Written pleadings filed by the Attorney General of Canada with the Quebec Superior Court

Appendix 10

Tobacco Reporting Regulations

Table of Contents

1. Introduction
2. The Objectives of the Regulations
3. The Requirement to Provide Information on Tobacco Products
4. The Grounds for the Challenge
   1. The Authority to Delegate
      1. Information on the manufacturing processes, ingredients, constituents and toxic emissions
      2. Information on sales
      3. Information on research projects
      4. Information on promotion
   2. Distribution of Jurisdictions
   3. Constant Unreasonable Search
5. Conclusion

A. Introduction

1.  Pursuant to the Tobacco Products Control Act (TPCA), some reporting requirements were imposed under the Tobacco Products Control Regulations (TPCR), SOR/89-21, December 27, 1988.

2.  On September 21, 1995, the Supreme Court of Canada declared some sections of the TPCA inoperative and, as a result, only sections 17 to 20 of the TPCR remained in force.

3.  Those sections required manufacturers and importers to report selected information on tobacco sales volume, ingredients and emissions.

4.  The Tobacco Reporting Regulations replaced sections 17 to 20 of the TPCR.

B. The objectives of the Regulations

5.   The objectives of the Regulations are summarized in the Regulatory Impact Analysis Statement published in Canada Gazette.

The Regulations expand the reporting requirements of the Tobacco Products Control Regulations (TPCR) by allowing Health Canada to obtain more complete data on tobacco products and by providing better access to more relevant and current information about the toxic substances in tobacco products and tobacco smoke. With this information, Health Canada will be in a better position to: increase awareness among Canadians of the content of tobacco products and the practices of tobacco manufacturers; support Canadian smokers to make better and more informed choices on tobacco use; assess the impact of smoking on Canadians and implement better control measures. For example, Health Canada could propose new Regulations that would require tobacco products to be modified in a given way to reduce nicotine content (and thus addiction) and toxicity, thus reducing the adverse health impacts of tobacco use.

...

The Regulations expand current reporting requirements to include more classes of tobacco products sold in Canada. The expanded list of tobacco products to be reported includes: cigarettes, cigarette tobacco, leaf tobacco, pipe tobacco, cigars, tobacco sticks, kreteks (clove and tobacco cigarettes), bidis (small tendu leaves hand-wrapped over tobacco), and smokeless tobacco. It is essential that Health Canada has access to information on the hazards of all tobacco products sold in Canada to better inform Canadians about hazards of tobacco use.

The Regulations also require that an expanded list of toxic chemicals found in tobacco smoke be reported for the above-mentioned classes of tobacco products with three exceptions: cigars, pipe tobacco and smokeless tobacco. Cigars and pipe tobacco are exempt from this requirement as standardized test methods have not yet been developed to test for the smoke from these products. Smokeless tobacco is exempt from the requirement as this product does not produce smoke. The list of reportable chemicals found in mainstream smoke (inhaled by the smoker) and side stream smoke (inhaled by non-smokers) is being increased from three (tar, nicotine and carbon monoxide) to more than 40 different chemical compounds. Manufacturers and importers must also report on a list of 33 chemicals found in whole tobacco (unburned tobacco). However, the Regulations allow for limited reporting for manufacturers with small market shares of the total sales of a designated product in that year in Canada. Additionally, for tobacco products where the level of selected chemicals in smoke has been demonstrated through laboratory testing to be similar among brands, tobacco manufacturers have the option to test a smaller number of brands using a mathematical calculations [sic]. Using this "benchmarking" provision in the Regulations would significantly reduce testing costs to industry while ensuring Canadians can still be fully informed of the range and level of toxic emissions in tobacco products.

The Regulations further require that tobacco manufacturers and importers provide product test results to Health Canada annually. Gathering this information is important in determining the level of hazardous toxins in tobacco products in addition to helping Health Canada better inform Canadians and ensure that tobacco products are not modified without the knowledge of the Department.

Manufacturers and importers are also required to report information on all aspects of their products, including the tobaccos and other components or ingredients used in the manufacturing process, and the papers, tubes and filters. This requirement applies to all manufacturers and importers of the above-mentioned classes of tobacco products sold in Canada. In addition, manufacturers and importers of cigarette papers, tubes and filters would be required to submit information on ingredients, components and performance specifications of these products. This information will be reported on a quarterly basis and will assist Health Canada in tracking trends in tobacco consumption as well as acting to alert the Department to possible changes or effects of changes in manufacturing procedures for tobacco products. Information on what products are being purchased by manufacturers and importers is also important to provide information on new products being introduced into the Canadian market so that Health Canada can adjust its programs where necessary.

...

The Regulations also specify that manufacturers and importers of tobacco products are required to report quarterly on promotional activities on a brand-by-brand, province-by-province basis. They stipulate, for example, that copies of all promotional materials and facsimiles of signs and programs used or displayed on site of sponsored events or activities be provided to Health Canada. The reporting requirements also include the cost of manufacturing the packaging of all consumer tobacco products. This information is essential in that all promotional activities undertaken by tobacco manufacturers have the potential of inducing nonsmokers to take up smoking. Health Canada can use this information to develop strategies to counter these activities with its own public educational initiatives.

(Emphasis added)

Tobacco Reporting Regulations-Regulatory Impact Analysis Statement

6.  During the hearings before the Standing Committee on Health, those objectives were discussed in the following terms:

The tobacco industry would provide monthly and quarterly sales reports on its tobacco products by brand. It would deliver information on how products are researched, including how new tobacco products are developed, the analysis of consumer attitudes and behaviour, and marketing approaches. Information on how tobacco companies promote their products, particularly at the retail level, would be required. In terms of manufacturing, information on product processing would be submitted to Health Canada.

The proposal requires reporting on more toxic chemicals found in tobacco. The list of chemical compounds to be reported on would grow from currently three to more than forty.

The proposed reporting regulations would increase our understanding of how the tobacco industry gains market share. Industry sales data would give us more information on the amount and type of tobacco products sold in various areas of the country. By matching this data with our statistics on tobacco use, we'd be able to draw a much more full picture of smoking trends and how we might address them.

What the additional data reveals about consumer behaviour will help us more effectively reach the Canadian public on issues of tobacco use. With information on product ingredients and research on product modification, Health Canada would be better able to monitor the dangerous and addictive aspects of tobacco products. Better information on tobacco product ingredients and the chemicals in tobacco smoke and unburned tobacco would ensure consumers' right to know of the ingredients and the hazards of the products they are using.

ED-111 - Testimony by Ian Potter, Assistant Deputy Minister, Health Canada, in the hearings on the Regulations before the Standing Committee on Health, on May 30, 2000, pp. 38/496-497.

The reporting regulations are an important element in the comprehensive tobacco control strategy. These reports perform three key tasks. First, they inform public policy-makers. Just as the labels are important for informing the consumer and the public, the reporting regulations appropriately inform the policy-makers.

Second, the reports generated inform science regarding product and ingredient content. For example, we have asked for manufacturing procedures. This information is necessary to determine how the product is made and to better understand the tobacco industry. Asking for ingredients on a quarterly basis will assist Health Canada in tracking and predicting trends in tobacco consumption.

[translation] The reports will ensure that any manufacturer claims for improved product can be clearly supported by evidence. The inventory of information will allow Health Canada to have early knowledge of the production plan, providing important insights into production and brand trends.

[English]
Third, the reporting regulations provide vital marketing information to better inform and target health programming in areas of prevention and cessation. Reports on sales will help Health Canada to track trends in consumption in general as well as trends across Canada, which can be used to support our own research, since consumers of tobacco products often underestimate their consumption.

This information is important in targeting effective cessation, prevention, and public health education efforts at the most appropriate groups. This will increase the value of the programs and ensure that public moneys are expended more effectively. We will get a bigger bang for our buck.

ED-111 - Testimony by Gillian Lynch, General Director, Bureau of Tobacco Control, Health Canada, in the hearings on the Regulations before the Standing Committee on Health on June 6, 2000, pp. 474/496-497.

C. The requirement to provide information on tobacco products

7.  The Reporting Regulations are not unique with respect to the requirement for tobacco manufacturers to provide reports and analyses concerning their products.

8.  Much of the information concerning the ingredients, the additives and the emissions required by the Tobacco Reporting Regulations is already supplied by the plaintiffs to the government of British Columbia under the Tobacco Testing and Disclosure Regulation, adopted July 31, 1998.

9.  In accordance with the British Columbia regulation, tobacco manufacturers must provide:

- a report on the ingredients and additives:

2 (1) Every manufacturer must submit an annual report to the minister which identifies and lists, by brand, all ingredients and additives in every brand of cigarette or cigarette tobacco of the manufacturer that is sold, offered for sale, distributed, advertised or promoted in British Columbia in a calendar year...

- a report on the constituents:

3 (1) Every manufacturer must submit an annual report to the minister that identifies and lists all of the following, by brand, for every brand of cigarette of the manufacturer that is sold, offered for sale, distributed, advertised or promoted in British Columbia in a calendar year...

- a report on the volume of cigarettes sold:

6 (1) In this section, "unit" for cigarettes means a single cigarette. (2) A manufacturer must report the total number of units for every brand of cigarette of the manufacturer that is sold in British Columbia in a calendar year by January 31 the following year.

Tobacco Testing and Disclosure Regulation, B.C. Reg. 282/98.

10.  The plaintiffs agreed to comply with that regulation following an agreement entered into as part of the legal proceedings undertaken by JTI-MacDonald claiming, inter alia, that the regulation adopted by British Columbia was beyond provincial jurisdiction.

ED-202 Memorandum of agreement of the settlement of the Supreme Court action A982885 between JTI-MacDonald Corp., Plaintiff, and the Attorney General of British Columbia, Defendant.

11.  In the United States, the states of Massachusetts and Texas adopted regulations requiring tobacco manufacturing companies to produce detailed reports on their products.

ED-49 Massachusetts Tobacco Ingredients and Nicotine Yield Act, Mass. Gen. Laws. Ch. 94. §307B (2000) and Mass. Regs. Code. Tit.105, §660.000 (2001)

Texas. Stat., Public health provisions, 76th Leg, Ch. 62, § 19.02(13)(1999).

12.  In Europe, the European Parliament Directive 2001/37/CE asks member states to require tobacco product manufacturers and importers to submit "a list of all ingredients, and quantities thereof, used in the manufacture of those tobacco products by brand name and type."

13.  That list is accompanied by a "statement setting out the reasons for the inclusion of such ingredients in those tobacco products. It shall indicate their function and category. The list shall also be accompanied by the toxicological data available to the manufacturer or importer regarding these ingredients in burnt or unburnt form as appropriate, referring in particular to their effects on health and taking into account, inter alia, any addictive effects..."

D-130 Directive 2001/37/CE of the European Parliament, section 6.

14.  Reporting requirements exist, moreover, in many federal statutes, in particular:

The Income Tax Act, R.S.C. (1985), c. 1 (5th Supp.);

The Canadian Environmental Protection Act (1999), 1999, c. 33; see also New Substances Notification Regulations, SOR/94-260;

The Canada Corporations Act, (R.S. 1970, c. C-32).

D. The grounds for the challenge

1. The authority to delegate

15.  The plaintiffs allege that the Tobacco Reporting Regulations are beyond the jurisdiction of the Tobacco Act.

16.  Their argument is in essence based on the fact that they do not recognize the connection between the objectives of the Act and the information required by the Regulations.

17.  Yet, the uncontroverted evidence regarding the complexity and the extent of the smoking problem demonstrates the need for the government to have access to the information required by the Regulations in order to meet the legislative objectives.

18.  The plaintiffs object to all the requests for information under the Regulations. Not one has met with their approval.

19.  In spite of many pre-hearing conferences and requests for concessions, their position has remained unchanged: no information is necessary for the government to fulfil the objectives set out in section 4 of the Act.

a. Information on the manufacturing processes, ingredients, constituents and toxic emissions

20.  The plaintiffs allege that there is neither reason nor logic (p. 63 of the ITL brief) for the disclosure of information concerning their product manufacturing processes and the modifications that are made in these processes (section 10 of the Regulations). They make a similar argument regarding the disclosure of information concerning their suppliers (section 11 of the Regulations). They did not present any evidence in support of their objection.

21.  We need only think of the W.S. Rickert study concerning the manipulation of the nicotine content of Canadian cigarettes by tobacco manufacturers to understand the necessity for the government to obtain information on manufacturing processes for tobacco products (and on their modifications) where the objective is health protection.

22.  That study shows that tobacco manufacturers control the nicotine content of their cigarettes by modifying the manufacturing process, in particular by using reconstituted tobacco.

The main vehicle for increasing the nicotine content of the tobacco in Canada cigarettes has been through selection of appropriate leaves (nicotine content varies with leaf position) and genetic manipulation of cultivars. However, if the brown fraction represents reconstituted material, the nicotine content of that material would be subject to a far greater control by the manufacturer.

D-118 A historical study of nicotine yields of Canadian cigarettes in relation to the composition and nicotine content of cigarette tobacco (1968-1995) by W.S. (Bill) Rickert, p. 50.

23.  The study points out that Imperial Tobacco raised the nicotine content of several of its brands through the addition of reconstituted tobacco.

The nicotine content of cigarette tobacco has been increasing roughly in a linear way since about 1980. This increase is most evident in the lamina fraction but is also noticeable in fractions of midrib and stem. With respect to individual brands of cigarettes, there are impressive differences; the nicotine content of Players RSFT manufactured by Imperial Tobacco increased rapidly from about 1980 to 1995 compared with Rothmans KSFT manufactured by Rothmans B&H. This suggests significant differences in cigarette design strategies among Canadian manufacturers which is further emphasized by the recent use of a "Brown" component in the manufacture of many Imperial Tobacco brands.

(Emphasis added)

D-118 A historical study of nicotine yields of Canadian cigarettes in relation to the composition and nicotine content of cigarette tobacco (1968-1995) by W.S. (Bill) Rickert, p.50.

24.  Since nicotine is the drug in tobacco that causes the smoker's drug addiction (see Section III, para. 11 et seq.), nothing more is needed to understand the importance of this information for protecting the health of Canadians.

25.  The impact of this information is even more warranted in a health protection context since the effectiveness of the physician's intervention with the patient is limited by the addiction.

D-156 Robitaille, "Le tabagisme, la maladie et la mort au Canada" [Tobacco, Disease and Death in Canada].

26.  What would the prevalence of smoking be today if the Canadian tobacco manufacturers had not regularly raised the nicotine content of cigarettes between 1980 and 1995? None of the three plaintiffs deemed it appropriate to mention at trial the increase in the nicotine content of Canadian cigarettes during the years when they argued the failure of government policies.

27.  The testimony by toxicologist Leonard Ritter demonstrates that, because of their toxicity, cigarettes continue to be a product about which the government must obtain the most information possible. What happens if the tobacco manufacturers alter the tobacco used, the manufacturing process, the composition of the paper? What happens if a change in a product we already know is capable of causing cancer also makes it capable of causing birth defects?

Now, what if there was a change in the tobacco that was used, or there was a change in the curing process, or there was a change in the part of the plant which was being used to manufacture the tobacco product? Or what if there was a change in the composition of the paper? I can go on and on and on. And what if that change resulted in a profile change that now made a product which was capable of causing cancer also very capable of causing birth defects?

Now, if we didnít have these studies continue on an ongoing basis and if we couldnít evaluate the results of those studies on an ongoing basis, how would we detect a change in the toxicity as a result of the change in the profile of the manufacturing process, so to speak?

Ritter, Volume 11, pp. 2384 to 2388.

28.  The toxicity of the product and the fact that no one is aware of the impact of the changes made by the manufacturers justify obtaining, on a continuous basis, data on the manufacturing processes, the ingredients, the constituents and the toxic emissions.

29.  There are some 4,000 chemical products in cigarette smoke, 43 of which have been identified as carcinogens..

Ritter, Volume 11, p. 2360.

30.  What happens if the government does not continuously obtain information on toxic tobacco emissions and a change made to the product by the tobacco companies substantially raises the number of smoking-related deaths? How can the effects of the product modifications be understood without any data?

31.  During Ed Ricard's testimony, ITL objected strongly to giving the Court its studies on the harmful health effects of its products. Forced by the Court to provide those studies, ITL's counsel suggested restricting the undertaking to 1986 to then answer that no study had been conducted more recently than 1986...

32.  We can nevertheless learn two things from the undertakings made in the examination of Mr. Ricard:

- ITL concedes having obtained some mutagenicity studies (Ames mutagenicity studies) on several types of cigarettes containing expanded tobacco, on the mutagenicity of flue-cured tobacco and on the effect of the permeability of cigarette paper. That is an admission that some changes in ingredients, constituents and manufacturing processes are capable of having an impact on the carcinogenic potential of the product. Why would ITL have conducted such studies if there were no reason or logic for thinking that the health of smokers might be affected?

- ITL failed to inform smokers of the findings of its studies and refuses to voluntarily disclose them to the government.

Undertakings by Ed Ricard January 28 - January 29, 2002 - Dated March 11, 2002

33.  Where the objective is health protection, it is easy to understand the interest in obtaining this information when we know that even the plaintiffs study the way in which the "design" of their products changes their carcinogenic potential.

... The information gained will not only rank any one countryís products but may also provide data on what are the significant design features influencing mutagenicity...

D-110D Ames Mutagenic Activity of Mainstream Condensate of Six Commercial Cigarettes for Imperial Tobacco Ltd. (Canada) - Project RIO. Report No. T. 153-C. Restricted [marked EDM/BTM/46D].

34.  It is just as easy to understand the importance to the government of obtaining the information required by the regulations when we know the ITL policy is to make smoking "acceptable" and that, to achieve this objective, it has to deny acknowledging that cigarettes are unsafe.

I thought that I should write to explain why it is that I cannot support your contention that we should give a higher priority to projects aimed at developing a "safe" cigarette (as perceived by those who claim our current product if "unsafe") by either eliminating, or a least reducing to acceptable levels, all components claimed by our critics to be carcinogenic.

The BAT objective is and should be to make the whole subject of smoking acceptable to the authorities and to the public at large since this is the real challenge facing the Industry. Not only do I believe that this is the right objective but I also believe that it is an achievable one.

...

A second practical objection is that in attempting to develop a "safe" cigarette you are, by implication in danger of being interpreted as accepting that the current product is "unsafe" and this is not a position that I think we should take.

(Emphasis added)

D-97 Letter to Purdy Crawford, Imasco Ltd., regarding development of SAFE Cigarette. [Includes] Note for E.A.A. Brunell, Esq. [from A.L. Heard] Canadian Project.

35.  ITL adopted a document destruction policy that means that the information, which might be necessary for assessing the impact of using an ingredient or of a product modification may no longer be available when required.

JPB-64 Imperial Tobacco Limited, Department of Research and Development, Document Retention Policy.

See also

Rolah Ann McCabe v. British American Tobacco Australia, Judgment of Justice Eames, Supreme Court of Victoria, delivered 22 March 2002.

b.  Information on sales

36.  The plaintiff tobacco companies also argue that reason and logic cannot explain the link existing between the request for sales information, in particular for Canada as a whole, for each province and, for exports, by country of destination (section 13 of the Regulations), and the objectives of the Act (p. 63 of the ITL brief).

37.  Mr. Ricard, ITL representative, concedes that, through the Canadian Tobacco Manufacturers Council (CTMC), the three plaintiffs exchange amongst themselves much data such as sales to distributors, shipments to their distributors and total weekly sales.

38.  Mr. Ricard states that this is the same data that his company objects to giving to the government under the Tobacco Reporting Regulations:

287     Q- Question 85, we're referring to... it's changes [sic] of data between companies. Would you please tell the Court why you do so?

A- Yes, My Lord, the three (3) companies exchange, we exchange our shipment data, as I have mentioned; we exchange our total sales by company to our distributors, the shipments that we make to our distributors; the total sales by company on a weekly basis; and on a monthly basis, we exchange the sales by brand. And again, the reason for that is so that each of the companies can know what the total sales volume is, that this is the type of information that we could each [sic], after survey to find out, and there are companies available on that, but through the CTMC, the major companies did agree to exchange shipment data, because we felt that there was no concern about each of the three (3) companies knowing exactly the amount of volume that we ship.

288     Q- Isn't it a fact that, under the reporting ranks, you have to provide the Government similar information?

A- Again I'm not... don't know specifically all of the details of every report that we have to provide to the Government, but our sales shipment information, as far as I know, is part of what we have to report, yes.

Ricard, Volume 9, January 28, 2002, Q287-288, pp. 1851-1852.

39.  That data is just as relevant to the government as it is to the tobacco companies, only the ultimate goals are different.

40.  The government needs that information to learn about the extent and the impact of issues like smuggling.

41.  Mr. Ricard confirmed at trial having exported substantial quantities of his products to the United States in the 1990s:

Again, that's a reference to the same thing, that we removed the limits that we had placed on our shipments to certain customers, and this relates to the duty-free and export market. And it's referring to that same thing.

Ricard, Volume 9, January 28, 2002, Q364, p. 1922.

42.  When we know that these "exports" were reintroduced into the country, it is easy to understand the significance to the government of obtaining the data required by the regulations.

43. It is even easier to understand the importance of that information when we know the impact of smuggling on the inducement to use tobacco.

44. The plaintiffs' documents speak loudly to the fact that the result of cigarette smuggling was a considerable reduction in their price, thereby making them more accessible and contributing to the increase in smoking among young people.^{1 2 3 4}

c.  Information on research projects

45.  The plaintiffs object to the disclosure of information concerning their research on the grounds of the absence of a connection between obtaining this information and the health protection objectives (page 63 of the ITL brief). They submitted no evidence in support of their argument.

46.  ITL, jointly with its parent corporation British American Tobacco and its other worldwide subsidiaries, conducted exhaustive scientific research into its products' carcinogenicity.

47. That research, which had remained secret until just recently, was revealed to the public when the BAT had to open its files to the public at its Guildford storage facility in England.

48. Some of those documents were presented to the Court by Leonard Ritter:

D-108 - BAT - A review of the biological activity of smoke - Report RD.2177, 1 November 1990:

SUMMARY:

This Report brings together results from the biological studies carried out over the last thirty years to investigate the influence cigarette product parameter changes have on the biological activity of smoke.

In this Report, activity is defined by the Ames Test, Mouse Skin Painting and Inhalation. Whilst the significance of these tests is open to debate, they have all been used extensively in evaluating the toxicity of tobacco smoke.

A wide range of product parameter features are discussed including tobacco types, reconstituted and novel smoking materials, paper, filters, additives as well as the changes brought about by modifying smoking pattern.

Summary charts allow a rapid overview of specific features and comparison of the relative responses found with the three assays.

- Report #164 "Summary of Ames Tests for Mutagenicity of Smoke Condensates," ITL Montréal, July 2, 1981, D-110C:

Of the several short-term tests that have recently been proposed for detecting the mutagenic/carcinogenic potential of chemicals, the one developed by Professor Bruce N. Ames appears to be the most reliable, and consequently has gained worldwide acceptance (p. 1).

The Ames mutagenicity test is relatively inexpensive, easy to perform and permits quantitative comparisons of smoke condensates to be made (p. 7).

Although correlations with the long-term carcinogenicity test are not perfect, any substance damaging the human genetic material should be of concern to man. Thus, tobacco smoke mutagenicity, should be studied for its own sake and not because it happens to correlate with its carcinogenicity (p. 7).

- Report T-234 "Bioassays of Mainstream and Sidestream Condensate from a Product with Total Sidestream Reduction and from Commercial Cigarettes," BAT, February 5, 1992, D-110A, at page i:

A product with total reduction of sidestream smoke components has recently been developed as part of Project "LESS".

The activity per unit weight of mainstream and sidestream condensates from this cigarette and a range of products of comparable mainstream delivery has been measured in the following in vitro bioassays.

-Bacterial mutagenicity (Ames Test)
-Mammalian chromosome damage
-Micronucleus formation
-Cytotoxicity

The result of the assays showed that the smoke condensates of the development cigarette did not differ in any major way from those of a range of products with similar mainstream deliveries. (Emphasis added)

- Report #165 "Ames Mutagenicity of Mainstream and Sidestream Smoke Condensates," ITL Montréal, May 13, 1981, D-110B:

Four lots of mainstream and sidestream smoke condensates were...tested for mutagenicity (p. 1)... (and the results showed that)... mainstream and sidestream smoke condensates from flue-cured tobacco cigarettes are similar in terms of Ames mutagenicity... this is the first clear demonstration of mutagenic activity in sidestream smoke condensates (p. 3).

- Report T.153-C "Ames Mutagenic Activity of Mainstream Condensate of Six Commercial Cigarettes for Imperial Tobacco Ltd. (Canada) - Project RIO," BAT, October 1984, D-110D:

The relative specific mutagenicity of mainstream condensate from six commercial cigarettes selected from the Canadian market were assessed using the Ames bacterial mutagenicity assay as part of a program to identify design characteristics influencing biological activity (PROJECT RIO) (p. iii).

The experimental results showing specific mutagenic activity are summarised in Figure 1. Craven A was ranked as the most mutagenic condensate followed by PLAYERS LIGHT, DU MAURIER, Export A, Mark 10 and Matinée (least mutagenic) (p. 2).

- Report #146 "The Use of the Freiri Slave Smoker to Investigate Changes in Smoking Behaviour" ITL Montréal, March 25, 1975, D-110E:

In monitoring the smoking habits of six Matinée King Size smokers as they encounter different cigarettes, smoke levels appear to be adjusted such that yields of nicotine...are maintained. By the incorporation of ventilation in cigarettes of specific tobacco blend, a level of nicotine closely matching that of their normal cigarette is maintained (p.1).

It was with... manipulations that...it was possible for the smoker to duplicate once again his nicotine yield (p. 8)

From these comparisons, it is seen that even though cigarette construction differed, similar smoke nicotine deliveries could be achieved, with little modification in smoking parameters (p.8).

Two studies have been described which show that a small group of Matinée King Size smokers, when smoking one different cigarette per day, change their smoking pattern (p. 14).

When a modified version of their normal cigarette is encountered (stronger tobacco blend, but with much increased ventilation), these smokers maintain a nicotine level... compared to their normal cigarette (p. 14).

49.  The link between this research on the carcinogenic potential of cigarettes and the health protection objective is obvious.

50.  It is even worrisome to think that the plaintiffs have research findings on the impact of modifications to their products and that they are firmly opposed to revealing them to the government and to smokers.

51.  The usefulness to the government of the information requested in the regulations is evident when we learn of the international research conducted by a group of companies to which ITL belongs. That research indicates the extent of the information's usefulness in the goal of protecting the health of Canadians.

52.  The research subjects are numerous: the effects of nicotine, the additives, the impact of product modification, the chemistry of the smoke, the reduction of specific constituents, etc. It is appropriate here to reproduce some excerpts from the Research Policy Group Meeting held in Vancouver in 1989:

53.  There are many examples as to relevance of the government being informed of the existence of this research for its health protection objective.

54.  Reference can also be made to the impact of the use of reconstituted tobacco on the increase in the nicotine content of cigarettes to observe the link existing between the importance of obtaining information on the manufacturers' research into toxicity, effects on health, ingredients and modifications to the products.

D-118 A historical study of nicotine yields of Canadian cigarettes in relation to the composition and nicotine content of cigarette tobacco (1968-1995) by W.S. (Bill) Rickert, p. 50.

55.  The compensation phenomenon also helps us understand the importance of obtaining data on the "manner in which" consumers use tobacco products (para. 15(1)(g)).

56.  In his report and during his testimony, chemist André Castonguay presented the risks to which this phenomenon exposes the smoker:

[translation]
Smokers who have developed an addiction to nicotine will change their smoking habits in several ways to maintain their nicotine intake level. This phenomenon is called "compensation." In practical terms, smokers who usually consume strong cigarettes and try light cigarettes will alter their inhalation profiles to increase their nicotine dose.

1- Smokers may increase or decrease consumption frequency (number of cigarettes smoked per day).

2- Smokers who consciously or unconsciously wish to increase their nicotine absorption (nicotine delivery) may inhale the smoke more deeply. They adopt this behaviour by increasing the volume of the puff.

One of the results of this behaviour is to increase the exposure of the distal areas of the lungs to tobacco smoke. The lung is composed of a series of branching tubes called bronchi. In smokers, these tubes can develop cancers called "squamous cell carcinomas".

D-113 Castonguay - Caractéristiques physiques, chimiques et toxicologiques des tabacs manufactures canadiens [Physical, chemical and toxicological characteristics of Canadian manufactured tobaccos].

57.  The link between obtaining information on taste and flavour research (para. 15(1)(d)) and the health protection objective is evident when we study the discoveries tobacco companies have made in this field and their effects on the health of smokers.

58.  We need only think of the menthol that is not added to the tobacco but to the packaging paper:

...A Menthol cigarette is just a regular cigarette where menthol is applied. In the case of the tailor made cigarettes... the Menthol is... is just a...they're just crystals, menthol crystals ...

... And the way that the menthol is applied to the factory-made cigarettes is that the menthol is applied to the foil, actually, that goes inside and then the cigarettes are put in...
Q- The foil goes inside what, Mr. Ricard?
A- Inside the package.

Ricard, examination on January 23, 2002, Volume 7, Q62-64, p. 1312.

59.  In 1998, a report by the United States Surgeon General revealed that mentholated cigarettes could be contributing to the increase in lung cancers among smokers by facilitating the absorption of the toxic cigarette smoke emissions.

Investigators have postulated that the more frequent smoking of menthol cigarettes by African Americans, compared with whites, contributes to their increased rate of lung cancer (Harris et al. 1993). In a recent experimental study of 12 persons after the amount of menthol injected into experimental cigarettes was increased, the amount of carbon monoxide exhaled by African American smokers also increased (Miller et al. 1994). In a comparison of smoking behaviour associated with mentholated cigarettes and regular cigarettes among 29 subjects, McCarthy and colleagues (1995) found higher mean puff volume and higher puff frequency after participants smoked regular cigarettes than after they smoked mentholated cigarettes; however, no differences in mean expired carbon monoxide levels were found. Available data suggest that mentholated cigarettes are not smoked more intensely than regular cigarettes (Jarvik et al. 1994; Miller et al. 1994; McCarthy et al. 1995; Ahijevych et al. 1996). Thus, mentholated cigarettes may promote lung permeability and diffusibility of smoke constituents (Jarvik et al. 1994; McCarthy et al. 1995; Clark et al. 1996a).

ED-146 Report of the Surgeon General 1998, Tobacco use among U.S. racial/ethnic minority groups, U.S. Department of Health and Human Services, Public Health Service, p. 142.

d.  Information on promotion

60.  The plaintiffs are also challenging the link between the disclosure of information concerning the spending and costs associated with their promotion and advertising activities (s. 16 et seq.) and the objectives of the Act.

61.  The analysis of that data allows Health Canada to obtain, among other things, information on the marketing of tobacco products so that health programs for prevention and cessation are more informed and more accurately targeted.

62.  That information is the same type as is provided by the American tobacco companies to the Federal Trade Commission.

63.  The analysis of this type of data, repeated in Richard Pollay's chart, demonstrates, for example, that between 1989 and 1995, during the "total advertising ban" as the plaintiffs describe it, ITL almost doubled its sponsorship spending ($18,239,000 in 1989 to $37,669,000 in 1995) and that its promotional spending has not stopped growing.

D-239 Tobacco Promotion Spending Patterns in Canada (C$000), Richard W. Pollay - Feb. 2002.

64.  This is why, as is written in the Regulatory Impact Analysis Statement, "This information is essential in that all promotional activities undertaken by tobacco manufacturers have the potential of inducing non-smokers to take up smoking. Health Canada can use this information to develop strategies to counter these activities with its own public educational initiatives."

Tobacco Reporting Regulations-Regulatory Impact Analysis Statement.

65.  In the United States, the Federal Trade Commission, pursuant to the Federal Cigarette Labelling and Advertising Act, presents a detailed annual report to Congress on the aggregate of the tobacco companies' promotional spending.

ED-275 Federal Trade Commission (FTC). Report to Congress for 1998, pursuant to the Federal Cigarette Labelling and Advertising Act. Washington, D.C.: FTC, 2000.

ED-46 Federal Trade Commission - Report to Congress for 1997 pursuant to the Federal Cigarette Labelling and Advertising Act. Washington, D.C.: FTC, 1999.

66.  With the information obtained from the American tobacco companies, the FTC was able to appraise the extent of the promotion aimed at promoting cigar use:

ED-276 - Federal Trade Commission - Report to Congress - Cigar Sales and Advertising and Promotional Expenditures for Calendar Years 1996 and 1997 - issued: 1999; p. 4:

C. The Increase in Advertising and Promotional Expenditures

The dramatic increase in cigar use in America has occurred in tandem with the increase in promotional activities surrounding cigar smoking. In the early 1990s, cigar enthusiasts began promoting fancy cigar dinners and smokerís evening [sic] in expensive restaurants and hotels. Such cigar events at restaurants, bars, and private clubs are now common. In addition, Cigar Aficionado and Smoke, two magazines devoted almost entirely to cigar smoking, have been introduced since 1992 and have rapidly gained popularity. These magazines have featured on their covers and in profile articles numerous cigar smoking actors and actresses, sports figures, and celebrity models. Also in recent years, cigars have appeared as props and in the plot lines of numerous movies and television shows. The data reported herein provide specific information on the types of advertising and promotional activities conducted by the leading cigar manufacturers in calendar years 1996 and 1997.

Table 3 reports the cigar manufacturersí total advertising and promotional expenditures for 1996 and 1997, together with a breakdown of those expenditures into sixteen advertising and promotional categories. The cigar manufacturersí total expenditures on advertising and promotion increased thirty-two percent from 1996 to 1997, from $30.9 million to $41 million. Moreover, there was a significant increase in the amount spent in almost every category of advertising and promotional expenditure.

By far, the industryís largest expenditures in 1996 and 1997 were on promotional allowances - that is, discounts and other incentives given to retailers to encourage cigar sales. In both years, these expenses comprised approximately forty percent of the total amount expended for advertising and promotion. The dollar amount spent on promotional allowances increased over thirty-one percent, from approximately $12.4 million in 1996 to $16.3 million in 1997.

Magazine advertising was the manufacturersí second largest advertising expense in both years, comprising over twenty-one percent of total expenditures in 1996 and twenty-four percent in 1997. Actual expenditures for magazine advertising increased forty-nine percent from 1996 to 1997, from $6.6 million to almost $10 million. Point of sale advertising, the next largest expenditure category, increased almost thirty-seven percent, from $3.8 million in 1996 to $5.2 million in 1997.

67.  A bill requiring tobacco companies to provide information on their promotion activities and scientific research was tabled before the United Kingdom's House of Commons on January 18, 2002.

ED-51-UK-Tobacco Disclosure Bill

2.  The distribution of jurisdictions

68.  We refer the Court to the legal argument.

3.  Constant unreasonable search

69.  We also refer the Court to the legal argument, reiterating however, that the purpose of the information required by the Regulations is to achieve the legislative objectives, and adding the following with respect to the argument concerning confidentiality.

70.  ITL claims that the Regulations constitute unreasonable search on the grounds that there is no provision in the Act or the Regulations guaranteeing the confidentiality of the information provided (page 66 of the ITL brief). It refers to Gernhart v.Her Majesty the Queen, [2000] 2 F.C. 292.

71.  But, the situation in Gernhart was actually the opposite to that presented in the Tobacco Act and the Regulations. In the Income Tax Act, R.S.C. (1985) c. 1 (5^th Supp.) there was a provision requiring the transmission by the Minister of copies of documents the taxpayer might expect to remain confidential.

176. (1) As soon as is reasonably practicable after receiving notice of an appeal to the Tax Court of Canada, other than one referred to in section 18 of the Tax Court of Canada Act, the Minister shall cause to be transmitted to the Tax Court of Canada and to the appellant, copies of all returns, notices of assessment, notices of objection and notifications, if any, that are relevant to the appeal.

(Emphasis added)

72.  The Tobacco Act contains no provision requiring the Minister to disclose the information obtained under the Tobacco Reporting Regulations.

73.  The disclosure of documents obtained under the Regulations is further governed by the Access to Information Act, R.S.C., c. A-1, which stipulates that the head of a federal institution is required, subject to the section's other provisions, to refuse to disclose records containing, inter alia, trade secrets of a third party, financial, commercial and scientific information:

20. (1) Subject to this section, the head of a government institution shall refuse to disclose any record requested under this Act that contains:

(a) trade secrets of a third party;

(b) financial, commercial, scientific or technical information that is confidential information supplied to a government institution by a third party and is treated consistently in a confidential manner by the third party;

(c) information the disclosure of which could reasonably be expected to result in material financial loss or gain to, or could reasonably be expected to prejudice the competitive position of, a third party; or

(d) information the disclosure of which could reasonably be expected to interfere with contractual or other negotiations of a third party.

E.  Conclusion

74.  The Tobacco Reporting Regulations are constitutional and contribute to the legislative objectives of the Tobacco Act. They are not ultra vires and do not contravene the Charter.

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¹  LN-9 (RJR-1302) 1992 Cigarette Marketing Action Plans, p. 80140 4083:
"The Tobacco Market - March 1992
1. Price/taxation will continue to have the largest impact on tobacco usage now and in the future."

²  LN-76 (RJR-96) The Canadian Tobacco Market 1993, p. 80120 8411:
"Impact of smuggled product
...
For the first time we have seen an increase in reported consumption."

³  D-89 Letter from Mr. Don Brown, Chairman, President and Chief Executive Officer of Imperial Tobacco Limited to Mr. Ulrich Herter, B.A.T. Industries, June 3, 1993:
Page 500028145-6:
"1. Temporary Royalty Rate Reduction
Until the smuggling issue is resolved, an increasing volume of our domestic sales in Canada will be exported, then smuggled back for sale here."

⁴  D-86 (ITL-439) - Broad Strokes 1994:
Page 17965:
"Our withdrawal from smuggling plummeted our share."