# Public Law 111-31/Division A/Title III

TITLE III—PREVENTION OF ILLICIT TRADE IN TOBACCO PRODUCTS

### SEC. 301. LABELING, RECORDKEEPING, RECORDS INSPECTION.

    Chapter IX of the Federal Food, Drug, and Cosmetic Act, as added by section 101, is further amended by adding at the end the following:
          ``SEC. 920. Labeling, recordkeeping, records inspection.
             ``(a) Origin Labeling.—
                ``(1) Requirement.—Beginning 1 year after the date of enactment of the Family Smoking Prevention and Tobacco Control Act, the label, packaging, and shipping containers of tobacco products other than cigarettes for introduction or delivery for introduction into interstate commerce in the United States shall bear the statement ‘sale only allowed in the United States’. Beginning 15 months after the issuance of the regulations required by section 4(d) of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1333), as amended by section 201 of Family Smoking Prevention and Tobacco Control Act, the label, packaging, and shipping containers of cigarettes for introduction or delivery for introduction into interstate commerce in the United States shall bear the statement ‘Sale only allowed in the United States’.
                ``(2) Effective date.—The effective date specified in paragraph (1) shall be with respect to the date of manufacture, provided that, in any case, beginning 30 days after such effective date, a manufacturer shall not introduce into the domestic commerce of the United States any product, irrespective of the date of manufacture, that is not in conformance with such paragraph.
             ``(b) Regulations Concerning Recordkeeping for Tracking and Tracing.—
                ``(1) In general.—The Secretary shall promulgate regulations regarding the establishment and maintenance of records by any person who manufactures, processes, transports, distributes, receives, packages, holds, exports, or imports tobacco products.
                ``(2) Inspection.—In promulgating the regulations described in paragraph (1), the Secretary shall consider which records are needed for inspection to monitor the movement of tobacco products from the point of manufacture through distribution to retail outlets to assist in investigating potential illicit trade, smuggling, or counterfeiting of tobacco products.
                ``(3) Codes.—The Secretary may require codes on the labels of tobacco products or other designs or devices for the purpose of tracking or tracing the tobacco product through the distribution system.
                ``(4) Size of business.—The Secretary shall take into account the size of a business in promulgating regulations under this section.
                ``(5) Recordkeeping by retailers.—The Secretary shall not require any retailer to maintain records relating to individual purchasers of tobacco products for personal consumption.
             ``(c) Records Inspection.—If the Secretary has a reasonable belief that a tobacco product is part of an illicit trade or smuggling or is a counterfeit product, each person who manufactures, processes, transports, distributes, receives, holds, packages, exports, or imports tobacco products shall, at the request of an officer or employee duly designated by the Secretary, permit such officer or employee, at reasonable times and within reasonable limits and in a reasonable manner, upon the presentation of appropriate credentials and a written notice to such person, to have access to and copy all records (including financial records) relating to such article that are needed to assist the Secretary in investigating potential illicit trade, smuggling, or counterfeiting of tobacco products. The Secretary shall not authorize an officer or employee of the government of any of the several States to exercise authority under the preceding sentence on Indian country without the express written consent of the Indian tribe involved.
             ``(d) Knowledge of Illegal Transaction.—
                ``(1) Notification.—If the manufacturer or distributor of a tobacco product has knowledge which reasonably supports the conclusion that a tobacco product manufactured or distributed by such manufacturer or distributor that has left the control of such person may be or has been—
                   ``(A) imported, exported, distributed, or offered for sale in interstate commerce by a person without paying duties or taxes required by law; or
                   ``(B) imported, exported, distributed, or diverted for possible illicit marketing, the manufacturer or distributor shall promptly notify the Attorney General and the Secretary of the Treasury of such knowledge.
                ``(2) Knowledge defined.—For purposes of this subsection, the term ‘knowledge’ as applied to a manufacturer or distributor means—
                   ``(A) the actual knowledge that the manufacturer or distributor had; or
                   ``(B) the knowledge which a reasonable person would have had under like circumstances or which would have been obtained upon the exercise of due care.
             ``(e) Consultation.—In carrying out this section, the Secretary shall consult with the Attorney General of the United States and the Secretary of the Treasury, as appropriate.´´.

### SEC. 302. STUDY AND REPORT.

    (a) Study.—
       The Comptroller General of the United States shall conduct a study of cross-border trade in tobacco products to—
          (1) collect data on cross-border trade in tobacco products, including illicit trade and trade of counterfeit tobacco products and make recommendations on the monitoring of such trade;
          (2) collect data on cross-border advertising (any advertising intended to be broadcast, transmitted, or distributed from the United States to another country) of tobacco products and make recommendations on how to prevent or eliminate, and what technologies could help facilitate the elimination of, cross-border advertising; and
          (3) collect data on the health effects (particularly with respect to individuals under 18 years of age) resulting from cross-border trade in tobacco products, including the health effects resulting from—
                (A) the illicit trade of tobacco products and the trade of counterfeit tobacco products; and
                (B) the differing tax rates applicable to tobacco products.
    (b) Report.—
       Not later than 18 months after the date of enactment of this Act, the Comptroller General of the United States shall submit to the Committee on Health, Education, Labor, and Pensions of the Senate and the Committee on Energy and Commerce of the House of Representatives a report on the study described in subsection (a).
    (c) Definition.—
       In this section:
          (1) The term “cross-border trade” means trade across a border of the United States, a State or Territory, or Indian country.
          (2) The term “Indian country” has the meaning given to such term in section 1151 of title 18, United States Code.
          (3) The terms “State” and “Territory” have the meanings given to those terms in section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321).