WASHINGTON - Yesterday the FDA??s Center for Tobacco Products hosted a webinar on "Compliance Training for Tobacco Retailers: What to Expect During a Tobacco Retailer Inspection." The webinar provided little new information, but did confirm some of our suspicions regarding FDA??s flawed interpretation of their statutory mandate ?" specifically as it relates to retailers?? due process rights and the number of violations that can result from a single inspection.

For more than a year, FDA has been conducting undercover inspections at retail outlets to ensure that retailers are complying with the restrictions contained in the Tobacco Control Act and FDA??s regulations implementing that law. These inspections currently cover the following restrictions:

• Prohibition on underage sales: Retailers may not sell tobacco to anyone under the age of 18.
• Age verification requirement: Retailers must verify the age of purchasers under the age of 27.
• Prohibition of free samples of tobacco products: Retailers may not offer free samples of cigarettes or smokeless tobacco.
• Restrictions regarding gifts/discounted items: Retailers are prohibited from offering any free cigarette or smokeless tobacco products, and prohibited from offering any benefit to a customer in return for purchasing cigarettes or smokeless tobacco product (except for free matches) unless that benefit is discounted cigarettes or smokeless tobacco. Further, retailers may not offer discounted cigarettes or smokeless tobacco in return for any non-tobacco purchase (e.g., gasoline.)
• Self-Service Displays: Retailers must remove any self-service displays of cigarettes or smokeless tobacco (including vending machines) unless only customers over the age of 18 are permitted to enter the premises.
• Tobacco Brand Names: Retailers are prohibited from selling any item other than cigarettes, smokeless tobacco, or roll-your-own paper, which bears the brand name, logo, symbol, or any other indicia of product identification identifiable with those used for any brand of cigarettes or smokeless tobacco. This includes items such as t-shirts, hats, key chains, etc.

Until recently, FDA had only been issuing Warning Letters to retailers that had been violating any of the above restrictions. However, they have begun issuing Civil Money Penalties to violators. At Tuesday??s webinar, FDA announced that 36 monetary fines have been issued to date, and announced that more money penalties will be issued going forward.

FDA also provided additional details regarding an inspection: Most inspections involve a state inspector under contract with FDA to conduct inspections on FDA??s behalf; if a minor is involved, the minor will be supervised by the inspector and attempt to purchase cigarettes or smokeless tobacco in a process designed to check if the retailer is asking for proper identification and verifying the minor??s age. Although inspectors are not required to announce themselves, they may do so, in which case they will provide the "most responsible person" at a retail outlet with their name and title, and provide them with a Form 482, which is FDA??s official notice of inspection.

Also at Tuesday??s Webinar, FDA confirmed two of our primary concerns regarding tobacco regulation. First, the presenter explicitly stated that a Warning Letter is not "final agency action," and thus retailers cannot appeal the allegations in a Warning Letter. This interpretation squarely contrasts with FDA??s statutory mandate, which says that retailers shall have a right to appeal all "violations," including violations leading to Warning Letters rather than civil money penalties.

Second, the presenter indicated that a retailer could be fined as much as $10,000 due to violations found in a single inspection. By interpreting the statute as permitting a single retail inspection to result in multiple "violations" (and thus higher monetary penalties), FDA is violating the law they are charged with implementing ?" although that statute permits FDA to inform a retailer of multiple compliance failures found during a single inspection, it does not grant FDA authority to penalize a retailer with multiple penalties for multiple violations resulting from a single inspection.

Though NACS was concerned that FDA was likely misinterpreting the Tobacco Control Act in these ways, it was not clear that this was the case until Tuesday??s Webinar. NACS urges all tobacco retailers to be aware of FDA??s flawed interpretations and immediately contact NACS if they wish to appeal the allegations contained in a Warning Letter or if they are fined for multiple violations discovered during a single inspection.

More specifically, as it currently stands, no tobacco retailers should be fined more than $250 as a result of failing a single inspection, and no retailers should be fined more than $500 as a result of failing two inspections. Moreover, until FDA issues formal regulations detailing the elements of an adequate employee-training program, no retailers should receive a monetary fined unless they have already received a Warning Letter.

NACS urges all retailers to challenge any violation ?" including Warning Letters ?" if the allegations are inaccurate. If any of these situations take place, please contact NACS immediately and consider hiring counsel.