily and
capriciously, and proposed a new standard that is unconstitutionally
vague.
[[Page 44537]]
    One comment stated that FDA also proposes that labeling or
advertising would be false or misleading if it ``lacks fair balance.''
It stated that FDA has obviously borrowed this concept from the
prescription drug regulations (Sec. 202.1(e)(5)(ii)), but it is
inapplicable to tobacco. The comment stated that, first, the ``fair
balance'' requirement for drugs is based not on the section 502 ``false
or misleading'' prohibition but rather on section 502(n)(3), which
requires that prescription drug advertising contain a ``true
statement'' relating to ``side effects, contraindications, and
effectiveness.''
    The comment stated that, second, as the drug regulation makes
clear, the ``fair balance'' required is between information about a
product's therapeutic benefits and information about its adverse
effects when used. It stated that because no therapeutic claims are
made for tobacco, the ``fair balance'' concept is simply inapplicable.
    One comment, however, stated that, under this regulation,
advertising for cigarettes and smokeless tobacco will be considered
false or misleading if it ``omits important information.'' It stated
that this is a reasonable rule, and that it should be part of the final
rule, but it is one that may be difficult for manufacturers to comply
with absent guidance from FDA.
    FDA has been persuaded that the proposed general guidance in
proposed Sec. 897.36 on what might constitute false and misleading
advertising has created unintended confusion. Under section 502(a) and
(q)(1) of the act, any restricted device is misbranded if its
advertising or labeling is false or misleading in any particular.
Section 201(n) of the act states that:
    If an article is alleged to be misbranded because the labeling
or advertising is misleading, then in determining whether the
labeling or advertising is misleading there shall be taken into
account (among other things) not only representations made or
suggested by statement, word, design, device, or any combination
thereof, but also the extent to which the labeling or advertising
fails to reveal facts material in the light of such representations
or material with respect to consequences which may result from the
use of the article to which the labeling or advertising relates
under the conditions of use prescribed in the labeling or
advertising thereof or under such conditions of use as are customary
or usual.
    After review of the applicable provisions of the act concerning
labeling and advertising, the agency has determined that those
provisions are adequate and that the definition in proposed Sec. 897.36
is unnecessary. Because cigarette and smokeless tobacco advertising
remains subject to regulatory action if it is false or misleading in
any particular, FDA has decided to delete Sec. 897.36 from the final
rule.
    (97) Some comments supporting proposed Sec. 897.36 recommended that
specific restrictions be placed on advertising that emphasizes tar and
nicotine levels and implies a weight benefit to tobacco products.
    Other comments suggested requiring the disclosure of ingredients.
These comments argued that consumers do not know the ingredients of
these products or the functions that these ingredients serve. It added
that consumers do not know the doses of nicotine and other critical
materials that they ingest with these products. The comment stated that
terms such as ``light'' and ``low tar'' have little meaning in view of
the tendency of consumers to smoke cigarettes differently depending
upon the way nicotine delivery has been engineered. A comment from a
tobacco company opposed disclosure of ingredients fearing loss of
valuable trade secret information.
    The agency has decided that these comments fall outside the scope
of this rulemaking. The agency did not propose labeling or advertising
restrictions concerning the levels of tar, nicotine, or other
components of cigarettes or smokeless tobacco, or perceived benefits of
tobacco products, only that labeling or advertising not be false or
misleading. It did not receive comments sufficient to warrant
restrictions addressing these issues. Consequently, advertising and
labeling claims will be evaluated on a case by case basis for
compliance with sections 201(n), 502(a), (q), and (r), 510(j) (21
U.S.C. 360(j)), and 520(e) of the act. Therefore, FDA is not modifying
part 897 to address these concerns at this time.
F. Additional First Amendment Issues
    Finally, several general issues were raised by commenters
concerning the nature of the protection afforded commercial speech by
the First Amendment.
    (98) One comment argued that the original understanding of the
First Amendment was that truthful commercial messages are fully
protected.
    In response to this comment, FDA points out that the Supreme Court
took the position that the First Amendment does not protect commercial
speech (see Valentine v. Chrestensen, 316 U.S. 52 (1942)), until it
repudiated that position in Virginia State Bd. of Pharmacy v. Virginia
Citizens Consumer Council, Inc., 425 U.S. 748 (1976). Since 1976, the
Court has decided numerous cases, most recently Rubin v. Coors, Florida
Bar v. Went For It, Inc., and 44 Liquormart Inc. v. Rhode Island, that
address the level of protection afforded commercial speech by the First
Amendment. FDA has followed that case law in its development of this
final rule. Therefore, FDA has developed this final rule in accordance
with the applicable law.
    (99) A comment filed by an association of advertising agencies
warned that the proposed regulations ``establish a dangerous precedent
that could open the floodgates to dramatic government intrusion into
the process of communication * * * and [are] a dangerous blueprint for
government censorship of other kinds of advertising.'' The comment
expressed concern that regulations of advertising for tobacco products
will permit, in fact will encourage, the future regulation of other
``controversial products.''
    Tobacco products are not ``controversial'' products as these
comments contend. They represent the single most preventable cause of
death in the United States (1989 Report to the Surgeon General at p.
i). Not only is the harm caused by tobacco use real (the comment refers
to ``imagined harm''), but the product that produces the disease and
death is addictive. Moreover, tobacco use begins among young people,
who may be able to describe the risks of tobacco use, but who do not
personalize that risk to themselves. These young people begin to use
tobacco before they can adequately weigh the consequences of use and
thus, become addicted and subject to the real long term harms caused by
tobacco use. That is why all 50 States and the District of Columbia
outlaw the sale of tobacco products to those under 18 years of age.
Finally, as discussed in section VI.D. of this document, advertising
does affect young people's decision to use tobacco products in a
significant and material way. This is not an ``assertion'' made out of
whole cloth but a reality. Thus, regulation of tobacco advertising may
set a precedent for future government action, but it sets a high
threshold for such regulation.
    The Supreme Court has granted ample protection to commercial
speech, but the Court has also stressed, nothing in the First Amendment
prevents the Government from ensuring ``that the stream of commercial
information flows cleanly as well as freely.'' (See Edenfield
[[Page 44538]]
v. Fane, 506 U.S. 761, 768.) One comment noted: ``This concern takes on
special force where, as here, crucial public health concerns are
implicated, and where a particularly powerful seller * * * has used its
virtually limitless resources to saturate the marketplace with its
promotional messages.''
    The Government's interest in protecting the health of children and
teenagers through measures designed to prevent them from beginning a
lifetime of addiction and disease is of the highest order and is
sufficient justification for the restrictions finalized here.
VII. Education Campaign
    In the Federal Register of August 11, 1995 (60 FR 41314), the Food
and Drug Administration (FDA) proposed to require that tobacco
companies establish a national education program, using television as
its predominant medium, to discourage children and adolescents from
using cigarettes and smokeless tobacco (the 1995 proposed rule). The
agency received more than 1,500 comments concerning the program, nearly
three-quarters of which favored going forward with it. The comments
raised many issues concerning the program as proposed, including
whether the proposed funding would be either equitable or sufficient,
whether industry's level of involvement would jeopardize its
effectiveness, whether current industry educational programs are
sufficient, about the design of the educational programs, the
manufacturer's obligations to carry them out, the agency's statutory
authority to require an education campaign under section 520(e) of the
Federal Food, Drug, and Cosmetic Act (the act)(21 U.S.C. 360j(e)), and
the constitutionality of the campaign as proposed.
    The agency has reexamined its statutory authority for requiring an
education campaign and believes that section 518(a) of the act (21
U.S.C. 360h(a)) is more appropriate and practicable than the restricted
device authority in section 520(e) of the act under which FDA had
proposed the education campaign. Under section 518(a) of the act, if
the agency finds that a device presents an unreasonable risk of
substantial harm to the public health, that notification is necessary
to eliminate this risk, and that no more practicable means is available
under the act, then, after consultation with device manufacturers, the
agency may issue a notification order that requires them to notify the
appropriate persons in a form appropriate to eliminate the risk. The
agency has used section 518(a)'s separate, affirmative grant of
statutory authority on a number of occasions to compel medical device
manufacturers to provide notice to users or potential users of their
products about risks presented by their use or misuse.
    The agency believes that, with respect to cigarettes and smokeless
tobacco, it could make the findings required by section 518(a) of the
act and so could order tobacco manufacturers to notify young people
about the substantial health risks that tobacco products present in a
form appropriate to eliminate the risk. That is, the agency believes
that it could find that cigarettes and smokeless tobacco present an
unreasonable risk of substantial harm to the public health, that
notification is necessary to eliminate this risk, and that no more
practicable means is available under the act.
    The agency has concluded, therefore, that it will not require an
education campaign as part of this tobacco rule. The agency intends,
however, to send letters that indicate that the agency believes that it
could make the statutory findings necessary to issue notification
orders under section 518(a) of the act to cigarette and smokeless
tobacco manufacturers. As section 518(a) of the act requires, these
consultation letters will offer tobacco companies an opportunity to
consult with the agency about the necessity for, and specific
requirements of, any notification orders before the agency issues any
orders to the companies.
    Because the education campaign will not be a requirement of this
final rule, the agency need not respond to the many comments that it
received concerning the proposed campaign. Nevertheless, because the
agency intends to pursue implementation of an education campaign using
the notification provision of section 518(a) of the act, the agency
will respond briefly to comments that questioned the effectiveness and
design of the proposed education campaign.
    (1) The agency received comments questioning the effectiveness of
other educational campaigns and the agency's use of these campaigns to
support the position that a national educational campaign would be
effective in helping reduce tobacco use among young people. Comments
from the tobacco industry argued that studies cited by FDA are
scientifically flawed and therefore that the agency overstated the
likely effects of the provision. One industry comment argued that FDA
misinterpreted a study by Simonich \251\ (the Simonich study), cited in
the preamble to the 1995 proposed rule to demonstrate that the media
campaign conducted under the Fairness Doctrine (FD) reduced cigarette
consumption by 6.2 percent (60 FR 41314 at 41327). The comment
concluded that the data from the Simonich study indicated that the
overall effect of the Fairness Doctrine was merely a 0.4 percent
decline in per capita consumption.
---------------------------------------------------------------------------
    \251\ Simonich, W. L., ``Government Antismoking Policies,''
Peter Lang Publishing, Inc., 1991.
---------------------------------------------------------------------------
    FDA disagrees with the industry's interpretation of the Simonich
study. The agency believes that the Simonich study results, correctly
interpreted, indicate that the FD education campaign reduced per capita
cigarette consumption an average of 4.5 percent, \252\ that is, a 4.5
percent reduction in consumption over the period of time over which the
FD was in effect for entire quarters. Thus, the FD education campaign
did play an important role in reducing per capita cigarette
consumption.
---------------------------------------------------------------------------
    \252\ Simonich modeled the effect of the FD as: % <greek-D>
Consumption = -0.063(X<INF>t + .46416X<INF>t-1 +
.46416<SUP>2X<INF>t-2 + .46416<SUP>3X<INF>t-3) where X<INF>t
represents antismoking advertising expenditures in quarter t and -
0.063 is the coefficient for the FD stock variable obtained from the
analysis (Id., p. 153). FDA used Simonich's model and his
``Estimated Fairness Doctrine Real Advertising Expenditure per
Capita 14+'' data series (Id., pp. 250, and 259-260) to calculate
the quarterly percent reduction in per capita cigarette consumption
from March 1967 through April 1970. The average percent reduction in
consumption for this period was 4.5 percent.
---------------------------------------------------------------------------
    (2) Comments also questioned the effectiveness of education
programs cited by the agency. The tobacco industry's comment argued
that California's $26 million multi-year media campaign actually
confirmed that televised education campaigns do not influence youth
smoking. Further, the comment stated that it was not possible to say
what impact, if any, a national media campaign's introduction or
termination had on consumption in Greece because Greece's educational
television and radio advertising campaign was only one element of an
overall education campaign.
    With regard to the California media campaign, FDA notes that this
campaign was directed to adults, not young people. Moreover, the media
campaign was countered by increased per capita spending by the tobacco
industry in the types of imagery-based advertising that influences
children and adolescents. Therefore, the agency would have expected the
media campaign to have had a greater negative impact on tobacco use by
adults than by children and
[[Page 44539]]
adolescents. FDA continues to believe that California's efforts
indicate that education campaigns, over time, can counter and reduce
the impact of prosmoking efforts.
    Further, while the comment correctly notes that Greece's national
effort to reduce smoking included posters, booklets, and similar
educational materials distributed through schools, health centers, and
other channels, the primary and most significant element of its program
consisted of antismoking messages broadcast on television and radio.
FDA continues to believe the Greek experience indicates, as stated in
the preamble to the 1995 proposed rule, that intensive education and
media messages about the health risks associated with tobacco use can
be effective.
    (3) Many comments from the tobacco and media industries and from
adult smokers argued that an education campaign is unnecessary because
cigarette manufacturers, individually and through the Tobacco
Institute, have undertaken voluntarily a variety of educational
programs aimed at discouraging underage smoking, and because
antismoking lessons are taught in schools.
    By contrast, other comments questioned industry's commitment to
reduce underage use of tobacco products. For example, several comments
emphasized that a voluntary program run by industry in the mid 1980's
failed to acknowledge that tobacco is addictive or causes disease.
    FDA agrees with comments that the tobacco industry has failed to
include in its voluntary youth educational programs important
information, such as the addictive nature of tobacco and the
association between tobacco use and disease. FDA further agrees that
this lack of complete information about tobacco products makes it
necessary to require that messages about the risks of tobacco use be
directed to children and adolescents. The recently observed decline in
the proportion of youth who see smoking as dangerous, despite the
widespread dissemination through schools of information about the
health hazards associated with tobacco use, supports the need for an
immediate response to this problem. Moreover, recent evidence suggests
that school-based education programs most effectively reduce underage
smoking when used in conjunction with media messages.
VIII. Additional Regulatory Requirements
    Subpart E of part 897 in the Food and Drug Administration's (FDA's)
August 11, 1995, proposed rule (60 FR 41314) would have consisted of
three provisions: Sec. 897.40 would have required manufacturers to
submit certain reports and would have required manufacturers,
distributors, and retailers to make records available to FDA upon
inspection; Sec. 897.42 would have instructed manufacturers,
distributors, and retailers to comply with any more stringent State or
local requirements relating to the sale, distribution, labeling,
advertising, or use of cigarettes and smokeless tobacco and would have
notified State and local governments how to request an advisory opinion
concerning the preemptive effect of part 897 on any particular State or
local requirement; and Sec. 897.44 would have required the agency to
take additional regulatory measures if, 7 years after the date of
publication of the final rule, the percentage of people under age 18
who smoke cigarettes had not decreased by 50 percent since 1994 and/or
the percentage of males under 18 who use smokeless tobacco had not
decreased by 50 percent since 1994.
    Proposed Sec. 897.40 Records and Reports, would have implemented
sections 510(j) and 704(a) of the act (21 U.S.C. 360(j) and 374(a))
with respect to cigarettes and smokeless tobacco. Section 510(j) of the
act requires the submission of labels, labeling, and a representative
sampling of advertising to FDA, and section 704(a) of the act gives the
agency inspection authority, which also includes the authority to
examine records, files, papers, processes, controls, and facilities:
    bearing on whether * * * restricted devices which are
adulterated or misbranded within the meaning of this Act, or which
may not be manufactured, introduced into interstate commerce, or
sold, or offered for sale by reason of any provision of this Act,
have been or are being manufactured, processed, packed, transported,
or held in any such place, or otherwise bearing on violation of this
Act.
    Proposed Sec. 897.42 Preemption of State and Local Requirements and
Requests for Advisory Opinions, was intended to reflect the preemption
provision in section 521(a) of the act (21 U.S.C. 360k(a)); that
section states, in relevant part, that:
    no State or political subdivision of a State may establish or
continue in effect with respect to a device intended for human use
any requirement--(1) which is different from, or in addition to, any
requirement applicable under this Act to the device, and (2) which
relates to the safety or effectiveness of the device or to any other
matter included in a requirement applicable to the device under this
Act.
Proposed Sec. 897.42 was also intended to recognize that many States
and local governments have enacted innovative and effective laws and
regulations pertaining to cigarettes and smokeless tobacco and to
encourage further activity in these areas (60 FR 41314 at 41340).
    In proposed Sec. 897.44 Additional Regulatory Measures, FDA
recognized that many different factors influence a young person's
decision to start smoking or to use smokeless tobacco and that the
affected industries have historically shown their ability to find new
ways of promoting their products whenever restrictions were imposed (60
FR 41314 at 41341). Consequently, to guard against the possibility that
its comprehensive regulations might be circumvented and to give firms
an incentive to take appropriate actions to discourage cigarette and
smokeless tobacco sales to people under 18, the agency proposed to
require additional regulatory measures if the outcome-based objectives
specified in proposed Sec. 897.44 were not met.
    In response to comments and upon further examination of existing
statutory and regulatory requirements, the agency has deleted
Secs. 897.40, 897.42, and 897.44 from the final rule.
Sec. 897.40--Records and Reports
    Proposed Sec. 897.40(a) would have required each manufacturer to
submit, on an annual basis, copies of all labels (or a representative
sample of labels if the labels would be similar for multiple products),
copies of all labeling, and a representative sample of advertising.
Proposed Sec. 897.40(b) would have provided an address for such
materials.
    (1) The agency received a number of comments from distributors,
wholesalers, and retailers stating that it would be too costly and
time-consuming, and thus too burdensome for small businesses to submit
the information required by proposed Sec. 897.40(a) and further, that
the information collected would not be useful in prohibiting young
people from using tobacco products.
    These comments misread proposed Sec. 897.40(a) by interpreting the
section to apply to distributors of tobacco products. By its terms,
this provision only applied to manufacturers of cigarettes and
smokeless tobacco. FDA agrees with the comments that it is unnecessary
for the agency to receive labels, labeling, and a representative
[[Page 44540]]
sampling of advertising for cigarettes and smokeless tobacco handled by
distributors. In order to clarify this point further, FDA has deleted
proposed Sec. 897.40(a) and (b), and is explicitly exempting
distributors of cigarettes and smokeless tobacco from the registration
requirement in section 510 of the act. Exempting distributors from the
registration requirement results in their exemption from the record
submission requirements in section 510(j) of the act. The agency has
amended the existing device registration and listing regulations in
part 807 by adding a new provision, at Sec. 807.65(j), to reflect this
exemption.
    FDA is authorized, under section 510(g)(4) of the act, to exempt
persons from the requirement of registering under section 510 of the
act. The agency agrees with the comments discussed above that stated
that reporting by distributors would be too burdensome and would not
result in any useful information. FDA believes that it will receive all
the information it needs from manufacturers, who are required to list
information with FDA under section 510 of the act. Further, there was
virtually no public comment supporting a registration and listing
requirement for distributors. Based on these considerations, FDA finds
that it is appropriate to exempt distributors of cigarettes and
smokeless tobacco, as defined in Sec. 897.3(c), from the registration
requirement in section 510 of the act as originally proposed because
compliance with section 510 of the act by distributors ``is not
necessary for the protection of the public health.''
    A comment from the cigarette industry argued that Sec. 897.40(a)
was inconsistent with the recordkeeping requirements in part 807 (21
CFR part 807) (the device registration and listing regulations) by
requiring annual submissions. A comment from a public health
organization supported proposed Sec. 897.40, and stated that the
reporting requirements were the same as those faced by other
manufacturers of drug delivery devices.
    Cigarette and smokeless tobacco manufacturers are required to
register and list under section 510 of the act. Upon consideration of
the industry comment, the agency believes it is more appropriate for
manufacturers to comply with the existing device registration and
listing requirements in part 807 than to create new requirements in
this regulation. Therefore, as stated earlier, FDA has deleted proposed
Sec. 897.40(a) and (b) from the rule.
    (2) A comment from the country's largest association of health
professionals supported proposed Sec. 897.40, but suggested that FDA
expand the reporting requirements to have each manufacturer monitor
brand-specific uptake by children and adolescents. The comment
suggested that these data could be used to supplement information from
the Monitoring the Future project and other surveys that do not
currently contain brand-specific data. The comment also stated that
cigar and loose-leaf tobacco manufacturers should be required to
monitor and report on use of their products by people under 18.
    The agency declines to accept the comment's suggestions. FDA
believes it is not necessary to obtain such data at this time. Rather,
it is more appropriate to allow the provisions of the final rule to
become effective and to monitor the effectiveness of the program before
considering the addition of new requirements. FDA also notes that it is
not asserting jurisdiction over cigars; cigar manufacturers are not
subject to the requirements of this rule.
    Proposed Sec. 897.40(c) would have required manufacturers,
distributors, and retailers to make records and other information
available to FDA inspectors for purposes of inspection, review,
copying, or any other use related to the enforcement of the act.
    (3) An industry comment argued that proposed Sec. 897.40(c)--which
required manufacturers, distributors, and retailers to ``make all
records and other information collected under this part and all records
and other information related to the events and persons identified in
such records'' available to FDA officials--so exceeds FDA's authority
that it fails the test set out in United States v. Morton Salt Co., 338
U.S. 632, 652 (1950), and, therefore, violates the Fourth and Fifth
Amendments to the Constitution. The comment argued that Sec. 897.40(c)
may require the release, for example, of marketing strategies, sales
figures, profits, personnel data, and proprietary information.
    FDA disagrees with this comment, but nevertheless, the agency has
deleted Sec. 897.40(c). Part 897 does not add records requirements
beyond those applicable to devices generally under existing
regulations, e.g., part 803 (21 CFR part 803) (medical device
reporting), part 804 (21 CFR part 804) (medical device distributor
reporting), part 807 (registration and listing), and part 820 (21 CFR
part 820) (good manufacturing practice). Section 897.40(c), as
proposed, is therefore unnecessary, since FDA retains the records,
reports, and inspection authority with respect to cigarettes and
smokeless tobacco that it has with respect to other restricted devices.
This authority is found, for example, in sections 510, 519, 702, 703,
and 704 of the act (21 U.S.C. 360, 360i, 372, 373, and 374). In
particular, section 704 of the act explicitly authorizes the agency to
inspect records regarding restricted devices, including records and
reports (and the related research) required under section 519 of the
act, shipment data, and data as to the qualifications of technical and
professional personnel performing functions subject to the act, except
that such inspections may not extend to financial, sales, pricing, or
other personnel and research data.
    Warrantless inspections of drug and device manufacturers authorized
by section 704 of the act are ``reasonable'' and therefore consistent
with the Fourth Amendment, in part because section 704 delineates the
scope of inspections with respect to prescription drugs and restricted
devices. (See United States v. Jamieson-McKames Pharmaceuticals, 651
F.2d 532, 538 and n.9 (8th Cir.), cert. denied, 455 U.S. 1016 (1981).)
    In particular, section 704 of the act meets the test established by
the Supreme Court, and cited in the comment, that is applied to
scrutinize administrative subpoenas under the Fourth Amendment's
proscription of unreasonable searches and seizures and the Fifth
Amendment's Due Process Clause: ``the inquiry is within the authority
of the agency, the demand is not too indefinite and the information
sought is reasonably relevant'' (Morton Salt, 338 U.S. at 652
(regarding order requiring report about compliance with earlier agency
order); see also EEOC v. Shell Oil Co., 466 U.S. 54, 72 n.26 (1984)
(citing Morton Salt regarding administrative subpeona); Reich v.
Montana Sulphur and Chem. Co., 32 F.3d 440, 448 (9th Cir. 1994) (same),
cert. denied, 115 S.Ct 1355 (1995); Resolution Trust Corp. v. Walde, 18
F.3d 943, 946 (D.C. Cir. 1994) (same)).
    The comment stressed that Sec. 897.40(c) as proposed failed to
satisfy the first part of the Morton Salt test because the act does not
grant FDA authority to regulate tobacco products and because Congress
has repeatedly refused to give FDA such authority. As discussed in
detail in the 1996 Jurisdictional Determination annexed hereto, FDA is
extending jurisdiction over tobacco products by a lawful application of
the act. Moreover, the records, reports, and
[[Page 44541]]
inspection provisions in sections 510, 519, 702, 703, and, in
particular, section 704 of the act, clearly specify the agency's
authority to inspect regarding restricted devices, including records
and reports required pursuant to section 519 of the act. An inspection
of records from manufacturers, distributors, or retailers regarding
tobacco products--which are restricted devices and which pursuant to
this rule are subject to the reporting requirements of parts 803 and
804--is therefore ``within the authority of the agency'' as required by
the Supreme Court in Morton Salt (338 U.S. at 652). Moreover, because
sections 704 and 519 of the act define the scope of such requests, by
their terms, such requests would meet the second and third parts of the
Morton Salt test, since they would not be ``too indefinite and the
information sought [would be] reasonably relevant'' to enforcement of
the provisions of part 897 (Id.).
    Even in the absence of proposed Sec. 897.40(c), manufacturers,
distributors, and retailers of cigarettes and smokeless tobacco are
subject to the same records access and inspection requirements as are
any manufacturers, distributors, and retailers of restricted medical
devices. As discussed in this section, these requirements are fully
consistent with the Fourth and Fifth Amendments.
    (4) Several comments from distributors and retailers asserted that
the recordkeeping requirements in proposed Sec. 897.40(c) would be
expensive and especially hard on small businesses. A few comments also
claimed that proposed Sec. 897.40(c) would not affect sales to children
and adolescents, but would instead result in lost business as
distributors or retailers would have to take the time to prepare and to
maintain records. A small number of comments simply opposed proposed
Sec. 897.40(c) without providing any reason or said it was
``offensive,'' ``intrusive,'' or would not produce any useful
information during an inspection.
    As stated previously in this section, FDA has revised the rule to
delete Sec. 897.40(c) entirely. The agency believes that the existing
reporting requirements in other regulations (such as part 803 for
medical device reporting (as amended by this rule), part 804 for
medical device distributor reporting (as amended by this rule), part
807 for registration and listing (as amended, to exclude distributors
of cigarettes and smokeless tobacco), and part 820 for good
manufacturing practices) make proposed Sec. 897.40(c) unnecessary. The
agency has also amended the rule to exempt distributors of cigarettes
and smokeless tobacco from part 807. Thus, distributors are only
expected to comply with the medical device distributor reporting
requirements in part 804.
    Retailers have no recordkeeping or reporting requirements under
part 897.
    Notwithstanding these changes to the rule, FDA believes that the
comments misunderstand the purpose of recordkeeping and reporting. The
records and reports that were described in the 1995 proposed rule were
never intended to have a direct role in reducing illegal sales to
children and adolescents. Neither were they intended to divert
distributor or retailer staff to ministerial functions or to intrude
into business activities. To the contrary, records and reports can help
firms and FDA ensure compliance with the regulations. For
manufacturers, distributors, and retailers, records and reports
demonstrate whether they have complied with a particular requirement.
Records are especially valuable in this respect because FDA's
enforcement strategy relies heavily on site inspections to determine
whether a party has complied with a statutory or regulatory
requirement, and records can show or help an agency inspector determine
whether a firm has a good compliance history. Firms that have good
compliance histories usually are inspected less frequently than others,
whereas firms with poor compliance histories may be inspected more
frequently or more rigorously.
    Inspections have other important benefits for firms. Inspections
can reveal areas where firms can improve their operations. Inspections
also apply to firms equally, regardless of their size, so firms that
manufacture, distribute, or sell the same or similar products meet the
same conditions or requirements. Furthermore, inspections, and FDA
enforcement generally, give consumers greater assurance in the products
they purchase because those products are held to the same standards or
requirements.
    For FDA, records and reports can provide information on current
industry practices and trends, help identify potential problems in a
regulatory program or in a firm's or industry's practice, and even
conserve agency resources by letting the agency concentrate its
inspection efforts on firms with poor compliance histories.
    Thus, for these reasons, FDA disagrees with those comments
suggesting that recordkeeping and reporting requirements or FDA
inspections will have no useful purpose.
Sec. 897.42--Preemption of State and Local Requirements and Requests
for Advisory Opinions
    (5) FDA received several comments that opposed proposed
Sec. 897.42, claiming that it was inconsistent with the process for
requesting exemptions from the preemption requirement in section 521 of
the act. The agency also received some comments supporting proposed
Sec. 897.42 precisely because it would have recognized and would have
preserved more stringent State and local requirements.
    After careful consideration and closer review of the act, the
agency has deleted proposed Sec. 897.42 from the rule. This issue is
addressed in greater detail in section X. of this document.
    Under Sec. 897.44 of the 1995 proposed rule, FDA would have
established goals of a 50-percent reduction in cigarette use by
individuals under the age of 18 years; a 50-percent reduction in
smokeless tobacco use by males under the age of 18 years; and no
increase in smokeless tobacco use by females under the age of 18 years.
The agency stated it would take additional regulatory measures if these
goals were not met 7 years after the publication date of the final
rule.
    FDA derived its outcome-based goals from the ``Healthy People
2000'' objectives. ``Healthy People 2000'' sets national health
promotion and disease prevention objectives for Americans. The report
was a joint effort by the U.S. Public Health Service (PHS), the
Institute of Medicine (IOM) at the National Academy of Sciences (NAS),
almost 300 national membership organizations such as the American
Medical Association (AMA), the American Academy of Pediatrics (AAP),
and the Blue Cross and Blue Shield Association, and all State health
departments. ``Healthy People 2000'' established a basic goal to reduce
by half the initiation of cigarette smoking by children and youth by
the year 2000.
    The agency proposed measuring progress toward the stated goals by
use of an objective, scientifically valid, and generally accepted
survey, such as the Monitoring the Future Project (MTFP). MTFP, funded
by the National Institute on Drug Abuse (NIDA) and administered by the
Institute for Social Research at the University of Michigan, has
collected data on daily smoking by 12th graders every year since 1976
and on smokeless tobacco use by 12th graders for the years 1986 to 1989
and 1992 to 1995.
    The agency did not include any specific additional requirements in
the
[[Page 44542]]
1995 proposed rule, but stated that FDA would propose specific
additional measures when it publishes a final rule and invited public
comment on what additional requirements should be considered.
    The agency received a number of comments arguing that the agency
should wait until it knows specifically what progress has been made
toward the goals before proposing additional regulatory measures. This
approach would allow the agency to identify specific barriers to
achieving the goals and to tailor any additional requirements to these
barriers. Other comments argued that FDA must provide the public an
opportunity to comment on specific additional regulatory measures
before they would take effect. FDA has decided that there is merit to
these comments. At this time, therefore, the agency is not proposing
additional regulatory measures beyond the restrictions in this
regulation and the requirements under section 518 of the Federal Food,
Drug, and Cosmetic Act (the act) (21 U.S.C. 360h). The agency instead
plans to monitor industry compliance with the agency's requirements as
well as the progress made toward meeting the stated goals of reducing
the use of tobacco products by individuals under the age of 18 within 7
years. In the event that additional measures are necessary to achieve
the goals, the agency retains the authority to propose and issue
additional regulatory requirements in a future rulemaking proceeding.
    FDA received approximately 60 individual comments related to this
provision, about evenly divided in support and opposition. Opposition
came primarily from the tobacco manufacturing and advertising
industries and from tobacco retailers. Comments from several State
legislators also opposed additional measures, as did one from a State
department of agriculture. Some comments maintained the provision was
invalid and unconstitutional; others objected that ``when regulations
fail, the answer is not more regulations.''
    Support for the measure came from national health organizations,
State health departments, and individuals who identified themselves as
parents, public health professionals, educators, and former smokers.
Supporters stressed the importance of effective measures to improve the
health of current and future generations.
    (6) One comment opposing the proposed provision contended that
imposing additional regulatory measures at the time that the final rule
is published would be unreasonable because it would not permit a
flexible response to future circumstances. It argued, for example, that
the same additional regulatory measures ``apparently would be triggered
at the specified date regardless of whether the reduction in the next 7
years is 49.8 percent or 2 percent.''
    Several comments in support of the provision also advocated greater
flexibility, but for different reasons. Because of the serious adverse
health effects linked to the use of tobacco products, these comments
urged the agency not to wait 7 years to evaluate progress and institute
corrective measures. Instead, they recommended interim or ongoing
review of compliance with the regulations and progress toward achieving
the goals.
    FDA agrees it is useful to put in place a system that will allow
flexibility in responding to future circumstances. Therefore, the
agency has decided to review on an ongoing basis the effectiveness of
specific provisions. It will rely on data from the MTFP and other
surveys recognized as using sound methodology to help measure
compliance with the provisions, detect loopholes, and evaluate progress
in achieving the goals. This will permit FDA to identify problem areas
in a timely manner and seek public comment on whether additional
measures should be considered.
    (7) Some comments objected to any further restrictions. Others
argued specifically against further advertising restrictions, saying it
is illogical to impose such additional measures without first
considering and attacking other causes for continued smoking among
youth. A few comments were concerned that the proposed provision would
inevitably result in a complete ban of all tobacco products, with a few
of those charging that this was FDA's true intent.
    One comment objected to the agency announcing as part of a final
rule specific measures it will impose, rather than simply propose, some
time in the future, maintaining that `` * * * the agency will have
failed to provide meaningful notice and opportunity to comment.''
    Many comments supported additional regulatory measures, if needed,
to achieve the desired reductions in tobacco use by young people. Some
advocated further restrictions on advertising, including: (1)
Eliminating all tobacco product advertising except for point-of-
purchase announcements of product availability limited to black and
white text only; (2) prohibiting all point of purchase advertising; (3)
eliminating direct mail marketing for cigarettes and smokeless tobacco;
(4) prohibiting all outdoor advertising; (5) prohibiting advertising in
publications marketed to youths, and possibly revising the definition
of ``adult publications''; and (6) outlawing all marketing of
cigarettes and smokeless tobacco. One comment recommended plain
packaging of cigarettes, and one suggested broadening the proposed
education program.
    Comments also proposed additional sales restrictions on tobacco
products, including stringent licensing requirements, increasing the
age of sale to 19, and selling cigarettes in cartons only.
    FDA rejects the comments suggesting that the agency intends to
eventually ban all tobacco products, as the agency has repeatedly
stated that such an outcome is not the appropriate public health
response under the act. FDA is not proposing the additional
restrictions on advertising or access suggested in the comments because
FDA does not anticipate at this time that these additional measures
will be required.
IX. Implementation Dates
    The Food and Drug Administration (FDA) has concluded that the
provisions of this rule should become effective 1 year after its date
of publication in the Federal Register, with three exceptions. A 6-
month effective date is established for the requirements in
Sec. 897.14(a) and (b) prohibiting retailers from selling cigarettes or
smokeless tobacco to persons under age 18 and requiring retailers to
check photographic identification of young purchasers for proof of age.
The requirement in Sec. 897.34(c) prohibiting sponsorships using
cigarette or smokeless tobacco brand names or other indicia of product
identification will be effective 2 years from the date of publication
of this final rule. Finally, manufacturers will be required to comply
with the registration and listing requirements in part 807, and the
good manufacturing practice requirements in part 820, 2 years from the
date of publication of this final rule.
     Although the agency specifically requested comment on when the
various provisions in the proposed rule should become effective, FDA
received relatively few comments on this subject.
    (1) One comment that opposed the rule argued that FDA should give
industry an opportunity in a hearing to challenge the ``factual
underpinnings''
[[Page 44543]]
of the rule before proceeding to implementation. In contrast, a
supporting comment strongly favored immediate action to implement the
rule, and a second comment stated that postponing implementation by
even a year ``means that another 500,000 young people will become
regular users of tobacco products.'' Another supporting comment
recommended that the effective date for provisions that prohibit sales
to persons under 18 be no more than 90 days from the date the final
regulations are issued, and that the effective date for provisions
affecting advertising and labeling be 6 months from the date the final
regulations are issued.
    FDA is not persuaded that a hearing is needed on the ``factual
underpinnings'' of the rule. In the preamble to the 1995 proposed rule,
the agency provided its rationale and evidentiary basis for each
provision of the regulation; interested persons have had a full
opportunity to submit their comments and any factual supporting data
for the agency to consider. Informal notice and comment rulemaking does
not require more. Moreover, the agency believes that there would be
little to gain from holding such a hearing, and that this step would
needlessly delay implementation of the final rule. Full responses to
the challenges made by this and other comments on the factual bases for
the rule are provided in this document.
    Because FDA has found that thousands of children purchase
cigarettes every day, the agency agrees with the supporting comments
that restrictions on such sales should be put into effect as soon as
possible. FDA recognizes, however, that the States also have laws
restricting youth access to tobacco products, some of which may be
preempted under section 521 of the act by this final regulation. The
agency intends to allow sufficient time for applications for exemption
from preemption to be requested, considered by the agency, and acted
upon. Therefore, FDA has determined that Sec. 897.14(a) and (b), which
prohibit the sale of tobacco products to individuals under the age of
18 and require retailers to examine a photographic identification to
ensure that the purchaser is at least 18 years of age, and is basic to
the goals of this final rule, will become effective 6 months from the
date of publication of this final rule in the Federal Register. This
should allow adequate time for the agency to process the applications
for exemption from preemption while not unduly delaying the
implementation of a very important part of the regulation.
    (2) As for the recommendation by one comment that the advertising
and labeling provisions of the rule become effective 6 months after the
final rule is issued, FDA believes that this period of time is not
consistent with the agency's policy of allowing sufficient time for
affected entities to learn about and comply with new regulatory
requirements. Instead, based on its own experience and that of other
Government agencies in regulating product advertising and labeling, FDA
has arrived at a period of 1 year from the date of publication of this
final rule in the Federal Register for manufacturers, distributors, and
retailers to meet most of the requirements of the rule. In reaching
this conclusion, FDA has taken into consideration the time needed to
comply with all the requirements of the rule, including time for
designing new labeling and advertising, for printing or filming these
new materials, for affixing new product labels and disseminating new
advertising materials, and for using up existing inventories of
products, supplies of promotional materials, and coupons that do not
comply with the new requirements.
    Examples of activities that will become violative and must cease 1
year from the date of publication of this rule in the Federal Register
include vending machine sales of cigarettes and smokeless tobacco and
sales from self-service displays (except in the narrowly-defined
locations that are exempted), sales of single cigarettes from opened
packages (``loosies''), sales of packages with fewer than 20
cigarettes, mail-order redemption of coupons for tobacco products,
distribution of free tobacco samples, and the sale or distribution of
nontobacco items showing the brand name (alone or in conjunction with
any other word), logo, symbol, motto, selling message, recognizable
color or pattern or colors, or any other indicia of product
identification identical or similar to, or identifiable with, those
used for any brand of cigarettes or smokeless tobacco. Examples of
additional requirements that must be met 1 year from the date of
publication include all advertising requirements (except as noted
below), and the requirement that manufacturers not use a trade or brand
name of a nontobacco product on a cigarette or smokeless tobacco
product except as specified in Sec. 897.16(a).
    The agency is excepting from the 1-year implementation period the
requirement that manufacturers comply with the existing registration
and listing requirements, found in part 807. The agency recognizes that
manufacturers are not accustomed to complying with these recordkeeping
and reporting requirements and will require additional time in which to
develop appropriate compliance procedures. Therefore, FDA is granting
manufacturers 2 years from the date of publication of this final rule
to begin complying with the requirements under part 807. The same
reasoning has led the agency to allow manufacturers the same 2-year-
period to prepare before they are required to comply with the good
manufacturing practice requirements in part 820.
    Finally, the agency is also excepting from the 1-year
implementation period the prohibitions in Sec. 897.34 (c) of
sponsorship using cigarette or smokeless tobacco brand names or other
indicia of product identification. The agency recognizes that
sponsorship of events is often arranged well in advance and that some
event promoters may be disadvantaged if they are not allowed adequate
time to replace tobacco sponsors who elect to cease sponsoring the
event, rather than switch to their corporate name. Accordingly, this
final rule provides that Sec. 897.34(c) will become effective 2 years
from the date of publication of this final rule.
X. Relationship Between the Rule and Other Federal and State Laws
    This section of the document discusses issues concerning the
relationship between this rule and other Federal and State laws. More
specifically, sections X.A. and X.B. of this document analyze comments
that addressed the potential effect upon this rule of other Federal
statutes that contain express provisions that restrict some areas of
Federal regulation of tobacco products. Section X.C. of this document
analyzes comments that raised the issue of whether this rule conflicts
with the congressional purpose behind the current regulatory scheme for
tobacco products. Section X.D. of this document analyzes comments that
addressed the issue of whether Congress intended for the current
regulatory scheme for tobacco products to be exclusive, such that this
rule might be foreclosed. Finally, sections X.E. and X.F. of this
document analyze comments that addressed the preemptive effect under
the Federal Food, Drug, and Cosmetic Act (the act) that the Food and
Drug Administration's (FDA's) regulation of tobacco products as drug
delivery devices will have upon
[[Page 44544]]
State and local requirements and upon State product liability claims.
A. The Federal Cigarette Labeling and Advertising Act
    (1) A number of comments argued that FDA's August 11, 1995,
proposed rule (60 FR 41314) (the 1995 proposed rule) is precluded by
section 5 of the Federal Cigarette Labeling and Advertising Act (the
Cigarette Act (15 U.S.C. 1334)). Other comments expressed the opposite
view, stating that 15 U.S.C. 1334 did not preclude the 1995 proposed
rule. Some of the comments that found no preclusion noted that the
scope of 15 U.S.C. 1334 is narrow, and applies only to cigarette
packages, thereby allowing for regulation of cigarette advertising and
promotion as contemplated by the 1995 proposed rule. After considering
all of the comments, FDA has concluded that none of the rule's
provisions, as embodied in the final rule, is expressly precluded by
the Cigarette Act. The following analysis explains this conclusion.
    The Cigarette Act contains the following provisions pertaining to
regulation of cigarettes:
     (a) No statement relating to smoking and health, other than the
statement required by [15 U.S.C. 1333], shall be required on any
cigarette package.
    (b) No requirement or prohibition based on smoking and health
shall be imposed under State law with respect to the advertising or
promotion of any cigarettes the packages of which are labeled in
conformity with the provisions of this chapter.
(15 U.S.C. 1334 (emphasis added))
    15 U.S.C. 1334(b) is expressly limited to requirements or
prohibitions imposed under State law, that relate to advertising or
promotion of cigarettes. Thus, 15 U.S.C. 1334(b) is inapplicable to
FDA's regulation under part 897 and does not foreclose FDA from
regulating cigarette advertising or promotion.
    15 U.S.C. 1334(a), which applies to statements on the cigarette
package, extends to both Federal and State regulation. However, the
scope of 15 U.S.C. 1334(a) is narrow, precluding Federal and State
regulation of cigarettes only to the extent that such regulation would
require any statement (other than the statement required by 15 U.S.C.
1333) ``relating to smoking and health'' to appear on the cigarette
package.
    There are two types of information that the final rule requires on
cigarette packages. The first is the ``established name,'' such as
``Cigarettes,'' which is required by section 502(e)(2) of the act (21
U.S.C. 352(e)(2)), and which the agency is implementing under
Sec. 897.24. The established name requirement is applicable to all
devices regulated under the act, and it serves merely to aid consumers
in the identification of the product.
    The second type of information that the final rule requires on
cigarette packages is the statement of intended use and age restriction
required under Sec. 897.25. This statement informs consumers about the
products' intended uses and that the products may not be sold to
persons under the age of 18.
    Neither the established name nor the statement of intended use and
age restriction is ``relat[ed] to smoking and health.'' Any indirect
relationship these requirements might have to smoking and health is
incidental and would be too ``tenuous, remote, or peripheral'' to
trigger preclusion under 15 U.S.C. 1334(a). (See District of Columbia
v. Greater Washington Bd. of Trade, 113 S. Ct. 580, 583 n.1 (1992)
(``Pre-emption does not occur * * * if the [law at issue] has only a
`tenuous, remote, or peripheral' connection with [the subject to which
preemption is applicable], as is the case with many laws of general
applicability'') (citations omitted).) To find otherwise could render
the limiting language of 15 U.S.C. 1334(a) meaningless. (See New York
State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins.
Co., 115 S. Ct. 1671, 1677 (1995) (finding that overly broad
construction of the phrase ``relate to'' ``would * * * read Congress's
words of limitation as mere sham, and [would] read the presumption
against pre-emption out of the law whenever Congress speaks to the
matter with generality'').)
    The agency notes that the established name requirement under
Sec. 897.24 is analogous to requirements imposed by the Bureau of
Alcohol, Tobacco and Firearms (BATF) on cigarette packages. Under 26
U.S.C. 5723(b), ``[e]very package of tobacco products * * * shall * * *
bear the marks, labels, and notices, if any, that the Secretary by
regulation prescribes.'' Under this statutory provision, BATF has
issued regulations requiring, for instance, that ``[e]very package of
cigarettes shall * * * have adequately imprinted thereon, or on a label
securely affixed thereto, the designation `cigarettes', the quantity of
such product contained therein, and the classification for tax
purposes, i.e., for small cigarettes, either `small' or `Class A', and
for large cigarettes, either `large' or `Class B'.'' (See 27 CFR
270.215.) In the same way that the requirement under 27 CFR 270.215
does not run afoul of 15 U.S.C. 1334 because it does not relate to
smoking and health, the established name requirement under Sec.  897.24
is also not precluded.
    Further guidance on the scope of preclusion under the Cigarette Act
can be found in the legislative history and purpose behind the
Cigarette Act. The history and purpose make clear that Congress
intended 15 U.S.C. 1334 to preclude only those ``statements'' that
constituted warning or cautionary statements on cigarette packages.
(See Cipollone v. Liggett Group, Inc., 112 S. Ct. 2608, 2618-19 (1992)
(finding that ``no statement relating to smoking and health'' language
in 1965 version of the Cigarette Act referred to the sort of warning
provided for in section 4 of that statute).) \253\ (See also H. Rept.
449, 89th Cong., 1st sess. (1965), reprinted in 1965 U.S. Code Cong. &
Admin. News 2350, 2350 (the Cigarette Act prohibits ``the requirement
of any other caution statement on the labeling of cigarettes under laws
administered by any Federal, State, or local authority'').)
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    \253\ Some of the comments take issue with FDA's application of
Federal-State preemption law, pointing out that the Supremacy Clause
and Tenth Amendment upon which this law is based have no application
in determining the relationship between different Federal statutes.
FDA is fully aware that Federal-State preemption law, as well as
those cases such as Cipollone that apply it, do not directly govern
the present situation concerning preclusion of Federal regulations
by Federal law. However, the principles contained in Federal-State
preemption law provide some general guidance for determining the
scope of preclusion intended by Congress, regardless of whether that
preclusion is directed at State or Federal law.
---------------------------------------------------------------------------
    Clearly, neither Sec. 897.24 nor Sec. 897.25 is a warning or
cautionary statement of the type Congress intended to preclude under 15
U.S.C. 1334. Accordingly, the requirements under these sections of the
final rule are not foreclosed by the Cigarette Act.
B. The Comprehensive Smokeless Tobacco Health Education Act
    (2) Several comments noted that the 1995 proposed rule would
prohibit advertisements for smokeless tobacco from appearing in certain
locations and media. One comment stated that any prohibition on
advertising under the 1995 proposed rule amounts to a ``compelled
absence of advertising,'' and is as much a ``statement relating to the
use of smokeless tobacco and health'' as is an explicit message
requirement. Thus, the comment asserted that such restrictions are
expressly precluded by the Comprehensive Smokeless Tobacco Health
Education Act (the Smokeless Act).
[[Page 44545]]
    Another comment stated that FDA's proposed restrictions on the
advertising of smokeless tobacco are foreclosed because they directly
affect such advertising in a manner that is ``so nearly identical''
``in purpose and effect'' to the advertising requirements mandated by
the Smokeless Act that they fall within that statute's express
prohibition of any other Federal ``statement'' related to smoking and
health. In contrast, some comments stated the position that the 1995
proposed rule is not expressly precluded by the Smokeless Act.
    After considering all comments, FDA has concluded that none of the
1995 proposed rule's provisions, with one exception, is expressly
precluded by the Smokeless Act. The following analysis explains this
conclusion.
    The Smokeless Act contains the following provision pertaining to
regulation of smokeless tobacco:
    No statement relating to the use of smokeless tobacco and
health, other than the statements required by [15 U.S.C. 4402],
shall be required by any Federal agency to appear on any package or
in any advertisement (unless the advertisement is an outdoor
billboard advertisement) of a smokeless tobacco product.
(15 U.S.C. 4406(a) (emphasis added))
    15 U.S.C. 4406(a) precludes only ``statement[s].'' Most
requirements under the final rule, such as those that limit the
locations or media in which smokeless tobacco may be advertised, do not
constitute ``statements'' within the meaning of 15 U.S.C. 4406(a). (See
Banzhaf v. Federal Communications Commission, 405 F.2d 1082 (D.C. Cir.
1968) (holding that the FCC ruling was not precluded by the Cigarette
Act because the ruling did not require inclusion of any ``statement * *
* in the advertising of any cigarettes''), cert. denied, 396 U.S. 842
(1969).) Thus, those sections of the final rule that limit the location
or media in which smokeless tobacco may be advertised, as well as other
requirements in the final rule that do not actually mandate an
affirmative statement, are not expressly precluded by the Smokeless
Act.
    Only three sections of the final rule actually require inclusion of
a ``statement'' on the packaging or in the advertising of smokeless
tobacco. These sections are Secs. 897.24, 897.25, and 897.32(c). In
addition, proposed Sec. 897.36, which is being omitted from the final
rule for reasons discussed later in this section, would have required
such a statement.
    As with cigarettes, Sec. 897.24 requires that packages of smokeless
tobacco bear the products' established names. Section 897.25 mandates,
in part, that packages of smokeless tobacco bear a statement of the
products' intended uses and age restriction. Section 897.32(c) requires
that advertising for smokeless tobacco include the products'
established names and statements of their intended uses. (See section
502(r)(1) and (r)(2) of the act.)
    For reasons similar to those discussed with regard to the Cigarette
Act, none of the statements required under Secs. 897.24, 897.25, and
897.32(c) are precluded under 15 U.S.C. 4406(a). (See section X.A. of
this document.) First, the required statements do not directly
``relat[e] to the use of smokeless tobacco and health.'' Second, the
required statements are not ``statements'' of the sort precluded by 15
U.S.C. 4406(a) because they do not convey any type of cautionary
message or warning of the sort Congress intended to foreclose.
Accordingly, the statements are not precluded by 15 U.S.C. 4406(a).
    Proposed Sec. 897.36 would have declared the labeling or
advertising of cigarettes and smokeless tobacco to be false or
misleading if it contained ``any express or implied false, deceptive,
or misleading statement, omit[ted] important information, lack[ed] fair
balance, or lack[ed] substantial evidence to support any claims made
for the product.'' Upon review of the comments and reconsideration of
this provision, FDA believes that, in some instances, manufacturers of
smokeless tobacco might have been required under FDA's proposed rule to
incorporate a statement relating to the use of smokeless tobacco and
health on the package or in the advertising of a smokeless tobacco
product in order to correct an omission of important information or a
lack of fair balance. Similarly, cigarette manufacturers might have
been required to include a statement relating to smoking and health on
the cigarette package. Such requirements would be precluded under the
Smokeless Act or the Cigarette Act. Thus, FDA has omitted Sec. 897.36
from the final rule.
    The agency notes, however, that tobacco products, like other
products regulated under the act, are still subject to section 502(a)
of the act, which provides, in part, that a device shall be deemed to
be misbranded ``[i]f its labeling is false or misleading in any
particular.'' Any requirement imposed under section 502(a) of the act
upon tobacco products is limited, however, to the extent that it is
precluded by the Smokeless Act or the Cigarette Act.
C. Conflict With Congressional Purpose Behind Current Regulatory Scheme
For Tobacco Products
    A number of comments asserted that the 1995 proposed rule conflicts
with other Federal statutes that regulate tobacco products. These
comments focused on three specific statutes: The Cigarette Act, the
Smokeless Act, and the Public Health Service Act (the PHS Act)
1. The Cigarette Act and The Smokeless Act
    (3) A number of comments argued that the 1995 proposed rule would
conflict with, and would nullify, some of the congressional objectives
behind the Cigarette Act and the Smokeless Act. Based on the alleged
conflict, some of the comments asserted that the general provisions of
the act must give way to the specific provisions of the Cigarette Act
and the Smokeless Act.
    FDA disagrees. As explained in sections X.A. and X.B. of this
document, FDA regulation of tobacco products under the authority of the
act does not conflict with the Cigarette Act or the Smokeless Act, and
thus such regulation is clearly capable of coexisting with these
statutes. (See Connecticut National Bank v. Germain, 112 S. Ct. 1146,
1149 (1992) (``so long as there is no `positive repugnancy' between two
laws, a court must give effect to both'') (citation omitted); Morton v.
Mancari, 417 U.S. 535, 551 (1974) (``The courts are not at liberty to
pick and choose among congressional enactments, and when two statutes
are capable of coexistence, it is the duty of the courts, absent a
clearly expressed congressional intention to the contrary, to regard
each as effective'').)
    The comments asserted a number of areas in which the 1995 proposed
rule would allegedly conflict with Federal law and congressional
intent:
    (4) Numerous comments argued that the 1995 proposed rule is
precluded because Congress, through enactment of the Cigarette Act and
the Smokeless Act, intended to foreclose all Federal agencies other
than the Federal Trade Commission (FTC) and the Federal Communications
Commission (FCC) from regulating the labeling and advertising of
tobacco products. Some of the comments criticized the 1995 proposed
rule, asserting that it would cause tobacco product manufacturers to be
held to separate and conflicting standards of conduct by different
agencies, thus conflicting with congressional intent to prevent
``diverse, nonuniform, and confusing cigarette
[[Continued on page 44546]]