Tobacco Documents Online

• JOHN P. RUPP COVINGTON ~ E~IJRLING 12.01 FIENNSYLVANIA AVENUEj N.W. WASHINGTON,. 0. C. 20044 CAe'Lr" ¢;OYl,,I NO June 30, 1987 DELIVERED B~ HAND Judith P. Wilkenfeld, Esquire Program Adviser CigaretteAdvertising and Testing Federal Trade Coma~ission Room 4007 601 Pennsylvania Avenue, N.W. Washington, D.C. 20580 Re: Commission Monitoring of TITL Testing Pro@ram Dear Ms. Wilkenfeld: There is enclosed a copy of guidelines for the future operation of the Tobacco Institute Testing Laboratory ("T!TL"). The guidelines are designed to resolve a number of uncertainties raised by the Federal Trade Commission's deci- sion to close its in-house testing laboratory. We understand that the Commission intends, despite the closing of its in-house laboratory, to continue to include "~ar" and nicotine data in the annual reports that the Commis- sion submits to Congress on cigarette advertising. We under- s~and further that the Commission staff would like in that con~ection to develop procedures that would permit the Commis- sion to monitor the TITL testing program. ............................... _Tha_~9;...~nited States cigarette manufacturers, who are responsible for the T~TL's ~perati~n.s .e,~ ~oh.ose behalf we are writing, do not believe that Commission oversight is needed ~o ensure the continued accuracy and reliability of the TITL testing program. Nevertheless, as an accommodation and in the spirit of cooperation, the manufacturers are prepared to permit Commission employees to monitor the TITL testing program in the manner you suggested during our recent meeting. Specifically, we have asked Dr. William Steele, TITL Director, to notify Mr. Harold Pillsbury of your staff at least ten (I0) days before the commencemen~ of any cigarette~ pickup, which is the first step in any testing cycle. Mr. Pillsbury will be permitted a~ that time to review the proce- dures to be used in the pickup. He also will be permitted to TI57900738

""VINGTON ~. BURLING Judith P. Wilkenfeld, Esquire June 30, 1987 Page 2 review any documents that discuss the pickup procedures, including any contracts that the TITL has entered into with the firm that has been selected to perform the pickup. Once cigarettes have begun to arrive at the TITL following a pickup, Mr. Pillsbury wil! be permitted to visit the TITL -- on any schedule he deems appropriate a~d without prior notice to Dr. Steele or other TITL employees -- to monitor the handling and testing of the cigarettes. In addition, Mr. Pillsbury will be given access to any TITL computer sheets and other test documents that are generated in the course of any testing cycle. Any copies of documents that Mr. Pillsbury may request,.not involving trade secrets or other confidential information, will be provided at TiTL's cost and will be billed directly to the Commission. Please let me know promptly if the foregoing proce- dures are satisfactory to the Commission staff. Sincerely:) John P. Rupp Enclosure ceb T157900739

June 30, 1987 MEMORANDUM REGARDING OPERATION OF THE TOBACCO INSTITUTE TESTING LABORATORY The following guidelines have been developed with respect to the operation of the Tobacco Institute Testing Laboratory ("TITL") and the inclusion in cigarette advertising of the "tar" and nicotine numbers generated by the TITL. These guidelines are designed to resolve a number of issues and uncertainties raised by the decision announced by the Federal Trade Commission on Ap=il 15, 1987, to close its in-house.testing laboratory. TITL OPERATION I. To the extent consistent with these guidelines, the TITL will continue to operate in the manner it has operated in the past. Specifically, the TITL shall be an activity of The Tobacco Institute but the books of accounts and records of the TITL shall be maintained separate and apart from those of The Tobacco Institute. The operations of the TITL shall be ~su~e=vise~ hy a committee consisting of one representative of each company participating in the laboratory ("Participating Company"). The day-to-day operations of the laboratory shall be subject to the supervision of a Laboratory Director who shall be responsible to the committee. 2. Each Participating Company shall make an initial annual payment of Two Hundred and Fifty Dollars ($250). The balance of the expense of operating the TITL, T157900740

- 2- minus any user fees levied and collected in accordance with paragraph 3-immediately below, shall be allocated on a share of domestic market basis among the Participating Companies whose respective annual sales of United States ~ax paid cigarettes exceed two billion units. 3. A non-Par£icipating Company that desires to submit for testing a cigarette brand or brand variety manufac- tured Or imported for sale in the United States will be permitted tO do so upon payment of a user fee. Such fee shall be calculated by dividing the total cost of ~operating ~he TITL during the calendar year most recently ended by the number of cigarette brand varieties tested by the TITL during such calendar year. In making such calculation, adjustments shall be made for any significant cost savings or additional expenses that are reasonably anticipated for the then-current calendar year. The user fee shall be payable in advance of testing. 4. The TITL shall initiate and attempt to complete during the second half of calendar year 1987 a cigarette test series, utilizing to the extent appropriate and practicable the pick-up and testing methodology previously used by the Pederal Trade Commission Testing Laboratory, including CO testing. The TITL shall not be obligated to conduct at any time ad hoc tests for Participzting or non-Participating Companies. Any such ad hoc request shall be deferred by the TITL until the market pick-up for the next-scheduled general test series. T157900741

- 2 - 5. Periodic reports of test results of the T!TL shall be made available simultaneously, and on the same basis, to all Participating Companies as well as to any non-Partici- pating Company that has requested that one or more of its cigarette brands or brand varieties be included in the partic- ular test series and has paid the appropriate user fee. Such reports shall be released first in draft form. Any Partici- pating or non-Participating Company, as described in this paragraph, shall have thirty (30) working days following receipt of any draft report to demand a retest of any o~ its cigarette brands or brand varieties included in the report~ No more than one retest shall be conducted by the TITL of any cigarette brand or brand variety in connection with any individual test series or report. The final report for any test series shall include, in the case of any brand or brand variety that has been subjec~ to retest, only ~he numbers generated on the retest. 6. Any Participating Company may withdraw from the TITL by giving ten (10) days' advance notice in writing to the Director of the TITL. Upon withdrawal, a company shall remain liable ~or dues and assessments thereafter to the extent necessary to cover any obligation created or expense incurred prior to the effective date of such withdrawal. USE OF T!TL TEST RESULTS 1. Each of the Participating Companies shall utilize in connection with the "tar" and nicotine legend in T157900742