[Federal Register Volume 80, Number 207 (Tuesday, October 27, 2015)]
[Notices]
[Pages 65758-65761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-27194]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection; 
Comment Request

AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').

ACTION: Notice.

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SUMMARY: The FTC seeks public comments on proposed information requests 
to marketers of electronic cigarettes. These comments will be 
considered before the Commission submits a request for Office of 
Management and Budget (``OMB'') review under the Paperwork Reduction 
Act (``PRA'') of compulsory process orders to those marketers. The 
information sought from those companies would include, among other 
things, data on annual sales and marketing expenditures. The Commission 
intends to ask OMB for a three-year clearance to collect this 
information.

DATES: Comments on the proposed information requests must be received 
on or before December 28, 2015.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write: ``Electronic 
Cigarettes: Paperwork Comment, FTC File No. P144504'' on your comment 
and file the comment online at https://ftcpublic.commentworks.com/ftc/electroniccigarettespra by following the instructions on the web-based 
form. If you prefer to file your comment on paper, mail your comment to 
the following address: Federal Trade Commission, Office of the 
Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex J), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW., 5th Floor Suite 5610 (Annex J), Washington, DC 
20024.

FOR FURTHER INFORMATION CONTACT: Requests for additional information 
should be addressed to Elizabeth Sanger or Shira Modell, Division of 
Advertising Practices, Bureau of Consumer Protection, Federal Trade 
Commission. Telephone: (202) 326-2757 (Sanger) or (202) 326-3116 
(Modell).

SUPPLEMENTARY INFORMATION:
    Background: For many years, the Commission has published reports on 
sales and marketing expenditures by the major cigarette and smokeless 
tobacco manufacturers. The data contained in

[[Page 65759]]

those reports are based on information submitted to the Commission, 
pursuant to compulsory process, by the largest domestic cigarette and 
smokeless tobacco manufacturers.
    In the past few years, sales of battery-powered devices generally 
referred to as electronic cigarettes or ``e-cigarettes'' have grown 
rapidly in the United States. Rather than burn tobacco, these devices 
heat liquid containing flavorings and chemicals (usually including 
nicotine) to produce an aerosol that is inhaled, and then exhaled, by 
the user. E-cigarettes, which are sold both online and in brick-and-
mortar stores, are available in both disposable and refillable models, 
in a range of nicotine strengths (including nicotine-free), and in a 
multitude of flavors; \1\ some companies allow consumers to order 
individually-customized flavor and nicotine content combinations.
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    \1\ Those flavors include tobacco and menthol, as well as fruits 
(e.g., green apple), beverages (e.g., coffee), desserts (e.g., 
turtle sundae), and others.
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    Given the increasing prevalence of e-cigarettes alongside 
conventional cigarettes and smokeless tobacco, the Commission believes 
it is necessary for the agency to begin collecting information from e-
cigarette marketers about their sales and marketing activities. The 
Commission intends to publish a report with the data it obtains,\2\ and 
to issue annual information requests to the major marketers, in order 
to track trends over time. The information will be sought using 
compulsory process under Section 6(b) of the Federal Trade Commission 
Act, 15 U.S.C. 46.
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    \2\ The report would not disclose any company-specific 
confidential data.
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    The Commission plans to address its information requests to the 
ultimate U.S. parent of e-cigarette marketers (``industry members'') in 
order to ensure that no relevant data from affiliated or subsidiary 
companies go unreported. The Commission intends to issue information 
requests to approximately five large and ten small industry members. 
Even though this number does not represent the entire industry, the 
responses should provide valuable information about a reasonable 
percentage of the e-cigarette market, including its major players. 
Because the number of separately incorporated companies affected by the 
Commission's requests will exceed nine entities, the Commission intends 
to seek OMB clearance under the PRA before requesting any information 
from the industry members. Under the PRA, 44 U.S.C. 3501-3521, federal 
agencies must obtain approval from OMB for each ``collection of 
information'' they conduct or sponsor if posed to ten or more entities 
within any twelve-month period. 44 U.S.C. 3502(3); 5 CFR 1320.3(c). 
``Collection of information'' means agency requests or requirements 
that members of the public submit reports, keep records, or provide 
information to a third party. 44 U.S.C. 3502(3); 5 CFR 1320.3(c). As 
required by section 3506(c)(2)(A) of the PRA, the FTC is providing this 
opportunity for public comment before requesting that OMB authorize the 
proposed collection of information.
    The FTC invites comments on: (1) Whether participation in the study 
is necessary, including whether the information will be practically 
useful; (2) the accuracy of our burden estimates, including whether the 
methodology and assumptions used are valid; (3) ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
(4) ways to minimize the burden of the collection of information.
    The Commission anticipates that its requests will seek the 
following categories of information: (1) Sales and give-aways of e-
cigarettes and related products (e.g., refill cartridges and e-
liquids); (2) marketing expenditures, including the amounts being spent 
on various media; (3) product placements in television programming, 
motion pictures, magazines, and other publications; (4) efforts such as 
age-screening mechanisms to prevent youth from being exposed to 
advertising and promotion for e-cigarettes or from obtaining free 
product samples; (5) expenditures on advertising to deter youth under 
the age of 18 from purchasing or using e-cigarettes; and (6) data 
collection activities, including data collection in connection with 
digital and social media marketing, and efforts to avoid collection of 
data from those under age 18. The Commission requests comments on its 
intention to seek the above-listed categories of information.
    The Commission also invites comments on the following issues:
    1. Should the FTC seek to collect data that are differentiated 
according to: (a) The various types of products sold and given away by 
industry members (e.g., collecting data on disposable devices 
separately from data on refillable devices and on refill supplies); (b) 
the various flavors and nicotine strengths of those sales and give-
aways; (c) the various sizes and liquid capacities of disposable e-
cigarettes, cartridges, and e-liquids sold and given away; and (d) 
whether the company sells directly to consumers (e.g., over the 
Internet) or to wholesalers and distributors for subsequent sale to 
consumers (e.g., at convenience stores)? Would less detailed 
information be sufficient, and, if so, what level of detail will 
suffice, and why?
    2. Should the Commission collect data on product sales separately 
from data on product give-aways?
    3. If an e-cigarette is sold with more than one cartridge (or 
container of e-liquid), should all of those cartridges be considered 
part of the initial sale, or should some of them be considered refills? 
If some of them should be considered refills, which ones? Does it 
matter whether those cartridges are part of the same Stock Keeping Unit 
(``SKU'') as the e-cigarette device? Whether they are packaged with it 
in the same blister pack?
    4. Should the Commission seek data on state-by-state sales of e-
cigarettes and related products?
    5. Is there other information the Commission should seek from the 
companies about sales and give-aways of their products?
    6. Assuming that the Commission's collection and reporting of 
highly detailed data is necessary for understanding the e-cigarette 
industry--e.g., which flavor and nicotine content combinations are sold 
the most in direct online transactions with consumers, and which are 
sold the most to wholesalers and retailers, and which products are most 
frequently given away--can industry members provide those data? In 
other words, can the companies provide data that distinguishes between: 
(a) Direct sales to consumers (e.g., online sales) and sales to 
retailers and distributors; (b) sales and give-aways of disposable e-
cigarettes and sales and give-aways of refillable e-cigarettes; and (c) 
the various combinations of sizes, flavors, and nicotine contents of 
their e-cigarettes and refill cartridges and e-liquids? For example, 
can the companies report the volume and sales value of higher nicotine, 
menthol-flavored e-liquid sold to retailers and distributors separately 
from sales of lower nicotine, pizza-flavored e-liquid sold directly to 
consumers? Can they report the volume and sales value of higher 
nicotine, tobacco-flavored cartridges and e-liquids sold with an e-
cigarette (i.e., in the same blister pack) separately from the volume 
and sales value of lower nicotine, dessert-flavored refill cartridges 
and e-liquids? Can the companies provide sales data on a state-by-state 
basis, and if so, can they do so for all sales or only for sales made 
directly to consumers?
    7. Should the Commission collect data for each individual e-
cigarette flavor sold by the companies, or should it identify various 
flavor categories (e.g.,

[[Page 65760]]

tobacco, fruit, dessert) for purposes of the companies' reports? If the 
Commission should use flavor categories, how should those categories be 
defined? Similarly, should the Commission collect data for every level 
of nicotine content sold by the companies, or should it identify 
various ranges of nicotine content (e.g., nicotine-free, from 1.8% to 
2.4%); if the Commission should use ranges, what should they be?
    Estimated hours burden: The FTC staff's estimate of the hours 
burden is based on the time that would be required to respond to the 
Commission's information request. The FTC currently anticipates sending 
information requests to as many as 15 e-cigarette companies each year. 
The Commission anticipates that these companies will vary in size, in 
the number of products they sell, and in the extent and variety of 
their advertising and promotion. Because of these variables, and the 
quick-changing nature of the industry at this point, FTC staff has not 
calculated separate burden estimates for large and small companies, as 
is otherwise traditionally the case for the Commission's cigarette and 
smokeless tobacco Orders. For example, an e-cigarette marketer with a 
large volume of sales but a relatively small product line could 
potentially require fewer resources to respond to the Commission's 
Order than a marketer with lower overall sales but a substantially 
larger product line that offers consumers a greater range of flavor and 
nicotine options. Rather than account for each potential permutation of 
factors, FTC staff has calculated a per company average at the upper 
limit of this potential range. Some companies will likely require less 
time to compile their responses.
    The Commission anticipates that even if it provides models for the 
Excel datafiles the companies will be required to submit, recipients of 
its Orders will need substantial time to prepare a response the first 
time. Once an e-cigarette marketer has prepared its first response to a 
Commission Order, however, it will need less time in subsequent years 
to prepare its reports because it will know what information it will be 
required to produce, and will already have a template for its 
submission.
    Accordingly, as an approximation, staff assumes a per company 
average of 200 hours for each recipient of the Commission's information 
requests the first year they have to comply with the Commission's 
Order. Staff anticipates that in subsequent years, the per company 
average will be 150 hours. Thus, the overall estimated burden for 15 
recipients of the information requests is 3,000 hours for the first 
year and 2,250 for each of the two subsequent years, or a total of 
7,500 hours. Thus, the average yearly burden, over the course of a 
prospective three-year clearance, per recipient (large and small), is 
167 hours (rounded to the nearest whole number). These estimates 
include any time spent by separately incorporated subsidiaries and 
other entities affiliated with the ultimate parent company that has 
received the information request.
    Estimated cost burden: Commission staff cannot calculate with 
precision the labor costs associated with this data production, as they 
entail varying compensation levels of management and/or support staff 
among companies of different sizes. The staff assumes that computer 
analysts and other non-legal staff will perform most of the work 
involved in responding to the Orders, although in-house legal personnel 
will be involved in reviewing the actual submission to the Commission. 
The staff believes that the same $100/hour wage that it used in its 
recent request for reauthorization of information requests to the major 
cigarette and smokeless tobacco manufacturers is appropriate here also 
for the combined efforts of these individuals. Using this figure, 
staff's best estimate for the total labor costs for 15 information 
requests is $300,000 (3,000 hours x $100/hour) for the first year and 
$225,000 for each of the two subsequent years (2,250 hours x $100/
hour), for a total of $750,000 over the entire three-year period. 
Annualized, labor cost per respondent will average approximately 
$16,700.
    Staff believes that the capital or other non-labor costs associated 
with the information requests are minimal. Although the information 
requests may necessitate that industry members maintain the requested 
information provided to the Commission, they should already have in 
place the means to compile and maintain business records.
    Request for comment: You can file a comment online or on paper. For 
the Commission to consider your comment, we must receive it on or 
before December 28, 2015. Write ``Electronic Cigarettes: Paperwork 
Comment, FTC File No. P144504'' on your comment. Your comment--
including your name and your state--will be placed on the public record 
of this proceeding, including, to the extent practicable, on the public 
Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a 
matter of discretion, the Commission tries to remove individuals' home 
contact information from comments before placing them on the Commission 
Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment doesn't include any 
sensitive personal information, such as anyone's Social Security 
number, date of birth, driver's license number or other state 
identification number or foreign country equivalent, passport number, 
financial account number, or credit or debit card number. You are also 
solely responsible for making sure that your comment does not include 
any sensitive health information, such as medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which is . . . privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information, such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names. If you 
want the Commission to give your comment confidential treatment, you 
must file it in paper form, with a request for confidential treatment, 
and you must follow the procedure explained in FTC Rule 4.9(c), 16 CFR 
4.9(c). Your comment will be kept confidential only if the FTC General 
Counsel grants your request in accordance with the law and the public 
interest.
    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online, or to send them to the Commission by courier or 
overnight service. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/electroniccigarettespra, by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``Electronic Cigarettes: 
Paperwork Comment, FTC File No. P114504'' on your comment and on the 
envelope, and mail it to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite 
CC-5610 (Annex J), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610

[[Page 65761]]

(Annex J), Washington, DC 20024. If possible, submit your paper comment 
to the Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before December 28, 2015. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2015-27194 Filed 10-26-15; 8:45 am]
BILLING CODE 6750-01-P