Showdown Looming on FDA Tobacco Legislation
On Tuesday, March 11, the House Energy and Commerce Committee's Subcommittee on
Health approved H.R. 1108, the Family Smoking Prevention and Tobacco Control
Act, a bill granting the Food and Drug Administration with regulatory authority
over the manufacture and retail of tobacco products.
As we have been reporting continuously for months, NACS focus in the legislation
is to amend the retailing provisions to preserve primary retail enforcement
authority at the state level, to give retailers an incentive to implement
stringent compliance programs, to ensure all retail formats including Internet
are held to the same standards and to allow convenience stores to sell smoking
cessation products.
In the days leading up to the markup and throughout the process, NACS has been
working with a variety of legislators to push for changes to the bill. The
champion of the legislation, Rep. Henry Waxman (D-CA) made some effort to
address concerns raised by certain Democrats on the committee, such as Reps.
Mike Ross (D-AR) and Bart Gordon (D-TN), but the changes made to the retail
provisions do not go nearly far enough to mitigate NACS concerns.
The specific changes include the following:
Provides the retailer with the opportunity for a hearing at a facility within
100 miles of the retailer's location or by telephone (retailer's choice) before
a tobacco "no-sale" order may be imposed
Changed the definition of repeated violations which could trigger a "no-sale"
order to mean at least five violations within three years (original language
left the number of violations to the discretion of the FDA)
Provides that FDA must provide notice of violation before conducting a follow-up
compliance inspection. Such notice must be delivered via registered or certified
mail, or personal delivery, to the retailer's address of record or to a
registered agent if one is designated
Establishes escalating monetary penalties for repeated violations and authorized
FDA to index these for inflation. Provides for lower fines for the first three
violations if the retailer uses an approved training program
None of these changes address the core issues NACS has identified as problems
with the bill. During the markup, the Republicans on the committee were prepared
to offer in excess of 20 amendments, many of them relating to the retail
concerns of NACS. The amendments sparked debate and a promise by Rep. Waxman to
work with the other members of the Committee in an effort to address these
issues before the full Energy and Commerce Committee meets to consider the bill,
expected sometime in April.
NACS is not confident that such discussions will effectively resolve our
concerns with the legislation, and is working with various members of the full
committee to ensure that amendments addressing these issues will be offered and
accepted during the markup.
EPA Tightens Air Quality Regulations; Proposes Legislation to Balance
Environmental Protections With CostsThis week the Environmental Protection
Agency issued new rules to tighten controls over ozone levels in the
environment. The new regulations amend the 8-hour ozone rule by reducing the
allowable concentration of ozone molecules from the current 0.084 parts per
million to 0.075 parts per million. The result: 345 additional counties will be
classified in non-attainment. Official designations are expected in 2010.
For retailers, of critical concern non-attainment will likely mean additional
controls on fuel quality and, in the more serious non-attainment areas,
additional controls on retail equipment with the possible requirement of Stage
II Vapor Recovery systems on dispensers and storage tanks.
The rule was not embraced by any interest group. The manufacturing side of the
issue claims the regulations are too stringent and will dramatically increase
the price for consumer goods and energy resources. Meanwhile, the environmental
community chastised the EPA for not setting the standard at a level below 0.070
parts per million, as had been recommended by a scientific advisory board. Both
sides indicated that litigation was possible.
Complying with these changes will require additional effort on the part of
states and localities that has been the case in the past. While the most severe
non-attainment counties will be required by regulation to implement such
standards are Stage II Vapor Recovery at gasoline retail locations, other
measures to reduce ozone will be required throughout the reclassified areas.
However, one tool employed by localities in the past, which wreaked havoc on
fuel supplies, will not be available.
Up until the Energy Policy Act of 2005, many localities would create their own
special blend of gasoline to meet air quality targets, resulting in a patchwork
of regulatory requirements that limited fungibility and left individual regions
more susceptible to supply shortages and price spikes. NACS advocated strongly
leading up to enactment of that legislation that such "boutique fuels" should be
limited in deference to national fuel supply fungibility.
NACS referenced then-pending 8-hour ozone standard and the reclassification, at
that time, of more than 400 counties into non-attainment status as a reason for
limiting the use of regionally specific, boutique fuels. With enactment of that
bill, NACS was able to stop the spread of boutique fuels and stop the further
deterioration of fungibility within the nation's fuel supply. Thus, localities
cannot sacrifice fuel supply availability in their efforts to satisfy the new
standards.
EPA also announced that it plans to develop draft legislation to present to
Congress later this year that would amend the Clean Air Act. According to the
press statement released by the EPA, the agency will focus its proposal on the
following four principles:
"The Clean Air Act and the National Ambient Air Quality Standards:
Must protect the public health and improve the overall well-being of our
citizens;
Should allow decision-makers to consider benefits, costs, risk tradeoffs, and
feasibility in making decisions about how to clean the air;
Should provide greater accountability and effective enforcement to ensure not
only paper requirements but also air quality requirements are met, especially in
areas with the furthest to go in meeting our standards;
Should allow the schedule for addressing NAAQS standards to be driven by the
available science and the prioritization of health and environmental concerns,
taking into account the multi-pollutant nature of air pollution."
This proposal drew sharp rebuke from the public health community. Bill Becker,
the head of the National Association of Clean Air Agencies, was quoted by Inside
EPA as saying, "Considering costs in setting the health-based air quality
standards deprives the public of knowing whether the air they breathe is
healthy."
Key Senators Discuss Permanent Estate Tax ReformsThis week Senate Finance
Committee Chairman Max Baucus (D-MT) and the senior Republican Charles Grassley
(R-IA) both stated they want to work on some sort of estate tax reform as the
expiration of the current reduction and one-year repeal in 2010 inch closer.
In a hearing this past Thursday, Chairman Baucus said "I'm ready to roll up my
sleeves and work with Senators to get a reform proposal that will benefit
Montana and the rest of the country." While he is on record for supporting full
repeal, the political dynamics do not indicate full repeal is possible. There is
more likely to be a compromise with various lower rates and higher exemptions.
The hearing was geared towards academia with three speakers presenting
alternative options to the estate tax, including an inheritance tax,
transfer-type taxes, and an accessions tax. Neither of the Senators that have
championed estate tax reform endorsed any of these alternatives, commenting only
that they "want the committee to have thought widely about the possibilities for
replacing the estate tax."
This week senators were also discussing the fiscal year 2009 budget resolution.
During the debate Senator Baucus added an amendment that would make available
more than $300 billion in tax reductions and would make permanent the 2009
estate tax rate and exemption levels. This year, the exemption amount is $2
million. In 2009 the exemption will go to $3.5 million and, then in 2010, the
tax will be repealed completely for one year. In 2011, the estate tax will
return to the draconian levels with an exemption of $1 million and a top tax
rate of 55 percent. The maximum rate Chairman Baucus would like to make
permanent is 45% (which is the level for 2008 and 2009).
Congress Heads HomeCongress leaves Washington at the end of the week for a
two-week recess during which time most will be traveling their districts,
meeting with constituents, holding town hall meetings, and basically trying to
get back in touch with their roots. This is a great opportunity for you reach
out and make your views known on policies that affect your business. If you need
any assistance in communicating with your legislators, you can visit NACS
Grassroots Website.
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