Calendar No. 353

105 th CONGRESS

2 d Session

S. 1415

Report No. 105-180

To reform and restructure the processes by which tobacco products are
manufactured, marketed, and distributed, to prevent the use of tobacco
products by minors, to redress the adverse health effects of tobacco
use, and for other purposes.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_

IN THE SENATE OF THE UNITED STATES

November 7, 1998

Mr. McCain (for himself, Mr. Hollings , Mr. Breaux, and Mr. Gorton )
introduced the following bill; which was read twice and referred to the
Committee on Commerce, Science, and Transportation

May 1, 1998

Reported by Mr. McCain, with an amendment in the nature of a substitute

\[Strike all after the enacting clause and insert the part printed in
italic\]

\_\_\_\_\_\_\_\_\_\_\_\_\_

A BILL

To reform and restructure the processes by which tobacco products are
manufactured, marketed, and distributed, to prevent the use of tobacco
products by minors, to redress the adverse health effects of tobacco
use, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,

\[Text of S. 1415, as introduced, inserted here in linetype\]

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

\(a\) Short Title.\_ This Act may be cited as the \`\`National Tobacco
Policy and Youth Smoking Reduction Act\'\'.

\(b\) Table of Contents.\_ The table of contents for this Act is as
follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purpose.

Sec. 4. Scope and effect.

Sec. 5. Non-preemption of more restrictive laws.

Sec. 6. Definitions.

Sec. 7. Notification if youthful cigarette smoking restrictions increase
youthful pipe and cigar smoking.

Sec. 8. Liability limitations disappear if manufacturers challenge
advertising limits.

Sec. 9. FTC jurisdiction not affected.

Sec. 10. Congressional review provisions.

Title I_Regulation of the Tobacco Industry

Subtitle A_Jurisdiction, Etc., of Food and Drug Administration

Sec. 101. Amendment of Federal Food, Drug, and Cosmetic Act of 1938.

\`\`Chapter IX_Tobacco Products

\`\`Sec. 901. FDA authority over tobacco products

\`\`Sec. 902. Adulterated tobacco products.

\`\`Sec. 903. Misbranded tobacco products.

\`\`Sec. 904. Submission of health information to the Secretary.

\`\`Sec. 905. Registration.

\`\`Sec. 906. General provisions respecting control of tobacco products.

\`\`Sec. 907. Performance standards.

\`\`Sec. 908. Notification and other remedies

\`\`Sec. 909. Records and reports on tobacco products.

\`\`Sec. 910. Premarket review of certain tobacco products.

\`\`Sec. 911. Judicial review.

\`\`Sec. 912. Postmarket surveillance

\`\`Sec. 913. Reduced risk tobacco products.

\`\`Sec. 914. Preservation of State and local authority.

\`\`Sec. 915. Tobacco Products Scientific Advisory Committee.

\`\`Sec. 916. Equal treatment of retail outlets.

Sec. 102. Conforming and other amendments to general provisions.

Subtitle B_Advertising

Sec. 121. Advertising provisions in protocol.

Sec. 122. Tobacco product labeling and advertising .

Sec. 123. Point-of-sale restrictions.

Title II_Reductions in Underage Tobacco Use

Subtitle A_Underage Use

Sec. 201. Goals for reducing underage tobacco use.

Sec. 202. Look-back assessment.

Sec. 203. Substantial non-attainment of required reductions.

Sec. 204. Definitions.

Subtitle B_State Enforcement Incentives

Sec. 211. Compliance bonus fund.

Sec. 212. Block grants.

Sec. 213. State enforcement incentives.

Sec. 214. Conforming change.

Subtitle C_Other Programs

Sec. 221. National smoking cessation program.

Sec. 222. National tobacco-free public education program.

Sec. 223. National community action program.

Sec. 224. State retail licensing program.

Title III_Tobacco Product Warnings and Smoke Constituent Disclosure

Subtitle A_Product Warnings, Labeling and Packaging

Sec. 301. Cigarette label and advertising warnings.

\`\`Sec. 4. Labeling.

Sec. 302. Authority to revise cigarette warning label statements.

Sec. 303. Smokeless tobacco labels and advertising warnings.

\`\`Sec. 3. Smokeless tobacco warning.

Sec. 304. Authority to revise smokeless tobacco product warning
labelstatements.

Sec. 305. Tar, nicotine, and other smoke constituent disclosure to
thepublic.

Subtitle B_Testing and Reporting of Tobacco Product Smoke Constituents

Sec. 311. Regulation requirement.

Title IV_National Tobacco Settlement Trust Fund

Subtitle A_General Payment Provisions

Sec. 401. Establishment of trust fund.

Sec. 402. State litigation settlement account.

Sec. 403. Payments by industry

Sec. 404. Adjustments.

Sec. 405. Tax treatment of payments.

Sec. 406. Enforcement for nonpayment.

Sec. 407. Administrative provisions.

Subtitle B_General Spending Provisions

Sec. 411. Implementing and enforcement funds.

Sec. 412. Improving child care and early childhood development.

Title V_Standards to Reduce Involuntary Exposure to Tobacco Smoke

Sec. 501. Definitions.

Sec. 502. Smoke-free environment policy.

Sec. 503. Citizen actions.

Sec. 504. Preemption.

Sec. 505. Regulations.

Sec. 506. Effective date.

Sec. 507. State choice.

Title VI_Application to Indian Tribes.

Sec. 601. Short title.

Sec. 602. Findings and purposes.

Sec. 603. Application of tobacco-related provisions to native Americans.

Sec. 604. State tobacco excise tax compliance.

Title VII_Civil Liability of Manufacturers of Tobacco Products

Sec. 701. Definitions

Sec. 702. Application.

Sec. 703. Preemption and relationship to other law.

Sec. 704. Governmental claims and Castano civil actions.

Sec. 705. Concurrent jurisdiction; Federal cause of action; actions;
damages;liability.

Sec. 706. Payment of tobacco claim settlements and judgments.

Sec. 707. Attorney\'s fees and expenses.

Sec. 708. Non-participating manufacturers.

Sec. 709. Conforming amendments.

Title VIII_Tobacco Industry Compliance and Employee Protection from
Reprisals

Sec. 801. Tobacco industry compliance accountability requirements.

Sec. 802. Tobacco product manufacturer employee protection.

Title IX_Public Disclosure of Tobacco Industry Documents

Sec. 901. Findings.

Sec. 902. Applicability.

Sec. 903. National Tobacco Document Depository.

Sec. 904. Privilege and trade secret claims.

Sec. 905. Disclosure by the depository.

Sec. 906. National Tobacco Documents Review Board.

Sec. 907. Resolution of disputed privilege and trade secret claims.

Sec. 908. Appeal of board decision.

Sec. 909. Miscellaneous.

Sec. 910. Penalties.

Sec. 911. Definitions.

Title X_Long-Term Economic Assistance for Farmers

Sec. 1001. Short title.

Sec. 1002. Definitions.

Subtitle A_Tobacco Community Revitalization Trust Fund

Sec. 1011. Establishment of trust fund.

Sec. 1012. Contributions by tobacco product manufacturers and importers.

Subtitle B_Tobacco Market Transition Assistance

Sec. 1021. Payments for lost tobacco quota.

Sec. 1022. Industry payments for all department costs associated with
tobaccoproduction.

Sec. 1023. Tobacco community economic development grants.

Sec. 1024. Flue-cured tobacco production permits.

\`\`Sec. 317a. Flue-cured tobacco production permits.

Sec. 1025. Modifications in federal tobacco programs.

Subtitle C_Farmer and Worker Transition Assistance

Sec. 1031. Tobacco worker transition program.

Sec. 1032. Farmer opportunity grants.

\`\`Subpart 9_Farmer Opportunity Grants

\`\`Sec. 420d. Statement of purpose.

\`\`Sec. 420e. Program authority; amount and determinations;
applications.

\`\`Sec. 420f. Student eligibility.

Subtitle D_Immunity

Sec. 1041. General immunity for tobacco producers and tobacco
warehouseowners.

Title XI_Miscellaneous

Subtitle A_Prohibitions Relating to Tobacco Products and Children

Sec. 1101. Short title.

Sec. 1102. Prohibitions relating to tobacco products and children.

\`\`Sec. 804. Prohibition on sale or distribution of tobacco products
tochildren.

\`\`Sec. 805. Labeling.

Sec. 1103. Enforcement.

Sec. 1104. Reward.

Sec. 1105. Definitions.

Sec. 1106. Amendments to Public Health Service Act.

\`\`Title XXVIII_National Efforts to Reduce Youth Smoking

\`\`Subtitle E_Reducing Youth Smoking and Tobacco-Related Diseases
Through Research

\`\`Sec. 2801. Study by the Institute of Medicine.

\`\`Sec. 2802. National tobacco task force.

\`\`Sec. 2803. Research activities of the Centers for Disease Control
andPrevention.

\`\`Sec. 2804. Research activities of the National Institutes of Health.

Sec. 1107. Ban on distribution of tobacco products produced by child
labor.

Subtitle B_Federal Licensing of Tobacco Product Distribution

Sec. 1121. Licensing of Tobacco Product Distribution.

Subtitle C_International Provisions

Sec. 1131. International tobacco control trust fund.

Sec. 1132. American center on global health and tobacco.

Sec. 1133. Prohibition on use of funds to facilitate the exportation
orpromotion of tobacco.

Sec. 1134. Harmonization with United States international commitments
andobligations.

Subtitle D_Prevention of Tobacco Smuggling

Sec. 1141. Definitions.

Sec. 1142. Tobacco product labeling requirements.

Sec. 1143. Requirements for the tracking of tobacco products.

Sec. 1144. Tobacco product permits.

Sec. 1145. Prohibitions.

Sec. 1146. Pricing and labeling of products sold on military
installations orby native Americans.

Sec. 1147. Prohibition against sale of tobacco products in or to
duty-freeshops or forwarding through or manufacture in trade zones.

Sec. 1148. Jurisdiction; penalties; compromise of liability.

Sec. 1149. Amendments to the Contraband Cigarette Trafficking Act.

Sec. 1150. Authorization of appropriations.

Subtitle E_Antitrust Exemption

Sec. 1161. Limited Antitrust Exemption.

Subtitle F_Special Provisions Concerning Programs for Women, Minorities,
and Others

Sec. 1171. Research related to patterns of smoking by women and
minorities.

Sec. 1172. Counter-advertising programs.

Sec. 1173. Prevention activities of community and migrant health
centers.

Subtitle G_Sense of the Senate

Sec. 1181. Sense of the Senate.

Subtitle H_Ban On Sale Of Tobacco Products Through The Use Of Vending
Machines

Sec. 1191. Ban of sale of tobacco products through the use of
vendingmachines.

Title XII_Tobacco Asbestos Trust Fund

Sec. 1201. Definitions.

Sec. 1202. Tobacco Asbestos Trust Fund.

Sec. 1203. Payments from fund I.

Sec. 1204. Payments from fund II.

Sec. 1205. Transfers from National Tobacco Settlement Trust Fund.

Sec. 1206. Rules for claims against asbestos trusts, asbestos
defendants, andtobacco companies.

Title XIII_Veterans\' Benefits

Sec. 1301. Recovery by secretary of veterans affairs.

\`\`Part VII_Recovery of Compensation Costs for Tobacco-Related
Disability or Death

\`\`Chapter 91_Tort Liability for Disability or Death Due to Tobacco Use

\`\` 9101. Recovery by Secretary of Veterans Affairs

\`\` 9102. Regulations

\`\` 9103. Limitation or repeal of other provisions for recovery
ofcompensation

\`\` 9104. Exemption from annual limitation on damages

SEC. 2. FINDINGS.

The Congress finds the following:

\(1\) The use of tobacco products by the Nation\'s children is a
pediatric disease of epic and worsening proportions that results in new
generations of tobacco-dependent children and adults.

\(2\) A consensus exists within the scientific and medical communities
that tobacco products are inherently dangerous and cause cancer, heart
disease, and other serious adverse health effects.

\(3\) Nicotine is an addictive drug.

\(4\) Virtually all new users of tobacco products are under the minimum
legal age to purchase such products.

\(5\) Tobacco advertising and marketing contribute significantly to the
use of nicotine-containing tobacco products by adolescents.

\(6\) Because past efforts to restrict advertising and marketing of
tobacco products have failed adequately to curb tobacco use by
adolescents, comprehensive restrictions on the sale, promotion, and
distribution of such products are needed.

\(7\) Federal and State governments have lacked the legal and regulatory
authority and resources they need to address comprehensively the public
health and societal problems caused by the use of tobacco products.

\(8\) Federal and State public health officials, the public health
community, and the public at large recognize that the tobacco industry
should be subject to ongoing oversight.

\(9\) Under Article I, Section 8 of the Constitution, the Congress is
vested with the responsibility for regulating interstate commerce and
commerce with Indian tribes.

\(10\) The sale, distribution, marketing, advertising, and use of
tobacco products are activities in and substantially affecting
interstate commerce. Such products are sold, marketed, advertised, and
distributed in interstate commerce on a nationwide basis, and have a
substantial effect on the Nation\'s economy.

\(11\) The sale, distribution, marketing, advertising, and use of such
products substantially affect interstate commerce through the health
care and other costs attributable to the use of tobacco products.

\(12\) Civil actions against tobacco product manufacturers and others
are pending in Federal and State courts arising from the use, marketing,
and sale of tobacco products. Among these actions are cases brought by
the attorneys general of more than 40 States, certain cities and
counties, and the Commonwealth of Puerto Rico, and other parties,
including Indian tribes, and class actions brought by private claimants
(such as in the Castano Civil Actions), seeking to recover monies
expended to treat tobacco-related diseases and for the protection of
minors and consumers, as well as penalties and other relief for
violations of antitrust, health, consumer protection, and other laws.

\(13\) Civil actions have been filed throughout the United States
against tobacco product manufacturers and their distributors, trade
associations, law firms, and consultants on behalf of individuals or
classes of individuals claiming to be dependent upon and injured by
tobacco products.

\(14\) These civil actions are complex, time-consuming, expensive, and
burdensome for both the litigants and Federal and State courts. To date,
these civil actions have not resulted in sufficient redress for smokers
or non-governmental third-party payers. To the extent that governmental
entities have been or may in the future be compensated for
tobacco-related claims they have brought, it is not now possible to
identify what portions of such past or future recoveries can be
attributed to their various antitrust, health, consumer protection, or
other causes of action.

\(15\) It is in the public interest for Congress to adopt comprehensive
public health legislation because of tobacco\'s unique position in the
Nation\'s history and economy; the need to prevent the sale,
distribution, marketing and advertising of tobacco products to persons
under the minimum legal age to purchase such products; and the need to
educate the public, especially young people, regarding the health
effects of using tobacco products.

\(16\) The public interest requires a timely, fair, equitable, and
consistent result that will serve the public interest by (A) providing
that a portion of the costs of treatment for diseases and adverse health
effects associated with the use of tobacco products is borne by the
manufacturers of these products, and (B) restricting throughout the
Nation the sale, distribution, marketing, and advertising of tobacco
products only to persons of legal age to purchase such products.

\(17\) Public health authorities estimate that the benefits to the
Nation of enacting Federal legislation to accomplish these goals would
be significant in human and economic terms.

\(18\) Reducing the use of tobacco by minors by 50 percent would prevent
well over 60,000 early deaths each year and save up to \$43 billion each
year in reduced medical costs, improved productivity, and the avoidance
of premature deaths.

\(19\) Advertising, marketing, and promotion of tobacco products have
been especially directed to attract young persons to use tobacco
products and these efforts have resulted in increased use of such
products by youth. Past efforts to oversee these activities have not
been successful in adequately preventing such increased use.

\(20\) In 1995, the tobacco industry spent close to \$4,900,000,000 to
attract new users, retain current users, increase current consumption,
and generate favorable long-term attitudes toward smoking and tobacco
use.

\(21\) Tobacco product advertising often misleadingly portrays the use
of tobacco as socially acceptable and healthful to minors.

\(22\) Tobacco product advertising is regularly seen by persons under
the age of 18, and persons under the age of 18 are regularly exposed to
tobacco product promotional efforts.

\(23\) Through advertisements during and sponsorship of sporting events,
tobacco has become strongly associated with sports and has become
portrayed as an integral part of sports and the healthy lifestyle
associated with rigorous sporting activity.

\(24\) Children are exposed to substantial and unavoidable tobacco
advertising that leads to favorable beliefs about tobacco use, plays a
role in leading young people to overestimate the prevalence of tobacco
use, and increases the number of young people who begin to use tobacco.

\(25\) Tobacco advertising increases the size of the tobacco market by
increasing consumption of tobacco products including increasing tobacco
use by young people.

\(26\) Children are more influenced by tobacco advertising than adults,
they smoke the most advertised brands, and children as young as 3 to 6
years old can recognize a character associated with smoking at the same
rate as they recognize cartoons and fast food characters.

\(27\) Tobacco company documents indicate that young people are an
important and often crucial segment of the tobacco market.

\(28\) Comprehensive advertising restrictions will have a positive
effect on the smoking rates of young people.

\(29\) Restrictions on advertising are necessary to prevent unrestricted
tobacco advertising from undermining legislation prohibiting access to
young people and providing for education about tobacco use.

\(30\) International experience shows that advertising regulations that
are stringent and comprehensive have a greater impact on overall tobacco
use and young people\'s use than weaker or less comprehensive ones.
Text-only requirements, while not as stringent as a ban, will help
reduce underage use of tobacco products while preserving the
informational function of advertising.

\(31\) It is in the public interest for Congress to adopt legislation to
address the public health crisis created by actions of the tobacco
industry.

\(32\) If, as a direct or indirect result of this Act, the consumption
of tobacco products in the United States is reduced significantly, then
tobacco farmers, their families, and their communities may suffer
economic hardship and displacement, notwithstanding their lack of
involvement in the manufacturing and marketing of tobacco products.

SEC. 3. PURPOSE.

The purposes of this Act are\_

\(1\) to confirm the authority of the Food and Drug Administration to
regulate tobacco products under the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 301 et seq.), by recognizing it as the primary Federal
regulatory authority with respect to the manufacture, marketing, and
distribution of tobacco products;

\(2\) to require the tobacco industry to fund both Federal and State
oversight of the tobacco industry from on-going payments by tobacco
product manufacturers;

\(3\) to require tobacco product manufacturers to provide ongoing
funding to be used for an aggressive Federal, State, and local
enforcement program and for a nationwide retail licensing system to
prevent minors from obtaining tobacco products, while expressly
permitting the States to adopt additional measures that further restrict
or eliminate the products\' use;

\(4\) to ensure that the Food and Drug Administration and the States may
continue to address issues of particular concern to public health
officials, especially the use of tobacco by young people and dependence
on tobacco;

\(5\) to impose severe financial surcharges on tobacco product
manufacturers if they do not substantially reduce tobacco use by young
people during the next decade;

\(6\) to authorize appropriate agencies of the Federal government to set
national standards controlling the manufacture of tobacco products and
the identity, public disclosure, and amount of ingredients used in such
products;

\(7\) to provide new and flexible enforcement authority to ensure that
the tobacco industry makes efforts to develop and introduce less harmful
tobacco products;

\(8\) to confirm the Food and Drug Administration\'s authority to
regulate the levels of tar, nicotine, and other harmful components of
tobacco products;

\(9\) in order to ensure that adults are better informed, to require
tobacco product manufacturers to disclose all research which has not
previously been made available, as well as research generated in the
future, relating to the health and dependency effects or safety of
tobacco products;

\(10\) to impose on tobacco product manufacturers the obligation to
provide funding for a variety of public health initiatives;

\(11\) to establish a minimum Federal standard for stringent
restrictions on smoking in public places, with funding to enforce such
standard derived from payments made by tobacco product manufacturers,
while also to permit State, Tribal, and local governments to enact
additional and more stringent standards or elect not to be covered by
the Federal standard;

\(12\) to authorize and fund from payments by tobacco product
manufacturers a continuing national counter-advertising and tobacco
control campaign which seeks to educate consumers and discourage
children and adolescents from beginning to use tobacco products, and
which encourages current users of tobacco products to discontinue using
such products;

\(13\) to establish a mechanism to compensate the States in settlement
of their various claims against tobacco product manufacturers;

\(14\) to authorize and to fund from payments by tobacco product
manufacturers a nationwide program of smoking cessation administered
through State and Tribal governments and the private sector;

\(15\) to establish and fund from payments by tobacco product
manufacturers a National Tobacco Settlement Fund;

\(16\) to affirm the rights of individuals to access to the courts, to
civil trial by jury, and to damages to compensate them for harm caused
by tobacco products;

\(17\) to continue to permit the sale of tobacco products to adults in
conjunction with measures to ensure that they are not sold or accessible
to underage purchasers;

\(18\) to impose appropriate regulatory controls on the tobacco
industry; and

\(19\) to protect tobacco farmers and their communities from the
economic impact of this Act by providing full funding for and the
continuation of the Federal tobacco program and by providing funds for
farmers and communities to develop new opportunities in
tobacco-dependent communities.

SEC. 4. SCOPE AND EFFECT.

\(a\) Intended Effect.\_ This Act is not intended to\_

\(1\) establish a precedent with regard to any other industry,
situation, circumstance, or legal action;

\(2\) express any position of the Congress with regard to the imposition
of punitive damages in general or as applied to any specific industry,
case, controversy, or product other than as provided in this Act;

\(3\) provide any authority regarding the imposition of, or the
appropriateness of imposing, punitive damages; or

\(4\) except as provided in this Act, affect any action pending in
State, Tribal, or Federal court, or any agreement, consent decree, or
contract of any kind.

\(b\) Taxation.\_ Notwithstanding any other provision of law, this Act
and the amendments made by this Act shall not affect any authority of
the Secretary of the Treasury (including any authority assigned to the
Bureau of Alcohol, Tobacco and Firearms) or of State or local
governments with regard to taxation for tobacco or tobacco products.

\(c\) Agricultural Activities.\_ The provisions of this Act which
authorize the Secretary to take certain actions with regard to tobacco
and tobacco products shall not be construed to affect any authority of
the Secretary of Agriculture under existing law regarding the growing,
cultivation, or curing of raw tobacco.

SEC. 5. NON-PREEMPTION OF MORE RESTRICTIVE LAWS.

\(a\) Age Restrictions.\_ Nothing in this Act or the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 301 et seq.), as amended by this Act, shall
prevent a Federal agency (including the Armed Forces), a State or its
political subdivisions, or the government of an Indian tribe from
adopting and enforcing additional measures that further restrict or
prohibit tobacco product sale to, use by, and accessibility to persons
under the legal age of purchase established by such agency, State,
subdivision, or government of an Indian tribe.

\(b\) Additional Measures.\_ Except as otherwise expressly provided in
this Act, nothing in this Act, the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 301 et seq.), or rules promulgated under such Acts, shall
limit the authority of a Federal agency (including the Armed Forces), a
State or its political subdivisions, or the government of an Indian
tribe to enact, adopt, promulgate, and enforce any law, rule,
regulation, or other measure with respect to tobacco products, including
laws, rules, regulations, or other measures relating to or prohibiting
the sale, distribution, possession, exposure to, or use of tobacco
products by persons of any age that are in addition to the provisions of
this Act and the amendments made by this Act. No provision of this Act
or amendment made by this Act shall limit or otherwise affect any State,
Tribal, or local taxation of tobacco products.

\(c\) State Law Not Affected.\_ Except as otherwise expressly provided
in this Act, nothing in this Act, the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 301 et seq.), or rules promulgated under such Acts, shall
supersede the authority of the States, pursuant to State law, to expend
funds provided by this Act.

SEC. 6. DEFINITIONS.

In this Act:

\(1\) Brand.\_ The term \`\`brand\'\' means a variety of tobacco product
distinguished by the tobacco used, tar content, nicotine content,
flavoring used, size, filtration, or packaging, logo, registered
trademark or brand name, identifiable pattern of colors, or any
combination of such attributes.

\(2\) Cigarette.\_ The term \`\`cigarette\'\' has the meaning given that
term by section 3(1) of the Federal Cigarette Labeling and Advertising
Act (15 U.S.C. 1332(1)), but also includes tobacco, in any form, that is
functional in the product, which, because of its appearance, the type of
tobacco used in the filler, or its packaging and labeling, is likely to
be offered to, or purchased by, consumers as a cigarette or as
roll-your-own tobacco.

\(3\) Cigarette tobacco.\_ The term \`\`cigarette tobacco\'\' means any
product that consists of loose tobacco that is intended for use by
consumers in a cigarette. Unless otherwise stated, the requirements for
cigarettes shall also apply to cigarette tobacco.

\(4\) Commerce.\_ The term \`\`commerce\'\' has the meaning given that
term by section 3(2) of the Federal Cigarette Labeling and Advertising
Act (15 U.S.C. 1332(2)).

\(5\) Consent decree.\_ The term \`\`consent decree\'\' means a consent
decree among participating tobacco product manufacturers whose
substantive terms are substantially equivalent to the form consent
decree published for purposes of this paragraph in the Congressional
Record.

\(6\) Distributor.\_ The term \`\`distributor\'\' as regards a tobacco
product means any person who furthers the distribution of cigarette or
smokeless tobacco, whether domestic or imported, at any point from the
original place of manufacture to the person who sells or distributes the
product to individuals for personal consumption. Common carriers are not
considered distributors for purposes of this Act.

\(7\) Indian country; Indian lands.\_ The terms \`\`Indian country\'\'
and \`\`Indian lands\'\' have the meaning given the term \`\`Indian
country\'\' by section 1151 of title 18, United States Code, and
includes lands under the jurisdiction of an Indian tribe or tribal
organization.

\(8\) Indian tribe.\_ The term \`\`Indian tribe\'\' has the meaning
given such term in section 4(e) of the Indian Self Determination and
Education Assistance Act (25 U.S.C. 450b(e)).

\(9\) Little cigar.\_ The term \`\`little cigar\'\' has the meaning
given that term by section 3(7) of the Federal Cigarette Labeling and
Advertising Act (15 U.S.C. 1332(7)).

\(10\) Tobacco product manufacturer.\_ Except in titles VII and X, the
term \`\`tobacco product manufacturer\'\' means any person, including
any repacker or relabeler, who manufactures, fabricates, assembles,
processes, or labels a finished cigarette or smokeless tobacco product.

\(11\) Nicotine.\_ The term \`\`nicotine\'\' means the chemical
substance named 3-(1-Methyl-2-pyrrolidinyl) pyridine or
C\[10\]H\[14\]N\[2\], including any salt or complex of nicotine.

\(12\) Package.\_ The term \`\`package\'\' means a pack, box, carton, or
container of any kind or, if no other container, any wrapping (including
cellophane), in which cigarettes or smokeless tobacco are offered for
sale, sold, or otherwise distributed to consumers.

\(13\) Point-of-sale.\_ The term \`\`point-of-sale\'\' means any
location at which a consumer can purchase or otherwise obtain cigarettes
or smokeless tobacco for personal consumption.

\(14\) Retailer.\_ The term \`\`retailer\'\' means any person who sells
cigarettes or smokeless tobacco to individuals for personal consumption,
or who operates a facility where self-service displays of tobacco
products are permitted.

\(15\) Roll-your-own tobacco.\_ The term \`\`roll-your-own tobacco\'\'
means any tobacco which, because of its appearance, type, packaging, or
labeling, is suitable for use and likely to be offered to, or purchased
by, consumers as tobacco for making cigarettes.

\(16\) Secretary.\_ Except in title VII and where the context otherwise
requires, the term \`\`Secretary\'\' means the Secretary of Health and
Human Services.

\(17\) Smokeless tobacco.\_ The term \`\`smokeless tobacco\'\' means any
product that consists of cut, ground, powdered, or leaf tobacco that
contains nicotine and that is intended to be placed in the oral cavity.

\(18\) State.\_ The term \`\`State\'\' means any State of the United
States and, for purposes of this Act, includes the District of Columbia,
the Commonwealth of Puerto Rico, Guam, the Virgin Islands, American
Samoa, Wake Island, Midway Islands, Kingman Reef, Johnston Atoll, the
Northern Mariana Islands, and any other trust territory or possession of
the United States.

\(19\) Tobacco product.\_ The term \`\`tobacco product\'\' means
cigarettes, cigarette tobacco, smokeless tobacco, little cigars,
roll-your-own tobacco, and fine cut products.

\(20\) United States.\_ The term \`\`United States\'\' means the 50
States of the United States of America and the District of Columbia, the
Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa,
Wake Island, Midway Islands, Kingman Reef, Johnston Atoll, the Northern
Mariana Islands, and any other trust territory or possession of the
United States.

\(21\) Master Settlement Agreement.\_ The term \`\`Master Settlement
Agreement\'\' means the agreement either previously entered or to be
entered into by the States, the participating tobacco product
manufacturers, and the Trade Associations implementing the June 20,
1997, Proposed Resolution, and published in the Congressional Record for
purposes of this Act.

\(22\) Participating tobacco product manufacturer.\_ The term
\`\`participating tobacco product manufacturer\'\' means\_

\(A\) a tobacco product manufacturer that, within 45 days after the date
of enactment of this Act (or within 45 days after the date on which such
manufacturer first manufactures tobacco products for sale or
distribution in the United States, if such date is after the date of
enactment of this Act)\_

\(i\) becomes a signatory to the Master Settlement Agreement; and

\(ii\) enters into consent decrees with each State that made a request
within the time period described in section 704(b); or

\(B\) a surviving entity established by a participating tobacco product
manufacturer.

\(23\) Non-participating tobacco product manufacturer.\_ The term
\`\`non-participating tobacco product manufacturer\'\' means a tobacco
product manufacturer that is not a participating tobacco product
manufacturer.

\(24\) Protocol.\_ The term \`\`Protocol\'\' means the agreement to be
entered into by the Secretary of Health and Human Services with the
participating tobacco product manufacturers under this Act.

SEC. 7. NOTIFICATION IF YOUTHFUL CIGARETTE SMOKING RESTRICTIONS INCREASE
YOUTHFUL PIPE AND CIGAR SMOKING.

The Secretary shall notify the Congress if the Secretary determines that
a decrease in underage use of tobacco products resulting from the
enactment of this Act has produced an increase in underage use of pipe
tobacco and cigars.

SEC. 8. LIABILITY LIMITATIONS DISAPPEAR IF TOBACCO PRODUCT MANUFACTURER
CHALLENGES ADVERTISING LIMITS.

If a tobacco product manufacturer, or any party acting on behalf of, in
collusion with, or at the request of, a tobacco product manufacturer
brings an action to have the advertising restrictions imposed on tobacco
products under this Act, or the amendments made by this Act, or the
application of those regulations to any person or circumstance held to
be unconstitutional or otherwise invalid under the laws of the United
States then the provisions of title VII relating to limitations on
liability shall not apply to that manufacturer, beginning on the date on
which the action is filed in a court of competent jurisdiction, and
continuing until such time as the action is withdrawn or dismissed.

SEC. 9. FTC JURISDICTION NOT AFFECTED.

\(a\) In General.\_ Except where expressly provided in this Act, nothing
in this Act shall be construed as limiting or diminishing the authority
of the Federal Trade Commission to enforce the laws under its
jurisdiction with respect to the advertising, sale, or distribution of
tobacco products.

\(b\) Enforcement by FTC.\_ Any advertising that violates this Act, part
897 of title 21, Code of Federal Regulations, or the Protocol is an
unfair or deceptive act or practice under section 5(a) of the Federal
Trade Commission Act (15 U.S.C. 45(a)) and shall be considered a
violation of a rule promulgated under section 18 of that Act (15 U.S.C.
57a).

SEC. 10. CONGRESSIONAL REVIEW PROVISIONS.

In accordance with section 801 of title 5, United States Code, the
Congress shall review, and may disapprove, any rule under this Act that
is subject to section 801. This section does not apply to the rule set
forth in part 897 oftitle 21, Code of Federal Regulations.

TITLE I_REGULATION OF THE TOBACCO INDUSTRY

Subtitle A_Jurisdiction, etc., of Food and Drug Administration

SEC. 101. AMENDMENT OF FEDERAL FOOD, DRUG, AND COSMETIC ACT OF 1938.

\(a\) Definition of Tobacco Products.\_ Section 201 of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 321) is amended by adding at the end
the following:

\`\`(kk) The term \`tobacco product\' means any product made or derived
from tobacco that is intended for human consumption, including any
component, part, or accessory of a tobacco product (except for raw
materials other than tobacco used in manufacturing a component, part, or
accessory of a tobacco product).\'\'.

\(b\) FDA Authority over Tobacco Products.\_ The Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 301 et seq.) is amended\_

\(1\) by redesignating chapter IX as chapter X;

\(2\) by redesignating sections 901 through 907 as sections 1001 through
1007; and

\(3\) by inserting after section 803 the following:

\`\`CHAPTER IX_TOBACCO PRODUCTS

\`\`SEC. 901. FDA AUTHORITY OVER TOBACCO PRODUCTS

\`\`(a) In General.\_ Tobacco products shall be regulated by the
Secretary under this chapter and shall not be subject to the provisions
of chapter V, unless\_

\`\`(1) such products are intended for use in the diagnosis, cure,
mitigation, treatment, or prevention of disease (within the meaning of
section 201(g)(1)(B) or section 201(h)(2)); or

\`\`(2) a health claim is made for such products under section
201(g)(1)(C) or 201(h)(3).

\`\`(b) Applicability.\_ This chapter shall apply to all tobacco
products subject to the provisions of part 897 of title 21, Code of
Federal Regulations, and to any other tobacco products that the
Secretary by regulation deems to be subject to this chapter.

\`\`(c) FDA Rule in Effect.\_ The provisions of part 897 of title 21,
Code of Federal Regulations, shall be deemed to be lawful and to have
been lawfully promulgated under the authority of this chapter. The
provisions of such part that are not in effect on the date of enactment
of this chapter shall take effect as in such part or upon such later
date as determined by the Secretary by order.

\`\`(d) Scope.\_

\`\`(1) Nothing in this chapter shall be construed to affect the
regulation of drugs and devices under chapter V that are not tobacco
products by the Secretary under the Federal Food, Drug and Cosmetic Act.

\`\`(2) The provisions of this chapter shall not apply to tobacco leaf
that is not in the possession of the manufacturer, or to the producers
of tobacco leaf, including tobacco growers, tobacco warehouses, and
tobacco grower cooperatives, nor shall any employee of the Food and Drug
Administration have any authority whatsoever to enter onto a farm owned
by a producer of tobacco leaf without the written consent of such
producer. Notwithstanding any other provision of this subparagraph, if a
producer of tobacco leaf is also a tobacco product manufacturer or
controlled by a tobacco product manufacturer, the producer shall be
subject to this chapter in the producer\'s capacity as a manufacturer.
Nothing in this chapter shall be construed to grant the Secretary
authority to promulgate regulations on any matter that involves the
production of tobacco leaf or a producer thereof, other than activities
by a manufacturer affecting production. For purposes of the preceding
sentence, the term \`controlled by\' means a member of the same
controlled group of corporations as that term is used in section 52(a)
of the Internal Revenue Code of 1986, or under common control within the
meaning of the regulations promulgated under section 52(b) of such Code.

\`\`SEC. 902. ADULTERATED TOBACCO PRODUCTS.

\`\`A tobacco product shall be deemed to be adulterated if\_

\`\`(1) it consists in whole or in part of any filthy, putrid, or
decomposed substance, or is otherwise contaminated by any poisonous or
deliterious substance that may render the product injurious to health;

\`\`(2) it has been prepared, packed, or held under insanitary
conditions whereby it may have been contaminated with filth, or whereby
it may have been rendered injurious to health;

\`\`(3) its container is composed, in whole or in part, of any poisonous
or deleterious substance which may render the contents injurious to
health;

\`\`(4) it is, or purports to be or is represented as, a tobacco product
which is subject to a performance standard established under section 907
unless such tobacco product is in all respects in conformity with such
standard;

\`\`(5) it is required by section 910(a) to have premarket approval, is
not exempt under section 906(f), and does not have an approved
application in effect;

\`\`(6) the methods used in, or the facilities or controls used for, its
manufacture, packing or storage are not in conformity with applicable
requirements under section 906(e)(1) or an applicable condition
prescribed by an order under section 906(e)(2); or

\`\`(7) it is a tobacco product for which an exemption has been granted
under section 906(f) for investigational use and the person who was
granted such exemption or any investigator who uses such tobacco product
under such exemption fails to comply with a requirement prescribed by or
under such section.

\`\`SEC. 903. MISBRANDED TOBACCO PRODUCTS.

\`\`(a) In General.\_ A tobacco product shall be deemed to be
misbranded\_

\`\`(1) if its labeling is false or misleading in any particular;

\`\`(2) if in package form unless it bears a label containing\_

\`\`(A) the name and place of business of the tobacco product
manufacturer, packer, or distributor; and

\`\`(B) an accurate statement of the quantity of the contents in terms
of weight, measure, or numerical count,

except that under subparagraph (B) of this paragraph reasonable
variations shall be permitted, and exemptions as to small packages shall
be established, by regulations prescribed by the Secretary;

\`\`(3) if any word, statement, or other information required by or
under authority of this chapter to appear on the label or labeling is
not prominently placed thereon with such conspicuousness (as compared
with other words, statements or designs in the labeling) and in such
terms as to render it likely to be read and understood by the ordinary
individual under customary conditions of purchase and use;

\`\`(4) if it has an established name, unless its label bears, to the
exclusion of any other nonproprietary name, its established name
prominently printed in type as required by the Secretary by regulation;

\`\`(5) if the Secretary has issued regulations requiring that its
labeling bear adequate directions for use, or adequate warnings against
use by children, that are necessary for the protection of users unless
its labeling conforms in all respects to such regulations;

\`\`(6) if it was manufactured, prepared, propagated, compounded, or
processed in any State in an establishment not duly registered under
section 905(b), if it was not included in a list required by section
905(i), if a notice or other information respecting it was not provided
as required by such section or section 905(j), or if it does not bear
such symbols from the uniform system for identification of tobacco
products prescribed under section 905(e) as the Secretary by regulation
requires;

\`\`(7) if, in the case of any tobacco product distributed or offered
for sale in any State\_

\`\`(A) its advertising is false or misleading in any particular; or

\`\`(B) it is sold, distributed, or used in violation of regulations
prescribed under section 906(d);

\`\`(8) unless, in the case of any tobacco product distributed or
offered for sale in any State, the manufacturer, packer, or distributor
thereof includes in all advertisements and other descriptive printed
matter issued or caused to be issued by the manufacturer, packer, or
distributor with respect to that tobacco product\_

\`\`(A) a true statement of the tobacco product\'s established name as
defined in paragraph (4) of this subsection, printed prominently; and

\`\`(B) a brief statement of\_

\`\`(i) the uses of the tobacco product and relevant warnings,
precautions, side effects, and contraindications; and

\`\`(ii) in the case of specific tobacco products made subject to a
finding by the Secretary after notice and opportunity for comment that
such action is necessary to protect the public health, a full
description of the components of such tobacco product or the formula
showing quantitatively each ingredient of such tobacco product to the
extent required in regulations which shall be issued by the Secretary
after an opportunity for a hearing;

\`\`(9) if it is a tobacco product subject to a performance standard
established under section 907, unless it bears such labeling as may be
prescribed in such performance standard; or

\`\`(10) if there was a failure or refusal\_

\`\`(A) to comply with any requirement prescribed under section 904 or
908;

\`\`(B) to furnish any material or information required by or under
section 909; or

\`\`(C) to comply with a requirement under section 912.

\`\`(b) Prior Approval of Statements on Label.\_ The Secretary may, by
regulation, require prior approval of statements made on the label of a
tobacco product. No regulation issued under this subsection may require
prior approval by the Secretary of the content of any advertisement and
no advertisement of a tobacco product, published after the date of
enactment of the National Tobacco Policy and Youth Smoking Reduction Act
shall, with respect to the matters specified in this section or covered
by regulations issued hereunder, be subject to the provisions of
sections 12 through 15 of the Federal Trade Commission Act (15 U.S.C. 52
through 55). This subsection does not apply to any printed matter which
the Secretary determines to be labeling as defined in section 201(m).

\`\`SEC. 904. SUBMISSION OF HEALTH INFORMATION TO THE SECRETARY.

\`\`(a) Requirement .\_Not later than 6 months after the date of
enactment of the National Tobacco Policy and Youth Smoking Reduction
Act, each tobacco product manufacturer or importer of tobacco products,
or agents thereof, shall submit to the Secretary the following
information:

\`\`(1) A listing of all tobacco ingredients, substances and compounds
that are, on such date, added by the manufacturer to the tobacco, paper,
filter, or other component of each tobacco product by brand and by
quantity in each brand and subbrand.

\`\`(2) A description of the content, delivery, and form of nicotine in
each tobacco product measured in milligrams of nicotine.

\`\`(3) All documents (including underlying scientific information)
relating to research activities, and research findings, conducted,
supported, or possessed by the manufacturer (or agents thereof) on the
health, behavioral, or physiologic effects of tobacco products, their
constituents, ingredients, and components, and tobacco additives,
described in paragraph (1).

\`\`(4) All documents (including underlying scientific information)
relating to research activities, and research findings, conducted,
supported, or possessed by the manufacturer that relate to the issue of
whether a reduction in risk to health from tobacco products can occur
upon the employment of technology available or known to the
manufacturer.

\`\`(5) All documents (including underlying scientific information)
relating to marketing research involving the use of tobacco products.

An importer of a tobacco product not manufactured in the United States
shall supply the information required of a tobacco product manufacturer
under this subsection.

\`\`(b) Annual Submission .\_A tobacco product manufacturer or importer
that is required to submit information under subsection (a) shall update
such information on an annual basis under a schedule determined by the
Secretary.

\`\`(c) Time for Submission .\_

\`\`(1) New products .\_At least 90 days prior to the delivery for
introduction into interstate commerce of a tobacco product not on the
market on the date of enactment of this chapter, the manufacturer of
such product shall provide the information required under subsection (a)
and such product shall be subject to the annual submission under
subsection (b).

\`\`(2) Modification of existing products .\_If at any time a tobacco
product manufacturer adds to its tobacco products a new tobacco
additive, increases or decreases the quantity of an existing tobacco
additive or the nicotine content, delivery, or form, or eliminates a
tobacco additive from any tobacco product, the manufacturer shall within
60 days of such action so advise the Secretary in writing and reference
such modification in submissions made under subsection (b).

\`\`SEC. 905. ANNUAL REGISTRATION.

\`\`(a) Definitions.\_ As used in this section\_

\`\`(1) the term \`manufacture, preparation, compounding, or
processing\' shall include repackaging or otherwise changing the
container, wrapper, or labeling of any tobacco product package in
furtherance of the distribution of the tobacco product from the original
place of manufacture to the person who makes final delivery or sale to
the ultimate consumer or user; and

\`\`(2) the term \`name\' shall include in the case of a partnership the
name of each partner and, in the case of a corporation, the name of each
corporate officer and director, and the State of incorporation.

\`\`(b) Registration by Owners and Operators.\_ On or before December 31
of each year every person who owns or operates any establishment in any
State engaged in the manufacture, preparation, compounding, or
processing of a tobacco product or tobacco products shall register with
the Secretary the name, places of business, and all such establishments
of that person.

\`\`(c) Registration of New Owners and Operators.\_ Every person upon
first engaging in the manufacture, preparation, compounding, or
processing of a tobacco product or tobacco products in any establishment
owned or operated in any State by that person shall immediately register
with the Secretary that person\'s name, place of business, and such
establishment.

\`\`(d) Registration of Added Establishments.\_ Every person required to
register under subsection (b) or (c) shall immediately register with the
Secretary any additional establishment which that person owns or
operates in any State and in which that person begins the manufacture,
preparation, compounding, or processing of a tobacco product or tobacco
products.

\`\`(e) Uniform Product Identification System.\_ The Secretary may by
regulation prescribe a uniform system for the identification of tobacco
products and may require that persons who are required to list such
tobacco products under subsection (i) of this section shall list such
tobacco products in accordance with such system.

\`\`(f) Public Access to Registration Information.\_ The Secretary shall
make available for inspection, to any person so requesting, any
registration filed under this section.

\`\`(g) Biennial Inspection of Registered Establishments.\_ Every
establishment in any State registered with the Secretary under this
section shall be subject to inspection under section 704, and every such
establishment engaged in the manufacture, compounding, or processing of
a tobacco product or tobacco products shall be so inspected by one or
more officers or employees duly designated by the Secretary at least
once in the 2-year period beginning with the date of registration of
such establishment under this section and at least once in every
successive 2-year period thereafter.

\`\`(h) Foreign Establishments May Register.\_ Any establishment within
any foreign country engaged in the manufacture, preparation,
compounding, or processing of a tobacco product or tobacco products, may
register under this section under regulations promulgated by the
Secretary. Such regulations shall require such establishment to provide
the information required by subsection (i) of this section and shall
include provisions for registration of any such establishment upon
condition that adequate and effective means are available, by
arrangement with the government of such foreign country or otherwise, to
enable the Secretary to determine from time to time whether tobacco
products manufactured, prepared, compounded, or processed in such
establishment, if imported or offered for import into the United States,
shall be refused admission on any of the grounds set forth in section
801(a).

\`\`(i) Registration Information.\_

\`\`(1) Product list.\_ Every person who registers with the Secretary
under subsection (b), (c), or (d) of this section shall, at the time of
registration under any such subsection, file with the Secretary a list
of all tobacco products which are being manufactured, prepared,
compounded, or processed by that person for commercial distribution and
which has not been included in any list of tobacco products filed by
that person with the Secretary under this paragraph or paragraph (2)
before such time of registration. Such list shall be prepared in such
form and manner as the Secretary may prescribe and shall be accompanied
by\_

\`\`(A) in the case of a tobacco product contained in the applicable
list with respect to which a performance standard has been established
under section 907 or which is subject to section 910, a reference to the
authority for the marketing of such tobacco product and a copy of all
labeling for such tobacco product;

\`\`(B) in the case of any other tobacco product contained in an
applicable list, a copy of all consumer information and other labeling
for such tobacco product, a representative sampling of advertisements
for such tobacco product, and, upon request made by the Secretary for
good cause, a copy of all advertisements for a particular tobacco
product; and

\`\`(C) if the registrant filing a list has determined that a tobacco
product contained in such list is not subject to a performance standard
established under section 907, a brief statement of the basis upon which
the registrant made such determination if the Secretary requests such a
statement with respect to that particular tobacco product.

\`\`(2) Biannual Report of Any Change in Product List.\_ Each person who
registers with the Secretary under this section shall report to the
Secretary once during the month of June of each year and once during the
month of December of each year the following:

\`\`(A) A list of each tobacco product introduced by the registrant for
commercial distribution which has not been included in any list
previously filed by that person with the Secretary under this
subparagraph or paragraph (1) of this subsection. A list under this
subparagraph shall list a tobacco product by its established name and
shall be accompanied by the other information required by paragraph (1).

\`\`(B) If since the date the registrant last made a report under this
paragraph that person has discontinued the manufacture, preparation,
compounding, or processing for commercial distribution of a tobacco
product included in a list filed under subparagraph (A) or paragraph
(1), notice of such discontinuance, the date of such discontinuance, and
the identity of its established name.

\`\`(C) If since the date the registrant reported under subparagraph (B)
a notice of discontinuance that person has resumed the manufacture,
preparation, compounding, or processing for commercial distribution of
the tobacco product with respect to which such notice of discontinuance
was reported, notice of such resumption, the date of such resumption,
the identity of such tobacco product by established name, and other
information required by paragraph (1), unless the registrant has
previously reported such resumption to the Secretary under this
subparagraph.

\`\`(D) Any material change in any information previously submitted
under this paragraph or paragraph (1).

\`\`(j) Report Preceding Introduction of Certain
Substantially-equivalent Products into Interstate Commerce.\_

\`\`(1) In general.\_ Each person who is required to register under this
section and who proposes to begin the introduction or delivery for
introduction into interstate commerce for commercial distribution of a
tobacco product intended for human use that was not commercially
marketed (other than for test marketing) in the United States as of
August 11, 1995, as defined by the Secretary by regulation shall, at
least 90 days before making such introduction or delivery, report to the
Secretary (in such form and manner as the Secretary shall by regulation
prescribe)\_

\`\`(A) the basis for such person\'s determination that the tobacco
product is substantially equivalent, within the meaning of section 910,
to a tobacco product commercially marketed (other than for test
marketing) in the United States as of August 11, 1995, that is in
compliance with the requirements of this Act; and

\`\`(B) action taken by such person to comply with the requirements
under section 907 that are applicable to the tobacco product.

\`\`(2) Application to certain post-August 11 th products.\_ A report
under this subsection for a tobacco product that was first introduced or
delivered for introduction into interstate commerce for commercial
distribution in the United States after August 11, 1995, and before the
date of enactment of the National Tobacco Policy and Youth Smoking
Reduction Act shall be submitted to the Secretary within 6 months after
the date of enactment of that Act.

\`\`SEC. 906. GENERAL PROVISIONS RESPECTING CONTROL OF TOBACCO PRODUCTS.

\`\`(a) In General.\_ Any requirement established by or under section
902, 903, 905, or 909 applicable to a tobacco product shall apply to
such tobacco product until the applicability of the requirement to the
tobacco product has been changed by action taken under section 907,
section 910, or subsection (d) of this section, and any requirement
established by or under section 902, 903, 905, or 909 which is
inconsistent with a requirement imposed on such tobacco product under
section 907, section 910, or subsection (d) of this section shall not
apply to such tobacco product.

\`\`(b) Information on Public Access and Comment.\_ Each notice of
proposed rulemaking under section 907, 908, 909, or 910, or under this
section, any other notice which is published in the Federal Register
with respect to any other action taken under any such section and which
states the reasons for such action, and each publication of findings
required to be made in connection with rulemaking under any such section
shall set forth\_

\`\`(1) the manner in which interested persons may examine data and
other information on which the notice or findings is based; and

\`\`(2) the period within which interested persons may present their
comments on the notice or findings (including the need therefor) orally
or in writing, which period shall be at least 60 days but may not exceed
90 days unless the time is extended by the Secretary by a notice
published in the Federal Register stating good cause therefor.

\`\`(c) Limited Confidentiality of Information.\_ Any information
reported to or otherwise obtained by the Secretary or the Secretary\'s
representative under section 904, 907, 908, 909, or 910 or 704, or under
subsection (e) or (f) of this section, which is exempt from disclosure
under subsection (a) of section 552 of title 5, United States Code, by
reason of subsection (b)(4) of that section shall be considered
confidential and shall not be disclosed, except that the information may
be disclosed to other officers or employees concerned with carrying out
this chapter, or when relevant in any proceeding under this chapter.

\`\`(d) Restrictions.\_

\`\`(1) The Secretary may by regulation require that a tobacco product
be restricted to sale, distribution, or use upon such conditions,
including restrictions on the access to, and the advertising and
promotion of, the tobacco product, as the Secretary may prescribe in
such regulation if, because of its potentiality for harmful effect or
the collateral measures necessary to its use, the Secretary determines
that such regulation would be appropriate for the protection of the
public health. The finding as to whether such regulation would be
appropriate for the protection of the public health shall be determined
with respect to the risks and benefits to the population as a whole,
including users and non-users of the tobacco product, and taking into
account\_

\`\`(A) the increased or decreased likelihood that existing users of
tobacco products will stop using such products; and

\`\`(B) the increased or decreased likelihood that those who do not use
tobacco products will start using such products.

No such condition may require that the sale or distribution of a tobacco
product be limited to the written or oral authorization of a
practitioner licensed by law to prescribe medical products.

\`\`(2) The label of a tobacco product shall bear such appropriate
statements of the restrictions required by a regulation under subsection
(a) as the Secretary may in such regulation prescribe.

\`\`(3) Because of the importance of any decision by the Secretary to
restrict the sale of any class of tobacco products on the market on the
date of enactment of the National Tobacco Policy and Youth Smoking
Reduction Act to specified categories of retail outlets, it is
appropriate for the Congress to have the opportunity to review such a
decision. Therefore, any such restriction may not take effect before the
date that is 2 years after the President notifies the Congress that a
final regulation imposing the restriction has been issued.

\`\`(e) Good Manufacturing Practice Requirements.\_

\`\`(1) Methods, facilities, and controls to conform.\_

\`\`(A) The Secretary may, in accordance with subparagraph (B),
prescribe regulations requiring that the methods used in, and the
facilities and controls used for, the manufacture, pre-production design
validation (including a process to assess the performance of a tobacco
product), packing and storage of a tobacco product, conform to current
good manufacturing practice, as prescribed in such regulations, to
assure that the public health is protected and that the tobacco product
is in compliance with this chapter.

\`\`(B) The Secretary shall\_

\`\`(i) before promulgating any regulation under subparagraph (A),
afford the Tobacco Products Scientific Advisory Committee established
under section 915 an opportunity to submit recommendations with respect
to the regulation proposed to be promulgated;

\`\`(ii) before promulgating any regulation under subparagraph (A),
afford opportunity for an oral hearing;

\`\`(iii) provide the advisory committee a reasonable time to make its
recommendation with respect to proposed regulations under subparagraph
(A); and

\`\`(iv) in establishing the effective date of a regulation promulgated
under this subsection, 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 shall provide for a reasonable period of time for such manufacturers
to conform to good manufacturing practices.

\`\`(2) Exemptions; variances.\_

\`\`(A) Any person subject to any requirement prescribed under paragraph
(1) may petition the Secretary for a permanent or temporary exemption or
variance from such requirement. Such a petition shall be submitted to
the Secretary in such form and manner as the Secretary shall prescribe
and shall\_

\`\`(i) in the case of a petition for an exemption from a requirement,
set forth the basis for the petitioner\'s determination that compliance
with the requirement is not required to assure that the tobacco product
will be in compliance with this chapter;

\`\`(ii) in the case of a petition for a variance from a requirement,
set 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 methods, facilities, and controls
prescribed by the requirement; and

\`\`(iii) contain such other information as the Secretary shall
prescribe.

\`\`(B) The Secretary may refer to the Tobacco Products Scientific
Advisory Committee established under section 915 any petition submitted
under subparagraph (A). The advisory committee shall report its
recommendations to the Secretary with respect to a petition referred to
it within 60 days after the date of the petition\'s referral. Within 60
days after\_

\`\`(i) the date the petition was submitted to the Secretary under
subparagraph (A); or

\`\`(ii) the day after the petition was referred to an advisory
committee,

whichever occurs later, the Secretary shall by order either deny the
petition or approve it.

\`\`(C) The Secretary may approve\_

\`\`(i) a petition for an exemption for a tobacco product from a
requirement if the Secretary determines that compliance with such
requirement is not required to assure that the tobacco product will be
in compliance with this chapter; and

\`\`(ii) a petition for a variance for a tobacco product from a
requirement if the Secretary 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,
controls, and facilities prescribed by the requirement are sufficient to
assure that the tobacco product will be in compliance with this chapter.

\`\`(D) An order of the Secretary approving a petition for a variance
shall prescribe such conditions respecting the methods used in, and the
facilities and controls used for, the manufacture, packing, and storage
of the tobacco product to be granted the variance under the petition as
may be necessary to assure that the tobacco product will be in
compliance with this chapter.

\`\`(E) After the issuance of an order under subparagraph (B) respecting
a petition, the petitioner shall have an opportunity for an informal
hearing on such order.

\`\`(3) Compliance with requirements under this subsection shall not be
required before the period ending 3 years after the date of enactment of
the National Tobacco Policy and Youth Smoking Reduction Act.

\`\`(f) Exemption for Investigational Use.\_ The Secretary may exempt
tobacco products intended for investigational use from this chapter
under such conditions as the Secretary may prescribe by regulation .

\`\`(g) Research and Development.\_ The Secretary may enter into
contracts for research, testing, and demonstrations respecting tobacco
products and may obtain tobacco products for research, testing, and
demonstration purposes without regard to section 3324(a) and (b) of
title 31, United States Code, and section 5 of title 41, United States
Code.

\`\`SEC. 907. PERFORMANCE STANDARDS.

\`\`(a) In General.\_

\`\`(1) Finding required.\_ The Secretary may adopt performance
standards for a tobacco product if the Secretary finds that a
performance standard is appropriate for the protection of the public
health. This finding shall be determined with respect to the risks and
benefits to the population as a whole, including users and non-users of
the tobacco product, and taking into account\_

\`\`(A) the increased or decreased likelihood that existing users of
tobacco products will stop using such products; and

\`\`(B) the increased or decreased likelihood that those who do not use
tobacco products will start using such products.

\`\`(2) Content of performance standards.\_ A performance standard
established under this section for a tobacco product\_

\`\`(A) shall include provisions to provide performance that is
appropriate for the protection of the public health, including
provisions, where appropriate\_

\`\`(i) for the reduction or elimination of nicotine yields of the
product;

\`\`(ii) for the reduction or elimination of other constituents or
harmful components of the product; or

\`\`(iii) relating to any other requirement under (B);

\`\`(B) shall, where necessary to be appropriate for the protection of
the public health, include\_

\`\`(i) provisions respecting the construction, components, ingredients,
and properties of the tobacco product;

\`\`(ii) provisions for the testing (on a sample basis or, if necessary,
on an individual basis) of the tobacco product;

\`\`(iii) provisions for the measurement of the performance
characteristics of the tobacco product;

\`\`(iv) provisions requiring that the results of each or of certain of
the tests of the tobacco product required to be made under clause (ii)
show that the tobacco product is in conformity with the portions of the
standard for which the test or tests were required; and

\`\`(v) a provision requiring that the sale and distribution of the
tobacco product be restricted but only to the extent that the sale and
distribution of a tobacco product may be restricted under a regulation
under section 906(d); and

\`\`(C) shall, where appropriate, require the use and prescribe the form
and content of labeling for the proper use of the tobacco product.

\`\`(3) Periodic re-evaluation of performance standards.\_ The Secretary
shall provide for periodic evaluation of performance standards
established under this section to determine whether such standards
should be changed to reflect new medical, scientific, or other
technological data. The Secretary may provide for testing under
paragraph (2) by any person.

\`\`(4) Involvement of other agencies; informed persons.\_ In carrying
out duties under this section, the Secretary shall, to the maximum
extent practicable\_

\`\`(A) use personnel, facilities, and other technical support available
in other Federal agencies;

\`\`(B) consult with other Federal agencies concerned with
standard-setting and other nationally or internationally recognized
standard-setting entities; and

\`\`(C) invite appropriate participation, through joint or other
conferences, workshops, or other means, by informed persons
representative of scientific, professional, industry, or consumer
organizations who in the Secretary\'s judgment can make a significant
contribution.

\`\`(b) Establishment of Standards.\_

\`\`(1) Notice.\_

\(A\) The Secretary shall publish in the Federal Register a notice of
proposed rulemaking for the establishment, amendment, or revocation of
any performance standard for a tobacco product.

\`\`(B) A notice of proposed rulemaking for the establishment or
amendment of a performance standard for a tobacco product shall\_

\`\`(i) set forth a finding with supporting justification that the
performance standard is appropriate for the protection of the public
health;

\`\`(ii) set forth proposed findings with respect to the risk of illness
or injury that the performance standard is intended to reduce or
eliminate; and

\`\`(iii) invite interested persons to submit an existing performance
standard for the tobacco product, including a draft or proposed
performance standard, for consideration by the Secretary.

\`\`(C) A notice of proposed rulemaking for the revocation of a
performance standard shall set forth a finding with supporting
justification that the performance standard is no longer necessary to be
appropriate for the protection of the public health.

\`\`(D) The Secretary shall consider all information submitted in
connection with a proposed standard, including information concerning
the countervailing effects of the performance standard on the health of
adolescent tobacco users, adult tobacco users, or non-tobacco users,
such as the creation of a significant demand for contraband or other
tobacco products that do not meet the requirements of this chapter and
the significance of such demand, and shall issue the standard if the
Secretary determines that the standard would be appropriate for the
protection of the public health.

\`\`(E) The Secretary shall provide for a comment period of not less
than 60 days.

\`\`(2) Promulgation.\_

\`\`(A) After the expiration of the period for comment on a notice of
proposed rulemaking published under paragraph (1) respecting a
performance standard and after consideration of such comments and any
report from the Tobacco Products Scientific Advisory Committee under
section 915, the Secretary shall\_

\`\`(i) promulgate a regulation establishing a performance standard and
publish in the Federal Register findings on the matters referred to in
paragraph (1); or

\`\`(ii) publish a notice terminating the proceeding for the development
of the standard together with the reasons for such termination.

\`\`(B) A regulation establishing a performance standard shall set forth
the date or dates upon which the standard shall take effect, but no such
regulation may take effect before one year after the date of its
publication unless the Secretary determines that an earlier effective
date is necessary for the protection of the public health. Such date or
dates shall be established so as to minimize, consistent with the public
health, economic loss to, and disruption or dislocation of, domestic and
international trade.

\`\`(3) Special rule for standard banning class of product or
eliminating nicotine content.\_ Because of the importance of a decision
of the Secretary to issue a regulation establishing a performance
standard\_

\`\`(A) eliminating all cigarettes, all smokeless tobacco products, or
any similar class of tobacco products, or

\`\`(B) requiring the reduction of nicotine yields of a tobacco product
to zero,

it is appropriate for the Congress to have the opportunity to review
such a decision. Therefore, any such standard may not take effect before
a date that is 2 years after the President notifies the Congress that a
final regulation imposing the restriction has been issued.

\`\`(4) Amendment; revocation.\_

\`\`(A) The Secretary, upon the Secretary\'s own initiative or upon
petition of an interested person may by a regulation, promulgated in
accordance with the requirements of paragraphs (1) and (2)(B) of this
subsection, amend or revoke a performance standard.

\`\`(B) The Secretary may declare a proposed amendment of a performance
standard to be effective on and after its publication in the Federal
Register and until the effective date of any final action taken on such
amendment if the Secretary determines that making it so effective is in
the public interest.

\`\`(5) Reference to Advisory Committee.\_ The Secretary\_

\`\`(A) may, on the Secretary\'s own initiative, refer a proposed
regulation for the establishment, amendment, or revocation of a
performance standard; or

\`\`(B) shall, upon the request of an interested person which
demonstrates good cause for referral and which is made before the
expiration of the period for submission of comments on such proposed
regulation,

refer such proposed regulation to the Tobacco Products Scientific
Advisory Committee established under section 915, for a report and
recommendation with respect to any matter involved in the proposed
regulation which requires the exercise of scientific judgment. If a
proposed regulation is referred under this subparagraph to the advisory
committee, the Secretary shall provide the advisory committee with the
data and information on which such proposed regulation is based. The
advisory committee shall, within 60 days after the referral of a
proposed regulation and after independent study of the data and
information furnished to it by the Secretary and other data and
information before it, submit to the Secretary a report and
recommendation respecting such regulation, together with all underlying
data and information and a statement of the reason or basis for the
recommendation. A copy of such report and recommendation shall be made
public by the Secretary.

\`\`SEC. 908. NOTIFICATION AND OTHER REMEDIES

\`\`(a) Notification.\_ If the Secretary determines that\_

\`\`(1) a tobacco product which is introduced or delivered for
introduction into interstate commerce for commercial distribution
presents an unreasonable risk of substantial harm to the public health;
and

\`\`(2) notification under this subsection is necessary to eliminate the
unreasonable risk of such harm and no more practicable means is
available under the provisions of this chapter (other than this section)
to eliminate such risk,

the Secretary may issue such order as may be necessary to assure that
adequate notification is provided in an appropriate form, by the persons
and means best suited under the circumstances involved, to all persons
who should properly receive such notification in order to eliminate such
risk. The Secretary may order notification by any appropriate means,
including public service announcements. Before issuing an order under
this subsection, the Secretary shall consult with the persons who are to
give notice under the order.

\`\`(b) No Exemption from Other Liability.\_ Compliance with an order
issued under this section shall not relieve any person from liability
under Federal or State law. In awarding damages for economic loss in an
action brought for the enforcement of any such liability, the value to
the plaintiff in such action of any remedy provided under such order
shall be taken into account.

\`\`(c) Recall Authority.\_

\`\`(1) In general.\_ If the Secretary finds that there is a reasonable
probability that a tobacco product contains a manufacturing or other
defect not ordinarily contained in tobacco products on the market that
would cause serious, adverse health consequences or death, the Secretary
shall issue an order requiring the appropriate person (including the
manufacturers, importers, distributors, or retailers of the tobacco
product) to immediately cease distribution of such tobacco product. The
order shall provide the person subject to the order with an opportunity
for an informal hearing, to be held not later than 10 days after the
date of the issuance of the order, on the actions required by the order
and on whether the order should be amended to require a recall of such
tobacco product. If, after providing an opportunity for such a hearing,
the Secretary determines that inadequate grounds exist to support the
actions required by the order, the Secretary shall vacate the order.

\`\`(2) Amendment of order to require recall.\_

\`\`(A) If, after providing an opportunity for an informal hearing under
paragraph (1), the Secretary determines that the order should be amended
to include a recall of the tobacco product with respect to which the
order was issued, the Secretary shall, except as provided in
subparagraph (B), amend the order to require a recall. The Secretary
shall specify a timetable in which the tobacco product recall will occur
and shall require periodic reports to the Secretary describing the
progress of the recall.

\`\`(B) An amended order under subparagraph (A)\_

\`\`(i) shall not include recall of a tobacco product from individuals;
and

\`\`(ii) shall provide for notice to persons subject to the risks
associated with the use of such tobacco product.

In providing the notice required by clause (ii), the Secretary may use
the assistance of retailers and other persons who distributed such
tobacco product. If a significant number of such persons cannot be
identified, the Secretary shall notify such persons under section
705(b).

\`\`(3) Remedy not exclusive.\_ The remedy provided by this subsection
shall be in addition to remedies provided by subsection (a) of this
section.

\`\`SEC. 909. RECORDS AND REPORTS ON TOBACCO PRODUCTS.

\`\`(a) In General.\_ Every person who is a tobacco product manufacturer
or importer of a tobacco product shall establish and maintain such
records, make such reports, and provide such information, as the
Secretary may by regulation reasonably require to assure that such
tobacco product is not adulterated or misbranded and to otherwise
protect public health. Regulations prescribed under the preceding
sentence\_

\`\`(1) may require a tobacco product manufacturer or importer to report
to the Secretary whenever the manufacturer or importer receives or
otherwise becomes aware of information that reasonably suggests that one
of its marketed tobacco products may have caused or contributed to a
serious unexpected adverse experience associated with the use of the
product or any significant increase in the frequency of a serious,
expected adverse product experience;

\`\`(2) shall require reporting of other significant adverse tobacco
product experiences as determined by the Secretary to be necessary to be
reported;

\`\`(3) shall not impose requirements unduly burdensome to a tobacco
product manufacturer or importer, taking into account the cost of
complying with such requirements and the need for the protection of the
public health and the implementation of this chapter;

\`\`(4) when prescribing the procedure for making requests for reports
or information, shall require that each request made under such
regulations for submission of a report or information to the Secretary
state the reason or purpose for such request and identify to the fullest
extent practicable such report or information;

\`\`(5) when requiring submission of a report or information to the
Secretary, shall state the reason or purpose for the submission of such
report or information and identify to the fullest extent practicable
such report or information; and

\`\`(6) may not require that the identity of any patient or user be
disclosed in records, reports, or information required under this
subsection unless required for the medical welfare of an individual, to
determine risks to public health of a tobacco product, or to verify a
record, report, or information submitted under this chapter.

In prescribing regulations under this subsection, the Secretary shall
have due regard for the professional ethics of the medical profession
and the interests of patients. The prohibitions of paragraph (6) of this
subsection continue to apply to records, reports, and information
concerning any individual who has been a patient, irrespective of
whether or when he ceases to be a patient.

\`\`(b) Reports of Removals and Corrections.\_

\(1\) Except as provided in paragraph (3), the Secretary shall by
regulation require a tobacco product manufacturer or importer of a
tobacco product to report promptly to the Secretary any corrective
action taken or removal from the market of a tobacco product undertaken
by such manufacturer or importer if the removal or correction was
undertaken\_

\`\`(A) to reduce a risk to health posed by the tobacco product; or

\`\`(B) to remedy a violation of this chapter caused by the tobacco
product which may present a risk to health.

A tobacco product manufacturer or importer of a tobacco product who
undertakes a corrective action or removal from the market of a tobacco
product which is not required to be reported under this subsection shall
keep a record of such correction or removal.

\`\`(2) No report of the corrective action or removal of a tobacco
product may be required under paragraph (1) if a report of the
corrective action or removal is required and has been submitted under
subsection (a) of this section.

\`\`SEC. 910. PREMARKET REVIEW OF CERTAIN TOBACCO PRODUCTS.

\`\`(a) In General.\_

\`\`(1) Premarket approval required.\_

\`\`(A) New products.\_ Approval under this section of an application
for premarket approval for any tobacco product that is not commercially
marketed (other than for test marketing) in the United States as of
August 11, 1995, is required unless the manufacturer has submitted a
report under section 905(j), and the Secretary has issued an order that
the tobacco product is substantially equivalent to a tobacco product
commercially marketed (other than for test marketing) in the United
States as of August 11, 1995, that is in compliance with the
requirements of this Act.

\`\`(B) Products introduced between August 11, 1995, and enactment of
this chapter.\_ Subparagraph (A) does not apply to a tobacco product
that\_

\`\`(i) was first introduced or delivered for introduction into
interstate commerce for commerce for commercial distribution in the
United States after August 11, 1995, and before the date of enactment of
the National Tobacco Policy and Youth Smoking Reduction Act; and

\`\`(ii) for which a report was submitted under section 905(j) within 6
months after such date,

until the Secretary issues an order that the tobacco product is
substantially equivalent for purposes of this section or requires
premarket approval.

\`\`(2) Substantially equivalent defined.\_

\`\`(A) For purposes of this section and section 905(j), the term
\`substantially equivalent\' or \`substantial equivalence\' mean, with
respect to the tobacco product being compared to the predicate tobacco
product, that the Secretary by order has found that the tobacco
product\_

\`\`(i) has the same characteristics as the predicate tobacco product;
or

\`\`(ii) has different characteristics and the information submitted
contains information, including clinical data if deemed necessary by the
Secretary, that demonstrates that it is not appropriate to regulate the
product under this section because the product does not raise different
questions of public health.

\`\`(B) For purposes of subparagraph (A), the term \`characteristics\'
means the materials, ingredients, design, composition, heating source,
or other features of a tobacco product.

\`\`(C) A tobacco product may not be found to be substantially
equivalent to a predicate tobacco product that has been removed from the
market at the initiative of the Secretary or that has been determined by
a judicial order to be misbranded or adulterated.

\`\`(3) Health Information.\_

\`\`(A) As part of a submission under section 905(j) respecting a
tobacco product, the person required to file a premarket notification
under such section shall provide an adequate summary of any health
information related to the tobacco product or state that such
information will be made available upon request by any person.

\`\`(B) Any summary under subparagraph (A) respecting a tobacco product
shall contain detailed information regarding data concerning adverse
health effects and shall be made available to the public by the
Secretary within 30 days of the issuance of a determination that such
tobacco product is substantially equivalent to another tobacco product.

\`\`(b) Application.\_

\`\`(1) Contents.\_ An application for premarket approval shall
contain\_

\`\`(A) full reports of all information, published or known to or which
should reasonably be known to the applicant, concerning investigations
which have been made to show the health risks of such tobacco product
and whether such tobacco product presents less risk than other tobacco
products;

\`\`(B) a full statement of the components, ingredients, and properties,
and of the principle or principles of operation, of such tobacco
product;

\`\`(C) a full description of the methods used in, and the facilities
and controls used for, the manufacture, processing, and, when relevant,
packing and installation of, such tobacco product;

\`\`(D) an identifying reference to any performance standard under
section 907 which would be applicable to any aspect of such tobacco
product, and either adequate information to show that such aspect of
such tobacco product fully meets such performance standard or adequate
information to justify any deviation from such standard;

\`\`(E) such samples of such tobacco product and of components thereof
as the Secretary may reasonably require;

\`\`(F) specimens of the labeling proposed to be used for such tobacco
product; and

\`\`(G) such other information relevant to the subject matter of the
application as the Secretary may require.

\`\`(2) Reference to Advisory Committee.\_ Upon receipt of an
application meeting the requirements set forth in paragraph (1), the
Secretary\_

\`\`(A) may, on the Secretary\'s own initiative; or

\`\`(B) shall, upon the request of an applicant,

refer such application to the Tobacco Products Scientific Advisory
Committee established under section 915 and for submission (within such
period as the Secretary may establish) of a report and recommendation
respecting approval of the application, together with all underlying
data and the reasons or basis for the recommendation.

\`\`(c) Action on Application.\_

\`\`(1) Deadline.\_

\`\`(A) As promptly as possible, but in no event later than 180 days
after the receipt of an application under subsection (b) of this
section, the Secretary, after considering the report and recommendation
submitted under paragraph (2) of such subsection, shall\_

\`\`(i) issue an order approving the application if the Secretary finds
that none of the grounds for denying approval specified in paragraph (2)
of this subsection applies; or

\`\`(ii) deny approval of the application if the Secretary finds (and
sets forth the basis for such finding as part of or accompanying such
denial) that one or more grounds for denial specified in paragraph (2)
of this subsection apply.

\`\`(B) An order approving an application for a tobacco product may
require as a condition to such approval that the sale and distribution
of the tobacco product be restricted but only to the extent that the
sale and distribution of a tobacco product may be restricted under a
regulation under section 906(d).

\`\`(2) Denial of approval.\_ The Secretary shall deny approval of an
application for a tobacco product if, upon the basis of the information
submitted to the Secretary as part of the application and any other
information before the Secretary with respect to such tobacco product,
the Secretary finds that\_

\`\`(A) there is a lack of a showing that permitting such tobacco
product to be marketed would be appropriate for the protection of the
public health;

\`\`(B) the methods used in, or the facilities or controls used for, the
manufacture, processing, or packing of such tobacco product do not
conform to the requirements of section 906(e);

\`\`(C) based on a fair evaluation of all material facts, the proposed
labeling is false or misleading in any particular; or

\`\`(D) such tobacco product is not shown to conform in all respects to
a performance standard in effect under section 907, compliance with
which is a condition to approval of the application, and there is a lack
of adequate information to justify the deviation from such standard.

\`\`(3) Denial Information.\_ Any denial of an application shall,
insofar as the Secretary determines to be practicable, be accompanied by
a statement informing the applicant of the measures required to place
such application in approvable form (which measures may include further
research by the applicant in accordance with one or more protocols
prescribed by the Secretary).

\`\`(4) Basis for finding.\_ For purposes of this section, the finding
as to whether approval of a tobacco product is appropriate for the
protection of the public health shall be determined with respect to the
risks and benefits to the population as a whole, including users and
non-users of the tobacco product, and taking into account\_

\`\`(A) the increased or decreased likelihood that existing users of
tobacco products will stop using such products; and

\`\`(B) the increased or decreased likelihood that those who do not use
tobacco products will start using such products.

\`\`(5) Basis for action.\_

\`\`(A) For purposes of paragraph (2)(A), whether permitting a tobacco
product to be marketed would be appropriate for the protection of the
public health shall, when appropriate, be determined on the basis of
well-controlled investigations, which may include one or more clinical
investigations by experts qualified by training and experience to
evaluate the tobacco product.

\`\`(B) If the Secretary determines that there exists valid scientific
evidence (other than evidence derived from investigations described in
subparagraph (A)) which is sufficient to evaluate the tobacco product
the Secretary may authorize that the determination for purposes of
paragraph (2)(A) be made on the basis of such evidence.

\`\`(d) Withdrawal and Temporary Suspension.\_

\`\`(1) In general.\_ The Secretary shall, upon obtaining, where
appropriate, advice on scientific matters from the Tobacco Products
Scientific Advisory Committee established under section 915, and after
due notice and opportunity for informal hearing to the holder of an
approved application for a tobacco product, issue an order withdrawing
approval of the application if the Secretary finds\_

\`\`(A) that the continued marketing of such tobacco product no longer
is appropriate for the protection of the public health;

\`\`(B) that the application contained or was accompanied by an untrue
statement of a material fact;

\`\`(C) that the applicant\_

\`\`(i) has failed to establish a system for maintaining records, or has
repeatedly or deliberately failed to maintain records or to make
reports, required by an applicable regulation under section 909;

\`\`(ii) has refused to permit access to, or copying or verification of,
such records as required by section 704; or

\`\`(iii) has not complied with the requirements of section 905;

\`\`(D) on the basis of new information before the Secretary with
respect to such tobacco product, evaluated together with the evidence
before the Secretary when the application was approved, that the methods
used in, or the facilities and controls used for, the manufacture,
processing, packing, or installation of such tobacco product do not
conform with the requirements of section 906(e) and were not brought
into conformity with such requirements within a reasonable time after
receipt of written notice from the Secretary of nonconformity;

\`\`(E) on the basis of new information before the Secretary, evaluated
together with the evidence before the Secretary when the application was
approved, that the labeling of such tobacco product, based on a fair
evaluation of all material facts, is false or misleading in any
particular and was not corrected within a reasonable time after receipt
of written notice from the Secretary of such fact; or

\`\`(F) on the basis of new information before the Secretary, evaluated
together with the evidence before the Secretary when the application was
approved, that such tobacco product is not shown to conform in all
respects to a performance standard which is in effect under section 907,
compliance with which was a condition to approval of the application,
and that there is a lack of adequate information to justify the
deviation from such standard.

\`\`(2) Appeal.\_ The holder of an application subject to an order
issued under paragraph (1) withdrawing approval of the application may,
by petition filed on or before the thirtieth day after the date upon
which he receives notice of such withdrawal, obtain review thereof in
accordance with subsection (e) of this section.

\`\`(3) Temporary suspension.\_ If, after providing an opportunity for
an informal hearing, the Secretary determines there is reasonable
probability that the continuation of distribution of a tobacco product
under an approved application would cause serious, adverse health
consequences or death, that is greater than ordinarily caused by tobacco
products on the market, the Secretary shall by order temporarily suspend
the approval of the application approved under this section. If the
Secretary issues such an order, the Secretary shall proceed
expeditiously under paragraph (1) to withdraw such application.

\`\`(e) Service of Order.\_ An order issued by the Secretary under this
section shall be served\_

\`\`(1) in person by any officer or employee of the department
designated by the Secretary; or

\`\`(2) by mailing the order by registered mail or certified mail
addressed to the applicant at the applicant\'s last known address in the
records of the Secretary.

\`\`SEC. 911. JUDICIAL REVIEW.

\`\`(a) In General.\_ Not later than 30 days after\_

\`\`(1) the promulgation of a regulation under section 907 establishing,
amending, or revoking a performance standard for a tobacco product; or

\`\`(2) a denial of an application for approval under section 910(c),

any person adversely affected by such regulation or order may file a
petition with the United States Court of Appeals for the District of
Columbia or for the circuit wherein such person resides or has his
principal place of business for judicial review of such regulation or
order. A copy of the petition shall be transmitted by the clerk of the
court to the Secretary or other officer designated by the Secretary for
that purpose. The Secretary shall file in the court the record of the
proceedings on which the Secretary based the Secretary\'s regulation or
order and each record or order shall contain a statement of the reasons
for its issuance and the basis, on the record, for its issuance. For
purposes of this section, the term \`record\' means all notices and
other matter published in the Federal Register with respect to the
regulation or order reviewed, all information submitted to the Secretary
with respect to such regulation or order, proceedings of any panel or
advisory committee with respect to such regulation or order, any hearing
held with respect to such regulation or order, and any other information
identified by the Secretary, in the administrative proceeding held with
respect to such regulation or order, as being relevant to such
regulation or order.

\`\`(b) Court May Order Secretary to Make Additional Findings.\_ If the
petitioner applies to the court for leave to adduce additional data,
views, or arguments respecting the regulation or order being reviewed
and shows to the satisfaction of the court that such additional data,
views, or arguments are material and that there were reasonable grounds
for the petitioner\'s failure to adduce such data, views, or arguments
in the proceedings before the Secretary, the court may order the
Secretary to provide additional opportunity for the oral presentation of
data, views, or arguments and for written submissions. The Secretary may
modify the Secretary\'s findings, or make new findings by reason of the
additional data, views, or arguments so taken and shall file with the
court such modified or new findings, and the Secretary\'s
recommendation, if any, for the modification or setting aside of the
regulation or order being reviewed, with the return of such additional
data, views, or arguments.

\`\`(c) Standard of Review.\_ Upon the filing of the petition under
subsection (a) of this section for judicial review of a regulation or
order, the court shall have jurisdiction to review the regulation or
order in accordance with chapter 7 of title 5, United States Code, and
to grant appropriate relief, including interim relief, as provided in
such chapter. A regulation or order described in paragraph (1) or (2) of
subsection (a) of this section shall not be affirmed if it is found to
be unsupported by substantial evidence on the record taken as a whole.

\`\`(d) Finality of Judgment.\_ The judgment of the court affirming or
setting aside, in whole or in part, any regulation or order shall be
final, subject to review by the Supreme Court of the United States upon
certiorari or certification, as provided in section 1254 of title 28,
United States Code.

\`\`(e) Other Remedies.\_ The remedies provided for in this section
shall be in addition to and not in lieu of any other remedies provided
by law.

\`\`(f) Regulations and Orders Must Recite Basis in Record.\_ To
facilitate judicial review under this section or under any other
provision of law of a regulation or order issued under section 906, 907,
908, 909, 910, or 914, each such regulation or order shall contain a
statement of the reasons for its issuance and the basis, in the record
of the proceedings held in connection with its issuance, for its
issuance.

\`\`SEC. 912. POSTMARKET SURVEILLANCE

\`\`(a) Discretionary Surveillance.\_ The Secretary may require a
tobacco product manufacturer to conduct postmarket surveillance for a
tobacco product of the manufacturer if the Secretary determines that
postmarket surveillance of the tobacco product is necessary to protect
the public health or is necessary to provide information regarding the
health risks and other safety issues involving the tobacco product.

\`\`(b) Surveillance Approval.\_ Each tobacco product manufacturer
required to conduct a surveillance of a tobacco product under subsection
(a) of this section shall, within 30 days after receiving notice that
the manufacturer is required to conduct such surveillance, submit, for
the approval of the Secretary, a protocol for the required surveillance.
The Secretary, within 60 days of the receipt of such protocol, shall
determine if the principal investigator proposed to be used in the
surveillance has sufficient qualifications and experience to conduct
such surveillance and if such protocol will result in collection of
useful data or other information necessary to protect the public health.
The Secretary may not approve such a protocol until it has been reviewed
by an appropriately qualified scientific and technical review committee
established by the Secretary.

\`\`SEC. 913. REDUCED RISK TOBACCO PRODUCTS.

\`\`(a) Requirements .\_

\`\`(1) In general .\_For purposes of this section, the term \`reduced
risk tobacco product\' means a tobacco product designated by the
Secretary under paragraph (2).

\`\`(2) Designation .\_

\`\`(A) In general.\_ A product may be designated by the Secretary as a
reduced risk tobacco product if the Secretary finds that the product
will significantly reduce harm to individuals caused by a tobacco
product and is otherwise appropriate to protect public health, based on
an application submitted by the manufacturer of the product (or other
responsible person) that\_

\`\`(i) demonstrates through testing on animals and short-term human
testing that use of such product results in ingestion or inhalation of a
substantially lower yield of toxic substances than use of conventional
tobacco products in the same category as the proposed reduced risk
product; and

\`\`(ii) if required by the Secretary, includes studies of the long-term
health effects of the product.

If such studies are required, the manufacturer may consult with the
Secretary regarding protocols for conducting the studies.

\`\`(B) Basis for finding.\_ In making the finding under subparagraph
(A), the Secretary shall take into account\_

\`\`(i) the risks and benefits to the population as a whole, including
both users of tobacco products and non-users of tobacco products;

\`\`(ii) the increased or decreased likelihood that existing users of
tobacco products will stop using such products including reduced risk
tobacco products;

\`\`(iii) the increased or decreased likelihood that those who do not
use tobacco products will start to use such products, including reduced
risk tobacco products; and

\`\`(iii) the risks and benefits to consumers from the use of a reduced
risk tobacco product as compared to the use of products approved under
chapter V to reduce exposure to tobacco.

\`\`(3) Marketing requirements .\_A tobacco product may be marketed and
labeled as a reduced risk tobacco product if it\_

\`\`(A) has been designated as a reduced risk tobacco product by the
Secretary under paragraph (2);

\`\`(B) bears a label prescribed by the Secretary concerning the
product\'s contribution to reducing harm to health; and

\`\`(C) complies with requirements prescribed by the Secretary relating
to marketing and advertising of the product, and other provisions of
this chapter as prescribed by the Secretary.

\`\`(b) Revocation of Designation .\_At any time after the date on which
a tobacco product is designated as a reduced risk tobacco product under
this section the Secretary may, after providing an opportunity for an
informal hearing, revoke such designation if the Secretary determines,
based on information not available at the time of the designation,
that\_

\`\`(1) the finding made under subsection (a)(2) is no longer valid; or

\`\`(2) the product is being marketed in violation of subsection (a)(3).

\`\`(c) Limitation .\_A tobacco product that is designated as a reduced
risk tobacco product that is in compliance with subsection (a) shall not
be regulated as a drug or device.

\`\`(d) Development of reduced risk tobacco product Technology .\_A
tobacco product manufacturer shall provide written notice to the
Secretary upon the development or acquisition by the manufacturer of any
technology that would reduce the risk of a tobacco product to the health
of the user for which the manufacturer is not seeking designation as a
\`reduced risk tobacco product\' under subsection (a).

\`\`SEC. 914. PRESERVATION OF STATE AND LOCAL AUTHORITY.

\`\`(a) Additional Requirements .\_

\`\`(1) In general .\_Except as provided in paragraph (2), nothing in
this Act shall be construed as prohibiting a State or political
subdivision thereof from adopting or enforcing a requirement applicable
to a tobacco product that is in addition to, or more stringent than,
requirements established under this chapter.

\`\`(2) Preemption of certain state and local requirements .\_

\`\`(A) Except as provided in subparagraph (B), no State or political
subdivision of a State may establish or continue in effect with respect
to a tobacco product any requirement which is different from, or in
addition to, any requirement applicable under the provisions of this
chapter relating to performance standards, premarket approval,
adulteration, misbranding, registration, reporting, good manufacturing
standards, or reduced risk products.

\`\`(B) Subparagraph (A) does not apply to requirements relating to the
sale, use, or distribution of a tobacco product including requirements
related to the access to, and the advertising and promotion of, a
tobacco product.

\`\`(b) Rule of Construction Regarding Product Liability .\_No provision
of this chapter relating to a tobacco product shall be construed to
modify or otherwise affect any action or the liability of any person
under the product liability law of any State.

\`\`(c) Waivers .\_Upon the application of a State or political
subdivision thereof, the Secretary may, by regulation promulgated after
notice and an opportunity for an oral hearing, exempt from subsection
(a), under such conditions as may be prescribed in such regulation, a
requirement of such State or political subdivision applicable to a
tobacco product if\_

\`\`(1) the requirement is more stringent than a requirement applicable
under the provisions described in subsection (a)(3) which would be
applicable to the tobacco product if an exemption were not in effect
under this subsection; or

\`\`(2) the requirement\_

\`\`(A) is required by compelling local conditions; and

\`\`(B) compliance with the requirement would not cause the tobacco
product to be in violation of any applicable requirement of this
chapter.

\`\`SEC. 915. TOBACCO PRODUCTS SCIENTIFIC ADVISORY COMMITTEE.

\`\`(a) Establishment .\_Not later than 1 year after the date of
enactment of the National Tobacco Policy and Youth Smoking Reduction
Act, the Secretary shall establish a 9-member advisory committee, to be
known as the \`Tobacco Products Scientific Advisory Committee\'.

\`\`(b) Membership .\_

\`\`(1) In general .\_The Secretary shall appoint as members of the
Tobacco Products Scientific Advisory Committee individuals who are
technically qualified by training and experience in the medicine,
medical ethics, science, or technology involving the manufacture,
evaluation, or use of tobacco products, who are of appropriately
diversified professional backgrounds. The committee shall be composed
of\_

\`\`(A) 3 individuals who are officers or employees of a State or local
government, or of the Federal government;

\`\`(B) 2 individuals as representatives of interests of the tobacco
manufacturing industry;

\`\`(C) 2 individuals as representatives of interests of physicians and
other healthcare professionals; and

\`\`(D) 2 individuals as representatives of the general public.

\`\`(2) Limitation .\_The Secretary may not appoint to the Advisory
Committee any individual who is in the regular full-time employ of the
Food and Drug Administration or any agency responsible for the
enforcement of this Act. The Secretary may appoint Federal officials as
ex-officio members.

\`\`(3) Chairperson .\_The Secretary shall designate 1 of the members of
the Advisory Committee to serve as chairperson.

\`\`(c) Duties .\_The Tobacco Products Scientific Advisory Committee
shall provide advice, information, and recommendations to the
Secretary\_

\`\`(1) as provided in this chapter;

\`\`(2) on the effects of the alteration of the nicotine yields from
tobacco products;

\`\`(3) on whether there is a threshold level below which nicotine
yields do not produce dependence on

the tobacco product involved; and

\`\`(4) on its review of other safety, dependence, or health issues
relating to tobacco products as requested by the Secretary.

\`\`(d) Compensation; Support; FACA.\_

\`\`(1) Compensation and travel.\_ Members of the Advisory Committee who
are not officers or employees of the United States, while attending
conferences or meetings of the committee or otherwise engaged in its
business, shall be entitled to receive compensation at rates to be fixed
by the Secretary, which may not exceed the daily equivalent of the rate
in effect for level 4 of the Senior Executive Schedule under section
5382 of title 5, United States Code, for each day (including travel
time) they are so engaged; and while so serving away from their homes or
regular places of business each member may be allowed travel expenses,
including per diem in lieu of subsistence, as authorized by section 5703
of title 5, United States Code, for persons in the Government service
employed intermittently.

\`\`(2) Administrative support.\_ The Secretary shall furnish the
Advisory Committee clerical and other assistance.

\`\`(3) Nonapplication of FACA.\_ Section 14 of the Federal Advisory
Committee Act (5 U.S.C. App. ) does not apply to the Advisory Committee.

\`\`(e) Proceedings of Advisory Panels and Committees.\_ The Advisory
Committee shall make and maintain a transcript of any proceeding of the
panel or committee. Each such panel and committee shall delete from any
transcript made under this subsection information which is exempt from
disclosure under section 552(b) of title 5, United States Code.

\`\`SEC. 916. EQUAL TREATMENT OF RETAIL OUTLETS.

\`\`The Secretary shall issue regulations to require that retail
establishments for which the predominant business is the sale of tobacco
products comply with any advertising restrictions applicable to retail
establishments accessible to individuals under the age of 18.\'\'.

SEC. 102. CONFORMING AND OTHER AMENDMENTS TO GENERAL PROVISIONS.

\(a\) Amendment of Federal Food, Drug, and Cosmetic Act.\_ Except as
otherwise expressly provided, whenever in this section an amendment is
expressed in terms of an amendment to, or repeal of, a section or other
provision, the reference is to a section or other provision of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.).

\(b\) Section 301.\_ Section 301 (21 U.S.C. 331) is amended\_

\(1\) by inserting \`\`tobacco product,\'\' in subsection (a) after
\`\`device,\'\';

\(2\) by inserting \`\`tobacco product,\'\' in subsection (b) after
\`\`device,\'\';

\(3\) by inserting \`\`tobacco product,\'\' in subsection (c) after
\`\`device,\'\';

\(4\) by striking \`\`515(f), or 519\'\' in subsection (e) and inserting
\`\`515(f), 519, or 909\'\';

\(5\) by inserting \`\`tobacco product,\'\' in subsection (g) after
\`\`device,\'\';

\(6\) by inserting \`\`tobacco product,\'\' in subsection (h) after
\`\`device,\'\';

\(7\) by striking \`\`708, or 721\'\' in subsection (j) and inserting
\`\`708, 721, 904, 905, 906, 907, 908, or 909\'\';

\(8\) by inserting \`\`tobacco product,\'\' in subsection (k) after
\`\`device,\'\';

\(9\) by striking subsection (p) and inserting the following:

\`\`(p) The failure to register in accordance with section 510 or 905,
the failure to provide any information required by section 510(j),
510(k), 905(i), or 905(j), or the failure to provide a notice required
by section 510(j)(2) or 905(J)(2).\'\';

\(10\) by striking subsection (q)(1) and inserting the following:

\`\`(q)(1) The failure or refusal\_

\`\`(A) to comply with any requirement prescribed under section 518,
520(g), 906(f), or 908;

\`\`(B) to furnish any notification or other material or information
required by or under section 519, 520(g), 904, 906(f), or 909; or

\`\`(C) to comply with a requirement under section 522 or 912.\'\';

\(11\) by striking \`\`device,\'\' in subsection (q)(2) and inserting
\`\`device or tobacco product,\'\'; and

\(12\) by inserting \`\`or tobacco product\'\' in subsection (r) after
\`\`device\'\' each time that it appears.

\(c\) Section 303.\_ Section 303(f)(1)(A) (21 U.S.C. 333(f)(1)(A))
isamended by inserting \`\`or tobacco products\'\' after
\`\`devices\'\'.

\(d\) Section 304.\_ Section 304 (21 U.S.C. 334) is amended\_

\(1\) by striking \`\`and\'\' before \`\`(D)\'\' in subsection (a)(2);

\(2\) by striking \`\`device.\'\' in subsection (a)(2) and inserting a
comma and \`\`(E) Any adulterated or misbranded tobacco product.\'\';

\(3\) by inserting \`\`tobacco product,\'\' in subsection (d)(1) after
\`\`device,\'\';

\(4\) by inserting \`\`or tobacco product\'\' in subsection (g)(1) after
\`\`device\'\' each place it appears; and

\(5\) by inserting \`\`or tobacco product\'\' in subsection (g)(2)(A)
after \`\`device\'\' each place it appears.

\(e\) Section 702.\_ Section 702(a) (21 U.S.C. 372(a)) is amended\_

\(1\) by inserting \`\`(1)\'\' after \`\`(a)\'\'; and

\(2\) by adding at the end thereof the following:

\`\`(2) For a tobacco product, to the extent feasible, the Secretary
shall contract with the States in accordance with paragraph (1) to carry
out inspections of retailers in connection with the enforcement of this
Act.\'\'.

\(f\) Section 703.\_ Section 703 (21 U.S.C. 373) is amended\_

\(1\) by inserting \`\`tobacco product,\'\' after \`\`device,\'\' each
place it appears; and

\(2\) by inserting \`\`tobacco products,\'\' after \`\`devices,\'\' each
place it appears.

\(g\) Section 704.\_ Section 704 (21 U.S.C. 374) is amended\_

\(1\) by inserting \`\`tobacco products,\'\' in subsection (a)(1)(A)
after \`\`devices,\'\' each place it appears;

\(2\) by inserting \`\`or tobacco products\'\' in subsection (a)(1)(B)
after \`\`restricted devices\'\' each place it appears; and

\(3\) by inserting \`\`tobacco product,\'\' in subsection (b) after
\`\`device,\'\'.

\(h\) Section 705.\_ Section 705(b) (21 U.S.C. 375(b)) is amended
byinserting \`\`tobacco products,\'\' after \`\`devices,\'\'.

\(i\) Section 709.\_ Section 709 (21 U.S. C. 379) is amended by
inserting\`\`or tobacco product\'\' after \`\`device\'\'.

\(j\) Section 801.\_ Section 801 (21 U.S.C. 381) is amended\_

\(1\) by inserting \`\`tobacco products,\'\' after \`\`devices,\'\' in
subsection (a) the first time it appears;

\(2\) by inserting \`\`or subsection (j) of section 905\'\' in
subsection (a) after \`\`section 510\'\'; and

\(3\) by striking \`\`drugs or devices\'\' each time it appears in
subsection (a) and inserting \`\`drugs, devices, or tobacco
products\'\';

\(4\) by inserting \`\`tobacco product,\'\' in subsection (e)(1) after
\`\`device,\'\';

\(2\) by redesignating paragraph (4) of subsection (e) as paragraph (5)
and inserting after paragraph (3), the following:

\`\`(4) Paragraph (1) does not apply to any tobacco product\_

\`\`(A) which does not comply with an applicable requirement of section
907 or 910; or

\`\`(B) which under section 906(f) is exempt from either such section.

This paragraph does not apply if the Secretary has determined that the
exportation of the tobacco product is not contrary to the public health
and safety and has the approval of the country to which it is intended
for export or the tobacco product is eligible for export under section
802.\'\'.

\(k\) Section 802.\_ Section 802 (21 U.S.C. 382) is amended\_

\(1\) by striking \`\`device\_\'\' in subsection (a) and inserting
\`\`device or tobacco product\_\'\';

\(2\) by striking \`\`and\'\' after the semicolon in subsection
(a)(1)(C);

\(3\) by striking subparagraph (C) of subsection (a)(2) and all that
follows in that subsection and inserting the following:

\`\`(C) is a banned device under section 516; or

\`\`(3) which, in the case of a tobacco product\_

\`\`(A) does not comply with an applicable requirement of section 907 or
910; or

\`\`(B) under section 906(f) is exempt from either such section,

is adulterated, misbranded, and in violation of such sections or Act
unless the export of the drug, device, or tobacco product is, except as
provided in subsection (f), authorized under subsection (b), (c), (d),
or (e) of this section or section 801(e)(2) or 801(e)(4). If a drug,
device, or tobacco product described in paragraph (1), (2), or (3) may
be exported under subsection (b) and if an application for such drug or
device under section 505, 515, or 910 of this Act or section 351 of the
Public Health Service Act (42 U.S.C. 262) was disapproved, the Secretary
shall notify the appropriate public health official of the country to
which such drug, device, or tobacco product will be exported of such
disapproval.\'\';

\(4\) by inserting \`\`or tobacco product\'\' in subsection (b)(1)(A)
after \`\`device\'\' each time it appears;

\(5\) by inserting \`\`or tobacco product\'\' in subsection (c) after
\`\`device\'\' and inserting \`\`or section 906(f)\'\' after
\`\`520(g).\'\';

\(6\) by inserting \`\`or tobacco product\'\' in subsection (f) after
\`\`device\'\' each time it appears; and

\(7\) by inserting \`\`or tobacco product\'\' in subsection (g) after
\`\`device\'\' each time it appears.

\(l\) Section 1003.\_ Section 1003(d)(2)(C) (as redesignated by
section101(a)) is amended\_

\(1\) by striking \`\`and\'\' after \`\`cosmetics,\'\'; and

\(2\) inserting a comma and \`\`and tobacco products\'\' after
\`\`devices\'\'.

Subtitle B_Advertising

SEC. 121. ADVERTISING PROVISIONS IN PROTOCOL.

The Protocol shall contain provisions enforceable at law under which
tobacco product manufacturers commit to observe limitations on
advertising that meet the requirements set forth in this subtitle.

SEC. 122. TOBACCO PRODUCT LABELING AND ADVERTISING .

\(a\) In General.\_ The Protocol shall require that no tobacco product
will be sold or distributed in the United States\_

\(1\) unless its advertising and labeling (including the package)\_

\(A\) contain no human image, animal image, or cartoon character;

\(B\) are not outdoor advertising, including advertising in enclosed
stadia and advertising from within a retail establishment that is
directed toward or visible from the outside of the establishment;

\(C\) are accompanied by a disclaimer in the advertising that words such
as \`\`light\'\' or \`\`low tar\'\' describing the product do not render
the product less hazardous than any other tobacco product, in addition
to such other requirements as the Secretary may impose;

\(D\) at the time the advertising or labeling is first used are
submitted to the Secretary so that the Secretary may conduct regular
review of the advertising and labeling;

\(E\) comply with any applicable requirement of the Federal Food, Drug,
and Cosmetic Act, the Federal Cigarette Labeling and Advertising Act,
and any regulation promulgated under either of those Acts;

\(F\) do not appear on the international computer network of both
Federal and non-Federal interoperable packet switches data networks (the
\`\`Internet\'\'), unless such advertising is designed to be
inaccessible in or from the United States to all individuals under the
age of 18 years;

\(G\) use only black text on white background, other than\_

\(i\) those locations where self-service displays are permitted under
subsection 123, if the advertising is not visible from outside the
establishment and is affixed to a wall or fixture in the establishment;
and (ii) advertisements appearing in any publication which the tobacco
product manufacturer, distributor, or retailer demonstrates to the
Secretary is a newspaper, magazine, periodical, or other publication
whose readers under the age of 18 years constitute 15 percent or less of
the total readership as measured by competent and reliable survey
evidence, and that is read by less than 2 million persons under the age
of 18 years as measured by competent and reliable survey evidence;

\(H\) for video formats, use only static black text on a white
background, and any accompanying audio uses only words without music or
sound effects; and

\(I\) for audio formats, use only words without music or sound effects;

\(2\) if a logo, symbol, motto, selling message, recognizable color or
pattern of colors, or any other indicia of product identification of the
tobacco product is contained in a movie, program, or video game for
which a direct or indirect payment has been made to ensure its
placement;

\(3\) if a direct or indirect payment has been made by any tobacco
product manufacturer, distributor, or retailer to any entity for the
purpose of promoting the image or use of the tobacco product through
print or film media that appeals to individuals under the age of 18
years or through a live performance by an entertainment artist that
appeals to such individuals;

\(4\) if a logo, symbol, motto, selling message, recognizable color or
pattern of colors, or any other indicia or product identification
identical to, similar to, or identifiable with the tobacco product is
used for any item (other than a tobacco product) or service marketed,
licensed, distributed or sold or caused to be marketed, licensed,
distributed, or sold by the tobacco product manufacturer or distributor
of the tobacco product;

\(5\) unless its package label and advertising bear the product\'s
established name and a statement of its intended use, as follows:

\(A\) \`\`Cigarettes-A Nicotine Delivery Device\'\';

\(B\) \`\`Cigarette Tobacco-A Nicotine Delivery Device\'\'; or

(C)\`\` Loose Leaf Chewing Tobacco\'\', \`\`Plug Chewing Tobacco\'\',
\`\`Twist Chewing Tobacco\'\', \`\`Moist Snuff\'\', or \`\`Dry
Snuff\'\', whichever is appropriate for the product, followed by \`\`-A
Nicotine Delivery Device\'\'; and

(6)(A) except as provided in subparagraph (B), if advertising or
labeling for such product that is otherwise in accordance with the
requirements of this section bears a tobacco product brand name (alone
or in conjunction with any other word) or any other indicia of tobacco
product identification and is disseminated in a medium other than
newspapers, magazines, periodicals or other publications (whether
periodic or limited distribution), nonpoint-of-sale promotional material
(including direct mail), point-of-sale promotional material, or audio or
video formats delivered at a point-of-sale; but

\(B\) notwithstanding subparagraph (A), advertising or labeling for
cigarettes or smokeless tobacco may be disseminated in a medium that is
not specified in paragraph (1) if the tobacco product manufacturer,
distributor, or retailer notifies the Secretary not later than 30 days
prior to the use of such medium, and the notice describes the medium and
the extent to which the advertising or labeling may be seen by persons
under the age of 18 years.

\(b\) Color Print Ads on Magazines.\_ The Protocol shall also provide
that no tobacco product may be sold or distributed in the United States
if any advertising for that product on the outside back cover of a
magazine appears in any color or combination of colors.

SEC. 123. POINT-OF-SALE RESTRICTIONS.

\(a\) In General.\_ Except as provided in subsection (b), the Protocol
shall provide that no participating tobacco product manufacturer,
distributor, or retailer shall engage in point-of-sale advertising of
any tobacco product in any retail establishment (other than an
establishment that sells only tobacco products) in which an individual
under 18 years of age is present, or permitted to enter, at any time.

\(b\) Permitted POS Locations.\_

\(1\) Placement.\_ A retailer may place 1 point-of-sale advertisement in
or at each retail establishment for its brand or the contracted house
retailer or private label brand of its wholesaler.

\(2\) Size.\_ The display area of any such point-of-sale advertisement
(either individually or in the aggregate) shall not be larger than 576
square inches and shall consist of black letters on white background or
another recognized typography.

\(3\) Proximity to candy.\_ Any such point-of-sale advertisement shall
not be attached to or located within 2 feet of any display fixture on
which candy is displayed for sale.

\(c\) Audio or Video.\_ Any audio or video format permitted under
regulations promulgated by the Secretary may be distributed at the time
of sale of a tobacco product to individuals over the age of 18 years,
but no such format may be played or shown in or at any location where
tobacco products are offered for sale.

\(d\) No Restrictive Covenants.\_ No participating tobacco product
manufacturer or distributor of tobacco products may enter into any
arrangement with a retailer that limits the retailer\'s ability to
display any form of advertising or promotional material originating with
another supplier and permitted by law to be displayed in a retail
establishment.

\(e\) Definitions.\_ As used in this section, the terms
\`\`point-of-sale advertisement\'\' and \`\`point-of-sale
advertising\'\' mean all printed or graphical materials bearing the
brand name (alone or in conjunction with any other word), logo, symbol,
motto, selling message, or any other indicia of product identification
identical or similar to, or identifiable with, those used for any brand
of cigarettes or smokeless tobacco, which, when used for its intended
purpose, can reasonably be anticipated to be seen by customers at a
location where tobacco products are offered for sale.

TITLE II_REDUCTIONS IN UNDERAGE TOBACCO USE

Subtitle A_Underage Use

SEC. 201. GOALS FOR REDUCING UNDERAGE TOBACCO USE.

\(a\) Goals.\_ As part of a comprehensive national tobacco control
policy, the Secretary, working in cooperation with State, Tribal, and
local governments and the private sector, shall take all actions under
this Act necessary to ensure that the required percentage reductions in
underage use of tobacco products set forth in this title are achieved.

\(b\) Required Reductions for Cigarettes.\_ With respect to cigarettes,
the required percentage reduction in underage use, as set forth in
section 202, means\_

I95

Calendar Year After Date of Enactment Required Percentage Reduction as a
Percentage of Base Incidence Percentage in Underage Cigarette Use

Years 3 and 4 15 percent

Years 5 and 6 30 percent

Years 7, 8, and 9 50 percent

Year 10 and thereafter 60 percent

\(c\) Required Reductions for Smokeless Tobacco.\_ With respect to
smokeless tobacco products, the required percentage reduction in
underage use, as set forth in section 202, means\_

I95

Calendar Year After Date of Enactment Required Percentage Reduction as a
Percentage of Base Incidence Percentage in Underage Smokeless Tobacco
Use

Years 3 and 4 12.5 percent

Years 5 and 6 25 percent

Years 7, 8, and 9 35 percent

Year 10 and thereafter 45 percent

SEC. 202. LOOK-BACK ASSESSMENT.

\(a\) Determination of Underage Use.\_ Upon the conclusion of the third
calendar year after the date of enactment of this Act, and annually
thereafter, the Secretary shall determine the percent incidence of
underage use of cigarettes and of smokeless tobacco by calculating the
average, weighted by relative population of such age groups in 1995 as
determined by the Bureau of the Census, of the percentages of
individuals in grade 12 (ages 16 and 17), in grade 10 (ages 14 and 15),
and in grade 8 (age 13) who used cigarettes or smokeless tobacco, as
appropriate, on a daily basis during the preceding calendar year. The
percentages used in this calculation are to be those measured by (1) the
University of Michigan Survey, or (2) such comparable index using
identical methodology as is chosen by the Secretary after notice and the
opportunity for comment in accordance with section 553 of title 5,
United States Code. If the methodology employed by the University of
Michigan Survey is changed in a material manner from that employed from
1986 through 1996 (including changes in the States or regions on which
the University of Michigan Survey is based), or is (in the opinion of
the Secretary) no longer the best available data, the Secretary shall
use the percentages measured by an index chosen by the Secretary, after
notice and the opportunity for comment in accordance with section 553 of
title 5, United States Code, that has a methodology identical to that
employed by the University of Michigan Survey from 1986 through 1996.
The Secretary shall makethe data on which the results of the University
of Michigan Survey or such other comparable index are based available to
the public upon request.

\(b\) Calculation of Non-attainment Penalties.\_

\(1\) Secretary to determine non-attainment percentage.\_ The Secretary
shall determine the non-attainment percentage for cigarettes and for
smokeless tobacco for each calendar year.

\(2\) Non-attainment penalty for cigarettes.\_ For each calendar year in
which the percentage reduction in underage use required by section
201(b) is not attained, the Secretary shall assess a penalty on
cigarette manufacturers as follows:I95

If the non-attainment percentage is: The penalty is:

Not more than 5 percent \$80,000,000 multiplied by the non-attainment
percentage

More than 5% but not more than 10% \$400,000,000, plus \$160,000,000
multiplied by the non-attainment percentage in excess of 5% but not in
excess of 10%

More than 10% but not more than 20% \$1,200,000,000, plus \$240,000,000
multiplied by the non-attainment percentage in excess of 10% but not in
excess of 20%

More than 20% \$3,500,000,000

\(3\) Non-attainment penalty for smokeless tobacco.\_ For each year in
which the percentage reduction in underage use required by section
201(c) is not attained, the Secretary shall assess a penalty on
smokeless tobacco product manufacturers as follows:

I95

If the non-attainment percentage is: The penalty is:

Not more than 5 percent \$8,000,000 multiplied by the non-attainment
percentage

More than 5% but not more than 10% \$40,000,000, plus \$16,000,000
multiplied by the non-attainment percentage in excess of 5% but not in
excess of 10%

More than 10% but not more than 20% \$120,000,000, plus \$24,000,000
multiplied by the non-attainment percentage in excess of 10% but not in
excess of 20%

More than 20% \$350,000,000

\(4\) Penalties to be adjusted for inflation.\_

\(A\) In general.\_ Beginning with the fourth calendar year after the
date of enactment of this Act, each dollar amount in the tables in
paragraphs (2) and (3) shall be increased by the inflation adjustment.

\(B\) Inflation adjustment.\_ For purposes of subparagraph (A), the
inflation adjustment for any calendar year is the percentage (if any) by
which\_

\(i\) the CPI for the preceding calendar year, exceeds

\(ii\) the CPI for the calendar year 1998.

\(C\) CPI.\_ For purposes of subparagraph (B), the CPI for any calendar
year is the average of the Consumer Price Index for all-urban consumers
published by the Department of Labor.

\(D\) Rounding.\_ If any increase determined under subparagraph (A) is
not a multiple of \$1,000, the increase shall be rounded to the nearest
multiple of \$1,000.

\(c\) Joint, Several, and Strict Obligation for Penalties.\_

\(1\) Cigarette manufacturers.\_ Any penalty due and payable by
cigarette manufacturers shall be the joint, several, and strict
obligation of such manufacturers.

\(2\) Smokeless tobacco.\_ Any penalty payable by smokeless tobacco
product manufacturers shall be the joint, several, and strict obligation
of such manufacturers.

\(d\) Exemptions for Small Manufacturers.\_

\(1\) Allocation by market share.\_ The Secretary shall make such
allocations according to each manufacturer\'s share of the domestic
cigarette or domestic smokeless tobacco market, as appropriate, in the
year for which the penalty is being assessed, based on actual Federal
excise tax payments.

\(2\) Exemption.\_ In any year in which a penalty is being assessed, the
Secretary shall exempt from payment any tobacco product manufacturer
with less than 1 percent of the domestic market share for a specific
category of tobacco product unless the Secretary finds that the
manufacturer\'s brands used by underage individuals at a rate equal to
or greater than the manufacturer\'s total market share for the type of
tobacco product.

\(e\) Method of Penalty Assessment.\_ The Secretary shall assess a
penalty for a specific calendar year on or before May 1 of the
subsequent calendar year. Penalty payments shall be paid on or before
July 1 of the year in which they are assessed. The Secretary may
establish, by regulation, interest at a rate up to 3 times the
prevailing prime rate at the time the penalty is assessed, and
additional charges in an amount up to 3 times the penalty, for late
payment of the penalty.

\(f\) Business Expense Deduction.\_ Any penalty paid by a tobacco
product manufacturer under this section shall not be deductible as an
ordinary and necessary business expense or otherwise under the Internal
Revenue Code of 1986.

\(g\) Penalty Liability Among Manufacturers.\_

\(1\) In general.\_ The District Courts of the United States shall have
jurisdiction to adjudicate any claim brought under this section by a
tobacco product manufacturer against one or more other tobacco product
manufacturers\_

\(A\) to recover a portion of the penalty paid by the plaintiff
manufacturer; or

\(B\) for a reallocation of the penalty among tobacco product
manufacturers.

\(2\) Contribution or reimbursement liability.\_ A tobacco product
manufacturer shall be liable under this subsection to one or more other
manufacturers if the plaintiff tobacco product manufacturer establishes
by a preponderance of the evidence that the defendant tobacco product
manufacturer, through its acts or omissions, was responsible for a
disproportionate share of the non-attainment penalty as compared to the
responsibility of the plaintiff manufacturer, as contemplated in
subsection (c)(3).

\(3\) Responsibility for agents, etc.\_ In any action brought under this
subsection, a tobacco product manufacturer shall be held responsible for
any act or omission of its attorneys, advertising agencies, or other
agents that contributed to that manufacturer\'s responsibility for the
penalty assessed under this section.

SEC. 203. SUBSTANTIAL NON-ATTAINMENT OF REQUIRED REDUCTIONS.

\(a\) Action by Secretary.\_

\(1\) In general.\_ If the Secretary determines that the non-attainment
percentage for any year is greater than 20 percentage points for
cigarettes or smokeless tobacco, then the Secretary shall determine, on
a brand-by-brand basis, using data that reflects a 1999 baseline, which
tobacco product manufacturers are responsible within the 2 categories of
tobacco products for the excess. The Secretary may commence an action
under this section against the tobacco product manufacturer or
manufacturers of the brand or brands of cigarettes or smokeless tobacco
products for which the non-attainment percentage exceeded 20 percentage
points.

\(2\) Determination.\_ The Secretary shall use research methodology that
is similar to, or the same as, that used in the University of Michigan
Survey, except\_

\(A\) the methodology shall be adapted to determining underage usage by
brand; and

\(B\) the base period shall be calendar year 1999.

\(b\) Procedures.\_ Any action under this section shall be commenced by
the Secretary in the United States District Court for the District of
Columbia within 90 days after publication in the Federal Register of the
determination that the non-attainment percentage for the tobacco product
in question is greater than 20 percentage points. Any such action shall
be heard and determined by a 3-judge court under section 2284 of title
28, United States Code.

\(c\) Determination by Court.\_ In any action under this section, the
court shall determine whether the preponderance of the evidence shows
that a tobacco product manufacturer\_

\(1\) has failed to comply substantially with the provisions of this Act
regarding underage tobacco use, of any rules or regulations promulgated
thereunder, or of any Federal or State laws regarding underage tobacco
use;

\(2\) has taken any material action to undermine the achievement of the
required percentage reduction for the tobacco product in question; or

\(3\) has failed to comply with all recommendations of the Tobacco
Agreement Accountability Panel established under section 801.

\(d\) Removal of Annual Aggregate Payment Limitation.\_ Except as
provided in subsections (e) and (g), if the court determines that the
preponderance of the evidence shows that a tobacco product manufacturer
engaged in conduct described in subsection (c) then section 706(c) of
this Act does not apply to the enforcement against, or the payment by,
such tobacco product manufacturer of any judgment or settlement that
becomes final after that determination is made. The liability
apportionment agreement described in section 706(e) of this Act shall
not require that other tobacco product manufacturers pay an increased
amount in any year over the amount they would have had to pay but for
this section.

\(e\) Defense.\_ An action under this section shall be dismissed, and
subsection (d) shall not apply, if the court finds that the Secretary\'s
determination under subsection (a) was unlawful under subparagraph (A),
(B), (C), or (D) of section 706(2) of title 5, United States Code. Any
judgments paid under section 706(c) of this Act and section (1)(d)(3) of
the Protocol prior to a final judgment determining that the Secretary\'s
determination was erroneous shall be fully credited, with interest,
under section 707(e) of this Act and section (1)(d)(3) of the Protocol.

\(f\) Review.\_ Decisions of the court under this section are reviewable
only by the Supreme Court by writ of certiorari granted upon the
petition of any party. The applicability of subsection (d) shall be
stayed during the pendency of any such petition or review.

\(g\) Continuing Effect.\_ Subsection (d) shall cease to apply to a
tobacco product manufacturer found to have engaged in conduct described
in subsection (c) upon the later of\_

\(1\) a determination by the Secretary under section 201 after the
commencement of action under subsection (a) that the non-attainment
percentage for the tobacco product in question is 20 or fewer percentage
points; or

\(2\) a finding by the court in an action filed against the Secretary by
the manufacturer, not earlier than 2 years after the determination
described in subsection (c) becomes final, that the preponderance of the
evidence shows that, in the period since that determination, the
manufacturer\_

\(A\) has complied with the provisions of this Act regarding underage
tobacco use, of any rules or regulations promulgated thereunder, and of
any other applicable Federal, State, or local laws, rules, or
regulations;

\(B\) has not taken any action to undermine the achievement of the
required percentage reduction for the tobacco product in question; and

\(C\) has pursued substantial additional measures reasonably calculated
to attain the required percentage reduction for the tobacco product in
question.

A judgment or settlement against the tobacco product manufacturer that
becomes final after a determination or finding described in paragraph
(1) or (2) of this subsection is not subject to subsection (d). An
action under paragraph (2) of this subsection shall be commenced in the
United States District Court for the District of Columbia, and shall be
heard and determined by a 3-judge court under section 2284 of title 28,
United States Code. A decision by the court under paragraph (2) of this
subsection is reviewable only by the Supreme Court by writ of certiorari
granted upon the petition of any party, and the decision shall be stayed
during the pendency of the petition or review. A determination or
finding described in paragraph (1) or (2) of this subsection does not
limit the Secretary\'s authority to bring a subsequent action under this
section against any tobacco product manufacturer or the applicability of
subsection (d) with respect to any such subsequent action.

\(h\) Definitions.\_ The definitions set forth in section 701 of this
Act apply to terms used in this section. A judgment or settlement
becomes final within the meaning of this section when it would qualify
as a final judgment or final settlement under section 701.

SEC. 204. DEFINITIONS.

As used in this subtitle\_

\(1\) The term \`\`base incidence percentage\'\' means\_

\(A\) in the case of cigarettes, the average, weighted by relative
population of the following age groups in 1995 as determined by the
Bureau of the Census, of (i) the average of the percentages of
individuals in grade 12 (ages 16 and 17) from 1986 to 1996 who used
cigarettes on a daily basis; (ii) the average of the percentages of
individuals in grade 10 (ages 14 and 15) from 1991 to 1996 who used
cigarettes on a daily basis; and (iii) the average of the percentages of
individuals in grade 8 (age 13) from 1991 to 1996 who used cigarettes on
a daily basis; and

\(B\) in the case of smokeless tobacco products, the average, weighted
by relative population of the following age groups in 1995 as determined
by the Bureau of the Census, of the percentage of individuals in grade
12 (ages 16 and 17), individuals in grade 10 (ages 14 and 15), and
individuals in grade 8 (age 13) who used smokeless tobacco products on a
daily basis in 1996.

The percentages specified in this paragraph are those measured by the
University of Michigan Survey or by such comparable index using
identical methodology as is chosen by the Secretary after notice and the
opportunity for comment in accordance with section 553 of title 5,
United States Code.

\(2\) The term \`\`cigarette manufacturers\'\' means manufacturers of
cigarettes sold in the United States.

\(3\) The term \`\`non-attainment percentage for cigarettes\'\' means
the number of percentage points yielded\_

\(A\) for a calendar year in which the percent incidence of underage use
of cigarettes is less than the base incidence percentage, by
subtracting\_

\(i\) the percentage by which the percent incidence of underage use of
cigarettes in that year is less than the base incidence percentage, from

\(ii\) the required percentage reduction applicable in that year; and

\(B\) for a calendar year in which the percent incidence of underage use
of cigarettes is greater than the base incidence percentage, adding\_

\(i\) the percentage by which the percent incidence of underage use of
cigarettes in that year is greater than the base incidence percentage;
and

\(ii\) the required percentage reduction applicable in that year.

\(4\) The term \`\`non-attainment percentage for smokeless tobacco
products\'\' means the number of percentage points yielded\_

\(A\) for a calendar year in which the percent incidence of underage use
of smokeless tobacco products is less than the base incidence
percentage, by subtracting\_

\(i\) the percentage by which the percent incidence of underage use of
smokeless tobacco products in that year is less than the base incidence
percentage, from

\(ii\) the required percentage reduction applicable in that year; and

\(B\) for a calendar year in which the percent incidence of underage use
of smokeless tobacco products is greater than the base incidence
percentage, by adding\_

\(i\) the percentage by which the percent incidence of underage use of
smokeless tobacco products in that year is greater than the base
incidence percentage; and

\(ii\) the required percentage reduction applicable in that year.

\(5\) The term \`\`smokeless tobacco product manufacturers\'\' means
manufacturers of smokeless tobacco products sold in the United States.

\(6\) The term \`\`University of Michigan Survey\'\' means the
University of Michigan\'s National High School Drug Use Survey entitled
\`\`Monitoring the Future\'\'.

Subtitle B_State Enforcement Incentives

SEC. 211. COMPLIANCE BONUS FUND.

\(a\) Establishment.\_ There is established within the National Tobacco
Settlement Trust Fund established by section 401 a separate account to
be known as the Compliance Bonus Account for States and Retailers. There
are authorized to be appropriated from such account such amounts as may
be necessary to carry out the provisions of this subtitle.

\(b\) Credits to Account.\_ For each fiscal year there shall be credited
to the Account an amount equal to\_

\(1\) 5 percent of the amounts credited to the National Tobacco
Settlement Trust Fund under section 401(b)(3); and

\(2\) any amounts withheld under section 213.

SEC. 212. BLOCK GRANTS.

\(a\) In General.\_ The Secretary shall award block grants to States
determined to be eligible under subsection (b).

\(b\) Eligible States.\_ To be eligible to receive a grant under
subsection (a), a State shall\_

\(1\) prepare and submit to the Secretary an application, at such time,
in such manner, and containing such information as the Secretary may
require; and

\(2\) with respect to the year involved, demonstrate to the satisfaction
of the Secretary that fewer than 5 percent of all individuals under 18
years of age who attempt to purchase tobacco products in the State in
such year are successful in such purchase.

\(c\) Payout; Use of Funds.\_

\(1\) Annual distribution.\_ For each fiscal year in which one or more
States is eligible to receive a grant under this section, the Secretary
shall pay out the balance in the account established under section
211(a) as of the end of the preceding fiscal year.

\(2\) Payment to State.\_ If more than one State is eligible to receive
a grant under this section for any fiscal year, the amount payable for
that fiscal year shall be apportioned among such eligible States on the
basis of population.

\(3\) Use of funds.\_ Each State that receives a grant under this
section shall distribute half of the amount received among retail
outlets of tobacco products that, for fiscal year for which the State
met the requirements of subsection (b), have outstanding records of
compliance with the restrictions on underage sales of tobacco products.

SEC. 213. STATE ENFORCEMENT INCENTIVES.

\(a\) In General.\_

\(1\) Activities and reports regarding enforcement.\_ A State shall\_

\(A\) conduct monthly random, unannounced inspections of sales or
distribution outlets in the State to ensure compliance with a law
prohibiting sales of tobacco products to individuals under 18 years of
age;

\(B\) annually submit to the Secretary a report describing\_

\(i\) the activities carried out by the State to enforce underage access
laws during the fiscal year; and

\(ii\) the extent of success the State has achieved in reducing the
availability of tobacco products to individuals under the age of 18
years; and

(C)(i) a detailed description of how the inspections described in
subparagraph (A) were conducted and the methods used to identify
outlets, with appropriate protection for the confidentiality of
information regarding the timing of inspections and other investigative
techniques whose effectiveness depends on continued confidentiality;

\(ii\) the identity of the single State agency designated by the
Governor of the State to be responsible for the implementation of the
requirements of this section.

\(2\) Minimum inspection schedule.\_ In order to meet the requirements
of paragraph (1)(A), inspections conducted by the State shall include at
least 250 random, unannounced inspections of retail sale outlets
annually for each 1,000,000 persons resident in the State, as most
recently determined by the Bureau of the Census. Such inspections shall
cover a range of outlets (not preselected on the basis of prior
violations) to measure overall levels of compliance as well as to
identify violations, and shall be conducted to provide a probability
sample of outlets. The sample must reflect the distribution of the
population under the age of 18 years throughout the State and the
distribution of the outlets throughout the State accessible to youth.
Indian tribes shall conduct such inspections monthly of at least 1
retail outlet subject to their jurisdiction for each 4,000 reservation
residents. Except as provided in this paragraph, any reports required by
this paragraph shall be made public. As used in this paragraph, the term
\`\`outlet\'\' refers to any location that sells at retail or otherwise
distributes tobacco products to consumers, including to locations that
sell such products over-the-counter.

\(b\) Noncompliance.\_

\(1\) Inspections.\_ The Secretary shall withhold from any State that
fails to meet the requirements of subsection (a) in any calendar year an
amount equal to an amount equal to 5 percent of the amount otherwise
payable under this subtitle to that State for the next fiscal year.

\(2\) Compliance rate.\_ The Secretary shall withhold from any State
that fails to demonstrate a compliance rate of\_

\(A\) at least 75 percent in the fifth and sixth fiscal years after the
date of enactment of the National Tobacco Policy and Youth Smoking Act;

\(B\) at least 85 percent in the seventh, eighth, and ninth fiscal years
after such date; and

\(C\) at least 90 percent in every fiscal year beginning with the tenth
fiscal year after such date,

an amount equal to one percentage point for each percentage point by
which the State failed to meet the percentage set forth in this
subsection for that year from the amount otherwise payable under this
subtitle for that fiscal year.

\(c\) Definition.\_ For the purposes of this section, the term \`\`first
applicable fiscal year\'\' means the first fiscal year beginning after
the fiscal year in which funding is made available to the States under
this section.

\(f\) Release and Disbursement.\_

\(1\) Upon notice from the Secretary that an amount payable under
section 202(e) has been ordered withheld under subsection (b), a State
may petition the Secretary for a release and disbursement of up to 75
percent of the amount withheld, and shall give timely written notice of
such petition to the attorney general of that State and to all tobacco
product manufacturers.

\(2\) The agency shall conduct a hearing on such a petition, in which
the attorney general of the State and tobacco product manufacturers may
participate and be heard.

\(3\) The burden shall be on the State to prove, by a preponderance of
the evidence, that the release and disbursement should be made. The
Secretary\'s decision on whether to grant such a release, and the amount
of any such disbursement, shall be based on whether\_

\(A\) the State has acted in good faith and in full compliance with this
Act, and any rules or regulations promulgated under this Act;

\(B\) the State has pursued all reasonably available measures to attain
the compliance rates and required percentage reductions applicable in
the year for which the release is being sought;

\(C\) there is evidence of any direct or indirect action by the State to
undermine the achievement of the compliance rates, the required
percentage reductions, or other terms and objectives of this Act or the
National Tobacco Policy and Youth Smoking Reduction Act; and

\(D\) any other relevant evidence.

\(4\) A State shall be entitled to interest on any withheld amount
released at the average United States 52-Week Treasury Bill rate for the
period between the withholding of the amount and its release.

\(5\) Any State attorney general or tobacco product manufacturer
aggrieved by a final decision on a petition filed under this subsection
may seek judicial review of such decision within 30 days in the United
States Court of Appeals for the District of Columbia Circuit. Unless
otherwise specified in this Act, judicial review under this section
shall be governed by sections 701 through 706 of title 5, United States
Code.

\(6\) No stay or other injunctive relief enjoining a reduction in a
State\'s allotment pending appeal or otherwise may be granted by the
Secretary or any court.

SEC. 214. CONFORMING CHANGE.

Section 1926 of the Public Health Service Act (42 U.S.C. 300x_26) is
hereby repealed.

Subtitle C_Other Programs

SEC. 221. NATIONAL SMOKING CESSATION PROGRAM.

\(a\) Establishment .\_The Secretary shall establish a program to be
known as the \`\`National Smoking Cessation Program\'\' under which the
Secretary may award grants to eligible public and nonprofit entities and
individuals for tobacco product use cessation purposes.

\(b\) Eligibility .\_

\(1\) Of entities .\_To be eligible to receive a grant under this
section an entity shall\_

\(A\) be a public or nonprofit private entity, including community
health centers and other community-based organizations with a focus on
low-income populations;

\(B\) prepare and submit to the Secretary an application at such time,
in such manner, and containing such information as the Secretary may
require;

\(C\) provide assurances that amounts received under the grant will be
used in accordance with subsection (c)(1); and

\(D\) meet any other requirements determined appropriate by the
Secretary.

\(2\) Of individuals .\_To be eligible to receive a grant under this
section an individual shall\_

\(A\) prepare and submit to the Secretary an application at such time,
in such manner, and containing such information as the Secretary may
require;

\(B\) provide assurances that amounts received under the grant will be
used only in accordance with subsection (c)(2); and

\(C\) meet any other requirements determined appropriate by the
Secretary.

\(c\) Use of Funds .\_

\(1\) By entities .\_An entity that receives a grant under this section
shall use amounts provided under the grant to establish or administer
tobacco product use cessation programs that are approved in accordance
with subsection (d).

\(2\) By individuals .\_An individual who receives a grant under this
section shall use amounts provided under the grant to enroll in a
tobacco product use cessation program or to purchase a tobacco product
use cessation product that has been approved in accordance with
subsection (d). Grants to individuals under this section may be in the
form of vouchers that may be used to pay the costs of enrollment in an
approved program or to purchase an approved product.

\(d\) Approval of Cessation Program or Devices .\_Using the best
available scientific information, the Secretary shall promulgate
regulations to provide for the approval of tobacco product use cessation
programs and drugs, human biological products, or medical devices
approved by the Food and Drug Administration or otherwise legally
marketed under the Federal Food, Drug, and Cosmetic Act (21 U.S. C. 301
et seq.) or under the Public Health Service Act (42 U.S.C. 201 et seq.)
for use as smoking cessation therapies or aids. The regulations shall
ensure that tobacco product users\_

\(1\) have reasonable access upon request to such comprehensive tobacco
use cessation programs and drugs, human biological products, or medical
devices; and

\(2\) have access to a broad range of cessation options that are
tailored to the needs of the individual tobacco user.

\(e\) Minority Focus.\_ The Secretary shall ensure smoking cessation
programs are directed to include minority populations in proportion to
their prevalence in the smoking population, and are linguistically and
culturally appropriate for such populations.

\(f\) Funding .\_There are authorized to be appropriated from the
National Tobacco Settlement Trust Fund, other than from amounts in the
State Litigation Settlement Account, such sums as may be necessary to
carry out this section.

SEC. 222. NATIONAL TOBACCO-FREE PUBLIC EDUCATION PROGRAM.

\(a\) Establishment of Board .\_

\(1\) In general .\_The Secretary shall establish an independent board
to be known as the \`\`Tobacco-Free Education Board\'\' (referred to in
this section as the \`\`Board\'\') to enter into contracts with or award
grants to eligible public and nonprofit private entities to carry out
public informational and educational activities designed to reduce the
use of tobacco products.

\(2\) Appointment .\_The Board shall be composed of 9 members to be
appointed by the Secretary, of whom\_

\(A\) at least 3 such members shall be individuals who are widely
recognized by the general public for achievement in the athletic,
cultural, entertainment, educational, business, or political field; and

\(B\) at least 3 such members shall be individuals who are heads of
major public health organizations.

\(3\) Terms and vacancies .\_The members of the Board shall serve
staggered terms as determined appropriate at the time of appointment by
the Secretary. A vacancy in the Board shall not affect its powers, but
shall be filled in the same manner as the original appointment.

\(4\) Powers .\_

\(A\) Hearings .\_The Board may hold such hearings, sit and act at such
times and places, take such testimony, and receive such evidence as the
Board considers advisable to carry out the purposes of this section.

\(B\) Information from federal agencies .\_The Board may secure directly
from any Federal department or agency such information as the Board
considers necessary to carry out the provisions of this section.

\(5\) Personnel matters .\_

\(A\) Compensation .\_Each member of the Board who is not an officer or
employee of the Federal Government shall be compensated at a rate equal
to the daily equivalent of the annual rate of basic pay prescribed for
level IV of the Executive Schedule under section 5315 of title 5, United
States Code, for each day (including travel time) during which such
member is engaged in the performance of the duties of the Board. All
members of the Board who are officers or employees of the United States
shall serve without compensation in addition to that received for their
services as officers or employees of the United States.

\(B\) Travel expenses .\_The members of the Board shall be allowed
travel expenses, including per diem in lieu of subsistence, at rates
authorized for employees of agencies under subchapter I of chapter 57 of
title 5, United States Code, while away from their homes or regular
places of business in the performance of services for the Board.

\(b\) Establishment of Program .\_The Secretary shall establish a
program to be known as the \`\`National Tobacco-Free Public Education
Program\'\' under which the Board may enter into contracts with or award
grants to eligible public and nonprofit private entities to carry out
public informational and educational activities designed to reduce the
use of tobacco products.

\(c\) Eligibility.\_ To be eligible to receive a grant under this
section an entity shall\_

\(1\) be a\_

\(A\) public entity or a State; or

\(B\) nonprofit private entity that\_

\(i\) is not affiliated with a tobacco product manufacturer or importer;

\(ii\) has a demonstrated record of working effectively to reduce
tobacco product use; and

\(iii\) has expertise in conducting a multi-media communications
campaign, including proven effective campaigns for minority populations;

\(2\) prepare and submit to the Secretary an application at such time,
in such manner, and containing such information as the Secretary may
require, including a description of the activities to be conducted using
amounts received under the grant or contract;

\(3\) provide assurances that amounts received under the grant will be
used in accordance with subsection (d); and

\(4\) provide assurances to the Secretary that\_

\(A\) the entity will annually report to the Secretary on the
effectiveness of the approaches implemented including approaches related
to high risk and minority populations;

\(B\) adequate records will be maintained with respect to such
assistance;

\(C\) amounts provided to individuals or entities will be subject to
independent audit; and

\(D\) activities of private entities or individuals will be coordinated
with State and local public health officials in the planning and
implementation of the program; and

\(5\) meet any other requirements determined appropriate by the
Secretary.

\(d\) Use of Funds.\_ An entity that receives a grant or contract under
this section shall use amounts provided under the grant or contract to
conduct multi-media public educational or information campaigns that are
designed to discourage and de-glamorize the use of tobacco products.
Such campaigns shall be designed to discourage the initiation of tobacco
use by minors and other populations and encourage those using such
products to quit. These campaigns shall include\_

\(1\) school-based programs that are focused on those regions of the
State with high smoking rates and targeted at populations most at risk
to start smoking;

\(2\) Statewide college and university based education program to
discourage individuals between the ages of 18 and 24 from beginning to
on colleges or universities with high smoking rates; or

\(3\) community-based prevention programs that are focused on those
populations within the community including minority populations, in
proportion to their prevalence in the smoking population that are most
at-risk to use tobacco products or that have been targeted by tobacco
advertising or marketing.

\(e\) Needs of Certain Populations.\_ In awarding grants and contracts
under this section, the Board shall take into consideration the needs of
particular populations, including using methods that are proven and
effective and are culturally and linguistically appropriate.

\(f\) Funding .\_There are authorized to be appropriated from the
National Tobacco Settlement Trust Fund, other than from amounts in the
State Litigation Settlement Account, such sums as may be necessary to
carry out this section.

SEC. 223. NATIONAL COMMUNITY ACTION PROGRAM.

\(a\) Establishment .\_The Secretary shall establish a program to be
known as the \`\`National Community Action Program\'\' under which the
Secretary may award grants to eligible State and local governmental
entities to carry out community-based tobacco control efforts that are
designed to encourage community involvement in reducing tobacco product
use.

\(b\) Eligibility .\_To be eligible to receive a grant under this
section an entity shall\_

\(1\) be a State or local public entity;

\(2\) prepare and submit to the Secretary an application at such time,
in such manner, and containing such information as the Secretary may
require;

\(3\) provide assurances that amounts received under the grant will be
used in accordance with the purposes of this section; and

\(4\) meet any other requirements determined appropriate by the
Secretary.

\(c\) Funding .\_There are authorized to be appropriated from the
National Tobacco Settlement Trust Fund, other than from amounts in the
State Litigation Settlement Account, such sums as may be necessary to
carry out this section.

SEC. 224. STATE RETAIL LICENSING PROGRAM.

\(a\) General Requirements.\_

\(1\) Establishment of Program.\_ The Secretary shall provide a block
grant under this Act to each State that has in effect a law that\_

\(A\) provides for the licensing of entities engaged in the sale or
distribution of tobacco products directly to consumers; and

\(B\) meets the standards described in this section.

\(2\) State agreement required.\_ In order to receive a block grant
under this section, a State\_

\(A\) shall enter into an agreement with the Secretary to assume
responsibilities for the implementation and enforcement of a tobacco
retailer licensing program;

\(B\) shall ensure compliance with the Youth Access Restrictions
regulations promulgated by the Secretary (21 C.F.R. 897.1 et seq.); and

\(C\) shall establish to the satisfaction of the Secretary that it has a
law or regulation that includes the following:

\(i\) Licensure and notice.\_ A State license is required for each
retail establishment involved in the sale or distribution of tobacco
products to consumers. The State has a program under which notice is
provided to such establishments and their employees of all licensing
requirements and responsibilities under State and Federal law relating
to the retail distribution of tobacco products.

\(ii\) Penalties.\_

\(I\) Criminal.\_ Criminal penalties are provided for the sale or
distribution of tobacco products to a consumer without a license.

\(II\) Civil.\_ Civil penalties are provided for the sale or
distribution of tobacco products in violation of State law, that include
graduated fines and suspension or revocation of licenses, for repeated
violations.

\(III\) Other.\_ There are other programs in place, including such
measures as fines, suspension of driver\'s license privileges, or
community service requirements, for underage youths who possess,
purchase, or attempt to purchase tobacco products.

\(iii\) Judicial review.\_ Judicial review procedures are in place for
an action of the State suspending, revoking, denying, or refusing to
renew any license under its program.

\(b\) Enforcement.\_ Each State that receives a grant under this section
shall undertake to enforce compliance with its tobacco retailing
licensing program in a manner that can reasonably be expected to reduce
the sale and distribution of tobacco products to individuals under 18
years of age. If the Secretary determines that a State is not enforcing
the law in accordance with such an undertaking, the Secretary may
withhold a portion of any unobligated funds under this section otherwise
payable to that State.

\(c\) Non-participating States Licensing Requirements.\_ For retailers
in States which have not established a licensing program under
subsection (a), the Secretary may promulgate regulations establishing a
Federal retail licensing program for retailers engaged in tobacco sales
to consumers in those States. The Secretary may enter into agreements
with States for the enforcement of those regulations. A State that
enters into such an agreement shall receive a grant under this section
to reimburse it for costs incurred in carrying out that agreement.

TITLE III_TOBACCO PRODUCT WARNINGS AND SMOKE CONSTITUENT DISCLOSURE

Subtitle A_Product Warnings, Labeling and Packaging

SEC. 301. CIGARETTE LABEL AND ADVERTISING WARNINGS.

Section 4 of the Federal Cigarette Labeling and Advertising Act (15
U.S.C. 1333) is amended to read as follows:

\`\`SEC. 4. LABELING.

\`\`(a) Label Requirements.\_

\`\`(1) In general.\_ It shall be unlawful for any person to
manufacture, package, or import for sale or distribution within the
United States any cigarettes the package of which fails to bear, in
accordance with the requirements of this section, one of the following
labels:

\`\`WARNING: Cigarettes are addictive\'\'

\`\`WARNING: Tobacco smoke can harm your children\'\'

\`\`WARNING: Cigarettes cause fatal lung disease\'\'

\`\`WARNING: Cigarettes cause cancer\'\'

\`\`WARNING: Cigarettes cause strokes and heart disease\'\'

\`\`WARNING: Smoking during pregnancy can harm your baby\'\'

\`\`WARNING: Smoking can kill you\'\'

\`\`WARNING: Tobacco smoke causes fatal lung disease in non-smokers\'\'

\`\`WARNING: Quitting smoking now greatly reduces serious risks to your
health\'\'

\`\`(2) Placement; typography; etc..\_

\`\`(A) In general.\_ Each label statement required by paragraph (1)
shall be located in the upper portion of the front and rear panels of
the package, directly on the package underneath the cellophane or other
clear wrapping. Except as provided in subparagraph (B), each label
statement shall comprise at least the top 25 percent of the front and
rear panels of the package. The word \`\`WARNING\'\' shall appear in
capital letters and all text shall be in conspicuous and legible
17-point type, unless the text of the label statement would occupy more
than 70 percent of such area, in which case the text may be in a smaller
conspicuous and legible type size, provided that at least 60 percent of
such area is occupied by required text. The text shall be black on a
white background, or white on a black background, in a manner that
contrasts, by typography, layout, or color, with all other printed
material on the package, in an alternating fashion under the plan
submitted under subsection (b)(4).

\`\`(B) Flip-top boxes.\_ For any cigarette brand package manufactured
or distributed before January 1, 2000, which employs a flip-top style
(if such packaging was used for that brand in commerce prior to June 21,
1997), the label statement required by paragraph (1) shall be located on
the flip-top area of the package, even if such area is less than 25
percent of the area of the front panel. Except as provided in this
paragraph, the provisions of this subsection shall apply to such
packages.

\`\`(3) Does not apply to foreign distribution.\_ The provisions of this
subsection do not apply to a tobacco product manufacturer or distributor
of cigarettes which does not manufacture, package, or import cigarettes
for sale or distribution within the United States.

\`\`(b) Advertising Requirements.\_

\`\`(1) In general.\_ It shall be unlawful for any tobacco product
manufacturer, importer, distributor, or retailer of cigarettes to
advertise or cause to be advertised within the United States any
cigarette unless its advertising bears, in accordance with the
requirements of this section, one of the labels specified in subsection
(a) of this section.

\`\`(2) Typography, etc..\_ Each label statement required by subsection
(a) of this section in cigarette advertising shall comply with the
standards set forth in this paragraph. For press and poster
advertisements, each such statement and (where applicable) any required
statement relating to tar, nicotine, or other constituent yield shall
comprise 20 percent of the area of the advertisement and shall appear in
a conspicuous and prominent format and location at the top of each
advertisement within the trim area. The Secretary may revise the
required type sizes in such area in such manner as the Secretary
determines appropriate. The word \`\`WARNING\'\' shall appear in capital
letters, and each label statement shall appear in conspicuous and
legible type. The text of the label statement shall be black if the
background is white and white if the background is black, under the plan
submitted under paragraph (4) of this subsection. The label statements
shall be enclosed by a rectangular border that is the same color as the
letters of the statements and that is the width of the first downstroke
of the capital \`\`W\'\' of the word \`\`WARNING\'\' in the label
statements. The text of such label statements shall be in a typeface pro
rata to the following requirements: 45-point type for a whole-page
broadsheet newspaper advertisement; 39-point type for a half-page
broadsheet newspaper advertisement; 39-point type for a whole-page
tabloid newspaper advertisement; 27-point type for a half-page tabloid
newspaper advertisement; 31.5-point type for a double page spread
magazine or whole-pagemagazine advertisement; 22.5-point type for a 28
centimeter by 3 columnadvertisement; and 15-point type for a 20
centimeter by 2 column advertisement. The label statements shall be in
English, except that in the case of\_

\`\`(A) an advertisement that appears in a newspaper, magazine,
periodical, or other publication that is not in English, the statements
shall appear in the predominant language of the publication; and

\`\`(B) in the case of any other advertisement that is not in English,
the statements shall appear in the same language as that principally
used in the advertisement.

\`\`(3) Adjustment by secretary.\_ The Secretary may, through a
rulemaking under section 553 of title 5, United States Code, adjust the
format and type sizes for the label statements required by this section
or the text, format, and type sizes of any required tar, nicotine yield,
or other constituent disclosures, or to establish the text, format, and
type sizes for any other disclosures required under the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 301 et. seq.). The text of any such
label statements or disclosures shall be required to appear only within
the 20 percent area of cigarette advertisements provided by paragraph
(2) of this subsection. The Secretary shall promulgate regulations which
provide for adjustments in the format and type sizes of any text
required to appear in such area to ensure that the total text required
to appear by law will fit within such area.

\`\`(4) Marketing requirements.\_

\`\`(A) The label statements specified in subsection (a)(1) shall be
randomly displayed in each 12-month period, in as equal a number of
times as is possible on each brand of the product and be randomly
distributed in all areas of the United States in which the product is
marketed in accordance with a plan submitted by the tobacco product
manufacturer, importer, distributor, or retailer and approved by the
Secretary.

\`\`(B) The label statements specified in subsection (a)(1) shall be
rotated quarterly in alternating sequence in advertisements for each
brand of cigarettes in accordance with a plan submitted by the tobacco
product manufacturer, importer, distributor, or retailer to, and
approved by, the Secretary.

\`\`(C) The Secretary shall review each plan submitted under
subparagraph (B) and approve it if the plan\_

\`\`(i) will provide for the equal distribution and display on packaging
and the rotation required in advertising under this subsection; and

\`\`(ii) assures that all of the labels required under this section will
be displayed by the tobacco product manufacturer, importer, distributor,
or retailer at the same time.\'\'.

SEC. 302. AUTHORITY TO REVISE CIGARETTE WARNING LABEL STATEMENTS.

Section 4 of the Federal Cigarette Labeling and Advertising Act ( 15
U.S.C. 1333), as amended by section 301 of this title, is further
amended by adding at the end the following:

\`\`(c) Change in Required Statements.\_ The Secretary may, by a
rulemaking conducted under section 553 of title 5, United States Code,
revise the text of any of the warning label statements required by
subsection (a) of this section if the Secretary determines that such a
change would promote greater public understanding of the risks
associated with the use of tobacco products.\'\'.

SEC. 303. SMOKELESS TOBACCO LABELS AND ADVERTISING WARNINGS.

Section 3 of the Comprehensive Smokeless Tobacco Health Education Act of
1986 (15 U.S.C. 4402) is amended to read as follows:

\`\`SEC. 3. SMOKELESS TOBACCO WARNING.

\`\`(a) General Rule.\_

\`\`(1) It shall be unlawful for any person to manufacture, package, or
import for sale or distribution within the United States any smokeless
tobacco product unless the product package bears, in accordance with the
requirements of this Act, one of the following labels:

\`\`WARNING: This product can cause mouth cancer\'\'

\`\`WARNING: This product can cause gum disease and tooth loss\'\'

\`\`WARNING: This product is not a safe alternative to cigarettes\'\'

\`\`WARNING: Smokeless tobacco is addictive\'\'

\`\`(2) Each label statement required by paragraph (1) shall be\_

\`\`(A) located on the 2 principal display panels of the package, and
each label statement shall comprise at least 25 percent of each such
display panel; and

\`\`(B) in 17-point conspicuous and legible type and in black text on a
white background, or white text on a black background, in a manner that
contrasts by typography, layout, or color, with all other printed
material on the package, in an alternating fashion under the plan
submitted under subsection (b)(3), except that if the text of a label
statement would occupy more than 70 percent of the area specified by
subparagraph (A), such text may appear in a smaller type size, so long
as at least 60 percent of such warning area is occupied by the label
statement.

\`\`(3) The label statements required by paragraph (1) shall be
introduced by each tobacco product manufacturer, packager, importer,
distributor, or retailer of smokeless tobacco products concurrently into
the distribution chain of such products.

\`\`(4) The provisions of this subsection do not apply to a tobacco
product manufacturer or distributor of any smokeless tobacco product
that does not manufacture, package, or import smokeless tobacco products
for sale or distribution within the United States.

\`\`(b) Required Labels.\_

\`\`(1) It shall be unlawful for any tobacco product manufacturer,
packager, importer, distributor, or retailer of smokeless tobacco
products to advertise or cause to be advertised within the United States
any smokeless tobacco product unless its advertising bears, in
accordance with the requirements of this section, one of the labels
specified in subsection (a).

\`\`(2) Each label statement required by subsection (a) in smokeless
tobacco advertising shall comply with the standards set forth in this
paragraph. For press and poster advertisements, each such statement and
(where applicable) any required statement relating to tar, nicotine, or
other constituent yield shall\_

\`\`(A) comprise at least 20 percent of the area of the advertisement,
and the warning area shall be delineated by a dividing line of
contrasting color from the advertisement; and

\`\`(B) the word \`\`WARNING\'\' shall appear in capital letters and
each label statement shall appear in conspicuous and legible type. The
text of the label statement shall be black on a white background, or
white on a black background, in an alternating fashion under the plan
submitted under paragraph (3).

\`\`(3)(A) The label statements specified in subsection (a)(1) shall be
randomly displayed in each 12-month period, in as equal a number of
times as is possible on each brand of the product and be randomly
distributed in all areas of the United States in which the product is
marketed in accordance with a plan submitted by the tobacco product
manufacturer, importer, distributor, or retailer and approved by the
Secretary.

\`\`(B) The label statements specified in subsection (a)(1) shall be
rotated quarterly in alternating sequence in advertisements for each
brand of smokeless tobacco product in accordance with a plan submitted
by the tobacco product manufacturer, importer, distributor, or retailer
to, and approved by, the Secretary.

\`\`(C) The Secretary shall review each plan submitted under
subparagraph (B) and approve it if the plan\_

\`\`(i) will provide for the equal distribution and display on packaging
and the rotation required in advertising under this subsection; and

\`\`(ii) assures that all of the labels required under this section will
be displayed by the tobacco product manufacturer, importer, distributor,
or retailer at the same time.\'\'.

SEC. 304. AUTHORITY TO REVISE SMOKELESS TOBACCO PRODUCT WARNING
LABELSTATEMENTS.

Section 3 of the Comprehensive Smokeless Tobacco Health Education Act of
1986 (15 U.S.C. 4402), as amended by section 303 of this title, is
further amended by adding at the end the following:

\`\`(c) Authority to Revise Warning Label Statements.\_ The Secretary
may, by a rulemaking conducted under section 553 of title 5, United
States Code, adjust the format, type size, and text of any of the
warning label statements required by subsection (a) of this section, or
establish the format, type size, and text of any other disclosures
required under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301
et seq.), if the Secretary finds that such a change would promote
greater public understanding of the risks associated with the use of
smokeless tobacco products.\'\'.

SEC. 305. TAR, NICOTINE, AND OTHER SMOKE CONSTITUENT DISCLOSURE TO
THEPUBLIC.

Section 4(a) of the Federal Cigarette Labeling and Advertising Act (15
U.S.C. 1333 (a)), as amended by section 301 of this title, is further
amended by adding at the end the following:

\`\`(4)(A) The Secretary shall, by a rulemaking conducted under section
553 of title 5, United States Code, determine (in the Secretary\'s sole
discretion) whether cigarette and other tobacco product manufacturers
shall be required to include in the area of each cigarette advertisement
specified by subsection (b) of this section, or on the package label, or
both, the tar and nicotine yields of the advertised or packaged brand.
Any such disclosure shall be in accordance with the methodology
established under such regulations, shall conform to the type size
requirements of subsection (b) of this section, and shall appear within
the area specified in subsection (b) of this section.

\`\`(B) Any differences between the requirements established by the
Secretary under subparagraph (A) and tar and nicotine yield reporting
requirements established by the Federal Trade Commission shall be
resolved by a memorandum of understanding between the Secretary and the
Federal Trade Commission.

\`\`(C) In addition to the disclosures required by subparagraph (A) of
this paragraph, the Secretary may, under a rulemaking conducted under
section 553 of title 5, United States Code, prescribe disclosure
requirements regarding the level of any cigarette or other tobacco
product smoke constituent. Any such disclosure may be required if the
Secretary determines that disclosure would be of benefit to the public
health, or otherwise would increase consumer awareness of the health
consequences of the use of tobacco products, except that no such
prescribed disclosure shall be required on the face of any cigarette
package or advertisement. Nothing in this section shall prohibit the
Secretary from requiring such prescribed disclosure through a cigarette
or other tobacco product package or advertisement insert, or by any
other means under the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
301 et seq.).\'\'.

Subtitle B_Testing and Reporting of Tobacco Product Smoke Constituents

SEC. 311. REGULATION REQUIREMENT.

\(a\) Testing, Reporting, and Disclosure.\_ Not later than 24 months
after the date of enactment of this Act, the Secretary, through the
Commissioner of the Food and Drug Administration, shall promulgate
regulations under the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
301 et seq.) that meet the requirements of subsection (b) of this
section.

\(b\) Contents of Rules.\_ The rules promulgated under subsection (a) of
this section shall require the testing, reporting, and disclosure of
tobacco product smoke constituents and ingredients that the Secretary
determines should be disclosed to the public in order to protect the
public health. Such constituents shall include tar, nicotine, carbon
monoxide, and such other smoke constituents or ingredients as the
Secretary may determine to be appropriate. The rule may require that
tobacco product manufacturers, packagers, or importers make such
disclosures relating to tar and nicotine through labels or advertising,
and make such disclosures regarding other smoke constituents or
ingredients as the Secretary determines are necessary to protect the
public health.

\(c\) Authority.\_ The Food and Drug Administration shall have authority
to conduct or to require the testing, reporting, or disclosure of
tobacco product smoke constituents.

TITLE IV_NATIONAL TOBACCO SETTLEMENT TRUST FUND

Subtitle A_General Payment Provisions

SEC. 401. ESTABLISHMENT OF TRUST FUND.

\(a\) Creation .\_

\(1\) In general .\_There is established in the Treasury of the United
States a trust fund to be known as the \`\`National Tobacco Settlement
Trust Fund\'\', consisting of such amounts as may be appropriated or
credited to the trust fund.

\(b\) Transfers to National Tobacco Settlement Trust Fund .\_There shall
be credited to the trust fund the following amounts:

\(1\) Amounts paid under section 403.

\(2\) Amounts equivalent to the fines or penalties paid under section
403, 404, or 406, including interest thereon.

\(3\) Amounts equivalent to penalties paid under section 202, including
interest thereon.

\(c\) Repayable Advances .\_

\(1\) Authorization .\_There are authorized to be appropriated to the
trust fund, as repayable advances, such sums as may from time to time be
necessary to make the expenditures authorized by this Act.

\(2\) Repayment with interest .\_Repayable advances made to the trust
fund shall be repaid, and interest on such advances shall be paid, to
the general fund of the Treasury when the Secretary of the Treasury
determines that moneys are available in the trust fund for such
purposes.

\(3\) Rate of interest .\_Interest on advances made under this
subsection shall be at a rate determined by the Secretary of the
Treasury (as of the close of the calendar month preceding the month in
which the advance is made) to be equal to the current average market
yield on outstanding marketable obligations of the United States with
remaining period to maturity comparable to the anticipated period during
which the advance will be outstanding.

\(d\) Expenditures From Trust Fund .\_Amounts in the trust fund shall be
available in each calendar year, as provided by appropriations Acts,
except that distributions to the States from amounts credited to the
State Litigation Settlement Account shall not require further
authorization or appropriation and shall be as provided in the Master
Settlement Agreement and this Act; and not less than 15 percent of the
amounts available for expenditure from the trust fund for each fiscal
year, in the aggregate, be expended without further appropriation
notwithstanding any other provision of this act for the following
purposes for activities pursuant to this act including\_

\(1\) the prevention of smoking;

\(2\) education;

\(3\) State, local, and private control of tobacco product use;

\(4\) smoking cessation.

\(e\) Budgetary Treatment of Trust Fund Operations .\_The receipts and
disbursements of the National Tobacco Settlement Trust Fund shall not be
included in the totals of the budget of the United States Government as
submitted by the President or of the congressional budget and shall be
exempt from any general budget limitation imposed by statute on
expenditures and net lending (budget outlays) of the United States
Government.

\(f\) Administrative Provisions.\_ Section 9602 of the Internal Revenue
Code of 1986 shall apply to the trust fund to the same extent as if it
were established by subchapter A of chapter 95 of such Code.

SEC. 402. STATE LITIGATION SETTLEMENT ACCOUNT.

\(a\) In General.\_ There is established within the trust fund a
separate account, to be known as the State Litigation Settlement
Account.

\(b\) Transfers to Account.\_ From amounts received by the trust fund
under section 403, the State Litigation Settlement Account shall be
credited with all settlement payments designated for allocation, without
further appropriation, among the several States, which shall consist
of\_

\(1\) the sum of \$196,500,000,000, to be paid in installments over a
period of 25 years; and

\(2\) beginning after the last installment under paragraph (1), 50
percent of the total annual payments made by participating tobacco
product manufacturers under section 403(b) each year thereafter.

\(c\) Reimbursement for State Expenditures.\_

\(1\) Payment .\_Amounts credited to the account are available, without
further appropriation, in each fiscal year to provide funds to each
State to reimburse such State for amounts expended by the State for the
treatment of individuals with tobacco-related illnesses or conditions.

\(2\) Amount .\_The amount for which a State is eligible for under
subparagraph (A) for a fiscal year shall be based on the Master
Settlement Agreement and its ancillary documents in accordance with such
agreements thereunder as may be entered into after the date of enactment
of this Act by the governors of the several States.

\(3\) Use of funds .\_A State may use amounts received under this
subsection as the State determines appropriate.

\(4\) Funds not available as Medicaid reimbursement.\_ Funds in the
account shall not be available to the Secretary as reimbursement of
Medicaid expenditures or considered as Medicaid overpayments for
purposes of recoupment.

\(d\) Payments to be Transferred Promptly to States.\_ The Secretary of
the Treasury shall transfer amounts available under subsection (c) to
each State as amounts are credited to the State Litigation Settlement
Account without undue delay.

SEC. 403. PAYMENTS BY INDUSTRY.

\(a\) Initial Payment.\_

\(1\) Certain participating tobacco product manufacturers.\_ The
following participating tobacco product manufacturers shall deposit into
the National Tobacco Settlement Trust Fund an aggregate payment of
\$10,000,000,000, apportioned as follows:

\(A\) Phillip Morris Incorporated_65.8 percent;

\(B\) Brown and Williamson Tobacco Corporation_17.3 percent;

\(C\) Lorillard Tobacco Company_7.1 percent;

\(D\) R.J. Reynolds Tobacco Company_6.6 percent; and

\(E\) United States Tobacco Company_3.2 percent.

\(2\) No contribution from other participating tobacco product
manufacturers.\_ No other participating tobacco product manufacturer
shall be required to contribute to the payment required by this
subsection.

\(3\) Payment date; interest.\_ Each participating tobacco product
manufacturer required to make a payment under paragraph (1) of this
subsection shall make such payment within 30 days after the date of
enactment of this Act in accordance with the terms of the Master
Settlement Agreement and shall owe interest on such payment at the prime
rate plus 10 percent, as published in the Wall Street Journal on the
latest publication date on or before the date of enactment of this Act,
for payments made after the required payment date.

\(b\) Annual Payments.\_ Each calendar year beginning after the required
payment date under subsection (a)(3) the participating tobacco product
manufacturers shall make total payments into the Fund for each calendar
year in the following applicable base amounts, subject to adjustment as
provided in section 404:

\(1\) year 1\_\$14,400,000,000;

\(2\) year 2\_\$15,400,000,000;

\(3\) year 3\_\$17,700,000,000;

\(4\) year 4\_\$21,000,000,000;

\(5\) year 5\_\$23,600,000,000; and

\(6\) year 6 and thereafter_the adjusted applicable base amount under
section 404.

\(c\) Payment schedule.\_ Each annual payment due under subsection (b)
shall be made in 3 equal installments due on March 1st, on June 1st, and
on September 1st of each year.

\(d\) Apportionment of Annual Payment.\_

\(1\) In general.\_ Each participating tobacco product manufacturer is
liable for its share of the applicable base amount payment due each year
under subsection (b). Any separate collection of these payments among
such participating tobacco product manufacturers shall be set forth in
accordance with an appendix to the Protocol. The annual payment is the
obligation and responsibility of only those participating tobacco
product manufacturers and their affiliates that directly sell tobacco
products in the domestic market to wholesalers, retailers, or consumers,
their successors and assigns, and any subsequent fraudulent transferee
(but only to the extent of the interest or obligation fraudulently
transferred).

\(2\) Determination of amount of payment due.\_ Each participating
tobacco product manufacturer is liable for its share of each installment
in proportion to its share of tobacco products sold in the domestic
market for the most recent available calendar quarter, as determined by
the Secretary of the Treasury not more than 2 months, and not less than
1 month, before the payment is due. One month before each payment is due
under this subsection, the Secretary shall make a final determination of
each tobacco product manufacturer\'s applicable base amount payment
obligation.

\(3\) Calculation of participating tobacco product manufacturer\'s share
of annual payment.\_ The share of the annual payment apportioned to a
participating tobacco product manufacturer shall be equal to that
manufacturer\'s share of adjusted units. A participating tobacco product
manufacturer\'s share of adjusted units shall be determined as follows:

\(A\) Units.\_ A participating tobacco product manufacturer\'s number of
units shall be determined by counting each\_

\(i\) pack of 20 cigarettes as 1 adjusted unit;

\(ii\) 1.2 ounces of moist snuff as 0.4 adjusted unit; and

\(iii\) 3 ounces of other smokeless tobacco product as 0.24 adjusted
units.

\(B\) Determination of adjusted units.\_ Except as provided in
subparagraph (C), a participating tobacco product manufacturer\'s number
of adjusted units shall be determined under the following table:

I95

For units: Each unit shall be treated as:

Not exceeding 150 million 25% of a unit

Exceeding 150 million, but not exceeding 300 milllion 50% of a unit

Exceeding 300 million 1 unit

\(C\) Special rule for large manufacturers.\_ If a participating tobacco
product manufacturer has more than 500 million units under subparagraph
(A), then that manufacturer\'s number of adjusted units shall be equal
to the total number of units, and not determined under subparagraph (B).

\(e\) Computations.\_ The determinations required by subsection (d)
shall be made and certified by the Secretary of Treasury. The parties
shall promptly provide the Treasury Department with information
sufficient for it to make such determinations.

\(f\) Nonapplication to Certain Manufacturers.\_

\(1\) Exemption.\_ A participating manufacturer described in paragraph
(3) is exempt from the payments required by subsection (b).

\(2\) Limitation.\_ Paragraph (1) applies only to assessments on
cigarettes to the extent that those cigarettes constitute less than 3
percent of all cigarettes manufactured and distributed to consumers in
any calendar year.

\(3\) Participating tobacco product manufacturers to which subsection
applies.\_ A participating tobacco product manufacturer is described in
this paragraph if it\_

\(A\) resolved tobacco-related civil actions with more than 25 States
before January 1, 1998, through written settlement agreements signed by
the attorneys general (or the equivalent chief legal officer if there is
no office of attorney general) of those States; and

\(B\) provides to all other States, not later than December 31, 1998,
the opportunity to enter into written settlement agreements that\_

\(i\) are substantially similar to the agreements entered into with
those 25 States; and

\(ii\) provide the other States with annual payment terms that are
equivalent to the most favorable annual payment terms of its written
settlement agreements with those 25 States.

SEC. 404. ADJUSTMENTS.

The applicable base amount under section 403(b) for a given calendar
year shall be adjusted as follows in determining the annual payment for
that year:

\(1\) Inflation adjustment.\_

\(A\) In general.\_ Beginning with the fourth calendar year after the
date of enactment of this Act, the adjusted applicable base amount under
section 403(b)(6) is the amount of the annual payment made for the
preceding year increased by the greater of 3 percent or the inflation
adjustment, adjusted (for calendar year 2005 and later years) by the
volume adjustment under paragraph (2).

\(B\) Inflation adjustment.\_ For purposes of subparagraph (A), the
inflation adjustment for any calendar year is the percentage (if any) by
which\_

\(i\) the CPI for the preceding calendar year, exceeds

\(ii\) the CPI for the second preceding calendar year.

\(C\) CPI.\_ For purposes of subparagraph (B), the CPI for any calendar
year is the average of the Consumer Price Index for all-urban consumers
published by the Department of Labor.

\(D\) Rounding.\_ If any increase determined under subparagraph (A) is
not a multiple of \$1,000, the increase shall be rounded to the nearest
multiple of \$1,000.

\(2\) Volume adjustment.\_ Beginning with calendar year 2005, the
applicable base amount (as adjusted for inflation under paragraph (1))
shall be adjusted for changes in volume of domestic sales by multiplying
the applicable base amount by the ratio of the actual volume for the
preceding year to the base volume. For purposes of this paragraph, the
term \`\`base volume\'\' means the number of units of tobacco products
sold domestically by the participating tobacco product manufacturers in
calendar year 1996, as reported by such manufacturers to the Secretary
of the Treasury.

SEC. 405. PAYMENTS TO BE PASSED THROUGH TO CONSUMERS.

\(a\) Target Price.\_ Each participating tobacco product manufacturer
shall use its best efforts to adjust the price at which it sells each
unit of tobacco products in the domestic market or to an importer for
resale in the domestic market by an amount sufficient to pass through to
each purchaser on a per-unit basis an equal share of the annual payments
to be made by such participating tobacco product manufacturer under this
Act and the Master Settlement agreement for the year in which the sale
occurs.

\(b\) Collection of Deficiency.\_

\(1\) In general.\_ If the Secretary determines that a participating
tobacco product manufacturer failed to comply with subsection (a), the
Secretary shall assess a penalty against that manufacturer in an amount
equal to\_

\(A\) 110 percent of the shortfall amount; or

\(B\) if the failure to comply with subsection (a) was intentional, up
to 125 percent of the shortfall amount .

\(2\) Shortfall amount.\_ For purposes of paragraph (1), the term
\`\`shortfall amount\'\' means\_

\(A\) the number of units of tobacco products sold by a tobacco product
manufacturer during a calendar year, multiplied by\_

\(B\) the excess of\_

\(i\) the average adjusted price for which each such unit would have
been sold during that year if the tobacco product manufacturer had met
the price contemplated by subsection (a); over

\(ii\) the average adjusted price for which each such unit was sold
during that year.

\(3\) Sole remedy for failure to pass payment through to consumers.\_
This subsection is the sole remedy available to any person, including
any State, for the failure by a participating tobacco product
manufacturer to pass through the payments under section 403 to consumers
as required by subsection (a).

SEC. 406. TAX TREATMENT OF PAYMENTS.

All payments made under section 403 are ordinary and necessary business
expenses for purposes of chapter 1 of the Internal Revenue Code of 1986,
and no part thereof is either in settlement of an actual or potential
liability for a fine or penalty (civil or criminal) or the cost of a
tangible or intangible asset or other future benefit.

SEC. 407. ENFORCEMENT FOR NONPAYMENT.

\(a\) Penalty .\_Any participating tobacco product manufacturer that
fails to make any payment required under section 403 or 405 within 60
days after the date on which such fee is due is liable for a civil
penalty of \$100,000 for each day during the noncompliance period.

\(b\) Noncompliance Period .\_For purposes of this section, the term
\`\`noncompliance period\'\' means, with respect to any failure to make
a payment required under section 403 or 405, the period\_

\(1\) beginning on the due date for such payment; and

\(2\) ending on the date on which such payment is paid in full.

\(c\) Limitations .\_

\(1\) In general .\_No penalty shall be imposed by subsection (a) on any
failure to make a payment under section 403 during any period for which
it is established to the satisfaction of the Secretary of the Treasury
that none of the persons responsible for such failure knew or,
exercising reasonable diligence, should have known, that such failure
existed.

\(2\) Corrections .\_No penalty shall be imposed under subsection (a) on
any failure to make a payment under section 403 if\_

\(A\) such failure was due to reasonable cause and not to willful
neglect; and

\(B\) such failure is corrected during the 30-day period beginning on
the 1st date that any of the persons responsible for such failure knew
or, exercising reasonable diligence, should have known, that such
failure existed.

\(3\) Waiver .\_In the case of any failure to make a payment under
section 403 that is due to reasonable cause and not to willful neglect,
the Secretary of the Treasury may waive all or part of the penalty
imposed under subsection (a) to the extent that the Secretary determines
that the payment of such penalty would be excessive relative to the
failure involved.

\(d\) Status as Participating Tobacco Product Manufacturer .\_If, at the
end of the 1-year period beginning on the date on which a participating
tobacco product manufacturer fails to make a timely payment as required
under section 403, such manufacture has not fully paid the amount owed
by such manufacturer under such section, such manufacturer shall be
considered a nonparticipating tobacco product manufacturer and shall not
be eligible for any protections or assistance provided for under this
Act.

Subtitle B_General Spending Provisions

SEC. 411. IMPLEMENTING AND ENFORCEMENT FUNDS.

Notwithstanding section 401(d), not less than \$300,000,000 of the
amounts available in the trust fund, other than in the State Litigation
Settlement Account, shall be made available for each fiscal year without
further appropriation to the Commissioner of Food and Drugs as
reimbursement for the costs incurred by the Food and Drug Administration
in implementing and enforcing requirements relating to tobacco products.
In order to ensure that the amounts provided by this section are used
for the purposes for which they are made available, the Commissioner
shall submit an account of such costs for each fiscal year to the
Secretary of the Treasury, in such detail as the Secretary may require,
within 60 days after the close of the fiscal year and transmit a copy of
the report to the Congress at the same time as it is submitted to the
Secretary.

SEC. 412. IMPROVING CHILD CARE AND EARLY CHILDHOOD DEVELOPMENT.

\(a\) In General.\_ The Secretary of the Treasury may transfer funds
from the National Tobacco Settlement Trust Fund for each fiscal year to
be used by the Secretary for the following purposes:

\(1\) Improving the affordability of child care through increased
appropriations for child care under the Child Care and Development Block
Grant Act of 1990 (42 U.S.C. 9859 et seq.).

\(2\) Enhancing the quality of child care and early childhood
development through the provision of grants to States under the Child
Care and Development Block Grant Act of 1990 (42 U.S.C. 9859 et seq.).

\(3\) Expanding the availability and quality of school-age care through
the provision of grants to States under the Child Care and Development
Block Grant Act of 1990 (42 U.S.C. 9859 et seq.).

\(4\) Assisting young children by providing grants to local
collaboratives under the Child Care and Development Block Grant Act of
1990 (42 U.S.C. 9859 et seq.) for the purpose of improving parent
education and supportive services, strengthening the quality of child
care, improving health services, and improving services for children
with disabilities.

\(b\) Supplement not Supplant.\_ Amounts made available to a State under
this section shall be used to supplement and not supplant other Federal,
State, and local funds provided for programs that serve the health and
developmental needs of children. Amounts provided to the State under any
of the provisions of law referred to in this section shall not be
reduced solely as a result of the availability of funds under this
section.

\(c\) Authorization of Appropriations.\_ There are authorized to be
appropriated from the trust fund established by section 401, other than
from amounts in the State Litigation Settlement Account, such sums as
are necessary to carry out this section.

TITLE V_STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO SMOKE

SEC. 501. DEFINITIONS.

In this title:

\(1\) Assistant secretary .\_The term \`\`Assistant Secretary\'\' means
the Assistant Secretary of the Occupational Safety and Health
Administration of the Department of Labor.

\(2\) Public facility .\_

\(A\) In general .\_The term \`\`public facility\'\' means any building
used for purposes that affect interstate or foreign commerce that is
regularly entered by 10 or more individuals at least 1 day per week
including any building owned by or leased to an agency, independent
establishment, department, or branch of the United States Government.

\(B\) Exclusions .\_The term \`\`public facility\'\' does not include a
building or portion thereof which is used for residential purposes or as
a restaurant (other than a fast food restaurant), bar, private club,
hotel guest room or common area, casino, bingo parlor, tobacconist\'s
shop, or prison.

\(C\) Fast food restaurant .\_The term \`\`fast food restaurant\'\'
means any restaurant or chain of restaurants that primarily distributes
food through a customer pick-up (either at a counter or drive-through
window). The Assistant Secretary may promulgate regulations to clarify
this subparagraph to ensure that the intended inclusion of
establishments catering to individuals under 18 years of age is
achieved.

\(3\) Responsible entity .\_The term \`\`responsible entity\'\' means,
with respect to any public facility, the owner of such facility except
that, in the case of any such facility or portion thereof which is
leased, such term means the lessee.

SEC. 502. SMOKE-FREE ENVIRONMENT POLICY.

\(a\) Policy Required .\_In order to protect children and adults from
cancer, respiratory disease, heart disease, and other adverse health
effects from breathing environmental tobacco smoke, the responsible
entity for each public facility shall adopt and implement at such
facility a smoke-free environment policy which meets the requirements of
subsection (b).

\(b\) Elements of Policy .\_

\(1\) In general .\_The responsible entity for a public facility shall\_

\(A\) prohibit the smoking of cigarettes, cigars, and pipes, and any
other combustion of tobacco within the facility and on facility property
within the immediate vicinity of the entrance to the facility; and

\(B\) post a clear and prominent notice of the smoking prohibition in
appropriate and visible locations at the public facility.

\(2\) Exception .\_The responsible entity for a public facility may
provide an exception to the prohibition specified in paragraph (1) for 1
or more specially designated smoking areas within a public facility if
such area or areas meet the requirements of subsection (c).

\(c\) Specially Designated Smoking Areas .\_A specially designated
smoking area meets the requirements of this subsection if\_

\(1\) the area is ventilated in accordance with specifications
promulgated by the Assistant Secretary that ensure that air from the
area is directly exhausted to the outside and does not recirculate or
drift to other areas within the public facility;

\(2\) the area is maintained at negative pressure, as compared to
adjoining nonsmoking areas, as determined under regulations promulgated
by the Assistant Secretary;

\(3\) nonsmoking individuals do not have to enter the area for any
purpose while smoking is occurring in such area; and

\(4\) cleaning and maintenance work are conducted in such area only when
no smoking is occurring in the area.

SEC. 503. CITIZEN ACTIONS.

\(a\) In General .\_An action may be brought to enforce the requirements
of this title by any aggrieved person, any State or local government
agency, or the Assistant Secretary.

\(b\) Venue .\_Any action to enforce this title may be brought in any
United States district court for the district in which the defendant
resides or is doing business to enjoin any violation of this title or to
impose a civil penalty for any such violation in the amount of not more
than \$5,000 per day of violation. The district courts shall have
jurisdiction, without regard to the amount in controversy or the
citizenship of the parties, to enforce this title and to impose civil
penalties under this title.

\(c\) Notice .\_An aggrieved person shall give any alleged violator
notice at least 60 days prior to commencing an action under this
section. No action may be commenced by an aggrieved person under this
section if such alleged violator complies with the requirements of this
title within such 60-day period and thereafter.

\(d\) Costs .\_The court, in issuing any final order in any action
brought under this section, may award costs of litigation (including
reasonable attorney and expert witness fees) to any prevailing
plaintiff, whenever the court determines such award is appropriate.

\(e\) Penalties .\_The court, in any action under this section to apply
civil penalties, shall have discretion to order that such civil
penalties be used for projects which further the policies of this title.
The court shall obtain the view of the Assistant Secretary in exercising
such discretion and selecting any such projects.

SEC. 504. PREEMPTION.

Nothing in this title shall preempt or otherwise affect any other
Federal, State, or local law which provides greater protection from
health hazards from environmental tobacco smoke.

SEC. 505. REGULATIONS.

The Assistant Secretary is authorized to promulgate such regulations as
the Assistant Secretary deems necessary to carry out this title.

SEC. 506. EFFECTIVE DATE.

Except as provided in section 507, the provisions of this title shall
take effect on the first day of January next following the next
regularly scheduled meeting of the State legislature occurring after the
date of enactment of this Act at which, under the procedural rules of
that legislature, a measure under section 507 may be considered.

SEC. 507. STATE CHOICE.

This title shall not apply to any State that, by law, provides that it
shall not apply to that State.

TITLE VI_APPLICATION TO INDIAN TRIBES.

SEC. 601. SHORT TITLE.

This title may be cited as the \`\`Reduction in Tobacco Use and
Regulation of Tobacco Products in Indian Country Act of 1998\'\'.

SEC. 602. FINDINGS AND PURPOSES.

\(a\) Findings .\_Congress finds that Native Americans have used tobacco
products for recreational, ceremonial, and traditional purposes for
centuries.

\(b\) Purposes .\_It is the purpose of this title to\_

\(1\) provide for the implementation of the National Tobacco Policy and
Youth Smoking Reduction Act with respect to the regulation of tobacco
products and other tobacco-related activities on Indian lands;

\(2\) recognize the historic Native American traditional and ceremonial
use of tobacco products, and to preserve and protect the cultural,
religious, and ceremonial uses of tobacco by members of Indian tribes;

\(3\) recognize and respect Indian tribal sovereignty and tribal
authority to make and enforce laws regarding the regulation of tobacco
distributors and tobacco products on Indian lands; and

\(4\) ensure that the necessary funding is made available to tribal
governments for licensing and enforcement of tobacco distributors and
tobacco products on Indian lands.

SEC. 603. APPLICATION OF TOBACCO-RELATED PROVISIONS TO NATIVE AMERICANS.

\(a\) In General .\_The provisions of this Act apply to the manufacture,
distribution, or sale of tobacco or tobacco products in Indian country
and on other trust lands subject to the jurisdiction of an Indian tribe.
To the extent that an Indian tribe engages in the manufacture,
distribution, or sale of tobacco products, the provisions of this Act
apply to that tribe.

\(b\) Traditional Use Exception .\_

\(1\) In general .\_In recognition of the religious, ceremonial, and
traditional uses of tobacco and tobacco products by Indian tribes and
the members of such tribes, nothing in this Act shall be construed to
infringe upon the right of such tribes or members of such tribes to
acquire, possess, use, or transfer any tobacco or tobacco products for
such purposes, or to permit an infringement upon the ability of minors
to participate and use tobacco products for religious, ceremonial, or
traditional purposes.

\(2\) Application of provisions .\_Paragraph (1) shall apply only to
those quantities of tobacco or tobacco products necessary to fulfill the
religious, ceremonial, or traditional purposes of an Indian tribe or the
members of such tribe, and shall not be construed to permit the general
marketing of tobacco or tobacco products in a manner that is not in
compliance with chapter IX of the Federal Food, Drug, and Cosmetic Act
as added by this Act.

\(3\) Limitation .\_Nothing in this Act shall be construed to permit an
Indian tribe or member of such a tribe to acquire, possess, use, or
transfer any tobacco or tobacco product in violation of section 2342 of
title 18, United States Code, with respect to the transportation of
contraband cigarettes.

\(c\) Payments to Tobacco Trust Fund .\_Any Indian tribe that engages in
the manufacture of tobacco products shall be subject to liability for
any annual fee payments that are levied on other tobacco product
manufacturers for purposes of the National Tobacco Settlement Trust
Fund. Any Indian tribe that does not pay such fees shall be considered a
nonparticipating tobacco product manufacturer under section 708 of this
Act.

\(d\) Application of Federal Food, Drug, and Cosmetic Act Requirements
.\_

\(1\) In general .\_The provisions of this Act and the provisions of the
Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) relating to the
manufacture, distribution, and sale of tobacco products shall apply in
Indian country and on other trust lands subject to the jurisdiction of
an Indian tribe. To the extent that an Indian tribe engages in the
manufacture, distribution, or sale of tobacco products, the provisions
of this Act apply to that tribe.

\(2\) Jurisdiction .\_With respect to tobacco-related activities that
take place in Indian country or on trust lands within the jurisdiction
of an Indian tribe, the responsibility for enforcing the regulations
promulgated under paragraph (1) shall be vested in\_

\(A\) the Indian tribe involved;

\(B\) the State within which the lands of the Indian tribe are located,
under a voluntary cooperative agreement entered into by the State and
the Indian tribe or tribal organization; or

\(C\) the Secretary.

\(3\) Eligibility for assistance .\_Under the regulations promulgated
under paragraph (1), the Secretary, in consultation with the Secretary
of the Interior, shall provide assistance to an Indian tribe in meeting
and enforcing the requirements under such regulations, including grant
funds, if\_

\(A\) the tribe or tribal organization has a governing body that has
powers and carries out duties that are similar to the powers and duties
of State or local governments;

\(B\) the functions to be exercised through the use of such assistance
relate to activities conducted in Indian country and on other trust
lands subject to the jurisdiction of the tribe; and

\(C\) the tribe is reasonably expected to be capable of carrying out the
functions required by the Secretary.

\(4\) Determinations .\_Not later than 60 days after the date on which
an Indian tribe submits an application for assistance under paragraph
(3), the Secretary shall make a determination concerning the eligibility
of such tribe for such assistance.

\(5\) Implementation by the secretary .\_If the Secretary determines
that the Indian tribe is not willing or not qualified to administer the
requirements of the regulations promulgated under this subsection, or
the tribe is considered to be a non-participating tobacco product
manufacturer, the Secretary, in consultation with the Secretary of the
Interior, shall implement and enforce such regulations on behalf of the
tribe.

\(6\) Deficient applications; opportunity to cure .\_If the Secretary
determines under paragraph (4) that a tribe is not eligible for
assistance under this subsection, the Secretary shall\_

\(A\) submit to such tribe in writing, a statement of the reasons for
such determination; and

\(B\) shall assist such tribe in overcoming any deficiencies that
resulted in the determination of ineligibility.

After an opportunity to review and cure such deficiencies, the tribe may
re-apply to the Secretary for assistance under this subsection.

\(e\) Retail Licensing Requirements .\_

\(1\) In general .\_The requirements of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 301 et seq.) and this Act with respect to the
licensing of tobacco retailers shall apply to retailers that sell
tobacco or tobacco products in Indian country or on trust lands within
the jurisdiction of an Indian tribe.

\(2\) Minimum federal standards .\_

\(A\) In general .\_Not later than 180 days after the date of enactment
of this Act, the Secretary shall promulgate regulations to authorize an
Indian tribe to implement a tribal tobacco product licensing program in
Indian country or on trust lands within the jurisdiction of that Indian
tribe.

\(B\) Minimum Standards .\_In order for an Indian tribe to assume
responsibility for the licensing and regulation of tobacco-related
activities conducted in Indian country or on other trust lands subject
to the jurisdiction of an Indian tribe, the Indian tribe shall establish
terms, conditions, and standards similar to those described in section
224 of this Act for a State licensing law.

\(C\) Waiver .\_An Indian tribe shall have the same right to apply for
waiver and modification of the law described in subparagraph (B) as a
State under the Act involved.

\(3\) Implementation by the secretary .\_If the Secretary, in
consultation with the Secretary of the Interior, determines that the
Indian tribe is not qualified to meet the minimum standards of paragraph
(2)(B), or the Secretary, in consultation with the Secretary of the
Interior, shall implement such requirements on behalf of the Indian
tribe.

\(f\) Eligibility for Public Health Payments .\_

\(1\) Grant .\_For each fiscal year the Secretary shall award a grant to
each Indian tribe that has an approved anti-smoking plan for the fiscal
year involved under paragraph (2) in an amount equal to the amount
determined under paragraph (3).

\(2\) Tribal plans .\_To be eligible to receive a grant under paragraph
(1), an Indian tribe shall prepare and submit to the Secretary an
anti-smoking plan and shall otherwise meet the requirements of
subsection (e). The Secretary shall promulgate regulations providing for
the form and content of anti-smoking plans to be submitted under this
paragraph.

\(3\) Amount determined .\_Except as provided in this subsection, the
amount of any grant for which an Indian tribe is eligible under
paragraph (1) shall be determined by the Secretary based on the product
of\_

\(A\) the ratio of the total number of individual residing on or in such
tribe\'s reservation, jurisdictional lands, or the active user
population, relative to the total population of the State involved; and

\(B\) the amount allocated under this Act to the State for such public
health purposes.

\(4\) Use .\_Amounts provided to a tribe under this subsection shall be
used to reimburse the tribe for smoking-related health expenditures, to
further the purposes of this Act and in accordance with a tribal
anti-smoking plan approved by the Secretary. Indian tribes shall have
the flexibility to utilize such amounts to meet the unique health care
needs of persons within their service populations within the context of
tribal health programs if such programs meet the fundamental Federal
goals and purposes of Federal Indian health care law and policy.

\(5\) Reallotment .\_Amounts set aside and not expended under this
subsection shall be reallotted among other eligible Indian tribes.

(g)\~ Obligations of Tobacco Product Manufacturers .\_Tobacco product
manufacturers, including Indian tribes, participating in, or covered
under this any Act shall not engage in any activity in Indian country or
on other trust lands subject to the jurisdiction of an Indian tribe that
is prohibited by this Act.

\(h\) Use of Trust Fund Payments .\_Amounts made available from the
tobacco trust fund under any Indian health provisions of this Act shall
be provided to the Indian Health Service and, through the provisions of
the Indian Self Determination and Education Assistance Act (25 U.S.C.
450b et seq.), to Indian tribes to be used to reduce tobacco
consumption, promote smoking cessation, and to fund related activities
including\_

\(1\) clinic and facility design, construction, repair, renovation,
maintenance, and improvement;

\(2\) health care provider services and equipment;

\(3\) domestic and community sanitation associated with clinic and
facility construction and improvement;

\(4\) inpatient and outpatient services; and

\(5\) other programs and services which have as their goal raising the
health status of Indians.

\(i\) Preemption .\_

\(1\) In general .\_Except as otherwise provided in this section,
nothing in this Act shall be construed to prohibit an Indian tribe from
imposing requirements, prohibitions, penalties, or other measures to
further the purposes of this title that are in addition to the
requirements, prohibitions, or penalties required by this title.

\(2\) Public exposure to smoke .\_Nothing in this title shall be
construed to preempt or otherwise affect any Indian tribe rule or
practice that provides greater protections from the health hazards of
environmental tobacco smoke.

SEC. 604. STATE TOBACCO EXCISE TAX COMPLIANCE.

An Indian tribe or tribal corporation shall collect any excise or sales
tax imposed by a State, within the exterior borders or which the sale
occurs, on non-members of the Indian tribe as a consequence of the
purchase of tobacco products by the non-member from the Indian tribe or
tribal corporation. The Indian tribe or tribal corporation shall remit
such taxes collected to the Treasury of the United States, which shall,
in turn, remit the taxes to the State in which they were collected.

TITLE VII_CIVIL LIABILITY OF TOBACCO PRODUCT MANUFACTURERS

SEC. 701. DEFINITIONS

In this title:

\(1\) Addiction claim; dependence claim.\_ The term \`\`addiction
claim\'\' or \`\`dependence claim\'\' refers only to any claim for
relief which is predicated upon claims of addiction to, or dependence
on, tobacco products, but neither term includes claims based upon
manifestation of tobacco-related diseases.

\(2\) Affiliate.\_ The term \`\`affiliate\'\' means a person who
directly or indirectly owns or controls, is owned or controlled by, or
is under common ownership or control with, another person. For purposes
of this definition, ownership means ownership of an equity interest, or
the equivalent thereof, of 10 percent or more, and person means an
individual, partnership, committee, association, corporation, or any
other organization or group of persons.

\(3\) Civil action.\_ The term \`\`civil action\'\' means any action,
lawsuit, or proceeding that is not a criminal action.

\(4\) Compensatory damages.\_ The term \`\`compensatory damages\'\'
refers to those damages necessary to reimburse an injured party, and
includes actual, general, and special damages.

\(5\) Court.\_ The term \`\`court\'\' means any judicial court, forum,
or tribunal within the United States, including without limitation any
Federal, State, or tribal court.

\(6\) Final judgment.\_ The term \`\`final judgment\'\' means a judgment
on which all rights of appeal or discretionary review have been
exhausted or waived or for which the time to appeal or seek such
discretionary review has expired.

\(7\) Final settlement.\_ The term \`\`final settlement\'\' means a
settlement agreement that is executed and approved as necessary to be
fully binding on all relevant parties.

\(8\) Individual.\_ The term \`\`individual\'\' means a human being and
does not include a corporation, partnership, unincorporated association,
trust, estate, or any other public or private entity, State or local
government, or Indian tribe.

\(9\) Punitive damages.\_ The term \`\`punitive damages\'\' means
damages in addition to compensatory damages having the character of
punishment or penalty.

\(10\) Reduced risk tobacco products.\_ The term \`\`reduced risk
tobacco product\'\' means a product designated as a reduced risk tobacco
product under section 916(a)(2) of the Federal Food, Drug, and Cosmetic
Act.

\(11\) Secretary.\_ The term \`\`Secretary\'\' means the Secretary of
the Treasury, except where the context otherwise requires.

\(12\) Tobacco claim.\_ The term \`\`tobacco claim\'\' means a claim
directly or indirectly arising out of, based on, or related to the
health-related effects of tobacco products, including without limitation
a claim arising out of, based on, or related to allegations regarding
any conduct, statement, or omission respecting the health-related
effects of such products.

\(13\) Tobacco product.\_ The term \`\`tobacco product\'\' means
cigarettes, cigarette tobacco, smokeless tobacco, little cigars,
roll-your-own tobacco, and fine cut tobacco products.

\(14\) Tobacco product manufacturer.\_ The term \`\`tobacco product
manufacturer\'\' means\_

\(A\) a person who directly, and not through any affiliate\_

\(i\) manufactures tobacco products for sale in the United States after
the date of enactment of this Act, including tobacco products for sale
in the United States through an importer;

\(ii\) is, after the date of enactment of this Act, the first purchaser
for resale in the United States of tobacco products manufactured for
sale outside of the United States;

\(iii\) engaged in activities described in clause (i) or (ii) prior to
the date of enactment of this Act, has not engaged in such activities
after the date of enactment of this Act, and was not as of June 20,
1997, an affiliate of a participating tobacco product manufacturer in
which the participating tobacco product manufacturer or its other
affiliates owned a 50 percent or greater interest;

\(iv\) is a successor or assign of any of the foregoing; or

\(v\) is an entity to which any of the foregoing directly or indirectly
makes, after the date of enactment of this Act, a fraudulent conveyance
or a transfer that would otherwise be voidable under part 5 of title 11
of the United States Code, but only to the extent of the interest or
obligation transferred; but

\(B\) does not include an affiliate of a tobacco product manufacturer
unless that affiliate is described in clause (i), (ii), (iii), (iv), or
(v) of subparagraph (A).

SEC. 702. APPLICATION.

\(a\) In General.\_ The provisions of this title shall apply to any
civil action involving a tobacco claim, including any such claim that
has not reached final judgment or final settlement as of the date of
enactment of this Act, that is brought or maintained against\_

\(1\) a participating tobacco product manufacturer or its predecessors;

\(2\) any person that at any time was or is an affiliate, officer,
director, employee, attorney, or agent of a participating tobacco
product manufacturer, unless such person is itself a non-participating
tobacco product manufacturer;

\(3\) an importer, distributor, wholesaler, or retailer of tobacco
products\_

\(A\) that, after the date of enactment of this Act, does not import,
distribute, or sell tobacco products made or sold by a non-participating
tobacco product manufacturer;

\(B\) whose business practices with respect to sales or operations
occurring within the United States, conform to the applicable
requirements of the marketing and advertising provisions of the Master
Settlement Agreement; and

\(C\) that is not itself a non-participating tobacco product
manufacturer;

\(4\) a supplier of component or constituent parts of tobacco products\_

\(A\) that, after the date of enactment of this Act, does not knowingly
sell any component or constituent parts of tobacco products to a non-
participating tobacco product manufacturer;

\(B\) whose business practices with respect to sales or operations
occurring within the United States, conform to the applicable
requirements of the marketing and advertisement provisions of the Master
Settlement Agreement; and

\(C\) that is not itself a non-participating tobacco product
manufacturer;

\(5\) a grower of tobacco products, unless such person is itself a
non-participating tobacco product manufacturer; or

\(6\) an insurer of any person described in paragraph (1), (2), (3),
(4), or (5) based on, arising out of, or related to tobacco products
manufactured, imported, distributed, or sold (or tobacco grown) by such
person (other than an action brought by the insured person), unless such
insurer is itself a non-participating tobacco product manufacturer.

\(b\) Exceptions.\_ The provisions of this title shall not apply to any
tobacco claim\_

\(1\) brought against any person other than a person described in
subsection (a) or to any tobacco claim that reached final judgment or
final settlement prior to the date of enactment of this Act;

\(2\) against an employer under valid workers\' compensation laws;

\(3\) arising under the securities laws of a State or the United States;

\(4\) brought by the United States;

\(5\) brought under this title by a State or a participating tobacco
product manufacturer to enforce this Act;

\(6\) asserting damage to the environment from exposures other than
environmental smoke or second hand smoke; or

\(7\) against a participating tobacco product manufacturer if that
manufacturer, or any of its principal officers, acting in that
officer\'s corporate capacity, is convicted of\_

\(A\) manufacturing or distributing misbranded tobacco products in
violation of the Federal Food, Drug, and Cosmetic Act;

\(B\) violating the reporting requirements of section 5762(a)(4) of the
Internal Revenue Code of 1986 (26 U.S.C. 5762(a)(4));

\(C\) violating, or aiding and abetting the violation of, any provision
of chapter 114 of title 18, United States Code; or

\(D\) violating any provision of chapter 47 or chapter 63 of title 18,
United States Code, in making reports or disclosures under this Act.

\(c\) State Option for One-Time Opt Out.\_ The Secretary shall establish
procedures under which the attorney general of a State may, not later
than 1 year after the date of enactment of this Act, elect not to
resolve a civil action described in subsection (a) or not to enter into
the Master Settlement Agreement. A State whose attorney general makes
such an election shall not be eligible to receive payments from the
trust fund established by section 401. rocedures under this paragraph
shall permit such a State to make such an election on a one-time basis.

SEC. 703. PREEMPTION AND RELATIONSHIP TO OTHER LAW.

\(a\) Preemption.\_ No civil action involving a tobacco claim to which
this title applies shall be maintained in any court except in accordance
with this title.

\(b\) Relationship to State Law.\_ This title supersedes State law only
to the extent that State law is inconsistent with this title.

\(c\) Criminal liability.\_ Nothing in this title shall be construed to
limit the criminal liability of tobacco product manufacturers,
retailers, or distributors, or their officers, directors, employees,
successors, or assigns.

SEC. 704. GOVERNMENTAL CLAIMS AND CASTANO CIVIL ACTIONS.

\(a\) In General.\_ Except as provided in subsection (b) and in section
702(c), no State, political subdivision of a State, municipal
corporation, governmental entity or corporation, Indian tribe, or agency
or subdivision thereof, or other entity acting in parens patriae, may
file or maintain any civil action involving a tobacco claim.

\(b\) Effect of Settlement Agreement or Consent Decree.\_ Within 30 days
after the date of enactment of this Act, any State may request that
tobacco product manufacturers enter into the Master Settlement Agreement
or a consent decree. If a State makes such a request and enters into a
consent decree, it may maintain a civil action involving a tobacco claim
only to the extent necessary to permit continuing court jurisdiction
over the consent decree. Nothing herein shall preclude any State from
bringing suit or seeking a court order to enforce the terms of the
Master Settlement Agreement or a consent decree.

\(c\) Castano Civil Actions.\_

\(1\) The rights and benefits afforded in section 221 of this Act, and
the various research activities envisioned by this Act, are provided in
settlement of, and shall constitute the exclusive remedy for the purpose
of determining civil liability as to those claims asserted in the
Castano Civil Actions, and all bases for any such claim under the laws
of any State are preempted (including State substantive, procedural,
remedial, and evidentiary provisions) and settled. The Castano Civil
Actions shall be dismissed with full reservation of the rights of
individual class members to pursue claims not based on addiction or
dependency in civil actions in accordance with this Act. For purposes of
determining application of statutes of limitation or repose, individual
actions filed within one year after the effective date of this Act by
those who were included within a Castano Civil Action shall be
considered to have been filed as of the date of the Castano Civil Action
applicable to said individual.

\(2\) For purposes of awarding attorneys fees and expenses for those
actions subject to this subsection, the matter at issue shall be
submitted to arbitration before one panel of arbitrators. In any such
arbitration, the arbitration panel shall consist of 3 persons, one of
whom shall be chosen by the attorneys of the Castano Plaintiffs\'
Litigation Committee who were signatories to the Memorandum of
Understanding dated June 20, 1997, by and between tobacco product
manufacturers, the Attorneys General, and private attorneys, one of whom
shall be chosen by the participating tobacco product manufacturers, and
one of whom shall be chosen jointly by those 2 arbitrators.

\(3\) The participating tobacco product manufacturers shall pay the
arbitration award.

SEC. 705. CONCURRENT JURISDICTION; FEDERAL CAUSE OF ACTION; ACTIONS;
DAMAGES;LIABILITY.

\(a\) In General.\_ Any tobacco claim in any civil action to which this
title applies shall be deemed to arise under this section and shall be
governed by the provisions of this title, but the substantive rules of
decision for such claim shall be derived from the law of the State or
Tribe that would have been applicable but for the operation of this
section, to the extent that such law is not inconsistent with the
provisions of this title. This Federal cause of action shall be the
exclusive means for the purpose of determining civil liability on any
such tobacco claim in any civil action to which this title applies, and
all other bases for tobacco claims under State, Tribal, and local law
are hereby preempted. District courts of the United States and tribal
courts shall have concurrent jurisdiction with the courts of the States
over any tobacco claim in any civil action under this section.

\(b\) Permissible Defendants.\_ In any civil action to which this
subtitle applies, tobacco claims may be filed or maintained only
against\_

\(1\) a tobacco product manufacturer; or

\(2\) a surviving entity established by a tobacco product manufacturer.

\(c\) Addiction and Dependence Claims Barred.\_ In any civil action to
which this title applies, no addiction claim or dependence claim may be
filed or maintained.

\(d\) Requirements.\_ The following requirements apply to civil actions
to which this title applies:

\(1\) Future reduced-risk products.\_ In any civil action to which this
subtitle applies, no allegation or evidence relating to reduced-risk
tobacco products developed after the date of enactment of this Act shall
be admissible or discoverable in any action on a tobacco claim arising
out of, based on, or related to any other tobacco product.

\(2\) Production of documents.\_ All documents or other records included
in the document depository required to be established and maintained
under section 903 of this Act shall be deemed produced in any civil
action involving a tobacco claim, and no court in such action shall
require additional production of any such document or record. Any such
document submitted to the court shall be considered authenticated with
the same legal status as the original.

\(e\) Liability.\_ The following provisions regarding liability shall
apply in civil actions to which this title applies:

\(1\) A tobacco product manufacturer shall be liable for any act or
omission of its attorneys, advertising agencies, and agents undertaken
in the representation of such tobacco product manufacturer.

\(2\) A tobacco product manufacturer shall be liable in connection with
any tobacco claim for the liability, if any, of any of its affiliates
arising from tobacco products sold directly by such affiliate in the
United States or to an importer for resale in the United States, unless
such affiliate is a participating tobacco product manufacturer or a
non-participating tobacco product manufacturer.

\(3\) Participating tobacco product manufacturers shall not be jointly
and severally liable on a tobacco claim with non-participating tobacco
product manufacturers. Nothing in this title prevents a participating
tobacco product manufacturer from being held jointly and severally
liable with any other person other than a non-participating tobacco
product manufacturer if such liability exists under the applicable
substantive rules of decision as determined under subsection (a), except
that any such imposition of joint and several liability against a
participating tobacco product manufacturer shall be subject to the
provisions of section 706.

\(4\) In any civil action involving both a tobacco claim against a
participating tobacco product manufacturer based in whole or in part
upon conduct occurring prior to the date of enactment of this Act and a
claim against 1 or more non-participating tobacco product manufacturers,
the court, upon application of a participating tobacco product
manufacturer shall sever a trial so that all claims against
participating tobacco product manufacturers shall be tried separately
from any claim involving non-participating tobacco product
manufacturers. If such severance results in a tobacco claim being
submitted to more than 1 jury or to the same jury for separate
deliberation the participating tobacco product manufacturer may not
assert any claim that would prejudice the dollar amount to be recovered
by the holder of the tobacco claim from the participating tobacco
product manufacturer due to the severance of the action including
satisfaction by way of jury verdict against the non-participating
tobacco product manufacturer. In any action brought against a
participating tobacco manufacturer and a person that is not a tobacco
product manufacturer, the court may sever the trial so that all claims
against such person may be tried separately.

\(5\) In any civil action brought involving a tobacco claim, there shall
be a presumption that nicotine is addictive and that the diseases
identified as being caused by use of tobacco products in the Center for
Disease Control and Prevention Reducing the Health Consequences of
Smoking: 25 Years of Progress: A Report of the Surgeon General (United
States Public Health Service 1989), The Health Consequences of Smoking:
Involuntary Smoking, (USPHS 1986); and The Health Consequences of Using
Smokeless Tobacco, (USPHS 1986), are caused in whole or in part by the
use of tobacco products, (referred to elsewhere in this paragraph as the
\`\`general causation presumption\'\'), and a jury empaneled to hear a
tobacco claim shall be so instructed. In all other respects, the burden
of proof as to the issue of whether a plaintiff\'s specific disease or
injury was caused by smoking shall be governed by the law of the State
or Tribe in which the tobacco claim was brought. The general causation
presumption shall in no way affect the ability of the defendant to
introduce evidence or argument which the defendant would otherwise be
entitled to present under the law of the State or Tribe in which the
tobacco claim was brought to rebut the general causation presumption, or
with respect to general causation, specific causation, or alternative
causation, or to introduce any other evidence or argument which the
defendant would otherwise be entitled to make.

\(f\) Preservation of Insurance Claims.\_

\(1\) In general.\_ If all participating tobacco product manufacturers
fail to make the payments required by this Act for any calendar year,
then\_

\(A\) beginning on the first day of the next calendar year, subsection
(a) does not apply to any insurance claim (including a direct action
claim) that is a tobacco claim, regardless of when that claim arose;

\(B\) any statute of limitations or doctrine of laches under applicable
law shall be tolled for the period\_

\(i\) beginning on the date of enactment of this Act; and

\(ii\) ending on the last day of that calendar year; and

\(C\) an insurance claim (including a direct action claim) that is a
tobacco claim and that is pending on the date of enactment of this Act
shall be preserved.

\(2\) Application of title 11, United States Code.\_ For purposes of
this subsection, nothing in this Act shall be construed to modify,
suspend, or otherwise affect the application of title 11, United States
Code, to participating tobacco manufacturers that fail to make such
payments.

\(3\) State law not affected.\_ Nothing in this subsection shall be
construed to expand or abridge State law.

SEC. 706. PAYMENT OF TOBACCO CLAIM SETTLEMENTS AND JUDGMENTS.

\(a\) In General.\_ Except as provided below, any judgment or settlement
in any civil action to which this subtitle applies shall be subject to
the process for payment of judgments and settlements set forth in this
section. No participating tobacco product manufacturer shall be
obligated to pay a judgment or settlement on a tobacco claim in any
civil action to which this title applies except in accordance with this
section. This section shall not apply to the portion, if any, of a
judgment that imposes punitive damages based on any conduct that\_

\(1\) occurs after the date of enactment of this Act; and

\(2\) is other than the manufacture, development, advertising,
marketing, or sale of tobacco products in compliance with this Act and
the Master Settlement Agreement.

\(b\) Registration with the Secretary of the Treasury.\_

\(1\) The Secretary shall maintain a record of settlements, judgments,
and payments in civil actions to which this title applies.

\(2\) Any party claiming entitlement to a monetary payment under a final
judgment or final settlement on a tobacco claim shall register such
claim with the Secretary by filing a true and correct copy of the final
judgment or final settlement agreement with the Secretary and providing
a copy of such filing to all other parties to the judgment or
settlement.

\(3\) The Secretary shall assign a priority for payment based upon the
date on which a proper registration of a final judgment or final
settlement occurs.

\(4\) Any participating tobacco product manufacturer making a payment on
any final judgment or final settlement to which this section applies
shall certify such payment to the Secretary by filing a true and correct
copy of the proof of payment and a statement of the remaining unpaid
portion, if any, of such final judgment or final settlement with the
Secretary and shall provide a copy of such filing to all other parties
to the judgment or settlement.

\(c\) Liability Cap.\_ The aggregate payments made by all participating
tobacco product manufacturers in any calendar year may not exceed
\$6,500,000,000. The Secretary shall initiate a rulemaking within 30
days afterthe date of enactment of this Act to establish a mechanism for
implementing this subsection in such a way that payments may be made
from all awards payable in that year. Amounts not payable because of the
application of this subsection, shall be carried forward and paid in the
next year, subject to the provisions of this subsection.

\(d\) Injunctive Relief.\_ A participating tobacco product manufacturer
may commence an action to enjoin any State court proceeding to enforce
or execute any judgment or settlement where payment has not been
authorized under this section. Such an action shall arise under the laws
of the United States and may be commenced in the district court of the
United States for the district in which the State court proceeding is
pending.

\(e\) Joint and Several Liability.\_ All participating tobacco product
manufacturers shall be jointly and severally liable for, and shall enter
into an agreement to apportion among them, any amounts payable under
judgments and settlements governed by this section arising in whole or
in part from conduct occurring prior to the date of enactment of this
Act. No participating tobacco product manufacturer shall cease
operations without establishing a surviving entity against which a
tobacco claim may be brought. Any obligation or interest of a
participating, tobacco product manufacturer arising under such liability
apportionment agreement shall be given priority and shall not be
rejected, avoided, or discharged in a proceeding, under title 11, United
States Code, or in any liquidation, reorganization, receivership, or
other insolvency proceeding under State law.

SEC. 707. ATTORNEY\'S FEES AND EXPENSES.

\(a\) Arbitration Panel.\_

\(1\) Establishment .\_ For the purpose of awarding of attorneys\' fees
and expenses relating to litigation affected by, or legal services that,
in whole or in part, resulted in or created a model for programs in,
this Act, and with respect to which litigation or services the attorney
involved is unable to agree with the plaintiff who employed that
attorney with respect to any dispute that may arise between them
regarding the fee agreement, the matter at issue shall be submitted to
arbitration. In any such arbitration, the arbitration panel shall
consist of 3 persons, one of whom shall be chosen by the plaintiff, one
of whom shall be chosen by the attorney, and one of whom shall be chosen
jointly by those 2 arbitrators.

\(2\) Operation.\_ Not later than 30 days after the date on which all
members of an arbitration panel are appointed under paragraph (1), the
panel shall establish the procedures under which the panel will operate
which shall include\_

\(A\) a requirement that any finding by the arbitration panel must be in
writing and supported by written reasons;

\(B\) procedures for the exchanging of exhibits and witness lists by the
various claimants for awards;

\(C\) to the maximum extent practicable, requirements that proceedings
before the panel be based on affidavits rather than live testimony; and

\(D\) a requirement that all claims be submitted to an arbitration panel
not later than 3 months after the date of this Act and a determination
made by the panel with respect to such claims not later than 7 months
after such date of enactment.

\(3\) Right to petition.\_ Any individual attorney or group of attorneys
involved in litigation affected by this Act shall have the right to
petition an arbitration panel for attorneys\' fees and expenses.

\(4\) Criteria.\_ In making any award under this section, an arbitration
panel shall consider the following criteria:

\(A\) The time and labor required by the claimant.

\(B\) The novelty and difficulty of the questions involved in the action
for which the claimant is making a claim.

\(C\) The skill requisite to perform the legal service involved
properly.

\(D\) The preclusion of other employment by the attorney due to
acceptance of the action involved.

\(E\) Whether the fee is fixed or a percentage.

\(F\) Time limitations imposed by the client or the circumstances.

\(G\) The amount involved and the results obtained.

\(H\) The experience, reputation, and ability of the attorneys involved.

\(I\) The undesirability of the action.

\(J\) Such other factors as justice may require.

\(5\) Appeal and enforcement.\_ The findings of an arbitration panel
shall be final, binding, nonappealable, and payable within 30 days after
the date on which the finding is made public, except that if an award is
to be paid in installments, the first installment shall be payable
within such 30 day period and succeeding installments shall be paid
annually thereafter.

\(b\) Validity and Enforceability of Private Agreements.\_
Notwithstanding any other provision of this Act, nothing in this section
shall be construed to abrogate or restrict in any way the rights of any
parties to mediate, negotiate, or settle any fee or expense disputes or
issues to which this section applies, or to enter into private
agreements with respect to the allocation or division of fees among the
attorneys party to any such agreement.

\(c\) Offset for Amounts Already Paid.\_ In making a determination under
this section with regard to a dispute between a State that pursued
independent civil action against tobacco product manufacturers and its
attorney, the arbitration panel shall take into account any amounts
already paid by the State under the agreement in dispute.

SEC. 708. NON-PARTICIPATING TOBACCO PRODUCT MANUFACTURERS.

\(a\) In General.\_ If a tobacco product manufacturer does not enter
into a consent decree or the Protocol before the date of enactment of
this Act, then the limitations on liability under this title do not
apply to that manufacturer.

\(b\) Imposition of Fee.\_

\(1\) In general.\_ There is hereby imposed on each tobacco product
manufacturer described in subsection (a) an annual fee for any calendar
year ending after the date of enactment of this Act for which it does
not enter into a consent decree or sign the Protocol

\(2\) Amount.\_

\(A\) Total.\_ The amount of the annual fee imposed by paragraph (1) is
equal to 150 percent of the amount that would be paid under section 403
of this Act for that year by that tobacco product manufacturer if it
were a participating tobacco product manufacturer.

\(B\) Per tobacco product manufacturer.\_ The Secretary shall promulgate
regulations\_

\(i\) under which the amount of the fee imposed under paragraph (1) for
any tobacco product manufacturer is to be determined; and

\(ii\) establishing procedures for the assessment and collection of any
fee imposed under paragraph (1).

SEC. 709. CONFORMING AMENDMENTS.

\(a\) Section 362(b) of title 11, United States Code, is amended by\_

\(1\) striking \`\`or\'\' after the semicolon in paragraph (17);

\(2\) striking \`\`petition.\'\' in paragraph (18) and inserting
\`\`petition; or\'\'; and

\(3\) adding at the end thereof the following:

\`\`(19) under subsection (a) of this section, of the commencement or
continuation of any action or other proceeding by or against a
participating tobacco product manufacturer as defined in section 6(22)
of the National Tobacco Policy and Youth Smoking Reduction Act regarding
any interest or obligation arising under or directly related to the
Master Settlement Agreement as defined in section 6(21) of that Act or
the liability apportionment agreement.\'\'.

\(b\) Section 365 of title 11, United States Code, is amended by\_

\(1\) striking \`\`and (d)\'\' in subsection (a) and inserting \`\`(d),
and (p)\'\'; and

\(2\) adding at the end thereof the following:

\`\`(p) The trustee may not reject, shall be deemed to have assumed as
of the commencement of the case, and shall cause the debtor to perform
on an executory contract of a participating tobacco product manufacturer
as defined in section 6(22) of the National Tobacco Policy and Youth
Smoking Reduction Act, to the extent such executory contract is, or is
directly related to, the Master Settlement Agreement as defined in
section 6(21) of that Act, or the liability apportionment agreement
described.\'\'.

\(c\) Section 507(a) of title 11, United States Code, is amended by
adding at the end thereof the following:

\`\`(10) Tenth, any unsecured claim of or against a participating
tobacco product manufacturer as defined in section 6(22) of the National
Tobacco Policy and Youth Smoking Reduction Act, regarding any interest
or obligation that arises under or is directly related to the Master
Settlement Agreement as defined in section 6(21) of that Act, or the
liability apportionment agreement.\'\'.

\(d\) Section 541(a) of title 11, United States Code, is amended by
adding at the end thereof the following:

\`\`(8) Any interest of the debtor in property to the extent that the
debtor has transferred or agreed to transfer such interest under the
Master Settlement Agreement as defined in section 6(21) of the National
Tobacco Policy and Youth Smoking Reduction Act or any written agreement
directly related to such Master Settlement Agreement, or the liability
apportionment agreement, or any written agreement directly related to
such liability apportionment agreement.\'\'.

\(e\) Section 1141 of title 11, United States Code, is amended by\_

\(1\) striking \`\`(d)(2) and (d)(3)\'\' in subsection (a) and inserting
\`\`(d)(2), (d)(3), and (d)(5)\'\';

\(2\) striking \`\`(d)(2) and (d)(3)\'\' in subsection (c) and inserting
\`\`(d)(2), (d)(3), and (d)(5)\'\'; and

\(3\) adding at the end of subsection (d) the following:

\`\`(5) The confirmation of a plan does not discharge a debtor from any
debt or other obligation arising under or directly related to the Master
Settlement Agreement as defined in section 6(21) of the National Tobacco
Policy and Youth Smoking Reduction Act, or the liability apportionment
agreement.\'\'.

TITLE VIII_TOBACCO INDUSTRY COMPLIANCE AND EMPLOYEE PROTECTION FROM
REPRISALS

SEC. 801. TOBACCO INDUSTRY COMPLIANCE ACCOUNTABILITY REQUIREMENTS.

\(a\) Establishment of Accountability Panel.\_ The Commissioner of Food
and Drugs, in consultation with the Secretary, shall establish an
advisory panel, to be known as the \`\`Tobacco Agreement Accountability
Panel\'\'. The panel shall consist of the Surgeon General, the Director
of the Center for Disease Control or the Director\'s delegate, and the
Director of the Health and Human Services Office of Minority Health.

\(b\) Tobacco Company Plan.\_ Within a year after the date of enactment
of this Act, each participating tobacco product manufacturer shall adopt
and submit to the Commissioner a plan to achieve the required percentage
reductions in underage use of tobacco products set forth in section 201,
and thereafter shall update its plan no less frequently than annually.
The Commissioner shall provide a copy of each such plan to the panel,
which shall review the plan and submit its views on the plan to the
Commissioner. The panel may recommend amendment of any plan to
incorporate additional measures to reduce underage tobacco use that are
consistent with the provisions of this Act.

\(c\) Annual Report.\_ The panel shall submit a report to the
Commissioner and to the Congress by January 31 of each year, which shall
be published in the Federal Register. In its report, the panel shall\_

\(1\) describe in detail each tobacco product manufacturer\'s compliance
with the provisions of this Act and its plan submitted under subsection
(b);

\(2\) report on whether each tobacco product manufacturer\'s efforts to
reduce underage smoking are likely to result in attainment of smoking
reduction targets under section 201;

\(3\) recommend, where necessary, additional measures individual tobacco
companies should undertake to meet those targets; and

\(4\) include, where applicable, the extent to which prior panel
recommendations have been adopted by each tobacco product manufacturer.

\(d\) Public Health Emergency.\_ If the panel determines unanimously at
any time that a tobacco product manufacturer\'s actions or inactions
with respect to its compliance with the Act are of such a nature as to
create a clear and present danger to the attainment of the targets for
underage smoking reduction, it shall immediately report such acts or
omissions to the Commissioner. If the Commissioner determines that such
report is supported by clear and convincing evidence, the Commissioner
may bring an action under section 203 seeking the immediate suspension
of the tobacco product manufacturer\'s annual limitation cap on civil
judgments. If the court determines that the Commissioner has proved by
clear and convincing evidence that the subject manufacturer\'s actions
or inactions are of such a nature that they present a clear and present
danger to the attainment of the targets for underage smoking reduction,
the court may suspend the subject manufacturer\'s annual limitation cap
on civil judgments.

SEC. 802. TOBACCO PRODUCT MANUFACTURER EMPLOYEE PROTECTION.

\(a\) Prohibited Acts.\_ No tobacco product manufacturer may discharge,
demote, or otherwise discriminate against any employee with respect to
compensation, terms, conditions, benefits, or privileges of employment
because the employee (or any person acting under a request of the
employee)\_

\(1\) notified the manufacturer, the Commissioner of Food and Drugs, the
Attorney General, or any Federal, State, or local public health or law
enforcement authority of an alleged violation of this or any other Act;

\(2\) refused to engage in any practice made unlawful by such Acts, if
the employee has identified the alleged illegality to the manufacturer;

\(3\) testified before Congress or at any Federal or State proceeding
regarding any provision (or proposed provision) of such Acts;

\(4\) commenced, caused to be commenced, or is about to commence or
cause to be commenced a proceeding under such Acts, or a proceeding for
the administration or enforcement of any requirement imposed under such
Acts;

\(5\) testified or is about to testify in any such proceeding; or

\(6\) assisted or participated, or is about to assist or participate, in
any manner in such a proceeding or in any other manner in such a
proceeding or in any other action to carry out the purposes of such
Acts.

\(b\) Employee Complaint.\_

\(1\) Any employee of a tobacco product manufacturer who believes that
he or she has been discharged, demoted, or otherwise discriminated
against by any person in violation of subsection (a) of this section
may, within 180 days after such violation occurs, file (or have any
person file on his or her behalf) a complaint with the Secretary
alleging such discharge, demotion, or discrimination. Upon receipt of
such a complaint, the Secretary shall notify the person named in the
complaint of its filing.

(2)(A) Upon receipt of a complaint under paragraph (1) of this
subsection, the Secretary shall conduct an investigation of the
violation alleged in the complaint. Within 30 days after the receipt of
such complaint, the Secretary shall complete such investigation and
shall notify in writing the complainant (and any such person acting in
his or her behalf) and the person alleged to have committed such
violation of the results of the investigation conducted under this
paragraph. Within 90 days after the receipt of such complaint, the
Secretary shall (unless the proceeding on the complaint is terminated by
the Secretary on the basis of a settlement entered into by the Secretary
and the person alleged to have committed such violation) issue an order
either providing the relief prescribed in subparagraph (B) of this
paragraph or denying the complaint. An order of the Secretary shall be
made on the record after notice and the opportunity for a hearing in
accordance with sections 554 and 556 of title 5, United States Code.
Upon the conclusion of such a hearing and the issuance of a recommended
decision that the complaint has merit, the Secretary shall issue a
preliminary order providing the relief prescribed in subparagraph (B) of
this paragraph, but may not order compensatory damages pending a final
order. The Secretary may not enter into a settlement terminating a
proceeding on a complaint without the participation and consent of the
complainant.

\(B\) If, in response to a complaint under paragraph (1) of this
subsection, the Secretary determines that a violation of this paragraph
has occurred, the Secretary shall order the person who committed such
violation to (i) take affirmative action to abate the violation, and
(ii) reinstate the complainant to his or her former position together
with compensation (including back pay), terms, conditions, and
privileges of his or her employment. The Secretary may order such person
to provide compensatory damages to the complainant. If an order is
issued under this subparagraph, the Secretary, at the request of the
complainant, shall assess the person against whom the order is issued a
sum equal to the aggregate amount of all costs and expenses (including
attorneys\' and expert witness fees) reasonably incurred (as determined
by the Secretary), by the complainant for, or in connection with, the
bringing of the complaint upon which the order is issued.

(3)(A) The Secretary shall dismiss a complaint filed under paragraph (1)
of this subsection, and shall not conduct the investigation required
under paragraph (2) of this subsection, unless the complainant has made
a prima facie showing that any behavior described in subsection (a) of
this section was a contributing factor in the unfavorable personnel
action alleged in the complaint.

\(B\) Notwithstanding a finding by the Secretary that the complainant
has made the showing required by subparagraph (A) of this paragraph, no
investigation required under paragraph (2) of this subsection shall be
conducted if the manufacturer demonstrates by clear and convincing
evidence that it would have taken the same unfavorable personnel action
in the absence of such behavior. Relief may not be ordered under
paragraph (1) of this subsection if the manufacturer demonstrates by
clear and convincing evidence that it would have taken the same
unfavorable personnel action in the absence of such behavior.

\(C\) The Secretary may determine that a violation of subsection (a) of
this section has occurred only if the complainant has demonstrated that
any behavior described in subsection (a) of this section was a
contributing factor in unfavorable personnel action alleged in the
complaint.

\(c\) Judicial Review.\_

\(1\) Any person adversely affected or aggrieved by an order issued
under subsection (a) of this section may obtain review of the order in
the United States court of appeals for the circuit in which the
violation, with respect to which the order was issued, allegedly
occurred. The petition for review must be filed within 60 days after the
issuance of the Secretary\'s order. Judicial review shall be available
as provided in chapter 7 of title 5, United States Code. The
commencement of proceedings under this subsection shall not, unless
ordered by the court, operate as a stay of the Secretary\'s order.

\(2\) An order of the Secretary with respect to which review could have
been obtained under paragraph (1) of this subsection shall not be
subject to judicial review in any criminal or civil proceeding.

\(d\) Noncompliance.\_ Whenever a person has failed to comply with an
order issued under subsection (b)(2) of this section, the Secretary may
file a civil action in the United States district court for the district
in which the violation occurred to enforce such order. In actions
brought under this subsection, the district courts shall have
jurisdiction to grant all appropriate relief, including injunctive
relief and compensatory and exemplary damages.

\(e\) Action to Ensure Compliance.\_

\(1\) Any person on whose behalf an order was issued under subsection
(b)(2) of this section may commence a civil action to require compliance
with such order against the person to whom such order was issued. The
appropriate United States district court shall have jurisdiction to
enforce such order, without regard to the amount in controversy or the
citizenship of the parties.

\(2\) The court, in issuing any final order under this subsection, may
award costs of litigation (including reasonable attorneys\' and expert
witness fees) to any party whenever the court determines such award is
appropriate.

\(f\) Enforcement.\_ Any non-discretionary duty imposed by this section
shall be enforceable in a mandamus proceeding brought under section 1361
of title 28, United States Code.

\(g\) Applicability to Certain Employees.\_ Subsection (a) of this
section shall not apply with respect to any employee who, acting without
direction from the manufacturer (or the agent of the manufacturer)
deliberately causes a violation of any requirement of this Act, the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq), or any
other law or regulation relating to tobacco products.

\(h\) Effect on Other Laws.\_ This section shall not be construed to
expand, diminish, or otherwise affect any right otherwise available to
an employee under Federal or State law to redress the employee\'s
discharge or other discriminatory action taken by a tobacco product
manufacturer against the employee.

\(i\) Posting.\_ The provisions of this section shall be prominently
posted in any place of employment to which this section applies.

TITLE IX_PUBLIC DISCLOSURE OF TOBACCO INDUSTRY DOCUMENTS

SEC. 901. FINDINGS.

The Congress finds that\_

\(1\) the American tobacco industry has made claims of attorney-client
privilege, attorney work product, and trade secrets to protect from
public disclosure thousands of internal documents sought by civil
litigants;

\(2\) a number of courts have found that these claims of privilege were
not made in good faith; and

\(3\) a prompt and full exposition of tobacco documents will\_

\(A\) promote understanding by the public of the tobacco industry\'s
research and practices; and

\(B\) further the purposes of this Act.

SEC. 902. APPLICABILITY.

This title shall apply to all participating tobacco product
manufacturers.

SEC. 903. NATIONAL TOBACCO DOCUMENT DEPOSITORY.

\(a\) Establishment.\_ Participating tobacco product manufacturers
shall, within 180 days after the enactment of this Act, establish a
National Tobacco Document Depository in the Washington, D.C., area. The
cost of establishing and operating the Depository shall be allocated
among such manufacturers on the basis of market share or as otherwise
agreed among them.

\(b\) Document Categories.\_ Within 30 days after the establishment of
the Depository, each participating tobacco product manufacturer shall
submit to the Depository\_

\(1\) all original laboratory research conducted or funded, directly or
indirectly, by any participating tobacco product manufacturers, the
Center for Tobacco Research and Tobacco Institute relating to the health
effects or safety of tobacco products, including without limitation all
original laboratory research relating to any method or means of making
tobacco products less hazardous to consumers;

\(2\) all documents produced by any participating tobacco product
manufacturer, the Center of Tobacco Research or Tobacco Institute to the
Attorney General of any State during discovery in any action brought on
behalf of any State and commenced after January 1, 1994;

\(3\) all documents produced by any participating tobacco product
manufacturer, Center for Tobacco Research or Tobacco Institute to the
Federal Trade Commission in connection with its investigation into the
\`\`Joe Camel\'\' advertising campaign and any underage marketing of
tobacco products to minors;

\(4\) all documents produced by any participating tobacco product
manufacturers, the Center for Tobacco Research or the Tobacco Institute
to litigation adversaries during discovery in any private litigation
matters;

\(5\) all documents produced by any participating tobacco product
manufacturer, the Center for Tobacco Research, or the Tobacco Institute
in any of the following private litigation matters:

\(A\) Philip Morris v. American Broadcasting Co., Law No.
7609CL94x00181-00 (Cir. Ct. Va. filed Mar. 26, 1994);

\(B\) Estate of Butler v. R.J. Reynolds Tobacco Co., Civ. A. No. 94-5-53
(Cir. Ct. Miss., filed May 12, 1994);

\(C\) Haines v. Liggett Group, No. 84-CV-678 (D.N.J., filed Feb. 22,
1984); and

\(D\) Cipollone v. Liggett Group, No. 83-CV-284 (D.N.J., filed Aug. 1,
1983);

\(6\) any document produced as evidence or potential evidence or
submitted to the court by participating tobacco product manufacturers in
any of the actions described in paragraph (5), including briefs and
other pleadings, memoranda, interrogatories, transcripts of depositions,
and expert witnesses and consultants materials, including
correspondence, reports, and testimony;

\(7\) any additional documents that any participating tobacco product
manufacturer, the Center for Tobacco Research, or the Tobacco Institute
have agreed or been required by any court to produce to litigation
adversaries as part of discovery in any action listed in paragraph (2),
(3), (4), or (5) but have not yet completed producing as of the date of
enactment of this Act;

\(8\) all indices of documents relating to tobacco products and health,
with any such indices that are maintained in computerized form placed
into the depository in both a computerized and hard-copy form;

\(9\) a privilege log describing each document or portion of a document
otherwise subject to production in the actions enumerated in this
subsection that any participating tobacco product manufacturer, the
Center for Tobacco Research, or the Tobacco Institute maintains, based
upon a good faith de novo re-review conducted after June 20, 1997, is
exempt from public disclosure under this title; and

\(10\) a trade secrecy log describing each document or portion of a
document that any participating tobacco product manufacturer, the Center
for Tobacco Research, or the Tobacco Institute maintains is exempt from
public disclosure under this title.

\(c\) Future Documents .\_With respect to documents created after the
date of enactment of this Act, the participating tobacco product
manufacturers and their trade associations shall place into the
depository in accordance with a schedule established by the Board the
following documents:

\(1\) All original laboratory research conducted or funded, directly or
indirectly, by any participating tobacco product manufacturer relating
to the health effects or safety of tobacco products, including without
limitation all original laboratory research relating to any methods or
means of making tobacco products less hazardous to consumers.

\(2\) All studies conducted or funded, directly or indirectly, by any
participating tobacco product manufacturer, relating to tobacco product
use by minors.

\(3\) All documents discussing or referring to the relationship, if any,
between advertising and promotion and the use of tobacco products by
minors.

\(4\) A privilege log describing each document or each portion of a
document otherwise subject to public disclosure under this subsection
that any participating tobacco product manufacturer maintains is exempt
from public disclosure under this title.

\(5\) A trade secrecy log describing each document or each portion of a
document otherwise subject to public disclosure under this subsection
that any participating tobacco product manufacturer, the Center for
Tobacco Research, or the Tobacco Institute maintains is exempt from
public disclosure under this Act.

\(d\) Document Identification and Index.\_ Documents submitted to the
Depository under this section shall be sequentially numbered and marked
to identify the participating tobacco product manufacturer. Within 15
days after submission of documents to the Depository, each tobacco
product manufacturer shall supply the Depository with a comprehensive
document index which references the applicable document categories
contained in subsection (b).

SEC. 904. PRIVILEGE AND TRADE SECRET CLAIMS.

\(a\) Separate Submission of Documents.\_ Any document that is subject
to a claim by a participating tobacco product manufacturer of
attorney-client privilege, attorney work product, or trade secret
protection shall be so marked and shall be submitted separately to the
Depository. Compliance with this subsection shall not be deemed to be a
waiver of any applicable claim of privilege or trade secret protection.

\(b\) Confidentiality.\_ Notwithstanding the provisions of section 552
of title 5 of the United States Code or the provisions of any State law,
documents, and information provided to the United States Department of
Justice or to State antitrust authorities under the Protocol shall be
kept confidential by and among the United States Department of Justice
and such authorities and shall be used only for the governmental
purposes of enforcing this Act, the Protocol, and the consent decrees.
The inspection and discovery rights provided to the States under the
Protocol and this section shall be exercised by each State but
coordinated through a multi-state States\' Attorneys General oversight
committee.

\(c\) Privilege and Trade Secret Logs.\_

\(1\) In general.\_ Within 15 days after submitting documents to the
Depository under subsection (a), each participating tobacco product
manufacturer shall submit to the Depository a comprehensive log which
identifies on a document-by-document basis all documents produced to the
Depository for which the manufacturer asserts attorney-client privilege,
attorney work-product, or trade secrecy. With respect to documents for
which the manufacturer previously has asserted one or more of the
aforementioned privileges or trade secret protection, the manufacturer
shall conduct a good faith de novo review of such documents to determine
whether such privilege or trade secret protection is appropriate.

\(2\) Organization of log.\_ The log shall be organized in numerical
order based upon the document identifier assigned to each document. For
each document, the log shall contain\_

\(A\) a description of the document, including type of document, title
of document, name and position or title of each author, addressee, and
other recipient who was intended to receive a copy, document date,
document purpose, and general subject matter;

\(B\) an explanation why the document or a portion of the document is
privileged or subject to trade secret protection; and

\(C\) a statement whether any previous claim of privilege or trade
secret was denied and, if so, in what proceeding.

\(3\) Public inspection.\_ Within 5 days of receipt of such a log, the
Depository shall make it available for public inspection and review.

\(d\) Declaration of Compliance.\_ Each participating tobacco product
manufacturer shall submit to the Board a declaration, in accordance with
the requirements of section 1746 of title 28, United States Code, by an
individual with responsibility for the de novo review of documents,
preparation of the privilege log, and knowledge of its contents. The
declarant shall attest to the manufacturer\'s compliance with the
requirements of this title pertaining to the review of documents and
preparation of a privilege log.

SEC. 905. DISCLOSURE BY THE DEPOSITORY.

\(a\) In General.\_ Within 30 days after receipt of a document that is
not subject to a claim of attorney-client privilege, attorney work
product, or trade secret protection, the Depository shall make the
document available to the public using the Internet and other means.

\(b\) Evidentiary Status.\_ The provisions of section 2116(a) and (b) of
title 44, United States Code, apply to records and documents submitted
to the Depository in the same manner and to the same extent as if they
were records submitted to the National Archives of the United States
required by statute to be retained indefinitely.

\(c\) Application of Confidentiality Law.\_ The release by the National
Tobacco Documents Review Board established under section 906 or any
employee of the Depository of any document recognized by the Depository
as protected as a trade secret is a violation of section 1905 of title
18, United States Code.

SEC. 906. NATIONAL TOBACCO DOCUMENTS REVIEW BOARD.

\(a\) Establishment.\_ There shall be a National Tobacco Documents
Review Board consisting of 5 members, qualified by training and
experience to carry out the functions of the Board, each of whom shall
be appointed by the President and with the advice and consent of the
Senate. Any person who is a citizen of the United States shall be
eligible to serve as a member of the Board. Each Board member shall be
appointed for a term of 7 years and shall be eligible for reappointment.
The Board shall have the power to hire such staff and establish such
operating procedures as it deems necessary to carry out its functions as
specified hereunder.

\(b\) Responsibility for Depository.\_ The Board shall have the
responsibility of maintaining the Depository and shall, in consultation
with the General Services Administration, establish guidelines and
procedures for the establishment and operation of the Depository,
including guidelines for the immediate disclosure of documents that are
not subject to unresolved claims of privilege or trade secrecy. The
Depository shall be open to the public and maintained in a manner that
permits it to be used as a resource for litigants, public health groups,
and persons with an interest in tobacco industry records and research
concerning smoking and health, addiction or nicotine dependency, safer
or less hazardous cigarettes, and underage tobacco use and marketing.
The Board may grant reasonable extensions of time for compliance upon a
showing of good cause.

\(c\) Privilege.\_ The Board shall apply the attorney-client privilege
and the attorney work-product doctrine in a manner consistent with
Federal law.

SEC. 907. RESOLUTION OF DISPUTED PRIVILEGE AND TRADE SECRET CLAIMS.

\(a\) In General.\_ The Board shall determine whether to uphold or
reject disputed claims of attorney client privilege, attorney work
product, or trade secret protection with respect to documents submitted
to the Depository. Any person may petition the Board to resolve a claim
that a document submitted to the Depository may not be disclosed to the
public. Such a determination shall be made by a majority of the Board,
in writing, and shall be subject to judicial review as specified in this
title. All such determinations shall be made solely on consideration of
the subject document and written submissions from the person claiming
that the document is privileged or protected by trade secrecy and from
any person seeking disclosure of the document. The Board shall cause
notice of the petition and the Board\'s decision to be published in the
Federal Register.

\(b\) Final Decision.\_ The Board may uphold a claim of privilege or
protection in its entirety or, in its sole discretion, it may redact
that portion of a document that it determines is protected from public
disclosure under subsection (a). Any decision of the Board shall be
final unless judicial review is sought under section 908. In the event
that judicial review is sosought, the Board\'s decision shall be stayed
pending a final judicial decision.

SEC. 908. APPEAL OF BOARD DECISION.

\(a\) Petition; Right of Appeal.\_ Any person may obtain judicial review
of a final decision of the Board by filing a petition for review with
the United States Court of Appeals for the Federal Circuit within 60
days after the publication of such decision in the Federal Register. A
copy of the petition shall be transmitted by the Clerk of the Court to
the Board. The Board shall file in the court the record of the
proceedings on which the Board based its decision (including any
documents reviewed by the Board in camera ) as provided in section 2112
of title 28, United States Code. Upon the filing of such petition, the
court shall have exclusive jurisdiction to affirm or set aside the
Board\'s decision, except that until the filing of the record the Board
may modify or set aside its decision.

\(b\) Additional Evidence and Arguments.\_ If the any party applies to
the court for leave to adduce additional evidence respecting the
decision being reviewed and shows to the satisfaction of the court that
such additional evidence or arguments are material and that there were
reasonable grounds for the failure to adduce such evidence or arguments
in the proceedings before the Board, the court may order the Board to
provide additional opportunity for the presentation of evidence or
arguments in such manner and upon such terms as the court deems proper.
The Board may modify its findings or make new findings by reason of the
additional evidence or arguments and shall file with the court such
modified or new findings, and its recommendation, if any, for the
modification or setting aside of the decision being reviewed.

\(c\) Standard of Review; Finality of Judgments.\_ The Board\'s findings
of fact, if supported by substantial evidence on the record taken as a
whole, shall be conclusive. The court shall review the Board\'s legal
conclusions de novo. The judgment of the court affirming or setting
aside the Board\'s decision shall be final, subject to review by the
Supreme Court of the United States upon certiorari or certification, as
provided in section 1254 of title 28, United States Code.

\(d\) Public Disclosure After Final Decision.\_ Within 30 days after a
final decision that a document, as redacted by the Board or in its
entirety, is not protected from disclosure by a claim of attorney-client
privilege, attorney work product, or trade secret protection, the Board
shall direct the Depository to make the document available to the
public. No Federal, Tribal, or State court shall have jurisdiction to
review a claim of attorney-client privilege, attorney work product, or
trade secret protection for a document that has lawfully been made
available to the public under this subsection.

\(e\) Effect of Non-disclosure Decision on Judicial Proceedings.\_ The
Board\'s decision that a document is protected by attorney-client
privilege, attorney work product, or trade secret protection is binding
only for the purpose of protecting the document from disclosure by the
Depository. The decision by the Board shall not be construed to prevent
a document from being disclosed in a judicial proceeding.

\(f\) Disclosure to the Food and Drug Administration.\_ Within 240 days
after the date of enactment of this Act, each participating tobacco
product manufacturer shall submit to the Food and Drug Administration
the documents identified in section 903(b) or 903(c), including
documents for which trade secret protection is claimed, with the
exception of any document for which privilege is claimed, and identified
in accordance with section 904(a). Each such manufacturer shall provide
the Administration with the privilege and trade secret logs identified
under section 904(b). With respect to documents that are claimed to
contain trade secret material, unless and until it is finally determined
under this title, either through judicial review or because time for
judicial review has expired, that such a document does not constitute or
contain trade secret material, the Administration shall treat the
document as a trade secret in accordance with section 708 of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 379) and the regulations
promulgated thereunder. Nothing herein shall limit the authority of the
Administration to obtain and use, in accordance with any provision of
the Federal Food, Drug, and Cosmetic Act and the regulations promulgated
thereunder, any document constituting or containing trade secret
material. Documents and materials received by the Administration under
this provision shall not be obtainable by or releasable to the public
through section 552 of title 5, United States Code, or any other
provision of law, and the only recourse to obtain these documents shall
be through the Board and Depository.

SEC. 909. MISCELLANEOUS.

The disclosure process in this title is not intended to affect the
Federal Rules of Civil or Criminal Procedure or any Federal law which
requires the disclosure of documents or which deals with attorney-client
privilege, attorney work product, or trade secret protection.

SEC. 910. PENALTIES.

\(a\) Good Faith Requirement.\_ Each participating tobacco product
manufacturer must act in good faith in asseting claims of privilege or
trade secret protection based on fact and law. If the Board determines
that a participating tobacco product manufacturer has not acted in good
faith with full knowledge of the truth of the facts asserted and with a
reasonable basis under existing law, the manufacturer shall be assessed
costs, which shall include the full administrative costs of handling the
claim of privilege, and all attorneys\' fees incurred by the Board and
any party contesting the privilege. The Board may also impose civil
penalties of up to \$10,000 per violation if it determines that the
manufacturer acted in bad faith in asserting a privilege, or knowingly
acted with the intent to delay, frustrate, defraud, or obstruct the
Board\'s determination of privilege or trade secret protection claims.

\(b\) Failure to Produce Document.\_ A failure by a participating
tobacco product manufacturer to produce indexes and documents in
compliance with the schedule set forth in this title, or with such
extension as may be granted by the Board, shall be punished by a civil
penalty of up to \$500 per violation. A separate violation occurs for
each document the manufacturer has failed to produce in a timely manner.
The maximum penalty under this subsection for a related series of
violations is \$10,000. In determining the amount of anycivil penalty,
the Board shall consider the number of documents, length of delay, any
history of prior violations, the ability to pay, and such other matters
as justice requires. Nothing in this title shall replace or supersede
any criminal sanction under title 18, United States Code, or any other
provision of law.

SEC. 911. DEFINITIONS.

For the purposes of this title\_

\(1\) Document.\_ The term \`\`document\'\' includes originals and
drafts of any kind of written or graphic matter, regardless of the
manner of production or reproduction, of any kind or description,
whether sent or received or neither, and all copies thereof that are
different in any way from the original (whether by interlineation,
receipt stamp, notation, indication of copies sent or received or
otherwise) regardless of whether confidential, privileged, or otherwise,
including any paper, book, account, photograph, blueprint, drawing,
agreement, contract, memorandum, advertising material, letter, telegram,
object, report, record, transcript, study, note, notation, working
paper, intra-office communication, intra-department communication,
chart, minute, index sheet, routing sheet, computer software, computer
data, delivery ticket, flow sheet, price list, quotation, bulletin,
circular, manual, summary, recording of telephone or other conversation
or of interviews, or of conferences, or any other written, recorded,
transcribed, punched, taped, filmed, or graphic matter, regardless of
the manner produced or reproduced. Such term also includes any tape,
recording, videotape, computerization, or other electronic recording,
whether digital or analog or a combination thereof.

\(2\) Trade secret.\_ The term \`\`trade secret\'\' means any
commercially valuable plan, formula, process, or device that is used for
making, compounding, processing, or preparing trade commodities and that
can be said to be the end-product of either innovation or substantial
effort, for which there is a direct relationship between the plan,
formula, process, or device and the productive process.

\(3\) Certain actions deemed to be proceedings.\_ Any action undertaken
under this title, including the search, indexing, and production of
documents, is deemed to be a \`\`proceeding\'\' before the executive
branch of the United States.

\(4\) Other terms.\_ Any term used in this title that is defined in
section 701 has the meaning given to it by that section.

TITLE X_LONG-TERM ECONOMIC ASSISTANCE FOR FARMERS

SEC. 1001. SHORT TITLE.

This title may be cited as the \`\`Long-Term Economic Assistance for
Farmers Act\'\' or the \`\`LEAF Act\'\'.

SEC. 1002. DEFINITIONS.

In this title:

\(1\) Participating tobacco producer .\_The term \`\`participating
tobacco producer\'\' means a quota holder, quota lessee, or quota
tenant.

\(2\) Quota holder .\_The term \`\`quota holder\'\' means a producer
that owns a farm for which a tobacco farm marketing quota or farm
acreage allotment was established under the Agricultural Adjustment Act
of 1938 (7 U.S.C. 1281 et seq.) for any of the 1995, 1996, or 1997 crop
years.

\(3\) Quota lessee .\_The term \`\`quota lessee\'\' means\_

\(A\) a producer that owns a farm that produced tobacco pursuant to a
lease and transfer to that farm of all or part of a tobacco farm
marketing quota or farm acreage allotment established under the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) for any of
the 1995, 1996, or 1997 crop years; or

\(B\) a producer that rented land from a farm operator to produce
tobacco under a tobacco farm marketing quota or farm acreage allotment
established under the Agricultural Adjustment Act of 1938 (7 U.S.C. 1281
et seq.) for any of the 1995, 1996, or 1997 crop years.

\(4\) Quota tenant .\_The term \`\`quota tenant\'\' means a producer
that\_

\(A\) is the principal producer, as determined by the Secretary, of
tobacco on a farm where tobacco is produced pursuant to a tobacco farm
marketing quota or farm acreage allotment established under the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) for any of
the 1995, 1996, or 1997 crop years; and

\(B\) is not a quota holder or quota lessee.

\(5\) Secretary .\_The term \`\`Secretary\'\' means\_

\(A\) in subtitles A and B, the Secretary of Agriculture; and

\(B\) in section 1031, the Secretary of Labor.

\(6\) Tobacco product importer .\_The term \`\`tobacco product
importer\'\' has the meaning given the term \`\`importer\'\' in section
5702 of the Internal Revenue Code of 1986.

\(7\) Tobacco product manufacturer .\_

\(A\) In general .\_The term \`\`tobacco product manufacturer\'\' has
the meaning given the term \`\`manufacturer of tobacco products\'\' in
section 5702 of the Internal Revenue Code of 1986.

\(B\) Exclusion .\_The term \`\`tobacco product manufacturer\'\' does
not include a person that manufactures cigars or pipe tobacco.

\(8\) Tobacco warehouse owner .\_The term \`\`tobacco warehouse
owner\'\' means a warehouseman that participated in an auction market
(as defined in the first section of the Tobacco Inspection Act (7 U.S.C.
511)) during the 1998 marketing year.

\(9\) Trust fund .\_The term \`\`Trust Fund\'\' means the Tobacco
Community Revitalization Trust Fund established under section 1011.

Subtitle A_Tobacco Community Revitalization Trust Fund

SEC. 1011. ESTABLISHMENT OF TRUST FUND.

\(a\) In General .\_There is established in the Treasury of the United
States a trust fund to be known as the \`\`Tobacco Community
Revitalization Trust Fund\'\', consisting of such amounts as may be
appropriated or credited to the Trust Fund. The Trust Fund shall be
administered by the Secretary.

\(b\) Transfers to Trust Fund .\_There are appropriated and transferred
to the Trust Fund for each fiscal year\_

\(1\) amounts contributed by tobacco product manufacturers and tobacco
product importers under section 1012; and

\(2\) an amount from the National Tobacco Settlement Trust Fund
established by section 401 equal to the aggregate amount of assessments
under section 1012 against participating tobacco manufacturers for that
fiscal year.

\(c\) Repayable Advances .\_

\(1\) Authorization .\_There are authorized to be appropriated to the
Trust Fund, as repayable advances, such sums as may from time to time be
necessary to make expenditures under subsection (d).

\(2\) Repayment with interest .\_Repayable advances made to the Trust
Fund shall be repaid, and interest on the advances shall be paid, to the
general fund of the Treasury when the Secretary of the Treasury
determines that moneys are available in the Trust Fund to make the
payments.

\(3\) Rate of interest .\_Interest on an advance made under this
subsection shall be at a rate determined by the Secretary of Treasury
(as of the close of the calendar month preceding the month in which the
advance is made) that is equal to the current average market yield on
outstanding marketable obligations of the United States with remaining
period to maturity comparable to the anticipated period during which the
advance will be outstanding.

\(d\) Expenditures From Trust Fund .\_Amounts in the Trust Fund shall be
available for making expenditures after October 1, 1998, to meet those
necessary obligations of the Federal Government that are authorized to
be paid under\_

\(1\) section 1021 for payments for lost tobacco quota for each of
fiscal years 1999 through 2023, but not to exceed \$1,650,000,000 for
any fiscal year except to the extent the payments are made in accordance
with subsection (d)(12) or (e)(9) of section 1021;

\(2\) section 1022 for industry payments for all costs of the Department
of Agriculture associated with the production of tobacco;

\(3\) section 1023 for tobacco community economic development grants,
but not to exceed\_

\(A\) \$375,000,000 for each of fiscal years 1999 through 2008, less any
amount required to be paid under section 1022 for the fiscal year; and

\(B\) \$450,000,000 for each of fiscal year 2009 through 2023, less any
amount required to be paid under section 1022 during the fiscal year;

\(4\) section 1031 for assistance provided under the tobacco worker
transition program, but not to exceed \$25,000,000 for any fiscal year;
and

\(5\) subpart 9 of part A of title IV of the Higher Education Act of
1965 for farmer opportunity grants, but not to exceed\_

\(A\) \$42,500,000 for each of the academic years 19992000 through
20032004;

\(B\) \$50,000,000 for each of the academic years 20042005 through
20082009;

\(C\) \$57,500,000 for each of the academic years 20092010 through
20132014;

\(D\) \$65,000,000 for each of the academic years 20142015 through
20182019; and

\(E\) \$72,500,000 for each of the academic years 20192020 through
20232024.

\(e\) Budgetary Treatment .\_This section constitutes budget authority
in advance of appropriations Acts and represents the obligation of the
Federal Government to provide payments to States and eligible persons in
accordance with this title.

SEC. 1012. CONTRIBUTIONS BY TOBACCO PRODUCT MANUFACTURERS ANDIMPORTERS.

\(a\) Definition of Market Share .\_In this section, the term \`\`market
share\'\' means the ratio of\_

\(1\) the tax liability of a tobacco product manufacturer or tobacco
product importer for a calendar year under section 5703 of the Internal
Revenue Code of 1986; to

\(2\) the tax liability of all tobacco product manufacturers or tobacco
product importers for the calendar year under section 5703 of the
Internal Revenue Code of 1986.

\(b\) Determinations .\_Not later than September 30 of each fiscal year,
the Secretary of the Treasury shall\_

\(1\) determine\_

\(A\) the market share of each tobacco product manufacturer or tobacco
product importer during the most recent calendar year;

\(B\) the total amount of assessments payable for the subsequent fiscal
year under subsection (c); and

\(C\) the amount of an assessment payable by the tobacco product
manufacturer or tobacco product importer for the fiscal year under
subsection (d); and

\(2\) notify each tobacco product manufacturer and tobacco product
importer of the determinations made under paragraph (1) with respect to
the manufacturer or importer.

\(c\) Total Amount of Assessments .\_

\(1\) In general .\_The total amount of assessments payable by all
tobacco product manufacturers and tobacco product importers into the
Trust Fund for a fiscal year shall be equal to\_

\(A\) the amount of the contribution to the Trust Fund for the fiscal
year required under paragraph (2); less

\(B\) any amount made available during the preceding fiscal year to the
Trust Fund out of funds transferred from National Tobacco Settlement
Trust Fund under section 1011(b)(2).

\(2\) Trust fund contributions .\_The amount of the contribution to the
Trust Fund shall be\_

\(A\) \$2,100,000,000 for each of fiscal years 1999 through 2008;

\(B\) \$500,000,000 for each of fiscal years 2009 through 2023; and

\(C\) for fiscal year 2024 and each subsequent fiscal year, the amount
payable under section 1022.

\(d\) Individual Amount of Assessments .\_The amount of an assessment
payable by each tobacco product manufacturer and tobacco product
importer into the Trust Fund for a fiscal year shall be equal to the
product obtained by multiplying\_

\(1\) the total amount of assessments payable by all tobacco product
manufacturers and tobacco product importers for the fiscal year under
subsection (c); and

\(2\) the market share of the tobacco product manufacturer or tobacco
product importer during the most recent calendar year determined under
subsection (b)(1)(A).

\(e\) Credit for Payments by Participating Tobacco Product
Manufacturers.\_ There shall be allowed as a credit against the amount
of any assessment under this section for a participating tobacco product
manufacturer an amount equal to the amount paid by that manufacturer
under section 403 of this Act (other than as penalty or interest) for
the calendar year ending in that fiscal year.

Subtitle B_Tobacco Market Transition Assistance

SEC. 1021. PAYMENTS FOR LOST TOBACCO QUOTA.

\(a\) In General .\_Beginning with the 1999 marketing year, the
Secretary shall make payments for lost tobacco quota to eligible quota
holders, quota lessees, and quota tenants as reimbursement for lost
tobacco quota as a result of a decrease in demand for domestically
produced tobacco.

\(b\) Eligibility .\_To be eligible to receive payments under this
section, a quota holder, quota lessee, or quota tenant shall\_

\(1\) prepare and submit to the Secretary an application at such time,
in such manner, and containing such information as the Secretary may
require, including information sufficient to make the demonstration
required under paragraph (2); and

\(2\) demonstrate to the satisfaction of the Secretary that, with
respect to the 1997 marketing year\_

\(A\) the producer was a quota holder and realized income from the
production of tobacco through\_

\(i\) the active production of tobacco;

\(ii\) the lease and transfer of tobacco quota to another farm;

\(iii\) the rental of all or part of the farm of the quota holder,
including the right to produce tobacco, to another tobacco producer; or

\(iv\) the hiring of a quota tenant to produce tobacco;

\(B\) the producer was a quota lessee; or

\(C\) the producer was a quota tenant.

\(c\) Base Quota Level .\_

\(1\) In general .\_The Secretary shall determine, for each quota
holder, quota lessee, and quota tenant, the base quota level for the
1995 through 1997 marketing years.

\(2\) Quota holders .\_The base quota level for a quota holder shall be
equal to the average tobacco farm marketing quota established for the
farm owned by the quota holder for the 1995 through 1997 marketing
years.

\(3\) Quota lessees .\_The base quota level for a quota lessee shall be
equal to\_

\(A\) 50 percent of the average number of pounds of tobacco quota
established for a farm for the 1995 through 1997 marketing years\_

\(i\) that was leased and transferred to a farm owned by the quota
lessee; or

\(ii\) for which the rights to produce the tobacco were rented to the
quota lessee; less

\(B\) 25 percent of the average number of pounds of tobacco quota
described in subparagraph (A) for which a quota tenant was the principal
producer of the tobacco quota.

\(4\) Quota tenants .\_The base quota level for a quota tenant shall be
equal to the sum of\_

\(A\) 50 percent of the average number of pounds of tobacco quota
established for a farm for the 1995 through 1997 marketing years\_

\(i\) that was owned by a quota holder; and

\(ii\) for which the quota tenant was the principal producer of the
tobacco on the farm; and

\(B\) 25 percent of the average number of pounds of tobacco quota for
the 1995 through 1997 marketing years\_

(i)(I) that was leased and transferred to a farm owned by the quota
lessee; or

\(II\) for which the rights to produce the tobacco were rented to the
quota lessee; and

\(ii\) for which the quota tenant was the principal producer of the
tobacco on the farm.

\(5\) Marketing quotas other than poundage quotas .\_

\(A\) In general .\_For each type of tobacco for which there is a
marketing quota or allotment (on an acreage basis), the base quota level
for each quota holder, quota lessee, or quota tenant shall be determined
in accordance with this subsection (based on a poundage conversion) by
multiplying\_

\(i\) the average tobacco farm marketing quota or allotment for the 1995
through 1997 marketing years; and

\(ii\) the average yield per acre for the farm for the type of tobacco
for the marketing years.

\(B\) Yields not available .\_If the average yield per acre is not
available for a farm, the Secretary shall calculate the base quota for
the quota holder, quota lessee, or quota tenant (based on a poundage
conversion) by determining the amount equal to the product obtained by
multiplying\_

\(i\) the average tobacco farm marketing quota or allotment for the 1995
through 1997 marketing years; and

\(ii\) the average county yield per acre for the county in which the
farm is located for the type of tobacco for the marketing years.

\(d\) Payments for Lost Tobacco Quota for Types of Tobacco Other Than
Flue-Cured Tobacco .\_

\(1\) Allocation of funds .\_Of the amounts made available under section
1011(d)(1) for payments for lost tobacco quota, the Secretary shall make
available for payments under this subsection an amount that bears the
same ratio to the amounts made available as\_

\(A\) the sum of all national marketing quotas for all types of tobacco
other than flue-cured tobacco during the 1995 through 1997 marketing
years; bears to

\(B\) the sum of all national marketing quotas for all types of tobacco
during the 1995 through 1997 marketing years.

\(2\) Option to relinquish quota .\_

\(A\) In general .\_Each quota holder shall be given the option to
relinquish the farm marketing quota or farm acreage allotment of the
quota holder in exchange for a payment made under paragraph (3).

\(B\) Notification .\_A quota holder shall give notification of the
intention of the quota holder to exercise the option at such time and in
such manner as the Secretary may require, but not later than January 15,
1999.

\(3\) Payments for lost tobacco quota to quota holders exercising
options to relinquish quota .\_

\(A\) In general .\_Subject to subparagraph (E), for each of fiscal
years 1999 through 2008, the Secretary shall make annual payments for
lost tobacco quota to each quota holder that has relinquished the farm
marketing quota or farm acreage allotment of the quota holder under
paragraph (2).

\(B\) Amount .\_The amount of a payment made to a quota holder described
in subparagraph (A) for a marketing year shall equal \\1/10\\ of the
lifetime limitation established under subparagraph (E).

\(C\) Timing .\_The Secretary shall begin making annual payments under
this paragraph for the marketing year in which the farm marketing quota
or farm acreage allotment is relinquished.

\(D\) Additional payments .\_The Secretary may increase annual payments
under this paragraph in accordance with paragraph (7)(E) to the extent
that funding is available.

\(E\) Lifetime limitation on payments .\_The total amount of payments
made under this paragraph to a quota holder shall not exceed the product
obtained by multiplying the base quota level for the quota holder by \$8
per pound.

\(4\) Reissuance of quota .\_

\(A\) Reallocation to lessee or tenant .\_If a quota holder exercises an
option to relinquish a tobacco farm marketing quota or farm acreage
allotment under paragraph (2), a quota lessee or quota tenant that was
the primary producer during the 1997 marketing year of tobacco pursuant
to the farm marketing quota or farm acreage allotment, as determined by
the Secretary, shall be given the option of having an allotment of the
farm marketing quota or farm acreage allotment reallocated to a farm
owned by the quota lessee or quota tenant.

\(B\) Conditions for reallocation .\_

\(i\) Timing .\_A quota lessee or quota tenant that is given the option
of having an allotment of a farm marketing quota or farm acreage
allotment reallocated to a farm owned by the quota lessee or quota
tenant under subparagraph (A) shall have 1 year from the date on which a
farm marketing quota or farm acreage allotment is relinquished under
paragraph (2) to exercise the option.

\(ii\) Limitation on acreage allotment .\_In the case of a farm acreage
allotment, the acreage allotment determined for any farm subsequent to
any reallocation under subparagraph (A) shall not exceed 50 percent of
the acreage of cropland of the farm owned by the quota lessee or quota
tenant.

\(iii\) Limitation on marketing quota .\_In the case of a farm marketing
quota, the marketing quota determined for any farm subsequent to any
reallocation under subparagraph (A) shall not exceed an amount
determined by multiplying\_

\(I\) the average county farm yield, as determined by the Secretary; and

\(II\) 50 percent of the acreage of cropland of the farm owned by the
quota lessee or quota tenant.

\(C\) Eligibility of lessee or tenant for payments .\_If a farm
marketing quota or farm acreage allotment is reallocated to a quota
lessee or quota tenant under subparagraph (A)\_

\(i\) the quota lessee or quota tenant shall not be eligible for any
additional payments under paragraph (5) or (6) as a result of the
reallocation; and

\(ii\) the base quota level for the quota lessee or quota tenant shall
not be increased as a result of the reallocation.

\(D\) Reallocation to quota holders within same county or state .\_

\(i\) In general .\_Except as provided in clause (ii), if there was no
quota lessee or quota tenant for the farm marketing quota or farm
acreage allotment for a type of tobacco, or if no quota lessee or quota
tenant exercises an option of having an allotment of the farm marketing
quota or farm acreage allotment for a type of tobacco reallocated, the
Secretary shall reapportion the farm marketing quota or farm acreage
allotment among the remaining quota holders for the type of tobacco
within the same county.

\(ii\) Cross-county leasing .\_In a State in which cross-county leasing
is authorized pursuant to section 319(l) of the Agricultural Adjustment
Act of 1938 (7 U.S.C. 1314e( l )), the Secretary shall reapportion the
farm marketing quota among the remaining quota holders for the type of
tobacco within the same State.

\(iii\) Eligibility of quota holder for payments .\_If a farm marketing
quota is reapportioned to a quota holder under this subparagraph\_

\(I\) the quota holder shall not be eligible for any additional payments
under paragraph (5) or (6) as a result of the reapportionment; and

\(II\) the base quota level for the quota holder shall not be increased
as a result of the reapportionment.

\(E\) Special rule for tenant of leased tobacco .\_If a quota holder
exercises an option to relinquish a tobacco farm marketing quota or farm
acreage allotment under paragraph (2), the farm marketing quota or farm
acreage allotment shall be divided evenly between, and the option of
reallocating the farm marketing quota or farm acreage allotment shall be
offered in equal portions to, the quota lessee and to the quota tenant,
if\_

\(i\) during the 1997 marketing year, the farm marketing quota or farm
acreage allotment was leased and transferred to a farm owned by the
quota lessee; and

\(ii\) the quota tenant was the primary producer, as determined by the
Secretary, of tobacco pursuant to the farm marketing quota or farm
acreage allotment.

\(5\) Payments for lost tobacco quota to quota holders .\_

\(A\) In general .\_Except as otherwise provided in this subsection,
during any marketing year in which the national marketing quota for a
type of tobacco is less than the average national marketing quota for
the 1995 through 1997 marketing years, the Secretary shall make payments
for lost tobacco quota to each quota holder that is eligible under
subsection (b), and has not exercised an option to relinquish a tobacco
farm marketing quota or farm acreage allotment under paragraph (2), in
an amount that is equal to the product obtained by multiplying\_

\(i\) the number of pounds by which the basic farm marketing quota (or
poundage conversion) is less than the base quota level for the quota
holder; and

\(ii\) \$4 per pound.

\(B\) Poundage conversion for marketing quotas other than poundage
quotas .\_

\(i\) In general .\_For each type of tobacco for which there is a
marketing quota or allotment (on an acreage basis), the poundage
conversion for each quota holder during a marketing year shall be
determined by multiplying\_

\(I\) the basic farm acreage allotment for the farm for the marketing
year; and

\(II\) the average yield per acre for the farm for the type of tobacco.

\(ii\) Yield not available .\_If the average yield per acre is not
available for a farm, the Secretary shall calculate the poundage
conversion for each quota holder during a marketing year by
multiplying\_

\(I\) the basic farm acreage allotment for the farm for the marketing
year; and

\(II\) the average county yield per acre for the county in which the
farm is located for the type of tobacco.

\(6\) Payments for lost tobacco quota to quota lessees and quota tenants
.\_Except as otherwise provided in this subsection, during any marketing
year in which the national marketing quota for a type of tobacco is less
than the average national marketing quota for the type of tobacco for
the 1995 through 1997 marketing years, the Secretary shall make payments
for lost tobacco quota to each quota lessee and quota tenant that is
eligible under subsection (b) in an amount that is equal to the product
obtained by multiplying\_

\(A\) the percentage by which the national marketing quota for the type
of tobacco is less than the average national marketing quota for the
type of tobacco for the 1995 through 1997 marketing years;

\(B\) the base quota level for the quota lessee or quota tenant; and

\(C\) \$4 per pound.

\(7\) Lifetime limitation on payments .\_Except as otherwise provided in
this subsection, the total amount of payments made under this subsection
to a quota holder, quota lessee, or quota tenant during the lifetime of
the quota holder, quota lessee, or quota tenant shall not exceed the
product obtained by multiplying\_

\(A\) the base quota level for the quota holder, quota lessee, or quota
tenant; and

\(B\) \$8 per pound.

\(8\) Limitations on aggregate annual payments .\_

\(A\) In general .\_Except as otherwise provided in this paragraph, the
total amount payable under this subsection for any marketing year shall
not exceed the amount made available under paragraph (1).

\(B\) Accelerated payments .\_Paragraph (1) shall not apply if
accelerated payments for lost tobacco quota are made in accordance with
paragraph (12).

\(C\) Reductions .\_If the sum of the amounts determined under
paragraphs (3), (5), and (6) for a marketing year exceeds the amount
made available under paragraph (1), the Secretary shall make a pro rata
reduction in the amounts payable under paragraphs (5) and (6) to quota
holders, quota lessees, and quota tenants under this subsection to
ensure that the total amount of payments for lost tobacco quota does not
exceed the amount made available under paragraph (1).

\(D\) Rollover of payments for lost tobacco quota .\_Subject to
subparagraph (A), if the Secretary makes a reduction in accordance with
subparagraph (C), the amount of the reduction shall be applied to the
next marketing year and added to the payments for lost tobacco quota for
the marketing year.

\(E\) Additional payments to quota holders exercising option to
relinquish quota .\_If the amount made available under paragraph (1)
exceeds the sum of the amounts determined under paragraphs (3), (5), and
(6) for a marketing year, the Secretary shall distribute the amount of
the excess pro rata to quota holders that have exercised an option to
relinquish a tobacco farm marketing quota or farm acreage allotment
under paragraph (2) by increasing the amount payable to each such holder
under paragraph (3).

\(9\) Subsequent sale and transfer of quota .\_Effective beginning with
the 1999 marketing year, on the sale and transfer of a farm marketing
quota or farm acreage allotment under section 316(g) or 319(g) of the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1314b(g), 1314e(g))\_

\(A\) the person that sold and transferred the quota or allotment shall
have\_

\(i\) the base quota level attributable to the person reduced by the
base quota level attributable to the quota that is sold and transferred;
and

\(ii\) the lifetime limitation on payments established under paragraph
(7) attributable to the person reduced by the product obtained by
multiplying\_

\(I\) the base quota level attributable to the quota; and

\(II\) \$8 per pound; and

\(B\) if the quota or allotment has never been relinquished by a
previous quota holder under paragraph (2), the person that acquired the
quota shall have\_

\(i\) the base quota level attributable to the person increased by the
base quota level attributable to the quota that is sold and transferred;
and

\(ii\) the lifetime limitation on payments established under paragraph
(7) attributable to the person\_

\(I\) increased by the product obtained by multiplying\_

(aa) the base quota level attributable to the quota; and

(bb) \$8 per pound; but

\(II\) decreased by any payments under paragraph (5) for lost tobacco
quota previously made that are attributable to the quota that is sold
and transferred.

\(10\) Sale or transfer of farm .\_On the sale or transfer of ownership
of a farm that is owned by a quota holder, the base quota level
established under subsection (c), the right to payments under paragraph
(5), and the lifetime limitation on payments established under paragraph
(7) shall transfer to the new owner of the farm to the same extent and
in the same manner as those provisions applied to the previous quota
holder.

\(11\) Death of quota lessee or quota tenant .\_If a quota lessee or
quota tenant that is entitled to payments under this subsection dies and
is survived by a spouse or 1 or more dependents, the right to receive
the payments shall transfer to the surviving spouse or, if there is no
surviving spouse, to the surviving dependents in equal shares.

\(12\) Acceleration of payments .\_

\(A\) In general .\_On the occurrence of any of the events described in
subparagraph (B), the Secretary shall make an accelerated lump sum
payment for lost tobacco quota as established under paragraphs (5) and
(6) to each quota holder, quota lessee, and quota tenant for any
affected type of tobacco in accordance with subparagraph (C).

\(B\) Triggering events .\_The Secretary shall make accelerated payments
under subparagraph (A) if after the date of enactment of this Act\_

\(i\) subject to subparagraph (D), for 3 consecutive marketing years,
the national marketing quota or national acreage allotment for a type of
tobacco is less than 50 percent of the national marketing quota or
national acreage allotment for the type of tobacco for the 1998
marketing year; or

\(ii\) Congress repeals or makes ineffective, directly or indirectly,
any provision of\_

\(I\) section 316 of the Agricultural Adjustment Act of 1938 (7 U.S.C.
1314b);

\(II\) section 319 of the Agricultural Adjustment Act of 1938 (7 U.S.C.
1314e);

\(III\) section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445);

\(IV\) section 106A of the Agricultural Act of 1949 (7 U.S.C. 14451); or

\(V\) section 106B of the Agricultural Act of 1949 (7 U.S.C. 14452).

\(C\) Amount .\_The amount of the accelerated payments made to each
quota holder, quota lessee, and quota tenant under this subsection shall
be equal to\_

\(i\) the amount of the lifetime limitation established for the quota
holder, quota lessee, or quota tenant under paragraph (7); less

\(ii\) any payments for lost tobacco quota received by the quota holder,
quota lessee, or quota tenant before the occurrence of any of the events
described in subparagraph (B).

\(D\) Referendum vote not a triggering event .\_A referendum vote of
producers for any type of tobacco that results in the national marketing
quota or national acreage allotment not being in effect for the type of
tobacco shall not be considered a triggering event under this paragraph.

\(13\) Ban on subsequent sale or leasing of farm marketing quota or farm
acreage allotment to quota holders exercising option to relinquish quota
.\_No quota holder that exercises the option to relinquish a farm
marketing quota or farm acreage allotment for any type of tobacco under
paragraph (2) shall be eligible to acquire a farm marketing quota or
farm acreage allotment for the type of tobacco, or to obtain the lease
or transfer of a farm marketing quota or farm acreage allotment for the
type of tobacco, for a period of 25 crop years after the date on which
the quota or allotment was relinquished.

\(e\) Payments for Lost Tobacco Quota for Flue-Cured Tobacco .\_

\(1\) Allocation of funds .\_Of the amounts made available under section
1011(d)(1) for payments for lost tobacco quota, the Secretary shall make
available for payments under this subsection an amount that bears the
same ratio to the amounts made available as\_

\(A\) the sum of all national marketing quotas for flue-cured tobacco
during the 1995 through 1997 marketing years; bears to

\(B\) the sum of all national marketing quotas for all types of tobacco
during the 1995 through 1997 marketing years.

\(2\) Relinquishment of quota .\_

\(A\) In general .\_Each quota holder of flue-cured tobacco during the
1998 marketing year shall relinquish the farm marketing quota or farm
acreage allotment in exchange for a payment made under paragraph (3) or
(4).

\(B\) Notification .\_The Secretary shall notify the quota holders of
the relinquishment of their quota or allotment at such time and in such
manner as the Secretary may require, but not later than November 15,
1998.

\(3\) Payments for lost flue-cured tobacco quota to quota holders that
relinquish quota .\_

\(A\) In general .\_For each of fiscal years 1999 through 2008, the
Secretary shall make annual payments for lost flue-cured tobacco to each
quota holder that has relinquished the farm marketing quota or farm
acreage allotment of the quota holder under paragraph (2).

\(B\) Amount .\_The amount of a payment made to a quota holder described
in subparagraph (A) for a marketing year shall equal \\1/10\\ of the
lifetime limitation established under paragraph (6).

\(C\) Timing .\_The Secretary shall begin making annual payments under
this paragraph for the marketing year in which the farm marketing quota
or farm acreage allotment is relinquished.

\(D\) Additional payments .\_The Secretary may increase annual payments
under this paragraph in accordance with paragraph (7)(E) to the extent
that funding is available.

\(4\) Payments for lost flue-cured tobacco quota to quota lessees and
quota tenants that have not relinquished permits .\_

\(A\) In general .\_Except as otherwise provided in this subsection,
during any marketing year in which the national marketing quota for
flue-cured tobacco is less than the average national marketing quota for
the 1995 through 1997 marketing years, the Secretary shall make payments
for lost tobacco quota to each quota lessee or quota tenant that\_

\(i\) is eligible under subsection (b);

\(ii\) has been issued an individual tobacco production permit under
section 317A(b) of the Agricultural Adjustment Act of 1938; and

\(iii\) has not exercised an option to relinquish the permit.

\(B\) Amount .\_The amount of a payment made to a quota holder described
in subparagraph (A) for a marketing year shall be equal to the product
obtained by multiplying\_

\(i\) the number of pounds by which the individual marketing limitation
established for the permit is less than twice the base quota level for
the quota holder; and

\(ii\) \$2 per pound.

\(5\) Payments for lost flue-cured tobacco quota to quota lessees and
quota tenants that have relinquished permits .\_

\(A\) In general .\_For each of fiscal years 1999 through 2008, the
Secretary shall make annual payments for lost flue-cured tobacco quota
to each quota lessee and quota tenant that has relinquished an
individual tobacco production permit under section 317A(b)(5) of the
Agricultural Adjustment Act of 1938.

\(B\) Amount .\_The amount of a payment made to a quota holder described
in subparagraph (A) for a marketing year shall be equal to \\1/10\\ of
the lifetime limitation established under paragraph (6).

\(C\) Timing .\_The Secretary shall begin making annual payments under
this paragraph for the marketing year in which the individual tobacco
production permit is relinquished.

\(D\) Additional payments .\_The Secretary may increase annual payments
under this paragraph in accordance with paragraph (7)(E) to the extent
that funding is available.

\(E\) Prohibition against permit expansion .\_A quota lessee or quota
tenant that receives a payment under this paragraph shall be ineligible
to receive any new or increased tobacco production permit from the
county production pool established under section 317A(b)(8) of the
Agricultural Adjustment Act of 1938.

\(6\) Lifetime limitation on payments .\_Except as otherwise provided in
this subsection, the total amount of payments made under this subsection
to a quota holder, quota lessee, or quota tenant during the lifetime of
the quota holder, quota lessee, or quota tenant shall not exceed the
product obtained by multiplying\_

\(A\) the base quota level for the quota holder, quota lessee, or quota
tenant; and

\(B\) \$8 per pound.

\(7\) Limitations on aggregate annual payments .\_

\(A\) In general .\_Except as otherwise provided in this paragraph, the
total amount payable under this subsection for any marketing year shall
not exceed the amount made available under paragraph (1).

\(B\) Accelerated payments .\_Paragraph (1) shall not apply if
accelerated payments for lost flue-cured tobacco quota are made in
accordance with paragraph (9).

\(C\) Reductions .\_If the sum of the amounts determined under
paragraphs (3), (4), and (5) for a marketing year exceeds the amount
made available under paragraph (1), the Secretary shall make a pro rata
reduction in the amounts payable under paragraph (4) to quota lessees
and quota tenants under this subsection to ensure that the total amount
of payments for lost flue-cured tobacco quota does not exceed the amount
made available under paragraph (1).

\(D\) Rollover of payments for lost flue-cured tobacco quota .\_Subject
to subparagraph (A), if the Secretary makes a reduction in accordance
with subparagraph (C), the amount of the reduction shall be applied to
the next marketing year and added to the payments for lost flue-cured
tobacco quota for the marketing year.

\(E\) Additional payments to quota holders exercising option to
relinquish quotas or permits, or to quota lessees or quota tenants
relinquishing permits .\_If the amount made available under paragraph
(1) exceeds the sum of the amounts determined under paragraphs (3), (4),
and (5) for a marketing year, the Secretary shall distribute the amount
of the excess pro rata to quota holders by increasing the amount payable
to each such holder under paragraphs (3) and (5).

\(8\) Death of quota holder, quota lessee, or quota tenant .\_If a quota
holder, quota lessee or quota tenant that is entitled to payments under
paragraph (4) or (5) dies and is survived by a spouse or 1 or more
descendants, the right to receive the payments shall transfer to the
surviving spouse or, if there is no surviving spouse, to the surviving
descendants in equal shares.

\(9\) Acceleration of payments .\_

\(A\) In general .\_On the occurrence of any of the events described in
subparagraph (B), the Secretary shall make an accelerated lump sum
payment for lost flue-cured tobacco quota as established under
paragraphs (3), (4), and (5) to each quota holder, quota lessee, and
quota tenant for flue-cured tobacco in accordance with subparagraph (C).

\(B\) Triggering events .\_The Secretary shall make accelerated payments
under subparagraph (A) if after the date of enactment of this Act\_

\(i\) subject to subparagraph (D), for 3 consecutive marketing years,
the national marketing quota or national acreage allotment for
flue-cured tobacco is less than 50 percent of the national marketing
quota or national acreage allotment for flue-cured tobacco for the 1998
marketing year; or

\(ii\) Congress repeals or makes ineffective, directly or indirectly,
any provision of\_

\(I\) section 316 of the Agricultural Adjustment Act of 1938 (7 U.S.C.
1314b);

\(II\) section 319 of the Agricultural Adjustment Act of 1938 (7 U.S.C.
1314e);

\(III\) section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445);

\(IV\) section 106A of the Agricultural Act of 1949 (7 U.S.C. 14451);

\(V\) section 106B of the Agricultural Act of 1949 (7 U.S.C. 14452); or

\(VI\) section 317A of the Agricultural Adjustment Act of 1938.

\(C\) Amount .\_The amount of the accelerated payments made to each
quota holder, quota lessee, and quota tenant under this subsection shall
be equal to\_

\(i\) the amount of the lifetime limitation established for the quota
holder, quota lessee, or quota tenant under paragraph (6); less

\(ii\) any payments for lost flue-cured tobacco quota received by the
quota holder, quota lessee, or quota tenant before the occurrence of any
of the events described in subparagraph (B).

\(D\) Referendum vote not a triggering event .\_A referendum vote of
producers for flue-cured tobacco that results in the national marketing
quota or national acreage allotment not being in effect for flue-cured
tobacco shall not be considered a triggering event under this paragraph.

SEC. 1022. INDUSTRY PAYMENTS FOR ALL DEPARTMENT COSTS ASSOCIATEDWITH
TOBACCO PRODUCTION.

\(a\) In General .\_The Secretary shall use such amounts as are
necessary from the Trust Fund at the end of each fiscal year to
reimburse the Secretary for\_

\(1\) costs associated with the administration of programs established
under this title and amendments made by this title;

\(2\) costs associated with the administration of the tobacco quota and
price support programs administered by the Secretary;

\(3\) costs to the Federal Government of carrying out crop insurance
programs for tobacco;

\(4\) costs associated with all agricultural research, extension, or
education activities associated with tobacco;

\(5\) costs associated with the administration of loan association and
cooperative programs for tobacco producers, as approved by the
Secretary; and

\(6\) any other costs incurred by the Department of Agriculture
associated with the production of tobacco.

\(b\) Limitations .\_Amounts made available under subsection (a) may not
be used\_

\(1\) to provide direct benefits to quota holders, quota lessees, or
quota tenants; or

\(2\) in a manner that results in a decrease, or an increase relative to
other crops, in the amount of the crop insurance premiums assessed to
participating tobacco producers under the Federal Crop Insurance Act (7
U.S.C. 1501 et seq.).

\(c\) Determinations .\_Not later than September 30, 1998, and each
fiscal year thereafter, the Secretary shall determine\_

\(1\) the amount of costs described in subsection (a); and

\(2\) the amount that will be provided under this section as
reimbursement for the costs.

SEC. 1023. TOBACCO COMMUNITY ECONOMIC DEVELOPMENT GRANTS.

\(a\) Authority .\_The Secretary shall make grants to tobacco-growing
States in accordance with this section to enable the States to carry out
economic development initiatives in tobacco-growing communities.

\(b\) Application .\_To be eligible to receive payments under this
section, a State shall prepare and submit to the Secretary an
application at such time, in such manner, and containing such
information as the Secretary may require, including\_

\(1\) a description of the activities that the State will carry out
using amounts received under the grant;

\(2\) a designation of an appropriate State agency to administer amounts
received under the grant; and

\(3\) a description of the steps to be taken to ensure that the funds
are distributed in accordance with subsection (e).

\(c\) Amount of Grant .\_

\(1\) In general .\_From the amounts available to carry out this section
for a fiscal year, the Secretary shall allot to each State an amount
that bears the same ratio to the amounts available as the total farm
income of the State derived from the production of tobacco during the
1995 through 1997 marketing years (as determined under paragraph (2))
bears to the total farm income of all States derived from the production
of tobacco during the 1995 through 1997 marketing years.

\(2\) Tobacco income .\_For the 1995 through 1997 marketing years, the
Secretary shall determine the amount of farm income derived from the
production of tobacco in each State and in all States.

\(d\) Payments .\_

\(1\) In general .\_A State that has an application approved by the
Secretary under subsection (b) shall be entitled to a payment under this
section in an amount that is equal to its allotment under subsection
(c).

\(2\) Form of payments .\_The Secretary may make payments under this
section to a State in installments, and in advance or by way of
reimbursement, with necessary adjustments on account of overpayments or
underpayments, as the Secretary may determine.

\(3\) Reallotments .\_Any portion of the allotment of a State under
subsection (c) that the Secretary determines will not be used to carry
out this section in accordance with an approved State application
required under subsection (b), shall be reallotted by the Secretary to
other States in proportion to the original allotments to the other
States.

\(e\) Use and Distribution of Funds .\_

\(1\) In general .\_Amounts received by a State under this section shall
be used to carry out economic development activities, including\_

\(A\) rural business enterprise activities described in subsections (c)
and (e) of section 310B of the Consolidated Farm and Rural Development
Act (7 U.S.C. 1932);

\(B\) down payment loan assistance programs that are similar to the
program described in section 310E of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1935);

\(C\) activities designed to help create productive farm or off-farm
employment in rural areas to provide a more viable economic base and
enhance opportunities for improved incomes, living standards, and
contributions by rural individuals to the economic and social
development of tobacco communities;

\(D\) activities that expand existing infrastructure, facilities, and
services to capitalize on opportunities to diversify economies in
tobacco communities and that support the development of new industries
or commercial ventures;

\(E\) activities by agricultural organizations that provide assistance
directly to participating tobacco producers to assist in developing
other agricultural activities that supplement tobacco-producing
activities;

\(F\) initiatives designed to create or expand locally owned value-added
processing and marketing operations in tobacco communities;

\(G\) technical assistance activities by persons to support farmer-owned
enterprises, or agriculture-based rural development enterprises, of the
type described in section 252 or 253 of the Trade Act of 1974 (19 U.S.C.
2342, 2343); and

\(H\) initiatives designed to partially compensate tobacco warehouse
owners for lost revenues and assist the tobacco warehouse owners in
establishing successful business enterprises.

\(2\) Tobacco-growing counties .\_Assistance may be provided by a State
under this section only to assist a county in the State that has been
determined by the Secretary to have in excess of \$100,000 in income
derived from the production of tobacco during 1 or more of the 1995
through 1997 marketing years.

\(3\) Distribution .\_

\(A\) Economic development activities .\_Not less than 20 percent of the
amounts received by a State under this section shall be used to carry
out\_

\(i\) economic development activities described in subparagraph (E) or
(F) of paragraph (1); or

\(ii\) agriculture-based rural development activities described in
paragraph (1)(G).

\(B\) Technical assistance activities .\_Not less than 4 percent of the
amounts received by a State under this section shall be used to carry
out technical assistance activities described in paragraph (1)(G).

\(C\) Tobacco warehouse owner initiatives .\_

\(i\) In general .\_Not less than 6 percent of the amounts received by a
State under this section during each of fiscal years 1999 through 2008
shall be used to carry out initiatives described in paragraph (1)(H).

\(ii\) Direct payments .\_Of the amount made available under clause (i),
not less than 80 percent of the amount shall be used to provide direct
payments to tobacco warehouse owners based on any decline in the annual
volume of tobacco sales as compared to the volume of tobacco sales
during the 1998 marketing year.

\(D\) Tobacco-growing counties .\_To be eligible to receive payments
under this section, a State shall demonstrate to the Secretary that
funding will be provided, during each 5-year period for which funding is
provided under this section, for activities in each county in the State
that has been determined under paragraph (2) to have in excess of
\$100,000 in income derived from the production of tobacco, in amounts
that are at least equal to the product obtained by multiplying\_

\(i\) the ratio that the tobacco production income in the county
determined under paragraph (2) bears to the total tobacco production
income for the State determined under subsection (c); and

\(ii\) 50 percent of the total amounts received by a State under this
section during the 5-year period.

\(f\) Preferences in Hiring .\_A State may require recipients of funds
under this section to provide a preference in employment to\_

\(1\) an individual who\_

\(A\) during the 1998 calendar year, was employed in the manufacture,
processing, or warehousing of tobacco or tobacco products, or resided,
in a county described in subsection (e)(2); and

\(B\) is eligible for assistance under the tobacco worker transition
program established under section 1031; or

\(2\) an individual who\_

\(A\) during the 1998 marketing year, carried out tobacco quota or
relevant tobacco production activities in a county described in
subsection (e)(2);

\(B\) is eligible for a farmer opportunity grant under subpart 9 of part
A of title IV of the Higher Education Act of 1965; and

\(C\) has successfully completed a course of study at an institution of
higher education.

\(g\) Maintenance of Effort .\_

\(1\) In general .\_Subject to paragraph (2), a State shall provide an
assurance to the Secretary that the amount of funds expended by the
State and all counties in the State described in subsection (e)(2) for
any activities funded under this section for a fiscal year is not less
than 90 percent of the amount of funds expended by the State and
counties for the activities for the preceding fiscal year.

\(2\) Reduction of grant amount .\_If a State does not provide an
assurance described in paragraph (1), the Secretary shall reduce the
amount of the grant determined under subsection (c) by an amount equal
to the amount by which the amount of funds expended by the State and
counties for the activities is less than 90 percent of the amount of
funds expended by the State and counties for the activities for the
preceding fiscal year, as determined by the Secretary.

\(3\) Federal funds .\_For purposes of this subsection, the amount of
funds expended by a State or county shall not include any amounts made
available by the Federal Government.

SEC. 1024. FLUE-CURED TOBACCO PRODUCTION PERMITS.

The Agricultural Adjustment Act of 1938 is amended by inserting after
section 317 (7 U.S.C. 1314c) the following:

\`\`SEC. 317A. FLUE-CURED TOBACCO PRODUCTION PERMITS.

\`\`(a) Definitions .\_In this section:

\`\`(1) Individual acreage limitation .\_The term \`individual acreage
limitation\' means the number of acres of flue-cured tobacco that may be
planted by the holder of a permit during a marketing year, calculated\_

\`\`(A) prior to\_

\`\`(i) any increase or decrease in the number due to undermarketings or
overmarketings; and

\`\`(ii) any reduction under subsection (i); and

\`\`(B) in a manner that ensures that\_

\`\`(i) the total of all individual acreage limitations is equal to the
national acreage allotment, less the reserve provided under subsection
(h); and

\`\`(ii) the individual acreage limitation for a marketing year bears
the same ratio to the individual acreage limitation for the previous
marketing year as the ratio that the national acreage allotment for the
marketing year bears to the national acreage allotment for the previous
marketing year, subject to adjustments by the Secretary to account for
any reserve provided under subsection (h).

\`\`(2) Individual marketing limitation .\_The term \`individual
marketing limitation\' means the number of pounds of flue-cured tobacco
that may be marketed by the holder of a permit during a marketing year,
calculated\_

\`\`(A) prior to\_

\`\`(i) any increase or decrease in the number due to undermarketings or
overmarketings; and

\`\`(ii) any reduction under subsection (i); and

\`\`(B) in a manner that ensures that\_

\`\`(i) the total of all individual marketing limitations is equal to
the national marketing quota, less the reserve provided under subsection
(h); and

\`\`(ii) the individual marketing limitation for a marketing year is
obtained by multiplying the individual acreage limitation by the permit
yield, prior to any adjustment for undermarketings or overmarketings.

\`\`(3) Individual tobacco production permit .\_The term \`individual
tobacco production permit\' means a permit issued by the Secretary to a
person authorizing the production of flue-cured tobacco for any
marketing year during which this section is effective.

\`\`(4) National acreage allotment .\_The term \`national acreage
allotment\' means the quantity determined by dividing\_

\`\`(A) the national marketing quota; by

\`\`(B) the national average yield goal.

\`\`(5) National average yield goal .\_The term \`national average yield
goal\' means the national average yield for flue-cured tobacco during
the 5 marketing years immediately preceding the marketing year for which
the determination is being made.

\`\`(6) National marketing quota .\_For the 1999 and each subsequent
crop of flue-cured tobacco, the term \`national marketing quota\' for a
marketing year means the quantity of flue-cured tobacco, as determined
by the Secretary, that is not more than 103 percent nor less than 97
percent of the total of\_

\`\`(A) the aggregate of the quantities of flue-cured tobacco that
domestic manufacturers of cigarettes estimate that the manufacturers
intend to purchase on the United States auction markets or from
producers during the marketing year, as compiled and determined under
section 320A;

\`\`(B) the average annual quantity of flue-cured tobacco exported from
the United States during the 3 marketing years immediately preceding the
marketing year for which the determination is being made; and

\`\`(C) the quantity, if any, of flue-cured tobacco that the Secretary,
in the discretion of the Secretary, determines is necessary to increase
or decrease the inventory of the producer-owned cooperative marketing
association that has entered into a loan agreement with the Commodity
Credit Corporation to make price support available to producers of
flue-cured tobacco to establish or maintain the inventory at the reserve
stock level for flue-cured tobacco.

\`\`(7) Permit yield .\_The term \`permit yield\' means the yield of
tobacco per acre for an individual tobacco production permit holder that
is\_

\`\`(A) based on a preliminary permit yield that is equal to the average
yield during the 5 marketing years immediately preceding the marketing
year for which the determination is made in the county where the holder
of the permit is authorized to plant flue-cured tobacco, as determined
by the Secretary, on the basis of actual yields of farms in the county;
and

\`\`(B) adjusted by a weighted national yield factor calculated by\_

\`\`(i) multiplying each preliminary permit yield by the individual
acreage limitation, prior to adjustments for overmarketings,
undermarketings, or reductions required under subsection (i); and

\`\`(ii) dividing the sum of the products under clause (i) for all
flue-cured individual tobacco production permit holders by the national
acreage allotment.

\`\`(b) Initial Issuance of Permits .\_

\`\`(1) Termination of flue-cured marketing quotas .\_On approval
through referendum under subsection (c), farm marketing quotas as
provided under section 317 shall no longer be in effect for flue-cured
tobacco.

\`\`(2) Issuance of permits to quota holders that were principal
producers .\_

\`\`(A) In general .\_On approval through a referendum under subsection
(c), each individual quota holder under section 317 that was a principal
producer of flue-cured tobacco during the 1998 marketing year, as
determined by the Secretary, shall be issued an individual tobacco
production permit under this section.

\`\`(B) Notification .\_The Secretary shall notify the holder of each
permit of the individual acreage limitation and the individual marketing
limitation applicable to the holder for each marketing year.

\`\`(C) Individual acreage limitation for 1999 marketing year .\_In
establishing the individual acreage limitation for the 1999 marketing
year under this section, the farm acreage allotment that was allotted to
a farm owned by the quota holder during the 1997 marketing year shall be
considered the individual acreage limitation for the previous marketing
year.

\`\`(D) Individual marketing limitation for 1999 marketing year .\_In
establishing the individual marketing limitation for the 1999 marketing
year under this section, the farm marketing quota that was allotted to a
farm owned by the quota holder during the 1997 marketing year shall be
considered the individual marketing limitation for the previous
marketing year.

\`\`(3) Quota holders that were not principal producers .\_

\`\`(A) In general .\_Except as provided in subparagraph (B), on
approval through a referendum under subsection (c)\_

\`\`(i) each person that was a quota holder under section 317 but that
was not a principal producer of flue-cured tobacco during the 1997
marketing year, as determined by the Secretary, shall not be eligible to
own a permit; and

\`\`(ii) the Secretary shall not issue any permit during the 25-year
period beginning on the date of enactment of this Act to any person that
was a quota holder and was not the principal producer of flue-cured
tobacco during the 1997 marketing year.

\`\`(B) Medical hardships and crop disasters .\_Subparagraph (A) shall
not apply to a person that would have been the principal producer of
flue-cured tobacco during the 1997 marketing year but for a medical
hardship or crop disaster that occurred during the 1997 marketing year.

\`\`(C) Administration .\_The Secretary shall issue regulations\_

\`\`(i) defining the term \`person\' for the purpose of this paragraph;
and

\`\`(ii) prescribing such rules as the Secretary determines are
necessary to ensure a fair and reasonable application of the prohibition
established under this paragraph.

\`\`(4) Issuance of permits to principal producers of flue-cured tobacco
.\_

\`\`(A) In general .\_On approval through a referendum under subsection
(c), each individual quota lessee or quota tenant (as defined in section
1002 of the LEAF Act) that was the principal producer of flue-cured
tobacco during the 1997 marketing year, as determined by the Secretary,
shall be issued an individual tobacco production permit under this
section.

\`\`(B) Individual acreage limitations .\_In establishing the individual
acreage limitation for the 1999 marketing year under this section, the
farm acreage allotment that was allotted to a farm owned by a quota
holder for whom the quota lessee or quota tenant was the principal
producer of flue-cured tobacco during the 1997 marketing year shall be
considered the individual acreage limitation for the previous marketing
year.

\`\`(C) Individual marketing limitations .\_In establishing the
individual marketing limitation for the 1999 marketing year under this
section, the individual marketing limitation for the previous year for
an individual described in this paragraph shall be calculated by
multiplying\_

\`\`(i) the farm marketing quota that was allotted to a farm owned by a
quota holder for whom the quota lessee or quota holder was the principal
producer of flue-cured tobacco during the 1997 marketing year, by

\`\`(ii) the ratio that\_

\`\`(I) the sum of all flue-cured tobacco farm marketing quotas for the
1997 marketing year prior to adjusting for undermarketing and
overmarketing; bears to

\`\`(II) the sum of all flue-cured tobacco farm marketing quotas for the
1998 marketing year, after adjusting for undermarketing and
overmarketing.

\`\`(D) Special rule for tenant of leased flue-cured tobacco .\_If the
farm marketing quota or farm acreage allotment of a quota holder was
produced pursuant to an agreement under which a quota lessee rented land
from a quota holder and a quota tenant was the primary producer, as
determined by the Secretary, of flue-cured tobacco pursuant to the farm
marketing quota or farm acreage allotment, the farm marketing quota or
farm acreage allotment shall be divided proportionately between the
quota lessee and quota tenant for purposes of issuing individual tobacco
production permits under this paragraph.

\`\`(5) Option of quota lessee or quota tenant to relinquish permit .\_

\`\`(A) In general .\_Each quota lessee or quota tenant that is issued
an individual tobacco production permit under paragraph (4) shall be
given the option of relinquishing the permit in exchange for payments
made under section 1021(e)(5) of the LEAF Act.

\`\`(B) Notification .\_A quota lessee or quota tenant that is issued an
individual tobacco production permit shall give notification of the
intention to exercise the option at such time and in such manner as the
Secretary may require, but not later than 30 days after the permit is
issued.

\`\`(C) Reallocation of permit .\_The Secretary shall add the authority
to produce flue-cured tobacco under the individual tobacco production
permit relinquished under this paragraph to the county production pool
established under paragraph (8) for reallocation by the appropriate
county committee.

\`\`(6) Active producer requirement .\_

\`\`(A) Requirement for sharing risk .\_No individual tobacco production
permit shall be issued to, or maintained by, a person that does not
fully share in the risk of producing a crop of flue-cured tobacco.

\`\`(B) Criteria for sharing risk .\_For purposes of this paragraph, a
person shall be considered to have fully shared in the risk of
production of a crop if\_

\`\`(i) the investment of the person in the production of the crop is
not less than 100 percent of the costs of production associated with the
crop;

\`\`(ii) the amount of the person\'s return on the investment is
dependent solely on the sale price of the crop; and

\`\`(iii) the person may not receive any of the return before the sale
of the crop.

\`\`(C) Persons not sharing risk .\_

\`\`(i) Forfeiture .\_Any person that fails to fully share in the risks
of production under this paragraph shall forfeit an individual tobacco
production permit if, after notice and opportunity for a hearing, the
appropriate county committee determines that the conditions for
forfeiture exist.

\`\`(ii) Reallocation .\_The Secretary shall add the authority to
produce flue-cured tobacco under the individual tobacco production
permit forfeited under this subparagraph to the county production pool
established under paragraph (8) for reallocation by the appropriate
county committee.

\`\`(D) Notice .\_Notice of any determination made by a county committee
under subparagraph (C) shall be mailed, as soon as practicable, to the
person involved.

\`\`(E) Review .\_If the person is dissatisfied with the determination,
the person may request, not later than 15 days after notice of the
determination is received, a review of the determination by a local
review committee under the procedures established under section 363 for
farm marketing quotas.

\`\`(7) County of origin requirement .\_For the 1999 and each subsequent
crop of flue-cured tobacco, all tobacco produced pursuant to an
individual tobacco production permit shall be produced in the same
county in which was produced the tobacco produced during the 1997
marketing year pursuant to the farm marketing quota or farm acreage
allotment on which the individual tobacco production permit is based.

\`\`(8) County production pool .\_

\`\`(A) In general .\_The authority to produce flue-cured tobacco under
an individual tobacco production permit that is forfeited, relinquished,
or surrendered within a county may be reallocated by the appropriate
county committee to tobacco producers located in the same county that
apply to the committee to produce flue-cured tobacco under the
authority.

\`\`(B) Priority .\_In reallocating individual tobacco production
permits under this paragraph, a county committee shall provide a
priority to\_

\`\`(i) an active tobacco producer that controls the authority to
produce a quantity of flue-cured tobacco under an individual tobacco
production permit that is equal to or less than the average number of
pounds of flue-cured tobacco that was produced by the producer during
each of the 1995 through 1997 marketing years, as determined by the
Secretary; and

\`\`(ii) a new tobacco producer.

\`\`(C) Criteria .\_Individual tobacco production permits shall be
reallocated by the appropriate county committee under this paragraph in
a fair and equitable manner after taking into consideration\_

\`\`(i) the experience of the producer;

\`\`(ii) the availability of land, labor, and equipment for the
production of tobacco;

\`\`(iii) crop rotation practices; and

\`\`(iv) the soil and other physical factors affecting the production of
tobacco.

\`\`(D) Medical hardships and crop disasters .\_Notwithstanding any
other provision of this Act, the Secretary may issue an individual
tobacco production permit under this paragraph to a producer that is
otherwise ineligible for the permit due to a medical hardship or crop
disaster that occurred during the 1997 marketing year.

\`\`(c) Referendum .\_

\`\`(1) Announcement of quota and allotment .\_Not later than December
15, 1998, the Secretary pursuant to subsection (b) shall determine and
announce\_

\`\`(A) the quantity of the national marketing quota for flue-cured
tobacco for the 1999 marketing year; and

\`\`(B) the national acreage allotment and national average yield goal
for the 1999 crop of flue-cured tobacco.

\`\`(2) Special referendum .\_Not later than 30 days after the
announcement of the quantity of the national marketing quota, the
Secretary shall conduct a special referendum of the producers that were
the principal producers of flue-cured tobacco of the 1997 crop to
determine whether the producers approve or oppose the establishment of
individual tobacco production permits on an acreage-poundage basis as
provided in this section for the 1999 through 2001 marketing years.

\`\`(3) Approval of permits .\_If the Secretary determines that more
than 66\\2/3\\ percent of the producers voting in the special referendum
approve the establishment of individual tobacco production permits on an
acreage-poundage basis\_

\`\`(A) individual tobacco production permits on an acreage-poundage
basis as provided in this section shall be in effect for the 1999
through 2001 marketing years; and

\`\`(B) marketing quotas on an acreage-poundage basis shall cease to be
in effect for the 1999 through 2001 marketing years.

\`\`(4) Disapproval of permits .\_If individual tobacco production
permits on an acreage-poundage basis are not approved by more than
66\\2/3\\ percent of the producers voting in the referendum, no
marketing quotas on an acreage-poundage basis shall continue in effect
that were proclaimed under section 317 prior to the referendum.

\`\`(5) Applicable marketing years .\_If individual tobacco production
permits have been made effective for flue-cured tobacco on an
acreage-poundage basis pursuant to this subsection, the Secretary shall,
not later than December 15 of any future marketing year, announce a
national marketing quota for that type of tobacco for the next 3
succeeding marketing years if the marketing year is the last year of 3
consecutive years for which individual tobacco production permits
previously proclaimed will be in effect.

\`\`(d) Annual Announcement of National Marketing Quota .\_The Secretary
shall determine and announce the national marketing quota, national
acreage allotment, and national average yield goal for the second and
third marketing years of any 3-year period for which individual tobacco
production permits are in effect on or before the December 15
immediately preceding the beginning of the marketing year to which the
quota, allotment, and goal apply.

\`\`(e) Annual Announcement of Individual Tobacco Production Permits
.\_If a national marketing quota, national acreage allotment, and
national average yield goal are determined and announced, the Secretary
shall provide for the determination of individual tobacco production
permits, individual acreage limitations, and individual marketing
limitations under this section for the crop and marketing year covered
by the determinations.

\`\`(f) Assignment of Tobacco Production Permits .\_

\`\`(1) Limitation to same county .\_Each individual tobacco production
permit holder shall assign the individual acreage limitation and
individual marketing limitation to 1 or more farms located within the
county of origin of the individual tobacco production permit.

\`\`(2) Filing with county committee .\_The assignment of an individual
acreage limitation and individual marketing limitation shall not be
effective until evidence of the assignment, in such form as required by
the Secretary, is filed with and determined by the county committee for
the county in which the farm involved is located.

\`\`(3) Limitation on tillable cropland .\_The total acreage assigned to
any farm under this subsection shall not exceed the acreage of cropland
on the farm.

\`\`(g) Prohibition on Sale or Leasing of Individual Tobacco Production
Permits .\_

\`\`(1) In general .\_Except as provided in paragraphs (2) and (3), the
Secretary shall not permit the sale and transfer, or lease and transfer,
of an individual tobacco production permit issued under this section.

\`\`(2) Transfer to descendants .\_

\`\`(A) Death .\_In the case of the death of a person to whom an
individual tobacco production permit has been issued under this section,
the permit shall transfer to the surviving spouse of the person or, if
there is no surviving spouse, to surviving direct descendants of the
person.

\`\`(B) Temporary inability to farm .\_In the case of the death of a
person to whom an individual tobacco production permit has been issued
under this section and whose descendants are temporarily unable to
produce a crop of tobacco, the Secretary may hold the license in the
name of the descendants for a period of not more than 18 months.

\`\`(3) Voluntary transfers .\_A person that is eligible to obtain an
individual tobacco production permit under this section may at any time
transfer all or part of the permit to the person\'s spouse or direct
descendants that are actively engaged in the production of tobacco.

\`\`(h) Reserve .\_

\`\`(1) In general .\_For each marketing year for which individual
tobacco production permits are in effect under this section, the
Secretary may establish a reserve from the national marketing quota in a
quantity equal to not more than 1 percent of the national marketing
quota to be available for\_

\`\`(A) making corrections of errors in individual acreage limitations
and individual marketing limitations;

\`\`(B) adjusting inequities; and

\`\`(C) establishing individual tobacco production permits for new
tobacco producers (except that not less than two-thirds of the reserve
shall be for establishing such permits for new tobacco producers).

\`\`(2) Eligible persons .\_To be eligible for a new individual tobacco
production permit, a producer must have owned a farm on which tobacco
was not produced or considered produced during the immediately preceding
5 years.

\`\`(3) Apportionment for new producers .\_The part of the reserve held
for apportionment to new individual tobacco producers shall be allotted
on the basis of\_

\`\`(A) land, labor, and equipment available for the production of
tobacco;

\`\`(B) crop rotation practices;

\`\`(C) soil and other physical factors affecting the production of
tobacco; and

\`\`(D) the past tobacco-producing experience of the producer.

\`\`(4) Permit yield .\_The permit yield for any producer for which a
new individual tobacco production permit is established shall be
determined on the basis of available productivity data for the land
involved and yields for similar farms in the same county.

\`\`(i) Penalties .\_

\`\`(1) Production on other farms .\_If any quantity of tobacco is
marketed as having been produced under an individual acreage limitation
or individual marketing limitation assigned to a farm but was produced
on a different farm, the individual acreage limitation or individual
marketing limitation for the following marketing year shall be
forfeited.

\`\`(2) False report .\_If a person to which an individual tobacco
production permit is issued files, or aids or acquiesces in the filing
of, a false report with respect to the assignment of an individual
acreage limitation or individual marketing limitation for a quantity of
tobacco, the individual acreage limitation or individual marketing
limitation for the following marketing year shall be forfeited.

\`\`(j) Marketing Penalties .\_

\`\`(1) In general .\_When individual tobacco production permits under
this section are in effect, provisions with respect to penalties for the
marketing of excess tobacco and the other provisions contained in
section 314 shall apply in the same manner and to the same extent as
they would apply under section 317(g) if farm marketing quotas were in
effect.

\`\`(2) Production on other farms .\_If a producer falsely identifies
tobacco as having been produced on or marketed from a farm to which an
individual acreage limitation or individual marketing limitation has
been assigned, future individual acreage limitations and individual
marketing limitations shall be forfeited.\'\'.

SEC. 1025. MODIFICATIONS IN FEDERAL TOBACCO PROGRAMS.

\(a\) Program Referenda .\_Section 312(c) of the Agricultural Adjustment
Act of 1938 (7 U.S.C. 1312(c)) is amended\_

\(1\) by striking \`\`(c) Within thirty\'\' and inserting the following:

\`\`(c) Referenda on Quotas .\_

\`\`(1) In general .\_Not later than 30\'\'; and

\(2\) by adding at the end the following:

\`\`(2) Referenda on program changes .\_

\`\`(A) In general .\_In the case of any type of tobacco for which
marketing quotas are in effect, on the receipt of a petition from more
than 5 percent of the producers of that type of tobacco in a State, the
Secretary shall conduct a statewide referendum on any proposal related
to the lease and transfer of tobacco quota within a State requested by
the petition that is authorized under this part.

\`\`(B) Approval of proposals .\_If a majority of producers of the type
of tobacco in the State approve a proposal in a referendum conducted
under subparagraph (A), the Secretary shall implement the proposal in a
manner that applies to all producers and quota holders of that type of
tobacco in the State.\'\'.

\(b\) Purchase Requirements .\_Section 320B of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1314h) is amended\_

\(1\) in subsection (c)\_

\(A\) by striking \`\`(c) The amount\'\' and inserting \`\`(c) Amount of
Penalty .\_For the 1998 and subsequent marketing years, the amount\'\';
and

\(B\) by striking paragraph (1) and inserting the following:

\`\`(1) 105 percent of the average market price for the type of tobacco
involved during the preceding marketing year; and\'\'; and

\(2\) by striking subsection (d) and inserting the following:

\`\`(d) Use of Penalty Payments .\_An amount equivalent to each penalty
collected by the Secretary under this section shall be transmitted by
the Secretary to the Secretary of the Treasury for deposit in the
Tobacco Community Revitalization Trust Fund established under section
1011 of the LEAF Act.\'\'.

\(c\) Elimination of Tobacco Marketing Assessment .\_

\(1\) In general .\_Section 106 of the Agricultural Act of 1949 (7
U.S.C. 1445) is amended by striking subsection (g).

\(2\) Conforming amendment .\_Section 422(c) of the Uruguay Round
Agreements Act (Public Law 103465; 7 U.S.C. 1445 note) is amended by
striking \`\`section 106(g), 106A, or 106B of the Agricultural Act of
1949 (7 U.S.C. 1445(g), 14451, or 14452)\'\' and inserting \`\`section
106A or 106B of the Agricultural Act of 1949 (7 U.S.C. 14451,
14452)\'\'.

\(d\) Adjustment for Land Rental Costs .\_Section 106 of the
Agricultural Act of 1949 (7 U.S.C. 1445) is amended by adding at the end
the following:

\`\`(h) Adjustment for Land Rental Costs .\_For each of the 1999 and
2000 marketing years for flue-cured tobacco, after consultation with
producers, State farm organizations and cooperative associations, the
Secretary shall make an adjustment in the price support level for
flue-cured tobacco equal to the annual change in the average cost per
pound to flue-cured producers, as determined by the Secretary, under
agreements through which producers rent land to produce flue-cured
tobacco.\'\'.

\(e\) Fire-Cured and D\~ark Air-Cured Tobacco Prog\~rams .\_

\(1\) Limitation on transfers .\_Section 318(g) of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 13l4d(g)) is amended\_

\(A\) by striking \`\`ten\'\' and inserting \`\`30\'\'; and

\(B\) by inserting \`\`during any crop year\'\' after \`\`transferred to
any farm\'\'.

\(2\) Loss of allotment or quota through underplanting .\_Section 318 of
the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314d) is amended by
adding at the end the following:

\`\`(k) Loss of Allotment or Quota Through Underplanting .\_Effective
for the 1999 and subsequent marketing years, no acreage allotment or
ac\~reage-poundage quota, other than a new marketing quota, shall be
established for a farm on which no fire-cured or dark air-cured tobacco
was planted or considered planted during at least 2 of the 3 crop years
immediately preceding the crop year for which the acreage allotment or
acreage-poundage quota would otherwise be established.\'\'.

\(f\) E\~xpansion of Types of Tobacco Subject to No Net Cost Assessment
.\_

\(1\) No net cost tobacco fund .\_Section 106A(d)(1)(A) of the
Agricultural Act of 1949 (7 U.S.C. 14451(d)(1)(A)) is amended\_

\(A\) in clause (ii), by inserting after \`\`Burley quota tobacco\'\'
the following: \`\`and fire-cured and dark air-cured quota tobacco\'\';
and

\(B\) in clause (iii)\_

\(i\) in the matter preceding subclause (I), by striking \`\`Flue-cured
or Burley tobacco\'\' and inserting \`\`each kind of tobacco for which
price support is made available under this Act, and each kind of like
tobacco,\'\'; and

\(ii\) by striking subclause (II) and inserting the following:

\`\`(II) the sum of the amount of the per pound producer contribution
and purchaser assessment (if any) for the kind of tobacco payable under
clauses (i) and (ii); and\'\'.

\(2\) No net cost tobacco account .\_Section 106B(d)(1) of the
Agricultural Act of 1949 (7 U.S.C. 14452(d)(1)) is amended\_

\(A\) in subparagraph (B), by inserting after \`\`Burley quota
tobacco\'\' the following: \`\`and fire-cured and dark air-cured
tobacco\'\'; and

\(B\) in subparagraph (C), by striking \`\`Flue-cured and Burley
tobacco\'\' and inserting \`\`each kind of tobacco for which price
support is made available under this Act, and each kind of like
tobacco,\'\'.

Subtitle C_Farmer and Worker Transition Assistance

SEC. 1031. TOBACCO WORKER TRANSITION PROGRAM.

\(a\) Group Eligibility Requirements .\_

\(1\) Criteria .\_A group of workers (including workers in any firm or
subdivision of a firm involved in the manufacture, processing, or
warehousing of tobacco or tobacco products) shall be certified as
eligible to apply for adjustment assistance under this section pursuant
to a petition filed under subsection (b) if the Secretary of Labor
determines that a significant number or proportion of the workers in the
workers\' firm or an appropriate subdivision of the firm have become
totally or partially separated, or are threatened to become totally or
partially separated, and\_

\(A\) the sales or production, or both, of the firm or subdivision have
decreased absolutely; and

\(B\) the implementation of the national tobacco settlement contributed
importantly to the workers\' separation or threat of separation and to
the decline in the sales or production of the firm or subdivision.

\(2\) Definition of contributed importantly .\_In paragraph (1)(B), the
term \`\`contributed importantly\'\' means a cause that is important but
not necessarily more important than any other cause.

\(3\) Regulations .\_The Secretary shall issue regulations relating to
the application of the criteria described in paragraph (1) in making
preliminary findings under subsection (b) and determinations under
subsection (c).

\(b\) Preliminary Findings and Basic Assistance .\_

\(1\) Filing of petitions .\_A petition for certification of eligibility
to apply for adjustment assistance under this section may be filed by a
group of workers (including workers in any firm or subdivision of a firm
involved in the manufacture, processing, or warehousing of tobacco or
tobacco products) or by their certified or recognized union or other
duly authorized representative with the Governor of the State in which
the workers\' firm or subdivision thereof is located.

\(2\) Findings and assistance .\_On receipt of a petition under
paragraph (1), the Governor shall\_

\(A\) notify the Secretary that the Governor has received the petition;

\(B\) within 10 days after receiving the petition\_

\(i\) make a preliminary finding as to whether the petition meets the
criteria described in subsection (a)(1); and

\(ii\) transmit the petition, together with a statement of the finding
under clause (i) and reasons for the finding, to the Secretary for
action under subsection (c); and

\(C\) if the preliminary finding under subparagraph (B)(i) is
affirmative, ensure that rapid response and basic readjustment services
authorized under other Federal laws are made available to the workers.

\(c\) Review of Petitions by Secretary; Certifications .\_

\(1\) In general .\_The Secretary, within 30 days after receiving a
petition under subsection (b)(2)(B)(ii), shall determine whether the
petition meets the criteria described in subsection (a)(1). On a
determination that the petition meets the criteria, the Secretary shall
issue to workers covered by the petition a certification of eligibility
to apply for the assistance described in subsection (d).

\(2\) Denial of certification .\_On the denial of a certification with
respect to a petition under paragraph (1), the Secretary shall review
the petition in accordance with the requirements of other applicable
assistance programs to determine if the workers may be certified under
the other programs.

\(d\) Comprehensive Assistance .\_

\(1\) In general .\_Workers covered by a certification issued by the
Secretary under subsection (c)(1) shall be provided with benefits and
services described in paragraph (2) in the same manner and to the same
extent as workers covered under a certification under subchapter A of
title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.), except that
the total amount of payments under this section for any fiscal year
shall not exceed \$25,000,000.

\(2\) Benefits and services .\_The benefits and services described in
this paragraph are the following:

\(A\) Employment services of the type described in section 235 of the
Trade Act of 1974 (19 U.S.C. 2295).

\(B\) Training described in section 236 of the Trade Act of 1974 (19
U.S.C. 2296), except that notwithstanding the provisions of section
236(a)(2)(A) of that Act, the total amount of payments for training
under this section for any fiscal year shall not exceed \$12,500,000.

\(C\) Tobacco worker readjustment allowances, which shall be provided in
the same manner as trade readjustment allowances are provided under part
I of subchapter B of chapter 2 of title II of the Trade Act of 1974 (19
U.S.C. 2291 et seq.), except that\_

\(i\) the provisions of sections 231(a)(5)(C) and 231(c) of that Act (19
U.S.C. 2291(a)(5)(C), 2291(c)), authorizing the payment of trade
readjustment allowances on a finding that it is not feasible or
appropriate to approve a training program for a worker, shall not be
applicable to payment of allowances under this section; and

\(ii\) notwithstanding the provisions of section 233(b) of that Act (19
U.S.C. 2293(b)), in order for a worker to qualify for tobacco
readjustment allowances under this section, the worker shall be enrolled
in a training program approved by the Secretary of the type described in
section 236(a) of that Act (19 U.S.C. 2296(a)) by the later of\_

\(I\) the last day of the 16th week of the worker\'s initial
unemployment compensation benefit period; or

\(II\) the last day of the 6th week after the week in which the
Secretary issues a certification covering the worker.

In cases of extenuating circumstances relating to enrollment of a worker
in a training program under this section, the Secretary may extend the
time for enrollment for a period of not to exceed 30 days.

\(D\) Job search allowances of the type described in section 237 of the
Trade Act of 1974 (19 U.S.C. 2297).

\(E\) Relocation allowances of the type described in section 238 of the
Trade Act of 1974 (19 U.S.C. 2298).

\(e\) Ineligibility of Individuals Receiving Payments for Lost Tobacco
Quota .\_No benefits or services may be provided under this section to
any individual who has received payments for lost tobacco quota under
section 1021.

\(f\) Funding .\_Of the amounts in the Trust Fund, the Secretary may use
not to exceed \$25,000,000 for each of fiscal years 1999 through 2008 to
provide assistance under this section.

\(g\) Effective Date .\_This section shall take effect on the date that
is the later of\_

\(1\) October l, 1998; or

\(2\) the date of enactment of this Act.

\(h\) Termination Date .\_No assistance, vouchers, allowances, or other
payments may be provided under this section after the date that is the
earlier of\_

\(1\) the date that is 10 years after the effective date of this section
under subsection (g); or

\(2\) the date on which legislation establishing a program providing
dislocated workers with comprehensive assistance substantially similar
to the assistance provided by this section becomes effective.

SEC. 1032. FARMER OPPORTUNITY GRANTS.

Part A of title IV of the Higher Education Act of 1965 (20 U.S.C. 1070
et seq.) is amended by adding at the end the following:

\`\`Subpart 9_Farmer Opportunity Grants

\`\`SEC. 420D. STATEMENT OF PURPOSE.

\`\`It is the purpose of this subpart to assist in making available the
benefits of postsecondary education to eligible students (determined in
accordance with section 420F) in institutions of higher education by
providing farmer opportunity grants to all eligible students.

\`\`SEC. 420E. PROGRAM AUTHORITY; AMOUNT AND DETERMINATIONS;
APPLICATIONS.

\`\`(a) Program Authority and Method of Distribution .\_

\`\`(1) Program authority .\_From amounts made available under section
1011(d)(5) of the LEAF Act, the Secretary, during the period beginning
July 1, 1999, and ending September 30, 2024, shall pay to each eligible
institution such sums as may be necessary to pay to each eligible
student (determined in accordance with section 420F) for each academic
year during which that student is in attendance at an institution of
higher education, as an undergraduate, a farmer opportunity grant in the
amount for which that student is eligible, as determined pursuant to
subsection (b). Not less than 85 percent of the sums shall be advanced
to eligible institutions prior to the start of each payment period and
shall be based on an amount requested by the institution as needed to
pay eligible students, except that this sentence shall not be construed
to limit the authority of the Secretary to place an institution on a
reimbursement system of payment.

\`\`(2) Construction .\_Nothing in this section shall be construed to
prohibit the Secretary from paying directly to students, in advance of
the beginning of the academic term, an amount for which the students are
eligible, in cases where the eligible institution elects not to
participate in the disbursement system required by paragraph (1).

\`\`(3) Designation .\_Grants made under this subpart shall be known as
\`farmer opportunity grants\'.

\`\`(b) Amount of Grants .\_

\`\`(1) Amounts .\_

\`\`(A) In general .\_The amount of the grant for a student eligible
under this subpart shall be\_

\`\`(i) \$1,700 for each of the academic years 19992000 through
20032004;

\`\`(ii) \$2,000 for each of the academic years 20042005 through
20082009;

\`\`(iii) \$2,300 for each of the academic years 20092010 through
20132014;

\`\`(iv) \$2,600 for each of the academic years 20142015 through
20182019; and

\`\`(v) \$2,900 for each of the academic years 20192020 through
20232024.

\`\`(B) Part-time rule .\_In any case where a student attends an
institution of higher education on less than a full-time basis
(including a student who attends an institution of higher education on
less than a half-time basis) during any academic year, the amount of the
grant for which that student is eligible shall be reduced in proportion
to the degree to which that student is not so attending on a full-time
basis, in accordance with a schedule of reductions established by the
Secretary for the purposes of this subparagraph, computed in accordance
with this subpart. The schedule of reductions shall be established by
regulation and published in the Federal Register.

\`\`(2) Maximum .\_No grant under this subpart shall exceed the cost of
attendance (as described in section 472) at the institution at which
that student is in attendance. If, with respect to any student, it is
determined that the amount of a grant exceeds the cost of attendance for
that year, the amount of the grant shall be reduced to an amount equal
to the cost of attendance at the institution.

\`\`(3) Prohibition .\_No grant shall be awarded under this subpart to
any individual who is incarcerated in any Federal, State, or local penal
institution.

\`\`(c) Period of Eligibility for Grants .\_

\`\`(1) In general .\_The period during which a student may receive
grants shall be the period required for the completion of the first
undergraduate baccalaureate course of study being pursued by that
student at the institution at which the student is in attendance, except
that any period during which the student is enrolled in a noncredit or
remedial course of study as described in paragraph (2) shall not be
counted for the purpose of this paragraph.

\`\`(2) Construction .\_Nothing in this section shall be construed to\_

\`\`(A) exclude from eligibility courses of study that are noncredit or
remedial in nature and that are determined by the institution to be
necessary to help the student be prepared for the pursuit of a first
undergraduate baccalaureate degree or certificate or, in the case of
courses in English language instruction, to be necessary to enable the
student to utilize already existing knowledge, training, or skills; and

\`\`(B) exclude from eligibility programs of study abroad that are
approved for credit by the home institution at which the student is
enrolled.

\`\`(3) Prohibition .\_No student is entitled to receive farmer
opportunity grant payments concurrently from more than 1 institution or
from the Secretary and an institution.

\`\`(d) Applications for Grants .\_

\`\`(1) In general .\_The Secretary shall from time to time set dates by
which students shall file applications for grants under this subpart.
The filing of applications under this subpart shall be coordinated with
the filing of applications under section 401(c).

\`\`(2) Information and assurances .\_Each student desiring a grant for
any year shall file with the Secretary an application for the grant
containing such information and assurances as the Secretary may deem
necessary to enable the Secretary to carry out the Secretary\'s
functions and responsibilities under this subpart.

\`\`(e) Distribution of Grants to Students .\_Payments under this
section shall be made in accordance with regulations promulgated by the
Secretary for such purpose, in such manner as will best accomplish the
purpose of this section. Any disbursement allowed to be made by
crediting the student\'s account shall be limited to tuition and fees
and, in the case of institutionally owned housing, room and board. The
student may elect to have the institution provide other such goods and
services by crediting the student\'s account.

\`\`(f) Insufficient Funding .\_If, for any fiscal year, the funds made
available to carry out this subpart from the Tobacco Community
Revitalization Trust Fund are insufficient to satisfy fully all grants
for students determined to be eligible under section 420F, the amount of
the grant provided under subsection (b) shall be reduced on a pro rata
basis among all eligible students.

\`\`(g) Treatment of Institutions and Students Under Other Laws .\_Any
institution of higher education that enters into an agreement with the
Secretary to disburse to students attending that institution the amounts
those students are eligible to receive under this subpart shall not be
deemed, by virtue of the agreement, to be a contractor maintaining a
system of records to accomplish a function of the Secretary. Recipients
of farmer opportunity grants shall not be considered to be individual
grantees for purposes of the Drug-Free Workplace Act of 1988 (41 U.S.C.
701 et seq.).

\`\`SEC. 420F. STUDENT ELIGIBILITY.

\`\`(a) In General .\_In order to receive any grant under this subpart,
a student shall\_

\`\`(1) be a member of a tobacco farm family in accordance with
subsection (b);

\`\`(2) be enrolled or accepted for enrollment in a degree, certificate,
or other program (including a program of study abroad approved for
credit by the eligible institution at which the student is enrolled)
leading to a recognized educational credential at an institution of
higher education that is an eligible institution in accordance with
section 487, and not be enrolled in an elementary or secondary school;

\`\`(3) if the student is presently enrolled at an institution of higher
education, be maintaining satisfactory progress in the course of study
the student is pursuing in accordance with subsection (c);

\`\`(4) not owe a refund on grants previously received at any
institution of higher education under this title, or be in default on
any loan from a student loan fund at any institution provided for in
part D, or a loan made, insured, or guaranteed by the Secretary under
this title for attendance at any institution;

\`\`(5) file with the institution of higher education that the student
intends to attend, or is attending, a document, that need not be
notarized, but that shall include\_

\`\`(A) a statement of educational purpose stating that the money
attributable to the grant will be used solely for expenses related to
attendance or continued attendance at the institution; and

\`\`(B) the student\'s social security number; and

\`\`(6) be a citizen of the United States.

\`\`(b) Tobacco Farm Families .\_

\`\`(1) In general .\_For the purpose of subsection (a)(1), a student is
a member of a tobacco farm family if during calendar year 1998 the
student was\_

\`\`(A) an individual who\_

\`\`(i) is a participating tobacco producer (as defined in section 1002
of the LEAF Act); or

\`\`(ii) is otherwise actively engaged in the production of tobacco;

\`\`(B) a spouse, son, daughter, stepson, or stepdaughter of an
individual described in subparagraph (A);

\`\`(C) an individual\_

\`\`(i) who was a brother, sister, stepbrother, stepsister, son-in-law,
or daughter-in-law of an individual described in subparagraph (A); and

\`\`(ii) whose principal place of residence was the home of the
individual described in subparagraph (A); or

\`\`(D) an individual who was a dependent (within the meaning of section
152 of the Internal Revenue Code of 1986) of an individual described in
subparagraph (A).

\`\`(2) Administration .\_On request, the Secretary of Agriculture shall
provide to the Secretary such information as is necessary to carry out
this subsection.

\`\`(c) Satisfactory Progress .\_

\`\`(1) In general .\_For the purpose of subsection (a)(3), a student is
maintaining satisfactory progress if\_

\`\`(A) the institution at which the student is in attendance reviews
the progress of the student at the end of each academic year, or its
equivalent, as determined by the institution; and

\`\`(B) the student has at least a cumulative C average or its
equivalent, or academic standing consistent with the requirements for
graduation, as determined by the institution, at the end of the second
such academic year.

\`\`(2) Special rule .\_Whenever a student fails to meet the eligibility
requirements of subsection (a)(3) as a result of the application of this
subsection and subsequent to that failure the student has academic
standing consistent with the requirements for graduation, as determined
by the institution, for any grading period, the student may, subject to
this subsection, again be eligible under subsection (a)(3) for a grant
under this subpart.

\`\`(3) Waiver .\_Any institution of higher education at which the
student is in attendance may waive paragraph (1) or (2) for undue
hardship based on\_

\`\`(A) the death of a relative of the student;

\`\`(B) the personal injury or illness of the student; or

\`\`(C) special circumstances as determined by the institution.

\`\`(d) Students Who Are Not Secondary School Graduates .\_In order for
a student who does not have a certificate of graduation from a school
providing secondary education, or the recognized equivalent of the
certificate, to be eligible for any assistance under this subpart, the
student shall meet either 1 of the following standards:

\`\`(1) Examination .\_The student shall take an independently
administered examination and shall achieve a score, specified by the
Secretary, demonstrating that the student can benefit from the education
or training being offered. The examination shall be approved by the
Secretary on the basis of compliance with such standards for
development, administration, and scoring as the Secretary may prescribe
in regulations.

\`\`(2) Determination .\_The student shall be determined as having the
ability to benefit from the education or training in accordance with
such process as the State shall prescribe. Any such process described or
approved by a State for the purposes of this section shall be effective
6 months after the date of submission to the Secretary unless the
Secretary disapproves the process. In determining whether to approve or
disapprove the process, the Secretary shall take into account the
effectiveness of the process in enabling students without secondary
school diplomas or the recognized equivalent to benefit from the
instruction offered by institutions utilizing the process, and shall
also take into account the cultural diversity, economic circumstances,
and educational preparation of the populations served by the
institutions.

\`\`(e) Special Rule for Correspondence Courses .\_A student shall not
be eligible to receive a grant under this subpart for a correspondence
course unless the course is part of a program leading to an associate,
bachelor, or graduate degree.

\`\`(f) Courses Offered Through Telecommunications .\_

\`\`(1) Relation to correspondence courses .\_A student enrolled in a
course of instruction at an eligible institution of higher education
(other than an institute or school that meets the definition in section
521(4)(C) of the Carl D. Perkins Vocational and Applied Technology
Education Act (20 U.S.C. 2471(4)(C))) that is offered in whole or in
part through telecommunications and leads to a recognized associate,
bachelor, or graduate degree conferred by the institution shall not be
considered to be enrolled in correspondence courses unless the total
amount of telecommunications and correspondence courses at the
institution equals or exceeds 50 percent of the courses.

\`\`(2) Restriction or reductions of financial aid .\_A student\'s
eligibility to receive a grant under this subpart may be reduced if a
financial aid officer determines under the discretionary authority
provided in section 479A that telecommunications instruction results in
a substantially reduced cost of attendance to the student.

\`\`(3) Definition .\_For the purposes of this subsection, the term
\`telecommunications\' means the use of television, audio, or computer
transmission, including open broadcast, closed circuit, cable,
microwave, or satellite, audio conferencing, computer conferencing, or
video cassettes or discs, except that the term does not include a course
that is delivered using video cassette or disc recordings at the
institution and that is not delivered in person to other students of
that institution.

\`\`(g) Study Abroad .\_Nothing in this subpart shall be construed to
limit or otherwise prohibit access to study abroad programs approved by
the home institution at which a student is enrolled. An otherwise
eligible student who is engaged in a program of study abroad approved
for academic credit by the home institution at which the student is
enrolled shall be eligible to receive a grant under this subpart,
without regard to whether the study abroad program is required as part
of the student\'s degree program.

\`\`(h) Verification of Social Security Number .\_The Secretary, in
cooperation with the Commissioner of Social Security, shall verify any
social security number provided by a student to an eligible institution
under subsection (a)(5)(B) and shall enforce the following conditions:

\`\`(1) Pending verification .\_Except as provided in paragraphs (2) and
(3), an institution shall not deny, reduce, delay, or terminate a
student\'s eligibility for assistance under this subpart because social
security number verification is pending.

\`\`(2) Denial or termination .\_If there is a determination by the
Secretary that the social security number provided to an eligible
institution by a student is incorrect, the institution shall deny or
terminate the student\'s eligibility for any grant under this subpart
until such time as the student provides documented evidence of a social
security number that is determined by the institution to be correct.

\`\`(3) Construction .\_Nothing in this subsection shall be construed to
permit the Secretary to take any compliance, disallowance, penalty, or
other regulatory action against\_

\`\`(A) any institution of higher education with respect to any error in
a social security number, unless the error was a result of fraud on the
part of the institution; or

\`\`(B) any student with respect to any error in a social security
number, unless the error was a result of fraud on the part of the
student.\'\'.

Subtitle D_Immunity

SEC. 1041. GENERAL IMMUNITY FOR TOBACCO PRODUCERS AND TOBACCOWAREHOUSE
OWNERS.

Notwithstanding any other provision of this title, a participating
tobacco producer, tobacco-related growers association, or tobacco
warehouse owner or employee may not be subject to liability in any
Federal or State court for any cause of action resulting from the
failure of any tobacco product manufacturer, distributor, or retailer to
comply with the National Tobacco Policy and Youth Smoking Reduction Act.

TITLE XI_MISCELLANEOUS

Subtitle A_Prohibitions Relating to Tobacco Products and Children

SEC. 1101. SHORT TITLE.

This subtitle may be cited as the \`\`Tobacco Use by Minors Prevention
Act\'\'.

SEC. 1102. PROHIBITIONS RELATING TO TOBACCO PRODUCTS AND CHILDREN.

Chapter VIII of the Federal Food, Drug, and Cosmetic Act is amended by
adding at the end the following:

\`\`SEC. 804. PROHIBITION ON SALE OR DISTRIBUTION OF TOBACCO PRODUCTS
TOCHILDREN.

\`\`(a) General Rule .\_It shall be unlawful for any domestic concern or
any officer, director, employee, or agent of such concern to make use of
the mails or any means or instrumentality of interstate commerce to
cause or contribute, either directly or through a foreign subsidiary,
joint venture, affiliate, or licensee, to\_

\`\`(1) the sale or distribution of tobacco products in a foreign
country to children; or

\`\`(2) the advertising or promotion of tobacco products in a foreign
country in a manner that does not comply with Federal requirements for
the advertisement or promotion of tobacco products in the United States

\`\`(b) Defense .\_In an action brought to enforce subsection (a), it
shall be an affirmative defense that the tobacco products involved were
sold, distributed, advertised, or promoted in the foreign country
involved in a manner that would be lawful if such conduct occurred in
the United States.

\`\`SEC. 805. LABELING.

\`\`It shall be unlawful for any domestic concern or any officer,
director, employee, or agent of such concern, either directly or through
a foreign subsidiary, joint venture, affiliate, or licensee, to make use
of the mails or any means or instrumentality of interstate commerce to
cause or contribute to the export from the United States or the sale or
distribution in, or export from, any other country any tobacco product
the package of which does not contain a warning label that\_

\`\`(1) is in the primary language or languages of the country in which
the tobacco product is sold or distributed to consumers; and

\`\`(2) except for the requirement of paragraph (1)\_

\`\`(A) complies with Federal requirements for labeling of similar
tobacco products manufactured, imported, or packaged for sale or
distribution in the United States; or

\`\`(B) complies with the labeling requirements of the foreign country
in which the product is sold or distributed to consumers and which
labeling requirements the Secretary determines are substantially similar
to Federal requirements and are adequately enforced by such
country.\'\'.

SEC. 1103. ENFORCEMENT.

Section 301 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331)
is amended by adding at the end the following:

\`\`(aa) To carry out an act made unlawful by section 804 or 805.\'\'.

SEC. 1104. REWARD.

Section 303(b)(5) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
333)(b)(5)) is amended by adding at the end the following: \`\`If a
person provides information leading to the institution of a criminal
proceeding against, and conviction of, a person for a violation of
section 301(aa), such person shall be entitled to one-half of the
criminal fine imposed and collected for such violation but not more than
\$125,000.\'\'.

SEC. 1105. DEFINITIONS.

Section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321),
as amended by section 101(a) of this Act is amended by adding at the end
the following:

\`\`(ll) The term \`domestic concern\' means\_

\`\`(1) any individual who is a citizen, national, or resident of the
United States; and

\`\`(2) any corporation, partnership, association, joint-stock company,
business trust, unincorporated organization, or sole proprietorship
which has its principal place of business in the United States or which
is organized under the laws of a State of the United States or a
territory, possession, or commonwealth of the United States.

\`\`(mm) The term \`children\' means individuals under the age of
18.\'\'.

SEC. 1106. AMENDMENTS TO PUBLIC HEALTH SERVICE ACT.

\(a\) In General .\_The Public Health Service Act (42 U.S.C. 201 et
seq.) is amended by adding at the end the following:

\`\`TITLE XXVIII_NATIONAL EFFORTS TO REDUCE YOUTH SMOKING

\`\`Subtitle E_Reducing Youth Smoking and Tobacco-Related Diseases
Through Research

\`\`SEC. 2801. STUDY BY THE INSTITUTE OF MEDICINE.

\`\`(a) Contract .\_Not later than 60 days after the date of enactment
of the National Tobacco Policy and Youth Smoking Reduction Act, the
Secretary shall enter into a contract with the Institute of Medicine for
the conduct of a study on the framework for a research agenda and
research priorities to be used by the National Tobacco Task Force
established under section 2802.

\`\`(b) Considerations .\_

\`\`(1) In general .\_In developing the framework for the research
agenda and research priorities under subsection (a) the Institute of
Medicine shall focus on increasing knowledge concerning the biological,
social, behavioral, public health, and community factors involved in the
prevention of tobacco use, reduction of tobacco use, and health
consequences of tobacco use.

\`\`(2) Specific considerations .\_In the study conducted under
subsection (a), the Institute of Medicine shall specifically consider\_

\`\`(A) public health and community research relating to tobacco use
prevention methods, including public education, media, community
strategies;

\`\`(B) behavioral research relating to addiction and tobacco use;

\`\`(C) health services research relating to tobacco product prevention
and cessation treatment methodologies;

\`\`(D) surveillance and epidemiology research relating to tobacco;

\`\`(E) biomedical, including clinical, research relating to prevention
and treatment of tobacco-related diseases; and

\`\`(F) economic research relating to the responsiveness of youth
smoking to price and other economic factors.

\`\`(c) Report .\_Not later than 10 months after the date on which the
Secretary enters into the contract under subsection (a), the Institute
of Medicine shall prepare and submit to the Secretary, the National Task
Force, the Committee on Labor and Human Resources of the Senate, and the
Committee on Commerce of the House of Representatives, a report that
shall contain the findings and recommendations of the Institute for the
purposes described in subsection (b).

\`\`(d) Authorization of Appropriations .\_There are authorized to be
appropriated \$750,000 to carry out this section.

\`\`SEC. 2802. NATIONAL TOBACCO TASK FORCE.

\`\`(a) Establishment .\_The Secretary shall establish a National
Tobacco Task Force (referred to in this subtitle as the \`National Task
Force\') to foster coordination among public health agencies, academic
bodies, and community groups that conduct or support tobacco-related
biomedical, clinical, behavioral, health services, public health and
community, and surveillance and epidemiology research activities.

\`\`(b) Composition .\_The National Task Force shall be composed of\_

\`\`(1) the Surgeon General;

\`\`(2) the Director of the Office of Smoking and Health of the Centers
for Disease Control and Prevention;

\`\`(3) the Administrator of the Agency for Health Care Policy and
Research;

\`\`(4) the Director of the National Institutes of Health;

\`\`(5) two representatives from non-governmental public health or
tobacco control organizations; and

\`\`(6) two representatives from State or local government public health
agencies and offices.

\`\`(c) Chair .\_The National Task Force shall be chaired by the
Secretary, and shall be staffed by the Centers for Disease Control and
Prevention.

\`\`(d) Duties .\_The Task Force shall\_

\`\`(1) in accordance with research agenda recommended under section
2801, coordinate and advise tobacco-related research activities among
Federal public health service agencies;

\`\`(2) collect and make available to States and communities, through
publication and other appropriate means, evidence-based tobacco-related
research results and recommendations and the practical application of
such results; and

\`\`(3) report on a biennial basis to the Secretary and the Committee on
Labor and Human Resources of the Senate, and the Committee on Commerce
of the House of Representatives on the current and planned activities of
participating Federal agencies;

\`\`(e) Research Activities .\_The research activities referred to in
subsection (a) shall be designed to address tobacco-related research
priorities, and shall include\_

\`\`(1) the development of effective strategies to prevent the use of
tobacco products among youth;

\`\`(2) an outline of cost-effective, accessible, and successful methods
for tobacco use cessation among adults and youths who want to quit;

\`\`(3) the development of breakthroughs in the understanding of the
effects on the human body of nicotine and other non-tobacco constituents
of tobacco products; and

\`\`(4) the development of an enhanced ability to prevent and treat
tobacco-related diseases.

\`\`SEC. 2803. RESEARCH ACTIVITIES OF THE CENTERS FOR DISEASE CONTROL
ANDPREVENTION.

\`\`(a) Funding .\_There are authorized to be appropriated from the
National Tobacco Settlement Trust Fund established by section 401 of the
National Tobacco Policy and Youth Smoking Reduction Act, other than from
amounts in the State Litigation Settlement Account, the following
amounts to carry out this section\_

\`\`(1) \$450,000,000 for each of the first 3 fiscal years after the
date of enactment of the National Tobacco Policy and Youth Smoking
Reduction Act;

\`\`(2) \$505,000,000 for each of the 4th and 5th fiscal years after
that date;

\`\`(3) \$405,000,000 for each of the 6th and 7th fiscal years after
that date;

\`\`(4) \$360,000,000 for each of the 8th and 9th fiscal years after
that date; and

\`\`(5) \$305,000,000 for the 10th fiscal year after that date.

\`\`(b) Duties .\_The Director of the Centers for Disease Control and
Prevention, working in consultation with National Task Force, shall
carry out tobacco-related surveillance and epidemiologic studies and
develop tobacco control and prevention strategies under this section.

\`\`(c) Trigger .\_No expenditures shall be made under this section
during any fiscal year in which the annual amount appropriated for the
Centers for Disease Control and Prevention is less than the amount so
appropriated for the prior fiscal year.

\`\`SEC. 2804. RESEARCH ACTIVITIES OF THE NATIONAL INSTITUTES OF HEALTH.

\`\`(a) Funding .\_There are authorized to be appropriated, from amounts
in the National Tobacco Settlement Trust Fund established by section 401
of the National Tobacco Policy and Youth Smoking Reduction Act, other
than from amounts in the State Litigation Settlement Account, to carry
out this section \$2,500,000,000 for each of the fiscal years 1999
through 2008.

\`\`(b) Establishment .\_The Secretary shall establish, within the
Office of the Director of the National Institutes of Health, a
Tobacco-Related Research Initiative (referred to in this section as the
\`tobacco initiative\') to be headed by the Director.

\`\`(c) Expenditure of Funds .\_The Director of the National Institutes
of Health acting through the tobacco initiative, and in consultation
with the National Tobacco Task Force, shall provide funds to conduct or
support epidemiological, behavioral, biomedical, and social science
research (including the training of researchers) related to the
prevention and treatment of tobacco addiction, and the prevention and
treatment of diseases associated with tobacco use.

\`\`(d) Guaranteed Minimum .\_Of the funds made available to the
National Institutes of Health under this section, not less than 33
percent of such funds shall be used to support epidemiological,
behavioral, and social science research related to the prevention and
treatment of tobacco addiction.

\`\`(e) Limitation .\_Except as may be necessary to study one of the
specific purposes described in subsection (f), funds made available
under subsection (d) shall not be used to support neurobiological
research, or research in which the behavior of an organism is observed
for the purpose of determining activity at the cellular or molecular
level.

\`\`(f) Nature of Research .\_Funds made available under subsection (d)
shall be used to conduct or support research with respect to one or more
of the following\_

\`\`(1) the epidemiology of tobacco use;

\`\`(2) the etiology of tobacco use;

\`\`(3) risk factors for tobacco use by children;

\`\`(4) prevention of tobacco use by children, including school and
community-based programs, and alternative activities;

\`\`(5) the relationship between tobacco use, alcohol abuse and illicit
drug abuse;

\`\`(6) behavioral and pharmacological smoking cessation methods and
technologies, including relapse prevention;

\`\`(7) the toxicity of tobacco products and their ingredients;

\`\`(8) the relative harmfulness of different tobacco products;

\`\`(9) environmental exposure to tobacco smoke;

\`\`(10) the impact of tobacco use by pregnant women on their fetuses;
and

\`\`(11) the redesign of tobacco products to reduce risks to public
health and safety.

\`\`(g) Coordination .\_In carrying out tobacco-related research under
this section, the Director of the National Institutes of Health, in
coordination with the National Tobacco Task Force, shall ensure
appropriate coordination with the research of other agencies, and shall
avoid duplicative efforts through all appropriate means, including
through the establishment of an Office of Tobacco-Related Research.

\`\`(h) Office of Tobacco-Related Research .\_

\`\`(1) Establishment .\_There is established within the National
Institutes of Health and Office of Tobacco-Related Research (referred to
in this subsection as the \`Office\'). The Office shall be headed by a
director to be appointed by the Secretary.

\`\`(2) Duties .\_The director of the Office shall\_

\`\`(A) in coordination with the National Tobacco Task Force, identify
tobacco-related research projects that should be conducted or supported
by the research institutes, and develop such projects in cooperation
with such institutes;

\`\`(B) coordinate tobacco-related research that is conducted or
supported by the National Institutes of Health;

\`\`(C) through the activities of the National Tobacco Task Force, take
steps to further cooperation and collaboration between the institutes of
the National Institutes of Health and other Federal agencies with
respect to tobacco-related research conducted or supported by such
agencies;

\`\`(D) ensure compliance with the funding levels described in
subsection (d) and the limitation described in subsection (e);

\`\`(E) annually recommend to Congress the allocation of anti-tobacco
research funds among the national research institutes; and

\`\`(F) establish a clearinghouse for information about tobacco-related
research conducted by governmental and non-governmental bodies.

\`\`(3) Administration .\_The Director of the National Institutes of
Health shall set-aside not less than 1 percent and not more than 3
percent of the funds made available under subsection (d) to administer
the Office.

\`\`(i) Trigger .\_No expenditure shall be made under subsection (a)
during any fiscal year in which the annual amount appropriated for the
National Institutes of Health is less than the amount so appropriated
for the prior fiscal year.\'\'.

\(b\) Research on Minority smoking and Tobacco-related Diseases.\_

Section 1707(b) of the Public Health Service Act (42 U.S.c. 300u-6(b))
is amended by striking \`\`(b) Duties.\_ The Secretary\'\' and inserting
the following:

\`\`(b) Duties.\_

\`\`(1) In General.\_

\`\`(A) Intereagency coordination.\_ With respect to minority health
activities of the Public Health Service, and the National Institutes of
Health, a representative of the Office of Minority Health within the
Department of Health and Human Services, a representative of the Office
of Minority Health within the National Institutes of Health, and a
representative of the Surgeon General shall\_

\`\`(i) seek to assure coordination of research, service delivery and
inclusion of community-based organizations related to tobacco-related
diseases, prevention, and cessation programs for ethnic, socio-economic
and culturally-diverse populations;

\`\`(ii) monitor and report to Congress biannually the amount of Federal
funds targeted for research related to minority tobacco-related
diseases, research into effective smoking cessation programs that are
culturally and linguistically appropriate, health service delivery, and
for community-based organizations providing smoking prevention and
cessation services, and report biannually to the Congress the
demonstrated effectiveness of these programs.\'\'.

\(c\) Medicaid Coverage of Outpatient Smoking Cessation Agents.\_
Paragraph (2) of section 1927(d) of the Public Health Service Act (42
U.S.C. 1396r-8(d)) is amended\_

\(1\) by striking subparagraph (E) and redesignating subparagraphs (F)
through (J) as subparagraphs (E) through (I); and

\(2\) by striking \`\`drugs.\'\' in subparagraph (F), as redesignated,
and inserting \`\`drugs, except agents, approved by the Food and Drug
Administration, when used to promote smoking cessation.\'\'.

SEC. 1107. BAN ON DISTRIBUTION OF TOBACCO PRODUCTS PRODUCED BY CHILD
LABOR.

Section 307 of the Tariff Act of 1930 (19 U.S.C. 1307) is amended by
inserting after \`\`United States.\'\' the following: \`\`The provisions
of this section apply with equal force to tobacco products produced or
manufactured wholly or in part in any foreign country by child
labor.\'\'.

Subtitle B_Federal Licensing of Tobacco Product Distribution

SEC. 1121. LICENSING OF TOBACCO PRODUCT DISTRIBUTION.

\(a\) In General .\_Except for any retailer licensed under section 224
of this Act, no domestic concern may engage in the manufacture, or
distribution of tobacco products for sale, in the United States more
than 1 year after the date of enactment of this Act, either directly or
through its foreign subsidiaries, affiliates, joint ventures, or
licensees, unless it is licensed to do so by the Secretary.

\(b\) Fee .\_

\(1\) In general .\_The annual license fee shall be \$1 per every 1000
cigarettes manufactured, or distributed for sale, by a domestic concern
either directly or through its foreign subsidiaries, affiliates, joint
ventures, or licensees and an equivalent amount, as established by the
Secretary, for other tobacco products.

\(2\) Credit .\_In any year, a domestic concern shall receive as a
credit towards that portion of its license fee under clause (i) which is
attributable to the manufacture of tobacco products subject to the
Federal excise tax under section 5701 of the Internal Revenue Code of
1986 the amount of tax it paid under that section.

\(c\) Regulations .\_Within 6 months after the date of the enactment of
this Act, the Secretary shall promulgate regulations to implement the
requirements of this section.

\(d\) Penalty .\_Any domestic concern which engages in the manufacture
of cigarettes or other tobacco products either directly or through its
foreign subsidiaries, affiliates, joint ventures, or licensees without
the license required by subsection (a) shall be considered to have
committed a prohibited act under section 301 of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 331).

\(e\) Domestic Concern Defined .\_For purposes of this section, the term
\`\`domestic concern\'\' means\_

\(1\) any individual who is a citizen, national, or resident of the
United States;

\(2\) any corporation, partnership, association, joint-stock company,
business trust, unincorporated organization, or sole proprietorship
which has its principal place of business in the United States or which
is organized under the laws of a State of the United States or a
territory, possession, or commonwealth of the United States; and

\(3\) includes any person engaged in the manufacture, or distribution
for sale, of cigarettes or other tobacco products on Indian lands.

Subtitle C_International Provisions

SEC. 1131. INTERNATIONAL TOBACCO CONTROL TRUST FUND.

\(a\) Establishment .\_There is established in the Treasury an
International Tobacco Control Trust Fund (referred to as the
\`\`International Trust Fund\'\') which shall be funded by the license
fees collected under section 1121.

\(b\) Use of International Trust Fund .\_Funds from the International
Trust Fund shall be available for use as follows:

\(1\) American Center on Global Health and Tobacco .\_Annual funds of
\$150,000,000 may be used from the International Trust Fund for the
American Center on Global Health and Tobacco as provided in
appropriation Acts.

\(2\) Health and human services .\_The Secretary of Health and Human
Services may use the funds deposited in the International Trust Fund for
grants and other forms of assistance to foreign governments,
nongovernmental organizations, and international organizations to
support tobacco control activities in foreign countries as provided in
appropriation Acts.

\(3\) Enforcement .\_The Secretary may use funds deposited in the
International Trust Fund for enforcement of any requirements related to
the sale, distribution, marketing, or promotion of tobacco products
internationally as provided in appropriation Acts.

SEC. 1132. AMERICAN CENTER ON GLOBAL HEALTH AND TOBACCO.

\(a\) Findings and Purpose .\_

\(1\) Findings .\_Congress makes the following findings:

\(A\) Tobacco use is estimated to have caused nearly 3,000,000 deaths a
year worldwide in the early 1990\'s, and is projected to cause in excess
of 10,000,000 additional deaths a year globally by 2030, more than any
single disease. More than 70 percent of those deaths are expected in
developing countries.

\(B\) Many countries are unprepared to address increases in tobacco
deaths, including the impact on health systems and health costs. While
tobacco consumption in the United States and other established market
economies has fallen over the last decade, consumption is rising in
China, India, East Asia, and former socialist economies. Tobacco
companies in the United States and elsewhere have increasingly targeted
those markets.

\(C\) Tobacco use markedly reduces good health and threatens to erode
the major health gains in life expectancy of the last century. Only
HIV/AIDS infection and tobacco are large and growing causes of death and
disease worldwide. The total projected deaths from tobacco over the next
10 years likely will exceed deaths from HIV/AIDS, maternal and childhood
conditions, and tuberculosis combined.

\(D\) The United States consistently has provided leadership and funding
to address the world\'s most pressing public health needs, including
HIV/AIDS, hunger, maternal and child health, and immunization.

\(E\) Through exports and overseas operations, United States tobacco
companies sell more cigarettes overseas than they do in the United
States. Foreign sales now account for more than half of all sales for
the 2 leading United States tobacco product manufacturers.

\(F\) United States companies spend billions of dollars on aggressive
tobacco marketing campaigns overseas that associate smoking with the
United States, affluence, freedom, and liberation. In many markets,
American companies reach youthful audiences through television and radio
advertising, free samples, and other methods that are outlawed in the
United States.

\(G\) In light of the role the United States tobacco companies have
played in spreading tobacco use globally, and in light of the large
financial benefits they continue to enjoy from tobacco exports, it is
appropriate that this section be enacted in order to provide assistance
and funding for international public education and mass media programs
to inform the public about the hazards of tobacco use.

\(H\) Smoking in United States films is pervasive and influences persons
in other countries who seek to emulate \`\`American activities\'\'
depicted in motion pictures. According to one study, more than half of
the top-grossing United States films released between 1991 and 1996
exhibited smoking. In these films, 80 percent of the male lead
characters and 27 percent of the female characters smoked. The motion
picture industry is painting a distorted picture that smoking is a truly
American activity.

\(2\) Purpose .\_The purpose of this section is to establish the
American Center on Global Health and Tobacco (herein after referred to
as \`\`ACT\'\'). ACT shall assist organizations in other countries to
reduce and prevent the use of tobacco. Activities ACT shall support
include\_

\(A\) public education programs that inform the public about the hazards
of tobacco use and of environmental tobacco smoke;

\(B\) mass media campaigns, including paid counter-tobacco
advertisements, to reverse the image appeal of pro-tobacco messages,
especially those that glamorize and \`\`Westernize\'\' tobacco use to
young people; and

\(C\) education about the economic and societal costs of tobacco use,
and effective tobacco use prevention and cessation strategies that are
appropriate for the country involved.

\(b\) Establishment .\_

\(1\) In general .\_There is hereby established in the District of
Columbia a private, nonprofit corporation to be known as the American
Center on Global Health and Tobacco. ACT shall\_

\(A\) not be an agency or establishment of the United States; and

\(B\) except as otherwise provided in this section, be subject to, and
have all the powers conferred upon a nonprofit corporation by the
District of Columbia Nonprofit Corporation Act (D.C. Code section 29-501
et seq.).

\(2\) Relation to united states .\_Nothing in this section shall be
construed as making ACT an agency or establishment of the United States,
or as making the members of the Board of ACT, or its employees, officers
or employees of the United States.

\(3\) Relation to nongovernmental organizations .\_ACT shall have a
limited staff, and, to the maximum extent practicable, utilize the
available experience and talents of nongovernmental organizations with
specialized experience in health, education, media, and tobacco.

\(4\) Governing board .\_ACT shall be governed by a board of up to 25
members including\_

\(A\) on a bipartisan basis, Members of the Senate and of the House of
Representatives;

\(B\) the heads of American public health organizations;

\(C\) the heads of American media, marketing, and other nongovernment
institutions and corporations; and

\(D\) individuals active in education, public health, and other relevant
activities.

\(5\) International advisory council .\_An International Advisory
Council consisting of representatives from key global, regional, and
national public health organizations, and leading individual educators
and health professionals shall provide advisory assistance to ACT.

\(c\) Funding .\_

\(1\) Definition of trust fund .\_In this section, the term \`\`Trust
Fund\'\' means the National Tobacco Settlement Trust Fund established by
section 401 of this Act, other than amounts in the State Litigation
Settlement Account.

\(2\) Establishment of global public health and education resource
account .\_There is established within the Trust Fund the Global Public
Health and Education Resource Account that shall be credited with
\$150,000,000 for each fiscal year.

\(3\) Transfer authority .\_The Secretary of the Treasury shall on
October 1 of each fiscal year beginning after the date of enactment of
this section, transfer \$150,000,000 from the Global Public Health and
Education Resource Account of the Trust Fund to the account of ACT to
carry out the activities authorized under this section.

\(4\) Termination of transfer authority .\_The authority of the
Secretary of the Treasury to transfer funds from the Trust Fund shall
expire with the expiration of the Trust Fund.

\(d\) Requirements for Eligibility for Annual Transfers From the Trust
Fund .\_

\(1\) Oversight .\_ACT and its grantees shall be subject to the
oversight and supervision of Congress, and shall annually submit a
report of its activities to Congress in accordance with paragraph
(5)(A)(iii).

\(2\) Compliance .\_

\(A\) Funding contingent on compliance .\_Annual payments from the Trust
Fund may be made to ACT under this section only if ACT complies with the
requirements specified in this section.

\(B\) Use of funds .\_ACT may only fund programs for private sector
groups, and may not carry out programs directly. ACT may provide funding
only for programs which are consistent with the purposes of this
section.

\(3\) Salaries and compensation .\_

\(A\) No other source of compensation .\_Officers and employees of ACT
may not receive any salary or other compensation from any source other
than ACT for services performed for ACT.

\(B\) United states officers and employees .\_An individual who is an
officer or employee of the United States who also serves on the Board of
Directors or as an officer or employee of ACT, may not receive any
compensation or travel expenses in connection with services performed
for ACT.

\(4\) Stocks and dividends .\_ACT shall not issue any shares of stock or
declare or pay any dividends.

\(5\) Audits .\_

\(A\) Independent public accountants .\_

\(i\) In general .\_The accounts of ACT shall be audited annually in
accordance with generally accepted auditing standards by independent
certified public accountants or independent licensed public accountants
certified or licensed by a regulatory authority of a State or other
political subdivision of the United States. The audits shall be
conducted at the place or places where the accounts of ACT are normally
kept. All books, accounts, financial records, reports, files, and all
other papers, things, or property belonging to or in use by ACT and
necessary to facilitate the audits shall be made available to the person
or persons conducting the audits, and full facilities for verifying
transactions with any assets held by depositories, fiscal agents, and
custodians shall be afforded to such person or persons.

\(ii\) Content of audit .\_The report of each audit conducted under
clause (i) shall be included in the annual report required under this
subsection. The audit report shall set forth the scope of the audit and
include such statements as are necessary to present fairly ACT\'s assets
and liabilities, surplus or deficit, with an analysis of the changes
therein during the year, supplemented in reasonable detail by a
statement of the income and expenses of ACT during the year, and a
statement of the application of funds, together with the independent
auditor\'s opinion of those statements.

\(iii\) Report .\_Not later than December 31 of each year, ACT shall
submit an annual report for the preceding fiscal year to the President
for transmittal to Congress. The report shall include a comprehensive
and detailed report of ACT\'s operations, activities, financial
condition, and accomplishments under this section and may include such
recommendations as ACT deems appropriate.

\(B\) Comptroller general .\_

\(i\) In general .\_The financial transactions of ACT for each fiscal
year may be audited by the Comptroller General in accordance with such
principles and procedures and under such rules and regulations as the
Comptroller General may prescribe. Any such audit shall be conducted at
the place or places where accounts of ACT are normally kept. The
Comptroller General shall have access to all books, accounts, records,
reports, files, and all other papers, things, or property belonging to
or in use by ACT pertaining to its financial transactions and necessary
to facilitate the audit. All books, accounts, records, reports, files,
papers, and property of ACT shall remain in the possession and custody
of ACT.

\(ii\) Report .\_A report of each audit shall be made by the Comptroller
General to Congress. A copy of each report shall be furnished to the
President and to ACT at the time the report is submitted to Congress.

\(6\) Recordkeeping .\_

\(A\) In general .\_ACT shall ensure that each recipient of assistance
from ACT under this section keeps such records as may be reasonably
necessary to fully disclose the amount and the disposition by such
recipient of the proceeds of such assistance, the total cost of the
project or undertaking in connection with which such assistance is given
or used, and the amount and nature of that portion of the cost of the
project or undertaking supplied by other sources, and such other records
as will facilitate an effective audit.

\(B\) Access .\_ACT shall ensure that it, or any of its duly authorized
representatives, shall have access for the purpose of audit and
examination to any books, documents, papers, and records of each
recipient of assistance from ACT that are pertinent to assistance
provided through ACT under this section.

SEC. 1133. PROHIBITION ON USE OF FUNDS TO FACILITATE THE EXPORTATION
ORPROMOTION OF TOBACCO.

\(a\) In General .\_Notwithstanding any other provision of law, no funds
made available by appropriations or otherwise made available may be used
by any officer, employee, department, or agency of the United States\_

\(1\) to promote or encourage the export, re-export, sale, manufacture,
advertising, promotion, distribution, or use of tobacco or tobacco
products to or in a foreign country; or

\(2\) to seek, through negotiation or otherwise, the removal or
reduction by any foreign country of any restriction or proposed
restriction in that country on the importation, export, re-export, sale,
manufacture, advertising, promotion, distribution, packaging, labeling,
use, content, imposition of tariffs, or taxation, of tobacco or tobacco
products.

\(b\) Exception .\_Subsection (a)(2) shall not apply to any restriction
or proposed restriction by a foreign country if\_

\(1\) the restriction is applied in a manner which constitutes a means
of arbitrary or unjustifiable discrimination between countries;

\(2\) the Secretary of Commerce certifies in writing to Congress that
the restriction is being applied in a manner that constitutes a means of
arbitrary or unjustifiable discrimination between countries; and

\(3\) the Secretary of Health and Human Services certifies to Congress
in writing that the restriction is not a reasonable means of protecting
the public health.

\(c\) Definition .\_In this section, the term \`\`arbitrary or
unjustifiable discrimination\'\' means a restriction or proposed
restriction by a foreign country that\_

\(1\) is arbitrary or unjustifiable; and

\(2\) does not adhere to the principle of national treatment and applies
less favorable treatment to goods that are imported into that country
than the country applies to like goods that are the product, growth, or
manufacture of that country.

SEC. 1134. HARMONIZATION WITH UNITED STATES INTERNATIONAL COMMITMENTS
ANDOBLIGATIONS.

The United States Trade Representative shall report to the Congress
within 90 days after the date of enactment of this Act on any provisions
of this Act that are inconsistent with obligations of the United States
under treaties or other international agreements to which it is a
signatory, including any treaty pending ratification, together with
recommendations as to how to implement or modify the provision without
violating international law.

Subtitle D_Prevention of Tobacco Smuggling

SEC. 1141. DEFINITIONS.

\(a\) Incorporation of Certain Definitions .\_In this subtitle, the
terms \`\`cigar\'\', \`\`cigarette\'\', \`\`person\'\', \`\`pipe
tobacco\'\', \`\`smokeless tobacco\'\', \`\`State\'\', \`\`tobacco
product\'\', and \`\`United States\'\' shall have the meanings given
such terms in sections 5702(a), 5702(b), 7701(a)(1), 5702(o),
5702(n)(1), 3306(j)(1), 5702(c), and 3306(j)(2) respectively of the
Internal Revenue Code of 1986.

\(b\) Other Definitions .\_In this subtitle:

\(1\) Affiliate .\_The term \`\`affiliate\'\' means any one of 2 or more
persons if 1 of such persons has actual or legal control, directly or
indirectly, whether by stock ownership or otherwise, of the other or
others of such persons, and any one of 2 or more persons subject to
common control, actual or legal, directly or indirectly, whether by
stock ownership or otherwise.

\(2\) Interstate or foreign commerce .\_The term \`\`interstate or
foreign commerce\'\' means commerce between any State and any place
outside thereof, or commerce within any Territory or the District of
Columbia, or between points within the same State but through any place
outside thereof.

\(3\) Secretary .\_The term \`\`Secretary\'\' means the Secretary of the
Treasury.

\(4\) Package .\_The term \`\`package\'\' means the innermost sealed
container irrespective of the material from which such container is
made, in which a tobacco product is placed by the manufacturer and in
which such tobacco product is offered for sale to a member of the
general public.

\(5\) Retailer .\_The term \`\`retailer\'\' means any dealer who sells,
or offers for sale, any tobacco product to any person other than a
wholesaler.

SEC. 1142. TOBACCO PRODUCT LABELING REQUIREMENTS.

\(a\) In General .\_It shall be unlawful for any person to sell or ship
or deliver for sale or shipment, or otherwise introduce in interstate or
foreign commerce, or to receive therein, or to remove from customs
custody for use, any tobacco product unless such product is packaged and
labeled in conformity with this section.

\(b\) Labeling .\_

\(1\) Identification .\_Not later than 1 year after the date of
enactment of this subtitle, the Secretary shall promulgate regulations
that require each manufacturer of tobacco products to legibly print a
unique serial number on all packages of tobacco products manufactured
for sale or distribution. Such serial number shall be designed to enable
the Secretary to identify the manufacturer of the product, and the
location and date of manufacture. The Secretary shall determine the size
and location of the serial number.

\(2\) Country of final destination .\_Each package of a tobacco product
that is exported shall be labeled with the name of the country of final
destination. The Secretary shall promulgate regulations to determine the
size and location of the label and under what circumstances a waiver of
this paragraph shall be granted.

\(c\) Prohibition on Alteration .\_It shall be unlawful for any person
to alter, mutilate, destroy, obliterate, or remove any mark or label
required under this subtitle upon a tobacco product in or affecting
commerce, except as authorized by Federal law or except under
regulations of the Secretary authorizing relabeling for purposes of
compliance with the requirements of this section or of State law.

SEC. 1143. REQUIREMENTS FOR THE TRACKING OF TOBACCO PRODUCTS.

\(a\) Posting of Bond .\_

\(1\) In general .\_It shall be unlawful for any person to export any
tobacco product unless such person\_

\(A\) has posted with the Secretary a tobacco product bond in accordance
with this section for such product that contains a disclosure of the
country to which such product will be exported; and

\(B\) receives a written statement from the recipient of the tobacco
products involved that such person\_

\(i\) will not knowingly and willfully violate any law or regulation of
such country with respect to such products; and

\(ii\) has never been convicted of any offense with respect to tobacco
products.

\(2\) Regulations .\_The Secretary shall promulgate regulations that
determine the frequency and the amount of each bond that must be posted
under paragraph (1), but in no case shall such amount be less than an
amount equal to the Federal tax imposed under chapter 52 of the Internal
Revenue Code of 1986 on the value of the shipment of the products
involved if such products were consumed within the United States.

\(b\) Return of Bond .\_The Secretary shall return a bond posted under
subsection (a) upon a determination by the Secretary (based on
documentation provided by the person who posted the bond in accordance
with regulations promulgated by the Secretary) that the tobacco products
to which the bond applies have been received in the country of final
destination as designated in the bond.

SEC. 1144. TOBACCO PRODUCT PERMITS.

\(a\) In General .\_Not later than 1 year after the date of enactment of
this Act, the Secretary shall establish a program under which tobacco
product permits are issued to persons (desiring to sell or ship, or
deliver for sale or shipment, or otherwise introduce in interstate or
foreign commerce, or to receive therein, or to remove from customs
custody for use, any tobacco product).

\(b\) Conditions .\_The issuance of a permit to a tobacco product
manufacturer under this section shall be conditioned upon the compliance
of the manufacturer with the requirements of this subtitle.

\(c\) Revocation, Suspension, and Annulment .\_The program established
under subsection (a) shall permit the Secretary to revoke, suspend, or
annul a permit issued under this section if the Secretary determines
that the terms or conditions of the permit have not been complied with.
Prior to any action under this subsection, the Secretary shall provide
the permittee with due notice and the opportunity for a hearing.

\(d\) Records and Audits .\_The Secretary shall, under the program
established under subsection (a), require permit holders to keep records
concerning the chain of custody of the tobacco products that are the
subject of the permit and make such records available to the Secretary
for inspection and audit.

\(e\) Retailers .\_This section shall not apply to retailers of tobacco
products, except that retailers shall maintain commercial records of
receipt, and such records shall be available to the Secretary for
inspection and audit.

SEC. 1145. PROHIBITIONS.

\(a\) Importation and Sale .\_It shall be unlawful, except under a
permit issued by the Secretary under section 1144\_

\(1\) to engage in the business of importing into the United States
tobacco products; or

\(2\) for any person so engaged to sell, offer, or deliver for sale,
contract to sell, or ship, in or affecting commerce, directly or
indirectly or through affiliate, tobacco products so imported.

\(b\) Manufacture and Sale .\_It shall be unlawful, except under a
permit issued by the Secretary under section 1144\_

\(1\) to engage in the business of manufacturing, packaging or
warehousing tobacco products; or

\(2\) for any person so engaged to sell, offer, or deliver for sale,
contract to sell, or ship, in interstate or foreign commerce, directly
or indirectly or through an affiliate, tobacco products so manufactured,
packaged or warehoused.

\(c\) Wholesale .\_It shall be unlawful, except under a permit issued by
the Secretary under section 1144\_

\(1\) to engage in the business of purchasing for resale at wholesale
tobacco products, or, as a principal or agent, to sell, offer for sale,
negotiate for, or hold out by solicitation, advertisement, or otherwise
as selling, providing, or arranging for, the purchase for resale at
wholesale of tobacco products; or

\(2\) for any person so engaged to receive or sell, offer or deliver for
sale, contract to sell, or ship, in or affecting commerce, directly or
indirectly or through an affiliate, tobacco products so purchased.

\(d\) Effective Date .\_The provisions of this section shall become
effective on the date that is 180 days after the date of enactment of
this Act.

SEC. 1146. PRICING AND LABELING OF PRODUCTS SOLD ON MILITARY
INSTALLATIONS ORBY NATIVE AMERICANS.

\(a\) Military Installations .\_

\(1\) In general .\_The Secretary, in consultation with the Secretary of
Defense, shall promulgate regulations that ensure that the price charged
for a tobacco product sold on a military installation (as defined in
section 2801(c)(2) of title 10, United States Code) is equal to\_

\(A\) the average price for which such product is sold in the
metropolitan area immediately bordering the military installation; or

\(B\) the highest price (inclusive of Federal or State taxes) for which
such product is sold on military installations located in the United
States;

whichever is greater.

\(2\) Label .\_The regulations under paragraph (1) shall require that
each package of a tobacco product that is sold on a military
installation be labeled as such. Such regulations shall include
requirements for the size and location of the label.

\(b\) Indian Tribes .\_The Secretary, in consultation with the Secretary
of Interior, shall promulgate regulations that require that each package
of a tobacco product that is sold on an Indian reservation (as defined
in section 403(9) of the Indian Child Protection and Family Violence
Prevention Act (25 U.S.C. 3202(9))) be labeled as such. Such regulations
shall include requirements for the size and location of the label.

SEC. 1147. PROHIBITION AGAINST SALE OF TOBACCO PRODUCTS IN OR TO
DUTY-FREESHOPS OR FORWARDING THROUGH OR MANUFACTURE IN TRADE ZONES.

\(a\) Duty-Free Shops .\_It shall be unlawful for any person to sell a
tobacco product\_

\(1\) in any duty-free shop located within the United States; or

\(2\) to any duty-free shop.

\(b\) Trade Zones .\_No person may forward through or manufacture a
tobacco product in any foreign trade zone, as defined for purposes of
the Act of June 18, 1934 (19 U.S.C. 81a et seq.).

SEC. 1148. JURISDICTION; PENALTIES; COMPROMISE OF LIABILITY.

\(a\) Jurisdiction .\_The District Courts of the United States, and the
United States court for any Territory, of the District where the offense
is committed or of which the offender is an inhabitant or has its
principal place of business, are vested with jurisdiction of any suit
brought by the Attorney General in the name of the United States, to
prevent and restrain violations of any of the provisions of this
subtitle.

\(b\) Penalties .\_The provisions of section 3571 of title 18, United
States Code, shall apply to any person convicted of violating any of the
provisions of this subtitle as if such person were convicted of a felony
under such title.

\(c\) Compromise of Liability .\_The Secretary is authorized, with
respect to any violation of this subtitle, to compromise the liability
arising with respect to a violation of this subtitle\_

\(1\) upon payment of a sum not in excess of \$10,000 for each offense,
to be collected by the Secretary and to be paid into the Treasury as
miscellaneous receipts; and

\(2\) in the case of repetitious violations and in order to avoid
multiplicity of criminal proceedings, upon agreement to a stipulation,
that the United States may, on its own motion upon 5 days\' notice to
the violator, cause a consent decree to be entered by any court of
competent jurisdiction enjoining the repetition of such violation.

SEC. 1149. AMENDMENTS TO THE CONTRABAND CIGARETTE TRAFFICKING ACT.

\(a\) Definitions .\_Section 2341 of title 18, United States Code, is
amended\_

\(1\) in paragraph (2)\_

\(A\) by striking \`\`60,000\'\' and inserting \`\`30,000\'\'; and

\(B\) by inserting after \`\`payment of cigarette taxes,\'\' the
following: \`\`or in the case of a State that does not require any such
indication of tax payment, if the person in possession of the cigarettes
is unable to provide any evidence that the cigarettes are moving legally
in interstate commerce,\'\'; and

\(2\) in paragraph (4), by striking \`\`and\'\' at the end;

\(3\) in paragraph (5), by striking the period and inserting a
semicolon; and

\(4\) by adding at the end the following:

\`\`(6) the term \`tobacco product\' means cigars, cigarettes, smokeless
tobacco, and pipe tobacco (as such terms are defined in section 5701 of
the Internal Revenue Code of 1986); and

\`\`(7) the term \`contraband tobacco product\' means a quantity in
excess of 30,000 of any tobacco product that is manufactured, sold,
shipped, delivered, transferred, or possessed in violation of Federal
laws relating to the distribution of tobacco products.\'\'.

\(b\) Unlawful Acts .\_Section 2342 of title 18, United States Code, is
amended\_

\(1\) in subsection (a), by inserting \`\`or contraband tobacco
products\'\' before the period;

\(2\) in subsection (b)\_

\(A\) by striking \`\`cigarettes\'\' and inserting \`\`tobacco
products\'\';

\(B\) by striking \`\`60,000\'\' and inserting \`\`30,000\'\'; and

\(C\) by inserting before the period the following: \`\`or knowingly to
fail to maintain distribution records, alter or obliterate required
markings, or interfere with any inspection as required with respect to
such quantity of tobacco products\'\'; and

\(3\) by adding at the end the following:

\`\`(c) It shall be unlawful for any person knowingly to transport
tobacco products under a false bill of lading or without any bill of
lading.\'\'.

\(c\) Recordkeeping .\_Section 2343 of title 18, United States Code, is
amended\_

\(1\) by striking \`\`cigarettes\'\' each place that such appears and
inserting \`\`tobacco products\'\';

\(2\) in subsection (a), by striking \`\`60,000\'\' and inserting
\`\`30,000\'\';

\(3\) in subsection (b), by striking \`\`60,000\'\' and inserting
\`\`30,000\'\'.

\(d\) Penalties .\_Section 2344 of title 18, United States Code, is
amended\_

\(1\) in subsection (c), by inserting \`\`or contraband tobacco
products\'\' after \`\`cigarettes\'\'; and

\(2\) by adding at the end the following:

\`\`(d) Any proceeds from the unlawful distribution of tobacco products
shall be subject to seizure and forfeiture under section
981(a)(1)(C).\'\'.

SEC. 1150. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated such sums as may be necessary to
carry out this subtitle.

Subtitle E_Antitrust Exemption

SEC. 1161. LIMITED ANTITRUST EXEMPTION.

\(a\) In General.\_ The antitrust laws of the United States (as defined
in section 1 of the Clayton Act (15 U.S.C. 12) and any other statute in
pari materia , and any similar law of a State, do not apply to the joint
discussion, consideration, review, action, agreement, or understanding
by or among any participating tobacco product manufacturers, for the
purposes of, and limited to\_

\(1\) entering into and complying with the Protocol, Trust Agreement, or
Consent Decree;

\(2\) refusing to deal with a distributor, retailer, or other seller of
tobacco products who distributes such products for sale to, or offers
for sale or sells such products to, underage persons, or who otherwise
fails to comply with the applicable requirements of the Act, the
Protocol, or Consent Decree; or

\(3\) submitting an application relating to a plan or program of the
type referred to in subsection (b) of this section or, entering into,
complying with or otherwise carrying out the terms of, any plan or
program that has been approved under subsection (b) of this section.

\(b\) Approval by Attorney General.\_ The Attorney General of the United
States is authorized to approve, upon application by one or more
participating tobacco product manufacturers, plans, or programs to
reduce the use of tobacco products by underage individuals. Before
approving any such plan or program, the Attorney General shall determine
that approval is appropriate as part of the effort to reduce the use of
tobacco products by underage individuals and will not have the effect of
unduly restraining competition. The Attorney General shall approve or
disapprove any such application in writing within 90 days from the date
it is received by the Department of Justice. Upon written withdrawal by
the Attorney General of any approval under this subsection, the
provisions of subsection (a)(3) shall not apply to any subsequent act or
omission with respect to the plan or program to which the approval
related.

Subtitle F_Special Provisions Concerning Programs for Women, Minorities,
and Others

SEC. 1171. RESEARCH RELATED TO PATTERNS OF SMOKING BY WOMEN AND
MINORITIES.

\(a\) Research Design Criteria.\_ Any research funded under this Act, or
under any amendment made by this Act, that is conducted for the purpose
of investigating factors affecting tobacco use and patterns of smoking,
shall if appropriate to the scope and purpose of the investigation
include data and analysis with respect to different factors that may be
present in the case of women or minorities.

\(b\) Patterns of Smoking.\_ Research funded under this Act, or under
any amendment made by this Act, examining patterns of smoking among
minorities should be conducted in proportion to their prevalence in the
smoking population and shall be conducted at minority education
institutions, where available, or institutions that provide the greatest
amount of health care to minority populations in a State.

SEC. 1172. COUNTER-ADVERTISING PROGRAMS.

\(a\) In General .\_The Secretary shall carry out programs to reduce
tobacco usage through media-based (such as counter-advertising
campaigns) and nonmedia-based education, prevention, and cessation
campaigns designed to discourage the use of tobacco products by
individuals and to encourage those who use such products to quit. Such
programs shall target, in a culturally and linguistically appropriate
manner, adults, children, women, and minorities who have been targeted
by tobacco industry advertising.

\(b\) Eligibility .\_To be eligible to receive assistance under this
section an entity or individual shall prepare and submit to the
Secretary an application at such time, in such manner, and containing
such information as the Secretary may require.

\(c\) Use of Funds .\_Amounts received by an individual or entity under
this section shall be used to carry out activities under the programs
established under subsection (a). Such amounts may be used to design and
implement such activities and to conduct research concerning the
effectiveness of such programs.

\(d\) Funding .\_There are authorized to be appropriated from the
National Tobacco Settlement Trust Fund established by section 401, other
than from amounts not in the State Litigation Settlement Account, or
otherwise obligated under this Act such sums as are necessary to carry
out the provisions of this section.

SEC. 1173. PREVENTION ACTIVITIES OF COMMUNITY AND MIGRANT HEALTH
CENTERS.

\(a\) Funding.\_ There are authorized to be appropriated from the
National Tobacco Settlement Trust Fund established by section 401, other
than from amounts in the State Litigation Settlement Account, of this
Act \$300,000,000 for each of the first 10 fiscal years beginning after
the date of enactment of this Act to carry out the provisions of
subsection (b).

\(b\) Program.\_ The Secretary shall make amounts made available under
subsection (a) available to Community, Migrant, and Homeless Health
Centers receiving grants under section 330 of the Public Health Service
Act (42 U.S.C. 254c) to provide health services for diseases related to
tobacco and to prevent tobacco-related diseases.

\(c\) Limitation.\_ No amount may be expended or obligated under
subsection (b) for any fiscal year in which the annual amount
appropriated for Community, Migrant, and Homeless Health Centers is less
than the amount appropriated for the previous fiscal year.

Subtitle G_Sense of the Senate

SEC. 1181. SENSE OF THE SENATE.

It is the sense of the Senate that the proceeds of this Act may be used
for purposes including, but not limited to\_

\(1\) reimbursing public health care financing programs for
tobacco-related costs, including Medicare;

\(2\) supporting tobacco use prevention and cessation, particularly with
respect to youth, including counter-advertising at the Federal, State,
Tribal, and local level;

\(3\) supporting tobacco-related health services research activities;

\(4\) assisting tobacco farmers and tobacco dependent communities;

\(5\) creating, and fully and adequately funding, a Tobacco Asbestos
Trust to assist victims of the unique harm that smoking causes to
asbestos workers;

\(6\) settling with and reimbursing States for tobacco-related health
care costs and damages, including Medicaid;

\(7\) providing funding for the Federal Black Lung Program;

\(8\) providing funding for child care and early childhood development;

\(9\) providing funding for veterans\' benefit programs; and

\(10\) providing funding for clinical trials at the National Institutes
of Health.

Subtitle H_Ban On Sale Of Tobacco Products Through The Use Of Vending
Machines

SEC. 1191. BAN OF SALE OF TOBACCO PRODUCTS THROUGH THE USE OF
VENDINGMACHINES.

\(a\) Ban of Sale of Tobacco Products Through the Use of Vending
Machines .\_Effective 12 months after the date of enactment of this Act,
it shall be unlawful to sell tobacco products through the use of a
vending machine.

\(b\) Compensation for Banned Vending Machines .\_

\(1\) In general .\_The owners and operators of tobacco vending machines
shall be reimbursed for the fair market value of their businesses,
including the cost of banned vending machines, compensation for lost
profits, unexpired contracts, and for the owner\'s or operator\'s plant
and equipment related only to the production of tobacco vending
machines.

\(2\) Tobacco vending reimburment corporation .\_

\(A\) Corporation .\_Reimbursment shall be directed through a private,
nonprofit corporation established in the District of Columbia, known as
the Tobacco Vending Reimburment Corporation (in this section referred to
as the \`\`Corporation\'\'). The Corporation is\_

\(i\) not an agency or establishment of the United States; and

\(ii\) except as otherwise provided in this section, is subject to, and
has all the powers conferred upon a nonprofit corporation by the
District of Columbia Nonprofit Corporation Act (D.C. Code section 29-501
et seq.).

\(B\) Duties .\_The Corporation shall\_

\(i\) disburse compensation funds to vending companies under this
section;

\(ii\) verify operational machines; and

\(iii\) maintain complete records of machine verification and
accountings of disbursements and administration of the compensation fund
established under paragraph (4).

\(3\) Management of corporation .\_

\(A\) Board of directors .\_The Corporation shall be managed by a Board
of Directors that\_

\(i\) consists of distinguished Americans with experience in finance,
public policy, or fund management;

\(ii\) includes at least 1 member of the United States tobacco vending
machine industry;

\(iii\) shall be paid an annual salary on an individualized basis of
\$40,000 out of amounts transferred to the Corporation under paragraph
(4)(A);

\(iv\) shall appoint a President to manage the day-to-day activities of
the Corporation;

\(v\) shall develop guidelines by which the President shall direct the
Corporation;

\(vi\) shall retain a national accounting firm to verify the
distribution of funds and audit the compensation fund established under
paragraph (4);

\(vii\) shall retain such legal, management, or consulting assistance as
is necessary and proper; and

\(viii\) shall periodically report to Congress regarding the activities
of the Corporation.

\(B\) Duties of the president of the corporation .\_The President of the
Corporation shall\_

\(i\) hire appropriate staff;

\(ii\) prepare the report of the Board of Directors of the Corporation
required under subparagraph (A)(viii); and

\(iii\) oversee Corporation functions, including verification of
machines, administration and disbursement of funds, maintenance of
complete records, operation of appeals procedures, and other directed
functions.

\(4\) Compensation Fund .\_

\(A\) Transfer of funds from tobacco industry payments .\_The Secretary
of the Treasury shall transfer to the Corporation, out of funds in the
National Tobacco Settlement Trust Fund, other than from amounts in the
State Litigation Settlement Account, such sums as are necessary to make
due compensation to owners and operators of tobacco vending machines and
to carry out the duties of the Corporation. Not later than 1 year after
such date on which the first transfer is made under this subparagraph,
the Secretary of the Treasury shall transfer to the Corporation out of
funds paid to the United States by the tobacco industry, such additional
sums as may be necessary for such purposes.

\(B\) Rules for disbursement of funds .\_

\(i\) Payments to owners and operators .\_The Corporation shall disburse
funds to compensate the owners and operators of tobacco vending machines
in accordance with the following:

\(I\) The fair market value of each tobacco vending machine verified by
the Corporation President in accordance with subparagraph (C), and
proven to have been in operation before August 10, 1995, shall be
disbursed to the owner of the machine seeking compensation.

\(II\) No compensation shall be made for a spiral glass front vending
machine.

\(ii\) Other payments .\_Funds transferred to the Corporation under
subparagraph (A) may be used to pay the administrative costs of the
Corporation that are necessary and proper or required by law. The total
amount paid by the Corporation for administrative and overhead costs,
including accounting fees, legal fees, consultant fees, and associated
administrative costs shall not exceed 5 percent of the total amount
transferred to the Corporation under subparagraph (A).

\(C\) Verification of vending machines .\_Verification of vending
machines shall be based on copies of official State vending licenses,
company computerized or handwritten sales records, or physical
inspection by the Corporation President or by an inspection agent
designated by the President. The Corporation President and the Board of
Directors of the Corporation shall work vigorously to prevent and
prosecute any fraudulent claims submitted for compensation.

\(D\) Return of account funds not distributed to vendors .\_The
Corporation shall be dissolved on the date that is 4 years after the
date of enactment of this Act. Any funds not dispersed or allocated to
claims pending as of that date shall be transferred to a public
anti-smoking trust, or used for such other purposes as Congress may
designate.

\(c\) Settlement of Legal Claims Pending Against the United States
.\_Acceptance of a compensation payment from the Corporation by a
vending machine owner or operator shall settle all pending and future
claims of the owner or operator against the United States that are based
on, or related to, the ban of the use of tobacco vending machines
imposed under this section and any other laws or regulations that limit
the use of tobacco vending machines.

\(d\) Authorization of Appropriations.\_ There are authorized to be
appropriated from the National Tobacco Settlement Trust Fund, other than
from amounts in the Senate Litigation Settlement Account, such sums as
may be necessary to carry out this section.

TITLE XII_TOBACCO ASBESTOS TRUST FUND

SEC. 1201. DEFINITIONS.

In this title:

\(1\) Asbestos claim.\_ The term \`\`asbestos claim\'\' means a claim
brought or capable of being brought in a court of competent jurisdiction
by a person for personal injury, wrongful death, loss of consortium, or
other damages arising from occupational exposure to asbestos or asbestos
containing products, including claims by spouses or household members
who were exposed to asbestos through the occupational exposure of
another person.

\(2\) Asbestos claimant.\_ The term \`\`asbestos claimant\'\' means a
person who brings an asbestos claim.

\(3\) Asbestos defendant.\_ The term \`\`asbestos defendant\'\' means a
person or existing entity (including a partnership or corporation) who
as part of its operations is defending asbestos claims on the date of
enactment of this Act.

\(4\) Asbestos/tobacco claim.\_ The term \`\`asbestos/tobacco claim\'\'
means a legally justiciable asbestos claim of a person who also claims
injury, disease, or death arising from exposure to tobacco.

\(5\) Asbestos/tobacco claimant.\_ The term \`\`asbestos/tobacco
claimant\'\' means a person who has an asbestos/tobacco claim.

\(6\) Asbestos trust.\_ The term \`\`asbestos trust\'\' means a
court-supervised trust that was established to resolve asbestos claims
arising directly or indirectly from exposure to asbestos or asbestos
containing products of an asbestos defendant, including a trust created
under the bankruptcy laws of the United States, or Rule 23 of the
Federal Rules of Civil Procedure.

\(7\) Exposure to tobacco.\_ The term \`\`exposure to tobacco\'\' means
any instance in which a person consumes, inhales, ingests, or uses a
tobacco product.

\(8\) Tobacco.\_ The term \`\`tobacco\'\' means tobacco in its
manufactured form, including cigars, cigarettes, cigarillos, cigarette
tobacco, little cigars, pipe tobacco, and smokeless tobacco.

\(9\) Tobacco company.\_ The term \`\`tobacco company\'\' means any
person, including any repacker, or relabeler, who manufactures,
fabricates, assembles, processes, or labels a finished tobacco product.

\(10\) Trust fund.\_ The term \`\`trust fund\'\' means the Tobacco
Asbestos Trust Fund established under section 1202.

SEC. 1202. TOBACCO ASBESTOS TRUST FUND.

\(a\) Establishment.\_

\(1\) In general.\_ There is established in the Treasury of the United
States a trust fund to be known as the \`\`Tobacco Asbestos Trust
Fund\'\', consisting of such amounts as may be appropriated or credited
to the trust fund.

\(2\) Division.\_

\(A\) In general.\_ The trust fund shall be composed of 2 funds to be
known as \`\`Fund I\'\' and \`\`Fund II\'\'. Each such fund shall meet
the requirements of this title.

\(B\) Fund i.\_

\(i\) Administration.\_ Fund I shall be administered by the trustees
appointed under paragraphs (1) and (3) of subsection (b). Fund I shall
be considered to be a designated settlement fund within the meaning of
section 468B of the Internal Revenue Code of 1986.

\(ii\) Purpose and use.\_ The purpose of Fund I shall be for the
reimbursement of asbestos trusts and asbestos defendants for payments
made by such trust and defendants for the tobacco-caused portion of
asbestos/tobacco claims. Fund I shall be used to allocate credits to
asbestos trusts and asbestos defendants who settled and paid the civil
claims of individuals who had exposure to tobacco and asbestos. Such
credits may be used to direct the payment of funds by the trustees to
pay asbestos claims and asbestos/tobacco claims, as described in section
1203.

\(C\) Fund ii.\_

\(i\) Administration.\_ Fund II shall be administered by the trustees
appointed under paragraphs (2) and (3) of subsection (b). Fund II shall
be considered to be a designated settlement fund within the meaning of
section 468B of the Internal Revenue Code of 1986.

\(ii\) Purpose.\_ The purpose of Fund II shall be to pay
asbestos/tobacco claims brought after the date of enactment of this Act
for the tobacco-caused portion of the claimant\'s harm, as described in
section 1204.

\(3\) Separate operations.\_ The operations of each Fund shall be
conducted separately. Upon majority vote of the trustees of Fund I and
upon majority vote of the trustees of Fund II, the Funds may, in the
interest of efficiency and economy, conduct certain tasks as a single
operation.

\(b\) Trustees.\_ Not later than 60 days after the date of enactment of
this Act\_

\(1\) the Secretary shall appoint 2 individuals to serve as trustees of
the trust fund, of which\_

\(A\) 1 individual shall represent asbestos trusts; and

\(B\) 1 individual shall represent asbestos defendants;

\(2\) the Secretary of Labor shall appoint 2 individuals to serve as
trustees of the trust fund, of which\_

\(A\) 1 individual shall represent asbestos claimants; and

\(B\) 1 individual shall represent labor organizations with asbestos
claimants as members; and

\(3\) the trustees appointed under paragraphs (1) and (2) shall appoint
an individual who shall be a member of the health care profession with
experience in asbestos disease or disability to serve as a trustee.

\(c\) Authorization and Allocations.\_

\(1\) Authorization.\_ There are appropriated, out of amounts in the
National Tobacco Settlement Trust Fund established by section 401 (other
than amounts in the State Litigation Settlement Account or otherwise
obligated), to the trust fund the amounts set forth in section 1205. The
Secretary of theTreasury shall transfer amounts appropriated under this
paragraph to the trust fund.

\(2\) Allocation between funds.\_

\(A\) Baseline allocation.\_ Of the amounts transferred under paragraph
(1), 50 percent shall be deposited into Fund I and 50 percent shall be
deposited into Fund II.

\(B\) Timing adjustment.\_ The trustees of Fund II may provide an
advance to Fund I as a loan (to be repaid from proceeds of Fund I) from
funds available in Fund II as may be necessary to further the purposes
of Fund I.

\(d\) Repayable Advances.\_

\(1\) Authorization.\_ In addition to the amounts appropriated under
subsection (c), there are authorized to be appropriated to the trust
fund, as repayable advances, such sums as may be necessary for fiscal
year 1999 and each subsequent fiscal year to make the expenditures
described in sections 1203 and 1204.

\(2\) Repayment with interest.\_ Repayable advances made to the trust
fund shall be repaid, and interest on the advances shall be paid to the
general fund of the Treasury when the Secretary of the Treasury
determines that monies are available in the Tobacco Asbestos Trust Fund
to make the payments.

\(3\) Rate of interest.\_ Interest on an advance made under this
subsection shall be at a rate determined by the Secretary of the
Treasury (as of the close of the calendar month preceding the month in
which the advance is made) that is equal to the current average market
yield on outstanding marketable obligations of the United States with
remaining period to maturity comparable to the anticipated period during
which the advance will be outstanding.

\(e\) Use of Trust Fund.\_

\(1\) In general.\_ The trust fund shall be used as provided for in this
title. No amount shall be expended or obligated from the trust fund
unless the expenditure or obligation is authorized by an appropriation
Act.

\(2\) Limitation.\_ Amounts may only be made available from the trust
fund to, or for the direct benefit of, asbestos claimants and
asbestos/tobacco claimants.

\(f\) Authority of Trustees.\_

\(1\) Decisions based on votes.\_ Except as provided in this Act, the
trustees of each Fund shall make decisions with regard to the respective
Funds based on a majority vote.

\(2\) General authority.\_ The trustees shall have the authority to take
such actions as may be necessary to effectuate the purposes of the trust
fund, including\_

\(A\) the investment of the trust fund assets in a reasonable and
prudent manner consistent with the needs and purposes of the trust fund;
and

\(B\) commencing actions to enforce any provisions or obligations
imposed under this title.

\(3\) Administrative authority.\_ The trustees shall have the authority
to employ officers, administrators, claims analysts, attorneys,
actuaries, investment specialists, and such other employees and agents
as may be required to administer the trust fund.

\(g\) Accounting for Expenses.\_ \~Except for the compensation and
expenses of the trustees, which shall be charged equally to Fund I and
Fund II, the trustees shall, to the extent feasible, separately account
for all salaries, overhead, and other costs and expenses as between Fund
I and Fund II on the basis of activities conducted separately with
respect to each such Fund.

\(h\) Expenditures From Trust Fund.\_ Amounts in the trust fund, and
each of its Funds, shall be made available in each fiscal year, as
provided by appropriations Acts, as necessary to make the expenditures
and allocations provided for in sections 1203 and 1204.

SEC. 1203. PAYMENTS FROM FUND I.

\(a\) In General.\_ Credits applying to the amounts deposited into Fund
I shall be allocated and disbursed as provided for in this section.

\(b\) Determination of Base.\_

\(1\) Notice.\_ Not later than 90 days after the date on which the
trustees for Fund I are appointed, the trustees shall provide notice to
all asbestos trusts and asbestos defendants of the establishment of the
Fund.

\(2\) Request for information.\_ The notice under paragraph (1) shall
request that each asbestos trust and asbestos defendant, within a
reasonable period of time, provide the trustees with information as to
the amount of payments or settlements made by or on behalf of such
trusts or defendants (and, in the case of non-bankruptcy trusts, also
made by or on behalf of their predecessor organizations), and the amount
of any outstanding bonded judgments, on asbestos claims as of the date
of enactment of this Act.

\(3\) Determination.\_ Based on the information provided under paragraph
(2), the trustees for Fund I shall determine the total amount of
payments and settlements and outstanding bonded judgments (reasonably
adjusted for the probable resolution as of the date the information is
submitted under paragraph (2)) on the asbestos claims of all asbestos
trusts and asbestos defendants that responded to the notice.

\(c\) Allocation of Credits.\_

\(1\) In general.\_ Upon review of the information submitted under
subsection (b)(2), the trustees for Fund I shall provide a credit with
respect to each asbestos trust and asbestos defendant submitting such
information.

\(2\) Amount.\_ A credit under paragraph (1) with respect to an asbestos
trust or asbestos defendant shall be based on the ratio of\_

\(A\) the amount of settlement payments and outstanding bonded judgments
on asbestos claims made by or on behalf of the trust or defendant; and

\(B\) the total amount of settlement payments and outstanding bonded
judgments on asbestos claims made by or on behalf of all asbestos trusts
and asbestos defendants described in paragraph (1).

\(d\) Additional Factors.\_

\(1\) Interest.\_ In making the allocation of credits under this
section, the trustees for Fund I shall consider the timing of past cash
payments and include an appropriate interest factor in making their
allocation determinations.

\(2\) Unpaid settlements.\_ In making the allocation of credits under
this section, the trustees for Fund I shall include the settlements of
asbestos trusts and asbestos defendants that have not been paid as of
the date of enactment of this Act in an amount not to exceed 20 percent
of the amount of such unpaid settlements.

\(3\) Limitation.\_ The aggregate amount of Fund I credits allocated to
asbestos trusts or asbestos defendants to account for unpaid settlements
under paragraph (2) shall not exceed an amount equal to 6 percent of the
amounts contained in Fund I for the year involved. Any necessary
reductions from the application of the limitation under this paragraph
shall be determined using the ratios described in subsection (c).

\(4\) Unused credits.\_ To the extent that any asbestos trust or
asbestos defendant has credits from its allocation under this section
that have not been the subject of a request and direction to be paid for
a period of 2 years from the date on which such credits are made
available, such unused credits shall be reallocated proportionally to
each asbestos trust and asbestos defendant submitting information under
subsection (b)(2) according to the amount of the unpaid settlements of
such trust and defendants which remain unpaid after making the
allocations required by this section.

\(e\) Review of Determinations.\_

\(1\) In general.\_ Any dispute regarding a determination made by the
trustees for Fund I under this section shall be resolved not later than
6 months after the date on which notice of such dispute is provided to
the trustees. Such resolution shall be under final and binding
arbitration under the rules of the American Arbitration Association.

\(2\) Scope.\_ The scope of any review under paragraph (1) shall be
limited to determining whether the determinations of the trustees were
unsupported by substantial evidence or were contrary to law.

\(3\) Application of section.\_ During the pendency of any dispute
resolution proceeding under this subsection, the trustees may continue
to implement the provisions of this section, reserving sufficient monies
as may be necessary in their judgment to satisfy the resolution of such
disputes.

\(f\) Use of Fund I Credits.\_

\(1\) For benefit of victims.\_ All monies credited to asbestos trusts
and asbestos defendants under this section shall be used solely for the
payment of asbestos claims and asbestos/tobacco claims. None of the
credits allocated under this section to an asbestos trust or asbestos
defendant shall be used for the costs of defending against an asbestos
claims, for payment of corporate dividends, for reimbursement of
insurers, or for any other corporate purpose.

\(2\) Mechanism for payment of victims.\_

\(A\) Asbestos defendants.\_ An asbestos defendant that receives an
allocation of credit under this section may only use such credit to
direct that a payment be made from Fund I to any asbestos claimant as
compensation for an asbestos claim or asbestos/tobacco claim. The
payment of such claimant shall be under a written request submitted by
the defendant to the Fund. Such requests are not subject to approval by
the Fund so long as they do not exceed the defendant\'s allocation of
credit under this section.

\(B\) Asbestos trust.\_ All monies resulting from credits allocated to
an asbestos trust under this section shall be paid to such trust for use
according to the rules of such trust with regard to the payment of
asbestos claims and asbestos/tobacco claims.

SEC. 1204. PAYMENTS FROM FUND II.

\(a\) In General.\_ Amounts deposited into II shall be disbursed as
provided for in this section.

\(b\) Establishment of Fund.\_ The trustee for Fund II shall establish
procedures and standards under subsection (c) for the payment, upon
approval of an appropriate application, of a reasonable reimbursement
for the costs, expenses, and fees incurred in connection with an
asbestos claim or an asbestos/tobacco claim.

\(c\) Procedures and Standards.\_ The procedures and standards
established under this subsection for the payment of compensation to
asbestos claimants and asbestos/tobacco claimants, shall include\_

\(1\) rules to ensure that compensation from Fund II is paid only for
that portion of an asbestos claimant\'s or an asbestos/tobacco
claimant\'s harm caused by exposure to tobacco;

\(2\) rules ensuring that\_

\(A\) all present and future such claimants are treated equitably in
relationship to each other; and

\(B\) if future demands against Fund II require limitations on current
payment, that priority be given to payment of asbestos claimants or
asbestos/tobacco claimants with the most serious harm due to exposure to
asbestos and tobacco;

\(3\) rules establishing application forms and procedures for the
submission of claims and supporting documentation;

\(4\) criteria establishing a minimum degree of asbestos disability or
impairment that must be demonstrated in order for a claimant to receive
compensation under this section;

\(5\) criteria for the coordination of the administration of Fund II
with the signatories to the Louisiana Agreement Providing Administrative
Alternatives for Claimants with Asbestos Related Conditions to expand
the agreement to include national coverage for claimants who may not be
compensated under the criteria provided for under paragraph (4);

\(6\) rules requiring recipients of funds from Fund II to execute a
release of personal injury claims for tobacco-caused harm; and

\(7\) rules to ensure that the administration of the claims process,
including attorney\'s fees, is fair and equitable to asbestos claimants
and asbestos/tobacco claimants.

\(d\) Period for Final Determinations.\_ The trustees for Fund II shall
make a final determination with respect to a claim submitted under this
section not later than 120 days after the date on which the claim is
submitted. In the event that exigent circumstances exist with respect to
a such a claim, as verified by a competent medical professional, such
final determination shall be made as soon as practicable, but in no case
later than 60 days after the date of the submission of such claim.

\(e\) No Limitation on Right to Sue.\_ Except as provided in section
1206(b), nothing in this title shall be construed to limit the rights of
any individual to bring a civil suit against a tobacco company.

\(f\) Claims Administration.\_ The trustees for Fund II may establish,
or enter into a contract for the establishment or operation of, a claims
facility for the processing, evaluation, and settlement of claims
submitted to Fund II.

\(g\) Review Jurisdiction.\_ The District Courts of the United States
shall have exclusive jurisdiction, without regard to the amount in
controversy or the citizenship of the parties, to review a determination
(or failure to make a determination as required by section 1206(a)) by
or on behalf of the trustees with respect to compensation under Fund II
by an individual bringing a claim. No such determination may be
overturned or remanded if it is supported by substantial evidence. A
claimant may not file a proceeding under this subsection unless the
plaintiff has provided the trustees with a notice of intent of the
plaintiff to file such an action, at least 90 days prior to the filing
of such action.

SEC. 1205. TRANSFERS FROM NATIONAL TOBACCO SETTLEMENT TRUST FUND.

\(a\) Special Asbestos-Tobacco Victim Transfers.\_ Beginning with
calendar year 1999, the Secretary of the Treasury shall, for each
calendar year, transfer from the National Tobacco Settlement Trust Fund
established under section 401 (other than from amounts in the State
Litigation Settlement Account) the amounts sufficient to provide the
trust fund established by section 1202 the following amounts:

\(l\) For calendar year 1999, \$1,000,000,000.

\(2\) For calendar year 2000, \$1,500,000,000.

\(3\) For calendar year 2001, \$3,000,000,000.

\(4\) For calendar year 2002, \$3,000,000,000.

\(5\) For calendar year 2003, \$3,000,000,000.

\(6\) For calendar year 2004, \$4,000,000,000.

\(7\) For each of the calendar years 2005 through 2014, \$550,000,000.

\(b\) Payments.\_ The Secretary of the Treasury shall ensure that
transfers are made under this section on a timely basis.

SEC. 1206. RULES FOR CLAIMS AGAINST ASBESTOS TRUSTS, ASBESTOS
DEFENDANTS, ANDTOBACCO COMPANIES.

\(a\) Purpose.\_

\(1\) In general.\_ It is the purpose of this title to ensure that
asbestos claimants and asbestos/tobacco claimants who are eligible, by
reason of harm resulting from exposure to asbestos and tobacco, to
receive compensation on a fair and timely basis.

\(2\) Rule of construction.\_ Nothing in this title shall be construed
to expand the rights of asbestos claimants and asbestos/tobacco
claimants in civil actions pending (or resolved) against asbestos
defendants or asbestos trusts on the date of enactment of this Act.

\(b\) Non-Binding Submission of Tobacco/Asbestos Claims to Fund II.\_

\(1\) In general.\_ A civil action by an individual for harm caused by
the combined effects of tobacco and asbestos shall not proceed to trial
or result in a judgment against an asbestos defendant or asbestos trust
until a claim is submitted to Fund II by such individual and finally
resolved in accordance with section 1204(c)(3) as determined by the
trustees for Fund II. For purposes of this paragraph, the term
\`\`proceed to trial\'\' means\_

\(A\) in a jury trial, to commence voir dire ; and

\(B\) in a nonjury trial, to begin the trial.

\(2\) Denial of claim.\_ A claimant whose claim under paragraph (1) is
denied, or who rejects an offer made by the trustees for Fund II, may
proceed to judgment or trial. All claimants shall receive a final
determination from Fund II within 120 days after submission of a claim.
In the event of exigent circumstances, verified by a competent medical
professional, a claimant shall receive a final determination from Fund
II as soon as practicable, but in all events within 60 days after
submission.

\(c\) Liability of Tobacco Companies.\_

\(1\) In general.\_ The provisions of this subsection limiting the civil
liability of tobacco companies shall remain in effect so long as the
transfers and deposits are made in accordance with the provisions of
this title.

\(2\) Claims of asbestos-tobacco victims.\_ Any claimant who receives a
payment from Fund II, shall execute a release of liability for all
tobacco-caused harm.

\(3\) Contribution claims for past amounts paid.\_ Notwithstanding any
other provision of law, no tobacco company shall be liable for
contribution, indemnity, or otherwise to any asbestos trust or asbestos
defendant on any claim arising from payments or obligations for payments
to asbestos claimants and asbestos/tobacco claimants made or incurred
prior to the date of enactment of this Act. All such claims by asbestos
defendants or asbestos trusts filed as of the date of enactment of this
Act are terminated.

\(4\) Contribution claims for future amounts.\_ Notwithstanding any
other provision of law, in any contribution or similar action against a
tobacco company arising from the payments or obligations for payments to
asbestos claimants and asbestos/tobacco claimants made or incurred after
the date of enactment of this Act, an asbestos trust or asbestos
defendant may aggregate and establish a claim based on valid statistical
proof on a consolidated basis. In such an action, the assessment of
damages to a tobacco company defendant shall be based upon the degree of
relative causation as between asbestos and tobacco based on statistical
data applicable to relevant disease categories.

\(5\) Rights reserved.\_ Nothing in this subsection shall be construed
to limit the rights of any person that chooses not to receive
compensation from Fund II to commence a civil action against any tobacco
company.

\(d\) Liability of Asbestos Trusts and Asbestos Defendants.\_

\(1\) Acceptance of fund ii award.\_ A claimant who accepts a payment
from Fund II shall execute a release of liability for all tobacco-caused
harm, and shall not recover from an asbestos defendant in any civil
action any damages for any portion of the harm caused by exposure to
tobacco.

\(2\) Fund ii claimant\'s right to sue.\_ A claimant, whose claim has
been denied by the trustees for Fund II, or who has rejected the offer
of a payment from Fund II, may pursue a civil action against a tobacco
defendant or asbestos defendant for personal injury attributable to both
tobacco and asbestos, to the extent that such action is otherwise
permissible under applicable law.

\(3\) Succession to claimant\'s rights.\_ Any asbestos defendant that
pays a part or all of a judgment that includes damages for
tobacco-caused harm may elect\_

\(A\) to\_

\(i\) succeed to the rights of the claimant involved, in the same
proportion that the payment by the defendant in the action involved
bears to the total amount of the judgment; and

\(ii\) to request compensation on behalf of the claimant from Fund II as
in the same manner as if the claimant had made a timely and proper
election to receive such compensation, and on the same basis as other
claimants similarly situated; or

\(B\) to pursue an action for indemnity or contribution against any
tobacco company.

\(4\) Contribution claims against asbestos companies.\_ An asbestos
trust or asbestos defendant shall not be liable to a tobacco company for
contribution, indemnity, or otherwise with respect to any claim arising
from payments or obligations for payments to asbestos claimants or for
exposure to tobacco and asbestos made or incurred either prior to or by
virtue of, the enactment of this Act. All such claims filed as of the
date of enactment of this Act are terminated.

\(e\) Preservation of Joint Liability for Asbestos-Caused Injury or
Condition.\_ Nothing in this title shall be construed to\_

\(1\) limit any joint liability under otherwise applicable law among
asbestos defendants or asbestos trusts for the portion of a claimant\'s
harm caused by asbestos;

\(2\) limit the ability of any individual to claim that his or her harm
was caused by asbestos; or

\(3\) delay the resolution of a claim brought by any individual against
an asbestos trust or asbestos defendant for compensation for harm caused
by asbestos.

TITLE XIII_VETERANS\' BENEFITS

SEC. 1301. RECOVERY BY SECRETARY OF VETERANS AFFAIRS.

Title 38, United States Code, is amended by adding after part VI the
following:

\`\`PART VII_RECOVERY OF COMPENSATION COSTS FOR TOBACCO-RELATED
DISABILITY OR DEATH

\`\`Chapter 91_Tort liability for disability or death due to tobacco use

\`\`Sec.

\`\`9101. Recovery by Secretary of Veterans Affairs

\`\`9102. Regulations

\`\`9103. Limitation or repeal of other provisions for recovery of
compensation

\`\`9104. Exemption from annual limitation on damages

\`\` 9101. Recovery by Secretary of Veterans Affairs

\`\`(a) Conditions; exceptions; persons liable; amount of recovery;
subrogation.\_ In any case in which the Secretary is authorized or
required by law to provide compensation under this title for disability
or death from injury or disease attributable in whole or in part to the
use of tobacco products by a veteran during the veterans active
military, naval, or air service under circumstances creating a tort
liability upon a participating tobacco product manufacturer,
distributor, or retailer of a tobacco product (other than or in addition
to the United States) to pay damages therefor, the Secretary shall have
a right to recover (independent of the rights of the injured or diseased
veteran) from said participating tobacco product manufacturer,
distributor, or retailer the cost of the compensation paid or to be paid
and shall, as to this right, be subrogated to any right or claim that
the injured or diseased veteran, his or her guardian, personal
representative, estate, dependents, or survivors has against such third
person to the extent of the cost of the compensation paid or to be paid.

\`\`(b) Enforcement procedure; intervention; joinder of parties; State
or Federal court proceedings.\_ The Secretary may, to enforce such right
under subsection (a) of this section:

\`\`(1) intervene or join in any action or proceeding brought by the
injured or diseased veteran, his or her guardian, personal
representative, estate, dependents, or survivors, against the
participating tobacco product manufacturer, distributor, or retailer of
a tobacco product who is liable for the injury or disease; or

\`\`(2) if such action or proceeding is not commenced within six months
after the first day on which compensation is paid by the Secretary in
connection with the injury or disease involved, institute and prosecute
legal proceedings against the participating tobacco product
manufacturer, distributor, or retailer of a tobacco product who is
liable for the injury or disease, in a State or Federal court, either
alone (in its own name or in the name of the injured veteran, his or her
guardian, personal representative, estate, dependents, or survivors) or
in conjunction with the injured or diseased veteran, his or her
guardian, personal representative, estate, dependents, or survivors.

\`\`(c) Credits to appropriations.\_ Any amount recovered or collected
under this section for compensation paid by the Secretary shall be
credited to a revolving fund established in the Treasury of the United
States known as the Department of Veterans Affairs Tobacco Recovery Fund
(hereafter called the Fund). The Fund shall be available to the
Secretary without fiscal year limitation for purposes of veterans
benefit programs, including administrative costs. The Secretary may
transfer such funds as deemed necessary to the various Department of
Veterans Affairs appropriations, which shall remain available until
expended.

\`\`(d) Definition.\_ For purposes of this section, the term
participating tobacco product manufacturer, distributor, or retailer of
a tobacco product means a manufacturer, distributor, or retailer of
tobacco products that has entered into a consent decree as such term is
defined in section 701 of the National Tobacco Policy and Youth Smoking
Reduction Act and that is a signatory to the Protocol as such term is
defined in section 6 of that Act.

\`\` 9102. Regulations

\`\`(a) Determination and establishment of present value of compensation
to be paid.\_ The Secretary may prescribe regulations to carry out this
chapter, including regulations with respect to the determination and
establishment of the present value of compensation to be paid to an
injured or diseased veteran or his or her surviving spouse, child, or
parent.

\`\`(b) Settlement, release and waiver of claims.\_ To the extent
prescribed by regulations under subsection (a) of this section, the
Secretary may\_

\`\`(1) compromise, or settle and execute a release of, any claim which
the Secretary has by virtue of the right established by section 9101 of
this title; or

\`\`(2) waive any such claim, in whole or in part, for the convenience
of the Government, or if he or she determines that collection would
result in undue hardship upon the veteran who suffered the injury or
disease or his or her surviving spouse, child or parent resulting in
payment of compensation.

\`\`(c) Damages recoverable for personal injury unaffected.\_ No action
taken by the Secretary in connection with the rights afforded under this
chapter shall operate to deny to the injured veteran or his or her
surviving spouse, child or parent the recovery for that portion of his
or her damage not covered hereunder.

\`\` 9103. Limitation or repeal of other provisions for recovery
ofcompensation

\`\`This chapter does not limit or repeal any other provision of law
providing for recovery by the Secretary of the cost of compensation
described in section 9101 of this title.

\`\` 9104. Exemption from annual limitation on damages

\`\`Any amount recovered under section 9101 of this title for
compensation paid or to be paid by the Secretary for disability or death
from injury or disease attributable in whole or in part to the use of
tobacco products by a veteran during the veterans active military,
naval, or air service shall not be subject to the limitation on the
annual amount of damages for which the participating tobacco product
manufacturers, distributors, and retailers may be found liable as
provided in the National Tobacco Policy and Youth Smoking Reduction Act
and shall not be counted in computing the annual amount of damages for
purposes of that section.\'\'.