ANA Regulatory Rumblings

Moran Bill Would Severely Restrict Advertising to Children

New legislation would have a dramatic impact on food and beverage advertising to children.  The bill, the Healthy Kids Act (H.R. 4053) was introduced on Friday in the U.S. House of Representatives by Representatives Jim Moran (D-VA) and Bill Pascrell (D-NJ).

It has two major advertising components.  First, Section 3 of the bill would require the Federal Trade Commission to promulgate rules defining advertising and marketing directed at children and youth, including a definition allowing the FTC to set the specific age covered by the rules.  It also requires the FTC to issue rules specifying categories of foods and beverages for which advertising of these products to children would be considered an unfair act or practice.  The legislation directs the FTC to utilize rapid notice and comment rulemaking rather than the more rigorous Magnuson-Moss rulemaking requirements.  To allow the FTC to conduct such a rulemaking, the bill repeals the limitation on the FTC’s unfairness authority over children’s advertising that Congress put in place in the late 1970’s, when the Washington Post editorial board went so far as to call the FTC the “national nanny.”  The categories of foods and beverages are established in the bill in three tiers:

• Tier 1 consists of foods and beverages that are “healthful for children and adolescents and the consumption of which is encouraged,”
• Tier 2 consists of foods and beverages that “do not exceed levels of …fat, sugars, and sodium that are acceptable in a healthful diet for children and adolescents,” and
• Tier 3 consists of foods “which do not contribute to a healthful diet for children and adolescents and the consumption of which is discouraged."

Additionally, the bill requires the Department of Health and Human Services to devise guidelines for marketing and advertising that take into account the emotional vulnerability of children, their cognitive abilities, and society’s interest in protecting children.

Second, Section 4 of the bill would require the Federal Communications Commission to establish rules that at a minimum, would prohibit any ads classified as Tier 3 during children’s programming and limit any ads in Tier 2 to 2 minutes per hour on weekends and 3 minutes per hour on weekdays.  These limits go much further than the 10 ½ minutes on weekends and 12 minute during the week ad time limits imposed by the Children’s Television Act for advertising during children’s programming.

This bill disregards the fact that many different foods can make up a healthy diet.  There is nothing wrong with any category of food or beverage per se, as long as it is consumed in moderation.  Instead, this bill requires government to make a food-by-food choice of what types of advertising can be shown and how much of it can be aired based on which foods it decides children should be “encouraged” and “discouraged” to consume.  As has been established repeatedly by the courts, government cannot limit speech merely because it may be disfavored. 

In his statement from the floor of the House, Rep. Moran stated, “…a child is not possessed of the full capacity for individual choice that is the presupposition of First Amendment guarantees.”  However, the U.S. Supreme Court has stated on many occasions that the level of discourse in society cannot be lowered to the level of the sandbox.  For these reasons, it is likely that these provisions would violate the First Amendment.

This bill would also likely go far beyond children.  The findings of the bill mention the fact that obesity is rising among 12-19 year olds as well.  Considering the bill allows the FTC to set its own definitions regarding the age covered by its rules, it has the potential to cover programming directed to teens and young adults as well.

ANA is a strong supporter of the Children’s Food and Beverage Advertising Initiative (CFBAI), which is the industry’s self-regulatory response to the obesity problem.  The initiative, which represents over 80% of advertising to children, is committed to shifting the mix of advertising to healthier food and beverage choices and encouraging healthier lifestyles.  We will continue to oppose strongly, however, government censorship of truthful and non-deceptive advertising of legal products.

 

ANA Writes to House Energy and Commerce Committee Ahead of CFPA Markup

A markup of the Consumer Financial Protection Act in the House Energy and Commerce Committee has been announced for Thursday.  This bill, which creates a new Consumer Financial Protection Agency (CFPA) will cover many issues impacting the FTC as well.  The FTC is the most important regulatory agency regulating advertising and therefore has great significance to the whole advertising community and to the economy in general. 

We have provided a letter to the Committee discussing our serious concerns with the proposed changes in this area.  

Suit Alleges Maine Child Protection Law Violates Constitution, Seeks Injunction

Yesterday, a suit was filed in Maine federal court by the Maine Independent Colleges Association, Maine Press Association, Netchoice and Reed Elsevier challenging a new law that severely restricts the collection, transfer and use of "personal information" or "health-related information" from minors, presumably anyone under age 18.  ANA is not a party to the suit, but we and many other business and industry groups strongly support it. 

This law is extremely broad.  It includes personal information including an individual’s name, physical address, or anything else that can be used to individually identify a person.  It also includes health information, regardless of whether that information is personally identifiable.  It prohibits the sale or transfer of any personal or health information, even if culled from public records or obtained from someone other than the minor, and prohibits the use of this information for commercial purposes, which it deems “predatory marketing.”  Finally, it contains a “bounty hunter” provision and creates an individual private right of action. 

The lawsuit argues that the law violates the First Amendment because it imposes a content-based restriction on speech that is not narrowly tailored to serve a compelling state interest.  The U.S. Supreme Court has long held that laws that restrict speech based on content must meet this so-called “strict scrutiny” test.  This law imposes a blanket prohibition on the use of health related information collected from minors for marketing purposes, even with parental consent.   It also hinders the ability of adults to access or receive anonymous content, since companies will have to censor content that could be considered directed at minors or face liability.

It also argues that this law is an impermissible restriction on interstate commerce that exceeds any local benefits.  The U.S. Constitution expressly grants the power to regulate interstate commerce to Congress, and states cannot discriminate against commerce from other states or unduly burden interstate commerce.  This law will force out-of-state marketers to comply with Maine’s law to protect themselves from class action lawsuits.  It also expressly conflicts with laws in other states, rendering compliance with a patchwork of conflicting laws impossible.  Additionally, the law conflicts with the federal Children’s Online Privacy Protection Act (COPPA), which is limited to children under 13 and permits the use of a child’s personally identifiable information for marketing purposes with parental consent.

Since the law will take effect on September 12, the suit seeks a preliminary injunction against enforcement.  We hope that the courts look favorably on the plaintiff’s motion, as this law could have millions of dollars worth of adverse impacts for any company that does business in Maine. 

The FCC Should Reject Proposals to Rate and Block TV Ads

When Congress called on the Federal Communications Commission (FCC) to examine rating and blocking issues, it specifically admonished the agency not to include in its report parental control technologies that “affect the packaging or pricing of content.”  In the current economy, the last thing the FCC should consider is a speculative regulatory regime that would seek to target and eliminate advertising.  That was the message in reply comments we filed today, along with the American Association of Advertising Agencies and the American Advertising Federation.

The FCC issued a Notice of Inquiry (NOI) on March 3rd seeking comments on the V-chip and other parental control technologies for video and audio programming.  We filed comments on April 16th urging the Commission to disavow any effort to require content ratings for TV commercials so that the V-chip could be used to block them.  Unfortunately, several advocacy groups have a long “wish list” of programming or commercial matter they would prefer to block.  So they filed comments asking the FCC to grant their wish -- to require TV commercials and additionally all programs with product placements to be rated so they could be blocked by the V-chip. 

Efforts to rate and block ads, while viewers can continue to receive the programs these ads support, would fundamentally undermine the economic foundations of a large portion of the TV media.

Also, rating TV commercials would be an administrative nightmare.  According to Nielsen data, thousands of new and newly revised TV ads appear each week, and several hundred thousand of these TV commercials appear each year.  Those ads appear in different media venues (broadcast, cable, syndication) and different versions (60-second or 30-second or 15-second) and are often produced and delivered under significant time pressure.  Requiring ratings on each of these ads would be highly disruptive and impossible to administer.  This ratings censorship scheme would be a clear example of regulatory overkill, as very few ads give rise to any controversy.

Imposing ratings on TV commercials and product placement goes far beyond the legal authority of the FCC.  It places an unconstitutional burden on advertisers and the programs they sponsor.  The First Amendment limits any regulation of commercial time that acts as a disincentive for speech. Even in good times, the FCC has always recognized the need to not undermine advertiser support for the media it regulates.  Rating TV commercials is a bad idea in any economic climate.  It’s a disastrous one in a period in which the media is already buffeted by the downturn in the economy.

Senate Tobacco Bill Violates the First Amendment

The U.S. Senate on Health, Education, Labor and Pensions (HELP) Committee is scheduled to vote next week on a major tobacco bill, the “Family Smoking Prevention and Tobacco Control Act.” (S.982).  This bill, introduced by Senator Edward Kennedy (D-MA), the Chairman of the committee, contains massive crushing and unprecedently broad advertising restrictions.  It gives the Food and Drug Administration (FDA) virtually complete regulatory control over all aspects of the marketing of tobacco products. 

The bill mandates the FDA to promulgate a rule to;

·         Ban all outdoor advertising for tobacco products within 1,000 feet of any elementary or secondary school or playground;

·         Require all permitted tobacco advertising, including direct mail, to be black text on a white background, except in magazines, newspapers or other periodicals with adult readership of 85% or more, or fewer than 2 million readers under the age of 18;

·         Require all advertisements and labels to identify the tobacco product as a “nicotine delivery device”;

·         Require all advertisements to contain a government-dictated “brief statement” (in addition to the current Surgeon General’s warning) to serve as a warning about possible dangers associated with the use of tobacco products;

·         Ban the use of promotional items such as hats or T-shirts containing the name or logo of a tobacco product, and prohibit other promotional techniques such as product give-aways, rebates or refunds;

·         Require sponsorship of athletic, musical, social or other cultural events in corporate name only regardless of the age of the audience;

·         Require all advertisers of tobacco products to fund and participate in a national public education campaign designed to discourage the use of tobacco products by minors. The FDA would require the annual fund established for this campaign to total $150 million;

·         Require compliance with more stringent requirements as enacted by state and local governments; and

·         Authorize the enactment of additional restrictions seven years after implementation of a final rule if the number of minors who use tobacco products has not decreased by 50% from 1994 levels.

Congress has the power to decide how to regulate the tobacco industry, but it must do so in ways that do not violate the Constitution.  ANA, the American Association of Advertising Agencies (AAAA) and the American Advertising Federation (AAF) delivered detailed comments to the members of the HELP Committee outlining our major concerns with the bill.

First, we believe the numerous marketing restrictions in the bill clearly violate the First Amendment.  The bill directs the Secretary of HHS to publish a final rule that is identical to the proposed rule adopted by the FDA in 1996.  It provides no opportunity for outside groups, within a fair regulatory rulemaking process, to be heard on the constitutional defects of the mandated rule.  In fact, legal experts from across the political spectrum agree that these unprecedentedly broad restrictions would result in a defacto ban on tobacco advertising. 

The mandated rule also would allow thousands of state and local governments to impose additional more stringent advertising restrictions beyond those contained in the mandated rule, making national advertising virtually impossible.

The bill also ignores a number of major developments since the FDA’s 1996 proposal.  The U.S. Supreme Court has made clear in a series of cases that every legal product, including tobacco, has the same level of First Amendment protection.  In 2001 in the Lorillard case, the Supreme Court struck down a Massachusetts provision identical to part of the mandated FDA rulemaking proposal.  Also, the tobacco industry voluntarily agreed to a broad range of serious changes in their marketing practices as part of the Master Settlement Agreement with the state attorneys general in 1998 – an agreement that raises no First Amendment concerns.

This is very troubling legislation that could create broad precedents adversely affecting advertising for many other controversial categories.

We urge members of the Senate HELP Committee to drop the unconstitutional marketing provisions from S.982.  If the committee fails to do so, the Congress should, at the very least, require a new, fair and open rulemaking by the FDA.  This rulemaking would allow the FDA to provide a fair hearing to those groups impacted by these restrictions and to take into account the many important Supreme Court and other judicial decisions affecting this area since the 1996 proposal.  The government can take strong steps to regulate tobacco sales and access to minors, but it must do so without trampling on the First Amendment.

 

Dysfunctional Legislation Syndrome

Congressman Jim Moran (D-VA) recently reintroduced H.R.2175, The Families for ED Advertising Decency Act. This legislation imposes a sweeping ban on the airing of all ads for medications to combat erectile dysfunction (ED) between the hours of six in the morning to ten o’clock at night.  Congressman Moran states that these broad restrictions are necessary to protect children from the “indecent” warnings aired during these ads.  This proposal is misguided, counterproductive and if enacted, unconstitutional. 

Ironically, the trigger for this censorship scheme is the inclusion of governmentally mandated warnings in the ads themselves.  The government simply cannot force companies to serve as a megaphone for their messages and then punish them for it by drastically restricting their speech.  The U.S. Supreme Court has made crystal clear that even where the subject of ads could be claimed to be “embarrassing” or “offensive” to some segment of the audience that fact does not authorize government bans or restrictions.

The Court, for example, in Carey v. Population Services noted that, “At least where obscenity is not involved, we have consistently held that the fact that protected speech may be offensive to some does not justify its suppression.” The Court also emphasized in Butler v. Michigan and Lorillard Tobacco Co. v. Reilly that where legal products are being sold to adults, the fact that some children will see the ads does not allow the government “to lower discourse in society to the level of the sandbox.”

The effort to substantially suppress the running of these ads completely overlooks their important health benefits.  In a study of over one million men who went to their doctors to discuss ED problems due to viewing ads discussing ED, over 140,000 of them were found to be suffering from serious and unsuspected health conditions like severe high blood pressure.  High blood pressure is rightly known as the “silent killer” and this early detection may have saved many lives or avoided other highly significant adverse health consequences.  An additional thirty-three thousand men in this group were found to have diabetes, which if not effectively treated can create an increased risk of blindness, kidney failure, stroke or heart attacks.

The prescription drug industry through the Pharmaceutical Research and Manufacturers Association (PhRMA) has developed Guiding Principles on direct to consumer advertising, which states that these companies will target these types of ads to an overwhelmingly adult audience.  For all of these reasons, the Congress should oppose these efforts to suppress and restrict ED ads.   Instead of tobogganing down this slippery slope of speech censorship, the Congress should categorically reject the increasing efforts to censor an ever growing number of categories of advertising as “indecent.”

ANA Calls on Supreme Court to Review Key Speech Case

In a “friend of the court” brief filed today in IMS Health v. Ayotte, ANA has asked the United States Supreme Court to consider a court of appeals decision that has broad implications regarding how advertising and marketing activities are analyzed under the First Amendment to the U.S. Constitution. 

A New Hampshire law, the Prescription Information Law (PIL), provides that “[r]ecords relating to prescription information…shall not be licensed, transferred, used or sold…for any commercial purpose,” which it defines broadly to include “advertising, marketing, promotion or any activity that could be used to influence sales or market share of pharmaceutical products.”  The law is designed to prevent the use of a physician’s prescription history to market prescription drugs to doctors, which the legislature claimed was a factor in the increasing prices paid by consumers for prescription drugs.  To prevent their use, the law therefore bans the gathering and dissemination of prescription histories. 

The First Circuit Court of Appeals held that the PIL was immune from First Amendment scrutiny since it regulates “conduct” and not “speech.”  Instead, the appeals court considered the activity of data collection as a “commodity” similar to regulating “beef jerky,” rather than the dissemination of truthful, nonmisleading information.  Since the court of appeals held that the protections afforded to commercial speech under the Supreme Court’s Central Hudson test were not applicable in this case, the PIL was examined under a lesser level of scrutiny (known as rational basis scrutiny) and upheld.

Our brief strongly argues that this decision is contrary to a long line of Supreme Court precedents and strikes at the heart of over thirty years of jurisprudence which has gradually increased the level of protection afforded commercial speech.  The Supreme Court has long granted First Amendment protection to the entire communication enterprise, from information gathering through to its dissemination.  All speech involves some sort of expressive conduct, from speaking to typing and printing.  If the First Circuit’s decision is permitted to stand, whole portions of the dissemination of truthful, nonmisleading speech for advertising and marketing purposes would be analyzed under a lesser standard of constitutional scrutiny and open to further overly restrictive regulation.  By drastically blurring the lines between conduct and speech the court of appeals threatens to severely undermine the foundations of speech protection in the United States.

Additionally, our brief asks the Court to clarify the definition of commercial speech, making clear the proper scope of the Central Hudson test.  Currently, there is a split among the lower appellate courts as to whether it covers speech that does “no more than propose a commercial transaction” or whether it applies more generally to “expression related solely to the economic interest of the speaker and its audience.”  This case could provide a forum to remedy definitional issues left open when the Court declined to hear the Nike case in 2003.   In that case, the California Supreme Court applied a broad definition of commercial speech to Nike’s public relations campaign in response to allegations of child labor and unfair trade practices overseas, and denying it full First Amendment protection.  A settlement in that case, however, left these important issues unresolved. 

Finally, this case also deals with a fundamental issue of the ability of advertisers to be able to develop and utilize data to target ads to consumers in an efficient manner, which provides a key basis for effective communication in a free society. 

 

If the Supreme Court decides to take the case, it will hear arguments in its 2010 term starting in October at the earliest. 

ANA Urges FCC to Reject Content Ratings for TV Commercials

ANA has urged the Federal Communications Commission (FCC) to disavow any effort to require content ratings for TV commercials so that the V-chip or other tools could be used to block them from the programming in which they appear.  Content ratings for TV commercials are unnecessary and would seriously undermine broadcasting and other ad-supported media such as cable and satellite programming.

ANA’s comments were filed today in response to a March 3 FCC Notice of Inquiry regarding a report the agency is required to submit to Congress under the Child Safe Viewing Act of 2007 on content blocking technologies.  Our comments were written by Robert Corn-Revere, noted First Amendment expert who is a partner at Davis Wright Tremaine LLP.

We believe that requiring content ratings for TV commercials would be economically ruinous for content providers in the electronic media.  Developing a system that enabled viewers to broadly block all ads while consuming the surrounding program would seriously diminish the value of all advertising, which underwrites the costs of production.

In addition, requiring thousands of ads to be rated because some may be “offensive” or “inappropriate” for children would be a clear example of regulatory overkill, as very few ads give rise to controversy.  Our comments describe the various industry self-regulatory programs that address concerns about ad placement for certain categories such as prescription drug products and alcohol beverage products.  We believe those programs are working.

Finally, we believe the FCC’s notice appears to go far beyond the scope of the Child Safe Viewing Act by raising the question of ratings for commercials separate from the programming in which they appear.  This is an issue the FCC considered and properly rejected a decade ago in the V-chip proceedings.

ANA Continues to Oppose ICANN Domain Name Proposal

ANA has filed supplemental comments with the Internet Corporation for Assigned Names and Numbers (ICANN) in opposition to their proposal to greatly expand the availability of generic top level domain names.  We filed detailed comments with ICANN last December outlining several specific concerns with this proposal.  In addition to comments from ANA and others in the business community, ICANN received comments from the US Department of Commerce’s National Telecommunications and Information Administration (NTIA), questioning whether a sufficient cost/benefit analysis had been performed.

While ICANN has made some changes in their proposal, we continue to believe that it is premature and highly likely to be counterproductive.  The contemplated expansion of the top level domain space will greatly increase the costs of brand management and create new opportunities for others to infringe, phish and engage in other deceptive practices.  We will continue to work with others in the business community and the US government to oppose the ICANN proposal and push for a real cost/benefit analysis.

ANA, 4A’s, AAF Strongly Criticize Proposed Tobacco Marketing Legislation

Today the Association of National Advertisers (ANA), American Association of Advertising Agencies (AAAA) and American Advertising Federation (AAF) submitted a detailed letter to Members of the House Energy and Commerce Committee expressing their strong opposition to H.R. 1256, the “Family Smoking Prevention and Tobacco Control Act.” The bill, introduced by the Committee’s Chairman, Congressman Henry Waxman (D-CA), and expected to be marked up in the House today, proposes the most severe restrictions on the marketing of a legal product in U.S. History.

The legislation would impose sweeping restrictions on the advertising of tobacco products that far exceed current regulations and clearly violate First Amendment protections of commercial speech guaranteed by the U.S. Constitution, according to the Associations and a broad range of legal authorities they have consulted.

“The terms of the legislation add local restrictions on top of federal regulations, essentially preventing tobacco marketers from implementing a national campaign,” said Dan Jaffe, Executive Vice President, Government Relations, ANA.  “The bill’s over-reaching prohibitions limit advertising to text only, ban pictures and color, and forbid outdoor advertising. This is a very troubling piece of legislation that could create broad precedents adversely affecting other areas of advertising.”