II

105TH CONGRESS

1ST SESSION S. 1415

To reform and restructure the processes by which tobacco products are

manufactured, marketed, and distributed, to prevent the use of tobacco

products by minors, to redress the adverse health effects of tobacco

use, and for other purposes.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 7, 1997

Mr. MCCAIN (for himself, Mr. HOLLINGS, Mr. BREAUX, and Mr. GORTON) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation

A BILL

To reform and restructure the processes by which tobacco

products are manufactured, marketed, and distributed,

to prevent the use of tobacco products by minors, to

redress the adverse health effects of tobacco use, and

for other purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Universal Tobacco Settlement Act’’.

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

7 this Act is as follows:
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Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purposes.

TITLE I—REGULATION OF THE TOBACCO INDUSTRY

Sec. 100. Definitions.

Subtitle A—Restriction on Marketing and Advertising

Sec. 101. Prohibitions on advertising.

Sec. 102. General restrictions.

Sec. 103. Format and content requirements for labeling and advertising.

Sec. 104. Statement of intended use.

Sec. 105. Ban on nontobacco items and services, contests and games of chance,

and sponsorship of events.

Sec. 106. Use of product descriptors.

Subtitle B—Warnings, Labeling and Packaging

Sec. 111. Cigarette warnings.

Sec. 112. Smokeless tobacco warnings.

Sec. 113. Ingredients.

Sec. 114. Enforcement, regulations, and construction.

Sec. 115. Preemption.

Sec. 116. Reports.

Sec. 117. Exports.

Sec. 118. Repeals.

Subtitle C—Restriction on Access to Tobacco Products

Sec. 121. Requirements relating to retailers.

Sec. 122. Manufacture, sale, and distribution.

Subtitle D—Licensing of Retail Tobacco Sellers

Sec. 131. Establishment of program.

Sec. 132. Requirements.

Sec. 133. Penalties, revocations and suspensions.

Sec. 134. Federal licensing of military and other entities.

Subtitle E—Regulation of Tobacco Product Development and Manufacturing

Sec. 141. Reference.

Sec. 142. Treatment of tobacco products as drugs.

Sec. 143. Health and safety regulation of tobacco products.

Subtitle F—Compliance Plans and Corporate Culture

Sec. 151. Compliance plans.

Sec. 152. Compliance programs.

Sec. 153. Whistleblower protections.

Sec. 154. Provisions relating to lobbying.

Sec. 155. Termination of certain entities.

Sec. 156. Enforcement.

TITLE II—REDUCTION IN UNDERAGE TOBACCO USE

Sec. 201. Purpose.
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Sec. 202. Determination of underage use base percentages.

Sec. 203. Annual daily incidence of underage use of tobacco products.

Sec. 204. Required reduction in underage tobacco use.

Sec. 205. Application of surcharges.

Sec. 206. Abatement procedures.

TITLE III—STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO

TOBACCO SMOKE

Sec. 301. Definitions.

Sec. 302. Smoke-free environment policy.

Sec. 303. Citizen actions.

Sec. 304. Preemption.

Sec. 305. Regulations.

Sec. 306. Effective date.

TITLE IV—PUBLIC HEALTH AND OTHER PROGRAMS

Subtitle A—Public Health Block Grant Program

Sec. 401. Public Health Trust Fund.

Sec. 402. Block grants to States.

Sec. 403. Allotments.

Sec. 404. Use of funds.

Sec. 405. Withholding of funds.

Subtitle B—Other Programs

Sec. 411. National Smoking Cessation Program.

Sec. 412. National Reduction in Tobacco Usage Program.

Sec. 413. National Tobacco-Free Public Education Program.

Sec. 414. National Event Sponsorship Program.

Sec. 415. National Community Action Program.

Sec. 416. National Cessation Research Program.

Sec. 417. Use of surcharge payments.

TITLE V—CONSENT DECREES, NON-PARTICIPATING

MANUFACTURERS, AND STATE ENFORCEMENT

Sec. 501. Purposes.

Subtitle A—Consent Decrees and Non-Participating Manufacturers

Sec. 511. Consent decrees.

Sec. 512. National tobacco control protocol.

Sec. 513. Non-participating manufacturers.

Subtitle B—State Enforcement

Sec. 521. Requirement of no sale to minors law.

Sec. 522. State reporting.

Sec. 523. Reduction in State payments.

TITLE VI—PROVISIONS RELATING TO TOBACCO-RELATED CIVIL

ACTIONS

Sec. 601. General immunity.

Sec. 602. Civil liability for past conduct.

Sec. 603. Civil liability for future conduct.
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Sec. 604. Non-participating manufacturers.

TITLE VII—PUBLIC DISCLOSURE OF HEALTH RESEARCH

Sec. 701. Purpose.

Sec. 702. National Tobacco Document Depository.

TITLE VIII—ASSISTANCE TO TOBACCO GROWERS AND

COMMUNITIES

Sec. 801. Short title; table of contents.

Sec. 802. Definitions.

SUBTITLE A—TOBACCO COMMUNITY REVITALIZATION TRUST

FUND

Sec. 811. Establishment of Trust Fund.

Sec. 812. Contributions by tobacco product manufacturers and importers.

SUBTITLE B—AGRICULTURAL MARKET TRANSITION ASSISTANCE

Sec. 821. Payments for lost tobacco quota.

Sec. 822. Industry payments for all Department costs associated with tobacco

production.

Sec. 823. Tobacco community economic development grants.

Sec. 824. Modifications in Federal tobacco programs.

SUBTITLE C—FARMER AND WORKER TRANSITION ASSISTANCE

Sec. 831. Tobacco worker transition program.

Sec. 832. Farmer opportunity grants.

SUBTITLE D—IMMUNITY

Sec. 841. General immunity for tobacco producers and warehousers.

TITLE IX—EFFECTIVE DATES AND OTHER PROVISIONS

Sec. 901. Effective dates.

Sec. 902. Native Americans.

Sec. 903. Preemption.

1 SEC. 2. FINDINGS.

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

4 (1) The Food and Drug Administration and

5 other public health authorities view the use of to6 bacco products by the nation’s children as a ‘‘pedi7 atric disease’’ of epic and worsening proportions that
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1 results in new generations of tobacco-dependent chil2 dren and adults.

3 (2) There is a consensus within the scientific

4 and medical communities that tobacco products are

5 inherently dangerous and cause cancer, heart dis6 ease, and other serious adverse health effects.

7 (3) The Food and Drug Administration and

8 other health authorities have concluded that virtually

9 all new users of tobacco products are under the age

10 of 18. Virtually all Federal, State, and local officials

11 and entities believe that tobacco advertising and

12 marketing contribute significantly to the use of nico13 tine-containing tobacco products by adolescents and

14 as such, sweeping new restriction on the sale, pro15 motion, and distribution of such products are need16 ed.

17 (4) Federal, State, and local governments lack

18 many of the legal means and resources needed to ad19 dress the societal problems caused by the use of to20 bacco products.

21 (5) Public health authorities believe that the so22 cietal benefits of enacting tobacco settlement legisla23 tion in human and economic terms would be vast.

24 The Food and Drug Administration found that re25 ducing underage tobacco use 50 percent ‘‘would pre-
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1 vent well over 60,000 early deaths’’. The Food and

2 Drug Administration has estimated that the mone3 tary value of the regulations promulgated as a result

4 of this Act will be worth up to $43,000,000,000 per

5 year in reduced medical costs, improved productivity,

6 and the benefit of avoiding the premature death of

7 loved ones.

8 (6) The unique position occupied by tobacco in

9 the history and economy of the United States, the

10 magnitude of the actual and potential tobacco-relat11 ed litigation, the need to avoid the cost, expense, un12 certainty, and inconsistency associated with such

13 protracted litigation, the need to limit the sale, dis14 tribution, marketing, and advertising of tobacco

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

16 educate the public (especially young people) of the

17 health effects of using tobacco products all dictate

18 that it would be in the public interest to enact legis19 lation to facilitate a resolution of such matters.

20 (b) FINDINGS RELATED TO INTERSTATE COMMERCE

21 AND THE JUDICIAL SYSTEM.—Congress makes the follow22 ing findings:

23 (1) The sale, distribution, marketing, advertis24 ing, and use of tobacco products are activities sub25 stantially affecting interstate commerce. Such prod-
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1 ucts are sold, marketed, advertised, and distributed

2 in interstate commerce on a nationwide basis and

3 have a substantial effect on the economy of the

4 United States.

5 (2) The sale, distribution, marketing, advertis6 ing, and use of tobacco products are activities that

7 substantially affect interstate commerce by virtue of

8 the health care and other costs that Federal and

9 State governmental authorities have incurred be10 cause of the usage of tobacco products.

11 (3) Various civil actions brought by State attor12 neys general, cities, counties, the Commonwealth of

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

14 classes and individuals to recover damages relating

15 to tobacco-related diseases, conditions and products

16 are pending throughout the United States, of these

17 actions are slow-moving, expensive, and burdensome

18 not only for the litigants but also for Federal and

19 State judicial systems.

20 SEC. 3. PURPOSES.

21 It is the purpose of this Act to—

22 (1) reiterate and enhance the authority of the

23 Food and Drug Administration to regulate tobacco

24 products and provide for tobacco industry funding of

25 the oversight activities of the Administration;
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1 (2) ban all outdoor tobacco advertising and ban

2 all cartoon characters and human figures used in

3 connection with tobacco advertising;

4 (3) provide for the funding by the tobacco in5 dustry of an aggressive Federal enforcement pro6 gram relating to tobacco advertising and distribu7 tion, including a State-administered retail licensing

8 system to prevent minors from obtaining tobacco

9 products;

10 (4) subject the tobacco industry to severe finan11 cial penalties in the event that underage tobacco

12 usage does not decline radically over the next 10

13 years;

14 (5) provide for the establishment of national

15 standards to control the manufacturing of tobacco

16 products and the ingredients used in such products;

17 (6) provide certain regulatory powers to the

18 Food and Drug Administration to encourage the de19 velopment and marketing by the tobacco industry of

20 ‘‘less hazardous tobacco products’’, including the

21 power to regulate the level of nicotine in such prod22 ucts;

23 (7) require the manufacturers of tobacco prod24 ucts to disclose all present and future non-public in-
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1 ternal laboratory research regarding tobacco prod2 ucts;

3 (8) establish a minimum Federal standard to

4 limit smoking in public places;

5 (9) provide for the establishment of a National

6 Tobacco Settlement Trust Fund to be funded by the

7 tobacco industry and used in accordance with this

8 Act;

9 (10) provide for the establishment of a national

10 education-oriented counter advertising and tobacco

11 control campaign to be funded through the National

12 Tobacco Settlement Trust Fund;

13 (11) provide annual payments to States to fund

14 health benefits programs and to create a tobacco

15 products liability judgments and settlements fund to

16 be funded through the National Tobacco Settlement

17 Trust Fund; and

18 (12) provide for the establishment of a national

19 program of smoking cessation to be funded through

20 the National Tobacco Settlement Trust Fund.

21 TITLE I—REGULATION OF THE

22 TOBACCO INDUSTRY

23 SEC. 100. DEFINITIONS.

24 In this Act:
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1 (1) BRAND.—The term ‘‘brand’’ means a vari2 ety of a tobacco product distinguished by the tobacco

3 used, tar content, nicotine content, flavoring used,

4 size, filtration, or packaging.

5 (2) CIGAR.—The term ‘‘cigar’’ means any roll

6 of tobacco wrapped in leaf tobacco or in any sub7 stance containing tobacco (other than any roll of to8 bacco which is a cigarette or cigarillo within the

9 meaning of paragraph (3) or (4)).

10 (3) CIGARETTE.—The term ‘‘cigarette’’ means

11 any product which contains nicotine, is intended to

12 be burned under ordinary conditions of use, and con13 sists of—

14 (A) any roll of tobacco wrapped in paper

15 or in any substance not containing tobacco; and

16 (B) any roll of tobacco wrapped in any

17 substance containing tobacco which, because of

18 its appearance, the type of tobacco used in the

19 filler, or its packaging and labeling, is likely to

20 be offered to, or purchased by, consumers as a

21 cigarette described in subparagraph (A).

22 (4) CIGARILLOS.—The term ‘‘cigarillos’’ means

23 any roll of tobacco wrapped in leaf tobacco or any

24 substance containing tobacco (other than any roll of

25 tobacco which is a cigarette within the meaning of
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1 paragraph (3)) and as to which 1,000 units weigh

2 not more than 3 pounds.

3 (5) 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 (6) 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 (7) COMMISSIONER.—The term ‘‘Commis4 sioner’’ means the Commissioner of Food and

5 Drugs.

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

7 means any person who furthers the distribution of

8 tobacco products, whether domestic or imported, at

9 any point from the original place of manufacture to

10 the person who sells or distributes the product to in11 dividuals for personal consumption. Such term shall

12 not include common carriers.

13 (9) LITTLE CIGAR.—The term ‘‘little cigar’’

14 means any roll of tobacco wrapped in leaf tobacco or

15 any substance containing tobacco (other than any

16 roll of tobacco which is a cigarette within the mean17 ing of subsection (1)) and as to which 1,000 units

18 weigh not more than 3 pounds.

19 (10) MANUFACTURER.—The term ‘‘manufac20 turer’’ means any person, including any repacker or

21 relabeler, who manufactures, fabricates, assembles,

22 processes, or labels a finished tobacco product.

23 (11) NICOTINE.—The term ‘‘nicotine’’ means

24 the chemical substance named 3-(1-Methyl-2-
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1 pyrrolidinyl) pyridine or C10H14N2, including any

2 salt or complex of nicotine.

3 (12) PACKAGE.—The term ‘‘package’’ means a

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

5 tobacco products are offered for sale, sold, or other6 wise distributed to consumers.

7 (13) PERSON.—The term ‘‘person’’ means an

8 individual, partnership, corporation, or any other

9 business or legal entity.

10 (14) PIPE TOBACCO.—The term ‘‘pipe tobacco’’

11 means any loose tobacco that, because of its appear12 ance, type, packaging, or labeling, is likely to be of13 fered to, or purchased by, consumers as a tobacco

14 product to be smoked in a pipe.

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

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

17 purchase or otherwise obtain tobacco products for

18 personal consumption.

19 (16) RETAILER.—The term ‘‘retailer’’ means

20 any person who sells tobacco products to individuals

21 for personal consumption, or who operates a facility

22 where vending machines or self-service displays are

23 permitted under this title.

24 (17) SALE.—The term ‘‘sale’’ includes the sell25 ing, providing samples of, or otherwise making to-
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1 bacco products available for personal consumption in

2 any place within the scope of this Act.

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

4 means the Secretary of Health and Human Services.

5 (19) SMOKELESS TOBACCO.—The term ‘‘smoke6 less tobacco’’ means any product that consists of

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

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

9 or nasal cavity.

10 (20) STATE.—The term ‘‘State’’ includes the

11 several States, the District of Columbia, the Com12 monwealth of Puerto Rico, Guam, the Virgin Is13 lands, American Samoa, the Northern Mariana Is14 lands, and any other territory or possession of the

15 United States. Such term includes any political divi16 sion of any State.

17 (21) TOBACCO.—The term ‘‘tobacco’’ means to18 bacco in its unmanufactured form.

19 (22) TOBACCO PRODUCT.—The term ‘‘tobacco

20 product’’ means cigars, cigarettes, cigarillos, ciga21 rette tobacco, little cigars, pipe tobacco, and smoke22 less tobacco.

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

24 means the National Tobacco Settlement Trust Fund

25 established under section 401.
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1 Subtitle A—Restriction on

2 Marketing and Advertising

3 SEC. 101. PROHIBITIONS ON ADVERTISING.

4 (a) PROHIBITION ON OUTDOOR ADVERTISING.—

5 (1) IN GENERAL.—No manufacturer, distribu6 tor, or retailer may use any form of outdoor tobacco

7 product advertising, including billboards, posters, or

8 placards.

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

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

11 retailer shall not advertise tobacco products in any

12 arena or stadium where athletic, musical, artistic, or

13 other social or cultural events or activities occur.

14 (b) PROHIBITION ON USE OF HUMAN IMAGES AND

15 CARTOONS.—No manufacturer, distributor, or retailer

16 may use a human image or a cartoon character or cartoon17 type character in its advertising, labeling, or promotional

18 material with respect to a tobacco product.

19 (c) PROHIBITION ON ADVERTISING ON THE

20 INTERNET.—No manufacturer, distributor, or retailer

21 may use the Internet to advertise tobacco products unless

22 such an advertisement is inaccessible in or from the Unit23 ed States.

24 (d) PROHIBITION ON POINT-OF-SALE ADVERTIS25 ING.—
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1 (1) IN GENERAL.—Except as otherwise pro2 vided in this subsection, no manufacturer, distribu3 tor, or retailer may use point-of-sale advertising of

4 tobacco products.

5 (2) ADULT-ONLY STORES AND TOBACCO OUT6 LETS.—Paragraph (1) shall not apply to point of

7 sale advertising at adult-only stores and tobacco out8 lets.

9 (3) PERMISSIBLE ADVERTISING.—

10 (A) IN GENERAL.—Each manufacturer of

11 tobacco products may display not more than 2

12 separate point-of-sale advertisements in or at

13 each location at which tobacco products are of14 fered for sale.

15 (B) MARKET SHARE MANUFACTURERS.—A

16 manufacturer with at least 25 percent of the

17 market share of the tobacco product involved

18 may display an additional point-of-sale adver19 tisement in or at each location at which tobacco

20 products are offered for sale.

21 (C) RETAILERS.—A retailer may have not

22 more than 1 point-of-sale advertisement relating

23 to the retailer’s own or its wholesaler’s con24 tracted retailer or private label brand of tobacco

25 product. No manufacturer or distributor may
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1 enter into any arrangement with a retailer to

2 limit the ability of the retailer to display any

3 form of permissible point-of-sale advertisement

4 or promotional material originating with an5 other manufacturer or distributor.

6 (4) LIMITATIONS.—

7 (A) IN GENERAL.—A point of sale adver8 tisement permitted under this subsection shall

9 be comprised of a display area that is not larger

10 than 576 square inches (either individually or

11 in the aggregate) and shall consist only of black

12 letters on a white background or other recog13 nized typographical marks. Such advertisement

14 shall not be attached to nor located within 2

15 feet of any fixture on which candy is displayed

16 for sale.

17 (B) AUDIO AND VIDEO FORMATS.—Audio

18 and video advertisements permitted under sec19 tion 103(c) may be distributed to individuals

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

21 but may not be played or viewed at such point

22 of sale.

23 (C) DISPLAY FIXTURES.—Display fixtures

24 in the form of signs consisting of brand name
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1 and price and not larger than 2 inches in height

2 are permitted.

3 (5) DEFINITION.—For purposes of this sub4 section, the term ‘‘point-of-sale advertising’’ means

5 all printed or graphical materials bearing the brand

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

7 logo, motto, selling message, recognizable color or

8 pattern of colors, or any other indicia of product

9 identification similar or identical to those used for

10 tobacco products which, when used for its intended

11 purpose, can reasonably be anticipated to be seen by

12 customers at a location at which tobacco products

13 are offered for sale.

14 SEC. 102. GENERAL RESTRICTIONS.

15 (a) RESTRICTION ON PRODUCT NAMES.—A manu16 facturer shall not use a trade or brand name of a non17 tobacco product as the trade or brand name for a cigarette

18 or smokeless tobacco product, except for a tobacco product

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

20 and a nontobacco product that were sold in the United

21 States on or before January 1, 1995.

22 (b) ADVERTISING LIMITED TO FDA SPECIFIED

23 MEDIA.—

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

25 or retailer may, in accordance with this title, dis-
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1 seminate or cause to be disseminated advertising or

2 labeling which bears a tobacco product brand name

3 (alone or in conjunction with any other word) or any

4 other indicia of tobacco product identification only in

5 newspapers, in magazines, in periodicals or other

6 publications (whether periodic or limited distribu7 tion), on billboards, posters and placards in accord8 ance with section 101(a), in nonpoint-of-sale pro9 motional material (including direct mail), in point10 of-sale promotional material, and in audio or video

11 formats delivered at a point-of-sale.

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

13 or retailer that intends to disseminate, or to cause

14 to be disseminated, advertising or labeling for a to15 bacco product in a medium that is not described in

16 paragraph (1) shall notify the Commissioner not less

17 than 30 days prior to the date on which such me18 dium is to be used. Such notice shall describe the

19 medium and discuss the extent to which the adver20 tising or labeling may be seen by individuals who are

21 under 18 years of age.

22 (3) ACTION BY COMMISSIONER.—

23 (c) RESTRICTION ON PLACEMENT IN ENTERTAIN24 MENT MEDIA.—
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1 (1) IN GENERAL.—No payment shall be made

2 by any manufacturer, distributor, or retailer for the

3 placement of any tobacco product or tobacco product

4 package or advertisement—

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

6 motion picture produced for viewing by the gen7 eral public; or

8 (B) in a video or on a video game machine.

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

10 means any electronic amusement device that utilizes

11 a computer, microprocessor, or similar electronic cir12 cuitry and its own cathode ray tube, or is designed

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

14 interacts with the user of the device.

15 (d) RESTRICTIONS ON GLAMORIZATION OF TOBACCO

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

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

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

19 product through print or film media that appeals to indi20 viduals under 18 years of age or through a live perform21 ance by an entertainment artist that appeals to such indi22 viduals.
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1 SEC. 103. FORMAT AND CONTENT REQUIREMENTS FOR LA2 BELING AND ADVERTISING.

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

4 (b) and (c), each manufacturer, distributor, and retailer

5 advertising or causing to be advertised, disseminating or

6 causing to be disseminated, any labeling or advertising for

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

8 background.

9 (b) CERTAIN ADVERTISING EXCEPTED.—

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

11 apply to advertising—

12 (A) in any facility where vending machines

13 and self-service displays are permitted under

14 this title if the advertising involved—

15 (i) is not visible from outside of the

16 facility; and

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

18 the facility;

19 (B) that appears in any publication

20 (whether periodic, limited, or controlled dis21 tribution) that the manufacturer, distributor, or

22 retailer demonstrates is an adult publication.

23 (2) ADULT PUBLICATION.—For purposes of

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

25 means a newspaper, magazine, periodical, or other

26 publication—
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1 (A) whose readers under 18 years of age

2 constitute 15 percent or less of the total reader3 ship as measured by competent and reliable

4 survey evidence; and

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

6 individuals who are under 18 years of age as

7 measured by competent and reliable survey evi8 dence.

9 (c) AUDIO OR VIDEO FORMATS.—Each manufac10 turer, distributor, and retailer advertising or causing to

11 be advertised any advertising for a tobacco product in an

12 audio or video format shall comply with the following:

13 (1) With respect to an audio format, the adver14 tising shall be limited to words only with no music

15 or sound effects.

16 (2) With respect to a video format, the advertis17 ing shall be limited to static black text only on a

18 white background. Any audio with the video adver19 tising shall be limited to words only with no music

20 or sound effects.

21 SEC. 104. STATEMENT OF INTENDED USE.

22 (a) REQUIREMENT.—Each manufacturer, distribu23 tor, and retailer advertising or causing to be advertised,

24 disseminating or causing to be disseminated, advertising

25 concerning cigarettes, cigarette tobacco, or smokeless to-
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1 bacco products otherwise permitted under this title shall

2 include, as provided in section 502 of the Federal Food,

3 Drug, and Cosmetic Act (21 U.S.C. 352), the established

4 name of the product and a statement of the intended use

5 of the product as provided for in subsection (b).

6 (b) USE STATEMENTS.—

7 (1) CIGARETTES.—A statement of intended use

8 for cigarettes or cigarette tobacco is as follows

9 (whichever is appropriate):

10 Cigarettes—A Nicotine-Delivery Device for Per11 sons 18 or Older.

12 Cigarette Tobacco—A Nicotine-Delivery Device

13 for Persons 18 or Older.

14 (2) SMOKELESS TOBACCO.—A statement of in15 tended use for a smokeless tobacco product is as fol16 lows (whichever is appropriate):

17 Loose Leaf Chewing Tobacco—A Nicotine-De18 livery Device for Persons 18 or Older.

19 Plug Chewing Tobacco—A Nicotine-Delivery

20 Device for Persons 18 or Older.

21 Twist Chewing Tobacco—A Nicotine-Delivery

22 Device for Persons 18 or Older.

23 Moist Snuff—A Nicotine-Delivery Device for

24 Persons 18 or Older.
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1 Dry Snuff—A Nicotine-Delivery Device for Per2 sons 18 or Older.

3 (c) TYPE AND LOCATION.—Requirements with re4 spect to type size, style, font, and location shall be deter5 mined by the Commissioner.

6 SEC. 105. BAN ON NONTOBACCO ITEMS AND SERVICES,

7 CONTESTS AND GAMES OF CHANCE, AND

8 SPONSORSHIP OF EVENTS.

9 (a) BAN ON ALL NONTOBACCO MERCHANDISE.—No

10 manufacturer, importer, distributor, or retailer shall mar11 ket, license, distribute, sell, or cause to be marketed, li12 censed, distributed or sold any item (other than tobacco

13 products) or service which bears the brand name (alone

14 or in conjunction with any other word), logo, symbol,

15 motto, selling message, recognizable color or pattern of

16 colors, or any other indicia of product identification simi17 lar or identifiable to those used for any brand of tobacco

18 products.

19 (b) GIFTS, CONTESTS, AND LOTTERIES.—No manu20 facturer, distributor, or retailer shall offer or cause to be

21 offered to any person purchasing tobacco products any gift

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

23 of the purchase of such products, or to any person in con24 sideration of furnishing evidence, such as credits, proofs25 of-purchase, or coupons, of such a purchase.
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1 (c) SPONSORSHIP.—

2 (1) IN GENERAL.—No manufacturer, distribu3 tor, or retailer shall sponsor or cause to be spon4 sored any athletic, musical, artistic, or other social

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

6 in which the brand name (alone or in conjunction

7 with any other word), logo, motto, selling message,

8 recognizable color or pattern of colors, or any other

9 indicia of product identification similar or identical

10 to those used for tobacco products is used.

11 (2) USE OF CORPORATE NAME.—A manufac12 turer, distributor, or retailer may sponsor or cause

13 to be sponsored any athletic, musical, artistic, or

14 other social or cultural event in the name of the cor15 poration which manufactures the tobacco product

16 if—

17 (A) both the corporate name and the cor18 poration were registered and in use in the Unit19 ed States prior to January 1, 1995; and

20 (B) the corporate name does not include

21 any brand name (alone or in conjunction with

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

23 message, recognizable color or pattern of colors,

24 or any other indicia or product identification
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1 identical or similar to, or identifiable with,

2 those used for any brand of tobacco products.

3 SEC. 106. USE OF PRODUCT DESCRIPTORS.

4 (a) IN GENERAL.—With respect to a tobacco product,

5 the label of which bears a product description (such as

6 ‘‘light’’ or ‘‘low tar’’), such label shall also contain, and

7 any advertisement concerning such product shall contain,

8 a mandatory disclaimer, to be established by the Sec9 retary, that states that such product has not been shown

10 to be less hazardous than another product of that type.

11 (b) RULE OF CONSTRUCTION.—Nothing in this sec12 tion shall be construed to limit the authority of the Food

13 and Drug Administration with respect to words used as

14 product descriptors.

15 Subtitle B—Warnings, Labeling

16 and Packaging

17 SEC. 111. CIGARETTE WARNINGS.

18 (a) IN GENERAL.—

19 (1) PACKAGING.—It shall be unlawful for any

20 person to manufacture, package, or import for sale

21 or distribution within the United States any ciga22 rettes the package of which fails to bear, in accord23 ance with the requirements of this section, one of

24 the following labels:

25 WARNING: Cigarettes Are Addictive.
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1 WARNING: Tobacco Smoke Can Harm Your

2 Children.

3 WARNING: Cigarettes Cause Fatal Lung Dis4 ease.

5 WARNING: Cigarettes Cause Cancer.

6 WARNING: Cigarettes Cause Strokes And

7 Heart Disease.

8 WARNING: Smoking During Pregnancy Can

9 Harm Your Baby.

10 WARNING: Smoking Can Kill You.

11 WARNING: Tobacco Smoke Causes Fatal

12 Lung Disease In Nonsmokers.

13 WARNING: Quitting Smoking Now Greatly

14 Reduces Serious Risks To Your Health.

15 (2) ADVERTISING.—It shall be unlawful for any

16 manufacturer or importer of cigarettes to advertise

17 or cause to be advertised within the United States

18 any cigarette unless the advertising bears, in accord19 ance with the requirements of this section, one of

20 the following labels:

21 WARNING: Cigarettes Are Addictive.

22 WARNING: Tobacco Smoke Can Harm Your

23 Children.

24 WARNING: Cigarettes Cause Fatal Lung Dis25 ease.
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1 WARNING: Cigarettes Cause Cancer.

2 WARNING: Cigarettes Cause Strokes And

3 Heart Disease.

4 WARNING: Smoking During Pregnancy Can

5 Harm Your Baby.

6 WARNING: Smoking Can Kill You.

7 WARNING: Tobacco Smoke Causes Fatal

8 Lung Disease In Nonsmokers.

9 WARNING: Quitting Smoking Now Greatly

10 Reduces Serious Risks To Your Health.

11 (b) REQUIREMENTS FOR LABELING.—

12 (1) LOCATION.—Each label statement required

13 by paragraph (1) of subsection (a) shall be located

14 on the upper portion of the front panel of the ciga15 rette package (or carton) and occupy not less than

16 25 percent of such front panel.

17 (2) TYPE AND COLOR.—With respect to each

18 label statement required by paragraph (1) of sub19 section (a), the phrase ‘‘WARNING’’ shall appear in

20 capital letters and the label statement shall be print21 ed in 17 point type with adjustments as determined

22 appropriate by the Commissioner to reflect the

23 length of the required statement. All the letters in

24 the label shall appear in conspicuous and legible

25 type, in contrast by typography, layout, or color with
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1 all other printed material on the package, and be

2 printed in an alternating black-on-white and white3 on-black format as determined appropriate by the

4 Commissioner.

5 (3) EXCEPTION.—The provisions of paragraph

6 (1) shall not apply in the case of a flip-top cigarette

7 package (offered for sale on the date of enactment

8 of this Act) where the front portion of the flip-top

9 does not comprise at least 25 percent of the front

10 panel. In the case of such a package, the label state11 ment required by paragraph (1) of subsection (a)

12 shall occupy the entire front portion of the flip top.

13 (c) REQUIREMENTS FOR ADVERTISING.—

14 (1) LOCATION.—Each label statement required

15 by paragraph (2) of subsection (a) shall occupy not

16 less than 20 percent of the area of the advertisement

17 involved.

18 (2) TYPE AND COLOR.—

19 (A) TYPE.—With respect to each label

20 statement required by paragraph (2) of sub21 section (a), the phrase ‘‘WARNING’’ shall ap22 pear in capital letters and the label statement

23 shall be printed in the following types:
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1 (i) With respect to whole page adver2 tisements on broadsheet newspaper—45

3 point type.

4 (ii) With respect to half page adver5 tisements on broadsheet newspaper—39

6 point type.

7 (iii) With respect to whole page adver8 tisements on tabloid newspaper—39 point

9 type.

10 (iv) With respect to half page adver11 tisements on tabloid newspaper—27 point

12 type.

13 (v) With respect to DPS magazine ad14 vertisements—31.5 point type.

15 (vi) With respect to whole page maga16 zine advertisements—31.5 point type.

17 (vii) With respect to 28cm x 3 column

18 advertisements—22.5 point type.

19 (viii) With respect to 20cm x 2 col20 umn advertisements—15 point type.

21 The Commissioner may revise the required type

22 sizes as the Commissioner determines appro23 priate within the 20 percent requirement.

24 (B) COLOR.—All the letters in the label

25 under this paragraph shall appear in conspicu-
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1 ous and legible type, in contrast by typography,

2 layout, or color with all other printed material

3 on the package, and be printed in an alternat4 ing black-on-white and white-on-black format as

5 determined appropriate by the Commissioner.

6 (d) ROTATION OF LABEL STATEMENTS.—

7 (1) IN GENERAL.—Except as provided in para8 graph (2), the label statements specified in para9 graphs (1) and (2) of subsection (a) shall be rotated

10 by each manufacturer or importer of cigarettes quar11 terly in alternating sequence on packages of each

12 brand of cigarettes manufactured by the manufac13 turer or importer and in the advertisements for each

14 such brand of cigarettes in accordance with a plan

15 submitted by the manufacturer or importer and ap16 proved by the Federal Trade Commission. The Fed17 eral Trade Commission shall approve a plan submit18 ted by a manufacturer or importer of cigarettes

19 which will provide the rotation required by this sub20 section and which assures that all of the labels re21 quired by paragraphs (1) and (2) will be displayed

22 by the manufacturer or importer at the same time.

23 (2) APPLICATION OF OTHER ROTATION RE24 QUIREMENTS.—
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1 (A) IN GENERAL.—A manufacturer or im2 porter of cigarettes may apply to the Federal

3 Trade Commission to have the label rotation

4 described in subparagraph (C) apply with re5 spect to a brand style of cigarettes manufac6 tured or imported by such manufacturer or im7 porter if—

8 (i) the number of cigarettes of such

9 brand style sold in the fiscal year of the

10 manufacturer or importer preceding the

11 submission of the application is less than

1 12 ⁄4 of 1 percent of all the cigarettes sold in

13 the United States in such year; and

(ii) more than 1 14 ⁄2 of the cigarettes

15 manufactured or imported by such manu16 facturer or importer for sale in the United

17 States are packaged into brand styles

18 which meet the requirements of clause (i).

19 If an application is approved by the Commis20 sion, the label rotation described in subpara21 graph (C) shall apply with respect to the appli22 cant during the 1-year period beginning on the

23 date of the application approval.

24 (B) PLAN.—An applicant under subpara25 graph (A) shall include in its application a plan
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1 under which the label statements specified in

2 paragraph (1) of subsection (a) will be rotated

3 by the applicant manufacturer or importer in

4 accordance with the label rotation described in

5 subparagraph (C).

6 (C) OTHER ROTATION REQUIREMENTS.—

7 Under the label rotation which the manufac8 turer or importer with an approved application

9 may put into effect, each of the labels specified

10 in paragraph (1) of subsection (a) shall appear

11 on the packages of each brand style of ciga12 rettes with respect to which the application was

13 approved an equal number of times within the

14 12-month period beginning on the date of the

15 approval by the Commission of the application.

16 (e) APPLICATION OF REQUIREMENT.—Subsection (a)

17 does not apply to a distributor, a retailer of cigarettes who

18 does not manufacture, package, or import cigarettes for

19 sale or distribution within the United States.

20 (f) TELEVISION AND RADIO ADVERTISING.—It shall

21 be unlawful to advertise cigarettes and little cigars on any

22 medium of electronic communications subject to the juris23 diction of the Federal Communications Commission.

24 SEC. 112. SMOKELESS TOBACCO WARNINGS.

25 (a) IN GENERAL.—
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1 (1) PACKAGING.—It shall be unlawful for any

2 person to manufacture, package, or import for sale

3 or distribution within the United States any smoke4 less tobacco product the package of which fails to

5 bear, in accordance with the requirements of this

6 section, one of the following labels:

7 WARNING: This Product May Cause Mouth

8 Cancer.

9 WARNING: This Product May Cause Gum

10 Disease And Tooth Loss.

11 WARNING: This Product Is Not A Safe Alter12 native To Cigarettes.

13 WARNING: Smokeless Tobacco Is Addictive.

14 (2) ADVERTISING.—It shall be unlawful for any

15 manufacturer or importer of smokeless tobacco prod16 ucts to advertise or cause to be advertised within the

17 United States any smokeless tobacco product unless

18 the advertising bears, in accordance with the re19 quirements of this section, one of the following la20 bels:

21 WARNING: This Product May Cause Mouth

22 Cancer.

23 WARNING: This Product May Cause Gum

24 Disease And Tooth Loss.
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1 WARNING: This Product Is Not A Safe Alter2 native To Cigarettes.

3 WARNING: Smokeless Tobacco Is Addictive.

4 (b) REQUIREMENTS FOR LABELING.—

5 (1) LOCATION.—Each label statement required

6 by paragraph (1) of subsection (a) shall be located

7 on the principal display panel of the product and oc8 cupy not less than 25 percent of such panel.

9 (2) TYPE AND COLOR.—With respect to each

10 label statement required by paragraph (1) of sub11 section (a), the phrase ‘‘WARNING’’ shall appear in

12 capital letters and the label statement shall be print13 ed in 17 point type with adjustments as determined

14 appropriate by the Commissioner to reflect the

15 length of the required statement. All the letters in

16 the label shall appear in conspicuous and legible type

17 in contrast by typography, layout, or color with all

18 other printed material on the package and be print19 ed in an alternating black on white and white on

20 black format as determined appropriate by the Com21 missioner.

22 (c) ADVERTISING AND ROTATION.—The provisions of

23 subsections (c) and (d)(1) of section 111 shall apply to

24 advertisements for smokeless tobacco products and the ro-
36

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1 tation of the label statements required under subsection

2 (a)(1) on such products.

3 (d) APPLICATION OF REQUIREMENT.—Subsection (a)

4 does not apply to a distributor or a retailer of smokeless

5 tobacco products who does not manufacture, package, or

6 import such products for sale or distribution within the

7 United States.

8 (e) TELEVISION AND RADIO ADVERTISING.—It shall

9 be unlawful to advertise smokeless tobacco on any medium

10 of electronic communications subject to the jurisdiction of

11 the Federal Communications Commission.

12 SEC. 113. INGREDIENTS.

13 Each person who manufactures, packages, or imports

14 cigarettes or smokeless tobacco products shall annually

15 provide the Secretary with the information required under

16 section 910 of the Federal Food, Drug, and Cosmetic Act

17 (as added by section 143(3) of this Act).

18 SEC. 114. ENFORCEMENT, REGULATIONS, AND CONSTRUC19 TION.

20 (a) ENFORCEMENT.—

21 (1) IN GENERAL.—A violation of section 111 or

22 112 or the regulations promulgated pursuant to this

23 subtitle shall be considered a violation of section 5

24 of the Federal Trade Commission Act.
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1 (2) FINES.—Any person who is found to violate

2 any provision of sections 111, 112, or 113(a) shall

3 be guilty of a misdemeanor and shall, on conviction

4 thereof, be subject to a fine of not more than

5 $10,000.

6 (b) INJUNCTIONS.—The several district courts of the

7 United States are vested with jurisdiction, for cause

8 shown, to prevent and restrain violations of this subtitle

9 upon the application of the Federal Trade Commission in

10 the case of a violation of section 111 or 112 or upon appli11 cation of the Attorney General of the United States acting

12 through the several United States attorneys in their sev13 eral districts in the case of a violation of section 113.

14 (c) REGULATIONS.—Not later than 180 days after

15 the date of the enactment of this Act, the Federal Trade

16 Commission shall promulgate such regulations as it may

17 require to implement sections 111 and 112.

18 (d) CONSTRUCTION.—Nothing in this subtitle (other

19 than the requirements of sections 111, 112, and 113) shall

20 be construed to limit, restrict, or expand the authority of

21 the Federal Trade Commission with respect to unfair or

22 deceptive acts or practices in the advertising of cigarettes

23 or smokeless tobacco products.
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1 SEC. 115. PREEMPTION.

2 (a) FEDERAL ACTION.—No statement relating to the

3 use of cigarettes or smokeless tobacco products and

4 health, other than the statements required by sections 111

5 or 112, shall be required by any Federal agency to appear

6 on any package or in any advertisement of cigarettes or

7 a smokeless tobacco product.

8 (b) STATE AND LOCAL ACTION.—No statement relat9 ing to the use of cigarettes or smokeless tobacco products

10 and health, other than the statements required by sections

11 111 and 112, shall be required by any State or local stat12 ute or regulation to be included on any package or in any

13 advertisement of cigarettes or a smokeless tobacco prod14 uct.

15 (c) EFFECT ON LIABILITY LAW.—Except as other16 wise provided in this Act, nothing in this subtitle shall re17 lieve any person from liability at common law or under

18 State statutory law to any other person.

19 SEC. 116. REPORTS.

20 (a) SECRETARY’S REPORT.—Not later than 6 months

21 after the date of enactment of this Act, and biennially

22 thereafter, the Secretary shall prepare and submit to Con23 gress a report containing—

24 (1) a description of the effects of health edu25 cation efforts on the use of cigarettes and smokeless

26 tobacco products;
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1 (2) a description of the use by the public of

2 cigarettes and smokeless tobacco products;

3 (3) an evaluation of the health effects of ciga4 rettes and smokeless tobacco products and the iden5 tification of areas appropriate for further research;

6 and

7 (4) such recommendations for legislation and

8 administrative action as the Secretary considers ap9 propriate.

10 (b) FTC REPORT.—Not later than 6 months after

11 the date of enactment of this Act, and biennially there12 after, the Federal Trade Commission shall prepare and

13 submit to Congress a report containing—

14 (1) a description of the current sales, advertis15 ing, and marketing practices associated with ciga16 rettes and smokeless tobacco products; and

17 (2) such recommendations for legislation and

18 administrative action as the Commission deems ap19 propriate.

20 SEC. 117. EXPORTS.

21 Packages of cigarettes or smokeless tobacco products

22 manufactured, imported, or packaged—

23 (1) for export from the United States; or
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1 (2) for delivery to a vessel or aircraft, as sup2 plies, for consumption beyond the jurisdiction of the

3 internal revenue laws of the United States;

4 shall be exempt from the requirements of this subtitle, but

5 such exemptions shall not apply to cigarettes or smokeless

6 tobacco products manufactured, imported, or packaged for

7 sale or distribution to members or units of the Armed

8 Forces of the United States located outside of the United

9 States.

10 SEC. 118. REPEALS.

11 The following Acts are repealed:

12 (1) The Federal Cigarette Labeling and Adver13 tising Act (15 U.S.C. 1331 et seq.).

14 (2) The Comprehensive Smokeless Tobacco

15 Health Education Act of 1986 (15 U.S.C. 4401 et

16 seq.).

17 Subtitle C—Restriction on Access

18 to Tobacco Products

19 SEC. 121. REQUIREMENTS RELATING TO RETAILERS.

20 (a) SALES TO MINORS PROHIBITED.—No retailer

21 may distribute a tobacco product to any individual who

22 is under 18 years of age.

23 (b) PHOTO IDENTIFICATION.—

24 (1) REQUIREMENT.—Except as provided in

25 paragraph (2), each retailer shall verify, by means of
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1 photographic identification containing the date of

2 birth of the bearer, that no individual purchasing a

3 tobacco product is under 18 years of age.

4 (2) EXCEPTION.—No verification under para5 graph (1) is required for any individual who is at

6 least 27 years of age.

7 (3) LOCATION OF PRODUCTS.—Except as pro8 vided in section 122(d), a retailer shall ensure that

9 all tobacco products are located in areas where cus10 tomers do not have access to the products.

11 (c) FACE-TO-FACE TRANSACTIONS.—Except as pro12 vided in section 122(c)(1), a retailer may sell tobacco

13 products only in a direct, face-to-face exchange without

14 the assistance of any electronic or mechanical device.

15 (d) OUT-OF-PACKAGE DISTRIBUTION.—No retailer

16 may break or otherwise open a tobacco product to sell or

17 distribute to individuals portions of such product (includ18 ing individual cigarettes or a number of cigarettes that

19 is smaller than the quantity in the minimum package size,

20 or any quantity of cigarette tobacco or smokeless tobacco

21 that is smaller than the smallest package distributed by

22 the retailer for individual consumer use).

23 (e) RETAILER COMPLIANCE WITH RESPECT TO

24 SELF-SERVICE.—Each retailer shall ensure that all to25 bacco-related self-service displays, advertising, labeling,
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1 and other items that are located in the establishment of

2 the retailer and that do not comply with the requirements

3 of this title are removed or are brought into compliance

4 with the requirements of this title.

5 SEC. 122. MANUFACTURE, SALE, AND DISTRIBUTION.

6 (a) MINIMUM CIGARETTE PACKAGE SIZE.—Except

7 as otherwise provided in this section, no manufacturer,

8 distributor, or retailer may sell or cause to be sold, or dis9 tribute or cause to be distributed, any cigarette package

10 that contains fewer than 20 cigarettes.

11 (b) PROHIBITION ON SAMPLING.—No manufacturer,

12 distributor, or retailer may distribute or cause to be dis13 tributed any free samples of any tobacco product.

14 (c) PROHIBITION ON DISTRIBUTION THROUGH SELF15 SERVICE MODES OF SALE.—

16 (1) VENDING MACHINES.—No manufacturer,

17 distributor, or retailer may distribute or cause to be

18 distributed any tobacco product through a vending

19 machine.

20 (2) OTHER DISPLAYS.—Except as provided in

21 subsection (d)(1)(B), no manufacturer, distributor,

22 or retailer may distribute or cause to be distributed

23 any tobacco product through a self-service display.

24 (d) PERMITTED SELF-SERVICE MODES OF SALE.—
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1 (1) IN GENERAL.—Notwithstanding this sub2 title, the following methods of distributing tobacco

3 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) Self-service displays that are located in

9 facilities where the retailer ensures that no indi10 viduals under 18 years of age are present or

11 permitted to enter at any time.

12 (2) MAIL-ORDER SALES.—

13 (A) IN GENERAL.—A manufacturer, dis14 tributor, or retailer may distribute or cause to

15 be distributed a tobacco product through mail16 order sales only if such sales are subject to a

17 procedure for verifying that no individual pur18 chasing such products is under 18 years of age.

19 (B) REVIEW BY COMMISSIONER.—Not

20 later than 2 years after the date of enactment

21 of this Act, the Commissioner shall review the

22 verification procedures implemented under sub23 paragraph (A) to determine whether individuals

24 under 18 years of age are obtaining tobacco

25 products through the mail. If the Commissioner
44

•S 1415 IS

1 determines that a significant number of under2 age individuals are obtaining such products

3 through the mail, the Commissioner may pro4 mulgate regulations to ban the distribution of

5 tobacco products through the mail.

6 Subtitle D—Licensing of Retail

7 Tobacco Sellers

8 SEC. 131. ESTABLISHMENT OF PROGRAM.

9 (a) IN GENERAL.—The Commissioner, after con10 sultation with the Secretary, shall establish a program

11 under which an entity would be required to obtain a State

12 or local license to sell or otherwise distribute tobacco prod13 ucts directly to consumers.

14 (b) PROHIBITION ON DISTRIBUTION.—No entity

15 shall sell or otherwise distribute tobacco products directly

16 to consumers unless such entity has in effect a tobacco

17 license issued or renewed in accordance with the laws of

18 the State in which the products are to be sold or otherwise

19 distributed.

20 (c) ELIGIBILITY OF STATE FOR PAYMENTS.—To be

21 eligible to receive a block grant under section 502, a State

22 shall have in effect laws that meet the standards described

23 in this subtitle that provide for the licensing of entities

24 engaged in the sale or distribution of tobacco products di-
45

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1 rectly to consumers and shall enforce such laws in accord2 ance with section 133.

3 SEC. 132. REQUIREMENTS.

4 (a) LICENSURE AND NOTICE.—

5 (1) IN GENERAL.—The State shall require that

6 each person engaged in the sale or distribution of to7 bacco products directly to consumers obtain a license

8 that is issued by the State. A separate license shall

9 be required for each place of business where tobacco

10 products are distributed or sold at retail.

11 (2) NOTICE.—The State shall notify every per12 son in the State who is engaged in the distribution

13 at retail of tobacco products of the license require14 ment of this section and of the date by which such

15 person shall have obtained a license in order to dis16 tribute such products.

17 (b) FEE.—The State may assess an annual licensing

18 fee with respect to each entity that desires to obtain a

19 license under subsection (a). Amounts derived from such

20 fees shall be used to offset the administrative costs in21 curred by the State in issuing and renewing licenses under

22 this subtitle.

23 (c) APPLICATION.—

24 (1) IN GENERAL.—An entity shall prepare and

25 submit to the State an application for a license (in-
46

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1 cluding the renewal of a license) under this section,

2 on such form as the State may require, that shall

3 set forth the name under which the applicant trans4 acts or intends to transact business, the location of

5 the place of business for which the license is to be

6 issued, the street address to which all notices rel7 evant to the license are to be sent (in this Act re8 ferred to as ‘‘notice address’’), and any other identi9 fying information that the State may require.

10 (2) ACTION BY STATE.—

11 (A) IN GENERAL.—The State shall issue or

12 renew a license or deny an application for a li13 cense or the renewal of a license within 30 days

14 of receiving a properly completed application

15 and the licensing fee. The State shall provide

16 notice to an applicant of an action on an appli17 cation denying the issuance of a license or re18 fusing to renew a license.

19 (B) FINDING BY STATE.—The State shall

20 deny the issuance or renewal of a license upon

21 an application if the State determines that the

22 applicant has failed to comply with the require23 ments of this title.

24 (3) SCOPE AND RENEWAL.—Every license is25 sued by the State shall be valid for a period deter-
47

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1 mined by the State and shall be renewed upon appli2 cation except as otherwise provided in this section.

3 SEC. 133. PENALTIES, REVOCATIONS AND SUSPENSIONS.

4 (a) PENALTIES.—

5 (1) CRIMINAL PENALTIES APPLICABLE TO UN6 LICENSED SELLERS.—Any individual who sells or

7 otherwise distributes tobacco products to a consumer

8 without a tobacco license in effect as provided for in

9 this subtitle shall be subject, under the applicable

10 State law, to a fine of not less than $1,000, or im11 prisonment of not less than 6 months, or both. With

12 respect to any corporate employer of such an indi13 vidual, the corporation shall be subject to a fine of

14 not more than $50,000.

15 (2) CIVIL PENALTIES APPLICABLE TO SELLERS

16 IN VIOLATION OF LICENSE.—

17 (A) IN GENERAL.—In addition to any

18 criminal penalties that may be imposed under

19 paragraph (1), a State may, in accordance with

20 subsection (b), impose civil penalties on any en21 tity that has sold or distributed tobacco prod22 ucts in the State in violation of the State to23 bacco licensing laws.
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1 (B) LIMITATIONS.—The civil penalties that

2 may be imposed under subparagraph (A) shall

3 not exceed the following:

4 (i) For the first offense within any 2-

5 year period, $500, or a 3-day suspension of

6 the tobacco license, or both.

7 (ii) For a second offense within any 2-

8 year period, $1,000, or a 7-day suspension

9 of the tobacco license, or both.

10 (iii) For a third offense within any 2-

11 year period, $2,000, or a 30-day suspen12 sion of the tobacco license, or both.

13 (iv) For a fourth offense within any 2-

14 year period, $5,000, or a 6-month suspen15 sion of the tobacco license, or both.

16 (v) For a fifth offense within any 2-

17 year period, $10,000, or a 1-year suspen18 sion of the tobacco license, or both.

19 (vi) For a sixth and any subsequent

20 offense within any 2-year period, $25,000,

21 or a 3-year revocation of the tobacco li22 cense.

23 (vii) For a tenth offense within any 2-

24 year period, the permanent revocation of

25 the tobacco license.
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1 (b) REVOCATION AND SUSPENSIONS.—

2 (1) NOTICE.—Upon a finding that a tobacco li3 censee has been determined by a court of competent

4 jurisdiction to have violated a provision of State law

5 under this subtitle during the license term, the State

6 shall notify the licensee in writing, served personally

7 or by registered mail at the principal place of busi8 ness of the licensee, that any subsequent violation of

9 such law at the same place of business may result

10 in an administrative action to suspend the license

11 for a period determined by the State in accordance

12 with subsection (a)(2)(B).

13 (2) SUSPENSION.—Upon finding that a further

14 violation by the tobacco licensee has occurred involv15 ing the same place of business for which the license

16 was issued and the licensee has been provided notice

17 under paragraph (1), the State may initiate an ad18 ministrative action to suspend the license for a pe19 riod to be determined in accordance with subsection

20 (a)(2)(B). If an administrative action to suspend a

21 license is initiated, the State shall immediately notify

22 the licensee, in writing at the principal place of busi23 ness of the licensee, of the initiation of the action

24 and the reasons therefore and permit the licensee an

25 opportunity, at least 30 days after written notice is
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1 served personally or by registered mail upon the li2 censee, to show why suspension of the license would

3 be unwarranted or unjust.

4 (3) REVOCATION.—The State may initiate an

5 administrative action to revoke a tobacco license that

6 previously has been suspended under paragraph (2)

7 if, during the 2-year period described in subsection

8 (a)(2)(B), a further violation of this subtitle is com9 mitted after the suspension by the licensee involving

10 the same place of business for which the license was

11 issued. If an administrative action to revoke a li12 cense is initiated, the State shall immediately notify

13 the licensee, in writing at the principal place of busi14 ness of the licensee, of the initiation of the action

15 and the reasons therefore and permit the licensee an

16 opportunity, at least 30 days after written notice is

17 served personally or by registered mail upon the li18 censee, to show why revocation of the license would

19 be unwarranted or unjust.

20 (c) JUDICIAL REVIEW.—A tobacco licensee may seek

21 judicial review of an action of the State suspending, revok22 ing, denying, or refusing to renew a license under this sec23 tion by filing a complaint in a court of competent jurisdic24 tion. A complaint shall be filed within 30 days after the
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1 date on which notice of the action involved is received by

2 the licensee. The court shall review the evidence de novo.

3 SEC. 134. FEDERAL LICENSING OF MILITARY AND OTHER

4 ENTITIES.

5 (a) IN GENERAL.—The Commissioner, in consulta6 tion with the Secretary of Defense, Secretary of State, and

7 other appropriate Federal officials, shall establish and im8 plement a Federal tobacco licensing program to be applied

9 to entities that sell or distribute tobacco products—

10 (1) on any military installation (as defined in

11 section 2801(c)(2) of title X, United States Code);

12 (2) in any United States embassy;

13 (3) in any facility owned and operated by the

14 Federal Government either in the United States or

15 in a foreign country;

16 (4) in any duty-free shop located within the

17 United States; or

18 (5) through any other Federal entity or on any

19 other Federal property as determined appropriate by

20 the Commissioner.

21 (b) REQUIREMENTS OF PROGRAM.—The program es22 tablished under subsection (a) shall apply requirements

23 (including those for penalties, suspensions, and revoca24 tions) similar to those required to be implemented by

25 States under this subtitle.
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1 (c) INDIAN TRIBES AND TRIBAL LANDS.—For pur2 poses of applying and enforcing the provisions of this sub3 title to entities that sell or otherwise distribute tobacco

4 products on Indian reservations (as defined in section

5 403(9) of the Indian Child Protection and Family Violence

6 Prevention Act (25 U.S.C. 3202(9))), an Indian tribe or

7 tribal organization (as such terms are defined in section

8 4 of the Indian Self Determination and Education Assist9 ance Act (25 U.S.C. 450b)) shall be treated as a State.

10 Subtitle E—Regulation of Tobacco

11 Product Development and Man12 ufacturing

13 SEC. 141. REFERENCE.

14 Whenever in this subtitle an amendment or repeal is

15 expressed in terms of an amendment to, or repeal of, a

16 section or other provision, the reference shall be consid17 ered to be made to a section or other provision of the Fed18 eral Food, Drug, and Cosmetic Act (21 U.S.C. 301 et

19 seq.).

20 SEC. 142. TREATMENT OF TOBACCO PRODUCTS AS DRUGS.

21 (a) DEFINITIONS.—

22 (1) DRUG.—

23 (A) IN GENERAL.—Section 201(g)(1) (21

24 U.S.C. 321(g)(1)) is amended by inserting be-
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1 fore the first period ‘‘; and (E) tobacco prod2 ucts’’.

3 (B) EXCEPTION.—Section 201(p) of such

4 Act is amended in paragraphs (1) and (2) by

5 striking ‘‘(except a new animal drug’’ and in6 serting ‘‘(except a tobacco product, a new ani7 mal drug,’’.

8 (2) DEVICES.—Section 201(h) (21 U.S.C.

9 321(h)) is amended by adding at the end the follow10 ing: ‘‘Such term includes a tobacco product which

11 shall be classified as a class II device.’’.

12 (3) OTHER DEFINITIONS.—Section 201 (21

13 U.S.C. 321) is amended by adding at the end there14 of the following new paragraphs:

15 ‘‘(ii) TOBACCO ADDITIVE.—The term ‘tobacco addi16 tive’ means any substance the intended use of which re17 sults or may reasonably be expected to result, directly or

18 indirectly, in the substance becoming a component of, or

19 otherwise affecting the characteristics of, any tobacco

20 product, including any substance that may have been re21 moved from the tobacco product and then readded in the

22 substance’s original or modified form.

23 ‘‘(jj) TAR.—The term ‘tar’ means mainstream total

24 articulate matter minus nicotine and water.
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1 ‘‘(kk) TOBACCO PRODUCT.—The term ‘tobacco prod2 uct’ has the meaning given such term in section 100(22)

3 of the Universal Tobacco Settlement Act.’’.

4 (b) ENFORCEMENT.—Section 301 (21 U.S.C. 331) is

5 amended by adding at the end thereof the following new

6 subsection:

7 ‘‘(x) The manufacture, labeling, distribution, and sale

8 of any adulterated or misbranded tobacco product in viola9 tion of—

10 ‘‘(1) regulations issued pursuant to section 903;

11 ‘‘(2) title I of the Universal Tobacco Settlement

12 Act.’’.

13 (c) ADULTERATED OR MISBRANDED PROVISIONS.—

14 (1) ADULTERATION.—Section 501 (21 U.S.C.

15 351) is amended by adding at the end the following:

16 ‘‘(j) If it is a tobacco product and it does not comply

17 with the provisions of chapter IX.’’.

18 (2) MISBRANDING.—Section 502 (21 U.S.C.

19 352) is amended by adding at the end the following:

20 ‘‘(u) If it is a tobacco product and its labeling does

21 not comply with the provisions of chapter IX and the pro22 visions of title I of the Universal Tobacco Settlement

23 Act.’’.

24 (d) CLASSIFICATION OF TOBACCO PRODUCTS.—Sec25 tion 512(a)(1)(B) (21 U.S.C. 360c(a)(1)(B)) is amended
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1 by adding at the end the following: ‘‘For purposes of this

2 Act, a tobacco product shall be classified as a class II de3 vice with performance standards applicable under chapter

4 IX.’’.

5 SEC. 143. HEALTH AND SAFETY REGULATION OF TOBACCO

6 PRODUCTS.

7 The Act (21 U.S.C. 301 et seq.) is amended—

8 (1) by redesignating chapter IX as chapter X;

9 (2) by redesignating sections 901, 902, 903,

10 904, and 905 as sections 1001, 1002, 1003, 1004,

11 and 1005, respectively; and

12 (3) by adding after chapter VIII the following

13 new chapter:

14 ‘‘CHAPTER IX—TOBACCO PRODUCTS

15 ‘‘SEC. 901. DEFINITIONS.

16 ‘‘For purposes of this chapter and in addition to the

17 definitions contained in section 201, the definitions under

18 section 100 of the Universal Tobacco Settlement Act shall

19 apply.

20 ‘‘SEC. 902. PURPOSE.

21 ‘‘It is the purpose of this chapter to impose a regu22 latory scheme applicable to the development and manufac23 turing of cigarettes and smokeless tobacco products/to24 bacco products. Such scheme shall include the approval

25 of the ingredients used in such products and the imposi-
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1 tion of standards to reduce the level of certain constituents

2 contained in such products, including nicotine.

3 ‘‘SEC. 903. PROMULGATION OF REGULATIONS.

4 ‘‘The Commissioner shall promulgate regulations gov5 erning the misbranding, adulteration, and dispensing of

6 tobacco products that are consistent with this chapter and

7 with the manner in which other products that are ingested

8 into the body are regulated under this Act, except that

9 the Commissioner may not promulgate a regulation that

10 prohibits the sale and distribution of a tobacco product

11 solely on the basis of the fact that tobacco causes disease.

12 Such regulations shall be promulgated not later than 6

13 months after the date of enactment of the Universal To14 bacco Settlement Act.

15 ‘‘SEC. 904. MINIMUM REQUIREMENTS.

16 ‘‘(a) MISBRANDING.—The regulations promulgated

17 under section 903 shall at a minimum require that a to18 bacco product be deemed to be misbranded if the labeling

19 of the package of such product is not in compliance with

20 the provisions of this chapter, of other applicable provi21 sions of this Act, or of sections 102(a), 103, 111, 112,

22 and 113 (as applicable to the type of product involved)

23 of the Universal Tobacco Settlement Act.

24 ‘‘(b) ADULTERATION.—The regulations promulgated

25 under section 903 shall at a minimum require that a to-
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1 bacco product be deemed to be adulterated if the Commis2 sioner determines that any tobacco additive in such prod3 uct, regardless of the amount of such tobacco additive, ei4 ther by itself or in conjunction with any other tobacco ad5 ditive or ingredient significantly increases the risk to

6 human health or the risk of addiction to such product.

7 ‘‘SEC. 905. PERFORMANCE STANDARDS FOR TOBACCO

8 PRODUCTS.

9 ‘‘(a) IN GENERAL.—With respect to tobacco prod10 ucts, the special controls required by section 513(a)(1)(B)

11 shall include performance standards for such products as

12 established in accordance with this section.

13 ‘‘(b) REQUIREMENTS.—A performance standard es14 tablished under this section for a tobacco product—

15 ‘‘(1) shall include provisions to require the

16 modification of the product to minimize the illness

17 or injury that may result in consumers as a result

18 of the use of such products, including the compo19 nents of such products that produce dependence

20 among such consumers; and

21 ‘‘(2) include, where appropriate—

22 ‘‘(A) provisions with respect to the con23 struction, components, ingredients, and prop24 erties of the tobacco product;
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1 ‘‘(B) provisions for the testing (on a sam2 ple basis or, if necessary, on an individual

3 basis) of the tobacco product or, if it is deter4 mined that no other more practicable means are

5 available to the Secretary to assure the con6 formity of the device to the standard, provisions

7 for the testing (on a sample basis or, if nec8 essary, on an individual basis) by the Secretary

9 or by another person at the direction of the

10 Secretary;

11 ‘‘(C) provisions for the measurement of the

12 performance characteristics of the tobacco prod13 uct;

14 ‘‘(D) provisions requiring that the results

15 of each or of certain of the tests of the device

16 required to be made under subparagraph (B)

17 demonstrate that the tobacco product is in con18 formity with the portions of the standard for

19 which the test or tests were required; and

20 ‘‘(E) a provision requiring that the sale

21 and distribution of the device be restricted but

22 only to the extent that the sale and distribution

23 of a device may be otherwise restricted under

24 this Act of title I of the Universal Tobacco Set25 tlement Act.
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1 ‘‘(c) EVALUATION.—The Secretary shall provide for

2 the periodic evaluation of a performance standard estab3 lished under this section to determine if such standards

4 should be changed to reflect new medical, scientific, or

5 other technological data.

6 ‘‘(d) PROCEDURES.—In carrying out this section, the

7 Secretary shall, to the maximum extent practicable—

8 ‘‘(1) use personnel, facilities, and other tech9 nical support available in other Federal agencies;

10 ‘‘(2) consult with the Scientific Advisory Com11 mittee established under section 906 and other Fed12 eral agencies concerned with standard-setting and

13 other nationally or internationally recognized stand14 ard-setting entities; and

15 ‘‘(3) invite appropriate participation, through

16 joint or other conferences, workshops, or other

17 means, by informed persons representative of sci18 entific, professional, industry, or consumer organiza19 tions who in the judgment of the Secretary can

20 make a significant contribution.

21 ‘‘(e) PROCEDURES.—

22 ‘‘(1) IN GENERAL.—The Secretary shall publish

23 in the Federal Register a notice of proposed rule24 making for the establishment, amendment, or rev-
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1 ocation of any performance standard under this sec2 tion.

3 ‘‘(2) NOTICE REQUIREMENTS.—A notice of pro4 posed rulemaking for the establishment or amend5 ment of a performance standard under this section

6 shall—

7 ‘‘(A) set forth a finding with supporting

8 justification that the performance standard is

9 appropriate under subsection (b)(1) with re10 spect to the product; and

11 ‘‘(B) invite interested persons to submit an

12 existing performance standard for the product,

13 including a draft or proposed performance

14 standard, for consideration by the Secretary.

15 ‘‘(3) COMMENT PERIOD.—The Secretary shall

16 provide for a comment period of not less than 60

17 days.

18 ‘‘(4) APPLICABILITY OF SECTION 514.—The

19 provisions of paragraphs (3) and (4) of section

20 514(b) shall apply to the establishment, amendment,

21 or revocation of any performance standard under

22 this section, except that any reference to an advisory

23 committee shall be deemed to be a reference to the

24 Scientific Advisory Committee established under sec25 tion 906.
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1 ‘‘(f) NICOTINE.—Except as provided in section 907,

2 a performance standard established under this section

3 may not require the elimination of nicotine from tobacco

4 products.

5 ‘‘(g) LIMITATION.—The Commissioner may not es6 tablish a performance standard under this section that has

7 the effect of prohibiting the sale and distribution, to indi8 viduals who are at least 18 years of age, of traditional

9 tobacco products in the basic form of the particular prod10 uct as described in the definition of the particular product

11 under section 100 of the Universal Tobacco Settlement

12 Act.

13 ‘‘SEC. 906. SCIENTIFIC ADVISORY COMMITTEE.

14 ‘‘(a) ESTABLISHMENT.—Not later than 1 year after

15 the date of enactment of the Universal Tobacco Settlement

16 Act, the Secretary shall establish an advisory committee,

17 to be known as the ‘Scientific Advisory Committee’, to as18 sist the Secretary in establishing, amending, or revoking

19 a performance standard under section 905.

20 ‘‘(b) MEMBERSHIP.—The Secretary shall appoint as

21 members of the Scientific Advisory Committee any individ22 uals with expertise in the medical, scientific, or other tech23 nological data involving the manufacture and use of to24 bacco products, and of appropriately diversified profes25 sional backgrounds. The Secretary may not appoint to the
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1 Committee any individual who is in the regular full-time

2 employ of the Federal Government. The Secretary shall

3 designate one of the members of each advisory committee

4 to serve as chairperson of the Committee. The Committee

5 shall include as nonvoting members a representative of

6 consumer interests and a representative of interests of the

7 device manufacturing industry.

8 ‘‘(c) COMPENSATION AND EXPENSES.—

9 ‘‘(1) COMPENSATION.—Members of the Sci10 entific Advisory Committee who are not officers or

11 employees of the United States, while attending con12 ferences or meetings of the Committee or otherwise

13 serving at the request of the Secretary, shall be enti14 tled to receive compensation at rates to be fixed by

15 the Secretary, which rates may not exceed the daily

16 equivalent of the rate of pay for level 4 of the Senior

17 Executive Schedule under section 5382 of title 5,

18 United States Code, for each day (including travel19 time) they are so engaged.

20 ‘‘(2) EXPENSES.—While conducting the busi21 ness of the Scientific Advisory Committee away from

22 their homes or regular places of business, each mem23 ber may be allowed travel expenses, including per

24 diem in lieu of subsistence, as authorized by section

25 5703 of title 5 of the United States Code for per-
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1 sons in the Government service employed intermit2 tently.

3 ‘‘(d) DUTIES.—The Scientific Advisory Committee

4 shall—

5 ‘‘(1) assist the Secretary in establishing,

6 amending, or revoking performance standards under

7 section 905;

8 ‘‘(2) examine and determine the effects of the

9 alteration of the nicotine yield levels in tobacco prod10 ucts;

11 ‘‘(3) examine and determine whether there is a

12 threshold level below which nicotine yields do not

13 produce dependence on the tobacco product involved,

14 and, if so, determine what that level is; and

15 ‘‘(4) review other safety, dependence or health

16 issues relating to tobacco products as determined ap17 propriate by the Secretary.

18 ‘‘SEC. 907. REQUIREMENTS RELATING TO NICOTINE AND

19 OTHER CONSTITUENTS.

20 ‘‘(a) GENERAL RULE.—Except as provided in sub21 section (d), the Secretary, based on a finding under sub22 section (b), may adopt a performance standard under sec23 tion 905 that requires the modification of a tobacco prod24 uct in a manner that involves—
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1 ‘‘(1) the gradual reduction of nicotine yields of

2 the product; or

3 ‘‘(2) the reduction or elimination of other con4 stituents or harmful components of the product.

5 ‘‘(b) REQUIRED FINDING.—

6 ‘‘(1) IN GENERAL.—A modification described in

7 subsection (a) shall not be adopted unless the Sec8 retary determines that the modification—

9 ‘‘(A) will result in a significant reduction

10 in the health risks associated with the use of

11 the tobacco product involved;

12 ‘‘(B) is technologically feasible; and

13 ‘‘(C) will not result in the creation of a sig14 nificant demand for contraband products or

15 other tobacco products that do not meet the

16 performance standard that requires the modi17 fication.

18 ‘‘(2) CONTRABAND PRODUCTS.—For purposes

19 of paragraph (1)(C), the Secretary, in determining

20 whether a significant demand for contraband prod21 ucts will be created, shall take into account—

22 ‘‘(A) the estimated number of dependent

23 tobacco product users residing in the United

24 States on the date on which the proposed modi25 fication is being considered;
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1 ‘‘(B) the availability to such users, or lack

2 thereof, of alternative products; and

3 ‘‘(C) any other factors determined appro4 priate by the Secretary.

5 ‘‘(3) SUBSTANTIAL EVIDENCE.—A determina6 tion under paragraph (2) shall be based upon sub7 stantial evidence as demonstrated through an admin8 istrative record developed through formal rule9 making procedures as required under title 5, United

10 States Code. Any such determination, and any deter11 mination by the Secretary with respect to a petition

12 filed for an administrative review of the modifica13 tion, shall be subject to judicial review in the United

14 States District Court for the District of Columbia.

15 ‘‘(c) LIMITATION.—Effective on the date that is 3

16 years after the date of enactment of the Universal Tobacco

17 Settlement Act, and notwithstanding any performance

18 standard established under this chapter, no cigarette or

19 tobacco product shall be sold or otherwise distributed in

20 the United States that exceeds a 12 milligram tar yield,

21 as determined using the testing methodology used by the

22 Federal Trade Commission on such date of enactment.

23 ‘‘(d) 12-YEAR PROHIBITION.—During the 12-year

24 period beginning on the date of enactment of the Universal

25 Tobacco Settlement Act, the Secretary shall not adopt any
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1 performance standard under section 905 that requires the

2 complete elimination of nicotine yields in a tobacco prod3 uct.

4 ‘‘(e) ACTION AFTER PROHIBITION.—

5 ‘‘(1) IN GENERAL.—After the expiration of the

6 12-year period referred to in subsection (d), the Sec7 retary may establish or amend any performance

8 standard to completely eliminate nicotine yields in a

9 tobacco product.

10 ‘‘(2) DETERMINATION.—Any performance

11 standard described in paragraph (1) shall not be

12 adopted unless the Secretary determines that the

13 standard—

14 ‘‘(A) will result in a significant overall re15 duction in the health risks associated with the

16 use of the tobacco product involved by consum17 ers, including individuals who continue to use

18 tobacco products but use such products less

19 often and individuals who stop using such prod20 ucts;

21 ‘‘(B) is technologically feasible; and

22 ‘‘(C) will not result in the creation of a sig23 nificant demand for contraband products or

24 other tobacco products that do not meet the

25 performance standard.
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1 ‘‘(3) HEALTH BENEFITS.—In making a deter2 mination with respect to health risks under para3 graph (2)(A), the Secretary shall consider—

4 ‘‘(A) the number of dependent tobacco

5 users residing in the United States on the date

6 on which the proposed performance standard is

7 being considered;

8 ‘‘(B) the availability and demonstrated

9 market acceptance of alternative products;

10 ‘‘(C) the effectiveness of tobacco product

11 cessation techniques and devices on the market

12 on the date on which the proposed performance

13 standard is being considered; and

14 ‘‘(D) any other factors determined appro15 priate by the Secretary.

16 ‘‘(4) PREPONDERANCE OF THE EVIDENCE.—A

17 determination under paragraph (2) with respect to

18 the elimination of nicotine, or an action that would

19 have an effect comparable to the elimination of nico20 tine, shall be based upon a preponderance of the evi21 dence as demonstrated, upon the request of a manu22 facturer, through a Part 12 hearing or notice and

23 comment rulemaking as required under title 5, Unit24 ed States Code. Any such determination, and any

25 determination by the Secretary with respect to a pe-
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1 tition filed for an administrative review of the modi2 fication, shall be subject to judicial review in the

3 United States District Court for the District of Co4 lumbia.

5 ‘‘(5) PHASE-IN.—A performance standard de6 scribed in paragraph (1) shall be implemented dur7 ing a 2-year phase-in period beginning on the date

8 on which all administrative or judicial action pro9 vided for under this chapter with respect to the

10 standard is completed.

11 ‘‘(f) TOBACCO CONSTITUENTS.—The Secretary shall

12 promulgate regulations for the testing, reporting and dis13 closure of tobacco smoke constituents that the Secretary

14 determines the public should be informed of to protect

15 public health, including tar, nicotine, and carbon mon16 oxide. Such regulations may require label and advertising

17 disclosures relating to tar and nicotine.

18 ‘‘SEC. 908. REDUCED RISK PRODUCTS.

19 ‘‘(a) MISBRANDING.—Except as provided in sub20 section (b), the regulations promulgated in accordance

21 with section 904(a) shall require that a tobacco product

22 be deemed to be misbranded if the labeling of the package

23 of the product, or the claims of the manufacturer in con24 nection with the product, can reasonably be interpreted

25 by an objective consumer as stating or implying that the
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1 product presents a reduced health risk as compared to

2 other similar products.

3 ‘‘(b) EXCEPTION.—

4 ‘‘(1) IN GENERAL.—Subsection (a) shall not

5 apply to the labeling of a tobacco product, or the

6 claims of the manufacturer in connection with the

7 product, if—

8 ‘‘(A) the manufacturer, based on scientific

9 evidence, demonstrates to the Commissioner

10 that the product significantly reduces the risk

11 to the health of the user as compared to other

12 similar tobacco products; and

13 ‘‘(B) the Commissioner approves the spe14 cific claim that will be made a part of the label15 ing of the product, or the specific claims of the

16 manufacturer in connection with the product.

17 ‘‘(2) REDUCTION IN HARM.—The Commissioner

18 shall promulgate regulations to permit the inclusion

19 of scientifically-based specific health claims on the

20 labeling of a tobacco product package, or the making

21 of such claims by the manufacturer in connection

22 with the product, where the Commissioner deter23 mines that the inclusion or making of such claims

24 would reduce harm to consumers and otherwise pro25 mote public health.
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1 ‘‘(c) DEVELOPMENT OF REDUCED RISK PRODUCT

2 TECHNOLOGY.—

3 ‘‘(1) NOTIFICATION OF COMMISSIONER.—The

4 manufacturer of a tobacco product shall provide

5 written notice to the Commissioner upon the devel6 opment or acquisition by the manufacturer of any

7 technology that would reduce the risk of such prod8 ucts to the health of the user.

9 ‘‘(2) CONFIDENTIALITY.—The Commissioner

10 shall promulgate regulations to provide a manufac11 turer with appropriate confidentiality protections

12 with respect to technology that is the subject of a

13 notification under paragraph (1) that contains evi14 dence that the technology involved is in the early de15 velopmental stages.

16 ‘‘(3) LICENSING.—

17 ‘‘(A) IN GENERAL.—With respect to any

18 technology developed or acquired under para19 graph (1), the manufacturer shall permit the

20 use of such technology by other manufacturers

21 of tobacco products to which this chapter ap22 plies.

23 ‘‘(B) FEES.—The Commissioner shall pro24 mulgate regulations to provide for the payment

25 of a commercially reasonable fee by each manu-
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1 facturer that uses the technology described

2 under subparagraph (A) to the manufacturer

3 that submits the notice under paragraph (1) for

4 such technology. Such regulations shall contain

5 procedures for the resolution of fee disputes be6 tween manufacturers under this subparagraph.

7 ‘‘(d) REQUIREMENT OF MANUFACTURE AND MAR8 KETING.—

9 ‘‘(1) PURPOSE.—It is the purpose of this sub10 section to provide for a mechanism to ensure that

11 tobacco products that are designed to be less hazard12 ous to the health of users are developed, tested, and

13 made available to consumers.

14 ‘‘(2) DETERMINATION.—Upon a determination

15 by the Commissioner that the manufacture of a to16 bacco product that is less hazardous to the health of

17 users is technologically feasible, the Commissioner

18 may, in accordance with this subsection, require that

19 certain manufacturers of such products manufacture

20 and market such less hazardous products.

21 ‘‘(3) MANUFACTURER.—

22 ‘‘(A) REQUIREMENT.—Except as provided

23 in subparagraph (B), the requirement under

24 paragraph (2) shall apply to any manufacturer

25 that provides a notification to the Commissioner
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1 under subsection (c)(1) concerning the tech2 nology that is the subject of the determination

3 of the Commissioner.

4 ‘‘(B) EXCEPTION.—The requirement under

5 subparagraph (A) shall not apply to a manufac6 turer if—

7 ‘‘(i) the manufacturer elects not to

8 manufacture such products and provides

9 notice to the Commissioner of such elec10 tion; and

11 ‘‘(ii) the manufacturer agrees to pro12 vide the technology involved, for a commer13 cially reasonable fee, to other manufactur14 ers that enter into agreements to use such

15 technology to manufacture and market to16 bacco products that are less hazardous to

17 the health of users.

18 ‘‘(4) ACTION BY PUBLIC HEALTH SERVICE.—If

19 no manufacturer elects or agrees to manufacture

20 and market tobacco products that are less hazardous

21 to the health of users through the use of technology

22 available pursuant to this subsection within a rea23 sonable period of time, as determined appropriate by

24 the Commissioner, the Commissioner, in consultation

25 with the Secretary and acting through the Public
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1 Health Service, shall, either directly or through

2 grants or contracts, provide for the manufacture and

3 marketing of such products.

4 ‘‘SEC. 909. GOOD MANUFACTURING PRACTICE STANDARDS.

5 ‘‘(a) AUTHORITY.—

6 ‘‘(1) IN GENERAL.—The Secretary may, in ac7 cordance with paragraph (2), prescribe regulations

8 requiring that the methods used in, and the facilities

9 and controls used for, the manufacture, pre-produc10 tion design validation (including a process to assess

11 the performance of a tobacco product), packing, and

12 storage of a tobacco product conform to current

13 good manufacturing practice, as prescribed in such

14 regulations, to ensure that such products will be in

15 compliance with this chapter.

16 ‘‘(2) REQUIREMENTS PRIOR TO REGULA17 TIONS.—Prior to the Secretary promulgating any

18 regulation under paragraph (1) the Secretary

19 shall—

20 ‘‘(A) afford the Scientific Advisory Com21 mittee established under section 906 an oppor22 tunity (with a reasonable time period) to submit

23 recommendations with respect to the regula24 tions proposed to be promulgated; and
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1 ‘‘(B) afford opportunity for an oral hear2 ing.

3 ‘‘(b) MINIMUM REQUIREMENTS.—The regulations

4 promulgated under subsection (a) shall at a minimum re5 quire—

6 ‘‘(1) the implementation of a quality control

7 system by the manufacturer of a tobacco product;

8 ‘‘(2) a process for the inspection of tobacco

9 product material prior to the packaging of such

10 product to be determined by the Commissioner;

11 ‘‘(3) procedures for the proper handling and

12 storage of the packaged tobacco product;

13 ‘‘(4) after consultation with the Administrator

14 of the Environmental Protection Agency, the devel15 opment and adherence to applicable tolerances with

16 respect to pesticide chemical residues in or on com17 modities used by the manufacturer in the manufac18 ture of the finished tobacco product;

19 ‘‘(5) the inspection of facilities by officials of

20 the Food and Drug Administration as otherwise pro21 vided for in this Act; and

22 ‘‘(6) record keeping and the reporting of certain

23 information.

24 ‘‘(c) PETITIONS FOR EXEMPTIONS AND

25 VARIANCES.—
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1 ‘‘(1) IN GENERAL.—Any person subject to any

2 requirement prescribed by regulations under sub3 section (a) may petition the Secretary for an exemp4 tion or variance from such requirement. Such a peti5 tion shall be submitted to the Secretary in such form

6 and manner as the Secretary shall prescribe and

7 shall—

8 ‘‘(A) in the case of a petition for an ex9 emption from a requirement, set forth the basis

10 for the petitioner’s determination that compli11 ance with the requirement is not required to en12 sure that the device is in compliance with this

13 chapter;

14 ‘‘(B) in the case of a petition for a vari15 ance from a requirement, set forth the methods

16 proposed to be used in, and the facilities and

17 controls proposed to be used for, the manufac18 ture, packing, and storage of the product in lieu

19 of the methods, facilities, and controls pre20 scribed by the requirement; and

21 ‘‘(C) contain such other information as the

22 Secretary shall prescribe.

23 ‘‘(2) SCIENTIFIC ADVISORY COMMITTEE.—The

24 Secretary may refer to the Scientific Advisory Com25 mittee established under section 906 any petition
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1 submitted under paragraph (1). The Scientific Advi2 sory Committee shall report its recommendations to

3 the Secretary with respect to a petition referred to

4 it within 60 days of the date of the petition’s refer5 ral. Within 60 days after—

6 ‘‘(A) the date the petition was submitted

7 to the Secretary under paragraph (1); or

8 ‘‘(B) if the petition was referred to the Sci9 entific Advisory Committee, the expiration of

10 the 60-day period beginning on the date the pe11 tition was referred to such Committee;

12 whichever occurs later, the Secretary shall by order

13 either deny the petition or approve it.

14 ‘‘(3) APPROVAL OF PETITION.—

15 ‘‘(A) IN GENERAL.—The Secretary may

16 approve—

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

18 tobacco product from a requirement if the

19 Secretary determines that compliance with

20 such requirement is not required to assure

21 that the product will comply with this

22 chapter; and

23 ‘‘(ii) a petition for a variance for a to24 bacco product from a requirement if the

25 Secretary determines that the methods to
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1 be used in, and the facilities and controls

2 to be used for, the manufacture, packing,

3 and storage of the product in lieu of the

4 methods, controls, and facilities prescribed

5 by the requirement are sufficient to ensure

6 that the product will comply with this

7 chapter.

8 ‘‘(B) CONDITIONS.—An order of the Sec9 retary approving a petition for a variance shall

10 prescribe such conditions respecting the meth11 ods used in, and the facilities and controls used

12 for, the manufacture, packing, and storage of

13 the tobacco product to be granted the variance

14 under the petition as may be necessary to en15 sure that the product will comply with this

16 chapter.

17 ‘‘(4) INFORMAL HEARING.—After the issuance

18 of an order under paragraph (2) respecting a peti19 tion, the petitioner shall have an opportunity for an

20 informal hearing on such order.

21 ‘‘(d) AGRICULTURAL PRODUCERS.—The Secretary

22 may not promulgate any regulation under this section that

23 has the effect of placing regulatory burdens on tobacco

24 producers (as such term is used for purposes of the Agri25 cultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.)
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1 and the Agricultural Act of 1949 (7 U.S.C. 1441 et seq.))

2 in excess of the regulatory burdens generally placed on

3 other agricultural commodity producers.

4 ‘‘SEC. 910. DISCLOSURE AND REPORTING OF NONTOBACCO

5 INGREDIENTS.

6 ‘‘(a) ANNUAL SUBMISSION.—

7 ‘‘(1) IN GENERAL.—Each manufacturer of a to8 bacco product shall annually provide the Secretary

9 with—

10 ‘‘(A) a list of all ingredients, substances,

11 and compounds (other than tobacco, water or

12 reconstituted tobacco sheet made wholly from

13 tobacco) that are added to the tobacco (and the

14 paper or filter of the product if applicable) in

15 the manufacture of the tobacco product, for

16 each brand of tobacco product so manufactured;

17 and

18 ‘‘(B) a description of the quantity of the

19 ingredients, substances, and compounds that

20 are listed under subparagraph (A) with respect

21 to each brand of tobacco product.

22 ‘‘(2) GENERAL DISCLOSURE OF SAFETY.—With

23 respect to each annual submission under paragraph

24 (1) during the 5-year period beginning on the date

25 of enactment of the Universal Tobacco Settlement
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1 Act, the manufacturer shall, for each ingredient,

2 substance, or compound contained on the list of the

3 manufacturer for the year involved, disclose whether

4 the manufacturer has determined that the ingredi5 ent, substance, or compound would be exempt from

6 public disclosure under this section.

7 ‘‘(b) SAFETY ASSESSMENTS.—

8 ‘‘(1) REQUIREMENT.—Not later than 5 years

9 after the date of enactment of the Universal Tobacco

10 Settlement Act, and annually thereafter, each manu11 facturer shall submit to the Secretary a safety as12 sessment for each ingredient, substance, or

13 compound that is listed under subsection (a)(1)(A)

14 with respect to each brand of tobacco product manu15 factured by each such manufacturer.

16 ‘‘(2) BASIS OF ASSESSMENT.—The safety as17 sessment of an ingredient, substance, or compound

18 described in paragraph (1) shall—

19 ‘‘(A) be based on the best scientific evi20 dence available at the time of the submission of

21 the assessment; and

22 ‘‘(B) result in a finding that there is a rea23 sonable certainty in the minds of competent sci24 entists that the ingredient, substance, or
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1 compound is not harmful in the quantities used

2 under the intended conditions of use.

3 ‘‘(c) PROHIBITION.—

4 ‘‘(1) REGULATIONS.—Not later than 12 months

5 after the date of enactment of the Universal Tobacco

6 Settlement Act, the Secretary shall promulgate regu7 lations to prohibit the use of any ingredient, sub8 stance, or compound in the tobacco product of a

9 manufacturer—

10 ‘‘(A) if no safety assessment has been sub11 mitted by the manufacturer for the ingredient,

12 substance, or compound; or

13 ‘‘(B) if the Secretary disapproves of the

14 safety of the ingredient, substance, or

15 compound that was the subject of the assess16 ment under paragraph (2).

17 ‘‘(2) REVIEW OF ASSESSMENTS.—

18 ‘‘(A) GENERAL REVIEW.—Not later than

19 90 days after the receipt of a safety assessment

20 under subsection (b), the Secretary shall review

21 the findings contained in such assessment.

22 ‘‘(B) APPROVAL OR DISAPPROVAL.—Not

23 later than 90 days after the completion of a re24 view under subparagraph (A), the Secretary

25 shall approve or disapprove of the safety of the
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1 ingredient, substance, or compound that was

2 the subject of the assessment and provide notice

3 to the manufacturer of such action.

4 ‘‘(C) INACTION BY SECRETARY.—If the

5 Secretary fails to act with respect to an assess6 ment during the 90-day period referred to in

7 subparagraph (B), the safety of the ingredient,

8 substance, or compound involved shall be

9 deemed to be approved.

10 ‘‘(d) DISCLOSURE OF INGREDIENTS TO THE PUB11 LIC.—

12 ‘‘(1) INITIAL DISCLOSURE.—The regulations

13 promulgated in accordance with section 904(a) shall,

14 at a minimum, require that, during the 5-year pe15 riod beginning on the date that is 6 months after

16 the date of enactment of the Universal Tobacco Set17 tlement Act, a tobacco product be deemed to be mis18 branded if the labeling of the package of such prod19 uct does not disclose the ingredients of the product

20 in accordance with the labeling provisions applicable

21 to food ingredients under this Act.

22 ‘‘(2) DISCLOSURE OF ALL INGREDIENTS.—The

23 regulations referred to in paragraph (1) shall, at a

24 minimum, require that, subsequent to the 5-year pe25 riod referred to in such paragraph, a tobacco prod-
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1 uct be deemed to be misbranded if the labeling of

2 the package of such product does not disclose all in3 gredients, substances, or compounds contained in

4 the product in accordance with the labeling provi5 sions applicable to food ingredients under this Act.

6 ‘‘(3) EXCEPTION.—Notwithstanding paragraph

7 (1), the Secretary may require that any ingredient,

8 substance, or compound contained in a tobacco prod9 uct that is otherwise exempt from disclosure be dis10 closed if the Secretary determines that such ingredi11 ent, substance, or compound is not safe as provided

12 for in subsection (c).

13 ‘‘(e) CONFIDENTIALITY.—Any information reported

14 to or otherwise obtained by the Secretary under this sec15 tion, and that is not required to be disclosed to the public

16 under subsection (d), shall be exempt from disclosure pur17 suant to subsection (a) of section 552 of title 5, United

18 States Code, by reason of subsection (b)(4) of such sec19 tion, shall be considered confidential and shall not be dis20 closed and may not be used by the Secretary as the basis

21 for the establishment or amendment of a performance

22 standard under section 905, except that such information

23 may be disclosed to other officers or employees concerned

24 with carrying out this Act or when relevant in any pro25 ceeding under this Act.
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1 ‘‘SEC. 911. NONAPPLICATION OF CERTAIN PROVISIONS.

2 ‘‘Sections 502(j), 516, 518, and 520(f) shall not

3 apply to tobacco products to which this chapter applies.’’.

4 Subtitle F—Compliance Plans and

5 Corporate Culture

6 SEC. 151. COMPLIANCE PLANS.

7 (a) IN GENERAL.—Not later than 1 year after the

8 date of enactment of this Act, and annually thereafter,

9 each manufacturer of a tobacco product shall prepare and

10 submit to the Secretary a plan to ensure that the manu11 facturer complies with all applicable Federal, State, and

12 local laws with respect to the manufacture and distribu13 tion of tobacco products.

14 (b) REQUIREMENTS.—A compliance plan submitted

15 under subsection (a) shall—

16 (1) contain the assurances of the manufacturer

17 that tobacco products will only be manufactured and

18 distributed in accordance with this Act and the

19 amendments made by this Act;

20 (2) identify methods to achieve the goals of—

21 (A) reducing the access of individuals

22 under 18 years of age to tobacco products; and

23 (B) reducing the incidence of the underage

24 consumption of tobacco products;
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1 (3) provide for the implementation of internal

2 incentives for achieving the reductions described in

3 paragraph (2);

4 (4) provide for the implementation of internal

5 incentives for the development of tobacco products

6 with a reduced health risk;

7 (5) contain a description of the compliance pro8 grams implemented under section 152 and the effec9 tiveness of such programs; and

10 (6) contain such other information as the Sec11 retary may require.

12 SEC. 152. COMPLIANCE PROGRAMS.

13 (a) IN GENERAL.—Not later than 1 year after the

14 date of enactment of this Act, each manufacturer of a to15 bacco product shall establish and implement one or more

16 compliance programs designed to ensure the compliance

17 of the manufacturer with Federal, State, and local laws

18 that limit the access of individuals under 18 years of age

19 to tobacco products.

20 (b) REQUIREMENTS.—A compliance program estab21 lished under subsection (a) shall—

22 (1) implement standards and procedures to be

23 adhered to by employees and agents that are de24 signed to reduce the incidence of violations of the

25 laws described in subsection (a);
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1 (2) provide for the assignment to 1 or more

2 specific corporate executives of the overall respon3 sibility for ensuring that the manufacturer complies

4 with the standards and procedures applicable under

5 this Act;

6 (3) ensure that due care is taken by the cor7 porate executives designated under paragraph (2) to

8 avoid delegating substantial discretionary authority

9 to individuals who the executives know (or should

10 have known through the exercise of due diligence)

11 have a propensity to disregard corporate policy;

12 (4) include procedures to inform all employees

13 and agents of the relevant standards and procedures

14 applicable to the manufacturer and the tobacco

15 products manufactured under this Act, including

16 procedures for the implementation of training pro17 grams or the dissemination of informational mate18 rials;

19 (5) provide for the conduct of internal audits,

20 and the establishment of hotlines and other meas21 ures to promote compliance with the laws described

22 in subsection (a);

23 (6) provide for the application of appropriate

24 disciplinary mechanisms and measures to employees

25 who are directly or indirectly violating the laws de-
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1 scribed in subsection (a) or otherwise not complying

2 with this Act;

3 (7) include measures to respond appropriately

4 where violations of laws described in subsection (a)

5 are alleged to have occurred or are occurring;

6 (8) include the promulgation of corporate policy

7 statements that express and explain the commitment

8 of the manufacturer to—

9 (A) compliance with applicable Federal,

10 State, and local laws;

11 (B) reducing the use of tobacco products

12 by individuals who are under 18 years of age;

13 and

14 (C) developing tobacco products that pose

15 a reduced risk to the health of the user;

16 (9) provide for the designation of a specific cor17 porate executive to serve as the compliance officer to

18 promote efforts to fulfill the commitment of the

19 manufacturer;

20 (10) include provisions for compiling reports on

21 compliance with this Act and the laws described in

22 paragraph (1) and including those reports in mate23 rials provided to stockholders; and

24 (11) include any other measures determined ap25 propriate by the Secretary.
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1 (c) REPORTING OF NONCOMPLIANCE.—Under the

2 compliance program of a manufacturer, the manufactur3 er’s employees shall be encouraged to report to the compli4 ance officer any known or alleged violations of this Act

5 (or an amendment made by this Act), including violations

6 by distributors or retailers. The compliance officer shall

7 furnish a copy of all such reports to the Secretary for ref8 erence to the appropriate Federal or State enforcement

9 authority.

10 (d) RETAIL ESTABLISHMENTS.—As part of the com11 pliance program established under this section, a manu12 facturer shall carry out efforts to encourage and assist (in13 cluding retail compliance checks and financial incentives)

14 retailers of the tobacco products manufactured by the

15 manufacturer in compliance with the Federal, State, and

16 local laws described in subsection (a).

17 SEC. 153. WHISTLEBLOWER PROTECTIONS.

18 (a) PROHIBITION OF REPRISALS.—An employee of

19 any manufacturer, distributor, or retailer of a tobacco

20 product may not be discharged, demoted, or otherwise dis21 criminated against (with respect to compensation, terms,

22 conditions, or privileges of employment) as a reprisal for

23 disclosing to an employee of the Food and Drug Adminis24 tration, the Department of Justice, or any State or local

25 regulatory or enforcement authority, information relating
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1 to a substantial violation of law related to this Act (or

2 an amendment made by this Act) or a State or local law

3 enacted to further the purposes of this Act.

4 (b) ENFORCEMENT.—Any employee or former em5 ployee who believes that such employee has been dis6 charged, demoted, or otherwise discriminated against in

7 violation of subsection (a) may file a civil action in the

8 appropriate United States district court before the end of

9 the 2-year period beginning on the date of such discharge,

10 demotion, or discrimination.

11 (c) REMEDIES.—If the district court determines that

12 a violation has occurred, the court may order the manufac13 turer, distributor, or retailer involved to—

14 (1) reinstate the employee to the employee’s

15 former position;

16 (2) pay compensatory damages; or

17 (3) take other appropriate actions to remedy

18 any past discrimination.

19 (d) LIMITATION.—The protections of this section

20 shall not apply to any employee who—

21 (1) deliberately causes or participates in the al22 leged violation of law or regulation; or

23 (2) knowingly or recklessly provides substan24 tially false information to the Food and Drug Ad-
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1 ministration, the Department of Justice, or any

2 State or local regulatory or enforcement authority.

3 SEC. 154. PROVISIONS RELATING TO LOBBYING.

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

5 terms ‘‘lobbying activities’’, ‘‘lobbying firm’’, and ‘‘lobby6 ist’’ have the meanings given such terms by section 3 of

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

8 (b) GENERAL REQUIREMENT.—A manufacturer, dis9 tributor, or retailer of a tobacco product shall require that

10 any lobbyist or lobbying firm employed or retained by the

11 manufacturer, distributor, or retailer, or any other individ12 ual who performs lobbying activities on behalf of the man13 ufacturer, distributor, or retailer, as part of the employ14 ment or retainer agreement refrain from supporting or op15 posing any Federal or State legislation, or otherwise sup16 porting or opposing any governmental action on any mat17 ter without the express consent of the manufacturer, dis18 tributor, or retailer.

19 (c) ADDITIONAL AGREEMENTS.—An individual shall

20 not be employed or retained to perform lobbying activities

21 on behalf of a manufacturer, distributor, or retailer of a

22 tobacco product unless such individual enters into a signed

23 agreement with the manufacturer, distributor, or retailer

24 that acknowledges that the individual—
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1 (1) is fully aware of, and will fully comply with,

2 all applicable laws and regulations relating to the

3 manufacture and distribution of tobacco products;

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

5 requirements of this Act (and the amendments made

6 by this Act);

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

8 consent decree entered into under title VI as that

9 decree applies to the manufacturer, distributor, or

10 retailer involved; and

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

12 business conduct policies and other applicable poli13 cies and commitments (including those relating to

14 the prevention of underage tobacco use) of the man15 ufacturer, distributor, or retailer involved.

16 SEC. 155. TERMINATION OF CERTAIN ENTITIES.

17 (a) REQUIREMENT.—Not later than 90 days after the

18 date of enactment of this Act, manufacturers, distributors,

19 or retailers of tobacco products shall provide for the termi20 nation of the activities of the Tobacco Institute and the

21 Council for Tobacco Research, U.S.A. and the Institute

22 and Council shall be dissolved.

23 (b) ESTABLISHMENT OF OTHER ENTITIES.—

24 (1) AUTHORITY.—Manufacturers, distributors,

25 or retailers of tobacco products may form or partici-
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1 pate in any trade organization or other industry as2 sociation only in accordance with this subsection.

3 (2) BOARD OF DIRECTORS.—A trade organiza4 tion or other industry association formed or partici5 pated in under this subsection shall—

6 (A) shall be administered by an independ7 ent board of directors, of which—

8 (i) during the 10-year period begin9 ning on the date on which the organization

10 or association is formed or first partici11 pated in under this subsection, not less

12 than 20 percent (at least 1 member) shall

13 be individuals who are not current or

14 former directors, officers, or employees of

15 an entity terminated under subsection (a)

16 or of the members of the association or or17 ganization; and

18 (ii) during the life of the association

19 or organization, no member shall be a di20 rector of any of the members of the asso21 ciation or organization;

22 (B) be administered by officers who are

23 appointed by the board of directors and who are

24 not otherwise employed by any of the members

25 of the association or organization; and
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1 (C) be provided with legal advice by a legal

2 adviser who is appointed by the board of direc3 tors and who is not otherwise employed by any

4 of the members of the association or organiza5 tion.

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

7 industry association formed or participated in under

8 this subsection shall adopt by-laws that—

9 (A) prohibit meetings by members of the

10 association or organization who are competitors

11 in the tobacco industry except under the spon12 sorship of the association or organization;

13 (B) require that every meeting of the

14 board of directors, or a subcommittee of the

15 board or other general committee, proceed

16 under and strictly adhere to an agenda that is

17 approved by the legal counsel and circulated in

18 advance; and

19 (C) require the taking of minutes that de20 scribe the substance of any meeting of the

21 members of the association or organization and

22 the maintenance of such minutes in the records

23 of the association or organization for a period

24 of 5 years following the meeting.

25 (c) DEPARTMENT OF JUSTICE.—
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1 (1) OVERSIGHT.—The Attorney General and, as

2 appropriate, State antitrust authorities shall exercise

3 oversight authority over any association or organiza4 tion to which subsection (b) applies.

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

6 year period beginning on the date on which an asso7 ciation or organization to which subsection (b) ap8 plies is formed, the Attorney General and, as appro9 priate State antitrust authorities shall, upon the

10 provision of reasonable notice to the legal counsel of

11 the association or organization, have access to—

12 (A) all books, records, meeting agenda and

13 minutes, and other documents maintained by

14 the association or organization; and

15 (B) the directors, officers, and employees

16 of the association or organization for interview

17 purposes.

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

19 States, acting through the attorney general of each

20 such State, may establish a multi-State oversight

21 committee to assist the Attorney General in exercis22 ing the oversight responsibilities under this section.

23 (4) CONFIDENTIALITY.—The Attorney General

24 shall promulgate regulations to provide that mate-
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1 rials provided under paragraph (2) are protected

2 with appropriate confidentiality protections.

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

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

5 U.S.C. 52 et seq.), and any other Federal or State anti6 trust laws shall not apply to an association or organization

7 to which subsection (b) applies.

8 SEC. 156. ENFORCEMENT.

9 (a) ASSESSMENT.—

10 (1) IN GENERAL.—The Secretary may assess a

11 civil penalty against any manufacturer of a tobacco

12 product of up to $25,000 per day of violation when13 ever, on the basis of any available information, the

14 Secretary finds that such manufacturer has violated

15 or is violating any requirement of this subtitle.

16 (2) LIMITATION.—The authority of the Sec17 retary under this subsection shall be limited to mat18 ters where the total penalty sought does not exceed

19 $200,000 and the first alleged date of violation oc20 curred not more than 12 months prior to the initi21 ation of the administrative action, except where the

22 Secretary and the Attorney General jointly deter23 mine that a matter involving a larger penalty

24 amount or longer period of violation is appropriate

25 for action.
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1 (3) JUDICIAL REVIEW.—Any determination by

2 the Administrator and the Attorney General under

3 paragraph (2) shall not be subject to judicial review.

4 (b) PROCEDURE.—

5 (1) IN GENERAL.—A civil penalty under sub6 section (a) shall be assessed by the Secretary by an

7 order made after an opportunity for a hearing on

8 the record in accordance with sections 554 and 556

9 of title 5 of the United States Code. The Secretary

10 shall issue reasonable rules for discovery and other

11 procedures for hearings under this paragraph. Be12 fore issuing such an order, the Secretary shall give

13 written notice to the manufacturer against whom the

14 assessment is being made of the Secretary’s proposal

15 to issue such an order and provide such manufac16 turer with an opportunity to request such a hearing

17 on the order, within 30 days of the date the notice

18 is received by such manufacturer.

19 (2) MODIFICATIONS.—The Secretary may com20 promise, modify, or remit, with or without condi21 tions, any penalty which may be imposed under this

22 section.

23 (c) FIELD CITATION PROGRAM.—

24 (1) IMPLEMENTATION.—The Secretary may

25 provide for the implementation, after consultation
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1 with the Attorney General and the States, of a field

2 citation program through regulations establishing

3 appropriate minor violations of this subtitle for

4 which field citations, assessing civil penalties not to

5 exceed $5,000 per day of violation, may be issued by

6 officers or employees designated by the Secretary.

7 (2) HEARING.—Any manufacturer to which a

8 field citation is assessed may, within a reasonable

9 time as prescribed by the Secretary through regula10 tion, elect to pay the penalty assessment or to re11 quest a hearing on the field citation. If a request for

12 a hearing is not made within the time specified in

13 the regulation, the penalty assessment in the field ci14 tation shall be final. Such hearing shall not be sub15 ject to section 554 or 556 of title 5 of the United

16 States Code, but shall provide a reasonable oppor17 tunity to be heard and to present evidence.

18 (3) NO DEFENSE.—Payment of a civil penalty

19 required by a field citation under this paragraph

20 shall not be a defense to further enforcement by the

21 United States or a State to correct a violation, or to

22 assess the statutory maximum penalty pursuant to

23 other authorities in the subtitle, if the violation con24 tinues.

25 (d) JUDICIAL REVIEW.—
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1 (1) RIGHT.—Any manufacturer against whom a

2 civil penalty is assessed under subsection (c) or to

3 which a penalty order is issued under subsection (a)

4 may seek review of such assessment in the United

5 States District Court for the District of Columbia or

6 for the district in which the violation is alleged to

7 have occurred or in which the principal place of

8 business of the manufacturer is located, by filing in

9 such court within 30 days following the date the

10 penalty order becomes final under subsection para11 graph (b), the assessment becomes final under sub12 section (c), or a final decision following a hearing

13 under subsection (c) is rendered, and by simulta14 neously sending a copy of the filing by certified mail

15 to the Secretary and the Attorney General.

16 (2) FILING.—Within 30 days after a filing

17 under paragraph (1), the Secretary shall file in the

18 court involved a certified copy, or certified index, as

19 appropriate, of the record on which the penalty

20 order or assessment was issued.

21 (3) ACTION BY COURT.—A court shall not set

22 aside or remand a penalty order or assessment

23 under this section unless there is not substantial evi24 dence in the record, taken as a whole, to support the
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1 finding of a violation or unless the order or penalty

2 assessment constitutes an abuse of discretion.

3 (4) LIMITATION.—A penalty order or assess4 ment under this section shall not be subject to re5 view by any court except as provided in this sub6 section. In any such proceedings, the United States

7 may seek to recover civil penalties ordered or as8 sessed under this section.

9 (e) FAILURE TO PAY.—

10 (1) IN GENERAL.—If any manufacturer fails to

11 pay an assessment of a civil penalty or fails to com12 ply with an penalty order under this section—

13 (A) after the order or assessment has be14 come final; or

15 (B) after a court, in an action brought

16 under subsection (d), has entered a final judg17 ment in favor of the Secretary;

18 the Secretary shall request the Attorney General to

19 bring a civil action in an appropriate district court

20 to enforce the order or to recover the amount or21 dered or assessed (plus interest at rates established

22 pursuant to section 6621(a)(2) of the Internal Reve23 nue Code of 1986 from the date of the final order

24 or decision or the date of the final judgment, as the

25 case may be). In such an action, the validity,
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1 amount, and appropriateness of such order or as2 sessment shall not be subject to review.

3 (2) ENFORCEMENT EXPENSES.—Any manufac4 turer who fails to pay on a timely basis a civil pen5 alty ordered or assessed under this section shall be

6 required to pay, in addition to such penalty and in7 terest, the United States enforcement expenses, in8 cluding attorneys fees and costs incurred by the

9 United States for collection proceedings and a quar10 terly nonpayment penalty for each quarter during

11 which such failure to pay persists. Such nonpayment

12 penalty shall be 10 percent of the aggregate amount

13 of such manufacturer’s outstanding penalties and

14 nonpayment penalties accrued as of the beginning of

15 such quarter.

16 (f) SCARLET LETTER ADVERTISING.—

17 TITLE II—REDUCTION IN

18 UNDERAGE TOBACCO USE

19 SEC. 201. PURPOSE.

20 It is the purpose of this title to encourage the achieve21 ment of dramatic and immediate reductions in the number

22 of underage consumers of tobacco products through the

23 imposition of substantial financial surcharges on manufac24 turers if certain underage tobacco-use reduction targets

25 are not met.
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1 SEC. 202. DETERMINATION OF UNDERAGE USE BASE PER2 CENTAGES.

3 (a) CIGARETTES.—For purposes of this section, the

4 underage use base percentage for cigarettes shall be a per5 centage determined by the Secretary, weighted by the rel6 ative population of the age groups involved as determined

7 using data compiled in 1995 by the Bureau of the Census,

8 based on—

9 (1) the average of the percentages of 12th grad10 ers (individuals who are 16 or 17 years of age) who

11 used cigarette products on a daily basis for each of

12 the calendar years 1986 through 1996;

13 (2) the average of the percentages of 10th grad14 ers (individuals who are 14 or 15 years of age) who

15 used cigarette products on a daily basis for each of

16 the calendar years 1991 through 1996; and

17 (3) the average of the percentages of 8th grad18 ers (individuals who are 13 years of age) who used

19 cigarette products on a daily basis for each of the

20 calendar years 1991 through 1996.

21 (b) SMOKELESS TOBACCO.—For purposes of this sec22 tion, the underage use base percentage for smokeless to23 bacco products shall be a percentage determined by the

24 Secretary, weighted by the relative population of the age

25 groups involved as determined using data compiled in

26 1995 by the Bureau of the Census, based on—
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1 (1) the average of the percentages of 12th grad2 ers (individuals who are 16 or 17 years of age) who

3 used smokeless tobacco products on a daily basis in

4 1996;

5 (2) the average of the percentages of 10th grad6 ers (individuals who are 14 or 15 years of age) who

7 used smokeless tobacco products on a daily basis in

8 1996; and

9 (3) the average of the percentages of 8th grad10 ers (individuals who are 13 years of age) who used

11 smokeless tobacco products on a daily basis in 1996.

12 (c) USE OF CERTAIN DATA OR METHODOLOGY.—For

13 purposes of determining the percentages under para14 graphs (1) through (3) of subsections (a) and (b), the Sec15 retary shall use the data contained in the National High

16 School Drug Use Survey entitled Monitoring the Future

17 by the University of Michigan or such other comparable

18 index, as determined appropriate by the Secretary after

19 notice and an opportunity for a hearing, that utilizes

20 methodology identical to that used by the University of

21 Michigan in such survey.

22 SEC. 203. ANNUAL DAILY INCIDENCE OF UNDERAGE USE OF

23 TOBACCO PRODUCTS.

24 (a) ANNUAL DETERMINATION.—Not later than the

25 expiration of the 5-year period beginning on the date of
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1 enactment of this Act, and annually thereafter, the Sec2 retary shall determine the average annual incidence of the

3 daily use of tobacco products by individuals who are under

4 18 years of age.

5 (b) CIGARETTES.—With respect to cigarette prod6 ucts, a determination under subsection (a) for a year shall

7 be based on the percentage, as weighted by the relative

8 population of the age groups involved as determined using

9 data compiled in 1995 by the Bureau of the Census, of—

10 (1) 12th graders (individuals who are 16 or 17

11 years of age) who used cigarette products on a daily

12 basis during the year involved;

13 (2) 10th graders (individuals who are 14 or 15

14 years of age) who used cigarette products on a daily

15 basis during the year involved; and

16 (3) 8th graders (individuals who are 13 years

17 of age) who used cigarette products on a daily basis

18 during the year involved.

19 (c) SMOKELESS TOBACCO.—With respect to smoke20 less tobacco products, a determination under subsection

21 (a) for a year shall be based on the percentage, as weight22 ed by the relative population of the age groups involved

23 as determined using data compiled in 1995 by the Bureau

24 of the Census, of—
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1 (1) 12th graders (individuals who are 16 or 17

2 years of age) who used smokeless tobacco products

3 on a daily basis during the year involved;

4 (2) 10th graders (individuals who are 14 or 15

5 years of age) who used smokeless tobacco products

6 on a daily basis during the year involved; and

7 (3) 8th graders (individuals who are 13 years

8 of age) who used cigarette smokeless tobacco on a

9 daily basis during the year involved.

10 (d) USE OF CERTAIN DATA OR METHODOLOGY.—

11 (1) IN GENERAL.—For purposes of determining

12 the percentages under paragraphs (1) through (3) of

13 subsections (b) and (c), the Secretary shall use the

14 data contained in the National High School Drug

15 Use Survey entitled Monitoring the Future by the

16 University of Michigan (if such survey is still being

17 undertaken) or such other comparable index, as de18 termined appropriate by the Secretary after notice

19 and an opportunity for a hearing, that utilizes meth20 odology identical to that used by the University of

21 Michigan in such survey.

22 (2) ALTERATION OF METHODOLOGY.—If the

23 Secretary determines that the methodology used by

24 the University of Michigan in the survey referred to

25 in paragraph (1) has been altered in a material
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1 manner from the methodology used during the pe2 riod from 1986 to 1996 (including by altering States

3 or regions on which the survey is based), the Sec4 retary, after notice and an opportunity for a hear5 ing, shall use percentages based on an index devel6 oped by the Secretary that utilizes methodology

7 identical to that used by the University of Michigan

8 in such survey.

9 SEC. 204. REQUIRED REDUCTION IN UNDERAGE TOBACCO

10 USE.

11 (a) IN GENERAL.—For purposes of assessing sur12 charges under section 205, the Secretary shall determine

13 whether the required percentage reduction in the underage

14 use of tobacco products for a year (based on the tables

15 contained in subsection (b)) has been achieved for the year

16 involved. Such determination shall be based on—

17 (1) with respect to cigarette products, the aver18 age annual incidence of the daily use of tobacco

19 products by individuals who are under 18 years of

20 age for the year involved (as determined under sec21 tion 203(b)) as compared to the underage use base

22 percentage for cigarette products (as determined

23 under section 202(a)); and

24 (2) with respect to smokeless tobacco products,

25 the average annual incidence of the daily use of
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1 smokeless tobacco products by individuals who are

2 under 18 years of age for the year involved (as de3 termined under section 203(c)) as compared to the

4 underage use base percentage for smokeless tobacco

5 products (as determined under section 202(b)).

6 (b) PERCENTAGE REDUCTION IN UNDERAGE USE OF

7 TOBACCO PRODUCTS.—For purposes of subsection (a),

8 the required percentage reduction in the underage use of

9 tobacco products with respect to each tobacco product

10 shall be determined according to the following tables:

11 (1) CIGARETTES.—

‘‘Calender year after enactment—The percentage decrease in the

use of cigarette products—

Fifth ......................................................................................... 30

Sixth ......................................................................................... 30

Seventh ..................................................................................... 50

Eighth ...................................................................................... 50

Ninth ........................................................................................ 50

Tenth and thereafter ............................................................... 60.

12 (2) SMOKELESS TOBACCO PRODUCTS.—

‘‘Calender year after enactment—The percentage decrease in the

use of smokeless tobacco

products—

Fifth ......................................................................................... 25

Sixth ......................................................................................... 25

Seventh ..................................................................................... 35

Eighth ...................................................................................... 35

Ninth ........................................................................................ 35

Tenth and thereafter ............................................................... 45.

13 SEC. 205. APPLICATION OF SURCHARGES.

14 (a) IN GENERAL.—If the Secretary determines that

15 the percentage reduction in the underage use of tobacco

16 products for a year has not been achieved as required
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1 under section 204, the Secretary shall impose a surcharge

2 on the manufacturers of the tobacco products involved.

3 (b) AMOUNT OF SURCHARGE.—

4 (1) IN GENERAL.—The amount of any sur5 charge to be imposed under this section for a cal6 endar year shall be equal to the product of—

7 (A) $80,000,000; and

8 (B) the number of applicable surcharge

9 percentage points as determined under sub10 section (c).

11 (2) ADJUSTMENTS.—The amount applicable

12 under paragraph (1) shall be annually adjusted by

13 the Secretary based on—

14 (A) with respect to subparagraph (A) of

15 such paragraph—

16 (i) the proportional percentage in17 crease or decrease, as compared to cal18 endar year 1995, in the population of indi19 viduals residing in the United States who

20 are at least 13 years of age but less than

21 18 years of age;

22 (ii) the proportional percentage in23 crease or decrease, as compared to cal24 endar year 1996, in the average profit per

25 unit (measured in cents and weighted by
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1 annual sales) earned by tobacco manufac2 turers for the tobacco product involved (as

3 determined by the Secretary through a

4 contract with a nationally recognized ac5 counting firm having no connection to to6 bacco manufacturers); and

7 (B) any methodology utilized to avoid the

8 double counting of underage individuals whose

9 tobacco use has previously resulted in the impo10 sition of a surcharge, limited to the extent that

11 there were not other underage users of tobacco

12 in such previous years for whom a surcharge

13 was not paid because of the limitation contained

14 in section 206.

15 (3) PROFIT PER UNIT.—For purposes of para16 graph (2)(A)(ii), the average profit per unit for cal17 endar 1996 shall be determined using the operating

18 profit reported by manufacturers to the Securities

19 and Exchange Commission.

20 (c) DETERMINATION OF APPLICABLE SURCHARGE

21 PERCENTAGE POINTS.—

22 (1) IN GENERAL.—Except as provided in para23 graph (2), with respect to a calendar year, the appli24 cable surcharge percentage points shall be equal to

25 the percentage point difference between—
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1 (A) the required percentage reduction in

2 the underage use of the tobacco product in3 volved for the year (based on the tables in sec4 tion 204(b)); and

5 (B) the number of percentage points by

6 which the average annual incidence of the daily

7 use of the tobacco products involved by individ8 uals who are under 18 years of age for the year

9 (as determined under section 203) is less than

10 the underage use base percentage for such

11 products (as determined under section 202).

12 (2) ADJUSTMENT.—If for any calendar year the

13 Secretary determines that the average annual inci14 dence of the daily use of the tobacco products in15 volved by individuals who are under 18 years of age

16 (as determined under section 203) is greater than

17 the underage use base percentage for such products

18 (as determined under section 202), the applicable

19 surcharge percentage point shall be equal to—

20 (A) the percentage point amount deter21 mined under paragraph (1)(A); and

22 (B) the number of percentage points by

23 which the average annual incidence of the daily

24 use of the tobacco products involved by individ25 uals who are under 18 years of age (as deter-
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1 mined under section 203) is greater than the

2 underage use base percentage for such products

3 (as determined under section 202).

4 (3) TYPE OF PRODUCT.—Separate determina5 tions shall be made under this section for cigarette

6 products and smokeless tobacco products.

7 (d) LIMITATION.—The total amount of surcharges

8 imposed with respect to each type of tobacco product (cig9 arette products or smokeless tobacco products) under this

10 section shall not exceed $2,000,000,000 (adjusted each

11 year by the Secretary to account for inflation) for any cal12 endar year.

13 (e) 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 manufacturers of such product as allocated by the market

18 share of each such manufacturer with respect to such

19 product. The market share of each manufacturer for each

20 such product shall be based on the actual Federal excise

21 tax payments made by such manufacturers for each such

22 product under the Internal Revenue Code of 1986.

23 (f) 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 to each manufacturer the
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1 amount for which such manufacturer is obligated. Not

2 later than July 1 of any year in which a manufacturer

3 receives an assessment under this section, the manufac4 turer shall pay such assessment in full or be subject to

5 such interest on such amount as the Secretary may by

6 regulation prescribe.

7 (g) USE OF AMOUNTS.—Amounts received under this

8 section shall be used as provided for in section 517.

9 (h) 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. 206. ABATEMENT PROCEDURES.

14 (a) PETITIONS.—Upon payment by a manufacturer

15 of the amount assessed to the manufacturer under section

16 205(f), the manufacturer may submit a petition to the

17 Secretary for an abatement of the assessment. A notice

18 of such abatement petition shall be submitted to the attor19 ney 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 manufacturer to prove, by a

5 preponderance of the evidence, that the manufacturer

6 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 manufacturer has acted in good faith

11 and in full compliance with this Act (and any

12 amendment made by this Act) and any regulations

13 or State or local laws promulgated in furtherance of

14 this Act;

15 (2) the manufacturer has pursued all reason16 ably available measures to attain the reductions;

17 (3) there is any evidence of any direct or indi18 rect action by the manufacturer to undermine the

19 achievement of the reductions required under section

20 204 or to undermine any other provision of this Act

21 (or amendment); and

22 (4) the manufacturer has taken (or failed to

23 take) any other action as determined appropriate by

24 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 not to exceed 75 percent of the amount paid

4 by the manufacturer, together with interest that may have

5 accrued on such amount during the period between the

6 date on which payment by the manufacturer was made

7 and the date on which the abatement order was granted.

8 Such interest shall be equal to that provided for the aver9 age 52-week Treasury Bill during the period involved.

10 (f) AGGRIEVED PARTIES.—Any manufacturer or at11 torney general of any State that is aggrieved by an abate12 ment that is granted under this section may seek judicial

13 review of the abatement decision within 30 days of the

14 date of such decision in the Court of Appeals for the Dis15 trict of Columbia Circuit. Review in such cases shall be

16 subject to the procedures described in sections 701

17 through 706 of title 5, United States Code.

18 (g) PROHIBITION.—A manufacturer may not file a

19 petition under subsection (a) until such time as the manu20 facturer has fully paid the Secretary the amount assessed

21 to the manufacturer under section 205(f).
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1 TITLE III—STANDARDS TO RE2 DUCE INVOLUNTARY EXPO3 SURE TO TOBACCO SMOKE

4 SEC. 301. DEFINITIONS.

5 In this title—

6 (1) ADMINISTRATOR.—The term ‘‘Adminis7 trator’’ means the Administrator of the Occupational

8 Safety and Health Administration.

9 (2) PUBLIC FACILITY.—

10 (A) IN GENERAL.—The term ‘‘public facil11 ity’’ means any building regularly entered by 10

12 or more individuals at least 1 day per week, in13 cluding any such building owned by or leased to

14 a Federal, State, or local government entity.

15 Such term shall not include any building or

16 portion thereof regularly used for residential

17 purposes.

18 (B) EXCLUSIONS.—Such term does not in19 clude a building which is used as a restaurant

20 (other than a fast food restaurant), bar, private

21 club, hotel guest room, casino, bingo parlor, to22 bacco merchant, or prison.

23 (C) FAST FOOD RESTAURANT.—The term

24 ‘‘fast food restaurant’’ means any restaurant or

25 chain of restaurants that primarily distributes
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1 food through a customer pick-up (either at a

2 counter or drive-through window). The Admin3 istrator of the Occupational Safety and Health

4 Administration may promulgate regulations to

5 clarify this subparagraph to ensure that the in6 tended inclusion of establishments catering

7 largely to individuals under 18 years of age is

8 achieved.

9 (3) RESPONSIBLE ENTITY.—The term ‘‘respon10 sible entity’’ means, with respect to any public facil11 ity, the owner of such facility except that, in the

12 case of any such facility or portion thereof which is

13 leased, such term means the lessee.

14 SEC. 302. SMOKE-FREE ENVIRONMENT POLICY.

15 (a) POLICY REQUIRED.—In order to protect children

16 and adults from cancer, respiratory disease, heart disease,

17 and other adverse health effects from breathing environ18 mental tobacco smoke, the responsible entity for each pub19 lic facility shall adopt and implement at such facility a

20 smoke-free environment policy which meets the require21 ments of subsection (b).

22 (b) ELEMENTS OF POLICY.—

23 (1) IN GENERAL.—Each smoke-free environ24 ment policy for a public facility shall—
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1 (A) prohibit the smoking of cigarettes, ci2 gars, and pipes, and any other combustion of

3 tobacco within the facility and on facility prop4 erty within the immediate vicinity of the en5 trance to the facility; and

6 (B) post a clear and prominent notice of

7 the smoking prohibition in appropriate and visi8 ble locations at the public facility.

9 (2) EXCEPTION.—The smoke-free environment

10 policy for a public facility may provide an exception

11 to the prohibition specified in paragraph (1) for 1 or

12 more specially designated smoking areas within a

13 public facility if such area or areas meet the require14 ments of subsection (c).

15 (c) SPECIALLY DESIGNATED SMOKING AREAS.—A

16 specially designated smoking area meets the requirements

17 of this subsection if—

18 (1) the area is ventilated in accordance with

19 specifications promulgated by the Administrator that

20 ensure that air from the area is directly exhausted

21 to the outside and does not recirculate or drift to

22 other areas within the public facility;

23 (2) the area is maintained at negative pressure,

24 as compared to adjoined nonsmoking areas, as deter-
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1 mined under regulations promulgated by the Admin2 istrator; and

3 (3) nonsmoking individuals do not have to enter

4 the area for any purpose while smoking is occurring

5 in such area.

6 Cleaning and maintenance work shall be conducted in such

7 area only while no smoking is occurring in the area.

8 SEC. 303. CITIZEN ACTIONS.

9 (a) IN GENERAL.—An action may be brought to en10 force the requirements of this title by any aggrieved per11 son, any State or local government agency, or the Admin12 istrator.

13 (b) VENUE.—Any action to enforce this title may be

14 brought in any United States district court for the district

15 in which the defendant resides or is doing business to en16 join any violation of this title or to impose a civil penalty

17 for any such violation in the amount of not more than

18 $5,000 per day of violation. The district courts shall have

19 jurisdiction, without regard to the amount in controversy

20 or the citizenship of the parties, to enforce this title and

21 to impose civil penalties under this title.

22 (c) NOTICE.—An aggrieved person shall give any al23 leged violator notice of at least 60 days prior to commenc24 ing an action under this section. No action may be com25 menced by an aggrieved person under this section if such
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1 alleged violator complies with the requirements of this title

2 within such 60-day period and thereafter.

3 (d) COSTS.—The court, in issuing any final order in

4 any action brought pursuant to this section, may award

5 costs of litigation (including reasonable attorney and ex6 pert witness fees) to any prevailing plaintiff, whenever the

7 court determines such award is appropriate.

8 (e) PENALTIES.—The court, in any action under this

9 section to apply civil penalties, shall have discretion to

10 order that such civil penalties be used for projects which

11 further the policies of this title. The court shall obtain the

12 view of the Administrator in exercising such discretion and

13 selecting any such projects.

14 SEC. 304. PREEMPTION.

15 Nothing in this title shall preempt or otherwise affect

16 any other Federal, State or local law which provides pro17 tection from health hazards from environmental tobacco

18 smoke.

19 SEC. 305. REGULATIONS.

20 The Administrator is authorized to promulgate such

21 regulations as the Administrator deems necessary to carry

22 out this title.
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1 SEC. 306. EFFECTIVE DATE.

2 The provisions of this title shall take effect on the

3 date that is 1 year after the date of enactment of this

4 Act.

5 TITLE IV—PUBLIC HEALTH AND

6 OTHER PROGRAMS

7 Subtitle A—Public Health Block

8 Grant Program

9 SEC. 401. PUBLIC HEALTH TRUST FUND.

10 (a) ESTABLISHMENT.—

11 (1) IN GENERAL.—The Secretary shall estab12 lish, as a separate fund within the Trust Fund es13 tablished under section 401, a trust fund to be

14 known as the ‘‘Public Health Trust Fund’’, consist15 ing of such amounts as may be appropriated or cred16 ited to the Trust Fund.

17 (2) TRUSTEES.—The trustees of the Trust

18 Fund shall be the Commissioner and the Secretary.

19 (b) TRANSFERS.—There are hereby appropriated and

20 transferred to the Trust Fund the amounts described in

21 section 401(d)(1) with respect to the year involved.

22 (c) EXPENDITURES FROM TRUST FUND.—Amounts

23 in the Public Health Trust Fund shall be available in each

24 calendar year, as provided by appropriations Act, for block

25 grants under section 502.
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1 SEC. 402. BLOCK GRANTS TO STATES.

2 (a) IN GENERAL.—For the purpose described in sub3 section (b), the Secretary shall award a block grant to

4 each State in each fiscal year in an amount based on the

5 allotment of the State as determined in accordance with

6 section 503.

7 (b) AUTHORIZED ACTIVITIES.—A State shall use

8 amounts received under a block grant only for the purpose

9 of planning, carrying out, and evaluating activities as pro10 vided for in section 504.

11 (c) APPLICATION.—To be eligible to receive a grant

12 under this subtitle a State shall prepare and submit to

13 the Secretary an application at such time, in such manner,

14 and containing such information as the Secretary may re15 quire, including such assurances as the Secretary may re16 quire regarding the compliance of the State with the re17 quirements of this Act.

18 SEC. 403. ALLOTMENTS.

19 (a) IN GENERAL.—Of the amounts appropriated and

20 available for block grants for a fiscal year under section

21 502, the Secretary shall allot to each State an amount

22 determined under the allotment formula under subsection

23 (b).

24 (b) ALLOTMENT FORMULA.—

25 (c) REALLOTMENTS.—To the extent that all the

26 funds appropriated under section 501(c) for a fiscal year
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1 and available for allotment in such fiscal year are not oth2 erwise allotted to States because—

3 (1) one or more States have not submitted an

4 application in accordance with section 502(c) for the

5 fiscal year; or

6 (2) one or more States have notified the Sec7 retary that they do not intend to use the full amount

8 of their allotment;

9 such excess shall be reallotted among each of the remain10 ing States in proportion to the amount otherwise allotted

11 to such States for the fiscal year without regard to this

12 subsection.

13 (d) INDIAN TRIBES AND TRIBAL ORGANIZATIONS.—

14 (1) IN GENERAL.—If the Secretary—

15 (A) receives a request from the governing

16 body of an Indian tribe or tribal organization

17 within any State that funds under this subtitle

18 be provided directly by the Secretary to such

19 tribe or organization; and

20 (B) determines that the members of such

21 tribe or tribal organization would be better

22 served by means of grants made directly by the

23 Secretary under this subtitle;

24 the Secretary shall reserve from amounts which

25 would otherwise be allotted to such State under sub-
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1 section (a) for the fiscal year the amount determined

2 under paragraph (2).

3 (2) AMOUNT.—The Secretary shall reserve for

4 the purpose of paragraph (1) from amounts that

5 would otherwise be allotted to such State under sub6 section (a) an amount to be determined by a formula

7 developed by the Secretary after consultation with

8 the Secretary of the Interior.

9 (3) GRANT.—The amount reserved by the Sec10 retary on the basis of a determination under this

11 subsection shall be granted to the Indian tribe or

12 tribal organization serving the individuals for whom

13 such a determination has been made.

14 (4) PLAN.—In order for an Indian tribe or trib15 al organization to be eligible for a grant for a fiscal

16 year under this subsection, it shall submit to the

17 Secretary a plan for such fiscal year which meets

18 such criteria as the Secretary may prescribe.

19 (5) DEFINITIONS.—The terms ‘‘Indian tribe’’

20 and ‘‘tribal organization’’ shall have the same mean21 ing given such terms in section 4(b) and section 4(c)

22 of the Indian Self-Determination and Education As23 sistance Act (25 U.S.C. 450b(b) and (c)).
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1 SEC. 404. USE OF FUNDS.

2 (a) IN GENERAL.—Amounts provided to a State

3 under a grant under this subtitle shall be used—

4 (1) to reimburse the State for expenses in5 curred by the State under the State program under

6 title XIX of the Social Security Act (42 U.S.C. 1396

7 et seq.) relating to the treatment of tobacco-related

8 illnesses or conditions;

9 (2) to reimburse the State for other expenses

10 incurred by the State in providing directly, or reim11 bursing others for the provision of, treatment for to12 bacco-related illnesses or conditions;

13 (3) to provide health care coverage, either di14 rectly or through arrangements with other entities,

15 for uninsured individuals under 18 years of age who

16 reside in the State;

17 (4) to establish a State tobacco products liabil18 ity judgments and settlement fund, as provided for

19 in subsection (c);

20 (5) to reimburse the State for expenses in21 curred in carrying out the tobacco licensure require22 ments of subtitle D of title I; and

23 (6) to carry out any other activities determined

24 appropriate by the State.
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1 (b) LIMITATIONS ON USES.—A State may not use

2 amounts provided under a grant under this subtitle for

3 programs or projects not approved of by the Secretary.

4 (c) JUDGMENT AND SETTLEMENT FUND.—

5 (1) IN GENERAL.—Each State that receives a

6 grant under this subtitle shall establish a fund for

7 the purpose of making payments under paragraph

8 (2).

9 (2) PAYMENTS.—The fund established under

10 paragraph (1) shall be used to make payments to in11 dividuals who have obtained a judgment in a to12 bacco-related action brought in a State court, or who

13 have entered into a settlement of such an action, of

14 the amount of any award under such judgment or

15 settlement that represents punitive damages.

16 SEC. 405. WITHHOLDING OF FUNDS.

17 (a) AUTHORITY.—

18 (1) IN GENERAL.—The Secretary shall, after

19 adequate notice and an opportunity for a hearing

20 conducted within the affected State, withhold funds

21 from any State which does not use its allotment in

22 accordance with the requirements of this subtitle.

23 The Secretary shall withhold such funds until the

24 Secretary finds that the reason for the withholding
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1 has been removed and there is reasonable assurance

2 that it will not recur.

3 (2) INVESTIGATION.—The Secretary may not

4 institute proceedings to withhold funds under para5 graph (1) unless the Secretary has conducted an in6 vestigation concerning whether the State has used

7 its allotment in accordance with the requirements of

8 this subtitle. Investigations required by this para9 graph shall be conducted within the affected State

10 by qualified investigators.

11 (3) RESPONSE TO COMPLAINTS.—The Secretary

12 shall respond in an expeditious manner to com13 plaints of a substantial or serious nature that a

14 State has failed to use funds in accordance with the

15 requirements of this subtitle.

16 (4) MINOR FAILURE.—The Secretary may not

17 withhold funds under paragraph (1) from a State

18 for a minor failure to comply with the requirements

19 of this subtitle.

20 (b) INVESTIGATIONS.—The Secretary shall conduct

21 in several States in each fiscal year investigations of the

22 use of funds received by the States under this subtitle in

23 order to evaluate compliance with the requirements of this

24 subtitle.
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1 (c) AVAILABILITY OF INFORMATION.—Each State,

2 and each entity which has received funds from an allot3 ment made to a State under this subtitle, shall make avail4 able to the Secretary, for examination, copying, or me5 chanical reproduction on or off the premises, appropriate

6 books, documents, papers, and records of the entity upon

7 a reasonable request therefore.

8 Subtitle B—Other Programs

9 SEC. 411. NATIONAL SMOKING CESSATION PROGRAM.

10 (a) ESTABLISHMENT.—The Secretary shall establish

11 a program to be known as the ‘‘National Smoking Ces12 sation Program’’ under which the Secretary may award

13 grants to eligible public and nonprofit entities and individ14 uals for smoking cessation purposes.

15 (b) ELIGIBILITY.—

16 (1) OF ENTITIES.—To be eligible to receive a

17 grant under this section an entity shall—

18 (A) be a public or nonprofit private entity;

19 (B) prepare and submit to the Secretary

20 an application at such time, in such manner,

21 and containing such information as the Sec22 retary may require;

23 (C) provide assurances that amounts re24 ceived under the grant will be used in accord25 ance with subsection (c)(1); and
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1 (D) meet any other requirements deter2 mined appropriate by the Secretary.

3 (2) OF INDIVIDUALS.—To be eligible to receive

4 a grant under this section an individual shall—

5 (A) prepare and submit to the Secretary

6 an application at such time, in such manner,

7 and containing such information as the Sec8 retary may require;

9 (B) provide assurances that amounts re10 ceived under the grant will be used only in ac11 cordance with subsection (c)(2); and

12 (C) meet any other requirements deter13 mined appropriate by the Secretary.

14 (c) USE OF FUNDS.—

15 (1) BY ENTITIES.—An entity that receives a

16 grant under this section shall use amounts provided

17 under the grant to establish or administer tobacco

18 product use cessation programs that are approved in

19 accordance with subsection (d).

20 (2) BY INDIVIDUALS.—An individual that re21 ceives a grant under this section shall use amounts

22 provided under the grant to enroll in a tobacco prod23 uct use cessation program or to purchase a tobacco

24 product cessation device that has been approved in

25 accordance with subsection (d). Grants to individuals
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1 under this section may be in the form of vouchers

2 that may be used to pay the costs of enrollment in

3 an approved program or to purchase an approved

4 device.

5 (d) APPROVAL OF CESSATION PROGRAM OR DE6 VICES.—Using the best available scientific information,

7 the Secretary shall promulgate regulations to provide for

8 the approval of tobacco product use cessation programs

9 and devices. Such regulations shall be designed to ensure

10 that tobacco product users, if requested, are provided with

11 reasonable access to safe and effective cessation programs

12 and devices. Such regulations shall ensure that such indi13 viduals have access to a broad range of cessation options

14 that are tailored to the needs of the individual tobacco

15 user.

16 (e) FUNDING.—The Secretary shall use amounts

17 available under section 401(d)(2) to carry out this section.

18 SEC. 412. NATIONAL REDUCTION IN TOBACCO USAGE PRO19 GRAM.

20 (a) ESTABLISHMENT.—The Secretary shall establish

21 a program to be known as the ‘‘National Reduction in To22 bacco Usage Program’’ under which the Secretary may

23 award grants to eligible public and nonprofit entities to

24 carry out activities designed to reduce the use of tobacco

25 products.
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1 (b) ELIGIBILITY.—To be eligible to receive a grant

2 under this section an entity shall—

3 (1) be a State health department, other public

4 entity, or a nonprofit private entity;

5 (2) prepare and submit to the Secretary an ap6 plication at such time, in such manner, and contain7 ing such information as the Secretary may require;

8 (3) provide assurances that amounts received

9 under the grant will be used in accordance with sub10 section (c); and

11 (4) meet any other requirements determined ap12 propriate by the Secretary.

13 (c) USE OF FUNDS.—An entity that receives a grant

14 under this section shall use amounts provided under the

15 grant to—

16 (1) carry out media-based and nonmedia-based

17 education, prevention, and cessation campaigns de18 signed to discourage the use of tobacco products by

19 individuals who are under 18 years of age and to en20 courage those who use such products to quit;

21 (2) carry out research concerning, and provide

22 for the development and public dissemination of,

23 technologies and methods to reduce the risk of de24 pendence and injury from tobacco product usage and

25 exposure;
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1 (3) provide for the identification, testing, and

2 evaluation of the health effects of both tobacco and

3 non-tobacco constituents of tobacco products; or

4 (4) carry out any other activities determined by

5 the Secretary to be consistent with the purposes of

6 this Act.

7 (d) FUNDING.—The Secretary shall use amounts

8 available under section 401(d)(3) to carry out this section.

9 SEC. 413. NATIONAL TOBACCO-FREE PUBLIC EDUCATION

10 PROGRAM.

11 (a) ESTABLISHMENT OF BOARD.—

12 (1) IN GENERAL.—The Secretary shall establish

13 an independent board to be known as the ‘‘Tobacco14 Free Education Board’’ (referred to in this section

15 as the ‘‘Board’’) to enter into contracts with or

16 award grants to eligible public and nonprofit private

17 entities to carry out public informational and edu18 cational activities designed to reduce the use of to19 bacco products.

20 (2) APPOINTMENT.—The Board shall be com21 posed of 9 members to be appointed by the Sec22 retary, of which—

23 (A) at least 3 such members shall be an in24 dividual who is widely recognized by the general

25 public for achievement in the athletic, cultural,
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1 entertainment, educational, business, or politi2 cal field; and

3 (B) at least 3 of whom shall be individuals

4 who are heads of a major public health organi5 zations.

6 (3) TERMS AND VACANCIES.—The members of

7 the Board shall serve staggered terms as determined

8 appropriate at the time of appointment by the Sec9 retary. Any vacancy in the Board shall not affect its

10 powers, but shall be filled in the same manner as the

11 original appointment.

12 (4) POWERS.—

13 (A) HEARINGS.—The Board may hold

14 such hearings, sit and act at such times and

15 places, take such testimony, and receive such

16 evidence as the Board considers advisable to

17 carry out the purposes of this section.

18 (B) INFORMATION FROM FEDERAL AGEN19 CIES.—The Board may secure directly from any

20 Federal department or agency such information

21 as the Board considers necessary to carry out

22 the provisions of this section.

23 (5) PERSONNEL MATTERS.—

24 (A) COMPENSATION.—Each member of the

25 Board who is not an officer or employee of the
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1 Federal Government shall be compensated at a

2 rate equal to the daily equivalent of the annual

3 rate of basic pay prescribed for level IV of the

4 Executive Schedule under section 5315 of title

5 5, United States Code, for each day (including

6 travel time) during which such member is en7 gaged in the performance of the duties of the

8 Board. All members of the Board who are offi9 cers or employees of the United States shall

10 serve without compensation in addition to that

11 received for their services as officers or employ12 ees of the United States.

13 (B) TRAVEL EXPENSES.—The members of

14 the Board shall be allowed travel expenses, in15 cluding per diem in lieu of subsistence, at rates

16 authorized for employees of agencies under sub17 chapter I of chapter 57 of title 5, United States

18 Code, while away from their homes or regular

19 places of business in the performance of serv20 ices for the Board.

21 (b) ESTABLISHMENT OF PROGRAM.—The Secretary

22 shall establish a program to be known as the ‘‘National

23 Tobacco-Free Public Education Program’’ under which

24 the Board may enter into contracts with or award grants

25 to eligible public and nonprofit private entities to carry
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1 out public informational and educational activities de2 signed to reduce the use of tobacco products.

3 (c) ELIGIBILITY.—To be eligible to receive a grant

4 under this section an entity shall—

5 (1) be a—

6 (A) public entity or a State health depart7 ment; or

8 (B) nonprofit private entity that—

9 (i) is not affiliated with a tobacco

10 product manufacturer or importer;

11 (ii) has a demonstrated record of

12 working effectively to reduce tobacco prod13 uct use; and

14 (iii) has expertise in conducting a

15 multi-media communications campaign;

16 (2) prepare and submit to the Secretary an ap17 plication at such time, in such manner, and contain18 ing such information as the Secretary may require,

19 including a description of the activities to be con20 ducted using amounts received under the grant or

21 contract;

22 (3) provide assurances that amounts received

23 under the grant will be used in accordance with sub24 section (d); and
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1 (4) meet any other requirements determined ap2 propriate by the Secretary.

3 (d) USE OF FUNDS.—An entity that receives a grant

4 or contract under this section shall use amounts provided

5 under the grant or contract to conduct multi-media public

6 educational or informational campaigns that are designed

7 to discourage and de-glamorize the use of tobacco prod8 ucts. Such campaigns shall be designed to discourage the

9 initiation of tobacco use by minors and encourage those

10 using such products to quit.

11 (e) NEEDS OF CERTAIN POPULATIONS.—In awarding

12 grants and contracts under this section, the Board shall

13 take into consideration the needs of particular popu14 lations.

15 (f) FUNDING.—The Secretary shall use amounts

16 available under section 401(d)(4) to carry out this section.

17 SEC. 414. NATIONAL EVENT SPONSORSHIP PROGRAM.

18 (a) ESTABLISHMENT.—The Secretary shall establish

19 a program to be known as the ‘‘National Event Sponsor20 ship Program’’ under which the Secretary may award

21 grants to eligible entities or individuals for the sponsorship

22 of activities described in subsection (c).

23 (b) ELIGIBILITY.—To be eligible to receive a grant

24 under this section an entity or individual shall—
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1 (1) prepare and submit to the Secretary an ap2 plication at such time, in such manner, and contain3 ing such information as the Secretary may require,

4 including—

5 (A) a description of the event, activity,

6 team, or entry for which the grant is to be pro7 vided;

8 (B) documentation that the event, activity,

9 team, or entry involved was sponsored or other10 wise funded by a tobacco manufacturer or dis11 tributor prior to the date of the application; and

12 (C) a certification that the applicant is un13 able to secure funding for the event, activity,

14 team, or entry involved from sources other than

15 those described in paragraph (2);

16 (2) provide assurances that amounts received

17 under the grant will be used in accordance with sub18 section (d); and

19 (3) meet any other requirements determined ap20 propriate by the Secretary.

21 (c) PERMISSIBLE SPONSORSHIP ACTIVITIES.—

22 Events, activities, teams, or entries for which a grant may

23 be provided under this section include—

24 (1) an athletic, musical, artistic, or other social

25 or cultural event or activity that was sponsored in
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1 whole or in part by a tobacco manufacturer or dis2 tributor prior to the date of enactment of this Act;

3 (2) the participation of a team that was spon4 sored in whole or in part by a tobacco manufacturer

5 or distributor prior to the date of enactment of this

6 Act, in an athletic event or activity; and

7 (3) the payment of a portion or all of the entry

8 fees of, or other financial or technical support pro9 vided to, an individual or team by a tobacco manu10 facturer or distributor prior to the date of enactment

11 of this Act, for participation of the individual in an

12 athletic, musical, artistic, or other social or cultural

13 event.

14 (d) USE OF FUNDS.—Amounts received under a

15 grant under this section shall be used to—

16 (1)(A) pay the costs associated with the spon17 sorship of an event or activity described in sub18 section (c)(1);

19 (B) provide for the sponsorship of an individual

20 or team;

21 (C) pay the required entry fees associated with

22 the participation of an individual or team in an

23 event or activity described in subsection (c)(3);

24 (D) provide financial or technical support to an

25 individual or team in connection with the participa-
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1 tion of that individual or team in an activity de2 scribed in subsection (c)(3); or

3 (E) for any other purposes determined appro4 priate by the Secretary; and

5 (2) promote images or activities to discourage

6 individuals from using tobacco products or encour7 age individuals who use such products to quit.

8 (e) ALLOCATION OF UNEXPENDED FUNDS.—

9 Amounts available for purposes of carrying out this sec10 tion and remaining available at the end of the 10-year pe11 riod described in section 401(d)(5), shall be used as fol12 lows:

13 (1) 50 percent of such amounts shall be used

14 to supplement amounts available for multi-media

15 campaigns under section 512;

16 (2) 25 percent of such amounts shall be used

17 to supplement amounts available for enforcement

18 purposes under section 401(d)(8); and

19 (3) 25 percent of such amounts shall be used

20 to supplement amounts available for community ac21 tion programs under section 515.

22 (f) FUNDING.—The Secretary shall use amounts

23 available under section 401(d)(5) to carry out this section.
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1 SEC. 415. NATIONAL COMMUNITY ACTION PROGRAM.

2 (a) ESTABLISHMENT.—The Secretary shall establish

3 a program to be known as the ‘‘National Community Ac4 tion Program’’ under which the Secretary may award

5 grants to eligible State and local governmental entities to

6 carry out community-based tobacco control efforts that

7 are designed to encourage community involvement in re8 ducing tobacco product use.

9 (b) ELIGIBILITY.—To be eligible to receive a grant

10 under this section an entity shall—

11 (1) be a State or local public entity;

12 (2) prepare and submit to the Secretary an ap13 plication at such time, in such manner, and contain14 ing such information as the Secretary may require;

15 (3) provide assurances that amounts received

16 under the grant will be used in accordance with the

17 purposes of this section; and

18 (4) meet any other requirements determined ap19 propriate by the Secretary.

20 (c) FUNDING.—The Secretary shall use amounts

21 available under section 401(d)(6) to carry out this section.

22 SEC. 416. NATIONAL CESSATION RESEARCH PROGRAM.

23 (a) ESTABLISHMENT.—The Secretary shall establish

24 a program to be known as the ‘‘National Cessation Re25 search Program’’ under which the Secretary may award

26 grants to eligible entities for research concerning, and the
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1 development of methods, drugs, and devices to discourage

2 individuals from using tobacco products and to assist indi3 viduals who use such products in quitting such use.

4 (b) ELIGIBILITY.—

5 (c) USE OF FUNDS.—

6 (d) ADDITIONAL REQUIREMENTS.—

7 (e) FUNDING.—The Secretary shall use amounts

8 available under section 401(d)(7) to carry out this section.

9 SEC. 417. USE OF SURCHARGE PAYMENTS.

10 (a) IN GENERAL.—Of the amount made available to

11 the Secretary each year under section 401(d)(9), the Sec12 retary shall—

13 (1) use not less than 90 percent of such amount

14 to award grants to State and local governmental and

15 public health agencies to carry out activities to fur16 ther reduce the use of tobacco products by individ17 uals who are under 18 years of age; and

18 (2) use not more than 10 percent of such

19 amount for the administrative costs associated with

20 the administration of title II and of chapter IX of

21 the Federal Food, Drug and Cosmetic Act (as added

22 by section 143(3)).

23 (b) TRANSFER OF CERTAIN AMOUNTS.—If the Sec24 retary determines that the administrative costs described
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1 in subsection (a)(2) are less than the amount available

2 under section subsection, the Secretary may—

3 (1) transfer any such excess amount to other

4 Federal, State, or local agencies to meet the needs

5 associated with the reduction of underage tobacco

6 usage; or

7 (2) expend such amounts directly for activities

8 to expedite the reduction of underage tobacco use.

9 (c) ELIGIBILITY.—To be eligible to receive a grant

10 under this section an entity shall—

11 (1) be a State or local governmental or public

12 health agency;

13 (2) prepare and submit to the Secretary an ap14 plication at such time, in such manner, and contain15 ing such information as the Secretary may require;

16 (3) provide assurances that amounts received

17 under the grant will be used in accordance with this

18 section; and

19 (4) meet any other requirements determined ap20 propriate by the Secretary.

21 (d) FUNDING.—The Secretary shall use amounts

22 available under section 401(d)(9) to carry out this section.
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1 TITLE V—CONSENT DECREES,

2 NON-PARTICIPATING MANU3 FACTURERS, AND STATE EN4 FORCEMENT

5 SEC. 501. PURPOSES.

6 It is the purpose of this title to provide for the estab7 lishment of consent decrees and the imposition of certain

8 payment provisions, in addition to those otherwise pro9 vided for under Federal or State laws, to encourage manu10 facturers, distributors, and retailers to comply with this

11 Act, and to otherwise provide for the enforcement of this

12 Act with respect to non-participating manufacturers.

13 Subtitle A—Consent Decrees and

14 Non-Participating Manufacturers

15 SEC. 511. CONSENT DECREES.

16 (a) REQUIREMENT.—To be eligible to receive pay17 ments under title V, a State, and to be eligible to receive

18 liability protections under title VII, a tobacco manufac19 turer or distributor, shall enter into consent decrees under

20 this section to be effective on the date of enactment of

21 this Act.

22 (b) TERMS AND CONDITIONS.—

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

24 contained in the consent decrees described in sub25 section (a) shall contain provisions to clarify the ap-
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1 plication and requirements of this Act (and the

2 amendments made by this Act), including provisions

3 relating to—

4 (A) restrictions on tobacco product adver5 tising and marketing and youth access to such

6 products;

7 (B) the termination, establishment, and

8 operation of trade associations;

9 (C) restrictions on tobacco lobbying;

10 (D) the disclosure of tobacco smoke con11 stituents;

12 (E) the disclosure of nontobacco ingredi13 ents found in tobacco products;

14 (F) the disclosure of existing and future

15 documents relating to health, toxicity, and addi16 tion related to tobacco product usage;

17 (G) compliance and corporate culture;

18 (H) the obligation of manufacturers to

19 make payments for the benefit of States;

20 (I) the obligation of manufacturers to

21 interact only with distributors and retailers that

22 operate in compliance with the applicable provi23 sions of Federal, State, or local law regarding

24 the marketing and sale of tobacco products;
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1 (J) requirements for warnings, labeling,

2 and packaging of tobacco products;

3 (K) the dismissal of pending litigation as

4 required under title VII and as agreed to by the

5 parties to the decree; and

6 (L) any other matter determined appro7 priate by the Secretary or the parties involved.

8 (2) LIMITATIONS.—The terms and conditions

9 contained in the consent decrees described in sub10 section (a) shall not contain provisions relating to—

11 (A) tobacco product design, performance,

12 or modification;

13 (B) manufacturing standards and good

14 manufacturing practices;

15 (C) testing and regulation with respect to

16 toxicity and ingredients approval; and

17 (D) the required percentage reductions in

18 the underage use of tobacco products for a year

19 under section 204.

20 (3) WAIVER OF CONSTITUTIONAL CLAIMS.—The

21 terms and conditions contained in the consent de22 crees described in subsection (a) shall include a pro23 vision waiving the Federal or State constitutional

24 claims of the parties and providing for the severabil25 ity of the provisions of the decree.
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1 (4) CONSTRUCTION.—The terms and conditions

2 contained in the consent decrees described in sub3 section (a) shall provide that the terms of the decree

4 will be construed in a manner that is consistent with

5 the provision of this Act.

6 (c) APPROVAL.—To be valid under this section, the

7 provisions of a consent decree must be approved by the

8 Secretary prior to approval or entry by a court.

9 (d) ENFORCEMENT.—

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

11 consent decree entered under this section shall re12 main in effect and enforceable regardless of whether

13 the provisions of this Act are amended, except that

14 any amendments to this Act that—

15 (A) establish Federal requirements that

16 are in conflict with obligations contained in the

17 consent decrees shall render such obligations

18 unenforceable;

19 (B) require allocations of funds that are in

20 conflict with the allocation contained in the con21 sent decrees shall render such consent decree

22 allocation unenforceable; and

23 (C) require warnings, labeling, or packag24 ing that conflicts with the warning, labeling, or

25 packaging requirements of the consent decree,
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1 shall require that modifications be made in the

2 consent decree to conform with such amend3 ments.

4 (2) BY STATE.—

5 (A) IN GENERAL.—A State may bring an

6 action to enforce the provisions of any consent

7 decree under this section in any appropriate

8 State court. Such proceedings may seek injunc9 tive relief only and may not seek criminal or

10 monetary sanctions. Enforcement of any injunc11 tive relief provided under a State action under

12 this section shall be permitted under any appli13 cable State law.

14 (B) CONSISTENCY.—The Secretary, in con15 sultation with the Attorney General, shall pro16 mulgate regulations to ensure the consistency of

17 State court ruling with respect to conduct

18 under a consent decree that is not exclusively

19 local in nature.

20 SEC. 512. NATIONAL TOBACCO CONTROL PROTOCOL.

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

22 the date of enactment of this Act, each tobacco manufac23 turer to which this Act applies shall enter into a National

24 Tobacco Control Protocol.
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1 (b) TERMS AND CONDITIONS.—The Protocol referred

2 to in subsection (a) shall be—

3 (1) developed by the Secretary as a binding and

4 enforceable contract that embodies the terms of this

5 Act; and

6 (2) designed to be enforceable in Federal or

7 State courts.

8 SEC. 513. NON-PARTICIPATING MANUFACTURERS.

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

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

11 602, such manufacturer shall not be eligible to receive the

12 liability protections under title VII.

13 (b) IMPOSITION OF USER FEE.—

14 (1) IN GENERAL.—Each manufacturer that

15 elects not to enter into a consent decree under sec16 tion 602 and not to become a signatory to the Na17 tional Tobacco Control Protocol under section 603

18 shall be subject to an annual fee established under

19 this subsection.

20 (2) AMOUNT OF FEE.—

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

22 established under this subsection for a year

23 shall be equal to the amounts provided under

24 paragraphs (1) and (8) of section 401(d) for

25 the year.
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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.

6 (c) SETTLEMENT RESERVE FUND.—

7 (1) IN GENERAL.—Each manufacturer to which

8 subsection (b)(1) applies shall annually deposit into

9 an escrowed reserve fund an amount equal to 150

10 percent of the amount that such manufacturer would

11 have paid under section 402 (except for that portion

12 of the payments that would have been made avail13 able under paragraphs (1) and (8) of section 401(d))

14 for the year in which the manufacturer is making

15 such deposit if the manufacturer had been a signa16 tory to the National Tobacco Control Protocol under

17 section 603.

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

19 fund of a manufacturer under paragraph (1) shall

20 be used solely for tobacco-related liability payments.

21 The manufacturer may reclaim any amounts remain22 ing in the fund (with interest) at the end of the 35-

23 year period beginning on the date on which such

24 fund is established.
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1 Subtitle B—State Enforcement

2 SEC. 521. REQUIREMENT OF NO SALE TO MINORS LAW.

3 (a) RELEVANT LAW.—

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

5 for each calendar year, the Secretary may not make

6 any payments to a State under section 403 unless

7 the State involved has in effect a law providing that

8 it is unlawful for any manufacturer, retailer, or dis9 tributor of tobacco products to sell or distribute any

10 such product to any individual under the age of 18

11 that meets the requirements of this section.

12 (2) DELAYED APPLICABILITY FOR CERTAIN

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

14 does not convene a regular session in fiscal year

15 1997, and in the case of a State whose legislature

16 does not convene a regular session in fiscal year

17 1998, the requirement described in paragraph (1) as

18 a condition of a receipt of payments under section

19 403 shall apply only for fiscal year 1999 and subse20 quent fiscal years.

21 (b) REQUIREMENTS.—A State law described in sub22 section (a) shall comply with the following:

23 (1) PROHIBITION ON SALE.—Such law shall

24 provide that it is unlawful for any manufacturer, re25 tailer, or distributor of tobacco products to sell or
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1 distribute any such product within the State to any

2 individual under the age of 18 years.

3 (2) PURCHASE, RECEIPT OR POSSESSION.—

4 (A) IN GENERAL.—Such law shall provide

5 that an individual under 18 years of age shall

6 not purchase or attempt to purchase, receive or

7 attempt to receive, possess or attempt to pos8 sess, smoke or attempt to smoke, or otherwise

9 use or consume or attempt to use or consume

10 a tobacco product in a public place.

11 (B) EMPLOYMENT.—Such law may permit

12 an individual under the age of 18 to possess a

13 tobacco product during regular working hours

14 and in the course of such individual’s employ15 ment if the tobacco product is not possessed for

16 such individual’s consumption.

17 (3) INSPECTIONS.—

18 (A) IN GENERAL.—Such law shall provide

19 that the State Police of a State, or such local

20 law enforcement authority duly designated by

21 the State Police, shall enforce this law in a

22 manner that can reasonably be expected to re23 duce the extent to which tobacco products are

24 distributed to individuals under 18 years of age

25 and shall, at least monthly, conduct random,
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1 unannounced inspections in accordance with

2 regulations promulgated by the Secretary under

3 this section to ensure compliance with this law.

4 (B) CONDUCT.—Inspections under this

5 paragraph shall be conducted in communities

6 geographically and statistically representative of

7 the entire State and the youth population of the

8 State. Not less than 250 such inspections shall

9 be conducted with respect to each 1,000,000

10 residents of the State.

11 SEC. 522. STATE REPORTING.

12 (a) IN GENERAL.—Not later than 2 years after the

13 date of enactment of this Act, and annually thereafter,

14 the State shall prepare and submit to the Secretary a re15 duction in tobacco product usage report. Such report shall,

16 except as provided in subsection (b)(3), be made available

17 to the general public of the State.

18 (b) CONTENTS.—A report submitted under sub19 section (a) shall include—

20 (1) a detailed description of the enforcement ac21 tivities undertaken by the State and the political

22 subdivisions of the State concerning tobacco product

23 usage laws for the year for which the report is being

24 prepared;
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1 (2) a detailed description of the progress of the

2 State in reducing the availability of tobacco products

3 to individuals under 18 years of age, including the

4 detailed statistical results of the compliance inspec5 tion required under section 621;

6 (3) a detailed description of the methods used

7 in such compliance inspection and in identifying out8 lets which were tested (the Secretary shall provide

9 protections for the confidentiality of information

10 provided under this paragraph);

11 (4) a detailed description of the strategies that

12 the State intends to utilize in the current and suc13 ceeding years to make further progress on reducing

14 the availability of tobacco products to individuals

15 under 18 years of age; and

16 (5) the identity of a single State agency that is

17 responsible for administering the requirements of

18 title III in the State.

19 SEC. 523. REDUCTION IN STATE PAYMENTS.

20 (a) ANNUAL DETERMINATION.—Beginning with re21 spect to the fifth full fiscal year after the date of enact22 ment of this Act, and each fiscal year thereafter the Sec23 retary shall make a determination as to whether each

24 State has pursued all reasonably available measures to en25 force the law described in section 621.
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1 (b) PRESUMPTIVE FINDING.—The Secretary shall

2 find presumptively that a State has not pursued all rea3 sonably available measures to enforce the law described

4 in section 621 if the Secretary determines that the State

5 has not achieved the following compliance rate results

6 based on the findings of the retail compliance inspections

7 conducted under the State law:

8 (1) With respect to each of the fifth and sixth

9 fiscal years following the date of enactment, 75 per10 cent compliance with State law.

11 (2) With respect to each of the seventh through

12 ninth fiscal years following the date of enactment,

13 85 percent compliance with State law.

14 (3) With respect to the tenth and each subse15 quent fiscal year following the date of enactment, 90

16 percent compliance with State law.

17 (c) AMOUNT OF REDUCTION.—

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

19 the Secretary determines does not meet the compli20 ance rates described in subsection (b), the Secretary

21 may reduce the amount that the State may be eligi22 ble for under section 501. The amount of any such

23 reduction shall not exceed an amount equal to 1 per24 cent of the amount for which the State is eligible for

25 under section 501 for the fiscal year involved for
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1 each 1 percentage point by which the State’s compli2 ance performance is below the applicable compliance

3 rate.

4 (2) LIMITATION.—In no event shall the amount

5 of any reduction under this section exceed an

6 amount equal to 20 percent of the amount for which

7 the State is eligible for under section 501 for the

8 fiscal year involved.

9 (3) REALLOTMENT.—The Secretary shall

10 reallot any amounts withheld under this subsection

11 to States with compliance rates that exceed the rates

12 applicable under subsection (b) in amounts to be de13 termined by the Secretary as appropriate to reward

14 States with the highest compliance rates.

15 (d) REVIEW.—

16 (1) PETITION FOR RELEASE.—Not later than

17 90 days after the date on which a notice from the

18 Secretary that the Secretary intends to make a re19 duction under subsection (c) is received, a State may

20 petition the Secretary for a release and disburse21 ment of such amount (referred to in this subsection

22 as the ‘‘withhold amount’’). The State shall give

23 prompt written notice of such petition to the State

24 attorney general.

25 (2) ACTION BY SECRETARY.—
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1 (A) HOLDING AND INVESTING OF

2 FUNDS.—Upon receipt of a petition under para3 graph (1), the Secretary shall designate the

4 withhold amount as subject to a petition and in5 vest such amount in interest-bearing securities

6 of the United States subject to a final disposi7 tion of the petition.

8 (B) BASIS FOR DETERMINATION.—In con9 sidering a petition received under paragraph

10 (1), the Secretary shall consider—

11 (i) whether the State has acted in

12 good faith and in full compliance with the

13 provisions of this Act (and the amend14 ments made by this Act) and any regula15 tions promulgated in furtherance of this

16 Act;

17 (ii) whether the State has pursued all

18 reasonably available measures to achieve

19 the compliance rates applicable under sub20 section (b) and the goals of this Act for re21 ducing the underage use of tobacco prod22 ucts;

23 (iii) whether there is any evidence of

24 any direct or indirect action taken by the

25 State to undermine the achievement of the
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1 compliance rates and goals described in

2 clause (ii); and

3 (iv) any other evidence determined ap4 propriate by the Secretary.

5 (C) BURDEN.—With respect to any action

6 by the Secretary on a petition under paragraph

7 (1), the burden shall be on the State to prove,

8 by a preponderance of the evidence, that the

9 State should be granted a release and disburse10 ment under the petition.

11 (D) HEARING.—The Secretary shall hold a

12 hearing, with notice and an opportunity to be

13 heard provided to the attorney general of the

14 State and to manufacturers, prior to making

15 any determination as to a petition under para16 graph (1).

17 (E) RELEASE OF FUNDS.—Upon a deter18 mination by the Secretary that the State has

19 met the burden imposed under subparagraph

20 (C) with respect to a petition, the Secretary

21 shall disburse not to exceed 75 percent of the

22 withhold amount (and any interest accrued on

23 such amount) to the State. The Secretary may

24 consider all relevant evidence in determining the
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1 amount to disburse to the State under this sub2 paragraph.

3 (3) APPEALS.—

4 (A) IN GENERAL.—Any manufacturer or

5 State attorney general aggrieved by a decision

6 of the Secretary under paragraph (2) may,

7 within 30 days of the date of such decision,

8 seek judicial review of the decision in the Unit9 ed States Court of Appeals for the District of

10 Columbia Circuit. The provisions of sections

11 701 through 706 of title 5, United States Code,

12 shall apply to appeals filed under this para13 graph.

14 (B) LIMITATION.—No stay or other in15 junctive relief that has the effect of enjoining

16 the withholding of amounts under this section

17 shall be permitted during the pendency of an

18 appeal filed under this paragraph.

19 (C) FINALITY.—The decision of the Court

20 of Appeals in an action under this paragraph

21 shall be final.
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1 TITLE VI—PROVISIONS RELAT2 ING TO TOBACCO-RELATED

3 CIVIL ACTIONS

4 SEC. 601. GENERAL IMMUNITY.

5 (a) STATE ATTORNEY GENERAL ACTIONS.—

6 (1) PENDING ACTIONS.—Civil actions that have

7 been commenced by a State or local governmental

8 entity, or on behalf of such an entity, against a

9 manufacturer, distributor, or retailer that is a signa10 tory to the National Tobacco Control Protocol under

11 section 612, and that are pending on the date of

12 enactment of this Act are terminated.

13 (2) FUTURE ACTIONS.—A manufacturer, dis14 tributor or retailer that is a signatory to the Na15 tional Tobacco Control Protocol under section 612

16 shall be immune from any civil action commenced

17 after the date of enactment of this Act by a Federal,

18 State, or local governmental entity, or on behalf of

19 such an entity, for all claims arising from the use

20 of a tobacco product.

21 (b) OTHER ACTIONS.—

22 (1) CLASS ACTIONS.—

23 (A) PENDING ACTIONS.—Class actions for

24 claims arising from the use of a tobacco prod25 uct that are pending against a manufacturer,
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1 distributor, or retailer that is a signatory to the

2 National Tobacco Control Protocol under sec3 tion 612, are terminated.

4 (B) FUTURE ACTIONS.—A manufacturer,

5 distributor, or retailer that is a signatory to the

6 National Tobacco Control Protocol under sec7 tion 612 shall be immune from any class action

8 commenced after the date of enactment of this

9 Act for all claims arising from the use of a to10 bacco product.

11 (2) ADDICTION AND DEPENDENCE CLAIMS.—

12 (A) PENDING ACTIONS.—Any civil action

13 for claims based on addition to or dependence

14 on a tobacco product that are pending against

15 a manufacturer, distributor, or retailer that is

16 a signatory to the National Tobacco Control

17 Protocol under section 612, are terminated.

18 (B) FUTURE ACTIONS.—A manufacturer,

19 distributor, or retailer that is a signatory to the

20 National Tobacco Control Protocol under sec21 tion 612 shall be immune from any civil action

22 commenced after the date of enactment of this

23 Act for all claims based on addition to or de24 pendence on a tobacco product.
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1 (c) PRESERVATION.—All personal injury claims aris2 ing from the use of a tobacco product by an individual

3 shall be preserved.

4 SEC. 602. CIVIL LIABILITY FOR PAST CONDUCT.

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

6 shall apply to all civil actions permitted under section 701

7 for relief arising from the conduct of a manufacturer, dis8 tributor, or retailer that is a signatory to the National To9 bacco Control Protocol under section 612 that occurred

10 prior to the date of enactment of this Act.

11 (b) PUNITIVE DAMAGES PROHIBITED.—No punitive

12 damages shall be awarded in any claim described in sub13 section (a).

14 (c) INDIVIDUAL TRIALS.—No class action suits, join15 der of parties, aggregation of claims, consolidation of ac16 tions, extrapolations, or other devices to resolve cases

17 other than on the basis of individual actions shall be per18 mitted without the consent of the defendant. Any defend19 ant, in an action that involves a violation of this sub20 section, may remove such action to an appropriate Federal

21 court.

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

23 National Tobacco Control Protocol under section 612, all

24 signatories shall agree to the joint sharing of any civil li25 ability for actions for damages arising from the use of to-
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1 bacco products. Such signatories shall not be jointly and

2 severally liable for damages involving nonsignatories. Ac3 tions involving both signatories and nonsignatories shall

4 be severed.

5 (e) PERMISSIBLE PARTIES.—

6 (1) PLAINTIFFS.—The following individuals

7 may be plaintiffs in a civil action to which this sec8 tion applies:

9 (A) Individuals bringing claims, or claims

10 derivative of such claims, on their own behalf

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

12 individuals.

13 (B) Third-party payors for claims not

14 based on subrogation that were pending on

15 June 9, 1997.

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

17 subrogation of individual claims permitted

18 under subparagraph (A).

19 (2) DEFENDANTS.—This section shall apply

20 only to actions brought against a signatory of the

21 National Tobacco Control Protocol under section

22 612, a successor or assign of such a signatory, any

23 future fraudulent transferees, or any entity for suit

24 designated to survive a defunct signatory. Such sig-
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1 natories shall be vicariously liable for the actions of

2 their agents.

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

4 there shall be no removal of a action to which this section

5 applies.

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

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

8 the risk of injury or illness to a user shall not be admissi9 ble or discoverable.

10 (h) CAPS ON SETTLEMENTS.—

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

12 a calendar year, the aggregate amount of all tobacco

13 claims judgments or settlements to which this sec14 tion applies, that the signatories of the National To15 bacco Control Protocol under section 612 shall be

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

17 33 percent of the annual payment required under

18 section 402 for the year involved.

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

20 the judgments and settlements described in para21 graph (1) exceed an amount equal to 33 percent of

22 the annual payment required under section 402 for

23 the year involved, such excess amount shall be paid

24 in the following year.
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1 (3) EFFECT OF SETTLEMENT.—The signatories

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

3 be applied against the amount owed by such signato4 ries to the National Tobacco Settlement Trust Fund

5 for the year involved, in an amount equal to 80 per6 cent of the aggregate amounts paid under judgments

7 or settlements of tobacco-related claims to which this

8 section applies for such year.

9 (4) INDIVIDUAL CAP.—With respect to an ac10 tion to which this section applies, any amount

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

12 year following the year in which the judgment or

13 settlement was entered, except that this paragraph

14 shall not apply if all other awards under judgments

15 or settlements entered in the first year can be paid

16 without exceeding the aggregate annual cap under

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

18 from year to year with no payments in any single

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

20 on such amounts until such time as the annual ag21 gregate cap is not exceeded.

22 (5) UNUSED PORTION OF CREDIT.—

23 (i) DEFENSE COSTS.—The signatories of the Na24 tional Tobacco Control Protocol under section 612 shall

25 be responsible for the payment of all attorneys’ fees and
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1 other costs associated with being a defendant in an action

2 to which this section applies.

3 SEC. 603. CIVIL LIABILITY FOR FUTURE CONDUCT.

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

5 shall apply to all civil actions permitted under section 701

6 for relief arising from the conduct of a manufacturer, dis7 tributor, or retailer that is a signatory to the National To8 bacco Control Protocol under section 612 that occurs after

9 the date of enactment of this Act.

10 (b) GENERAL PROVISIONS.—The provisions of sub11 sections (c) and (e) through (i) of section 702 shall apply

12 to actions under this section.

13 (c) THIRD-PARTY PAYOR CLAIMS.—Third-party

14 payor claims that are not based on subrogation shall not

15 be commenced under this section.

16 SEC. 604. NON-PARTICIPATING MANUFACTURERS.

17 The provisions of this title shall not apply to any

18 manufacturer, distributor, or retailer that is not a signa19 tory to the National Tobacco Control Protocol under sec20 tion 612.

21 TITLE VII—PUBLIC DISCLOSURE

22 OF HEALTH RESEARCH

23 SEC. 701. PURPOSE.

24 It is the purpose of this title to provide for the disclo25 sure of previously nonpublic or confidential documents by
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1 manufacturers of tobacco products, including the results

2 of internal health research, and to provide for a procedure

3 to settle claims of attorney-client privilege, work product,

4 or trade secrets with respect to such documents.

5 SEC. 702. NATIONAL TOBACCO DOCUMENT DEPOSITORY.

6 (a) ESTABLISHMENT.—To be eligible to receive the

7 protections provided under title VII, manufacturers of to8 bacco products, acting in conjunction with the Tobacco In9 stitute and the Council for Tobacco Research, U.S.A.

10 (prior to the termination of such entities under section

11 155), shall, not later than 180 days after the date of en12 actment of this Act, establish and maintain a National To13 bacco Document Depository (in this title referred to as

14 the ‘‘Depository’’). Such Depository shall be located in the

15 Washington, D.C. area and be open to the public.

16 (b) USE OF DEPOSITORY.—The Depository shall be

17 maintained in a manner that permits the Depository to

18 be used as a resource for litigants, public health groups,

19 and any other individuals who have an interest in the cor20 porate records and research of the manufacturers concern21 ing smoking and health, addiction or nicotine dependency,

22 safer or less hazardous cigarettes, and underage tobacco

23 use and marketing.
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1 (c) CONTENTS.—The Depository shall include (and

2 manufacturers and the Tobacco Institute and the Council

3 for Tobacco Research, U.S.A. shall provide)—

4 (1) within 180 days of the date of enactment of

5 this Act, all documents provided by such entities to

6 plaintiffs in—

7 (A) civil or criminal actions brought by

8 State attorneys general (including all docu9 ments selected by plaintiffs from the Guilford

10 Repository of the United Kingdom);

11 (B) Philip Morris Companies Inc.’s defa12 mation action against Capital Cities/American

13 Broadcasting Company News;

14 (C) the Federal Trade Commission’s inves15 tigation concerning Joe Camel and underage

16 marketing;

17 (D) the Haines and Cippollone actions;

18 and

19 (E) the Butler action in Mississippi;

20 (2) within 90 days after the date of enactment

21 of this Act, any exiting documents discussing or re22 ferring to health research, addiction or dependency,

23 safer or less hazardous cigarettes, studies of the

24 smoking habits of minors, and the relationship be25 tween advertising or promotion and youth smoking,
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1 that the entities described in subsection (a) have not

2 completed producing as required in the actions de3 scribed in paragraph (1);

4 (3) within 180 days of the date of enactment of

5 this Act, all documents relating to indices (as de6 fined by the court in the Minnesota Attorney Gen7 eral action) of documents relating to smoking and

8 health, including all indices identified by the manu9 facturers in the Washington, Texas, and Minnesota

10 Attorney General actions;

11 (4) upon the settlement of any action referred

12 to in this subsection, and after a good-faith, de novo,

13 document-by-document review of all documents pre14 viously withheld from production in any actions on

15 the grounds of attorney-client privilege, all docu16 ments determined to be outside of the scope of the

17 privilege;

18 (5) all existing or future documents relating to

19 original laboratory research concerning the health or

20 safety of tobacco products, including all laboratory

21 research results relating to methods used to make

22 tobacco products less hazardous to consumers;

23 (6) a comprehensive new attorney-client privi24 lege log of all documents, itemized in sufficient de25 tail so as to enable any interested individual to de-
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1 termine whether the individual will challenge the

2 claim of privilege, that the entities described in sub3 section (a) (based on the de novo review of such doc4 uments by such entities) claim are protected from

5 disclosure under the attorney-client privilege;

6 (7) all existing or future documents relating to

7 studies of the smoking habits of minors or docu8 ments referring to any relationship between advertis9 ing and promotion and underage smoking; and

10 (8) all other documents determined appropriate

11 under regulations promulgated by the Secretary.

12 (d) DISPUTE RESOLUTION PANEL.—

13 (1) ESTABLISHMENT.—The Judicial Conference

14 of the United States shall establish a Tobacco Docu15 ments Dispute Resolution Panel, to be composed of

16 three Federal judges to be appointed by the Con17 ference, to resolve all disputes involving claims of at18 torney-client, work product, or trade secrets privilege

19 with respect to documents required to be deposited

20 into the Depository under subsection (c) that may be

21 brought by Federal, State, or local governmental of22 ficials or the public or asserted in any action by a

23 manufacturer.
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1 (2) BASIS FOR DETERMINATIONS.—The deter2 minations of the Panel established under paragraph

3 (1) shall be based on—

4 (A) the American Bar Association/Amer5 ican Law Institute Model Rules or the prin6 cipals of Federal law with respect to attorney7 client or work product privilege; and

8 (B) the Uniform Trade Secrets Act with

9 respect to trade secrecy.

10 (3) DECISION.—Any decision of the Panel es11 tablished under paragraph (1) shall be final and

12 binding upon all Federal and State courts.

13 (4) ASSESSING OF FEES.—As part of a deter14 mination under this subsection, the Panel estab15 lished under paragraph (1) shall determined whether

16 a claimant of the privilege acted in good faith and

17 had a factual and legal basis for asserting the claim.

18 If the Panel determines that the claimant did not

19 act in good faith, the Panel may assess costs against

20 the claimant, including a reasonable attorneys’ fee,

21 and may apply such other sanctions as the Panel de22 termines appropriate.

23 (5) ACCELERATED REVIEW.—The Panel estab24 lished under paragraph (1) shall establish proce25 dures for the accelerated review of challenges to a
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1 claim of privilege. Such procedures shall include as2 surances that an individual filing a challenge to such

3 a claim need not make a prima facie showing of any

4 kind as a prerequisite to an in camera review of the

5 documents at issue.

6 (6) SPECIAL MASTERS.—The Panel established

7 under paragraph (1) may appoint Special Masters in

8 accordance with Rule 53 of the Federal Rules of

9 Civil Procedure. The cost relating to any Special

10 Master shall be assessed to the manufacturers as

11 part of a fee process to be established under regula12 tions promulgated by the Secretary.

13 (e) OTHER PROVISIONS.—

14 (1) NO WAIVER OF PRIVILEGE.—Compliance

15 with this section by the entities described in sub16 section (a) shall not be deemed to be a waiver on be17 half of such entities of any applicable privilege or

18 protection.

19 (2) AVOIDANCE OF DESTRUCTION.—In estab20 lishing the Depository, procedures shall be imple21 mented to protect against the destruction of docu22 ments.

23 (3) DEEMED PRODUCED.—Any documents con24 tained in the Depository shall be deemed to have
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1 been produced for purposes of any tobacco-related

2 litigation in the United States.

3 (f) DOCUMENTS.—For purposes of this section, the

4 term ‘‘documents’’ shall include any paper documents that

5 may be printed using data that is contained in computer

6 files.

7 TITLE VIII—ASSISTANCE TO TO8 BACCO GROWERS AND COM9 MUNITIES

10 SEC. 801. SHORT TITLE.

11 This title may be cited as the ‘‘Long-Term Economic

12 Assistance for Farmers Act’’ or the ‘‘LEAF Act’’.

13 SEC. 802. DEFINITIONS.

14 In this title:

15 (1) ACTIVE TOBACCO PRODUCER.—The term

16 ‘‘active tobacco producer’’ means a quota holder,

17 quota lessee, or quota tenant.

18 (2) QUOTA HOLDER.—The term ‘‘quota holder’’

19 means a producer that owns a farm for which a to20 bacco farm marketing quota or farm acreage allot21 ment was established under the Agricultural Adjust22 ment Act of 1938 (7 U.S.C. 1281 et seq.) for any

23 of the 1994, 1995, or 1996 crop years.

24 (3) QUOTA LESSEE.—The term ‘‘quota lessee’’

25 means—
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1 (A) a producer that owns a farm that pro2 duced tobacco pursuant to a lease and transfer

3 to that farm of all or part of a tobacco farm

4 marketing quota or farm acreage allotment es5 tablished under the Agricultural Adjustment

6 Act of 1938 (7 U.S.C. 1281 et seq.) for any of

7 the 1994, 1995, or 1996 crop years; or

8 (B) a producer that rented land from a

9 farm operator to produce tobacco under a to10 bacco farm marketing quota or farm acreage al11 lotment established under the Agricultural Ad12 justment Act of 1938 (7 U.S.C. 1281 et seq.)

13 for any of the 1994, 1995, or 1996 crop years.

14 (4) QUOTA TENANT.—The term ‘‘quota tenant’’

15 means a producer who—

16 (A) is the principal producer, as deter17 mined by the Secretary, of tobacco on a farm

18 where tobacco is produced pursuant to a to19 bacco farm marketing quota or farm acreage al20 lotment established under the Agricultural Ad21 justment Act of 1938 (7 U.S.C. 1281 et seq.)

22 for any of the 1994, 1995, or 1996 crop years;

23 and

24 (B) is not a quota holder or quota lessee.
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1 (5) SECRETARY.—The term ‘‘Secretary’’

2 means—

3 (A) in titles I and II, the Secretary of Ag4 riculture; and

5 (B) in section 301, the Secretary of Labor.

6 (6) TOBACCO PRODUCT IMPORTER.—The term

7 ‘‘tobacco product importer’’ has the meaning given

8 the term ‘‘importer’’ in section 5702 of the Internal

9 Revenue Code of 1986.

10 (7) TOBACCO PRODUCT MANUFACTURER.—

11 (A) IN GENERAL.—The term ‘‘tobacco

12 product manufacturer’’ has the meaning given

13 the term ‘‘manufacturer of tobacco products’’ in

14 section 5702 of the Internal Revenue Code of

15 1986.

16 (B) EXCLUSION.—The term ‘‘tobacco

17 product manufacturer’’ does not include a per18 son that manufactures cigars or pipe tobacco.

19 (8) TRUST FUND.—The term ‘‘Trust Fund’’

20 means the Tobacco Community Revitalization Trust

21 Fund established under section 101.
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1 Subtitle A—Tobacco Community

2 Revitalization Trust Fund

3 SEC. 811. ESTABLISHMENT OF TRUST FUND.

4 (a) IN GENERAL.—There is established in the Treas5 ury of the United States a trust fund to be known as the

6 ‘‘Tobacco Community Revitalization Trust Fund’’, con7 sisting of such amounts as may be appropriated or cred8 ited to the Trust Fund. The Trust Fund shall be adminis9 tered by the Secretary.

10 (b) TRANSFERS TO TRUST FUND.—There are appro11 priated and transferred to the Trust Fund for each fiscal

12 year—

13 (1) amounts contributed by tobacco product

14 manufacturers and tobacco product importers under

15 section 102; and

16 (2) amounts made available to the Trust Fund

17 out of funds allocated through national tobacco set18 tlement legislation.

19 (c) REPAYABLE ADVANCES.—

20 (1) AUTHORIZATION.—There are authorized to

21 be appropriated to the Trust Fund, as repayable ad22 vances, such sums as may from time to time be nec23 essary to make expenditures under subsection (d).

24 (2) REPAYMENT WITH INTEREST.—Repayable

25 advances made to the Trust Fund shall be repaid,
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1 and interest on the advances shall be paid, to the

2 general fund of the Treasury when the Secretary of

3 the Treasury determines that moneys are available

4 in the Trust Fund to make the payments.

5 (3) RATE OF INTEREST.—Interest on an ad6 vance made under this subsection shall be at a rate

7 determined by the Secretary of the Treasury (as of

8 the close of the calendar month preceding the month

9 in which the advance is made) that is equal to the

10 current average market yield on outstanding market11 able obligations of the United States with remaining

12 period to maturity comparable to the anticipated pe13 riod during which the advance will be outstanding.

14 (d) EXPENDITURES FROM TRUST FUND.—Amounts

15 in the Trust Fund shall be available for making expendi16 tures after October 1, 1998, to meet those necessary obli17 gations of the Federal Government that are authorized to

18 be paid under—

19 (1) section 201 for payments for lost tobacco

20 quota for each of fiscal years 1999 through 2023,

21 but not to exceed $1,600,000,000 for any fiscal year

22 except to the extent the payments are made in ac23 cordance with section 201(j);
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1 (2) section 202 for industry payments for all

2 costs of the Department of Agriculture associated

3 with the production of tobacco;

4 (3) section 203 for tobacco community eco5 nomic development grants, but not to exceed—

6 (A) $400,000,000 for each of fiscal years

7 1999 through 2008, less any amount required

8 to be paid under section 202 for the fiscal year;

9 and

10 (B) $450,000,000 for each of fiscal year

11 2009 through 2023, less any amount required

12 to be paid under section 202 during the fiscal

13 year;

14 (4) section 301 for assistance provided under

15 the tobacco worker transition program, but not to

16 exceed $50,000,000 for any fiscal year; and

17 (5) subpart 9 of part A of title IV of the High18 er Education Act of 1965 for farmer opportunity

19 grants, but not to exceed—

20 (A) $42,500,000 for each of the academic

21 years 1999–2000 through 2003–2004;

22 (B) $50,000,000 for each of the academic

23 years 2004–2005 through 2008–2009;

24 (C) $57,500,000 for each of the academic

25 years 2009–2010 through 2013–2014;
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1 (D) $65,000,000 for each of the academic

2 years 2014–2015 through 2018–2019; and

3 (E) $72,500,000 for each of the academic

4 years 2019–2020 through 2023–2024.

5 (e) BUDGETARY TREATMENT.—This section con6 stitutes budget authority in advance of appropriations

7 Acts and represents the obligation of the Federal Govern8 ment to provide payments to States and eligible persons

9 in accordance with this title.

10 SEC. 812. CONTRIBUTIONS BY TOBACCO PRODUCT MANU11 FACTURERS AND IMPORTERS.

12 (a) DEFINITION OF MARKET SHARE.—In this sec13 tion, the term ‘‘market share’’ means the ratio of—

14 (1) the tax liability of a tobacco product manu15 facturer or tobacco product importer (as defined in

16 section 2) for a calendar year under section 5703 of

17 the Internal Revenue Code of 1986; to

18 (2) the tax liability of all tobacco product man19 ufacturers or tobacco product importers (as defined

20 in section 2) for the calendar year under section

21 5703 of the Internal Revenue Code of 1986.

22 (b) DETERMINATIONS.—Not later than September

23 30 of each fiscal year, the Secretary of the Treasury

24 shall—

25 (1) determine—
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1 (A) the market share of each tobacco prod2 uct manufacturer or tobacco product importer

3 during the most recent calendar year;

4 (B) the total amount of assessments pay5 able for the subsequent fiscal year under sub6 section (c); and

7 (C) the amount of an assessment payable

8 by the tobacco product manufacturer or tobacco

9 product importer for the fiscal year under sub10 section (d); and

11 (2) notify each tobacco product manufacturer

12 and tobacco product importer of the determinations

13 made under paragraph (1) with respect to the manu14 facturer or importer.

15 (c) TOTAL AMOUNT OF ASSESSMENTS.—

16 (1) IN GENERAL.—The total amount of assess17 ments payable by all tobacco product manufacturers

18 and tobacco product importers into the Trust Fund

19 for a fiscal year shall be equal to—

20 (A) the amount of the contribution to the

21 Trust Fund for the fiscal year required under

22 paragraph (2); less

23 (B) any amount made available during the

24 preceding fiscal year to the Trust Fund out of
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1 funds allocated through national tobacco settle2 ment legislation.

3 (2) TRUST FUND CONTRIBUTIONS.—The

4 amount of the contribution to the Trust Fund shall

5 be—

6 (A) $2,100,000,000 for each of fiscal years

7 1999 through 2008;

8 (B) $500,000,000 for each of fiscal years

9 2009 through 2023; and

10 (C) for fiscal year 2024 and each subse11 quent fiscal year, the amount payable under

12 section 202.

13 (d) INDIVIDUAL AMOUNT OF ASSESSMENTS.—The

14 amount of an assessment payable by each tobacco product

15 manufacturer and tobacco product importer into the Trust

16 Fund for a fiscal year shall be equal to the product ob17 tained by multiplying—

18 (1) the total amount of assessments payable by

19 all tobacco product manufacturers and tobacco prod20 uct importers for the fiscal year under subsection

21 (c); by

22 (2) the market share of the tobacco product

23 manufacturer or tobacco product importer during

24 the most recent calendar year determined under sub25 section (b)(1)(A).
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1 Subtitle B—Agricultural Market

2 Transition Assistance

3 SEC. 821. PAYMENTS FOR LOST TOBACCO QUOTA.

4 (a) IN GENERAL.—Beginning with the 1999 market5 ing year, the Secretary shall make payments for lost to6 bacco quota to eligible quota holders, quota lessees, and

7 quota tenants as reimbursement for lost tobacco quota as

8 a result of a decrease in demand for domestically produced

9 tobacco.

10 (b) ELIGIBILITY.—To be eligible to receive payments

11 under this section, a quota holder, quota lessee, or quota

12 tenant shall—

13 (1) prepare and submit to the Secretary an ap14 plication at such time, in such manner, and contain15 ing such information as the Secretary may require,

16 including information sufficient to make the dem17 onstration required under paragraph (2); and

18 (2) demonstrate to the satisfaction of the Sec19 retary that, with respect to the 1996 marketing

20 year—

21 (A) the producer was a quota holder and

22 realized income from the production of tobacco

23 through—

24 (i) the active production of tobacco;
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1 (ii) the lease and transfer of tobacco

2 quota to another farm;

3 (iii) the rental of all or part of the

4 farm of the quota holder, including the

5 right to produce tobacco, to another to6 bacco producer; or

7 (iv) the hiring of a quota tenant to

8 produce tobacco;

9 (B) the producer was a quota lessee; or

10 (C) the producer was a quota tenant.

11 (c) BASE QUOTA LEVEL.—

12 (1) IN GENERAL.—The Secretary shall deter13 mine, for each quota holder, quota lessee, and quota

14 tenant, the base quota level for the 1994 through

15 1996 marketing years.

16 (2) QUOTA HOLDERS.—The base quota level for

17 a quota holder shall be equal to the average tobacco

18 farm marketing quota established for the farm

19 owned by the quota holder for the 1994 through

20 1996 marketing years.

21 (3) QUOTA LESSEES.—The base quota level for

22 a quota lessee shall be equal to—

23 (A) 50 percent of the average number of

24 pounds of tobacco quota established for a farm

25 for the 1994 through 1996 marketing years—
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1 (i) that was leased and transferred to

2 a farm owned by the quota lessee; or

3 (ii) for which the rights to produce

4 the tobacco were rented to the quota les5 see; less

6 (B) 25 percent of the average number of

7 pounds of tobacco quota described in paragraph

8 (A) for which a quota tenant was the principal

9 producer of the tobacco quota.

10 (4) QUOTA TENANTS.—The base quota level for

11 a quota tenant shall be equal to the sum of—

12 (A) 50 percent of the average number of

13 pounds of tobacco quota established for a farm

14 for the 1994 through 1996 marketing years—

15 (i) that was owned by a quota holder;

16 and

17 (ii) for which the quota tenant was

18 the principal producer of the tobacco on

19 the farm; and

20 (B) 25 percent of the average number of

21 pounds of tobacco quota for the 1994 through

22 1996 marketing years—

23 (i)(I) that was leased and transferred

24 to a farm owned by the quota lessee; or
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1 (II) for which the rights to produce

2 the tobacco were rented to the quota les3 see; and

4 (ii) for which the quota tenant was

5 the principal producer of the tobacco on

6 the farm.

7 (5) MARKETING QUOTAS OTHER THAN POUND8 AGE QUOTAS.—For each kind of tobacco for which

9 there is a marketing quota or allotment (on an acre10 age basis), the base quota level for each quota hold11 er, quota lessee, or quota tenant shall be determined

12 in accordance with this subsection (based on a

13 poundage conversion) in an amount equal to the

14 product obtained by multiplying—

15 (A) the average tobacco farm marketing

16 quota or allotment for the 1994 through 1996

17 marketing years; by

18 (B) the average county yield per acre for

19 the county in which the farm is located for the

20 kind of tobacco for the marketing years.

21 (d) PAYMENTS.—Except as otherwise provided in this

22 section, during any marketing year in which the national

23 marketing quota for a kind of tobacco is less than the av24 erage national marketing quota level for the kind of to25 bacco for the 1994 through 1996 marketing years, the
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1 Secretary shall make payments for lost tobacco quota to

2 each quota holder, quota lessee, and quota tenant that is

3 eligible under subsection (b) in an amount that is equal

4 to the product obtained by multiplying—

5 (1) the percentage by which the national mar6 keting quota for the kind of tobacco is less than the

7 average national marketing quota level for the kind

8 of tobacco for the 1994 through 1996 marketing

9 years; by

10 (2) the base quota level for the quota holder,

11 quota lessee, or quota tenant; by

12 (3) $4 per pound.

13 (e) LIFETIME LIMITATION ON PAYMENTS.—Except

14 as otherwise provided in this section, the total amount of

15 payments made under this section to a quota holder, quota

16 lessee, or quota tenant during the lifetime of the holder,

17 lessee, or tenant shall not exceed the product obtained by

18 multiplying—

19 (1) the base quota level for the quota holder,

20 quota lessee, or quota tenant; by

21 (2) $8 per pound.

22 (f) LIMITATIONS ON AGGREGATE ANNUAL PAY23 MENTS.—

24 (1) IN GENERAL.—Except as otherwise pro25 vided in this subsection, the total amount payable
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1 under this section for any marketing year shall not

2 exceed $1,600,000,000.

3 (2) ACCELERATED PAYMENTS.—Paragraph (1)

4 shall not apply if accelerated payments for lost to5 bacco quota are made in accordance with subsection

6 (j).

7 (3) REDUCTIONS.—If the amount determined

8 under subsection (d) for a marketing year exceeds

9 the amount described in paragraph (1), the Sec10 retary shall make a pro rata reduction in the

11 amounts payable to quota holders, quota lessees, and

12 quota tenants under this section to ensure that the

13 total amount of the payments for lost tobacco quota

14 does not exceed the limitation established under

15 paragraph (1).

16 (4) ROLLOVER OF PAYMENTS FOR LOST TO17 BACCO QUOTA.—Subject to paragraph (1), if the

18 Secretary makes a reduction in accordance with

19 paragraph (3), the amount of the reduction shall be

20 applied to the next marketing year and added to the

21 payments for lost tobacco for the marketing year.

22 (g) SUBSEQUENT SALE AND TRANSFER OF

23 QUOTA.—Effective beginning January 1, 1999, on the

24 sale and transfer of a farm marketing quota under section
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•S 1415 IS

1 316(g) or 319(g) of the Agricultural Adjustment Act of

2 1938 (7 U.S.C. 1314b(g), 1314e(g))—

3 (1) the person who sold and transferred the

4 quota shall have—

5 (A) the base quota level attributable to the

6 person reduced by the base quota level attrib7 utable to the quota that is sold and transferred;

8 and

9 (B) the lifetime limitation on payments es10 tablished under subsection (e) attributable to

11 the person reduced by the product obtained by

12 multiplying—

13 (i) the base quota level attributable to

14 the quota; by

15 (ii) $8 per pound; and

16 (2) the person who acquired the quota shall

17 have—

18 (A) the base quota level attributable to the

19 person increased by the base quota level attrib20 utable to the quota that was sold and trans21 ferred; and

22 (B) the lifetime limitation on payments es23 tablished under subsection (e) attributable to

24 the person—
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1 (i) increased by the product obtained

2 by multiplying—

3 (I) the base quota level attrib4 utable to the quota; by

5 (II) $8 per pound; but

6 (ii) decreased by any payments for

7 lost tobacco quota previously made that

8 are attributable to the quota that was sold

9 and transferred.

10 (h) SALE OR TRANSFER OF FARM.—On the sale or

11 transfer of ownership of a farm that is owned by a quota

12 holder, the base quota level established under subsection

13 (c), the right to payments under subsection (d), and the

14 lifetime limitation on payments established under sub15 section (e) shall transfer to the new owner of the farm

16 to the same extent and in the same manner as those sub17 sections applied to the previous quota holder.

18 (i) DEATH OF QUOTA LESSEE OR QUOTA TENANT.—

19 If a quota lessee or quota tenant who is entitled to pay20 ments under this section dies and is survived by a spouse

21 or 1 or more dependents, the right to receive the payments

22 shall transfer to the surviving spouse or, if there is no

23 surviving spouse, to the surviving dependents in equal

24 shares.

25 (j) ACCELERATION OF PAYMENTS.—
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1 (1) IN GENERAL.—On the occurrence of any of

2 the events described in paragraph (2), the Secretary

3 shall make an accelerated lump sum payment for

4 lost tobacco quota to each quota holder, quota les5 see, and quota tenant for any affected kind of to6 bacco in accordance with paragraph (3).

7 (2) TRIGGERING EVENTS.—The Secretary shall

8 make accelerated payments under paragraph (1) if

9 after the date of enactment of this title—

10 (A) for 3 consecutive marketing years, the

11 national marketing quota for a kind of tobacco

12 is less than 50 percent of the national market13 ing quota for the kind of tobacco for the 1996

14 marketing year; or

15 (B) Congress repeals or makes ineffective,

16 directly or indirectly, any provision of—

17 (i) section 316(g) of the Agricultural

18 Adjustment Act of 1938 (7 U.S.C.

19 1314b(g));

20 (ii) section 319(g) of the Agricultural

21 Adjustment Act of 1938 (7 U.S.C.

22 1314e(g));

23 (iii) section 106 of the Agricultural

24 Act of 1949 (7 U.S.C. 1445);
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•S 1415 IS

1 (iv) section 106A of the Agricultural

2 Act of 1949 (7 U.S.C. 1445–1); or

3 (v) section 106B of the Agricultural

4 Act of 1949 (7 U.S.C. 1445–2).

5 (3) AMOUNT.—The amount of the accelerated

6 payments made to each quota holder, quota lessee,

7 and quota tenant under this subsection shall be

8 equal to—

9 (A) the amount of the lifetime limitation

10 established for the quota holder, quota lessee,

11 or quota tenant under subsection (e); less

12 (B) any payments for lost tobacco quota

13 received by the quota holder, quota lessee, or

14 quota tenant before the occurrence of any of

15 the events described in paragraph (2).

16 SEC. 822. INDUSTRY PAYMENTS FOR ALL DEPARTMENT

17 COSTS ASSOCIATED WITH TOBACCO PRODUC18 TION.

19 (a) IN GENERAL.—The Secretary shall use such

20 amounts as are necessary from the Trust Fund at the end

21 of each fiscal year to reimburse the Secretary for—

22 (1) costs associated with the administration of

23 programs established under this title and amend24 ments made by this title;
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1 (2) costs associated with the administration of

2 the tobacco quota and price support programs ad3 ministered by the Secretary;

4 (3) costs to the Federal Government of carrying

5 out crop insurance programs for tobacco;

6 (4) costs associated with all agricultural re7 search, extension, or education activities associated

8 with tobacco;

9 (5) costs associated with the administration of

10 loan association and cooperative programs for to11 bacco producers, as approved by the Secretary; and

12 (6) any other costs incurred by the Department

13 of Agriculture associated with the production of to14 bacco.

15 (b) LIMITATIONS.—Amounts made available under

16 subsection (a) may not be used—

17 (1) to provide direct benefits to quota holders,

18 quota lessees, or quota tenants; or

19 (2) in a manner that results in a decrease, or

20 an increase relative to other crops, in the amount of

21 the crop insurance premiums assessed to active to22 bacco producers under the Federal Crop Insurance

23 Act (7 U.S.C. 1501 et seq.).
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1 (c) DETERMINATIONS.—Not later than September

2 30, 1998, and each fiscal year thereafter, the Secretary

3 shall determine—

4 (1) the amount of costs described in subsection

5 (a); and

6 (2) the amount that will be provided under this

7 section as reimbursement for the costs.

8 SEC. 823. TOBACCO COMMUNITY ECONOMIC DEVELOP9 MENT GRANTS.

10 (a) AUTHORITY.—The Secretary shall make grants to

11 tobacco-growing States in accordance with this section to

12 enable the States to carry out economic development ini13 tiatives in tobacco-growing communities.

14 (b) APPLICATION.—To be eligible to receive payments

15 under this section, a State shall prepare and submit to

16 the Secretary an application at such time, in such manner,

17 and containing such information as the Secretary may re18 quire, including—

19 (1) a description of the activities that the State

20 will carry out using amounts received under the

21 grant;

22 (2) a designation of an appropriate State agen23 cy to administer amounts received under the grant;

24 and
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•S 1415 IS

1 (3) a description of the steps to be taken to en2 sure that the funds are distributed in accordance

3 with subsection (e).

4 (c) AMOUNT OF GRANT.—

5 (1) IN GENERAL.—From the amounts available

6 to carry out this section for a fiscal year, the Sec7 retary shall allot to each State an amount that bears

8 the same ratio to the amounts available as the total

9 income of the State derived from the production of

10 tobacco during the 1994 through 1996 marketing

11 years (as determined under paragraph (2)) bears to

12 the total income of all States derived from the pro13 duction of tobacco during the 1994 through 1996

14 marketing years.

15 (2) TOBACCO INCOME.—For the 1994 through

16 1996 marketing years, the Secretary shall determine

17 the amount of income derived from the production

18 of tobacco in each State and in all States.

19 (d) PAYMENTS.—

20 (1) IN GENERAL.—A State that has an applica21 tion approved by the Secretary under subsection (b)

22 shall be entitled to a payment under this section in

23 an amount that is equal to its allotment under sub24 section (c).
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•S 1415 IS

1 (2) FORM OF PAYMENTS.—The Secretary may

2 make payments under this section to a State in in3 stallments, and in advance or by way of reimburse4 ment, with necessary adjustments on account of

5 overpayments or underpayments, as the Secretary

6 may determine.

7 (3) REALLOTMENTS.—Any portion of the allot8 ment of a State under subsection (c) that the Sec9 retary determines will not be used to carry out this

10 section in accordance with an approved State appli11 cation required under subsection (b), shall be reallot12 ted by the Secretary to other States in proportion to

13 the original allotments to the other States.

14 (e) USE AND DISTRIBUTION OF FUNDS.—

15 (1) IN GENERAL.—Amounts received by a State

16 under this section shall be used to carry out eco17 nomic development activities, including—

18 (A) rural business enterprise activities de19 scribed in subsections (c) and (e) of section

20 310B of the Consolidated Farm and Rural De21 velopment Act (7 U.S.C. 1932);

22 (B) down payment loan assistance pro23 grams that are similar to the program described

24 in section 310E of the Consolidated Farm and

25 Rural Development Act (7 U.S.C. 1935);
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1 (C) activities designed to help create pro2 ductive farm or off-farm employment in rural

3 areas to provide a more viable economic base

4 and enhance opportunities for improved in5 comes, living standards, and contributions by

6 rural individuals to the economic and social de7 velopment of tobacco communities;

8 (D) activities that expand existing infra9 structure, facilities, and services to capitalize on

10 opportunities to diversify economies in tobacco

11 communities and that support the development

12 of new industries or commercial ventures;

13 (E) activities by agricultural organizations

14 that provide assistance directly to active tobacco

15 producers to assist in developing other agricul16 tural activities that supplement tobacco-produc17 ing activities;

18 (F) initiatives designed to create or expand

19 locally owned value-added processing and mar20 keting operations in tobacco communities; and

21 (G) technical assistance activities by per22 sons to support farmer-owned enterprises, or

23 agriculture-based rural development enterprises,

24 of the type described in section 252 or 253 of

25 the Trade Act of 1974 (19 U.S.C. 2342, 2343).
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1 (2) TOBACCO-GROWING COUNTIES.—Assistance

2 may be provided by a State under this section only

3 to assist a county in the State that has been deter4 mined by the Secretary to have in excess of

5 $100,000 in income derived from the production of

6 tobacco during 1 or more of the 1994 through 1996

7 marketing years.

8 (3) DISTRIBUTION.—

9 (A) ECONOMIC DEVELOPMENT ACTIVI10 TIES.—Not less than 20 percent of the amounts

11 received by a State under this section shall be

12 used to carry out—

13 (i) economic development activities de14 scribed in subparagraph (E) or (F) of

15 paragraph (1); or

16 (ii) agriculture-based rural develop17 ment activities described in paragraph

18 (1)(G).

19 (B) TECHNICAL ASSISTANCE ACTIVI20 TIES.—Not less than 4 percent of the amounts

21 received by a State under this section shall be

22 used to carry out technical assistance activities

23 described in paragraph (1)(G).

24 (C) TOBACCO-GROWING COUNTIES.—To be

25 eligible to receive payments under this section,
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•S 1415 IS

1 a State shall demonstrate to the Secretary that

2 funding will be provided, during each 5-year pe3 riod for which funding is provided under this

4 section, for activities in each county in the

5 State that has been determined under para6 graph (2) to have in excess of $100,000 in in7 come derived from the production of tobacco, in

8 amounts that are at least equal to the product

9 obtained by multiplying—

10 (i) the ratio that the tobacco produc11 tion income in the county determined

12 under paragraph (2) bears to the total to13 bacco production income for the State de14 termined under subsection (c); by

15 (ii) 50 percent of the total amounts

16 received by a State under this section dur17 ing the 5-year period.

18 (f) PREFERENCES IN HIRING.—A State may require

19 recipients of funds under this section to provide a pref20 erence in employment to—

21 (1) an individual who—

22 (A) during the 1996 calendar year, was

23 employed in the manufacture, processing, or

24 warehousing of tobacco or tobacco products, or
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•S 1415 IS

1 resided, in a county described in subsection

2 (e)(2); and

3 (B) is eligible for assistance under the to4 bacco worker transition program established

5 under section 301; or

6 (2) an individual who—

7 (A) during the 1996 marketing year, car8 ried out tobacco quota or relevant tobacco pro9 duction activities in a county described in sub10 section (e)(2);

11 (B) is eligible for a farmer opportunity

12 grant under subpart 9 of part A of title IV of

13 the Higher Education Act of 1965; and

14 (C) has successfully completed a course of

15 study at an institution of higher education.

16 SEC. 824. MODIFICATIONS IN FEDERAL TOBACCO PRO17 GRAMS.

18 (a) PROGRAM REFERENDA.—Section 312(c) of the

19 Agricultural Adjustment Act of 1938 (7 U.S.C. 1312(c))

20 is amended—

21 (1) by striking ‘‘(c) Within thirty’’ and insert22 ing the following:

23 ‘‘(c) REFERENDA ON QUOTAS.—

24 ‘‘(1) IN GENERAL.—Not later than 30’’; and

25 (2) by adding at the end the following:
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•S 1415 IS

1 ‘‘(2) REFERENDA ON PROGRAM CHANGES.—

2 ‘‘(A) IN GENERAL.—In the case of any

3 kind of tobacco for which marketing quotas are

4 in effect, on the receipt of a petition from more

5 than 5 percent of the producers of that kind of

6 tobacco in a State, the Secretary shall conduct

7 a statewide referendum on any proposal related

8 to the lease and transfer of tobacco quota with9 in a State requested by the petition that is au10 thorized under this part.

11 ‘‘(B) APPROVAL OF PROPOSALS.—If a ma12 jority of producers of the kind of tobacco in the

13 State approve a proposal in a referendum con14 ducted under subparagraph (A), the Secretary

15 shall implement the proposal in a manner that

16 applies to all producers and quota holders of

17 that kind of tobacco in the State.’’.

18 (b) PURCHASE REQUIREMENTS.—Section 320B of

19 the Agricultural Adjustment Act of 1938 (7 U.S.C.

20 1314h) is amended—

21 (1) in subsection (c), by striking paragraph (1)

22 and inserting the following:

23 ‘‘(1) 105 percent of the average market price

24 for the kind of tobacco involved during the preceding

25 marketing year; by’’; and
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•S 1415 IS

1 (2) by striking subsection (d) and inserting the

2 following:

3 ‘‘(d) USE OF PENALTY PAYMENTS.—An amount

4 equivalent to each penalty collected by the Secretary under

5 this section shall be transmitted by the Secretary to the

6 Secretary of the Treasury for deposit in the Tobacco Com7 munity Revitalization Trust Fund established under sec8 tion 101 of the LEAF Act.’’.

9 (c) ELIMINATION OF TOBACCO MARKETING ASSESS10 MENT.—

11 (1) IN GENERAL.—Section 106 of the Agricul12 tural Act of 1949 (7 U.S.C. 1445(g)) is amended by

13 striking subsection (g).

14 (2) CONFORMING AMENDMENT.—Section

15 422(c) of the Uruguay Round Agreements Act (Pub16 lic Law 103–465; 7 U.S.C. 1445 note) is amended

17 by striking ‘‘section 106(g), 106A, or 106B of the

18 Agricultural Act of 1949 (7 U.S.C. 1445(g), 1445–

19 1, or 1445–2)’’ and inserting ‘‘section 106A or

20 106B of the Agricultural Act of 1949 (7 U.S.C.

21 1445–1, 1445–2)’’.

22 Subtitle C—Farmer and Worker

23 Transition Assistance

24 SEC. 831. TOBACCO WORKER TRANSITION PROGRAM.

25 (a) GROUP ELIGIBILITY REQUIREMENTS.—
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1 (1) CRITERIA.—A group of workers (including

2 workers in any firm or subdivision of a firm involved

3 in the manufacture, processing, or warehousing of

4 tobacco or tobacco products) shall be certified as eli5 gible to apply for adjustment assistance under this

6 section pursuant to a petition filed under subsection

7 (b) if the Secretary of Labor determines that a sig8 nificant number or proportion of the workers in 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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•S 1415 IS

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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•S 1415 IS

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 payments for lost tobacco quota under

25 section 201.
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•S 1415 IS

1 (f) FUNDING.—Of the amounts in the Trust Fund,

2 the Secretary may use not to exceed $50,000,000 for each

3 of 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 l, 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. 832. 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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•S 1415 IS

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 amounts

13 made available under section 101(d)(5) of the LEAF

14 Act, the Secretary, during the period beginning July

15 1, 1999, and ending September 30, 2024, shall pay

16 to each eligible institution such sums as may be nec17 essary to pay to each eligible student (determined in

18 accordance with section 420F) for each academic

19 year during which that student is in attendance at

20 an institution of higher education, as an under21 graduate, a farmer opportunity grant in the amount

22 for which that student is eligible, as determined pur23 suant to subsection (b). Not less than 85 percent of

24 such sums shall be advanced to eligible institutions

25 prior to the start of each payment period and shall

26 be based upon an amount requested by the institu-
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•S 1415 IS

1 tion as needed to pay eligible students, except that

2 this sentence shall not be construed to limit the au3 thority of the Secretary to place an institution on a

4 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 ‘‘(b) AMOUNT OF GRANTS.—

16 ‘‘(1) AMOUNTS.—

17 ‘‘(A) IN GENERAL.—The amount of the

18 grant for a student eligible under this subpart

19 shall be—

20 ‘‘(i) $1,700 for each of the academic

21 years 1999–2000 through 2003–2004;

22 ‘‘(ii) $2,000 for each of the academic

23 years 2004–2005 through 2008–2009;

24 ‘‘(iii) $2,300 for each of the academic

25 years 2009–2010 through 2013–2014;
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1 ‘‘(iv) $2,600 for each of the academic

2 years 2014–2015 through 2018–2019; and

3 ‘‘(v) $2,900 for each of the academic

4 years 2019–2020 through 2023–2024.

5 ‘‘(B) PART-TIME RULE.—In any case

6 where a student attends an institution of higher

7 education on less than a full-time basis (includ8 ing a student who attends an institution of

9 higher education on less than a half-time basis)

10 during any academic year, the amount of the

11 grant for which that student is eligible shall be

12 reduced in proportion to the degree to which

13 that student is not so attending on a full-time

14 basis, in accordance with a schedule of reduc15 tions established by the Secretary for the pur16 poses of this subparagraph, computed in ac17 cordance with this subpart. Such schedule of re18 ductions shall be established by regulation and

19 published in the Federal Register.

20 ‘‘(2) MAXIMUM.—No grant under this subpart

21 shall exceed the cost of attendance (as described in

22 section 472) at the institution at which that student

23 is in attendance. If, with respect to any student, it

24 is determined that the amount of a grant exceeds

25 the cost of attendance for that year, the amount of
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1 the grant shall be reduced to an amount equal to the

2 cost of attendance at such institution.

3 ‘‘(3) PROHIBITION.—No grant shall be awarded

4 under this subpart to any individual who is incarcer5 ated in any Federal, State, or local penal institution.

6 ‘‘(c) PERIOD OF ELIGIBILITY FOR GRANTS.—

7 ‘‘(1) IN GENERAL.—The period during which a

8 student may receive grants shall be the period re9 quired for the completion of the first undergraduate

10 baccalaureate course of study being pursued by that

11 student at the institution at which the student is in

12 attendance, except that any period during which the

13 student is enrolled in a noncredit or remedial course

14 of study as described in paragraph (2) shall not be

15 counted for the purpose of this paragraph.

16 ‘‘(2) CONSTRUCTION.—Nothing in this section

17 shall be construed to—

18 ‘‘(A) exclude from eligibility courses of

19 study that are noncredit or remedial in nature

20 and that are determined by the institution to be

21 necessary to help the student be prepared for

22 the pursuit of a first undergraduate bacca23 laureate degree or certificate or, in the case of

24 courses in English language instruction, to be

25 necessary to enable the student to utilize al-
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1 ready existing knowledge, training, or skills;

2 and

3 ‘‘(B) exclude from eligibility programs of

4 study abroad that are approved for credit by

5 the home institution at which the student is

6 enrolled.

7 ‘‘(3) PROHIBITION.—No student is entitled to

8 receive farmer opportunity grant payments concur9 rently from more than 1 institution or from the Sec10 retary and an institution.

11 ‘‘(d) APPLICATIONS FOR GRANTS.—

12 ‘‘(1) IN GENERAL.—The Secretary shall from

13 time to time set dates by which students shall file

14 applications for grants under this subpart. The filing

15 of applications under this subpart shall be coordi16 nated with the filing of applications under section

17 401(c).

18 ‘‘(2) INFORMATION AND ASSURANCES.—Each

19 student desiring a grant for any year shall file with

20 the Secretary an application for the grant containing

21 such information and assurances as the Secretary

22 may deem necessary to enable the Secretary to carry

23 out the Secretary’s functions and responsibilities

24 under this subpart.
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1 ‘‘(e) DISTRIBUTION OF GRANTS TO STUDENTS.—

2 Payments under this section shall be made in accordance

3 with regulations promulgated by the Secretary for such

4 purpose, in such manner as will best accomplish the pur5 pose of this section. Any disbursement allowed to be made

6 by crediting the student’s account shall be limited to tui7 tion and fees and, in the case of institutionally owned

8 housing, room and board. The student may elect to have

9 the institution provide other such goods and services by

10 crediting the student’s account.

11 ‘‘(f) INSUFFICIENT FUNDING.—If, for any fiscal

12 year, the funds made available to carry out this subpart

13 from the Tobacco Community Revitalization Trust Fund

14 are insufficient to satisfy fully all grants for students de15 termined to be eligible under section 420F, the amount

16 of the grant provided under subsection (b) shall be re17 duced on a pro rata basis among all eligible students.

18 ‘‘(g) TREATMENT OF INSTITUTIONS AND STUDENTS

19 UNDER OTHER LAWS.—Any institution of higher edu20 cation that enters into an agreement with the Secretary

21 to disburse to students attending that institution the

22 amounts those students are eligible to receive under this

23 subpart shall not be deemed, by virtue of such agreement,

24 to be a contractor maintaining a system of records to ac25 complish a function of the Secretary. Recipients of farmer
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1 opportunity grants shall not be considered to be individual

2 grantees for purposes of the Drug-Free Workplace Act of

3 1988 (41 U.S.C. 701 et seq.).

4 ‘‘SEC. 420F. STUDENT ELIGIBILITY.

5 ‘‘(a) IN GENERAL.—In order to receive any grant

6 under this subpart, a student shall—

7 ‘‘(1) be a member of a tobacco farm family in

8 accordance with subsection (b);

9 ‘‘(2) be enrolled or accepted for enrollment in

10 a degree, certificate, or other program (including a

11 program of study abroad approved for credit by the

12 eligible institution at which such student is enrolled)

13 leading to a recognized educational credential at an

14 institution of higher education that is an eligible in15 stitution in accordance with section 487, and not be

16 enrolled in an elementary or secondary school;

17 ‘‘(3) if the student is presently enrolled at an

18 institution of higher education, be maintaining satis19 factory progress in the course of study the student

20 is pursuing in accordance with subsection (c);

21 ‘‘(4) not owe a refund on grants previously re22 ceived at any institution of higher education under

23 this title, or be in default on any loan from a stu24 dent loan fund at any institution provided for in

25 part D, or a loan made, insured, or guaranteed by
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1 the Secretary under this title for attendance at any

2 institution;

3 ‘‘(5) file with the institution of higher education

4 that the student intends to attend, or is attending,

5 a document, that need not be notarized, but that

6 shall include—

7 ‘‘(A) a statement of educational purpose

8 stating that the money attributable to such

9 grant will be used solely for expenses related

10 to attendance or continued attendance at such

11 institution; and

12 ‘‘(B) such student’s social security num13 ber; and

14 ‘‘(6) be a citizen of the United States.

15 ‘‘(b) TOBACCO FARM FAMILIES.—

16 ‘‘(1) IN GENERAL.—For the purpose of sub17 section (a)(1), a student is a member of a tobacco

18 farm family if during calendar year 1996 the stu19 dent was—

20 ‘‘(A) an individual who—

21 ‘‘(i) is an active tobacco producer (as

22 defined in section 2 of the LEAF Act); or

23 ‘‘(ii) is otherwise actively engaged in

24 the production of tobacco;
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1 ‘‘(B) a spouse, son, daughter, stepson, or

2 stepdaughter of an individual described in sub3 paragraph (A);

4 ‘‘(C) an individual—

5 ‘‘(i) who was a brother, sister, step6 brother, stepsister, son-in-law, or daughter7 in-law of an individual described in sub8 paragraph (A); and

9 ‘‘(ii) whose principal place of resi10 dence was the home of the individual de11 scribed in subparagraph (A); or

12 ‘‘(D) an individual who was a dependent

13 (within the meaning of section 152 of the Inter14 nal Revenue Code of 1986) of an individual de15 scribed in subparagraph (A).

16 ‘‘(2) ADMINISTRATION.—On request, the Sec17 retary of Agriculture shall provide to the Secretary

18 such information as is necessary to carry out this

19 subsection.

20 ‘‘(c) SATISFACTORY PROGRESS.—

21 ‘‘(1) IN GENERAL.—For the purpose of sub22 section (a)(3), a student is maintaining satisfactory

23 progress if—

24 ‘‘(A) the institution at which the student is

25 in attendance reviews the progress of the stu-
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1 dent at the end of each academic year, or its

2 equivalent, as determined by the institution;

3 and

4 ‘‘(B) the student has at least a cumulative

5 C average or its equivalent, or academic stand6 ing consistent with the requirements for grad7 uation, as determined by the institution, at the

8 end of the second such academic year.

9 ‘‘(2) SPECIAL RULE.—Whenever a student fails

10 to meet the eligibility requirements of subsection

11 (a)(3) as a result of the application of this sub12 section and subsequent to that failure the student

13 has academic standing consistent with the require14 ments for graduation, as determined by the institu15 tion, for any grading period, the student may, sub16 ject to this subsection, again be eligible under sub17 section (a)(3) for a grant under this subpart.

18 ‘‘(3) WAIVER.—Any institution of higher edu19 cation at which the student is in attendance may

20 waive paragraph (1) or (2) for undue hardship based

21 on—

22 ‘‘(A) the death of a relative of the student;

23 ‘‘(B) the personal injury or illness of the

24 student; or
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1 ‘‘(C) special circumstances as determined

2 by the institution.

3 ‘‘(d) STUDENTS WHO ARE NOT SECONDARY SCHOOL

4 GRADUATES.—In order for a student who does not have

5 a certificate of graduation from a school providing second6 ary education, or the recognized equivalent of such certifi7 cate, to be eligible for any assistance under this subpart,

8 the student shall meet either 1 of the following standards:

9 ‘‘(1) EXAMINATION.—The student shall take an

10 independently administered examination and shall

11 achieve a score, specified by the Secretary, dem12 onstrating that such student can benefit from the

13 education or training being offered. Such examina14 tion shall be approved by the Secretary on the basis

15 of compliance with such standards for development,

16 administration, and scoring as the Secretary may

17 prescribe in regulations.

18 ‘‘(2) DETERMINATION.—The student shall be

19 determined as having the ability to benefit from the

20 education or training in accordance with such proc21 ess as the State shall prescribe. Any such process

22 described or approved by a State for the purposes of

23 this section shall be effective 6 months after the date

24 of submission to the Secretary unless the Secretary

25 disapproves such process. In determining whether to
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1 approve or disapprove such process, the Secretary

2 shall take into account the effectiveness of such

3 process in enabling students without secondary

4 school diplomas or the recognized equivalent to bene5 fit from the instruction offered by institutions utiliz6 ing such process, and shall also take into account

7 the cultural diversity, economic circumstances, and

8 educational preparation of the populations served by

9 the institutions.

10 ‘‘(e) SPECIAL RULE FOR CORRESPONDENCE

11 COURSES.—A student shall not be eligible to receive a

12 grant under this subpart for a correspondence course un13 less such course is part of a program leading to an associ14 ate, bachelor, or graduate degree.

15 ‘‘(f) COURSES OFFERED THROUGH TELECOMMUNI16 CATIONS.—

17 ‘‘(1) RELATION TO CORRESPONDENCE

18 COURSES.—A student enrolled in a course of in19 struction at an eligible institution of higher edu20 cation (other than an institute or school that meets

21 the definition in section 521(4)(C) of the Carl D.

22 Perkins Vocational and Applied Technology Edu23 cation Act (20 U.S.C. 2471(4)(C))) that is offered

24 in whole or in part through telecommunications and

25 leads to a recognized associate, bachelor, or graduate
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1 degree conferred by such institution shall not be

2 considered to be enrolled in correspondence courses

3 unless the total amount of telecommunications and

4 correspondence courses at such institution equals or

5 exceeds 50 percent of such courses.

6 ‘‘(2) RESTRICTION OR REDUCTIONS OF FINAN7 CIAL AID.—A student’s eligibility to receive a grant

8 under this subpart may be reduced if a financial aid

9 officer determines under the discretionary authority

10 provided in section 479A that telecommunications

11 instruction results in a substantially reduced cost of

12 attendance to such student.

13 ‘‘(3) DEFINITION.—For the purposes of this

14 subsection, the term ‘telecommunications’ means the

15 use of television, audio, or computer transmission,

16 including open broadcast, closed circuit, cable,

17 microwave, or satellite, audio conferencing, computer

18 conferencing, or video cassettes or discs, except that

19 such term does not include a course that is delivered

20 using video cassette or disc recordings at such insti21 tution and that is not delivered in person to other

22 students of that institution.

23 ‘‘(g) STUDY ABROAD.—Nothing in this subpart shall

24 be construed to limit or otherwise prohibit access to study

25 abroad programs approved by the home institution at
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1 which a student is enrolled. An otherwise eligible student

2 who is engaged in a program of study abroad approved

3 for academic credit by the home institution at which the

4 student is enrolled shall be eligible to receive a grant under

5 this subpart, without regard to whether such study abroad

6 program is required as part of the student’s degree

7 program.

8 ‘‘(h) VERIFICATION OF SOCIAL SECURITY NUM9 BER.—The Secretary, in cooperation with the Commis10 sioner of Social Security, shall verify any social security

11 number provided by a student to an eligible institution

12 under subsection (a)(5)(B) and shall enforce the following

13 conditions:

14 ‘‘(1) PENDING VERIFICATION.—Except as pro15 vided in paragraphs (2) and (3), an institution shall

16 not deny, reduce, delay, or terminate a student’s eli17 gibility for assistance under this subpart because so18 cial security number verification is pending.

19 ‘‘(2) DENIAL OR TERMINATION.—If there is a

20 determination by the Secretary that the social secu21 rity number provided to an eligible institution by a

22 student is incorrect, the institution shall deny or ter23 minate the student’s eligibility for any grant under

24 this subpart until such time as the student provides
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1 documented evidence of a social security number

2 that is determined by the institution to be correct.

3 ‘‘(3) CONSTRUCTION.—Nothing in this sub4 section shall be construed to permit the Secretary to

5 take any compliance, disallowance, penalty, or other

6 regulatory action against—

7 ‘‘(A) any institution of higher education

8 with respect to any error in a social security

9 number, unless such error was a result of fraud

10 on the part of the institution; or

11 ‘‘(B) any student with respect to any error

12 in a social security number, unless such error

13 was a result of fraud on the part of the

14 student.’’.

15 Subtitle D—Immunity

16 SEC. 841. GENERAL IMMUNITY FOR TOBACCO PRODUCERS

17 AND WAREHOUSERS.

18 Notwithstanding any other provision of this title, an

19 active tobacco producer, tobacco-related growers associa20 tion, or tobacco warehouse owner or employee may not be

21 subject to liability in any Federal or State court for any

22 cause of action resulting from the failure of any tobacco

23 product manufacturer, distributor, or retailer to comply

24 with national tobacco settlement legislation.
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1 TITLE IX—EFFECTIVE DATES

2 AND OTHER PROVISIONS

3 SEC. 901. EFFECTIVE DATES.

4 (a) IN GENERAL.—Except as provided in subsection

5 (b), and as otherwise provided in this Act, the provisions

6 of this Act shall take effect on the date of enactment of

7 this Act.

8 (b) EXCEPTIONS.—The following provisions shall be9 come effective as follows:

10 (1) The retail tobacco product display provi11 sions under subtitle A of title I shall be applicable

12 to retailers on the date that is 9 months after the

13 date of enactment of this Act.

14 (2) The provisions relating to the display of to15 bacco product signs and displays by retailers under

16 subtitle A of title I shall be applicable to retailers on

17 the date that is 5 months after the date of enact18 ment of this Act.

19 (3) The provisions of subtitle A of title I relat20 ing to advertising shall be applicable on the date

21 that is 9 months after the date of enactment of this

22 Act.

23 (4) The labeling requirements of subtitle A of

24 title I and of chapter 9 of the Federal Food, Drug,

25 and Cosmetic Act (as added by section 143(3) of
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1 this Act) shall be applicable (as determined under

2 regulations promulgated by the Secretary) with re3 spect to—

(A) 1 4 ⁄3 of all tobacco product packages, on

5 the date that is 90 days after the date of enact6 ment of this Act;

(B) 1 7 ⁄3 of all tobacco product packages, on

8 the date that is 120 days after the date of en9 actment of this Act; and

(C) 1 10 ⁄3 of all tobacco product packages, on

11 the date that is 180 days after the date of en12 actment of this Act.

13 (5) The provisions of section 105 relating to the

14 sponsorship of events shall be applicable on Decem15 ber 31, 1998.

16 (6) The provisions of section 121 shall be appli17 cable on the date that is 3 months after the date of

18 enactment of this Act.

19 (7) The provisions of section 122 relating to

20 vending machines shall be applicable on the date

21 that is 12 months after the date of enactment of

22 this Act.

23 (8) The provisions of section 122 relating to

24 minimum package size shall be applicable on the
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1 date that is 3 months after the date of enactment

2 of this Act.

3 (9) The provisions of section 122 relating to

4 vending machines shall be applicable on the date

5 that is 12 months after the date of enactment of

6 this Act.

7 (10) The provisions of section 122 relating to

8 sampling shall be applicable on the date that is 3

9 months after the date of enactment of this Act.

10 (11) The provisions of section 909 of the Fed11 eral Food, Drug and Cosmetic Act (as added by sec12 tion 143(3) of this Act) relating to good manufac13 turing practices shall be applicable on the date that

14 is 24 months after the date of enactment of this Act

15 or on a date determined appropriate by the Sec16 retary.

17 (12) The provisions of subtitle F of title I relat18 ing to corporate compliance shall be applicable on

19 the date that is 12 months after the date of enact20 ment of this Act.

21 SEC. 902. NATIVE AMERICANS.

22 (a) INDIAN COUNTRY.—The provisions of this Act (or

23 an amendment made by this Act) shall apply to the manu24 facture, distribution, and sale of tobacco products within

25 Indian country.
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1 (b) INDIAN TRIBES.—To the extent that an Indian

2 tribe or tribal organization engages in the manufacture,

3 distribution, or sale of tobacco products, the provisions of

4 this Act (or an amendment made by this Act) shall apply

5 to such tribe or organization.

6 (c) PAYMENTS TO TRUST FUND.—Any Indian tribe

7 or tribal organization that engages in the manufacture of

8 tobacco products shall be subject to liability under section

9 402, or shall be considered a non-participating manufac10 turer for purposes of section 613, and shall be subject to

11 surcharges under section 205.

12 (d) APPLICATION OF FDA REQUIREMENTS.—

13 (1) IN GENERAL.—The Secretary shall promul14 gate regulations to provide for the application of the

15 requirements of the Food, Drug and Cosmetic Act

16 to tobacco products manufactured, distributed, or

17 sold within Indian country.

18 (2) ELIGIBILITY FOR ASSISTANCE.—Under the

19 regulations promulgated under paragraph (1), the

20 Secretary may provide assistance to an Indian tribe

21 or tribal organization in meeting and enforcing the

22 requirements under such regulations if—

23 (A) the tribe or organization has a govern24 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 on

5 lands within the jurisdiction of the tribe or or6 ganization; and

7 (C) the tribe or organization is reasonably

8 expected to be capable of carrying out the func9 tions required by the Secretary.

10 (e) RETAIL LICENSING REQUIREMENTS.—

11 (1) IN GENERAL.—The requirements of subtitle

12 D of title I shall apply to retailers that sell tobacco

13 products within Indian country.

14 (2) SELF-REGULATION.—The Secretary shall

15 promulgate regulations to permit the Indian tribe or

16 tribal organization with jurisdiction over the lands

17 involved to implement a tribal licensing program

18 that is at least as strict as the program in operation

19 in the State in which the land involved is located.

20 (3) IMPLEMENTATION BY SECRETARY.—If the

21 Secretary determines that the Indian tribe or tribal

22 organization is not qualified to administer the re23 quirements of subtitle D of title I, the Secretary

24 shall implement such requirements on behalf of the
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1 tribe or organization or delegate such authority to

2 the State involved.

3 (f) ELIGIBILITY FOR PUBLIC HEALTH PAYMENTS.—

4 (1) IN GENERAL.—Except as provided in para5 graph (2), an Indian tribe or tribal organization

6 shall be considered a State for purposes of eligibility

7 under title V.

8 (2) PUBLIC HEALTH PROGRAM.—

9 (A) IN GENERAL.—Each State that re10 ceives a payment under section 502 shall set

11 aside an appropriate portion, as determined

12 under regulations prescribed by the Secretary,

13 of such payment for use by Indian tribes or

14 tribal organizations within the State.

15 (B) AMOUNT.—The amount of any funds

16 under subparagraph (A) for which an Indian

17 tribe or tribal organization is eligible shall be

18 determined by the State based on the propor19 tion of the registered members of the tribe in20 volved as compared to the total population of all

21 such registered members in the State.

22 (C) USE.—Amounts provided to a tribe or

23 organization under this paragraph shall be used

24 as provided for in section 504 and in accord25 ance with a plan submitted by the tribe or orga-
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1 nization and approved by the Secretary as being

2 in compliance with this Act.

3 (D) REALLOTMENT.—Any amounts set

4 aside and not expended under this paragraph

5 shall be reallotted among other eligible tribes

6 and organizations.

7 (g) OBLIGATION OF MANUFACTURERS.—

8 (1) PROHIBITION.—A manufacturer shall not

9 engage in any activity within Indian country that is

10 otherwise prohibited under this Act (or an amend11 ment made by this Act).

12 (2) LIMITATION ON SALE.—A manufacturer

13 shall not sell or otherwise distribute a tobacco prod14 uct for subsequent manufacture, distribution, or sale

15 to an Indian tribe or tribal organization, or provide

16 such products to a manufacturer, distributor, or re17 tailer that is subject to the jurisdiction of a tribe or

18 organization, except under the same terms and con19 ditions as the manufacturer imposes on other manu20 facturers, distributors, or retailers.

21 (h) DEFINITIONS.—In this section:

22 (1) INDIAN COUNTRY.—The term ‘‘Indian coun23 try’’ has the meaning given such term by section

24 1151 of title 18, United States Code.
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1 (2) INDIAN TRIBE.—The term ‘‘Indian tribe’’

2 has the meaning given to such term by section 4(e)

3 of the Indian Self-Determination and Education As4 sistance Act (25 U.S.C. 450b(e)).

5 (3) TRIBAL ORGANIZATION.—The term ‘‘tribal

6 organization’’ has the meaning given such term in

7 section 4 of the Indian Self Determination and Edu8 cation Assistance Act (25 U.S.C. 450b).

9 SEC. 903. PREEMPTION.

10 (a) GENERAL PREEMPTION.—Except as otherwise

11 provided for in this section, nothing in this Act shall be

12 construed as prohibiting a State from imposing require13 ments, prohibitions, penalties or other measures to further

14 the purposes of this Act that are in addition to the re15 quirements, prohibitions, or penalties required under this

16 Act. To the extent not inconsistent with the purposes of

17 this Act, State and local governments may impose addi18 tional tobacco product control measures to further restrict

19 or limit the use of such products by minors.

20 (b) ENFORCEMENT.—A State may not impose obliga21 tions or requirements relating to the enforcement of this

22 Act in a manner that conflicts with the provisions of title

23 VI.

24 (c) PUBLIC EXPOSURE TO SMOKE.—Nothing in title

25 III shall be construed to preempt or otherwise affect any
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1 other Federal, State or local law which provides greater

2 protection from the health hazards of environmental to3 bacco smoke.

4 (d) TAXES.—Nothing in this Act shall be construed

5 to prohibit a State from imposing taxes on tobacco prod6 ucts or tobacco product manufacturers, distributors, or re7 tailers.

8 (e) NATIVE AMERICANS.—Except as provided in sec9 tion 902, a State may not impose obligations or require10 ments relating to the application of this Act to Indian

11 tribes and tribal organizations.

Æ