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experienced a time lag between the time and regulations to become a bank FEDERAL TRADE COMMISSION they file a request with the Commission holding company and/or to acquire the and when the request is deemed assets or the ownership of, control of, or Rescission of FTC Guidance submitted for the purpose of beginning the power to vote shares of a bank or Concerning the Cambridge Filter the 60-day clock? How can the bank holding company and all of the Method Commission improve on rendering banks and nonbanking companies AGENCY: Federal Trade Commission advisory opinions promptly? owned by the bank holding company, What else can the Commission do to including the companies listed below. ACTION: Notice improve the advisory opinion process? The applications listed below, as well SUMMARY: The Federal Trade B. Policy Statements and Other as other related filings required by the Commission (‘‘FTC’’ or ‘‘Commission’’) Guidelines Board, are available for immediate has rescinded its 1966 guidance inspection at the Federal Reserve Bank providing that it is generally not a In recent years the Commission has indicated. The applications also will be violation of the FTC Act to make factual issued a number of policy statements, available for inspection at the offices of statements of the tar and nicotine yields which are available on the the Board of Governors. Interested of cigarettes when statements of such Commission’s Web site at http:// persons may express their views in yields are supported by testing www.fec.gov/law/policy.shtml. Have writing on the standards enumerated in conducted pursuant to the Cambridge these statements helped increase the the BHC Act (12 U.S.C. 1842(c)). If the Filter Method, also frequently referred transparency of the Commission’s proposal also involves the acquisition of to as ‘‘the FTC Method.’’ In addition, practices and procedures? How can the a nonbanking company, the review also advertisers should not use terms such as transparency of the Commission’s includes whether the acquisition of the ‘‘per FTC Method’’ or other phrases that practices and procedures be improved? nonbanking company complies with the state or imply FTC endorsement or Are there substantive or procedural standards in section 4 of the BHC Act approval of the Cambridge Filter flaws in any of these policy statements (12 U.S.C. 1843). Unless otherwise Method or other machine-based test that the Commission should address or noted, nonbanking activities will be methods. revise? Should any of these policy conducted throughout the United States. DATES: statements be embodied in regulations Additional information on all bank Except as specified in this to provide better clarity and access to holding companies may be obtained notice, the Commission’s rescission of the public? Are there additional policy from the National Information Center the guidance is effective on November statements that the Commission should website at www.ffiec.gov/nic/. 26, 2008. consider issuing? If so, what Unless otherwise noted, comments ADDRESSES: Requests for copies of this Commission practices and procedures regarding each of these applications notice should be sent to the Consumer should be addressed in the policy must be received at the Reserve Bank Response Center, Room 130, Federal statements? Should policy statements, indicated or the offices of the Board of Trade Commission, 600 Pennsylvania directives and guidelines be placed on Governors not later than January 2, Avenue, NW, Washington, DC 20580. the Web site? 2009. The notice is also available on the What other policy statements could Internet at the Commission’s web site, A. Federal Reserve Bank of San the Commission issue that would be http://www.ftc.gov. Francisco (Kenneth Binning, Vice helpful to the public? President, Applications and FOR FURTHER INFORMATION CONTACT: IV. Other Issues Enforcement) 101 Market Street, San Requests for additional information Francisco, California 94105–1579: should be addressed to Rosemary Rosso, As noted above, the Commission Senior Attorney, Division of Advertising welcomes comments on other issues 1. Carpenter Fund Manager GP LLC; Carpenter Community Bancfund–A, Practices, Bureau of Consumer relevant to these enforcement policies Protection, Federal Trade Commission, and procedures, including any L.P.; Carpenter Fund Management Company, LLC; Carpenter Community 600 Pennsylvania Avenue, NW, comments concerning how the FEC Washington, DC 20580, (202) 326–2174. might increase the fairness, substantive Bancfund, L.P.; Carpenter Community Bancfund CA, L.P.; SCJ, Inc.; CCFW, Inc. SUPPLEMENTARY INFORMATION: Cigarette and procedural due process, efficiency yields for tar, nicotine, and carbon and effectiveness of the Commission. (dba Carpenter & Company), all of Irvine, California, to acquire CG monoxide are typically measured by the On behalf of the Commission. Holdings, Inc., Wilmington, Delaware, Cambridge Filter Method, which Dated: December 2, 2008. and thereby indirectly acquire up to 80 commonly has been referred to as ‘‘the Donald F. McGahn II, percent of the voting shares of California FTC Method.’’ On July 14, 2008, the Chairman, Federal Election Commission. General Bank, N.A, (in organization), Commission published a Federal [FR Doc. E8–28896 Filed 12–5–08; 8:45 am] Pasadena, California. Register notice seeking comment on a proposal to rescind guidance the BILLING CODE 6715–01–P In connection with this application, CG Holdings, Inc., Wilmington, Commission issued in 1966, which Delaware, has also applied to become a stated that it generally is not a violation of the FTC Act to make factual FEDERAL RESERVE SYSTEM bank holding company by acquiring up to 80 percent of the voting shares of statements of the tar and nicotine yields Formations of, Acquisitions by, and California General Bank, N.A. (in of cigarettes when statements of such Mergers of Bank Holding Companies organization), Pasadena, California. yields are supported by testing conducted pursuant to the Cambridge The companies listed in this notice Board of Governors of the Federal Reserve Filter Method. 73 Fed. Reg. 40350 (July have applied to the Board for approval, System, December 3, 2008. 14, 2008). The Notice sought comment pursuant to the Bank Holding Company Robert deV. Frierson, concerning the Commission’s proposal, Act of 1956 (12 U.S.C. 1841 et seq.) Deputy Secretary of the Board. and the likely effects of rescission of the (BHC Act), Regulation Y (12 CFR Part [FR Doc. E8–28933 Filed 12–5–08; 8:45 am] FTC guidance. On July 30, the 225), and all other applicable statutes BILLING CODE 6210–01–S Commission extended the comment

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period until September 12, 2008. 73 cigarettes. In 1966, most public health Today, the consensus of the federal Fed. Reg. 44268 (July 30, 2008). officials believed that reducing the health agencies and the scientific amount of ‘‘tar’’ in a cigarette could community is that machine-based I. BACKGROUND reduce a smoker’s risk of lung cancer. measurements of tar and nicotine yields On March 25, 1966, the Commission Therefore, it was thought that giving using the Cambridge Filter Method ‘‘do informed the major cigarette consumers uniform and standardized not offer smokers meaningful manufacturers that factual statements of information about the tar and nicotine information on the amount of tar and the tar and nicotine content of the yields of cigarettes would help smokers nicotine they will receive from a mainstream smoke of cigarettes would make informed decisions about the cigarette, or on the relative amounts of not be in violation of legal provisions cigarettes they smoked.2 tar and nicotine exposure they are likely administered by the FTC so long as: Despite dramatic decreases in to receive from smoking different brands (1) no collateral representations (other machine-measured tar and nicotine of cigarettes.’’4 than factual statements of tar and yields since then, the Commission has Given the serious limitations of the nicotine content of cigarettes offered for been concerned for some time that the existing test method, the Commission sale to the public) are made, expressly current test method may be misleading published a Federal Register Notice or by implication, as to reduction or to individual consumers who rely on seeking comment on a proposal to elimination of health hazards, and (2) the ratings it produces as indicators of rescind its guidance providing that the statement of tar and nicotine content the amount of tar and nicotine they factual statements supported by testing is supported by adequate records of tests actually will get from their cigarettes, or conducted pursuant to the Cambridge conducted in accordance with the who use this information as a basis for Filter Method generally would not 1 Cambridge Filter Method. comparison when choosing which violate the FTC Act. Importantly, the 1966 guidance only cigarettes they smoke. In fact, the addressed simple factual statements of current yields tend to be relatively poor II. COMMENTS RECEIVED IN tar and nicotine yields. It did not apply predictors of tar and nicotine exposure. RESPONSE TO COMMISSION’S to other conduct or express or implied This is primarily due to smoker NOTICE representations, even if they concerned compensation—i.e., the tendency of The Commission received 36 tar and nicotine yields. Thus, deceptive smokers of lower-rated cigarettes to take comments in response to its Federal claims about tar and nicotine yields or bigger, deeper, or more frequent puffs, Register Notice.5 Of those, 27 health risks continued to be subject to or to otherwise alter their smoking commenters supported the proposal to the full force of the Commission’s behavior in order to obtain the dosage rescind the 1966 guidance, seven jurisdiction. See, e.g., FTC v. Brown & of nicotine they need. comments opposed the proposal, and Williamson Tobacco Corp., 778 F. 2d 35 Concerns about the machine-based two comments neither supported nor (D.C. Cir. 1985); American Tobacco Co., Cambridge Filter Method became a opposed the specific proposal to rescind 119 F.T.C. 3 (1995). Moreover, the substantially greater issue in the 1990s the 1966 guidance.6 The comments are Commission’s 1966 guidance did not because of changes in modern cigarette discussed below. require companies to state the tar and design and due to a better nicotine yields of their cigarettes in understanding of the nature and effects Human Services (Nov. 19, 1998). The DHHS their advertisements or on product of compensatory smoking behavior.3 provided its initial response to the FTC in an NCI labels. Rather, it set forth the type of Report concerning the public health effects of low 2 When the test method was adopted, the public tar cigarettes. Smoking and Tobacco Control substantiation the Commission would Monograph 13: Risks Associated with Smoking deem adequate to support statements of health community believed that ‘‘[t]he preponderance of scientific information strongly Cigarettes with Low Machine-Measured Yields of tar and nicotine yields if cigarette suggests that the lower the tar and nicotine content Tar and Nicotine, National Institutes of Health, companies chose to make such of cigarette smoke, the less harmful would be the National Cancer Institute (2001) (‘‘Monograph 13’’). effect.’’ U.S. Dept. of Health and Human Services, The national panel of scientific experts assembled statements. for the review concluded that the existing scientific From the outset, cigarette testing The Health Consequences of Smoking: The Changing Cigarette 1 (1981) (quoting a 1966 Public evidence, including patterns of mortality from under the Cambridge Filter Method was Health Service statement). smoking-caused diseases, does not indicate a benefit to public health from changes in cigarette intended to produce uniform, 3 To address these concerns, in 1994, the standardized data about the tar and Commission, along with Congressman Henry design and manufacturing over the past 50 years. Monograph 13 at 10. nicotine yields of mainstream cigarette Waxman, asked the National Cancer Institute (‘‘NCI’’) to convene a consensus conference to 4 Testimony of Cathy Backinger, Ph.D., Acting smoke, not to replicate actual human address cigarette testing issues. That conference Chief, Tobacco Control Research Branch, National smoking. Because no test known at the took place in December 1994. Smoking and Cancer Institute, presented before the Committee on time could accurately replicate human Tobacco Control Monograph 7: The FTC Cigarette Science, Commerce and Transportation, U.S. Senate smoking, the FTC believed that the most Test Method for Determining Tar, Nicotine, and (Nov. 13, 2007). See also Testimony of Jonathan M. Carbon Monoxide Yields of U.S. Cigarettes: Report Samet, M.D., M.S., Professor and Chair, Dept. of important objective was to ensure that of the NCI Expert Committee, National Institutes of Epidemiology, Johns Hopkins Bloomberg School of cigarette companies could present tar Health, National Cancer Institute (1996). In 1997, Public Health, presented before the Committee on and nicotine information to the public the Commission published a Federal Register Science, Commerce and Transportation, U.S. Senate based on a standardized method that Notice proposing certain changes to the test method (Nov. 13, 2007); Monograph 13. in accordance with recommendations from the NCI 5 The comments are cited in this notice by would allow comparisons among consensus conference. 42 Fed. Reg. 48,158 (Sept. reference to the name of the commenter. The 12, 1997). In response, the cigarette companies comments are available on the Internet at the 1 News Release of the Federal Trade Commission argued in favor of retaining the existing test Commission’s web site, http://www.ftc.gov. The (Mar. 25, 1966) (reciting the text of identical letters method. Public health agencies asked the comments also are on the public record and are sent to the major cigarette manufacturers and the Commission to postpone its proposed modifications available for public inspection by contacting the Administrator of The Cigarette Advertising Code, until a broader review of unresolved scientific Consumer Response Center, 600 Pennsylvania Inc.). The Cambridge Filter Method determines the issues surrounding the system could be addressed. Avenue, NW, Washington, DC 20580 from 9 a.m. to relative yields of individual cigarettes by In 1998, the Commission responded to the public 5 p.m. Monday through Friday, except federal ‘‘smoking’’ them in a standardized fashion, health agencies’ concerns by formally requesting holidays. according to a pre-determined protocol, on a that the Department of Health and Human Services 6 One of these comments, from a church machine. The machine is calibrated to take one puff (‘‘DHHS’’) conduct a review of the FTC’s cigarette organization, indicated the group’s general concern of 2-seconds duration and 35 ml. volume every test method. Letter from Donald S. Clark, Secretary, that any tobacco use is harmful. In addition, an minute, and to smoke the cigarettes to a specified Federal Trade Commission to the Honorable Donna individual expressed the view that the Commission length. E. Shalala, Secretary, Department of Health and was complicit in deceptions by cigarette companies.

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A. Comments Supporting the Proposal 2. Likely Effects of Rescinding the 1966 tobacco-specific nitrosamines, and to Comments supporting the Guidance require cigarette companies to disclose 22 Commission’s proposal to rescind its Some of the commenters stated that those yields on cigarette packages. 1966 guidance came from public health rescinding the 1966 Guidance would 2. Industry Comments and tobacco advocacy organizations, an help ensure that consumers are not Each of the four major domestic international health organization, a misled and would lead to a better public cigarette manufacturers stated that the municipal health department, academic understanding that lower yield FTC should retain the current guidance. and health professionals, individuals, cigarettes do not reduce health risks These commenters said that the 1966 and Members of the United States 14 caused by smoking. Other commenters guidance, permitting the use of a single Senate.7 indicated that rescinding the guidance standardized test method, the 1. Basis for Support would facilitate smoking cessation by Cambridge Filter method, should be 15 eliminating deceptive claims. One retained until a replacement or One commenter, an official at the commenter stated that rescinding the American Cancer Society, stated that the supplemental test method is guidance would allow consumers to 23 guidance should be rescinded because it approved. These commenters noted make more informed choices about that federal and international scientific has not served its purpose of informing cigarettes by no longer permitting consumers about brands that confer less authorities currently are exploring 8 information that minimizes the health means for addressing the limitations of risk of tobacco-related harm. Several risks associated with smoking.16 commenters indicated their support for machine-based test methods such as the Another indicated that rescission of the Cambridge Filter method. the proposal because the tar and guidance was likely to have positive nicotine yields derived through the effects on smoking intensity, brand a. Basis for Opposition and Likely Cambridge Filter Method do not provide choice, and/or attempts to quit Effects of Rescission meaningful information about the smoking.17 One organization stated that The industry comments stated three relative health risks among cigarette Commission withdrawal of the guidance general bases for their opposition to the brands.9 Other commenters stated that would help public health organizations proposed rescission of the guidance. machine-based yields do not provide be more effective in their efforts to meaningful information to consumers First, each of the companies stated that support smoking cessation and to about the amount of tar and nicotine elimination of the current guidance will prevent youth initiation of smoking.18 actually inhaled by smokers or the lead to consumer confusion, especially since the existing guidance has been in differences in exposure they would B. COMMENTS OPPOSING THE place for over 40 years.24 Second, most receive when switching brands of PROPOSAL cigarettes.10 Some of these commenters of the industry commenters indicated The Commission received comments cited research showing that there is no that a uniform test method is in the opposing its proposal from the four 25 meaningful difference in a smoker’s public interest. Two commenters major domestic cigarette manufacturers, exposure to tar and nicotine based on stated that consumers would have no and three individuals.19 whether that smoker smoked ‘‘light’’ or means for evaluating relative yields of low tar cigarettes, or regular full- 1. Comments from Individuals cigarettes without a single standardized 26 flavored cigarettes.11 Many of the test method. One company indicated One individual, affiliated with a that elimination of the guidance could commenters stated that the tar and smoking cessation program, indicated nicotine yields derived from the lead to a new ‘‘tar derby’’ in which that the current test method provides companies would use different methods Cambridge Filter method are misleading useful information to consumers trying to consumers.12 Some commenters cited of measuring the yields in their to quit smoking by allowing them to studies indicating that consumers cigarettes, thereby leading to greater choose brands that have very low yields 27 mistakenly believe that lower yield consumer confusion. Third, three of of nicotine as an initial part of the cigarettes confer a reduced risk of harm the industry comments contended that cessation process.20 The other two relative to higher yield cigarettes.13 Commission withdrawal of the guidance individuals stated that the FTC should would be misguided in light of pending 7 fix the existing method rather than legislation that would give the U.S. The commenters are the American Academy of 21 Pediatrics, the American Cancer Society Cancer rescind its guidance. One of these Food and Drug Administration (‘‘FDA’’) Action Network, American Legacy Foundation, Dr. comments added that once the test jurisdiction over cigarette testing A. Brandt, Campaign for Tobacco Free Kids (joined method is fixed, the FTC should amend 28 by 19 health-related organizations), Dr. G. Connolly, specifically and tobacco generally. Dr. M. Eriksen, Joanie Fogel, M. Hauckq, K. Karnes, its guidance to require companies to test These commenters stated that if the D. Kasper, P. Konigsberg, Konigsberg, Senator not only tar, nicotine, and carbon legislation is enacted, the FDA might Lautenberg (joined by 15 additional Senators), Dr. monoxide yields, but also other decide to reinstate the Cambridge Filter J. Love, Dr. D. Lynch, A. Moore, NYC Department identified toxins in tobacco smoke such of Health and Hygiene, Dr. R. O’Connor, method or impose a test method at odds Partnership for Prevention, M. Reilly, Smokefree as aldehydes, benzopyrenes, and with the Commission’s proposal. Thus, Pennsylvania, Dr. M. Thun, Dr. N. Benowitz, Dr. D. Commission withdrawal of the guidance Burns, Dr. K. Warner, and the World Health 14 E.g., American Legacy Foundation, Brandt, now could lead to two upheavals in a Eriksen, NYC Dept. of Health. Organization (‘‘WHO’’). relatively short period of time, leading 8 Thun. 15 E.g., Campaign for Tobacco Free Kids, 9 E.g., Brandt, Kasper, NYC Dept. of Health. Connolly, Fogel, Karnes, Kasper, Lautenberg, Love, 22 10 E.g., Campaign for Tobacco Free Kids, Partnership for Prevention. Wright. American Academy of Pediatrics, Connolly, Hackq, 16 NYC Dept. of Health. 23 Liggett, Philip Morris, R.J. Reynolds, Lorillard Benowitz, Burns, WHO. 17 Love. (until DHHS responds to FTC request for 11 E.g., American Legacy Foundation, Campaign 18 Campaign for Tobacco Free Kids. recommendations as to whether and how to change for Tobacco Free Kids, Connolly. 19 Liggett Group LLC, Lorillard Tobacco the existing test method). 24 12 E.g., American Legacy Foundation, Brandt, Company, Philip Morris USA, R.J. Reynolds Liggett, Lorillard, Philip Morris, R.J. Reynolds. Campaign for Tobacco Free Kids, Connolly, Eriksen, Tobacco Company, Dr. J. Nitzkin, Dr. R. Shipley, Dr. 25 E.g., Philip Morris, Liggett, Lorillard. Karnes, Lautenberg, Moore, O’Connor, Partnership C. Wright. 26 Philip Morris, Lorillard. for Prevention, Thun, Warner, WHO. 20 Shipley. 27 Philip Morris. 13 E.g., Thun. 21 Wright, Nitzkin. 28 Liggett, Lorillard, R.J. Reynolds.

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to confusion and unnecessary industry withdraw its 1966 guidance. Advertisers alternative. The FTC does not have the expense.29 One company also said that who include statements of tar and specialized scientific expertise needed rescission of the guidance was nicotine yields as measured by the to design and evaluate scientific test unwarranted because the Commission Cambridge Filter method must ensure methodologies. Thus, when evaluating has not presented evidence that such claims comport with the FTC medical or other scientific issues, the demonstrating that consumers are Act. In addition, advertisers should no Commission often relies on other misled by the yields derived from the longer use the phrase ‘‘by FTC Method’’ governmental agencies and outside current test method.30 or other terms or phrases that state or experts with more knowledge in the imply the Commission’s approval or relevant area. Accordingly, in 1994, the b. Require Additional Disclosures as an endorsement of the Cambridge Filter Alternative to Rescission Commission asked the NCI to convene method, or yields derived from that a consensus conference to address Three of the industry comments method or other machine-based test cigarette testing issues, and, in 1998, the recommended that the Commission methods. FTC asked the Department of Health consider the use of disclosures or 1. Basis for the Commission’s Rescission and Human Services for disclaimers as an alternative to of the 1966 Guidance recommendations concerning whether rescission of the guidance. These and how to change the test method.32 commenters stated that disclosures or The Commission has reached this There currently does not appear to be a disclaimers would reduce any perceived decision for several reasons. First, the scientific consensus on these issues. Nor risk of consumer confusion as to the tar underlying premise for the is there any anticipated date for and nicotine yields obtained by the Commission’s guidance was that tar and reaching a resolution of these issues. Cambridge Filter method. Liggett nicotine statements based on the suggested that the FTC consider the use Cambridge Filter Method would help Thus, simply waiting until the issues of qualifying information or disclosures. consumers make informed decisions by are resolved does not appear warranted Lorillard recommended the use of providing a metric for reducing their or reasonable. disclaimers such as ‘‘results may vary.’’ risk of adverse health effects from Similarly, the Commission is not Philip Morris stated that the smoking. There is now a consensus convinced that simply amending the Commission should consider publishing among the public health and scientific guidance to require the addition of additional consumer education such as communities that the Cambridge Filter disclosures or disclaimers is an an FTC Consumer Alert explaining the method is sufficiently flawed that adequate alternative to rescission of the limits of the Cambridge Filter method, statements of tar and nicotine yields as guidance. or require specific disclosures or measured by that method are not likely to help consumers make informed Likewise, the Commission does not disclaimers that would decrease the agree that rescission of the guidance is likelihood of consumer confusion. decisions. Thus, the underlying premise of the 1966 guidance is no longer valid. unwarranted or ill-advised because c. Use of Terms That State or Imply FTC In addition, the Commission believes pending legislation would give the FDA Endorsement the statements of tar and nicotine yields jurisdiction over cigarette testing In its Federal Register Notice seeking as measured by this test method are specifically, and tobacco generally. public comment, the Commission stated confusing at best, and are likely to Legislation vesting the FDA with that advertisers should no longer use the mislead consumers who believe they jurisdiction over tobacco products has phrase ‘‘by FTC Method’’ or other terms will get proportionately less tar and been introduced annually for over a 33 or phrases that state or imply the nicotine from lower-rated cigarettes decade and has yet to be enacted. Commission’s approval or endorsement than from higher-rated brands. The Most tobacco manufacturers have of the Cambridge Filter method, or Commission will not allow its stamp of opposed that legislation, and it is not yields derived from such method, if the approval on a test method that is clear when such legislation may be 1966 guidance were rescinded. None of confusing or misleading to consumers. enacted into law. Moreover, given the the cigarette companies, nor other Finally, removal of any reference to clear scientific consensus concerning commenters, raised any objections the FTC should substantially improve the inherent limitations of the concerning this issue. Liggett requested consumer education efforts. It is Cambridge Filter method, it is not likely guidance as to whether companies difficult for the FTC or public health that the FDA would reimpose a uniform would be able to use terms such as ‘‘by officials to discuss the limitations of system of cigarette testing that required Cambridge Method’’ as an alternative to ratings obtained pursuant to a test use of the Cambridge Filter method as ‘‘by FTC Method.’’ method that is stated to be a method it exists today. apparently endorsed by an agency of the d. Effective Dates federal government. For example, the 32 See supra note 3. The industry comments noted that the Commission’s consumer alert on tar and 33 The Commission notes that it has long Commission did not specify any nicotine yields conveys an overall recommended that Congress consider giving effective date for compliance if the message that consumers should not trust authority over cigarette testing to one of the federal government’s science-based public health agencies. agency decided to withdraw its the tar and nicotine numbers, while at See, e.g., Prepared Statement of the Federal Trade guidance. Most of these comments the same time, cigarette brand Commission Before the Committee on Commerce, recommended that the FTC provide at advertising implies that the FTC is Science, and Transportation, United States Senate least a one-year interim period.31 endorsing those numbers. (November 13, 2007); Prepared Statement of the Federal Trade Commission Before the Committee III. DISCUSSION 2. The Proposed Alternatives Are on Energy and Commerce, Subcommittee on Inadequate Commerce, Trade, and Consumer Protection, After considering all of the comments, United States House of Representatives (June 3, the Commission has decided to Given the inherent limits of the 2003); Prepared Statement of the Federal Trade Cambridge Filter method, the Commission Before the Committee on Government Reform, United States House of Representatives 29 E.g., R.J. Reynolds, Lorillard. Commission does not believe that (June 3, 2003); Report to Congress for 1997, 30 Lorillard. retaining the guidance until approval of Pursuant to the Cigarette Labeling and Advertising 31 Liggett, Philip Morris, and R.J. Reynolds. a new test method is a viable Act (July 1999).

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3. Requests for Guidance Concerning 4. Dates action to ban the use of descriptors Future Tar and Nicotine Statements appears unwarranted at this time. The Commission understands that At the same time, any continued use The comments submitted by the packaging, advertising, and marketing of descriptors is subject to the FTC Act’s cigarette manufacturers requested materials that relied on the 1966 proscription against deceptive acts and guidance on several issues. In guidance may already be in channels of practices. To the extent that descriptors particular, Lorillard asked whether distribution and cannot be readily are used in a manner that conveys an Commission rescission of its 1966 withdrawn. In the exercise of its overall impression that is false, guidance would permit companies to prosecutorial discretion, the misleading, or unsubstantiated, such include any statements of tar and Commission does not intend to use would be actionable. Thus, nicotine yields in future cigarette challenge actions taken in reliance on companies must ensure that any advertisements.34 The Commission’s that guidance under circumstances in continued use of descriptors does not rescission of its guidance does not which altering or withdrawal of the convey an erroneous or unsubstantiated prohibit statements of tar and nicotine materials was impracticable. message that a particular cigarette yields as long as those claims are Specifically, the Commission will not presents a reduced risk of harm or is truthful, non-misleading, and consider any challenges, prior to otherwise likely to mislead consumers. January 1, 2009, to materials that adequately substantiated. If a claim is IV. CONCLUSION not likely to mislead, advertisers can conformed to the 1966 guidance. generally make such a claim without Additionally, the Commission will not Based upon the analysis discussed running afoul of the FTC Act. At the consider challenges to point-of-sale above, the Federal Trade Commission same time, companies must ensure that materials before March 1, 2009; to print has rescinded its 1966 guidance that it their claims do not erroneously convey advertisements that have already been generally is not a violation of the FTC the impression that the stated yields are distributed to publishers for publication Act to make factual statements of the tar the amounts of tar or nicotine a before March 1, 2009; or to inventories and nicotine yields of cigarettes when consumer is actually likely to inhale of cigarette packaging distributed before statements of such yields are supported from cigarette smoke, or convey an March 1, 2009, to the extent that those by testing conducted pursuant to the erroneous or unsubstantiated message packaging materials were printed before Cambridge Filter Method, also that a relatively lower yield cigarette January 1, 2009. frequently referred to as ‘‘the FTC Test Method.’’ Advertisers should not use presents a reduced risk of harm.35 5. Use of Descriptors terms such as ‘‘per FTC Method’’ or Liggett requested guidance as to Cigarette manufacturers have adopted other phrases that state or imply FTC whether companies could include descriptive terms such as ‘‘light’’ and endorsement or approval of the reference to the ‘‘Cambridge Filter ‘‘ultra low’’ based on ranges of machine- Cambridge Filter Method or other method’’ rather than the ‘‘FTC method’’ measured tar yields. The Commission machine-based test methods. in any future advertisements. The has neither defined those terms, nor By direction of the Commission. Commission’s rescission of its 1966 provided guidance or authorization as to Donald S. Clark guidance does not prohibit companies the use of descriptors. Thus, the Secretary from referencing the specific test Commission did not address, nor did it method used to measure any stated seek comment on, the use of descriptors CONCURRING STATEMENT OF yields of tar or nicotine. Future claims in its July 14, 2008 Federal Register COMMISSIONER PAMELA JONES will be evaluated under the FTC Act’s Notice. Nonetheless, a number of HARBOUR prohibition against deceptive acts or comments raised the use of descriptors. practices. Thus, companies can make Regarding Federal Register Notice In particular, several of the comments Rescinding the FTC’s 1966 Guidance claims that reference a specific test supporting Commission rescission of Concerning the Cambridge Filter Method method as long as the claims are the 1966 guidance recommended that truthful, non-misleading, and the Commission ban any use of Today, the Commission has taken a bold substantiated. Companies should ensure descriptors.36 Several of the industry step: removing its apparent imprimatur from that such claims do not falsely state or comments, on the other hand, requested cigarette advertisements. This action, while imply the FTC’s endorsement or guidance as to their continued use of commendable, should only be a first step. approval of that method. descriptors.37 Further action is needed. Contrary to recent criticism,1 the FTC has The Commission declines the not been a passive player in the area of 34 Lorillard likewise asked whether companies invitation to initiate a proceeding that were still required to state tar and nicotine yields tobacco advertising. The Commission has in cigarette advertisements pursuant to a 1970 would prohibit all use of descriptors. long advocated for the development of a new agreement among major cigarette manufacturers. Cigarette manufacturers have been test for tar and nicotine.2 The Commission The Commission notes that it is not a signatory to banned from using descriptors by the has sought assistance from the scientific that agreement, and has never required statements trial judge in the RICO lawsuit brought community to determine what changes of tar and nicotine yields in cigarette by the U.S. Department of Justice,38 should be made to the testing method. There advertisements. See Brief of the United States as still is no consensus on this issue, however, Amicus Curiae in Support of Respondent, Altria although that remedy is one of the and this lack of agreement has led the Group, Inc. v. Good, No. 07–562 (U.S. Sup. Ct. June issues currently before the court of Commission to rescind its outdated guidance. 2008). appeals. Accordingly, Commission Tobacco companies will no longer be able 35 For example, broad, unqualified claims that to use terms indicating that the FTC approves emphasize a product feature that may have no relative or actual significance or benefit to 36 E.g., American Academy of Pediatrics, consumers, or that fail to disclose information American Legacy Foundation, O’Connor, Brandt. 1 See Jerry Markon, Suit on Tobacco Ads Sparks necessary to eliminate a misleading impression, or 37 Liggett, Lorillard, R.J. Reynolds. Philip Morris Feisty Debate, Washington Post, Oct. 7, 2008, at that deceptively imply a comparative benefit could indicated that it did not address the use of A02. pose concerns under the FTC Act. See, e.g., descriptors in its comment in light of the 2 See Prepared Statement of the Federal Trade Deception Policy Statement, appended to Cliffdale Commission’s Federal Register Notice and on-going Commission Before the Committee on Commerce, Associates, Inc., 103 F.T.C. 110, 174 (1984), cited litigation. Science, and Transportation, United States Senate with approval in Kraft, Inc. v. FTC, 970 F.2d 314 38 U.S. v. Philip Morris USA, Inc., 449 F. Supp. (November 13, 2007), (http://www.ftc.gov/os/ (7th Cir. 1992), cert. denied, 507 U.S. 909 (1993). 2d 1 (D.D.C. 2006). testimony/P064508tobacco.pdf).

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or endorses the Cambridge Filter Method. cigarettes, when actually smoked by people, DEPARTMENT OF HEALTH AND The Commission also has clarified that if would not deliver lower tar or nicotine.1 HUMAN SERVICES tobacco firms choose to make claims based And for far too long, the tobacco industry on this discredited testing method, these has attempted to use the FTC imprimatur to Food and Drug Administration claims will not enjoy any presumption of imply government endorsement of the tar legitimacy. Going forward, advertisements for and nicotine ratings.2 The implication that [Docket No. FDA–2008–N–0038] cigarettes, like any other ads, will continue this agency had mandated disclosure of the Risk Communication Advisory to be scrutinized under Section 5 of the FTC ratings furthered the misconception that the Act. descriptors—and the ratings themselves— Committee; Notice of Meeting Now that the FTC has removed its apparent said something meaningful about the AGENCY: imprimatur from the testing method, I urge Food and Drug Administration, absolute or relative health characteristics of HHS. the scientific community to redouble its the cigarettes.3 To the contrary, the FTC has ACTION: Notice. efforts. Scientists must develop a test that never required disclosure of tar and nicotine provides consumers with a meaningful yields, nor authorized the use of descriptors.4 measure of the tar and nicotine yields of the This notice announces a forthcoming There’s another benefit to our action today. cigarettes they smoke. meeting of a public advisory committee Efforts to educate consumers about the facts More importantly, I urge the next Congress of the Food and Drug Administration to reintroduce S. 625, the Family Smoking behind cigarette ratings—i.e., that the ratings (FDA). The meeting will be open to the Prevention and Tobacco Control Act. This can’t predict the amount of tar and nicotine public. bill includes several key consumer protection a smoker gets from any particular cigarette, Name of Committee: Risk in part because smokers compensate for the measures. First, the bill allows the Food and Communication Advisory Committee. lower tar and nicotine yield by inhaling more Drug Administration to regulate tobacco General Function of the Committee: products. The FDA has lacked any authority deeply and smoking longer5—will no longer have to battle a contrary message on cigarette To provide advice and in this area for decades, and tobacco recommendations to the agency on manufacturers have exploited the void. The advertisements that may have led to bill would authorize FDA scientists to track, consumer confusion about what the ratings FDA’s regulatory issues. analyze, and regulate the components of really mean. Date and Time: The meeting will be tobacco products. If this legislation is After today, there should be no confusion: held on February 26, 2009, from 8 a.m. enacted, the FDA will wield more effective there is no such thing as a safe—or even a to 5 p.m. and February 27, 2009, from tools to protect public health. safer—cigarette. 8 a.m. to 2 p.m. Second, the bill properly assigns authority [FR Doc. E8–28969 Filed 12–5–08: 8:45 am] Addresses: Submit electronic to the FDA to issue certain regulations [Billing Code: 6750–01–S] comments and information to http:// concerning tar and nicotine yields, including www.regulations.gov. Comments are to requirements governing the methodology for be identified with the docket number determining tar and nicotine yields and the 1 In the U.S. Department of Justice lawsuit against the major tobacco companies under the Racketeer found in brackets in the heading of this public disclosure of information about such document. Written comments should be yields or other constituents of tobacco smoke. Influenced and Corrupt Organizations Act (‘‘RICO’’), U.S. District Court Judge Kessler ruled For more than 10 years, the Commission has submitted to the Division of Dockets that the tobacco company defendants had ‘‘falsely Management (HFA–305), Food and Drug recommended to Congress that one of the marketed and promoted low tar/light cigarettes as government’s science-based public health less harmful than full-flavor cigarettes in order to Administration, 5630 Fishers Lane, rm. agencies be given jurisdiction over cigarette keep people smoking and sustain corporate 1061, Rockville, MD 20852, by close of testing. The FDA clearly has the requisite revenues’’ and that they ‘‘internally recognized that business on March 31, 2009. All scientific expertise for this task. low tar cigarettes are not less harmful than full- comments received will be posted Third, the bill appropriately preserves flavor cigarettes.’’ United States v. Philip Morris USA, 449 F. Supp. 2d 1, 430, 456 (D.D.C. 2006); see without change, including any personal coordination between the FTC and the FDA also id. at 430–561. The case is now on appeal. information provided. Comments in enforcing labeling and marketing 2 For example, in defending against a class action received on or before February 12, 2009, requirements. This kind of enforcement is a lawsuit against manufacturers of ‘‘light’’ and ‘‘low- will be provided to the committee core element of the FTC’s consumer tar’’ cigarettes, Philip Morris wrongly asserted that protection mission. The bill wisely preserves the FTC ‘‘has required tobacco companies to before or at the meeting; comments the FTC’s jurisdiction over unfair or disclose tar and nicotine yields in cigarette received after that time will still be deceptive cigarette advertising. advertising using a government-mandated testing considered by FDA. The regulation of the manufacture, sale, methodology and has authorized them to use Location: National Transportation descriptors as shorthand references to those Safety Board (NTSB) Conference Center, advertising, and marketing of tobacco numerical test results.’’ Brief for Petitioner Philip products is a tall order, but it is crucial to the Morris at 2, Altria v. Good, No. 07–562 (U.S. Mar. 429 L’Enfant Plaza SW., Washington, health of our country, especially its young 31, 2008). DC 20594 (at Metro’s L’Enfant Plaza people. Smoking is a continuing public 3 Tobacco company research conducted literally station; parking is limited and public health crisis. It deserves to be at the top of decades ago—which was never presented to the transportation is recommended.) the new administration’s public health Commission—indicated that lower tested yields did Contact Person: Lee L. Zwanziger, agenda. not entail a reduction in smoke intake. Brief for the United States as Amicus Curiae Supporting Office of the Commissioner, Office of CONCURRING STATEMENT OF Respondents at 9, Altria v. Good, No. 07–562 (U.S. Policy, Planning and Preparedness, COMMISSIONER JON LEIBOWITZ June 18, 2008). See also id. at 9–11 (setting forth Office of Planning (HFP–60), Food and instances where tobacco companies failed to Drug Administration, 5600 Fishers Lane Regarding Rescission of Guidance on disclose to the Commission, or affirmatively Cigarette Testing Methodology downplayed, effects of compensation); Philip (for express delivery: rm. 15–22), Morris, 449 F. Supp. 2d at 431 (‘‘Defendants did not Rockville, MD, 20857, 301–827–2895, Our action today ensures that tobacco disclose the full extent and depth of their FAX: 301–827–3285, Food and Drug companies may not wrap their misleading tar knowledge and understanding of smoker Administration, or FDA Advisory and nicotine ratings in a cloak of government compensation to the public health community or to sponsorship. Simply put, the FTC will not be government regulators.’’). Committee Information Line, 1–800– a smokescreen for tobacco companies’ 4 See Brief for the United States as Amicus Curiae 741–8138 (301–443–0572 in the shameful marketing practices. Supporting Respondents at 15, Altria v. Good, No. Washington, DC area), code For far too long, tobacco companies have 07–562 (U.S. June 18, 2008). 8732112560. Please call the Information 5 advertised cigarettes using ‘‘light’’ and ‘‘low E.g., FTC Consumer Alert, Up in Smoke: The Truth About Tar and Nicotine Ratings, Line for up-to-date information on this tar’’ descriptors based on machine-tested tar (www.ftc.gov/bcp/edu/pubs/consumer/alerts/ meeting. A notice in the Federal and nicotine results while knowing that the alt069.pdf) (May 2000). Register about last minute modifications

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