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RJ Reynolds

Memorandum of Understanding. Proposed Resolution. Preamble.

Date: 20 Jun 1997
Length: 71 pages
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cuc tW A" P.i}7,72 . H su Chula bi"• ' Roben Red pm =-- bS"•.l.4at Will Ke~p • -----~-~-
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ones. TThIs statute, which extends far beyond anything FDA has prevloutly proposed or attempted, can be expected to produce human and economic benefNa many times greater than such existing regulatbna. As part of this settternent, the tobaooo compantes recognize the historic changes that wiil be occurring to their business. They will fully oomply, with increased federal regulatbn, tocus intense efforts on dramatic reductions in youth aooesa and youth tobacco usage, recognize that the regulatory scheme encourages the development of products with reduced risk and aoknowledge the predominant public health positions associated with the use of tobacco products. (Sourcefpreoeden!~ FDA Rule) .5.
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. R.J. REYNOLDS TOBACCO COMPANY by: Anhut F. Oo1din BROWN dc wtLUAMSON TOBACCO CORPORATION r y- by: Arthur F. Ooldcn LORILLARD TOBACCO COAPANY Ls'r~~_,~~G[,.+ Daoni: C. Vtooo, Attorney Owaa1 IJNITBD STATES TOBACCO COMPANY STATE OF WAS}UNOTON by: -<2,:_L...1 ~f~ .. RiaEud H. Verheij STASOF NEW YORK .zr.;c.~ .. :u.
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J• . :~ 5 J Eu+p<.rcELLEY.5OzL4G 262 e00 e000 P.11/72 A. Up Front Commitment .................................... 34 B. Base Annual Payments ................................... 34 C. Appllcability ............................................ 35 D. Tax Treatrnsnt .......................................... 35 Tlde VII: Public HeaRh Funds From Tobaooo Settlement As Reoommended by The Attomeys General For Consideration by the President and the Congress ..............................................38 Tlde VIiI: Clvil l.lablllty ............................................ 39 A Oeneral ............................................... 39 B. Pnovisions as to CIvU LiabAity for Past Conduct .................. 39 C. Provisiona aa to CNiF Uabtlsy for Future Conduct ............... 41 TtdelX: Board Approval ..........................................42 Apilendices_~ Appendix I: Waminqs In Advertisements Appendix II: Retail Tobacco Product Seper Penattlss Appendix III: Application to Indian Trbss Appendix IV: Industry AssoclatloAs Appendix V: 'Look 6sdc' Appendix VI: State Enforcement Incentives Appendbc VII: RestrlcNons on Potnt of Sale Advertbinp Appendix VIIt: Publio Disclosure of Pait and Future Tobacco In4ustry Documents and Health Researdt .7.
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~• ~.-..., :d.a? s-AOc.Ki..xEr.SCRtW 2B2 a20 000e P.la/72 Contants page Preamble ......................................................... ..................... ....... .......1 Title 1: Reformatlon of the Tobacco induatry ............................ 8 A. Restrk;tiona on MarketinQ and Adveriistng ...................... 8 8. Waminga, LabeBnB and PaakaginQ ........................... 9 C. RestricHona on Atioeisto Tobacco Produc6s ...................11 0. t.loenting ot Retall Tobacco Produot Setlen3 ...... . ............. 12 E. Regulation ot Tobacco Product Development and Manufacluring ..13. F. Non-tobacoo ingredienta. . . . . ............................. 18 0. Comptiance and Coryonte Culture ......................... 21 H. EfFectlve Datea ......................................... 23 Title 11: 'Look Back' Provislona/State Enforcement inoentNee ............. 2< 1itle- III: Penalties and Entoroement; Consent Decrees; NoMParNoipatUy Companies .............................................28 A. Psnaltles and Enforoement ........... : ............ . ....... 28 S. ConsentDstxea ........................................2T C. Non-paKiapating Companiea ............................... 28 Title N: Nationwide Standards to Minimite fnvotuntary Expoeure to Environmental Tobaooo Smoke ............................. 90 T18e V: Scope andt:ffeot ..........................................31 A. Scope of FDA Authorhy ................................... 32 B. State Authodty .......................................... 32 Title VI: PtogramslFundin9 ........................................ 34 -a-
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1. Paragraphs 2, 3, 5, 8, 7, 8, 9,110 end 111n Seotlon 9 apply. 2. No third•party payor (or similar) ctoimt not batad on •ubropation. Title IX: Board Approval The terms of this resolution are wbJeq to approval by th+ Boards o1 Oireaora of the partioipatinq tobaooo oompanlas: -42-
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Memorandum of tlndtntandinn The undersigned counsel, on behalf of their respective clients; hereby enter ittto this Memorandtun of Understanding to support the adoption of federallegislation, and aay necessary ancillary undertakings, incorporatiag the festutes desccibed in the proposed resolution attached hereto as Exhibit A. In order to achieve a resolution In the public interest, the tobacco companies have agreed to support, subject to approval by tbeir boards of directors, a package whloh Includes certain legislative and regulatory provisioas witb ahioh they do not necessarily egtes. Nevattbekis, tbe companies are willing to actxpt faglstation inearporati" these provisloW In the iatt:rem of reaching an overall resoludon of the Important irntes faeing the industry and the nation. This Memorandum of Understandiag is subject to review of the'Mal terms of twy such legislation and related documenu aad say necessuy approvals bythe vuious States and tbe boards of directors of the companies. June 20,1497 Wasbington, D.C. PHILIF MORRIS INCORPORAZED by: ' erbert M. Weebtell STA78 OF AR]ZONA S7AYE 0F CONN$CfICUT ! by Richud BhmuttdrJ. Attoruey Cleneral i3nnt Woods, Attomey l3eneral
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r-~.-:yy% 1e: 21 eIFP:. 'cEU.Zr.5cR6QS'i 202 00B 8000 t.19/7j Eech ttate must erwct a ttaNtory or rpuhtory entoroenwnt saheme that provida substentiNy NmiM' Waldee /o the mlNmum tedenl standard:lor a robN Ooensinp Pmgrnm, (SoumelProcadenG Waihhgton 6fete Aloohd Uansinp AaJ ~ -45. ~ N ~ co W 0
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European Union, have imposed new waming labels. Further, the Federal trade Commission's methodology to measure the'4tu" and ntoodne yleMa of dparoftea has been critlcized as producing misleading Information. 1. The leylslatlon, through amendments to the Federal Ciparette labeUng and Advertising Aat and the ComprehenaWe Smokeless Tobaooo Hea4h Education Apt, would mandate nativ rotaWq warnings, to be introduoed ooncurrently into the distribution ohah on all tobacco product paqkaAea and oaRons, and to be rotated quarterfy In all advertisements. For olDarettee, the warnings would be: ° 'WARNINO: Cgarattef aro addidi,e' ° 'WARNIN(3: Tobacco aaake can harm your ctiAdrsn' • "WARNING: CiDarettea cause fatal k,ng diaeaa" • "YVARNIN(3: Ciparetlea cause canoer' ° 'WARNINO: Ciparettea cause strokea and hea't dlaeaae" ° 1WRNINC3: Smoking during pregnancy can harm your baby' • '1/i/ARNINO: Smokinp con kE yott' • 'WARNINO: Tobacco snake ausas tabal lung dtasaae h nort- amokera' • "WARNING: Quitdng smokkv nokv.qreatly_ reduoer serious ri:ka to Your heaMh• For amokelesa tobacco produft, the wamiVt would be: • 'WARNINO: This product can cause mouth cenoar' • 'WARNINO: Thia product can cause gum disease and tooth bae' • •1NARNINO: ThM product iS not a aafe atEsmallre to aigerottea• • 'WARNINO: Smokeleq tobeooo is addiodA• For ciyarettee. the wamhga would ooaipy 26% of tt* troM pane) o/ the padcaEa (w+dudtng padca and oartaa) and woiAd appe.r on the uppa pordon thereof. The legialation would contain a grandfather provition for existlng brands wkh Npfop .10-
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irrtSpacdw of rvhawr tha imptemeMkp repulationa htw basn prortwlpalad. The leplalation would 09 Praempt or otherwise aQeat 1ny olhor a,tata or boal law or repuNitlon that resutct: amokinp In pubUc fadRtla in an aqual or atricter manner. Nor would the legislation preempt or otherwise aNsot any Rodsral rules that reatrlet amoklnq In fedsred facUides. (Souroe/procedsnt: H.R 3434, as reported out of oommlaee: WISHA woricpYm amokinp rule; state law exemptions for the "hoapltalily asctor") -31-
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TITLE VI: PropramslFundlnp TOTAL 25 YEAR PACKAOE FACE VALUE -=366,8 Billlon ~ ~ A. Up Front Commitment - Lump Sum Cash Payment -=10 Bllpon i 1. Payable on StftM S4nlnp pate. l, B. Base Annual Payments - 26 Year Total Face Value N=3SA.E / 1. Btttion (Ftpuros Sub)eot to Inltatlon,Protsatlon and Market Volume Adjustments) GuraSbn-annual paymenb in perpets* , ~, 2. Commenoement -1?!31 of Ant tull yeu Mer statubs st~inUp 3. Face Amounts (Indudea payments from ap kduttry sources): P.ymwr rar 1 : 3 4 0 64 ~ f~ yO e~. I 1. q 4.9 3.5 3• 8 TOHI 3SY,~ gaw ~~ i9.6! i11.{C i/4B !1!a 11a8 C,,i )5y -J . Artwunt i60 M i1e :+0a s10B s+tea .\ Pubeo ""M Tnw =2ba t2i! fJ.6a !4S i!E ftiD r . t+fa `., :189 4. Inflation Pnotection forAnnual Payments • C3rea* ot 3% or CPI app6ed .aoh yeu on "pnsvlous year, bepinntn2 w>fh 11M annual payment 5. Ad'~tment for Volume Decaase (Adult voh+ms Only) or Total vopme Inatsse • Be9tnninp In year 1; payment made sWtJ to soheeuled amwal payment tknes the nAio of actual nSeven1 darNelb tobaoco product unit sales voMxna 1o raMvant btaa volufne. In ths wenl of a deeilne In vohnne, titevant aatud vokrne and roNvant base voMxne aro aduk volume hputw h t!w event of an fnaease In volume, relevant adual vokrn and ~ J U
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tob,ooo mtnufactu»n irnpM WiOar ctfiw montA:otuttrro . dlstributon atnd r.t#l seqdrn ur+der 1M AaC or tny appMc.bb re9utetions,
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Appendix 1• Warnings In Adv.rtfeemwMe The space In pnse and poeter ddverthemsnta for 1ob,}o,oo productt tlW ik . to be devobd to the wamkg and, wMte r!lNvatd,.tM'qf,' 6OOtlfN and any otMr constituent yield atatemenb wiu be 20% 0f the area of the bdwrtyemenl. TM size ; of the pdntlnp of the waminp and the yleld ststemehte ahdq be pro rota to the following examples; a) Whole page broadsheet newepaper 0_46 poMt type b) HaK paQe broadeheet neYrtip*pec • 30.p01nt type a) Whole page tabfpld Mwapbper • 39 pbiM type d) Half page tsblold neNaip.per • 2? poM qrp~ e) DP8 mepaxine - 31.6 point type Q) 28 c~n~ X 3 ooluwrn~s Z2.61~~ pointtype h) 20 cre X 2 oohama • 16 pOUt type FDA may revise the requited type slzes within the 20% requlroment.
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• Establish a mhdmum paGcaQe size of 20 cqarettee (8Q7.16(b)) • Impose rotabar compliance obPqationt to ansurro ft all salf4arvke displaya, advertis+nq, labapnp and othar itemt oonton Wph aY appAcabie requkements (867.14(a)) • Ban tha samptinp of tobacco products (897.18(d)) • Ban the dWebutlon of tobacco Produats ttuMh the mafl, mludinp redemption of coupons, except for salss aubJaot to proof of tp, with a review afler 2 yean by FDA to data/mine N minors aro obRaWrg tobaooo productw throuph the ma,1(qoes beyond 887,18(cXx)()) Bui{dft on and pckp beyond tha FDA RA tha leaisladon wou1Q; ° Ban aq sales of tobaooo products throuph vandhv machines (poes beyond 897.16(ox2)(p)) ° Ban seli servioe displays of tobacco produots, except h adua-ony facilities. In aN other retafl outlets, tobacco Producb must be placed out of reach of COnlufMni (4l., bahlnd ft counter or under IoOIW and-ksy) or. Y on the counter, not visbb or aooeosbk to conaumen (goe: beyond (897.16(o)(2)pU (Souroe/preoedent FDA Ruk) D. Ucensing of Ratail Tobacco Product Sati+ts. The leqlsla8on would nandate nlinknunl faderal steufdaldf for a retail Mo6rpMp program ahat the fideral qovemnnent and ata6e and ba1 authodtles would anforoa ttuouyh fundinp provlded by 1he Industry Paymenta. Any entity that salfa directly to aor"neri - whether a manufacturer, whole:akt, knpoftr, diatrilwtor or netapar - would require a Uoanaa. Blamerra of the ioanainp propnan would tnclude: • Alandatlnp aonpilanoe wRh the Aat as a oondMbn to oblain a,nd hoid a loena • Panaltlaa for violftions ($e Appsndlx N) • Suspenslon or revocation of loenses (on a sita•byalhe bssis) fot c~ viotations (US Appandix A) -12-
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2@2 ©00 8f100 P.12M TITLE 1: Reformation Of The Tobaoco lnduatry Title I of the fspisSation would inoorponte and expand upon FOA's teoent regulation of nbodnaoontalnirp tobacco produota. Ths YoAosMnQ nilet would apply to aA tobaooo producta eold M the U.S. (Includkg ab Its teMtoriea and possassiona, as well aa dutyfroe shops wift U.S. botdera). The new repUne would be allowed to operate ae described below toLtjyW. FDA would have authority to make revbkans even within this period vndar extraordlnart+ circumstaanaea. ThereaRer, the FDA would be aulhorized to review and revise the rules under applicable Agency procedures. A. Restrintbna on Mariceflnp and Advertising The advertising and marketing of tobacco products would be draatbaly crutallad, indudtnp in ways that exceed the FDA ale as originaqy promulgated and in ways that have previously been challenged on First Amendment grounds. As in the FDA rub, the new regime wouW: • ProhibR the use of nort•tobaooo brand names as brand names of tobacco products except for tobaooo products In existenoe as of January 1,1998 (897.18(a))t • ReatrW tobacco product adveRislnp to FDA apecMed medta (597.30(ax1)-(2)) • Reatriot penniaslbMs tobacco product advertbinp to black texl on a whlEt baokqround exoept for adveRbhp h adult-0n!y faoiptlea and In adutt pubalcaNona (897.92(a){b)) • -RequUe dparstte and smokeless tobacco produot advertlserntnts to any tha FOAtnatxlabed statement of Intended use flrVoo6na DeCroary Oevioe'ry (897.32(c)) • San al nonAobaooo merchandise, broWMV Oapa. lacksh or bapa bearUp tha name, logo or aell'inp neiaoQa of ; tobtooo brand (897.W) • 8an ofrara of non-tobaooo kena or q1M based on pmot of purchase of bobaooo produda (897.34(b)) + Ths dtationa 1n thla and in tha next aeotbn are to Part 807 of the FOA'a tobacoo resulatbna, 61 Fed. Rep. 44396 (Auquat 28,199d).
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In any judicial review, the deference accorded to the Apencys findings shall depend upon the extent to which the matter at Iswa Is then within the Agenvys field of expertise. 8. Manufactudnp 4vensight The lepblatfon would aubJeot tobacco product manufacturers to good manufaduiinp practice standards ("CiMPe") oomparable to those epptioebk to medical device manufacturers, food companies and other FDA reputated Industrks, but taNored tpedflcaBy to tobaooo produds. In this raQani then would be: • Implementation of a quality control system (e.q., to prevent oontamknadon) • Inspection of tobacco produ4t materiels~(e.Q., to ensuro oompttanoe wtlh quality etandards) • Requirements for proper handlinp of tUlahed product • Tolerances for pesUdde ohemioat residues In or on oommodittioa in the possession of the manutaaturer, exbtlnp EPA auttarily and aversiqht Is retained • Inspection authority oomparable to FDA's authority over other FDA regulated products. Indudlrp the abft to enter manutactur{ng ptanb and demand oertain reoords • Reoad keeping and reportlnp reQuisemeMt Tobacco fiaimera wiN faCe no qMaber regulatory burden than the pmduoere of otl+er raw products repuiated by the tederal poVerrxment. [SouroeJpreoedenb FDA Rule; FDCA, 21 U.S.C. Seotlona BAtir 380) 7. Aooeaa to Company intormatlon • The ~, ql Ad~ ~W w~ tr~nould ens~ure t'ha/t/ ~pn~Wo~uylly ~ novpubio ot ooM.l~dentlal' NN{/Mn tM ~~fl~ ~ ~ Y A - ~ 11 ~fOl,W health research doaxnenb - an daolotad to FDA, prlvata Iltipanb and the pubpa. Yl-a detAfia of the arrargentent are set krth In Appendix Vltt.
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a9reement for Civil 5.edky, Protocol manuhotunn not Jointly and saverotly liable for Ilabft of non-Protoooi manufacturers. Triais involvinq both protocol an4 noth Protocol manufacturers to be aevered. 5. Permissible pariies, . Plain6ffa - a. Claims of indivtduab, or ofakms derhratlve of. suoh dapns, mtnt be brouDht elth6r by person Wknlnp fnjwy ot MIn. b. Thkd"rty payot (and airrllar) olahrs not bas.d on trub"atlon lhat ;vran pendiV as o1 a9qi. c. Thirdlparty payor (0d tim5ar) clakns besed on tsubropat3on of >ndirWwW dahnr no extrapoktlons. etc. Oefendants - a, Adlons may be maUtatned only spinst manuMotuAtq oompani.a. Kwir auccessora and atstqns, any tuWte frauduient trarqferrf, and/or enUty for tuit desqn9ud 1a sunAve defunot manut'aatunx. b. Manufaatuten hbie trioariausy for aota of 'apettb {Ududhp i44rtiiNfp apenoiee rnd attonNye). 8. No removal exvept under ppragraph 2*bove. 7. The devsbpment of 'reduoed flak' tobaooo produob Nost the .ffective date of th0 Ad is n9i1Mt adnft" tot disooverabb. a. Statute of WNtations: for al aalaur dwual atabr bwe povernirp tirne pariods fiom inyury, disoovvy, notloe or oontaminrikxJvbtatton. 9, Mnual aqp"te ap for JudpmenqJssttlsments; 33% of annual Industry base psyment (kidudUp any reductions for rokane dec5ne). If MroQats W"n%MVIsments for a -40-
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A tuQ.r dssCrtpUon Is provideA In /lppend6c V. In addllbn, ft proposed lat 9oes waq beyond tha provktoas of the Synar AmendmenCa 'no tobaooo sales to mkW law and talated tepuAeit10m, 42 U.S.C. § 300X•28, and the Final Rule pronwlpateid thereundst, which taeame etfecOve February 20, 1998 (81 Fed. Rep., JutN 19, 1998). .; The propoNd Act requbsa the severd Statea to undertake aipnMloaM eMao.rrMnt ptops deafyhed to drafn8tiC80y-reduoe ft Mlofde~os of yOWh itllokNlQ, v1d y0ft aoo0if to tOba00o products. Tme erftnoanent oblipaHons ere iundad by IndusbyPaymentr. Each etate mu:t malnroln spx+iAo leveh of orftmornft plloA,'ot the atau tNke the to.e of a slpnfllcant portbn of the heakh oire propram funds oftrvMiro payable to the etate under ft /1ot. Amounta wMhMld from etaba ral doinp an adequaN entq0en1ertt JOb Wpl be roa00o8ted t0 ttaw Wllh a aupOffOr "n0 b/9{ ti0 f11bo!'i' enforr,err~ record. No state wiN be held responsibN for eaka to underpe oormm7era outside that atate'e jurisdldbn. The deta9s of theae state enforoement Inoentlvea are set fohh in Appendbc V1. -25-
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2'02 000 OfiGlO P.e5/i2 . FOR SETTLBrdENT 0lSCUSSION Py,/jMSES ONLY 6120027 2:Q0 e. . PROPQ§e:D RESOLUTION PREAMBLE This legislation would mandate a total reformation and restniaurinp of how tobacco products are manufactured, marketed and diatnbuted In thb oountry, The nation can thereby aee feat and swift progress In preventinp underage use of tobaoco, addresaing the adverse health effects of tobacco use and changing the corporate adture of the tobaoao Industry. The Food and Drug Admintistntlon ("FL1AA") and'other public health authoritiea view the use of tobacco producta,by our naUon's ohifdren as a'pediatric dlseaae" of epic and worsenin9 proportions that resulb tn new generations of tobaoooslependent children and aduMe. There Is also a oonsensus MMtsln the sclentiAo and medical oormiunitiea that tobacco products are inherantly danperous and cause cancer, heart disease and other serious adverse heafth effects. The FDA and other health authoritiaa have oonoluded that vktuady ab new users of tobaooo pmducia are under legal a9e. Presklent Clinton, the FDA. the Federal Trade Conenlsslon ("FrC'y, stats Attomeys t3eneral and pubGc health authorities all believe that tobaooo adver6sUng wrd marheft oontt@wte siqnficanty to the use of niootine contalnln~ tobacco produots by adobsoants. These oAfctafs have concluded that, beoeuse past efforts to tbstrtd edvertlsinp and markettnp haw faAed to curb adolescent tobaaoo use, sweeping new ryUiotlons on the sale, promotion and dishibution o{ such produels us needed. Unta now, federal and state 9ovenrne~ts have taoked many of the le9al rr:eans and resouroes they need to addrast the sooletal probkms caused by the u3e of tobaooo produoti. These ofliclale heve been armed only with crude regulatory toott which they view ati irwdequate to achleYa the publlo heaRh objectives wRh which they are eharped. This leDiaiatlon areatly atraryThens both the faderal and state ~owmrt~ents' reputetory arse+>.t and fumiahea them with addriionat resources neeQed to addre» a pubfa MaNh probbm 1M1 affeota mflRor» of Annarfoarq, lndudlnp most Ynportarttty undarW b1*OCO use. Further, It is oorMernplated. that certain of the ob6qatiorsa of tho tobacco comWlee will be hipfemented by a bindinp, enforosable oonbaaual protoooi. A.
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• Ban sponsorships, Inckudinp concerts and fportinp events, in the name,lopo or sellinp mesaspe of a tobacco brand (897,34(c)) Further, building on and going beyond the FDA rule, the new regime would: • Ban the use of human images and C4rtoon characters - thereby eiknlnatinp Joe CemN and the Mer/boro Men - In all tobsoco advertising and on tobacoo product packages • Ban rA outdoor tobacoo product advartlsing, lnduding In enclosed stadis as weA u brand adveAbing dUsded outside from a roted estabYahment (modilles 897.30(ax1) and extends 897.3fl(b)) • Prohibtt tobaooo product advertising on the Int4met unless designed to be Insocessibk ln or trom the United SlatO • EatabBah nationwide rosb4otions in non tduM-only iad6tles on point of sale advertbinp with a view toward m**ntilnp the Impad of such adveNsinq on minors. These provisions, which en detaNed In Appendix V11, restrict point of sele advsrNsinp that was otherwise pennlded in retail estabtistunents by tM FDA nule. ° Ban dlreot and tndirect psyments for tobacco product placement h moviea, tel8viston proDrams and vtdeo pames • ProMlt d'ued and indioed paymenb to 'plsnarite' tobaooo use in medla appealing to mtrroro, lndudinp recorded and iw perfonrWuwee of musio • vV4drout WnivM the FDA's nonnsl rulsmaldnp authoAttr In thts ana, requtre that the use, in twlh existkg and tLtun brand atyks, of words turrendy employed as produot desaiptots (e.q., "rght" or'bw tar') be aooompu9ed by a mandatory dtdainlar In advertiserrMnts (e.g., '8rand X not ahoNm to be lea hatudow than ottNr doanlt4s'1; exernplan of ati new adv.rtiranp and oobaoao products labelkp shaN be submilted to FDA oonpmn0y wNh their ftodudlon tnto ths mukati*oe tor FOA'a or4oMp rsvtew. (Souroe/preoadenC FDA Rule; 21 c.FR 1a1.70j 8. Warninps, LsW" and Paokaqlnp 7be tederadyrnandaied warning labels on aiparethes wen Wt changed in 1t?84. Since then a number of countries, Indudinp Canada and members of the .9.
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.J.-cu-i~f37 16+1a BL.AGC.KELLEY.r-~,C21.,X'j 18t 000 e00e P.]" TITLE IiL Penalqee and En/branNnt; Consent Deo"l Non-Partlcipatlnq Companies A. Penaltiea and Enfonoemarvt • This legislation will be entorosabN both by the federal qovemment, Indudinp FDA and dvq and orirtntnal dWbloni of the Oepartment of Justice, and by the tevenAl Steta. FDA wYl at" hoye the authority to oontract dk.otly with atate agencies to ufabt wNh enforoement. N oonduot Is subject to a pertloular State's oonaumK protectlon law or similar Itahrte, such atata may prooeed undsr that IaMr. • State enforoement acdona -~ whether brought under the Act or a State't oonsumer protecqon low - oould not lmpote obApat;orn or w~here the lepia~tlo~n does not specNiodNyy prethe err~ additional ~ law obligations), and would be &nitfd to'the olvif and aimkw penaMies established by the laptelatlon and by the prohlbNlorr on duplicatfve penalties. State eMoroement prooesdinpa under the Act (or predk;ated on conduct viotatlnp to Aot), exoept thoee exclusively looal in nahne, would be rrmov" to federat oourt. Nothing In the Act pndudea a State from enforolnp Itt laws In the ordinary fashion as to mattert not oovend by tln Aot or Protoooi. • CNp and crtmUal penaltlee for vb*tlora of 1M legislation bfiad on those QoVendnD othK 4NQt Of deVloOa regulated under tM Food, ong and Coametlo Act and# whvm tappllabN, under Title 1e of Ihe U.S. Code. • In addidon, the indwtr,y faces oivM penalqee of up to:1o rtdlqon per . vbtaUon for any vbl.tions cf the ob8gatlora b disclose to the FDA research about tobaoooVoduot te*Wfh etbw and kdbtrn.tlon repardhp to to*tly d norkobaooo a+one*nb and oonatltvenb used In thNr produota. Thla peeaiNy h 1en tlma the largest pMaqy faoed by othsr drug or dwloe manufactimem br atnnA.r violations. • to retlect to tact tlut not ul Stabes haw /kd Wwwb agalnst to tobacco induatry, but that the krtiN/M of tM negotlatora la to pro+ride tt» beneAta of the settleanent to aU StatOt. the induatry alao wM enter iMo a bindlrp and enforceable national tobaooo oontrol
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0. Compilanoe and Corporaba Culture. A key element In achbvVnp the Aot's qoah vrill be toranp d tundamental change in the way the tobacco industry does business. Aooordb+pN, ft Act witl provide for means to ensure that the induatry will not ony ownply with the bttat of the law but vriM also have powerful Incentives to prevent underage uWe of tobacco products and to strive to devefop and market kss hazardous tobacco products. EbL manufacturers would be required to oreate plans, with an annual revlaw and updata, to: • Ensure compliance wph aN applicable taws and regulations • fdentHy ways to ad0aw th* powb of reduosd youth aooeN to and , Incidence ot underap consumptlpn of tobaooc products and provide internal inoentlvss iof dolnp so • Provide intemal lnoantives to develop products with reduced rIsk AmW , with a apeclsl emphasis on fawa and roqulatlona tfqd make It tafilawM b< sell tobacco products to unde" penions and oihat YnMa dkaCiod at th4 issue of underape tobaoeo usa, trie manutaqwen must krpl.ment oompliance proprame that Include, at a minimum, the Mowing sbeanb: • Compliance standards and pnOoeduna<ta be toMaw*d by employees vlolab ~ ~ ~" of ~~ft ~~ of • Assipnment to spadlfo bd s?_W" 1fth-lewl psraannel of iM .; «yanisalicin of ovsr.i> n to ovasiM oompllpna wlth tM rebvant standards and proodduras, espeoloqtr In regard to prevendnp underape bbsooo uq • Use of due oere not to,~~~ dlsondon~ay aulhorky b indMdua~t who the knowvs, a should hwe lotown ' ttwouph U,o axeroaft of due dMpeno., had a proper,alty to disreqaod corpo"b PaCY • Sbsps to ootnmunioale rehWnt stMnd&rds and ptooeduros to d employees and other agents (Udsft lobbylsty, ..q., by nqukkq putioipation in M*thp prcprams or by dlaeminalkg pubAoatlons that exptaln in a pradlad manner wFtat b nequY e! • tntemal audlts, Nct#nes and othet measures to promote oornpAanoi -21-
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2. untrormily of Warning Labea, Paokepinp, labelk+p and OtMr Advertising Requirementb; Manuhcturinp Repulnmente • Current federal law provfdklp 1br nattonal unNomMCy of wamktp labeb, packaDiV and Iabelinp requiremenh, tnd advtrtJainp snd promotion requirements rolated to tobAooo and NeaNh, ia preflfyed, exoopt that this Iepisiatlon 9iwtt FDA expreai saud*rity to require ohanQee In the language of tM warninpa, wbjeot to ahe atandard requirement that It provide putDa notice and a hea" oppoRunity prior to makhp such chanpee. • Shlary, fhe provisione of FDCA desipned to. proaride uMlom* In produd manufaeturirq an4 design reQulcarwnti retatinD to mqdlpd devbes wS apply to tobeooo products, exaept that any applioallon by a Stste or bcaiity for an exemption pennittirq it to adopt tWdfdonal or different reQuirements relating to pertonnanoa standards . or good manufacturinp practloes may onty bo . pranted if the teauirOmant would not unduly burden Interttate, oonuneroe. Further, to enaure that FDA has an adequate opportunMy to evaluate non4obaooo Inpredbnts as deacrlbed In Title i{F), no aaiempifon reta6nQ to ingredienta may be applied foa until the Aflh annhronwy o/ the eifedive date of the Act
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boxes comprising less than 25% of the front panN. For smokeless tobacco products, the vrarnings would appear on the Principal display panel (e.p;, a band around the can for motst smokeless tobacco products) and would occupy 25% of the display panel The warnings would be prkNed Mt IN wdlh ourrent Canadian standards (e.p.,1i point type with appropriate adjwtments depending on length of roquired text) and in an attematinp black on white and whRs on btack fomvt. The size and placement of waminps In adverbaenbrb would foAow the nequirements set tosfh In the existing United COnqdom stsnderdt. As desated in Appendbc 1, the warning text and, where rokvanl, `taP and nlcotlne (or Other oonstituent) yield Information would ooaipy 20% of press adverlFsemenb. Ciparslb and smokebss tobacco product padcapea would also catry iM FDA mandated statement of Intended use ('Nbotlne DeMery Devioe") on the side of Pack; 2. The FDA would be required to promulgate a ruts poveminQ the testlnp, reporting and disclosure of tobaooo Wooke constituents that the Agency determines the publo should be kttocmed of to proteot public health, Indudinq, but not furW to'tu' nlootjne and oarbon monoxide. This authority would be trant/erred from the FTC and would Include the autlwrky to rvqulr. labet and advettistnp dlsdoaures relatlnp to "Far' and nkoodne, as weY as disclosures by other means roiatln9 to other oonstituenb. (Souroelpreoedent: Canadian wamktp t~egulatbns; FDA Rule; FDCA, 21 U.S.C. Sec. 360h, with oonformbq amendment in Npht of FCLIW C. Restrictlons on Acoas to Tobacco Produob Preventing youth aooess to tobacco produats b a major oOjeot/va oT this leplslatlon and the FDA Rutt. With0ul prevenOrg stote and local pOVemments from 6nposinp stricter measuros, the lepislatlon vauid Incorporate every aoaess rettrwon of the FDA Rule, and more. As 1n the FDA Rule, the leplalydon would: • 8et p ndnimum a9e of 18 to purohate tobaooo produc4s (887.14(a)) • Require retailers to check photo idanttllatlon of anyone under 27 (W.14(bXi)-(2)) • Estabrsh the basla requkernanc of aoabataoe transactions 1or d aales of tobacco producb (eti'l.14(0)) • Ban the sale of tobaooo products Rom opened packages (807.14(d)) •11•
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year exceed annual approQate oep, exoeis doa not have to be paid that year and rolls over. Any )udpmentslsettbments run apeinit defonnlank but qlw rise to e0cent-on-thedoNar ondit dgalnst annual payment In year paid. Suttable providon for fettlement oontultidon and pennlsslon. Manufsotunxs oontrol kuununoe clakra, and any Insurance noovary obtalMd by mtnufaqW" (net of cost) on account of }udpment bnd/or settlemant oovered by above sharing arran9emeM aoooeted $0% to anwel Payments. Manufacturers rstain any Inauranoe pnoceeds on account of dehnse ooetrt. Provblon with resped to 1ndMdual "ments above $1 rNdbn: amount In exoeq of $1 mNion not paid tMt yar unless every other ~udpn+enthottlement oan be sstbAed wkhin the annual a9grepete ap. Excess rolla fonwand without interest and Is paid at the nte of i1 mlMbn par YOar, untU the Arst year that the *nnualapprepaa oap it . not exceeded (at which time the remahd.r b paid 1n Iu~ Ror . purpaee of this pnlvhion', e th""Ay p#yot (or;~ action not based on subrogation Is trqted u havinp been broupht by a sinpte ptalnHlt and i4 sub)eat to the $1 enSbn roAaver on that basls: 10. tn ttie event that tha annual "proOsES ap h not reached kt any year, a Conunlesfon appofntad. by tM Pnuldent w4 deWmine the appropdab atlaoatlon of the aMOUnf ropresentlnp the unused .mount M th. ondlt. 1rne Corrrnbsion wBl be eMltled to oablder, among pubio health, governmental eMltin. and otMr utee of fM Mds, appBontions for oompenutlon irorn pmns, inoludinp norr : eubropatton daft of ttatSt pSAy Ptyors, pot othenMw ` eMitled to oompensatlon under the Ad. 11. Oe%nee oft patd by rtanutaatunn. C. Provlsions as bo CMI UabNity for futv» Conduat The topmNnp proviaons apply to sults for tebt aA.qp from W6una conduct - t.e.. sults daim>nq inJury or damage oeuaed by conduct taidnq pboe at2er the efieotlve date of the Ad. 41-
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may neither fila an abetan>iM PeMion or tNk Judldai trvbw Of a dedalon denytnp an abatemenCN K has hlbd tio pay aa wroharpe in a timely fashion. 8. No stay oc otMr anyundNe rotkf Qnjolninp Impositlon and oflikctlon of ths eurcharpa amounta, pendlnp appeal ot othetwAes may bo 9rnnted by tM FDA or any Court. [SouroelpnOedent 8 U.S.C. Sections Srt, 6W87, 701-00) .ST.
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avoidt oonstitudonsl questions that mfpht othenMse be raised by establishing a separate renkne for noMartidptltinp tnanu/actursn• Nonrpartictpatinp tnanutaadarors would be subHd to the access reetrictione and regulatory oversight set forth aboHfa. They would receive none of the civll Nabilby protections deioribed In TiBe VIII. Their product would be subject to a ufer fee equal to the portion of the paymenb by parodpatinp manuhoturore allocated to fund publlo health propnwrns and fedend and state enforesment of the aooea rsstriotlor~s. • Ths resolution further teeopntta ft - unllce the participating manufacAurers - non-parNclpatinp manufaottuera wvql not have made oonsanwal paymente to aettN governrrMntal aatlont for health oarr ooeti, to eeltle dast aatloru and In to provlde conslderatbn for the perW1 arltlornent ct indMduaI tort sctlora (indudirq punitive damages daMm), Because such aotiona would ranaln wholly unsattsAad, it Is vital that the daMants be etwurad that funds wNl be avaNable to satisfy any Judprttlr+ts that may be obtatnad. Aooordinqly, the resolution requira that each non- pacticlpaatirtq manuhoturer ptaoe Into an eaormed tesaw tund each yaar an amount equfll to 160% of Its sham of tha annual payment roqulrod of puNolpatlnp manufacbunn (othar then the portion allooated to pubbc health proprame iub federal and aate entor~. The:a esaowed funds wot8d be earm#rlced for potendal qabiNty paymante, and the manufacturer wouid recbim them with Irrtereat 35 yean leter to the extent they had not bean paid out In (iabluty. • Morsovar, 1M resolutlon aho reoogntrm that - beoaule non- partldpatlnp manufiaturers ara not eub)ot to the corporate culture oonrnihnenta requklrp manufacturers to monitor diqrlbtAor and MaA.r ooenpsanoe with ths un0onpe aoom resbiotlora - dletrbufbn Md febN saNa of tlatt nanufactutwW produdt pneent • particularly great obetade b the : aohievenwnt and eraoroemant cr the .oo.a re.btaaorn. l the re.oh,tlon provtd.s that tho ex.rnptlon from d~+r~~ Y~typr appioablo to di•tdbutora and ratuNis of the producb of patddpaikq manufadurea wpl not appy to dbtributore and retaliers who handle tobacco products of nor}paNclpadnp marnAadunn.
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Protocol embodytrp certain tenns of the proposed reeolutlon. As an enforceable oontnot, whic+ would not be eubJeat to hctaf constRutional challenQe, this Protocol will provide benefits and enforcement Nhte to the federal 9ovemment and all states. B, Coneem Decrees ° Certain tenna ot the apreenront w1N also be raNr*ttd In oonseM decreee between the tobacco Industry and the states that wtp not take effect undi aRer enaotrneM of the Act 1?+ae consent decrees wIA be klentloal to. and wYl reltenate, ttM twrra of the aproem.nt with ra:peot to: (1) roetrictlora on ddvertipinp, marketkg lind youth access to tobaooo products: (2) trade aeaooiatlora; (3) restrictions an kibbylnp; (4) dledoeun of tobacco `>rnoke conatltuentt; (6) disclosure of non•tobaooo Inprddienb; (8) diacb:ure of existlnp and fuiure Industry doaunenb relalfnp fo health. toxicity and addiclbn; (7) comptianoe Snd oorporate adlure; (8) obltqationt to make monetary payrtnenta t+o the Stabe reNectlnp their reasonable share of the total provkfed, by the Act (O) obGpatlons of the Industry to deal only wtth distributon ub. rete#en that operate tn oomplhna with appNc:abN provlelorn of law respectsnp the distrtbutlon, sale and markeWp of tobacco produols; (10) warNnps. Fabe6np and packay{np (to thf exkpnt noted bekriv); and (11) diamisaal of other pendlnp ptipNion spacilied by the parties. ' The oonaeM deaess wW not contalln provlebtu ae b: (1) produot desipn. pertormanoe or modtlicWoa; (2) mwdaObuitq stdndalde and pood mfnuteetudnp pticYtloes;'(3I'feredrip and ropuh8on wNh respect to bxdo8y and Ugredknb approvA and (4) the nN{onal FDA'look baok' provbbne. • The oonseM deaeee wS provl0e lhlAt tlwk Wmt we b be construed In ooMOnnBy wNh the Adt " the proboool and wilh eaah other. shte prooeediV to enlorob tho p"AdonM of the aqnMnt deafes may be broWht In eft oourt, eubjeat to an mWable procedure !o enwre oa~ nSnpt wNh napeol to oonduat that Is not szolushrory 1ooa1 in oherad.r. State `ptoooe" Ip entbroe the coneent decreee may seeic kl}unadvw nNiN only. and nley not eeek crlmkW or nwnetary aanotiont. A 8tsa eha8 not be Mlbd from eeekhp orknkutl or o1Mr sanctions (or a oompanye -27-
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trx+ . ncwc i x r.S~[:G 202 000 09W P. 23/72 • My aubpoQna authority FDA haa wllh rotped b manutacttuon ot medical devices generally Vrould oleo appN to tobacco product manufacturers. F. Nonkobacco Ingredlonts Currently, at the federal tavol, tobacco manufacturers aro required only to autxnlt aggregated inpredient informatlon (n4t by brand or oompany) to HH8 for monftodnq and review. Nor do tobacco producb manuFacturen currently dl<dooe to consumers Ingredients Information for each of the tobaooo produots they aN. The legislation would aupersede the current oftenaitldted federal irpndbnt law and confirm FOA'o authortty to evaluate eN additlvea in tobbooo produda. No non- tobaooo Ingredient could be uaed In manufaoturGg tobaooo producb unNq ft manufacturer can demonstrate that such inpredlenta not hamtUi under ft c c~"y Intended conditions of use. Further, the Iegislation would require the ~ manufacturers to dlsdose to FDA the inprodlants and the uraunta thereof In each brand. In additlon, k would require manutaakurors to disclose kprodleM information to the public under regu(ations comparable to what ourment federal low ' requIres for food products, retlecdnq the Intended condltions of use. Under this proposed leqietatlon: • ManufaChuera would be required to pravldo FDA on a oonAdenWl baata a list or a1 Inpredlenh, substenoa and oompounds (olhar than tobaooo, watar or reoorWAutsd :lobaoco attieet made whotNtrom tobacco) which are adeed by tt~e manuiaot<~ar to the tob~aooo, papor or 1WW of tho tobaooo produot by brand &nd by qvanNty in taaah braM. For each such kem, the marwfaduter would Identlly whedw or not R beNevoa that 1he item would be oxempt from pubtb dlacioaurt under the leptalation. • Manufaoturers wroutd bs reQuked to aubmN, wltldn 6 yen of ft enadment a tha Aot, for each trgnadient Qurtehtly added a ft tobacco produot, a ad.ty aaesament, baaed on the be+tt avahbb evtdenoa, tto thers k a ttiesonabM oertsk* M"Tha mY* of oompear~t aciantlsesYhat tM trgmdtaM tup eo a opeotAad Unounq la ' not hartrMul under the Intendod oorft ra bf ua.. FDA stal promutpata appt{cabte rspulabona wilhin 12 moret~l. . VNNhin a atahnory tlmo perlod FDA must review eaaeawnerfi(a) In aooordanoe wth the appeoabN atandKd; within 90 daM FDA ahaA approw or dtaapprove an •19-
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designed to ensuro compilanoe with snNqust and other appGoabla lawrl. ($o JWPendbt M F',na1Hb oompanbs would be wbJeot to 11nm and penaus (indudinp "8oariat letW adverbsinp) for bmdtlnp their obllgatlont vita-vls the dsvelopment, implementatlon and enforoement of oomplianoe Plans and oorporate Prtrdplea Theae psnalHes shall tollow the tdwme set torth in tFN Clebn AU Act, up to $25,000 per day per vioiMBon with a toW no4 to exoaed $200,000. In addltlon, each manuraaturara emptoyees shan be direated to teporR to that manut.oturers oompRanoe ofiosr any known or alfeped violatiom of ttib 'Aot by retal>,ri or dWbutors. In aooordanoe wkh prooedures eetebiished by FD& the oomphnoa otfaar ahap be roqulnd to fumhh aM such roporb to FDA br roferMOa i;c appropriate federai or ttala eMorcetneM t*4rltlea. Tl+1r rtquw/aduror shaA be subJecx to firm or penalt/es fn ft event Its oompNanoe ot'Aoet hik to tumbh any such reporb b FDA. jSouroNprooederM: Federal Or2anttatlonal Sentencing Ouideqnee; varbus tederal oonsent decreee; vuiom oorporats ernSronttanhl proprarrn) H. EffectNs Qaba Many of the foregoinq requiremenb rota" to the rsionnatlon ot the tobaooo industry will baoome efiaWw shoAy Mter the Act h sipnsd by the Prettdft @1CIUdUQ ft MOSMinQ categories of nSIN Mh, W11iC11 WiG be ftilmOnted Cn f110 dafes Indicabed: calm= Rehil Product Displays Re1aN Wpnape Adve*hq Paaw9e L,ee" Sponsorshlpe VendMp maohinea SaffP" t l' M~q in.; t"ltl[t. ry{t.r[N~.l C0(mam .^^.Pwwv. FaModsoa transadfoni S.n on saka ot open padn 20 dparema par peok minMum Puerto Rioo padc size EffectNs Dahs on Final Paasaos A mO*t 6 mornta 6 montlu 1/8 in 00 days 1191n 120 days 113in180daye 12191/ti8 112 moMht 3 nrocft 24 nwahs or In sooordsnoe wllh nul.rnaWnp, 'whmewt !s later 1Ztnotdhs .s morft a moMhs . 3 moMha 112 montla •28-
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the Agency shap have the authority to mandate that a manufaoturer eubJeot to this Act who ( teohnotopy (at suoh . manuf,cturers election) elttter Intradua tuoh producta, or, at a oommerotsly reasonable ma~kst rs , oense such tedmolopy to s manufacturer who a8rees to bring the technology to market In a reasonable tkne fnime. In ths event th8t no manufacturer or licensee Introduoes such'leas harardous tobaoco products; within a reasonable ttrne hame set by FDA, then Rhe U S Putzlla Nealsh Servloe may._ produoe either Uselt~_o_r ~h_ ~Goenafnn arrarpemeait, anY euch product W • The goal of any rule mandatinp the Introductlon ht6o the marketplace of'leea haurdous tobacco products' for whioh the taohnoloqy axiett a to quarantea that a medw*m eadsta to ensure that products whfch appear to hold out the hope of reduclnp risk are aduaAy tested and made avaDable In the marketplaos and not held badc. 5. Perforrnanoe Standards To f~ the pubbo health, to promote the produotbn of'reduoed risk' tobacco produc#, and to minimize ttte harm to oonsumera of tobaooo products by Int~uri that the best avaRable, feaaible safety technoloov beaom~, the Industry sfandard, FD ANhOfity t0 promUlgate PerfOmlanCe 8UtldadE pursuant to Sectlon $14 that oequire the modtfkatlon of tobacco ptnducts to reduce the harm cauaed by tttoaa pmducb (Indudktp 1M oomponerM that produce drup dependence), provided tMt the standard shall not requlh ft prohbltlon on the aak to adults of badttlonal tobacco products In the basb foam as dstaoribe0ln the August 28, 1960 FCA Rule at 01 Fed. Req. at 44810 (to be oodtAed at 21 C.F.R. Seation 897.3). SpedSCaAy: A. For a perlod of no fawer than twelvg years tolWwktp Uhe effective date of the Act, the product P.riormanoe Standards wlr be povemed by the foeovvirq; The Agency shall be permitted to adopt perfoananoe starWarda that require tlta modMCatbn of exlsttrq tobacco products, fioNid" the gradual nduc5on, but not tt» elrrdnatlon, of nbotlne yhldsk and the posstbts eik*atlon of othar ooratlaienb or other hannhd oomponan6 of the tobaooo product, based upon a Wn8lhat the modlAcatlon, (a) wll result In a sqrMQosnt reduopon of the heatlh tisb asaopiated wMh such produds to oonuur»rs tttereof, (b) Is t.chnotoploaNy ieasbN, and (o) wil nat rasult in 1M creatbn of a alpnMioant d.rtMnd for corraband or other tobaooo products that do na meet the product sahty standard. In detennkiinp the ristc of tM demand for a nmrket -16-
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TITLE V: Ecopa and EtYeot A. Scope of FDA AuttaNty • AII product sold In U.S. commeroe • Covers new entrants; imports; U.S. duty froe. ete. • t3ATF to retain fiscal authority over tobaooo pcoducts • FTC to retain mdstiaq author/K+, except forW, nlcotina, and cadon monoxldo testlnp • Grower UmMatbn: FDA Jurisdiction doee not Sxtend to 1M prowinp, ~ cuttlvation or curin0 of raw tobaooo (USDA has ucduslva autho0lty). B. Stata Authortty 1. Pressrvertlon of State and Local Oovennrnant Laws and Legal Auttwrtty • Wtale settinp a tederal "AooP for tobaooo cOntt01 measures in many subatantive anaas, th le9hation prosenre., to the maxXnum extant, state and fooal povenunent auttwky to taks additional tobacco oonVol measures that kdw ceabtot or 04nineN tM producCt uaa by and aocessbby to nfta. • This bpialatbn ebo psnnNs ststs and bc.l paMemmtnts to tnsct meaauros that turthK restrict or epmtnate empbyee and Evend pubbc eAosun to amoldnq In worlcplaota and b oBur public and private ptaod an6 faoNNfp. • j1k (eqal au1hOtlly of a state or to0al QoVOfnnwt to }uftlfOt Noau, teatttOt of eAnlNlib the ia10 or dbtfSbWon of tobacco ptoduEtf, and to impose stata or local taxes on such produds. also cenuxina unohanped. ' ThS kpisWon nhim aknlat flex,btlty for Iridtwn trbet, mAltary fadfiHes and otlw fedaral aponclas. .32.
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...~v....c..~c xr~w 202 000 00Qi0 P.26/?2 • Appropriate abdpAnary mechanfhrrs and mNwres (e.g., dis9tpGne of empbyeae who violate martcednp reatrkXfonA) • Reasonable ttepa to respond approprWely to a vlofartlon and to prevent further almNar vlolatlorn Purthearwre, the AOt would provide 'Mfilstlebbwers' In the tobaooo industry uvifh the mmmum probeatlon ava6abfe under ourrerA federat tWulea. Beyond oomplianoe with the bt<sr ot the law, manufaoturert would be roquired to take aftirmatlve stepa (n turtheranoe of the ephR of the new rpime, "udlnp: , ' Pramlyating oorporaba pftlples that eWeFs and e"in the oomparso oornm*nent 10 oompeana, nduc#on: of underage tobaooo uae, and deveioprttpnt of teduoed risk bbaooo produott • Designating a apecM'q indtvidu.l w" Nph4bwl personnel of the orpaniZdtkn with approprlaSt responabft &nd eutl** to promote eNat: to attain itwae new standards ' Provldinp reports to shareNoldere on oompPance ai weM as progress taward meetlrg these new standards Manufacturea would abo be requlrod to work wrih roteM orpanlzaUons on oomp8ana, indudkq retader oomp6anoe checks and firdinaial incsnWes for oompllanae. Ift eaah tobac+oo marn%Ckrer would requks aM Oontract Mbybb (and «rW otMr third"rqea who mry enOW h bbbykg aWtlaa on behaH of a manufaahueri to aQree tlW they wa not support or oppoae any Wba or litderal Ieghlation,.or aeek or oppo~e eny qowertvnenbl aatlon on any mat(er, vdlhout !M manufactuWa euPrse authoriZatfon. MarwMduroni'would aho rewbr anyone lobbyinp on their bahalf to aprar in wrNkp tt* a) they we wvare of and w11 Ny corrply wRh al appNcabla lawe and roguMiont; b) they haw revbwed and wAI A* oorMly wMh the Aat as k ppWe b IMmt 0) tl1ey: haw nvkwed and w(N tuRy ooanpy wah the Ca+s.nt OaM ae It appOs to`lMm; and d) they haw reNfrwsd and wU tu9y abbe by tto nwnuhohxsre bwkwu oonducf poNdee and any other polclea and oprwkmanb aa fhey «ppiy, eepeotatly those rebled to proventlon of youth tobaooo ua.g.. ):M& wMh nMety days aMr the AcYa..Re*w dsa, ths robaooo tnatltut..nd the Coundl for Tobaooo Reawoh, U.8A w0uid be disaoNed and dbbarWsd. Tobeooo product maMta0dx.ra wouid be . perttW to torm riew lrade ass0oisttoru only In aooordance wNh atdat prooeduret and led.nl oversiqM -22-
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: o~ Jc Kiu.EY . $.';~ 202 000 a000 P" a" are sold, marketsd, ad+refted and disbtbuted In Utentate commera on a nationwide basis, and have a substantial ettsct on the nation's eoonomy. The sale, d'atribution. marketlrg, adverblsiny and uss of such products are abo activities suMtantiatly aNeft interstate oommeroe by vlrtue of the health oaree and other oosts that sederai and State povemmental authottties have attrlbutsd to usage of tobaooo products. Various eJw ac8ons are pending in state and federal oourts ariainp from the use, markeft a sale of tobaooo products. Amonp these actions aro oasae btapht by some 40 state IWomeya General, aajes broupht byoeMln oitiss and oountlea, the Commonwealdt of PusRo Rioo, and other tltird-parV payor ea8es seekhQ to recover monl6a spent treatiRp tobaoomlated diseases end tor ths proEec-0ion of minoR and oonsumsrs. Also pendhg In oourta puoWhout the United States are varSous pMate putatiw class action iawwib 4roupht on taehatf of MdivWuala cWkninp to be dependent upon and injured by tobacoo produab. Addltlonaiy, a mutt>tude of YWivlduai suite have been fllad against the tobacco . products manufacturers andlor their disUfttors, trade asaociatlons. iaw 8m1s and aotreuttaMs. A1 of these cNf actions aro oomplex, slowmmovinp, expensive and burdensome, not only for the Crtigants but aho for the nation's stati and tedend judidariea. Moreovet, none of those liftations has to date resulted in the copeotiorr of any monies to oompensa4e smokers or third-party payora: Only natlonai lepisMon offers the prospect of a a*IR, fair, equitabk and oonsbtent result that vvould serve (he puM lnterest by (1 ) ensuAnp that a portion of the costs of treatrrront for diseases and adversa heatth ettac#a Inked b the use of tnbaooo producls Is bame by tlte manufachuers of ftea products, and (2) restrlctlnp natiorrNids the saie, dtatrbuftn, merkepnp Wd advertitirp 4i tobaooo products to parsons of 1e9ai apa The unque posMlon ooaapied by tabaooo h the noUon'e tdstory and eoonorry, the magnitude of actual and pobtnbai tobaooatefaled OtlQatior<, tha need to avoid to oost, expenae, unoertatrriy end inoor»bbenay assocFaEed with suoh protra*d Cdigatlon, the need b Ymit tha eeie, distAbudon, marfoeft and advertisinp of tobaooo products to penone of le" ape, and the need to adueft tlw pubk apepiaihr yourp people, of tlw heaMh dfsqa at uNrg tobaooo producls ap olotate that tt would be in the pubio Merest to araot thta lepistadon to b, Ofate a reaoiutiat of the metters desated. Pubtlo hemNh auCtorid" be6eve that the sodetal benelMs of this bpialatlon, h human and eoorwmb tenm, woW be vaat. In particular, FDA has faKUtd tMd rechwlcp undenpe tobaooo use by 60% 'wouid prevent well ovar 60,000 a~ery deatht.' FpA has espma6ed tttet to moneGty vaiue of ib proesnt neDulatbns wi1 be woAh up !o i43 babn per year in reduced medipd ooate, irrpon+ed producbvity and 1M beneflt of avoidinq the prernabue death of loved -4-
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,-,{h - hEU.e'r. 202 800 000a P.06/r2 The lep+stdtbn reairirma indMduata' right of eaoest to the oourts, to civil viaf by Jury and to full oompensatory damaQes. Resotution through the Act of . potential punithre damages liability of the tobacoo Industry for past conduct Is only made in the context of the oomprehensive settlement proposed by the lepi;iatton. tt b not Intended to have precedental eNeck nor does it express any positlon adverse to the impositfon of punitiva damages in general or as applied to any other specific industry, case, controversy or product and does not provide any authority whatsoever regarding the propriety of punitlve damages. Amonp other things, the new redime would: • Contirtn FOA'e authority to tepulata tobaoco produob under the Food, Drug and coametlo Aqt, inaktnp FDA not only the proeminenR repufatory agency with respect to tha manubqun, marketinp and distribution of tobacco produots twt also requiring the tobaooo Industry to fund FOA's oversipht out of ornpoinP payMenta by the manufacturen pursuant to the new rbQime ('Industry Paymentaq. • 00 beyond FDA'e current regulations to ban 61 outdoor tobacco advertising and to eCeninate c~ characters and human figures, such as Joe t:eme/ and the Med6oro Man, two tobaooo tcons which the pubGc health oomrrwnRy has long asla9ad as advetttalt>p appealing to our nation'a youth. • Impose and provide fundtnQ out of the tndudry Payments for an aggrmtve federal enforoement program, IndudMp a 8tater pdministered rotall tbenatrg ayetern, to ebop minors from obWnLp tobacco products, whle in no way presronHnp the Statea ~ kom enactinp additlonai measure:. • Fnwre thet the FOA and the Stetes hava tha repulatory tbxibAlty to address iuues of paRiotdar Costoem to pubNo heallh oHiclala, such as youth tobaooo usage and tobacco dependence. ' Subject the tobacco Industry to aavero flranoqd iutdhamQea In the event underage tobacco use does not deoine radicariy over the next decade. EmpaHer the federat povernment to aet MWat atandards oontrollinp the manufactdrirp of tobaoao products and the InpredienOs used in such products. .Z.
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t1TLB VIU: CIvO Uability The foAowinp provisions would govern actlonf for aMl liability related to tobaoM and health. q. General I. Present Attomsy 3enerel actloni (or eMilu acdons brought by or on behalf of any governmental pnt/ty), Pam$ PstMe and dan acdons arR Ie9blativNy'WJdd. No iubrrn prosecutlon of such actions. AN 'eddbdon7dspendmos elaims are settied asb .A other penonsi k)ury oWMns we reaerved. As to eipnstory Statel, pwndinD Conpreqlortet enaotrnent, no stay appNoPUone wAI be meQe tn pendlnp actiona, based upon ' the hd of this resohdbn, without mutual consent of the partle:. 2. ThW.party payor (and simNar) acUone pendinp at of t"t are not settled. but povomed by provisions ropardh+p paat oonduat set forth In Section 8 below. 8. Provisions as to Civii Uability for Past Conduqt The following provisions apply to auib for reiwt arhinp from pset conduct - I.e., suits by perrons claiming Injury or damape coueeG by conduct taking place prior to the effec,We date of the Aot. 1. AN puniWe damepb dAMn1 resolved aa part of overel •etdenent No punltive dam*pes 1n IndMdud tort acdona. 2. Iedividu.i triaie only: Lo., no dut NotioM4 Joinder, agqropationa, oonsioiidaUaie. eftwaUora or otha dwioee to resolve oeesa other than on the basis of indhriduai htak, without detendarR't oonsenf. Action removsble by defendant to tederIl court upon rsoetpt or appAaNat to, or ader ot sbAe court proyidinp for trW or other prooedure In vtolatlon of thie prvvMion: 3. Exoept .a evressy txovWed In the Aat, FCLAA and apprioebk cate law undatged by dN Aot 4. ProvWed that tl:e fin npottslMp oompvdat enter into the Protoool: Protocol n>wnutadiuere to enar k>to /otnt sharing
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releWM bw voltdtTle an1 total voNxtN fiQurq. B'fe v b t926 voluma. • Any reduatlon in an annual piymfrnt witl be reduced by 25% of any increaa abovo the hdufbyi befe yNr fNt operaWq proflb (aRe( applloo6on of InMtor disMsed abova) from domestic sales of tobaooo produab, 6. Payrranf Protection • Pmvide for paymoM priorlty/ooMlnuation duMp bankruptcy/ "antztllon Ixoossdlnpe. Protoool arua be re)eobd In baNOUpRCy. Obiipttlon for aMu11 payrfbnb reMpontbipty onty of entitler< ta1YnQ into dwosbo nerket. : 7. Pase-Throuph • In onder to promote mludmum r.duqlon h youth smokirq~ th~ / ststute would provlde for the Mruwd Peyn»Mt to be refleoeed J In tM prioea manufactursn charpe for tobtooo producb. C. Appflcability 1. AppGcabb to AA Seilers of Tobsao0 Produais • Through protoool and itatute to protoool aignatorMt. • Throuph attsmatlve statutoiy+provWone to "nataiee. C. Tax TreatrrNnt M paymeft pursuan/ to ft ApreenleM (Indu6rg ftw putsWM to 11da Iq ehaq be deemed ordinary and raoeewy butin•q expet»N for ttw year of paymmd, and no paR theroot' a.ilfiw h ptllemt of an aaWa1 or potsnttal Iabllity for a flne or penalty (cdvq or ptmirO or tt* oo=t of a tan2ible or inmuole aseM. .3',i-
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TITLE VII; Public Health Funds From Tobacco Settlement As Recomr»ended Qy The Atton»ya O.naN For Consfafir.tlon 8y The PnsJdant And Tha Congnos BASED ON THE PREMISE OF $ 1 BIWON FOR TNE FIRST YEAR AND c3RADUALLY INCREASING TO=1.5 BILLION'MERF.AFTER, ADJUSTED • FOR INFLATION AFTER THE FIRST YEAR. BASED ON THE PREMISE OF $1 BIWON FOR SMOKINO CESSATION FOR THE FIRST 4 YEARS AND $1.5 BIWON THERE+1fTER, ADJUSTED FOR INFLATION, (A) • ALLOCATION OF GRANT MONIES AMONG PROGRAMS - The use of moneys undet this Seotbn shall be qmited to propmrnt,phbttshed undet this ' Sectlon, ah,atM be adJtated for Ydhtlon 4nnuW irom thr iKeatlve date, ub shaM be allocated amony such propnms ss foMows: (1) $125,000.000 for the ft BvN yesrs and iZ2b,tlOD,000 annually thereatter to the Secretary of HH8 to aooompWah the purpoass desoAbed h, Paragraph (8) of this Stctfon (Redudfonln Tobiooo U"); (2) t300,000,000 annuaMy for the FDA to aury out Its oftkalora under and to anroroe the terms of tlds Aa,lnahidinp for pnnts to the abtes to asaist In the .ntoroanat of the provMiom of the Aoe: (3) $75,000,000 for.tha.llnlt t6w. ysari. =100,.000,0001n the WriO year, and $125,000,000 .ntwaly thenslMr to'tind atatt and botil tob.ooo ooMrol oommunky basad .fforb modeUd on the ASSIST pngram, desipned to enoourape votnmunlly Hvoketrent h reducing tob.ooo tfa *nd the ernobnent and MpWnent.Gon of policies daipned to reduos the w" of tobaooo produots; e+eftds tor cw~b 0'dis axap. ir ~idNidwls trom s ~ tWkq a bobshow to help IndNiduaN to ault uft ft~SOOo; (5) 6epinninp in the seoond yeu, s75,000,000 umu* for a poMod of ten (10) years to oonnpemate amMs, teuns « eeffin in iuoh events, who tose sponsotship by the tiob.ooo ttWktby st a natdt of ft AAt, or who outtently reoelve tobacco industry Nndhp to sponsor evenh and e{vat to ropl.oe that -36-
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permitted to roquire the aReratlon of tobacco ProduOts then being marketed, lnduding the .Iknlnatbn of nlootlne and the eNminatlon of other oonatduents or other demonstrated harnHut oomponenta of the tobacco product,' based upon a finding that (a) the $ataty standard will result In a slpnMioant overall reduction of the health risks to tobacco consumers as a group! (b) tha modification is teohnologicely feasible, and (o) the modification wNl not resutt in the creation of a f;ipniAcant demand for contraband or other tobacco products ihat do not meet the safety atandard. In detem-inlnp the overd health benefit of a change, the Agenoy shaN oonsider the number of dependent tobaoqo users then tn exdatenoe, the evaAabtMy and demonslretb matket acceptance of altemate produds then on the maAkM„ and the effectlveness of amokinp cessation teohnlquea and dev{as then on tftie market and such other factors as the Agency may deam relevant. Given the signiAcanoe of such an action, the Agency A be permitted to require to elketnatbn of niootine or take such other aotion that would have an eMeot comparable to the eBmination of nicotine baaed upon a"preponderanoe of the evldenoe' pursuant to, at a manuiscturers election, a Part 12 haarinp, or notioe and oomment rub making, with a rpht of Judiotal review. Any such edlon ahaM be phased h, and no such phasean sha11 beph In kq than two ysars, to permlk Ume for a meahirpful Congressbnal review pursuant to the ouneM prooedures of the Regulstory Reform Act of 1990. In the event a party subsequently Aks a petition seetdng an adminiatratiw revlew of wheiMr a modiAoatbn has, In fact, resulted In thft creation of a siAnlAant derrand for oontraband or other tobaooo products that do not meet the aatsty standard and the FDA donies 1M patitlan, ths petMfoner shall have the ripM to seelc Judi~ciat review of the daniat of the petltton. + The eUrtdnatbn of nlooHne or other hamdul oonstituent ahaN not be dsemed to viotate the proFabkion on the iale of tradNlonal tobacoo products ro adulb, even M k n>vults In a ra0udion of the number of the consumers who use the tobaooo producta than romaWtq on tM market. ~ This Yxludee the roduqion In hana which w91 result from deoreaeed drug dependence from the reducsion andlor elimination of nlooflM trom (a) those who oondnue to use tobacco products, but teas often, and (b) ihoae who stop usirq tobacco produott. •17•
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associations shall produce into the depository on an ongoing' basrs any future studies of the smoking habits of minors or documents discussing or referring to the relationship, if any, between advertising and promotion and underage smoking. • No original laboratory research retating to the health or safety of tobacco products shaN be withheld from either the. FDA or ; the depository on grounds of attorney-olient ptivilegA or.work._ product protection. 8. The tobacco manufacturers' and 'CTR's and Ti's oomplianoe with any of the provisions of this Act shaa not be deemed a waiver of any applicable privitege or protettion. 7. The Act will also incorporate reasonable and appropriate provisions . to protect against the destruction of documents bearing on.matters of public health or safety. TOTfL P:?2
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or (b) by such comparsble index us{np idantiad methodolopy as Is ch0een by the F0A aMr notioe and hearirp. 8 tM methOdotoW ot the UnlveniRy of Mlchtpan Survey is herearter Gunped In a materfat manner haa lhat employad in 1 QOb-9t# (inolyairy by ohanpiV the states or regions on which that Surveyy is. batbd), Ihe FDA shaM use the peroentapes measured by en indax &a6n by 1t aRer noRloe and hearirg hsvlnV a methodo"y Identical to .OW en*byed by the UnMersNy of Mbhipan Sun+ey In 1966-96. For smotceless tobacco produd use, Ihe FDA wiN calculate the averaqe, vreiphtaE by nlatWe poQ*tion of such ape proupt b 199b as detenrirwd by the U.S. Bureau ot Cenws, ot the perosntaSs of Sth (ape 13),101h (apes 14 ard 1!) end 121h pnders '(aDa 16 end 17) who used anoketea tobacco produds on a dally bash'tlurhD the preceding year. This c.buWion is b be made uelrp tM earr» methodoloqy as wlth respect Oo otparotbb produot use. Any dats underyinp the Unhrereity of Mirhlpan Survey shaA be avaYable by request from FOA. 3. Tt+e redudlon requlrements (emrasssd as ndudbn from the base peruentaye) for cigarette produots are as tolbwe: Y4lt /{/Ser Enactment yean 5-0 30% reduodon ye:us T-9 50% reduction yaar 10 (and 60% roductlon therealtar) The MQuctlon requtnaments (eqw"sed as r.duodon from ths bas, peroentpa) for smokeless bobaooo produots are as bAowe: Y4ir After EGlghWnt years 6-8 25% redudion yean T-9 35% reduatloft -52-
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5. AMr Pay*M «Its ehare of tM tumharp., a tobaooo produot manuhctuW mey uek hturn ot up b 76% Ot that payfnent throuph the abatement prooedures desMbed below. C. - Use of the Suroharye The Surcharpe funds wovld be used in an manner designed to speed the reducdon of the levels of underage tobacco use. Upon Anal oompledon and Wew of any abacemeM petltloe, ft FDA wosyd ban:hr as yranb to tt* and bal pomurwM publo heft sWwa, wMout furtMr pppropriatlon, 90% of al moniM pdd ss 8ufcharpe amouna. . • 11The FUA may reWn up to 10 peroant of wch 8uroharpe amounts Ibr Admtnbtratlw Cosb - tM a~abon of ft 6u<dherqe provistons of the Act and relatbd prooeedinps, and for otlwr admin. IetratlYe requtremenla tmpoW on the FDA by the Ad. • U 10 pereent of the Swdurpe amounb exoee$s ft Admink*atlMe Co.b, the FDA naq+ (1) Mraf.r any porUon of ft e.xoea b olher tederal asenake, or b etak and boal qovenunad aqenoUe,1A meet the objedNe of nducdon of youlfi 1obOqgo.usap, or M may eVend such amounts dir.atly to speed 1he reduction d undenpe bDaooo uss. As a oondltlon of such transfers, the redplenta of ih. brentfernd .. funds wouid be reQuind to spend 1Mm on additlonsl Nfab by state and looal OovemmeM aqenda, or by oomr,aot bei~ suoA aDendes and pAva/e endtles, to Nhher rodua ths uee of bbeooc produab by ohiidrsn and adobsoenb. 0. Abatement Prooedures Upon payment of Its eBoable shan of uv 6un:hupe. t tobaooo product manutaaturor may petldon the FDA tcr an abatement of ft iuroMW, end s1aN 9'sve timely written natlcft of such petltloe to the attomeys Sen.rw) of the sewril statea. 1. The FDA ehaN aondud ,• headnp on an ababnwnt petltlon punuant to !he procedures sat toAh in seotlons 6%, 5S6 end 5ST of Tltla 5 of the united States Code.
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othenNse spacfbed In this Ad. judicisl reMew, under this Sect{on ahall be powtnad by Sectlons 701 •700 of 11U. 6 ot tht UnNaa 8tetea Code. No stay or othsr inJunotiw MNt RnjoGtiinp bnpolltion of tht MMnhotO pend4rp appeal or otJtierwlse nqy be 9ranted by the FOA or rny cant No appeal may be takon trom an #pency dedsbn denyfnp a p.Iriion to release and dksbume a WUhhold Anaunt unbsa liled wlthh 30 daya ft0owkq notloe of such daoisbn. No stay or other injur*4 neqet,'lnJolnirq 1mPotltlon ot ths withhold pendlnp appeal or olhOnabe, my be granted, by uy oouA or adminictrstivt aasnay. Appeab Akd herautift shall be mads IC tla ollhfCt of Cokunbla Circuit Court of Appob arid, on appeal, shd 0. 9memed by the prooedural and avidentiay provWiom of the AdminishMtlvi Prooadura ft unlaaa on,enMse speaAsd in this Aat The Wpmant of the Dlta+a of Ca,mtibia coud a Appeab on appeal shaN be MaI. 42•
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In oontraband producb, to FDA ehaA take Into account the number of dependent tobacco produot users .nd ths evallabiAty, or lack thereof, of alternative products then on the market and such other factont as the Agenay may deem relevant The authority to require such product modification can be exenlssd upon a showing of "eubstantiil evkienoe" based upon an admbdstrative roeord devs" throuph, e MnnN rule making subject to the Administratnre Procedures Aot, with the right of judlcial review, and any such modilioatwn shaN be subjed to the cument prooedutss of the Rpulatoty Reform Act of 1QOa to provide ttme and a prooess for "rep to Intervene should It so *wose. In the event a party subsequently fpes a petltlort seeking an adminbtrattve review of whether a modlnoAtlon has, In hct, resulted In the creation of a sfpnUWent demand for oontrsband or other tobaooo produds that do not meet the wfety standard and FDA denies the petition, the petldoner ahall have the ripht to seek judlytal review of the denlal of the petitteon. Additionally: •. WRh1n one year of to effect)ve date,of thie Aot, the FDA / sha0 establish a 8dendfio Advlsoty CCmmlttee to examine J and detennine the efhcb of the alteMbn of.nkootlne yield levets and to examft and detemihN whsther t4Nre is a threshold bysl below which rllooft yblde do not produce drug dependenoe and, k eo, to deteKnMe that tevei, and abo review sny other safaty, dependence or heW ItuN so designated by FDA. • Separate from and without detradinp from the Apenoyh sutl'torky under the requirements of the Section 514 Perfonnanoe 8tandard `noted above, oNeotlsn ttiroe yean trom the date of snaoMeM of thlt Ibt, to oiqsnNte shdll be / aokd in ihe UnMed Sbtiee whioh exoeede s 1Z mp'tar yleld, .~ usinp to teetlnp matlhodolopy now beinp used by the Fedaal Trade Cornrnieelon. 8. Atter the inttlal twelve yex perlod, the Apenoy wlq be pennlt<ed to eet product eafety standards that go beyond the standards k is authorized to set pursuant to the above noted provisions and. H R does so, any such ptoduot Performance Standarda shap be governed by the fopowirq: TM Apenay wil be -16-
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TitJe IV; Nationwide Standards To MinhM=e Involuntary Exposure To Environmental Tobacco Smoke Until now, there has been no rninhnum or other tedennl standard Qoverninq smoking In public places or at woAc. The IepislYtlon woutd; • Reatrlat Indoor unokinp In "ptibib faOities' Q.a., any buNdkp t~ °<,,-P" ropulaAy entered by 10 or mon individw;b at lesat one daY per week) to ventilated areae with systems that • Exhauat ttM aIr dicsotly b the outside; - Maintain the rmoldnD aroa at'neqatlve preaure' oompared wIth adJokihp anas; and - Do not reokadaba the air Inside the put;dc tactnly. • Ensure that no ompbyet ahaM be roquired to enter a designatad emokSnp ara whiis smoking is ooouninp. Cleaning and maintenance work M a designated smoking area ahaA be conducted vhile no smoklnp Is ooourtinp. • Fxempt reataurants (but g2 'Faat food" reetauranb)' and bara ftd&p tt;oee In hoteb), prlvate dubs, hotel puest rooma, casinos, bingo parlom tobaooo merdhanti and pri.ora. • Oireot OSHA to iaaw, not M~ar than one ye.r a(oer the effeatlvt daa of the kqwdion, rs0utatloM tntpktnendnp end enfordip the peeoedinp.tandardf, Meith oMaoemerrt ooata paid out of the Industry Paynanta. The tmoldnp roatrlatlona outl'u»d in this Tltle would take elt.at on tha tht anniveraary of Ihe enaatrtient of the lepkla4on ' •Faat lood' restaurant means any restaurant or chain of restaurants which prfrtwiry distrbuaa food via antomer pldcV (ellh.r at:s counter oa dAw- throuph windaV). In aAdltlon, OSHA would be authortaad to huu roqulatlona olarayhq thN dolinifion 6o the exlant necessary to eracae that the InOendaO incfwbn ol.bWetwnb oatarkp farp.y 1o minat Is aohNwd. My such regulation may consider such taolon as whslher a nthunnt aither hat Nradwd pFaygrounda or play anaa for chiidren. uses ad aimpaipra that feadxe or promtnsntly Indude cartoon chanoter. .ndlor toy Olverwaya or adwrttaea 'happy ma.P or ott;er oomparable kida-combtnatlon platters, and other factors OSHA deema rNovant J A Op J 1~
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GLN.y..RCI.L.CY.SOoZLW M eW OM P.1"Z FOCA (21 U.S.C. Seotion 3aQd? ahd be petmitted notwlthstandlnp 21 U.S.C. Seetiona 360t, 352Q) and 380h(e) 4, Reduced Rkks Products Products sold that an obJectlve, reasonable consumer would beifeve pose less ot a health risk: • Tobacoo product manufacturers wiu be baned from maklnq otairm that could njaaonably be herp*ed to state or heO a roduoed heakh riak untesa tha manufaatunr damoratratas to FDA that the product sdendfioaNy does in tact 's{pnplcantly reduce ths ;tlsk to heallh' trom ordhary tobaooo producb. Currently amploy.d produat descAptora such as 'GphP and 'bw W will be reputated as descdbed in 1(q) above. • FDA would have to approve aR heahh daims (dMeot or ImpAsd), as wep as the oontent and placement of uiy such alalms h advertberrbnts, to praveM 1ha puWl4 Yran belnp misled and to prevent tha adveiftern.nt from belnp used to axpand, or prevent the oonCactlon of, the marketplaoe. • For 9eas hasandoia tobaooo produda', FDA wIG be authorlted to pennit :oieMilk*.bsead spedAo heellh *1ma -and to penM exo4ptlon. m th. adverGtinp reetrictlona 1hat.appty to oth.r Rniduots If FDA detanntnea Ihat wch , adveMft would reduoD hann and pronbta the publo heaNh. Ths FCA wAl pnxnulpsbe a Me to govem how theas deiartranatiaa wll be mede. The mamriacbmts wiM be nquirod to tiody FDA of any tsohnokqy that thsy daveiop or aotlutre arb that roduoas III* rbk trom tobaooo prvduofs and, for a cocrMroldy roasa+ebte teeo 10 aoq loe"e d such tschnoiopy, twt only 10 ttate 4ompanla! Sbo oovK.d by the aam. obipfons. Prooedural prolectorn wlt be buit ln b reaobe Acen:e tee dtwulea, U itM privats paRia awiot s,Qre. anora ftneehros tkat MtM Molwrolopy nporMd b 1M FDA 1. M thk early deyslopment stapee, V» mwdxkmvd be pmvided oonifdentlalky • Proteotion durrg 1he dswlopnW proass. The Apency ahat also have 1M auQwdty marKaEe tnhoduotlon of Mas haxardoua lobaooo ptoducb' tedviobykay ftesAla, afbar a iortpat Me makkI wb)ect to the AdMnietatlw Prooedures Aat CAPAJ, wilh the ri2ht of )dlctal teview. In doinp ao, ~`,-;,,•.y,. ~"~ Ike LJ... ~
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a:z1 asC.K,OI,.er,sM,oa 2ax eea eeea P.sirrt 4. If FDA detam9nas tlwt an Indian trlba doaa not qua* 1or lraalmant as a atabe. FDA wfq dkecby adminbter Ite roW licensing propram, or may deftate aAh authotrty to 1hr ateq. C. Tobacco Compansatlon And Public Health Gr.rtls 1. A poAion o1 ft settlanwn{ funda to whbh a ahta la othwaha eMltlsd .haN be paid to HH$ fot dlabibutlon to ihe lndiln tribaa wliOh haw boen oectlAed by FDA for lraatmeM as< SUM. Tha Apxla, b ba paid tor auofi pwposaa on behalf of MW lrba alialf be da0amh~d by ft pnDpottlon of npMAtad tribal mafMbata raid.nt on ft re»n+ation to tha iotri popuhtbn oi ths W1e In whtoh 1M 1rb N Iooalad. TM lunda to ba dlebibuad W IndMn fta shall ba uaad fa the aeme purpoa,ea aa thoaa Amda aro b ba med.by ft ttal/d and be aub)sot Io 1ha auna compNana nqinrrdtnb for nehA qNa to mUors as are the ttatw under the A& 2. 7hs Deparbrrent of HeaNh and Hunan Se(vbes wft annually pay to ths 9ovaadnp body ot aaah lndien triba Ib sh~ra ot tlht tunda for uaa undar an FDA4pproved plan 4ftar arnnW aattlKoation by FOA, unda the aama standards that ap* to ft Sfata, lhlt the Indian Wt! is in oaKnptianoa wdh the requiremeMs of tha Ad and any applabte roaulatlons. 3. B HHS doea not Mribute sA, or a portion, of an Nblan frWay Wn of tfift funds In any given year bafta. Uw bW has not qualilied under ft bama of ft *edbn or haa not ntat tha oonipYaroa rsqutswnenb for reW aba to Mnon, ttroq fundt wIM be diablIANd W odw quaNAed Ubaa !n 1M aamm abdt tor tlo arno pwpaea and on the aame praportiorW baskt leat tl» nornqwWl.d bb.'a poputatbn, as oTher astdement MWa aro to `be dlatrbNad to tl+a tribea. D. Obpqabons of Tobaooo ManuhoWnm 1. Tobacco manufaftan ahM not etwo In arw dati,Aly cn kfdlan . kmda subjaat to ft Act whbh acihAly the manubdur.rs may not aRhenNaa do wl8dn a 8tab. 2. Tobacco nwnufavdxais also sorsa not b fal ~oi»ooo produds ior manul'achxa, dhb6utlon, ot Wa to an Indim 6ft, a.b a manuf,olursr, dbbbuW, or rNaN aaNar aubJect 1o ft JuhdbOon of an Indian bbs, a, ccapt under the aams femtia affd oondMons aa tln -47-
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i5tee a.aaci KEu.EY .50tWCi 262 000 8000 P.48~"t Appendix 11 • Retail Toblicoo Product 31INrP,nOItlM ; 1. Thf sale of lobaooo produot• b oonswnOs'by an un0oensed asMr shan be a akmin.l vioWbn, ud be SuW to minimum p«nalty of stAoO, or impriwnmenk tor 8 months, or both, M an Indlvfdud, or !n ' ft case of a oorporoUor+, by a awdnwm pcnally of $60.000. Any stabs or boaf Jurbdiaion may provfde by srilute or cods mon aevere penaldss. 2. In addition to any aindnd psnatRbs wlkh mmy be impossd undar any applloabla stab or loocl law, d boboooo product loenses may bc wbJsoead to otvl sarbbont, kroMxpnp puroaltMs, or iosnM sutpenslon or rovoatbn (oo d sib.*%+Me bfft or a oombinstlon thersof. for any vtotatbn of Ih. pmWm.or Ihs fttt HoenaUp lewa repaniirp sales to mhart: Such sandlon iMM not exobed thft foaowin0. (a) For the tlrst ofrem wMhin any two year perbd, t500 or a $ day Ibsnss suspension or b*. (b) For ths seoond ofhnss wifhki anY two year period, $1,000 or a t day Rosnse suspwnsbn or botlt. (c) For the Wrd oftrns wllhtn.ny two year period, $2,000 or a 30 day losnis swpau{on or bolh. (d) For to fouAh oftsmt wilhln ;any two yew pWW, $5.000 or a e monlh iarae swpmtbn or both. (a) For -ths ft oftu wpNn .ny two yeu psrlod. $10,000 or t ysar lioew swpension or both; (Q For IM sbdh and any wWaqtNM olbnsa wofi ury two yew peAod, i'ta,ooo or a rsvooa0on of 8oerno wNh no pos~l~r oi ~ ta s perbd oI thro. y..rs. ` (4) Psm*nsnt ioen:e tsvocatbn N nnndatory tbr 1M Wdh oHerns wilhin ary two ym p.rbd.
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inprsdienCe safNy, and If FDA takes no aCtlon, the kprsdhnt Is deemed approved. FDA may abo chatkW any manufacturers assertion that an kqredisnt woufd be exempt from disdosunr to consumers undet : appboabk roputatbnt compaMbb to what current federal law requires for tood productt. New ftrodfanlt or use of ourtent "midientt beyond the apeaitwd maxirnum amount are eubJect to a companble process prior to usa. • FDA wouW be oaquind to proteat at wfotly oonlidscdlad ingisdOsu~. If not tubjeot to such dlsdosuteiMomlat~ d will be troatetl as trade aecrob under ledsral taw, exempt irom FOtA requeeti and proteded by prooedura whlch shal kndude the deaipnation of an ayent who will ston M N a lodced cabinet, mwftinr record of any pereon who has aooeu to the Information and roquYe a written oonAdentlaft oanmlmsnt from any such person. • Manufadurora would be required to disdosa to the publo fnpredkt* information pursuant to ropulaUon; oompanfbb to wt-at current tederal taw requires for food producb. Qutinp an tnltlat 5 yaar perlod. each InprodieM that would be exwnpt from disclosure under the bod repkna wautd be proaumad not to be aubJaot to disclosure unless FDA disproves Its sdely. Hcwewr, morKdocturem would be required to disclose all Inprodiente whlCh they have been compeMed to pubsdy dkioee with respeot to a paAicuMit txand 'in otdw to oanpy with a atahbor roputatlon (s.p., MAGh 41 P M. • htanufacturoa would be required to hm prooolune for to selec6on, teeft, purohaie, stocape and use oflVrodienta. The Ikt would: Provfde for record hsepia0 resardp-0 inpredNnt; • Allow FDA aooeaa to such reooads, with protnatlon of propriebNry iMormation iSouroelprooadent: MA Chapter 91, 53078; 21 C.F.R. §§101.4, 901.106, and '101.174; 18 U.S.C. $1905; 6 U.S.C. §3S2(bX4); MA proposed rep. 105 c.M.R. §aIMsooRj -20-
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2. The attomeyr general of thp awanl atata ahap be entitlea to t» heard and to partkipste in euoh a haaft 3. The burden ahal be on ttN manutaclurar to prova, by a preponderance of the avidenoe, that the manutacturer rhould be granted an ab'tement. 4. The FnA'a deMon on whether to grant an abatement, 1nd the amount thereof, N any, shall be baaad on whether (a) The manuhcturat tus acted in pood taMh and in IuA oornpAanoe wAh the Act utd any fGA rula or regulations prortuApaW thereunder, and afl appNcabla taderai, etlite or tooai laws, rules or regulations; (b) In addltlon to full oomptianoe aa set torth in (a) abova, the manufadunr has pursued ap reasonably avaAabta . msaturq to atttln the nQuM teduotio* (o) There is avidenoa of any action, dinlat ot indinect, taken by the manufacturer to undem*w the icftremsnt of tha required reduotion: or other tecma and objedlves of the Aak and (d) Any other nbvant evlCenoa. 5. Upon a MdMp by tha FDA 'that ft matwtaobuer meati the grounds for an abatement under the atand&nia aat forth abow, k ahad order an abatement of up to 75% ot the Surohaw with kiterett at the averape Ur,Kad 81044 32-Waeic Trtpury 811 rata W the period batween paytnant and abatenNnt of the turoharpe. The FDA may oonetdu al retevant avidenca i<i detenNnlnq what per- oaMapa to order abatid. 8. My munrEtotunr or eta0a attomay qeneal apprtavad by an abafAmrnt pNNion deoleion of ft FDA m* teNt judidat review ttWeot wOln 30 daya M ft UniEad Stada W ot Appeala tor ttte DWtiot of Cokrnbh GrouM. Unless otl»Wba ipedMd in Nb l1at. judieirtl rwtrw under this alaoUon ah42 be, po±»rned by teotione 7a1.7G8 otTltle 6 otthe United States Code. 7. NotvrkMtandlnq the toroqoicq, a tobaaoo proAud muu,hatuntr
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.J~-GU'L:D• O' (L b..q]c 1 r.EU.EY . ScXRSAG 202 e0B 00aa P.46M Appendix 111 • Appfioadon to Indian Tribas A. Applloatlon CtAat 1. The prov>8'ana of tha FOCA, thft rogulaitoni oI the FQq, and the Act mlsWq to the manutacluue, dfaMbutlon snd Nb of tobaooo producEt shaN apply on Indian lands u.d" fn 18 U.S,C ¢1161 uid,on any othec tn,et lande cubJeat ~ the Iui~diotlon of on Indian UIb4. To ft extent that an Indfan 1r11* enpapea In'UM manutaduh, dladmNon or sale of tobawo produab. the provisiorMt of ihb Act sheN ipply a such abe. - 2. Any fedennl tax or fee impoaed an the manuhctuns, dimAyAlon at eale ot tobaooo produca shar M pold by any Indlan tbe enpiged In such actMtiea. or by per.orn enpsped fn such acihAda on such Indian lande, to the tuns eM euoh tax ct tee appNp b olhar penon' under ft tew. 8. Tdbal Programa And Authottty 1. For the purposes of ft proNWm of thlt Aqt, FDA la authorited b tneat any tedesely{roopnit.d Indian bbe .q A sM94l end h aulhaized to provtde any suoh Uibe qrant «t)d oontract a=elahna b carry out the lioensirg and w0mornent tunotlon: provided by ft seWon. 2 Such Veabnent ahaa be auarorfaod only IF ~ w (e)betant~al posrornme ettal powen and dutles, «~ ~ (b) the huurotiona 1o be exeroiad by 1M kblan tdb! undK ft esoft pettNn b aaNANee on tnat landa wMNn tlw Jurtadkoon od the ti'b; and (0) tha Indian trtbe ls roaaonaby expewed b be apabN a auryk~p cut the rurwllone hpubed wber n,b Aat (8ouroe/premdent Clean Ak Ad 42 U.S.C. J7801(d)) 3. FOA regulations which eetebhh ' tetN floerqtnp propAm ahd eppy on Indian wst landl, end each trlbe'e proW.m ahal be no Isp strlot than ttw program atlhe Sptt in vfiidti the trft is loo.led:;:
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• A roquiremmt tA diaftution of tobaoao, produtts for rossle to consumers be made ony to Aoenaed entlties ° Uoensin5 fees to oover the adminhtrativs oats of issuing staa licenaes (sA other costs covered as noted abow) • Comparable federal Aoensing progntms (wNh federal en/orOemeM) for mllttary tadUtles, U.S. government lnttaAatlotis abroad, and vRher U.S. tenltorbs and posaessio4 not *erwiae under the )udsdktton of the States (induding dutydree shops wtthtn U.S, bordon) • Comparable Noensing prograrm 1o govem toboooo pr'oduot talet on Indian lands (In Appendbc Itq (Souroelprocedent: Various staSe Iswrs governing =aabs of tobaooo products and aioohol'ia bsverefles) E Reputaatlon of Tobacco Produot Cwelopinent and Manufachrring This /egielation, for the Gr:t time, would Ynpose i nqulatory reglme to govem the deveiopment and manufa&dng of qparettes and smokeless tobaooo produds. inoluding FDA approval of ft Irqredbnts used U such producta and knposib'on of standards for reducUg the level of osrtatn oonsdtuentt, inckAq nbotine. FJernents of the reputatory repime wouid kwlude: 1. Tobsooo produots shal have the same dsfinAlon as contained in the FDA Rule. JurisdMon shaM alto oovet RoA Your Own, Uttls Cipaus, Fkne Cut, ft 2. Tobacco wt# continue to be aftgortaed as a 'dng' and a'devloe' under the Food, Ong end Coanetio Aot rFOCAI. 'TM Agetwys authorqy to regulabs the producb a°rsstrfc~e0 medlost dw1oN' wYi be expidly noogNked vnd tobwoo ptodu~olt 1MM bo obWM.d at a nsrr wbcabegory ot a Clat a dwioe purwsnR a 21 U.S.C. seaUon 380a FOCA shsr 5ppy to these produw at praAded by tfie Aat and the amsndrtwts lo FOC/1 contained haeh 3. The Class 11 clafsMbati0fl sMl pefmlt FOA to roquire product modifioation of lobaaoo produals, Mt'dudi<p 1hs ro5uletlon of nboNna oornsnt, and atwl provlde ttart the aate a loboooo pmducb to adults in the form ft oonfomn to PeAonnsnod StMidartls ostabbhsd ior tobaooo praduob putsuant to Seatlon 514 ('8sotlon 514') ot the -13-
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. _ w cv+J•. ncu.L { ~ xh'.LU 2B2 00a @a00 -,.a7/r2 • Provide new and flexible regulatory enforoement powers to ensure that the toHaooo Industry wortu to devetop and tntroduce 'tess hazardous tobaooo produ(%,' indudinp, tamong Othar thinps, vestlnp FDA with the power to regulate the levels of nbodne In tobaooo producb. • Requiro the manutaatunNa of tobaooa products to disclose aM Prreviousty non-pubUo Urtemal laboratory rpaeuoh and a1 naw internal laboratory research qenerated in the future retaft to the heahh etfects or aatety of their produoct. • t:stab6sh a minknum fedepd standan! wMh tough rosaktions on arnoktng In pubio piaoes with enforoement funtllnp from the Indusby Payments, whAe prroaervkg the authority of etate and bcal governments to enaot even moro savere standaals. • Authorize and tund from Industry PayrMnts s $500 mAlbn annual, nationtl education-oriented oounber4dvertlsU+g and tobaooo oonbol oampafpn aeeldnp to dleoouca9e the Wtlatlon of tobaooo um by dOren and adolesoelds and to enoou"e ourrtent tobaooo product usera to quM use of the ptoducts. ' Authorize and fund fromindustry Payrnents to annual payment to ap States of signKcant, or4otV 1lnandel oompensstion to fund health bene8ts program expenditures and to estabish and fund a tobaooo products iabi6ty MdNnsntr and s.tNornlnt fauid. • Authortre and fund from Induatry Paymenb a natlonwide propnm, _ adrtkstared Uxouph State povsnxnentt and to prtvati seotar. of snakicg oAssation. The sale of tobaooo produets to adults would remain legal but subject to reshlctwe rtaawrot b ensure, that they am not to10 to undsraps pudasen. 'theae nteaeuros respond directly to ooraemR voioed by fedenl and sbte publo health otAc>ata, the public heath communMy and the pubAo at 4usp lhat ths tobaooo induetsy should be sub)eat b t#>• ttrioteet soMlny and requ4atory overaiQht 1TThis atatuEe inpoaes ragulatory oantrok, Indud>np dvl and ortmintd woffis, equaf tio. .nd in many ~espects .exoeedinp, .thoee knposed on other regulated trdustri.a. Futther, d Mnpoas on bobaooo manufaeturan the obigatfon to provide fundinp from Industry Payments for an army of pubio heaMh InMlatlm. The sale. dWWbution, maketlnp, adwrtlsinp and use of pob.aoo produds are acMies substantialy, aNeaUrg inletstati oommeroe. Such ptoducb .3.
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Appsnd4x N - Industry Assooiationt Wthin 90 days of ths NtscM data of the Act, the tobsooo produd manuhatunis shaN disband and dissolve ths Cound br Tobscoo Raldaroh, U.8A dnd the tobaooo Instihita. In addltlon, with rosp.ct(O any new tridi atisooisttona: A. Tobaooo product manutaotumrs may tonn or paNdp.ls h aq nwr tobaooo lnduity trads assodatbn, My such nwv bad. assodation ahap have an kidapdndent bOd1d of dMeftfe, in aooordanos with the toNo+Mrg tpv~rtb:' Rat at Naq 10 yrsn after the fonmartion ot ths new a uootdbn, a mftnuxn of 40 puoad of the dtreot4rs, but at knt `ww dirsdor; ahall be otha thsn a cumant or tom+.r d'irncto6 omw ar .mployMt of uw taoobUon membar or afMlated oompuiy. ` No otlur dkpctor of s new trads assodatjon msy bs, at tM sun. *n.4 d dh*t of any iqoOiMion msmber or afMated oompany. TfwoMio.ri sbaQ b. appoYM by the board antl shafl be smploysa o/ ths ss6oolatlon, and duRrp th.M term shaM not b..mptoy.d by any aqoobrtion m*mpir or affted oonipany. Legal counsel for any such nsoobtion shall be Independent and not senro as bpa) ooullN) to any association member or.fUatbd oompany whAe counss{ to 1M a»oWadon, B. Any new tobaaoo produot manufacdunn' traC. sfoabtbn shaN adopt bydev» 9oveminp the assoftOon's prooedutea and ttn adhrl8es of ks nwmb.rs, board, Wpkry.es, 9" and otMr repraasntathrs. Ths by4aws shaU Mdud*, *monp otlar itAnp, Provisions #%at (1) msmbsrs who arm oor"titort ln tlro lobaooo induaay shaN not mest on tM anodatbn's business axoept und.r sponsorshlp of ths assooiation; (2) .vsyr boud of dkeCtqt mwMl(p, boMd ttta oomrt,l>Rets. n,e.tl~,p, O.n.r.~ a.odaton or oon+n,itbas msNkg, and any ottw aseootstion sponsordd mMtlnp, shtA proosrd undsr.nd strkdly adh.ra to sn aga+d., approved by lepal couneN and chaulatsd In advanOr and shall b(3) rapu.~for ap s ~udht~~ and shal b a i kita the assodatlon tor a p.nod of a y.an. r19.
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their atatas and oommuMda. In oreWq the ProDrem the Secr+at.ry or Indeprdant body ahaM tke tak. inao oooount the nteds of paR/oular populations. The goal shaq be thenduotlon of tobaooo product usage, both by •esklnp to disooura" the inltlatlon of tobaooo we by penarK under the spe of 1 S and by snoouraqlnp ourrent tobsooo us.rt to quh. (D) Tobaooo We Cessation - For the flnt 4 yeum, $1 bANon, and thereatter, $1.5 bNqon of to total amount pald by the bbaooo indusfry shan be pqid kft a Trust Fund to be used to aalst indlAluilt who want to quit Utkg MQOOO to do so. VVUt*n 12 months the Saoretary shaN pron*fb npulatlont to govern (1) ths .sb~t of criteria for and a prooedure for tlN spprova) of oeseatfon aro~e3p r.au~i~~as for torw`~`aa s~ ~na~tteye tr~om~d+e a~wt t~o fund the tobaooo oessatlon atlarts, and (3) the Prooeduros to povem the tbbaooo oeaaatbn program. . Ths goal of to t,obaooo oeuaBon proaram shaN to enabls the most tobsooo users posslbla to teosivf atukttinos in thetr dott to quit using tobliooo by providing tlnandal assktanos and idwOyGg tho programq, technigues, and devfoss that have beso shown to be satt and atfiotlw. BMeft to IndtNdueM shouW not be &nlted to a single eAoo, but should be talbred to the needs of kdArtdual smolcsrs aooadirp to ttandardt etlAfthed by the Seaatary using Ihs 6est ava9abM scientiQo pufdeUm. (E) PubOc Hab Trust Fund Pretiderltlal Cqtmlafton - A Presidential oorrrrdnlon wlq be appolntsd to kiduds »pna.nlabtves of the pubqo hsaMh oawwnily, Att.ornays t3eneral, CHU aqan" and othem to datarmin.lhs speoiflc lobaooo-rslated medical researoh for whioh the $26 B1qlon Pub3o Heath Trust Fund w81 be used. -38-.
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~• • Nc.,.c r a.,nwu 202 000 @@0@ P.2b/l2 7ITlE Ii: "Look Baok" ProvhlonalShts Enforcement inoentiva A central afm of this legislation is to achieve dramatb and immedfate reductions in the number of underage consumers of tobacco produota. The legislation accordingly contains a'IookbadP provbbn pivin2 tobdooo product manufacturers significant economic Inaenthros to take -ewry possible etap to ensure that the adveR1a1n2. marketind and disalbutlon requirements of thb Act are met, and tmposinq substantfat suroharges on the manufacturers In the evsnt that underage tobacco•use reduction targets aro not ao?8eved. The look-baak' provision sets tarpets fior the dramatic reduction of • current levels of underaqe tobaooo use (a measund by the UM+rdtstty of Michigan's Natlonal High School Drug Use Sutvey "AWitorkq the Rutunej. Underage use of ciparstts products must decline by at lefst S atknn.d levels over the last decade by the fifth yeat after the kp :. takes effect by at ~ least 0% from esrinated levels over the lest decade by the seventh yaar sfter ehe Iepbtation takes effeat, by at lesat 60% from estlmatod leveb over the tast decade by the tenth year after Ihe bq'lls' tion takes eNea, tynd remain it tuoh reduced levels or below thereafber. (ltroae required roductlona amount to even steeper dedhee from current bvets of underage smokkfD.) Underage use of smokeless tobacco products must deo8ne'by at kast 26%ftom current levels by the flfth year after the legislation takes Nfeot, by at kast 36% from current levels by the seventh yaar after the legislation takes effiot, by at kast 45% trom current levels by the tenth year aftar ahe legislation takes.eflrot, and remain at such reduced ky" or below thereafter. FDA w8 ennuOAy aasses the prevalsnoe of underage tobsooo use (bated on the methodotopy employed by the Unhrersity of Michigan sum.y) to determine whether tl»ss targets have bean met. It a target has not been met, FDA wiq pnpose • naandatory surcharge on the relev.nt industry (otpareta or amokaNs= bkooo) based upon an appcoxMatton of the prroaera valw of iho proik tM Industry woutd aam owr th. Nvas of a1 undenape uaera In a=:: of the tupat (subJaat lo an anrwal ap of $2 bilpon for the dparatte indwby (a4ust.d e;oh ywir for Inilatlon) `and a comparaby derNed oap for the srnokeka tobacco tndus6y). Tobaooo produa manufsceuen could reaNe a partial abatemant of tfils surahaupe (up ta 76%) only if Uhey coutd thereafter prova to FDA that they had fuy oompAed wllh the Act, had taken aN reasonabfy available maasuros to reduce youth tobacco ua and had not taken any action to undemdn• ihe achle+rerneM of the requlnd reductions. -24-
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documents that the manufaaturers;' CTR and TI, based on their de novo review, continue to deem to be le9itimatey privileged against disdosure. • Itemite on this new prtvNege lop aN oi the descnptnre detaN that the court has required defendanns to fumish document. by-document on their pdvilepe logs in the Minnesota Attorney General adion, thereby ensurw% that there wiN be sufficient detail on the priv8eqe logs to enable any Interested person to determine whether he or she vrishea to dtialferpe daimts of privileQe or trade:ecrecy on any partbular doaKnents. 3. The Act also would establish a panet of three iederai,-Article Iil judges, appointed by fhe Judicial Contetenoe, to hear and decide an disputes over daUns . of ; privNeye or ar#de seorets, exoept for those disputes that already have been detelmined by other tederat or state courts at the time the Act is enacted or are pending in oases prior to the tkne the CouR has had an opportunity to bedin Eo review prNnege claims. ° The threeyudge panel shall dedde,ali privilege or traae serxecy challenges asserted by the :federal government the States, pubCC and private Ntlgants, health officials and the public vdth respect to tobacco 1rMustry doouments, • The Act wouid vest exclusNe federal jurisdktion for the thret- 1udge panel to dedde any suoh :dispUtes in aoooManoe with . ths ABAtAU 1Nodet Rules andlor principbe of federal iaw with respect to priwlepe eutd tite" Unltoom Trade Secreta Act with respect to trade seorecy. Any such adjudicaUon ahan be reviewable only in the manner pneeaibed by 2e U.S.C. (Soc. 125a-oeniorari). ' The panePs adjudioations shaN be bindlng upon all tederal and state courts in aU itipation in the Unned States, ° The panel shall be authorixed to appoint Special Masterti pursuant to Fed. R. Civ. P. 53, wkh the cost to be borne by the tobacco induaUy. • Once the Act becomes eifedive and the thre0+udg0 panel is appointed. aN disputes that may arise concerning privHeQe
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Appendix Vltl • Public Disclosure of Past and Future Tobacco Industry Documents and Health Research The legislation would ensure that previousty non•pubtic or oontldential documents from the flles of the tobaooo industry o indudlnp'tt» results of Internal health nesearoh - are disclosed to the iederel povernment, the States, public and private Iitipants, health officials and ft pubYc. The tptslatfon also would provide for binding, streamlined and eaeleretsd judidal detertn(natbna with natlonwide efrea In the ewnt that dkpMe< remtkl owr ft tpidmoy of otaims of prnn'fepes or proteotbna, IncludinD atlaney4nt pAdepe, and wortc product and trade aeaN protecNons. 1. Under the Aot, the man~AadutsR and CTR end TI would .sablish a national tobacco dooument depoWory that IM open to ft pubUc and located In the Washinqton, DO ua. 11As depoeiDory wvoutd serve as a resource for Otlpants, txib8o heehh groups, and anyone elae wifh an intereet In the tobaooo indWa oorporata reoords on the tubjeots of smohk>!p and healtlti, addbNon or nbotlns dependenoy, safer or teea hetardq» dpsrettes and underage tobacco use and marketing. SpeoiioaM}r• • The depocitory would inohide aN of ft doaWnenh produoW to the ottw side by thM nanAftaan,'C'!R and TI In tM Attomeya Oenersl actions (tnoludwp MI dooumsntb selected by ptainthFa irom fhe tiuUford, U.K npoelbory), Philip Morrls Companl.s Ina'a defamatlon acft apak>rt Crapltal C1tJeefABC fQewsv ft FTCs YweaqQalion oonoeminp Joe CamN and un4era9s nnAuqtp, tM Uki0! Wd SkOA! acoont< and ttte gla tatodon In MlstlplppL • In the ewat thene are addft ai exisdnq docutnenb disoussft or rehrtMp b health reaearoh, addiction or dependenay, sat.rMea ha:ardoua otDarbtlac, sWdlea of the amokinp habits of minors and tlN nMtloMhlp belween advsAlaUg or pn~~at~'~f+idrq that the lritnuh0bmers or uade tove :not yet o0rtple6ld producUq as aprs.d or requlh0 In'the abowe actlons, such additlonal docuenenb shall be plaiced In 1!» depoal6ory oonxnendnp wNhM !a0 drp of IM NlrotNe dabe of the Act, and oondud•rnq as aoon a pradioable ahereaftet. 44-
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Appendix VI: baa Entoroea»nt Inc.ntlv.s The d.aia of the state enforosment Uoenttvos dre u torows: tn addltlon to FDA and other fbderat apMaY, state attorney 9enersl and other existing state and local aw enforoemnent authotny under 4urrent law, ft propoeed Act Mqutros ft foUowinp: A. saas must tti.ve in .ft.at a`no ; satN to minoW hw provkiup that 1t is unNnd<rl ia any nauxihCtM, nstaiW oa dlettbu6or o( robaooo proOuCts to seU or dieVbute uty such produats to 4fry Wwom und.r ft "a a 18. (42 U.S.C. $300X-2a(aXU; da C.F.R. 6Sb,130(b)).: ThIs fbdo ftattreory reQuirement nen*k» tn addi6on to tM f.deral r.ptidatory pnthblfbns on r.td aatm of tobaooo produW to ddldren and adoksaana (aNo d.tped as penons und.r the aqa of 18) adopted by ft FOA Nr 8s Aupu.t 2e,1t" Flnft RuM (to be oodMkd at 21 C.F.R. §Q97.1d ld W.); 8. 8a4a must oondud randcm, unannounoed hspooyorq at least monihy, and h oonMNtlet Seoqr,phbAqy 04 11atistioW rrproWitiHve of the anNre ttaEQ and 8t yoWh popuhuon so ensutt oompAonos wltll tlu'ra ukt to rninots' taw, and htVlement 'any other *ction whioh ft state be0em srm neoessary to .nforoe u,ft lew.4 (poa furawr a,an 45 C.F.R. §9a.13o(c), 96.130(dx1),(d)(2); C. Saas must oonduct at bat 250 mndom, unannourvad lnspectlons of retaflet oanpe.nom wNh tha 'no iales to mhors• law per ym for .ach 1 mftn of natd.nt popuAstion, as deterrnlnid by 11N most r.oant d.oennist oensus. In the ass of ttDa,-.6ba mwt oondud no N+wr 8idn 25 such lnspectloru per bootlon of polnt of saM to oaqwom P.r Yeer, oonduoDed throu9hout the year. As a oonaition to r.oNrinp any m*Vya dw anQ psysDw punuant to the Act satee must anrnu* ahn* a roport to the FOA Mrq 10 Saoa niuet make tMU reporb pubio (.zoept as provtd.d in (0) bek* wft* tlre *ate. 8uah :bte MpoRS must holude at laat the foAowkp: A. A deakd dnatpdon off enbroem.nt aottvNss undertqken by the state and Its political subdWkxa durkg tha pnoadtnp tederal ffeo.l yaar
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x+.~c.a.i. 1. 5~ 202 e0@ e000 P.32/72 subMuent vlotadon of an inJunctlon enternd by the oourt In an action broupht to enforoe a,e Con,ent dea.. • The provbbns of 1M conmnt d.or+ese wfN rematn enforceable regardless of whether subeequeM danpet.M the'Aot or in any other pnovislon of law dMnlnish the obliyttbns of tt~h P oompaniss in ' the areas covered by tha consent deaees, exoepC (1) wheh such changes aoeate federel requirortwntt that produoe obNpeqone in conflict wth ttwq oontaUed In the oonMnt deqeet; (2) wMh respeet to the allocatlon of funda; and (3) wKh rapeot to warnir", labeling ana padcapinp. wan respect tio warnhg., MeBnp and padcaqlnp, If tlre reqtdrementr of the Act am IaEer modNMd, or N Conpreas auWequently pr"lts warnings on tobsooo produobt, the ooraent deoreee wll be modifted to oonfonm to euoh requlrenwntt. Howewr, if Congrssa hhr etknlnabet altooether tlhe waming requirement in ft Aot, the waminps origUtfly eet forM in ft Act (the eocaled Ceswdlsn warNm) ehap be mandated and enforceable under the consent decresa. ° In addltlon, thn parlbs reoopnlsp tTuat oertain provle{ona of the consent deorees and the egresment mby reQuiro them te aot (or refrain from acting) in e manner' ehat 1My mtqht otherwiN otatm would violate the fedetal or state aonsdtutlm. They wil thewora In the oonant decreee expreesty wafw 'wy d,kn lhat 1M provia3ons of ft consent decroee or ft apre~ violO fbe kderat os aaae oonat/hAiont. TM ooraent deoreee wBl also state that If a provision of te Aa ' covered -by the deoroee ie subaequenuy declared unlyonttltutlonal, the provision nmaha an enrorceaat>te am, ot nua oonsent deasee. C. No"artioOarinp oonpania • The repMe envlsioned by ft tesohrtbn woNd be subehftMy underad fi oertaki oompeMee wen fhe b tQnon tto 6nita0aw R impoees, and were 4ateud " b st1 bblrooo Pmduob at tOwer prbes (because " were not makkq the paymenN daoibed above) and Orouph bet tNhiobed sdvetdllnp and muiaMUq activi6es. The r4.olubon aooordb* antiotpstis the poeeibtYqr " eane manufaaturen of tobeaoo produi:b mey not oonNnt to tfw katltubon of thb reone. Rdher than seekUp to impote on woh manutacturon the adverdeinp rettrfcdoru. U roquUad p.ynenb and oorpora6e wNure ohafqes at for<h above, (he reeolubon -28-
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C. Moreover, under the new r.pime: 1. The structure, by-laws, and aothAes of tobaooo Industry trade assodatlons ahaN be subject to oontlnukp Ov.rtlpht by the U.S. tkparlm.nl of Justloe and by state anlitrust authorNlet. For d period ot 10 yean trom Ihe ctaadon of a new trade assodatlon, suoh aulhdrltlN ; may, wUhout Gmitatan on whatever of.ar dphts to aooem " may be pemnltted, upon reasonable pAor notloa: (e) have aoosu durkq tpuhr o(Aoe hount to inspaat and oopy aa booka, raoorda, rr»atlep .y.n" ane minutes. and other aqoolatlod dooumanb: ub (b) Interview ft assootaqon's `dhotora, oflloara and employeee, who may have oounSN prsant The lnspecdon and disoowry riahts provided 1n (a) and (b) above ahaM !M axarciNd tluouph #1 multl-stsl. Stata' Attomeys Oeneral ovwWt oonimlttea. Any doourtMMs and InronnaEioA provided to any ttaa dunuaM tio (a) snd (b) above shaN be kept oonlidentlal by and among the atatta and shall be utlqzed only for governmental purposes of eMorcinp the Act and anoihry doaunents. 2. In order to achievw Ma'qoplt ot ft Apmenant and the Act relatlnp to tobaaoo ua by chWren Ind adolooscorbo ta tobaooo product mWKIfa*m _ nay, notwMhtesrtdkg ft provisions of 1tw SMrman Irot iFN ttpybon /1at, or wny oihsr fedeni or stale anuonat ww, aat unNs , or~m.y johay oor.fer, ooordhab or aot h oonoM, for ~~y hited purpoaa. ManulaGtunn mutt oDWn prior approvat horn the Deputment of JusUoe ot any plan ot pmcats 1or ta" adion pursuant to ft eectlon; howewrs no approval ahd be requlrod of speoNic iolbiK I&M N4ooordanoa aA an approved e Srounds~for abatee»nt of any~surM b a n~wwh~iobun~e b tor fabure to maat tha hduc6ona h undarapa ~obaooo ua eontenplated h ft rosokAion and the Adt. 40.
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7th Year after year of .06% enadment of Act 10th Year alter year of 90% enactment of Aot and annualy thersaMr Theae oomPlbnce peroentapea are avreased ae the peroenlape of tho random, unannounoed oompusnoe ot*dca oonduoted ptxsuant 10 tme Aq 1or whkh the resaa.r rolsated aafa of bbaooo produds to t* poba" undetap. Purohuar. (no1a: Uim PMorrranoe tarpeb we fu more atrtrpaM on 1M states than thoae tn tha 8ynar NMnendmerd, whiCh sets sf a'4ina1 pod' 0 bnpg of no leq than 80% (LL an haPacdon fNura nAa of no mora than 20%) wift "amni yean." 8a. 45 C.F.R. ¢N.130. In sdditlon, `tla ProPos*d Aol'a tarvdb an mandatory, unMorm nattonat rnhknum pedonnanca requUemerrN, whRe 1FN Syn1u Amendmark oaria for MHS ahnply b'nepatlata" an Interim p8rformenoe brget" be0hnin0 in 199$). Reduction of Money AAoeated to Sta1e Not Mopq Pe arice Ta„oals It a alste does not mest Rhe Aat't "no sales to mhon' Perfonnanoe target fbr retal oomp6anoe ahedcs, Uwn !ha FoA may refuss to pay b that non- aomplykp atatie oerhh M" oOwnMu payabN to that stata wbW thM proposed Aot No state ahM be hefd reeponsbb for aala to underMpe oonwmera outalde thst sutt'e kuiedbtlon. 8peoiAotly, the FDA may wltNwld from woh abta an amount equd to 1% of moneyi oSMnwiss payabla /o.tlu! *toa undar ft Aat b defray hastth can.xp.ndWrat of ptt* proynms.ot.medba aeeirlenoe torsaoh Percentage Poh by whioh ft atate't Wvmuroe on es mVdaewy ooffphnos checka flaNk to rnsv the r.quU.d Parbrmanoa targets for lhM yeu. In no want may ft FDA withhold mooa Ihan 20% of the naney oB+.nvise albabla to such etaf,e utdet ft Aot fbr woh putposet. TM FDA daiM rNft any 1Nkhhaid JlnnouMsft ona 1hN. b sbba tlut axoeed the Ad'a P.rtwmanoa Tarpab, in amounb aAd by an doqNon formula dearmk»d by 1tN apancy b rawerd fhoN ahtea wNh fhe bat reoord of rsdudnp youth aooaa b bbaooo produab. Upon notloe irom tlu FDA ot a wllhtold of moneya (the "1Mlhhold Mwunn .aoo" to tM atMa under the Aot, a state autrjeot to such notioa of
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Appsndix YII . Restrktions on Point of Bate Adwrtbtnq follows: The details with raspea to point of sak advartnYq rastrfaqon$ ara as 1. There shaq be no Point of SaN Advartisin8 of tobaooo produoti, lxotudinp adu8-ony storos and tobaooo ouBets, except as provided hsrNn: A Each manufaotunx of tobacco products may tl+n not mon than twro separate pokM of safe awdr.rHsarrNMs In or at each tooNlon at which tobaooo products ara olruid tor iats, exoept ary msnu"urr wlth 26 percent of maAat ohrm mRy havw one Wtlonat point of aata adverds.rnast A rMaitw may have one tt8n for lts own or b vfiolesaferis contracted house rahller or prtvate {abel brand. No suppBer of tobaooo produob " eMar Mdo any arnnpemera wNh a rrbllar that lrntb Iha rqtaNf's ablQttt to d'ispqy ary krm of advertklrp or promotlonW matarW oA8ina8np wlth another suppMr and pertnilbed by lew lo bs dlsplayed at retaN. B. Point of Sab advettisamenb permitted tre* each shaM be of a dispfay area not tarpar than 8]8 spuara Inches (eMher tndividwltt+ or in the apprepate) and shai oonsNt of bladc tetxan on whlts baohqround or nsoo8nttad typoyraptaal mukR. Potnt of Sata advsrtbement: shaM not be attaahed.b nor looated wtlhM two bat of any tbesxe on which owndy la d4tay.d Ior aaJ.. OWay Rxturas< an pemtittad agra caairalnp of brand nam and prica, not Iqpsr tlm I Inches In height. 2. Except as provlded herain, Point of Satt Adva*kip sha1 mean att prinbd or qraphkat rratarhls bearinq the brand narne (alone or In oordunotton tvllh p~ud~IdendAa~w'oA idsr~ airnNrAb ot Id~bte, ~ thoas uiad for any brand of dparst#a ar sfnolaslasa lpbaooo, whlch, when wad tvr Bs Intended purpota, an tiaonaby be Bntidpatsd to be aan by ouatOrr>•ra at a tooation at which Wbaooo producb an offered for ak. 3. Audto and VOao bnnats olharrriff pwrtU4 under ttM F0A Rule may tk dbtrlbutad tn advlt oonsur»ra at potnt of aaN twt my not be played or shown at poBnt of sal. p.a„ no'statk vdeo dkptayaI.'
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Gaims by the mamufacturers or trade assodations retatiN to smoking and health subjects must be rasotved through thisz prooeas, except for disputes In pending cases that can be resolved prbr to the time the Court has had an opportunity to begin to renew pnvilege otaims. • If a dalm of privilege Is not upheld. the thr*udpe panel shaU consider whetlher the daimant had a.good I`dRh factual and tegai basis for an asserlion of prtvilepe snd, it the aairnant did not, shall assess against the daimant boats and attomeys' fees and may asseas such additionaf ooata or sanctsons as the panel may deem eppropriate• 4. in order to expedke tha prooess of judicial ravlew and to ensure that , the federal povemment, the States, pubBc and private litigants, heatth officials and the pubbo no tonper need to be oonoerned that daims of privitepe and trade seareoy are being asserted impropeAy or wiAhout legal baw the legislation would aeate an acoterated prooeaa by WNCh any puWc or private person or entity, sub)W $o a; rght of intenrentbn by any other intenested, person or entiy, may . chaAenpe any dairt>a of privilege or trade secrecy,befon3 the tltree- ` judqe panel, Under the Ad, a person or ent)tlr,Nft such an action bo . chalbnpa to privde9e or trade.seorecy'tvd not need to make any prima fade ahoHring of any kirid as a prBnequiske to in oamera review of tho dooument or doaxnents at isaue. 5. The manufacturers would also be subjset to certain continuing discbsurs ot>Npationa over and above the aforementioned provisions and wfiatever further judidal disoovery may be required in pending or future dvii acdona. SpeeiAcaly, for the first time ever, the manuiaoturers would be required to disclose aA odpknal taboratory tesearoh retatinp to the heaNh or safety of tobaoac produas, includirg, without rimitation, all laboratory research ratating to ways to make tobacco products less hazardous to o"uniers. • VAhenever such research ;ia parfoned in the future, the manufacturers shaM disdose Its results to the FDA. • In addition, aA such research (exoept for bpidmate trade secrets) shall be produced to the national doWment depository desonbed above. In addition, the manufacturers and trade ~t•
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year 10 (and 46% roduONOn therealter) 8. The Surchupe Wfisra the FDA's calcubtlon (per ft procedure tet foRh above) sho" that the reduetlon requirrmenb with Mped to ur4erps use of oipaMte producb were noc met In tt* preoedinq ysar,lM FDAwIN irnpose a w"e on tM manu• hdurers of aiparetie pro0ucts. Where ihe FDA"e aeaeament shows that ft Reductlon Requvetnenb wNh resped to undbrape ,usa. Of smokltife bbaooo proEucb were not met In the pn}oedinp yqrW fhe FDA wif Impose a surdarpe on the marxifaatunert of srnokeiess tobtooo producb. 1. The surcharge wb raspeot bo the of9arat6e UQustry we be cdlculated as to0awa: (a) The FDA wN the de%m*e tM percentage poht ailhrenoe betereen: (q the required peroenqge reduotlon appbeble b a 91ven year, and (n aye peraer"e by urtaoh nve pernarrt lnaaenoR of underpe va of oipanrtta produds for tlW yeu Is lets thart the base M+oldenae peroe+,rsae. pn the event that tM FDA'e cafCUlAlbn of th. pWoent Inddetft a underage use of dpenHle products for ehat yW ls qraahr tlwr ft baee inddsnoe percenhpe, the numb.r vl poroentr.0e poinb uted we1 be (i) the requMsd perombpe nduotlon tor tt* yeu pku (IR fM percents" by whtoh the_actuaW penm# inofdenoe for that year is preater fhan the base k1QI0enm per0enhpe.) (b) The suroharpe A be $0 mHon tor each peroenhipe point derN.d per the above prooedurn. Thb anaunt WMds an approzeratlort ot the prosent vatw of ft prolit 1M ofpltrNe MOuMy wow wm ow tM Nh of underaqe emokea In axo.a ot 1M rpuind reductlorr (at tanronA lewb bf poputabn. and proAq. Tfde caloulatlon wA1i be #ub)ed to the fopowinp: (1) the t00 mlqon vrM be adkatrd proportlonaley for peroentape ktiasam or deornaaes oomparpd wMh 19l6 in ft populatlon of persont relident In tM unlted Sbtee epad 13-ir, inctusiue. -53-
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VLS~K•KELLEY•$CRUM 202 e0e a000 P.4lrt2 funding, provided that the event, team, or entry Is otherwise unable to replace ft tobaooo Induatry sponsonhip durkp thoee phron y4an. Funds used for this purpose shak promote a Quk TobaoOO Use tlanw. AMr a ten year perlod, no . addkbnsl funds sMA be used for ft purpose and ft (undo previously apooabed to this purpose shall be used ae iollovrs: 60% to etpplemeM /undlnp of 1hb muW media campaigns In paragraph (1) of this aubsscNon; 25% to eupplement Ihe funding of the entoroement provislons of paragraph (2) oi this subsection: and 25% to supplement the fundin8 of community action programs ln paragraph (3) of this subsection. (8) ESTABUSHMENT OF PROGRAMS 8Y THE SECRETARY • The Seaetary shaM establish proaram to aooompAih the folowln8 Purpoeea-. (1) the reduolion of tobtiooo produq ut+tpe, both by BsNdnp to dboourape the inklation of tobacco use by penone under the ape of 18 and by enoouraBUp ourrent tabaooo uNn to quk through medWbased and noneWia based educatloe, prevention and oessation WmpalBns. '(M Secretary may make grants to state health departmente to assist In wrrylnp out tM purposes of thia provisbn. (2) the research ft and development and pubpc dissemination of technolopies and methods to reduce the rtsk of dependenae and In/ury from tobaooo product usage and exposuw, (3) the identlAoatlon, testing and ewkation of the health eifects of both tobacoo and nornWbaooa ooartituentt o/bobaoao products; (4) tho promulpWonft of atoh otMr rular and regulations as are neoessary -and pnopar 10 aury out 1hs provislone of thb A6t, aa we0 as the devstopment of such other proprame a tlo Seooebuy dehrmines .re oorabhnt wNh the 9oeb of tM /bt. (C) PubSo Education Cartpafpn • i50Q,000,000 ehel be spent annwtiy In such muMknedM obmpaipna deelpnod to dboourbpe uid d.9l.rnorlte the uee to tobaooo producb. To oarty out auoh eAorb, an InaepenQeM tanoroAt the rtapubio hesMh orpant~K creabd wbioh ehaA oonUaot or mata pranb to rahwollt pdvate entl8es who are umdfpW.d with tobaooo manuhctur.rs or tobaooo kryaoreers, who have a demon:trated rooord of workMg eflsothrey to reduoe tobaooo produot use sind expertMe In multl-medla oanreKxdaUoru oeanpatpns. The independent body shak be bulhoited to cormsot wkh state health deparbrnnta, where appropriate, to run oampaipna br -37-
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withhold mer petAlon ttK ayenoy for a nNeese and dtbbun4rtNnt of the YYdhold . Amourn, and shall pive f4ney wrhbn noda of such petlbon to the atEOmey peneal for that state and to tq tobaooo produot menufacturen. The epenoy ehetQ hold, and Invsst in interest beertnq eecur>tlss of the UnNid Stm*s QovemmerM or b a9encles. any WiUftld Mrounts wbJect bo e pending petldon for nekese and disbursement or related eppeal until final dlsposNton ot sucfi petMlon and appsal. In the oase ot peNflon by 6 slote for aMlesa Ind dbbursemeM of • VVRhhold Amount, tM a9anqh deoiakn on whether to 9rant such +e ptUtlon, and the amount thereby released and dlsbunedo it uty, sMd be based on whether. (1) the state has actsd In good fsMh end In fult oompManas with the Aat, and utiy apenoy nAee ot rorlaliorts promAated tlserounder, (2) 1M wbs has pursued ae.nea~onaby available trs*wjm to attain the Retail Comp>'iana Cheok P.rtortnana Tarpete And You1h SmoWrq Redudion Oaatie ot the Act (3) tl+ere is evidenoe of sny oction, dareot or kidlnct, Wun by the stah to undennine the schlemmnent of the RetaY Complitnoe Cheok Perfortnana Targets and Youth 8moldnp Reduclion Goals or other teene and ob)ecWee ofi the Aot and (4) any other relsvant evidenoe. Tfa burden eheU be on the state to prove, by t pMpcttd.ranoe of ft evldenoe, that the st+ts eho~d be granted a release and dabunement oI tfie VVlthhold Mnount or any poNon theraof. Prior to 4ecisbn. the epenay &W hoid • haarinS on tM p0on, wlth notloe end opportunity to be hwd 91m to the attornsy oenent ot tlhtt stab u4to aif dontestio tobaooo produdirmnutaciueti. ,~ands tf~ie~burd no ppro~ot t oa~at~e e~meft b~w~sgrro s set tonh above f VVi"hold Mnount. then M shati order a nZNiw and dlsbureernw* o1 up b 75% of ttve WAhhold Mmit eppalb, wd It ehal so tekei4 aed dWbxx=e to to stab. tl* amoaxit, wtlh Intarosl ei eM *wKege UnMed Stalmo $24" troaeury 8o M& for the pedod belvw no0a wd n4ae of such WNhhold Amount TM apMxyy may consider al r.kv.nt eNdenam in daertnMUg ft peroentpe of ttN V4khhoid AnwUnc to older ro+esiea end disbursed. My nquiuhdwar or stals atbomey penerel aNrNved by 0 WNhFroid Amount dedsion of the aqerwy mhr tsek judioiaf realew tereof wldan 30 daysi U U» UMted States Court of Appsafs for 1M ObtAd of Columbia CkouR. Unka -011-
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• Fxoept lor prlvReged and trade t+eaet mAtetlaU (whioh ahan ' be axunpt hom dkdown (nto the depaltotYl, oM dooumenta ' placed in the deposltoty shal be produoed Wlthout any confidentialRy deaipnaNons of any kind. • A1onq with the:e document collections, iM nunuhcturan and trade assodatwns ahaN place Into the depotabry at tndlcee (as defined by the ooutt'i order In the `Minntsoa Attonwy f3eneni action) of doaxnAmb netatin2 to anakinp and heaMh, indudlnp all lndlos; IdentMed by tM rr$nufaoturen In the Washitpton, Texaa and Minnefott /Utbmey 4rnent actlotu. My oomputarited indloaa shtaN be produced In boih a indioa~an nQauind U adet to preW any prNlepOd~or tsadt wret tnroemation; such radact7orn ahaN be subJeat to tM ' procedures aai torth bstotiv for adjudfatlnp any disputes om datrns of pdvtlepa and Uaft sscraoy.) • AA doouments ptaoad into, the depalroay shaq be deemad produced for putpwaa of any ptlpatbn tn the Unfted SMtN. The eourt In each undaAft aadon std retain ttM dlsorNlon to determine the admla;IDlfity on a oaseby-oas basit of any such produced dooument ` The tobacco Induatry ahaN beu the expense of maMtaUlnp the depository. 2. Immediately upon ifiattslnp a tasoMbn of tlase itlpatlonfs wNh the Attaneys (w+erN, wMhout Waltlnp for Gonotaa to sttbody tNasa requirement M the proposed ioSUlNtlon, tl» narwFeoluran, C'1'R and YY:haN: • Commence to OofldW a QOO"alih, 0o noVO, doOUtiNnt•by" doaunmt rwiaww oa a doa.neMs prsabkuy wftMld ftn+ producdon in roLaooo Itlqtlon on proundd of pA+Aepd. The purpoaa ot tldta wYldw' ahd be bWm* dooumanb wldoh the nviewer oondudea an not ptMie2ed. AA tloo4Mnwtb so identlMd " be Plaoad In the deposltory s toon a Pactlobble. • Propare and plaoe h tM national drpodbry as aoon aa pcacbabte a oomprehemNe new '0tMepa top of al -06-
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(2) the $80 mUUon tivfYl be 0d)wt6d proportlonatety /or percentepe k+crrasee or deonaeN Oompprra wNh t400 In the avereQe profit per unit (me» urod In ants >tn4 weighted by annual sales) eerned by the ciparettr indwtty. PN *verpe protlt pdr rndt In 1396 will be derhed irom the Indushyi opsrttlnp ProM as (aported to the SEC; and the average profil per unft for the yoar in whbh the suma,.rps is beMg dNatnirNd rdM be oebu{eted snd oertMed to the FDA by a m1jor, ns6onaBy reoopnized aooountlnp firm havinp no extstinp connection to the tobfoco industry usinp the aame methodolopy as employed In darhMp the averaqe proAt per unR for 190a.) (3) the surcharge wA be trduosd to pnvent doubte oountinp ot penons whose emokinp had ahady rowlted In tM imposMbn of s surcharge in previous years (to ths extent that there were not underage unokers of oompuabls age in fhoM pnvfout years on whom a surcharge was not paid bewuee of the cap set forth in paragraph (d) below). (4) the surcharge may not exceed $2 babon In any ysar (as adjusted for intlaftn). 2. The turrharqe with respect bo the smOk4S3te tobsooo industry wt4 be derived ttuou0h a oompusbls prooedure based upon a bass psre peroentape polnt amount and a oep tpsoilfo to thtl Industr)t. 3. The turoharpe Payable by oi0aretb mantaaolunn A be the Jolnt and several obltga8on.ot thae mWAtaabxen, $Aoosted by aalwt martat ehan. The ur"p psyableby arnokatees tobsooo produa marwf acturws wiM be the joMt ahd wwrN obppatlotf of those manufacturers, as apotmed In the alrns mtnner. Withh alah such reepecove product markN, ttre FDA vAA mdte such abcatlan socadUp to each rranufidursrs rNatlw ' ma*dt vokime '. h 1M United States domestic aipsr.la or antoMNse bbaoco muftab h the year ror whbh ate wrohatge k belnp atMted, based on sotuN iederat excisa tax paymerdr. 4. The surcharqe tor a plven ysw, It any, wM be asmaed by the FDA be p~atd on or~before~Juy of tfie~ja~r M~v~ichs ~~ the FOA. The FOA nuy sttabtsh, by npubtlon, Ubreet at a rals up
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Appendix V -"look Qaok" A summary of the `bok-back' provision Is as tolkm: A. The Reductlon Repulremenb. 1, The roquif+ed reduclbne 1n underp. tob" ua an mea;und aoakart a baa peroeMp.. For underbq.;uee o/ otpant6a, 1he ba:e perrsntpe is the average, weighted by nlNtlw populatlon of tuoh aq. proupd k11 M as determined bY 1M U.B. Ceneui Bunau, of (a) Ihe awrapo of ft 'iu of 12{h qtedan (a~ 16 and 1T) trom 1086101698 who.tM produob on a dapY bqiR ro) nu~ avera,pe ot a,e peroas.~a ai toa~ Sr.a.rs {a~t 14.na 16) hom t99t b 1996 who used dpareqe produots on. dily bah3 bnd (to) 996wfro usad cip4db on a ida~r( . The ipw• antapa a.lhoa mea,untl by lM. uniwntty of Mtohtqany Na- tlon.t High School Drug Use Surwy "Modlotkq ft Futun' a bY . such oompar" b+drn usinp Idm6oal mtaadolopy a It ohoaan by FOA aRer notla 4nd haadnp. For underap uie of enakN.p tobaooo produats, the bpa peroentap k ft averaQs, weiphte0 by ntltllw poputatlon M iuoh a9e groups M 1995 as dNertnkNd by tht V.8.ts~w~ 8a"u, of (a) 1h* peroenhqe of 12fh pnden (ages 16 and 17) in 1996 who uaed anokeNa lcbaooo produds on a daAy beala: (b)1he perantye of 101h graders (apq 14 ud ,16) in 1806 . Who used omokeUa products on a daAy baaiso,and (o) ft peroeMpe ot 0 qnalOn (ap. 13) in 1486 who uted sirwkeNif tobtooo produob on a dallY bpN. Thess peroentapa am to bL decNrd from ft iame. aotxne a art Uie peroontsqee wiqi raepect (O ua otoljareta praduolx 2. AtOer the Mtlti year aMr.nactrtek ot tl+t Aa r+d anrnay ihereaA/rl 1hM FdA wAl aakcAaO.lhe k+oideaoo Ot daMy uN d bbaooo produoh by tooM undar 16 yew of tge ds 1o1oM*0 For dgare!!a produet wa, 1M FDA w1M oala~Y the avKapee wethad by nWw populMloe of such po aap M 1006 a deker**d by the U.S. Bureau of Censue, of ft p.roerftba of 12th pradea (aba 16 and 17),101A QMdW (a6M 14 ad 15) and ft praders (ape 13) who used oiQareqe produob on a daAy bak an b be tl ~meawt~i~d (a) The by bn~u~~ Vqoldpan $wva~r, .y1.
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B. A detaAed desaiptlon of tM etale's proproes In ndudnp the aveRablNhr ot bbaooo pmduas to IndMduak under the age of 10. indudlnp 1M detalled ststistlce" nssufts of the mandated compliance d,ecks; C. A detadsd desalpNon o11M meThods uled In the oompllanoe checW, end In ide"kq oulleb whbh wen tested, wfth IM fDA providlnp the stste appropriate ooMldentlaAty saipuyuds for infonntUon pnyvlded to the apenoY re9ydinp 1M tlrtdnp and hnrostfpatlve teohnlqua of ebts oanplbnoe ctwdcs that depend for Iheir ooftued eAlosry upon such oonAdenllWNty, D. A deWMd desalptlon off tbteply the s.hra iMsrWs to u'fizs In 1s1o currenl and suooeedinp y.ut b malce turlMt prop*t an redudnp 1M avalablaKy of bb`cw produob to etMm and ddoteeaenb; and E. The IdeMly of the "ehple slaM egencY' responslbN for tulfpAnp Ihs Syrav AnnendmaM uul 1M Acts roquhmenb, Indudinp the ooordUatlon and report ot etm effabs to ruduoe youth sooe" to tobaooo products sad or af'ored for sate In n,e saa. (abenpthees and exEends beyaM 45 C.F.R 596.130(e) by addinp 9reabsr detaA to the reQuiremenls and transfenft nepoRhip ob6paUon of sbtes to FDA from HHS) The FDA Is requked to make an annual detennUatlon, prtor to sdocatinp any ft+oneys aaocsba b 1tfit sb0e. undsr 4h. ,propossd Aa for tNe purposea of deftyiix; pubb hakh oarm ptvpnm ependlturol (but. not Nwkbkp or oondMonUp Monsys made avaNable under the Ast ta Ihe p.ymeM of ptMOs daims), ae b whNher each stafs ha'putsuid al Maonabty rraiable meaeures to entcnae the prohbition on saNs a tobsooo produola to dsfldnn #nd sdobsoems. In addition to the aiherh at b1ti In 45 C.F.R §98.130, the proposed AcX wil rtWO fie FOA b lind pnsumpllwly tlat ths tft has not 'pursusd al reasonaby avdsble measunsa b.M~oras' Ihs'ra ialee b mtnon IaMI' uankss IM sfatft has adNfsvsd, In ts bNawYq yrax, tlu folowUp aanpihna rate rosulls ia 1M retiI oomp6snoe ah.ft nqO.d by d» A& FederM FNoal Year ReW CompRsnoe Cheok ltnwRlm PMannsnes Tjroat _ Sth Yswt atbr yser of 76% erIaclmsnt ot Aa -sa

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