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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1343 Introduced in Senate (IS)]

105th CONGRESS
  1st Session
                                S. 1343

 To amend the Internal Revenue Code of 1986 to increase the excise tax 
  rate on tobacco products and deposit the resulting revenues into a 
    Public Health and Education Resource Trust Fund, and for other 
                               purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            October 29, 1997

Mr. Lautenberg introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To amend the Internal Revenue Code of 1986 to increase the excise tax 
  rate on tobacco products and deposit the resulting revenues into a 
    Public Health and Education Resource Trust Fund, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Public Health and 
Education Resource (PHAER) Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
       TITLE I--IMPOSITION OF INCREASED TAXES ON TOBACCO PRODUCTS

Sec. 101. Increase in excise tax rate on tobacco products in addition 
                            to such increase contained in the Balanced 
                            Budget Act of 1997.
Sec. 102. Tax treatment for certain tobacco-related expenses.
                       TITLE II--PHAER TRUST FUND

Sec. 201. Public Health and Education Resource Trust Fund.
     TITLE III--FEDERAL STANDARDS WITH RESPECT TO TOBACCO PRODUCTS

Sec. 301. Federal standards with respect to tobacco products.
                     TITLE IV--SENSE OF THE SENATE

Sec. 401. Sense of the Senate regarding comprehensive tobacco 
                            legislation.

       TITLE I--IMPOSITION OF INCREASED TAXES ON TOBACCO PRODUCTS

SEC. 101. INCREASE IN EXCISE TAX RATE ON TOBACCO PRODUCTS IN ADDITION 
              TO SUCH INCREASE CONTAINED IN THE BALANCED BUDGET ACT OF 
              1997.

    (a) Cigarettes.--Subsection (b) of section 5701 of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``$12 per thousand ($10 per thousand on 
        cigarettes removed during 1991 or 1992);'' in paragraph (1) and 
        inserting ``the applicable rate per thousand determined in 
        accordance with the following table:

``In the case of cigarettes removed             The applicable rate is:
        during:
    1998..........................................              $12.00 
    1999..........................................              $37.00 
    2000..........................................              $67.00 
    2001..........................................              $92.00 
    2002..........................................           $94.50.'';
        and
            (2) by striking paragraph (2) and inserting the following:
            ``(2) Large cigarettes.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), on cigarettes, weighing more than 3 
                pounds per thousand, the applicable rate per thousand 
                determined in accordance with the following table:

``In the case of cigarettes removed             The applicable rate is:
        during:
    1998..........................................              $25.20 
    1999..........................................              $77.70 
    2000..........................................             $140.70 
    2001..........................................             $193.20 
    2002..........................................             $198.45.
                    ``(B) Exception.--On cigarettes more than 6\1/2\ 
                inches in length, at the rate prescribed for cigarettes 
                weighing not more than 3 pounds per thousand, counting 
                each 2\3/4\ inches, or fraction thereof, of the length 
                of each as one cigarette.''
    (b) Cigars.--Subsection (a) of section 5701 of such Code is 
amended--
            (1) by striking ``$1.125 cents per thousand (93.75 cents 
        per thousand on cigars removed during 1991 or 1992),'' in 
        paragraph (1) and inserting ``the applicable rate per thousand 
        determined in accordance with the following table:

      

           ``In the case of       The applicable rate is:               
            cigars removed                                              
            during:                                                     
             1998...............  $1.125 cents                          
             1999...............  $3.4687 cents                         
             2000...............  $6.2822 cents                         
             2001...............  $8.6264 cents                         
             2002...............  $8.8588 cents.'';                     
                                                                        

        and
            (2) by striking paragraph (2) and inserting the following:
            ``(2) Large cigars.--On cigars, weighing more than 3 pounds 
        per thousand, the applicable percentage of the price for which 
        sold but not more that the applicable rate per thousand 
        determined in accordance with the following table:
      

                                                                                                                
    In the case of cigars removed                                                                               
               during:                    The applicable percentage is:            The applicable rate is:      
                                                                                                                
1998                                                        12.750%                                $30.00       
1999                                                        39.312%                                $92.50       
2000                                                        71.189%                               $167.50       
2001                                                        97.753%                               $230.00       
2002                                                       100.407%                            $236.25.''       
                                                                                                                

    (c) Cigarette Papers.--Subsection (c) of section 5701 of such Code 
is amended to read as follows:
    ``(c) Cigarette Papers.--
            ``(1) In general.--Except as provided in paragraph (2), on 
        each book or set of cigarette papers containing more than 25 
        papers, manufactured in or imported into the United States, 
        there shall be imposed a tax of the applicable rate for each 50 
        papers or fractional part thereof as determined in accordance 
        with the following table:

``In the case of cigarette papers               The applicable rate is:
        removed during:
    1998..........................................            .75 cent 
    1999..........................................          2.31 cents 
    2000..........................................          4.18 cents 
    2001..........................................          5.74 cents 
    2002..........................................          5.91 cents.
            ``(2) Exception.--If cigarette papers measure more than 
        6\1/2\ inches in length, such cigarette papers shall be taxable 
        at the rate prescribed, counting each 2\3/4\ inches, or 
        fraction thereof, of the length of each as one cigarette 
        paper.''
    (d) Cigarette Tubes.--Subsection (d) of section 5701 of such Code 
is amended to read as follows:
    ``(d) Cigarette Tubes.--
            ``(1) In general.--Except as provided in paragraph (2), on 
        cigarette tubes, manufactured in or imported into the United 
        States, there shall be imposed a tax of the applicable rate for 
        each 50 tubes or fractional part thereof as determined in 
        accordance with the following table:

``In the case of cigarette tubes                The applicable rate is:
        removed during:
    1998..........................................          1.50 cents 
    1999..........................................          4.62 cents 
    2000..........................................          8.39 cents 
    2001..........................................         11.53 cents 
    2002..........................................         11.82 cents.
            ``(2) Exception.--If cigarette tubes measure more than 6\1/
        2\ inches in length, such cigarette tubes shall be taxable at 
        the rate prescribed, counting each 2\3/4\ inches, or fraction 
        thereof, of the length of each as one cigarette tube.''
    (e) Smokeless Tobacco.--Paragraphs (1) and (2) of subsection (e) of 
section 5701 of such Code are is amended to read as follows:
            ``(1) Snuff.--On snuff, the applicable rate per pound 
        determined in accordance with the following table (and a 
        proportionate tax at the like rate on all fractional parts of a 
        pound):

``In the case of snuff removed                  The applicable rate is:
        during:
    1998..........................................            36 cents 
    1999..........................................               $1.11 
    2000..........................................               $2.01 
    2001..........................................               $2.76 
    2002..........................................        $2.835 cents.
            ``(2) Chewing tobacco.--On chewing tobacco, the applicable 
        rate per pound determined in accordance with the following 
        table (and a proportionate tax at the like rate on all 
        fractional parts of a pound):

``In the case of chewing tobacco                The applicable rate is:
        removed during:
    1998..........................................            12 cents 
    1999..........................................            37 cents 
    2000..........................................            67 cents 
    2001..........................................            92 cents 
    2002..........................................        94.5 cents.''
    (f) Pipe Tobacco.--Subsection (f) of section 5701 of such Code is 
amended to read as follows:
    ``(f) Pipe Tobacco.--On pipe tobacco, manufactured in or imported 
into the United States, there shall be imposed a tax of the applicable 
rate per pound determined in accordance with the following table (and a 
proportionate tax at the like rate on all fractional parts of a pound):

      

           ``In the case of pipe  The applicable rate is:               
            tobacco removed                                             
            during:                                                     
             1998...............  67.5 cents                            
             1999...............  $2.0812 cents                         
             2000...............  $3.7705 cents                         
             2001...............  $5.1774 cents                         
             2002...............  $5.3157 cents.''                      
                                                                        

    (g) Imposition of Excise Tax on Manufacture or Importation of Roll-
Your-Own Tobacco.--
            (1) In general.--Section 5701 of such Code (relating to 
        rate of tax) is amended by redesignating subsection (g) as 
        subsection (h) and by inserting after subsection (f) the 
        following new subsection:
    ``(g) Roll-Your-Own Tobacco.--On roll-your-own tobacco, 
manufactured in or imported into the United States, there shall be 
imposed a tax of the applicable rate per pound determined in accordance 
with the following table (and a proportionate tax at the like rate on 
all fractional parts of a pound):

      

           ``In the case of roll- The applicable rate is:               
            your-own tobacco                                            
            removed during:                                             
             1998...............  67.5 cents                            
             1999...............  $2.0812 cents                         
             2000...............  $3.7705 cents                         
             2001...............  $5.1774 cents                         
             2002...............  $5.3157 cents.''                      
                                                                        

            (2) Roll-your-own tobacco.--Section 5702 of such Code 
        (relating to definitions) is amended by adding at the end the 
        following new subsection:
    ``(p) 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.''
            (3) Technical amendments.--
                    (A) Subsection (c) of section 5702 of such Code is 
                amended by striking ``and pipe tobacco'' and inserting 
                ``pipe tobacco, and roll-your-own tobacco''.
                    (B) Subsection (d) of section 5702 of such Code is 
                amended--
                            (i) in the material preceding paragraph 
                        (1), by striking ``or pipe tobacco'' and 
                        inserting ``pipe tobacco, or roll-your-own 
                        tobacco'', and
                            (ii) by striking paragraph (1) and 
                        inserting the following new paragraph:
            ``(1) a person who produces cigars, cigarettes, smokeless 
        tobacco, pipe tobacco, or roll-your-own tobacco solely for the 
        person's own personal consumption or use, and''.
                    (C) The chapter heading for chapter 52 of such Code 
                is amended to read as follows:

    ``CHAPTER 52--TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES''.

                    (D) The table of chapters for subtitle E of such 
                Code is amended by striking the item relating to 
                chapter 52 and inserting the following new item:

                              ``Chapter 52. Tobacco products and 
                                        cigarette papers and tubes.''
    (h) Inflation Adjustment of Rates and Floor Stocks Taxes.--Section 
5701 of such Code, as amended by subsection (g), is amended by 
redesignating subsection (h) as subsection (j) and by inserting after 
subsection (g) the following:
    ``(h) Inflation adjustment.--In the case of a calendar year after 
2002, the dollar amount contained in the table in each of the preceding 
subsections (and the percentage contained in the table contained in 
subsection (b)(2)) applicable to the preceding calendar year (after the 
application of this subsection) shall be increased by an amount equal 
to--
            ``(1) such dollar amount (or percentage), multiplied by
            ``(2) the greatest of--
                    ``(A) the cost-of-living adjustment determined 
                under section 1(f)(3) for such calendar year by 
                substituting `the second preceding calendar year' for 
                `calendar year 1992' in subparagraph (B) thereof,
                    ``(B) the medical consumer price index for such 
                calendar year determined in the same manner as the 
                adjustment described in subparagraph (A), or
                    ``(C) 3 percent.
    ``(j) Floor Stocks Taxes.--
            ``(1) Imposition of tax.--On tobacco products and cigarette 
        papers and tubes manufactured in or imported into the United 
        States which are removed before any tax increase date, and held 
        on such date for sale by any person, there is hereby imposed a 
        tax in an amount equal to the excess of--
                    ``(A) the tax which would be imposed under any 
                preceding subsection of this section on the article if 
the article had been removed on such date, over
                    ``(B) the prior tax (if any) imposed under such 
                subsection on such article.
            ``(2) Liability for tax and method of payment.--
                    ``(A) Liability for tax.--A person holding 
                cigarettes on any tax increase date, to which any tax 
                imposed by paragraph (1) applies shall be liable for 
                such tax.
                    ``(B) Method of payment.--The tax imposed by 
                paragraph (1) shall be paid in such manner as the 
                Secretary shall prescribe by regulations.
                    ``(C) Time for payment.--The tax imposed by 
                paragraph (1) shall be paid on or before April 1 
                following any tax increase date.
            ``(3) Articles in foreign trade zones.--Notwithstanding the 
        Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a) and any 
        other provision of law, any article which is located in a 
        foreign trade zone on any tax increase date, shall be subject 
        to the tax imposed by paragraph (1) if--
                    ``(A) internal revenue taxes have been determined, 
                or customs duties liquidated, with respect to such 
                article before such date pursuant to a request made 
                under the 1st proviso of section 3(a) of such Act, or
                    ``(B) such article is held on such date under the 
                supervision of a customs officer pursuant to the 2d 
                proviso of such section 3(a).
            ``(4) Tax increase date.--The term ``tax increase date'' 
        means January 1.
            ``(5) Controlled groups.--Rules similar to the rules of 
        section 5061(e)(3) shall apply for purposes of this subsection.
            ``(6) Other laws applicable.--All provisions of law, 
        including penalties, applicable with respect to the taxes 
        imposed by the preceding subsections of this section shall, 
        insofar as applicable and not inconsistent with the provisions 
        of this subsection, apply to the floor stocks taxes imposed by 
        paragraph (1), to the same extent as if such taxes were imposed 
        by such subsections. The Secretary may treat any person who 
        bore the ultimate burden of the tax imposed by paragraph (1) as 
        the person to whom a credit or refund under such provisions may 
        be allowed or made.''
    (i) Modifications of Certain Tobacco Tax Provisions.--
            (1) Exemption for exported tobacco products and cigarette 
        papers and tubes to apply only to articles marked for export.--
                    (A) Subsection (b) of section 5704 of such Code is 
                amended by adding at the end the following new 
                sentence: ``Tobacco products and cigarette papers and 
                tubes may not be transferred or removed under this 
                subsection unless such products or papers and tubes 
                bear such marks, labels, or notices as the Secretary 
                shall by regulations prescribe.''
                    (B) Section 5761 of such Code is amended by 
                redesignating subsections (c) and (d) as subsections 
                (d) and (e), respectively, and by inserting after 
                subsection (b) the following new subsection:
    ``(c) Sale of Tobacco Products and Cigarette Papers and Tubes for 
Export.--Except as provided in subsections (b) and (d) of section 
5704--
            ``(1) every person who sells, relands, or receives within 
        the jurisdiction of the United States any tobacco products or 
        cigarette papers or tubes which have been labeled or shipped 
        for exportation under this chapter,
            ``(2) every person who sells or receives such relanded 
        tobacco products or cigarette papers or tubes, and
            ``(3) every person who aids or abets in such selling, 
        relanding, or receiving,
shall, in addition to the tax and any other penalty provided in this 
title, be liable for a penalty equal to the greater of $1,000 or 5 
times the amount of the tax imposed by this chapter. All tobacco 
products and cigarette papers and tubes relanded within the 
jurisdiction of the United States, and all vessels, vehicles, and 
aircraft used in such relanding or in removing such products, papers, 
and tubes from the place where relanded, shall be forfeited to the 
United States.''
                    (C) Subsection (a) of section 5761 of such Code is 
                amended by striking ``subsection (b)'' and inserting 
                ``subsection (b) or (c)''.
                    (D) Subsection (d) of section 5761 of such Code, as 
                redesignated by subparagraph (B), is amended by 
                striking ``The penalty imposed by subsection (b)'' and 
                inserting ``The penalties imposed by subsections (b) 
                and (c)''.
                    (E)(i) Subpart F of chapter 52 of such Code is 
                amended by adding at the end the following new section:

``SEC. 5754. RESTRICTION ON IMPORTATION OF PREVIOUSLY EXPORTED TOBACCO 
              PRODUCTS.

    ``(a) In General.--Tobacco products and cigarette papers and tubes 
previously exported from the United States may be imported or brought 
into the United States only as provided in section 5704(d). For 
purposes of this section, section 5704(d), section 5761, and such other 
provisions as the Secretary may specify by regulations, references to 
exportation shall be treated as including a reference to shipment to 
the Commonwealth of Puerto Rico.
    ``(b) Cross Reference.--

                                ``For penalty for the sale of tobacco 
products and cigarette papers and tubes in the United States which are 
labeled for export, see section 5761(c).''
                    (ii) The table of sections for subpart F of chapter 
                52 of such Code is amended by adding at the end the 
                following new item:

                              ``Sec. 5754. Restriction on importation 
                                        of previously exported tobacco 
                                        products.''
            (2) Importers required to be qualified.--
                    (A) Sections 5712, 5713(a), 5721, 5722, 5762(a)(1), 
                and 5763 (b) and (c) of such Code are each amended by 
                inserting ``or importer'' after ``manufacturer''.
                    (B) The heading of subsection (b) of section 5763 
                of such Code is amended by inserting ``Qualified 
                Importers,'' after ``Manufacturers,''.
                    (C) The heading for subchapter B of chapter 52 of 
                such Code is amended by inserting ``and Importers'' 
                after ``Manufacturers''.
                    (D) The item relating to subchapter B in the table 
                of subchapters for chapter 52 of such Code is amended 
                by inserting ``and importers'' after ``manufacturers''.
            (3) Books of 25 or fewer cigarette papers subject to tax.--
        Subsection (c) of section 5701 of such Code is amended by 
        striking ``On each book or set of cigarette papers containing 
        more than 25 papers,'' and inserting ``On cigarette papers,''.
            (4) Storage of tobacco products.--Subsection (k) of section 
        5702 of such Code is amended by inserting ``under section 
        5704'' after ``internal revenue bond''.
            (5) Authority to prescribe minimum manufacturing activity 
        requirements.--Section 5712 of such Code is amended by striking 
        ``or'' at the end of paragraph (1), by redesignating paragraph 
        (2) as paragraph (3), and by inserting after paragraph (1) the 
        following new paragraph:
            ``(2) the activity proposed to be carried out at such 
        premises does not meet such minimum capacity or activity 
        requirements as the Secretary may prescribe, or''.
    (j) Repeal of Duplicative Provisions.--Section 9302 (other than 
subsection (i)(2)) of the Balanced Budget Act of 1997 is repealed.
    (k) Effective Date.--The amendments and repeal made by this section 
shall apply to articles removed (as defined in section 5702(k) of the 
Internal Revenue Code of 1986, as amended by this section) after 
December 31, 1997.

SEC. 102. TAX TREATMENT FOR CERTAIN TOBACCO-RELATED EXPENSES.

    (a) In General.--Section 275(a) of the Internal Revenue Code of 
1986 (relating to certain taxes) is amended by inserting after 
paragraph (6) the following:
            ``(7) Taxes imposed by chapter 52, but only in an amount 
        determined at rates in excess of the rates of such taxes 
        effective in 1998.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1998.

                       TITLE II--PHAER TRUST FUND

SEC. 201. PUBLIC HEALTH AND EDUCATION RESOURCE TRUST FUND.

    (a) In General.--Subchapter A of chapter 98 of the Internal Revenue 
Code of 1986 (relating to trust fund code) is amended by adding at the 
end the following new section:

``SEC. 9512. PUBLIC HEALTH AND EDUCATION RESOURCE TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Public Health and 
Education Resource Trust Fund' (hereafter referred to in this section 
as the `PHAER Trust Fund'), consisting of such amounts as may be 
appropriated or transferred to the Trust Fund as provided in this 
section or section 9602(b).
    ``(b) Transfers to Trust Fund.--There is hereby appropriated to the 
Trust Fund an amount equivalent to the net increase in revenues 
received in the Treasury attributable to the amendments made by section 
2 of the Public Health and Education Resource (PHAER) Act as estimated 
by the Secretary.
    ``(c) Obligations From Trust Fund.--
            ``(1) State programs.--
                    ``(A) In general.--An applicable percentage of 75 
                percent of the amounts available in the Trust Fund in a 
                fiscal year shall be distributed by the Secretary of 
                Health and Human Services to each State meeting the 
                requirements of subparagraphs (C) and (D) to be used by 
                such State and by local government entities within such 
                State in such fiscal year and the succeeding fiscal 
                year in the following manner:
                            ``(i) Not less than 10 nor more than 30 
                        percent of such amounts to State and local 
                        school and community-based tobacco education, 
                        prevention, and treatment programs.
                            ``(ii) Not less than 10 nor more than 30 
                        percent of such amounts to State and local 
                        smoking cessation programs and services, 
                        including pharmacological therapies.
                            ``(iii) Not less than 10 nor more than 30 
                        percent of such amounts to State and local 
                        counter advertising programs.
                            ``(iv) Not less than 10 nor more than 25 
                        percent of such amounts to the State Children's 
                        Health Insurance Program under title XXI of the 
                        Social Security Act (42 U.S.C. 1397aa et seq.) 
                        to be in addition to the amount appropriated 
                        under section 2104 of such Act.
                            ``(v) Not less than 5 nor more than 10 
                        percent of such amounts to--
                                    ``(I) the Special Supplemental Food 
                                Program for Women, Infants, and 
                                Children under section 17 of the Child 
                                Nutrition Act of 1966 (42 U.S.C. 1786) 
                                to be in addition to the amount 
                                appropriated under such section, or
                                    ``(II) the Maternal and Child 
                                Health Services Block Grant program 
                                under title V of the Social Security 
                                Act (42 U.S.C. 701 et seq.) to be in 
                                addition to the amount appropriated 
                                under such title, or
                                    ``(III) a combination of both 
                                programs as determined by the State.
                            ``(vi) Not less than 1 nor more than 3 
                        percent of such amounts to the American Stop 
                        Smoking Intervention Study for Cancer 
                        Prevention (ASSIST) program for such State or 
other State or local community-based tobacco control programs.
                            ``(vii) Not more than 5 percent of such 
                        amounts to a State general health care block 
                        grant program.
                    ``(B) Allocation rules.--For purposes of 
                subparagraph (A), the applicable percentage for any 
                State is determined in accordance with the following 
                table:

    State                                         Applicable Percentage
        Alabama...................................            1.270390 
        Alaska....................................            0.241356 
        Arizona...................................            1.163883 
        Arkansas..................................            0.751011 
        California................................            8.805641 
        Colorado..................................            1.054018 
        Connecticut...............................            1.596937 
        Delaware..................................            0.227018 
        District of Columbia......................            0.534487 
        Florida...................................            3.590667 
        Georgia...................................            2.007112 
        Hawaii....................................            0.642527 
        Idaho.....................................            0.257835 
        Illinois..................................            4.272898 
        Indiana...................................            1.714594 
        Iowa......................................            0.758686 
        Kansas....................................            0.762230 
        Kentucky..................................            1.875439 
        Louisiana.................................            1.916886 
        Maine.....................................            0.870740 
        Maryland..................................            2.051849 
        Massachusetts.............................            3.700447 
        Michigan..................................            4.431824 
        Minnesota.................................            2.474364 
        Mississippi...............................            0.851450 
        Missouri..................................            1.659116 
        Montana...................................            0.335974 
        Nebraska..................................            0.445356 
        Nevada....................................            0.307294 
        New Hampshire.............................            0.552048 
        New Jersey................................            3.494187 
        New Mexico................................            0.465816 
        New York..................................           14.529380 
        North Carolina............................            2.097625 
        North Dakota..............................            0.250758 
        Ohio......................................            4.690156 
        Oklahoma..................................            0.841972 
        Oregon....................................            1.092920 
        Pennsylvania..............................            5.233270 
        Rhode Island..............................            0.821727 
        South Carolina............................            0.883628 
        South Dakota..............................            0.234849 
        Tennessee.................................            2.479873 
        Texas.....................................            4.451382 
        Utah......................................            0.330016 
        Vermont...................................            0.370244 
        Virginia..................................            1.373860 
        Washington................................            1.794612 
        West Virginia.............................            1.003660 
        Wisconsin.................................            2.098696 
        Wyoming...................................            0.122405 
        American Samoa............................            0.008681 
        N. Mariana Islands........................            0.001519 
        Guam......................................            0.006506 
        U.S. Virgin Islands.......................            0.004804 
        Puerto Rico...............................            0.193175.
                    ``(C) State plans for certain allocations.--Each 
                State, working in collaboration with local government 
                entities, shall submit a plan to the Secretary of 
                Health and Human Services for approval for an 
                allocation under the programs described in subparagraph 
                (A), specifying the percentage share for each program. 
                Each State plan shall provide for an equitable 
                allocation of funds to local government entities, 
                specifically in relation to local government tobacco-
                related health care needs and anti-tobacco education, 
                prevention, and control activities. If a State fails to 
                provide any component of a State plan with respect to 
                any program allocation or if the Secretary of Health 
                and Human Services disapproves any such component, the 
                Secretary may make the allocation for such program to 1 
                or more local government or private entities located in 
                such State pursuant to plans submitted by such entities 
                and approved by the Secretary.
                    ``(D) Prohibition of supplantation of state 
                funds.--Each State shall demonstrate to the 
                satisfaction of the Secretary of Health and Human 
                Services that an allocation to a State under a program 
                described in subparagraph (A) in any fiscal year shall 
                be used to supplement, not supplant, existing funding 
                for such program.
            ``(2) Federal programs.--
                    ``(A) In general.--Twenty-five percent of the 
                amounts available in the Trust Fund in a fiscal year 
                shall be distributed in the following manner:
                            ``(i) 10 percent of such amounts to the 
                        Office of the Commissioner of Food and Drug 
                        Administration to be allocated at the 
                        Commissioner's discretion to conduct tobacco 
                        control activities.
                            ``(ii) 25 percent of such amounts to the 
                        Office of the Secretary of Agriculture to be 
                        allocated at the Secretary's discretion to 
                        protect the financial well-being of tobacco 
                        farmers, their families, and their communities.
                            ``(iii) 20 percent of such amounts to be 
                        allocated at the discretion of the Secretary of 
                        Health and Human Services to--
                                    ``(I) the Office of the Director of 
                                the National Institutes of Health to be 
                                allocated at the Director's discretion 
                                to conduct disease research, and
                                    ``(II) the Office of the Director 
                                of the Centers for Disease Control and 
                                Prevention to be allocated at the 
                                Director's discretion to decrease 
                                smoking.
                            ``(iv) 20 percent of such amounts to the 
                        Office of the Secretary of Health and Human 
                        Services to be allocated at the Secretary's 
                        discretion--
                                    ``(I) to conduct prevention 
                                programs resulting from the study 
under section 4108 of the Balanced Budget Act of 1997, and
                                    ``(II) to increase the Federal 
                                payment for the coverage of qualified 
                                medicare beneficiaries under section 
                                1902(a)(10)(E)(i) of the Social 
                                Security Act (42 U.S.C. 
                                1396a(a)(10)(E)(i)) and specified low-
                                income medicare beneficiaries under 
                                section 1902(a)(10)(E)(iii) of such Act 
                                (42 U.S.C. 1396a(a)(10)(E)(iii)).
                            ``(v) 20 percent of such amounts to fund a 
                        national counter advertising program.
                            ``(vi) 2 percent of such amounts to the 
                        Office of the Administrator of the Agency for 
                        International Development to be allocated at 
                        the Administrator's discretion to strengthen 
                        international efforts to control tobacco.
                            ``(vii) 2 percent of such amounts to the 
                        Office of the Director of the Office of 
                        National Drug Control Policy to be allocated at 
                        the Director's discretion to conduct tobacco 
                        education and prevention programs.
                            ``(viii) 1 percent of such amounts to the 
                        Office of the Secretary of Veterans Affairs to 
                        be allocated at the Secretary's discretion to 
                        conduct tobacco education, intervention, and 
                        outreach programs.
                    ``(B) Grants and contracts fully funded in first 
                year.--With respect to any grant or contract funded by 
                amounts distributed under paragraph (1), the full 
                amount of the total obligation of such grant or 
                contract shall be funded in the first year of such 
                grant or contract, and shall remain available until 
                expended.''
    (b) Conforming Amendment.--The table of sections for such 
subchapter A is amended by adding at the end the following new item:

``Sec. 9512. Public Health and Education Resource Trust Fund.''

     TITLE III--FEDERAL STANDARDS WITH RESPECT TO TOBACCO PRODUCTS

SEC. 301. FEDERAL STANDARDS WITH RESPECT TO TOBACCO PRODUCTS.

    (a) Cigarettes.--Subsection (b) of section 5 of the Federal 
Cigarette Labeling And Advertising Act (15 U.S.C. 1334(b)) is repealed.
    (b) Smokeless Tobacco.--Subsection (b) of section 7 of the 
Comprehensive Smokeless Tobacco Health Education Act of 1986 (15 U.S.C. 
4406(b)) is repealed.

                     TITLE IV--SENSE OF THE SENATE

SEC. 401. SENSE OF THE SENATE REGARDING COMPREHENSIVE TOBACCO 
              LEGISLATION.

    It is the sense of the Senate that any final comprehensive tobacco 
legislation funded by the PHAER Trust Fund under section 9512 of the 
Internal Revenue Code of 1986, as added by section 201 of this Act, 
must include, at the very least, the following additional elements:
            (1) Stiff penalties that give the tobacco industry the 
        strongest possible incentive to stop targeting children.
            (2) Full authority for the Food and Drug Administration to 
        regulate tobacco like any other drug or device with sufficient 
        flexibility to meet changing circumstances.
            (3) Codification of the Food and Drug Administration's 
        initiative to prevent teen smoking and the imposition of 
        stronger restrictions on youth access and advertising 
        consistent with the United States Constitution.
            (4) Broad disclosure of tobacco industry documents, 
        including documents that have been hidden under false claims of 
        the attorney-client privilege.
            (5) Efforts to ensure that the tobacco industry stops 
        marketing and promoting tobacco to children, including 
        comprehensive corporate compliance programs.
            (6) Elimination of secondhand tobacco smoke in public and 
        private buildings in which 10 or more people regularly enter.
            (7) Disclosure of the ingredients and constituents of all 
        tobacco products to the public and the imposition of more 
        prominent health warning labels on packaging to send a strong 
        and clear message to children about the dangers of tobacco use.
            (8) A prohibition on the use of Federal Government 
        resources to weaken nondiscriminatory public health laws or 
        promote tobacco sales abroad.
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