[Federal Register Volume 89, Number 20 (Tuesday, January 30, 2024)]
[Notices]
[Pages 5893-5897]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01798]
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FEDERAL TRADE COMMISSION
Agency Information Collection Activities; Submission for OMB
Review; New Collection
AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').
ACTION: Notice.
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SUMMARY: In accordance with the Paperwork Reduction Act of 1995
(``PRA''), the Federal Trade Commission (``FTC'' or ``Commission'') is
submitting to the Office of Management and Budget (``OMB'') its
proposal to seek OMB clearance for information collection requirements
contained in the Federal Cigarette Labeling and Advertising Act
(``FCLAA''). The FCLAA requires the FTC to review plans for the
rotation of health warnings on cigarette packaging and advertising. The
current provisional clearance expires on January 31, 2024, and the FTC
intends to seek OMB renewal for three years.
DATES: Comments must be received on or before February 29, 2024.
ADDRESSES: Interested parties may file a comment online or on paper, by
[[Page 5894]]
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Written comments and
recommendations for the proposed information collection should be sent
within 30 days of publication of this notice to www.reginfo.gov/public/do/PRAMain. Find this particular information collection by selecting
``Currently under 30-day Review--Open for Public Comments'' or by using
the search function.
FOR FURTHER INFORMATION CONTACT: Shira Modell, General Attorney,
Division of Advertising Practices, Bureau of Consumer Protection, (202)
725-2162, [email protected].
SUPPLEMENTARY INFORMATION:
A. Background
The Federal Cigarette Labeling and Advertising Act, 15 U.S.C. 1331
et seq. (2006 ed.) (``FCLAA'') tasks the FTC with reviewing the
rotation of statutorily-prescribed Surgeon General's health warnings on
cigarette packaging and in advertisements, and requires the FTC to
collect certain information from manufacturers, packagers, and
importers importing for sale, distributing, or advertising cigarettes
in the United States.
Because this information collection requirement is statutorily
prescribed, OMB clearance was not required for the requirement to
submit information to be effective.\1\ Nonetheless, the FTC recently
decided to obtain OMB clearance for this statutorily mandated
information collection. Accordingly, on July 28, 2023, the FTC obtained
from OMB (i) approval of an expedited provisional clearance for this
information collection (OMB Control Number: 3084-0175, Title:
Information Collection under the Federal Cigarette Labeling and
Advertising Act), and (ii) a waiver under 5 CFR 1320.13(d) of the
requirement to publish a notice of the emergency clearance request. On
September 6, 2023, the FTC published a Federal Register notice with a
60-day comment period soliciting comments from the public concerning
the proposed collections of information (hereinafter, ``Federal
Register Notice''). See 88 FR 60941 (September 6, 2023). In response to
this Federal Register Notice, the FTC received four responsive, non-
duplicative comments.\2\
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\1\ An agency not having obtained OMB clearance for a
statutorily-mandated information collection requirement does not
excuse a respondent's failure to comply with the requirement. U.S.
v. Ionia Management S.A., 498 F. Supp. 2d 477, 489 (D. Conn. 2007);
accord 5 CFR 1320.6(e) (where information collection requirements
are imposed by statute, an agency's not having complied with the
requirements of the PRA is not a defense against the assessment of a
penalty).
\2\ See Comment FTC-2023-0056-0007, https://www.regulations.gov/comment/FTC-2023-0056-0007 (Sept. 27, 2023) [hereinafter Comment
from Anonymous]; Comment FTC-2023-0056-0009, https://www.regulations.gov/comment/FTC-2023-0056-0009 (Nov. 6, 2023)
[hereinafter State AGO Comment]; Comment FTC-2023-0056-0006, https://www.regulations.gov/comment/FTC-2023-0056-0006 (Sept. 23, 2023)
[hereinafter JD Comment]; Comment FTC-2023-0056-0010, https://www.regulations.gov/comment/FTC-2023-0056-0010 (Nov. 6, 2023)
[hereinafter ITG Brands & Commonwealth Brands Comment].
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B. Comments
Three of the four comments express the commenters' strong support
for the information collection, noting that the collection of the
information is useful and necessary for the purpose of the promotion of
public health.\3\ One of the four comments expresses concerns
pertaining to the information collection.\4\ In the remainder of this
section, the Commission provides summaries of the four comments and the
Commission's responses to the comments.
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\3\ See State AGO Comment; see also JD Comment; Comment from
Anonymous.
\4\ See ITG Brands & Commonwealth Brands Comment.
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I. Individual Commenters
Comments: Two of the four comments the Commission received express
strong support for the information collection, and explain that the
commenters had personally witnessed the effects of tobacco addiction on
others.\5\
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\5\ See JD Comment; Comment from Anonymous.
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Response: The Commission shares the commenters' concern about the
importance of informing consumers about the health risks associated
with cigarette smoking through display of the Surgeon General's health
warnings on cigarette packaging and advertising.
II. Comment by State Attorneys General
Comment: The Offices of the Attorneys General for the States of
Maryland, Arizona, Arkansas, California, Colorado, Connecticut, Hawaii,
Illinois, Montana, Missouri, New Mexico, Ohio, Oklahoma, Oregon,
Pennsylvania, Rhode Island, South Carolina, Tennessee, and Washington
(hereinafter, collectively referred to as ``State AGOs'') submitted a
joint comment, noting that the information collection (``FCLAA
information collection'') is useful and necessary for the purpose of
the promotion of public health, and aids State governments in their
regulation of cigarette manufacturers seeking to sell cigarettes in the
States.\6\ The State AGOs note that most States publish a directory of
cigarette brands that have been approved for sale in their respective
States, and require manufacturers to submit certain information,
including approval letters from the FTC showing that the manufacturers
have submitted plans that the FTC found to be compliant with the
FCLAA.\7\ According to the State AGOs, the submission of the approval
letters (1) promotes public health by ensuring that cigarette brands a
manufacturer seeks to sell in the State will bear required health
warnings that alert consumers to the risks cigarettes pose to the
smoker's health and the health of people nearby; (2) informs States
about the cigarette brands a manufacturer intends to sell during the
upcoming year; (3) serves as a tool for States to verify that
cigarettes listed on their directory of approved brands are, in fact,
legal for sale in the United States; and (4) provides a level of
assurance to the reviewing States that a manufacturer is a business
that is in good standing, capable of meeting its regulatory obligations
with different government agencies, and committed to operating legally.
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\6\ See State AGO Comment.
\7\ State AGO Comment (citing Md. Code Ann., Bus. Reg. sections
16-501 to -508; Ohio Rev. Code Ann. section 1346.05 et seq.; 35 Pa.
Stat. Ann. sections 5702.101 et seq.; S.C. Code Ann. sections 11-48-
30; Tenn. Code Ann. sections 67-4-2601 et seq.).
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Response: The FTC appreciates the comment, which underscores the
necessity of this information collection.
I. Comment by ITG Brands, LLC, and Commonwealth Brands, LLC
Comment: ITG Brands, LLC, submitted a public comment on behalf of
itself and its affiliate, Commonwealth Brands, LLC, voicing the
following concerns pertaining to this information collection.
First, the two cigarette companies assert that the Notice's
apparent position that rotation plans must identify brand styles by
name exceeds FTC's statutory authority and is unnecessary. According to
the two cigarette companies, the text of 15 U.S.C. 1333(copyright) only
requires that rotation plans sufficiently explain how cigarette
manufacturers will comply with their quarterly or simultaneous rotation
obligations. The two cigarette companies assert that because the text
of 15 U.S.C. 1333(c)(1) does not employ the term ``brand style,'' the
statute does not suggest that any element of a rotation plan must be
brand-specific. In support of this argument, they note that, in 1985,
the FTC approved a number of rotation plans that include language
continuing to permit those cigarette
[[Page 5895]]
manufacturers to introduce new brands and brand styles without having
to seek prior approval or submit sample packaging.
Second, the two cigarette companies argue that the Federal Register
Notice's apparent position that cigarette manufacturers must submit
packaging for new brands and brand styles and packaging changes for
existing brand styles, exceeds the FTC's statutory authority and is
unnecessary. Noting that 15 U.S.C. 1333(c) does not specify that
cigarette manufacturers must submit ``packages'' to the FTC for
approval, the two cigarette companies contend that Congress would have
expressly required cigarette manufacturers to submit ``packages,'' if
it had intended them to do so. The two companies assert that FTC
appears to be using the rotation plan requirement of 15 U.S.C. 1333(c)
to enforce the warning label requirements of paragraphs (a) and (b) of
15 U.S.C. 1333, although 15 U.S.C. 1333(c) only requires manufacturers
to submit a plan ensuring compliance with the subsection's rotation
requirements. According to the two cigarette companies, 15 U.S.C.
1333(c) does not require the plan to cover the manufacturer's
compliance with paragraphs (a) and (b) of 15 U.S.C. 1333. The two
cigarette companies argue that ``the FTC seems to recognize this by its
treatment of the major tobacco companies, as on information and belief
the FTC has not required them to submit sample packaging before
implementing packaging changes since 1985.''
Third, the two cigarette companies assert that the information
collection imposes a substantial burden on cigarette manufacturers
beyond the burden stated in the Federal Register Notice. The two
companies contend that the Commission's analysis fails to account for
the costs cigarette manufacturers incur as a result of submitting
packaging for the agency's review and that even the collection
activities accounted for in the burden analysis are drastically
underestimated.
For example, the two cigarette companies assert that the submission
of ``revised packaging and plan documents involves . . . far more than
the 8 hours that the FTC estimates, with a more accurate estimate based
on ITG and Commonwealth's experience requiring up to 20 to 40 hours per
submission.'' The companies' estimate includes, among other things, the
time spent making printing arrangements for packaging samples and
addressing any changes requested by the FTC.
The two companies also assert that, due to the fact that the FTC
requires cigarette manufacturers to submit actual packaging samples,
rather than PDFs of packaging samples, the introduction of new brand
styles requires a special print run from an outside printing company.
According to the two companies, samples of actual packaging for new
products are often not available until shortly before the intended
launch of such products and require up to three months of lead time for
printing ``and additional expense for printing a complete sample set
from $8,000 to $25,000 per variant.'' The two cigarette companies state
that the aggregate burden in time and expense resulting from this is
substantial when cigarette companies introduce several new brand styles
a year. Moreover, the companies assert that, since the plans of Philip
Morris and RJR/Lorillard permit those manufacturers to introduce new
brands and brand styles without having to seek prior approval or submit
sample packaging, other cigarette companies--such as ITG Brands, LLC,
and Commonwealth Brands, LLC--experience a substantial competitive
burden as a result of this delay.
Fourth, the two cigarette companies argue that the FTC should
minimize these burdens by (1) allowing all manufacturers to adopt
rotation plans that permit the introduction of new brands or brand
styles without further submission to the Commission as long as the
rotation plan explains how the warnings on such new products will be
appropriately rotated, and (2) no longer requiring manufacturers to
submit ``every packaging change [to the FTC] for review and approval.''
The two cigarette companies contend that doing so would be consistent
with the regulations the U.S. Food and Drug Administration (``FDA'')
has issued in light of the pending transfer of statutory authority
concerning the display of health warnings. The two companies claim that
in a final rule, titled ``Tobacco Products; Required Warnings for
Cigarette Packages and Advertisements,'' the FDA took the position
that, ``in lieu of a supplement to an approved plan for a new brand,
manufacturers may reference in their initial plan `all brands' in their
product listing(s) . . . and incorporate any new brands into their
approved plan, so long as no other changes are made to the plan.'' \8\
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\8\ ITG Brands & Commonwealth Brands Comment (citing 85 FR 15638
(Mar. 18, 2020)).
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Response: The two companies are correct that section 1333(c)(1)
does not explicitly mention brand styles. However, section 1333(b)(1),
which addresses the format of packaging warnings, specifically states
that the health warning statements must be in ``conspicuous and legible
type in contrast by typography, layout, or color with all other printed
material on the package.'' Accordingly, to ensure that the Surgeon
General's health warnings on cigarette packs and cartons are
conspicuous, since at least 1991, the Commission has required
manufacturers and importers to submit health warning plans for all new
cigarette brands and brand styles, and has reviewed the packaging
submitted with those plans by the manufacturers and importers before
that packaging is sent out into the marketplace. As a practical matter,
no other system would efficiently effectuate Congress's intent that the
warnings be conspicuous on cigarette packaging.
Moreover, section 1333(c)(2) of the FCLAA does expressly use the
term ``brand style'' with respect to a manufacturer or importer that is
applying for permission to use the alternative to quarterly rotation.
Section 1333(c)(2)(A) sets forth the requirements that must be met to
qualify for the alternative ``with respect to a brand style of
cigarettes,'' \9\ including that the number of cigarettes ``of such
brand style'' sold in the previous fiscal year is less than one-quarter
of 1 percent of all cigarettes sold in the U.S. that year.
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\9\ 15 U.S.C. 1333(c)(2)(A) (emphasis added).
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The Commission believes it has the authority under FCLAA to review
the format of packaging warnings in order to ensure that the Act's
statutory requirements are satisfied. Paragraph (a)(1) of section 1333
sets forth the requisite wording of the four packaging warnings, and
paragraph (b)(1) of section 1333 sets forth the aforementioned format
requirements applicable to the ``label statements'' required by
paragraph (a)(1). Paragraph (c)(1) of section 1333 then refers to the
``label statements'' specified in paragraph (a)(1), and provides that
the label statements are required to be rotated ``on packages of each
brand of cigarettes manufactured by the manufacture or importer'' in
accordance with a plan approved by the Commission that ensures ``that
all of the labels required . . . will be displayed by the manufacturer
or importer.'' \10\ Read together, these provisions provide the basis
for the Commission to require that manufacturers and importers submit
packaging samples to ensure that the rotation plan meets the
statutorily prescribed rotation and formatting requirements. In order
to do so for new brands and brand styles, the Commission must have the
ability to
[[Page 5896]]
require cigarette manufacturers and importers to submit updated
rotation plans and packaging samples.
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\10\ See 15 U.S.C. 1333(c)(1) (emphasis added).
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With regard to the companies' argument that the information
collection imposes a substantial burden on cigarette manufacturers
beyond the burden stated in the Federal Register Notice, the Commission
notes the following. First, ``[s]amples of products or of any other
physical objects,'' which, by definition, includes packaging samples,
do not constitute ``information'' for purposes of the PRA,\11\ and any
costs related to the preparation and submission of any such samples
should not be included in a burden analysis prepared for purposes of
the PRA.\12\
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\11\ See 5 CFR 1320.3(c) (``Collection of information means . .
. the obtaining, causing to be obtained, soliciting, or requiring
the disclosure to an agency, third parties or the public of
information by or for an agency. . . .'') (emphasis omitted)
(emphasis added), CFR 1320.3(h)(2) (`` `Information' does not
generally include . . . [s]amples of products or of any other
physical objects.'').
\12\ See 5 CFR 1320.3(b)(1) (defining the term ``burden'' as
``the total time, effort, or financial resources expended by persons
to generate, maintain, retain, or disclose or provide information to
or for a Federal agency'') (emphasis added).
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Second, the companies' estimate that, in the context of the
introduction of new brands and brand styles, the preparation and
submission of an amended plan takes approximately 20 to 40 hours--i.e.,
up to a full workweek--is likely not reflective of the industry
average. The amendment of an existing rotation plan to add a new brand
or brand style is generally relatively quick and simple, and cigarette
manufacturers can use their existing approved rotation plans as
templates. A company with an approved plan for rotating the warnings
quarterly on its packaging must merely identify the new brand style
being added to that plan and submit the packaging for that new brand
style; \13\ if the company wishes to add a new brand to its plan, it
must also identify the warning that will be assigned to that brand
during each quarter of the year. If the company wishes to use the
option provided by section 1333(c)(2) and display the four warnings an
equal number of times during the year on the packaging of certain brand
styles, it must provide information sufficient to show that its sales
satisfy both of the criteria in 15 U.S.C. 1333(c)(2)(A), provide
packaging, and explain--again, as it has done previously--how it will
ensure that all four warnings will be equally displayed during the one-
year period beginning on the date the plan is approved (for example, by
using printing plates that produce an even number of all four warnings
simultaneously on each print run).
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\13\ The Commission's insistence on actual packaging, rather
than just artwork, reflects its experience that colors can be
different in artwork than in final packaging, and that those
differences can affect whether the warnings are conspicuous.
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Third, the two cigarette companies' estimate includes activities
that do not result from a collection of information. Specifically,
because, as indicated above, the submission of the samples does not
constitute a collection of information for purposes of the PRA,\14\ the
two cigarette companies' estimate erroneously includes time spent
making printing arrangements.\15\ Furthermore, when a plan submitted to
the Commission cannot be approved in its original form, FTC staff
usually provides the cigarette manufacturer with specific,
individualized guidance as to the changes necessary for Commission
approval. As the PRA exempts ``request[s] for facts or opinions
addressed to a single person'' and ``[f]acts or opinions obtained or
solicited through nonstandardized follow-up questions designed to
clarify responses to approved collections of information,'' \16\ the
time spent incorporating requested changes into the companies'
proposals should not be reflected in the burden estimate for this
information collection.\17\
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\14\ See supra note 13.
\15\ See supra note 15.
\16\ See 5 CFR 1320.3(h)(6), (9).
\17\ See supra note 15.
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Fourth, the Commission questions the companies' assertion that the
preparation of their plans requires the assistance of outside counsel.
For the years 2017 through 2021--the most recent years for which the
two companies' plans are on the public record--their plans were all
signed by in-house counsel. Although some manufacturers and importers
do use outside counsel to file their plans, they presumably do so
because it makes more sense from a business perspective than using in-
house personnel.
The companies also fail to explain why the submission to the
Commission of the packaging that they intend to use for new products
requires a significant lead time for printing that would not otherwise
be incurred. Even if the Commission were to allow manufacturers to
adopt rotation plans that permit the introduction of new brands or
brand styles without further submission to the Commission,
manufacturers and importers would nonetheless have to create, print,
and then review any packaging for new varieties or redesigned packaging
for existing varieties for compliance with the FCLAA's format
requirements.\18\ The two companies also fail to explain why the
expense associated with the preparation of sample packaging by an
outside printing company would not still be incurred if the companies
were to review their own new packaging for compliance with FCLAA
(rather than submit them to the Commission for approval).
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\18\ As noted supra note 13, the preparation and submission of
packaging samples does not constitute a collection of information
for purposes of the PRA, and, thus, should be disregarded for
purposes of this burden analysis.
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The companies also argue that the fact that they are required to
seek Commission approval prior to the introduction of new brand styles
or packaging causes them to suffer a ``substantial competitive
burden.'' However, consideration of whether the requirement imposes a
competitive burden is beyond the scope of a burden analysis under the
PRA, which defines the term ``burden'' more narrowly.\19\ Furthermore,
the two companies' final argument--that is, that requiring Commission
approval for the introduction of new brand styles is inconsistent with
the approach that the FDA proposed in light of the pending transfer of
statutory authority concerning the display of health warnings \20\--is
equally beyond the scope of this notice. The FDA's proposed approach is
based on the Family Smoking Prevention and Tobacco Control Act, Public
Law 111-31, tit. II, sec. 201 (June 22, 2009) (hereinafter,
``FSPTCA''), which differs from the FCLAA in significant aspects.\21\
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\19\ For a definition of the term ``burden,'' see 44 U.S.C.
3502(2) and 5 CFR 1320.3(b)(1).
\20\ ITG Brands & Commonwealth Brands Comment (citing 85 FR
15638 (Mar. 18, 2020)).
\21\ For example, the FSPTCA provides precise details as to the
size, font, location, and color of the nine warning statements that
will ultimately replace the current four Surgeon General's warnings.
See 15 U.S.C. 1333(a)(2) (2009 ed.). Additionally, only the FCLAA
specifically requires the annual submission of information
demonstrating that the manufacturer or importer continues to qualify
for equalization of the health warnings.
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Accordingly, as the Commission does not find the two companies'
arguments to be convincing, the Commission declines to adjust the
estimates that were included in its expedited provisional clearance
request and approved by OMB on July 28, 2023.
C. Overview of Information Collection
Title of Collection: Information Collection under the Federal
Cigarette Labeling and Advertising Act.
OMB Control Number: 3084-0175.
Type of Review: Extension without change of currently approved
collection.
[[Page 5897]]
Abstract: The Federal Cigarette Labeling and Advertising Act, 15
U.S.C. 1331 et seq. (2006 ed.) (``FCLAA''), requires cigarette
manufacturers, packagers, and importers to place one of four
statutorily-prescribed Surgeon General's health warnings on cigarette
packaging and in advertisements, on a rotational basis in accordance
with plans reviewed and approved by the FTC. Each manufacturer,
packager, and importer (hereinafter, also referred to as
``respondents'') wishing to import for sale or distribute cigarettes in
the United States is required to submit a plan to the FTC that (1)
explains how the respondent intends to comply with the statutory
requirement to display the statutorily-prescribed health warnings on
its packaging, (2) identifies each of the respondent's brands and brand
styles, (3) includes a schedule (or other explanation) showing the
warnings that will be assigned to each brand during each quarter of the
year, and (4) specifies when in the manufacturing process the
respondent will consult its rotation schedule for that particular brand
in order to assign the appropriate quarterly warning. Respondents
wishing to engage in advertising of cigarettes in the United States are
required to submit to the FTC a plan that (1) includes a rotation
schedule for the four statutorily-prescribed health warnings for each
brand the respondent intends to advertise, (2) specifies how the
respondent will determine which health warnings will appear on
different kinds of advertisements, and (3) specifies how the respondent
will handle advertisements that feature more than one of the
respondent's brands.
The FCLAA also provides for an alternative method for displaying
the required health warnings on packaging--that is, equalization.
Specifically, manufacturers, packagers, and importers may seek the
FTC's approval to display the health warnings on a particular cigarette
brand style an equal number of times. In order to obtain approval for
equalization, respondents must submit an additional plan to the FTC
that establishes (1) that their sales satisfy the statutory-prescribed
requirements for equalization, and (2) how the respondent will ensure
that all four health warnings will be equally displayed during the one-
year period following the plan's approval (e.g., by using printing
plates that produce an even number of all four warnings simultaneously
on each print run). Respondents seeking to equalize must submit new
plans annually to demonstrate that their sales continue to qualify for
equalization.
The Commission uses the information to assess--as it is required to
do under the FCLAA--whether a manufacturer or importer will display the
Surgeon General's health warnings in compliance with the governing
statutory provisions in the FCLAA.
Affected Public: Private Sector: Businesses and other for-profit
entities.
Estimated Annual Burden Hours: 328.
Estimated Annual Labor Costs: $16,695.
Estimated Annual Non-Labor Costs: $0.
D. Request for Comment
Pursuant to OMB regulations, 5 CFR part 1320, which implement the
PRA, 44 U.S.C. 3501 et seq., the FTC is providing this second
opportunity for public comment while submitting to OMB its request for
clearance for the information collection requirements contained in the
FCLAA. For more details about the requirements and the basis for the
calculations summarized above, see 88 FR 60941.
Your comment--including your name and your state--will be placed on
the public record of this proceeding. Because your comment will be made
public, you are solely responsible for making sure that your comment
does not 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 ensuring that your comment does not
include any sensitive health information, such as medical records or
other individually identifiable health information. In addition, your
comment should not include any ``[t]rade secret or any commercial or
financial information which is . . . privileged or confidential''--as
provided 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)--including, in particular, competitively
sensitive information, such as costs, sales statistics, inventories,
formulas, patterns devices, manufacturing processes, or customer names.
Josephine Liu,
Assistant General Counsel for Legal Counsel.
[FR Doc. 2024-01798 Filed 1-29-24; 8:45 am]
BILLING CODE 6750-01-P