House Passes Bill to Impose Fees, Restrictions on Tobacco Product Importers/Manufacturers, Etc.

(Although the House has passed H.R. 1256, it is not in effect. Generally, in order for a bill to be implemented, identical versions of that bill must be passed by both the House and Senate and then the bill must be approved (enacted) by the President.)

Bill Would Provide FDA with New Authority Over Tobacco, Impose Fees, Etc.

H.R. 1256 would provide the Food and Drug Administration with new authority under the Federal Food, Drug, and Cosmetic Act (FFDCA) to regulate the manufacture, marketing, and distribution of tobacco products; address the use of tobacco by young people and dependence on tobacco; provide new and flexible enforcement authority to ensure that there is effective oversight of the tobacco industry's efforts to develop, introduce, and promote less harmful tobacco products; continue to permit the sale of tobacco products to adults; impose appropriate regulatory controls on the tobacco industry; and strengthen legislation against illicit trade in tobacco products, etc. H.R. would also require registration of foreign facilities, specific importer record keeping, importer notification of corrective action, submission of ingredient lists, etc.

President Supported House Passage of H.R. 1256, Looks Forward to Further Refinement

According to a recent Statement of Administration Policy, the Obama Administration strongly supported House passage of H.R. 1256 and looks forward to working with Congress to further refine the legislation on any issues of potential concern.

Highlights of H.R. 1256

According to a Congressional summary, H.R. 1256 would (partial list):

User fee on tobacco product importers, manufacturers, etc. - require the assessment of a quarterly user fee on importers and manufacturers of tobacco products (based on the class of tobacco product and the company market share), and deem a tobacco product adulterated if the manufacturer or importer of the product fails to pay the assessed user fee.

Foreign establishment registration - require foreign establishments to register and ensure that adequate and effective means are available to determine whether their tobacco products conform with Federal Food, Drug, and Cosmetic Act (FFDCA) requirements. The bill would also deem a tobacco product to be misbranded if it was manufactured, prepared, or processed in an establishment not registered with the Secretary.

Submission of ingredient lists, etc. - require tobacco product importers or manufacturers to submit to the Secretary: (1) a listing of all ingredients, including ingredients added by the manufacturer to the tobacco, paper, or filter, by brand and quantity; (2) a description of the content, delivery, and form of nicotine in each tobacco product; (3) a listing of all constituents, including smoke constituents, identified by the Secretary as harmful or potentially harmful to health in each tobacco product; and (4) all documents developed that relate to the health, toxicological, behavioral, or physiologic effects of tobacco products and their constituents, ingredients, components, and additives.

Research results may be requested - allow the Secretary to request additional information from a tobacco product importer or manufacturer relating to: (1) research activities or findings on the effects of tobacco products and their constituents and on whether the health risk can be reduced if the manufacturer employs known or available technology; and (2) marketing research or practices used by manufacturers or distributors.

Record keeping - require manufacturers and importers to comply with record keeping and reporting requirements established by the Secretary, such as informing the Secretary of any information that reasonably suggests that a marketed tobacco product may have caused or contributed to a serious unexpected adverse experience.

Importer, etc. notification of corrective action - direct the Secretary to require prompt notification by manufacturers and importers of any corrective action taken or any removal from the market of a tobacco product to reduce a health risk posed by the product or to remedy a violation of this Act that may present such a risk.

Cease in distribution, recalls - allow the Secretary to notify the public if a tobacco product poses an unreasonable risk of substantial harm to the public health and require the Secretary to order a cease in distribution and a recall (after a hearing) of a tobacco product if there is a reasonable probability that it contains a defect not ordinarily contained in tobacco products that would cause serious, adverse health consequences or death.

Prohibit certain ingredients - prohibit a tobacco product manufacturer from using tobacco, including foreign grown tobacco, that contains a pesticide chemical residue at a level greater than any tolerance applicable to domestically grown tobacco; prohibit a cigarette or any of its components from containing as a constituent or additive certain artificial or natural flavors or herbs or spices that is a characterizing flavor of the tobacco product or tobacco smoke; allow the Secretary to adopt additional tobacco product standards as appropriate to protect the public health, which may include standards for: (1) reducing nicotine yields; (2) reducing or eliminating other constituents or harmful components; and (3) product testing; and allow the Secretary to amend or revoke a tobacco product standard.

Prohibit Secretary from banning all cigarettes, smokeless tobacco, cigars, etc. - prohibit the Secretary from: (1) banning all cigarettes, all smokeless tobacco products, all little cigars, all cigars other than little cigars, all pipe tobacco, or all roll-your-own tobacco products; or (2) requiring the reduction of nicotine yields of a tobacco product to zero.

Pre-market approval of new tobacco products - require premarket approval of all new tobacco products (products not substantially equivalent to an existing tobacco product) commercially marketed after February 15, 2007. The bill would define "substantially equivalent" as having the same characteristics or having different characteristics but not raising different questions of public health.

Illicit trade, smuggling or counterfeiting tobacco products - set forth labeling, inspection, and record keeping requirements to prevent the illicit trade, smuggling, or counterfeiting of tobacco products.

Tobacco products sold without paying duties, diverted, etc. - require a manufacturer or distributor to notify the Attorney General and the Secretary of the Treasury promptly of any knowledge that reasonably supports the conclusion that a tobacco product manufactured or distributed has left its control and may be or has been: (1) imported, exported, distributed, or sold without paying duties or taxes; or (2) diverted for possible illicit marketing.

Regulations requiring testing, reporting - require the Secretary, acting through the FDA Commissioner, to promulgate regulations under this Act within two years that require the testing and reporting of tobacco product constituents, ingredients, and additives that the Secretary determines should be tested to protect the public health. The bill would give the Secretary the authority to conduct or require the testing, reporting, or disclosure of tobacco product constituents.

The bill would delay the imposition of such testing regulations on small tobacco product manufacturers and allow additional such delays under certain circumstances.

Report on tobacco exports - require the Secretary to submit a report to the relevant committees on: (1) the nature, extent, and destination of U.S. tobacco product exports that do not conform to tobacco product standards established under this Act; (2) the public health implications of such exports; and (3) recommendations or assessments of policy alternatives available to reduce any negative public health impact.

Tar and nicotine labels - require the Secretary to determine whether manufacturers should be required to include on the label and advertisements the tar and nicotine yields of the product. The bill would allow the Secretary to require disclosure of the level of constituents in a tobacco product if such disclosures would benefit the public health or increase consumer awareness of the health consequences of the use of tobacco products.

Study on cross-border trades and advertising - requires the Comptroller General to conduct a study to collect data on cross-border trades and advertising in tobacco products and the health effects resulting from such trades and to make recommendations on monitoring such trades and preventing or eliminating such advertising.

(See bill for details on additional topics, such as adulterated and misbranded tobacco products, warning labels, restrictions on advertising, advertising and labeling of modified risk tobacco products, notification of changes, restriction of sale or distribution of tobacco products, good manufacturing practices and HACCP, unfair or deceptive acts or practices, additional rulemakings, and prohibited acts.)

Statement of Administration Policy (dated 04/01/09) available at http://www.whitehouse.gov/omb/assets/sap_111/saphr1256h_20090401.pdf.

H.R. 1256 as passed by House available at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1256eh.txt.pdf.

Library of Congress summary of H.R. 1256 available by emailing documents@brokerpower.com.