Tobacco Documents Online

---

RECEIVED V./. PRIVILEGED 0Cl 28 /,3'j I" JOHN ALAR MEMORANDUM TO: FROM: DATE: RE: I, W. Hughes E. Pepples October 24, 1984 Cigarette Labeling and Advertising Legislation In early 1983, it became apparent that the anti-smoking lobby in Congress would not be satisfied with minor Changes in the present statute. They were intent'instead on pushing "for amendments to the law that were both fundamental and essentially punitive. The anti-smoking lobby appeared to be ready to accept a single strengthened warning if agreement on such warning could be reached by the industry and HHS Assistant Secretary Brandt. But when such agreement was reached, the principal sponsors of anti-cigarette legislation in the Senate summarily rejected the June 1983 warning notice proposal that was submitted by Secretary Brandt, following discussions with industry representatives. By mid-1983, it was clear that the industry's principal adversaries in the Senate and'the House were not realistically considering a reasonable compromise. During the last half of 1983 and into the spring of 198~, efforts were made to identify the provisions of then-pending legislative proposals that represented the greatest threats to the industry's long term interests. The issues so identified, which were given varying treatment in the Hatch/Packwood bills in the Senat~and the Waxman bill in the House were as follows: i) 2) 3) Cause ~n__g_U_~_g_e- - An extensive set of findings stating that smoking is the major cause of a variety of adverse health effects. Attribution - The findings contained in the bills were attr3buted to Congress rather than the Surgeon General and the bills did not acknowledge or in any way intimate the existence of a continuing scientific controversy with respect to any of the findings. Circle and Arrow Format - The Packwood and Waxman B~-~i-~--~--~d have required use of a circle and arrow format for the warning notice in cigarette advertising. 0

:E --4 0 3" C P) < Zr C ~- ,~.0 ~ 0

-3- ]he bill approved recently by the House and Senate elin, inates or modifies some of the more extreme anti-smoking Broposals noted above. (One has to ask how much better we could have done if our friends had been enlisted in the cause.) Specifically: i) ~&e___~anqua~e - The f3nd3ngs contained ~n previous Dills have Oeen eliminated from H.R. 3979 because of last-minute bargaining by Senator Ford. lhe substance of those flndings does appear, however, io the House Report on H.R. 3979. 7he word "cause" is used in that report in discussing the conclusions of the Surgeon General with respect to smoking and various illnesses. (In addition, some of the most objectionable language in the findings sections of the earlier bills was either el/minated or modified.) 2) Attribution -Even before the recent elimination of the finaings portion of H.R. 3979, the oi12 was amended to attribute all findings to the Surgeon General. ]he principle of attribution to the Surgeon General is largely, but not completely, preserved in the pertinent House Report on H.R. 3979. 3) Circle and Arrow Format - 7he circle and arrow warning ~6-Ei-~-T6~T~C--c~C~-C~I:~i-~ in the F'ackwood and Waxnlan bills has been eliminated. As approved, H.R. 5979 does require, however, a 50% increase in the size of the warning notice in non-billboard cigarette advertising as well as several display cha~ges affecting both cigarette labeling and advertising. 4) 5) Addict/on Warninq - The proposed addiction warning has been elimina~ea ~there is also no reference to "death" -dn any of the warnings). ]he perLJnent House Report also ls silent on the addiction issue. ]he House Report does state, however, that the deletion of specific findings and warnings "should not be construed to reflect--either positively or negatively--the Committee's views of their respective scientific validity" nicotine and CO aisclosure provision of earlier bills does not appear in H.R. 3979 as approved by the House ~..~ and Senate. At the same t/me, one off the warning statements required by the bill attr/butes to the Surgeon General the warn]ng that cigarette smoke contains "Carbon Monoxide"

7) 8) ~ng_[_ed~nts_~£_~9_~u[~ - H.R. 5979 conLains provisions on ~ngreaients disclosure that are s/mJlar to the ingredients provisions of the Hatch and Waxman bills. lhe House Report asserts that those provisions "supercede, in all respects, [the] volurlt~ry agreement entered into between the Department of HHS and the tobacco industry in 3une, 1982" ]he Packwood proposal to require d/sclosure of ingredients information on cigarette packages has not been adopted. 3urisdiction of the F]C - ]he provisions of H.R. 5979 ~6~~E~neate-~--j-~i<~sdiction of the F]C are hardly a model of legislative craftsmanship. It could be argued, focusing only on the text of the pertinent provisions that H.R. 5979 neither expands nor reduces the prior jurisdiction ofthe FTC with respect to cigarette labeling and advertising. Under such a view, the only additional authority granted to FTC covers the receipt and approval of warning notice rotations plans. Unfortunately, it also can be argued that Sect/on 8 of the bill confers on the F]C jurisdiction to enforce, without limitation, "the requ/rements of Sect/on 4"--which includes cigarette labeling as well as advertising requirements. Taking all pertinent considerations into account, it seems that H.R. 3979 ultimately will be read as giving the F]C authority to enforce all provisiclns of the bill governing cigarette labeling and advert/sing. Despite recent floor statements by HoGse proponents of H.R. 5979, it is much less clear that the bill either could or would be read as "transferring exclusive ~urisdlctlon" to the FIC. ]he provisions bf current law giving the 3ustice Department criminal and ]n]unctive enforcement author/ty with respect to violat/ons of the Federal Cigarette labeling and Advertisin9 Act were redesignated by H.R. 5979, but -~were not otherwise Changed. it seems highly unliWely that the court could be persuaded, notwithstanding the recent floor statements of Representat/ve O/ngel arid others, that H.R. 5979 confers exclusive enforcement authority upon the FTC. if the floor statements of Representative Dingel arid others on this point are given any effect other than negating the floor statements of Senators Pressler and Heflin, it may be to convince the 3ustice Department to defer to the FIC on cigarette labeling and advert/sing issues. _F~.en}_p_t__L_o_n. - lhe preempt/on provision of existing law is not altered by H.R. 3979. Neither is there any ]"'"~

I~, I~. ~'C F~. 0 D ~ 0 < C C~ ~< , (9 0 CrD ~u 0 C1 _.~ F~.F~. ~'. CT ..~ 0 D" • "-~ < (D 0 0 ~-0 <O 0 0 C (D C ~ 0 < D r- ~-0 (9 0 ~ × 2r D

-6- 2) the ~ndustry must deal with under the statutory ingredients provision, and ~t would appear desirable not to alienate HHS; (2) the industry could be subject to a charge of bad faith jf it backed off working with HHS simply because of the passage of the legislation; (3) there have been continuing attacks on the lndustry's posture on ingredients from an}i-tobacco quarters, including some of the media, and cessatlon of the work with HHS could intensify those attacks; and (4) by continuing to operate under the voluntary agreement, we may be able to get some early indications of the altitude and approach HHS will take to the complete list of ingredients that is to be submitted under the statutory provision. ~he submission of a rotation Section 4 of H.R. 3979 requires manufacturers to submit a rotation plan to the F~C that ensures that the new warning statements are rotated on c;garette packages and in cigarette advertising "quarterly in alternating sequence" The rotation of warnings takes effect "upon the expiration of a one year period beginning on the date of the enactment" of H.R. 3979--that is, or~ October 12, 1985. Accordingly, all packages and advertising leaving our hands on that date must bear the new warnir, gs and the rotation plan w~ll be in effect. The House report on H.R. 3979 makes clear that cigarette manufacturers may submit a joint plan. lhe General Counsel at the October 19, ~98~ meeting agreed to formulate a single plan on behalf 6f all major domestic cigarette manufacturers. Submission of a joint plan should minimize the number of rotation options presented to the FTC. Even more i~portantly, the process of developing a joint plan should contribute to or involve the k~nd of careful plannJng and deliberation that will result 3n rotatLon requirements that are both reasonable and not unduly -~burdensome. Since rotation of the new warning notices on cigarette packages and in cigarette advertising will have to begin on October 12, 1985, the approved rotation plan undouotedly will have to be in effect well before that time to ensure an orderly and uninterrupted transition. conserve decrees. As a[reaOy noted, dJsp~ay off the new (with associated format, s~ze and~..~

-7- /dy type face changes) will have to begin An October 12, 1985. The outstanding consent decrees in the Federal Court in the Southern Distrlct of New York will continue to remain in effect during the one year transition period. The text of H.R. 3979 preserves the substance of the outstanding consent decrees except as specifically altered by the bi11. Several passages in the House Report indicate that that was the committee's intent. The House Report also states that the committee intended the consent decrees to "remain in effect"--although the meaning of that statement is not altogether clear, particularly, in view of the subsequent floor statements asserting that the committee intended to transfer to FTC exclusive enforcement authority" with respect to the requirements of Section 4 of the bill. Clearly the provisions of the decrees that are inconsistent with H.R. 5979 will become a nullity on the effective date of Section 4 Of the bill, October l~r, 1985. Although not free fro~ Oouot, it also appears that (a) the provisions of H.R. 5979 would not be held to have been automatically incorporated into the consent decrees by operation of law5 (b) the Department of Justice--again probably acting on request of the FTC--could seek to reopen the outstanding decrees to incorporate new provisions based on the requirements of Section 4 of H:R. 3979; and (c) the court in New York migh,t well permit reopening for that purpose. In my opinion, the companies should wait to see what the government does and if the government tries to reopen the consent ~ders, the manufacturers should use the good arguments available to us to resist the reopening. I have asked the company lawyers to consider this issue prior to our next meeting on November i~ so we can reach a decision at that time. E.P. ~-~