[Federal Register Volume 76, Number 222 (Thursday, November 17, 2011)]
[Proposed Rules]
[Pages 71281-71286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-29702]



[[Page 71281]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 1140

[Docket No. FDA-2011-N-0493]

RIN 0910-AG40


Regulations Restricting the Sale and Distribution of Cigarettes 
and Smokeless Tobacco To Protect Children and Adolescents

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Food and Drug Administration (FDA) is proposing to amend 
the Agency's regulations to allow the manufacturer of a cigarette or 
smokeless tobacco product with a trade or brand name that is also the 
trade or brand name of a nontobacco product to continue to use the name 
if the tobacco product was sold in the United States on or before June 
22, 2009. FDA further proposes to amend the Agency's regulations to 
ensure that a manufacturer of a cigarette or smokeless tobacco product 
may continue to use its trade or brand name even if that name is 
subsequently registered with the United States Patent and Trademark 
Office (USPTO) or subsequently used for a nontobacco product.

DATES: Submit either electronic or written comments by January 31, 
2012.

ADDRESSES: You may submit comments, identified by Docket No. FDA-2011-
N-0493 and/or RIN 0910-AG40 by any of the following methods:

Electronic Submissions

    Submit electronic comments in the following way:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.

Written Submissions

    Submit written submissions in the following ways:
     Fax: (301) 827-6870.
     Mail/Hand delivery/Courier (for paper, disk, or CD-ROM 
submissions): Division of Dockets Management (HFA-305), Food and Drug 
Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.
    Instructions: All submissions received must include the Agency 
name, Docket No. FDA-2011-N-0493, and RIN 0910-AG40, for this 
rulemaking. All comments received may be posted without change to 
http://www.regulations.gov, including any personal information 
provided. For additional information on submitting comments, see the 
``Comments'' heading of the SUPPLEMENTARY INFORMATION section of this 
document.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov and insert the 
docket number, found in brackets in the heading of this document, into 
the ``Search'' box and follow the prompts and/or go to the Division of 
Dockets Management, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Gail Schmerfeld, Center for Tobacco 
Products, 9200 Corporate Blvd., Rockville, MD 20850-3229, 1-(877) 287-
1373, [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    On June 22, 2009, the President signed the Family Smoking 
Prevention and Tobacco Control Act (Pub. L. 111-31) (Tobacco Control 
Act) into law. The Tobacco Control Act amended the Federal Food, Drug, 
and Cosmetic Act (the FD&C Act) (21 U.S.C. 301 et seq.) by adding a new 
chapter granting FDA important new authority to regulate the 
manufacture, marketing, and distribution of tobacco products to protect 
public health generally and to reduce tobacco use by minors.
    Section 102 of the Tobacco Control Act required FDA to publish a 
final rule regarding cigarettes and smokeless tobacco identical in its 
provisions to the ``Regulations Restricting the Sale and Distribution 
of Cigarettes and Smokeless Tobacco to Protect Children and 
Adolescents'' (61 FR 44396, August 28, 1996) (1996 final rule), with 
certain specified exceptions. None of the specified exceptions affect 
the substance of Sec.  897.16(a) (21 CFR 897.16(a)) of the 1996 final 
rule. Thus, Sec.  1140.16(a) (21 CFR 1140.16(a)) in the reissued 1996 
final rule is identical to Sec.  897.16(a) of the 1996 final rule: 
``Restriction on product names. A manufacturer shall not use a trade or 
brand name of a nontobacco product as the trade or brand name for a 
cigarette or smokeless tobacco product, except for a tobacco product 
whose trade or brand name was on both a tobacco product and a 
nontobacco product that were sold in the United States on January 1, 
1995.''
    This provision, like other provisions in the 1996 final rule, was 
intended to ensure that the restrictions on sale and distribution to 
children and adolescents were not undermined by how the product was 
presented to the public (61 FR 44396 at 44444). If a manufacturer was 
permitted to use a popular nontobacco product trade name and put it on 
a tobacco product, the manufacturer could attempt to exploit the 
imagery or consumer identification attached to the nontobacco product 
to make the tobacco product appeal to young people (Id.).
    FDA included the January 1, 1995, date in Sec.  897.16(a) of the 
1996 final rule so that the restriction would not apply to cigarette 
and smokeless tobacco products that already were using trade or brand 
names that were also on nontobacco product (60 FR 41314 at 41324 
(August 11, 1995), 61 FR 44396 at 44444)). FDA's intent was to 
prospectively prohibit tobacco manufacturers from using nontobacco 
trade or brand names, whether used on tangible products or for 
services, on cigarettes and smokeless tobacco products (Id.).\1\ Thus, 
the section permitted manufacturers to continue using a nontobacco 
trade or brand name for its cigarettes or smokeless tobacco product if 
the name was on both a tobacco product and a nontobacco product sold in 
the United States on or before January 1, 1995 (61 FR 44396 at 44444).
---------------------------------------------------------------------------

    \1\ FDA intended to construe this grandfather exception narrowly 
such that, if the trade or brand name of a pre-existing nontobacco 
product was ``Old Time Country Store,'' the grandfather exception 
would not apply to a cigarette product called ``Old Time'' because 
``Old Time'' was not identical to the name of the pre-existing 
nontobacco product (61 FR 44396 at 44445).
---------------------------------------------------------------------------

    FDA also intended that this provision of the 1996 final rule would 
apply only to trade names in use in the United States (61 FR 44396 at 
44445). In the preamble to the 1996 final rule, FDA acknowledged that 
it would be unreasonable for the regulations to encompass all possible 
nontobacco product trade names, regardless of their nationality or 
whether the trade name was a registered trademark. Neither FDA nor 
manufacturers would be able to ensure that the name was not used 
outside the United States.
    FDA is proposing to amend Sec.  1140.16(a) to change the 
grandfather date from January 1, 1995, to June 22, 2009, in recognition 
of the fact that 14 years elapsed since the publication of the 1996 
final rule. Using the January 1995 date significantly changes Sec.  
1140.16(a), from a provision that was intended to apply prospectively 
to one that applies retroactively. The proposed rule would amend the 
section to allow cigarettes and smokeless tobacco products sold in the 
United States on or before June 22, 2009, to continue to be sold under 
their trade or brand name, even if the trade or brand name was also

[[Page 71282]]

used for a nontobacco product sold during that time. Thus, the proposed 
amendment would restore the FDA's original intention that the 
restriction apply prospectively only.
    FDA is also proposing to amend Sec.  1140.16(a) to ensure that a 
manufacturer may continue to use the trade or brand name of its 
cigarette or smokeless tobacco product if the trade or brand name is 
later registered with the USPTO or used on a nontobacco product.\2\ 
Thus, a tobacco manufacturer would not be required to monitor whether a 
trade or brand name is registered for a nontobacco product after it 
initiates the sale of its tobacco product under a particular trade or 
brand name. In order to ensure that tobacco companies can comply with, 
and FDA can enforce, the proposed restriction, the proposed amendment 
would make explicit that the prohibition on the use of a nontobacco 
trade or brand name turns on whether such name is ``registered,'' that 
is, whether it is listed in the USPTO's registration listing. FDA 
believes that this proposed change is consistent with the intent of the 
provision as originally issued in 1996 to prevent tobacco product 
manufacturers from exploiting the imagery and consumer identification 
associated with the trade or brand name of a nontobacco product. Thus, 
the provision should apply to situations where the use of the trade or 
brand name on the nontobacco product precedes the sale of a tobacco 
product with the same trade or brand name and should not restrict trade 
or brand names of tobacco products in other situations.
---------------------------------------------------------------------------

    \2\ USPTO registers trade or brand names for both goods and 
services.
---------------------------------------------------------------------------

    In addition, FDA is proposing to amend Sec.  1140.16(a) to permit 
manufacturers to request an exemption from the restriction based on 
information that adequately demonstrates that their proposed trade or 
brand name does not substantially appeal to children or adolescents. 
The goal of the restriction is to ensure that manufacturers cannot 
exploit the imagery or consumer identification attached to the 
nontobacco product to make the tobacco product appeal to young people. 
If the manufacturer demonstrates in a written submission to the 
Director of FDA's Center for Tobacco Products that the proposed name 
(e.g., through the associated imagery or consumer identification 
attached to the nontobacco product) does not have substantial appeal to 
young people, then the potential for such exploitation is unlikely and 
the request for an exception would be granted.
    As originally proposed, and as amended, the restriction on product 
names is intended to limit the sales and distribution of cigarettes and 
smokeless tobacco to children and adolescents. The State's interest in 
preventing the use of tobacco products by minors is well established. 
FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 161 (2000) 
(``[FDA] has amply demonstrated that tobacco use, particularly among 
children and adolescents, poses perhaps the single most significant 
threat to public health in the United States.''); Lorillard Tobacco Co. 
v. Reilly, 533 U.S. 525, 564 (2001) (``The State's interest in 
preventing underage tobacco use is substantial, and even 
compelling.''). The proposed restriction on the use of nontobacco 
product names provides a reasonable means to effect the goal of 
preventing the use of tobacco in minors.
    Tobacco use continues to be the single leading preventable cause of 
death and disease in the United States (Ref. 1). More than 80 percent 
of established adult smokers begin smoking before age 18 years (Ref. 1) 
and, of those adolescents who continue to smoke regularly, 
approximately 50 percent will die from smoking-attributable disease 
(Ref. 2). Among children, data from the 2009 Youth Risk Behavior 
Survey, a nationally representative survey of students in grades 9 
through 12 in the United States, showed that almost half (46.3 percent) 
of U.S. high school students had tried cigarette smoking, and an 
estimated 19.5 percent of students were current cigarette smokers (Ref. 
3). Overall, approximately 7.3 percent of high school students in 2009 
were frequent cigarette users, and 11.2 percent of students under the 
age of 18 had been daily smokers at some point during their lifetime. 
Furthermore, followup studies of youth smokers have indicated that a 
significant number of students who are light smokers (i.e., students 
who are not daily smokers or who smoke less than 10 cigarettes per day) 
in high school will become heavy smokers after leaving high school 
(Ref. 4). In 2009, nearly 9 percent of high school students used a 
smokeless tobacco product (e.g., chewing tobacco, snuff, or dip) (Ref. 
5). The Surgeon General reports that adolescents who use smokeless 
tobacco are more likely than nonusers to become cigarette smokers (Ref. 
5).
    Research supports the conclusion that tobacco advertising and 
promotion contribute to youth smoking initiation (Refs. 6 at p. 131, 7, 
8, 9, and 10). The cigarette industry spends billions of dollars on 
advertising and promotion each year (Ref. 11). The National Cancer 
Institute (NCI) Monograph 19 stated that ``tobacco advertising forms 
part of an integrated marketing communications strategy combining 
sponsorship, brand merchandising, brand stretching, packaging, point-
of-sale promotions, and product placement'' (Ref. 12 at p. 7). With 
respect to marketing tobacco to children and adolescents, Monograph 19 
concluded among other things, that: (1) Tobacco advertising targets the 
psychological needs of adolescents (e.g., popularity) and ``adolescents 
who believe that smoking can satisfy their psychological needs, or 
whose desired image of themselves is similar to their image of smokers, 
are more likely to smoke cigarettes'' and (2) even brief exposure to 
tobacco advertising influences adolescents' intentions to smoke (Ref. 
12 at pp. 280 and 281).
    Brand equity, which consists of company name, brand, symbols, and 
slogans, and their underlying associations, is a primary source of 
competitive advantage and future earnings (Ref. 13). Researchers have 
found that by the time children reach 11 or 12 years of age, they are 
decoding consumption symbols based on brand names, forming impressions 
of product owners based on the image and meanings of the brand name 
identified with the product (Ref. 14).
    As new marketing restrictions under the reissued final rule go into 
effect, the incentive to use other means such as brand name extension 
increases. Experience shows that, when faced with restrictions on 
marketing and advertising, tobacco firms shift their promotional 
efforts away from restricted practices and into a different mix of 
activities that are permissible (Ref. 15).
    In light of the new regulations restricting the sale and 
distribution of cigarettes and smokeless tobacco products, one possible 
way for a tobacco company to attempt to gain immediate cachet with the 
youth market would be to purchase or license the name of a nontobacco 
product that has already established brand equity with youth. As FDA 
explained in issuing the original version of the rule, the restriction 
on the use of a nontobacco brand name sought to limit the elements of 
marketing and advertising ``that resonate most strongly with the needs 
of those under 18 to establish an appropriate image and to create a 
sense of acceptance and belonging.'' 61 FR 44396 at 44444 (1996). For 
example, the name of a popular motorcycle or cosmetic brand, if used on 
a tobacco product, may create immediate interest and appeal in the 
youth market. This would allow the tobacco companies to again 
capitalize on the susceptibility of this age group to

[[Page 71283]]

certain advertising and marketing practices, and to the appeal of 
brands in particular. Accordingly, the proposed restriction on the use 
of nontobacco product names is one means of preventing tobacco 
companies from circumventing the sale and distribution restrictions 
implemented in the reissued 1996 final rule.
    As amended, the brand name provision permits tobacco products sold 
on or before the June 22, 2009, the date of enactment of the Tobacco 
Control Act, to continue to be marketed with their current brand name. 
This change in date restores the prospective intent of the 1996 
provision. Further, neither the reissued 1996 final rule, nor the 
proposed amendment, would affect any aspect of marketing; the only 
effect of the proposed rule change would be to allow some additional 
brand names that are not allowed under the reissued 1996 final rule. 
Finally, requiring companies, when introducing new tobacco products, to 
research other uses of the same brand name is reasonable and does not 
significantly affect the way companies can introduce new tobacco 
products.
    In addition, by amending the rule to allow tobacco companies to 
continue to use the trade or brand name of its cigarette or smokeless 
tobacco product after that brand name is later registered by another 
company with the USPTO or used on a nontobacco product, FDA seeks to 
prevent companies who manufacture products other than tobacco from 
unfairly exploiting the rule to the detriment of tobacco companies. 
Accordingly, once a tobacco product is introduced to the market under a 
particular brand name, the subsequent introduction of a nontobacco 
product under the same name, or the registration of that brand name for 
a nontobacco product, would not make the continued marketing of the 
tobacco product under the same brand name a violation of this rule.
    Furthermore, by amending the rule to allow manufacturers to seek an 
exemption from the restriction upon a demonstration that the proposed 
name does not have substantial appeal to children or adolescents, FDA 
seeks to target the restriction to achieve the specific intended goal.

II. Legal Authority

    FDA's authority to issue this proposed rule is provided by section 
102 of the Tobacco Control Act. Sections 102(a)(3) and (a)(4) provide 
that FDA may amend the reissued 1996 final rule in accordance with the 
Administrative Procedure Act requirements for notice and comment 
rulemaking (chapter 5 of title 5 of the United States Code). In 
addition, section 701(a) of the FD&C Act (21 U.S.C. 371(a)) gives FDA 
general rulemaking authority to issue regulations for the efficient 
enforcement of the FD&C Act.

III. FDA Enforcement of the Brand Name Provision

    On May 7, 2010, FDA announced the availability of the guidance 
entitled ``Enforcement Policy Concerning Certain Regulations 
Restricting the Sale and Distribution of Cigarettes and Smokeless 
Tobacco'' (75 FR 25271, May 7, 2010). Persons with access to the 
Internet may obtain an electronic version of that guidance document at 
either http://www.regulations.gov or http://www.fda.gov/TobaccoProducts/GuidanceComplianceRegulatoryInformation/default.htm. 
FDA issued the guidance in part because it was aware of concerns 
regarding Sec.  1140.16(a). The guidance discusses FDA's enforcement 
discretion policy concerning Sec.  1140.16(a) while it considers what 
changes to the section, if any, would be appropriate to address those 
concerns. Specifically, the guidance provides that FDA intends to 
exercise its enforcement discretion concerning Sec.  1140.16(a) not to 
commence enforcement actions under this provision where: (1) The trade 
or brand name of the cigarettes or smokeless tobacco product was 
registered, or the product was marketed, in the United States on or 
before June 22, 2009; or (2) The first marketing or registration in the 
United States of the tobacco product occurs before the first marketing 
or registration in the United States of the nontobacco product bearing 
the same name; provided, however, that the tobacco and nontobacco 
product are not owned, manufactured, or distributed by the same, 
related, or affiliated entities including as a licensee.

IV. Environmental Impact

    FDA has carefully considered the potential environmental impacts of 
this rule and determined under 21 CFR 25.30(h) that this action is of a 
type that does not individually or cumulatively have a significant 
effect on the human environment. Therefore, neither an environmental 
assessment nor an environmental impact statement is required.

V. Analysis of Impacts

    FDA has examined the impacts of the proposed rule under Executive 
Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 
U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4). Executive Orders 12866 and 13563 direct Agencies to assess all 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety, and other advantages; distributive impacts; and 
equity). The Agency believes that this proposed rule is not a 
significant regulatory action as defined by Executive Order 12866.
    The Regulatory Flexibility Act requires Agencies to analyze 
regulatory options that would minimize any significant impact of a rule 
on small entities. Because the proposed rule would not impose any 
direct or indirect costs on industry or government, but rather would 
only change the date on which products were exempted from complying 
with the brand name prohibition in the reissued 1996 final rule and 
ensure that cigarette and smokeless tobacco brands may continue to use 
a trade or brand name that is subsequently used, or subsequently 
registered for use, on a nontobacco product, the Agency proposes to 
certify that the rule would not have a significant economic impact on a 
substantial number of small entities.
    Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires 
that Agencies prepare a written statement, which includes an assessment 
of anticipated costs and benefits, before proposing ``any rule that 
includes any Federal mandate that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100,000,000 or more (adjusted annually for 
inflation) in any one year.'' The current threshold after adjustment 
for inflation is $136 million, using the most current (2010) Implicit 
Price Deflator for the Gross Domestic Product. FDA does not expect this 
proposed rule to result in any 1-year expenditure that would meet or 
exceed this amount.

A. Affected Products

    FDA has identified 17 cigarette and smokeless tobacco products that 
are out of compliance with Sec.  1140.16(a) of the reissued 1996 final 
rule, which became effective on June 22, 2010, but that would be in 
compliance under the proposed amendment. These products were introduced 
between January 1, 1995 (the date when products were grandfathered in 
under the 1996 final rule), and June 22, 2009 (the grandfather date set 
forth in this proposed amendment), and they share names with nontobacco 
products presently

[[Page 71284]]

registered with the USPTO.\3\ The 17 product names appear in table 1 of 
this Federal Register document.\4\

                                                     Table 1--Products Affected by the Proposed Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Year of
   Cigarette or smokeless tobacco brand       introduction                         Examples of nontobacco products with same name**
--------------------------------------------------------------------------------------------------------------------------------------------------------
Complete..................................              2004  Golf Balls, Disposable Adult Briefs and Underwear.
Eclipse...................................              1996  Insect Traps, Oxygen Concentrators for Medical Use.
Exact.....................................              2001  Ink and Toner, Medical and Surgical Instruments.
Exalt*....................................              2001  Display Racks, Cattle Vaccines.
Grand Prix*...............................              2008  Apparel for Horseback Riding, Car Wash Services.
Kayak*....................................              1999  Internet Travel Services, Protective Swimming Pool Liners.
King's....................................              1995  All-Purpose Flour, Safety Apparatus.
Lone Star.................................              2002  Welding Machines, Beer.
Longhorn*.................................              2003  Investment and Financial Services, Apparel.
Premis....................................              2004  Integrated Circuits, Hospital Accounting Software.
Pro*......................................              2008  Bicycles and Bicycle Accessories, Fireworks.
Quest.....................................              2003  Software, Snowboards.
Revel*....................................              2001  Loudspeakers, Bedding and Bathroom Accessories.
Roger.....................................              1999  Apparel, Pilot Training Services.
Stonewall*................................              2001  Concrete Blocks for Retaining Walls, Turf and Herbicide.
Tahoe.....................................              2000  Cookies, Hearth and Fireplace Products.
Thunder...................................              2009  Earmuffs, Potato Chips.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Smokeless Tobacco Product.
** List is not exhaustive.
Sources: Refs. 16 through 22.

    Table 1 includes 10 cigarette brands. Data from the 2005 National 
Survey on Drug Use and Health (NSDUH) indicate that each of the 9 
cigarette brands in this list that had been introduced by 2005 was the 
usual cigarette choice for less than (probably significantly less than) 
1.9 percent of smokers (Ref. 23).\5\ Results from the 2008 Maxwell 
Reports, the primary private source of cigarette sales data, are 
consistent with those from the NSDUH (Ref 24).\6\ There are no reported 
data indicating that any of the brands listed in table 1 are brands 
popular with youth. Several sources agree that the most popular brands 
among youth are Marlboro, Newport, and Camel (Refs. 23 and 25).
---------------------------------------------------------------------------

    \3\ Registrations were current as of September 22, 2010.
    \4\ There are additional tobacco products that share names with 
nontobacco products whose names are not registered with the USPTO.
    \5\ NSDUH is a large, nationally representative survey conducted 
by the Substance Abuse and Mental Health Services Administration 
(SAMHSA). While its primary purpose relates to drug use in the 
United States, it also provides information regarding cigarette use. 
Individuals aged 12 and above who had smoked within the past month 
were asked about their usual brand choice during that time period. 
The data indicate that the top 10 brands account for the usual 
choice of over 80 percent of respondents, with shares ranging from 
42.4 percent for Marlboro to 1.9 percent for Salem and USA Gold. 
None of the brands listed in table 1 appears in the list of top 10 
brands. Accordingly, the shares must be less than 1.9 percent, and 
we believe that the shares are likely substantially less than that 
given the brands' relative obscurity.
    \6\ Maxwell lists 2008's 14 highest-selling cigarette brands, 
the smallest of which (Misty) had a 1.4 percent market share (4.87 
billion units sold). Since none of the brands appearing in table 1 
are among the top 14 ranked by Maxwell, each would have had a market 
share no higher than 1.4 percent.
---------------------------------------------------------------------------

    Table 1 includes seven smokeless tobacco brands. Five of them were 
introduced before 2005. The 2005 NSDUH identifies the 15 brands used 
most often by past-month smokeless tobacco users (Ref. 26). The only 
brand from table 1, among the five introduced prior to 2005, reported 
separately in the NSDUH data is Longhorn, which had an overall share of 
0.7 percent. Among persons aged 12 to 17, it had a share of only 0.4 
percent. The remaining brand shares were too small to be reported 
individually.

B. Benefits of the Proposed Rule

    The proposed rule would allow the manufacturers of cigarettes and 
smokeless tobacco products listed in table 1 of this Federal Register 
document to avoid incurring the costs associated with changing their 
products' names. Relevant types of costs may include label redesign, 
market-testing new names, and additional promotional spending to inform 
customers of name changes. Furthermore, because the proposed amendment 
ensures that manufacturers may continue to use a trade or brand name 
for their tobacco product even if that name is subsequently used or 
registered for use with the USPTO, it would allow an unknown number of 
additional producers to avoid these name change costs.
    Another benefit of the rule accrues to consumers of tobacco 
products that are out of compliance with the reissued 1996 final rule 
but are not profitable enough to justify the cost of a name change. 
Without this proposed amendment, such products could be discontinued 
and their consumers (other than those who quit using tobacco products) 
would have to switch to less-preferred brands.

C. Costs of the Proposed Rule

    The costs imposed on society by the proposed rule can take the 
following forms: (1) Reduced producer profits (sales revenues minus 
production cost) that are not offset by increased profits of other 
firms or (2) losses borne by consumers. Costs in the form of reduced 
producer profits are likely to be zero since the proposed amendment 
would allow firms to avoid incurring production costs associated with 
renaming their products (as discussed in section V.B of this Federal 
Register document) and the proposed amendment would not change total 
sales of cigarettes and smokeless tobacco products (though sales may 
shift between particular brands as discussed in section V.D of this 
Federal Register document).
    Losses borne by consumers take the form of health and life 
expectancy effects. To the extent that (a) Young people initiate 
tobacco use based on imagery from nontobacco products that

[[Page 71285]]

share brand names with cigarettes and smokeless tobacco and (b) current 
users of these products continue consuming tobacco due only to brand 
loyalty, morbidity and mortality will increase, most notably among 
those new tobacco users but also among individuals exposed to passive 
smoking. FDA anticipates, however, these types of costs due to changing 
the grandfather date will be negligible since sales of the affected 
tobacco products are low overall and are expected to remain low in the 
future.\7\ Moreover, given the addictive nature of tobacco and the lack 
of strong brand imagery associated with the affected products, brand 
loyalty is unlikely to be a primary factor in the continuance of 
tobacco consumption by established users of these products. Thus, FDA 
estimates the total cost of the proposed amendment to be near zero.
---------------------------------------------------------------------------

    \7\ Most of the nontobacco products with which they share names 
(examples are listed in table 1) are not widely-recognized consumer 
products and lack strong brand equity; consequently, consumers, 
including youth, are not likely to identify the nontobacco product 
names with particular brand images, much less be motivated by them 
to initiate or continue tobacco use.
---------------------------------------------------------------------------

D. Distributional Effects of the Proposed Rule

    In the absence of the proposed amendment, name changes would be 
required for the 17 products listed in table 1 of this Federal Register 
document. If current consumers of these products do not switch to the 
renamed products, it is likely, given the addictive nature of tobacco, 
that at least some would start consuming other brands of cigarettes or 
smokeless tobacco.\8\ The amendment, by preventing this shift in sales, 
maintains value for the producers of table 1 products, instead of 
transferring value to producers of substitute products as would occur 
under the rule as originally published.
---------------------------------------------------------------------------

    \8\ If a discontinued product has a low sales volume, there are 
a large array of similar products on the market to which consumers 
could switch.
---------------------------------------------------------------------------

VI. Federalism

    FDA has analyzed this proposed rule in accordance with the 
principles set forth in Executive Order 13132. Section 4(a) of the 
Executive order requires Agencies to ``construe * * * a Federal statute 
to preempt State law only where the statute contains an express 
preemption provision or there is some other clear evidence that the 
Congress intended preemption of State law, or where the exercise of 
State authority conflicts with the exercise of Federal authority under 
the Federal statute.'' Section 916(a)(2) of the FD&C Act (21 U.S.C. 
387p) expressly preempts any State or local requirement ``which is 
different from, or in addition to, any requirement under [Chapter IX of 
the FD&C Act] relating to'', among other things, misbranding. This 
express preemption provision, however, ``does not apply to requirements 
relating to'' among other things ``the sale, distribution, * * * access 
to, [or] the advertising and promotion of, * * * tobacco products.'' If 
this proposed rule is made final, the final rule would modify the 
existing restrictions on the sale and distribution of cigarettes and 
smokeless tobacco products. The failure to comply with those 
restrictions, as modified, renders the product misbranded under the 
FD&C Act.

VII. Paperwork Reduction Act of 1995

    FDA tentatively concludes that this proposed rule contains no 
collection of information. Therefore, clearance by the Office of 
Management and Budget under the Paperwork Reduction Act of 1995 is not 
required.

VIII. Requests for Comments

    FDA is requesting comments on this proposed rule. In drafting this 
proposal, FDA was aware of concerns that had been raised by Sec.  
1140.16(a) of the reissued 1996 final rule, including claims raised in 
litigation brought in federal district court challenging the 
constitutionality of the rule. After considering these concerns and 
claims, FDA is proposing to narrow the scope of the existing rule.
    The current rule is intended to ensure that other restrictions on 
the sale and distribution of cigarettes and smokeless tobacco products 
to children and adolescents are not undermined by a tobacco 
manufacturer attempting to exploit the imagery or consumer 
identification attached to a nontobacco product. We request comments, 
including any data or information, on whether the proposal adequately 
addresses this goal, including topics such as the importance of brand 
names to children and adolescents, criteria FDA could use to evaluate 
whether a particular brand name has appeal to children and adolescents 
and under what circumstances a brand name might acquire appeal to 
children and adolescents, the vulnerability of children and adolescents 
to targeted marketing strategies, and instances where brand names have 
been used to attract the youth market.
    With respect to the request for exemption process in proposed Sec.  
1140.16(a)(3), the Agency requests comments on the standard 
manufacturers should be required to meet to qualify for the exemption 
(whether substantial appeal to youth or some other standard), as well 
as the criteria and specific types of information that should be 
required to demonstrate that a name does not exceed the standard in its 
appeal to youth. FDA also requests comments on alternative approaches 
to narrowing the restriction, such as prohibiting use of a registered 
nontobacco brand name on a tobacco product only if such name is 
registered to the same, related, or affiliated entity or is used under 
a licensing agreement (under the assumption that non-affiliated 
companies would protect their registered brand names that have strong 
imagery or consumer identification). If you suggest this or an 
alternative approach, you should address the basis for the limitation, 
such as by providing data or information showing how this limitation 
will ensure that manufacturers do not exploit the imagery or consumer 
identification attached to a nontobacco product.
    Interested persons may submit to the Division of Dockets Management 
(see ADDRESSES) either electronic or written comments regarding this 
document. It is only necessary to send one set of comments. It is no 
longer necessary to send two copies of mailed comments. Identify 
comments with the docket number found in brackets in the heading of 
this document. Received comments may be seen in the Division of Dockets 
Management between 9 a.m. and 4 p.m., Monday through Friday.

IX. References

    The following references have been placed on display in the 
Division of Dockets Management (see ADDRESSES) and may be seen by 
interested persons between 9 a.m. and 4 p.m. Monday through Friday. 
(FDA has verified Web site addresses, but FDA is not responsible for 
any subsequent changes to the Web sites after this document publishes 
in the Federal Register.)

1. Centers for Disease Control and Prevention, ``Tobacco Use Among 
Middle and High School Students--United States, 2000-2009,'' 
Morbidity and Mortality Weekly Report, 59(33); 1063-1068, August 27, 
2010, available at http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5933a2.htm.
2. Centers for Disease Control and Prevention, ``Trends in Smoking 
Initiation Among Adolescents and Young Adults--United States, 1980-
1989,'' Morbidity and Mortality Weekly Report, 44(28); 521-525, July 
21, 1995, available at http://www.cdc.gov/mmwr/preview/mmwrhtml/00038190.htm.
3. Centers for Disease Control and Prevention, ``Youth Risk Behavior 
Surveillance--United States, 2009,'' Morbidity and Mortality Weekly 
Report,

[[Page 71286]]

59 (No. SS-5): June 4, 2010, available at http://www.cdc.gov/mmwr/pdf/ss/ss5905.pdf.
4. Johnston, L.D., et al., ``Smoking Continues Gradual Decline Among 
U.S. Teens, Smokeless Tobacco Threatens a Comeback,'' University of 
Michigan News Service: Ann Arbor, MI, December 14, 2009, available 
at http://www.monitoringthefuture.org/data/09data.html#2009data-cigs.
5. Centers for Disease Control and Prevention, ``Tobacco Use and the 
Health of Young People,'' July 5, 2011, available at http://www.cdc.gov/HealthyYouth/tobacco/facts.htm.
6. 1994 Institute of Medicine, Growing Up Tobacco Free: Preventing 
Nicotine Addiction in Children and Youths,'' Washington, DC: 
National Academy Press (1994), (``[T]obacco advertising and 
promotion undoubtedly contribute to the multiple and convergent 
psychosocial influences that lead children and youths to begin using 
these products and to become addicted to them.'')
7. Finding 2673, United States v. Philip Morris, 449 F. Supp 2d 1, 
990 (D.D.C. 2006) (``[M]arketing has been and continues to be 
enormously effective in influencing young people to smoke.''), aff'd 
in relevant part, 566 F.3d 1095 (D.C. Cir. 2009) (per curiam), cert. 
denied, 130 S. Ct. 3501 (2010).
8. Shadel, W.G. and Tharp-Taylor, S., ``How Does Exposure to 
Cigarette Advertising Contribute to Smoking in Adolescents? The Role 
of Developing Self-Concept and Identification With Advertising 
Models,'' Addictive Behavior, 34(11); 932-937, November 2009.
9. Krugman, Dean M., et al., ``Understanding the Role of Cigarette 
Promotion and Youth Smoking in a Changing Marketing Environment,'' 
Journal of Health Communications, 10:261-278, 2005 (``Advertising 
and promotion continue to play an important role in selling 
cigarettes to youth even after the 1998 MSA [Master Settlement 
Agreement].'')
10. Henriksen, Lisa, et al., ``A Longitudinal Study of Exposure to 
Retail Cigarette Advertising and Smoking Initiation,'' Pediatrics, 
126(2); 232-238, August 2010, available at http://pediatrics.aappublications.org/cgi/content/abstract/126/2/232.
11. Federal Trade Commission Cigarette Report for 2007 and 2008 
(issued 2011), available at http://www.ftc.gov/os/2011/07/110729cigarettereport.pdf, and Federal Trade Commission Smokeless 
Tobacco Report for 2007 and 2008 (issued 2011), available at http://www.ftc.gov/os/2011/07/110729smokelesstobaccoreport.pdf (In 2008, 
the tobacco industry spent $9.94 billion on advertising and 
promotion of cigarettes, and another $547.9 million for smokeless 
tobacco products.)
12. National Cancer Institute, ``The Role of Media in Promoting and 
Reducing Tobacco Use,'' NCI Tobacco Monograph Series, Monograph 19, 
NIH Publication No. 07-6242, 2008, available at http://cancercontrol.cancer.gov/TCRB/monographs/19/index.html.
13. Aaker, David A., ``Managing Brand Equity: Capitalizing on the 
Value of a Brand Name,'' The Free Press, 1991.
14. Achenreiner, Gwen B., and John, Deborah R., ``The Meaning of 
Brand Names to Children: A Developmental Investigation,'' Journal of 
Consumer Psychology 13(3), 205-219, 217, 2003.
15. Lee, R.G., Taylor, V, and McGetrick, R., ``Toward Reducing Youth 
Exposure to Tobacco Messages: Examining the Breadth of Brand and 
Nonbrand Communication,'' Journal of Health Communication, Vol. 
9:461-479, 466, 2004. (``In summary, our examination of product 
brand communications indicates that in the wake of the MSA [Master 
Settlement Agreement], tobacco firms have channeled their 
promotional efforts away from restricted media and into a different 
mix of activities that are permissible, in a fashion similar to the 
changes after the 1971 broadcast ban. * * * These redistributed 
industry promotional activities not only work against the objectives 
of the MSA, but also contribute to the breadth of protobacco 
messages facing youth.'')
16. Burritt, Chris, ``Swedish Match Targets Wall Street Smokers With 
Snus Tobacco,'' Bloomberg News Service, March 16, 2010, http://www.bloomberg.com/apps/news?pid=conewsstory&tkr+MO:US&sid=aDwD6ER.R4_Y.
17. ``Form 10-K for Star Scientific, Inc,'' Yahoo! Finance, March 
16, 2010.
18. ``Indian Tribe Launches New Cigarette Brand,'' All Business, 
April 20, 2004, available at http://www.allbusiness.com/retail-trade/food-stores/4482001-1.html.
19. Pederson, L.L. and D.E. Nelson, ``Literature Review and Summary 
of Perceptions, Attitudes, Beliefs, and Marketing of Potentially 
Reduced Exposure Products: Communication Implications,'' Nicotine & 
Tobacco Research, 9(5): 525-534, May 2007.
20. Roerty, Gerard J., et al., Letter to Lawrence Deyton, Director 
of the Center for Tobacco Products, October 22, 2009.
21. Tobacco Products Wikiproducts Site, available at http://tobaccoproducts.org/index.php/Main_Page.
22. United States Patent and Trademark Office, Trademark Electronic 
Search System (TESS), available at http://tess2.uspto.gov/bin/gate.exe? f=searchstr&state=4004:9eb3t4.1.1.
23. SAMHSA, Office of Applied Studies, The NSDUH Report: Cigarette 
Brand Preferences in 2005, January 12, 2007, http://www.oas.samhsa.gov/2k7/cigBrands/cigBrands.pdf.
24. Maxwell, John C, The Maxwell Report: Year-End and Fourth Quarter 
2008 Sales Estimates for the Cigarette Industry, Richmond, VA: John 
C. Maxwell, Jr., February 2009.
25. O'Hegarty, M., et al., ``Cigarette Brand Preference Among Middle 
and High School Students Who Are Established Smokers: United States, 
2004 and 2006,'' Morbidity and Mortality Weekly Report, 58 (5): 112-
115, February 13, 2009, http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5805a3.htm.
26. SAMHSA, Office of Applied Studies, ``Results From the 2005 
National Survey on Drug Use and Health: Detailed Tables,'' September 
2006, http://www.oas.samhsa.gov/NSDUH/2k5nsduh/tabs/Sect7peTabs58to67.pdf.

List of Subjects in 21 CFR Part 1140

    Advertising, Labeling, Smoking, Tobacco.

    Therefore, under the Federal Food, Drug, and Cosmetic Act, as 
amended by section 102 of the Tobacco Control Act, and under the 
authority delegated to the Commissioner of Food and Drugs, it is 
proposed that 21 CFR part 1140 be amended as follows:

PART 1140--CIGARETTES AND SMOKELESS TOBACCO

    1. The authority citation for 21 CFR part 1140 reads as follows:

    Authority: 21 U.S.C. 301 et seq., Sec. 102, Pub. L. 111-31, 123 
Stat. 1776.

    2. In Sec.  1140.16, revise paragraph (a) to read as follows:


Sec.  1140.16  Conditions of manufacture, sale, and distribution.

    (a) Restriction on product names. (1) Except as provided in 
paragraph (a)(2) or (a)(3) of this section, a manufacturer shall not 
use a trade or brand name for a cigarette or smokeless tobacco product 
if that name was registered with the United States Patent and Trademark 
Office for a nontobacco product on the date the tobacco product was 
first sold in the United States.
    (2) Paragraph (a)(1) of this section does not apply to a cigarette 
or smokeless tobacco product sold on or before June 22, 2009.
    (3) A manufacturer may request an exemption from the restriction on 
use of a trade or brand name in paragraph (a)(1) of this section. Such 
request must be in writing to the Director of the Center for Tobacco 
Products and contain sufficient information to demonstrate that the 
trade or brand name that is registered for a nontobacco product does 
not, based on its use for the nontobacco product, have a substantial 
appeal to children or adolescents.
* * * * *

    Dated: November 10, 2011.
Leslie Kux,
Acting Assistant Commissioner for Policy.
[FR Doc. 2011-29702 Filed 11-16-11; 8:45 am]
BILLING CODE 4160-01-P