Intro to the Issue
In an effort to reduce the incidence of smoking, particularly among minors, and to improve the safety of tobacco products, Congress passed a law giving the Food and Drug Administration regulatory authority over the manufacture and retailing of tobacco.

The June 22, 2009, enactment of the Family Smoking Prevention and Tobacco Control Act capped a 12-year effort that was begun in 1997 by Sen. John McCain (R-AZ) to provide the FDA with the authority to regulate the manufacture and sale of tobacco. When FDA promulgated regulations without congressional authority, NACS brought its complaint before the U.S. Supreme Court and won. On March 21, 2000, the court upheld the August 1998 Fourth Circuit Court of Appeals’ decision and ruled that FDA lacked the legal authority to regulate tobacco by a vote of 5 to 4. NACS was the sole trade association representing retailers in the lawsuit.

Since that ruling, members of Congress have consistently considered legislation to grant the FDA with the requisite congressional authority and NACS has successfully defeated these efforts. However, in 2006, the political dynamics in Washington shifted and supporters of the legislation were able to attract sufficient support to pass legislation in June 2009.

Why You Should Care
According to the NACS State of the Industry Report of 2008 Data, sales of cigarettes and other tobacco products constituted more than 36 percent of the average in-store sales at NACS member retail locations. While controversial, tobacco is a legal product and one that is important to the economic viability of the convenience store industry.

The new law providing FDA the authority to regulate the manufacture and retail of tobacco products could have a significant effect on convenience retailers in the form of advertising and marketing restrictions, new gruesome warning label requirements, and other provisions.

What NACS Is Doing
During consideration of the legislation, NACS was able to negotiate several provisions that will lessen the burden on convenience retailers and help level the playing field with other retail channels of trade, such as Internet vendors and Native American tribes. The following NACS priorities are included in the new law:

• Create a level playing field by applying the bill’s provisions to all tobacco retailers, including Native American and Internet vendors
• Grant procedural safeguards to ensure a fair regulatory process
• Provide incentives for retailers to adopt good compliance and training practices
• Protect against the imposition of double fines for the same conduct
• Set fair boundaries for retailer liability

The FDA must now prepare regulations implementing the various provisions of the new law. NACS is engaged in the rulemaking process and will be diligent in advocating for the rights of its members under the new regime.

Latest Developments
During the 110th Congress, the House Energy and Commerce Committee’s Subcommittee on Health passed the Family Smoking Prevention and Tobacco Control Act (H.R. 1108) by a vote of 18 to 9 on March 11, 2008. Following Subcommittee approval, NACS and its congressional allies began lengthy negotiations with the Committee. Although unable to remove from the bill the transfer of authority to the FDA, NACS successfully reached an agreement with the Committee to include all of the other retailer priorities, as noted above. Accordingly, NACS withdrew its opposition to the bill.
 
On April 2, 2008, the House Energy and Commerce Committee passed the amended legislation by a vote of 38 to 12. On July 31, 2008, the House voted on final passage 326 to 102. The bill was sent to the Senate, but no further action was taken.
 
In the current 111th Congress, the House Energy and Commerce Committee passed H.R. 1256, the Family Smoking Prevention and Tobacco Control Act, by a vote of 39-13 on March 4, 2009. The House of Representatives passed the bill 298 to 112 on April 2. The bill included the language secured by NACS the previous year.

The Senate passed its version of the bill on June 11 on by vote of 79 to 17 after adding a requirement for gruesome warning labels on packages of tobacco products. The House passed the Senate version on June 12, and President Obama signed it into law on June 22.

On June 30, the FDA opened a public comment period extending until September 29, 2009, while it began developing the rules to implement the law.

NACS is working with FDA to ensure retailer concerns properly considered during the rulemaking process. The following schedule for rulemaking was established by the bill:

• In September 2009, the Secretary of Health and HumanServices may begin creating tobacco product standards, including restrictions on the sale of tobacco products. However, product standards may not take effect until at least one year after they are published. According to the law, the effective date will be chosen so as to minimize economic loss and disruption of trade.
• In December 2009, the Secretary will publish an Enforcement Action Plan to implement restrictions on the promotion and advertising of menthol and cigarettes to minors.
• In December 2009, FDA must publish the 1996 final rule, which included both advertising restrictions and age verification requirements. That rule must take effect June 22, 2009. These 1996 regulations stipulated, among other things:
• Cigarettes can only be sold in direct, face-to-face transactions, except that mail-order sales are allowed and vending machine and self-service sales are allowed in adult facilities. Self-service displays are not allowed.
• Prohibits selling singles and requires packs to have at least 20 cigarettes. No free samples of cigarettes can be distributed.
• Prohibits outdoor advertising within 1,000 feet of a playground, elementary or secondary school.
• Limits ads to black and white text. (The 1996 regulations exempted adult facilities and adult publications — the new law does not include this exemption.)
• Limits audio and video ads to words without sound effects or music and video images can only consist of black and white text.
• Prohibits the sale of any items (key chains, etc.) bearing a cigarette logo or brand name.
• In December 2010, FDA must implement a program to monitor and enforce compliance with the 1996 rule. 
• In December 2010, regulations to prevent the sale and distribution of tobacco products to minors via non-face-to-face transactions (i.e., over the Internet and by mail order) will be made official.
• In June 2011, regulations regarding advertising tobacco products to youth over the Internet and through other non-face-to-face methods will be official.
• Fifteen months after they are issued, regulations regarding label warnings on cigarettes and smokeless tobacco products will become effective. These requirements will not apply to retailers, so long as the retailer does not create or modify the products’ label statements. However, after the effective date, retailers will be held liable if they publicly display an advertisement that does not include a warning.