Weighing In

Support varies for tobacco regulation bill, a double-edged sword for retailers
WASHINGTON -- While there is growing acceptance that the U.S. Food & Drug Administration (FDA) will soon take on regulation of tobacco products and sales, not everyone is ready to lay down their guns. "President Obama is likely to sign FDA regulation of tobacco legislation," wrote the Petroleum Marketers Association of America (PMAA) in a newsletter yesterday, adding, however, "PMAA will continue to oppose FDA regulation of tobacco legislation."

Similarly, Winston-Salem, N.C.-based R.J. Reynolds Tobacco Co. continues to oppose the bill, noting that it is flawed for several [image-nocss] reasons, including that it does not establish a regulatory framework that would appreciably reduce tobacco-related death and disease, it makes it virtually impossible for tobacco manufacturers to develop and introduce products that have the potential to reduce the risk of tobacco usage and it would impede accurate communications to adult tobacco consumers about the comparative risks between different types of tobacco products.

Meanwhile, the National Association of Convenience Stores (NACS) is holding strong to its "no position" stance on the bill, H.R. 1256, which was approved by the House Energy & Commerce Committee on Wednesday with several concessions NACS received last year fully intact.

"What we did is take a bad bill [that we knew was going to pass] and try to lessen the impact on retailers," said Lyle Beckwith, NACS senior vice president of government relations, during a conference call with reporters yesterday. "Over a week of negotiations, we were offered everything that we asked for, except for keeping retailing regulation at the state level. We were told going into those negotiations, 'That's off the table; the FDA is going to regulate you. Now what else do you want to talk about?' "

The concessions NACS did receive included:
Ensuring that the bill's provisions are enforced in an even-handed way against all retailers, including Internet and tribal retailers. Due process safeguards ensuring that retailers get effective notice of violations before followup compliance checks occur. Providing retailers with benefits for implementing compliance programs, including lighter fines and consideration to prevent no tobacco sale orders. Requiring the FDA to take the amount of a state fine out of the amount of a federal fine for the same violation so that there is no double penalty. Protections against retailer liability for problems with warning labels on ads and packages of tobacco products. Allowing convenience stores to sell all nonprescription smoking cessation products. "What we needed to do in order to get that package was to drop our opposition [to the bill]," said Beckwith. "Originally, Representative Henry Waxman, [D-Calif.; then member and currently chairman of the House Energy & Commerce Committee], said they wanted our support, and we said you will never have our support for this. The best we will do is withdraw our opposition, and they agreed."

Retailer Sonja Hubbard, CEO of Texarkana, Texas-based E-Z Mart and chairman of NACS, said the compromise was made with the best intentions of retailers in mind. "I think with what we actually came out with, trying to level the playing field for convenience retailers, who were being more onerously attacked, we made great strides," she said.

And Philip Morris USA, Richmond, Va., has shown strong support for the regulation, noting on its website that "tough but reasonable federal regulation can benefit shareholders and other stakeholders by ensuring that all tobacco manufacturers and importers doing business in the U.S. operate at the same high standards," among other things.

For retailers, however, there are still a lot of unknowns. Both Hubbard and retailer Tom Robinson, CEO of San Jose, Calif.-based Robinson Oil and chairman or NACS' government relations committee, admit there are still shortcomings to the bill. "As a retailer, I am far from happy with this FDA legislation," he said. "I do think that NACS made the right choice, given the cards that NACS was dealt. We believe that just saying no [to the bill] wouldn't have been as productive as identifying some very important pieces and finding out if there was some place that we could compromise."

Aspects that Robinson is still uncomfortable with include the lack of detail in the bill and the addition of more regulation in general. "Any time that you go into a much higher level of regulation there's a fair amount of trepidation, especially when it's not clear what is going to happen," he said. "Maybe as it sorts out, the additional overlay of regulations that FDA is going to put on may not be any worse than what we're currently dealing with, but there's a certain amount of unknown [in this case]."

PMAA, while accepting there are benefits to the bill, offers a much more extensive list of reasons it opposes the action, including the fact the bill would punish retailers if the packaging, labeling or advertising for tobacco products are found to be out of compliance with whatever regulations are determined by the FDA. "Retailers are rarely involved with any of those decisions and should not be punished for manufacturers' mistakes," the association noted. "Second, H.R. 1256 does not limit itself to just additional federal regulation. State and local laws are not pre-empted, meaning the bill does not prohibit states or localities from enacting additional measures on the sale, distribution, possession, exposure and access to tobacco products." [Editor's note: NACS officials said the packaging and labeling issue was resolved as part of their negotiations.]

The full House is expected to vote on the bill soon, although no date has been set. The Senate will then look at its version of the bill, which does not include NACS' compromises; however, Beckwith said he is confident the Senate will adopt the House language.

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