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Price v. Philip Morris12/15/2005
in tar and nicotine yields by encouraging tobacco companies to compete to bring lower yield products to market. The FTC adopted several mechanisms in support of these goals. First, it adopted a "single uniform protocol" to derive the tar and nicotine numbers that could be conveyed to consumers. Second, it published the numbers derived from the testing program. Initially, the numbers were reported to Congress. Later, the FTC permitted (and eventually required) that the numbers be included in cigarette packaging and advertising. Thus, in keeping with both goals, the FTC encourages competitive advertising of tar and nicotine yields. Dr. Peterman further testified that a third part of the FTC program is the permitting of the use of certain designators such as "light" and "low tar" if the product meets certain conditions specified by the FTC.
In response to questions regarding the FTC's regulatory activity, Dr. Peterman testified that the FTC can undertake the promulgation of formal rules. In lieu of formal rulemaking, the FTC can withdraw proposed rules if those affected voluntarily agree to comply. In addition, the FTC can issue advisory opinions upon request by an industry actor or other interested party. Finally, the FTC can undertake investigative and enforcement efforts pursuant to section 5 of the FTC Act. 15 U.S.C. ยง45(a) (2000). After filing a formal complaint charging a violation of the Act, the FTC can resolve the complaint and achieve its regulatory objective by means of a consent order. Such orders are a matter of public record and are published in the Federal Register. According to Dr. Peterman, the FTC uses such orders to "provide guidance to other firms in the industry." He stated, "While I was at the Commission, we considered all the activities that resulted in changes in firm behavior in response to Commission action as the FTC regulation of that activity." Thus, the FTC selected cases for enforcement "with the aim" of providing "significant guidance" to industry members.
A substantial part of Dr. Peterman's testimony involved the history of the regulation of cigarette advertising that this court has already summarized, above, based on the documentary record. In addition, he testified regarding the FTC's own use of and definitions of the terms "low tar" and "ultra low tar." Specific reference was made to the FTC's annual Report to Congress, which Dr. Peterman described as a report summarizing "what's going [on with regard] to cigarette advertising, the regulatory activities the commission is engaged in, and to make recommendations to Congress for changes in the law." The Annual Report is an official statement of the FTC, which the FTC is required by the Labeling Act to prepare.
Copies of the annual FTC Reports to Congress from 1967 to 2000 were identified by Dr. Peterman and admitted into evidence without objection. Dr. Peterman testified that he reviewed the reports in preparation for his testimony and that they reflected the official position taken by the FTC at the time they were transmitted to Congress. Specifically, he called attention to the portions of the 1968, 1970, 1971, 1979, and 1980 reports in which the FTC used or defined the term "low tar." He opined that the FTC has adopted an "official definition" of the term as a cigarette containing 15 milligrams or less tar.
Through the testimony of Dr. Peterman, PMUSA also called the circuit court's attention to several reports prepared by FTC staff that were placed on the public record and transmitted to Congress. According to Dr. Peterman, such reports represent the position of the FTC. In one report, the FTC staff noted that FTC annual reports to Congress "began in early 1967 and signaled the beginnin
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