Tobacco Enforcement and Evaluation

		(Budget Authority in Millions)
	FY 2000 Enacted	FY 2000 Actual	FY 2001 Appropriation	FY 2002 Request
Total	$34.000	$5.701	$0	$0
Total FTE	25	21	0	0

On August 23, 1996, FDA issued its final regulation restricting the sale and marketing of nicotine-containing cigarettes and smokeless tobacco products.The rule contained a comprehensive set of provisions that limit young people's access to tobacco products, as well as restrictions on the marketing of these products to minors. The rule was the culmination of an intense multi-year investigation that sought to determine if FDA had jurisdiction over these products, and if so, what form regulation should take.

The cigarette, smokeless tobacco, advertising and retail industries, and others brought suit in the United States District Court for the Middle District of North Carolina (Greensboro Division) to invalidate FDA's assertion of jurisdiction and enjoin its regulations. Argument was heard on February 10, 1997 and the Court issued its decision on April 25, 1997 upholding FDA's jurisdiction and its access and labeling regulations. The Court held that the statutory provision relied on by FDA did not provide FDA with authority to regulate advertising and promotion of tobacco products. Furthermore, the court delayed implementation of all remaining provisions, pending appeal, except those for age and photo identification that had gone into effect on February 28, 1997.

Both the government and plaintiffs appealed to the United States Court of Appeals for the Fourth Circuit. On August 13, 1998, the Fourth Circuit issued its decision finding the FDA's assertion of jurisdiction and issuance of regulations invalid. On April 26, 1999, the U.S. Supreme Court granted the Petition for a Writ of Certiorari filed by the Solicitor General. The granting of the petition continued a stay of the issuance of the Fourth Circuit's mandate while the Supreme Court considered the case. The age and identification provisions of FDA's tobacco rule in effect since February 1997 therefore remained in effect pending the Supreme Court's final decision.

On March 21, 2000, the Supreme Court, in a 5-4 decision, affirmed the decision of the U.S. Court of Appeals for the Fourth Circuit that FDA lacks jurisdiction under the Federal Food, Drug, and Cosmetic Act to regulate cigarettes as they are customarily marketed. FDA immediately began the process of an orderly shutdown. This following information summarizes FDA's shutdown activities for FY 2000.

Enforcement

Within several hours of the Supreme Court's ruling, FDA issued termination notices via e-mail to the States and Territories under contract with FDA to enforce the Age and ID restrictions. FDA informed its contractors of the Supreme Court's decision, terminated their contracts for the convenience of the government, and directed them to stop conducting FDA compliance checks at tobacco retail establishments.

On April 7, 2000, in consultation with FDA's Contracts Office, FDA issued interim guidance via e-mail to States regarding termination activities, including invoicing, settlement proposals and inventory. On April 14, 2000, FDA's Contracts Office authorized States to continue doing specified work-in-progress in order to prevent undue loss to the government. This work included returning all compliance check forms to FDA, resolving questions concerning completed compliance checks, submitting a final quarterly report, and storing evidence. Under Federal Acquisition Regulations (48 CFR Part 52), the FDA Contracts Office issued deadlines for specific termination activities:

Compliance-Based Outreach

On March 21, 2000, FDA issued a stop work order to Arnold Communications, the national advertising firm under contract to conduct a multimedia ad campaign targeted to retailers and consumers. Currently, FDA is evaluating Arnold’s invoices and settlement proposal in order to make a final payment and close out their contract.

Regulation

In FY 2000, FDA had planned on exploring questions associated with product regulation, including classification and quality system regulations to ensure that the health consequences of tobacco products or their ingredients, additives or constituents are made less harmful. No funds were expended as of March 21, 2000, so the associated funding for this activity was included as a part of FDA's FY 2000 tobacco reprogramming requests approved by the House and Senate.