DAR File No. 39797
This rule was published in the October 15, 2015, issue (Vol. 2015, No. 20) of the Utah State Bulletin.
Health, Disease Control and Prevention, Health Promotion
Electronic-Cigarette Substance Standards
Notice of Proposed Rule
DAR File No.: 39797
Filed: 10/01/2015 11:13:59 AM
Purpose of the rule or reason for the change:
During the 2015 General Session, the state legislature passed a new statute, Section 26-57-103 (H.B. 415) authorizing the Utah Department of Health to set standards for electronic-cigarette substances.
Summary of the rule or change:
The proposed rule seeks to regulate electronic-cigarette substances at the point of sale between the retailer and the consumer. The regulation takes the form of standards for: 1) labeling; 2) nicotine content; 3) packaging; and 4) product quality. As stated in Section 26-57-103, the sale of electronic-cigarette substances that fail to meet these standards will be prohibited. The purpose of enacting regulatory standards for these products is to attempt to limit the increased number of nicotine related poisonings in the state. Labeling standards seek to better communicate product information and nicotine toxicity to the consumers. Standards for nicotine content set a limit for the concentration of nicotine in an electronic-cigarette substance, and a maximum for variation from the labelled concentration. Packaging standards are intended to make child entry and tampering to the product more difficult. Product quality standards prescribe requirements for ingredients used in electronic-cigarette substances. The rule also features recordkeeping provisions that will aid retailers in proving compliance to the aforementioned standards.
State statutory or constitutional authorization for this rule:
- Subsection 59-14-803(5)
- Section 26-57-103
Anticipated cost or savings to:
the state budget:
The state health department will incur costs from the implementation of this rule. The state health department will need to utilize a contract with their media partners to distribute the information of the rule to effected persons. The state health department will be responsible for funding the compliance checks of local health departments to enforce this rule. As no additional funding was provided to the department as a part of the authority to create the rule, the state health department will need to divide the funds used for tobacco retail compliance-checks with the compliance checks for this rule. As such, it will cost the state health department approximately $172,800 of the Tobacco Prevention and Control Programs budget to cover the cost of enforcing the rule. Calculating savings to state government is difficult, but there are departments that may experience savings as a result of this rule. It is hoped that the Utah Poison Control Center will see a decrease in the number of poison control calls related to electronic-cigarette substances. Though exact figures are not available, it is estimated that the cost of receiving a poison control call is $65 and the number of electronic-cigarette related poison control calls in 2014 was 131, and therefore cost the state $8,515. It is unlikely that the standards in the rule will eliminate these calls to poison control centers, but a decrease would mean savings for the state. There may also be savings to the Utah Medicaid program. Poisonings among Medicaid covered individuals would increase medical bills. It has been estimated that the medical costs associated with a single poisoning is $15,000 for in-hospital treatment and $3,000 for an emergency room visit. Though the health department cannot determine the number of electronic-cigarette related poisoning among Medicaid patients (and thus the total savings), it is expected that that there would be some savings to Medicaid through enforcing the rule.
The state health department will be responsible for funding the compliance checks of local health departments to enforce the rule; therefore state funds become a part of the local health department's budget. As no additional funding was provided to the department as a part of the authority to create the rule, local health departments will need to divide the funds used for tobacco retail compliance checks with the compliance checks for this rule. As such, it will cost local health departments approximately $172,800 to enforce the standards of the rule. However, local health departments may impose fines for non-compliance, which could offset some of these costs. The state health department does not expect that there will be any savings to local government budgets. It is anticipated that the rule will only interact with local government in the context of ensuring compliance. Therefore savings will only occur at the local government level if there are fines imposed by a local government entity and that revenue exceeds the cost of enforcement. At this time, the health department cannot predict these amounts.
The state health department anticipates that there will be costs to small businesses that sell or manufacture electronic-cigarette substances. Representatives from the electronic-cigarette industry have estimated that for rule compliance a small specialty-business would need to invest approximately $13,000 to $470,000 to their operations during the first year of rule enforcement. Because the number of small specialty-businesses is unknown, the health department cannot estimate cost to the industry as a whole. However, the wide range in the cost estimate perhaps reflects the large variability in product quality that exists in the industry. Much of the responsibility to comply with the rule will fall on manufacturers who sell to Utah retailers, as it is the manufacturer who has control over labeling, nicotine content, packaging, and product quality. Industry representatives estimate that the rule will cost a small manufacturer approximately $13,000 to $340,000 during the first year of enforcement. Because the number of small manufacturers is unknown, we cannot estimate the cost to the industry as a whole. Also, much of this cost is reported as lost sales through the restriction of nicotine content. Therefore the industry cost estimate is based on the assumption that consumers would not purchase an alternative product if their selection was restricted. The manufacturer would also face non-fiscal costs. Prescribing manufacturer labeling requirements may be perceived as an infringement of the manufacturer's freedom of speech. Also, the manufacturer may face a perceived infringement on their intellectual property if product information is requested by the enforcing agency. The small specialty-retailer will also face costs because of the rule. The small specialty-retailer may experience a loss in business because of the restrictions placed on the nicotine content. Industry representatives have estimated that the rule will cost a small specialty-retailer approximately $22,000 to $470,000 during the first year of enforcement. Because the number of small specialty-businesses is unknown, the health department cannot estimate the cost to the industry as a whole. Also, the industry cost estimate is based on the assumption that consumers would not purchase an alternative product if their selection of nicotine content was restricted. The small specialty-retailer may also experience enforcement costs through fines imposed on them by local health departments. The schedule of these fines would be decided upon by local health departments once the rule has been implemented, and as such the potential cost is unknown. Local health departments also have the authority to report violations and request that the state tax commission revoke the license of a non-compliant business. Revocation of a tobacco license would equate to a loss in business, but it is expected that with an adequate period to prepare for enforcement this event would be rare. The small specialty-retailer may incur come small costs to educate staff on compliance with the rule. It is not possible to predict these costs due to varying circumstances, but to reduce this burden the state and local health department will provide support. It is expected that small general-retailers will incur little cost through the enforcement of the rule. General retailers typically sell manufacturer-sealed electronic-cigarette substances, which are exempt from the rule. General retailers may experience some cost through educating staff on the rule or through incurring local enforcement fines. However, because the number of small general-retailers who sell these products is unknown, the health department cannot estimate the total cost they will incur. The state health department anticipates little non-fiscal costs to the retailer; except for in the rare event that a local health department exercises their authority to seize goods they have determined to be a danger to public health.
persons other than small businesses, businesses, or local governmental entities:
The state health department anticipates that there will be costs and savings to the public. Those who purchase electronic-cigarette substances may experience a monetary cost as retailers increase their prices to afford compliance. With the available data it is not possible to predict the potential price increase. Consumers may also perceive the restrictions of nicotine content as a nuisance or an infringement of their personal liberties, or both. Major savings to the public will come from preventing poisonings. The average medical bill associated with a poisoning is approximately $15,000 for inpatient treatment and $3,000 in emergency room fees. The cost of a poisoning in terms of lost productivity is approximately $2,600 per poisoning if the victim is hospitalized. It is difficult to estimate a population level saving; however, it could be sizable when considering there were 131 electronic-cigarette related poison control calls in 2014. There may also be savings to the public over time. Long-term studies may show that electronic-cigarettes are significantly detrimental to health. Placing safety warnings on electronic-cigarette substances may dissuade use and therefore prevent illness and medical costs in the future. However, without the result of these long-term studies, the reality of this situation is unknown. There is evidence that suggests that electronic-cigarettes among youth may be connected to using traditional tobacco. If this is the case, the provisions of the rule may reduce future tobacco related medical costs. The Centers for Disease Control and Prevention has estimated that in Utah, residents as a whole experience $542,000,000 annually because of tobacco products. General retailers may experience some cost through educating staff on the rule or through incurring local enforcement fines. However, because the number of general retailers who sell these products is unknown, we cannot estimate the total cost they will incur.
Compliance costs for affected persons:
The state health department has sought comment from representatives in the electronic-cigarette industry. It is estimated that an individual small-manufacturer will incur approximately $13,000 to $340,000 in compliance costs during the first year of rule enforcement. It is expected that the majority of these costs will come from redesigning labels, and sales lost through limiting nicotine content. Therefore this industry estimate is based on the assumption that the consumer would not purchase an alternate product if their selection was restricted. The small-specialty retailer will also incur compliance costs. It is estimated that a single, small specialty-retailer will need to pay approximately $22,000 to $470,000 to comply with the rule. It is expected that the majority of these costs will come from sales lost through limiting nicotine content. Therefore this industry cost estimate is based on the assumption that the consumer would not purchase an alternate product if their selection was restricted. It is expected that general-retailers will incur little compliance cost, because the majority of the products they sell are exempt from the rule. The small portion of general retailers that will come under regulation may experience; 1) a negligible loss in sales; 2) some cost through educating staff; and 3) potential fines through local enforcement. However, because the number of general retailers who sell these products is unknown, the health department cannot estimate what individual compliance cost they will incur.
Comments by the department head on the fiscal impact the rule may have on businesses:
This rule will have a fiscal impact on business. There is a wide variation in estimated costs provided by industry representatives. The high initial cost of compliance is most likely a reflection of the absence of regulation this industry has so far experienced.
Joseph Miner, MD, Executive Director
The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:Health
Disease Control and Prevention, Health Promotion
CANNON HEALTH BLDG
288 N 1460 W
SALT LAKE CITY, UT 84116-3231
Direct questions regarding this rule to:
- Luke Chalmers at the above address, by phone at 801-538-6260, or by Internet E-mail at email@example.com
Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:
This rule may become effective on:
Joseph Miner, Executive Director
R384. Disease Control and Prevention, Health Promotion.
More information about a Notice of Proposed Rule is available online.
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For questions regarding the content or application of this rule, please contact Stephanie Saperstein at the above address, by phone at 801-538-6430, by FAX at , or by Internet E-mail at firstname.lastname@example.org. For questions about the rulemaking process, please contact the Division of Administrative Rules.