Calendar No.  353
105 th CONGRESS
2 d Session
S. 1415
Report No.  105-180
To reform and restructure the processes by which tobacco products are manufactured, marketed,
and distributed, to prevent the use of tobacco products by minors, to redress the adverse health
effects of tobacco use, and for other purposes.
______________
IN THE SENATE OF THE UNITED STATES
November  7, 1998
Mr.  McCain  (for himself, Mr.  Hollings , Mr.  Breaux,  and Mr.  Gorton ) introduced the
following bill; which was read twice and referred to the Committee on Commerce, Science, and
Transportation
May  1, 1998
Reported by Mr.  McCain,  with an amendment in the nature of a substitute
[Strike all after the enacting clause and insert the part printed in italic]
_____________
A BILL
To reform and restructure the processes by which tobacco products are manufactured, marketed,
and distributed, to prevent the use of tobacco products by minors, to redress the adverse health
effects of tobacco use, and for other purposes.
  Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled,
[Text of S. 1415, as introduced, inserted here in linetype]
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
 (a)  Short Title._ This Act may be cited as the ``National Tobacco Policy and Youth Smoking
Reduction Act''.
 (b)  Table of Contents._ The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purpose.
Sec. 4. Scope and effect.
Sec. 5. Non-preemption of more restrictive laws.
Sec. 6. Definitions.
Sec. 7. Notification if youthful cigarette smoking restrictions increase youthful pipe and cigar
smoking.
Sec. 8. Liability limitations disappear if manufacturers challenge advertising limits.
Sec. 9. FTC jurisdiction not affected.
Sec. 10. Congressional review provisions.
Title I_Regulation of the Tobacco Industry
Subtitle A_Jurisdiction, Etc., of Food and Drug Administration
Sec. 101. Amendment of Federal Food, Drug, and Cosmetic Act of 1938.
``Chapter IX_Tobacco Products
``Sec. 901. FDA authority over tobacco products
``Sec. 902. Adulterated tobacco products.
``Sec. 903. Misbranded tobacco products.
``Sec. 904. Submission of health information to the Secretary.
``Sec. 905. Registration.
``Sec. 906. General provisions respecting control of tobacco products.
``Sec. 907. Performance standards.
``Sec. 908. Notification and other remedies
``Sec. 909. Records and reports on tobacco products.
``Sec. 910. Premarket review of certain tobacco products.
``Sec. 911. Judicial review.
``Sec. 912. Postmarket surveillance
``Sec. 913. Reduced risk tobacco products.
``Sec. 914. Preservation of State and local authority.
``Sec. 915. Tobacco Products Scientific Advisory Committee.
``Sec. 916. Equal treatment of retail outlets.
Sec. 102. Conforming and other amendments to general provisions.
Subtitle B_Advertising
Sec. 121. Advertising provisions in protocol.
Sec. 122. Tobacco product labeling and advertising .
Sec. 123. Point-of-sale restrictions.
Title II_Reductions in Underage Tobacco Use
Subtitle A_Underage Use
Sec. 201. Goals for reducing underage tobacco use.
Sec. 202. Look-back assessment.
Sec. 203. Substantial non-attainment of required reductions.
Sec. 204. Definitions.
Subtitle B_State Enforcement Incentives
Sec. 211. Compliance bonus fund.
Sec. 212. Block grants.
Sec. 213. State enforcement incentives.
Sec. 214. Conforming change.
Subtitle C_Other Programs
Sec. 221. National smoking cessation program.
Sec. 222. National tobacco-free public education program.
Sec. 223. National community action program.
Sec. 224. State retail licensing program.
Title III_Tobacco Product Warnings and Smoke Constituent Disclosure
Subtitle A_Product Warnings, Labeling and Packaging
Sec. 301. Cigarette label and advertising warnings.
``Sec. 4. Labeling.
Sec. 302. Authority to revise cigarette warning label statements.
Sec. 303. Smokeless tobacco labels and advertising warnings.
``Sec. 3. Smokeless tobacco warning.
Sec. 304. Authority to revise smokeless tobacco product warning labelstatements.
Sec. 305. Tar, nicotine, and other smoke constituent disclosure to thepublic.
Subtitle B_Testing and Reporting of Tobacco Product Smoke Constituents
Sec. 311. Regulation requirement.
Title IV_National Tobacco Settlement Trust Fund
Subtitle A_General Payment Provisions
Sec. 401. Establishment of trust fund.
Sec. 402. State litigation settlement account.
Sec. 403. Payments by industry
Sec. 404. Adjustments.
Sec. 405. Tax treatment of payments.
Sec. 406. Enforcement for nonpayment.
Sec. 407. Administrative provisions.
Subtitle B_General Spending Provisions
Sec. 411. Implementing and enforcement funds.
Sec. 412. Improving child care and early childhood development.
Title V_Standards to Reduce Involuntary Exposure to Tobacco Smoke
Sec. 501. Definitions.
Sec. 502. Smoke-free environment policy.
Sec. 503. Citizen actions.
Sec. 504. Preemption.
Sec. 505. Regulations.
Sec. 506. Effective date.
Sec. 507. State choice.
Title VI_Application to Indian Tribes.
Sec. 601. Short title.
Sec. 602. Findings and purposes.
Sec. 603. Application of tobacco-related provisions to native Americans.
Sec. 604. State tobacco excise tax compliance.
Title VII_Civil Liability of Manufacturers of Tobacco Products
Sec. 701. Definitions
Sec. 702. Application.
Sec. 703. Preemption and relationship to other law.
Sec. 704. Governmental claims and Castano civil actions.
Sec. 705. Concurrent jurisdiction; Federal cause of action; actions; damages;liability.
Sec. 706. Payment of tobacco claim settlements and judgments.
Sec. 707. Attorney's fees and expenses.
Sec. 708. Non-participating manufacturers.
Sec. 709. Conforming amendments.
Title VIII_Tobacco Industry Compliance and Employee Protection from Reprisals
Sec. 801. Tobacco industry compliance accountability requirements.
Sec. 802. Tobacco product manufacturer employee protection.
Title IX_Public Disclosure of Tobacco Industry Documents
Sec. 901. Findings.
Sec. 902. Applicability.
Sec. 903. National Tobacco Document Depository.
Sec. 904. Privilege and trade secret claims.
Sec. 905. Disclosure by the depository.
Sec. 906. National Tobacco Documents Review Board.
Sec. 907. Resolution of disputed privilege and trade secret claims.
Sec. 908. Appeal of board decision.
Sec. 909. Miscellaneous.
Sec. 910. Penalties.
Sec. 911. Definitions.
Title X_Long-Term Economic Assistance for Farmers
Sec. 1001. Short title.
Sec. 1002. Definitions.
Subtitle A_Tobacco Community Revitalization Trust Fund
Sec. 1011. Establishment of trust fund.
Sec. 1012. Contributions by tobacco product manufacturers and importers.
Subtitle B_Tobacco Market Transition Assistance
Sec. 1021. Payments for lost tobacco quota.
Sec. 1022. Industry payments for all department costs associated with tobaccoproduction.
Sec. 1023. Tobacco community economic development grants.
Sec. 1024. Flue-cured tobacco production permits.
``Sec. 317a. Flue-cured tobacco production permits.
Sec. 1025. Modifications in federal tobacco programs.
Subtitle C_Farmer and Worker Transition Assistance
Sec. 1031. Tobacco worker transition program.
Sec. 1032. Farmer opportunity grants.
``Subpart 9_Farmer Opportunity Grants
``Sec. 420d. Statement of purpose.
``Sec. 420e. Program authority; amount and determinations; applications.
``Sec. 420f. Student eligibility.
Subtitle D_Immunity
Sec. 1041. General immunity for tobacco producers and tobacco warehouseowners.
Title XI_Miscellaneous
Subtitle A_Prohibitions Relating to Tobacco Products and Children
Sec. 1101. Short title.
Sec. 1102. Prohibitions relating to tobacco products and children.
``Sec. 804. Prohibition on sale or distribution of tobacco products tochildren.
``Sec. 805. Labeling.
Sec. 1103. Enforcement.
Sec. 1104. Reward.
Sec. 1105. Definitions.
Sec. 1106. Amendments to Public Health Service Act.
``Title XXVIII_National Efforts to Reduce Youth Smoking
``Subtitle E_Reducing Youth Smoking and Tobacco-Related Diseases Through Research
``Sec. 2801. Study by the Institute of Medicine.
``Sec. 2802. National tobacco task force.
``Sec. 2803. Research activities of the Centers for Disease Control andPrevention.
``Sec. 2804. Research activities of the National Institutes of Health.
Sec. 1107. Ban on distribution of tobacco products produced by child labor.
Subtitle B_Federal Licensing of Tobacco Product Distribution
Sec. 1121. Licensing of Tobacco Product Distribution.
Subtitle C_International Provisions
Sec. 1131. International tobacco control trust fund.
Sec. 1132. American center on global health and tobacco.
Sec. 1133. Prohibition on use of funds to facilitate the exportation orpromotion of tobacco.
Sec. 1134. Harmonization with United States international commitments andobligations.
Subtitle D_Prevention of Tobacco Smuggling
Sec. 1141. Definitions.
Sec. 1142. Tobacco product labeling requirements.
Sec. 1143. Requirements for the tracking of tobacco products.
Sec. 1144. Tobacco product permits.
Sec. 1145. Prohibitions.
Sec. 1146. Pricing and labeling of products sold on military installations orby native Americans.
Sec. 1147. Prohibition against sale of tobacco products in or to duty-freeshops or forwarding
through or manufacture in trade zones.
Sec. 1148. Jurisdiction; penalties; compromise of liability.
Sec. 1149. Amendments to the Contraband Cigarette Trafficking Act.
Sec. 1150. Authorization of appropriations.
Subtitle E_Antitrust Exemption
Sec. 1161. Limited Antitrust Exemption.
Subtitle F_Special Provisions Concerning Programs for Women, Minorities, and Others
Sec. 1171. Research related to patterns of smoking by women and minorities.
Sec. 1172. Counter-advertising programs.
Sec. 1173. Prevention activities of community and migrant health centers.
Subtitle G_Sense of the Senate
Sec. 1181. Sense of the Senate.
Subtitle H_Ban On Sale Of Tobacco Products Through The Use Of Vending Machines
Sec. 1191. Ban of sale of tobacco products through the use of vendingmachines.
Title XII_Tobacco Asbestos Trust Fund
Sec. 1201. Definitions.
Sec. 1202. Tobacco Asbestos Trust Fund.
Sec. 1203. Payments from fund I.
Sec. 1204. Payments from fund II.
Sec. 1205. Transfers from National Tobacco Settlement Trust Fund.
Sec. 1206. Rules for claims against asbestos trusts, asbestos defendants, andtobacco companies.
Title XIII_Veterans' Benefits
Sec. 1301. Recovery by secretary of veterans affairs.
``Part VII_Recovery of Compensation Costs for Tobacco-Related Disability or Death
``Chapter 91_Tort Liability for Disability or Death Due to Tobacco Use
``  9101. Recovery by Secretary of Veterans Affairs
``  9102. Regulations
``  9103. Limitation or repeal of other provisions for recovery ofcompensation
``  9104. Exemption from annual limitation on damages
SEC. 2. FINDINGS.
 The Congress finds the following:
 (1) The use of tobacco products by the Nation's children is a pediatric disease of epic and
worsening proportions that results in new generations of tobacco-dependent children and adults.
 (2) A consensus exists within the scientific and medical communities that tobacco products are
inherently dangerous and cause cancer, heart disease, and other serious adverse health effects.
 (3) Nicotine is an addictive drug.
 (4) Virtually all new users of tobacco products are under the minimum legal age to purchase such
products.
 (5) Tobacco advertising and marketing contribute significantly to the use of nicotine-containing
tobacco products by adolescents.
 (6) Because past efforts to restrict advertising and marketing of tobacco products have failed
adequately to curb tobacco use by adolescents, comprehensive restrictions on the sale, promotion,
and distribution of such products are needed.
 (7) Federal and State governments have lacked the legal and regulatory authority and resources
they need to address comprehensively the public health and societal problems caused by the use of
tobacco products.
 (8) Federal and State public health officials, the public health community, and the public at large
recognize that the tobacco industry should be subject to ongoing oversight.
 (9) Under Article I, Section 8 of the Constitution, the Congress is vested with the responsibility
for regulating interstate commerce and commerce with Indian tribes.
 (10) The sale, distribution, marketing, advertising, and use of tobacco products are activities in
and substantially affecting interstate commerce. Such products are sold, marketed, advertised, and
distributed in interstate commerce on a nationwide basis, and have a substantial effect on the
Nation's economy.
 (11) The sale, distribution, marketing, advertising, and use of such products substantially affect
interstate commerce through the health care and other costs attributable to the use of tobacco
products.
 (12) Civil actions against tobacco product manufacturers and others are pending in Federal and
State courts arising from the use, marketing, and sale of tobacco products. Among these actions
are cases brought by the attorneys general of more than 40 States, certain cities and counties, and
the Commonwealth of Puerto Rico, and other parties, including Indian tribes, and class actions
brought by private claimants (such as in the Castano Civil Actions), seeking to recover monies
expended to treat tobacco-related diseases and for the protection of minors and consumers, as
well as penalties and other relief for violations of antitrust, health, consumer protection, and other
laws.
 (13) Civil actions have been filed throughout the United States against tobacco product
manufacturers and their distributors, trade associations, law firms, and consultants on behalf of
individuals or classes of individuals claiming to be dependent upon and injured by tobacco
products.
 (14) These civil actions are complex, time-consuming, expensive, and burdensome for both the
litigants and Federal and State courts. To date, these civil actions have not resulted in sufficient
redress for smokers or non-governmental third-party payers. To the extent that governmental
entities have been or may in the future be compensated for tobacco-related claims they have
brought, it is not now possible to identify what portions of such past or future recoveries can be
attributed to their various antitrust, health, consumer protection, or other causes of action.
 (15) It is in the public interest for Congress to adopt comprehensive public health legislation
because of tobacco's unique position in the Nation's history and economy; the need to prevent the
sale, distribution, marketing and advertising of tobacco products to persons under the minimum
legal age to purchase such products; and the need to educate the public, especially young people,
regarding the health effects of using tobacco products.
 (16) The public interest requires a timely, fair, equitable, and consistent result that will serve the
public interest by (A) providing that a portion of the costs of treatment for diseases and adverse
health effects associated with the use of tobacco products is borne by the manufacturers of these
products, and (B) restricting throughout the Nation the sale, distribution, marketing, and
advertising of tobacco products only to persons of legal age to purchase such products.
 (17) Public health authorities estimate that the benefits to the Nation of enacting Federal
legislation to accomplish these goals would be significant in human and economic terms.
 (18) Reducing the use of tobacco by minors by 50 percent would prevent well over 60,000 early
deaths each year and save up to $43 billion each year in reduced medical costs, improved
productivity, and the avoidance of premature deaths.
 (19) Advertising, marketing, and promotion of tobacco products have been especially directed to
attract young persons to use tobacco products and these efforts have resulted in increased use of
such products by youth. Past efforts to oversee these activities have not been successful in
adequately preventing such increased use.
 (20) In 1995, the tobacco industry spent close to $4,900,000,000 to attract new users, retain
current users, increase current consumption, and generate favorable long-term attitudes toward
smoking and tobacco use.
 (21) Tobacco product advertising often misleadingly portrays the use of tobacco as socially
acceptable and healthful to minors.
 (22) Tobacco product advertising is regularly seen by persons under the age of 18, and persons
under the age of 18 are regularly exposed to tobacco product promotional efforts.
 (23) Through advertisements during and sponsorship of sporting events, tobacco has become
strongly associated with sports and has become portrayed as an integral part of sports and the
healthy lifestyle associated with rigorous sporting activity.
 (24) Children are exposed to substantial and unavoidable tobacco advertising that leads to
favorable beliefs about tobacco use, plays a role in leading young people to overestimate the
prevalence of tobacco use, and increases the number of young people who begin to use tobacco.
 (25) Tobacco advertising increases the size of the tobacco market by increasing consumption of
tobacco products including increasing tobacco use by young people.
 (26) Children are more influenced by tobacco advertising than adults, they smoke the most
advertised brands, and children as young as 3 to 6 years old can recognize a character associated
with smoking at the same rate as they recognize cartoons and fast food characters.
 (27) Tobacco company documents indicate that young people are an important and often crucial
segment of the tobacco market.
 (28) Comprehensive advertising restrictions will have a positive effect on the smoking rates of
young people.
 (29) Restrictions on advertising are necessary to prevent unrestricted tobacco advertising from
undermining legislation prohibiting access to young people and providing for education about
tobacco use.
 (30) International experience shows that advertising regulations that are stringent and
comprehensive have a greater impact on overall tobacco use and young people's use than weaker
or less comprehensive ones. Text-only requirements, while not as stringent as a ban, will help
reduce underage use of tobacco products while preserving the informational function of
advertising.
 (31) It is in the public interest for Congress to adopt legislation to address the public health crisis
created by actions of the tobacco industry.
 (32) If, as a direct or indirect result of this Act, the consumption of tobacco products in the
United States is reduced significantly, then tobacco farmers, their families, and their communities
may suffer economic hardship and displacement, notwithstanding their lack of involvement in the
manufacturing and marketing of tobacco products.
SEC. 3. PURPOSE.
 The purposes of this Act are_
 (1) to confirm the authority of the Food and Drug Administration to regulate tobacco products
under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), by recognizing it as the
primary Federal regulatory authority with respect to the manufacture, marketing, and distribution
of tobacco products;
 (2) to require the tobacco industry to fund both Federal and State oversight of the tobacco
industry from on-going payments by tobacco product manufacturers;
 (3) to require tobacco product manufacturers to provide ongoing funding to be used for an
aggressive Federal, State, and local enforcement program and for a nationwide retail licensing
system to prevent minors from obtaining tobacco products, while expressly permitting the States
to adopt additional measures that further restrict or eliminate the products' use;
 (4) to ensure that the Food and Drug Administration and the States may continue to address
issues of particular concern to public health officials, especially the use of tobacco by young
people and dependence on tobacco;
 (5) to impose severe financial surcharges on tobacco product manufacturers if they do not
substantially reduce tobacco use by young people during the next decade;
 (6) to authorize appropriate agencies of the Federal government to set national standards
controlling the manufacture of tobacco products and the identity, public disclosure, and amount of
ingredients used in such products;
 (7) to provide new and flexible enforcement authority to ensure that the tobacco industry makes
efforts to develop and introduce less harmful tobacco products;
 (8) to confirm the Food and Drug Administration's authority to regulate the levels of tar,
nicotine, and other harmful components of tobacco products;
 (9) in order to ensure that adults are better informed, to require tobacco product manufacturers
to disclose all research which has not previously been made available, as well as research
generated in the future, relating to the health and dependency effects or safety of tobacco
products;
 (10) to impose on tobacco product manufacturers the obligation to provide funding for a variety
of public health initiatives;
 (11) to establish a minimum Federal standard for stringent restrictions on smoking in public
places, with funding to enforce such standard derived from payments made by tobacco product
manufacturers, while also to permit State, Tribal, and local governments to enact additional and
more stringent standards or elect not to be covered by the Federal standard;
 (12) to authorize and fund from payments by tobacco product manufacturers a continuing
national counter-advertising and tobacco control campaign which seeks to educate consumers and
discourage children and adolescents from beginning to use tobacco products, and which
encourages current users of tobacco products to discontinue using such products;
 (13) to establish a mechanism to compensate the States in settlement of their various claims
against tobacco product manufacturers;
 (14) to authorize and to fund from payments by tobacco product manufacturers a nationwide
program of smoking cessation administered through State and Tribal governments and the private
sector;
 (15) to establish and fund from payments by tobacco product manufacturers a National Tobacco
Settlement Fund;
 (16) to affirm the rights of individuals to access to the courts, to civil trial by jury, and to
damages to compensate them for harm caused by tobacco products;
 (17) to continue to permit the sale of tobacco products to adults in conjunction with measures to
ensure that they are not sold or accessible to underage purchasers;
 (18) to impose appropriate regulatory controls on the tobacco industry; and
 (19) to protect tobacco farmers and their communities from the economic impact of this Act by
providing full funding for and the continuation of the Federal tobacco program and by providing
funds for farmers and communities to develop new opportunities in tobacco-dependent
communities.
SEC. 4. SCOPE AND EFFECT.
 (a)  Intended Effect._ This Act is not intended to_
 (1) establish a precedent with regard to any other industry, situation, circumstance, or legal
action;
 (2) express any position of the Congress with regard to the imposition of punitive damages in
general or as applied to any specific industry, case, controversy, or product other than as provided
in this Act;
 (3) provide any authority regarding the imposition of, or the appropriateness of imposing,
punitive damages; or
 (4) except as provided in this Act, affect any action pending in State, Tribal, or Federal court, or
any agreement, consent decree, or contract of any kind.
 (b)  Taxation._ Notwithstanding any other provision of law, this Act and the amendments made
by this Act shall not affect any authority of the Secretary of the Treasury (including any authority
assigned to the Bureau of Alcohol, Tobacco and Firearms) or of State or local governments with
regard to taxation for tobacco or tobacco products.
 (c)  Agricultural Activities._ The provisions of this Act which authorize the Secretary to take
certain actions with regard to tobacco and tobacco products shall not be construed to affect any
authority of the Secretary of Agriculture under existing law regarding the growing, cultivation, or
curing of raw tobacco.
SEC. 5. NON-PREEMPTION OF MORE RESTRICTIVE LAWS.
 (a)  Age Restrictions._ Nothing in this Act or the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 301 et seq.), as amended by this Act, shall prevent a Federal agency (including the Armed
Forces), a State or its political subdivisions, or the government of an Indian tribe from adopting
and enforcing additional measures that further restrict or prohibit tobacco product sale to, use by,
and accessibility to persons under the legal age of purchase established by such agency, State,
subdivision, or government of an Indian tribe.
 (b)  Additional Measures._ Except as otherwise expressly provided in this Act, nothing in this
Act, the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), or rules promulgated
under such Acts, shall limit the authority of a Federal agency (including the Armed Forces), a
State or its political subdivisions, or the government of an Indian tribe to enact, adopt,
promulgate, and enforce any law, rule, regulation, or other measure with respect to tobacco
products, including laws, rules, regulations, or other measures relating to or prohibiting the sale,
distribution, possession, exposure to, or use of tobacco products by persons of any age that are in
addition to the provisions of this Act and the amendments made by this Act. No provision of this
Act or amendment made by this Act shall limit or otherwise affect any State, Tribal, or local
taxation of tobacco products.
 (c)  State Law Not Affected._ Except as otherwise expressly provided in this Act, nothing in this
Act, the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), or rules promulgated
under such Acts, shall supersede the authority of the States, pursuant to State law, to expend
funds provided by this Act.
SEC. 6. DEFINITIONS.
 In this Act:
 (1)  Brand._ The term ``brand'' means a variety of tobacco product distinguished by the tobacco
used, tar content, nicotine content, flavoring used, size, filtration, or packaging, logo, registered
trademark or brand name, identifiable pattern of colors, or any combination of such attributes.
 (2)  Cigarette._ The term ``cigarette'' has the meaning given that term by section 3(1) of the
Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1332(1)), but also includes tobacco, in
any form, that is functional in the product, which, because of its appearance, the type of tobacco
used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by,
consumers as a cigarette or as roll-your-own tobacco.
 (3)  Cigarette tobacco._ The term ``cigarette tobacco'' means any product that consists of loose
tobacco that is intended for use by consumers in a cigarette. Unless otherwise stated, the
requirements for cigarettes shall also apply to cigarette tobacco.
 (4)  Commerce._ The term ``commerce'' has the meaning given that term by section 3(2) of the
Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1332(2)).
 (5)  Consent decree._ The term ``consent decree'' means a consent decree among participating
tobacco product manufacturers whose substantive terms are substantially equivalent to the form
consent decree published for purposes of this paragraph in the Congressional Record.
 (6)  Distributor._ The term ``distributor'' as regards a tobacco product means any person who
furthers the distribution of cigarette or smokeless tobacco, whether domestic or imported, at any
point from the original place of manufacture to the person who sells or distributes the product to
individuals for personal consumption. Common carriers are not considered distributors for
purposes of this Act.
 (7)  Indian country; Indian lands._ The terms ``Indian country'' and ``Indian lands'' have the
meaning given the term ``Indian country'' by section 1151 of title 18, United States Code, and
includes lands under the jurisdiction of an Indian tribe or tribal organization.
 (8)  Indian tribe._ The term ``Indian tribe'' has the meaning given such term in section 4(e) of the
Indian Self Determination and Education Assistance Act (25 U.S.C. 450b(e)).
 (9)  Little cigar._ The term ``little cigar'' has the meaning given that term by section 3(7) of the
Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1332(7)).
 (10)  Tobacco product manufacturer._ Except in titles VII and X, the term ``tobacco product
manufacturer'' means any person, including any repacker or relabeler, who manufactures,
fabricates, assembles, processes, or labels a finished cigarette or smokeless tobacco product.
 (11)  Nicotine._ The term ``nicotine'' means the chemical substance named 3-(1-Methyl-2-
pyrrolidinyl) pyridine or C[10]H[14]N[2], including any salt or complex of nicotine.
 (12)  Package._ The term ``package'' means a pack, box, carton, or container of any kind or, if no
other container, any wrapping (including cellophane), in which cigarettes or smokeless tobacco
are offered for sale, sold, or otherwise distributed to consumers.
 (13)  Point-of-sale._ The term ``point-of-sale'' means any location at which a consumer can
purchase or otherwise obtain cigarettes or smokeless tobacco for personal consumption.
 (14)  Retailer._ The term ``retailer'' means any person who sells cigarettes or smokeless tobacco
to individuals for personal consumption, or who operates a facility where self-service displays of
tobacco products are permitted.
 (15)  Roll-your-own tobacco._ The term ``roll-your-own tobacco'' means any tobacco which,
because of its appearance, type, packaging, or labeling, is suitable for use and likely to be offered
to, or purchased by, consumers as tobacco for making cigarettes.
 (16)  Secretary._ Except in title VII and where the context otherwise requires, the term
``Secretary'' means the Secretary of Health and Human Services.
 (17)  Smokeless tobacco._ The term ``smokeless tobacco'' means any product that consists of
cut, ground, powdered, or leaf tobacco that contains nicotine and that is intended to be placed in
the oral cavity.
 (18)  State._ The term ``State'' means any State of the United States and, for purposes of this
Act, includes the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin
Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, Johnston Atoll, the
Northern Mariana Islands, and any other trust territory or possession of the United States.
 (19)  Tobacco product._ The term ``tobacco product'' means cigarettes, cigarette tobacco,
smokeless tobacco, little cigars, roll-your-own tobacco, and fine cut products.
 (20)  United States._ The term ``United States'' means the 50 States of the United States of
America and the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin
Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, Johnston Atoll, the
Northern Mariana Islands, and any other trust territory or possession of the United States.
 (21)  Master Settlement Agreement._  The term ``Master Settlement Agreement'' means the
agreement either previously entered or to be entered into by the States, the participating tobacco
product manufacturers, and the Trade Associations implementing the June 20, 1997, Proposed
Resolution, and published in the Congressional Record for purposes of this Act.
 (22)  Participating tobacco product manufacturer._  The term ``participating tobacco product
manufacturer'' means_
 (A) a tobacco product manufacturer that, within 45 days after the date of enactment of this Act
(or within 45 days after the date on which such manufacturer first manufactures tobacco products
for sale or distribution in the United States, if such date is after the date of enactment of this
Act)_
 (i) becomes a signatory to the Master Settlement Agreement; and
 (ii) enters into consent decrees with each State that made a request within the time period
described in section 704(b); or
 (B) a surviving entity established by a participating tobacco product manufacturer.
 (23)  Non-participating tobacco product manufacturer._  The term ``non-participating tobacco
product manufacturer'' means a tobacco product manufacturer that is not a participating tobacco
product manufacturer.
 (24)  Protocol._  The term ``Protocol'' means the agreement to be entered into by the Secretary
of Health and Human Services with the participating tobacco product manufacturers under this
Act.
SEC. 7. NOTIFICATION IF YOUTHFUL CIGARETTE SMOKING RESTRICTIONS
INCREASE YOUTHFUL PIPE AND CIGAR SMOKING.
 The Secretary shall notify the Congress if the Secretary determines that a decrease in underage
use of tobacco products resulting from the enactment of this Act has produced an increase in
underage use of pipe tobacco and cigars.
SEC. 8. LIABILITY LIMITATIONS DISAPPEAR IF TOBACCO PRODUCT
MANUFACTURER CHALLENGES ADVERTISING LIMITS.
 If a tobacco product manufacturer, or any party acting on behalf of, in collusion with, or at the
request of, a tobacco product manufacturer brings an action to have the advertising restrictions
imposed on tobacco products under this Act, or the amendments made by this Act, or the
application of those regulations to any person or circumstance held to be unconstitutional or
otherwise invalid under the laws of the United States then the provisions of title VII relating to
limitations on liability shall not apply to that manufacturer, beginning on the date on which the
action is filed in a court of competent jurisdiction, and continuing until such time as the action is
withdrawn or dismissed.
SEC. 9. FTC JURISDICTION NOT AFFECTED.
 (a)  In General._ Except where expressly provided in this Act, nothing in this Act shall be
construed as limiting or diminishing the authority of the Federal Trade Commission to enforce the
laws under its jurisdiction with respect to the advertising, sale, or distribution of tobacco
products.
 (b)  Enforcement by FTC._ Any advertising that violates this Act, part 897 of title 21, Code of
Federal Regulations, or the Protocol is an unfair or deceptive act or practice under section 5(a) of
the Federal Trade Commission Act (15 U.S.C. 45(a)) and shall be considered a violation of a rule
promulgated under section 18 of that Act (15 U.S.C. 57a).
SEC. 10. CONGRESSIONAL REVIEW PROVISIONS.
 In accordance with section 801 of title 5, United States Code, the Congress shall review, and
may disapprove, any rule under this Act that is subject to section 801. This section does not apply
to the rule set forth in part 897 oftitle 21, Code of Federal Regulations.
TITLE I_REGULATION OF THE TOBACCO INDUSTRY
Subtitle A_Jurisdiction, etc., of Food and Drug Administration
SEC. 101. AMENDMENT OF FEDERAL FOOD, DRUG, AND COSMETIC ACT OF 1938.
 (a)  Definition of Tobacco Products._ Section 201 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 321) is amended by adding at the end the following:
 ``(kk) The term `tobacco product' means any product made or derived from tobacco that is
intended for human consumption, including any component, part, or accessory of a tobacco
product (except for raw materials other than tobacco used in manufacturing a component, part, or
accessory of a tobacco product).''.
 (b)  FDA Authority over Tobacco Products._ The Federal Food, Drug, and Cosmetic Act (21
U.S.C. 301 et seq.) is amended_
 (1) by redesignating chapter IX as chapter X;
 (2) by redesignating sections 901 through 907 as sections 1001 through 1007; and
 (3) by inserting after section 803 the following:
``CHAPTER IX_TOBACCO PRODUCTS
``SEC. 901. FDA AUTHORITY OVER TOBACCO PRODUCTS
  ``(a)  In General._ Tobacco products shall be regulated by the Secretary under this chapter and
shall not be subject to the provisions of chapter V, unless_
 ``(1) such products are intended for use in the diagnosis, cure, mitigation, treatment, or
prevention of disease (within the meaning of section 201(g)(1)(B) or section 201(h)(2)); or
 ``(2) a health claim is made for such products under section 201(g)(1)(C) or 201(h)(3).
 ``(b)  Applicability._ This chapter shall apply to all tobacco products subject to the provisions of
part 897 of title 21, Code of Federal Regulations, and to any other tobacco products that the
Secretary by regulation deems to be subject to this chapter.
 ``(c)  FDA Rule in Effect._ The provisions of part 897 of title 21, Code of Federal Regulations,
shall be deemed to be lawful and to have been lawfully promulgated under the authority of this
chapter. The provisions of such part that are not in effect on the date of enactment of this chapter
shall take effect as in such part or upon such later date as determined by the Secretary by order.
 ``(d)  Scope._
 ``(1) Nothing in this chapter shall be construed to affect the regulation of drugs and devices
under chapter V that are not tobacco products by the Secretary under the Federal Food, Drug and
Cosmetic Act.
 ``(2) The provisions of this chapter shall not apply to tobacco leaf that is not in the possession of
the manufacturer, or to the producers of tobacco leaf, including tobacco growers, tobacco
warehouses, and tobacco grower cooperatives, nor shall any employee of the Food and Drug
Administration have any authority whatsoever to enter onto a farm owned by a producer of
tobacco leaf without the written consent of such producer. Notwithstanding any other provision
of this subparagraph, if a producer of tobacco leaf is also a tobacco product manufacturer or
controlled by a tobacco product manufacturer, the producer shall be subject to this chapter in the
producer's capacity as a manufacturer. Nothing in this chapter shall be construed to grant the
Secretary authority to promulgate regulations on any matter that involves the production of
tobacco leaf or a producer thereof, other than activities by a manufacturer affecting production.
For purposes of the preceding sentence, the term `controlled by' means a member of the same
controlled group of corporations as that term is used in section 52(a) of the Internal Revenue
Code of 1986, or under common control within the meaning of the regulations promulgated under
section 52(b) of such Code.
``SEC. 902. ADULTERATED TOBACCO PRODUCTS.
 ``A tobacco product shall be deemed to be adulterated if_
 ``(1) it consists in whole or in part of any filthy, putrid, or decomposed substance, or is otherwise
contaminated by any poisonous or deliterious substance that may render the product injurious to
health;
 ``(2) it has been prepared, packed, or held under insanitary conditions whereby it may have been
contaminated with filth, or whereby it may have been rendered injurious to health;
 ``(3) its container is composed, in whole or in part, of any poisonous or deleterious substance
which may render the contents injurious to health;
 ``(4) it is, or purports to be or is represented as, a tobacco product which is subject to a
performance standard established under section 907 unless such tobacco product is in all respects
in conformity with such standard;
 ``(5) it is required by section 910(a) to have premarket approval, is not exempt under section
906(f), and does not have an approved application in effect;
 ``(6) the methods used in, or the facilities or controls used for, its manufacture, packing or
storage are not in conformity with applicable requirements under section 906(e)(1) or an
applicable condition prescribed by an order under section 906(e)(2); or
 ``(7) it is a tobacco product for which an exemption has been granted under section 906(f) for
investigational use and the person who was granted such exemption or any investigator who uses
such tobacco product under such exemption fails to comply with a requirement prescribed by or
under such section.
``SEC. 903. MISBRANDED TOBACCO PRODUCTS.
 ``(a)  In General._ A tobacco product shall be deemed to be misbranded_
 ``(1) if its labeling is false or misleading in any particular;
 ``(2) if in package form unless it bears a label containing_
 ``(A) the name and place of business of the tobacco product manufacturer, packer, or distributor;
and
 ``(B) an accurate statement of the quantity of the contents in terms of weight, measure, or
numerical count,
except that under subparagraph (B) of this paragraph reasonable variations shall be permitted, and
exemptions as to small packages shall be established, by regulations prescribed by the Secretary;
 ``(3) if any word, statement, or other information required by or under authority of this chapter
to appear on the label or labeling is not prominently placed thereon with such conspicuousness (as
compared with other words, statements or designs in the labeling) and in such terms as to render
it likely to be read and understood by the ordinary individual under customary conditions of
purchase and use;
 ``(4) if it has an established name, unless its label bears, to the exclusion of any other
nonproprietary name, its established name prominently printed in type as required by the Secretary
by regulation;
 ``(5) if the Secretary has issued regulations requiring that its labeling bear adequate directions for
use, or adequate warnings against use by children, that are necessary for the protection of users
unless its labeling conforms in all respects to such regulations;
 ``(6) if it was manufactured, prepared, propagated, compounded, or processed in any State in an
establishment not duly registered under section 905(b), if it was not included in a list required by
section 905(i), if a notice or other information respecting it was not provided as required by such
section or section 905(j), or if it does not bear such symbols from the uniform system for
identification of tobacco products prescribed under section 905(e) as the Secretary by regulation
requires;
 ``(7) if, in the case of any tobacco product distributed or offered for sale in any State_
 ``(A) its advertising is false or misleading in any particular; or
 ``(B) it is sold, distributed, or used in violation of regulations prescribed under section 906(d);
 ``(8) unless, in the case of any tobacco product distributed or offered for sale in any State, the
manufacturer, packer, or distributor thereof includes in all advertisements and other descriptive
printed matter issued or caused to be issued by the manufacturer, packer, or distributor with
respect to that tobacco product_
 ``(A) a true statement of the tobacco product's established name as defined in paragraph (4) of
this subsection, printed prominently; and
 ``(B) a brief statement of_
 ``(i) the uses of the tobacco product and relevant warnings, precautions, side effects, and
contraindications; and
 ``(ii) in the case of specific tobacco products made subject to a finding by the Secretary after
notice and opportunity for comment that such action is necessary to protect the public health, a
full description of the components of such tobacco product or the formula showing quantitatively
each ingredient of such tobacco product to the extent required in regulations which shall be issued
by the Secretary after an opportunity for a hearing;
 ``(9) if it is a tobacco product subject to a performance standard established under section 907,
unless it bears such labeling as may be prescribed in such performance standard; or
 ``(10) if there was a failure or refusal_
 ``(A) to comply with any requirement prescribed under section 904 or 908;
 ``(B) to furnish any material or information required by or under section 909; or
 ``(C) to comply with a requirement under section 912.
 ``(b)  Prior Approval of Statements on Label._ The Secretary may, by regulation, require prior
approval of statements made on the label of a tobacco product. No regulation issued under this
subsection may require prior approval by the Secretary of the content of any advertisement and no
advertisement of a tobacco product, published after the date of enactment of the National
Tobacco Policy and Youth Smoking Reduction Act shall, with respect to the matters specified in
this section or covered by regulations issued hereunder, be subject to the provisions of sections 12
through 15 of the Federal Trade Commission Act (15 U.S.C. 52 through 55). This subsection
does not apply to any printed matter which the Secretary determines to be labeling as defined in
section 201(m).
``SEC. 904. SUBMISSION OF HEALTH INFORMATION TO THE SECRETARY.
 ``(a)  Requirement ._Not later than 6 months after the date of enactment of the National Tobacco
Policy and Youth Smoking Reduction Act, each tobacco product manufacturer or importer of
tobacco products, or agents thereof, shall submit to the Secretary the following information:
 ``(1) A listing of all tobacco ingredients, substances and compounds that are, on such date, added
by the manufacturer to the tobacco, paper, filter, or other component of each tobacco product by
brand and by quantity in each brand and subbrand.
 ``(2) A description of the content, delivery, and form of nicotine in each tobacco product
measured in milligrams of nicotine.
 ``(3) All documents (including underlying scientific information) relating to research activities,
and research findings, conducted, supported, or possessed by the manufacturer (or agents thereof)
on the health, behavioral, or physiologic effects of tobacco products, their constituents,
ingredients, and components, and tobacco additives, described in paragraph (1).
 ``(4) All documents (including underlying scientific information) relating to research activities,
and research findings, conducted, supported, or possessed by the manufacturer that relate to the
issue of whether a reduction in risk to health from tobacco products can occur upon the
employment of technology available or known to the manufacturer.
 ``(5) All documents (including underlying scientific information) relating to marketing research
involving the use of tobacco products.
An importer of a tobacco product not manufactured in the United States shall supply the
information required of a tobacco product manufacturer under this subsection.
 ``(b)  Annual Submission ._A tobacco product manufacturer or importer that is required to
submit information under subsection (a) shall update such information on an annual basis under a
schedule determined by the Secretary.
 ``(c)  Time for Submission ._
 ``(1)  New products ._At least 90 days prior to the delivery for introduction into interstate
commerce of a tobacco product not on the market on the date of enactment of this chapter, the
manufacturer of such product shall provide the information required under subsection (a) and
such product shall be subject to the annual submission under subsection (b).
 ``(2)  Modification of existing products ._If at any time a tobacco product manufacturer adds to
its tobacco products a new tobacco additive, increases or decreases the quantity of an existing
tobacco additive or the nicotine content, delivery, or form, or eliminates a tobacco additive from
any tobacco product, the manufacturer shall within 60 days of such action so advise the Secretary
in writing and reference such modification in submissions made under subsection (b).
``SEC. 905. ANNUAL REGISTRATION.
 ``(a)  Definitions._ As used in this section_
 ``(1) the term `manufacture, preparation, compounding, or processing' shall include repackaging
or otherwise changing the container, wrapper, or labeling of any tobacco product package in
furtherance of the distribution of the tobacco product from the original place of manufacture to
the person who makes final delivery or sale to the ultimate consumer or user; and
 ``(2) the term `name' shall include in the case of a partnership the name of each partner and, in the
case of a corporation, the name of each corporate officer and director, and the State of
incorporation.
 ``(b)  Registration by Owners and Operators._ On or before December 31 of each year every
person who owns or operates any establishment in any State engaged in the manufacture,
preparation, compounding, or processing of a tobacco product or tobacco products shall register
with the Secretary the name, places of business, and all such establishments of that person.
 ``(c)  Registration of New Owners and Operators._ Every person upon first engaging in the
manufacture, preparation, compounding, or processing of a tobacco product or tobacco products
in any establishment owned or operated in any State by that person shall immediately register with
the Secretary that person's name, place of business, and such establishment.
 ``(d)  Registration of Added Establishments._ Every person required to register under subsection
(b) or (c) shall immediately register with the Secretary any additional establishment which that
person owns or operates in any State and in which that person begins the manufacture,
preparation, compounding, or processing of a tobacco product or tobacco products.
 ``(e)  Uniform Product Identification System._ The Secretary may by regulation prescribe a
uniform system for the identification of tobacco products and may require that persons who are
required to list such tobacco products under subsection (i) of this section shall list such tobacco
products in accordance with such system.
 ``(f)  Public Access to Registration Information._ The Secretary shall make available for
inspection, to any person so requesting, any registration filed under this section.
 ``(g)  Biennial Inspection of Registered Establishments._ Every establishment in any State
registered with the Secretary under this section shall be subject to inspection under section 704,
and every such establishment engaged in the manufacture, compounding, or processing of a
tobacco product or tobacco products shall be so inspected by one or more officers or employees
duly designated by the Secretary at least once in the 2-year period beginning with the date of
registration of such establishment under this section and at least once in every successive 2-year
period thereafter.
 ``(h)  Foreign Establishments May Register._ Any establishment within any foreign country
engaged in the manufacture, preparation, compounding, or processing of a tobacco product or
tobacco products, may register under this section under regulations promulgated by the Secretary.
Such regulations shall require such establishment to provide the information required by
subsection (i) of this section and shall include provisions for registration of any such establishment
upon condition that adequate and effective means are available, by arrangement with the
government of such foreign country or otherwise, to enable the Secretary to determine from time
to time whether tobacco products manufactured, prepared, compounded, or processed in such
establishment, if imported or offered for import into the United States, shall be refused admission
on any of the grounds set forth in section 801(a).
 ``(i)  Registration Information._
 ``(1)  Product list._ Every person who registers with the Secretary under subsection (b), (c), or
(d) of this section shall, at the time of registration under any such subsection, file with the
Secretary a list of all tobacco products which are being manufactured, prepared, compounded, or
processed by that person for commercial distribution and which has not been included in any list
of tobacco products filed by that person with the Secretary under this paragraph or paragraph (2)
before such time of registration. Such list shall be prepared in such form and manner as the
Secretary may prescribe and shall be accompanied by_
 ``(A) in the case of a tobacco product contained in the applicable list with respect to which a
performance standard has been established under section 907 or which is subject to section 910, a
reference to the authority for the marketing of such tobacco product and a copy of all labeling for
such tobacco product;
 ``(B) in the case of any other tobacco product contained in an applicable list, a copy of all
consumer information and other labeling for such tobacco product, a representative sampling of
advertisements for such tobacco product, and, upon request made by the Secretary for good
cause, a copy of all advertisements for a particular tobacco product; and
 ``(C) if the registrant filing a list has determined that a tobacco product contained in such list is
not subject to a performance standard established under section 907, a brief statement of the basis
upon which the registrant made such determination if the Secretary requests such a statement with
respect to that particular tobacco product.
 ``(2)  Biannual Report of Any Change in Product List._ Each person who registers with the
Secretary under this section shall report to the Secretary once during the month of June of each
year and once during the month of December of each year the following:
 ``(A) A list of each tobacco product introduced by the registrant for commercial distribution
which has not been included in any list previously filed by that person with the Secretary under
this subparagraph or paragraph (1) of this subsection. A list under this subparagraph shall list a
tobacco product by its established name and shall be accompanied by the other information
required by paragraph (1).
 ``(B) If since the date the registrant last made a report under this paragraph that person has
discontinued the manufacture, preparation, compounding, or processing for commercial
distribution of a tobacco product included in a list filed under subparagraph (A) or paragraph (1),
notice of such discontinuance, the date of such discontinuance, and the identity of its established
name.
 ``(C) If since the date the registrant reported under subparagraph (B) a notice of discontinuance
that person has resumed the manufacture, preparation, compounding, or processing for
commercial distribution of the tobacco product with respect to which such notice of
discontinuance was reported, notice of such resumption, the date of such resumption, the identity
of such tobacco product by established name, and other information required by paragraph (1),
unless the registrant has previously reported such resumption to the Secretary under this
subparagraph.
 ``(D) Any material change in any information previously submitted under this paragraph or
paragraph (1).
 ``(j)  Report Preceding Introduction of Certain Substantially-equivalent Products into Interstate
Commerce._
 ``(1)  In general._ Each person who is required to register under this section and who proposes
to begin the introduction or delivery for introduction into interstate commerce for commercial
distribution of a tobacco product intended for human use that was not commercially marketed
(other than for test marketing) in the United States as of August 11, 1995, as defined by the
Secretary by regulation shall, at least 90 days before making such introduction or delivery, report
to the Secretary (in such form and manner as the Secretary shall by regulation prescribe)_
 ``(A) the basis for such person's determination that the tobacco product is substantially
equivalent, within the meaning of section 910, to a tobacco product commercially marketed (other
than for test marketing) in the United States as of August 11, 1995, that is in compliance with the
requirements of this Act; and
 ``(B) action taken by such person to comply with the requirements under section 907 that are
applicable to the tobacco product.
 ``(2)  Application to certain post-August  11 th products._ A report under this subsection for a
tobacco product that was first introduced or delivered for introduction into interstate commerce
for commercial distribution in the United States after August 11, 1995, and before the date of
enactment of the National Tobacco Policy and Youth Smoking Reduction Act shall be submitted
to the Secretary within 6 months after the date of enactment of that Act.
``SEC. 906. GENERAL PROVISIONS RESPECTING CONTROL OF TOBACCO
PRODUCTS.
 ``(a)  In General._ Any requirement established by or under section 902, 903, 905, or 909
applicable to a tobacco product shall apply to such tobacco product until the applicability of the
requirement to the tobacco product has been changed by action taken under section 907, section
910, or subsection (d) of this section, and any requirement established by or under section 902,
903, 905, or 909 which is inconsistent with a requirement imposed on such tobacco product under
section 907, section 910, or subsection (d) of this section shall not apply to such tobacco product.
 ``(b)  Information on Public Access and Comment._ Each notice of proposed rulemaking under
section 907, 908, 909, or 910, or under this section, any other notice which is published in the
Federal Register with respect to any other action taken under any such section and which states
the reasons for such action, and each publication of findings required to be made in connection
with rulemaking under any such section shall set forth_
 ``(1) the manner in which interested persons may examine data and other information on which
the notice or findings is based; and
 ``(2) the period within which interested persons may present their comments on the notice or
findings (including the need therefor) orally or in writing, which period shall be at least 60 days
but may not exceed 90 days unless the time is extended by the Secretary by a notice published in
the Federal Register stating good cause therefor.
 ``(c)  Limited Confidentiality of Information._ Any information reported to or otherwise obtained
by the Secretary or the Secretary's representative under section 904, 907, 908, 909, or 910 or
704, or under subsection (e) or (f) of this section, which is exempt from disclosure under
subsection (a) of section 552 of title 5, United States Code, by reason of subsection (b)(4) of that
section shall be considered confidential and shall not be disclosed, except that the information may
be disclosed to other officers or employees concerned with carrying out this chapter, or when
relevant in any proceeding under this chapter.
 ``(d)  Restrictions._
 ``(1) The Secretary may by regulation require that a tobacco product be restricted to sale,
distribution, or use upon such conditions, including restrictions on the access to, and the
advertising and promotion of, the tobacco product, as the Secretary may prescribe in such
regulation if, because of its potentiality for harmful effect or the collateral measures necessary to
its use, the Secretary determines that such regulation would be appropriate for the protection of
the public health. The finding as to whether such regulation would be appropriate for the
protection of the public health shall be determined with respect to the risks and benefits to the
population as a whole, including users and non-users of the tobacco product, and taking into
account_
 ``(A) the increased or decreased likelihood that existing users of tobacco products will stop using
such products; and
 ``(B) the increased or decreased likelihood that those who do not use tobacco products will start
using such products.
No such condition may require that the sale or distribution of a tobacco product be limited to the
written or oral authorization of a practitioner licensed by law to prescribe medical products.
 ``(2) The label of a tobacco product shall bear such appropriate statements of the restrictions
required by a regulation under subsection (a) as the Secretary may in such regulation prescribe.
 ``(3) Because of the importance of any decision by the Secretary to restrict the sale of any class
of tobacco products on the market on the date of enactment of the National Tobacco Policy and
Youth Smoking Reduction Act to specified categories of retail outlets, it is appropriate for the
Congress to have the opportunity to review such a decision. Therefore, any such restriction may
not take effect before the date that is 2 years after the President notifies the Congress that a final
regulation imposing the restriction has been issued.
 ``(e)  Good Manufacturing Practice Requirements._
 ``(1)  Methods, facilities, and controls to conform._
 ``(A) The Secretary may, in accordance with subparagraph (B), prescribe regulations requiring
that the methods used in, and the facilities and controls used for, the manufacture, pre-production
design validation (including a process to assess the performance of a tobacco product), packing
and storage of a tobacco product, conform to current good manufacturing practice, as prescribed
in such regulations, to assure that the public health is protected and that the tobacco product is in
compliance with this chapter.
 ``(B) The Secretary shall_
 ``(i) before promulgating any regulation under subparagraph (A), afford the Tobacco Products
Scientific Advisory Committee established under section 915 an opportunity to submit
recommendations with respect to the regulation proposed to be promulgated;
 ``(ii) before promulgating any regulation under subparagraph (A), afford opportunity for an oral
hearing;
 ``(iii) provide the advisory committee a reasonable time to make its recommendation with respect
to proposed regulations under subparagraph (A); and
 ``(iv) in establishing the effective date of a regulation promulgated under this subsection, take
into account the differences in the manner in which the different types of tobacco products have
historically been produced, the financial resources of the different tobacco product manufacturers,
and the state of their existing manufacturing facilities; and shall provide for a reasonable period of
time for such manufacturers to conform to good manufacturing practices.
 ``(2)  Exemptions; variances._
 ``(A) Any person subject to any requirement prescribed under paragraph (1) may petition the
Secretary for a permanent or temporary exemption or variance from such requirement. Such a
petition shall be submitted to the Secretary in such form and manner as the Secretary shall
prescribe and shall_
 ``(i) in the case of a petition for an exemption from a requirement, set forth the basis for the
petitioner's determination that compliance with the requirement is not required to assure that the
tobacco product will be in compliance with this chapter;
 ``(ii) in the case of a petition for a variance from a requirement, set forth the methods proposed
to be used in, and the facilities and controls proposed to be used for, the manufacture, packing,
and storage of the tobacco product in lieu of the methods, facilities, and controls prescribed by the
requirement; and
 ``(iii) contain such other information as the Secretary shall prescribe.
 ``(B) The Secretary may refer to the Tobacco Products Scientific Advisory Committee
established under section 915 any petition submitted under subparagraph (A). The advisory
committee shall report its recommendations to the Secretary with respect to a petition referred to
it within 60 days after the date of the petition's referral. Within 60 days after_
 ``(i) the date the petition was submitted to the Secretary under subparagraph (A); or
 ``(ii) the day after the petition was referred to an advisory committee,
whichever occurs later, the Secretary shall by order either deny the petition or approve it.
 ``(C) The Secretary may approve_
 ``(i) a petition for an exemption for a tobacco product from a requirement if the Secretary
determines that compliance with such requirement is not required to assure that the tobacco
product will be in compliance with this chapter; and
 ``(ii) a petition for a variance for a tobacco product from a requirement if the Secretary
determines that the methods to be used in, and the facilities and controls to be used for, the
manufacture, packing, and storage of the tobacco product in lieu of the methods, controls, and
facilities prescribed by the requirement are sufficient to assure that the tobacco product will be in
compliance with this chapter.
 ``(D) An order of the Secretary approving a petition for a variance shall prescribe such conditions
respecting the methods used in, and the facilities and controls used for, the manufacture, packing,
and storage of the tobacco product to be granted the variance under the petition as may be
necessary to assure that the tobacco product will be in compliance with this chapter.
 ``(E) After the issuance of an order under subparagraph (B) respecting a petition, the petitioner
shall have an opportunity for an informal hearing on such order.
 ``(3) Compliance with requirements under this subsection shall not be required before the period
ending 3 years after the date of enactment of the National Tobacco Policy and Youth Smoking
Reduction Act.
 ``(f)  Exemption for Investigational Use._ The Secretary may exempt tobacco products intended
for investigational use from this chapter under such conditions as the Secretary may prescribe by
regulation .
 ``(g)  Research and Development._ The Secretary may enter into contracts for research, testing,
and demonstrations respecting tobacco products and may obtain tobacco products for research,
testing, and demonstration purposes without regard to section 3324(a) and (b) of title 31, United
States Code, and section 5 of title 41, United States Code.
``SEC. 907. PERFORMANCE STANDARDS.
 ``(a)  In General._
 ``(1)  Finding required._ The Secretary may adopt performance standards for a tobacco product
if the Secretary finds that a performance standard is appropriate for the protection of the public
health. This finding shall be determined with respect to the risks and benefits to the population as
a whole, including users and non-users of the tobacco product, and taking into account_
 ``(A) the increased or decreased likelihood that existing users of tobacco products will stop using
such products; and
 ``(B) the increased or decreased likelihood that those who do not use tobacco products will start
using such products.
 ``(2)  Content of performance standards._ A performance standard established under this section
for a tobacco product_
 ``(A) shall include provisions to provide performance that is appropriate for the protection of the
public health, including provisions, where appropriate_
 ``(i) for the reduction or elimination of nicotine yields of the product;
 ``(ii) for the reduction or elimination of other constituents or harmful components of the product;
or
 ``(iii) relating to any other requirement under (B);
 ``(B) shall, where necessary to be appropriate for the protection of the public health, include_
 ``(i) provisions respecting the construction, components, ingredients, and properties of the
tobacco product;
 ``(ii) provisions for the testing (on a sample basis or, if necessary, on an individual basis) of the
tobacco product;
 ``(iii) provisions for the measurement of the performance characteristics of the tobacco product;
 ``(iv) provisions requiring that the results of each or of certain of the tests of the tobacco product
required to be made under clause (ii) show that the tobacco product is in conformity with the
portions of the standard for which the test or tests were required; and
 ``(v) a provision requiring that the sale and distribution of the tobacco product be restricted but
only to the extent that the sale and distribution of a tobacco product may be restricted under a
regulation under section 906(d); and
 ``(C) shall, where appropriate, require the use and prescribe the form and content of labeling for
the proper use of the tobacco product.
 ``(3)  Periodic re-evaluation of performance standards._ The Secretary shall provide for periodic
evaluation of performance standards established under this section to determine whether such
standards should be changed to reflect new medical, scientific, or other technological data. The
Secretary may provide for testing under paragraph (2) by any person.
 ``(4)  Involvement of other agencies; informed persons._ In carrying out duties under this section,
the Secretary shall, to the maximum extent practicable_
 ``(A) use personnel, facilities, and other technical support available in other Federal agencies;
 ``(B) consult with other Federal agencies concerned with standard-setting and other nationally or
internationally recognized standard-setting entities; and
 ``(C) invite appropriate participation, through joint or other conferences, workshops, or other
means, by informed persons representative of scientific, professional, industry, or consumer
organizations who in the Secretary's judgment can make a significant contribution.
 ``(b)  Establishment of Standards._
 ``(1)  Notice._
 (A) The Secretary shall publish in the Federal Register a notice of proposed rulemaking for the
establishment, amendment, or revocation of any performance standard for a tobacco product.
 ``(B) A notice of proposed rulemaking for the establishment or amendment of a performance
standard for a tobacco product shall_
 ``(i) set forth a finding with supporting justification that the performance standard is appropriate
for the protection of the public health;
 ``(ii) set forth proposed findings with respect to the risk of illness or injury that the performance
standard is intended to reduce or eliminate; and
 ``(iii) invite interested persons to submit an existing performance standard for the tobacco
product, including a draft or proposed performance standard, for consideration by the Secretary.
 ``(C) A notice of proposed rulemaking for the revocation of a performance standard shall set
forth a finding with supporting justification that the performance standard is no longer necessary
to be appropriate for the protection of the public health.
 ``(D) The Secretary shall consider all information submitted in connection with a proposed
standard, including information concerning the countervailing effects of the performance standard
on the health of adolescent tobacco users, adult tobacco users, or non-tobacco users, such as the
creation of a significant demand for contraband or other tobacco products that do not meet the
requirements of this chapter and the significance of such demand, and shall issue the standard if
the Secretary determines that the standard would be appropriate for the protection of the public
health.
 ``(E) The Secretary shall provide for a comment period of not less than 60 days.
 ``(2)  Promulgation._
 ``(A) After the expiration of the period for comment on a notice of proposed rulemaking
published under paragraph (1) respecting a performance standard and after consideration of such
comments and any report from the Tobacco Products Scientific Advisory Committee under
section 915, the Secretary shall_
 ``(i) promulgate a regulation establishing a performance standard and publish in the Federal
Register findings on the matters referred to in paragraph (1); or
 ``(ii) publish a notice terminating the proceeding for the development of the standard together
with the reasons for such termination.
 ``(B) A regulation establishing a performance standard shall set forth the date or dates upon
which the standard shall take effect, but no such regulation may take effect before one year after
the date of its publication unless the Secretary determines that an earlier effective date is
necessary for the protection of the public health. Such date or dates shall be established so as to
minimize, consistent with the public health, economic loss to, and disruption or dislocation of,
domestic and international trade.
 ``(3)  Special rule for standard banning class of product or eliminating nicotine content._ Because
of the importance of a decision of the Secretary to issue a regulation establishing a performance
standard_
 ``(A) eliminating all cigarettes, all smokeless tobacco products, or any similar class of tobacco
products, or
 ``(B) requiring the reduction of nicotine yields of a tobacco product to zero,
it is appropriate for the Congress to have the opportunity to review such a decision. Therefore,
any such standard may not take effect before a date that is 2 years after the President notifies the
Congress that a final regulation imposing the restriction has been issued.
 ``(4)  Amendment; revocation._
 ``(A) The Secretary, upon the Secretary's own initiative or upon petition of an interested person
may by a regulation, promulgated in accordance with the requirements of paragraphs (1) and
(2)(B) of this subsection, amend or revoke a performance standard.
 ``(B) The Secretary may declare a proposed amendment of a performance standard to be
effective on and after its publication in the Federal Register and until the effective date of any final
action taken on such amendment if the Secretary determines that making it so effective is in the
public interest.
 ``(5)  Reference to Advisory Committee._ The Secretary_
 ``(A) may, on the Secretary's own initiative, refer a proposed regulation for the establishment,
amendment, or revocation of a performance standard; or
 ``(B) shall, upon the request of an interested person which demonstrates good cause for referral
and which is made before the expiration of the period for submission of comments on such
proposed regulation,
refer such proposed regulation to the Tobacco Products Scientific Advisory Committee
established under section 915, for a report and recommendation with respect to any matter
involved in the proposed regulation which requires the exercise of scientific judgment. If a
proposed regulation is referred under this subparagraph to the advisory committee, the Secretary
shall provide the advisory committee with the data and information on which such proposed
regulation is based. The advisory committee shall, within 60 days after the referral of a proposed
regulation and after independent study of the data and information furnished to it by the Secretary
and other data and information before it, submit to the Secretary a report and recommendation
respecting such regulation, together with all underlying data and information and a statement of
the reason or basis for the recommendation. A copy of such report and recommendation shall be
made public by the Secretary.
``SEC. 908. NOTIFICATION AND OTHER REMEDIES
 ``(a)  Notification._ If the Secretary determines that_
 ``(1) a tobacco product which is introduced or delivered for introduction into interstate
commerce for commercial distribution presents an unreasonable risk of substantial harm to the
public health; and
 ``(2) notification under this subsection is necessary to eliminate the unreasonable risk of such
harm and no more practicable means is available under the provisions of this chapter (other than
this section) to eliminate such risk,
the Secretary may issue such order as may be necessary to assure that adequate notification is
provided in an appropriate form, by the persons and means best suited under the circumstances
involved, to all persons who should properly receive such notification in order to eliminate such
risk. The Secretary may order notification by any appropriate means, including public service
announcements. Before issuing an order under this subsection, the Secretary shall consult with the
persons who are to give notice under the order.
 ``(b)  No Exemption from Other Liability._ Compliance with an order issued under this section
shall not relieve any person from liability under Federal or State law. In awarding damages for
economic loss in an action brought for the enforcement of any such liability, the value to the
plaintiff in such action of any remedy provided under such order shall be taken into account.
 ``(c)  Recall Authority._
 ``(1)  In general._ If the Secretary finds that there is a reasonable probability that a tobacco
product contains a manufacturing or other defect not ordinarily contained in tobacco products on
the market that would cause serious, adverse health consequences or death, the Secretary shall
issue an order requiring the appropriate person (including the manufacturers, importers,
distributors, or retailers of the tobacco product) to immediately cease distribution of such tobacco
product. The order shall provide the person subject to the order with an opportunity for an
informal hearing, to be held not later than 10 days after the date of the issuance of the order, on
the actions required by the order and on whether the order should be amended to require a recall
of such tobacco product. If, after providing an opportunity for such a hearing, the Secretary
determines that inadequate grounds exist to support the actions required by the order, the
Secretary shall vacate the order.
 ``(2)  Amendment of order to require recall._
 ``(A) If, after providing an opportunity for an informal hearing under paragraph (1), the Secretary
determines that the order should be amended to include a recall of the tobacco product with
respect to which the order was issued, the Secretary shall, except as provided in subparagraph
(B), amend the order to require a recall. The Secretary shall specify a timetable in which the
tobacco product recall will occur and shall require periodic reports to the Secretary describing the
progress of the recall.
 ``(B) An amended order under subparagraph (A)_
 ``(i) shall not include recall of a tobacco product from individuals; and
 ``(ii) shall provide for notice to persons subject to the risks associated with the use of such
tobacco product.
In providing the notice required by clause (ii), the Secretary may use the assistance of retailers and
other persons who distributed such tobacco product. If a significant number of such persons
cannot be identified, the Secretary shall notify such persons under section 705(b).
 ``(3)  Remedy not exclusive._ The remedy provided by this subsection shall be in addition to
remedies provided by subsection (a) of this section.
``SEC. 909. RECORDS AND REPORTS ON TOBACCO PRODUCTS.
 ``(a)  In General._ Every person who is a tobacco product manufacturer or importer of a tobacco
product shall establish and maintain such records, make such reports, and provide such
information, as the Secretary may by regulation reasonably require to assure that such tobacco
product is not adulterated or misbranded and to otherwise protect public health. Regulations
prescribed under the preceding sentence_
 ``(1) may require a tobacco product manufacturer or importer to report to the Secretary
whenever the manufacturer or importer receives or otherwise becomes aware of information that
reasonably suggests that one of its marketed tobacco products may have caused or contributed to
a serious unexpected adverse experience associated with the use of the product or any significant
increase in the frequency of a serious, expected adverse product experience;
 ``(2) shall require reporting of other significant adverse tobacco product experiences as
determined by the Secretary to be necessary to be reported;
 ``(3) shall not impose requirements unduly burdensome to a tobacco product manufacturer or
importer, taking into account the cost of complying with such requirements and the need for the
protection of the public health and the implementation of this chapter;
 ``(4) when prescribing the procedure for making requests for reports or information, shall require
that each request made under such regulations for submission of a report or information to the
Secretary state the reason or purpose for such request and identify to the fullest extent practicable
such report or information;
 ``(5) when requiring submission of a report or information to the Secretary, shall state the reason
or purpose for the submission of such report or information and identify to the fullest extent
practicable such report or information; and
 ``(6) may not require that the identity of any patient or user be disclosed in records, reports, or
information required under this subsection unless required for the medical welfare of an
individual, to determine risks to public health of a tobacco product, or to verify a record, report,
or information submitted under this chapter.
In prescribing regulations under this subsection, the Secretary shall have due regard for the
professional ethics of the medical profession and the interests of patients. The prohibitions of
paragraph (6) of this subsection continue to apply to records, reports, and information concerning
any individual who has been a patient, irrespective of whether or when he ceases to be a patient.
 ``(b)  Reports of Removals and Corrections._
 (1) Except as provided in paragraph (3), the Secretary shall by regulation require a tobacco
product manufacturer or importer of a tobacco product to report promptly to the Secretary any
corrective action taken or removal from the market of a tobacco product undertaken by such
manufacturer or importer if the removal or correction was undertaken_
 ``(A) to reduce a risk to health posed by the tobacco product; or
 ``(B) to remedy a violation of this chapter caused by the tobacco product which may present a
risk to health.
A tobacco product manufacturer or importer of a tobacco product who undertakes a corrective
action or removal from the market of a tobacco product which is not required to be reported
under this subsection shall keep a record of such correction or removal.
 ``(2) No report of the corrective action or removal of a tobacco product may be required under
paragraph (1) if a report of the corrective action or removal is required and has been submitted
under subsection (a) of this section.
``SEC. 910. PREMARKET REVIEW OF CERTAIN TOBACCO PRODUCTS.
 ``(a)  In General._
 ``(1)  Premarket approval required._
 ``(A)  New products._ Approval under this section of an application for premarket approval for
any tobacco product that is not commercially marketed (other than for test marketing) in the
United States as of August 11, 1995, is required unless the manufacturer has submitted a report
under section 905(j), and the Secretary has issued an order that the tobacco product is
substantially equivalent to a tobacco product commercially marketed (other than for test
marketing) in the United States as of August 11, 1995, that is in compliance with the requirements
of this Act.
 ``(B) Products introduced between August  11, 1995,  and enactment of this chapter._
Subparagraph (A) does not apply to a tobacco product that_
 ``(i) was first introduced or delivered for introduction into interstate commerce for commerce for
commercial distribution in the United States after August 11, 1995, and before the date of
enactment of the National Tobacco Policy and Youth Smoking Reduction Act; and
 ``(ii) for which a report was submitted under section 905(j) within 6 months after such date,
until the Secretary issues an order that the tobacco product is substantially equivalent for
purposes of this section or requires premarket approval.
 ``(2)  Substantially equivalent defined._
 ``(A) For purposes of this section and section 905(j), the term `substantially equivalent' or
`substantial equivalence' mean, with respect to the tobacco product being compared to the
predicate tobacco product, that the Secretary by order has found that the tobacco product_
 ``(i) has the same characteristics as the predicate tobacco product; or
 ``(ii) has different characteristics and the information submitted contains information, including
clinical data if deemed necessary by the Secretary, that demonstrates that it is not appropriate to
regulate the product under this section because the product does not raise different questions of
public health.
 ``(B) For purposes of subparagraph (A), the term `characteristics' means the materials,
ingredients, design, composition, heating source, or other features of a tobacco product.
 ``(C) A tobacco product may not be found to be substantially equivalent to a predicate tobacco
product that has been removed from the market at the initiative of the Secretary or that has been
determined by a judicial order to be misbranded or adulterated.
 ``(3)  Health Information._
 ``(A) As part of a submission under section 905(j) respecting a tobacco product, the person
required to file a premarket notification under such section shall provide an adequate summary of
any health information related to the tobacco product or state that such information will be made
available upon request by any person.
 ``(B) Any summary under subparagraph (A) respecting a tobacco product shall contain detailed
information regarding data concerning adverse health effects and shall be made available to the
public by the Secretary within 30 days of the issuance of a determination that such tobacco
product is substantially equivalent to another tobacco product.
 ``(b)  Application._
 ``(1)  Contents._ An application for premarket approval shall contain_
 ``(A) full reports of all information, published or known to or which should reasonably be known
to the applicant, concerning investigations which have been made to show the health risks of such
tobacco product and whether such tobacco product presents less risk than other tobacco
products;
 ``(B) a full statement of the components, ingredients, and properties, and of the principle or
principles of operation, of such tobacco product;
 ``(C) a full description of the methods used in, and the facilities and controls used for, the
manufacture, processing, and, when relevant, packing and installation of, such tobacco product;
 ``(D) an identifying reference to any performance standard under section 907 which would be
applicable to any aspect of such tobacco product, and either adequate information to show that
such aspect of such tobacco product fully meets such performance standard or adequate
information to justify any deviation from such standard;
 ``(E) such samples of such tobacco product and of components thereof as the Secretary may
reasonably require;
 ``(F) specimens of the labeling proposed to be used for such tobacco product; and
 ``(G) such other information relevant to the subject matter of the application as the Secretary
may require.
 ``(2)  Reference to Advisory Committee._ Upon receipt of an application meeting the
requirements set forth in paragraph (1), the Secretary_
 ``(A) may, on the Secretary's own initiative; or
 ``(B) shall, upon the request of an applicant,
refer such application to the Tobacco Products Scientific Advisory Committee established under
section 915 and for submission (within such period as the Secretary may establish) of a report and
recommendation respecting approval of the application, together with all underlying data and the
reasons or basis for the recommendation.
 ``(c)  Action on Application._
 ``(1)  Deadline._
 ``(A) As promptly as possible, but in no event later than 180 days after the receipt of an
application under subsection (b) of this section, the Secretary, after considering the report and
recommendation submitted under paragraph (2) of such subsection, shall_
 ``(i) issue an order approving the application if the Secretary finds that none of the grounds for
denying approval specified in paragraph (2) of this subsection applies; or
 ``(ii) deny approval of the application if the Secretary finds (and sets forth the basis for such
finding as part of or accompanying such denial) that one or more grounds for denial specified in
paragraph (2) of this subsection apply.
 ``(B) An order approving an application for a tobacco product may require as a condition to such
approval that the sale and distribution of the tobacco product be restricted but only to the extent
that the sale and distribution of a tobacco product may be restricted under a regulation under
section 906(d).
 ``(2)  Denial of approval._ The Secretary shall deny approval of an application for a tobacco
product if, upon the basis of the information submitted to the Secretary as part of the application
and any other information before the Secretary with respect to such tobacco product, the
Secretary finds that_
 ``(A) there is a lack of a showing that permitting such tobacco product to be marketed would be
appropriate for the protection of the public health;
 ``(B) the methods used in, or the facilities or controls used for, the manufacture, processing, or
packing of such tobacco product do not conform to the requirements of section 906(e);
 ``(C) based on a fair evaluation of all material facts, the proposed labeling is false or misleading in
any particular; or
 ``(D) such tobacco product is not shown to conform in all respects to a performance standard in
effect under section 907, compliance with which is a condition to approval of the application, and
there is a lack of adequate information to justify the deviation from such standard.
 ``(3)  Denial Information._ Any denial of an application shall, insofar as the Secretary determines
to be practicable, be accompanied by a statement informing the applicant of the measures required
to place such application in approvable form (which measures may include further research by the
applicant in accordance with one or more protocols prescribed by the Secretary).
 ``(4)  Basis for finding._ For purposes of this section, the finding as to whether approval of a
tobacco product is appropriate for the protection of the public health shall be determined with
respect to the risks and benefits to the population as a whole, including users and non-users of the
tobacco product, and taking into account_
 ``(A) the increased or decreased likelihood that existing users of tobacco products will stop using
such products; and
 ``(B) the increased or decreased likelihood that those who do not use tobacco products will start
using such products.
 ``(5)  Basis for action._
 ``(A) For purposes of paragraph (2)(A), whether permitting a tobacco product to be marketed
would be appropriate for the protection of the public health shall, when appropriate, be
determined on the basis of well-controlled investigations, which may include one or more clinical
investigations by experts qualified by training and experience to evaluate the tobacco product.
 ``(B) If the Secretary determines that there exists valid scientific evidence (other than evidence
derived from investigations described in subparagraph (A)) which is sufficient to evaluate the
tobacco product the Secretary may authorize that the determination for purposes of paragraph
(2)(A) be made on the basis of such evidence.
 ``(d)  Withdrawal and Temporary Suspension._
 ``(1)  In general._ The Secretary shall, upon obtaining, where appropriate, advice on scientific
matters from the Tobacco Products Scientific Advisory Committee established under section 915,
and after due notice and opportunity for informal hearing to the holder of an approved application
for a tobacco product, issue an order withdrawing approval of the application if the Secretary
finds_
 ``(A) that the continued marketing of such tobacco product no longer is appropriate for the
protection of the public health;
 ``(B) that the application contained or was accompanied by an untrue statement of a material
fact;
 ``(C) that the applicant_
 ``(i) has failed to establish a system for maintaining records, or has repeatedly or deliberately
failed to maintain records or to make reports, required by an applicable regulation under section
909;
 ``(ii) has refused to permit access to, or copying or verification of, such records as required by
section 704; or
 ``(iii) has not complied with the requirements of section 905;
 ``(D) on the basis of new information before the Secretary with respect to such tobacco product,
evaluated together with the evidence before the Secretary when the application was approved,
that the methods used in, or the facilities and controls used for, the manufacture, processing,
packing, or installation of such tobacco product do not conform with the requirements of section
906(e) and were not brought into conformity with such requirements within a reasonable time
after receipt of written notice from the Secretary of nonconformity;
 ``(E) on the basis of new information before the Secretary, evaluated together with the evidence
before the Secretary when the application was approved, that the labeling of such tobacco
product, based on a fair evaluation of all material facts, is false or misleading in any particular and
was not corrected within a reasonable time after receipt of written notice from the Secretary of
such fact; or
 ``(F) on the basis of new information before the Secretary, evaluated together with the evidence
before the Secretary when the application was approved, that such tobacco product is not shown
to conform in all respects to a performance standard which is in effect under section 907,
compliance with which was a condition to approval of the application, and that there is a lack of
adequate information to justify the deviation from such standard.
 ``(2)  Appeal._ The holder of an application subject to an order issued under paragraph (1)
withdrawing approval of the application may, by petition filed on or before the thirtieth day after
the date upon which he receives notice of such withdrawal, obtain review thereof in accordance
with subsection (e) of this section.
 ``(3)  Temporary suspension._ If, after providing an opportunity for an informal hearing, the
Secretary determines there is reasonable probability that the continuation of distribution of a
tobacco product under an approved application would cause serious, adverse health consequences
or death, that is greater than ordinarily caused by tobacco products on the market, the Secretary
shall by order temporarily suspend the approval of the application approved under this section. If
the Secretary issues such an order, the Secretary shall proceed expeditiously under paragraph (1)
to withdraw such application.
 ``(e)  Service of Order._ An order issued by the Secretary under this section shall be served_
 ``(1) in person by any officer or employee of the department designated by the Secretary; or
 ``(2) by mailing the order by registered mail or certified mail addressed to the applicant at the
applicant's last known address in the records of the Secretary.
``SEC. 911. JUDICIAL REVIEW.
 ``(a)  In General._ Not later than 30 days after_
 ``(1) the promulgation of a regulation under section 907 establishing, amending, or revoking a
performance standard for a tobacco product; or
 ``(2) a denial of an application for approval under section 910(c),
any person adversely affected by such regulation or order may file a petition with the United
States Court of Appeals for the District of Columbia or for the circuit wherein such person resides
or has his principal place of business for judicial review of such regulation or order. A copy of the
petition shall be transmitted by the clerk of the court to the Secretary or other officer designated
by the Secretary for that purpose. The Secretary shall file in the court the record of the
proceedings on which the Secretary based the Secretary's regulation or order and each record or
order shall contain a statement of the reasons for its issuance and the basis, on the record, for its
issuance. For purposes of this section, the term `record' means all notices and other matter
published in the Federal Register with respect to the regulation or order reviewed, all information
submitted to the Secretary with respect to such regulation or order, proceedings of any panel or
advisory committee with respect to such regulation or order, any hearing held with respect to
such regulation or order, and any other information identified by the Secretary, in the
administrative proceeding held with respect to such regulation or order, as being relevant to such
regulation or order.
 ``(b)  Court May Order Secretary to Make Additional Findings._ If the petitioner applies to the
court for leave to adduce additional data, views, or arguments respecting the regulation or order
being reviewed and shows to the satisfaction of the court that such additional data, views, or
arguments are material and that there were reasonable grounds for the petitioner's failure to
adduce such data, views, or arguments in the proceedings before the Secretary, the court may
order the Secretary to provide additional opportunity for the oral presentation of data, views, or
arguments and for written submissions. The Secretary may modify the Secretary's findings, or
make new findings by reason of the additional data, views, or arguments so taken and shall file
with the court such modified or new findings, and the Secretary's recommendation, if any, for the
modification or setting aside of the regulation or order being reviewed, with the return of such
additional data, views, or arguments.
 ``(c)  Standard of Review._ Upon the filing of the petition under subsection (a) of this section for
judicial review of a regulation or order, the court shall have jurisdiction to review the regulation
or order in accordance with chapter 7 of title 5, United States Code, and to grant appropriate
relief, including interim relief, as provided in such chapter. A regulation or order described in
paragraph (1) or (2) of subsection (a) of this section shall not be affirmed if it is found to be
unsupported by substantial evidence on the record taken as a whole.
 ``(d)  Finality of Judgment._ The judgment of the court affirming or setting aside, in whole or in
part, any regulation or order shall be final, subject to review by the Supreme Court of the United
States upon certiorari or certification, as provided in section 1254 of title 28, United States Code.
 ``(e)  Other Remedies._ The remedies provided for in this section shall be in addition to and not
in lieu of any other remedies provided by law.
 ``(f)  Regulations and Orders Must Recite Basis in Record._ To facilitate judicial review under
this section or under any other provision of law of a regulation or order issued under section 906,
907, 908, 909, 910, or 914, each such regulation or order shall contain a statement of the reasons
for its issuance and the basis, in the record of the proceedings held in connection with its issuance,
for its issuance.
``SEC. 912. POSTMARKET SURVEILLANCE
 ``(a)  Discretionary Surveillance._ The Secretary may require a tobacco product manufacturer to
conduct postmarket surveillance for a tobacco product of the manufacturer if the Secretary
determines that postmarket surveillance of the tobacco product is necessary to protect the public
health or is necessary to provide information regarding the health risks and other safety issues
involving the tobacco product.
 ``(b)  Surveillance Approval._ Each tobacco product manufacturer required to conduct a
surveillance of a tobacco product under subsection (a) of this section shall, within 30 days after
receiving notice that the manufacturer is required to conduct such surveillance, submit, for the
approval of the Secretary, a protocol for the required surveillance. The Secretary, within 60 days
of the receipt of such protocol, shall determine if the principal investigator proposed to be used in
the surveillance has sufficient qualifications and experience to conduct such surveillance and if
such protocol will result in collection of useful data or other information necessary to protect the
public health. The Secretary may not approve such a protocol until it has been reviewed by an
appropriately qualified scientific and technical review committee established by the Secretary.
``SEC. 913. REDUCED RISK TOBACCO PRODUCTS.
 ``(a)  Requirements ._
 ``(1)  In general ._For purposes of this section, the term `reduced risk tobacco product' means a
tobacco product designated by the Secretary under paragraph (2).
 ``(2)  Designation ._
 ``(A)  In general._ A product may be designated by the Secretary as a reduced risk tobacco
product if the Secretary finds that the product will significantly reduce harm to individuals caused
by a tobacco product and is otherwise appropriate to protect public health, based on an
application submitted by the manufacturer of the product (or other responsible person) that_
 ``(i) demonstrates through testing on animals and short-term human testing that use of such
product results in ingestion or inhalation of a substantially lower yield of toxic substances than use
of conventional tobacco products in the same category as the proposed reduced risk product; and
 ``(ii) if required by the Secretary, includes studies of the long-term health effects of the product.
If such studies are required, the manufacturer may consult with the Secretary regarding protocols
for conducting the studies.
 ``(B)  Basis for finding._ In making the finding under subparagraph (A), the Secretary shall take
into account_
 ``(i) the risks and benefits to the population as a whole, including both users of tobacco products
and non-users of tobacco products;
 ``(ii) the increased or decreased likelihood that existing users of tobacco products will stop using
such products including reduced risk tobacco products;
 ``(iii) the increased or decreased likelihood that those who do not use tobacco products will start
to use such products, including reduced risk tobacco products; and
 ``(iii) the risks and benefits to consumers from the use of a reduced risk tobacco product as
compared to the use of products approved under chapter V to reduce exposure to tobacco.
 ``(3)  Marketing requirements ._A tobacco product may be marketed and labeled as a reduced
risk tobacco product if it_
 ``(A) has been designated as a reduced risk tobacco product by the Secretary under paragraph
(2);
 ``(B) bears a label prescribed by the Secretary concerning the product's contribution to reducing
harm to health; and
 ``(C) complies with requirements prescribed by the Secretary relating to marketing and
advertising of the product, and other provisions of this chapter as prescribed by the Secretary.
 ``(b)  Revocation of Designation ._At any time after the date on which a tobacco product is
designated as a reduced risk tobacco product under this section the Secretary may, after providing
an opportunity for an informal hearing, revoke such designation if the Secretary determines, based
on information not available at the time of the designation, that_
 ``(1) the finding made under subsection (a)(2) is no longer valid; or
 ``(2) the product is being marketed in violation of subsection (a)(3).
 ``(c)  Limitation ._A tobacco product that is designated as a reduced risk tobacco product that is
in compliance with subsection (a) shall not be regulated as a drug or device.
 ``(d)  Development of reduced risk tobacco product Technology ._A tobacco product
manufacturer shall provide written notice to the Secretary upon the development or acquisition by
the manufacturer of any technology that would reduce the risk of a tobacco product to the health
of the user for which the manufacturer is not seeking designation as a `reduced risk tobacco
product' under subsection (a).
``SEC. 914. PRESERVATION OF STATE AND LOCAL AUTHORITY.
 ``(a)  Additional Requirements ._
 ``(1)  In general ._Except as provided in paragraph (2), nothing in this Act shall be construed as
prohibiting a State or political subdivision thereof from adopting or enforcing a requirement
applicable to a tobacco product that is in addition to, or more stringent than, requirements
established under this chapter.
 ``(2)  Preemption of certain state and local requirements ._
 ``(A) Except as provided in subparagraph (B), no State or political subdivision of a State may
establish or continue in effect with respect to a tobacco product any requirement which is
different from, or in addition to, any requirement applicable under the provisions of this chapter
relating to performance standards, premarket approval, adulteration, misbranding, registration,
reporting, good manufacturing standards, or reduced risk products.
 ``(B) Subparagraph (A) does not apply to requirements relating to the sale, use, or distribution of
a tobacco product including requirements related to the access to, and the advertising and
promotion of, a tobacco product.
 ``(b)  Rule of Construction Regarding Product Liability ._No provision of this chapter relating to
a tobacco product shall be construed to modify or otherwise affect any action or the liability of
any person under the product liability law of any State.
 ``(c)  Waivers ._Upon the application of a State or political subdivision thereof, the Secretary
may, by regulation promulgated after notice and an opportunity for an oral hearing, exempt from
subsection (a), under such conditions as may be prescribed in such regulation, a requirement of
such State or political subdivision applicable to a tobacco product if_
 ``(1) the requirement is more stringent than a requirement applicable under the provisions
described in subsection (a)(3) which would be applicable to the tobacco product if an exemption
were not in effect under this subsection; or
 ``(2) the requirement_
 ``(A) is required by compelling local conditions; and
 ``(B) compliance with the requirement would not cause the tobacco product to be in violation of
any applicable requirement of this chapter.
``SEC. 915. TOBACCO PRODUCTS SCIENTIFIC ADVISORY COMMITTEE.
 ``(a)  Establishment ._Not later than 1 year after the date of enactment of the National Tobacco
Policy and Youth Smoking Reduction Act, the Secretary shall establish a 9-member advisory
committee, to be known as the `Tobacco Products Scientific Advisory Committee'.
 ``(b)  Membership ._
 ``(1)  In general ._The Secretary shall appoint as members of the Tobacco Products Scientific
Advisory Committee individuals who are technically qualified by training and experience in the
medicine, medical ethics, science, or technology involving the manufacture, evaluation, or use of
tobacco products, who are of appropriately diversified professional backgrounds. The committee
shall be composed of_
 ``(A) 3 individuals who are officers or employees of a State or local government, or of the
Federal government;
 ``(B) 2 individuals as representatives of interests of the tobacco manufacturing industry;
 ``(C) 2 individuals as representatives of interests of physicians and other healthcare professionals;
and
 ``(D) 2 individuals as representatives of the general public.
 ``(2)  Limitation ._The Secretary may not appoint to the Advisory Committee any individual who
is in the regular full-time employ of the Food and Drug Administration or any agency responsible
for the enforcement of this Act. The Secretary may appoint Federal officials as ex-officio
members.
 ``(3)  Chairperson ._The Secretary shall designate 1 of the members of the Advisory Committee
to serve as chairperson.
 ``(c)  Duties ._The Tobacco Products Scientific Advisory Committee shall provide advice,
information, and recommendations to the Secretary_
 ``(1) as provided in this chapter;
 ``(2) on the effects of the alteration of the nicotine yields from tobacco products;
 ``(3) on whether there is a threshold level below which nicotine yields do not produce
dependence on
the tobacco product involved; and
 ``(4) on its review of other safety, dependence, or health issues relating to tobacco products as
requested by the Secretary.
 ``(d)  Compensation; Support; FACA._
 ``(1)  Compensation and travel._ Members of the Advisory Committee who are not officers or
employees of the United States, while attending conferences or meetings of the committee or
otherwise engaged in its business, shall be entitled to receive compensation at rates to be fixed by
the Secretary, which may not exceed the daily equivalent of the rate in effect for level 4 of the
Senior Executive Schedule under section 5382 of title 5, United States Code, for each day
(including travel time) they are so engaged; and while so serving away from their homes or
regular places of business each member may be allowed travel expenses, including per diem in lieu
of subsistence, as authorized by section 5703 of title 5, United States Code, for persons in the
Government service employed intermittently.
 ``(2)  Administrative support._ The Secretary shall furnish the Advisory Committee clerical and
other assistance.
 ``(3)  Nonapplication of FACA._ Section 14 of the Federal Advisory Committee Act (5 U.S.C.
App. ) does not apply to the Advisory Committee.
 ``(e)  Proceedings of Advisory Panels and Committees._ The Advisory Committee shall make
and maintain a transcript of any proceeding of the panel or committee. Each such panel and
committee shall delete from any transcript made under this subsection information which is
exempt from disclosure under section 552(b) of title 5, United States Code.
``SEC. 916. EQUAL TREATMENT OF RETAIL OUTLETS.
  ``The Secretary shall issue regulations to require that retail establishments for which the
predominant business is the sale of tobacco products comply with any advertising restrictions
applicable to retail establishments accessible to individuals under the age of 18.''.
SEC. 102. CONFORMING AND OTHER AMENDMENTS TO GENERAL PROVISIONS.
 (a)  Amendment of Federal Food, Drug, and Cosmetic Act._ Except as otherwise expressly
provided, whenever in this section an amendment is expressed in terms of an amendment to, or
repeal of, a section or other provision, the reference is to a section or other provision of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.).
 (b)  Section  301._ Section 301 (21 U.S.C. 331) is amended_
 (1) by inserting ``tobacco product,'' in subsection (a) after ``device,'';
 (2) by inserting ``tobacco product,'' in subsection (b) after ``device,'';
 (3) by inserting ``tobacco product,'' in subsection (c) after ``device,'';
 (4) by striking ``515(f), or 519'' in subsection (e) and inserting ``515(f), 519, or 909'';
 (5) by inserting ``tobacco product,'' in subsection (g) after ``device,'';
 (6) by inserting ``tobacco product,'' in subsection (h) after ``device,'';
 (7) by striking ``708, or 721'' in subsection (j) and inserting ``708, 721, 904, 905, 906, 907, 908,
or 909'';
 (8) by inserting ``tobacco product,'' in subsection (k) after ``device,'';
 (9) by striking subsection (p) and inserting the following:
 ``(p) The failure to register in accordance with section 510 or 905, the failure to provide any
information required by section 510(j), 510(k), 905(i), or 905(j), or the failure to provide a notice
required by section 510(j)(2) or 905(J)(2).'';
 (10) by striking subsection (q)(1) and inserting the following:
 ``(q)(1) The failure or refusal_
 ``(A) to comply with any requirement prescribed under section 518, 520(g), 906(f), or 908;
 ``(B) to furnish any notification or other material or information required by or under section
519, 520(g), 904, 906(f), or 909; or
 ``(C) to comply with a requirement under section 522 or 912.'';
 (11) by striking ``device,'' in subsection (q)(2) and inserting ``device or tobacco product,''; and
 (12) by inserting ``or tobacco product'' in subsection (r) after ``device'' each time that it appears.
 (c)  Section  303._  Section 303(f)(1)(A) (21 U.S.C. 333(f)(1)(A)) isamended by inserting ``or
tobacco products'' after ``devices''.
 (d)  Section  304._ Section 304 (21 U.S.C. 334) is amended_
 (1) by striking ``and'' before ``(D)'' in subsection (a)(2);
 (2) by striking ``device.'' in subsection (a)(2) and inserting a comma and ``(E) Any adulterated or
misbranded tobacco product.'';
 (3) by inserting ``tobacco product,'' in subsection (d)(1) after ``device,'';
 (4) by inserting ``or tobacco product'' in subsection (g)(1) after ``device'' each place it appears;
and
 (5) by inserting ``or tobacco product'' in subsection (g)(2)(A) after ``device'' each place it
appears.
 (e)  Section  702._ Section 702(a) (21 U.S.C. 372(a)) is amended_
 (1) by inserting ``(1)'' after ``(a)''; and
 (2) by adding at the end thereof the following:
 ``(2) For a tobacco product, to the extent feasible, the Secretary shall contract with the States in
accordance with paragraph (1) to carry out inspections of retailers in connection with the
enforcement of this Act.''.
 (f)  Section  703._ Section 703 (21 U.S.C. 373) is amended_
 (1) by inserting ``tobacco product,'' after ``device,'' each place it appears; and
 (2) by inserting ``tobacco products,'' after ``devices,'' each place it appears.
 (g)  Section  704._ Section 704 (21 U.S.C. 374) is amended_
 (1) by inserting ``tobacco products,'' in subsection (a)(1)(A) after ``devices,'' each place it
appears;
 (2) by inserting ``or tobacco products'' in subsection (a)(1)(B) after ``restricted devices'' each
place it appears; and
 (3) by inserting ``tobacco product,'' in subsection (b) after ``device,''.
 (h)  Section  705._ Section 705(b) (21 U.S.C. 375(b)) is amended byinserting ``tobacco
products,'' after ``devices,''.
 (i)  Section  709._ Section 709 (21 U.S. C. 379) is amended by inserting``or tobacco product''
after ``device''.
 (j)  Section  801._ Section 801 (21 U.S.C. 381) is amended_
 (1) by inserting ``tobacco products,'' after ``devices,'' in subsection (a) the first time it appears;
 (2) by inserting ``or subsection (j) of section 905'' in subsection (a) after ``section 510''; and
 (3) by striking ``drugs or devices'' each time it appears in subsection (a) and inserting ``drugs,
devices, or tobacco products'';
 (4) by inserting ``tobacco product,'' in subsection (e)(1) after ``device,'';
 (2) by redesignating paragraph (4) of subsection (e) as paragraph (5) and inserting after
paragraph (3), the following:
 ``(4) Paragraph (1) does not apply to any tobacco product_
 ``(A) which does not comply with an applicable requirement of section 907 or 910; or
 ``(B) which under section 906(f) is exempt from either such section.
This paragraph does not apply if the Secretary has determined that the exportation of the tobacco
product is not contrary to the public health and safety and has the approval of the country to
which it is intended for export or the tobacco product is eligible for export under section 802.''.
 (k)  Section  802._ Section 802 (21 U.S.C. 382) is amended_
 (1) by striking ``device_'' in subsection (a) and inserting ``device or tobacco product_'';
 (2) by striking ``and'' after the semicolon in subsection (a)(1)(C);
 (3) by striking subparagraph (C) of subsection (a)(2) and all that follows in that subsection and
inserting the following:
 ``(C) is a banned device under section 516; or
 ``(3) which, in the case of a tobacco product_
 ``(A) does not comply with an applicable requirement of section 907 or 910; or
 ``(B) under section 906(f) is exempt from either such section,
is adulterated, misbranded, and in violation of such sections or Act unless the export of the drug,
device, or tobacco product is, except as provided in subsection (f), authorized under subsection
(b), (c), (d), or (e) of this section or section 801(e)(2) or 801(e)(4). If a drug, device, or tobacco
product described in paragraph (1), (2), or (3) may be exported under subsection (b) and if an
application for such drug or device under section 505, 515, or 910 of this Act or section 351 of
the Public Health Service Act (42 U.S.C. 262) was disapproved, the Secretary shall notify the
appropriate public health official of the country to which such drug, device, or tobacco product
will be exported of such disapproval.'';
 (4) by inserting ``or tobacco product'' in subsection (b)(1)(A) after ``device'' each time it appears;
 (5) by inserting ``or tobacco product'' in subsection (c) after ``device'' and inserting ``or section
906(f)'' after ``520(g).'';
 (6) by inserting ``or tobacco product'' in subsection (f) after ``device'' each time it appears; and
 (7) by inserting ``or tobacco product'' in subsection (g) after ``device'' each time it appears.
 (l)  Section  1003._ Section 1003(d)(2)(C) (as redesignated by section101(a)) is amended_
 (1) by striking ``and'' after ``cosmetics,''; and
 (2) inserting a comma and ``and tobacco products'' after ``devices''.
Subtitle B_Advertising
SEC. 121. ADVERTISING PROVISIONS IN PROTOCOL.
 The Protocol shall contain provisions enforceable at law under which tobacco product
manufacturers commit to observe limitations on advertising that meet the requirements set forth in
this subtitle.
SEC. 122. TOBACCO PRODUCT LABELING AND ADVERTISING .
 (a)  In General._ The Protocol shall require that no tobacco product will be sold or distributed in
the United States_
 (1) unless its advertising and labeling (including the package)_
 (A) contain no human image, animal image, or cartoon character;
 (B) are not outdoor advertising, including advertising in enclosed stadia and advertising from
within a retail establishment that is directed toward or visible from the outside of the
establishment;
 (C) are accompanied by a disclaimer in the advertising that words such as ``light'' or ``low tar''
describing the product do not render the product less hazardous than any other tobacco product,
in addition to such other requirements as the Secretary may impose;
 (D) at the time the advertising or labeling is first used are submitted to the Secretary so that the
Secretary may conduct regular review of the advertising and labeling;
 (E) comply with any applicable requirement of the Federal Food, Drug, and Cosmetic Act, the
Federal Cigarette Labeling and Advertising Act, and any regulation promulgated under either of
those Acts;
 (F) do not appear on the international computer network of both Federal and non-Federal
interoperable packet switches data networks (the ``Internet''), unless such advertising is designed
to be inaccessible in or from the United States to all individuals under the age of 18 years;
 (G) use only black text on white background, other than_
 (i) those locations where self-service displays are permitted under subsection 123, if the
advertising is not visible from outside the establishment and is affixed to a wall or fixture in the
establishment; and    (ii) advertisements appearing in any publication which the tobacco product
manufacturer, distributor, or retailer demonstrates to the Secretary is a newspaper, magazine,
periodical, or other publication whose readers under the age of 18 years constitute 15 percent or
less of the total readership as measured by competent and reliable survey evidence, and that is
read by less than 2 million persons under the age of 18 years as measured by competent and
reliable survey evidence;
 (H) for video formats, use only static black text on a white background, and any accompanying
audio uses only words without music or sound effects; and
 (I) for audio formats, use only words without music or sound effects;
 (2) if a logo, symbol, motto, selling message, recognizable color or pattern of colors, or any other
indicia of product identification of the tobacco product is contained in a movie, program, or video
game for which a direct or indirect payment has been made to ensure its placement;
 (3) if a direct or indirect payment has been made by any tobacco product manufacturer,
distributor, or retailer to any entity for the purpose of promoting the image or use of the tobacco
product through print or film media that appeals to individuals under the age of 18 years or
through a live performance by an entertainment artist that appeals to such individuals;
 (4) if a logo, symbol, motto, selling message, recognizable color or pattern of colors, or any other
indicia or product identification identical to, similar to, or identifiable with the tobacco product is
used for any item (other than a tobacco product) or service marketed, licensed, distributed or sold
or caused to be marketed, licensed, distributed, or sold by the tobacco product manufacturer or
distributor of the tobacco product;
 (5) unless its package label and advertising bear the product's established name and a statement
of its intended use, as follows:
 (A) ``Cigarettes-A Nicotine Delivery Device'';
 (B) ``Cigarette Tobacco-A Nicotine Delivery Device''; or
 (C)`` Loose Leaf Chewing Tobacco'', ``Plug Chewing Tobacco'', ``Twist Chewing Tobacco'',
``Moist Snuff'', or ``Dry Snuff'', whichever is appropriate for the product, followed by ``-A
Nicotine Delivery Device''; and
 (6)(A) except as provided in subparagraph (B), if advertising or labeling for such product that is
otherwise in accordance with the requirements of this section bears a tobacco product brand name
(alone or in conjunction with any other word) or any other indicia of tobacco product
identification and is disseminated in a medium other than newspapers, magazines, periodicals or
other publications (whether periodic or limited distribution), nonpoint-of-sale promotional
material (including direct mail), point-of-sale promotional material, or audio or video formats
delivered at a point-of-sale; but
 (B) notwithstanding subparagraph (A), advertising or labeling for cigarettes or smokeless
tobacco may be disseminated in a medium that is not specified in paragraph (1) if the tobacco
product manufacturer, distributor, or retailer notifies the Secretary not later than 30 days prior to
the use of such medium, and the notice describes the medium and the extent to which the
advertising or labeling may be seen by persons under the age of 18 years.
 (b)  Color Print Ads on Magazines._ The Protocol shall also provide that no tobacco product
may be sold or distributed in the United States if any advertising for that product on the outside
back cover of a magazine appears in any color or combination of colors.
SEC. 123. POINT-OF-SALE RESTRICTIONS.
 (a)  In General._ Except as provided in subsection (b), the Protocol shall provide that no
participating tobacco product manufacturer, distributor, or retailer shall engage in point-of-sale
advertising of any tobacco product in any retail establishment (other than an establishment that
sells only tobacco products) in which an individual under 18 years of age is present, or permitted
to enter, at any time.
 (b)  Permitted POS Locations._
 (1)  Placement._ A retailer may place 1 point-of-sale advertisement in or at each retail
establishment for its brand or the contracted house retailer or private label brand of its wholesaler.
 (2)  Size._ The display area of any such point-of-sale advertisement (either individually or in the
aggregate) shall not be larger than 576 square inches and shall consist of black letters on white
background or another recognized typography.
 (3)  Proximity to candy._ Any such point-of-sale advertisement shall not be attached to or
located within 2 feet of any display fixture on which candy is displayed for sale.
 (c)  Audio or Video._ Any audio or video format permitted under regulations promulgated by the
Secretary may be distributed at the time of sale of a tobacco product to individuals over the age of
18 years, but no such format may be played or shown in or at any location where tobacco
products are offered for sale.
 (d)  No Restrictive Covenants._ No participating tobacco product manufacturer or distributor of
tobacco products may enter into any arrangement with a retailer that limits the retailer's ability to
display any form of advertising or promotional material originating with another supplier and
permitted by law to be displayed in a retail establishment.
 (e)  Definitions._ As used in this section, the terms ``point-of-sale advertisement'' and ``point-of-
sale advertising'' mean all printed or graphical materials bearing the brand name (alone or in
conjunction with any other word), logo, symbol, motto, selling message, or any other indicia of
product identification identical or similar to, or identifiable with, those used for any brand of
cigarettes or smokeless tobacco, which, when used for its intended purpose, can reasonably be
anticipated to be seen by customers at a location where tobacco products are offered for sale.
TITLE II_REDUCTIONS IN UNDERAGE TOBACCO USE
Subtitle A_Underage Use
SEC. 201. GOALS FOR REDUCING UNDERAGE TOBACCO USE.
 (a)  Goals._ As part of a comprehensive national tobacco control policy, the Secretary, working
in cooperation with State, Tribal, and local governments and the private sector, shall take all
actions under this Act necessary to ensure that the required percentage reductions in underage use
of tobacco products set forth in this title are achieved.
 (b)  Required Reductions for Cigarettes._ With respect to cigarettes, the required percentage
reduction in underage use, as set forth in section 202, means_
I95
 Calendar Year After Date of Enactment Required Percentage Reduction as a Percentage of Base
Incidence Percentage in Underage Cigarette Use
Years 3 and 4 15 percent
Years 5 and 6 30 percent
Years 7, 8, and 9  50 percent
Year 10 and thereafter 60 percent
 (c)  Required Reductions for Smokeless Tobacco._ With respect to smokeless tobacco products,
the required percentage reduction in underage use, as set forth in section 202, means_
I95
 Calendar Year After Date of Enactment Required Percentage Reduction as a Percentage of Base
Incidence Percentage in Underage Smokeless Tobacco Use
Years 3 and 4 12.5 percent
Years 5 and 6 25 percent
Years 7, 8, and 9  35 percent
Year 10 and thereafter 45 percent
SEC. 202. LOOK-BACK ASSESSMENT.
 (a)  Determination of Underage Use._ Upon the conclusion of the third calendar year after the
date of enactment of this Act, and annually thereafter, the Secretary shall determine the percent
incidence of underage use of cigarettes and of smokeless tobacco by calculating the average,
weighted by relative population of such age groups in 1995 as determined by the Bureau of the
Census, of the percentages of individuals in grade 12 (ages 16 and 17), in grade 10 (ages 14 and
15), and in grade 8 (age 13) who used cigarettes or smokeless tobacco, as appropriate, on a daily
basis during the preceding calendar year. The percentages used in this calculation are to be those
measured by (1) the University of Michigan Survey, or (2) such comparable index using identical
methodology as is chosen by the Secretary after notice and the opportunity for comment in
accordance with section 553 of title 5, United States Code. If the methodology employed by the
University of Michigan Survey is changed in a material manner from that employed from 1986
through 1996 (including changes in the States or regions on which the University of Michigan
Survey is based), or is (in the opinion of the Secretary) no longer the best available data, the
Secretary shall use the percentages measured by an index chosen by the Secretary, after notice
and the opportunity for comment in accordance with section 553 of title 5, United States Code,
that has a methodology identical to that employed by the University of Michigan Survey from
1986 through 1996. The Secretary shall makethe data on which the results of the University of
Michigan Survey or such other comparable index are based available to the public upon request.
 (b)  Calculation of Non-attainment Penalties._
 (1)  Secretary to determine non-attainment percentage._ The Secretary shall determine the non-
attainment percentage for cigarettes and for smokeless tobacco for each calendar year.
 (2)  Non-attainment penalty for cigarettes._ For each calendar year in which the percentage
reduction in underage use required by section 201(b) is not attained, the Secretary shall assess a
penalty on cigarette manufacturers as follows:I95
 If the non-attainment percentage is: The penalty is:
Not more than 5 percent $80,000,000 multiplied by the non-attainment percentage
More than 5% but not more than 10% $400,000,000, plus $160,000,000 multiplied by the non-
attainment percentage in excess of 5% but not in excess of 10%
More than 10% but not more than 20%  $1,200,000,000, plus $240,000,000 multiplied by the
non-attainment percentage in excess of 10% but not in excess of 20%
More than 20% $3,500,000,000
 (3)  Non-attainment penalty for smokeless tobacco._ For each year in which the percentage
reduction in underage use required by section 201(c) is not attained, the Secretary shall assess a
penalty on smokeless tobacco product manufacturers as follows:
I95
 If the non-attainment percentage is: The penalty is:
Not more than 5 percent $8,000,000 multiplied by the non-attainment percentage
More than 5% but not more than 10% $40,000,000, plus $16,000,000 multiplied by the non-
attainment percentage in excess of 5% but not in excess of 10%
More than 10% but not more than 20%  $120,000,000, plus $24,000,000 multiplied by the non-
attainment percentage in excess of 10% but not in excess of 20%
More than 20% $350,000,000
 (4)  Penalties to be adjusted for inflation._
 (A)  In general._ Beginning with the fourth calendar year after the date of enactment of this Act,
each dollar amount in the tables in paragraphs (2) and (3) shall be increased by the inflation
adjustment.
 (B)  Inflation adjustment._ For purposes of subparagraph (A), the inflation adjustment for any
calendar year is the percentage (if any) by which_
 (i) the CPI for the preceding calendar year, exceeds
 (ii) the CPI for the calendar year 1998.
 (C)  CPI._ For purposes of subparagraph (B), the CPI for any calendar year is the average of the
Consumer Price Index for all-urban consumers published by the Department of Labor.
 (D)  Rounding._ If any increase determined under subparagraph (A) is not a multiple of $1,000,
the increase shall be rounded to the nearest multiple of $1,000.
 (c)  Joint, Several, and Strict Obligation for Penalties._
 (1)  Cigarette manufacturers._ Any penalty due and payable by cigarette manufacturers shall be
the joint, several, and strict obligation of such manufacturers.
 (2)  Smokeless tobacco._ Any penalty payable by smokeless tobacco product manufacturers shall
be the joint, several, and strict obligation of such manufacturers.
 (d)  Exemptions for Small Manufacturers._
 (1)  Allocation by market share._ The Secretary shall make such allocations according to each
manufacturer's share of the domestic cigarette or domestic smokeless tobacco market, as
appropriate, in the year for which the penalty is being assessed, based on actual Federal excise tax
payments.
 (2)  Exemption._ In any year in which a penalty is being assessed, the Secretary shall exempt
from payment any tobacco product manufacturer with less than 1 percent of the domestic market
share for a specific category of tobacco product unless the Secretary finds that the manufacturer's
brands used by underage individuals at a rate equal to or greater than the manufacturer's total
market share for the type of tobacco product.
 (e)  Method of Penalty Assessment._ The Secretary shall assess a penalty for a specific calendar
year on or before May 1 of the subsequent calendar year. Penalty payments shall be paid on or
before July 1 of the year in which they are assessed. The Secretary may establish, by regulation,
interest at a rate up to 3 times the prevailing prime rate at the time the penalty is assessed, and
additional charges in an amount up to 3 times the penalty, for late payment of the penalty.
 (f)  Business Expense Deduction._ Any penalty paid by a tobacco product manufacturer under
this section shall not be deductible as an ordinary and necessary business expense or otherwise
under the Internal Revenue Code of 1986.
 (g)  Penalty Liability Among Manufacturers._
 (1)  In general._ The District Courts of the United States shall have jurisdiction to adjudicate any
claim brought under this section by a tobacco product manufacturer against one or more other
tobacco product manufacturers_
 (A) to recover a portion of the penalty paid by the plaintiff manufacturer; or
 (B) for a reallocation of the penalty among tobacco product manufacturers.
 (2)  Contribution or reimbursement liability._ A tobacco product manufacturer shall be liable
under this subsection to one or more other manufacturers if the plaintiff tobacco product
manufacturer establishes by a preponderance of the evidence that the defendant tobacco product
manufacturer, through its acts or omissions, was responsible for a disproportionate share of the
non-attainment penalty as compared to the responsibility of the plaintiff manufacturer, as
contemplated in subsection (c)(3).
 (3)  Responsibility for agents, etc._ In any action brought under this subsection, a tobacco
product manufacturer shall be held responsible for any act or omission of its attorneys, advertising
agencies, or other agents that contributed to that manufacturer's responsibility for the penalty
assessed under this section.
SEC. 203. SUBSTANTIAL NON-ATTAINMENT OF REQUIRED REDUCTIONS.
 (a)  Action by Secretary._
 (1)  In general._ If the Secretary determines that the non-attainment percentage for any year is
greater than 20 percentage points for cigarettes or smokeless tobacco, then the Secretary shall
determine, on a brand-by-brand basis, using data that reflects a 1999 baseline, which tobacco
product manufacturers are responsible within the 2 categories of tobacco products for the excess.
The Secretary may commence an action under this section against the tobacco product
manufacturer or manufacturers of the brand or brands of cigarettes or smokeless tobacco
products for which the non-attainment percentage exceeded 20 percentage points.
 (2)  Determination._ The Secretary shall use research methodology that is similar to, or the same
as, that used in the University of Michigan Survey, except_
 (A) the methodology shall be adapted to determining underage usage by brand; and
 (B) the base period shall be calendar year 1999.
 (b)  Procedures._ Any action under this section shall be commenced by the Secretary in the
United States District Court for the District of Columbia within 90 days after publication in the
Federal Register of the determination that the non-attainment percentage for the tobacco product
in question is greater than 20 percentage points. Any such action shall be heard and determined by
a 3-judge court under section 2284 of title 28, United States Code.
 (c)  Determination by Court._ In any action under this section, the court shall determine whether
the preponderance of the evidence shows that a tobacco product manufacturer_
 (1) has failed to comply substantially with the provisions of this Act regarding underage tobacco
use, of any rules or regulations promulgated thereunder, or of any Federal or State laws regarding
underage tobacco use;
 (2) has taken any material action to undermine the achievement of the required percentage
reduction for the tobacco product in question; or
 (3) has failed to comply with all recommendations of the Tobacco Agreement Accountability
Panel established under section 801.
 (d)  Removal of Annual Aggregate Payment Limitation._ Except as provided in subsections (e)
and (g), if the court determines that the preponderance of the evidence shows that a tobacco
product manufacturer engaged in conduct described in subsection (c) then section 706(c) of this
Act does not apply to the enforcement against, or the payment by, such tobacco product
manufacturer of any judgment or settlement that becomes final after that determination is made.
The liability apportionment agreement described in section 706(e) of this Act shall not require that
other tobacco product manufacturers pay an increased amount in any year over the amount they
would have had to pay but for this section.
 (e)  Defense._ An action under this section shall be dismissed, and subsection (d) shall not apply,
if the court finds that the Secretary's determination under subsection (a) was unlawful under
subparagraph (A), (B), (C), or (D) of section 706(2) of title 5, United States Code. Any
judgments paid under section 706(c) of this Act and section (1)(d)(3) of the Protocol prior to a
final judgment determining that the Secretary's determination was erroneous shall be fully
credited, with interest, under section 707(e) of this Act and section (1)(d)(3) of the Protocol.
 (f)  Review._ Decisions of the court under this section are reviewable only by the Supreme Court
by writ of certiorari granted upon the petition of any party. The applicability of subsection (d)
shall be stayed during the pendency of any such petition or review.
 (g)  Continuing Effect._ Subsection (d) shall cease to apply to a tobacco product manufacturer
found to have engaged in conduct described in subsection (c) upon the later of_
 (1) a determination by the Secretary under section 201 after the commencement of action under
subsection (a) that the non-attainment percentage for the tobacco product in question is 20 or
fewer percentage points; or
 (2) a finding by the court in an action filed against the Secretary by the manufacturer, not earlier
than 2 years after the determination described in subsection (c) becomes final, that the
preponderance of the evidence shows that, in the period since that determination, the
manufacturer_
 (A) has complied with the provisions of this Act regarding underage tobacco use, of any rules or
regulations promulgated thereunder, and of any other applicable Federal, State, or local laws,
rules, or regulations;
 (B) has not taken any action to undermine the achievement of the required percentage reduction
for the tobacco product in question; and
 (C) has pursued substantial additional measures reasonably calculated to attain the required
percentage reduction for the tobacco product in question.
A judgment or settlement against the tobacco product manufacturer that becomes final after a
determination or finding described in paragraph (1) or (2) of this subsection is not subject to
subsection (d). An action under paragraph (2) of this subsection shall be commenced in the United
States District Court for the District of Columbia, and shall be heard and determined by a 3-judge
court under section 2284 of title 28, United States Code. A decision by the court under paragraph
(2) of this subsection is reviewable only by the Supreme Court by writ of certiorari granted upon
the petition of any party, and the decision shall be stayed during the pendency of the petition or
review. A determination or finding described in paragraph (1) or (2) of this subsection does not
limit the Secretary's authority to bring a subsequent action under this section against any tobacco
product manufacturer or the applicability of subsection (d) with respect to any such subsequent
action.
 (h)  Definitions._ The definitions set forth in section 701 of this Act apply to terms used in this
section. A judgment or settlement becomes final within the meaning of this section when it would
qualify as a final judgment or final settlement under section 701.
SEC. 204. DEFINITIONS.
 As used in this subtitle_
 (1) The term ``base incidence percentage'' means_
 (A) in the case of cigarettes, the average, weighted by relative population of the following age
groups in 1995 as determined by the Bureau of the Census, of (i) the average of the percentages
of individuals in grade 12 (ages 16 and 17) from 1986 to 1996 who used cigarettes on a daily
basis; (ii) the average of the percentages of individuals in grade 10 (ages 14 and 15) from 1991 to
1996 who used cigarettes on a daily basis; and (iii) the average of the percentages of individuals in
grade 8 (age 13) from 1991 to 1996 who used cigarettes on a daily basis; and
 (B) in the case of smokeless tobacco products, the average, weighted by relative population of
the following age groups in 1995 as determined by the Bureau of the Census, of the percentage of
individuals in grade 12 (ages 16 and 17), individuals in grade 10 (ages 14 and 15), and individuals
in grade 8 (age 13) who used smokeless tobacco products on a daily basis in 1996.
The percentages specified in this paragraph are those measured by the University of Michigan
Survey or by such comparable index using identical methodology as is chosen by the Secretary
after notice and the opportunity for comment in accordance with section 553 of title 5, United
States Code.
 (2) The term ``cigarette manufacturers'' means manufacturers of cigarettes sold in the United
States.
 (3) The term ``non-attainment percentage for cigarettes'' means the number of percentage points
yielded_
 (A) for a calendar year in which the percent incidence of underage use of cigarettes is less than
the base incidence percentage, by subtracting_
 (i) the percentage by which the percent incidence of underage use of cigarettes in that year is less
than the base incidence percentage, from
 (ii) the required percentage reduction applicable in that year; and
 (B) for a calendar year in which the percent incidence of underage use of cigarettes is greater
than the base incidence percentage, adding_
 (i) the percentage by which the percent incidence of underage use of cigarettes in that year is
greater than the base incidence percentage; and
 (ii) the required percentage reduction applicable in that year.
 (4) The term ``non-attainment percentage for smokeless tobacco products'' means the number of
percentage points yielded_
 (A) for a calendar year in which the percent incidence of underage use of smokeless tobacco
products is less than the base incidence percentage, by subtracting_
 (i) the percentage by which the percent incidence of underage use of smokeless tobacco products
in that year is less than the base incidence percentage, from
 (ii) the required percentage reduction applicable in that year; and
 (B) for a calendar year in which the percent incidence of underage use of smokeless tobacco
products is greater than the base incidence percentage, by adding_
 (i) the percentage by which the percent incidence of underage use of smokeless tobacco products
in that year is greater than the base incidence percentage; and
 (ii) the required percentage reduction applicable in that year.
 (5) The term ``smokeless tobacco product manufacturers'' means manufacturers of smokeless
tobacco products sold in the United States.
 (6) The term ``University of Michigan Survey'' means the University of Michigan's National High
School Drug Use Survey entitled ``Monitoring the Future''.
Subtitle B_State Enforcement Incentives
SEC. 211. COMPLIANCE BONUS FUND.
 (a)  Establishment._ There is established within the National Tobacco Settlement Trust Fund
established by section 401 a separate account to be known as the Compliance Bonus Account for
States and Retailers.  There are authorized to be appropriated from such account such amounts as
may be necessary to carry out the provisions of this subtitle.
 (b)  Credits to Account._ For each fiscal year there shall be credited to the Account an amount
equal to_
 (1) 5 percent of the amounts credited to the National Tobacco Settlement Trust Fund under
section 401(b)(3); and
 (2) any amounts withheld under section 213.
SEC. 212. BLOCK GRANTS.
 (a)  In General._ The Secretary shall award block grants to States determined to be eligible under
subsection (b).
 (b)  Eligible States._ To be eligible to receive a grant under subsection (a), a State shall_
 (1) prepare and submit to the Secretary an application, at such time, in such manner, and
containing such information as the Secretary may require; and
 (2) with respect to the year involved, demonstrate to the satisfaction of the Secretary that fewer
than 5 percent of all individuals under 18 years of age who attempt to purchase tobacco products
in the State in such year are successful in such purchase.
 (c)  Payout; Use of Funds._
 (1)  Annual distribution._ For each fiscal year in which one or more States is eligible to receive a
grant under this section, the Secretary shall pay out the balance in the account established under
section 211(a) as of the end of the preceding fiscal year.
 (2)  Payment to State._ If more than one State is eligible to receive a grant under this section for
any fiscal year, the amount payable for that fiscal year shall be apportioned among such eligible
States on the basis of population.
 (3)  Use of funds._ Each State that receives a grant under this section shall distribute half of the
amount received among retail outlets of tobacco products that, for fiscal year for which the State
met the requirements of subsection (b), have outstanding records of compliance with the
restrictions on underage sales of tobacco products.
SEC. 213. STATE ENFORCEMENT INCENTIVES.
 (a)  In General._
 (1)  Activities and reports regarding enforcement._ A State shall_
 (A) conduct monthly random, unannounced inspections of sales or distribution outlets in the
State to ensure compliance with a law prohibiting sales of tobacco products to individuals under
18 years of age;
 (B) annually submit to the Secretary a report describing_
 (i) the activities carried out by the State to enforce underage access laws during the fiscal year;
and
 (ii) the extent of success the State has achieved in reducing the availability of tobacco products to
individuals under the age of 18 years; and
 (C)(i) a detailed description of how the inspections described in subparagraph (A) were
conducted and the methods used to identify outlets, with appropriate protection for the
confidentiality of information regarding the timing of inspections and other investigative
techniques whose effectiveness depends on continued confidentiality;
 (ii) the identity of the single State agency designated by the Governor of the State to be
responsible for the implementation of the requirements of this section.
 (2)  Minimum inspection schedule._ In order to meet the requirements of paragraph (1)(A),
inspections conducted by the State shall include at least 250 random, unannounced inspections of
retail sale outlets annually for each 1,000,000 persons resident in the State, as most recently
determined by the Bureau of the Census. Such inspections shall cover a range of outlets (not
preselected on the basis of prior violations) to measure overall levels of compliance as well as to
identify violations, and shall be conducted to provide a probability sample of outlets. The sample
must reflect the distribution of the population under the age of 18 years throughout the State and
the distribution of the outlets throughout the State accessible to youth. Indian tribes shall conduct
such inspections monthly of at least 1 retail outlet subject to their jurisdiction for each 4,000
reservation residents. Except as provided in this paragraph, any reports required by this paragraph
shall be made public. As used in this paragraph, the term ``outlet'' refers to any location that sells
at retail or otherwise distributes tobacco products to consumers, including to locations that sell
such products over-the-counter.
 (b)  Noncompliance._
 (1)  Inspections._ The Secretary shall withhold from any State that fails to meet the requirements
of subsection (a) in any calendar year an amount equal to an amount equal to 5 percent of the
amount otherwise payable under this subtitle to that State for the next fiscal year.
 (2)  Compliance rate._ The Secretary shall withhold from any State that fails to demonstrate a
compliance rate of_
 (A) at least 75 percent in the fifth and sixth fiscal years after the date of enactment of the
National Tobacco Policy and Youth Smoking Act;
 (B) at least 85 percent in the seventh, eighth, and ninth fiscal years after such date; and
 (C) at least 90 percent in every fiscal year beginning with the tenth fiscal year after such date,
an amount equal to one percentage point for each percentage point by which the State failed to
meet the percentage set forth in this subsection for that year from the amount otherwise payable
under this subtitle for that fiscal year.
 (c)  Definition._ For the purposes of this section, the term ``first applicable fiscal year'' means the
first fiscal year beginning after the fiscal year in which funding is made available to the States
under this section.
 (f)  Release and Disbursement._
 (1) Upon notice from the Secretary that an amount payable under section 202(e) has been
ordered withheld under subsection (b), a State may petition the Secretary for a release and
disbursement of up to 75 percent of the amount withheld, and shall give timely written notice of
such petition to the attorney general of that State and to all tobacco product manufacturers.
 (2) The agency shall conduct a hearing on such a petition, in which the attorney general of the
State and tobacco product manufacturers may participate and be heard.
 (3) The burden shall be on the State to prove, by a preponderance of the evidence, that the
release and disbursement should be made. The Secretary's decision on whether to grant such a
release, and the amount of any such disbursement, shall be based on whether_
 (A) the State has acted in good faith and in full compliance with this Act, and any rules or
regulations promulgated under this Act;
 (B) the State has pursued all reasonably available measures to attain the compliance rates and
required percentage reductions applicable in the year for which the release is being sought;
 (C) there is evidence of any direct or indirect action by the State to undermine the achievement of
the compliance rates, the required percentage reductions, or other terms and objectives of this Act
or the National Tobacco Policy and Youth Smoking Reduction Act; and
 (D) any other relevant evidence.
 (4) A State shall be entitled to interest on any withheld amount released at the average United
States 52-Week Treasury Bill rate for the period between the withholding of the amount and its
release.
(5) Any State attorney general or tobacco product manufacturer aggrieved by a final decision on a
petition filed under this subsection may seek judicial review of such decision within 30 days in the
United States Court of Appeals for the District of Columbia Circuit. Unless otherwise specified in
this Act, judicial review under this section shall be governed by sections 701 through 706 of title
5, United States Code.
 (6) No stay or other injunctive relief enjoining a reduction in a State's allotment pending appeal
or otherwise may be granted by the Secretary or any court.
SEC. 214. CONFORMING CHANGE.
 Section 1926 of the Public Health Service Act (42 U.S.C. 300x_26) is hereby repealed.
Subtitle C_Other Programs
SEC. 221. NATIONAL SMOKING CESSATION PROGRAM.
 (a)  Establishment ._The Secretary shall establish a program to be known as the ``National
Smoking Cessation Program'' under which the Secretary may award grants to eligible public and
nonprofit entities and individuals for tobacco product use cessation purposes.
 (b)  Eligibility ._
 (1)  Of entities ._To be eligible to receive a grant under this section an entity shall_
 (A) be a public or nonprofit private entity, including community health centers and other
community-based organizations with a focus on low-income populations;
 (B) prepare and submit to the Secretary an application at such time, in such manner, and
containing such information as the Secretary may require;
 (C) provide assurances that amounts received under the grant will be used in accordance with
subsection (c)(1); and
 (D) meet any other requirements determined appropriate by the Secretary.
 (2)  Of individuals ._To be eligible to receive a grant under this section an individual shall_
 (A) prepare and submit to the Secretary an application at such time, in such manner, and
containing such information as the Secretary may require;
 (B) provide assurances that amounts received under the grant will be used only in accordance
with subsection (c)(2); and
 (C) meet any other requirements determined appropriate by the Secretary.
 (c)  Use of Funds ._
 (1)  By entities ._An entity that receives a grant under this section shall use amounts provided
under the grant to establish or administer tobacco product use cessation programs that are
approved in accordance with subsection (d).
 (2)  By individuals ._An individual who receives a grant under this section shall use amounts
provided under the grant to enroll in a tobacco product use cessation program or to purchase a
tobacco product use cessation product that has been approved in accordance with subsection (d).
Grants to individuals under this section may be in the form of vouchers that may be used to pay
the costs of enrollment in an approved program or to purchase an approved product.
 (d)  Approval of Cessation Program or Devices ._Using the best available scientific information,
the Secretary shall promulgate regulations to provide for the approval of tobacco product use
cessation programs and drugs, human biological products, or medical devices approved by the
Food and Drug Administration or otherwise legally marketed under the Federal Food, Drug, and
Cosmetic Act (21 U.S. C. 301 et seq.) or under the Public Health Service Act (42 U.S.C. 201 et
seq.) for use as smoking cessation therapies or aids. The regulations shall ensure that tobacco
product users_
 (1) have reasonable access upon request to such comprehensive tobacco use cessation programs
and drugs, human biological products, or medical devices; and
 (2) have access to a broad range of cessation options that are tailored to the needs of the
individual tobacco user.
 (e)  Minority Focus._ The Secretary shall ensure smoking cessation programs are directed to
include minority populations in proportion to their prevalence in the smoking population, and are
linguistically and culturally appropriate for such populations.
 (f)  Funding ._There are authorized to be appropriated from the National Tobacco Settlement
Trust Fund, other than from amounts in the State Litigation Settlement Account, such sums as
may be necessary to carry out this section.
SEC. 222. NATIONAL TOBACCO-FREE PUBLIC EDUCATION PROGRAM.
 (a)  Establishment of Board ._
 (1)  In general ._The Secretary shall establish an independent board to be known as the
``Tobacco-Free Education Board'' (referred to in this section as the ``Board'') to enter into
contracts with or award grants to eligible public and nonprofit private entities to carry out public
informational and educational activities designed to reduce the use of tobacco products.
 (2)  Appointment ._The Board shall be composed of 9 members to be appointed by the
Secretary, of whom_
 (A) at least 3 such members shall be individuals who are widely recognized by the general public
for achievement in the athletic, cultural, entertainment, educational, business, or political field; and
 (B) at least 3 such members shall be individuals who are heads of major public health
organizations.
 (3)  Terms and vacancies ._The members of the Board shall serve staggered terms as determined
appropriate at the time of appointment by the Secretary. A vacancy in the Board shall not affect
its powers, but shall be filled in the same manner as the original appointment.
 (4)  Powers ._
 (A)  Hearings ._The Board may hold such hearings, sit and act at such times and places, take
such testimony, and receive such evidence as the Board considers advisable to carry out the
purposes of this section.
 (B)  Information from federal agencies ._The Board may secure directly from any Federal
department or agency such information as the Board considers necessary to carry out the
provisions of this section.
 (5)  Personnel matters ._
 (A)  Compensation ._Each member of the Board who is not an officer or employee of the Federal
Government shall be compensated at a rate equal to the daily equivalent of the annual rate of basic
pay prescribed for level IV of the Executive Schedule under section 5315 of title 5, United States
Code, for each day (including travel time) during which such member is engaged in the
performance of the duties of the Board. All members of the Board who are officers or employees
of the United States shall serve without compensation in addition to that received for their
services as officers or employees of the United States.
 (B)  Travel expenses ._The members of the Board shall be allowed travel expenses, including per
diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of
chapter 57 of title 5, United States Code, while away from their homes or regular places of
business in the performance of services for the Board.
 (b)  Establishment of Program ._The Secretary shall establish a program to be known as the
``National Tobacco-Free Public Education Program'' under which the Board may enter into
contracts with or award grants to eligible public and nonprofit private entities to carry out public
informational and educational activities designed to reduce the use of tobacco products.
 (c)  Eligibility._ To be eligible to receive a grant under this section an entity shall_
 (1) be a_
 (A) public entity or a State; or
 (B) nonprofit private entity that_
 (i) is not affiliated with a tobacco product manufacturer or importer;
 (ii) has a demonstrated record of working effectively to reduce tobacco product use; and
 (iii) has expertise in conducting a multi-media communications campaign, including proven
effective campaigns for minority populations;
 (2) prepare and submit to the Secretary an application at such time, in such manner, and
containing such information as the Secretary may require, including a description of the activities
to be conducted using amounts received under the grant or contract;
 (3) provide assurances that amounts received under the grant will be used in accordance with
subsection (d); and
 (4) provide assurances to the Secretary that_
 (A) the entity will annually report to the Secretary on the effectiveness of the approaches
implemented including approaches related to high risk and minority populations;
 (B) adequate records will be maintained with respect to such assistance;
 (C) amounts provided to individuals or entities will be subject to independent audit; and
 (D) activities of private entities or individuals will be coordinated with State and local public
health officials in the planning and implementation of the program; and
 (5) meet any other requirements determined appropriate by the Secretary.
 (d)  Use of Funds._ An entity that receives a grant or contract under this section shall use
amounts provided under the grant or contract to conduct multi-media public educational or
information campaigns that are designed to discourage and de-glamorize the use of tobacco
products. Such campaigns shall be designed to discourage the initiation of tobacco use by minors
and other populations and encourage those using such products to quit. These campaigns shall
include_
 (1) school-based programs that are focused on those regions of the State with high smoking rates
and targeted at populations most at risk to start smoking;
 (2) Statewide college and university based education program to discourage individuals between
the ages of 18 and 24 from beginning to on colleges or universities with high smoking rates; or
 (3) community-based prevention programs that are focused on those populations within the
community including minority populations, in proportion to their prevalence in the smoking
population that are most at-risk to use tobacco products or that have been targeted by tobacco
advertising or marketing.
 (e)  Needs of Certain Populations._ In awarding grants and contracts under this section, the
Board shall take into consideration the needs of particular populations, including using methods
that are proven and effective and are culturally and linguistically appropriate.
 (f)  Funding ._There are authorized to be appropriated from the National Tobacco Settlement
Trust Fund, other than from amounts in the State Litigation Settlement Account, such sums as
may be necessary to carry out this section.
SEC. 223. NATIONAL COMMUNITY ACTION PROGRAM.
 (a)  Establishment ._The Secretary shall establish a program to be known as the ``National
Community Action Program'' under which the Secretary may award grants to eligible State and
local governmental entities to carry out community-based tobacco control efforts that are
designed to encourage community involvement in reducing tobacco product use.
 (b)  Eligibility ._To be eligible to receive a grant under this section an entity shall_
 (1) be a State or local public entity;
 (2) prepare and submit to the Secretary an application at such time, in such manner, and
containing such information as the Secretary may require;
 (3) provide assurances that amounts received under the grant will be used in accordance with the
purposes of this section; and
 (4) meet any other requirements determined appropriate by the Secretary.
 (c)  Funding ._There are authorized to be appropriated from the National Tobacco Settlement
Trust Fund, other than from amounts in the State Litigation Settlement Account, such sums as
may be necessary to carry out this section.
SEC. 224. STATE RETAIL LICENSING PROGRAM.
 (a)  General Requirements._
 (1)  Establishment of Program._ The Secretary shall provide a block grant under this Act to each
State that has in effect a law that_
 (A) provides for the licensing of entities engaged in the sale or distribution of tobacco products
directly to consumers; and
 (B) meets the standards described in this section.
 (2)  State agreement required._ In order to receive a block grant under this section, a State_
 (A) shall enter into an agreement with the Secretary to assume responsibilities for the
implementation and enforcement of a tobacco retailer licensing program;
 (B) shall ensure compliance with the Youth Access Restrictions regulations promulgated by the
Secretary (21 C.F.R. 897.1 et seq.); and
 (C) shall establish to the satisfaction of the Secretary that it has a law or regulation that includes
the following:
 (i)  Licensure and notice._ A State license is required for each retail establishment involved in the
sale or distribution of tobacco products to consumers. The State has a program under which
notice is provided to such establishments and their employees of all licensing requirements and
responsibilities under State and Federal law relating to the retail distribution of tobacco products.
 (ii)  Penalties._
 (I)  Criminal._ Criminal penalties are provided for the sale or distribution of tobacco products to
a consumer without a license.
 (II)  Civil._ Civil penalties are provided for the sale or distribution of tobacco products in
violation of State law, that include graduated fines and suspension or revocation of licenses, for
repeated violations.
 (III)  Other._ There are other programs in place, including such measures as fines, suspension of
driver's license privileges, or community service requirements, for underage youths who possess,
purchase, or attempt to purchase tobacco products.
 (iii)  Judicial review._ Judicial review procedures are in place for an action of the State
suspending, revoking, denying, or refusing to renew any license under its program.
 (b)  Enforcement._ Each State that receives a grant under this section shall undertake to enforce
compliance with its tobacco retailing licensing program in a manner that can reasonably be
expected to reduce the sale and distribution of tobacco products to individuals under 18 years of
age. If the Secretary determines that a State is not enforcing the law in accordance with such an
undertaking, the Secretary may withhold a portion of any unobligated funds under this section
otherwise payable to that State.
 (c)  Non-participating States Licensing Requirements._ For retailers in States which have not
established a licensing program under subsection (a), the Secretary may promulgate regulations
establishing a Federal retail licensing program for retailers engaged in tobacco sales to consumers
in those States. The Secretary may enter into agreements with States for the enforcement of those
regulations. A State that enters into such an agreement shall receive a grant under this section to
reimburse it for costs incurred in carrying out that agreement.
TITLE III_TOBACCO PRODUCT WARNINGS AND SMOKE CONSTITUENT
DISCLOSURE
Subtitle A_Product Warnings, Labeling and Packaging
SEC. 301. CIGARETTE LABEL AND ADVERTISING WARNINGS.
 Section 4 of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1333) is amended to
read as follows:
``SEC. 4. LABELING.
 ``(a)  Label Requirements._
 ``(1)  In general._ It shall be unlawful for any person to manufacture, package, or import for sale
or distribution within the United States any cigarettes the package of which fails to bear, in
accordance with the requirements of this section, one of the following labels:
``WARNING: Cigarettes are addictive''
``WARNING: Tobacco smoke can harm your children''
``WARNING: Cigarettes cause fatal lung disease''
``WARNING: Cigarettes cause cancer''
``WARNING: Cigarettes cause strokes and heart disease''
``WARNING: Smoking during pregnancy can harm your baby''
``WARNING: Smoking can kill you''
``WARNING: Tobacco smoke causes fatal lung disease in non-smokers''
``WARNING: Quitting smoking now greatly reduces serious risks to your health''
 ``(2)  Placement; typography; etc.._
 ``(A)  In general._ Each label statement required by paragraph (1) shall be located in the upper
portion of the front and rear panels of the package, directly on the package underneath the
cellophane or other clear wrapping. Except as provided in subparagraph (B), each label statement
shall comprise at least the top 25 percent of the front and rear panels of the package. The word
``WARNING'' shall appear in capital letters and all text shall be in conspicuous and legible 17-
point type, unless the text of the label statement would occupy more than 70 percent of such area,
in which case the text may be in a smaller conspicuous and legible type size, provided that at least
60 percent of such area is occupied by required text. The text shall be black on a white
background, or white on a black background, in a manner that contrasts, by typography, layout,
or color, with all other printed material on the package, in an alternating fashion under the plan
submitted under subsection (b)(4).
 ``(B)  Flip-top boxes._ For any cigarette brand package manufactured or distributed before
January 1, 2000, which employs a flip-top style (if such packaging was used for that brand in
commerce prior to June 21, 1997), the label statement required by paragraph (1) shall be located
on the flip-top area of the package, even if such area is less than 25 percent of the area of the
front panel. Except as provided in this paragraph, the provisions of this subsection shall apply to
such packages.
 ``(3)  Does not apply to foreign distribution._ The provisions of this subsection do not apply to a
tobacco product manufacturer or distributor of cigarettes which does not manufacture, package,
or import cigarettes for sale or distribution within the United States.
 ``(b)  Advertising Requirements._
 ``(1)  In general._ It shall be unlawful for any tobacco product manufacturer, importer,
distributor, or retailer of cigarettes to advertise or cause to be advertised within the United States
any cigarette unless its advertising bears, in accordance with the requirements of this section, one
of the labels specified in subsection (a) of this section.
 ``(2)  Typography, etc.._ Each label statement required by subsection (a) of this section in
cigarette advertising shall comply with the standards set forth in this paragraph. For press and
poster advertisements, each such statement and (where applicable) any required statement relating
to tar, nicotine, or other constituent yield shall comprise 20 percent of the area of the
advertisement and shall appear in a conspicuous and prominent format and location at the top of
each advertisement within the trim area. The Secretary may revise the required type sizes in such
area in such manner as the Secretary determines appropriate. The word ``WARNING'' shall
appear in capital letters, and each label statement shall appear in conspicuous and legible type.
The text of the label statement shall be black if the background is white and white if the
background is black, under the plan submitted under paragraph (4) of this subsection. The label
statements shall be enclosed by a rectangular border that is the same color as the letters of the
statements and that is the width of the first downstroke of the capital ``W'' of the word
``WARNING'' in the label statements. The text of such label statements shall be in a typeface pro
rata to the following requirements: 45-point type for a whole-page broadsheet newspaper
advertisement; 39-point type for a half-page broadsheet newspaper advertisement; 39-point type
for a whole-page tabloid newspaper advertisement; 27-point type for a half-page tabloid
newspaper advertisement; 31.5-point type for a double page spread magazine or whole-
pagemagazine advertisement; 22.5-point type for a 28 centimeter by 3 columnadvertisement; and
15-point type for a 20 centimeter by 2 column advertisement. The label statements shall be in
English, except that in the case of_
 ``(A) an advertisement that appears in a newspaper, magazine, periodical, or other publication
that is not in English, the statements shall appear in the predominant language of the publication;
and
 ``(B) in the case of any other advertisement that is not in English, the statements shall appear in
the same language as that principally used in the advertisement.
 ``(3)  Adjustment by secretary._ The Secretary may, through a rulemaking under section 553 of
title 5, United States Code, adjust the format and type sizes for the label statements required by
this section or the text, format, and type sizes of any required tar, nicotine yield, or other
constituent disclosures, or to establish the text, format, and type sizes for any other disclosures
required under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et. seq.). The text of
any such label statements or disclosures shall be required to appear only within the 20 percent
area of cigarette advertisements provided by paragraph (2) of this subsection. The Secretary shall
promulgate regulations which provide for adjustments in the format and type sizes of any text
required to appear in such area to ensure that the total text required to appear by law will fit
within such area.
 ``(4)  Marketing requirements._
 ``(A) The label statements specified in subsection (a)(1) shall be randomly displayed in each 12-
month period, in as equal a number of times as is possible on each brand of the product and be
randomly distributed in all areas of the United States in which the product is marketed in
accordance with a plan submitted by the tobacco product manufacturer, importer, distributor, or
retailer and approved by the Secretary.
 ``(B) The label statements specified in subsection (a)(1) shall be rotated quarterly in alternating
sequence in advertisements for each brand of cigarettes in accordance with a plan submitted by
the tobacco product manufacturer, importer, distributor, or retailer to, and approved by, the
Secretary.
 ``(C) The Secretary shall review each plan submitted under subparagraph (B) and approve it if
the plan_
 ``(i) will provide for the equal distribution and display on packaging and the rotation required in
advertising under this subsection; and
 ``(ii) assures that all of the labels required under this section will be displayed by the tobacco
product manufacturer, importer, distributor, or retailer at the same time.''.
SEC. 302. AUTHORITY TO REVISE CIGARETTE WARNING LABEL STATEMENTS.
 Section 4 of the Federal Cigarette Labeling and Advertising Act ( 15 U.S.C. 1333), as amended
by section 301 of this title, is further amended by adding at the end the following:
 ``(c)  Change in Required Statements._ The Secretary may, by a rulemaking conducted under
section 553 of title 5, United States Code, revise the text of any of the warning label statements
required by subsection (a) of this section if the Secretary determines that such a change would
promote greater public understanding of the risks associated with the use of tobacco products.''.
SEC. 303. SMOKELESS TOBACCO LABELS AND ADVERTISING WARNINGS.
 Section 3 of the Comprehensive Smokeless Tobacco Health Education Act of 1986 (15 U.S.C.
4402) is amended to read as follows:
``SEC. 3. SMOKELESS TOBACCO WARNING.
 ``(a)  General Rule._
 ``(1) It shall be unlawful for any person to manufacture, package, or import for sale or
distribution within the United States any smokeless tobacco product unless the product package
bears, in accordance with the requirements of this Act, one of the following labels:
``WARNING: This product can cause mouth cancer''
``WARNING: This product can cause gum disease and tooth loss''
``WARNING: This product is not a safe alternative to cigarettes''
``WARNING: Smokeless tobacco is addictive''
 ``(2) Each label statement required by paragraph (1) shall be_
 ``(A) located on the 2 principal display panels of the package, and each label statement shall
comprise at least 25 percent of each such display panel; and
 ``(B) in 17-point conspicuous and legible type and in black text on a white background, or white
text on a black background, in a manner that contrasts by typography, layout, or color, with all
other printed material on the package, in an alternating fashion under the plan submitted under
subsection (b)(3), except that if the text of a label statement would occupy more than 70 percent
of the area specified by subparagraph (A), such text may appear in a smaller type size, so long as
at least 60 percent of such warning area is occupied by the label statement.
 ``(3) The label statements required by paragraph (1) shall be introduced by each tobacco product
manufacturer, packager, importer, distributor, or retailer of smokeless tobacco products
concurrently into the distribution chain of such products.
 ``(4) The provisions of this subsection do not apply to a tobacco product manufacturer or
distributor of any smokeless tobacco product that does not manufacture, package, or import
smokeless tobacco products for sale or distribution within the United States.
 ``(b)  Required Labels._
 ``(1) It shall be unlawful for any tobacco product manufacturer, packager, importer, distributor,
or retailer of smokeless tobacco products to advertise or cause to be advertised within the United
States any smokeless tobacco product unless its advertising bears, in accordance with the
requirements of this section, one of the labels specified in subsection (a).
 ``(2) Each label statement required by subsection (a) in smokeless tobacco advertising shall
comply with the standards set forth in this paragraph. For press and poster advertisements, each
such statement and (where applicable) any required statement relating to tar, nicotine, or other
constituent yield shall_
 ``(A) comprise at least 20 percent of the area of the advertisement, and the warning area shall be
delineated by a dividing line of contrasting color from the advertisement; and
 ``(B) the word ``WARNING'' shall appear in capital letters and each label statement shall appear
in conspicuous and legible type. The text of the label statement shall be black on a white
background, or white on a black background, in an alternating fashion under the plan submitted
under paragraph (3).
 ``(3)(A) The label statements specified in subsection (a)(1) shall be randomly displayed in each
12-month period, in as equal a number of times as is possible on each brand of the product and be
randomly distributed in all areas of the United States in which the product is marketed in
accordance with a plan submitted by the tobacco product manufacturer, importer, distributor, or
retailer and approved by the Secretary.
 ``(B) The label statements specified in subsection (a)(1) shall be rotated quarterly in alternating
sequence in advertisements for each brand of smokeless tobacco product in accordance with a
plan submitted by the tobacco product manufacturer, importer, distributor, or retailer to, and
approved by, the Secretary.
 ``(C) The Secretary shall review each plan submitted under subparagraph (B) and approve it if
the plan_
 ``(i) will provide for the equal distribution and display on packaging and the rotation required in
advertising under this subsection; and
 ``(ii) assures that all of the labels required under this section will be displayed by the tobacco
product manufacturer, importer, distributor, or retailer at the same time.''.
SEC. 304. AUTHORITY TO REVISE SMOKELESS TOBACCO PRODUCT WARNING
LABELSTATEMENTS.
 Section 3 of the Comprehensive Smokeless Tobacco Health Education Act of 1986 (15 U.S.C.
4402), as amended by section 303 of this title, is further amended by adding at the end the
following:
 ``(c)  Authority to Revise Warning Label Statements._ The Secretary may, by a rulemaking
conducted under section 553 of title 5, United States Code, adjust the format, type size, and text
of any of the warning label statements required by subsection (a) of this section, or establish the
format, type size, and text of any other disclosures required under the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 301 et seq.), if the Secretary finds that such a change would promote
greater public understanding of the risks associated with the use of smokeless tobacco products.''.
SEC. 305. TAR, NICOTINE, AND OTHER SMOKE CONSTITUENT DISCLOSURE TO
THEPUBLIC.
 Section 4(a) of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1333 (a)), as
amended by section 301 of this title, is further amended by adding at the end the following:
 ``(4)(A) The Secretary shall, by a rulemaking conducted under section 553 of title 5, United
States Code, determine (in the Secretary's sole discretion) whether cigarette and other tobacco
product manufacturers shall be required to include in the area of each cigarette advertisement
specified by subsection (b) of this section, or on the package label, or both, the tar and nicotine
yields of the advertised or packaged brand. Any such disclosure shall be in accordance with the
methodology established under such regulations, shall conform to the type size requirements of
subsection (b) of this section, and shall appear within the area specified in subsection (b) of this
section.
 ``(B) Any differences between the requirements established by the Secretary under subparagraph
(A) and tar and nicotine yield reporting requirements established by the Federal Trade
Commission shall be resolved by a memorandum of understanding between the Secretary and the
Federal Trade Commission.
 ``(C) In addition to the disclosures required by subparagraph (A) of this paragraph, the Secretary
may, under a rulemaking conducted under section 553 of title 5, United States Code, prescribe
disclosure requirements regarding the level of any cigarette or other tobacco product smoke
constituent. Any such disclosure may be required if the Secretary determines that disclosure
would be of benefit to the public health, or otherwise would increase consumer awareness of the
health consequences of the use of tobacco products, except that no such prescribed disclosure
shall be required on the face of any cigarette package or advertisement. Nothing in this section
shall prohibit the Secretary from requiring such prescribed disclosure through a cigarette or other
tobacco product package or advertisement insert, or by any other means under the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 301 et seq.).''.
Subtitle B_Testing and Reporting of Tobacco Product Smoke Constituents
SEC. 311. REGULATION REQUIREMENT.
 (a)  Testing, Reporting, and Disclosure._ Not later than 24 months after the date of enactment of
this Act, the Secretary, through the Commissioner of the Food and Drug Administration, shall
promulgate regulations under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.)
that meet the requirements of subsection (b) of this section.
 (b)  Contents of Rules._ The rules promulgated under subsection (a) of this section shall require
the testing, reporting, and disclosure of tobacco product smoke constituents and ingredients that
the Secretary determines should be disclosed to the public in order to protect the public health.
Such constituents shall include tar, nicotine, carbon monoxide, and such other smoke constituents
or ingredients as the Secretary may determine to be appropriate. The rule may require that
tobacco product manufacturers, packagers, or importers make such disclosures relating to tar and
nicotine through labels or advertising, and make such disclosures regarding other smoke
constituents or ingredients as the Secretary determines are necessary to protect the public health.
 (c)  Authority._ The Food and Drug Administration shall have authority to conduct or to require
the testing, reporting, or disclosure of tobacco product smoke constituents.
TITLE IV_NATIONAL TOBACCO SETTLEMENT TRUST FUND
Subtitle A_General Payment Provisions
SEC. 401. ESTABLISHMENT OF TRUST FUND.
 (a)  Creation ._
 (1)  In general ._There is established in the Treasury of the United States a trust fund to be
known as the ``National Tobacco Settlement Trust Fund'', consisting of such amounts as may be
appropriated or credited to the trust fund.
 (b)  Transfers to National Tobacco Settlement Trust Fund ._There shall be credited to the trust
fund the following amounts:
 (1) Amounts paid under section 403.
 (2) Amounts equivalent to the fines or penalties paid under section 403, 404, or 406, including
interest thereon.
 (3) Amounts equivalent to penalties paid under section 202, including interest thereon.
 (c)  Repayable Advances ._
 (1)  Authorization ._There are authorized to be appropriated to the trust fund, as repayable
advances, such sums as may from time to time be necessary to make the expenditures authorized
by this Act.
 (2)  Repayment with interest ._Repayable advances made to the trust fund shall be repaid, and
interest on such advances shall be paid, to the general fund of the Treasury when the Secretary of
the Treasury determines that moneys are available in the trust fund for such purposes.
 (3)  Rate of interest ._Interest on advances made under this subsection shall be at a rate
determined by the Secretary of the Treasury (as of the close of the calendar month preceding the
month in which the advance is made) to be equal to the current average market yield on
outstanding marketable obligations of the United States with remaining period to maturity
comparable to the anticipated period during which the advance will be outstanding.
 (d)  Expenditures From Trust Fund ._Amounts in the trust fund shall be available in each
calendar year, as provided by appropriations Acts, except that distributions to the States from
amounts credited to the State Litigation Settlement Account shall not require further
authorization or appropriation and shall be as provided in the Master Settlement Agreement and
this Act; and not less than 15 percent of the amounts available for expenditure from the trust fund
for each fiscal year, in the aggregate, be expended without further appropriation notwithstanding
any other provision of this act for the following purposes for activities pursuant to this act
including_
 (1) the prevention of smoking;
 (2) education;
 (3) State, local, and private control of tobacco product use;
 (4) smoking cessation.
 (e)  Budgetary Treatment of Trust Fund Operations ._The receipts and disbursements of the
National Tobacco Settlement Trust Fund shall not be included in the totals of the budget of the
United States Government as submitted by the President or of the congressional budget and shall
be exempt from any general budget limitation imposed by statute on expenditures and net lending
(budget outlays) of the United States Government.
 (f)  Administrative Provisions._ Section 9602 of the Internal Revenue Code of 1986 shall apply
to the trust fund to the same extent as if it were established by subchapter A of chapter 95 of such
Code.
SEC. 402. STATE LITIGATION SETTLEMENT ACCOUNT.
 (a)  In General._ There is established within the trust fund a separate account, to be known as the
State Litigation Settlement Account.
 (b)  Transfers to Account._ From amounts received by the trust fund under section 403, the State
Litigation Settlement Account shall be credited with all settlement payments designated for
allocation, without further appropriation, among the several States, which shall consist of_
 (1) the sum of $196,500,000,000, to be paid in installments over a period of 25 years; and
 (2) beginning after the last installment under paragraph (1), 50 percent of the total annual
payments made by participating tobacco product manufacturers under section 403(b) each year
thereafter.
 (c)  Reimbursement for State Expenditures._
 (1)  Payment ._Amounts credited to the account are available, without further appropriation, in
each fiscal year to provide funds to each State to reimburse such State for amounts expended by
the State for the treatment of individuals with tobacco-related illnesses or conditions.
 (2)  Amount ._The amount for which a State is eligible for under subparagraph (A) for a fiscal
year shall be based on the Master Settlement Agreement and its ancillary documents in
accordance with such agreements thereunder as may be entered into after the date of enactment of
this Act by the governors of the several States.
  (3)  Use of funds ._A State may use amounts received under this subsection as the State
determines appropriate.
 (4)  Funds not available as Medicaid reimbursement._ Funds in the account shall not be available
to the Secretary as reimbursement of Medicaid expenditures or considered as Medicaid
overpayments for purposes of recoupment.
 (d)  Payments to be Transferred Promptly to States._ The Secretary of the Treasury shall transfer
amounts available under subsection (c) to each State as amounts are credited to the State
Litigation Settlement Account without undue delay.
SEC. 403. PAYMENTS BY INDUSTRY.
 (a)  Initial Payment._
 (1)  Certain participating tobacco product manufacturers._ The following participating tobacco
product manufacturers shall deposit into the National Tobacco Settlement Trust Fund an
aggregate payment of $10,000,000,000, apportioned as follows:
 (A) Phillip Morris Incorporated_65.8 percent;
 (B) Brown and Williamson Tobacco Corporation_17.3 percent;
 (C) Lorillard Tobacco Company_7.1 percent;
 (D) R.J. Reynolds Tobacco Company_6.6 percent; and
 (E) United States Tobacco Company_3.2 percent.
 (2)  No contribution from other participating tobacco product manufacturers._ No other
participating tobacco product manufacturer shall be required to contribute to the payment
required by this subsection.
 (3)  Payment date; interest._ Each participating tobacco product manufacturer required to make a
payment under paragraph (1) of this subsection shall make such payment within 30 days after the
date of enactment of this Act in accordance with the terms of the Master Settlement Agreement
and shall owe interest on such payment at the prime rate plus 10 percent, as published in the Wall
Street Journal on the latest publication date on or before the date of enactment of this Act, for
payments made after the required payment date.
 (b)  Annual Payments._ Each calendar year beginning after the required payment date under
subsection (a)(3) the participating tobacco product manufacturers shall make total payments into
the Fund for each calendar year in the following applicable base amounts, subject to adjustment as
provided in section 404:
 (1) year 1_$14,400,000,000;
 (2) year 2_$15,400,000,000;
 (3) year 3_$17,700,000,000;
 (4) year 4_$21,000,000,000;
 (5) year 5_$23,600,000,000; and
 (6) year 6 and thereafter_the adjusted applicable base amount under section 404.
 (c)  Payment schedule._ Each annual payment due under subsection (b) shall be made in 3 equal
installments due on March 1st, on June 1st, and on  September 1st of each year.
 (d)  Apportionment of Annual Payment._
 (1)  In general._ Each participating tobacco product manufacturer is liable for its share of the
applicable base amount payment due each year under subsection (b). Any separate collection of
these payments among such participating tobacco product manufacturers shall be set forth in
accordance with an appendix to the Protocol. The annual payment is the obligation and
responsibility of only those participating tobacco product manufacturers and their affiliates that
directly sell tobacco products in the domestic market to wholesalers, retailers, or consumers, their
successors and assigns, and any subsequent fraudulent transferee (but only to the extent of the
interest or obligation fraudulently transferred).
 (2)  Determination of amount of payment due._ Each participating tobacco product manufacturer
is liable for its share of each installment in proportion to its share of tobacco products sold in the
domestic market for the most recent available calendar quarter, as determined by the Secretary of
the Treasury not more than 2 months, and not less than 1 month, before the payment is due. One
month before each payment is due under this subsection, the Secretary shall make a final
determination of each tobacco product manufacturer's applicable base amount payment obligation.
 (3)  Calculation of participating tobacco product manufacturer's share of annual payment._ The
share of the annual payment apportioned to a participating tobacco product manufacturer shall be
equal to that manufacturer's share of adjusted units. A participating tobacco product
manufacturer's share of adjusted units shall be determined as follows:
 (A)  Units._ A participating tobacco product manufacturer's number of units shall be determined
by counting each_
 (i) pack of 20 cigarettes as 1 adjusted unit;
 (ii) 1.2 ounces of moist snuff as 0.4 adjusted unit; and
 (iii) 3 ounces of other smokeless tobacco product as 0.24 adjusted units.
 (B)  Determination of adjusted units._ Except as provided in subparagraph (C), a participating
tobacco product manufacturer's number of adjusted units shall be determined under the following
table:
I95
 For units: Each unit shall be treated as:
Not exceeding 150 million 25% of a unit
Exceeding 150 million, but not exceeding 300 milllion 50% of a unit
Exceeding 300 million 1 unit
 (C)  Special rule for large manufacturers._ If a participating tobacco product manufacturer has
more than 500 million units under subparagraph (A), then that manufacturer's number of adjusted
units shall be equal to the total number of units, and not determined under subparagraph (B).
 (e)  Computations._ The determinations required by subsection (d) shall be made and certified by
the Secretary of Treasury. The parties shall promptly provide the Treasury Department with
information sufficient for it to make such determinations.
 (f)  Nonapplication to Certain Manufacturers._
 (1)  Exemption._ A participating manufacturer described in paragraph (3) is exempt from the
payments required by subsection (b).
 (2)  Limitation._ Paragraph (1) applies only to assessments on cigarettes to the extent that those
cigarettes constitute less than 3 percent of all cigarettes manufactured and distributed to
consumers in any calendar year.
 (3)  Participating tobacco product manufacturers to which subsection applies._ A participating
tobacco product manufacturer is described in this paragraph if it_
 (A) resolved tobacco-related civil actions with more than 25 States before January 1, 1998,
through written settlement agreements signed by the attorneys general (or the equivalent chief
legal officer if there is no office of attorney general) of those States; and
 (B) provides to all other States, not later than December 31, 1998, the opportunity to enter into
written settlement agreements that_
 (i) are substantially similar to the agreements entered into with those 25 States; and
 (ii) provide the other States with annual payment terms that are equivalent to the most favorable
annual payment terms of its written settlement agreements with those 25 States.
SEC. 404. ADJUSTMENTS.
 The applicable base amount under section 403(b) for a given calendar year shall be adjusted as
follows in determining the annual payment for that year:
 (1)  Inflation adjustment._
 (A)  In general._ Beginning with the fourth calendar year after the date of enactment of this Act,
the adjusted applicable base amount under section 403(b)(6) is the amount of the annual payment
made for the preceding year increased by the greater of 3 percent or the inflation adjustment,
adjusted (for calendar year 2005 and later years) by the volume adjustment under paragraph (2).
 (B)  Inflation adjustment._ For purposes of subparagraph (A), the inflation adjustment for any
calendar year is the percentage (if any) by which_
 (i) the CPI for the preceding calendar year, exceeds
 (ii) the CPI for the second preceding calendar year.
 (C)  CPI._ For purposes of subparagraph (B), the CPI for any calendar year is the average of the
Consumer Price Index for all-urban consumers published by the Department of Labor.
 (D)  Rounding._ If any increase determined under subparagraph (A) is not a multiple of $1,000,
the increase shall be rounded to the nearest multiple of $1,000.
 (2)  Volume adjustment._ Beginning with calendar year 2005, the applicable base amount (as
adjusted for inflation under paragraph (1)) shall be adjusted for changes in volume of domestic
sales by multiplying the applicable base amount by the ratio of the actual volume for the preceding
year to the base volume. For purposes of this paragraph, the term ``base volume'' means the
number of units of tobacco products sold domestically by the participating tobacco product
manufacturers in calendar year 1996, as reported by such manufacturers to the Secretary of the
Treasury.
SEC. 405. PAYMENTS TO BE PASSED THROUGH TO CONSUMERS.
 (a)  Target Price._ Each participating tobacco product manufacturer shall use its best efforts to
adjust the price at which it sells each unit of tobacco products in the domestic market or to an
importer for resale in the domestic market by an amount sufficient to pass through to each
purchaser on a per-unit basis an equal share of the annual payments to be made by such
participating tobacco product manufacturer under this Act and the Master Settlement agreement
for the year in which the sale occurs.
 (b)  Collection of Deficiency._
 (1)  In general._ If the Secretary determines that a participating tobacco product manufacturer
failed to comply with subsection (a), the Secretary shall assess a penalty against that manufacturer
in an amount equal to_
 (A) 110 percent of the shortfall amount; or
 (B) if the failure to comply with subsection (a) was intentional, up to 125 percent of the shortfall
amount .
 (2)  Shortfall amount._ For purposes of paragraph (1), the term ``shortfall amount'' means_
 (A) the number of units of tobacco products sold by a tobacco product manufacturer during a
calendar year, multiplied by_
 (B) the excess of_
 (i) the average adjusted price for which each such unit would have been sold during that year if
the tobacco product manufacturer had met the price contemplated by subsection (a); over
 (ii) the average adjusted price for which each such unit was sold during that year.
 (3)  Sole remedy for failure to pass payment through to consumers._ This subsection is the sole
remedy available to any person, including any State, for the failure by a participating tobacco
product manufacturer to pass through the payments under section 403 to consumers as required
by subsection (a).
SEC. 406. TAX TREATMENT OF PAYMENTS.
 All payments made under section 403 are ordinary and necessary business expenses for purposes
of chapter 1 of the Internal Revenue Code of 1986, and no part thereof is either in settlement of
an actual or potential liability for a fine or penalty (civil or criminal) or the cost of a tangible or
intangible asset or other future benefit.
SEC. 407. ENFORCEMENT FOR NONPAYMENT.
 (a)  Penalty ._Any participating tobacco product manufacturer that fails to make any payment
required under section 403 or 405 within 60 days after the date on which such fee is due is liable
for a civil penalty of $100,000 for each day during the noncompliance period.
 (b)  Noncompliance Period ._For purposes of this section, the term ``noncompliance period''
means, with respect to any failure to make a payment required under section 403 or 405, the
period_
 (1) beginning on the due date for such payment; and
 (2) ending on the date on which such payment is paid in full.
 (c)  Limitations ._
 (1)  In general ._No penalty shall be imposed by subsection (a) on any failure to make a payment
under section 403 during any period for which it is established to the satisfaction of the Secretary
of the Treasury that none of the persons responsible for such failure knew or, exercising
reasonable diligence, should have known, that such failure existed.
 (2)  Corrections ._No penalty shall be imposed under subsection (a) on any failure to make a
payment under section 403 if_
 (A) such failure was due to reasonable cause and not to willful neglect; and
 (B) such failure is corrected during the 30-day period beginning on the 1st date that any of the
persons responsible for such failure knew or, exercising reasonable diligence, should have known,
that such failure existed.
 (3)  Waiver ._In the case of any failure to make a payment under section 403 that is due to
reasonable cause and not to willful neglect, the Secretary of the Treasury may waive all or part of
the penalty imposed under subsection (a) to the extent that the Secretary determines that the
payment of such penalty would be excessive relative to the failure involved.
 (d)  Status as Participating Tobacco Product Manufacturer ._If, at the end of the 1-year period
beginning on the date on which a participating tobacco product manufacturer fails to make a
timely payment as required under section 403, such manufacture has not fully paid the amount
owed by such manufacturer under such section, such manufacturer shall be considered a
nonparticipating tobacco product manufacturer and shall not be eligible for any protections or
assistance provided for under this Act.
Subtitle B_General Spending Provisions
SEC. 411. IMPLEMENTING AND ENFORCEMENT FUNDS.
 Notwithstanding section 401(d), not less than $300,000,000 of the amounts available in the trust
fund, other than in the State Litigation Settlement Account, shall be made available for each fiscal
year without further appropriation to the Commissioner of Food and Drugs as reimbursement for
the costs incurred by the Food and Drug Administration in implementing and enforcing
requirements relating to tobacco products.  In order to ensure that the amounts provided by this
section are used for the purposes for which they are made available, the Commissioner shall
submit an account of such costs for each fiscal year to the Secretary of the Treasury, in such detail
as the Secretary may require, within 60 days after the close of the fiscal year and transmit a copy
of the report to the Congress at the same time as it is submitted to the Secretary.
SEC. 412. IMPROVING CHILD CARE AND EARLY CHILDHOOD DEVELOPMENT.
 (a)  In General._ The Secretary of the Treasury may transfer funds from the National Tobacco
Settlement Trust Fund for each fiscal year to be used by the Secretary for the following purposes:
 (1) Improving the affordability of child care through increased appropriations for child care under
the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9859 et seq.).
 (2) Enhancing the quality of child care and early childhood development through the provision of
grants to States under the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9859
et seq.).
 (3) Expanding the availability and quality of school-age care through the provision of grants to
States under the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9859 et seq.).
 (4) Assisting young children by providing grants to local collaboratives under the Child Care and
Development Block Grant Act of 1990 (42 U.S.C. 9859 et seq.) for the purpose of improving
parent education and supportive services, strengthening the quality of child care, improving health
services, and improving services for children with disabilities.
 (b)  Supplement not Supplant._ Amounts made available to a State under this section shall be
used to supplement and not supplant other Federal, State, and local funds provided for programs
that serve the health and developmental needs of children. Amounts provided to the State under
any of the provisions of law referred to in this section shall not be reduced solely as a result of the
availability of funds under this section.
 (c)  Authorization of Appropriations._ There are authorized to be appropriated from the trust
fund established by section 401, other than from amounts in the State Litigation Settlement
Account, such sums as are necessary to carry out this section.
TITLE V_STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO
SMOKE
SEC. 501. DEFINITIONS.
 In this title:
 (1)  Assistant secretary ._The term ``Assistant Secretary'' means the Assistant Secretary of the
Occupational Safety and Health Administration of the Department of Labor.
 (2)  Public facility ._
 (A)  In general ._The term ``public facility'' means any building used for purposes that affect
interstate or foreign commerce that is regularly entered by 10 or more individuals at least 1 day
per week including any building owned by or leased to an agency, independent establishment,
department, or branch of the United States Government.
 (B)  Exclusions ._The term ``public facility'' does not include a building or portion thereof which
is used for residential purposes or as a restaurant (other than a fast food restaurant), bar, private
club, hotel guest room or common area, casino, bingo parlor, tobacconist's shop, or prison.
 (C)  Fast food restaurant ._The term ``fast food restaurant'' means any restaurant or chain of
restaurants that primarily distributes food through a customer pick-up (either at a counter or
drive-through window). The Assistant Secretary may promulgate regulations to clarify this
subparagraph to ensure that the intended inclusion of establishments catering to individuals under
18 years of age is achieved.
 (3)  Responsible entity ._The term ``responsible entity'' means, with respect to any public facility,
the owner of such facility except that, in the case of any such facility or portion thereof which is
leased, such term means the lessee.
SEC. 502. SMOKE-FREE ENVIRONMENT POLICY.
 (a)  Policy Required ._In order to protect children and adults from cancer, respiratory disease,
heart disease, and other adverse health effects from breathing environmental tobacco smoke, the
responsible entity for each public facility shall adopt and implement at such facility a smoke-free
environment policy which meets the requirements of subsection (b).
 (b)  Elements of Policy ._
 (1)  In general ._The responsible entity for a public facility shall_
 (A) prohibit the smoking of cigarettes, cigars, and pipes, and any other combustion of tobacco
within the facility and on facility property within the immediate vicinity of the entrance to the
facility; and
 (B) post a clear and prominent notice of the smoking prohibition in appropriate and visible
locations at the public facility.
 (2)  Exception ._The responsible entity for a public facility may provide an exception to the
prohibition specified in paragraph (1) for 1 or more specially designated smoking areas within a
public facility if such area or areas meet the requirements of subsection (c).
 (c)  Specially Designated Smoking Areas ._A specially designated smoking area meets the
requirements of this subsection if_
 (1) the area is ventilated in accordance with specifications promulgated by the Assistant Secretary
that ensure that air from the area is directly exhausted to the outside and does not recirculate or
drift to other areas within the public facility;
 (2) the area is maintained at negative pressure, as compared to adjoining nonsmoking areas, as
determined under regulations promulgated by the Assistant Secretary;
 (3) nonsmoking individuals do not have to enter the area for any purpose while smoking is
occurring in such area; and
 (4) cleaning and maintenance work are conducted in such area only when no smoking is
occurring in the area.
SEC. 503. CITIZEN ACTIONS.
 (a)  In General ._An action may be brought to enforce the requirements of this title by any
aggrieved person, any State or local government agency, or the Assistant Secretary.
 (b)  Venue ._Any action to enforce this title may be brought in any United States district court
for the district in which the defendant resides or is doing business to enjoin any violation of this
title or to impose a civil penalty for any such violation in the amount of not more than $5,000 per
day of violation. The district courts shall have jurisdiction, without regard to the amount in
controversy or the citizenship of the parties, to enforce this title and to impose civil penalties
under this title.
 (c)  Notice ._An aggrieved person shall give any alleged violator notice at least 60 days prior to
commencing an action under this section. No action may be commenced by an aggrieved person
under this section if such alleged violator complies with the requirements of this title within such
60-day period and thereafter.
 (d)  Costs ._The court, in issuing any final order in any action brought under this section, may
award costs of litigation (including reasonable attorney and expert witness fees) to any prevailing
plaintiff, whenever the court determines such award is appropriate.
 (e)  Penalties ._The court, in any action under this section to apply civil penalties, shall have
discretion to order that such civil penalties be used for projects which further the policies of this
title. The court shall obtain the view of the Assistant Secretary in exercising such discretion and
selecting any such projects.
SEC. 504. PREEMPTION.
 Nothing in this title shall preempt or otherwise affect any other Federal, State, or local law which
provides greater protection from health hazards from environmental tobacco smoke.
SEC. 505. REGULATIONS.
 The Assistant Secretary is authorized to promulgate such regulations as the Assistant Secretary
deems necessary to carry out this title.
SEC. 506. EFFECTIVE DATE.
 Except as provided in section 507, the provisions of this title shall take effect on the first day of
January next following the next regularly scheduled meeting of the State legislature occurring
after the date of enactment of this Act at which, under the procedural rules of that legislature, a
measure under section 507 may be considered.
SEC. 507. STATE CHOICE.
 This title shall not apply to any State that, by law, provides that it shall not apply to that State.
TITLE VI_APPLICATION TO INDIAN TRIBES.
SEC. 601. SHORT TITLE.
 This title may be cited as the ``Reduction in Tobacco Use and Regulation of Tobacco Products in
Indian Country Act of 1998''.
SEC. 602. FINDINGS AND PURPOSES.
 (a)  Findings ._Congress finds that Native Americans have used tobacco products for
recreational, ceremonial, and traditional purposes for centuries.
 (b)  Purposes ._It is the purpose of this title to_
 (1) provide for the implementation of the National Tobacco Policy and Youth Smoking
Reduction Act with respect to the regulation of tobacco products and other tobacco-related
activities on Indian lands;
 (2) recognize the historic Native American traditional and ceremonial use of tobacco products,
and to preserve and protect the cultural, religious, and ceremonial uses of tobacco by members of
Indian tribes;
 (3) recognize and respect Indian tribal sovereignty and tribal authority to make and enforce laws
regarding the regulation of tobacco distributors and tobacco products on Indian lands; and
 (4) ensure that the necessary funding is made available to tribal governments for licensing and
enforcement of tobacco distributors and tobacco products on Indian lands.
SEC. 603. APPLICATION OF TOBACCO-RELATED PROVISIONS TO NATIVE
AMERICANS.
 (a)  In General ._The provisions of this Act apply to the manufacture, distribution, or sale of
tobacco or tobacco products in Indian country and on other trust lands subject to the jurisdiction
of an Indian tribe. To the extent that an Indian tribe engages in the manufacture, distribution, or
sale of tobacco products, the provisions of this Act apply to that tribe.
 (b)  Traditional Use Exception ._
 (1)  In general ._In recognition of the religious, ceremonial, and traditional uses of tobacco and
tobacco products by Indian tribes and the members of such tribes, nothing in this Act shall be
construed to infringe upon the right of such tribes or members of such tribes to acquire, possess,
use, or transfer any tobacco or tobacco products for such purposes, or to permit an infringement
upon the ability of minors to participate and use tobacco products for religious, ceremonial, or
traditional purposes.
 (2)  Application of provisions ._Paragraph (1) shall apply only to those quantities of tobacco or
tobacco products necessary to fulfill the religious, ceremonial, or traditional purposes of an Indian
tribe or the members of such tribe, and shall not be construed to permit the general marketing of
tobacco or tobacco products in a manner that is not in compliance with chapter IX of the Federal
Food, Drug, and Cosmetic Act as added by this Act.
 (3)  Limitation ._Nothing in this Act shall be construed to permit an Indian tribe or member of
such a tribe to acquire, possess, use, or transfer any tobacco or tobacco product in violation of
section 2342 of title 18, United States Code, with respect to the transportation of contraband
cigarettes.
 (c)  Payments to Tobacco Trust Fund ._Any Indian tribe that engages in the manufacture of
tobacco products shall be subject to liability for any annual fee payments that are levied on other
tobacco product manufacturers for purposes of the National Tobacco Settlement Trust Fund. Any
Indian tribe that does not pay such fees shall be considered a nonparticipating tobacco product
manufacturer under section 708 of this Act.
 (d)  Application of Federal Food, Drug, and Cosmetic Act Requirements ._
 (1)  In general ._The provisions of this Act and the provisions of the Food, Drug, and Cosmetic
Act (21 U.S.C. 301 et seq.) relating to the manufacture, distribution, and sale of tobacco products
shall apply in Indian country and on other trust lands subject to the jurisdiction of an Indian tribe.
To the extent that an Indian tribe engages in the manufacture, distribution, or sale of tobacco
products, the provisions of this Act apply to that tribe.
 (2)  Jurisdiction ._With respect to tobacco-related activities that take place in Indian country or
on trust lands within the jurisdiction of an Indian tribe, the responsibility for enforcing the
regulations promulgated under paragraph (1) shall be vested in_
 (A) the Indian tribe involved;
 (B) the State within which the lands of the Indian tribe are located, under a voluntary cooperative
agreement entered into by the State and the Indian tribe or tribal organization; or
 (C) the Secretary.
 (3)  Eligibility for assistance ._Under the regulations promulgated under paragraph (1), the
Secretary, in consultation with the Secretary of the Interior, shall provide assistance to an Indian
tribe in meeting and enforcing the requirements under such regulations, including grant funds, if_
 (A) the tribe or tribal organization has a governing body that has powers and carries out duties
that are similar to the powers and duties of State or local governments;
 (B) the functions to be exercised through the use of such assistance relate to activities conducted
in Indian country and on other trust lands subject to the jurisdiction of the tribe; and
 (C) the tribe is reasonably expected to be capable of carrying out the functions required by the
Secretary.
 (4)  Determinations ._Not later than 60 days after the date on which an Indian tribe submits an
application for assistance under paragraph (3), the Secretary shall make a determination
concerning the eligibility of such tribe for such assistance.
 (5)  Implementation by the secretary ._If the Secretary determines that the Indian tribe is not
willing or not qualified to administer the requirements of the regulations promulgated under this
subsection, or the tribe is considered to be a non-participating tobacco product manufacturer, the
Secretary, in consultation with the Secretary of the Interior, shall implement and enforce such
regulations on behalf of the tribe.
 (6)  Deficient applications; opportunity to cure ._If the Secretary determines under paragraph (4)
that a tribe is not eligible for assistance under this subsection, the Secretary shall_
 (A) submit to such tribe in writing, a statement of the reasons for such determination; and
 (B) shall assist such tribe in overcoming any deficiencies that resulted in the determination of
ineligibility.
After an opportunity to review and cure such deficiencies, the tribe may re-apply to the Secretary
for assistance under this subsection.
 (e)  Retail Licensing Requirements ._
 (1)  In general ._The requirements of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301
et seq.) and this Act with respect to the licensing of tobacco retailers shall apply to retailers that
sell tobacco or tobacco products in Indian country or on trust lands within the jurisdiction of an
Indian tribe.
 (2)  Minimum federal standards ._
 (A)  In general ._Not later than 180 days after the date of enactment of this Act, the Secretary
shall promulgate regulations to authorize an Indian tribe to implement a tribal tobacco product
licensing program in Indian country or on trust lands within the jurisdiction of that Indian tribe.
 (B)  Minimum Standards ._In order for an Indian tribe to assume responsibility for the licensing
and regulation of tobacco-related activities conducted in Indian country or on other trust lands
subject to the jurisdiction of an Indian tribe, the Indian tribe shall establish terms, conditions, and
standards similar to those described in section 224 of this Act for a State licensing law.
 (C)  Waiver ._An Indian tribe shall have the same right to apply for waiver and modification of
the law described in subparagraph (B) as a State under the Act involved.
 (3)  Implementation by the secretary ._If the Secretary, in consultation with the Secretary of the
Interior, determines that the Indian tribe is not qualified to meet the minimum standards of
paragraph (2)(B), or the Secretary, in consultation with the Secretary of the Interior, shall
implement such requirements on behalf of the Indian tribe.
 (f)  Eligibility for Public Health Payments ._
 (1)  Grant ._For each fiscal year the Secretary shall award a grant to each Indian tribe that has an
approved anti-smoking plan for the fiscal year involved under paragraph (2) in an amount equal to
the amount determined under paragraph (3).
 (2)  Tribal plans ._To be eligible to receive a grant under paragraph (1), an Indian tribe shall
prepare and submit to the Secretary an anti-smoking plan and shall otherwise meet the
requirements of subsection (e). The Secretary shall promulgate regulations providing for the form
and content of anti-smoking plans to be submitted under this paragraph.
 (3)  Amount determined ._Except as provided in this subsection, the amount of any grant for
which an Indian tribe is eligible under paragraph (1) shall be determined by the Secretary based on
the product of_
 (A) the ratio of the total number of individual residing on or in such tribe's reservation,
jurisdictional lands, or the active user population, relative to the total population of the State
involved; and
 (B) the amount allocated under this Act to the State for such public health purposes.
 (4)  Use ._Amounts provided to a tribe under this subsection shall be used to reimburse the tribe
for smoking-related health expenditures, to further the purposes of this Act and in accordance
with a tribal anti-smoking plan approved by the Secretary. Indian tribes shall have the flexibility to
utilize such amounts to meet the unique health care needs of persons within their service
populations within the context of tribal health programs if such programs meet the fundamental
Federal goals and purposes of Federal Indian health care law and policy.
 (5)  Reallotment ._Amounts set aside and not expended under this subsection shall be reallotted
among other eligible Indian tribes.
 (g)~  Obligations of Tobacco Product Manufacturers ._Tobacco product manufacturers,
including Indian tribes, participating in, or covered under this any Act shall not engage in any
activity in Indian country or on other trust lands subject to the jurisdiction of an Indian tribe that
is prohibited by this Act.
 (h)  Use of Trust Fund Payments ._Amounts made available from the tobacco trust fund under
any Indian health provisions of this Act shall be provided to the Indian Health Service and,
through the provisions of the Indian Self Determination and Education Assistance Act (25 U.S.C.
450b et seq.), to Indian tribes to be used to reduce tobacco consumption, promote smoking
cessation, and to fund related activities including_
 (1) clinic and facility design, construction, repair, renovation, maintenance, and improvement;
 (2) health care provider services and equipment;
 (3) domestic and community sanitation associated with clinic and facility construction and
improvement;
 (4) inpatient and outpatient services; and
 (5) other programs and services which have as their goal raising the health status of Indians.
 (i)  Preemption ._
 (1)  In general ._Except as otherwise provided in this section, nothing in this Act shall be
construed to prohibit an Indian tribe from imposing requirements, prohibitions, penalties, or other
measures to further the purposes of this title that are in addition to the requirements, prohibitions,
or penalties required by this title.
 (2)  Public exposure to smoke ._Nothing in this title shall be construed to preempt or otherwise
affect any Indian tribe rule or practice that provides greater protections from the health hazards of
environmental tobacco smoke.
SEC. 604. STATE TOBACCO EXCISE TAX COMPLIANCE.
 An Indian tribe or tribal corporation shall collect any excise or sales tax imposed by a State,
within the exterior borders or which the sale occurs, on non-members of the Indian tribe as a
consequence of the purchase of tobacco products by the non-member from the Indian tribe or
tribal corporation. The Indian tribe or tribal corporation shall remit such taxes collected to the
Treasury of the United States, which shall, in turn, remit the taxes to the State in which they were
collected.
TITLE VII_CIVIL LIABILITY OF TOBACCO PRODUCT MANUFACTURERS
SEC. 701. DEFINITIONS
 In this title:
 (1)  Addiction claim; dependence claim._ The term ``addiction claim'' or ``dependence claim''
refers only to any claim for relief which is predicated upon claims of addiction to, or dependence
on, tobacco products, but neither term includes claims based upon manifestation of tobacco-
related diseases.
 (2)  Affiliate._ The term ``affiliate'' means a person who directly or indirectly owns or controls, is
owned or controlled by, or is under common ownership or control with, another person. For
purposes of this definition, ownership means ownership of an equity interest, or the equivalent
thereof, of 10 percent or more, and person means an individual, partnership, committee,
association, corporation, or any other organization or group of persons.
 (3)  Civil action._ The term ``civil action'' means any action, lawsuit, or proceeding that is not a
criminal action.
 (4)  Compensatory damages._ The term ``compensatory damages'' refers to those damages
necessary to reimburse an injured party, and includes actual, general, and special damages.
 (5)  Court._ The term ``court'' means any judicial court, forum, or tribunal within the United
States, including without limitation any Federal, State, or tribal court.
 (6)  Final judgment._ The term ``final judgment'' means a judgment on which all rights of appeal
or discretionary review have been exhausted or waived or for which the time to appeal or seek
such discretionary review has expired.
 (7)  Final settlement._ The term ``final settlement'' means a settlement agreement that is executed
and approved as necessary to be fully binding on all relevant parties.
 (8)  Individual._ The term ``individual'' means a human being and does not include a corporation,
partnership, unincorporated association, trust, estate, or any other public or private entity, State
or local government, or Indian tribe.
 (9)  Punitive damages._ The term ``punitive damages'' means damages in addition to
compensatory damages having the character of punishment or penalty.
 (10)  Reduced risk tobacco products._ The term ``reduced risk tobacco product'' means a
product designated as a reduced risk tobacco product under section 916(a)(2) of the Federal
Food, Drug, and Cosmetic Act.
 (11)  Secretary._ The term ``Secretary'' means the Secretary of the Treasury, except where the
context otherwise requires.
 (12)  Tobacco claim._ The term ``tobacco claim'' means a claim directly or indirectly arising out
of, based on, or related to the health-related effects of tobacco products, including without
limitation a claim arising out of, based on, or related to allegations regarding any conduct,
statement, or omission respecting the health-related effects of such products.
 (13)  Tobacco product._ The term ``tobacco product'' means cigarettes, cigarette tobacco,
smokeless tobacco, little cigars, roll-your-own tobacco, and fine cut tobacco products.
 (14)  Tobacco product manufacturer._ The term ``tobacco product manufacturer'' means_
 (A) a person who directly, and not through any affiliate_
 (i) manufactures tobacco products for sale in the United States after the date of enactment of this
Act, including tobacco products for sale in the United States through an importer;
 (ii) is, after the date of enactment of this Act, the first purchaser for resale in the United States of
tobacco products manufactured for sale outside of the United States;
 (iii) engaged in activities described in clause (i) or (ii) prior to the date of enactment of this Act,
has not engaged in such activities after the date of enactment of this Act, and was not as of June
20, 1997, an affiliate of a participating tobacco product manufacturer in which the participating
tobacco product manufacturer or its other affiliates owned a 50 percent or greater interest;
 (iv) is a successor or assign of any of the foregoing; or
 (v) is an entity to which any of the foregoing directly or indirectly makes, after the date of
enactment of this Act, a fraudulent conveyance or a transfer that would otherwise be voidable
under part 5 of title 11 of the United States Code, but only to the extent of the interest or
obligation transferred; but
 (B) does not include an affiliate of a tobacco product manufacturer unless that affiliate is
described in clause (i), (ii), (iii), (iv), or (v) of subparagraph (A).
SEC. 702. APPLICATION.
 (a)  In General._ The provisions of this title shall apply to any civil action involving a tobacco
claim, including any such claim that has not reached final judgment or final settlement as of the
date of enactment of this Act, that is brought or maintained against_
 (1) a participating tobacco product manufacturer or its predecessors;
 (2) any person that at any time was or is an affiliate, officer, director, employee, attorney, or
agent of a participating tobacco product manufacturer, unless such person is itself a non-
participating tobacco product manufacturer;
 (3) an importer, distributor, wholesaler, or retailer of tobacco products_
 (A) that, after the date of enactment of this Act, does not import, distribute, or sell tobacco
products made or sold by a non-participating tobacco product manufacturer;
 (B) whose business practices with respect to sales or operations occurring within the United
States, conform to the applicable requirements of the marketing and advertising provisions of the
Master Settlement Agreement; and
 (C) that is not itself a non-participating tobacco product manufacturer;
 (4) a supplier of component or constituent parts of tobacco products_
 (A) that, after the date of enactment of this Act, does not knowingly sell any component or
constituent parts of tobacco products to a non- participating tobacco product manufacturer;
 (B) whose business practices with respect to sales or operations occurring within the United
States, conform to the applicable requirements of the marketing and advertisement provisions of
the Master Settlement Agreement; and
 (C) that is not itself a non-participating tobacco product manufacturer;
 (5) a grower of tobacco products, unless such person is itself a non-participating tobacco product
manufacturer; or
 (6) an insurer of any person described in paragraph (1), (2), (3), (4), or (5) based on, arising out
of, or related to tobacco products manufactured, imported, distributed, or sold (or tobacco
grown) by such person (other than an action brought by the insured person), unless such insurer is
itself a non-participating tobacco product manufacturer.
 (b)  Exceptions._ The provisions of this title shall not apply to any tobacco claim_
 (1) brought against any person other than a person described in subsection (a) or to any tobacco
claim that reached final judgment or final settlement prior to the date of enactment of this Act;
 (2) against an employer under valid workers' compensation laws;
 (3) arising under the securities laws of a State or the United States;
 (4) brought by the United States;
 (5) brought under this title by a State or a participating tobacco product manufacturer to enforce
this Act;
 (6) asserting damage to the environment from exposures other than environmental smoke or
second hand smoke; or
 (7) against a participating tobacco product manufacturer if that manufacturer, or any of its
principal officers, acting in that officer's corporate capacity, is convicted of_
 (A) manufacturing or distributing misbranded tobacco products in violation of the Federal Food,
Drug, and Cosmetic Act;
 (B) violating the reporting requirements of section 5762(a)(4) of the Internal Revenue Code of
1986 (26 U.S.C. 5762(a)(4));
 (C) violating, or aiding and abetting the violation of, any provision of chapter 114 of title 18,
United States Code; or
 (D) violating any provision of chapter 47 or chapter 63 of title 18, United States Code, in making
reports or disclosures under this Act.
 (c)  State Option for One-Time Opt Out._ The Secretary shall establish procedures under which
the attorney general of a State may, not later than 1 year after the date of enactment of this Act,
elect not to resolve a civil action described in subsection (a) or not to enter into the Master
Settlement Agreement. A State whose attorney general makes such an election shall not be
eligible to receive payments from the trust fund established by section 401. rocedures under this
paragraph shall permit such a State to make such an election on a one-time basis.
SEC. 703. PREEMPTION AND RELATIONSHIP TO OTHER LAW.
 (a)  Preemption._ No civil action involving a tobacco claim to which this title applies shall be
maintained in any court except in accordance with this title.
 (b)  Relationship to State Law._ This title supersedes State law only to the extent that State law
is inconsistent with this title.
 (c)  Criminal liability._ Nothing in this title shall be construed to limit the criminal liability of
tobacco product manufacturers, retailers, or distributors, or their officers, directors, employees,
successors, or assigns.
SEC. 704. GOVERNMENTAL CLAIMS AND CASTANO CIVIL ACTIONS.
 (a)  In General._ Except as provided in subsection (b) and in section 702(c), no State, political
subdivision of a State, municipal corporation, governmental entity or corporation, Indian tribe, or
agency or subdivision thereof, or other entity acting in  parens patriae,  may file or maintain any
civil action involving a tobacco claim.
 (b)  Effect of Settlement Agreement or Consent Decree._ Within 30 days after the date of
enactment of this Act, any State may request that tobacco product manufacturers enter into the
Master Settlement Agreement or a consent decree. If a State makes such a request and enters into
a consent decree, it may maintain a civil action involving a tobacco claim only to the extent
necessary to permit continuing court jurisdiction over the consent decree. Nothing herein shall
preclude any State from bringing suit or seeking a court order to enforce the terms of the Master
Settlement Agreement or a consent decree.
 (c)  Castano Civil Actions._
 (1) The rights and benefits afforded in section 221 of this Act, and the various research activities
envisioned by this Act, are provided in settlement of, and shall constitute the exclusive remedy for
the purpose of determining civil liability as to those claims asserted in the Castano Civil Actions,
and all bases for any such claim under the laws of any State are preempted (including State
substantive, procedural, remedial, and evidentiary provisions) and settled. The Castano Civil
Actions shall be dismissed with full reservation of the rights of individual class members to pursue
claims not based on addiction or dependency in civil actions in accordance with this Act. For
purposes of determining application of statutes of limitation or repose, individual actions filed
within one year after the effective date of this Act by those who were included within a Castano
Civil Action shall be considered to have been filed as of the date of the Castano Civil Action
applicable to said individual.
 (2) For purposes of awarding attorneys fees and expenses for those actions subject to this
subsection, the matter at issue shall be submitted to arbitration before one panel of arbitrators. In
any such arbitration, the arbitration panel shall consist of 3 persons, one of whom shall be chosen
by the attorneys of the Castano Plaintiffs' Litigation Committee who were signatories to the
Memorandum of Understanding dated June 20, 1997, by and between tobacco product
manufacturers, the Attorneys General, and private attorneys, one of whom shall be chosen by the
participating tobacco product manufacturers, and one of whom shall be chosen jointly by those 2
arbitrators.
 (3) The participating tobacco product manufacturers shall pay the arbitration award.
SEC. 705. CONCURRENT JURISDICTION; FEDERAL CAUSE OF ACTION; ACTIONS;
DAMAGES;LIABILITY.
 (a)  In General._ Any tobacco claim in any civil action to which this title applies shall be deemed
to arise under this section and shall be governed by the provisions of this title, but the substantive
rules of decision for such claim shall be derived from the law of the State or Tribe that would
have been applicable but for the operation of this section, to the extent that such law is not
inconsistent with the provisions of this title. This Federal cause of action shall be the exclusive
means for the purpose of determining civil liability on any such tobacco claim in any civil action to
which this title applies, and all other bases for tobacco claims under State, Tribal, and local law
are hereby preempted. District courts of the United States and tribal courts shall have concurrent
jurisdiction with the courts of the States over any tobacco claim in any civil action under this
section.
 (b)  Permissible Defendants._ In any civil action to which this subtitle applies, tobacco claims
may be filed or maintained only against_
 (1) a tobacco product manufacturer; or
 (2) a surviving entity established by a tobacco product manufacturer.
 (c)  Addiction and Dependence Claims Barred._ In any civil action to which this title applies, no
addiction claim or dependence claim may be filed or maintained.
 (d)  Requirements._ The following requirements apply to civil actions to which this title applies:
 (1)  Future reduced-risk products._ In any civil action to which this subtitle applies, no allegation
or evidence relating to reduced-risk tobacco products developed after the date of enactment of
this Act shall be admissible or discoverable in any action on a tobacco claim arising out of, based
on, or related to any other tobacco product.
 (2)  Production of documents._ All documents or other records included in the document
depository required to be established and maintained under section 903 of this Act shall be
deemed produced in any civil action involving a tobacco claim, and no court in such action shall
require additional production of any such document or record. Any such document submitted to
the court shall be considered authenticated with the same legal status as the original.
 (e)  Liability._ The following provisions regarding liability shall apply in civil actions to which this
title applies:
 (1) A tobacco product manufacturer shall be liable for any act or omission of its attorneys,
advertising agencies, and agents undertaken in the representation of such tobacco product
manufacturer.
 (2) A tobacco product manufacturer shall be liable in connection with any tobacco claim for the
liability, if any, of any of its affiliates arising from tobacco products sold directly by such affiliate
in the United States or to an importer for resale in the United States, unless such affiliate is a
participating tobacco product manufacturer or a non-participating tobacco product manufacturer.
 (3) Participating tobacco product manufacturers shall not be jointly and severally liable on a
tobacco claim with non-participating tobacco product manufacturers. Nothing in this title prevents
a participating tobacco product manufacturer from being held jointly and severally liable with any
other person other than a non-participating tobacco product manufacturer if such liability exists
under the applicable substantive rules of decision as determined under subsection (a), except that
any such imposition of joint and several liability against a participating tobacco product
manufacturer shall be subject to the provisions of section 706.
 (4) In any civil action involving both a tobacco claim against a participating tobacco product
manufacturer based in whole or in part upon conduct occurring prior to the date of enactment of
this Act and a claim against 1 or more non-participating tobacco product manufacturers, the
court, upon application of a participating tobacco product manufacturer shall sever a trial so that
all claims against participating tobacco product manufacturers shall be tried separately from any
claim involving non-participating tobacco product manufacturers. If such severance results in a
tobacco claim being submitted to more than 1 jury or to the same jury for separate deliberation
the participating tobacco product manufacturer may not assert any claim that would prejudice the
dollar amount to be recovered by the holder of the tobacco claim from the participating tobacco
product manufacturer due to the severance of the action including satisfaction by way of jury
verdict against the non-participating tobacco product manufacturer. In any action brought against
a participating tobacco manufacturer and a person that is not a tobacco product manufacturer, the
court may sever the trial so that all claims against such person may be tried separately.
 (5) In any civil action brought involving a tobacco claim, there shall be a presumption that
nicotine is addictive and that the diseases identified as being caused by use of tobacco products in
the Center for Disease Control and Prevention Reducing the Health Consequences of Smoking:
25 Years of Progress: A Report of the Surgeon General (United States Public Health Service
1989), The Health Consequences of Smoking: Involuntary Smoking, (USPHS 1986); and The
Health Consequences of Using Smokeless Tobacco, (USPHS 1986), are caused in whole or in
part by the use of tobacco products, (referred to elsewhere in this paragraph as the ``general
causation presumption''), and a jury empaneled to hear a tobacco claim shall be so instructed. In
all other respects, the burden of proof as to the issue of whether a plaintiff's specific disease or
injury was caused by smoking shall be governed by the law of the State or Tribe in which the
tobacco claim was brought. The general causation presumption shall in no way affect the ability of
the defendant to introduce evidence or argument which the defendant would otherwise be entitled
to present under the law of the State or Tribe in which the tobacco claim was brought to rebut the
general causation presumption, or with respect to general causation, specific causation, or
alternative causation, or to introduce any other evidence or argument which the defendant would
otherwise be entitled to make.
 (f)  Preservation of Insurance Claims._
 (1)  In general._ If all participating tobacco product manufacturers fail to make the payments
required by this Act for any calendar year, then_
 (A)  beginning on the first day of the next calendar year, subsection (a) does not apply to any
insurance claim (including a direct action claim) that is a tobacco claim, regardless of when that
claim arose;
 (B) any statute of limitations or doctrine of laches under applicable law shall be tolled for the
period_
 (i) beginning on the date of enactment of this Act; and
 (ii) ending on the last day of that calendar year; and
 (C) an insurance claim (including a direct action claim) that is a tobacco claim and that is pending
on the date of enactment of this Act shall be preserved.
 (2)  Application of title 11, United States Code._ For purposes of this subsection, nothing in this
Act shall be construed to modify, suspend, or otherwise affect the application of title 11, United
States Code, to participating tobacco manufacturers that fail to make such payments.
 (3)  State law not affected._ Nothing in this subsection shall be construed to expand or abridge
State law.
SEC. 706. PAYMENT OF TOBACCO CLAIM SETTLEMENTS AND JUDGMENTS.
 (a)  In General._ Except as provided below, any judgment or settlement in any civil action to
which this subtitle applies shall be subject to the process for payment of judgments and
settlements set forth in this section. No participating tobacco product manufacturer shall be
obligated to pay a judgment or settlement on a tobacco claim in any civil action to which this title
applies except in accordance with this section. This section shall not apply to the portion, if any,
of a judgment that imposes punitive damages based on any conduct that_
 (1) occurs after the date of enactment of this Act; and
 (2) is other than the manufacture, development, advertising, marketing, or sale of tobacco
products in compliance with this Act and the Master Settlement Agreement.
 (b)  Registration with the Secretary of the Treasury._
 (1) The Secretary shall maintain a record of settlements, judgments, and payments in civil actions
to which this title applies.
 (2) Any party claiming entitlement to a monetary payment under a final judgment or final
settlement on a tobacco claim shall register such claim with the Secretary by filing a true and
correct copy of the final judgment or final settlement agreement with the Secretary and providing
a copy of such filing to all other parties to the judgment or settlement.
 (3) The Secretary shall assign a priority for payment based upon the date on which a proper
registration of a final judgment or final settlement occurs.
 (4) Any participating tobacco product manufacturer making a payment on any final judgment or
final settlement to which this section applies shall certify such payment to the Secretary by filing a
true and correct copy of the proof of payment and a statement of the remaining unpaid portion, if
any, of such final judgment or final settlement with the Secretary and shall provide a copy of such
filing to all other parties to the judgment or settlement.
 (c)  Liability Cap._ The aggregate payments made by all participating tobacco product
manufacturers in any calendar year may not exceed $6,500,000,000. The Secretary shall initiate a
rulemaking within 30 days afterthe date of enactment of this Act to establish a mechanism for
implementing this subsection in such a way that payments may be made from all awards payable in
that year. Amounts not payable because of the application of this subsection, shall be carried
forward and paid in the next year, subject to the provisions of this subsection.
 (d)  Injunctive Relief._ A participating tobacco product manufacturer may commence an action
to enjoin any State court proceeding to enforce or execute any judgment or settlement where
payment has not been authorized under this section. Such an action shall arise under the laws of
the United States and may be commenced in the district court of the United States for the district
in which the State court proceeding is pending.
 (e)  Joint and Several Liability._ All participating tobacco product manufacturers shall be jointly
and severally liable for, and shall enter into an agreement to apportion among them, any amounts
payable under judgments and settlements governed by this section arising in whole or in part from
conduct occurring prior to the date of enactment of this Act. No participating tobacco product
manufacturer shall cease operations without establishing a surviving entity against which a
tobacco claim may be brought. Any obligation or interest of a participating, tobacco product
manufacturer arising under such liability apportionment agreement shall be given priority and shall
not be rejected, avoided, or discharged in a proceeding, under title 11, United States Code, or in
any liquidation, reorganization, receivership, or other insolvency proceeding under State law.
SEC. 707. ATTORNEY'S FEES AND EXPENSES.
 (a)  Arbitration Panel._
 (1)  Establishment ._ For the purpose of awarding of attorneys' fees and expenses relating to
litigation affected by, or legal services that, in whole or in part, resulted in or created a model for
programs in, this Act, and with respect to which litigation or services the attorney involved is
unable to agree with the plaintiff who employed that attorney with respect to any dispute that may
arise between them regarding the fee agreement, the matter at issue shall be submitted to
arbitration. In any such arbitration, the arbitration panel shall consist of 3 persons, one of whom
shall be chosen by the plaintiff, one of whom shall be chosen by the attorney, and one of whom
shall be chosen jointly by those 2 arbitrators.
 (2)  Operation._ Not later than 30 days after the date on which all members of an arbitration
panel are appointed under paragraph (1), the panel shall establish the procedures under which the
panel will operate which shall include_
 (A) a requirement that any finding by the arbitration panel must be in writing and supported by
written reasons;
 (B) procedures for the exchanging of exhibits and witness lists by the various claimants for
awards;
 (C) to the maximum extent practicable, requirements that proceedings before the panel be based
on affidavits rather than live testimony; and
 (D) a requirement that all claims be submitted to an arbitration panel not later than 3 months after
the date of this Act and a determination made by the panel with respect to such claims not later
than 7 months after such date of enactment.
 (3)  Right to petition._ Any individual attorney or group of attorneys involved in litigation
affected by this Act shall have the right to petition an arbitration panel for attorneys' fees and
expenses.
 (4)  Criteria._ In making any award under this section, an arbitration panel shall consider the
following criteria:
 (A) The time and labor required by the claimant.
 (B) The novelty and difficulty of the questions involved in the action for which the claimant is
making a claim.
 (C) The skill requisite to perform the legal service involved properly.
 (D) The preclusion of other employment by the attorney due to acceptance of the action
involved.
 (E) Whether the fee is fixed or a percentage.
 (F) Time limitations imposed by the client or the circumstances.
 (G) The amount involved and the results obtained.
 (H) The experience, reputation, and ability of the attorneys involved.
 (I) The undesirability of the action.
 (J) Such other factors as justice may require.
 (5)  Appeal and enforcement._ The findings of an arbitration panel shall be final, binding,
nonappealable, and payable within 30 days after the date on which the finding is made public,
except that if an award is to be paid in installments, the first installment shall be payable within
such 30 day period and succeeding installments shall be paid annually thereafter.
 (b)  Validity and Enforceability of Private Agreements._ Notwithstanding any other provision of
this Act, nothing in this section shall be construed to abrogate or restrict in any way the rights of
any parties to mediate, negotiate, or settle any fee or expense disputes or issues to which this
section applies, or to enter into private agreements with respect to the allocation or division of
fees among the attorneys party to any such agreement.
 (c)  Offset for Amounts Already Paid._ In making a determination under this section with regard
to a dispute between a State that pursued independent civil action against tobacco product
manufacturers and its attorney, the arbitration panel shall take into account any amounts already
paid by the State under the agreement in dispute.
SEC. 708. NON-PARTICIPATING TOBACCO PRODUCT MANUFACTURERS.
 (a)  In General._ If a tobacco product manufacturer does not enter into a consent decree or the
Protocol before the date of enactment of this Act, then the limitations on liability under this title
do not apply to that manufacturer.
 (b)  Imposition of Fee._
 (1)  In general._ There is hereby imposed on each tobacco product manufacturer described in
subsection (a) an annual fee for any calendar year ending after the date of enactment of this Act
for which it does not enter into a consent decree or sign the Protocol
 (2)  Amount._
 (A)  Total._ The amount of the annual fee imposed by paragraph (1) is equal to 150 percent of
the amount that would be paid under section 403 of this Act for that year by that tobacco product
manufacturer if it were a participating tobacco product manufacturer.
 (B)  Per tobacco product manufacturer._ The Secretary shall promulgate regulations_
 (i) under which the amount of the fee imposed under paragraph (1) for any tobacco product
manufacturer is to be determined; and
 (ii) establishing procedures for the assessment and collection of any fee imposed under paragraph
(1).
SEC. 709. CONFORMING AMENDMENTS.
 (a) Section 362(b) of title 11, United States Code, is amended by_
 (1) striking ``or'' after the semicolon in paragraph (17);
 (2) striking ``petition.'' in paragraph (18) and inserting ``petition; or''; and
 (3) adding at the end thereof the following:
 ``(19) under subsection (a) of this section, of the commencement or continuation of any action or
other proceeding by or against a participating tobacco product manufacturer as defined in section
6(22) of the National Tobacco Policy and Youth Smoking Reduction Act regarding any interest
or obligation arising under or directly related to the Master Settlement Agreement as defined in
section 6(21) of that Act or the liability apportionment agreement.''.
 (b) Section 365 of title 11, United States Code, is amended by_
 (1) striking ``and (d)'' in subsection (a) and inserting ``(d), and (p)''; and
 (2) adding at the end thereof the following:
 ``(p) The trustee may not reject, shall be deemed to have assumed as of the commencement of
the case, and shall cause the debtor to perform on an executory contract of a participating tobacco
product manufacturer as defined in section 6(22) of the National Tobacco Policy and Youth
Smoking Reduction Act, to the extent such executory contract is, or is directly related to, the
Master Settlement Agreement as defined in section 6(21) of that Act, or the liability
apportionment agreement described.''.
 (c) Section 507(a) of title 11, United States Code, is amended by adding at the end thereof the
following:
 ``(10) Tenth, any unsecured claim of or against a participating tobacco product manufacturer as
defined in section 6(22) of the National Tobacco Policy and Youth Smoking Reduction Act,
regarding any interest or obligation that arises under or is directly related to the Master Settlement
Agreement as defined in section 6(21) of that Act, or the liability apportionment agreement.''.
 (d) Section 541(a) of title 11, United States Code, is amended by adding at the end thereof the
following:
 ``(8) Any interest of the debtor in property to the extent that the debtor has transferred or agreed
to transfer such interest under the Master Settlement Agreement as defined in section 6(21) of the
National Tobacco Policy and Youth Smoking Reduction Act or any written agreement directly
related to such Master Settlement Agreement, or the liability apportionment agreement, or any
written agreement directly related to such liability apportionment agreement.''.
 (e) Section 1141 of title 11, United States Code, is amended by_
 (1) striking ``(d)(2) and (d)(3)'' in subsection (a) and inserting ``(d)(2), (d)(3), and (d)(5)'';
 (2) striking ``(d)(2) and (d)(3)'' in subsection (c) and inserting ``(d)(2), (d)(3), and (d)(5)''; and
 (3) adding at the end of subsection (d) the following:
 ``(5) The confirmation of a plan does not discharge a debtor from any debt or other obligation
arising under or directly related to the Master Settlement Agreement as defined in section 6(21) of
the National Tobacco Policy and Youth Smoking Reduction Act, or the liability apportionment
agreement.''.
TITLE VIII_TOBACCO INDUSTRY COMPLIANCE AND EMPLOYEE PROTECTION
FROM REPRISALS
SEC. 801. TOBACCO INDUSTRY COMPLIANCE ACCOUNTABILITY REQUIREMENTS.
 (a)  Establishment of Accountability Panel._ The Commissioner of Food and Drugs, in
consultation with the Secretary, shall establish an advisory panel, to be known as the ``Tobacco
Agreement Accountability Panel''. The panel shall consist of the Surgeon General, the Director of
the Center for Disease Control or the Director's delegate, and the Director of the Health and
Human Services Office of Minority Health.
 (b)  Tobacco Company Plan._ Within a year after the date of enactment of this Act, each
participating tobacco product manufacturer shall adopt and submit to the Commissioner a plan to
achieve the required percentage reductions in underage use of tobacco products set forth in
section 201, and thereafter shall update its plan no less frequently than annually. The
Commissioner shall provide a copy of each such plan to the panel, which shall review the plan and
submit its views on the plan to the Commissioner. The panel may recommend amendment of any
plan to incorporate additional measures to reduce underage tobacco use that are consistent with
the provisions of this Act.
 (c)  Annual Report._ The panel shall submit a report to the Commissioner and to the Congress by
January 31 of each year, which shall be published in the Federal Register. In its report, the panel
shall_
 (1) describe in detail each tobacco product manufacturer's compliance with the provisions of this
Act and its plan submitted under subsection (b);
 (2) report on whether each tobacco product manufacturer's efforts to reduce underage smoking
are likely to result in attainment of smoking reduction targets under section 201;
 (3) recommend, where necessary, additional measures individual tobacco companies should
undertake to meet those targets; and
 (4) include, where applicable, the extent to which prior panel recommendations have been
adopted by each tobacco product manufacturer.
 (d)  Public Health Emergency._ If the panel determines unanimously at any time that a tobacco
product manufacturer's actions or inactions with respect to its compliance with the Act are of
such a nature as to create a clear and present danger to the attainment of the targets for underage
smoking reduction, it shall immediately report such acts or omissions to the Commissioner. If the
Commissioner determines that such report is supported by clear and convincing evidence, the
Commissioner may bring an action under section 203 seeking the immediate suspension of the
tobacco product manufacturer's annual limitation cap on civil judgments. If the court determines
that the Commissioner has proved by clear and convincing evidence that the subject
manufacturer's actions or inactions are of such a nature that they present a clear and present
danger to the attainment of the targets for underage smoking reduction, the court may suspend
the subject manufacturer's annual limitation cap on civil judgments.
SEC. 802. TOBACCO PRODUCT MANUFACTURER EMPLOYEE PROTECTION.
 (a)  Prohibited Acts._ No tobacco product manufacturer may discharge, demote, or otherwise
discriminate against any employee with respect to compensation, terms, conditions, benefits, or
privileges of employment because the employee (or any person acting under a request of the
employee)_
 (1) notified the manufacturer, the Commissioner of Food and Drugs, the Attorney General, or
any Federal, State, or local public health or law enforcement authority of an alleged violation of
this or any other Act;
 (2) refused to engage in any practice made unlawful by such Acts, if the employee has identified
the alleged illegality to the manufacturer;
 (3) testified before Congress or at any Federal or State proceeding regarding any provision (or
proposed provision) of such Acts;
 (4) commenced, caused to be commenced, or is about to commence or cause to be commenced a
proceeding under such Acts, or a proceeding for the administration or enforcement of any
requirement imposed under such Acts;
 (5) testified or is about to testify in any such proceeding; or
 (6) assisted or participated, or is about to assist or participate, in any manner in such a
proceeding or in any other manner in such a proceeding or in any other action to carry out the
purposes of such Acts.
 (b)  Employee Complaint._
 (1) Any employee of a tobacco product manufacturer who believes that he or she has been
discharged, demoted, or otherwise discriminated against by any person in violation of subsection
(a) of this section may, within 180 days after such violation occurs, file (or have any person file on
his or her behalf) a complaint with the Secretary alleging such discharge, demotion, or
discrimination. Upon receipt of such a complaint, the Secretary shall notify the person named in
the complaint of its filing.
 (2)(A) Upon receipt of a complaint under paragraph (1) of this subsection, the Secretary shall
conduct an investigation of the violation alleged in the complaint. Within 30 days after the receipt
of such complaint, the Secretary shall complete such investigation and shall notify in writing the
complainant (and any such person acting in his or her behalf) and the person alleged to have
committed such violation of the results of the investigation conducted under this paragraph.
Within 90 days after the receipt of such complaint, the Secretary shall (unless the proceeding on
the complaint is terminated by the Secretary on the basis of a settlement entered into by the
Secretary and the person alleged to have committed such violation) issue an order either
providing the relief prescribed in subparagraph (B) of this paragraph or denying the complaint. An
order of the Secretary shall be made on the record after notice and the opportunity for a hearing
in accordance with sections 554 and 556 of title 5, United States Code. Upon the conclusion of
such a hearing and the issuance of a recommended decision that the complaint has merit, the
Secretary shall issue a preliminary order providing the relief prescribed in subparagraph (B) of this
paragraph, but may not order compensatory damages pending a final order. The Secretary may
not enter into a settlement terminating a proceeding on a complaint without the participation and
consent of the complainant.
 (B) If, in response to a complaint under paragraph (1) of this subsection, the Secretary
determines that a violation of this paragraph has occurred, the Secretary shall order the person
who committed such violation to (i) take affirmative action to abate the violation, and (ii) reinstate
the complainant to his or her former position together with compensation (including back pay),
terms, conditions, and privileges of his or her employment. The Secretary may order such person
to provide compensatory damages to the complainant. If an order is issued under this
subparagraph, the Secretary, at the request of the complainant, shall assess the person against
whom the order is issued a sum equal to the aggregate amount of all costs and expenses
(including attorneys' and expert witness fees) reasonably incurred (as determined by the
Secretary), by the complainant for, or in connection with, the bringing of the complaint upon
which the order is issued.
 (3)(A) The Secretary shall dismiss a complaint filed under paragraph (1) of this subsection, and
shall not conduct the investigation required under paragraph (2) of this subsection, unless the
complainant has made a  prima facie  showing that any behavior described in subsection (a) of this
section was a contributing factor in the unfavorable personnel action alleged in the complaint.
 (B) Notwithstanding a finding by the Secretary that the complainant has made the showing
required by subparagraph (A) of this paragraph, no investigation required under paragraph (2) of
this subsection shall be conducted if the manufacturer demonstrates by clear and convincing
evidence that it would have taken the same unfavorable personnel action in the absence of such
behavior. Relief may not be ordered under paragraph (1) of this subsection if the manufacturer
demonstrates by clear and convincing evidence that it would have taken the same unfavorable
personnel action in the absence of such behavior.
 (C) The Secretary may determine that a violation of subsection (a) of this section has occurred
only if the complainant has demonstrated that any behavior described in subsection (a) of this
section was a contributing factor in unfavorable personnel action alleged in the complaint.
 (c)  Judicial Review._
 (1) Any person adversely affected or aggrieved by an order issued under subsection (a) of this
section may obtain review of the order in the United States court of appeals for the circuit in
which the violation, with respect to which the order was issued, allegedly occurred. The petition
for review must be filed within 60 days after the issuance of the Secretary's order. Judicial review
shall be available as provided in chapter 7 of title 5, United States Code. The commencement of
proceedings under this subsection shall not, unless ordered by the court, operate as a stay of the
Secretary's order.
 (2) An order of the Secretary with respect to which review could have been obtained under
paragraph (1) of this subsection shall not be subject to judicial review in any criminal or civil
proceeding.
 (d)  Noncompliance._ Whenever a person has failed to comply with an order issued under
subsection (b)(2) of this section, the Secretary may file a civil action in the United States district
court for the district in which the violation occurred to enforce such order. In actions brought
under this subsection, the district courts shall have jurisdiction to grant all appropriate relief,
including injunctive relief and compensatory and exemplary damages.
 (e)  Action to Ensure Compliance._
 (1) Any person on whose behalf an order was issued under subsection (b)(2) of this section may
commence a civil action to require compliance with such order against the person to whom such
order was issued. The appropriate United States district court shall have jurisdiction to enforce
such order, without regard to the amount in controversy or the citizenship of the parties.
 (2) The court, in issuing any final order under this subsection, may award costs of litigation
(including reasonable attorneys' and expert witness fees) to any party whenever the court
determines such award is appropriate.
 (f)  Enforcement._ Any non-discretionary duty imposed by this section shall be enforceable in a
mandamus proceeding brought under section 1361 of title 28, United States Code.
 (g)  Applicability to Certain Employees._ Subsection (a) of this section shall not apply with
respect to any employee who, acting without direction from the manufacturer (or the agent of the
manufacturer) deliberately causes a violation of any requirement of this Act, the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 301 et seq), or any other law or regulation relating to
tobacco products.
 (h)  Effect on Other Laws._ This section shall not be construed to expand, diminish, or otherwise
affect any right otherwise available to an employee under Federal or State law to redress the
employee's discharge or other discriminatory action taken by a tobacco product manufacturer
against the employee.
 (i)  Posting._ The provisions of this section shall be prominently posted in any place of
employment to which this section applies.
TITLE IX_PUBLIC DISCLOSURE OF TOBACCO INDUSTRY DOCUMENTS
SEC. 901. FINDINGS.
 The Congress finds that_
 (1) the American tobacco industry has made claims of attorney-client privilege, attorney work
product, and trade secrets to protect from public disclosure thousands of internal documents
sought by civil litigants;
 (2) a number of courts have found that these claims of privilege were not made in good faith; and
 (3) a prompt and full exposition of tobacco documents will_
 (A) promote understanding by the public of the tobacco industry's research and practices; and
 (B) further the purposes of this Act.
SEC. 902. APPLICABILITY.
 This title shall apply to all participating tobacco product manufacturers.
SEC. 903. NATIONAL TOBACCO DOCUMENT DEPOSITORY.
 (a)  Establishment._ Participating tobacco product manufacturers shall, within 180 days after the
enactment of this Act, establish a National Tobacco Document Depository in the Washington,
D.C., area. The cost of establishing and operating the Depository shall be allocated among such
manufacturers on the basis of market share or as otherwise agreed among them.
 (b)  Document Categories._ Within 30 days after the establishment of the Depository, each
participating tobacco product manufacturer shall submit to the Depository_
 (1) all original laboratory research conducted or funded, directly or indirectly, by any
participating tobacco product manufacturers, the Center for Tobacco Research and Tobacco
Institute relating to the health effects or safety of tobacco products, including without limitation
all original laboratory research relating to any method or means of making tobacco products less
hazardous to consumers;
 (2) all documents produced by any participating tobacco product manufacturer, the Center of
Tobacco Research or Tobacco Institute to the Attorney General of any State during discovery in
any action brought on behalf of any State and commenced after January 1, 1994;
 (3) all documents produced by any participating tobacco product manufacturer, Center for
Tobacco Research or Tobacco Institute to the Federal Trade Commission in connection with its
investigation into the ``Joe Camel'' advertising campaign and any underage marketing of tobacco
products to minors;
 (4) all documents produced by any participating tobacco product manufacturers, the Center for
Tobacco Research or the Tobacco Institute to litigation adversaries during discovery in any
private litigation matters;
 (5) all documents produced by any participating tobacco product manufacturer, the Center for
Tobacco Research, or the Tobacco Institute in any of the following private litigation matters:
 (A) Philip Morris v. American Broadcasting Co., Law No. 7609CL94x00181-00 (Cir. Ct. Va.
filed Mar. 26, 1994);
 (B) Estate of Butler v. R.J. Reynolds Tobacco Co., Civ. A. No. 94-5-53 (Cir. Ct. Miss., filed
May 12, 1994);
 (C) Haines v. Liggett Group, No. 84-CV-678 (D.N.J., filed Feb. 22, 1984); and
 (D) Cipollone v. Liggett Group, No. 83-CV-284 (D.N.J., filed Aug. 1, 1983);
 (6) any document produced as evidence or potential evidence or submitted to the court by
participating tobacco product manufacturers in any of the actions described in paragraph (5),
including briefs and other pleadings, memoranda, interrogatories, transcripts of depositions, and
expert witnesses and consultants materials, including correspondence, reports, and testimony;
 (7) any additional documents that any participating tobacco product manufacturer, the Center for
Tobacco Research, or the Tobacco Institute have agreed or been required by any court to
produce to litigation adversaries as part of discovery in any action listed in paragraph (2), (3), (4),
or (5) but have not yet completed producing as of the date of enactment of this Act;
 (8) all indices of documents relating to tobacco products and health, with any such indices that
are maintained in computerized form placed into the depository in both a computerized and hard-
copy form;
 (9) a privilege log describing each document or portion of a document otherwise subject to
production in the actions enumerated in this subsection that any participating tobacco product
manufacturer, the Center for Tobacco Research, or the Tobacco Institute maintains, based upon a
good faith  de novo  re-review conducted after June 20, 1997, is exempt from public disclosure
under this title; and
 (10) a trade secrecy log describing each document or portion of a document that any
participating tobacco product manufacturer, the Center for Tobacco Research, or the Tobacco
Institute maintains is exempt from public disclosure under this title.
 (c)  Future Documents ._With respect to documents created after the date of enactment of this
Act, the participating tobacco product manufacturers and their trade associations shall place into
the depository in accordance with a schedule established by the Board the following documents:
 (1) All original laboratory research conducted or funded, directly or indirectly, by any
participating tobacco product manufacturer relating to the health effects or safety of tobacco
products, including without limitation all original laboratory research relating to any methods or
means of making tobacco products less hazardous to consumers.
 (2) All studies conducted or funded, directly or indirectly, by any participating tobacco product
manufacturer, relating to tobacco product use by minors.
 (3) All documents discussing or referring to the relationship, if any, between advertising and
promotion and the use of tobacco products by minors.
 (4) A privilege log describing each document or each portion of a document otherwise subject to
public disclosure under this subsection that any participating tobacco product manufacturer
maintains is exempt from public disclosure under this title.
 (5) A trade secrecy log describing each document or each portion of a document otherwise
subject to public disclosure under this subsection that any participating tobacco product
manufacturer, the Center for Tobacco Research, or the Tobacco Institute maintains is exempt
from public disclosure under this Act.
 (d)  Document Identification and Index._ Documents submitted to the Depository under this
section shall be sequentially numbered and marked to identify the participating tobacco product
manufacturer. Within 15 days after submission of documents to the Depository, each tobacco
product manufacturer shall supply the Depository with a comprehensive document index which
references the applicable document categories contained in subsection (b).
SEC. 904. PRIVILEGE AND TRADE SECRET CLAIMS.
 (a)  Separate Submission of Documents._ Any document that is subject to a claim by a
participating tobacco product manufacturer of attorney-client privilege, attorney work product, or
trade secret protection shall be so marked and shall be submitted separately to the Depository.
Compliance with this subsection shall not be deemed to be a waiver of any applicable claim of
privilege or trade secret protection.
 (b)  Confidentiality._ Notwithstanding the provisions of section 552 of title 5 of the United States
Code or the provisions of any State law, documents, and information provided to the United
States Department of Justice or to State antitrust authorities under the Protocol shall be kept
confidential by and among the United States Department of Justice and such authorities and shall
be used only for the governmental purposes of enforcing this Act, the Protocol, and the consent
decrees. The inspection and discovery rights provided to the States under the Protocol and this
section shall be exercised by each State but coordinated through a multi-state States' Attorneys
General oversight committee.
 (c)  Privilege and Trade Secret Logs._
 (1)  In general._ Within 15 days after submitting documents to the Depository under subsection
(a), each participating tobacco product manufacturer shall submit to the Depository a
comprehensive log which identifies on a document-by-document basis all documents produced to
the Depository for which the manufacturer asserts attorney-client privilege, attorney work-
product, or trade secrecy. With respect to documents for which the manufacturer previously has
asserted one or more of the aforementioned privileges or trade secret protection, the manufacturer
shall conduct a good faith  de novo  review of such documents to determine whether such
privilege or trade secret protection is appropriate.
 (2)  Organization of log._ The log shall be organized in numerical order based upon the
document identifier assigned to each document. For each document, the log shall contain_
 (A) a description of the document, including type of document, title of document, name and
position or title of each author, addressee, and other recipient who was intended to receive a
copy, document date, document purpose, and general subject matter;
 (B) an explanation why the document or a portion of the document is privileged or subject to
trade secret protection; and
 (C) a statement whether any previous claim of privilege or trade secret was denied and, if so, in
what proceeding.
 (3)  Public inspection._ Within 5 days of receipt of such a log, the Depository shall make it
available for public inspection and review.
 (d)  Declaration of Compliance._ Each participating tobacco product manufacturer shall submit
to the Board a declaration, in accordance with the requirements of section 1746 of title 28, United
States Code, by an individual with responsibility for the  de novo  review of documents,
preparation of the privilege log, and knowledge of its contents. The declarant shall attest to the
manufacturer's compliance with the requirements of this title pertaining to the review of
documents and preparation of a privilege log.
SEC. 905. DISCLOSURE BY THE DEPOSITORY.
 (a)  In General._ Within 30 days after receipt of a document that is not subject to a claim of
attorney-client privilege, attorney work product, or trade secret protection, the Depository shall
make the document available to the public using the Internet and other means.
 (b)  Evidentiary Status._ The provisions of section 2116(a) and (b) of title 44, United States
Code, apply to records and documents submitted to the Depository in the same manner and to the
same extent as if they were records submitted to the National Archives of the United States
required by statute to be retained indefinitely.
 (c)  Application of Confidentiality Law._ The release by the National Tobacco Documents
Review Board established under section 906 or any employee of the Depository of any document
recognized by the Depository as protected as a trade secret is a violation of section 1905 of title
18, United States Code.
SEC. 906. NATIONAL TOBACCO DOCUMENTS REVIEW BOARD.
 (a)  Establishment._ There shall be a National Tobacco Documents Review Board consisting of 5
members, qualified by training and experience to carry out the functions of the Board, each of
whom shall be appointed by the President and with the advice and consent of the Senate. Any
person who is a citizen of the United States shall be eligible to serve as a member of the Board.
Each Board member shall be appointed for a term of 7 years and shall be eligible for
reappointment. The Board shall have the power to hire such staff and establish such operating
procedures as it deems necessary to carry out its functions as specified hereunder.
 (b)  Responsibility for Depository._ The Board shall have the responsibility of maintaining the
Depository and shall, in consultation with the General Services Administration, establish
guidelines and procedures for the establishment and operation of the Depository, including
guidelines for the immediate disclosure of documents that are not subject to unresolved claims of
privilege or trade secrecy. The Depository shall be open to the public and maintained in a manner
that permits it to be used as a resource for litigants, public health groups, and persons with an
interest in tobacco industry records and research concerning smoking and health, addiction or
nicotine dependency, safer or less hazardous cigarettes, and underage tobacco use and marketing.
The Board may grant reasonable extensions of time for compliance upon a showing of good
cause.
 (c)  Privilege._ The Board shall apply the attorney-client privilege and the attorney work-product
doctrine in a manner consistent with Federal law.
SEC. 907. RESOLUTION OF DISPUTED PRIVILEGE AND TRADE SECRET CLAIMS.
 (a)  In General._ The Board shall determine whether to uphold or reject disputed claims of
attorney client privilege, attorney work product, or trade secret protection with respect to
documents submitted to the Depository. Any person may petition the Board to resolve a claim
that a document submitted to the Depository may not be disclosed to the public. Such a
determination shall be made by a majority of the Board, in writing, and shall be subject to judicial
review as specified in this title. All such determinations shall be made solely on consideration of
the subject document and written submissions from the person claiming that the document is
privileged or protected by trade secrecy and from any person seeking disclosure of the document.
The Board shall cause notice of the petition and the Board's decision to be published in the
Federal Register.
 (b)  Final Decision._ The Board may uphold a claim of privilege or protection in its entirety or, in
its sole discretion, it may redact that portion of a document that it determines is protected from
public disclosure under subsection (a). Any decision of the Board shall be final unless judicial
review is sought under section 908. In the event that judicial review is sosought, the Board's
decision shall be stayed pending a final judicial decision.
SEC. 908. APPEAL OF BOARD DECISION.
 (a)  Petition; Right of Appeal._ Any person may obtain judicial review of a final decision of the
Board by filing a petition for review with the United States Court of Appeals for the Federal
Circuit within 60 days after the publication of such decision in the Federal Register. A copy of the
petition shall be transmitted by the Clerk of the Court to the Board. The Board shall file in the
court the record of the proceedings on which the Board based its decision (including any
documents reviewed by the Board in  camera ) as provided in section 2112 of title 28, United
States Code. Upon the filing of such petition, the court shall have exclusive jurisdiction to affirm
or set aside the Board's decision, except that until the filing of the record the Board may modify
or set aside its decision.
 (b)  Additional Evidence and Arguments._ If the any party applies to the court for leave to
adduce additional evidence respecting the decision being reviewed and shows to the satisfaction
of the court that such additional evidence or arguments are material and that there were
reasonable grounds for the failure to adduce such evidence or arguments in the proceedings
before the Board, the court may order the Board to provide additional opportunity for the
presentation of evidence or arguments in such manner and upon such terms as the court deems
proper. The Board may modify its findings or make new findings by reason of the additional
evidence or arguments and shall file with the court such modified or new findings, and its
recommendation, if any, for the modification or setting aside of the decision being reviewed.
 (c)  Standard of Review; Finality of Judgments._ The Board's findings of fact, if supported by
substantial evidence on the record taken as a whole, shall be conclusive. The court shall review
the Board's legal conclusions  de novo.  The judgment of the court affirming or setting aside the
Board's decision shall be final, subject to review by the Supreme Court of the United States upon
certiorari or certification, as provided in section 1254 of title 28, United States Code.
 (d)  Public Disclosure After Final Decision._ Within 30 days after a final decision that a
document, as redacted by the Board or in its entirety, is not protected from disclosure by a claim
of attorney-client privilege, attorney work product, or trade secret protection, the Board shall
direct the Depository to make the document available to the public. No Federal, Tribal, or State
court shall have jurisdiction to review a claim of attorney-client privilege, attorney work product,
or trade secret protection for a document that has lawfully been made available to the public
under this subsection.
 (e)  Effect of Non-disclosure Decision on Judicial Proceedings._ The Board's decision that a
document is protected by attorney-client privilege, attorney work product, or trade secret
protection is binding only for the purpose of protecting the document from disclosure by the
Depository. The decision by the Board shall not be construed to prevent a document from being
disclosed in a judicial proceeding.
 (f)  Disclosure to the Food and Drug Administration._ Within 240 days after the date of
enactment of this Act, each participating tobacco product manufacturer shall submit to the Food
and Drug Administration the documents identified in section 903(b) or 903(c), including
documents for which trade secret protection is claimed, with the exception of any document for
which privilege is claimed, and identified in accordance with section 904(a). Each such
manufacturer shall provide the Administration with the privilege and trade secret logs identified
under section 904(b). With respect to documents that are claimed to contain trade secret material,
unless and until it is finally determined under this title, either through judicial review or because
time for judicial review has expired, that such a document does not constitute or contain trade
secret material, the Administration shall treat the document as a trade secret in accordance with
section 708 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 379) and the regulations
promulgated thereunder. Nothing herein shall limit the authority of the Administration to obtain
and use, in accordance with any provision of the Federal Food, Drug, and Cosmetic Act and the
regulations promulgated thereunder, any document constituting or containing trade secret
material. Documents and materials received by the Administration under this provision shall not
be obtainable by or releasable to the public through section 552 of title 5, United States Code, or
any other provision of law, and the only recourse to obtain these documents shall be through the
Board and Depository.
SEC. 909. MISCELLANEOUS.
 The disclosure process in this title is not intended to affect the Federal Rules of Civil or Criminal
Procedure or any Federal law which requires the disclosure of documents or which deals with
attorney-client privilege, attorney work product, or trade secret protection.
SEC. 910. PENALTIES.
 (a)  Good Faith Requirement._ Each participating tobacco product manufacturer must act in
good faith in asseting claims of privilege or trade secret protection based on fact and law. If the
Board determines that a participating tobacco product manufacturer has not acted in good faith
with full knowledge of the truth of the facts asserted and with a reasonable basis under existing
law, the manufacturer shall be assessed costs, which shall include the full administrative costs of
handling the claim of privilege, and all attorneys' fees incurred by the Board and any party
contesting the privilege. The Board may also impose civil penalties of up to $10,000 per violation
if it determines that the manufacturer acted in bad faith in asserting a privilege, or knowingly
acted with the intent to delay, frustrate, defraud, or obstruct the Board's determination of
privilege or trade secret protection claims.
 (b)  Failure to Produce Document._ A failure by a participating tobacco product manufacturer to
produce indexes and documents in compliance with the schedule set forth in this title, or with
such extension as may be granted by the Board, shall be punished by a civil penalty of up to $500
per violation. A separate violation occurs for each document the manufacturer has failed to
produce in a timely manner. The maximum penalty under this subsection for a related series of
violations is $10,000. In determining the amount of anycivil penalty, the Board shall consider the
number of documents, length of delay, any history of prior violations, the ability to pay, and such
other matters as justice requires. Nothing in this title shall replace or supersede any criminal
sanction under title 18, United States Code, or any other provision of law.
SEC. 911. DEFINITIONS.
 For the purposes of this title_
 (1)  Document._ The term ``document'' includes originals and drafts of any kind of written or
graphic matter, regardless of the manner of production or reproduction, of any kind or
description, whether sent or received or neither, and all copies thereof that are different in any
way from the original (whether by interlineation, receipt stamp, notation, indication of copies sent
or received or otherwise) regardless of whether confidential, privileged, or otherwise, including
any paper, book, account, photograph, blueprint, drawing, agreement, contract, memorandum,
advertising material, letter, telegram, object, report, record, transcript, study, note, notation,
working paper, intra-office communication, intra-department communication, chart, minute, index
sheet, routing sheet, computer software, computer data, delivery ticket, flow sheet, price list,
quotation, bulletin, circular, manual, summary, recording of telephone or other conversation or of
interviews, or of conferences, or any other written, recorded, transcribed, punched, taped, filmed,
or graphic matter, regardless of the manner produced or reproduced. Such term also includes any
tape, recording, videotape, computerization, or other electronic recording, whether digital or
analog or a combination thereof.
 (2)  Trade secret._ The term ``trade secret'' means any commercially valuable plan, formula,
process, or device that is used for making, compounding, processing, or preparing trade
commodities and that can be said to be the end-product of either innovation or substantial effort,
for which there is a direct relationship between the plan, formula, process, or device and the
productive process.
 (3)  Certain actions deemed to be proceedings._ Any action undertaken under this title, including
the search, indexing, and production of documents, is deemed to be a ``proceeding'' before the
executive branch of the United States.
 (4)  Other terms._ Any term used in this title that is defined in section 701 has the meaning given
to it by that section.
TITLE X_LONG-TERM ECONOMIC ASSISTANCE FOR FARMERS
 SEC. 1001. SHORT TITLE.
   This title may be cited as the ``Long-Term Economic Assistance for Farmers Act'' or the
``LEAF Act''.
 SEC. 1002. DEFINITIONS.
   In this title:
   (1)  Participating tobacco producer ._The term ``participating tobacco producer'' means a quota
holder, quota lessee, or quota tenant.
   (2)  Quota holder ._The term ``quota holder'' means a producer that owns a farm for which a
tobacco farm marketing quota or farm acreage allotment was established under the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) for any of the 1995, 1996, or 1997 crop years.
   (3)  Quota lessee ._The term ``quota lessee'' means_
   (A) a producer that owns a farm that produced tobacco pursuant to a lease and transfer to that
farm of all or part of a tobacco farm marketing quota or farm acreage allotment established under
the Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) for any of the 1995, 1996, or
1997 crop years; or
   (B) a producer that rented land from a farm operator to produce tobacco under a tobacco farm
marketing quota or farm acreage allotment established under the Agricultural Adjustment Act of
1938 (7 U.S.C. 1281 et seq.) for any of the 1995, 1996, or 1997 crop years.
   (4)  Quota tenant ._The term ``quota tenant'' means a producer that_
   (A) is the principal producer, as determined by the Secretary, of tobacco on a farm where
tobacco is produced pursuant to a tobacco farm marketing quota or farm acreage allotment
established under the Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) for any of the
1995, 1996, or 1997 crop years; and
   (B) is not a quota holder or quota lessee.
   (5)  Secretary ._The term ``Secretary'' means_
   (A) in subtitles A and B, the Secretary of Agriculture; and
   (B) in section 1031, the Secretary of Labor.
   (6)  Tobacco product importer ._The term ``tobacco product importer'' has the meaning given
the term ``importer'' in section 5702 of the Internal Revenue Code of 1986.
   (7)  Tobacco product manufacturer ._
   (A)  In general ._The term ``tobacco product manufacturer'' has the meaning given the term
``manufacturer of tobacco products'' in section 5702 of the Internal Revenue Code of 1986.
   (B)  Exclusion ._The term ``tobacco product manufacturer'' does not include a person that
manufactures cigars or pipe tobacco.
   (8)  Tobacco warehouse owner ._The term ``tobacco warehouse owner'' means a
warehouseman that participated in an auction market (as defined in the first section of the
Tobacco Inspection Act (7 U.S.C. 511)) during the 1998 marketing year.
   (9)  Trust fund ._The term ``Trust Fund'' means the Tobacco Community Revitalization Trust
Fund established under section 1011.
Subtitle A_Tobacco Community Revitalization Trust Fund
 SEC. 1011. ESTABLISHMENT OF TRUST FUND.
   (a)  In General ._There is established in the Treasury of the United States a trust fund to be
known as the ``Tobacco Community Revitalization Trust Fund'', consisting of such amounts as
may be appropriated or credited to the Trust Fund. The Trust Fund shall be administered by the
Secretary.
   (b)  Transfers to Trust Fund ._There are appropriated and transferred to the Trust Fund for
each fiscal year_
   (1) amounts contributed by tobacco product manufacturers and tobacco product importers
under section 1012; and
   (2) an amount from the National Tobacco Settlement Trust Fund established by section 401
equal to the aggregate amount of assessments under section 1012 against participating tobacco
manufacturers for that fiscal year.
   (c)  Repayable Advances ._
   (1)  Authorization ._There are authorized to be appropriated to the Trust Fund, as repayable
advances, such sums as may from time to time be necessary to make expenditures under
subsection (d).
   (2)  Repayment with interest ._Repayable advances made to the Trust Fund shall be repaid, and
interest on the advances shall be paid, to the general fund of the Treasury when the Secretary of
the Treasury determines that moneys are available in the Trust Fund to make the payments.
   (3)  Rate of interest ._Interest on an advance made under this subsection shall be at a rate
determined by the Secretary of Treasury (as of the close of the calendar month preceding the
month in which the advance is made) that is equal to the current average market yield on
outstanding marketable obligations of the United States with remaining period to maturity
comparable to the anticipated period during which the advance will be outstanding.
   (d)  Expenditures From Trust Fund ._Amounts in the Trust Fund shall be available for making
expenditures after October 1, 1998, to meet those necessary obligations of the Federal
Government that are authorized to be paid under_
   (1) section 1021 for payments for lost tobacco quota for each of fiscal years 1999 through
2023, but not to exceed $1,650,000,000 for any fiscal year except to the extent the payments are
made in accordance with subsection (d)(12) or (e)(9) of section 1021;
   (2) section 1022 for industry payments for all costs of the Department of Agriculture associated
with the production of tobacco;
   (3) section 1023 for tobacco community economic development grants, but not to exceed_
   (A) $375,000,000 for each of fiscal years 1999 through 2008, less any amount required to be
paid under section 1022 for the fiscal year; and
   (B) $450,000,000 for each of fiscal year 2009 through 2023, less any amount required to be
paid under section 1022 during the fiscal year;
   (4) section 1031 for assistance provided under the tobacco worker transition program, but not
to exceed $25,000,000 for any fiscal year; and
   (5) subpart 9 of part A of title IV of the Higher Education Act of 1965 for farmer opportunity
grants, but not to exceed_
   (A) $42,500,000 for each of the academic years 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.
   (e)  Budgetary Treatment ._This section constitutes budget authority in advance of
appropriations Acts and represents the obligation of the Federal Government to provide payments
to States and eligible persons in accordance with this title.
 SEC. 1012. CONTRIBUTIONS BY TOBACCO PRODUCT MANUFACTURERS
ANDIMPORTERS.
   (a)  Definition of Market Share ._In this section, the term ``market share'' means the ratio of_
   (1) the tax liability of a tobacco product manufacturer or tobacco product importer for a
calendar year under section 5703 of the Internal Revenue Code of 1986; to
   (2) the tax liability of all tobacco product manufacturers or tobacco product importers for the
calendar year under section 5703 of the Internal Revenue Code of 1986.
   (b)  Determinations ._Not later than September 30 of each fiscal year, the Secretary of the
Treasury shall_
   (1) determine_
   (A) the market share of each tobacco product manufacturer or tobacco product importer during
the most recent calendar year;
   (B) the total amount of assessments payable for the subsequent fiscal year under subsection (c);
and
   (C) the amount of an assessment payable by the tobacco product manufacturer or tobacco
product importer for the fiscal year under subsection (d); and
   (2) notify each tobacco product manufacturer and tobacco product importer of the
determinations made under paragraph (1) with respect to the manufacturer or importer.
   (c)  Total Amount of Assessments ._
   (1)  In general ._The total amount of assessments payable by all tobacco product manufacturers
and tobacco product importers into the Trust Fund for a fiscal year shall be equal to_
   (A) the amount of the contribution to the Trust Fund for the fiscal year required under
paragraph (2); less
   (B) any amount made available during the preceding fiscal year to the Trust Fund out of funds
transferred from National Tobacco Settlement Trust Fund under section 1011(b)(2).
   (2)  Trust fund contributions ._The amount of the contribution to the Trust Fund shall be_
   (A) $2,100,000,000 for each of fiscal years 1999 through 2008;
   (B) $500,000,000 for each of fiscal years 2009 through 2023; and
   (C) for fiscal year 2024 and each subsequent fiscal year, the amount payable under section
1022.
   (d)  Individual Amount of Assessments ._The amount of an assessment payable by each tobacco
product manufacturer and tobacco product importer into the Trust Fund for a fiscal year shall be
equal to the product obtained by multiplying_
   (1) the total amount of assessments payable by all tobacco product manufacturers and tobacco
product importers for the fiscal year under subsection (c); and
   (2) the market share of the tobacco product manufacturer or tobacco product importer during
the most recent calendar year determined under subsection (b)(1)(A).
 (e)  Credit for Payments by Participating Tobacco Product Manufacturers._ There shall be
allowed as a credit against the amount of any assessment under this section for a participating
tobacco product manufacturer an amount equal to the amount paid by that manufacturer under
section 403 of this Act (other than as penalty or interest) for the calendar year ending in that fiscal
year.
 Subtitle B_Tobacco Market Transition Assistance
 SEC. 1021. PAYMENTS FOR LOST TOBACCO QUOTA.
   (a)  In General ._Beginning with the 1999 marketing year, the Secretary shall make payments
for lost tobacco quota to eligible quota holders, quota lessees, and quota tenants as
reimbursement for lost tobacco quota as a result of a decrease in demand for domestically
produced tobacco.
   (b)  Eligibility ._To be eligible to receive payments under this section, a quota holder, quota
lessee, or quota tenant shall_
   (1) prepare and submit to the Secretary an application at such time, in such manner, and
containing such information as the Secretary may require, including information sufficient to make
the demonstration required under paragraph (2); and
   (2) demonstrate to the satisfaction of the Secretary that, with respect to the 1997 marketing
year_
   (A) the producer was a quota holder and realized income from the production of tobacco
through_
   (i) the active production of tobacco;
   (ii) the lease and transfer of tobacco quota to another farm;
   (iii) the rental of all or part of the farm of the quota holder, including the right to produce
tobacco, to another tobacco producer; or
   (iv) the hiring of a quota tenant to produce tobacco;
   (B) the producer was a quota lessee; or
   (C) the producer was a quota tenant.
   (c)  Base Quota Level ._
   (1)  In general ._The Secretary shall determine, for each quota holder, quota lessee, and quota
tenant, the base quota level for the 1995 through 1997 marketing years.
   (2)  Quota holders ._The base quota level for a quota holder shall be equal to the average
tobacco farm marketing quota established for the farm owned by the quota holder for the 1995
through 1997 marketing years.
   (3)  Quota lessees ._The base quota level for a quota lessee shall be equal to_
   (A) 50 percent of the average number of pounds of tobacco quota established for a farm for the
1995 through 1997 marketing years_
   (i) that was leased and transferred to a farm owned by the quota lessee; or
   (ii) for which the rights to produce the tobacco were rented to the quota lessee; less
   (B) 25 percent of the average number of pounds of tobacco quota described in subparagraph
(A) for which a quota tenant was the principal producer of the tobacco quota.
   (4)  Quota tenants ._The base quota level for a quota tenant shall be equal to the sum of_
   (A) 50 percent of the average number of pounds of tobacco quota established for a farm for the
1995 through 1997 marketing years_
   (i) that was owned by a quota holder; and
   (ii) for which the quota tenant was the principal producer of the tobacco on the farm; and
   (B) 25 percent of the average number of pounds of tobacco quota for the 1995 through 1997
marketing years_
   (i)(I) that was leased and transferred to a farm owned by the quota lessee; or
   (II) for which the rights to produce the tobacco were rented to the quota lessee; and
   (ii) for which the quota tenant was the principal producer of the tobacco on the farm.
   (5)  Marketing quotas other than poundage quotas ._
   (A)  In general ._For each type of tobacco for which there is a marketing quota or allotment (on
an acreage basis), the base quota level for each quota holder, quota lessee, or quota tenant shall
be determined in accordance with this subsection (based on a poundage conversion) by
multiplying_
   (i) the average tobacco farm marketing quota or allotment for the 1995 through 1997 marketing
years; and
   (ii) the average yield per acre for the farm for the type of tobacco for the marketing years.
   (B)  Yields not available ._If the average yield per acre is not available for a farm, the Secretary
shall calculate the base quota for the quota holder, quota lessee, or quota tenant (based on a
poundage conversion) by determining the amount equal to the product obtained by multiplying_
   (i) the average tobacco farm marketing quota or allotment for the 1995 through 1997 marketing
years; and
   (ii) the average county yield per acre for the county in which the farm is located for the type of
tobacco for the marketing years.
   (d)  Payments for Lost Tobacco Quota for Types of Tobacco Other Than Flue-Cured Tobacco
._
   (1)  Allocation of funds ._Of the amounts made available under section 1011(d)(1) for payments
for lost tobacco quota, the Secretary shall make available for payments under this subsection an
amount that bears the same ratio to the amounts made available as_
   (A) the sum of all national marketing quotas for all types of tobacco other than flue-cured
tobacco during the 1995 through 1997 marketing years; bears to
   (B) the sum of all national marketing quotas for all types of tobacco during the 1995 through
1997 marketing years.
   (2)  Option to relinquish quota ._
   (A)  In general ._Each quota holder shall be given the option to relinquish the farm marketing
quota or farm acreage allotment of the quota holder in exchange for a payment made under
paragraph (3).
   (B)  Notification ._A quota holder shall give notification of the intention of the quota holder to
exercise the option at such time and in such manner as the Secretary may require, but not later
than January 15, 1999.
   (3)  Payments for lost tobacco quota to quota holders exercising options to relinquish quota ._
   (A)  In general ._Subject to subparagraph (E), for each of fiscal years 1999 through 2008, the
Secretary shall make annual payments for lost tobacco quota to each quota holder that has
relinquished the farm marketing quota or farm acreage allotment of the quota holder under
paragraph (2).
   (B)  Amount ._The amount of a payment made to a quota holder described in subparagraph (A)
for a marketing year shall equal \1/10\ of the lifetime limitation established under subparagraph
(E).
   (C)  Timing ._The Secretary shall begin making annual payments under this paragraph for the
marketing year in which the farm marketing quota or farm acreage allotment is relinquished.
   (D)  Additional payments ._The Secretary may increase annual payments under this paragraph
in accordance with paragraph (7)(E) to the extent that funding is available.
   (E)  Lifetime limitation on payments ._The total amount of payments made under this paragraph
to a quota holder shall not exceed the product obtained by multiplying the base quota level for the
quota holder by $8 per pound.
   (4)  Reissuance of quota ._
   (A)  Reallocation to lessee or tenant ._If a quota holder exercises an option to relinquish a
tobacco farm marketing quota or farm acreage allotment under paragraph (2), a quota lessee or
quota tenant that was the primary producer during the 1997 marketing year of tobacco pursuant
to the farm marketing quota or farm acreage allotment, as determined by the Secretary, shall be
given the option of having an allotment of the farm marketing quota or farm acreage allotment
reallocated to a farm owned by the quota lessee or quota tenant.
   (B)  Conditions for reallocation ._
   (i)  Timing ._A quota lessee or quota tenant that is given the option of having an allotment of a
farm marketing quota or farm acreage allotment reallocated to a farm owned by the quota lessee
or quota tenant under subparagraph (A) shall have 1 year from the date on which a farm
marketing quota or farm acreage allotment is relinquished under paragraph (2) to exercise the
option.
   (ii)  Limitation on acreage allotment ._In the case of a farm acreage allotment, the acreage
allotment determined for any farm subsequent to any reallocation under subparagraph (A) shall
not exceed 50 percent of the acreage of cropland of the farm owned by the quota lessee or quota
tenant.
   (iii)  Limitation on marketing quota ._In the case of a farm marketing quota, the marketing
quota determined for any farm subsequent to any reallocation under subparagraph (A) shall not
exceed an amount determined by multiplying_
   (I) the average county farm yield, as determined by the Secretary; and
   (II) 50 percent of the acreage of cropland of the farm owned by the quota lessee or quota
tenant.
   (C)  Eligibility of lessee or tenant for payments ._If a farm marketing quota or farm acreage
allotment is reallocated to a quota lessee or quota tenant under subparagraph (A)_
   (i) the quota lessee or quota tenant shall not be eligible for any additional payments under
paragraph (5) or (6) as a result of the reallocation; and
   (ii) the base quota level for the quota lessee or quota tenant shall not be increased as a result of
the reallocation.
   (D)  Reallocation to quota holders within same county or state ._
   (i)  In general ._Except as provided in clause (ii), if there was no quota lessee or quota tenant
for the farm marketing quota or farm acreage allotment for a type of tobacco, or if no quota
lessee or quota tenant exercises an option of having an allotment of the farm marketing quota or
farm acreage allotment for a type of tobacco reallocated, the Secretary shall reapportion the farm
marketing quota or farm acreage allotment among the remaining quota holders for the type of
tobacco within the same county.
   (ii)  Cross-county leasing ._In a State in which cross-county leasing is authorized pursuant to
section 319(l) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314e( l )), the Secretary
shall reapportion the farm marketing quota among the remaining quota holders for the type of
tobacco within the same State.
   (iii)  Eligibility of quota holder for payments ._If a farm marketing quota is reapportioned to a
quota holder under this subparagraph_
   (I) the quota holder shall not be eligible for any additional payments under paragraph (5) or (6)
as a result of the reapportionment; and
   (II) the base quota level for the quota holder shall not be increased as a result of the
reapportionment.
   (E)  Special rule for tenant of leased tobacco ._If a quota holder exercises an option to
relinquish a tobacco farm marketing quota or farm acreage allotment under paragraph (2), the
farm marketing quota or farm acreage allotment shall be divided evenly between, and the option
of reallocating the farm marketing quota or farm acreage allotment shall be offered in equal
portions to, the quota lessee and to the quota tenant, if_
   (i) during the 1997 marketing year, the farm marketing quota or farm acreage allotment was
leased and transferred to a farm owned by the quota lessee; and
   (ii) the quota tenant was the primary producer, as determined by the Secretary, of tobacco
pursuant to the farm marketing quota or farm acreage allotment.
   (5)  Payments for lost tobacco quota to quota holders ._
   (A)  In general ._Except as otherwise provided in this subsection, during any marketing year in
which the national marketing quota for a type of tobacco is less than the average national
marketing quota for the 1995 through 1997 marketing years, the Secretary shall make payments
for lost tobacco quota to each quota holder that is eligible under subsection (b), and has not
exercised an option to relinquish a tobacco farm marketing quota or farm acreage allotment under
paragraph (2), in an amount that is equal to the product obtained by multiplying_
   (i) the number of pounds by which the basic farm marketing quota (or poundage conversion) is
less than the base quota level for the quota holder; and
   (ii) $4 per pound.
   (B)  Poundage conversion for marketing quotas other than poundage quotas ._
   (i)  In general ._For each type of tobacco for which there is a marketing quota or allotment (on
an acreage basis), the poundage conversion for each quota holder during a marketing year shall be
determined by multiplying_
   (I) the basic farm acreage allotment for the farm for the marketing year; and
   (II) the average yield per acre for the farm for the type of tobacco.
   (ii)  Yield not available ._If the average yield per acre is not available for a farm, the Secretary
shall calculate the poundage conversion for each quota holder during a marketing year by
multiplying_
   (I) the basic farm acreage allotment for the farm for the marketing year; and
   (II) the average county yield per acre for the county in which the farm is located for the type of
tobacco.
   (6)  Payments for lost tobacco quota to quota lessees and quota tenants ._Except as otherwise
provided in this subsection, during any marketing year in which the national marketing quota for a
type of tobacco is less than the average national marketing quota for the type of tobacco for the
1995 through 1997 marketing years, the Secretary shall make payments for lost tobacco quota to
each quota lessee and quota tenant that is eligible under subsection (b) in an amount that is equal
to the product obtained by multiplying_
   (A) the percentage by which the national marketing quota for the type of tobacco is less than
the average national marketing quota for the type of tobacco for the 1995 through 1997
marketing years;
   (B) the base quota level for the quota lessee or quota tenant; and
   (C) $4 per pound.
   (7)  Lifetime limitation on payments ._Except as otherwise provided in this subsection, the total
amount of payments made under this subsection to a quota holder, quota lessee, or quota tenant
during the lifetime of the quota holder, quota lessee, or quota tenant shall not exceed the product
obtained by multiplying_
   (A) the base quota level for the quota holder, quota lessee, or quota tenant; and
   (B) $8 per pound.
   (8)  Limitations on aggregate annual payments ._
   (A)  In general ._Except as otherwise provided in this paragraph, the total amount payable
under this subsection for any marketing year shall not exceed the amount made available under
paragraph (1).
   (B)  Accelerated payments ._Paragraph (1) shall not apply if accelerated payments for lost
tobacco quota are made in accordance with paragraph (12).
   (C)  Reductions ._If the sum of the amounts determined under paragraphs (3), (5), and (6) for a
marketing year exceeds the amount made available under paragraph (1), the Secretary shall make
a pro rata reduction in the amounts payable under paragraphs (5) and (6) to quota holders, quota
lessees, and quota tenants under this subsection to ensure that the total amount of payments for
lost tobacco quota does not exceed the amount made available under paragraph (1).
   (D)  Rollover of payments for lost tobacco quota ._Subject to subparagraph (A), if the
Secretary makes a reduction in accordance with subparagraph (C), the amount of the reduction
shall be applied to the next marketing year and added to the payments for lost tobacco quota for
the marketing year.
   (E)  Additional payments to quota holders exercising option to relinquish quota ._If the amount
made available under paragraph (1) exceeds the sum of the amounts determined under paragraphs
(3), (5), and (6) for a marketing year, the Secretary shall distribute the amount of the excess pro
rata to quota holders  that have exercised an option to relinquish a tobacco farm marketing quota
or farm acreage allotment under paragraph (2) by increasing the amount payable to each such
holder under paragraph (3).
    (9)  Subsequent sale and transfer of quota ._Effective beginning with the 1999 marketing year,
on the sale and transfer of a farm marketing quota or farm acreage allotment under section 316(g)
or 319(g) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314b(g), 1314e(g))_
   (A) the person that sold and transferred the quota or allotment shall have_
   (i) the base quota level attributable to the person reduced by the base quota level attributable to
the quota that is sold and transferred; and
   (ii) the lifetime limitation on payments established under paragraph (7) attributable to the person
reduced by the product obtained by multiplying_
   (I) the base quota level attributable to the quota; and
   (II) $8 per pound; and
   (B) if the quota or allotment has never been relinquished by a previous quota holder under
paragraph (2), the person that acquired the quota shall have_
   (i) the base quota level attributable to the person increased by the base quota level attributable
to the quota that is sold and transferred; and
   (ii) the lifetime limitation on payments established under paragraph (7) attributable to the
person_
   (I) increased by the product obtained by multiplying_
   (aa) the base quota level attributable to the quota; and
   (bb) $8 per pound; but
   (II) decreased by any payments under paragraph (5) for lost tobacco quota previously made that
are attributable to the quota that is sold and transferred.
   (10)  Sale or transfer of farm ._On the sale or transfer of ownership of a farm that is owned by a
quota holder, the base quota level established under subsection (c), the right to payments under
paragraph (5), and the lifetime limitation on payments established under paragraph (7) shall
transfer to the new owner of the farm to the same extent and in the same manner as those
provisions applied to the previous quota holder.
   (11)  Death of quota lessee or quota tenant ._If a quota lessee or quota tenant that is entitled to
payments under this subsection dies and is survived by a spouse or 1 or more dependents, the
right to receive the payments shall transfer to the surviving spouse or, if there is no surviving
spouse, to the surviving dependents in equal shares.
   (12)  Acceleration of payments ._
   (A)  In general ._On the occurrence of any of the events described in subparagraph (B), the
Secretary shall make an accelerated lump sum payment for lost tobacco quota as established
under paragraphs (5) and (6) to each quota holder, quota lessee, and quota tenant for any affected
type of tobacco in accordance with subparagraph (C).
   (B)  Triggering events ._The Secretary shall make accelerated payments under subparagraph
(A) if after the date of enactment of this Act_
   (i) subject to subparagraph (D), for 3 consecutive marketing years, the national marketing quota
or national acreage allotment for a type of tobacco is less than 50 percent of the national
marketing quota or national acreage allotment for the type of tobacco for the 1998 marketing
year; or
   (ii) Congress repeals or makes ineffective, directly or indirectly, any provision of_
   (I) section 316 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314b);
   (II) section 319 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314e);
   (III) section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445);
   (IV) section 106A of the Agricultural Act of 1949 (7 U.S.C. 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 during the 1998 marketing year shall
relinquish the farm marketing quota or farm acreage allotment in exchange for a payment made
under paragraph (3) or (4).
   (B)  Notification ._The Secretary shall notify the quota holders of the relinquishment of their
quota or allotment at such time and in such manner as the Secretary may require, but not later
than November 15, 1998.
   (3)  Payments for lost flue-cured tobacco quota to quota holders that relinquish quota ._
   (A)  In general ._For each of fiscal years 1999 through 2008, the Secretary shall make annual
payments for lost flue-cured tobacco to each quota holder that has relinquished the farm
marketing quota or farm acreage allotment of the quota holder under paragraph (2).
   (B)  Amount ._The amount of a payment made to a quota holder described in subparagraph (A)
for a marketing year shall equal \1/10\ of the lifetime limitation established under paragraph (6).
   (C)  Timing ._The Secretary shall begin making annual payments under this paragraph for the
marketing year in which the farm marketing quota or farm acreage allotment is relinquished.
   (D)  Additional payments ._The Secretary may increase annual payments under this paragraph
in accordance with paragraph (7)(E) to the extent that funding is available.
   (4)  Payments for lost flue-cured tobacco quota to quota lessees and quota tenants that have not
relinquished permits ._
   (A)  In general ._Except as otherwise provided in this subsection, during any marketing year in
which the national marketing quota for flue-cured tobacco is less than the average national
marketing quota for the 1995 through 1997 marketing years, the Secretary shall make payments
for lost tobacco quota to each quota lessee or quota tenant that_
   (i) is eligible under subsection (b);
   (ii) has been issued an individual tobacco production permit under section 317A(b) of the
Agricultural Adjustment Act of 1938; and
   (iii) has not exercised an option to relinquish the permit.
   (B)  Amount ._The amount of a payment made to a quota holder described in subparagraph (A)
for a marketing year shall be equal to the product obtained by multiplying_
   (i) the number of pounds by which the individual marketing limitation established for the permit
is less than twice the base quota level for the quota holder; and
   (ii) $2 per pound.
   (5)  Payments for lost flue-cured tobacco quota to quota lessees and quota tenants that have
relinquished permits ._
   (A)  In general ._For each of fiscal years 1999 through 2008, the Secretary shall make annual
payments for lost flue-cured tobacco quota to each quota lessee and quota tenant that has
relinquished an individual tobacco production permit under section 317A(b)(5) of the Agricultural
Adjustment Act of 1938.
   (B)  Amount ._The amount of a payment made to a quota holder described in subparagraph (A)
for a marketing year shall be equal to \1/10\ of the lifetime limitation established under paragraph
(6).
   (C)  Timing ._The Secretary shall begin making annual payments under this paragraph for the
marketing year in which the individual tobacco production permit is relinquished.
   (D)  Additional payments ._The Secretary may increase annual payments under this paragraph
in accordance with paragraph (7)(E) to the extent that funding is available.
   (E)  Prohibition against permit expansion ._A quota lessee or quota tenant that receives a
payment under this paragraph shall be ineligible to receive any new or increased tobacco
production permit from the county production pool established under section 317A(b)(8) of the
Agricultural Adjustment Act of 1938.
   (6)  Lifetime limitation on payments ._Except as otherwise provided in this subsection, the total
amount of payments made under this subsection to a quota holder, quota lessee, or quota tenant
during the lifetime of the quota holder, quota lessee, or quota tenant shall not exceed the product
obtained by multiplying_
   (A) the base quota level for the quota holder, quota lessee, or quota tenant; and
   (B) $8 per pound.
   (7)  Limitations on aggregate annual payments ._
   (A)  In general ._Except as otherwise provided in this paragraph, the total amount payable
under this subsection for any marketing year shall not exceed the amount made available under
paragraph (1).
   (B)  Accelerated payments ._Paragraph (1) shall not apply if accelerated payments for lost flue-
cured tobacco quota are made in accordance with paragraph (9).
   (C)  Reductions ._If the sum of the amounts determined under paragraphs (3), (4), and (5) for a
marketing year exceeds the amount made available under paragraph (1), the Secretary shall make
a pro rata reduction in the amounts payable under paragraph (4) to quota lessees and quota
tenants under this subsection to ensure that the total amount of payments for lost flue-cured
tobacco quota does not exceed the amount made available under paragraph (1).
   (D)  Rollover of payments for lost flue-cured tobacco quota ._Subject to subparagraph (A), if
the Secretary makes a reduction in accordance with subparagraph (C), the amount of the
reduction shall be applied to the next marketing year and added to the payments for lost flue-
cured tobacco quota for the marketing year.
   (E)  Additional payments to quota holders exercising option to relinquish quotas or permits, or
to quota lessees or quota tenants relinquishing permits ._If the amount made available under
paragraph (1) exceeds the sum of the amounts determined under paragraphs (3), (4), and (5) for a
marketing year, the Secretary shall distribute the amount of the excess pro rata to quota holders
by increasing the amount payable to each such holder under paragraphs (3) and (5).
   (8)  Death of quota holder, quota lessee, or quota tenant ._If a quota holder, quota lessee or
quota tenant that is entitled to payments under paragraph (4) or (5) dies and is survived by a
spouse or 1 or more descendants, the right to receive the payments shall transfer to the surviving
spouse or, if there is no surviving spouse, to the surviving descendants in equal shares.
   (9)  Acceleration of payments ._
   (A)  In general ._On the occurrence of any of the events described in subparagraph (B), the
Secretary shall make an accelerated lump sum payment for lost flue-cured tobacco quota as
established under paragraphs (3), (4), and (5) to each quota holder, quota lessee, and quota tenant
for flue-cured tobacco in accordance with subparagraph (C).
   (B)  Triggering events ._The Secretary shall make accelerated payments under subparagraph
(A) if after the date of enactment of this Act_
   (i) subject to subparagraph (D), for 3 consecutive marketing years, the national marketing quota
or national acreage allotment for flue-cured tobacco is less than 50 percent of the national
marketing quota or national acreage allotment for flue-cured tobacco for the 1998 marketing year;
or
   (ii) Congress repeals or makes ineffective, directly or indirectly, any provision of_
   (I) section 316 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314b);
   (II) section 319 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314e);
   (III) section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445);
   (IV) section 106A of the Agricultural Act of 1949 (7 U.S.C. 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 as are necessary from the Trust Fund at
the end of each fiscal year to reimburse the Secretary for_
   (1) costs associated with the administration of programs established under this title and
amendments made by this title;
   (2) costs associated with the administration of the tobacco quota and price support programs
administered by the Secretary;
   (3) costs to the Federal Government of carrying out crop insurance programs for tobacco;
   (4) costs associated with all agricultural research, extension, or education activities associated
with tobacco;
   (5) costs associated with the administration of loan association and cooperative programs for
tobacco producers, as approved by the Secretary; and
   (6) any other costs incurred by the Department of Agriculture associated with the production of
tobacco.
   (b)  Limitations ._Amounts made available under subsection (a) may not be used_
   (1) to provide direct benefits to quota holders, quota lessees, or quota tenants; or
   (2) in a manner that results in a decrease, or an increase relative to other crops, in the amount of
the crop insurance premiums assessed to participating tobacco producers under the Federal Crop
Insurance Act (7 U.S.C. 1501 et seq.).
   (c)  Determinations ._Not later than September 30, 1998, and each fiscal year thereafter, the
Secretary shall determine_
   (1) the amount of costs described in subsection (a); and
   (2) the amount that will be provided under this section as reimbursement for the costs.
 SEC. 1023. TOBACCO COMMUNITY ECONOMIC DEVELOPMENT GRANTS.
   (a)  Authority ._The Secretary shall make grants to tobacco-growing States in accordance with
this section to enable the States to carry out economic development initiatives in tobacco-growing
communities.
   (b)  Application ._To be eligible to receive payments under this section, a State shall prepare
and submit to the Secretary an application at such time, in such manner, and containing such
information as the Secretary may require, including_
   (1) a description of the activities that the State will carry out using amounts received under the
grant;
   (2) a designation of an appropriate State agency to administer amounts received under the
grant; and
   (3) a description of the steps to be taken to ensure that the funds are distributed in accordance
with subsection (e).
   (c)  Amount of Grant ._
   (1)  In general ._From the amounts available to carry out this section for a fiscal year, the
Secretary shall allot to each State an amount that bears the same ratio to the amounts available as
the total farm income of the State derived from the production of tobacco during the 1995
through 1997 marketing years (as determined under paragraph (2)) bears to the total farm income
of all States derived from the production of tobacco during the 1995 through 1997 marketing
years.
   (2)  Tobacco income ._For the 1995 through 1997 marketing years, the Secretary shall
determine the amount of farm income derived from the production of tobacco in each State and in
all States.
   (d)  Payments ._
   (1)  In general ._A State that has an application approved by the Secretary under subsection (b)
shall be entitled to a payment under this section in an amount that is equal to its allotment under
subsection (c).
   (2)  Form of payments ._The Secretary may make payments under this section to a State in
installments, and in advance or by way of reimbursement, with necessary adjustments on account
of overpayments or underpayments, as the Secretary may determine.
   (3)  Reallotments ._Any portion of the allotment of a State under subsection (c) that the
Secretary determines will not be used to carry out this section in accordance with an approved
State application required under subsection (b), shall be reallotted by the Secretary to other States
in proportion to the original allotments to the other States.
   (e)  Use and Distribution of Funds ._
   (1)  In general ._Amounts received by a State under this section shall be used to carry out
economic development activities, including_
   (A) rural business enterprise activities described in subsections (c) and (e) of section 310B of
the Consolidated Farm and Rural Development Act (7 U.S.C. 1932);
   (B) down payment loan assistance programs that are similar to the program described in section
310E of the Consolidated Farm and Rural Development Act (7 U.S.C. 1935);
   (C) activities designed to help create productive farm or off-farm employment in rural areas to
provide a more viable economic base and enhance opportunities for improved incomes, living
standards, and contributions by rural individuals to the economic and social development of
tobacco communities;
   (D) activities that expand existing infrastructure, facilities, and services to capitalize on
opportunities to diversify economies in tobacco communities and that support the development of
new industries or commercial ventures;
   (E) activities by agricultural organizations that provide assistance directly to participating
tobacco producers to assist in developing other agricultural activities that supplement tobacco-
producing activities;
   (F) initiatives designed to create or expand locally owned value-added processing and marketing
operations in tobacco communities;
   (G) technical assistance activities by persons to support farmer-owned enterprises, or
agriculture-based rural development enterprises, of the type described in section 252 or 253 of the
Trade Act of 1974 (19 U.S.C. 2342, 2343); and
   (H) initiatives designed to partially compensate tobacco warehouse owners for lost revenues
and assist the tobacco warehouse owners in establishing successful business enterprises.
   (2)  Tobacco-growing counties ._Assistance may be provided by a State under this section only
to assist a county in the State that has been determined by the Secretary to have in excess of
$100,000 in income derived from the production of tobacco during 1 or more of the 1995 through
1997 marketing years.
   (3)  Distribution ._
   (A)  Economic development activities ._Not less than 20 percent of the amounts received by a
State under this section shall be used to carry out_
   (i) economic development activities described in subparagraph (E) or (F) of paragraph (1); or
   (ii) agriculture-based rural development activities described in paragraph (1)(G).
   (B)  Technical assistance activities ._Not less than 4 percent of the amounts received by a State
under this section shall be used to carry out technical assistance activities described in paragraph
(1)(G).
   (C)  Tobacco warehouse owner initiatives ._
   (i)  In general ._Not less than 6 percent of the amounts received by a State under this section
during each of fiscal years 1999 through 2008 shall be used to carry out initiatives described in
paragraph (1)(H).
   (ii)  Direct payments ._Of the amount made available under clause (i), not less than 80 percent
of the amount shall be used to provide direct payments to tobacco warehouse owners based on
any decline in the annual volume of tobacco sales as compared to the volume of tobacco sales
during the 1998 marketing year.
   (D)  Tobacco-growing counties ._To be eligible to receive payments under this section, a State
shall demonstrate to the Secretary that funding will be provided, during each 5-year period for
which funding is provided under this section, for activities in each county in the State that has
been determined under paragraph (2) to have in excess of $100,000 in income derived from the
production of tobacco, in amounts that are at least equal to the product obtained by multiplying_
   (i) the ratio that the tobacco production income in the county determined under paragraph (2)
bears to the total tobacco production income for the State determined under subsection (c); and
   (ii) 50 percent of the total amounts received by a State under this section during the 5-year
period.
   (f)  Preferences in Hiring ._A State may require recipients of funds under this section to provide
a preference in employment to_
   (1) an individual who_
   (A) during the 1998 calendar year, was employed in the manufacture, processing, or
warehousing of tobacco or tobacco products, or resided, in a county described in subsection
(e)(2); and
   (B) is eligible for assistance under the tobacco worker transition program established under
section 1031; or
   (2) an individual who_
   (A) during the 1998 marketing year, carried out tobacco quota or relevant tobacco production
activities in a county described in subsection (e)(2);
   (B) is eligible for a farmer opportunity grant under subpart 9 of part A of title IV of the Higher
Education Act of 1965; and
   (C) has successfully completed a course of study at an institution of higher education.
   (g)  Maintenance of Effort ._
   (1)  In general ._Subject to paragraph (2), a State shall provide an assurance to the Secretary
that the amount of funds expended by the State and all counties in the State described in
subsection (e)(2) for any activities funded under this section for a fiscal year is not less than 90
percent of the amount of funds expended by the State and counties for the activities for the
preceding fiscal year.
   (2)  Reduction of grant amount ._If a State does not provide an assurance described in
paragraph (1), the Secretary shall reduce the amount of the grant determined under subsection (c)
by an amount equal to the amount by which the amount of funds expended by the State and
counties for the activities is less than 90 percent of the amount of funds expended by the State and
counties for the activities for the preceding fiscal year, as determined by the Secretary.
   (3)  Federal funds ._For purposes of this subsection, the amount of funds expended by a State
or county shall not include any amounts made available by the Federal Government.
 SEC. 1024. FLUE-CURED TOBACCO PRODUCTION PERMITS.
   The Agricultural Adjustment Act of 1938 is amended by inserting after section 317 (7 U.S.C.
1314c) the following:
 ``SEC. 317A. FLUE-CURED TOBACCO PRODUCTION PERMITS.
   ``(a)  Definitions ._In this section:
   ``(1)  Individual acreage limitation ._The term `individual acreage limitation' means the number
of acres of flue-cured tobacco that may be planted by the holder of a permit during a marketing
year, calculated_
   ``(A) prior to_
   ``(i) any increase or decrease in the number due to undermarketings or overmarketings; and
   ``(ii) any reduction under subsection (i); and
   ``(B) in a manner that ensures that_
   ``(i) the total of all individual acreage limitations is equal to the national acreage allotment, less
the reserve provided under subsection (h); and
   ``(ii) the individual acreage limitation for a marketing year bears the same ratio to the individual
acreage limitation for the previous marketing year as the ratio that the national acreage allotment
for the marketing year bears to the national acreage allotment for the previous marketing year,
subject to adjustments by the Secretary to account for any reserve provided under subsection (h).
   ``(2)  Individual marketing limitation ._The term `individual marketing limitation' means the
number of pounds of flue-cured tobacco that may be marketed by the holder of a permit during a
marketing year, calculated_
   ``(A) prior to_
   ``(i) any increase or decrease in the number due to undermarketings or overmarketings; and
   ``(ii) any reduction under subsection (i); and
   ``(B) in a manner that ensures that_
   ``(i) the total of all individual marketing limitations is equal to the national marketing quota, less
the reserve provided under subsection (h); and
   ``(ii) the individual marketing limitation for a marketing year is obtained by multiplying the
individual acreage limitation by the permit yield, prior to any adjustment for undermarketings or
overmarketings.
   ``(3)  Individual tobacco production permit ._The term `individual tobacco production permit'
means a permit issued by the Secretary to a person authorizing the production of flue-cured
tobacco for any marketing year during which this section is effective.
   ``(4)  National acreage allotment ._The term `national acreage allotment' means the quantity
determined by dividing_
   ``(A) the national marketing quota; by
   ``(B) the national average yield goal.
   ``(5)  National average yield goal ._The term `national average yield goal' means the national
average yield for flue-cured tobacco during the 5 marketing years immediately preceding the
marketing year for which the determination is being made.
   ``(6)  National marketing quota ._For the 1999 and each subsequent crop of flue-cured tobacco,
the term `national marketing quota' for a marketing year means the quantity of flue-cured tobacco,
as determined by the Secretary, that is not more than 103 percent nor less than 97 percent of the
total of_
   ``(A) the aggregate of the quantities of flue-cured tobacco that domestic manufacturers of
cigarettes estimate that the manufacturers intend to purchase on the United States auction
markets or from producers during the marketing year, as compiled and determined under section
320A;
   ``(B) the average annual quantity of flue-cured tobacco exported from the United States during
the 3 marketing years immediately preceding the marketing year for which the determination is
being made; and
   ``(C) the quantity, if any, of flue-cured tobacco that the Secretary, in the discretion of the
Secretary, determines is necessary to increase or decrease the inventory of the producer-owned
cooperative marketing association that has entered into a loan agreement with the Commodity
Credit Corporation to make price support available to producers of flue-cured tobacco to
establish or maintain the inventory at the reserve stock level for flue-cured tobacco.
   ``(7)  Permit yield ._The term `permit yield' means the yield of tobacco per acre for an individual
tobacco production permit holder that is_
   ``(A) based on a preliminary permit yield that is equal to the average yield during the 5
marketing years immediately preceding the marketing year for which the determination is made in
the county where the holder of the permit is authorized to plant flue-cured tobacco, as determined
by the Secretary, on the basis of actual yields of farms in the county; and
   ``(B) adjusted by a weighted national yield factor calculated by_
   ``(i) multiplying each preliminary permit yield by the individual acreage limitation, prior to
adjustments for overmarketings, undermarketings, or reductions required under subsection (i);
and
   ``(ii) dividing the sum of the products under clause (i) for all flue-cured individual tobacco
production permit holders by the national acreage allotment.
   ``(b)  Initial Issuance of Permits ._
   ``(1)  Termination of flue-cured marketing quotas ._On approval through referendum under
subsection (c), farm marketing quotas as provided under section 317 shall no longer be in effect
for flue-cured tobacco.
   ``(2)  Issuance of permits to quota holders that were principal producers ._
   ``(A)  In general ._On approval through a referendum under subsection (c), each individual
quota holder under section 317 that was a principal producer of flue-cured tobacco during the
1998 marketing year, as determined by the Secretary, shall be issued an individual tobacco
production permit under this section.
   ``(B)  Notification ._The Secretary shall notify the holder of each permit of the individual
acreage limitation and the individual marketing limitation applicable to the holder for each
marketing year.
   ``(C)  Individual acreage limitation for 1999 marketing year ._In establishing the individual
acreage limitation for the 1999 marketing year under this section, the farm acreage allotment that
was allotted to a farm owned by the quota holder during the 1997 marketing year shall be
considered the individual acreage limitation for the previous marketing year.
   ``(D)  Individual marketing limitation for 1999 marketing year ._In establishing the individual
marketing limitation for the 1999 marketing year under this section, the farm marketing quota that
was allotted to a farm owned by the quota holder during the 1997 marketing year shall be
considered the individual marketing limitation for the previous marketing year.
   ``(3)  Quota holders that were not principal producers ._
   ``(A)  In general ._Except as provided in subparagraph (B), on approval through a referendum
under subsection (c)_
   ``(i) each person that was a quota holder under section 317 but that was not a principal
producer of flue-cured tobacco during the 1997 marketing year, as determined by the Secretary,
shall not be eligible to own a permit; and
   ``(ii) the Secretary shall not issue any permit during the 25-year period beginning on the date of
enactment of this Act to any person that was a quota holder and was not the principal producer of
flue-cured tobacco during the 1997 marketing year.
   ``(B)  Medical hardships and crop disasters ._Subparagraph (A) shall not apply to a person that
would have been the principal producer of flue-cured tobacco during the 1997 marketing year but
for a medical hardship or crop disaster that occurred during the 1997 marketing year.
   ``(C)  Administration ._The Secretary shall issue regulations_
   ``(i) defining the term `person' for the purpose of this paragraph; and
   ``(ii) prescribing such rules as the Secretary determines are necessary to ensure a fair and
reasonable application of the prohibition established under this paragraph.
   ``(4)  Issuance of permits to principal producers of flue-cured tobacco ._
   ``(A)  In general ._On approval through a referendum under subsection (c), each individual
quota lessee or quota tenant (as defined in section 1002 of the LEAF Act) that was the principal
producer of flue-cured tobacco during the 1997 marketing year, as determined by the Secretary,
shall be issued an individual tobacco production permit under this section.
   ``(B)  Individual acreage limitations ._In establishing the individual acreage limitation for the
1999 marketing year under this section, the farm acreage allotment that was allotted to a farm
owned by a quota holder for whom the quota lessee or quota tenant was the principal producer of
flue-cured tobacco during the 1997 marketing year shall be considered the individual acreage
limitation for the previous marketing year.
   ``(C)  Individual marketing limitations ._In establishing the individual marketing limitation for
the 1999 marketing year under this section, the individual marketing limitation for the previous
year for an individual described in this paragraph shall be calculated by multiplying_
   ``(i) the farm marketing quota that was allotted to a farm owned by a quota holder for whom
the quota lessee or quota holder was the principal producer of flue-cured tobacco during the 1997
marketing year, by
   ``(ii) the ratio that_
   ``(I) the sum of all flue-cured tobacco farm marketing quotas for the 1997 marketing year prior
to adjusting for undermarketing and overmarketing; bears to
   ``(II) the sum of all flue-cured tobacco farm marketing quotas for the 1998 marketing year, after
adjusting for undermarketing and overmarketing.
   ``(D)  Special rule for tenant of leased flue-cured tobacco ._If the farm marketing quota or farm
acreage allotment of a quota holder was produced pursuant to an agreement under which a quota
lessee rented land from a quota holder and a quota tenant was the primary producer, as
determined by the Secretary, of flue-cured tobacco pursuant to the farm marketing quota or farm
acreage allotment, the farm marketing quota or farm acreage allotment shall be divided
proportionately between the quota lessee and quota tenant for purposes of issuing individual
tobacco production permits under this paragraph.
   ``(5)  Option of quota lessee or quota tenant to relinquish permit ._
   ``(A)  In general ._Each quota lessee or quota tenant that is issued an individual tobacco
production permit under paragraph (4) shall be given the option of relinquishing the permit in
exchange for payments made under section 1021(e)(5) of the LEAF Act.
   ``(B)  Notification ._A quota lessee or quota tenant that is issued an individual tobacco
production permit shall give notification of the intention to exercise the option at such time and in
such manner as the Secretary may require, but not later than 30 days after the permit is issued.
   ``(C)  Reallocation of permit ._The Secretary shall add the authority to produce flue-cured
tobacco under the individual tobacco production permit relinquished under this paragraph to the
county production pool established under paragraph (8) for reallocation by the appropriate county
committee.
 ``(6)  Active producer requirement ._
   ``(A)  Requirement for sharing risk ._No individual tobacco production permit shall be issued
to, or maintained by, a person that does not fully share in the risk of producing a crop of flue-
cured tobacco.
   ``(B)  Criteria for sharing risk ._For purposes of this paragraph, a person shall be considered to
have fully shared in the risk of production of a crop if_
   ``(i) the investment of the person in the production of the crop is not less than 100 percent of
the costs of production associated with the crop;
   ``(ii) the amount of the person's return on the investment is dependent solely on the sale price of
the crop; and
   ``(iii) the person may not receive any of the return before the sale of the crop.
   ``(C)  Persons not sharing risk ._
   ``(i)  Forfeiture ._Any person that fails to fully share in the risks of production under this
paragraph shall forfeit an individual tobacco production permit if, after notice and opportunity for
a hearing, the appropriate county committee determines that the conditions for forfeiture exist.
   ``(ii)  Reallocation ._The Secretary shall add the authority to produce flue-cured tobacco under
the individual tobacco production permit forfeited under this subparagraph to the county
production pool established under paragraph (8) for reallocation by the appropriate county
committee.
   ``(D)  Notice ._Notice of any determination made by a county committee under subparagraph
(C) shall be mailed, as soon as practicable, to the person involved.
   ``(E)  Review ._If the person is dissatisfied with the determination, the person may request, not
later than 15 days after notice of the determination is received, a review of the determination by a
local review committee under the procedures established under section 363 for farm marketing
quotas.
   ``(7)  County of origin requirement ._For the 1999 and each subsequent crop of flue-cured
tobacco, all tobacco produced pursuant to an individual tobacco production permit shall be
produced in the same county in which was produced the tobacco produced during the 1997
marketing year pursuant to the farm marketing quota or farm acreage allotment on which the
individual tobacco production permit is based.
   ``(8)  County production pool ._
   ``(A)  In general ._The authority to produce flue-cured tobacco under an individual tobacco
production permit that is forfeited, relinquished, or surrendered within a county may be
reallocated by the appropriate county committee to tobacco producers located in the same county
that apply to the committee to produce flue-cured tobacco under the authority.
   ``(B)  Priority ._In reallocating individual tobacco production permits under this paragraph, a
county committee shall provide a priority to_
   ``(i) an active tobacco producer that controls the authority to produce a quantity of flue-cured
tobacco under an individual tobacco production permit that is equal to or less than the average
number of pounds of flue-cured tobacco that was produced by the producer during each of the
1995 through 1997 marketing years, as determined by the Secretary; and
   ``(ii) a new tobacco producer.
   ``(C)  Criteria ._Individual tobacco production permits shall be reallocated by the appropriate
county committee under this paragraph in a fair and equitable manner after taking into
consideration_
   ``(i) the experience of the producer;
   ``(ii) the availability of land, labor, and equipment for the production of tobacco;
   ``(iii) crop rotation practices; and
   ``(iv) the soil and other physical factors affecting the production of tobacco.
   ``(D)  Medical hardships and crop disasters ._Notwithstanding any other provision of this Act,
the Secretary may issue an individual tobacco production permit under this paragraph to a
producer that is otherwise ineligible for the permit due to a medical hardship or crop disaster that
occurred during the 1997 marketing year.
   ``(c)  Referendum ._
   ``(1)  Announcement of quota and allotment ._Not later than December 15, 1998, the Secretary
pursuant to subsection (b) shall determine and announce_
   ``(A) the quantity of the national marketing quota for flue-cured tobacco for the 1999 marketing
year; and
   ``(B) the national acreage allotment and national average yield goal for the 1999 crop of flue-
cured tobacco.
   ``(2)  Special referendum ._Not later than 30 days after the announcement of the quantity of the
national marketing quota, the Secretary shall conduct a special referendum of the producers that
were the principal producers of flue-cured tobacco of the 1997 crop to determine whether the
producers approve or oppose the establishment of individual tobacco production permits on an
acreage-poundage basis as provided in this section for the 1999 through 2001 marketing years.
   ``(3)  Approval of permits ._If the Secretary determines that more than 66\2/3\ percent of the
producers voting in the special referendum approve the establishment of individual tobacco
production permits on an acreage-poundage basis_
   ``(A) individual tobacco production permits on an acreage-poundage basis as provided in this
section shall be in effect for the 1999 through 2001 marketing years; and
   ``(B) marketing quotas on an acreage-poundage basis shall cease to be in effect for the 1999
through 2001 marketing years.
   ``(4)  Disapproval of permits ._If individual tobacco production permits on an acreage-
poundage basis are not approved by more than 66\2/3\ percent of the producers voting in the
referendum, no marketing quotas on an acreage-poundage basis shall continue in effect that were
proclaimed under section 317 prior to the referendum.
   ``(5)  Applicable marketing years ._If individual tobacco production permits have been made
effective for flue-cured tobacco on an acreage-poundage basis pursuant to this subsection, the
Secretary shall, not later than December 15 of any future marketing year, announce a national
marketing quota for that type of tobacco for the next 3 succeeding marketing years if the
marketing year is the last year of 3 consecutive years for which individual tobacco production
permits previously proclaimed will be in effect.
   ``(d)  Annual Announcement of National Marketing Quota ._The Secretary shall determine and
announce the national marketing quota, national acreage allotment, and national average yield
goal for the second and third marketing years of any 3-year period for which individual tobacco
production permits are in effect on or before the December 15 immediately preceding the
beginning of the marketing year to which the quota, allotment, and goal apply.
   ``(e)  Annual Announcement of Individual Tobacco Production Permits ._If a national
marketing quota, national acreage allotment, and national average yield goal are determined and
announced, the Secretary shall provide for the determination of individual tobacco production
permits, individual acreage limitations, and individual marketing limitations under this section for
the crop and marketing year covered by the determinations.
   ``(f)  Assignment of Tobacco Production Permits ._
   ``(1)  Limitation to same county ._Each individual tobacco production permit holder shall assign
the individual acreage limitation and individual marketing limitation to 1 or more farms located
within the county of origin of the individual tobacco production permit.
   ``(2)  Filing with county committee ._The assignment of an individual acreage limitation and
individual marketing limitation shall not be effective until evidence of the assignment, in such form
as required by the Secretary, is filed with and determined by the county committee for the county
in which the farm involved is located.
   ``(3)  Limitation on tillable cropland ._The total acreage assigned to any farm under this
subsection shall not exceed the acreage of cropland on  the farm.
   ``(g)  Prohibition on Sale or Leasing of Individual Tobacco Production Permits ._
   ``(1)  In general ._Except as provided in paragraphs (2) and (3), the Secretary shall not permit
the sale and transfer, or lease and transfer, of an individual tobacco production permit issued
under this section.
   ``(2)  Transfer to descendants ._
   ``(A)  Death ._In the case of the death of a person to whom an individual tobacco production
permit has been issued under this section, the permit shall transfer to the surviving spouse of the
person or, if there is no surviving spouse, to surviving direct descendants of the person.
   ``(B)  Temporary inability to farm ._In the case of the death of a person to whom an individual
tobacco production permit has been issued under this section and whose descendants are
temporarily unable to produce a crop of tobacco, the Secretary may hold the license in the name
of the descendants for a period of not more than 18 months.
   ``(3)  Voluntary transfers ._A person that is eligible to obtain an individual tobacco production
permit under this section may at any time transfer all or part of the permit to the person's spouse
or direct descendants that are actively engaged in the production of tobacco.
   ``(h)  Reserve ._
   ``(1)  In general ._For each marketing year for which individual tobacco production permits are
in effect under this section, the Secretary  may establish a reserve from the national marketing
quota in a quantity equal to not more than 1 percent of the national marketing quota to be
available for_
   ``(A) making corrections of errors in individual acreage limitations and individual marketing
limitations;
   ``(B) adjusting inequities; and
   ``(C) establishing individual tobacco production permits for new tobacco producers (except that
not less than two-thirds of the reserve shall be for establishing such permits for new tobacco
producers).
   ``(2)  Eligible persons ._To be eligible for a new individual tobacco production permit, a
producer must have owned a farm on which tobacco was not produced or considered produced
during the immediately preceding 5 years.
   ``(3)  Apportionment for new producers ._The part of the reserve held for apportionment to
new individual tobacco producers shall be allotted on the basis of_
   ``(A) land, labor, and equipment available for the production of tobacco;
   ``(B) crop rotation practices;
   ``(C) soil and other physical factors affecting the production of tobacco; and
   ``(D) the past tobacco-producing experience of the producer.
   ``(4)  Permit yield ._The permit yield for any producer for which a new individual tobacco
production permit is established shall be determined on the basis of available productivity data for
the land involved and yields for similar farms in the same county.
   ``(i)  Penalties ._
   ``(1)  Production on other farms ._If any quantity of tobacco is  marketed as having been
produced under an individual acreage limitation or individual marketing limitation assigned to a
farm but was produced on a different farm, the individual acreage limitation or individual
marketing limitation for the following marketing year shall be forfeited.
   ``(2)  False report ._If a person to which an individual tobacco production permit is issued files,
or aids or acquiesces in the filing of, a false report with respect to the assignment of an individual
acreage limitation or individual marketing limitation for a quantity of tobacco, the individual
acreage limitation or individual marketing limitation for the following marketing year shall be
forfeited.
   ``(j)  Marketing Penalties ._
   ``(1)  In general ._When individual tobacco production permits under this section are in effect,
provisions with respect to penalties for the marketing of excess tobacco and the other provisions
contained in section 314  shall apply in the same manner and to the same extent as they would
apply under section 317(g) if farm marketing quotas were in effect.
   ``(2)  Production on other farms ._If a producer falsely identifies tobacco as having been
produced on or marketed from a farm to which an individual acreage limitation or individual
marketing limitation has been assigned, future individual acreage limitations and individual
marketing limitations shall be forfeited.''.
 SEC. 1025. MODIFICATIONS IN FEDERAL TOBACCO PROGRAMS.
   (a)  Program Referenda ._Section 312(c) of the Agricultural Adjustment Act of 1938 (7 U.S.C.
1312(c)) is amended_
   (1) by striking ``(c) Within thirty'' and inserting the following:
   ``(c)  Referenda on Quotas ._
   ``(1)  In general ._Not later than 30''; and
   (2) by adding at the end the following:
   ``(2)  Referenda on program changes ._
   ``(A)  In general ._In the case of any type of tobacco for which marketing quotas are in effect,
on the receipt of a petition from more than 5 percent of the producers of that type of tobacco in a
State, the Secretary shall conduct a statewide referendum on any proposal related to the lease and
transfer of tobacco quota within a State requested by the petition that is authorized under this
part.
   ``(B)  Approval of proposals ._If a majority of producers of the type of tobacco in the State
approve a proposal in a referendum conducted under subparagraph (A), the Secretary shall
implement the proposal in a manner that applies to all producers and quota holders of that type of
tobacco in the State.''.
   (b)  Purchase Requirements ._Section 320B of the Agricultural Adjustment Act of 1938 (7
U.S.C. 1314h) is amended_
   (1) in subsection (c)_
   (A) by striking ``(c) The amount'' and inserting ``(c)  Amount of Penalty ._For the 1998 and
subsequent marketing years, the amount''; and
   (B) by striking paragraph (1) and inserting the following:
   ``(1) 105 percent of the average market price for the type of tobacco involved during the
preceding marketing year; and''; and
   (2) by striking subsection (d) and inserting the following:
   ``(d)  Use of Penalty Payments ._An amount equivalent to each penalty collected by the
Secretary under this section shall be transmitted by the Secretary to the Secretary of the Treasury
for deposit in the Tobacco Community Revitalization Trust Fund established under section 1011
of the LEAF Act.''.
   (c)  Elimination of Tobacco Marketing Assessment ._
   (1)  In general ._Section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445) is amended by
striking subsection (g).
   (2)  Conforming amendment ._Section 422(c) of the Uruguay Round Agreements Act (Public
Law 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 in the Trust Fund, the Secretary may use not to exceed
$25,000,000 for each of fiscal years 1999 through 2008 to provide assistance under this section.
   (g)  Effective Date ._This section shall take effect on the date that is the later of_
   (1) October l, 1998; or
   (2) the date of enactment of this Act.
   (h)  Termination Date ._No assistance, vouchers, allowances, or other payments may be
provided under this section after the date that is the earlier of_
   (1) the date that is 10 years after the effective date of this section under subsection (g); or
   (2) the date on which legislation establishing a program providing dislocated workers with
comprehensive assistance substantially similar to the assistance provided by this section becomes
effective.
 SEC. 1032. FARMER OPPORTUNITY GRANTS.
   Part A of title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) is amended by
adding at the end the following:
 ``Subpart 9_Farmer Opportunity Grants
 ``SEC. 420D. STATEMENT OF PURPOSE.
   ``It is the purpose of this subpart to assist in making available the benefits of postsecondary
education to eligible students (determined in accordance with section 420F) in institutions of
higher education by providing farmer opportunity grants to all eligible students.
 ``SEC. 420E. PROGRAM AUTHORITY; AMOUNT AND DETERMINATIONS;
APPLICATIONS.
   ``(a)  Program Authority and Method of Distribution ._
   ``(1)  Program authority ._From amounts made available under section 1011(d)(5) of the LEAF
Act, the Secretary, during the period beginning July 1, 1999, and ending September 30, 2024,
shall pay to each eligible institution such sums as may be necessary to pay to each eligible student
(determined in accordance with section 420F) for each academic year during which that student is
in attendance at an institution of higher education, as an undergraduate, a farmer opportunity
grant in the amount for which that student is eligible, as determined pursuant to subsection (b).
Not less than 85 percent of the sums shall be advanced to eligible institutions prior to the start of
each payment period and shall be based on an amount requested by the institution as needed to
pay eligible students, except that this sentence shall not be construed to limit the authority of the
Secretary to place an institution on a reimbursement system of payment.
   ``(2)  Construction ._Nothing in this section shall be construed to prohibit the Secretary from
paying directly to students, in advance of the beginning of the academic term, an amount for
which the students are eligible, in cases where the eligible institution elects not to participate in
the disbursement system required by paragraph (1).
   ``(3)  Designation ._Grants made under this subpart shall be known as `farmer opportunity
grants'.
   ``(b)  Amount of Grants ._
   ``(1)  Amounts ._
   ``(A)  In general ._The amount of the grant for a student eligible under this subpart shall be_
   ``(i) $1,700 for each of the academic years 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 from the Tobacco Community Revitalization Trust Fund are insufficient to satisfy fully all
grants for students determined to be eligible under section 420F, the amount of the grant provided
under subsection (b) shall be reduced on a pro rata basis among all eligible students.
   ``(g)  Treatment of Institutions and Students Under Other Laws ._Any institution of higher
education that enters into an agreement with the Secretary to disburse to students attending that
institution the amounts those students are eligible to receive under this subpart shall not be
deemed, by virtue of the agreement, to be a contractor maintaining a system of records to
accomplish a function of the Secretary. Recipients of farmer opportunity grants shall not be
considered to be individual grantees for purposes of the Drug-Free Workplace Act of 1988 (41
U.S.C. 701 et seq.).
 ``SEC. 420F. STUDENT ELIGIBILITY.
   ``(a)  In General ._In order to receive any grant under this subpart, a student shall_
   ``(1) be a member of a tobacco farm family in accordance with subsection (b);
   ``(2) be enrolled or accepted for enrollment in a degree, certificate, or other program (including
a program of study abroad approved for credit by the eligible institution at which the student is
enrolled) leading to a recognized educational credential at an institution of higher education that is
an eligible institution in accordance with section 487, and not be enrolled in an elementary or
secondary school;
   ``(3) if the student is presently enrolled at an institution of higher education, be maintaining
satisfactory progress in the course of study the student is pursuing in accordance with subsection
(c);
   ``(4) not owe a refund on grants previously received at any institution of higher education under
this title, or be in default on any loan from a student loan fund at any institution provided for in
part D, or a loan made, insured, or guaranteed by the Secretary under this title for attendance at
any institution;
   ``(5) file with the institution of higher education that the student intends to attend, or is
attending, a document, that need not be notarized, but that shall include_
   ``(A) a statement of educational purpose stating that the money attributable to the grant will be
used solely for expenses related to attendance or continued attendance at the institution; and
   ``(B) the student's social security number; and
   ``(6) be a citizen of the United States.
   ``(b)  Tobacco Farm Families ._
   ``(1)  In general ._For the purpose of subsection (a)(1), a student is a member of a tobacco farm
family if during calendar year 1998 the student was_
   ``(A) an individual who_
   ``(i) is a participating tobacco producer (as defined in section 1002 of the LEAF Act); or
   ``(ii) is otherwise actively engaged in the production of tobacco;
   ``(B) a spouse, son, daughter, stepson, or stepdaughter of an individual described in
subparagraph (A);
   ``(C) an individual_
   ``(i) who was a brother, sister, stepbrother, stepsister, son-in-law, or daughter-in-law of an
individual described in subparagraph (A); and
   ``(ii) whose principal place of residence was the home of the individual described in
subparagraph (A); or
   ``(D) an individual who was a dependent (within the meaning of section 152 of the Internal
Revenue Code of 1986) of an individual described in subparagraph (A).
   ``(2)  Administration ._On request, the Secretary of Agriculture shall provide to the Secretary
such information as is necessary to carry out this subsection.
   ``(c)  Satisfactory Progress ._
   ``(1)  In general ._For the purpose of subsection (a)(3), a student is maintaining satisfactory
progress if_
   ``(A) the institution at which the student is in attendance reviews the progress of the student at
the end of each academic year, or its equivalent, as determined by the institution; and
   ``(B) the student has at least a cumulative C average or its equivalent, or academic standing
consistent with the requirements for graduation, as determined by the institution, at the end of the
second such academic year.
   ``(2)  Special rule ._Whenever a student fails to meet the eligibility requirements of subsection
(a)(3) as a result of the application of this subsection and subsequent to that failure the student
has academic standing consistent with the requirements for graduation, as determined by the
institution, for any grading period, the student may, subject to this subsection, again be eligible
under subsection (a)(3) for a grant under this subpart.
   ``(3)  Waiver ._Any institution of higher education at which the student is in attendance may
waive paragraph (1) or (2) for undue hardship based on_
   ``(A) the death of a relative of the student;
   ``(B) the personal injury or illness of the student; or
   ``(C) special circumstances as determined by the institution.
   ``(d)  Students Who Are Not Secondary School Graduates ._In order for a student who does
not have a certificate of graduation from a school providing secondary education, or the
recognized equivalent of the certificate, to be eligible for any assistance under this subpart, the
student shall meet either 1 of the following standards:
   ``(1)  Examination ._The student shall take an independently administered examination and shall
achieve a score, specified by the Secretary, demonstrating that the student can benefit from the
education or training being offered. The examination shall be approved by the Secretary on the
basis of compliance with such standards for development, administration, and scoring as the
Secretary may prescribe in regulations.
   ``(2)  Determination ._The student shall be determined as having the ability to benefit from the
education or training in accordance with such process as the State shall prescribe. Any such
process described or approved by a State for the purposes of this section shall be effective 6
months after the date of submission to the Secretary unless the Secretary disapproves the process.
In determining whether to approve or disapprove the process, the Secretary shall take into
account the effectiveness of the process in enabling students without secondary school diplomas
or the recognized equivalent to benefit from the instruction offered by institutions utilizing the
process, and shall also take into account the cultural diversity, economic circumstances, and
educational preparation of the populations served by the institutions.
   ``(e)  Special Rule for Correspondence Courses ._A student shall not be eligible to receive a
grant under this subpart for a correspondence course unless the course is part of a program
leading to an associate, bachelor, or graduate degree.
   ``(f)  Courses Offered Through Telecommunications ._
   ``(1)  Relation to correspondence courses ._A student enrolled in a course of instruction at an
eligible institution of higher education (other than an institute or school that meets the definition
in section 521(4)(C) of the Carl D. Perkins Vocational and Applied Technology Education Act
(20 U.S.C. 2471(4)(C))) that is offered in whole or in part through telecommunications and leads
to a recognized associate, bachelor, or graduate degree conferred by the institution shall not be
considered to be enrolled in correspondence courses unless the total amount of
telecommunications and correspondence courses at the institution equals or exceeds 50 percent of
the courses.
   ``(2)  Restriction or reductions of financial aid ._A student's eligibility to receive a grant under
this subpart may be reduced if a financial aid officer determines under the discretionary authority
provided in section 479A that telecommunications instruction results in a substantially reduced
cost of attendance to the student.
   ``(3)  Definition ._For the purposes of this subsection, the term `telecommunications' means the
use of television, audio, or computer transmission, including open broadcast, closed circuit, cable,
microwave, or satellite, audio conferencing, computer conferencing, or video cassettes or discs,
except that the term does not include a course that is delivered using video cassette or disc
recordings at the institution and that is not delivered in person to other students of that institution.
   ``(g)  Study Abroad ._Nothing in this subpart shall be construed to limit or otherwise prohibit
access to study abroad programs approved by the home institution at which a student is enrolled.
An otherwise eligible student who is engaged in a program of study abroad approved for
academic credit by the home institution at which the student is enrolled shall be eligible to receive
a grant under this subpart, without regard to whether the study abroad program is required as part
of the student's degree program.
   ``(h)  Verification of Social Security Number ._The Secretary, in cooperation with the
Commissioner of Social Security, shall verify any social security number provided by a student to
an eligible institution under subsection (a)(5)(B) and shall enforce the following conditions:
   ``(1)  Pending verification ._Except as provided in paragraphs (2) and (3), an institution shall
not deny, reduce, delay, or terminate a student's eligibility for assistance under this subpart
because social security number verification is pending.
   ``(2)  Denial or termination ._If there is a determination by the Secretary that the social security
number provided to an eligible institution by a student is incorrect, the institution shall deny or
terminate the student's eligibility for any grant under this subpart until such time as the student
provides documented evidence of a social security number that is determined by the institution to
be correct.
   ``(3)  Construction ._Nothing in this subsection shall be construed to permit the Secretary to
take any compliance, disallowance, penalty, or other regulatory action against_
   ``(A) any institution of higher education with respect to any error in a social security number,
unless the error was a result of fraud on the part of the institution; or
   ``(B) any student with respect to any error in a social security number, unless the error was a
result of fraud on the part of the student.''.
 Subtitle D_Immunity
 SEC. 1041. GENERAL IMMUNITY FOR TOBACCO PRODUCERS AND
TOBACCOWAREHOUSE OWNERS.
   Notwithstanding any other provision of this title, a participating tobacco producer, tobacco-
related growers association, or tobacco warehouse owner or employee may not be subject to
liability in any Federal or State court for any cause of action resulting from the failure of any
tobacco product manufacturer, distributor, or retailer to comply with the National Tobacco Policy
and Youth Smoking Reduction Act.
TITLE XI_MISCELLANEOUS
Subtitle A_Prohibitions Relating to Tobacco Products and Children
SEC. 1101. SHORT TITLE.
 This subtitle may be cited as the ``Tobacco Use by Minors Prevention Act''.
SEC. 1102. PROHIBITIONS RELATING TO TOBACCO PRODUCTS AND CHILDREN.
 Chapter VIII of the Federal Food, Drug, and Cosmetic Act is amended by adding at the end the
following:
``SEC. 804. PROHIBITION ON SALE OR DISTRIBUTION OF TOBACCO PRODUCTS
TOCHILDREN.
 ``(a)  General Rule ._It shall be unlawful for any domestic concern or any officer, director,
employee, or agent of such concern to make use of the mails or any means or instrumentality of
interstate commerce to cause or contribute, either directly or through a foreign subsidiary, joint
venture, affiliate, or licensee, to_
 ``(1) the sale or distribution of tobacco products in a foreign country to children; or
 ``(2) the advertising or promotion of tobacco products in a foreign country in a manner that does
not comply with Federal requirements for the advertisement or promotion of tobacco products in
the United States
 ``(b)  Defense ._In an action brought to enforce subsection (a), it shall be an affirmative defense
that the tobacco products involved were sold, distributed, advertised, or promoted in the foreign
country involved in a manner that would be lawful if such conduct occurred in the United States.
``SEC. 805. LABELING.
 ``It shall be unlawful for any domestic concern or any officer, director, employee, or agent of
such concern, either directly or through a foreign subsidiary, joint venture, affiliate, or licensee, to
make use of the mails or any means or instrumentality of interstate commerce to cause or
contribute to the export from the United States or the sale or distribution in, or export from, any
other country any tobacco product the package of which does not contain a warning label that_
 ``(1) is in the primary language or languages of the country in which the tobacco product is sold
or distributed to consumers; and
 ``(2) except for the requirement of paragraph (1)_
 ``(A) complies with Federal requirements for labeling of similar tobacco products manufactured,
imported, or packaged for sale or distribution in the United States; or
 ``(B) complies with the labeling requirements of the foreign country in which the product is sold
or distributed to consumers and which labeling requirements the Secretary determines are
substantially similar to Federal requirements and are adequately enforced by such country.''.
SEC. 1103. ENFORCEMENT.
 Section 301 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331) is amended by adding
at the end the following:
 ``(aa) To carry out an act made unlawful by section 804 or 805.''.
SEC. 1104. REWARD.
 Section 303(b)(5) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 333)(b)(5)) is
amended by adding at the end the following: ``If a person provides information leading to the
institution of a criminal proceeding against, and conviction of, a person for a violation of section
301(aa), such person shall be entitled to one-half of the criminal fine imposed and collected for
such violation but not more than $125,000.''.
SEC. 1105. DEFINITIONS.
 Section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321), as amended by
section 101(a) of this Act is amended by adding at the end the following:
 ``(ll) The term `domestic concern' means_
 ``(1) any individual who is a citizen, national, or resident of the United States; and
 ``(2) any corporation, partnership, association, joint-stock company, business trust,
unincorporated organization, or sole proprietorship which has its principal place of business in the
United States or which is organized under the laws of a State of the United States or a territory,
possession, or commonwealth of the United States.
 ``(mm) The term `children' means individuals under the age of 18.''.
SEC. 1106. AMENDMENTS TO PUBLIC HEALTH SERVICE ACT.
 (a)  In General ._The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by adding at
the end the following:
``TITLE XXVIII_NATIONAL EFFORTS TO REDUCE YOUTH SMOKING
``Subtitle E_Reducing Youth Smoking and Tobacco-Related Diseases Through Research
``SEC. 2801. STUDY BY THE INSTITUTE OF MEDICINE.
 ``(a)  Contract ._Not later than 60 days after the date of enactment of the National Tobacco
Policy and Youth Smoking Reduction Act, the Secretary shall enter into a contract with the
Institute of Medicine for the conduct of a study on the framework for a research agenda and
research priorities to be used by the National Tobacco Task Force established under section 2802.
 ``(b)  Considerations ._
 ``(1)  In general ._In developing the framework for the research agenda and research priorities
under subsection (a) the Institute of Medicine shall focus on increasing knowledge concerning the
biological, social, behavioral, public health, and community factors involved in the prevention of
tobacco use, reduction of tobacco use, and health consequences of tobacco use.
 ``(2)  Specific considerations ._In the study conducted under subsection (a), the Institute of
Medicine shall specifically consider_
 ``(A) public health and community research relating to tobacco use prevention methods,
including public education, media, community strategies;
 ``(B) behavioral research relating to addiction and tobacco use;
 ``(C) health services research relating to tobacco product prevention and cessation treatment
methodologies;
 ``(D) surveillance and epidemiology research relating to tobacco;
 ``(E) biomedical, including clinical, research relating to prevention and treatment of tobacco-
related diseases; and
 ``(F) economic research relating to the responsiveness of youth smoking to price and other
economic factors.
 ``(c)  Report ._Not later than 10 months after the date on which the Secretary enters into the
contract under subsection (a), the Institute of Medicine shall prepare and submit to the Secretary,
the National Task Force, the Committee on Labor and Human Resources of the Senate, and the
Committee on Commerce of the House of Representatives, a report that shall contain the findings
and recommendations of the Institute for the purposes described in subsection (b).
 ``(d)  Authorization of Appropriations ._There are authorized to be appropriated $750,000 to
carry out this section.
``SEC. 2802. NATIONAL TOBACCO TASK FORCE.
 ``(a)  Establishment ._The Secretary shall establish a National Tobacco Task Force (referred to in
this subtitle as the `National Task Force') to foster coordination among public health agencies,
academic bodies, and community groups that conduct or support tobacco-related biomedical,
clinical, behavioral, health services, public health and community, and surveillance and
epidemiology research activities.
 ``(b)  Composition ._The National Task Force shall be composed of_
 ``(1) the Surgeon General;
 ``(2) the Director of the Office of Smoking and Health of the Centers for Disease Control and
Prevention;
 ``(3) the Administrator of the Agency for Health Care Policy and Research;
 ``(4) the Director of the National Institutes of Health;
 ``(5) two representatives from non-governmental public health or tobacco control organizations;
and
 ``(6) two representatives from State or local government public health agencies and offices.
 ``(c)  Chair ._The National Task Force shall be chaired by the Secretary, and shall be staffed by
the Centers for Disease Control and Prevention.
 ``(d)  Duties ._The Task Force shall_
 ``(1) in accordance with research agenda recommended under section 2801, coordinate and
advise tobacco-related research activities among Federal public health service agencies;
 ``(2) collect and make available to States and communities, through publication and other
appropriate means, evidence-based tobacco-related research results and recommendations and the
practical application of such results; and
 ``(3) report on a biennial basis to the Secretary and the Committee on Labor and Human
Resources of the Senate, and the Committee on Commerce of the House of Representatives on
the current and planned activities of participating Federal agencies;
 ``(e)  Research Activities ._The research activities referred to in subsection (a) shall be designed
to address tobacco-related research priorities, and shall include_
 ``(1) the development of effective strategies to prevent the use of tobacco products among youth;
 ``(2) an outline of cost-effective, accessible, and successful methods for tobacco use cessation
among adults and youths who want to quit;
 ``(3) the development of breakthroughs in the understanding of the effects on the human body of
nicotine and other non-tobacco constituents of tobacco products; and
 ``(4) the development of an enhanced ability to prevent and treat tobacco-related diseases.
``SEC. 2803. RESEARCH ACTIVITIES OF THE CENTERS FOR DISEASE CONTROL
ANDPREVENTION.
 ``(a)  Funding ._There are authorized to be appropriated from the National Tobacco Settlement
Trust Fund established by section 401 of the National Tobacco Policy and Youth Smoking
Reduction Act, other than from amounts in the State Litigation Settlement Account, the following
amounts to carry out this section_
 ``(1) $450,000,000 for each of the first 3 fiscal years after the date of enactment of the National
Tobacco Policy and Youth Smoking Reduction Act;
 ``(2) $505,000,000 for each of the 4th and 5th fiscal years after that date;
 ``(3) $405,000,000 for each of the 6th and 7th fiscal years after that date;
 ``(4) $360,000,000 for each of the 8th and 9th fiscal years after that date; and
 ``(5) $305,000,000 for the 10th fiscal year after that date.
 ``(b)  Duties ._The Director of the Centers for Disease Control and Prevention, working in
consultation with National Task Force, shall carry out tobacco-related surveillance and
epidemiologic studies and develop tobacco control and prevention strategies under this section.
 ``(c)  Trigger ._No expenditures shall be made under this section during any fiscal year in which
the annual amount appropriated for the Centers for Disease Control and Prevention is less than
the amount so appropriated for the prior fiscal year.
``SEC. 2804. RESEARCH ACTIVITIES OF THE NATIONAL INSTITUTES OF HEALTH.
 ``(a)  Funding ._There are authorized to be appropriated, from amounts in the National Tobacco
Settlement Trust Fund established by section 401 of the National Tobacco Policy and Youth
Smoking Reduction Act, other than from amounts in the State Litigation Settlement Account, to
carry out this section $2,500,000,000 for each of the fiscal years 1999 through 2008.
 ``(b)  Establishment ._The Secretary shall establish, within the Office of the Director of the
National Institutes of Health, a Tobacco-Related Research Initiative (referred to in this section as
the `tobacco initiative') to be headed by the Director.
 ``(c)  Expenditure of Funds ._The Director of the National Institutes of Health acting through the
tobacco initiative, and in consultation with the National Tobacco Task Force, shall provide funds
to conduct or support epidemiological, behavioral, biomedical, and social science research
(including the training of researchers) related to the prevention and treatment of tobacco
addiction, and the prevention and treatment of diseases associated with tobacco use.
 ``(d)  Guaranteed Minimum ._Of the funds made available to the National Institutes of Health
under this section, not less than 33 percent of such funds shall be used to support epidemiological,
behavioral, and social science research related to the prevention and treatment of tobacco
addiction.
 ``(e)  Limitation ._Except as may be necessary to study one of the specific purposes described in
subsection (f), funds made available under subsection (d) shall not be used to support
neurobiological research, or research in which the behavior of an organism is observed for the
purpose of determining activity at the cellular or molecular level.
 ``(f)  Nature of Research ._Funds made available under subsection (d) shall be used to conduct or
support research with respect to one or more of the following_
 ``(1) the epidemiology of tobacco use;
 ``(2) the etiology of tobacco use;
 ``(3) risk factors for tobacco use by children;
 ``(4) prevention of tobacco use by children, including school and community-based programs,
and alternative activities;
 ``(5) the relationship between tobacco use, alcohol abuse and illicit drug abuse;
 ``(6) behavioral and pharmacological smoking cessation methods and technologies, including
relapse prevention;
 ``(7) the toxicity of tobacco products and their ingredients;
 ``(8) the relative harmfulness of different tobacco products;
 ``(9) environmental exposure to tobacco smoke;
 ``(10) the impact of tobacco use by pregnant women on their fetuses; and
 ``(11) the redesign of tobacco products to reduce risks to public health and safety.
 ``(g)  Coordination ._In carrying out tobacco-related research under this section, the Director of
the National Institutes of Health, in coordination with the National Tobacco Task Force, shall
ensure appropriate coordination with the research of other agencies, and shall avoid duplicative
efforts through all appropriate means, including through the establishment of an Office of
Tobacco-Related Research.
 ``(h)  Office of Tobacco-Related Research ._
 ``(1)  Establishment ._There is established within the National Institutes of Health and Office of
Tobacco-Related Research (referred to in this subsection as the `Office'). The Office shall be
headed by a director to be appointed by the Secretary.
 ``(2)  Duties ._The director of the Office shall_
 ``(A) in coordination with the National Tobacco Task Force, identify tobacco-related research
projects that should be conducted or supported by the research institutes, and develop such
projects in cooperation with such institutes;
 ``(B) coordinate tobacco-related research that is conducted or supported by the National
Institutes of Health;
 ``(C) through the activities of the National Tobacco Task Force, take steps to further
cooperation and collaboration between the institutes of the National Institutes of Health and other
Federal agencies with respect to tobacco-related research conducted or supported by such
agencies;
 ``(D) ensure compliance with the funding levels described in subsection (d) and the limitation
described in subsection (e);
 ``(E) annually recommend to Congress the allocation of anti-tobacco research funds among the
national research institutes; and
 ``(F) establish a clearinghouse for information about tobacco-related research conducted by
governmental and non-governmental bodies.
 ``(3)  Administration ._The Director of the National Institutes of Health shall set-aside not less
than 1 percent and not more than 3 percent of the funds made available under subsection (d) to
administer the Office.
 ``(i)  Trigger ._No expenditure shall be made under subsection (a) during any fiscal year in which
the annual amount appropriated for the National Institutes of Health is less than the amount so
appropriated for the prior fiscal year.''.
 (b)  Research on Minority smoking and Tobacco-related Diseases._
 Section 1707(b) of the Public Health Service Act (42 U.S.c. 300u-6(b)) is amended by striking
``(b)  Duties._ The Secretary'' and inserting the following:
 ``(b)  Duties._
 ``(1)  In General._
 ``(A)  Intereagency coordination._ With respect to minority health activities of the Public Health
Service, and the National Institutes of Health, a representative of the Office of Minority Health
within the Department of Health and Human Services, a representative of the Office of Minority
Health within the National Institutes of Health, and a representative of the Surgeon General shall_
 ``(i) seek to assure coordination of research, service delivery and inclusion of community-based
organizations related to tobacco-related diseases, prevention, and cessation programs for ethnic,
socio-economic and culturally-diverse populations;
 ``(ii) monitor and report to Congress biannually the amount of Federal funds targeted for
research related to minority tobacco-related diseases, research into effective smoking cessation
programs that are culturally and linguistically appropriate, health service delivery, and for
community-based organizations providing smoking prevention and cessation services, and report
biannually to the Congress the demonstrated effectiveness of these programs.''.
 (c)  Medicaid Coverage of Outpatient Smoking Cessation Agents._ Paragraph (2) of section
1927(d) of the Public Health Service Act (42 U.S.C. 1396r-8(d)) is amended_
 (1) by striking subparagraph (E) and redesignating subparagraphs (F) through (J) as
subparagraphs (E) through (I); and
 (2) by striking ``drugs.'' in subparagraph (F), as redesignated, and inserting ``drugs, except
agents, approved by the Food and Drug Administration, when used to promote smoking
cessation.''.
SEC. 1107. BAN ON DISTRIBUTION OF TOBACCO PRODUCTS PRODUCED BY CHILD
LABOR.
 Section 307 of the Tariff Act of 1930 (19 U.S.C. 1307) is amended by inserting after ``United
States.'' the following: ``The provisions of this section apply with equal force to tobacco products
produced or manufactured wholly or in part in any foreign country by child labor.''.
Subtitle B_Federal Licensing of Tobacco Product Distribution
SEC. 1121. LICENSING OF TOBACCO PRODUCT DISTRIBUTION.
 (a)  In General ._Except for any retailer licensed under section 224 of this Act, no domestic
concern may engage in the manufacture, or distribution of tobacco products for sale, in the United
States more than 1 year after the date of enactment of this Act, either directly or through its
foreign subsidiaries, affiliates, joint ventures, or licensees, unless it is licensed to do so by the
Secretary.
 (b)  Fee ._
 (1)  In general ._The annual license fee shall be $1 per every 1000 cigarettes manufactured, or
distributed for sale, by a domestic concern either directly or through its foreign subsidiaries,
affiliates, joint ventures, or licensees and an equivalent amount, as established by the Secretary,
for other tobacco products.
 (2)  Credit ._In any year, a domestic concern shall receive as a credit towards that portion of its
license fee under clause (i) which is attributable to the manufacture of tobacco products subject to
the Federal excise tax under section 5701 of the Internal Revenue Code of 1986 the amount of tax
it paid under that section.
 (c)  Regulations ._Within 6 months after the date of the enactment of this Act, the Secretary shall
promulgate regulations to implement the requirements of this section.
 (d)  Penalty ._Any domestic concern which engages in the manufacture of cigarettes or other
tobacco products either directly or through its foreign subsidiaries, affiliates, joint ventures, or
licensees without the license required by subsection (a) shall be considered to have committed a
prohibited act under section 301 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331).
 (e)  Domestic Concern Defined ._For purposes of this section, the term ``domestic concern''
means_
 (1) any individual who is a citizen, national, or resident of the United States;
 (2) any corporation, partnership, association, joint-stock company, business trust, unincorporated
organization, or sole proprietorship which has its principal place of business in the United States
or which is organized under the laws of a State of the United States or a territory, possession, or
commonwealth of the United States; and
 (3) includes any person engaged in the manufacture, or distribution for sale, of cigarettes or other
tobacco products on Indian lands.
Subtitle C_International Provisions
SEC. 1131. INTERNATIONAL TOBACCO CONTROL TRUST FUND.
 (a)  Establishment ._There is established in the Treasury an International Tobacco Control Trust
Fund (referred to as the ``International Trust Fund'') which shall be funded by the license fees
collected under section 1121.
 (b)  Use of International Trust Fund ._Funds from the International Trust Fund shall be available
for use as follows:
 (1)  American Center on Global Health and Tobacco ._Annual funds of $150,000,000 may be
used from the International Trust Fund for the American Center on Global Health and Tobacco as
provided in appropriation Acts.
 (2)  Health and human services ._The Secretary of Health and Human Services may use the funds
deposited in the International Trust Fund for grants and other forms of assistance to foreign
governments, nongovernmental organizations, and international organizations to support tobacco
control activities in foreign countries as provided in appropriation Acts.
 (3)  Enforcement ._The Secretary may use funds deposited in the International Trust Fund for
enforcement of any requirements related to the sale, distribution, marketing, or promotion of
tobacco products internationally as provided in appropriation Acts.
SEC. 1132. AMERICAN CENTER ON GLOBAL HEALTH AND TOBACCO.
 (a)  Findings and Purpose ._
 (1)  Findings ._Congress makes the following findings:
 (A) Tobacco use is estimated to have caused nearly 3,000,000 deaths a year worldwide in the
early 1990's, and is projected to cause in excess of 10,000,000 additional deaths a year globally by
2030, more than any single disease. More than 70 percent of those deaths are expected in
developing countries.
 (B) Many countries are unprepared to address increases in tobacco deaths, including the impact
on health systems and health costs. While tobacco consumption in the United States and other
established market economies has fallen over the last decade, consumption is rising in China,
India, East Asia, and former socialist economies. Tobacco companies in the United States and
elsewhere have increasingly targeted those markets.
 (C) Tobacco use markedly reduces good health and threatens to erode the major health gains in
life expectancy of the last century. Only HIV/AIDS  infection and tobacco are large and growing
causes of death and disease worldwide. The total projected deaths from tobacco over the next 10
years likely will exceed deaths from HIV/AIDS, maternal and childhood conditions, and
tuberculosis combined.
 (D) The United States consistently has provided leadership and funding to address the world's
most pressing public health needs, including HIV/AIDS, hunger, maternal and child health, and
immunization.
 (E) Through exports and overseas operations, United States tobacco companies sell more
cigarettes overseas than they do in the United States.  Foreign sales now account for more than
half of all sales for the 2 leading United States tobacco product manufacturers.
 (F) United States companies spend billions of dollars on aggressive tobacco marketing campaigns
overseas that associate smoking with the United States, affluence, freedom, and liberation. In
many markets, American companies reach youthful audiences through television and radio
advertising, free samples, and other methods that are outlawed in the United States.
 (G) In light of the role the United States tobacco companies have played in spreading tobacco
use globally, and in light of the large financial benefits they continue to enjoy from tobacco
exports, it is appropriate that this section be enacted in order to provide assistance and funding for
international public education and mass media programs to inform the public about the hazards of
tobacco use.
 (H) Smoking in United States films is pervasive and influences persons in other countries who
seek to emulate ``American activities'' depicted in motion pictures. According to one study, more
than half of the top-grossing United States films released between 1991 and 1996 exhibited
smoking. In these films, 80 percent of the male lead characters and 27 percent of the female
characters smoked. The motion picture industry is painting a distorted picture that smoking is a
truly American activity.
 (2)  Purpose ._The purpose of this section is to establish the American Center on Global Health
and Tobacco (herein after referred to as ``ACT''). ACT shall assist organizations in other
countries to reduce and prevent the use of tobacco. Activities ACT shall support include_
 (A) public education programs that inform the public about the hazards of tobacco use and of
environmental tobacco smoke;
 (B) mass media campaigns, including paid counter-tobacco advertisements, to reverse the image
appeal of pro-tobacco messages, especially those that glamorize and ``Westernize'' tobacco use to
young people; and
 (C) education about the economic and societal costs of tobacco use, and effective tobacco use
prevention and cessation strategies that are appropriate for the country involved.
 (b)  Establishment ._
 (1)  In general ._There is hereby established in the District of Columbia a private, nonprofit
corporation to be known as the American Center on Global Health and Tobacco. ACT shall_
 (A) not be an agency or establishment of the United States; and
 (B) except as otherwise provided in this section, be subject to, and have all the powers conferred
upon a nonprofit corporation by the District of Columbia Nonprofit Corporation Act (D.C. Code
section 29-501 et seq.).
 (2)  Relation to united states ._Nothing in this section shall be construed as making ACT an
agency or establishment of the United States, or as making the members of the Board of ACT, or
its employees, officers or employees of the United States.
 (3)  Relation to nongovernmental organizations ._ACT shall have a limited staff, and, to the
maximum extent practicable, utilize the available experience and talents of nongovernmental
organizations with specialized experience in health, education, media, and tobacco.
 (4)  Governing board ._ACT shall be governed by a board of up to 25 members including_
 (A) on a bipartisan basis, Members of the Senate and of the House of Representatives;
 (B) the heads of American public health organizations;
 (C) the heads of American media, marketing, and other nongovernment institutions and
corporations; and
 (D) individuals active in education, public health, and other relevant activities.
 (5)  International advisory council ._An International Advisory Council consisting of
representatives from key global, regional, and national public health organizations, and leading
individual educators and health professionals shall provide advisory assistance to ACT.
 (c)  Funding ._
 (1)  Definition of trust fund ._In this section, the term ``Trust Fund'' means the National Tobacco
Settlement Trust Fund established by section 401 of this Act, other than amounts in the State
Litigation Settlement Account.
 (2)  Establishment of global public health and education resource account ._There is established
within the Trust Fund the Global Public Health and Education Resource Account that shall be
credited with $150,000,000 for each fiscal year.
 (3)  Transfer authority ._The Secretary of the Treasury shall on October 1 of each fiscal year
beginning after the date of enactment of this section, transfer $150,000,000 from the Global
Public Health and Education Resource Account of the Trust Fund to the account of ACT to carry
out the activities authorized under this section.
 (4)  Termination of transfer authority ._The authority of the Secretary of the Treasury to transfer
funds from the Trust Fund shall expire with the expiration of the Trust Fund.
 (d)  Requirements for Eligibility for Annual Transfers From the Trust Fund ._
 (1)  Oversight ._ACT and its grantees shall be subject to the oversight and supervision of
Congress, and shall annually submit a report of its activities to Congress in accordance with
paragraph (5)(A)(iii).
 (2)  Compliance ._
 (A)  Funding contingent on compliance ._Annual payments from the Trust Fund may be made to
ACT under this section only if ACT complies with the requirements specified in this section.
 (B)  Use of funds ._ACT may only fund programs for private sector groups, and may not carry
out programs directly. ACT may provide funding only for programs which are consistent with the
purposes of this section.
 (3)  Salaries and compensation ._
 (A)  No other source of compensation ._Officers and employees of ACT may not receive any
salary or other compensation from any source other than ACT for services performed for ACT.
 (B)  United states officers and employees ._An individual who is an officer or employee of the
United States who also serves on the Board of Directors or as an officer or employee of ACT,
may not receive any compensation or travel expenses in connection with services performed for
ACT.
 (4)  Stocks and dividends ._ACT shall not issue any shares of stock or declare or pay any
dividends.
 (5)  Audits ._
 (A)  Independent public accountants ._
 (i)  In general ._The accounts of ACT shall be audited annually in accordance with generally
accepted auditing standards by independent certified public accountants or independent licensed
public accountants certified or licensed by a regulatory authority of a State or other political
subdivision of the United States. The audits shall be conducted at the place or places where the
accounts of ACT are normally kept. All books, accounts, financial records, reports, files, and all
other papers, things, or property belonging to or in use by ACT and necessary to facilitate the
audits shall be made available to the person or persons conducting the audits, and full facilities for
verifying transactions with any assets held by depositories, fiscal agents, and custodians shall be
afforded to such person or persons.
 (ii)  Content of audit ._The report of each audit conducted under clause (i) shall be included in
the annual report required under this subsection. The audit report shall set forth the scope of the
audit and include such statements as are necessary to present fairly ACT's assets and liabilities,
surplus or deficit, with an analysis of the changes therein during the year, supplemented in
reasonable detail by a statement of the income and expenses of ACT during the year, and a
statement of the application of funds, together with the independent auditor's opinion of those
statements.
 (iii)  Report ._Not later than December 31 of each year, ACT shall submit an annual report for
the preceding fiscal year to the President for transmittal to Congress. The report shall include a
comprehensive and detailed report of ACT's operations, activities, financial condition, and
accomplishments under this section and may include such recommendations as ACT deems
appropriate.
 (B)  Comptroller general ._
 (i)  In general ._The financial transactions of ACT for each fiscal year may be audited by the
Comptroller General in accordance with such principles and procedures and under such rules and
regulations as the Comptroller General may prescribe. Any such audit shall be conducted at the
place or places where accounts of ACT are normally kept. The Comptroller General shall have
access to all books, accounts, records, reports, files, and all other papers, things, or property
belonging to or in use by ACT pertaining to its financial transactions and necessary to facilitate
the audit. All books, accounts, records, reports, files, papers, and property of ACT shall remain in
the possession and custody of ACT.
 (ii)  Report ._A report of each audit shall be made by the Comptroller General to Congress. A
copy of each report shall be furnished to the President and to ACT at the time the report is
submitted to Congress.
 (6)  Recordkeeping ._
 (A)  In general ._ACT shall ensure that each recipient of assistance from ACT under this section
keeps such records as may be reasonably necessary to fully disclose the amount and the
disposition by such recipient of the proceeds of such assistance, the total cost of the project or
undertaking in connection with which such assistance is given or used, and the amount and nature
of that portion of the cost of the project or undertaking supplied by other sources, and such other
records as will facilitate an effective audit.
 (B)  Access ._ACT shall ensure that it, or any of its duly authorized representatives, shall have
access for the purpose of audit and examination to any books, documents, papers, and records of
each recipient of assistance from ACT that are pertinent to assistance provided through ACT
under this section.
SEC. 1133. PROHIBITION ON USE OF FUNDS TO FACILITATE THE EXPORTATION
ORPROMOTION OF TOBACCO.
 (a)  In General ._Notwithstanding any other provision of law, no funds made available by
appropriations or otherwise made available may be used by any officer, employee, department, or
agency of the United States_
 (1) to promote or encourage the export, re-export, sale, manufacture, advertising, promotion,
distribution, or use of tobacco or tobacco products to or in a foreign country; or
 (2) to seek, through negotiation or otherwise, the removal or reduction by any foreign country of
any restriction or proposed restriction in that country on the importation, export, re-export, sale,
manufacture, advertising, promotion, distribution, packaging, labeling, use, content, imposition of
tariffs, or taxation, of tobacco or tobacco products.
 (b)  Exception ._Subsection (a)(2) shall not apply to any restriction or proposed restriction by a
foreign country if_
 (1) the restriction is applied in a manner which constitutes a means of arbitrary or unjustifiable
discrimination between countries;
 (2) the Secretary of Commerce certifies in writing to Congress that the restriction is being
applied in a manner that constitutes a means of arbitrary or unjustifiable discrimination between
countries; and
 (3) the Secretary of Health and Human Services certifies to Congress in writing that the
restriction is not a reasonable means of protecting the public health.
 (c)  Definition ._In this section, the term ``arbitrary or unjustifiable discrimination'' means a
restriction or proposed restriction by a foreign country that_
 (1) is arbitrary or unjustifiable; and
 (2) does not adhere to the principle of national treatment and applies less favorable treatment to
goods that are imported into that country than the country applies to like goods that are the
product, growth, or manufacture of that country.
SEC. 1134. HARMONIZATION WITH UNITED STATES INTERNATIONAL
COMMITMENTS ANDOBLIGATIONS.
 The United States Trade Representative shall report to the Congress within 90 days after the date
of enactment of this Act on any provisions of this Act that are inconsistent with obligations of the
United States under treaties or other international agreements to which it is a signatory, including
any treaty pending ratification, together with recommendations as to how to implement or modify
the provision without violating international law.
Subtitle D_Prevention of Tobacco Smuggling
SEC. 1141. DEFINITIONS.
 (a)  Incorporation of Certain Definitions ._In this subtitle, the terms ``cigar'', ``cigarette'',
``person'', ``pipe tobacco'', ``smokeless tobacco'', ``State'', ``tobacco product'', and ``United
States'' shall have the meanings given such terms in sections 5702(a), 5702(b), 7701(a)(1),
5702(o), 5702(n)(1), 3306(j)(1), 5702(c), and 3306(j)(2) respectively of the Internal Revenue
Code of 1986.
 (b)  Other Definitions ._In this subtitle:
 (1)  Affiliate ._The term ``affiliate'' means any one of 2 or more persons if 1 of such persons has
actual or legal control, directly or indirectly, whether by stock ownership or otherwise, of the
other or others of such persons, and any one of 2 or more persons subject to common control,
actual or legal, directly or indirectly, whether by stock ownership or otherwise.
 (2)  Interstate or foreign commerce ._The term ``interstate or foreign commerce'' means
commerce between any State and any place outside thereof, or commerce within any Territory or
the District of Columbia, or between points within the same State but through any place outside
thereof.
 (3)  Secretary ._The term ``Secretary'' means the Secretary of the Treasury.
 (4)  Package ._The term ``package'' means the innermost sealed container irrespective of the
material from which such container is made, in which a tobacco product is placed by the
manufacturer and in which such tobacco product is offered for sale to a member of the general
public.
 (5)  Retailer ._The term ``retailer'' means any dealer who sells, or offers for sale, any tobacco
product to any person other than a wholesaler.
SEC. 1142. TOBACCO PRODUCT LABELING REQUIREMENTS.
 (a)  In General ._It shall be unlawful for any person to sell or ship or deliver for sale or shipment,
or otherwise introduce in interstate or foreign commerce, or to receive therein, or to remove from
customs custody for use, any tobacco product unless such product is packaged and labeled in
conformity with this section.
 (b)  Labeling ._
 (1)  Identification ._Not later than 1 year after the date of enactment of this subtitle, the Secretary
shall promulgate regulations that require each manufacturer of tobacco products to legibly print a
unique serial number on all packages of tobacco products manufactured for sale or distribution.
Such serial number shall be designed to enable the Secretary to identify the manufacturer of the
product, and the location and date of manufacture. The Secretary shall determine the size and
location of the serial number.
 (2)  Country of final destination ._Each package of a tobacco product that is exported shall be
labeled with the name of the country of final destination. The Secretary shall promulgate
regulations to determine the size and location of the label and under what circumstances a waiver
of this paragraph shall be granted.
 (c)  Prohibition on Alteration ._It shall be unlawful for any person to alter, mutilate, destroy,
obliterate, or remove any mark or label required under this subtitle upon a tobacco product in or
affecting commerce, except as authorized by Federal law or except under regulations of the
Secretary authorizing relabeling for purposes of compliance with the requirements of this section
or of State law.
SEC. 1143. REQUIREMENTS FOR THE TRACKING OF TOBACCO PRODUCTS.
 (a)  Posting of Bond ._
 (1)  In general ._It shall be unlawful for any person to export any tobacco product unless such
person_
 (A) has posted with the Secretary a tobacco product bond in accordance with this section for
such product that contains a disclosure of the country to which such product will be exported; and
 (B) receives a written statement from the recipient of the tobacco products involved that such
person_
 (i) will not knowingly and willfully violate any law or regulation of such country with respect to
such products; and
 (ii) has never been convicted of any offense with respect to tobacco products.
 (2)  Regulations ._The Secretary shall promulgate regulations that determine the frequency and
the amount of each bond that must be posted under paragraph (1), but in no case shall such
amount be less than an amount equal to the Federal tax imposed under chapter 52 of the Internal
Revenue Code of 1986 on the value of the shipment of the products involved if such products
were consumed within the United States.
 (b)  Return of Bond ._The Secretary shall return a bond posted under subsection (a) upon a
determination by the Secretary (based on documentation provided by the person who posted the
bond in accordance with regulations promulgated by the Secretary) that the tobacco products to
which the bond applies have been received in the country of final destination as designated in the
bond.
SEC. 1144. TOBACCO PRODUCT PERMITS.
 (a)  In General ._Not later than 1 year after the date of enactment of this Act, the Secretary shall
establish a program under which tobacco product permits are issued to persons (desiring to sell or
ship, or deliver for sale or shipment, or otherwise introduce in interstate or foreign commerce, or
to receive therein, or to remove from customs custody for use, any tobacco product).
 (b)  Conditions ._The issuance of a permit to a tobacco product manufacturer under this section
shall be conditioned upon the compliance of the manufacturer with the requirements of this
subtitle.
 (c)  Revocation, Suspension, and Annulment ._The program established under subsection (a)
shall permit the Secretary to revoke, suspend, or annul a permit issued under this section if the
Secretary determines that the terms or conditions of the permit have not been complied with.
Prior to any action under this subsection, the Secretary shall provide the permittee with due notice
and the opportunity for a hearing.
 (d)  Records and Audits ._The Secretary shall, under the program established under subsection
(a), require permit holders to keep records concerning the chain of custody of the tobacco
products that are the subject of the permit and make such records available to the Secretary for
inspection and audit.
 (e)  Retailers ._This section shall not apply to retailers of tobacco products, except that retailers
shall maintain commercial records of receipt, and such records shall be available to the Secretary
for inspection and audit.
SEC. 1145. PROHIBITIONS.
 (a)  Importation and Sale ._It shall be unlawful, except under a permit issued by the Secretary
under section 1144_
 (1) to engage in the business of importing into the United States tobacco products; or
 (2) for any person so engaged to sell, offer, or deliver for sale, contract to sell, or ship, in or
affecting commerce, directly or indirectly or through affiliate, tobacco products so imported.
 (b)  Manufacture and Sale ._It shall be unlawful, except under a permit issued by the Secretary
under section 1144_
 (1) to engage in the business of manufacturing, packaging or warehousing tobacco products; or
 (2) for any person so engaged to sell, offer, or deliver for sale, contract to sell, or ship, in
interstate or foreign commerce, directly or indirectly or through an affiliate, tobacco products so
manufactured, packaged or warehoused.
 (c)  Wholesale ._It shall be unlawful, except under a permit issued by the Secretary under section
1144_
 (1) to engage in the business of purchasing for resale at wholesale tobacco products, or, as a
principal or agent, to sell, offer for sale, negotiate for, or hold out by solicitation, advertisement,
or otherwise as selling, providing, or arranging for, the purchase for resale at wholesale of
tobacco products; or
 (2) for any person so engaged to receive or sell, offer or deliver for sale, contract to sell, or ship,
in or affecting commerce, directly or indirectly or through an affiliate, tobacco products so
purchased.
 (d)  Effective Date ._The provisions of this section shall become effective on the date that is 180
days after the date of enactment of this Act.
SEC. 1146. PRICING AND LABELING OF PRODUCTS SOLD ON MILITARY
INSTALLATIONS ORBY NATIVE AMERICANS.
 (a)  Military Installations ._
 (1)  In general ._The Secretary, in consultation with the Secretary of Defense, shall promulgate
regulations that ensure that the price charged for a tobacco product sold on a military installation
(as defined in section 2801(c)(2) of title 10, United States Code) is equal to_
 (A) the average price for which such product is sold in the metropolitan area immediately
bordering the military installation; or
 (B) the highest price (inclusive of Federal or State taxes) for which such product is sold on
military installations located in the United States;
whichever is greater.
 (2)  Label ._The regulations under paragraph (1) shall require that each package of a tobacco
product that is sold on a military installation be labeled as such. Such regulations shall include
requirements for the size and location of the label.
 (b)  Indian Tribes ._The Secretary, in consultation with the Secretary of Interior, shall
promulgate regulations that require that each package of a tobacco product that is sold on an
Indian reservation (as defined in section 403(9) of the Indian Child Protection and Family
Violence Prevention Act (25 U.S.C. 3202(9))) be labeled as such. Such regulations shall include
requirements for the size and location of the label.
SEC. 1147. PROHIBITION AGAINST SALE OF TOBACCO PRODUCTS IN OR TO DUTY-
FREESHOPS OR FORWARDING THROUGH OR MANUFACTURE IN TRADE ZONES.
 (a)  Duty-Free Shops ._It shall be unlawful for any person to sell a tobacco product_
 (1) in any duty-free shop located within the United States; or
 (2) to any duty-free shop.
 (b)  Trade Zones ._No person may forward through or manufacture a tobacco product in any
foreign trade zone, as defined for purposes of the Act of June 18, 1934 (19 U.S.C. 81a et seq.).
SEC. 1148. JURISDICTION; PENALTIES; COMPROMISE OF LIABILITY.
 (a)  Jurisdiction ._The District Courts of the United States, and the United States court for any
Territory, of the District where the offense is committed or of which the offender is an inhabitant
or has its principal place of business, are vested with jurisdiction of any suit brought by the
Attorney General in the name of the United States, to prevent and restrain violations of any of the
provisions of this subtitle.
 (b)  Penalties ._The provisions of section 3571 of title 18, United States Code, shall apply to any
person convicted of violating any of the provisions of this subtitle as if such person were
convicted of a felony under such title.
 (c)  Compromise of Liability ._The Secretary is authorized, with respect to any violation of this
subtitle, to compromise the liability arising with respect to a violation of this subtitle_
 (1) upon payment of a sum not in excess of $10,000 for each offense, to be collected by the
Secretary and to be paid into the Treasury as miscellaneous receipts; and
 (2) in the case of repetitious violations and in order to avoid multiplicity of criminal proceedings,
upon agreement to a stipulation, that the United States may, on its own motion upon 5 days'
notice to the violator, cause a consent decree to be entered by any court of competent jurisdiction
enjoining the repetition of such violation.
SEC. 1149. AMENDMENTS TO THE CONTRABAND CIGARETTE TRAFFICKING ACT.
 (a)  Definitions ._Section 2341 of title 18, United States Code, is amended_
 (1) in paragraph (2)_
 (A) by striking ``60,000'' and inserting ``30,000''; and
 (B) by inserting after ``payment of cigarette taxes,'' the following: ``or in the case of a State that
does not require any such indication of tax payment, if the person in possession of the cigarettes is
unable to provide any evidence that the cigarettes are moving legally in interstate commerce,''; and
 (2) in paragraph (4), by striking ``and'' at the end;
 (3) in paragraph (5), by striking the period and inserting a semicolon; and
 (4) by adding at the end the following:
 ``(6) the term `tobacco product' means cigars, cigarettes, smokeless tobacco, and pipe tobacco
(as such terms are defined in section 5701 of the Internal Revenue Code of 1986); and
 ``(7) the term `contraband tobacco product' means a quantity in excess of 30,000 of any tobacco
product that is manufactured, sold, shipped, delivered, transferred, or possessed in violation of
Federal laws relating to the distribution of tobacco products.''.
 (b)  Unlawful Acts ._Section 2342 of title 18, United States Code, is amended_
 (1) in subsection (a), by inserting ``or contraband tobacco products'' before the period;
 (2) in subsection (b)_
 (A) by striking ``cigarettes'' and inserting ``tobacco products'';
 (B) by striking ``60,000'' and inserting ``30,000''; and
 (C) by inserting before the period the following: ``or knowingly to fail to maintain distribution
records, alter or obliterate required markings, or interfere with any inspection as required with
respect to such quantity of tobacco products''; and
 (3) by adding at the end the following:
 ``(c) It shall be unlawful for any person knowingly to transport tobacco products under a false
bill of lading or without any bill of lading.''.
 (c)  Recordkeeping ._Section 2343 of title 18, United States Code, is amended_
 (1) by striking ``cigarettes'' each place that such appears and inserting ``tobacco products'';
 (2) in subsection (a), by striking ``60,000'' and inserting ``30,000'';
 (3) in subsection (b), by striking ``60,000'' and inserting ``30,000''.
 (d)  Penalties ._Section 2344 of title 18, United States Code, is amended_
 (1) in subsection (c), by inserting ``or contraband tobacco products'' after ``cigarettes''; and
 (2) by adding at the end the following:
 ``(d) Any proceeds from the unlawful distribution of tobacco products shall be subject to seizure
and forfeiture under section 981(a)(1)(C).''.
SEC. 1150. AUTHORIZATION OF APPROPRIATIONS.
 There are authorized to be appropriated such sums as may be necessary to carry out this subtitle.
Subtitle E_Antitrust Exemption
SEC. 1161. LIMITED ANTITRUST EXEMPTION.
 (a)  In General._ The antitrust laws of the United States (as defined in section 1 of the Clayton
Act (15 U.S.C. 12) and any other statute in  pari materia , and any similar law of a State, do not
apply to the joint discussion, consideration, review, action, agreement, or understanding by or
among any participating tobacco product manufacturers, for the purposes of, and limited to_
 (1) entering into and complying with the Protocol, Trust Agreement, or Consent Decree;
 (2) refusing to deal with a distributor, retailer, or other seller of tobacco products who distributes
such products for sale to, or offers for sale or sells such products to, underage persons, or who
otherwise fails to comply with the applicable requirements of the Act, the Protocol, or Consent
Decree; or
 (3) submitting an application relating to a plan or program of the type referred to in subsection
(b) of this section or, entering into, complying with or otherwise carrying out the terms of, any
plan or program that has been approved under subsection (b) of this section.
 (b)  Approval by Attorney General._ The Attorney General of the United States is authorized to
approve, upon application by one or more participating tobacco product manufacturers, plans, or
programs to reduce the use of tobacco products by underage individuals. Before approving any
such plan or program, the Attorney General shall determine that approval is appropriate as part of
the effort to reduce the use of tobacco products by underage individuals and will not have the
effect of unduly restraining competition. The Attorney General shall approve or disapprove any
such application in writing within 90 days from the date it is received by the Department of
Justice. Upon written withdrawal by the Attorney General of any approval under this subsection,
the provisions of subsection (a)(3) shall not apply to any subsequent act or omission with respect
to the plan or program to which the approval related.
Subtitle F_Special Provisions Concerning Programs for Women, Minorities, and Others
SEC. 1171. RESEARCH RELATED TO PATTERNS OF SMOKING BY WOMEN AND
MINORITIES.
 (a)  Research Design Criteria._ Any research funded under this Act, or under any amendment
made by this Act, that is conducted for the purpose of investigating factors affecting tobacco use
and patterns of smoking, shall if appropriate to the scope and purpose of the investigation include
data and analysis with respect to different factors that may be present in the case of women or
minorities.
 (b)  Patterns of Smoking._ Research funded under this Act, or under any amendment made by
this Act, examining patterns of smoking among minorities should be conducted in proportion to
their prevalence in the smoking population and shall be conducted at minority education
institutions, where available, or institutions that provide the greatest amount of health care to
minority populations in a State.
SEC. 1172. COUNTER-ADVERTISING PROGRAMS.
 (a)  In General ._The Secretary shall carry out programs to reduce tobacco usage through media-
based (such as counter-advertising campaigns) and nonmedia-based education, prevention, and
cessation campaigns designed to discourage the use of tobacco products by individuals and to
encourage those who use such products to quit. Such programs shall target, in a culturally and
linguistically appropriate manner, adults, children, women, and minorities who have been targeted
by tobacco industry advertising.
 (b)  Eligibility ._To be eligible to receive assistance under this section an entity or individual shall
prepare and submit to the Secretary an application at such time, in such manner, and containing
such information as the Secretary may require.
 (c)  Use of Funds ._Amounts received by an individual or entity under this section shall be used
to carry out activities under the programs established under subsection (a). Such amounts may be
used to design and implement such activities and to conduct research concerning the effectiveness
of such programs.
 (d)  Funding ._There are authorized to be appropriated from the National Tobacco Settlement
Trust Fund established by section 401, other than from amounts not in the State Litigation
Settlement Account, or otherwise obligated under this Act such sums as are necessary to carry
out the provisions of this section.
SEC. 1173. PREVENTION ACTIVITIES OF COMMUNITY AND MIGRANT HEALTH
CENTERS.
 (a)  Funding._ There are authorized to be appropriated from the National Tobacco Settlement
Trust Fund established by section 401, other than from amounts in the State Litigation Settlement
Account, of this Act $300,000,000 for each of the first 10 fiscal years beginning after the date of
enactment of this Act to carry out the provisions of subsection (b).
 (b)  Program._ The Secretary shall make amounts made available under subsection (a) available
to Community, Migrant, and Homeless Health Centers receiving grants under section 330 of the
Public Health Service Act (42 U.S.C. 254c) to provide health services for diseases related to
tobacco and to prevent tobacco-related diseases.
 (c)  Limitation._ No amount may be expended or obligated under subsection (b) for any fiscal
year in which the annual amount appropriated for Community, Migrant, and Homeless Health
Centers is less than the amount appropriated for the previous fiscal year.
Subtitle G_Sense of the Senate
SEC. 1181. SENSE OF THE SENATE.
 It is the sense of the Senate that the proceeds of this Act may be used for purposes including, but
not limited to_
 (1) reimbursing public health care financing programs for tobacco-related costs, including
Medicare;
 (2) supporting tobacco use prevention and cessation, particularly with respect to youth, including
counter-advertising at the Federal, State, Tribal, and local level;
 (3) supporting tobacco-related health services research activities;
 (4) assisting tobacco farmers and tobacco dependent communities;
 (5) creating, and fully and adequately funding, a Tobacco Asbestos Trust to assist victims of the
unique harm that smoking causes to asbestos workers;
 (6) settling with and reimbursing States for tobacco-related health care costs and damages,
including Medicaid;
 (7) providing funding for the Federal Black Lung Program;
 (8) providing funding for child care and early childhood development;
 (9) providing funding for veterans' benefit programs; and
 (10) providing funding for clinical trials at the National Institutes of Health.
Subtitle H_Ban On Sale Of Tobacco Products Through The Use Of Vending Machines
SEC. 1191. BAN OF SALE OF TOBACCO PRODUCTS THROUGH THE USE OF
VENDINGMACHINES.
 (a)  Ban of Sale of Tobacco Products Through the Use of Vending Machines ._Effective 12
months after the date of enactment of this Act, it shall be unlawful to sell tobacco products
through the use of a vending machine.
 (b)  Compensation for Banned Vending Machines ._
 (1)  In general ._The owners and operators of tobacco vending machines shall be reimbursed for
the fair market value of their businesses, including the cost of banned vending machines,
compensation for lost profits, unexpired contracts, and for the owner's or operator's plant and
equipment related only to the production of tobacco vending machines.
 (2)  Tobacco vending reimburment corporation ._
 (A)  Corporation ._Reimbursment shall be directed through a private, nonprofit corporation
established in the District of Columbia, known as the Tobacco Vending Reimburment
Corporation (in this section referred to as the ``Corporation''). The Corporation is_
 (i) not an agency or establishment of the United States; and
 (ii) except as otherwise provided in this section, is subject to, and has all the powers conferred
upon a nonprofit corporation by the District of Columbia Nonprofit Corporation Act (D.C. Code
section 29-501 et seq.).
 (B)  Duties ._The Corporation shall_
 (i) disburse compensation funds to vending companies under this section;
 (ii) verify operational machines; and
 (iii) maintain complete records of machine verification and accountings of disbursements and
administration of the compensation fund established under paragraph (4).
 (3)  Management of corporation ._
 (A)  Board of directors ._The Corporation shall be managed by a Board of Directors that_
 (i) consists of distinguished Americans with experience in finance, public policy, or fund
management;
 (ii) includes at least 1 member of the United States tobacco vending machine industry;
 (iii) shall be paid an annual salary on an individualized basis of $40,000 out of amounts
transferred to the Corporation under paragraph (4)(A);
 (iv) shall appoint a President to manage the day-to-day activities of the Corporation;
 (v) shall develop guidelines by which the President shall direct the Corporation;
 (vi) shall retain a national accounting firm to verify the distribution of funds and audit the
compensation fund established under paragraph (4);
 (vii) shall retain such legal, management, or consulting assistance as is necessary and proper; and
 (viii) shall periodically report to Congress regarding the activities of the Corporation.
 (B)  Duties of the president of the corporation ._The President of the Corporation shall_
 (i) hire appropriate staff;
 (ii) prepare the report of the Board of Directors of the Corporation required under subparagraph
(A)(viii); and
 (iii) oversee Corporation functions, including verification of machines, administration and
disbursement of funds, maintenance of complete records, operation of appeals procedures, and
other directed functions.
 (4)  Compensation Fund ._
 (A)  Transfer of funds from tobacco industry payments ._The Secretary of the Treasury shall
transfer to the Corporation, out of funds in the National Tobacco Settlement Trust Fund, other
than from amounts in the State Litigation Settlement Account, such sums as are necessary to
make due compensation to owners and operators of tobacco vending machines and to carry out
the duties of the Corporation. Not later than 1 year after such date on which the first transfer is
made under this subparagraph, the Secretary of the Treasury shall transfer to the Corporation out
of funds paid to the United States by the tobacco industry, such additional sums as may be
necessary for such purposes.
 (B)  Rules for disbursement of funds ._
 (i)  Payments to owners and operators ._The Corporation shall disburse funds to compensate the
owners and operators of tobacco vending machines in accordance with the following:
 (I) The fair market value of each tobacco vending machine verified by the Corporation President
in accordance with subparagraph (C), and proven to have been in operation before August 10,
1995, shall be disbursed to the owner of the machine seeking compensation.
 (II) No compensation shall be made for a spiral glass front vending machine.
 (ii)  Other payments ._Funds transferred to the Corporation under subparagraph (A) may be used
to pay the administrative costs of the Corporation that are necessary and proper or required by
law. The total amount paid by the Corporation for administrative and overhead costs, including
accounting fees, legal fees, consultant fees, and associated administrative costs shall not exceed 5
percent of the total amount transferred to the Corporation under subparagraph (A).
 (C)  Verification of vending machines ._Verification of vending machines shall be based on
copies of official State vending licenses, company computerized or handwritten sales records, or
physical inspection by the Corporation President or by an inspection agent designated by the
President. The Corporation President and the Board of Directors of the Corporation shall work
vigorously to prevent and prosecute any fraudulent claims submitted for compensation.
 (D)  Return of account funds not distributed to vendors ._The Corporation shall be dissolved on
the date that is 4 years after the date of enactment of this Act. Any funds not dispersed or
allocated to claims pending as of that date shall be transferred to a public anti-smoking trust, or
used for such other purposes as Congress may designate.
 (c)  Settlement of Legal Claims Pending Against the United States ._Acceptance of a
compensation payment from the Corporation by a vending machine owner or operator shall settle
all pending and future claims of the owner or operator against the United States that are based on,
or related to, the ban of the use of tobacco vending machines imposed under this section and any
other laws or regulations that limit the use of tobacco vending machines.
 (d)  Authorization of Appropriations._ There are authorized to be appropriated from the National
Tobacco Settlement Trust Fund, other than from amounts in the Senate Litigation Settlement
Account, such sums as may be necessary to carry out this section.
TITLE XII_TOBACCO ASBESTOS TRUST FUND
SEC. 1201. DEFINITIONS.
 In this title:
 (1)  Asbestos claim._ The term ``asbestos claim'' means a claim brought or capable of being
brought in a court of competent jurisdiction by a person for personal injury, wrongful death, loss
of consortium, or other damages arising from occupational exposure to asbestos or asbestos
containing products, including claims by spouses or household members who were exposed to
asbestos through the occupational exposure of another person.
 (2)  Asbestos claimant._ The term ``asbestos claimant'' means a person who brings an asbestos
claim.
 (3)  Asbestos defendant._ The term ``asbestos defendant'' means a person or existing entity
(including a partnership or corporation) who as part of its operations is defending asbestos claims
on the date of enactment of this Act.
  (4)  Asbestos/tobacco claim._ The term ``asbestos/tobacco claim'' means a legally justiciable
asbestos claim of a person who also claims injury, disease, or death arising from exposure to
tobacco.
  (5)  Asbestos/tobacco claimant._ The term ``asbestos/tobacco claimant'' means a person who has
an asbestos/tobacco claim.
  (6)  Asbestos trust._ The term ``asbestos trust'' means a court-supervised trust that was
established to resolve asbestos claims arising directly or indirectly from exposure to asbestos or
asbestos containing products of an asbestos defendant, including a trust created under the
bankruptcy laws of the United States, or Rule 23 of the Federal Rules of Civil Procedure.
  (7)  Exposure to tobacco._ The term ``exposure to tobacco'' means any instance in which a
person consumes, inhales, ingests, or uses a tobacco product.
  (8)  Tobacco._ The term ``tobacco'' means tobacco in its manufactured form, including cigars,
cigarettes, cigarillos, cigarette tobacco, little cigars, pipe tobacco, and smokeless tobacco.
  (9)  Tobacco company._ The term ``tobacco company'' means any person, including any
repacker, or relabeler, who manufactures, fabricates, assembles, processes, or labels a finished
tobacco product.
  (10)  Trust fund._ The term ``trust fund'' means the Tobacco Asbestos Trust Fund established
under section 1202.
SEC. 1202. TOBACCO ASBESTOS TRUST FUND.
  (a)  Establishment._
  (1)  In general._ There is established in the Treasury of the United States a trust fund to be
known as the ``Tobacco Asbestos Trust Fund'', consisting of such amounts as may be
appropriated or credited to the trust fund.
  (2)  Division._
  (A)  In general._ The trust fund shall be composed of 2 funds to be known as ``Fund I'' and
``Fund II''. Each such fund shall meet the requirements of this title.
  (B)  Fund i._
  (i)  Administration._ Fund I shall be administered by the trustees appointed under paragraphs (1)
and (3) of subsection (b). Fund I shall be considered to be a designated settlement fund within the
meaning of section 468B of the Internal Revenue Code of 1986.
  (ii)  Purpose and use._ The purpose of Fund I shall be for the reimbursement of asbestos trusts
and asbestos defendants for payments made by such trust and defendants for the tobacco-caused
portion of asbestos/tobacco claims. Fund I shall be used to allocate credits to asbestos trusts and
asbestos defendants who settled and paid the civil claims of individuals who had exposure to
tobacco and asbestos. Such credits may be used to direct the payment of funds by the trustees to
pay asbestos claims and asbestos/tobacco claims, as described in section 1203.
  (C)  Fund ii._
  (i)  Administration._ Fund II shall be administered by the trustees appointed under paragraphs
(2) and (3) of subsection (b). Fund II shall be considered to be a designated settlement fund within
the meaning of section 468B of the Internal Revenue Code of 1986.
  (ii)  Purpose._ The purpose of Fund II shall be to pay asbestos/tobacco claims brought after the
date of enactment of this Act for the tobacco-caused portion of the claimant's harm, as described
in section 1204.
  (3)  Separate operations._ The operations of each Fund shall be conducted separately. Upon
majority vote of the trustees of Fund I and upon majority vote of the trustees of Fund II, the
Funds may, in the interest of efficiency and economy, conduct certain tasks as a single operation.
  (b)  Trustees._ Not later than 60 days after the date of enactment of this Act_
  (1) the Secretary shall appoint 2 individuals to serve as trustees of the trust fund, of which_
  (A) 1 individual shall represent asbestos trusts; and
  (B) 1 individual shall represent asbestos defendants;
  (2) the Secretary of Labor shall appoint 2 individuals to serve as trustees of the trust fund, of
which_
  (A) 1 individual shall represent asbestos claimants; and
  (B) 1 individual shall represent labor organizations with asbestos claimants as members; and
  (3) the trustees appointed under paragraphs (1) and (2) shall appoint an individual who shall be a
member of the health care profession with experience in asbestos disease or disability to serve as a
trustee.
  (c)  Authorization and Allocations._
  (1)  Authorization._ There are appropriated, out of amounts in the National Tobacco Settlement
Trust Fund established by section 401 (other than amounts in the State Litigation Settlement
Account or otherwise obligated), to the trust fund the amounts set forth in section 1205.  The
Secretary of theTreasury shall transfer amounts appropriated under this paragraph to the trust
fund.
  (2)  Allocation between funds._
  (A)  Baseline allocation._ Of the amounts transferred under paragraph (1), 50 percent shall be
deposited into Fund I and 50 percent shall be deposited into Fund II.
  (B)  Timing adjustment._ The trustees of Fund II may provide an advance to Fund I as a loan (to
be repaid from proceeds of Fund I) from funds available in Fund II as may be necessary to further
the purposes of Fund I.
  (d)  Repayable Advances._
  (1)  Authorization._ In addition to the amounts appropriated under subsection (c), there are
authorized to be appropriated to the trust fund, as repayable advances, such sums as may be
necessary for fiscal year 1999 and each subsequent fiscal year to make the expenditures described
in sections 1203 and 1204.
  (2)  Repayment with interest._ Repayable advances made to the trust fund shall be repaid, and
interest on the advances shall be paid to the general fund of the Treasury when the Secretary of
the Treasury determines that monies are available in the Tobacco Asbestos Trust Fund to make
the payments.
  (3)  Rate of interest._ Interest on an advance made under this subsection shall be at a rate
determined by the Secretary of the Treasury (as of the close of the calendar month preceding the
month in which the advance is made) that is equal to the current average market yield on
outstanding marketable obligations of the United States with remaining period to maturity
comparable to the anticipated period during which the advance will be outstanding.
  (e)  Use of Trust Fund._
  (1)  In general._ The trust fund shall be used as provided for in this title.  No amount shall be
expended or obligated from the trust fund unless the expenditure or obligation is authorized by an
appropriation Act.
  (2)  Limitation._ Amounts may only be made available from the trust fund to, or for the direct
benefit of, asbestos claimants and asbestos/tobacco claimants.
  (f)  Authority of Trustees._
  (1)  Decisions based on votes._ Except as provided in this Act, the trustees of each Fund shall
make decisions with regard to the respective Funds based on a majority vote.
  (2)  General authority._ The trustees shall have the authority to take such actions as may be
necessary to effectuate the purposes of the trust fund, including_
  (A) the investment of the trust fund assets in a reasonable and prudent manner consistent with
the needs and purposes of the trust fund; and
  (B) commencing actions to enforce any provisions or obligations imposed under this title.
  (3)  Administrative authority._ The trustees shall have the authority to employ officers,
administrators, claims analysts, attorneys, actuaries, investment specialists, and such other
employees and agents as may be required to administer the trust fund.
  (g)  Accounting for Expenses._ ~Except for the compensation and expenses of the trustees,
which shall be charged equally to Fund I and Fund II, the trustees shall, to the extent feasible,
separately account for all salaries, overhead, and other costs and expenses as between Fund I and
Fund II on the basis of activities conducted separately with respect to each such Fund.
  (h)  Expenditures From Trust Fund._ Amounts in the trust fund, and each of its Funds, shall be
made available in each fiscal year, as provided by appropriations Acts, as necessary to make the
expenditures and allocations provided for in sections 1203 and 1204.
SEC. 1203. PAYMENTS FROM FUND I.
  (a)  In General._ Credits applying to the amounts deposited into Fund I shall be allocated and
disbursed as provided for in this section.
  (b)  Determination of Base._
  (1)  Notice._ Not later than 90 days after the date on which the trustees for Fund I are
appointed, the trustees shall provide notice to all asbestos trusts and asbestos defendants of the
establishment of the Fund.
  (2)  Request for information._ The notice under paragraph (1) shall request that each asbestos
trust and asbestos defendant, within a reasonable period of time, provide the trustees with
information as to the amount of payments or settlements made by or on behalf of such trusts or
defendants (and, in the case of non-bankruptcy trusts, also made by or on behalf of their
predecessor organizations), and the amount of any outstanding bonded judgments, on asbestos
claims as of the date of enactment of this Act.
  (3)  Determination._ Based on the information provided under paragraph (2), the trustees for
Fund I shall determine the total amount of payments and settlements and outstanding bonded
judgments (reasonably adjusted for the probable resolution as of the date the information is
submitted under paragraph (2)) on the asbestos claims of all asbestos trusts and asbestos
defendants that responded to the notice.
  (c)  Allocation of Credits._
  (1)  In general._ Upon review of the information submitted under subsection (b)(2), the trustees
for Fund I shall provide a credit with respect to each asbestos trust and asbestos defendant
submitting such information.
  (2)  Amount._ A credit under paragraph (1) with respect to an asbestos trust or asbestos
defendant shall be based on the ratio of_
  (A) the amount of settlement payments and outstanding bonded judgments on asbestos claims
made by or on behalf of the trust or defendant; and
  (B) the total amount of settlement payments and outstanding bonded judgments on asbestos
claims made by or on behalf of all asbestos trusts and asbestos defendants described in paragraph
(1).
  (d)  Additional Factors._
  (1)  Interest._ In making the allocation of credits under this section, the trustees for Fund I shall
consider the timing of past cash payments and include an appropriate interest factor in making
their allocation determinations.
  (2)  Unpaid settlements._ In making the allocation of credits under this section, the trustees for
Fund I shall include the settlements of asbestos trusts and asbestos defendants that have not been
paid as of the date of enactment of this Act in an amount not to exceed 20 percent of the amount
of such unpaid settlements.
  (3)  Limitation._ The aggregate amount of Fund I credits allocated to asbestos trusts or asbestos
defendants to account for unpaid settlements under paragraph (2) shall not exceed an amount
equal to 6 percent of the amounts contained in Fund I for the year involved. Any necessary
reductions from the application of the limitation under this paragraph shall be determined using
the ratios described in subsection (c).
  (4)  Unused credits._ To the extent that any asbestos trust or asbestos defendant has credits
from its allocation under this section that have not been the subject of a request and direction to
be paid for a period of 2 years from the date on which such credits are made available, such
unused credits shall be reallocated proportionally to each asbestos trust and asbestos defendant
submitting information under subsection (b)(2) according to the amount of the unpaid settlements
of such trust and defendants which remain unpaid after making the allocations required by this
section.
  (e)  Review of Determinations._
  (1)  In general._ Any dispute regarding a determination made by the trustees for Fund I under
this section shall be resolved not later than 6 months after the date on which notice of such
dispute is provided to the trustees. Such resolution shall be under final and binding arbitration
under the rules of the American Arbitration Association.
  (2)  Scope._ The scope of any review under paragraph (1) shall be limited to determining
whether the determinations of the trustees were unsupported by substantial evidence or were
contrary to law.
  (3)  Application of section._ During the pendency of any dispute resolution proceeding under
this subsection, the trustees may continue to implement the provisions of this section, reserving
sufficient monies as may be necessary in their judgment to satisfy the resolution of such disputes.
  (f)  Use of Fund I Credits._
  (1)  For benefit of victims._ All monies credited to asbestos trusts and asbestos defendants under
this section shall be used solely for the payment of asbestos claims and asbestos/tobacco claims.
None of the credits allocated under this section to an asbestos trust or asbestos defendant shall be
used for the costs of defending against an asbestos claims, for payment of corporate dividends, for
reimbursement of insurers, or for any other corporate purpose.
  (2)  Mechanism for payment of victims._
  (A)  Asbestos defendants._ An asbestos defendant that receives an allocation of credit under this
section may only use such credit to direct that a payment be made from Fund I to any asbestos
claimant as compensation for an asbestos claim or asbestos/tobacco claim. The payment of such
claimant shall be under a written request submitted by the defendant to the Fund. Such requests
are not subject to approval by the Fund so long as they do not exceed the defendant's allocation of
credit under this section.
  (B)  Asbestos trust._ All monies resulting from credits allocated to an asbestos trust under this
section shall be paid to such trust for use according to the rules of such trust with regard to the
payment of asbestos claims and asbestos/tobacco claims.
SEC. 1204. PAYMENTS FROM FUND II.
  (a)  In General._ Amounts deposited into II shall be disbursed as provided for in this section.
  (b)  Establishment of Fund._ The trustee for Fund II shall establish procedures and standards
under subsection (c) for the payment, upon approval of an appropriate application, of a reasonable
reimbursement for the costs, expenses, and fees incurred in connection with an asbestos claim or
an asbestos/tobacco claim.
  (c)  Procedures and Standards._ The procedures and standards established under this subsection
for the payment of compensation to asbestos claimants and asbestos/tobacco claimants, shall
include_
  (1) rules to ensure that compensation from Fund II is paid only for that portion of an asbestos
claimant's or an asbestos/tobacco claimant's harm caused by exposure to tobacco;
  (2) rules ensuring that_
  (A) all present and future such claimants are treated equitably in relationship to each other; and
  (B) if future demands against Fund II require limitations on current payment, that priority be
given to payment of asbestos claimants or asbestos/tobacco claimants with the most serious harm
due to exposure to asbestos and tobacco;
  (3) rules establishing application forms and procedures for the submission of claims and
supporting documentation;
  (4) criteria establishing a minimum degree of asbestos disability or impairment that must be
demonstrated in order for a claimant to receive compensation under this section;
  (5) criteria for the coordination of the administration of Fund II with the signatories to the
Louisiana Agreement Providing Administrative Alternatives for Claimants with Asbestos Related
Conditions to expand the agreement to include national coverage for claimants who may not be
compensated under the criteria provided for under paragraph (4);
  (6) rules requiring recipients of funds from Fund II to execute a release of personal injury claims
for tobacco-caused harm; and
  (7) rules to ensure that the administration of the claims process, including attorney's fees, is fair
and equitable to asbestos claimants and asbestos/tobacco claimants.
  (d)  Period for Final Determinations._ The trustees for Fund II shall make a final determination
with respect to a claim submitted under this section not later than 120 days after the date on
which the claim is submitted. In the event that exigent circumstances exist with respect to a such a
claim, as verified by a competent medical professional, such final determination shall be made as
soon as practicable, but in no case later than 60 days after the date of the submission of such
claim.
  (e)  No Limitation on Right to Sue._ Except as provided in section 1206(b), nothing in this title
shall be construed to limit the rights of any individual to bring a civil suit against a tobacco
company.
  (f)  Claims Administration._ The trustees for Fund II may establish, or enter into a contract for
the establishment or operation of, a claims facility for the processing, evaluation, and settlement of
claims submitted to Fund II.
  (g)  Review Jurisdiction._ The District Courts of the United States shall have exclusive
jurisdiction, without regard to the amount in controversy or the citizenship of the parties, to
review a determination (or failure to make a determination as required by section 1206(a)) by or
on behalf of the trustees with respect to compensation under Fund II by an individual bringing a
claim. No such determination may be overturned or remanded if it is supported by substantial
evidence. A claimant may not file a proceeding under this subsection unless the plaintiff has
provided the trustees with a notice of intent of the plaintiff to file such an action, at least 90 days
prior to the filing of such action.
SEC. 1205. TRANSFERS FROM NATIONAL TOBACCO SETTLEMENT TRUST FUND.
  (a)  Special Asbestos-Tobacco Victim Transfers._ Beginning with calendar year 1999, the
Secretary of the Treasury shall, for each calendar year, transfer from the National Tobacco
Settlement Trust Fund established under section 401 (other than from amounts in the State
Litigation Settlement Account) the amounts sufficient to provide the trust fund established by
section 1202 the following amounts:
  (l) For calendar year 1999, $1,000,000,000.
  (2) For calendar year 2000, $1,500,000,000.
  (3) For calendar year 2001, $3,000,000,000.
  (4) For calendar year 2002, $3,000,000,000.
  (5) For calendar year 2003, $3,000,000,000.
  (6) For calendar year 2004, $4,000,000,000.
  (7) For each of the calendar years 2005 through 2014, $550,000,000.
  (b)  Payments._ The Secretary of the Treasury shall ensure that transfers are made under this
section on a timely basis.
SEC. 1206. RULES FOR CLAIMS AGAINST ASBESTOS TRUSTS, ASBESTOS
DEFENDANTS, ANDTOBACCO COMPANIES.
  (a)  Purpose._
  (1)  In general._ It is the purpose of this title to ensure that asbestos claimants and
asbestos/tobacco claimants who are eligible, by reason of harm resulting from exposure to
asbestos and tobacco, to receive compensation on a fair and timely basis.
  (2)  Rule of construction._ Nothing in this title shall be construed to expand the rights of
asbestos claimants and asbestos/tobacco claimants in civil actions pending (or resolved) against
asbestos defendants or asbestos trusts on the date of enactment of this Act.
  (b)  Non-Binding Submission of Tobacco/Asbestos Claims to Fund II._
  (1)  In general._ A civil action by an individual for harm caused by the combined effects of
tobacco and asbestos shall not proceed to trial or result in a judgment against an asbestos
defendant or asbestos trust until a claim is submitted to Fund II by such individual and finally
resolved in accordance with section 1204(c)(3) as determined by the trustees for Fund II. For
purposes of this paragraph, the term ``proceed to trial'' means_
  (A) in a jury trial, to commence  voir dire ; and
  (B) in a nonjury trial, to begin the trial.
  (2)  Denial of claim._ A claimant whose claim under paragraph (1) is denied, or who rejects an
offer made by the trustees for Fund II, may proceed to judgment or trial. All claimants shall
receive a final determination from Fund II within 120 days after submission of a claim. In the
event of exigent circumstances, verified by a competent medical professional, a claimant shall
receive a final determination from Fund II as soon as practicable, but in all events within 60 days
after submission.
  (c)  Liability of Tobacco Companies._
  (1)  In general._ The provisions of this subsection limiting the civil liability of tobacco companies
shall remain in effect so long as the transfers and deposits are made in accordance with the
provisions of this title.
  (2)  Claims of asbestos-tobacco victims._ Any claimant who receives a payment from Fund II,
shall execute a release of liability for all tobacco-caused harm.
  (3)  Contribution claims for past amounts paid._ Notwithstanding any other provision of law, no
tobacco company shall be liable for contribution, indemnity, or otherwise to any asbestos trust or
asbestos defendant on any claim arising from payments or obligations for payments to asbestos
claimants and asbestos/tobacco claimants made or incurred prior to the date of enactment of this
Act. All such claims by asbestos defendants or asbestos trusts filed as of the date of enactment of
this Act are terminated.
  (4)  Contribution claims for future amounts._ Notwithstanding any other provision of law, in any
contribution or similar action against a tobacco company arising from the payments or obligations
for payments to asbestos claimants and asbestos/tobacco claimants made or incurred after the date
of enactment of this Act, an asbestos trust or asbestos defendant may aggregate and establish a
claim based on valid statistical proof on a consolidated basis. In such an action, the assessment of
damages to a tobacco company defendant shall be based upon the degree of relative causation as
between asbestos and tobacco based on statistical data applicable to relevant disease categories.
  (5)  Rights reserved._ Nothing in this subsection shall be construed to limit the rights of any
person that chooses not to receive compensation from Fund II to commence a civil action against
any tobacco company.
  (d)  Liability of Asbestos Trusts and Asbestos Defendants._
  (1)  Acceptance of fund ii award._ A claimant who accepts a payment from Fund II shall execute
a release of liability for all tobacco-caused harm, and shall not recover from an asbestos defendant
in any civil action any damages for any portion of the harm caused by exposure to tobacco.
  (2)  Fund ii claimant's right to sue._ A claimant, whose claim has been denied by the trustees for
Fund II, or who has rejected the offer of a payment from Fund II, may pursue a civil action
against a tobacco defendant or asbestos defendant for personal injury attributable to both tobacco
and asbestos, to the extent that such action is otherwise permissible under applicable law.
  (3)  Succession to claimant's rights._ Any asbestos defendant that pays a part or all of a
judgment that includes damages for tobacco-caused harm may elect_
  (A) to_
  (i) succeed to the rights of the claimant involved, in the same proportion that the payment by the
defendant in the action involved bears to the total amount of the judgment; and
  (ii) to request compensation on behalf of the claimant from Fund II as in the same manner as if
the claimant had made a timely and proper election to receive such compensation, and on the
same basis as other claimants similarly situated; or
  (B) to pursue an action for indemnity or contribution against any tobacco company.
  (4)  Contribution claims against asbestos companies._ An asbestos trust or asbestos defendant
shall not be liable to a tobacco company for contribution, indemnity, or otherwise with respect to
any claim arising from payments or obligations for payments to asbestos claimants or for exposure
to tobacco and asbestos made or incurred either prior to or by virtue of, the enactment of this
Act. All such claims filed as of the date of enactment of this Act are terminated.
  (e)  Preservation of Joint Liability for Asbestos-Caused Injury or Condition._ Nothing in this
title shall be construed to_
  (1) limit any joint liability under otherwise applicable law among asbestos defendants or asbestos
trusts for the portion of a claimant's harm caused by asbestos;
  (2) limit the ability of any individual to claim that his or her harm was caused by asbestos; or
  (3) delay the resolution of a claim brought by any individual against an asbestos trust or asbestos
defendant for compensation for harm caused by asbestos.
TITLE XIII_VETERANS' BENEFITS
SEC. 1301. RECOVERY BY SECRETARY OF VETERANS AFFAIRS.
  Title 38, United States Code, is amended by adding after part VI the following:
``PART VII_RECOVERY OF COMPENSATION COSTS FOR TOBACCO-RELATED
DISABILITY OR DEATH
``Chapter 91_Tort liability for disability or death due to tobacco use
``Sec.
``9101. Recovery by Secretary of Veterans Affairs
``9102. Regulations
``9103. Limitation or repeal of other provisions for recovery of compensation
``9104. Exemption from annual limitation on damages
``  9101. Recovery by Secretary of Veterans Affairs
  ``(a)  Conditions; exceptions; persons liable; amount of recovery; subrogation._ In any case in
which the Secretary is authorized or required by law to provide compensation under this title for
disability or death from injury or disease attributable in whole or in part to the use of tobacco
products by a veteran during the veterans active military, naval, or air service under circumstances
creating a tort liability upon a participating tobacco product manufacturer, distributor, or retailer
of a tobacco product (other than or in addition to the United States) to pay damages therefor, the
Secretary shall have a right to recover (independent of the rights of the injured or diseased
veteran) from said participating tobacco product manufacturer, distributor, or retailer the cost of
the compensation paid or to be paid and shall, as to this right, be subrogated to any right or claim
that the injured or diseased veteran, his or her guardian, personal representative, estate,
dependents, or survivors has against such third person to the extent of the cost of the
compensation paid or to be paid.
  ``(b)  Enforcement procedure; intervention; joinder of parties; State or Federal court
proceedings._ The Secretary may, to enforce such right under subsection (a) of this section:
  ``(1) intervene or join in any action or proceeding brought by the injured or diseased veteran, his
or her guardian, personal representative, estate, dependents, or survivors, against the participating
tobacco product manufacturer, distributor, or retailer of a tobacco product who is liable for the
injury or disease; or
  ``(2) if such action or proceeding is not commenced within six months after the first day on
which compensation is paid by the Secretary in connection with the injury or disease involved,
institute and prosecute legal proceedings against the participating tobacco product manufacturer,
distributor, or retailer of a tobacco product who is liable for the injury or disease, in a State or
Federal court, either alone (in its own name or in the name of the injured veteran, his or her
guardian, personal representative, estate, dependents, or survivors) or in conjunction with the
injured or diseased veteran, his or her guardian, personal representative, estate, dependents, or
survivors.
  ``(c)  Credits to appropriations._ Any amount recovered or collected under this section for
compensation paid by the Secretary shall be credited to a revolving fund established in the
Treasury of the United States known as the Department of Veterans Affairs Tobacco Recovery
Fund (hereafter called the Fund). The Fund shall be available to the Secretary without fiscal year
limitation for purposes of veterans benefit programs, including administrative costs. The Secretary
may transfer such funds as deemed necessary to the various Department of Veterans Affairs
appropriations, which shall remain available until expended.
  ``(d)  Definition._ For purposes of this section, the term participating tobacco product
manufacturer, distributor, or retailer of a tobacco product means a manufacturer, distributor, or
retailer of tobacco products that has entered into a consent decree as such term is defined in
section 701 of the National Tobacco Policy and Youth Smoking Reduction Act and that is a
signatory to the Protocol as such term is defined in section 6 of that Act.
``  9102. Regulations
  ``(a)  Determination and establishment of present value of compensation to be paid._ The
Secretary may prescribe regulations to carry out this chapter, including regulations with respect to
the determination and establishment of the present value of compensation to be paid to an injured
or diseased veteran or his or her surviving spouse, child, or parent.
  ``(b)  Settlement, release and waiver of claims._ To the extent prescribed by regulations under
subsection (a) of this section, the Secretary may_
  ``(1) compromise, or settle and execute a release of, any claim which the Secretary has by virtue
of the right established by section 9101 of this title; or
  ``(2) waive any such claim, in whole or in part, for the convenience of the Government, or if he
or she determines that collection would result in undue hardship upon the veteran who suffered
the injury or disease or his or her surviving spouse, child or parent resulting in payment of
compensation.
  ``(c)  Damages recoverable for personal injury unaffected._ No action taken by the Secretary in
connection with the rights afforded under this chapter shall operate to deny to the injured veteran
or his or her surviving spouse, child or parent the recovery for that portion of his or her damage
not covered hereunder.
``  9103. Limitation or repeal of other provisions for recovery ofcompensation
  ``This chapter does not limit or repeal any other provision of law providing for recovery by the
Secretary of the cost of compensation described in section 9101 of this title.
``  9104. Exemption from annual limitation on damages
  ``Any amount recovered under section 9101 of this title for compensation paid or to be paid by
the Secretary for disability or death from injury or disease attributable in whole or in part to the
use of tobacco products by a veteran during the veterans active military, naval, or air service shall
not be subject to the limitation on the annual amount of damages for which the participating
tobacco product manufacturers, distributors, and retailers may be found liable as provided in the
National Tobacco Policy and Youth Smoking Reduction Act and shall not be counted in
computing the annual amount of damages for purposes of that section.''.