II

105TH CONGRESS

1ST SESSION S. 1530

To resolve ongoing tobacco litigation, to reform the civil justice system responsible for adjudicating tort claims against companies that manufacturer

tobacco products, and establish a national tobacco policy for the United

States that will decrease youth tobacco use and reduce the marketing

of tobacco products to young Americans.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 13, 1997

Mr. HATCH introduced the following bill; which was read the first time

A BILL

To resolve ongoing tobacco litigation, to reform the civil

justice system responsible for adjudicating tort claims

against companies that manufacturer tobacco products,

and establish a national tobacco policy for the United

States that will decrease youth tobacco use and reduce

the marketing of tobacco products to young Americans.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Placing Restraints on Tobacco’s Endangerment of Chil6 dren and Teens Act’’ or the ‘‘PROTECT Act’’.
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1 (b) TABLE OF CONTENTS.—The table of contents of

2 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Goals and purposes.

Sec. 4. National goals for the reduction in underage tobacco use.

Sec. 5. Definitions.

TITLE I—NATIONAL TOBACCO SETTLEMENT TRUST FUND

Sec. 101. Establishment of Trust Fund.

Sec. 102. Licensing fees payment schedule.

Sec. 103. Enforcement.

TITLE II—NATIONAL PROTOCOL AND LIABILITY PROVISIONS

Subtitle A—National Tobacco Control Protocol

CHAPTER 1—ESTABLISHMENT

Sec. 201. Requirement.

CHAPTER 2—TERMS AND CONDITIONS

SUBCHAPTER A—PROTOCOL RESTRICTIONS ON ADVERTISING

Sec. 211. Application of subchapter.

Sec. 212. Agreement to prohibit certain advertising.

Sec. 213. Consensual restrictions.

Sec. 214. Agreement on format and content requirements for labeling and advertising.

Sec. 215. Agreement to ban on nontobacco items and services, contests and

games of chance, and sponsorship of events.

SUBCHAPTER B—PROVISIONS RELATING TO LOBBYING

Sec. 220. Application of subchapter.

Sec. 221. Agreement to provisions relating to lobbying.

Sec. 222. Agreement to terminate certain entities.

SUBCHAPTER C—OTHER PROVISIONS

Sec. 225. Application of subchapter.

Sec. 226. Determination of licensing fee amount.

Sec. 227. Attorney’s fees and expenses.

Sec. 228. Limitations with respect to Indian country.

CHAPTER 3—ENFORCEMENT

Sec. 231. Federal enforcement of the protocol.

Sec. 232. State enforcement of the protocol.

Sec. 233. Private enforcement of protocol.

Sec. 234. Removal.

Subtitle B—Consent Decrees

Sec. 241. Consent decrees.
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Sec. 242. State enforcement of consent decrees.

Sec. 243. Non-participating manufacturers.

Subtitle C—Liability Provisions

CHAPTER 1—GENERAL PROVISIONS

Sec. 251. Definitions.

CHAPTER 2—IMMUNITY AND LIABILITY FOR PAST CONDUCT

Sec. 255. Application of chapter.

Sec. 256. General immunity.

Sec. 257. Civil liability for past conduct.

Sec. 258. Civil liability for future conduct.

Sec. 259. Non-participating manufacturers.

Sec. 260. Payment of judgments and settlements.

Sec. 261. State eligibility.

Sec. 262. Removal.

Sec. 263. Conforming amendments.

TITLE III—REDUCTION IN UNDERAGE TOBACCO USE

Subtitle A—State Laws Regarding the Sale of Tobacco Products to Minors

Sec. 300. Short title.

Sec. 301. State laws regarding sale of tobacco products to individuals under the

age of 18.

Sec. 302. Model State law.

Subtitle B—Required Reduction in Underage Usage

Sec. 311. Purpose.

Sec. 312. Determination of underage use base percentages.

Sec. 313. Annual daily incidence of underage use of tobacco products.

Sec. 314. Required reduction in underage tobacco use.

Sec. 315. Application of surcharges.

Sec. 316. Abatement procedures.

Sec. 317. Incentive for exceeding reduction goals.

TITLE IV—HEALTH AND SAFETY REGULATION OF TOBACCO

PRODUCTS

Sec. 401. Health and safety regulation of tobacco products.

‘‘CHAPTER IX—HEALTH PROMOTION AND DISEASE PREVENTION

PROGRAM FOR TOBACCO PRODUCTS

‘‘Sec. 900. Definitions.

‘‘SUBCHAPTER A—TOBACCO PRODUCT REGULATION

‘‘Sec. 901. Statement of general duties.

‘‘Sec. 902. Tobacco product health risk management standards.

‘‘Sec. 903. Good manufacturing practice standards.

‘‘Sec. 904. Tobacco product labeling, warning, and packaging standards.

‘‘Sec. 905. Reduced risk tobacco products.

‘‘Sec. 906. Tobacco product marketing provisions.

‘‘Sec. 907. Tobacco Products Scientific Advisory Committee.
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‘‘Sec. 908. Reports.

‘‘Sec. 909. Judicial review.

‘‘Sec. 910. Preemption.

Sec. 402. Technical provisions.

Sec. 403. Federal licensing of military and other entities.

TITLE V—PAYMENTS TO STATES AND PUBLIC HEALTH

PROGRAMS

Subtitle A—Payments to States

Sec. 501. Reimbursement for State expenditures.

Sec. 502. Requirement for State use of certain funds.

Subtitle B—Public Health Programs

Sec. 521. National Institutes of Health Trust Fund for Health Research.

Sec. 522. National anti-tobacco product consumption and tobacco product cessation public health program.

TITLE VI—STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO

TOBACCO SMOKE

Sec. 601. Definitions.

Sec. 602. Smoke-free environment policy.

Sec. 603. Preemption.

Sec. 604. Regulations.

Sec. 605. Effective date.

TITLE VII—PUBLIC DISCLOSURE OF HEALTH RESEARCH

Sec. 701. Purpose.

Sec. 702. National tobacco document depository.

Sec. 703. Enforcement.

TITLE VIII—AGRICULTURAL TRANSITION PROVISIONS

Sec. 801. Short title.

Sec. 802. Purposes.

Sec. 803. Definitions.

SUBTITLE A—TOBACCO PRODUCTION TRANSITION

CHAPTER 1—TOBACCO TRANSITION CONTRACTS

Sec. 811. Tobacco Transition Account.

Sec. 812. Offer and terms of tobacco transition contracts.

Sec. 813. Elements of contracts.

Sec. 814. Buyout payments to owners.

Sec. 815. Transition payments to producers.

Sec. 816. Tobacco worker transition program.

Sec. 817. Farmer opportunity grants.

CHAPTER 2—RURAL ECONOMIC ASSISTANCE BLOCK GRANTS

Sec. 821. Rural economic assistance block grants.

SUBTITLE B—TOBACCO PRICE SUPPORT AND PRODUCTION ADJUSTMENT

PROGRAMS
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CHAPTER 1—TOBACCO PRICE SUPPORT PROGRAM

Sec. 831. Interim reform of tobacco price support program.

Sec. 832. Termination of tobacco price support program.

CHAPTER 2—TOBACCO PRODUCTION ADJUSTMENT PROGRAMS

Sec. 835. Termination of tobacco production adjustment programs.

SUBTITLE C—FUNDING

Sec. 841. Trust Fund.

Sec. 842. Commodity Credit Corporation.

TITLE IX—MISCELLANEOUS PROVISIONS

Sec. 901. Provisions relating to Native Americans.

Sec. 902. Whistleblower protections.

Sec. 903. Limited antitrust exemption.

Sec. 904. Pass-through.

Sec. 905. Effective date.

1 SEC. 2. FINDINGS.

2 (a) GENERAL FINDINGS.—Congress makes the fol3 lowing findings:

4 (1) Tobacco is an addictive substance the use of

5 which constitutes the Nation’s number 1 preventable

6 cause of death.

7 (2) The use of tobacco products by the nation’s

8 children is a serious and growing public health prob9 lem that results in new generations of tobacco-de10 pendent children and adults.

11 (3) There is a consensus within the scientific

12 and medical communities that currently marketed

13 tobacco products are inherently unsafe and cause

14 cancer, heart disease, and other serious adverse

15 health effects. The tobacco industry concealed rel-
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1 evant data concerning the effects of tobacco prod2 ucts on adolescents and adults.

3 (4) Virtually all new users of tobacco products

4 are under the age of 18. Tobacco industry advertis5 ing and marketing is directed at adolescents and as

6 such, sweeping new restriction on the sale, pro7 motion, and distribution of such products are need8 ed.

9 (5) Enhancing the existing legal mechanisms

10 and the available prevention, research, and treat11 ment resources with respect to tobacco will allow our

12 Nation to address more effectively the problems as13 sociated with the use of tobacco products.

14 (6) Public health authorities believe that the so15 cietal benefits of enacting tobacco settlement legisla16 tion in human and economic terms would be vast.

17 The Secretary of Health and Human Services has

18 found that reducing underage tobacco use 50 per19 cent ‘‘would prevent well over 60,000 early deaths’’.

20 The Secretary has estimated that the monetary

21 value of the regulations promulgated as a result of

22 this Act will be an estimated $43,000,000,000 per

23 year in reduced medical costs, improved productivity,

24 and the benefit of avoiding the premature death of

25 loved ones.
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1 (7) The unique position occupied by tobacco in

2 the history and economy of the United States, the

3 magnitude of the actual and potential tobacco-relat4 ed litigation, the advisability of avoiding the cost, ex5 pense, uncertainty, and inconsistency associated with

6 such protracted litigation, the need to limit the sale,

7 distribution, marketing, and advertising of tobacco

8 products to persons of legal age, and the need to

9 better educate the public (especially young people)

10 concerning the health risks of using tobacco prod11 ucts make it in the public interest to enact legisla12 tion to facilitate a comprehensive resolution of such

13 matters.

14 (b) FINDINGS RELATED TO INTERSTATE COMMERCE

15 AND THE JUDICIAL SYSTEM.—Congress makes the follow16 ing findings:

17 (1) The sale, distribution, marketing, advertis18 ing, and use of tobacco products are activities sub19 stantially affecting interstate commerce and as such,

20 have a substantial effect on the economy of the

21 United States.

22 (2) The sale, distribution, marketing, advertis23 ing, and use of tobacco products are activities that

24 substantially affect interstate commerce by virtue of

25 the health care-related and other costs that Federal
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1 and State governmental authorities have incurred

2 because of the usage of tobacco products.

3 (3) Various civil actions brought by State attor4 neys general, cities, counties, the Commonwealth of

5 Puerto Rico, third-party payors, and other private

6 classes and individuals to recover damages relating

7 to tobacco-related diseases, conditions and products

8 are pending throughout the United States; of these

9 actions are slow-moving, expensive, and burdensome

10 not only for the litigants but also for Federal and

11 State judicial systems.

12 SEC. 3. GOALS AND PURPOSES.

13 (a) GOALS.—It is a goal of this Act to—

14 (1) decrease youth smoking and reduce the

15 marketing of tobacco products to young Americans;

16 (2) decrease tobacco use by all Americans by

17 encouraging public education and smoking cessation

18 programs and to decrease the exposure of individuals

19 to environmental (second-hand) smoke;

20 (3) enhance biomedical research efforts into dis21 eases associated with tobacco use;

22 (4) advance our knowledge about the health ef23 fects of nicotine and tobacco on the human body;
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1 (5) provide transition assistance to tobacco

2 farmers and create incentives to reduce the produc3 tion and distribution of tobacco products;

4 (6) return to the States funds that they have

5 expended with respect to tobacco-related health care

6 costs and other costs related to tobacco;

7 (7) establish the authority of the Food and

8 Drug Administration with respect to the types of to9 bacco products that may be lawfully sold;

10 (8) reform tobacco litigation practices to bring

11 finality to current litigation and provide greater pre12 dictability in future individual cases; and

13 (9) wisely invest increased tobacco revenues in

14 important public health priorities, such as smoking

15 cessation, public education, counter-advertising.

16 (b) PURPOSES.—It is the purpose of this Act to—

17 (1) provide for the funding by the tobacco in18 dustry of an aggressive Federal enforcement pro19 gram relating to tobacco advertising and distribu20 tion, including a State-administered retail licensing

21 system to prevent minors from obtaining tobacco

22 products;

23 (2) subject the tobacco industry to severe finan24 cial penalties in the event that underage tobacco
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1 usage does not decline radically over the next 10

2 years;

3 (3) provide for the establishment of national

4 standards to control the manufacturing of tobacco

5 products and the ingredients used in such products;

6 (4) provide certain regulatory powers to the

7 Secretary of Health and Human Services to encour8 age the development and marketing by the tobacco

9 industry of ‘‘less hazardous tobacco products’’, in10 cluding the power to regulate the level of nicotine in

11 such products;

12 (5) require the manufacturers of tobacco prod13 ucts to disclose all present and future non-public in14 ternal laboratory research regarding tobacco prod15 ucts;

16 (6) establish a minimum Federal standard to

17 limit smoking in public places, including the halls of

18 Congress;

19 (7) provide for the establishment of a National

20 Tobacco Settlement Trust Fund to be funded by the

21 tobacco industry and used in accordance with this

22 Act;

23 (8) provide for the establishment of a national

24 education-oriented counter advertising and tobacco
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1 use prevention campaign to be funded through the

2 National Tobacco Settlement Trust Fund;

3 (9) provide annual payments to States to fund

4 tobacco-related health benefits programs through the

5 National Tobacco Settlement Trust Fund; and

6 (10)(A) settle the present tobacco-related gov7 ernmental parens patriae and private class actions

8 as to which a final judgment or final settlement has

9 not been reached as of the effective date of this Act;

10 (B) bar future tobacco-related claims based on

11 dependency;

12 (C) preclude claims for punitive damages based

13 on conduct that took place prior to the effective date

14 of this Act to that such claims are not reduced to

15 final judgment or final settlement prior to the effec16 tive date of this Act; and

17 (D) preclude further class actions or aggrega18 tions of claims in tobacco-related actions.

19 SEC. 4. NATIONAL GOALS FOR THE REDUCTION IN UNDER20 AGE TOBACCO USE.

21 (a) IN GENERAL.—With respect to the average an22 nual incidence of the daily use of tobacco products by indi23 viduals who are under 18 years of age, it shall be the na24 tional goals of the United States that such use be reduced

25 as follows:
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1 (1) CIGARETTES.—With respect to cigarettes—

2 (A) in the fifth and sixth calendar years

3 after the date of enactment of this Act the per4 centage decrease in the use of cigarette prod5 ucts shall be at least 30 percent;

6 (B) in the seventh, eighth and ninth cal7 endar years after the date of enactment of this

8 Act the percentage decrease in the use of ciga9 rette products shall be at least 50 percent; and

10 (C) in the tenth and subsequent calendar

11 years after the date of enactment of this Act

12 the percentage decrease in the use of cigarette

13 products shall be at least 60 percent.

14 (2) SMOKELESS TOBACCO PRODUCTS.—With re15 spect to smokeless tobacco products—

16 (A) in the fifth and sixth calendar years

17 after the date of enactment of this Act the per18 centage decrease in the use of smokeless to19 bacco products shall be at least 25 percent;

20 (B) in the seventh, eighth and ninth cal21 endar years after the date of enactment of this

22 Act the percentage decrease in the use of

23 smokeless tobacco products shall be at least 35

24 percent; and
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1 (C) in the tenth and subsequent calendar

2 years after the date of enactment of this Act

3 the percentage decrease in the use of smokeless

4 tobacco products shall be at least 45 percent.

5 (b) DETERMINATIONS.—Determinations as to wheth6 er the national goals described in subsection (a) have been

7 met shall be made in accordance with the provisions of

8 subtitle B of title III.

9 SEC. 5. DEFINITIONS.

10 In this Act:

11 (1) BRAND.—The term ‘‘brand’’ means a vari12 ety of a tobacco product distinguished by the tobacco

13 used, tar content, nicotine content, flavoring used,

14 size, filtration, or packaging.

15 (2) CIGARETTE.—The term ‘‘cigarette’’ means

16 any product which contains nicotine, is intended to

17 be burned under ordinary conditions of use, and con18 sists of—

19 (A) any roll of tobacco wrapped in paper

20 or in any substance not containing tobacco; and

21 (B) any roll of tobacco wrapped in any

22 substance containing tobacco which, because of

23 its appearance, the type of tobacco used in the

24 filler, or its packaging and labeling, is likely to
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1 be offered to, or purchased by, consumers as a

2 cigarette described in subparagraph (A).

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

4 tobacco’’ means any product that consists of loose

5 tobacco that contains or delivers nicotine and is in6 tended for use by persons in a cigarette. Unless oth7 erwise stated, the requirements of this Act pertain8 ing to cigarettes shall also apply to cigarette to9 bacco.

10 (4) COMMERCE.—The term ‘‘commerce’’

11 means—

12 (A) commerce between any State, the Dis13 trict of Columbia, the Commonwealth of Puerto

14 Rico, Guam, the Virgin Islands, American

15 Samoa, the Northern Mariana Islands or any

16 territory or possession of the United States;

17 (B) commerce between points in any State,

18 the District of Columbia, the Commonwealth of

19 Puerto Rico, Guam, the Virgin Islands, Amer20 ican Samoa, the Northern Mariana Islands or

21 any territory or possession of the United States;

22 or

23 (C) commerce wholly within the District of

24 Columbia, Guam, the Virgin Islands, American
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1 Samoa, the Northern Mariana Islands or any

2 territory or possession of the United States.

3 (5) COMMISSIONER.—The term ‘‘Commis4 sioner’’ means the Commissioner of Food and

5 Drugs.

6 (6) CONSENT DECREE.—The term ‘‘consent de7 cree’’ means a consent decree executed by the par8 ticipating manufacturers and a State under the pro9 vision of section 241.

10 (7) COURT.—The term ‘‘court’’ means any judi11 cial or agency court, forum or tribunal within the

12 United States, including without limitation any Fed13 eral, State, or tribal court.

14 (8) DISTRIBUTOR.—The term ‘‘distributor’’

15 means any person who furthers the distribution of

16 tobacco products, whether domestic or imported, at

17 any point from the original place of manufacture to

18 the person who sells or distributes the product to in19 dividuals for personal consumption. Such term shall

20 not include common carriers.

21 (9) INDIAN TRIBE.—The term ‘‘Indian tribe’’

22 has the same meaning given such term in section

23 4(e) of the Indian Self Determination and Education

24 Assistance Act (25 U.S.C. 450b(e)).
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1 (10) TRIBAL ORGANIZATION.—The term ‘‘tribal

2 organization’’ has the same meaning given such

3 term in section 4 of the Indian Self Determination

4 and Education Assistance Act (25 U.S.C. 450b).

5 (11) MANUFACTURER.—The term ‘‘manufac6 turer’’ means—

7 (A) a person who directly (not through a

8 subsidiary company or affiliate) manufactures

9 tobacco products for sale in the United States;

10 (B) a successor or assign of a person de11 scribed in subparagraph (A);

12 (C) an entity established by a person de13 scribed in subparagraph (A); or

14 (D) an entity to which a person described

15 in subparagraph (A) directly or indirectly

16 makes a fraudulent conveyance after the effec17 tive date of this Act or a transfer that would

18 otherwise be voidable under chapter 7 of title

19 11, United States Code, but only to the extent

20 of the interest or obligation transferred.

21 Such term shall not include a parent or affiliate of

22 a person who manufactures tobacco products unless

23 such parent or affiliate itself is a person described

24 in any of subparagraphs (A) through (D).
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1 (12) NICOTINE.—The term ‘‘nicotine’’ means

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

3 pyrrolidinyl)pyridine or C10H14N2, including any salt

4 or complex of nicotine.

5 (13) PACKAGE.—The term ‘‘package’’ means a

6 pack, box, carton, or container of any kind in which

7 tobacco products are offered for sale, sold, or other8 wise distributed to consumers.

9 (14) PARTICIPATING MANUFACTURER.—The

10 term ‘‘participating manufacturer’’ means a manu11 facturer which, within the periods specified in the

12 applicable provisions of title II—

13 (A) enters into the Protocol; and

14 (B) enters into a consent decree with each

15 State that requests that the manufacturer enter

16 into the Protocol.

17 (15) PERSON.—The term ‘‘person’’ means an

18 individual, partnership, corporation, or any other

19 business or legal entity.

20 (16) POINT OF SALE.—The term ‘‘point of

21 sale’’ means any location at which an individual can

22 purchase or otherwise obtain tobacco products for

23 personal consumption.

24 (17) PROTOCOL.—The term ‘‘Protocol’’ means

25 the protocol to be executed under subtitle A of title
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1 II for the purpose of setting forth certain obligations

2 being undertaken by the Attorney General, partici3 pating manufacturers, the chief executive officer of

4 each State, and a representative of the members of

5 the class certified for purposes of Dianne Castano v.

6 American Tobacco Company, as consideration for

7 the resolution of tobacco claims through the civil li8 ability provisions of title II.

9 (18) RETAILER.—The term ‘‘retailer’’ means

10 any person who sells tobacco products to individuals

11 for personal consumption, or who operates a facility

12 where vending machines or self-service displays are

13 permitted under this Act.

14 (19) SALE.—The term ‘‘sale’’ includes the sell15 ing, providing samples of, or otherwise making to16 bacco products available for personal consumption in

17 any place within the scope of this Act.

18 (20) SECRETARY.—The term ‘‘Secretary’’

19 means the Secretary of Health and Human Services.

20 (21) SMOKELESS TOBACCO.—The term ‘‘smoke21 less tobacco’’ means any product that consists of

22 cut, ground, powdered, or leaf tobacco that contains

23 nicotine and that is intended to be placed in the oral

24 or nasal cavity.
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1 (22) STATE.—The term ‘‘State’’ includes the

2 several States, the District of Columbia, the Com3 monwealth of Puerto Rico, Guam, the Virgin Is4 lands, American Samoa, the Northern Mariana Is5 lands, and any other territory or possession of the

6 United States. Such term includes any political divi7 sion of any State.

8 (23) TOBACCO.—The term ‘‘tobacco’’ means to9 bacco in its unmanufactured form.

10 (24) TOBACCO CLAIM.—The term ‘‘tobacco

11 claim’’ means a claim directly or indirectly arising

12 out of, based on, or related to the health-related ef13 fects or attributes of tobacco products, including a

14 claim arising out of, based on, or related to allega15 tions regarding any conduct, statement or omission

16 concerning the health-related effects or attributes of

17 such products, that is brought against—

18 (A) a manufacturer or the predecessors or

19 past, present or future parents, affiliates, offi20 cers, directors, employees or agents of a manu21 facturer; or

22 (B) any importer, supplier, distributor,

23 wholesaler, retailer or other seller of tobacco

24 products or any grower of tobacco.
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1 (25) TOBACCO PRODUCT.—The term ‘‘tobacco

2 product’’ means cigarettes, cigarette tobacco, and

3 smokeless tobacco.

4 (26) TRUST FUND.—The term ‘‘Trust Fund’’

5 means the National Tobacco Settlement Trust Fund

6 established under section 101.

7 TITLE I—NATIONAL TOBACCO

8 SETTLEMENT TRUST FUND

9 SEC. 101. ESTABLISHMENT OF TRUST FUND.

10 (a) CREATION AND DEPOSITS.—

11 (1) IN GENERAL.—There is established in the

12 Treasury of the United States a trust fund to be

13 known as the ‘‘National Tobacco Settlement Trust

14 Fund’’.

15 (2) DEPOSITS.—The Trust Fund shall be com16 posed of the following deposits to be paid by partici17 pating manufacturers under the fee payment sched18 ule under section 102:

19 (A) COMPENSATORY DAMAGE DEPOSITS.—

20 With respect to compensatory damages,

21 $303,337,500,000 shall be deposited in the

22 Trust Fund and shall represent the settlement

23 amount referred to in the Protocol and the con24 sent decrees.
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1 (B) PUNITIVE DAMAGE DEPOSITS.—With

2 respect to punitive damages, $95,000,000,000

3 shall be deposited in the Trust Fund and shall

4 represent the settlement of tobacco-related pu5 nitive damages claims which occurred prior to

6 the date of enactment of this Act, and shall be

7 used to fund the Trust Fund for Health Re8 search under section 521.

9 (3) ACCOUNTS IN TRUST FUND.—The National

10 Tobacco Settlement Trust Fund shall consist of—

11 (A) a State Account, and

12 (B) a Federal Account.

13 Each such Account shall consist of such amounts as

14 may be transferred to it under this section or cred15 ited under section 103(b)(3).

16 (4) TRUSTEES.—

17 (A) IN GENERAL.—The National Tobacco

18 Settlement Trust Fund shall be administered by

19 the Attorney General who shall serve together

20 with the Secretary of the Treasury and the Sec21 retary of Health and Human Services as the

22 Trustees of the Fund.

23 (B) ADVISORY BOARD.—The Trustees of

24 the Trust Fund, in administering the Trust
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1 Fund, shall be advised by an advisory board es2 tablished under section 103.

3 (b) TRANSFERS TO TRUST FUND.—There is trans4 ferred to the State Account and the Federal Account of

5 the National Tobacco Settlement Trust Fund, without fur6 ther appropriation, an amount equal to 50 percent in the

7 case of the State Account and 50 percent in the case of

8 the Federal Account of the—

9 (1) amounts received under section 102, less

10 the amounts made available under subparagraphs

11 (D), (E), and (F) of subsection (c)(3) for tobacco

12 transition, Native Americans, and asbestos-related

13 injuries;

14 (2) amounts paid as fines or penalties, includ15 ing interest thereon, under section 104; and

16 (3) amounts repaid or recovered under section

17 315, including interest thereon.

18 (c) EXPENDITURES FROM TRUST FUND.—

19 (1) IN GENERAL.—Amounts in the National

20 Tobacco Settlement Trust Fund shall be made avail21 able in each fiscal year, without further appropria22 tion, as described in the table in paragraph (2).

23 (2) EXPENDITURE TABLE.—For purposes of

24 paragraph (1), amounts shall be made available in
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1 each full fiscal year following the date of enactment

2 of this Act as follows:

In billions of dollars

Year States Public

Health Research Asbestos Agriculture NativeAmericans

1st 3.25 1.1 2.15 0 3.0925 0.2

2nd 3.75 1.6 2.15 0.2 5.0925 0.2

3rd 4.75 2.2 2.55 0.2 6.1925 0.2

4th 7.0 3.3 3.7 0.2 .0925 0.2

5th 7.5 3.5 4.0 0.2 .0925 0.2

6th 8.0 4.0 4.0 0.2 0.1 0.2

7th 8.0 4.0 4.0 0.2 0.1 0.2

8th 8.0 4.0 4.0 0.2 0.1 0.2

9th 8.0 4.0 4.0 0.2 0.1 0.2

10th 8.0 4.0 4.0 0.2 0.1 0.2

11th 8.0 4.0 4.0 0.2 0.0575 0.2

12th 8.0 4.0 4.0 0.2 0.0575 0.2

13th 8.0 4.0 4.0 0.2 0.0575 0.2

14th 8.0 4.0 4.0 0.2 0.0575 0.2

15th 8.0 4.0 4.0 0.2 0.0575 0.2

16th 8.0 4.0 4.0 0.2 0.065 0.2

17th 8.0 4.0 4.0 0.2 0.065 0.2

18th 8.0 4.0 4.0 0.2 0.065 0.2

19th 8.0 4.0 4.0 0.2 0.065 0.2

20th 8.0 4.0 4.0 0.2 0.065 0.2

21st 8.0 4.0 4.0 0.2 0.0725 0.2

22nd 8.0 4.0 4.0 0.2 0.0725 0.2

23rd 8.0 4.0 4.0 0.2 0.0725 0.2

24th 8.0 4.0 4.0 0.2 0.0725 0.2

25th 8.0 4.0 4.0 0.2 0.0725 0.2

3 (3) DEFINITIONS AND USE OF FUNDS.—With

4 respect to the table in paragraph (2):

5 (A) STATE.—The term ‘‘State’’ means the

6 State account established under subsection

7 (a)(3)(A). Amounts provided to the State Ac8 count under this section shall be available in

9 each fiscal year, without further appropriation,

10 to make payments to the States as provided for

11 in subtitle A of title V.

12 (B) RESEARCH.—The term ‘‘research’’

13 means activities carried out by the Secretary
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1 under section 521 to conduct and support bio2 medical and behavioral research into the causes

3 of tobacco use, diseases and conditions associ4 ated with tobacco use and other substance

5 abuse dependencies, and the development of

6 therapies for such diseases and conditions.

7 (C) PUBLIC HEALTH.—The term ‘‘public

8 health’’ means public health activities carried

9 out by the Secretary under section 522 to im10 plement the National Anti-Tobacco Product

11 Consumption and Tobacco Product Cessation

12 Public Health Program to further the purposes

13 of this Act.

14 (D) ASBESTOS.—The term ‘‘asbestos’’

15 means programs and activities carried out by

16 the Secretary of Labor relating to victims of as17 bestos-related injuries with respect to which the

18 use of tobacco products have been determined

19 to be a significant contributor.

20 (E) AGRICULTURE.—The term ‘‘agri21 culture’’ means the Tobacco Transition Account

22 to be administered by the Secretary of Agri23 culture as provided for under section 841.

24 (F) NATIVE AMERICANS.—The term ‘‘Na25 tive Americans’’ means anti-tobacco consump-
25

•S 1530 IS

1 tion and cessation activities to be carried out by

2 the Indian Health Service under section 901(h).

3 (4) FEDERAL ACCOUNT.—Amounts to which

4 subparagraphs (B) through (D) of paragraph (3)

5 apply shall be deposited into Federal Account and

6 shall be available in each fiscal year, without further

7 appropriation, as described in such subparagraphs.

8 (5) RESERVATION.—Prior to making available

9 amounts under this subsection for a fiscal year, the

10 Trustees shall reserve the amounts to which sub11 paragraphs (E) through (G) of paragraph (3) apply,

12 for use in each fiscal year, without further appro13 priation, as described in such subparagraphs.

14 (d) MAINTENANCE OF EFFORT.—The Trustees may

15 not make an expenditure for a fiscal year—

16 (1) under subsection (c)(1), unless a State cer17 tifies that the aggregate expenditure of funds of the

18 State, exclusive of Federal funds, for the purposes of

19 the expenditure under such subsection will be main20 tained at a level that does not fall below the average

21 level of such aggregate expenditure for the preceding

22 2 fiscal years of the State; and

23 (2) under any subparagraph of subsection

24 (c)(2), unless such expenditure is in addition to, and

25 not in substitution for, any appropriation otherwise
26

•S 1530 IS

1 applicable with respect to the purpose described in

2 such subparagraph.

3 (e) ADJUSTMENTS.—The amounts described in sub4 section (a)(1) relating to deposits and in subsection (c)

5 relating to expenditures shall be adjusted annually by the

6 Trustees to account for any adjustments made under sec7 tion 102(c)(2) relating to fee payments. Amounts for ex8 penditures under subsection (c) shall be adjusted propor9 tionally by the Trustees based on the adjustments under

10 section 102(c)(2).

11 SEC. 102. LICENSING FEES PAYMENT SCHEDULE.

12 (a) REQUIREMENT OF INITIAL PAYMENT.—To be eli13 gible to receive the protections provided under subtitle C

14 of title II, participating manufacturers shall, on the later

15 of—

16 (1) the date of enactment of this Act;

17 (2) the date on which the Protocol is executed

18 under section 201; or

19 (3) the date on which all applicable consent de20 crees are executed under section 241;

21 pay licensing fees to the Trust Fund in an aggregate

22 amount of $10,000,000,000.

23 (b) SUBSEQUENT BASE AMOUNT PAYMENTS.—To be

24 eligible to receive the protections provided under subtitle

25 C of title II, participating manufacturers shall, not later
27

•S 1530 IS

1 than December 31 of each year involved, pay licensing fees

2 to the Trust Fund in an aggregate amount of—

3 (1) with respect to the first fiscal year following

4 the year in which the fees are paid under subsection

5 (a), $9,792,500,000;

6 (2) with respect to the second such fiscal year,

7 $12,992,500,000;

8 (3) with respect to the third such fiscal year,

9 $16,092,500,000;

10 (4) with respect to the fourth such fiscal year,

11 $14,492,500,000;

12 (5) with respect to the fifth such fiscal year,

13 $15,492,500,000;

14 (6) with respect to the sixth such fiscal year,

15 and each of the next 4 succeeding fiscal years,

16 $16,500,000,000 for each such year;

17 (7) with respect to the 11th such fiscal year,

18 and each of the next 4 succeeding fiscal years,

19 $16,457,500,000 for each such year;

20 (8) with respect to the 16th such fiscal year,

21 and each of the next 4 succeeding fiscal years,

22 $16,465,000,000 for each such year; and

23 (9) with respect to the 21st such fiscal year,

24 and each of the next 4 succeeding fiscal years,

25 $16,472,500,000 for each such year.
28

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1 (c) ADJUSTMENTS.—

2 (1) IN GENERAL.—The amount of the annual

3 base amount payments for each year under sub4 section (b) shall be adjusted by the Trustees in ac5 cordance with the formula described in paragraph

6 (2). In prescribing such adjustments, the Trustees

7 shall ensure that participating manufacturers make

8 annual payments based on their relative domestic

9 volume of sales of units of tobacco products during

10 the year for which the payment is due.

11 (2) FORMULA.—

12 (A) INFLATION ADJUSTMENT.—With re13 spect to a year, the base amount payment for

14 such year under subsection (b) shall be in15 creased for such year by the greater of 3 per16 cent or the percentage increase in the

17 Consumer Price Index for the period beginning

18 in the first full fiscal year beginning after the

19 date of enactment of this Act and ending in the

20 year for which the determination is being made.

21 (B) VOLUME ADJUSTMENT.—

22 (i) DETERMINATION.—With respect to

23 a year—

24 (I) if the actual volume is greater

25 than the base volume, the amount of
29

•S 1530 IS

1 the annual base amount payments for

2 such year under subsection (b) shall

3 be increased by an amount equal to

4 the amount determined by multiplying

5 such base amount by the ratio of the

6 actual volume to the base volume; or

7 (II) if the actual volume is less

8 than the base volume, the annual base

9 amount payments for such year under

10 subsection (b) shall be reduced by an

11 amount equal to the amount deter12 mined by multiplying such base

13 amount by the greater of—

14 (aa) the ratio of the actual

15 volume to the base volume; or

16 (bb) the ratio of the portion

17 of the actual volume attributable

18 to sales to individuals 18 years of

19 age or older to the portion of the

20 base volume attributable to sales

21 to individual 18 years of age or

22 older.

23 (ii) REQUIRED REDUCTION.—If a re24 duction in the applicable base amount is

25 required under clause (ii), but the partici-
30

•S 1530 IS

1 pating manufacturers’ aggregate net oper2 ating profits from domestic sales of to3 bacco products for the year for which the

4 annual payment is being calculated, as re5 ported to the Securities and Exchange

6 Commission, is greater than such partici7 pating manufacturers’ aggregate net oper8 ating profits from domestic sales of to9 bacco products in 1996 (as increased for

10 inflation) as reported to the Securities and

11 Exchange Commission, such reduction

12 shall be reduced (but not below zero) by an

13 amount equal to 25 percent of such in14 crease in such profits.

15 (iii) NONREPORTING MANUFAC16 TURER.—In the case of a participating

17 manufacturer that does not report profits

18 to the Securities and Exchange Commis19 sion, the profit figures referred to in this

20 subparagraph shall be those reflected in

21 that participating manufacturer’s audited

22 financial statements for the applicable

23 year. The determination of the participat24 ing manufacturers’ aggregate net operating

25 profits from domestic sales of tobacco
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•S 1530 IS

1 products shall be derived using the same

2 methodology as was employed in deriving

3 such participating manufacturers’ aggre4 gate net operating profits from domestic

5 sales of tobacco products in 1996, as re6 ported to the Securities and Exchange

7 Commission.

8 (iv) DEFINITIONS.—For purposes of

9 this subparagraph—

10 (I) the term ‘‘actual volume’’

11 means the number of units of tobacco

12 products sold domestically by partici13 pating manufacturers in the year in14 volved (as reported by such participat15 ing manufacturers to the Secretary);

16 and

17 (II) the term ‘‘base volume’’

18 means the number of units of tobacco

19 products sold domestically by partici20 pating manufacturers in 1996.

21 (d) DETERMINATION OF AMOUNT.—The amount of

22 licensing fees that each participating manufacturer shall

23 be required to pay to the Trust Fund under this section

24 shall be determined under the Protocol under section 226.

25 In making such determinations, consideration shall be pro-
32

•S 1530 IS

1 vided for any payments made by manufacturers to States

2 under any settlement of a civil action described in section

3 256(a).

4 (e) GUIDELINES.—The Trustees shall develop guide5 lines and implement procedures for the collection of fees

6 under this section.

7 (f) COLLECTION OF UNPAID PAYMENTS.—In any

8 case where the Trustees do not receive a payment under

9 this section within 30 days after it is due, such payment

10 shall be treated as a claim of the United States Govern11 ment subject to subchapter II of chapter 37 of title 31,

12 United States Code.

13 SEC. 103. ADMINISTRATIVE PROVISIONS.

14 (a) DUTY OF TRUSTEES.—It shall be the duty of the

15 Attorney General as a Trustees of the National Tobacco

16 Settlement Trust Fund to hold the Trust Fund and to

17 report to the Committees on Judiciary, Labor and Human

18 Resources, Commerce and Agriculture of the Senate and

19 the Committees on Judiciary, Commerce, and Agriculture

20 of the House of Representatives each fiscal year—

21 (1) on the financial condition and the results of

22 the operations of the Trust Fund during the fiscal

23 year preceding the fiscal year in which such report

24 is submitted, and
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•S 1530 IS

1 (2) on the expected condition and operations of

2 the Trust Fund during the fiscal year in which such

3 report is submitted and the 5 fiscal years succeeding

4 such fiscal year.

5 Such report shall be printed as both a House and Senate

6 document of the session of the Congress to which the re7 port is made.

8 (b) INVESTMENT OF AMOUNTS IN TRUST FUND.—

9 (1) INVESTMENT IN OBLIGATIONS.—The Trust10 ees shall invest such portion of the State Account

11 and the Federal Account of the National Tobacco

12 Settlement Trust Fund as is not, in their judgment,

13 required to meet current withdrawals. Such invest14 ments may be made only in interest-bearing obliga15 tions of the United States. For such purpose, such

16 obligations may be acquired—

17 (A) on original issue at the issue price, or

18 (B) by purchase of outstanding obligations

19 at the market price.

20 (2) SALE OF OBLIGATIONS.—Any obligation ac21 quired by the State Account or the Federal Account

22 of the Trust Fund may be sold by the Secretary of

23 the Treasury at the market price.

24 (3) CREDITING OF INTEREST AND SALE PRO25 CEEDS.—The interest on, and the proceeds from the
34

•S 1530 IS

1 sale or redemption of, any obligations held in the

2 State Account or the Federal Account of the Trust

3 Fund shall be credited to and form a part of such

4 Account.

5 (c) ESTABLISHMENT OF ADVISORY BOARD.—

6 (1) IN GENERAL.—There is established an advi7 sory board (referred to in this subsection as the

8 ‘‘Advisory Board’’) to advise the Trustees of the Na9 tional Tobacco Settlement Trust Fund in the admin10 istration of the Trust Fund.

11 (2) MEMBERSHIP.—

12 (A) IN GENERAL.—The Advisory Board

13 shall be composed of the Trustees of the Na14 tional Tobacco Settlement Trust Fund, who

15 shall act as the co-chairpersons of the Advisory

16 Board, and 4 members to be appointed—

(i) 1 17 ⁄2 by the Speaker of the House of

18 Representatives, in consultation with the

19 minority leader of the House of Represent20 atives, and

(ii) 1 21 ⁄2 by the majority leader of the

22 Senate, in consultation with the minority

23 leader of the Senate.
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1 (b) NOMINEES.—The members appointed

2 under each clause of subparagraph (A) shall be

3 chosen in the following manner:

4 (i) 1 member from a nominee list pre5 pared by State attorneys general.

6 (ii) 1 member from a nominee list

7 prepared by representatives of the tobacco

8 industry.

9 (iii) 1 member from a nominee list

10 prepared by representatives of public

11 health experts.

12 (iv) 1 member from a nominee list

13 prepared by representatives of the mem14 bers of the class of plaintiffs in Dianne

15 Castano v. American Tobacco Company.

16 (3) TERMS AND VACANCIES.—Each member of

17 the Advisory Board shall serve for a term of 4 years,

18 to begin on the date of appointment. Any vacancy on

19 the Advisory Board shall not affect its powers, but

20 shall be filled in the same manner as the original ap21 pointment. Any member appointed to fill a vacancy

22 occurring before the expiration of the term for which

23 the member’s predecessor was appointed shall be ap24 pointed for the remainder of that term.

25 (4) POWERS.—
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•S 1530 IS

1 (A) HEARINGS.—The Advisory Board may

2 hold such hearings, sit and act at such times

3 and places, take such testimony, and receive

4 such evidence as the Advisory Board considers

5 advisable to carry out the duties of the Advisory

6 Board.

7 (B) INFORMATION FROM FEDERAL AGEN8 CIES.—The Advisory Board may secure directly

9 from any Federal department or agency such

10 information as the Advisory Board considers

11 necessary to carry out such duties.

12 (5) PERSONNEL MATTERS.—

13 (A) COMPENSATION.—Each member of the

14 Advisory Board who is not an officer or em15 ployee of the Federal Government shall serve

16 without compensation. All members of the Advi17 sory Board who are officers or employees of the

18 United States shall serve without compensation

19 in addition to that received for their services as

20 officers or employees of the United States.

21 (B) TRAVEL EXPENSES.—The members of

22 the Advisory Board shall be allowed travel ex23 penses, including per diem in lieu of subsist24 ence, at rates authorized for employees of agen25 cies under subchapter I of chapter 57 of title 5,
37

•S 1530 IS

1 United States Code, while away from their

2 homes or regular places of business in the per3 formance of services for the Advisory Board.

4 (6) LIMITATION.—Amounts used for adminis5 trative expenses under this section shall not exceed

6 .1 percent of the amounts in the Trust Fund in each

7 year or $15,000,000 whichever is less.

8 (7) NONAPPLICATION OF FACA.—The provi9 sions of the Federal Advisory Committee Act (5

10 U.S.C. App. 2) shall not apply to the Advisory

11 Board established under this subsection.

12 (d) BUDGETARY TREATMENT OF TRUST FUND OP13 ERATIONS.—

14 (1) IN GENERAL.—The receipts and disburse15 ments of the National Tobacco Settlement Trust

16 Fund shall not be included in the totals of the budg17 et of the United States Government as submitted by

18 the President or of the congressional budget and

19 shall be exempt from any general budget limitation

20 imposed by statute on expenditures and net lending

21 (budget outlays) of the United States Government.

22 (2) NO TRANSFERS BETWEEN TRUST FUND

23 AND GENERAL FUND.—No provision of law may pro24 vide for payments from the general fund of the

25 Treasury to the National Tobacco Settlement Trust
38

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1 Fund or for payments from the Trust Fund to the

2 general fund of the Treasury.

3 SEC. 104. ENFORCEMENT.

4 (a) INITIAL PENALTY.—There is hereby imposed an

5 initial penalty on the failure of any participating manufac6 turer to make any fee payment required under section 102

7 within 60 days after the date on which such fee is due.

8 (b) AMOUNT OF PENALTY.—The amount of the pen9 alty imposed by subsection (a) on any failure with respect

10 to a manufacturer shall be $100,000 for each day during

11 the noncompliance period.

12 (c) NONCOMPLIANCE PERIOD.—For purposes of this

13 section, the term ‘‘noncompliance period’’ means, with re14 spect to any failure to make the fee payment required

15 under section 102, the period—

16 (1) beginning on the due date for such pay17 ment; and

18 (2) ending on the date on which such payment

19 is paid in full.

20 (d) LIMITATIONS.—

21 (1) IN GENERAL.—No penalty shall be imposed

22 by subsection (a) on any failure to make a fee pay23 ment under section 102 during any period for which

24 it is established to the satisfaction of the Trustees

25 that none of the persons responsible for such failure
39

•S 1530 IS

1 knew or, exercising reasonable diligence, would have

2 known, that such failure existed.

3 (2) CORRECTIONS.—No penalty shall be im4 posed under subsection (a) on any failure to make

5 a fee payment under section 102 if—

6 (A) such failure was due to reasonable

7 cause and not to willful neglect; and

8 (B) such failure is corrected during the 30-

9 day period beginning on the 1st date that any

10 of the persons responsible for such failure knew

11 or, exercising reasonable diligence, would have

12 known, that such failure existed.

13 (3) WAIVER.—In the case of any failure to

14 make a fee payment under section 102 that is due

15 to reasonable cause and not to willful neglect, the

16 Trustees may waive all or part of the penalty im17 posed under subsection (a) to the extent that the

18 Trustees determines that the payment of such pen19 alty would be excessive relative to the failure in20 volved.

21 (e) STATUS AS PARTICIPATING MANUFACTURER.—If,

22 at the end of the 1-year period beginning on the date on

23 which a participating manufacturer fails to make a timely

24 fee payment as required under section 102, such manufac25 ture has not fully paid the amount owed by such manufac-
40

•S 1530 IS

1 turer under such section, such manufacturer shall be con2 sidered a nonparticipating manufacturer and shall not be

3 eligible for any protections or assistance provided for

4 under this Act (including the liability protections under

5 subtitle C of title I).

6 TITLE II—NATIONAL PROTOCOL

7 AND LIABILITY PROVISIONS

8 Subtitle A—National Tobacco

9 Control Protocol

10 CHAPTER 1—ESTABLISHMENT

11 SEC. 201. REQUIREMENT.

12 (a) REQUIREMENT.—To be eligible to receive the li13 ability protections provided for in subtitle C, each tobacco

14 manufacturer to which this Act applies shall, not later

15 than 90 days after the date of enactment of this Act, enter

16 into a National Tobacco Control Protocol with the Attor17 ney General of the United States, the chief executive offi18 cer of each State, and a representative of the members

19 of the class certified for purposes of Dianne Castano v.

20 American Tobacco Company.

21 (b) TERMS AND CONDITIONS.—The Protocol referred

22 to in subsection (a) shall be—

23 (1) developed by the Attorney General, in con24 sultation with the Secretary, the State attorneys’

25 general, and other individuals determined appro-
41

•S 1530 IS

1 priate by the Attorney General, as a binding and en2 forceable contract that embodies the terms of this

3 subtitle; and

4 (2) designed to be enforceable in Federal or

5 State courts as provided for in this subtitle.

6 (c) CONTRACTS.—As part of the Protocol under this

7 subtitle, a participating manufacturer shall agree, with re8 spect to any contract entered into by the manufacturer

9 with an entity that is a distributor or retailer of tobacco

10 products, to include in such contract as a term and condi11 tion a requirement that such distributor or retailer comply

12 with the provisions of the Protocol.

13 CHAPTER 2—TERMS AND CONDITIONS

14 Subchapter A—Protocol Restrictions on

15 Advertising

16 SEC. 211. APPLICATION OF SUBCHAPTER.

17 The provisions of this subchapter shall be considered

18 as part of the Protocol.

19 SEC. 212. AGREEMENT TO PROHIBIT CERTAIN ADVERTIS20 ING.

21 (a) PROHIBITION ON OUTDOOR ADVERTISING.—

22 (1) IN GENERAL.—No manufacturer, distribu23 tor, or retailer may use any form of outdoor tobacco

24 product advertising, including billboards, posters, or

25 placards.
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•S 1530 IS

1 (2) STADIA AND ARENAS.—Except as otherwise

2 provided in this title, a manufacturer, distributor, or

3 retailer shall not advertise tobacco products in any

4 arena or stadium where athletic, musical, artistic or

5 other social or cultural events or activities occur.

6 (b) PROHIBITION ON USE OF HUMAN IMAGES AND

7 CARTOONS.—No manufacturer, distributor, or retailer

8 may use a human image or a cartoon character or cartoon9 type character in its advertising, labeling or promotional

10 material with respect to a tobacco product.

11 (c) PROHIBITION ON ADVERTISING ON THE

12 INTERNET.—No manufacturer, distributor, or retailer

13 may use the Internet to advertise tobacco products unless

14 such an advertisement is inaccessible in or from the Unit15 ed States.

16 (d) PROHIBITION ON POINT OF SALE ADVERTIS17 ING.—

18 (1) IN GENERAL.—Except as otherwise pro19 vided in this subsection, no manufacturer, distribu20 tor, or retailer may use point of sale advertising of

21 tobacco products.

22 (2) ADULT ONLY STORES AND TOBACCO OUT23 LETS.—Paragraph (1) shall not apply to point of

24 sale advertising at adult only stores and tobacco out25 lets.
43

•S 1530 IS

1 (3) PERMISSIBLE ADVERTISING.—

2 (A) IN GENERAL.—Each manufacturer of

3 tobacco products may display not more than 2

4 separate point of sale advertisements in or at

5 each location at which tobacco products are of6 fered for sale.

7 (B) MARKET SHARE MANUFACTURERS.—A

8 manufacturer with at least 25 percent of the

9 market share of the tobacco product involved

10 may display an additional point of sale adver11 tisement in or at each location at which tobacco

12 products are offered for sale.

13 (C) RETAILERS.—No manufacturer, dis14 tributor, or retailer may enter into any arrange15 ment with a retailer to limit the ability of the

16 retailer to display any form of permissible point

17 of sale advertisement or promotional material

18 originating with another manufacturer, dis19 tributor, or retailer.

20 (4) LIMITATIONS.—

21 (A) IN GENERAL.—A point of sale adver22 tisement permitted under this subsection shall

23 be comprised of a display area than is not larg24 er than 576 square inches (either individually

25 or in the aggregate) and shall consist only of
44

•S 1530 IS

1 black letters on a white background or other

2 recognized typographical marks. Such advertise3 ment shall not be attached to nor located within

4 2 feet of any fixture on which candy is dis5 played for sale.

6 (B) AUDIO AND VIDEO FORMATS.—Audio

7 and video advertisements permitted under sec8 tion 214(c) may be distributed to individuals

9 who are 18 years of age or older at point of sale

10 but may not be played or viewed at such point

11 of sale.

12 (C) DISPLAY FIXTURES.—Display fixtures

13 in the form of signs consisting of brand name

14 and price and not larger than 2 inches in height

15 are permitted.

16 (5) DEFINITION.—For purposes of this sub17 section, the term ‘‘point of sale advertising’’ means

18 all printed or graphical materials bearing the brand

19 name (alone or in conjunction with any other word),

20 logo, motto, selling message, recognizable color or

21 pattern of colors, or any other indicia of product

22 identification similar or identical to those used for

23 tobacco products, which, when used for its intended

24 purpose, can reasonably be anticipated to be seen by
45

•S 1530 IS

1 customers at a location at which tobacco products

2 are offered for sale.

3 SEC. 213. CONSENSUAL RESTRICTIONS.

4 (a) RESTRICTION ON PRODUCT NAMES.—A manu5 facturer shall not use a trade or brand name of a non6 tobacco product as the trade or brand name for a cigarette

7 or smokeless tobacco product, except for a tobacco product

8 whose trade or brand name was on both a tobacco product

9 and a nontobacco product that were sold in the United

10 States on January 1, 1995.

11 (b) ADVERTISING LIMIT ACTIONS.—

12 (1) IN GENERAL.—A manufacturer, distributor,

13 or retailer may in accordance with this title, dissemi14 nate or cause to be disseminated advertising or la15 beling which bears a tobacco product brand name

16 (alone or on conjunction with any other word) or

17 any other indicia of tobacco product identification

18 only in newspapers, in magazines, in periodicals or

19 other publications (whether periodic or limited dis20 tribution), on billboards, posters and placards in ac21 cordance with section 212(a), in nonpoint of sale

22 promotional material (including direct mail), in

23 point-of-sale promotional material, and in audio or

24 video formats delivered at a point-of-sale.
46

•S 1530 IS

1 (2) LIMITATION.—A manufacturer, distributor,

2 or retailer that intends to disseminate, or to cause

3 to be disseminated, advertising or labeling for a to4 bacco product in a medium that is not described in

5 paragraph (1) shall notify the Commissioner not less

6 than 30 days prior to the date on which such me7 dium is to be used. Such notice shall describe the

8 medium and discuss the extent to which the adver9 tising or labeling may be seen by individuals who are

10 under 18 years of age.

11 (3) ACTION BY COMMISSIONER.—Not later than

12 30 days after the date on which the Commissioner

13 receives a notice under paragraph (2), the Commis14 sioner shall make a determination with respect to

15 the action to be taken concerning such notice.

16 (c) RESTRICTION ON PLACEMENT IN ENTERTAIN17 MENT MEDIA.—

18 (1) IN GENERAL.—No payment shall be made

19 by any manufacturer, distributor, or retailer for the

20 placement of any tobacco product or tobacco product

21 package or advertisement—

22 (A) as a prop in any television program or

23 motion picture produced for viewing by the gen24 eral public; or

25 (B) in a video or on a video game machine.
47

•S 1530 IS

1 (2) VIDEO GAME.—The term ‘‘video game’’

2 means any electronic amusement device that utilizes

3 a computer, microprocessor, or similar electronic cir4 cuitry and its own cathode ray tube, or is designed

5 to be used with a television set or a monitor, that

6 interacts with the user of the device.

7 (3) VIDEO.—The term ‘‘video’’ means an audio8 visual work produced for viewing by the general pub9 lic, such as a television program, a motion picture,

10 a music video, and the audiovisual display of a video

11 game.

12 (d) RESTRICTIONS ON GLAMORIZATION OF TOBACCO

13 PRODUCTS.—No direct or indirect payment shall be made

14 by any manufacturer, distributor, or retailer to any entity

15 for the purpose of promoting the image or use of a tobacco

16 product through print or film media that appeals to indi17 viduals under 18 years of age or through a live perform18 ance by an entertainment artist that appeals to such indi19 viduals.

20 SEC. 214. AGREEMENT ON FORMAT AND CONTENT RE21 QUIREMENTS FOR LABELING AND ADVERTIS22 ING.

23 (a) IN GENERAL.—Except as provided in subsections

24 (b) and (c), each manufacturer, distributor, or retailer ad25 vertising or causing to be advertised, disseminating or
48

•S 1530 IS

1 causing to be disseminated, any labeling or advertising for

2 a tobacco product shall use only black text on a white

3 background.

4 (b) CERTAIN ADVERTISING EXCEPTED.—

5 (1) IN GENERAL.—Subsection (a) shall not

6 apply to advertising—

7 (A) in any facility where vending machines

8 and self-service displays are permitted under

9 this title if the advertising involved—

10 (i) is not visible from outside of the

11 facility; and

12 (ii) is affixed to a wall or fixture in

13 the facility;

14 (B) that appears in any publication

15 (whether periodic or limited distribution) that is

16 an adult publication.

17 (2) ADULT PUBLICATION.—For purposes of

18 paragraph (1)(B), the term ‘‘adult publication’’

19 means a newspaper, magazine, periodical, or other

20 publication—

21 (A) whose readers under 18 years of age

22 constitute 15 percent or less of the total reader23 ship as measured by competent and reliable

24 survey evidence; and
49

•S 1530 IS

1 (B) that is read by fewer than 2,000,000

2 individuals who are under 18 years of age as

3 measured by competent and reliable survey evi4 dence.

5 (c) AUDIO OR VIDEO FORMATS.—Each manufac6 turer, distributor or retailer advertising or causing to be

7 advertised any advertising for a tobacco product in an

8 audio or video format shall comply with the following:

9 (1) With respect to an audio format, the adver10 tising shall be limited to words only with no music

11 or sound effects.

12 (2) With respect to a video format, the advertis13 ing shall be limited to static black text only on a

14 white background. Any audio with the video adver15 tising shall be limited to words only with no music

16 or sound effects.

17 SEC. 215. AGREEMENT TO BAN ON NONTOBACCO ITEMS

18 AND SERVICES, CONTESTS AND GAMES OF

19 CHANCE, AND SPONSORSHIP OF EVENTS.

20 (a) BAN ON ALL NON-TOBACCO MERCHANDISE.—No

21 manufacturer, importer, distributor, or retailer shall mar22 ket, license, distribute, sell or cause to be marketed, li23 censed, distributed or sold any item (other than tobacco

24 products) or service, which bears the brand name (alone

25 or in conjunction with any other word), logo, symbol,
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•S 1530 IS

1 motto, selling message, recognizable color or pattern of

2 colors, or any other indicia of product identification simi3 lar or identifiable to those used for any brand of tobacco

4 products.

5 (b) GIFTS, CONTESTS, AND LOTTERIES.—No manu6 facturer, distributor, or retailer shall offer or cause to be

7 offered to any person purchasing tobacco products any gift

8 or item (other than a tobacco product) in consideration

9 of the purchase of such products, or to any person in con10 sideration of furnishing evidence, such as credits, proofs11 of-purchase, or coupons, of such a purchase.

12 (c) SPONSORSHIP.—

13 (1) IN GENERAL.—No manufacturer, distribu14 tor, or retailer shall sponsor or cause to be spon15 sored any athletic, musical, artistic or other social or

16 cultural event, or any entry or team in any event, in

17 which the brand name (alone or in conjunction with

18 any other word), logo, motto, selling message, rec19 ognizable color or pattern of colors, or any other in20 dicia of product identification similar or identical to

21 those used for tobacco products is used.

22 (2) USE OF CORPORATE NAME.—A manufac23 turer, distributor, or retailer may sponsor or cause

24 to be sponsored any athletic, musical, artistic or

25 other social or cultural event in the name of the cor-
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1 poration which manufactures the tobacco product

2 if—

3 (A) both the corporate name and the cor4 poration were registered and in use in the Unit5 ed States prior to January 1, 1995; and

6 (B) the corporate name does not include

7 any brand name (alone or in conjunction with

8 any other word), logo, symbol, motto, selling

9 message, recognizable color or pattern of colors,

10 or any other indicia or product identification

11 identical or similar to, or identifiable with,

12 those used for any brand of tobacco products.

13 Subchapter B—Provisions relating to

14 Lobbying

15 SEC. 220. APPLICATION OF SUBCHAPTER.

16 The provisions of this subchapter shall be considered

17 as part of the Protocol.

18 SEC. 221. AGREEMENT TO PROVISIONS RELATING TO LOB19 BYING.

20 (a) DEFINITIONS.—For purposes of this section, the

21 terms ‘‘lobbying activities’’, ‘‘lobbying firm’’, and ‘‘lobby22 ist’’ have the meanings given such terms by section 3 of

23 the Lobbying Disclosure Act of 1995 (2 U.S.C. 1602).

24 (b) GENERAL REQUIREMENT.—A manufacturer of a

25 tobacco product shall require that any lobbyist or lobbying
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1 firm employed or retained by the manufacturer, or any

2 other individual who performs lobbying activities on behalf

3 of the manufacturer, as part of the employment or re4 tainer agreement refrain from supporting or opposing any

5 Federal or State legislation, or otherwise supporting or op6 posing any governmental action on any matter without the

7 express consent of the manufacturer.

8 (c) ADDITIONAL AGREEMENTS.—An individual shall

9 not be employed or retained to perform lobbying activities

10 on behalf of a manufacturer of a tobacco product unless

11 such individual enters into a signed agreement with the

12 manufacturer that acknowledges that the individual—

13 (1) is fully aware of, and will fully comply with,

14 all applicable laws and regulations relating to the

15 manufacture and distribution of tobacco products;

16 (2) has reviewed and will fully comply with the

17 requirements of this Act (and the amendments made

18 by this Act);

19 (3) has reviewed and will fully comply with any

20 consent decree entered into under subtitle C as that

21 decree applies to the manufacturer involved; and

22 (4) has reviewed and will fully comply with the

23 business conduct policies and other applicable poli24 cies and commitments (including those relating to
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1 the prevention of underage tobacco use) of the man2 ufacturer involved.

3 SEC. 222. AGREEMENT TO TERMINATE CERTAIN ENTITIES.

4 (a) REQUIREMENT.—Not later than 1 year after the

5 date of enactment of this Act, manufacturers of tobacco

6 products shall provide for the termination of the activities

7 of the Tobacco Institute and the Council for Tobacco Re8 search, U.S.A. and the Institute and Council shall be dis9 solved.

10 (b) ESTABLISHMENT OF OTHER ENTITIES.—

11 (1) AUTHORITY.—Manufacturers of tobacco

12 products may form or participate in any trade orga13 nization or other industry association only in accord14 ance with this subsection.

15 (2) BOARD OF DIRECTORS.—A trade organiza16 tion or other industry association formed or partici17 pated in under this subsection shall—

18 (A) shall be administered by an independ19 ent board of directors, of which—

20 (i) during the 10-year period begin21 ning on the date on which the organization

22 or association is formed or first partici23 pated in under this subsection, not less

24 than 20 percent (at least 1 member) shall

25 be individuals who are not current or
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1 former directors, officers, or employees of

2 an entity terminated under subsection (a)

3 or of the members of the association or or4 ganization; and

5 (ii) during the life of the association

6 or organization, no member shall be a di7 rector of any of the members of the asso8 ciation or organization;

9 (B) be administered by officers who are

10 appointed by the board of directors and who are

11 not otherwise employed by any of the members

12 of the association or organization; and

13 (C) be provided with legal advice by a legal

14 adviser who is appointed by the board of direc15 tors and who is not otherwise employed by any

16 of the members of the association or organiza17 tion.

18 (3) BY-LAWS.—A trade organization or other

19 industry association formed or participated in under

20 this subsection shall adopt by-laws that—

21 (A) prohibit meetings by members of the

22 association or organization who are competitors

23 in the tobacco industry except under the spon24 sorship of the association or organization;
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1 (B) require that every meeting of the

2 board of directors, or a subcommittee of the

3 board or other general committee, proceed

4 under and strictly adhere to an agenda that is

5 approved by the legal counsel and circulated in

6 advance; and

7 (C) require the taking of minutes that de8 scribe the substance of any meeting of the

9 members of the association or organization and

10 the maintenance of such minutes in the records

11 of the association or organization for a period

12 of 5 years following the meeting.

13 (c) DEPARTMENT OF JUSTICE.—

14 (1) OVERSIGHT.—The Attorney General and, as

15 appropriate, State antitrust authorities shall exercise

16 oversight authority over any association or organiza17 tion to which subsection (b) applies.

18 (2) ACCESS AND INSPECTION.—During the 10-

19 year period beginning on the date on which an asso20 ciation or organization to which subsection (b) ap21 plies is formed, the Attorney General and, as appro22 priate State antitrust authorities shall, upon the

23 provision of reasonable notice to the legal counsel of

24 the association or organization, have access to—
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1 (A) all books, records, meeting agenda and

2 minutes, and other documents maintained by

3 the association or organization; and

4 (B) the directors, officers, and employees

5 of the association or organization for interview

6 purposes.

7 (3) MULTI-STATE COMMITTEE.—Two or more

8 States, acting through the attorney general of each

9 such State, may establish a multi-State oversight

10 committee to assist the Attorney General in exercis11 ing the oversight responsibilities under this section.

12 (4) CONFIDENTIALITY.—The Attorney General

13 shall promulgate regulations to provide that mate14 rials provided under paragraph (2) are protected

15 with appropriate confidentiality protections.

16 (d) ANTITRUST EXEMPTIONS.—The provisions of the

17 Sherman Act (15 U.S.C. 1 et seq.), the Clayton Act (29

18 U.S.C. 52 et seq.), and any other Federal or State anti19 trust laws shall not apply to an association or organization

20 to which subsection (b) applies.

21 Subchapter C—Other Provisions

22 SEC. 225. APPLICATION OF SUBCHAPTER.

23 The provisions of this subchapter shall be considered

24 as part of the Protocol.
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1 SEC. 226. DETERMINATION OF LICENSING FEE AMOUNT.

2 With respect to the total amount of licensing fees to

3 be paid by participating manufacturers under section 102

4 for a fiscal year, such manufacturers shall determine the

5 percentage of such total amount that each such manufac6 turer shall be required to pay and the manner in which

7 such payments will be made.

8 SEC. 227. ATTORNEY’S FEES AND EXPENSES.

9 (a) ARBITRATION PANEL.—

10 (1) ESTABLISHMENT.—For the purpose of

11 awarding of attorneys’ fees and expenses relating to

12 litigation affected by, or legal services that resulted

13 in whole or in part in, this Act, there is established

14 an Arbitration Panel which shall consist of—

15 (A) 3 members to be appointed by the

16 Trustees;

17 (B) 1 member to be appointed by the par18 ticipating manufacturers;

19 (C) 1 member to be appointed by the At20 torneys General of the States who were signato21 ries to the Memorandum of Understanding

22 dated June 20, 1997, by and between tobacco

23 manufacturers, the Attorneys Generals, and pri24 vate attorneys; and

25 (D) 1 member to be appointed by the pri26 vate attorneys, including attorneys representing
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1 plaintiffs in the case of Dianne Castano v.

2 American Tobacco Company.

3 (2) OPERATION.—

4 (A) ESTABLISHMENT.—The members of

5 the Arbitration Panel shall be appointed not

6 later than 30 days after the effective date of

7 this Act.

8 (B) PROCEDURES.—Not later than 30

9 days after the date on which all members of the

10 Arbitration Panel are appointed under para11 graph (1), the Panel shall establish the proce12 dures under which the Panel will operate which

13 shall include—

14 (i) a requirement that any finding by

15 the Arbitration Panel must be in writing

16 and supported by written reasons;

17 (ii) procedures for the exchanging of

18 exhibits and witness lists by the various

19 claimants for awards;

20 (iii) to the maximum extent prac21 ticable, requirements that proceedings be22 fore the Panel be based on affidavits rath23 er than live testimony; and

24 (iv) a requirement that all claims be

25 submitted to the Arbitration Panel not
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1 later than 3 months after the effective date

2 of this Act and a determination made by

3 the Panel with respect to such claims not

4 later than 7 months after such date of en5 actment.

6 (3) RIGHT TO PETITION.—Any individual attor7 ney or group of attorneys involved in litigation af8 fected by this Act shall have the right to petition the

9 Arbitration Panel for attorneys’ fees and expenses.

10 (4) CRITERIA.—In making any award pursuant

11 to this section, the Arbitration Panel shall consider

12 the following criteria:

13 (A) The time and labor required by the

14 claimant.

15 (B) The novelty and difficulty of the ques16 tions involved in the action for which the claim17 ant is making a claim.

18 (C) The skill requisite to perform the legal

19 service involved properly.

20 (D) The preclusion of other employment by

21 the attorney due to acceptance of the action in22 volved.

23 (E) Whether the fee is fixed or a percent24 age.
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1 (F) Time limitations imposed by the client

2 or the circumstances.

3 (G) The amount involved and the results

4 obtained.

5 (H) The experience, reputation, and ability

6 of the attorneys involved.

7 (I) The undesirability of the action.

8 (5) APPEAL AND ENFORCEMENT.—The findings

9 of the Arbitration Panel shall be final, binding, non10 appealable, and payable within 30 days after the

11 date on which the finding is made public, except that

12 if an award is to be paid in installments, the first

13 installment shall be payable within such 30 day pe14 riod and succeeding installments shall be paid annu15 ally thereafter.

16 (b) SOURCE AND PAYMENT OF AWARDS.—In no

17 event shall any award of the Arbitration Panel be paid

18 from, credited against, or otherwise affect in any way any

19 fee payments that are required to be made by any partici20 pating manufacturer under to section 102 or under any

21 other provision of this Act. Any such award shall be paid

22 by participating manufacturers pursuant to an allocation

23 agreement among such manufacturers.

24 (c) VALIDITY AND ENFORCEABILITY OF PRIVATE

25 AGREEMENTS.—Notwithstanding any other provision of
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1 this Act, nothing in this section shall be construed to abro2 gate or restrict in any way the rights of any parties to

3 mediate, negotiate, or settle any fee or expense disputes

4 or issues to which this section applies, or to enter into

5 private agreements with respect to the allocation or divi6 sion of fees among the attorneys party to any such agree7 ment.

8 (d) LIMITATION.—Notwithstanding any other provi9 sion of law, in no event shall the amount of attorneys’

10 fees awarded under this section for a fiscal year exceed

11 an amount equal to 5 percent of the amount paid to the

12 Trust Fund under section 102 for the fiscal year. Any

13 amounts in excess of such amount may be collected in sub14 sequent fiscal years subject to the 5 percent limitation

15 with respect to each such fiscal year. The manufacturer

16 signatories to the Protocol shall be responsible for the pay17 ment of all such attorneys’ fees and such payments shall

18 not be counted against the fee payments to be made under

19 section 102 nor shall they be drawn from the National

20 Tobacco Settlement Trust Fund.

21 SEC. 228. LIMITATIONS WITH RESPECT TO INDIAN COUN22 TRY.

23 (a) GENERAL PROHIBITION.—A participating manu24 facturer shall not engage in any activity within Indian

25 country (as defined in section 901) that is otherwise pro-
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1 hibited under this Act (or an amendment made by this

2 Act).

3 (b) LIMITATION ON SALE.—A participating manufac4 turer shall not sell or otherwise distribute a tobacco prod5 uct for subsequent manufacture, distribution, or sale to

6 an Indian tribe or tribal organization, or provide such

7 products to a manufacturer, distributor, or retailer that

8 is subject to the jurisdiction of a tribe or organization,

9 except under the same terms and conditions as the manu10 facturer imposes on other manufacturers, distributors, or

11 retailers.

12 CHAPTER 3—ENFORCEMENT

13 SEC. 231. FEDERAL ENFORCEMENT OF THE PROTOCOL.

14 (a) CIVIL ACTION.—The Attorney General, acting in

15 his or her capacity as a Trustee, may bring a civil action

16 for the enforcement, or to restrain any breach, of the Pro17 tocol in the United States District Court for the District

18 of Columbia or in the district court of the United States

19 for the district in which the breach occurred.

20 (b) REMEDY.—In any action under subsection (a),

21 the district court involved—

22 (1) shall restrain the conduct that is the subject

23 of the breach of the Protocol;

24 (2) shall order specific performance of the obli25 gations set forth in the Protocol; and
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1 (3) may order civil penalties against any manu2 facturer who knowingly violates a requirement of the

3 Protocol in an amount not to exceed $10,000,000

4 for all such violations adjudicated in a single pro5 ceeding.

6 (c) CONTRACTS WITH STATE AGENCIES.—The At7 torney General may enter into contracts with an agency

8 of any State to assist in the enforcement of the provisions

9 of the Protocol.

10 (d) ACTION BY ATTORNEY GENERAL.—With respect

11 to the funding of any activities under subsection (a), the

12 Attorney General shall use amounts available in the Trust

13 Fund under section 101. If the Attorney General deter14 mines that amounts available in the Trust Fund are insuf15 ficient, the Attorney General may use amounts available

16 for the activities of the Department of Justice.

17 SEC. 232. STATE ENFORCEMENT OF THE PROTOCOL.

18 (a) CIVIL ACTION.—The chief law enforcement offi19 cer of a State may bring in its own name and within its

20 jurisdiction a civil action for the enforcement, or to re21 strain a breach, of the Protocol if the alleged violation that

22 is the subject of the proceedings occurred in that State.

23 (b) LIMITATION.—No proceeding described in sub24 section (a) may be commenced or maintained by a State—
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1 (1) prior to the expiration of the 30-day period

2 beginning on the date on which the State has given

3 notice to the Attorney General that the State in4 tends to bring such proceeding; or

5 (2) if the Attorney General is diligently pros6 ecuting, or has diligently prosecuted or settled, a

7 proceeding pertaining to such alleged breach.

8 In any proceeding described in paragraph (2) that is

9 brought by the Attorney General a State may intervene

10 as a matter of right.

11 (c) REMEDIES.—In any proceeding described in sub12 section (b)—

13 (1) the remedies available shall be those de14 scribed in section 231(b); and

15 (2) no civil penalty shall be imposed if any

16 State is diligently prosecuting, or has already dili17 gently prosecuted or settled, a proceeding described

18 in subsection (b) pertaining to such alleged breach

19 seeking any civil penalty.

20 (d) SINGLE BREACH.—For purposes of this section,

21 conduct arising out of the same transaction or occurrence,

22 or a related series of transactions or occurrences, that

23 breaches any obligation under the Protocol shall be consid24 ered to be part of a single breach.
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1 SEC. 233. PRIVATE ENFORCEMENT OF PROTOCOL.

2 (a) IN GENERAL.—A participating manufacturer

3 may seek a declaration of the rights and obligations of

4 the manufacturer under the Protocol by filing an action

5 pursuant to section 2201 of title 28, United States Code.

6 (b) CIVIL ACTION.—A participating manufacturer

7 may bring a civil action against another participating

8 manufacturer to enforce, or restrain breaches of, the Pro9 tocol by such other participating manufacturer, except

10 that—

11 (1) no such action may be commenced or main12 tained if the Secretary is diligently prosecuting, or

13 has diligently prosecuted or settled, a proceeding

14 pertaining to such alleged breach;

15 (2) no such action may seek—

16 (A) monetary relief if any State is already

17 diligently prosecuting, or has already diligently

18 prosecuted or settled, a proceeding pertaining

19 to such alleged breach seeking any civil penalty;

20 or

21 (B) injunctive relief in any State that is al22 ready diligently prosecuting, or has already dili23 gently prosecuted or settled, a proceeding per24 taining to such alleged breach seeking injunc25 tive relief; and
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1 (3) the court, in any such action, shall restrain

2 conduct in breach of the Protocol and order specific

3 performance of the obligations set forth in the Pro4 tocol, and may award damages up to the amount of

5 profits lost by reason of the breach by the partici6 pating manufacturer bringing such action.

7 (c) SINGLE BREACH.—For purposes of this section,

8 conduct arising out of the same transaction or occurrence,

9 or a related series of transactions or occurrences, that

10 breaches any obligation under the Protocol shall be consid11 ered to be part of a single breach.

12 (d) RIGHT OF INTERVENTION.—In any proceeding

13 described in section 231(a) or 232(a), any participating

14 manufacturer may intervene as a matter of right.

15 SEC. 234. REMOVAL.

16 Chapter 89 of title 28, United States Code, is amend17 ed by adding at the end the following:

18 ‘‘§ 1453. Removal of state actions regarding tobacco

19 products

20 ‘‘Any action described in section 231, 232, or 242

21 of the PROTECT Act that is brought in State court may

22 be removed by any defendant to the Federal court for the

23 district or division embracing the location in which such

24 action was brought, except that this section will not apply

25 where the alleged violation arises from conduct—
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1 ‘‘(1) solely within the territorial boundaries of

2 the State bringing such action; and

3 ‘‘(2) not associated with or part of a pattern or

4 course of conduct involving any similar acts or omis5 sions in any other State.’’.

6 Subtitle B—Consent Decrees

7 SEC. 241. CONSENT DECREES.

8 (a) REQUIREMENT.—To be eligible to receive pay9 ments under title V, a State, to be eligible to receive liabil10 ity protections under subtitle C, a tobacco manufacturer,

11 and to be eligible to receive any benefits under this Act,

12 a representative of the members of the class certified for

13 purposes of Dianne Castano v. American Tobacco Com14 pany, shall enter into consent decrees under this section

15 to be effective on the date of enactment of this Act.

16 (b) TERMS AND CONDITIONS.—

17 (1) IN GENERAL.—The terms and conditions

18 contained in the consent decrees described in sub19 section (a) shall contain provisions to clarify the ap20 plication and requirements of this Act (and the

21 amendments made by this Act), and the Protocol,

22 including, but not limited to, provisions relating to—

23 (A) restrictions on tobacco product adver24 tising and marketing and youth access to such

25 products;
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1 (B) the termination, establishment, and

2 operation of trade associations;

3 (C) restrictions on tobacco lobbying;

4 (D) the disclosure of tobacco smoke con5 stituents;

6 (E) the disclosure of nontobacco ingredi7 ents found in tobacco products;

8 (F) the disclosure of existing and future

9 documents relating to health, toxicity, and ad10 diction related to tobacco product usage;

11 (G) the obligation of manufacturers to

12 make payments for the benefit of States, pri13 vate litigants and the general public;

14 (H) the obligation of manufacturers to

15 interact only with distributors and retailers that

16 operate in compliance with the applicable provi17 sions of Federal, State, or local law regarding

18 the marketing and sale of tobacco products;

19 (I) requirements for warnings, labeling,

20 and packaging of tobacco products;

21 (K) the dismissal of pending litigation as

22 required under title VII and as agreed to by the

23 parties to the decree; and

24 (L) any other matter determined appro25 priate by the Secretary or the parties involved.
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1 (2) LIMITATIONS.—The terms and conditions

2 contained in the consent decrees described in sub3 section (a) shall not contain provisions relating to—

4 (A) tobacco product design, performance,

5 or modification;

6 (B) manufacturing standards and good

7 manufacturing practices;

8 (C) testing and regulation with respect to

9 toxicity and ingredients approval; and

10 (D) the national goals relating to percent11 age reductions in the underage use of tobacco

12 products for a year under section 5.

13 (3) WAIVER OF CONSTITUTIONAL CLAIMS.—The

14 terms and conditions contained in the consent de15 crees described in subsection (a) shall include a pro16 vision waiving the Federal or State constitutional

17 claims of the parties and providing for the severabil18 ity of the provisions of the decree.

19 (4) CONSTRUCTION.—The terms and conditions

20 contained in the consent decrees described in sub21 section (a) shall provide that the terms of the decree

22 will be construed in a manner that is consistent with

23 the provision of this Act.
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1 (c) APPROVAL.—To be valid under this section, the

2 provisions of a consent decree must be approved by the

3 Attorney General prior to approval or entry by a court.

4 (d) ENFORCEMENT.—

5 (1) CHANGES IN LAW.—The provisions of a

6 consent decree entered under this section shall re7 main in effect and enforceable regardless of whether

8 the provisions of this Act are amended, except that

9 any amendments to this Act that—

10 (A) establish Federal requirements that

11 are in conflict with obligations contained in the

12 consent decrees shall render such obligations

13 unenforceable;

14 (B) require allocations of funds that are in

15 conflict with the allocation contained in the con16 sent decrees shall render such consent decree

17 allocation unenforceable; and

18 (C) require warnings, labeling, or packag19 ing that conflicts with the warning, labeling, or

20 packaging requirements of the consent decree,

21 shall require that modifications be made in the

22 consent decree to conform with such amend23 ments.

24 (2) BY STATE.—
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1 (A) IN GENERAL.—A State may bring an

2 action to enforce the provisions of any consent

3 decree under this section in any appropriate

4 State court. Such proceedings may seek injunc5 tive relief only and may not seek criminal or

6 monetary sanctions. Enforcement of any injunc7 tive relief provided under a State action under

8 this section shall be permitted under any appli9 cable State law.

10 (B) CONSISTENCY.—The Attorney General

11 shall promulgate regulations to ensure the con12 sistency of State court ruling with respect to

13 conduct under a consent decree that is not ex14 clusively local in nature.

15 SEC. 242. STATE ENFORCEMENT OF CONSENT DECREES.

16 (a) IN GENERAL.—Subject to subsections (b) and (c),

17 a State may bring in its own name and within its jurisdic18 tion proceedings for the enforcement, or to restrain viola19 tions of, the terms of a consent decree described in section

20 241 that is entered into by that State.

21 (b) INJUNCTIVE RELIEF.—A proceeding described in

22 subsection (a) shall be limited to injunctive relief only and

23 may not seek or impose criminal or monetary relief if

24 criminal or monetary relief may be imposed for the subse-
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1 quent violation of any injunction that is entered in an ac2 tion described in subsection (a).

3 (c) INTERPRETATION.—In any proceeding described

4 in subsection (a), the meaning of this Act and the Protocol

5 shall control the interpretation of the corresponding terms

6 of the consent decree, and such terms shall be interpreted

7 in a manner identical to the interpretation given the cor8 responding terms of this Act and the Protocol.

9 SEC. 243. NON-PARTICIPATING MANUFACTURERS.

10 (a) IN GENERAL.—With respect to a manufacturer

11 that elects not to enter into a consent decree under section

12 241, such manufacturer shall not be eligible to receive the

13 liability protections under subtitle C.

14 (b) IMPOSITION OF FEE.—

15 (1) IN GENERAL.—A manufacturer shall be

16 subject to an annual fee as established under this

17 subsection unless such manufacturer enters into con18 sent decrees as provided for in section 241 and be19 comes a signatory to the Protocol under section 201.

20 (2) AMOUNT.—

21 (A) TOTAL.—The total amount of all fees

22 established under this subsection for a year

23 shall be equal to the amount of fees to be paid

24 by manufacturers under section 102 for the

25 year involved.
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1 (B) PER MANUFACTURER.—The Secretary

2 shall promulgate regulations for the purpose of

3 assessing fees under this subsection and deter4 mining the amount of the fee to be assessed to

5 each manufacturer which shall be based on the

6 market share of each such manufacturer.

7 (c) SETTLEMENT RESERVE FUND.—

8 (1) IN GENERAL.—Each nonparticipating man9 ufacturer to which subsection (b)(1) applies shall an10 nually deposit into an escrowed reserve fund an

11 amount equal to 150 percent of the amount that

12 such manufacturer would have paid under section

13 102 for the year in which the manufacturer is mak14 ing such deposit if the manufacturer had been a sig15 natory to the Protocol under section 201.

16 (2) USE.—Amounts contained in the reserve

17 fund of a manufacturer under paragraph (1) shall

18 be used solely for tobacco-related liability payments.

19 The manufacturer may reclaim any amounts remain20 ing in the fund (with interest) at the end of the 35-

21 year period beginning on the date on which such

22 fund is established.
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1 Subtitle C—Liability Provisions

2 CHAPTER 1—GENERAL PROVISIONS

3 SEC. 251. DEFINITIONS.

4 In this subtitle:

5 ‘‘(1) FINAL JUDGMENT.—The term ‘‘final judg6 ment’’ means a judgment on which all rights of ap7 peal or discretionary review have been exhausted or

8 waived or for which the time to appeal or seek such

9 discretionary review has expired.

10 ‘‘(2) FINAL SETTLEMENT.—The term ‘‘final

11 settlement’’ means a settlement agreement that is

12 executed and approved as necessary to be fully bind13 ing on all relevant parties.

14 ‘‘(3) INDIVIDUAL CLAIM.—The term ‘‘individual

15 claim’’ means a claim for relief that is based on the

16 death of, injury to, or loss of consortium of a single

17 individual and that is brought directly by such indi18 vidual or by the estate or natural heirs of such indi19 vidual.

20 ‘‘(4) THIRD-PARTY PAYOR.—The term ‘‘third21 party payor’’ means any person, including an insur22 ance company or health and welfare plan, who

23 claims to have paid money or incurred a debt as a

24 result of injury to another person, except that such

25 term shall not include the heirs or survivors of a sin-
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1 gle individual with respect to an injury to such indi2 vidual.

3 CHAPTER 2—IMMUNITY AND LIABILITY

4 FOR PAST CONDUCT

5 SEC. 255. APPLICATION OF CHAPTER.

6 (a) IN GENERAL.—This chapter shall apply to the en7 forcement of all judgments and settlements with respect

8 to tobacco claims maintained against participating manu9 facturers.

10 (b) LIMITATION ON ENFORCEMENT.—A judgment or

11 settlement concerning any tobacco claim described in sub12 section (a) that is not a final judgment or final settlement

13 as of the effective date of this Act shall not be enforced

14 by any court except in accordance with this chapter.

15 (c) GENERAL PROHIBITION.—

16 (1) IN GENERAL.—No obligation to pay any

17 amount under a judgment or settlement to which

18 this chapter applies shall arise, nor shall a lien, at19 tachment, garnishment or other means of collecting

20 or securing payment under any such judgment or

21 settlement issue, become operative, or be enforced,

22 except as provided for in this chapter.

23 (2) REQUIREMENT OF STATEMENT.—A judg24 ment to which this chapter applies that requires a

25 monetary payment shall not be issued or entered un-
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1 less such judgment contains a statement, on the face

2 of the judgment, of the following:

3 ‘‘Satisfaction of this judgment is subject to

4 the requirements of the PROTECT Act.’’.

5 (3) ENFORCEMENT.—A judgment to which this

6 chapter applies that does not contain the statement

7 required under paragraph (2) shall not be valid or

8 enforceable.

9 (4) APPEAL.—The posting of a bond or the ap10 plication of any form of penalty or enhanced interest

11 may not be required in connection with the appeal

12 of any judgment to which this chapter applies.

13 SEC. 256. GENERAL IMMUNITY.

14 (a) STATE ATTORNEY GENERAL ACTIONS.—

15 (1) PENDING ACTIONS.—Health-related civil ac16 tions that have been commenced by a State or local

17 governmental entity, or on behalf of such an entity,

18 against a manufacturer that is a signatory to the

19 National Tobacco Control Protocol under section

20 201 and that are pending on the date of enactment

21 of this Act are terminated.

22 (2) FUTURE ACTIONS.—A manufacturer that is

23 a signatory to the National Tobacco Control Proto24 col under section 201 shall be immune from any civil

25 action commenced after the date of enactment of
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1 this Act by a Federal, State, or local governmental

2 entity, or on behalf of such an entity, for all health3 related claims arising from the use of a tobacco

4 product.

5 (b) OTHER ACTIONS.—

6 (1) CLASS ACTIONS.—

7 (A) PENDING ACTIONS.—Class actions for

8 claims arising from the use of a tobacco prod9 uct that are pending against a manufacturer

10 that is a signatory to the National Tobacco

11 Control Protocol under section 201, are termi12 nated.

13 (B) FUTURE ACTIONS.—A manufacturer

14 that is a signatory to the National Tobacco

15 Control Protocol under section 201 shall be im16 mune from any class action commenced after

17 the date of enactment of this Act for all claims

18 arising from the use of a tobacco product.

19 (2) ADDICTION AND DEPENDENCE CLAIMS.—

20 (A) PENDING ACTIONS.—Any civil action

21 for claims based on addiction to or dependence

22 on a tobacco product that are pending against

23 a manufacturer that is a signatory to the Na24 tional Tobacco Control Protocol under section

25 201, are terminated.
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1 (B) FUTURE ACTIONS.—A manufacturer

2 that is a signatory to the National Tobacco

3 Control Protocol under section 201 shall be im4 mune from any civil action commenced after the

5 date of enactment of this Act for all claims

6 based on addiction to or dependence on a to7 bacco product.

8 (c) PRESERVATION.—All personal injury claims aris9 ing from the use of a tobacco product by an individual

10 shall be preserved.

11 SEC. 257. CIVIL LIABILITY FOR PAST CONDUCT.

12 (a) APPLICATION.—The provisions of this section

13 shall apply to all civil actions permitted under section 256

14 for relief arising from the conduct of a manufacturer that

15 is a signatory to the National Tobacco Control Protocol

16 under section 201 that occurred prior to the date of enact17 ment of this Act.

18 (b) PUNITIVE DAMAGES PROHIBITED.—No punitive

19 damages shall be awarded in any claim described in sub20 section (a).

21 (c) INDIVIDUAL TRIALS.—No class action suits, join22 der of parties, aggregation of claims, consolidation of ac23 tions, extrapolations, or other devices to resolve cases

24 other than on the basis of individual actions shall be per25 mitted without the consent of the defendant. Any defend-
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1 ant, in an action that involves a violation of this sub2 section, may remove such action to an appropriate Federal

3 court.

4 (d) JOINT SHARING AGREEMENT.—As part of the

5 National Tobacco Control Protocol under section 201, all

6 signatories shall agree to the joint sharing of any civil li7 ability for actions for damages arising from the use of to8 bacco products. Such signatories shall not be jointly and

9 severally liable for damages involving nonsignatories. Ac10 tions involving both signatories and nonsignatories shall

11 be severed.

12 (e) PERMISSIBLE PARTIES.—

13 (1) PLAINTIFFS.—The following individuals

14 may be plaintiffs in a civil action to which this sec15 tion applies:

16 (A) Individuals bringing claims, or claims

17 derivative of such claims, on their own behalf

18 for a tobacco-related injury, or the heirs of such

19 individuals.

20 (B) Third-party payors for claims not

21 based on subrogation that were pending on

22 June 9, 1997.

23 (C) Third-party payors for claims based on

24 subrogation of individual claims permitted

25 under subparagraph (A).
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1 (2) DEFENDANTS.—This section shall apply

2 only to actions brought against a signatory of the

3 National Tobacco Control Protocol under section

4 201, a successor or assign of such a signatory, any

5 future fraudulent transferees, or any entity for suit

6 designated to survive a defunct signatory. Such sig7 natories shall be vicariously liable for the actions of

8 their agents.

9 (f) REMOVAL.—Except as provided in subsection (c),

10 there shall be no removal of an action to which this section

11 applies.

12 (g) DISCOVERY.—The development, after the date of

13 enactment of this Act, of any tobacco product that reduces

14 the risk of injury or illness to a user shall not be admissi15 ble or discoverable.

16 (h) LIMITATION ON ENFORCEMENT.—

17 (1) IN GENERAL.—A judgment or settlement

18 concerning any tobacco claim in a civil action per19 mitted under section 256 that is not a final judg20 ment or final settlement as of the effective date of

21 this Act shall not be enforced by any court except

22 in accordance with this section.

23 (2) OBLIGATIONS.—No obligation to pay any

24 amount under a judgment or settlement to which

25 this section applies shall arise, nor shall a lien, at-
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1 tachment, garnishment or other means of collecting

2 or securing payment under any such judgment or

3 settlement issue, become operative, or be enforced,

4 except to the extent that the Secretary of the Treas5 ury certifies that the requirements of subsection (i)

6 have been met.

7 (3) REQUIREMENT OF STATEMENT.—A judg8 ment to which this section applies that requires a

9 monetary payment shall not be issued or entered un10 less such judgment contains a statement, on the face

11 of the judgment, of the following:

12 ‘‘Satisfaction of this judgment is subject to

13 the requirements of section 257 of the PRO14 TECT Act.’’.

15 (4) ENFORCEMENT.—A judgment to which this

16 section applies that does not contain the statement

17 required under paragraph (3) shall not be valid or

18 enforceable.

19 (5) APPEAL.—The posting of a bond or the ap20 plication of any form of penalty or enhanced interest

21 may not be required in connection with the appeal

22 of any judgment to which this section applies.

23 (i) PROCEDURES FOR COLLECTION OF JUDGMENT.—

24 (1) CERTIFICATION.—A participating manufac25 turer shall not make, or be required to make, any
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1 monetary payment with respect to any judgment or

2 settlement to which this section applies unless the

3 Attorney General acting as Trustee—

4 (A) certifies that the requirements of para5 graph (2) have been met with respect to such

6 payment; and

7 (B) publishes such certification in the Fed8 eral Register.

9 (2) FILING WITH ATTORNEY GENERAL.—

10 (A) BY PARTY CLAIMING ENTITLEMENT.—

11 Any party claiming an entitlement to monetary

12 payment under a final judgment or final settle13 ment of a tobacco claim to which this section

14 applies shall register such claim with the Attor15 ney General acting as Trustee by filing a true

16 and correct copy of the final judgment or final

17 settlement agreement with the Attorney General

18 and providing a copy of such filing to all other

19 parties to the judgment or settlement.

20 (B) OF PAYMENT.—Any party making a

21 payment described in this subsection shall cer22 tify such payment to the Attorney General by

23 filing a true and correct copy of the instrument

24 of payment and a statement of the remaining

25 unpaid portion, if any, of the final judgment or
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1 final settlement involved with the Attorney Gen2 eral and providing a copy of such filing to all

3 other parties to the judgment or settlement.

4 (3) DETERMINATIONS.—Not later than 30 days

5 after the date of which the Attorney General receives

6 a registration of a claim under paragraph (2)(A) the

7 Attorney General shall determine whether payment

8 of such claim is permitted under this section. If the

9 Attorney General determines that such claim is pay10 able under this section, the Secretary shall certify

11 such claim.

12 (4) PAYMENT.—Subject to the limitations con13 tained in subsection (j), a participating manufac14 turer to which a claim that is certified under para15 graph (3) applies, shall make payment on such claim

16 not later than 1 year after the date of such certifi17 cation.

18 (j) LIMITATIONS.—

19 (1) AGGREGATE ANNUAL CAP.—With respect to

20 a calendar year, the aggregate amount of all tobacco

21 claims judgments or settlements to which this sec22 tion applies, that the signatories of the National To23 bacco Control Protocol under section 201 shall be

24 required to pay, shall not exceed an amount equal to

25 33 percent of the annual fee payments required of
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1 all such signatories under section 102 for the year

2 involved. The Attorney General, based on certifi3 cations issued under subsection (i)(3) shall make de4 terminations with respect to the amounts of pay5 ments to be made in a calendar year.

6 (2) PAYMENT OF EXCESS.—If the amount of

7 the judgments and settlements described in para8 graph (1) exceed an amount equal to 33 percent of

9 the annual fee payments required under section 102

10 for the year involved, such excess amount shall be

11 paid in the following year.

12 (3) EFFECT OF SETTLEMENT.—The signatories

13 described in paragraph (1) shall receive a credit, to

14 be applied against the amount owed by such signato15 ries to the National Tobacco Settlement Trust Fund

16 under section 102 for the year involved, in an

17 amount equal to 80 percent of the aggregate

18 amounts paid under judgments or settlements of to19 bacco-related claims to which this section applies for

20 such year.

21 (5) INDIVIDUAL CAP.—With respect to an ac22 tion to which this section applies, any amount

23 awarded in excess of $1,000,000 may be paid in the

24 year following the year in which the judgment or

25 settlement was entered, except that this paragraph
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1 shall not apply if all other awards under judgments

2 or settlements entered in the first year can be paid

3 without exceeding the aggregate annual cap under

4 paragraph (1). Such excess amount shall carry over

5 from year to year with no payments in any single

6 year exceeding $1,000,000 and no interest accruing

7 on such amounts until such time as the annual ag8 gregate cap is not exceeded.

9 (k) DEFENSE COSTS.—The signatories of the Na10 tional Tobacco Control Protocol under section 201 shall

11 be responsible for the payment of all attorneys’ fees and

12 other costs associated with being a defendant in an action

13 to which this section applies.

14 SEC. 258. CIVIL LIABILITY FOR FUTURE CONDUCT.

15 (a) APPLICATION.—The provisions of this section

16 shall apply to all civil actions permitted under section 256

17 for relief arising from the conduct of a manufacturer that

18 is a signatory to the National Tobacco Control Protocol

19 under section 201 that occurs after the date of enactment

20 of this Act.

21 (b) GENERAL PROVISIONS.—The provisions of sub22 sections (c) and (e) through (i) of section 256 shall apply

23 to actions under this section.
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1 (c) THIRD-PARTY PAYOR CLAIMS.—Third-party

2 payor claims that are not based on subrogation shall not

3 be commenced under this section.

4 SEC. 259. NON-PARTICIPATING MANUFACTURERS.

5 The provisions of this title shall not apply to any

6 manufacturer that—

7 (1) is not a signatory to the National Tobacco

8 Control Protocol under section 201; and

9 (2) is at least 12 months delinquent in the pay10 ment of amounts under section 102.

11 SEC. 260. PAYMENT OF JUDGMENTS AND SETTLEMENTS.

12 (a) IN GENERAL.—Notwithstanding sections 1257,

13 1738 and 2283 of title 28, United States Code, or any

14 doctrine of abstention or principle of res judicta or collat15 eral estoppel, a participating manufacturer may commence

16 an action in a district court of the United States to enjoin

17 any State court proceeding to enforce or execute any judg18 ment or settlement that is unenforceable under this chap19 ter. Such an action shall be deemed a civil action arising

20 under the laws of the United States for purposes of section

21 1331 of title 28, United States Code, and may be com22 menced in the district court of the United States for the

23 district and division embracing the place where the State

24 court proceeding is pending.
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1 (b) INJUNCTIONS.—Upon a demonstration by the

2 participating manufacturer in an action under subsection

3 (a) that the judgment or settlement that is the subject

4 of such action is unenforceable under this chapter, the

5 court shall issue an injunction against the enforcement of

6 such judgment or settlement and may order such other

7 relief as is appropriate.

8 SEC. 261. STATE ELIGIBILITY.

9 (a) REQUIREMENT FOR STATE LAW.—To be eligible

10 to receive funds under subtitle A of title V, a State shall—

11 (1) have in effect a State law that provides

12 that—

13 (A) sections 256 through 259 shall be the

14 law of the State and shall be binding in all pro15 ceedings in any court or tribunal in the State

16 without limitation, notwithstanding any other

17 provision of law, court decision, rule or practice;

18 and

19 (B) any defendant in a civil action to

20 which this Act applies shall have a right of

21 prompt interlocutory appeal to the highest court

22 of the State to enforce the requirements of the

23 State law; and

24 (2) have withdrawn and dismissed with preju25 dice any claim required to be dismissed by the State
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1 under this chapter within 60 days of the effective

2 date of this Act.

3 (b) CERTIFICATION.—Not later than 6 months after

4 the effective date of this Act, and annually thereafter, the

5 Attorney General shall certify that each State that is eligi6 ble to receive funds under subtitle A of title V has com7 plied with the requirements of this section. A State shall

8 not be eligible for such funds prior to being certified under

9 this subsection.

10 (c) EFFECT OF NONENACTMENT OF LAW.—

11 (1) IN GENERAL.—With respect to a State that

12 does not comply with subsection (a)(1), no tobacco

13 claim that is otherwise maintainable under this

14 chapter shall be maintained in any court of that

15 State.

16 (2) APPLICATION OF LAW.—Until such time as

17 the State complies with subsection (a)(1), any to18 bacco claim that is otherwise maintainable under

19 this chapter that is asserted under the law of, or in

20 the courts of, such State shall be deemed to arise

21 under this section and shall be subject to the provi22 sions of this chapter, and the substantive rules of

23 decision for such claim shall otherwise be derived

24 from the law of the State that would have been ap25 plicable but for the operation of this subsection.
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1 SEC. 262. REMOVAL.

2 Chapter 89 of title 28, United States Code, (as

3 amended by section 234) is further amended by adding

4 at the end the following:

5 ‘‘§ 1454. Removal of certain actions relating to to6 bacco products

7 ‘‘(a) LIMITATION.—A civil action in any State court

8 that is maintainable under chapter 1 of subtitle C of title

9 I of the PROTECT Act shall not be removed to a district

10 court of the United States except as provided for in this

11 section.

12 ‘‘(b) REMOVAL PERMITTED.—

13 ‘‘(1) AGREEMENT OF PARTIES.—A civil action

14 maintainable under chapter 1 of subtitle C of title

15 I of the PROTECT Act may be removed at any time

16 prior to judgment to the district court of the United

17 States for the district and division embracing the

18 place where such action is pending if all plaintiffs

19 and all defendants consent in writing to such re20 moval.

21 ‘‘(2) PARTICIPATING MANUFACTURER.—A civil

22 action that a defendant reasonably contends is being

23 conducted in a manner inconsistent with the terms

24 of chapter 1 of subtitle C of title II of the PRO25 TECT Act may he removed by such defendant to

26 the district court of the United States for the dis-
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1 trict and division embracing the place where such

2 action is pending, if the removing defendant is a

3 participating manufacturer as defined in section 5 of

4 such Act.

5 ‘‘(c) JURISDICTION.—In any action removed pursu6 ant to subsection (b), the district court shall have jurisdic7 tion over such action to the full extent permitted under

8 the Constitution.

9 ‘‘(d) NOTICE.—The notice of removal of a civil action

10 under subsection (b)(2) shall be filed not later than 30

11 days after the receipt by the removing defendant of an

12 order or ruling that such defendant reasonably contends

13 is inconsistent with the terms of chapter 1 of subtitle C

14 of title II of the PROTECT Act.

15 ‘‘(e) DETERMINATIONS BY DISTRICT COURT.—In a

16 civil action removed under subsection (b)(2), if the district

17 court determines—

18 ‘‘(1) that the action was being conducted in a

19 manner inconsistent with the terms of chapter 1 of

20 subtitle C of title II of the PROTECT Act, the dis21 trict court shall—

22 ‘‘(A) order that the action be dismissed

23 without prejudice; or

24 ‘‘(B) enter such other orders as may be

25 necessary to bring the action into conformity
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1 with such chapter and retain jurisdiction over

2 any claim or claims as necessary to serve the

3 interests of justice and the requirements of the

4 PROTECT Act;

5 ‘‘(2) that the action was being conducted in a

6 manner consistent with the terms of such chapter

7 but that the defendant removing the action had a

8 reasonable basis to seek removal under this section,

9 the district court shall retain jurisdiction over any

10 claim or claims as may be necessary to serve the in11 terests of justice and the requirements of the PRO12 TECT Act; or

13 ‘‘(3) that the defendant removing the action

14 had no reasonable basis for contending that such ac15 tion was being conducted in a manner inconsistent

16 with the terms of such chapter, the district court

17 shall remand the case to the State court from which

18 it was removed.

19 ‘‘(f) REVIEWABILITY OF ORDER.—An order remand20 ing an action to a State court under subsection (e) shall

21 be reviewable by appeal or otherwise.

22 ‘‘(h) MISCELLANEOUS.—For purposes of this sec23 tion—

24 ‘‘(1) the parties in controversy shall be consid25 ered to be of diverse citizenship unless all plaintiffs
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1 (including all members of any plaintiff class) and all

2 defendants are citizens of the same State;

3 ‘‘(2) a corporation shall be considered to be a

4 citizen only of the State of its incorporation; and

5 ‘‘(3) there shall be no requirement of a mini6 mum amount in controversy.

7 ‘‘(i) APPLICATION OF CERTAIN PROCEDURES.—The

8 procedures described in sections 1446(a), 1446(d), and

9 1447(a) through (c) shall be applicable to an action re10 moved under this section.’’.

11 SEC. 263. CONFORMING AMENDMENTS.

12 Title 11, United States Code, is amended—

13 (1) in section 362(b)—

14 (A) in paragraph (17), by striking ‘‘or’’ at

15 the end;

16 (B) in paragraph (18), by striking the pe17 riod and inserting ‘‘; or’’; and

18 (C) by inserting after paragraph (18), the

19 following:

20 ‘‘(19) under subsection (a) of this section, of

21 the commencement or continuation of any action or

22 other proceeding by a participating manufacturer

23 (as defined in section 5 of the PROTECT Act) re24 garding any interest or obligation arising under or

25 directly related to a liability apportionment agree-
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1 ment entered into in accordance with chapter 1 of

2 subtitle C of title II of the PROTECT Act.’’;

3 (2) in section 365—

4 (A) in subsection (a), by striking ‘‘and

5 (d)’’ and inserting ‘‘(d), and (p)’’; and

6 (B) by adding at the end the following:

7 ‘‘(p) The trustee may not reject, shall be deemed to

8 have assumed as of the commencement of the case, and

9 shall cause the debtor to perform on an executory contract

10 of a participating manufacturer (as defined in section 5

11 of the PROTECT Act) to the extent such executory con12 tract is directly related to a liability apportionment agree13 ment entered into in accordance with chapter 1 of subtitle

14 C of title II of the PROTECT Act.’’;

15 (3) in section 507(a), by adding at the end the

16 following:

17 ‘‘(10) Tenth, any unsecured claim of a partici18 pating tobacco product manufacturer (as defined in

19 section 5 of the PROTECT Act) that arises under

20 or is directly related to a liability apportionment

21 agreement entered into in accordance with chapter 1

22 of subtitle C of title II of the PROTECT Act.’’;

23 (4) in section section 541(b)—

24 (A) in paragraph (4), by striking ‘‘or’’ at

25 the end;
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1 (B) in paragraph (5), by striking the pe2 riod and inserting ‘‘; or’’; and

3 (C) by inserting after paragraph (5), the

4 following:

5 ‘‘(6) any interest of the debtor in property to

6 the extent that the debtor has transferred or agreed

7 to transfer such interest pursuant to a liability ap8 portionment agreement entered into in accordance

9 with chapter 1 of subtitle C of title II of the PRO10 TECT Act or any written agreement directly related

11 to such liability apportionment agreement.’’; and

12 (5) in subsection 1141—

13 (A) in subsection (a), by striking ‘‘and

14 (d)(3)’’ and inserting ‘‘, (d)(3), and (d)(5)’’;

15 (B) in subsection (a), by striking ‘‘and

16 (d)(3)’’ and inserting ‘‘, (d)(3), and (d)(5)’’;

17 and

18 (C) in subsection (d), by adding at the end

19 the following:

20 ‘‘(5) The confirmation of a plan does not discharge

21 a debtor from any debt or other obligation arising under

22 or directly related to a liability apportionment agreement

23 entered into in accordance with chapter 1 of subtitle C

24 of title II of the PROTECT Act.’’.
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1 TITLE III—REDUCTION IN

2 UNDERAGE TOBACCO USE

3 Subtitle A—State Laws Regarding

4 the Sale of Tobacco Products to

5 Minors

6 SEC. 300. SHORT TITLE.

7 This subtitle may be cited as the ‘‘Tobacco Use by

8 Minors Prevention Act’’.

9 SEC. 301. STATE LAWS REGARDING SALE OF TOBACCO

10 PRODUCTS TO INDIVIDUALS UNDER THE AGE

11 OF 18.

12 (a) ELIGIBILITY.—

13 (1) IN GENERAL.—Subject to paragraph (2),

14 for fiscal year 1999 and each subsequent fiscal year

15 a State shall not be eligible for payments under sub16 title A of title V if that State does not have in effect

17 a State law with the provisions contained in the

18 model State law described in section 302.

19 (2) DELAYED APPLICABILITY FOR CERTAIN

20 STATES.—In the case of a State whose legislature

21 does not convene a regular session in fiscal year

22 1999, the requirement described in paragraph (1)

23 shall apply only for fiscal year 2000 and subsequent

24 fiscal years.
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1 (b) ENFORCEMENT.—For the first applicable fiscal

2 year and for each subsequent fiscal year, a State shall—

3 (1) enforce the law described in subsection

4 (a)(1) systematically and conscientiously and in a

5 manner that can reasonably be expected to reduce

6 the extent to which tobacco products are available to

7 individuals under the age of 18;

8 (2) certify that the State requires such enforce9 ment of such law to be treated as a priority by State

10 and local law enforcement authorities;

11 (3) conduct random, unannounced inspections

12 to ensure compliance with the law described in sub13 section (a)(1); and

14 (4) annually submit to the Trustees a report

15 describing—

16 (A) the activities carried out by the State

17 to enforce such law during the fiscal year pre18 ceding the fiscal year for which the State is

19 seeking the grant;

20 (B) the steps taken by the State to ensure

21 that enforcement of such law was treated as a

22 priority by State and local law enforcement au23 thorities;

24 (C) the extent of success the State has

25 achieved in reducing the availability of tobacco
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1 products to individuals under the age of 18, in2 cluding the results of the inspections conducted

3 under paragraph (1); and

4 (D) the strategies to be utilized by the

5 State for enforcing such law during the fiscal

6 year for which the grant is sought.

7 (c) FUNDING.—The law specified in subsection (a)(1)

8 may be administered and enforced by a State using—

9 (1) any amounts made available to the State

10 under subtitle A of title V;

11 (2) any fees collected for licenses issued pursu12 ant to the law described in subsection (a)(1);

13 (3) any fines or penalties assessed for violations

14 of the law specified in subsection (a)(1); or

15 (4) any other funding source that the legisla16 ture of the State may prescribe by statute.

17 (d) NONCOMPLIANCE OF STATE.—Before making a

18 payment under subtitle A of title V to a State for the first

19 applicable fiscal year or any subsequent fiscal year, the

20 Trustees, in consultation with the Secretary, shall make

21 a determination whether the State has maintained compli22 ance with subsections (a) and (b). If, after notice to the

23 State and an opportunity for a hearing, the Trustees de24 termines that the State is not in compliance with such

25 subsections, the Trustees shall reduce the amount of the
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1 State payment under such subtitle for the fiscal year in2 volved by an amount equal to—

3 (1) in the case of the first applicable fiscal year,

4 10 percent of the amount determined under subtitle

5 A of title V;

6 (2) in the case of the first fiscal year following

7 such applicable fiscal year, 20 percent of the amount

8 determined under such sections for the State for the

9 fiscal year;

10 (3) in the case of the second such fiscal year,

11 30 percent of the amount determined under such

12 sections for the State for the fiscal year; and

13 (4) in the case of the third such fiscal year or

14 any subsequent fiscal year, 40 percent of the amount

15 determined under such sections for the State for the

16 fiscal year.

17 (e) WAIVER AND MODIFICATION.—

18 (1) IN GENERAL.—A State may request that

19 the Secretary waive, or permit the modification of,

20 any provision or provisions of the model State law

21 described in section 302.

22 (2) REQUIREMENTS.—The Secretary shall

23 grant a request for a waiver or modification under

24 paragraph (1) unless the Secretary determines

25 that—
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1 (A) the State has not demonstrated that

2 the State has enacted laws that implement re3 quirements that are comparable to the require4 ments of all of the elements of the model State

5 law under section 302; or

6 (A) the cumulative effect of granting all of

7 such waivers or modifications with respect to

8 the State would render the youth anti-tobacco

9 laws and marketing systems of the State to be

10 ineffective.

11 (f) DEFINITION.—For purposes of this section, the

12 term ‘‘first applicable fiscal year’’ means—

13 (1) fiscal year 2000, in the case of any State

14 described in subsection (a)(2); and

15 (2) fiscal year 1999, in the case of any other

16 State.

17 SEC. 302. MODEL STATE LAW.

18 The model State law described in this section with

19 respect to a State is the following:

20 ‘‘SECTION 1. DISTRIBUTION TO MINORS.

21 ‘‘(a) IN GENERAL.—No person shall distribute a to22 bacco product to an individual under 18 years of age. A

23 person who violates this subsection is liable for—

24 ‘‘(1) a civil money penalty of $100 for the first

25 violation of this subsection;
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1 ‘‘(2) a civil money penalty of $200 for a second

2 violation of this subsection; and

3 ‘‘(3) a civil money penalty of $500 for a third

4 and subsequent violation of this subsection.

5 ‘‘(b) EMPLOYERS.—The employer of an employee

6 who has violated subsection (a) more than once while in

7 the employ of the employer is liable for a civil money pen8 alty of $250 for each violation by such employee. An em9 ployer who pays a civil money penalty under this sub10 section shall not, for purposes of section 10, be considered

11 as having violated this Act.

12 ‘‘(c) DEFENSES.—It shall be a defense to a charge

13 brought under subsection (a) that—

14 ‘‘(1) the defendant—

15 ‘‘(A) relied upon proof of age that ap16 peared on its face to be valid, or

17 ‘‘(B) had complied with the requirements

18 of section 7, or

19 ‘‘(2) the individual to whom the tobacco prod20 uct was distributed was at the time of the distribu21 tion employed in violation of section 8(b).

22 ‘‘(d) ENFORCEMENT.—A person who violates sub23 section (a) shall not be liable for a civil money penalty

24 unless the individual who received the tobacco product is

25 proceeded against under section 2(a), except that such a
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1 person shall be liable for such penalty if such individual

2 was not proceeded against because such individual was

3 testing compliance with this Act under section 8(b).

4 ‘‘SEC. 2. PURCHASE, RECEIPT, OR POSSESSION BY MINORS

5 PROHIBITED.

6 ‘‘(a) IN GENERAL.—An individual under 18 years of

7 age shall not purchase or attempt to purchase, receive or

8 attempt to receive, possess or attempt to possess, smoke

9 or attempt to smoke, or otherwise use or consume or at10 tempt to use or consume a tobacco product in a public

11 place. An individual who violates this subsection is liable

12 for a civil money penalty of not less than $25 and not

13 more than $150 for each violation and shall be subject

14 to suspension of the individual’s authorization to operate

15 a motor vehicle. Upon the second or subsequent violation

16 of this subsection, the authorization of such individual to

17 operate a motor vehicle shall be suspended for a period

18 of not less than 30 days and such individual shall be re19 quired to perform community service.

20 ‘‘(b) NOTICE.—A law enforcement agency, upon de21 termining that an individual under 18 years of age alleg22 edly purchased, received, possessed, smoked, or otherwise

23 used or attempted to purchase, receive, possess, smoke,

24 or otherwise use, a tobacco product in violation of sub25 section (a) shall notify the individual’s parent or parents,
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1 custodian, or guardian as to the nature of the violation

2 if the name and address of a parent, guardian, or custo3 dian is reasonably ascertainable by the law enforcement

4 agency. The notice required by this subsection shall be

5 made not later than 48 hours after the individual who al6 legedly violated subsection (a) is cited by such agency for

7 the violation. The notice may be made by any means rea8 sonably calculated to give prompt actual notice, including

9 notice in person, by telephone, or by first-class mail.

10 ‘‘(c) EMPLOYMENT.—Subsection (a) does not pro11 hibit an individual under the age of 18 from possessing

12 a tobacco product during regular working hours and in

13 the course of such individual’s employment if the tobacco

14 product is not possessed for such individual’s consump15 tion.

16 ‘‘SEC. 3. SIGNAGE.

17 ‘‘It shall be unlawful for any person who sells tobacco

18 products over-the-counter to fail to post conspicuously a

19 sign communicating that—

20 ‘‘(1) the sale of tobacco products to individuals

21 under the age of 18 is prohibited by law,

22 ‘‘(2) the purchase of tobacco products by indi23 viduals under the age of 18 is prohibited by law, and

24 ‘‘(3) proof of age may be demanded.
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1 A person who fails to post a sign in violation of this section

2 is liable for a civil money penalty of $250 for each viola3 tion.

4 ‘‘SEC. 4. SAMPLING.

5 ‘‘It shall be unlawful for any person to distribute to6 bacco product samples in any face-to-face transaction

7 without first procuring, from any prospective purchaser or

8 recipient who appears to be under the age of 18, proof

9 of age establishing that such prospective purchaser or re10 cipient is 18 years of age or older. A person who violates

11 this section is liable for a civil money penalty of $250 for

12 each violation. This section does not apply to distributions

13 of tobacco products in an area or establishment that indi14 viduals under the age of 18 are not permitted to enter.

15 ‘‘SEC. 5. OUT-OF-PACKAGE DISTRIBUTION.

16 ‘‘It shall be unlawful for any person to distribute

17 cigarettes or smokeless tobacco products other than in an

18 unopened package originating with the manufacturer that

19 bears the health warning required by Federal law. A per20 son who distributes a cigarette or smokeless tobacco prod21 uct in violation of this section is liable for a civil money

22 penalty of $250 for each violation.

23 ‘‘SEC. 6. DISPLAYS.

24 ‘‘(a) GENERAL RULE.—It shall be unlawful for any

25 person who sells tobacco products to maintain packages
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1 of such products in any display or storage configuration

2 which affords customers direct access to such packages.

3 ‘‘(b) PENALTY.—Any person who violates subsection

4 (a) is liable for a civil money penalty of $250 for each

5 violation.

6 ‘‘SEC. 7. NOTIFICATION OF EMPLOYEES.

7 ‘‘(a) NOTICE TO EMPLOYEES.—Within 180 days of

8 the effective date of this Act, every person engaged in the

9 business of distributing tobacco products at retail shall im10 plement a program to notify each employee employed by

11 that person who distributes tobacco products that this

12 Act—

13 ‘‘(1) prohibits the distribution of tobacco prod14 ucts to any individual under 18 years of age and the

15 purchase, receipt, possession, smoking, or other use

16 or consumption of tobacco products by any individ17 ual under 18 years of age,

18 ‘‘(2) prohibits out-of-package distribution of

19 cigarettes and smokeless tobacco products, and

20 ‘‘(3) permits a defense to a charge of distribu21 tion of a tobacco product to an individual under 18

22 years of age based on evidence that the defendant

23 relied upon proof of age that appeared on its face

24 to be valid.
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1 Any employer failing to provide the required notice to any

2 employee shall be liable for a civil money penalty of $250

3 for each violation.

4 ‘‘(b) STATEMENT.—It shall be a defense to a charge

5 that an employer violated subsection (a) of this section

6 that the employee acknowledged receipt, either in writing

7 or by electronic means, of a statement in substantially the

8 following form:

9 ‘‘I understand that State law prohibits the distribu10 tion of tobacco products to individuals under 18

11 years of age and out-of-package distribution of ciga12 rettes and smokeless tobacco products and permits

13 a defense based on evidence that a prospective pur14 chaser’s proof of age was reasonably relied upon and

15 appeared on its face to be valid. I understand that

16 if I sell, give, or voluntarily provide tobacco products

17 to an individual under the age of 18, I may be found

18 responsible for a civil money penalty for each viola19 tion. I promise to comply with this law.’’

20 ‘‘(c) VICARIOUS LIABILITY.—If an employer is

21 charged with a violation of subsection (a) and the em22 ployer uses as a defense to such charge the defense pro23 vided by subsection (b), the employer shall be deemed to

24 be liable for such violation if such employer pays the pen-
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1 alty imposed on the employee involved in such violation

2 or in any way reimburses the employee for such penalty.

3 ‘‘SEC. 8. RANDOM UNANNOUNCED INSPECTIONS; REPORT4 ING; AND COMPLIANCE.

5 ‘‘(a) ENFORCEMENT AND INSPECTION.—The State

6 Police of a State, or such local law enforcement authority

7 duly designated by the State Police, shall enforce this Act

8 in a manner that can reasonably be expected to reduce

9 the extent to which tobacco products are distributed to

10 individuals under 18 years of age and shall conduct ran11 dom, unannounced inspections in accordance with the pro12 cedures set forth in this Act and in regulations issued

13 under section 301 of the PROTECT Act to ensure compli14 ance with this Act.

15 ‘‘(b) USE OF INDIVIDUALS UNDER 18.—The State

16 may engage an individual under 18 years of age to test

17 compliance with this Act, except that such an individual

18 may be used to test compliance with this Act only if the

19 testing is conducted under the following conditions:

20 ‘‘(1) Prior to use of any individual under the

21 age of 18 years in a random, unannounced inspec22 tion, written consent shall be obtained from such in23 dividual’s parents or legal guardian.
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1 ‘‘(2) An individual under 18 years of age shall

2 act solely under the supervision and direction of the

3 State during a random, unannounced inspection.

4 ‘‘(3) An individual under 18 years of age used

5 in random, unannounced inspections shall not be

6 used in any such inspection at a store in which such

7 individual is a regular customer.

8 ‘‘(4) If an individual under 18 years of age par9 ticipating in random, unannounced inspections is

10 questioned about such individual’s age, such person

11 shall state such individual’s actual age and shall

12 present a true and correct proof of age if requested

13 at any time during the inspection to present it.

14 ‘‘(c) PENALTY.—Any person who uses any person

15 under 18 years of age, other than as permitted by sub16 section (b), to test compliance with this Act, is liable for

17 a civil money penalty of $250 for each violation.

18 ‘‘(d) USE OF PENALTY MONEY AND FEES.—Civil

19 money penalties collected for violations of this Act and

20 fees collected under section 9 may only be used to defray

21 the costs of administration and enforcement of this Act.

22 ‘‘SEC. 9. LICENSURE.

23 ‘‘(a) IN GENERAL.—The State shall require that each

24 person engaged in the distribution of tobacco products

25 hold a license issued under this section. A separate license
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1 shall be required for each place of business where tobacco

2 products are distributed at retail. A license issued under

3 this section is not assignable and is valid only for the per4 son in whose name it is issued and for the place of busi5 ness designated in the license.

6 ‘‘(b) FEE.—The annual license fee shall be not less

7 than $500 for each place of business where tobacco prod8 ucts are distributed at retail.

9 ‘‘(c) APPLICATION.—Every application for a license,

10 including renewal of a license, under this section shall be

11 made upon a form provided by the State and shall set

12 forth the name under which the applicant transacts or in13 tends to transact business, the location of the place of

14 business for which the license is to be issued, the street

15 address to which all notices relevant to the license are to

16 be sent (in this Act referred to as ‘notice address’), and

17 any other identifying information that the State may re18 quire.

19 ‘‘(d) ACTION ON LICENSE.—The State shall issue or

20 renew a license or deny an application for a license or the

21 renewal of a license within 30 days of receiving a properly

22 completed application and the license fee. The State shall

23 provide notice to an applicant of action on an application

24 denying the issuance of a license or refusing to renew a

25 license.
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1 ‘‘(e) SCOPE AND RENEWAL.—Every license issued by

2 the State shall be valid for 1 year from the date of issu3 ance and shall be renewed upon application except as oth4 erwise provided in this Act.

5 ‘‘(f) CHANGE OF ADDRESS.—Upon notification of a

6 change of address for a place of business for which a li7 cense has been issued, a license shall be reissued for the

8 new address without the filing of a new application.

9 ‘‘(g) NOTICE.—The State shall notify every person

10 in the State who is engaged in the distribution at retail

11 of tobacco products of the license requirement of this sec12 tion and of the date by which such person should have

13 obtained a license.

14 ‘‘(h) PENALTY.—

15 ‘‘(1) IN GENERAL.—Any person who engages in

16 the distribution at retail of tobacco products without

17 a license required by this section is liable for a civil

18 money penalty in an amount equal to two times the

19 applicable license fee and $100 for each day on

20 which such distribution continues without a license.

21 ‘‘(2) SUSPENSION OR REVOCATION.—Any per22 son who engages in the distribution at retail of to23 bacco products after a license issued under this sec24 tion has been suspended or revoked is liable for a

25 civil money penalty of $250 per day for each day on
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1 which such distribution continues after the date such

2 person received notice of such suspension or revoca3 tion.

4 ‘‘(i) TERM.—The term of a license shall be 1 year.

5 ‘‘(j) EFFECTIVE DATE.—No person shall engage in

6 the distribution at retail of tobacco products on or after

7 180 days after the date of enactment of this Act unless

8 the person is authorized to do so by a license issued pursu9 ant to this section or is an employee or agent of a person

10 who has been issued such a license.

11 ‘‘SEC. 10. SUSPENSION, REVOCATION, DENIAL, AND NON12 RENEWAL OF LICENSES.

13 ‘‘(a) NOTICE.—Upon a finding that a licensee has

14 been determined by a court of competent jurisdiction to

15 have violated this Act during the license term, the State

16 shall notify the licensee in writing, served personally or

17 by registered mail at the notice address, that any subse18 quent violation of this Act at the same place of business

19 may result in an administrative action to suspend the li20 cense for a period determined by the State.

21 ‘‘(b) SUSPENSION.—Upon finding that a further vio22 lation by the licensee has occurred involving the same

23 place of business for which the license was issued and the

24 licensee has been provided notice under subsection (a), the

25 State may initiate an administrative action to suspend the
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1 license for a period to be determined by the State. If an

2 administrative action to suspend a license is initiated, the

3 State shall immediately notify the licensee in writing at

4 the notice address of the initiation of the action and the

5 reasons therefore and permit the licensee an opportunity,

6 at least 30 days after written notice is served personally

7 or by registered mail upon the licensee, to show why sus8 pension of the license would be unwarranted or unjust.

9 ‘‘(c) REVOCATION.—The State may initiate an ad10 ministrative action to revoke a license that previously has

11 been suspended under subsection (b) if, during the one

12 year period in which the license was issued, a further vio13 lation of this Act is committed after the suspension by

14 the licensee involving the same place of business for which

15 the license was issued. If an administrative action to re16 voke a license is initiated, the State shall immediately no17 tify the licensee in writing at the notice address of the

18 initiation of the action and the reasons therefore and per19 mit the licensee an opportunity, at least 30 days after

20 written notice is served personally or by registered mail

21 upon the licensee, to show why revocation of the license

22 would be unwarranted or unjust.

23 ‘‘(d) OTHER VIOLATIONS.—No action with respect to

24 any license at a place of business may be taken based on

25 a violation that occurred subsequent to the occurrence of
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1 another violation unless such other violation is fully adju2 dicated at the time the subsequent violation occurred.

3 ‘‘(e) FEE.—A person whose license has been sus4 pended or revoked with respect to a place of business pur5 suant to this section shall pay the State a fee of $1,000

6 for the renewal or reissuance of the license at that same

7 place of business.

8 ‘‘(f) EFFECT ON APPLICATION FOR NEW LICENSE.—

9 Revocation of a license under subsection (c) with respect

10 to a place of business shall not be grounds to deny an

11 application by that person for a new license with respect

12 to that place of business for more than 12 months subse13 quent to the date of such revocation. Revocation or sus14 pension of a license with respect to a particular place of

15 business shall not be the grounds to deny an application

16 for a new license, to refuse to renew a license, or to revoke

17 or suspend an existing license at another place of business.

18 ‘‘(g) JUDICIAL REVIEW.—A licensee may seek judi19 cial review of an action of the State suspending, revoking,

20 denying, or refusing to renew a license under this section

21 by filing a complaint in a court of competent jurisdiction.

22 A complaint shall be filed within 30 days after the date

23 on which notice of the action is received by the licensee.

24 The court shall review the evidence de novo.
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1 ‘‘(h) REPORT.—The State shall not report any action

2 suspending, revoking, denying, or refusing to renew a li3 cense under this section to the Secretary of Health and

4 Human Services, unless judicial review, if any, of the ac5 tion has been completed.

6 ‘‘SEC. 11. PREEMPTION.

7 ‘‘(a) IN GENERAL.—The provisions of this Act shall

8 not preempt any provisions of State or local law that pro9 vide greater restrictions than those required in this Act

10 so long as such State or local laws do not conflict with

11 regulations issued under section 910 of the Federal Food,

12 Drug and Cosmetic Act.

13 ‘‘(b) FOOD AND DRUG ADMINISTRATION.—Nothing

14 in this Act shall be construed to prohibit the Secretary

15 of Health and Human Services from regulating tobacco

16 products under chapter IX of the Federal Food, Drug,

17 and Cosmetic Act.

18 ‘‘SEC. 12. SEVERABILITY.

19 ‘‘If any provision of this Act or its application to any

20 person or circumstance is held invalid, such holding shall

21 not affect other provisions or applications of this Act that

22 can be given effect without the invalid application.
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1 ‘‘SEC. 13. NO PRIVATE RIGHT OF ACTION.

2 ‘‘Nothing in this Act shall be construed to create a

3 right of action by any private person for any violation of

4 any provision of this Act.

5 ‘‘SEC. 14. JURISDICTION AND VENUE.

6 ‘‘Any action alleging a violation of this Act may only

7 be brought in a court of general jurisdiction in the city

8 or county where the violation is alleged to have occurred.

9 ‘‘SEC. 15. REPORT.

10 ‘‘The State shall prepare for submission annually to

11 the Secretary of Health and Human Services a report on

12 the State’s reporting of compliance with this title and any

13 implementing regulations promulgated by the Secretary.

14 ‘‘SEC. 16. DEFINITIONS.

15 ‘‘For purposes of this Act:

16 ‘‘(1) DIRECT ACCESS.—The term ‘direct access’

17 means the ability of a customer to obtain physically

18 a package of tobacco products without the interven19 tion of an employee of the establishment.

20 ‘‘(2) PACKAGE.—The term ‘package’ means a

21 pack, box, carton, pouch, or container of any kind

22 in which cigarettes or smokeless tobacco products

23 are offered for sale, sold, or otherwise distributed to

24 consumers.

25 ‘‘(3) PROOF OF AGE.—The term ‘proof of age’

26 means a driver’s license or other form of identifica-
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1 tion issued by a governmental authority or other

2 identification that includes a photograph and the

3 date of birth of the individual.

4 ‘‘(4) SAMPLE.—The term ‘sample’ means a to5 bacco product distributed to members of the public

6 at no cost for the purpose of promoting the product,

7 but excludes tobacco products distributed—

8 ‘‘(A) in conjunction with the sale of other

9 tobacco products,

10 ‘‘(B) to consumer or market research pan11 els,

12 ‘‘(C) to persons employed in the trade, or

13 ‘‘(D) to customers or consumers in re14 sponse to customer or consumer complaints.

15 ‘‘(5) TOBACCO PRODUCT.—The term ‘tobacco

16 product’ means—

17 ‘‘(A) ‘tobacco products’ as defined in sec18 tion 5 of the PROTECT Act; or

19 ‘‘(B) any other product containing tobacco

20 as a principal ingredient which, because of its

21 appearance, type, or tobacco used in the prod22 uct, or its packaging and labeling, is likely to

23 be offered to, or purchased by, consumers as a

24 tobacco product as described in subparagraph

25 (A).’’.
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1 Subtitle B—Required Reduction in

2 Underage Usage

3 SEC. 311. PURPOSE.

4 It is the purpose of this subtitle to encourage the

5 achievement of dramatic and immediate reductions in the

6 number of underage consumers of tobacco products

7 through the imposition of substantial financial surcharges

8 on participating manufacturers if certain underage to9 bacco-use reduction targets are not met.

10 SEC. 312. DETERMINATION OF UNDERAGE USE BASE PER11 CENTAGES.

12 (a) CIGARETTES.—For purposes of this section, the

13 underage use base percentage for cigarettes shall be a per14 centage determined by the Secretary, weighted by the rel15 ative population of the age groups involved as determined

16 using data compiled in 1995 by the Bureau of the Census,

17 based on—

18 (1) the average of the percentages of 12th grad19 ers (individuals who are 16 or 17 years of age) who

20 used cigarette products on a daily basis for each of

21 the calendar years 1986 through 1996;

22 (2) the average of the percentages of 10th grad23 ers (individuals who are 14 or 15 years of age) who

24 used cigarette products on a daily basis for each of

25 the calendar years 1991 through 1996; and
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1 (3) the average of the percentages of 8th grad2 ers (individuals who are 13 years of age) who used

3 cigarette products on a daily basis for each of the

4 calendar years 1991 through 1996.

5 (b) SMOKELESS TOBACCO.—For purposes of this sec6 tion, the underage use base percentage for smokeless to7 bacco products shall be a percentage determined by the

8 Secretary, weighted by the relative population of the age

9 groups involved as determined using data compiled in

10 1995 by the Bureau of the Census, based on—

11 (1) the average of the percentages of 12th grad12 ers (individuals who are 16 or 17 years of age) who

13 used smokeless tobacco products on a daily basis in

14 1996;

15 (2) the average of the percentages of 10th grad16 ers (individuals who are 14 or 15 years of age) who

17 used smokeless tobacco products on a daily basis in

18 1996; and

19 (3) the average of the percentages of 8th grad20 ers (individuals who are 13 years of age) who used

21 smokeless tobacco products on a daily basis in 1996.

22 (c) USE OF CERTAIN DATA OR METHODOLOGY.—For

23 purposes of determining the percentages under para24 graphs (1) through (3) of subsections (a) and (b), the Sec25 retary shall use the data contained in the National High
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1 School Drug Use Survey entitled Monitoring the Future

2 by the University of Michigan or such other comparable

3 index, as determined appropriate by the Secretary after

4 notice and an opportunity for a hearing, that utilizes

5 methodology identical to that used by the University of

6 Michigan in such survey.

7 SEC. 313. ANNUAL DAILY INCIDENCE OF UNDERAGE USE OF

8 TOBACCO PRODUCTS.

9 (a) ANNUAL DETERMINATION.—Not later than the

10 expiration of the 5-year period beginning on the date of

11 enactment of this Act, and annually thereafter, the Sec12 retary shall determine the average annual incidence of the

13 daily use of tobacco products by individuals who are under

14 18 years of age.

15 (b) CIGARETTES.—With respect to cigarette prod16 ucts, a determination under subsection (a) for a year shall

17 be based on the percentage, as weighted by the relative

18 population of the age groups involved as determined using

19 data compiled in 1995 by the Bureau of the Census, of—

20 (1) 12th graders (individuals who are 16 or 17

21 years of age) who used cigarette products on a daily

22 basis during the year involved;

23 (2) 10th graders (individuals who are 14 or 15

24 years of age) who used cigarette products on a daily

25 basis during the year involved; and
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1 (3) 8th graders (individuals who are 13 years

2 of age) who used cigarette products on a daily basis

3 during the year involved.

4 (c) SMOKELESS TOBACCO.—With respect to smoke5 less tobacco products, a determination under subsection

6 (a) for a year shall be based on the percentage, as weight7 ed by the relative population of the age groups involved

8 as determined using data compiled in 1995 by the Bureau

9 of the Census, of—

10 (1) 12th graders (individuals who are 16 or 17

11 years of age) who used smokeless tobacco products

12 on a daily basis during the year involved;

13 (2) 10th graders (individuals who are 14 or 15

14 years of age) who used smokeless tobacco products

15 on a daily basis during the year involved; and

16 (3) 8th graders (individuals who are 13 years

17 of age) who used cigarette smokeless tobacco on a

18 daily basis during the year involved.

19 (d) USE OF CERTAIN DATA OR METHODOLOGY.—

20 (1) IN GENERAL.—For purposes of determining

21 the percentages under paragraphs (1) through (3) of

22 subsections (b) and (c), the Secretary shall use the

23 data contained in the National High School Drug

24 Use Survey entitled Monitoring the Future by the

25 University of Michigan (if such survey is still being
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1 undertaken) or such other comparable index, as de2 termined appropriate by the Secretary after notice

3 and an opportunity for a hearing, that utilizes meth4 odology identical to that used by the University of

5 Michigan in such survey.

6 (2) ALTERATION OF METHODOLOGY.—If the

7 Secretary determines that the methodology used by

8 the University of Michigan in the survey referred to

9 in paragraph (1) has been altered in a material

10 manner from the methodology used during the pe11 riod from 1986 to 1996 (including by altering States

12 or regions on which the survey is based), the Sec13 retary, after notice and an opportunity for a hear14 ing, shall use percentages based on an index devel15 oped by the Secretary that utilizes methodology

16 identical to that used by the University of Michigan

17 in such survey.

18 SEC. 314. REQUIRED REDUCTION IN UNDERAGE TOBACCO

19 USE.

20 (a) IN GENERAL.—For purposes of assessing sur21 charges under section 315, the Secretary shall determine

22 whether the required percentage reduction in the underage

23 use of tobacco products for a year (based on the tables

24 contained in subsection (b)) has been achieved for the year

25 involved. Such determination shall be based on—
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1 (1) with respect to cigarette products, the aver2 age annual incidence of the daily use of tobacco

3 products by individuals who are under 18 years of

4 age for the year involved (as determined under sec5 tion 313(b)) as compared to the underage use base

6 percentage for cigarette products (as determined

7 under section 312(a)); and

8 (2) with respect to smokeless tobacco products,

9 the average annual incidence of the daily use of

10 smokeless tobacco products by individuals who are

11 under 18 years of age for the year involved (as de12 termined under section 313(c)) as compared to the

13 underage use base percentage for smokeless tobacco

14 products (as determined under section 312(b)).

15 (b) PERCENTAGE REDUCTION IN UNDERAGE USE OF

16 TOBACCO PRODUCTS.—For purposes of subsection (a),

17 the required percentage reduction in the underage use of

18 tobacco products with respect to each tobacco product

19 shall be determined based on the national goals for the

20 reduction in underage tobacco use under section 4.

21 SEC. 315. APPLICATION OF SURCHARGES.

22 (a) IN GENERAL.—If the Secretary determines that

23 the percentage reduction in the underage use of tobacco

24 products for a year has not been achieved as required

25 under section 314, the Secretary shall impose a surcharge
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1 on the participating manufacturers of the tobacco prod2 ucts involved.

3 (b) AMOUNT OF SURCHARGE.—

4 (1) IN GENERAL.—

5 (A) CIGARETTES.—With respect to ciga6 rettes, the amount of any surcharge to be im7 posed under this section for a calendar year

8 shall be equal to—

9 (i) with respect to each of the first 5

10 calendar years to which this section ap11 plies, the product of—

12 (I) $100,000,000, and the num13 ber of applicable surcharge percentage

14 points as determined under subsection

15 (c) up to 5 percentage points;

16 (II) $200,000,000, and the num17 ber of applicable surcharge percentage

18 points as determined under subsection

19 (c), if such percentage points are

20 greater than 5 but less than 11 per21 centage points; and

22 (III) $300,000,000, and the

23 number of applicable surcharge per24 centage points as determined under

25 subsection (c), if such percentage
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1 points are 11 or more percentage

2 points; and

3 (ii) with respect to calendar years suc4 ceeding the period referred to in subpara5 graph (A), the product of—

6 (I) $250,000,000, and the num7 ber of applicable surcharge percentage

8 points as determined under subsection

9 (c) up to 5 percentage points; and

10 (II) $500,000,000, and the num11 ber of applicable surcharge percentage

12 points as determined under subsection

13 (c), if such percentage points are 5 or

14 more percentage points.

15 (B) SMOKELESS TOBACCO.—With respect

16 to smokeless tobacco, the amount of any sur17 charge to be imposed under this section for a

18 calendar year shall be equal to—

19 (i) with respect to each of the first 5

20 calendar years to which this section ap21 plies, the product of—

22 (I) $15,000,000, and the number

23 of applicable surcharge percentage

24 points as determined under subsection

25 (c) up to 5 percentage points;
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1 (II) $30,000,000, and the num2 ber of applicable surcharge percentage

3 points as determined under subsection

4 (c), if such percentage points are

5 greater than 5 but less than 11 per6 centage points; and

7 (III) $45,000,000, and the num8 ber of applicable surcharge percentage

9 points as determined under subsection

10 (c), if such percentage points are 11

11 or more percentage points; and

12 (ii) with respect to calendar years suc13 ceeding the period referred to in subpara14 graph (A), the product of—

15 (I) $30,000,000, and the number

16 of applicable surcharge percentage

17 points as determined under subsection

18 (c) up to 5 percentage points; and

19 (II) $60,000,000, and the num20 ber of applicable surcharge percentage

21 points as determined under subsection

22 (c), if such percentage points are 5 or

23 more percentage points.
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1 (2) ADJUSTMENTS.—The amount applicable

2 under paragraph (1) shall be annually adjusted by

3 the Secretary based on—

4 (A) with respect to subparagraph (A) of

5 such paragraph—

6 (i) the proportional percentage in7 crease or decrease, as compared to cal8 endar year 1995, in the population of indi9 viduals residing in the United States who

10 are at least 13 years of age but less than

11 18 years of age;

12 (ii) the proportional percentage in13 crease or decrease, as compared to cal14 endar year 1996, in the average profit per

15 unit (measured in cents and weighted by

16 annual sales) earned by participating man17 ufacturers for the tobacco product involved

18 (as determined by the Secretary through a

19 contract with a nationally recognized ac20 counting firm having no connection to such

21 manufacturers); and

22 (B) any methodology utilized to avoid the

23 double counting of underage individuals whose

24 tobacco use has previously resulted in the impo25 sition of a surcharge, limited to the extent that
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1 there were not other underage users of tobacco

2 in such previous years for whom a surcharge

3 was not paid because of the limitation contained

4 in section 316.

5 (3) PROFIT PER UNIT.—For purposes of para6 graph (2)(A)(ii), the average profit per unit for cal7 endar 1996 shall be determined using the operating

8 profit reported by participating manufacturers to the

9 Securities and Exchange Commission.

10 (4) ANNUAL LIMITATIONS.—The total amount

11 of surcharges imposed under this section for a cal12 endar year shall not exceed—

13 (A) in the case of cigarettes—

14 (i) $5,000,000,000 for each of the

15 years described in paragraph (1)(A)(i); and

16 (ii) $10,000,000,000 for each of the

17 years described in paragraph (1)(A)(ii);

18 and

19 (B) in the case of smokeless tobacco prod20 ucts—

21 (i) $500,000,000 for each of the years

22 described in paragraph (1)(B)(i); and

23 (ii) $1,000,000,000 for each of the

24 years described in paragraph (1)(B)(ii).
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1 (c) DETERMINATION OF APPLICABLE SURCHARGE

2 PERCENTAGE POINTS.—

3 (1) IN GENERAL.—Except as provided in para4 graph (2), with respect to a calendar year, the appli5 cable surcharge percentage points shall be equal to

6 the percentage point difference between—

7 (A) the required percentage reduction in

8 the underage use of the tobacco product in9 volved for the year (based on the tables in sec10 tion 314(b)); and

11 (B) the number of percentage points by

12 which the average annual incidence of the daily

13 use of the tobacco products involved by individ14 uals who are under 18 years of age for the year

15 (as determined under section 313) is less than

16 the underage use base percentage for such

17 products (as determined under section 312).

18 (2) ADJUSTMENT.—If for any calendar year the

19 Secretary determines that the average annual inci20 dence of the daily use of the tobacco products in21 volved by individuals who are under 18 years of age

22 (as determined under section 313) is greater than

23 the underage use base percentage for such products

24 (as determined under section 312), the applicable

25 surcharge percentage point shall be equal to—
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1 (A) the percentage point amount deter2 mined under paragraph (1)(A); and

3 (B) the number of percentage points by

4 which the average annual incidence of the daily

5 use of the tobacco products involved by individ6 uals who are under 18 years of age (as deter7 mined under section 313) is greater than the

8 underage use base percentage for such products

9 (as determined under section 312).

10 (3) TYPE OF PRODUCT.—Separate determina11 tions shall be made under this section for cigarette

12 products and smokeless tobacco products.

13 (d) JOINT AND SEVERAL OBLIGATION.—Any sur14 charge imposed under this section with respect to a to15 bacco product (cigarette products or smokeless tobacco

16 products) shall be the joint and several obligation of all

17 participating manufacturers of such product as allocated

18 by the market share of each such manufacturer with re19 spect to such product. The market share of each manufac20 turer for each such product shall be based on the market

21 share of such product for the year preceding the year for

22 which the determination is being made.

23 (e) ASSESSMENT.—Not later than May 1 of each year

24 in which a surcharge will be imposed under this section,

25 the Secretary shall assess, pursuant to subsection (d), to
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1 each participating manufacturer the amount for which

2 such manufacturer is obligated. Not later than July 1 of

3 any year in which a manufacturer receives an assessment

4 under this section, the manufacturer shall pay such as5 sessment in full or be subject to such interest on such

6 amount as the Secretary may by regulation prescribe.

7 (f) USE OF AMOUNTS.—Amounts received under this

8 section shall be used to further the purposes of this Act.

9 (g) PROHIBITION.—No stay or other injunctive relief

10 may be granted by the Secretary or any court that has

11 the effect of enjoining the imposition and collection of the

12 surcharges to be applied under this section.

13 SEC. 316. ABATEMENT PROCEDURES.

14 (a) PETITIONS.—Upon payment by a participating

15 manufacturer of the amount assessed to the manufacturer

16 under section 315(f), the manufacturer may submit a peti17 tion to the Secretary for an abatement of the assessment.

18 A notice of such abatement petition shall be submitted to

19 the attorney general of each State.

20 (b) HEARING.—The Secretary shall provide for the

21 conduct of a hearing on an abatement petition received

22 under subsection (a) pursuant to the procedures described

23 in sections 554, 556, and 557 of title 5, United States

24 Code. The attorney general of any State shall be permitted
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1 to be heard at any hearing conducted under this sub2 section.

3 (c) BURDEN.—The burden at any hearing under sub4 section (b) shall be on the participating manufacturer to

5 prove, by a preponderance of the evidence, that the manu6 facturer should be granted the abatement.

7 (d) BASIS OF DECISION.—Any decision regarding a

8 petition for an abatement under this section shall be based

9 on a determination as to whether—

10 (1) the participating manufacturer has acted in

11 good faith and in full compliance with this Act (and

12 any amendment made by this Act) and any regula13 tions or State or local laws promulgated in further14 ance of this Act;

15 (2) the participating manufacturer has pursued

16 all reasonably available measures to attain the re17 ductions;

18 (3) there is any evidence of any direct or indi19 rect action by the participating manufacturer to un20 dermine the achievement of the reductions required

21 under section 314 or to undermine any other provi22 sion of this Act (or amendment); and

23 (4) the participating manufacturer has taken

24 (or failed to take) any other action as determined

25 appropriate by the Secretary.
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1 (e) AMOUNT.—Upon a determination granting an

2 abatement under this section, the Secretary shall order the

3 abatement of any or all of the amount paid by the partici4 pating manufacturer (as determined by the Secretary), to5 gether with interest that may have accrued on such

6 amount during the period between the date on which pay7 ment by the manufacturer was made and the date on

8 which the abatement order was granted. Such interest

9 shall be equal to that provided for the average 52-week

10 Treasury Bill during the period involved.

11 (f) AGGRIEVED PARTIES.—Any participating manu12 facturer or attorney general of any State that is aggrieved

13 by an abatement that is granted under this section may

14 seek judicial review of the abatement decision within 30

15 days of the date of such decision in the Court of Appeals

16 for the District of Columbia Circuit. Review in such cases

17 shall be subject to the procedures described in sections

18 701 through 706 of title 5, United States Code.

19 (g) PROHIBITION.—A participating manufacturer

20 may not file a petition under subsection (a) until such time

21 as the manufacturer has fully paid the Secretary the

22 amount assessed to the manufacturer under section

23 315(f).
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1 SEC. 317. INCENTIVE FOR EXCEEDING REDUCTION GOALS.

2 (a) IN GENERAL.—If the Secretary determines that

3 the percentage reduction in the underage use of tobacco

4 products for a year exceeds 60 percent for cigarettes and

5 45 percent for smokeless tobacco products for a year as

6 required under section 314, the Secretary shall notify the

7 Trustees who shall adjust, in accordance with subsection

8 (b), the amount of the licensing fee that a participating

9 manufacturer shall be required to pay for such year under

10 section 102.

11 (b) AMOUNT.—

12 (1) CIGARETTES.—With respect to cigarettes,

13 the amount of a licensing fee adjustment applicable

14 to a participating manufacturer under this section

shall be an amount equal to 1 15 ⁄80 of the amount that

16 the manufacturer is required to pay for such year

17 multiplied by the number of percentage points by

18 which the manufacturer has reduced underage to19 bacco use in excess of the 60 percent reduction re20 quired under section 314.

21 (2) SMOKELESS TOBACCO.—With respect to

22 smokeless tobacco, the amount of a licensing fee ad23 justment applicable to a participating manufacturer

under this section shall be an amount equal to 1 24 ⁄110

25 of the amount that the manufacturer is required to

26 pay for such year multiplied by the number of per-
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1 centage points by which the manufacturer has re2 duced underage tobacco use in excess of the 45 per3 cent reduction required under section 314.

4 (c) PROCEDURES.—The Trustees, in consultation

5 with the Secretary, shall develop procedures to carry out

6 this section.

7 TITLE IV—HEALTH AND SAFETY

8 REGULATION OF TOBACCO

9 PRODUCTS

10 SEC. 401. HEALTH AND SAFETY REGULATION OF TOBACCO

11 PRODUCTS.

12 (a) PROHIBITED ACTS.—Section 301 of the Federal

13 Food, Drug, and Cosmetic Act (21 U.S.C. 331) is amend14 ed by adding at the end the following:

15 ‘‘(x) The introduction or delivery for introduction into

16 interstate commerce of any tobacco product that does not

17 comply with the provisions of chapter IX.

18 ‘‘(y) The failure by the manufacturer of a tobacco

19 product to comply with a tobacco product health risk man20 agement standard, a good manufacturing practice stand21 ard, a tobacco product labeling, warning or packaging

22 standard, or any other requirement of chapter IX.’’.

23 (b) DEFINITION.—Section 201(g)(1) of the Federal

24 Food, Drug, and Cosmetic Act (21 U.S.C. 301(g)(1)) is

25 amended by striking ‘‘; and (D)’’ and inserting ‘‘, includ-
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1 ing nicotine-containing tobacco products that do not com2 ply with chapter IX; and (D)’’.

3 (c) INSPECTIONS.—Section 704(a)(1) of the Federal

4 Food, Drug, and Cosmetic Act (21 U.S.C. 374(a)(1)) is

5 amended—

6 (1) in subparagraph (A), by striking ‘‘or cos7 metics’’ each place that such appears and inserting

8 ‘‘, cosmetics, or tobacco products’’; and

9 (2) in the second sentence, by striking ‘‘drugs

10 or’’ each place that such appears and inserting

11 ‘‘drugs, tobacco products or’’.

12 (d) REGULATION OF TOBACCO PRODUCTS.—The

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

14 et seq.) is amended—

15 (1) by redesignating chapter IX as chapter X;

16 (2) by redesignating sections 901, 902, 903,

17 904, and 905 as sections 1001, 1002, 1003, 1004,

18 and 1005, respectively; and

19 (3) by adding after chapter VIII the following

20 new chapter:

21 ‘‘CHAPTER IX—HEALTH AND SAFETY REGU22 LATORY REQUIREMENTS RELATING TO TO23 BACCO PRODUCTS

24 ‘‘SEC. 900. DEFINITIONS.

25 ‘‘In this chapter:
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1 ‘‘(1) CIGARETTE.—The term ‘cigarette’ means

2 any product which contains nicotine, is intended to

3 be burned under ordinary conditions of use, and con4 sists of—

5 ‘‘(A) any roll of tobacco wrapped in paper

6 or in any substance not containing tobacco; and

7 ‘‘(B) any roll of tobacco wrapped in any sub8 stance containing tobacco which, because of its ap9 pearance, the type of tobacco used in the filler, or

10 its packaging and labeling, is likely to be offered to,

11 or purchased by, consumers as a cigarette described

12 in subparagraph (A).

13 ‘‘(2) CIGARETTE TOBACCO.—The term ‘ciga14 rette tobacco’ means any product that consists of

15 loose tobacco that contains or delivers nicotine and

16 is intended for use by persons in a cigarette. Unless

17 otherwise stated, the requirements of this title per18 taining to cigarettes shall also apply to cigarette to19 bacco.

20 ‘‘(3) NICOTINE.—The term ‘nicotine’ means the

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

22 pyrrolidinyl)pyridine or C10H14N2, including any salt

23 or complex of nicotine.’’.

24 ‘‘(4) SMOKELESS TOBACCO.—The term ‘smoke25 less tobacco’ means any product that consists of cut,
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1 ground, powdered, or leaf tobacco that contains nico2 tine and that is intended to be placed in the oral

3 or nasal cavity.

4 ‘‘(5) TAR.—The term ‘tar’ means mainstream

5 total particulate matter minus nicotine and water.

6 ‘‘(6) TOBACCO ADDITIVE.—The term ‘tobacco

7 additive’ means any substance the intended use of

8 which results or may reasonably be expected to re9 sult, directly or indirectly, in the substance becoming

10 a component of, or otherwise affecting the character11 istics of, any tobacco product, including any sub12 stance that may have been removed from the tobacco

13 product and then readded in the substance’s original

14 or modified form.

15 ‘‘(7) TOBACCO PRODUCT.—The term ‘tobacco

16 product’ means cigarettes and smokeless tobacco

17 products.

18 ‘‘Subchapter A—Tobacco Product Regulation

19 ‘‘SEC. 901. STATEMENT OF GENERAL DUTIES.

20 ‘‘As part of the comprehensive health promotion and

21 disease prevention program established under this chapter

22 and the PROTECT Act (and the amendments made by

23 such Act) relating to diseases and conditions associated

24 with the use of tobacco products, and that places a special
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1 emphasis on discouraging the use of such products by

2 young Americans, the Secretary shall—

3 ‘‘(1) develop and implement health risk man4 agement standards for tobacco products under sec5 tion 902;

6 ‘‘(2) develop and implement good manufactur7 ing practice standards for tobacco products under

8 section 903;

9 ‘‘(3) develop and implement tobacco product la10 beling, warning, and packaging standards under sec11 tion 904;

12 ‘‘(4) develop and implement standards that en13 courage the development and use of reduced risk to14 bacco products under section 905;

15 ‘‘(5) develop and implement tobacco product

16 marketing standards under section 906;

17 ‘‘(6) establish and oversee a tobacco products

18 scientific advisory committee under section 907 to

19 provide advice on the establishment of tobacco prod20 uct marketing standards under section 902, 903,

21 904, and 905; and

22 ‘‘(7) submit reports to Congress evaluating the

23 effectiveness of this chapter and the PROTECT Act

24 as described in section 908.
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1 ‘‘SEC. 902. TOBACCO PRODUCT HEALTH RISK MANAGE2 MENT STANDARDS.

3 ‘‘(a) AUTHORITY.—

4 ‘‘(1) IN GENERAL.—The Secretary shall by reg5 ulation (promulgated under the authority of section

6 701(a) and consistent with the procedures described

7 in section 553 of title 5, United States Code) estab8 lish tobacco product health risk standards.

9 ‘‘(2) CONSULTATION.—In developing and pro10 mulgating regulations under this chapter, the Sec11 retary shall consult (as the Secretary determines ap12 propriate) with—

13 ‘‘(A) the Federal public health and safety

14 officials, including—

15 ‘‘(i) the Surgeon General;

16 ‘‘(ii) the Director of the Centers for

17 Disease Control and Prevention;

18 ‘‘(iii) the Director of the Office on

19 Smoking and Health of the Centers for

20 Disease Control and Prevention;

21 ‘‘(iv) the Commissioner of Food and

22 Drugs;

23 ‘‘(v) the Director of the National In24 stitutes of Health;

25 ‘‘(vi) the Director of the National

26 Cancer Institute;
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1 ‘‘(vii) the Administrator of the Agency

2 for Health Care Policy and Research;

3 ‘‘(viii) the Administrator of the Sub4 stance Abuse and Mental Health Services

5 Administration;

6 ‘‘(ix) the Administrator of the Health

7 Resources and Services Administration;

8 ‘‘(x) the Director of the Office of Na9 tional Drug Control Policy;

10 ‘‘(xi) the Administrator of the Drug

11 Enforcement Agency;

12 ‘‘(xii) the Administrator of the Bu13 reau of Alcohol, Tobacco, and Firearms;

14 and

15 ‘‘(xiii) other Federal public health ex16 perts; and

17 ‘‘(B) other public health and safety ex18 perts, including State and local public health

19 and safety officials, and other interested mem20 bers of the public and affected parties.

21 ‘‘(b) PROCEDURES FOR THE ESTABLISHMENT OF

22 STANDARDS.—

23 ‘‘(1) PUBLICATION OF NOTICE.—

24 ‘‘(A) IN GENERAL.—The Secretary shall

25 publish in the Federal Register a notice of pro-
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1 posed rulemaking for the establishment, amend2 ment, or revocation of any health risk manage3 ment standard for a tobacco product under this

4 section. The Secretary may publish an advance

5 notice of proposed rulemaking in order to solicit

6 broad input at an earlier stage in the rule7 making process.

8 ‘‘(B) CONTENTS OF NOTICE.—A notice of

9 proposed rulemaking for the establishment or

10 amendment of a health risk management stand11 ard for a tobacco product shall be accompanied

12 by a justification of the proposed action and

13 shall—

14 ‘‘(i) invite interested persons to sub15 mit to the Secretary, within 30 days of the

16 publication of the notice, requests for

17 changes in the standard based on new in18 formation relevant to the standard; and

19 ‘‘(ii) invite interested persons to sub20 mit an existing health risk management

21 standard for the tobacco product, including

22 a draft or proposed health risk manage23 ment standard, for consideration by the

24 Secretary.
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1 ‘‘(C) NOTICE OF REVOCATION.—A notice

2 of proposed rulemaking for the revocation of a

3 health risk management standard shall set

4 forth a finding with supporting justification

5 that the health risk management standard is no

6 longer necessary with respect to the tobacco

7 product.

8 ‘‘(D) COMMENTS.—The Secretary shall

9 provide for a comment period of not less than

10 60 days after the date on which a notice has

11 been published under this paragraph.

12 ‘‘(2) REQUEST FOR CHANGE.—If, after the

13 publication of a notice in accordance with paragraph

14 (1), the Secretary receives a request for a change in

15 the health risk management standard for a tobacco

16 product, the Secretary shall, within 60 days of the

17 publication of the notice, either deny the request or

18 give notice of an intent to initiate such a change.

19 ‘‘(3) REGULATION FOR ESTABLISHMENT.—

20 ‘‘(A) IN GENERAL.—After the expiration of

21 the period for comment on a notice of proposed

22 rulemaking published under paragraph (1) with

23 respect to a health risk management standard,

24 and after consideration of such comments and

25 any report from the tobacco products advisory
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1 committee under section 907, the Secretary

2 shall—

3 ‘‘(i) promulgate a regulation establish4 ing a health risk management standard

5 and publish in the Federal Register find6 ings on the matters referred to in sub7 section (b); or

8 ‘‘(ii) publish a notice terminating the

9 proceeding for the development of the

10 standard together with the reasons for

11 such termination.

12 ‘‘(B) CONTENTS.—A regulation establish13 ing a health risk management standard under

14 subparagraph (A) shall set forth the date or

15 dates upon which the standard shall take effect,

16 but no such regulation may take effect before

17 the expiration of the 1-year period beginning on

18 the date of its publication unless the Secretary

19 determines that an earlier effective date is nec20 essary for the protection of the public health.

21 Such date or dates shall be established so as to

22 minimize economic loss to, and disruption or

23 dislocation of, domestic and international trade.

24 ‘‘(4) AMENDING OR REVOKING OF STAND25 ARDS.—
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1 ‘‘(A) IN GENERAL.—The Secretary, upon

2 the initiative of the Secretary or upon petition

3 of an interested person, may by regulation, pro4 mulgated in accordance with the requirements

5 of paragraphs (1), (2), and (3), amend or re6 voke a health risk management standard for a

7 tobacco product.

8 ‘‘(B) EFFECTIVENESS OF AMENDMENT.—

9 The Secretary may declare a proposed amend10 ment of a health risk management standard

11 under this section to be effective on and after

12 its publication in the Federal Register and until

13 the effective date of any final action taken on

14 such amendment if the Secretary determines

15 that making it so effective is in the public inter16 est. A proposed amendment of a health risk

17 management standard made so effective under

18 the preceding sentence may not prohibit, during

19 the period in which it is so effective, the intro20 duction or delivery for introduction into inter21 state commerce of a tobacco product which con22 forms to such standard without the change or

23 changes provided by such proposed amendment.
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1 ‘‘(c) REGULATION OF THE COMPOSITION OF TO2 BACCO PRODUCTS.—Tobacco product health risk manage3 ment standards established under this section shall—

4 ‘‘(1) include provisions that are designed to re5 duce the overall health risks to the public based

6 upon the best available technology, including the re7 duction in risk to the consumers of such products,

8 individuals who reduce or cease the use of such

9 products, and individuals who do not initiate the use

10 of such products;

11 ‘‘(2) where necessary to provide a reduction in

12 the overall health risks of tobacco products to the

13 public, include requirements—

14 ‘‘(A) if technologically and commercially

15 feasible, with respect to the construction, com16 ponents, constituents, ingredients (including to17 bacco additives), and properties of the product,

18 including the establishment of levels of nicotine

19 and other components, ingredients (including

20 tobacco additives), and constituents of the prod21 uct, or smoke emitted by such products;

22 ‘‘(B) specifying the procedures for the test23 ing of such products, including devising proce24 dures to be used by tobacco product manufac25 turers, the Secretary, or other appropriate enti-
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1 ties, to measure relevant health-related charac2 teristics of such products;

3 ‘‘(C) for the testing of such products, in4 cluding devising procedures to be used by man5 ufacturers, the Secretary, or other appropriate

6 entities to measure the relevant health related

7 characteristics of such products to assess the

8 conformity of such products with the applicable

9 health risk management standards; and

10 ‘‘(D) to limit the sale and distribution of

11 tobacco products to the extent authorized by

12 this chapter;

13 ‘‘(3) as required under section 904, prescribe

14 certain conditions pertaining to the labeling and ad15 vertising of tobacco products.

16 ‘‘(4) comply with regulations promulgated by

17 the Secretary that specify the health risk assessment

18 procedures for the testing of tobacco and nontobacco

19 constituents contained in tobacco products and de20 terminations concerning such products under sub21 section (d).

22 ‘‘(5) not later than 3 years after the date of en23 actment of this chapter, limit the amount of tar in

24 a cigarette to not more than 12 milligrams, except

25 that nothing in this paragraph shall be construed as
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1 limiting the authority of the Secretary to promulgate

2 regulations further limiting the amount of tar that

3 may be contained in a cigarette.

4 ‘‘(d) TOBACCO PRODUCTS RISK ASSESSMENT

5 STANDARDS.—

6 ‘‘(1) TOBACCO CONSTITUENTS.—The health

7 risk management standards promulgated under sub8 section (c)(4) with respect to the testing of tobacco

9 products shall include provisions relating to the as10 sessment of the health risks posed by the compo11 nents of tobacco, including nicotine and tar, and by

12 tobacco use including carbon-monoxide.

13 ‘‘(2) NONTOBACCO INGREDIENTS.—

14 ‘‘(A) IN GENERAL.—The health risk man15 agement regulations under subsection (c)(4)

16 with respect to the testing of nontobacco ingre17 dients used in tobacco products—

18 ‘‘(i) during the 5-year period begin19 ning on the date of enactment of this chap20 ter, this paragraph shall only apply to new

21 ingredients (those ingredients that were

22 not previously used in such products on

23 such date of enactment) used in such prod24 ucts; and
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1 ‘‘(ii) after the expiration of the 5-year

2 period described in clause (i), this section

3 shall apply to all ingredients used in such

4 products.

5 ‘‘(B) IMPLEMENTATION.—In carrying out

6 this section, all requirements with respect to

7 nontobacco ingredients, substances, and com8 pounds shall be implemented in accordance with

9 subparagraph (A).

10 ‘‘(3) HEALTH RISK ASSESSMENTS.—

11 ‘‘(A) REQUIREMENT.—Not later than 5

12 years after the date of enactment of this chap13 ter, and annually thereafter, each manufacturer

14 shall submit to the Secretary a health risk as15 sessment for each ingredient, substance, or

16 compound that is listed under subsection

17 (e)(1)(A) with respect to each brand of tobacco

18 product manufactured by each such manufac19 turer.

20 ‘‘(B) AVAILABILITY OF NEW INFORMA21 TION.—The Secretary may include in the regu22 lations promulgated under this section, provi23 sions that permit manufacturers to, in subse24 quent years, revise information that was sub25 mitted under subparagraph (A) in previous
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1 years if new data becomes available to that

2 manufacturer. Such regulations may require

3 that a manufacturer submit a simple notifica4 tion to the Secretary where the manufacturer

5 determines that no new data has become avail6 able during the previous year.

7 ‘‘(C) JOINT SUBMISSION.—At the discre8 tion of the Secretary, the health risk assess9 ments under this paragraph may be conducted

10 by qualified third party organizations on behalf

11 of more than 1 manufacturer for 1 or more

12 product or ingredient, substance or compound if

13 a joint submission is consistent with the public

14 health.

15 ‘‘(D) BASIS OF ASSESSMENT.—The health

16 risk assessment of an ingredient, substance, or

17 compound described in subparagraph (A)

18 shall—

19 ‘‘(i) be based on the best scientific evi20 dence available at the time of the submis21 sion of the assessment; and

22 ‘‘(ii) ascertain whether there is a rea23 sonable certainty in the minds of com24 petent scientists that the ingredient, sub25 stance, or compound is not harmful in the
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1 quantities used under the intended condi2 tions of use.

3 ‘‘(4) REGULATORY ACTION.—

4 ‘‘(A) ABSENCE OF A RISK ASSESSMENT.—

5 Not later than 12 months after the date of en6 actment of this chapter and subject to the re7 quirements of paragraphs (1) and (3)(A), the

8 Secretary shall promulgate regulations to pro9 hibit the use of any ingredient, substance, or

10 compound in the tobacco product of a manufac11 turer if no health risk assessment has been sub12 mitted as required under this subsection by the

13 manufacturer for the ingredient, substance, or

14 compound.

15 ‘‘(B) REVIEW OF HEALTH RISK ASSESS16 MENTS.—

17 ‘‘(i) GENERAL REVIEW.—Not later

18 than 90 days after the receipt of a health

19 risk assessment under this subsection, the

20 Secretary shall review the findings con21 tained in such assessment.

22 ‘‘(ii) APPROVAL, CONDITIONAL AP23 PROVAL, OR DISAPPROVAL.—The Secretary

24 shall approve or disapprove of, or condi25 tion, the use of the ingredient, substance,
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1 or compound that was the subject of the

2 assessment under this subsection within

3 120 days after the completion of a review

4 under clause (i) and provide notice to the

5 manufacturer of such action.

6 ‘‘(iii) GENERAL APPLICABILITY.—At

7 the discretion of the Secretary, the ap8 proval, conditional, approval, or dis9 approval of a particular ingredient, sub10 stance, or compound under clause (ii) may

11 by regulation be made generally applicable

12 to tobacco product manufacturers or a sub13 group of such manufacturers. In the case

14 of a conditional approval, the Secretary

15 shall develop a procedure to enable manu16 facturers to certify that the condition will

17 be complied with.

18 ‘‘(iv) INACTION BY SECRETARY.—If

19 the Secretary fails to act with respect to

20 an assessment during the period referred

21 to in clause (ii), the safety of the ingredi22 ent, substance, or compound involved shall

23 be deemed to be approved with respect to

24 the manufacturer submitting the assess25 ment until such time as the succeeding an-
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1 nual risk assessment is submitted by the

2 manufacturer or a review is completed.

3 ‘‘(e) ANNUAL SUBMISSION.—

4 ‘‘(1) IN GENERAL.—Each manufacturer of a to5 bacco product shall annually provide the Secretary

6 with—

7 ‘‘(A) a list of all ingredients, substances,

8 and compounds (other than tobacco, water or

9 reconstituted tobacco sheet made wholly from

10 tobacco) that are added in the manufacture of

11 the tobacco product, for each brand of tobacco

12 product so manufactured;

13 ‘‘(B) a description of the quantity of the

14 ingredients, substances, and compounds that

15 are listed under subparagraph (A) with respect

16 to each brand of tobacco product;

17 ‘‘(C) a description of the nicotine content

18 of the product, measured in milligrams of nico19 tine;

20 ‘‘(D) any other information determined ap21 propriate by the Secretary and included as a re22 quirement in a regulation promulgated under

23 this section.

24 ‘‘(2) GENERAL DISCLOSURE AND CONFIDEN25 TIALITY.—
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1 ‘‘(A) REQUIREMENT.—Regulations under

2 subsection (c)(4) shall require that each person

3 who manufacturers, packages, or imports ciga4 rettes or smokeless tobacco products shall an5 nually provide the Secretary with the informa6 tion required under this section, including infor7 mation as to all ingredients, substances and

8 compounds in a tobacco product.

9 ‘‘(B) CONFIDENTIALITY.—

10 ‘‘(i) PETITION BY MANUFACTURER.—

11 Upon the submission of the information re12 quired under subsection (d)(1), or the sub13 mission of any other information under

14 any other provisions of this chapter, a

15 manufacturer may petition the Secretary

16 to exempt certain ingredients, substances,

17 or compounds or other information submit18 ted from public disclosure under this sub19 section on the basis that such information

20 should be considered confidential as a

21 trade secret. Such petition may be accom22 panied by such data as the manufacturer

23 elects to submit.

24 ‘‘(ii) DETERMINATION.—Not later

25 than 90 days after receiving a petition
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1 under clause (i), the Secretary, in consulta2 tion with the Attorney General, shall make

3 a determination with respect to whether

4 the information described in the petition

5 should be exempt from disclosure under

6 clause (i) as a trade secret. The Secretary

7 shall provide the manufacturer involved

8 with notice of such determination, but the

9 decision of the Secretary shall be final.

10 ‘‘(iii) PROCEDURES FOR CONFIDEN11 TIAL INFORMATION.—The Secretary shall

12 develop procedures to maintain the con13 fidentiality of information that is treated

14 as a trade secret under a determination

15 under clause (ii). Such procedures shall in16 clude—

17 ‘‘(I) a requirement that such in18 formation be maintained in a secure

19 facility; and

20 ‘‘(ii) a requirement that only the Sec21 retary, or the authorized agents of the Sec22 retary, will have access to the information

23 and shall be instructed to maintain the

24 confidentiality of such information.
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1 ‘‘(iv) HEALTH DISCLOSURE.—Not2 withstanding a determination under clause

3 (ii), the Secretary may require that any in4 gredient, substance, or compound con5 tained in a tobacco product that is deter6 mined to be exempt from disclosure be dis7 closed if the Secretary determines that it is

8 in the interest of public health to disclose

9 such ingredient, substance, or compound.

10 ‘‘(v) OTHER DISCLOSURE.—The Sec11 retary (or any employee of the Department

12 of Health and Human Services) shall not

13 disclose any information described in sub14 clause (I) if such disclosure is prohibited

15 under any provision of law. Any informa16 tion that is not required to be disclosed to

17 the public under this subsection, shall be

18 exempt from disclosure pursuant to sub19 section (a) of section 552 of title 5, United

20 States Code, by reason of subsection (b)(4)

21 of such section, and shall be considered

22 confidential and shall not be disclosed, ex23 cept that such information may be dis24 closed to other officers or employees as

25 provided for in clause (iii)(II) or when rel-
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1 evant in any proceeding under this chap2 ter.

3 ‘‘(3) GENERAL DISCLOSURE OF SAFETY.—With

4 respect to each annual submission under paragraph

5 (1) during the 5-year period beginning on the date

6 of enactment of this chapter, the manufacturer shall,

7 for each ingredient, substance, or compound con8 tained on the list of the manufacturer for the year

9 involved, disclose whether the manufacturer has de10 termined that the ingredient, substance, or

11 compound would be exempt from public disclosure

12 under this chapter.

13 ‘‘(f) ACTIONS TO MODIFY OR PROHIBIT CERTAIN TO14 BACCO PRODUCTS.—

15 ‘‘(1) IN GENERAL.—The Secretary may adopt a

16 health risk management standard under this section

17 that requires—

18 ‘‘(A) the modification of a tobacco product

19 in a manner that involves—

20 ‘‘(i) the gradual reduction or elimi21 nation of nicotine yields of the product; or

22 ‘‘(ii) the reduction or elimination of

23 other harmful constituents, ingredients (in24 cluding tobacco additives), substances,

25 compounds and properties of the product
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1 in accordance with subsection (d)(4)(B),

2 including the establishment of levels of nic3 otine and other components, ingredients

4 (including tobacco additives), and constitu5 ents of the product, or smoke emitted by

6 such products; or

7 ‘‘(B) the prohibition of a tobacco product.

8 ‘‘(2) CONSIDERATIONS.—In determining wheth9 er to require a modification or prohibition described

10 in paragraph (1), the Secretary shall identify, make

11 available for public comment, and consider relevant

12 factors including whether the modification or prohi13 bition—

14 ‘‘(A) will result in a significant reduction

15 in the health risks associated with the use of

16 the tobacco product, constituent, or component

17 involved;

18 ‘‘(B) will result in a significant increase in

19 the number of individuals seeking tobacco prod20 uct cessation or withdrawal treatments, includ21 ing an assessment of the effectiveness and ac22 cessibility of such treatments;

23 ‘‘(C) will result in the creation of a signifi24 cant demand for, and supply of, contraband
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1 products or other tobacco products that do not

2 meet the requirements of this chapter; and

3 ‘‘(D) is technologically feasible for com4 mercial manufacturing.

5 ‘‘(3) GENERAL PROHIBITION OF TOBACCO

6 PRODUCTS.—

7 ‘‘(A) NONDELEGATION.—The Secretary

8 may not delegate the authority provided under

9 this section to promulgate a regulation that re10 sults in a general prohibition of a class of to11 bacco products.

12 ‘‘(B) CONGRESSIONAL REVIEW.—In ac13 cordance with section 801 of title 5, United

14 States Code, Congress shall review, and may

15 disapprove, any rule of the Secretary establish16 ing, amending, or revoking a tobacco product

17 health risk management standard, except that

18 with respect to a standard that results in a gen19 eral prohibition of a class of tobacco products,

20 such standard shall only take effect upon the

21 date of enactment of a joint resolution of ap22 proval of such standard. The provisions of sec23 tion 802 of title 5, United States Code, relating

24 to certain disapproval resolutions shall apply to
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1 the consideration of any joint resolution of ap2 proval under this subsection.

3 ‘‘(g) COMPLIANCE.—

4 ‘‘(1) IN GENERAL.—Health risk management

5 standards under this section shall apply to all to6 bacco products to which such standards are relevant.

7 ‘‘(2) LIMITATION.—During the period in which

8 a regulation promulgated under this section estab9 lishing a health risk standard is in effect, a tobacco

10 product shall not be considered to be in violation of

11 section 301 if such product is in compliance with

12 such regulation.

13 ‘‘(h) EVALUATION.—The Secretary shall periodically

14 evaluate the effectiveness of tobacco product health risk

15 standards to determine whether such standards should be

16 amended to reflect new medical, scientific, or technological

17 information.

18 ‘‘SEC. 903. GOOD MANUFACTURING PRACTICE STANDARDS.

19 ‘‘(a) AUTHORITY.—

20 ‘‘(1) IN GENERAL.—The Secretary shall, in ac21 cordance with subsections (a) and (b) of section 902,

22 prescribe regulations requiring that the methods

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

24 manufacture, packing, and storage of a tobacco

25 product conform to current good manufacturing
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1 practice, as prescribed in such regulations, to ensure

2 that such products will be in compliance with this

3 chapter.

4 ‘‘(2) REGISTRATION.—The regulations promul5 gated under paragraph (1) shall require that all to6 bacco product manufacturers register with the Sec7 retary.

8 ‘‘(3) SPECIAL CONSULTATION PROCEDURES.—

9 In developing and promulgating any regulation

10 under paragraph (1) the Secretary shall afford the

11 Tobacco Products Scientific Advisory Committee es12 tablished under section 907 an opportunity (with a

13 reasonable time period) to submit recommendations

14 in response to the notice of proposed rulemaking.

15 ‘‘(b) PESTICIDE RESIDUES.—The regulations pro16 mulgated under subsection (a) shall at a minimum re17 quire, after consultation with the Administrator of the En18 vironmental Protection Agency, the development and ad19 herence to applicable tolerances with respect to pesticide

20 chemical residues in finished tobacco products, except that

21 such tolerances shall only apply if the Administrator deter22 mines that such tolerances are necessary to prevent such

23 residues from being injurious to health when used in to24 bacco products.
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1 ‘‘(c) PETITIONS FOR EXEMPTIONS AND

2 VARIANCES.—

3 ‘‘(1) IN GENERAL.—Any person subject to any

4 requirement prescribed by regulations under sub5 section (a) may petition the Secretary for an exemp6 tion or variance from such requirement. Such a peti7 tion shall be submitted to the Secretary in such form

8 and manner as the Secretary shall by regulation pre9 scribe and shall—

10 ‘‘(A) in the case of a petition for an ex11 emption from a requirement, set forth the basis

12 for the petitioner’s determination that compli13 ance with the requirement is not required to en14 sure that the tobacco product is in compliance

15 with section 902;

16 ‘‘(B) in the case of a petition for a vari17 ance from a requirement, set forth the methods

18 proposed to be used in, and the facilities and

19 controls proposed to be used for, the manufac20 ture, packing, and storage of the product in lieu

21 of the methods, facilities, and controls pre22 scribed by the requirement; and

23 ‘‘(C) contain such other information as the

24 Secretary shall prescribe.
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1 ‘‘(2) TOBACCO PRODUCT REQUIREMENTS WAIV2 ER BOARD.—

3 ‘‘(A) AUTHORITY.—The Secretary shall es4 tablish a Tobacco Product Requirements Waiv5 er Board (referred to in this paragraph as the

6 ‘Waiver Board’) to provide advice and make

7 recommendations to the Secretary with respect

8 to the approval or disapproval of petitions sub9 mitted under paragraph (1).

10 ‘‘(B) MEMBERSHIP.—The Waiver Board

11 shall be composed of 9 members to be ap12 pointed by the Secretary, of which—

13 ‘‘(i) 3 members shall be appointed

14 from among individuals who are officers or

15 employees of the Federal Government or a

16 State or local government;

17 ‘‘(ii) 2 members shall be appointed

18 from among individuals who are represent19 atives of the interests of the cigarette and

20 smokeless tobacco industries;

21 ‘‘(iii) 2 members shall be appointed

22 from among individuals who are represent23 atives of the interests of physicians and

24 other health professionals; and
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1 ‘‘(iv) 2 members shall be appointed

2 from among individuals who are represent3 atives of the interests of the general public.

4 ‘‘(C) CHAIRPERSON.—The Secretary shall

5 designate 1 of the members of the Waiver

6 Board to serve as the Chairperson.

7 ‘‘(D) COMPENSATION AND EXPENSES.—

8 ‘‘(i) COMPENSATION.—Members of

9 the Waiver Board who are not officers or

10 employees of the United States, while at11 tending conferences or meetings of the

12 Waiver Board or otherwise serving at the

13 request of the Secretary, shall be entitled

14 to receive compensation at rates to be fixed

15 by the Secretary, which rates may not ex16 ceed the daily equivalent of the rate of pay

17 for level 4 of the Senior Executive Sched18 ule under section 5382 of title 5, United

19 States Code, for each day (including trav20 eltime) they are so engaged.

21 ‘‘(ii) EXPENSES.—While conducting

22 the business of the Waiver Board away

23 from their homes or regular places of busi24 ness, each member may be allowed travel

25 expenses, including per diem in lieu of sub-
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•S 1530 IS

1 sistence, as authorized by section 5703 of

2 title 5 of the United States Code for per3 sons in the Government service employed

4 intermittently.

5 ‘‘(3) ACTION ON PETITION.—

6 ‘‘(A) IN GENERAL.—Not later than 120

7 days of the date on which the Secretary receives

8 the recommendations of the Waiver Board, the

9 Secretary shall issue an order approving or de10 nying a petition submitted under paragraph (1).

11 The Secretary may approve—

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

13 tobacco product from a requirement if the

14 Secretary determines that absolute compli15 ance with such requirement is not required

16 to assure that the product will comply with

17 this section and is otherwise consistent

18 with the public health; and

19 ‘‘(ii) a petition for a variance for a to20 bacco product from a requirement if the

21 Secretary determines that the methods to

22 be used in, and the facilities and controls

23 to be used for, the manufacture, packing,

24 and storage of the product in lieu of the

25 methods, controls, and facilities prescribed
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1 by the requirement are sufficient to ensure

2 that the product will comply with this sec3 tion and is otherwise in compliance with

4 the public health.

5 ‘‘(B) CONDITIONS.—An order of the Sec6 retary approving a petition for a variance shall

7 prescribe such conditions respecting the meth8 ods used in, and the facilities and controls used

9 for, the manufacture, packing, and storage of

10 the tobacco product to be granted the variance

11 under the petition as may be necessary to en12 sure that the product will comply with this sec13 tion.

14 ‘‘(4) INFORMAL HEARING.—After the issuance

15 of an order under paragraph (3) respecting a peti16 tion, the petitioner shall have an opportunity for an

17 informal hearing on such order.

18 ‘‘(d) RECORDKEEPING AND REPORTING.—The regu19 lations promulgated under subsection (a) shall require

20 that manufacturers maintain such files and records as the

21 Secretary may reasonably require relating to tobacco prod22 uct safety. Such regulations may require manufacturers

23 to report serious adverse events that are not well-known

24 or well-documented by the scientific community (including
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1 events related to contamination or a change in any ingre2 dient or any major change in manufacturing processes).

3 ‘‘(e) INSPECTION AUTHORITY.—As provided in sec4 tion 704, the officers and employees of the Secretary shall

5 have the authority to conduct unannounced inspections of

6 any factory, warehouse, or other establishment of any to7 bacco product manufacturer and shall have access to the

8 records, files, papers, processes, controls, and facilities re9 lating to tobacco product manufacturing.

10 ‘‘(f) AGRICULTURAL PRODUCERS.—The Secretary

11 may not promulgate any regulation under this section that

12 has the effect of placing regulatory burdens on tobacco

13 producers (as such term is used for purposes of the Agri14 cultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.)

15 and the Agricultural Act of 1949 (7 U.S.C. 1441 et seq.))

16 in excess of the regulatory burdens generally placed on

17 other agricultural commodity producers.

18 ‘‘SEC. 904. TOBACCO PRODUCT LABELING, WARNING, AND

19 PACKAGING STANDARDS.

20 ‘‘(a) CIGARETTES.—

21 ‘‘(1) IN GENERAL.—

22 ‘‘(A) PACKAGING.—It shall be unlawful for

23 any person to manufacture, package, or import

24 for sale or distribution within the United States

25 any cigarettes the package of which fails to
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1 bear, in accordance with the requirements of

2 this subsection, one of the following statements:

3 ‘‘WARNING: Cigarettes Are Addictive.

4 ‘‘WARNING: Tobacco Smoke Can Harm

5 Your Children.

6 ‘‘WARNING: Cigarettes Cause Fatal Lung

7 Disease.

8 ‘‘WARNING: Cigarettes Cause Cancer.

9 ‘‘WARNING: If You Think Smoking Is

10 Cool, You Are Dead Wrong.

11 ‘‘WARNING: Cigarettes Cause Strokes

12 And Heart Disease.

13 ‘‘WARNING: Smoking During Pregnancy

14 Can Harm Your Baby.

15 ‘‘WARNING: Smoking Can Kill You.

16 ‘‘WARNING: Tobacco Smoke Causes

17 Fatal Lung Disease In Nonsmokers.

18 ‘‘WARNING: Quitting Smoking Now

19 Greatly Reduces Serious Risks To Your

20 Health.

21 ‘‘(B) ADVERTISING.—It shall be unlawful

22 for any manufacturer or importer of cigarettes

23 to advertise or cause to be advertised within the

24 United States any cigarette unless the advertis25 ing bears, in accordance with the requirements
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1 of this subsection, one of the following state2 ments:

3 ‘‘WARNING: Cigarettes Are Addictive.

4 ‘‘WARNING: Tobacco Smoke Can Harm

5 Your Children.

6 ‘‘WARNING: Cigarettes Cause Fatal Lung

7 Disease.

8 ‘‘WARNING: Cigarettes Cause Cancer.

9 ‘‘WARNING: If You Think Smoking Is

10 Cool, You Are Dead Wrong.

11 ‘‘WARNING: Cigarettes Cause Strokes

12 And Heart Disease.

13 ‘‘WARNING: Smoking During Pregnancy

14 Can Harm Your Baby.

15 ‘‘WARNING: Smoking Can Kill You.

16 ‘‘WARNING: Tobacco Smoke Causes

17 Fatal Lung Disease In Nonsmokers.

18 ‘‘WARNING: Quitting Smoking Now

19 Greatly Reduces Serious Risks To Your

20 Health.

21 ‘‘(2) REQUIREMENTS FOR LABEL STATE22 MENTS.—

23 ‘‘(A) LOCATION.—Each label statement re24 quired by subparagraph (A) of paragraph (1)

25 shall be located on the upper portion of the
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1 front panel of the cigarette package (or carton)

2 and occupy not less than 25 percent of such

3 front panel.

4 ‘‘(B) TYPE AND COLOR.—With respect to

5 each label statement required by subparagraph

6 (A) of paragraph (1), the phrase ‘WARNING’

7 shall appear in capital letters and the label

8 statement shall be printed in 17 point type with

9 adjustments as determined appropriate by the

10 Secretary to reflect the length of the required

11 statement. All the letters in the label statement

12 shall appear in conspicuous and legible type, in

13 contrast by typography, layout, or color with all

14 other printed material on the package, and be

15 printed in an alternating black-on-white and

16 white-on-black format as determined appro17 priate by the Secretary.

18 ‘‘(C) EXCEPTION.—The provisions of sub19 paragraph (A) shall not apply in the case of a

20 flip-top cigarette package (offered for sale on

21 the date of enactment of this title) where the

22 front portion of the flip-top does not comprise

23 at least 25 percent of the front panel. In the

24 case of such a package, the label statement re25 quired by subparagraph (A) of paragraph (1)
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1 shall occupy the entire front portion of the flip

2 top.

3 ‘‘(3) REQUIREMENTS FOR ADVERTISING.—

4 ‘‘(A) LOCATION.—Each label statement re5 quired by subparagraph (B) of paragraph (1)

6 shall occupy not less than 20 percent of the

7 area of the advertisement involved.

8 ‘‘(B) TYPE AND COLOR.—

9 ‘‘(i) TYPE.—With respect to each

10 label statement required by subparagraph

11 (B) of paragraph (1), the phrase ‘WARN12 ING’ shall appear in capital letters and the

13 label statement shall be printed in the fol14 lowing types:

15 ‘‘(I) With respect to whole page

16 advertisements on broadsheet news17 paper—45 point type.

18 ‘‘(II) With respect to half page

19 advertisements on broadsheet news20 paper—39 point type.

21 ‘‘(III) With respect to whole page

22 advertisements on tabloid news23 paper—39 point type.
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1 ‘‘(IV) With respect to half page

2 advertisements on tabloid news3 paper—27 point type.

4 ‘‘(V) With respect to DPS maga5 zine advertisements—31.5 point type.

6 ‘‘(VI) With respect to whole page

7 magazine advertisements—31.5 point

8 type.

9 ‘‘(VII) With respect to 28cm x 3

10 column advertisements—22.5 point

11 type.

12 ‘‘(VIII) With respect to 20cm x 2

13 column advertisements—15 point

14 type.

15 The Secretary may revise the required type

16 sizes as the Secretary determines appro17 priate within the 20 percent requirement.

18 ‘‘(ii) COLOR.—All the letters in the

19 label statement under this subparagraph

20 shall appear in conspicuous and legible

21 type, in contrast by typography, layout, or

22 color with all other printed material in the

23 advertisement, and be printed in an alter24 nating black-on-white and white-on-black
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1 format as determined appropriate by the

2 Secretary.

3 ‘‘(4) ROTATION OF LABEL STATEMENTS.—

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

5 subparagraph (B), the label statements speci6 fied in subparagraphs (A) and (B) of paragraph

7 (1) shall be rotated by each manufacturer or

8 importer of cigarettes quarterly in alternating

9 sequence on packages of each brand of ciga10 rettes manufactured by the manufacturer or

11 importer and in the advertisements for each

12 such brand of cigarettes in accordance with a

13 plan submitted by the manufacturer or im14 porter and approved by the Secretary. The Sec15 retary shall approve a plan submitted by a

16 manufacturer or importer of cigarettes which

17 will provide the rotation required by this para18 graph and which assures that all of the label

19 statements required by subparagraphs (A) and

20 (B) will be displayed by the manufacturer or

21 importer at the same time.

22 ‘‘(B) APPLICATION OF OTHER ROTATION

23 REQUIREMENTS.—

24 ‘‘(i) IN GENERAL.—A manufacturer

25 or importer of cigarettes may apply to the
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1 Secretary to have the rotation schedule de2 scribed in clause (iii) apply with respect to

3 a brand style of cigarettes manufactured

4 or imported by such manufacturer or im5 porter if—

6 ‘‘(I) the number of cigarettes of

7 such brand style sold in the fiscal year

8 of the manufacturer or importer pre9 ceding the submission of the application is less than 1 10 ⁄4 of 1 percent of all

11 the cigarettes sold in the United

12 States in such year; and

‘‘(II) more than 1 13 ⁄2 of the ciga14 rettes manufactured or imported by

15 such manufacturer or importer for

16 sale in the United States are

17 packaged into brand styles which meet

18 the requirements of subclause (I).

19 If an application is approved by the Sec20 retary, the rotation schedule described in

21 clause (iii) shall apply with respect to the

22 applicant during the 1-year period begin23 ning on the date of the application ap24 proval.
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1 ‘‘(ii) PLAN.—An applicant under

2 clause (i) shall include in its application a

3 plan under which the label statements

4 specified in subparagraph (A) of paragraph

5 (1) will be rotated by the applicant manu6 facturer or importer in accordance with the

7 label rotation described in clause (iii).

8 ‘‘(iii) OTHER ROTATION REQUIRE9 MENTS.—Under the rotation schedule

10 which the manufacturer or importer with

11 an approved application may put into ef12 fect, each of the label statements specified

13 in subparagraph (A) of paragraph (1) shall

14 appear on the packages of each brand style

15 of cigarettes with respect to which the ap16 plication was approved an equal number of

17 times within the 12-month period begin18 ning on the date of the approval by the

19 Secretary of the application.

20 ‘‘(5) APPLICATION OF REQUIREMENT.—Para21 graph (1) does not apply to a distributor or retailer

22 of cigarettes who does not manufacture, package, or

23 import cigarettes for sale or distribution within the

24 United States.
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1 ‘‘(6) TELEVISION AND RADIO ADVERTISING.—It

2 shall be unlawful to advertise cigarettes and little ci3 gars on any medium of electronic communications

4 subject to the jurisdiction of the Federal Commu5 nications Commission.

6 ‘‘(b) SMOKELESS TOBACCO PRODUCTS.—

7 ‘‘(1) IN GENERAL.—

8 ‘‘(A) PACKAGING.—It shall be unlawful for

9 any person to manufacture, package, or import

10 for sale or distribution within the United States

11 any smokeless tobacco product the package of

12 which fails to bear, in accordance with the re13 quirements of this subsection, one of the follow14 ing statements:

15 WARNING: This Product May Cause

16 Mouth Cancer.

17 WARNING: This Product May Cause

18 Gum Disease And Tooth Loss.

19 WARNING: This Product Is Not A Safe

20 Alternative To Cigarettes.

21 WARNING: Smokeless Tobacco Is Addict22 ive.

23 ‘‘(B) ADVERTISING.—It shall be unlawful

24 for any manufacturer or importer of smokeless

25 tobacco products to advertise or cause to be ad-
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1 vertised within the United States any smokeless

2 tobacco product unless the advertising bears, in

3 accordance with the requirements of this sub4 section, one of the following statements:

5 WARNING: This Product May Cause

6 Mouth Cancer.

7 WARNING: This Product May Cause

8 Gum Disease And Tooth Loss.

9 WARNING: This Product Is Not A Safe

10 Alternative To Cigarettes.

11 WARNING: Smokeless Tobacco Is Addict12 ive.

13 ‘‘(2) REQUIREMENTS FOR LABEL STATE14 MENTS.—

15 ‘‘(A) LOCATION.—Each label statement re16 quired by subparagraph (A) of paragraph (1)

17 shall be located on the principal display panel

18 of the product and occupy not less than 25 per19 cent of such panel.

20 ‘‘(B) TYPE AND COLOR.—With respect to

21 each label statement required by subparagraph

22 (A) of paragraph (1), the phrase ‘WARNING’

23 shall appear in capital letters and the label

24 statement shall be printed in 17 point type with

25 adjustments as determined appropriate by the
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1 Secretary to reflect the length of the required

2 statement. All the letters in the label statement

3 shall appear in conspicuous and legible type in

4 contrast by typography, layout, or color with all

5 other printed material on the package and be

6 printed in an alternating black on white and

7 white on black format as determined appro8 priate by the Secretary.

9 ‘‘(3) ADVERTISING AND ROTATION.—The provi10 sions of paragraphs (3) and (4)(A) of subsection (a)

11 shall apply to advertisements for smokeless tobacco

12 products and the rotation of the statements required

13 under paragraph (1)(A) on such products.

14 ‘‘(4) APPLICATION OF REQUIREMENT.—Para15 graph (1) does not apply to a distributor or retailer

16 of smokeless tobacco products who does not manu17 facture, package, or import such products for sale or

18 distribution within the United States.

19 ‘‘(5) TELEVISION AND RADIO ADVERTISING.—It

20 shall be unlawful to advertise smokeless tobacco on

21 any medium of electronic communications subject to

22 the jurisdiction of the Federal Communications

23 Commission.

24 (c) STATEMENT OF INTENDED USE.—
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1 (1) REQUIREMENT.—Each manufacturer, dis2 tributor, and retailer advertising or causing to be

3 advertised, disseminating or causing to be dissemi4 nated advertising concerning, tobacco products oth5 erwise permitted under this chapter shall include, in

6 a type size and format as the Secretary may pre7 scribe in a regulation promulgated under subsection

8 (d), the established name of the product and a state9 ment of the intended use of the product as provided

10 for in paragraph (2).

11 (3) INTENDED USE STATEMENTS.—

12 (A) CIGARETTES.—A statement of in13 tended use for cigarettes or cigarette tobacco is

14 as follows (whichever is appropriate):

15 ‘‘Cigarettes—A Dangerous Tobacco Product In16 tended For Use Only By Persons 18 or Older.

17 ‘‘Cigarette Tobacco—A Dangerous Tobacco

18 Product Intended For Use Only By Persons 18

19 or Older.

20 (B) SMOKELESS TOBACCO.—A statement

21 of intended use for a smokeless tobacco product

22 is as follows (whichever is appropriate):

23 ‘‘Loose Leaf Chewing Tobacco—A Dangerous

24 Tobacco Product Intended For Use Only By

25 Persons 18 or Older.
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1 ‘‘Plug Chewing Tobacco—A Dangerous To2 bacco Product Intended For Use Only By Per3 sons 18 or Older.

4 ‘‘Twist Chewing Tobacco—A Dangerous To5 bacco Product Intended For Use Only By Per6 sons 18 or Older.

7 ‘‘Moist Snuff—A Dangerous Tobacco Product

8 Intended For Use Only By Persons 18 or

9 Older.

10 ‘‘Dry Snuff—A Dangerous Tobacco Product In11 tended For Use Only By Persons 18 or Older.

12 ‘‘(d) REGULATIONS.—

13 ‘‘(1) IN GENERAL.—Not later than 180 days

14 after the date of the enactment of this title, the Sec15 retary shall promulgate such regulations as may be

16 necessary to implement subsections (a), (b), and (c).

17 ‘‘(2) AUTHORITY TO REVISE TOBACCO PRODUCT

18 LABELING STATEMENTS.—

19 ‘‘(A) IN GENERAL.—The Secretary may by

20 rule change the text of any of the statements

21 required under subsections (a) and (b). A rule

22 promulgated under this subparagraph shall not

23 become effective prior to the expiration of the

24 1-year period beginning on the date on which
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1 the final rule is published in the Federal Reg2 ister.

3 ‘‘(B) LIMITATION.—The Secretary may

4 not promulgate any rule under subparagraph

5 (A) during the 5-year period beginning on the

6 effective date of the PROTECT Act unless the

7 Secretary can demonstrate extraordinary cir8 cumstances.

9 ‘‘(3) COMMON OR USUAL NAMES.—The Sec10 retary, in accordance with the procedures set forth

11 in section 902, shall promulgate regulations requir12 ing the disclosure to the public of the common or

13 usual name of each ingredient (other than tobacco,

14 water, or reconstituted tobacco sheet made wholly

15 from tobacco) contained in a tobacco product in de16 scending order of predominance by weight, except

17 that such regulations—

18 ‘‘(A) may provide for the disclosure of

19 spices, flavorings, and colorings without naming

20 each spice, flavoring, or coloring; and

21 ‘‘(B) may exempt from disclosure inciden22 tal additives, including processing aids and

23 chemical preservatives, that are present in a to24 bacco product at insignificant levels that the
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1 Secretary determines do not have any func2 tional effect or health risk.

3 ‘‘(e) PREEMPTION.—No statement relating to the use

4 of cigarettes or smokeless tobacco products and health,

5 other than the statements required by subsections (a), (b),

6 or (c), shall be required on any package or in any adver7 tisement of cigarettes or a smokeless tobacco product.

8 ‘‘(f) EXPORTS.—Packages of cigarettes or smokeless

9 tobacco products manufactured, imported, or packaged—

10 ‘‘(1) for export from the United States; or

11 ‘‘(2) for delivery to a vessel or aircraft, as sup12 plies, for consumption beyond the jurisdiction of the

13 internal revenue laws of the United States;

14 shall be exempt from the requirements of this chapter, but

15 such exemptions shall not apply to cigarettes or smokeless

16 tobacco products manufactured, imported, or packaged for

17 sale or distribution to members or units of the Armed

18 Forces of the United States located outside of the United

19 States.

20 ‘‘SEC. 905. REDUCED RISK TOBACCO PRODUCTS.

21 ‘‘(a) GENERAL RULE.—Except as provided in sub22 section (b), the regulations promulgated in accordance

23 with section 902 shall require that a tobacco product be

24 deemed to be in violation with this chapter if the labeling

25 of the package of the product, or the claims of the manu-
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1 facturer in connection with the product, can reasonably

2 be interpreted as stating or implying that the product pre3 sents a reduced health risk as compared to other similar

4 products. Any tobacco product accompanied by a claim to

5 diagnose, cure, mitigate, treat, or prevent a disease, not

6 including statements that the Secretary may permit for

7 reduced risk tobacco products under this section, will be

8 subject to regulation as a new drug under section 505.

9 ‘‘(b) EXCEPTION.—

10 ‘‘(1) IN GENERAL.—Subsection (a) shall not

11 apply to the labeling of a tobacco product, or the

12 claims of the manufacturer in connection with the

13 product, if—

14 ‘‘(A) the manufacturer, based on scientific

15 evidence, demonstrates to the Secretary that

16 the product reduces the risk to the health of the

17 user as compared to other similar tobacco prod18 ucts; and

19 ‘‘(B) the Secretary approves the specific

20 claim that will be made a part of the labeling

21 of the product, or the specific claims of the

22 manufacturer in connection with the product.

23 ‘‘(2) REDUCTION IN HEALTH RISK.—The Sec24 retary shall promulgate regulations to permit the in25 clusion of scientifically-based specific health claims
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1 on the labeling of a tobacco product package, or the

2 making of such claims by the manufacturer in con3 nection with the product, where the Secretary deter4 mines that the inclusion or making of such claims

5 would reduce the health risk to consumers and oth6 erwise promote public health.

7 ‘‘(c) DEVELOPMENT OF REDUCED RISK TOBACCO

8 PRODUCT TECHNOLOGY.—

9 ‘‘(1) NOTIFICATION OF SECRETARY.—The man10 ufacturer of a tobacco product shall provide written

11 notice to the Secretary upon the development or ac12 quisition by the manufacturer of any technology that

13 would reduce the risk of such products to the health

14 of the user. Such notification shall not be required

15 until adequate intellectual property protections have

16 been secured by the manufacturer, such as the issu17 ance of a patent or the execution of a licensing

18 agreement.

19 ‘‘(2) CONFIDENTIALITY.—The Secretary shall

20 promulgate regulations to provide a manufacturer

21 with appropriate confidentiality protections with re22 spect to technology that is the subject of a notifica23 tion under paragraph (1) that contains evidence that

24 the technology involved is in the early developmental

25 stages.
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1 ‘‘(3) LICENSING.—

2 ‘‘(A) IN GENERAL.—With respect to any

3 technology for which a notification has been

4 provided under paragraph (1), the manufac5 turer shall permit the use of such technology by

6 other manufacturers of tobacco products to

7 which this chapter applies.

8 ‘‘(B) FEES.—The Secretary of Commerce

9 shall promulgate regulations to provide for the

10 payment of a commercially reasonable fee by

11 each manufacturer that uses the technology de12 scribed under subparagraph (A) to the manu13 facturer that submits the notice under para14 graph (1) for such technology. Such regulations

15 shall contain procedures for the resolution of

16 fee disputes between manufacturers under this

17 subparagraph.

18 ‘‘(d) REQUIREMENT OF MANUFACTURE AND MAR19 KETING.—

20 ‘‘(1) PURPOSE.—It is the purpose of this sub21 section to provide for a mechanism to create incen22 tives that help ensure that tobacco products that are

23 designed to be less hazardous to the health of users

24 are developed, tested, and made available to consum25 ers.
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1 ‘‘(2) DETERMINATION.—Upon a determination

2 by the Secretary that the manufacture of a tobacco

3 product that is less hazardous to the health of users

4 is technologically and commercially feasible, the Sec5 retary may, in accordance with this subsection and

6 through the issuance or amendment of a health risk

7 standard under section 902—

8 ‘‘(A) require the disclosure of the existence

9 of such technology;

10 ‘‘(B) prohibit the use of technology that is

11 superseded by such new technology; and

12 ‘‘(C) require that manufacturers cease

13 manufacturing and marketing tobacco products

14 that do not incorporate such technology.

15 ‘‘SEC. 906. TOBACCO PRODUCT MARKETING RESTRICTIONS.

16 ‘‘(a) IN GENERAL.—The Secretary shall by regula17 tion implement the prohibitions described in this section

18 concerning the marketing of tobacco products to minors.

19 ‘‘(b) SALES TO MINORS PROHIBITED.—No retailer

20 may distribute a tobacco product to any individual who

21 is under 18 years of age.

22 ‘‘(c) PHOTO IDENTIFICATION.—

23 ‘‘(1) REQUIREMENT.—Except as provided in

24 paragraph (2), each retailer shall verify, by means of

25 photographic identification containing the date of
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1 birth of the bearer, that no individual purchasing a

2 tobacco product is under 18 years of age.

3 ‘‘(2) EXCEPTION.—No verification under para4 graph (1) is required for any individual who is at

5 least 27 years of age.

6 ‘‘(3) LOCATION OF PRODUCTS.—Except as pro7 vided in subsection (j), a retailer shall ensure that

8 all tobacco products are located in areas where cus9 tomers do not have access to the products.

10 ‘‘(d) FACE-TO-FACE TRANSACTIONS.—Except as

11 provided in subsection (i)(1), a retailer may sell tobacco

12 products only in a direct, face-to-face exchange without

13 the assistance of any electronic or mechanical device.

14 ‘‘(e) OUT-OF-PACKAGE DISTRIBUTION.—No retailer

15 may break or otherwise open a tobacco product to sell or

16 distribute to individuals portions of such product (includ17 ing individual cigarettes or a number of cigarettes that

18 is smaller than the quantity in the minimum package size,

19 or any quantity of cigarette tobacco or smokeless tobacco

20 that is smaller than the smallest package distributed by

21 the retailer for individual consumer use).

22 ‘‘(f) RETAILER COMPLIANCE WITH RESPECT TO

23 SELF-SERVICE.—Each retailer shall ensure that all to24 bacco-related self-service displays, advertising, labeling,

25 and other items that are located in the establishment of
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1 the retailer and that do not comply with the requirements

2 of this section are removed or are brought into compliance

3 with the requirements of this section.

4 ‘‘(g) MINIMUM CIGARETTE PACKAGE SIZE.—Except

5 as otherwise provided in this section, no manufacturer,

6 distributor, or retailer may sell or cause to be sold, or dis7 tribute or cause to be distributed, any cigarette package

8 that contains fewer than 20 cigarettes.

9 ‘‘(h) PROHIBITION ON SAMPLING.—No manufac10 turer, distributor, or retailer may distribute or cause to

11 be distributed any free samples of any tobacco product.

12 ‘‘(i) PROHIBITION ON DISTRIBUTION THROUGH

13 SELF-SERVICE MODES OF SALE.—

14 ‘‘(1) VENDING MACHINES.—Except as provided

15 in subsection (j)(1)(B), no manufacturer, distribu16 tor, or retailer may distribute or cause to be distrib17 uted any tobacco product through a vending ma18 chine.

19 ‘‘(2) OTHER DISPLAYS.—Except as provided in

20 subsection (j)(1)(C), no manufacturer, distributor,

21 or retailer may distribute or cause to be distributed

22 any tobacco product through a self-service display.

23 ‘‘(j) PERMITTED SELF-SERVICE MODES OF SALE.—
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1 ‘‘(1) IN GENERAL.—Notwithstanding any other

2 provision of this section, the following methods of

3 distributing tobacco products are permitted:

4 ‘‘(A) Mail-order sales as provided for in

5 paragraph (2), except that mail-order redemp6 tion of coupons and the distribution of free

7 samples through the mail shall be prohibited.

8 ‘‘(B) Distribution through vending ma9 chines that are located in facilities where the

10 retailer ensures that no individuals under 18

11 years of age are present or permitted to enter

12 at any time.

13 ‘‘(C) Distribution through self-service dis14 plays that are located in facilities where the re15 tailer ensures that no individuals under 18

16 years of age are present or permitted to enter

17 at any time.

18 ‘‘(2) MAIL-ORDER SALES.—

19 ‘‘(A) IN GENERAL.—A manufacturer, dis20 tributor, or retailer may distribute or cause to

21 be distributed a tobacco product through mail22 order sales only if such sales are subject to a

23 procedure for verifying that no individual pur24 chasing such products is under 18 years of age.
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1 ‘‘(B) REVIEW BY SECRETARY.—Not later

2 than 2 years after the date of enactment of this

3 section, the Secretary shall review the verifica4 tion procedures implemented under subpara5 graph (A) to determine whether individuals

6 under 18 years of age are obtaining tobacco

7 products through the mail. If the Secretary de8 termines that a significant number of underage

9 individuals are obtaining such products through

10 the mail, the Secretary may promulgate regula11 tions in accordance with section 902 to prohibit

12 the distribution of tobacco products through the

13 mail.

14 ‘‘SEC. 907. TOBACCO PRODUCTS SCIENTIFIC ADVISORY

15 COMMITTEE.

16 ‘‘(a) ESTABLISHMENT.—Not later than 1 year after

17 the date of enactment of this chapter, the Secretary shall

18 establish an advisory committee, to be known as the ‘To19 bacco Products Scientific Advisory Committee’, to assist

20 the Secretary in establishing, amending, or revoking a reg21 ulation promulgated under section 902, 903, 904, or 905.

22 ‘‘(b) MEMBERSHIP.—

23 ‘‘(1) IN GENERAL.—The Secretary shall appoint

24 as members of the Tobacco Products Scientific Advi25 sory Committee—
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1 ‘‘(A) individuals with expertise in the med2 icine, science, or technology involving the manu3 facture and use of tobacco products, who are of

4 appropriately diversified professional back5 grounds;

6 ‘‘(B) individuals with expertise in law or

7 ethics;

8 ‘‘(C) a representative of tobacco product

9 manufacturers;

10 ‘‘(D) a representative of the general public

11 selected from anti-tobacco organizations; and

12 ‘‘(E) a representative of the general public

13 selected from pro-tobacco organizations.

14 ‘‘(2) LIMITATION.—The Secretary may not ap15 point to the Advisory Committee any individual who

16 is in the regular full-time employ of the Federal

17 Government. The Secretary may appoint Federal of18 ficials as ex-officio members.

19 ‘‘(3) CHAIRPERSON.—The Secretary shall des20 ignate 1 of the members of advisory committee to

21 serve as chairperson of the Advisory Committee.

22 ‘‘(c) DUTIES.—The Tobacco Products Scientific Ad23 visory Committee shall—
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1 ‘‘(1) assist the Secretary in establishing,

2 amending, or revoking regulations under section

3 902, 903, 904, or 905;

4 ‘‘(2) examine and make recommendations con5 cerning the effects of the alteration of the nicotine

6 yield levels in tobacco products;

7 ‘‘(3) examine and make recommendations con8 cerning whether there is a threshold level below

9 which nicotine yields do not produce dependence on

10 the tobacco product involved, and, if so, determine

11 what that level is; and

12 ‘‘(4) review other safety, dependence or health

13 issues relating to tobacco products as requested by

14 the Secretary.

15 ‘‘SEC. 908. REPORTS.

16 ‘‘Not later than 18 months after the date of enact17 ment of this chapter, and biennially thereafter, the Sec18 retary shall prepare and submit to Congress a report con19 taining—

20 ‘‘(1) a description of the current sales, advertis21 ing, and marketing practices associated with tobacco

22 products;

23 ‘‘(2) a description of the use patterns of tobacco

24 products, including a report on use by individuals

25 under 18 years of age;
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1 ‘‘(3) a description of the effects of health pro2 motion and disease prevention efforts related to the

3 use of tobacco products;

4 ‘‘(4) an evaluation of the health promotion and

5 disease prevention efforts relating to tobacco prod6 ucts and the identification of areas appropriate for

7 further research; and

8 ‘‘(5) such recommendations for legislation and

9 administrative action relating to tobacco products as

10 the Secretary considers appropriate.

11 ‘‘SEC. 909. JUDICIAL REVIEW.

12 ‘‘(a) APPLICATION OF SECTION.—

13 ‘‘(1) IN GENERAL.—Not later than 60 days

14 after the effective date of any regulation under this

15 chapter establishing, amending, or revoking a health

16 risk management standard for a tobacco product,

17 any person adversely affected by such regulation

18 may file a petition with the United States Court of

19 Appeals for the District of Columbia or for the cir20 cuit wherein such person resides or has its principal

21 place of business for judicial review of such regula22 tion. A copy of the petition shall be transmitted by

23 the clerk of the court to the Secretary or other offi24 cer designated by him for that purpose.
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1 ‘‘(2) RECORD OF PROCEEDING.—The Secretary

2 shall file in the court under paragraph (1) the

3 record of the proceedings on which the Secretary

4 based the regulation involved as provided for in sec5 tion 2112 of title 28, United States Code.

6 ‘‘(3) DEFINITION.—For purposes of this sec7 tion, the term ‘record’ means all notices and other

8 matter published in the Federal Register with re9 spect to the regulation reviewed, all information sub10 mitted to the Secretary with respect to such regula11 tion, proceedings of any panel or advisory committee

12 with respect to such regulation, any hearing held

13 with respect to such regulation, and any other infor14 mation identified by the Secretary, in the adminis15 trative proceeding held with respect to such regula16 tion, as being relevant to such regulation.

17 ‘‘(b) ADDITIONAL DATA, VIEWS, AND ARGUMENTS.—

18 If the petitioner applies to the court under this section

19 for leave to adduce additional data, views, or arguments

20 respecting the regulation being reviewed and shows to the

21 satisfaction of the court that such additional data, views,

22 or arguments are material and that there were reasonable

23 grounds for the petitioner’s failure to adduce such data,

24 views, or arguments in the proceedings before the Sec25 retary, the court may order the Secretary to provide addi-
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1 tional opportunity for the oral presentation of data, views,

2 or arguments and for written submissions. The Secretary

3 may modify such findings, or make new findings by reason

4 of the additional data, views, or arguments so taken and

5 shall file with the court such modified or new findings,

6 and the recommendations of the Secretary, if any, for the

7 modification or setting aside of the regulation or order

8 being reviewed, with the return of such additional data,

9 views, or arguments.

10 ‘‘(c) STANDARD FOR REVIEW.—Upon the filing of the

11 petition under subsection (a) judicial review of a regula12 tion, the court shall have jurisdiction to review the regula13 tion in accordance with chapter 7 of title 5, United States

14 Code, and to grant appropriate relief, including interim

15 relief, as provided for in such chapter. A regulation pro16 mulgated under this chapter shall not be affirmed if it is

17 found to be unsupported by substantial evidence on the

18 record taken as a whole.

19 ‘‘(d) FINALITY OF JUDGMENTS.—The judgment of

20 the court affirming or setting aside, in whole or in part,

21 any regulation under this section shall be final, subject

22 to review by the Supreme Court of the United States upon

23 certiorari or certification, as provided for in section 1254

24 of title 28, United States Code.
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1 ‘‘(e) OTHER REMEDIES.—The remedies provided for

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

3 any other remedies provided for by law.

4 ‘‘(f) STATEMENT OF REASONS.—To facilitate judicial

5 review under this section or under any other provision of

6 law of a regulation issued under this chapter, each such

7 regulation shall contain a statement of the reasons for its

8 issuance and the basis, in the record of the proceedings

9 held in connection with its issuance, for its issuance.

10 ‘‘SEC. 910. PREEMPTION.

11 ‘‘(a) LIMITATION.—No requirement with respect to

12 a tobacco product shall be applied by any State or local

13 statute or regulation if such requirement conflicts with the

14 requirements of section 902, 903, 904, or 905.

15 ‘‘(b) RULE OF CONSTRUCTION.—Nothing in this sec16 tion shall be construed as prohibiting a State or political

17 subdivision of a State from enacting statutes or regula18 tions concerning tobacco products so long as such statutes

19 or regulations do not conflict with the requirements of sec20 tion 902, 903, 904, or 905.

21 ‘‘(c) EFFECT ON LIABILITY LAW.—Except as other22 wise provided in this chapter, nothing in this section shall

23 relieve any person from liability at common law or under

24 State statutory law to any other person.’’.
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1 SEC. 402. TECHNICAL PROVISIONS.

2 (a) APPLICATION OF FEDERAL CIGARETTE LABEL3 ING AND ADVERTISING ACT.—The provisions of the Fed4 eral Cigarette Labeling and Advertising Act (15 U.S.C.

5 1331 et seq.) that apply to cigarettes shall be superseded

6 by the provisions of this title (and the amendments made

7 by this title).

8 (b) REPEAL.—The Comprehensive Smokeless To9 bacco Health Education Act of 1986 (15 U.S.C. 4401 et

10 seq.) is repealed.

11 SEC. 403. FEDERAL LICENSING OF MILITARY AND OTHER

12 ENTITIES.

13 (a) IN GENERAL.—The Secretary, in consultation

14 with the Secretary of Defense, Secretary of State, and

15 other appropriate Federal officials, shall establish and im16 plement a Federal tobacco licensing program to be applied

17 to entities that sell or distribute tobacco products—

18 (1) on any military installation (as defined in

19 section 2801(c)(2) of title X, United States Code);

20 (2) in any United States embassy;

21 (3) in any facility owned and operated by the

22 Federal Government either in the United States or

23 in a foreign country;

24 (4) in any duty-free shop located within the

25 United States; or
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1 (5) through any other Federal entity or on any

2 other Federal property as determined appropriate by

3 the Secretary.

4 (b) REQUIREMENTS OF PROGRAM.—The program es5 tablished under subsection (a) shall apply requirements

6 (including those for penalties, suspensions, and revoca7 tions) similar to those required to be implemented by

8 States under this subtitle.

9 (c) INDIAN TRIBES AND TRIBAL LANDS.—For pur10 poses of applying and enforcing the provisions of this sub11 title to entities that sell or otherwise distribute tobacco

12 products on Indian reservations (as defined in section

13 403(9) of the Indian Child Protection and Family Violence

14 Prevention Act (25 U.S.C. 3202(9))), an Indian tribe or

15 tribal organization shall be treated as a State.

16 TITLE V—PAYMENTS TO STATES

17 AND PUBLIC HEALTH PRO18 GRAMS

19 Subtitle A—Payments to States

20 SEC. 501. REIMBURSEMENT FOR STATE EXPENDITURES.

21 (a) PAYMENTS.—

22 (1) IN GENERAL.—The Trustees shall use

23 amounts made available under section 101(c)(1) in

24 each fiscal year to provide funds to each State to re25 imburse such State for amounts expended by the
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1 State for the treatment of individuals with tobacco2 related illnesses or conditions.

3 (2) AMOUNT.—The amount for which a State is

4 eligible for under paragraph (1) for a fiscal year

5 shall be based on the applicable percentage described

6 in paragraph (3) of the amount available for such

7 fiscal year under paragraph (1).

8 (3) APPLICABLE PERCENTAGE.—For purposes

9 of paragraph (2), the applicable percentage for any

10 State is determined in accordance with the following

11 table.

State Applicable Percentage

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

Alaska ............................................................................... 0.241356

Arizona ............................................................................. 1.163883

Arkansas ........................................................................... 0.751011

California .......................................................................... 8.805641

Colorado ........................................................................... 1.054018

Connecticut ....................................................................... 1.596937

Delaware ........................................................................... 0.227018

District of Columbia ......................................................... 0.534487

Florida .............................................................................. 3.590667

Georgia ............................................................................. 2.007112

Hawaii .............................................................................. 0.642527

Idaho ................................................................................ 0.257835

Illinois ............................................................................... 4.272898

Indiana ............................................................................. 1.714594

Iowa .................................................................................. 0.758686

Kansas .............................................................................. 0.762230

Kentucky .......................................................................... 1.875439

Louisiana .......................................................................... 1.916886

Maine ................................................................................ 0.870740

Maryland .......................................................................... 2.051849

Massachusetts .................................................................. 3.700447

Michigan ........................................................................... 4.431824

Minnesota ......................................................................... 2.474364

Mississippi ........................................................................ 0.851450

Missouri ............................................................................ 1.659116

Montana ........................................................................... 0.335974

Nebraska .......................................................................... 0.445356

Nevada ............................................................................. 0.307294

New Hampshire ................................................................ 0.552048
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State Applicable Percentage

New Jersey ....................................................................... 3.494187

New Mexico ...................................................................... 0.465816

New York ......................................................................... 14.529380

North Carolina ................................................................. 2.097625

North Dakota ................................................................... 0.250758

Ohio .................................................................................. 4.690156

Oklahoma ......................................................................... 0.841972

Oregon .............................................................................. 1.092920

Pennsylvania .................................................................... 5.233270

Rhode Island .................................................................... 0.821727

South Carolina ................................................................. 0.883628

South Dakota ................................................................... 0.234849

Tennessee ......................................................................... 2.479873

Texas ................................................................................ 4.451382

Utah ................................................................................. 0.330016

Vermont ............................................................................ 0.370244

Virginia ............................................................................. 1.373860

Washington ...................................................................... 1.794612

West Virginia ................................................................... 1.003660

Wisconsin ......................................................................... 2.098696

Wyoming .......................................................................... 0.122405

American Samoa .............................................................. 0.008681

N. Mariana Islands .......................................................... 0.001519

Guam ................................................................................ 0.006506

U.S. Virgin Islands .......................................................... 0.004804

Puerto Rico ...................................................................... 0.193175.

1 (4) USE OF FUNDS.—Except as provided in

2 subsection (b), a State may use amounts received

3 under this subsection as the State determines appro4 priate.

5 (b) AMOUNT ATTRIBUTABLE TO FEDERAL MEDICAL

6 ASSISTANCE PERCENTAGE.—

7 (1) DETERMINATION.—With respect to each

8 State, the Trustees shall determine the amount of

9 the reimbursement under subsection (a) for each fis10 cal year that is equal to the percentage that has

11 been applied to the State as the Federal medical as12 sistance percentage (as defined in section 1905(b))
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1 of the Social Security Act (42 U.S.C. 1396d(b)) ex2 penditures by the State for the preceding fiscal year.

3 (2) REQUIRED USE.—With respect to the

4 amount determined under paragraph (1) for a State

5 for a fiscal year, the Secretary shall not treat such

6 amount as an overpayment under any joint Federal7 State health program if the State certifies to the

8 Trustee that such amount will be used by the State

9 for anti-smoking or tobacco-related purposes under

10 section 502.

11 (c) INDIAN TRIBES.—Based on the determinations

12 made by the Trustees under section 901(f)(2), the Trust13 ees shall, from amounts available for payments to States

14 under this section in a fiscal year, reserve not less than

15 the aggregate amount determined under section 901(f)(2)

16 for payments to Indian tribes under such section 901(f).

17 The Trustees shall reduce the amounts payable to a State

18 under this section in accordance with determinations with

19 respect to such State under section 901(f) to provide

20 amounts to Indian tribes and tribal organizations in such

21 States.
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1 SEC. 502. REQUIREMENTS FOR STATE USE OF CERTAIN

2 FUNDS.

3 (a) STATE PLAN.—To be eligible to receive a pay4 ment under section 501(b) a State shall prepare and sub5 mit to the Trustees a State plan that—

6 (1) describes the manner in which the State in7 tends to use amounts provided under this subsection

8 to conduct anti-tobacco programs consistent with

9 this Act and consistent with the smoking cessation

10 guidelines issued by the Agency for Health Care Pol11 icy and Research;

12 (2) describes the specific anti-smoking pro13 grams that will be funded by the State;

14 (3) describes the amount of funds that will be

15 used for each program described in paragraph (2);

16 (4) describes the activities to be conducted

17 under such programs, including the populations to

18 be served, the eligibility standards for such popu19 lations, if any, and the goals and purposes of such

20 programs;

21 (5) describes the measurable objectives that will

22 be used to evaluate program outcomes;

23 (6) describes the procedures to be used by the

24 State to conduct outreach to potential program par25 ticipants;
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1 (7) describes the manner in which such pro2 grams will be coordinated with other Federal and

3 State anti-smoking initiatives; and

4 (8) has been approved under subsection (b).

5 (b) SUBMISSION, APPROVAL, AND AMENDMENT OF

6 PLAN.—

7 (1) INITIAL PLAN.—

8 (A) IN GENERAL.—As a condition of re9 ceiving payment under section 501(b), a State

10 shall submit to the Trustees an anti-smoking

11 program plan that meets the applicable require12 ments of this subsection.

13 (B) APPROVAL.—Except as the Trustees

14 may provide under paragraph (5), a State plan

15 submitted under subparagraph (A)—

16 (i) shall be approved for purposes of

17 this section; and

18 (ii) shall be effective beginning with a

19 calendar quarter that is specified in the

20 plan, but in no case earlier than October 1,

21 1998.

22 (2) AMENDMENTS.—

23 (A) IN GENERAL.—A State may amend, in

24 whole or in part, its State anti-smoking plan at
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1 any time through transmittal of a plan amend2 ment.

3 (B) APPROVAL.—Except as the Trustees

4 may provide under paragraph (5), an amend5 ment to a State plan submitted under subpara6 graph (A)—

7 (i) shall be approved for purposes of

8 this title, and

9 (ii) shall be effective as provided in

10 subparagraph (C).

11 (C) EFFECTIVE DATES FOR AMEND12 MENTS.—An amendment to a State plan shall

13 take effect on one or more effective dates speci14 fied in the amendment.

15 (3) DISAPPROVAL.—

16 (A) PROMPT REVIEW OF PLAN SUBMIT17 TALS.—The Trustees shall promptly review

18 State plans and plan amendments submitted

19 under this subsection to determine if they sub20 stantially comply with the requirements of this

21 section.

22 (B) 90-DAY APPROVAL DEADLINES.—A

23 State plan or plan amendment is considered ap24 proved unless the Trustees notifies the State in

25 writing, within 90 days after receipt of the plan
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1 or amendment, that the plan or amendment is

2 disapproved (and the reasons for disapproval)

3 or that specified additional information is need4 ed.

5 (C) CORRECTION.—In the case of a dis6 approval of a plan or plan amendment, the

7 Trustees shall provide a State with a reasonable

8 opportunity for correction before taking finan9 cial sanctions against the State on the basis of

10 such disapproval.

11 (4) PROGRAM OPERATION.—

12 (A) IN GENERAL.—The State shall conduct

13 the program in accordance with the plan (and

14 any amendments) approved under paragraph

15 (3) and with the requirements of this section.

16 (B) VIOLATIONS.—The Trustees shall es17 tablish a process for enforcing requirements

18 under this section. Such process shall provide

19 for the withholding of funds in the case of sub20 stantial noncompliance with such requirements.

21 In the case of an enforcement action against a

22 State under this subparagraph, the Trustees

23 shall provide a State with a reasonable oppor24 tunity for correction before taking financial
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1 sanctions against the State on the basis of such

2 an action.

3 (5) CONTINUED APPROVAL.—An approved

4 State plan shall continue in effect unless and until

5 the State amends the plan under paragraph (2) or

6 the Trustees finds, under paragraph (4), substantial

7 noncompliance of the plan with the requirements of

8 this section.

9 (c) OBJECTIVES AND GOALS, PLAN ADMINISTRA10 TION.—

11 (1) RECORDS, REPORTS, AUDITS, AND EVALUA12 TION.—

13 (A) DATA COLLECTION, RECORDS, AND RE14 PORTS.—A State plan shall include an assur15 ance that the State will collect the data, main16 tain the records, and furnish the reports to the

17 Trustees, at the times and in the standardized

18 format the Trustees may require in order to en19 able the Trustees to monitor State program ad20 ministration and compliance and to evaluate

21 and compare the effectiveness of State plans

22 under this section.

23 (B) STATE ASSESSMENT AND STUDY.—A

24 State plan shall include a description of the

25 State’s plan for the annual assessments and re-
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1 ports under subsection (c)(1) and the evalua2 tion required by subsection (c)(2).

3 (C) AUDITS.—A State plan shall include

4 an assurance that the State will afford the

5 Trustees access to any records or information

6 relating to the plan for the purposes of review

7 or audit.

8 (2) PROGRAM DEVELOPMENT PROCESS.—A

9 State plan shall include a description of the process

10 used to involve the public in the design and imple11 mentation of the plan and the method for ensuring

12 ongoing public involvement.

13 (3) PROGRAM BUDGET.—A State plan shall in14 clude a description of the budget for the plan. The

15 description shall be updated periodically as necessary

16 and shall include details on the planned use of funds

17 and the sources of the non-Federal share of plan ex18 penditures, including any requirements for cost-shar19 ing by beneficiaries.

20 (d) ANNUAL REPORTS; EVALUATIONS.—

21 (1) ANNUAL REPORT.—The State shall—

22 (A) assess the operation of the State plan

23 under this section in each fiscal year, including

24 the progress made in reducing the number of

25 adults and children who use tobacco; and
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1 (B) report to the Trustees, by January 1

2 following the end of the fiscal year, on the re3 sult of the assessment.

4 (2) STATE EVALUATIONS.—

5 (A) IN GENERAL.—By March 31, 2000,

6 each State that has a State plan shall submit

7 to the Trustees an evaluation that includes each

8 of the following:

9 (i) An assessment of the effectiveness

10 of the State plan in reducing the number

11 of children and adults who use tobacco

12 products.

13 (ii) A description and analysis of the

14 effectiveness of elements of the State plan.

15 (iii) An assessment of the effective16 ness of other public and private programs

17 in the State in meeting program goals.

18 (iv) A review and assessment of State

19 activities to coordinate the plan under this

20 section with other public and private anti21 tobacco programs.

22 (v) Recommendations for improving

23 the program under this section.

24 (B) REPORT OF THE TRUSTEES.—The

25 Trustees shall submit to Congress and make
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1 available to the public by December 31, 2001,

2 a report based on the evaluations submitted by

3 States under subparagraph (A), containing any

4 conclusions and recommendations the Trustees

5 considers appropriate.

6 (e) PROGRAMS.—Anti-tobacco activities may be con7 ducted using amounts received under section 501(b) in

8 conjunction with and under the following programs:

9 (1) The special supplemental food program

10 under section 17 of the Child Nutrition Act of 1966

11 (42 U.S.C. 1786).

12 (2) The Maternal and Child Health Services

13 Block Grant program under title V of the Social Se14 curity Act (42 U.S.C. 701 et seq.).

15 (3) The State Children’s Health Insurance Pro16 gram of the State under title XXI of the Social Se17 curity Act (42 U.S.C. 1397aa et seq.).

18 (4) A Head Start program under the Head

19 Start Act (42 U.S.C. 9801 et seq.).

20 (5) The school lunch program under the Na21 tional School Lunch Act (42 U.S.C. 1751 et seq.).

22 (6) An Indian Health Service Program.

23 (7) The community health center program

24 under section 330 of the Public Health Service Act

25 (42 U.S.C. 254b).
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1 (8) Programs under title X of the Public

2 Health Service Act (42 U.S.C. 300 et seq.).

3 (9) Programs under title XXVI of the Public

4 Health Service Act (42 U.S.C. 300ff-11).

5 (10) State-initiated smoking cessation programs

6 that include provisions for reimbursing individuals

7 for medications or other therapeutic techniques.

8 (11) State-initiated public education campaigns,

9 including multi-media counter-advertising cam10 paigns.

11 (12) State-initiated programs for event sponsor12 ship transitional assistance, including sponsoring or

13 otherwise supporting athletic, artistic, or other social

14 and cultural events traditionally under the sponsor15 ship of, or that received other support from, tobacco

16 product manufacturers or distributors prior to the

17 date of enactment of this Act.

18 (f) APPLICATION OF REQUIREMENTS.—The require19 ments of the respective provisions of law described in sub20 section (e) shall apply to any funds made available under

21 this section through State programs under any such provi22 sion of law to the same extent that such requirements

23 would otherwise apply to such programs under such provi24 sions of law.
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1 Subtitle B—Public Health

2 Programs

3 SEC. 521. NATIONAL INSTITUTES OF HEALTH TRUST FUND

4 FOR HEALTH RESEARCH.

5 (a) CREATION OF TRUST FUND.—There is estab6 lished a trust fund to be known as the ‘‘National Institutes

7 of Health Trust Fund for Health Research’’ (referred to

8 in this section as the ‘‘Trust Fund’’), consisting of such

9 amounts as may be appropriated or transferred to the

10 Trust Fund pursuant to section 101(c)(2) and (3)(D).

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

12 appropriated to the Trust Fund for each fiscal year an

13 amount equivalent to the amount described in section

14 101(d)(2)(A) for such fiscal year.

15 (c) OBLIGATIONS FROM TRUST FUND.—

16 (1) IN GENERAL.—Subject to the provisions of

17 paragraph (4), with respect to the amounts made

18 available in the Trust Fund in a fiscal year, the Sec19 retary shall distribute during any fiscal year—

20 (A) 2 percent of such amounts to the Of21 fice of the Director of the National Institutes of

22 Health to be allocated at the Director’s discre23 tion—

24 (i) for carrying out the responsibilities

25 of the Office of the Director, including the
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1 Office of Research on Women’s Health and

2 the Office of Research on Minority Health,

3 the Office of Alternative Medicine, the Of4 fice of Rare Disease Research, the Office

5 of Behavioral and Social Sciences Research

6 (for use for efforts to reduce tobacco use),

7 the Office of Dietary Supplements, and the

8 Office for Disease Prevention; and

9 (ii) for construction and acquisition of

10 equipment for or facilities of or used by

11 the National Institutes of Health;

12 (B) 2 percent of such amounts for transfer

13 to the National Center for Research Resources

14 to carry out section 1502 of the National Insti15 tutes of Health Revitalization Act of 1993 con16 cerning Biomedical and Behavioral Research

17 Facilities;

18 (C) 1 percent of such amounts for carrying

19 out section 301 and part D of title IV of the

20 Public Health Service Act with respect to

21 health information communications;

22 (D) 10 percent of such amounts for carry23 ing out section 414 of the Public Health Service

24 Act with respect to national cancer research

25 and demonstration centers; and
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1 (E) the remainder of such amounts to

2 member institutes and centers, including the

3 Office of AIDS Research, of the National Insti4 tutes of Health in the same proportion to the

5 total amount received under this section, as the

6 amount of annual appropriations under appro7 priations Acts for each member institute and

8 Centers for the fiscal year bears to the total

9 amount of appropriations under appropriations

10 Acts for all member institutes and Centers of

11 the National Institutes of Health for the fiscal

12 year.

13 (2) PLANS OF ALLOCATION.—The amounts

14 transferred under paragraph (1)(E) shall be allo15 cated by the Director of the National Institutes of

16 Health or the various directors of the institutes and

17 centers, as the case may be, pursuant to allocation

18 plans developed by the various advisory councils to

19 such directors, after consultation with such

20 directors.

21 (3) GRANTS AND CONTRACTS FULLY FUNDED

22 IN FIRST YEAR.—With respect to any grant or con23 tract funded by amounts distributed under para24 graph (1), the full amount of the total obligation of

25 such grant or contract shall be funded in the first
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1 year of such grant or contract, and shall remain

2 available until expended.

3 (4) TRIGGER AND RELEASE OF MONIES AND

4 PHASE-IN.—

5 (A) TRIGGER AND RELEASE.—No expendi6 ture shall be made under paragraph (1) during

7 any fiscal year in which the annual amount ap8 propriated for the National Institutes of Health

9 is less than the amount so appropriated for the

10 prior fiscal year.

11 (B) PHASE-IN.—The Secretary of Health

12 and Human Services shall phase-in the distribu13 tions required under paragraph (1) so that—

14 (i) 25 percent of the amount in the

15 Trust Fund is distributed in the first fiscal

16 year for which funds are available;

17 (ii) 50 percent of the amount in the

18 Trust Fund is distributed in the second

19 fiscal year for which funds are available;

20 (iii) 75 percent of the amount in the

21 Trust Fund is distributed in the third fis22 cal year for which funds are available; and

23 (iv) 100 percent of the amount in the

24 Trust Fund is distributed in the fourth
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1 and each succeeding fiscal year for which

2 funds are available.

3 (d) NATIONAL TOBACCO RESEARCH AGENDA.—

4 (1) IN GENERAL.—Not later than 1 year after

5 the date of enactment of this Act, and annually

6 thereafter, the Director of the National Institutes of

7 Health, in collaboration with the Director of the

8 Centers for Disease Control and Prevention, the

9 Commissioner of Food and Drugs, the Administrator

10 of the Substance Abuse and Mental Health Services

11 Administration, and the Director of the Office of

12 National Drug Control Policy, shall prepare and

13 submit to the Secretary and to the appropriate com14 mittees of Congress a National Tobacco Research

15 Agenda.

16 (2) CONTENTS.—The Agenda submitted under

17 paragraph (a) shall reflect the research needs in the

18 area of tobacco-related illnesses and diseases and

19 conditions related to other abused substances for the

20 year for which the Agenda is being submitted, with

21 special emphasis on youth tobacco use. The Agenda

22 shall include research concerning—

23 (A) the role of tobacco products in causing

24 cancer, cardiovascular diseases, stroke, and

25 other diseases;
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1 (B) genetic and behavioral factors that are

2 related to the use of tobacco or the development

3 of tobacco-related diseases;

4 (C) the development of prevention and

5 treatment modalities with respect to tobacco

6 use and cessation;

7 (D) the development and use of safer and

8 less addictive tobacco products;

9 (E) tobacco-related surveillance and edu10 cation, including the effects of counter-advertis11 ing;

12 (F) biomedical and behavioral research of

13 the type described in subparagraphs (A)

14 through (E) for other abused substances such

15 as illicit narcotics; and

16 (G) brain development in the early years of

17 life, and the continued physical, intellectual,

18 and social development of children, with empha19 sis on how tobacco and other abused substances

20 affect such development.

21 (e) BUDGET TREATMENT OF AMOUNTS IN TRUST

22 FUND.—The amounts in the Trust Fund shall be excluded

23 from, and shall not be taken into account, for purposes

24 of any budget enforcement procedure under the Congres-
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1 sional Budget Act of 1974 or the Balanced Budget and

2 Emergency Deficit Control Act of 1985.

3 SEC. 522. NATIONAL ANTI-TOBACCO PRODUCT CONSUMP4 TION AND TOBACCO PRODUCT CESSATION

5 PUBLIC HEALTH PROGRAM.

6 (a) AUTHORITY AND DUTIES.—Using amounts made

7 available pursuant to section 101(c)(2) and (3)(D), the

8 Secretary shall carry out the following activities:

9 (1) NATIONAL ANTI-TOBACCO PROGRAM.—

10 (A) IN GENERAL.—The Secretary shall es11 tablish and implement a national anti-tobacco

12 product consumption and tobacco product ces13 sation program to discourage individuals from

14 beginning to use tobacco products and other

15 substances of abuse and to assist individuals

16 who consume such products to discontinue such

17 use, with special emphasis placed on health pro18 motion and disease prevention activities that

19 discourage children under the age of 18 from

20 initiating or continuing use of such products;

21 (B) REQUIREMENTS.—In carrying out the

22 program under subparagraph (A), the Secretary

23 shall—

24 (i) to the maximum extent practicable,

25 act in cooperation with State and local
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1 public health officials, and private for-prof2 it and non-profit entities that carry out

3 anti-tobacco product use and tobacco prod4 uct cessation programs; and

5 (ii) to the extent determined appro6 priate by the Secretary, coordinate the pro7 gram through the Centers for Disease Con8 trol and Prevention, Office on Smoking

9 and Health.

10 (2) ADMINISTRATIVE ACTIVITIES.—The Sec11 retary shall provide funds for the administration and

12 implementation of the public health and regulatory

13 provisions of this Act (including the amendments

14 made by this Act), including funds for the Centers

15 for Disease Control and Prevention and the Food

16 and Drug Administration.

17 (3) BLOCK GRANTS.—The Secretary shall use

18 not less than 50 percent of the amounts available in

19 each fiscal year under this section to provide block

20 grants to States to carry out activities described in

21 subsection (c).

22 (b) RECOMMENDATIONS.—In developing programs

23 under this section, the Secretary shall consider, as appro24 priate, the recommendations of the members of the class
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1 certified for purposes of Dianne Castano v. American To2 bacco Company.

3 (c) DIRECT FEDERAL ACTIVITIES.—Under the na4 tional anti-tobacco product consumption and tobacco ces5 sation program implemented under subsection (a)(1), the

6 Secretary shall carry out the following activities:

7 (1) PUBLIC EDUCATION.—

8 (A) MODEL CURRICULA.—The Secretary,

9 acting through the Director of the Centers for

10 Disease Control and Prevention, shall develop

11 model curricula and other materials designed to

12 educate the public about the health risks associ13 ated with tobacco use. Such educational mate14 rials shall be specially designed to influence the

15 knowledge, attitudes, and behavior of young

16 Americans.

17 (B) ASSISTANCE BY CDC.—The Director of

18 the Centers for Disease Control and Prevention

19 shall provide technical assistance to State and

20 local public health and education officials and

21 parent-teacher and other civic organizations in

22 developing age effective anti-tobacco educational

23 curricula and other materials.

24 (C) CHRONIC CONSUMERS OF TOBACCO

25 PRODUCTS.—Educational efforts under this
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1 paragraph shall include the development of ma2 terials that advise members of the public who

3 consume tobacco products of the risks of con4 tinuing to use such products and the benefits of

5 discontinuing the use of these products.

6 (D) CESSATION EDUCATION.—The Direc7 tor of the Centers for Disease Control and Pre8 vention, in consultation with State and local

9 public health officials, shall take appropriate ac10 tion to inform consumers of tobacco products

11 about effective therapies for ceasing the con12 sumption of tobacco products. Such actions

13 shall be consistent with the tobacco use ces14 sation guidelines issued by the Agency for

15 Health Care Policy and Research.

16 (2) COUNTER-ADVERTISING.—The Secretary

17 shall carry out a mass media public education cam18 paign designed to counter the effects of marketing

19 practices of tobacco product manufacturers and dis20 tributors.

21 (3) MODEL STATE PROGRAM.—The Secretary

22 shall establish a model smoking cessation program

23 that may be used by States in the design of State24 based smoking cessation programs. Such model pro25 gram shall provide for the provision of grants and
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1 other assistance by such States to eligible entities

2 and individuals in the State for the establishment or

3 administration of tobacco product use prevention

4 and cessation programs.

5 (4) OTHER ACTIVITIES.—The Secretary may

6 undertake anti-tobacco product consumption and

7 cessation activities in addition to those specified in

8 paragraphs (1) through (3). Such activities may in9 clude enhanced direct Federal programs whose goal

10 is to reduce the use of other abused substances such

11 as illicit drugs.

12 (5) GRANTS AND CONTRACTS.—The Secretary,

13 acting under the authority provided under section

14 301 of the Public Health Service Act (42 U.S.C. 241

15 et seq.), may award grants and contracts under sub16 section (a)(1) to public and private entities (includ17 ing for-profit entities if determined appropriate by

18 the Secretary) to carry out educational, counter-ad19 vertising and other activities described in this sub20 section.

21 (d) VOLUNTARY TOBACCO USE PREVENTION AND

22 CESSATION BLOCK GRANTS.—

23 (1) IN GENERAL.—The Secretary shall award

24 block grants to States under subsection (a)(3) to en25 able such States to carry out activities for the pur-
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1 pose of planning, implementing, and evaluating to2 bacco use prevention and cessation activities de3 scribed in paragraph (4).

4 (2) ELIGIBILITY.—To be eligible to receive a

5 grant under this section, a State shall certify to the

6 Secretary that such State has in effect and is en7 forcing a law that contains the provisions described

8 in the model State law described in section 302.

9 (3) APPLICATION.—

10 (A) IN GENERAL.—A State that desires to

11 receive a voluntary block grant under sub12 section (a)(4) shall prepare and submit to the

13 Secretary an application, at such time, in such

14 manner, and accompanied by such information

15 as the Secretary may require.

16 (B) CONTENTS.—An application submitted

17 under subparagraph (A) shall—

18 (i) describe the activities that will be

19 carried out using assistance under this

20 subsection; and

21 (ii) provide such assurances as the

22 Secretary determines to be necessary to

23 carry out this subsection.

24 (C) JOINT APPLICATION.—The Secretary

25 shall permit a State to submit a joint applica-
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1 tion for funds under this subsection and section

2 502.

3 (4) USE OF FUNDS.—A State shall use

4 amounts received under this section to carry out to5 bacco abuse activities described in section 502(e).

6 (5) FORMULA.—The amount of a block grant

7 under this subsection shall be determined by the

8 Secretary based on a formula to be developed by the

9 Secretary that takes into consideration the number

10 of children between the ages of 10 and 18 in each

11 State.

12 (6) NONPARTICIPATING STATES.—If a State

13 elects not to participate in the voluntary block grant

14 program under this subsection, the funds allocated

15 to such State will be distributed to participating

16 States in the same ratio as amounts provided to

17 such States under the formula developed under

18 paragraph (5).

19 TITLE VI—STANDARDS TO RE20 DUCE INVOLUNTARY EXPO21 SURE TO TOBACCO SMOKE

22 SEC. 601. DEFINITIONS.

23 In this title—
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1 (1) ADMINISTRATOR.—The term ‘‘Adminis2 trator’’ means the Administrator of the Occupational

3 Safety and Health Administration.

4 (2) PUBLIC FACILITY.—

5 (A) IN GENERAL.—The term ‘‘public facil6 ity’’ means any building regularly entered by 10

7 or more individuals at least 1 day per week, in8 cluding any such building owned by or leased to

9 a Federal, State, or local government entity,

10 and including any building under the control of

11 Congress or an instrumentality of Congress (as

12 such term is defined for purposes of section 509

13 of the Americans with Disabilities Act of 1990

14 (42 U.S.C. 12209). Such term shall not include

15 any building or portion thereof regularly used

16 for residential purposes.

17 (B) EXCLUSIONS.—The term ‘‘public facil18 ity’’ does not include a building which is used

19 as a bar, bar area, private club, hotel guest

20 room, casino, bingo parlor, or the facilities of

21 any tobacco product manufacturer or distribu22 tor or the facilities of any retailer primarily en23 gaged in the business of selling tobacco prod24 ucts.
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1 (C) BAR.—The term ‘‘bar’’ means any in2 door area that is open to the general public and

3 that is devoted to the sale and service of alco4 holic beverages for on-premises consumption

5 and where the service of food is only incidental

6 to the consumption of such beverages. Service

7 of food shall be considered incidental if the food

8 service generated less than 50 percent of the

9 total annual gross sales of the establishment.

10 (D) BAR AREA.—The term ‘‘bar area’’

11 means an area within a restaurant that is de12 voted to the sale and service of alcoholic bev13 erages for on-premises consumption and where

14 the service of food is only incidental to the con15 sumption of such beverages. Service of food

16 shall be considered incidental if the food service

17 generated less than 50 percent of the total an18 nual gross sales of the area. Nothing in this

19 title shall be construed to require that a res20 taurant to separate the bar area from the re21 mainder of the establishment.

22 (3) RESPONSIBLE ENTITY.—The term ‘‘respon23 sible entity’’ means, with respect to any public facil24 ity, the owner of such facility except that, in the
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1 case of any such facility or portion thereof which is

2 leased, such term means the lessee.

3 (4) RESTAURANT.—The term ‘‘restaurant’’

4 means any indoor area that is open to the general

5 public, or a portion of such area, in which the busi6 ness is the sale of food for on-premises consumption

7 and which has an indoor seating capacity of greater

8 than 50 individuals. Such term includes cafeterias,

9 coffee shops, diners, sandwich shops, and short

10 order cafes. Such term shall not include the bar area

11 of any such area.

12 SEC. 602. 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) or, in the case of schools or facili20 ties serving children, subsection (d).

21 (b) ELEMENTS OF POLICY.—

22 (1) IN GENERAL.—Each smoke-free environ23 ment policy for a public facility shall—

24 (A) prohibit the smoking of cigarettes, ci25 gars, and pipes, and any other combustion of
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1 tobacco within the facility and on facility prop2 erty within the immediate vicinity of the en3 trance to the facility; and

4 (B) post a clear and prominent notice of

5 the smoking prohibition in appropriate and visi6 ble locations at the public facility.

7 (2) EXCEPTION.—

8 (A) IN GENERAL.—Except as provided in

9 subparagraph (B), the smoke-free environment

10 policy for a public facility may provide an ex11 ception to the prohibition specified in paragraph

12 (1) for 1 or more specially designated smoking

13 areas within a public facility if such area or

14 areas meet the requirements of subsection (c).

15 (B) LIMITATION.—Subparagraph (A) shall

16 not apply to a public facility that is a res17 taurant or prison.

18 (c) SPECIALLY DESIGNATED SMOKING AREAS.—A

19 specially designated smoking area meets the requirements

20 of this subsection if—

21 (1) the area is ventilated in accordance with

22 specifications promulgated by the Administrator that

23 ensure that air from the area is directly exhausted

24 to the outside and does not recirculate or drift to

25 other areas within the public facility;
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1 (2) the area is maintained at negative pressure,

2 as compared to adjoined nonsmoking areas, as deter3 mined under regulations promulgated by the Admin4 istrator; and

5 (3) nonsmoking individuals do not have to enter

6 the area for any purpose while smoking is occurring

7 in such area.

8 Cleaning and maintenance work shall be conducted in such

9 area only while no smoking is occurring in the area.

10 (d) SPECIAL RULES FOR SCHOOLS AND OTHER FA11 CILITIES SERVING CHILDREN.—

12 (1) IN GENERAL.—With respect to a facility de13 scribed in paragraph (1), the responsible entity for

14 the facility shall adopt and implement at such facil15 ity a smoke-free environment policy that—

16 (A) prohibits the smoking of cigarettes, ci17 gars, and pipes, and any other combustion of

18 tobacco within the facility and on facility prop19 erty;

20 (B) prohibits the use of smokeless tobacco

21 products within the facility and on facility prop22 erty; and

23 (C) post a clear and prominent notice of

24 the smoking and smokeless tobacco prohibition
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1 in appropriate and visible locations at the public

2 facility.

3 (2) FACILITY.—A facility described in this sub4 paragraph is—

5 (A) an elementary or secondary school (as

6 such term is defined in section 14101 of the El7 ementary and Secondary Education Act of 1965

8 (20 U.S.C. 8801);

9 (B) any facility at which a Head Start pro10 gram or project is being carried out under the

11 Head Start Act (42 U.S.C. 9831 et. seq.); and

12 (C) any facility, other than a home-based

13 facility, at which a licensed or certified child

14 care provider provides child care services.

15 (3) DESIGNATED AREAS.—The smoke-free envi16 ronment policy for a facility described in paragraph

17 (2) may provide an exception to the prohibition spec18 ified in paragraph (1) for 1 or more specially des19 ignated smoking areas within such facility if such

20 area or areas meet the requirements of subsection

21 (c).

22 SEC. 603. PREEMPTION.

23 Nothing in this title shall preempt or otherwise affect

24 any other Federal, State or local law which provides pro25 tections from health hazards from environmental tobacco
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1 smoke that are equal to or greater than the protections

2 provided for under this title.

3 SEC. 604. REGULATIONS.

4 Not later than 6 months after the date of enactment

5 of this Act, the Administrator shall promulgate such regu6 lations as necessary to carry out this title. Such regula7 tions shall delegate to the States a right to enforce the

8 provisions of this title.

9 SEC. 605. EFFECTIVE DATE.

10 The provisions of this title shall take effect on the

11 date that is 6 months after the date on which regulations

12 are promulgated under section 604 or 1 year after the

13 date of enactment of this Act, whichever is later.

14 TITLE VII—PUBLIC DISCLOSURE

15 OF HEALTH RESEARCH

16 SEC. 701. PURPOSE.

17 It is the purpose of this title to provide for the disclo18 sure of previously nonpublic or confidential documents by

19 manufacturers of tobacco products, including the results

20 of internal health research, and to provide for a procedure

21 to settle claims of attorney-client privilege, work product,

22 or trade secrets with respect to such documents.

23 SEC. 702. NATIONAL TOBACCO DOCUMENT DEPOSITORY.

24 (a) ESTABLISHMENT.—
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1 (1) IN GENERAL.—To be eligible to receive the

2 liability protections provided for under subtitle C of

3 title I, manufacturers of tobacco products, acting in

4 conjunction with the Tobacco Institute and the

5 Council for Tobacco Research, U.S.A. (prior to the

6 termination of such entities under section 155), and

7 in accordance with the guidelines and procedures es8 tablished under paragraph (2), shall, not later than

9 90 days after the date of enactment of this Act, es10 tablish and maintain a National Tobacco Document

11 Depository (in this title referred to as the ‘‘Deposi12 tory’’). Such Depository shall be located in the

13 Washington, D.C. area and be open to the public.

14 (2) GUIDELINES.—The Attorney General, in

15 consultation with the General Services Administra16 tion, shall establish guidelines and procedures for

17 the establishment and operation of the Depository,

18 including guidelines for the immediate disclosure of

19 documents relating to health and safety.

20 (b) USE OF DEPOSITORY.—The Depository shall be

21 maintained in a manner that permits the Depository to

22 be used as a resource for litigants, public health groups,

23 and any other individuals who have an interest in the cor24 porate records and research of the manufacturers concern25 ing smoking and health, addiction or nicotine dependency,
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1 safer or less hazardous cigarettes, and underage tobacco

2 use and marketing.

3 (c) CONTENTS.—The Depository shall include (and

4 manufacturers and the Tobacco Institute and the Council

5 for Tobacco Research, U.S.A. shall provide)—

6 (1) within 30 days of the date on which the De7 pository is established, all documents provided by

8 such entities to plaintiffs in—

9 (A) civil or criminal actions brought by

10 State attorneys general (including all docu11 ments selected by plaintiffs from the Guilford

12 Repository of the United Kingdom);

13 (B) Philip Morris Companies Inc.’s defa14 mation action against Capital Cities/American

15 Broadcasting Company News;

16 (C) the Federal Trade Commission’s inves17 tigation concerning Joe Camel and underage

18 marketing;

19 (D) Haines v. Liggett Group, Inc. (814 F.

20 Supp. 414 (D.N.J., Jan. 26, 1993)) and

21 Cippollone v. Liggett Group, Inc. (822 F. 2d

22 335, 56 USLW 2028, 7 Fed. R. Serv. 3d 1438

23 (3rd Cir. (N.J.), Jun. 8, 1987)); and

24 (E) Estate of Burl Butler v. Philip Morris,

25 Inc. (case No. 94–4–53);
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1 (2) within 90 days after the date of enactment

2 of this Act, any exiting documents discussing or re3 ferring to health research, addiction or dependency,

4 safer or less hazardous cigarettes, studies of the

5 smoking habits of minors, and the relationship be6 tween advertising or promotion and youth smoking,

7 that the entities described in subsection (a) have not

8 completed producing as required in the actions de9 scribed in paragraph (1);

10 (3) within 30 days of the date on which the De11 pository is established, all documents relating to in12 dices (as defined by the court in State of Minnesota

13 and Blue Cross and Blue Shield of Minnesota v.

14 Philip Morris, Inc., et al.) of documents relating to

15 smoking and health, including all indices identified

16 by the manufacturers in the State of Texas v. Amer17 ican Tobacco Company, et al.;

18 (4) upon the settlement of any action referred

19 to in this subsection, and after a good-faith, de novo,

20 document-by-document review of all documents pre21 viously withheld from production in any actions on

22 the grounds of attorney-client privilege, all docu23 ments determined to be outside of the scope of the

24 privilege;
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1 (5) all existing or future documents relating to

2 original laboratory research concerning the health or

3 safety of tobacco products, including all laboratory

4 research results relating to methods used to make

5 tobacco products less hazardous to consumers;

6 (6) a comprehensive new attorney-client privi7 lege log of all documents, itemized in sufficient de8 tail so as to enable any interested individual to de9 termine whether the individual will challenge the

10 claim of privilege, that the entities described in sub11 section (a) (based on the de novo review of such doc12 uments by such entities) claim are protected from

13 disclosure under the attorney-client privilege;

14 (7) all existing or future documents relating to

15 studies of the smoking habits of minors or docu16 ments referring to any relationship between advertis17 ing and promotion and underage smoking;

18 (8) all original laboratory research conducted or

19 funded, directly or indirectly, by any participating

20 tobacco product manufacturer relating to the health

21 effects or safety of tobacco products, including all

22 original laboratory research relating to any methods

23 or means of making tobacco products less hazardous

24 to consumers;
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1 (9) all studies conducted or funded, directly or

2 indirectly, by any participating tobacco product

3 manufacturer, relating to tobacco product use by mi4 nors;

5 (10) all documents discussing or referring to

6 the relationship, if any, between advertising and pro7 motion and the use of tobacco products by minors;

8 (11) a privilege log describing each document or

9 each portion of a document otherwise subject to pub10 lic disclosure under this subsection that any partici11 pating tobacco product manufacturer maintains is

12 exempt from the public disclosure provisions of this

13 Act pursuant to subsection (d);

14 (12) a trade secrecy log describing each docu15 ment or each document otherwise subject to public

16 disclosure; and

17 (13) all other documents determined appro18 priate under regulations promulgated by the Sec19 retary.

20 (d) DISPUTE RESOLUTION PANEL.—

21 (1) ESTABLISHMENT.—The Judicial Conference

22 of the United States shall establish a Tobacco Docu23 ments Dispute Resolution Panel, to be composed of

24 three Federal judges to be appointed by the Con25 ference, to resolve all disputes involving claims of at-
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1 torney-client, work product, or trade secrets privilege

2 with respect to documents required to be deposited

3 into the Depository under subsection (c) that may be

4 brought by Federal, State, or local governmental of5 ficials or the public or asserted in any action by a

6 manufacturer.

7 (2) BASIS FOR DETERMINATIONS.—The deter8 minations of the Panel established under paragraph

9 (1) shall be based on—

10 (A) the American Bar Association/Amer11 ican Law Institute Model Rules or the prin12 cipals of Federal law with respect to attorney13 client or work product privilege; and

14 (B) the Uniform Trade Secrets Act with

15 respect to trade secrecy.

16 (3) DECISION.—Any decision of the Panel es17 tablished under paragraph (1) shall be final and

18 binding upon all Federal and State courts.

19 (4) ASSESSING OF FEES.—As part of a deter20 mination under this subsection, the Panel estab21 lished under paragraph (1) shall determined whether

22 a claimant of the privilege acted in good faith and

23 had a factual and legal basis for asserting the claim.

24 If the Panel determines that the claimant did not

25 act in good faith, the Panel may assess costs against
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1 the claimant, including a reasonable attorneys’ fee,

2 and may apply such other sanctions as the Panel de3 termines appropriate.

4 (5) ACCELERATED REVIEW.—The Panel estab5 lished under paragraph (1) shall establish proce6 dures for the accelerated review of challenges to a

7 claim of privilege. Such procedures shall include as8 surances that an individual filing a challenge to such

9 a claim need not make a prima facie showing of any

10 kind as a prerequisite to an in camera review of the

11 documents at issue.

12 (6) SPECIAL MASTERS.—The Panel established

13 under paragraph (1) may appoint Special Masters in

14 accordance with Rule 53 of the Federal Rules of

15 Civil Procedure. The cost relating to any Special

16 Master shall be assessed to the manufacturers as

17 part of a fee process to be established under regula18 tions promulgated by the Secretary.

19 (e) OTHER PROVISIONS.—

20 (1) NO WAIVER OF PRIVILEGE.—Compliance

21 with this section by the entities described in sub22 section (a) shall not be deemed to be a waiver on be23 half of such entities of any applicable privilege or

24 protection.
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1 (2) AVOIDANCE OF DESTRUCTION.—In estab2 lishing the Depository, procedures shall be imple3 mented to protect against the destruction of docu4 ments.

5 (3) DEEMED PRODUCED.—Any documents con6 tained in the Depository shall be deemed to have

7 been produced for purposes of any tobacco-related

8 litigation in the United States.

9 (f) DOCUMENTS.—For purposes of this section, the

10 term ‘‘documents’’ shall include any paper documents that

11 may be printed using data that is contained in computer

12 files.

13 SEC. 703. ENFORCEMENT.

14 (a) IN GENERAL.—The Attorney General, acting

15 through the National Tobacco Settlement Trust Fund, or

16 the chief law enforcement officer of a State may bring a

17 proceeding before the dispute resolution panel under sec18 tion 802(e) to enforce violations of such section. The panel

19 shall have exclusive jurisdiction over actions to enforce vio20 lations of this title.

21 (b) NOTICE.—The person against whom a violation

22 is alleged under subsection (a) shall be given notice of a

23 proceeding before the panel and an opportunity to be

24 heard. Participating tobacco product manufacturers shall

25 have the right to intervene in such proceedings.
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1 (c) PENALTIES.—Violations of this subtitle shall give

2 rise to civil penalty of not to exceed $15,000 per violation

3 and $1,000,000 for all violations adjudicated in a single

4 proceeding, except that no penalty may be assessed where

5 the person committing the violation had a good faith fac6 tual and legal basis that the document, portion of a docu7 ment, or portion of an index of document that is the sub8 ject of the alleged violation was exempt from public disclo9 sure under subsections (c) or (d) of section 702.

10 (d) SINGLE VIOLATION.—For purposes of this sec11 tion, a failure to disclose 1 or more portions of a single

12 document in violation of this title shall be considered to

13 be part of a single violation.

14 TITLE VIII—AGRICULTURAL

15 TRANSITION PROVISIONS

16 SEC. 801. SHORT TITLE.

17 This title may be cited as the ‘‘Tobacco Transition

18 Act’’.

19 SEC. 802. PURPOSES.

20 The purposes of this title are—

21 (1) to authorize the use of binding contracts be22 tween the United States and tobacco quota owners

23 and tobacco producers to compensate them for the

24 termination of Federal programs that support the

25 production of tobacco in the United States;
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1 (2) to make available to States funds for eco2 nomic assistance initiatives in counties of States that

3 are dependent on the production of tobacco; and

4 (3) to terminate Federal programs that support

5 the production of tobacco in the United States.

6 SEC. 803. DEFINITIONS.

7 In this title:

8 (1) ASSOCIATION.—The term ‘‘association’’

9 means a producer-owned cooperative marketing asso10 ciation that has entered into a loan agreement with

11 the Commodity Credit Corporation to make price

12 support available to producers.

13 (2) BUYOUT PAYMENT.—The term ‘‘buyout

14 payment’’ means a payment made to a quota owner

15 under section 814 in 1 or more installments in ac16 cordance with section 812(c)(1).

17 (3) CONTRACT.—The term ‘‘contract’’ or ‘‘to18 bacco transition contract’’ means a contract entered

19 into under section 812.

20 (4) GOVERNOR.—The term ‘‘Governor’’ means

21 the chief executive officer of a State.

22 (5) LEASE.—The term ‘‘lease’’ means a rental

23 of quota on either a cash rent or crop share basis.

24 (6) MARKETING YEAR.—The term ‘‘marketing

25 year’’ means—
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1 (A) in the case of Flue-cured tobacco, the

2 period beginning July 1 and ending the follow3 ing June 30; and

4 (B) in the case of each other kind of to5 bacco, the period beginning October 1 and end6 ing the following September 30.

7 (7) OWNER.—The term ‘‘owner’’ means a per8 son who, at the time of entering into a tobacco tran9 sition contract, owns quota provided by the Sec10 retary.

11 (8) PHASEOUT PERIOD.—The term ‘‘phaseout

12 period’’ means the 3-year period consisting of the

13 1999 through 2001 marketing years.

14 (9) PRICE SUPPORT.—The term ‘‘price sup15 port’’ means a nonrecourse loan provided by the

16 Commodity Credit Corporation through an associa17 tion for the kind of tobacco involved.

18 (10) PRODUCER.—The term ‘‘producer’’ means

19 a person who during at least 3 of the 1993 through

20 1997 crops of tobacco (as determined by the Sec21 retary) that were subject to quota—

22 (A) leased quota;

23 (B) shared in the risk of producing a crop

24 of tobacco; and

25 (C) marketed the tobacco subject to quota.
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1 (11) QUOTA.—The term ‘‘quota’’ means the

2 quantity of tobacco produced in the United States,

3 and marketed during a marketing year, that will be

4 used in, or exported from, the United States during

5 the marketing year (including an adjustment for

6 stocks), as estimated by the Secretary.

7 (12) SECRETARY.—The term ‘‘Secretary’’

8 means the Secretary of Agriculture.

9 (13) STATE.—The term ‘‘State’’ means each of

10 the several States of the United States, the District

11 of Columbia, the Commonwealth of Puerto Rico, and

12 any other territory or possession of the United

13 States.

14 (14) TOBACCO.—The term ‘‘tobacco’’ means

15 any kind of tobacco for which a marketing quota is

16 in effect or for which a marketing quota is not dis17 approved by producers.

18 (15) TOBACCO TRANSITION ACCOUNT.—The

19 term ‘‘Tobacco Transition Account’’ means the To20 bacco Transition Account established by section

21 811(a).

22 (16) TRANSITION PAYMENT.—The term ‘‘tran23 sition payment’’ means a payment made to a pro24 ducer under section 815 for each of the 1999

25 through 2001 marketing years.
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1 (17) TRUST FUND.—The term ‘‘Trust Fund’’

2 means the National Tobacco Settlement Trust Fund

3 established in the Treasury of the United States

4 consisting of amounts that are appropriated or cred5 ited to the Trust Fund from the tobacco settlement

6 approved by Congress.

7 (18) UNITED STATES.—The term ‘‘United

8 States’’, when used in a geographical sense, means

9 all of the States.

10 Subtitle A—Tobacco Production

11 Transition

12 CHAPTER 1—TOBACCO TRANSITION

13 CONTRACTS

14 SEC. 811. TOBACCO TRANSITION ACCOUNT.

15 (a) ESTABLISHMENT.—There is established a To16 bacco Transition Account into to which amounts shall be

17 transferred as provided for in section 841.

18 (b) USE.—Funds appropriated or credited to the To19 bacco Transition Account shall be available for providing

20 buyout payments and transition payments authorized

21 under this chapter.

22 (c) TERMINATION.—The Tobacco Transition Account

23 terminates effective September 30, 2001.
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1 SEC. 812. OFFER AND TERMS OF TOBACCO TRANSITION

2 CONTRACTS.

3 (a) OFFER.—The Secretary shall offer to enter into

4 a tobacco transition contract with each owner and pro5 ducer of tobacco.

6 (b) TERMS.—Under the terms of a contract, the

7 owner or producer shall agree, in exchange for a payment

8 made pursuant to section 814 or 815, as applicable, to

9 relinquish the value of quota that is owned or leased.

10 (c) RIGHTS OF OWNERS AND PRODUCERS.—

11 (1) OWNERS.—An owner shall receive a buyout

12 payment in 3 equal installments, 1 installment for

13 each of the 1999 through 2001 crops of tobacco, in

14 which case the owner shall have the right to con15 tinue production of each of those crops.

16 (2) PRODUCERS.—In the case of each of the

17 1999 through 2001 crops for the kind of tobacco in18 volved, a producer who is not an owner during the

19 1998 marketing year for the kind of tobacco in20 volved shall not be subject to any restrictions on the

21 quantity of tobacco produced or marketed.

22 SEC. 813. ELEMENTS OF CONTRACTS.

23 (a) DEADLINES FOR CONTRACTING.—

24 (1) COMMENCEMENT.—To the maximum extent

25 practicable, the Secretary shall commence entering
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1 into contracts under this chapter not later than 90

2 days after the date of enactment of this Act.

3 (2) DEADLINE.—The Secretary may not enter

4 into a contract under this chapter after June 30,

5 1999.

6 (b) DURATION OF CONTRACT.—

7 (1) BEGINNING DATE.—The term of a contract

8 shall begin on the date that is the beginning of the

9 1999 marketing year for the kind of tobacco in10 volved.

11 (2) TERMINATION DATE.—The term of a con12 tract shall terminate on the date that is the end of

13 the 2001 marketing year for the kind of tobacco in14 volved.

15 (c) TIME FOR PAYMENT.—

16 (1) IN GENERAL.—A buyout payment or transi17 tion payment shall be made not later than the date

18 that is the beginning of the marketing year for the

19 kind of tobacco involved for each year of the term

20 of a tobacco transition contract of an owner or pro21 ducer of tobacco.

22 (2) APPLICABILITY.—This subsection shall be

23 applicable to all payments covered by section 812(c).
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1 SEC. 814. BUYOUT PAYMENTS TO OWNERS.

2 (a) IN GENERAL.—During the phaseout period, the

3 Secretary shall make buyout payments to owners in ac4 cordance with section 812(c)(1).

5 (b) COMPENSATION FOR LOST VALUE.—The pay6 ment shall constitute compensation for the lost value to

7 the owner of the quota.

8 (c) PAYMENT CALCULATION.—Under this section,

9 the total amount of the buyout payment made to an owner

10 shall be determined by multiplying—

11 (1) $8.00; by

12 (2) the average annual quantity of quota owned

13 by the owner during the 1995 through 1997 crop

14 years.

15 SEC. 815. TRANSITION PAYMENTS TO PRODUCERS.

16 (a) IN GENERAL.—The Secretary shall make transi17 tion payments during each of the 1999 through 2001 mar18 keting years for a kind of tobacco that was subject to a

19 quota to a producer who—

20 (1) produced the kind of tobacco during at least

21 3 of the 1993 through 1997 crop years; and

22 (2) entered into a tobacco transition contract.

23 (b) TRANSITION PAYMENTS LIMITED TO LEASED

24 QUOTA.—A producer shall be eligible for transition pay25 ments only for the portion of the production of the pro-
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1 ducer that is subject to quota that is leased during the

2 3 crop years described in subsection (a)(1).

3 (c) COMPENSATION FOR LOST REVENUE.—The pay4 ments shall constitute compensation for the lost revenue

5 incurred by a tobacco producer during each of the 1999

6 through 2001 marketing years for the kind of tobacco in7 volved.

8 (d) ELECTION BY PRODUCER; PRODUCTION.—

9 (1) ELECTION.—The producer may elect which

10 3 of the 1993 through 1997 crop years shall be used

11 for the calculation under subsection (e).

12 (2) PRODUCTION.—The producer shall have the

13 burden of demonstrating to the Secretary the pro14 duction of tobacco for each year of the election.

15 (e) PAYMENT CALCULATION.—Under this section,

16 each of the 3 transition payments made to a producer for

17 the kind of tobacco involved shall be determined by mul18 tiplying—

19 (1) 40 cents; by

20 (2) the average quantity of the kind of tobacco

21 produced by the producer during the 3 crop years

22 elected by the producer under subsection (d).

23 SEC. 816. TOBACCO WORKER TRANSITION PROGRAM.

24 (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 such

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

14 such firm or subdivision have decreased abso15 lutely; and

16 (B) the implementation of the national to17 bacco settlement contributed importantly to

18 such workers’ separation or threat of separation

19 and to the decline in the sales or production of

20 such 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 such workers’ firm or subdivision

17 thereof is located.

18 (2) FINDINGS AND ASSISTANCE.—Upon receipt

19 of a petition under paragraph (1), the Governor

20 shall—

21 (A) notify the Secretary that the Governor

22 has received the petition;

23 (B) within 10 days after receiving the peti24 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).

20 Upon a determination that the petition meets such

21 criteria, the Secretary shall issue to workers covered

22 by the petition a certification of eligibility to apply

23 for the assistance described in subsection (d).

24 (2) DENIAL OF CERTIFICATION.—Upon the de25 nial of a certification with respect to a petition
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1 under paragraph (1), the Secretary shall review the

2 petition in accordance with the requirements of

3 other applicable assistance programs to determine if

4 the workers may be certified under such other provi5 sions.

6 (d) COMPREHENSIVE ASSISTANCE.—

7 (1) IN GENERAL.—Workers covered by a certifi8 cation issued by the Secretary under subsection

9 (c)(1) shall be provided with benefits and services

10 described in paragraph (2) in the same manner and

11 to the same extent as workers covered under a cer12 tification under subchapter A of title II of the Trade

13 Act of 1974 (19 U.S.C. 2271 et seq.), except that

14 the total amount of payments under this section for

15 any fiscal year shall not exceed $50,000,000.

16 (2) BENEFITS AND SERVICES.—The benefits

17 and services described in this paragraph are the fol18 lowing:

19 (A) Employment services of the type de20 scribed in section 235 of the Trade Act of 1974

21 (19 U.S.C. 2295).

22 (B) Training described in section 236 of

23 the Trade Act of 1974 (19 U.S.C. 2296), ex24 cept that notwithstanding the provisions of sec25 tion 236(a)(2)(A) of such Act, the total amount
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1 of payments for training under this section for

2 any fiscal year shall not exceed $25,000,000.

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 such Act (19

11 U.S.C. 2291(a)(5)(C), 2291(c)), authoriz12 ing the payment of trade readjustment al13 lowances upon a finding that it is not fea14 sible or appropriate to approve a training

15 program for a worker, shall not be applica16 ble to payment of allowances under this

17 section; and

18 (ii) notwithstanding the provisions of

19 section 233(b) of such 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 such Act (19 U.S.C. 2296(a)) by

2 the later of—

3 (I) the last day of the 16th week

4 of such 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 such

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 buyout payments for tobacco quotas

25 under section 812.
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1 (f) FUNDING.—Of the amounts in the Account, the

2 Secretary may use not to exceed $50,000,000 for each of

3 fiscal years 1999 through 2008 to provide assistance

4 under this section.

5 (g) EFFECTIVE DATE.—This section shall take effect

6 on the date that is the later of—

7 (1) October 1, 1998; or

8 (2) the date on which legislation implementing

9 the national tobacco settlement is enacted.

10 (h) TERMINATION DATE.—No assistance, vouchers,

11 allowances, or other payments may be provided under this

12 section after the date that is the earlier of—

13 (1) the date that is 10 years after the effective

14 date of this section under subsection (g); or

15 (2) the date on which legislation establishing a

16 program providing dislocated workers with com17 prehensive assistance substantially similar to the as18 sistance provided by this section becomes effective.

19 SEC. 817. FARMER OPPORTUNITY GRANTS.

20 Part A of title IV of the Higher Education Act of

21 1965 (20 U.S.C. 1070 et seq.) is amended by adding at

22 the end the following:
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1 ‘‘Subpart 9—Farmer Opportunity Grants

2 ‘‘SEC. 420D. STATEMENT OF PURPOSE.

3 ‘‘It is the purpose of this subpart to assist in making

4 available the benefits of postsecondary education to eligi5 ble students (determined in accordance with section 420F)

6 in institutions of higher education by providing farmer op7 portunity grants to all eligible students.

8 ‘‘SEC. 420E. PROGRAM AUTHORITY; AMOUNT AND DETER9 MINATIONS; APPLICATIONS.

10 ‘‘(a) PROGRAM AUTHORITY AND METHOD OF

11 DISTRIBUTION.—

12 ‘‘(1) PROGRAM AUTHORITY.—From the To13 bacco Transition Account under section 811 of the

14 PROTECT Act, the Secretary, during the period be15 ginning July 1, 1999, and ending September 30,

16 2024, shall pay to each eligible institution such sums

17 as may be necessary to pay to each eligible student

18 (determined in accordance with section 420F) for

19 each academic year during which that student is in

20 attendance at an institution of higher education, as

21 an undergraduate, a farmer opportunity grant in the

22 amount for which that student is eligible, as deter23 mined pursuant to subsection (b). Not less than 85

24 percent of such sums shall be advanced to eligible

25 institutions prior to the start of each payment period

26 and shall be based upon an amount requested by the
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1 institution as needed to pay eligible students, except

2 that this sentence shall not be construed to limit the

3 authority of the Secretary to place an institution on

4 a reimbursement system of payment.

5 ‘‘(2) CONSTRUCTION.—Nothing in this section

6 shall be construed to prohibit the Secretary from

7 paying directly to students, in advance of the begin8 ning of the academic term, an amount for which the

9 students are eligible, in cases where the eligible in10 stitution elects not to participate in the disburse11 ment system required by paragraph (1).

12 ‘‘(3) DESIGNATION.—Grants made under this

13 subpart shall be known as ‘farmer opportunity

14 grants’.

15 ‘‘(4) AMOUNTS.—To carry out this subpart

16 there shall be transferred the following amounts

17 from the Tobacco Transition Account:

18 ‘‘(A) $42,500,000 for each of the academic

19 years 1999–2000 through 2003–2004.

20 ‘‘(B) $50,000,000 for each of the academic

21 years 2004–2005 through 2008–2009.

22 ‘‘(C) $57,500,000 for each of the academic

23 years 2009–2010 through 2013–2014.

24 ‘‘(D) $65,000,000 for each of the academic

25 years 2014–2015 through 2018–2019.
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1 ‘‘(E) $72,500,000 for each of the academic

2 years 2019–2020 through 2023–2024.

3 ‘‘(b) AMOUNT OF GRANTS.—

4 ‘‘(1) AMOUNTS.—

5 ‘‘(A) IN GENERAL.—The amount of the

6 grant for a student eligible under this subpart

7 shall be—

8 ‘‘(i) $1,700, or such sum as may be

9 available, for each of the academic years

10 1999–2000 through 2003–2004;

11 ‘‘(ii) $2,000, or such sum as may be

12 available, for each of the academic years

13 2004–2005 through 2008–2009;

14 ‘‘(iii) $2,300, or such sum as may be

15 available, for each of the academic years

16 2009–2010 through 2013–2014;

17 ‘‘(iv) $2,600, or such sum as may be

18 available, for each of the academic years

19 2014–2015 through 2018–2019; and

20 ‘‘(v) $2,900, or such sum as may be

21 available, for each of the academic years

22 2019–2020 through 2023–2024.

23 ‘‘(B) PART-TIME RULE.—In any case

24 where a student attends an institution of higher

25 education on less than a full-time basis (includ-
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1 ing a student who attends an institution of

2 higher education on less than a half-time basis)

3 during any academic year, the amount of the

4 grant for which that student is eligible shall be

5 reduced in proportion to the degree to which

6 that student is not so attending on a full-time

7 basis, in accordance with a schedule of reduc8 tions established by the Secretary for the pur9 poses of this subparagraph, computed in ac10 cordance with this subpart. Such schedule of re11 ductions shall be established by regulation and

12 published in the Federal Register.

13 ‘‘(2) MAXIMUM.—No grant or combination of

14 grants under this subpart shall exceed the cost of

15 tuition and fees at the institution at which that stu16 dent is in attendance. If, with respect to any stu17 dent, it is determined that the amount of a grant ex18 ceeds the cost of tuition and fees for that year, the

19 amount of the farmer opportunity grant shall be re20 duced to an amount equal to the cost of tuition and

21 fees at such institution.

22 ‘‘(3) PROHIBITION.—No grant shall be awarded

23 under this subpart to any individual who is incarcer24 ated in any Federal, State, or local penal institution.

25 ‘‘(c) PERIOD OF ELIGIBILITY FOR GRANTS.—
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1 ‘‘(1) IN GENERAL.—The period during which a

2 student may receive grants shall be the period re3 quired for the completion of the first undergraduate

4 baccalaureate course of study being pursued by that

5 student at the institution at which the student is in

6 attendance, except that any period during which the

7 student is enrolled in a noncredit or remedial course

8 of study as described in paragraph (2) shall not be

9 counted for the purpose of this paragraph.

10 ‘‘(2) CONSTRUCTION.—Nothing in this section

11 shall be construed to—

12 ‘‘(A) exclude from eligibility courses of

13 study that are noncredit or remedial in nature

14 and that are determined by the institution to be

15 necessary to help the student be prepared for

16 the pursuit of a first undergraduate bacca17 laureate degree or certificate or, in the case of

18 courses in English language instruction, to be

19 necessary to enable the student to utilize al20 ready existing knowledge, training, or skills;

21 and

22 ‘‘(B) exclude from eligibility programs of

23 study abroad that are approved for credit by

24 the home institution at which the student is

25 enrolled.
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1 ‘‘(3) PROHIBITION.—No student is entitled to

2 receive farmer opportunity grant payments concur3 rently from more than 1 institution or from the Sec4 retary and an institution.

5 ‘‘(d) APPLICATIONS FOR GRANTS.—

6 ‘‘(1) IN GENERAL.—The Secretary shall from

7 time to time set dates by which students shall file

8 applications for grants under this subpart. The filing

9 of applications under this subpart shall be coordi10 nated with the filing of applications under section

11 411(d).

12 ‘‘(2) INFORMATION AND ASSURANCES.—Each

13 student desiring a grant for any year shall file with

14 the Secretary an application for the grant containing

15 such information and assurances as the Secretary

16 may deem necessary to enable the Secretary to carry

17 out the Secretary’s functions and responsibilities

18 under this subpart.

19 ‘‘(e) DISTRIBUTION OF GRANTS TO STUDENTS.—

20 Payments under this section shall be made in accordance

21 with regulations promulgated by the Secretary for such

22 purpose, in such manner as will best accomplish the pur23 pose of this section. Any disbursement allowed to be made

24 by crediting the student’s account shall be limited to tui25 tion and fees and, in the case of institutionally owned
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1 housing, room and board. The student may elect to have

2 the institution provide other such goods and services by

3 crediting the student’s account.

4 ‘‘(f) INSUFFICIENT FUNDING.—If, for any fiscal

5 year, the funds made available to carry out this subpart

6 from the Tobacco Community Revitalization Trust Fund

7 are insufficient to satisfy fully all grants for students de8 termined to be eligible under section 420F, the amount

9 of the grant provided under subsection (b) shall be re10 duced on a pro rata basis among all eligible students.

11 ‘‘(g) TREATMENT OF INSTITUTIONS AND STUDENTS

12 UNDER OTHER LAWS.—Any institution of higher edu13 cation that enters into an agreement with the Secretary

14 to disburse to students attending that institution the

15 amounts those students are eligible to receive under this

16 subpart shall not be deemed, by virtue of such agreement,

17 to be a contractor maintaining a system of records to ac18 complish a function of the Secretary. Recipients of farmer

19 opportunity grants shall not be considered to be individual

20 grantees for purposes of the Drug-Free Workplace Act of

21 1988 (41 U.S.C. 701 et seq.).

22 ‘‘SEC. 420F. STUDENT ELIGIBILITY.

23 ‘‘(a) IN GENERAL.—In order to receive any grant

24 under this subpart, a student shall—
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1 ‘‘(1) be a member of a tobacco farm family in

2 accordance with subsection (b);

3 ‘‘(2) be enrolled or accepted for enrollment in

4 a degree, certificate, or other program (including a

5 program of study abroad approved for credit by the

6 eligible institution at which such student is enrolled)

7 leading to a recognized educational credential at an

8 institution of higher education that is an eligible in9 stitution in accordance with section 487, and not be

10 enrolled in an elementary or secondary school;

11 ‘‘(3) if the student is presently enrolled at an

12 institution of higher education, be maintaining satis13 factory progress in the course of study the student

14 is pursuing in accordance with subsection (c);

15 ‘‘(4) not owe a refund on grants previously re16 ceived at any institution of higher education under

17 this title, or be in default on any loan from a stu18 dent loan fund at any institution provided for in

19 part D, or a loan made, insured, or guaranteed by

20 the Secretary under this title for attendance at any

21 institution;

22 ‘‘(5) file with the institution of higher education

23 that the student intends to attend, or is attending,

24 a document, that need not be notarized, but that

25 shall include—
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•S 1530 IS

1 ‘‘(A) a statement of educational purpose

2 stating that the money attributable to such

3 grant will be used solely for expenses related to

4 attendance or continued attendance at such in5 stitution; and

6 ‘‘(B) such student’s social security num7 ber; and

8 ‘‘(6) be a citizen of the United States.

9 ‘‘(b) TOBACCO FARM FAMILIES.—

10 ‘‘(1) IN GENERAL.—For the purpose of sub11 section (a)(1), a student is a member of a tobacco

12 farm family if during calendar year 1996 the stu13 dent was—

14 ‘‘(A) an individual who—

15 ‘‘(i) is an active tobacco producer; or

16 ‘‘(ii) is otherwise actively engaged in

17 the production of tobacco;

18 ‘‘(B) a spouse, son, daughter, stepson, or

19 stepdaughter of an individual described in sub20 paragraph (A);

21 ‘‘(C) an individual—

22 ‘‘(i) who was a brother, sister, step23 brother, stepsister, son-in-law, or daughter24 in-law of an individual described in sub25 paragraph (A); and
262

•S 1530 IS

1 ‘‘(ii) whose principal place of resi2 dence was the home of the individual de3 scribed in subparagraph (A); or

4 ‘‘(D) an individual who was a dependent

5 (within the meaning of section 152 of the Inter6 nal Revenue Code of 1986) of an individual de7 scribed in subparagraph (A).

8 ‘‘(2) ADMINISTRATION.—On request, the Sec9 retary of Agriculture shall provide to the Secretary

10 such information as is necessary to carry out this

11 subsection.

12 ‘‘(c) SATISFACTORY PROGRESS.—

13 ‘‘(1) IN GENERAL.—For the purpose of sub14 section (a)(3), a student is maintaining satisfactory

15 progress if—

16 ‘‘(A) the institution at which the student is

17 in attendance reviews the progress of the stu18 dent at the end of each academic year, or its

19 equivalent, as determined by the institution;

20 and

21 ‘‘(B) the student has at least a cumulative

22 C average or its equivalent, or academic stand23 ing consistent with the requirements for grad24 uation, as determined by the institution, at the

25 end of the second such academic year.
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1 ‘‘(2) SPECIAL RULE.—Whenever a student fails

2 to meet the eligibility requirements of subsection

3 (a)(3) as a result of the application of this sub4 section and subsequent to that failure the student

5 has academic standing consistent with the require6 ments for graduation, as determined by the institu7 tion, for any grading period, the student may, sub8 ject to this subsection, again be eligible under sub9 section (a)(3) for a grant under this subpart.

10 ‘‘(3) WAIVER.—Any institution of higher edu11 cation at which the student is in attendance may

12 waive paragraph (1) or (2) for undue hardship based

13 on—

14 ‘‘(A) the death of a relative of the student;

15 ‘‘(B) the personal injury or illness of the

16 student; or

17 ‘‘(C) special circumstances as determined

18 by the institution.

19 ‘‘(d) STUDENTS WHO ARE NOT SECONDARY SCHOOL

20 GRADUATES.—In order for a student who does not have

21 a certificate of graduation from a school providing second22 ary education, or the recognized equivalent of such certifi23 cate, to be eligible for any assistance under this subpart,

24 the student shall meet either 1 of the following standards:
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•S 1530 IS

1 ‘‘(1) EXAMINATION.—The student shall take an

2 independently administered examination and shall

3 achieve a score, specified by the Secretary, dem4 onstrating that such student can benefit from the

5 education or training being offered. Such examina6 tion shall be approved by the Secretary on the basis

7 of compliance with such standards for development,

8 administration, and scoring as the Secretary may

9 prescribe in regulations.

10 ‘‘(2) DETERMINATION.—The student shall be

11 determined as having the ability to benefit from the

12 education or training in accordance with such proc13 ess as the State shall prescribe. Any such process

14 described or approved by a State for the purposes of

15 this section shall be effective 6 months after the date

16 of submission to the Secretary unless the Secretary

17 disapproves such process. In determining whether to

18 approve or disapprove such process, the Secretary

19 shall take into account the effectiveness of such

20 process in enabling students without secondary

21 school diplomas or the recognized equivalent to bene22 fit from the instruction offered by institutions utiliz23 ing such process, and shall also take into account

24 the cultural diversity, economic circumstances, and
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•S 1530 IS

1 educational preparation of the populations served by

2 the institutions.

3 ‘‘(e) SPECIAL RULE FOR CORRESPONDENCE

4 COURSES.—A student shall not be eligible to receive a

5 grant under this subpart for a correspondence course un6 less such course is part of a program leading to an associ7 ate, bachelor, or graduate degree.

8 ‘‘(f) COURSES OFFERED THROUGH TELECOMMUNI9 CATIONS.—

10 ‘‘(1) RELATION TO CORRESPONDENCE

11 COURSES.—A student enrolled in a course of in12 struction at an eligible institution of higher edu13 cation (other than an institute or school that meets

14 the definition in section 521(4)(C) of the Carl D.

15 Perkins Vocational and Applied Technology Edu16 cation Act (20 U.S.C. 2471(4)(C))) that is offered

17 in whole or in part through telecommunications and

18 leads to a recognized associate, bachelor, or graduate

19 degree conferred by such institution shall not be

20 considered to be enrolled in correspondence courses

21 unless the total amount of telecommunications and

22 correspondence courses at such institution equals or

23 exceeds 50 percent of such courses.

24 ‘‘(2) RESTRICTION OR REDUCTIONS OF FINAN25 CIAL AID.—A student’s eligibility to receive a grant
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•S 1530 IS

1 under this subpart may be reduced if a financial aid

2 officer determines under the discretionary authority

3 provided in section 479A that telecommunications

4 instruction results in a substantially reduced cost of

5 attendance to such student.

6 ‘‘(3) DEFINITION.—For the purposes of this

7 subsection, the term ‘telecommunications’ means the

8 use of television, audio, or computer transmission,

9 including open broadcast, closed circuit, cable,

10 microwave, or satellite, audio conferencing, computer

11 conferencing, or video cassettes or discs, except that

12 such term does not include a course that is delivered

13 using video cassette or disc recordings at such insti14 tution and that is not delivered in person to other

15 students of that institution.

16 ‘‘(g) STUDY ABROAD.—Nothing in this subpart shall

17 be construed to limit or otherwise prohibit access to study

18 abroad programs approved by the home institution at

19 which a student is enrolled. An otherwise eligible student

20 who is engaged in a program of study abroad approved

21 for academic credit by the home institution at which the

22 student is enrolled shall be eligible to receive a grant under

23 this subpart, without regard to whether such study abroad

24 program is required as part of the student’s degree

25 program.
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•S 1530 IS

1 ‘‘(h) VERIFICATION OF SOCIAL SECURITY NUM2 BER.—The Secretary, in cooperation with the Commis3 sioner of Social Security, shall verify any social security

4 number provided by a student to an eligible institution

5 under subsection (a)(5)(B) and shall enforce the following

6 conditions:

7 ‘‘(1) PENDING VERIFICATION.—Except as pro8 vided in paragraphs (2) and (3), an institution shall

9 not deny, reduce, delay, or terminate a student’s eli10 gibility for assistance under this subpart because so11 cial security number verification is pending.

12 ‘‘(2) DENIAL OR TERMINATION.—If there is a

13 determination by the Secretary that the social secu14 rity number provided to an eligible institution by a

15 student is incorrect, the institution shall deny or ter16 minate the student’s eligibility for any grant under

17 this subpart until such time as the student provides

18 documented evidence of a social security number

19 that is determined by the institution to be correct.

20 ‘‘(3) CONSTRUCTION.—Nothing in this sub21 section shall be construed to permit the Secretary to

22 take any compliance, disallowance, penalty, or other

23 regulatory action against—

24 ‘‘(A) any institution of higher education

25 with respect to any error in a social security
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•S 1530 IS

1 number, unless such error was a result of fraud

2 on the part of the institution; or

3 ‘‘(B) any student with respect to any error

4 in a social security number, unless such error

5 was a result of fraud on the part of the

6 student.’’.

7 CHAPTER 2—RURAL ECONOMIC

8 ASSISTANCE BLOCK GRANTS

9 SEC. 821. RURAL ECONOMIC ASSISTANCE BLOCK GRANTS.

10 (a) IN GENERAL.—For each of fiscal years 1999

11 through 2001, the Secretary shall use funds in the To12 bacco Transition Account to provide block grants to to13 bacco-growing States to assist areas of such a State that

14 are economically dependent on the production of tobacco.

15 (b) FUNDING.—To carry out this section, there shall

16 be credited to the Tobacco Transition Account, from the

17 Trust Fund, $100,000,000 for each of fiscal years 1999

18 through 2001.

19 (c) 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 (b) to make block grant payments to the Governors

24 of tobacco-growing States.
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•S 1530 IS

1 (2) AMOUNT.—The amount of a block grant

2 paid to a tobacco-growing State shall be based on—

3 (A) the number of counties in the State in

4 which tobacco production is a significant part of

5 the county’s economy; and

6 (B) the level of economic dependence of

7 the county on tobacco production.

8 (d) GRANTS BY STATES TO ASSIST TOBACCO-GROW9 ING AREAS.—

10 (1) IN GENERAL.—A Governor of a tobacco11 growing State shall use the amount of the block

12 grant to the State under subsection (c) to make

13 grants to counties or other public or private entities

14 in the State to assist areas that are dependent on

15 the production of tobacco, as determined by the Gov16 ernor.

17 (2) AMOUNT.—The amount of a grant paid to

18 a county or other entity to assist an area shall be

19 based on (as determined by the Secretary)—

20 (A) the ratio of gross tobacco sales receipts

21 in the area to the total farm income in the area;

22 and

23 (B) the ratio of all tobacco related receipts

24 in the area to the total income in the area.
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•S 1530 IS

1 (3) USE OF GRANTS.—A county or other entity

2 that receives a grant under this subsection shall 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 who are eco6 nomically dependent on the production of tobacco,

7 including use for—

8 (A) on-farm diversification and alternatives

9 to the production of tobacco and risk manage10 ment; and

11 (B) off-farm activities such as development

12 of non-tobacco related jobs.

13 (e) TERMINATION OF AUTHORITY.—The authority

14 provided by this section terminates October 1, 2001.

15 Subtitle B—Tobacco Price Support

16 and Production Adjustment Pro17 grams

18 CHAPTER 1—TOBACCO PRICE SUPPORT

19 PROGRAM

20 SEC. 831. INTERIM REFORM OF TOBACCO PRICE SUPPORT

21 PROGRAM.

22 (a) PRICE SUPPORT RATES.—Section 106 of the Ag23 ricultural Act of 1949 (7 U.S.C. 1445) is amended—

24 (1) by striking subsection (a) and inserting the

25 following:
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•S 1530 IS

1 ‘‘(a) IN GENERAL.—The price support rate for each

2 kind of tobacco for which quotas have been approved shall

3 be reduced by—

4 ‘‘(1) for the 1999 crop, 25 percent from the

5 1998 support rate for the kind of tobacco involved;

6 ‘‘(2) for the 2000 crop, 10 percent from the

7 1999 support rate for the kind of tobacco involved;

8 and

9 ‘‘(3) for the 2001 crop, 10 percent from the

10 2000 support rate for the kind of tobacco involved.’’;

11 (2) by striking subsections (b) and (f); and

12 (3) by redesignating subsections (c), (d), and

13 (g) as subsections (b), (c), and (d), respectively.

14 (b) BUDGET DEFICIT ASSESSMENT.—Section 106 of

15 the Agricultural Act of 1949 (7 U.S.C. 1445) (as amended

16 by subsection (a)(3)) is amended by striking subsection

17 (d) and inserting the following:

18 ‘‘(d) TOBACCO TRANSITION PAYMENT.—Effective

19 only for the 1998 crop of tobacco, the Secretary of the

20 Treasury shall transfer from the Tobacco Transition Ac21 count of the National Tobacco Settlement Trust Fund an

22 amount equal to the product obtained by multiplying—

23 ‘‘(1) the amount per pound equal to 2 percent

24 of the national price support level for each kind of
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•S 1530 IS

1 tobacco for which price support is made available

2 under this Act; and

3 ‘‘(2) the total quantity of the kind of tobacco

4 that is produced or purchased in, or imported into,

5 the United States.’’.

6 (c) NO NET COST TOBACCO FUND AND ACCOUNT.—

7 (1) NO NET COST TOBACCO FUND.—Section

8 106A of the Agricultural Act of 1949 (7 U.S.C.

9 1445–1) is amended to read as follows:

10 ‘‘SEC. 106A. NO NET COST TOBACCO FUND.

11 ‘‘(a) DEFINITIONS.—In this section:

12 ‘‘(1) ASSOCIATION.—The term ‘association’

13 means a producer-owned cooperative marketing asso14 ciation that has entered into a loan agreement with

15 the Corporation to make price support available to

16 producers of a kind of tobacco.

17 ‘‘(2) CORPORATION.—The term ‘Corporation’

18 means the Commodity Credit Corporation, an agen19 cy and instrumentality of the United States within

20 the Department of Agriculture through which the

21 Secretary makes price support available to produc22 ers.

23 ‘‘(3) NET GAINS.—The term ‘net gains’ means

24 the amount by which the total proceeds obtained

25 from the sale by an association of a crop of quota
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•S 1530 IS

1 tobacco pledged to the Corporation for a price sup2 port loan exceeds the principal amount of the price

3 support loan made by the Corporation to the asso4 ciation on the crop, plus interest, charges, and costs

5 of administering the price support program.

6 ‘‘(4) NO NET COST TOBACCO FUND.—The term

7 ‘No Net Cost Tobacco Fund’ means the capital ac8 count established within each association under this

9 section.

10 ‘‘(5) PURCHASER.—The term ‘purchaser’

11 means any person who purchases in the United

12 States, either directly or indirectly for the account of

13 the person or another person, Flue-cured or burley

14 quota tobacco.

15 ‘‘(6) QUOTA TOBACCO.—The term ‘quota to16 bacco’ means any kind of tobacco for which market17 ing quotas are in effect or for which marketing

18 quotas are not disapproved by producers.

19 ‘‘(7) TRUST FUND.—The term ‘Trust Fund’

20 means the National Tobacco Settlement Trust Fund

21 established in the Treasury of the United States

22 consisting of amounts that are appropriated or cred23 ited to the Trust Fund from the tobacco settlement

24 approved by Congress.
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1 ‘‘(b) PRICE SUPPORT PROGRAM; LOANS.—The Sec2 retary—

3 ‘‘(1) may carry out the tobacco price support

4 program through the Corporation; and

5 ‘‘(2) shall, except as otherwise provided by this

6 section, continue to make price support available to

7 producers through loans to associations that, under

8 agreements with the Corporation, agree to make

9 loan advances to producers.

10 ‘‘(c) ESTABLISHMENT OF FUND.—

11 ‘‘(1) IN GENERAL.—Each association shall es12 tablish within the association a No Net Cost To13 bacco Fund.

14 ‘‘(2) AMOUNT.—There shall be transferred

15 from the Trust Fund to each No Net Cost Tobacco

16 Fund such amount as the Secretary determines will

17 be adequate to reimburse the Corporation for any

18 net losses that the Corporation may sustain under

19 its loan agreements with the association, based on—

20 ‘‘(A) reasonable estimates of the amounts

21 that the Corporation has lent or will lend to the

22 association for price support for the 1982 and

23 subsequent crops of quota tobacco, except that

24 for the 1986 and subsequent crops of burley

25 quota tobacco, the Secretary shall determine the
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•S 1530 IS

1 amount of assessments without regard to any

2 net losses that the Corporation may sustain

3 under the loan agreements of the Corporation

4 with the association for the 1983 crop of burley

5 quota tobacco;

6 ‘‘(B) the cost of administering the tobacco

7 price support program (as determined by the

8 Secretary); and

9 ‘‘(C) the proceeds that will be realized

10 from the sales of tobacco that are pledged to

11 the Corporation by the association as security

12 for loans.

13 ‘‘(d) ADMINISTRATION.—The Secretary shall—

14 ‘‘(1) require that the No Net Cost Tobacco

15 Fund established by each association be kept and

16 maintained separately from all other accounts of the

17 association and be used exclusively, as prescribed by

18 the Secretary, for the purpose of ensuring, insofar

19 as practicable, that the Corporation, under its loan

20 agreements with the association with respect to

21 1982 and subsequent crops of quota tobacco, will

22 suffer no net losses (including recovery of the

23 amount of loans extended to cover the overhead

24 costs of the association), after any net gains are ap25 plied to net losses of the Corporation under para-
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•S 1530 IS

1 graph (3), except that, notwithstanding any other

2 provision of law, the association may, with the ap3 proval of the Secretary, use funds in the No Net

4 Cost Tobacco Fund, including interest and other

5 earnings, for—

6 ‘‘(A) the purposes of reducing the associa7 tion’s outstanding indebtedness to the Corpora8 tion associated with 1982 and subsequent crops

9 of quota tobacco and making loan advances to

10 producers as authorized; and

11 ‘‘(B) any other purposes that will be mutu12 ally beneficial to producers and purchasers and

13 to the Corporation;

14 ‘‘(2) permit an association to invest the funds

15 in the No Net Cost Tobacco Fund in such manner

16 as the Secretary may approve, and require that the

17 interest or other earnings on the investment shall

18 become a part of the No Net Cost Tobacco Fund;

19 ‘‘(3) require that loan agreements between the

20 Corporation and the association provide that the

21 Corporation shall retain the net gains from each of

22 the 1982 and subsequent crops of tobacco pledged

23 by the association as security for price support

24 loans, and that the net gains will be used for the

25 purpose of—
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•S 1530 IS

1 ‘‘(A) offsetting any losses sustained by the

2 Corporation under its loan agreements with the

3 association for any of the 1982 and subsequent

4 crops of tobacco; or

5 ‘‘(B) reducing the outstanding balance of

6 any price support loan made by the Corporation

7 to the association under the loan agreements

8 for 1982 and subsequent crops of tobacco; and

9 ‘‘(4) effective for the 1986 and subsequent

10 crops of quota tobacco, if the Secretary determines

11 that the amount in the No Net Cost Tobacco Fund

12 or the net gains referred to in paragraph (3) exceeds

13 the total amount necessary for the purposes speci14 fied in this section, suspend the transfer of amounts

15 from the Trust Fund to the No Net Cost Tobacco

16 Fund under this section.

17 ‘‘(e) NONCOMPLIANCE.—

18 ‘‘(1) IN GENERAL.—If any association that has

19 entered into a loan agreement with the Corporation

20 with respect to any of the 1982 or subsequent crops

21 of quota tobacco fails or refuses to comply with this

22 section (including regulations promulgated under

23 this section) or the terms of the agreement, the Sec24 retary may terminate the agreement or provide that
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1 no additional loan funds may be made available

2 under the agreement to the association.

3 ‘‘(2) PRICE SUPPORT.—If the Secretary takes

4 action under paragraph (1), the Secretary shall

5 make price support available to producers of the

6 kind or kinds of tobacco, the price of which had been

7 supported through loans to the association, through

8 such other means as are authorized by this Act or

9 the Commodity Credit Corporation Charter Act (15

10 U.S.C. 714 et seq.).

11 ‘‘(f) TERMINATION OF AGREEMENT OR ASSOCIA12 TION.—If, under subsection (e), a loan agreement with an

13 association is terminated, or if an association having a

14 loan agreement with the Corporation is dissolved, merges

15 with another association, or otherwise ceases to operate,

16 the No Net Cost Tobacco Fund or the net gains referred

17 to in subsection (d)(3) shall be applied or disposed of in

18 such manner as the Secretary may approve or prescribe,

19 except that the net gains shall, to the extent necessary,

20 first be applied or used for the purposes specified in this

21 section.

22 ‘‘(g) REGULATIONS.—The Secretary shall issue such

23 regulations as are necessary to carry out this section.’’.
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1 (2) NO NET COST TOBACCO ACCOUNT.—Section

2 106B of the Agricultural Act of 1949 (7 U.S.C.

3 1445–2) is amended to read as follows:

4 ‘‘SEC. 106B. NO NET COST TOBACCO ACCOUNT.

5 ‘‘(a) DEFINITIONS.—In this section:

6 ‘‘(1) AREA.—The term ‘area’, when used in

7 connection with an association, means the general

8 geographical area in which farms of the producer9 members of the association are located, as deter10 mined by the Secretary.

11 ‘‘(2) ASSOCIATION.—The term ‘association’ has

12 the meaning given the term in section 106A(a)(1).

13 ‘‘(3) CORPORATION.—The term ‘Corporation’

14 has the meaning given the term in section

15 106A(a)(2).

16 ‘‘(4) NET GAINS.—The term ‘net gains’ has the

17 meaning given the term in section 106A(a)(3).

18 ‘‘(5) NO NET COST TOBACCO ACCOUNT.—The

19 term ‘No Net Cost Tobacco Account’ means an ac20 count established by and in the Corporation for an

21 association under this section.

22 ‘‘(6) PURCHASER.—The term ‘purchaser’ has

23 the meaning given the term in section 106A(a)(5).

24 ‘‘(7) TOBACCO.—The term ‘tobacco’ means any

25 kind of tobacco (as defined in section 301(b) of the
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•S 1530 IS

1 Agricultural Adjustment Act of 1938 (7 U.S.C.

2 1301(b))) for which marketing quotas are in effect

3 or for which marketing quotas are not disapproved

4 by producers.

5 ‘‘(8) TRUST FUND.—The term ‘Trust Fund’

6 has the meaning given the term in section

7 106A(a)(7).

8 ‘‘(b) PRICE SUPPORT PROGRAM; LOANS.—Notwith9 standing section 106A, the Secretary shall, on the request

10 of any association, and may, if the Secretary determines,

11 after consultation with the association, that the accumula12 tion of the No Net Cost Tobacco Fund for the association

13 under section 106A is, and is likely to remain, inadequate

14 to reimburse the Corporation for net losses that the Cor15 poration sustains under its loan agreements with the asso16 ciation—

17 ‘‘(1) continue to make price support available to

18 producers through the association in accordance

19 with loan agreements entered into between the Cor20 poration and the association; and

21 ‘‘(2) establish and maintain in accordance with

22 this section a No Net Cost Tobacco Account for the

23 association in lieu of the No Net Cost Tobacco Fund

24 established within the association under section

25 106A.
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1 ‘‘(c) ESTABLISHMENT OF ACCOUNT.—

2 ‘‘(1) IN GENERAL.—A No Net Cost Tobacco

3 Account established for an association under sub4 section (b)(2) shall be established within the Cor5 poration.

6 ‘‘(2) AMOUNT.—There shall be transferred

7 from the Trust Fund to each No Net Cost Tobacco

8 Account such amount as the Secretary determines

9 will be adequate to reimburse the Corporation for

10 any net losses that the Corporation may sustain

11 under its loan agreements with the association,

12 based on—

13 ‘‘(A) reasonable estimates of the amounts

14 that the Corporation has lent or will lend to the

15 association for price support for the 1982 and

16 subsequent crops of quota tobacco, except that

17 for the 1986 and subsequent crops of burley

18 quota tobacco, the Secretary shall determine the

19 amount of assessments without regard to any

20 net losses that the Corporation may sustain

21 under the loan agreements of the Corporation

22 with the association for the 1983 crop of burley

23 quota tobacco;
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•S 1530 IS

1 ‘‘(B) the cost of administering the tobacco

2 price support program (as determined by the

3 Secretary); and

4 ‘‘(C) the proceeds that will be realized

5 from the sales of the kind of tobacco involved

6 that are pledged to the Corporation by the asso7 ciation as security for loans.

8 ‘‘(3) ADMINISTRATION.—On the establishment

9 of a No Net Cost Tobacco Account for an associa10 tion, any amount in the No Net Cost Tobacco Fund

11 established within the association under section

12 106A shall be applied or disposed of in such manner

13 as the Secretary may approve or prescribe, except

14 that the amount shall, to the extent necessary, first

15 be applied or used for the purposes specified in that

16 section.

17 ‘‘(d) USE.—Amounts deposited in a No Net Cost To18 bacco Account established for an association shall be used

19 by the Secretary for the purpose of ensuring, insofar as

20 practicable, that the Corporation under its loan agree21 ments with the association will suffer, with respect to the

22 crop involved, no net losses (including recovery of the

23 amount of loans extended to cover the overhead costs of

24 the association), after any net gains are applied to net

25 losses of the Corporation under subsection (g).
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1 ‘‘(e) EXCESS AMOUNTS.—If the Secretary determines

2 that the amount in the No Net Cost Tobacco Account or

3 the net gains referred to in subsection (g) exceed the total

4 amount necessary to carry out this section, the Secretary

5 shall suspend the transfer of amounts from the Trust

6 Fund to the No Net Cost Tobacco Account under this sec7 tion.

8 ‘‘(f) TERMINATION OF AGREEMENT OR ASSOCIA9 TION.—In the case of an association for which a No Net

10 Cost Tobacco Account is established under subsection

11 (b)(2), if a loan agreement between the Corporation and

12 the association is terminated, if the association is dissolved

13 or merges with another association that has entered into

14 a loan agreement with the Corporation to make price sup15 port available to producers of the kind of tobacco involved,

16 or if the No Net Cost Tobacco Account terminates by op17 eration of law, amounts in the No Net Cost Tobacco Ac18 count and the net gains referred to in subsection (g) shall

19 be applied to or disposed of in such manner as the Sec20 retary may prescribe, except that the net gains shall, to

21 the extent necessary, first be applied to or used for the

22 purposes specified in this section.

23 ‘‘(g) NET GAINS.—The provisions of section

24 106A(d)(3) relating to net gains shall apply to any loan

25 agreement between an association and the Corporation en-
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1 tered into on or after the establishment of a No Net Cost

2 Tobacco Account for the association under subsection

3 (b)(2).

4 ‘‘(h) REGULATIONS.—The Secretary shall issue such

5 regulations as are necessary to carry out this section.’’.

6 (3) CONFORMING AMENDMENTS.—

7 (A) Section 314(a) of the Agricultural Ad8 justment Act of 1938 (7 U.S.C. 1314(a)) is

9 amended in the first sentence—

10 (i) by striking ‘‘(1)’’; and

11 (ii) by striking ‘‘, or (2)’’ and all that

12 follows through ‘‘106B(d)(1) of that Act’’.

13 (B) Section 320B(c)(1) of the Agricultural

14 Adjustment Act of 1938 (7 U.S.C. 1314h(c)(1))

15 is amended by inserting after ‘‘1445–2)’’ the

16 following: ‘‘(as in effect before the effective date

17 of the amendments made by section 831(c) of

18 the Tobacco Transition Act)’’.

19 (d) ADMINISTRATIVE COSTS.—Section 1109 of the

20 Agriculture and Food Act of 1981 (Public Law 97–98;

21 7 U.S.C. 1445 note) is repealed.

22 (e) CROPS.—This section and the amendments made

23 by this section shall apply with respect to the 1999 and

24 subsequent crops of the kind of tobacco involved.
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1 SEC. 832. TERMINATION OF TOBACCO PRICE SUPPORT

2 PROGRAM.

3 (a) PARITY PRICE SUPPORT.—Section 101 of the Ag4 ricultural Act of 1949 (7 U.S.C. 1441) is amended—

5 (1) in the first sentence of subsection (a), by

6 striking ‘‘tobacco (except as otherwise provided here7 in), corn,’’ and inserting ‘‘corn’’;

8 (2) by striking subsections (c), (g), (h), and (i);

9 (3) in subsection (d)(3)—

10 (A) by striking ‘‘, except tobacco,’’; and

11 (B) by striking ‘‘and no price support shall

12 be made available for any crop of tobacco for

13 which marketing quotas have been disapproved

14 by producers;’’; and

15 (4) by redesignating subsections (d) and (e) as

16 subsections (c) and (d), respectively.

17 (b) TERMINATION OF TOBACCO PRICE SUPPORT AND

18 NO NET COST PROVISIONS.—Sections 106, 106A, and

19 106B of the Agricultural Act of 1949 (7 U.S.C. 1445,

20 1445–1, 1445–2) are repealed.

21 (c) DEFINITION OF BASIC AGRICULTURAL COMMOD22 ITY.—Section 408(c) of the Agricultural Act of 1949 (7

23 U.S.C. 1428(c)) is amended by striking ‘‘tobacco,’’.

24 (d) REVIEW OF BURLEY TOBACCO IMPORTS.—Sec25 tion 3 of Public Law 98–59 (7 U.S.C. 625) is repealed.
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1 (e) POWERS OF COMMODITY CREDIT CORPORA2 TION.—Section 5 of the Commodity Credit Corporation

3 Charter Act (15 U.S.C. 714c) is amended by inserting

4 ‘‘(other than tobacco)’’ after ‘‘agricultural commodities’’

5 each place it appears.

6 (f) TRANSITION PROVISIONS.—

7 (1) LIABILITY.—The amendments made by this

8 section shall not affect the liability of any person

9 under any provision of law as in effect before the ef10 fective date of this section.

11 (2) TOBACCO STOCKS AND LOANS.—The Sec12 retary shall issue regulations that require—

13 (A) the orderly disposition of tobacco

14 stocks; and

15 (B) the repayment of all tobacco price sup16 port loans by not later than 1 year after the ef17 fective date of this section.

18 (g) CROPS.—This section and the amendments made

19 by this section shall apply with respect to the 2002 and

20 subsequent crops of the kind of tobacco involved.
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1 CHAPTER 2—TOBACCO PRODUCTION

2 ADJUSTMENT PROGRAMS

3 SEC. 835. TERMINATION OF TOBACCO PRODUCTION AD4 JUSTMENT PROGRAMS.

5 (a) DECLARATION OF POLICY.—Section 2 of the Ag6 ricultural Adjustment Act of 1938 (7 U.S.C. 1282) is

7 amended by striking ‘‘tobacco,’’.

8 (b) DEFINITIONS.—Section 301(b) of the Agricul9 tural Adjustment Act of 1938 (7 U.S.C. 1301(b)) is

10 amended—

11 (1) in paragraph (3)—

12 (A) by striking subparagraph (C); and

13 (B) by redesignating subparagraph (D) as

14 subparagraph (C);

15 (2) in paragraph (6)(A), by striking ‘‘tobacco,’’;

16 (3) in paragraph (7), by striking the following:

17 ‘‘tobacco (flue-cured), July 1–June 30;

18 ‘‘tobacco (other than flue-cured), October

19 1–September 30;’’;

20 (4) in paragraph (10)—

21 (A) by striking subparagraph (B); and

22 (B) by redesignating subparagraph (C) as

23 subparagraph (B);

24 (5) in paragraph (11)(B), by striking ‘‘and to25 bacco’’;
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1 (6) in paragraph (12), by striking ‘‘tobacco,’’;

2 (7) in paragraph (14)—

3 (A) in subparagraph (A), by striking

4 ‘‘(A)’’; and

5 (B) by striking subparagraphs (B), (C),

6 and (D);

7 (8) by striking paragraph (15);

8 (9) in paragraph (16)—

9 (A) by striking subparagraph (B); and

10 (B) by redesignating subparagraph (C) as

11 subparagraph (B); and

12 (10) by redesignating paragraphs (16) and (17)

13 as paragraphs (15) and (16), respectively.

14 (c) PARITY PAYMENTS.—Section 303 of the Agricul15 tural Adjustment Act of 1938 (7 U.S.C. 1303) is amended

16 in the first sentence by striking ‘‘rice, or tobacco,’’ and

17 inserting ‘‘or rice,’’.

18 (d) MARKETING QUOTAS.—Part I of subtitle B of

19 title III of the Agricultural Adjustment Act of 1938 (7

20 U.S.C. 1311 et seq.) is repealed.

21 (e) ADMINISTRATIVE PROVISIONS.—Section 361 of

22 the Agricultural Adjustment Act of 1938 (7 U.S.C. 1361)

23 is amended by striking ‘‘tobacco,’’.
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1 (f) ADJUSTMENT OF QUOTAS.—Section 371 of the

2 Agricultural Adjustment Act of 1938 (7 U.S.C. 1371) is

3 amended—

4 (1) in the first sentence of subsection (a), by

5 striking ‘‘peanuts, or tobacco’’ and inserting ‘‘or

6 peanuts’’; and

7 (2) in the first sentence of subsection (b), by

8 striking ‘‘peanuts or tobacco’’ and inserting ‘‘or pea9 nuts’’.

10 (g) REPORTS AND RECORDS.—Section 373 of the Ag11 ricultural Adjustment Act of 1938 (7 U.S.C. 1373) is

12 amended—

13 (1) by striking ‘‘peanuts, or tobacco’’ each place

14 it appears in subsections (a) and (b) and inserting

15 ‘‘or peanuts’’; and

16 (2) in subsection (a)—

17 (A) in the first sentence, by striking ‘‘all

18 persons engaged in the business of redrying,

19 prizing, or stemming tobacco for producers,’’;

20 and

21 (B) in the last sentence, by striking

22 ‘‘$500;’’ and all that follows through the period

23 at the end of the sentence and inserting

24 ‘‘$500.’’.
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1 (h) REGULATIONS.—Section 375(a) of the Agricul2 tural Adjustment Act of 1938 (7 U.S.C. 1375(a)) is

3 amended by striking ‘‘peanuts, or tobacco’’ and inserting

4 ‘‘or peanuts’’.

5 (i) EMINENT DOMAIN.—Section 378 of the Agricul6 tural Adjustment Act of 1938 (7 U.S.C. 1378) is amend7 ed—

8 (1) in the first sentence of subsection (c), by

9 striking ‘‘cotton, tobacco, and peanuts’’ and insert10 ing ‘‘cotton and peanuts’’; and

11 (2) by striking subsections (d), (e), and (f).

12 (j) BURLEY TOBACCO FARM RECONSTITUTION.—

13 Section 379 of the Agricultural Adjustment Act of 1938

14 (7 U.S.C. 1379) is amended—

15 (1) in subsection (a)—

16 (A) by striking ‘‘(a)’’; and

17 (B) in paragraph (6), by striking ‘‘, but

18 this clause (6) shall not be applicable in the

19 case of burley tobacco’’; and

20 (2) by striking subsections (b) and (c).

21 (k) ACREAGE-POUNDAGE QUOTAS.—Section 4 of the

22 Act entitled ‘‘An Act to amend the Agricultural Adjust23 ment Act of 1938, as amended, to provide for acreage24 poundage marketing quotas for tobacco, to amend the to25 bacco price support provisions of the Agricultural Act of
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1 1949, as amended, and for other purposes’’, approved

2 April 16, 1965 (Public Law 89–12; 7 U.S.C. 1314c note),

3 is repealed.

4 (l) BURLEY TOBACCO ACREAGE ALLOTMENTS.—The

5 Act entitled ‘‘An Act relating to burley tobacco farm acre6 age allotments under the Agricultural Adjustment Act of

7 1938, as amended’’, approved July 12, 1952 (7 U.S.C.

8 1315), is repealed.

9 (m) TRANSFER OF ALLOTMENTS.—Section 703 of

10 the Food and Agriculture Act of 1965 (7 U.S.C. 1316)

11 is repealed.

12 (n) ADVANCE RECOURSE LOANS.—Section

13 13(a)(2)(B) of the Food Security Improvements Act of

14 1986 (7 U.S.C. 1433c–1(a)(2)(B)) is amended by striking

15 ‘‘tobacco and’’.

16 (o) TOBACCO FIELD MEASUREMENT.—Section 1112

17 of the Omnibus Budget Reconciliation Act of 1987 (Public

18 Law 100–203) is amended by striking subsection (c).

19 (p) LIABILITY.—The amendments made by this sec20 tion shall not affect the liability of any person under any

21 provision of law as in effect before the effective date under

22 subsection (q).

23 (q) CROPS.—This section and the amendments made

24 by this section shall apply with respect to the 1999 and

25 subsequent crops of the kind of tobacco involved.
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1 Subtitle C—Funding

2 SEC. 841. TRUST FUND.

3 (a) REQUEST.—The Secretary of Agriculture shall

4 request the Trustees to transfer to the Tobacco Transition

5 Account, amounts authorized or necessary under sections

6 814, 815, 816, 817, and 821, and the amendments made

7 by section 831, to the account of the Commodity Credit

8 Corporation.

9 (b) TRANSFER.—On receipt of such a request, the

10 Trustees shall transfer amounts requested under sub11 section (a).

12 (c) USE.—The Secretary of Agriculture shall use the

13 amounts transferred under subsection (b) to carry out the

14 activities described in subsection (a).

15 (d) TERMINATION OF AUTHORITY.—The authority

16 provided under this section shall expire on September 30,

17 2001.

18 SEC. 842. COMMODITY CREDIT CORPORATION.

19 The Secretary may use the funds, facilities, and au20 thorities of the Commodity Credit Corporation to carry

21 out this title and the amendments made by this title.

22 TITLE IX—MISCELLANEOUS

23 PROVISIONS

24 SEC. 901. PROVISIONS RELATING TO NATIVE AMERICANS.

25 (a) INDIAN COUNTRY.—
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1 (1) IN GENERAL.—The provisions of this Act

2 (or an amendment made by this Act) shall apply to

3 the manufacture, distribution, and sale of tobacco

4 products within Indian country.

5 (2) DEFINITION.—As used in this section, the

6 term ‘‘Indian country’’ has the meaning given such

7 term in section 1151 of title 18, United States Code.

8 (b) INDIAN TRIBES.—

9 (1) IN GENERAL.—To the extent that an Indian

10 tribe or tribal organization engages in the manufac11 ture, distribution, or sale of tobacco products, the

12 provisions of this Act (or an amendment made by

13 this Act) shall apply to such tribe or organization.

14 (2) RELIGIOUS PRACTICE EXCEPTION.—In rec15 ognition of the religious and ceremonial uses of to16 bacco and tobacco products by many Indian tribes

17 and the members of such tribes, nothing in this Act

18 (or and amendment made by this Act) shall be con19 strued to infringe upon the rights of such tribes or

20 members to transfer, acquire, possess, or use any to21 bacco or tobacco products for such purposes. The

22 preceding sentence shall only be construed to apply

23 to those quantities of tobacco products necessary to

24 fulfill recognized religious or ceremonial purposes

25 and not to permit the general marketing of tobacco
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1 products not in compliance with chapter IX of the

2 Federal Food, Drug and Cosmetic Act.

3 (c) PAYMENTS TO TRUST FUND.—Any Indian tribe

4 or tribal organization that engages in the manufacturer

5 of tobacco products shall be subject to liability for fee pay6 ments under section 102, or shall be considered a non7 participating manufacturer and shall be subject to sur8 charges under subtitle B of title III.

9 (d) APPLICATION OF FEDERAL FOOD, DRUG AND

10 COSMETIC ACT REQUIREMENTS.—

11 (1) IN GENERAL.—The Secretary, in consulta12 tion with the Secretary of the Interior, shall promul13 gate regulations to provide for the waiver of any re14 quirements of the Food, Drug and Cosmetic Act

15 with respect to tobacco products manufactured, dis16 tributed, or sold within Indian country as appro17 priate to comply with subsection (b)(1).

18 (2) ELIGIBILITY FOR ASSISTANCE.—Under the

19 regulations promulgated under paragraph (1), the

20 Secretary, after consultation with the Secretary of

21 the Interior, may provide assistance to an Indian

22 tribe or tribal organization in meeting and enforcing

23 the requirements under such regulations if—

24 (A) the tribe or organization has a govern25 ing body that has powers and carries out duties
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1 that are similar to the powers and duties of

2 State or local governments;

3 (B) the functions to be exercised through

4 the use of such assistance relate to activities

5 within the exterior boundaries of the reservation

6 or other areas within the jurisdiction of the

7 tribe involved; and

8 (C) the tribe or organization is reasonably

9 expected to be capable of carrying out the func10 tions required by the Secretary.

11 (3) DETERMINATIONS.—The Secretary shall

12 make determinations concerning the eligibility of an

13 Indian tribe or tribal organization for assistance

14 under regulations under paragraph (1) not later

15 than 90 days after the date on which such tribe or

16 organization submits an application for such assist17 ance.

18 (e) RETAIL LICENSING REQUIREMENTS.—

19 (1) IN GENERAL.—The requirements of subtitle

20 C of title I shall apply to retailers that sell tobacco

21 products within Indian country.

22 (2) SELF-REGULATION.—Not later than 6

23 months after the date of enactment of this Act, the

24 Secretary shall promulgate regulations to permit the

25 Indian tribe or tribal organization to implement a
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1 tribal licensing program within the exterior bound2 aries of the reservation or other areas within the ju3 risdiction of the tribe.

4 (3) IMPLEMENTATION BY SECRETARY.—If the

5 Secretary determines that the Indian tribe or tribal

6 organization is not qualified to administer the re7 quirements of subtitle C of title I, the Secretary, in

8 consultation with the Secretary of the Interior, shall

9 implement such requirements on behalf of the tribe

10 or organization.

11 (f) ELIGIBILITY FOR PUBLIC HEALTH PAYMENTS.—

12 (1) IN GENERAL.—For each fiscal year the Sec13 retary shall pay to each Indian tribe that has an ap14 proved tribal anti-smoking plan a tribal grant for

15 the fiscal year in an amount equal to the amount de16 termined under paragraph (2), and shall reduce the

17 amounts payable under section 501 to any State in

18 which the service area or areas of the Indian tribe

19 are located by the amount so determined.

20 (2) AMOUNT DETERMINED.—The amount of

21 any funds for which an Indian tribe is eligible under

22 paragraph (1) shall be determined by the Secretary

23 based on the proportion of the total number of Indi24 ans residing on such tribe’s reservation in the State

25 as compared to the total population of the State and
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1 the amount allocated to Indian tribes under section

2 501.

3 (3) USE.—Amounts provided to a tribe or orga4 nization under this paragraph shall be used to fur5 ther the purposes of this Act and in accordance with

6 a plan submitted by the tribe or organization and

7 approved by the Secretary as being in compliance

8 with this Act. Tribes and tribal organizations shall

9 have the flexibility to utilize such amounts to meet

10 the unique health needs of such tribes within the

11 context of tribal health programs if such programs

12 meet the fundamental Federal requirements under

13 this Act as determined by the Secretary.

14 (4) REALLOTMENT.—Any amounts set-aside

15 and not expended under this paragraph shall be re16 allotted among other eligible tribes and organiza17 tions.

18 (g) OBLIGATION OF MANUFACTURERS.—A partici19 pating manufacturer shall not engage in any activity with20 in Indian country that is prohibited under the Protocol.

21 (h) INDIAN HEALTH SERVICE.—Amounts made

22 available under section 101(c)(3)(F) shall be provided to

23 the Indian Health Service to be used for anti-tobacco-re24 lated consumption and cessation activities 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;

7 (4) inpatient and outpatient services; and

8 (5) other programs and services provided

9 through the Indian Health Service or through tribal

10 contracts, compacts, grants or cooperative agree11 ments with the Indian Health Service and which are

12 deemed appropriate to raising the health status of

13 Indians.

14 (i) PREEMPTION.—

15 (1) GENERAL PREEMPTION.—Except as other16 wise provided for in this section, nothing in this Act

17 shall be construed as prohibiting an Indian tribe or

18 tribal organization from imposing requirements, pro19 hibitions, penalties or other measures to further the

20 purposes of this Act that are in addition to the re21 quirements, prohibitions, or penalties required under

22 this Act.

23 (2) PUBLIC EXPOSURE TO SMOKE.—Nothing in

24 title VI shall be construed to preempt or otherwise

25 affect any Indian tribe or tribal organization rule or
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1 practice that provides greater protection from the

2 health hazards of environmental tobacco smoke.

3 (3) NATIVE AMERICANS.—Except as provided

4 in this section, a State may not impose obligations

5 or requirements relating to the application of this

6 Act to Indian tribes and tribal organizations.

7 SEC. 902. WHISTLEBLOWER PROTECTIONS.

8 (a) PROHIBITION OF REPRISALS.—An employee of

9 any manufacturer, distributor, or retailer of a tobacco

10 product may not be discharged, demoted, or otherwise dis11 criminated against (with respect to compensation, terms,

12 conditions, or privileges of employment) as a reprisal for

13 disclosing to an employee of the Food and Drug Adminis14 tration, the Department of Justice, or any State or local

15 regulatory or enforcement authority, information relating

16 to a substantial violation of law related to this Act (or

17 an amendment made by this Act) or a State or local law

18 enacted to further the purposes of this Act.

19 (b) ENFORCEMENT.—Any employee or former em20 ployee who believes that such employee has been dis21 charged, demoted, or otherwise discriminated against in

22 violation of subsection (a) may file a civil action in the

23 appropriate United States district court before the end of

24 the 2-year period beginning on the date of such discharge,

25 demotion, or discrimination.
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1 (c) REMEDIES.—If the district court determines that

2 a violation has occurred, the court may order the manufac3 turer, distributor, or retailer involved to—

4 (1) reinstate the employee to the employee’s

5 former position;

6 (2) pay compensatory damages; or

7 (3) take other appropriate actions to remedy

8 any past discrimination.

9 (d) LIMITATION.—The protections of this section

10 shall not apply to any employee who—

11 (1) deliberately causes or participates in the al12 leged violation of law or regulation; or

13 (2) knowingly or recklessly provides substan14 tially false information to the Food and Drug Ad15 ministration, the Department of Justice, or any

16 other Federal, State or local regulatory or enforce17 ment authority.

18 SEC. 903. LIMITED ANTITRUST EXEMPTION.

19 (a) IN GENERAL.—The Federal antitrust laws, and

20 any similar laws of any State, shall not apply to any joint

21 discussion, consideration, review, action or agreement by

22 or among any participating manufacturers, or any individ23 uals acting on behalf of any participating manufacturers,

24 for the purposes of, and limited to—
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1 (1) entering into the Protocol under section 201

2 or a consent decree under section 241;

3 (2) refusing to deal with a distributor, retailer,

4 or other seller of tobacco products who distributes

5 such products for sale to, or offers for sale or sells

6 such products to, underage individuals, or who oth7 erwise fails to comply with applicable requirements

8 of this Act, the Protocol or a consent decree; or

9 (3) submitting an application relating to, enter10 ing into, or complying with or otherwise carrying out

11 the terms of any plan or program that has been ap12 proved under subsection (b).

13 (b) PROGRAMS FOR REDUCTIONS IN UNDERAGE

14 USE.—

15 (1) IN GENERAL.—The Attorney General may

16 approve, upon the application of 1 or more partici17 pating manufacturers, a plan or program to reduce

18 the use of tobacco products by underage individuals.

19 (2) DETERMINATION.—Not later than 90 days

20 after the date on which a plan or program is re21 ceived under paragraph (1), the Attorney General

22 shall approve or disapprove such plan or program.

23 In determining whether to approve a plan or pro24 gram under paragraph (1), the Secretary shall con25 sider whether the plan or program is appropriate as
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1 part of the effort to reduce the use of tobacco prod2 ucts by underage individuals and will not have the

3 effect of unduly restraining competition.

4 (3) WITHDRAWING OF APPROVAL.—Subsection

5 (a)(3) shall not apply with respect to any plan or

6 program that has not been approved by the Attorney

7 General or that has had such an approval subse8 quently withdrawn.

9 SEC. 904. PASS-THROUGH.

10 Nothing in this Act shall be construed as prohibiting

11 a manufacturer from passing the costs of the amount of

12 any payments, including surcharges, assessed under this

13 Act on to consumers of tobacco products as a further eco14 nomic deterrent to the use of such products.

15 SEC. 905. EFFECTIVE DATE.

16 This Act shall become effective on the date of enact17 ment of this Act.

Æ