Court Opinion

ID: 4119607
Source: CourtListenerOpinion
Date Created: 2017-01-27 22:41:16.657899+00
Date Added: 2024-06-11T09:36:53.269204
License: Public Domain

Constitutionality of Proposed Limitations on Tobacco Industry
Congress has the authority under the C onstitution to im pose significant new regulations on tobacco
   com panies, including (1) restrictions on advertising and m arketing o f tobacco products that are
   tailored to prevent access to advertising by m inors; (2) contingent m onetary exactions, to be col­
   lected from tobacco com panies if tobacco use by m inors fails to meet prescribed targets; and (3)
   requirem ents that com panies disclose certain docum ents to the public and to federal regulators

Consent by the tobacco com panies to increased federal regulation, w hich those com panies m ight grant
   in order to qualify for federally prescribed lim its on liability, would perm it C ongress to establish
   additional restrictions on tobacco advertising that it could not im pose directly.

                                                                                                     May 13, 1998

                    S t a t e m e n t B e f o r e t h e C o m m it t e e o n t h e J u d ic ia r y
                                          U n it e d St a t e s S e n a t e

   Mr. Chairman, thank you for inviting the Department of Justice to testify
regarding the constitutionality of limitations on the tobacco industry that are cur­
rently under consideration in the Senate. We begin by addressing Congress’s con­
stitutional authority to regulate the tobacco industry without that industry’s con­
sent. We will explain that, even in the absence of consent, the Congress may
impose important restrictions on the tobacco industry in furtherance of the public
health. Included among such permissible regulations are (1) meaningful restric­
tions on the advertising and marketing of tobacco products; (2) the direct imposi­
tion of “ lookback” assessments; and (3) document disclosure requirements. We
address these particular categories because some have questioned Congress’s
power in these areas. Finally, we address the benefits of obtaining industry con­
sent.

I. Congress Can Enact Comprehensive Tobacco Legislation Without the Industry's
Consent

  Last September, the President announced five principal goals for comprehensive
tobacco legislation. Those goals include:

         * a comprehensive plan to reduce teen smoking, including the
         imposition of assessments that would increase cigarette prices by
         amounts necessary to meet youth smoking targets;

         * express reaffirmation that the Food and Drug Administration
         ( “ FDA” ) has full authority to regulate tobacco products;

         * changes in the way the tobacco industry does business, espe­
         cially in the area of advertising directed at children;

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       * progress toward other critical public health goals, such as the
       expansion of smoking cessation and prevention programs and the
       reduction of secondhand smoke; and

       *   protection for tobacco farmers and their communities.

  Certainly there would be significant advantages to having the tobacco industry
participate in the nation’s effort to reduce youth smoking, hence the President
has indicated that he would prefer the industry do so. But Congress has ample
authority to enact comprehensive tobacco legislation that achieves these crucial
goals without the industry’s consent.

  For example, consistent with the Constitution, Congress may enact, without
industry consent, provisions that would:

       * impose assessments on all tobacco manufacturers that would
       increase the price of cigarettes by $1.10 per pack over five years;

       *   confirm full FDA authority;

       * establish marketing and advertising restrictions that would track
       the FDA’s regulation;

       * impose extensive labelling and ingredient disclosure require­
       ments;

       * fund programs that would protect tobacco farmers and their
       communities;

       * impose significant lookback assessments that would ensure
       continued reductions in youth smoking;

       * establish licensing and registration provisions that would pre­
       vent the creation of a black market; and

       *   require disclosure of relevant, non-privileged documents.

The Department believes that Congress can and should pass a law that achieves
all of the above objectives, with or without the industry’s consent. Every day
we delay, 3,000 more of our children take up smoking; at present rates, 1,000
of them will die prematurely as a result. Congress has the constitutional power
to rewrite their future with a comprehensive tobacco bill.

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II. Congress o r the FDA Can Impose Marketing Restrictions on the Tobacco
Industry Without Its Consent

        A. D irect Imposition o f the FDA Regulations

   Under prevailing Supreme Court precedent, the government has the authority
to impose restrictions on tobacco product advertising, where such restrictions are
appropriately tailored to prevent access to advertising by minors, who may not
lawfully purchase the advertised product. Thus, while there are certain advertising
restrictions that may need industry consent in order to survive constitutional chal­
lenge, it is important not to lose sight of the important advertising restrictions—
such as those set forth in the FDA regulation— that may be imposed directly.
   Under the test set out by the Supreme Court in Central Hudson Gas & Elec.
Corp. v. Public Serv. C om m ’n, 447 U.S. 557 (1980), the threshold question is
whether the regulated speech is “ related to unlawful activity” or is misleading.
Id. at 564. If so, the speech can be freely regulated by the government. Because
children cannot lawfully purchase tobacco products, Congress may restrict tobacco
advertising that promotes those unlawful transactions.
   Tobacco advertising does, however, provide information to adults, who may
lawfully purchase tobacco products. Thus, it is necessary to consider the remainder
of the Central Hudson test in evaluating the constitutionality of restrictions on
tobacco advertising. That test asks (1) “ whether the asserted governmental interest
is substantial;” (2) “ whether the regulation directly advances the governmental
interest asserted;” and (3) “ whether [the regulation] is not more extensive than
is necessary to serve that interest.” Id. at 566. There is no question that the interest
in protecting children from becoming addicted to tobacco products is substantial
and that marketing restrictions such as those in the FDA’s regulation advance
that interest. That leaves only the last part of the test—the “ fit.”
   This inquiry does not amount to a “ least restrictive means” test. Instead, the
Supreme Court’s decisions require “ reasonable” fit between the government’s
ends and the means chosen to accomplish those ends. See Board o f Trustees v.
Fox, 492 U.S. 469, 480 (1989). The fit need not be perfect, only reasonable; it
need not be the single best disposition, only one whose scope is in proportion
to the interest served. See id. Accordingly, a commercial speech restriction will
fail the narrow-tailoring requirement only if it “ burden[s] substantially more
speech than necessary.” United States v. Edge Broad. Co., 509 U.S. 418, 430
(1993). Critically for present purposes, courts likely would find that a restriction
is sufficiently tailored if it leaves open adequate alternative channels for the
communication of commercial speech. See Florida Bar v. Went fo r It, Inc., 515
U.S. 618, 632 (1995).
   As we have argued in the pending litigation, the FDA’s regulation falls within
the permissible scope of the government’s power. As the Supreme Court has made
clear, “ [t]he First Amendment’s concern for commercial speech is based on the

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informational function of advertising.” Central Hudson, 447 U.S. at 563. The
FDA regulations have been carefully tailored to preserve this informational func­
tion of tobacco advertising.
  The FDA restrictions are also carefully tailored to achieve their end—reduction
of tobacco product advertising to minors. Thus, the FDA regulation bars the use
of image and color in the advertising of tobacco products but allows it in des­
ignated adult publications and facilities. It bans outdoor advertising— including
so-called tombstone advertising— within 1,000 feet of schools and playgrounds,
but allows tombstone advertising elsewhere. It prohibits brand-name sponsorship
of athletic, social and cultural events, but permits sponsorship in company names.
The regulation restricts those aspects of tobacco advertising that are most likely
to be influential to minors while ensuring that adult publications and facilities
are excepted from its reach and that basic product and price information will be
generally available in other fora. For these reasons, the FDA regulation is fully
constitutional.
 We note that the Supreme Court’s recent decision in 44 Liquormart, Inc. v.
Rhode Island, 517 U.S. 484 (1996), is consistent with our analysis. There, the
Court considered a broad ban on price advertising about alcohol products. A
majority of the Court reaffirmed the continuing validity of the Central Hudson
test in striking down the ban, and even Justice Stevens’ arguably more protective
approach did not purport to limit the ability of government to regulate advertising
in a manner that is tailored to the legitimate interest in protecting those who are
not lawful consumers of the product.
   Indeed, the Court of Appeals for the Fourth Circuit recently applied the Court’s
decision in 44 Liquorm art in upholding a Baltimore city ordinance that substan­
tially limited, but did not prohibit, the outdoor advertising of alcohol and tobacco
products. See Anheuser-Busch, Inc. v. Schmoke, 101 F.3d 325 (4th Cir. 1996),
cert, denied, 520 U.S. 1204 (1997); Penn Adver. o f Baltimore, Inc. v. M ayor o f
Baltimore, 101 F.3d 332 (4th Cir. 1996), cert, denied, 520 U.S. 1204 (1997).
The Fourth Circuit noted that, in contrast to the price advertising ban at issue
in 44 Liquormart, the Baltimore ordinance represented a tailored measure aimed
at protecting minors who could not lawfully purchase tobacco or alcohol products.
It was not a general prohibition aimed at keeping lawful consumers in the dark.
We believe that this reasoning strongly supports the FDA regulation.
  In light o f these constitutional principles, Congress has the authority to impose
significant restrictions on tobacco advertising in the absence of industry consent
without infringing First Amendment rights. To that end, the Department believes
that any comprehensive tobacco legislation must confirm FDA’s authority to
promulgate such regulations and must reaffirm the FDA’s authority to have
promulgated the advertising restrictions that are already on the books.

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       B. Making Additional Advertising Restrictions Conditional

   Certain advertising restrictions that are set forth in the June 20th resolution,
as well as several of the bills before the Senate, go beyond those contained in
the FDA regulation. These additional advertising restrictions raise significant con­
stitutional concerns that are not presented by the FDA regulation. They would
restrict more substantially adults’ access to commercial information because they
generally do not contain the important exceptions for adult facilities and publica­
tions, and for geographic areas not frequented by children, that help to make the
FDA regulation constitutional. As a result, legislation that directly imposed these
additional restrictions would be vulnerable to significant constitutional challenge.
   We believe, however, that legislation could be crafted, consistent with the Con­
stitution, in which manufacturers could agree to comply with the additional restric­
tions in exchange for certain benefits. Such an agreement could be accomplished
through a protocol between a participating manufacturer and the federal govern­
ment, in which, among other things, a manufacturer could choose to receive cer­
tain benefits, such as limitations on liability, in return for an agreement not to
engage in certain additional types of advertising of tobacco products. Although
such provisions would present novel constitutional questions, we believe that they
should be upheld.

       C. Application o f the Unconstitutional Conditions Doctrine

   In our view, the “ unconstitutional conditions” doctrine should not bar the
government from including the additional advertising restrictions in a properly
structured protocol. In general, the doctrine prohibits the government from condi­
tioning benefits, such as federal funding, on the recipient’s willingness to forego
the exercise of constitutional rights. There are strong arguments, however, that
the doctrine should apply with less force in this unique context.
   First, virtually every speech restriction that the Supreme Court has analyzed
under the unconstitutional conditions doctrine has involved a limitation on fully
protected speech. See, e.g.~FCC vrLeague o f Women Voters'; 468 U.Sr364'(1984):~
A strong argument can be made that there is more room in the commercial speech
context for a distinction to be drawn between “ burdens” and “ benefits” than
there is in the non-commercial speech context. The greater “ hardiness” of
commercial speech, inspired as it is by the profit motive, makes it less likely
to be “ chilled” by overbroad legislation. See Virginia State Bd. o f Pharmacy
v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 771 n.24 (1976). This
same hardiness makes it less likely that the offer of government benefits will
impermissibly “ coerce” commercial speakers into foregoing the exercise of First
Amendment rights. Thus, offers of benefits that would be suspect if put forth

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in exchange for restrictions on political speech should not be similarly suspect
if put forth in exchange for restrictions on commercial speech.
   Second, we believe that a protocol could offer what should properly be under­
stood to constitute a constitutionally permissible “ benefit” rather than a constitu­
tionally suspect “ burden.” Such a protocol could be structured so that a manufac­
turer that elects not to participate in the protocol would be no worse off than
it would have been in the absence of the offer of the “ benefit.” A protocol of
this sort would be distinguishable from the provision invalidated in 44 Liquormart,
Inc. v. Rhode Island , 517 U.S. 484 (1996). There, the lead opinion explained that
an otherwise unconstitutional prohibition on virtually all price advertising could
not be justified as a permissible condition on a retailer’s license to sell. That
analysis should not bar the government from conditioning what could only be
described as a benefit to the industry on a manufacturer’s compliance with more
limited advertising restrictions that are intended to serve a legitimate governmental
interest.
   As a result, although these are novel questions for which there is no clear prece­
dent, we believe that legislation that contains the additional advertising restrictions
in a conditional form can be drafted in a manner that should survive constitutional
challenge. For example, a protocol between a participating manufacturer and the
federal government, in which, among other things, the manufacturer chooses to
accept certain limitations on liability in return for an agreement not to engage
in the outdoor advertising of tobacco products, should survive constitutional chal­
lenge.
   It is important to emphasize that our analysis o f how the unconstitutional condi­
tions doctrine should be applied in this context is predicated on the unique
characteristics o f commercial speech. A different analysis would apply to restric­
tions outside the commercial speech context, such as restrictions on lobbying by
the tobacco industry. Therefore, we do not believe that Congress should enact
legislation that includes any restrictions on political/noncommercial speech—
whether imposed directly or conditionally. The inclusion of such restrictions would
raise grave constitutional concerns.

III. C ongress Can Impose Lookback Assessments Without the Industry’s Consent

       A . Background

  A number of proposals for comprehensive tobacco legislation call for the
imposition o f “ lookback” assessments from tobacco companies. Unlike the annual
assessments, which apply regardless of the prevalence of youth smoking, lookback
assessments are contingent and take effect only if reductions in tobacco use by
minors fail to meet prescribed targets. There are two distinct types of possible
lookback assessments, which could apply singly or in combination: industry-wide
assessments based on aggregate figures for youth consumption of particular classes

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of tobacco products, and company-specific assessments based on brand-by-brand
youth consumption data.
   Some observers have argued that the imposition of lookback assessments on
tobacco companies that neither consented to the lookback regime nor violated spe­
cific marketing and distribution restrictions would violate rights guaranteed by
the substantive component of the Due Process Clause of the Fifth Amendment,
the Takings Clause, and the Bill of Attainder Clause.
   We do not believe that these objections are well-founded. Properly designed
lookback assessments, in our view, should survive constitutional challenge under
current doctrine.

       B. Substantive Due Process

   Several of the pending tobacco bills propose to collect annual assessments from
tobacco companies. These annual assessments are designed to serve two principal
purposes—increasing price to dampen youth consumption and supporting other
government efforts to reduce this consumption (and to address its adverse health
effects). We are confident that the imposition of annual assessments on tobacco
companies would be upheld as a reasonable means of promoting these legitimate
federal objectives.
   Lookback assessments, triggered by evidence of persistently high tobacco use
by minors, can be structured to serve many of the same purposes as the annual
assessments and thus be integrally related to achieving the principal objectives
of those assessments. Lookback provisions supplement the annual assessments in
the event that the annual assessments prove to be insufficient to achieve
Congress’s goals. At the same time, they encourage the industry— which may be
uniquely situated to develop innovative strategies—to take action to minimize
youth smoking. Thus, lookback provisions that augment the annual assessments
are no less reasonable than the annual assessments themselves, and would survive
a challenge under the Supreme Court’s substantive due process jurisprudence.
  In'explaining the limited reach of substantive due process doctrine on legislation
that regulates economk activity, the^ Supreme. Court has stated that “ legislative
Acts adjusting the burdens and benefits of economic life come to the Court with-
a presumption of constitutionality, and . . . the burden is on the one complaining
of a due process violation to establish that the legislature has acted in an arbitrary
and irrational way.” Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976).
The Supreme Court has upheld various federal assessments designed to generate
revenues needed to address the costs of particular economic activities. In Turner
Elkhorn, for example, the Court upheld federal legislation that imposed liability
on coal operators to finance black lung benefits for miners who retired before
enactment of that legislation. Similarly, in Pension Benefit Guaranty Corp. v. R.A.
Gray & Co., 467 U.S. 717 (1984), the Court upheld the imposition of liability

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on employers to meet pension shortfalls attributable to employers’ earlier with­
drawals from multi-employer pension plans.
   In other contexts, the Supreme Court has exhibited a similar reluctance to upset
legislative judgments pertaining to the proper adjustment of the “ burdens and
benefits o f economic life.” In two such cases, Alaska Fish Salting & By-Prods.
Co. v. Smith, 255 U.S. 44 (1921) (Holmes, J., writing for a unanimous Court),
and C ity o f Pittsburgh v. Alco Parking Corp., 417 U.S. 369 (1974), the Court
upheld against substantive due process challenges substantial excise taxes designed
for the purpose of inhibiting disfavored business activities.
   These decisions strongly support Congress’s authority to impose lookback
assessments without regard to company consent. The proposed lookback assess­
ments for tobacco companies would raise fewer constitutional questions than the
assessments at issue in Turner Elkhorn and Pension Benefit Guaranty because
the lookback assessments would be strictly prospective in operation. Unlike the
businesses that incurred liability under the schemes upheld in these cases, no
tobacco company would have to pay a lookback assessment based on events that
occurred prior to enactment of the comprehensive tobacco bill. In other respects,
lookback provisions would operate in a manner similar to the retroactive black
lung and pension assessments that the Court upheld in Turner Elkhorn and Pen­
sion Benefit Guaranty. Moreover, although the assessments are not an excise tax,
because they would increase prices in order to reduce youth tobacco consumption,
they could be sustained based on the analysis that Alaska Fish Salting and City
o f Pittsburgh relied upon to uphold excise taxes on the disfavored activities at
issue there.
   While some pending bills refer to lookback assessments as “ penalties,” we
believe that this phrasing does not accurately describe their function or purpose.
To the contrary, they are inherently regulatory in nature, creating salutary incen­
tives, raising prices, and otherwise supporting further efforts to reduce youth
consumption, where such consumption has not been reduced sufficiently without
them.
   Company-specific assessments are a rational and constitutional approach as
well. Like industry-wide assessments, they provide salutary incentives for tobacco
companies both to comply with direct statutory and regulatory restrictions on mar­
keting to minors and to devise additional measures to reduce youth tobacco
consumption, based upon the companies’ unique expertise on the causes of such
consumption. Indeed, company-specific assessments may be crucial to the
effectiveness o f the overall lookback scheme because they relieve free-rider prob­
lems. Without company-specific assessments, individual companies might have
incentives to recruit new underage users at the expense of the entire industry.
Company-specific lookback assessments also will help pay for the increased costs
to society o f high rates of youth smoking, at the expense of companies who profit
the most from sales to minors. They may, in addition, contribute to further price

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      increases where the annual assessments failed to prompt sufficient reductions in
      youth consumption. Thus, company-specific lookback assessments that are
      designed to serve these purposes are not “ arbitrary and irrational” and therefore
      do not violate the substantive due process doctrine.
          Some have argued that tobacco manufacturers should be given the opportunity
      to argue that they are “ innocent” and that high youth consumption rates are not
      attributable to company misdeeds or failure aggressively to fight youth tobacco,
      consumption. See, e.g., Bennis v. Michigan, 516 U.S. 442, 469 (1996) (Stevens,
      J., dissenting) (criticizing deterrent rationale that state offered to justify the for­
      feiture of an innocent co-owner’s interest in a car that the other co-owner used
      to commit a crime). This argument, however, does not respond at all to some
      of the purposes behind lookback assessments, including, for example, raising the
      price. Moreover, even considering only the deterrence rationale, lookback assess­
      ments would survive constitutional scrutiny. Applying current doctrine, a court
      would be likely to accept the rationality of legislative judgments (1) that an
       “ innocent company” defense would unduly undermine the deterrent effect of
      lookback incentives, or (2) that an innocent company defense should not be recog­
      nized because companies with excessive youth smoking rates could always do
      more to reduce youth consumption.

             C. The Just Compensation and Bill o f Attainder Clauses

           Assertions that lookback assessments would violate the Just Compensation and
         Bill of Attainder Clauses are also unfounded. As Chief Justice Rehnquist observed
         for the Court in Bennis, when the federal government acquires property through
         the lawful exercise of powers other than the power of eminent domain, there is
         no requirement that it pay compensation. 516 U.S. at 454. Furthermore, the
         Supreme Court has stated that “ it would be surprising indeed to discover” that
         economic regulation, though sustainable against a due process challenge, would
         nevertheless be found to violate the Takings Clause. Concrete Pipe & Prods, o f
-------- Cal. Inc. v. Construction Laborers^Pension Trust, 508.LLS. 602, 641 (1993X ___
        The Bill of Attainder Clause prohibits the singling out of particular individuals
      or entities for legislatively mandated punishment. E.g., United States v. Brown,
      381 U.S. 437 (1965). The lookback provisions would apply to all manufacturers
      of tobacco products and would operate as one component of comprehensive
      industry-wide reform legislation. Legislation of this scope does not single out
      individuals or entities for adverse treatment within the meaning of the Bill of
      Attainder Clause. Moreover, as stated in the earlier discussion of substantive due
      process issues, there is no apparent need for Congress to structure lookback assess­
      ments as punishments for tobacco company misconduct.

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IV. Congress Can Impose Document Disclosure Requirements on the Tobacco
Industry Without Its Consent

   Many of the proposed bills, as well as the June 20th resolution, include provi­
sions that would require tobacco manufacturers to disclose corporate documents
to the public and to make additional document disclosures to regulatory agencies,
such as the FDA. These contemplated provisions often, but do not always, make
consent to these disclosure requirements a condition of a participating manufactur­
er’s receipt of certain specified benefits. Although some have argued that docu­
ment disclosure requirements violate the Takings and Due Process Clauses, as
well as Fourth Amendment rights, we believe that such requirements may be
imposed consistent with the Constitution even in the absence of provisions condi­
tioning benefits on industry consent.
   As an initial matter, it is our understanding that any document disclosure provi­
sion, even if imposed directly, would be limited in application to those entities
that wished to continue manufacturing tobacco products. In this respect, even
seemingly mandatory document disclosure requirements are in an important sense
“ consensual” for purposes of evaluating challenges to them brought under the
Takings or Due Process Clauses.
   The leading case concerning the application of the Takings Clause to federal
document disclosure requirements is Ruckelshaus v. Monsanto Co., 467 U.S. 986
(1984). There, Monsanto sued the Environmental Protection Agency ( “ EPA” ) for
the Agency’s use and disclosure of health, safety, and environmental data that
state law protected as trade secrets but that the company had submitted in order
to register its products for sale within the United States as required by the Federal
Insecticide, Fungicide, and Rodenticide Act ( “ FIFRA” ). The Court found that
M onsanto was entitled to compensation for EPA’s use and disclosure of the
information that the company had submitted between 1972 to 1978, when FIFRA
contained an explicit assurance that registration data would be kept confidential.
Id. at 1011. On the other hand, the Court rejected Monsanto’s claim to compensa­
tion for EPA’s use and disclosure of the data that the company had submitted
before 1972 and after 1978, periods during which FIFRA contained no such assur­
ance.
  The Court specifically rejected Monsanto’s argument that FIFRA’s imposition
of a data-disclosure requirement, as a precondition to the registration of pesticides
for sale within the United States, represented an unconstitutional condition on
access to a valuable government benefit:

       [A]s long as Monsanto is aware of the conditions under which the
       data are submitted, and the conditions are rationally related to a
       legitimate Government interest, a voluntary submission of data in

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        exchange for the economic [benefit] of a registration can hardly
        be called a taking.

Id. at 1007.

   Ruckelshaus suggests that continued authorization to market tobacco products
within the United States constitutes a valuable governmental benefit that may be
conditioned on document disclosure requirements. Following the enactment of fed­
eral legislation making these terms clear, any tobacco company that continued
to sell its products within the United States would be treated as having accepted
the federal disclosure program. See id. at 1007 n .ll.
   Moreover, the takings issue arose in Ruckelshaus only because federal law
required the public disclosure of material that state law would clearly have pro­
tected as trade secrets. Some tobacco proposals are further insulated from a takings
challenge because they require material that state law protects as trade secrets
(or under attomey-client privilege) to be disclosed only to government officials
on a confidential basis. The takings claim would then have to be either that (1)
the docum ents. themselves—rather than the proprietary information contained
therein—constituted property that had been taken by federal law, or (2) the costs
of complying with the disclosure provisions were sufficiently burdensome as to
constitute a taking. Takings claims of these latter types are unlikely to succeed.
   The D.C. Circuit’s ruling that a federal statute requiring former President Nixon
to make available his presidential papers constituted a taking is not to the contrary.
Nixon v. United States, 978 F.2d 1269 (D.C. Cir. 1992). Ruckelshaus suggests
that a far different analysis should apply where, as here, the disclosure requirement
is a legitimate condition on a regulated industry’s receipt of a valuable govern­
mental benefit— the continued authority to participate in the United States tobacco
market. In addition, in contrast to the Nixon papers, it is doubtful that exclusive
company access to the corporate records of the tobacco industry would have much
value apart from the trade secret information contained therein, which we presume
would not be made available to the public. Finally, it should be noted that many
of the documents that would be subject to production have already been produced
in the course of discovery”in prior or pending litigation,- an d th atsu ch documents
would be subject to discovery in future litigation.
   W e also believe that a due process challenge to the document disclosure provi­
sions would fail. Such a provision would likely be assessed as economic regula­
tion, which is ordinarily accorded a substantial presumption of constitutionality.
See Turner Elkhorn, 428 U.S. at 15. Due Process, as applied to statutes imposing
or adjusting economic burdens, generally requires no more than “ a legitimate
legislative purpose furthered by [a] rational means.” Pension Benefit Guarantee,
467 U.S. at 729. Thus, so long as the disclosure requirement, as well as the attend­
ant compliance costs, are rationally related to a legitimate governmental interest,

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as we believe they would be, they should survive whatever due process challenge
may arise.
   Finally, we do not believe that the Fourth Amendment would bar the federal
government from requiring manufacturers to submit a substantial number of their
corporate records to a designated depository that would be open to public inspec­
tion. The Supreme Court has consistently upheld broad corporate disclosure
requirements against Fourth Amendment challenge, whether such disclosure has
been mandated by subpoena or by general legislation. See California Bankers
A ss’n v. Schultz, 416 U.S. 21 (1974) (upholding the Bank Secrecy Act); Oklahoma
Press P u b l’g Co. v. Walling, 327 U.S. 186 (1946) (upholding a subpoena). In
so doing, the Supreme Court has explained that

       corporations can claim no equality with individuals in the enjoy­
       ment o f a right to privacy. They are endowed with public attributes.
       They have a collective impact upon society, from which they derive
       the privilege of acting as artificial entities. The Federal Government
       allows them the privilege o f engaging in interstate commerce. . . .
       Even if one were to regard the request for information in this case
       as caused by nothing more than official curiosity, nevertheless law-
       enforcing agencies have a legitimate right to satisfy themselves that
       corporate behavior is consistent with law and the public interest.

California Bankers A s s ’n, 416 U.S. at 65-66 (quoting United States v. Morton
Salt Co., 338 U.S. 632, 651-52 (1950)) (citations omitted).
   In sum, the industry’s consent is not needed in order to permit the federal
government to enact disclosure requirements on the tobacco industry. So long as
the requirement would reasonably serve the federal government’s regulatory
interests and would not require tobacco companies to disclose documents that are
privileged or to make public material that contains trade secrets, we see little
risk o f a successful constitutional challenge.

V. The Advantages o f Participation by the Industry

   Although Congress can enact effective tobacco legislation without industry con­
sent, participation of the tobacco industry would have advantages. The tobacco
industry is in the best position to change its business practices in a manner that
keeps cigarettes away from children. Moreover, consent of the regulated entity
would substantially minimize the likelihood that any constitutional challenge
would succeed. Further, some restrictions, in particular certain advertising restric­
tions that go beyond the FDA regulation, may depend upon consent in order to
survive constitutional review. Finally, there are other advantages to obtaining
industry consent, such as reducing the likelihood of protracted legal challenges
and minimizing delay in implementing the provisions of the Act.

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                  Constitutionality o f Proposed Limitations on Tobacco Industry

   Some of the bills before Congress seek to accomplish the reduction in litigation
through provisions that would forbid tobacco companies from challenging the
bill’s advertising restrictions or that would withdraw benefits from companies if
they brought a legal challenge to the restrictions. We do not believe that these
are sound approaches because there is a significant chance that a court would
invalidate such provisions as a restriction on fully protected First Amendment
activity— namely, constitutional litigation.
   We note, however, that a protocol could provide that manufacturers would
receive benefits only if they were subject to certain legal requirements; thus, even
if the provisions that directly imposed certain advertising restrictions were struck
down, the manufacturers could still be made subject to those restrictions, which
could be included as independent terms of the protocol. Manufacturers who signed
on to the protocol would therefore have little incentive to challenge the direct
imposition of the restrictions.
   It is important to stress that consent is not a panacea and that even voluntary
provisions would still be open to substantial challenge. We believe, however, that
securing the industry’s cooperation would reduce the risks of protracted litigation.

VI. Conclusion

   The conclusion that should be drawn from this discussion is that there are
advantages to having the tobacco industry’s participation in the nation’s effort
to reduce youth smoking, but that Congress should not allow the lack of such
consent to impede it from legislating to achieve the goals that the President has
set forth for comprehensive tobacco legislation. Even in the absence of consent,
Congress can increase the price of cigarettes, impose appropriately tailored, but
still significant, advertising restrictions on the industry, and achieve the important
public health goals that the President has identified.

                                                               DAVID W. OGDEN
                                                       Counselor to the Attorney General

—    -   --------- -----   -------   -------------     -     RANDOLPH D. MOSS       _-
                                                       Deputy Assistant Attorney General
                                                           Office o f Legal Counsel

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