S. 1415 Amdt.  

AMENDMENT NO.   

CAL. NO.     

Purpose: Further modification of the Commerce Committee amendment.

IN THE SENATE OF THE UNITED STATES_ 105 th  Cong., 2 d  Sess.

S. 1415,  105 th  Congress, 2 d  Session

May  __, 1998

(  ) Referred to the Committee on ______ and ordered to be printed

(  ) Ordered to lie on the table and to be printed

Intended  to be proposed by Mr.  McCain  (for himself and Mr.  Hollings)

Viz:  Strike out all after the enacting clause and insert the following:

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. Relationship to other, related Federal, State, local, and Tribal  laws.

Sec. 6. Definitions.

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

Sec. 8. FTC jurisdiction not affected.

Sec. 9. Congressional review provisions.

TITLE I_REGULATION OF THE TOBACCO INDUSTRY

Sec. 101. Amendment of Federal Food, Drug, and Cosmetic Act of 1938.
Sec. 102. Conforming and other amendments to general provisions.
Sec. 103. Construction of current regulations.
TITLE II_REDUCTIONS IN UNDERAGE TOBACCO USE

Subtitle A_Underage Use 

Sec. 201. Findings.
Sec. 202. Purpose.
Sec. 203. Goals for reducing underage tobacco use.
Sec. 204. Look-back assessment.
Sec. 205. Definitions.
Subtitle B_State Retail Licensing and Enforcement Incentives

Sec. 231. State retail licensing and enforcement block grants.
Sec. 232. Block grants for compliance bonuses.
Sec. 233. Conforming change.
Subtitle C_Tobacco Use Prevention and Cessation Initiatives

Sec. 261. Tobacco use prevention and cessation initiatives.
TITLE III_TOBACCO PRODUCT WARNINGS AND SMOKE CONSTITUENT DISCLOSURE

Subtitle A_Product Warnings, Labeling and Packaging

Sec. 301. Cigarette label and advertising warnings.
Sec. 302. Authority to revise cigarette warning label Statements.
Sec. 303. Smokeless tobacco labels and advertising warnings.
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 TRUST FUND

Sec. 401. Establishment of trust fund.
Sec. 402. Payments by industry.
Sec. 403. Adjustments.
Sec. 404. Payments to be passed through to consumers.
Sec. 405. Tax treatment of payments.
Sec. 406. Enforcement for nonpayment.
Subtitle B_General Spending Provisions

Sec. 451. Allocation accounts.
Sec. 452. Grants to States.
Sec. 453. Indian health service.
Sec. 454. Research at the National Science Foundation.
Sec. 455. Medicare cancer patient demonstration project; evaluation andreport to Congress.

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 title to Indian lands and to Native Americans.
TITLE VII_TOBACCO CLAIMS

Sec. 701. Definitions.
Sec. 702. Application; preemption.
Sec. 703. Rules governing tobacco claims.
TITLE VIII_TOBACCO INDUSTRY ACCOUNTABILITY REQUIREMENTS AND EMPLOYEE PROTECTION FROM REPRISALS

Sec. 801. Accountability requirements and oversight of the tobacco industry.
Sec. 802. Tobacco product manufacturer employee protection.
TITLE IX_PUBLIC DISCLOSURE OF TOBACCO INDUSTRY DOCUMENTS

Sec. 901. Findings.
Sec. 902. Applicability.
Sec. 903. Document disclosure.
Sec. 904. Document review.
Sec. 905. Resolution of disputed privilege and trade secret claims.
Sec. 906. Appeal of panel decision.
Sec. 907. Miscellaneous.
Sec. 908. Penalties.
Sec. 909. Definitions.
TITLE X_LONG-TERM ECONOMIC ASSISTANCE FOR FARMERS

Sec. 1001. Short title.
Sec. 1002. Definitions.
Subtitle A_Tobacco Community Revitalization 

Sec. 1011. Authorization of appropriations.
Sec. 1012. Expenditures.
Sec. 1013. Budgetary treatment.
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. 1025. Modifications in Federal tobacco programs.
Subtitle C_Farmer and Worker Transition Assistance

Sec. 1031. Tobacco worker transition program.
Sec. 1032. Farmer opportunity grants.
Subtitle D_Immunity

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

TITLE XI_MISCELLANEOUS PROVISIONS

Subtitle A_International Provisions

Sec. 1101. Policy.
Sec. 1102. Tobacco control negotiations.
Sec. 1103. Report to Congress.
Sec. 1104. Funding.
Sec. 1105. Prohibition of funds to facilitate the exportation or promotion oftobacco.

Sec. 1106. Health labeling of tobacco products for export.
Sec. 1107. International tobacco control awareness.
Subtitle B_Anti-smuggling Provisions

Sec. 1131. Definitions.
Sec. 1132. Tobacco product labeling requirements.
Sec. 1133. Tobacco product licenses.
Sec. 1134. Prohibitions.
Sec. 1135. Labeling of products sold by Native Americans.
Sec. 1136. Limitation on activities involving tobacco products in foreigntrade zones.

Sec. 1137. Jurisdiction; penalties; compromise of liability.
Sec. 1138. Amendments to the Contraband Cigarette Trafficking Act.
Sec. 1139. Funding.
Sec. 1140. Rules and regulations.
Subtitle C_Other Provisions

Sec. 1161. Improving child care and early childhood development.
Sec. 1162. Ban of sale of tobacco products through the use of vendingmachines.

Sec. 1163. Amendments to the Employee Retirement Income Security Act of 1974.
TITLE XII_ASBESTOS-RELATED TOBACCO CLAIMS

Sec. 1201. National tobacco trust funds available under future legislation.
TITLE XIII_VETERANS' BENEFITS 

Sec. 1301. Recovery by Secretary of Veterans' Affairs.
TITLE XIV_EXCHANGE OF BENEFITS FOR AGREEMENT 

Sec. 1401. Conferral of benefits on participating tobacco productmanufacturers in return for their assumption of specific obligations.

Sec. 1402. Participating tobacco product manufacturer.
Sec. 1403. General provisions of protocol.
Sec. 1404. Tobacco product labeling and advertising requirements of protocol.
Sec. 1405. Point-of-sale requirements.
Sec. 1406. Application of title.
Sec. 1407. Governmental claims.
Sec. 1408. Addiction and dependency claims; Castano Civil Actions.
Sec. 1409. Substantial non-attainment of required reductions.
Sec. 1410. Public health emergency.
Sec. 1411. Tobacco claims brought against participating tobacco productmanufacturers.

Sec. 1412. Payment of tobacco claim settlements and judgments.
Sec. 1413. Attorneys' fees and expenses.
Sec. 1414. Effect of court decisions.
Sec. 1415. Criminal laws not affected.
Sec. 1416. Congress reserves the right to enact laws in the future.
Sec. 1417. Definitions.

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 because they 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) The citizens of the several States are exposed to, and adversely affected by, environmental smoke in public buildings and other facilities which imposes a burden on interstate commerce.

 (13) 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.

 (14) 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.

 (15) 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.

 (16) 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.

 (17) 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.

 (18) 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.

 (19) 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.

 (20) 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.

 (21) 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.

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

 (23) 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.

 (24) 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.

 (25) 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.

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

 (27) 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.

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

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

 (30) 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.

 (31) 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.

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

 (33) 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.

 (34) The use of tobacco products in motion pictures and other mass media glamorizes its use for young people and encourages them to use tobacco products.

SEC. 3. PURPOSE. 

 The purposes of this Act are_ 

 (1) to clarify 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 licensing system to prevent minors from obtaining tobacco products and to prevent the unlawful distribution of 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 financial surcharges on tobacco product manufacturers if tobacco use by young people does not substantially decline;

 (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 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, 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 if that State's standard is as protective, or more protective, of the public health;

 (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 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; or

 (2) 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. RELATIONSHIP TO OTHER, RELATED FEDERAL, STATE, LOCAL, AND TRIBAL  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)  No Less Stringent._ Nothing in this Act or the amendments made by this Act is intended to supersede any State, local, or Tribal law that is not less stringent than this Act, or other Acts as amended by this Act.

 (d)  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)  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.

 (6)  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 owned by an Indian tribe or a member thereof over which the United States exercises jurisdiction on behalf of the tribe or tribal member. 

 (7)  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)).

 (8)  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)).

 (9)  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.

 (10)  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.

 (11)  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.

 (12)  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.

 (13)  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.

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

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

 (16)  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.

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

 (18)  Tobacco product manufacturer._ Except in titles VII, X, and XIV, the term ``tobacco product manufacturer'' means any person, including any repacker or relabeler, who_

 (A) manufactures, fabricates, assembles, processes, or labels a finished cigarette or smokeless tobacco product; or 

 (B) imports a finished cigarette or smokeless tobacco product for sale or distribution in the United States.

 (19)  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.

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 underage use of pipe tobacco and cigars is increasing. 

SEC. 8. 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 or part 897 of title 21, Code of Federal Regulations, 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. 9. 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

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)  Scope._ 

 ``(1) Nothing in this chapter, any policy issued or regulation promulgated thereunder, or the National Tobacco Policy and Youth Smoking Reduction Act, shall be construed to affect the Secretary's authority over, or the regulation of, products under this Act that are not tobacco products under chapter V  of the Federal Food, Drug and Cosmetic Act or any other chapter of that 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 deleterious 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 (or agents thereof) 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) No restriction under paragraph (1) may prohibit the sale of any tobacco product in face-to face transactions by a specific category of retail outlets.

 ``(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 an advisory committee 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 an advisory committee 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 an advisory committee, 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 an advisory committee, 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 an advisory committee 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 an advisory committee, 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

 ``(iv) 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. 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,'';

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

 (13) by adding at the end thereof the following:

 ``(aa) The sale of tobacco products in violation of a no-tobacco-sale order issued under section 303(f).''.

 (c) Section 303._ Section 303(f) (21 U.S.C. 333(f)) is amended_
 (1) by amending the caption to read as follows:

 ``(f)  Civil Penalties; No-tobacco-sale Orders._'';

 (2) by inserting ``or tobacco products'' after ``devices'' in paragraph (1)(A);

 (3) by redesignating paragraphs (3), (4), and (5) as paragraphs (4), (5), and (6), and inserting after paragraph (2) the following:

 ``(3) If the Secretary finds that a person has committed repeated violations of restrictions promulgated under section 906(d) at a particular retail outlet then the Secretary may impose a no-tobacco-sale order on that person prohibiting the sale of tobacco products in that outlet.  A no-tobacco-sale order may be imposed with a civil penalty under paragraph (1).'';

 (4) by striking ``assessed'' the first time it appears in subparagraph (A) of paragraph (4), as redesignated, and inserting ``assessed, or a no-tobacco-sale order may be imposed,'';

 (5) by striking ``penalty'' in such subparagraph and inserting ``penalty, or upon whom a no-tobacco-order is to be imposed,'';

 (6) by inserting after ``penalty,'' in subparagraph (B) of paragraph (4), as redesignated, the following:  ``or the period to be covered by a no-tobacco-sale order,'';

 (7) by adding at the end of such subparagraph the following:  ``A no-tobacco-sale order permanently prohibiting an individual retail outlet from selling tobacco products shall include provisions that allow the outlet, after a specified period of time, to request that the Secretary compromise, modify, or terminate the order.'';

 (8) by adding at the end of paragraph (4), as redesignated, the following:

 ``(D) The Secretary may compromise, modify, or terminate, with or without conditions, any no-tobacco-sale order.'';

 (9) by striking ``(3)(A)'' in paragraph (5), as resdesignated, and inserting ``(4)(A)'';

 (10) by inserting ``or the imposition of a no-tobacco-sale order'' after ``penalty'' the first 2 places it appears in such paragraph;

 (11) by striking ``issued.'' in such paragraph and inserting ``issued, or on which the no-tobacco-sale order was imposed, as the case may be.''; and

 (12) by striking ``paragraph (4)'' each place it appears in paragraph (6), as redesignated, and inserting ``paragraph (5)''.

 (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''.

 (m)  Effective Date for no-tobacco-sale order amendments._ The amendments made by subsection (c), other than the amendment made by paragraph (2) thereof, shall take effect only upon the promulgation of final regulations by the Secretary_

 (1) defining the term ``repeated violation'', as used in section 303(f) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 333(f)) as amended by subsection (c), by identifying the number of violations of particular requirements over a specified period of time that constitute a repeated violation;

 (2) providing for notice to the retailer of each violation at a particular retail outlet;

 (3) providing that a person may not be charged with a violation at a particular retail outlet unless the Secretary has provided notice to the retailer of all previous violations at that outlet;

 (4) establishing a period of time during which, if there are no violations by a particular retail outlet, that outlet will not considered to have been the site of repeated violations when the next violation occurs; and

 (5) providing that good faith reliance on false identification does not constitute a violation of any minimum age requirement for the sale of tobacco products.

SEC. 103.  CONSTRUCTION OF CURRENT REGULATIONS.
 (a)  In General._ The final regulations promulgated by the Secretary in the August 28, 1996, issue of the Federal Register (62 Red. Reg. 44615-44618) and codified at part 897 of title 21, Code of Federal Regulations, are hereby deemed to be lawful and to have been lawfully promulgated by the Secretary under chapter IX and section 701 of the Federal Food, Drug, and Cosmetic Act, as amended by this Act, and not under chapter V of the Federal Food, Drug, and Cosmetic Act.  The provisions of part 897 that are not in effect on the date of enactment of this Act shall take effect as in such part  or upon such later date as determined by the Secretary by order.  The Secretary shall amend the designation of authority in such regulations in accordance with this subsection.

 (b)  Limitation on Advisory Opinions._ As of the date of enactment of this Act, the following documents issued by the Food and Drug Administration shall not constitute advisory opinions under section 10.85(d)(1) of title 21, Codeof Federal Regulations, except as they apply to tobacco products, and shall not be cited by the Secretary or the Food and Drug Administration as binding precedent.

 (1) The preamble to the proposed rule in the document entitled ``Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco Products to Protect Children and Adolescents'' (60 Fed. Reg. 41314-41372 (August 11, 1995)).

 (2) The document entitled ``Nicotine in Cigarettes and Smokeless Tobacco Products is a Drug and These Products Are Nicotine Delivery Devices Under the Federal Food, Drug, and Cosmetic Act;; (60 Fed. Reg. 41453-41787 (August 11, 1995)).

 (3) The preamble to the final rule in the document entitled ``Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco to Protect Children and Adolescents'' (61 Fed. Reg. 44396-44615 (August 28, 1996)).

 (4) The document entitled ``Nicotine in Cigarettes and Smokeless Tobacco is a Drug and These Products are Nicotine Delivery Devices Under the Federal Food, Drug, and Cosmetic Act; Jurisdictional Determination;; (61 Fed. Reg. 44619-45318 (August 28, 1996)).

TITLE II_REDUCTIONS IN UNDERAGE TOBACCO USE

Subtitle A_Underage Use 

SEC. 201.  FINDINGS.
 The Congress finds the following:

 (1) Reductions in the underage use of tobacco products are critically important to the public health.  

 (2) Achieving this critical public health goal can be substantially furthered by increasing the price of tobacco products to discourage underage use if reduction targets are not achieved and by creating financial incentives for manufacturers to discourage youth from using their tobacco products. 

 (3) When reduction targets in underage use are not achieved on an industry-wide basis, the price increases that will result from an industry-wide assessment will provide an additional deterrence to youth tobacco use.  

 (4) Manufacturer-specific incentives that will be imposed if reduction targets are not met by a manufacturer provide a strong incentive for each manufacturer to make all efforts to discourage youth use of its brands and ensure the effectiveness of the industry-wide assessments.

SEC. 202. PURPOSE.
 This title is intended to ensure that, in the event that other measures contained in this Act prove to be inadequate to produce substantial reductions in tobacco use by minors, tobacco companies will pay additional assessments.  These additional assessments are designed to lower youth tobacco consumption in a variety of ways: by triggering further increases in the price of tobacco products, by encouraging tobacco companies to work to meet statutory targets for reductions in youth tobacco consumption, and providing support for further reduction efforts.

SEC. 203.  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 204, 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 204, 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. 204. LOOK-BACK ASSESSMENT.
 (a)  Annual Performance Survey._ Beginning no later than 1999 and annually thereafter the Secretary shall conduct a survey, in accordance with the methodology in subsection (d)(1), to determine_

 (1) the  percentage of all young individuals who used a type of tobacco product within the past 30 days; and

 (2) the percentage of young individuals who identify each brand of each type of tobacco product as the usual brand of that type smoked or used within the past 30 days.

 (b)  Annual Determination._ The Secretary shall make an annual determination, based on the annual performance survey conducted under subsection (a), of whether the required percentage reductions in underage use of tobacco products for a year have been achieved for the year involved.  The determination shall be based on the annual percent prevalence of the use of tobacco products, for the industry as a whole and of particular manufacturers, by young individuals (as determined by the surveys conducted by the Secretary) for the year involved as compared to the base incidence percentages.

 (c)  Confidentiality of Data._ The Secretary may conduct a survey relating to tobacco use involving minors.  If the information collected in the course of conducting the annual performance survey results in the individual supplying the information or described in it to be identifiable, the information may not be used for any purpose other than the purpose for which it was supplied unless that individual (or that individual's guardian) consents to its use for such other purpose.  The information may not be published or released in any other form if the individual supplying the information or described in it is identifiable unless that individual (or that individual's guardian) consents to its publication or release in other form.

 (d)  Methodolgy._

 (1)  In general._ The survey required by subsection (a) shall_

 (A) be based on a nationally representative sample of young individuals;

 (B) be a household-based, in person survey (which may include computer-assisted technology);

 (C) measure use of each type of tobacco product within the past 30 days;

 (D) identify the usual brand of each type of tobacco product used within the past 30 days; and

 (E) permit the calculation of the actual percentage reductions in underage use of a type of tobacco product (or, in the case of the manufacturer-specific surcharge, the use of a type of tobacco product of a manufacturer) based on the point estimates of the percentage of young individuals reporting use of a type of tobacco product (or, in the case of the manufacturer-specific surcharge, the use of a type of tobacco product of a manufacturer) from the annual performance survey.

 (2)  Criteria for deeming point estimates correct._ Point estimates under paragraph (1)(E) are deemed conclusively to be correct and accurate for calculating actual percentage reductions in underage use of a type of tobacco product (or, in the case of the manufacturer-specific surcharge, the use of a type of tobacco product of a particular manufacturer) for the purpose of measuring compliance with percent reduction targets and calculating surcharges provided that the precision of estimates (based on sampling error) of the percentage of young individuals reporting use of a type of tobacco product (or, in the case of the manufacturer-specific surcharge, the use of a type of tobacco product of a manufacturer) is such that the 95-percent confidence interval around such point estimates is no more than plus or minus 1 percent. 

 (3)  Survey deemed correct, proper, and accurate._ A survey using the methodology required by this subsection is deemed conclusively to be proper, correct, and accurate for purposes of this Act.

 (4)  Secretary may adopt different methodology._ The Secretary by notice and comment rulemaking may adopt a survey methodology that is different than the methodology described in paragraph (1) if the different methodology is at least as statistically precise as that methodology.

 (e)  Industry-wide Non-attainment Surcharges._ 

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

 (2)  Non-attainment surcharge for cigarettes._ For each calendar year in which the percentage reduction in underage use required by section 203b) is not attained, the Secretary shall assess a surcharge on cigarette manufacturers as follows:I95  

 If the non-attainment percentage is: The surcharge 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%  $1,200,000,000, plus $240,000,000 multiplied by the non-attainment percentage in excess of 10% 

More than 21.6% $4,000,000,000

 (3)  Non-attainment surcharge for smokeless tobacco._ For each year in which the percentage reduction in underage use required by section 203c) is not attained, the Secretary shall assess a surcharge on smokeless tobacco product manufacturers as follows:

I95  

 If the non-attainment percentage is: The surcharge 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%  $120,000,000, plus $24,000,000 multiplied by the non-attainment percentage in excess of 10% 

More than 21.6% $400,000,000

 (4)  Strict liability; joint and several liability._ Liability for any surcharge imposed under subsection (e) shall be_

 (A) strict liability; and

 (B) joint and several liability_

 (i) among all cigarette manufacturers for surcharges imposed under subsection (e)(2); and

 (ii) among all smokeless tobacco manufacturers for surcharges imposed under subsection (e)(3).

 (5)  Surcharge liability among manufacturers._ 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 surcharge as compared to the responsibility of the plaintiff manufacturer.

 (6)  Exemptions for small manufacturers._ 

 (A)  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 surcharge is being assessed, based on actual Federal excise tax payments.

 (B)  Exemption._ In any year in which a surcharge 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 products are used by underage individuals at a rate equal to or greater than the manufacturer's total market share for the type of tobacco product.  

 (f)  Manufacturer-specific Surcharges._

 (1)  Required percentage reductions._ Each manufacturer which manufactured a brand or brands of tobacco product on or before the date of the enactment of this Act shall reduce the percentage of young individuals who use such manufacturer's brand or brands as their usual brand in accordance with the required percentage reductions described under subsections (b) (with respect to cigarettes) and (c ) (with respect to smokeless tobacco). 

 (2)  Application to less popular brands._ Each manufacturer which manufactured a brand or brands of tobacco product on or before the date of the enactment of this Act for which the base incidence percentage is equal to or less than the  de minimis  level shall ensure that the percent prevalence of young individuals who use the manufacturer's tobacco products as their usual brand remains equal to or less than the  de minimis  level described in paragraph (4).

 (3)  New entrants._ Each manufacturer of a tobacco product which begins to manufacture a tobacco product after the date of the enactment of this Act shall ensure that the percent prevalence of young individuals who use the manufacturer's tobacco products as their usual brand is equal to or less than the  de minimis  level.

 (4)  De minimis level defined._ The  de minimis  level is equal to 1 percent prevalence of the use of each manufacturer's brands of tobacco product by young individuals (as determined on the basis of the annual performance survey conducted by the Secretary) for a year.

 (5)  Target reduction levels._

 (A)  Existing manufacturers._  For purposes of this section, the target reduction level for each type of tobacco product for a year for a manufacturer is the product of the required percentage reduction for a type of tobacco product for a year and the manufacturers base incidence percentage for such tobacco product.

 (B)  New manufacturers; manufacturers with low base incidence percentages._ With respect to a manufacturer which begins to manufacture a tobacco product after the date of the enactment of this Act or a manufacturer for which the baseline level as measured by the annual performance survey is equal to or less than the  de minimis  level described in paragraph (4), the base incidence percentage is the  de minimis  level, and the required percentage reduction in underage use for a type of tobacco product with respect to a manufacturer for a year shall be deemed to be the number of percentage points necessary to reduce the actual percent prevalence of young individuals identifying a brand of such tobacco product of such manufacturer as the usual brand smoked or used for such year to the  de minimis  level.

 (6)  Surcharge amount._

 (A)  In general._ If the Secretary determines that the required percentage reduction in use of a type of tobacco product has not been achieved by such manufacturer for a year, the Secretary shall impose a surcharge on such manufacturer under this paragraph.

 (B)  Amount._ The amount of the manufacturer-specific surcharge for a type of tobacco product for a year under this paragraph is $1,000, multiplied by the number of young individuals for which such firm is in noncompliance with respect to its target reduction level. 

 (C)  Determination of number of young individuals._ For purposes of subparagraph (B) the number of young individuals for which a manufacturer is in noncompliance for a year shall be determined by the Secretary from the annual performance survey and shall be calculated based on the estimated total number of young individuals in such year and the actual percentage prevalence of young individuals identifying a brand of such tobacco product of such manufacturer as the usual brand smoked or used in such year as compared to such manufacturer's target reduction level for the year.

 (7)  De minimis rule._ The Secretary may not impose a surcharge on a manufacturer for a type of tobacco product for a year if the Secretary determines that actual percent prevalence of young individuals identifying that manufacturer's brands of such tobacco product as the usual products smoked or used for such year is less than 1 percent. 

 (g)  Surcharges To Be Adjusted for Inflation._

 (1)  In general._ Beginning with the fourth calendar year after the date of enactment of this Act, each dollar amount in the tables in subsections (e)(2), (e)(3), and (f)(6)(B) shall be increased by the inflation adjustment.

 (2)  Inflation adjustment._ For purposes of paragraph (1), the inflation adjustment for any calendar year is the percentage (if any) by which_

 (A) the CPI for the preceding calendar year, exceeds

 (B) the CPI for the calendar year 1998.
 (3)  CPI._ For purposes of paragraph (2), the CPI for any calendar year is the average of the Consumer Price Index for all-urban consumers published by the Department of Labor.

 (4)  Rounding._ If any increase determined under paragraph (1) is not a multiple of $1,000, the increase shall be rounded to the nearest multiple of $1,000.
 (h)  Method of Surcharge Assessment._ The Secretary shall assess a surcharge for a specific calendar year on or before May 1 of the subsequent calendar year. Surcharge 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 surcharge is assessed, and additional charges in an amount up to 3 times the surcharge, for late payment of the surcharge.

 (i)  Business Expense Deduction._ Any surcharge 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.
 (j)  Appeal Rights._ The amount of any surcharge is committed to the sound discretion of the Secretary and shall be subject to judicial review by the United States Court of Appeals for the District of Columbia Circuit, based on the arbitrary and capricious standard of section 706(2)(A) of title 5, United States Code. Notwithstanding any other provisions of law, no court shall have authority to stay any surcharge payments due the Secretary under this Act pending judicial review.

 (k)  Responsibility for Agents._ 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 surcharge assessed under this section.

SEC. 205. DEFINITIONS.
 In this subtitle: 

 (1)  Base incidence percentage._ The term ``base incidence percentage'' means, with respect to each type of tobacco product, the percentage of young individuals determined to have used such tobacco product in the first annual performance survey for 1999.
 (2)  Manufacturers base incidence percentage._ The term ``manufacturers base incidence percentage'' is, with respect to each type of tobacco product, the percentage of young individuals determined to have identified a brand of such tobacco product of such manufacturer as the usual brand smoked or used in the first annual performance survey for 1999.
 (3)  Young individuals._ The term ``young individuals'' means individuals who are over 11 years of age and under 18 years of age.

 (4)  Cigarette manufacturers._ The term ``cigarette manufacturers'' means manufacturers of cigarettes sold in the United States. 

 (5)  Non-attainment percentage for cigarettes._ 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.

 (6)  Non-attainment percentage for smokeless tobacco products._ 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.

 (7)  Smokeless tobacco product manufacturers._ The term ``smokeless tobacco product manufacturers'' means manufacturers of smokeless tobacco products sold in the United States.

Subtitle B_State Retail Licensing and Enforcement Incentives

SEC. 231. STATE RETAIL LICENSING AND ENFORCEMENT BLOCK GRANTS.
 (a)  In General._ The Secretary shall make State retail licensing and enforcement block grants in accordance with the provisions of this section.  There are authorized to be appropriated to the Secretary from the National Tobacco Trust Fund $200,000,000 for each fiscal year to carry out the provisions of this section.

 (b)  Requirements._

 (1)  Establishment._ The Secretary shall provide a block grant, based on population, under this subtitle 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; 

 (B) makes it illegal to sell or distribute tobacco products to individuals under 18 years of age; and 

 (C) 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 prohibit retailers from selling or otherwise distributing tobacco products to individuals under 18 years of age in accordance with the Youth Access Restrictions regulations promulgated by the Secretary (21 C.F.R. 897.14(a) and (b));
 (C) shall make available to appropriate Federal agencies designated by the Secretary requested information concerning retail establishments involved in the sale or distribution of tobacco products to consumers; and 

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

 (i)  Licensure; sources; and notice._ A requirement for a State license for each retail establishment involved in the sale or distribution of tobacco products to consumers. A requirement that a retail establishment may purchase tobacco products only from Federally-licensed manufacturers, importers, or wholesalers. 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 for the sale or distribution of tobacco products to a consumer without a license.

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

 (III)  Other._ Other programs, 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 for an action of the State suspending, revoking, denying, or refusing to renew any license under its program.

 (c)  Enforcement._

 (1)  Undertaking._ Each State that receives a grant under this subtitle 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.

 (2)  Activities and reports regarding enforcement._ A State that receives a grant under this subtitle 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 in detail_

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

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

 (iii) 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; and

 (iv) 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.

 (3)  Minimum inspection standards._ Inspections conducted by the State shall be conducted by the State in such a way as to ensure a scientifically sound estimate (with a 95 percent confidence interval that such estimates are accurate to within plus or minus 3 percentage points), using an accurate list of retail establishments throughout the State. 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. 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. 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.

 (d)  Noncompliance._

 (1)  Inspections._ The Secretary shall withhold from any State that fails to meet the requirements of subsection (b) in any calendar year 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 the annual compliance targets that were negotiated with the Secretary under section 1926 of the Public Health Service Act (42 U.S.C. 300x_26) as such section was in effect before its repeal by this Act through the third fiscal year after the date of enactment of this Act;

 (B) at least 80 percent in the fourth fiscal year after such date;

 (C) at least 85 percent in the fifth and sixth fiscal years after such date; and 

 (D) at least 90 percent in every fiscal year beginning with the seventh 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. 

 (e)  Release and Disbursement._ 

 (1) Upon notice from the Secretary that an amount payable under this section has been ordered withheld under subsection (d), 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 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 presents scientifically sound survey data showing that the State is making significant progress toward reducing the use of tobacco products by individuals who have not attained the age of 18 years;

 (B) the State presents scientifically-based data showing that it has progressively decreased the availability of tobacco products to such individuals;

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

 (D) the State provides evidence that it plans to improve enforcement of these laws in the next fiscal year; and

 (E) any other relevant evidence.

 (4) A State is 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.

 (f)  Non-participating States Licensing Requirements._ For retailers in States which have not established a licensing program under subsection (a), the Secretary shall promulgate regulations establishing Federal retail licensing 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.

 (g)  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.

SEC. 232. BLOCK GRANTS FOR COMPLIANCE BONUSES.
 (a)  In General._ The Secretary shall make block grants to States determined to be eligible under subsection (b) in accordance with the provisions of this section.  There are authorized to be appropriated to the Secretary from the National Tobacco Trust Fund $100,000,000 for each fiscal year to carry out the provisions of this section.

 (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._ 

 (1)  Payment to State._ If one or more States are 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. 

 (2)  Year in which no State receives grant._ If in any fiscal year no State is eligible to receive a grant under this section, then the Secretary may use not more than 25 percent of the amount appropriated to carry out this section for that fiscal year to support efforts to improve State and local enforcement of laws regulating the use, sale, and distribution of tobacco products to individuals under the age of 18 years.

 (3)  Amounts available without fiscal year limitation._ Any amount appropriated under this section remaining unexpended and unobligated at the end of a fiscal year shall remain available for obligation and expenditure in the following fiscal year.

SEC. 233. CONFORMING CHANGE.
 Section 1926 of the Public Health Service Act (42 U.S.C. 300x_26) is hereby repealed.

Subtitle C_Tobacco Use Prevention and Cessation Initiatives

SEC. 261. TOBACCO USE PREVENTION AND CESSATION INITIATIVES.
 Title XIX of the Public Health Service Act (42 U.S.C. 300w et seq.) is amended by adding at the end the following:

``Part D_Tobacco Use Prevention and Cessation Initiatives

``Subpart I_Cessation and Community-Based Prevention Block Grants

``SEC. 1981. FUNDING FROM TOBACCO SETTLEMENT TRUST FUND.
 ``(a)  In General ._From amounts contained in the Public Health Allocation Account under section 451(b)(2)(A) and (C) of the National Tobacco Policy and Youth Smoking Reduction Act for a fiscal year, there are authorized to be appropriated (under subsection (d) of such section) to carry out this subpart_

 (1) for cessation activities, the amounts appropriated under section 451 (b)(2)(A); and

 (2) for prevention and education activities, the amounts appropriated under section 451 (b)(2)(C).

 ``(b)  National Activities ._

 ``(1)Not more than 10 percent of the amount made available for any fiscal year under subsection (a) shall be made available to the Secretary to carry out activities under section 1981B and 1981D(d).

 ``(2) Not more than 10 percent of the amount available for any fiscal year under subsection (a)(1) shall be available to the Secretary to carry out activities under section 1981D(d).

``SEC. 1981A. ALLOTMENTS.

 ``(a)  Amount ._

 ``(1)  In general ._From the amount made available under section 1981 for any fiscal year the Secretary, acting through the Director of the Centers for Disease Control and Prevention (referred to in this subpart as the `Director'), shall allot to each State an amount based on a formula to be developed by the Secretary that is based on the tobacco prevention and cessation needs of each State including the needs of the State's minority populations.

 ``(2)  Minimum amount ._In determining the amount of allotments under paragraph (1), the Secretary shall ensure that no State receives less than \1/2\ of 1 percent of the amount available under section 1981(a) for the fiscal year involved.

 ``(b)  Reallotment ._To the extent that amounts made available under section 1981 for a fiscal year are not otherwise allotted to States because_

 ``(1) 1 or more States have not submitted an application or description of activities in accordance with section 1981D for the fiscal year;

 ``(2) 1 or more States have notified the Secretary that they do not intend to use the full amount of their allotment; or

 ``(3) the Secretary has determined that the State is not in compliance with this subpart, and therefore is subject to penalties under section 1981D(g);

such excess amount shall be reallotted among each of the remaining States in proportion to the amount otherwise allotted to such States for the fiscal year involved without regard to this subsection.

 ``(c)  Payments ._

 ``(1)  In general ._The Secretary, acting through the Director of the Centers for Disease Control and Prevention, shall utilize the funds made available under this section to make payments to States under allotments under this subpart as provided for under section 203 of the Intergovernmental Cooperation Act of 1968.
 ``(2)  Federal grantees ._From amounts available under section 1981(b)(2), the Secretary may make grants, or supplement existing grants, to entities eligible for funds under the programs described in section 1981C(d)(1) and (10) to enable such entities to carry out smoking cessation activities under this subpart, except not less than 25 percent of this amount shall be used for the program described in 1981C(d)(6).

 ``(3)  Availability of funds ._Any amount paid to a State for a fiscal year under this subpart and remaining unobligated at the end of such year shall remain available to such State for the next fiscal year for the purposes for which such payment was made. 

 ``(d)   Regulations ._Not later than 9 months after the date of enactment of this part, the Secretary shall promulgate regulations to implement this subpart. This subpart shall take effect regardless of the date on which such regulations are promulgated.

``SEC. 1981B. TECHNICAL ASSISTANCE AND PROVISION OF SUPPLIES AND SERVICES IN LIEU OF FUNDS.

 ``(a)  Technical Assistance ._The Secretary, acting through the Director of the Centers for Disease Control and Prevention, shall, without charge to a State receiving an allotment under section 1981A, provide to such State (or to any public or nonprofit private entity within the State) technical assistance and training with respect to the planning, development, operation, and evaluation of any program or service carried out pursuant to the program involved. The Secretary may provide such technical assistance or training directly, through contract, or through grants.

 ``(b)  Provision of Supplies and Service in Lieu of Grant Funds ._The Secretary, at the request of a State, may reduce the amount of payments to the State under section 1981A(c) by_ 

 ``(1) the fair market value of any supplies or equipment furnished by the Secretary to the State; and

 ``(2) the amount of the pay, allowances, and travel expenses of any officer or employee of the Federal Government when detailed to the State and the amount of any other costs incurred in connection with the detail of such officer or employee;

when the furnishing of such supplies or equipment or the detail of such an officer or employee is for the convenience of and at the request of the State and for the purpose of conducting activities described in section 1981C. The amount by which any payment is so reduced shall be available for payment by the Secretary of the costs incurred in furnishing the supplies or equipment or in detailing the personnel, on which reduction of the payment is based, and the amount shall be deemed to be part of the payment and shall be deemed to have been paid to the State.

``SEC. 1981C. PERMITTED USERS OF CESSATION BLOCK GRANTS AND OF COMMUNITY-BASED PREVENTION BLOCK GRANTS.

 ``(a)  Tobacco Use Cessation Activities ._Except as provided in subsections (d) and (e), amounts described in subsection (a)(1) may be used for the following:

 ``(1) Evidence-based cessation activities described in the plan of the State, submitted in accordance with section 1981D, including_

 ``(A) evidence-based programs designed to assist individuals, especially young people and minorities who have been targeted by tobacco product manufacturers, to quit their use of tobacco products;

 ``(B) training in cessation intervention methods for health plans and health professionals, including physicians, nurses, dentists, health educators, public health professionals, and other health care providers; 

 ``(C) programs to encourage health insurers and health plans to provide coverage for evidence-based tobacco use cessation interventions and therapies, except that the use of any funds under this clause to offset the cost of providing a smoking cessation benefit shall be on a temporary demonstration basis only; 

 ``(D) culturally and linguistically appropriate programs targeted toward minority and low-income individuals, individuals residing in medically underserved areas, uninsured individuals, and pregnant women; 

 ``(E) programs to encourage employer-based wellness programs to provide evidence-based tobacco use cessation intervention and therapies; and

 ``(F) programs that target populations whose smoking rate is disproportionately high in comparison to the smoking rate population-wide in the State. 

 ``(2) Planning, administration, and educational activities related to the activities described in paragraph (1).

 ``(3) The monitoring and evaluation of activities carried out under paragraphs (1) and (2), and reporting and disseminating resulting information to health professionals and the public.

 ``(4) Targeted pilot programs with evaluation components to encourage innovation and experimentation with new methodologies.

 ``(b)  State and Community Action Activities ._Except as provided in subsections (d) and (e), amounts described in subsection (a)(2) may be used for the following:

 ``(1) Evidence-based activities for tobacco use prevention and control described in the plan of the State, submitted in accordance with section 1981D, including_

 ``(A) State and community initiatives;

 ``(B) community-based prevention programs, similar to programs currently funded by NIH;

 ``(C) programs focused on those populations within the community that are most at risk to use tobacco products or that have been targeted by tobacco advertising or marketing;

 ``(D) school programs to prevent and reduce tobacco use and addiction, including school programs focused in those regions of the State with high smoking rates and targeted at populations most at risk to start smoking;

 ``(E) culturally and linguistically appropriate initiatives targeted towards minority and low-income individuals, individuals residing in medically underserved areas, and women of child-bearing age; 

 ``(F) the development and implementation of tobacco-related public health and health promotion campaigns and public policy initiatives;

 ``(G) assistance to local governmental entities within the State to conduct appropriate anti-tobacco activities.

 ``(H) strategies to ensure that the State's smoking prevention activities include minority, low-income, and other undeserved populations; and

 ``(I) programs that target populations whose smoking rate is disproportionately high in comparison to the smoking rate population-wide in the State.

 ``(2) Planning, administration, and educational activities related to the activities described in paragraph (1).

 ``(3) The monitoring and evaluation of activities carried out under paragraphs (1) and (2), and reporting and disseminating resulting information to health professionals and the public.

 ``(4) Targeted pilot programs with evaluation components to encourage innovation and experimentation with new methodologies.

 ``(c)  Coordination ._Tobacco use cessation and community-based prevention activities permitted under subsections (b) and (c) may be conducted in conjunction with recipients of other Federally_funded programs within the State, including_

 ``(1) the special supplemental food program under section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786);

 ``(2) the Maternal and Child Health Services Block Grant program under title V of the Social Security Act (42 U.S.C. 701 et seq.);

 ``(3) the State Children's Health Insurance Program of the State under title XXI of the Social Security Act (42 U.S.C. 13397aa et seq.);

 ``(4) the school lunch program under the National School Lunch Act (42 U.S.C. 1751 et seq.);

 ``(5) an Indian Health Service Program;

 ``(6) the community, migrant, and homeless health centers program under section 330 of the Public Health Service Act (42 U.S.C. 254b);

 ``(7) state-initiated smoking cessation programs that include provisions for reimbursing individuals for medications or therapeutic techniques;

 ``(8) the substance abuse and mental health services block grant program, and the preventive health services block grant program, under title XIX of the Public Health Service Act (42 U.S.C. 300w et seq.);

 ``(9) the Medicaid program under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.); and

 ``(10) programs administered by the Department of Defense and the Department of Veterans Affairs.

 ``(d)  Limitation ._A State may not use amounts paid to the State under section 1981A(c) to_

 ``(1) make cash payments except with appropriate documentation to intended recipients of tobacco use cessation services;

 ``(2) fund educational, recreational, or health activities not based on scientific evidence that the activity will prevent smoking or lead to success of cessation efforts

 ``(3) purchase or improve land, purchase, construct, or permanently improve (other than minor remodeling) any building or other facility, or purchase major medical equipment;

 ``(4) satisfy any requirement for the expenditure of non-Federal funds as a condition of the receipt of Federal funds; or

 ``(5) provide financial assistance to any entity other than a public or nonprofit private entity or a private entity consistent with subsection (b)(1)(C).

This subsection shall not apply to the support of targeted pilot programs that use innovative and experimental new methodologies and include an evaluation component.

 ``(e)  Administration ._Not more than 5 percent of the allotment of a State for a fiscal year under this subpart may be used by the State to administer the funds paid to the State under section 1981A(c). The State shall pay from non-Federal sources the remaining costs of administering such funds.

``SEC. 1981D. ADMINISTRATIVE PROVISIONS.

 ``(a)  Application ._The Secretary may make payments under section 1981A(c) to a State for a fiscal year only if_ 

 ``(1) the State submits to the Secretary an application, in such form and by such date as the Secretary may require, for such payments;

 ``(2) the application contains a State plan prepared in a manner consistent with section 1905(b) and in accordance with tobacco-related guidelines promulgated by the Secretary; 

 ``(3) the application contains a certification that is consistent with the certification required under section 1905(c); and

 ``(4) the application contains such assurances as the Secretary may require regarding the compliance of the State with the requirements of this subpart (including assurances regarding compliance with the agreements described in subsection (c)).

 ``(b)  State Plan ._A State plan under subsection (a)(2) shall be developed in a manner consistent with the plan developed under section 1905(b) except that such plan_

 ``(1) with respect to activities described in section 1981C(b)_

 ``(A) shall provide for tobacco use cessation intervention and treatment consistent with the tobacco use cessation guidelines issued by the Agency for Health Care Policy and Research, or another evidence-based guideline approved by the Secretary, or treatments using 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 for use as tobacco use cessation therapies or aids;

 ``(B) may, to encourage innovation and experimentation with new methodologies, provide for or may include a targeted pilot program with an evaluation component;

 ``(C) shall provide for training in tobacco use cessation intervention methods for health plans and health professionals, including physicians, nurses, dentists, health educators, public health professionals, and other health care providers;

 ``(D) shall ensure access to tobacco use cessation programs for rural and underserved populations; 

 ``(E) shall recognize that some individuals may require more than one attempt for successful cessation; and

 ``(F) shall be tailored to the needs of specific populations, including minority populations; and

 ``(2) with respect to State and community-based prevention activities described in section 1981C(c), shall specify the activities authorized under such section that the State intends to carry out.

 ``(c)  Certification ._The certification referred to in subsection (a)(3) shall be consistent with the certification required under section 1905(c), except that

 ``(1) the State shall agree to expend payments under section 1981A(c) only for the activities authorized in section 1981C; 

 ``(2) paragraphs (9) and (10) of such section shall not apply; and

 ``(3) the State is encouraged to establish an advisory committee in accordance with section 1981E.

 ``(d)  Reports, Data, and Audits ._The provisions of section 1906 shall apply with respect to a State that receives payments under section 1981A(c) and be applied in a manner consistent with the manner in which such provisions are applied to a State under part, except that the data sets referred to in section 1905(a)(2) shall be developed for uniformly defining levels of youth and adult use of tobacco products, including uniform data for racial and ethnic groups, for use in the reports required under this subpart.

 ``(e)  Withholding ._The provisions of 1907 shall apply with respect to a State that receives payments under section 1981A(c) and be applied in a manner consistent with the manner in which such provisions are applied to a State under part A.

 ``(f)  Nondiscrimination ._The provisions of 1908 shall apply with respect to a State that receives payments under section 1981A(c) and be applied in a manner consistent with the manner in which such provisions are applied to a State under part A.

 ``(g)  Criminal Penalties ._The provisions of 1909 shall apply with respect to a State that receives payments under section 1981A(c) and be applied in a manner consistent with the manner in which such provisions are applied to a State under part A.

``SEC. 1981E. STATE ADVISORY COMMITTEE.

 ``(a)  In General ._For purposes of sections 1981D(c)(3), an advisory committee is in accordance with this section if such committee meets the conditions described in this subsection.

 ``(b)  Duties ._The recommended duties of the committee are_ 

 ``(1) to hold public hearings on the State plans required under sections 1981D; and

 ``(2) to make recommendations under this subpart regarding the development and implementation of such plans, including recommendations on_ 

 ``(A) the conduct of assessments under the plans; 

 ``(B) which of the activities authorized in section 1981C should be carried out in the State;

 ``(C) the allocation of payments made to the State under section 1981A(c); 

 ``(D) the coordination of activities carried out under such plans with relevant programs of other entities; and

 ``(E) the collection and reporting of data in accordance with section 1981D.

 ``(c)  Composition ._

 ``(1)  In general ._The recommended composition of the advisory committee is members of the general public, such officials of the health departments of political subdivisions of the State, public health professionals, teenagers, minorities, and such experts in tobacco product research as may be necessary to provide adequate representation of the general public and of such health departments, and that members of the committee shall be subject to the provisions of sections 201, 202, and 203 of title 18, United States Code.

 ``(2)  Representatives ._With respect to compliance with paragraph (1), the membership of the advisory committee may include representatives of community-based organizations (including minority community-based organizations), schools of public health, and entities to which the State involved awards grants or contracts to carry out activities authorized under section 1981C.

``Subpart II_Tobacco-Free Counter-Advertising Programs

``SEC. 1982. FEDERAL-STATE COUNTER-ADVERTISING PROGRAMS.
 ``(a)  National Campaign ._

 ``(1)  In general ._The Secretary shall conduct a national campaign 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, to encourage those who use such products to quit, and to educate the public about the hazards of exposure to environmental tobacco smoke. 

 ``(2)  Requirements ._The national campaign under paragraph (1) shall_

 ``(A) target those populations that have been targeted by tobacco industry advertising using culturally and linguistically appropriate means;

 ``(B) include a research and evaluation component; and

 ``(C) be designed in a manner that permits the campaign to be modified for use at the State or local level.

 ``(b)  Establishment of an Advisory Board ._

 ``(1)  In general ._The Secretary shall establish a board to be known as the `National Tobacco Free Education Advisory Board' (referred to in this section as the `Board') to evaluate and provide long range planning for the development and effective dissemination of public informational and educational campaigns and other activities that are part of the campaign under subsection (a).

 ``(2)  Composition ._The Board shall be composed of_

 ``(A) 9 non-Federal members to be appointed by the President, after consultation and agreement with the Majority and Minority Leaders of the Senate and the Speaker and Minority Leader of the Health or Representatives, of which_

 ``(i) at least 3 such members shall be individuals who are widely recognized by the general public for cultural, educational, behavioral science or medical achievement; 

 ``(ii) at least 3 of whom shall be individuals who hold positions of leadership in major public health organizations, including minority public health organizations; and

 ``(iii) at least 3 of whom shall be individuals recognized as experts in the field of advertising and marketing, of which_

 ``(I) 1 member shall have specific expertise in advertising and marketing to children and teens; and

 ``(II) 1 member shall have expertise in marketing research and evaluation; and

 ``(B) the Surgeon General, the Director of the Centers for Disease Control and Prevention, or their designees, shall serve as an ex officio members of the Board.

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

 ``(4)  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.

 ``(5)  Awards._ In carrying out subsection (a), the Secretary may_

 ``(A) enter into contracts with or award grants to eligible entities to develop messages and campaigns designed to prevent and reduce the use of tobacco products that are based on effective strategies to affect behavioral changes in children and other targeted populations, including minority populations;

 ``(B) enter into contracts with or award grants to eligible entities to carry out public informational and educational activities designed to reduce the use of tobacco products; 

 ``(6)  Powers and duties._ The Board may_

 ``(A) 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; and

 ``(B) secure directly from any Federal department or agency such information as the Board considers necessary to carry out the provisions of this section.

 ``(c)  Eligibility ._To be eligible to receive funding under this section an entity shall_

 ``(1) be a_

 ``(A) public entity or a State health department; or

 ``(B) private or nonprofit private entity that_

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

 ``(II) has a demonstrated record of working effectively to reduce tobacco product use; or

 ``(III) has expertise in conducting a multi-media communications campaign; and

 ``(ii) has expertise in developing strategies that affect behavioral changes in children and other targeted populations, including 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 this section will be used in accordance with subsection (c); and

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

 ``(d)  Use of Funds ._An entity that receives funds under this section shall use amounts provided under the grant or contract to conduct multi-media and non-media public educational, informational, marketing and promotional campaigns that are designed to discourage and de-glamorize the use of tobacco products, encourage those using such products to quit, and educate the public about the hazards of exposure to environmental tobacco smoke. Such amounts may be used to design and implement such activities and shall be used to conduct research concerning the effectiveness of such programs.

 ``(e)  Needs of Certain Populations ._In awarding grants and contracts under this section, the Secretary shall take into consideration the needs of particular populations, including minority populations, and use methods that are culturally and linguistically appropriate. 

 ``(f)  Coordination ._The Secretary shall ensure that programs and activities under this section are coordinated with programs and activities carried out under this title.

 ``(g)  Allocation of Funds ._Not to exceed_

 ``(1) 25 percent of the amount made available under subsection (h) for each fiscal year shall be provided to States for State and local media-based and nonmedia-based education, prevention and cessation campaigns; 

 ``(2) no more than 20 percent of the amount made available under subsection (h) for each fiscal year shall be used specifically for the development of new messages and campaigns; 

 ``(3) the remainder shall be used specifically to place media messages and carry out other dissemination activities described in subsection (d); and 

 ``(4) half of 1 percent for administrative costs and expenses.

 ``(h)  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.''.

``Part E_Reducing Youth Smoking and Tobacco-Related Diseases Through Research

``SEC. 1991. FUNDING FROM TOBACCO SETTLEMENT TRUST FUND.
 No expenditures shall be made under sections 451(b) or (c)_

 ``(1) for the National Institutes of Health during any fiscal year in which the annual amount appropriated for such Institutes is less than the amount so appropriated for the prior fiscal year;

 ``(2) for the Centers for Disease Control and Prevention during any fiscal year in which the annual amount appropriated for such Centers is less than the amount so appropriated for the prior fiscal year; or

 ``(3) for the Agency for Health Care Policy and Research during any fiscal year in which the annual amount appropriated for such Agency is less than the amount so appropriated for the prior fiscal year.

``SEC. 1991A. STUDY BY THE INSTITUTE OF MEDICINE. 

 ``(a)  Contract ._Not later than 60 days after the date of enactment of this title, 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 under this part. 

 ``(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 include research on_

 ``(A) public health and community research relating to tobacco use prevention methods, including public education, media, community strategies; 

 ``(B) behavioral research relating to addiction, tobacco use, and patterns of smoking, including risk factors for tobacco use by children, women, and racial and ethnic minorities; 

 ``(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, including a focus on minorities, including racial and ethnic minorities;

 ``(F) the effects of tobacco products, ingredients of tobacco products, and tobacco smoke on the human body and methods of reducing any negative effects, including the development of non-addictive, reduced risk tobacco products;

 ``(G) differentials between brands of tobacco products with respect to health effects or addiction; 

 ``(H) risks associated with environmental exposure to tobacco smoke, including a focus on children and infants;

 ``(I) effects of tobacco use by pregnant women; and

 ``(J) other matters determined appropriate by the Institute.

 ``(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 Committee on Labor and Human Resources, and the Committee on Appropriations 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). 

``SEC. 1991B. RESEARCH COORDINATION. 

 ``(a)  In General ._The Secretary shall foster coordination among Federal research agencies, 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)  Report ._The Secretary shall prepare and submit a report on a biennial basis to the Committee on Labor and Human Resources, and the Committee on Appropriations of the Senate, and the Committee on Commerce of the House of Representatives on the current and planned tobacco-related research activities of participating Federal agencies. 

``SEC. 1991C. RESEARCH ACTIVITIES OF THE CENTERS FOR DISEASE CONTROL AND PREVENTION. 

 ``(a)  Duties ._The Director of the Centers for Disease Control and Prevention shall, from amounts provided under section 451(c), and after review of the study of the Institute of Medicine, carry out tobacco-related surveillance and epidemiologic studies and develop tobacco control and prevention strategies; and 

 ``(b)  Youth Surveillance Systems._ From amounts provided under section 451(b), the Director of the Centers for Disease Control and Prevention shall provide for the use of youth surveillance systems to monitor the use of all tobacco products by individuals under the age of 18, including brands-used to enable determinations to be made of company-specific youth market share.

``SEC. 1991D. 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.  

 ``(b)  Expenditure of Funds ._The Director of the National Institutes of Health shall provide funds to conduct or support epidemiological, behavioral, biomedical, and social science research, including research related to the prevention and treatment of tobacco addiction, and the prevention and treatment of diseases associated with tobacco use. 

 ``(c)  Guaranteed Minimum._ Of the funds made available to the National Institutes of Health under this section, such sums as may be necessary, may be used to support epidemiological, behavioral, and social science research related to the prevention and treatment of tobacco addiction.

 ``(d)  Nature of Research ._Funds made available under subsection (d) may 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; 

 ``(11) the redesign of tobacco products to reduce risks to public health and safety; and

 ``(12) other appropriate epidemiological, behavioral, and social science research.

 ``(e)  Coordination ._In carrying out tobacco-related research under this section, the Director of the National Institutes of Health shall ensure appropriate coordination with the research of other agencies, and shall avoid duplicative efforts through all appropriate means.

 ``(h)  Administration._ The director of the NIH Office of Behavioral and Social Sciences Research may_

 ``(1) identify tobacco-related research initiatives that should be conducted or supported by the research institutes, and develop such projects in cooperation with such institutes;

 ``(2) coordinate tobacco-related research that is conducted or supported by the National Institutes of Health;

 ``(3) annually recommend to Congress the allocation of anti-tobacco research funds among the national research institutes; and

 ``(4) establish a clearinghouse for information about tobacco-related research conducted by governmental and non-governmental bodies.

 ``(f)  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.

 ``(g)  Report._ The Director of the NIH shall every 2 years prepare and submit to the Congress a report ____ research activities, including funding levels, for research made available under subsection (c).  

 (b)  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. 1991E. RESEARCH ACTIVITIES OF THE AGENCY FOR HEALTH CARE POLICY AND RESEARCH.

 ``(a)  In General ._The Administrator of the Agency for Health Care Policy and Research shall carry out outcomes, effectiveness, cost-effectiveness, and other health services research related to effective interventions for the prevention and cessation of tobacco use and appropriate strategies for implementing those services, the outcomes and delivery of care for diseases related to tobacco use, and the development of quality measures for evaluating the provision of those services.

 ``(b)  Analyses and Special Programs ._The Secretary, acting through the Administrator of the Agency for Health Care Policy and Research, shall support_

 ``(1) and conduct periodic analyses and evaluations of the best scientific information in the area of smoking and other tobacco product use cessation; and

 ``(2) the development and dissemination of special programs in cessation intervention for health plans and national health professional societies.''.

 

TITLE III_TOBACCO PRODUCT WARNINGS AND SMOKE CONSTITUENT DISCLOSURE

Subtitle A_Product Warnings, Labeling and Packaging

SEC. 301. CIGARETTE LABEL AND ADVERTISING WARNINGS. 
 (a)  In General._ 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 at least 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.''.

 (b)  Repeal of Prohibition on State Restriction._ Section 5 of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1334) is amended_

 (1) by striking ``(a)  Additional statements._'' in subsection (a); and

 (2) by striking subsection (b).

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, 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. 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.

 ``(c)  Television and radio advertising._ It is unlawful to advertise smokeless tobacco on any medium of electronic communications subject to the jurisdiction of the Federal Communications Commission.''.

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:

 ``(d)  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 TRUST FUND

SEC. 401. ESTABLISHMENT OF TRUST FUND. 
 (a)  Creation ._There is established in the Treasury of the United States a trust fund to be known as the ``National Tobacco Trust Fund'', consisting of such amounts as may be appropriated or credited to the trust fund. 

 (b)  Transfers to National Tobacco Trust Fund._ There shall be credited to the trust fund the net revenues resulting from the following amounts:

 (1) Amounts paid under section 402.
 (2) Amounts equal to the fines or penalties paid under section 402, 403, or 405, including interest thereon.

 (3) Amounts equal to penalties paid under section 202, including interest thereon.

 (c)  Net Revenues._ For purposes of subsection (b), the term ``net revenues'' means the amount estimated by the Secretary of the Treasury based on the excess of_

 (1) the amounts received in the Treasury under subsection (b), over 

 (2) the decrease in the taxes imposed by chapter 1 and chapter 52 of the Internal Revenue Code of 1986, and other offsets, resulting from the amounts received under subsection (b).

 (d)  Expenditures from the Trust Fund._ Amounts in the Trust Fund shall be available in each fiscal year, as provided in appropriation Acts.  The authority to allocate net revenues as provided in this title and to obligate any amounts so allocated is contingent upon actual receipt of net revenues. 

 (e)  Budgetary Treatment._ The amount of net receipts in excess of that amount which is required to offset the direct spending in this Act under section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 902) shall be available exclusively to offset the appropriations required to fund the authorizations of appropriations in this Act (including the amendments made by this Act), and the amount of such appropriations shall not be included in the estimates required under section 251 of that Act (2 U.S.C. 901).

 (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 98 of such Code, except that, for purposes of section 9602(b)(3), any interest or proceeds shall be covered into the Treasury as miscellaneous receipts.

SEC. 402. PAYMENTS BY INDUSTRY.
 (a)  Initial Payment._ 

 (1)  Certain tobacco product manufacturers._ The following participating tobacco product manufacturers, subject to the provisions of title XIV, shall deposit into the National Tobacco 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. 

 (E) United States Tobacco Company_3.2 percent.

 (2)  No contribution from other tobacco product manufacturers._ No other tobacco product manufacturer shall be required to contribute to the payment required by this subsection. 

 (3)  Payment date; interest._ Each 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 compliance with this Act and shall owe interest on such payment at the prime rate plus 10 percent per annum, 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 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 403:

 (1) year 1_$14,400,000,000.
 (2) year 2_$15,400,000,000.
 (3) year 3_$17,700,000,000.
 (4) year 4_$21,400,000,000. 
 (5) year 5_$23,600,000,000.
 (6) year 6 and thereafter_the adjusted applicable base amount under section 403.
 (c)  Payment Schedule; Reconciliation._

 (1)  Estimated payments._ Deposits toward the annual payment liability for each calendar year under subsection (d)(2) shall be made in 3 equal installments due on March 1st, on June 1st, and on August 1st of each year.  Each installment shall be equal to one-third of the estimated annual payment liability for that calendar year. Deposits of installments paid after the due date shall accrue interest at the prime rate plus 10 percent per annum, as published in the Wall Street Journal on the latest publication date on or before the payment date.

 (2)  Reconciliation._ If the liability for a calendar year under subsection (d)(2) exceeds the deposits made during that calendar year, the manufacturer shall pay the unpaid liability on March 1st of the succeeding calendar year, along with the first deposit for that succeeding year.  If the deposits during a calendar year exceed the liability for the calendar year under subsection (d)(2), the manufacturer shall subtract the amount of the excess deposits from its deposit on March 1st of the succeeding calendar year.

 (d)  Apportionment of Annual Payment._

 (1)  In general._ Each tobacco product manufacturer is liable for its share of the applicable base amount payment due each year under subsection (b). The annual payment is the obligation and responsibility of only those 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 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 calendar year. One month after the end of the calendar year, the Secretary shall make a final determination of each tobacco product manufacturer's applicable base amount payment obligation. 

 (3)  Calculation of tobacco product manufacturer's share of annual payment._ The share of the annual payment apportioned to a tobacco product manufacturer shall be equal to that manufacturer's share of adjusted units, taking into account the manufacturer's total production of such units sold in the domestic market. A tobacco product manufacturer's share of adjusted units shall be determined as follows:

 (A)  Units._ A 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 0.75 adjusted unit; and

 (iii) 3 ounces of other smokeless tobacco product as 0.35 adjusted units.

 (B)  Determination of adjusted units._ Except as provided in subparagraph (C), a smokeless 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 70% of a unit

Exceeding 150 million 100% of a unit

 (C)  Adjusted units determined on total domestic production._ For purposes of determining a manufacturer's number of adjusted units under subparagraph (B), a manufacturer's total production of units, whether intended for domestic consumption or export, shall be taken into account.

 (D)  Special rule for large manufacturers._ If a tobacco product manufacturer has more than 200 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)  Smokeless equivalency study._ Not later than January 1, 2003, the Secretary shall submit to the Congress a report detailing the extent to which youths are substituting smokeless tobacco products for cigarettes.  If the Secretary determines that significant substitution is occurring, the Secretary shall include in the report recommendations to address substitution, including consideration of modification of the provisions of subparagraph (A).

 (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 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)  Tobacco product manufacturers to which subsection applies._ A 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. 403. ADJUSTMENTS.
 The applicable base amount under section 402(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 sixth calendar year after the date of enactment of this Act, the adjusted applicable base amount under section 402(b)(6) is the amount of the annual payment made for the preceding year increased by the greater of 3 percent or the annual increase in the CPI,   adjusted (for calendar year 2002 and later years) by the volume adjustment under paragraph (2).

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

 (C)  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 2002, 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 calendar year to the base volume. For purposes of this paragraph, the term ``base volume'' means 80 percent of the number of units of taxable domestic removals and taxed imports of cigarettes in calendar year 1997, as reported to the Secretary of the Treasury. For purposes of this subsection, the term ``actual volume'' means the number of adjusted unites as defined in section 402(d)(3)(A).

SEC. 404. PAYMENTS TO BE PASSED THROUGH TO CONSUMERS.
 Each 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 tobacco product manufacturer under this Act for the year in which the sale occurs. 

SEC. 405. TAX TREATMENT OF PAYMENTS.
 All payments made under section 402 are ordinary and necessary business expenses for purposes of chapter 1 of the Internal Revenue Code of 1986 for the year in which such payments are made, 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. 406. ENFORCEMENT FOR NONPAYMENT.
 (a)  Penalty ._Any tobacco product manufacturer that fails to make any payment required under section 402 or 404 within 60 days after the date on which such fee is due is liable for a civil penalty computed on the unpaid balance at a rate of prime plus 10 percent per annum, as published in the Wall Street Journal on the latest publication date on or before the payment date, during the period the payment remains unmade.

 (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 402 or 404, 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 402 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 402 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 402 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.

Subtitle B_General Spending Provisions

SEC. 451. ALLOCATION ACCOUNTS.
 (a)  State Litigation Settlement Account._

 (1)  In general._ There is established within the Trust Fund a separate account, to be known as the State Litigation Settlement Account. Of the net revenues credited to the Trust Fund under section 401(b)(1) for each fiscal year, 40 percent of the amounts designated for allocation under the settlement payments shall be allocated to this account. Such amounts shall be reduced by the additional estimated Federal expenditures that will be incurred as a result of State expenditures under section 452, which amounts shall be transferred to the miscellaneous receipts of the Treasury.  If, after 10 years, the estimated 25-year total amount projected to received in this account will be different than amount than $196,500,000,000, then beginning with the eleventh year the 40 percent share will be adjusted as necessary, to a percentage not in excees of 50 percent and not less than 30 percent, to achieve that 25-year total amount.

 (2)  Appropriation._ Amounts so calculated are hereby appropriated and available until expended and shall be available to States for grants authorized under this Act.

 (3)  Distribution formula._ The Secretary of the Treasury shall consult with the National Governors Association, the National Association of Attorneys General, and the National Conference of State Legislators on a formula for the distribution of amounts in the State Litigation Settlement Account and report to the Congress within 90 days after the date of enactment of this Act with recommendations for implementing a distribution formula.

 (4)  Use of funds ._A State may use amounts received under this subsection as the State determines appropriate, consistent with the other provisions of this Act.

 (5)  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.

 (b)  Public Health Allocation Account._

 (1)  In general._  There is established within the trust fund a separate account, to be known as the Public Health Account. Twenty-two percent of the net revenues credited to the trust fund under section 401(b)(1) and all the net revenues credited to the trust fund under section 401(b)(3) shall be allocated to this account.

 (2)  Authorization of appropriations._ Amounts in the Public Health Account shall be available to the extent and only in the amounts provided in advance in appropriations Acts, to remain available until expended, only for the purposes of: 

 (A)  Cessation and other treatments._ Of the total amounts allocated to this account, not less than 25 percent, but not more than 35 percent are to be used to carry out smoking cessation activities under part D of title XIX of the Public Health Service Act, as added by title II of this Act.

 (B)  Indian health service._ Of the total amounts allocated to this account, not less than 3 percent, but not more than 7 percent are to be used to carry out activities under section 453.
 (C)  Education and prevention._ Of the total amounts allocated to this account, not less than 50 percent, but not more than 65 percent are to be used to carry out_

 (i) counter-advertising activities under section 1982 of the Public Health Service Act as amended by this Act;

 (ii) smoking prevention activities under section 223; 

 (iii) surveys under section 1991C of the Public Health Service Act, as added by this Act (but, in no fiscal year may the amounts used to carry out such surveys be less than 10 percent of the amounts available under this subsection); and

 (iv) international activities under section 1132.
 (D)  Enforcement._ Of the total amounts allocated to this account, not less than 17.5 percent nor more than 22.5 percent are to be used to carry out thefollowing:

 (i) Food and Drug Administration activities.

 (I) The Food and Drug Administration shall receive not less than 15 percent of the funds provided in subparagraph (D) in the first fiscal year beginning after the date of enactment of this Act, 35 percent of such funds in the second year beginning after the date of enactment, and 50 percent of such funds for each fiscal year beginning after the date of enactment, as reimbursements for the costs incurred by the Food and Drug Administration in implementing and enforcing requirements relating to tobacco products. 

 (II) No expenditures shall be made under subparagraph (D) during any fiscal year in which the annual amount appropriated for the Food and Drug Administration is less than the amount so appropriated for the prior fiscal year. 

 (ii) State retail licensing activities under section 251.
 (iii) Anti-Smuggling activities under section 1141.
 (c)  Health and Health-related Research Allocation Account._

 (1)  In general._  There is established within the trust fund a separate account, to be known as the Health and Health-Related Research Account. Of the net revenues credited to the trust fund under section 401(b)(1), 22 percent shall be allocated to this account. 

 (2)  Authorization of appropriations._ Amounts in the Health and Health-Related Research Account shall be available to the extent and in the amounts provided in advance in appropriations acts, to remain available until expended, only for the following purposes:

 (A) $750,000 shall be made vailable in fiscal year 1999 for the study to be conducted under section 1991 of the Public Health Service Act.

 (B) National Institutes of Health Research under section 1991D of the Public Health Service Act, as added by this Act. Of the total amounts allocated to this account, not less than 75 percent, but not more than 87 percent shall be used for this purpose. 

 (C) Centers for Disease Control under section 1991C of the Public Health Service Act, as added by this Act,  and Agency for Health Care Policy and Research under section 1991E of the Public Health Service Act, as added by this Act. authorized under sections 2803 of that Act, as so added. Of the total amounts allocated to this account, not less than 12 percent, but not more than 18 percent shall be used for this purpose. 

 (D) National Science Foundation Research under section 454. Of the totalamounts allocated to this account, not less than 1 percent, but not more than 1 percent shall be used for this purpose.

 (E) Cancer Clinical Trials under section 455. Of the total amountsallocated to this account, $750,000,000 shall be used for the first 3 fiscal years for this purpose.

 (d)  Farmers Assistance Allocation Account._

 (1)  In general._  There is established within the trust fund a separate account, to be known as the Farmers Assistance Account. Of the net revenues credited to the trust fund under section 401(b)(1) in each fiscal year_

 (A) 16 percent shall be allocated to this account for the first 10 years after the date of enactment of this Act; and

 (B) 4 percent shall be allocated to this account for each subsequent year until the account has received a total of $28,500,000,000. 
 (2)  Appropriation._ Amounts allocated to this account are hereby appropriated and shall be available until expended for the purposes of section 1012.
 (e)  Medicare Preservation Account._ There is established within the trust fund a separate account, to be known as the Medicare Preservation Account.  If, in any year, the net amounts credited to the trust fund for payments under section 402(b) are greater than the net revenues originally estimated under section 401(b), the amount of any such excess shall be credited to the Medicare Preservation Account.  Beginning in the eleventh year beginning after the date of enactment of this Act, 12 percent of the net revenues credited to the trust fund under seciton 401(b)(1) shall be allocated to this account.  Funds credited to this account shall be transferred to the Medicare Hospital Insurance Trust Fund.

SEC. 452. GRANTS TO STATES. 
 (a)  Amounts._ From the amount made available under section 402(a) for each fiscal year, each State shall receive a grant on a quarterly basis according to a formula. 

 (b)  Use of Funds._

 (1)  Unrestricted funds._ A State may use funds, not to exceed 50 percent of the amount received under this section in a fiscal year, for any activities determined appropriate by the State.

 (2)  Restricted funds._ A State shall use not less than 50 percent of the amount received under this section in a fiscal year to carry out additional activities or provide additional services under_

 (A) the State program under the maternal and child health services block grant under title V of the Social Security Act (42 U.S.C. 701 et seq.);

 (B) funding for child care under section 418 of the Social Security Act, notwithstanding subsection (b)(2) of that section;

 (C) federally funded child welfare and abuse programs under title IV-B of the Social Security Act;

 (D) programs administered within the State under the authority of the Substance Abuse and Mental Health Services Administration under title XIX, part B of the Public Health Service Act;

 (E) Safe and Drug-Free Schools Program under title IV, part A, of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7111 et seq.);

 (F) the Department of Education's Dwight D. Eisenhower Professional Development program under title II of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6601 et seq.); and

 (G) The State Children's Health Insurance Program authorized under title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.), provided that the amount expended on this program does not exceed 6 percent of the total amount of restricted funds available to the State each fiscal year.

 (c)  No Substitution of Spending._ Amounts referred to in subsection (b)(2) shall be used to supplement and not supplant other Federal, State, or local funds provided for any of the programs described in subparagraphs (A) through (G) of subsection (b)(2). Restricted funds, except as provided for in subsection (b)(2)(G), shall not be used as State matching funds. Amounts provided to the State under any of the provisions of law referred to in such subparagraph shall not be reduced solely as a result of the availability of funds under this section.

 (d)  Federal-State Match Rates._ Current (1998) matching requirements apply to each program listed under subsection (b)(2), except for the program described under subsection (b)(2)(B). For the program described under subsection (b)(2)(B), after an individual State has expended resources sufficient to receive its full Federal amount under section 418(a)(2)(B) of the Social Security Act (subject to the matching requirements in section 418(a)(2)(C) of such Act), the Federal share of expenditures shall be 80 percent.

 (e)  Maintenance of Effort._ To receive funds under this subsection, States must demonstrate a maintenance of effort. This maintenance of effort is defined as the sum of_

 (1) an amount equal to 95 percent of Federal fiscal year 1997 State spending on the programs under subsections (b)(2)(B), (c), and (d); and

 (2) an amount equal to the product of the amount described in paragraph (1) and_

 (A) for fiscal year 1999, the lower of_ 

 (i) general inflation as measured by the consumer price index for the previous year; or

 (ii) the annual growth in the Federal appropriation for the program in the previous fiscal year; and

 (B) for subsequent fiscal years, the lower of_

 (i) the cumulative general inflation as measured by the consumer price index for the period between 1997 and the previous year; or

 (ii) the cumulative growth in the Federal appropriation for the program for the period between fiscal year 1997 and the previous fiscal year.

The 95-percent maintenance-of-effort requirement in paragraph (1), and the adjustments in paragraph (2), apply to each program identified in paragraph (1) on an individual basis.

 (f)  Options for Children's Health Outreach._ In addition to the options for the use of grants described in this section, the following are new options to be added to States' choices for conducting children's health outreach: 

 (1)  Expansion of presumptive eligibility option for children._

 (A)  In general._ Section 1920A(b)(3)(A)(I) of the Social Security Act (42 U.S.C. 1396r-1a(b)(3)(A)(I)) is amended_

 (i) by striking ``described in subsection (a) or (II) is authorized'' and inserting ``described in subsection (a), (II) is authorized''; and

 (ii) by inserting before the semicolon ``, eligibility for benefits under part A of title IV, eligibility of a child to receive benefits under the State plan under this title or title XXI, (III) is a staff member of a public school, child care resource and referral center, or agency administering a plan under part D of title IV, or (IV) is so designated by the State''.

 (B)  Technical amendments._ Section 1920A of that Act (42 U.S.C. 1396r-1a) is amended_

 (i) in subsection (b)(3)(A)(ii), by striking ``paragraph (1)(A)'' and inserting ``paragraph (2)(A)''; and

 (ii) in subsection (c)(2), in the matter preceding subparagraph (A), by striking ``subsection (b)(1)(A)'' and inserting ``subsection (b)(2)(A)''.

 (2)  Removal of requirement that children's health insurance program allotments be reduced by costs related to presumptive eligibility determinations._

 (A)  In general._ Section 2104(d) of the Social Security Act (42 U.S.C. 1397dd(d)) is amended by striking ``the sum of_'' and all that follows through the paragraph designation ``(2)'' and merging all that remains of subsection (d) into a single sentence.

 (B)  Effective date._ The amendment made by subsection (a) shall be deemed to have taken effect on August 5, 1997.
 (3)  Increased funding for administrative costs related to outreach and eligibility determinations for children._ Section 1931(h) of the Social Security Act (42 U.S.C. 1396u-1(h)) is amended_

 (A) by striking the subsection caption and inserting ``(h)  Increased federal matching rate for administrative costs related to outreach and eligibility determinations for children._'';

 (B) in paragraph (2), by striking ``eligibility determinations'' and all that follows and inserting ``determinations of the eligibility of children for benefits under the State plan under this title or title XXI, outreach to children likely to be eligible for such benefits, and such other outreach- and eligibility-related activities as the Secretary may approve.''; 

 (C) in paragraph (3), by striking ``and ending with fiscal year 2000 shall not exceed $500,000,000'' and inserting ``shall not exceed $525,000,000''; and

 (D) by striking paragraph (4).

 (g)  Periodic reassessment of spending options._ Spending options under subsection (b)(2) will be reassessed jointly by the States and Federal government every 5 years and be reported to the Secretary.

SEC. 453. INDIAN HEALTH SERVICE. 
 Amounts available under section 451(b)(2)(B) shall be provided to the Indian Health Service to be used for anti-tobacco-related consumption and cessation activities including_

  (1) clinic and facility design, construction, repair, renovation, maintenance and improvement;

  (2) provider services and equipment;

  (3) domestic and community sanitation associated with clinic and facility construction and improvement; and

  (4) other programs and service provided through the Indian Health Service or through tribal contracts, compacts, grants, or cooperative agreements with the Indian Health Service and which are deemed appropriate to raising the health status of Indians.

SEC. 454. RESEARCH AT THE NATIONAL SCIENCE FOUNDATION. 
 Amounts available under section 451(c)(2)(C) shall be made available for necessary expenses in carry out the National Science Foundation Act of 1950 (U.S.C. 1861-1875), and the Act to establish a National Medal of Science (42 U.S.C. 1880-1881). 

SEC. 455. MEDICARE CANCER PATIENT DEMONSTRATION PROJECT; EVALUATION ANDREPORT TO CONGRESS.

 (a)  Establishment._ The Secretary shall establish a 3-year demonstration project which provides for payment under the Medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) of routine patient care costs_

 (1) which are provided to an individual diagnosed with cancer and enrolled in the Medicare program under such title as part of the individual's participation in an approved clinical trial program; and

 (2) which are not otherwise eligible for payment under such title for individuals who are entitled to benefits under such title.

 (b)  Application._ The beneficiary cost sharing provisions under the Medicare program, such as deductibles, coinsurance, and copayment amounts, shall apply to any individual in a demonstration project conducted under this section.

 (c)  Approved Clinical Trial Program._

 (1)  In general._ For purposes of this section, the term ``approved clinical trial program'' means a clinical trial program which is approved by_

 (A) the National Institutes of Health;

 (B) a National Institutes of Health cooperative group or a National Institutes of Health center; and

 (C) the National Cancer Institute, 

with respect to programs that oversee and coordinate extramural clinical cancer research, trials sponsored by such Institute and conducted at designated cancer centers, clinical trials, and Institute grants that support clinical investigators.

 (2)  Modifications in approved trials._ Beginning 1 year after the date of enactment of this Act, the Secretary, in consultation with the Cancer Policy Board of the Institute of Medicine, may modify or add to the requirements of paragraph (1) with respect to an approved clinical trial program.

 (d)  Routine Patient Care Costs._

 (1)  In general._ For purposes of this section, the term ``routine patient care costs'' include the costs associated with the provision of items and services that_

 (A) would otherwise be covered under the Medicare program if such items and services were not provided in connection with an approved clinical trial program; and

 (B) are furnished according to the design of an approved clinical trial program.

 (2)  Exclusion._ For purposes of this section, the term ``routine patient care costs'' does not include the costs associated with the provision of_

 (A) an investigational drug or device, unless the Secretary has authorized the manufacturer of such drug or device to charge for such drug or device; or

 (B) any item or service supplied without charge by the sponsor of the approved clinical trial program.

 (e)  Study._ The Secretary shall study the impact on the Medicare program under title XVIII of the Social Security Act of covering routine patient care costs for individuals with a diagnosis of cancer and other diagnoses, who are entitled to benefits under such title and who are enrolled in an approved clinical trial program.

 (f)  Report to congress._ Not later than 30 months after the date of enactment of this Act, the Secretary shall submit a report to Congress that contains a detailed description of the results of the study conducted under subsection (e) including recommendations regarding the extension and expansion of the demonstration project conducted under 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 the executive, legislative, or judicial 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 defined ._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 if the lessee is actively engaged in supervising day-to-day activity in the leased space.

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.

 (f)  Application with OSHA._ Nothing in this section affects enforcement of the Occupational Safety and Health Act of 1970.
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, after consulting with the Administrator of the Environmental Protection Agency, 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.
 Any State or local government may opt out of this title by promulgating a State or local law, subject to certification by the Assistant Secretary that the law is as or more protective of the public's health as this title, based on the best available science.  Any State or local government may opt to enforce this title itself, subject to certification by the Assistant Secretary that the enforcement mechanism will effectively protect the public health. 

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)  Purpose._ It is the purpose of this title to_

 (1) provide for the implementation of this 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 TITLE TO INDIAN LANDS AND TO NATIVE AMERICANS.
 (a)  In general._ The provisions of this Act shall apply to the manufacture, distribution, and sale of tobacco or tobacco products on Indian lands, including such activities of an Indian tribe or member of such 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 permit an infringement upon upon the right of such tribes or members of such tribes to acquire, possess, use, or transfer any tobacco or tobacco product for such purposes, or to infringe upon the ability of minors to participate and use tobacco products for such 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 manufacture, distribution, sale or use of tobacco or tobacco products in a manner that is not in compliance with this Act or the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.)

 (c)  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 2341 of title 18, United States Code, with respect to the transportation of contraband cigarettes. 

 (d)  Application on Indian Lands._ 

 (1)  In general._ The Secretary, in consultation with the Secretary of Interior, shall promulgate regulations to implement this section as necessary to apply this Act and the Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) with respect to tobacco products manufactured, distributed, or sold on Indian lands.

 (2)  Scope._ This Act and the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) shall apply to the manufacture, distribution and sale of tobacco products on Indian lands, including such activities by Indian tribes and members of such tribes.

 (3)  Tribal Tobacco Retailer Licensing Program._ 

 (A)  In general._ The requirements of this Act with respect to the licensing of tobacco retailers shall apply to all retailers that sell tobacco or tobacco products on Indian lands, including Indian tribes, and members thereof.

 (B)  Implementation._ 

 (i)  In general._ An Indian tribe may implement and enforce a tobacco retailer licensing and enforcement program on its Indian lands consistent with the provisions of section 231 if the tribe is eligible under subparagraph (D). For purposes of this clause, section 231 shall be applied to an Indian tribe by substituting ``Indian tribe'' for ``State'' each place it appears, and an Indian tribe shall not be ineligible for grants under that section if the Secretary applies that section to the tribe by modifying it to address tribal population, land base, and jurisdictional factors.  

 (ii)  Cooperation._ An Indian tribe and State with tobacco retailer licensing programs within adjacent jurisdictions should consult and confer to ensure effective implementation of their respective programs.

 (C)  Enforcement._ The Secretary may vest the responsibility for implementation and enforcement of a tobacco retailer licensing program in_

 (i) the Indian tribe involved; 

 (ii) the State within which the lands of the Indian tribe are located pursuant to a voluntary cooperative agreement entered into by the State and the Indian tribe; or

 (iii) the Secretary pursuant to subparagraph (F).

 (D)  Eligibility._ To be eligible to implement and enforce a tobacco retailer licensing program under section 231, the Secretary, in consultation with the Secretary of Interior, must find that_

 (i) the Indian tribe has a governing body that has powers and carries out duties that are similar to the powers and duties of State or local governments;

 (ii) the functions to be exercised relate to activities conducted on its Indian lands; and 

 (iii) the Indian tribe is reasonably expected to be capable of carrying out the functions required by the Secretary.

 (E)  Determinations._ Not later than 90 days after the date on which an Indian tribe submits an application for authority under subparagraph (D), the Secretary shall make a determination concerning the eligibility of such tribe for such authority. Each tribe found eligible under subparagraph (D) shall be eligible to enter into agreements for block grants under section 231, to conduct a licensing and enforcement program pursuant to section 231, and for bonuses under section 232.
 (F)  Implementation by the secretary._ If the Secretary determines that the Indian tribe is not willing or not qualified to administer a retail licensing and enforcement program, the Secretary, in consultation with the Secretary of Interior, shall promulgate regulations for a program for such tribes in the same manner as for States which have not established a tobacco retailer licensing program under section 231(f).

 (G)  Deficient applications; opportunity to cure._

 (i) If the Secretary determines under subparagraph (F) that a Indian tribe is not eligible to establish a tobacco retailer licensing program, the Secretary shall_

 (I) submit to such tribe, in writing, a statement of the reasons for such determination of ineligibility; and

 (II) shall assist such tribe in overcoming any deficiencies that resulted in the determination of ineligibility.

 (ii) After an opportunity to review and cure such deficiencies, the tribe may re-apply to the Secretary for assistance under this subsection.

 (H)  Secretarial review._ The Secretary may periodically review the tribal tobacco retailer licensing program of a tribe approved pursuant to subparagraph (E), including the effectiveness of the program, the tribe's enforcement thereof, and the compatibility of the tribe's program with the program of the State in which the tribe is located.  The program shall be subject to all applicable requirements of section 231.
 (e)  Eligibility for Public Heath Funds._ 

 (1)  Eligibility for grants._ 

 (A) For each fiscal year the Secretary may award grants to Indian tribes from the federal Account or other federal funds, except a tribe that is not a participating tobacco product manufacturer (as defined in section 1402(a), for the same purposes as States and local governments are eligible to receive grants from the Federal Account as provided for in this Act. Indian tribes shall have the flexibility to utilize such grants to meet the unique health care needs of their service populations consistent with the goals and purposes of Federal Indian health care law and policy.

 (B) In promulgating regulations for the approval and funding of smoking cessation programs under section 221 the Secretary shall ensure that adequate funding is available to address the high rate of smoking among Native Americans.

 (2)  Health care funding._ 

 (A)  Indian health service._ Each fiscal year the Secretary shall disburse to the Indian Health Service from the National Tobacco Settlement Trust Fund an amount determined by the Secretary in consultation with the Secretary of the Interior equal to the product of_

 (i) the ratio of the total Indian health care service population relative to the total population of the United States; and 

 (ii) the amount allocated to the States each year from the State Litigation Trust Account.

 (B)  Funding._ The trustees of the Trust Fund shall for each fiscal year transfer to the Secretary from the State Litigation Trust Account the amount determined pursuant to paragraph (A).

 (C)  Use of health care trust funds._ Amounts made available to the Indian Health Service under this paragraph shall be made available to Indian tribes pursuant to the provisions of the Indian Self Determination and Education Assistance Act (25 U.S.C. 450b et seq.), shall be used to reduce tobacco consumption, promote smoking cessation, and shall be used to fund health care activities including_

 (i) clinic and facility design, construction, repair, renovation, maintenance, and improvement;

 (ii) health care provider services and equipment;

 (iii) domestic and community sanitation associated with clinic and facility construction and improvement;

 (iv) inpatient and outpatient services; and

 (v) other programs and services which have as their goal raising the health status of Indians.

 (f)  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 Act that are in addition to the requirements, prohibitions, or penalties required by this Act.

 (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 hazard of environmental tobacco smoke.

 (g)  Disclaimer._ Nothing in this Act shall be construed to increase or diminish tribal or State jurisdiction on Indian lands with respect to tobacco-related activities.

TITLE VII_TOBACCO CLAIMS

SEC. 701. DEFINITIONS.
 In this title:

 (1)  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 ten percent or more, and person means an individual, partnership, committee, association, corporation, or any other organization or group of persons.

 (2)  Civil action._ The term ``civil action'' means any action, lawsuit, or proceeding that is not a criminal action.

 (3)  Court._ The term ``court'' means any judicial or agency court, forum, or tribunal within the United States, including without limitation any Federal, State, or tribal court.

 (4)  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.

 (5)  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.

 (6)  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.

 (7)  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.

 (8)  Tobacco product manufacturer._ The term ``tobacco product manufacturer'' means a person who_

 (A) 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;

 (B) 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; 

 (C) engaged in activities described in subparagraph (A) or (B) 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 tobacco product manufacturer in which the tobacco product manufacturer or its other affiliates owned a 50 percent or greater interest;

 (D) is a successor or assign of any of the foregoing; 

 (E) 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; or

 (F) is an affiliate of a tobacco product manufacturer.

 (9)  Castano civil actions._ The term ``Castano Civil Actions'' means the following civil actions: Gloria Wilkinson Lyons et al. v. American Tobacco Co., et al. (USDC Alabama 96-0881-BH; Agnes McGinty, et al. v. American Tobacco Co., et al. (USDC Arkansas LR-C-96-881); Willard R. Brown, et al. v. R.J. Reynolds Co., et al. (San Diego, California-00711400); Gray Davis & James Ellis, et al. R.J. Reynolds Tobacco Co., et al. (San Diego, California-00706458); Chester Lyons, et al. v. Brown & Williamson Tobacco Corp., et al. (Fulton County, Georgia-E-59346); Rosalyn Peterson, et al. v. American Tobacco Co., et al. (USDC Hawaii-97-00233-HG); Jean Clay , et al. v. American Tobacco Co., et al. (USDC Illinois Benton Division-97-4167-JPG); William J. Norton, et al. v. RJR Nabisco Holdings Corp., et al. (Madison County, Indiana 48D01-9605-CP-0271); Alga Emig, et al. v. American Tobacco Co., et al. (USDC Kansas-97-1121-MLB); Gloria Scott, et al. v. American Tobacco Co., et al. (Orleans Parish, Louisiana-97-1178); Vern Masepohl, et al. v. American Tobacco Co., et al. (USDC Minnesota-3-96-CV-888); Matthew Tepper, et al. v. Philip Morris Incorporated, et al (Bergen County, New Jersey-BER-L-4983-97-E); Carol A. Connor, et al. v. American Tobacco Co., et al. (Bernalillo County, New Mexico-CV96-8464); Edwin Paul Hoskins, et al. v. R.J. Reynolds Tobacco Co., et al.; Josephine Stewart-Lomantz v. Brown & Williamson Tobacco, et al.; Rose Frosina, et al. v. Philip Morris Incorporated, et al.; Catherine Zito, et al. v. American Tobacco Co., et al.; Kevin Mroczkowski, et al. v. Lorillard Tobacco Company, et al. (Supreme Court, New York County, New York-110949 thru 110953); Judith E. Chamberlain, et al. v. American Tobacco Co., et al. (USDC Ohio-1:96CV2005); Brian walls, et al. v. American Tobacco Co., et al. (USDC Oklahoma-97-CV-218-H); Steven R. Arch, et al. v. American Tobacco Co., et al. (USDC Pennsylvania-96-5903-CN); Barreras-Ruiz, et al. v. American Tobacco Co., et al. (USDC Puerto Rico-96-2300-JAF); Joanne Anderson, et al. v. American Tobacco Co., et al. (Know County, Tennessee); Carlis Cole, et al. v. The Tobacco institute, Inc., et al. (USDC Beaumont Texas Division-1:97CV0256); Carrol Jackson, et al. v. Philip Morris Incorporated, et al. (Salt Lake County, Utah-CV No. 98-0901634PI).

SEC. 702. APPLICATION; PREEMPTION.
 (a)  Application._ The provisions of this title govern any tobacco claim in any civil action brought in an State, Tribal, or Federal court, including any such claim that has not reached final judgment or final settlement as of the date of enactment of this Act. 

 (b)  Preemption._ This title supersedes State law only to the extent that State law applies to a matter covered by this title.  Any matter that is not governed by this title, including any standard of liability applicable to a manufacturer, shall be governed by any applicable State, Tribal, or Federal law.

 (c)  Criminal Liability Untouched._ 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. 703. RULES GOVERNING TOBACCO CLAIMS.
 (a)  General Causation Presumption._ In any civil action to which this title applies brought involving a tobacco claim, there shall be an evidentiary 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, (hereinafter referred to 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. This 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. 

 (b)  Actions Against Participating Tobacco Product Manufacturers._ In any civil action brought involving a tobacco claim against participating tobacco product manufacturers, as that term is defined in title XIV, the provisions of title XIV apply in conjunction with the provisions of this title. 

TITLE VIII_TOBACCO INDUSTRY ACCOUNTABILITY REQUIREMENTS AND EMPLOYEE PROTECTION FROM REPRISALS

SEC. 801. ACCOUNTABILITY REQUIREMENTS AND OVERSIGHT OF THE TOBACCO INDUSTRY.
 (a)  Accountability._ The Secretary, following regular consultation with the Commissioner of Food and Drugs, 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 shall annually issue a report as provided for in subsection (c).

 (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 Secretary 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 annual report of the Secretary 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 Secretary shall submit a report to the Congress by January 31 of each year, which shall be published in the Federal Register. The report 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.

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 applies to all tobacco product manufacturers. 

SEC. 903. DOCUMENT DISCLOSURE.
 (a)  Disclosure to the Food and Drug Administration._

 (1)  Within 60 days after the date of enactment of this Act, each tobacco product manufacturer shall submit to the Food and Drug Administration the documents identified in subsection (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 subsection (b). Each such manufacturer shall provide the Administration with the privilege and trade secret logs identified under subsection (b). 

 (2) 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 process established by section 905.
 (3) If a document depository is not established under title XIV, the Secretary shall establish by regulation a procedure for making public all documents submitted under paragraph (1) except documents for which trade secret protection has been claimed and for which there has not been a final judicial determination that the document does not contain a trade secret.

 (b)  Separate Submission of Documents._

 (1)  (1) Privileged Trade Secret Documents._ Any document required to be submitted under subsection (c) or (d) that is subject to a claim by a tobacco product manufacturer of attorney-client privilege, attorney work product, or trade secret protection shall be so marked and shall be submitted to the panel under section 904 within 30 days after its appointment. Compliance with this subsection shall not be deemed to be a waiver of any applicable claim of privilege or trade secret protection.

 (2)  Privilege and trade secret logs._

 (A)  In general._ Within 15 days after submitting documents  under paragraph (1), each tobacco product manufacturer shall submit  a comprehensive log which identifies on a document-by-document basis all documents produced  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.

 (B)  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_

 (i) 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; 

 (ii) an explanation why the document or a portion of the document is privileged or subject to trade secret protection; and 

 (iii) a statement whether any previous claim of privilege or trade secret was denied and, if so, in what proceeding. 

 (C)  Public inspection._ Within 5 days of receipt of such a log, the Depository shall make it available for public inspection and review.

 (3)  Declaration of compliance._ Each tobacco product manufacturer shall submit to the Depository 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 subsection pertaining to the review of documents and preparation of a privilege log.

 (c)  Document Categories._ Each tobacco product manufacturer shall submit_

 (1) every existing document (including any document subject to a claim of attorney-client privilege, attorney work product, or trade secret protection) in the manufacturer's possession, custody, or control relating, referring, or pertaining to_

 (A) any studies, research, or analysis of any possible health or pharmacological effects in humans or animals, including addiction, associated with the use of tobacco products or components of tobacco products;

 (B) the engineering, manipulation, or control of nicotine in tobacco products;

 (C) the sale or marketing of tobacco products;

 (D) any research involving safer or less hazardous tobacco products;

 (E) tobacco use by minors; or

 (F) the relationship between advertising or promotion and the use of tobacco products;

 (2) all documents produced by any 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 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 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 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 Depository by 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 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 tobacco product manufacturer, the Center for Tobacco Research, or the Tobacco Institute maintains, based upon a good faith  de novo  re-review conducted after the date of enactment of this Act is exempt from public disclosure under this title; and

 (10) a trade secrecy log describing each document or portion of a document that any tobacco product manufacturer, the Center for Tobacco Research, or the Tobacco Institute maintains is exempt from public disclosure under this title.

 (d)  Future Documents ._With respect to documents created after the date of enactment of this Act, the tobacco product manufacturers and their trade associations shall_

 (1) place the documents in the depository; and

 (2) provide a copy of the documents to the Food and Drug Administration (with the exception of documents subject to a claim of attorney-client privilege or attorney work product).

 (1) Every existing document (including any document subject to a claim of attorney-client privilege, attorney work product, or trade secret protection) in the manufacturer's possession, custody, or control relating, referring, or pertaining to_

 (A) any studies, research, or analysis of any possible health or pharmacological effects in humans or animals, including addiction, associated with the use of tobacco products or components of tobacco products;

 (B) the engineering, manipulation, or control of nicotine in tobacco products;

 (C) the sale or marketing of tobacco products;

 (D) any research involving safer or less hazardous tobacco products;

 (E) tobacco use by minors; or

 (F) the relationship between advertising or promotion and the use of tobacco products;

 (2) Every existing document (including any document subject to a claim of attorney-client privilege, attorney work product, or trade secret protection) in the manufacturer's possession, custody, or control_

 (A) produced, or ordered to be produced, by the tobacco product manufacturer in any health-related civil or criminal proceeding, judicial or administrative; and

 (B) that the panel established under section 906 determines is appropriate for submission.

 (3) All studies conducted or funded, directly or indirectly, by any tobacco product manufacturer, relating to tobacco product use by minors.

 (4) All documents discussing or referring to the relationship, if any, between advertising and promotion and the use of tobacco products by minors. 

 (5) A privilege log describing each document or each portion of a document otherwise subject to public disclosure under this subsection that any tobacco product manufacturer maintains is exempt from public disclosure under this title.

 (6) A trade secrecy log describing each document or each portion of a document otherwise subject to public disclosure under this subsection that any tobacco product manufacturer, the Center for Tobacco Research, or the Tobacco Institute maintains is exempt from public disclosure under this Act.

 (e)  Document Identification and Index._ Documents submitted  under this section shall be sequentially numbered and marked to identify the tobacco product manufacturer. Within 15 days after submission of documents, each tobacco product manufacturer shall supply the panel with a comprehensive document index which references the applicable document categories contained in subsection (b). 

SEC. 904. DOCUMENT REVIEW.
 (a)  Ajudication of Privilege Claims._ An claim of attorney-client privilege, trade secret protection, or other claim of privilege with respect to a document required to be submitted by this title shall be heard by a 3-judge panel of the United States District Court for the District of Columbia under section 2284 of title 28, United States Code.  The panel may appoint special masters, employ such personnel, and establish such procedures as it deems necessary to carry out its functions under this title.

 (b)  Privilege._ The panel shall apply the attorney-client privilege, the attorney work-product doctrine, and the trade secret doctrine in a manner consistent with Federal law. 

SEC. 905. RESOLUTION OF DISPUTED PRIVILEGE AND TRADE SECRET CLAIMS.
 (a)  In General._ The panel 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. Any person may petition the panel to resolve a claim that a document submitted may not be disclosed to the public. Such a determination shall be made by a majority of the panel, 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 panel shall cause notice of the petition and the panel's decision to be published in the Federal Register. 

 (b)  Final Decision._ The panel 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 panel shall be final unless judicial review is sought under section 906. In the event that judicial review is sosought, the panel's decision shall be stayed pending a final judicial decision.

SEC. 906. APPEAL OF PANEL DECISION.
 (a)  Petition; Right of Appeal._ Any person may obtain judicial review of a final decision of the panel 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 panel. The panel shall file in the court the record of the proceedings on which the panel based its decision (including any documents reviewed by the panel 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 panel's decision, except that until the filing of the record the panel 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 panel, the court may order the panel to provide additional opportunity for the presentation of evidence or arguments in such manner and upon such terms as the court deems proper. The panel 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 panel's findings of fact, if supported by substantial evidence on the record taken as a whole, shall be conclusive. The court shall review the panel's legal conclusions  de novo.  The judgment of the court affirming or setting aside the panel'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 panel or in its entirety, is not protected from disclosure by a claim of attorney-client privilege, attorney work product, or trade secret protection, the panel shall direct that the document be made available to the Commissioner of Food and Drugs under section 903(a). 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 panel'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 panel shall not be construed to prevent a document from being disclosed in a judicial proceeding or interfere with the authority of a court to determine whether a document is admissible or whether its production may be compelled.

SEC. 907. 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. 908. PENALTIES.
 (a)  Good Faith Requirement._ Each tobacco product manufacturer shall act in good faith in asserting claims of privilege or trade secret protection based on fact and law. If the panel determines that a 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 panel and any party contesting the privilege. The panel may also impose civil penalties of up to $50,000 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 panel's determination of privilege, attorney work product, or trade secret protection claims. 

 (b)  Failure to Produce Document._ A failure by a 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 panel, shall be punished by a civil penalty of up to $50,000 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 $5,000,000. In determining the amount of anycivil penalty, the panel 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. 909. 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 an owner of a farm on January 1, 1998, 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.).

   (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)  Flue-cured tobacco._ The term ``flue-cured tobacco'' includes  type 21 and type 37 tobacco.

Subtitle A_Tobacco Community Revitalization 

 SEC. 1011. AUTHORIZATION OF APPROPRIATIONS.
 There are appropriated and transferred to the Secretary for each fiscal year such amounts from the National Tobacco Trust Fund established by section 401, other than from amounts in the State Litigation Settlement Account, as may be necessary to carry out the provisions of this title.

 SEC. 1012. EXPENDITURES.
 The Secretary is authorized, subject to appropriations, to make payments 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 1999"2000 through 2003"2004;

   (B) $50,000,000 for each of the academic years 2004"2005 through 2008"2009;

   (C) $57,500,000 for each of the academic years 2009"2010 through 2013"2014;

   (D) $65,000,000 for each of the academic years 2014"2015 through 2018"2019; and

   (E) $72,500,000 for each of the academic years 2019"2020 through 2023"2024.
SEC. 1013. BUDGETARY TREATMENT.

 This subtitle 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.

 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.

   (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 (or would have realized income, as determined by the Secretary, but for a medical hardship or crop disaster during the 1997 marketing year) 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 the farm for the 1995 through 1997 marketing years_

   (i) that was leased and transferred to a farm owned by the quota lessee; or

   (ii) that was rented to the quota lessee for the right to produce the tobacco; 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, for types of tobacco other than flue-cured tobacco,      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, for types of tobacco other than flue-cured tobacco, 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, for types of tobacco other than flue-cured tobacco, 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. 1445"1); or

   (V) section 106B of the Agricultural Act of 1949 (7 U.S.C. 1445"2).

   (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 shall relinquish the farm marketing quota or farm acreage allotment in exchange for a payment made under paragraph (3) due to the transition from farm marketing quotas as provided under section 317 of the Agricultural Adjustment Act of 1938 for flue-cured tobacco to individual tobacco production permits as provided under section 317A of the Agricultural Adjustment Act of 1938 for flue-cured tobacco.

   (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 lessee or quota tenant 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 lessee or quota tenant; 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 lessee or quota tenant 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. 1445"1); 

   (V) section 106B of the Agricultural Act of 1949 (7 U.S.C. 1445"2); 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 remaining unspent and obligated 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. For purposes of this section, the term ``tobacco-growing county'' includes a political subdivision surrounded within a State by a county 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 ._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).

   (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 the date of enactment of the National Tobacco Policy and Youth Smoking Reduction Act, 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 ._By January 15, 1999, 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 for 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 for 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 ._By January 15, 1999, 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 45 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 in 2001, the Secretary shall conduct a special referendum of the tobacco production permit holders that were the principal producers of flue-cured tobacco of the 1997 crop to determine whether the producers approve or oppose the continuation of individual tobacco production permits on an acreage-poundage basis as provided in this section for the 2002 through 2004 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 2002 through 2004 marketing years; and 

   ``(B) marketing quotas on an acreage-poundage basis shall cease to be in effect for the 2002 through 2004 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 not have been the principal producer of tobacco 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''.

   (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 103"465; 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), 1445"1, or 1445"2)'' and inserting ``section 106A or 106B of the Agricultural Act of 1949 (7 U.S.C. 1445"1, 1445"2)''.

   (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. 1445"1(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. 1445"2(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 appropriated to carry out this title,  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 1999"2000 through 2003"2004;

   ``(ii) $2,000 for each of the academic years 2004"2005 through 2008"2009;

   ``(iii) $2,300 for each of the academic years 2009"2010 through 2013"2014;

   ``(iv) $2,600 for each of the academic years 2014"2015 through 2018"2019; and

   ``(v) $2,900 for each of the academic years 2019"2020 through 2023"2024.
   ``(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 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 PROVISIONS

Subtitle A_International Provisions

SEC. 1101. POLICY.
 It shall be the policy of the United States government to pursue bilateral and multilateral agreements that include measures designed to_

 (1) restrict or eliminate tobacco advertising and promotion aimed at children;

 (2) require effective warning labels on packages and advertisements of tobacco products;

 (3) require disclosure of tobacco ingredient information to the public;

 (4) limit access to tobacco products by young people;

 (5) reduce smuggling of tobacco and tobacco products;

 (6) ensure public protection from environmental tobacco smoke; and

 (7) promote tobacco product policy and program information sharing between or among the parties to those agreements.

SEC. 1102. TOBACCO CONTROL NEGOTIATIONS.
 The President, in consultation with the Secretary of State, the Secretary of Health and Human Services, and the United States Trade Representative, shall_

 (1) act as the lead negotiator for the United States in the area of international tobacco control;

 (2) coordinate among U.S. foreign policy and trade negotiators in the area of effective international tobacco control policy; 

 (3) work closely with non-governmental groups, including public health groups; and

 (4) report annually to the Congress on the progress of negotiations to achieve effective international tobacco control policy.

SEC. 1103. REPORT TO CONGRESS.
 Not later than 150 days after the enactment of this Act and annually thereafter, the Secretary of Health and Human Services shall transmit to the Congress a report identifying the international fora wherein international tobacco control efforts may be negotiated.

SEC. 1104. FUNDING.
 There are authorized such sums as are necessary to carry out the provisions of this subtitle. 

SEC. 1105. PROHIBITION OF FUNDS TO FACILITATE THE EXPORTATION OR PROMOTION OFTOBACCO.

 (a)  In General._ No officer, employee, department, or agency of the United States may promote the sale or export of tobacco or tobacco products, or seek the reduction or removal by any foreign country of restrictions on the marketing of tobacco or tobacco products, unless such restrictions are not applied equally to all tobacco and tobacco products.  The United States Trade Representative shall consult with the Secretary regarding inquiries, negotiations, and representations with respect to tobacco and tobacco products, including whether proposed restrictions are reasonable protections of public health.

 (b)  Notification._ Whenever such inquiries, negotiations, or representations are made, the United States Trade Representative shall notify the Congress within 10 days afterwards regarding the nature of the inquiry, negotiation, or representation.

SEC. 1106. HEALTH LABELING OF TOBACCO PRODUCTS FOR EXPORT.
 (a)  In General._

 (1)  Exports must be labeled._ It shall be unlawful for any United States person, directly or through approval or facilitation of a transaction by a foreign person, to make use of the United States mail or of any instrument of interstate commerce to authorize or contribute to the export from the United States any tobacco product unless the tobacco product packaging contains a warning label that_

 (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 specific health hazard warning labeling requirements of the foreign country to which the product is exported.

 (2)  U.S. requirements apply if the destination country does not require specific health hazard warning labels._ Subparagraph (B) of paragraph (1) does not apply to exports to a foreign country that does not have any specific health hazard warning label requirements for the tobacco product being exported.

 (b)  United States Person Defined._ For purposes of this section, the term ``United States person'' means_

 (1) an individual who is a citizen, national, or resident of the United States; and

 (2) a corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship which has its principal place of business in the United States. 

 (c)  Report to Congress on Enforcement; Feasibility Regulations._

 (1)  The president._ The President shall_

 (A) report to the Congress within 90 days after the date of enactment of this Act_

 (i) regarding methods to ensure compliance with subsection (a); and

 (ii) listing countries whose health warnings related to tobacco products are substantially similar to those in the United States; and

 (B) promulgate regulations within 1 year after the date of enactment of this Act that will ensure compliance with subsection (a). 

 (2)  The secretary._ The Secretary shall determine through regulation the feasibility and practicability of requiring health warning labeling in the language of the country of destination weighing the health and other benefits and economic and other costs.  To the greatest extent practicable, the Secretary should design a system that requires the language of the country of destination while minimizing the dislocative effects of such a system. 

SEC. 1107. INTERNATIONAL TOBACCO CONTROL AWARENESS. 
 (a)  Establishment of International Tobacco Control Awareness._ The Secretary is authorized to establish an international tobacco control awareness effort.  The Secretary shall_

 (1) promote efforts to share information and provide education internationally about the health, economic, social, and other costs of tobacco use, including scientific and epidemiological data related to tobacco and tobacco use and enhancing countries' capacity to collect, analyze, and disseminating such data;

 (2) promote policies and support and coordinate international efforts, including international agreements or arrangements, that seek to enhance the awareness and understanding of the costs associated with tobacco use;

 (3) support the development of appropriate governmental control activities in foreign countries, such as assisting countries to design, implement, and evaluate programs and policies used in the United States or other countries; including the training of United States diplomatic and commercial representatives outside the United States; 

 (4) undertake other activities as appropriate in foreign countries that help achieve a reduction of tobacco use;

 (5) permit United States participation in annual meetings of government and non-government representatives concerning international tobacco use and efforts to reduce tobacco use;

 (6) promote 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

 (7) create capacity and global commitment to reduce international tobacco use and prevent youth smoking, including the use of models of previous public health efforts to address global health problems.

 (b)  Activities._

 (1)  In general._ The activities under subsection (a) shall include_

 (A) public health and education programs;

 (B) technical assistance;

 (C) cooperative efforts and support for related activities of multilateral organization and international organizations;

 (D) training; and

 (E) such other activities that support the objectives of this section as may be appropriate.

 (2)  Grants and contracts._ In carrying out this section, the Secretary shall make grants to, enter into and carry out agreements with, and enter into other transactions with any individual, corporation, or other entity, whether within or outside the United States, including governmental and nongovernmental organizations, international organizations, and multilateral organizations.

 (3)  Transfer of funds to agencies._ The Secretary may transfer to any agency of the United States any part of any funds appropriated for the purpose of carrying out this section.  Funds authorized to be appropriated by this section shall be available for obligation and expenditure in accordance with the provisions of this section or in accordance with the authority governing the activities of the agency to which such funds are transferred.

 (c)  Authorization of Appropriations._ There are authorized to be appropriated, from the National Tobacco Trust Fund, to carry out the provisions of this section, including the administrative costs incurred by any agency of the United States in carrying out this section, $350,000,000 for each of the fiscal years 1999 through 2004, and such sums as may be necessary for each fiscal year thereafter. A substantial amount of such funds shall be granted to non-governmental organizations. Any amount appropriated pursuant to this authorization shall remain available without fiscal year limitation until expended.

Subtitle B_Anti-smuggling Provisions

SEC. 1131. DEFINITIONS.
 (a)  Incorporation of Certain Definitions._ In this subtitle, the terms ``cigar'', ``cigarette'', ``person'', ``pipe tobacco'', ``roll-your-own 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), 5702(p), 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 other or others of such persons, and any 2 or more of such 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 any 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 at retail. The term ``retailer'' includes any duty free store that sells, offers for sale, or otherwise distributes at retail in any single transaction 30 or less packages, or it equivalent for other tobacco products.

 (6)  Exporter._ The term ``exporter'' means any person engaged in the business of exporting tobacco products from the United States for purposes of sale or distribution; and the term ``licensed exporter'' means any such person licensed under the provisions of this subtitle. Any duty-free store that sells, offers for sale, or otherwise distributes to any person in any single transaction more than 30 packages of cigarettes, or its equivalent for other tobacco products as the Secretary shall by regulation prescribe, shall be deemed an ``exporter'' under this subtitle. 

 (7)  Importer._ The term ``importer'' means any person engaged in the business of importing tobacco products into the United States for purposes of sale or distribution; and the term ``licensed importer'' means any such person licensed under the provisions of this subtitle.

 (8)  Intentionally._ The term ``intentionally'' means doing an act, or omitting to do an act, deliberately, and not due to accident, inadvertence, or mistake. An intentional act does not require that a person knew that his act constituted an offense.

 (9)  Manufacturer._  The term ``manufacturer'' means any person engaged in the business of manufacturing a tobacco product for purposes of sale or distribution, except that such term shall not include a person who manufactures less than 30,000 cigarettes, or its equivalent as determined by regulations, in any twelve month period;; and the term ``licensed manufacturer'' means any such person licensed under the provisions of this subtitle, except that such term shall not include a person who produces cigars, cigarettes, smokeless tobacco, or pipe tobacco solely for his own personal consumption or use.

 (10)  Wholesaler._ The term ``wholesaler'' means any person engaged in the business of purchasing tobacco products for resale at wholesale, or any person acting as an agent or broker for any person engaged in the business of purchasing tobacco products for resale at wholesale, and the term ``licensed wholesaler'' means any such person licensed under the provisions of this subtitle.

SEC. 1132. TOBACCO PRODUCT LABELING REQUIREMENTS.
 (a)  In General._ It is 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 Act, the Secretary shall promulgate regulations that require each manufacturer or importer of tobacco products to legibly print a unique serial number on all packages of tobacco products manufactured or imported for sale or distribution. The serial number shall be designed to enable the Secretary to identify the manufacturer or importer of the product, and the location and date of manufacture or importation. The Secretary shall determine the size and location of the serial number.

 (2)  Marking requirements for exports._ Each package of a tobacco product that is exported shall be marked for export from the United States. The Secretary shall promulgate regulations to determine the size and location of the mark and under what circumstances a waiver of this paragraph shall be granted.

 (c)  Prohibition on Alteration._ It is 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 pursuant to regulations of the Secretary authorizing relabeling for purposes of compliance with the requirements of this section or of State law.

SEC. 1133. TOBACCO PRODUCT LICENSES.
 (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 licenses are issued to manufacturers, importers, exporters, and wholesalers of tobacco products.

 (b)(1)  Eligibility._ A person is entitled to a license unless the Secretary finds_

 (A) that such person has been previously convicted of a Federal crime relating to tobacco, including the taxation thereof; 

 (B) that such person has, within 5 years prior to the date of application, been previously convicted of any felony under Federal or State law; or 

 (C) that such person is, by virtue of his business experience, financial standing, or trade connections, not likely to maintain such operations in conformity with Federal law.

 (2)  Conditions._ The issuance of a license under this section shall be conditioned upon the compliance with the requirements of this subtitle, all Federal laws relating to the taxation of tobacco products, chapter 114 of title 18, United States Code, and any regulations issued pursuant to such statutes.

 (c)  Revocation, Suspension, and Annulment._ The program established under subsection (a) shall permit the Secretary to revoke, suspend, or annul a license issued under this section if the Secretary determines that the terms or conditions of the license have not been complied with. Prior to any action under this subsection, the Secretary shall provide the licensee with due notice and the opportunity for a hearing.

 (d)  Records and Audits._ The Secretary shall, under the program established under subsection (a), require all license holders to keep records concerning the chain of custody of the tobacco products that are the subject of the license and make such records available to the Secretary for inspection and audit.

 (e)  Retailers._ This section does not apply to retailers of tobacco products, except that retailers shall maintain records of receipt, and such records shall be available to the Secretary for inspection and audit. An ordinary commercial record or invoice will satisfy this requirement provided such record shows the date of receipt, from whom such products were received and the quantity of tobacco products received.

SEC. 1134. PROHIBITIONS.
 (a)  Importation and Sale._ It is unlawful, except pursuant to a license issued by the Secretary under this subtitle_

 (1) to engage in the business of importing tobacco products into the United States; 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 an affiliate, tobacco products so imported.

 (b)  Manufacture and sale._ It is unlawful, except pursuant to a license issued by the Secretary under this subtitle_

 (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 or affecting commerce, directly or indirectly or through an affiliate, tobacco products so manufactured, packaged, or warehoused.

 (c)  Wholesale._ It is unlawful, except pursuant to a license issued by the Secretary under this subtitle_ 

 (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)  Exportation._

 (1)  In general._ It is unlawful, except pursuant to a license issued by the Secretary under this subtitle_ 

 (A) to engage in the business of exporting tobacco products from the United States; or

 (B) 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 an affiliate, tobacco products received for export.

 (2)  Report._ Prior to exportation of tobacco products from the United States, the exporter shall submit a report in such manner and form as the Secretary may by regulation prescribe to enable the Secretary to identify the shipment and assure that it reaches its intended destination.

 (3)  Agreements with foreign governments._ The Secretary is authorized to enter into agreements with foreign governments to exchange or share information contained in reports received from exporters of tobacco products if the Secretary believes that such an agreement will assist in_

 (A) insuring compliance with any law or regulation enforced or administered by an agency of the United States; or

 (B) preventing or detecting violation of the laws or regulations of a foreign government with which the Secretary has entered into an agreement.

Such information may be exchanged or shared with a foreign government only if the Secretary obtains assurances from such government that the information will be held in confidence and used only for the purpose of preventing or detecting violations of the laws or regulations of such government or the United States and, provided further that no information may be exchanged or shared with any government that has violated such assurances.

 (e)  Unlawful Acts._

 (1)  Unlicensed receipt or delivery._ It is unlawful for any licensed importer, licensed manufacturer, or licensed wholesaler intentionally to ship, transport, deliver or receive any tobacco products from or to any person other than a person licensed under this chapter or a retailer licensed under the provisions of this Act, except a licensed importer may receive foreign tobacco products from a foreign manufacturer or a foreign distributor that have not previously entered the United States. 

 (2)  Receipt of re-imported goods._ It is unlawful for any person, except a licensed manufacturer or a licensed exporter to receive any tobacco products that have previously been exported and returned to the United States.

 (3)  Delivery by exporter._ It is unlawful for any licensed exporter intentionally to ship, transport, sell or deliver for sale any tobacco products to any person other than a licensed manufacturer or foreign purchaser.

 (4)  Shipment of export-only goods._ It is unlawful for any person other than a licensed exporter intentionally to ship, transport, receive or possess, for purposes of resale, any tobacco product in packages marked ``FOR EXPORT FROM THE UNITED STATES,'' other than for direct return to the manufacturer or exporter for re-packing or for re-exportation.

 (5)  False statements._ It is unlawful for any licensed manufacturer, licensed exporter, licensed importer, or licensed wholesaler to make intentionally any false entry in, to fail willfully to make appropriate entry in, or to fail willfully to maintain properly any record or report that he is required to keep as required by this chapter or the regulations promulgated thereunder.

 (h)  Effective date._ The provisions of this section shall become effective on the date that is 365 days after the date of enactment of this Act.

SEC. 1135. LABELING OF PRODUCTS SOLD BY NATIVE AMERICANS. 
 The Secretary, in consultation with the Secretary of the 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. 1136. LIMITATION ON ACTIVITIES INVOLVING TOBACCO PRODUCTS IN FOREIGNTRADE ZONES.

 (a)  Manufacture of tobacco products in Foreign Trade Zones._ No person shall 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.).

 (b)  Exporting or importing from or into a Foreign Trade Zone._ Any person exporting or importing tobacco products from or into a foreign trade zone, as defined for purposes of the Act of June 18, 1934 (19 U.S.C. 81a et seq.), shall comply with the requirements provided in this subtitle. In any case where the person operating in a foreign trade zone is acting on behalf of a person licensed under this subtitle, qualification as an importer or exporter will not be required, if such person complies with the requirements set forth in section 1134(d)(2) and (3) of this subtitle.

SEC. zzz1137. 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._ Any person violating any of the provisions of this subtitle shall, upon conviction, be fined as provided in section 3571 of title 18, United States Code, imprisoned for not more than 5 years, or both.

 (c)  Civil Penalties._ The Secretary may, in lieu of referring violations of this subtitle for criminal prosecution, impose a civil penalty of not more than $10,000 for each offense.

 (d)  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.

 (e)  Forfeiture._

 (1) The Secretary may seize and forfeit any conveyance, tobacco products, or monetary instrument (as defined in section 5312 of title 31, United States Code) involved in a violation of this subtitle, or any property, real or personal, which constitutes or is derived from proceeds traceable to a violation of this chapter. For purposes of this paragraph, the provisions of subsections (a)(2), (b)(2), and (c) through (j) of section 981 of title 18, United States Code, apply to seizures and forfeitures under this paragraph insofar as they are applicable and not inconsistent with the provisions of this subtitle.

 (2) The court, in imposing sentence upon a person convicted of an offense under this subtitle, shall order that the person forfeit to the United States any property described in paragraph (1). The seizure and forfeiture of such property shall be governed by subsections (b), (c), and (e) through (p) of section 853 of title 21, United States Code, insofar as they are applicable and not inconsistent with the provisions of this subtitle.

SEC. 1138. AMENDMENTS TO THE CONTRABAND CIGARETTE TRAFFICKING ACT.
 (a)  Definitions._ Section 2341 of title 18, United States Code, is amended_

 (1) by striking ``60,000'' and inserting ``30,000'' in paragraph (2);    (2) by inserting after ``payment of cigarette taxes,'' in paragraph (2) 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,''; 

 (3) by striking ``and'' at the end of paragraph (4);

 (4) by striking ``Treasury.'' in paragraph (5) and inserting ``Treasury;''; and

 (5) by adding at the end thereof the following: 

 ``(6) the term `tobacco product' means cigars, cigarettes, smokeless tobacco, roll your own 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) 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; and 

 ``(B) a quantity of tobacco product that is equivalent to an excess of 30,000 cigarettes, as determined by regulation, which bears no evidence of the payment of applicable State tobacco taxes in the State where such tobacco products are found, if such State requires a stamp, impression, or other indication to be placed on packages or other containers of product to evidence payment of tobacco taxes, or in the case of a State that does not require any such indication of tax payment, if the person in possession of the tobacco product is unable to provide any evidence that the tobacco products are moving legally in interstate commerce and which are in the possession of any person other than a person defined in paragraph (2) of this section.''.

 (b)  Unlawful Acts._ Section 2342 of title 18, United States Code, is amended_

 (1) by inserting ``or contraband tobacco products'' before the period in subsection (a); and

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

 ``(c) It is unlawful for any person_

 ``(1) knowingly to make any false statement or representation with respect to the information required by this chapter to be kept in the records or reports of any person who ships, sells, or distributes any quantity of cigarettes in excess of 30,000 in a single transaction, or tobacco products in such equivalent quantities as shall be determined by regulation; or 

 ``(2) knowingly to fail or knowingly to fail to maintain distribution records or reports, alter or obliterate required markings, or interfere with any inspection as required with respect to such quantity of cigarettes or other tobacco products.

 ``(d) It shall be unlawful for any person knowingly to transport cigarettes or other tobacco products under a false bill of lading or without any bill of lading.''.

 (d)  Recordkeeping._ Section 2343 of title 18, United States Code, is amended_

 (1) by striking ``60,000'' in subsection (a) and inserting ``30,000'';

 (2) by inserting after ``transaction'' in subsection (a) the following: ``or, in the case of other tobacco products an equivalent quantity as determined by regulation,'' ; 

 (3) by striking the last sentence of subsection (a) and inserting the following:  

``Except as provided in subsection (c) of this section, nothing contained herein shall authorize the Secretary to require reporting under this section.'';

 (4) by striking ``60,000'' in subsection (b) and inserting ``30,000'';

 (5) by inserting after ``transaction'' in subsection (b) the following: ``or, in the case of other tobacco products an equivalent quantity as determined by regulation,''; and

 (6) by adding at the end thereof the following:

 ``(c)(1) Any person who ships, sells, or distributes for resale tobacco products in interstate commerce, whereby such tobacco products are shipped into a State taxing the sale or use of such tobacco products or who advertises or offers tobacco products for such sale or transfer and shipment shall_

 ``(A) first file with the tobacco tax administrator of the State into which such shipment is made or in which such advertisement or offer is disseminated, a statement setting for the persons name, and trade name (if any), and the address of the persons principal place of business and of any other place of business; and

 ``(B) not later than the 10th day of each month, file with the tobacco tax administrator of the State into which such shipment is made a memorandum or a copy of the invoice covering each and every shipment of tobacco products made during the previous month into such State; the memorandum or invoice in each case to include the name and address of the person to whom the shipment was made, the brand, and the quantity thereof.

 ``(2) The fact that any person ships or delivers for shipment any tobacco products shall, if such shipment is into a State in which such person has filed a statement with the tobacco tax administrator under paragraph (1)(A) of this subsection, be presumptive evidence that such tobacco products were sold, shipped, or distributed for resale by such person.

 ``(3) For purposes of this subsection_

 ``(A) the term `use' includes consumption, storage, handling, or disposal of tobacco products; and

 ``(B) the term `tobacco tax administrator' means the State official authorized to administer tobacco tax laws of the State.''.

 (e)  Penalties._ Section 2344 of title 18, United States Code, is amended_ 

 (1) by inserting ``or (c)'' in subsection (b) after ``section 2344(b)'';

 (2) by inserting ``or contraband tobacco products'' after ``cigarettes'' in subsection (c); and 

 (3) by adding at the end thereof the following: 

 ``(d) Any proceeds from the unlawful distribution of tobacco shall be subject to seizure and forfeiture under section 981(a)(1)(C).''.

 (f)  Repeal of Federal Law Relating to Collection of State Cigarette Taxes._ The Act of October 19, 1949, (63 Stat. 884; 15 U.S.C. 375-378) is hereby repealed.

SEC. 1139. FUNDING.
 (a)  License Fees._ The Secretary may, in the Secretary's sole discretion, set the fees for licenses required by this chapter, in such amounts as are necessary to recover the costs of administering the provisions of this chapter, including preventing trafficking in contraband tobacco products.

 (b)  Disposition of Fees._ Fees collected by the Secretary under this chapter shall be deposited in an account with the Treasury of the United States that is specially designated for paying the costs associated with the administration or enforcement of this chapter or any other Federal law relating to the unlawful trafficking of tobacco products. The Secretary is authorized and directed to pay out of any funds available in such account any expenses incurred by the Federal Government in administering and enforcing this chapter or any other Federal law relating to the unlawful trafficking in tobacco products (including expenses incurred for the salaries and expenses of individuals employed to provide such services). None of the funds deposited into such account shall be available for any purpose other than making payments authorized under the preceding sentence.

SEC. 1140. RULES AND REGULATIONS.
 The Secretary shall prescribe all needful rules and regulations for the enforcement of this chapter, including all rules and regulations that are necessary to ensure the lawful distribution of tobacco products in interstate or foreign commerce.

Subtitle C_Other Provisions

SEC. 1161. IMPROVING CHILD CARE AND EARLY CHILDHOOD DEVELOPMENT.
 (a)  In General._ There are authorized to be appropriated to the Secretary from the National Tobacco Trust Fund such sums as may be necessary 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.

SEC. 1162. 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, subject to the availability of appropriations under subsection (d), for the fair market value of their 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''). Except as otherwise provided in this section, the Corporation 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 in an amount determined by the President of the Corporation not to exceed $40,000 individually, 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 reasonable; 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)  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 appropriated to the Corporation under subsection (d) 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 1 percent of the total amount appropriated to the Corporation under subsection (d).

 (B)  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.

 (C)  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 to the Corporation from funds not otherwise obligated in the Treasury or out of the National Tobacco Trust Fund, such sums as may be necessary to carry out this section.

SEC. 1163. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.
 (a)  In General ._Subpart B of part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1185 et seq.) is amended by adding at the end the following new section:

``SEC. 713. REQUIRED COVERAGE FOR MINIMUM HOSPITAL STAY FOR MASTECTOMIES ANDLYMPH NODE DISSECTIONS FOR THE TREATMENT OF BREAST CANCER AND COVERAGE FOR RECONSTRUCTIVE SURGERY FOLLOWING MASTECTOMIES.

 ``(a)  Inpatient Care ._

 ``(1)  In general ._A group health plan, and a health insurance issuer providing health insurance coverage in connection with a group health plan, that provides medical and surgical benefits shall ensure that inpatient coverage with respect to the surgical treatment of breast cancer (including a mastectomy, lumpectomy, or lymph node dissection for the treatment of breast cancer) is provided for a period of time as is determined by the attending physician, in his or her professional judgment consistent with generally accepted medical standards, in consultation with the patient, and subject to subsection (d), to be medically appropriate.

 ``(2)  Exception ._Nothing in this section shall be construed as requiring the provision of inpatient coverage if the attending physician in consultation with the patient determine that a shorter period of hospital stay is medically appropriate.

  ``(b)  Reconstructive Surgery._ A group health plan, and a health insurance issuer providing health insurance coverage in connection with a group health plan, that provides medical and surgical benefits with respect to a mastectomy shall ensure that, in a case in which a mastectomy patient elects breast reconstruction, coverage is provided for_

 ``(1) all stages of reconstruction of the breast on which the mastectomy has been performed; 

 ``(2) surgery and reconstruction of the other breast to produce a symmetrical appearance; and

 ``(3) the costs of prostheses and complications of mastectomy including lymphedemas;

in the manner determined by the attending physician and the patient to be appropriate. Such coverage may be subject to annual deductibles and coinsurance provisions as may be deemed appropriate and as are consistent with those established for other benefits under the plan or coverage. Written notice of the availability of such coverage shall be delivered to the participant upon enrollment and annually thereafter.

 ``(c)  Notice ._A group health plan, and a health insurance issuer providing health insurance coverage in connection with a group health plan shall provide notice to each participant and beneficiary under such plan regarding the coverage required by this section in accordance with regulations promulgated by the Secretary. Such notice shall be in writing and prominently positioned in any literature or correspondence made available or distributed by the plan or issuer and shall be transmitted_

 ``(1) in the next mailing made by the plan or issuer to the participant or beneficiary;

 ``(2) as part of any yearly informational packet sent to the participant or beneficiary; or 

 ``(3) not later than January 1, 1998;

whichever is earlier.

 ``(d)  No Authorization Required ._

 ``(1)  In general ._An attending physician shall not be required to obtain authorization from the plan or issuer for prescribing any length of stay in connection with a mastectomy, a lumpectomy, or a lymph node dissection for the treatment of breast cancer.

 ``(2)  Prenotification ._Nothing in this section shall be construed as preventing a group health plan from requiring prenotification of an inpatient stay referred to in this section if such requirement is consistent with terms and conditions applicable to other inpatient benefits under the plan, except that the provision of such inpatient stay benefits shall not be contingent upon such notification.

 ``(e)  Prohibitions ._A group health plan, and a health insurance issuer offering group health insurance coverage in connection with a group health plan, may not_

 ``(1) deny to a patient eligibility, or continued eligibility, to enroll or to renew coverage under the terms of the plan, solely for the purpose of avoiding the requirements of this section;

 ``(2) provide monetary payments or rebates to individuals to encourage such individuals to accept less than the minimum protections available under this section;

 ``(3) penalize or otherwise reduce or limit the reimbursement of an attending provider because such provider provided care to an individual participant or beneficiary in accordance with this section;

 ``(4) provide incentives (monetary or otherwise) to an attending provider to induce such provider to provide care to an individual participant or beneficiary in a manner inconsistent with this section; and

 ``(5) subject to subsection (f)(3), restrict benefits for any portion of a period within a hospital length of stay required under subsection (a) in a manner which is less favorable than the benefits provided for any preceding portion of such stay.

 ``(f)  Rules of Construction ._

 ``(1)  In general ._Nothing in this section shall be construed to require a patient who is a participant or beneficiary_

 ``(A) to undergo a mastectomy or lymph node dissection in a hospital; or

 ``(B) to stay in the hospital for a fixed period of time following a mastectomy or lymph node dissection.

 ``(2)  Limitation ._This section shall not apply with respect to any group health plan, or any group health insurance coverage offered by a health insurance issuer, which does not provide benefits for hospital lengths of stay in connection with a mastectomy or lymph node dissection for the treatment of breast cancer.

 ``(3)  Cost sharing ._Nothing in this section shall be construed as preventing a group health plan or issuer from imposing deductibles, coinsurance, or other cost-sharing in relation to benefits for hospital lengths of stay in connection with a mastectomy or lymph node dissection for the treatment of breast cancer under the plan (or under health insurance coverage offered in connection with a group health plan), except that such coinsurance or other cost-sharing for any portion of a period within a hospital length of stay required under subsection (a) may not be greater than such coinsurance or cost-sharing for any preceding portion of such stay.

 ``(4)  Level and type of reimbursements ._Nothing in this section shall be construed to prevent a group health plan or a health insurance issuer offering group health insurance coverage from negotiating the level and type of reimbursement with a provider for care provided in accordance with this section.

 ``(g)  Preemption, Relation to State Laws ._

 ``(1)  In general ._Nothing in this section shall be construed to preempt any State law in effect on the date of enactment of this section with respect to health insurance coverage that_

 ``(A) such State law requiressuch coverage to provide for at least a 48-hour hospital length of stay following a mastectomy performed for treatment of breast cancer and at least a 24-hour hospital length of stay following a lymph node dissection of breast cancer;

 ``(B) requires coverage of at least the coverage of reconstructive breast surgery otherwise required under this section; or

 ``(C) requires coverage for breast cancer treatments (including breast reconstruction) in accordance with scientific evidence-based practices or guidelines recommended by established medical associations.

 ``(2)  Application of section ._With respect to a State law_

 ``(A) described in paragraph (1)(A), the provisions of this section relating to breast reconstruction shall apply in such State; and

 ``(B) described in paragraph (1)(B), the provisions of this section relating to length of stays for surgical breast treatment shall apply in such State.

 ``(3)  Erisa ._Nothing in this section shall be construed to affect or modify the provisions of section 514 with respect to group health plans.''.

 (b)  Clerical Amendment ._The table of contents in section 1 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 note) is amended by inserting after the item relating to section 712 the following new item:

``Sec. 713. Required coverage for minimum hospital stay for mastectomies andlymph node dissections for the treatment of breast cancer and coverage for reconstructive surgery following mastectomies.''. 

  (c)  Effective Dates ._

 (1)  In general ._The amendments made by this section shall apply with respect to plan years beginning on or after the date of enactment of this Act.

 (2)  Special rule for collective bargaining agreements ._In the case of a group health plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers, any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement added by this section shall not be treated as a termination of such collective bargaining agreement.

 

TITLE XII_ASBESTOS-RELATED TOBACCO CLAIMS

SEC. 1201. NATIONAL TOBACCO TRUST FUNDS AVAILABLE UNDER FUTURE LEGISLATION.
 If the Congress enacts qualifying legislation after the date of enactment of this Act to provide for the payment of asbestos claims, then amounts in the National Tobacco Trust Fund established by title IV of this Act set aside for public health expenditures shall be available, as provided by appropriation Acts, to make those payments.  For purposes of this section, the term ``qualifying legislation'' means a public law that amends this Act and changes the suballocations of funds set aside for public health expenditures under title IV of this Act to provide for the payment of those claims.   

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 COSTS FOR TOBACCO-RELATED DISABILITY OR DEATH

``Chapter 91_Tort liability for disability, injury, disease, 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 and medical care services 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 tobacco product manufacturer (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 tobacco product manufacturer the cost of the compensation paid or to be paid and the costs of medical care services provided, 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 and the costs of medical services provided.

 ``(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 tobacco product manufacturer who is liable for the injury or disease; or 

 ``(2) if such action or proceeding is not commenced within 6 months after the first day on which compensation is paid, or the medical care services are provided, by the Secretary in connection with the injury or disease involved, institute and prosecute legal proceedings against the tobacco product manufacturer 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, and medical care services provided, 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 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.

``'  9102. Regulations
 ``(a)  Determination and establishment of present value of compensation and medical care services 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, and medical care services provided to a veteran.

 ``(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, or receipt of medical care services.

 ``(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 and medical care services

 ``This chapter does not limit or repeal any other provision of law providing for recovery by the Secretary of the cost of compensation and medical care services 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, and the cost of medical care services provided, 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 tobacco product manufacturers  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.''.

TITLE XIV_EXCHANGE OF BENEFITS FOR AGREEMENT 

TO TAKE ADDITIONAL MEASURES TO REDUCE YOUTH SMOKING 

SEC. 1401. CONFERRAL OF BENEFITS ON PARTICIPATING TOBACCO PRODUCTMANUFACTURERS IN RETURN FOR THEIR ASSUMPTION OF SPECIFIC OBLIGATIONS. 

 Participating tobacco product manufacturers shall receive the benefits, and assume the obligations, set forth in this title.

SEC. 1402. PARTICIPATING TOBACCO PRODUCT MANUFACTURER. 
 (a)  In General._ Except as provided in subsection (b), a tobacco product manufacturer that_

 (1) executes a protocol with the Secretary of Health and Human Services that meets the requirements of sections 1403, 1404, and 1405; and

 (2) makes the payment required under section 402(a)(1),

is, for purposes of this title, a participating tobacco products manufacturer.

 (b)  Disqualification._

 (1)  Ineligibility._ Notwithstanding subsection (a), a tobacco product manufacturer may not become a participating tobacco products manufacturer if_ 

 (A) the tobacco product manufacturer or any of its principal officers (acting in that official's corporate capacity), is convicted of_ 

 (i) manufacturing or distributing misbranded tobacco products in violation of the criminal prohibitions on such misbranding established under section 301 or 303 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331 or 333); 

 (ii) violating reporting requirements established under section 5762(a)(4) of the Internal Revenue Code of 1986 (26 U.S.C. 5762(a)(4));

 (iii) violating, or aiding and abetting the violation of chapter 114 of title 18, United States Code; or

 (iv) violating Federal prohibitions on mail fraud, wire fraud, or the making of false statements to Federal officials in the course of making reports or disclosures required by this Act; or 

 (B) the tobacco product manufacturer, at the end of the 1-year period beginning on the date on which such manufacturer fails to make a required assessment payment under title IV of this Act, has not fully made such payment. 

 (2)  Disqualification._ A tobacco product manufacturer that has become a participating tobacco product manufacturer shall cease to be treated as a participating tobacco product manufacturer if_

 (A) it, or any of its principal officers (acting in that official's corporate capacity) is convicted of an offense described in paragraph (1)(A); or

 (B) it fails to make such a payment within the time period described in paragraph (1)(B).

 (c)  Non-participating Tobacco Manufacturers._ Any tobacco product manufacturer that_

 (1) does not execute a protocol in accordance with subsection (a);

 (2) fails to make the payment required by section 402(a)(1) (if applicable to that manufacturer);

 (3) is not eligible, under subsection (b)(1), to become a participating tobacco product manufacturer; or

 (4) ceases to be treated as a participating tobacco product manufacturer under subsection (b)(2),

is, for purposes of this title, a non-participating tobacco product manufacturer.

SEC. 1403. GENERAL PROVISIONS OF PROTOCOL.
 (a)  In General._ For purposes of section 1402, a protocol meets the requirements of this section if it_

 (1) contains the provisions described in subsection (b); and

 (2) is enforceable at law.

 (b)  Required Provisions._ The protocol shall include the following provisions:

 (1) The tobacco product manufacturer executing the protocol will not engage in any conduct that was, either on the date of enactment of this Act, or at any time after the date of enactment of this Act_

 (A) prohibited by this Act; 

 (B) prohibited by any regulation promulgated by the Food and Drug Administration that applies to tobacco products; or 

 (C) prohibited by any other statute. 

 (2) The tobacco product manufacturer executing the protocol will contract with only such distributors and retailers who have operated in compliance with the applicable provisions of Federal, State, or local law regarding the marketing and sale of tobacco products and who agree to comply with advertising and marketing provisions in paragraph (3). 

 (3) The tobacco product manufacturer executing the protocol will be bound in marketing tobacco products by the following provisions, whether or not these provisions have legal force and effect against manufacturers who are not signatories to the protocol_ 

 (A) the advertising and marketing provisions of part 897 of title 21, Code of Federal Regulations, that were published in the Federal Register on August 28, 1996, and which shall be adopted and incorporated as independent terms of the protocol; 

 (B) the requirements of section 1404; and 

 (C) the requirements of section 1405.
 (4) The tobacco product manufacturer executing the protocol will make any payments to the National Tobacco Trust Fund in title IV that are required to be made under that title or in any other title of this Act. 

 (5) The tobacco product manufacturer executing the protocol will be bound by the provisions of title IV, and any other title of this Act with respect to payments required under title IV, without regard to whether those provisions have legal force and effect against manufacturers who have not become signatories. 

 (6) The tobacco product manufacturer executing the protocol will make the industry-wide and manufacturer-specific look-back assessment payments that may be required under title II. 

 (7) The tobacco product manufacturer executing the protocol will be bound by the provisions of title II that require a manufacturer to make look-back assessments, and any other title of this Act with respect to such assessments, without regard to whether such terms have legal force and effect against manufacturers who have not become signatories. 

 (8) The tobacco product manufacturer executing the protocol will, within 180 days after the date of enactment of this Act and in conjunction with other participating tobacco product manufacturers, establish a National Tobacco Document Depository in the Washington, D.C. area_

 (A) that is not affiliated with, or controlled by, any tobacco product manufacturer;

 (B) the establishment and operational costs of which are allocated among participating tobacco product manufacturers; and

 (C) that will make any document submitted to it under title IX of this Act and finally determined not to be subject to attorney-client privilege, attorney work product, or trade secret exclusions, available to the public using the Internet or other means within 30 days after receiving the document.

 (c)  Provisions Applicable to Documents._ The provisions of section 2116(a) and (b) of title 44, United States Code, apply to records and documents submitted to the Depository (or, to the alternative depository, if any, established by the Secretary by regulation under title IX of this Act) 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.

SEC. 1404. TOBACCO PRODUCT LABELING AND ADVERTISING REQUIREMENTS OF PROTOCOL.
 (a)  In General._ For purposes of section 1402, a protocol meets the requirements of this section if it requires that_

 (1) no tobacco product will be sold or distributed in the United States 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 on mass transit vehicles, and advertising from within a retail establishment that is directed toward or visible from the outside of the establishment; 

 (C) 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;

 (D) 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;

 (E) 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; 

 (F) use only black text on white background, other than_

 (i) those locations other than retail stores where no person under the age of 18 is permitted or present at any time, 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;

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

 (8) 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 brand-name 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 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; and

 (5)(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. 1405. POINT-OF-SALE REQUIREMENTS.
 (a)  In General._ For purposes of section 1402, a protocol meets the requirements of this section if it provides that, except as provided in subsection (b), point-of-sale advertising of any tobacco product in any retail establishment is prohibited. 

 (b)  Permitted POS Locations._ 

 (1)  Placement._ One point-of-sale advertisement may be placed 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 played or shown in, but not distributed, at any location where tobacco products are offered for sale.

 (d)  No Restrictive Covenants._ No  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 (other than a pack, box, carton, or container of any kind in which cigarettes or smokeless tobacco is offered for sale, sold, or otherwise distributed to consumers) 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.

SEC. 1406. APPLICATION OF TITLE.
 (a)  In General._ The provisions of this title apply to any civil action involving a tobacco claim brought pursuant to title VII of this Act, including any such claim that has not reached final judgment or final settlement as of the date of enactment of this Act, only if such claim is brought or maintained against_

 (1) a participating tobacco product manufacturer or its predecessors;

 (2) 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 manufacturer;

 (B) whose business practices with respect to sales or operations occurring within the United States, conform to the applicable requirements of the protocol; and

 (C) that is not itself a non-participating tobacco product manufacturer;

 (3) a supplier of component or constituent parts of tobacco products_

 (A) whose business practices with respect to sales or operations occurring within the United States, conform to the applicable requirements of the protocol; and

 (B) that is not itself a non-participating tobacco product manufacturer;

 (4) a grower of tobacco products, unless such person is itself a non-participating tobacco product manufacturer; or

 (5) an insurer of any person described in paragraph (1), (2), (3), or (4) 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 those 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 State;

 (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) brought against a supplier of a component or constituent part of a tobacco product, if the component or constituent part was sold after the date of enactment of this Act, and the supplier knew that the tobacco product giving rise to the claim would be manufactured in the United States by a nonparticipating tobacco product manufacturer. 

SEC. 1407. GOVERNMENTAL CLAIMS. 
 (a)  In General._ Except as provided in subsection (b) and (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 against a participating tobacco product manufacturer.

 (b)  Effect on Existing State Suits of Settlement Agreement or Consent Decree._ Within 30 days after the date of enactment of this Act, any State that has filed a civil action involving a tobacco claim against a participating tobacco product manufacturer may elect to settle such action against said tobacco product manufacturer. If a State makes such an election to enter into a settlement or 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 settlement or consent decree. Nothing herein shall preclude any State from bringing suit or seeking a court order to enforce the terms of such settlement or decree.

 (c)  State Option for One-Time Opt Out._ Any State that does not make the election described in subsection (b) may continue its lawsuit, notwithstanding subsection (a) of this section. A State that does not make such an election shall not be eligible to receive payments from the trust fund in title IV.

 (d)  30-day Delay._ No settlement or consent decree entered into under subsection (b) may take effect until 30 days after the date of enactment of this Act.

 (f)  Preservation of Insurance Claims._

 (1)  In general._ If all participating tobacco product manufacturers fail to make the payments required by title IV 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. 1408. ADDICTION AND DEPENDENCY CLAIMS; CASTANO CIVIL ACTIONS. 
 (a)  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 against a participating tobacco product manufacturer.

 (b)  Castano Civil Actions._ 

 (1) The rights and benefits afforded in 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, as defined in section 1417(2), 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. 1409.  SUBSTANTIAL NON-ATTAINMENT OF REQUIRED REDUCTIONS. 
 (a)  Action by Secretary._ If the Secretary determines under title II 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.

 (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 a tobacco product manufacturer has shown, by a preponderance of the evidence that it_

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

 (3) has used its best efforts to reduce underage tobacco use to a degree at least equal to the required percentage reductions.

 (d)  Removal of Annual Aggregate Payment Limitation._ Except as provided in subsections (e) and (g), if the court determines that a tobacco product manufacturer has failed to make the showing described in subsection (c) then sections 1411 and 1412 of this Act do 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. 

 (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 1412 of this Act prior to a final judgment determining that the Secretary's determination was erroneous shall be fully credited, with interest, under section 1412 of this Act. 

 (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 manufacturer has shown by a preponderance of the evidence 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 used its best efforts 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.

SEC. 1410. PUBLIC HEALTH EMERGENCY.
 If the Secretary, in consultation with the Commissioner of Food and Drugs, 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 determines 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 that the manufacturer will not attain the targets for underage smoking reduction, the Secretary may bring an action under section 1409 seeking the immediate suspension of the tobacco product manufacturer's annual limitation cap on civil judgments. If the court determines that the Secretary 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 that the manufacturer will not attain the targets for underage smoking reduction, the court may suspend the subject manufacturer's annual limitation cap on civil judgments.

SEC. 1411. TOBACCO CLAIMS BROUGHT AGAINST PARTICIPATING TOBACCO PRODUCTMANUFACTURERS. 

 (a)  Permissible Defendants._ In any civil action to which this title applies, tobacco claims may be filed or maintained only against_

 (1) a participating tobacco product manufacturer; or

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

 (b)  Actions involving participating and non-participating manufacturers._ 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 require the jury to or shall itself apportion liability as between the participating tobacco product manufacturer and non-participating tobacco product manufacturers.

SEC. 1412. PAYMENT OF TOBACCO CLAIM SETTLEMENTS AND JUDGMENTS. 
 (a)  In General._ Except as provided in this section, 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 any agreement incident thereto.

 (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) 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._

 (1)  In general._ The aggregate payments made by all participating tobacco product manufacturers in any calendar year may not exceed $8,000,000,000.  
 (2)  Implementation._ The Secretary shall initiate a rulemaking within 30 days after the date of enactment of this Act to establish a mechanism for implementing this subsection in such a way to ensure the fair and equitable payment of final judgments or final settlements on tobacco claims under this title. 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.

 (3)  Inflation adjustment._

 (A)  In general._ The amount in paragraph (1) shall be increased annually, beginning with the second calendar year beginning after the date of enactment of this Act, by the greater of 3 percent or the annual increase in the CPI.

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

 (C)  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.
 (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. 

 (f)  Bankruptcy of Participating Manufacturer._ No participating tobacco product manufacturer shall cease operations without establishing a surviving entity against which a tobacco claim may be brought. Any obligation , interest, or debt of a participating, tobacco product manufacturer arising under such liability apportionment agreement shall be given priority and shall not be rejected, avoided, discharged, or otherwise modified or diminished  in a proceeding, under title 11, United States Code, or in any liquidation, reorganization, receivership, or other insolvency proceeding under State law.  A trustee or receiver in any proceeding under title 11, United States Code, or in liquidation, reorganization, receivership, or other insolvency proceeding under State law, may avoid any transfer of an interest of the participating tobacco product manufacturer, or any obligation incurred by such manufacturer, that was made or incurred on or within 2 years before the date of the filing of a bankruptcy petition, if such manufacturer made such transfer or incurred such obligation to hinder or defeat in any fashion the payment of any obligation, interest, or debt of the manufacturer arising under the liability apportionment agreement.  Any property vesting in the participating tobacco product manufacturer following such a proceeding shall be subject to all claims and interest of creditors arising under the liability apportionment agreement. 

 (f)  Limitation on State Courts._ No court of any State, Tribe, or political subdivision of a State may take any action to inhibit the effective operation of subsection (c).

SEC. 1413. ATTORNEYS' FEES AND EXPENSES.
 (a)  Arbitration Panel._ 

 (1)  Right to Establish ._ 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. 1414. EFFECT OF COURT DECISIONS.
 (a)  Severability._ If any provision of titles I through XIII, or the application thereof to any person, manufacturer or circumstance, is held invalid, the remainder of the provisions of those titles, and the application of such provision to other persons or circumstances, shall not be affected thereby. 

 (b)  Nonseverability._ If a court of competent jurisdiction enters a final decision substantially limiting or impairing the essential elements of title XIV, specifically the requirements of sections 1404 and 1405, then the provisions of section 1412 are null and void and of no effect. 

SEC. 1415. CRIMINAL LAWS NOT AFFECTED.
 Nothing in this title shall be construed to limit the criminal liability of tobacco product manufacturers, retailers, or distributors or their directors, officers, employees, successors, or assigns.

SEC. 1416. CONGRESS RESERVES THE RIGHT TO ENACT LAWS IN THE FUTURE.
 The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress in accordance with the provisions of Article I of the Constitution of the United States and more than 200 years of history. 

SEC. 1417. DEFINITIONS.
 In this title:

 (1)  Terms defined in title VII._ Any term used in this title that is defined in title VII has the meaning given to it in title VII.

 (2)  Additional definitions._

 (A)  Addiction claim; dependence claim._ The term ``addiction claim'' or ``dependence claim'' refers only to any cause of action to the extent that the prayer for relief seeks a cessation program, or other public health program that is to be available to members of the general public and is designed to reduce or eliminate the users' addiction to, or dependence on, tobacco products, and as used herein is brought by those who claim the need for nicotine reduction assistance. Neither addiction or dependence claims include claims related to or involving manifestation of illness or tobacco-related diseases.

 (B)  Compensatory damages._ The term ``compensatory damages'' refers to those damages necessary to reimburse an injured party, and includes actual, general, and special damages.

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

 (D)  Punitive damages._ The term ``punitive damages'' means damages in addition to compensatory damages having the character of punishment or penalty.

 (E)  Secretary._ The term ``Secretary'' means the Secretary of the Treasury, except where the context otherwise requires.

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