Amendment No. 2420

S. 1415
IIIA

AMENDMENT NO. 2420 Calendar No. 370

Purpose: Modification of the Commerce Committee amendment.

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

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May 18, 1998

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

AMENDMENT intended to be proposed by Mr. LOTT for Mr.

MCCAIN

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

following:

1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

3 ‘‘National Tobacco Policy and Youth Smoking Reduction

4 Act’’.

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

6 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purpose.

Sec. 4. Scope and effect.

Sec. 5. Relationship to other, related Federal, State, local, and Tribal laws.

Sec. 6. Definitions.

Sec. 7. Notification if youthful cigarette smoking restrictions increase youthful

pipe and cigar smoking.

Sec. 8. FTC jurisdiction not affected.

Sec. 9. Congressional review provisions.

TITLE I—REGULATION OF THE TOBACCO INDUSTRY

Sec. 101. Amendment of Federal Food, Drug, and Cosmetic Act of 1938.

Sec. 102. Conforming and other amendments to general provisions.

Sec. 103. Construction of current regulations.
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TITLE II—REDUCTIONS IN UNDERAGE TOBACCO USE

Subtitle A—Underage Use

Sec. 201. Findings.

Sec. 202. Purpose.

Sec. 203. Goals for reducing underage tobacco use.

Sec. 204. Look-back assessment.

Sec. 205. Definitions.

Subtitle B—State Retail Licensing and Enforcement Incentives

Sec. 231. State retail licensing and enforcement block grants.

Sec. 232. Block grants for compliance bonuses.

Sec. 233. Conforming change.

Subtitle C—Tobacco Use Prevention and Cessation Initiatives

Sec. 261. Tobacco use prevention and cessation initiatives.

TITLE III—TOBACCO PRODUCT WARNINGS AND SMOKE

CONSTITUENT DISCLOSURE

Subtitle A—Product Warnings, Labeling and Packaging

Sec. 301. Cigarette label and advertising warnings.

Sec. 302. Authority to revise cigarette warning label Statements.

Sec. 303. Smokeless tobacco labels and advertising warnings.

Sec. 304. Authority to revise smokeless tobacco product warning label statements.

Sec. 305. Tar, nicotine, and other smoke constituent disclosure to the public.

Subtitle B—Testing and Reporting of Tobacco Product Smoke Constituents

Sec. 311. Regulation requirement.

TITLE IV—NATIONAL TOBACCO TRUST FUND

Sec. 401. Establishment of trust fund.

Sec. 402. Payments by industry.

Sec. 403. Adjustments.

Sec. 404. Payments to be passed through to consumers.

Sec. 405. Tax treatment of payments.

Sec. 406. Enforcement for nonpayment.

Subtitle B—General Spending Provisions

Sec. 451. Allocation accounts.

Sec. 452. Grants to States.

Sec. 453. Indian health service.

Sec. 454. Research at the National Science Foundation.

Sec. 455. Medicare cancer patient demonstration project; evaluation and report

to Congress.

TITLE V—STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO

TOBACCO SMOKE

Sec. 501. Definitions.

Sec. 502. Smoke-free environment policy.
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Sec. 503. Citizen actions.

Sec. 504. Preemption.

Sec. 505. Regulations.

Sec. 506. Effective date.

Sec. 507. State choice.

TITLE VI—APPLICATION TO INDIAN TRIBES

Sec. 601. Short title.

Sec. 602. Findings and purposes.

Sec. 603. Application of title to Indian lands and to Native Americans.

TITLE VII—TOBACCO CLAIMS

Sec. 701. Definitions.

Sec. 702. Application; preemption.

Sec. 703. Rules governing tobacco claims.

TITLE VIII—TOBACCO INDUSTRY ACCOUNTABILITY

REQUIREMENTS AND EMPLOYEE PROTECTION FROM REPRISALS

Sec. 801. Accountability requirements and oversight of the tobacco industry.

Sec. 802. Tobacco product manufacturer employee protection.

TITLE IX—PUBLIC DISCLOSURE OF TOBACCO INDUSTRY

DOCUMENTS

Sec. 901. Findings.

Sec. 902. Applicability.

Sec. 903. Document disclosure.

Sec. 904. Document review.

Sec. 905. Resolution of disputed privilege and trade secret claims.

Sec. 906. Appeal of panel decision.

Sec. 907. Miscellaneous.

Sec. 908. Penalties.

Sec. 909. Definitions.

TITLE X—LONG-TERM ECONOMIC ASSISTANCE FOR FARMERS

Sec. 1001. Short title.

Sec. 1002. Definitions.

Subtitle A—Tobacco Community Revitalization

Sec. 1011. Authorization of appropriations.

Sec. 1012. Expenditures.

Sec. 1013. Budgetary treatment.

Subtitle B—Tobacco Market Transition Assistance

Sec. 1021. Payments for lost tobacco quota.

Sec. 1022. Industry payments for all department costs associated with tobacco

production.

Sec. 1023. Tobacco community economic development grants.

Sec. 1024. Flue-cured tobacco production permits.

Sec. 1025. Modifications in Federal tobacco programs.

Subtitle C—Farmer and Worker Transition Assistance
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Sec. 1031. Tobacco worker transition program.

Sec. 1032. Farmer opportunity grants.

Subtitle D—Immunity

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

owners.

TITLE XI—MISCELLANEOUS PROVISIONS

Subtitle A—International Provisions

Sec. 1101. Policy.

Sec. 1102. Tobacco control negotiations.

Sec. 1103. Report to Congress.

Sec. 1104. Funding.

Sec. 1105. Prohibition of funds to facilitate the exportation or promotion of tobacco.

Sec. 1106. Health labeling of tobacco products for export.

Sec. 1107. International tobacco control awareness.

Subtitle B—Anti-smuggling Provisions

Sec. 1131. Definitions.

Sec. 1132. Tobacco product labeling requirements.

Sec. 1133. Tobacco product licenses.

Sec. 1134. Prohibitions.

Sec. 1135. Labeling of products sold by Native Americans.

Sec. 1136. Limitation on activities involving tobacco products in foreign trade

zones.

Sec. 1137. Jurisdiction; penalties; compromise of liability.

Sec. 1138. Amendments to the Contraband Cigarette Trafficking Act.

Sec. 1139. Funding.

Sec. 1140. Rules and regulations.

Subtitle C—Other Provisions

Sec. 1161. Improving child care and early childhood development.

Sec. 1162. Ban of sale of tobacco products through the use of vending machines.

Sec. 1163. Amendments to the Employee Retirement Income Security Act of

1974.

TITLE XII—ASBESTOS-RELATED TOBACCO CLAIMS

Sec. 1201. National tobacco trust funds available under future legislation.

TITLE XIII—VETERANS’ BENEFITS

Sec. 1301. Recovery by Secretary of Veterans’ Affairs.

TITLE XIV—EXCHANGE OF BENEFITS FOR AGREEMENT

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

Sec. 1402. Participating tobacco product manufacturer.

Sec. 1403. General provisions of protocol.

Sec. 1404. Tobacco product labeling and advertising requirements of protocol.

Sec. 1405. Point-of-sale requirements.
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Sec. 1406. Application of title.

Sec. 1407. Governmental claims.

Sec. 1408. Addiction and dependency claims; Castano Civil Actions.

Sec. 1409. Substantial non-attainment of required reductions.

Sec. 1410. Public health emergency.

Sec. 1411. Tobacco claims brought against participating tobacco product manufacturers.

Sec. 1412. Payment of tobacco claim settlements and judgments.

Sec. 1413. Attorneys’ fees and expenses.

Sec. 1414. Effect of court decisions.

Sec. 1415. Criminal laws not affected.

Sec. 1416. Congress reserves the right to enact laws in the future.

Sec. 1417. Definitions.

TITLE XV—TOBACCO TRANSITION

Sec. 1501. Short title.

Sec. 1502. Purposes.

Sec. 1503. Definitions.

Subtitle A—Tobacco Production Transition

Chapter 1—Tobacco Transition Contracts

Sec. 1511. Tobacco community revitalization trust fund.

Sec. 1512. Offer and terms of tobacco transition contracts.

Sec. 1513. Elements of contracts.

Sec. 1514. Buyout payments to owners.

Sec. 1515. Transition payments to producers.

Chapter 2—Rural Economic Assistance Block Grants

Sec. 1521. Rural economic assistance block grants.

Subtitle B—Tobacco Price Support and Production Adjustment Programs

Chapter 1—Tobacco Price Support Program

Sec. 1531. Interim reform of tobacco price support program.

Sec. 1532. Termination of tobacco price support program.

Chapter 2—Tobacco Production Adjustment Programs

Sec. 1541. Termination of tobacco production adjustment programs.

Subtitle C—Funding

Sec. 1551. Trust fund.

Sec. 1552. Tobacco related administrative costs and subsidies.

Sec. 1553. Commodity credit corporation.

Subtitle D—Miscellaneous

Sec. 1561. Liability for obligations of tobacco product manufacturers.

Sec. 1562. FDA regulation of tobacco production and farms.
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1 SEC. 2. FINDINGS.

2 The Congress finds the following:

3 (1) The use of tobacco products by the Nation’s

4 children is a pediatric disease of epic and worsening

5 proportions that results in new generations of to6 bacco-dependent children and adults.

7 (2) A consensus exists within the scientific and

8 medical communities that tobacco products are in9 herently dangerous and cause cancer, heart disease,

10 and other serious adverse health effects.

11 (3) Nicotine is an addictive drug.

12 (4) Virtually all new users of tobacco products

13 are under the minimum legal age to purchase such

14 products.

15 (5) Tobacco advertising and marketing contrib16 ute significantly to the use of nicotine-containing to17 bacco products by adolescents.

18 (6) Because past efforts to restrict advertising

19 and marketing of tobacco products have failed ade20 quately to curb tobacco use by adolescents, com21 prehensive restrictions on the sale, promotion, and

22 distribution of such products are needed.

23 (7) Federal and State governments have lacked

24 the legal and regulatory authority and resources

25 they need to address comprehensively the public
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1 health and societal problems caused by the use of to2 bacco products.

3 (8) Federal and State public health officials,

4 the public health community, and the public at large

5 recognize that the tobacco industry should be subject

6 to ongoing oversight.

7 (9) Under Article I, Section 8 of the Constitu8 tion, the Congress is vested with the responsibility

9 for regulating interstate commerce and commerce

10 with Indian tribes.

11 (10) The sale, distribution, marketing, advertis12 ing, and use of tobacco products are activities in and

13 substantially affecting interstate commerce because

14 they are sold, marketed, advertised, and distributed

15 in interstate commerce on a nationwide basis, and

16 have a substantial effect on the Nation’s economy.

17 (11) The sale, distribution, marketing, advertis18 ing, and use of such products substantially affect

19 interstate commerce through the health care and

20 other costs attributable to the use of tobacco prod21 ucts.

22 (12) The citizens of the several States are ex23 posed to, and adversely affected by, environmental

24 smoke in public buildings and other facilities which

25 imposes a burden on interstate commerce.
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1 (13) Civil actions against tobacco product man2 ufacturers and others are pending in Federal and

3 State courts arising from the use, marketing, and

4 sale of tobacco products. Among these actions are

5 cases brought by the attorneys general of more than

6 40 States, certain cities and counties, and the Com7 monwealth of Puerto Rico, and other parties, includ8 ing Indian tribes, and class actions brought by pri9 vate claimants (such as in the Castano Civil Ac10 tions), seeking to recover monies expended to treat

11 tobacco-related diseases and for the protection of mi12 nors and consumers, as well as penalties and other

13 relief for violations of antitrust, health, consumer

14 protection, and other laws.

15 (14) Civil actions have been filed throughout

16 the United States against tobacco product manufac17 turers and their distributors, trade associations, law

18 firms, and consultants on behalf of individuals or

19 classes of individuals claiming to be dependent upon

20 and injured by tobacco products.

21 (15) These civil actions are complex, time-con22 suming, expensive, and burdensome for both the liti23 gants and Federal and State courts. To date, these

24 civil actions have not resulted in sufficient redress

25 for smokers or non-governmental third-party payers.
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1 To the extent that governmental entities have been

2 or may in the future be compensated for tobacco-re3 lated claims they have brought, it is not now possible

4 to identify what portions of such past or future re5 coveries can be attributed to their various antitrust,

6 health, consumer protection, or other causes of ac7 tion.

8 (16) It is in the public interest for Congress to

9 adopt comprehensive public health legislation be10 cause of tobacco’s unique position in the Nation’s

11 history and economy; the need to prevent the sale,

12 distribution, marketing and advertising of tobacco

13 products to persons under the minimum legal age to

14 purchase such products; and the need to educate the

15 public, especially young people, regarding the health

16 effects of using tobacco products.

17 (17) The public interest requires a timely, fair,

18 equitable, and consistent result that will serve the

19 public interest by (A) providing that a portion of the

20 costs of treatment for diseases and adverse health

21 effects associated with the use of tobacco products

22 is borne by the manufacturers of these products, and

23 (B) restricting throughout the Nation the sale, dis24 tribution, marketing, and advertising of tobacco
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1 products only to persons of legal age to purchase

2 such products.

3 (18) Public health authorities estimate that the

4 benefits to the Nation of enacting Federal legislation

5 to accomplish these goals would be significant in

6 human and economic terms.

7 (19) Reducing the use of tobacco by minors by

8 50 percent would prevent well over 60,000 early

9 deaths each year and save up to $43 billion each

10 year in reduced medical costs, improved productivity,

11 and the avoidance of premature deaths.

12 (20) Advertising, marketing, and promotion of

13 tobacco products have been especially directed to at14 tract young persons to use tobacco products and

15 these efforts have resulted in increased use of such

16 products by youth. Past efforts to oversee these ac17 tivities have not been successful in adequately pre18 venting such increased use.

19 (21) In 1995, the tobacco industry spent close

20 to $4,900,000,000 to attract new users, retain cur21 rent users, increase current consumption, and gen22 erate favorable long-term attitudes toward smoking

23 and tobacco use.
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1 (22) Tobacco product advertising often

2 misleadingly portrays the use of tobacco as socially

3 acceptable and healthful to minors.

4 (23) Tobacco product advertising is regularly

5 seen by persons under the age of 18, and persons

6 under the age of 18 are regularly exposed to tobacco

7 product promotional efforts.

8 (24) Through advertisements during and spon9 sorship of sporting events, tobacco has become

10 strongly associated with sports and has become por11 trayed as an integral part of sports and the healthy

12 lifestyle associated with rigorous sporting activity.

13 (25) Children are exposed to substantial and

14 unavoidable tobacco advertising that leads to favor15 able beliefs about tobacco use, plays a role in leading

16 young people to overestimate the prevalence of to17 bacco use, and increases the number of young people

18 who begin to use tobacco.

19 (26) Tobacco advertising increases the size of

20 the tobacco market by increasing consumption of to21 bacco products including increasing tobacco use by

22 young people.

23 (27) Children are more influenced by tobacco

24 advertising than adults, they smoke the most adver25 tised brands, and children as young as 3 to 6 years
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1 old can recognize a character associated with smok2 ing at the same rate as they recognize cartoons and

3 fast food characters.

4 (28) Tobacco company documents indicate that

5 young people are an important and often crucial seg6 ment of the tobacco market.

7 (29) Comprehensive advertising restrictions will

8 have a positive effect on the smoking rates of young

9 people.

10 (30) Restrictions on advertising are necessary

11 to prevent unrestricted tobacco advertising from un12 dermining legislation prohibiting access to young

13 people and providing for education about tobacco

14 use.

15 (31) International experience shows that adver16 tising regulations that are stringent and comprehen17 sive have a greater impact on overall tobacco use

18 and young people’s use than weaker or less com19 prehensive ones. Text-only requirements, while not

20 as stringent as a ban, will help reduce underage use

21 of tobacco products while preserving the informa22 tional function of advertising.

23 (32) It is in the public interest for Congress to

24 adopt legislation to address the public health crisis

25 created by actions of the tobacco industry.
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1 (33) If, as a direct or indirect result of this Act,

2 the consumption of tobacco products in the United

3 States is reduced significantly, then tobacco farmers,

4 their families, and their communities may suffer eco5 nomic hardship and displacement, notwithstanding

6 their lack of involvement in the manufacturing and

7 marketing of tobacco products.

8 (34) The use of tobacco products in motion pic9 tures and other mass media glamorizes its use for

10 young people and encourages them to use tobacco

11 products.

12 SEC. 3. PURPOSE.

13 The purposes of this Act are—

14 (1) to clarify the authority of the Food and

15 Drug Administration to regulate tobacco products

16 under the Federal Food, Drug, and Cosmetic Act

17 (21 U.S.C. 301 et seq.), by recognizing it as the pri18 mary Federal regulatory authority with respect to

19 the manufacture, marketing, and distribution of to20 bacco products;

21 (2) to require the tobacco industry to fund both

22 Federal and State oversight of the tobacco industry

23 from on-going payments by tobacco product manu24 facturers;
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1 (3) to require tobacco product manufacturers to

2 provide ongoing funding to be used for an aggressive

3 Federal, State, and local enforcement program and

4 for a nationwide licensing system to prevent minors

5 from obtaining tobacco products and to prevent the

6 unlawful distribution of tobacco products, while ex7 pressly permitting the States to adopt additional

8 measures that further restrict or eliminate the prod9 ucts’ use;

10 (4) to ensure that the Food and Drug Adminis11 tration and the States may continue to address

12 issues of particular concern to public health officials,

13 especially the use of tobacco by young people and de14 pendence on tobacco;

15 (5) to impose financial surcharges on tobacco

16 product manufacturers if tobacco use by young peo17 ple does not substantially decline;

18 (6) to authorize appropriate agencies of the

19 Federal government to set national standards con20 trolling the manufacture of tobacco products and the

21 identity, public disclosure, and amount of ingredi22 ents used in such products;

23 (7) to provide new and flexible enforcement au24 thority to ensure that the tobacco industry makes ef-
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1 forts to develop and introduce less harmful tobacco

2 products;

3 (8) to confirm the Food and Drug Administra4 tion’s authority to regulate the levels of tar, nicotine,

5 and other harmful components of tobacco products;

6 (9) in order to ensure that adults are better in7 formed, to require tobacco product manufacturers to

8 disclose research which has not previously been

9 made available, as well as research generated in the

10 future, relating to the health and dependency effects

11 or safety of tobacco products;

12 (10) to impose on tobacco product manufactur13 ers the obligation to provide funding for a variety of

14 public health initiatives;

15 (11) to establish a minimum Federal standard

16 for stringent restrictions on smoking in public

17 places, while also to permit State, Tribal, and local

18 governments to enact additional and more stringent

19 standards or elect not to be covered by the Federal

20 standard if that State’s standard is as protective, or

21 more protective, of the public health;

22 (12) to authorize and fund from payments by

23 tobacco product manufacturers a continuing national

24 counter-advertising and tobacco control campaign

25 which seeks to educate consumers and discourage
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1 children and adolescents from beginning to use to2 bacco products, and which encourages current users

3 of tobacco products to discontinue using such prod4 ucts;

5 (13) to establish a mechanism to compensate

6 the States in settlement of their various claims

7 against tobacco product manufacturers;

8 (14) to authorize and to fund from payments by

9 tobacco product manufacturers a nationwide pro10 gram of smoking cessation administered through

11 State and Tribal governments and the private sec12 tor;

13 (15) to establish and fund from payments by

14 tobacco product manufacturers a National Tobacco

15 Fund;

16 (16) to affirm the rights of individuals to access

17 to the courts, to civil trial by jury, and to damages

18 to compensate them for harm caused by tobacco

19 products;

20 (17) to continue to permit the sale of tobacco

21 products to adults in conjunction with measures to

22 ensure that they are not sold or accessible to under23 age purchasers;

24 (18) to impose appropriate regulatory controls

25 on the tobacco industry; and
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1 (19) to protect tobacco farmers and their com2 munities from the economic impact of this Act by

3 providing full funding for and the continuation of

4 the Federal tobacco program and by providing funds

5 for farmers and communities to develop new oppor6 tunities in tobacco-dependent communities.

7 SEC. 4. SCOPE AND EFFECT.

8 (a) INTENDED EFFECT.—This Act is not intended

9 to—

10 (1) establish a precedent with regard to any

11 other industry, situation, circumstance, or legal ac12 tion; or

13 (2) except as provided in this Act, affect any

14 action pending in State, Tribal, or Federal court, or

15 any agreement, consent decree, or contract of any

16 kind.

17 (b) TAXATION.—Notwithstanding any other provision

18 of law, this Act and the amendments made by this Act

19 shall not affect any authority of the Secretary of the

20 Treasury (including any authority assigned to the Bureau

21 of Alcohol, Tobacco and Firearms) or of State or local gov22 ernments with regard to taxation for tobacco or tobacco

23 products.

24 (c) AGRICULTURAL ACTIVITIES.—The provisions of

25 this Act which authorize the Secretary to take certain ac-
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1 tions with regard to tobacco and tobacco products shall

2 not be construed to affect any authority of the Secretary

3 of Agriculture under existing law regarding the growing,

4 cultivation, or curing of raw tobacco.

5 SEC. 5. RELATIONSHIP TO OTHER, RELATED FEDERAL,

6 STATE, LOCAL, AND TRIBAL LAWS.

7 (a) AGE RESTRICTIONS.—Nothing in this Act or the

8 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301

9 et seq.), as amended by this Act, shall prevent a Federal

10 agency (including the Armed Forces), a State or its politi11 cal subdivisions, or the government of an Indian tribe from

12 adopting and enforcing additional measures that further

13 restrict or prohibit tobacco product sale to, use by, and

14 accessibility to persons under the legal age of purchase

15 established by such agency, State, subdivision, or govern16 ment of an Indian tribe.

17 (b) ADDITIONAL MEASURES.—Except as otherwise

18 expressly provided in this Act, nothing in this Act, the

19 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301

20 et seq.), or rules promulgated under such Acts, shall limit

21 the authority of a Federal agency (including the Armed

22 Forces), a State or its political subdivisions, or the govern23 ment of an Indian tribe to enact, adopt, promulgate, and

24 enforce any law, rule, regulation, or other measure with

25 respect to tobacco products, including laws, rules, regula-
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1 tions, or other measures relating to or prohibiting the sale,

2 distribution, possession, exposure to, or use of tobacco

3 products by persons of any age that are in addition to

4 the provisions of this Act and the amendments made by

5 this Act. No provision of this Act or amendment made

6 by this Act shall limit or otherwise affect any State, Trib7 al, or local taxation of tobacco products.

8 (c) NO LESS STRINGENT.—Nothing in this Act or

9 the amendments made by this Act is intended to supersede

10 any State, local, or Tribal law that is not less stringent

11 than this Act, or other Acts as amended by this Act.

12 (d) STATE LAW NOT AFFECTED.—Except as other13 wise expressly provided in this Act, nothing in this Act,

14 the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301

15 et seq.), or rules promulgated under such Acts, shall su16 persede the authority of the States, pursuant to State law,

17 to expend funds provided by this Act.

18 SEC. 6. DEFINITIONS.

19 In this Act:

20 (1) BRAND.—The term ‘‘brand’’ means a vari21 ety of tobacco product distinguished by the tobacco

22 used, tar content, nicotine content, flavoring used,

23 size, filtration, or packaging, logo, registered trade24 mark or brand name, identifiable pattern of colors,

25 or any combination of such attributes.
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1 (2) CIGARETTE.—The term ‘‘cigarette’’ has the

2 meaning given that term by section 3(1) of the Fed3 eral Cigarette Labeling and Advertising Act (15

4 U.S.C. 1332(1)), but also includes tobacco, in any

5 form, that is functional in the product, which, be6 cause of its appearance, the type of tobacco used in

7 the filler, or its packaging and labeling, is likely to

8 be offered to, or purchased by, consumers as a ciga9 rette or as roll-your-own tobacco.

10 (3) CIGARETTE TOBACCO.—The term ‘‘cigarette

11 tobacco’’ means any product that consists of loose

12 tobacco that is intended for use by consumers in a

13 cigarette. Unless otherwise stated, the requirements

14 for cigarettes shall also apply to cigarette tobacco.

15 (4) COMMERCE.—The term ‘‘commerce’’ has

16 the meaning given that term by section 3(2) of the

17 Federal Cigarette Labeling and Advertising Act (15

18 U.S.C. 1332(2)).

19 (5) DISTRIBUTOR.—The term ‘‘distributor’’ as

20 regards a tobacco product means any person who

21 furthers the distribution of cigarette or smokeless to22 bacco, whether domestic or imported, at any point

23 from the original place of manufacture to the person

24 who sells or distributes the product to individuals for
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1 personal consumption. Common carriers are not con2 sidered distributors for purposes of this Act.

3 (6) INDIAN COUNTRY; INDIAN LANDS.—The

4 terms ‘‘Indian country’’ and ‘‘Indian lands’’ have the

5 meaning given the term ‘‘Indian country’’ by section

6 1151 of title 18, United States Code, and includes

7 lands owned by an Indian tribe or a member thereof

8 over which the United States exercises jurisdiction

9 on behalf of the tribe or tribal member.

10 (7) INDIAN TRIBE.—The term ‘‘Indian tribe’’

11 has the meaning given such term in section 4(e) of

12 the Indian Self Determination and Education Assist13 ance Act (25 U.S.C. 450b(e)).

14 (8) LITTLE CIGAR.—The term ‘‘little cigar’’ has

15 the meaning given that term by section 3(7) of the

16 Federal Cigarette Labeling and Advertising Act (15

17 U.S.C. 1332(7)).

18 (9) NICOTINE.—The term ‘‘nicotine’’ means the

19 chemical substance named 3-(1-Methyl-2-

20 pyrrolidinyl) pyridine or C[10]H[14]N[2], including

21 any salt or complex of nicotine.

22 (10) PACKAGE.—The term ‘‘package’’ means a

23 pack, box, carton, or container of any kind or, if no

24 other container, any wrapping (including cello25 phane), in which cigarettes or smokeless tobacco are
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1 offered for sale, sold, or otherwise distributed to con2 sumers.

3 (11) POINT-OF-SALE.—The term ‘‘point-of4 sale’’ means any location at which a consumer can

5 purchase or otherwise obtain cigarettes or smokeless

6 tobacco for personal consumption.

7 (12) RETAILER.—The term ‘‘retailer’’ means

8 any person who sells cigarettes or smokeless tobacco

9 to individuals for personal consumption, or who op10 erates a facility where self-service displays of tobacco

11 products are permitted.

12 (13) ROLL-YOUR-OWN TOBACCO.—The term

13 ‘‘roll-your-own tobacco’’ means any tobacco which,

14 because of its appearance, type, packaging, or label15 ing, is suitable for use and likely to be offered to,

16 or purchased by, consumers as tobacco for making

17 cigarettes.

18 (14) SECRETARY.—Except in title VII and

19 where the context otherwise requires, the term ‘‘Sec20 retary’’ means the Secretary of Health and Human

21 Services.

22 (15) SMOKELESS TOBACCO.—The term ‘‘smoke23 less tobacco’’ means any product that consists of

24 cut, ground, powdered, or leaf tobacco and that is

25 intended to be placed in the oral or nasal cavity.
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1 (16) STATE.—The term ‘‘State’’ means any

2 State of the United States and, for purposes of this

3 Act, includes the District of Columbia, the Common4 wealth of Puerto Rico, Guam, the Virgin Islands,

5 American Samoa, Wake Island, Midway Islands,

6 Kingman Reef, Johnston Atoll, the Northern Mari7 ana Islands, and any other trust territory or posses8 sion of the United States.

9 (17) TOBACCO PRODUCT.—The term ‘‘tobacco

10 product’’ means cigarettes, cigarette tobacco, smoke11 less tobacco, little cigars, roll-your-own tobacco, and

12 fine cut products.

13 (18) TOBACCO PRODUCT MANUFACTURER.—Ex14 cept in titles VII, X, and XIV, the term ‘‘tobacco

15 product manufacturer’’ means any person, including

16 any repacker or relabeler, who—

17 (A) manufactures, fabricates, assembles,

18 processes, or labels a finished cigarette or

19 smokeless tobacco product; or

20 (B) imports a finished cigarette or smoke21 less tobacco product for sale or distribution in

22 the United States.

23 (19) UNITED STATES.—The term ‘‘United

24 States’’ means the 50 States of the United States of

25 America and the District of Columbia, the Common-
24

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1 wealth of Puerto Rico, Guam, the Virgin Islands,

2 American Samoa, Wake Island, Midway Islands,

3 Kingman Reef, Johnston Atoll, the Northern Mari4 ana Islands, and any other trust territory or posses5 sion of the United States.

6 SEC. 7. NOTIFICATION IF YOUTHFUL CIGARETTE SMOKING

7 RESTRICTIONS INCREASE YOUTHFUL PIPE

8 AND CIGAR SMOKING.

9 The Secretary shall notify the Congress if the Sec10 retary determines that underage use of pipe tobacco and

11 cigars is increasing.

12 SEC. 8. FTC JURISDICTION NOT AFFECTED.

13 (a) IN GENERAL.—Except where expressly provided

14 in this Act, nothing in this Act shall be construed as limit15 ing or diminishing the authority of the Federal Trade

16 Commission to enforce the laws under its jurisdiction with

17 respect to the advertising, sale, or distribution of tobacco

18 products.

19 (b) ENFORCEMENT BY FTC.—Any advertising that

20 violates this Act or part 897 of title 21, Code of Federal

21 Regulations, is an unfair or deceptive act or practice under

22 section 5(a) of the Federal Trade Commission Act (15

23 U.S.C. 45(a)) and shall be considered a violation of a rule

24 promulgated under section 18 of that Act (15 U.S.C. 57a).
25

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1 SEC. 9. CONGRESSIONAL REVIEW PROVISIONS.

2 In accordance with section 801 of title 5, United

3 States Code, the Congress shall review, and may dis4 approve, any rule under this Act that is subject to section

5 801. This section does not apply to the rule set forth in

6 part 897 of title 21, Code of Federal Regulations.

7 TITLE I—REGULATION OF THE

8 TOBACCO INDUSTRY

9 SEC. 101. AMENDMENT OF FEDERAL FOOD, DRUG, AND

10 COSMETIC ACT OF 1938.

11 (a) DEFINITION OF TOBACCO PRODUCTS.—Section

12 201 of the Federal Food, Drug, and Cosmetic Act (21

13 U.S.C. 321) is amended by adding at the end the follow14 ing:

15 ‘‘(kk) The term ‘tobacco product’ means any

16 product made or derived from tobacco that is in17 tended for human consumption, including any com18 ponent, part, or accessory of a tobacco product (ex19 cept for raw materials other than tobacco used in

20 manufacturing a component, part, or accessory of a

21 tobacco product).’’.

22 (b) FDA AUTHORITY OVER TOBACCO PRODUCTS.—

23 The Federal Food, Drug, and Cosmetic Act (21 U.S.C.

24 301 et seq.) is amended—

25 (1) by redesignating chapter IX as chapter X;
26

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1 (2) by redesignating sections 901 through 907

2 as sections 1001 through 1007; and

3 (3) by inserting after section 803 the following:

4 ‘‘CHAPTER IX—TOBACCO

5 PRODUCTS

6 ‘‘SEC. 901. FDA AUTHORITY OVER TOBACCO PRODUCTS

7 ‘‘(a) IN GENERAL.—Tobacco products shall be regu8 lated by the Secretary under this chapter and shall not

9 be subject to the provisions of chapter V, unless—

10 ‘‘(1) such products are intended for use in the

11 diagnosis, cure, mitigation, treatment, or prevention

12 of disease (within the meaning of section

13 201(g)(1)(B) or section 201(h)(2)); or

14 ‘‘(2) a health claim is made for such products

15 under section 201(g)(1)(C) or 201(h)(3).

16 ‘‘(b) APPLICABILITY.—This chapter shall apply to all

17 tobacco products subject to the provisions of part 897 of

18 title 21, Code of Federal Regulations, and to any other

19 tobacco products that the Secretary by regulation deems

20 to be subject to this chapter.

21 ‘‘(c) SCOPE.—

22 ‘‘(1) Nothing in this chapter, any policy issued

23 or regulation promulgated thereunder, or the Na24 tional Tobacco Policy and Youth Smoking Reduction

25 Act, shall be construed to affect the Secretary’s au-
27

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1 thority over, or the regulation of, products under

2 this Act that are not tobacco products under chapter

3 V of the Federal Food, Drug and Cosmetic Act or

4 any other chapter of that Act.

5 ‘‘(2) The provisions of this chapter shall not

6 apply to tobacco leaf that is not in the possession of

7 the manufacturer, or to the producers of tobacco

8 leaf, including tobacco growers, tobacco warehouses,

9 and tobacco grower cooperatives, nor shall any em10 ployee of the Food and Drug Administration have

11 any authority whatsoever to enter onto a farm

12 owned by a producer of tobacco leaf without the

13 written consent of such producer. Notwithstanding

14 any other provision of this subparagraph, if a pro15 ducer of tobacco leaf is also a tobacco product man16 ufacturer or controlled by a tobacco product manu17 facturer, the producer shall be subject to this chap18 ter in the producer’s capacity as a manufacturer.

19 Nothing in this chapter shall be construed to grant

20 the Secretary authority to promulgate regulations on

21 any matter that involves the production of tobacco

22 leaf or a producer thereof, other than activities by

23 a manufacturer affecting production. For purposes

24 of the preceding sentence, the term ‘controlled by’

25 means a member of the same controlled group of
28

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1 corporations as that term is used in section 52(a) of

2 the Internal Revenue Code of 1986, or under com3 mon control within the meaning of the regulations

4 promulgated under section 52(b) of such Code.

5 ‘‘SEC. 902. ADULTERATED TOBACCO PRODUCTS.

6 ‘‘A tobacco product shall be deemed to be adulterated

7 if—

8 ‘‘(1) it consists in whole or in part of any filthy,

9 putrid, or decomposed substance, or is otherwise

10 contaminated by any poisonous or deleterious sub11 stance that may render the product injurious to

12 health;

13 ‘‘(2) it has been prepared, packed, or held

14 under insanitary conditions whereby it may have

15 been contaminated with filth, or whereby it may

16 have been rendered injurious to health;

17 ‘‘(3) its container is composed, in whole or in

18 part, of any poisonous or deleterious substance

19 which may render the contents injurious to health;

20 ‘‘(4) it is, or purports to be or is represented

21 as, a tobacco product which is subject to a perform22 ance standard established under section 907 unless

23 such tobacco product is in all respects in conformity

24 with such standard;
29

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1 ‘‘(5) it is required by section 910(a) to have

2 premarket approval, is not exempt under section

3 906(f), and does not have an approved application in

4 effect;

5 ‘‘(6) the methods used in, or the facilities or

6 controls used for, its manufacture, packing or stor7 age are not in conformity with applicable require8 ments under section 906(e)(1) or an applicable con9 dition prescribed by an order under section

10 906(e)(2); or

11 ‘‘(7) it is a tobacco product for which an ex12 emption has been granted under section 906(f) for

13 investigational use and the person who was granted

14 such exemption or any investigator who uses such

15 tobacco product under such exemption fails to com16 ply with a requirement prescribed by or under such

17 section.

18 ‘‘SEC. 903. MISBRANDED TOBACCO PRODUCTS.

19 ‘‘(a) IN GENERAL.—A tobacco product shall be

20 deemed to be misbranded—

21 ‘‘(1) if its labeling is false or misleading in any

22 particular;

23 ‘‘(2) if in package form unless it bears a label

24 containing—
30

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1 ‘‘(A) the name and place of business of the

2 tobacco product manufacturer, packer, or dis3 tributor; and

4 ‘‘(B) an accurate statement of the quantity

5 of the contents in terms of weight, measure, or

6 numerical count,

7 except that under subparagraph (B) of this para8 graph reasonable variations shall be permitted, and

9 exemptions as to small packages shall be established,

10 by regulations prescribed by the Secretary;

11 ‘‘(3) if any word, statement, or other informa12 tion required by or under authority of this chapter

13 to appear on the label or labeling is not prominently

14 placed thereon with such conspicuousness (as com15 pared with other words, statements or designs in the

16 labeling) and in such terms as to render it likely to

17 be read and understood by the ordinary individual

18 under customary conditions of purchase and use;

19 ‘‘(4) if it has an established name, unless its

20 label bears, to the exclusion of any other nonpropri21 etary name, its established name prominently print22 ed in type as required by the Secretary by regula23 tion;

24 ‘‘(5) if the Secretary has issued regulations re25 quiring that its labeling bear adequate directions for
31

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1 use, or adequate warnings against use by children,

2 that are necessary for the protection of users unless

3 its labeling conforms in all respects to such regula4 tions;

5 ‘‘(6) if it was manufactured, prepared, propa6 gated, compounded, or processed in any State in an

7 establishment not duly registered under section

8 905(b), if it was not included in a list required by

9 section 905(i), if a notice or other information re10 specting it was not provided as required by such sec11 tion or section 905(j), or if it does not bear such

12 symbols from the uniform system for identification

13 of tobacco products prescribed under section 905(e)

14 as the Secretary by regulation requires;

15 ‘‘(7) if, in the case of any tobacco product dis16 tributed or offered for sale in any State—

17 ‘‘(A) its advertising is false or misleading

18 in any particular; or

19 ‘‘(B) it is sold, distributed, or used in vio20 lation of regulations prescribed under section

21 906(d);

22 ‘‘(8) unless, in the case of any tobacco product

23 distributed or offered for sale in any State, the man24 ufacturer, packer, or distributor thereof includes in

25 all advertisements and other descriptive printed mat-
32

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1 ter issued or caused to be issued by the manufac2 turer, packer, or distributor with respect to that to3 bacco product—

4 ‘‘(A) a true statement of the tobacco prod5 uct’s established name as defined in paragraph

6 (4) of this subsection, printed prominently; and

7 ‘‘(B) a brief statement of—

8 ‘‘(i) the uses of the tobacco product

9 and relevant warnings, precautions, side

10 effects, and contraindications; and

11 ‘‘(ii) in the case of specific tobacco

12 products made subject to a finding by the

13 Secretary after notice and opportunity for

14 comment that such action is necessary to

15 protect the public health, a full description

16 of the components of such tobacco product

17 or the formula showing quantitatively each

18 ingredient of such tobacco product to the

19 extent required in regulations which shall

20 be issued by the Secretary after an oppor21 tunity for a hearing;

22 ‘‘(9) if it is a tobacco product subject to a per23 formance standard established under section 907,

24 unless it bears such labeling as may be prescribed in

25 such performance standard; or
33

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1 ‘‘(10) if there was a failure or refusal—

2 ‘‘(A) to comply with any requirement pre3 scribed under section 904 or 908;

4 ‘‘(B) to furnish any material or informa5 tion required by or under section 909; or

6 ‘‘(C) to comply with a requirement under

7 section 912.

8 ‘‘(b) PRIOR APPROVAL OF STATEMENTS ON

9 LABEL.—The Secretary may, by regulation, require prior

10 approval of statements made on the label of a tobacco

11 product. No regulation issued under this subsection may

12 require prior approval by the Secretary of the content of

13 any advertisement and no advertisement of a tobacco

14 product, published after the date of enactment of the Na15 tional Tobacco Policy and Youth Smoking Reduction Act

16 shall, with respect to the matters specified in this section

17 or covered by regulations issued hereunder, be subject to

18 the provisions of sections 12 through 15 of the Federal

19 Trade Commission Act (15 U.S.C. 52 through 55). This

20 subsection does not apply to any printed matter which the

21 Secretary determines to be labeling as defined in section

22 201(m).
34

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1 ‘‘SEC. 904. SUBMISSION OF HEALTH INFORMATION TO THE

2 SECRETARY.

3 ‘‘(a) REQUIREMENT.—Not later than 6 months after

4 the date of enactment of the National Tobacco Policy and

5 Youth Smoking Reduction Act, each tobacco product man6 ufacturer or importer of tobacco products, or agents there7 of, shall submit to the Secretary the following information:

8 ‘‘(1) A listing of all tobacco ingredients, sub9 stances and compounds that are, on such date,

10 added by the manufacturer to the tobacco, paper, fil11 ter, or other component of each tobacco product by

12 brand and by quantity in each brand and subbrand.

13 ‘‘(2) A description of the content, delivery, and

14 form of nicotine in each tobacco product measured

15 in milligrams of nicotine.

16 ‘‘(3) All documents (including underlying sci17 entific information) relating to research activities,

18 and research findings, conducted, supported, or pos19 sessed by the manufacturer (or agents thereof) on

20 the health, behavioral, or physiologic effects of to21 bacco products, their constituents, ingredients, and

22 components, and tobacco additives, described in

23 paragraph (1).

24 ‘‘(4) All documents (including underlying sci25 entific information) relating to research activities,

26 and research findings, conducted, supported, or pos-
35

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1 sessed by the manufacturer (or agents thereof) that

2 relate to the issue of whether a reduction in risk to

3 health from tobacco products can occur upon the

4 employment of technology available or known to the

5 manufacturer.

6 ‘‘(5) All documents (including underlying sci7 entific information) relating to marketing research

8 involving the use of tobacco products.

9 An importer of a tobacco product not manufactured in the

10 United States shall supply the information required of a

11 tobacco product manufacturer under this subsection.

12 ‘‘(b) ANNUAL SUBMISSION.—A tobacco product man13 ufacturer or importer that is required to submit informa14 tion under subsection (a) shall update such information

15 on an annual basis under a schedule determined by the

16 Secretary.

17 ‘‘(c) TIME FOR SUBMISSION.—

18 ‘‘(1) NEW PRODUCTS.—At least 90 days prior

19 to the delivery for introduction into interstate com20 merce of a tobacco product not on the market on the

21 date of enactment of this chapter, the manufacturer

22 of such product shall provide the information re23 quired under subsection (a) and such product shall

24 be subject to the annual submission under sub25 section (b).
36

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1 ‘‘(2) MODIFICATION OF EXISTING PRODUCTS.—

2 If at any time a tobacco product manufacturer adds

3 to its tobacco products a new tobacco additive, in4 creases or decreases the quantity of an existing to5 bacco additive or the nicotine content, delivery, or

6 form, or eliminates a tobacco additive from any to7 bacco product, the manufacturer shall within 60

8 days of such action so advise the Secretary in writ9 ing and reference such modification in submissions

10 made under subsection (b).

11 ‘‘SEC. 905. ANNUAL REGISTRATION.

12 ‘‘(a) DEFINITIONS.—As used in this section—

13 ‘‘(1) the term ‘manufacture, preparation,

14 compounding, or processing’ shall include repackag15 ing or otherwise changing the container, wrapper, or

16 labeling of any tobacco product package in further17 ance of the distribution of the tobacco product from

18 the original place of manufacture to the person who

19 makes final delivery or sale to the ultimate consumer

20 or user; and

21 ‘‘(2) the term ‘name’ shall include in the case

22 of a partnership the name of each partner and, in

23 the case of a corporation, the name of each cor24 porate officer and director, and the State of incorpo25 ration.
37

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1 ‘‘(b) REGISTRATION BY OWNERS AND OPERATORS.—

2 On or before December 31 of each year every person who

3 owns or operates any establishment in any State engaged

4 in the manufacture, preparation, compounding, or proc5 essing of a tobacco product or tobacco products shall reg6 ister with the Secretary the name, places of business, and

7 all such establishments of that person.

8 ‘‘(c) REGISTRATION OF NEW OWNERS AND OPERA9 TORS.—Every person upon first engaging in the manufac10 ture, preparation, compounding, or processing of a tobacco

11 product or tobacco products in any establishment owned

12 or operated in any State by that person shall immediately

13 register with the Secretary that person’s name, place of

14 business, and such establishment.

15 ‘‘(d) REGISTRATION OF ADDED ESTABLISHMENTS.—

16 Every person required to register under subsection (b) or

17 (c) shall immediately register with the Secretary any addi18 tional establishment which that person owns or operates

19 in any State and in which that person begins the manufac20 ture, preparation, compounding, or processing of a tobacco

21 product or tobacco products.

22 ‘‘(e) UNIFORM PRODUCT IDENTIFICATION SYS23 TEM.—The Secretary may by regulation prescribe a uni24 form system for the identification of tobacco products and

25 may require that persons who are required to list such
38

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1 tobacco products under subsection (i) of this section shall

2 list such tobacco products in accordance with such system.

3 ‘‘(f) PUBLIC ACCESS TO REGISTRATION INFORMA4 TION.—The Secretary shall make available for inspection,

5 to any person so requesting, any registration filed under

6 this section.

7 ‘‘(g) BIENNIAL INSPECTION OF REGISTERED ESTAB8 LISHMENTS.—Every establishment in any State registered

9 with the Secretary under this section shall be subject to

10 inspection under section 704, and every such establish11 ment engaged in the manufacture, compounding, or proc12 essing of a tobacco product or tobacco products shall be

13 so inspected by one or more officers or employees duly

14 designated by the Secretary at least once in the 2-year

15 period beginning with the date of registration of such es16 tablishment under this section and at least once in every

17 successive 2-year period thereafter.

18 ‘‘(h) FOREIGN ESTABLISHMENTS MAY REGISTER.—

19 Any establishment within any foreign country engaged in

20 the manufacture, preparation, compounding, or processing

21 of a tobacco product or tobacco products, may register

22 under this section under regulations promulgated by the

23 Secretary. Such regulations shall require such establish24 ment to provide the information required by subsection (i)

25 of this section and shall include provisions for registration
39

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1 of any such establishment upon condition that adequate

2 and effective means are available, by arrangement with the

3 government of such foreign country or otherwise, to enable

4 the Secretary to determine from time to time whether to5 bacco products manufactured, prepared, compounded, or

6 processed in such establishment, if imported or offered for

7 import into the United States, shall be refused admission

8 on any of the grounds set forth in section 801(a).

9 ‘‘(i) REGISTRATION INFORMATION.—

10 ‘‘(1) PRODUCT LIST.—Every person who reg11 isters with the Secretary under subsection (b), (c),

12 or (d) of this section shall, at the time of registra13 tion under any such subsection, file with the Sec14 retary a list of all tobacco products which are being

15 manufactured, prepared, compounded, or processed

16 by that person for commercial distribution and

17 which has not been included in any list of tobacco

18 products filed by that person with the Secretary

19 under this paragraph or paragraph (2) before such

20 time of registration. Such list shall be prepared in

21 such form and manner as the Secretary may pre22 scribe and shall be accompanied by—

23 ‘‘(A) in the case of a tobacco product con24 tained in the applicable list with respect to

25 which a performance standard has been estab-
40

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1 lished under section 907 or which is subject to

2 section 910, a reference to the authority for the

3 marketing of such tobacco product and a copy

4 of all labeling for such tobacco product;

5 ‘‘(B) in the case of any other tobacco prod6 uct contained in an applicable list, a copy of all

7 consumer information and other labeling for

8 such tobacco product, a representative sampling

9 of advertisements for such tobacco product,

10 and, upon request made by the Secretary for

11 good cause, a copy of all advertisements for a

12 particular tobacco product; and

13 ‘‘(C) if the registrant filing a list has de14 termined that a tobacco product contained in

15 such list is not subject to a performance stand16 ard established under section 907, a brief state17 ment of the basis upon which the registrant

18 made such determination if the Secretary re19 quests such a statement with respect to that

20 particular tobacco product.

21 ‘‘(2) BIANNUAL REPORT OF ANY CHANGE IN

22 PRODUCT LIST.—Each person who registers with the

23 Secretary under this section shall report to the Sec24 retary once during the month of June of each year
41

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1 and once during the month of December of each

2 year the following:

3 ‘‘(A) A list of each tobacco product intro4 duced by the registrant for commercial distribu5 tion which has not been included in any list

6 previously filed by that person with the Sec7 retary under this subparagraph or paragraph

8 (1) of this subsection. A list under this sub9 paragraph shall list a tobacco product by its es10 tablished name and shall be accompanied by the

11 other information required by paragraph (1).

12 ‘‘(B) If since the date the registrant last

13 made a report under this paragraph that person

14 has discontinued the manufacture, preparation,

15 compounding, or processing for commercial dis16 tribution of a tobacco product included in a list

17 filed under subparagraph (A) or paragraph (1),

18 notice of such discontinuance, the date of such

19 discontinuance, and the identity of its estab20 lished name.

21 ‘‘(C) If since the date the registrant re22 ported under subparagraph (B) a notice of dis23 continuance that person has resumed the manu24 facture, preparation, compounding, or process25 ing for commercial distribution of the tobacco
42

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1 product with respect to which such notice of

2 discontinuance was reported, notice of such re3 sumption, the date of such resumption, the

4 identity of such tobacco product by established

5 name, and other information required by para6 graph (1), unless the registrant has previously

7 reported such resumption to the Secretary

8 under this subparagraph.

9 ‘‘(D) Any material change in any informa10 tion previously submitted under this paragraph

11 or paragraph (1).

12 ‘‘(j) REPORT PRECEDING INTRODUCTION OF CER13 TAIN SUBSTANTIALLY-EQUIVALENT PRODUCTS INTO

14 INTERSTATE COMMERCE.—

15 ‘‘(1) IN GENERAL.—Each person who is re16 quired to register under this section and who pro17 poses to begin the introduction or delivery for intro18 duction into interstate commerce for commercial dis19 tribution of a tobacco product intended for human

20 use that was not commercially marketed (other than

21 for test marketing) in the United States as of Au22 gust 11, 1995, as defined by the Secretary by regu23 lation shall, at least 90 days before making such in24 troduction or delivery, report to the Secretary (in
43

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1 such form and manner as the Secretary shall by reg2 ulation prescribe)—

3 ‘‘(A) the basis for such person’s determina4 tion that the tobacco product is substantially

5 equivalent, within the meaning of section 910,

6 to a tobacco product commercially marketed

7 (other than for test marketing) in the United

8 States as of August 11, 1995, that is in compli9 ance with the requirements of this Act; and

10 ‘‘(B) action taken by such person to com11 ply with the requirements under section 907

12 that are applicable to the tobacco product.

13 ‘‘(2) APPLICATION TO CERTAIN POST-AUGUST

14 11TH PRODUCTS.—A report under this subsection

15 for a tobacco product that was first introduced or

16 delivered for introduction into interstate commerce

17 for commercial distribution in the United States

18 after August 11, 1995, and before the date of enact19 ment of the National Tobacco Policy and Youth

20 Smoking Reduction Act shall be submitted to the

21 Secretary within 6 months after the date of enact22 ment of that Act.
44

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1 ‘‘SEC. 906. GENERAL PROVISIONS RESPECTING CONTROL

2 OF TOBACCO PRODUCTS.

3 ‘‘(a) IN GENERAL.—Any requirement established by

4 or under section 902, 903, 905, or 909 applicable to a

5 tobacco product shall apply to such tobacco product until

6 the applicability of the requirement to the tobacco product

7 has been changed by action taken under section 907, sec8 tion 910, or subsection (d) of this section, and any re9 quirement established by or under section 902, 903, 905,

10 or 909 which is inconsistent with a requirement imposed

11 on such tobacco product under section 907, section 910,

12 or subsection (d) of this section shall not apply to such

13 tobacco product.

14 ‘‘(b) INFORMATION ON PUBLIC ACCESS AND COM15 MENT.—Each notice of proposed rulemaking under section

16 907, 908, 909, or 910, or under this section, any other

17 notice which is published in the Federal Register with re18 spect to any other action taken under any such section

19 and which states the reasons for such action, and each

20 publication of findings required to be made in connection

21 with rulemaking under any such section shall set forth—

22 ‘‘(1) the manner in which interested persons

23 may examine data and other information on which

24 the notice or findings is based; and

25 ‘‘(2) the period within which interested persons

26 may present their comments on the notice or find-
45

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1 ings (including the need therefor) orally or in writ2 ing, which period shall be at least 60 days but may

3 not exceed 90 days unless the time is extended by

4 the Secretary by a notice published in the Federal

5 Register stating good cause therefor.

6 ‘‘(c) LIMITED CONFIDENTIALITY OF INFORMA7 TION.—Any information reported to or otherwise obtained

8 by the Secretary or the Secretary’s representative under

9 section 904, 907, 908, 909, or 910 or 704, or under sub10 section (e) or (f) of this section, which is exempt from

11 disclosure under subsection (a) of section 552 of title 5,

12 United States Code, by reason of subsection (b)(4) of that

13 section shall be considered confidential and shall not be

14 disclosed, except that the information may be disclosed to

15 other officers or employees concerned with carrying out

16 this chapter, or when relevant in any proceeding under

17 this chapter.

18 ‘‘(d) RESTRICTIONS.—

19 ‘‘(1) The Secretary may by regulation require

20 that a tobacco product be restricted to sale, distribu21 tion, or use upon such conditions, including restric22 tions on the access to, and the advertising and pro23 motion of, the tobacco product, as the Secretary may

24 prescribe in such regulation if, because of its poten25 tiality for harmful effect or the collateral measures
46

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1 necessary to its use, the Secretary determines that

2 such regulation would be appropriate for the protec3 tion of the public health. The finding as to whether

4 such regulation would be appropriate for the protec5 tion of the public health shall be determined with re6 spect to the risks and benefits to the population as

7 a whole, including users and non-users of the to8 bacco product, and taking into account—

9 ‘‘(A) the increased or decreased likelihood

10 that existing users of tobacco products will stop

11 using such products; and

12 ‘‘(B) the increased or decreased likelihood

13 that those who do not use tobacco products will

14 start using such products.

15 No such condition may require that the sale or dis16 tribution of a tobacco product be limited to the writ17 ten or oral authorization of a practitioner licensed

18 by law to prescribe medical products.

19 ‘‘(2) The label of a tobacco product shall bear

20 such appropriate statements of the restrictions re21 quired by a regulation under subsection (a) as the

22 Secretary may in such regulation prescribe.

23 ‘‘(3) No restriction under paragraph (1) may

24 prohibit the sale of any tobacco product in face-to
47

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1 face transactions by a specific category of retail out2 lets.

3 ‘‘(e) GOOD MANUFACTURING PRACTICE REQUIRE4 MENTS.—

5 ‘‘(1) METHODS, FACILITIES, AND CONTROLS TO

6 CONFORM.—

7 ‘‘(A) The Secretary may, in accordance

8 with subparagraph (B), prescribe regulations

9 requiring that the methods used in, and the fa10 cilities and controls used for, the manufacture,

11 pre-production design validation (including a

12 process to assess the performance of a tobacco

13 product), packing and storage of a tobacco

14 product, conform to current good manufactur15 ing practice, as prescribed in such regulations,

16 to assure that the public health is protected and

17 that the tobacco product is in compliance with

18 this chapter.

19 ‘‘(B) The Secretary shall—

20 ‘‘(i) before promulgating any regula21 tion under subparagraph (A), afford an ad22 visory committee an opportunity to submit

23 recommendations with respect to the regu24 lation proposed to be promulgated;
48

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1 ‘‘(ii) before promulgating any regula2 tion under subparagraph (A), afford oppor3 tunity for an oral hearing;

4 ‘‘(iii) provide the advisory committee a

5 reasonable time to make its recommenda6 tion with respect to proposed regulations

7 under subparagraph (A); and

8 ‘‘(iv) in establishing the effective date

9 of a regulation promulgated under this

10 subsection, take into account the dif11 ferences in the manner in which the dif12 ferent types of tobacco products have his13 torically been produced, the financial re14 sources of the different tobacco product

15 manufacturers, and the state of their exist16 ing manufacturing facilities; and shall pro17 vide for a reasonable period of time for

18 such manufacturers to conform to good

19 manufacturing practices.

20 ‘‘(2) EXEMPTIONS; VARIANCES.—

21 ‘‘(A) Any person subject to any require22 ment prescribed under paragraph (1) may peti23 tion the Secretary for a permanent or tem24 porary exemption or variance from such re25 quirement. Such a petition shall be submitted
49

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1 to the Secretary in such form and manner as

2 the Secretary shall prescribe and shall—

3 ‘‘(i) in the case of a petition for an ex4 emption from a requirement, set forth the

5 basis for the petitioner’s determination

6 that compliance with the requirement is

7 not required to assure that the tobacco

8 product will be in compliance with this

9 chapter;

10 ‘‘(ii) in the case of a petition for a

11 variance from a requirement, set forth the

12 methods proposed to be used in, and the

13 facilities and controls proposed to be used

14 for, the manufacture, packing, and storage

15 of the tobacco product in lieu of the meth16 ods, facilities, and controls prescribed by

17 the requirement; and

18 ‘‘(iii) contain such other information

19 as the Secretary shall prescribe.

20 ‘‘(B) The Secretary may refer to an advi21 sory committee any petition submitted under

22 subparagraph (A). The advisory committee

23 shall report its recommendations to the Sec24 retary with respect to a petition referred to it
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1 within 60 days after the date of the petition’s

2 referral. Within 60 days after—

3 ‘‘(i) the date the petition was submit4 ted to the Secretary under subparagraph

5 (A); or

6 ‘‘(ii) the day after the petition was re7 ferred to an advisory committee,

8 whichever occurs later, the Secretary shall by

9 order either deny the petition or approve it.

10 ‘‘(C) The Secretary may approve—

11 ‘‘(i) a petition for an exemption for a

12 tobacco product from a requirement if the

13 Secretary determines that compliance with

14 such requirement is not required to assure

15 that the tobacco product will be in compli16 ance with this chapter; and

17 ‘‘(ii) a petition for a variance for a to18 bacco product from a requirement if the

19 Secretary determines that the methods to

20 be used in, and the facilities and controls

21 to be used for, the manufacture, packing,

22 and storage of the tobacco product in lieu

23 of the methods, controls, and facilities pre24 scribed by the requirement are sufficient to
51

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1 assure that the tobacco product will be in

2 compliance with this chapter.

3 ‘‘(D) An order of the Secretary approving

4 a petition for a variance shall prescribe such

5 conditions respecting the methods used in, and

6 the facilities and controls used for, the manu7 facture, packing, and storage of the tobacco

8 product to be granted the variance under the

9 petition as may be necessary to assure that the

10 tobacco product will be in compliance with this

11 chapter.

12 ‘‘(E) After the issuance of an order under

13 subparagraph (B) respecting a petition, the pe14 titioner shall have an opportunity for an infor15 mal hearing on such order.

16 ‘‘(3) Compliance with requirements under this

17 subsection shall not be required before the period

18 ending 3 years after the date of enactment of the

19 National Tobacco Policy and Youth Smoking Reduc20 tion Act.

21 ‘‘(f) EXEMPTION FOR INVESTIGATIONAL USE.—The

22 Secretary may exempt tobacco products intended for in23 vestigational use from this chapter under such conditions

24 as the Secretary may prescribe by regulation.
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1 ‘‘(g) RESEARCH AND DEVELOPMENT.—The Sec2 retary may enter into contracts for research, testing, and

3 demonstrations respecting tobacco products and may ob4 tain tobacco products for research, testing, and dem5 onstration purposes without regard to section 3324(a) and

6 (b) of title 31, United States Code, and section 5 of title

7 41, United States Code.

8 ‘‘SEC. 907. PERFORMANCE STANDARDS.

9 ‘‘(a) IN GENERAL.—

10 ‘‘(1) FINDING REQUIRED.—The Secretary may

11 adopt performance standards for a tobacco product

12 if the Secretary finds that a performance standard

13 is appropriate for the protection of the public health.

14 This finding shall be determined with respect to the

15 risks and benefits to the population as a whole, in16 cluding users and non-users of the tobacco product,

17 and taking into account—

18 ‘‘(A) the increased or decreased likelihood

19 that existing users of tobacco products will stop

20 using such products; and

21 ‘‘(B) the increased or decreased likelihood

22 that those who do not use tobacco products will

23 start using such products.
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1 ‘‘(2) CONTENT OF PERFORMANCE STAND2 ARDS.—A performance standard established under

3 this section for a tobacco product—

4 ‘‘(A) shall include provisions to provide

5 performance that is appropriate for the protec6 tion of the public health, including provisions,

7 where appropriate—

8 ‘‘(i) for the reduction or elimination of

9 nicotine yields of the product;

10 ‘‘(ii) for the reduction or elimination

11 of other constituents or harmful compo12 nents of the product; or

13 ‘‘(iii) relating to any other require14 ment under (B);

15 ‘‘(B) shall, where necessary to be appro16 priate for the protection of the public health,

17 include—

18 ‘‘(i) provisions respecting the con19 struction, components, ingredients, and

20 properties of the tobacco product;

21 ‘‘(ii) provisions for the testing (on a

22 sample basis or, if necessary, on an indi23 vidual basis) of the tobacco product;
54

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1 ‘‘(iii) provisions for the measurement

2 of the performance characteristics of the

3 tobacco product;

4 ‘‘(iv) provisions requiring that the re5 sults of each or of certain of the tests of

6 the tobacco product required to be made

7 under clause (ii) show that the tobacco

8 product is in conformity with the portions

9 of the standard for which the test or tests

10 were required; and

11 ‘‘(v) a provision requiring that the

12 sale and distribution of the tobacco prod13 uct be restricted but only to the extent

14 that the sale and distribution of a tobacco

15 product may be restricted under a regula16 tion under section 906(d); and

17 ‘‘(C) shall, where appropriate, require the

18 use and prescribe the form and content of label19 ing for the proper use of the tobacco product.

20 ‘‘(3) PERIODIC RE-EVALUATION OF PERFORM21 ANCE STANDARDS.—The Secretary shall provide for

22 periodic evaluation of performance standards estab23 lished under this section to determine whether such

24 standards should be changed to reflect new medical,

25 scientific, or other technological data. The Secretary
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1 may provide for testing under paragraph (2) by any

2 person.

3 ‘‘(4) INVOLVEMENT OF OTHER AGENCIES; IN4 FORMED PERSONS.—In carrying out duties under

5 this section, the Secretary shall, to the maximum ex6 tent practicable—

7 ‘‘(A) use personnel, facilities, and other

8 technical support available in other Federal

9 agencies;

10 ‘‘(B) consult with other Federal agencies

11 concerned with standard-setting and other na12 tionally or internationally recognized standard13 setting entities; and

14 ‘‘(C) invite appropriate participation,

15 through joint or other conferences, workshops,

16 or other means, by informed persons represent17 ative of scientific, professional, industry, or con18 sumer organizations who in the Secretary’s

19 judgment can make a significant contribution.

20 ‘‘(b) ESTABLISHMENT OF STANDARDS.—

21 ‘‘(1) NOTICE.—

22 (A) The Secretary shall publish in the

23 Federal Register a notice of proposed rule24 making for the establishment, amendment, or
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1 revocation of any performance standard for a

2 tobacco product.

3 ‘‘(B) A notice of proposed rulemaking for

4 the establishment or amendment of a perform5 ance standard for a tobacco product shall—

6 ‘‘(i) set forth a finding with support7 ing justification that the performance

8 standard is appropriate for the protection

9 of the public health;

10 ‘‘(ii) set forth proposed findings with

11 respect to the risk of illness or injury that

12 the performance standard is intended to

13 reduce or eliminate; and

14 ‘‘(iii) invite interested persons to sub15 mit an existing performance standard for

16 the tobacco product, including a draft or

17 proposed performance standard, for consid18 eration by the Secretary.

19 ‘‘(C) A notice of proposed rulemaking for

20 the revocation of a performance standard shall

21 set forth a finding with supporting justification

22 that the performance standard is no longer nec23 essary to be appropriate for the protection of

24 the public health.
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1 ‘‘(D) The Secretary shall consider all infor2 mation submitted in connection with a proposed

3 standard, including information concerning the

4 countervailing effects of the performance stand5 ard on the health of adolescent tobacco users,

6 adult tobacco users, or non-tobacco users, such

7 as the creation of a significant demand for con8 traband or other tobacco products that do not

9 meet the requirements of this chapter and the

10 significance of such demand, and shall issue the

11 standard if the Secretary determines that the

12 standard would be appropriate for the protec13 tion of the public health.

14 ‘‘(E) The Secretary shall provide for a

15 comment period of not less than 60 days.

16 ‘‘(2) PROMULGATION.—

17 ‘‘(A) After the expiration of the period for

18 comment on a notice of proposed rulemaking

19 published under paragraph (1) respecting a per20 formance standard and after consideration of

21 such comments and any report from an advi22 sory committee, the Secretary shall—

23 ‘‘(i) promulgate a regulation establish24 ing a performance standard and publish in
58

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1 the Federal Register findings on the mat2 ters referred to in paragraph (1); or

3 ‘‘(ii) publish a notice terminating the

4 proceeding for the development of the

5 standard together with the reasons for

6 such termination.

7 ‘‘(B) A regulation establishing a perform8 ance standard shall set forth the date or dates

9 upon which the standard shall take effect, but

10 no such regulation may take effect before one

11 year after the date of its publication unless the

12 Secretary determines that an earlier effective

13 date is necessary for the protection of the pub14 lic health. Such date or dates shall be estab15 lished so as to minimize, consistent with the

16 public health, economic loss to, and disruption

17 or dislocation of, domestic and international

18 trade.

19 ‘‘(3) SPECIAL RULE FOR STANDARD BANNING

20 CLASS OF PRODUCT OR ELIMINATING NICOTINE CON21 TENT.—Because of the importance of a decision of

22 the Secretary to issue a regulation establishing a

23 performance standard—
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1 ‘‘(A) eliminating all cigarettes, all smoke2 less tobacco products, or any similar class of to3 bacco products, or

4 ‘‘(B) requiring the reduction of nicotine

5 yields of a tobacco product to zero,

6 it is appropriate for the Congress to have the oppor7 tunity to review such a decision. Therefore, any such

8 standard may not take effect before a date that is

9 2 years after the President notifies the Congress

10 that a final regulation imposing the restriction has

11 been issued.

12 ‘‘(4) AMENDMENT; REVOCATION.—

13 ‘‘(A) The Secretary, upon the Secretary’s

14 own initiative or upon petition of an interested

15 person may by a regulation, promulgated in ac16 cordance with the requirements of paragraphs

17 (1) and (2)(B) of this subsection, amend or re18 voke a performance standard.

19 ‘‘(B) The Secretary may declare a pro20 posed amendment of a performance standard to

21 be effective on and after its publication in the

22 Federal Register and until the effective date of

23 any final action taken on such amendment if

24 the Secretary determines that making it so ef25 fective is in the public interest.
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1 ‘‘(5) REFERENCE TO ADVISORY COMMITTEE.—

2 The Secretary—

3 ‘‘(A) may, on the Secretary’s own initia4 tive, refer a proposed regulation for the estab5 lishment, amendment, or revocation of a per6 formance standard; or

7 ‘‘(B) shall, upon the request of an inter8 ested person which demonstrates good cause for

9 referral and which is made before the expiration

10 of the period for submission of comments on

11 such proposed regulation,

12 refer such proposed regulation to an advisory committee,

13 for a report and recommendation with respect to any mat14 ter involved in the proposed regulation which requires the

15 exercise of scientific judgment. If a proposed regulation

16 is referred under this subparagraph to the advisory com17 mittee, the Secretary shall provide the advisory committee

18 with the data and information on which such proposed

19 regulation is based. The advisory committee shall, within

20 60 days after the referral of a proposed regulation and

21 after independent study of the data and information fur22 nished to it by the Secretary and other data and informa23 tion before it, submit to the Secretary a report and rec24 ommendation respecting such regulation, together with all

25 underlying data and information and a statement of the
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1 reason or basis for the recommendation. A copy of such

2 report and recommendation shall be made public by the

3 Secretary.

4 ‘‘SEC. 908. NOTIFICATION AND OTHER REMEDIES

5 ‘‘(a) NOTIFICATION.—If the Secretary determines

6 that—

7 ‘‘(1) a tobacco product which is introduced or

8 delivered for introduction into interstate commerce

9 for commercial distribution presents an unreasonable

10 risk of substantial harm to the public health; and

11 ‘‘(2) notification under this subsection is nec12 essary to eliminate the unreasonable risk of such

13 harm and no more practicable means is available

14 under the provisions of this chapter (other than this

15 section) to eliminate such risk,

16 the Secretary may issue such order as may be necessary

17 to assure that adequate notification is provided in an ap18 propriate form, by the persons and means best suited

19 under the circumstances involved, to all persons who

20 should properly receive such notification in order to elimi21 nate such risk. The Secretary may order notification by

22 any appropriate means, including public service announce23 ments. Before issuing an order under this subsection, the

24 Secretary shall consult with the persons who are to give

25 notice under the order.
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1 ‘‘(b) NO EXEMPTION FROM OTHER LIABILITY.—

2 Compliance with an order issued under this section shall

3 not relieve any person from liability under Federal or

4 State law. In awarding damages for economic loss in an

5 action brought for the enforcement of any such liability,

6 the value to the plaintiff in such action of any remedy

7 provided under such order shall be taken into account.

8 ‘‘(c) RECALL AUTHORITY.—

9 ‘‘(1) IN GENERAL.—If the Secretary finds that

10 there is a reasonable probability that a tobacco prod11 uct contains a manufacturing or other defect not or12 dinarily contained in tobacco products on the market

13 that would cause serious, adverse health con14 sequences or death, the Secretary shall issue an

15 order requiring the appropriate person (including

16 the manufacturers, importers, distributors, or retail17 ers of the tobacco product) to immediately cease dis18 tribution of such tobacco product. The order shall

19 provide the person subject to the order with an op20 portunity for an informal hearing, to be held not

21 later than 10 days after the date of the issuance of

22 the order, on the actions required by the order and

23 on whether the order should be amended to require

24 a recall of such tobacco product. If, after providing

25 an opportunity for such a hearing, the Secretary de-
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1 termines that inadequate grounds exist to support

2 the actions required by the order, the Secretary shall

3 vacate the order.

4 ‘‘(2) AMENDMENT OF ORDER TO REQUIRE RE5 CALL.—

6 ‘‘(A) If, after providing an opportunity for

7 an informal hearing under paragraph (1), the

8 Secretary determines that the order should be

9 amended to include a recall of the tobacco prod10 uct with respect to which the order was issued,

11 the Secretary shall, except as provided in sub12 paragraph (B), amend the order to require a

13 recall. The Secretary shall specify a timetable in

14 which the tobacco product recall will occur and

15 shall require periodic reports to the Secretary

16 describing the progress of the recall.

17 ‘‘(B) An amended order under subpara18 graph (A)—

19 ‘‘(i) shall not include recall of a to20 bacco product from individuals; and

21 ‘‘(ii) shall provide for notice to per22 sons subject to the risks associated with

23 the use of such tobacco product.

24 In providing the notice required by clause (ii),

25 the Secretary may use the assistance of retail-
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1 ers and other persons who distributed such to2 bacco product. If a significant number of such

3 persons cannot be identified, the Secretary shall

4 notify such persons under section 705(b).

5 ‘‘(3) REMEDY NOT EXCLUSIVE.—The remedy

6 provided by this subsection shall be in addition to

7 remedies provided by subsection (a) of this section.

8 ‘‘SEC. 909. RECORDS AND REPORTS ON TOBACCO PROD9 UCTS.

10 ‘‘(a) IN GENERAL.—Every person who is a tobacco

11 product manufacturer or importer of a tobacco product

12 shall establish and maintain such records, make such re13 ports, and provide such information, as the Secretary may

14 by regulation reasonably require to assure that such to15 bacco product is not adulterated or misbranded and to

16 otherwise protect public health. Regulations prescribed

17 under the preceding sentence—

18 ‘‘(1) may require a tobacco product manufac19 turer or importer to report to the Secretary when20 ever the manufacturer or importer receives or other21 wise becomes aware of information that reasonably

22 suggests that one of its marketed tobacco products

23 may have caused or contributed to a serious unex24 pected adverse experience associated with the use of

25 the product or any significant increase in the fre-
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1 quency of a serious, expected adverse product experi2 ence;

3 ‘‘(2) shall require reporting of other significant

4 adverse tobacco product experiences as determined

5 by the Secretary to be necessary to be reported;

6 ‘‘(3) shall not impose requirements unduly bur7 densome to a tobacco product manufacturer or im8 porter, taking into account the cost of complying

9 with such requirements and the need for the protec10 tion of the public health and the implementation of

11 this chapter;

12 ‘‘(4) when prescribing the procedure for making

13 requests for reports or information, shall require

14 that each request made under such regulations for

15 submission of a report or information to the Sec16 retary state the reason or purpose for such request

17 and identify to the fullest extent practicable such re18 port or information;

19 ‘‘(5) when requiring submission of a report or

20 information to the Secretary, shall state the reason

21 or purpose for the submission of such report or in22 formation and identify to the fullest extent prac23 ticable such report or information; and

24 ‘‘(6) may not require that the identity of any

25 patient or user be disclosed in records, reports, or
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1 information required under this subsection unless re2 quired for the medical welfare of an individual, to

3 determine risks to public health of a tobacco prod4 uct, or to verify a record, report, or information sub5 mitted under this chapter.

6 In prescribing regulations under this subsection, the Sec7 retary shall have due regard for the professional ethics of

8 the medical profession and the interests of patients. The

9 prohibitions of paragraph (6) of this subsection continue

10 to apply to records, reports, and information concerning

11 any individual who has been a patient, irrespective of

12 whether or when he ceases to be a patient.

13 ‘‘(b) REPORTS OF REMOVALS AND CORRECTIONS.—

14 (1) Except as provided in paragraph (3), the

15 Secretary shall by regulation require a tobacco prod16 uct manufacturer or importer of a tobacco product

17 to report promptly to the Secretary any corrective

18 action taken or removal from the market of a to19 bacco product undertaken by such manufacturer or

20 importer if the removal or correction was under21 taken—

22 ‘‘(A) to reduce a risk to health posed by

23 the tobacco product; or
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1 ‘‘(B) to remedy a violation of this chapter

2 caused by the tobacco product which may

3 present a risk to health.

4 A tobacco product manufacturer or importer of a tobacco

5 product who undertakes a corrective action or removal

6 from the market of a tobacco product which is not re7 quired to be reported under this subsection shall keep a

8 record of such correction or removal.

9 ‘‘(2) No report of the corrective action or re10 moval of a tobacco product may be required under

11 paragraph (1) if a report of the corrective action or

12 removal is required and has been submitted under

13 subsection (a) of this section.

14 ‘‘SEC. 910. PREMARKET REVIEW OF CERTAIN TOBACCO

15 PRODUCTS.

16 ‘‘(a) IN GENERAL.—

17 ‘‘(1) PREMARKET APPROVAL REQUIRED.—

18 ‘‘(A) NEW PRODUCTS.—Approval under

19 this section of an application for premarket ap20 proval for any tobacco product that is not com21 mercially marketed (other than for test market22 ing) in the United States as of August 11,

23 1995, is required unless the manufacturer has

24 submitted a report under section 905(j), and

25 the Secretary has issued an order that the to-
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1 bacco product is substantially equivalent to a

2 tobacco product commercially marketed (other

3 than for test marketing) in the United States

4 as of August 11, 1995, that is in compliance

5 with the requirements of this Act.

6 ‘‘(B) PRODUCTS INTRODUCED BETWEEN

7 AUGUST 11, 1995, AND ENACTMENT OF THIS

8 CHAPTER.—Subparagraph (A) does not apply

9 to a tobacco product that—

10 ‘‘(i) was first introduced or delivered

11 for introduction into interstate commerce

12 for commerce for commercial distribution

13 in the United States after August 11,

14 1995, and before the date of enactment of

15 the National Tobacco Policy and Youth

16 Smoking Reduction Act; and

17 ‘‘(ii) for which a report was submitted

18 under section 905(j) within 6 months after

19 such date,

20 until the Secretary issues an order that the to21 bacco product is substantially equivalent for

22 purposes of this section or requires premarket

23 approval.

24 ‘‘(2) SUBSTANTIALLY EQUIVALENT DEFINED.—
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1 ‘‘(A) For purposes of this section and sec2 tion 905(j), the term ‘substantially equivalent’

3 or ‘substantial equivalence’ mean, with respect

4 to the tobacco product being compared to the

5 predicate tobacco product, that the Secretary by

6 order has found that the tobacco product—

7 ‘‘(i) has the same characteristics as

8 the predicate tobacco product; or

9 ‘‘(ii) has different characteristics and

10 the information submitted contains infor11 mation, including clinical data if deemed

12 necessary by the Secretary, that dem13 onstrates that it is not appropriate to reg14 ulate the product under this section be15 cause the product does not raise different

16 questions of public health.

17 ‘‘(B) For purposes of subparagraph (A),

18 the term ‘characteristics’ means the materials,

19 ingredients, design, composition, heating source,

20 or other features of a tobacco product.

21 ‘‘(C) A tobacco product may not be found

22 to be substantially equivalent to a predicate to23 bacco product that has been removed from the

24 market at the initiative of the Secretary or that
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1 has been determined by a judicial order to be

2 misbranded or adulterated.

3 ‘‘(3) HEALTH INFORMATION.—

4 ‘‘(A) As part of a submission under section

5 905(j) respecting a tobacco product, the person

6 required to file a premarket notification under

7 such section shall provide an adequate summary

8 of any health information related to the tobacco

9 product or state that such information will be

10 made available upon request by any person.

11 ‘‘(B) Any summary under subparagraph

12 (A) respecting a tobacco product shall contain

13 detailed information regarding data concerning

14 adverse health effects and shall be made avail15 able to the public by the Secretary within 30

16 days of the issuance of a determination that

17 such tobacco product is substantially equivalent

18 to another tobacco product.

19 ‘‘(b) APPLICATION.—

20 ‘‘(1) CONTENTS.—An application for premarket

21 approval shall contain—

22 ‘‘(A) full reports of all information, pub23 lished or known to or which should reasonably

24 be known to the applicant, concerning investiga25 tions which have been made to show the health
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1 risks of such tobacco product and whether such

2 tobacco product presents less risk than other

3 tobacco products;

4 ‘‘(B) a full statement of the components,

5 ingredients, and properties, and of the principle

6 or principles of operation, of such tobacco prod7 uct;

8 ‘‘(C) a full description of the methods used

9 in, and the facilities and controls used for, the

10 manufacture, processing, and, when relevant,

11 packing and installation of, such tobacco prod12 uct;

13 ‘‘(D) an identifying reference to any per14 formance standard under section 907 which

15 would be applicable to any aspect of such to16 bacco product, and either adequate information

17 to show that such aspect of such tobacco prod18 uct fully meets such performance standard or

19 adequate information to justify any deviation

20 from such standard;

21 ‘‘(E) such samples of such tobacco product

22 and of components thereof as the Secretary

23 may reasonably require;

24 ‘‘(F) specimens of the labeling proposed to

25 be used for such tobacco product; and
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1 ‘‘(G) such other information relevant to

2 the subject matter of the application as the Sec3 retary may require.

4 ‘‘(2) REFERENCE TO ADVISORY COMMITTEE.—

5 Upon receipt of an application meeting the require6 ments set forth in paragraph (1), the Secretary—

7 ‘‘(A) may, on the Secretary’s own initia8 tive; or

9 ‘‘(B) shall, upon the request of an appli10 cant,

11 refer such application to an advisory committee and

12 for submission (within such period as the Secretary

13 may establish) of a report and recommendation re14 specting approval of the application, together with

15 all underlying data and the reasons or basis for the

16 recommendation.

17 ‘‘(c) ACTION ON APPLICATION.—

18 ‘‘(1) DEADLINE.—

19 ‘‘(A) As promptly as possible, but in no

20 event later than 180 days after the receipt of

21 an application under subsection (b) of this sec22 tion, the Secretary, after considering the report

23 and recommendation submitted under para24 graph (2) of such subsection, shall—
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1 ‘‘(i) issue an order approving the ap2 plication if the Secretary finds that none of

3 the grounds for denying approval specified

4 in paragraph (2) of this subsection applies;

5 or

6 ‘‘(ii) deny approval of the application

7 if the Secretary finds (and sets forth the

8 basis for such finding as part of or accom9 panying such denial) that one or more

10 grounds for denial specified in paragraph

11 (2) of this subsection apply.

12 ‘‘(B) An order approving an application for

13 a tobacco product may require as a condition to

14 such approval that the sale and distribution of

15 the tobacco product be restricted but only to

16 the extent that the sale and distribution of a to17 bacco product may be restricted under a regula18 tion under section 906(d).

19 ‘‘(2) DENIAL OF APPROVAL.—The Secretary

20 shall deny approval of an application for a tobacco

21 product if, upon the basis of the information submit22 ted to the Secretary as part of the application and

23 any other information before the Secretary with re24 spect to such tobacco product, the Secretary finds

25 that—
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1 ‘‘(A) there is a lack of a showing that per2 mitting such tobacco product to be marketed

3 would be appropriate for the protection of the

4 public health;

5 ‘‘(B) the methods used in, or the facilities

6 or controls used for, the manufacture, process7 ing, or packing of such tobacco product do not

8 conform to the requirements of section 906(e);

9 ‘‘(C) based on a fair evaluation of all mate10 rial facts, the proposed labeling is false or mis11 leading in any particular; or

12 ‘‘(D) such tobacco product is not shown to

13 conform in all respects to a performance stand14 ard in effect under section 907, compliance with

15 which is a condition to approval of the applica16 tion, and there is a lack of adequate informa17 tion to justify the deviation from such standard.

18 ‘‘(3) DENIAL INFORMATION.—Any denial of an

19 application shall, insofar as the Secretary determines

20 to be practicable, be accompanied by a statement in21 forming the applicant of the measures required to

22 place such application in approvable form (which

23 measures may include further research by the appli24 cant in accordance with one or more protocols pre25 scribed by the Secretary).
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1 ‘‘(4) BASIS FOR FINDING.—For purposes of

2 this section, the finding as to whether approval of a

3 tobacco product is appropriate for the protection of

4 the public health shall be determined with respect to

5 the risks and benefits to the population as a whole,

6 including users and non-users of the tobacco prod7 uct, and taking into account—

8 ‘‘(A) the increased or decreased likelihood

9 that existing users of tobacco products will stop

10 using such products; and

11 ‘‘(B) the increased or decreased likelihood

12 that those who do not use tobacco products will

13 start using such products.

14 ‘‘(5) BASIS FOR ACTION.—

15 ‘‘(A) For purposes of paragraph (2)(A),

16 whether permitting a tobacco product to be

17 marketed would be appropriate for the protec18 tion of the public health shall, when appro19 priate, be determined on the basis of well-con20 trolled investigations, which may include one or

21 more clinical investigations by experts qualified

22 by training and experience to evaluate the to23 bacco product.

24 ‘‘(B) If the Secretary determines that

25 there exists valid scientific evidence (other than
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1 evidence derived from investigations described

2 in subparagraph (A)) which is sufficient to

3 evaluate the tobacco product the Secretary may

4 authorize that the determination for purposes

5 of paragraph (2)(A) be made on the basis of

6 such evidence.

7 ‘‘(d) WITHDRAWAL AND TEMPORARY SUSPENSION.—

8 ‘‘(1) IN GENERAL.—The Secretary shall, upon

9 obtaining, where appropriate, advice on scientific

10 matters from an advisory committee, and after due

11 notice and opportunity for informal hearing to the

12 holder of an approved application for a tobacco

13 product, issue an order withdrawing approval of the

14 application if the Secretary finds—

15 ‘‘(A) that the continued marketing of such

16 tobacco product no longer is appropriate for the

17 protection of the public health;

18 ‘‘(B) that the application contained or was

19 accompanied by an untrue statement of a mate20 rial fact;

21 ‘‘(C) that the applicant—

22 ‘‘(i) has failed to establish a system

23 for maintaining records, or has repeatedly

24 or deliberately failed to maintain records
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1 or to make reports, required by an applica2 ble regulation under section 909;

3 ‘‘(ii) has refused to permit access to,

4 or copying or verification of, such records

5 as required by section 704; or

6 ‘‘(iii) has not complied with the re7 quirements of section 905;

8 ‘‘(D) on the basis of new information be9 fore the Secretary with respect to such tobacco

10 product, evaluated together with the evidence

11 before the Secretary when the application was

12 approved, that the methods used in, or the fa13 cilities and controls used for, the manufacture,

14 processing, packing, or installation of such to15 bacco product do not conform with the require16 ments of section 906(e) and were not brought

17 into conformity with such requirements within a

18 reasonable time after receipt of written notice

19 from the Secretary of nonconformity;

20 ‘‘(E) on the basis of new information be21 fore the Secretary, evaluated together with the

22 evidence before the Secretary when the applica23 tion was approved, that the labeling of such to24 bacco product, based on a fair evaluation of all

25 material facts, is false or misleading in any par-
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1 ticular and was not corrected within a reason2 able time after receipt of written notice from

3 the Secretary of such fact; or

4 ‘‘(F) on the basis of new information be5 fore the Secretary, evaluated together with the

6 evidence before the Secretary when the applica7 tion was approved, that such tobacco product is

8 not shown to conform in all respects to a per9 formance standard which is in effect under sec10 tion 907, compliance with which was a condi11 tion to approval of the application, and that

12 there is a lack of adequate information to jus13 tify the deviation from such standard.

14 ‘‘(2) APPEAL.—The holder of an application

15 subject to an order issued under paragraph (1) with16 drawing approval of the application may, by petition

17 filed on or before the thirtieth day after the date

18 upon which he receives notice of such withdrawal,

19 obtain review thereof in accordance with subsection

20 (e) of this section.

21 ‘‘(3) TEMPORARY SUSPENSION.—If, after pro22 viding an opportunity for an informal hearing, the

23 Secretary determines there is reasonable probability

24 that the continuation of distribution of a tobacco

25 product under an approved application would cause
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1 serious, adverse health consequences or death, that

2 is greater than ordinarily caused by tobacco prod3 ucts on the market, the Secretary shall by order

4 temporarily suspend the approval of the application

5 approved under this section. If the Secretary issues

6 such an order, the Secretary shall proceed expedi7 tiously under paragraph (1) to withdraw such appli8 cation.

9 ‘‘(e) SERVICE OF ORDER.—An order issued by the

10 Secretary under this section shall be served—

11 ‘‘(1) in person by any officer or employee of the

12 department designated by the Secretary; or

13 ‘‘(2) by mailing the order by registered mail or

14 certified mail addressed to the applicant at the ap15 plicant’s last known address in the records of the

16 Secretary.

17 ‘‘SEC. 911. JUDICIAL REVIEW.

18 ‘‘(a) IN GENERAL.—Not later than 30 days after—

19 ‘‘(1) the promulgation of a regulation under

20 section 907 establishing, amending, or revoking a

21 performance standard for a tobacco product; or

22 ‘‘(2) a denial of an application for approval

23 under section 910(c),

24 any person adversely affected by such regulation or order

25 may file a petition with the United States Court of Ap-
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1 peals for the District of Columbia or for the circuit where2 in such person resides or has his principal place of busi3 ness for judicial review of such regulation or order. A copy

4 of the petition shall be transmitted by the clerk of the

5 court to the Secretary or other officer designated by the

6 Secretary for that purpose. The Secretary shall file in the

7 court the record of the proceedings on which the Secretary

8 based the Secretary’s regulation or order and each record

9 or order shall contain a statement of the reasons for its

10 issuance and the basis, on the record, for its issuance. For

11 purposes of this section, the term ‘record’ means all no12 tices and other matter published in the Federal Register

13 with respect to the regulation or order reviewed, all infor14 mation submitted to the Secretary with respect to such

15 regulation or order, proceedings of any panel or advisory

16 committee with respect to such regulation or order, any

17 hearing held with respect to such regulation or order, and

18 any other information identified by the Secretary, in the

19 administrative proceeding held with respect to such regu20 lation or order, as being relevant to such regulation or

21 order.

22 ‘‘(b) COURT MAY ORDER SECRETARY TO MAKE AD23 DITIONAL FINDINGS.—If the petitioner applies to the

24 court for leave to adduce additional data, views, or argu25 ments respecting the regulation or order being reviewed
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1 and shows to the satisfaction of the court that such addi2 tional data, views, or arguments are material and that

3 there were reasonable grounds for the petitioner’s failure

4 to adduce such data, views, or arguments in the proceed5 ings before the Secretary, the court may order the Sec6 retary to provide additional opportunity for the oral pres7 entation of data, views, or arguments and for written sub8 missions. The Secretary may modify the Secretary’s find9 ings, or make new findings by reason of the additional

10 data, views, or arguments so taken and shall file with the

11 court such modified or new findings, and the Secretary’s

12 recommendation, if any, for the modification or setting

13 aside of the regulation or order being reviewed, with the

14 return of such additional data, views, or arguments.

15 ‘‘(c) STANDARD OF REVIEW.—Upon the filing of the

16 petition under subsection (a) of this section for judicial

17 review of a regulation or order, the court shall have juris18 diction to review the regulation or order in accordance

19 with chapter 7 of title 5, United States Code, and to grant

20 appropriate relief, including interim relief, as provided in

21 such chapter. A regulation or order described in paragraph

22 (1) or (2) of subsection (a) of this section shall not be

23 affirmed if it is found to be unsupported by substantial

24 evidence on the record taken as a whole.
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1 ‘‘(d) FINALITY OF JUDGMENT.—The judgment of the

2 court affirming or setting aside, in whole or in part, any

3 regulation or order shall be final, subject to review by the

4 Supreme Court of the United States upon certiorari or

5 certification, as provided in section 1254 of title 28,

6 United States Code.

7 ‘‘(e) OTHER REMEDIES.—The remedies provided for

8 in this section shall be in addition to and not in lieu of

9 any other remedies provided by law.

10 ‘‘(f) REGULATIONS AND ORDERS MUST RECITE

11 BASIS IN RECORD.—To facilitate judicial review under

12 this section or under any other provision of law of a regu13 lation or order issued under section 906, 907, 908, 909,

14 910, or 914, each such regulation or order shall contain

15 a statement of the reasons for its issuance and the basis,

16 in the record of the proceedings held in connection with

17 its issuance, for its issuance.

18 ‘‘SEC. 912. POSTMARKET SURVEILLANCE

19 ‘‘(a) DISCRETIONARY SURVEILLANCE.—The Sec20 retary may require a tobacco product manufacturer to

21 conduct postmarket surveillance for a tobacco product of

22 the manufacturer if the Secretary determines that

23 postmarket surveillance of the tobacco product is nec24 essary to protect the public health or is necessary to pro-
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1 vide information regarding the health risks and other safe2 ty issues involving the tobacco product.

3 ‘‘(b) SURVEILLANCE APPROVAL.—Each tobacco

4 product manufacturer required to conduct a surveillance

5 of a tobacco product under subsection (a) of this section

6 shall, within 30 days after receiving notice that the manu7 facturer is required to conduct such surveillance, submit,

8 for the approval of the Secretary, a protocol for the re9 quired surveillance. The Secretary, within 60 days of the

10 receipt of such protocol, shall determine if the principal

11 investigator proposed to be used in the surveillance has

12 sufficient qualifications and experience to conduct such

13 surveillance and if such protocol will result in collection

14 of useful data or other information necessary to protect

15 the public health. The Secretary may not approve such

16 a protocol until it has been reviewed by an appropriately

17 qualified scientific and technical review committee estab18 lished by the Secretary.

19 ‘‘SEC. 913. REDUCED RISK TOBACCO PRODUCTS.

20 ‘‘(a) REQUIREMENTS.—

21 ‘‘(1) IN GENERAL.—For purposes of this sec22 tion, the term ‘reduced risk tobacco product’ means

23 a tobacco product designated by the Secretary under

24 paragraph (2).

25 ‘‘(2) DESIGNATION.—
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1 ‘‘(A) IN GENERAL.—A product may be

2 designated by the Secretary as a reduced risk

3 tobacco product if the Secretary finds that the

4 product will significantly reduce harm to indi5 viduals caused by a tobacco product and is oth6 erwise appropriate to protect public health,

7 based on an application submitted by the manu8 facturer of the product (or other responsible

9 person) that—

10 ‘‘(i) demonstrates through testing on

11 animals and short-term human testing that

12 use of such product results in ingestion or

13 inhalation of a substantially lower yield of

14 toxic substances than use of conventional

15 tobacco products in the same category as

16 the proposed reduced risk product; and

17 ‘‘(ii) if required by the Secretary, in18 cludes studies of the long-term health ef19 fects of the product.

20 If such studies are required, the manufacturer

21 may consult with the Secretary regarding proto22 cols for conducting the studies.

23 ‘‘(B) BASIS FOR FINDING.—In making the

24 finding under subparagraph (A), the Secretary

25 shall take into account—
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1 ‘‘(i) the risks and benefits to the pop2 ulation as a whole, including both users of

3 tobacco products and non-users of tobacco

4 products;

5 ‘‘(ii) the increased or decreased likeli6 hood that existing users of tobacco prod7 ucts will stop using such products includ8 ing reduced risk tobacco products;

9 ‘‘(iii) the increased or decreased likeli10 hood that those who do not use tobacco

11 products will start to use such products,

12 including reduced risk tobacco products;

13 and

14 ‘‘(iv) the risks and benefits to con15 sumers from the use of a reduced risk to16 bacco product as compared to the use of

17 products approved under chapter V to re18 duce exposure to tobacco.

19 ‘‘(3) MARKETING REQUIREMENTS.—A tobacco

20 product may be marketed and labeled as a reduced

21 risk tobacco product if it—

22 ‘‘(A) has been designated as a reduced risk

23 tobacco product by the Secretary under para24 graph (2);
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1 ‘‘(B) bears a label prescribed by the Sec2 retary concerning the product’s contribution to

3 reducing harm to health; and

4 ‘‘(C) complies with requirements prescribed

5 by the Secretary relating to marketing and ad6 vertising of the product, and other provisions of

7 this chapter as prescribed by the Secretary.

8 ‘‘(b) REVOCATION OF DESIGNATION.—At any time

9 after the date on which a tobacco product is designated

10 as a reduced risk tobacco product under this section the

11 Secretary may, after providing an opportunity for an in12 formal hearing, revoke such designation if the Secretary

13 determines, based on information not available at the time

14 of the designation, that—

15 ‘‘(1) the finding made under subsection (a)(2)

16 is no longer valid; or

17 ‘‘(2) the product is being marketed in violation

18 of subsection (a)(3).

19 ‘‘(c) LIMITATION.—A tobacco product that is des20 ignated as a reduced risk tobacco product that is in com21 pliance with subsection (a) shall not be regulated as a

22 drug or device.

23 ‘‘(d) DEVELOPMENT OF REDUCED RISK TOBACCO

24 PRODUCT TECHNOLOGY.—A tobacco product manufac25 turer shall provide written notice to the Secretary upon
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1 the development or acquisition by the manufacturer of any

2 technology that would reduce the risk of a tobacco product

3 to the health of the user for which the manufacturer is

4 not seeking designation as a ‘reduced risk tobacco product’

5 under subsection (a).

6 ‘‘SEC. 914. PRESERVATION OF STATE AND LOCAL AUTHOR7 ITY.

8 ‘‘(a) ADDITIONAL REQUIREMENTS.—

9 ‘‘(1) IN GENERAL.—Except as provided in para10 graph (2), nothing in this Act shall be construed as

11 prohibiting a State or political subdivision thereof

12 from adopting or enforcing a requirement applicable

13 to a tobacco product that is in addition to, or more

14 stringent than, requirements established under this

15 chapter.

16 ‘‘(2) PREEMPTION OF CERTAIN STATE AND

17 LOCAL REQUIREMENTS.—

18 ‘‘(A) Except as provided in subparagraph

19 (B), no State or political subdivision of a State

20 may establish or continue in effect with respect

21 to a tobacco product any requirement which is

22 different from, or in addition to, any require23 ment applicable under the provisions of this

24 chapter relating to performance standards, pre25 market approval, adulteration, misbranding,
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1 registration, reporting, good manufacturing

2 standards, or reduced risk products.

3 ‘‘(B) Subparagraph (A) does not apply to

4 requirements relating to the sale, use, or dis5 tribution of a tobacco product including require6 ments related to the access to, and the advertis7 ing and promotion of, a tobacco product.

8 ‘‘(b) RULE OF CONSTRUCTION REGARDING PRODUCT

9 LIABILITY.—No provision of this chapter relating to a to10 bacco product shall be construed to modify or otherwise

11 affect any action or the liability of any person under the

12 product liability law of any State.

13 ‘‘(c) WAIVERS.—Upon the application of a State or

14 political subdivision thereof, the Secretary may, by regula15 tion promulgated after notice and an opportunity for an

16 oral hearing, exempt from subsection (a), under such con17 ditions as may be prescribed in such regulation, a require18 ment of such State or political subdivision applicable to

19 a tobacco product if—

20 ‘‘(1) the requirement is more stringent than a

21 requirement applicable under the provisions de22 scribed in subsection (a)(3) which would be applica23 ble to the tobacco product if an exemption were not

24 in effect under this subsection; or

25 ‘‘(2) the requirement—
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1 ‘‘(A) is required by compelling local condi2 tions; and

3 ‘‘(B) compliance with the requirement

4 would not cause the tobacco product to be in

5 violation of any applicable requirement of this

6 chapter.

7 ‘‘SEC. 915. EQUAL TREATMENT OF RETAIL OUTLETS.

8 ‘‘The Secretary shall issue regulations to require that

9 retail establishments for which the predominant business

10 is the sale of tobacco products comply with any advertising

11 restrictions applicable to retail establishments accessible

12 to individuals under the age of 18.’’.

13 SEC. 102. CONFORMING AND OTHER AMENDMENTS TO GEN14 ERAL PROVISIONS.

15 (a) AMENDMENT OF FEDERAL FOOD, DRUG, AND

16 COSMETIC ACT.—Except as otherwise expressly provided,

17 whenever in this section an amendment is expressed in

18 terms of an amendment to, or repeal of, a section or other

19 provision, the reference is to a section or other provision

20 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.

21 301 et seq.).

22 (b) SECTION 301.—Section 301 (21 U.S.C. 331) is

23 amended—

24 (1) by inserting ‘‘tobacco product,’’ in sub25 section (a) after ‘‘device,’’;
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1 (2) by inserting ‘‘tobacco product,’’ in sub2 section (b) after ‘‘device,’’;

3 (3) by inserting ‘‘tobacco product,’’ in sub4 section (c) after ‘‘device,’’;

5 (4) by striking ‘‘515(f), or 519’’ in subsection

6 (e) and inserting ‘‘515(f), 519, or 909’’;

7 (5) by inserting ‘‘tobacco product,’’ in sub8 section (g) after ‘‘device,’’;

9 (6) by inserting ‘‘tobacco product,’’ in sub10 section (h) after ‘‘device,’’;

11 (7) by striking ‘‘708, or 721’’ in subsection (j)

12 and inserting ‘‘708, 721, 904, 905, 906, 907, 908,

13 or 909’’;

14 (8) by inserting ‘‘tobacco product,’’ in sub15 section (k) after ‘‘device,’’;

16 (9) by striking subsection (p) and inserting the

17 following:

18 ‘‘(p) The failure to register in accordance with section

19 510 or 905, the failure to provide any information re20 quired by section 510(j), 510(k), 905(i), or 905(j), or the

21 failure to provide a notice required by section 510(j)(2)

22 or 905(J)(2).’’;

23 (10) by striking subsection (q)(1) and inserting

24 the following:

25 ‘‘(q)(1) The failure or refusal—
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1 ‘‘(A) to comply with any requirement prescribed

2 under section 518, 520(g), 906(f), or 908;

3 ‘‘(B) to furnish any notification or other mate4 rial or information required by or under section 519,

5 520(g), 904, 906(f), or 909; or

6 ‘‘(C) to comply with a requirement under sec7 tion 522 or 912.’’;

8 (11) by striking ‘‘device,’’ in subsection (q)(2)

9 and inserting ‘‘device or tobacco product,’’;

10 (12) by inserting ‘‘or tobacco product’’ in sub11 section (r) after ‘‘device’’ each time that it appears;

12 and

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

14 ‘‘(aa) The sale of tobacco products in violation

15 of a no-tobacco-sale order issued under section

16 303(f).’’.

17 (c) SECTION 303.—Section 303(f) (21 U.S.C. 333(f))

18 is amended—

19 (1) by amending the caption to read as follows:

20 ‘‘(f) CIVIL PENALTIES; NO-TOBACCO-SALE OR21 DERS.—’’;

22 (2) by inserting ‘‘or tobacco products’’ after

23 ‘‘devices’’ in paragraph (1)(A);
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1 (3) by redesignating paragraphs (3), (4), and

2 (5) as paragraphs (4), (5), and (6), and inserting

3 after paragraph (2) the following:

4 ‘‘(3) If the Secretary finds that a person has

5 committed repeated violations of restrictions promul6 gated under section 906(d) at a particular retail out7 let then the Secretary may impose a no-tobacco-sale

8 order on that person prohibiting the sale of tobacco

9 products in that outlet. A no-tobacco-sale order may

10 be imposed with a civil penalty under paragraph

11 (1).’’;

12 (4) by striking ‘‘assessed’’ the first time it ap13 pears in subparagraph (A) of paragraph (4), as re14 designated, and inserting ‘‘assessed, or a no-tobacco15 sale order may be imposed,’’;

16 (5) by striking ‘‘penalty’’ in such subparagraph

17 and inserting ‘‘penalty, or upon whom a no-tobacco18 order is to be imposed,’’;

19 (6) by inserting after ‘‘penalty,’’ in subpara20 graph (B) of paragraph (4), as redesignated, the fol21 lowing: ‘‘or the period to be covered by a no-tobacco22 sale order,’’;

23 (7) by adding at the end of such subparagraph

24 the following: ‘‘A no-tobacco-sale order permanently

25 prohibiting an individual retail outlet from selling to-
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1 bacco products shall include provisions that allow

2 the outlet, after a specified period of time, to request

3 that the Secretary compromise, modify, or terminate

4 the order.’’;

5 (8) by adding at the end of paragraph (4), as

6 redesignated, the following:

7 ‘‘(D) The Secretary may compromise, mod8 ify, or terminate, with or without conditions,

9 any no-tobacco-sale order.’’;

10 (9) by striking ‘‘(3)(A)’’ in paragraph (5), as

11 resdesignated, and inserting ‘‘(4)(A)’’;

12 (10) by inserting ‘‘or the imposition of a no-to13 bacco-sale order’’ after ‘‘penalty’’ the first 2 places

14 it appears in such paragraph;

15 (11) by striking ‘‘issued.’’ in such paragraph

16 and inserting ‘‘issued, or on which the no-tobacco17 sale order was imposed, as the case may be.’’; and

18 (12) by striking ‘‘paragraph (4)’’ each place it

19 appears in paragraph (6), as redesignated, and in20 serting ‘‘paragraph (5)’’.

21 (d) SECTION 304.—Section 304 (21 U.S.C. 334) is

22 amended—

23 (1) by striking ‘‘and’’ before ‘‘(D)’’ in sub24 section (a)(2);
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1 (2) by striking ‘‘device.’’ in subsection (a)(2)

2 and inserting a comma and ‘‘(E) Any adulterated or

3 misbranded tobacco product.’’;

4 (3) by inserting ‘‘tobacco product,’’ in sub5 section (d)(1) after ‘‘device,’’;

6 (4) by inserting ‘‘or tobacco product’’ in sub7 section (g)(1) after ‘‘device’’ each place it appears;

8 and

9 (5) by inserting ‘‘or tobacco product’’ in sub10 section (g)(2)(A) after ‘‘device’’ each place it ap11 pears.

12 (e) SECTION 702.—Section 702(a) (21 U.S.C.

13 372(a)) is amended—

14 (1) by inserting ‘‘(1)’’ after ‘‘(a)’’; and

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

16 ‘‘(2) For a tobacco product, to the extent feasible,

17 the Secretary shall contract with the States in accordance

18 with paragraph (1) to carry out inspections of retailers

19 in connection with the enforcement of this Act.’’.

20 (f) SECTION 703.—Section 703 (21 U.S.C. 373) is

21 amended—

22 (1) by inserting ‘‘tobacco product,’’ after ‘‘de23 vice,’’ each place it appears; and

24 (2) by inserting ‘‘tobacco products,’’ after ‘‘de25 vices,’’ each place it appears.
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1 (g) SECTION 704.—Section 704 (21 U.S.C. 374) is

2 amended—

3 (1) by inserting ‘‘tobacco products,’’ in sub4 section (a)(1)(A) after ‘‘devices,’’ each place it ap5 pears;

6 (2) by inserting ‘‘or tobacco products’’ in sub7 section (a)(1)(B) after ‘‘restricted devices’’ each

8 place it appears; and

9 (3) by inserting ‘‘tobacco product,’’ in sub10 section (b) after ‘‘device,’’.

11 (h) SECTION 705.—Section 705(b) (21 U.S.C.

12 375(b)) is amended by inserting ‘‘tobacco products,’’ after

13 ‘‘devices,’’.

14 (i) SECTION 709.—Section 709 (21 U.S. C. 379) is

15 amended by inserting ‘‘or tobacco product’’ after ‘‘device’’.

16 (j) SECTION 801.—Section 801 (21 U.S.C. 381) is

17 amended—

18 (1) by inserting ‘‘tobacco products,’’ after ‘‘de19 vices,’’ in subsection (a) the first time it appears;

20 (2) by inserting ‘‘or subsection (j) of section

21 905’’ in subsection (a) after ‘‘section 510’’; and

22 (3) by striking ‘‘drugs or devices’’ each time it

23 appears in subsection (a) and inserting ‘‘drugs, de24 vices, or tobacco products’’;
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1 (4) by inserting ‘‘tobacco product,’’ in sub2 section (e)(1) after ‘‘device,’’;

3 (5) by redesignating paragraph (4) of sub4 section (e) as paragraph (5) and inserting after

5 paragraph (3), the following:

6 ‘‘(4) Paragraph (1) does not apply to any to7 bacco product—

8 ‘‘(A) which does not comply with an appli9 cable requirement of section 907 or 910; or

10 ‘‘(B) which under section 906(f) is exempt

11 from either such section.

12 This paragraph does not apply if the Secretary has

13 determined that the exportation of the tobacco prod14 uct is not contrary to the public health and safety

15 and has the approval of the country to which it is

16 intended for export or the tobacco product is eligible

17 for export under section 802.’’.

18 (k) SECTION 802.—Section 802 (21 U.S.C. 382) is

19 amended—

20 (1) by striking ‘‘device—’’ in subsection (a) and

21 inserting ‘‘device or tobacco product—’’;

22 (2) by striking ‘‘and’’ after the semicolon in

23 subsection (a)(1)(C);
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1 (3) by striking subparagraph (C) of subsection

2 (a)(2) and all that follows in that subsection and in3 serting the following:

4 ‘‘(C) is a banned device under section 516;

5 or

6 ‘‘(3) which, in the case of a tobacco product—

7 ‘‘(A) does not comply with an applicable

8 requirement of section 907 or 910; or

9 ‘‘(B) under section 906(f) is exempt from

10 either such section,

11 is adulterated, misbranded, and in violation of such

12 sections or Act unless the export of the drug, device,

13 or tobacco product is, except as provided in sub14 section (f), authorized under subsection (b), (c), (d),

15 or (e) of this section or section 801(e)(2) or

16 801(e)(4). If a drug, device, or tobacco product de17 scribed in paragraph (1), (2), or (3) may be ex18 ported under subsection (b) and if an application for

19 such drug or device under section 505, 515, or 910

20 of this Act or section 351 of the Public Health Serv21 ice Act (42 U.S.C. 262) was disapproved, the Sec22 retary shall notify the appropriate public health offi23 cial of the country to which such drug, device, or to24 bacco product will be exported of such disapproval.’’;
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1 (4) by inserting ‘‘or tobacco product’’ in sub2 section (b)(1)(A) after ‘‘device’’ each time it ap3 pears;

4 (5) by inserting ‘‘or tobacco product’’ in sub5 section (c) after ‘‘device’’ and inserting ‘‘or section

6 906(f)’’ after ‘‘520(g).’’;

7 (6) by inserting ‘‘or tobacco product’’ in sub8 section (f) after ‘‘device’’ each time it appears; and

9 (7) by inserting ‘‘or tobacco product’’ in sub10 section (g) after ‘‘device’’ each time it appears.

11 (l) SECTION 1003.—Section 1003(d)(2)(C) (as redes12 ignated by section 101(a)) is amended—

13 (1) by striking ‘‘and’’ after ‘‘cosmetics,’’; and

14 (2) inserting a comma and ‘‘and tobacco prod15 ucts’’ after ‘‘devices’’.

16 (m) EFFECTIVE DATE FOR NO-TOBACCO-SALE

17 ORDER AMENDMENTS.—The amendments made by sub18 section (c), other than the amendment made by paragraph

19 (2) thereof, shall take effect only upon the promulgation

20 of final regulations by the Secretary—

21 (1) defining the term ‘‘repeated violation’’, as

22 used in section 303(f) of the Federal Food, Drug,

23 and Cosmetic Act (21 U.S.C. 333(f)) as amended by

24 subsection (c), by identifying the number of viola-
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1 tions of particular requirements over a specified pe2 riod of time that constitute a repeated violation;

3 (2) providing for notice to the retailer of each

4 violation at a particular retail outlet;

5 (3) providing that a person may not be charged

6 with a violation at a particular retail outlet unless

7 the Secretary has provided notice to the retailer of

8 all previous violations at that outlet;

9 (4) establishing a period of time during which,

10 if there are no violations by a particular retail out11 let, that outlet will not considered to have been the

12 site of repeated violations when the next violation oc13 curs; and

14 (5) providing that good faith reliance on false

15 identification does not constitute a violation of any

16 minimum age requirement for the sale of tobacco

17 products.

18 SEC. 103. CONSTRUCTION OF CURRENT REGULATIONS.

19 (a) IN GENERAL.—The final regulations promulgated

20 by the Secretary in the August 28, 1996, issue of the Fed21 eral Register (62 Fed. Reg. 44615-44618) and codified

22 at part 897 of title 21, Code of Federal Regulations, are

23 hereby deemed to be lawful and to have been lawfully pro24 mulgated by the Secretary under chapter IX and section

25 701 of the Federal Food, Drug, and Cosmetic Act, as
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1 amended by this Act, and not under chapter V of the Fed2 eral Food, Drug, and Cosmetic Act. The provisions of part

3 897 that are not in effect on the date of enactment of

4 this Act shall take effect as in such part or upon such

5 later date as determined by the Secretary by order. The

6 Secretary shall amend the designation of authority in such

7 regulations in accordance with this subsection.

8 (b) LIMITATION ON ADVISORY OPINIONS.—As of the

9 date of enactment of this Act, the following documents

10 issued by the Food and Drug Administration shall not

11 constitute advisory opinions under section 10.85(d)(1) of

12 title 21, Code of Federal Regulations, except as they apply

13 to tobacco products, and shall not be cited by the Sec14 retary or the Food and Drug Administration as binding

15 precedent.

16 (1) The preamble to the proposed rule in the

17 document entitled ‘‘Regulations Restricting the Sale

18 and Distribution of Cigarettes and Smokeless To19 bacco Products to Protect Children and Adoles20 cents’’ (60 Fed. Reg. 41314–41372 (August 11,

21 1995)).

22 (2) The document entitled ‘‘Nicotine in Ciga23 rettes and Smokeless Tobacco Products is a Drug

24 and These Products Are Nicotine Delivery Devices
101

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1 Under the Federal Food, Drug, and Cosmetic Act;;

2 (60 Fed. Reg. 41453–41787 (August 11, 1995)).

3 (3) The preamble to the final rule in the docu4 ment entitled ‘‘Regulations Restricting the Sale and

5 Distribution of Cigarettes and Smokeless Tobacco to

6 Protect Children and Adolescents’’ (61 Fed. Reg.

7 44396–44615 (August 28, 1996)).

8 (4) The document entitled ‘‘Nicotine in Ciga9 rettes and Smokeless Tobacco is a Drug and These

10 Products are Nicotine Delivery Devices Under the

11 Federal Food, Drug, and Cosmetic Act; Jurisdic12 tional Determination; (61 Fed. Reg. 44619–45318

13 (August 28, 1996)).

14 TITLE II—REDUCTIONS IN

15 UNDERAGE TOBACCO USE

16 Subtitle A—Underage Use

17 SEC. 201. FINDINGS.

18 The Congress finds the following:

19 (1) Reductions in the underage use of tobacco

20 products are critically important to the public

21 health.

22 (2) Achieving this critical public health goal can

23 be substantially furthered by increasing the price of

24 tobacco products to discourage underage use if re25 duction targets are not achieved and by creating fi-
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1 nancial incentives for manufacturers to discourage

2 youth from using their tobacco products.

3 (3) When reduction targets in underage use are

4 not achieved on an industry-wide basis, the price in5 creases that will result from an industry-wide assess6 ment will provide an additional deterrence to youth

7 tobacco use.

8 (4) Manufacturer-specific incentives that will be

9 imposed if reduction targets are not met by a manu10 facturer provide a strong incentive for each manu11 facturer to make all efforts to discourage youth use

12 of its brands and ensure the effectiveness of the in13 dustry-wide assessments.

14 SEC. 202. PURPOSE.

15 This title is intended to ensure that, in the event that

16 other measures contained in this Act prove to be inad17 equate to produce substantial reductions in tobacco use

18 by minors, tobacco companies will pay additional assess19 ments. These additional assessments are designed to lower

20 youth tobacco consumption in a variety of ways: by trig21 gering further increases in the price of tobacco products,

22 by encouraging tobacco companies to work to meet statu23 tory targets for reductions in youth tobacco consumption,

24 and providing support for further reduction efforts.
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1 SEC. 203. GOALS FOR REDUCING UNDERAGE TOBACCO USE.

2 (a) GOALS.—As part of a comprehensive national to3 bacco control policy, the Secretary, working in cooperation

4 with State, Tribal, and local governments and the private

5 sector, shall take all actions under this Act necessary to

6 ensure that the required percentage reductions in under7 age use of tobacco products set forth in this title are

8 achieved.

9 (b) REQUIRED REDUCTIONS FOR CIGARETTES.—

10 With respect to cigarettes, the required percentage reduc11 tion in underage use, as set forth in section 204, means—

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

12 (c) REQUIRED REDUCTIONS FOR SMOKELESS TO13 BACCO.—With respect to smokeless tobacco products, the

14 required percentage reduction in underage use, as set

15 forth in section 204, means—

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
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1 SEC. 204. LOOK-BACK ASSESSMENT.

2 (a) ANNUAL PERFORMANCE SURVEY.—Beginning no

3 later than 1999 and annually thereafter the Secretary

4 shall conduct a survey, in accordance with the methodol5 ogy in subsection (d)(1), to determine—

6 (1) the percentage of all young individuals who

7 used a type of tobacco product within the past 30

8 days; and

9 (2) the percentage of young individuals who

10 identify each brand of each type of tobacco product

11 as the usual brand of that type smoked or used

12 within the past 30 days.

13 (b) ANNUAL DETERMINATION.—The Secretary shall

14 make an annual determination, based on the annual per15 formance survey conducted under subsection (a), of

16 whether the required percentage reductions in underage

17 use of tobacco products for a year have been achieved for

18 the year involved. The determination shall be based on the

19 annual percent prevalence of the use of tobacco products,

20 for the industry as a whole and of particular manufactur21 ers, by young individuals (as determined by the surveys

22 conducted by the Secretary) for the year involved as com23 pared to the base incidence percentages.

24 (c) CONFIDENTIALITY OF DATA.—The Secretary

25 may conduct a survey relating to tobacco use involving mi26 nors. If the information collected in the course of conduct-
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1 ing the annual performance survey results in the individ2 ual supplying the information or described in it to be iden3 tifiable, the information may not be used for any purpose

4 other than the purpose for which it was supplied unless

5 that individual (or that individual’s guardian) consents to

6 its use for such other purpose. The information may not

7 be published or released in any other form if the individual

8 supplying the information or described in it is identifiable

9 unless that individual (or that individual’s guardian) con10 sents to its publication or release in other form.

11 (d) METHODOLGY.—

12 (1) IN GENERAL.—The survey required by sub13 section (a) shall—

14 (A) be based on a nationally representative

15 sample of young individuals;

16 (B) be a household-based, in person survey

17 (which may include computer-assisted tech18 nology);

19 (C) measure use of each type of tobacco

20 product within the past 30 days;

21 (D) identify the usual brand of each type

22 of tobacco product used within the past 30

23 days; and

24 (E) permit the calculation of the actual

25 percentage reductions in underage use of a type
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1 of tobacco product (or, in the case of the manu2 facturer-specific surcharge, the use of a type of

3 tobacco product of a manufacturer) based on

4 the point estimates of the percentage of young

5 individuals reporting use of a type of tobacco

6 product (or, in the case of the manufacturer7 specific surcharge, the use of a type of tobacco

8 product of a manufacturer) from the annual

9 performance survey.

10 (2) CRITERIA FOR DEEMING POINT ESTIMATES

11 CORRECT.—Point estimates under paragraph (1)(E)

12 are deemed conclusively to be correct and accurate

13 for calculating actual percentage reductions in un14 derage use of a type of tobacco product (or, in the

15 case of the manufacturer-specific surcharge, the use

16 of a type of tobacco product of a particular manu17 facturer) for the purpose of measuring compliance

18 with percent reduction targets and calculating sur19 charges provided that the precision of estimates

20 (based on sampling error) of the percentage of

21 young individuals reporting use of a type of tobacco

22 product (or, in the case of the manufacturer-specific

23 surcharge, the use of a type of tobacco product of

24 a manufacturer) is such that the 95-percent con-
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1 fidence interval around such point estimates is no

2 more than plus or minus 1 percent.

3 (3) SURVEY DEEMED CORRECT, PROPER, AND

4 ACCURATE.—A survey using the methodology re5 quired by this subsection is deemed conclusively to

6 be proper, correct, and accurate for purposes of this

7 Act.

8 (4) SECRETARY MAY ADOPT DIFFERENT METH9 ODOLOGY.—The Secretary by notice and comment

10 rulemaking may adopt a survey methodology that is

11 different than the methodology described in para12 graph (1) if the different methodology is at least as

13 statistically precise as that methodology.

14 (e) INDUSTRY-WIDE NON-ATTAINMENT SUR15 CHARGES.—

16 (1) SECRETARY TO DETERMINE INDUSTRY17 WIDE NON-ATTAINMENT PERCENTAGE.—The Sec18 retary shall determine the industry-wide non-attain19 ment percentage for cigarettes and for smokeless to20 bacco for each calendar year.

21 (2) NON-ATTAINMENT SURCHARGE FOR CIGA22 RETTES.—For each calendar year in which the per23 centage reduction in underage use required by sec24 tion 203b) is not attained, the Secretary shall assess

25 a surcharge on cigarette manufacturers as follows:
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If the non-attainment

percentage is: The surcharge is:

Not more than 5 percent $80,000,000 multiplied by the non-attainment

percentage

More than 5% but not more

than 10% $400,000,000, plus $160,000,000 multiplied by

the non-attainment percentage in excess of 5%

but not in excess of 10%

More than 10% $1,200,000,000, plus $240,000,000 multiplied by

the non-attainment percentage in excess of 10%

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

1 (3) NON-ATTAINMENT SURCHARGE FOR SMOKE2 LESS TOBACCO.—For each year in which the per3 centage reduction in underage use required by sec4 tion 203c) is not attained, the Secretary shall assess

5 a surcharge on smokeless tobacco product manufac6 turers as follows:

If the non-attainment

percentage is: The surcharge is:

Not more than 5 percent $8,000,000 multiplied by the non-attainment

percentage

More than 5% but not more

than 10% $40,000,000, plus $16,000,000 multiplied by the

non-attainment percentage in excess of 5% but

not in excess of 10%

More than 10% $120,000,000, plus $24,000,000 multiplied by

the non-attainment percentage in excess of 10%

More than 21.6% $400,000,000

7 (4) STRICT LIABILITY; JOINT AND SEVERAL LI8 ABILITY.—Liability for any surcharge imposed under

9 subsection (e) shall be—

10 (A) strict liability; and

11 (B) joint and several liability—
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1 (i) among all cigarette manufacturers

2 for surcharges imposed under subsection

3 (e)(2); and

4 (ii) among all smokeless tobacco man5 ufacturers for surcharges imposed under

6 subsection (e)(3).

7 (5) SURCHARGE LIABILITY AMONG MANUFAC8 TURERS.—A tobacco product manufacturer shall be

9 liable under this subsection to one or more other

10 manufacturers if the plaintiff tobacco product manu11 facturer establishes by a preponderance of the evi12 dence that the defendant tobacco product manufac13 turer, through its acts or omissions, was responsible

14 for a disproportionate share of the non-attainment

15 surcharge as compared to the responsibility of the

16 plaintiff manufacturer.

17 (6) EXEMPTIONS FOR SMALL MANUFACTUR18 ERS.—

19 (A) ALLOCATION BY MARKET SHARE.—

20 The Secretary shall make such allocations ac21 cording to each manufacturer’s share of the do22 mestic cigarette or domestic smokeless tobacco

23 market, as appropriate, in the year for which

24 the surcharge is being assessed, based on actual

25 Federal excise tax payments.
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1 (B) EXEMPTION.—In any year in which a

2 surcharge is being assessed, the Secretary shall

3 exempt from payment any tobacco product

4 manufacturer with less than 1 percent of the

5 domestic market share for a specific category of

6 tobacco product unless the Secretary finds that

7 the manufacturer’s products are used by under8 age individuals at a rate equal to or greater

9 than the manufacturer’s total market share for

10 the type of tobacco product.

11 (f) MANUFACTURER-SPECIFIC SURCHARGES.—

12 (1) REQUIRED PERCENTAGE REDUCTIONS.—

13 Each manufacturer which manufactured a brand or

14 brands of tobacco product on or before the date of

15 the enactment of this Act shall reduce the percent16 age of young individuals who use such manufactur17 er’s brand or brands as their usual brand in accord18 ance with the required percentage reductions de19 scribed under subsections (b) (with respect to ciga20 rettes) and (c ) (with respect to smokeless tobacco).

21 (2) APPLICATION TO LESS POPULAR BRANDS.—

22 Each manufacturer which manufactured a brand or

23 brands of tobacco product on or before the date of

24 the enactment of this Act for which the base inci25 dence percentage is equal to or less than the de
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1 minimis level shall ensure that the percent preva2 lence of young individuals who use the manufactur3 er’s tobacco products as their usual brand remains

4 equal to or less than the de minimis level described

5 in paragraph (4).

6 (3) NEW ENTRANTS.—Each manufacturer of a

7 tobacco product which begins to manufacture a to8 bacco product after the date of the enactment of this

9 Act shall ensure that the percent prevalence of

10 young individuals who use the manufacturer’s to11 bacco products as their usual brand is equal to or

12 less than the de minimis level.

13 (4) DE MINIMIS LEVEL DEFINED.—The de

14 minimis level is equal to 1 percent prevalence of the

15 use of each manufacturer’s brands of tobacco prod16 uct by young individuals (as determined on the basis

17 of the annual performance survey conducted by the

18 Secretary) for a year.

19 (5) TARGET REDUCTION LEVELS.—

20 (A) EXISTING MANUFACTURERS.— For

21 purposes of this section, the target reduction

22 level for each type of tobacco product for a year

23 for a manufacturer is the product of the re24 quired percentage reduction for a type of to25 bacco product for a year and the manufacturers
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1 base incidence percentage for such tobacco

2 product.

3 (B) NEW MANUFACTURERS; MANUFACTUR4 ERS WITH LOW BASE INCIDENCE PERCENT5 AGES.—With respect to a manufacturer which

6 begins to manufacture a tobacco product after

7 the date of the enactment of this Act or a man8 ufacturer for which the baseline level as meas9 ured by the annual performance survey is equal

10 to or less than the de minimis level described in

11 paragraph (4), the base incidence percentage is

12 the de minimis level, and the required percent13 age reduction in underage use for a type of to14 bacco product with respect to a manufacturer

15 for a year shall be deemed to be the number of

16 percentage points necessary to reduce the ac17 tual percent prevalence of young individuals

18 identifying a brand of such tobacco product of

19 such manufacturer as the usual brand smoked

20 or used for such year to the de minimis level.

21 (6) SURCHARGE AMOUNT.—

22 (A) IN GENERAL.—If the Secretary deter23 mines that the required percentage reduction in

24 use of a type of tobacco product has not been

25 achieved by such manufacturer for a year, the
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1 Secretary shall impose a surcharge on such

2 manufacturer under this paragraph.

3 (B) AMOUNT.—The amount of the manu4 facturer-specific surcharge for a type of tobacco

5 product for a year under this paragraph is

6 $1,000, multiplied by the number of young indi7 viduals for which such firm is in noncompliance

8 with respect to its target reduction level.

9 (C) DETERMINATION OF NUMBER OF

10 YOUNG INDIVIDUALS.—For purposes of sub11 paragraph (B) the number of young individuals

12 for which a manufacturer is in noncompliance

13 for a year shall be determined by the Secretary

14 from the annual performance survey and shall

15 be calculated based on the estimated total num16 ber of young individuals in such year and the

17 actual percentage prevalence of young individ18 uals identifying a brand of such tobacco prod19 uct of such manufacturer as the usual brand

20 smoked or used in such year as compared to

21 such manufacturer’s target reduction level for

22 the year.

23 (7) DE MINIMIS RULE.—The Secretary may not

24 impose a surcharge on a manufacturer for a type of

25 tobacco product for a year if the Secretary deter-
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1 mines that actual percent prevalence of young indi2 viduals identifying that manufacturer’s brands of

3 such tobacco product as the usual products smoked

4 or used for such year is less than 1 percent.

5 (g) SURCHARGES TO BE ADJUSTED FOR INFLA6 TION.—

7 (1) IN GENERAL.—Beginning with the fourth

8 calendar year after the date of enactment of this

9 Act, each dollar amount in the tables in subsections

10 (e)(2), (e)(3), and (f)(6)(B) shall be increased by the

11 inflation adjustment.

12 (2) INFLATION ADJUSTMENT.—For purposes of

13 paragraph (1), the inflation adjustment for any cal14 endar year is the percentage (if any) by which—

15 (A) the CPI for the preceding calendar

16 year, exceeds

17 (B) the CPI for the calendar year 1998.

18 (3) CPI.—For purposes of paragraph (2), the

19 CPI for any calendar year is the average of the Con20 sumer Price Index for all-urban consumers published

21 by the Department of Labor.

22 (4) ROUNDING.—If any increase determined

23 under paragraph (1) is not a multiple of $1,000, the

24 increase shall be rounded to the nearest multiple of

25 $1,000.
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1 (h) METHOD OF SURCHARGE ASSESSMENT.—The

2 Secretary shall assess a surcharge for a specific calendar

3 year on or before May 1 of the subsequent calendar year.

4 Surcharge payments shall be paid on or before July 1 of

5 the year in which they are assessed. The Secretary may

6 establish, by regulation, interest at a rate up to 3 times

7 the prevailing prime rate at the time the surcharge is as8 sessed, and additional charges in an amount up to 3 times

9 the surcharge, for late payment of the surcharge.

10 (i) BUSINESS EXPENSE DEDUCTION.—Any sur11 charge paid by a tobacco product manufacturer under this

12 section shall not be deductible as an ordinary and nec13 essary business expense or otherwise under the Internal

14 Revenue Code of 1986.

15 (j) APPEAL RIGHTS.—The amount of any surcharge

16 is committed to the sound discretion of the Secretary and

17 shall be subject to judicial review by the United States

18 Court of Appeals for the District of Columbia Circuit,

19 based on the arbitrary and capricious standard of section

20 706(2)(A) of title 5, United States Code. Notwithstanding

21 any other provisions of law, no court shall have authority

22 to stay any surcharge payments due the Secretary under

23 this Act pending judicial review.

24 (k) RESPONSIBILITY FOR AGENTS.—In any action

25 brought under this subsection, a tobacco product manufac-
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1 turer shall be held responsible for any act or omission of

2 its attorneys, advertising agencies, or other agents that

3 contributed to that manufacturer’s responsibility for the

4 surcharge assessed under this section.

5 SEC. 205. DEFINITIONS.

6 In this subtitle:

7 (1) BASE INCIDENCE PERCENTAGE.—The term

8 ‘‘base incidence percentage’’ means, with respect to

9 each type of tobacco product, the percentage of

10 young individuals determined to have used such to11 bacco product in the first annual performance survey

12 for 1999.

13 (2) MANUFACTURERS BASE INCIDENCE PER14 CENTAGE.—The term ‘‘manufacturers base incidence

15 percentage’’ is, with respect to each type of tobacco

16 product, the percentage of young individuals deter17 mined to have identified a brand of such tobacco

18 product of such manufacturer as the usual brand

19 smoked or used in the first annual performance sur20 vey for 1999.

21 (3) YOUNG INDIVIDUALS.—The term ‘‘young

22 individuals’’ means individuals who are over 11

23 years of age and under 18 years of age.
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1 (4) CIGARETTE MANUFACTURERS.—The term

2 ‘‘cigarette manufacturers’’ means manufacturers of

3 cigarettes sold in the United States.

4 (5) NON-ATTAINMENT PERCENTAGE FOR CIGA5 RETTES.—The term ‘‘non-attainment percentage for

6 cigarettes’’ means the number of percentage points

7 yielded—

8 (A) for a calendar year in which the per9 cent incidence of underage use of cigarettes is

10 less than the base incidence percentage, by sub11 tracting—

12 (i) the percentage by which the per13 cent incidence of underage use of ciga14 rettes in that year is less than the base in15 cidence percentage, from

16 (ii) the required percentage reduction

17 applicable in that year; and

18 (B) for a calendar year in which the per19 cent incidence of underage use of cigarettes is

20 greater than the base incidence percentage,

21 adding—

22 (i) the percentage by which the per23 cent incidence of underage use of ciga24 rettes in that year is greater than the base

25 incidence percentage; and
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1 (ii) the required percentage reduction

2 applicable in that year.

3 (6) NON-ATTAINMENT PERCENTAGE FOR

4 SMOKELESS TOBACCO PRODUCTS.—The term ‘‘non5 attainment percentage for smokeless tobacco prod6 ucts’’ means the number of percentage points yield7 ed—

8 (A) for a calendar year in which the per9 cent incidence of underage use of smokeless to10 bacco products is less than the base incidence

11 percentage, by subtracting—

12 (i) the percentage by which the per13 cent incidence of underage use of smoke14 less tobacco products in that year is less

15 than the base incidence percentage, from

16 (ii) the required percentage reduction

17 applicable in that year; and

18 (B) for a calendar year in which the per19 cent incidence of underage use of smokeless to20 bacco products is greater than the base inci21 dence percentage, by adding—

22 (i) the percentage by which the per23 cent incidence of underage use of smoke24 less tobacco products in that year is great25 er than the base incidence percentage; and
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1 (ii) the required percentage reduction

2 applicable in that year.

3 (7) SMOKELESS TOBACCO PRODUCT MANUFAC4 TURERS.—The term ‘‘smokeless tobacco product

5 manufacturers’’ means manufacturers of smokeless

6 tobacco products sold in the United States.

7 Subtitle B—State Retail Licensing

8 and Enforcement Incentives

9 SEC. 231. STATE RETAIL LICENSING AND ENFORCEMENT

10 BLOCK GRANTS.

11 (a) IN GENERAL.—The Secretary shall make State

12 retail licensing and enforcement block grants in accord13 ance with the provisions of this section. There are author14 ized to be appropriated to the Secretary from the National

15 Tobacco Trust Fund $200,000,000 for each fiscal year to

16 carry out the provisions of this section.

17 (b) REQUIREMENTS.—

18 (1) ESTABLISHMENT.—The Secretary shall pro19 vide a block grant, based on population, under this

20 subtitle to each State that has in effect a law that—

21 (A) provides for the licensing of entities

22 engaged in the sale or distribution of tobacco

23 products directly to consumers;
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1 (B) makes it illegal to sell or distribute to2 bacco products to individuals under 18 years of

3 age; and

4 (C) meets the standards described in this

5 section.

6 (2) STATE AGREEMENT REQUIRED.—In order

7 to receive a block grant under this section, a State—

8 (A) shall enter into an agreement with the

9 Secretary to assume responsibilities for the im10 plementation and enforcement of a tobacco re11 tailer licensing program;

12 (B) shall prohibit retailers from selling or

13 otherwise distributing tobacco products to indi14 viduals under 18 years of age in accordance

15 with the Youth Access Restrictions regulations

16 promulgated by the Secretary (21 C.F.R.

17 897.14(a) and (b));

18 (C) shall make available to appropriate

19 Federal agencies designated by the Secretary

20 requested information concerning retail estab21 lishments involved in the sale or distribution of

22 tobacco products to consumers; and

23 (D) shall establish to the satisfaction of

24 the Secretary that it has a law or regulation

25 that includes the following:
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1 (i) LICENSURE; SOURCES; AND NO2 TICE.—A requirement for a State license

3 for each retail establishment involved in

4 the sale or distribution of tobacco products

5 to consumers. A requirement that a retail

6 establishment may purchase tobacco prod7 ucts only from Federally-licensed manufac8 turers, importers, or wholesalers. A pro9 gram under which notice is provided to

10 such establishments and their employees of

11 all licensing requirements and responsibil12 ities under State and Federal law relating

13 to the retail distribution of tobacco prod14 ucts.

15 (ii) PENALTIES.—

16 (I) CRIMINAL.—Criminal pen17 alties for the sale or distribution of to18 bacco products to a consumer without

19 a license.

20 (II) CIVIL.—Civil penalties for

21 the sale or distribution of tobacco

22 products in violation of State law, in23 cluding graduated fines and suspen24 sion or revocation of licenses for re25 peated violations.
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1 (III) OTHER.—Other programs,

2 including such measures as fines, sus3 pension of driver’s license privileges,

4 or community service requirements,

5 for underage youths who possess, pur6 chase, or attempt to purchase tobacco

7 products.

8 (iii) JUDICIAL REVIEW.—Judicial re9 view procedures for an action of the State

10 suspending, revoking, denying, or refusing

11 to renew any license under its program.

12 (c) ENFORCEMENT.—

13 (1) UNDERTAKING.—Each State that receives a

14 grant under this subtitle shall undertake to enforce

15 compliance with its tobacco retailing licensing pro16 gram in a manner that can reasonably be expected

17 to reduce the sale and distribution of tobacco prod18 ucts to individuals under 18 years of age. If the Sec19 retary determines that a State is not enforcing the

20 law in accordance with such an undertaking, the

21 Secretary may withhold a portion of any unobligated

22 funds under this section otherwise payable to that

23 State.
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1 (2) ACTIVITIES AND REPORTS REGARDING EN2 FORCEMENT.—A State that receives a grant under

3 this subtitle shall—

4 (A) conduct monthly random, unannounced

5 inspections of sales or distribution outlets in the

6 State to ensure compliance with a law prohibit7 ing sales of tobacco products to individuals

8 under 18 years of age;

9 (B) annually submit to the Secretary a re10 port describing in detail—

11 (i) the activities carried out by the

12 State to enforce underage access laws dur13 ing the fiscal year;

14 (ii) the extent of success the State has

15 achieved in reducing the availability of to16 bacco products to individuals under the

17 age of 18 years;

18 (iii) how the inspections described in

19 subparagraph (A) were conducted and the

20 methods used to identify outlets, with ap21 propriate protection for the confidentiality

22 of information regarding the timing of in23 spections and other investigative tech24 niques whose effectiveness depends on con25 tinued confidentiality; and
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1 (iv) the identity of the single State

2 agency designated by the Governor of the

3 State to be responsible for the implementa4 tion of the requirements of this section.

5 (3) MINIMUM INSPECTION STANDARDS.—In6 spections conducted by the State shall be conducted

7 by the State in such a way as to ensure a scientif8 ically sound estimate (with a 95 percent confidence

9 interval that such estimates are accurate to within

10 plus or minus 3 percentage points), using an accu11 rate list of retail establishments throughout the

12 State. Such inspections shall cover a range of outlets

13 (not preselected on the basis of prior violations) to

14 measure overall levels of compliance as well as to

15 identify violations. The sample must reflect the dis16 tribution of the population under the age of 18 years

17 throughout the State and the distribution of the out18 lets throughout the State accessible to youth. Except

19 as provided in this paragraph, any reports required

20 by this paragraph shall be made public. As used in

21 this paragraph, the term ‘‘outlet’’ refers to any loca22 tion that sells at retail or otherwise distributes to23 bacco products to consumers, including to locations

24 that sell such products over-the-counter.

25 (d) NONCOMPLIANCE.—
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1 (1) INSPECTIONS.—The Secretary shall with2 hold from any State that fails to meet the require3 ments of subsection (b) in any calendar year an

4 amount equal to 5 percent of the amount otherwise

5 payable under this subtitle to that State for the next

6 fiscal year.

7 (2) COMPLIANCE RATE.—The Secretary shall

8 withhold from any State that fails to demonstrate a

9 compliance rate of—

10 (A) at least the annual compliance targets

11 that were negotiated with the Secretary under

12 section 1926 of the Public Health Service Act

13 (42 U.S.C. 300x—26) as such section was in

14 effect before its repeal by this Act through the

15 third fiscal year after the date of enactment of

16 this Act;

17 (B) at least 80 percent in the fourth fiscal

18 year after such date;

19 (C) at least 85 percent in the fifth and

20 sixth fiscal years after such date; and

21 (D) at least 90 percent in every fiscal year

22 beginning with the seventh fiscal year after

23 such date,

24 an amount equal to one percentage point for each

25 percentage point by which the State failed to meet
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1 the percentage set forth in this subsection for that

2 year from the amount otherwise payable under this

3 subtitle for that fiscal year.

4 (e) RELEASE AND DISBURSEMENT.—

5 (1) Upon notice from the Secretary that an

6 amount payable under this section has been ordered

7 withheld under subsection (d), a State may petition

8 the Secretary for a release and disbursement of up

9 to 75 percent of the amount withheld, and shall give

10 timely written notice of such petition to the attorney

11 general of that State and to all tobacco product

12 manufacturers.

13 (2) The agency shall conduct a hearing on such

14 a petition, in which the attorney general of the State

15 may participate and be heard.

16 (3) The burden shall be on the State to prove,

17 by a preponderance of the evidence, that the release

18 and disbursement should be made. The Secretary’s

19 decision on whether to grant such a release, and the

20 amount of any such disbursement, shall be based on

21 whether—

22 (A) the State presents scientifically sound

23 survey data showing that the State is making

24 significant progress toward reducing the use of
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1 tobacco products by individuals who have not

2 attained the age of 18 years;

3 (B) the State presents scientifically-based

4 data showing that it has progressively decreased

5 the availability of tobacco products to such indi6 viduals;

7 (C) the State has acted in good faith and

8 in full compliance with this Act, and any rules

9 or regulations promulgated under this Act;

10 (D) the State provides evidence that it

11 plans to improve enforcement of these laws in

12 the next fiscal year; and

13 (E) any other relevant evidence.

14 (4) A State is entitled to interest on any with15 held amount released at the average United States

16 52-Week Treasury Bill rate for the period between

17 the withholding of the amount and its release.

18 (5) Any State attorney general or tobacco product

19 manufacturer aggrieved by a final decision on a peti20 tion filed under this subsection may seek judicial re21 view of such decision within 30 days in the United

22 States Court of Appeals for the District of Columbia

23 Circuit. Unless otherwise specified in this Act, judi24 cial review under this section shall be governed by
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1 sections 701 through 706 of title 5, United States

2 Code.

3 (6) No stay or other injunctive relief enjoining

4 a reduction in a State’s allotment pending appeal or

5 otherwise may be granted by the Secretary or any

6 court.

7 (f) NON-PARTICIPATING STATES LICENSING RE8 QUIREMENTS.—For retailers in States which have not es9 tablished a licensing program under subsection (a), the

10 Secretary shall promulgate regulations establishing Fed11 eral retail licensing for retailers engaged in tobacco sales

12 to consumers in those States. The Secretary may enter

13 into agreements with States for the enforcement of those

14 regulations. A State that enters into such an agreement

15 shall receive a grant under this section to reimburse it for

16 costs incurred in carrying out that agreement.

17 (g) DEFINITION.—For the purposes of this section,

18 the term ‘‘first applicable fiscal year’’ means the first fis19 cal year beginning after the fiscal year in which funding

20 is made available to the States under this section.

21 SEC. 232. BLOCK GRANTS FOR COMPLIANCE BONUSES.

22 (a) IN GENERAL.—The Secretary shall make block

23 grants to States determined to be eligible under subsection

24 (b) in accordance with the provisions of this section. There

25 are authorized to be appropriated to the Secretary from
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1 the National Tobacco Trust Fund $100,000,000 for each

2 fiscal year to carry out the provisions of this section.

3 (b) ELIGIBLE STATES.—To be eligible to receive a

4 grant under subsection (a), a State shall—

5 (1) prepare and submit to the Secretary an ap6 plication, at such time, in such manner, and contain7 ing such information as the Secretary may require;

8 and

9 (2) with respect to the year involved, dem10 onstrate to the satisfaction of the Secretary that

11 fewer than 5 percent of all individuals under 18

12 years of age who attempt to purchase tobacco prod13 ucts in the State in such year are successful in such

14 purchase.

15 (c) PAYOUT.—

16 (1) PAYMENT TO STATE.—If one or more

17 States are eligible to receive a grant under this sec18 tion for any fiscal year, the amount payable for that

19 fiscal year shall be apportioned among such eligible

20 States on the basis of population.

21 (2) YEAR IN WHICH NO STATE RECEIVES

22 GRANT.—If in any fiscal year no State is eligible to

23 receive a grant under this section, then the Sec24 retary may use not more than 25 percent of the

25 amount appropriated to carry out this section for
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1 that fiscal year to support efforts to improve State

2 and local enforcement of laws regulating the use,

3 sale, and distribution of tobacco products to individ4 uals under the age of 18 years.

5 (3) AMOUNTS AVAILABLE WITHOUT FISCAL

6 YEAR LIMITATION.—Any amount appropriated under

7 this section remaining unexpended and unobligated

8 at the end of a fiscal year shall remain available for

9 obligation and expenditure in the following fiscal

10 year.

11 SEC. 233. CONFORMING CHANGE.

12 Section 1926 of the Public Health Service Act (42

13 U.S.C. 300x—26) is hereby repealed.

14 Subtitle C—Tobacco Use Preven15 tion and Cessation Initiatives

16 SEC. 261. TOBACCO USE PREVENTION AND CESSATION INI17 TIATIVES.

18 Title XIX of the Public Health Service Act (42

19 U.S.C. 300w et seq.) is amended by adding at the end

20 the following:
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1 ‘‘PART D—TOBACCO USE PREVENTION AND CESSATION

2 INITIATIVES

3 ‘‘SUBPART I—CESSATION AND COMMUNITY-BASED

4 PREVENTION BLOCK GRANTS

5 ‘‘SEC. 1981. FUNDING FROM TOBACCO SETTLEMENT TRUST

6 FUND.

7 ‘‘(a) IN GENERAL.—From amounts contained in the

8 Public Health Allocation Account under section

9 451(b)(2)(A) and (C) of the National Tobacco Policy and

10 Youth Smoking Reduction Act for a fiscal year, there are

11 authorized to be appropriated (under subsection (d) of

12 such section) to carry out this subpart—

13 ‘‘(1) for cessation activities, the amounts appro14 priated under section 451(b)(2)(A); and

15 ‘‘(2) for prevention and education activities, the

16 amounts appropriated under section 451(b)(2)(C).

17 ‘‘(b) NATIONAL ACTIVITIES.—

18 ‘‘(1) Not more than 10 percent of the amount

19 made available for any fiscal year under subsection

20 (a) shall be made available to the Secretary to carry

21 out activities under section 1981B and 1981D(d).

22 ‘‘(2) Not more than 10 percent of the amount

23 available for any fiscal year under subsection (a)(1)

24 shall be available to the Secretary to carry out ac25 tivities under section 1981D(d).
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1 ‘‘SEC. 1981A. ALLOTMENTS.

2 ‘‘(a) AMOUNT.—

3 ‘‘(1) IN GENERAL.—From the amount made

4 available under section 1981 for any fiscal year the

5 Secretary, acting through the Director of the Cen6 ters for Disease Control and Prevention (referred to

7 in this subpart as the ‘Director’), shall allot to each

8 State an amount based on a formula to be developed

9 by the Secretary that is based on the tobacco pre10 vention and cessation needs of each State including

11 the needs of the State’s minority populations.

12 ‘‘(2) MINIMUM AMOUNT.—In determining the

13 amount of allotments under paragraph (1), the Sec14 retary shall ensure that no State receives less than

1 15 ⁄2 of 1 percent of the amount available under sec16 tion 1981(a) for the fiscal year involved.

17 ‘‘(b) REALLOTMENT.—To the extent that amounts

18 made available under section 1981 for a fiscal year are

19 not otherwise allotted to States because—

20 ‘‘(1) 1 or more States have not submitted an

21 application or description of activities in accordance

22 with section 1981D for the fiscal year;

23 ‘‘(2) 1 or more States have notified the Sec24 retary that they do not intend to use the full amount

25 of their allotment; or
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1 ‘‘(3) the Secretary has determined that the

2 State is not in compliance with this subpart, and

3 therefore is subject to penalties under section

4 1981D(g);

5 such excess amount shall be reallotted among each of the

6 remaining States in proportion to the amount otherwise

7 allotted to such States for the fiscal year involved without

8 regard to this subsection.

9 ‘‘(c) PAYMENTS.—

10 ‘‘(1) IN GENERAL.—The Secretary, acting

11 through the Director of the Centers for Disease

12 Control and Prevention, shall utilize the funds made

13 available under this section to make payments to

14 States under allotments under this subpart as pro15 vided for under section 203 of the Intergovernmental

16 Cooperation Act of 1968.

17 ‘‘(2) FEDERAL GRANTEES.—From amounts

18 available under section 1981(b)(2), the Secretary

19 may make grants, or supplement existing grants, to

20 entities eligible for funds under the programs de21 scribed in section 1981C(d)(1) and (10) to enable

22 such entities to carry out smoking cessation activi23 ties under this subpart, except not less than 25 per24 cent of this amount shall be used for the program

25 described in 1981C(d)(6).
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1 ‘‘(3) AVAILABILITY OF FUNDS.—Any amount

2 paid to a State for a fiscal year under this subpart

3 and remaining unobligated at the end of such year

4 shall remain available to such State for the next fis5 cal year for the purposes for which such payment

6 was made.

7 ‘‘(d) REGULATIONS.—Not later than 9 months after

8 the date of enactment of this part, the Secretary shall pro9 mulgate regulations to implement this subpart. This sub10 part shall take effect regardless of the date on which such

11 regulations are promulgated.

12 ‘‘SEC. 1981B. TECHNICAL ASSISTANCE AND PROVISION OF

13 SUPPLIES AND SERVICES IN LIEU OF FUNDS.

14 ‘‘(a) TECHNICAL ASSISTANCE.—The Secretary, act15 ing through the Director of the Centers for Disease Con16 trol and Prevention, shall, without charge to a State re17 ceiving an allotment under section 1981A, provide to such

18 State (or to any public or nonprofit private entity within

19 the State) technical assistance and training with respect

20 to the planning, development, operation, and evaluation of

21 any program or service carried out pursuant to the pro22 gram involved. The Secretary may provide such technical

23 assistance or training directly, through contract, or

24 through grants.
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1 ‘‘(b) PROVISION OF SUPPLIES AND SERVICE IN LIEU

2 OF GRANT FUNDS.—The Secretary, at the request of a

3 State, may reduce the amount of payments to the State

4 under section 1981A(c) by—

5 ‘‘(1) the fair market value of any supplies or

6 equipment furnished by the Secretary to the State;

7 and

8 ‘‘(2) the amount of the pay, allowances, and

9 travel expenses of any officer or employee of the

10 Federal Government when detailed to the State and

11 the amount of any other costs incurred in connection

12 with the detail of such officer or employee;

13 when the furnishing of such supplies or equipment or the

14 detail of such an officer or employee is for the convenience

15 of and at the request of the State and for the purpose

16 of conducting activities described in section 1981C. The

17 amount by which any payment is so reduced shall be avail18 able for payment by the Secretary of the costs incurred

19 in furnishing the supplies or equipment or in detailing the

20 personnel, on which reduction of the payment is based,

21 and the amount shall be deemed to be part of the payment

22 and shall be deemed to have been paid to the State.
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1 ‘‘SEC. 1981C. PERMITTED USERS OF CESSATION BLOCK

2 GRANTS AND OF COMMUNITY-BASED PRE3 VENTION BLOCK GRANTS.

4 ‘‘(a) TOBACCO USE CESSATION ACTIVITIES.—Except

5 as provided in subsections (d) and (e), amounts described

6 in subsection (a)(1) may be used for the following:

7 ‘‘(1) Evidence-based cessation activities de8 scribed in the plan of the State, submitted in accord9 ance with section 1981D, including—

10 ‘‘(A) evidence-based programs designed to

11 assist individuals, especially young people and

12 minorities who have been targeted by tobacco

13 product manufacturers, to quit their use of to14 bacco products;

15 ‘‘(B) training in cessation intervention

16 methods for health plans and health profes17 sionals, including physicians, nurses, dentists,

18 health educators, public health professionals,

19 and other health care providers;

20 ‘‘(C) programs to encourage health insur21 ers and health plans to provide coverage for evi22 dence-based tobacco use cessation interventions

23 and therapies, except that the use of any funds

24 under this clause to offset the cost of providing

25 a smoking cessation benefit shall be on a tem26 porary demonstration basis only;
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1 ‘‘(D) culturally and linguistically appro2 priate programs targeted toward minority and

3 low-income individuals, individuals residing in

4 medically underserved areas, uninsured individ5 uals, and pregnant women;

6 ‘‘(E) programs to encourage employer7 based wellness programs to provide evidence8 based tobacco use cessation intervention and

9 therapies; and

10 ‘‘(F) programs that target populations

11 whose smoking rate is disproportionately high

12 in comparison to the smoking rate population13 wide in the State.

14 ‘‘(2) Planning, administration, and educational

15 activities related to the activities described in para16 graph (1).

17 ‘‘(3) The monitoring and evaluation of activities

18 carried out under paragraphs (1) and (2), and re19 porting and disseminating resulting information to

20 health professionals and the public.

21 ‘‘(4) Targeted pilot programs with evaluation

22 components to encourage innovation and experimen23 tation with new methodologies.

24 ‘‘(b) STATE AND COMMUNITY ACTION ACTIVITIES.—

25 Except as provided in subsections (d) and (e), amounts
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1 described in subsection (a)(2) may be used for the follow2 ing:

3 ‘‘(1) Evidence-based activities for tobacco use

4 prevention and control described in the plan of the

5 State, submitted in accordance with section 1981D,

6 including—

7 ‘‘(A) State and community initiatives;

8 ‘‘(B) community-based prevention pro9 grams, similar to programs currently funded by

10 NIH;

11 ‘‘(C) programs focused on those popu12 lations within the community that are most at

13 risk to use tobacco products or that have been

14 targeted by tobacco advertising or marketing;

15 ‘‘(D) school programs to prevent and re16 duce tobacco use and addiction, including school

17 programs focused in those regions of the State

18 with high smoking rates and targeted at popu19 lations most at risk to start smoking;

20 ‘‘(E) culturally and linguistically appro21 priate initiatives targeted towards minority and

22 low-income individuals, individuals residing in

23 medically underserved areas, and women of

24 child-bearing age;
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1 ‘‘(F) the development and implementation

2 of tobacco-related public health and health pro3 motion campaigns and public policy initiatives;

4 ‘‘(G) assistance to local governmental enti5 ties within the State to conduct appropriate

6 anti-tobacco activities.

7 ‘‘(H) strategies to ensure that the State’s

8 smoking prevention activities include minority,

9 low-income, and other undeserved populations;

10 and

11 ‘‘(I) programs that target populations

12 whose smoking rate is disproportionately high

13 in comparison to the smoking rate population14 wide in the State.

15 ‘‘(2) Planning, administration, and educational

16 activities related to the activities described in para17 graph (1).

18 ‘‘(3) The monitoring and evaluation of activities

19 carried out under paragraphs (1) and (2), and re20 porting and disseminating resulting information to

21 health professionals and the public.

22 ‘‘(4) Targeted pilot programs with evaluation

23 components to encourage innovation and experimen24 tation with new methodologies.
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1 ‘‘(c) COORDINATION.—Tobacco use cessation and

2 community-based prevention activities permitted under

3 subsections (b) and (c) may be conducted in conjunction

4 with recipients of other Federally—funded programs with5 in the State, including—

6 ‘‘(1) the special supplemental food program

7 under section 17 of the Child Nutrition Act of 1966

8 (42 U.S.C. 1786);

9 ‘‘(2) the Maternal and Child Health Services

10 Block Grant program under title V of the Social Se11 curity Act (42 U.S.C. 701 et seq.);

12 ‘‘(3) the State Children’s Health Insurance

13 Program of the State under title XXI of the Social

14 Security Act (42 U.S.C. 13397aa et seq.);

15 ‘‘(4) the school lunch program under the Na16 tional School Lunch Act (42 U.S.C. 1751 et seq.);

17 ‘‘(5) an Indian Health Service Program;

18 ‘‘(6) the community, migrant, and homeless

19 health centers program under section 330 of the

20 Public Health Service Act (42 U.S.C. 254b);

21 ‘‘(7) state-initiated smoking cessation programs

22 that include provisions for reimbursing individuals

23 for medications or therapeutic techniques;

24 ‘‘(8) the substance abuse and mental health

25 services block grant program, and the preventive
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1 health services block grant program, under title XIX

2 of the Public Health Service Act (42 U.S.C. 300w

3 et seq.);

4 ‘‘(9) the Medicaid program under title XIX of

5 the Social Security Act (42 U.S.C. 1396 et seq.);

6 and

7 ‘‘(10) programs administered by the Depart8 ment of Defense and the Department of Veterans

9 Affairs.

10 ‘‘(d) LIMITATION.—A State may not use amounts

11 paid to the State under section 1981A(c) to—

12 ‘‘(1) make cash payments except with appro13 priate documentation to intended recipients of to14 bacco use cessation services;

15 ‘‘(2) fund educational, recreational, or health

16 activities not based on scientific evidence that the

17 activity will prevent smoking or lead to success of

18 cessation efforts

19 ‘‘(3) purchase or improve land, purchase, con20 struct, or permanently improve (other than minor

21 remodeling) any building or other facility, or pur22 chase major medical equipment;

23 ‘‘(4) satisfy any requirement for the expendi24 ture of non-Federal funds as a condition of the re25 ceipt of Federal funds; or
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1 ‘‘(5) provide financial assistance to any entity

2 other than a public or nonprofit private entity or a

3 private entity consistent with subsection (b)(1)(C).

4 This subsection shall not apply to the support of targeted

5 pilot programs that use innovative and experimental new

6 methodologies and include an evaluation component.

7 ‘‘(e) ADMINISTRATION.—Not more than 5 percent of

8 the allotment of a State for a fiscal year under this sub9 part may be used by the State to administer the funds

10 paid to the State under section 1981A(c). The State shall

11 pay from non-Federal sources the remaining costs of ad12 ministering such funds.

13 ‘‘SEC. 1981D. ADMINISTRATIVE PROVISIONS.

14 ‘‘(a) APPLICATION.—The Secretary may make pay15 ments under section 1981A(c) to a State for a fiscal year

16 only if—

17 ‘‘(1) the State submits to the Secretary an ap18 plication, in such form and by such date as the Sec19 retary may require, for such payments;

20 ‘‘(2) the application contains a State plan pre21 pared in a manner consistent with section 1905(b)

22 and in accordance with tobacco-related guidelines

23 promulgated by the Secretary;
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1 ‘‘(3) the application contains a certification that

2 is consistent with the certification required under

3 section 1905(c); and

4 ‘‘(4) the application contains such assurances

5 as the Secretary may require regarding the compli6 ance of the State with the requirements of this sub7 part (including assurances regarding compliance

8 with the agreements described in subsection (c)).

9 ‘‘(b) STATE PLAN.—A State plan under subsection

10 (a)(2) shall be developed in a manner consistent with the

11 plan developed under section 1905(b) except that such

12 plan—

13 ‘‘(1) with respect to activities described in sec14 tion 1981C(b)—

15 ‘‘(A) shall provide for tobacco use cessation

16 intervention and treatment consistent with the

17 tobacco use cessation guidelines issued by the

18 Agency for Health Care Policy and Research, or

19 another evidence-based guideline approved by

20 the Secretary, or treatments using drugs,

21 human biological products, or medical devices

22 approved by the Food and Drug Administra23 tion, or otherwise legally marketed under the

24 Federal Food, Drug and Cosmetic Act for use

25 as tobacco use cessation therapies or aids;
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1 ‘‘(B) may, to encourage innovation and ex2 perimentation with new methodologies, provide

3 for or may include a targeted pilot program

4 with an evaluation component;

5 ‘‘(C) shall provide for training in tobacco

6 use cessation intervention methods for health

7 plans and health professionals, including physi8 cians, nurses, dentists, health educators, public

9 health professionals, and other health care pro10 viders;

11 ‘‘(D) shall ensure access to tobacco use

12 cessation programs for rural and underserved

13 populations;

14 ‘‘(E) shall recognize that some individuals

15 may require more than one attempt for success16 ful cessation; and

17 ‘‘(F) shall be tailored to the needs of spe18 cific populations, including minority popu19 lations; and

20 ‘‘(2) with respect to State and community-based

21 prevention activities described in section 1981C(c),

22 shall specify the activities authorized under such sec23 tion that the State intends to carry out.
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1 ‘‘(c) CERTIFICATION.—The certification referred to

2 in subsection (a)(3) shall be consistent with the certifi3 cation required under section 1905(c), except that

4 ‘‘(1) the State shall agree to expend payments

5 under section 1981A(c) only for the activities au6 thorized in section 1981C;

7 ‘‘(2) paragraphs (9) and (10) of such section

8 shall not apply; and

9 ‘‘(3) the State is encouraged to establish an ad10 visory committee in accordance with section 1981E.

11 ‘‘(d) REPORTS, DATA, AND AUDITS.—The provisions

12 of section 1906 shall apply with respect to a State that

13 receives payments under section 1981A(c) and be applied

14 in a manner consistent with the manner in which such

15 provisions are applied to a State under part, except that

16 the data sets referred to in section 1905(a)(2) shall be

17 developed for uniformly defining levels of youth and adult

18 use of tobacco products, including uniform data for racial

19 and ethnic groups, for use in the reports required under

20 this subpart.

21 ‘‘(e) WITHHOLDING.—The provisions of 1907 shall

22 apply with respect to a State that receives payments under

23 section 1981A(c) and be applied in a manner consistent

24 with the manner in which such provisions are applied to

25 a State under part A.
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1 ‘‘(f) NONDISCRIMINATION.—The provisions of 1908

2 shall apply with respect to a State that receives payments

3 under section 1981A(c) and be applied in a manner con4 sistent with the manner in which such provisions are ap5 plied to a State under part A.

6 ‘‘(g) CRIMINAL PENALTIES.—The provisions of 1909

7 shall apply with respect to a State that receives payments

8 under section 1981A(c) and be applied in a manner con9 sistent with the manner in which such provisions are ap10 plied to a State under part A.

11 ‘‘SEC. 1981E. STATE ADVISORY COMMITTEE.

12 ‘‘(a) IN GENERAL.—For purposes of sections

13 1981D(c)(3), an advisory committee is in accordance with

14 this section if such committee meets the conditions de15 scribed in this subsection.

16 ‘‘(b) DUTIES.—The recommended duties of the com17 mittee are—

18 ‘‘(1) to hold public hearings on the State plans

19 required under sections 1981D; and

20 ‘‘(2) to make recommendations under this sub21 part regarding the development and implementation

22 of such plans, including recommendations on—

23 ‘‘(A) the conduct of assessments under the

24 plans;
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1 ‘‘(B) which of the activities authorized in

2 section 1981C should be carried out in the

3 State;

4 ‘‘(C) the allocation of payments made to

5 the State under section 1981A(c);

6 ‘‘(D) the coordination of activities carried

7 out under such plans with relevant programs of

8 other entities; and

9 ‘‘(E) the collection and reporting of data in

10 accordance with section 1981D.

11 ‘‘(c) COMPOSITION.—

12 ‘‘(1) IN GENERAL.—The recommended composi13 tion of the advisory committee is members of the

14 general public, such officials of the health depart15 ments of political subdivisions of the State, public

16 health professionals, teenagers, minorities, and such

17 experts in tobacco product research as may be nec18 essary to provide adequate representation of the gen19 eral public and of such health departments, and that

20 members of the committee shall be subject to the

21 provisions of sections 201, 202, and 203 of title 18,

22 United States Code.

23 ‘‘(2) REPRESENTATIVES.—With respect to com24 pliance with paragraph (1), the membership of the

25 advisory committee may include representatives of
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1 community-based organizations (including minority

2 community-based organizations), schools of public

3 health, and entities to which the State involved

4 awards grants or contracts to carry out activities au5 thorized under section 1981C.

6 ‘‘SUBPART II—TOBACCO-FREE COUNTER-ADVERTISING

7 PROGRAMS

8 ‘‘SEC. 1982. FEDERAL-STATE COUNTER-ADVERTISING PRO9 GRAMS.

10 ‘‘(a) NATIONAL CAMPAIGN.—

11 ‘‘(1) IN GENERAL.—The Secretary shall con12 duct a national campaign to reduce tobacco usage

13 through media-based (such as counter-advertising

14 campaigns) and nonmedia-based education, preven15 tion and cessation campaigns designed to discourage

16 the use of tobacco products by individuals, to en17 courage those who use such products to quit, and to

18 educate the public about the hazards of exposure to

19 environmental tobacco smoke.

20 ‘‘(2) REQUIREMENTS.—The national campaign

21 under paragraph (1) shall—

22 ‘‘(A) target those populations that have

23 been targeted by tobacco industry advertising

24 using culturally and linguistically appropriate

25 means;
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1 ‘‘(B) include a research and evaluation

2 component; and

3 ‘‘(C) be designed in a manner that permits

4 the campaign to be modified for use at the

5 State or local level.

6 ‘‘(b) ESTABLISHMENT OF AN ADVISORY BOARD.—

7 ‘‘(1) IN GENERAL.—The Secretary shall estab8 lish a board to be known as the ‘National Tobacco

9 Free Education Advisory Board’ (referred to in this

10 section as the ‘Board’) to evaluate and provide long

11 range planning for the development and effective

12 dissemination of public informational and edu13 cational campaigns and other activities that are part

14 of the campaign under subsection (a).

15 ‘‘(2) COMPOSITION.—The Board shall be com16 posed of—

17 ‘‘(A) 9 non-Federal members to be ap18 pointed by the President, after consultation and

19 agreement with the Majority and Minority

20 Leaders of the Senate and the Speaker and Mi21 nority Leader of the Health or Representatives,

22 of which—

23 ‘‘(i) at least 3 such members shall be

24 individuals who are widely recognized by
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1 the general public for cultural, educational,

2 behavioral science or medical achievement;

3 ‘‘(ii) at least 3 of whom shall be indi4 viduals who hold positions of leadership in

5 major public health organizations, includ6 ing minority public health organizations;

7 and

8 ‘‘(iii) at least 3 of whom shall be indi9 viduals recognized as experts in the field of

10 advertising and marketing, of which—

11 ‘‘(I) 1 member shall have specific

12 expertise in advertising and marketing

13 to children and teens; and

14 ‘‘(II) 1 member shall have exper15 tise in marketing research and evalua16 tion; and

17 ‘‘(B) the Surgeon General, the Director of

18 the Centers for Disease Control and Prevention,

19 or their designees, shall serve as an ex officio

20 members of the Board.

21 ‘‘(3) TERMS AND VACANCIES.—The members of

22 the Board shall serve for a term of 3 years. Such

23 terms shall be staggered as determined appropriate

24 at the time of appointment by the Secretary. Any

25 vacancy in the Board shall not affect its powers, but
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1 shall be filled in the same manner as the original ap2 pointment.

3 ‘‘(4) TRAVEL EXPENSES.—The members of the

4 Board shall be allowed travel expenses, including per

5 diem in lieu of subsistence, at rates authorized for

6 employees of agencies under subchapter I of chapter

7 57 of title 5, United States Code, while away from

8 their homes or regular places of business in the per9 formance of services for the Board.

10 ‘‘(5) AWARDS.—In carrying out subsection (a),

11 the Secretary may—

12 ‘‘(A) enter into contracts with or award

13 grants to eligible entities to develop messages

14 and campaigns designed to prevent and reduce

15 the use of tobacco products that are based on

16 effective strategies to affect behavioral changes

17 in children and other targeted populations, in18 cluding minority populations;

19 ‘‘(B) enter into contracts with or award

20 grants to eligible entities to carry out public in21 formational and educational activities designed

22 to reduce the use of tobacco products;

23 ‘‘(6) POWERS AND DUTIES.—The Board may—

24 ‘‘(A) hold such hearings, sit and act at

25 such times and places, take such testimony, and
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1 receive such evidence as the Board considers

2 advisable to carry out the purposes of this sec3 tion; and

4 ‘‘(B) secure directly from any Federal de5 partment or agency such information as the

6 Board considers necessary to carry out the pro7 visions of this section.

8 ‘‘(c) ELIGIBILITY.—To be eligible to receive funding

9 under this section an entity shall—

10 ‘‘(1) be a—

11 ‘‘(A) public entity or a State health depart12 ment; or

13 ‘‘(B) private or nonprofit private entity

14 that—

15 ‘‘(i)(I) is not affiliated with a tobacco

16 product manufacturer or importer;

17 ‘‘(II) has a demonstrated record of

18 working effectively to reduce tobacco prod19 uct use; or

20 ‘‘(III) has expertise in conducting a

21 multi-media communications campaign;

22 and

23 ‘‘(ii) has expertise in developing strat24 egies that affect behavioral changes in chil-
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1 dren and other targeted populations, in2 cluding minority populations;

3 ‘‘(2) prepare and submit to the Secretary an

4 application at such time, in such manner, and con5 taining such information as the Secretary may re6 quire, including a description of the activities to be

7 conducted using amounts received under the grant

8 or contract;

9 ‘‘(3) provide assurances that amounts received

10 under this section will be used in accordance with

11 subsection (c); and

12 ‘‘(4) meet any other requirements determined

13 appropriate by the Secretary.

14 ‘‘(d) USE OF FUNDS.—An entity that receives funds

15 under this section shall use amounts provided under the

16 grant or contract to conduct multi-media and non-media

17 public educational, informational, marketing and pro18 motional campaigns that are designed to discourage and

19 de-glamorize the use of tobacco products, encourage those

20 using such products to quit, and educate the public about

21 the hazards of exposure to environmental tobacco smoke.

22 Such amounts may be used to design and implement such

23 activities and shall be used to conduct research concerning

24 the effectiveness of such programs.
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1 ‘‘(e) NEEDS OF CERTAIN POPULATIONS.—In award2 ing grants and contracts under this section, the Secretary

3 shall take into consideration the needs of particular popu4 lations, including minority populations, and use methods

5 that are culturally and linguistically appropriate.

6 ‘‘(f) COORDINATION.—The Secretary shall ensure

7 that programs and activities under this section are coordi8 nated with programs and activities carried out under this

9 title.

10 ‘‘(g) ALLOCATION OF FUNDS.—Not to exceed—

11 ‘‘(1) 25 percent of the amount made available

12 under subsection (h) for each fiscal year shall be

13 provided to States for State and local media-based

14 and nonmedia-based education, prevention and ces15 sation campaigns;

16 ‘‘(2) no more than 20 percent of the amount

17 made available under subsection (h) for each fiscal

18 year shall be used specifically for the development of

19 new messages and campaigns;

20 ‘‘(3) the remainder shall be used specifically to

21 place media messages and carry out other dissemi22 nation activities described in subsection (d); and

23 ‘‘(4) half of 1 percent for administrative costs

24 and expenses.
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1 ‘‘(h) TRIGGER.—No expenditures shall be made

2 under this section during any fiscal year in which the an3 nual amount appropriated for the Centers for Disease

4 Control and Prevention is less than the amount so appro5 priated for the prior fiscal year.’’.

6 ‘‘PART E—REDUCING YOUTH SMOKING AND TOBACCO7 RELATED DISEASES THROUGH RESEARCH

8 ‘‘SEC. 1991. FUNDING FROM TOBACCO SETTLEMENT TRUST

9 FUND.

10 No expenditures shall be made under sections 451(b)

11 or (c)—

12 ‘‘(1) for the National Institutes of Health dur13 ing any fiscal year in which the annual amount ap14 propriated for such Institutes is less than the

15 amount so appropriated for the prior fiscal year;

16 ‘‘(2) for the Centers for Disease Control and

17 Prevention during any fiscal year in which the an18 nual amount appropriated for such Centers is less

19 than the amount so appropriated for the prior fiscal

20 year; or

21 ‘‘(3) for the Agency for Health Care Policy and

22 Research during any fiscal year in which the annual

23 amount appropriated for such Agency is less than

24 the amount so appropriated for the prior fiscal year.
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1 ‘‘SEC. 1991A. STUDY BY THE INSTITUTE OF MEDICINE.

2 ‘‘(a) CONTRACT.—Not later than 60 days after the

3 date of enactment of this title, the Secretary shall enter

4 into a contract with the Institute of Medicine for the con5 duct of a study on the framework for a research agenda

6 and research priorities to be used under this part.

7 ‘‘(b) CONSIDERATIONS.—

8 ‘‘(1) IN GENERAL.—In developing the frame9 work for the research agenda and research priorities

10 under subsection (a) the Institute of Medicine shall

11 focus on increasing knowledge concerning the bio12 logical, social, behavioral, public health, and commu13 nity factors involved in the prevention of tobacco

14 use, reduction of tobacco use, and health con15 sequences of tobacco use.

16 ‘‘(2) SPECIFIC CONSIDERATIONS.—In the study

17 conducted under subsection (a), the Institute of

18 Medicine shall specifically include research on—

19 ‘‘(A) public health and community research

20 relating to tobacco use prevention methods, in21 cluding public education, media, community

22 strategies;

23 ‘‘(B) behavioral research relating to addic24 tion, tobacco use, and patterns of smoking, in25 cluding risk factors for tobacco use by children,

26 women, and racial and ethnic minorities;
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1 ‘‘(C) health services research relating to

2 tobacco product prevention and cessation treat3 ment methodologies;

4 ‘‘(D) surveillance and epidemiology re5 search relating to tobacco;

6 ‘‘(E) biomedical, including clinical, re7 search relating to prevention and treatment of

8 tobacco-related diseases, including a focus on

9 minorities, including racial and ethnic minori10 ties;

11 ‘‘(F) the effects of tobacco products, ingre12 dients of tobacco products, and tobacco smoke

13 on the human body and methods of reducing

14 any negative effects, including the development

15 of non-addictive, reduced risk tobacco products;

16 ‘‘(G) differentials between brands of to17 bacco products with respect to health effects or

18 addiction;

19 ‘‘(H) risks associated with environmental

20 exposure to tobacco smoke, including a focus on

21 children and infants;

22 ‘‘(I) effects of tobacco use by pregnant

23 women; and

24 ‘‘(J) other matters determined appropriate

25 by the Institute.
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1 ‘‘(c) REPORT.—Not later than 10 months after the

2 date on which the Secretary enters into the contract under

3 subsection (a), the Institute of Medicine shall prepare and

4 submit to the Secretary, the Committee on Labor and

5 Human Resources, and the Committee on Appropriations

6 of the Senate, and the Committee on Commerce of the

7 House of Representatives, a report that shall contain the

8 findings and recommendations of the Institute for the pur9 poses described in subsection (b).

10 ‘‘SEC. 1991B. RESEARCH COORDINATION.

11 ‘‘(a) IN GENERAL.—The Secretary shall foster co12 ordination among Federal research agencies, public health

13 agencies, academic bodies, and community groups that

14 conduct or support tobacco-related biomedical, clinical, be15 havioral, health services, public health and community,

16 and surveillance and epidemiology research activities.

17 ‘‘(b) REPORT.—The Secretary shall prepare and sub18 mit a report on a biennial basis to the Committee on

19 Labor and Human Resources, and the Committee on Ap20 propriations of the Senate, and the Committee on Com21 merce of the House of Representatives on the current and

22 planned tobacco-related research activities of participating

23 Federal agencies.
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1 ‘‘SEC. 1991C. RESEARCH ACTIVITIES OF THE CENTERS FOR

2 DISEASE CONTROL AND PREVENTION.

3 ‘‘(a) DUTIES.—The Director of the Centers for Dis4 ease Control and Prevention shall, from amounts provided

5 under section 451(c), and after review of the study of the

6 Institute of Medicine, carry out tobacco-related surveil7 lance and epidemiologic studies and develop tobacco con8 trol and prevention strategies; and

9 ‘‘(b) YOUTH SURVEILLANCE SYSTEMS.—From

10 amounts provided under section 451(b), the Director of

11 the Centers for Disease Control and Prevention shall pro12 vide for the use of youth surveillance systems to monitor

13 the use of all tobacco products by individuals under the

14 age of 18, including brands-used to enable determinations

15 to be made of company-specific youth market share.

16 ‘‘SEC. 1991D. RESEARCH ACTIVITIES OF THE NATIONAL IN17 STITUTES OF HEALTH.

18 ‘‘(a) FUNDING.—There are authorized to be appro19 priated, from amounts in the National Tobacco Settlement

20 Trust Fund established by section 401 of the National To21 bacco Policy and Youth Smoking Reduction Act.

22 ‘‘(b) EXPENDITURE OF FUNDS.—The Director of the

23 National Institutes of Health shall provide funds to con24 duct or support epidemiological, behavioral, biomedical,

25 and social science research, including research related to

26 the prevention and treatment of tobacco addiction, and the
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1 prevention and treatment of diseases associated with to2 bacco use.

3 ‘‘(c) GUARANTEED MINIMUM.—Of the funds made

4 available to the National Institutes of Health under this

5 section, such sums as may be necessary, may be used to

6 support epidemiological, behavioral, and social science re7 search related to the prevention and treatment of tobacco

8 addiction.

9 ‘‘(d) NATURE OF RESEARCH.—Funds made available

10 under subsection (d) may be used to conduct or support

11 research with respect to one or more of the following—

12 ‘‘(1) the epidemiology of tobacco use;

13 ‘‘(2) the etiology of tobacco use;

14 ‘‘(3) risk factors for tobacco use by children;

15 ‘‘(4) prevention of tobacco use by children, in16 cluding school and community-based programs, and

17 alternative activities;

18 ‘‘(5) the relationship between tobacco use, alco19 hol abuse and illicit drug abuse;

20 ‘‘(6) behavioral and pharmacological smoking

21 cessation methods and technologies, including re22 lapse prevention;

23 ‘‘(7) the toxicity of tobacco products and their

24 ingredients;
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1 ‘‘(8) the relative harmfulness of different to2 bacco products;

3 ‘‘(9) environmental exposure to tobacco smoke;

4 ‘‘(10) the impact of tobacco use by pregnant

5 women on their fetuses;

6 ‘‘(11) the redesign of tobacco products to re7 duce risks to public health and safety; and

8 ‘‘(12) other appropriate epidemiological, behav9 ioral, and social science research.

10 ‘‘(e) COORDINATION.—In carrying out tobacco-relat11 ed research under this section, the Director of the Na12 tional Institutes of Health shall ensure appropriate coordi13 nation with the research of other agencies, and shall avoid

14 duplicative efforts through all appropriate means.

15 ‘‘(h) ADMINISTRATION.—The director of the NIH Of16 fice of Behavioral and Social Sciences Research may—

17 ‘‘(1) identify tobacco-related research initiatives

18 that should be conducted or supported by the re19 search institutes, and develop such projects in co20 operation with such institutes;

21 ‘‘(2) coordinate tobacco-related research that is

22 conducted or supported by the National Institutes of

23 Health;
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1 ‘‘(3) annually recommend to Congress the allo2 cation of anti-tobacco research funds among the na3 tional research institutes; and

4 ‘‘(4) establish a clearinghouse for information

5 about tobacco-related research conducted by govern6 mental and non-governmental bodies.

7 ‘‘(f) TRIGGER.—No expenditure shall be made under

8 subsection (a) during any fiscal year in which the annual

9 amount appropriated for the National Institutes of Health

10 is less than the amount so appropriated for the prior fiscal

11 year.

12 ‘‘(g) REPORT.—The Director of the NIH shall every

13 2 years prepare and submit to the Congress a report

14 ———— research activities, including funding levels, for

15 research made available under subsection (c).

16 (b) MEDICAID COVERAGE OF OUTPATIENT SMOKING

17 CESSATION AGENTS.—Paragraph (2) of section 1927(d)

18 of the Public Health Service Act (42 U.S.C. 1396r–8(d))

19 is amended—

20 (1) by striking subparagraph (E) and redesig21 nating subparagraphs (F) through (J) as subpara22 graphs (E) through (I); and

23 (2) by striking ‘‘drugs.’’ in subparagraph (F),

24 as redesignated, and inserting ‘‘drugs, except agents,
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1 approved by the Food and Drug Administration,

2 when used to promote smoking cessation.’’.

3 ‘‘SEC. 1991E. RESEARCH ACTIVITIES OF THE AGENCY FOR

4 HEALTH CARE POLICY AND RESEARCH.

5 ‘‘(a) IN GENERAL.—The Administrator of the Agen6 cy for Health Care Policy and Research shall carry out

7 outcomes, effectiveness, cost-effectiveness, and other

8 health services research related to effective interventions

9 for the prevention and cessation of tobacco use and appro10 priate strategies for implementing those services, the out11 comes and delivery of care for diseases related to tobacco

12 use, and the development of quality measures for evaluat13 ing the provision of those services.

14 ‘‘(b) ANALYSES AND SPECIAL PROGRAMS.—The Sec15 retary, acting through the Administrator of the Agency

16 for Health Care Policy and Research, shall support—

17 ‘‘(1) and conduct periodic analyses and evalua18 tions of the best scientific information in the area of

19 smoking and other tobacco product use cessation;

20 and

21 ‘‘(2) the development and dissemination of spe22 cial programs in cessation intervention for health

23 plans and national health professional societies.’’.
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1 TITLE III—TOBACCO PRODUCT

2 WARNINGS AND SMOKE CON3 STITUENT DISCLOSURE

4 Subtitle A—Product Warnings,

5 Labeling and Packaging

6 SEC. 301. CIGARETTE LABEL AND ADVERTISING WARNINGS.

7 (a) IN GENERAL.—Section 4 of the Federal Cigarette

8 Labeling and Advertising Act (15 U.S.C. 1333) is amend9 ed to read as follows:

10 ‘‘SEC. 4. LABELING.

11 ‘‘(a) LABEL REQUIREMENTS.—

12 ‘‘(1) IN GENERAL.—It shall be unlawful for any

13 person to manufacture, package, or import for sale

14 or distribution within the United States any ciga15 rettes the package of which fails to bear, in accord16 ance with the requirements of this section, one of

17 the following labels:

18 ‘‘WARNING: Cigarettes are addictive’’

19 ‘‘WARNING: Tobacco smoke can harm your chil20 dren’’

21 ‘‘WARNING: Cigarettes cause fatal lung disease’’

22 ‘‘WARNING: Cigarettes cause cancer’’

23 ‘‘WARNING: Cigarettes cause strokes and heart

24 disease’’
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1 ‘‘WARNING: Smoking during pregnancy can harm

2 your baby’’

3 ‘‘WARNING: Smoking can kill you’’

4 ‘‘WARNING: Tobacco smoke causes fatal lung dis5 ease in non-smokers’’

6 ‘‘WARNING: Quitting smoking now greatly reduces

7 serious risks to your health’’

8 ‘‘(2) PLACEMENT; TYPOGRAPHY; ETC.—

9 ‘‘(A) IN GENERAL.—Each label statement

10 required by paragraph (1) shall be located in

11 the upper portion of the front and rear panels

12 of the package, directly on the package under13 neath the cellophane or other clear wrapping.

14 Except as provided in subparagraph (B), each

15 label statement shall comprise at least the top

16 25 percent of the front and rear panels of the

17 package. The word ‘‘WARNING’’ shall appear

18 in capital letters and all text shall be in con19 spicuous and legible 17-point type, unless the

20 text of the label statement would occupy more

21 than 70 percent of such area, in which case the

22 text may be in a smaller conspicuous and leg23 ible type size, provided that at least 60 percent

24 of such area is occupied by required text. The

25 text shall be black on a white background, or
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1 white on a black background, in a manner that

2 contrasts, by typography, layout, or color, with

3 all other printed material on the package, in an

4 alternating fashion under the plan submitted

5 under subsection (b)(4).

6 ‘‘(B) FLIP-TOP BOXES.—For any cigarette

7 brand package manufactured or distributed be8 fore January 1, 2000, which employs a flip-top

9 style (if such packaging was used for that

10 brand in commerce prior to June 21, 1997), the

11 label statement required by paragraph (1) shall

12 be located on the flip-top area of the package,

13 even if such area is less than 25 percent of the

14 area of the front panel. Except as provided in

15 this paragraph, the provisions of this subsection

16 shall apply to such packages.

17 ‘‘(3) DOES NOT APPLY TO FOREIGN DISTRIBU18 TION.—The provisions of this subsection do not

19 apply to a tobacco product manufacturer or distribu20 tor of cigarettes which does not manufacture, pack21 age, or import cigarettes for sale or distribution

22 within the United States.

23 ‘‘(b) ADVERTISING REQUIREMENTS.—

24 ‘‘(1) IN GENERAL.—It shall be unlawful for any

25 tobacco product manufacturer, importer, distributor,
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1 or retailer of cigarettes to advertise or cause to be

2 advertised within the United States any cigarette

3 unless its advertising bears, in accordance with the

4 requirements of this section, one of the labels speci5 fied in subsection (a) of this section.

6 ‘‘(2) TYPOGRAPHY, ETC.—Each label statement

7 required by subsection (a) of this section in cigarette

8 advertising shall comply with the standards set forth

9 in this paragraph. For press and poster advertise10 ments, each such statement and (where applicable)

11 any required statement relating to tar, nicotine, or

12 other constituent yield shall comprise at least 20

13 percent of the area of the advertisement and shall

14 appear in a conspicuous and prominent format and

15 location at the top of each advertisement within the

16 trim area. The Secretary may revise the required

17 type sizes in such area in such manner as the Sec18 retary determines appropriate. The word ‘‘WARN19 ING’’ shall appear in capital letters, and each label

20 statement shall appear in conspicuous and legible

21 type. The text of the label statement shall be black

22 if the background is white and white if the back23 ground is black, under the plan submitted under

24 paragraph (4) of this subsection. The label state25 ments shall be enclosed by a rectangular border that
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1 is the same color as the letters of the statements

2 and that is the width of the first downstroke of the

3 capital ‘‘W’’ of the word ‘‘WARNING’’ in the label

4 statements. The text of such label statements shall

5 be in a typeface pro rata to the following require6 ments: 45-point type for a whole-page broadsheet

7 newspaper advertisement; 39-point type for a half8 page broadsheet newspaper advertisement; 39-point

9 type for a whole-page tabloid newspaper advertise10 ment; 27-point type for a half-page tabloid news11 paper advertisement; 31.5-point type for a double

12 page spread magazine or whole-page magazine ad13 vertisement; 22.5-point type for a 28 centimeter by

14 3 column advertisement; and 15-point type for a 20

15 centimeter by 2 column advertisement. The label

16 statements shall be in English, except that in the

17 case of—

18 ‘‘(A) an advertisement that appears in a

19 newspaper, magazine, periodical, or other publi20 cation that is not in English, the statements

21 shall appear in the predominant language of the

22 publication; and

23 ‘‘(B) in the case of any other advertise24 ment that is not in English, the statements
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1 shall appear in the same language as that prin2 cipally used in the advertisement.

3 ‘‘(3) ADJUSTMENT BY SECRETARY.—The Sec4 retary may, through a rulemaking under section 553

5 of title 5, United States Code, adjust the format and

6 type sizes for the label statements required by this

7 section or the text, format, and type sizes of any re8 quired tar, nicotine yield, or other constituent disclo9 sures, or to establish the text, format, and type sizes

10 for any other disclosures required under the Federal

11 Food, Drug, and Cosmetic Act (21 U.S.C. 301 et.

12 seq.). The text of any such label statements or dis13 closures shall be required to appear only within the

14 20 percent area of cigarette advertisements provided

15 by paragraph (2) of this subsection. The Secretary

16 shall promulgate regulations which provide for ad17 justments in the format and type sizes of any text

18 required to appear in such area to ensure that the

19 total text required to appear by law will fit within

20 such area.

21 ‘‘(4) MARKETING REQUIREMENTS.—

22 ‘‘(A) The label statements specified in sub23 section (a)(1) shall be randomly displayed in

24 each 12-month period, in as equal a number of

25 times as is possible on each brand of the prod-
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1 uct and be randomly distributed in all areas of

2 the United States in which the product is mar3 keted in accordance with a plan submitted by

4 the tobacco product manufacturer, importer,

5 distributor, or retailer and approved by the Sec6 retary.

7 ‘‘(B) The label statements specified in sub8 section (a)(1) shall be rotated quarterly in al9 ternating sequence in advertisements for each

10 brand of cigarettes in accordance with a plan

11 submitted by the tobacco product manufacturer,

12 importer, distributor, or retailer to, and ap13 proved by, the Secretary.

14 ‘‘(C) The Secretary shall review each plan

15 submitted under subparagraph (B) and approve

16 it if the plan—

17 ‘‘(i) will provide for the equal distribu18 tion and display on packaging and the ro19 tation required in advertising under this

20 subsection; and

21 ‘‘(ii) assures that all of the labels re22 quired under this section will be displayed

23 by the tobacco product manufacturer, im24 porter, distributor, or retailer at the same

25 time.’’.
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1 (b) REPEAL OF PROHIBITION ON STATE RESTRIC2 TION.—Section 5 of the Federal Cigarette Labeling and

3 Advertising Act (15 U.S.C. 1334) is amended—

4 (1) by striking ‘‘(a) ADDITIONAL STATE5 MENTS.—’’ IN SUBSECTION (A); AND

6 (2) by striking subsection (b).

7 SEC. 302. AUTHORITY TO REVISE CIGARETTE WARNING

8 LABEL STATEMENTS.

9 Section 4 of the Federal Cigarette Labeling and Ad10 vertising Act ( 15 U.S.C. 1333), as amended by section

11 301 of this title, is further amended by adding at the end

12 the following:

13 ‘‘(c) CHANGE IN REQUIRED STATEMENTS.—The Sec14 retary may, by a rulemaking conducted under section 553

15 of title 5, United States Code, adjust the format, type size,

16 and text of any of the warning label statements required

17 by subsection (a) of this section, or establish the format,

18 type size, and text of any other disclosures required under

19 the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301

20 et seq.), if the Secretary finds that such a change would

21 promote greater public understanding of the risks associ22 ated with the use of smokeless tobacco products.’’.
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1 SEC. 303. SMOKELESS TOBACCO LABELS AND ADVERTISING

2 WARNINGS.

3 Section 3 of the Comprehensive Smokeless Tobacco

4 Health Education Act of 1986 (15 U.S.C. 4402) is amend5 ed to read as follows:

6 ‘‘SEC. 3. SMOKELESS TOBACCO WARNING.

7 ‘‘(a) GENERAL RULE.—

8 ‘‘(1) It shall be unlawful for any person to man9 ufacture, package, or import for sale or distribution

10 within the United States any smokeless tobacco

11 product unless the product package bears, in accord12 ance with the requirements of this Act, one of the

13 following labels:

14 ‘‘WARNING: This product can cause mouth cancer’’

15 ‘‘WARNING: This product can cause gum disease

16 and tooth loss’’

17 ‘‘WARNING: This product is not a safe alternative

18 to cigarettes’’

19 ‘‘WARNING: Smokeless tobacco is addictive’’

20 ‘‘(2) Each label statement required by para21 graph (1) shall be—

22 ‘‘(A) located on the 2 principal display

23 panels of the package, and each label statement

24 shall comprise at least 25 percent of each such

25 display panel; and
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1 ‘‘(B) in 17-point conspicuous and legible

2 type and in black text on a white background,

3 or white text on a black background, in a man4 ner that contrasts by typography, layout, or

5 color, with all other printed material on the

6 package, in an alternating fashion under the

7 plan submitted under subsection (b)(3), except

8 that if the text of a label statement would oc9 cupy more than 70 percent of the area specified

10 by subparagraph (A), such text may appear in

11 a smaller type size, so long as at least 60 per12 cent of such warning area is occupied by the

13 label statement.

14 ‘‘(3) The label statements required by para15 graph (1) shall be introduced by each tobacco prod16 uct manufacturer, packager, importer, distributor, or

17 retailer of smokeless tobacco products concurrently

18 into the distribution chain of such products.

19 ‘‘(4) The provisions of this subsection do not

20 apply to a tobacco product manufacturer or distribu21 tor of any smokeless tobacco product that does not

22 manufacture, package, or import smokeless tobacco

23 products for sale or distribution within the United

24 States.

25 ‘‘(b) REQUIRED LABELS.—
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1 ‘‘(1) It shall be unlawful for any tobacco prod2 uct manufacturer, packager, importer, distributor, or

3 retailer of smokeless tobacco products to advertise or

4 cause to be advertised within the United States any

5 smokeless tobacco product unless its advertising

6 bears, in accordance with the requirements of this

7 section, one of the labels specified in subsection (a).

8 ‘‘(2) Each label statement required by sub9 section (a) in smokeless tobacco advertising shall

10 comply with the standards set forth in this para11 graph. For press and poster advertisements, each

12 such statement and (where applicable) any required

13 statement relating to tar, nicotine, or other constitu14 ent yield shall—

15 ‘‘(A) comprise at least 20 percent of the

16 area of the advertisement, and the warning area

17 shall be delineated by a dividing line of con18 trasting color from the advertisement; and

19 ‘‘(B) the word ‘‘WARNING’’ shall appear

20 in capital letters and each label statement shall

21 appear in conspicuous and legible type. The text

22 of the label statement shall be black on a white

23 background, or white on a black background, in

24 an alternating fashion under the plan submitted

25 under paragraph (3).
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1 ‘‘(3)(A) The label statements specified in sub2 section (a)(1) shall be randomly displayed in each

3 12-month period, in as equal a number of times as

4 is possible on each brand of the product and be ran5 domly distributed in all areas of the United States

6 in which the product is marketed in accordance with

7 a plan submitted by the tobacco product manufac8 turer, importer, distributor, or retailer and approved

9 by the Secretary.

10 ‘‘(B) The label statements specified in sub11 section (a)(1) shall be rotated quarterly in alternat12 ing sequence in advertisements for each brand of

13 smokeless tobacco product in accordance with a plan

14 submitted by the tobacco product manufacturer, im15 porter, distributor, or retailer to, and approved by,

16 the Secretary.

17 ‘‘(C) The Secretary shall review each plan sub18 mitted under subparagraph (B) and approve it if the

19 plan—

20 ‘‘(i) will provide for the equal distribution

21 and display on packaging and the rotation re22 quired in advertising under this subsection; and

23 ‘‘(ii) assures that all of the labels required

24 under this section will be displayed by the to-
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1 bacco product manufacturer, importer, distribu2 tor, or retailer at the same time.

3 ‘‘(c) TELEVISION AND RADIO ADVERTISING.—It is

4 unlawful to advertise smokeless tobacco on any medium

5 of electronic communications subject to the jurisdiction of

6 the Federal Communications Commission.’’.

7 SEC. 304. AUTHORITY TO REVISE SMOKELESS TOBACCO

8 PRODUCT WARNING LABEL STATEMENTS.

9 Section 3 of the Comprehensive Smokeless Tobacco

10 Health Education Act of 1986 (15 U.S.C. 4402), as

11 amended by section 303 of this title, is further amended

12 by adding at the end the following:

13 ‘‘(d) AUTHORITY TO REVISE WARNING LABEL

14 STATEMENTS.—The Secretary may, by a rulemaking con15 ducted under section 553 of title 5, United States Code,

16 adjust the format, type size, and text of any of the warn17 ing label statements required by subsection (a) of this sec18 tion, or establish the format, type size, and text of any

19 other disclosures required under the Federal Food, Drug,

20 and Cosmetic Act (21 U.S.C. 301 et seq.), if the Secretary

21 finds that such a change would promote greater public un22 derstanding of the risks associated with the use of smoke23 less tobacco products.’’.
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1 SEC. 305. TAR, NICOTINE, AND OTHER SMOKE CONSTITU2 ENT DISCLOSURE TO THE PUBLIC.

3 Section 4(a) of the Federal Cigarette Labeling and

4 Advertising Act (15 U.S.C. 1333 (a)), as amended by sec5 tion 301 of this title, is further amended by adding at

6 the end the following:

7 ‘‘(4)(A) The Secretary shall, by a rulemaking

8 conducted under section 553 of title 5, United

9 States Code, determine (in the Secretary’s sole dis10 cretion) whether cigarette and other tobacco product

11 manufacturers shall be required to include in the

12 area of each cigarette advertisement specified by

13 subsection (b) of this section, or on the package

14 label, or both, the tar and nicotine yields of the ad15 vertised or packaged brand. Any such disclosure

16 shall be in accordance with the methodology estab17 lished under such regulations, shall conform to the

18 type size requirements of subsection (b) of this sec19 tion, and shall appear within the area specified in

20 subsection (b) of this section.

21 ‘‘(B) Any differences between the requirements

22 established by the Secretary under subparagraph (A)

23 and tar and nicotine yield reporting requirements es24 tablished by the Federal Trade Commission shall be

25 resolved by a memorandum of understanding be-
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1 tween the Secretary and the Federal Trade Commis2 sion.

3 ‘‘(C) In addition to the disclosures required by

4 subparagraph (A) of this paragraph, the Secretary

5 may, under a rulemaking conducted under section

6 553 of title 5, United States Code, prescribe disclo7 sure requirements regarding the level of any ciga8 rette or other tobacco product smoke constituent.

9 Any such disclosure may be required if the Secretary

10 determines that disclosure would be of benefit to the

11 public health, or otherwise would increase consumer

12 awareness of the health consequences of the use of

13 tobacco products, except that no such prescribed dis14 closure shall be required on the face of any cigarette

15 package or advertisement. Nothing in this section

16 shall prohibit the Secretary from requiring such pre17 scribed disclosure through a cigarette or other to18 bacco product package or advertisement insert, or by

19 any other means under the Federal Food, Drug, and

20 Cosmetic Act (21 U.S.C. 301 et seq.).’’.
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1 Subtitle B—Testing and Reporting

2 of Tobacco Product Smoke Con3 stituents

4 SEC. 311. REGULATION REQUIREMENT.

5 (a) TESTING, REPORTING, AND DISCLOSURE.—Not

6 later than 24 months after the date of enactment of this

7 Act, the Secretary, through the Commissioner of the Food

8 and Drug Administration, shall promulgate regulations

9 under the Federal Food, Drug, and Cosmetic Act (21

10 U.S.C. 301 et seq.) that meet the requirements of sub11 section (b) of this section.

12 (b) CONTENTS OF RULES.—The rules promulgated

13 under subsection (a) of this section shall require the test14 ing, reporting, and disclosure of tobacco product smoke

15 constituents and ingredients that the Secretary determines

16 should be disclosed to the public in order to protect the

17 public health. Such constituents shall include tar, nicotine,

18 carbon monoxide, and such other smoke constituents or

19 ingredients as the Secretary may determine to be appro20 priate. The rule may require that tobacco product manu21 facturers, packagers, or importers make such disclosures

22 relating to tar and nicotine through labels or advertising,

23 and make such disclosures regarding other smoke con24 stituents or ingredients as the Secretary determines are

25 necessary to protect the public health.
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1 (c) AUTHORITY.—The Food and Drug Administra2 tion shall have authority to conduct or to require the test3 ing, reporting, or disclosure of tobacco product smoke con4 stituents.

5 TITLE IV—NATIONAL TOBACCO

6 TRUST FUND

7 SEC. 401. ESTABLISHMENT OF TRUST FUND.

8 (a) CREATION.—There is established in the Treasury

9 of the United States a trust fund to be known as the ‘‘Na10 tional Tobacco Trust Fund’’, consisting of such amounts

11 as may be appropriated or credited to the trust fund.

12 (b) TRANSFERS TO NATIONAL TOBACCO TRUST

13 FUND.—There shall be credited to the trust fund the net

14 revenues resulting from the following amounts:

15 (1) Amounts paid under section 402.

16 (2) Amounts equal to the fines or penalties paid

17 under section 402, 403, or 405, including interest

18 thereon.

19 (3) Amounts equal to penalties paid under sec20 tion 202, including interest thereon.

21 (c) NET REVENUES.—For purposes of subsection

22 (b), the term ‘‘net revenues’’ means the amount estimated

23 by the Secretary of the Treasury based on the excess of—

24 (1) the amounts received in the Treasury under

25 subsection (b), over
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1 (2) the decrease in the taxes imposed by chap2 ter 1 and chapter 52 of the Internal Revenue Code

3 of 1986, and other offsets, resulting from the

4 amounts received under subsection (b).

5 (d) EXPENDITURES FROM THE TRUST FUND.—

6 Amounts in the Trust Fund shall be available in each fis7 cal year, as provided in appropriation Acts. The authority

8 to allocate net revenues as provided in this title and to

9 obligate any amounts so allocated is contingent upon ac10 tual receipt of net revenues.

11 (e) BUDGETARY TREATMENT.—The amount of net

12 receipts in excess of that amount which is required to off13 set the direct spending in this Act under section 252 of

14 the Balanced Budget and Emergency Deficit Control Act

15 of 1985 (2 U.S.C. 902) shall be available exclusively to

16 offset the appropriations required to fund the authoriza17 tions of appropriations in this Act (including the amend18 ments made by this Act), and the amount of such appro19 priations shall not be included in the estimates required

20 under section 251 of that Act (2 U.S.C. 901).

21 (f) ADMINISTRATIVE PROVISIONS.—Section 9602 of

22 the Internal Revenue Code of 1986 shall apply to the trust

23 fund to the same extent as if it were established by sub24 chapter A of chapter 98 of such Code, except that, for

25 purposes of section 9602(b)(3), any interest or proceeds
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1 shall be covered into the Treasury as miscellaneous re2 ceipts.

3 SEC. 402. PAYMENTS BY INDUSTRY.

4 (a) INITIAL PAYMENT.—

5 (1) CERTAIN TOBACCO PRODUCT MANUFACTUR6 ERS.—The following participating tobacco product

7 manufacturers, subject to the provisions of title

8 XIV, shall deposit into the National Tobacco Trust

9 Fund an aggregate payment of $10,000,000,000,

10 apportioned as follows:

11 (A) Phillip Morris Incorporated—65.8 per12 cent.

13 (B) Brown and Williamson Tobacco Cor14 poration—17.3 percent.

15 (C) Lorillard Tobacco Company—7.1 per16 cent.

17 (D) R.J. Reynolds Tobacco Company—6.6

18 percent.

19 (E) United States Tobacco Company—3.2

20 percent.

21 (2) NO CONTRIBUTION FROM OTHER TOBACCO

22 PRODUCT MANUFACTURERS.—No other tobacco

23 product manufacturer shall be required to contribute

24 to the payment required by this subsection.
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1 (3) PAYMENT DATE; INTEREST.—Each tobacco

2 product manufacturer required to make a payment

3 under paragraph (1) of this subsection shall make

4 such payment within 30 days after the date of com5 pliance with this Act and shall owe interest on such

6 payment at the prime rate plus 10 percent per

7 annum, as published in the Wall Street Journal on

8 the latest publication date on or before the date of

9 enactment of this Act, for payments made after the

10 required payment date.

11 (b) ANNUAL PAYMENTS.—Each calendar year begin12 ning after the required payment date under subsection

13 (a)(3) the tobacco product manufacturers shall make total

14 payments into the Fund for each calendar year in the fol15 lowing applicable base amounts, subject to adjustment as

16 provided in section 403:

17 (1) year 1—$14,400,000,000.

18 (2) year 2—$15,400,000,000.

19 (3) year 3—$17,700,000,000.

20 (4) year 4—$21,400,000,000.

21 (5) year 5—$23,600,000,000.

22 (6) year 6 and thereafter—the adjusted appli23 cable base amount under section 403.

24 (c) PAYMENT SCHEDULE; RECONCILIATION.—
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1 (1) ESTIMATED PAYMENTS.—Deposits toward

2 the annual payment liability for each calendar year

3 under subsection (d)(2) shall be made in 3 equal in4 stallments due on March 1st, on June 1st, and on

5 August 1st of each year. Each installment shall be

6 equal to one-third of the estimated annual payment

7 liability for that calendar year. Deposits of install8 ments paid after the due date shall accrue interest

9 at the prime rate plus 10 percent per annum, as

10 published in the Wall Street Journal on the latest

11 publication date on or before the payment date.

12 (2) RECONCILIATION.—If the liability for a cal13 endar year under subsection (d)(2) exceeds the de14 posits made during that calendar year, the manufac15 turer shall pay the unpaid liability on March 1st of

16 the succeeding calendar year, along with the first de17 posit for that succeeding year. If the deposits during

18 a calendar year exceed the liability for the calendar

19 year under subsection (d)(2), the manufacturer shall

20 subtract the amount of the excess deposits from its

21 deposit on March 1st of the succeeding calendar

22 year.

23 (d) APPORTIONMENT OF ANNUAL PAYMENT.—

24 (1) IN GENERAL.—Each tobacco product manu25 facturer is liable for its share of the applicable base
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1 amount payment due each year under subsection

2 (b). The annual payment is the obligation and re3 sponsibility of only those tobacco product manufac4 turers and their affiliates that directly sell tobacco

5 products in the domestic market to wholesalers, re6 tailers, or consumers, their successors and assigns,

7 and any subsequent fraudulent transferee (but only

8 to the extent of the interest or obligation fraudu9 lently transferred).

10 (2) DETERMINATION OF AMOUNT OF PAYMENT

11 DUE.—Each tobacco product manufacturer is liable

12 for its share of each installment in proportion to its

13 share of tobacco products sold in the domestic mar14 ket for the calendar year. One month after the end

15 of the calendar year, the Secretary shall make a

16 final determination of each tobacco product manu17 facturer’s applicable base amount payment obliga18 tion.

19 (3) CALCULATION OF TOBACCO PRODUCT MAN20 UFACTURER’S SHARE OF ANNUAL PAYMENT.—The

21 share of the annual payment apportioned to a to22 bacco product manufacturer shall be equal to that

23 manufacturer’s share of adjusted units, taking into

24 account the manufacturer’s total production of such

25 units sold in the domestic market. A tobacco product
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1 manufacturer’s share of adjusted units shall be de2 termined as follows:

3 (A) UNITS.—A tobacco product manufac4 turer’s number of units shall be determined by

5 counting each—

6 (i) pack of 20 cigarettes as 1 adjusted

7 unit;

8 (ii) 1.2 ounces of moist snuff as 0.75

9 adjusted unit; and

10 (iii) 3 ounces of other smokeless to11 bacco product as 0.35 adjusted units.

12 (B) DETERMINATION OF ADJUSTED

13 UNITS.—Except as provided in subparagraph

14 (C), a smokeless tobacco product manufactur15 er’s number of adjusted units shall be deter16 mined under the following table:

For units: Each unit shall be treated as:

Not exceeding 150 million 70% of a unit

Exceeding 150 million 100% of a unit

17 (C) ADJUSTED UNITS DETERMINED ON

18 TOTAL DOMESTIC PRODUCTION.—For purposes

19 of determining a manufacturer’s number of ad20 justed units under subparagraph (B), a manu21 facturer’s total production of units, whether in22 tended for domestic consumption or export,

23 shall be taken into account.
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1 (D) SPECIAL RULE FOR LARGE MANUFAC2 TURERS.—If a tobacco product manufacturer

3 has more than 200 million units under subpara4 graph (A), then that manufacturer’s number of

5 adjusted units shall be equal to the total num6 ber of units, and not determined under sub7 paragraph (B).

8 (E) SMOKELESS EQUIVALENCY STUDY.—

9 Not later than January 1, 2003, the Secretary

10 shall submit to the Congress a report detailing

11 the extent to which youths are substituting

12 smokeless tobacco products for cigarettes. If the

13 Secretary determines that significant substi14 tution is occurring, the Secretary shall include

15 in the report recommendations to address sub16 stitution, including consideration of modifica17 tion of the provisions of subparagraph (A).

18 (e) COMPUTATIONS.—The determinations required

19 by subsection (d) shall be made and certified by the Sec20 retary of Treasury. The parties shall promptly provide the

21 Treasury Department with information sufficient for it to

22 make such determinations.

23 (f) NONAPPLICATION TO CERTAIN MANUFACTUR24 ERS.—
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1 (1) EXEMPTION .—A manufacturer described in

2 paragraph (3) is exempt from the payments required

3 by subsection (b).

4 (2) LIMITATION.—Paragraph (1) applies only

5 to assessments on cigarettes to the extent that those

6 cigarettes constitute less than 3 percent of all ciga7 rettes manufactured and distributed to consumers in

8 any calendar year.

9 (3) TOBACCO PRODUCT MANUFACTURERS TO

10 WHICH SUBSECTION APPLIES.—A tobacco product

11 manufacturer is described in this paragraph if it—

12 (A) resolved tobacco-related civil actions

13 with more than 25 States before January 1,

14 1998, through written settlement agreements

15 signed by the attorneys general (or the equiva16 lent chief legal officer if there is no office of at17 torney general) of those States; and

18 (B) provides to all other States, not later

19 than December 31, 1998, the opportunity to

20 enter into written settlement agreements that—

21 (i) are substantially similar to the

22 agreements entered into with those 25

23 States; and

24 (ii) provide the other States with an25 nual payment terms that are equivalent to
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1 the most favorable annual payment terms

2 of its written settlement agreements with

3 those 25 States.

4 SEC. 403. ADJUSTMENTS.

5 The applicable base amount under section 402(b) for

6 a given calendar year shall be adjusted as follows in deter7 mining the annual payment for that year:

8 (1) INFLATION ADJUSTMENT.—

9 (A) IN GENERAL.—Beginning with the

10 sixth calendar year after the date of enactment

11 of this Act, the adjusted applicable base amount

12 under section 402(b)(6) is the amount of the

13 annual payment made for the preceding year

14 increased by the greater of 3 percent or the an15 nual increase in the CPI, adjusted (for calendar

16 year 2002 and later years) by the volume ad17 justment under paragraph (2).

18 (B) CPI.—For purposes of subparagraph

19 (A), the CPI for any calendar year is the aver20 age of the Consumer Price Index for all-urban

21 consumers published by the Department of

22 Labor.

23 (C) ROUNDING.—If any increase deter24 mined under subparagraph (A) is not a multiple
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1 of $1,000, the increase shall be rounded to the

2 nearest multiple of $1,000.

3 (2) VOLUME ADJUSTMENT.—Beginning with

4 calendar year 2002, the applicable base amount (as

5 adjusted for inflation under paragraph (1)) shall be

6 adjusted for changes in volume of domestic sales by

7 multiplying the applicable base amount by the ratio

8 of the actual volume for the calendar year to the

9 base volume. For purposes of this paragraph, the

10 term ‘‘base volume’’ means 80 percent of the num11 ber of units of taxable domestic removals and taxed

12 imports of cigarettes in calendar year 1997, as re13 ported to the Secretary of the Treasury. For pur14 poses of this subsection, the term ‘‘actual volume’’

15 means the number of adjusted unites as defined in

16 section 402(d)(3)(A).

17 SEC. 404. PAYMENTS TO BE PASSED THROUGH TO CONSUM18 ERS.

19 Each tobacco product manufacturer shall use its best

20 efforts to adjust the price at which it sells each unit of

21 tobacco products in the domestic market or to an importer

22 for resale in the domestic market by an amount sufficient

23 to pass through to each purchaser on a per-unit basis an

24 equal share of the annual payments to be made by such
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1 tobacco product manufacturer under this Act for the year

2 in which the sale occurs.

3 SEC. 405. TAX TREATMENT OF PAYMENTS.

4 All payments made under section 402 are ordinary

5 and necessary business expenses for purposes of chapter

6 1 of the Internal Revenue Code of 1986 for the year in

7 which such payments are made, and no part thereof is

8 either in settlement of an actual or potential liability for

9 a fine or penalty (civil or criminal) or the cost of a tangible

10 or intangible asset or other future benefit.

11 SEC. 406. ENFORCEMENT FOR NONPAYMENT.

12 (a) PENALTY.—Any tobacco product manufacturer

13 that fails to make any payment required under section 402

14 or 404 within 60 days after the date on which such fee

15 is due is liable for a civil penalty computed on the unpaid

16 balance at a rate of prime plus 10 percent per annum,

17 as published in the Wall Street Journal on the latest publi18 cation date on or before the payment date, during the pe19 riod the payment remains unmade.

20 (b) NONCOMPLIANCE PERIOD.—For purposes of this

21 section, the term ‘‘noncompliance period’’ means, with re22 spect to any failure to make a payment required under

23 section 402 or 404, the period—

24 (1) beginning on the due date for such pay25 ment; and
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1 (2) ending on the date on which such payment

2 is paid in full.

3 (c) LIMITATIONS.—

4 (1) IN GENERAL.—No penalty shall be imposed

5 by subsection (a) on any failure to make a payment

6 under section 402 during any period for which it is

7 established to the satisfaction of the Secretary of the

8 Treasury that none of the persons responsible for

9 such failure knew or, exercising reasonable diligence,

10 should have known, that such failure existed.

11 (2) CORRECTIONS.—No penalty shall be im12 posed under subsection (a) on any failure to make

13 a payment under section 402 if—

14 (A) such failure was due to reasonable

15 cause and not to willful neglect; and

16 (B) such failure is corrected during the 30-

17 day period beginning on the 1st date that any

18 of the persons responsible for such failure knew

19 or, exercising reasonable diligence, should have

20 known, that such failure existed.

21 (3) WAIVER.—In the case of any failure to

22 make a payment under section 402 that is due to

23 reasonable cause and not to willful neglect, the Sec24 retary of the Treasury may waive all or part of the

25 penalty imposed under subsection (a) to the extent
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1 that the Secretary determines that the payment of

2 such penalty would be excessive relative to the fail3 ure involved.

4 Subtitle B—General Spending

5 Provisions

6 SEC. 451. ALLOCATION ACCOUNTS.

7 (a) STATE LITIGATION SETTLEMENT ACCOUNT.—

8 (1) IN GENERAL.—There is established within

9 the Trust Fund a separate account, to be known as

10 the State Litigation Settlement Account. Of the net

11 revenues credited to the Trust Fund under section

12 401(b)(1) for each fiscal year, 40 percent of the

13 amounts designated for allocation under the settle14 ment payments shall be allocated to this account.

15 Such amounts shall be reduced by the additional es16 timated Federal expenditures that will be incurred

17 as a result of State expenditures under section 452,

18 which amounts shall be transferred to the mis19 cellaneous receipts of the Treasury. If, after 10

20 years, the estimated 25-year total amount projected

21 to received in this account will be different than

22 amount than $196,500,000,000, then beginning with

23 the eleventh year the 40 percent share will be ad24 justed as necessary, to a percentage not in excees of
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1 50 percent and not less than 30 percent, to achieve

2 that 25-year total amount.

3 (2) APPROPRIATION.—Amounts so calculated

4 are hereby appropriated and available until expended

5 and shall be available to States for grants authorized

6 under this Act.

7 (3) DISTRIBUTION FORMULA.—The Secretary

8 of the Treasury shall consult with the National Gov9 ernors Association, the National Association of At10 torneys General, and the National Conference of

11 State Legislators on a formula for the distribution

12 of amounts in the State Litigation Settlement Ac13 count and report to the Congress within 90 days

14 after the date of enactment of this Act with rec15 ommendations for implementing a distribution for16 mula.

17 (4) USE OF FUNDS.—A State may use amounts

18 received under this subsection as the State deter19 mines appropriate, consistent with the other provi20 sions of this Act.

21 (5) FUNDS NOT AVAILABLE AS MEDICAID REIM22 BURSEMENT.—Funds in the account shall not be

23 available to the Secretary as reimbursement of Med24 icaid expenditures or considered as Medicaid over25 payments for purposes of recoupment.
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1 (b) PUBLIC HEALTH ALLOCATION ACCOUNT.—

2 (1) IN GENERAL.— There is established within

3 the trust fund a separate account, to be known as

4 the Public Health Account. Twenty-two percent of

5 the net revenues credited to the trust fund under

6 section 401(b)(1) and all the net revenues credited

7 to the trust fund under section 401(b)(3) shall be al8 located to this account.

9 (2) AUTHORIZATION OF APPROPRIATIONS.—

10 Amounts in the Public Health Account shall be

11 available to the extent and only in the amounts pro12 vided in advance in appropriations Acts, to remain

13 available until expended, only for the purposes of:

14 (A) CESSATION AND OTHER TREAT15 MENTS.—Of the total amounts allocated to this

16 account, not less than 25 percent, but not more

17 than 35 percent are to be used to carry out

18 smoking cessation activities under part D of

19 title XIX of the Public Health Service Act, as

20 added by title II of this Act.

21 (B) INDIAN HEALTH SERVICE.—Of the

22 total amounts allocated to this account, not less

23 than 3 percent, but not more than 7 percent

24 are to be used to carry out activities under sec25 tion 453.
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1 (C) EDUCATION AND PREVENTION.—Of

2 the total amounts allocated to this account, not

3 less than 50 percent, but not more than 65 per4 cent are to be used to carry out—

5 (i) counter-advertising activities under

6 section 1982 of the Public Health Service

7 Act as amended by this Act;

8 (ii) smoking prevention activities

9 under section 223;

10 (iii) surveys under section 1991C of

11 the Public Health Service Act, as added by

12 this Act (but, in no fiscal year may the

13 amounts used to carry out such surveys be

14 less than 10 percent of the amounts avail15 able under this subsection); and

16 (iv) international activities under sec17 tion 1132.

18 (D) ENFORCEMENT.—Of the total

19 amounts allocated to this account, not less than

20 17.5 percent nor more than 22.5 percent are to

21 be used to carry out the following:

22 (i) Food and Drug Administration ac23 tivities.

24 (I) The Food and Drug Adminis25 tration shall receive not less than 15
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1 percent of the funds provided in sub2 paragraph (D) in the first fiscal year

3 beginning after the date of enactment

4 of this Act, 35 percent of such funds

5 in the second year beginning after the

6 date of enactment, and 50 percent of

7 such funds for each fiscal year begin8 ning after the date of enactment, as

9 reimbursements for the costs incurred

10 by the Food and Drug Administration

11 in implementing and enforcing re12 quirements relating to tobacco prod13 ucts.

14 (II) No expenditures shall be

15 made under subparagraph (D) during

16 any fiscal year in which the annual

17 amount appropriated for the Food

18 and Drug Administration is less than

19 the amount so appropriated for the

20 prior fiscal year.

21 (ii) State retail licensing activities

22 under section 251.

23 (iii) Anti-Smuggling activities under

24 section 1141.
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1 (c) HEALTH AND HEALTH-RELATED RESEARCH AL2 LOCATION ACCOUNT.—

3 (1) IN GENERAL.— There is established within

4 the trust fund a separate account, to be known as

5 the Health and Health-Related Research Account.

6 Of the net revenues credited to the trust fund under

7 section 401(b)(1), 22 percent shall be allocated to

8 this account.

9 (2) AUTHORIZATION OF APPROPRIATIONS.—

10 Amounts in the Health and Health-Related Research

11 Account shall be available to the extent and in the

12 amounts provided in advance in appropriations acts,

13 to remain available until expended, only for the fol14 lowing purposes:

15 (A) $750,000 shall be made vailable in fis16 cal year 1999 for the study to be conducted

17 under section 1991 of the Public Health Service

18 Act.

19 (B) National Institutes of Health Research

20 under section 1991D of the Public Health Serv21 ice Act, as added by this Act. Of the total

22 amounts allocated to this account, not less than

23 75 percent, but not more than 87 percent shall

24 be used for this purpose.
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1 (C) Centers for Disease Control under sec2 tion 1991C of the Public Health Service Act, as

3 added by this Act, and Agency for Health Care

4 Policy and Research under section 1991E of

5 the Public Health Service Act, as added by this

6 Act. authorized under sections 2803 of that

7 Act, as so added. Of the total amounts allocated

8 to this account, not less than 12 percent, but

9 not more than 18 percent shall be used for this

10 purpose.

11 (D) National Science Foundation Research

12 under section 454. Of the total amounts allo13 cated to this account, not less than 1 percent,

14 but not more than 1 percent shall be used for

15 this purpose.

16 (E) Cancer Clinical Trials under section

17 455. Of the total amounts allocated to this ac18 count, $750,000,000 shall be used for the first

19 3 fiscal years for this purpose.

20 (d) FARMERS ASSISTANCE ALLOCATION ACCOUNT.—

21 (1) IN GENERAL.— There is established within

22 the trust fund a separate account, to be known as

23 the Farmers Assistance Account. Of the net reve24 nues credited to the trust fund under section

25 401(b)(1) in each fiscal year—
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1 (A) 16 percent shall be allocated to this ac2 count for the first 10 years after the date of en3 actment of this Act; and

4 (B) 4 percent shall be allocated to this ac5 count for each subsequent year until the ac6 count has received a total of $28,500,000,000.

7 (2) APPROPRIATION.—Amounts allocated to

8 this account are hereby appropriated and shall be

9 available until expended for the purposes of section

10 1012.

11 (e) MEDICARE PRESERVATION ACCOUNT.—There is

12 established within the trust fund a separate account, to

13 be known as the Medicare Preservation Account. If, in any

14 year, the net amounts credited to the trust fund for pay15 ments under section 402(b) are greater than the net reve16 nues originally estimated under section 401(b), the

17 amount of any such excess shall be credited to the Medi18 care Preservation Account. Beginning in the eleventh year

19 beginning after the date of enactment of this Act, 12 per20 cent of the net revenues credited to the trust fund under

21 seciton 401(b)(1) shall be allocated to this account. Funds

22 credited to this account shall be transferred to the Medi23 care Hospital Insurance Trust Fund.
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1 SEC. 452. GRANTS TO STATES.

2 (a) AMOUNTS.—From the amount made available

3 under section 402(a) for each fiscal year, each State shall

4 receive a grant on a quarterly basis according to a for5 mula.

6 (b) USE OF FUNDS.—

7 (1) UNRESTRICTED FUNDS.—A State may use

8 funds, not to exceed 50 percent of the amount re9 ceived under this section in a fiscal year, for any ac10 tivities determined appropriate by the State.

11 (2) RESTRICTED FUNDS.—A State shall use not

12 less than 50 percent of the amount received under

13 this section in a fiscal year to carry out additional

14 activities or provide additional services under—

15 (A) the State program under the maternal

16 and child health services block grant under title

17 V of the Social Security Act (42 U.S.C. 701 et

18 seq.);

19 (B) funding for child care under section

20 418 of the Social Security Act, notwithstanding

21 subsection (b)(2) of that section;

22 (C) federally funded child welfare and

23 abuse programs under title IV–B of the Social

24 Security Act;

25 (D) programs administered within the

26 State under the authority of the Substance
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1 Abuse and Mental Health Services Administra2 tion under title XIX, part B of the Public

3 Health Service Act;

4 (E) Safe and Drug-Free Schools Program

5 under title IV, part A, of the Elementary and

6 Secondary Education Act of 1965 (20 U.S.C.

7 7111 et seq.);

8 (F) the Department of Education’s Dwight

9 D. Eisenhower Professional Development pro10 gram under title II of the Elementary and Sec11 ondary Education Act of 1965 (20 U.S.C. 6601

12 et seq.); and

13 (G) The State Children’s Health Insurance

14 Program authorized under title XXI of the So15 cial Security Act (42 U.S.C. 1397aa et seq.),

16 provided that the amount expended on this pro17 gram does not exceed 6 percent of the total

18 amount of restricted funds available to the

19 State each fiscal year.

20 (c) NO SUBSTITUTION OF SPENDING.—Amounts re21 ferred to in subsection (b)(2) shall be used to supplement

22 and not supplant other Federal, State, or local funds pro23 vided for any of the programs described in subparagraphs

24 (A) through (G) of subsection (b)(2). Restricted funds, ex25 cept as provided for in subsection (b)(2)(G), shall not be
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1 used as State matching funds. Amounts provided to the

2 State under any of the provisions of law referred to in

3 such subparagraph shall not be reduced solely as a result

4 of the availability of funds under this section.

5 (d) FEDERAL-STATE MATCH RATES.—Current

6 (1998) matching requirements apply to each program list7 ed under subsection (b)(2), except for the program de8 scribed under subsection (b)(2)(B). For the program de9 scribed under subsection (b)(2)(B), after an individual

10 State has expended resources sufficient to receive its full

11 Federal amount under section 418(a)(2)(B) of the Social

12 Security Act (subject to the matching requirements in sec13 tion 418(a)(2)(C) of such Act), the Federal share of ex14 penditures shall be 80 percent.

15 (e) MAINTENANCE OF EFFORT.—To receive funds

16 under this subsection, States must demonstrate a mainte17 nance of effort. This maintenance of effort is defined as

18 the sum of—

19 (1) an amount equal to 95 percent of Federal

20 fiscal year 1997 State spending on the programs

21 under subsections (b)(2)(B), (c), and (d); and

22 (2) an amount equal to the product of the

23 amount described in paragraph (1) and—

24 (A) for fiscal year 1999, the lower of—
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1 (i) general inflation as measured by

2 the consumer price index for the previous

3 year; or

4 (ii) the annual growth in the Federal

5 appropriation for the program in the pre6 vious fiscal year; and

7 (B) for subsequent fiscal years, the lower

8 of—

9 (i) the cumulative general inflation as

10 measured by the consumer price index for

11 the period between 1997 and the previous

12 year; or

13 (ii) the cumulative growth in the Fed14 eral appropriation for the program for the

15 period between fiscal year 1997 and the

16 previous fiscal year.

17 The 95-percent maintenance-of-effort requirement in

18 paragraph (1), and the adjustments in paragraph (2),

19 apply to each program identified in paragraph (1) on an

20 individual basis.

21 (f) OPTIONS FOR CHILDREN’S HEALTH OUT22 REACH.—In addition to the options for the use of grants

23 described in this section, the following are new options to

24 be added to States’ choices for conducting children’s

25 health outreach:
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1 (1) EXPANSION OF PRESUMPTIVE ELIGIBILITY

2 OPTION FOR CHILDREN.—

3 (A) IN GENERAL.—Section

4 1920A(b)(3)(A)(I) of the Social Security Act

5 (42 U.S.C. 1396r–1a(b)(3)(A)(I)) is amended—

6 (i) by striking ‘‘described in sub7 section (a) or (II) is authorized’’ and in8 serting ‘‘described in subsection (a), (II) is

9 authorized’’; and

10 (ii) by inserting before the semicolon

11 ‘‘, eligibility for benefits under part A of

12 title IV, eligibility of a child to receive ben13 efits under the State plan under this title

14 or title XXI, (III) is a staff member of a

15 public school, child care resource and refer16 ral center, or agency administering a plan

17 under part D of title IV, or (IV) is so des18 ignated by the State’’.

19 (B) TECHNICAL AMENDMENTS.—Section

20 1920A of that Act (42 U.S.C. 1396r–1a) is

21 amended—

22 (i) in subsection (b)(3)(A)(ii), by

23 striking ‘‘paragraph (1)(A)’’ and inserting

24 ‘‘paragraph (2)(A)’’; and
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1 (ii) in subsection (c)(2), in the matter

2 preceding subparagraph (A), by striking

3 ‘‘subsection (b)(1)(A)’’ and inserting ‘‘sub4 section (b)(2)(A)’’.

5 (2) REMOVAL OF REQUIREMENT THAT CHIL6 DREN’S HEALTH INSURANCE PROGRAM ALLOTMENTS

7 BE REDUCED BY COSTS RELATED TO PRESUMPTIVE

8 ELIGIBILITY DETERMINATIONS.—

9 (A) IN GENERAL.—Section 2104(d) of the

10 Social Security Act (42 U.S.C. 1397dd(d)) is

11 amended by striking ‘‘the sum of—’’ and all

12 that follows through the paragraph designation

13 ‘‘(2)’’ and merging all that remains of sub14 section (d) into a single sentence.

15 (B) EFFECTIVE DATE.—The amendment

16 made by subsection (a) shall be deemed to have

17 taken effect on August 5, 1997.

18 (3) INCREASED FUNDING FOR ADMINISTRATIVE

19 COSTS RELATED TO OUTREACH AND ELIGIBILITY

20 DETERMINATIONS FOR CHILDREN.—Section 1931(h)

21 of the Social Security Act (42 U.S.C. 1396u–1(h))

22 is amended—

23 (A) by striking the subsection caption and

24 inserting ‘‘(h) INCREASED FEDERAL MATCHING

25 RATE FOR ADMINISTRATIVE COSTS RELATED
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1 TO OUTREACH AND ELIGIBILITY DETERMINA2 TIONS FOR CHILDREN.—’’;

3 (B) in paragraph (2), by striking ‘‘eligi4 bility determinations’’ and all that follows and

5 inserting ‘‘determinations of the eligibility of

6 children for benefits under the State plan under

7 this title or title XXI, outreach to children like8 ly to be eligible for such benefits, and such

9 other outreach- and eligibility-related activities

10 as the Secretary may approve.’’;

11 (C) in paragraph (3), by striking ‘‘and

12 ending with fiscal year 2000 shall not exceed

13 $500,000,000’’ and inserting ‘‘shall not exceed

14 $525,000,000’’; and

15 (D) by striking paragraph (4).

16 (g) PERIODIC REASSESSMENT OF SPENDING OP17 TIONS.—Spending options under subsection (b)(2) will be

18 reassessed jointly by the States and Federal government

19 every 5 years and be reported to the Secretary.

20 SEC. 453. INDIAN HEALTH SERVICE.

21 Amounts available under section 451(b)(2)(B) shall

22 be provided to the Indian Health Service to be used for

23 anti-tobacco-related consumption and cessation activities

24 including—
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1 (1) clinic and facility design, construction, re2 pair, renovation, maintenance and improvement;

3 (2) provider services and equipment;

4 (3) domestic and community sanitation associ5 ated with clinic and facility construction and im6 provement; and

7 (4) other programs and service provided

8 through the Indian Health Service or through tribal

9 contracts, compacts, grants, or cooperative agree10 ments with the Indian Health Service and which are

11 deemed appropriate to raising the health status of

12 Indians.

13 SEC. 454. RESEARCH AT THE NATIONAL SCIENCE FOUNDA14 TION.

15 Amounts available under section 451(c)(2)(C) shall

16 be made available for necessary expenses in carry out the

17 National Science Foundation Act of 1950 (U.S.C. 1861–

18 1875), and the Act to establish a National Medal of

19 Science (42 U.S.C. 1880–1881).

20 SEC. 455. MEDICARE CANCER PATIENT DEMONSTRATION

21 PROJECT; EVALUATION AND REPORT TO

22 CONGRESS.

23 (a) ESTABLISHMENT.—The Secretary shall establish

24 a 3-year demonstration project which provides for pay25 ment under the Medicare program under title XVIII of
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1 the Social Security Act (42 U.S.C. 1395 et seq.) of routine

2 patient care costs—

3 (1) which are provided to an individual diag4 nosed with cancer and enrolled in the Medicare pro5 gram under such title as part of the individual’s par6 ticipation in an approved clinical trial program; and

7 (2) which are not otherwise eligible for payment

8 under such title for individuals who are entitled to

9 benefits under such title.

10 (b) APPLICATION.—The beneficiary cost sharing pro11 visions under the Medicare program, such as deductibles,

12 coinsurance, and copayment amounts, shall apply to any

13 individual in a demonstration project conducted under this

14 section.

15 (c) APPROVED CLINICAL TRIAL PROGRAM.—

16 (1) IN GENERAL.—For purposes of this section,

17 the term ‘‘approved clinical trial program’’ means a

18 clinical trial program which is approved by—

19 (A) the National Institutes of Health;

20 (B) a National Institutes of Health cooper21 ative group or a National Institutes of Health

22 center; and

23 (C) the National Cancer Institute,

24 with respect to programs that oversee and coordi25 nate extramural clinical cancer research, trials spon-
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1 sored by such Institute and conducted at designated

2 cancer centers, clinical trials, and Institute grants

3 that support clinical investigators.

4 (2) MODIFICATIONS IN APPROVED TRIALS.—

5 Beginning 1 year after the date of enactment of this

6 Act, the Secretary, in consultation with the Cancer

7 Policy Board of the Institute of Medicine, may mod8 ify or add to the requirements of paragraph (1) with

9 respect to an approved clinical trial program.

10 (d) ROUTINE PATIENT CARE COSTS.—

11 (1) IN GENERAL.—For purposes of this section,

12 the term ‘‘routine patient care costs’’ include the

13 costs associated with the provision of items and serv14 ices that—

15 (A) would otherwise be covered under the

16 Medicare program if such items and services

17 were not provided in connection with an ap18 proved clinical trial program; and

19 (B) are furnished according to the design

20 of an approved clinical trial program.

21 (2) EXCLUSION.—For purposes of this section,

22 the term ‘‘routine patient care costs’’ does not in23 clude the costs associated with the provision of—

24 (A) an investigational drug or device, un25 less the Secretary has authorized the manufac-
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1 turer of such drug or device to charge for such

2 drug or device; or

3 (B) any item or service supplied without

4 charge by the sponsor of the approved clinical

5 trial program.

6 (e) STUDY.—The Secretary shall study the impact on

7 the Medicare program under title XVIII of the Social Se8 curity Act of covering routine patient care costs for indi9 viduals with a diagnosis of cancer and other diagnoses,

10 who are entitled to benefits under such title and who are

11 enrolled in an approved clinical trial program.

12 (f) REPORT TO CONGRESS.—Not later than 30

13 months after the date of enactment of this Act, the Sec14 retary shall submit a report to Congress that contains a

15 detailed description of the results of the study conducted

16 under subsection (e) including recommendations regarding

17 the extension and expansion of the demonstration project

18 conducted under this section.

19 TITLE V—STANDARDS TO RE20 DUCE INVOLUNTARY EXPO21 SURE TO TOBACCO SMOKE

22 SEC. 501. DEFINITIONS.

23 In this title:

24 (1) ASSISTANT SECRETARY.—The term ‘‘Assist25 ant Secretary’’ means the Assistant Secretary of the
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1 Occupational Safety and Health Administration of

2 the Department of Labor.

3 (2) PUBLIC FACILITY.—

4 (A) IN GENERAL.—The term ‘‘public facil5 ity’’ means any building used for purposes that

6 affect interstate or foreign commerce that is

7 regularly entered by 10 or more individuals at

8 least 1 day per week including any building

9 owned by or leased to an agency, independent

10 establishment, department, or the executive,

11 legislative, or judicial branch of the United

12 States Government.

13 (B) EXCLUSIONS.—The term ‘‘public facil14 ity’’ does not include a building or portion

15 thereof which is used for residential purposes or

16 as a restaurant (other than a fast food res17 taurant), bar, private club, hotel guest room or

18 common area, casino, bingo parlor, tobacco19 nist’s shop, or prison.

20 (C) FAST FOOD RESTAURANT DEFINED.—

21 The term ‘‘fast food restaurant’’ means any

22 restaurant or chain of restaurants that pri23 marily distributes food through a customer

24 pick-up (either at a counter or drive-through

25 window). The Assistant Secretary may promul-
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1 gate regulations to clarify this subparagraph to

2 ensure that the intended inclusion of establish3 ments catering to individuals under 18 years of

4 age is achieved.

5 (3) RESPONSIBLE ENTITY.—The term ‘‘respon6 sible entity’’ means, with respect to any public facil7 ity, the owner of such facility except that, in the

8 case of any such facility or portion thereof which is

9 leased, such term means the lessee if the lessee is

10 actively engaged in supervising day-to-day activity in

11 the leased space.

12 SEC. 502. SMOKE-FREE ENVIRONMENT POLICY.

13 (a) POLICY REQUIRED.—In order to protect children

14 and adults from cancer, respiratory disease, heart disease,

15 and other adverse health effects from breathing environ16 mental tobacco smoke, the responsible entity for each pub17 lic facility shall adopt and implement at such facility a

18 smoke-free environment policy which meets the require19 ments of subsection (b).

20 (b) ELEMENTS OF POLICY.—

21 (1) IN GENERAL.—The responsible entity for a

22 public facility shall—

23 (A) prohibit the smoking of cigarettes, ci24 gars, and pipes, and any other combustion of

25 tobacco within the facility and on facility prop-
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1 erty within the immediate vicinity of the en2 trance to the facility; and

3 (B) post a clear and prominent notice of

4 the smoking prohibition in appropriate and visi5 ble locations at the public facility.

6 (2) EXCEPTION.—The responsible entity for a

7 public facility may provide an exception to the prohi8 bition specified in paragraph (1) for 1 or more spe9 cially designated smoking areas within a public facil10 ity if such area or areas meet the requirements of

11 subsection (c).

12 (c) SPECIALLY DESIGNATED SMOKING AREAS.—A

13 specially designated smoking area meets the requirements

14 of this subsection if—

15 (1) the area is ventilated in accordance with

16 specifications promulgated by the Assistant Sec17 retary that ensure that air from the area is directly

18 exhausted to the outside and does not recirculate or

19 drift to other areas within the public facility;

20 (2) the area is maintained at negative pressure,

21 as compared to adjoining nonsmoking areas, as de22 termined under regulations promulgated by the As23 sistant Secretary;
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1 (3) nonsmoking individuals do not have to enter

2 the area for any purpose while smoking is occurring

3 in such area; and

4 (4) cleaning and maintenance work are con5 ducted in such area only when no smoking is occur6 ring in the area.

7 SEC. 503. CITIZEN ACTIONS.

8 (a) IN GENERAL.—An action may be brought to en9 force the requirements of this title by any aggrieved per10 son, any State or local government agency, or the Assist11 ant Secretary.

12 (b) VENUE.—Any action to enforce this title may be

13 brought in any United States district court for the district

14 in which the defendant resides or is doing business to en15 join any violation of this title or to impose a civil penalty

16 for any such violation in the amount of not more than

17 $5,000 per day of violation. The district courts shall have

18 jurisdiction, without regard to the amount in controversy

19 or the citizenship of the parties, to enforce this title and

20 to impose civil penalties under this title.

21 (c) NOTICE.—An aggrieved person shall give any al22 leged violator notice at least 60 days prior to commencing

23 an action under this section. No action may be commenced

24 by an aggrieved person under this section if such alleged
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1 violator complies with the requirements of this title within

2 such 60-day period and thereafter.

3 (d) COSTS.—The court, in issuing any final order in

4 any action brought under this section, may award costs

5 of litigation (including reasonable attorney and expert wit6 ness fees) to any prevailing plaintiff, whenever the court

7 determines such award is appropriate.

8 (e) PENALTIES.—The court, in any action under this

9 section to apply civil penalties, shall have discretion to

10 order that such civil penalties be used for projects which

11 further the policies of this title. The court shall obtain the

12 view of the Assistant Secretary in exercising such discre13 tion and selecting any such projects.

14 (f) APPLICATION WITH OSHA.—Nothing in this sec15 tion affects enforcement of the Occupational Safety and

16 Health Act of 1970.

17 SEC. 504. PREEMPTION.

18 Nothing in this title shall preempt or otherwise affect

19 any other Federal, State, or local law which provides

20 greater protection from health hazards from environ21 mental tobacco smoke.

22 SEC. 505. REGULATIONS.

23 The Assistant Secretary is authorized to promulgate

24 such regulations, after consulting with the Administrator
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1 of the Environmental Protection Agency, as the Assistant

2 Secretary deems necessary to carry out this title.

3 SEC. 506. EFFECTIVE DATE.

4 Except as provided in section 507, the provisions of

5 this title shall take effect on the first day of January next

6 following the next regularly scheduled meeting of the State

7 legislature occurring after the date of enactment of this

8 Act at which, under the procedural rules of that legisla9 ture, a measure under section 507 may be considered.

10 SEC. 507. STATE CHOICE.

11 Any State or local government may opt out of this

12 title by promulgating a State or local law, subject to cer13 tification by the Assistant Secretary that the law is as or

14 more protective of the public’s health as this title, based

15 on the best available science. Any State or local govern16 ment may opt to enforce this title itself, subject to certifi17 cation by the Assistant Secretary that the enforcement

18 mechanism will effectively protect the public health.

19 TITLE VI—APPLICATION TO

20 INDIAN TRIBES

21 SEC. 601. SHORT TITLE.

22 This title may be cited as the ‘‘Reduction in Tobacco

23 Use and Regulation of Tobacco Products in Indian Coun24 try Act of 1998’’.
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1 SEC. 602. FINDINGS AND PURPOSES.

2 (a) FINDINGS.—Congress finds that Native Ameri3 cans have used tobacco products for recreational, ceremo4 nial, and traditional purposes for centuries.

5 (b) PURPOSE.—It is the purpose of this title to—

6 (1) provide for the implementation of this Act

7 with respect to the regulation of tobacco products,

8 and other tobacco-related activities on Indian lands;

9 (2) recognize the historic Native American tra10 ditional and ceremonial use of tobacco products, and

11 to preserve and protect the cultural, religious, and

12 ceremonial uses of tobacco by members of Indian

13 tribes;

14 (3) recognize and respect Indian tribal sov15 ereignty and tribal authority to make and enforce

16 laws regarding the regulation of tobacco distributors

17 and tobacco products on Indian lands; and

18 (4) ensure that the necessary funding is made

19 available to tribal governments for licensing and en20 forcement of tobacco distributors and tobacco prod21 ucts on Indian lands.

22 SEC. 603. APPLICATION OF TITLE TO INDIAN LANDS AND

23 TO NATIVE AMERICANS.

24 (a) IN GENERAL.—The provisions of this Act shall

25 apply to the manufacture, distribution, and sale of tobacco
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1 or tobacco products on Indian lands, including such activi2 ties of an Indian tribe or member of such tribe.

3 (b) TRADITIONAL USE EXCEPTION.—

4 (1) IN GENERAL.—In recognition of the reli5 gious, ceremonial, and traditional uses of tobacco

6 and tobacco products by Indian tribes and the mem7 bers of such tribes, nothing in this Act shall be con8 strued to permit an infringement upon upon the

9 right of such tribes or members of such tribes to ac10 quire, possess, use, or transfer any tobacco or to11 bacco product for such purposes, or to infringe upon

12 the ability of minors to participate and use tobacco

13 products for such religious, ceremonial, or tradi14 tional purposes.

15 (2) APPLICATION OF PROVISIONS.—Paragraph

16 (1) shall apply only to those quantities of tobacco or

17 tobacco products necessary to fulfill the religious,

18 ceremonial, or traditional purposes of an Indian

19 tribe or the members of such tribe, and shall not be

20 construed to permit the general manufacture, dis21 tribution, sale or use of tobacco or tobacco products

22 in a manner that is not in compliance with this Act

23 or the Federal Food, Drug, and Cosmetic Act (21

24 U.S.C. 301 et seq.)
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1 (c) LIMITATION.—Nothing in this Act shall be con2 strued to permit an Indian tribe or member of such a tribe

3 to acquire, possess, use, or transfer any tobacco or tobacco

4 product in violation of section 2341 of title 18, United

5 States Code, with respect to the transportation of contra6 band cigarettes.

7 (d) APPLICATION ON INDIAN LANDS.—

8 (1) IN GENERAL.—The Secretary, in consulta9 tion with the Secretary of Interior, shall promulgate

10 regulations to implement this section as necessary to

11 apply this Act and the Food, Drug, and Cosmetic

12 Act (21 U.S.C. 301 et seq.) with respect to tobacco

13 products manufactured, distributed, or sold on In14 dian lands.

15 (2) SCOPE.—This Act and the Federal Food,

16 Drug, and Cosmetic Act (21 U.S.C. 301 et seq.)

17 shall apply to the manufacture, distribution and sale

18 of tobacco products on Indian lands, including such

19 activities by Indian tribes and members of such

20 tribes.

21 (3) TRIBAL TOBACCO RETAILER LICENSING

22 PROGRAM.—

23 (A) IN GENERAL.—The requirements of

24 this Act with respect to the licensing of tobacco

25 retailers shall apply to all retailers that sell to-
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1 bacco or tobacco products on Indian lands, in2 cluding Indian tribes, and members thereof.

3 (B) IMPLEMENTATION.—

4 (i) IN GENERAL.—An Indian tribe

5 may implement and enforce a tobacco re6 tailer licensing and enforcement program

7 on its Indian lands consistent with the pro8 visions of section 231 if the tribe is eligible

9 under subparagraph (D). For purposes of

10 this clause, section 231 shall be applied to

11 an Indian tribe by substituting ‘‘Indian

12 tribe’’ for ‘‘State’’ each place it appears,

13 and an Indian tribe shall not be ineligible

14 for grants under that section if the Sec15 retary applies that section to the tribe by

16 modifying it to address tribal population,

17 land base, and jurisdictional factors.

18 (ii) COOPERATION.—An Indian tribe

19 and State with tobacco retailer licensing

20 programs within adjacent jurisdictions

21 should consult and confer to ensure effec22 tive implementation of their respective pro23 grams.

24 (C) ENFORCEMENT.—The Secretary may

25 vest the responsibility for implementation and
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1 enforcement of a tobacco retailer licensing pro2 gram in—

3 (i) the Indian tribe involved;

4 (ii) the State within which the lands

5 of the Indian tribe are located pursuant to

6 a voluntary cooperative agreement entered

7 into by the State and the Indian tribe; or

8 (iii) the Secretary pursuant to sub9 paragraph (F).

10 (D) ELIGIBILITY.—To be eligible to imple11 ment and enforce a tobacco retailer licensing

12 program under section 231, the Secretary, in

13 consultation with the Secretary of Interior,

14 must find that—

15 (i) the Indian tribe has a governing

16 body that has powers and carries out du17 ties that are similar to the powers and du18 ties of State or local governments;

19 (ii) the functions to be exercised relate

20 to activities conducted on its Indian lands;

21 and

22 (iii) the Indian tribe is reasonably ex23 pected to be capable of carrying out the

24 functions required by the Secretary.
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1 (E) DETERMINATIONS.—Not later than 90

2 days after the date on which an Indian tribe

3 submits an application for authority under sub4 paragraph (D), the Secretary shall make a de5 termination concerning the eligibility of such

6 tribe for such authority. Each tribe found eligi7 ble under subparagraph (D) shall be eligible to

8 enter into agreements for block grants under

9 section 231, to conduct a licensing and enforce10 ment program pursuant to section 231, and for

11 bonuses under section 232.

12 (F) IMPLEMENTATION BY THE SEC13 RETARY.—If the Secretary determines that the

14 Indian tribe is not willing or not qualified to

15 administer a retail licensing and enforcement

16 program, the Secretary, in consultation with the

17 Secretary of Interior, shall promulgate regula18 tions for a program for such tribes in the same

19 manner as for States which have not estab20 lished a tobacco retailer licensing program

21 under section 231(f).

22 (G) DEFICIENT APPLICATIONS; OPPOR23 TUNITY TO CURE.—

24 (i) If the Secretary determines under

25 subparagraph (F) that a Indian tribe is
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1 not eligible to establish a tobacco retailer

2 licensing program, the Secretary shall—

3 (I) submit to such tribe, in writ4 ing, a statement of the reasons for

5 such determination of ineligibility; and

6 (II) shall assist such tribe in

7 overcoming any deficiencies that re8 sulted in the determination of ineli9 gibility.

10 (ii) After an opportunity to review

11 and cure such deficiencies, the tribe may

12 re-apply to the Secretary for assistance

13 under this subsection.

14 (H) SECRETARIAL REVIEW.—The Sec15 retary may periodically review the tribal tobacco

16 retailer licensing program of a tribe approved

17 pursuant to subparagraph (E), including the ef18 fectiveness of the program, the tribe’s enforce19 ment thereof, and the compatibility of the

20 tribe’s program with the program of the State

21 in which the tribe is located. The program shall

22 be subject to all applicable requirements of sec23 tion 231.

24 (e) ELIGIBILITY FOR PUBLIC HEATH FUNDS.—

25 (1) ELIGIBILITY FOR GRANTS.—
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1 (A) For each fiscal year the Secretary may

2 award grants to Indian tribes from the federal

3 Account or other federal funds, except a tribe

4 that is not a participating tobacco product man5 ufacturer (as defined in section 1402(a), for the

6 same purposes as States and local governments

7 are eligible to receive grants from the Federal

8 Account as provided for in this Act. Indian

9 tribes shall have the flexibility to utilize such

10 grants to meet the unique health care needs of

11 their service populations consistent with the

12 goals and purposes of Federal Indian health

13 care law and policy.

14 (B) In promulgating regulations for the

15 approval and funding of smoking cessation pro16 grams under section 221 the Secretary shall en17 sure that adequate funding is available to ad18 dress the high rate of smoking among Native

19 Americans.

20 (2) HEALTH CARE FUNDING.—

21 (A) INDIAN HEALTH SERVICE.—Each fis22 cal year the Secretary shall disburse to the In23 dian Health Service from the National Tobacco

24 Settlement Trust Fund an amount determined
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1 by the Secretary in consultation with the Sec2 retary of the Interior equal to the product of—

3 (i) the ratio of the total Indian health

4 care service population relative to the total

5 population of the United States; and

6 (ii) the amount allocated to the States

7 each year from the State Litigation Trust

8 Account.

9 (B) FUNDING.—The trustees of the Trust

10 Fund shall for each fiscal year transfer to the

11 Secretary from the State Litigation Trust Ac12 count the amount determined pursuant to para13 graph (A).

14 (C) USE OF HEALTH CARE TRUST

15 FUNDS.—Amounts made available to the Indian

16 Health Service under this paragraph shall be

17 made available to Indian tribes pursuant to the

18 provisions of the Indian Self Determination and

19 Education Assistance Act (25 U.S.C. 450b et

20 seq.), shall be used to reduce tobacco consump21 tion, promote smoking cessation, and shall be

22 used to fund health care activities including—

23 (i) clinic and facility design, construc24 tion, repair, renovation, maintenance, and

25 improvement;
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1 (ii) health care provider services and

2 equipment;

3 (iii) domestic and community sanita4 tion associated with clinic and facility con5 struction and improvement;

6 (iv) inpatient and outpatient services;

7 and

8 (v) other programs and services which

9 have as their goal raising the health status

10 of Indians.

11 (f) PREEMPTION.—

12 (1) IN GENERAL.—Except as otherwise pro13 vided in this section, nothing in this Act shall be

14 construed to prohibit an Indian tribe from imposing

15 requirements, prohibitions, penalties, or other meas16 ures to further the purposes of this Act that are in

17 addition to the requirements, prohibitions, or pen18 alties required by this Act.

19 (2) PUBLIC EXPOSURE TO SMOKE.—Nothing in

20 this title shall be construed to preempt or otherwise

21 affect any Indian tribe rule or practice that provides

22 greater protections from the health hazard of envi23 ronmental tobacco smoke.
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1 (g) DISCLAIMER.—Nothing in this Act shall be con2 strued to increase or diminish tribal or State jurisdiction

3 on Indian lands with respect to tobacco-related activities.

4 TITLE VII—TOBACCO CLAIMS

5 SEC. 701. DEFINITIONS.

6 In this title:

7 (1) AFFILIATE.—The term ‘‘affiliate’’ means a

8 person who directly or indirectly owns or controls, is

9 owned or controlled by, or is under common owner10 ship or control with, another person. For purposes

11 of this definition, ownership means ownership of an

12 equity interest, or the equivalent thereof, of ten per13 cent or more, and person means an individual, part14 nership, committee, association, corporation, or any

15 other organization or group of persons.

16 (2) CIVIL ACTION.—The term ‘‘civil action’’

17 means any action, lawsuit, or proceeding that is not

18 a criminal action.

19 (3) COURT.—The term ‘‘court’’ means any judi20 cial or agency court, forum, or tribunal within the

21 United States, including without limitation any Fed22 eral, State, or tribal court.

23 (4) FINAL JUDGMENT.—The term ‘‘final judg24 ment’’ means a judgment on which all rights of ap25 peal or discretionary review have been exhausted or
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1 waived or for which the time to appeal or seek such

2 discretionary review has expired.

3 (5) FINAL SETTLEMENT.—The term ‘‘final set4 tlement’’ means a settlement agreement that is exe5 cuted and approved as necessary to be fully binding

6 on all relevant parties.

7 (6) INDIVIDUAL.—The term ‘‘individual’’ means

8 a human being and does not include a corporation,

9 partnership, unincorporated association, trust, es10 tate, or any other public or private entity, State or

11 local government, or Indian tribe.

12 (7) TOBACCO CLAIM.—The term ‘‘tobacco

13 claim’’ means a claim directly or indirectly arising

14 out of, based on, or related to the health-related ef15 fects of tobacco products, including without limita16 tion a claim arising out of, based on or related to

17 allegations regarding any conduct, statement, or

18 omission respecting the health-related effects of such

19 products.

20 (8) TOBACCO PRODUCT MANUFACTURER.—The

21 term ‘‘tobacco product manufacturer’’ means a per22 son who—

23 (A) manufactures tobacco products for sale

24 in the United States after the date of enact-
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1 ment of this Act, including tobacco products for

2 sale in the United States through an importer;

3 (B) is, after the date of enactment of this

4 Act, the first purchaser for resale in the United

5 States of tobacco products manufactured for

6 sale outside of the United States;

7 (C) engaged in activities described in sub8 paragraph (A) or (B) prior to the date of enact9 ment of this Act, has not engaged in such ac10 tivities after the date of enactment of this Act,

11 and was not as of June 20, 1997, an affiliate

12 of a tobacco product manufacturer in which the

13 tobacco product manufacturer or its other affili14 ates owned a 50 percent or greater interest;

15 (D) is a successor or assign of any of the

16 foregoing;

17 (E) is an entity to which any of the fore18 going directly or indirectly makes, after the

19 date of enactment of this Act, a fraudulent con20 veyance or a transfer that would otherwise be

21 voidable under part 5 of title 11 of the United

22 States Code, but only to the extent of the inter23 est or obligation transferred; or

24 (F) is an affiliate of a tobacco product

25 manufacturer.
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1 (9) CASTANO CIVIL ACTIONS.—The term

2 ‘‘Castano Civil Actions’’ means the following civil ac3 tions: Gloria Wilkinson Lyons et al. v. American To4 bacco Co., et al. (USDC Alabama 96–0881–BH;

5 Agnes McGinty, et al. v. American Tobacco Co., et

6 al. (USDC Arkansas LR–C–96–881); Willard R.

7 Brown, et al. v. R.J. Reynolds Co., et al. (San

8 Diego, California–00711400); Gray Davis & James

9 Ellis, et al. R.J. Reynolds Tobacco Co., et al. (San

10 Diego, California–00706458); Chester Lyons, et al.

11 v. Brown & Williamson Tobacco Corp., et al. (Fulton

12 County, Georgia–E–59346); Rosalyn Peterson, et al.

13 v. American Tobacco Co., et al. (USDC Hawaii–97–

14 00233–HG); Jean Clay , et al. v. American Tobacco

15 Co., et al. (USDC Illinois Benton Division–97–

16 4167–JPG); William J. Norton, et al. v. RJR Na17 bisco Holdings Corp., et al. (Madison County, Indi18 ana 48D01–9605–CP–0271); Alga Emig, et al. v.

19 American Tobacco Co., et al. (USDC Kansas–97–

20 1121–MLB); Gloria Scott, et al. v. American To21 bacco Co., et al. (Orleans Parish, Louisiana–97–

22 1178); Vern Masepohl, et al. v. American Tobacco

23 Co., et al. (USDC Minnesota–3–96–CV–888); Mat24 thew Tepper, et al. v. Philip Morris Incorporated, et

25 al (Bergen County, New Jersey–BER–L–4983–97–
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1 E); Carol A. Connor, et al. v. American Tobacco Co.,

2 et al. (Bernalillo County, New Mexico–CV96–8464);

3 Edwin Paul Hoskins, et al. v. R.J. Reynolds To4 bacco Co., et al.; Josephine Stewart–Lomantz v.

5 Brown & Williamson Tobacco, et al.; Rose Frosina,

6 et al. v. Philip Morris Incorporated, et al.; Catherine

7 Zito, et al. v. American Tobacco Co., et al.; Kevin

8 Mroczkowski, et al. v. Lorillard Tobacco Company,

9 et al. (Supreme Court, New York County, New

10 York–110949 thru 110953); Judith E. Chamberlain,

11 et al. v. American Tobacco Co., et al. (USDC Ohio–

12 1:96CV2005); Brian walls, et al. v. American To13 bacco Co., et al. (USDC Oklahoma–97–CV–218–H);

14 Steven R. Arch, et al. v. American Tobacco Co., et

15 al. (USDC Pennsylvania–96–5903–CN); Barreras16 Ruiz, et al. v. American Tobacco Co., et al. (USDC

17 Puerto Rico–96–2300–JAF); Joanne Anderson, et

18 al. v. American Tobacco Co., et al. (Know County,

19 Tennessee); Carlis Cole, et al. v. The Tobacco insti20 tute, Inc., et al. (USDC Beaumont Texas Division–

21 1:97CV0256); Carrol Jackson, et al. v. Philip Morris

22 Incorporated, et al. (Salt Lake County, Utah–CV

23 No. 98–0901634PI).
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1 SEC. 702. APPLICATION; PREEMPTION.

2 (a) APPLICATION.—The provisions of this title govern

3 any tobacco claim in any civil action brought in an State,

4 Tribal, or Federal court, including any such claim that

5 has not reached final judgment or final settlement as of

6 the date of enactment of this Act.

7 (b) PREEMPTION.—This title supersedes State law

8 only to the extent that State law applies to a matter cov9 ered by this title. Any matter that is not governed by this

10 title, including any standard of liability applicable to a

11 manufacturer, shall be governed by any applicable State,

12 Tribal, or Federal law.

13 (c) CRIMINAL LIABILITY UNTOUCHED.—Nothing in

14 this title shall be construed to limit the criminal liability

15 of tobacco product manufacturers, retailers, or distribu16 tors, or their officers, directors, employees, successors, or

17 assigns.

18 SEC. 703. RULES GOVERNING TOBACCO CLAIMS.

19 (a) GENERAL CAUSATION PRESUMPTION.—In any

20 civil action to which this title applies brought involving

21 a tobacco claim, there shall be an evidentiary presumption

22 that nicotine is addictive and that the diseases identified

23 as being caused by use of tobacco products in the Center

24 for Disease Control and Prevention Reducing the Health

25 Consequences of Smoking: 25 Years of Progress: A Report

26 of the Surgeon General (United States Public Health
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1 Service 1989), The Health Consequences of Smoking: In2 voluntary Smoking, (USPHS 1986); and The Health Con3 sequences of Using Smokeless Tobacco, (USPHS 1986),

4 are caused in whole or in part by the use of tobacco prod5 ucts, (hereinafter referred to as the ‘‘general causation

6 presumption’’), and a jury empaneled to hear a tobacco

7 claim shall be so instructed. In all other respects, the bur8 den of proof as to the issue of whether a plaintiff’s specific

9 disease or injury was caused by smoking shall be governed

10 by the law of the State or Tribe in which the tobacco claim

11 was brought. This general causation presumption shall in

12 no way affect the ability of the defendant to introduce evi13 dence or argument which the defendant would otherwise

14 be entitled to present under the law of the State or Tribe

15 in which the tobacco claim was brought to rebut the gen16 eral causation presumption, or with respect to general cau17 sation, specific causation, or alternative causation, or to

18 introduce any other evidence or argument which the de19 fendant would otherwise be entitled to make.

20 (b) ACTIONS AGAINST PARTICIPATING TOBACCO

21 PRODUCT MANUFACTURERS.—In any civil action brought

22 involving a tobacco claim against participating tobacco

23 product manufacturers, as that term is defined in title

24 XIV, the provisions of title XIV apply in conjunction with

25 the provisions of this title.
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1 TITLE VIII—TOBACCO INDUSTRY

2 ACCOUNTABILITY REQUIRE3 MENTS AND EMPLOYEE PRO4 TECTION FROM REPRISALS

5 SEC. 801. ACCOUNTABILITY REQUIREMENTS AND OVER6 SIGHT OF THE TOBACCO INDUSTRY.

7 (a) ACCOUNTABILITY.—The Secretary, following reg8 ular consultation with the Commissioner of Food and

9 Drugs, the Surgeon General, the Director of the Center

10 for Disease Control or the Director’s delegate, and the Di11 rector of the Health and Human Services Office of Minor12 ity Health shall annually issue a report as provided for

13 in subsection (c).

14 (b) TOBACCO COMPANY PLAN.—Within a year after

15 the date of enactment of this Act, each participating to16 bacco product manufacturer shall adopt and submit to the

17 Secretary a plan to achieve the required percentage reduc18 tions in underage use of tobacco products set forth in sec19 tion 201, and thereafter shall update its plan no less fre20 quently than annually. The annual report of the Secretary

21 may recommend amendment of any plan to incorporate

22 additional measures to reduce underage tobacco use that

23 are consistent with the provisions of this Act.

24 (c) ANNUAL REPORT.—The Secretary shall submit a

25 report to the Congress by January 31 of each year, which
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1 shall be published in the Federal Register. The report

2 shall—

3 (1) describe in detail each tobacco product man4 ufacturer’s compliance with the provisions of this

5 Act and its plan submitted under subsection (b);

6 (2) report on whether each tobacco product

7 manufacturer’s efforts to reduce underage smoking

8 are likely to result in attainment of smoking reduc9 tion targets under section 201;

10 (3) recommend, where necessary, additional

11 measures individual tobacco companies should un12 dertake to meet those targets; and

13 (4) include, where applicable, the extent to

14 which prior panel recommendations have been adopt15 ed by each tobacco product manufacturer.

16 SEC. 802. TOBACCO PRODUCT MANUFACTURER EMPLOYEE

17 PROTECTION.

18 (a) PROHIBITED ACTS.—No tobacco product manu19 facturer may discharge, demote, or otherwise discriminate

20 against any employee with respect to compensation, terms,

21 conditions, benefits, or privileges of employment because

22 the employee (or any person acting under a request of the

23 employee)—

24 (1) notified the manufacturer, the Commis25 sioner of Food and Drugs, the Attorney General, or
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1 any Federal, State, or local public health or law en2 forcement authority of an alleged violation of this

3 or any other Act;

4 (2) refused to engage in any practice made un5 lawful by such Acts, if the employee has identified

6 the alleged illegality to the manufacturer;

7 (3) testified before Congress or at any Federal

8 or State proceeding regarding any provision (or pro9 posed provision) of such Acts;

10 (4) commenced, caused to be commenced, or is

11 about to commence or cause to be commenced a pro12 ceeding under such Acts, or a proceeding for the ad13 ministration or enforcement of any requirement im14 posed under such Acts;

15 (5) testified or is about to testify in any such

16 proceeding; or

17 (6) assisted or participated, or is about to assist

18 or participate, in any manner in such a proceeding

19 or in any other manner in such a proceeding or in

20 any other action to carry out the purposes of such

21 Acts.

22 (b) EMPLOYEE COMPLAINT.—

23 (1) Any employee of a tobacco product manu24 facturer who believes that he or she has been dis25 charged, demoted, or otherwise discriminated
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1 against by any person in violation of subsection (a)

2 of this section may, within 180 days after such viola3 tion occurs, file (or have any person file on his or

4 her behalf) a complaint with the Secretary alleging

5 such discharge, demotion, or discrimination. Upon

6 receipt of such a complaint, the Secretary shall no7 tify the person named in the complaint of its filing.

8 (2)(A) Upon receipt of a complaint under para9 graph (1) of this subsection, the Secretary shall con10 duct an investigation of the violation alleged in the

11 complaint. Within 30 days after the receipt of such

12 complaint, the Secretary shall complete such inves13 tigation and shall notify in writing the complainant

14 (and any such person acting in his or her behalf)

15 and the person alleged to have committed such viola16 tion of the results of the investigation conducted

17 under this paragraph. Within 90 days after the re18 ceipt of such complaint, the Secretary shall (unless

19 the proceeding on the complaint is terminated by the

20 Secretary on the basis of a settlement entered into

21 by the Secretary and the person alleged to have com22 mitted such violation) issue an order either providing

23 the relief prescribed in subparagraph (B) of this

24 paragraph or denying the complaint. An order of the

25 Secretary shall be made on the record after notice
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1 and the opportunity for a hearing in accordance with

2 sections 554 and 556 of title 5, United States Code.

3 Upon the conclusion of such a hearing and the

4 issuance of a recommended decision that the com5 plaint has merit, the Secretary shall issue a prelimi6 nary order providing the relief prescribed in sub7 paragraph (B) of this paragraph, but may not order

8 compensatory damages pending a final order. The

9 Secretary may not enter into a settlement terminat10 ing a proceeding on a complaint without the partici11 pation and consent of the complainant.

12 (B) If, in response to a complaint under para13 graph (1) of this subsection, the Secretary deter14 mines that a violation of this paragraph has oc15 curred, the Secretary shall order the person who

16 committed such violation to (i) take affirmative ac17 tion to abate the violation, and (ii) reinstate the

18 complainant to his or her former position together

19 with compensation (including back pay), terms, con20 ditions, and privileges of his or her employment. The

21 Secretary may order such person to provide compen22 satory damages to the complainant. If an order is

23 issued under this subparagraph, the Secretary, at

24 the request of the complainant, shall assess the per25 son against whom the order is issued a sum equal
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1 to the aggregate amount of all costs and expenses

2 (including attorneys’ and expert witness fees) rea3 sonably incurred (as determined by the Secretary),

4 by the complainant for, or in connection with, the

5 bringing of the complaint upon which the order is

6 issued.

7 (3)(A) The Secretary shall dismiss a complaint

8 filed under paragraph (1) of this subsection, and

9 shall not conduct the investigation required under

10 paragraph (2) of this subsection, unless the com11 plainant has made a prima facie showing that any

12 behavior described in subsection (a) of this section

13 was a contributing factor in the unfavorable person14 nel action alleged in the complaint.

15 (B) Notwithstanding a finding by the Secretary

16 that the complainant has made the showing required

17 by subparagraph (A) of this paragraph, no investiga18 tion required under paragraph (2) of this subsection

19 shall be conducted if the manufacturer demonstrates

20 by clear and convincing evidence that it would have

21 taken the same unfavorable personnel action in the

22 absence of such behavior. Relief may not be ordered

23 under paragraph (1) of this subsection if the manu24 facturer demonstrates by clear and convincing evi-
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1 dence that it would have taken the same unfavorable

2 personnel action in the absence of such behavior.

3 (C) The Secretary may determine that a viola4 tion of subsection (a) of this section has occurred

5 only if the complainant has demonstrated that any

6 behavior described in subsection (a) of this section

7 was a contributing factor in unfavorable personnel

8 action alleged in the complaint.

9 (c) JUDICIAL REVIEW.—

10 (1) Any person adversely affected or aggrieved

11 by an order issued under subsection (a) of this sec12 tion may obtain review of the order in the United

13 States court of appeals for the circuit in which the

14 violation, with respect to which the order was issued,

15 allegedly occurred. The petition for review must be

16 filed within 60 days after the issuance of the Sec17 retary’s order. Judicial review shall be available as

18 provided in chapter 7 of title 5, United States Code.

19 The commencement of proceedings under this sub20 section shall not, unless ordered by the court, oper21 ate as a stay of the Secretary’s order.

22 (2) An order of the Secretary with respect to

23 which review could have been obtained under para24 graph (1) of this subsection shall not be subject to

25 judicial review in any criminal or civil proceeding.
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1 (d) NONCOMPLIANCE.—Whenever a person has failed

2 to comply with an order issued under subsection (b)(2)

3 of this section, the Secretary may file a civil action in the

4 United States district court for the district in which the

5 violation occurred to enforce such order. In actions

6 brought under this subsection, the district courts shall

7 have jurisdiction to grant all appropriate relief, including

8 injunctive relief and compensatory and exemplary dam9 ages.

10 (e) ACTION TO ENSURE COMPLIANCE.—

11 (1) Any person on whose behalf an order was

12 issued under subsection (b)(2) of this section may

13 commence a civil action to require compliance with

14 such order against the person to whom such order

15 was issued. The appropriate United States district

16 court shall have jurisdiction to enforce such order,

17 without regard to the amount in controversy or the

18 citizenship of the parties.

19 (2) The court, in issuing any final order under

20 this subsection, may award costs of litigation (in21 cluding reasonable attorneys’ and expert witness

22 fees) to any party whenever the court determines

23 such award is appropriate.

24 (f) ENFORCEMENT.—Any non-discretionary duty im25 posed by this section shall be enforceable in a mandamus
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1 proceeding brought under section 1361 of title 28, United

2 States Code.

3 (g) APPLICABILITY TO CERTAIN EMPLOYEES.—Sub4 section (a) of this section shall not apply with respect to

5 any employee who, acting without direction from the man6 ufacturer (or the agent of the manufacturer) deliberately

7 causes a violation of any requirement of this Act, the Fed8 eral Food, Drug, and Cosmetic Act (21 U.S.C. 301 et

9 seq), or any other law or regulation relating to tobacco

10 products.

11 (h) EFFECT ON OTHER LAWS.—This section shall

12 not be construed to expand, diminish, or otherwise affect

13 any right otherwise available to an employee under Fed14 eral or State law to redress the employee’s discharge or

15 other discriminatory action taken by a tobacco product

16 manufacturer against the employee.

17 (i) POSTING.—The provisions of this section shall be

18 prominently posted in any place of employment to which

19 this section applies.

20 TITLE IX—PUBLIC DISCLOSURE

21 OF TOBACCO INDUSTRY DOC22 UMENTS

23 SEC. 901. FINDINGS.

24 The Congress finds that—
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1 (1) the American tobacco industry has made

2 claims of attorney-client privilege, attorney work

3 product, and trade secrets to protect from public

4 disclosure thousands of internal documents sought

5 by civil litigants;

6 (2) a number of courts have found that these

7 claims of privilege were not made in good faith; and

8 (3) a prompt and full exposition of tobacco doc9 uments will—

10 (A) promote understanding by the public

11 of the tobacco industry’s research and practices;

12 and

13 (B) further the purposes of this Act.

14 SEC. 902. APPLICABILITY.

15 This title applies to all tobacco product manufactur16 ers.

17 SEC. 903. DOCUMENT DISCLOSURE.

18 (a) DISCLOSURE TO THE FOOD AND DRUG ADMINIS19 TRATION.—

20 (1) Within 60 days after the date of enactment

21 of this Act, each tobacco product manufacturer shall

22 submit to the Food and Drug Administration the

23 documents identified in subsection (c), including

24 documents for which trade secret protection is

25 claimed, with the exception of any document for
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1 which privilege is claimed, and identified in accord2 ance with subsection (b). Each such manufacturer

3 shall provide the Administration with the privilege

4 and trade secret logs identified under subsection (b).

5 (2) With respect to documents that are claimed

6 to contain trade secret material, unless and until it

7 is finally determined under this title, either through

8 judicial review or because time for judicial review

9 has expired, that such a document does not con10 stitute or contain trade secret material, the Adminis11 tration shall treat the document as a trade secret in

12 accordance with section 708 of the Federal Food,

13 Drug, and Cosmetic Act (21 U.S.C. 379) and the

14 regulations promulgated thereunder. Nothing herein

15 shall limit the authority of the Administration to ob16 tain and use, in accordance with any provision of the

17 Federal Food, Drug, and Cosmetic Act and the reg18 ulations promulgated thereunder, any document con19 stituting or containing trade secret material. Docu20 ments and materials received by the Administration

21 under this provision shall not be obtainable by or re22 leasable to the public through section 552 of title 5,

23 United States Code, or any other provision of law,

24 and the only recourse to obtain these documents
246

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1 shall be through the process established by section

2 905.

3 (3) If a document depository is not established

4 under title XIV, the Secretary shall establish by reg5 ulation a procedure for making public all documents

6 submitted under paragraph (1) except documents for

7 which trade secret protection has been claimed and

8 for which there has not been a final judicial deter9 mination that the document does not contain a trade

10 secret.

11 (b) SEPARATE SUBMISSION OF DOCUMENTS.—

12 (1) PRIVILEGED TRADE SECRET DOCUMENTS.—

13 Any document required to be submitted under sub14 section (c) or (d) that is subject to a claim by a to15 bacco product manufacturer of attorney-client privi16 lege, attorney work product, or trade secret protec17 tion shall be so marked and shall be submitted to

18 the panel under section 904 within 30 days after its

19 appointment. Compliance with this subsection shall

20 not be deemed to be a waiver of any applicable claim

21 of privilege or trade secret protection.

22 (2) PRIVILEGE AND TRADE SECRET LOGS.—

23 (A) IN GENERAL.—Within 15 days after

24 submitting documents under paragraph (1),

25 each tobacco product manufacturer shall submit
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1 a comprehensive log which identifies on a docu2 ment-by-document basis all documents produced

3 for which the manufacturer asserts attorney-cli4 ent privilege, attorney work-product, or trade

5 secrecy. With respect to documents for which

6 the manufacturer previously has asserted one or

7 more of the aforementioned privileges or trade

8 secret protection, the manufacturer shall con9 duct a good faith de novo review of such docu10 ments to determine whether such privilege or

11 trade secret protection is appropriate.

12 (B) ORGANIZATION OF LOG.—The log shall

13 be organized in numerical order based upon the

14 document identifier assigned to each document.

15 For each document, the log shall contain—

16 (i) a description of the document, in17 cluding type of document, title of docu18 ment, name and position or title of each

19 author, addressee, and other recipient who

20 was intended to receive a copy, document

21 date, document purpose, and general sub22 ject matter;

23 (ii) an explanation why the document

24 or a portion of the document is privileged

25 or subject to trade secret protection; and
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1 (iii) a statement whether any previous

2 claim of privilege or trade secret was de3 nied and, if so, in what proceeding.

4 (C) PUBLIC INSPECTION.—Within 5 days

5 of receipt of such a log, the Depository shall

6 make it available for public inspection and re7 view.

8 (3) DECLARATION OF COMPLIANCE.—Each to9 bacco product manufacturer shall submit to the De10 pository a declaration, in accordance with the re11 quirements of section 1746 of title 28, United States

12 Code, by an individual with responsibility for the de

13 novo review of documents, preparation of the privi14 lege log, and knowledge of its contents. The declar15 ant shall attest to the manufacturer’s compliance

16 with the requirements of this subsection pertaining

17 to the review of documents and preparation of a

18 privilege log.

19 (c) DOCUMENT CATEGORIES.—Each tobacco product

20 manufacturer shall submit—

21 (1) every existing document (including any doc22 ument subject to a claim of attorney-client privilege,

23 attorney work product, or trade secret protection) in

24 the manufacturer’s possession, custody, or control

25 relating, referring, or pertaining to—
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1 (A) any studies, research, or analysis of

2 any possible health or pharmacological effects

3 in humans or animals, including addiction, as4 sociated with the use of tobacco products or

5 components of tobacco products;

6 (B) the engineering, manipulation, or con7 trol of nicotine in tobacco products;

8 (C) the sale or marketing of tobacco prod9 ucts;

10 (D) any research involving safer or less

11 hazardous tobacco products;

12 (E) tobacco use by minors; or

13 (F) the relationship between advertising or

14 promotion and the use of tobacco products;

15 (2) all documents produced by any tobacco

16 product manufacturer, the Center of Tobacco Re17 search or Tobacco Institute to the Attorney General

18 of any State during discovery in any action brought

19 on behalf of any State and commenced after Janu20 ary 1, 1994;

21 (3) all documents produced by any tobacco

22 product manufacturer, Center for Tobacco Research

23 or Tobacco Institute to the Federal Trade Commis24 sion in connection with its investigation into the
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1 ‘‘Joe Camel’’ advertising campaign and any under2 age marketing of tobacco products to minors;

3 (4) all documents produced by any tobacco

4 product manufacturers, the Center for Tobacco Re5 search or the Tobacco Institute to litigation adver6 saries during discovery in any private litigation mat7 ters;

8 (5) all documents produced by any tobacco

9 product manufacturer, the Center for Tobacco Re10 search, or the Tobacco Institute in any of the follow11 ing private litigation matters:

12 (A) Philip Morris v. American Broadcast13 ing Co., Law No. 7609CL94x00181–00 (Cir.

14 Ct. Va. filed Mar. 26, 1994);

15 (B) Estate of Butler v. R.J. Reynolds To16 bacco Co., Civ. A. No. 94–5–53 (Cir. Ct. Miss.,

17 filed May 12, 1994);

18 (C) Haines v. Liggett Group, No. 84–CV–

19 678 (D.N.J., filed Feb. 22, 1984); and

20 (D) Cipollone v. Liggett Group, No. 83–

21 CV–284 (D.N.J., filed Aug. 1, 1983);

22 (6) any document produced as evidence or po23 tential evidence or submitted to the Depository by

24 tobacco product manufacturers in any of the actions

25 described in paragraph (5), including briefs and
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1 other pleadings, memoranda, interrogatories, tran2 scripts of depositions, and expert witnesses and con3 sultants materials, including correspondence, re4 ports, and testimony;

5 (7) any additional documents that any tobacco

6 product manufacturer, the Center for Tobacco Re7 search, or the Tobacco Institute have agreed or been

8 required by any court to produce to litigation adver9 saries as part of discovery in any action listed in

10 paragraph (2), (3), (4), or (5) but have not yet com11 pleted producing as of the date of enactment of this

12 Act;

13 (8) all indices of documents relating to tobacco

14 products and health, with any such indices that are

15 maintained in computerized form placed into the de16 pository in both a computerized and hard-copy form;

17 (9) a privilege log describing each document or

18 portion of a document otherwise subject to produc19 tion in the actions enumerated in this subsection

20 that any tobacco product manufacturer, the Center

21 for Tobacco Research, or the Tobacco Institute

22 maintains, based upon a good faith de novo re-review

23 conducted after the date of enactment of this Act is

24 exempt from public disclosure under this title; and
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1 (10) a trade secrecy log describing each docu2 ment or portion of a document that any tobacco

3 product manufacturer, the Center for Tobacco Re4 search, or the Tobacco Institute maintains is exempt

5 from public disclosure under this title.

6 (d) FUTURE DOCUMENTS.—With respect to docu7 ments created after the date of enactment of this Act, the

8 tobacco product manufacturers and their trade associa9 tions shall—

10 (1) place the documents in the depository; and

11 (2) provide a copy of the documents to the

12 Food and Drug Administration (with the exception

13 of documents subject to a claim of attorney-client

14 privilege or attorney work product).

15 (1) Every existing document (including any doc16 ument subject to a claim of attorney-client privilege,

17 attorney work product, or trade secret protection) in

18 the manufacturer’s possession, custody, or control

19 relating, referring, or pertaining to—

20 (A) any studies, research, or analysis of

21 any possible health or pharmacological effects

22 in humans or animals, including addiction, as23 sociated with the use of tobacco products or

24 components of tobacco products;
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1 (B) the engineering, manipulation, or con2 trol of nicotine in tobacco products;

3 (C) the sale or marketing of tobacco prod4 ucts;

5 (D) any research involving safer or less

6 hazardous tobacco products;

7 (E) tobacco use by minors; or

8 (F) the relationship between advertising or

9 promotion and the use of tobacco products;

10 (2) Every existing document (including any doc11 ument subject to a claim of attorney-client privilege,

12 attorney work product, or trade secret protection) in

13 the manufacturer’s possession, custody, or control—

14 (A) produced, or ordered to be produced,

15 by the tobacco product manufacturer in any

16 health-related civil or criminal proceeding, judi17 cial or administrative; and

18 (B) that the panel established under sec19 tion 906 determines is appropriate for submis20 sion.

21 (3) All studies conducted or funded, directly or

22 indirectly, by any tobacco product manufacturer, re23 lating to tobacco product use by minors.
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1 (4) All documents discussing or referring to the

2 relationship, if any, between advertising and pro3 motion and the use of tobacco products by minors.

4 (5) A privilege log describing each document or

5 each portion of a document otherwise subject to pub6 lic disclosure under this subsection that any tobacco

7 product manufacturer maintains is exempt from

8 public disclosure under this title.

9 (6) A trade secrecy log describing each docu10 ment or each portion of a document otherwise sub11 ject to public disclosure under this subsection that

12 any tobacco product manufacturer, the Center for

13 Tobacco Research, or the Tobacco Institute main14 tains is exempt from public disclosure under this

15 Act.

16 (e) DOCUMENT IDENTIFICATION AND INDEX.—Docu17 ments submitted under this section shall be sequentially

18 numbered and marked to identify the tobacco product

19 manufacturer. Within 15 days after submission of docu20 ments, each tobacco product manufacturer shall supply

21 the panel with a comprehensive document index which ref22 erences the applicable document categories contained in

23 subsection (b).
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1 SEC. 904. DOCUMENT REVIEW.

2 (a) AJUDICATION OF PRIVILEGE CLAIMS.—An claim

3 of attorney-client privilege, trade secret protection, or

4 other claim of privilege with respect to a document re5 quired to be submitted by this title shall be heard by a

6 3-judge panel of the United States District Court for the

7 District of Columbia under section 2284 of title 28,

8 United States Code. The panel may appoint special mas9 ters, employ such personnel, and establish such procedures

10 as it deems necessary to carry out its functions under this

11 title.

12 (b) PRIVILEGE.—The panel shall apply the attorney13 client privilege, the attorney work-product doctrine, and

14 the trade secret doctrine in a manner consistent with Fed15 eral law.

16 SEC. 905. RESOLUTION OF DISPUTED PRIVILEGE AND

17 TRADE SECRET CLAIMS.

18 (a) IN GENERAL.—The panel shall determine wheth19 er to uphold or reject disputed claims of attorney client

20 privilege, attorney work product, or trade secret protection

21 with respect to documents submitted. Any person may pe22 tition the panel to resolve a claim that a document submit23 ted may not be disclosed to the public. Such a determina24 tion shall be made by a majority of the panel, in writing,

25 and shall be subject to judicial review as specified in this

26 title. All such determinations shall be made solely on con-
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1 sideration of the subject document and written submis2 sions from the person claiming that the document is privi3 leged or protected by trade secrecy and from any person

4 seeking disclosure of the document. The panel shall cause

5 notice of the petition and the panel’s decision to be pub6 lished in the Federal Register.

7 (b) FINAL DECISION.—The panel may uphold a claim

8 of privilege or protection in its entirety or, in its sole dis9 cretion, it may redact that portion of a document that it

10 determines is protected from public disclosure under sub11 section (a). Any decision of the panel shall be final unless

12 judicial review is sought under section 906. In the event

13 that judicial review is so sought, the panel’s decision shall

14 be stayed pending a final judicial decision.

15 SEC. 906. APPEAL OF PANEL DECISION.

16 (a) PETITION; RIGHT OF APPEAL.—Any person may

17 obtain judicial review of a final decision of the panel by

18 filing a petition for review with the United States Court

19 of Appeals for the Federal Circuit within 60 days after

20 the publication of such decision in the Federal Register.

21 A copy of the petition shall be transmitted by the Clerk

22 of the Court to the panel. The panel shall file in the court

23 the record of the proceedings on which the panel based

24 its decision (including any documents reviewed by the

25 panel in camera) as provided in section 2112 of title 28,
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1 United States Code. Upon the filing of such petition, the

2 court shall have exclusive jurisdiction to affirm or set aside

3 the panel’s decision, except that until the filing of the

4 record the panel may modify or set aside its decision.

5 (b) ADDITIONAL EVIDENCE AND ARGUMENTS.—If

6 the any party applies to the court for leave to adduce addi7 tional evidence respecting the decision being reviewed and

8 shows to the satisfaction of the court that such additional

9 evidence or arguments are material and that there were

10 reasonable grounds for the failure to adduce such evidence

11 or arguments in the proceedings before the panel, the

12 court may order the panel to provide additional oppor13 tunity for the presentation of evidence or arguments in

14 such manner and upon such terms as the court deems

15 proper. The panel may modify its findings or make new

16 findings by reason of the additional evidence or arguments

17 and shall file with the court such modified or new findings,

18 and its recommendation, if any, for the modification or

19 setting aside of the decision being reviewed.

20 (c) STANDARD OF REVIEW; FINALITY OF JUDG21 MENTS.—The panel’s findings of fact, if supported by sub22 stantial evidence on the record taken as a whole, shall be

23 conclusive. The court shall review the panel’s legal conclu24 sions de novo. The judgment of the court affirming or set25 ting aside the panel’s decision shall be final, subject to
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1 review by the Supreme Court of the United States upon

2 certiorari or certification, as provided in section 1254 of

3 title 28, United States Code.

4 (d) PUBLIC DISCLOSURE AFTER FINAL DECISION.—

5 Within 30 days after a final decision that a document,

6 as redacted by the panel or in its entirety, is not protected

7 from disclosure by a claim of attorney-client privilege, at8 torney work product, or trade secret protection, the panel

9 shall direct that the document be made available to the

10 Commissioner of Food and Drugs under section 903(a).

11 No Federal, Tribal, or State court shall have jurisdiction

12 to review a claim of attorney-client privilege, attorney

13 work product, or trade secret protection for a document

14 that has lawfully been made available to the public under

15 this subsection.

16 (e) EFFECT OF NON-DISCLOSURE DECISION ON JU17 DICIAL PROCEEDINGS.—The panel’s decision that a docu18 ment is protected by attorney-client privilege, attorney

19 work product, or trade secret protection is binding only

20 for the purpose of protecting the document from disclosure

21 by the Depository. The decision by the panel shall not be

22 construed to prevent a document from being disclosed in

23 a judicial proceeding or interfere with the authority of a

24 court to determine whether a document is admissible or

25 whether its production may be compelled.
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1 SEC. 907. MISCELLANEOUS.

2 The disclosure process in this title is not intended to

3 affect the Federal Rules of Civil or Criminal Procedure

4 or any Federal law which requires the disclosure of docu5 ments or which deals with attorney-client privilege, attor6 ney work product, or trade secret protection.

7 SEC. 908. PENALTIES.

8 (a) GOOD FAITH REQUIREMENT.—Each tobacco

9 product manufacturer shall act in good faith in asserting

10 claims of privilege or trade secret protection based on fact

11 and law. If the panel determines that a tobacco product

12 manufacturer has not acted in good faith with full knowl13 edge of the truth of the facts asserted and with a reason14 able basis under existing law, the manufacturer shall be

15 assessed costs, which shall include the full administrative

16 costs of handling the claim of privilege, and all attorneys’

17 fees incurred by the panel and any party contesting the

18 privilege. The panel may also impose civil penalties of up

19 to $50,000 per violation if it determines that the manufac20 turer acted in bad faith in asserting a privilege, or know21 ingly acted with the intent to delay, frustrate, defraud,

22 or obstruct the panel’s determination of privilege, attorney

23 work product, or trade secret protection claims.

24 (b) FAILURE TO PRODUCE DOCUMENT.—A failure

25 by a tobacco product manufacturer to produce indexes and

26 documents in compliance with the schedule set forth in
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1 this title, or with such extension as may be granted by

2 the panel, shall be punished by a civil penalty of up to

3 $50,000 per violation. A separate violation occurs for each

4 document the manufacturer has failed to produce in a

5 timely manner. The maximum penalty under this sub6 section for a related series of violations is $5,000,000. In

7 determining the amount of any civil penalty, the panel

8 shall consider the number of documents, length of delay,

9 any history of prior violations, the ability to pay, and such

10 other matters as justice requires. Nothing in this title shall

11 replace or supersede any criminal sanction under title 18,

12 United States Code, or any other provision of law.

13 SEC. 909. DEFINITIONS.

14 For the purposes of this title—

15 (1) DOCUMENT.—The term ‘‘document’’ in16 cludes originals and drafts of any kind of written or

17 graphic matter, regardless of the manner of produc18 tion or reproduction, of any kind or description,

19 whether sent or received or neither, and all copies

20 thereof that are different in any way from the origi21 nal (whether by interlineation, receipt stamp, nota22 tion, indication of copies sent or received or other23 wise) regardless of whether confidential, privileged,

24 or otherwise, including any paper, book, account,

25 photograph, blueprint, drawing, agreement, contract,
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1 memorandum, advertising material, letter, telegram,

2 object, report, record, transcript, study, note, nota3 tion, working paper, intra-office communication,

4 intra-department communication, chart, minute,

5 index sheet, routing sheet, computer software, com6 puter data, delivery ticket, flow sheet, price list,

7 quotation, bulletin, circular, manual, summary, re8 cording of telephone or other conversation or of

9 interviews, or of conferences, or any other written,

10 recorded, transcribed, punched, taped, filmed, or

11 graphic matter, regardless of the manner produced

12 or reproduced. Such term also includes any tape, re13 cording, videotape, computerization, or other elec14 tronic recording, whether digital or analog or a com15 bination thereof.

16 (2) TRADE SECRET.—The term ‘‘trade secret’’

17 means any commercially valuable plan, formula,

18 process, or device that is used for making,

19 compounding, processing, or preparing trade com20 modities and that can be said to be the end-product

21 of either innovation or substantial effort, for which

22 there is a direct relationship between the plan, for23 mula, process, or device and the productive process.

24 (3) CERTAIN ACTIONS DEEMED TO BE PRO25 CEEDINGS.—Any action undertaken under this title,
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1 including the search, indexing, and production of

2 documents, is deemed to be a ‘‘proceeding’’ before

3 the executive branch of the United States.

4 (4) OTHER TERMS.—Any term used in this title

5 that is defined in section 701 has the meaning given

6 to it by that section.

7 TITLE X—LONG-TERM ECO8 NOMIC ASSISTANCE FOR

9 FARMERS

10 SEC. 1001. SHORT TITLE.

11 This title may be cited as the ‘‘Long-Term Economic

12 Assistance for Farmers Act’’ or the ‘‘LEAF Act’’.

13 SEC. 1002. DEFINITIONS.

14 In this title:

15 (1) PARTICIPATING TOBACCO PRODUCER.—The

16 term ‘‘participating tobacco producer’’ means a

17 quota holder, quota lessee, or quota tenant.

18 (2) QUOTA HOLDER.—The term ‘‘quota holder’’

19 means an owner of a farm on January 1, 1998, for

20 which a tobacco farm marketing quota or farm acre21 age allotment was established under the Agricultural

22 Adjustment Act of 1938 (7 U.S.C. 1281 et seq.).

23 (3) QUOTA LESSEE.—The term ‘‘quota lessee’’

24 means—
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1 (A) a producer that owns a farm that pro2 duced tobacco pursuant to a lease and transfer

3 to that farm of all or part of a tobacco farm

4 marketing quota or farm acreage allotment es5 tablished under the Agricultural Adjustment

6 Act of 1938 (7 U.S.C. 1281 et seq.) for any of

7 the 1995, 1996, or 1997 crop years; or

8 (B) a producer that rented land from a

9 farm operator to produce tobacco under a to10 bacco farm marketing quota or farm acreage al11 lotment established under the Agricultural Ad12 justment Act of 1938 (7 U.S.C. 1281 et seq.)

13 for any of the 1995, 1996, or 1997 crop years.

14 (4) QUOTA TENANT.—The term ‘‘quota tenant’’

15 means a producer that—

16 (A) is the principal producer, as deter17 mined by the Secretary, of tobacco on a farm

18 where tobacco is produced pursuant to a to19 bacco farm marketing quota or farm acreage al20 lotment established under the Agricultural Ad21 justment Act of 1938 (7 U.S.C. 1281 et seq.)

22 for any of the 1995, 1996, or 1997 crop years;

23 and

24 (B) is not a quota holder or quota lessee.
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1 (5) SECRETARY.—The term ‘‘Secretary’’

2 means—

3 (A) in subtitles A and B, the Secretary of

4 Agriculture; and

5 (B) in section 1031, the Secretary of

6 Labor.

7 (6) TOBACCO PRODUCT IMPORTER.—The term

8 ‘‘tobacco product importer’’ has the meaning given

9 the term ‘‘importer’’ in section 5702 of the Internal

10 Revenue Code of 1986.

11 (7) TOBACCO PRODUCT MANUFACTURER.—

12 (A) IN GENERAL.—The term ‘‘tobacco

13 product manufacturer’’ has the meaning given

14 the term ‘‘manufacturer of tobacco products’’ in

15 section 5702 of the Internal Revenue Code of

16 1986.

17 (B) EXCLUSION.—The term ‘‘tobacco

18 product manufacturer’’ does not include a per19 son that manufactures cigars or pipe tobacco.

20 (8) TOBACCO WAREHOUSE OWNER.—The term

21 ‘‘tobacco warehouse owner’’ means a warehouseman

22 that participated in an auction market (as defined in

23 the first section of the Tobacco Inspection Act (7

24 U.S.C. 511)) during the 1998 marketing year.
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1 (9) FLUE-CURED TOBACCO.—The term ‘‘flue2 cured tobacco’’ includes type 21 and type 37 to3 bacco.

4 Subtitle A—Tobacco Community

5 Revitalization

6 SEC. 1011. AUTHORIZATION OF APPROPRIATIONS.

7 There are appropriated and transferred to the Sec8 retary for each fiscal year such amounts from the National

9 Tobacco Trust Fund established by section 401, other

10 than from amounts in the State Litigation Settlement Ac11 count, as may be necessary to carry out the provisions of

12 this title.

13 SEC. 1012. EXPENDITURES.

14 The Secretary is authorized, subject to appropria15 tions, to make payments under—

16 (1) section 1021 for payments for lost tobacco

17 quota for each of fiscal years 1999 through 2023,

18 but not to exceed $1,650,000,000 for any fiscal year

19 except to the extent the payments are made in ac20 cordance with subsection (d)(12) or (e)(9) of section

21 1021;

22 (2) section 1022 for industry payments for all

23 costs of the Department of Agriculture associated

24 with the production of tobacco;
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1 (3) section 1023 for tobacco community eco2 nomic development grants, but not to exceed—

3 (A) $375,000,000 for each of fiscal years

4 1999 through 2008, less any amount required

5 to be paid under section 1022 for the fiscal

6 year; and

7 (B) $450,000,000 for each of fiscal year

8 2009 through 2023, less any amount required

9 to be paid under section 1022 during the fiscal

10 year;

11 (4) section 1031 for assistance provided under

12 the tobacco worker transition program, but not to

13 exceed $25,000,000 for any fiscal year; and

14 (5) subpart 9 of part A of title IV of the High15 er Education Act of 1965 for farmer opportunity

16 grants, but not to exceed—

17 (A) $42,500,000 for each of the academic

18 years 1999–2000 through 2003–2004;

19 (B) $50,000,000 for each of the academic

20 years 2004–2005 through 2008–2009;

21 (C) $57,500,000 for each of the academic

22 years 2009–2010 through 2013–2014;

23 (D) $65,000,000 for each of the academic

24 years 2014–2015 through 2018–2019; and
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1 (E) $72,500,000 for each of the academic

2 years 2019–2020 through 2023–2024.

3 SEC. 1013. BUDGETARY TREATMENT.

4 This subtitle constitutes budget authority in advance

5 of appropriations Acts and represents the obligation of the

6 Federal Government to provide payments to States and

7 eligible persons in accordance with this title.

8 Subtitle B—Tobacco Market

9 Transition Assistance

10 SEC. 1021. PAYMENTS FOR LOST TOBACCO QUOTA.

11 (a) IN GENERAL.—Beginning with the 1999 market12 ing year, the Secretary shall make payments for lost to13 bacco quota to eligible quota holders, quota lessees, and

14 quota tenants as reimbursement for lost tobacco quota.

15 (b) ELIGIBILITY.—To be eligible to receive payments

16 under this section, a quota holder, quota lessee, or quota

17 tenant shall—

18 (1) prepare and submit to the Secretary an ap19 plication at such time, in such manner, and contain20 ing such information as the Secretary may require,

21 including information sufficient to make the dem22 onstration required under paragraph (2); and

23 (2) demonstrate to the satisfaction of the Sec24 retary that, with respect to the 1997 marketing

25 year—
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1 (A) the producer was a quota holder and

2 realized income (or would have realized income,

3 as determined by the Secretary, but for a medi4 cal hardship or crop disaster during the 1997

5 marketing year) from the production of tobacco

6 through—

7 (i) the active production of tobacco;

8 (ii) the lease and transfer of tobacco

9 quota to another farm;

10 (iii) the rental of all or part of the

11 farm of the quota holder, including the

12 right to produce tobacco, to another to13 bacco producer; or

14 (iv) the hiring of a quota tenant to

15 produce tobacco;

16 (B) the producer was a quota lessee; or

17 (C) the producer was a quota tenant.

18 (c) BASE QUOTA LEVEL.—

19 (1) IN GENERAL.—The Secretary shall deter20 mine, for each quota holder, quota lessee, and quota

21 tenant, the base quota level for the 1995 through

22 1997 marketing years.

23 (2) QUOTA HOLDERS.—The base quota level for

24 a quota holder shall be equal to the average tobacco

25 farm marketing quota established for the farm
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1 owned by the quota holder for the 1995 through

2 1997 marketing years.

3 (3) QUOTA LESSEES.—The base quota level for

4 a quota lessee shall be equal to—

5 (A) 50 percent of the average number of

6 pounds of tobacco quota established for the

7 farm for the 1995 through 1997 marketing

8 years—

9 (i) that was leased and transferred to

10 a farm owned by the quota lessee; or

11 (ii) that was rented to the quota les12 see for the right to produce the tobacco;

13 less

14 (B) 25 percent of the average number of

15 pounds of tobacco quota described in subpara16 graph (A) for which a quota tenant was the

17 principal producer of the tobacco quota.

18 (4) QUOTA TENANTS.—The base quota level for

19 a quota tenant shall be equal to the sum of—

20 (A) 50 percent of the average number of

21 pounds of tobacco quota established for a farm

22 for the 1995 through 1997 marketing years—

23 (i) that was owned by a quota holder;

24 and
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1 (ii) for which the quota tenant was

2 the principal producer of the tobacco on

3 the farm; and

4 (B) 25 percent of the average number of

5 pounds of tobacco quota for the 1995 through

6 1997 marketing years—

7 (i)(I) that was leased and transferred

8 to a farm owned by the quota lessee; or

9 (II) for which the rights to produce

10 the tobacco were rented to the quota les11 see; and

12 (ii) for which the quota tenant was

13 the principal producer of the tobacco on

14 the farm.

15 (5) MARKETING QUOTAS OTHER THAN POUND16 AGE QUOTAS.—

17 (A) IN GENERAL.—For each type of to18 bacco for which there is a marketing quota or

19 allotment (on an acreage basis), the base quota

20 level for each quota holder, quota lessee, or

21 quota tenant shall be determined in accordance

22 with this subsection (based on a poundage con23 version) by multiplying—
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1 (i) the average tobacco farm market2 ing quota or allotment for the 1995

3 through 1997 marketing years; and

4 (ii) the average yield per acre for the

5 farm for the type of tobacco for the mar6 keting years.

7 (B) YIELDS NOT AVAILABLE.—If the aver8 age yield per acre is not available for a farm,

9 the Secretary shall calculate the base quota for

10 the quota holder, quota lessee, or quota tenant

11 (based on a poundage conversion) by determin12 ing the amount equal to the product obtained

13 by multiplying—

14 (i) the average tobacco farm market15 ing quota or allotment for the 1995

16 through 1997 marketing years; and

17 (ii) the average county yield per acre

18 for the county in which the farm is located

19 for the type of tobacco for the marketing

20 years.

21 (d) PAYMENTS FOR LOST TOBACCO QUOTA FOR

22 TYPES OF TOBACCO OTHER THAN FLUE-CURED TO23 BACCO.—

24 (1) ALLOCATION OF FUNDS.—Of the amounts

25 made available under section 1011(d)(1) for pay-
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1 ments for lost tobacco quota, the Secretary shall

2 make available for payments under this subsection

3 an amount that bears the same ratio to the amounts

4 made available as—

5 (A) the sum of all national marketing

6 quotas for all types of tobacco other than flue7 cured tobacco during the 1995 through 1997

8 marketing years; bears to

9 (B) the sum of all national marketing

10 quotas for all types of tobacco during the 1995

11 through 1997 marketing years.

12 (2) OPTION TO RELINQUISH QUOTA.—

13 (A) IN GENERAL.—Each quota holder, for

14 types of tobacco other than flue-cured tobacco,

15 shall be given the option to relinquish the farm

16 marketing quota or farm acreage allotment of

17 the quota holder in exchange for a payment

18 made under paragraph (3).

19 (B) NOTIFICATION.—A quota holder shall

20 give notification of the intention of the quota

21 holder to exercise the option at such time and

22 in such manner as the Secretary may require,

23 but not later than January 15, 1999.
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1 (3) PAYMENTS FOR LOST TOBACCO QUOTA TO

2 QUOTA HOLDERS EXERCISING OPTIONS TO RELIN3 QUISH QUOTA.—

4 (A) IN GENERAL.—Subject to subpara5 graph (E), for each of fiscal years 1999

6 through 2008, the Secretary shall make annual

7 payments for lost tobacco quota to each quota

8 holder that has relinquished the farm marketing

9 quota or farm acreage allotment of the quota

10 holder under paragraph (2).

11 (B) AMOUNT.—The amount of a payment

12 made to a quota holder described in subparagraph (A) for a marketing year shall equal 1 13 ⁄10

14 of the lifetime limitation established under sub15 paragraph (E).

16 (C) TIMING.—The Secretary shall begin

17 making annual payments under this paragraph

18 for the marketing year in which the farm mar19 keting quota or farm acreage allotment is relin20 quished.

21 (D) ADDITIONAL PAYMENTS.—The Sec22 retary may increase annual payments under

23 this paragraph in accordance with paragraph

24 (7)(E) to the extent that funding is available.
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1 (E) LIFETIME LIMITATION ON PAY2 MENTS.—The total amount of payments made

3 under this paragraph to a quota holder shall

4 not exceed the product obtained by multiplying

5 the base quota level for the quota holder by $8

6 per pound.

7 (4) REISSUANCE OF QUOTA.—

8 (A) REALLOCATION TO LESSEE OR TEN9 ANT.—If a quota holder exercises an option to

10 relinquish a tobacco farm marketing quota or

11 farm acreage allotment under paragraph (2), a

12 quota lessee or quota tenant that was the pri13 mary producer during the 1997 marketing year

14 of tobacco pursuant to the farm marketing

15 quota or farm acreage allotment, as determined

16 by the Secretary, shall be given the option of

17 having an allotment of the farm marketing

18 quota or farm acreage allotment reallocated to

19 a farm owned by the quota lessee or quota ten20 ant.

21 (B) CONDITIONS FOR REALLOCATION.—

22 (i) TIMING.—A quota lessee or quota

23 tenant that is given the option of having

24 an allotment of a farm marketing quota or

25 farm acreage allotment reallocated to a
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1 farm owned by the quota lessee or quota

2 tenant under subparagraph (A) shall have

3 1 year from the date on which a farm mar4 keting quota or farm acreage allotment is

5 relinquished under paragraph (2) to exer6 cise the option.

7 (ii) LIMITATION ON ACREAGE ALLOT8 MENT.—In the case of a farm acreage al9 lotment, the acreage allotment determined

10 for any farm subsequent to any realloca11 tion under subparagraph (A) shall not ex12 ceed 50 percent of the acreage of cropland

13 of the farm owned by the quota lessee or

14 quota tenant.

15 (iii) LIMITATION ON MARKETING

16 QUOTA.—In the case of a farm marketing

17 quota, the marketing quota determined for

18 any farm subsequent to any reallocation

19 under subparagraph (A) shall not exceed

20 an amount determined by multiplying—

21 (I) the average county farm yield,

22 as determined by the Secretary; and

23 (II) 50 percent of the acreage of

24 cropland of the farm owned by the

25 quota lessee or quota tenant.
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1 (C) ELIGIBILITY OF LESSEE OR TENANT

2 FOR PAYMENTS.—If a farm marketing quota or

3 farm acreage allotment is reallocated to a quota

4 lessee or quota tenant under subparagraph

5 (A)—

6 (i) the quota lessee or quota tenant

7 shall not be eligible for any additional pay8 ments under paragraph (5) or (6) as a re9 sult of the reallocation; and

10 (ii) the base quota level for the quota

11 lessee or quota tenant shall not be in12 creased as a result of the reallocation.

13 (D) REALLOCATION TO QUOTA HOLDERS

14 WITHIN SAME COUNTY OR STATE.—

15 (i) IN GENERAL.—Except as provided

16 in clause (ii), if there was no quota lessee

17 or quota tenant for the farm marketing

18 quota or farm acreage allotment for a type

19 of tobacco, or if no quota lessee or quota

20 tenant exercises an option of having an al21 lotment of the farm marketing quota or

22 farm acreage allotment for a type of to23 bacco reallocated, the Secretary shall re24 apportion the farm marketing quota or

25 farm acreage allotment among the remain-
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1 ing quota holders for the type of tobacco

2 within the same county.

3 (ii) CROSS-COUNTY LEASING.—In a

4 State in which cross-county leasing is au5 thorized pursuant to section 319(l) of the

6 Agricultural Adjustment Act of 1938 (7

7 U.S.C. 1314e(l)), the Secretary shall re8 apportion the farm marketing quota

9 among the remaining quota holders for the

10 type of tobacco within the same State.

11 (iii) ELIGIBILITY OF QUOTA HOLDER

12 FOR PAYMENTS.—If a farm marketing

13 quota is reapportioned to a quota holder

14 under this subparagraph—

15 (I) the quota holder shall not be

16 eligible for any additional payments

17 under paragraph (5) or (6) as a result

18 of the reapportionment; and

19 (II) the base quota level for the

20 quota holder shall not be increased as

21 a result of the reapportionment.

22 (E) SPECIAL RULE FOR TENANT OF

23 LEASED TOBACCO.—If a quota holder exercises

24 an option to relinquish a tobacco farm market25 ing quota or farm acreage allotment under
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1 paragraph (2), the farm marketing quota or

2 farm acreage allotment shall be divided evenly

3 between, and the option of reallocating the farm

4 marketing quota or farm acreage allotment

5 shall be offered in equal portions to, the quota

6 lessee and to the quota tenant, if—

7 (i) during the 1997 marketing year,

8 the farm marketing quota or farm acreage

9 allotment was leased and transferred to a

10 farm owned by the quota lessee; and

11 (ii) the quota tenant was the primary

12 producer, as determined by the Secretary,

13 of tobacco pursuant to the farm marketing

14 quota or farm acreage allotment.

15 (5) PAYMENTS FOR LOST TOBACCO QUOTA TO

16 QUOTA HOLDERS.—

17 (A) IN GENERAL.—Except as otherwise

18 provided in this subsection, during any market19 ing year in which the national marketing quota

20 for a type of tobacco is less than the average

21 national marketing quota for the 1995 through

22 1997 marketing years, the Secretary shall make

23 payments for lost tobacco quota to each quota

24 holder, for types of tobacco other than flue25 cured tobacco, that is eligible under subsection
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1 (b), and has not exercised an option to relin2 quish a tobacco farm marketing quota or farm

3 acreage allotment under paragraph (2), in an

4 amount that is equal to the product obtained

5 by multiplying—

6 (i) the number of pounds by which the

7 basic farm marketing quota (or poundage

8 conversion) is less than the base quota

9 level for the quota holder; and

10 (ii) $4 per pound.

11 (B) POUNDAGE CONVERSION FOR MARKET12 ING QUOTAS OTHER THAN POUNDAGE

13 QUOTAS.—

14 (i) IN GENERAL.—For each type of

15 tobacco for which there is a marketing

16 quota or allotment (on an acreage basis),

17 the poundage conversion for each quota

18 holder during a marketing year shall be

19 determined by multiplying—

20 (I) the basic farm acreage allot21 ment for the farm for the marketing

22 year; and

23 (II) the average yield per acre for

24 the farm for the type of tobacco.
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1 (ii) YIELD NOT AVAILABLE.—If the

2 average yield per acre is not available for

3 a farm, the Secretary shall calculate the

4 poundage conversion for each quota holder

5 during a marketing year by multiplying—

6 (I) the basic farm acreage allot7 ment for the farm for the marketing

8 year; and

9 (II) the average county yield per

10 acre for the county in which the farm

11 is located for the type of tobacco.

12 (6) PAYMENTS FOR LOST TOBACCO QUOTA TO

13 QUOTA LESSEES AND QUOTA TENANTS.—Except as

14 otherwise provided in this subsection, during any

15 marketing year in which the national marketing

16 quota for a type of tobacco is less than the average

17 national marketing quota for the type of tobacco for

18 the 1995 through 1997 marketing years, the Sec19 retary shall make payments for lost tobacco quota to

20 each quota lessee and quota tenant, for types of to21 bacco other than flue-cured tobacco, that is eligible

22 under subsection (b) in an amount that is equal to

23 the product obtained by multiplying—

24 (A) the percentage by which the national

25 marketing quota for the type of tobacco is less
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1 than the average national marketing quota for

2 the type of tobacco for the 1995 through 1997

3 marketing years;

4 (B) the base quota level for the quota les5 see or quota tenant; and

6 (C) $4 per pound.

7 (7) LIFETIME LIMITATION ON PAYMENTS.—Ex8 cept as otherwise provided in this subsection, the

9 total amount of payments made under this sub10 section to a quota holder, quota lessee, or quota ten11 ant during the lifetime of the quota holder, quota

12 lessee, or quota tenant shall not exceed the product

13 obtained by multiplying—

14 (A) the base quota level for the quota hold15 er, quota lessee, or quota tenant; and

16 (B) $8 per pound.

17 (8) LIMITATIONS ON AGGREGATE ANNUAL PAY18 MENTS.—

19 (A) IN GENERAL.—Except as otherwise

20 provided in this paragraph, the total amount

21 payable under this subsection for any marketing

22 year shall not exceed the amount made avail23 able under paragraph (1).

24 (B) ACCELERATED PAYMENTS.—Para25 graph (1) shall not apply if accelerated pay-
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1 ments for lost tobacco quota are made in ac2 cordance with paragraph (12).

3 (C) REDUCTIONS.—If the sum of the

4 amounts determined under paragraphs (3), (5),

5 and (6) for a marketing year exceeds the

6 amount made available under paragraph (1),

7 the Secretary shall make a pro rata reduction

8 in the amounts payable under paragraphs (5)

9 and (6) to quota holders, quota lessees, and

10 quota tenants under this subsection to ensure

11 that the total amount of payments for lost to12 bacco quota does not exceed the amount made

13 available under paragraph (1).

14 (D) ROLLOVER OF PAYMENTS FOR LOST

15 TOBACCO QUOTA.—Subject to subparagraph

16 (A), if the Secretary makes a reduction in ac17 cordance with subparagraph (C), the amount of

18 the reduction shall be applied to the next mar19 keting year and added to the payments for lost

20 tobacco quota for the marketing year.

21 (E) ADDITIONAL PAYMENTS TO QUOTA

22 HOLDERS EXERCISING OPTION TO RELINQUISH

23 QUOTA.—If the amount made available under

24 paragraph (1) exceeds the sum of the amounts

25 determined under paragraphs (3), (5), and (6)
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1 for a marketing year, the Secretary shall dis2 tribute the amount of the excess pro rata to

3 quota holders that have exercised an option to

4 relinquish a tobacco farm marketing quota or

5 farm acreage allotment under paragraph (2) by

6 increasing the amount payable to each such

7 holder under paragraph (3).

8 (9) SUBSEQUENT SALE AND TRANSFER OF

9 QUOTA.—Effective beginning with the 1999 market10 ing year, on the sale and transfer of a farm market11 ing quota or farm acreage allotment under section

12 316(g) or 319(g) of the Agricultural Adjustment Act

13 of 1938 (7 U.S.C. 1314b(g), 1314e(g))—

14 (A) the person that sold and transferred

15 the quota or allotment shall have—

16 (i) the base quota level attributable to

17 the person reduced by the base quota level

18 attributable to the quota that is sold and

19 transferred; and

20 (ii) the lifetime limitation on pay21 ments established under paragraph (7) at22 tributable to the person reduced by the

23 product obtained by multiplying—

24 (I) the base quota level attrib25 utable to the quota; and
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1 (II) $8 per pound; and

2 (B) if the quota or allotment has never

3 been relinquished by a previous quota holder

4 under paragraph (2), the person that acquired

5 the quota shall have—

6 (i) the base quota level attributable to

7 the person increased by the base quota

8 level attributable to the quota that is sold

9 and transferred; and

10 (ii) the lifetime limitation on pay11 ments established under paragraph (7) at12 tributable to the person—

13 (I) increased by the product ob14 tained by multiplying—

15 (aa) the base quota level at16 tributable to the quota; and

17 (bb) $8 per pound; but

18 (II) decreased by any payments

19 under paragraph (5) for lost tobacco

20 quota previously made that are attrib21 utable to the quota that is sold and

22 transferred.

23 (10) SALE OR TRANSFER OF FARM.—On the

24 sale or transfer of ownership of a farm that is owned

25 by a quota holder, the base quota level established
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1 under subsection (c), the right to payments under

2 paragraph (5), and the lifetime limitation on pay3 ments established under paragraph (7) shall transfer

4 to the new owner of the farm to the same extent

5 and in the same manner as those provisions applied

6 to the previous quota holder.

7 (11) DEATH OF QUOTA LESSEE OR QUOTA TEN8 ANT.—If a quota lessee or quota tenant that is enti9 tled to payments under this subsection dies and is

10 survived by a spouse or 1 or more dependents, the

11 right to receive the payments shall transfer to the

12 surviving spouse or, if there is no surviving spouse,

13 to the surviving dependents in equal shares.

14 (12) ACCELERATION OF PAYMENTS.—

15 (A) IN GENERAL.—On the occurrence of

16 any of the events described in subparagraph

17 (B), the Secretary shall make an accelerated

18 lump sum payment for lost tobacco quota as es19 tablished under paragraphs (5) and (6) to each

20 quota holder, quota lessee, and quota tenant for

21 any affected type of tobacco in accordance with

22 subparagraph (C).

23 (B) TRIGGERING EVENTS.—The Secretary

24 shall make accelerated payments under sub-
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1 paragraph (A) if after the date of enactment of

2 this Act—

3 (i) subject to subparagraph (D), for 3

4 consecutive marketing years, the national

5 marketing quota or national acreage allot6 ment for a type of tobacco is less than 50

7 percent of the national marketing quota or

8 national acreage allotment for the type of

9 tobacco for the 1998 marketing year; or

10 (ii) Congress repeals or makes ineffec11 tive, directly or indirectly, any provision

12 of—

13 (I) section 316 of the Agricul14 tural Adjustment Act of 1938 (7

15 U.S.C. 1314b);

16 (II) section 319 of the Agricul17 tural Adjustment Act of 1938 (7

18 U.S.C. 1314e);

19 (III) section 106 of the Agricul20 tural Act of 1949 (7 U.S.C. 1445);

21 (IV) section 106A of the Agricul22 tural Act of 1949 (7 U.S.C. 1445–1);

23 or

24 (V) section 106B of the Agricul25 tural Act of 1949 (7 U.S.C. 1445–2).
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1 (C) AMOUNT.—The amount of the acceler2 ated payments made to each quota holder,

3 quota lessee, and quota tenant under this sub4 section shall be equal to—

5 (i) the amount of the lifetime limita6 tion established for the quota holder, quota

7 lessee, or quota tenant under paragraph

8 (7); less

9 (ii) any payments for lost tobacco

10 quota received by the quota holder, quota

11 lessee, or quota tenant before the occur12 rence of any of the events described in sub13 paragraph (B).

14 (D) REFERENDUM VOTE NOT A TRIGGER15 ING EVENT.—A referendum vote of producers

16 for any type of tobacco that results in the na17 tional marketing quota or national acreage al18 lotment not being in effect for the type of to19 bacco shall not be considered a triggering event

20 under this paragraph.

21 (13) BAN ON SUBSEQUENT SALE OR LEASING

22 OF FARM MARKETING QUOTA OR FARM ACREAGE AL23 LOTMENT TO QUOTA HOLDERS EXERCISING OPTION

24 TO RELINQUISH QUOTA.—No quota holder that exer25 cises the option to relinquish a farm marketing
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1 quota or farm acreage allotment for any type of to2 bacco under paragraph (2) shall be eligible to ac3 quire a farm marketing quota or farm acreage allot4 ment for the type of tobacco, or to obtain the lease

5 or transfer of a farm marketing quota or farm acre6 age allotment for the type of tobacco, for a period

7 of 25 crop years after the date on which the quota

8 or allotment was relinquished.

9 (e) PAYMENTS FOR LOST TOBACCO QUOTA FOR

10 FLUE-CURED TOBACCO.—

11 (1) ALLOCATION OF FUNDS.—Of the amounts

12 made available under section 1011(d)(1) for pay13 ments for lost tobacco quota, the Secretary shall

14 make available for payments under this subsection

15 an amount that bears the same ratio to the amounts

16 made available as—

17 (A) the sum of all national marketing

18 quotas for flue-cured tobacco during the 1995

19 through 1997 marketing years; bears to

20 (B) the sum of all national marketing

21 quotas for all types of tobacco during the 1995

22 through 1997 marketing years.

23 (2) RELINQUISHMENT OF QUOTA.—

24 (A) IN GENERAL.—Each quota holder of

25 flue-cured tobacco shall relinquish the farm
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1 marketing quota or farm acreage allotment in

2 exchange for a payment made under paragraph

3 (3) due to the transition from farm marketing

4 quotas as provided under section 317 of the Ag5 ricultural Adjustment Act of 1938 for flue6 cured tobacco to individual tobacco production

7 permits as provided under section 317A of the

8 Agricultural Adjustment Act of 1938 for flue9 cured tobacco.

10 (B) NOTIFICATION.—The Secretary shall

11 notify the quota holders of the relinquishment

12 of their quota or allotment at such time and in

13 such manner as the Secretary may require, but

14 not later than November 15, 1998.

15 (3) PAYMENTS FOR LOST FLUE-CURED TO16 BACCO QUOTA TO QUOTA HOLDERS THAT RELIN17 QUISH QUOTA.—

18 (A) IN GENERAL.—For each of fiscal years

19 1999 through 2008, the Secretary shall make

20 annual payments for lost flue-cured tobacco to

21 each quota holder that has relinquished the

22 farm marketing quota or farm acreage allot23 ment of the quota holder under paragraph (2).

24 (B) AMOUNT.—The amount of a payment

25 made to a quota holder described in subpara-
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graph (A) for a marketing year shall equal 1 1 ⁄10

2 of the lifetime limitation established under

3 paragraph (6).

4 (C) TIMING.—The Secretary shall begin

5 making annual payments under this paragraph

6 for the marketing year in which the farm mar7 keting quota or farm acreage allotment is relin8 quished.

9 (D) ADDITIONAL PAYMENTS.—The Sec10 retary may increase annual payments under

11 this paragraph in accordance with paragraph

12 (7)(E) to the extent that funding is available.

13 (4) PAYMENTS FOR LOST FLUE-CURED TO14 BACCO QUOTA TO QUOTA LESSEES AND QUOTA TEN15 ANTS THAT HAVE NOT RELINQUISHED PERMITS.—

16 (A) IN GENERAL.—Except as otherwise

17 provided in this subsection, during any market18 ing year in which the national marketing quota

19 for flue-cured tobacco is less than the average

20 national marketing quota for the 1995 through

21 1997 marketing years, the Secretary shall make

22 payments for lost tobacco quota to each quota

23 lessee or quota tenant that—

24 (i) is eligible under subsection (b);
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1 (ii) has been issued an individual to2 bacco production permit under section

3 317A(b) of the Agricultural Adjustment

4 Act of 1938; and

5 (iii) has not exercised an option to re6 linquish the permit.

7 (B) AMOUNT.—The amount of a payment

8 made to a quota lessee or quota tenant de9 scribed in subparagraph (A) for a marketing

10 year shall be equal to the product obtained by

11 multiplying—

12 (i) the number of pounds by which the

13 individual marketing limitation established

14 for the permit is less than twice the base

15 quota level for the quota lessee or quota

16 tenant; and

17 (ii) $2 per pound.

18 (5) PAYMENTS FOR LOST FLUE-CURED TO19 BACCO QUOTA TO QUOTA LESSEES AND QUOTA TEN20 ANTS THAT HAVE RELINQUISHED PERMITS.—

21 (A) IN GENERAL.—For each of fiscal years

22 1999 through 2008, the Secretary shall make

23 annual payments for lost flue-cured tobacco

24 quota to each quota lessee and quota tenant

25 that has relinquished an individual tobacco pro-
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1 duction permit under section 317A(b)(5) of the

2 Agricultural Adjustment Act of 1938.

3 (B) AMOUNT.—The amount of a payment

4 made to a quota lessee or quota tenant de5 scribed in subparagraph (A) for a marketing

year shall be equal to 1 6 ⁄10 of the lifetime limita7 tion established under paragraph (6).

8 (C) TIMING.—The Secretary shall begin

9 making annual payments under this paragraph

10 for the marketing year in which the individual

11 tobacco production permit is relinquished.

12 (D) ADDITIONAL PAYMENTS.—The Sec13 retary may increase annual payments under

14 this paragraph in accordance with paragraph

15 (7)(E) to the extent that funding is available.

16 (E) PROHIBITION AGAINST PERMIT EXPAN17 SION.—A quota lessee or quota tenant that re18 ceives a payment under this paragraph shall be

19 ineligible to receive any new or increased to20 bacco production permit from the county pro21 duction pool established under section

22 317A(b)(8) of the Agricultural Adjustment Act

23 of 1938.

24 (6) LIFETIME LIMITATION ON PAYMENTS.—Ex25 cept as otherwise provided in this subsection, the
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1 total amount of payments made under this sub2 section to a quota holder, quota lessee, or quota ten3 ant during the lifetime of the quota holder, quota

4 lessee, or quota tenant shall not exceed the product

5 obtained by multiplying—

6 (A) the base quota level for the quota hold7 er, quota lessee, or quota tenant; and

8 (B) $8 per pound.

9 (7) LIMITATIONS ON AGGREGATE ANNUAL PAY10 MENTS.—

11 (A) IN GENERAL.—Except as otherwise

12 provided in this paragraph, the total amount

13 payable under this subsection for any marketing

14 year shall not exceed the amount made avail15 able under paragraph (1).

16 (B) ACCELERATED PAYMENTS.—Para17 graph (1) shall not apply if accelerated pay18 ments for lost flue-cured tobacco quota are

19 made in accordance with paragraph (9).

20 (C) REDUCTIONS.—If the sum of the

21 amounts determined under paragraphs (3), (4),

22 and (5) for a marketing year exceeds the

23 amount made available under paragraph (1),

24 the Secretary shall make a pro rata reduction

25 in the amounts payable under paragraph (4) to
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1 quota lessees and quota tenants under this sub2 section to ensure that the total amount of pay3 ments for lost flue-cured tobacco quota does not

4 exceed the amount made available under para5 graph (1).

6 (D) ROLLOVER OF PAYMENTS FOR LOST

7 FLUE-CURED TOBACCO QUOTA.—Subject to

8 subparagraph (A), if the Secretary makes a re9 duction in accordance with subparagraph (C),

10 the amount of the reduction shall be applied to

11 the next marketing year and added to the pay12 ments for lost flue-cured tobacco quota for the

13 marketing year.

14 (E) ADDITIONAL PAYMENTS TO QUOTA

15 HOLDERS EXERCISING OPTION TO RELINQUISH

16 QUOTAS OR PERMITS, OR TO QUOTA LESSEES

17 OR QUOTA TENANTS RELINQUISHING PER18 MITS.—If the amount made available under

19 paragraph (1) exceeds the sum of the amounts

20 determined under paragraphs (3), (4), and (5)

21 for a marketing year, the Secretary shall dis22 tribute the amount of the excess pro rata to

23 quota holders by increasing the amount payable

24 to each such holder under paragraphs (3) and

25 (5).
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1 (8) DEATH OF QUOTA HOLDER, QUOTA LESSEE,

2 OR QUOTA TENANT.—If a quota holder, quota lessee

3 or quota tenant that is entitled to payments under

4 paragraph (4) or (5) dies and is survived by a

5 spouse or 1 or more descendants, the right to receive

6 the payments shall transfer to the surviving spouse

7 or, if there is no surviving spouse, to the surviving

8 descendants in equal shares.

9 (9) ACCELERATION OF PAYMENTS.—

10 (A) IN GENERAL.—On the occurrence of

11 any of the events described in subparagraph

12 (B), the Secretary shall make an accelerated

13 lump sum payment for lost flue-cured tobacco

14 quota as established under paragraphs (3), (4),

15 and (5) to each quota holder, quota lessee, and

16 quota tenant for flue-cured tobacco in accord17 ance with subparagraph (C).

18 (B) TRIGGERING EVENTS.—The Secretary

19 shall make accelerated payments under sub20 paragraph (A) if after the date of enactment of

21 this Act—

22 (i) subject to subparagraph (D), for 3

23 consecutive marketing years, the national

24 marketing quota or national acreage allot25 ment for flue-cured tobacco is less than 50
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1 percent of the national marketing quota or

2 national acreage allotment for flue-cured

3 tobacco for the 1998 marketing year; or

4 (ii) Congress repeals or makes ineffec5 tive, directly or indirectly, any provision

6 of—

7 (I) section 316 of the Agricul8 tural Adjustment Act of 1938 (7

9 U.S.C. 1314b);

10 (II) section 319 of the Agricul11 tural Adjustment Act of 1938 (7

12 U.S.C. 1314e);

13 (III) section 106 of the Agricul14 tural Act of 1949 (7 U.S.C. 1445);

15 (IV) section 106A of the Agricul16 tural Act of 1949 (7 U.S.C. 1445–1);

17 (V) section 106B of the Agricul18 tural Act of 1949 (7 U.S.C. 1445–2);

19 or

20 (VI) section 317A of the Agricul21 tural Adjustment Act of 1938.

22 (C) AMOUNT.—The amount of the acceler23 ated payments made to each quota holder,

24 quota lessee, and quota tenant under this sub25 section shall be equal to—
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1 (i) the amount of the lifetime limita2 tion established for the quota holder, quota

3 lessee, or quota tenant under paragraph

4 (6); less

5 (ii) any payments for lost flue-cured

6 tobacco quota received by the quota holder,

7 quota lessee, or quota tenant before the oc8 currence of any of the events described in

9 subparagraph (B).

10 (D) REFERENDUM VOTE NOT A TRIGGER11 ING EVENT.—A referendum vote of producers

12 for flue-cured tobacco that results in the na13 tional marketing quota or national acreage al14 lotment not being in effect for flue-cured to15 bacco shall not be considered a triggering event

16 under this paragraph.

17 SEC. 1022. INDUSTRY PAYMENTS FOR ALL DEPARTMENT

18 COSTS ASSOCIATED WITH TOBACCO PRODUC19 TION.

20 (a) IN GENERAL.—The Secretary shall use such

21 amounts remaining unspent and obligated at the end of

22 each fiscal year to reimburse the Secretary for—

23 (1) costs associated with the administration of

24 programs established under this title and amend25 ments made by this title;
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1 (2) costs associated with the administration of

2 the tobacco quota and price support programs ad3 ministered by the Secretary;

4 (3) costs to the Federal Government of carrying

5 out crop insurance programs for tobacco;

6 (4) costs associated with all agricultural re7 search, extension, or education activities associated

8 with tobacco;

9 (5) costs associated with the administration of

10 loan association and cooperative programs for to11 bacco producers, as approved by the Secretary; and

12 (6) any other costs incurred by the Department

13 of Agriculture associated with the production of to14 bacco.

15 (b) LIMITATIONS.—Amounts made available under

16 subsection (a) may not be used—

17 (1) to provide direct benefits to quota holders,

18 quota lessees, or quota tenants; or

19 (2) in a manner that results in a decrease, or

20 an increase relative to other crops, in the amount of

21 the crop insurance premiums assessed to participat22 ing tobacco producers under the Federal Crop Insur23 ance Act (7 U.S.C. 1501 et seq.).
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1 (c) DETERMINATIONS.—Not later than September

2 30, 1998, and each fiscal year thereafter, the Secretary

3 shall determine—

4 (1) the amount of costs described in subsection

5 (a); and

6 (2) the amount that will be provided under this

7 section as reimbursement for the costs.

8 SEC. 1023. TOBACCO COMMUNITY ECONOMIC DEVELOP9 MENT GRANTS.

10 (a) AUTHORITY.—The Secretary shall make grants to

11 tobacco-growing States in accordance with this section to

12 enable the States to carry out economic development ini13 tiatives in tobacco-growing communities.

14 (b) APPLICATION.—To be eligible to receive payments

15 under this section, a State shall prepare and submit to

16 the Secretary an application at such time, in such manner,

17 and containing such information as the Secretary may re18 quire, including—

19 (1) a description of the activities that the State

20 will carry out using amounts received under the

21 grant;

22 (2) a designation of an appropriate State agen23 cy to administer amounts received under the grant;

24 and
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1 (3) a description of the steps to be taken to en2 sure that the funds are distributed in accordance

3 with subsection (e).

4 (c) AMOUNT OF GRANT.—

5 (1) IN GENERAL.—From the amounts available

6 to carry out this section for a fiscal year, the Sec7 retary shall allot to each State an amount that bears

8 the same ratio to the amounts available as the total

9 farm income of the State derived from the produc10 tion of tobacco during the 1995 through 1997 mar11 keting years (as determined under paragraph (2))

12 bears to the total farm income of all States derived

13 from the production of tobacco during the 1995

14 through 1997 marketing years.

15 (2) TOBACCO INCOME.—For the 1995 through

16 1997 marketing years, the Secretary shall determine

17 the amount of farm income derived from the produc18 tion of tobacco in each State and in all States.

19 (d) PAYMENTS.—

20 (1) IN GENERAL.—A State that has an applica21 tion approved by the Secretary under subsection (b)

22 shall be entitled to a payment under this section in

23 an amount that is equal to its allotment under sub24 section (c).
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1 (2) FORM OF PAYMENTS.—The Secretary may

2 make payments under this section to a State in in3 stallments, and in advance or by way of reimburse4 ment, with necessary adjustments on account of

5 overpayments or underpayments, as the Secretary

6 may determine.

7 (3) REALLOTMENTS.—Any portion of the allot8 ment of a State under subsection (c) that the Sec9 retary determines will not be used to carry out this

10 section in accordance with an approved State appli11 cation required under subsection (b), shall be reallot12 ted by the Secretary to other States in proportion to

13 the original allotments to the other States.

14 (e) USE AND DISTRIBUTION OF FUNDS.—

15 (1) IN GENERAL.—Amounts received by a State

16 under this section shall be used to carry out eco17 nomic development activities, including—

18 (A) rural business enterprise activities de19 scribed in subsections (c) and (e) of section

20 310B of the Consolidated Farm and Rural De21 velopment Act (7 U.S.C. 1932);

22 (B) down payment loan assistance pro23 grams that are similar to the program described

24 in section 310E of the Consolidated Farm and

25 Rural Development Act (7 U.S.C. 1935);
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1 (C) activities designed to help create pro2 ductive farm or off-farm employment in rural

3 areas to provide a more viable economic base

4 and enhance opportunities for improved in5 comes, living standards, and contributions by

6 rural individuals to the economic and social de7 velopment of tobacco communities;

8 (D) activities that expand existing infra9 structure, facilities, and services to capitalize on

10 opportunities to diversify economies in tobacco

11 communities and that support the development

12 of new industries or commercial ventures;

13 (E) activities by agricultural organizations

14 that provide assistance directly to participating

15 tobacco producers to assist in developing other

16 agricultural activities that supplement tobacco17 producing activities;

18 (F) initiatives designed to create or expand

19 locally owned value-added processing and mar20 keting operations in tobacco communities;

21 (G) technical assistance activities by per22 sons to support farmer-owned enterprises, or

23 agriculture-based rural development enterprises,

24 of the type described in section 252 or 253 of
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1 the Trade Act of 1974 (19 U.S.C. 2342, 2343);

2 and

3 (H) initiatives designed to partially com4 pensate tobacco warehouse owners for lost reve5 nues and assist the tobacco warehouse owners

6 in establishing successful business enterprises.

7 (2) TOBACCO-GROWING COUNTIES.—Assistance

8 may be provided by a State under this section only

9 to assist a county in the State that has been deter10 mined by the Secretary to have in excess of

11 $100,000 in income derived from the production of

12 tobacco during 1 or more of the 1995 through 1997

13 marketing years. For purposes of this section, the

14 term ‘‘tobacco-growing county’’ includes a political

15 subdivision surrounded within a State by a county

16 that has been determined by the Secretary to have

17 in excess of $100,000 in income derived from the

18 production of tobacco during 1 or more of the 1995

19 through 1997 marketing years.

20 (3) DISTRIBUTION.—

21 (A) ECONOMIC DEVELOPMENT ACTIVI22 TIES.—Not less than 20 percent of the amounts

23 received by a State under this section shall be

24 used to carry out—
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1 (i) economic development activities de2 scribed in subparagraph (E) or (F) of

3 paragraph (1); or

4 (ii) agriculture-based rural develop5 ment activities described in paragraph

6 (1)(G).

7 (B) TECHNICAL ASSISTANCE ACTIVI8 TIES.—Not less than 4 percent of the amounts

9 received by a State under this section shall be

10 used to carry out technical assistance activities

11 described in paragraph (1)(G).

12 (C) TOBACCO WAREHOUSE OWNER INITIA13 TIVES.—Not less than 6 percent of the amounts

14 received by a State under this section during

15 each of fiscal years 1999 through 2008 shall be

16 used to carry out initiatives described in para17 graph (1)(H).

18 (D) TOBACCO-GROWING COUNTIES.—To be

19 eligible to receive payments under this section,

20 a State shall demonstrate to the Secretary that

21 funding will be provided, during each 5-year pe22 riod for which funding is provided under this

23 section, for activities in each county in the

24 State that has been determined under para25 graph (2) to have in excess of $100,000 in in-
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1 come derived from the production of tobacco, in

2 amounts that are at least equal to the product

3 obtained by multiplying—

4 (i) the ratio that the tobacco produc5 tion income in the county determined

6 under paragraph (2) bears to the total to7 bacco production income for the State de8 termined under subsection (c); and

9 (ii) 50 percent of the total amounts

10 received by a State under this section dur11 ing the 5-year period.

12 (f) PREFERENCES IN HIRING.—A State may require

13 recipients of funds under this section to provide a pref14 erence in employment to—

15 (1) an individual who—

16 (A) during the 1998 calendar year, was

17 employed in the manufacture, processing, or

18 warehousing of tobacco or tobacco products, or

19 resided, in a county described in subsection

20 (e)(2); and

21 (B) is eligible for assistance under the to22 bacco worker transition program established

23 under section 1031; or

24 (2) an individual who—
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1 (A) during the 1998 marketing year, car2 ried out tobacco quota or relevant tobacco pro3 duction activities in a county described in sub4 section (e)(2);

5 (B) is eligible for a farmer opportunity

6 grant under subpart 9 of part A of title IV of

7 the Higher Education Act of 1965; and

8 (C) has successfully completed a course of

9 study at an institution of higher education.

10 (g) MAINTENANCE OF EFFORT.—

11 (1) IN GENERAL.—Subject to paragraph (2), a

12 State shall provide an assurance to the Secretary

13 that the amount of funds expended by the State and

14 all counties in the State described in subsection

15 (e)(2) for any activities funded under this section for

16 a fiscal year is not less than 90 percent of the

17 amount of funds expended by the State and counties

18 for the activities for the preceding fiscal year.

19 (2) REDUCTION OF GRANT AMOUNT.—If a

20 State does not provide an assurance described in

21 paragraph (1), the Secretary shall reduce the

22 amount of the grant determined under subsection (c)

23 by an amount equal to the amount by which the

24 amount of funds expended by the State and counties

25 for the activities is less than 90 percent of the
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1 amount of funds expended by the State and counties

2 for the activities for the preceding fiscal year, as de3 termined by the Secretary.

4 (3) FEDERAL FUNDS.—For purposes of this

5 subsection, the amount of funds expended by a State

6 or county shall not include any amounts made avail7 able by the Federal Government.

8 SEC. 1024. FLUE-CURED TOBACCO PRODUCTION PERMITS.

9 The Agricultural Adjustment Act of 1938 is amended

10 by inserting after section 317 (7 U.S.C. 1314c) the follow11 ing:

12 ‘‘SEC. 317A. FLUE-CURED TOBACCO PRODUCTION PERMITS.

13 ‘‘(a) DEFINITIONS.—In this section:

14 ‘‘(1) INDIVIDUAL ACREAGE LIMITATION.—The

15 term ‘individual acreage limitation’ means the num16 ber of acres of flue-cured tobacco that may be plant17 ed by the holder of a permit during a marketing

18 year, calculated—

19 ‘‘(A) prior to—

20 ‘‘(i) any increase or decrease in the

21 number due to undermarketings or over22 marketings; and

23 ‘‘(ii) any reduction under subsection

24 (i); and

25 ‘‘(B) in a manner that ensures that—
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1 ‘‘(i) the total of all individual acreage

2 limitations is equal to the national acreage

3 allotment, less the reserve provided under

4 subsection (h); and

5 ‘‘(ii) the individual acreage limitation

6 for a marketing year bears the same ratio

7 to the individual acreage limitation for the

8 previous marketing year as the ratio that

9 the national acreage allotment for the mar10 keting year bears to the national acreage

11 allotment for the previous marketing year,

12 subject to adjustments by the Secretary to

13 account for any reserve provided under

14 subsection (h).

15 ‘‘(2) INDIVIDUAL MARKETING LIMITATION.—

16 The term ‘individual marketing limitation’ means

17 the number of pounds of flue-cured tobacco that

18 may be marketed by the holder of a permit during

19 a marketing year, calculated—

20 ‘‘(A) prior to—

21 ‘‘(i) any increase or decrease in the

22 number due to undermarketings or over23 marketings; and

24 ‘‘(ii) any reduction under subsection

25 (i); and
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1 ‘‘(B) in a manner that ensures that—

2 ‘‘(i) the total of all individual market3 ing limitations is equal to the national

4 marketing quota, less the reserve provided

5 under subsection (h); and

6 ‘‘(ii) the individual marketing limita7 tion for a marketing year is obtained by

8 multiplying the individual acreage limita9 tion by the permit yield, prior to any ad10 justment for undermarketings or over11 marketings.

12 ‘‘(3) INDIVIDUAL TOBACCO PRODUCTION PER13 MIT.—The term ‘individual tobacco production per14 mit’ means a permit issued by the Secretary to a

15 person authorizing the production of flue-cured to16 bacco for any marketing year during which this sec17 tion is effective.

18 ‘‘(4) NATIONAL ACREAGE ALLOTMENT.—The

19 term ‘national acreage allotment’ means the quantity

20 determined by dividing—

21 ‘‘(A) the national marketing quota; by

22 ‘‘(B) the national average yield goal.

23 ‘‘(5) NATIONAL AVERAGE YIELD GOAL.—The

24 term ‘national average yield goal’ means the national

25 average yield for flue-cured tobacco during the 5
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1 marketing years immediately preceding the market2 ing year for which the determination is being made.

3 ‘‘(6) NATIONAL MARKETING QUOTA.—For the

4 1999 and each subsequent crop of flue-cured to5 bacco, the term ‘national marketing quota’ for a

6 marketing year means the quantity of flue-cured to7 bacco, as determined by the Secretary, that is not

8 more than 103 percent nor less than 97 percent of

9 the total of—

10 ‘‘(A) the aggregate of the quantities of

11 flue-cured tobacco that domestic manufacturers

12 of cigarettes estimate that the manufacturers

13 intend to purchase on the United States auction

14 markets or from producers during the market15 ing year, as compiled and determined under

16 section 320A;

17 ‘‘(B) the average annual quantity of flue18 cured tobacco exported from the United States

19 during the 3 marketing years immediately pre20 ceding the marketing year for which the deter21 mination is being made; and

22 ‘‘(C) the quantity, if any, of flue-cured to23 bacco that the Secretary, in the discretion of

24 the Secretary, determines is necessary to in25 crease or decrease the inventory of the pro-
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1 ducer-owned cooperative marketing association

2 that has entered into a loan agreement with the

3 Commodity Credit Corporation to make price

4 support available to producers of flue-cured to5 bacco to establish or maintain the inventory at

6 the reserve stock level for flue-cured tobacco.

7 ‘‘(7) PERMIT YIELD.—The term ‘permit yield’

8 means the yield of tobacco per acre for an individual

9 tobacco production permit holder that is—

10 ‘‘(A) based on a preliminary permit yield

11 that is equal to the average yield during the 5

12 marketing years immediately preceding the

13 marketing year for which the determination is

14 made in the county where the holder of the per15 mit is authorized to plant flue-cured tobacco, as

16 determined by the Secretary, on the basis of ac17 tual yields of farms in the county; and

18 ‘‘(B) adjusted by a weighted national yield

19 factor calculated by—

20 ‘‘(i) multiplying each preliminary per21 mit yield by the individual acreage limita22 tion, prior to adjustments for overmarket23 ings, undermarketings, or reductions re24 quired under subsection (i); and
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1 ‘‘(ii) dividing the sum of the products

2 under clause (i) for all flue-cured individ3 ual tobacco production permit holders by

4 the national acreage allotment.

5 ‘‘(b) INITIAL ISSUANCE OF PERMITS.—

6 ‘‘(1) TERMINATION OF FLUE-CURED MARKET7 ING QUOTAS.—On the date of enactment of the Na8 tional Tobacco Policy and Youth Smoking Reduction

9 Act, farm marketing quotas as provided under sec10 tion 317 shall no longer be in effect for flue-cured

11 tobacco.

12 ‘‘(2) ISSUANCE OF PERMITS TO QUOTA HOLD13 ERS THAT WERE PRINCIPAL PRODUCERS.—

14 ‘‘(A) IN GENERAL.—By January 15, 1999,

15 each individual quota holder under section 317

16 that was a principal producer of flue-cured to17 bacco during the 1998 marketing year, as de18 termined by the Secretary, shall be issued an

19 individual tobacco production permit under this

20 section.

21 ‘‘(B) NOTIFICATION.—The Secretary shall

22 notify the holder of each permit of the individ23 ual acreage limitation and the individual mar24 keting limitation applicable to the holder for

25 each marketing year.
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1 ‘‘(C) INDIVIDUAL ACREAGE LIMITATION

2 FOR 1999 MARKETING YEAR.—In establishing

3 the individual acreage limitation for the 1999

4 marketing year under this section, the farm

5 acreage allotment that was allotted to a farm

6 owned by the quota holder for the 1997 mar7 keting year shall be considered the individual

8 acreage limitation for the previous marketing

9 year.

10 ‘‘(D) INDIVIDUAL MARKETING LIMITATION

11 FOR 1999 MARKETING YEAR.—In establishing

12 the individual marketing limitation for the 1999

13 marketing year under this section, the farm

14 marketing quota that was allotted to a farm

15 owned by the quota holder for the 1997 mar16 keting year shall be considered the individual

17 marketing limitation for the previous marketing

18 year.

19 ‘‘(3) QUOTA HOLDERS THAT WERE NOT PRIN20 CIPAL PRODUCERS.—

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

22 subparagraph (B), on approval through a ref23 erendum under subsection (c)—

24 ‘‘(i) each person that was a quota

25 holder under section 317 but that was not
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1 a principal producer of flue-cured tobacco

2 during the 1997 marketing year, as deter3 mined by the Secretary, shall not be eligi4 ble to own a permit; and

5 ‘‘(ii) the Secretary shall not issue any

6 permit during the 25-year period beginning

7 on the date of enactment of this Act to any

8 person that was a quota holder and was

9 not the principal producer of flue-cured to10 bacco during the 1997 marketing year.

11 ‘‘(B) MEDICAL HARDSHIPS AND CROP DIS12 ASTERS.—Subparagraph (A) shall not apply to

13 a person that would have been the principal

14 producer of flue-cured tobacco during the 1997

15 marketing year but for a medical hardship or

16 crop disaster that occurred during the 1997

17 marketing year.

18 ‘‘(C) ADMINISTRATION.—The Secretary

19 shall issue regulations—

20 ‘‘(i) defining the term ‘person’ for the

21 purpose of this paragraph; and

22 ‘‘(ii) prescribing such rules as the Sec23 retary determines are necessary to ensure

24 a fair and reasonable application of the
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1 prohibition established under this para2 graph.

3 ‘‘(4) ISSUANCE OF PERMITS TO PRINCIPAL PRO4 DUCERS OF FLUE-CURED TOBACCO.—

5 ‘‘(A) IN GENERAL.—By January 15, 1999,

6 each individual quota lessee or quota tenant (as

7 defined in section 1002 of the LEAF Act) that

8 was the principal producer of flue-cured tobacco

9 during the 1997 marketing year, as determined

10 by the Secretary, shall be issued an individual

11 tobacco production permit under this section.

12 ‘‘(B) INDIVIDUAL ACREAGE LIMITA13 TIONS.—In establishing the individual acreage

14 limitation for the 1999 marketing year under

15 this section, the farm acreage allotment that

16 was allotted to a farm owned by a quota holder

17 for whom the quota lessee or quota tenant was

18 the principal producer of flue-cured tobacco

19 during the 1997 marketing year shall be consid20 ered the individual acreage limitation for the

21 previous marketing year.

22 ‘‘(C) INDIVIDUAL MARKETING LIMITA23 TIONS.—In establishing the individual market24 ing limitation for the 1999 marketing year

25 under this section, the individual marketing
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1 limitation for the previous year for an individ2 ual described in this paragraph shall be cal3 culated by multiplying—

4 ‘‘(i) the farm marketing quota that

5 was allotted to a farm owned by a quota

6 holder for whom the quota lessee or quota

7 holder was the principal producer of flue8 cured tobacco during the 1997 marketing

9 year, by

10 ‘‘(ii) the ratio that—

11 ‘‘(I) the sum of all flue-cured to12 bacco farm marketing quotas for the

13 1997 marketing year prior to adjust14 ing for undermarketing and over15 marketing; bears to

16 ‘‘(II) the sum of all flue-cured to17 bacco farm marketing quotas for the

18 1998 marketing year, after adjusting

19 for undermarketing and overmarket20 ing.

21 ‘‘(D) SPECIAL RULE FOR TENANT OF

22 LEASED FLUE-CURED TOBACCO.—If the farm

23 marketing quota or farm acreage allotment of a

24 quota holder was produced pursuant to an

25 agreement under which a quota lessee rented
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1 land from a quota holder and a quota tenant

2 was the primary producer, as determined by the

3 Secretary, of flue-cured tobacco pursuant to the

4 farm marketing quota or farm acreage allot5 ment, the farm marketing quota or farm acre6 age allotment shall be divided proportionately

7 between the quota lessee and quota tenant for

8 purposes of issuing individual tobacco produc9 tion permits under this paragraph.

10 ‘‘(5) OPTION OF QUOTA LESSEE OR QUOTA

11 TENANT TO RELINQUISH PERMIT.—

12 ‘‘(A) IN GENERAL.—Each quota lessee or

13 quota tenant that is issued an individual to14 bacco production permit under paragraph (4)

15 shall be given the option of relinquishing the

16 permit in exchange for payments made under

17 section 1021(e)(5) of the LEAF Act.

18 ‘‘(B) NOTIFICATION.—A quota lessee or

19 quota tenant that is issued an individual to20 bacco production permit shall give notification

21 of the intention to exercise the option at such

22 time and in such manner as the Secretary may

23 require, but not later than 45 days after the

24 permit is issued.
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1 ‘‘(C) REALLOCATION OF PERMIT.—The

2 Secretary shall add the authority to produce

3 flue-cured tobacco under the individual tobacco

4 production permit relinquished under this para5 graph to the county production pool established

6 under paragraph (8) for reallocation by the ap7 propriate county committee.

8 ‘‘(6) ACTIVE PRODUCER REQUIREMENT.—

9 ‘‘(A) REQUIREMENT FOR SHARING RISK.—

10 No individual tobacco production permit shall

11 be issued to, or maintained by, a person that

12 does not fully share in the risk of producing a

13 crop of flue-cured tobacco.

14 ‘‘(B) CRITERIA FOR SHARING RISK.—For

15 purposes of this paragraph, a person shall be

16 considered to have fully shared in the risk of

17 production of a crop if—

18 ‘‘(i) the investment of the person in

19 the production of the crop is not less than

20 100 percent of the costs of production as21 sociated with the crop;

22 ‘‘(ii) the amount of the person’s re23 turn on the investment is dependent solely

24 on the sale price of the crop; and
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1 ‘‘(iii) the person may not receive any

2 of the return before the sale of the crop.

3 ‘‘(C) PERSONS NOT SHARING RISK.—

4 ‘‘(i) FORFEITURE.—Any person that

5 fails to fully share in the risks of produc6 tion under this paragraph shall forfeit an

7 individual tobacco production permit if,

8 after notice and opportunity for a hearing,

9 the appropriate county committee deter10 mines that the conditions for forfeiture

11 exist.

12 ‘‘(ii) REALLOCATION.—The Secretary

13 shall add the authority to produce flue14 cured tobacco under the individual tobacco

15 production permit forfeited under this sub16 paragraph to the county production pool

17 established under paragraph (8) for re18 allocation by the appropriate county com19 mittee.

20 ‘‘(D) NOTICE.—Notice of any determina21 tion made by a county committee under sub22 paragraph (C) shall be mailed, as soon as prac23 ticable, to the person involved.

24 ‘‘(E) REVIEW.—If the person is dissatis25 fied with the determination, the person may re-
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1 quest, not later than 15 days after notice of the

2 determination is received, a review of the deter3 mination by a local review committee under the

4 procedures established under section 363 for

5 farm marketing quotas.

6 ‘‘(7) COUNTY OF ORIGIN REQUIREMENT.—For

7 the 1999 and each subsequent crop of flue-cured to8 bacco, all tobacco produced pursuant to an individ9 ual tobacco production permit shall be produced in

10 the same county in which was produced the tobacco

11 produced during the 1997 marketing year pursuant

12 to the farm marketing quota or farm acreage allot13 ment on which the individual tobacco production

14 permit is based.

15 ‘‘(8) COUNTY PRODUCTION POOL.—

16 ‘‘(A) IN GENERAL.—The authority to

17 produce flue-cured tobacco under an individual

18 tobacco production permit that is forfeited, re19 linquished, or surrendered within a county may

20 be reallocated by the appropriate county com21 mittee to tobacco producers located in the same

22 county that apply to the committee to produce

23 flue-cured tobacco under the authority.

24 ‘‘(B) PRIORITY.—In reallocating individual

25 tobacco production permits under this para-
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1 graph, a county committee shall provide a pri2 ority to—

3 ‘‘(i) an active tobacco producer that

4 controls the authority to produce a quan5 tity of flue-cured tobacco under an individ6 ual tobacco production permit that is equal

7 to or less than the average number of

8 pounds of flue-cured tobacco that was pro9 duced by the producer during each of the

10 1995 through 1997 marketing years, as

11 determined by the Secretary; and

12 ‘‘(ii) a new tobacco producer.

13 ‘‘(C) CRITERIA.—Individual tobacco pro14 duction permits shall be reallocated by the ap15 propriate county committee under this para16 graph in a fair and equitable manner after tak17 ing into consideration—

18 ‘‘(i) the experience of the producer;

19 ‘‘(ii) the availability of land, labor,

20 and equipment for the production of to21 bacco;

22 ‘‘(iii) crop rotation practices; and

23 ‘‘(iv) the soil and other physical fac24 tors affecting the production of tobacco.
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1 ‘‘(D) MEDICAL HARDSHIPS AND CROP DIS2 ASTERS.—Notwithstanding any other provision

3 of this Act, the Secretary may issue an individ4 ual tobacco production permit under this para5 graph to a producer that is otherwise ineligible

6 for the permit due to a medical hardship or

7 crop disaster that occurred during the 1997

8 marketing year.

9 ‘‘(c) REFERENDUM.—

10 ‘‘(1) ANNOUNCEMENT OF QUOTA AND ALLOT11 MENT.—Not later than December 15, 1998, the Sec12 retary pursuant to subsection (b) shall determine

13 and announce—

14 ‘‘(A) the quantity of the national market15 ing quota for flue-cured tobacco for the 1999

16 marketing year; and

17 ‘‘(B) the national acreage allotment and

18 national average yield goal for the 1999 crop of

19 flue-cured tobacco.

20 ‘‘(2) SPECIAL REFERENDUM.—Not later than

21 30 days after the announcement of the quantity of

22 the national marketing quota in 2001, the Secretary

23 shall conduct a special referendum of the tobacco

24 production permit holders that were the principal

25 producers of flue-cured tobacco of the 1997 crop to
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1 determine whether the producers approve or oppose

2 the continuation of individual tobacco production

3 permits on an acreage-poundage basis as provided in

4 this section for the 2002 through 2004 marketing

5 years.

6 ‘‘(3) APPROVAL OF PERMITS.—If the Secretary

determines that more than 662 7 ⁄3 percent of the pro8 ducers voting in the special referendum approve the

9 establishment of individual tobacco production per10 mits on an acreage-poundage basis—

11 ‘‘(A) individual tobacco production permits

12 on an acreage-poundage basis as provided in

13 this section shall be in effect for the 2002

14 through 2004 marketing years; and

15 ‘‘(B) marketing quotas on an acreage16 poundage basis shall cease to be in effect for

17 the 2002 through 2004 marketing years.

18 ‘‘(4) DISAPPROVAL OF PERMITS.—If individual

19 tobacco production permits on an acreage-poundage

basis are not approved by more than 662 20 ⁄3 percent

21 of the producers voting in the referendum, no mar22 keting quotas on an acreage-poundage basis shall

23 continue in effect that were proclaimed under sec24 tion 317 prior to the referendum.
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1 ‘‘(5) APPLICABLE MARKETING YEARS.—If indi2 vidual tobacco production permits have been made

3 effective for flue-cured tobacco on an acreage-pound4 age basis pursuant to this subsection, the Secretary

5 shall, not later than December 15 of any future

6 marketing year, announce a national marketing

7 quota for that type of tobacco for the next 3 suc8 ceeding marketing years if the marketing year is the

9 last year of 3 consecutive years for which individual

10 tobacco production permits previously proclaimed

11 will be in effect.

12 ‘‘(d) ANNUAL ANNOUNCEMENT OF NATIONAL MAR13 KETING QUOTA.—The Secretary shall determine and an14 nounce the national marketing quota, national acreage al15 lotment, and national average yield goal for the second

16 and third marketing years of any 3-year period for which

17 individual tobacco production permits are in effect on or

18 before the December 15 immediately preceding the begin19 ning of the marketing year to which the quota, allotment,

20 and goal apply.

21 ‘‘(e) ANNUAL ANNOUNCEMENT OF INDIVIDUAL TO22 BACCO PRODUCTION PERMITS.—If a national marketing

23 quota, national acreage allotment, and national average

24 yield goal are determined and announced, the Secretary

25 shall provide for the determination of individual tobacco
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1 production permits, individual acreage limitations, and in2 dividual marketing limitations under this section for the

3 crop and marketing year covered by the determinations.

4 ‘‘(f) ASSIGNMENT OF TOBACCO PRODUCTION PER5 MITS.—

6 ‘‘(1) LIMITATION TO SAME COUNTY.—Each in7 dividual tobacco production permit holder shall as8 sign the individual acreage limitation and individual

9 marketing limitation to 1 or more farms located

10 within the county of origin of the individual tobacco

11 production permit.

12 ‘‘(2) FILING WITH COUNTY COMMITTEE.—The

13 assignment of an individual acreage limitation and

14 individual marketing limitation shall not be effective

15 until evidence of the assignment, in such form as re16 quired by the Secretary, is filed with and determined

17 by the county committee for the county in which the

18 farm involved is located.

19 ‘‘(3) LIMITATION ON TILLABLE CROPLAND.—

20 The total acreage assigned to any farm under this

21 subsection shall not exceed the acreage of cropland

22 on the farm.

23 ‘‘(g) PROHIBITION ON SALE OR LEASING OF INDI24 VIDUAL TOBACCO PRODUCTION PERMITS.—
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1 ‘‘(1) IN GENERAL.—Except as provided in para2 graphs (2) and (3), the Secretary shall not permit

3 the sale and transfer, or lease and transfer, of an in4 dividual tobacco production permit issued under this

5 section.

6 ‘‘(2) TRANSFER TO DESCENDANTS.—

7 ‘‘(A) DEATH.—In the case of the death of

8 a person to whom an individual tobacco produc9 tion permit has been issued under this section,

10 the permit shall transfer to the surviving spouse

11 of the person or, if there is no surviving spouse,

12 to surviving direct descendants of the person.

13 ‘‘(B) TEMPORARY INABILITY TO FARM.—

14 In the case of the death of a person to whom

15 an individual tobacco production permit has

16 been issued under this section and whose de17 scendants are temporarily unable to produce a

18 crop of tobacco, the Secretary may hold the li19 cense in the name of the descendants for a pe20 riod of not more than 18 months.

21 ‘‘(3) VOLUNTARY TRANSFERS.—A person that

22 is eligible to obtain an individual tobacco production

23 permit under this section may at any time transfer

24 all or part of the permit to the person’s spouse or
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1 direct descendants that are actively engaged in the

2 production of tobacco.

3 ‘‘(h) RESERVE.—

4 ‘‘(1) IN GENERAL.—For each marketing year

5 for which individual tobacco production permits are

6 in effect under this section, the Secretary may estab7 lish a reserve from the national marketing quota in

8 a quantity equal to not more than 1 percent of the

9 national marketing quota to be available for—

10 ‘‘(A) making corrections of errors in indi11 vidual acreage limitations and individual mar12 keting limitations;

13 ‘‘(B) adjusting inequities; and

14 ‘‘(C) establishing individual tobacco pro15 duction permits for new tobacco producers (ex16 cept that not less than two-thirds of the reserve

17 shall be for establishing such permits for new

18 tobacco producers).

19 ‘‘(2) ELIGIBLE PERSONS.—To be eligible for a

20 new individual tobacco production permit, a pro21 ducer must not have been the principal producer of

22 tobacco during the immediately preceding 5 years.

23 ‘‘(3) APPORTIONMENT FOR NEW PRODUCERS.—

24 The part of the reserve held for apportionment to
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1 new individual tobacco producers shall be allotted on

2 the basis of—

3 ‘‘(A) land, labor, and equipment available

4 for the production of tobacco;

5 ‘‘(B) crop rotation practices;

6 ‘‘(C) soil and other physical factors affect7 ing the production of tobacco; and

8 ‘‘(D) the past tobacco-producing experience

9 of the producer.

10 ‘‘(4) PERMIT YIELD.—The permit yield for any

11 producer for which a new individual tobacco produc12 tion permit is established shall be determined on the

13 basis of available productivity data for the land in14 volved and yields for similar farms in the same coun15 ty.

16 ‘‘(i) PENALTIES.—

17 ‘‘(1) PRODUCTION ON OTHER FARMS.—If any

18 quantity of tobacco is marketed as having been pro19 duced under an individual acreage limitation or indi20 vidual marketing limitation assigned to a farm but

21 was produced on a different farm, the individual

22 acreage limitation or individual marketing limitation

23 for the following marketing year shall be forfeited.

24 ‘‘(2) FALSE REPORT.—If a person to which an

25 individual tobacco production permit is issued files,
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1 or aids or acquiesces in the filing of, a false report

2 with respect to the assignment of an individual acre3 age limitation or individual marketing limitation for

4 a quantity of tobacco, the individual acreage limita5 tion or individual marketing limitation for the fol6 lowing marketing year shall be forfeited.

7 ‘‘(j) MARKETING PENALTIES.—

8 ‘‘(1) IN GENERAL.—When individual tobacco

9 production permits under this section are in effect,

10 provisions with respect to penalties for the market11 ing of excess tobacco and the other provisions con12 tained in section 314 shall apply in the same man13 ner and to the same extent as they would apply

14 under section 317(g) if farm marketing quotas were

15 in effect.

16 ‘‘(2) PRODUCTION ON OTHER FARMS.—If a

17 producer falsely identifies tobacco as having been

18 produced on or marketed from a farm to which an

19 individual acreage limitation or individual marketing

20 limitation has been assigned, future individual acre21 age limitations and individual marketing limitations

22 shall be forfeited.’’.
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1 SEC. 1025. MODIFICATIONS IN FEDERAL TOBACCO PRO2 GRAMS.

3 (a) PROGRAM REFERENDA.—Section 312(c) of the

4 Agricultural Adjustment Act of 1938 (7 U.S.C. 1312(c))

5 is amended—

6 (1) by striking ‘‘(c) Within thirty’’ and insert7 ing the following:

8 ‘‘(c) REFERENDA ON QUOTAS.—

9 ‘‘(1) IN GENERAL.—Not later than 30’’; and

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

11 ‘‘(2) REFERENDA ON PROGRAM CHANGES.—

12 ‘‘(A) IN GENERAL.—In the case of any

13 type of tobacco for which marketing quotas are

14 in effect, on the receipt of a petition from more

15 than 5 percent of the producers of that type of

16 tobacco in a State, the Secretary shall conduct

17 a statewide referendum on any proposal related

18 to the lease and transfer of tobacco quota with19 in a State requested by the petition that is au20 thorized under this part.

21 ‘‘(B) APPROVAL OF PROPOSALS.—If a ma22 jority of producers of the type of tobacco in the

23 State approve a proposal in a referendum con24 ducted under subparagraph (A), the Secretary

25 shall implement the proposal in a manner that
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1 applies to all producers and quota holders of

2 that type of tobacco in the State.’’.

3 (b) PURCHASE REQUIREMENTS.—Section 320B of

4 the Agricultural Adjustment Act of 1938 (7 U.S.C.

5 1314h) is amended—

6 (1) in subsection (c)—

7 (A) by striking ‘‘(c) The amount’’ and in8 serting ‘‘(c) AMOUNT OF PENALTY.—For the

9 1998 and subsequent marketing years, the

10 amount’’; and

11 (B) by striking paragraph (1) and insert12 ing the following:

13 ‘‘(1) 105 percent of the average market price

14 for the type of tobacco involved during the preceding

15 marketing year; and’’.

16 (c) ELIMINATION OF TOBACCO MARKETING ASSESS17 MENT.—

18 (1) IN GENERAL.—Section 106 of the Agricul19 tural Act of 1949 (7 U.S.C. 1445) is amended by

20 striking subsection (g).

21 (2) CONFORMING AMENDMENT.—Section

22 422(c) of the Uruguay Round Agreements Act (Pub23 lic Law 103–465; 7 U.S.C. 1445 note) is amended

24 by striking ‘‘section 106(g), 106A, or 106B of the

25 Agricultural Act of 1949 (7 U.S.C. 1445(g), 1445–
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1 1, or 1445–2)’’ and inserting ‘‘section 106A or

2 106B of the Agricultural Act of 1949 (7 U.S.C.

3 1445–1, 1445–2)’’.

4 (d) ADJUSTMENT FOR LAND RENTAL COSTS.—Sec5 tion 106 of the Agricultural Act of 1949 (7 U.S.C. 1445)

6 is amended by adding at the end the following:

7 ‘‘(h) ADJUSTMENT FOR LAND RENTAL COSTS.—For

8 each of the 1999 and 2000 marketing years for flue-cured

9 tobacco, after consultation with producers, State farm or10 ganizations and cooperative associations, the Secretary

11 shall make an adjustment in the price support level for

12 flue-cured tobacco equal to the annual change in the aver13 age cost per pound to flue-cured producers, as determined

14 by the Secretary, under agreements through which pro15 ducers rent land to produce flue-cured tobacco.’’.

16 (e) FIRE-CURED AND DARK AIR-CURED TOBACCO

17 PROGRAMS.—

18 (1) LIMITATION ON TRANSFERS.—Section

19 318(g) of the Agricultural Adjustment Act of 1938

20 (7 U.S.C. 13l4d(g)) is amended—

21 (A) by striking ‘‘ten’’ and inserting ‘‘30’’;

22 and

23 (B) by inserting ‘‘during any crop year’’

24 after ‘‘transferred to any farm’’.
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1 (2) LOSS OF ALLOTMENT OR QUOTA THROUGH

2 UNDERPLANTING.—Section 318 of the Agricultural

3 Adjustment Act of 1938 (7 U.S.C. 1314d) is amend4 ed by adding at the end the following:

5 ‘‘(k) LOSS OF ALLOTMENT OR QUOTA THROUGH

6 UNDERPLANTING.—Effective for the 1999 and subse7 quent marketing years, no acreage allotment or acreage8 poundage quota, other than a new marketing quota, shall

9 be established for a farm on which no fire-cured or dark

10 air-cured tobacco was planted or considered planted dur11 ing at least 2 of the 3 crop years immediately preceding

12 the crop year for which the acreage allotment or acreage13 poundage quota would otherwise be established.’’.

14 (f) EXPANSION OF TYPES OF TOBACCO SUBJECT TO

15 NO NET COST ASSESSMENT.—

16 (1) NO NET COST TOBACCO FUND.—Section

17 106A(d)(1)(A) of the Agricultural Act of 1949 (7

18 U.S.C. 1445–1(d)(1)(A)) is amended—

19 (A) in clause (ii), by inserting after ‘‘Bur20 ley quota tobacco’’ the following: ‘‘and fire21 cured and dark air-cured quota tobacco’’; and

22 (B) in clause (iii)—

23 (i) in the matter preceding subclause

24 (I), by striking ‘‘Flue-cured or Burley to25 bacco’’ and inserting ‘‘each kind of tobacco
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1 for which price support is made available

2 under this Act, and each kind of like to3 bacco,’’; and

4 (ii) by striking subclause (II) and in5 serting the following:

6 ‘‘(II) the sum of the amount of

7 the per pound producer contribution

8 and purchaser assessment (if any) for

9 the kind of tobacco payable under

10 clauses (i) and (ii); and’’.

11 (2) NO NET COST TOBACCO ACCOUNT.—Section

12 106B(d)(1) of the Agricultural Act of 1949 (7

13 U.S.C. 1445–2(d)(1)) is amended—

14 (A) in subparagraph (B), by inserting after

15 ‘‘Burley quota tobacco’’ the following: ‘‘and

16 fire-cured and dark air-cured tobacco’’; and

17 (B) in subparagraph (C), by striking

18 ‘‘Flue-cured and Burley tobacco’’ and inserting

19 ‘‘each kind of tobacco for which price support

20 is made available under this Act, and each kind

21 of like tobacco,’’.

22 Subtitle C—Farmer and Worker

23 Transition Assistance

24 SEC. 1031. TOBACCO WORKER TRANSITION PROGRAM.

25 (a) GROUP ELIGIBILITY REQUIREMENTS.—
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1 (1) CRITERIA.—A group of workers (including

2 workers in any firm or subdivision of a firm involved

3 in the manufacture, processing, or warehousing of

4 tobacco or tobacco products) shall be certified as eli5 gible to apply for adjustment assistance under this

6 section pursuant to a petition filed under subsection

7 (b) if the Secretary of Labor determines that a sig8 nificant number or proportion of the workers in the

9 workers’ firm or an appropriate subdivision of the

10 firm have become totally or partially separated, or

11 are threatened to become totally or partially sepa12 rated, and—

13 (A) the sales or production, or both, of the

14 firm or subdivision have decreased absolutely;

15 and

16 (B) the implementation of the national to17 bacco settlement contributed importantly to the

18 workers’ separation or threat of separation and

19 to the decline in the sales or production of the

20 firm or subdivision.

21 (2) DEFINITION OF CONTRIBUTED IMPOR22 TANTLY.—In paragraph (1)(B), the term ‘‘contrib23 uted importantly’’ means a cause that is important

24 but not necessarily more important than any other

25 cause.
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1 (3) REGULATIONS.—The Secretary shall issue

2 regulations relating to the application of the criteria

3 described in paragraph (1) in making preliminary

4 findings under subsection (b) and determinations

5 under subsection (c).

6 (b) PRELIMINARY FINDINGS AND BASIC ASSIST7 ANCE.—

8 (1) FILING OF PETITIONS.—A petition for cer9 tification of eligibility to apply for adjustment assist10 ance under this section may be filed by a group of

11 workers (including workers in any firm or subdivi12 sion of a firm involved in the manufacture, process13 ing, or warehousing of tobacco or tobacco products)

14 or by their certified or recognized union or other

15 duly authorized representative with the Governor of

16 the State in which the workers’ firm or subdivision

17 thereof is located.

18 (2) FINDINGS AND ASSISTANCE.—On receipt of

19 a petition under paragraph (1), the Governor shall—

20 (A) notify the Secretary that the Governor

21 has received the petition;

22 (B) within 10 days after receiving the peti23 tion—
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1 (i) make a preliminary finding as to

2 whether the petition meets the criteria de3 scribed in subsection (a)(1); and

4 (ii) transmit the petition, together

5 with a statement of the finding under

6 clause (i) and reasons for the finding, to

7 the Secretary for action under subsection

8 (c); and

9 (C) if the preliminary finding under sub10 paragraph (B)(i) is affirmative, ensure that

11 rapid response and basic readjustment services

12 authorized under other Federal laws are made

13 available to the workers.

14 (c) REVIEW OF PETITIONS BY SECRETARY; CERTIFI15 CATIONS.—

16 (1) IN GENERAL.—The Secretary, within 30

17 days after receiving a petition under subsection

18 (b)(2)(B)(ii), shall determine whether the petition

19 meets the criteria described in subsection (a)(1). On

20 a determination that the petition meets the criteria,

21 the Secretary shall issue to workers covered by the

22 petition a certification of eligibility to apply for the

23 assistance described in subsection (d).

24 (2) DENIAL OF CERTIFICATION.—On the denial

25 of a certification with respect to a petition under
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1 paragraph (1), the Secretary shall review the peti2 tion in accordance with the requirements of other

3 applicable assistance programs to determine if the

4 workers may be certified under the other programs.

5 (d) COMPREHENSIVE ASSISTANCE.—

6 (1) IN GENERAL.—Workers covered by a certifi7 cation issued by the Secretary under subsection

8 (c)(1) shall be provided with benefits and services

9 described in paragraph (2) in the same manner and

10 to the same extent as workers covered under a cer11 tification under subchapter A of title II of the Trade

12 Act of 1974 (19 U.S.C. 2271 et seq.), except that

13 the total amount of payments under this section for

14 any fiscal year shall not exceed $25,000,000.

15 (2) BENEFITS AND SERVICES.—The benefits

16 and services described in this paragraph are the fol17 lowing:

18 (A) Employment services of the type de19 scribed in section 235 of the Trade Act of 1974

20 (19 U.S.C. 2295).

21 (B) Training described in section 236 of

22 the Trade Act of 1974 (19 U.S.C. 2296), ex23 cept that notwithstanding the provisions of sec24 tion 236(a)(2)(A) of that Act, the total amount
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1 of payments for training under this section for

2 any fiscal year shall not exceed $12,500,000.

3 (C) Tobacco worker readjustment allow4 ances, which shall be provided in the same man5 ner as trade readjustment allowances are pro6 vided under part I of subchapter B of chapter

7 2 of title II of the Trade Act of 1974 (19

8 U.S.C. 2291 et seq.), except that—

9 (i) the provisions of sections

10 231(a)(5)(C) and 231(c) of that Act (19

11 U.S.C. 2291(a)(5)(C), 2291(c)), authoriz12 ing the payment of trade readjustment al13 lowances on a finding that it is not feasible

14 or appropriate to approve a training pro15 gram for a worker, shall not be applicable

16 to payment of allowances under this sec17 tion; and

18 (ii) notwithstanding the provisions of

19 section 233(b) of that Act (19 U.S.C.

20 2293(b)), in order for a worker to qualify

21 for tobacco readjustment allowances under

22 this section, the worker shall be enrolled in

23 a training program approved by the Sec24 retary of the type described in section
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1 236(a) of that Act (19 U.S.C. 2296(a)) by

2 the later of—

3 (I) the last day of the 16th week

4 of the worker’s initial unemployment

5 compensation benefit period; or

6 (II) the last day of the 6th week

7 after the week in which the Secretary

8 issues a certification covering the

9 worker.

10 In cases of extenuating circumstances re11 lating to enrollment of a worker in a train12 ing program under this section, the Sec13 retary may extend the time for enrollment

14 for a period of not to exceed 30 days.

15 (D) Job search allowances of the type de16 scribed in section 237 of the Trade Act of 1974

17 (19 U.S.C. 2297).

18 (E) Relocation allowances of the type de19 scribed in section 238 of the Trade Act of 1974

20 (19 U.S.C. 2298).

21 (e) INELIGIBILITY OF INDIVIDUALS RECEIVING PAY22 MENTS FOR LOST TOBACCO QUOTA.—No benefits or serv23 ices may be provided under this section to any individual

24 who has received payments for lost tobacco quota under

25 section 1021.
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1 (f) FUNDING.—Of the amounts appropriated to carry

2 out this title, the Secretary may use not to exceed

3 $25,000,000 for each of fiscal years 1999 through 2008

4 to provide assistance under this section.

5 (g) EFFECTIVE DATE.—This section shall take effect

6 on the date that is the later of—

7 (1) October l, 1998; or

8 (2) the date of enactment of this Act.

9 (h) TERMINATION DATE.—No assistance, vouchers,

10 allowances, or other payments may be provided under this

11 section after the date that is the earlier of—

12 (1) the date that is 10 years after the effective

13 date of this section under subsection (g); or

14 (2) the date on which legislation establishing a

15 program providing dislocated workers with com16 prehensive assistance substantially similar to the as17 sistance provided by this section becomes effective.

18 SEC. 1032. FARMER OPPORTUNITY GRANTS.

19 Part A of title IV of the Higher Education Act of

20 1965 (20 U.S.C. 1070 et seq.) is amended by adding at

21 the end the following:

22 ‘‘Subpart 9—Farmer Opportunity Grants

23 ‘‘SEC. 420D. STATEMENT OF PURPOSE.

24 ‘‘It is the purpose of this subpart to assist in making

25 available the benefits of postsecondary education to eligi-
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1 ble students (determined in accordance with section 420F)

2 in institutions of higher education by providing farmer op3 portunity grants to all eligible students.

4 ‘‘SEC. 420E. PROGRAM AUTHORITY; AMOUNT AND DETER5 MINATIONS; APPLICATIONS.

6 ‘‘(a) PROGRAM AUTHORITY AND METHOD OF DIS7 TRIBUTION.—

8 ‘‘(1) PROGRAM AUTHORITY.—From amounts

9 made available under section 1011(d)(5) of the

10 LEAF Act, the Secretary, during the period begin11 ning July 1, 1999, and ending September 30, 2024,

12 shall pay to each eligible institution such sums as

13 may be necessary to pay to each eligible student (de14 termined in accordance with section 420F) for each

15 academic year during which that student is in at16 tendance at an institution of higher education, as an

17 undergraduate, a farmer opportunity grant in the

18 amount for which that student is eligible, as deter19 mined pursuant to subsection (b). Not less than 85

20 percent of the sums shall be advanced to eligible in21 stitutions prior to the start of each payment period

22 and shall be based on an amount requested by the

23 institution as needed to pay eligible students, except

24 that this sentence shall not be construed to limit the
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1 authority of the Secretary to place an institution on

2 a reimbursement system of payment.

3 ‘‘(2) CONSTRUCTION.—Nothing in this section

4 shall be construed to prohibit the Secretary from

5 paying directly to students, in advance of the begin6 ning of the academic term, an amount for which the

7 students are eligible, in cases where the eligible in8 stitution elects not to participate in the disburse9 ment system required by paragraph (1).

10 ‘‘(3) DESIGNATION.—Grants made under this

11 subpart shall be known as ‘farmer opportunity

12 grants’.

13 ‘‘(b) AMOUNT OF GRANTS.—

14 ‘‘(1) AMOUNTS.—

15 ‘‘(A) IN GENERAL.—The amount of the

16 grant for a student eligible under this subpart

17 shall be—

18 ‘‘(i) $1,700 for each of the academic

19 years 1999–2000 through 2003–2004;

20 ‘‘(ii) $2,000 for each of the academic

21 years 2004–2005 through 2008–2009;

22 ‘‘(iii) $2,300 for each of the academic

23 years 2009–2010 through 2013–2014;

24 ‘‘(iv) $2,600 for each of the academic

25 years 2014–2015 through 2018–2019; and
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1 ‘‘(v) $2,900 for each of the academic

2 years 2019–2020 through 2023–2024.

3 ‘‘(B) PART-TIME RULE.—In any case

4 where a student attends an institution of higher

5 education on less than a full-time basis (includ6 ing a student who attends an institution of

7 higher education on less than a half-time basis)

8 during any academic year, the amount of the

9 grant for which that student is eligible shall be

10 reduced in proportion to the degree to which

11 that student is not so attending on a full-time

12 basis, in accordance with a schedule of reduc13 tions established by the Secretary for the pur14 poses of this subparagraph, computed in ac15 cordance with this subpart. The schedule of re16 ductions shall be established by regulation and

17 published in the Federal Register.

18 ‘‘(2) MAXIMUM.—No grant under this subpart

19 shall exceed the cost of attendance (as described in

20 section 472) at the institution at which that student

21 is in attendance. If, with respect to any student, it

22 is determined that the amount of a grant exceeds

23 the cost of attendance for that year, the amount of

24 the grant shall be reduced to an amount equal to the

25 cost of attendance at the institution.
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1 ‘‘(3) PROHIBITION.—No grant shall be awarded

2 under this subpart to any individual who is incarcer3 ated in any Federal, State, or local penal institution.

4 ‘‘(c) PERIOD OF ELIGIBILITY FOR GRANTS.—

5 ‘‘(1) IN GENERAL.—The period during which a

6 student may receive grants shall be the period re7 quired for the completion of the first undergraduate

8 baccalaureate course of study being pursued by that

9 student at the institution at which the student is in

10 attendance, except that any period during which the

11 student is enrolled in a noncredit or remedial course

12 of study as described in paragraph (2) shall not be

13 counted for the purpose of this paragraph.

14 ‘‘(2) CONSTRUCTION.—Nothing in this section

15 shall be construed to—

16 ‘‘(A) exclude from eligibility courses of

17 study that are noncredit or remedial in nature

18 and that are determined by the institution to be

19 necessary to help the student be prepared for

20 the pursuit of a first undergraduate bacca21 laureate degree or certificate or, in the case of

22 courses in English language instruction, to be

23 necessary to enable the student to utilize al24 ready existing knowledge, training, or skills;

25 and
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1 ‘‘(B) exclude from eligibility programs of

2 study abroad that are approved for credit by

3 the home institution at which the student is en4 rolled.

5 ‘‘(3) PROHIBITION.—No student is entitled to

6 receive farmer opportunity grant payments concur7 rently from more than 1 institution or from the Sec8 retary and an institution.

9 ‘‘(d) APPLICATIONS FOR GRANTS.—

10 ‘‘(1) IN GENERAL.—The Secretary shall from

11 time to time set dates by which students shall file

12 applications for grants under this subpart. The filing

13 of applications under this subpart shall be coordi14 nated with the filing of applications under section

15 401(c).

16 ‘‘(2) INFORMATION AND ASSURANCES.—Each

17 student desiring a grant for any year shall file with

18 the Secretary an application for the grant containing

19 such information and assurances as the Secretary

20 may deem necessary to enable the Secretary to carry

21 out the Secretary’s functions and responsibilities

22 under this subpart.

23 ‘‘(e) DISTRIBUTION OF GRANTS TO STUDENTS.—

24 Payments under this section shall be made in accordance

25 with regulations promulgated by the Secretary for such
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1 purpose, in such manner as will best accomplish the pur2 pose of this section. Any disbursement allowed to be made

3 by crediting the student’s account shall be limited to tui4 tion and fees and, in the case of institutionally owned

5 housing, room and board. The student may elect to have

6 the institution provide other such goods and services by

7 crediting the student’s account.

8 ‘‘(f) INSUFFICIENT FUNDING.—If, for any fiscal

9 year, the funds made available to carry out this subpart

10 are insufficient to satisfy fully all grants for students de11 termined to be eligible under section 420F, the amount

12 of the grant provided under subsection (b) shall be re13 duced on a pro rata basis among all eligible students.

14 ‘‘(g) TREATMENT OF INSTITUTIONS AND STUDENTS

15 UNDER OTHER LAWS.—Any institution of higher edu16 cation that enters into an agreement with the Secretary

17 to disburse to students attending that institution the

18 amounts those students are eligible to receive under this

19 subpart shall not be deemed, by virtue of the agreement,

20 to be a contractor maintaining a system of records to ac21 complish a function of the Secretary. Recipients of farmer

22 opportunity grants shall not be considered to be individual

23 grantees for purposes of the Drug-Free Workplace Act of

24 1988 (41 U.S.C. 701 et seq.).
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1 ‘‘SEC. 420F. STUDENT ELIGIBILITY.

2 ‘‘(a) IN GENERAL.—In order to receive any grant

3 under this subpart, a student shall—

4 ‘‘(1) be a member of a tobacco farm family in

5 accordance with subsection (b);

6 ‘‘(2) be enrolled or accepted for enrollment in

7 a degree, certificate, or other program (including a

8 program of study abroad approved for credit by the

9 eligible institution at which the student is enrolled)

10 leading to a recognized educational credential at an

11 institution of higher education that is an eligible in12 stitution in accordance with section 487, and not be

13 enrolled in an elementary or secondary school;

14 ‘‘(3) if the student is presently enrolled at an

15 institution of higher education, be maintaining satis16 factory progress in the course of study the student

17 is pursuing in accordance with subsection (c);

18 ‘‘(4) not owe a refund on grants previously re19 ceived at any institution of higher education under

20 this title, or be in default on any loan from a stu21 dent loan fund at any institution provided for in

22 part D, or a loan made, insured, or guaranteed by

23 the Secretary under this title for attendance at any

24 institution;

25 ‘‘(5) file with the institution of higher education

26 that the student intends to attend, or is attending,
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1 a document, that need not be notarized, but that

2 shall include—

3 ‘‘(A) a statement of educational purpose

4 stating that the money attributable to the grant

5 will be used solely for expenses related to at6 tendance or continued attendance at the institu7 tion; and

8 ‘‘(B) the student’s social security number;

9 and

10 ‘‘(6) be a citizen of the United States.

11 ‘‘(b) TOBACCO FARM FAMILIES.—

12 ‘‘(1) IN GENERAL.—For the purpose of sub13 section (a)(1), a student is a member of a tobacco

14 farm family if during calendar year 1998 the stu15 dent was—

16 ‘‘(A) an individual who—

17 ‘‘(i) is a participating tobacco pro18 ducer (as defined in section 1002 of the

19 LEAF Act); or

20 ‘‘(ii) is otherwise actively engaged in

21 the production of tobacco;

22 ‘‘(B) a spouse, son, daughter, stepson, or

23 stepdaughter of an individual described in sub24 paragraph (A);

25 ‘‘(C) an individual—
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1 ‘‘(i) who was a brother, sister, step2 brother, stepsister, son-in-law, or daughter3 in-law of an individual described in sub4 paragraph (A); and

5 ‘‘(ii) whose principal place of resi6 dence was the home of the individual de7 scribed in subparagraph (A); or

8 ‘‘(D) an individual who was a dependent

9 (within the meaning of section 152 of the Inter10 nal Revenue Code of 1986) of an individual de11 scribed in subparagraph (A).

12 ‘‘(2) ADMINISTRATION.—On request, the Sec13 retary of Agriculture shall provide to the Secretary

14 such information as is necessary to carry out this

15 subsection.

16 ‘‘(c) SATISFACTORY PROGRESS.—

17 ‘‘(1) IN GENERAL.—For the purpose of sub18 section (a)(3), a student is maintaining satisfactory

19 progress if—

20 ‘‘(A) the institution at which the student is

21 in attendance reviews the progress of the stu22 dent at the end of each academic year, or its

23 equivalent, as determined by the institution;

24 and
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1 ‘‘(B) the student has at least a cumulative

2 C average or its equivalent, or academic stand3 ing consistent with the requirements for grad4 uation, as determined by the institution, at the

5 end of the second such academic year.

6 ‘‘(2) SPECIAL RULE.—Whenever a student fails

7 to meet the eligibility requirements of subsection

8 (a)(3) as a result of the application of this sub9 section and subsequent to that failure the student

10 has academic standing consistent with the require11 ments for graduation, as determined by the institu12 tion, for any grading period, the student may, sub13 ject to this subsection, again be eligible under sub14 section (a)(3) for a grant under this subpart.

15 ‘‘(3) WAIVER.—Any institution of higher edu16 cation at which the student is in attendance may

17 waive paragraph (1) or (2) for undue hardship based

18 on—

19 ‘‘(A) the death of a relative of the student;

20 ‘‘(B) the personal injury or illness of the

21 student; or

22 ‘‘(C) special circumstances as determined

23 by the institution.

24 ‘‘(d) STUDENTS WHO ARE NOT SECONDARY SCHOOL

25 GRADUATES.—In order for a student who does not have
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1 a certificate of graduation from a school providing second2 ary education, or the recognized equivalent of the certifi3 cate, to be eligible for any assistance under this subpart,

4 the student shall meet either 1 of the following standards:

5 ‘‘(1) EXAMINATION.—The student shall take an

6 independently administered examination and shall

7 achieve a score, specified by the Secretary, dem8 onstrating that the student can benefit from the

9 education or training being offered. The examination

10 shall be approved by the Secretary on the basis of

11 compliance with such standards for development, ad12 ministration, and scoring as the Secretary may pre13 scribe in regulations.

14 ‘‘(2) DETERMINATION.—The student shall be

15 determined as having the ability to benefit from the

16 education or training in accordance with such proc17 ess as the State shall prescribe. Any such process

18 described or approved by a State for the purposes of

19 this section shall be effective 6 months after the date

20 of submission to the Secretary unless the Secretary

21 disapproves the process. In determining whether to

22 approve or disapprove the process, the Secretary

23 shall take into account the effectiveness of the proc24 ess in enabling students without secondary school di25 plomas or the recognized equivalent to benefit from
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1 the instruction offered by institutions utilizing the

2 process, and shall also take into account the cultural

3 diversity, economic circumstances, and educational

4 preparation of the populations served by the institu5 tions.

6 ‘‘(e) SPECIAL RULE FOR CORRESPONDENCE

7 COURSES.—A student shall not be eligible to receive a

8 grant under this subpart for a correspondence course un9 less the course is part of a program leading to an associ10 ate, bachelor, or graduate degree.

11 ‘‘(f) COURSES OFFERED THROUGH TELECOMMUNI12 CATIONS.—

13 ‘‘(1) RELATION TO CORRESPONDENCE

14 COURSES.—A student enrolled in a course of in15 struction at an eligible institution of higher edu16 cation (other than an institute or school that meets

17 the definition in section 521(4)(C) of the Carl D.

18 Perkins Vocational and Applied Technology Edu19 cation Act (20 U.S.C. 2471(4)(C))) that is offered

20 in whole or in part through telecommunications and

21 leads to a recognized associate, bachelor, or graduate

22 degree conferred by the institution shall not be con23 sidered to be enrolled in correspondence courses un24 less the total amount of telecommunications and cor-
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1 respondence courses at the institution equals or ex2 ceeds 50 percent of the courses.

3 ‘‘(2) RESTRICTION OR REDUCTIONS OF FINAN4 CIAL AID.—A student’s eligibility to receive a grant

5 under this subpart may be reduced if a financial aid

6 officer determines under the discretionary authority

7 provided in section 479A that telecommunications

8 instruction results in a substantially reduced cost of

9 attendance to the student.

10 ‘‘(3) DEFINITION.—For the purposes of this

11 subsection, the term ‘telecommunications’ means the

12 use of television, audio, or computer transmission,

13 including open broadcast, closed circuit, cable,

14 microwave, or satellite, audio conferencing, computer

15 conferencing, or video cassettes or discs, except that

16 the term does not include a course that is delivered

17 using video cassette or disc recordings at the institu18 tion and that is not delivered in person to other stu19 dents of that institution.

20 ‘‘(g) STUDY ABROAD.—Nothing in this subpart shall

21 be construed to limit or otherwise prohibit access to study

22 abroad programs approved by the home institution at

23 which a student is enrolled. An otherwise eligible student

24 who is engaged in a program of study abroad approved

25 for academic credit by the home institution at which the
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1 student is enrolled shall be eligible to receive a grant under

2 this subpart, without regard to whether the study abroad

3 program is required as part of the student’s degree pro4 gram.

5 ‘‘(h) VERIFICATION OF SOCIAL SECURITY NUM6 BER.—The Secretary, in cooperation with the Commis7 sioner of Social Security, shall verify any social security

8 number provided by a student to an eligible institution

9 under subsection (a)(5)(B) and shall enforce the following

10 conditions:

11 ‘‘(1) PENDING VERIFICATION.—Except as pro12 vided in paragraphs (2) and (3), an institution shall

13 not deny, reduce, delay, or terminate a student’s eli14 gibility for assistance under this subpart because so15 cial security number verification is pending.

16 ‘‘(2) DENIAL OR TERMINATION.—If there is a

17 determination by the Secretary that the social secu18 rity number provided to an eligible institution by a

19 student is incorrect, the institution shall deny or ter20 minate the student’s eligibility for any grant under

21 this subpart until such time as the student provides

22 documented evidence of a social security number

23 that is determined by the institution to be correct.

24 ‘‘(3) CONSTRUCTION.—Nothing in this sub25 section shall be construed to permit the Secretary to
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1 take any compliance, disallowance, penalty, or other

2 regulatory action against—

3 ‘‘(A) any institution of higher education

4 with respect to any error in a social security

5 number, unless the error was a result of fraud

6 on the part of the institution; or

7 ‘‘(B) any student with respect to any error

8 in a social security number, unless the error

9 was a result of fraud on the part of the stu10 dent.’’.

11 Subtitle D—Immunity

12 SEC. 1041. GENERAL IMMUNITY FOR TOBACCO PRODUCERS

13 AND TOBACCO WAREHOUSE OWNERS.

14 Notwithstanding any other provision of this title, a

15 participating tobacco producer, tobacco-related growers

16 association, or tobacco warehouse owner or employee may

17 not be subject to liability in any Federal or State court

18 for any cause of action resulting from the failure of any

19 tobacco product manufacturer, distributor, or retailer to

20 comply with the National Tobacco Policy and Youth

21 Smoking Reduction Act.
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1 TITLE XI—MISCELLANEOUS

2 PROVISIONS

3 Subtitle A—International

4 Provisions

5 SEC. 1101. POLICY.

6 It shall be the policy of the United States government

7 to pursue bilateral and multilateral agreements that in8 clude measures designed to—

9 (1) restrict or eliminate tobacco advertising and

10 promotion aimed at children;

11 (2) require effective warning labels on packages

12 and advertisements of tobacco products;

13 (3) require disclosure of tobacco ingredient in14 formation to the public;

15 (4) limit access to tobacco products by young

16 people;

17 (5) reduce smuggling of tobacco and tobacco

18 products;

19 (6) ensure public protection from environmental

20 tobacco smoke; and

21 (7) promote tobacco product policy and pro22 gram information sharing between or among the

23 parties to those agreements.
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1 SEC. 1102. TOBACCO CONTROL NEGOTIATIONS.

2 The President, in consultation with the Secretary of

3 State, the Secretary of Health and Human Services, and

4 the United States Trade Representative, shall—

5 (1) act as the lead negotiator for the United

6 States in the area of international tobacco control;

7 (2) coordinate among U.S. foreign policy and

8 trade negotiators in the area of effective inter9 national tobacco control policy;

10 (3) work closely with non-governmental groups,

11 including public health groups; and

12 (4) report annually to the Congress on the

13 progress of negotiations to achieve effective inter14 national tobacco control policy.

15 SEC. 1103. REPORT TO CONGRESS.

16 Not later than 150 days after the enactment of this

17 Act and annually thereafter, the Secretary of Health and

18 Human Services shall transmit to the Congress a report

19 identifying the international fora wherein international to20 bacco control efforts may be negotiated.

21 SEC. 1104. FUNDING.

22 There are authorized such sums as are necessary to

23 carry out the provisions of this subtitle.
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1 SEC. 1105. PROHIBITION OF FUNDS TO FACILITATE THE EX2 PORTATION OR PROMOTION OF TOBACCO.

3 (a) IN GENERAL.—No officer, employee, department,

4 or agency of the United States may promote the sale or

5 export of tobacco or tobacco products, or seek the reduc6 tion or removal by any foreign country of restrictions on

7 the marketing of tobacco or tobacco products, unless such

8 restrictions are not applied equally to all tobacco and to9 bacco products. The United States Trade Representative

10 shall consult with the Secretary regarding inquiries, nego11 tiations, and representations with respect to tobacco and

12 tobacco products, including whether proposed restrictions

13 are reasonable protections of public health.

14 (b) NOTIFICATION.—Whenever such inquiries, nego15 tiations, or representations are made, the United States

16 Trade Representative shall notify the Congress within 10

17 days afterwards regarding the nature of the inquiry, nego18 tiation, or representation.

19 SEC. 1106. HEALTH LABELING OF TOBACCO PRODUCTS FOR

20 EXPORT.

21 (a) IN GENERAL.—

22 (1) EXPORTS MUST BE LABELED.—It shall be

23 unlawful for any United States person, directly or

24 through approval or facilitation of a transaction by

25 a foreign person, to make use of the United States

26 mail or of any instrument of interstate commerce to
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1 authorize or contribute to the export from the

2 United States any tobacco product unless the to3 bacco product packaging contains a warning label

4 that—

5 (A) complies with Federal requirements for

6 labeling of similar tobacco products manufac7 tured, imported, or packaged for sale or dis8 tribution in the United States; or

9 (B) complies with the specific health haz10 ard warning labeling requirements of the for11 eign country to which the product is exported.

12 (2) U.S. REQUIREMENTS APPLY IF THE DES13 TINATION COUNTRY DOES NOT REQUIRE SPECIFIC

14 HEALTH HAZARD WARNING LABELS.—Subparagraph

15 (B) of paragraph (1) does not apply to exports to

16 a foreign country that does not have any specific

17 health hazard warning label requirements for the to18 bacco product being exported.

19 (b) UNITED STATES PERSON DEFINED.—For pur20 poses of this section, the term ‘‘United States person’’

21 means—

22 (1) an individual who is a citizen, national, or

23 resident of the United States; and

24 (2) a corporation, partnership, association,

25 joint-stock company, business trust, unincorporated
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1 organization, or sole proprietorship which has its

2 principal place of business in the United States.

3 (c) REPORT TO CONGRESS ON ENFORCEMENT; FEA4 SIBILITY REGULATIONS.—

5 (1) THE PRESIDENT.—The President shall—

6 (A) report to the Congress within 90 days

7 after the date of enactment of this Act—

8 (i) regarding methods to ensure com9 pliance with subsection (a); and

10 (ii) listing countries whose health

11 warnings related to tobacco products are

12 substantially similar to those in the United

13 States; and

14 (B) promulgate regulations within 1 year

15 after the date of enactment of this Act that will

16 ensure compliance with subsection (a).

17 (2) THE SECRETARY.—The Secretary shall de18 termine through regulation the feasibility and prac19 ticability of requiring health warning labeling in the

20 language of the country of destination weighing the

21 health and other benefits and economic and other

22 costs. To the greatest extent practicable, the Sec23 retary should design a system that requires the lan24 guage of the country of destination while minimizing

25 the dislocative effects of such a system.
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1 SEC. 1107. INTERNATIONAL TOBACCO CONTROL AWARE2 NESS.

3 (a) ESTABLISHMENT OF INTERNATIONAL TOBACCO

4 CONTROL AWARENESS.—The Secretary is authorized to

5 establish an international tobacco control awareness ef6 fort. The Secretary shall—

7 (1) promote efforts to share information and

8 provide education internationally about the health,

9 economic, social, and other costs of tobacco use, in10 cluding scientific and epidemiological data related to

11 tobacco and tobacco use and enhancing countries’

12 capacity to collect, analyze, and disseminating such

13 data;

14 (2) promote policies and support and coordinate

15 international efforts, including international agree16 ments or arrangements, that seek to enhance the

17 awareness and understanding of the costs associated

18 with tobacco use;

19 (3) support the development of appropriate gov20 ernmental control activities in foreign countries,

21 such as assisting countries to design, implement,

22 and evaluate programs and policies used in the

23 United States or other countries; including the train24 ing of United States diplomatic and commercial rep25 resentatives outside the United States;
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1 (4) undertake other activities as appropriate in

2 foreign countries that help achieve a reduction of to3 bacco use;

4 (5) permit United States participation in an5 nual meetings of government and non-government

6 representatives concerning international tobacco use

7 and efforts to reduce tobacco use;

8 (6) promote mass media campaigns, including

9 paid counter-tobacco advertisements to reverse the

10 image appeal of pro-tobacco messages, especially

11 those that glamorize and ‘‘Westernize’’ tobacco use

12 to young people; and

13 (7) create capacity and global commitment to

14 reduce international tobacco use and prevent youth

15 smoking, including the use of models of previous

16 public health efforts to address global health prob17 lems.

18 (b) ACTIVITIES.—

19 (1) IN GENERAL.—The activities under sub20 section (a) shall include—

21 (A) public health and education programs;

22 (B) technical assistance;

23 (C) cooperative efforts and support for re24 lated activities of multilateral organization and

25 international organizations;
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1 (D) training; and

2 (E) such other activities that support the

3 objectives of this section as may be appropriate.

4 (2) GRANTS AND CONTRACTS.—In carrying out

5 this section, the Secretary shall make grants to,

6 enter into and carry out agreements with, and enter

7 into other transactions with any individual, corpora8 tion, or other entity, whether within or outside the

9 United States, including governmental and non10 governmental organizations, international organiza11 tions, and multilateral organizations.

12 (3) TRANSFER OF FUNDS TO AGENCIES.—The

13 Secretary may transfer to any agency of the United

14 States any part of any funds appropriated for the

15 purpose of carrying out this section. Funds author16 ized to be appropriated by this section shall be avail17 able for obligation and expenditure in accordance

18 with the provisions of this section or in accordance

19 with the authority governing the activities of the

20 agency to which such funds are transferred.

21 (c) AUTHORIZATION OF APPROPRIATIONS.—There

22 are authorized to be appropriated, from the National To23 bacco Trust Fund, to carry out the provisions of this sec24 tion, including the administrative costs incurred by any

25 agency of the United States in carrying out this section,
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1 $350,000,000 for each of the fiscal years 1999 through

2 2004, and such sums as may be necessary for each fiscal

3 year thereafter. A substantial amount of such funds shall

4 be granted to non-governmental organizations. Any

5 amount appropriated pursuant to this authorization shall

6 remain available without fiscal year limitation until ex7 pended.

8 Subtitle B—Anti-smuggling

9 Provisions

10 SEC. 1131. DEFINITIONS.

11 (a) INCORPORATION OF CERTAIN DEFINITIONS.—In

12 this subtitle, the terms ‘‘cigar’’, ‘‘cigarette’’, ‘‘person’’,

13 ‘‘pipe tobacco’’, ‘‘roll-your-own tobacco’’, ‘‘smokeless to14 bacco’’, ‘‘State’’, ‘‘tobacco product’’, and ‘‘United States’’,

15 shall have the meanings given such terms in sections

16 5702(a), 5702(b), 7701(a)(1), 5702(o), 5702(n)(1),

17 5702(p), 3306(j)(1), 5702(c), and 3306(j)(2) respectively

18 of the Internal Revenue Code of 1986.

19 (b) OTHER DEFINITIONS.—In this subtitle:

20 (1) AFFILIATE.—The term ‘‘affiliate’’ means

21 any one of 2 or more persons if 1 of such persons

22 has actual or legal control, directly or indirectly,

23 whether by stock ownership or otherwise, of other or

24 others of such persons, and any 2 or more of such

25 persons subject to common control, actual or legal,
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1 directly or indirectly, whether by stock ownership or

2 otherwise.

3 (2) INTERSTATE OR FOREIGN COMMERCE.—The

4 term ‘‘interstate or foreign commerce’’ means any

5 commerce between any State and any place outside

6 thereof, or commerce within any Territory or the

7 District of Columbia, or between points within the

8 same State but through any place outside thereof.

9 (3) SECRETARY.—The term ‘‘Secretary’’ means

10 the Secretary of the Treasury.

11 (4) PACKAGE.—The term ‘‘package’’ means the

12 innermost sealed container irrespective of the mate13 rial from which such container is made, in which a

14 tobacco product is placed by the manufacturer and

15 in which such tobacco product is offered for sale to

16 a member of the general public.

17 (5) RETAILER.—The term ‘‘retailer’’ means any

18 dealer who sells, or offers for sale, any tobacco prod19 uct at retail. The term ‘‘retailer’’ includes any duty

20 free store that sells, offers for sale, or otherwise dis21 tributes at retail in any single transaction 30 or less

22 packages, or it equivalent for other tobacco products.

23 (6) EXPORTER.—The term ‘‘exporter’’ means

24 any person engaged in the business of exporting to25 bacco products from the United States for purposes
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1 of sale or distribution; and the term ‘‘licensed ex2 porter’’ means any such person licensed under the

3 provisions of this subtitle. Any duty-free store that

4 sells, offers for sale, or otherwise distributes to any

5 person in any single transaction more than 30 pack6 ages of cigarettes, or its equivalent for other tobacco

7 products as the Secretary shall by regulation pre8 scribe, shall be deemed an ‘‘exporter’’ under this

9 subtitle.

10 (7) IMPORTER.—The term ‘‘importer’’ means

11 any person engaged in the business of importing to12 bacco products into the United States for purposes

13 of sale or distribution; and the term ‘‘licensed im14 porter’’ means any such person licensed under the

15 provisions of this subtitle.

16 (8) INTENTIONALLY.—The term ‘‘intentionally’’

17 means doing an act, or omitting to do an act, delib18 erately, and not due to accident, inadvertence, or

19 mistake. An intentional act does not require that a

20 person knew that his act constituted an offense.

21 (9) MANUFACTURER.— The term ‘‘manufac22 turer’’ means any person engaged in the business of

23 manufacturing a tobacco product for purposes of

24 sale or distribution, except that such term shall not

25 include a person who manufactures less than 30,000
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1 cigarettes, or its equivalent as determined by regula2 tions, in any twelve month period;; and the term ‘‘li3 censed manufacturer’’ means any such person li4 censed under the provisions of this subtitle, except

5 that such term shall not include a person who pro6 duces cigars, cigarettes, smokeless tobacco, or pipe

7 tobacco solely for his own personal consumption or

8 use.

9 (10) WHOLESALER.—The term ‘‘wholesaler’’

10 means any person engaged in the business of pur11 chasing tobacco products for resale at wholesale, or

12 any person acting as an agent or broker for any per13 son engaged in the business of purchasing tobacco

14 products for resale at wholesale, and the term ‘‘li15 censed wholesaler’’ means any such person licensed

16 under the provisions of this subtitle.

17 SEC. 1132. TOBACCO PRODUCT LABELING REQUIREMENTS.

18 (a) IN GENERAL.—It is unlawful for any person to

19 sell, or ship or deliver for sale or shipment, or otherwise

20 introduce in interstate or foreign commerce, or to receive

21 therein, or to remove from Customs custody for use, any

22 tobacco product unless such product is packaged and la23 beled in conformity with this section.

24 (b) LABELING.—
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1 (1) IDENTIFICATION.—Not later than 1 year

2 after the date of enactment of this Act, the Sec3 retary shall promulgate regulations that require each

4 manufacturer or importer of tobacco products to leg5 ibly print a unique serial number on all packages of

6 tobacco products manufactured or imported for sale

7 or distribution. The serial number shall be designed

8 to enable the Secretary to identify the manufacturer

9 or importer of the product, and the location and

10 date of manufacture or importation. The Secretary

11 shall determine the size and location of the serial

12 number.

13 (2) MARKING REQUIREMENTS FOR EXPORTS.—

14 Each package of a tobacco product that is exported

15 shall be marked for export from the United States.

16 The Secretary shall promulgate regulations to deter17 mine the size and location of the mark and under

18 what circumstances a waiver of this paragraph shall

19 be granted.

20 (c) PROHIBITION ON ALTERATION.—It is unlawful

21 for any person to alter, mutilate, destroy, obliterate, or

22 remove any mark or label required under this subtitle

23 upon a tobacco product in or affecting commerce, except

24 pursuant to regulations of the Secretary authorizing re-
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1 labeling for purposes of compliance with the requirements

2 of this section or of State law.

3 SEC. 1133. TOBACCO PRODUCT LICENSES.

4 (a) IN GENERAL.—Not later than 1 year after the

5 date of enactment of this Act, the Secretary shall establish

6 a program under which tobacco product licenses are issued

7 to manufacturers, importers, exporters, and wholesalers of

8 tobacco products.

9 (b)(1) ELIGIBILITY.—A person is entitled to a license

10 unless the Secretary finds—

11 (A) that such person has been previously con12 victed of a Federal crime relating to tobacco, includ13 ing the taxation thereof;

14 (B) that such person has, within 5 years prior

15 to the date of application, been previously convicted

16 of any felony under Federal or State law; or

17 (C) that such person is, by virtue of his busi18 ness experience, financial standing, or trade connec19 tions, not likely to maintain such operations in con20 formity with Federal law.

21 (2) CONDITIONS.—The issuance of a license under

22 this section shall be conditioned upon the compliance with

23 the requirements of this subtitle, all Federal laws relating

24 to the taxation of tobacco products, chapter 114 of title
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1 18, United States Code, and any regulations issued pursu2 ant to such statutes.

3 (c) REVOCATION, SUSPENSION, AND ANNULMENT.—

4 The program established under subsection (a) shall permit

5 the Secretary to revoke, suspend, or annul a license issued

6 under this section if the Secretary determines that the

7 terms or conditions of the license have not been complied

8 with. Prior to any action under this subsection, the Sec9 retary shall provide the licensee with due notice and the

10 opportunity for a hearing.

11 (d) RECORDS AND AUDITS.—The Secretary shall,

12 under the program established under subsection (a), re13 quire all license holders to keep records concerning the

14 chain of custody of the tobacco products that are the sub15 ject of the license and make such records available to the

16 Secretary for inspection and audit.

17 (e) RETAILERS.—This section does not apply to re18 tailers of tobacco products, except that retailers shall

19 maintain records of receipt, and such records shall be

20 available to the Secretary for inspection and audit. An or21 dinary commercial record or invoice will satisfy this re22 quirement provided such record shows the date of receipt,

23 from whom such products were received and the quantity

24 of tobacco products received.
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1 SEC. 1134. PROHIBITIONS.

2 (a) IMPORTATION AND SALE.—It is unlawful, except

3 pursuant to a license issued by the Secretary under this

4 subtitle—

5 (1) to engage in the business of importing to6 bacco products into the United States; or

7 (2) for any person so engaged to sell, offer, or

8 deliver for sale, contract to sell, or ship, in or affect9 ing commerce, directly or indirectly or through an

10 affiliate, tobacco products so imported.

11 (b) MANUFACTURE AND SALE.—It is unlawful, ex12 cept pursuant to a license issued by the Secretary under

13 this subtitle—

14 (1) to engage in the business of manufacturing,

15 packaging or warehousing tobacco products; or

16 (2) for any person so engaged to sell, offer, or

17 deliver for sale, contract to sell, or ship, in or affect18 ing commerce, directly or indirectly or through an

19 affiliate, tobacco products so manufactured, pack20 aged, or warehoused.

21 (c) WHOLESALE.—It is unlawful, except pursuant to

22 a license issued by the Secretary under this subtitle—

23 (1) to engage in the business of purchasing for

24 resale at wholesale tobacco products, or, as a prin25 cipal or agent, to sell, offer for sale, negotiate for,

26 or hold out by solicitation, advertisement, or other-
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1 wise as selling, providing, or arranging for, the pur2 chase for resale at wholesale of tobacco products; or

3 (2) for any person so engaged to receive or sell,

4 offer or deliver for sale, contract to sell, or ship, in

5 or affecting commerce, directly or indirectly or

6 through an affiliate, tobacco products so purchased.

7 (d) EXPORTATION.—

8 (1) IN GENERAL.—It is unlawful, except pursu9 ant to a license issued by the Secretary under this

10 subtitle—

11 (A) to engage in the business of exporting

12 tobacco products from the United States; or

13 (B) for any person so engaged to sell,

14 offer, or deliver for sale, contract to sell, or

15 ship, in or affecting commerce, directly or indi16 rectly or through an affiliate, tobacco products

17 received for export.

18 (2) REPORT.—Prior to exportation of tobacco

19 products from the United States, the exporter shall

20 submit a report in such manner and form as the

21 Secretary may by regulation prescribe to enable the

22 Secretary to identify the shipment and assure that

23 it reaches its intended destination.

24 (3) AGREEMENTS WITH FOREIGN GOVERN25 MENTS.—The Secretary is authorized to enter into
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1 agreements with foreign governments to exchange or

2 share information contained in reports received from

3 exporters of tobacco products if the Secretary be4 lieves that such an agreement will assist in—

5 (A) insuring compliance with any law or

6 regulation enforced or administered by an agen7 cy of the United States; or

8 (B) preventing or detecting violation of the

9 laws or regulations of a foreign government

10 with which the Secretary has entered into an

11 agreement.

12 Such information may be exchanged or shared with

13 a foreign government only if the Secretary obtains

14 assurances from such government that the informa15 tion will be held in confidence and used only for the

16 purpose of preventing or detecting violations of the

17 laws or regulations of such government or the

18 United States and, provided further that no infor19 mation may be exchanged or shared with any gov20 ernment that has violated such assurances.

21 (e) UNLAWFUL ACTS.—

22 (1) UNLICENSED RECEIPT OR DELIVERY.—It is

23 unlawful for any licensed importer, licensed manu24 facturer, or licensed wholesaler intentionally to ship,

25 transport, deliver or receive any tobacco products
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1 from or to any person other than a person licensed

2 under this chapter or a retailer licensed under the

3 provisions of this Act, except a licensed importer

4 may receive foreign tobacco products from a foreign

5 manufacturer or a foreign distributor that have not

6 previously entered the United States.

7 (2) RECEIPT OF RE-IMPORTED GOODS.—It is

8 unlawful for any person, except a licensed manufac9 turer or a licensed exporter to receive any tobacco

10 products that have previously been exported and re11 turned to the United States.

12 (3) DELIVERY BY EXPORTER.—It is unlawful

13 for any licensed exporter intentionally to ship, trans14 port, sell or deliver for sale any tobacco products to

15 any person other than a licensed manufacturer or

16 foreign purchaser.

17 (4) SHIPMENT OF EXPORT-ONLY GOODS.—It is

18 unlawful for any person other than a licensed ex19 porter intentionally to ship, transport, receive or

20 possess, for purposes of resale, any tobacco product

21 in packages marked ‘‘FOR EXPORT FROM THE

22 UNITED STATES,’’ other than for direct return to

23 the manufacturer or exporter for re-packing or for

24 re-exportation.
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1 (5) FALSE STATEMENTS.—It is unlawful for

2 any licensed manufacturer, licensed exporter, li3 censed importer, or licensed wholesaler to make in4 tentionally any false entry in, to fail willfully to

5 make appropriate entry in, or to fail willfully to

6 maintain properly any record or report that he is re7 quired to keep as required by this chapter or the

8 regulations promulgated thereunder.

9 (f) EFFECTIVE DATE.—The provisions of this section

10 shall become effective on the date that is 365 days after

11 the date of enactment of this Act.

12 SEC. 1135. LABELING OF PRODUCTS SOLD BY NATIVE

13 AMERICANS.

14 The Secretary, in consultation with the Secretary of

15 the Interior, shall promulgate regulations that require that

16 each package of a tobacco product that is sold on an In17 dian reservation (as defined in section 403(9) of the In18 dian Child Protection and Family Violence Prevention Act

19 (25 U.S.C. 3202(9)) be labeled as such. Such regulations

20 shall include requirements for the size and location of the

21 label.
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1 SEC. 1136. LIMITATION ON ACTIVITIES INVOLVING TO2 BACCO PRODUCTS IN FOREIGN TRADE

3 ZONES.

4 (a) MANUFACTURE OF TOBACCO PRODUCTS IN FOR5 EIGN TRADE ZONES.—No person shall manufacture a to6 bacco product in any foreign trade zone, as defined for

7 purposes of the Act of June 18, 1934 (19 U.S.C. 81a et

8 seq.).

9 (b) EXPORTING OR IMPORTING FROM OR INTO A

10 FOREIGN TRADE ZONE.—Any person exporting or import11 ing tobacco products from or into a foreign trade zone,

12 as defined for purposes of the Act of June 18, 1934 (19

13 U.S.C. 81a et seq.), shall comply with the requirements

14 provided in this subtitle. In any case where the person op15 erating in a foreign trade zone is acting on behalf of a

16 person licensed under this subtitle, qualification as an im17 porter or exporter will not be required, if such person com18 plies with the requirements set forth in section 1134(d)(2)

19 and (3) of this subtitle.

20 SEC. 1137. JURISDICTION; PENALTIES; COMPROMISE OF LI21 ABILITY.

22 (a) JURISDICTION.—The District Courts of the

23 United States, and the United States Court for any Terri24 tory, of the District where the offense is committed or of

25 which the offender is an inhabitant or has its principal

26 place of business, are vested with jurisdiction of any suit
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1 brought by the Attorney General in the name of the

2 United States, to prevent and restrain violations of any

3 of the provisions of this subtitle.

4 (b) PENALTIES.—Any person violating any of the

5 provisions of this subtitle shall, upon conviction, be fined

6 as provided in section 3571 of title 18, United States

7 Code, imprisoned for not more than 5 years, or both.

8 (c) CIVIL PENALTIES.—The Secretary may, in lieu

9 of referring violations of this subtitle for criminal prosecu10 tion, impose a civil penalty of not more than $10,000 for

11 each offense.

12 (d) COMPROMISE OF LIABILITY.—The Secretary is

13 authorized, with respect to any violation of this subtitle,

14 to compromise the liability arising with respect to a viola15 tion of this subtitle—

16 (1) upon payment of a sum not in excess of

17 $10,000 for each offense, to be collected by the Sec18 retary and to be paid into the Treasury as mis19 cellaneous receipts; and

20 (2) in the case of repetitious violations and in

21 order to avoid multiplicity of criminal proceedings,

22 upon agreement to a stipulation, that the United

23 States may, on its own motion upon 5 days notice

24 to the violator, cause a consent decree to be entered
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1 by any court of competent jurisdiction enjoining the

2 repetition of such violation.

3 (e) FORFEITURE.—

4 (1) The Secretary may seize and forfeit any

5 conveyance, tobacco products, or monetary instru6 ment (as defined in section 5312 of title 31, United

7 States Code) involved in a violation of this subtitle,

8 or any property, real or personal, which constitutes

9 or is derived from proceeds traceable to a violation

10 of this chapter. For purposes of this paragraph, the

11 provisions of subsections (a)(2), (b)(2), and (c)

12 through (j) of section 981 of title 18, United States

13 Code, apply to seizures and forfeitures under this

14 paragraph insofar as they are applicable and not in15 consistent with the provisions of this subtitle.

16 (2) The court, in imposing sentence upon a per17 son convicted of an offense under this subtitle, shall

18 order that the person forfeit to the United States

19 any property described in paragraph (1). The seizure

20 and forfeiture of such property shall be governed by

21 subsections (b), (c), and (e) through (p) of section

22 853 of title 21, United States Code, insofar as they

23 are applicable and not inconsistent with the provi24 sions of this subtitle.
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1 SEC. 1138. AMENDMENTS TO THE CONTRABAND CIGARETTE

2 TRAFFICKING ACT.

3 (a) DEFINITIONS.—Section 2341 of title 18, United

4 States Code, is amended—

5 (1) by striking ‘‘60,000’’ and inserting

6 ‘‘30,000’’ in paragraph (2);

7 (2) by inserting after ‘‘payment of cigarette

8 taxes,’’ in paragraph (2) the following: ‘‘or in the

9 case of a State that does not require any such indi10 cation of tax payment, if the person in possession of

11 the cigarettes is unable to provide any evidence that

12 the cigarettes are moving legally in interstate com13 merce,’’;

14 (3) by striking ‘‘and’’ at the end of paragraph

15 (4);

16 (4) by striking ‘‘Treasury.’’ in paragraph (5)

17 and inserting ‘‘Treasury;’’; and

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

19 ‘‘(6) the term ‘tobacco product’ means cigars,

20 cigarettes, smokeless tobacco, roll your own and pipe

21 tobacco (as such terms are defined in section 5701

22 of the Internal Revenue Code of 1986); and

23 ‘‘(7) the term ‘contraband tobacco product’

24 means—

25 ‘‘(A) a quantity in excess of 30,000 of any

26 tobacco product that is manufactured, sold,
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1 shipped, delivered, transferred, or possessed in

2 violation of Federal laws relating to the dis3 tribution of tobacco products; and

4 ‘‘(B) a quantity of tobacco product that is

5 equivalent to an excess of 30,000 cigarettes, as

6 determined by regulation, which bears no evi7 dence of the payment of applicable State to8 bacco taxes in the State where such tobacco

9 products are found, if such State requires a

10 stamp, impression, or other indication to be

11 placed on packages or other containers of prod12 uct to evidence payment of tobacco taxes, or in

13 the case of a State that does not require any

14 such indication of tax payment, if the person in

15 possession of the tobacco product is unable to

16 provide any evidence that the tobacco products

17 are moving legally in interstate commerce and

18 which are in the possession of any person other

19 than a person defined in paragraph (2) of this

20 section.’’.

21 (b) UNLAWFUL ACTS.—Section 2342 of title 18,

22 United States Code, is amended—

23 (1) by inserting ‘‘or contraband tobacco prod24 ucts’’ before the period in subsection (a); and

25 (2) by adding at the end thereof the following:
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1 ‘‘(c) It is unlawful for any person—

2 ‘‘(1) knowingly to make any false statement or

3 representation with respect to the information re4 quired by this chapter to be kept in the records or

5 reports of any person who ships, sells, or distributes

6 any quantity of cigarettes in excess of 30,000 in a

7 single transaction, or tobacco products in such

8 equivalent quantities as shall be determined by regu9 lation; or

10 ‘‘(2) knowingly to fail or knowingly to fail to

11 maintain distribution records or reports, alter or ob12 literate required markings, or interfere with any in13 spection as required with respect to such quantity of

14 cigarettes or other tobacco products.

15 ‘‘(d) It shall be unlawful for any person knowingly

16 to transport cigarettes or other tobacco products under a

17 false bill of lading or without any bill of lading.’’.

18 (c) RECORDKEEPING.—Section 2343 of title 18,

19 United States Code, is amended—

20 (1) by striking ‘‘60,000’’ in subsection (a) and

21 inserting ‘‘30,000’’;

22 (2) by inserting after ‘‘transaction’’ in sub23 section (a) the following: ‘‘or, in the case of other to24 bacco products an equivalent quantity as determined

25 by regulation,’’;
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1 (3) by striking the last sentence of subsection

2 (a) and inserting the following:

3 ‘‘Except as provided in subsection (c) of this section, noth4 ing contained herein shall authorize the Secretary to re5 quire reporting under this section.’’;

6 (4) by striking ‘‘60,000’’ in subsection (b) and

7 inserting ‘‘30,000’’;

8 (5) by inserting after ‘‘transaction’’ in sub9 section (b) the following: ‘‘or, in the case of other to10 bacco products an equivalent quantity as determined

11 by regulation,’’; and

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

13 ‘‘(c)(1) Any person who ships, sells, or distributes for

14 resale tobacco products in interstate commerce, whereby

15 such tobacco products are shipped into a State taxing the

16 sale or use of such tobacco products or who advertises or

17 offers tobacco products for such sale or transfer and ship18 ment shall—

19 ‘‘(A) first file with the tobacco tax adminis20 trator of the State into which such shipment is made

21 or in which such advertisement or offer is dissemi22 nated, a statement setting for the persons name, and

23 trade name (if any), and the address of the persons

24 principal place of business and of any other place of

25 business; and
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1 ‘‘(B) not later than the 10th day of each

2 month, file with the tobacco tax administrator of the

3 State into which such shipment is made a memoran4 dum or a copy of the invoice covering each and every

5 shipment of tobacco products made during the pre6 vious month into such State; the memorandum or

7 invoice in each case to include the name and address

8 of the person to whom the shipment was made, the

9 brand, and the quantity thereof.

10 ‘‘(2) The fact that any person ships or delivers for

11 shipment any tobacco products shall, if such shipment is

12 into a State in which such person has filed a statement

13 with the tobacco tax administrator under paragraph

14 (1)(A) of this subsection, be presumptive evidence that

15 such tobacco products were sold, shipped, or distributed

16 for resale by such person.

17 ‘‘(3) For purposes of this subsection—

18 ‘‘(A) the term ‘use’ includes consumption, stor19 age, handling, or disposal of tobacco products; and

20 ‘‘(B) the term ‘tobacco tax administrator’

21 means the State official authorized to administer to22 bacco tax laws of the State.’’.

23 (e) PENALTIES.—Section 2344 of title 18, United

24 States Code, is amended—
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1 (1) by inserting ‘‘or (c)’’ in subsection (b) after

2 ‘‘section 2344(b)’’;

3 (2) by inserting ‘‘or contraband tobacco prod4 ucts’’ after ‘‘cigarettes’’ in subsection (c); and

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

6 ‘‘(d) Any proceeds from the unlawful distribution of

7 tobacco shall be subject to seizure and forfeiture under

8 section 981(a)(1)(C).’’.

9 (f) REPEAL OF FEDERAL LAW RELATING TO COL10 LECTION OF STATE CIGARETTE TAXES.—The Act of Oc11 tober 19, 1949, (63 Stat. 884; 15 U.S.C. 375-378) is here12 by repealed.

13 SEC. 1139. FUNDING.

14 (a) LICENSE FEES.—The Secretary may, in the Sec15 retary’s sole discretion, set the fees for licenses required

16 by this chapter, in such amounts as are necessary to re17 cover the costs of administering the provisions of this

18 chapter, including preventing trafficking in contraband to19 bacco products.

20 (b) DISPOSITION OF FEES.—Fees collected by the

21 Secretary under this chapter shall be deposited in an ac22 count with the Treasury of the United States that is spe23 cially designated for paying the costs associated with the

24 administration or enforcement of this chapter or any other

25 Federal law relating to the unlawful trafficking of tobacco
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1 products. The Secretary is authorized and directed to pay

2 out of any funds available in such account any expenses

3 incurred by the Federal Government in administering and

4 enforcing this chapter or any other Federal law relating

5 to the unlawful trafficking in tobacco products (including

6 expenses incurred for the salaries and expenses of individ7 uals employed to provide such services). None of the funds

8 deposited into such account shall be available for any pur9 pose other than making payments authorized under the

10 preceding sentence.

11 SEC. 1140. RULES AND REGULATIONS.

12 The Secretary shall prescribe all needful rules and

13 regulations for the enforcement of this chapter, including

14 all rules and regulations that are necessary to ensure the

15 lawful distribution of tobacco products in interstate or for16 eign commerce.

17 Subtitle C—Other Provisions

18 SEC. 1161. IMPROVING CHILD CARE AND EARLY CHILD19 HOOD DEVELOPMENT.

20 (a) IN GENERAL.—There are authorized to be appro21 priated to the Secretary from the National Tobacco Trust

22 Fund such sums as may be necessary for each fiscal year

23 to be used by the Secretary for the following purposes:

24 (1) Improving the affordability of child care

25 through increased appropriations for child care
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1 under the Child Care and Development Block Grant

2 Act of 1990 (42 U.S.C. 9859 et seq.).

3 (2) Enhancing the quality of child care and

4 early childhood development through the provision of

5 grants to States under the Child Care and Develop6 ment Block Grant Act of 1990 (42 U.S.C. 9859 et

7 seq.).

8 (3) Expanding the availability and quality of

9 school-age care through the provision of grants to

10 States under the Child Care and Development Block

11 Grant Act of 1990 (42 U.S.C. 9859 et seq.).

12 (4) Assisting young children by providing

13 grants to local collaboratives under the Child Care

14 and Development Block Grant Act of 1990 (42

15 U.S.C. 9859 et seq.) for the purpose of improving

16 parent education and supportive services, strength17 ening the quality of child care, improving health

18 services, and improving services for children with

19 disabilities.

20 (b) SUPPLEMENT NOT SUPPLANT.—Amounts made

21 available to a State under this section shall be used to

22 supplement and not supplant other Federal, State, and

23 local funds provided for programs that serve the health

24 and developmental needs of children. Amounts provided

25 to the State under any of the provisions of law referred
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1 to in this section shall not be reduced solely as a result

2 of the availability of funds under this section.

3 SEC. 1162. BAN OF SALE OF TOBACCO PRODUCTS THROUGH

4 THE USE OF VENDING MACHINES.

5 (a) BAN OF SALE OF TOBACCO PRODUCTS THROUGH

6 THE USE OF VENDING MACHINES.—Effective 12 months

7 after the date of enactment of this Act, it shall be unlawful

8 to sell tobacco products through the use of a vending ma9 chine.

10 (b) COMPENSATION FOR BANNED VENDING MA11 CHINES.—

12 (1) IN GENERAL.—The owners and operators of

13 tobacco vending machines shall be reimbursed, sub14 ject to the availability of appropriations under sub15 section (d), for the fair market value of their tobacco

16 vending machines.

17 (2) TOBACCO VENDING REIMBURMENT COR18 PORATION.—

19 (A) CORPORATION.—Reimbursment shall

20 be directed through a private, nonprofit cor21 poration established in the District of Colum22 bia, known as the Tobacco Vending

23 Reimburment Corporation (in this section re24 ferred to as the ‘‘Corporation’’). Except as oth25 erwise provided in this section, the Corporation
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1 is subject to, and has all the powers conferred

2 upon a nonprofit corporation by the District of

3 Columbia Nonprofit Corporation Act (D.C.

4 Code section 29–501 et seq.).

5 (B) DUTIES.—The Corporation shall—

6 (i) disburse compensation funds to

7 vending companies under this section;

8 (ii) verify operational machines; and

9 (iii) maintain complete records of ma10 chine verification and accountings of dis11 bursements and administration of the com12 pensation fund established under para13 graph (4).

14 (3) MANAGEMENT OF CORPORATION.—

15 (A) BOARD OF DIRECTORS.—The Corpora16 tion shall be managed by a Board of Directors

17 that—

18 (i) consists of distinguished Americans

19 with experience in finance, public policy, or

20 fund management;

21 (ii) includes at least 1 member of the

22 United States tobacco vending machine in23 dustry;

24 (iii) shall be paid an annual salary in

25 an amount determined by the President of
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1 the Corporation not to exceed $40,000 in2 dividually, out of amounts transferred to

3 the Corporation under paragraph (4)(A);

4 (iv) shall appoint a President to man5 age the day-to-day activities of the Cor6 poration;

7 (v) shall develop guidelines by which

8 the President shall direct the Corporation;

9 (vi) shall retain a national accounting

10 firm to verify the distribution of funds and

11 audit the compensation fund established

12 under paragraph (4);

13 (vii) shall retain such legal, manage14 ment, or consulting assistance as is nec15 essary and reasonable; and

16 (viii) shall periodically report to Con17 gress regarding the activities of the Cor18 poration.

19 (B) DUTIES OF THE PRESIDENT OF THE

20 CORPORATION.—The President of the Corpora21 tion shall—

22 (i) hire appropriate staff;

23 (ii) prepare the report of the Board of

24 Directors of the Corporation required

25 under subparagraph (A)(viii); and
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1 (iii) oversee Corporation functions, in2 cluding verification of machines, adminis3 tration and disbursement of funds, mainte4 nance of complete records, operation of ap5 peals procedures, and other directed func6 tions.

7 (4) COMPENSATION FUND.—

8 (A) RULES FOR DISBURSEMENT OF

9 FUNDS.—

10 (i) PAYMENTS TO OWNERS AND OPER11 ATORS.—The Corporation shall disburse

12 funds to compensate the owners and opera13 tors of tobacco vending machines in ac14 cordance with the following:

15 (I) The fair market value of each

16 tobacco vending machine verified by

17 the Corporation President in accord18 ance with subparagraph (C), and

19 proven to have been in operation be20 fore August 10, 1995, shall be dis21 bursed to the owner of the machine

22 seeking compensation.

23 (II) No compensation shall be

24 made for a spiral glass front vending

25 machine.
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1 (ii) OTHER PAYMENTS.—Funds ap2 propriated to the Corporation under sub3 section (d) may be used to pay the admin4 istrative costs of the Corporation that are

5 necessary and proper or required by law.

6 The total amount paid by the Corporation

7 for administrative and overhead costs, in8 cluding accounting fees, legal fees, consult9 ant fees, and associated administrative

10 costs shall not exceed 1 percent of the total

11 amount appropriated to the Corporation

12 under subsection (d).

13 (B) VERIFICATION OF VENDING MA14 CHINES.—Verification of vending machines

15 shall be based on copies of official State vend16 ing licenses, company computerized or hand17 written sales records, or physical inspection by

18 the Corporation President or by an inspection

19 agent designated by the President. The Cor20 poration President and the Board of Directors

21 of the Corporation shall work vigorously to pre22 vent and prosecute any fraudulent claims sub23 mitted for compensation.

24 (C) RETURN OF ACCOUNT FUNDS NOT DIS25 TRIBUTED TO VENDORS.—The Corporation
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1 shall be dissolved on the date that is 4 years

2 after the date of enactment of this Act. Any

3 funds not dispersed or allocated to claims pend4 ing as of that date shall be transferred to a

5 public anti-smoking trust, or used for such

6 other purposes as Congress may designate.

7 (c) SETTLEMENT OF LEGAL CLAIMS PENDING

8 AGAINST THE UNITED STATES.—Acceptance of a com9 pensation payment from the Corporation by a vending ma10 chine owner or operator shall settle all pending and future

11 claims of the owner or operator against the United States

12 that are based on, or related to, the ban of the use of

13 tobacco vending machines imposed under this section and

14 any other laws or regulations that limit the use of tobacco

15 vending machines.

16 (d) AUTHORIZATION OF APPROPRIATIONS.—There

17 are authorized to be appropriated to the Corporation from

18 funds not otherwise obligated in the Treasury or out of

19 the National Tobacco Trust Fund, such sums as may be

20 necessary to carry out this section.

21 SEC. 1163. AMENDMENTS TO THE EMPLOYEE RETIREMENT

22 INCOME SECURITY ACT OF 1974.

23 (a) IN GENERAL.—Subpart B of part 7 of subtitle

24 B of title I of the Employee Retirement Income Security
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1 Act of 1974 (29 U.S.C. 1185 et seq.) is amended by add2 ing at the end the following new section:

3 ‘‘SEC. 713. REQUIRED COVERAGE FOR MINIMUM HOSPITAL

4 STAY FOR MASTECTOMIES AND LYMPH NODE

5 DISSECTIONS FOR THE TREATMENT OF

6 BREAST CANCER AND COVERAGE FOR RE7 CONSTRUCTIVE SURGERY FOLLOWING

8 MASTECTOMIES.

9 ‘‘(a) INPATIENT CARE.—

10 ‘‘(1) IN GENERAL.—A group health plan, and a

11 health insurance issuer providing health insurance

12 coverage in connection with a group health plan,

13 that provides medical and surgical benefits shall en14 sure that inpatient coverage with respect to the sur15 gical treatment of breast cancer (including a mastec16 tomy, lumpectomy, or lymph node dissection for the

17 treatment of breast cancer) is provided for a period

18 of time as is determined by the attending physician,

19 in his or her professional judgment consistent with

20 generally accepted medical standards, in consultation

21 with the patient, and subject to subsection (d), to be

22 medically appropriate.

23 ‘‘(2) EXCEPTION.—Nothing in this section shall

24 be construed as requiring the provision of inpatient

25 coverage if the attending physician in consultation
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1 with the patient determine that a shorter period of

2 hospital stay is medically appropriate.

3 ‘‘(b) RECONSTRUCTIVE SURGERY.—A group health

4 plan, and a health insurance issuer providing health insur5 ance coverage in connection with a group health plan, that

6 provides medical and surgical benefits with respect to a

7 mastectomy shall ensure that, in a case in which a mastec8 tomy patient elects breast reconstruction, coverage is pro9 vided for—

10 ‘‘(1) all stages of reconstruction of the breast

11 on which the mastectomy has been performed;

12 ‘‘(2) surgery and reconstruction of the other

13 breast to produce a symmetrical appearance; and

14 ‘‘(3) the costs of prostheses and complications

15 of mastectomy including lymphedemas;

16 in the manner determined by the attending physician and

17 the patient to be appropriate. Such coverage may be sub18 ject to annual deductibles and coinsurance provisions as

19 may be deemed appropriate and as are consistent with

20 those established for other benefits under the plan or cov21 erage. Written notice of the availability of such coverage

22 shall be delivered to the participant upon enrollment and

23 annually thereafter.

24 ‘‘(c) NOTICE.—A group health plan, and a health in25 surance issuer providing health insurance coverage in con-
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1 nection with a group health plan shall provide notice to

2 each participant and beneficiary under such plan regard3 ing the coverage required by this section in accordance

4 with regulations promulgated by the Secretary. Such no5 tice shall be in writing and prominently positioned in any

6 literature or correspondence made available or distributed

7 by the plan or issuer and shall be transmitted—

8 ‘‘(1) in the next mailing made by the plan or

9 issuer to the participant or beneficiary;

10 ‘‘(2) as part of any yearly informational packet

11 sent to the participant or beneficiary; or

12 ‘‘(3) not later than January 1, 1998;

13 whichever is earlier.

14 ‘‘(d) NO AUTHORIZATION REQUIRED.—

15 ‘‘(1) IN GENERAL.—An attending physician

16 shall not be required to obtain authorization from

17 the plan or issuer for prescribing any length of stay

18 in connection with a mastectomy, a lumpectomy, or

19 a lymph node dissection for the treatment of breast

20 cancer.

21 ‘‘(2) PRENOTIFICATION.—Nothing in this sec22 tion shall be construed as preventing a group health

23 plan from requiring prenotification of an inpatient

24 stay referred to in this section if such requirement

25 is consistent with terms and conditions applicable to
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1 other inpatient benefits under the plan, except that

2 the provision of such inpatient stay benefits shall not

3 be contingent upon such notification.

4 ‘‘(e) PROHIBITIONS.—A group health plan, and a

5 health insurance issuer offering group health insurance

6 coverage in connection with a group health plan, may

7 not—

8 ‘‘(1) deny to a patient eligibility, or continued

9 eligibility, to enroll or to renew coverage under the

10 terms of the plan, solely for the purpose of avoiding

11 the requirements of this section;

12 ‘‘(2) provide monetary payments or rebates to

13 individuals to encourage such individuals to accept

14 less than the minimum protections available under

15 this section;

16 ‘‘(3) penalize or otherwise reduce or limit the

17 reimbursement of an attending provider because

18 such provider provided care to an individual partici19 pant or beneficiary in accordance with this section;

20 ‘‘(4) provide incentives (monetary or otherwise)

21 to an attending provider to induce such provider to

22 provide care to an individual participant or bene23 ficiary in a manner inconsistent with this section;

24 and
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1 ‘‘(5) subject to subsection (f)(3), restrict bene2 fits for any portion of a period within a hospital

3 length of stay required under subsection (a) in a

4 manner which is less favorable than the benefits pro5 vided for any preceding portion of such stay.

6 ‘‘(f) RULES OF CONSTRUCTION.—

7 ‘‘(1) IN GENERAL.—Nothing in this section

8 shall be construed to require a patient who is a par9 ticipant or beneficiary—

10 ‘‘(A) to undergo a mastectomy or lymph

11 node dissection in a hospital; or

12 ‘‘(B) to stay in the hospital for a fixed pe13 riod of time following a mastectomy or lymph

14 node dissection.

15 ‘‘(2) LIMITATION.—This section shall not apply

16 with respect to any group health plan, or any group

17 health insurance coverage offered by a health insur18 ance issuer, which does not provide benefits for hos19 pital lengths of stay in connection with a mastec20 tomy or lymph node dissection for the treatment of

21 breast cancer.

22 ‘‘(3) COST SHARING.—Nothing in this section

23 shall be construed as preventing a group health plan

24 or issuer from imposing deductibles, coinsurance, or

25 other cost-sharing in relation to benefits for hospital
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1 lengths of stay in connection with a mastectomy or

2 lymph node dissection for the treatment of breast

3 cancer under the plan (or under health insurance

4 coverage offered in connection with a group health

5 plan), except that such coinsurance or other cost6 sharing for any portion of a period within a hospital

7 length of stay required under subsection (a) may not

8 be greater than such coinsurance or cost-sharing for

9 any preceding portion of such stay.

10 ‘‘(4) LEVEL AND TYPE OF REIMBURSE11 MENTS.—Nothing in this section shall be construed

12 to prevent a group health plan or a health insurance

13 issuer offering group health insurance coverage from

14 negotiating the level and type of reimbursement with

15 a provider for care provided in accordance with this

16 section.

17 ‘‘(g) PREEMPTION, RELATION TO STATE LAWS.—

18 ‘‘(1) IN GENERAL.—Nothing in this section

19 shall be construed to preempt any State law in effect

20 on the date of enactment of this section with respect

21 to health insurance coverage that—

22 ‘‘(A) such State law requires such coverage

23 to provide for at least a 48-hour hospital length

24 of stay following a mastectomy performed for

25 treatment of breast cancer and at least a 24-
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1 hour hospital length of stay following a lymph

2 node dissection of breast cancer;

3 ‘‘(B) requires coverage of at least the cov4 erage of reconstructive breast surgery otherwise

5 required under this section; or

6 ‘‘(C) requires coverage for breast cancer

7 treatments (including breast reconstruction) in

8 accordance with scientific evidence-based prac9 tices or guidelines recommended by established

10 medical associations.

11 ‘‘(2) APPLICATION OF SECTION.—With respect

12 to a State law—

13 ‘‘(A) described in paragraph (1)(A), the

14 provisions of this section relating to breast re15 construction shall apply in such State; and

16 ‘‘(B) described in paragraph (1)(B), the

17 provisions of this section relating to length of

18 stays for surgical breast treatment shall apply

19 in such State.

20 ‘‘(3) ERISA.—Nothing in this section shall be

21 construed to affect or modify the provisions of sec22 tion 514 with respect to group health plans.’’.

23 (b) CLERICAL AMENDMENT.—The table of contents

24 in section 1 of the Employee Retirement Income Security

25 Act of 1974 (29 U.S.C. 1001 note) is amended by insert-
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1 ing after the item relating to section 712 the following

2 new item:

‘‘Sec. 713. Required coverage for minimum hospital stay for mastectomies and

lymph node dissections for the treatment of breast cancer and

coverage for reconstructive surgery following mastectomies.’’.

3 (c) EFFECTIVE DATES.—

4 (1) IN GENERAL.—The amendments made by

5 this section shall apply with respect to plan years be6 ginning on or after the date of enactment of this

7 Act.

8 (2) SPECIAL RULE FOR COLLECTIVE BARGAIN9 ING AGREEMENTS.—In the case of a group health

10 plan maintained pursuant to 1 or more collective

11 bargaining agreements between employee representa12 tives and 1 or more employers, any plan amendment

13 made pursuant to a collective bargaining agreement

14 relating to the plan which amends the plan solely to

15 conform to any requirement added by this section

16 shall not be treated as a termination of such collec17 tive bargaining agreement.

18 TITLE XII—ASBESTOS-RELATED

19 TOBACCO CLAIMS

20 SEC. 1201. NATIONAL TOBACCO TRUST FUNDS AVAILABLE

21 UNDER FUTURE LEGISLATION.

22 If the Congress enacts qualifying legislation after the

23 date of enactment of this Act to provide for the payment

24 of asbestos claims, then amounts in the National Tobacco
402

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1 Trust Fund established by title IV of this Act set aside

2 for public health expenditures shall be available, as pro3 vided by appropriation Acts, to make those payments. For

4 purposes of this section, the term ‘‘qualifying legislation’’

5 means a public law that amends this Act and changes the

6 suballocations of funds set aside for public health expendi7 tures under title IV of this Act to provide for the payment

8 of those claims.

9 TITLE XIII—VETERANS’

10 BENEFITS

11 SEC. 1301. RECOVERY BY SECRETARY OF VETERANS AF12 FAIRS.

13 Title 38, United States Code, is amended by adding

14 after part VI the following:

15 ‘‘PART VII—RECOVERY OF COSTS

16 FOR TOBACCO-RELATED DIS17 ABILITY OR DEATH

18 ‘‘CHAPTER 91—TORT LIABILITY FOR DISABILITY,

19 INJURY, DISEASE, OR DEATH DUE TO TOBACCO USE

‘‘Sec.

‘‘9101. Recovery by Secretary of Veterans Affairs

‘‘9102. Regulations

‘‘9103. Limitation or repeal of other provisions for recovery of compensation

‘‘9104. Exemption from annual limitation on damages

20 ‘‘§ 9101. Recovery by Secretary of Veterans Affairs

21 ‘‘(a) CONDITIONS; EXCEPTIONS; PERSONS LIABLE;

22 AMOUNT OF RECOVERY; SUBROGATION.—In any case in
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1 which the Secretary is authorized or required by law to

2 provide compensation and medical care services under this

3 title for disability or death from injury or disease attrib4 utable in whole or in part to the use of tobacco products

5 by a veteran during the veterans active military, naval,

6 or air service under circumstances creating a tort liability

7 upon a tobacco product manufacturer (other than or in

8 addition to the United States) to pay damages therefor,

9 the Secretary shall have a right to recover (independent

10 of the rights of the injured or diseased veteran) from said

11 tobacco product manufacturer the cost of the compensa12 tion paid or to be paid and the costs of medical care serv13 ices provided, and shall, as to this right, be subrogated

14 to any right or claim that the injured or diseased veteran,

15 his or her guardian, personal representative, estate, de16 pendents, or survivors has against such third person to

17 the extent of the cost of the compensation paid or to be

18 paid and the costs of medical services provided.

19 ‘‘(b) ENFORCEMENT PROCEDURE; INTERVENTION;

20 JOINDER OF PARTIES; STATE OR FEDERAL COURT PRO21 CEEDINGS.—The Secretary may, to enforce such right

22 under subsection (a) of this section—

23 ‘‘(1) intervene or join in any action or proceed24 ing brought by the injured or diseased veteran, his

25 or her guardian, personal representative, estate, de-
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1 pendents, or survivors, against the tobacco product

2 manufacturer who is liable for the injury or disease;

3 or

4 ‘‘(2) if such action or proceeding is not com5 menced within 6 months after the first day on which

6 compensation is paid, or the medical care services

7 are provided, by the Secretary in connection with the

8 injury or disease involved, institute and prosecute

9 legal proceedings against the tobacco product manu10 facturer who is liable for the injury or disease, in a

11 State or Federal court, either alone (in its own name

12 or in the name of the injured veteran, his or her

13 guardian, personal representative, estate, depend14 ents, or survivors) or in conjunction with the injured

15 or diseased veteran, his or her guardian, personal

16 representative, estate, dependents, or survivors.

17 ‘‘(c) CREDITS TO APPROPRIATIONS.—Any amount re18 covered or collected under this section for compensation

19 paid, and medical care services provided, by the Secretary

20 shall be credited to a revolving fund established in the

21 Treasury of the United States known as the Department

22 of Veterans Affairs Tobacco Recovery Fund (hereafter

23 called the Fund). The Fund shall be available to the Sec24 retary without fiscal year limitation for purposes of veter25 ans programs, including administrative costs. The Sec-
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1 retary may transfer such funds as deemed necessary to

2 the various Department of Veterans Affairs appropria3 tions, which shall remain available until expended.

4 ‘‘§ 9102. Regulations

5 ‘‘(a) DETERMINATION AND ESTABLISHMENT OF

6 PRESENT VALUE OF COMPENSATION AND MEDICAL CARE

7 SERVICES TO BE PAID.—The Secretary may prescribe

8 regulations to carry out this chapter, including regulations

9 with respect to the determination and establishment of the

10 present value of compensation to be paid to an injured

11 or diseased veteran or his or her surviving spouse, child,

12 or parent, and medical care services provided to a veteran.

13 ‘‘(b) SETTLEMENT, RELEASE AND WAIVER OF

14 CLAIMS.—To the extent prescribed by regulations under

15 subsection (a) of this section, the Secretary may—

16 ‘‘(1) compromise, or settle and execute a release

17 of, any claim which the Secretary has by virtue of

18 the right established by section 9101 of this title; or

19 ‘‘(2) waive any such claim, in whole or in part,

20 for the convenience of the Government, or if he or

21 she determines that collection would result in undue

22 hardship upon the veteran who suffered the injury

23 or disease or his or her surviving spouse, child or

24 parent resulting in payment of compensation, or re25 ceipt of medical care services.
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1 ‘‘(c) DAMAGES RECOVERABLE FOR PERSONAL IN2 JURY UNAFFECTED.—No action taken by the Secretary

3 in connection with the rights afforded under this chapter

4 shall operate to deny to the injured veteran or his or her

5 surviving spouse, child or parent the recovery for that por6 tion of his or her damage not covered hereunder.

7 ‘‘§ 9103. Limitation or repeal of other provisions for

8 recovery of compensation and medical

9 care services

10 ‘‘This chapter does not limit or repeal any other pro11 vision of law providing for recovery by the Secretary of

12 the cost of compensation and medical care services de13 scribed in section 9101 of this title.

14 ‘‘§ 9104. Exemption from annual limitation on dam15 ages

16 ‘‘Any amount recovered under section 9101 of this

17 title for compensation paid or to be paid, and the cost

18 of medical care services provided, by the Secretary for dis19 ability or death from injury or disease attributable in

20 whole or in part to the use of tobacco products by a vet21 eran during the veterans active military, naval, or air serv22 ice shall not be subject to the limitation on the annual

23 amount of damages for which the tobacco product manu24 facturers may be found liable as provided in the National

25 Tobacco Policy and Youth Smoking Reduction Act and
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1 shall not be counted in computing the annual amount of

2 damages for purposes of that section.’’.

3 TITLE XIV—EXCHANGE OF BENE4 FITS FOR AGREEMENT TO

5 TAKE ADDITIONAL MEAS6 URES TO REDUCE YOUTH

7 SMOKING

8 SEC. 1401. CONFERRAL OF BENEFITS ON PARTICIPATING

9 TOBACCO PRODUCT MANUFACTURERS IN RE10 TURN FOR THEIR ASSUMPTION OF SPECIFIC

11 OBLIGATIONS.

12 Participating tobacco product manufacturers shall re13 ceive the benefits, and assume the obligations, set forth

14 in this title.

15 SEC. 1402. PARTICIPATING TOBACCO PRODUCT MANUFAC16 TURER.

17 (a) IN GENERAL.—Except as provided in subsection

18 (b), a tobacco product manufacturer that—

19 (1) executes a protocol with the Secretary of

20 Health and Human Services that meets the require21 ments of sections 1403, 1404, and 1405; and

22 (2) makes the payment required under section

23 402(a)(1),

24 is, for purposes of this title, a participating tobacco prod25 ucts manufacturer.
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1 (b) DISQUALIFICATION.—

2 (1) INELIGIBILITY.—Notwithstanding sub3 section (a), a tobacco product manufacturer may not

4 become a participating tobacco products manufac5 turer if—

6 (A) the tobacco product manufacturer or

7 any of its principal officers (acting in that offi8 cial’s corporate capacity), is convicted of—

9 (i) manufacturing or distributing mis10 branded tobacco products in violation of

11 the criminal prohibitions on such mis12 branding established under section 301 or

13 303 of the Federal Food, Drug, and Cos14 metic Act (21 U.S.C. 331 or 333);

15 (ii) violating reporting requirements

16 established under section 5762(a)(4) of the

17 Internal Revenue Code of 1986 (26 U.S.C.

18 5762(a)(4));

19 (iii) violating, or aiding and abetting

20 the violation of chapter 114 of title 18,

21 United States Code; or

22 (iv) violating Federal prohibitions on

23 mail fraud, wire fraud, or the making of

24 false statements to Federal officials in the
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1 course of making reports or disclosures re2 quired by this Act; or

3 (B) the tobacco product manufacturer, at

4 the end of the 1-year period beginning on the

5 date on which such manufacturer fails to make

6 a required assessment payment under title IV

7 of this Act, has not fully made such payment.

8 (2) DISQUALIFICATION.—A tobacco product

9 manufacturer that has become a participating to10 bacco product manufacturer shall cease to be treated

11 as a participating tobacco product manufacturer if—

12 (A) it, or any of its principal officers (act13 ing in that official’s corporate capacity) is con14 victed of an offense described in paragraph

15 (1)(A); or

16 (B) it fails to make such a payment within

17 the time period described in paragraph (1)(B).

18 (c) NON-PARTICIPATING TOBACCO MANUFACTUR19 ERS.—Any tobacco product manufacturer that—

20 (1) does not execute a protocol in accordance

21 with subsection (a);

22 (2) fails to make the payment required by sec23 tion 402(a)(1) (if applicable to that manufacturer);
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1 (3) is not eligible, under subsection (b)(1), to

2 become a participating tobacco product manufac3 turer; or

4 (4) ceases to be treated as a participating to5 bacco product manufacturer under subsection (b)(2),

6 is, for purposes of this title, a non-participating tobacco

7 product manufacturer.

8 SEC. 1403. GENERAL PROVISIONS OF PROTOCOL.

9 (a) IN GENERAL.—For purposes of section 1402, a

10 protocol meets the requirements of this section if it—

11 (1) contains the provisions described in sub12 section (b); and

13 (2) is enforceable at law.

14 (b) REQUIRED PROVISIONS.—The protocol shall in15 clude the following provisions:

16 (1) The tobacco product manufacturer execut17 ing the protocol will not engage in any conduct that

18 was, either on the date of enactment of this Act, or

19 at any time after the date of enactment of this

20 Act—

21 (A) prohibited by this Act;

22 (B) prohibited by any regulation promul23 gated by the Food and Drug Administration

24 that applies to tobacco products; or

25 (C) prohibited by any other statute.
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1 (2) The tobacco product manufacturer execut2 ing the protocol will contract with only such dis3 tributors and retailers who have operated in compli4 ance with the applicable provisions of Federal, State,

5 or local law regarding the marketing and sale of to6 bacco products and who agree to comply with adver7 tising and marketing provisions in paragraph (3).

8 (3) The tobacco product manufacturer execut9 ing the protocol will be bound in marketing tobacco

10 products by the following provisions, whether or not

11 these provisions have legal force and effect against

12 manufacturers who are not signatories to the proto13 col—

14 (A) the advertising and marketing provi15 sions of part 897 of title 21, Code of Federal

16 Regulations, that were published in the Federal

17 Register on August 28, 1996, and which shall

18 be adopted and incorporated as independent

19 terms of the protocol;

20 (B) the requirements of section 1404; and

21 (C) the requirements of section 1405.

22 (4) The tobacco product manufacturer execut23 ing the protocol will make any payments to the Na24 tional Tobacco Trust Fund in title IV that are re-
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1 quired to be made under that title or in any other

2 title of this Act.

3 (5) The tobacco product manufacturer execut4 ing the protocol will be bound by the provisions of

5 title IV, and any other title of this Act with respect

6 to payments required under title IV, without regard

7 to whether those provisions have legal force and ef8 fect against manufacturers who have not become sig9 natories.

10 (6) The tobacco product manufacturer execut11 ing the protocol will make the industry-wide and

12 manufacturer-specific look-back assessment pay13 ments that may be required under title II.

14 (7) The tobacco product manufacturer execut15 ing the protocol will be bound by the provisions of

16 title II that require a manufacturer to make look17 back assessments, and any other title of this Act

18 with respect to such assessments, without regard to

19 whether such terms have legal force and effect

20 against manufacturers who have not become signato21 ries.

22 (8) The tobacco product manufacturer execut23 ing the protocol will, within 180 days after the date

24 of enactment of this Act and in conjunction with

25 other participating tobacco product manufacturers,
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1 establish a National Tobacco Document Depository

2 in the Washington, D.C. area—

3 (A) that is not affiliated with, or controlled

4 by, any tobacco product manufacturer;

5 (B) the establishment and operational

6 costs of which are allocated among participating

7 tobacco product manufacturers; and

8 (C) that will make any document submit9 ted to it under title IX of this Act and finally

10 determined not to be subject to attorney-client

11 privilege, attorney work product, or trade secret

12 exclusions, available to the public using the

13 Internet or other means within 30 days after

14 receiving the document.

15 (c) PROVISIONS APPLICABLE TO DOCUMENTS.—The

16 provisions of section 2116(a) and (b) of title 44, United

17 States Code, apply to records and documents submitted

18 to the Depository (or, to the alternative depository, if any,

19 established by the Secretary by regulation under title IX

20 of this Act) in the same manner and to the same extent

21 as if they were records submitted to the National Archives

22 of the United States required by statute to be retained

23 indefinitely.
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1 SEC. 1404. TOBACCO PRODUCT LABELING AND ADVERTIS2 ING REQUIREMENTS OF PROTOCOL.

3 (a) IN GENERAL.—For purposes of section 1402, a

4 protocol meets the requirements of this section if it re5 quires that—

6 (1) no tobacco product will be sold or distrib7 uted in the United States unless its advertising and

8 labeling (including the package)—

9 (A) contain no human image, animal

10 image, or cartoon character;

11 (B) are not outdoor advertising, including

12 advertising in enclosed stadia and on mass

13 transit vehicles, and advertising from within a

14 retail establishment that is directed toward or

15 visible from the outside of the establishment;

16 (C) at the time the advertising or labeling

17 is first used are submitted to the Secretary so

18 that the Secretary may conduct regular review

19 of the advertising and labeling;

20 (D) comply with any applicable require21 ment of the Federal Food, Drug, and Cosmetic

22 Act, the Federal Cigarette Labeling and Adver23 tising Act, and any regulation promulgated

24 under either of those Acts;

25 (E) do not appear on the international

26 computer network of both Federal and non-
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1 Federal interoperable packet switches data net2 works (the ‘‘Internet’’), unless such advertising

3 is designed to be inaccessible in or from the

4 United States to all individuals under the age

5 of 18 years;

6 (F) use only black text on white back7 ground, other than—

8 (i) those locations other than retail

9 stores where no person under the age of 18

10 is permitted or present at any time, if the

11 advertising is not visible from outside the

12 establishment and is affixed to a wall or

13 fixture in the establishment; and

14 (ii) advertisements appearing in any

15 publication which the tobacco product

16 manufacturer, distributor, or retailer dem17 onstrates to the Secretary is a newspaper,

18 magazine, periodical, or other publication

19 whose readers under the age of 18 years

20 constitute 15 percent or less of the total

21 readership as measured by competent and

22 reliable survey evidence, and that is read

23 by less than 2 million persons under the

24 age of 18 years as measured by competent

25 and reliable survey evidence;
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1 (G) for video formats, use only static black

2 text on a white background, and any accom3 panying audio uses only words without music or

4 sound effects;

5 (8) for audio formats, use only words with6 out music or sound effects;

7 (2) if a logo, symbol, motto, selling message,

8 recognizable color or pattern of colors, or any other

9 indicia of brand-name product identification of the

10 tobacco product is contained in a movie, program, or

11 video game for which a direct or indirect payment

12 has been made to ensure its placement;

13 (3) if a direct or indirect payment has been

14 made by any tobacco product manufacturer, dis15 tributor, or retailer to any entity for the purpose of

16 promoting use of the tobacco product through print

17 or film media that appeals to individuals under the

18 age of 18 years or through a live performance by an

19 entertainment artist that appeals to such individ20 uals;

21 (4) if a logo, symbol, motto, selling message,

22 recognizable color or pattern of colors, or any other

23 indicia or product identification identical to, similar

24 to, or identifiable with the tobacco product is used

25 for any item (other than a tobacco product) or serv-
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1 ice marketed, licensed, distributed or sold or caused

2 to be marketed, licensed, distributed, or sold by the

3 tobacco product manufacturer or distributor of the

4 tobacco product; and

5 (5)(A) except as provided in subparagraph (B),

6 if advertising or labeling for such product that is

7 otherwise in accordance with the requirements of

8 this section bears a tobacco product brand name

9 (alone or in conjunction with any other word) or any

10 other indicia of tobacco product identification and is

11 disseminated in a medium other than newspapers,

12 magazines, periodicals or other publications (whether

13 periodic or limited distribution), nonpoint-of-sale

14 promotional material (including direct mail), point15 of-sale promotional material, or audio or video for16 mats delivered at a point-of-sale; but

17 (B) notwithstanding subparagraph (A), adver18 tising or labeling for cigarettes or smokeless tobacco

19 may be disseminated in a medium that is not speci20 fied in paragraph (1) if the tobacco product manu21 facturer, distributor, or retailer notifies the Sec22 retary not later than 30 days prior to the use of

23 such medium, and the notice describes the medium

24 and the extent to which the advertising or labeling

25 may be seen by persons under the age of 18 years.
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1 (b) COLOR PRINT ADS ON MAGAZINES.—The proto2 col shall also provide that no tobacco product may be sold

3 or distributed in the United States if any advertising for

4 that product on the outside back cover of a magazine ap5 pears in any color or combination of colors.

6 SEC. 1405. POINT-OF-SALE REQUIREMENTS.

7 (a) IN GENERAL.—For purposes of section 1402, a

8 protocol meets the requirements of this section if it pro9 vides that, except as provided in subsection (b), point-of10 sale advertising of any tobacco product in any retail estab11 lishment is prohibited.

12 (b) PERMITTED POS LOCATIONS.—

13 (1) PLACEMENT.—One point-of-sale advertise14 ment may be placed in or at each retail establish15 ment for its brand or the contracted house retailer

16 or private label brand of its wholesaler.

17 (2) SIZE.—The display area of any such point18 of-sale advertisement (either individually or in the

19 aggregate) shall not be larger than 576 square

20 inches and shall consist of black letters on white

21 background or another recognized typography.

22 (3) PROXIMITY TO CANDY.—Any such point-of23 sale advertisement shall not be attached to or lo24 cated within 2 feet of any display fixture on which

25 candy is displayed for sale.
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1 (c) AUDIO OR VIDEO.—Any audio or video format

2 permitted under regulations promulgated by the Secretary

3 may be played or shown in, but not distributed, at any

4 location where tobacco products are offered for sale.

5 (d) NO RESTRICTIVE COVENANTS.—No tobacco

6 product manufacturer or distributor of tobacco products

7 may enter into any arrangement with a retailer that limits

8 the retailer’s ability to display any form of advertising or

9 promotional material originating with another supplier

10 and permitted by law to be displayed in a retail establish11 ment.

12 (e) DEFINITIONS.—As used in this section, the terms

13 ‘‘point-of-sale advertisement’’ and ‘‘point-of-sale advertis14 ing’’ mean all printed or graphical materials (other than

15 a pack, box, carton, or container of any kind in which ciga16 rettes or smokeless tobacco is offered for sale, sold, or oth17 erwise distributed to consumers) bearing the brand name

18 (alone or in conjunction with any other word), logo, sym19 bol, motto, selling message, or any other indicia of product

20 identification identical or similar to, or identifiable with,

21 those used for any brand of cigarettes or smokeless to22 bacco, which, when used for its intended purpose, can rea23 sonably be anticipated to be seen by customers at a loca24 tion where tobacco products are offered for sale.
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1 SEC. 1406. APPLICATION OF TITLE.

2 (a) IN GENERAL.—The provisions of this title apply

3 to any civil action involving a tobacco claim brought pur4 suant to title VII of this Act, including any such claim

5 that has not reached final judgment or final settlement

6 as of the date of enactment of this Act, only if such claim

7 is brought or maintained against—

8 (1) a participating tobacco product manufac9 turer or its predecessors;

10 (2) an importer, distributor, wholesaler, or re11 tailer of tobacco products—

12 (A) that, after the date of enactment of

13 this Act, does not import, distribute, or sell to14 bacco products made or sold by a non-partici15 pating tobacco manufacturer;

16 (B) whose business practices with respect

17 to sales or operations occurring within the

18 United States, conform to the applicable re19 quirements of the protocol; and

20 (C) that is not itself a non-participating

21 tobacco product manufacturer;

22 (3) a supplier of component or constituent parts

23 of tobacco products—

24 (A) whose business practices with respect

25 to sales or operations occurring within the
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1 United States, conform to the applicable re2 quirements of the protocol; and

3 (B) that is not itself a non-participating

4 tobacco product manufacturer;

5 (4) a grower of tobacco products, unless such

6 person is itself a non-participating tobacco product

7 manufacturer; or

8 (5) an insurer of any person described in para9 graph (1), (2), (3), or (4) based on, arising out of,

10 or related to tobacco products manufactured, im11 ported, distributed, or sold (or tobacco grown) by

12 such person (other than an action brought by the in13 sured person), unless such insurer is itself a non14 participating tobacco product manufacturer.

15 (b) EXCEPTIONS.—The provisions of this title shall

16 not apply to any tobacco claim—

17 (1) brought against any person other than

18 those described in subsection (a) or to any tobacco

19 claim that reached final judgment or final settlement

20 prior to the date of enactment of this Act;

21 (2) against an employer under valid workers’

22 compensation laws;

23 (3) arising under the securities laws of a State

24 or the United State;

25 (4) brought by the United States;
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1 (5) brought under this title by a State or a par2 ticipating tobacco product manufacturer to enforce

3 this Act;

4 (6) asserting damage to the environment from

5 exposures other than environmental smoke or sec6 ond-hand smoke; or

7 (7) brought against a supplier of a component

8 or constituent part of a tobacco product, if the com9 ponent or constituent part was sold after the date of

10 enactment of this Act, and the supplier knew that

11 the tobacco product giving rise to the claim would be

12 manufactured in the United States by a nonpartici13 pating tobacco product manufacturer.

14 SEC. 1407. GOVERNMENTAL CLAIMS.

15 (a) IN GENERAL.—Except as provided in subsection

16 (b) and (c), no State, political subdivision of a State, mu17 nicipal corporation, governmental entity or corporation,

18 Indian tribe, or agency or subdivision thereof, or other en19 tity acting in parens patriae, may file or maintain any civil

20 action involving a tobacco claim against a participating to21 bacco product manufacturer.

22 (b) EFFECT ON EXISTING STATE SUITS OF SETTLE23 MENT AGREEMENT OR CONSENT DECREE.—Within 30

24 days after the date of enactment of this Act, any State

25 that has filed a civil action involving a tobacco claim
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1 against a participating tobacco product manufacturer may

2 elect to settle such action against said tobacco product

3 manufacturer. If a State makes such an election to enter

4 into a settlement or a consent decree, it may maintain a

5 civil action involving a tobacco claim only to the extent

6 necessary to permit continuing court jurisdiction over the

7 settlement or consent decree. Nothing herein shall pre8 clude any State from bringing suit or seeking a court

9 order to enforce the terms of such settlement or decree.

10 (c) STATE OPTION FOR ONE-TIME OPT OUT.—Any

11 State that does not make the election described in sub12 section (b) may continue its lawsuit, notwithstanding sub13 section (a) of this section. A State that does not make

14 such an election shall not be eligible to receive payments

15 from the trust fund in title IV.

16 (d) 30-DAY DELAY.—No settlement or consent de17 cree entered into under subsection (b) may take effect

18 until 30 days after the date of enactment of this Act.

19 (f) PRESERVATION OF INSURANCE CLAIMS.—

20 (1) IN GENERAL.—If all participating tobacco

21 product manufacturers fail to make the payments

22 required by title IV for any calendar year, then—

23 (A) beginning on the first day of the next

24 calendar year, subsection (a) does not apply to

25 any insurance claim (including a direct action
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1 claim) that is a tobacco claim, regardless of

2 when that claim arose;

3 (B) any statute of limitations or doctrine

4 of laches under applicable law shall be tolled for

5 the period—

6 (i) beginning on the date of enactment

7 of this Act; and

8 (ii) ending on the last day of that cal9 endar year; and

10 (C) an insurance claim (including a direct

11 action claim) that is a tobacco claim and that

12 is pending on the date of enactment of this Act

13 shall be preserved.

14 (2) APPLICATION OF TITLE 11, UNITED STATES

15 CODE.—For purposes of this subsection, nothing in

16 this Act shall be construed to modify, suspend, or

17 otherwise affect the application of title 11, United

18 States Code, to participating tobacco manufacturers

19 that fail to make such payments.

20 (3) STATE LAW NOT AFFECTED.—Nothing in

21 this subsection shall be construed to expand or

22 abridge State law.
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1 SEC. 1408. ADDICTION AND DEPENDENCY CLAIMS;

2 CASTANO CIVIL ACTIONS.

3 (a) ADDICTION AND DEPENDENCE CLAIMS

4 BARRED.—In any civil action to which this title applies,

5 no addiction claim or dependence claim may be filed or

6 maintained against a participating tobacco product manu7 facturer.

8 (b) CASTANO CIVIL ACTIONS.—

9 (1) The rights and benefits afforded in this Act,

10 and the various research activities envisioned by this

11 Act, are provided in settlement of, and shall con12 stitute the exclusive remedy for the purpose of deter13 mining civil liability as to those claims asserted in

14 the Castano Civil Actions, and all bases for any such

15 claim under the laws of any State are preempted

16 (including State substantive, procedural, remedial,

17 and evidentiary provisions) and settled. The Castano

18 Civil Actions shall be dismissed with full reservation

19 of the rights of individual class members to pursue

20 claims not based on addiction or dependency in civil

21 actions, as defined in section 1417(2), in accordance

22 with this Act. For purposes of determining applica23 tion of statutes of limitation or repose, individual ac24 tions filed within one year after the effective date of

25 this Act by those who were included within a

26 Castano Civil Action shall be considered to have
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1 been filed as of the date of the Castano Civil Action

2 applicable to said individual.

3 (2) For purposes of awarding attorneys fees

4 and expenses for those actions subject to this sub5 section, the matter at issue shall be submitted to ar6 bitration before one panel of arbitrators. In any such

7 arbitration, the arbitration panel shall consist of 3

8 persons, one of whom shall be chosen by the attor9 neys of the Castano Plaintiffs’ Litigation Committee

10 who were signatories to the Memorandum of Under11 standing dated June 20, 1997, by and between to12 bacco product manufacturers, the Attorneys General,

13 and private attorneys, one of whom shall be chosen

14 by the participating tobacco product manufacturers,

15 and one of whom shall be chosen jointly by those 2

16 arbitrators.

17 (3) The participating tobacco product manufac18 turers shall pay the arbitration award.

19 SEC. 1409. SUBSTANTIAL NON-ATTAINMENT OF REQUIRED

20 REDUCTIONS.

21 (a) ACTION BY SECRETARY.—If the Secretary deter22 mines under title II that the non-attainment percentage

23 for any year is greater than 20 percentage points for ciga24 rettes or smokeless tobacco, then the Secretary shall deter25 mine, on a brand-by-brand basis, using data that reflects
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1 a 1999 baseline, which tobacco product manufacturers are

2 responsible within the 2 categories of tobacco products for

3 the excess. The Secretary may commence an action under

4 this section against the tobacco product manufacturer or

5 manufacturers of the brand or brands of cigarettes or

6 smokeless tobacco products for which the non-attainment

7 percentage exceeded 20 percentage points.

8 (b) PROCEDURES.—Any action under this section

9 shall be commenced by the Secretary in the United States

10 District Court for the District of Columbia within 90 days

11 after publication in the Federal Register of the determina12 tion that the non-attainment percentage for the tobacco

13 product in question is greater than 20 percentage points.

14 Any such action shall be heard and determined by a 3-

15 judge court under section 2284 of title 28, United States

16 Code.

17 (c) DETERMINATION BY COURT.—In any action

18 under this section, the court shall determine whether a

19 tobacco product manufacturer has shown, by a preponder20 ance of the evidence that it—

21 (1) has complied substantially with the provi22 sions of this Act regarding underage tobacco use, of

23 any rules or regulations promulgated thereunder, or

24 of any Federal or State laws regarding underage to25 bacco use;
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1 (2) has not taken any material action to under2 mine the achievement of the required percentage re3 duction for the tobacco product in question; and

4 (3) has used its best efforts to reduce underage

5 tobacco use to a degree at least equal to the required

6 percentage reductions.

7 (d) REMOVAL OF ANNUAL AGGREGATE PAYMENT

8 LIMITATION.—Except as provided in subsections (e) and

9 (g), if the court determines that a tobacco product manu10 facturer has failed to make the showing described in sub11 section (c) then sections 1411 and 1412 of this Act do

12 not apply to the enforcement against, or the payment by,

13 such tobacco product manufacturer of any judgment or

14 settlement that becomes final after that determination is

15 made.

16 (e) DEFENSE.—An action under this section shall be

17 dismissed, and subsection (d) shall not apply, if the court

18 finds that the Secretary’s determination under subsection

19 (a) was unlawful under subparagraph (A), (B), (C), or (D)

20 of section 706(2) of title 5, United States Code. Any judg21 ments paid under section 1412 of this Act prior to a final

22 judgment determining that the Secretary’s determination

23 was erroneous shall be fully credited, with interest, under

24 section 1412 of this Act.
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1 (f) REVIEW.—Decisions of the court under this sec2 tion are reviewable only by the Supreme Court by writ

3 of certiorari granted upon the petition of any party. The

4 applicability of subsection (d) shall be stayed during the

5 pendency of any such petition or review.

6 (g) CONTINUING EFFECT.—Subsection (d) shall

7 cease to apply to a tobacco product manufacturer found

8 to have engaged in conduct described in subsection (c)

9 upon the later of—

10 (1) a determination by the Secretary under sec11 tion 201 after the commencement of action under

12 subsection (a) that the non-attainment percentage

13 for the tobacco product in question is 20 or fewer

14 percentage points; or

15 (2) a finding by the court in an action filed

16 against the Secretary by the manufacturer, not ear17 lier than 2 years after the determination described

18 in subsection (c) becomes final, that the manufac19 turer has shown by a preponderance of the evidence

20 that, in the period since that determination, the

21 manufacturer—

22 (A) has complied with the provisions of

23 this Act regarding underage tobacco use, of any

24 rules or regulations promulgated thereunder,
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1 and of any other applicable Federal, State, or

2 local laws, rules, or regulations;

3 (B) has not taken any action to undermine

4 the achievement of the required percentage re5 duction for the tobacco product in question; and

6 (C) has used its best efforts to attain the

7 required percentage reduction for the tobacco

8 product in question.

9 A judgment or settlement against the tobacco product

10 manufacturer that becomes final after a determination or

11 finding described in paragraph (1) or (2) of this sub12 section is not subject to subsection (d). An action under

13 paragraph (2) of this subsection shall be commenced in

14 the United States District Court for the District of Colum15 bia, and shall be heard and determined by a 3-judge court

16 under section 2284 of title 28, United States Code. A deci17 sion by the court under paragraph (2) of this subsection

18 is reviewable only by the Supreme Court by writ of certio19 rari granted upon the petition of any party, and the deci20 sion shall be stayed during the pendency of the petition

21 or review. A determination or finding described in para22 graph (1) or (2) of this subsection does not limit the Sec23 retary’s authority to bring a subsequent action under this

24 section against any tobacco product manufacturer or the
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1 applicability of subsection (d) with respect to any such

2 subsequent action.

3 SEC. 1410. PUBLIC HEALTH EMERGENCY.

4 If the Secretary, in consultation with the Commis5 sioner of Food and Drugs, the Surgeon General, the Di6 rector of the Center for Disease Control or the Director’s

7 delegate, and the Director of the Health and Human Serv8 ices Office of Minority Health determines at any time that

9 a tobacco product manufacturer’s actions or inactions with

10 respect to its compliance with the Act are of such a nature

11 as to create a clear and present danger that the manufac12 turer will not attain the targets for underage smoking re13 duction, the Secretary may bring an action under section

14 1409 seeking the immediate suspension of the tobacco

15 product manufacturer’s annual limitation cap on civil

16 judgments. If the court determines that the Secretary has

17 proved by clear and convincing evidence that the subject

18 manufacturer’s actions or inactions are of such a nature

19 that they present a clear and present danger that the man20 ufacturer will not attain the targets for underage smoking

21 reduction, the court may suspend the subject manufactur22 er’s annual limitation cap on civil judgments.
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1 SEC. 1411. TOBACCO CLAIMS BROUGHT AGAINST PARTICI2 PATING TOBACCO PRODUCT MANUFACTUR3 ERS.

4 (a) PERMISSIBLE DEFENDANTS.—In any civil action

5 to which this title applies, tobacco claims may be filed or

6 maintained only against—

7 (1) a participating tobacco product manufac8 turer; or

9 (2) a surviving entity established by a partici10 pating tobacco product manufacturer.

11 (b) ACTIONS INVOLVING PARTICIPATING AND NON12 PARTICIPATING MANUFACTURERS.—In any civil action in13 volving both a tobacco claim against a participating to14 bacco product manufacturer based in whole or in part

15 upon conduct occurring prior to the date of enactment of

16 this Act and a claim against 1 or more non-participating

17 tobacco product manufacturers, the court, upon applica18 tion of a participating tobacco product manufacturer, shall

19 require the jury to or shall itself apportion liability as be20 tween the participating tobacco product manufacturer and

21 non-participating tobacco product manufacturers.

22 SEC. 1412. PAYMENT OF TOBACCO CLAIM SETTLEMENTS

23 AND JUDGMENTS.

24 (a) IN GENERAL.—Except as provided in this section,

25 any judgment or settlement in any civil action to which

26 this subtitle applies shall be subject to the process for pay-
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1 ment of judgments and settlements set forth in this sec2 tion. No participating tobacco product manufacturer shall

3 be obligated to pay a judgment or settlement on a tobacco

4 claim in any civil action to which this title applies except

5 in accordance with this section. This section shall not

6 apply to the portion, if any, of a judgment that imposes

7 punitive damages based on any conduct that—

8 (1) occurs after the date of enactment of this

9 Act; and

10 (2) is other than the manufacture, development,

11 advertising, marketing, or sale of tobacco products

12 in compliance with this Act and any agreement inci13 dent thereto.

14 (b) REGISTRATION WITH THE SECRETARY OF THE

15 TREASURY.—

16 (1) The Secretary shall maintain a record of

17 settlements, judgments, and payments in civil ac18 tions to which this title applies.

19 (2) Any party claiming entitlement to a mone20 tary payment under a final judgment or final settle21 ment on a tobacco claim shall register such claim

22 with the Secretary by filing a true and correct copy

23 of the final judgment or final settlement agreement

24 with the Secretary and providing a copy of such fil-
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1 ing to all other parties to the judgment or settle2 ment.

3 (3) Any participating tobacco product manufac4 turer making a payment on any final judgment or

5 final settlement to which this section applies shall

6 certify such payment to the Secretary by filing a

7 true and correct copy of the proof of payment and

8 a statement of the remaining unpaid portion, if any,

9 of such final judgment or final settlement with the

10 Secretary and shall provide a copy of such filing to

11 all other parties to the judgment or settlement.

12 (c) LIABILITY CAP.—

13 (1) IN GENERAL.—The aggregate payments

14 made by all participating tobacco product manufac15 turers in any calendar year may not exceed

16 $8,000,000,000.

17 (2) IMPLEMENTATION.—The Secretary shall

18 initiate a rulemaking within 30 days after the date

19 of enactment of this Act to establish a mechanism

20 for implementing this subsection in such a way to

21 ensure the fair and equitable payment of final judg22 ments or final settlements on tobacco claims under

23 this title. Amounts not payable because of the appli24 cation of this subsection, shall be carried forward
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1 and paid in the next year, subject to the provisions

2 of this subsection.

3 (3) INFLATION ADJUSTMENT.—

4 (A) IN GENERAL.—The amount in para5 graph (1) shall be increased annually, beginning

6 with the second calendar year beginning after

7 the date of enactment of this Act, by the great8 er of 3 percent or the annual increase in the

9 CPI.

10 (B) CPI.—For purposes of subparagraph

11 (A), the CPI for any calendar year is the aver12 age of the Consumer Price Index for all-urban

13 consumers published by the Department of

14 Labor.

15 (C) ROUNDING.—If any increase deter16 mined under subparagraph (A) is not a multiple

17 of $1,000, the increase shall be rounded to the

18 nearest multiple of $1,000.

19 (d) INJUNCTIVE RELIEF.—A participating tobacco

20 product manufacturer may commence an action to enjoin

21 any State court proceeding to enforce or execute any judg22 ment or settlement where payment has not been author23 ized under this section. Such an action shall arise under

24 the laws of the United States and may be commenced in
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1 the district court of the United States for the district in

2 which the State court proceeding is pending.

3 (e) JOINT AND SEVERAL LIABILITY.—All participat4 ing tobacco product manufacturers shall be jointly and

5 severally liable for, and shall enter into an agreement to

6 apportion among them, any amounts payable under judg7 ments and settlements governed by this section arising in

8 whole or in part from conduct occurring prior to the date

9 of enactment of this Act.

10 (f) BANKRUPTCY OF PARTICIPATING MANUFAC11 TURER.—No participating tobacco product manufacturer

12 shall cease operations without establishing a surviving en13 tity against which a tobacco claim may be brought. Any

14 obligation , interest, or debt of a participating, tobacco

15 product manufacturer arising under such liability appor16 tionment agreement shall be given priority and shall not

17 be rejected, avoided, discharged, or otherwise modified or

18 diminished in a proceeding, under title 11, United States

19 Code, or in any liquidation, reorganization, receivership,

20 or other insolvency proceeding under State law. A trustee

21 or receiver in any proceeding under title 11, United States

22 Code, or in liquidation, reorganization, receivership, or

23 other insolvency proceeding under State law, may avoid

24 any transfer of an interest of the participating tobacco

25 product manufacturer, or any obligation incurred by such
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1 manufacturer, that was made or incurred on or within 2

2 years before the date of the filing of a bankruptcy petition,

3 if such manufacturer made such transfer or incurred such

4 obligation to hinder or defeat in any fashion the payment

5 of any obligation, interest, or debt of the manufacturer

6 arising under the liability apportionment agreement. Any

7 property vesting in the participating tobacco product man8 ufacturer following such a proceeding shall be subject to

9 all claims and interest of creditors arising under the liabil10 ity apportionment agreement.

11 (f) LIMITATION ON STATE COURTS.—No court of any

12 State, Tribe, or political subdivision of a State may take

13 any action to inhibit the effective operation of subsection

14 (c).

15 SEC. 1413. ATTORNEYS’ FEES AND EXPENSES.

16 (a) ARBITRATION PANEL.—

17 (1) RIGHT TO ESTABLISH.—For the purpose of

18 awarding of attorneys’ fees and expenses relating to

19 litigation affected by, or legal services that, in whole

20 or in part, resulted in or created a model for pro21 grams in, this Act, and with respect to which litiga22 tion or services the attorney involved is unable to

23 agree with the plaintiff who employed that attorney

24 with respect to any dispute that may arise between

25 them regarding the fee agreement, the matter at
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1 issue shall be submitted to arbitration. In any such

2 arbitration, the arbitration panel shall consist of 3

3 persons, one of whom shall be chosen by the plain4 tiff, one of whom shall be chosen by the attorney,

5 and one of whom shall be chosen jointly by those 2

6 arbitrators.

7 (2) OPERATION.—Not later than 30 days after

8 the date on which all members of an arbitration

9 panel are appointed under paragraph (1), the panel

10 shall establish the procedures under which the panel

11 will operate which shall include—

12 (A) a requirement that any finding by the

13 arbitration panel must be in writing and sup14 ported by written reasons;

15 (B) procedures for the exchanging of ex16 hibits and witness lists by the various claimants

17 for awards;

18 (C) to the maximum extent practicable, re19 quirements that proceedings before the panel be

20 based on affidavits rather than live testimony;

21 and

22 (D) a requirement that all claims be sub23 mitted to an arbitration panel not later than 3

24 months after the date of this Act and a deter25 mination made by the panel with respect to
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1 such claims not later than 7 months after such

2 date of enactment.

3 (3) RIGHT TO PETITION.—Any individual attor4 ney or group of attorneys involved in litigation af5 fected by this Act shall have the right to petition an

6 arbitration panel for attorneys’ fees and expenses.

7 (4) CRITERIA.—In making any award under

8 this section, an arbitration panel shall consider the

9 following criteria:

10 (A) The time and labor required by the

11 claimant.

12 (B) The novelty and difficulty of the ques13 tions involved in the action for which the claim14 ant is making a claim.

15 (C) The skill requisite to perform the legal

16 service involved properly.

17 (D) The preclusion of other employment by

18 the attorney due to acceptance of the action in19 volved.

20 (E) Whether the fee is fixed or a percent21 age.

22 (F) Time limitations imposed by the client

23 or the circumstances.

24 (G) The amount involved and the results

25 obtained.
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1 (H) The experience, reputation, and ability

2 of the attorneys involved.

3 (I) The undesirability of the action.

4 (J) Such other factors as justice may re5 quire.

6 (5) APPEAL AND ENFORCEMENT.—The findings

7 of an arbitration panel shall be final, binding, non8 appealable, and payable within 30 days after the

9 date on which the finding is made public, except that

10 if an award is to be paid in installments, the first

11 installment shall be payable within such 30 day pe12 riod and succeeding installments shall be paid annu13 ally thereafter.

14 (b) VALIDITY AND ENFORCEABILITY OF PRIVATE

15 AGREEMENTS.—Notwithstanding any other provision of

16 this Act, nothing in this section shall be construed to abro17 gate or restrict in any way the rights of any parties to

18 mediate, negotiate, or settle any fee or expense disputes

19 or issues to which this section applies, or to enter into

20 private agreements with respect to the allocation or divi21 sion of fees among the attorneys party to any such agree22 ment.

23 (c) OFFSET FOR AMOUNTS ALREADY PAID.—In

24 making a determination under this section with regard to

25 a dispute between a State that pursued independent civil
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1 action against tobacco product manufacturers and its at2 torney, the arbitration panel shall take into account any

3 amounts already paid by the State under the agreement

4 in dispute.

5 SEC. 1414. EFFECT OF COURT DECISIONS.

6 (a) SEVERABILITY.—If any provision of titles I

7 through XIII, or the application thereof to any person,

8 manufacturer or circumstance, is held invalid, the remain9 der of the provisions of those titles, and the application

10 of such provision to other persons or circumstances, shall

11 not be affected thereby.

12 (b) NONSEVERABILITY.—If a court of competent ju13 risdiction enters a final decision substantially limiting or

14 impairing the essential elements of title XIV, specifically

15 the requirements of sections 1404 and 1405, then the pro16 visions of section 1412 are null and void and of no effect.

17 SEC. 1415. CRIMINAL LAWS NOT AFFECTED.

18 Nothing in this title shall be construed to limit the

19 criminal liability of tobacco product manufacturers, retail20 ers, or distributors or their directors, officers, employees,

21 successors, or assigns.

22 SEC. 1416. CONGRESS RESERVES THE RIGHT TO ENACT

23 LAWS IN THE FUTURE.

24 The right to alter, amend, or repeal any provision of

25 this Act is hereby reserved to the Congress in accordance
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1 with the provisions of Article I of the Constitution of the

2 United States and more than 200 years of history.

3 SEC. 1417. DEFINITIONS.

4 In this title:

5 (1) TERMS DEFINED IN TITLE VII.—Any term

6 used in this title that is defined in title VII has the

7 meaning given to it in title VII.

8 (2) ADDITIONAL DEFINITIONS.—

9 (A) ADDICTION CLAIM; DEPENDENCE

10 CLAIM.—The term ‘‘addiction claim’’ or ‘‘de11 pendence claim’’ refers only to any cause of ac12 tion to the extent that the prayer for relief

13 seeks a cessation program, or other public

14 health program that is to be available to mem15 bers of the general public and is designed to re16 duce or eliminate the users’ addiction to, or de17 pendence on, tobacco products, and as used

18 herein is brought by those who claim the need

19 for nicotine reduction assistance. Neither addic20 tion or dependence claims include claims related

21 to or involving manifestation of illness or to22 bacco-related diseases.

23 (B) COMPENSATORY DAMAGES.—The term

24 ‘‘compensatory damages’’ refers to those dam25 ages necessary to reimburse an injured party,
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1 and includes actual, general, and special dam2 ages.

3 (C) PROTOCOL.—The term ‘‘protocol’’

4 means the agreement to be entered into by the

5 Secretary of Health and Human Services with

6 a participating tobacco product manufacturers

7 under this title.

8 (D) PUNITIVE DAMAGES.—The term ‘‘pu9 nitive damages’’ means damages in addition to

10 compensatory damages having the character of

11 punishment or penalty.

12 (E) SECRETARY.—The term ‘‘Secretary’’

13 means the Secretary of the Treasury, except

14 where the context otherwise requires.

15 TITLE XV—TOBACCO

16 TRANSITION

17 SEC. 1501. SHORT TITLE.

18 This title may be cited as the ‘‘Tobacco Transition

19 Act’’.

20 SEC. 1502. PURPOSES.

21 The purposes of this title are—

22 (1) to authorize the use of binding contracts be23 tween the United States and tobacco quota owners

24 and tobacco producers to compensate them for the
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1 termination of Federal programs that support the

2 production of tobacco in the United States;

3 (2) to make available to States funds for eco4 nomic assistance initiatives in counties of States that

5 are dependent on the production of tobacco; and

6 (3) to terminate Federal programs that support

7 the production of tobacco in the United States.

8 SEC. 1503. DEFINITIONS.

9 In this title:

10 (1) ASSOCIATION.—The term ‘‘association’’

11 means a producer-owned cooperative marketing asso12 ciation that has entered into a loan agreement with

13 the Commodity Credit Corporation to make price

14 support available to producers.

15 (2) BUYOUT PAYMENT.—The term ‘‘buyout

16 payment’’ means a payment made to a quota owner

17 under section 1514 for each of the 1999 through

18 2001 marketing years.

19 (3) CONTRACT.—The term ‘‘contract’’ or ‘‘to20 bacco transition contract’’ means a contract entered

21 into under section 1512.

22 (4) GOVERNOR.—The term ‘‘Governor’’ means

23 the chief executive officer of a State.

24 (5) LEASE.—The term ‘‘lease’’ means—
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1 (A) the rental of quota on either a cash

2 rent or crop share basis;

3 (B) the rental of farmland to produce to4 bacco under a farm marketing quota; or

5 (C) the lease and transfer of quota for the

6 marketing of tobacco produced on the farm of

7 a lessor.

8 (6) MARKETING YEAR.—The term ‘‘marketing

9 year’’ means—

10 (A) in the case of Flue-cured tobacco, the

11 period beginning July 1 and ending the follow12 ing June 30; and

13 (B) in the case of each other kind of to14 bacco, the period beginning October 1 and end15 ing the following September 30.

16 (7) OWNER.—The term ‘‘owner’’ means a per17 son that, at the time of entering into a tobacco tran18 sition contract, owns quota provided by the Sec19 retary.

20 (8) PRICE SUPPORT.—The term ‘‘price sup21 port’’ means a nonrecourse loan provided by the

22 Commodity Credit Corporation through an associa23 tion for a kind of tobacco.

24 (9) PRODUCER.—The term ‘‘producer’’ means a

25 person that for each of the 1995 through 1997 crops
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1 of tobacco (as determined by the Secretary) that

2 were subject to quota—

3 (A) leased quota or farmland;

4 (B) shared in the risk of producing a crop

5 of tobacco; and

6 (C) marketed the tobacco subject to quota.

7 (10) QUOTA.—The term ‘‘quota’’ means the

8 right to market tobacco under a basic marketing

9 quota or acreage allotment allotted to a person

10 under the Agricultural Adjustment Act of 1938 (7

11 U.S.C. 1281 et seq.).

12 (11) SECRETARY.—The term ‘‘Secretary’’

13 means the Secretary of Agriculture.

14 (12) STATE.—The term ‘‘State’’ means each of

15 the several States of the United States, the District

16 of Columbia, the Commonwealth of Puerto Rico, and

17 any other territory or possession of the United

18 States.

19 (13) TOBACCO.—The term ‘‘tobacco’’ means

20 any kind of tobacco for which—

21 (A) a marketing quota is in effect;

22 (B) a marketing quota is not disapproved

23 by producers; or

24 (C) price support is available.
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1 (14) TOBACCO PRODUCT MANUFACTURER.—

2 The term ‘‘tobacco product manufacturer’’ has the

3 meaning given the term ‘‘manufacturer of tobacco

4 products’’ in section 5702 of the Internal Revenue

5 Code of 1986.

6 (15) TRANSITION PAYMENT.—The term ‘‘tran7 sition payment’’ means a payment made to a pro8 ducer under section 1515 for each of the 1999

9 through 2001 marketing years.

10 (16) TRUST FUND.—The term ‘‘Trust Fund’’

11 means the Tobacco Community Revitalization Trust

12 Fund established by section 1511.

13 (17) UNITED STATES.—The term ‘‘United

14 States’’, when used in a geographical sense, means

15 all of the States.

16 Subtitle A—Tobacco Production

17 Transition

18 CHAPTER 1—TOBACCO TRANSITION

19 CONTRACTS

20 SEC. 1511. TOBACCO COMMUNITY REVITALIZATION TRUST

21 FUND.

22 (a) ESTABLISHMENT.—There is established in the

23 Treasury of the United States a trust fund to be known

24 as the ‘‘Tobacco Community Revitalization Trust Fund’’,
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1 consisting of amounts paid into the Trust Fund under

2 subsection (d).

3 (b) ADMINISTRATION.—The Trust Fund shall be ad4 ministered by the Secretary of the Treasury.

5 (c) USE.—Funds in the Trust Fund shall be available

6 for making—

7 (1) buyout payments;

8 (2) transition payments; and

9 (3) rural economic assistance block grants

10 under section 1521.

11 (d) TRANSFER FROM NATIONAL TOBACCO SETTLE12 MENT TRUST FUND.—The Secretary of the Treasury shall

13 transfer from the National Tobacco Settlement Trust

14 Fund to the Trust Fund such amounts as the Secretary

15 of Agriculture determines are necessary to carry out this

16 title.

17 (e) TERMINATION.—The Trust Fund shall terminate

18 effective September 30, 2003.

19 SEC. 1512. OFFER AND TERMS OF TOBACCO TRANSITION

20 CONTRACTS.

21 (a) OFFER.—The Secretary shall offer to enter into

22 a tobacco transition contract with each owner and pro23 ducer.

24 (b) TERMS.—
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1 (1) OWNERS.—In exchange for a payment

2 made under section 1514, an owner shall agree to

3 relinquish the quota owned by the owner.

4 (2) PRODUCERS.—In exchange for a payment

5 made under section 1515, a producer shall agree to

6 relinquish the value of the quota leased by the pro7 ducer.

8 (c) RIGHT TO GROW TOBACCO.—Each owner or pro9 ducer that enters into a contract shall have the right to

10 continue the production of tobacco for each of the 1999

11 and subsequent crops of tobacco.

12 SEC. 1513. ELEMENTS OF CONTRACTS.

13 (a) DEADLINES FOR CONTRACTING.—

14 (1) COMMENCEMENT.—To the maximum extent

15 practicable, the Secretary shall commence entering

16 into contracts under this chapter not later than 90

17 days after the date of enactment of this Act.

18 (2) DEADLINE.—The Secretary may not enter

19 into a contract under this chapter after June 30,

20 1999.

21 (b) DURATION OF CONTRACT.—The term of a con22 tract shall—

23 (1) begin on the date that is the beginning of

24 the 1999 marketing year for a kind of tobacco; and
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1 (2) terminate on the date that is the end of the

2 2001 marketing year for the kind of tobacco.

3 (c) TIME FOR PAYMENT.—A buyout payment or

4 transition payment shall be made not later than the date

5 that is the beginning of the marketing year for a kind of

6 tobacco for each year of the term of a tobacco transition

7 contract of an owner or producer.

8 SEC. 1514. BUYOUT PAYMENTS TO OWNERS.

9 (a) IN GENERAL.—The Secretary shall make buyout

10 payments in 3 equal installments, 1 installment for each

11 of the 1999 through 2001 marketing years for each kind

12 of tobacco involved, to an owner that owns quota at the

13 time of entering into a tobacco transition contract.

14 (b) COMPENSATION FOR LOST VALUE.—The pay15 ment shall constitute compensation for the lost value to

16 the owner of the quota.

17 (c) PAYMENT CALCULATION.—Under this section,

18 the total amount of the buyout payment made to an owner

19 shall be determined by multiplying—

20 (1) $8.00; by

21 (2) the average annual quantity of quota owned

22 by the owner during the 1995 through 1997 crop

23 years.
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1 SEC. 1515. TRANSITION PAYMENTS TO PRODUCERS.

2 (a) IN GENERAL.—The Secretary shall make transi3 tion payments in 3 equal installments, 1 installment for

4 each of the 1999 through 2001 marketing years for each

5 kind of tobacco produced, to a producer that—

6 (1) produced the kind of tobacco for each of the

7 1995 through 1997 crops; and

8 (2) entered into a tobacco transition contract.

9 (b) TRANSITION PAYMENTS LIMITED TO LEASED

10 QUOTA.—A producer shall be eligible for transition pay11 ments only for the portion of the production of the pro12 ducer that is subject to quota that is leased (as defined

13 in section 1503(5) of this Act) during the 3 crop years

14 described in subsection (a)(1).

15 (c) COMPENSATION FOR LOST REVENUE.—The pay16 ments shall constitute compensation for the lost revenue

17 incurred by a tobacco producer for a kind of tobacco.

18 (d) PRODUCTION HISTORY; PRODUCTION.—

19 (1) PRODUCTION HISTORY.—The Secretary

20 shall base a transition payment made to a producer

21 on the average quantity of tobacco subject to a mar22 keting quota that is produced by the producer for

23 each of the 1995 through 1997 crops.

24 (2) PRODUCTION.—The producer shall have the

25 burden of demonstrating to the Secretary the pro-
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1 duction of tobacco for each of the 1995 through

2 1997 crops.

3 (e) PAYMENT CALCULATION.—Under this section,

4 the total amount of the transition payment made to a pro5 ducer shall be determined by multiplying—

6 (1) $4.00; by

7 (2) the average quantity of the kind of tobacco

8 produced by the producer for each of the 1995

9 through 1997 crops.

10 CHAPTER 2—RURAL ECONOMIC

11 ASSISTANCE BLOCK GRANTS

12 SEC. 1521. RURAL ECONOMIC ASSISTANCE BLOCK GRANTS.

13 (a) IN GENERAL.—From funds transferred from the

14 Trust Fund, the Secretary shall use $200,000,000 for

15 each of fiscal years 1999 through 2003 to provide block

16 grants to tobacco-growing States to assist areas of such

17 a State that are economically dependent on the production

18 of tobacco.

19 (b) PAYMENTS BY SECRETARY TO TOBACCO-GROW20 ING STATES.—

21 (1) IN GENERAL.—The Secretary shall use the

22 amount available for a fiscal year under subsection

23 (a) to make block grant payments to the Governors

24 of tobacco-growing States.
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1 (2) AMOUNT.—The amount of a block grant

2 paid to a tobacco-growing State shall be based on,

3 as determined by the Secretary—

4 (A) the number of counties in the State in

5 which tobacco production is a significant part of

6 the county’s economy; and

7 (B) the level of economic dependence of

8 the counties on tobacco production.

9 (c) GRANTS BY STATES TO ASSIST TOBACCO-GROW10 ING AREAS.—

11 (1) IN GENERAL.—A Governor of a tobacco12 growing State shall use the amount of the block

13 grant to the State under subsection (b) to make

14 grants to counties or other public or private entities

15 in the State to assist areas that are dependent on

16 the production of tobacco, as determined by the Gov17 ernor.

18 (2) AMOUNT.—The amount of a grant paid to

19 a county or other entity to assist an area shall be

20 based on—

21 (A) the ratio of gross tobacco sales receipts

22 in the area to the total farm income in the area;

23 and

24 (B) the ratio of all tobacco related receipts

25 in the area to the total income in the area.
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1 (3) USE OF GRANTS.—A county or other entity

2 that receives a grant under this subsection may use

3 the grant in a manner determined appropriate by

4 the county or entity (with the approval of the State)

5 to assist producers and other persons that are eco6 nomically dependent on the production of tobacco,

7 including use for—

8 (A) on-farm diversification, alternatives to

9 the production of tobacco, and risk manage10 ment;

11 (B) off-farm activities such as education,

12 retraining, and development of non-tobacco re13 lated jobs; and

14 (C) assistance to tobacco warehouse own15 ers or operators.

16 (d) TERMINATION OF AUTHORITY.—The authority

17 provided by this section terminates September 30, 2003.
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1 Subtitle B—Tobacco Price Support

2 and Production Adjustment Pro3 grams

4 CHAPTER 1—TOBACCO PRICE SUPPORT

5 PROGRAM

6 SEC. 1531. INTERIM REFORM OF TOBACCO PRICE SUPPORT

7 PROGRAM.

8 (a) PRICE SUPPORT RATES.—Section 106(f) of the

9 Agricultural Act of 1949 (7 U.S.C. 1445(f)) is amended

10 by adding at the end the following:

11 ‘‘(9) TOBACCO PRICE SUPPORT RATES.—Not12 withstanding any other provision of this subsection,

13 the price support rate for each kind of tobacco for

14 which quotas were approved for the 1998 crop shall

15 be reduced by—

16 ‘‘(A) for the 1999 crop, 25 percent from

17 the 1998 support rate for a kind of tobacco;

18 ‘‘(B) for the 2000 crop, 10 percent from

19 the 1999 support rate for a kind of tobacco;

20 and

21 ‘‘(C) for the 2001 crop, 10 percent from

22 the 2000 support rate for a kind of tobacco.’’.

23 (b) NO NET COST TOBACCO FUND.—Section 106A

24 of the Agricultural Act of 1949 (7 U.S.C. 1445–1) is

25 amended—
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1 (1) by striking ‘‘quota tobacco’’ each place it

2 appears and inserting ‘‘tobacco’’;

3 (2) in subsection (a), by striking paragraph (7)

4 and inserting the following:

5 ‘‘(7) the term ‘tobacco’ means any kind of to6 bacco for which—

7 ‘‘(A) a marketing quota is in effect;

8 ‘‘(B) a marketing quota is not disapproved

9 by producers; or

10 ‘‘(C) price support is available.’’;

11 (3) in the second sentence of subsection (c), by

12 striking ‘‘contributed by producer-members or’’;

13 (4) in subsection (d)—

14 (A) in paragraph (1)—

15 (i) in subparagraph (A)—

16 (I) by striking clause (i);

17 (II) by redesignating clauses (ii)

18 and (iii) as clauses (i) and (ii), respec19 tively; and

20 (III) in clause (ii) (as so redesig21 nated), by striking subclause (II) and

22 inserting the following:

23 ‘‘(II) the amount of per pound

24 purchaser assessments that are pay25 able by domestic purchasers of Flue-
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1 cured and Burley tobacco under

2 clause (i); and’’; and

3 (ii) in subparagraph (B)—

4 (I) by striking ‘‘that, upon’’ and

5 all that follows through ‘‘In making’’

6 and inserting ‘‘in making’’; and

7 (II) in the last sentence, by strik8 ing ‘‘contributions and’’;

9 (B) in paragraph (2)—

10 (i) by striking ‘‘producer contribution

11 or’’; and

12 (ii) by striking subparagraphs (A) and

13 (B) and inserting the following:

14 ‘‘(A) from the person that acquired the to15 bacco involved from the producer;

16 ‘‘(B) if the tobacco involved is marketed by

17 a producer through a warehouseman or agent,

18 from the warehouseman or agent, who may add

19 an amount equal to the purchaser assessment

20 to the price paid by the purchaser;’’;

21 (C) in paragraph (3), by striking ‘‘, and

22 use of’’ and all that follows through ‘‘of the

23 Fund’’; and

24 (D) in paragraph (7), by striking ‘‘con25 tributions and’’; and
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1 (5) in subsection (h), by striking ‘‘contribution

2 or’’ each place it appears.

3 (c) NO NET COST TOBACCO ACCOUNT.—Section

4 106B of the Agricultural Act of 1949 (7 U.S.C. 1445–

5 2) is amended—

6 (1) by striking ‘‘quota tobacco’’ each place it

7 appears and inserting ‘‘tobacco’’;

8 (2) in subsection (a), by striking paragraph (5)

9 and inserting the following:

10 ‘‘(5) the term ‘tobacco’ means any kind of to11 bacco for which—

12 ‘‘(A) a marketing quota is in effect;

13 ‘‘(B) a marketing quota is not disapproved

14 by producers; or

15 ‘‘(C) price support is available;’’;

16 (3) in subsection (c)(1), by striking ‘‘producers,

17 purchasers,’’ and inserting ‘‘purchasers’’; and

18 (4) in subsection (d)—

19 (A) in paragraph (1)—

20 (i) by striking subparagraph (A);

21 (ii) by redesignating subparagraphs

22 (B) and (C) as subparagraphs (A) and

23 (B), respectively; and

24 (iii) in subparagraph (A) (as redesig25 nated), by striking ‘‘also’’;
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1 (B) in paragraph (2)—

2 (i) in subparagraph (A)—

3 (I) in the first sentence, by strik4 ing ‘‘the amount of the marketing as5 sessment’’ through ‘‘association’s area

6 and’’; and

7 (II) by striking the second sen8 tence;

9 (ii) in subparagraph (C)(ii)—

10 (I) by striking ‘‘sum of the’’;

11 (II) by striking ‘‘producer and’’;

12 and

13 (III) by striking ‘‘producers

14 and’’; and

15 (C) in paragraph (3)—

16 (i) by striking ‘‘(3)(A)’’ and all that

17 follows through the end of subparagraph

18 (B) and inserting the following:

19 ‘‘(3) COLLECTION OF ASSESSMENTS.—

20 ‘‘(A) PURCHASERS.—Except as provided in

21 subparagraphs (B) and (C), an assessment to

22 be paid by a purchaser under paragraph (1)

23 shall be collected from the person who acquired

24 the tobacco involved from the producer.
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1 ‘‘(B) WAREHOUSEMAN OR AGENT.—If to2 bacco of the kind for which an account is estab3 lished is marketed by a producer through a

4 warehouseman or agent, the purchaser assess5 ment shall be collected from the warehouseman

6 or agent, who may add an amount equal to the

7 purchaser assessment to the price paid by the

8 purchaser.’’; and

9 (ii) in subparagraph (C), by striking

10 ‘‘both the producer and’’.

11 (d) ADMINISTRATIVE COSTS.—Section 1109 of the

12 Agriculture and Food Act of 1981 (Public Law 97–98;

13 7 U.S.C. 1445 note) is repealed.

14 (e) CROPS.—This section and the amendments made

15 by this section shall apply with respect to the 1999

16 through 2001 marketing years.

17 SEC. 1532. TERMINATION OF TOBACCO PRICE SUPPORT

18 PROGRAM.

19 (a) PARITY PRICE SUPPORT.—Section 101 of the Ag20 ricultural Act of 1949 (7 U.S.C. 1441) is amended—

21 (1) in the first sentence of subsection (a), by

22 striking ‘‘tobacco (except as otherwise provided here23 in), corn,’’ and inserting ‘‘corn’’;

24 (2) by striking subsections (c), (g), (h), and (i);

25 (3) in subsection (d)(3)—
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1 (A) by striking ‘‘, except tobacco,’’; and

2 (B) by striking ‘‘and no price support shall

3 be made available for any crop of tobacco for

4 which marketing quotas have been disapproved

5 by producers;’’; and

6 (4) by redesignating subsections (d) and (e) as

7 subsections (c) and (d), respectively.

8 (b) TERMINATION OF TOBACCO PRICE SUPPORT.—

9 Sections 106 of the Agricultural Act of 1949 (7 U.S.C.

10 1445) is amended by striking subsections (a) through (f).

11 (c) DEFINITION OF BASIC AGRICULTURAL COMMOD12 ITY.—Section 408(c) of the Agricultural Act of 1949 (7

13 U.S.C. 1428(c)) is amended by striking ‘‘tobacco,’’.

14 (d) REVIEW OF BURLEY TOBACCO IMPORTS.—Sec15 tion 3 of Public Law 98–59 (7 U.S.C. 625) is repealed.

16 (e) POWERS OF COMMODITY CREDIT CORPORA17 TION.—Section 5 of the Commodity Credit Corporation

18 Charter Act (15 U.S.C. 714c) is amended by inserting

19 ‘‘(other than tobacco)’’ after ‘‘agricultural commodities’’

20 each place it appears.

21 (f) TRANSITION PROVISIONS.—

22 (1) LIABILITY.—The amendments made by this

23 section shall not affect the liability of any person

24 under any provision of law as in effect before the ef25 fective date of this section.
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1 (2) TOBACCO INVENTORIES.—The Secretary

2 shall issue regulations that require the orderly sale

3 of tobacco inventories held by associations.

4 (3) NO NET COST TOBACCO FUND.—

5 (A) IN GENERAL.—Section 106A of the

6 Agricultural Act of 1949 (7 U.S.C. 1445–1) is

7 amended by adding at the end the following:

8 ‘‘(i) ASSESSMENTS TO COVER NET LOSSES AFTER

9 2001 MARKETING YEAR.—

10 ‘‘(1) IN GENERAL.—Effective the day after the

11 last day of the 2001 marketing year for the kind of

12 tobacco involved, purchasers and importers of to13 bacco shall pay no net cost assessments as deter14 mined by an association, with the approval of Sec15 retary, and as provided in this subsection.

16 ‘‘(2) BASIS.—The amount of the assessment

17 shall be based on any unpaid past losses, and antici18 pated future losses, from sales of tobacco inventory.

19 ‘‘(3) COLLECTION.—Assessments shall be col20 lected as provided in subsection (d)(2).

21 ‘‘(4) PENALTY FOR FAILURE TO PAY ASSESS22 MENT.—Penalties for failure to pay assessments

23 shall be calculated as provided in subsection (h).
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1 ‘‘(5) DURATION OF ASSESSMENTS.—Assess2 ments required under this subsection shall be re3 quired until—

4 ‘‘(A) all tobacco price support loans, in5 cluding interest, are repaid to the Commodity

6 Credit Corporation; and

7 ‘‘(B) the Commodity Credit Corporation

8 has been reimbursed for all net losses sustained

9 as a result of price support loans provided

10 through the 2001 crop of the kind of tobacco

11 involved.’’.

12 (B) CONFORMING AMENDMENTS.—Section

13 106A of the Agricultural Act of 1949 (7 U.S.C.

14 1445–1) (as amended by section 1531(b)) is

15 amended—

16 (i) in subsection (a)—

17 (I) in paragraph (5), by inserting

18 ‘‘and’’ after the semicolon;

19 (II) in paragraph (6), by striking

20 ‘‘; and’’ and inserting a period; and

21 (III) by striking paragraph (7);

22 (ii) by striking subsection (b);

23 (iii) in subsection (d)—

24 (I) in the last sentence of para25 graph (1), by striking ‘‘the amounts
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1 which the Corporation will lend to the

2 association under such agreements

3 and’’;

4 (II) by striking paragraph (2)

5 and inserting the following:

6 ‘‘(2) collect the assessment due under para7 graph (1) by directly notifying the purchaser or im8 porter of the amount of the assessment and how

9 payment should be made;’’; and

10 (III) in paragraph (3), by strik11 ing ‘‘: Provided, That,’’ and all that

12 follows and inserting ‘‘, except that,

13 notwithstanding any other provision of

14 law, the association may use amounts

15 in the Fund (including interest and

16 other earnings) for the purposes of re17 ducing the association’s outstanding

18 indebtedness to the Corporation asso19 ciated with 1982 and subsequent

20 crops of tobacco;’’;

21 (iv) in subsection (e)—

22 (I) in the first sentence, by strik23 ing ‘‘or provide’’ and all that follows

24 through ‘‘the association’’; and
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1 (II) by striking the second sen2 tence; and

3 (v) in subsection (h), by striking

4 ‘‘(h)(1)(A)’’ and all that follows through

5 the end of subparagraph (B) and inserting

6 the following:

7 ‘‘(h) FAILURE TO PAY CONTRIBUTIONS OR ASSESS8 MENTS.—

9 ‘‘(1) IN GENERAL.—

10 ‘‘(A) PURCHASERS.—Each purchaser that

11 fails to pay an assessment as required by sub12 section (d)(2) at such time and in such manner

13 as may be prescribed by the Secretary, shall be

14 liable, in addition to any amount due, to a mar15 keting penalty at a rate equal to 75 percent of

16 the average market price (calculated to the

17 nearest whole cent) for the kind of tobacco in18 volved for the 2001 marketing year on the

19 quantity of tobacco as to which the failure oc20 curs.

21 ‘‘(B) IMPORTERS.—Each importer that

22 fails to pay an assessment as required by sub23 section (d)(2) at such time and in such manner

24 as may be prescribed by the Secretary, shall be

25 liable, in addition to any amount due, for a
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1 marketing penalty at a rate equal to 75 percent

2 of the average market price (calculated to the

3 nearest whole cent) for the respective kind of

4 tobacco for the 2001 marketing year on the

5 quantity of tobacco as to which the failure oc6 curs.’’.

7 (4) NO NET COST TOBACCO ACCOUNT.—

8 (A) IN GENERAL.—Section 106B of the

9 Agricultural Act of 1949 (7 U.S.C. 1445–2) is

10 amended by adding at the end the following:

11 ‘‘(k) ASSESSMENTS TO COVER NET LOSSES AFTER

12 2001 MARKETING YEAR.—

13 ‘‘(1) IN GENERAL.—Subject to subsection (b),

14 effective the day after the last day of the 2001 mar15 keting year for the kind of tobacco involved, pur16 chasers and importers of tobacco shall pay no net

17 cost assessments as determined by an association,

18 with the approval of Secretary, and as provided in

19 this subsection.

20 ‘‘(2) BASIS.—The amount of the assessment

21 shall be based on any unpaid past losses, and antici22 pated future losses, from sales of tobacco inventory.

23 ‘‘(3) COLLECTION.—Assessments shall be col24 lected as provided in subsection (d)(3).
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1 ‘‘(4) PENALTY FOR FAILURE TO PAY ASSESS2 MENT.—Penalties for failure to pay assessments

3 shall be calculated as provided in subsection (j).

4 ‘‘(5) DURATION OF ASSESSMENTS.—Assess5 ments required under this subsection shall be re6 quired until—

7 ‘‘(A) all tobacco price support loans, in8 cluding interest, are repaid to the Commodity

9 Credit Corporation; and

10 ‘‘(B) the Commodity Credit Corporation

11 has been reimbursed for all net losses sustained

12 as a result of price support loans provided

13 through the 2001 crop of the kind of tobacco

14 involved.’’.

15 (B) CONFORMING AMENDMENTS.—Section

16 106B of the Agricultural Act of 1949 (7 U.S.C.

17 1445–2) (as amended by section 1531(c)) is

18 amended—

19 (i) in subsection (a)—

20 (I) by striking paragraph (5);

21 and

22 (II) by redesignating paragraphs

23 (6) through (8) as paragraphs (5)

24 through (7), respectively;
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1 (ii) by striking subsection (b) and in2 serting the following:

3 ‘‘(b) ESTABLISHMENT.—Notwithstanding section

4 106A, the Secretary shall, on the request of any associa5 tion, and may, if the Secretary determines, after consulta6 tion with the association, that the accumulation of the No

7 Net Cost Tobacco Fund for the association under section

8 106A is, and is likely to remain, inadequate to reimburse

9 the Corporation for net losses that the Corporation sus10 tains under its loan agreement with the association, estab11 lish and maintain in accordance with this section a No

12 Net Cost Tobacco Account for the association in lieu of

13 the No Net Cost Tobacco Fund established within the as14 sociation under section 106A.’’;

15 (iii) in subsection (d)—

16 (I) in the third sentence of para17 graph (2)(A), by striking ‘‘the

18 amounts which the Corporation will

19 lend to such association under such

20 agreements and’’; and

21 (II) by striking paragraph (3)

22 and inserting the following:

23 ‘‘(3) COLLECTION.—Any assessment to be paid

24 by a purchaser or importer under paragraph (1)
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1 shall be collected from the purchaser or importer by

2 the Secretary.’’; and

3 (iv) in subsection (j), by striking

4 ‘‘(j)(1)(A)’’ and all that follows through

5 the end of subparagraph (B) and inserting

6 the following:

7 ‘‘(j) FAILURE TO PAY CONTRIBUTIONS OR ASSESS8 MENTS.—

9 ‘‘(1) IN GENERAL.—

10 ‘‘(A) PURCHASERS.—Each purchaser that

11 fails to pay to the Secretary an assessment as

12 required by subsection (d)(3) at such time and

13 in such manner as may be prescribed by the

14 Secretary, shall be liable, in addition to any

15 amount due, to a marketing penalty at a rate

16 equal to 75 percent of the average market price

17 (calculated to the nearest whole cent) for the

18 kind of tobacco involved for the 2001 marketing

19 year on the quantity of tobacco as to which the

20 failure occurs.

21 ‘‘(B) IMPORTERS.—Each importer that

22 fails to pay to the Secretary an assessment as

23 required by subsection (d)(3) at such time and

24 in such manner as may be prescribed by the

25 Secretary, shall be liable, in addition to any
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1 amount due, for a marketing penalty at a rate

2 equal to 75 percent of the average market price

3 (calculated to the nearest whole cent) for the

4 respective kind of tobacco for the 2001 market5 ing year on the quantity of tobacco as to which

6 the failure occurs.’’.

7 (g) NET GAINS HELD BY COMMODITY CREDIT COR8 PORATION.—The Secretary shall ensure that the net gains

9 in the No Net Cost Tobacco Account of the Commodity

10 Credit Corporation as of September 30, 2002, equal or

11 exceed the balance in the Account that existed on Septem12 ber 30, 1998.

13 (h) CROPS.—

14 (1) IN GENERAL.—Except as provided in para15 graph (2), this section and the amendments made by

16 this section shall apply the day after the last day of

17 the 2001 marketing year for the kind of tobacco in18 volved.

19 (2) NET LOSSES TO THE COMMODITY CREDIT

20 CORPORATION.—Sections 106A and 106B of the Ag21 ricultural Act of 1949 (7 U.S.C. 1445–1, 1445–2)

22 are repealed effective on the date on which the Sec23 retary—

24 (A) determines that—
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1 (i) all tobacco price support loans,

2 plus interest, have been repaid by associa3 tions; and

4 (ii) the Commodity Credit Corporation

5 has been reimbursed for all net losses sus6 tained as a result of price support loans

7 provided through the 2001 crop of the

8 kind of tobacco involved; and

9 (B) publishes a notice of the determination

10 in the Federal Register.

11 CHAPTER 2—TOBACCO PRODUCTION

12 ADJUSTMENT PROGRAMS

13 SEC. 1541. TERMINATION OF TOBACCO PRODUCTION AD14 JUSTMENT PROGRAMS.

15 (a) DECLARATION OF POLICY.—Section 2 of the Ag16 ricultural Adjustment Act of 1938 (7 U.S.C. 1282) is

17 amended by striking ‘‘tobacco,’’.

18 (b) DEFINITIONS.—Section 301(b) of the Agricul19 tural Adjustment Act of 1938 (7 U.S.C. 1301(b)) is

20 amended—

21 (1) in paragraph (3)—

22 (A) by striking subparagraph (C); and

23 (B) by redesignating subparagraph (D) as

24 subparagraph (C);

25 (2) in paragraph (6)(A), by striking ‘‘tobacco,’’;
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1 (3) in paragraph (7), by striking the following:

2 ‘‘tobacco (flue-cured), July 1—June 30;

3 ‘‘tobacco (other than flue-cured), October

4 1–September 30;’’;

5 (4) in paragraph (10)—

6 (A) by striking subparagraph (B); and

7 (B) by redesignating subparagraph (C) as

8 subparagraph (B);

9 (5) in paragraph (11)(B), by striking ‘‘and to10 bacco’’;

11 (6) in paragraph (12), by striking ‘‘tobacco,’’;

12 (7) in paragraph (14)—

13 (A) in subparagraph (A), by striking

14 ‘‘(A)’’; and

15 (B) by striking subparagraphs (B), (C),

16 and (D);

17 (8) by striking paragraph (15);

18 (9) in paragraph (16)—

19 (A) by striking subparagraph (B); and

20 (B) by redesignating subparagraph (C) as

21 subparagraph (B); and

22 (10) by redesignating paragraphs (16) and (17)

23 as paragraphs (15) and (16), respectively.

24 (c) PARITY PAYMENTS.—Section 303 of the Agricul25 tural Adjustment Act of 1938 (7 U.S.C. 1303) is amended
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1 in the first sentence by striking ‘‘rice, or tobacco,’’ and

2 inserting ‘‘or rice,’’.

3 (d) MARKETING QUOTAS.—Part I of subtitle B of

4 title III of the Agricultural Adjustment Act of 1938 (7

5 U.S.C. 1311 et seq.) is repealed.

6 (e) ADMINISTRATIVE PROVISIONS.—Section 361 of

7 the Agricultural Adjustment Act of 1938 (7 U.S.C. 1361)

8 is amended by striking ‘‘tobacco,’’.

9 (f) ADJUSTMENT OF QUOTAS.—Section 371 of the

10 Agricultural Adjustment Act of 1938 (7 U.S.C. 1371) is

11 amended—

12 (1) in the first sentence of subsection (a), by

13 striking ‘‘peanuts, or tobacco’’ and inserting ‘‘or

14 peanuts’’; and

15 (2) in the first sentence of subsection (b), by

16 striking ‘‘peanuts or tobacco’’ and inserting ‘‘or pea17 nuts’’.

18 (g) REPORTS AND RECORDS.—Section 373 of the Ag19 ricultural Adjustment Act of 1938 (7 U.S.C. 1373) is

20 amended—

21 (1) by striking ‘‘peanuts, or tobacco’’ each place

22 it appears in subsections (a) and (b) and inserting

23 ‘‘or peanuts’’; and

24 (2) in subsection (a)—
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1 (A) in the first sentence, by striking ‘‘all

2 persons engaged in the business of redrying,

3 prizing, or stemming tobacco for producers,’’;

4 and

5 (B) in the last sentence, by striking

6 ‘‘$500;’’ and all that follows through the period

7 at the end of the sentence and inserting

8 ‘‘$500.’’.

9 (h) REGULATIONS.—Section 375(a) of the Agricul10 tural Adjustment Act of 1938 (7 U.S.C. 1375(a)) is

11 amended by striking ‘‘peanuts, or tobacco’’ and inserting

12 ‘‘or peanuts’’.

13 (i) EMINENT DOMAIN.—Section 378 of the Agricul14 tural Adjustment Act of 1938 (7 U.S.C. 1378) is amend15 ed—

16 (1) in the first sentence of subsection (c), by

17 striking ‘‘cotton, tobacco, and peanuts’’ and insert18 ing ‘‘cotton and peanuts’’; and

19 (2) by striking subsections (d), (e), and (f).

20 (j) BURLEY TOBACCO FARM RECONSTITUTION.—

21 Section 379 of the Agricultural Adjustment Act of 1938

22 (7 U.S.C. 1379) is amended—

23 (1) in subsection (a)—

24 (A) by striking ‘‘(a)’’; and
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1 (B) in paragraph (6), by striking ‘‘, but

2 this clause (6) shall not be applicable in the

3 case of burley tobacco’’; and

4 (2) by striking subsections (b) and (c).

5 (k) ACREAGE-POUNDAGE QUOTAS.—Section 4 of the

6 Act entitled ‘‘An Act to amend the Agricultural Adjust7 ment Act of 1938, as amended, to provide for acreage8 poundage marketing quotas for tobacco, to amend the to9 bacco price support provisions of the Agricultural Act of

10 1949, as amended, and for other purposes’’, approved

11 April 16, 1965 (Public Law 89–12; 7 U.S.C. 1314c note),

12 is repealed.

13 (l) BURLEY TOBACCO ACREAGE ALLOTMENTS.—The

14 Act entitled ‘‘An Act relating to burley tobacco farm acre15 age allotments under the Agricultural Adjustment Act of

16 1938, as amended’’, approved July 12, 1952 (7 U.S.C.

17 1315), is repealed.

18 (m) TRANSFER OF ALLOTMENTS.—Section 703 of

19 the Food and Agriculture Act of 1965 (7 U.S.C. 1316)

20 is repealed.

21 (n) ADVANCE RECOURSE LOANS.—Section

22 13(a)(2)(B) of the Food Security Improvements Act of

23 1986 (7 U.S.C. 1433c–1(a)(2)(B)) is amended by striking

24 ‘‘tobacco and’’.
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1 (o) TOBACCO FIELD MEASUREMENT.—Section 1112

2 of the Omnibus Budget Reconciliation Act of 1987 (Public

3 Law 100–203) is amended by striking subsection (c).

4 (p) LIABILITY.—The amendments made by this sec5 tion shall not affect the liability of any person under any

6 provision of law as in effect before the effective date under

7 subsection (q).

8 (q) CROPS.—This section and the amendments made

9 by this section shall apply with respect to the 1999 and

10 subsequent crops of the kind of tobacco involved.

11 Subtitle C—Funding

12 SEC. 1551. TRUST FUND.

13 (a) REQUEST.—The Secretary of Agriculture shall

14 request the Secretary of the Treasury to transfer from the

15 Trust Fund amounts authorized under sections 1514,

16 1515, and 1521 to the account of the Commodity Credit

17 Corporation.

18 (b) TRANSFER.—On receipt of such a request, the

19 Secretary of the Treasury shall transfer amounts re20 quested under subsection (a).

21 (c) USE.—The Secretary of Agriculture shall use the

22 amounts transferred under subsection (b) to carry out the

23 activities described in subsection (a).
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1 (d) TERMINATION OF AUTHORITY.—The authority

2 provided under this section shall expire on September 30,

3 2003.

4 SEC. 1552. TOBACCO RELATED ADMINISTRATIVE COSTS

5 AND SUBSIDIES.

6 (a) IN GENERAL.—The Secretary shall provide, by

7 regulation, for a nonrefundable marketing assessment

8 paid by purchasers of tobacco during each of the 1999

9 through 2024 fiscal years.

10 (b) BASIS.—The assessment shall be—

11 (1) on a per pound basis, as determined by the

12 Secretary; and

13 (2) based on estimated annual costs to the Fed14 eral Government of tobacco related administrative

15 costs and subsidies in accordance with this section.

16 (c) AGGREGATE ASSESSMENT AMOUNT.—For each

17 fiscal year, the Secretary shall estimate the costs to the

18 Federal Government relating to tobacco that involve—

19 (1) agricultural extension;

20 (2) handling, sampling, grading, inspecting, and

21 weighing;

22 (3) administering and providing subsidies for

23 crop insurance; and
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1 (4) administering the tobacco price support pro2 gram for each of the 1999 through 2001 fiscal

3 years.

4 (d) ASSESSMENT AMOUNT FOR EACH KIND OF TO5 BACCO.—For each fiscal year, the Secretary shall deter6 mine the amount of the total costs determined under sub7 section (c) that benefit each kind of tobacco.

8 (e) ESTIMATED MARKETINGS.—For each fiscal year,

9 the Secretary shall estimate the pounds marketed during

10 the fiscal year for each kind of tobacco.

11 (f) ASSESSMENT RATE.—For each kind of tobacco

12 for each fiscal year, the Secretary shall calculate an as13 sessment rate per pound by dividing—

14 (1) the amount determined under subsection

15 (d); by

16 (2) the estimated pounds marketed as esti17 mated under (e).

18 (g) REMITTANCE BY PURCHASER.—For each fiscal

19 year, each purchaser of tobacco shall remit to the Com20 modity Credit Corporation a nonrefundable marketing as21 sessment equal to the amount obtained by multiplying—

22 (1) the assessment rate for the kind of tobacco

23 purchased; by

24 (2) the number of pounds of the kind of tobacco

25 purchased.
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1 (h) PENALTIES.—If any purchaser fails to remit the

2 assessment required by this section or fails to comply with

3 such requirements for recordkeeping as are established by

4 the Secretary to carry out this section, the purchaser shall

5 be liable to the Secretary for a civil penalty in an amount

6 determined by the Secretary that does not exceed the

7 amount obtained by multiplying—

8 (1) the quantity of the kind of tobacco involved

9 in the violation; by

10 (2) the assessment rate for the kind of tobacco.

11 (i) ENFORCEMENT.—The Secretary may enforce this

12 section in the courts of the United States.

13 SEC. 1553. COMMODITY CREDIT CORPORATION.

14 The Secretary may use the funds, facilities, and au15 thorities of the Commodity Credit Corporation to carry

16 out this title and the amendments made by this title.

17 Subtitle D—Miscellaneous

18 SEC. 1561. LIABILITY FOR OBLIGATIONS OF TOBACCO

19 PRODUCT MANUFACTURERS.

20 A person that owns or produces tobacco, or owns or

21 operates a tobacco warehouse, shall not be liable for—

22 (1) any action or legal penalty or obligation of

23 a manufacturer of a tobacco product under this Act;

24 or
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1 (2) any financial penalty or payment owed by a

2 manufacturer of a tobacco product under this Act.

3 SEC. 1562. FDA REGULATION OF TOBACCO PRODUCTION

4 AND FARMS.

5 Notwithstanding any other provision of law, an offi6 cer, employee, or agent of the Food and Drug Administra7 tion shall not—

8 (1) regulate the production of a crop of tobacco

9 by a person; or

10 (2) enter the farm of a person that owns or

11 produces tobacco without the consent of the person.