II

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Public Health and Education Resource (PHAER) Act’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:

Sec. 1. Short title; table of contents.
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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.

1 TITLE I—IMPOSITION OF IN2 CREASED TAXES ON TO3 BACCO PRODUCTS

4 SEC. 101. INCREASE IN EXCISE TAX RATE ON TOBACCO

5 PRODUCTS IN ADDITION TO SUCH INCREASE

6 CONTAINED IN THE BALANCED BUDGET ACT

7 OF 1997.

8 (a) CIGARETTES.—Subsection (b) of section 5701 of

9 the Internal Revenue Code of 1986 is amended—

10 (1) by striking ‘‘$12 per thousand ($10 per

11 thousand on cigarettes removed during 1991 or

12 1992);’’ in paragraph (1) and inserting ‘‘the applica13 ble rate per thousand determined in accordance with

14 the following table:

‘‘In the case of cigarettes removed

during:

The applicable rate is:

1998 ......................................................................................... $12.00

1999 ......................................................................................... $37.00

2000 ......................................................................................... $67.00

2001 ......................................................................................... $92.00

2002 ......................................................................................... $94.50.’’;
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1 and

2 (2) by striking paragraph (2) and inserting the

3 following:

4 ‘‘(2) LARGE CIGARETTES.—

5 ‘‘(A) IN GENERAL.—Except as provided in

6 subparagraph (B), on cigarettes, weighing more

7 than 3 pounds per thousand, the applicable rate

8 per thousand determined in accordance with the

9 following table:

‘‘In the case of cigarettes removed

during:

The applicable rate is:

1998 ......................................................................................... $25.20

1999 ......................................................................................... $77.70

2000 ......................................................................................... $140.70

2001 ......................................................................................... $193.20

2002 ......................................................................................... $198.45.

10 ‘‘(B) EXCEPTION.—On cigarettes more

than 61 11 ⁄2 inches in length, at the rate pre12 scribed for cigarettes weighing not more than 3

pounds per thousand, counting each 23 13 ⁄4 inches,

14 or fraction thereof, of the length of each as one

15 cigarette.’’

16 (b) CIGARS.—Subsection (a) of section 5701 of such

17 Code is amended—

18 (1) by striking ‘‘$1.125 cents per thousand

19 (93.75 cents per thousand on cigars removed during

20 1991 or 1992),’’ in paragraph (1) and inserting ‘‘the
4

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1 applicable rate per thousand determined in accord2 ance with the following table:

‘‘In the case of cigars removed during:The applicable

rate is:

1998 ........................................................... $1.125 cents

1999 ........................................................... $3.4687 cents

2000 ........................................................... $6.2822 cents

2001 ........................................................... $8.6264 cents

2002 ........................................................... $8.8588 cents.’’;

3 and

4 (2) by striking paragraph (2) and inserting the

5 following:

6 ‘‘(2) LARGE CIGARS.—On cigars, weighing more

7 than 3 pounds per thousand, the applicable percent8 age of the price for which sold but not more that the

9 applicable rate per thousand determined in accord10 ance 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.’’

11 (c) CIGARETTE PAPERS.—Subsection (c) of section

12 5701 of such Code is amended to read as follows:

13 ‘‘(c) CIGARETTE PAPERS.—

14 ‘‘(1) IN GENERAL.—Except as provided in para15 graph (2), on each book or set of cigarette papers

16 containing more than 25 papers, manufactured in or

17 imported into the United States, there shall be im-
5

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1 posed a tax of the applicable rate for each 50 papers

2 or fractional part thereof as determined in accord3 ance with the following table:

‘‘In the case of cigarette papers

removed during:

The applicable rate is:

1998 ......................................................................................... .75 cent

1999 ......................................................................................... 2.31 cents

2000 ......................................................................................... 4.18 cents

2001 ......................................................................................... 5.74 cents

2002 ......................................................................................... 5.91 cents.

4 ‘‘(2) EXCEPTION.—If cigarette papers measure

more than 61 5 ⁄2 inches in length, such cigarette pa6 pers shall be taxable at the rate prescribed, counting

each 23 7 ⁄4 inches, or fraction thereof, of the length of

8 each as one cigarette paper.’’

9 (d) CIGARETTE TUBES.—Subsection (d) of section

10 5701 of such Code is amended to read as follows:

11 ‘‘(d) CIGARETTE TUBES.—

12 ‘‘(1) IN GENERAL.—Except as provided in para13 graph (2), on cigarette tubes, manufactured in or

14 imported into the United States, there shall be im15 posed a tax of the applicable rate for each 50 tubes

16 or fractional part thereof as determined in accord17 ance with the following table:

‘‘In the case of cigarette tubes removed during:The applicable rate is:

1998 ......................................................................................... 1.50 cents

1999 ......................................................................................... 4.62 cents

2000 ......................................................................................... 8.39 cents

2001 ......................................................................................... 11.53 cents

2002 ......................................................................................... 11.82 cents.
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1 ‘‘(2) EXCEPTION.—If cigarette tubes measure

more than 61 2 ⁄2 inches in length, such cigarette tubes

3 shall be taxable at the rate prescribed, counting each

23 4 ⁄4 inches, or fraction thereof, of the length of each

5 as one cigarette tube.’’

6 (e) SMOKELESS TOBACCO.—Paragraphs (1) and (2)

7 of subsection (e) of section 5701 of such Code are is

8 amended to read as follows:

9 ‘‘(1) SNUFF.—On snuff, the applicable rate per

10 pound determined in accordance with the following

11 table (and a proportionate tax at the like rate on all

12 fractional parts of a pound):

‘‘In the case of snuff removed during:The applicable rate is:

1998 ......................................................................................... 36 cents

1999 ......................................................................................... $1.11

2000 ......................................................................................... $2.01

2001 ......................................................................................... $2.76

2002 ......................................................................................... $2.835 cents.

13 ‘‘(2) CHEWING TOBACCO.—On chewing tobacco,

14 the applicable rate per pound determined in accord15 ance with the following table (and a proportionate

16 tax at the like rate on all fractional parts of a

17 pound):

‘‘In the case of chewing tobacco

removed during:

The applicable rate is:

1998 ......................................................................................... 12 cents

1999 ......................................................................................... 37 cents

2000 ......................................................................................... 67 cents

2001 ......................................................................................... 92 cents

2002 ......................................................................................... 94.5 cents.’’
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1 (f) PIPE TOBACCO.—Subsection (f) of section 5701

2 of such Code is amended to read as follows:

3 ‘‘(f) PIPE TOBACCO.—On pipe tobacco, manufac4 tured in or imported into the United States, there shall

5 be imposed a tax of the applicable rate per pound deter6 mined in accordance with the following table (and a pro7 portionate tax at the like rate on all fractional parts of

8 a pound):

‘‘In the case of pipe tobacco removed during:The applicable

rate is:

1998 ........................................................... 67.5 cents

1999 ........................................................... $2.0812 cents

2000 ........................................................... $3.7705 cents

2001 ........................................................... $5.1774 cents

2002 ........................................................... $5.3157 cents.’’

9 (g) IMPOSITION OF EXCISE TAX ON MANUFACTURE

10 OR IMPORTATION OF ROLL-YOUR-OWN TOBACCO.—

11 (1) IN GENERAL.—Section 5701 of such Code

12 (relating to rate of tax) is amended by redesignating

13 subsection (g) as subsection (h) and by inserting

14 after subsection (f) the following new subsection:

15 ‘‘(g) ROLL-YOUR-OWN TOBACCO.—On roll-your-own

16 tobacco, manufactured in or imported into the United

17 States, there shall be imposed a tax of the applicable rate

18 per pound determined in accordance with the following

19 table (and a proportionate tax at the like rate on all frac20 tional parts of a pound):

‘‘In the case of roll-your-own tobacco removed during:The applicable

rate is:

1998 ........................................................... 67.5 cents

1999 ........................................................... $2.0812 cents
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2000 ........................................................... $3.7705 cents

2001 ........................................................... $5.1774 cents

2002 ........................................................... $5.3157 cents.’’

1 (2) ROLL-YOUR-OWN TOBACCO.—Section 5702

2 of such Code (relating to definitions) is amended by

3 adding at the end the following new subsection:

4 ‘‘(p) ROLL-YOUR-OWN TOBACCO.—The term ‘roll5 your-own tobacco’ means any tobacco which, because of

6 its appearance, type, packaging, or labeling, is suitable for

7 use and likely to be offered to, or purchased by, consumers

8 as tobacco for making cigarettes.’’

9 (3) TECHNICAL AMENDMENTS.—

10 (A) Subsection (c) of section 5702 of such

11 Code is amended by striking ‘‘and pipe to12 bacco’’ and inserting ‘‘pipe tobacco, and roll13 your-own tobacco’’.

14 (B) Subsection (d) of section 5702 of such

15 Code is amended—

16 (i) in the material preceding para17 graph (1), by striking ‘‘or pipe tobacco’’

18 and inserting ‘‘pipe tobacco, or roll-your19 own tobacco’’, and

20 (ii) by striking paragraph (1) and in21 serting the following new paragraph:

22 ‘‘(1) a person who produces cigars, cigarettes,

23 smokeless tobacco, pipe tobacco, or roll-your-own to-
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1 bacco solely for the person’s own personal consump2 tion or use, and’’.

3 (C) The chapter heading for chapter 52 of

4 such Code is amended to read as follows:

5 ‘‘CHAPTER 52—TOBACCO PRODUCTS AND

6 CIGARETTE PAPERS AND TUBES’’.

7 (D) The table of chapters for subtitle E of

8 such Code is amended by striking the item re9 lating to chapter 52 and inserting the following

10 new item:

‘‘CHAPTER 52. Tobacco products and cigarette papers and tubes.’’

11 (h) INFLATION ADJUSTMENT OF RATES AND FLOOR

12 STOCKS TAXES.—Section 5701 of such Code, as amended

13 by subsection (g), is amended by redesignating subsection

14 (h) as subsection (j) and by inserting after subsection (g)

15 the following:

16 ‘‘(h) INFLATION ADJUSTMENT.—In the case of a cal17 endar year after 2002, the dollar amount contained in the

18 table in each of the preceding subsections (and the per19 centage contained in the table contained in subsection

20 (b)(2)) applicable to the preceding calendar year (after the

21 application of this subsection) shall be increased by an

22 amount equal to—

23 ‘‘(1) such dollar amount (or percentage), multi24 plied by

25 ‘‘(2) the greatest of—
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1 ‘‘(A) the cost-of-living adjustment deter2 mined under section 1(f)(3) for such calendar

3 year by substituting ‘the second preceding cal4 endar year’ for ‘calendar year 1992’ in subpara5 graph (B) thereof,

6 ‘‘(B) the medical consumer price index for

7 such calendar year determined in the same

8 manner as the adjustment described in sub9 paragraph (A), or

10 ‘‘(C) 3 percent.

11 ‘‘(j) FLOOR STOCKS TAXES.—

12 ‘‘(1) IMPOSITION OF TAX.—On tobacco prod13 ucts and cigarette papers and tubes manufactured in

14 or imported into the United States which are re15 moved before any tax increase date, and held on

16 such date for sale by any person, there is hereby im17 posed a tax in an amount equal to the excess of—

18 ‘‘(A) the tax which would be imposed

19 under any preceding subsection of this section

20 on the article if the article had been removed

21 on such date, over

22 ‘‘(B) the prior tax (if any) imposed under

23 such subsection on such article.

24 ‘‘(2) LIABILITY FOR TAX AND METHOD OF PAY25 MENT.—
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1 ‘‘(A) LIABILITY FOR TAX.—A person hold2 ing cigarettes on any tax increase date, to

3 which any tax imposed by paragraph (1) applies

4 shall be liable for such tax.

5 ‘‘(B) METHOD OF PAYMENT.—The tax im6 posed by paragraph (1) shall be paid in such

7 manner as the Secretary shall prescribe by reg8 ulations.

9 ‘‘(C) TIME FOR PAYMENT.—The tax im10 posed by paragraph (1) shall be paid on or be11 fore April 1 following any tax increase date.

12 ‘‘(3) ARTICLES IN FOREIGN TRADE ZONES.—

13 Notwithstanding the Act of June 18, 1934 (48 Stat.

14 998, 19 U.S.C. 81a) and any other provision of law,

15 any article which is located in a foreign trade zone

16 on any tax increase date, shall be subject to the tax

17 imposed by paragraph (1) if—

18 ‘‘(A) internal revenue taxes have been de19 termined, or customs duties liquidated, with re20 spect to such article before such date pursuant

21 to a request made under the 1st proviso of sec22 tion 3(a) of such Act, or

23 ‘‘(B) such article is held on such date

24 under the supervision of a customs officer pur25 suant to the 2d proviso of such section 3(a).
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1 ‘‘(4) TAX INCREASE DATE.—The term ‘‘tax in2 crease date’’ means January 1.

3 ‘‘(5) CONTROLLED GROUPS.—Rules similar to

4 the rules of section 5061(e)(3) shall apply for pur5 poses of this subsection.

6 ‘‘(6) OTHER LAWS APPLICABLE.—All provisions

7 of law, including penalties, applicable with respect to

8 the taxes imposed by the preceding subsections of

9 this section shall, insofar as applicable and not in10 consistent with the provisions of this subsection,

11 apply to the floor stocks taxes imposed by paragraph

12 (1), to the same extent as if such taxes were im13 posed by such subsections. The Secretary may treat

14 any person who bore the ultimate burden of the tax

15 imposed by paragraph (1) as the person to whom a

16 credit or refund under such provisions may be al17 lowed or made.’’

18 (i) MODIFICATIONS OF CERTAIN TOBACCO TAX PRO19 VISIONS.—

20 (1) EXEMPTION FOR EXPORTED TOBACCO

21 PRODUCTS AND CIGARETTE PAPERS AND TUBES TO

22 APPLY ONLY TO ARTICLES MARKED FOR EXPORT.—

23 (A) Subsection (b) of section 5704 of such

24 Code is amended by adding at the end the fol25 lowing new sentence: ‘‘Tobacco products and
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1 cigarette papers and tubes may not be trans2 ferred or removed under this subsection unless

3 such products or papers and tubes bear such

4 marks, labels, or notices as the Secretary shall

5 by regulations prescribe.’’

6 (B) Section 5761 of such Code is amended

7 by redesignating subsections (c) and (d) as sub8 sections (d) and (e), respectively, and by insert9 ing after subsection (b) the following new sub10 section:

11 ‘‘(c) SALE OF TOBACCO PRODUCTS AND CIGARETTE

12 PAPERS AND TUBES FOR EXPORT.—Except as provided

13 in subsections (b) and (d) of section 5704—

14 ‘‘(1) every person who sells, relands, or receives

15 within the jurisdiction of the United States any to16 bacco products or cigarette papers or tubes which

17 have been labeled or shipped for exportation under

18 this chapter,

19 ‘‘(2) every person who sells or receives such re20 landed tobacco products or cigarette papers or tubes,

21 and

22 ‘‘(3) every person who aids or abets in such

23 selling, relanding, or receiving,

24 shall, in addition to the tax and any other penalty provided

25 in this title, be liable for a penalty equal to the greater
14

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1 of $1,000 or 5 times the amount of the tax imposed by

2 this chapter. All tobacco products and cigarette papers

3 and tubes relanded within the jurisdiction of the United

4 States, and all vessels, vehicles, and aircraft used in such

5 relanding or in removing such products, papers, and tubes

6 from the place where relanded, shall be forfeited to the

7 United States.’’

8 (C) Subsection (a) of section 5761 of such

9 Code is amended by striking ‘‘subsection (b)’’

10 and inserting ‘‘subsection (b) or (c)’’.

11 (D) Subsection (d) of section 5761 of such

12 Code, as redesignated by subparagraph (B), is

13 amended by striking ‘‘The penalty imposed by

14 subsection (b)’’ and inserting ‘‘The penalties

15 imposed by subsections (b) and (c)’’.

16 (E)(i) Subpart F of chapter 52 of such

17 Code is amended by adding at the end the fol18 lowing new section:

19 ‘‘SEC. 5754. RESTRICTION ON IMPORTATION OF PRE20 VIOUSLY EXPORTED TOBACCO PRODUCTS.

21 ‘‘(a) IN GENERAL.—Tobacco products and cigarette

22 papers and tubes previously exported from the United

23 States may be imported or brought into the United States

24 only as provided in section 5704(d). For purposes of this

25 section, section 5704(d), section 5761, and such other pro-
15

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1 visions as the Secretary may specify by regulations, ref2 erences to exportation shall be treated as including a ref3 erence to shipment to the Commonwealth of Puerto Rico.

4 ‘‘(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).’’

5 (ii) The table of sections for subpart F of

6 chapter 52 of such Code is amended by adding

7 at the end the following new item:

‘‘Sec. 5754. Restriction on importation of previously exported tobacco products.’’

8 (2) IMPORTERS REQUIRED TO BE QUALIFIED.—

9 (A) Sections 5712, 5713(a), 5721, 5722,

10 5762(a)(1), and 5763 (b) and (c) of such Code

11 are each amended by inserting ‘‘or importer’’

12 after ‘‘manufacturer’’.

13 (B) The heading of subsection (b) of sec14 tion 5763 of such Code is amended by inserting

15 ‘‘QUALIFIED IMPORTERS,’’ after ‘‘MANUFAC16 TURERS,’’.

17 (C) The heading for subchapter B of chap18 ter 52 of such Code is amended by inserting

19 ‘‘and Importers’’ after ‘‘Manufactur20 ers’’.

21 (D) The item relating to subchapter B in

22 the table of subchapters for chapter 52 of such
16

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1 Code is amended by inserting ‘‘and importers’’

2 after ‘‘manufacturers’’.

3 (3) BOOKS OF 25 OR FEWER CIGARETTE PA4 PERS SUBJECT TO TAX.—Subsection (c) of section

5 5701 of such Code is amended by striking ‘‘On each

6 book or set of cigarette papers containing more than

7 25 papers,’’ and inserting ‘‘On cigarette papers,’’.

8 (4) STORAGE OF TOBACCO PRODUCTS.—Sub9 section (k) of section 5702 of such Code is amended

10 by inserting ‘‘under section 5704’’ after ‘‘internal

11 revenue bond’’.

12 (5) AUTHORITY TO PRESCRIBE MINIMUM MANU13 FACTURING ACTIVITY REQUIREMENTS.—Section

14 5712 of such Code is amended by striking ‘‘or’’ at

15 the end of paragraph (1), by redesignating para16 graph (2) as paragraph (3), and by inserting after

17 paragraph (1) the following new paragraph:

18 ‘‘(2) the activity proposed to be carried out at

19 such premises does not meet such minimum capacity

20 or activity requirements as the Secretary may pre21 scribe, or’’.

22 (j) REPEAL OF DUPLICATIVE PROVISIONS.—Section

23 9302 (other than subsection (i)(2)) of the Balanced Budg24 et Act of 1997 is repealed.
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1 (k) EFFECTIVE DATE.—The amendments and repeal

2 made by this section shall apply to articles removed (as

3 defined in section 5702(k) of the Internal Revenue Code

4 of 1986, as amended by this section) after December 31,

5 1997.

6 SEC. 102. TAX TREATMENT FOR CERTAIN TOBACCO-RELAT7 ED EXPENSES.

8 (a) IN GENERAL.—Section 275(a) of the Internal

9 Revenue Code of 1986 (relating to certain taxes) is

10 amended by inserting after paragraph (6) the following:

11 ‘‘(7) Taxes imposed by chapter 52, but only in

12 an amount determined at rates in excess of the rates

13 of such taxes effective in 1998.’’

14 (b) EFFECTIVE DATE.—The amendment made by

15 this section shall apply to taxable years beginning after

16 December 31, 1998.

17 TITLE II—PHAER TRUST FUND

18 SEC. 201. PUBLIC HEALTH AND EDUCATION RESOURCE

19 TRUST FUND.

20 (a) IN GENERAL.—Subchapter A of chapter 98 of the

21 Internal Revenue Code of 1986 (relating to trust fund

22 code) is amended by adding at the end the following new

23 section:
18

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1 ‘‘SEC. 9512. PUBLIC HEALTH AND EDUCATION RESOURCE

2 TRUST FUND.

3 ‘‘(a) CREATION OF TRUST FUND.—There is estab4 lished in the Treasury of the United States a trust fund

5 to be known as the ‘Public Health and Education Re6 source Trust Fund’ (hereafter referred to in this section

7 as the ‘PHAER Trust Fund’), consisting of such amounts

8 as may be appropriated or transferred to the Trust Fund

9 as provided in this section or section 9602(b).

10 ‘‘(b) TRANSFERS TO TRUST FUND.—There is hereby

11 appropriated to the Trust Fund an amount equivalent to

12 the net increase in revenues received in the Treasury at13 tributable to the amendments made by section 2 of the

14 Public Health and Education Resource (PHAER) Act as

15 estimated by the Secretary.

16 ‘‘(c) OBLIGATIONS FROM TRUST FUND.—

17 ‘‘(1) STATE PROGRAMS.—

18 ‘‘(A) IN GENERAL.—An applicable percent19 age of 75 percent of the amounts available in

20 the Trust Fund in a fiscal year shall be distrib21 uted by the Secretary of Health and Human

22 Services to each State meeting the requirements

23 of subparagraphs (C) and (D) to be used by

24 such State and by local government entities

25 within such State in such fiscal year and the

26 succeeding fiscal year in the following manner:
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1 ‘‘(i) Not less than 10 nor more than

2 30 percent of such amounts to State and

3 local school and community-based tobacco

4 education, prevention, and treatment pro5 grams.

6 ‘‘(ii) Not less than 10 nor more than

7 30 percent of such amounts to State and

8 local smoking cessation programs and serv9 ices, including pharmacological therapies.

10 ‘‘(iii) Not less than 10 nor more than

11 30 percent of such amounts to State and

12 local counter advertising programs.

13 ‘‘(iv) Not less than 10 nor more than

14 25 percent of such amounts to the State

15 Children’s Health Insurance Program

16 under title XXI of the Social Security Act

17 (42 U.S.C. 1397aa et seq.) to be in addi18 tion to the amount appropriated under sec19 tion 2104 of such Act.

20 ‘‘(v) Not less than 5 nor more than

21 10 percent of such amounts to—

22 ‘‘(I) the Special Supplemental

23 Food Program for Women, Infants,

24 and Children under section 17 of the

25 Child Nutrition Act of 1966 (42
20

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1 U.S.C. 1786) to be in addition to the

2 amount appropriated under such sec3 tion, or

4 ‘‘(II) the Maternal and Child

5 Health Services Block Grant program

6 under title V of the Social Security

7 Act (42 U.S.C. 701 et seq.) to be in

8 addition to the amount appropriated

9 under such title, or

10 ‘‘(III) a combination of both pro11 grams as determined by the State.

12 ‘‘(vi) Not less than 1 nor more than

13 3 percent of such amounts to the American

14 Stop Smoking Intervention Study for Can15 cer Prevention (ASSIST) program for such

16 State or other State or local community17 based tobacco control programs.

18 ‘‘(vii) Not more than 5 percent of

19 such amounts to a State general health

20 care block grant program.

21 ‘‘(B) ALLOCATION RULES.—For purposes

22 of subparagraph (A), the applicable percentage

23 for any State is determined in accordance with

24 the following table:

State Applicable Percentage

Alabama ........................................................................... 1.270390

Alaska ............................................................................... 0.241356
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State Applicable Percentage

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.
22

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1 ‘‘(C) STATE PLANS FOR CERTAIN ALLOCA2 TIONS.—Each State, working in collaboration

3 with local government entities, shall submit a

4 plan to the Secretary of Health and Human

5 Services for approval for an allocation under

6 the programs described in subparagraph (A),

7 specifying the percentage share for each pro8 gram. Each State plan shall provide for an eq9 uitable allocation of funds to local government

10 entities, specifically in relation to local govern11 ment tobacco-related health care needs and

12 anti-tobacco education, prevention, and control

13 activities. If a State fails to provide any compo14 nent of a State plan with respect to any pro15 gram allocation or if the Secretary of Health

16 and Human Services disapproves any such com17 ponent, the Secretary may make the allocation

18 for such program to 1 or more local government

19 or private entities located in such State pursu20 ant to plans submitted by such entities and ap21 proved by the Secretary.

22 ‘‘(D) PROHIBITION OF SUPPLANTATION OF

23 STATE FUNDS.—Each State shall demonstrate

24 to the satisfaction of the Secretary of Health

25 and Human Services that an allocation to a
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1 State under a program described in subpara2 graph (A) in any fiscal year shall be used to

3 supplement, not supplant, existing funding for

4 such program.

5 ‘‘(2) FEDERAL PROGRAMS.—

6 ‘‘(A) IN GENERAL.—Twenty-five percent of

7 the amounts available in the Trust Fund in a

8 fiscal year shall be distributed in the following

9 manner:

10 ‘‘(i) 10 percent of such amounts to

11 the Office of the Commissioner of Food

12 and Drug Administration to be allocated at

13 the Commissioner’s discretion to conduct

14 tobacco control activities.

15 ‘‘(ii) 25 percent of such amounts to

16 the Office of the Secretary of Agriculture

17 to be allocated at the Secretary’s discretion

18 to protect the financial well-being of to19 bacco farmers, their families, and their

20 communities.

21 ‘‘(iii) 20 percent of such amounts to

22 be allocated at the discretion of the Sec23 retary of Health and Human Services to—

24 ‘‘(I) the Office of the Director of

25 the National Institutes of Health to
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1 be allocated at the Director’s discre2 tion to conduct disease research, and

3 ‘‘(II) the Office of the Director of

4 the Centers for Disease Control and

5 Prevention to be allocated at the Di6 rector’s discretion to decrease smok7 ing.

8 ‘‘(iv) 20 percent of such amounts to

9 the Office of the Secretary of Health and

10 Human Services to be allocated at the Sec11 retary’s discretion—

12 ‘‘(I) to conduct prevention pro13 grams resulting from the study under

14 section 4108 of the Balanced Budget

15 Act of 1997, and

16 ‘‘(II) to increase the Federal pay17 ment for the coverage of qualified

18 medicare beneficiaries under section

19 1902(a)(10)(E)(i) of the Social Secu20 rity Act (42 U.S.C.

21 1396a(a)(10)(E)(i)) and specified low22 income medicare beneficiaries under

23 section 1902(a)(10)(E)(iii) of such

24 Act (42 U.S.C. 1396a(a)(10)(E)(iii)).
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1 ‘‘(v) 20 percent of such amounts to

2 fund a national counter advertising pro3 gram.

4 ‘‘(vi) 2 percent of such amounts to the

5 Office of the Administrator of the Agency

6 for International Development to be allo7 cated at the Administrator’s discretion to

8 strengthen international efforts to control

9 tobacco.

10 ‘‘(vii) 2 percent of such amounts to

11 the Office of the Director of the Office of

12 National Drug Control Policy to be allo13 cated at the Director’s discretion to con14 duct tobacco education and prevention pro15 grams.

16 ‘‘(viii) 1 percent of such amounts to

17 the Office of the Secretary of Veterans Af18 fairs to be allocated at the Secretary’s dis19 cretion to conduct tobacco education, inter20 vention, and outreach programs.

21 ‘‘(B) GRANTS AND CONTRACTS FULLY

22 FUNDED IN FIRST YEAR.—With respect to any

23 grant or contract funded by amounts distrib24 uted under paragraph (1), the full amount of

25 the total obligation of such grant or contract
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1 shall be funded in the first year of such grant

2 or contract, and shall remain available until ex3 pended.’’

4 (b) CONFORMING AMENDMENT.—The table of sec5 tions for such subchapter A is amended by adding at the

6 end the following new item:

‘‘Sec. 9512. Public Health and Education Resource Trust Fund.’’

7 TITLE III—FEDERAL STANDARDS

8 WITH RESPECT TO TOBACCO

9 PRODUCTS

10 SEC. 301. FEDERAL STANDARDS WITH RESPECT TO TO11 BACCO PRODUCTS.

12 (a) CIGARETTES.—Subsection (b) of section 5 of the

13 Federal Cigarette Labeling And Advertising Act (15

14 U.S.C. 1334(b)) is repealed.

15 (b) SMOKELESS TOBACCO.—Subsection (b) of section

16 7 of the Comprehensive Smokeless Tobacco Health Edu17 cation Act of 1986 (15 U.S.C. 4406(b)) is repealed.

18 TITLE IV—SENSE OF THE

19 SENATE

20 SEC. 401. SENSE OF THE SENATE REGARDING COMPREHEN21 SIVE TOBACCO LEGISLATION.

22 It is the sense of the Senate that any final com23 prehensive tobacco legislation funded by the PHAER

24 Trust Fund under section 9512 of the Internal Revenue

25 Code of 1986, as added by section 201 of this Act, must
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1 include, at the very least, the following additional ele2 ments:

3 (1) Stiff penalties that give the tobacco indus4 try the strongest possible incentive to stop targeting

5 children.

6 (2) Full authority for the Food and Drug Ad7 ministration to regulate tobacco like any other drug

8 or device with sufficient flexibility to meet changing

9 circumstances.

10 (3) Codification of the Food and Drug Adminis11 tration’s initiative to prevent teen smoking and the

12 imposition of stronger restrictions on youth access

13 and advertising consistent with the United States

14 Constitution.

15 (4) Broad disclosure of tobacco industry docu16 ments, including documents that have been hidden

17 under false claims of the attorney-client privilege.

18 (5) Efforts to ensure that the tobacco industry

19 stops marketing and promoting tobacco to children,

20 including comprehensive corporate compliance pro21 grams.

22 (6) Elimination of secondhand tobacco smoke in

23 public and private buildings in which 10 or more

24 people regularly enter.
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1 (7) Disclosure of the ingredients and constitu2 ents of all tobacco products to the public and the im3 position of more prominent health warning labels on

4 packaging to send a strong and clear message to

5 children about the dangers of tobacco use.

6 (8) A prohibition on the use of Federal Govern7 ment resources to weaken nondiscriminatory public

8 health laws or promote tobacco sales abroad.

Æ