conforming. If a potential nonconforming product is determined to be
nonconforming, it would need to remain segregated throughout
investigation and disposition, including any rework. For purposes of
proposed part 1120, ``segregation'' means setting the identified
potential nonconforming product apart from other product (i.e., placing
it away from conforming in-process material). This segregation could be
accomplished by placing it in a quarantined or specifically marked-off
area. Manufacturers should use prudence and segregate potential
nonconforming tobacco product in a manner that is appropriate, given
the nature of the potential nonconformity. For example, if a product is
potentially nonconforming because it may be contaminated with pests,
pathogens, or other substances that are likely to spread, it should be
segregated and stored in a manner that prevents contamination of other
tobacco products.
    Proposed Sec.  1120.74(b) would require finished and bulk tobacco
product manufacturers to investigate all potential nonconforming
tobacco products. The purpose of the investigation is to determine
whether the product is in fact nonconforming and, if it is found to be
nonconforming, to determine the scope and cause of the nonconformity,
and the risk of illness or injury it poses. Under proposed Sec.
1120.74(b)(1), in order to determine if

the product is nonconforming, FDA is proposing to require that the
investigation include an examination of relevant production processes
and controls, laboratory testing, complaints, and any other relevant
records and sources of information.
    For example, in accordance with proposed Sec. Sec.  1120.66(a)(3)
and 1120.74(b), if there was a deviation from a production process, a
tobacco product manufacturer would be required to conduct an
investigation to determine if the production process deviation resulted
in a nonconforming product. For example, if the fermentation of a
tobacco blend deviates from established production processes and
controls for fermentation, such as maintaining temperature and humidity
through specified turn cycles necessary to meet a pH specification, the
tobacco product manufacturer would be required to perform an
investigation to determine if the deviation resulted in a nonconforming
product.
    Similarly, if a manufacturer uses a laboratory to perform product
acceptance activities, and there is an out-of-specification (OOS)
laboratory test result, the manufacturer would need to investigate the
OOS test result under proposed Sec.  1120.74(b) to determine whether
the product is nonconforming or the OOS result is due to another cause
such as laboratory error. Under proposed Sec.  1120.74(b)(1), the
investigation would be required to include an examination of relevant
production processes and controls and any other relevant records and
sources of information such as the laboratory method and review of
initial testing and calibration of the laboratory equipment. Such an
investigation could determine that the OOS test results came from an
aberration of the measurement process (e.g., laboratory error,
defective testing equipment, or deviation from an established
laboratory test method) and that the potential nonconforming product is
not nonconforming. Alternatively, an investigation could conclude that
the OOS test result was valid and that the product was nonconforming as
a result of the manufacturing process.
    If a tobacco product is determined to be nonconforming, under
proposed Sec.  1120.74(b)(2), the investigation also would be required
to determine the scope and cause of the nonconformance and the risk of
illness or injury posed by the nonconformance. Examination of relevant
production processes and controls and any other relevant records and
sources of information could help a manufacturer determine if any other
batches are affected or if nonconforming product has been distributed.
For example, if the investigation of a nonconforming product determines
that the cause is due to fragments from a cutting blade, the
manufacturer may need to investigate other batches on which the cutting
blade was used since it was last inspected and take appropriate follow
up action. For any product determined to be nonconforming,
documentation of the investigation activities under proposed Sec.
1120.74(d) should include the product name (brand and sub-brand),
additional product identification, and quantity of nonconforming
tobacco product. The additional product identification should include
all unique identifiers associated with the tobacco product and, if
applicable, the manufacturing code of the finished or bulk tobacco
product.
    The proposed rule would also require that, for products determined
to be nonconforming, the investigation include an examination of the
risk of illness or injury posed by the nonconformance, because this
risk would be relevant to the manufacturer's disposition decision under
proposed Sec.  1120.74(c). Furthermore, this information can feed into
the manufacturer's risk management process under proposed Sec.
1120.42.
    Under proposed Sec.  1120.74(b), an investigation would be required
to be performed for all potential nonconforming products. However, if a
previous investigation has been completed and it is determined to be
applicable to the current investigation, the results and followup of
the previous investigation could be cross-referenced and applied to the
current investigation. In other words, if the cause of a nonconforming
product is determined to be the same as that of a previous
nonconforming product, the manufacturer could cross-reference the
results of the previous investigation and would not need to repeat
aspects of the investigation that would be redundant.
    Proposed Sec.  1120.74(c) would require finished and bulk tobacco
product manufacturers to determine the disposition of all nonconforming
tobacco products and to conduct any necessary follow up action. Under
proposed Sec.  1120.74(c), nonconforming product could not be released
for distribution without rework or an adequate justification. Thus,
nonconforming product could be reworked as appropriate under proposed
Sec.  1120.78, distributed with an adequate justification (as explained
below), or discarded. If a manufacturer determines that nonconforming
product can be reworked, the disposition decision should address how
the rework will correct the nonconformity without adversely affecting
the product. For example, if an ENDS manufacturer decides to rework a
nonconforming circuit board by resoldering a joint, the manufacturer
should document how such rework does not adversely affect the circuit
board by melting or delaminating board components.
    A manufacturer may determine that a nonconforming tobacco product
can be released for distribution without rework; however, proposed
Sec.  1120.74(c) would require the manufacturer to provide an adequate
written justification before releasing such product. An adequate
written justification would be required to address why releasing the
product would not result in an increased risk of illness or injury or
in the tobacco product being adulterated or misbranded. For example, if
a manufacturer determines that a product is nonconforming because of a
minor discrepancy in the color of its packaging (e.g., Pantone 2415 C
vs. an established specification of Pantone 2415 CP) and that the
product can be released for distribution without rework, the
manufacturer could provide an adequate written justification (i.e.,
explain that the minor color discrepancy will not increase the risk of
illness or injury or render the product adulterated or misbranded) and
release the nonconforming product. However, nonconforming product that
would increase the risk of illness or injury, or that would result in
the tobacco product being adulterated or misbranded would not be
acceptable for release without rework. For example, if a nonconformity
results in a modification of a product that would require a new
marketing application under section 905 or 910 of the FD&C Act and make
the product misbranded under section 903(a)(6) of the FD&C Act or
adulterated under section 902(6)(A) of the FD&C Act, the nonconforming
product could not be released for distribution without rework.
Similarly, a tobacco product that becomes contaminated by glass
fragments from an unprotected light fixture would present an increased
risk of injury to the user that would warrant discarding the product as
it may not be possible for it to be reworked.
    Proposed Sec.  1120.74(c) would also require finished and bulk
tobacco product manufacturers to conduct any necessary followup
actions. Follow up actions could include initiating a CAPA under
proposed Sec.  1120.16 and taking appropriate corrective action on
other affected batches. If nonconforming product has already been
distributed, the manufacturer could initiate a recall.

Necessary followup should be informed by the results of the
investigation under proposed Sec.  1120.74(b); for example, the risk of
illness or injury posed by the nonconformance may affect the type of
CAPA to be taken.
    Proposed Sec.  1120.74(d) would require finished and bulk tobacco
product manufacturers to maintain records of all activities required
under this section. This provision would require that such records
include the date and time of the activity, the individual performing
the activity, type of activity performed, any information that
demonstrates the requirement was met, and any data or calculations
necessary to reconstruct the results. As stated elsewhere in this
preamble, for purposes of this proposed part 1120, FDA interprets
``reconstruct'' to mean the ability to re-create the results by
analyzing all data, including source and metadata data, and records,
including calculations. For any product determined to be nonconforming,
the records should document the product name (brand and sub-brand), any
additional product identification information (e.g., manufacturing
code(s), batch number, or unique ID as applicable), and the quantity of
nonconforming tobacco product. This information is important for
verifying that all potential nonconforming product is properly handled,
that nonconforming product investigations are appropriately thorough
and complete, and that disposition decisions are made to prevent the
release of nonconforming product for distribution and are properly
justified.
    In addition to helping to prevent the distribution of nonconforming
product, the proposed nonconforming product requirements would help
assure that the public health is protected by requiring tobacco product
manufacturers to perform a systematic assessment of nonconforming
product and take appropriate followup. Nonconforming product can result
from a design problem, failure to meet tobacco product specifications,
failures of or problems with purchasing controls, inadequate process
controls, improper facilities or equipment, inadequate training,
inadequate manufacturing methods and procedures, or improper handling
of the tobacco product. The proposed provisions would require
manufacturers to investigate the cause of nonconforming product and
take appropriate followup, such as CAPAs, to eliminate or minimize
future nonconformities. For example, if a cigarette manufacturer
determined that a cigarette did not meet its filter pressure drop
specification (a nonconformity that can expose consumers to increased
risk of exposure to constituents compared to what would normally be
expected from cigarette use (Ref. 147), these provisions would require
that the manufacturer undertake a systematic assessment to determine
the cause of the nonconformity and the need for CAPAs to be taken,
which would help prevent the manufacture and sale of similar
nonconforming product. If the results of acceptance activities
demonstrate that the product does not meet the specification, the
manufacturer would be required to take the steps to address
nonconformities in accordance with proposed Sec.  1120.74.
Specifically, the manufacturer would need to identify and segregate the
nonconforming product to prevent mixups and distribution of
nonconforming product, investigate the nonconformity, and determine the
disposition of the product.
    As another example, where a tobacco product manufacturer determines
that its product does not conform to established pH specifications, it
would be required to comply with this proposed provision. The amount
and speed of nicotine delivered by a tobacco product is related to the
proportion of nicotine in a tobacco product and/or its emissions that
is in the unprotonated or ``free-base'' form (also known as the un-
ionized free-base form); therefore, a product that delivers more
unprotonated nicotine at a faster rate is more addictive and toxic than
other tobacco products. Because the pH scale is logarithmic, the
proportion of unprotonated nicotine increases or decreases sharply with
relatively small changes in pH. For example, at a pH of 7, about 7
percent of the nicotine is free; at a pH of 9 or more, 80 percent of
the nicotine is in the free form. Tobacco and smoke pH appear to be
controlled primarily by the use of ammonia compounds and other
substances used in tobacco processing and final cigarette production,
which serve to optimize the free nicotine levels (Ref. 6). Accordingly,
a tobacco product's specifications (including the amount of
ingredients, additives, and materials such as ammonia compounds) can
affect the product's pH. A manufacturer's investigation and disposition
of such nonconforming product would help to ensure that such products
are not placed into distribution and that such nonconformities do not
occur in the future, thereby helping ensure that consumers are not
exposed to greater risks than those normally associated with the use of
the product.
    The proposed nonconforming product requirements would help assure
that tobacco products are in compliance with the requirements of
chapter IX of the FD&C Act by providing thorough steps and actions to
be taken on nonconforming tobacco products. These measures would help
ensure that tobacco products that are nonconforming are either not
placed into distribution or are reworked so that they conform to
established specifications, including those provided by the
manufacturer to FDA in any relevant tobacco product applications (i.e.,
SE Report, request for exemption from SE, PMTA, MRTPA). In addition,
they would help manufacturers to ensure, and FDA to verify, that
manufacturers are not making changes to finished tobacco products that
may render them new tobacco products adulterated under section 902(6)
of the FD&C Act or misbranded under section 903(a)(6) of the FD&C Act.
8. Returned Tobacco Product
    Proposed Sec.  1120.76(a) would require each finished and bulk
tobacco product manufacturer to establish and maintain procedures for
the control and disposition of returned tobacco product. Returned
tobacco products are commercially distributed finished or bulk tobacco
products returned to the tobacco product manufacturer by any person not
under the control of the tobacco product manufacturer, including a
wholesaler/distributor, retailer, consumer, or a member of the public.
These proposed requirements are generally similar to practices of
manufacturing establishments that follow ISO 9001.
    Proposed Sec.  1120.76(a)(1) would require finished and bulk
tobacco product manufacturers to identify returned tobacco product with
the product name, manufacturing code, quantity returned, date the
manufacturer received the returned product, and reason for return.
Returned tobacco products should be identified using appropriate means
such as a tag or label to prevent mixups and inadvertent use or
distribution.
    Proposed Sec.  1120.76(a)(2) would require finished and bulk
tobacco product manufacturers to segregate the identified returned
tobacco product in a manner that prevents mixups and use of returned
tobacco product prior to evaluation and disposition. Returned tobacco
products could be segregated by being placed in a quarantined area or
in an identified location that prevents mixups.
    Proposed Sec.  1120.76(a)(3) would require finished and bulk
tobacco product manufacturers to evaluate identified returned tobacco
product and determine its disposition (i.e., discard,

rework, release for distribution). Evaluation is necessary to determine
whether the returned product should be discarded, whether it is
appropriate for rework under proposed Sec.  1120.78, or whether the
product can be released for distribution. If during an evaluation, a
manufacturer determines that returned tobacco product is potentially
nonconforming, the manufacturer would be required to follow its
nonconforming product procedures in accordance with proposed Sec.
1120.74. Under proposed Sec.  1120.76(a)(3), tobacco product
manufacturers would have flexibility to determine how to evaluate
returned tobacco product. A tobacco product manufacturer could use
inspection, testing, or other verification methods to evaluate the
returned tobacco product and make an appropriate disposition
determination. Returned tobacco product would be required to be
discarded unless the manufacturer determines that it can be reworked,
or released for distribution based on an adequate written
justification. An adequate written justification would show that the
returned product is not nonconforming or explain why releasing
nonconforming returned product would not result in an increased risk of
illness or injury or in the tobacco product being adulterated or
misbranded (see also proposed Sec.  1120.74(c)).
    In some circumstances, a manufacturer could determine that returned
nonconforming product can be reworked to meet established
specifications. For example, if a tobacco product is returned because
the package contained an incorrect quantity, the manufacturer could
repackage the product with the correct quantity. The release of
nonconforming returned product for distribution should not occur except
in limited circumstances where the manufacturer can provide an adequate
written justification that addresses why releasing the product would
not result in an increased risk of illness or injury or in the tobacco
product being adulterated or misbranded (see proposed Sec.
1120.74(c)). For example, a manufacturer could release a returned
product for distribution without rework if the product was mistakenly
sent to a distributor or retailer and returned in unopened and intact
packaging with no visible signs of damage or contamination.
    FDA notes that when returned products are determined to be
potentially nonconforming under proposed Sec.  1120.74, or are
associated with complaints under proposed Sec.  1120.14 or with a CAPA
under proposed Sec.  1120.16, the requirements in those sections,
including all investigation requirements, would apply and take
precedence. If returned products are needed (e.g., for product testing)
in order to conduct an adequate investigation under those sections, a
manufacturer should complete the investigation before discarding the
returned product under proposed Sec.  1120.76. For example, if a
manufacturer determines that a returned product might contain a
contaminant, it should keep the product and complete an investigation
on the nature and scope of the contamination before the returned
product is discarded.
    If a tobacco product manufacturer's disposition decision is to
rework the returned tobacco product, the rework would need to be
performed in accordance with proposed Sec.  1120.78.
    Proposed Sec.  1120.76(b) would require finished and bulk tobacco
product manufacturers to maintain records of all activities required
under this section. Under this proposed provision, records must include
the date and time, individual performing the activity, type of activity
performed, any information that demonstrates the requirement was met,
and any data or calculations necessary to reconstruct the results. As
stated elsewhere in the preamble, FDA interprets ``reconstruct'' to
mean the ability to re-create the results by analyzing all data,
including source and metadata data, and records, including
calculations. In addition, records of evaluation and disposition would
be required to include the product name, manufacturing code, quantity
returned, date the manufacturer received the returned product, reason
for the return, disposition decision and any justification, and the
name of the individual making the decision.
    The industry GMP recommendations do not include returned product
provisions. The Agency believes the proposed returned tobacco product
requirements would help assure that the public health is protected by
requiring that manufacturers of finished and bulk tobacco products
evaluate returned tobacco products and adequately justify their
disposition decisions. For example, FDA has learned that some tobacco
products have been contaminated with insecticides, gasoline or diesel
fuel, or other toxic substances during shipment (e.g., Refs. 148 and
149). In addition, FDA is aware that tobacco products such as ENDS may
be altered or customized by a vape shop, resulting in nonconformity,
including contamination. If these products are returned to the
manufacturer, this provision would help ensure that they are handled
appropriately and that any subsequent distribution of the products is
adequately justified.
    The proposed returned tobacco product requirements would assure
that the public health is protected and that products are in compliance
with chapter IX of the FD&C Act by helping to prevent contamination and
adulteration of tobacco products. Contaminated and adulterated tobacco
products can adversely affect public health over and above the risk
normally associated with the use of the product.
9. Reprocessing and Rework
    Proposed Sec.  1120.78 would require finished and bulk tobacco
product manufacturers to establish and maintain procedures for
reprocessing and reworking tobacco product. These proposed requirements
are similar to practices that are already being implemented by the
tobacco industry, as FDA has observed during inspections, and to the
practices of manufacturing establishments that follow ISO 9001. FDA has
found that tobacco product manufacturers use reprocessing procedures in
their manufacturing process (Refs. 150-154).
    Proposed Sec.  1120.3 defines ``reprocessing'' as using tobacco
product that has been previously recovered from manufacturing in the
subsequent manufacture of a finished or bulk tobacco product. An
example of reprocessing would be using tobacco recovered during the
production process, such as cigarette tobacco recovered from the ripper
short process (e.g., Ref. 155) or tobacco recovered from smokeless
tobacco cans that are rejected for being the incorrect weight, in the
subsequent manufacture of cigarettes or smokeless tobacco cans that use
the same tobacco blend. Proposed Sec.  1120.3 defines ``rework'' as
action taken on a nonconforming or returned tobacco product to ensure
the product meets the specifications and other requirements in the MMR
of a subsequently manufactured product before it is released for
further manufacturing or distribution. An example of rework would be
the repackaging or relabeling of a finished tobacco product due to
nonconforming packaging or labeling.
    Specifically, proposed Sec.  1120.78(a)(1) would require the
reprocessing and rework procedures to include evaluation of the tobacco
product to determine whether the product is appropriate for
reprocessing or rework and authorization of any reprocessing or rework
by a designated individual. Under proposed Sec.  1120.78(a)(1), tobacco

product would be appropriate for reprocessing if it is uncontaminated
and has the same specifications as those in the MMR of the subsequently
manufactured tobacco product. For example, tobacco recovered through a
ripper short process would be appropriate for reprocessing if it is
uncontaminated and has the same tobacco blend/type, size, and length,
as specified in the MMR of the subsequently manufactured tobacco
product. Tobacco recovered from one brand of a finished or bulk tobacco
product could be reprocessed for use in the subsequent manufacture of
another brand/sub-brand of a finished or bulk tobacco product if it has
the same tobacco blend/types, cut size, and length and otherwise meets
the MMR specifications for the other brand/sub-brand. However,
mentholated tobacco, for example, would not be appropriate for
reprocessing in the subsequent manufacture of a nonmentholated finished
or bulk tobacco product.
    A tobacco product would be appropriate for rework if further
manufacturing can correct the nonconformity and the product could meet
the specifications and other requirements in the MMR of a subsequently
manufactured tobacco product. For example, if a tobacco product is
nonconforming because of a contaminant, it would be appropriate for
rework if further manufacturing could eliminate the contaminant and the
tobacco product could meet the specifications and other requirements in
the MMR for the subsequently manufactured product.
    The evaluation required under proposed Sec.  1120.78(a)(1) could be
done by conducting testing or other inspection or verification
activities, or by providing an adequate written justification for why
the tobacco product is appropriate for reprocessing or rework. FDA has
observed on inspections that reprocessing often occurs in the following
in-line situations: incomplete cigarettes produced by a maker machine
(e.g., loose ends, ripper shorts, paper damage, or empty tip (no filter
attached)); and smokeless tobacco cans that are rejected for missing or
having an incorrect label or being the incorrect weight. In these types
of situations, manufacturers typically determine that the tobacco is
appropriate for reprocessing without further investigation or testing
because it is uncontaminated and can be directly recovered from
manufacturing for use in the subsequent manufacture of finished or bulk
tobacco products. For example, if the manufacturer decides to reprocess
tobacco from unformed cigarettes that are rejected by the maker
equipment, under proposed Sec.  1120.78(a)(1), the manufacturer would
be required to evaluate the tobacco to ensure that it is appropriate
for reprocessing. The evaluation could determine that the recovered
tobacco is appropriate for reprocessing because these unformed
cigarettes were collected directly from the maker and, therefore,
further testing is not necessary to show that the tobacco is not
contaminated and conforms to the specifications established in the MMR
for the subsequently manufactured product. The manufacturer should
provide an adequate written justification for its determination that is
appropriate to reprocess the recovered tobacco, either in its
reprocessing procedure or on an ad hoc basis. If the manufacturer
chooses to reprocess tobacco products out-of-line (i.e., tobacco not
recovered directly from the production line), it should determine
whether the evaluation should include testing the product to ascertain
eligibility for reprocessing (e.g., testing to ensure that the product
is not contaminated).
    A manufacturer would also have to perform an evaluation under
proposed Sec.  1120.78(a)(1) to determine whether tobacco product is
appropriate for rework. For example, if finished packages of cigars are
rejected for being the incorrect weight, a manufacturer would have to
evaluate the nonconforming product to determine if it is appropriate
for rework. The evaluation could determine that the nonconformity is
due to the package having four cigars instead of the required five
cigars, and that the product can undergo repackaging to address the
nonconformity and meet the specifications and other requirements in the
MMR for the subsequently manufactured product. In some cases, an
evaluation may show that a product is not appropriate for rework. For
example, an evaluation of returned tobacco product may determine that
it is not appropriate for rework because further manufacturing cannot
remove a contaminant, such as an insecticide (e.g., Ref. 148).
    Proposed Sec.  1120.78(a)(2) would require the reprocessing and
rework procedures to detail the production processes, including process
controls, in accordance with proposed Sec.  1120.66(a), and acceptance
activities, in accordance with Sec.  1120.64(c), used to ensure the
reprocessed or reworked tobacco conforms to the requirements
established in the MMR for the subsequently manufactured product.
Usually, the production processes and controls used for reprocessing
and rework would be the same as those used for the subsequently
manufactured product under proposed Sec.  1120.66(a) and reflected in
its MMR under proposed Sec.  1120.44(a)(2). However, there may be
instances in which a manufacturer uses different production processes
or process controls when reprocessing or reworking tobacco product. If
reprocessing or rework involves different production processes and
controls, proposed Sec.  1120.78(a)(2) would require that reprocessing
and rework procedures include these different production processes and
controls. For example, if a manufacturer recovers tobacco product from
a packing and labeling machine, determines that the product is
nonconforming because it has incorrect labels, and decides to rework it
using a manual relabeling process, the manufacturer would be required
to include in its reworking procedures the production processes and
controls for the manual relabeling process used to ensure that the
subsequent reworked finished tobacco product conforms to the MMR
specifications.
    Proposed Sec.  1120.78(b) would establish the requirement to
maintain records of all activities required under this section. Under
this proposed provision, records must include the date and time,
individual performing the activity, type of activity performed, any
information that demonstrates the requirement was met, and any data or
calculations necessary to reconstruct the results. As stated elsewhere
in this preamble, FDA interprets ``reconstruct'' to mean the ability to
recreate the results by analyzing all data, including source and
metadata data, and records, including calculations.
    Additionally, proposed Sec.  1120.78(b) would require that the
production record of any finished or bulk tobacco product that includes
reprocessed or reworked product include the amount, any unique
identifier(s) assigned under proposed Sec.  1120.64(b), any batch
number, and any manufacturing code associated with the reprocessed or
reworked product. These requirements are necessary to enable the
tobacco product manufacturer to trace tobacco products consisting of
(in whole or in part) reprocessed or reworked material and take
appropriate corrective action, such as a recall or changes to
procedures, if these products are determined to be nonconforming
following reprocessing or rework. Reprocessing or rework records would
be required to be maintained in the tobacco product's production record
to show that the product conforms to the MMR.

    The proposed reprocessing and rework requirements would assure that
the public health is protected and that tobacco products are in
compliance with chapter IX of the FD&C Act by helping to ensure that
reprocessed or reworked tobacco products are not contaminated or
adulterated or misbranded and meet the requirements in the MMR for the
subsequently manufactured product. They would also help maintain
traceability in case there is nonconformity as a result of ineffective
reprocessing or reworking processes or procedures and corrective action
is needed.

F. Packaging and Labeling Controls

1. Packaging and Labeling, and Repackaging and Relabeling, Controls
    Proposed Sec.  1120.92 would require finished and bulk tobacco
product manufacturers to establish and maintain procedures to control
packaging and labeling activities to prevent mixups and to ensure that
all packaging and labeling are approved for use by the manufacturer and
comply with all requirements of the MMR (see proposed Sec.  1120.44) as
well as all other applicable requirements of the FD&C Act, CSTHEA,
FCLAA and their implementing regulations. These proposed requirements
are generally similar to the practices of manufacturing establishments
that follow ISO 9001 and to the proposed packaging and labeling
controls in the industry recommendations.
    Other applicable requirements of the FD&C Act, CSTHEA, FCLAA, and
their implementing regulations include, among others: requirements
related to false or misleading labeling of tobacco products under
section 903(a)(1); requirements for including certain information on
the label of tobacco products in package form under section 903(a)(2)
of the FD&C Act; and package warning statement requirements for
cigarettes under section 4 of FCLAA, for smokeless tobacco under
section 3(a) of CSTHEA, for cigarette tobacco, RYO tobacco, and covered
tobacco products other than cigars under Sec.  1143.3(a) (21 CFR
1143.3(a)), and for cigars under Sec.  1143.5(a). This includes warning
rotation plan requirements for packages pursuant to section 4(c)(1) of
FCLAA, section 3(b)(3)(C) of CSTHEA and Sec.  1143.5(c). For example,
under Sec.  1143.5, packaging for cigars is required to contain certain
warning statements in accordance with an FDA-approved warning plan.
Accordingly, under this proposed provision, finished cigar
manufacturers would have to establish and maintain procedures to
control packaging and labeling activities to ensure that the correct
required warning statement is applied to the cigar package, that the
formatting requirements are met, and that the warnings on the package
label follow the approved warning plan (Sec.  1143.5). See also
proposed Sec.  1120.98 for related requirements about warning plans.
    As set forth in proposed Sec.  1120.44(a)(3), the MMR would be
required to include all packaging, labeling, and labels approved by the
manufacturer for use with the finished or bulk tobacco product. The
packaging and labeling control procedure requirement proposed in this
section would ensure that only the approved packaging, labeling, and
labels are used on finished and bulk tobacco products.
    A tobacco product manufacturer could control packaging and labeling
operations to prevent mixups using a variety of techniques. For
example, a manufacturer could release approved and accepted packaging
and labeling for each production batch (i.e., a manufacturer could
release the packaging and labeling in the same manner as it would
release received components from a supplier that pass acceptance
activities). Product acceptance could utilize verification activities,
such as visual inspection and optical scanners, to inspect finished and
bulk tobacco products to ensure the use of correct packaging and
labeling, including correct package warning statements on finished
products. Outdated or obsolete packaging and labeling should be
destroyed.
    Proposed Sec.  1120.92(a)(1) would require that the packaging and
labeling control procedures address label integrity. Specifically, this
provision would require that labels be indelibly printed on or
permanently affixed to finished and bulk tobacco product packages so
they remain legible, prominent, and conspicuous during the customary
conditions of processing, packing, storage, handling, distribution, and
use. For a finished tobacco product, permanently affixed means the
label must remain on the product package through the expected duration
of use of the tobacco product by the consumer. For a bulk tobacco
product, permanently affixed means the label must remain on the product
package until the receipt by the subsequent manufacturer (e.g.,
finished tobacco product manufacturer, packager or labeler). These
label integrity requirements are intended to ensure that labels remain
affixed to the tobacco product, and that the information contained on
the label remains visible and readable and is not adversely affected by
conditions such as ink bleeding, adhesion loss, or fading.
    Proposed Sec.  1120.92(a)(2) establishes design and construction
requirements for packaging and labeling and for storage and shipping
cases and containers. Specifically, proposed Sec.  1120.92(a)(2)(i)
would require that a manufacturer has procedures that ensure that a
product's packaging and labeling do not contaminate or otherwise render
the tobacco product adulterated or misbranded. To comply with this
requirement, as part of its packaging and labeling procedures, a
tobacco product manufacturer could evaluate the packaging materials to
assess toxicological issues and verify that the material would not
contaminate the tobacco product (Ref. 156). For example, packaging or
label solvents such as benzene, toluene, methyl ethyl ketone, methyl
cellosolve, and cellosolve are among the chemicals that can transfer
from packaging materials to tobacco products and cause contamination
(e.g., Refs. 157-159). This proposed provision is intended to ensure
that, among other things, a product's packaging and labeling do not
render the product adulterated due to the use of these types of
chemicals.
    Proposed Sec.  1120.92(a)(2)(ii) would require that the
manufacturer has procedures that ensure storage and shipping cases or
containers of finished or bulk tobacco products are designed and
constructed to protect against contamination and adulteration of
finished and bulk tobacco products during the customary conditions of
storage, handling, and distribution. For example, if tobacco products
are customarily stored, handled, or shipped in conditions where the
tobacco product can be exposed to oils, hazardous materials, or
insanitary conditions, the storage and shipping cases or containers
would have to be able to protect the products from becoming
contaminated or adulterated. Also, if customary environmental
conditions of storage, handling, and distribution (such as temperature,
moisture, and humidity) can contaminate or adulterate the tobacco
products (e.g., mold contamination), the storage and shipping cases or
containers would have to protect the products from these conditions
adequately.
    Proposed Sec.  1120.92(b) would require finished and bulk tobacco
product manufacturers to maintain records of all activities required
under this section. According to this provision, records must include
the date and time, individual performing the activity, type of activity
performed, any information that demonstrates the requirement was

met, and any data or calculations necessary to reconstruct the results.
    These proposed requirements would help assure that the public
health is protected and that tobacco products are in compliance with
chapter IX of the FD&C Act. Proper packaging and labeling of finished
and bulk tobacco products are necessary to avoid mixups and to ensure
that the packaging and labeling do not contaminate or otherwise render
the tobacco product adulterated or misbranded. If a manufacturer
applies the wrong label to a tobacco product, the label may be false or
misleading, rendering the product misbranded under section 903(a)(1) of
the FD&C Act. Such a product could impact public health. For example,
in the case of a mixup, if a manufacturer applies the wrong nicotine
concentration label to an e-liquid such that the product contains
significantly higher levels of nicotine than what is stated on the
label, this can increase the risk of addictiveness.
    Proper packaging and labeling of tobacco products play an important
role in FDA's comprehensive public health approach to tobacco control.
The Tobacco Control Act contains a number of provisions related to the
packaging and labeling of tobacco products. For example, certain
tobacco product labeling must be submitted to FDA when tobacco
manufacturers register under section 905(i)(1) of the FD&C Act.
Specimens of tobacco product labeling must also be submitted with PMTAs
under section 910(b)(1)(F) of the FD&C Act. Similarly, sample product
labels and labeling must be included in MRTP applications under section
911(d)(4) of the FD&C Act. Additionally, section 903(a)(1) of the FD&C
Act includes provisions related to false or misleading labeling of
tobacco products, such as, for example, labeling that fails to bear
required health warning statements (see section 201(n) of the FD&C
Act). In addition, FDA's Deeming Rule requires warning statements on
the packages of all covered tobacco products, cigarette tobacco, and
RYO tobacco, with limited exceptions (see part 1143). The packaging and
labeling of tobacco products contain required warning statements that
promote greater understanding of the risks associated with the use of
tobacco products (Ref. 160). For a discussion regarding why health
warnings are appropriate for the protection of the public health and
the effectiveness of warning statements, please see the analysis in the
proposed Deeming Rule (79 FR 23142 at 23163-65). Requiring that tobacco
product manufacturers establish and maintain procedures to control
packaging and labeling activities would help to ensure that the
manufacturers successfully carry out the labeling requirements in the
Tobacco Control Act.
    Proposed Sec.  1120.94(a) would require finished tobacco product
manufacturers to establish and maintain procedures to control
repackaging and relabeling activities. These procedures would be
required to address all requirements described in proposed Sec.
1120.92. The terms ``repackaging'' and ``relabeling'' describe
activities in which the package or label of a finished tobacco product
is subsequently changed or replaced. Repackaging and relabeling may be
performed by the same person who originally packaged and labeled the
product or by someone other than the original packager/labeler. For
example, if a manufacturer receives returned tobacco products and
determines that the products could be distributed with new packages or
labels, the manufacturer would have to comply with this provision,
among others. In addition, this proposed provision would apply to an
importer that changes or replaces the packages or labels of imported
finished tobacco products. These proposed requirements are generally
similar to the practices of manufacturing establishments that follow
ISO 9001, and to the proposed repackaging and relabeling provision in
the industry recommendations.
    Proposed Sec.  1120.94(b) would require finished tobacco product
manufacturers to maintain records of all activities required under this
section. According to this provision, records must include the date and
time, the individual performing the activity, the type of activity
performed, any information that demonstrates the requirement was met,
and any data or calculations necessary to reconstruct the results.
    Like the proposed packaging and labeling control requirements
(discussed in the preceding section), these proposed requirements would
help assure that the public health is protected and that tobacco
products are in compliance with the requirements of chapter IX of the
FD&C Act. If a manufacturer applies the wrong label to the tobacco
product, the product may be misbranded under section 903. In addition,
if a finished tobacco product manufacturer recalls a product because
the product was distributed with the wrong label, and determines that
rework of that product is possible through repackaging or relabeling,
the proposed requirements would help ensure that the reworked tobacco
product conforms to the established specifications and other applicable
requirements.
    Proper packaging and labeling of tobacco products play an important
role in FDA's comprehensive public health approach to tobacco control.
The Tobacco Control Act contains a number of provisions related to the
packaging and labeling of tobacco products (e.g., sections 905(i)(1),
910(b)(1)(F), and 911(d)(4) of the FD&C Act), including provisions
related to false or misleading labeling (section 903(a)(1) of the FD&C
Act), such as labeling that fails to bear required health warning
statements (see section 201(n) of the FD&C Act). For a discussion
regarding why health warnings are appropriate for the protection of the
public health and the effectiveness of warning statements, please see
the analysis in the proposed Deeming Rule (79 FR 23142 at 23162).
Requiring that tobacco product manufacturers establish and maintain
procedures for repackaging and relabeling activities would help to
ensure that the manufacturers successfully carry out the labeling
requirements in the Tobacco Control Act.
2. Manufacturing Code
    Proposed Sec.  1120.96(a) would require that each finished and bulk
tobacco product manufacturer apply a manufacturing code to the
packaging or label of all finished and bulk tobacco products. These
proposed requirements are generally similar to the practices of
manufacturing establishments that follow ISO 9001 and practices that
FDA has observed during establishment inspections, as well as to the
proposed requirements of the industry recommendations.
    For a finished tobacco product, the manufacturing code would need
to be applied in a manner that assures it would remain on the packaging
or label through the expected duration of a consumer's use of the
tobacco product. For a bulk tobacco product, the manufacturing code
would need to be applied in a manner that assures it would remain on
the packaging or label until receipt by the subsequent tobacco product
manufacturer.
    For example, under this proposed provision, a finished cigarette
manufacturer, who sells individual packs of cigarettes as well as
cartons of cigarettes, would be required to apply a manufacturing code
to each carton and to each pack of cigarettes. Similarly, a smokeless
manufacturer who sells individual cans of smokeless tobacco as well as
multiple cans packaged together in a plastic sleeve would need to apply
a manufacturing code to the sleeve and to each individual can. Some
cigarette manufacturers already apply similar

codes on cartons of cigarettes, and some smokeless tobacco product
manufacturers apply similar codes on the plastic sleeve that holds
individual and multiple cans of smokeless tobacco. Since the carton and
the sleeve are typically discarded by the consumer during use, this
section also would require that the manufacturing code be applied on
the individual cigarette pack and smokeless can. FDA has observed on
inspections that many manufacturers apply a code to the packaging,
labeling, or shipping containers of finished tobacco products, which
may be discarded prior to a consumer's use or immediately upon opening
by the consumer, but FDA believes this practice is not sufficient.
Under the proposed provisions, if a user stores the tobacco product and
then later experiences an injury or illness due to a hazard or
contaminant, or has another health-related problem, the user would be
able to notify the manufacturer of the affected product using the
product's manufacturing code, even if the packaging sleeve has been
discarded.
    Proposed Sec.  1120.96(b) would require that the manufacturing code
for each finished and bulk tobacco product be permanently affixed,
legible, conspicuous, and prominent. The code should be easily visible,
and it should not be obscured or be able to be mutilated or removed in
whole or in part. For example, a manufacturing code that is partially
smudged and cannot be read in its entirety would not meet the proposed
requirement. This proposed requirement would allow for ready
identification of the manufacturing code during distribution and sale.
It also would help FDA to identify and trace nonconforming or violative
tobacco products and perform relevant inspections to determine the
scope of the problem and recommend or require appropriate corrective
action such as a recall or stock recovery.
    Proposed Sec.  1120.96(c) would require that the manufacturing code
contain the following information listed in the following order: (1)
the manufacturing date in two-digit numerical values in the month-day-
year format (MMDDYY), and (2) the finished or bulk tobacco product
batch number. FDA proposes to require the manufacturing code to include
the batch number because the batch number is the common identifier for
the product in the production and distribution records. Because the
batch number would be documented in the production record (see proposed
Sec.  1120.70) and the production record would include all the relevant
manufacturing information for the batch (e.g., unique identifiers of
incoming components, acceptance activities results, identification of
major equipment and processing lines used in the manufacturing of the
batch), the manufacturing code on the product package or label would
establish a link to the manufacturing history of the product and, as
discussed in proposed Sec.  1120.104, to certain records of
distribution.
    The proposed manufacturing code requirement would help assure that
the public health is protected by providing for tobacco product
traceability. The manufacturing code would enable tobacco product
manufacturers to determine the manufacturing and distribution history
of finished and bulk tobacco products. If a product user becomes ill or
injured due to a hazard or contaminant, or otherwise has a tobacco-
related health problem, the user would be able to notify the
manufacturer of the affected product using the product's manufacturing
code. The manufacturer could use this information to review the
production record as part of a complaint, nonconforming product, or
CAPA investigation to determine the scope and cause of the issue. In
addition, the manufacturing code would help the manufacturer determine
the distribution history of the affected tobacco product if it needs to
take a corrective action, such as a recall or stock recovery.
    In addition, the proposed requirement would help assure that
tobacco products are in compliance with the requirements of chapter IX
of the FD&C Act. If adulterated or misbranded products have been
manufactured and distributed, the Agency can identify affected batches
and take appropriate actions. For example, the manufacturing code would
help FDA effectuate an order under section 908(a) of the FD&C Act to
provide notification about tobacco products that present an
unreasonable risk of substantial harm to the public health in order to
eliminate such risk. This information would also help to effectuate an
order under section 908(c) to recall tobacco products, where FDA finds
that there is a reasonable probability that the tobacco product
contains a manufacturing or other problem not ordinarily contained in
tobacco products on the market that would cause serious, adverse health
consequences or death. In addition, if FDA tests tobacco products at
retail locations and determines that the products are adulterated or
misbranded, it would be able to use the manufacturing code to conduct
relevant inspections or investigations (e.g., review production and
distribution records) to determine the scope and cause of the issue and
take appropriate action.
3. Warning Plans
    Proposed Sec.  1120.98(a) would require each finished tobacco
product manufacturer that is required to comply with a warning plan for
tobacco product packaging (under the FD&C Act, FCLAA, CSTHEA, or their
implementing regulations) to establish and maintain procedures to
implement the requirements of such warning plan. For example, under
Sec.  1143.5(c), certain cigar packages must bear warning statements
that are randomly displayed in each 12-month period, in as equal a
number of times as is possible on each brand of cigar, and randomly
distributed in all areas of the United States in which the product is
marketed in accordance with a plan submitted by the cigar manufacturer,
importer, distributor, or retailer to, and approved by, FDA. Proposed
Sec.  1120.98(a) would require cigar manufacturers that are required to
comply with an FDA-approved plan under Sec.  1143.5(c) to establish and
maintain procedures to ensure that such a plan is implemented and
followed. Similarly, finished cigarette and smokeless tobacco product
manufacturers would have to establish and maintain procedures to ensure
that warning plans for cigarette and smokeless tobacco product
packaging required under FCLAA and CSTHEA are implemented and followed.
    Under section 903(a)(1) of the FD&C Act, a tobacco product is
deemed to be misbranded if its labeling is false or misleading in any
particular. This could include, for example, a case in which a
manufacturer includes the same single warning on all product packages,
when there is a requirement to rotate a number of different warnings
(see section 201(n) of the FD&C Act). This provision would help the
Agency to ensure that tobacco product packaging displays all applicable
required health warning statements. FDA has observed that some
manufacturers do engage in activities that address warning plans but we
have also found, during inspections, that some manufacturers do not
have proper procedures in place at the manufacturing facility to ensure
the warning statements are randomly displayed in each 12-month period,
in as equal a number of times as is possible on each brand of product,
and randomly distributed in all areas of the United States in which the
product is marketed (e.g., Refs. 55 and 161) (see 15 U.S.C. 4402).
    Manufacturers could adopt a number of practices to comply with
applicable warning plans. For example,

manufacturers could order labels on which the warnings are printed in
sequence on the label rolls such that, for a given production run, each
of the warnings is applied equally. Alternatively, manufacturers could
use multiple label rolls that contain one of the required warning
labels and have a supervisor tasked with calculating and documenting
when to switch the roll to ensure that the required warning labels are
equally applied in a batch. Further, manufacturers could establish
procedures that define the specific number of each of the required
warning statements needed for printing or affixing to the label of each
brand of product during the manufacturing process and outline
procedures for shipment of the products to ensure random distribution.
Such practices could be included in the procedures required in this
proposed provision.
    Under proposed Sec.  1120.98(a), the warning plan procedures would
be required to include the inspection of the packaging before
distribution to ensure that finished tobacco product labels bear the
required warning statements in accordance with the warning plan. For
example, FDA is aware that some manufacturers use visual inspection or
electronic optical scanners to perform inspection of packaging and
labeling to confirm that the correct warning statements have been
applied.
    Proposed Sec.  1120.98(b) would require finished tobacco product
manufacturers that are required to comply with a warning plan for
tobacco product packaging (under the FD&C Act, FCLAA, CSTHEA, or their
implementing regulations) to maintain records that demonstrate that
they are in compliance with the warning plan. For example, if the
manufacturer must comply with a cigar warning plan under Sec.  1143.5,
this provision would require the manufacturer to maintain records that
demonstrate that the required warning statements are randomly displayed
in each 12-month period, in as equal number of times as possible on
each brand of cigar packaging. Such records also would need to
demonstrate that the required warning statements on packaging are
randomly distributed in all areas of the United States in which the
cigar is marketed. Records required under this proposed provision could
include a copy of the relevant FDA approved warning plan, copies of the
product labels maintained in the production records (see proposed Sec.
1120.70(b)(6)), distribution records maintained under proposed Sec.
1120.104(b), and any additional records demonstrating compliance with
any requirements for random distribution and random and equal display.
    The Agency has observed that many tobacco product manufacturers
have adopted a number of different practices that would meet the
requirements in proposed Sec.  1120.98(b). For example, FDA is aware
that some smokeless tobacco manufacturers keep records from audits or
an accounting of each of the four required warning statements that are
ordered for and applied to smokeless tobacco product packaging to
confirm that over a 12-month period, each of the four required warning
statements are randomly displayed, in as equal a number of times as is
possible for each brand of product. FDA is aware that other
manufacturers have used a quality audit, to verify the production of
required warning statements on packaging within a 12-month period (Ref.
162). Other manufacturers document in their production, inventory, or
shipment records the specific warning statements that have been used or
applied to packaging, and demonstrate through distribution records that
the required warning statements have been randomly distributed.
    The industry GMP recommendations do not call for warning plans. The
Agency believes that the proposed requirements would help assure that
the public health is protected. This provision would help ensure that
manufacturers who produce finished tobacco products that are subject to
a warning plan establish and maintain packaging procedures to ensure
compliance with applicable laws and regulations to warn users of known
health risks. The World Health Organization (WHO)'s Framework
Convention on Tobacco Control (FCTC), an evidence-based treaty,
provides a regulatory strategy for health warnings on packaging and
labeling (Ref. 163), for addressing the serious negative impacts of
tobacco products, calls for rotating health warnings to ensure that
they do not become stale (Ref. 164). Salient warnings would be more
visible to consumers, informing them of the consequences associated
with use of tobacco products. Accordingly, this provision would help
assure that the public health goals of the warning label requirements
are met.
    These proposed requirements also would help assure that tobacco
products are in compliance with chapter IX of the FD&C Act. Under
section 903(a)(1) of the FD&C Act, a tobacco product is deemed to be
misbranded if its labeling is false or misleading in any particular.
This could include, for example, a case in which a manufacturer
includes the same single warning on all product packages, when there is
a requirement to rotate a number of different warnings (see section
201(n) of the FD&C Act). By ensuring that tobacco product manufacturers
establish and maintain packaging procedures that address required
warning plans, the proposed provision would help ensure that tobacco
products are not misbranded.

G. Handling, Storage, and Distribution

1. Handling and Storage
    Proposed Sec.  1120.102 would require finished and bulk tobacco
product manufacturers to establish and maintain procedures to ensure
that tobacco products are handled and stored under appropriate
conditions to prevent nonconforming products as well as mixups,
deterioration, contamination, adulteration, and misbranding of tobacco
products. These proposed requirements are generally similar to the
practices of manufacturing establishments that follow ISO 9001, the
proposed handling and storage provision in the industry
recommendations, and controls that are already being implemented by the
tobacco industry, as observed by FDA during inspections.
    Handling and storage procedures under proposed Sec.  1120.102 could
include, for example, establishing storage conditions to control
temperature and humidity to prevent mold growth, and adopting certain
product segregation practices to prevent mixups. If a manufacturer
restricts access to designated storage areas through the use of keys,
bar code readers, or other means, the procedures should detail, among
other things, who is permitted access and what steps should be followed
prior to handling. Such procedures are intended to prevent mixups or
the use of unsuitable materials in manufacturing.
    These proposed requirements would apply to all stages of handling
and storage in which a manufacturer is involved, including handling and
storage as part of the production process. The handling and storage
procedures should complement other procedures required under this
proposed rule, such as, for example, the procedures required in
proposed Subpart C--Buildings, Facilities, and Equipment.
    The proposed handling and storage requirements are intended, in
part, to prevent deterioration of the tobacco product after it has
undergone product acceptance activities and has been approved for
release into distribution. For example, the tobacco-specific

nitrosamines (TSNAs) 4-(methylnitrosamino)-1-(3-pyridyl)-1-butanone
(NNK) and N-nitrosonornicotine (NNN) are formed from tobacco alkaloids
and nitrosating agents, such as nitrite (Ref. 165). These TSNAs are
potent carcinogenic agents found in smokeless tobacco products (82 FR
8004, January 23, 2017). The concentration of NNK and NNN may increase
in smokeless tobacco when stored at room temperature due to microbial
action (Refs. 56 and 166). Additionally, high storage temperature of
cured tobacco has been shown to contribute to TSNA formation (Ref.
167). However, controls exist that can limit the formation of TSNA,
including refrigeration of the tobacco products during storage (Ref.
165). If such handling and storage conditions are necessary to ensure
that a finished or bulk tobacco product remains within its NNN or NNK
specification, this provision would require a manufacturer to establish
and maintain procedures for such handling and storage controls.
    The proposed handling and storage requirements are also intended to
prevent contamination. For example, in storage, the environment's
moisture content and relative humidity can support mold growth and
aflatoxin production by aflatoxigenic molds (Refs. 168 and 169).
Manufacturers can decrease the likelihood of mold contamination in
tobacco products by controlling the temperature and humidity during
storage. Additionally, FDA is aware that tobacco products in many
countries contain numerous contaminant by-products attributed to
storage practices (Ref. 165). These storage practices can introduce
NTRMs, including manufacturing materials, pesticides, cleaning
compounds, microorganisms, and animal or insect excrement or parts into
the tobacco product (Refs. 6 and 170). A tobacco product can also
become contaminated if it is stored close to highly aromatic liquids or
materials, such as kerosene, oils, grease, and paraffin (Ref. 171). The
proposed requirements in this section are intended to ensure that
tobacco product manufacturers adopt handling and storage practices that
prevent such contamination.
    The proposed handling and storage requirements are also intended to
protect against problems that could occur from product or ingredient
mixups. For example, if the manufacturer does not implement these
handling and storage requirements and ingredients are mishandled during
the manufacturing process without detection, a label might not
accurately reflect the content of ingredients of the product.
    The Agency believes that the proposed handling and storage
requirements would help assure that the public health is protected and
that tobacco products are in compliance with the requirements of
chapter IX of the FD&C Act. Establishing and maintaining procedures for
handling and storage is an important step in preventing nonconforming
products and mixups, contamination, deterioration, adulteration, and
misbranding.
2. Distribution
    Proposed Sec.  1120.104 would require finished and bulk tobacco
product manufacturers to establish and maintain procedures related to
the distribution of finished and bulk tobacco products. These proposed
requirements would apply only to tobacco product distribution within
the manufacturer's control (i.e., to the initial consignee and direct
account). These proposed requirements are generally similar to the
practices of manufacturing establishments that follow ISO 9001, the
distribution provision in the industry recommendations, and practices
that are already being implemented by the tobacco industry, as observed
by FDA during inspections.
    Specifically, proposed Sec.  1120.104(a)(1) would require finished
and bulk tobacco product manufacturers to establish and maintain
distribution procedures to ensure that finished and bulk tobacco
products are distributed to the initial consignee under appropriate
conditions to prevent nonconforming product as well as mixups,
deterioration, contamination, adulteration, and misbranding of tobacco
products. FDA intends for this provision to provide manufacturers
flexibility in determining what conditions are appropriate for
protecting their tobacco products against mixups, deterioration,
contamination, adulteration, or misbranding. For example, a tobacco
product manufacturer could seek to ensure that distribution conditions
are appropriate by inspecting the integrity of shipping containers to
make sure that there are no problematic conditions such as holes or
gaps, checking the cleanliness and environmental conditions of
transport containers, and making sure that there are no conditions that
can attract insects and rodents. Additionally, a tobacco product
manufacturer could establish distribution requirements to prohibit the
distribution of finished and bulk tobacco products in transport
containers that ship agricultural products, such as livestock and
manure remnants in the form of organic fertilizer, to prevent tobacco
products from becoming contaminated with bacteria such as E. coli and
fecal coliform (Ref. 172). A manufacturer could also establish shipping
procedures that require inspection of the shipping conditions to
prevent the shipment of tobacco product in circumstances where they may
become contaminated by toxic or hazardous substances. For example,
shipping procedures could address circumstances similar to a reported
situation where a shipment of cigarettes was contaminated with ant and
roach spray (Ref. 148).
    Proposed Sec.  1120.104(a)(2) would require finished and bulk
tobacco product manufacturers to establish and maintain distribution
procedures to ensure that only those finished and bulk tobacco products
approved for release are distributed. (See proposed Sec.  1120.70 for
the proposed requirement for review and approval of the production
record for release of each batch of finished and bulk tobacco product
for distribution.) This requirement is intended to prevent the release
of nonconforming product or products that have not undergone applicable
product acceptance activities. Tobacco product manufacturers would have
the flexibility to determine the appropriate procedures and practices
to control the distribution of their tobacco products. For example, FDA
has observed on inspections that tobacco product manufacturers have
used printed or electronically scannable labels, tags, and signs to
ensure that only tobacco products that have been approved for release
may be distributed.
    Proposed Sec.  1120.104(b) would require finished and bulk tobacco
product manufacturers to maintain distribution records. According to
this paragraph, the distribution records would be required to include
the name and address of the initial consignee, the identification and
quantity of finished or bulk tobacco products shipped, date of
shipment, and the manufacturing code(s) of the tobacco products. The
meaning of ``consignee'' in this context would be the person to whom
the tobacco product is delivered, which is consistent with the use of
consignee in other Agency distribution recordkeeping requirements
(e.g., Sec.  820.160). The initial consignee is the first person to
whom the manufacturer (or any person(s) acting on behalf of the
manufacturer) delivers the tobacco products. The initial consignee can
be a warehouse, wholesaler, distributor, or retailer, who is a customer
of the manufacturer. However, the requirement would not include

individual purchasers of tobacco products for personal consumption.
This basic information is needed to identify where tobacco products
have been initially distributed in order, for example, to facilitate a
corrective action such as a recall or stock recovery.
    Proposed Sec.  1120.104(c) would require finished and bulk tobacco
product manufacturers to maintain a list of direct accounts. For
purposes of this rule, ``direct accounts'' means all persons who are
customers of the tobacco product manufacturer that receive finished or
bulk tobacco products directly from the tobacco product manufacturer or
from any person under control of the manufacturer. Direct accounts may
include wholesalers, distributors, and retailers. Direct accounts do
not include individual purchasers of tobacco products for personal
consumption.
    The list of direct accounts would be required to contain the name,
address, and contact information of each entity. This list is different
from the distribution record, which only lists the individual initial
consignee associated with a particular shipment. The list of direct
account information is necessary, for example, to facilitate
investigations of nonconforming product. In addition, this information
would assist in tracing finished or bulk tobacco products to all
persons to whom the tobacco product manufacturer has distributed or
sold products. This requirement would be consistent with 21 CFR part 7
provisions regarding voluntary recalls initiated by manufacturers.
    The proposed distribution requirements would help assure that the
public health is protected by requiring finished and bulk tobacco
products to be distributed under appropriate conditions to prevent
nonconforming tobacco products as well as mixups, deterioration,
contamination, adulteration and misbranding of tobacco products. A
finished or bulk tobacco product may deteriorate or be adversely
affected by distribution conditions (e.g., environmental transport
conditions).
    The proposed requirements also would help assure that tobacco
products are in compliance with the requirements of chapter IX of the
FD&C Act by helping to establish traceability of finished and bulk
tobacco products. Tracing finished and bulk tobacco products would
enable tobacco product manufacturers and FDA to identify where tobacco
products that do not meet the requirements of the FD&C Act have been
distributed and sold. This information would facilitate notification of
consignees and persons in the distribution chain in order to
efficiently conduct a product recall under section 908 of the FD&C Act,
if necessary. The scope of a product recall would likely be much
broader than necessary if records of product distribution were not
available to pinpoint distribution, thus potentially decreasing a
recall's effectiveness and increasing cost to the tobacco product
manufacturer.
    The proposed requirements also, in conjunction with the proposed
unique identifier, production record, and manufacturing code
requirements, would help enable FDA to assure the integrity of the
supply chain from suppliers to finished or bulk tobacco product
manufacturers as well as from finished or bulk tobacco product
manufacturers to the initial consignees.

H. Recordkeeping and Document Controls

    Proposed Sec.  1120.122 would establish recordkeeping and document
control requirements.
    For purposes of this proposed part 1120, documents generally refer
to written (paper or electronic) procedures, forms, work instructions,
etc., such as the procedures that a finished or bulk tobacco product
manufacturer establishes and maintains to address a TPMP requirement.
For example, a tobacco product complaint procedure and complaint form
template that is established under proposed Sec.  1120.14 are
considered to be documents. For purposes of this proposed part 1120,
records generally refer to the written (paper or electronic) output
from activities undertaken to implement the documents. For example,
records include written results of complaint and nonconforming product
investigations, and laboratory testing activities. We note that this
use of the term ``record'' is specific to proposed part 1120 and does
not affect how that term is applied in other contexts.
    All documents and records required under the proposed rule would be
required to meet certain requirements under proposed Sec.  1120.122(a).
We are proposing additional requirements for records under proposed
Sec.  1120.122(b) and for documents under proposed Sec.  1120.122(c).
FDA notes that if a tobacco product manufacturer establishes and
maintains documents and records required under proposed part 1120 in an
electronic format, then they are subject to the requirements of 21 CFR
part 11.
    Specifically, proposed Sec.  1120.122(a) would establish general
requirements that apply to all documents and records required under
proposed part 1120. Proposed Sec.  1120.122(a)(1) would require that
documents and records required under proposed part 1120 be written in
English, or an accurate English translation must be made available upon
request. Documents and records (including any associated source data)
could be maintained in the native language of a foreign tobacco product
manufacturer as long as a translation is made available upon request.
FDA expects that a manufacturer would fulfill requests for documents or
records translations promptly to ensure that there are no delays of
inspections or investigations. The accuracy of the English translation
could be demonstrated by, for example, providing a certification of the
translation, using a certified translator, or providing information on
the competency of the translator.
    Proposed Sec.  1120.122(a)(2) would require that all documents and
records required by proposed part 1120, that are associated with a
batch of finished or bulk tobacco product, must be retained for a
period of not less than 4 years from the date of distribution of the
batch or until the product reaches its expiration date if one exists,
whichever is later. Examples of such records include purchasing,
acceptance, production, laboratory testing, warning plans, and
distribution records. FDA has selected 4 years as a means to help
assure that the records would be available for at least one biennial
FDA inspection under sections 704 (21 U.S.C. 374) and 905(g) of the
FD&C Act.
    Documents and records that would be required by proposed part 1120,
that are not associated with a batch of finished or bulk, would be
required to be retained for a period of not less than 4 years from the
date they were last in effect. Examples of these documents and records
include training, calibration, and pest control procedures and records
required under proposed Sec. Sec.  1120.12 (Organization and
personnel), 1120.36 (Equipment) and 1120.34 (Buildings, facilities, and
grounds), respectively.
    Proposed Sec.  1120.122(a)(3) would require that all documents and
records required under proposed part 1120 be maintained at the
manufacturing establishment or another location that is readily
accessible to responsible officials of the tobacco product manufacturer
and to FDA. FDA interprets ``readily accessible'' to FDA as the
documents and records being made available to FDA upon request within
the course of an inspection. Documents and records, regardless of
location, would be considered readily accessible to FDA if the tobacco
product manufacturer can respond to an FDA investigator's request
promptly and

without delaying the inspection or investigation.
    The requirement to maintain documents and records at the
manufacturing establishment or other locations that are readily
accessible to responsible officials of the tobacco product manufacturer
is intended to enable the manufacturer to exercise control over the
documents and records, which will help ensure accountability. FDA would
consider ``responsible officials'' to include management with executive
responsibility. The proposed requirement also would help ensure that
the responsible officials at the manufacturing establishment have ready
access to those documents and records that are essential for performing
required activities and making critical decisions.
    This provision would require that the documents and records
required to be maintained, including those not stored at the
establishment, be made readily accessible during the 4-year retention
period to FDA for inspection and photocopying or other means of
reproduction. Documents and records required under this part may be
retained either as originals or as true copies such as photocopies,
microfilm, microfiche or other reproductions which preserve the content
and meaning of the data, including associated metadata and audit
trails. Where reduction techniques are used, suitable reader, computer,
and copying equipment should be readily accessible to FDA during an
inspection. Documents and records that can be immediately retrieved
from another location as originals or true copies, including by
computer or other electronic means, would meet the requirements of this
paragraph.
    Proposed Sec.  1120.122(b) would establish additional requirements
that apply to all records required under proposed part 1120.
Specifically, proposed Sec.  1120.122(b) would require that all
records, regardless of storage medium, must be attributable, legible,
contemporaneously recorded, original, and accurate (ALCOA). The ALCOA
requirements of proposed Sec.  1120.122(b) are basic principles that
describe minimum standards for how records should be collected and
maintained in order to protect the integrity of the data they preserve.
For purposes of this requirement, records include all records required
to be maintained under proposed part 1120, such as, for example,
written results from inspections, tests, other verification activities.
These ALCOA requirements would apply to all records regardless of
format or storage media, including paper-based and electronic records.
For example, laboratory test records would be required to include all
relevant raw data, graphs, and charts. This provision is intended to
ensure the data integrity of information generated to demonstrate
compliance with the proposed TPMP rule.
    The ALCOA requirements are defined under proposed Sec.
1120.122(b)(2) and further explained as follows:
     Attributable means that the data in a record is traceable
to its source. This means it should be attributable to the originator
of the data, whether that source is an individual, an automated piece
of equipment, or individual operating equipment. For example, if an
ENDS manufacturer conducts an acceptance test of e-liquid, using gas
chromatography-mass spectrometry, to determine its nicotine
concentration, the record would have to identify the gas
chromatography-mass spectrometry equipment used and the personnel who
performed the test and state the result. This applies to any changes,
corrections, deletions, or revisions to a record.
     Legible means the record is permanently recorded in a
readable format. A legible record prevents loss and preserves
traceability of changes without obscuring the original entry or
subsequent additions or deletions. For example, if test information is
recorded on a laboratory notebook or form, it would have to be recorded
in ink. If any changes are made, the original entry would have to be
struck out to preserve the first capture of the data and initialed and
dated for traceability. Electronic data that are first stored in
temporary memory before creating a permanent record would not comply
with the proposed requirement, because the process would fail to save
the first capture of the data and would not preserve the traceability
of changes. Practices like this, that allow data manipulation prior to
transfer to the permanent record, compromise the data integrity of the
record and would not comply with this requirement.
     Contemporaneously recorded means that data is recorded at
the time the procedure, assessment, observation, or other activity is
performed.
     Original means the record reflects the first capture of
the data and all information related to all subsequent changes required
to fully reconstruct the TPMP activities. An original record preserves
the record content and the meaning of the data, including associated
metadata. Original records may be static or dynamic. A static record,
such as a paper record, is fixed and allows little or no interaction
between the user and record content. Records in a dynamic state allow
the user to interact with the information. For example, electronic
records in database formats that allow the user to track, trend, and
query data are examples of records in a dynamic state. This provision
would require that information that is first captured in a dynamic
state remain available in that state.
     Accurate means that the data in a record is correct,
truthful, complete, valid, and reliable. All records required under
this part, including the associated data and metadata, must be
accurate. Depending on the manufacturing process and record systems
used, data may be captured manually by human observation or automated
electronic equipment (e.g., an electronic manufacturing system,
records, or laboratory system). If errors occur, they should be
specifically noted. Accurate also would require that there are no
changes or edits to the recorded data without documented amendments.
Electronic data that are first stored in temporary memory before
creating a permanent record would not comply with the proposed
requirement because such practice allows for data manipulation prior to
recording, thus compromising the data integrity.
    In order to comply with proposed Sec.  1120.122(b) and other
requirements of this proposed rule, finished and bulk tobacco
manufacturers would need to preserve the metadata associated with TPMP
records. Metadata are the contextual information required to understand
the data. For example, without metadata the number ``20'' is
meaningless. With additional context such as the unit of measure (e.g.,
20 mg nicotine/cigarette), the value 20 is given meaning. Metadata are
structured information that describes, explains, or otherwise makes it
easier to retrieve, use, or manage data. Metadata include the unit of
measure, date/time stamp for when the data were acquired,
identification of the person who conducted the test or analysis that
generated the data, and identification of the equipment used to capture
the data. Specific pieces of metadata may be required by other subparts
of this proposed rule.
    Finished and bulk tobacco product manufacturers also may find that
audit trails assist them in demonstrating that information or data in a
record complies with the proposed recordkeeping requirements. An audit
trail is a form of metadata that contains information associated with
actions related to the creation, modification, or deletion of a TPMP
record. An audit trail is a chronology of the ``who, what, when, and
why'' of a record. For a paper

record, the audit trail of a change would be recorded via a single line
cross-out that allows the original entry to remain legible and includes
the initials of the person making the change, the date of the change,
and the reason for the change. The audit trail for a paper record
should be contained within the four corners of the record. For
electronic records, an audit trail is a secure, computer-generated,
time-stamped electronic file that that allows for reconstruction of the
course of events relating to the creation, modification, or deletion of
a record.
    Finished and bulk tobacco product manufacturers may comply with the
proposed requirement of Sec.  1120.122(b) that records be ``original''
by maintaining original records or true copies of those records through
the records retention period. A true copy, like the original record,
would preserve the record content and meaning of the data, including
associated metadata and any audit trails. A true copy may only be
retained in lieu of the original if it preserves the static or dynamic
state of the original and if the copy has been compared to the original
and verified to contain the entire content and meaning of the original
record, including all metadata and any audit trails. Consistent with
the cGMP requirements for other FDA-regulated products, true copies may
be photocopies, pictures, scanned copies, microfilm, microfiche,
electronic records, or other equivalent reproductions depending on form
and content of the original record.
    The extent of what would need to be included in a true copy is
dependent on the original record. For example, when an individual
writes a contemporaneous observation in a notebook or on a worksheet or
scrap of paper, this is the first capture of data; this piece of paper
would need to be retained unless a true copy is created. If a true copy
is made, it must capture any written notes, strikeouts, erasure marks,
and all other alterations to the original record.
    Proposed Sec.  1120.122(c) would require tobacco product
manufacturers to establish and maintain procedures to control all
documents established to meet requirements under proposed part 1120.
For the purposes of proposed part 1120, documents generally refer to
written procedures (such as standard operating procedures), work
instructions, and blank forms, such as the procedures that a finished
and or bulk tobacco product manufacturer establishes and maintains to
address a TPMP requirement. However, completed forms and testing
results generated when implementing activities under proposed part 1120
are considered records and therefore would not be subject to Sec.
1120.122(c). For example, a pH acceptance testing procedure and blank
form to record the pH test result are documents that would be subject
to the general requirements under Sec.  1120.122(a) and to the document
controls under proposed Sec.  1120.122(c). When pH testing is performed
according to the testing procedure and the results are recorded on the
form, this creates a record subject to the requirements under proposed
Sec.  1120.122(a) and (b). Similarly, a complaint procedure and a
complaint record template established to comply with proposed Sec.
1120.14 are documents and would need to comply with the proposed
requirements in Sec.  1120.122(a) and (c); the record maintained for a
specific complaint event would be required to comply with the proposed
requirements in Sec.  1120.122(a) and (b), but it would not be required
to comply with the proposed requirements in Sec.  1120.122(c).
    Proposed Sec.  1120.122(c)(1) would require the document control
procedures to include requirements for document approval and
distribution. To comply with this proposed provision, manufacturers
would need to assign personnel to review and approve all documents
established to meet the requirements of proposed part 1120. Such review
and approval would have to be completed before the document is
implemented. For example, under proposed Sec.  1120.14, manufacturers
would be required to establish and maintain procedures for the receipt,
evaluation, investigation, and documentation of all complaints.
Personnel must review and approve the complaint procedure prior to the
issuance and use of the procedure. The approval would be required to
include the date, name, and signature of the individual(s) approving
the document. Documents that are established to meet requirements
proposed part 1120 would be required to be available at all locations
for which they are designated, used, or otherwise necessary, and all
such documents that are superseded and obsolete would have to be
promptly removed from all points of use or otherwise prevented from
unintended use. On inspections, FDA has observed the use of obsolete
documents on the production line. Personnel who use an obsolete
document may not adequately perform a required activity, which can
result in the manufacture of nonconforming products.
    Proposed Sec.  1120.122(c)(2) would require that the document
control procedures include requirements related to document changes.
Specifically, changes to documents would have to be reviewed and
approved prior to implementation by an individual(s) in the same
function or part of the organization (e.g., Quality Assurance
Department) that performed the original review and approval. The
purpose of this proposed requirement is to ensure that individual(s) in
the same job function as those who originally reviewed and approved the
document review any changes because these individuals typically have
the best insight on the impact of the changes.
    Proposed Sec.  1120.122(c)(2) also would require that approved
changes be communicated to the appropriate personnel in a timely
manner. For example, a manufacturer could comply with this requirement
by making the changed documents readily accessible at all locations for
which they are designated, used, or otherwise necessary, and by
retraining affected personnel on the changed documents. FDA has
observed on inspections instances where manufacturers made changes to
procedures, but the changes were not communicated in a timely manner to
the personnel utilizing the documents. Without these proposed
requirements in place, personnel may not be aware that changes have
been made to a procedure, which can result in the manufacture of
nonconforming products.
    In addition, proposed Sec.  1120.122(c)(2) would require that
superseded and obsolete documents be archived. For purposes of proposed
part 1120, archiving means that the superseded or obsolete document
would be retained for historical reference. These documents would have
to be retained in accordance with the time period in proposed Sec.
1120.122(a)(2) (e.g., for 4 years after last use, when not associated
with a batch of finished or bulk tobacco product). These documents may
be useful to manufacturers when performing an investigation of products
manufactured and distributed using a previous version of a document.
For example, an obsolete MMR would provide helpful information on
specifications when investigating a nonconforming product that was
manufactured under that version of the MMR.
    Further, proposed Sec.  1120.12(c)(2) would require tobacco product
manufacturers to maintain records of changes to documents. According to
this paragraph, document change records must include the following
information: a description of the change; identification of the
affected documents; the name and signature of the approving
individual(s); the approval date; and the

date the change becomes effective. Maintaining change records on
computers would be acceptable, provided that appropriate controls are
implemented to ensure the integrity of the electronic data and
signatures. Electronic signatures could be used to satisfy this
requirement. All electronic records are subject to part 11.
    The proposed requirements would help assure that the public health
is protected. Documents and records are essential to the ability to
conduct adequate investigations in case of problems (e.g., to determine
the scope and cause of a nonconforming product issue) and take an
appropriate corrective action, such as a recall.
    The Agency also believes that the proposed document control
requirements would help assure that the public health is protected.
Document controls would establish a formal, documented system that
defines how and by whom documents will be reviewed and approved. They
also would include the procedures used for updating documents, for the
distribution and maintenance of all required documents, and for the
removal of obsolete and superseded documents. Controlled documents are
necessary to establish consistent practices in manufacturing operations
and provide a basis for employee training and supervision. If documents
are not appropriately approved and current versions distributed for
use, or if obsolete documents are used to manufacture tobacco products,
manufacturing operations might proceed in an ad hoc manner that could
result in the manufacture of nonconforming products. For example, if a
manufacturer changes an acceptance activity procedure document to
include a visual inspection of a new type of foreign material to
address consumers' complaints, this change would have to be reviewed,
approved, and communicated to the appropriate personnel in a timely
manner. If personnel who are responsible for conducting this visual
inspection are not informed of this change, they may fail to perform
this activity and release products that contain this foreign material.
    The proposed requirements would also help assure that tobacco
products are in compliance with the requirements of chapter IX of the
FD&C Act by ensuring that FDA can verify that the activities required
under proposed part 1120 have been implemented and that the documents
and records are trustworthy and reliable. Data integrity is an
essential foundation of the proposed rule and is critical to FDA's
ability to protect the public health. The proposed ALCOA requirements
are necessary in order to protect the integrity of TPMP records. Widely
accepted, the ALCOA requirements are the basic principles of data
integrity (Refs. 174-177). The effectiveness of FDA inspections depends
on the veracity of the information provided by regulated entities to
the Agency. The vast majority of the time, FDA is absent from the
establishment. The Agency depends on records and documents to
reconstruct events which it was not present to witness. FDA's
experiences in other regulated product areas have shown that data-
integrity-related manufacturing violations, including data fraud and
falsification of records, have led to numerous regulatory actions.
Other regulatory agencies and public health organizations, like the
World Health Organization, the European Medicines Agency, the Medicines
& Healthcare Products Regulatory Agency of the United Kingdom, and the
Therapeutic Goods Administration of Australia share FDA's view that
data integrity principles are a core component of good manufacturing
practice (id.). Because data integrity principles are essential to the
quality systems and QMS, they are among the portions of those
approaches adopted by the Agency in this proposed rule. Data integrity
lapses in the regulated manufacturing environments are critical
deficiencies because they undermine the ability of FDA to verify if a
product is manufactured in accordance with its marketing authorization.
Consequently, the proposed ALCOA requirement helps assure that tobacco
products are in compliance with the requirements of chapter IX of the
FD&C Act by giving the Agency confidence in the integrity of the
records which are at the center of the regulatory scheme envisioned by
the Tobacco Control Act.
    In addition, the Agency believes that the proposed document control
requirements would help ensure that tobacco products are in compliance
with the requirements of chapter IX of the FD&C Act, because, for
example, documents established to meet the requirements of proposed
part 1120 are necessary to implement the manufacturing methods and
procedures specified in the MMR and ensure that a tobacco product
conforms to its specifications. Thus, these documents would enable FDA
to help ensure that new tobacco products and MRTPs are manufactured
consistent with the specifications provided in their applications
(i.e., SE Report, request for SE exemption, PMTA, MRTPA) and that pre-
existing products are manufactured consistent with their original
characteristics.

I. Small Tobacco Product Manufacturers

    Proposed Sec.  1120.130 provides for an extended compliance
deadline that would grant small tobacco product manufacturers of
finished and bulk tobacco products additional time to implement the
requirements in part 1120, consistent with section 906(e)(1)(B)(v) of
the FD&C Act. Instead of being required to comply with part 1120 on the
effective date of the final rule, small tobacco manufacturers would be
required to comply with the requirements in part 1120 4 years after the
effective date of the final rule. FDA believes that this extended
compliance deadline for small tobacco product manufacturers would
provide them with sufficient time to implement the proposed
requirements.

J. Exemptions and Variances

1. Exemptions and Variances
    Proposed Sec.  1120.140 explains that, under section 906(e)(2) of
the FD&C Act, any person subject to any of the TPMP requirements could
petition FDA for a permanent or temporary exemption or variance from
any of these requirements. The petitioner remains subject to the
relevant requirements unless FDA grants the petition for an exemption
or variance under proposed Sec.  1120.146. Thus, any person who
petitions FDA for an exemption or variance would have to follow the
TPMP requirements in proposed part 1120 unless and until FDA grants the
petition.
    Section 906(e)(2)(A) of the FD&C Act provides FDA the authority to
prescribe the form and manner for submission of petitions. Under
proposed Sec.  1120.140, an individual petitioning for an exemption or
variance would have to submit the petition, including all information
supporting the petition, in an electronic format that FDA can process,
review, and archive. FDA intends to provide information on its website
on how to provide the electronic submission to FDA (e.g., information
on electronic media and methods of transmission). Electronic submission
of information is consistent with the Government Paperwork Elimination
Act (Pub. L. 105-277, Title VII). Because of the broad availability of
the internet, FDA does not anticipate any need to submit a petition for
an exemption or variance, and supporting materials, in a nonelectronic
format. However, if the petitioner is unable to submit a petition in an
electronic

format, the petitioner may submit a written request to FDA asking that
FDA allow the submission in an alternative format, explaining in detail
why the petitioner cannot submit the petition in an electronic format
and why an alternate format is necessary. Proposed Sec.  1120.140 would
also require that all petitions, including supporting information, and
all requests to submit a petition in an alternative format, be legible
and in the English language. These proposed requirements would ensure
that FDA could review the petitions expeditiously and appropriately.
2. Petition for an Exemption or Variance
    Proposed Sec.  1120.142 would require that a petition for an
exemption or variance be submitted with supporting documentation and
contain: (1) the petitioner's name, address, and contact information;
(2) identification of the tobacco product(s); (3) the requirement(s) in
part 1120 for which an exemption or variance is requested; a detailed
explanation of why the exemption or variance is requested, including
why the tobacco product manufacturer is not able to comply with the
requirement(s) of proposed part 1120; and (4) the duration of the
proposed exemption or variance. In addition, for a petition for a
variance, this section would require a detailed explanation setting
forth the methods proposed to be used in, and the facilities and
controls proposed to be used for, the manufacture, packing, and storage
of the tobacco product in lieu of the requirement(s) in part 1120, as
well as the basis for the petitioner's determination that the proposed
methods will be sufficient to assure that the public health will be
protected and that the tobacco product(s) will be in compliance with
chapter IX of the FD&C Act. For a petition for an exemption, this
provision would require a detailed explanation setting forth the basis
for the petitioner's determination that compliance with the
requirement(s) is not required to assure that the public health will be
protected and the tobacco product will be in compliance with chapter IX
of the FD&C Act. Additional information that would be required with a
petition for an exemption or a petition for a variance includes: any
other information justifying the exemption or variance; a statement
certifying that, to the best of the petitioner's knowledge and belief,
the information provided in the petition includes all information and
views on which the petition relies, including representative data, and
any information known to the petitioner that is unfavorable to the
petition; and an environmental assessment (EA) under part 25 (21 CFR
part 25) prepared in accordance with Sec.  25.40.
    FDA expects that the submission of this information, along with
supporting documentation will enable FDA to determine whether to grant
a petition for a variance or exemption. FDA is considering including
additional requirements for the specific contents of petitions for
variances and exemptions and is seeking comment on the kinds of
information and/or evidence that would be helpful in determining
whether a petition should be granted.
3. Referral to the Tobacco Products Scientific Advisory Committee
(TPSAC)
    Proposed Sec.  1120.144 explains that FDA may refer any petition
submitted under this subpart to the TPSAC. If FDA refers a petition for
an exemption or variance to the TPSAC, the TPSAC would be required to
report its recommendations to FDA with respect to the petition referred
to it within 60 days after the date of the petition's referral.
4. Petition Determination
    Proposed Sec.  1120.146(a) explains how FDA would make a
determination on a petition for an exemption. Under proposed Sec.
1120.146(a)(1), the Agency may, upon review of the information
submitted and any recommendation from the TPSAC, approve a petition for
an exemption from a TPMP requirement if it determines that compliance
with such requirement is not required to assure that the tobacco
product will be in compliance with chapter IX of the FD&C Act. As
discussed above, in deciding whether to grant or deny a petition FDA
will consider all the information provided by the petitioner including
the basis of the petitioner's determination that compliance with the
requirement is not needed to assure that the public health is
protected. Proposed Sec.  1120.146(a)(2) provides that, if FDA
determines that the information submitted by the petitioner is
insufficient to enable FDA to make a determination whether an exemption
is appropriate, the Agency could request additional information from
the petitioner. Proposed Sec.  1120.146(a)(2) also provides that if the
petitioner fails to respond by the time specified in the request, FDA
could consider the exemption request withdrawn. FDA specifically
requests comments from stakeholders as to what information should be
included in a petition for exemption and how long it would take for a
typical firm to gather and prepare the information that would be
included in the petition for exemption.
    Proposed Sec.  1120.146(b) explains how FDA would make a
determination on a petition for a variance. Under proposed Sec.
1120.146(b)(1), the Agency may, upon review of the information
submitted and any recommendation from the TPSAC, approve a petition for
a variance if it determines that the methods to be used in, and the
facilities and controls to be used for, the manufacture, packing, and
storage of the tobacco product in lieu of the methods, facilities, and
controls prescribed by the requirements in part 1120 are sufficient to
assure that the tobacco product will be in compliance with chapter IX
of the FD&C Act. As discussed above, in deciding whether to grant or
deny a petition FDA will consider all the information provided by the
petitioner, including the basis of the petitioner's determination that
the proposed alternative methods, facilities, and controls are
sufficient to assure that the public health is protected. Proposed
Sec.  1120.146(b)(2) provides that, if FDA determines that the
information submitted by the petitioner is insufficient to enable FDA
to make a determination whether a variance is appropriate, the Agency
may request additional information from the petitioner. Proposed Sec.
1120.146(b)(2) also provides that if the petitioner fails to respond by
the time specified in the request, FDA may consider the variance
request withdrawn.
    Proposed Sec.  1120.146(c) explains the timeframe in which FDA
would make a decision on a petition. Proposed Sec.  1120.146(c)
provides that FDA would either grant or deny a petition within 60 days
after the date the complete petition was submitted to FDA under Sec.
1120.142 or within 60 days after the day after FDA referred the
petition to TPSAC under Sec.  1120.144, whichever date is later. The
60-day review period under proposed Sec.  1120.146(c)(1) would begin
when FDA receives a complete petition. Thus, if FDA receives an
incomplete petition and requests additional information under Sec.
1120.146(a)(2) or Sec.  1120.146(b)(2), the 60-day review period would
not begin until FDA receives the additional information that completes
the petition. FDA intends to request additional information, if
necessary, within 60 days after the date the incomplete petition was
submitted to FDA.
    Proposed Sec.  1120.146(d) provides that an order from FDA granting
a variance would prescribe such conditions respecting the methods used
in, and the facilities and controls used for, the manufacture, packing,
and storage of the tobacco product as may be necessary to assure that
the tobacco product will be

in compliance with chapter IX of the FD&C Act.
5. Hearing
    Proposed Sec.  1120.148 explains that after FDA issues an order
under Sec.  1120.146, the petitioner would have the opportunity for an
informal hearing under part 16 (21 CFR part 16).

V. Proposed Effective and Compliance Dates

    FDA proposes that any final rule become effective 2 years after the
date the final rule publishes in the Federal Register. Section
906(e)(1)(B)(iv) of the FD&C Act specifies that, in establishing the
effective date of any TPMP regulations, FDA must take into account the
differences in the manner in which the different types of tobacco
products have historically been produced, the financial resources of
the different tobacco product manufacturers, and the state of their
existing manufacturing facilities, and must provide for a reasonable
period of time for such manufacturers to conform to any TPMP
regulations. FDA has considered these factors in determining the
proposed effective dates for this rule.
    The Agency's proposed rule utilizes a standards-based approach to
the regulation of all types of finished and bulk tobacco products,
which is similar to the approach taken by the other cGMPs and voluntary
standards considered in the development of this proposal. Thus, the
proposed regulation provides the framework that all manufacturers would
utilize and apply in a manner that is appropriate to a given tobacco
product. FDA is proposing this effective date to ensure that
manufacturers of all types of covered tobacco products will have
adequate time to comply regardless of the complexity of their
manufacturing process.
    In addition, FDA inspections have demonstrated that a number of
manufacturers already have implemented many measures similar to the
proposed TPMP requirements. FDA also believes that manufacturers other
than small tobacco product manufacturers have the financial resources
to comply with the proposed requirements within 2 years, as
demonstrated by the proposed regulatory impact analysis (PRIA) and the
fact that a number of manufacturers already have implemented similar
provisions. Those manufacturers meeting the definition of small tobacco
product manufacturers will have an additional 4 years to come into
compliance (see proposed Sec.  1120.130). FDA inspections and facility
visits have noted that entities that manufacture the originally
regulated products (i.e., cigarettes, smokeless, cigarette tobacco, and
RYO) as well as entities that manufacture deemed products generally
already have some manufacturing controls in place that are similar to
the proposed rule (e.g., a QMS or some portions of a QMS). FDA believes
that the proposed effective date is feasible and that different
effective dates for different types of manufacturers are not needed.
    Accordingly, FDA believes that 2 years is a reasonable period of
time for manufacturers (other than small tobacco product manufacturers)
to comply with any final TPMP regulations. During those 2 years, FDA
expects that manufacturers would take steps to plan and implement
business operations that will comply with the final rule. FDA
specifically requests comment regarding this proposed 2-year effective
date.
    Section 906(e)(1)(B)(v) of the FD&C Act specifies that FDA may not
require any small tobacco product manufacturer to comply with any TPMP
regulations for at least 4 years following the effective date of the
regulation. As discussed in subpart J of the proposed regulation, FDA
proposes that small tobacco product manufacturers of finished and bulk
tobacco products not be required to comply with the TPMP regulations
until 4 years after the effective date of the final rule. This proposed
compliance date would give small tobacco product manufacturers a total
of 6 years to comply with the TPMP regulations, and FDA believes that
this extended compliance date for small tobacco product manufacturers
would provide them with sufficient time to implement the requirements
in any final rule. This proposed effective date is consistent with the
recommendation of some tobacco companies (Docket No. FDA-2013-N-0227).
FDA requests comment on this proposed effective and compliance dates
from all interested parties.

VI. Preliminary Economic Analysis of Impacts

A. Introduction

    We have examined the impacts of the proposed rule under Executive
Order (E.O.) 12866, E.O. 13563, the Regulatory Flexibility Act (5
U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4). E.O. 12866 and 13563 direct us to assess all costs and benefits
of available regulatory alternatives and, when regulation is necessary,
to select regulatory approaches that maximize net benefits (including
potential economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity). We believe that this
proposed rule is a significant regulatory action as defined by E.O.
12866.
    The Regulatory Flexibility Act requires us to analyze regulatory
options that would minimize any significant impact of a rule on small
entities. Because small entities are likely to incur a large portion of
the costs to comply with the proposed rule, we find that the proposed
rule would have a significant economic impact on a substantial number
of small entities.
    The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires
us to prepare a written statement, which includes an assessment of
anticipated costs and benefits, before proposing ``any rule that
includes any Federal mandate that may result in the expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100,000,000 or more (adjusted annually for
inflation) in any one year.'' The current threshold after adjustment
for inflation is $158 million, using the most current (2020) Implicit
Price Deflator for the Gross Domestic Product. This proposed rule would
not result in an expenditure in any year that meets or exceeds this
amount.

B. Summary of Costs and Benefits

    The proposed rule, if finalized, would establish requirements for
manufacturers of finished and bulk tobacco products on the methods used
in, and the facilities and controls used for, the manufacture, pre-
production design validation, packing, and storage of tobacco products.
The TPMP requirements described in the proposed rule are expected to
ensure that tobacco product manufacturers control the design and
specifications of finished and bulk tobacco products, providing a level
of assurance of conformity in the production of tobacco products to
established and required specifications that does not occur in the
existing market for tobacco products, to prevent the adulteration and
misbranding of finished and bulk tobacco products, and establish
controls for traceability purposes.
    We quantify two potential benefits of the proposed rule. First, the
manufacturing controls required by the proposed regulation are likely
to reduce the likelihood that nonconforming products are manufactured
and commercially distributed which, in turn, would reduce social costs
associated with product recalls and market withdrawals. The social
costs of a recall, due to inadequate or

insufficient controls, may extend beyond the costs to the manufacturer
conducting the recall and may include shareholders as well as
consumers, retailers, and wholesalers. If a recall or market withdrawal
were necessary, the records required by the proposed regulation would
help locate nonconforming products that were commercially distributed,
which would also be expected to reduce the cost of conducting recalls
and market withdrawals, both voluntary and involuntary. Since 2009,
tobacco product manufacturers have initiated eight voluntary recalls,
resulting in at least three million cans of smokeless tobacco and 62
million cigarettes recalled or withdrawn from the market. Furthermore,
we estimate that, if the proposed rule is finalized, the costs of
product recalls and market withdrawals may fall by between $4 million
and $213 million per year.
    Another quantified potential benefit of the proposed rule is that
adverse events due to nonconforming finished and bulk tobacco products
would decrease as a result of improvements in the control of tobacco
product manufacturing operations. We use data on exposure calls to
Poison Control Centers (PCs) throughout the United States to quantify
the impact of the proposed rule on the number of exposure calls
reporting clinical effects such as vomiting, nausea, abdominal pain,
etc. associated with the consumption of tobacco products that,
according to the PCs Certified Specialists in Poison Information, had
been tampered with or contaminated. We estimate from 2001 to 2030, a
total of 11,135 projected exposures, or an annual average of 371
exposures per year, associated with the consumption of such
products.\6\ Based just on these data regarding calls to PCs, if the
proposed rule is finalized, we estimate that the total (undiscounted)
monetized health losses associated with contaminated tobacco products
may be reduced by between $908 and $2,723 per year.
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    \6\ The 11,135 projected exposures are estimated from observed
2001-2017 exposures (adjusted for under-reporting) and adjusted to
account for apparent trend of increasing exposure calls from 2018
through 2030. We used this forecast to estimate a baseline trend of
what would occur without implementing this proposed rule. Figures
are also adjusted for underreporting as explained in the Benefits of
the Proposed Rule, section D.2 of the Preliminary Regulatory Impact
Analysis (Ref. 184).
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    There are other potential benefits associated with the proposed
rule which we have not quantified. First, the proposed recordkeeping
provisions will also support FDA's regulatory compliance activities and
help FDA implement and enforce other provisions of the FD&C Act which
will likely generate government cost savings. Second, the proposed
rule, if finalized, may further reduce losses to health and property
for users and nonusers associated with nonconforming tobacco products,
beyond those estimated in the quantified benefits. Third, the proposed
rule's risk assessment, CAPA, tobacco products complaints and related
provisions will facilitate investigation and identification of causes
and root causes of consumer complaints and other reports of adverse
events. Other benefits include avoided spillover costs to capital
markets.\7\
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    \7\ Estimated quantified benefits of avoided recalls include
reduced external costs in the supply chain of the recalled or
withdrawn products (or they exclude reduced recall costs to
manufacturers). Estimated external costs of conducting a recall or
market withdrawal include lost sales to retailers and wholesalers,
expenses associated with notifying tobacco retailers (for
wholesalers) and consumers, removal and storage of inventory costs
collection and shipping costs, disposal costs, and legal costs,
among others. Estimated quantified benefits do not include avoided
spillover costs to capital markets.
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    The potential costs of the rule include tasks associated with
establishing and maintaining procedures for various aspects of the
manufacturing, preproduction design validation, packing and storage
processes. Examples of these tasks include conducting new or more
stringent manufacturing activities, writing and updating standard
operating procedures (SOPs), training employees to engage in new or
more stringent manufacturing activities, and keeping new or additional
records. We estimate that (undiscounted) one-time costs range from $39
million to $73 million and (undiscounted) recurring costs range from
$15 million per year to $56 million per year. FDA is also proposing
that any final rule become effective two years after the date of the
final rule's publication. FDA is further proposing in Sec.  1120.130 of
this rule that manufacturers meeting the definition of small tobacco
product manufacturer would be required to comply with the requirements
of this rule four years after the effective date of the final rule
(i.e., six years after the date of the final rule's publication).
Because small manufacturers would have more time than non-small
manufacturers to comply with the requirements of this proposed rule, we
estimate all costs to reflect the staggered compliance dates. We
estimate learning costs for both non-small and small manufacturers to
begin one year after publication (year 1). Non-small manufacturers and
small manufacturers would incur costs one and five years, respectively,
after the publication date of a final rule as they work to come into
compliance with the rule two and six years from the date of final
publication.\8\ We therefore estimate the present value of total
domestic costs annualized over ten years using a discount rate of seven
percent is estimated to range from $13 million per year to $54 million
per year, and from $14 million per year to $43 million per year using a
discount rate of three percent. Our estimated benefits will begin to
accrue on the same years as the compliance dates (years 2 and 6). The
present value of total benefits annualized over ten years using a
discount rate of seven percent is estimated to range from $1.9 million
per year to $97.0 million per year, and from $2.1 million per year to
$106.5 million per year using a discount rate of three percent. Table 1
summarizes our estimate of the annualized costs and benefits of the
proposed rule.
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    \8\ The year of publication is year zero and the effective date
is year two. In order for non-small manufacturers to comply with the
requirements of this rule by the effective date (year two), we
assume they will begin to incur compliance costs on year one. For
small manufacturers to comply four years after the effective date or
year six, we assume they will begin to incur compliance costs on
year five. Benefits from non-small and small manufacturers begin to
accrue on year two and year six respectively. All values have been
adjusted to reflect 2020 dollars. Estimated costs in Table 1
represent estimated costs incurred by domestic manufacturers and
domestic importers. Estimated benefits in Table 1 are from reduced
exposure and reduced recall related costs associated with both
domestic and imported tobacco products sold in the U.S.

                                   Table 1--Summary of Benefits, Costs and Distributional Effects of the Proposed Rule
                                                                    [$ millions/year]
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                                                                                Units
                                                                                ---------------------------------------
                Category                    Primary        Low          High                    Discount      Period                  Notes
                                            estimate     estimate     estimate       Year         rate       covered
                                                                                dollars     (percent)     (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
    Annualized Monetized $millions/year.        $27.2         $1.9        $97.0         2020            7           10  Quantified benefits include a
                                                 29.9          2.1        106.5         2020            3           10   summation of potential
                                                                                reductions in (1) cost of
                                                                                recalls and market withdrawals
                                                                                and (2) adverse health effects
                                                                                associated with contaminated or
                                                                                otherwise nonconforming tobacco
                                                                                products.
    Annualized Quantified...............                                                                7           10
                                                                                3           10
                                         -----------------------------------------------------------------
    Qualitative.........................  Non-quantified benefits include (1) Government costs savings              10
                                          due to aiding FDA compliance efforts; (2) potentially reducing
                                          losses to health and property for users and nonusers associated
                                          with nonconforming tobacco products; and (3) facilitating the
                                          investigation and identification of causes and root causes of
                                          consumer complaints and other reports of adverse events.
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Costs:
    Annualized Monetized $millions/year.         27.0         13.3         41.1         2020            7           10  Annualized total costs of
                                                 28.2         13.7         43.0         2020            3           10   compliance with the proposed
                                                                                rule. Range of estimates
                                                                                captures uncertainty.
    Annualized Quantified...............                                                                7           10
                                                                                3           10
    Qualitative.........................                                                                            10
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Transfers:
    Federal Annualized Monetized                                                                        7           10
     $millions/year.                                                                                3           10
                                         ------------------------------------------------------------------------------
    From/To.............................  From:
                                          To:                                10
                                         ------------------------------------------------------------------------------
    Other Annualized Monetized $millions/                                                               7           10
     year.                                                                                3           10
                                         ------------------------------------------------------------------------------