Cigarette Smokeless Tobacco Reports '11 SS FIN_mtd

Supporting Statement
FTC Cigarette and Smokeless Tobacco Data Collection
OMB Control # 3084-0134
(1)

Necessity for Information Collection

Beginning in 1967, the Federal Trade Commission (“FTC” or “Commission”) submitted
annual reports to Congress on cigarette sales and marketing pursuant to the Federal Cigarette
Labeling and Advertising Act. 15 U.S.C. §§ 1331-1341. Beginning in 1987, the FTC submitted
biennially to Congress reports on smokeless tobacco pursuant to the Comprehensive Smokeless
Tobacco Health Education Act. 15 U.S.C. §§ 4401-4408. The reports were based on data
submitted by the largest U.S. cigarette and smokeless tobacco manufacturers.
The Federal Reports Elimination and Sunset Act of 19951 allowed the agency to decide
whether to continue publishing these reports. In response to a request for public comment,2
many public health and tobacco control advocates cited the importance and utility of the FTC’s
reports,3 and the Commission has continued to issue them.
The Commission decided to address its information requests to the ultimate parent of
each of the leading cigarette and smokeless tobacco manufacturers in order to ensure that no
relevant data from affiliated companies went unreported. This increased the number of
separately incorporated entities required to provide data, bringing the requirements within the
scope of the Paperwork Reduction Act (“PRA”). The current OMB clearance under the PRA
runs through January 31, 2012, which the Commission seeks to extend for three years.
(2)

Use of the Information

The Commission will use the information collected to publish periodic reports on
cigarette and smokeless tobacco sales and marketing. To the FTC’s knowledge, the information
published in these reports is not available from any other source.
The information requests the Commission intends to issue will seek data regarding, inter
alia: (1) the tobacco sales of industry members; (2) how much industry members spend
advertising and promoting their tobacco products, and the amounts spent in each of several
specified expenditure categories; (3) whether industry members are involved in the appearance
of their tobacco products in television shows or movies; (4) how much industry members spend
on advertising intended to reduce youth tobacco use; (5) the events, if any, during which industry
members’ tobacco brands are televised; and (6) for the cigarette industry, the tar, nicotine, and
carbon monoxide ratings of their cigarettes, to the extent industry members possess such data.
The information will be sought under the authority of Section 6(b) of the FTC Act, 15 U.S.C. §

1

Pub. L. No. 104-66, Section 3003(a)(1), 109 Stat. 734.

2

66 Fed. Reg. 18640 (April 10, 2001).

3

See http://www.ftc.gov/os/comments/tobaccocomments2/index.shtm.

46(b).
(3)

Information Technology

Improved information technology may assist in gathering and producing this information.
Consistent with the aims of the Government Paperwork Elimination Act, 44 U.S.C. § 3504 note,
the FTC will allow the submission of information through electronic or automated collection
techniques. In addition, database software also will be used to compile information and thereby
facilitate review and analysis by FTC staff.

(4)

Efforts to Identify Duplication
There is no reliable information available elsewhere that can be used for these purposes.

(5)

Efforts to Minimize the Burden on Small Organizations

The requests to the five largest cigarette and the five largest smokeless tobacco
manufacturers will not have a significant impact on a substantial number of small entities.
Wherever possible, the FTC will attempt to minimize the time commitment necessary to respond to
the information requests. The FTC will consider proposals for use of information technology that
may reduce burden.
(6)

Consequences of Not Conducting the Collection or Conducting Less Frequently

If the information is not collected, the FTC will not have the data necessary to prepare the
reports. The burden of the information collection has been reduced as much as possible, and the
information is collected no more frequently than once per year.

(7)

Circumstances Requiring Collection Inconsistent with Guidelines

The reporting requirements are consistent with all the applicable guidelines contained in
5 C.F.R. § 1320.5(d)(2).
(8)

Consultation Outside the Agency

As required by 5 C.F.R.§ 1320.8(d), the FTC published a notice seeking public comment
on the proposed collections of information, see 76 Fed. Reg. 47187 (Aug. 4, 2011), and is doing
so again contemporaneously with this submission. The Commission did not receive any
comments in response to the August 4, 2011 Federal Register Notice.

(9)

Payments and Gifts to Respondents
There is no provision for payments or gifts to respondents.

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(10) & (11)

Assurances of Confidentiality/Matters of a Sensitive Nature

In connection with the information requests, the Commission will receive information of a
confidential nature. Under Section 6(f) of the FTC Act, 15 U.S.C. § 46(f), such information will be
protected from disclosure while it remains confidential commercial information. Individual
company information will be anonymized and/or aggregated so that information about the
industry cannot be broken down to disclose information about any submitter.

(12)

Estimated Annual Hours and Labor Cost Burden

Although the Commission plans to seek information from the five largest cigarette
companies and the five largest smokeless tobacco companies in 2012 and the ensuing two years
of requested clearance,4 this burden estimate is based on the Commission issuing up to 15
information requests per year. This conservative estimate is designed to anticipate future
changes in these markets that might warrant obtaining data from other industry members.
These cigarette and smokeless tobacco companies vary greatly in size, in the number of
products that they sell, and in the extent and variety of their advertising and promotion. Prior
input from the industries, paired with staff’s knowledge of those industries, suggests that smaller
companies would require from 30 to 80 hours to gather, organize, format, and produce their
responses per information request, while the very largest companies might require as much as
hundreds of hours. Staff continues to assume a per company average of 180 hours for the ten
largest recipients of the Commission’s information request to comply with it; cumulatively,
1,800 hours per year, or 5,400 hours over the three years that would be covered by the extension
of OMB’s clearance.5
Staff estimates that for the smaller companies -- the potential five added recipients -burden should not exceed 60 hours per company or 300 hours, cumulatively, per year. Thus,
overall estimated burden for a maximum of 15 recipients of the information request is 2,100
hours per year or 6,300 hours over three years. These estimates include any time spent by
separately incorporated subsidiaries and other entities affiliated with the ultimate parent
company that has received the information request.
It is not possible to calculate precisely the labor costs associated with this data
production, as they entail varying compensation levels of management and/or support staff
among companies of different sizes. The estimate assumes that personnel with technical training
will handle most of the tasks involved in the data collection process, although legal personnel
will likely be involved in preparing the actual submission to the Commission. Staff has applied
an average hourly wage of $100/hour for the combined labor classifications. Thus, estimated
total labor costs for up to 15 information requests is $210,000 per year, for $630,000,
4

In August 2011, the Commission issued information requests to five cigarette companies and five
smokeless tobacco companies. The Commission anticipates that it will issue requests to the same number of
companies in 2012 and subsequent years.
5

73 Fed. Reg. 46006 (Aug. 7, 2008); 73 Fed. Reg. 67174 (Nov. 13, 2008).

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cumulatively, for a projected three-year clearance.
(13)

Estimated Annual Capital or Other Non-labor Costs

The capital or other non-labor costs associated with the information collection are
minimal. Although industry members may have to preserve relevant business records to
accommodate the Commission’s information requirements, they already have the means in place
to do so.
(14)

Estimate of Cost to the Federal Government

Staff estimates that the total cost each year to the FTC’s Bureaus of Consumer Protection
and Economics of collecting and analyzing this information is approximately $18,000. This is
based on the assumption that about seven percent of an attorney work year is devoted to those
tasks. The cost in attorney time will be approximately $11,000. In addition, about five percent
of an economist’s work year, approximately $7,000, will be devoted to processing the data
submitted.
(15)

Changes in Burden

Burden hour estimates and non-labor costs are unchanged from the preceding request for
renewed clearance. Estimated labor costs associated with burden hours have been reduced,
however, from $150 to $100 per hour to reflect staff’s further experience with the submissions of
companies in response to these information requests. Previously, staff assumed that
“professional” personnel (e.g., legal, financial, marketing) would handle most of the information
gathering and production. As noted above, FTC staff now assumes that these tasks will be done
by a combination of legal and technical staff, but mostly the latter.
(16)

Statistical Use of Information/Publication of Results

The information provided by the respondents will be used to prepare annual reports that
will be publicly released. The collection of the information will begin after the completion of the
OMB review process. The estimated date for the completion of the first reports is August 2012.

(17) & (18)

Failure to Display the OMB Expiration Date/ Exceptions to Certification

Not applicable.

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