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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1530 Introduced in Senate (IS)]

105th CONGRESS
  1st Session
                                S. 1530

  To resolve ongoing tobacco litigation, to reform the civil justice 
system responsible for adjudicating tort claims against companies that 
manufacturer tobacco products, and establish a national tobacco policy 
 for the United States that will decrease youth tobacco use and reduce 
         the marketing of tobacco products to young Americans.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           November 13, 1997

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

_______________________________________________________________________

                                 A BILL

 
  To resolve ongoing tobacco litigation, to reform the civil justice 
system responsible for adjudicating tort claims against companies that 
manufacturer tobacco products, and establish a national tobacco policy 
 for the United States that will decrease youth tobacco use and reduce 
         the marketing of tobacco products to young Americans.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Placing Restraints 
on Tobacco's Endangerment of Children and Teens Act'' or the ``PROTECT 
Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Goals and purposes.
Sec. 4. National goals for the reduction in underage tobacco use.
Sec. 5. Definitions.
            TITLE I--NATIONAL TOBACCO SETTLEMENT TRUST FUND

Sec. 101. Establishment of Trust Fund.
Sec. 102. Licensing fees payment schedule.
Sec. 103. Enforcement.
          TITLE II--NATIONAL PROTOCOL AND LIABILITY PROVISIONS

             Subtitle A--National Tobacco Control Protocol

                        Chapter 1--Establishment

Sec. 201. Requirement.
           subchapter a--protocol restrictions on advertising
Sec. 211. Application of subchapter.
Sec. 212. Agreement to prohibit certain advertising.
Sec. 213. Consensual restrictions.
Sec. 214. Agreement on format and content requirements for labeling and 
                            advertising.
Sec. 215. Agreement to ban on nontobacco items and services, contests 
                            and games of chance, and sponsorship of 
             subchapter b--provisions relating to lobbying
Sec. 220. Application of subchapter.
Sec. 221. Agreement to provisions relating to lobbying.
Sec. 222. Agreement tsubchapter c--other provisions
Sec. 225. Application of subchapter.
Sec. 226. Determination of licensing fee amount.
Sec. 227. Attorney's fees and expenses.
Sec. 228. Limitations with respect to Indian country.
                         Chapter 3--Enforcement

Sec. 231. Federal enforcement of the protocol.
Sec. 232. State enforcement of the protocol.
Sec. 233. Private enforcement of protocol.
Sec. 234. Removal.
                      Subtitle B--Consent Decrees

Sec. 241. Consent decrees.
Sec. 242. State enforcement of consent decrees.
Sec. 243. Non-participating manufacturers.
                    Subtitle C--Liability Provisions

                     Chapter 1--General Provisions

Sec. 251. Definitions.
           Chapter 2--Immunity And Liability for Past Conduct

Sec. 255. Application of chapter.
Sec. 256. General immunity.
Sec. 257. Civil liability for past conduct.
Sec. 258. Civil liability for future conduct.
Sec. 259. Non-participating manufacturers.
Sec. 260. Payment of judgments and settlements.
Sec. 261. State eligibility.
Sec. 262. Removal.
Sec. 263. Conforming amendments.
              TITLE III--REDUCTION IN UNDERAGE TOBACCO USE

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

Sec. 300. Short title.
Sec. 301. State laws regarding sale of tobacco products to individuals 
                            under the age of 18.
Sec. 302. Model State law.
            Subtitle B--Required Reduction in Underage Usage

Sec. 311. Purpose.
Sec. 312. Determination of underage use base percentages.
Sec. 313. Annual daily incidence of underage use of tobacco products.
Sec. 314. Required reduction in underage tobacco use.
Sec. 315. Application of surcharges.
Sec. 316. Abatement procedures.
Sec. 317. Incentive for exceeding reduction goals.
       TITLE IV--HEALTH AND SAFETY REGULATION OF TOBACCO PRODUCTS

Sec. 401. Health and safety regulation of tobacco products.
   ``CHAPTER IX--HEALTH PROMOTION AND DISEASE PREVENTION PROGRAM FOR 
                            TOBACCO PRODUCTS

        ``Sec. ``subchapter a--tobacco product regulation
        ``Sec. 901. Statement of general duties.
        ``Sec. 902. Tobacco product health risk management standards.
        ``Sec. 903. Good manufacturing practice standards.
        ``Sec. 904. Tobacco product labeling, warning, and packaging 
                            standards.
        ``Sec. 905. Reduced risk tobacco products.
        ``Sec. 906. Tobacco product marketing provisions.
        ``Sec. 907. Tobacco Products Scientific Advisory Committee.
        ``Sec. 908. Reports.
        ``Sec. 909. Judicial review.
        ``Sec. 910. Preemption.
Sec. 402. Technical provisions.
Sec. 403. Federal licensing of military and other entities.
         TITLE V--PAYMENTS TO STATES AND PUBLIC HEALTH PROGRAMS

                     Subtitle A--Payments to States

Sec. 501. Reimbursement for State expenditures.
Sec. 502. Requirement for State use of certain funds.
                   Subtitle B--Public Health Programs

Sec. 521. National Institutes of Health Trust Fund for Health Research.
Sec. 522. National anti-tobacco product consumption and tobacco product 
                            cessation public health program.
  TITLE VI--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO SMOKE

Sec. 601. Definitions.
Sec. 602. Smoke-free environment policy.
Sec. 603. Preemption.
Sec. 604. Regulations.
Sec. 605. Effective date.
            TITLE VII--PUBLIC DISCLOSURE OF HEALTH RESEARCH

Sec. 701. Purpose.
Sec. 702. National tobacco document depository.
Sec. 703. Enforcement.
             TITLE VIII--AGRICULTURAL TRANSITION PROVISIONS

Sec. 801. Short title.
Sec. 802. Purposes.
Sec. 803. Definitions.
               Subtitle A--Tobacco Production Transition

                Chapter 1--Tobacco Transition Contracts

Sec. 811. Tobacco Transition Account.
Sec. 812. Offer and terms of tobacco transition contracts.
Sec. 813. Elements of contracts.
Sec. 814. Buyout payments to owners.
Sec. 815. Transition payments to producers.
Sec. 816. Tobacco worker transition program.
Sec. 817. Farmer opportunity grants.
           Chapter 2--Rural Economic Assistance Block Grants

Sec. 821. Rural economic assistance block grants.
  Subtitle B--Tobacco Price Support and Production Adjustment Programs

                Chapter 1--Tobacco Price Support Program

Sec. 831. Interim reform of tobacco price support program.
Sec. 832. Termination of tobacco price support program.
           Chapter 2--Tobacco Production Adjustment Programs

Sec. 835. Termination of tobacco production adjustment programs.
                          Subtitle C--Funding

Sec. 841. Trust Fund.
Sec. 842. Commodity Credit Corporation.
                   TITLE IX--MISCELLANEOUS PROVISIONS

Sec. 901. Provisions relating to Native Americans.
Sec. 902. Whistleblower protections.
Sec. 903. Limited antitrust exemption.
Sec. 904. Pass-through.
Sec. 905. Effective date.

SEC. 2. FINDINGS.

    (a) General Findings.--Congress makes the following findings:
            (1) Tobacco is an addictive substance the use of which 
        constitutes the Nation's number 1 preventable cause of death.
            (2) The use of tobacco products by the nation's children is 
        a serious and growing public health problem that results in new 
        generations of tobacco-dependent children and adults.
            (3) There is a consensus within the scientific and medical 
        communities that currently marketed tobacco products are 
        inherently unsafe and cause cancer, heart disease, and other 
        serious adverse health effects. The tobacco industry concealed 
        relevant data concerning the effects of tobacco products on 
        adolescents and adults.
            (4) Virtually all new users of tobacco products are under 
        the age of 18. Tobacco industry advertising and marketing is 
        directed at adolescents and as such, sweeping new restriction 
        on the sale, promotion, and distribution of such products are 
        needed.
            (5) Enhancing the existing legal mechanisms and the 
        available prevention, research, and treatment resources with 
        respect to tobacco will allow our Nation to address more 
        effectively the problems associated with the use of tobacco 
        products.
            (6) Public health authorities believe that the societal 
        benefits of enacting tobacco settlement legislation in human 
        and economic terms would be vast. The Secretary of Health and 
        Human Services has found that reducing underage tobacco use 50 
        percent ``would prevent well over 60,000 early deaths''. The 
        Secretary has estimated that the monetary value of the 
        regulations promulgated as a result of this Act will be an 
        estimated $43,000,000,000 per year in reduced medical costs, 
        improved productivity, and the benefit of avoiding the 
        premature death of loved ones.
            (7) The unique position occupied by tobacco in the history 
        and economy of the United States, the magnitude of the actual 
        and potential tobacco-related litigation, the advisability of 
        avoiding the cost, expense, uncertainty, and inconsistency 
        associated with such protracted litigation, the need to limit 
        the sale, distribution, marketing, and advertising of tobacco 
        products to persons of legal age, and the need to better 
        educate the public (especially young people) concerning the 
        health risks of using tobacco products make it in the public 
        interest to enact legislation to facilitate a comprehensive 
        resolution of such matters.
    (b) Findings Related to Interstate Commerce and the Judicial 
System.--Congress makes the following findings:
            (1) The sale, distribution, marketing, advertising, and use 
        of tobacco products are activities substantially affecting 
        interstate commerce and as such, have a substantial effect on 
        the economy of the United States.
            (2) The sale, distribution, marketing, advertising, and use 
        of tobacco products are activities that substantially affect 
        interstate commerce by virtue of the health care-related and 
        other costs that Federal and State governmental authorities 
        have incurred because of the usage of tobacco products.
            (3) Various civil actions brought by State attorneys 
        general, cities, counties, the Commonwealth of Puerto Rico, 
        third-party payors, and other private classes and individuals 
        to recover damages relating to tobacco-related diseases, 
        conditions and products are pending throughout the United 
        States; of these actions are slow-moving, expensive, and 
        burdensome not only for the litigants but also for Federal and 
        State judicial systems.

SEC. 3. GOALS AND PURPOSES.

    (a) Goals.--It is a goal of this Act to--
            (1) decrease youth smoking and reduce the marketing of 
        tobacco products to young Americans;
            (2) decrease tobacco use by all Americans by encouraging 
        public education and smoking cessation programs and to decrease 
        the exposure of individuals to environmental (second-hand) 
        smoke;
            (3) enhance biomedical research efforts into diseases 
        associated with tobacco use;
            (4) advance our knowledge about the health effects of 
        nicotine and tobacco on the human body;
            (5) provide transition assistance to tobacco farmers and 
        create incentives to reduce the production and distribution of 
        tobacco products;
            (6) return to the States funds that they have expended with 
        respect to tobacco-related health care costs and other costs 
        related to tobacco;
            (7) establish the authority of the Food and Drug 
        Administration with respect to the types of tobacco products 
        that may be lawfully sold;
            (8) reform tobacco litigation practices to bring finality 
        to current litigation and provide greater predictability in 
        future individual cases; and
            (9) wisely invest increased tobacco revenues in important 
        public health priorities, such as smoking cessation, public 
        education, counter-advertising.
    (b) Purposes.--It is the purpose of this Act to--
            (1) provide for the funding by the tobacco industry of an 
        aggressive Federal enforcement program relating to tobacco 
        advertising and distribution, including a State-administered 
        retail licensing system to prevent minors from obtaining 
        tobacco products;
            (2) subject the tobacco industry to severe financial 
        penalties in the event that underage tobacco usage does not 
        decline radically over the next 10 years;
            (3) provide for the establishment of national standards to 
        control the manufacturing of tobacco products and the 
        ingredients used in such products;
            (4) provide certain regulatory powers to the Secretary of 
        Health and Human Services to encourage the development and 
        marketing by the tobacco industry of ``less hazardous tobacco 
        products'', including the power to regulate the level of 
        nicotine in such products;
            (5) require the manufacturers of tobacco products to 
        disclose all present and future non-public internal laboratory 
        research regarding tobacco products;
            (6) establish a minimum Federal standard to limit smoking 
        in public places, including the halls of Congress;
            (7) provide for the establishment of a National Tobacco 
        Settlement Trust Fund to be funded by the tobacco industry and 
        used in accordance with this Act;
            (8) provide for the establishment of a national education-
        oriented counter advertising and tobacco use prevention 
        campaign to be funded through the National Tobacco Settlement 
        Trust Fund;
            (9) provide annual payments to States to fund tobacco-
        related health benefits programs through the National Tobacco 
        Settlement Trust Fund; and
            (10)(A) settle the present tobacco-related governmental 
        parens patriae and private class actions as to which a final 
        judgment or final settlement has not been reached as of the 
        effective date of this Act;
            (B) bar future tobacco-related claims based on dependency;
            (C) preclude claims for punitive damages based on conduct 
        that took place prior to the effective date of this Act to that 
        such claims are not reduced to final judgment or final 
        settlement prior to the effective date of this Act; and
            (D) preclude further class actions or aggregations of 
        claims in tobacco-related actions.

SEC. 4. NATIONAL GOALS FOR THE REDUCTION IN UNDERAGE TOBACCO USE.

    (a) In General.--With respect to the average annual incidence of 
the daily use of tobacco products by individuals who are under 18 years 
of age, it shall be the national goals of the United States that such 
use be reduced as follows:
            (1) Cigarettes.--With respect to cigarettes--
                    (A) in the fifth and sixth calendar years after the 
                date of enactment of this Act the percentage decrease 
                in the use of cigarette products shall be at least 30 
                percent;
                    (B) in the seventh, eighth and ninth calendar years 
                after the date of enactment of this Act the percentage 
                decrease in the use of cigarette products shall be at 
                least 50 percent; and
                    (C) in the tenth and subsequent calendar years 
                after the date of enactment of this Act the percentage 
                decrease in the use of cigarette products shall be at 
                least 60 percent.
            (2) Smokeless tobacco products.--With respect to smokeless 
        tobacco products--
                    (A) in the fifth and sixth calendar years after the 
                date of enactment of this Act the percentage decrease 
in the use of smokeless tobacco products shall be at least 25 percent;
                    (B) in the seventh, eighth and ninth calendar years 
                after the date of enactment of this Act the percentage 
                decrease in the use of smokeless tobacco products shall 
                be at least 35 percent; and
                    (C) in the tenth and subsequent calendar years 
                after the date of enactment of this Act the percentage 
                decrease in the use of smokeless tobacco products shall 
                be at least 45 percent.
    (b) Determinations.--Determinations as to whether the national 
goals described in subsection (a) have been met shall be made in 
accordance with the provisions of subtitle B of title III.

SEC. 5. DEFINITIONS.

    In this Act:
            (1) Brand.--The term ``brand'' means a variety of a tobacco 
        product distinguished by the tobacco used, tar content, 
        nicotine content, flavoring used, size, filtration, or 
        packaging.
            (2) Cigarette.--The term ``cigarette'' means any product 
        which contains nicotine, is intended to be burned under 
        ordinary conditions of use, and consists of--
                    (A) any roll of tobacco wrapped in paper or in any 
                substance not containing tobacco; and
                    (B) any roll of tobacco wrapped in any substance 
                containing tobacco which, because of its appearance, 
                the type of tobacco used in the filler, or its 
                packaging and labeling, is likely to be offered to, or 
                purchased by, consumers as a cigarette described in 
                subparagraph (A).
            (3) Cigarette tobacco.--The term ``cigarette tobacco'' 
        means any product that consists of loose tobacco that contains 
        or delivers nicotine and is intended for use by persons in a 
        cigarette. Unless otherwise stated, the requirements of this 
        Act pertaining to cigarettes shall also apply to cigarette 
        tobacco.
            (4) Commerce.--The term ``commerce'' means--
                    (A) commerce between any State, the District of 
                Columbia, the Commonwealth of Puerto Rico, Guam, the 
                Virgin Islands, American Samoa, the Northern Mariana 
                Islands or any territory or possession of the United 
                States;
                    (B) commerce between points in any State, the 
                District of Columbia, the Commonwealth of Puerto Rico, 
                Guam, the Virgin Islands, American Samoa, the Northern 
                Mariana Islands or any territory or possession of the 
                United States; or
                    (C) commerce wholly within the District of 
                Columbia, Guam, the Virgin Islands, American Samoa, the 
                Northern Mariana Islands or any territory or possession 
                of the United States.
            (5) Commissioner.--The term ``Commissioner'' means the 
        Commissioner of Food and Drugs.
            (6) Consent decree.--The term ``consent decree'' means a 
        consent decree executed by the participating manufacturers and 
        a State under the provision of section 241.
            (7) Court.--The term ``court'' means any judicial or agency 
        court, forum or tribunal within the United States, including 
        without limitation any Federal, State, or tribal court.
            (8) Distributor.--The term ``distributor'' means any person 
        who furthers the distribution of tobacco products, whether 
        domestic or imported, at any point from the original place of 
        manufacture to the person who sells or distributes the product 
        to individuals for personal consumption. Such term shall not 
        include common carriers.
            (9) Indian tribe.--The term ``Indian tribe'' has the same 
        meaning given such term in section 4(e) of the Indian Self 
        Determination and Education Assistance Act (25 U.S.C. 450b(e)).
            (10) Tribal organization.--The term ``tribal organization'' 
        has the same meaning given such term in section 4 of the Indian 
Self Determination and Education Assistance Act (25 U.S.C. 450b).
            (11) Manufacturer.--The term ``manufacturer'' means--
                    (A) a person who directly (not through a subsidiary 
                company or affiliate) manufactures tobacco products for 
                sale in the United States;
                    (B) a successor or assign of a person described in 
                subparagraph (A);
                    (C) an entity established by a person described in 
                subparagraph (A); or
                    (D) an entity to which a person described in 
                subparagraph (A) directly or indirectly makes a 
                fraudulent conveyance after the effective date of this 
                Act or a transfer that would otherwise be voidable 
                under chapter 7 of title 11, United States Code, but 
                only to the extent of the interest or obligation 
                transferred.
        Such term shall not include a parent or affiliate of a person 
        who manufactures tobacco products unless such parent or 
        affiliate itself is a person described in any of subparagraphs 
        (A) through (D).
            (12) Nicotine.--The term ``nicotine'' means the chemical 
        substance named 3-(1-Methyl-2-pyrrolidinyl)pyridine or 
        C<INF>10</INF>H<INF>14</INF>N<INF>2</INF>, including any salt 
        or complex of nicotine.
            (13) Package.--The term ``package'' means a pack, box, 
        carton, or container of any kind in which tobacco products are 
        offered for sale, sold, or otherwise distributed to consumers.
            (14) Participating manufacturer.--The term ``participating 
        manufacturer'' means a manufacturer which, within the periods 
        specified in the applicable provisions of title II--
                    (A) enters into the Protocol; and
                    (B) enters into a consent decree with each State 
                that requests that the manufacturer enter into the 
                Protocol.
            (15) Person.--The term ``person'' means an individual, 
        partnership, corporation, or any other business or legal 
        entity.
            (16) Point of sale.--The term ``point of sale'' means any 
        location at which an individual can purchase or otherwise 
        obtain tobacco products for personal consumption.
            (17) Protocol.--The term ``Protocol'' means the protocol to 
        be executed under subtitle A of title II for the purpose of 
        setting forth certain obligations being undertaken by the 
        Attorney General, participating manufacturers, the chief 
        executive officer of each State, and a representative of the 
        members of the class certified for purposes of Dianne Castano 
        v. American Tobacco Company, as consideration for the 
        resolution of tobacco claims through the civil liability 
        provisions of title II.
            (18) Retailer.--The term ``retailer'' means any person who 
        sells tobacco products to individuals for personal consumption, 
        or who operates a facility where vending machines or self-
        service displays are permitted under this Act.
            (19) Sale.--The term ``sale'' includes the selling, 
        providing samples of, or otherwise making tobacco products 
        available for personal consumption in any place within the 
        scope of this Act.
            (20) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (21) Smokeless tobacco.--The term ``smokeless tobacco'' 
        means any product that consists of cut, ground, powdered, or 
        leaf tobacco that contains nicotine and that is intended to be 
        placed in the oral or nasal cavity.
            (22) State.--The term ``State'' includes the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, Guam, the Virgin Islands, American Samoa, the Northern 
        Mariana Islands, and any other territory or possession of the 
        United States. Such term includes any political division of any 
        State.
            (23) Tobacco.--The term ``tobacco'' means tobacco in its 
        unmanufactured form.
            (24) Tobacco claim.--The term ``tobacco claim'' means a 
        claim directly or indirectly arising out of, based on, or 
        related to the health-related effects or attributes of tobacco 
        products, including a claim arising out of, based on, or 
        related to allegations regarding any conduct, statement or 
        omission concerning the health-related effects or attributes of 
        such products, that is brought against--
                    (A) a manufacturer or the predecessors or past, 
                present or future parents, affiliates, officers, 
                directors, employees or agents of a manufacturer; or
                    (B) any importer, supplier, distributor, 
                wholesaler, retailer or other seller of tobacco 
                products or any grower of tobacco.
            (25) Tobacco product.--The term ``tobacco product'' means 
        cigarettes, cigarette tobacco, and smokeless tobacco.
            (26) Trust fund.--The term ``Trust Fund'' means the 
        National Tobacco Settlement Trust Fund established under 
        section 101.

            TITLE I--NATIONAL TOBACCO SETTLEMENT TRUST FUND

SEC. 101. ESTABLISHMENT OF TRUST FUND.

    (a) Creation and Deposits.--
            (1) In general.--There is established in the Treasury of 
        the United States a trust fund to be known as the ``National 
        Tobacco Settlement Trust Fund''.
            (2) Deposits.--The Trust Fund shall be composed of the 
        following deposits to be paid by participating manufacturers 
        under the fee payment schedule under section 102:
                    (A) Compensatory damage deposits.--With respect to 
                compensatory damages, $303,337,500,000 shall be 
                deposited in the Trust Fund and shall represent the 
                settlement amount referred to in the Protocol and the 
                consent decrees.
                    (B) Punitive damage deposits.--With respect to 
                punitive damages, $95,000,000,000 shall be deposited in 
                the Trust Fund and shall represent the settlement of 
                tobacco-related punitive damages claims which occurred 
                prior to the date of enactment of this Act, and shall 
                be used to fund the Trust Fund for Health Research 
                under section 521.
            (3) Accounts in trust fund.--The National Tobacco 
        Settlement Trust Fund shall consist of--
                    (A) a State Account, and
                    (B) a Federal Account.
        Each such Account shall consist of such amounts as may be 
        transferred to it under this section or credited under section 
        103(b)(3).
            (4) Trustees.--
                    (A) In general.--The National Tobacco Settlement 
                Trust Fund shall be administered by the Attorney 
                General who shall serve together with the Secretary of 
                the Treasury and the Secretary of Health and Human 
                Services as the Trustees of the Fund.
                    (B) Advisory board.--The Trustees of the Trust 
                Fund, in administering the Trust Fund, shall be advised 
                by an advisory board established under section 103.
    (b) Transfers to Trust Fund.--There is transferred to the State 
Account and the Federal Account of the National Tobacco Settlement 
Trust Fund, without further appropriation, an amount equal to 50 
percent in the case of the State Account and 50 percent in the case of 
the Federal Account of the--
            (1) amounts received under section 102, less the amounts 
        made available under subparagraphs (D), (E), and (F) of 
        subsection (c)(3) for tobacco transition, Native Americans, and 
        asbestos-related injuries;
            (2) amounts paid as fines or penalties, including interest 
        thereon, under section 104; and
            (3) amounts repaid or recovered under section 315, 
        including interest thereon.
    (c) Expenditures From Trust Fund.--
            (1) In general.--Amounts in the National Tobacco Settlement 
        Trust Fund shall be made available in each fiscal year, without 
        further appropriation, as described in the table in paragraph 
        (2).
            (2) Expenditure table.--For purposes of paragraph (1), 
        amounts shall be made available in each full fiscal year 
        following the date of enactment of this Act as follows:

      

                                             In billions of dollars                                             
----------------------------------------------------------------------------------------------------------------
                                                                                                       Native   
     Year           States       Public Health     Research        Asbestos        Agriculture       Americans  
----------------------------------------------------------------------------------------------------------------
                                                                                                                
 1st              3.25            1.1             2.15            0               3.0925             0.2        
 2nd              3.75            1.6             2.15            0.2             5.0925             0.2        
 3rd              4.75            2.2             2.55            0.2             6.1925             0.2        
 4th              7.0             3.3             3.7             0.2             .0925              0.2        
 5th              7.5             3.5             4.0             0.2             .0925              0.2        
 6th              8.0             4.0             4.0             0.2             0.1                0.2        
 7th              8.0             4.0             4.0             0.2             0.1                0.2        
 8th              8.0             4.0             4.0             0.2             0.1                0.2        
 9th              8.0             4.0             4.0             0.2             0.1                0.2        
 10th             8.0             4.0             4.0             0.2             0.1                0.2        
 11th             8.0             4.0             4.0             0.2             0.0575             0.2        
 12th             8.0             4.0             4.0             0.2             0.0575             0.2        
 13th             8.0             4.0             4.0             0.2             0.0575             0.2        
 14th             8.0             4.0             4.0             0.2             0.0575             0.2        
 15th             8.0             4.0             4.0             0.2             0.0575             0.2        
 16th             8.0             4.0             4.0             0.2             0.065              0.2        
 17th             8.0             4.0             4.0             0.2             0.065              0.2        
 18th             8.0             4.0             4.0             0.2             0.065              0.2        
 19th             8.0             4.0             4.0             0.2             0.065              0.2        
 20th             8.0             4.0             4.0             0.2             0.065              0.2        
 21st             8.0             4.0             4.0             0.2             0.0725             0.2        
 22nd             8.0             4.0             4.0             0.2             0.0725             0.2        
 23rd             8.0             4.0             4.0             0.2             0.0725             0.2        
 24th             8.0             4.0             4.0             0.2             0.0725             0.2        
 25th             8.0             4.0             4.0             0.2             0.0725             0.2        
----------------------------------------------------------------------------------------------------------------

            (3) Definitions and use of funds.--With respect to the 
        table in paragraph (2):
                    (A) State.--The term ``State'' means the State 
                account established under subsection (a)(3)(A). Amounts 
                provided to the State Account under this section shall 
                be available in each fiscal year, without further 
                appropriation, to make payments to the States as 
                provided for in subtitle A of title V.
                    (B) Research.--The term ``research'' means 
                activities carried out by the Secretary under section 
                521 to conduct and support biomedical and behavioral 
                research into the causes of tobacco use, diseases and 
                conditions associated with tobacco use and other 
                substance abuse dependencies, and the development of 
therapies for such diseases and conditions.
                    (C) Public health.--The term ``public health'' 
                means public health activities carried out by the 
                Secretary under section 522 to implement the National 
                Anti-Tobacco Product Consumption and Tobacco Product 
                Cessation Public Health Program to further the purposes 
                of this Act.
                    (D) Asbestos.--The term ``asbestos'' means programs 
                and activities carried out by the Secretary of Labor 
                relating to victims of asbestos-related injuries with 
                respect to which the use of tobacco products have been 
                determined to be a significant contributor.
                    (E) Agriculture.--The term ``agriculture'' means 
                the Tobacco Transition Account to be administered by 
                the Secretary of Agriculture as provided for under 
                section 841.
                    (F) Native americans.--The term ``Native 
                Americans'' means anti-tobacco consumption and 
                cessation activities to be carried out by the Indian 
                Health Service under section 901(h).
            (4) Federal account.--Amounts to which subparagraphs (B) 
        through (D) of paragraph (3) apply shall be deposited into 
        Federal Account and shall be available in each fiscal year, 
        without further appropriation, as described in such 
        subparagraphs.
            (5) Reservation.--Prior to making available amounts under 
        this subsection for a fiscal year, the Trustees shall reserve 
        the amounts to which subparagraphs (E) through (G) of paragraph 
        (3) apply, for use in each fiscal year, without further 
        appropriation, as described in such subparagraphs.
    (d) Maintenance of Effort.--The Trustees may not make an 
expenditure for a fiscal year--
            (1) under subsection (c)(1), unless a State certifies that 
        the aggregate expenditure of funds of the State, exclusive of 
        Federal funds, for the purposes of the expenditure under such 
        subsection will be maintained at a level that does not fall 
        below the average level of such aggregate expenditure for the 
        preceding 2 fiscal years of the State; and
            (2) under any subparagraph of subsection (c)(2), unless 
        such expenditure is in addition to, and not in substitution 
        for, any appropriation otherwise applicable with respect to the 
        purpose described in such subparagraph.
    (e) Adjustments.--The amounts described in subsection (a)(1) 
relating to deposits and in subsection (c) relating to expenditures 
shall be adjusted annually by the Trustees to account for any 
adjustments made under section 102(c)(2) relating to fee payments. 
Amounts for expenditures under subsection (c) shall be adjusted 
proportionally by the Trustees based on the adjustments under section 
102(c)(2).

SEC. 102. LICENSING FEES PAYMENT SCHEDULE.

    (a) Requirement of Initial Payment.--To be eligible to receive the 
protections provided under subtitle C of title II, participating 
manufacturers shall, on the later of--
            (1) the date of enactment of this Act;
            (2) the date on which the Protocol is executed under 
        section 201; or
            (3) the date on which all applicable consent decrees are 
        executed under section 241;
pay licensing fees to the Trust Fund in an aggregate amount of 
$10,000,000,000.
    (b) Subsequent Base Amount Payments.--To be eligible to receive the 
protections provided under subtitle C of title II, participating 
manufacturers shall, not later than December 31 of each year involved, 
pay licensing fees to the Trust Fund in an aggregate amount of--
            (1) with respect to the first fiscal year following the 
        year in which the fees are paid under subsection (a), 
        $9,792,500,000;
            (2) with respect to the second such fiscal year, 
        $12,992,500,000;
            (3) with respect to the third such fiscal year, 
        $16,092,500,000;
            (4) with respect to the fourth such fiscal year, 
        $14,492,500,000;
            (5) with respect to the fifth such fiscal year, 
        $15,492,500,000;
            (6) with respect to the sixth such fiscal year, and each of 
        the next 4 succeeding fiscal years, $16,500,000,000 for each 
        such year;
            (7) with respect to the 11th such fiscal year, and each of 
        the next 4 succeeding fiscal years, $16,457,500,000 for each 
        such year;
            (8) with respect to the 16th such fiscal year, and each of 
        the next 4 succeeding fiscal years, $16,465,000,000 for each 
        such year; and
            (9) with respect to the 21st such fiscal year, and each of 
        the next 4 succeeding fiscal years, $16,472,500,000 for each 
        such year.
    (c) Adjustments.--
            (1) In general.--The amount of the annual base amount 
        payments for each year under subsection (b) shall be adjusted 
        by the Trustees in accordance with the formula described in 
        paragraph (2). In prescribing such adjustments, the Trustees 
        shall ensure that participating manufacturers make annual 
        payments based on their relative domestic volume of sales of 
        units of tobacco products during the year for which the payment 
        is due.
            (2) Formula.--
                    (A) Inflation adjustment.--With respect to a year, 
                the base amount payment for such year under subsection 
                (b) shall be increased for such year by the greater of 
                3 percent or the percentage increase in the Consumer 
                Price Index for the period beginning in the first full 
                fiscal year beginning after the date of enactment of 
                this Act and ending in the year for which the 
                determination is being made.
                    (B) Volume adjustment.--
                            (i) Determination.--With respect to a 
                        year--
                                    (I) if the actual volume is greater 
                                than the base volume, the amount of the 
                                annual base amount payments for such 
                                year under subsection (b) shall be 
                                increased by an amount equal to the 
                                amount determined by multiplying such 
                                base amount by the ratio of the actual 
                                volume to the base volume; or
                                    (II) if the actual volume is less 
                                than the base volume, the annual base 
                                amount payments for such year under 
                                subsection (b) shall be reduced by an 
                                amount equal to the amount determined 
                                by multiplying such base amount by the 
                                greater of--
                                            (aa) the ratio of the 
                                        actual volume to the base 
                                        volume; or
                                            (bb) the ratio of the 
                                        portion of the actual volume 
                                        attributable to sales to 
                                        individuals 18 years of age or 
                                        older to the portion of the 
                                        base volume attributable to 
                                        sales to individual 18 years of 
                                        age or older.
                            (ii) Required reduction.--If a reduction in 
                        the applicable base amount is required under 
                        clause (ii), but the participating 
                        manufacturers' aggregate net operating profits 
                        from domestic sales of tobacco products for the 
                        year for which the annual payment is being 
                        calculated, as reported to the Securities and 
                        Exchange Commission, is greater than such 
                        participating manufacturers' aggregate net 
                        operating profits from domestic sales of 
                        tobacco products in 1996 (as increased for 
                        inflation) as reported to the Securities and 
                        Exchange Commission, such reduction shall be 
                        reduced (but not below zero) by an amount equal 
                        to 25 percent of such increase in such profits.
                            (iii) Nonreporting manufacturer.--In the 
                        case of a participating manufacturer that does 
                        not report profits to the Securities and 
                        Exchange Commission, the profit figures 
                        referred to in this subparagraph shall be those 
                        reflected in that participating manufacturer's 
                        audited financial statements for the applicable 
                        year. The determination of the participating 
                        manufacturers' aggregate net operating profits 
                        from domestic sales of tobacco products shall 
                        be derived using the same methodology as was 
                        employed in deriving such participating 
                        manufacturers' aggregate net operating profits 
                        from domestic sales of tobacco products in 
                        1996, as reported to the Securities and 
                        Exchange Commission.
                            (iv) Definitions.--For purposes of this 
                        subparagraph--
                                    (I) the term ``actual volume'' 
                                means the number of units of tobacco 
                                products sold domestically by 
                                participating manufacturers in the year 
                                involved (as reported by such 
                                participating manufacturers to the 
                                Secretary); and
                                    (II) the term ``base volume'' means 
                                the number of units of tobacco products 
                                sold domestically by participating 
                                manufacturers in 1996.
    (d) Determination of Amount.--The amount of licensing fees that 
each participating manufacturer shall be required to pay to the Trust 
Fund under this section shall be determined under the Protocol under 
section 226. In making such determinations, consideration shall be 
provided for any payments made by manufacturers to States under any 
settlement of a civil action described in section 256(a).
    (e) Guidelines.--The Trustees shall develop guidelines and 
implement procedures for the collection of fees under this section.
    (f) Collection of Unpaid Payments.--In any case where the Trustees 
do not receive a payment under this section within 30 days after it is 
due, such payment shall be treated as a claim of the United States 
Government subject to subchapter II of chapter 37 of title 31, United 
States Code.

SEC. 103. ADMINISTRATIVE PROVISIONS.

    (a) Duty of Trustees.--It shall be the duty of the Attorney General 
as a Trustees of the National Tobacco Settlement Trust Fund to hold the 
Trust Fund and to report to the Committees on Judiciary, Labor and 
Human Resources, Commerce and Agriculture of the Senate and the 
Committees on Judiciary, Commerce, and Agriculture of the House of 
Representatives each fiscal year--
            (1) on the financial condition and the results of the 
        operations of the Trust Fund during the fiscal year preceding 
        the fiscal year in which such report is submitted, and
            (2) on the expected condition and operations of the Trust 
        Fund during the fiscal year in which such report is submitted 
        and the 5 fiscal years succeeding such fiscal year.
Such report shall be printed as both a House and Senate document of the 
session of the Congress to which the report is made.
    (b) Investment of Amounts in Trust Fund.--
            (1) Investment in obligations.--The Trustees shall invest 
        such portion of the State Account and the Federal Account of 
        the National Tobacco Settlement Trust Fund as is not, in their 
        judgment, required to meet current withdrawals. Such 
        investments may be made only in interest-bearing obligations of 
        the United States. For such purpose, such obligations may be 
        acquired--
                    (A) on original issue at the issue price, or
                    (B) by purchase of outstanding obligations at the 
                market price.
            (2) Sale of obligations.--Any obligation acquired by the 
        State Account or the Federal Account of the Trust Fund may be 
        sold by the Secretary of the Treasury at the market price.
            (3) Crediting of interest and sale proceeds.--The interest 
        on, and the proceeds from the sale or redemption of, any 
        obligations held in the State Account or the Federal Account of 
        the Trust Fund shall be credited to and form a part of such 
        Account.
    (c) Establishment of Advisory Board.--
            (1) In general.--There is established an advisory board 
        (referred to in this subsection as the ``Advisory Board'') to 
        advise the Trustees of the National Tobacco Settlement Trust 
        Fund in the administration of the Trust Fund.
            (2) Membership.--
                    (A) In general.--The Advisory Board shall be 
                composed of the Trustees of the National Tobacco 
                Settlement Trust Fund, who shall act as the co-
                chairpersons of the Advisory Board, and 4 members to be 
                appointed--
                            (i) \1/2\ by the Speaker of the House of 
                        Representatives, in consultation with the 
                        minority leader of the House of 
                        Representatives, and
                            (ii) \1/2\ by the majority leader of the 
                        Senate, in consultation with the minority 
                        leader of the Senate.
                    (b) Nominees.--The members appointed under each 
                clause of subparagraph (A) shall be chosen in the 
                following manner:
                            (i) 1 member from a nominee list prepared 
                        by State attorneys general.
                            (ii) 1 member from a nominee list prepared 
                        by representatives of the tobacco industry.
                            (iii) 1 member from a nominee list prepared 
                        by representatives of public health experts.
                            (iv) 1 member from a nominee list prepared 
                        by representatives of the members of the class 
                        of plaintiffs in Dianne Castano v. American 
                        Tobacco Company.
            (3) Terms and vacancies.--Each member of the Advisory Board 
        shall serve for a term of 4 years, to begin on the date of 
        appointment. Any vacancy on the Advisory Board shall not affect 
        its powers, but shall be filled in the same manner as the 
        original appointment. Any member appointed to fill a vacancy 
        occurring before the expiration of the term for which the 
        member's predecessor was appointed shall be appointed for the 
        remainder of that term.
            (4) Powers.--
                    (A) Hearings.--The Advisory Board may hold such 
                hearings, sit and act at such times and places, take 
                such testimony, and receive such evidence as the 
Advisory Board considers advisable to carry out the duties of the 
Advisory Board.
                    (B) Information from federal agencies.--The 
                Advisory Board may secure directly from any Federal 
                department or agency such information as the Advisory 
                Board considers necessary to carry out such duties.
            (5) Personnel matters.--
                    (A) Compensation.--Each member of the Advisory 
                Board who is not an officer or employee of the Federal 
                Government shall serve without compensation. All 
                members of the Advisory Board who are officers or 
                employees of the United States shall serve without 
                compensation in addition to that received for their 
                services as officers or employees of the United States.
                    (B) Travel expenses.--The members of the Advisory 
                Board shall be allowed travel expenses, including per 
                diem in lieu of subsistence, at rates authorized for 
                employees of agencies under subchapter I of chapter 57 
                of title 5, United States Code, while away from their 
                homes or regular places of business in the performance 
                of services for the Advisory Board.
            (6) Limitation.--Amounts used for administrative expenses 
        under this section shall not exceed .1 percent of the amounts 
        in the Trust Fund in each year or $15,000,000 whichever is 
        less.
            (7) Nonapplication of faca.--The provisions of the Federal 
        Advisory Committee Act (5 U.S.C. App. 2) shall not apply to the 
        Advisory Board established under this subsection.
    (d) Budgetary Treatment of Trust Fund Operations.--
            (1) In general.--The receipts and disbursements of the 
        National Tobacco Settlement Trust Fund shall not be included in 
        the totals of the budget of the United States Government as 
        submitted by the President or of the congressional budget and 
        shall be exempt from any general budget limitation imposed by 
        statute on expenditures and net lending (budget outlays) of the 
        United States Government.
            (2) No transfers between trust fund and general fund.--No 
        provision of law may provide for payments from the general fund 
        of the Treasury to the National Tobacco Settlement Trust Fund 
        or for payments from the Trust Fund to the general fund of the 
        Treasury.

SEC. 104. ENFORCEMENT.

    (a) Initial Penalty.--There is hereby imposed an initial penalty on 
the failure of any participating manufacturer to make any fee payment 
required under section 102 within 60 days after the date on which such 
fee is due.
    (b) Amount of Penalty.--The amount of the penalty imposed by 
subsection (a) on any failure with respect to a manufacturer shall be 
$100,000 for each day during the noncompliance period.
    (c) Noncompliance Period.--For purposes of this section, the term 
``noncompliance period'' means, with respect to any failure to make the 
fee payment required under section 102, the period--
            (1) beginning on the due date for such payment; and
            (2) ending on the date on which such payment is paid in 
        full.
    (d) Limitations.--
            (1) In general.--No penalty shall be imposed by subsection 
        (a) on any failure to make a fee payment under section 102 
        during any period for which it is established to the 
        satisfaction of the Trustees that none of the persons 
        responsible for such failure knew or, exercising reasonable 
        diligence, would have known, that such failure existed.
            (2) Corrections.--No penalty shall be imposed under 
        subsection (a) on any failure to make a fee payment under 
        section 102 if--
                    (A) such failure was due to reasonable cause and 
                not to willful neglect; and
                    (B) such failure is corrected during the 30-day 
                period beginning on the 1st date that any of the 
                persons responsible for such failure knew or, 
                exercising reasonable diligence, would have known, that 
                such failure existed.
            (3) Waiver.--In the case of any failure to make a fee 
        payment under section 102 that is due to reasonable cause and 
        not to willful neglect, the Trustees may waive all or part of 
        the penalty imposed under subsection (a) to the extent that the 
        Trustees determines that the payment of such penalty would be 
        excessive relative to the failure involved.
    (e) Status as Participating Manufacturer.--If, at the end of the 1-
year period beginning on the date on which a participating manufacturer 
fails to make a timely fee payment as required under section 102, such 
manufacture has not fully paid the amount owed by such manufacturer 
under such section, such manufacturer shall be considered a 
nonparticipating manufacturer and shall not be eligible for any 
protections or assistance provided for under this Act (including the 
liability protections under subtitle C of title I).

          TITLE II--NATIONAL PROTOCOL AND LIABILITY PROVISIONS

             Subtitle A--National Tobacco Control Protocol

                        CHAPTER 1--ESTABLISHMENT

SEC. 201. REQUIREMENT.

    (a) Requirement.--To be eligible to receive the liability 
protections provided for in subtitle C, each tobacco manufacturer to 
which this Act applies shall, not later than 90 days after the date of 
enactment of this Act, enter into a National Tobacco Control Protocol 
with the Attorney General of the United States, the chief executive 
officer of each State, and a representative of the members of the class 
certified for purposes of Dianne Castano v. American Tobacco Company.
    (b) Terms and Conditions.--The Protocol referred to in subsection 
(a) shall be--
            (1) developed by the Attorney General, in consultation with 
        the Secretary, the State attorneys' general, and other 
        individuals determined appropriate by the Attorney General, as 
        a binding and enforceable contract that embodies the terms of 
        this subtitle; and
            (2) designed to be enforceable in Federal or State courts 
        as provided for in this subtitle.
    (c) Contracts.--As part of the Protocol under this subtitle, a 
participating manufacturer shall agree, with respect to any contract 
entered into by the manufacturer with an entity that is a distributor 
or retailer of tobacco products, to include in such contract as a term 
and condition a requirement that such distributor or retailer comply 
with the provisions of the Protocol.

                    CHAPTER 2--TERMS AND CONDITIONS

           Subchapter A--Protocol Restrictions on Advertising

SEC. 211. APPLICATION OF SUBCHAPTER.

    The provisions of this subchapter shall be considered as part of 
the Protocol.

SEC. 212. AGREEMENT TO PROHIBIT CERTAIN ADVERTISING.

    (a) Prohibition on Outdoor Advertising.--
            (1) In general.--No manufacturer, distributor, or retailer 
        may use any form of outdoor tobacco product advertising, 
        including billboards, posters, or placards.
            (2) Stadia and arenas.--Except as otherwise provided in 
        this title, a manufacturer, distributor, or retailer shall not 
        advertise tobacco products in any arena or stadium where 
        athletic, musical, artistic or other social or cultural events 
        or activities occur.
    (b) Prohibition on Use of Human Images and Cartoons.--No 
manufacturer, distributor, or retailer may use a human image or a 
cartoon character or cartoon-type character in its advertising, 
labeling or promotional material with respect to a tobacco product.
    (c) Prohibition on Advertising on the Internet.--No manufacturer, 
distributor, or retailer may use the Internet to advertise tobacco 
products unless such an advertisement is inaccessible in or from the 
United States.
    (d) Prohibition on Point of Sale Advertising.--
            (1) In general.--Except as otherwise provided in this 
        subsection, no manufacturer, distributor, or retailer may use 
        point of sale advertising of tobacco products.
            (2) Adult only stores and tobacco outlets.--Paragraph (1) 
        shall not apply to point of sale advertising at adult only 
        stores and tobacco outlets.
            (3) Permissible advertising.--
                    (A) In general.--Each manufacturer of tobacco 
                products may display not more than 2 separate point of 
                sale advertisements in or at each location at which 
                tobacco products are offered for sale.
                    (B) Market share manufacturers.--A manufacturer 
                with at least 25 percent of the market share of the 
                tobacco product involved may display an additional 
                point of sale advertisement in or at each location at 
                which tobacco products are offered for sale.
                    (C) Retailers.--No manufacturer, distributor, or 
                retailer may enter into any arrangement with a retailer 
                to limit the ability of the retailer to display any 
                form of permissible point of sale advertisement or 
                promotional material originating with another 
                manufacturer, distributor, or retailer.
            (4) Limitations.--
                    (A) In general.--A point of sale advertisement 
                permitted under this subsection shall be comprised of a 
                display area than is not larger than 576 square inches 
                (either individually or in the aggregate) and shall 
                consist only of black letters on a white background or 
other recognized typographical marks. Such advertisement shall not be 
attached to nor located within 2 feet of any fixture on which candy is 
displayed for sale.
                    (B) Audio and video formats.--Audio and video 
                advertisements permitted under section 214(c) may be 
                distributed to individuals who are 18 years of age or 
                older at point of sale but may not be played or viewed 
                at such point of sale.
                    (C) Display fixtures.--Display fixtures in the form 
                of signs consisting of brand name and price and not 
                larger than 2 inches in height are permitted.
            (5) Definition.--For purposes of this subsection, the term 
        ``point of sale advertising'' means all printed or graphical 
        materials bearing the brand name (alone or in conjunction with 
        any other word), logo, motto, selling message, recognizable 
        color or pattern of colors, or any other indicia of product 
        identification similar or identical to those used for tobacco 
        products, which, when used for its intended purpose, can 
        reasonably be anticipated to be seen by customers at a location 
        at which tobacco products are offered for sale.

SEC. 213. CONSENSUAL RESTRICTIONS.

    (a) Restriction on Product Names.--A manufacturer shall not use a 
trade or brand name of a nontobacco product as the trade or brand name 
for a cigarette or smokeless tobacco product, except for a tobacco 
product whose trade or brand name was on both a tobacco product and a 
nontobacco product that were sold in the United States on January 1, 
1995.
    (b) Advertising Limit Actions.--
            (1) In general.--A manufacturer, distributor, or retailer 
        may in accordance with this title, disseminate or cause to be 
        disseminated advertising or labeling which bears a tobacco 
        product brand name (alone or on conjunction with any other 
        word) or any other indicia of tobacco product identification 
        only in newspapers, in magazines, in periodicals or other 
        publications (whether periodic or limited distribution), on 
        billboards, posters and placards in accordance with section 
        212(a), in nonpoint of sale promotional material (including 
        direct mail), in point-of-sale promotional material, and in 
        audio or video formats delivered at a point-of-sale.
            (2) Limitation.--A manufacturer, distributor, or retailer 
        that intends to disseminate, or to cause to be disseminated, 
        advertising or labeling for a tobacco product in a medium that 
        is not described in paragraph (1) shall notify the Commissioner 
        not less than 30 days prior to the date on which such medium is 
        to be used. Such notice shall describe the medium and discuss 
        the extent to which the advertising or labeling may be seen by 
        individuals who are under 18 years of age.
            (3) Action by commissioner.--Not later than 30 days after 
        the date on which the Commissioner receives a notice under 
        paragraph (2), the Commissioner shall make a determination with 
        respect to the action to be taken concerning such notice.
    (c) Restriction on Placement in Entertainment Media.--
            (1) In general.--No payment shall be made by any 
        manufacturer, distributor, or retailer for the placement of any 
        tobacco product or tobacco product package or advertisement--
                    (A) as a prop in any television program or motion 
                picture produced for viewing by the general public; or
                    (B) in a video or on a video game machine.
            (2) Video game.--The term ``video game'' means any 
        electronic amusement device that utilizes a computer, 
        microprocessor, or similar electronic circuitry and its own 
        cathode ray tube, or is designed to be used with a television 
        set or a monitor, that interacts with the user of the device.
            (3) Video.--The term ``video'' means an audiovisual work 
        produced for viewing by the general public, such as a 
        television program, a motion picture, a music video, and the 
        audiovisual display of a video game.
    (d) Restrictions on Glamorization of Tobacco Products.--No direct 
or indirect payment shall be made by any manufacturer, distributor, or 
retailer to any entity for the purpose of promoting the image or use of 
a tobacco product through print or film media that appeals to 
individuals under 18 years of age or through a live performance by an 
entertainment artist that appeals to such individuals.

SEC. 214. AGREEMENT ON FORMAT AND CONTENT REQUIREMENTS FOR LABELING AND 
              ADVERTISING.

    (a) In General.--Except as provided in subsections (b) and (c), 
each manufacturer, distributor, or retailer advertising or causing to 
be advertised, disseminating or causing to be disseminated, any 
labeling or advertising for a tobacco product shall use only black text 
on a white background.
    (b) Certain Advertising Excepted.--
            (1) In general.--Subsection (a) shall not apply to 
        advertising--
                    (A) in any facility where vending machines and 
                self-service displays are permitted under this title if 
                the advertising involved--
                            (i) is not visible from outside of the 
                        facility; and
                            (ii) is affixed to a wall or fixture in the 
                        facility;
                    (B) that appears in any publication (whether 
                periodic or limited distribution) that is an adult 
                publication.
            (2) Adult publication.--For purposes of paragraph (1)(B), 
        the term ``adult publication'' means a newspaper, magazine, 
        periodical, or other publication--
                    (A) whose readers under 18 years of age constitute 
                15 percent or less of the total readership as measured 
                by competent and reliable survey evidence; and
                    (B) that is read by fewer than 2,000,000 
                individuals who are under 18 years of age as measured 
                by competent and reliable survey evidence.
    (c) Audio or Video Formats.--Each manufacturer, distributor or 
retailer advertising or causing to be advertised any advertising for a 
tobacco product in an audio or video format shall comply with the 
following:
            (1) With respect to an audio format, the advertising shall 
        be limited to words only with no music or sound effects.
            (2) With respect to a video format, the advertising shall 
        be limited to static black text only on a white background. Any 
        audio with the video advertising shall be limited to words only 
        with no music or sound effects.

SEC. 215. AGREEMENT TO BAN ON NONTOBACCO ITEMS AND SERVICES, CONTESTS 
              AND GAMES OF CHANCE, AND SPONSORSHIP OF EVENTS.

    (a) Ban on All Non-Tobacco Merchandise.--No manufacturer, importer, 
distributor, or retailer shall market, license, distribute, sell or 
cause to be marketed, licensed, distributed or sold any item (other 
than tobacco products) or service, which bears the brand name (alone or 
in conjunction with any other word), logo, symbol, motto, selling 
message, recognizable color or pattern of colors, or any other indicia 
of product identification similar or identifiable to those used for any 
brand of tobacco products.
    (b) Gifts, Contests, and Lotteries.--No manufacturer, distributor, 
or retailer shall offer or cause to be offered to any person purchasing 
tobacco products any gift or item (other than a tobacco product) in 
consideration of the purchase of such products, or to any person in 
consideration of furnishing evidence, such as credits, proofs-of-
purchase, or coupons, of such a purchase.
    (c) Sponsorship.--
            (1) In general.--No manufacturer, distributor, or retailer 
        shall sponsor or cause to be sponsored any athletic, musical, 
        artistic or other social or cultural event, or any entry or 
        team in any event, in which the brand name (alone or in 
        conjunction with any other word), logo, motto, selling message, 
        recognizable color or pattern of colors, or any other indicia 
        of product identification similar or identical to those used 
        for tobacco products is used.
            (2) Use of corporate name.--A manufacturer, distributor, or 
        retailer may sponsor or cause to be sponsored any athletic, 
        musical, artistic or other social or cultural event in the name 
        of the corporation which manufactures the tobacco product if--
                    (A) both the corporate name and the corporation 
                were registered and in use in the United States prior 
                to January 1, 1995; and
                    (B) the corporate name does not include any brand 
                name (alone or in conjunction with any other word), 
                logo, symbol, motto, selling message, recognizable 
                color or pattern of colors, or any other indicia or 
                product identification identical or similar to, or 
                identifiable with, those used for any brand of tobacco 
                products.

             Subchapter B--Provisions relating to Lobbying

SEC. 220. APPLICATION OF SUBCHAPTER.

    The provisions of this subchapter shall be considered as part of 
the Protocol.

SEC. 221. AGREEMENT TO PROVISIONS RELATING TO LOBBYING.

    (a) Definitions.--For purposes of this section, the terms 
``lobbying activities'', ``lobbying firm'', and ``lobbyist'' have the 
meanings given such terms by section 3 of the Lobbying Disclosure Act 
of 1995 (2 U.S.C. 1602).
    (b) General Requirement.--A manufacturer of a tobacco product shall 
require that any lobbyist or lobbying firm employed or retained by the 
manufacturer, or any other individual who performs lobbying activities 
on behalf of the manufacturer, as part of the employment or retainer 
agreement refrain from supporting or opposing any Federal or State 
legislation, or otherwise supporting or opposing any governmental 
action on any matter without the express consent of the manufacturer.
    (c) Additional Agreements.--An individual shall not be employed or 
retained to perform lobbying activities on behalf of a manufacturer of 
a tobacco product unless such individual enters into a signed agreement 
with the manufacturer that acknowledges that the individual--
            (1) is fully aware of, and will fully comply with, all 
        applicable laws and regulations relating to the manufacture and 
        distribution of tobacco products;
            (2) has reviewed and will fully comply with the 
        requirements of this Act (and the amendments made by this Act);
            (3) has reviewed and will fully comply with any consent 
        decree entered into under subtitle C as that decree applies to 
        the manufacturer involved; and
            (4) has reviewed and will fully comply with the business 
        conduct policies and other applicable policies and commitments 
        (including those relating to the prevention of underage tobacco 
        use) of the manufacturer involved.

SEC. 222. AGREEMENT TO TERMINATE CERTAIN ENTITIES.

    (a) Requirement.--Not later than 1 year after the date of enactment 
of this Act, manufacturers of tobacco products shall provide for the 
termination of the activities of the Tobacco Institute and the Council 
for Tobacco Research, U.S.A. and the Institute and Council shall be 
dissolved.
    (b) Establishment of Other Entities.--
            (1) Authority.--Manufacturers of tobacco products may form 
        or participate in any trade organization or other industry 
        association only in accordance with this subsection.
            (2) Board of directors.--A trade organization or other 
        industry association formed or participated in under this 
        subsection shall--
                    (A) shall be administered by an independent board 
                of directors, of which--
                            (i) during the 10-year period beginning on 
                        the date on which the organization or 
                        association is formed or first participated in 
                        under this subsection, not less than 20 percent 
                        (at least 1 member) shall be individuals who 
                        are not current or former directors, officers, 
                        or employees of an entity terminated under 
                        subsection (a) or of the members of the 
                        association or organization; and
                            (ii) during the life of the association or 
                        organization, no member shall be a director of 
                        any of the members of the association or 
                        organization;
                    (B) be administered by officers who are appointed 
                by the board of directors and who are not otherwise 
                employed by any of the members of the association or 
                organization; and
                    (C) be provided with legal advice by a legal 
                adviser who is appointed by the board of directors and 
                who is not otherwise employed by any of the members of 
                the association or organization.
            (3) By-laws.--A trade organization or other industry 
        association formed or participated in under this subsection 
        shall adopt by-laws that--
                    (A) prohibit meetings by members of the association 
                or organization who are competitors in the tobacco 
                industry except under the sponsorship of the 
                association or organization;
                    (B) require that every meeting of the board of 
                directors, or a subcommittee of the board or other 
                general committee, proceed under and strictly adhere to 
                an agenda that is approved by the legal counsel and 
                circulated in advance; and
                    (C) require the taking of minutes that describe the 
                substance of any meeting of the members of the 
                association or organization and the maintenance of such 
                minutes in the records of the association or 
                organization for a period of 5 years following the 
                meeting.
    (c) Department of Justice.--
            (1) Oversight.--The Attorney General and, as appropriate, 
        State antitrust authorities shall exercise oversight authority 
        over any association or organization to which subsection (b) 
        applies.
            (2) Access and inspection.--During the 10-year period 
        beginning on the date on which an association or organization 
        to which subsection (b) applies is formed, the Attorney General 
        and, as appropriate State antitrust authorities shall, upon the 
        provision of reasonable notice to the legal counsel of the 
        association or organization, have access to--
                    (A) all books, records, meeting agenda and minutes, 
                and other documents maintained by the association or 
                organization; and
                    (B) the directors, officers, and employees of the 
                association or organization for interview purposes.
            (3) Multi-state committee.--Two or more States, acting 
        through the attorney general of each such State, may establish 
        a multi-State oversight committee to assist the Attorney 
        General in exercising the oversight responsibilities under this 
        section.
            (4) Confidentiality.--The Attorney General shall promulgate 
        regulations to provide that materials provided under paragraph 
        (2) are protected with appropriate confidentiality protections.
    (d) Antitrust Exemptions.--The provisions of the Sherman Act (15 
U.S.C. 1 et seq.), the Clayton Act (29 U.S.C. 52 et seq.), and any 
other Federal or State antitrust laws shall not apply to an association 
or organization to which subsection (b) applies.

                     Subchapter C--Other Provisions

SEC. 225. APPLICATION OF SUBCHAPTER.

    The provisions of this subchapter shall be considered as part of 
the Protocol.

SEC. 226. DETERMINATION OF LICENSING FEE AMOUNT.

    With respect to the total amount of licensing fees to be paid by 
participating manufacturers under section 102 for a fiscal year, such 
manufacturers shall determine the percentage of such total amount that 
each such manufacturer shall be required to pay and the manner in which 
such payments will be made.

SEC. 227. ATTORNEY'S FEES AND EXPENSES.

    (a) Arbitration Panel.--
            (1) Establishment.--For the purpose of awarding of 
        attorneys' fees and expenses relating to litigation affected 
        by, or legal services that resulted in whole or in part in, 
        this Act, there is established an Arbitration Panel which shall 
        consist of--
                    (A) 3 members to be appointed by the Trustees;
                    (B) 1 member to be appointed by the participating 
                manufacturers;
                    (C) 1 member to be appointed by the Attorneys 
                General of the States who were signatories to the 
                Memorandum of Understanding dated June 20, 1997, by and 
                between tobacco manufacturers, the Attorneys Generals, 
                and private attorneys; and
                    (D) 1 member to be appointed by the private 
                attorneys, including attorneys representing plaintiffs 
                in the case of Dianne Castano v. American Tobacco 
                Company.
            (2) Operation.--
                    (A) Establishment.--The members of the Arbitration 
                Panel shall be appointed not later than 30 days after 
                the effective date of this Act.
                    (B) Procedures.--Not later than 30 days after the 
                date on which all members of the Arbitration Panel are 
                appointed under paragraph (1), the Panel shall 
                establish the procedures under which the Panel will 
                operate which shall include--
                            (i) a requirement that any finding by the 
                        Arbitration Panel must be in writing and 
                        supported by written reasons;
                            (ii) procedures for the exchanging of 
                        exhibits and witness lists by the various 
                        claimants for awards;
                            (iii) to the maximum extent practicable, 
                        requirements that proceedings before the Panel 
                        be based on affidavits rather than live 
                        testimony; and
                            (iv) a requirement that all claims be 
                        submitted to the Arbitration Panel not later 
                        than 3 months after the effective date of this 
                        Act and a determination made by the Panel with 
                        respect to such claims not later than 7 months 
                        after such date of enactment.
            (3) Right to petition.--Any individual attorney or group of 
        attorneys involved in litigation affected by this Act shall 
        have the right to petition the Arbitration Panel for attorneys' 
        fees and expenses.
            (4) Criteria.--In making any award pursuant to this 
        section, the Arbitration Panel shall consider the following 
        criteria:
                    (A) The time and labor required by the claimant.
                    (B) The novelty and difficulty of the questions 
                involved in the action for which the claimant is making 
                a claim.
                    (C) The skill requisite to perform the legal 
                service involved properly.
                    (D) The preclusion of other employment by the 
                attorney due to acceptance of the action involved.
                    (E) Whether the fee is fixed or a percentage.
                    (F) Time limitations imposed by the client or the 
                circumstances.
                    (G) The amount involved and the results obtained.
                    (H) The experience, reputation, and ability of the 
                attorneys involved.
                    (I) The undesirability of the action.
            (5) Appeal and enforcement.--The findings of the 
        Arbitration Panel shall be final, binding, nonappealable, and 
        payable within 30 days after the date on which the finding is 
        made public, except that if an award is to be paid in 
        installments, the first installment shall be payable within 
        such 30 day period and succeeding installments shall be paid 
        annually thereafter.
    (b) Source and Payment of Awards.--In no event shall any award of 
the Arbitration Panel be paid from, credited against, or otherwise 
affect in any way any fee payments that are required to be made by any 
participating manufacturer under to section 102 or under any other 
provision of this Act. Any such award shall be paid by participating 
manufacturers pursuant to an allocation agreement among such 
manufacturers.
    (c) Validity and Enforceability of Private Agreements.--
Notwithstanding any other provision of this Act, nothing in this 
section shall be construed to abrogate or restrict in any way the 
rights of any parties to mediate, negotiate, or settle any fee or 
expense disputes or issues to which this section applies, or to enter 
into private agreements with respect to the allocation or division of 
fees among the attorneys party to any such agreement.
    (d) Limitation.--Notwithstanding any other provision of law, in no 
event shall the amount of attorneys' fees awarded under this section 
for a fiscal year exceed an amount equal to 5 percent of the amount 
paid to the Trust Fund under section 102 for the fiscal year. Any 
amounts in excess of such amount may be collected in subsequent fiscal 
years subject to the 5 percent limitation with respect to each such 
fiscal year. The manufacturer signatories to the Protocol shall be 
responsible for the payment of all such attorneys' fees and such 
payments shall not be counted against the fee payments to be made under 
section 102 nor shall they be drawn from the National Tobacco 
Settlement Trust Fund.

SEC. 228. LIMITATIONS WITH RESPECT TO INDIAN COUNTRY.

    (a) General Prohibition.--A participating manufacturer shall not 
engage in any activity within Indian country (as defined in section 
901) that is otherwise prohibited under this Act (or an amendment made 
by this Act).
    (b) Limitation on Sale.--A participating manufacturer shall not 
sell or otherwise distribute a tobacco product for subsequent 
manufacture, distribution, or sale to an Indian tribe or tribal 
organization, or provide such products to a manufacturer, distributor, 
or retailer that is subject to the jurisdiction of a tribe or 
organization, except under the same terms and conditions as the 
manufacturer imposes on other manufacturers, distributors, or 
retailers.

                         CHAPTER 3--ENFORCEMENT

SEC. 231. FEDERAL ENFORCEMENT OF THE PROTOCOL.

    (a) Civil Action.--The Attorney General, acting in his or her 
capacity as a Trustee, may bring a civil action for the enforcement, or 
to restrain any breach, of the Protocol in the United States District 
Court for the District of Columbia or in the district court of the 
United States for the district in which the breach occurred.
    (b) Remedy.--In any action under subsection (a), the district court 
involved--
            (1) shall restrain the conduct that is the subject of the 
        breach of the Protocol;
            (2) shall order specific performance of the obligations set 
        forth in the Protocol; and
            (3) may order civil penalties against any manufacturer who 
        knowingly violates a requirement of the Protocol in an amount 
        not to exceed $10,000,000 for all such violations adjudicated 
        in a single proceeding.
    (c) Contracts With State Agencies.--The Attorney General may enter 
into contracts with an agency of any State to assist in the enforcement 
of the provisions of the Protocol.
    (d) Action by Attorney General.--With respect to the funding of any 
activities under subsection (a), the Attorney General shall use amounts 
available in the Trust Fund under section 101. If the Attorney General 
determines that amounts available in the Trust Fund are insufficient, 
the Attorney General may use amounts available for the activities of 
the Department of Justice.

SEC. 232. STATE ENFORCEMENT OF THE PROTOCOL.

    (a) Civil Action.--The chief law enforcement officer of a State may 
bring in its own name and within its jurisdiction a civil action for 
the enforcement, or to restrain a breach, of the Protocol if the 
alleged violation that is the subject of the proceedings occurred in 
that State.
    (b) Limitation.--No proceeding described in subsection (a) may be 
commenced or maintained by a State--
            (1) prior to the expiration of the 30-day period beginning 
        on the date on which the State has given notice to the Attorney 
        General that the State intends to bring such proceeding; or
            (2) if the Attorney General is diligently prosecuting, or 
        has diligently prosecuted or settled, a proceeding pertaining 
        to such alleged breach.
In any proceeding described in paragraph (2) that is brought by the 
Attorney General a State may intervene as a matter of right.
    (c) Remedies.--In any proceeding described in subsection (b)--
            (1) the remedies available shall be those described in 
        section 231(b); and
            (2) no civil penalty shall be imposed if any State is 
        diligently prosecuting, or has already diligently prosecuted or 
        settled, a proceeding described in subsection (b) pertaining to 
        such alleged breach seeking any civil penalty.
    (d) Single Breach.--For purposes of this section, conduct arising 
out of the same transaction or occurrence, or a related series of 
transactions or occurrences, that breaches any obligation under the 
Protocol shall be considered to be part of a single breach.

SEC. 233. PRIVATE ENFORCEMENT OF PROTOCOL.

    (a) In General.--A participating manufacturer may seek a 
declaration of the rights and obligations of the manufacturer under the 
Protocol by filing an action pursuant to section 2201 of title 28, 
United States Code.
    (b) Civil Action.--A participating manufacturer may bring a civil 
action against another participating manufacturer to enforce, or 
restrain breaches of, the Protocol by such other participating 
manufacturer, except that--
            (1) no such action may be commenced or maintained if the 
        Secretary is diligently prosecuting, or has diligently 
        prosecuted or settled, a proceeding pertaining to such alleged 
        breach;
            (2) no such action may seek--
                    (A) monetary relief if any State is already 
                diligently prosecuting, or has already diligently 
                prosecuted or settled, a proceeding pertaining to such 
                alleged breach seeking any civil penalty; or
                    (B) injunctive relief in any State that is already 
                diligently prosecuting, or has already diligently 
                prosecuted or settled, a proceeding pertaining to such 
                alleged breach seeking injunctive relief; and
            (3) the court, in any such action, shall restrain conduct 
        in breach of the Protocol and order specific performance of the 
        obligations set forth in the Protocol, and may award damages up 
        to the amount of profits lost by reason of the breach by the 
        participating manufacturer bringing such action.
    (c) Single Breach.--For purposes of this section, conduct arising 
out of the same transaction or occurrence, or a related series of 
transactions or occurrences, that breaches any obligation under the 
Protocol shall be considered to be part of a single breach.
    (d) Right of Intervention.--In any proceeding described in section 
231(a) or 232(a), any participating manufacturer may intervene as a 
matter of right.

SEC. 234. REMOVAL.

    Chapter 89 of title 28, United States Code, is amended by adding at 
the end the following:
``Sec. 1453. Removal of state actions regarding tobacco products
    ``Any action described in section 231, 232, or 242 of the PROTECT 
Act that is brought in State court may be removed by any defendant to 
the Federal court for the district or division embracing the location 
in which such action was brought, except that this section will not 
apply where the alleged violation arises from conduct--
            ``(1) solely within the territorial boundaries of the State 
        bringing such action; and
            ``(2) not associated with or part of a pattern or course of 
        conduct involving any similar acts or omissions in any other 
        State.''.

                      Subtitle B--Consent Decrees

SEC. 241. CONSENT DECREES.

    (a) Requirement.--To be eligible to receive payments under title V, 
a State, to be eligible to receive liability protections under subtitle 
C, a tobacco manufacturer, and to be eligible to receive any benefits 
under this Act, a representative of the members of the class certified 
for purposes of Dianne Castano v. American Tobacco Company, shall enter 
into consent decrees under this section to be effective on the date of 
enactment of this Act.
    (b) Terms and Conditions.--
            (1) In general.--The terms and conditions contained in the 
        consent decrees described in subsection (a) shall contain 
        provisions to clarify the application and requirements of this 
        Act (and the amendments made by this Act), and the Protocol, 
        including, but not limited to, provisions relating to--
                    (A) restrictions on tobacco product advertising and 
                marketing and youth access to such products;
                    (B) the termination, establishment, and operation 
                of trade associations;
                    (C) restrictions on tobacco lobbying;
                    (D) the disclosure of tobacco smoke constituents;
                    (E) the disclosure of nontobacco ingredients found 
                in tobacco products;
                    (F) the disclosure of existing and future documents 
                relating to health, toxicity, and addiction related to 
                tobacco product usage;
                    (G) the obligation of manufacturers to make 
                payments for the benefit of States, private litigants 
                and the general public;
                    (H) the obligation of manufacturers to interact 
                only with distributors and retailers that operate in 
                compliance with the applicable provisions of Federal, 
                State, or local law regarding the marketing and sale of 
                tobacco products;
                    (I) requirements for warnings, labeling, and 
                packaging of tobacco products;
                    (K) the dismissal of pending litigation as required 
                under title VII and as agreed to by the parties to the 
                decree; and
                    (L) any other matter determined appropriate by the 
                Secretary or the parties involved.
            (2) Limitations.--The terms and conditions contained in the 
        consent decrees described in subsection (a) shall not contain 
        provisions relating to--
                    (A) tobacco product design, performance, or 
                modification;
                    (B) manufacturing standards and good manufacturing 
                practices;
                    (C) testing and regulation with respect to toxicity 
                and ingredients approval; and
                    (D) the national goals relating to percentage 
                reductions in the underage use of tobacco products for 
                a year under section 5.
            (3) Waiver of constitutional claims.--The terms and 
        conditions contained in the consent decrees described in 
        subsection (a) shall include a provision waiving the Federal or 
        State constitutional claims of the parties and providing for 
        the severability of the provisions of the decree.
            (4) Construction.--The terms and conditions contained in 
        the consent decrees described in subsection (a) shall provide 
        that the terms of the decree will be construed in a manner that 
        is consistent with the provision of this Act.
    (c) Approval.--To be valid under this section, the provisions of a 
consent decree must be approved by the Attorney General prior to 
approval or entry by a court.
    (d) Enforcement.--
            (1) Changes in law.--The provisions of a consent decree 
        entered under this section shall remain in effect and 
        enforceable regardless of whether the provisions of this Act 
        are amended, except that any amendments to this Act that--
                    (A) establish Federal requirements that are in 
                conflict with obligations contained in the consent 
                decrees shall render such obligations unenforceable;
                    (B) require allocations of funds that are in 
                conflict with the allocation contained in the consent 
                decrees shall render such consent decree allocation 
                unenforceable; and
                    (C) require warnings, labeling, or packaging that 
                conflicts with the warning, labeling, or packaging 
                requirements of the consent decree, shall require that 
                modifications be made in the consent decree to conform 
                with such amendments.
            (2) By state.--
                    (A) In general.--A State may bring an action to 
                enforce the provisions of any consent decree under this 
                section in any appropriate State court. Such 
                proceedings may seek injunctive relief only and may not 
                seek criminal or monetary sanctions. Enforcement of any 
                injunctive relief provided under a State action under 
                this section shall be permitted under any applicable 
                State law.
                    (B) Consistency.--The Attorney General shall 
                promulgate regulations to ensure the consistency of 
                State court ruling with respect to conduct under a 
                consent decree that is not exclusively local in nature.

SEC. 242. STATE ENFORCEMENT OF CONSENT DECREES.

    (a) In General.--Subject to subsections (b) and (c), a State may 
bring in its own name and within its jurisdiction proceedings for the 
enforcement, or to restrain violations of, the terms of a consent 
decree described in section 241 that is entered into by that State.
    (b) Injunctive Relief.--A proceeding described in subsection (a) 
shall be limited to injunctive relief only and may not seek or impose 
criminal or monetary relief if criminal or monetary relief may be 
imposed for the subsequent violation of any injunction that is entered 
in an action described in subsection (a).
    (c) Interpretation.--In any proceeding described in subsection (a), 
the meaning of this Act and the Protocol shall control the 
interpretation of the corresponding terms of the consent decree, and 
such terms shall be interpreted in a manner identical to the 
interpretation given the corresponding terms of this Act and the 
Protocol.

SEC. 243. NON-PARTICIPATING MANUFACTURERS.

    (a) In General.--With respect to a manufacturer that elects not to 
enter into a consent decree under section 241, such manufacturer shall 
not be eligible to receive the liability protections under subtitle C.
    (b) Imposition of Fee.--
            (1) In general.--A manufacturer shall be subject to an 
        annual fee as established under this subsection unless such 
        manufacturer enters into consent decrees as provided for in 
        section 241 and becomes a signatory to the Protocol under 
        section 201.
            (2) Amount.--
                    (A) Total.--The total amount of all fees 
                established under this subsection for a year shall be 
                equal to the amount of fees to be paid by manufacturers 
                under section 102 for the year involved.
                    (B) Per manufacturer.--The Secretary shall 
                promulgate regulations for the purpose of assessing 
                fees under this subsection and determining the amount 
                of the fee to be assessed to each manufacturer which 
                shall be based on the market share of each such 
                manufacturer.
    (c) Settlement Reserve Fund.--
            (1) In general.--Each nonparticipating manufacturer to 
        which subsection (b)(1) applies shall annually deposit into an 
        escrowed reserve fund an amount equal to 150 percent of the 
        amount that such manufacturer would have paid under section 102 
        for the year in which the manufacturer is making such deposit 
        if the manufacturer had been a signatory to the Protocol under 
        section 201.
            (2) Use.--Amounts contained in the reserve fund of a 
        manufacturer under paragraph (1) shall be used solely for 
        tobacco-related liability payments. The manufacturer may 
        reclaim any amounts remaining in the fund (with interest) at 
        the end of the 35-year period beginning on the date on which 
        such fund is established.

                    Subtitle C--Liability Provisions

                     CHAPTER 1--GENERAL PROVISIONS

SEC. 251. DEFINITIONS.

    In this subtitle:
            ``(1) Final judgment.--The term ``final judgment'' means a 
        judgment on which all rights of appeal or discretionary review 
        have been exhausted or waived or for which the time to appeal 
        or seek such discretionary review has expired.
            ``(2) Final settlement.--The term ``final settlement'' 
        means a settlement agreement that is executed and approved as 
        necessary to be fully binding on all relevant parties.
            ``(3) Individual claim.--The term ``individual claim'' 
        means a claim for relief that is based on the death of, injury 
        to, or loss of consortium of a single individual and that is 
        brought directly by such individual or by the estate or natural 
        heirs of such individual.
            ``(4) Third-party payor.--The term ``third-party payor'' 
        means any person, including an insurance company or health and 
        welfare plan, who claims to have paid money or incurred a debt 
        as a result of injury to another person, except that such term 
        shall not include the heirs or survivors of a single individual 
        with respect to an injury to such individual.

           CHAPTER 2--IMMUNITY AND LIABILITY FOR PAST CONDUCT

SEC. 255. APPLICATION OF CHAPTER.

    (a) In General.--This chapter shall apply to the enforcement of all 
judgments and settlements with respect to tobacco claims maintained 
against participating manufacturers.
    (b) Limitation on Enforcement.--A judgment or settlement concerning 
any tobacco claim described in subsection (a) that is not a final 
judgment or final settlement as of the effective date of this Act shall 
not be enforced by any court except in accordance with this chapter.
    (c) General Prohibition.--
            (1) In general.--No obligation to pay any amount under a 
        judgment or settlement to which this chapter applies shall 
        arise, nor shall a lien, attachment, garnishment or other means 
        of collecting or securing payment under any such judgment or 
        settlement issue, become operative, or be enforced, except as 
        provided for in this chapter.
            (2) Requirement of statement.--A judgment to which this 
        chapter applies that requires a monetary payment shall not be 
        issued or entered unless such judgment contains a statement, on 
        the face of the judgment, of the following:
                    ``Satisfaction of this judgment is subject to the 
                requirements of the PROTECT Act.''.
            (3) Enforcement.--A judgment to which this chapter applies 
        that does not contain the statement required under paragraph 
        (2) shall not be valid or enforceable.
            (4) Appeal.--The posting of a bond or the application of 
        any form of penalty or enhanced interest may not be required in 
        connection with the appeal of any judgment to which this 
        chapter applies.

SEC. 256. GENERAL IMMUNITY.

    (a) State Attorney General Actions.--
            (1) Pending actions.--Health-related civil actions that 
        have been commenced by a State or local governmental entity, or 
        on behalf of such an entity, against a manufacturer that is a 
        signatory to the National Tobacco Control Protocol under 
        section 201 and that are pending on the date of enactment of 
        this Act are terminated.
            (2) Future actions.--A manufacturer that is a signatory to 
        the National Tobacco Control Protocol under section 201 shall 
        be immune from any civil action commenced after the date of 
        enactment of this Act by a Federal, State, or local 
governmental entity, or on behalf of such an entity, for all health-
related claims arising from the use of a tobacco product.
    (b) Other Actions.--
            (1) Class actions.--
                    (A) Pending actions.--Class actions for claims 
                arising from the use of a tobacco product that are 
                pending against a manufacturer that is a signatory to 
                the National Tobacco Control Protocol under section 
                201, are terminated.
                    (B) Future actions.--A manufacturer that is a 
                signatory to the National Tobacco Control Protocol 
                under section 201 shall be immune from any class action 
                commenced after the date of enactment of this Act for 
                all claims arising from the use of a tobacco product.
            (2) Addiction and dependence claims.--
                    (A) Pending actions.--Any civil action for claims 
                based on addiction to or dependence on a tobacco 
                product that are pending against a manufacturer that is 
                a signatory to the National Tobacco Control Protocol 
                under section 201, are terminated.
                    (B) Future actions.--A manufacturer that is a 
                signatory to the National Tobacco Control Protocol 
                under section 201 shall be immune from any civil action 
                commenced after the date of enactment of this Act for 
                all claims based on addiction to or dependence on a 
                tobacco product.
    (c) Preservation.--All personal injury claims arising from the use 
of a tobacco product by an individual shall be preserved.

SEC. 257. CIVIL LIABILITY FOR PAST CONDUCT.

    (a) Application.--The provisions of this section shall apply to all 
civil actions permitted under section 256 for relief arising from the 
conduct of a manufacturer that is a signatory to the National Tobacco 
Control Protocol under section 201 that occurred prior to the date of 
enactment of this Act.
    (b) Punitive Damages Prohibited.--No punitive damages shall be 
awarded in any claim described in subsection (a).
    (c) Individual Trials.--No class action suits, joinder of parties, 
aggregation of claims, consolidation of actions, extrapolations, or 
other devices to resolve cases other than on the basis of individual 
actions shall be permitted without the consent of the defendant. Any 
defendant, in an action that involves a violation of this subsection, 
may remove such action to an appropriate Federal court.
    (d) Joint Sharing Agreement.--As part of the National Tobacco 
Control Protocol under section 201, all signatories shall agree to the 
joint sharing of any civil liability for actions for damages arising 
from the use of tobacco products. Such signatories shall not be jointly 
and severally liable for damages involving nonsignatories. Actions 
involving both signatories and nonsignatories shall be severed.
    (e) Permissible Parties.--
            (1) Plaintiffs.--The following individuals may be 
        plaintiffs in a civil action to which this section applies:
                    (A) Individuals bringing claims, or claims 
                derivative of such claims, on their own behalf for a 
                tobacco-related injury, or the heirs of such 
                individuals.
                    (B) Third-party payors for claims not based on 
                subrogation that were pending on June 9, 1997.
                    (C) Third-party payors for claims based on 
                subrogation of individual claims permitted under 
                subparagraph (A).
            (2) Defendants.--This section shall apply only to actions 
        brought against a signatory of the National Tobacco Control 
        Protocol under section 201, a successor or assign of such a 
        signatory, any future fraudulent transferees, or any entity for 
        suit designated to survive a defunct signatory. Such 
        signatories shall be vicariously liable for the actions of 
        their agents.
    (f) Removal.--Except as provided in subsection (c), there shall be 
no removal of an action to which this section applies.
    (g) Discovery.--The development, after the date of enactment of 
this Act, of any tobacco product that reduces the risk of injury or 
illness to a user shall not be admissible or discoverable.
    (h) Limitation on Enforcement.--
            (1) In general.--A judgment or settlement concerning any 
        tobacco claim in a civil action permitted under section 256 
        that is not a final judgment or final settlement as of the 
        effective date of this Act shall not be enforced by any court 
        except in accordance with this section.
            (2) Obligations.--No obligation to pay any amount under a 
        judgment or settlement to which this section applies shall 
        arise, nor shall a lien, attachment, garnishment or other means 
        of collecting or securing payment under any such judgment or 
        settlement issue, become operative, or be enforced, except to 
        the extent that the Secretary of the Treasury certifies that 
        the requirements of subsection (i) have been met.
            (3) Requirement of statement.--A judgment to which this 
        section applies that requires a monetary payment shall not be 
        issued or entered unless such judgment contains a statement, on 
        the face of the judgment, of the following:
                    ``Satisfaction of this judgment is subject to the 
                requirements of section 257 of the PROTECT Act.''.
            (4) Enforcement.--A judgment to which this section applies 
        that does not contain the statement required under paragraph 
        (3) shall not be valid or enforceable.
            (5) Appeal.--The posting of a bond or the application of 
        any form of penalty or enhanced interest may not be required in 
        connection with the appeal of any judgment to which this 
        section applies.
    (i) Procedures for Collection of Judgment.--
            (1) Certification.--A participating manufacturer shall not 
        make, or be required to make, any monetary payment with respect 
to any judgment or settlement to which this section applies unless the 
Attorney General acting as Trustee--
                    (A) certifies that the requirements of paragraph 
                (2) have been met with respect to such payment; and
                    (B) publishes such certification in the Federal 
                Register.
            (2) Filing with attorney general.--
                    (A) By party claiming entitlement.--Any party 
                claiming an entitlement to monetary payment under a 
                final judgment or final settlement of a tobacco claim 
                to which this section applies shall register such claim 
                with the Attorney General acting as Trustee by filing a 
                true and correct copy of the final judgment or final 
                settlement agreement with the Attorney General and 
                providing a copy of such filing to all other parties to 
                the judgment or settlement.
                    (B) Of payment.--Any party making a payment 
                described in this subsection shall certify such payment 
                to the Attorney General by filing a true and correct 
                copy of the instrument of payment and a statement of 
                the remaining unpaid portion, if any, of the final 
                judgment or final settlement involved with the Attorney 
                General and providing a copy of such filing to all 
                other parties to the judgment or settlement.
            (3) Determinations.--Not later than 30 days after the date 
        of which the Attorney General receives a registration of a 
        claim under paragraph (2)(A) the Attorney General shall 
        determine whether payment of such claim is permitted under this 
        section. If the Attorney General determines that such claim is 
        payable under this section, the Secretary shall certify such 
        claim.
            (4) Payment.--Subject to the limitations contained in 
        subsection (j), a participating manufacturer to which a claim 
        that is certified under paragraph (3) applies, shall make 
        payment on such claim not later than 1 year after the date of 
        such certification.
    (j) Limitations.--
            (1) Aggregate annual cap.--With respect to a calendar year, 
        the aggregate amount of all tobacco claims judgments or 
        settlements to which this section applies, that the signatories 
        of the National Tobacco Control Protocol under section 201 
        shall be required to pay, shall not exceed an amount equal to 
        33 percent of the annual fee payments required of all such 
        signatories under section 102 for the year involved. The 
        Attorney General, based on certifications issued under 
        subsection (i)(3) shall make determinations with respect to the 
        amounts of payments to be made in a calendar year.
            (2) Payment of excess.--If the amount of the judgments and 
        settlements described in paragraph (1) exceed an amount equal 
        to 33 percent of the annual fee payments required under section 
        102 for the year involved, such excess amount shall be paid in 
        the following year.
            (3) Effect of settlement.--The signatories described in 
        paragraph (1) shall receive a credit, to be applied against the 
        amount owed by such signatories to the National Tobacco 
        Settlement Trust Fund under section 102 for the year involved, 
        in an amount equal to 80 percent of the aggregate amounts paid 
        under judgments or settlements of tobacco-related claims to 
        which this section applies for such year.
            (5) Individual cap.--With respect to an action to which 
        this section applies, any amount awarded in excess of 
        $1,000,000 may be paid in the year following the year in which 
        the judgment or settlement was entered, except that this 
        paragraph shall not apply if all other awards under judgments 
        or settlements entered in the first year can be paid without 
        exceeding the aggregate annual cap under paragraph (1). Such 
        excess amount shall carry over from year to year with no 
        payments in any single year exceeding $1,000,000 and no 
        interest accruing on such amounts until such time as the annual 
        aggregate cap is not exceeded.
    (k) Defense Costs.--The signatories of the National Tobacco Control 
Protocol under section 201 shall be responsible for the payment of all 
attorneys' fees and other costs associated with being a defendant in an 
action to which this section applies.

SEC. 258. CIVIL LIABILITY FOR FUTURE CONDUCT.

    (a) Application.--The provisions of this section shall apply to all 
civil actions permitted under section 256 for relief arising from the 
conduct of a manufacturer that is a signatory to the National Tobacco 
Control Protocol under section 201 that occurs after the date of 
enactment of this Act.
    (b) General Provisions.--The provisions of subsections (c) and (e) 
through (i) of section 256 shall apply to actions under this section.
    (c) Third-Party Payor Claims.--Third-party payor claims that are 
not based on subrogation shall not be commenced under this section.

SEC. 259. NON-PARTICIPATING MANUFACTURERS.

    The provisions of this title shall not apply to any manufacturer 
that--
            (1) is not a signatory to the National Tobacco Control 
        Protocol under section 201; and
            (2) is at least 12 months delinquent in the payment of 
        amounts under section 102.

SEC. 260. PAYMENT OF JUDGMENTS AND SETTLEMENTS.

    (a) In General.--Notwithstanding sections 1257, 1738 and 2283 of 
title 28, United States Code, or any doctrine of abstention or 
principle of res judicta or collateral estoppel, a participating 
manufacturer may commence an action in a district court of the United 
States to enjoin any State court proceeding to enforce or execute any 
judgment or settlement that is unenforceable under this chapter. Such 
an action shall be deemed a civil action arising under the laws of the 
United States for purposes of section 1331 of title 28, United States 
Code, and may be commenced in the district court of the United States 
for the district and division embracing the place where the State court 
proceeding is pending.
    (b) Injunctions.--Upon a demonstration by the participating 
manufacturer in an action under subsection (a) that the judgment or 
settlement that is the subject of such action is unenforceable under 
this chapter, the court shall issue an injunction against the 
enforcement of such judgment or settlement and may order such other 
relief as is appropriate.

SEC. 261. STATE ELIGIBILITY.

    (a) Requirement for State Law.--To be eligible to receive funds 
under subtitle A of title V, a State shall--
            (1) have in effect a State law that provides that--
                    (A) sections 256 through 259 shall be the law of 
                the State and shall be binding in all proceedings in 
                any court or tribunal in the State without limitation, 
                notwithstanding any other provision of law, court 
                decision, rule or practice; and
                    (B) any defendant in a civil action to which this 
                Act applies shall have a right of prompt interlocutory 
                appeal to the highest court of the State to enforce the 
                requirements of the State law; and
            (2) have withdrawn and dismissed with prejudice any claim 
        required to be dismissed by the State under this chapter within 
        60 days of the effective date of this Act.
    (b) Certification.--Not later than 6 months after the effective 
date of this Act, and annually thereafter, the Attorney General shall 
certify that each State that is eligible to receive funds under 
subtitle A of title V has complied with the requirements of this 
section. A State shall not be eligible for such funds prior to being 
certified under this subsection.
    (c) Effect of Nonenactment of Law.--
            (1) In general.--With respect to a State that does not 
        comply with subsection (a)(1), no tobacco claim that is 
        otherwise maintainable under this chapter shall be maintained 
        in any court of that State.
            (2) Application of law.--Until such time as the State 
        complies with subsection (a)(1), any tobacco claim that is 
        otherwise maintainable under this chapter that is asserted 
        under the law of, or in the courts of, such State shall be 
        deemed to arise under this section and shall be subject to the 
        provisions of this chapter, and the substantive rules of 
        decision for such claim shall otherwise be derived from the law 
        of the State that would have been applicable but for the 
        operation of this subsection.

SEC. 262. REMOVAL.

    Chapter 89 of title 28, United States Code, (as amended by section 
234) is further amended by adding at the end the following:
``Sec. 1454. Removal of certain actions relating to tobacco products
    ``(a) Limitation.--A civil action in any State court that is 
maintainable under chapter 1 of subtitle C of title I of the PROTECT 
Act shall not be removed to a district court of the United States 
except as provided for in this section.
    ``(b) Removal Permitted.--
            ``(1) Agreement of parties.--A civil action maintainable 
        under chapter 1 of subtitle C of title I of the PROTECT Act may 
        be removed at any time prior to judgment to the district court 
        of the United States for the district and division embracing 
        the place where such action is pending if all plaintiffs and 
        all defendants consent in writing to such removal.
            ``(2) Participating manufacturer.--A civil action that a 
        defendant reasonably contends is being conducted in a manner 
        inconsistent with the terms of chapter 1 of subtitle C of title 
        II of the PROTECT Act may he removed by such defendant to the 
        district court of the United States for the district and 
        division embracing the place where such action is pending, if 
        the removing defendant is a participating manufacturer as 
        defined in section 5 of such Act.
    ``(c) Jurisdiction.--In any action removed pursuant to subsection 
(b), the district court shall have jurisdiction over such action to the 
full extent permitted under the Constitution.
    ``(d) Notice.--The notice of removal of a civil action under 
subsection (b)(2) shall be filed not later than 30 days after the 
receipt by the removing defendant of an order or ruling that such 
defendant reasonably contends is inconsistent with the terms of chapter 
1 of subtitle C of title II of the PROTECT Act.
    ``(e) Determinations by District Court.--In a civil action removed 
under subsection (b)(2), if the district court determines--
            ``(1) that the action was being conducted in a manner 
        inconsistent with the terms of chapter 1 of subtitle C of title 
        II of the PROTECT Act, the district court shall--
                    ``(A) order that the action be dismissed without 
                prejudice; or
                    ``(B) enter such other orders as may be necessary 
                to bring the action into conformity with such chapter 
and retain jurisdiction over any claim or claims as necessary to serve 
the interests of justice and the requirements of the PROTECT Act;
            ``(2) that the action was being conducted in a manner 
        consistent with the terms of such chapter but that the 
        defendant removing the action had a reasonable basis to seek 
        removal under this section, the district court shall retain 
        jurisdiction over any claim or claims as may be necessary to 
        serve the interests of justice and the requirements of the 
        PROTECT Act; or
            ``(3) that the defendant removing the action had no 
        reasonable basis for contending that such action was being 
        conducted in a manner inconsistent with the terms of such 
        chapter, the district court shall remand the case to the State 
        court from which it was removed.
    ``(f) Reviewability of Order.--An order remanding an action to a 
State court under subsection (e) shall be reviewable by appeal or 
otherwise.
    ``(h) Miscellaneous.--For purposes of this section--
            ``(1) the parties in controversy shall be considered to be 
        of diverse citizenship unless all plaintiffs (including all 
        members of any plaintiff class) and all defendants are citizens 
        of the same State;
            ``(2) a corporation shall be considered to be a citizen 
        only of the State of its incorporation; and
            ``(3) there shall be no requirement of a minimum amount in 
        controversy.
    ``(i) Application of Certain Procedures.--The procedures described 
in sections 1446(a), 1446(d), and 1447(a) through (c) shall be 
applicable to an action removed under this section.''.

SEC. 263. CONFORMING AMENDMENTS.

    Title 11, United States Code, is amended--
            (1) in section 362(b)--
                    (A) in paragraph (17), by striking ``or'' at the 
                end;
                    (B) in paragraph (18), by striking the period and 
                inserting ``; or''; and
                    (C) by inserting after paragraph (18), the 
                following:
            ``(19) under subsection (a) of this section, of the 
        commencement or continuation of any action or other proceeding 
        by a participating manufacturer (as defined in section 5 of the 
        PROTECT Act) regarding any interest or obligation arising under 
        or directly related to a liability apportionment agreement 
        entered into in accordance with chapter 1 of subtitle C of 
        title II of the PROTECT Act.'';
            (2) in section 365--
                    (A) in subsection (a), by striking ``and (d)'' and 
                inserting ``(d), and (p)''; and
                    (B) by adding at the end the following:
    ``(p) The trustee may not reject, shall be deemed to have assumed 
as of the commencement of the case, and shall cause the debtor to 
perform on an executory contract of a participating manufacturer (as 
defined in section 5 of the PROTECT Act) to the extent such executory 
contract is directly related to a liability apportionment agreement 
entered into in accordance with chapter 1 of subtitle C of title II of 
the PROTECT Act.'';
            (3) in section 507(a), by adding at the end the following:
            ``(10) Tenth, any unsecured claim of a participating 
        tobacco product manufacturer (as defined in section 5 of the 
        PROTECT Act) that arises under or is directly related to a 
        liability apportionment agreement entered into in accordance 
        with chapter 1 of subtitle C of title II of the PROTECT Act.'';
            (4) in section section 541(b)--
                    (A) in paragraph (4), by striking ``or'' at the 
                end;
                    (B) in paragraph (5), by striking the period and 
                inserting ``; or''; and
                    (C) by inserting after paragraph (5), the 
                following:
            ``(6) any interest of the debtor in property to the extent 
        that the debtor has transferred or agreed to transfer such 
        interest pursuant to a liability apportionment agreement 
        entered into in accordance with chapter 1 of subtitle C of 
        title II of the PROTECT Act or any written agreement directly 
        related to such liability apportionment agreement.''; and
            (5) in subsection 1141--
                    (A) in subsection (a), by striking ``and (d)(3)'' 
                and inserting ``, (d)(3), and (d)(5)'';
                    (B) in subsection (a), by striking ``and (d)(3)'' 
                and inserting ``, (d)(3), and (d)(5)''; and
                    (C) in subsection (d), by adding at the end the 
                following:
    ``(5) The confirmation of a plan does not discharge a debtor from 
any debt or other obligation arising under or directly related to a 
liability apportionment agreement entered into in accordance with 
chapter 1 of subtitle C of title II of the PROTECT Act.''.

              TITLE III--REDUCTION IN UNDERAGE TOBACCO USE

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

SEC. 300. SHORT TITLE.

    This subtitle may be cited as the ``Tobacco Use by Minors 
Prevention Act''.

SEC. 301. STATE LAWS REGARDING SALE OF TOBACCO PRODUCTS TO INDIVIDUALS 
              UNDER THE AGE OF 18.

    (a) Eligibility.--
            (1) In general.--Subject to paragraph (2), for fiscal year 
        1999 and each subsequent fiscal year a State shall not be 
        eligible for payments under subtitle A of title V if that State 
        does not have in effect a State law with the provisions 
        contained in the model State law described in section 302.
            (2) Delayed applicability for certain states.--In the case 
        of a State whose legislature does not convene a regular session 
        in fiscal year 1999, the requirement described in paragraph (1) 
        shall apply only for fiscal year 2000 and subsequent fiscal 
        years.
    (b) Enforcement.--For the first applicable fiscal year and for each 
subsequent fiscal year, a State shall--
            (1) enforce the law described in subsection (a)(1) 
        systematically and conscientiously and in a manner that can 
        reasonably be expected to reduce the extent to which tobacco 
        products are available to individuals under the age of 18;
            (2) certify that the State requires such enforcement of 
        such law to be treated as a priority by State and local law 
        enforcement authorities;
            (3) conduct random, unannounced inspections to ensure 
        compliance with the law described in subsection (a)(1); and
            (4) annually submit to the Trustees a report describing--
                    (A) the activities carried out by the State to 
                enforce such law during the fiscal year preceding the 
                fiscal year for which the State is seeking the grant;
                    (B) the steps taken by the State to ensure that 
                enforcement of such law was treated as a priority by 
                State and local law enforcement authorities;
                    (C) the extent of success the State has achieved in 
                reducing the availability of tobacco products to 
                individuals under the age of 18, including the results 
                of the inspections conducted under paragraph (1); and
                    (D) the strategies to be utilized by the State for 
                enforcing such law during the fiscal year for which the 
                grant is sought.
    (c) Funding.--The law specified in subsection (a)(1) may be 
administered and enforced by a State using--
            (1) any amounts made available to the State under subtitle 
        A of title V;
            (2) any fees collected for licenses issued pursuant to the 
        law described in subsection (a)(1);
            (3) any fines or penalties assessed for violations of the 
        law specified in subsection (a)(1); or
            (4) any other funding source that the legislature of the 
        State may prescribe by statute.
    (d) Noncompliance of State.--Before making a payment under subtitle 
A of title V to a State for the first applicable fiscal year or any 
subsequent fiscal year, the Trustees, in consultation with the 
Secretary, shall make a determination whether the State has maintained 
compliance with subsections (a) and (b). If, after notice to the State 
and an opportunity for a hearing, the Trustees determines that the 
State is not in compliance with such subsections, the Trustees shall 
reduce the amount of the State payment under such subtitle for the 
fiscal year involved by an amount equal to--
            (1) in the case of the first applicable fiscal year, 10 
        percent of the amount determined under subtitle A of title V;
            (2) in the case of the first fiscal year following such 
        applicable fiscal year, 20 percent of the amount determined 
        under such sections for the State for the fiscal year;
            (3) in the case of the second such fiscal year, 30 percent 
        of the amount determined under such sections for the State for 
        the fiscal year; and
            (4) in the case of the third such fiscal year or any 
        subsequent fiscal year, 40 percent of the amount determined 
        under such sections for the State for the fiscal year.
    (e) Waiver and Modification.--
            (1) In general.--A State may request that the Secretary 
        waive, or permit the modification of, any provision or 
        provisions of the model State law described in section 302.
            (2) Requirements.--The Secretary shall grant a request for 
        a waiver or modification under paragraph (1) unless the 
        Secretary determines that--
                    (A) the State has not demonstrated that the State 
                has enacted laws that implement requirements that are 
                comparable to the requirements of all of the elements 
                of the model State law under section 302; or
                    (A) the cumulative effect of granting all of such 
                waivers or modifications with respect to the State 
                would render the youth anti-tobacco laws and marketing 
                systems of the State to be ineffective.
    (f) Definition.--For purposes of this section, the term ``first 
applicable fiscal year'' means--
            (1) fiscal year 2000, in the case of any State described in 
        subsection (a)(2); and
            (2) fiscal year 1999, in the case of any other State.

SEC. 302. MODEL STATE LAW.

    The model State law described in this section with respect to a 
State is the following:

``SECTION 1. DISTRIBUTION TO MINORS.

    ``(a) In General.--No person shall distribute a tobacco product to 
an individual under 18 years of age. A person who violates this 
subsection is liable for--
            ``(1) a civil money penalty of $100 for the first violation 
        of this subsection;
            ``(2) a civil money penalty of $200 for a second violation 
        of this subsection; and
            ``(3) a civil money penalty of $500 for a third and 
        subsequent violation of this subsection.
    ``(b) Employers.--The employer of an employee who has violated 
subsection (a) more than once while in the employ of the employer is 
liable for a civil money penalty of $250 for each violation by such 
employee. An employer who pays a civil money penalty under this 
subsection shall not, for purposes of section 10, be considered as 
having violated this Act.
    ``(c) Defenses.--It shall be a defense to a charge brought under 
subsection (a) that--
            ``(1) the defendant--
                    ``(A) relied upon proof of age that appeared on its 
                face to be valid, or
                    ``(B) had complied with the requirements of section 
                7, or
            ``(2) the individual to whom the tobacco product was 
        distributed was at the time of the distribution employed in 
        violation of section 8(b).
    ``(d) Enforcement.--A person who violates subsection (a) shall not 
be liable for a civil money penalty unless the individual who received 
the tobacco product is proceeded against under section 2(a), except 
that such a person shall be liable for such penalty if such individual 
was not proceeded against because such individual was testing 
compliance with this Act under section 8(b).

``SEC. 2. PURCHASE, RECEIPT, OR POSSESSION BY MINORS PROHIBITED.

    ``(a) In General.--An individual under 18 years of age shall not 
purchase or attempt to purchase, receive or attempt to receive, possess 
or attempt to possess, smoke or attempt to smoke, or otherwise use or 
consume or attempt to use or consume a tobacco product in a public 
place. An individual who violates this subsection is liable for a civil 
money penalty of not less than $25 and not more than $150 for each 
violation and shall be subject to suspension of the individual's 
authorization to operate a motor vehicle. Upon the second or subsequent 
violation of this subsection, the authorization of such individual to 
operate a motor vehicle shall be suspended for a period of not less 
than 30 days and such individual shall be required to perform community 
service.
    ``(b) Notice.--A law enforcement agency, upon determining that an 
individual under 18 years of age allegedly purchased, received, 
possessed, smoked, or otherwise used or attempted to purchase, receive, 
possess, smoke, or otherwise use, a tobacco product in violation of 
subsection (a) shall notify the individual's parent or parents, 
custodian, or guardian as to the nature of the violation if the name 
and address of a parent, guardian, or custodian is reasonably 
ascertainable by the law enforcement agency. The notice required by 
this subsection shall be made not later than 48 hours after the 
individual who allegedly violated subsection (a) is cited by such 
agency for the violation. The notice may be made by any means 
reasonably calculated to give prompt actual notice, including notice in 
person, by telephone, or by first-class mail.
    ``(c) Employment.--Subsection (a) does not prohibit an individual 
under the age of 18 from possessing a tobacco product during regular 
working hours and in the course of such individual's employment if the 
tobacco product is not possessed for such individual's consumption.

``SEC. 3. SIGNAGE.

    ``It shall be unlawful for any person who sells tobacco products 
over-the-counter to fail to post conspicuously a sign communicating 
that--
            ``(1) the sale of tobacco products to individuals under the 
        age of 18 is prohibited by law,
            ``(2) the purchase of tobacco products by individuals under 
        the age of 18 is prohibited by law, and
            ``(3) proof of age may be demanded.
A person who fails to post a sign in violation of this section is 
liable for a civil money penalty of $250 for each violation.

``SEC. 4. SAMPLING.

    ``It shall be unlawful for any person to distribute tobacco product 
samples in any face-to-face transaction without first procuring, from 
any prospective purchaser or recipient who appears to be under the age 
of 18, proof of age establishing that such prospective purchaser or 
recipient is 18 years of age or older. A person who violates this 
section is liable for a civil money penalty of $250 for each violation. 
This section does not apply to distributions of tobacco products in an 
area or establishment that individuals under the age of 18 are not 
permitted to enter.

``SEC. 5. OUT-OF-PACKAGE DISTRIBUTION.

    ``It shall be unlawful for any person to distribute cigarettes or 
smokeless tobacco products other than in an unopened package 
originating with the manufacturer that bears the health warning 
required by Federal law. A person who distributes a cigarette or 
smokeless tobacco product in violation of this section is liable for a 
civil money penalty of $250 for each violation.

``SEC. 6. DISPLAYS.

    ``(a) General Rule.--It shall be unlawful for any person who sells 
tobacco products to maintain packages of such products in any display 
or storage configuration which affords customers direct access to such 
packages.
    ``(b) Penalty.--Any person who violates subsection (a) is liable 
for a civil money penalty of $250 for each violation.

``SEC. 7. NOTIFICATION OF EMPLOYEES.

    ``(a) Notice to Employees.--Within 180 days of the effective date 
of this Act, every person engaged in the business of distributing 
tobacco products at retail shall implement a program to notify each 
employee employed by that person who distributes tobacco products that 
this Act--
            ``(1) prohibits the distribution of tobacco products to any 
        individual under 18 years of age and the purchase, receipt, 
        possession, smoking, or other use or consumption of tobacco 
        products by any individual under 18 years of age,
            ``(2) prohibits out-of-package distribution of cigarettes 
        and smokeless tobacco products, and
            ``(3) permits a defense to a charge of distribution of a 
        tobacco product to an individual under 18 years of age based on 
        evidence that the defendant relied upon proof of age that 
        appeared on its face to be valid.
Any employer failing to provide the required notice to any employee 
shall be liable for a civil money penalty of $250 for each violation.
    ``(b) Statement.--It shall be a defense to a charge that an 
employer violated subsection (a) of this section that the employee 
acknowledged receipt, either in writing or by electronic means, of a 
statement in substantially the following form:
        ``I understand that State law prohibits the distribution of 
        tobacco products to individuals under 18 years of age and out-
        of-package distribution of cigarettes and smokeless tobacco 
        products and permits a defense based on evidence that a 
        prospective purchaser's proof of age was reasonably relied upon 
        and appeared on its face to be valid. I understand that if I 
        sell, give, or voluntarily provide tobacco products to an 
        individual under the age of 18, I may be found responsible for 
        a civil money penalty for each violation. I promise to comply 
        with this law.''
    ``(c) Vicarious Liability.--If an employer is charged with a 
violation of subsection (a) and the employer uses as a defense to such 
charge the defense provided by subsection (b), the employer shall be 
deemed to be liable for such violation if such employer pays the 
penalty imposed on the employee involved in such violation or in any 
way reimburses the employee for such penalty.

``SEC. 8. RANDOM UNANNOUNCED INSPECTIONS; REPORTING; AND COMPLIANCE.

    ``(a) Enforcement and Inspection.--The State Police of a State, or 
such local law enforcement authority duly designated by the State 
Police, shall enforce this Act in a manner that can reasonably be 
expected to reduce the extent to which tobacco products are distributed 
to individuals under 18 years of age and shall conduct random, 
unannounced inspections in accordance with the procedures set forth in 
this Act and in regulations issued under section 301 of the PROTECT Act 
to ensure compliance with this Act.
    ``(b) Use of Individuals Under 18.--The State may engage an 
individual under 18 years of age to test compliance with this Act, 
except that such an individual may be used to test compliance with this 
Act only if the testing is conducted under the following conditions:
            ``(1) Prior to use of any individual under the age of 18 
        years in a random, unannounced inspection, written consent 
        shall be obtained from such individual's parents or legal 
        guardian.
            ``(2) An individual under 18 years of age shall act solely 
        under the supervision and direction of the State during a 
        random, unannounced inspection.
            ``(3) An individual under 18 years of age used in random, 
        unannounced inspections shall not be used in any such 
        inspection at a store in which such individual is a regular 
        customer.
            ``(4) If an individual under 18 years of age participating 
        in random, unannounced inspections is questioned about such 
        individual's age, such person shall state such individual's 
        actual age and shall present a true and correct proof of age if 
        requested at any time during the inspection to present it.
    ``(c) Penalty.--Any person who uses any person under 18 years of 
age, other than as permitted by subsection (b), to test compliance with 
this Act, is liable for a civil money penalty of $250 for each 
violation.
    ``(d) Use of Penalty Money and Fees.--Civil money penalties 
collected for violations of this Act and fees collected under section 9 
may only be used to defray the costs of administration and enforcement 
of this Act.

``SEC. 9. LICENSURE.

    ``(a) In General.--The State shall require that each person engaged 
in the distribution of tobacco products hold a license issued under 
this section. A separate license shall be required for each place of 
business where tobacco products are distributed at retail. A license 
issued under this section is not assignable and is valid only for the 
person in whose name it is issued and for the place of business 
designated in the license.
    ``(b) Fee.--The annual license fee shall be not less than $500 for 
each place of business where tobacco products are distributed at 
retail.
    ``(c) Application.--Every application for a license, including 
renewal of a license, under this section shall be made upon a form 
provided by the State and shall set forth the name under which the 
applicant transacts or intends to transact business, the location of 
the place of business for which the license is to be issued, the street 
address to which all notices relevant to the license are to be sent (in 
this Act referred to as `notice address'), and any other identifying 
information that the State may require.
    ``(d) Action on License.--The State shall issue or renew a license 
or deny an application for a license or the renewal of a license within 
30 days of receiving a properly completed application and the license 
fee. The State shall provide notice to an applicant of action on an 
application denying the issuance of a license or refusing to renew a 
license.
    ``(e) Scope and Renewal.--Every license issued by the State shall 
be valid for 1 year from the date of issuance and shall be renewed upon 
application except as otherwise provided in this Act.
    ``(f) Change of Address.--Upon notification of a change of address 
for a place of business for which a license has been issued, a license 
shall be reissued for the new address without the filing of a new 
application.
    ``(g) Notice.--The State shall notify every person in the State who 
is engaged in the distribution at retail of tobacco products of the 
license requirement of this section and of the date by which such 
person should have obtained a license.
    ``(h) Penalty.--
            ``(1) In general.--Any person who engages in the 
        distribution at retail of tobacco products without a license 
        required by this section is liable for a civil money penalty in 
        an amount equal to two times the applicable license fee and 
        $100 for each day on which such distribution continues without 
        a license.
            ``(2) Suspension or revocation.--Any person who engages in 
        the distribution at retail of tobacco products after a license 
        issued under this section has been suspended or revoked is 
        liable for a civil money penalty of $250 per day for each day 
        on which such distribution continues after the date such person 
        received notice of such suspension or revocation.
    ``(i) Term.--The term of a license shall be 1 year.
    ``(j) Effective Date.--No person shall engage in the distribution 
at retail of tobacco products on or after 180 days after the date of 
enactment of this Act unless the person is authorized to do so by a 
license issued pursuant to this section or is an employee or agent of a 
person who has been issued such a license.

``SEC. 10. SUSPENSION, REVOCATION, DENIAL, AND NONRENEWAL OF LICENSES.

    ``(a) Notice.--Upon a finding that a licensee has been determined 
by a court of competent jurisdiction to have violated this Act during 
the license term, the State shall notify the licensee in writing, 
served personally or by registered mail at the notice address, that any 
subsequent violation of this Act at the same place of business may 
result in an administrative action to suspend the license for a period 
determined by the State.
    ``(b) Suspension.--Upon finding that a further violation by the 
licensee has occurred involving the same place of business for which 
the license was issued and the licensee has been provided notice under 
subsection (a), the State may initiate an administrative action to 
suspend the license for a period to be determined by the State. If an 
administrative action to suspend a license is initiated, the State 
shall immediately notify the licensee in writing at the notice address 
of the initiation of the action and the reasons therefore and permit 
the licensee an opportunity, at least 30 days after written notice is 
served personally or by registered mail upon the licensee, to show why 
suspension of the license would be unwarranted or unjust.
    ``(c) Revocation.--The State may initiate an administrative action 
to revoke a license that previously has been suspended under subsection 
(b) if, during the one year period in which the license was issued, a 
further violation of this Act is committed after the suspension by the 
licensee involving the same place of business for which the license was 
issued. If an administrative action to revoke a license is initiated, 
the State shall immediately notify the licensee in writing at the 
notice address of the initiation of the action and the reasons 
therefore and permit the licensee an opportunity, at least 30 days 
after written notice is served personally or by registered mail upon 
the licensee, to show why revocation of the license would be 
unwarranted or unjust.
    ``(d) Other Violations.--No action with respect to any license at a 
place of business may be taken based on a violation that occurred 
subsequent to the occurrence of another violation unless such other 
violation is fully adjudicated at the time the subsequent violation 
occurred.
    ``(e) Fee.--A person whose license has been suspended or revoked 
with respect to a place of business pursuant to this section shall pay 
the State a fee of $1,000 for the renewal or reissuance of the license 
at that same place of business.
    ``(f) Effect on Application for New License.--Revocation of a 
license under subsection (c) with respect to a place of business shall 
not be grounds to deny an application by that person for a new license 
with respect to that place of business for more than 12 months 
subsequent to the date of such revocation. Revocation or suspension of 
a license with respect to a particular place of business shall not be 
the grounds to deny an application for a new license, to refuse to 
renew a license, or to revoke or suspend an existing license at another 
place of business.
    ``(g) Judicial Review.--A licensee may seek judicial review of an 
action of the State suspending, revoking, denying, or refusing to renew 
a license under this section by filing a complaint in a court of 
competent jurisdiction. A complaint shall be filed within 30 days after 
the date on which notice of the action is received by the licensee. The 
court shall review the evidence de novo.
    ``(h) Report.--The State shall not report any action suspending, 
revoking, denying, or refusing to renew a license under this section to 
the Secretary of Health and Human Services, unless judicial review, if 
any, of the action has been completed.

``SEC. 11. PREEMPTION.

    ``(a) In General.--The provisions of this Act shall not preempt any 
provisions of State or local law that provide greater restrictions than 
those required in this Act so long as such State or local laws do not 
conflict with regulations issued under section 910 of the Federal Food, 
Drug and Cosmetic Act.
    ``(b) Food and Drug Administration.--Nothing in this Act shall be 
construed to prohibit the Secretary of Health and Human Services from 
regulating tobacco products under chapter IX of the Federal Food, Drug, 
and Cosmetic Act.

``SEC. 12. SEVERABILITY.

    ``If any provision of this Act or its application to any person or 
circumstance is held invalid, such holding shall not affect other 
provisions or applications of this Act that can be given effect without 
the invalid application.

``SEC. 13. NO PRIVATE RIGHT OF ACTION.

    ``Nothing in this Act shall be construed to create a right of 
action by any private person for any violation of any provision of this 
Act.

``SEC. 14. JURISDICTION AND VENUE.

    ``Any action alleging a violation of this Act may only be brought 
in a court of general jurisdiction in the city or county where the 
violation is alleged to have occurred.

``SEC. 15. REPORT.

    ``The State shall prepare for submission annually to the Secretary 
of Health and Human Services a report on the State's reporting of 
compliance with this title and any implementing regulations promulgated 
by the Secretary.

``SEC. 16. DEFINITIONS.

    ``For purposes of this Act:
            ``(1) Direct access.--The term `direct access' means the 
        ability of a customer to obtain physically a package of tobacco 
        products without the intervention of an employee of the 
        establishment.
            ``(2) Package.--The term `package' means a pack, box, 
        carton, pouch, or container of any kind in which cigarettes or 
        smokeless tobacco products are offered for sale, sold, or 
        otherwise distributed to consumers.
            ``(3) Proof of age.--The term `proof of age' means a 
        driver's license or other form of identification issued by a 
        governmental authority or other identification that includes a 
        photograph and the date of birth of the individual.
            ``(4) Sample.--The term `sample' means a tobacco product 
        distributed to members of the public at no cost for the purpose 
        of promoting the product, but excludes tobacco products 
        distributed--
                    ``(A) in conjunction with the sale of other tobacco 
                products,
                    ``(B) to consumer or market research panels,
                    ``(C) to persons employed in the trade, or
                    ``(D) to customers or consumers in response to 
                customer or consumer complaints.
            ``(5) Tobacco product.--The term `tobacco product' means--
                    ``(A) `tobacco products' as defined in section 5 of 
                the PROTECT Act; or
                    ``(B) any other product containing tobacco as a 
                principal ingredient which, because of its appearance, 
                type, or tobacco used in the product, or its packaging 
                and labeling, is likely to be offered to, or purchased 
                by, consumers as a tobacco product as described in 
                subparagraph (A).''.

            Subtitle B--Required Reduction in Underage Usage

SEC. 311. PURPOSE.

    It is the purpose of this subtitle to encourage the achievement of 
dramatic and immediate reductions in the number of underage consumers 
of tobacco products through the imposition of substantial financial 
surcharges on participating manufacturers if certain underage tobacco-
use reduction targets are not met.

SEC. 312. DETERMINATION OF UNDERAGE USE BASE PERCENTAGES.

    (a) Cigarettes.--For purposes of this section, the underage use 
base percentage for cigarettes shall be a percentage determined by the 
Secretary, weighted by the relative population of the age groups 
involved as determined using data compiled in 1995 by the Bureau of the 
Census, based on--
            (1) the average of the percentages of 12th graders 
        (individuals who are 16 or 17 years of age) who used cigarette 
        products on a daily basis for each of the calendar years 1986 
        through 1996;
            (2) the average of the percentages of 10th graders 
        (individuals who are 14 or 15 years of age) who used cigarette 
        products on a daily basis for each of the calendar years 1991 
        through 1996; and
            (3) the average of the percentages of 8th graders 
        (individuals who are 13 years of age) who used cigarette 
        products on a daily basis for each of the calendar years 1991 
        through 1996.
    (b) Smokeless Tobacco.--For purposes of this section, the underage 
use base percentage for smokeless tobacco products shall be a 
percentage determined by the Secretary, weighted by the relative 
population of the age groups involved as determined using data compiled 
in 1995 by the Bureau of the Census, based on--
            (1) the average of the percentages of 12th graders 
        (individuals who are 16 or 17 years of age) who used smokeless 
        tobacco products on a daily basis in 1996;
            (2) the average of the percentages of 10th graders 
        (individuals who are 14 or 15 years of age) who used smokeless 
        tobacco products on a daily basis in 1996; and
            (3) the average of the percentages of 8th graders 
        (individuals who are 13 years of age) who used smokeless 
        tobacco products on a daily basis in 1996.
    (c) Use of Certain Data or Methodology.--For purposes of 
determining the percentages under paragraphs (1) through (3) of 
subsections (a) and (b), the Secretary shall use the data contained in 
the National High School Drug Use Survey entitled Monitoring the Future 
by the University of Michigan or such other comparable index, as 
determined appropriate by the Secretary after notice and an opportunity 
for a hearing, that utilizes methodology identical to that used by the 
University of Michigan in such survey.

SEC. 313. ANNUAL DAILY INCIDENCE OF UNDERAGE USE OF TOBACCO PRODUCTS.

    (a) Annual Determination.--Not later than the expiration of the 5-
year period beginning on the date of enactment of this Act, and 
annually thereafter, the Secretary shall determine the average annual 
incidence of the daily use of tobacco products by individuals who are 
under 18 years of age.
    (b) Cigarettes.--With respect to cigarette products, a 
determination under subsection (a) for a year shall be based on the 
percentage, as weighted by the relative population of the age groups 
involved as determined using data compiled in 1995 by the Bureau of the 
Census, of--
            (1) 12th graders (individuals who are 16 or 17 years of 
        age) who used cigarette products on a daily basis during the 
        year involved;
            (2) 10th graders (individuals who are 14 or 15 years of 
        age) who used cigarette products on a daily basis during the 
        year involved; and
            (3) 8th graders (individuals who are 13 years of age) who 
        used cigarette products on a daily basis during the year 
        involved.
    (c) Smokeless Tobacco.--With respect to smokeless tobacco products, 
a determination under subsection (a) for a year shall be based on the 
percentage, as weighted by the relative population of the age groups 
involved as determined using data compiled in 1995 by the Bureau of the 
Census, of--
            (1) 12th graders (individuals who are 16 or 17 years of 
        age) who used smokeless tobacco products on a daily basis 
        during the year involved;
            (2) 10th graders (individuals who are 14 or 15 years of 
        age) who used smokeless tobacco products on a daily basis 
        during the year involved; and
            (3) 8th graders (individuals who are 13 years of age) who 
        used cigarette smokeless tobacco on a daily basis during the 
        year involved.
    (d) Use of Certain Data or Methodology.--
            (1) In general.--For purposes of determining the 
        percentages under paragraphs (1) through (3) of subsections (b) 
        and (c), the Secretary shall use the data contained in the 
        National High School Drug Use Survey entitled Monitoring the 
        Future by the University of Michigan (if such survey is still 
        being undertaken) or such other comparable index, as determined 
appropriate by the Secretary after notice and an opportunity for a 
hearing, that utilizes methodology identical to that used by the 
University of Michigan in such survey.
            (2) Alteration of methodology.--If the Secretary determines 
        that the methodology used by the University of Michigan in the 
        survey referred to in paragraph (1) has been altered in a 
        material manner from the methodology used during the period 
        from 1986 to 1996 (including by altering States or regions on 
        which the survey is based), the Secretary, after notice and an 
        opportunity for a hearing, shall use percentages based on an 
        index developed by the Secretary that utilizes methodology 
        identical to that used by the University of Michigan in such 
        survey.

SEC. 314. REQUIRED REDUCTION IN UNDERAGE TOBACCO USE.

    (a) In General.--For purposes of assessing surcharges under section 
315, the Secretary shall determine whether the required percentage 
reduction in the underage use of tobacco products for a year (based on 
the tables contained in subsection (b)) has been achieved for the year 
involved. Such determination shall be based on--
            (1) with respect to cigarette products, the average annual 
        incidence of the daily use of tobacco products by individuals 
        who are under 18 years of age for the year involved (as 
        determined under section 313(b)) as compared to the underage 
        use base percentage for cigarette products (as determined under 
        section 312(a)); and
            (2) with respect to smokeless tobacco products, the average 
        annual incidence of the daily use of smokeless tobacco products 
        by individuals who are under 18 years of age for the year 
        involved (as determined under section 313(c)) as compared to 
        the underage use base percentage for smokeless tobacco products 
        (as determined under section 312(b)).
    (b) Percentage Reduction in Underage Use of Tobacco Products.--For 
purposes of subsection (a), the required percentage reduction in the 
underage use of tobacco products with respect to each tobacco product 
shall be determined based on the national goals for the reduction in 
underage tobacco use under section 4.

SEC. 315. APPLICATION OF SURCHARGES.

    (a) In General.--If the Secretary determines that the percentage 
reduction in the underage use of tobacco products for a year has not 
been achieved as required under section 314, the Secretary shall impose 
a surcharge on the participating manufacturers of the tobacco products 
involved.
    (b) Amount of Surcharge.--
            (1) In general.--
                    (A) Cigarettes.--With respect to cigarettes, the 
                amount of any surcharge to be imposed under this 
                section for a calendar year shall be equal to--
                            (i) with respect to each of the first 5 
                        calendar years to which this section applies, 
                        the product of--
                                    (I) $100,000,000, and the number of 
                                applicable surcharge percentage points 
                                as determined under subsection (c) up 
                                to 5 percentage points;
                                    (II) $200,000,000, and the number 
                                of applicable surcharge percentage 
                                points as determined under subsection 
                                (c), if such percentage points are 
                                greater than 5 but less than 11 
                                percentage points; and
                                    (III) $300,000,000, and the number 
                                of applicable surcharge percentage 
                                points as determined under subsection 
                                (c), if such percentage points are 11 
                                or more percentage points; and
                            (ii) with respect to calendar years 
                        succeeding the period referred to in 
                        subparagraph (A), the product of--
                                    (I) $250,000,000, and the number of 
                                applicable surcharge percentage points 
                                as determined under subsection (c) up 
                                to 5 percentage points; and
                                    (II) $500,000,000, and the number 
                                of applicable surcharge percentage 
                                points as determined under subsection 
                                (c), if such percentage points are 5 or 
                                more percentage points.
                    (B) Smokeless tobacco.--With respect to smokeless 
                tobacco, the amount of any surcharge to be imposed 
                under this section for a calendar year shall be equal 
                to--
                            (i) with respect to each of the first 5 
                        calendar years to which this section applies, 
                        the product of--
                                    (I) $15,000,000, and the number of 
                                applicable surcharge percentage points 
                                as determined under subsection (c) up 
                                to 5 percentage points;
                                    (II) $30,000,000, and the number of 
                                applicable surcharge percentage points 
                                as determined under subsection (c), if 
                                such percentage points are greater than 
                                5 but less than 11 percentage points; 
                                and
                                    (III) $45,000,000, and the number 
                                of applicable surcharge percentage 
                                points as determined under subsection 
                                (c), if such percentage points are 11 
                                or more percentage points; and
                            (ii) with respect to calendar years 
                        succeeding the period referred to in 
                        subparagraph (A), the product of--
                                    (I) $30,000,000, and the number of 
                                applicable surcharge percentage points 
                                as determined under subsection (c) up 
                                to 5 percentage points; and
                                    (II) $60,000,000, and the number of 
                                applicable surcharge percentage points 
                                as determined under subsection (c), if 
                                such percentage points are 5 or more 
                                percentage points.
            (2) Adjustments.--The amount applicable under paragraph (1) 
        shall be annually adjusted by the Secretary based on--
                    (A) with respect to subparagraph (A) of such 
                paragraph--
                            (i) the proportional percentage increase or 
                        decrease, as compared to calendar year 1995, in 
                        the population of individuals residing in the 
                        United States who are at least 13 years of age 
                        but less than 18 years of age;
                            (ii) the proportional percentage increase 
                        or decrease, as compared to calendar year 1996, 
                        in the average profit per unit (measured in 
                        cents and weighted by annual sales) earned by 
                        participating manufacturers for the tobacco 
                        product involved (as determined by the 
                        Secretary through a contract with a nationally 
                        recognized accounting firm having no connection 
                        to such manufacturers); and
                    (B) any methodology utilized to avoid the double 
                counting of underage individuals whose tobacco use has 
                previously resulted in the imposition of a surcharge, 
                limited to the extent that there were not other 
                underage users of tobacco in such previous years for 
                whom a surcharge was not paid because of the limitation 
                contained in section 316.
            (3) Profit per unit.--For purposes of paragraph (2)(A)(ii), 
        the average profit per unit for calendar 1996 shall be 
        determined using the operating profit reported by participating 
        manufacturers to the Securities and Exchange Commission.
            (4) Annual limitations.--The total amount of surcharges 
        imposed under this section for a calendar year shall not 
        exceed--
                    (A) in the case of cigarettes--
                            (i) $5,000,000,000 for each of the years 
                        described in paragraph (1)(A)(i); and
                            (ii) $10,000,000,000 for each of the years 
                        described in paragraph (1)(A)(ii); and
                    (B) in the case of smokeless tobacco products--
                            (i) $500,000,000 for each of the years 
                        described in paragraph (1)(B)(i); and
                            (ii) $1,000,000,000 for each of the years 
                        described in paragraph (1)(B)(ii).
    (c) Determination of Applicable Surcharge Percentage Points.--
            (1) In general.--Except as provided in paragraph (2), with 
        respect to a calendar year, the applicable surcharge percentage 
        points shall be equal to the percentage point difference 
        between--
                    (A) the required percentage reduction in the 
                underage use of the tobacco product involved for the 
                year (based on the tables in section 314(b)); and
                    (B) the number of percentage points by which the 
                average annual incidence of the daily use of the 
                tobacco products involved by individuals who are under 
                18 years of age for the year (as determined under 
                section 313) is less than the underage use base 
                percentage for such products (as determined under 
                section 312).
            (2) Adjustment.--If for any calendar year the Secretary 
        determines that the average annual incidence of the daily use 
        of the tobacco products involved by individuals who are under 
        18 years of age (as determined under section 313) is greater 
        than the underage use base percentage for such products (as 
        determined under section 312), the applicable surcharge 
        percentage point shall be equal to--
                    (A) the percentage point amount determined under 
                paragraph (1)(A); and
                    (B) the number of percentage points by which the 
                average annual incidence of the daily use of the 
                tobacco products involved by individuals who are under 
                18 years of age (as determined under section 313) is 
                greater than the underage use base percentage for such 
                products (as determined under section 312).
            (3) Type of product.--Separate determinations shall be made 
        under this section for cigarette products and smokeless tobacco 
        products.
    (d) Joint and Several Obligation.--Any surcharge imposed under this 
section with respect to a tobacco product (cigarette products or 
smokeless tobacco products) shall be the joint and several obligation 
of all participating manufacturers of such product as allocated by the 
market share of each such manufacturer with respect to such product. 
The market share of each manufacturer for each such product shall be 
based on the market share of such product for the year preceding the 
year for which the determination is being made.
    (e) Assessment.--Not later than May 1 of each year in which a 
surcharge will be imposed under this section, the Secretary shall 
assess, pursuant to subsection (d), to each participating manufacturer 
the amount for which such manufacturer is obligated. Not later than 
July 1 of any year in which a manufacturer receives an assessment under 
this section, the manufacturer shall pay such assessment in full or be 
subject to such interest on such amount as the Secretary may by 
regulation prescribe.
    (f) Use of Amounts.--Amounts received under this section shall be 
used to further the purposes of this Act.
    (g) Prohibition.--No stay or other injunctive relief may be granted 
by the Secretary or any court that has the effect of enjoining the 
imposition and collection of the surcharges to be applied under this 
section.

SEC. 316. ABATEMENT PROCEDURES.

    (a) Petitions.--Upon payment by a participating manufacturer of the 
amount assessed to the manufacturer under section 315(f), the 
manufacturer may submit a petition to the Secretary for an abatement of 
the assessment. A notice of such abatement petition shall be submitted 
to the attorney general of each State.
    (b) Hearing.--The Secretary shall provide for the conduct of a 
hearing on an abatement petition received under subsection (a) pursuant 
to the procedures described in sections 554, 556, and 557 of title 5, 
United States Code. The attorney general of any State shall be 
permitted to be heard at any hearing conducted under this subsection.
    (c) Burden.--The burden at any hearing under subsection (b) shall 
be on the participating manufacturer to prove, by a preponderance of 
the evidence, that the manufacturer should be granted the abatement.
    (d) Basis of Decision.--Any decision regarding a petition for an 
abatement under this section shall be based on a determination as to 
whether--
            (1) the participating manufacturer has acted in good faith 
        and in full compliance with this Act (and any amendment made by 
        this Act) and any regulations or State or local laws 
        promulgated in furtherance of this Act;
            (2) the participating manufacturer has pursued all 
        reasonably available measures to attain the reductions;
            (3) there is any evidence of any direct or indirect action 
        by the participating manufacturer to undermine the achievement 
        of the reductions required under section 314 or to undermine 
        any other provision of this Act (or amendment); and
            (4) the participating manufacturer has taken (or failed to 
        take) any other action as determined appropriate by the 
        Secretary.
    (e) Amount.--Upon a determination granting an abatement under this 
section, the Secretary shall order the abatement of any or all of the 
amount paid by the participating manufacturer (as determined by the 
Secretary), together with interest that may have accrued on such amount 
during the period between the date on which payment by the manufacturer 
was made and the date on which the abatement order was granted. Such 
interest shall be equal to that provided for the average 52-week 
Treasury Bill during the period involved.
    (f) Aggrieved Parties.--Any participating manufacturer or attorney 
general of any State that is aggrieved by an abatement that is granted 
under this section may seek judicial review of the abatement decision 
within 30 days of the date of such decision in the Court of Appeals for 
the District of Columbia Circuit. Review in such cases shall be subject 
to the procedures described in sections 701 through 706 of title 5, 
United States Code.
    (g) Prohibition.--A participating manufacturer may not file a 
petition under subsection (a) until such time as the manufacturer has 
fully paid the Secretary the amount assessed to the manufacturer under 
section 315(f).

SEC. 317. INCENTIVE FOR EXCEEDING REDUCTION GOALS.

    (a) In General.--If the Secretary determines that the percentage 
reduction in the underage use of tobacco products for a year exceeds 60 
percent for cigarettes and 45 percent for smokeless tobacco products 
for a year as required under section 314, the Secretary shall notify 
the Trustees who shall adjust, in accordance with subsection (b), the 
amount of the licensing fee that a participating manufacturer shall be 
required to pay for such year under section 102.
    (b) Amount.--
            (1) Cigarettes.--With respect to cigarettes, the amount of 
        a licensing fee adjustment applicable to a participating 
        manufacturer under this section shall be an amount equal to \1/
        80\ of the amount that the manufacturer is required to pay for 
        such year multiplied by the number of percentage points by 
        which the manufacturer has reduced underage tobacco use in 
        excess of the 60 percent reduction required under section 314.
            (2) Smokeless tobacco.--With respect to smokeless tobacco, 
        the amount of a licensing fee adjustment applicable to a 
        participating manufacturer under this section shall be an 
        amount equal to \1/110\ of the amount that the manufacturer is 
        required to pay for such year multiplied by the number of 
        percentage points by which the manufacturer has reduced 
        underage tobacco use in excess of the 45 percent reduction 
        required under section 314.
    (c) Procedures.--The Trustees, in consultation with the Secretary, 
shall develop procedures to carry out this section.

       TITLE IV--HEALTH AND SAFETY REGULATION OF TOBACCO PRODUCTS

SEC. 401. HEALTH AND SAFETY REGULATION OF TOBACCO PRODUCTS.

    (a) Prohibited Acts.--Section 301 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 331) is amended by adding at the end the 
following:
    ``(x) The introduction or delivery for introduction into interstate 
commerce of any tobacco product that does not comply with the 
provisions of chapter IX.
    ``(y) The failure by the manufacturer of a tobacco product to 
comply with a tobacco product health risk management standard, a good 
manufacturing practice standard, a tobacco product labeling, warning or 
packaging standard, or any other requirement of chapter IX.''.
    (b) Definition.--Section 201(g)(1) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 301(g)(1)) is amended by striking ``; and (D)'' 
and inserting ``, including nicotine-containing tobacco products that 
do not comply with chapter IX; and (D)''.
    (c) Inspections.--Section 704(a)(1) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 374(a)(1)) is amended--
            (1) in subparagraph (A), by striking ``or cosmetics'' each 
        place that such appears and inserting ``, cosmetics, or tobacco 
        products''; and
            (2) in the second sentence, by striking ``drugs or'' each 
        place that such appears and inserting ``drugs, tobacco products 
        or''.
    (d) Regulation of Tobacco Products.--The Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 301 et seq.) is amended--
            (1) by redesignating chapter IX as chapter X;
            (2) by redesignating sections 901, 902, 903, 904, and 905 
        as sections 1001, 1002, 1003, 1004, and 1005, respectively; and
            (3) by adding after chapter VIII the following new chapter:

  ``CHAPTER IX--HEALTH AND SAFETY REGULATORY REQUIREMENTS RELATING TO 
                            TOBACCO PRODUCTS

``SEC. 900. DEFINITIONS.

    ``In this chapter:
            ``(1) Cigarette.--The term `cigarette' means any product 
        which contains nicotine, is intended to be burned under 
        ordinary conditions of use, and consists of--
                    ``(A) any roll of tobacco wrapped in paper or in 
                any substance not containing tobacco; and
            ``(B) any roll of tobacco wrapped in any substance 
        containing tobacco which, because of its appearance, the type 
        of tobacco used in the filler, or its packaging and labeling, 
        is likely to be offered to, or purchased by, consumers as a 
        cigarette described in subparagraph (A).
            ``(2) Cigarette tobacco.--The term `cigarette tobacco' 
        means any product that consists of loose tobacco that contains 
        or delivers nicotine and is intended for use by persons in a 
        cigarette. Unless otherwise stated, the requirements of this 
        title pertaining to cigarettes shall also apply to cigarette 
        tobacco.
            ``(3) Nicotine.--The term `nicotine' means the chemical 
        substance named 3-(1-Methyl-2-pyrrolidinyl)pyridine or 
        C<INF>10</INF>H<INF>14</INF>N<INF>2</INF>, including any salt 
        or complex of nicotine.''.
            ``(4) Smokeless tobacco.--The term `smokeless tobacco' 
        means any product that consists of cut, ground, powdered, or 
leaf tobacco that contains nicotine and that is intended to be placed 
in the oral or nasal cavity.
            ``(5) Tar.--The term `tar' means mainstream total 
        particulate matter minus nicotine and water.
            ``(6) Tobacco additive.--The term `tobacco additive' means 
        any substance the intended use of which results or may 
        reasonably be expected to result, directly or indirectly, in 
        the substance becoming a component of, or otherwise affecting 
        the characteristics of, any tobacco product, including any 
        substance that may have been removed from the tobacco product 
        and then readded in the substance's original or modified form.
            ``(7) Tobacco product.--The term `tobacco product' means 
        cigarettes and smokeless tobacco products.

               ``Subchapter A--Tobacco Product Regulation

``SEC. 901. STATEMENT OF GENERAL DUTIES.

    ``As part of the comprehensive health promotion and disease 
prevention program established under this chapter and the PROTECT Act 
(and the amendments made by such Act) relating to diseases and 
conditions associated with the use of tobacco products, and that places 
a special emphasis on discouraging the use of such products by young 
Americans, the Secretary shall--
            ``(1) develop and implement health risk management 
        standards for tobacco products under section 902;
            ``(2) develop and implement good manufacturing practice 
        standards for tobacco products under section 903;
            ``(3) develop and implement tobacco product labeling, 
        warning, and packaging standards under section 904;
            ``(4) develop and implement standards that encourage the 
        development and use of reduced risk tobacco products under 
        section 905;
            ``(5) develop and implement tobacco product marketing 
        standards under section 906;
            ``(6) establish and oversee a tobacco products scientific 
        advisory committee under section 907 to provide advice on the 
        establishment of tobacco product marketing standards under 
        section 902, 903, 904, and 905; and
            ``(7) submit reports to Congress evaluating the 
        effectiveness of this chapter and the PROTECT Act as described 
        in section 908.

``SEC. 902. TOBACCO PRODUCT HEALTH RISK MANAGEMENT STANDARDS.

    ``(a) Authority.--
            ``(1) In general.--The Secretary shall by regulation 
        (promulgated under the authority of section 701(a) and 
        consistent with the procedures described in section 553 of 
        title 5, United States Code) establish tobacco product health 
        risk standards.
            ``(2) Consultation.--In developing and promulgating 
        regulations under this chapter, the Secretary shall consult (as 
        the Secretary determines appropriate) with--
                    ``(A) the Federal public health and safety 
                officials, including--
                            ``(i) the Surgeon General;
                            ``(ii) the Director of the Centers for 
                        Disease Control and Prevention;
                            ``(iii) the Director of the Office on 
                        Smoking and Health of the Centers for Disease 
                        Control and Prevention;
                            ``(iv) the Commissioner of Food and Drugs;
                            ``(v) the Director of the National 
                        Institutes of Health;
                            ``(vi) the Director of the National Cancer 
                        Institute;
                            ``(vii) the Administrator of the Agency for 
                        Health Care Policy and Research;
                            ``(viii) the Administrator of the Substance 
                        Abuse and Mental Health Services 
                        Administration;
                            ``(ix) the Administrator of the Health 
                        Resources and Services Administration;
                            ``(x) the Director of the Office of 
                        National Drug Control Policy;
                            ``(xi) the Administrator of the Drug 
                        Enforcement Agency;
                            ``(xii) the Administrator of the Bureau of 
                        Alcohol, Tobacco, and Firearms; and
                            ``(xiii) other Federal public health 
                        experts; and
                    ``(B) other public health and safety experts, 
                including State and local public health and safety 
                officials, and other interested members of the public 
                and affected parties.
    ``(b) Procedures for the Establishment of Standards.--
            ``(1) Publication of notice.--
                    ``(A) In general.--The Secretary shall publish in 
                the Federal Register a notice of proposed rulemaking 
                for the establishment, amendment, or revocation of any 
                health risk management standard for a tobacco product 
                under this section. The Secretary may publish an 
                advance notice of proposed rulemaking in order to 
                solicit broad input at an earlier stage in the 
                rulemaking process.
                    ``(B) Contents of notice.--A notice of proposed 
                rulemaking for the establishment or amendment of a 
                health risk management standard for a tobacco product 
                shall be accompanied by a justification of the proposed 
                action and shall--
                            ``(i) invite interested persons to submit 
                        to the Secretary, within 30 days of the 
                        publication of the notice, requests for changes 
                        in the standard based on new information 
                        relevant to the standard; and
                            ``(ii) invite interested persons to submit 
                        an existing health risk management standard for 
                        the tobacco product, including a draft or 
                        proposed health risk management standard, for 
                        consideration by the Secretary.
                    ``(C) Notice of revocation.--A notice of proposed 
                rulemaking for the revocation of a health risk 
                management standard shall set forth a finding with 
                supporting justification that the health risk 
                management standard is no longer necessary with respect 
                to the tobacco product.
                    ``(D) Comments.--The Secretary shall provide for a 
                comment period of not less than 60 days after the date 
                on which a notice has been published under this 
                paragraph.
            ``(2) Request for change.--If, after the publication of a 
        notice in accordance with paragraph (1), the Secretary receives 
        a request for a change in the health risk management standard 
        for a tobacco product, the Secretary shall, within 60 days of 
        the publication of the notice, either deny the request or give 
        notice of an intent to initiate such a change.
            ``(3) Regulation for establishment.--
                    ``(A) In general.--After the expiration of the 
                period for comment on a notice of proposed rulemaking 
                published under paragraph (1) with respect to a health 
                risk management standard, and after consideration of 
                such comments and any report from the tobacco products 
                advisory committee under section 907, the Secretary 
                shall--
                            ``(i) promulgate a regulation establishing 
                        a health risk management standard and publish 
                        in the Federal Register findings on the matters 
                        referred to in subsection (b); or
                            ``(ii) publish a notice terminating the 
                        proceeding for the development of the standard 
                        together with the reasons for such termination.
                    ``(B) Contents.--A regulation establishing a health 
                risk management standard under subparagraph (A) shall 
                set forth the date or dates upon which the standard 
                shall take effect, but no such regulation may take 
                effect before the expiration of the 1-year period 
                beginning on the date of its publication unless the 
                Secretary determines that an earlier effective date is 
                necessary for the protection of the public health. Such 
                date or dates shall be established so as to minimize 
                economic loss to, and disruption or dislocation of, 
                domestic and international trade.
            ``(4) Amending or revoking of standards.--
                    ``(A) In general.--The Secretary, upon the 
                initiative of the Secretary or upon petition of an 
                interested person, may by regulation, promulgated in 
                accordance with the requirements of paragraphs (1), 
                (2), and (3), amend or revoke a health risk management 
                standard for a tobacco product.
                    ``(B) Effectiveness of amendment.--The Secretary 
                may declare a proposed amendment of a health risk 
                management standard under this section to be effective 
                on and after its publication in the Federal Register 
                and until the effective date of any final action taken 
                on such amendment if the Secretary determines that 
                making it so effective is in the public interest. A 
                proposed amendment of a health risk management standard 
                made so effective under the preceding sentence may not 
                prohibit, during the period in which it is so 
                effective, the introduction or delivery for 
                introduction into interstate commerce of a tobacco 
                product which conforms to such standard without the 
                change or changes provided by such proposed amendment.
    ``(c) Regulation of the Composition of Tobacco Products.--Tobacco 
product health risk management standards established under this section 
shall--
            ``(1) include provisions that are designed to reduce the 
        overall health risks to the public based upon the best 
        available technology, including the reduction in risk to the 
        consumers of such products, individuals who reduce or cease the 
        use of such products, and individuals who do not initiate the 
        use of such products;
            ``(2) where necessary to provide a reduction in the overall 
        health risks of tobacco products to the public, include 
        requirements--
                    ``(A) if technologically and commercially feasible, 
                with respect to the construction, components, 
                constituents, ingredients (including tobacco 
                additives), and properties of the product, including 
                the establishment of levels of nicotine and other 
                components, ingredients (including tobacco additives), 
                and constituents of the product, or smoke emitted by 
                such products;
                    ``(B) specifying the procedures for the testing of 
                such products, including devising procedures to be used 
                by tobacco product manufacturers, the Secretary, or 
                other appropriate entities, to measure relevant health-
                related characteristics of such products;
                    ``(C) for the testing of such products, including 
                devising procedures to be used by manufacturers, the 
                Secretary, or other appropriate entities to measure the 
                relevant health related characteristics of such 
                products to assess the conformity of such products with 
                the applicable health risk management standards; and
                    ``(D) to limit the sale and distribution of tobacco 
                products to the extent authorized by this chapter;
            ``(3) as required under section 904, prescribe certain 
        conditions pertaining to the labeling and advertising of 
        tobacco products.
            ``(4) comply with regulations promulgated by the Secretary 
        that specify the health risk assessment procedures for the 
        testing of tobacco and nontobacco constituents contained in 
        tobacco products and determinations concerning such products 
        under subsection (d).
            ``(5) not later than 3 years after the date of enactment of 
        this chapter, limit the amount of tar in a cigarette to not 
        more than 12 milligrams, except that nothing in this paragraph 
        shall be construed as limiting the authority of the Secretary 
to promulgate regulations further limiting the amount of tar that may 
be contained in a cigarette.
    ``(d) Tobacco Products Risk Assessment Standards.--
            ``(1) Tobacco constituents.--The health risk management 
        standards promulgated under subsection (c)(4) with respect to 
        the testing of tobacco products shall include provisions 
        relating to the assessment of the health risks posed by the 
        components of tobacco, including nicotine and tar, and by 
        tobacco use including carbon-monoxide.
            ``(2) Nontobacco ingredients.--
                    ``(A) In general.--The health risk management 
                regulations under subsection (c)(4) with respect to the 
                testing of nontobacco ingredients used in tobacco 
                products--
                            ``(i) during the 5-year period beginning on 
                        the date of enactment of this chapter, this 
                        paragraph shall only apply to new ingredients 
                        (those ingredients that were not previously 
                        used in such products on such date of 
                        enactment) used in such products; and
                            ``(ii) after the expiration of the 5-year 
                        period described in clause (i), this section 
                        shall apply to all ingredients used in such 
                        products.
                    ``(B) Implementation.--In carrying out this 
                section, all requirements with respect to nontobacco 
                ingredients, substances, and compounds shall be 
                implemented in accordance with subparagraph (A).
            ``(3) Health risk assessments.--
                    ``(A) Requirement.--Not later than 5 years after 
                the date of enactment of this chapter, and annually 
                thereafter, each manufacturer shall submit to the 
                Secretary a health risk assessment for each ingredient, 
                substance, or compound that is listed under subsection 
                (e)(1)(A) with respect to each brand of tobacco product 
                manufactured by each such manufacturer.
                    ``(B) Availability of new information.--The 
                Secretary may include in the regulations promulgated 
                under this section, provisions that permit 
                manufacturers to, in subsequent years, revise 
                information that was submitted under subparagraph (A) 
                in previous years if new data becomes available to that 
                manufacturer. Such regulations may require that a 
                manufacturer submit a simple notification to the 
                Secretary where the manufacturer determines that no new 
                data has become available during the previous year.
                    ``(C) Joint submission.--At the discretion of the 
                Secretary, the health risk assessments under this 
                paragraph may be conducted by qualified third party 
                organizations on behalf of more than 1 manufacturer for 
                1 or more product or ingredient, substance or compound 
                if a joint submission is consistent with the public 
                health.
                    ``(D) Basis of assessment.--The health risk 
                assessment of an ingredient, substance, or compound 
                described in subparagraph (A) shall--
                            ``(i) be based on the best scientific 
                        evidence available at the time of the 
                        submission of the assessment; and
                            ``(ii) ascertain whether there is a 
                        reasonable certainty in the minds of competent 
                        scientists that the ingredient, substance, or 
                        compound is not harmful in the quantities used 
                        under the intended conditions of use.
            ``(4) Regulatory action.--
                    ``(A) Absence of a risk assessment.--Not later than 
                12 months after the date of enactment of this chapter 
                and subject to the requirements of paragraphs (1) and 
                (3)(A), the Secretary shall promulgate regulations to 
                prohibit the use of any ingredient, substance, or 
                compound in the tobacco product of a manufacturer if no 
                health risk assessment has been submitted as required 
                under this subsection by the manufacturer for the 
                ingredient, substance, or compound.
                    ``(B) Review of health risk assessments.--
                            ``(i) General review.--Not later than 90 
                        days after the receipt of a health risk 
                        assessment under this subsection, the Secretary 
                        shall review the findings contained in such 
                        assessment.
                            ``(ii) Approval, conditional approval, or 
                        disapproval.--The Secretary shall approve or 
                        disapprove of, or condition, the use of the 
                        ingredient, substance, or compound that was the 
subject of the assessment under this subsection within 120 days after 
the completion of a review under clause (i) and provide notice to the 
manufacturer of such action.
                            ``(iii) General applicability.--At the 
                        discretion of the Secretary, the approval, 
                        conditional, approval, or disapproval of a 
                        particular ingredient, substance, or compound 
                        under clause (ii) may by regulation be made 
                        generally applicable to tobacco product 
                        manufacturers or a subgroup of such 
                        manufacturers. In the case of a conditional 
                        approval, the Secretary shall develop a 
                        procedure to enable manufacturers to certify 
                        that the condition will be complied with.
                            ``(iv) Inaction by secretary.--If the 
                        Secretary fails to act with respect to an 
                        assessment during the period referred to in 
                        clause (ii), the safety of the ingredient, 
                        substance, or compound involved shall be deemed 
                        to be approved with respect to the manufacturer 
                        submitting the assessment until such time as 
                        the succeeding annual risk assessment is 
                        submitted by the manufacturer or a review is 
                        completed.
    ``(e) Annual Submission.--
            ``(1) In general.--Each manufacturer of a tobacco product 
        shall annually provide the Secretary with--
                    ``(A) a list of all ingredients, substances, and 
                compounds (other than tobacco, water or reconstituted 
                tobacco sheet made wholly from tobacco) that are added 
                in the manufacture of the tobacco product, for each 
                brand of tobacco product so manufactured;
                    ``(B) a description of the quantity of the 
                ingredients, substances, and compounds that are listed 
                under subparagraph (A) with respect to each brand of 
                tobacco product;
                    ``(C) a description of the nicotine content of the 
                product, measured in milligrams of nicotine;
                    ``(D) any other information determined appropriate 
                by the Secretary and included as a requirement in a 
                regulation promulgated under this section.
            ``(2) General disclosure and confidentiality.--
                    ``(A) Requirement.--Regulations under subsection 
                (c)(4) shall require that each person who 
                manufacturers, packages, or imports cigarettes or 
                smokeless tobacco products shall annually provide the 
                Secretary with the information required under this 
                section, including information as to all ingredients, 
                substances and compounds in a tobacco product.
                    ``(B) Confidentiality.--
                            ``(i) Petition by manufacturer.--Upon the 
                        submission of the information required under 
                        subsection (d)(1), or the submission of any 
                        other information under any other provisions of 
                        this chapter, a manufacturer may petition the 
                        Secretary to exempt certain ingredients, 
                        substances, or compounds or other information 
                        submitted from public disclosure under this 
                        subsection on the basis that such information 
                        should be considered confidential as a trade 
                        secret. Such petition may be accompanied by 
                        such data as the manufacturer elects to submit.
                            ``(ii) Determination.--Not later than 90 
                        days after receiving a petition under clause 
                        (i), the Secretary, in consultation with the 
                        Attorney General, shall make a determination 
                        with respect to whether the information 
                        described in the petition should be exempt from 
                        disclosure under clause (i) as a trade secret. 
                        The Secretary shall provide the manufacturer 
                        involved with notice of such determination, but 
                        the decision of the Secretary shall be final.
                            ``(iii) Procedures for confidential 
                        information.--The Secretary shall develop 
                        procedures to maintain the confidentiality of 
                        information that is treated as a trade secret 
                        under a determination under clause (ii). Such 
                        procedures shall include--
                                    ``(I) a requirement that such 
                                information be maintained in a secure 
                                facility; and
                            ``(ii) a requirement that only the 
                        Secretary, or the authorized agents of the 
                        Secretary, will have access to the information 
                        and shall be instructed to maintain the 
                        confidentiality of such information.
                            ``(iv) Health disclosure.--Notwithstanding 
                        a determination under clause (ii), the 
                        Secretary may require that any ingredient, 
                        substance, or compound contained in a tobacco 
                        product that is determined to be exempt from 
                        disclosure be disclosed if the Secretary 
                        determines that it is in the interest of public 
                        health to disclose such ingredient, substance, 
                        or compound.
                            ``(v) Other disclosure.--The Secretary (or 
                        any employee of the Department of Health and 
                        Human Services) shall not disclose any 
                        information described in subclause (I) if such 
                        disclosure is prohibited under any provision of 
                        law. Any information that is not required to be 
                        disclosed to the public under this subsection, 
                        shall be exempt from disclosure pursuant to 
                        subsection (a) of section 552 of title 5, 
                        United States Code, by reason of subsection 
                        (b)(4) of such section, and shall be considered 
                        confidential and shall not be disclosed, except 
                        that such information may be disclosed to other 
                        officers or employees as provided for in clause 
                        (iii)(II) or when relevant in any proceeding 
                        under this chapter.
            ``(3) General disclosure of safety.--With respect to each 
        annual submission under paragraph (1) during the 5-year period 
        beginning on the date of enactment of this chapter, the 
        manufacturer shall, for each ingredient, substance, or compound 
        contained on the list of the manufacturer for the year 
        involved, disclose whether the manufacturer has determined that 
        the ingredient, substance, or compound would be exempt from 
        public disclosure under this chapter.
    ``(f) Actions to Modify or Prohibit Certain Tobacco Products.--
            ``(1) In general.--The Secretary may adopt a health risk 
        management standard under this section that requires--
                    ``(A) the modification of a tobacco product in a 
                manner that involves--
                            ``(i) the gradual reduction or elimination 
                        of nicotine yields of the product; or
                            ``(ii) the reduction or elimination of 
                        other harmful constituents, ingredients 
                        (including tobacco additives), substances, 
                        compounds and properties of the product in 
                        accordance with subsection (d)(4)(B), including 
                        the establishment of levels of nicotine and 
                        other components, ingredients (including 
                        tobacco additives), and constituents of the 
                        product, or smoke emitted by such products; or
                    ``(B) the prohibition of a tobacco product.
            ``(2) Considerations.--In determining whether to require a 
        modification or prohibition described in paragraph (1), the 
        Secretary shall identify, make available for public comment, 
        and consider relevant factors including whether the 
        modification or prohibition--
                    ``(A) will result in a significant reduction in the 
                health risks associated with the use of the tobacco 
                product, constituent, or component involved;
                    ``(B) will result in a significant increase in the 
                number of individuals seeking tobacco product cessation 
                or withdrawal treatments, including an assessment of 
                the effectiveness and accessibility of such treatments;
                    ``(C) will result in the creation of a significant 
                demand for, and supply of, contraband products or other 
                tobacco products that do not meet the requirements of 
                this chapter; and
                    ``(D) is technologically feasible for commercial 
                manufacturing.
            ``(3) General prohibition of tobacco products.--
                    ``(A) Nondelegation.--The Secretary may not 
                delegate the authority provided under this section to 
                promulgate a regulation that results in a general 
                prohibition of a class of tobacco products.
                    ``(B) Congressional Review.--In accordance with 
                section 801 of title 5, United States Code, Congress 
                shall review, and may disapprove, any rule of the 
                Secretary establishing, amending, or revoking a tobacco 
                product health risk management standard, except that 
                with respect to a standard that results in a general 
                prohibition of a class of tobacco products, such 
                standard shall only take effect upon the date of 
                enactment of a joint resolution of approval of such 
                standard. The provisions of section 802 of title 5, 
                United States Code, relating to certain disapproval 
                resolutions shall apply to the consideration of any 
                joint resolution of approval under this subsection.
    ``(g) Compliance.--
            ``(1) In general.--Health risk management standards under 
        this section shall apply to all tobacco products to which such 
        standards are relevant.
            ``(2) Limitation.--During the period in which a regulation 
        promulgated under this section establishing a health risk 
        standard is in effect, a tobacco product shall not be 
        considered to be in violation of section 301 if such product is 
        in compliance with such regulation.
    ``(h) Evaluation.--The Secretary shall periodically evaluate the 
effectiveness of tobacco product health risk standards to determine 
whether such standards should be amended to reflect new medical, 
scientific, or technological information.

``SEC. 903. GOOD MANUFACTURING PRACTICE STANDARDS.

    ``(a) Authority.--
            ``(1) In general.--The Secretary shall, in accordance with 
        subsections (a) and (b) of section 902, prescribe regulations 
        requiring that the methods used in, and the facilities and 
        controls used for, the manufacture, packing, and storage of a 
        tobacco product conform to current good manufacturing practice, 
        as prescribed in such regulations, to ensure that such products 
        will be in compliance with this chapter.
            ``(2) Registration.--The regulations promulgated under 
        paragraph (1) shall require that all tobacco product 
        manufacturers register with the Secretary.
            ``(3) Special consultation procedures.--In developing and 
        promulgating any regulation under paragraph (1) the Secretary 
        shall afford the Tobacco Products Scientific Advisory Committee 
        established under section 907 an opportunity (with a reasonable 
        time period) to submit recommendations in response to the 
        notice of proposed rulemaking.
    ``(b) Pesticide Residues.--The regulations promulgated under 
subsection (a) shall at a minimum require, after consultation with the 
Administrator of the Environmental Protection Agency, the development 
and adherence to applicable tolerances with respect to pesticide 
chemical residues in finished tobacco products, except that such 
tolerances shall only apply if the Administrator determines that such 
tolerances are necessary to prevent such residues from being injurious 
to health when used in tobacco products.
    ``(c) Petitions for Exemptions and Variances.--
            ``(1) In general.--Any person subject to any requirement 
        prescribed by regulations under subsection (a) may petition the 
        Secretary for an exemption or variance from such requirement. 
        Such a petition shall be submitted to the Secretary in such 
        form and manner as the Secretary shall by regulation prescribe 
        and shall--
                    ``(A) in the case of a petition for an exemption 
                from a requirement, set forth the basis for the 
                petitioner's determination that compliance with the 
                requirement is not required to ensure that the tobacco 
                product is in compliance with section 902;
                    ``(B) in the case of a petition for a variance from 
                a requirement, set forth the methods proposed to be 
                used in, and the facilities and controls proposed to be 
                used for, the manufacture, packing, and storage of the 
                product in lieu of the methods, facilities, and 
                controls prescribed by the requirement; and
                    ``(C) contain such other information as the 
                Secretary shall prescribe.
            ``(2) Tobacco product requirements waiver board.--
                    ``(A) Authority.--The Secretary shall establish a 
                Tobacco Product Requirements Waiver Board (referred to 
                in this paragraph as the `Waiver Board') to provide 
                advice and make recommendations to the Secretary with 
                respect to the approval or disapproval of petitions 
                submitted under paragraph (1).
                    ``(B) Membership.--The Waiver Board shall be 
                composed of 9 members to be appointed by the Secretary, 
                of which--
                            ``(i) 3 members shall be appointed from 
                        among individuals who are officers or employees 
                        of the Federal Government or a State or local 
                        government;
                            ``(ii) 2 members shall be appointed from 
                        among individuals who are representatives of 
                        the interests of the cigarette and smokeless 
                        tobacco industries;
                            ``(iii) 2 members shall be appointed from 
                        among individuals who are representatives of 
                        the interests of physicians and other health 
                        professionals; and
                            ``(iv) 2 members shall be appointed from 
                        among individuals who are representatives of 
                        the interests of the general public.
                    ``(C) Chairperson.--The Secretary shall designate 1 
                of the members of the Waiver Board to serve as the 
                Chairperson.
                    ``(D) Compensation and expenses.--
                            ``(i) Compensation.--Members of the Waiver 
                        Board who are not officers or employees of the 
                        United States, while attending conferences or 
                        meetings of the Waiver Board or otherwise 
                        serving at the request of the Secretary, shall 
                        be entitled to receive compensation at rates to 
                        be fixed by the Secretary, which rates may not 
                        exceed the daily equivalent of the rate of pay 
                        for level 4 of the Senior Executive Schedule 
                        under section 5382 of title 5, United States 
                        Code, for each day (including traveltime) they 
                        are so engaged.
                            ``(ii) Expenses.--While conducting the 
                        business of the Waiver Board away from their 
                        homes or regular places of business, each 
                        member may be allowed travel expenses, 
                        including per diem in lieu of subsistence, as 
                        authorized by section 5703 of title 5 of the 
                        United States Code for persons in the 
                        Government service employed intermittently.
            ``(3) Action on petition.--
                    ``(A) In general.--Not later than 120 days of the 
                date on which the Secretary receives the 
                recommendations of the Waiver Board, the Secretary 
                shall issue an order approving or denying a petition 
                submitted under paragraph (1). The Secretary may 
                approve--
                            ``(i) a petition for an exemption for a 
                        tobacco product from a requirement if the 
                        Secretary determines that absolute compliance 
                        with such requirement is not required to assure 
                        that the product will comply with this section 
                        and is otherwise consistent with the public 
                        health; and
                            ``(ii) a petition for a variance for a 
                        tobacco product from a requirement if the 
                        Secretary determines that the methods to be 
                        used in, and the facilities and controls to be 
                        used for, the manufacture, packing, and storage 
                        of the product in lieu of the methods, 
                        controls, and facilities prescribed by the 
                        requirement are sufficient to ensure that the 
                        product will comply with this section and is 
                        otherwise in compliance with the public health.
                    ``(B) Conditions.--An order of the Secretary 
                approving a petition for a variance shall prescribe 
                such conditions respecting the methods used in, and the 
                facilities and controls used for, the manufacture, 
                packing, and storage of the tobacco product to be 
                granted the variance under the petition as may be 
                necessary to ensure that the product will comply with 
                this section.
            ``(4) Informal hearing.--After the issuance of an order 
        under paragraph (3) respecting a petition, the petitioner shall 
        have an opportunity for an informal hearing on such order.
    ``(d) Recordkeeping and Reporting.--The regulations promulgated 
under subsection (a) shall require that manufacturers maintain such 
files and records as the Secretary may reasonably require relating to 
tobacco product safety. Such regulations may require manufacturers to 
report serious adverse events that are not well-known or well-
documented by the scientific community (including events related to 
contamination or a change in any ingredient or any major change in 
manufacturing processes).
    ``(e) Inspection Authority.--As provided in section 704, the 
officers and employees of the Secretary shall have the authority to 
conduct unannounced inspections of any factory, warehouse, or other 
establishment of any tobacco product manufacturer and shall have access 
to the records, files, papers, processes, controls, and facilities 
relating to tobacco product manufacturing.
    ``(f) Agricultural Producers.--The Secretary may not promulgate any 
regulation under this section that has the effect of placing regulatory 
burdens on tobacco producers (as such term is used for purposes of the 
Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) and the 
Agricultural Act of 1949 (7 U.S.C. 1441 et seq.)) in excess of the 
regulatory burdens generally placed on other agricultural commodity 
producers.

``SEC. 904. TOBACCO PRODUCT LABELING, WARNING, AND PACKAGING STANDARDS.

    ``(a) Cigarettes.--
            ``(1) In general.--
                    ``(A) Packaging.--It shall be unlawful for any 
                person to manufacture, package, or import for sale or 
                distribution within the United States any cigarettes 
                the package of which fails to bear, in accordance with 
                the requirements of this subsection, one of the 
                following statements:
                        ``WARNING: Cigarettes Are Addictive.
                        ``WARNING: Tobacco Smoke Can Harm Your 
                        Children.
                        ``WARNING: Cigarettes Cause Fatal Lung Disease.
                        ``WARNING: Cigarettes Cause Cancer.
                        ``WARNING: If You Think Smoking Is Cool, You 
                        Are Dead Wrong.
                        ``WARNING: Cigarettes Cause Strokes And Heart 
                        Disease.
                        ``WARNING: Smoking During Pregnancy Can Harm 
                        Your Baby.
                        ``WARNING: Smoking Can Kill You.
                        ``WARNING: Tobacco Smoke Causes Fatal Lung 
                        Disease In Nonsmokers.
                        ``WARNING: Quitting Smoking Now Greatly Reduces 
                        Serious Risks To Your Health.
                    ``(B) Advertising.--It shall be unlawful for any 
                manufacturer or importer of cigarettes to advertise or 
                cause to be advertised within the United States any 
                cigarette unless the advertising bears, in accordance 
                with the requirements of this subsection, one of the 
                following statements:
                        ``WARNING: Cigarettes Are Addictive.
                        ``WARNING: Tobacco Smoke Can Harm Your 
                        Children.
                        ``WARNING: Cigarettes Cause Fatal Lung Disease.
                        ``WARNING: Cigarettes Cause Cancer.
                        ``WARNING: If You Think Smoking Is Cool, You 
                        Are Dead Wrong.
                        ``WARNING: Cigarettes Cause Strokes And Heart 
                        Disease.
                        ``WARNING: Smoking During Pregnancy Can Harm 
                        Your Baby.
                        ``WARNING: Smoking Can Kill You.
                        ``WARNING: Tobacco Smoke Causes Fatal Lung 
                        Disease In Nonsmokers.
                        ``WARNING: Quitting Smoking Now Greatly Reduces 
                        Serious Risks To Your Health.
            ``(2) Requirements for label statements.--
                    ``(A) Location.--Each label statement required by 
                subparagraph (A) of paragraph (1) shall be located on 
                the upper portion of the front panel of the cigarette 
                package (or carton) and occupy not less than 25 percent 
                of such front panel.
                    ``(B) Type and color.--With respect to each label 
                statement required by subparagraph (A) of paragraph 
                (1), the phrase `WARNING' shall appear in capital 
                letters and the label statement shall be printed in 17 
                point type with adjustments as determined appropriate 
                by the Secretary to reflect the length of the required 
                statement. All the letters in the label statement shall 
                appear in conspicuous and legible type, in contrast by 
                typography, layout, or color with all other printed 
                material on the package, and be printed in an 
                alternating black-on-white and white-on-black format as 
                determined appropriate by the Secretary.
                    ``(C) Exception.--The provisions of subparagraph 
                (A) shall not apply in the case of a flip-top cigarette 
                package (offered for sale on the date of enactment of 
                this title) where the front portion of the flip-top 
                does not comprise at least 25 percent of the front 
                panel. In the case of such a package, the label 
                statement required by subparagraph (A) of paragraph (1) 
                shall occupy the entire front portion of the flip top.
            ``(3) Requirements for advertising.--
                    ``(A) Location.--Each label statement required by 
                subparagraph (B) of paragraph (1) shall occupy not less 
                than 20 percent of the area of the advertisement 
                involved.
                    ``(B) Type and color.--
                            ``(i) Type.--With respect to each label 
                        statement required by subparagraph (B) of 
                        paragraph (1), the phrase `WARNING' shall 
                        appear in capital letters and the label 
                        statement shall be printed in the following 
                        types:
                                    ``(I) With respect to whole page 
                                advertisements on broadsheet 
                                newspaper--45 point type.
                                    ``(II) With respect to half page 
                                advertisements on broadsheet 
                                newspaper--39 point type.
                                    ``(III) With respect to whole page 
                                advertisements on tabloid newspaper--39 
                                point type.
                                    ``(IV) With respect to half page 
                                advertisements on tabloid newspaper--27 
                                point type.
                                    ``(V) With respect to DPS magazine 
                                advertisements--31.5 point type.
                                    ``(VI) With respect to whole page 
                                magazine advertisements--31.5 point 
                                type.
                                    ``(VII) With respect to 28cm x 3 
                                column advertisements--22.5 point type.
                                    ``(VIII) With respect to 20cm x 2 
                                column advertisements--15 point type.
                        The Secretary may revise the required type 
                        sizes as the Secretary determines appropriate 
                        within the 20 percent requirement.
                            ``(ii) Color.--All the letters in the label 
                        statement under this subparagraph shall appear 
                        in conspicuous and legible type, in contrast by 
                        typography, layout, or color with all other 
                        printed material in the advertisement, and be 
                        printed in an alternating black-on-white and 
                        white-on-black format as determined appropriate 
                        by the Secretary.
            ``(4) Rotation of label statements.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the label statements specified in 
                subparagraphs (A) and (B) of paragraph (1) shall be 
                rotated by each manufacturer or importer of cigarettes 
                quarterly in alternating sequence on packages of each 
                brand of cigarettes manufactured by the manufacturer or 
                importer and in the advertisements for each such brand 
                of cigarettes in accordance with a plan submitted by 
                the manufacturer or importer and approved by the 
                Secretary. The Secretary shall approve a plan submitted 
                by a manufacturer or importer of cigarettes which will 
                provide the rotation required by this paragraph and 
                which assures that all of the label statements required 
                by subparagraphs (A) and (B) will be displayed by the 
                manufacturer or importer at the same time.
                    ``(B) Application of other rotation requirements.--
                            ``(i) In general.--A manufacturer or 
                        importer of cigarettes may apply to the 
                        Secretary to have the rotation schedule 
                        described in clause (iii) apply with respect to 
                        a brand style of cigarettes manufactured or 
                        imported by such manufacturer or importer if--
                                    ``(I) the number of cigarettes of 
                                such brand style sold in the fiscal 
                                year of the manufacturer or importer 
                                preceding the submission of the 
                                application is less than \1/4\ of 1 
                                percent of all the cigarettes sold in 
                                the United States in such year; and
                                    ``(II) more than \1/2\ of the 
                                cigarettes manufactured or imported by 
                                such manufacturer or importer for sale 
                                in the United States are packaged into 
                                brand styles which meet the 
                                requirements of subclause (I).
                        If an application is approved by the Secretary, 
                        the rotation schedule described in clause (iii) 
                        shall apply with respect to the applicant 
                        during the 1-year period beginning on the date 
                        of the application approval.
                            ``(ii) Plan.--An applicant under clause (i) 
                        shall include in its application a plan under 
                        which the label statements specified in 
                        subparagraph (A) of paragraph (1) will be 
                        rotated by the applicant manufacturer or 
                        importer in accordance with the label rotation 
                        described in clause (iii).
                            ``(iii) Other rotation requirements.--Under 
                        the rotation schedule which the manufacturer or 
                        importer with an approved application may put 
                        into effect, each of the label statements 
                        specified in subparagraph (A) of paragraph (1) 
                        shall appear on the packages of each brand 
                        style of cigarettes with respect to which the 
                        application was approved an equal number of 
                        times within the 12-month period beginning on 
                        the date of the approval by the Secretary of 
                        the application.
            ``(5) Application of requirement.--Paragraph (1) does not 
        apply to a distributor or retailer of cigarettes who does not 
        manufacture, package, or import cigarettes for sale or 
        distribution within the United States.
            ``(6) Television and radio advertising.--It shall be 
        unlawful to advertise cigarettes and little cigars on any 
        medium of electronic communications subject to the jurisdiction 
        of the Federal Communications Commission.
    ``(b) Smokeless Tobacco Products.--
            ``(1) In general.--
                    ``(A) Packaging.--It shall be unlawful for any 
                person to manufacture, package, or import for sale or 
                distribution within the United States any smokeless 
                tobacco product the package of which fails to bear, in 
                accordance with the requirements of this subsection, 
                one of the following statements:
                        WARNING: This Product May Cause Mouth Cancer.
                        WARNING: This Product May Cause Gum Disease And 
                        Tooth Loss.
                        WARNING: This Product Is Not A Safe Alternative 
                        To Cigarettes.
                        WARNING: Smokeless Tobacco Is Addictive.
                    ``(B) Advertising.--It shall be unlawful for any 
                manufacturer or importer of smokeless tobacco products 
                to advertise or cause to be advertised within the 
                United States any smokeless tobacco product unless the 
                advertising bears, in accordance with the requirements 
                of this subsection, one of the following statements:
                        WARNING: This Product May Cause Mouth Cancer.
                        WARNING: This Product May Cause Gum Disease And 
                        Tooth Loss.
                        WARNING: This Product Is Not A Safe Alternative 
                        To Cigarettes.
                        WARNING: Smokeless Tobacco Is Addictive.
            ``(2) Requirements for label statements.--
                    ``(A) Location.--Each label statement required by 
                subparagraph (A) of paragraph (1) shall be located on 
                the principal display panel of the product and occupy 
                not less than 25 percent of such panel.
                    ``(B) Type and color.--With respect to each label 
                statement required by subparagraph (A) of paragraph 
                (1), the phrase `WARNING' shall appear in capital 
                letters and the label statement shall be printed in 17 
                point type with adjustments as determined appropriate 
                by the Secretary to reflect the length of the required 
                statement. All the letters in the label statement shall 
                appear in conspicuous and legible type in contrast by 
                typography, layout, or color with all other printed 
                material on the package and be printed in an 
                alternating black on white and white on black format as 
                determined appropriate by the Secretary.
            ``(3) Advertising and rotation.--The provisions of 
        paragraphs (3) and (4)(A) of subsection (a) shall apply to 
        advertisements for smokeless tobacco products and the rotation 
        of the statements required under paragraph (1)(A) on such 
        products.
            ``(4) Application of requirement.--Paragraph (1) does not 
        apply to a distributor or retailer of smokeless tobacco 
        products who does not manufacture, package, or import such 
        products for sale or distribution within the United States.
            ``(5) Television and radio advertising.--It shall be 
        unlawful to advertise smokeless tobacco on any medium of 
        electronic communications subject to the jurisdiction of the 
        Federal Communications Commission.
    (c) Statement of Intended Use.--
            (1) Requirement.--Each manufacturer, distributor, and 
        retailer advertising or causing to be advertised, disseminating 
        or causing to be disseminated advertising concerning, tobacco 
        products otherwise permitted under this chapter shall include, 
        in a type size and format as the Secretary may prescribe in a 
        regulation promulgated under subsection (d), the established 
        name of the product and a statement of the intended use of the 
        product as provided for in paragraph (2).
            (3) Intended use statements.--
                    (A) Cigarettes.--A statement of intended use for 
                cigarettes or cigarette tobacco is as follows 
                (whichever is appropriate):
                ``Cigarettes--A Dangerous Tobacco Product Intended For 
                Use Only By Persons 18 or Older.
                ``Cigarette Tobacco--A Dangerous Tobacco Product 
                Intended For Use Only By Persons 18 or Older.
                    (B) Smokeless tobacco.--A statement of intended use 
                for a smokeless tobacco product is as follows 
                (whichever is appropriate):
                ``Loose Leaf Chewing Tobacco--A Dangerous Tobacco 
                Product Intended For Use Only By Persons 18 or Older.
                ``Plug Chewing Tobacco--A Dangerous Tobacco Product 
                Intended For Use Only By Persons 18 or Older.
                ``Twist Chewing Tobacco--A Dangerous Tobacco Product 
                Intended For Use Only By Persons 18 or Older.
                ``Moist Snuff--A Dangerous Tobacco Product Intended For 
                Use Only By Persons 18 or Older.
                ``Dry Snuff--A Dangerous Tobacco Product Intended For 
                Use Only By Persons 18 or Older.
    ``(d) Regulations.--
            ``(1) In general.--Not later than 180 days after the date 
        of the enactment of this title, the Secretary shall promulgate 
        such regulations as may be necessary to implement subsections 
        (a), (b), and (c).
            ``(2) Authority to revise tobacco product labeling 
        statements.--
                    ``(A) In general.--The Secretary may by rule change 
                the text of any of the statements required under 
                subsections (a) and (b). A rule promulgated under this 
                subparagraph shall not become effective prior to the 
                expiration of the 1-year period beginning on the date 
                on which the final rule is published in the Federal 
                Register.
                    ``(B) Limitation.--The Secretary may not promulgate 
                any rule under subparagraph (A) during the 5-year 
                period beginning on the effective date of the PROTECT 
                Act unless the Secretary can demonstrate extraordinary 
                circumstances.
            ``(3) Common or usual names.--The Secretary, in accordance 
        with the procedures set forth in section 902, shall promulgate 
        regulations requiring the disclosure to the public of the 
        common or usual name of each ingredient (other than tobacco, 
        water, or reconstituted tobacco sheet made wholly from tobacco) 
        contained in a tobacco product in descending order of 
        predominance by weight, except that such regulations--
                    ``(A) may provide for the disclosure of spices, 
                flavorings, and colorings without naming each spice, 
                flavoring, or coloring; and
                    ``(B) may exempt from disclosure incidental 
                additives, including processing aids and chemical 
                preservatives, that are present in a tobacco product at 
                insignificant levels that the Secretary determines do 
                not have any functional effect or health risk.
    ``(e) Preemption.--No statement relating to the use of cigarettes 
or smokeless tobacco products and health, other than the statements 
required by subsections (a), (b), or (c), shall be required on any 
package or in any advertisement of cigarettes or a smokeless tobacco 
product.
    ``(f) Exports.--Packages of cigarettes or smokeless tobacco 
products manufactured, imported, or packaged--
            ``(1) for export from the United States; or
            ``(2) for delivery to a vessel or aircraft, as supplies, 
        for consumption beyond the jurisdiction of the internal revenue 
        laws of the United States;
shall be exempt from the requirements of this chapter, but such 
exemptions shall not apply to cigarettes or smokeless tobacco products 
manufactured, imported, or packaged for sale or distribution to members 
or units of the Armed Forces of the United States located outside of 
the United States.

``SEC. 905. REDUCED RISK TOBACCO PRODUCTS.

    ``(a) General Rule.--Except as provided in subsection (b), the 
regulations promulgated in accordance with section 902 shall require 
that a tobacco product be deemed to be in violation with this chapter 
if the labeling of the package of the product, or the claims of the 
manufacturer in connection with the product, can reasonably be 
interpreted as stating or implying that the product presents a reduced 
health risk as compared to other similar products. Any tobacco product 
accompanied by a claim to diagnose, cure, mitigate, treat, or prevent a 
disease, not including statements that the Secretary may permit for 
reduced risk tobacco products under this section, will be subject to 
regulation as a new drug under section 505.
    ``(b) Exception.--
            ``(1) In general.--Subsection (a) shall not apply to the 
        labeling of a tobacco product, or the claims of the 
        manufacturer in connection with the product, if--
                    ``(A) the manufacturer, based on scientific 
                evidence, demonstrates to the Secretary that the 
                product reduces the risk to the health of the user as 
                compared to other similar tobacco products; and
                    ``(B) the Secretary approves the specific claim 
                that will be made a part of the labeling of the 
                product, or the specific claims of the manufacturer in 
                connection with the product.
            ``(2) Reduction in health risk.--The Secretary shall 
        promulgate regulations to permit the inclusion of 
        scientifically-based specific health claims on the labeling of 
        a tobacco product package, or the making of such claims by the 
        manufacturer in connection with the product, where the 
        Secretary determines that the inclusion or making of such 
        claims would reduce the health risk to consumers and otherwise 
        promote public health.
    ``(c) Development of Reduced Risk Tobacco Product Technology.--
            ``(1) Notification of secretary.--The manufacturer of a 
        tobacco product shall provide written notice to the Secretary 
        upon the development or acquisition by the manufacturer of any 
        technology that would reduce the risk of such products to the 
        health of the user. Such notification shall not be required 
        until adequate intellectual property protections have been 
        secured by the manufacturer, such as the issuance of a patent 
        or the execution of a licensing agreement.
            ``(2) Confidentiality.--The Secretary shall promulgate 
        regulations to provide a manufacturer with appropriate 
        confidentiality protections with respect to technology that is 
        the subject of a notification under paragraph (1) that contains 
        evidence that the technology involved is in the early 
        developmental stages.
            ``(3) Licensing.--
                    ``(A) In general.--With respect to any technology 
                for which a notification has been provided under 
                paragraph (1), the manufacturer shall permit the use of 
                such technology by other manufacturers of tobacco 
                products to which this chapter applies.
                    ``(B) Fees.--The Secretary of Commerce shall 
                promulgate regulations to provide for the payment of a 
                commercially reasonable fee by each manufacturer that 
                uses the technology described under subparagraph (A) to 
                the manufacturer that submits the notice under 
                paragraph (1) for such technology. Such regulations 
                shall contain procedures for the resolution of fee 
                disputes between manufacturers under this subparagraph.
    ``(d) Requirement of Manufacture and Marketing.--
            ``(1) Purpose.--It is the purpose of this subsection to 
        provide for a mechanism to create incentives that help ensure 
        that tobacco products that are designed to be less hazardous to 
        the health of users are developed, tested, and made available 
        to consumers.
            ``(2) Determination.--Upon a determination by the Secretary 
        that the manufacture of a tobacco product that is less 
        hazardous to the health of users is technologically and 
        commercially feasible, the Secretary may, in accordance with 
        this subsection and through the issuance or amendment of a 
        health risk standard under section 902--
                    ``(A) require the disclosure of the existence of 
                such technology;
                    ``(B) prohibit the use of technology that is 
                superseded by such new technology; and
                    ``(C) require that manufacturers cease 
                manufacturing and marketing tobacco products that do 
                not incorporate such technology.

``SEC. 906. TOBACCO PRODUCT MARKETING RESTRICTIONS.

    ``(a) In General.--The Secretary shall by regulation implement the 
prohibitions described in this section concerning the marketing of 
tobacco products to minors.
    ``(b) Sales to Minors Prohibited.--No retailer may distribute a 
tobacco product to any individual who is under 18 years of age.
    ``(c) Photo Identification.--
            ``(1) Requirement.--Except as provided in paragraph (2), 
        each retailer shall verify, by means of photographic 
        identification containing the date of birth of the bearer, that 
        no individual purchasing a tobacco product is under 18 years of 
        age.
            ``(2) Exception.--No verification under paragraph (1) is 
        required for any individual who is at least 27 years of age.
            ``(3) Location of products.--Except as provided in 
        subsection (j), a retailer shall ensure that all tobacco 
        products are located in areas where customers do not have 
        access to the products.
    ``(d) Face-to-Face Transactions.--Except as provided in subsection 
(i)(1), a retailer may sell tobacco products only in a direct, face-to-
face exchange without the assistance of any electronic or mechanical 
device.
    ``(e) Out-of-Package Distribution.--No retailer may break or 
otherwise open a tobacco product to sell or distribute to individuals 
portions of such product (including individual cigarettes or a number 
of cigarettes that is smaller than the quantity in the minimum package 
size, or any quantity of cigarette tobacco or smokeless tobacco that is 
smaller than the smallest package distributed by the retailer for 
individual consumer use).
    ``(f) Retailer Compliance With Respect to Self-Service.--Each 
retailer shall ensure that all tobacco-related self-service displays, 
advertising, labeling, and other items that are located in the 
establishment of the retailer and that do not comply with the 
requirements of this section are removed or are brought into compliance 
with the requirements of this section.
    ``(g) Minimum Cigarette Package Size.--Except as otherwise provided 
in this section, no manufacturer, distributor, or retailer may sell or 
cause to be sold, or distribute or cause to be distributed, any 
cigarette package that contains fewer than 20 cigarettes.
    ``(h) Prohibition on Sampling.--No manufacturer, distributor, or 
retailer may distribute or cause to be distributed any free samples of 
any tobacco product.
    ``(i) Prohibition on Distribution Through Self-Service Modes of 
Sale.--
            ``(1) Vending machines.--Except as provided in subsection 
        (j)(1)(B), no manufacturer, distributor, or retailer may 
        distribute or cause to be distributed any tobacco product 
        through a vending machine.
            ``(2) Other displays.--Except as provided in subsection 
        (j)(1)(C), no manufacturer, distributor, or retailer may 
        distribute or cause to be distributed any tobacco product 
        through a self-service display.
    ``(j) Permitted Self-Service Modes of Sale.--
            ``(1) In general.--Notwithstanding any other provision of 
        this section, the following methods of distributing tobacco 
        products are permitted:
                    ``(A) Mail-order sales as provided for in paragraph 
                (2), except that mail-order redemption of coupons and 
                the distribution of free samples through the mail shall 
                be prohibited.
                    ``(B) Distribution through vending machines that 
                are located in facilities where the retailer ensures 
                that no individuals under 18 years of age are present 
                or permitted to enter at any time.
                    ``(C) Distribution through self-service displays 
                that are located in facilities where the retailer 
                ensures that no individuals under 18 years of age are 
                present or permitted to enter at any time.
            ``(2) Mail-order sales.--
                    ``(A) In general.--A manufacturer, distributor, or 
                retailer may distribute or cause to be distributed a 
                tobacco product through mail-order sales only if such 
                sales are subject to a procedure for verifying that no 
                individual purchasing such products is under 18 years 
                of age.
                    ``(B) Review by secretary.--Not later than 2 years 
                after the date of enactment of this section, the 
                Secretary shall review the verification procedures 
                implemented under subparagraph (A) to determine whether 
                individuals under 18 years of age are obtaining tobacco 
                products through the mail. If the Secretary determines 
                that a significant number of underage individuals are 
                obtaining such products through the mail, the Secretary 
                may promulgate regulations in accordance with section 
                902 to prohibit the distribution of tobacco products 
                through the mail.

``SEC. 907. TOBACCO PRODUCTS SCIENTIFIC ADVISORY COMMITTEE.

    ``(a) Establishment.--Not later than 1 year after the date of 
enactment of this chapter, the Secretary shall establish an advisory 
committee, to be known as the `Tobacco Products Scientific Advisory 
Committee', to assist the Secretary in establishing, amending, or 
revoking a regulation promulgated under section 902, 903, 904, or 905.
    ``(b) Membership.--
            ``(1) In general.--The Secretary shall appoint as members 
        of the Tobacco Products Scientific Advisory Committee--
                    ``(A) individuals with expertise in the medicine, 
                science, or technology involving the manufacture and 
                use of tobacco products, who are of appropriately 
                diversified professional backgrounds;
                    ``(B) individuals with expertise in law or ethics;
                    ``(C) a representative of tobacco product 
                manufacturers;
                    ``(D) a representative of the general public 
                selected from anti-tobacco organizations; and
                    ``(E) a representative of the general public 
                selected from pro-tobacco organizations.
            ``(2) Limitation.--The Secretary may not appoint to the 
        Advisory Committee any individual who is in the regular full-
        time employ of the Federal Government. The Secretary may 
        appoint Federal officials as ex-officio members.
            ``(3) Chairperson.--The Secretary shall designate 1 of the 
        members of advisory committee to serve as chairperson of the 
        Advisory Committee.
    ``(c) Duties.--The Tobacco Products Scientific Advisory Committee 
shall--
            ``(1) assist the Secretary in establishing, amending, or 
        revoking regulations under section 902, 903, 904, or 905;
            ``(2) examine and make recommendations concerning the 
        effects of the alteration of the nicotine yield levels in 
        tobacco products;
            ``(3) examine and make recommendations concerning whether 
        there is a threshold level below which nicotine yields do not 
        produce dependence on the tobacco product involved, and, if so, 
determine what that level is; and
            ``(4) review other safety, dependence or health issues 
        relating to tobacco products as requested by the Secretary.

``SEC. 908. REPORTS.

    ``Not later than 18 months after the date of enactment of this 
chapter, and biennially thereafter, the Secretary shall prepare and 
submit to Congress a report containing--
            ``(1) a description of the current sales, advertising, and 
        marketing practices associated with tobacco products;
            ``(2) a description of the use patterns of tobacco 
        products, including a report on use by individuals under 18 
        years of age;
            ``(3) a description of the effects of health promotion and 
        disease prevention efforts related to the use of tobacco 
        products;
            ``(4) an evaluation of the health promotion and disease 
        prevention efforts relating to tobacco products and the 
        identification of areas appropriate for further research; and
            ``(5) such recommendations for legislation and 
        administrative action relating to tobacco products as the 
        Secretary considers appropriate.

``SEC. 909. JUDICIAL REVIEW.

    ``(a) Application of Section.--
            ``(1) In general.--Not later than 60 days after the 
        effective date of any regulation under this chapter 
        establishing, amending, or revoking a health risk management 
        standard for a tobacco product, any person adversely affected 
        by such regulation may file a petition with the United States 
        Court of Appeals for the District of Columbia or for the 
        circuit wherein such person resides or has its principal place 
        of business for judicial review of such regulation. A copy of 
        the petition shall be transmitted by the clerk of the court to 
        the Secretary or other officer designated by him for that 
        purpose.
            ``(2) Record of proceeding.--The Secretary shall file in 
        the court under paragraph (1) the record of the proceedings on 
        which the Secretary based the regulation involved as provided 
        for in section 2112 of title 28, United States Code.
            ``(3) Definition.--For purposes of this section, the term 
        `record' means all notices and other matter published in the 
        Federal Register with respect to the regulation reviewed, all 
        information submitted to the Secretary with respect to such 
        regulation, proceedings of any panel or advisory committee with 
        respect to such regulation, any hearing held with respect to 
        such regulation, and any other information identified by the 
        Secretary, in the administrative proceeding held with respect 
        to such regulation, as being relevant to such regulation.
    ``(b) Additional Data, Views, and Arguments.--If the petitioner 
applies to the court under this section for leave to adduce additional 
data, views, or arguments respecting the regulation being reviewed and 
shows to the satisfaction of the court that such additional data, 
views, or arguments are material and that there were reasonable grounds 
for the petitioner's failure to adduce such data, views, or arguments 
in the proceedings before the Secretary, the court may order the 
Secretary to provide additional opportunity for the oral presentation 
of data, views, or arguments and for written submissions. The Secretary 
may modify such findings, or make new findings by reason of the 
additional data, views, or arguments so taken and shall file with the 
court such modified or new findings, and the recommendations of the 
Secretary, if any, for the modification or setting aside of the 
regulation or order being reviewed, with the return of such additional 
data, views, or arguments.
    ``(c) Standard for Review.--Upon the filing of the petition under 
subsection (a) judicial review of a regulation, the court shall have 
jurisdiction to review the regulation in accordance with chapter 7 of 
title 5, United States Code, and to grant appropriate relief, including 
interim relief, as provided for in such chapter. A regulation 
promulgated under this chapter shall not be affirmed if it is found to 
be unsupported by substantial evidence on the record taken as a whole.
    ``(d) Finality of Judgments.--The judgment of the court affirming 
or setting aside, in whole or in part, any regulation under this 
section shall be final, subject to review by the Supreme Court of the 
United States upon certiorari or certification, as provided for in 
section 1254 of title 28, United States Code.
    ``(e) Other Remedies.--The remedies provided for in this section 
shall be in addition to and not in lieu of any other remedies provided 
for by law.
    ``(f) Statement of Reasons.--To facilitate judicial review under 
this section or under any other provision of law of a regulation issued 
under this chapter, each such regulation shall contain a statement of 
the reasons for its issuance and the basis, in the record of the 
proceedings held in connection with its issuance, for its issuance.

``SEC. 910. PREEMPTION.

    ``(a) Limitation.--No requirement with respect to a tobacco product 
shall be applied by any State or local statute or regulation if such 
requirement conflicts with the requirements of section 902, 903, 904, 
or 905.
    ``(b) Rule of Construction.--Nothing in this section shall be 
construed as prohibiting a State or political subdivision of a State 
from enacting statutes or regulations concerning tobacco products so 
long as such statutes or regulations do not conflict with the 
requirements of section 902, 903, 904, or 905.
    ``(c) Effect on Liability Law.--Except as otherwise provided in 
this chapter, nothing in this section shall relieve any person from 
liability at common law or under State statutory law to any other 
person.''.

SEC. 402. TECHNICAL PROVISIONS.

    (a) Application of Federal Cigarette Labeling and Advertising 
Act.--The provisions of the Federal Cigarette Labeling and Advertising 
Act (15 U.S.C. 1331 et seq.) that apply to cigarettes shall be 
superseded by the provisions of this title (and the amendments made by 
this title).
    (b) Repeal.--The Comprehensive Smokeless Tobacco Health Education 
Act of 1986 (15 U.S.C. 4401 et seq.) is repealed.

SEC. 403. FEDERAL LICENSING OF MILITARY AND OTHER ENTITIES.

    (a) In General.--The Secretary, in consultation with the Secretary 
of Defense, Secretary of State, and other appropriate Federal 
officials, shall establish and implement a Federal tobacco licensing 
program to be applied to entities that sell or distribute tobacco 
products--
            (1) on any military installation (as defined in section 
        2801(c)(2) of title X, United States Code);
            (2) in any United States embassy;
            (3) in any facility owned and operated by the Federal 
        Government either in the United States or in a foreign country;
            (4) in any duty-free shop located within the United States; 
        or
            (5) through any other Federal entity or on any other 
        Federal property as determined appropriate by the Secretary.
    (b) Requirements of Program.--The program established under 
subsection (a) shall apply requirements (including those for penalties, 
suspensions, and revocations) similar to those required to be 
implemented by States under this subtitle.
    (c) Indian Tribes and Tribal Lands.--For purposes of applying and 
enforcing the provisions of this subtitle to entities that sell or 
otherwise distribute tobacco products on Indian reservations (as 
defined in section 403(9) of the Indian Child Protection and Family 
Violence Prevention Act (25 U.S.C. 3202(9))), an Indian tribe or tribal 
organization shall be treated as a State.

         TITLE V--PAYMENTS TO STATES AND PUBLIC HEALTH PROGRAMS

                     Subtitle A--Payments to States

SEC. 501. REIMBURSEMENT FOR STATE EXPENDITURES.

    (a) Payments.--
            (1) In general.--The Trustees shall use amounts made 
        available under section 101(c)(1) in each fiscal year to 
        provide funds to each State to reimburse such State for amounts 
        expended by the State for the treatment of individuals with 
        tobacco-related illnesses or conditions.
            (2) Amount.--The amount for which a State is eligible for 
        under paragraph (1) for a fiscal year shall be based on the 
        applicable percentage described in paragraph (3) of the amount 
available for such fiscal year under paragraph (1).
            (3) Applicable percentage.--For purposes of paragraph (2), 
        the applicable percentage for any State is determined in 
        accordance with the following table.

State                                             Applicable Percentage
        Alabama...................................            1.270390 
        Alaska....................................            0.241356 
        Arizona...................................            1.163883 
        Arkansas..................................            0.751011 
        California................................            8.805641 
        Colorado..................................            1.054018 
        Connecticut...............................            1.596937 
        Delaware..................................            0.227018 
        District of Columbia......................            0.534487 
        Florida...................................            3.590667 
        Georgia...................................            2.007112 
        Hawaii....................................            0.642527 
        Idaho.....................................            0.257835 
        Illinois..................................            4.272898 
        Indiana...................................            1.714594 
        Iowa......................................            0.758686 
        Kansas....................................            0.762230 
        Kentucky..................................            1.875439 
        Louisiana.................................            1.916886 
        Maine.....................................            0.870740 
        Maryland..................................            2.051849 
        Massachusetts.............................            3.700447 
        Michigan..................................            4.431824 
        Minnesota.................................            2.474364 
        Mississippi...............................            0.851450 
        Missouri..................................            1.659116 
        Montana...................................            0.335974 
        Nebraska..................................            0.445356 
        Nevada....................................            0.307294 
        New Hampshire.............................            0.552048 
        New Jersey................................            3.494187 
        New Mexico................................            0.465816 
        New York..................................           14.529380 
        North Carolina............................            2.097625 
        North Dakota..............................            0.250758 
        Ohio......................................            4.690156 
        Oklahoma..................................            0.841972 
        Oregon....................................            1.092920 
        Pennsylvania..............................            5.233270 
        Rhode Island..............................            0.821727 
        South Carolina............................            0.883628 
        South Dakota..............................            0.234849 
        Tennessee.................................            2.479873 
        Texas.....................................            4.451382 
        Utah......................................            0.330016 
        Vermont...................................            0.370244 
        Virginia..................................            1.373860 
        Washington................................            1.794612 
        West Virginia.............................            1.003660 
        Wisconsin.................................            2.098696 
        Wyoming...................................            0.122405 
        American Samoa............................            0.008681 
        N. Mariana Islands........................            0.001519 
        Guam......................................            0.006506 
        U.S. Virgin Islands.......................            0.004804 
        Puerto Rico...............................            0.193175.
            (4) Use of funds.--Except as provided in subsection (b), a 
        State may use amounts received under this subsection as the 
        State determines appropriate.
    (b) Amount Attributable to Federal Medical Assistance Percentage.--
            (1) Determination.--With respect to each State, the 
        Trustees shall determine the amount of the reimbursement under 
        subsection (a) for each fiscal year that is equal to the 
        percentage that has been applied to the State as the Federal 
        medical assistance percentage (as defined in section 1905(b)) 
        of the Social Security Act (42 U.S.C. 1396d(b)) expenditures by 
        the State for the preceding fiscal year.
            (2) Required use.--With respect to the amount determined 
        under paragraph (1) for a State for a fiscal year, the 
        Secretary shall not treat such amount as an overpayment under 
        any joint Federal-State health program if the State certifies 
        to the Trustee that such amount will be used by the State for 
        anti-smoking or tobacco-related purposes under section 502.
    (c) Indian Tribes.--Based on the determinations made by the 
Trustees under section 901(f)(2), the Trustees shall, from amounts 
available for payments to States under this section in a fiscal year, 
reserve not less than the aggregate amount determined under section 
901(f)(2) for payments to Indian tribes under such section 901(f). The 
Trustees shall reduce the amounts payable to a State under this section 
in accordance with determinations with respect to such State under 
section 901(f) to provide amounts to Indian tribes and tribal 
organizations in such States.

SEC. 502. REQUIREMENTS FOR STATE USE OF CERTAIN FUNDS.

    (a) State Plan.--To be eligible to receive a payment under section 
501(b) a State shall prepare and submit to the Trustees a State plan 
that--
            (1) describes the manner in which the State intends to use 
        amounts provided under this subsection to conduct anti-tobacco 
        programs consistent with this Act and consistent with the 
        smoking cessation guidelines issued by the Agency for Health 
        Care Policy and Research;
            (2) describes the specific anti-smoking programs that will 
        be funded by the State;
            (3) describes the amount of funds that will be used for 
        each program described in paragraph (2);
            (4) describes the activities to be conducted under such 
        programs, including the populations to be served, the 
        eligibility standards for such populations, if any, and the 
        goals and purposes of such programs;
            (5) describes the measurable objectives that will be used 
        to evaluate program outcomes;
            (6) describes the procedures to be used by the State to 
        conduct outreach to potential program participants;
            (7) describes the manner in which such programs will be 
        coordinated with other Federal and State anti-smoking 
        initiatives; and
            (8) has been approved under subsection (b).
    (b) Submission, Approval, and Amendment of Plan.--
            (1) Initial plan.--
                    (A) In general.--As a condition of receiving 
                payment under section 501(b), a State shall submit to 
the Trustees an anti-smoking program plan that meets the applicable 
requirements of this subsection.
                    (B) Approval.--Except as the Trustees may provide 
                under paragraph (5), a State plan submitted under 
                subparagraph (A)--
                            (i) shall be approved for purposes of this 
                        section; and
                            (ii) shall be effective beginning with a 
                        calendar quarter that is specified in the plan, 
                        but in no case earlier than October 1, 1998.
            (2) Amendments.--
                    (A) In general.--A State may amend, in whole or in 
                part, its State anti-smoking plan at any time through 
                transmittal of a plan amendment.
                    (B) Approval.--Except as the Trustees may provide 
                under paragraph (5), an amendment to a State plan 
                submitted under subparagraph (A)--
                            (i) shall be approved for purposes of this 
                        title, and
                            (ii) shall be effective as provided in 
                        subparagraph (C).
                    (C) Effective dates for amendments.--An amendment 
                to a State plan shall take effect on one or more 
                effective dates specified in the amendment.
            (3) Disapproval.--
                    (A) Prompt review of plan submittals.--The Trustees 
                shall promptly review State plans and plan amendments 
                submitted under this subsection to determine if they 
                substantially comply with the requirements of this 
                section.
                    (B) 90-day approval deadlines.--A State plan or 
                plan amendment is considered approved unless the 
                Trustees notifies the State in writing, within 90 days 
                after receipt of the plan or amendment, that the plan 
                or amendment is disapproved (and the reasons for 
                disapproval) or that specified additional information 
                is needed.
                    (C) Correction.--In the case of a disapproval of a 
                plan or plan amendment, the Trustees shall provide a 
                State with a reasonable opportunity for correction 
                before taking financial sanctions against the State on 
                the basis of such disapproval.
            (4) Program operation.--
                    (A) In general.--The State shall conduct the 
                program in accordance with the plan (and any 
                amendments) approved under paragraph (3) and with the 
                requirements of this section.
                    (B) Violations.--The Trustees shall establish a 
                process for enforcing requirements under this section. 
                Such process shall provide for the withholding of funds 
                in the case of substantial noncompliance with such 
                requirements. In the case of an enforcement action 
                against a State under this subparagraph, the Trustees 
                shall provide a State with a reasonable opportunity for 
                correction before taking financial sanctions against 
                the State on the basis of such an action.
            (5) Continued approval.--An approved State plan shall 
        continue in effect unless and until the State amends the plan 
        under paragraph (2) or the Trustees finds, under paragraph (4), 
        substantial noncompliance of the plan with the requirements of 
        this section.
    (c) Objectives and Goals, Plan Administration.--
            (1) Records, reports, audits, and evaluation.--
                    (A) Data collection, records, and reports.--A State 
                plan shall include an assurance that the State will 
                collect the data, maintain the records, and furnish the 
                reports to the Trustees, at the times and in the 
                standardized format the Trustees may require in order 
                to enable the Trustees to monitor State program 
                administration and compliance and to evaluate and 
                compare the effectiveness of State plans under this 
                section.
                    (B) State assessment and study.--A State plan shall 
                include a description of the State's plan for the 
                annual assessments and reports under subsection (c)(1) 
                and the evaluation required by subsection (c)(2).
                    (C) Audits.--A State plan shall include an 
                assurance that the State will afford the Trustees 
                access to any records or information relating to the 
                plan for the purposes of review or audit.
            (2) Program development process.--A State plan shall 
        include a description of the process used to involve the public 
        in the design and implementation of the plan and the method for 
        ensuring ongoing public involvement.
            (3) Program budget.--A State plan shall include a 
        description of the budget for the plan. The description shall 
        be updated periodically as necessary and shall include details 
        on the planned use of funds and the sources of the non-Federal 
        share of plan expenditures, including any requirements for 
        cost-sharing by beneficiaries.
    (d) Annual Reports; Evaluations.--
            (1) Annual report.--The State shall--
                    (A) assess the operation of the State plan under 
                this section in each fiscal year, including the 
                progress made in reducing the number of adults and 
                children who use tobacco; and
                    (B) report to the Trustees, by January 1 following 
                the end of the fiscal year, on the result of the 
                assessment.
            (2) State evaluations.--
                    (A) In general.--By March 31, 2000, each State that 
                has a State plan shall submit to the Trustees an 
                evaluation that includes each of the following:
                            (i) An assessment of the effectiveness of 
                        the State plan in reducing the number of 
children and adults who use tobacco products.
                            (ii) A description and analysis of the 
                        effectiveness of elements of the State plan.
                            (iii) An assessment of the effectiveness of 
                        other public and private programs in the State 
                        in meeting program goals.
                            (iv) A review and assessment of State 
                        activities to coordinate the plan under this 
                        section with other public and private anti-
                        tobacco programs.
                            (v) Recommendations for improving the 
                        program under this section.
                    (B) Report of the trustees.--The Trustees shall 
                submit to Congress and make available to the public by 
                December 31, 2001, a report based on the evaluations 
                submitted by States under subparagraph (A), containing 
                any conclusions and recommendations the Trustees 
                considers appropriate.
    (e) Programs.--Anti-tobacco activities may be conducted using 
amounts received under section 501(b) in conjunction with and under the 
following programs:
            (1) The special supplemental food program under section 17 
        of the Child Nutrition Act of 1966 (42 U.S.C. 1786).
            (2) The Maternal and Child Health Services Block Grant 
        program under title V of the Social Security Act (42 U.S.C. 701 
        et seq.).
            (3) The State Children's Health Insurance Program of the 
        State under title XXI of the Social Security Act (42 U.S.C. 
        1397aa et seq.).
            (4) A Head Start program under the Head Start Act (42 
        U.S.C. 9801 et seq.).
            (5) The school lunch program under the National School 
        Lunch Act (42 U.S.C. 1751 et seq.).
            (6) An Indian Health Service Program.
            (7) The community health center program under section 330 
        of the Public Health Service Act (42 U.S.C. 254b).
            (8) Programs under title X of the Public Health Service Act 
        (42 U.S.C. 300 et seq.).
            (9) Programs under title XXVI of the Public Health Service 
        Act (42 U.S.C. 300ff-11).
            (10) State-initiated smoking cessation programs that 
        include provisions for reimbursing individuals for medications 
        or other therapeutic techniques.
            (11) State-initiated public education campaigns, including 
        multi-media counter-advertising campaigns.
            (12) State-initiated programs for event sponsorship 
        transitional assistance, including sponsoring or otherwise 
        supporting athletic, artistic, or other social and cultural 
        events traditionally under the sponsorship of, or that received 
        other support from, tobacco product manufacturers or 
        distributors prior to the date of enactment of this Act.
    (f) Application of Requirements.--The requirements of the 
respective provisions of law described in subsection (e) shall apply to 
any funds made available under this section through State programs 
under any such provision of law to the same extent that such 
requirements would otherwise apply to such programs under such 
provisions of law.

                   Subtitle B--Public Health Programs

SEC. 521. NATIONAL INSTITUTES OF HEALTH TRUST FUND FOR HEALTH RESEARCH.

    (a) Creation of Trust Fund.--There is established a trust fund to 
be known as the ``National Institutes of Health Trust Fund for Health 
Research'' (referred to in this section as the ``Trust Fund''), 
consisting of such amounts as may be appropriated or transferred to the 
Trust Fund pursuant to section 101(c)(2) and (3)(D).
    (b) Transfers to Trust Fund.--There is hereby appropriated to the 
Trust Fund for each fiscal year an amount equivalent to the amount 
described in section 101(d)(2)(A) for such fiscal year.
    (c) Obligations From Trust Fund.--
            (1) In general.--Subject to the provisions of paragraph 
        (4), with respect to the amounts made available in the Trust 
        Fund in a fiscal year, the Secretary shall distribute during 
        any fiscal year--
                    (A) 2 percent of such amounts to the Office of the 
                Director of the National Institutes of Health to be 
                allocated at the Director's discretion--
                            (i) for carrying out the responsibilities 
                        of the Office of the Director, including the 
                        Office of Research on Women's Health and the 
                        Office of Research on Minority Health, the 
                        Office of Alternative Medicine, the Office of 
                        Rare Disease Research, the Office of Behavioral 
                        and Social Sciences Research (for use for 
                        efforts to reduce tobacco use), the Office of 
                        Dietary Supplements, and the Office for Disease 
                        Prevention; and
                            (ii) for construction and acquisition of 
                        equipment for or facilities of or used by the 
                        National Institutes of Health;
                    (B) 2 percent of such amounts for transfer to the 
                National Center for Research Resources to carry out 
                section 1502 of the National Institutes of Health 
                Revitalization Act of 1993 concerning Biomedical and 
                Behavioral Research Facilities;
                    (C) 1 percent of such amounts for carrying out 
                section 301 and part D of title IV of the Public Health 
                Service Act with respect to health information 
                communications;
                    (D) 10 percent of such amounts for carrying out 
                section 414 of the Public Health Service Act with 
                respect to national cancer research and demonstration 
                centers; and
                    (E) the remainder of such amounts to member 
                institutes and centers, including the Office of AIDS 
                Research, of the National Institutes of Health in the 
                same proportion to the total amount received under this 
                section, as the amount of annual appropriations under 
                appropriations Acts for each member institute and 
                Centers for the fiscal year bears to the total amount 
                of appropriations under appropriations Acts for all 
                member institutes and Centers of the National 
                Institutes of Health for the fiscal year.
            (2) Plans of allocation.--The amounts transferred under 
        paragraph (1)(E) shall be allocated by the Director of the 
        National Institutes of Health or the various directors of the 
        institutes and centers, as the case may be, pursuant to 
        allocation plans developed by the various advisory councils to 
        such directors, after consultation with such directors.
            (3) Grants and contracts fully funded in first year.--With 
        respect to any grant or contract funded by amounts distributed 
        under paragraph (1), the full amount of the total obligation of 
        such grant or contract shall be funded in the first year of 
        such grant or contract, and shall remain available until 
        expended.
            (4) Trigger and release of monies and phase-in.--
                    (A) Trigger and release.--No expenditure shall be 
                made under paragraph (1) during any fiscal year in 
                which the annual amount appropriated for the National 
                Institutes of Health is less than the amount so 
                appropriated for the prior fiscal year.
                    (B) Phase-in.--The Secretary of Health and Human 
                Services shall phase-in the distributions required 
                under paragraph (1) so that--
                            (i) 25 percent of the amount in the Trust 
                        Fund is distributed in the first fiscal year 
                        for which funds are available;
                            (ii) 50 percent of the amount in the Trust 
                        Fund is distributed in the second fiscal year 
                        for which funds are available;
                            (iii) 75 percent of the amount in the Trust 
                        Fund is distributed in the third fiscal year 
                        for which funds are available; and
                            (iv) 100 percent of the amount in the Trust 
                        Fund is distributed in the fourth and each 
                        succeeding fiscal year for which funds are 
                        available.
    (d) National Tobacco Research Agenda.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, and annually thereafter, the Director of 
        the National Institutes of Health, in collaboration with the 
        Director of the Centers for Disease Control and Prevention, the 
        Commissioner of Food and Drugs, the Administrator of the 
        Substance Abuse and Mental Health Services Administration, and 
        the Director of the Office of National Drug Control Policy, 
        shall prepare and submit to the Secretary and to the 
        appropriate committees of Congress a National Tobacco Research 
        Agenda.
            (2) Contents.--The Agenda submitted under paragraph (a) 
        shall reflect the research needs in the area of tobacco-related 
        illnesses and diseases and conditions related to other abused 
        substances for the year for which the Agenda is being 
        submitted, with special emphasis on youth tobacco use. The 
        Agenda shall include research concerning--
                    (A) the role of tobacco products in causing cancer, 
                cardiovascular diseases, stroke, and other diseases;
                    (B) genetic and behavioral factors that are related 
                to the use of tobacco or the development of tobacco-
                related diseases;
                    (C) the development of prevention and treatment 
                modalities with respect to tobacco use and cessation;
                    (D) the development and use of safer and less 
                addictive tobacco products;
                    (E) tobacco-related surveillance and education, 
                including the effects of counter-advertising;
                    (F) biomedical and behavioral research of the type 
                described in subparagraphs (A) through (E) for other 
                abused substances such as illicit narcotics; and
                    (G) brain development in the early years of life, 
                and the continued physical, intellectual, and social 
                development of children, with emphasis on how tobacco 
                and other abused substances affect such development.
    (e) Budget Treatment of Amounts in Trust Fund.--The amounts in the 
Trust Fund shall be excluded from, and shall not be taken into account, 
for purposes of any budget enforcement procedure under the 
Congressional Budget Act of 1974 or the Balanced Budget and Emergency 
Deficit Control Act of 1985.

SEC. 522. NATIONAL ANTI-TOBACCO PRODUCT CONSUMPTION AND TOBACCO PRODUCT 
              CESSATION PUBLIC HEALTH PROGRAM.

    (a) Authority and Duties.--Using amounts made available pursuant to 
section 101(c)(2) and (3)(D), the Secretary shall carry out the 
following activities:
            (1) National anti-tobacco program.--
                    (A) In general.--The Secretary shall establish and 
                implement a national anti-tobacco product consumption 
                and tobacco product cessation program to discourage 
                individuals from beginning to use tobacco products and 
                other substances of abuse and to assist individuals who 
                consume such products to discontinue such use, with 
                special emphasis placed on health promotion and disease 
                prevention activities that discourage children under 
                the age of 18 from initiating or continuing use of such 
                products;
                    (B) Requirements.--In carrying out the program 
                under subparagraph (A), the Secretary shall--
                            (i) to the maximum extent practicable, act 
                        in cooperation with State and local public 
                        health officials, and private for-profit and 
                        non-profit entities that carry out anti-tobacco 
                        product use and tobacco product cessation 
                        programs; and
                            (ii) to the extent determined appropriate 
                        by the Secretary, coordinate the program 
                        through the Centers for Disease Control and 
                        Prevention, Office on Smoking and Health.
            (2) Administrative activities.--The Secretary shall provide 
        funds for the administration and implementation of the public 
        health and regulatory provisions of this Act (including the 
        amendments made by this Act), including funds for the Centers 
        for Disease Control and Prevention and the Food and Drug 
        Administration.
            (3) Block grants.--The Secretary shall use not less than 50 
        percent of the amounts available in each fiscal year under this 
        section to provide block grants to States to carry out 
        activities described in subsection (c).
    (b) Recommendations.--In developing programs under this section, 
the Secretary shall consider, as appropriate, the recommendations of 
the members of the class certified for purposes of Dianne Castano v. 
American Tobacco Company.
    (c) Direct Federal Activities.--Under the national anti-tobacco 
product consumption and tobacco cessation program implemented under 
subsection (a)(1), the Secretary shall carry out the following 
activities:
            (1) Public education.--
                    (A) Model curricula.--The Secretary, acting through 
                the Director of the Centers for Disease Control and 
                Prevention, shall develop model curricula and other 
                materials designed to educate the public about the 
                health risks associated with tobacco use. Such 
                educational materials shall be specially designed to 
                influence the knowledge, attitudes, and behavior of 
                young Americans.
                    (B) Assistance by cdc.--The Director of the Centers 
                for Disease Control and Prevention shall provide 
                technical assistance to State and local public health 
                and education officials and parent-teacher and other 
                civic organizations in developing age effective anti-
                tobacco educational curricula and other materials.
                    (C) Chronic consumers of tobacco products.--
                Educational efforts under this paragraph shall include 
                the development of materials that advise members of the 
                public who consume tobacco products of the risks of 
                continuing to use such products and the benefits of 
                discontinuing the use of these products.
                    (D) Cessation education.--The Director of the 
                Centers for Disease Control and Prevention, in 
                consultation with State and local public health 
                officials, shall take appropriate action to inform 
                consumers of tobacco products about effective therapies 
for ceasing the consumption of tobacco products. Such actions shall be 
consistent with the tobacco use cessation guidelines issued by the 
Agency for Health Care Policy and Research.
            (2) Counter-advertising.--The Secretary shall carry out a 
        mass media public education campaign designed to counter the 
        effects of marketing practices of tobacco product manufacturers 
        and distributors.
            (3) Model state program.--The Secretary shall establish a 
        model smoking cessation program that may be used by States in 
        the design of State-based smoking cessation programs. Such 
        model program shall provide for the provision of grants and 
        other assistance by such States to eligible entities and 
        individuals in the State for the establishment or 
        administration of tobacco product use prevention and cessation 
        programs.
            (4) Other activities.--The Secretary may undertake anti-
        tobacco product consumption and cessation activities in 
        addition to those specified in paragraphs (1) through (3). Such 
        activities may include enhanced direct Federal programs whose 
        goal is to reduce the use of other abused substances such as 
        illicit drugs.
            (5) Grants and contracts.--The Secretary, acting under the 
        authority provided under section 301 of the Public Health 
        Service Act (42 U.S.C. 241 et seq.), may award grants and 
        contracts under subsection (a)(1) to public and private 
        entities (including for-profit entities if determined 
        appropriate by the Secretary) to carry out educational, 
        counter-advertising and other activities described in this 
        subsection.
    (d) Voluntary Tobacco Use Prevention and Cessation Block Grants.--
            (1) In general.--The Secretary shall award block grants to 
        States under subsection (a)(3) to enable such States to carry 
        out activities for the purpose of planning, implementing, and 
        evaluating tobacco use prevention and cessation activities 
        described in paragraph (4).
            (2) Eligibility.--To be eligible to receive a grant under 
        this section, a State shall certify to the Secretary that such 
        State has in effect and is enforcing a law that contains the 
        provisions described in the model State law described in 
        section 302.
            (3) Application.--
                    (A) In general.--A State that desires to receive a 
                voluntary block grant under subsection (a)(4) shall 
                prepare and submit to the Secretary an application, at 
                such time, in such manner, and accompanied by such 
                information as the Secretary may require.
                    (B) Contents.--An application submitted under 
                subparagraph (A) shall--
                            (i) describe the activities that will be 
                        carried out using assistance under this 
                        subsection; and
                            (ii) provide such assurances as the 
                        Secretary determines to be necessary to carry 
                        out this subsection.
                    (C) Joint application.--The Secretary shall permit 
                a State to submit a joint application for funds under 
                this subsection and section 502.
            (4) Use of funds.--A State shall use amounts received under 
        this section to carry out tobacco abuse activities described in 
        section 502(e).
            (5) Formula.--The amount of a block grant under this 
        subsection shall be determined by the Secretary based on a 
        formula to be developed by the Secretary that takes into 
        consideration the number of children between the ages of 10 and 
        18 in each State.
            (6) Nonparticipating states.--If a State elects not to 
        participate in the voluntary block grant program under this 
        subsection, the funds allocated to such State will be 
        distributed to participating States in the same ratio as 
        amounts provided to such States under the formula developed 
        under paragraph (5).

  TITLE VI--STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO TOBACCO SMOKE

SEC. 601. DEFINITIONS.

    In this title--
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Occupational Safety and Health 
        Administration.
            (2) Public facility.--
                    (A) In general.--The term ``public facility'' means 
                any building regularly entered by 10 or more 
                individuals at least 1 day per week, including any such 
                building owned by or leased to a Federal, State, or 
                local government entity, and including any building 
                under the control of Congress or an instrumentality of 
                Congress (as such term is defined for purposes of 
section 509 of the Americans with Disabilities Act of 1990 (42 U.S.C. 
12209). Such term shall not include any building or portion thereof 
regularly used for residential purposes.
                    (B) Exclusions.--The term ``public facility'' does 
                not include a building which is used as a bar, bar 
                area, private club, hotel guest room, casino, bingo 
                parlor, or the facilities of any tobacco product 
                manufacturer or distributor or the facilities of any 
                retailer primarily engaged in the business of selling 
                tobacco products.
                    (C) Bar.--The term ``bar'' means any indoor area 
                that is open to the general public and that is devoted 
                to the sale and service of alcoholic beverages for on-
                premises consumption and where the service of food is 
                only incidental to the consumption of such beverages. 
                Service of food shall be considered incidental if the 
                food service generated less than 50 percent of the 
                total annual gross sales of the establishment.
                    (D) Bar area.--The term ``bar area'' means an area 
                within a restaurant that is devoted to the sale and 
                service of alcoholic beverages for on-premises 
                consumption and where the service of food is only 
                incidental to the consumption of such beverages. 
                Service of food shall be considered incidental if the 
                food service generated less than 50 percent of the 
                total annual gross sales of the area. Nothing in this 
                title shall be construed to require that a restaurant 
                to separate the bar area from the remainder of the 
                establishment.
            (3) Responsible entity.--The term ``responsible entity'' 
        means, with respect to any public facility, the owner of such 
        facility except that, in the case of any such facility or 
        portion thereof which is leased, such term means the lessee.
            (4) Restaurant.--The term ``restaurant'' means any indoor 
        area that is open to the general public, or a portion of such 
        area, in which the business is the sale of food for on-premises 
        consumption and which has an indoor seating capacity of greater 
        than 50 individuals. Such term includes cafeterias, coffee 
        shops, diners, sandwich shops, and short order cafes. Such term 
        shall not include the bar area of any such area.

SEC. 602. SMOKE-FREE ENVIRONMENT POLICY.

    (a) Policy Required.--In order to protect children and adults from 
cancer, respiratory disease, heart disease, and other adverse health 
effects from breathing environmental tobacco smoke, the responsible 
entity for each public facility shall adopt and implement at such 
facility a smoke-free environment policy which meets the requirements 
of subsection (b) or, in the case of schools or facilities serving 
children, subsection (d).
    (b) Elements of Policy.--
            (1) In general.--Each smoke-free environment policy for a 
        public facility shall--
                    (A) prohibit the smoking of cigarettes, cigars, and 
                pipes, and any other combustion of tobacco within the 
                facility and on facility property within the immediate 
                vicinity of the entrance to the facility; and
                    (B) post a clear and prominent notice of the 
                smoking prohibition in appropriate and visible 
                locations at the public facility.
            (2) Exception.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the smoke-free environment policy for a public 
                facility may provide an exception to the prohibition 
                specified in paragraph (1) for 1 or more specially 
                designated smoking areas within a public facility if 
                such area or areas meet the requirements of subsection 
                (c).
                    (B) Limitation.--Subparagraph (A) shall not apply 
                to a public facility that is a restaurant or prison.
    (c) Specially Designated Smoking Areas.--A specially designated 
smoking area meets the requirements of this subsection if--
            (1) the area is ventilated in accordance with 
        specifications promulgated by the Administrator that ensure 
        that air from the area is directly exhausted to the outside and 
        does not recirculate or drift to other areas within the public 
        facility;
            (2) the area is maintained at negative pressure, as 
        compared to adjoined nonsmoking areas, as determined under 
        regulations promulgated by the Administrator; and
            (3) nonsmoking individuals do not have to enter the area 
        for any purpose while smoking is occurring in such area.
Cleaning and maintenance work shall be conducted in such area only 
while no smoking is occurring in the area.
    (d) Special Rules for Schools and Other Facilities Serving 
Children.--
            (1) In general.--With respect to a facility described in 
        paragraph (1), the responsible entity for the facility shall 
        adopt and implement at such facility a smoke-free environment 
        policy that--
                    (A) prohibits the smoking of cigarettes, cigars, 
                and pipes, and any other combustion of tobacco within 
                the facility and on facility property;
                    (B) prohibits the use of smokeless tobacco products 
                within the facility and on facility property; and
                    (C) post a clear and prominent notice of the 
                smoking and smokeless tobacco prohibition in 
                appropriate and visible locations at the public 
                facility.
            (2) Facility.--A facility described in this subparagraph 
        is--
                    (A) an elementary or secondary school (as such term 
                is defined in section 14101 of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8801);
                    (B) any facility at which a Head Start program or 
                project is being carried out under the Head Start Act 
                (42 U.S.C. 9831 et. seq.); and
                    (C) any facility, other than a home-based facility, 
                at which a licensed or certified child care provider 
                provides child care services.
            (3) Designated areas.--The smoke-free environment policy 
        for a facility described in paragraph (2) may provide an 
        exception to the prohibition specified in paragraph (1) for 1 
        or more specially designated smoking areas within such facility 
        if such area or areas meet the requirements of subsection (c).

SEC. 603. PREEMPTION.

    Nothing in this title shall preempt or otherwise affect any other 
Federal, State or local law which provides protections from health 
hazards from environmental tobacco smoke that are equal to or greater 
than the protections provided for under this title.

SEC. 604. REGULATIONS.

    Not later than 6 months after the date of enactment of this Act, 
the Administrator shall promulgate such regulations as necessary to 
carry out this title. Such regulations shall delegate to the States a 
right to enforce the provisions of this title.

SEC. 605. EFFECTIVE DATE.

    The provisions of this title shall take effect on the date that is 
6 months after the date on which regulations are promulgated under 
section 604 or 1 year after the date of enactment of this Act, 
whichever is later.

            TITLE VII--PUBLIC DISCLOSURE OF HEALTH RESEARCH

SEC. 701. PURPOSE.

    It is the purpose of this title to provide for the disclosure of 
previously nonpublic or confidential documents by manufacturers of 
tobacco products, including the results of internal health research, 
and to provide for a procedure to settle claims of attorney-client 
privilege, work product, or trade secrets with respect to such 
documents.

SEC. 702. NATIONAL TOBACCO DOCUMENT DEPOSITORY.

    (a) Establishment.--
            (1) In general.--To be eligible to receive the liability 
        protections provided for under subtitle C of title I, 
        manufacturers of tobacco products, acting in conjunction with 
        the Tobacco Institute and the Council for Tobacco Research, 
        U.S.A. (prior to the termination of such entities under section 
        155), and in accordance with the guidelines and procedures 
        established under paragraph (2), shall, not later than 90 days 
        after the date of enactment of this Act, establish and maintain 
        a National Tobacco Document Depository (in this title referred 
        to as the ``Depository''). Such Depository shall be located in 
        the Washington, D.C. area and be open to the public.
            (2) Guidelines.--The Attorney General, in consultation with 
        the General Services Administration, shall establish guidelines 
        and procedures for the establishment and operation of the 
        Depository, including guidelines for the immediate disclosure 
        of documents relating to health and safety.
    (b) Use of Depository.--The Depository shall be maintained in a 
manner that permits the Depository to be used as a resource for 
litigants, public health groups, and any other individuals who have an 
interest in the corporate records and research of the manufacturers 
concerning smoking and health, addiction or nicotine dependency, safer 
or less hazardous cigarettes, and underage tobacco use and marketing.
    (c) Contents.--The Depository shall include (and manufacturers and 
the Tobacco Institute and the Council for Tobacco Research, U.S.A. 
shall provide)--
            (1) within 30 days of the date on which the Depository is 
        established, all documents provided by such entities to 
        plaintiffs in--
                    (A) civil or criminal actions brought by State 
                attorneys general (including all documents selected by 
                plaintiffs from the Guilford Repository of the United 
                Kingdom);
                    (B) Philip Morris Companies Inc.'s defamation 
                action against Capital Cities/American Broadcasting 
                Company News;
                    (C) the Federal Trade Commission's investigation 
                concerning Joe Camel and underage marketing;
                    (D) Haines v. Liggett Group, Inc. (814 F. Supp. 414 
                (D.N.J., Jan. 26, 1993)) and Cippollone v. Liggett 
                Group, Inc. (822 F. 2d 335, 56 USLW 2028, 7 Fed. R. 
                Serv. 3d 1438 (3rd Cir. (N.J.), Jun. 8, 1987)); and
                    (E) Estate of Burl Butler v. Philip Morris, Inc. 
                (case No. 94-4-53);
            (2) within 90 days after the date of enactment of this Act, 
        any exiting documents discussing or referring to health 
        research, addiction or dependency, safer or less hazardous 
        cigarettes, studies of the smoking habits of minors, and the 
        relationship between advertising or promotion and youth 
        smoking, that the entities described in subsection (a) have not 
        completed producing as required in the actions described in 
        paragraph (1);
            (3) within 30 days of the date on which the Depository is 
        established, all documents relating to indices (as defined by 
        the court in State of Minnesota and Blue Cross and Blue Shield 
        of Minnesota v. Philip Morris, Inc., et al.) of documents 
        relating to smoking and health, including all indices 
        identified by the manufacturers in the State of Texas v. 
        American Tobacco Company, et al.;
            (4) upon the settlement of any action referred to in this 
        subsection, and after a good-faith, de novo, document-by-
        document review of all documents previously withheld from 
        production in any actions on the grounds of attorney-client 
        privilege, all documents determined to be outside of the scope 
        of the privilege;
            (5) all existing or future documents relating to original 
        laboratory research concerning the health or safety of tobacco 
        products, including all laboratory research results relating to 
        methods used to make tobacco products less hazardous to 
        consumers;
            (6) a comprehensive new attorney-client privilege log of 
        all documents, itemized in sufficient detail so as to enable 
        any interested individual to determine whether the individual 
        will challenge the claim of privilege, that the entities 
        described in subsection (a) (based on the de novo review of 
        such documents by such entities) claim are protected from 
        disclosure under the attorney-client privilege;
            (7) all existing or future documents relating to studies of 
        the smoking habits of minors or documents referring to any 
        relationship between advertising and promotion and underage 
        smoking;
            (8) all original laboratory research conducted or funded, 
        directly or indirectly, by any participating tobacco product 
        manufacturer relating to the health effects or safety of 
        tobacco products, including all original laboratory research 
        relating to any methods or means of making tobacco products 
        less hazardous to consumers;
            (9) all studies conducted or funded, directly or 
        indirectly, by any participating tobacco product manufacturer, 
        relating to tobacco product use by minors;
            (10) all documents discussing or referring to the 
        relationship, if any, between advertising and promotion and the 
        use of tobacco products by minors;
            (11) a privilege log describing each document or each 
        portion of a document otherwise subject to public disclosure 
        under this subsection that any participating tobacco product 
        manufacturer maintains is exempt from the public disclosure 
        provisions of this Act pursuant to subsection (d);
            (12) a trade secrecy log describing each document or each 
        document otherwise subject to public disclosure; and
            (13) all other documents determined appropriate under 
        regulations promulgated by the Secretary.
    (d) Dispute Resolution Panel.--
            (1) Establishment.--The Judicial Conference of the United 
        States shall establish a Tobacco Documents Dispute Resolution 
        Panel, to be composed of three Federal judges to be appointed 
        by the Conference, to resolve all disputes involving claims of 
        attorney-client, work product, or trade secrets privilege with 
        respect to documents required to be deposited into the 
        Depository under subsection (c) that may be brought by Federal, 
        State, or local governmental officials or the public or 
        asserted in any action by a manufacturer.
            (2) Basis for determinations.--The determinations of the 
        Panel established under paragraph (1) shall be based on--
                    (A) the American Bar Association/American Law 
                Institute Model Rules or the principals of Federal law 
                with respect to attorney-client or work product 
                privilege; and
                    (B) the Uniform Trade Secrets Act with respect to 
                trade secrecy.
            (3) Decision.--Any decision of the Panel established under 
        paragraph (1) shall be final and binding upon all Federal and 
        State courts.
            (4) Assessing of fees.--As part of a determination under 
        this subsection, the Panel established under paragraph (1) 
        shall determined whether a claimant of the privilege acted in 
        good faith and had a factual and legal basis for asserting the 
        claim. If the Panel determines that the claimant did not act in 
        good faith, the Panel may assess costs against the claimant, 
        including a reasonable attorneys' fee, and may apply such other 
        sanctions as the Panel determines appropriate.
            (5) Accelerated review.--The Panel established under 
        paragraph (1) shall establish procedures for the accelerated 
        review of challenges to a claim of privilege. Such procedures 
        shall include assurances that an individual filing a challenge 
        to such a claim need not make a prima facie showing of any kind 
        as a prerequisite to an in camera review of the documents at 
        issue.
            (6) Special masters.--The Panel established under paragraph 
        (1) may appoint Special Masters in accordance with Rule 53 of 
        the Federal Rules of Civil Procedure. The cost relating to any 
        Special Master shall be assessed to the manufacturers as part 
        of a fee process to be established under regulations 
        promulgated by the Secretary.
    (e) Other Provisions.--
            (1) No waiver of privilege.--Compliance with this section 
        by the entities described in subsection (a) shall not be deemed 
        to be a waiver on behalf of such entities of any applicable 
        privilege or protection.
            (2) Avoidance of destruction.--In establishing the 
        Depository, procedures shall be implemented to protect against 
        the destruction of documents.
            (3) Deemed produced.--Any documents contained in the 
        Depository shall be deemed to have been produced for purposes 
        of any tobacco-related litigation in the United States.
    (f) Documents.--For purposes of this section, the term 
``documents'' shall include any paper documents that may be printed 
using data that is contained in computer files.

SEC. 703. ENFORCEMENT.

    (a) In General.--The Attorney General, acting through the National 
Tobacco Settlement Trust Fund, or the chief law enforcement officer of 
a State may bring a proceeding before the dispute resolution panel 
under section 802(e) to enforce violations of such section. The panel 
shall have exclusive jurisdiction over actions to enforce violations of 
this title.
    (b) Notice.--The person against whom a violation is alleged under 
subsection (a) shall be given notice of a proceeding before the panel 
and an opportunity to be heard. Participating tobacco product 
manufacturers shall have the right to intervene in such proceedings.
    (c) Penalties.--Violations of this subtitle shall give rise to 
civil penalty of not to exceed $15,000 per violation and $1,000,000 for 
all violations adjudicated in a single proceeding, except that no 
penalty may be assessed where the person committing the violation had a 
good faith factual and legal basis that the document, portion of a 
document, or portion of an index of document that is the subject of the 
alleged violation was exempt from public disclosure under subsections 
(c) or (d) of section 702.
    (d) Single Violation.--For purposes of this section, a failure to 
disclose 1 or more portions of a single document in violation of this 
title shall be considered to be part of a single violation.

             TITLE VIII--AGRICULTURAL TRANSITION PROVISIONS

SEC. 801. SHORT TITLE.

    This title may be cited as the ``Tobacco Transition Act''.

SEC. 802. PURPOSES.

    The purposes of this title are--
            (1) to authorize the use of binding contracts between the 
        United States and tobacco quota owners and tobacco producers to 
        compensate them for the termination of Federal programs that 
        support the production of tobacco in the United States;
            (2) to make available to States funds for economic 
        assistance initiatives in counties of States that are dependent 
        on the production of tobacco; and
            (3) to terminate Federal programs that support the 
        production of tobacco in the United States.

SEC. 803. DEFINITIONS.

    In this title:
            (1) Association.--The term ``association'' means a 
        producer-owned cooperative marketing association that has 
        entered into a loan agreement with the Commodity Credit 
        Corporation to make price support available to producers.
            (2) Buyout payment.--The term ``buyout payment'' means a 
        payment made to a quota owner under section 814 in 1 or more 
        installments in accordance with section 812(c)(1).
            (3) Contract.--The term ``contract'' or ``tobacco 
        transition contract'' means a contract entered into under 
        section 812.
            (4) Governor.--The term ``Governor'' means the chief 
        executive officer of a State.
            (5) Lease.--The term ``lease'' means a rental of quota on 
        either a cash rent or crop share basis.
            (6) Marketing year.--The term ``marketing year'' means--
                    (A) in the case of Flue-cured tobacco, the period 
                beginning July 1 and ending the following June 30; and
                    (B) in the case of each other kind of tobacco, the 
                period beginning October 1 and ending the following 
                September 30.
            (7) Owner.--The term ``owner'' means a person who, at the 
        time of entering into a tobacco transition contract, owns quota 
        provided by the Secretary.
            (8) Phaseout period.--The term ``phaseout period'' means 
        the 3-year period consisting of the 1999 through 2001 marketing 
        years.
            (9) Price support.--The term ``price support'' means a 
        nonrecourse loan provided by the Commodity Credit Corporation 
        through an association for the kind of tobacco involved.
            (10) Producer.--The term ``producer'' means a person who 
        during at least 3 of the 1993 through 1997 crops of tobacco (as 
        determined by the Secretary) that were subject to quota--
                    (A) leased quota;
                    (B) shared in the risk of producing a crop of 
                tobacco; and
                    (C) marketed the tobacco subject to quota.
            (11) Quota.--The term ``quota'' means the quantity of 
        tobacco produced in the United States, and marketed during a 
        marketing year, that will be used in, or exported from, the 
        United States during the marketing year (including an 
        adjustment for stocks), as estimated by the Secretary.
            (12) Secretary.--The term ``Secretary'' means the Secretary 
        of Agriculture.
            (13) State.--The term ``State'' means each of the several 
        States of the United States, the District of Columbia, the 
        Commonwealth of Puerto Rico, and any other territory or 
        possession of the United States.
            (14) Tobacco.--The term ``tobacco'' means any kind of 
        tobacco for which a marketing quota is in effect or for which a 
        marketing quota is not disapproved by producers.
            (15) Tobacco transition account.--The term ``Tobacco 
        Transition Account'' means the Tobacco Transition Account 
        established by section 811(a).
            (16) Transition payment.--The term ``transition payment'' 
        means a payment made to a producer under section 815 for each 
        of the 1999 through 2001 marketing years.
            (17) Trust fund.--The term ``Trust Fund'' means the 
        National Tobacco Settlement Trust Fund established in the 
        Treasury of the United States consisting of amounts that are 
        appropriated or credited to the Trust Fund from the tobacco 
        settlement approved by Congress.
            (18) United states.--The term ``United States'', when used 
        in a geographical sense, means all of the States.

               Subtitle A--Tobacco Production Transition

                CHAPTER 1--TOBACCO TRANSITION CONTRACTS

SEC. 811. TOBACCO TRANSITION ACCOUNT.

    (a) Establishment.--There is established a Tobacco Transition 
Account into to which amounts shall be transferred as provided for in 
section 841.
    (b) Use.--Funds appropriated or credited to the Tobacco Transition 
Account shall be available for providing buyout payments and transition 
payments authorized under this chapter.
    (c) Termination.--The Tobacco Transition Account terminates 
effective September 30, 2001.

SEC. 812. OFFER AND TERMS OF TOBACCO TRANSITION CONTRACTS.

    (a) Offer.--The Secretary shall offer to enter into a tobacco 
transition contract with each owner and producer of tobacco.
    (b) Terms.--Under the terms of a contract, the owner or producer 
shall agree, in exchange for a payment made pursuant to section 814 or 
815, as applicable, to relinquish the value of quota that is owned or 
leased.
    (c) Rights of Owners and Producers.--
            (1) Owners.--An owner shall receive a buyout payment in 3 
        equal installments, 1 installment for each of the 1999 through 
        2001 crops of tobacco, in which case the owner shall have the 
        right to continue production of each of those crops.
            (2) Producers.--In the case of each of the 1999 through 
        2001 crops for the kind of tobacco involved, a producer who is 
        not an owner during the 1998 marketing year for the kind of 
        tobacco involved shall not be subject to any restrictions on 
        the quantity of tobacco produced or marketed.

SEC. 813. ELEMENTS OF CONTRACTS.

    (a) Deadlines for Contracting.--
            (1) Commencement.--To the maximum extent practicable, the 
        Secretary shall commence entering into contracts under this 
        chapter not later than 90 days after the date of enactment of 
        this Act.
            (2) Deadline.--The Secretary may not enter into a contract 
        under this chapter after June 30, 1999.
    (b) Duration of Contract.--
            (1) Beginning date.--The term of a contract shall begin on 
        the date that is the beginning of the 1999 marketing year for 
        the kind of tobacco involved.
            (2) Termination date.--The term of a contract shall 
        terminate on the date that is the end of the 2001 marketing 
        year for the kind of tobacco involved.
    (c) Time for Payment.--
            (1) In general.--A buyout payment or transition payment 
        shall be made not later than the date that is the beginning of 
        the marketing year for the kind of tobacco involved for each 
        year of the term of a tobacco transition contract of an owner 
        or producer of tobacco.
            (2) Applicability.--This subsection shall be applicable to 
        all payments covered by section 812(c).

SEC. 814. BUYOUT PAYMENTS TO OWNERS.

    (a) In General.--During the phaseout period, the Secretary shall 
make buyout payments to owners in accordance with section 812(c)(1).
    (b) Compensation for Lost Value.--The payment shall constitute 
compensation for the lost value to the owner of the quota.
    (c) Payment Calculation.--Under this section, the total amount of 
the buyout payment made to an owner shall be determined by 
multiplying--
            (1) $8.00; by
            (2) the average annual quantity of quota owned by the owner 
        during the 1995 through 1997 crop years.

SEC. 815. TRANSITION PAYMENTS TO PRODUCERS.

    (a) In General.--The Secretary shall make transition payments 
during each of the 1999 through 2001 marketing years for a kind of 
tobacco that was subject to a quota to a producer who--
            (1) produced the kind of tobacco during at least 3 of the 
        1993 through 1997 crop years; and
            (2) entered into a tobacco transition contract.
    (b) Transition Payments Limited to Leased Quota.--A producer shall 
be eligible for transition payments only for the portion of the 
production of the producer that is subject to quota that is leased 
during the 3 crop years described in subsection (a)(1).
    (c) Compensation for Lost Revenue.--The payments shall constitute 
compensation for the lost revenue incurred by a tobacco producer during 
each of the 1999 through 2001 marketing years for the kind of tobacco 
involved.
    (d) Election by Producer; Production.--
            (1) Election.--The producer may elect which 3 of the 1993 
        through 1997 crop years shall be used for the calculation under 
        subsection (e).
            (2) Production.--The producer shall have the burden of 
        demonstrating to the Secretary the production of tobacco for 
        each year of the election.
    (e) Payment Calculation.--Under this section, each of the 3 
transition payments made to a producer for the kind of tobacco involved 
shall be determined by multiplying--
            (1) 40 cents; by
            (2) the average quantity of the kind of tobacco produced by 
        the producer during the 3 crop years elected by the producer 
        under subsection (d).

SEC. 816. TOBACCO WORKER TRANSITION PROGRAM.

    (a) Group Eligibility Requirements.--
            (1) Criteria.--A group of workers (including workers in any 
        firm or subdivision of a firm involved in the manufacture, 
        processing, or warehousing of tobacco or tobacco products) 
        shall be certified as eligible to apply for adjustment 
        assistance under this section pursuant to a petition filed 
        under subsection (b) if the Secretary of Labor determines that 
        a significant number or proportion of the workers in such 
        workers' firm or an appropriate subdivision of the firm have 
        become totally or partially separated, or are threatened to 
        become totally or partially separated, and--
                    (A) the sales or production, or both, of such firm 
                or subdivision have decreased absolutely; and
                    (B) the implementation of the national tobacco 
                settlement contributed importantly to such workers' 
                separation or threat of separation and to the decline 
                in the sales or production of such firm or subdivision.
            (2) Definition of contributed importantly.--In paragraph 
        (1)(B), the term ``contributed importantly'' means a cause that 
        is important but not necessarily more important than any other 
        cause.
            (3) Regulations.--The Secretary shall issue regulations 
        relating to the application of the criteria described in 
        paragraph (1) in making preliminary findings under subsection 
        (b) and determinations under subsection (c).
    (b) Preliminary Findings and Basic Assistance.--
            (1) Filing of petitions.--A petition for certification of 
        eligibility to apply for adjustment assistance under this 
        section may be filed by a group of workers (including workers 
        in any firm or subdivision of a firm involved in the 
        manufacture, processing, or warehousing of tobacco or tobacco 
        products) or by their certified or recognized union or other 
        duly authorized representative with the Governor of the State 
        in which such workers' firm or subdivision thereof is located.
            (2) Findings and assistance.--Upon receipt of a petition 
        under paragraph (1), the Governor shall--
                    (A) notify the Secretary that the Governor has 
                received the petition;
                    (B) within 10 days after receiving the petition--
                            (i) make a preliminary finding as to 
                        whether the petition meets the criteria 
                        described in subsection (a)(1); and
                            (ii) transmit the petition, together with a 
                        statement of the finding under clause (i) and 
                        reasons for the finding, to the Secretary for 
                        action under subsection (c); and
                    (C) if the preliminary finding under subparagraph 
                (B)(i) is affirmative, ensure that rapid response and 
                basic readjustment services authorized under other 
                Federal laws are made available to the workers.
    (c) Review of Petitions by Secretary; Certifications.--
            (1) In general.--The Secretary, within 30 days after 
        receiving a petition under subsection (b)(2)(B)(ii), shall 
        determine whether the petition meets the criteria described in 
        subsection (a)(1). Upon a determination that the petition meets 
        such criteria, the Secretary shall issue to workers covered by 
        the petition a certification of eligibility to apply for the 
        assistance described in subsection (d).
            (2) Denial of certification.--Upon the denial of a 
        certification with respect to a petition under paragraph (1), 
        the Secretary shall review the petition in accordance with the 
        requirements of other applicable assistance programs to 
        determine if the workers may be certified under such other 
        provisions.
    (d) Comprehensive Assistance.--
            (1) In general.--Workers covered by a certification issued 
        by the Secretary under subsection (c)(1) shall be provided with 
        benefits and services described in paragraph (2) in the same 
        manner and to the same extent as workers covered under a 
        certification under subchapter A of title II of the Trade Act 
        of 1974 (19 U.S.C. 2271 et seq.), except that the total amount 
        of payments under this section for any fiscal year shall not 
        exceed $50,000,000.
            (2) Benefits and services.--The benefits and services 
        described in this paragraph are the following:
                    (A) Employment services of the type described in 
                section 235 of the Trade Act of 1974 (19 U.S.C. 2295).
                    (B) Training described in section 236 of the Trade 
                Act of 1974 (19 U.S.C. 2296), except that 
                notwithstanding the provisions of section 236(a)(2)(A) 
                of such Act, the total amount of payments for training 
                under this section for any fiscal year shall not exceed 
                $25,000,000.
                    (C) Tobacco worker readjustment allowances, which 
                shall be provided in the same manner as trade 
                readjustment allowances are provided under part I of 
                subchapter B of chapter 2 of title II of the Trade Act 
                of 1974 (19 U.S.C. 2291 et seq.), except that--
                            (i) the provisions of sections 231(a)(5)(C) 
                        and 231(c) of such Act (19 U.S.C. 
                        2291(a)(5)(C), 2291(c)), authorizing the 
                        payment of trade readjustment allowances upon a 
                        finding that it is not feasible or appropriate 
                        to approve a training program for a worker, 
                        shall not be applicable to payment of 
                        allowances under this section; and
                            (ii) notwithstanding the provisions of 
                        section 233(b) of such Act (19 U.S.C. 2293(b)), 
                        in order for a worker to qualify for tobacco 
                        readjustment allowances under this section, the 
                        worker shall be enrolled in a training program 
                        approved by the Secretary of the type described 
                        in section 236(a) of such Act (19 U.S.C. 
2296(a)) by the later of--
                                    (I) the last day of the 16th week 
                                of such worker's initial unemployment 
                                compensation benefit period; or
                                    (II) the last day of the 6th week 
                                after the week in which the Secretary 
                                issues a certification covering such 
                                worker.
                        In cases of extenuating circumstances relating 
                        to enrollment of a worker in a training program 
                        under this section, the Secretary may extend 
                        the time for enrollment for a period of not to 
                        exceed 30 days.
                    (D) Job search allowances of the type described in 
                section 237 of the Trade Act of 1974 (19 U.S.C. 2297).
                    (E) Relocation allowances of the type described in 
                section 238 of the Trade Act of 1974 (19 U.S.C. 2298).
    (e) Ineligibility of Individuals Receiving Payments for Lost 
Tobacco Quota.--No benefits or services may be provided under this 
section to any individual who has received buyout payments for tobacco 
quotas under section 812.
    (f) Funding.--Of the amounts in the Account, the Secretary may use 
not to exceed $50,000,000 for each of fiscal years 1999 through 2008 to 
provide assistance under this section.
    (g) Effective Date.--This section shall take effect on the date 
that is the later of--
            (1) October 1, 1998; or
            (2) the date on which legislation implementing the national 
        tobacco settlement is enacted.
    (h) Termination Date.--No assistance, vouchers, allowances, or 
other payments may be provided under this section after the date that 
is the earlier of--
            (1) the date that is 10 years after the effective date of 
        this section under subsection (g); or
            (2) the date on which legislation establishing a program 
        providing dislocated workers with comprehensive assistance 
        substantially similar to the assistance provided by this 
        section becomes effective.

SEC. 817. FARMER OPPORTUNITY GRANTS.

    Part A of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1070 et seq.) is amended by adding at the end the following:

                 ``Subpart 9--Farmer Opportunity Grants

``SEC. 420D. STATEMENT OF PURPOSE.

    ``It is the purpose of this subpart to assist in making available 
the benefits of postsecondary education to eligible students 
(determined in accordance with section 420F) in institutions of higher 
education by providing farmer opportunity grants to all eligible 
students.

``SEC. 420E. PROGRAM AUTHORITY; AMOUNT AND DETERMINATIONS; 
              APPLICATIONS.

    ``(a) Program Authority and Method of Distribution.--
            ``(1) Program authority.--From the Tobacco Transition 
        Account under section 811 of the PROTECT Act, the Secretary, 
        during the period beginning July 1, 1999, and ending September 
        30, 2024, shall pay to each eligible institution such sums as 
        may be necessary to pay to each eligible student (determined in 
        accordance with section 420F) for each academic year during 
        which that student is in attendance at an institution of higher 
        education, as an undergraduate, a farmer opportunity grant in 
        the amount for which that student is eligible, as determined 
        pursuant to subsection (b). Not less than 85 percent of such 
        sums shall be advanced to eligible institutions prior to the 
        start of each payment period and shall be based upon an amount 
        requested by the institution as needed to pay eligible 
        students, except that this sentence shall not be construed to 
        limit the authority of the Secretary to place an institution on 
        a reimbursement system of payment.
            ``(2) Construction.--Nothing in this section shall be 
        construed to prohibit the Secretary from paying directly to 
        students, in advance of the beginning of the academic term, an 
        amount for which the students are eligible, in cases where the 
        eligible institution elects not to participate in the 
        disbursement system required by paragraph (1).
            ``(3) Designation.--Grants made under this subpart shall be 
        known as `farmer opportunity grants'.
            ``(4) Amounts.--To carry out this subpart there shall be 
        transferred the following amounts from the Tobacco Transition 
        Account:
                    ``(A) $42,500,000 for each of the academic years 
                1999-2000 through 2003-2004.
                    ``(B) $50,000,000 for each of the academic years 
                2004-2005 through 2008-2009.
                    ``(C) $57,500,000 for each of the academic years 
                2009-2010 through 2013-2014.
                    ``(D) $65,000,000 for each of the academic years 
                2014-2015 through 2018-2019.
                    ``(E) $72,500,000 for each of the academic years 
                2019-2020 through 2023-2024.
    ``(b) Amount of Grants.--
            ``(1) Amounts.--
                    ``(A) In general.--The amount of the grant for a 
                student eligible under this subpart shall be--
                            ``(i) $1,700, or such sum as may be 
                        available, for each of the academic years 1999-
                        2000 through 2003-2004;
                            ``(ii) $2,000, or such sum as may be 
                        available, for each of the academic years 2004-
                        2005 through 2008-2009;
                            ``(iii) $2,300, or such sum as may be 
                        available, for each of the academic years 2009-
                        2010 through 2013-2014;
                            ``(iv) $2,600, or such sum as may be 
                        available, for each of the academic years 2014-
                        2015 through 2018-2019; and
                            ``(v) $2,900, or such sum as may be 
                        available, for each of the academic years 2019-
                        2020 through 2023-2024.
                    ``(B) Part-time rule.--In any case where a student 
                attends an institution of higher education on less than 
                a full-time basis (including a student who attends an 
                institution of higher education on less than a half-
                time basis) during any academic year, the amount of the 
                grant for which that student is eligible shall be 
                reduced in proportion to the degree to which that 
                student is not so attending on a full-time basis, in 
                accordance with a schedule of reductions established by 
                the Secretary for the purposes of this subparagraph, 
                computed in accordance with this subpart. Such schedule 
                of reductions shall be established by regulation and 
                published in the Federal Register.
            ``(2) Maximum.--No grant or combination of grants under 
        this subpart shall exceed the cost of tuition and fees at the 
        institution at which that student is in attendance. If, with 
        respect to any student, it is determined that the amount of a 
        grant exceeds the cost of tuition and fees for that year, the 
        amount of the farmer opportunity grant shall be reduced to an 
        amount equal to the cost of tuition and fees at such 
        institution.
            ``(3) Prohibition.--No grant shall be awarded under this 
        subpart to any individual who is incarcerated in any Federal, 
        State, or local penal institution.
    ``(c) Period of Eligibility for Grants.--
            ``(1) In general.--The period during which a student may 
        receive grants shall be the period required for the completion 
        of the first undergraduate baccalaureate course of study being 
        pursued by that student at the institution at which the student 
        is in attendance, except that any period during which the 
        student is enrolled in a noncredit or remedial course of study 
        as described in paragraph (2) shall not be counted for the 
        purpose of this paragraph.
            ``(2) Construction.--Nothing in this section shall be 
        construed to--
                    ``(A) exclude from eligibility courses of study 
                that are noncredit or remedial in nature and that are 
                determined by the institution to be necessary to help 
                the student be prepared for the pursuit of a first 
                undergraduate baccalaureate degree or certificate or, 
                in the case of courses in English language instruction, 
                to be necessary to enable the student to utilize 
                already existing knowledge, training, or skills; and
                    ``(B) exclude from eligibility programs of study 
                abroad that are approved for credit by the home 
                institution at which the student is enrolled.
            ``(3) Prohibition.--No student is entitled to receive 
        farmer opportunity grant payments concurrently from more than 1 
        institution or from the Secretary and an institution.
    ``(d) Applications for Grants.--
            ``(1) In general.--The Secretary shall from time to time 
        set dates by which students shall file applications for grants 
        under this subpart. The filing of applications under this 
        subpart shall be coordinated with the filing of applications 
        under section 411(d).
            ``(2) Information and assurances.--Each student desiring a 
        grant for any year shall file with the Secretary an application 
        for the grant containing such information and assurances as the 
        Secretary may deem necessary to enable the Secretary to carry 
        out the Secretary's functions and responsibilities under this 
        subpart.
    ``(e) Distribution of Grants to Students.--Payments under this 
section shall be made in accordance with regulations promulgated by the 
Secretary for such purpose, in such manner as will best accomplish the 
purpose of this section. Any disbursement allowed to be made by 
crediting the student's account shall be limited to tuition and fees 
and, in the case of institutionally owned housing, room and board. The 
student may elect to have the institution provide other such goods and 
services by crediting the student's account.
    ``(f) Insufficient Funding.--If, for any fiscal year, the funds 
made available to carry out this subpart from the Tobacco Community 
Revitalization Trust Fund are insufficient to satisfy fully all grants 
for students determined to be eligible under section 420F, the amount 
of the grant provided under subsection (b) shall be reduced on a pro 
rata basis among all eligible students.
    ``(g) Treatment of Institutions and Students Under Other Laws.--Any 
institution of higher education that enters into an agreement with the 
Secretary to disburse to students attending that institution the 
amounts those students are eligible to receive under this subpart shall 
not be deemed, by virtue of such agreement, to be a contractor 
maintaining a system of records to accomplish a function of the 
Secretary. Recipients of farmer opportunity grants shall not be 
considered to be individual grantees for purposes of the Drug-Free 
Workplace Act of 1988 (41 U.S.C. 701 et seq.).

``SEC. 420F. STUDENT ELIGIBILITY.

    ``(a) In General.--In order to receive any grant under this 
subpart, a student shall--
            ``(1) be a member of a tobacco farm family in accordance 
        with subsection (b);
            ``(2) be enrolled or accepted for enrollment in a degree, 
        certificate, or other program (including a program of study 
        abroad approved for credit by the eligible institution at which 
        such student is enrolled) leading to a recognized educational 
        credential at an institution of higher education that is an 
        eligible institution in accordance with section 487, and not be 
        enrolled in an elementary or secondary school;
            ``(3) if the student is presently enrolled at an 
        institution of higher education, be maintaining satisfactory 
        progress in the course of study the student is pursuing in 
        accordance with subsection (c);
            ``(4) not owe a refund on grants previously received at any 
        institution of higher education under this title, or be in 
        default on any loan from a student loan fund at any institution 
        provided for in part D, or a loan made, insured, or guaranteed 
        by the Secretary under this title for attendance at any 
        institution;
            ``(5) file with the institution of higher education that 
        the student intends to attend, or is attending, a document, 
        that need not be notarized, but that shall include--
                    ``(A) a statement of educational purpose stating 
                that the money attributable to such grant will be used 
                solely for expenses related to attendance or continued 
                attendance at such institution; and
                    ``(B) such student's social security number; and
            ``(6) be a citizen of the United States.
    ``(b) Tobacco Farm Families.--
            ``(1) In general.--For the purpose of subsection (a)(1), a 
        student is a member of a tobacco farm family if during calendar 
        year 1996 the student was--
                    ``(A) an individual who--
                            ``(i) is an active tobacco producer; or
                            ``(ii) is otherwise actively engaged in the 
                        production of tobacco;
                    ``(B) a spouse, son, daughter, stepson, or 
                stepdaughter of an individual described in subparagraph 
                (A);
                    ``(C) an individual--
                            ``(i) who was a brother, sister, 
                        stepbrother, stepsister, son-in-law, or 
                        daughter-in-law of an individual described in 
                        subparagraph (A); and
                            ``(ii) whose principal place of residence 
                        was the home of the individual described in 
                        subparagraph (A); or
                    ``(D) an individual who was a dependent (within the 
                meaning of section 152 of the Internal Revenue Code of 
                1986) of an individual described in subparagraph (A).
            ``(2) Administration.--On request, the Secretary of 
        Agriculture shall provide to the Secretary such information as 
        is necessary to carry out this subsection.
    ``(c) Satisfactory Progress.--
            ``(1) In general.--For the purpose of subsection (a)(3), a 
        student is maintaining satisfactory progress if--
                    ``(A) the institution at which the student is in 
                attendance reviews the progress of the student at the 
                end of each academic year, or its equivalent, as 
                determined by the institution; and
                    ``(B) the student has at least a cumulative C 
                average or its equivalent, or academic standing 
                consistent with the requirements for graduation, as 
                determined by the institution, at the end of the second 
                such academic year.
            ``(2) Special rule.--Whenever a student fails to meet the 
        eligibility requirements of subsection (a)(3) as a result of 
        the application of this subsection and subsequent to that 
        failure the student has academic standing consistent with the 
        requirements for graduation, as determined by the institution, 
        for any grading period, the student may, subject to this 
        subsection, again be eligible under subsection (a)(3) for a 
        grant under this subpart.
            ``(3) Waiver.--Any institution of higher education at which 
        the student is in attendance may waive paragraph (1) or (2) for 
        undue hardship based on--
                    ``(A) the death of a relative of the student;
                    ``(B) the personal injury or illness of the 
                student; or
                    ``(C) special circumstances as determined by the 
                institution.
    ``(d) Students Who Are Not Secondary School Graduates.--In order 
for a student who does not have a certificate of graduation from a 
school providing secondary education, or the recognized equivalent of 
such certificate, to be eligible for any assistance under this subpart, 
the student shall meet either 1 of the following standards:
            ``(1) Examination.--The student shall take an independently 
        administered examination and shall achieve a score, specified 
        by the Secretary, demonstrating that such student can benefit 
        from the education or training being offered. Such examination 
        shall be approved by the Secretary on the basis of compliance 
        with such standards for development, administration, and 
        scoring as the Secretary may prescribe in regulations.
            ``(2) Determination.--The student shall be determined as 
        having the ability to benefit from the education or training in 
        accordance with such process as the State shall prescribe. Any 
        such process described or approved by a State for the purposes 
        of this section shall be effective 6 months after the date of 
        submission to the Secretary unless the Secretary disapproves 
        such process. In determining whether to approve or disapprove 
        such process, the Secretary shall take into account the 
        effectiveness of such process in enabling students without 
        secondary school diplomas or the recognized equivalent to 
        benefit from the instruction offered by institutions utilizing 
        such process, and shall also take into account the cultural 
        diversity, economic circumstances, and educational preparation 
        of the populations served by the institutions.
    ``(e) Special Rule for Correspondence Courses.--A student shall not 
be eligible to receive a grant under this subpart for a correspondence 
course unless such course is part of a program leading to an associate, 
bachelor, or graduate degree.
    ``(f) Courses Offered Through Telecommunications.--
            ``(1) Relation to correspondence courses.--A student 
        enrolled in a course of instruction at an eligible institution 
        of higher education (other than an institute or school that 
        meets the definition in section 521(4)(C) of the Carl D. 
        Perkins Vocational and Applied Technology Education Act (20 
        U.S.C. 2471(4)(C))) that is offered in whole or in part through 
        telecommunications and leads to a recognized associate, 
        bachelor, or graduate degree conferred by such institution 
        shall not be considered to be enrolled in correspondence 
        courses unless the total amount of telecommunications and 
        correspondence courses at such institution equals or exceeds 50 
        percent of such courses.
            ``(2) Restriction or reductions of financial aid.--A 
        student's eligibility to receive a grant under this subpart may 
        be reduced if a financial aid officer determines under the 
        discretionary authority provided in section 479A that 
        telecommunications instruction results in a substantially 
        reduced cost of attendance to such student.
            ``(3) Definition.--For the purposes of this subsection, the 
        term `telecommunications' means the use of television, audio, 
        or computer transmission, including open broadcast, closed 
        circuit, cable, microwave, or satellite, audio conferencing, 
        computer conferencing, or video cassettes or discs, except that 
        such term does not include a course that is delivered using 
        video cassette or disc recordings at such institution and that 
        is not delivered in person to other students of that 
        institution.
    ``(g) Study Abroad.--Nothing in this subpart shall be construed to 
limit or otherwise prohibit access to study abroad programs approved by 
the home institution at which a student is enrolled. An otherwise 
eligible student who is engaged in a program of study abroad approved 
for academic credit by the home institution at which the student is 
enrolled shall be eligible to receive a grant under this subpart, 
without regard to whether such study abroad program is required as part 
of the student's degree program.
    ``(h) Verification of Social Security Number.--The Secretary, in 
cooperation with the Commissioner of Social Security, shall verify any 
social security number provided by a student to an eligible institution 
under subsection (a)(5)(B) and shall enforce the following conditions:
            ``(1) Pending verification.--Except as provided in 
        paragraphs (2) and (3), an institution shall not deny, reduce, 
        delay, or terminate a student's eligibility for assistance 
        under this subpart because social security number verification 
        is pending.
            ``(2) Denial or termination.--If there is a determination 
        by the Secretary that the social security number provided to an 
        eligible institution by a student is incorrect, the institution 
        shall deny or terminate the student's eligibility for any grant 
        under this subpart until such time as the student provides 
        documented evidence of a social security number that is 
        determined by the institution to be correct.
            ``(3) Construction.--Nothing in this subsection shall be 
        construed to permit the Secretary to take any compliance, 
        disallowance, penalty, or other regulatory action against--
                    ``(A) any institution of higher education with 
                respect to any error in a social security number, 
                unless such error was a result of fraud on the part of 
                the institution; or
                    ``(B) any student with respect to any error in a 
                social security number, unless such error was a result 
                of fraud on the part of the student.''.

           CHAPTER 2--RURAL ECONOMIC ASSISTANCE BLOCK GRANTS

SEC. 821. RURAL ECONOMIC ASSISTANCE BLOCK GRANTS.

    (a) In General.--For each of fiscal years 1999 through 2001, the 
Secretary shall use funds in the Tobacco Transition Account to provide 
block grants to tobacco-growing States to assist areas of such a State 
that are economically dependent on the production of tobacco.
    (b) Funding.--To carry out this section, there shall be credited to 
the Tobacco Transition Account, from the Trust Fund, $100,000,000 for 
each of fiscal years 1999 through 2001.
    (c) Payments by Secretary to Tobacco-Growing States.--
            (1) In general.--The Secretary shall use the amount 
        available for a fiscal year under subsection (b) to make block 
        grant payments to the Governors of tobacco-growing States.
            (2) Amount.--The amount of a block grant paid to a tobacco-
        growing State shall be based on--
                    (A) the number of counties in the State in which 
                tobacco production is a significant part of the 
                county's economy; and
                    (B) the level of economic dependence of the county 
                on tobacco production.
    (d) Grants by States To Assist Tobacco-Growing Areas.--
            (1) In general.--A Governor of a tobacco-growing State 
        shall use the amount of the block grant to the State under 
        subsection (c) to make grants to counties or other public or 
        private entities in the State to assist areas that are 
        dependent on the production of tobacco, as determined by the 
        Governor.
            (2) Amount.--The amount of a grant paid to a county or 
        other entity to assist an area shall be based on (as determined 
        by the Secretary)--
                    (A) the ratio of gross tobacco sales receipts in 
                the area to the total farm income in the area; and
                    (B) the ratio of all tobacco related receipts in 
                the area to the total income in the area.
            (3) Use of grants.--A county or other entity that receives 
        a grant under this subsection shall use the grant in a manner 
        determined appropriate by the county or entity (with the 
approval of the State) to assist producers and other persons who are 
economically dependent on the production of tobacco, including use 
for--
                    (A) on-farm diversification and alternatives to the 
                production of tobacco and risk management; and
                    (B) off-farm activities such as development of non-
                tobacco related jobs.
    (e) Termination of Authority.--The authority provided by this 
section terminates October 1, 2001.

  Subtitle B--Tobacco Price Support and Production Adjustment Programs

                CHAPTER 1--TOBACCO PRICE SUPPORT PROGRAM

SEC. 831. INTERIM REFORM OF TOBACCO PRICE SUPPORT PROGRAM.

    (a) Price Support Rates.--Section 106 of the Agricultural Act of 
1949 (7 U.S.C. 1445) is amended--
            (1) by striking subsection (a) and inserting the following:
    ``(a) In General.--The price support rate for each kind of tobacco 
for which quotas have been approved shall be reduced by--
            ``(1) for the 1999 crop, 25 percent from the 1998 support 
        rate for the kind of tobacco involved;
            ``(2) for the 2000 crop, 10 percent from the 1999 support 
        rate for the kind of tobacco involved; and
            ``(3) for the 2001 crop, 10 percent from the 2000 support 
        rate for the kind of tobacco involved.'';
            (2) by striking subsections (b) and (f); and
            (3) by redesignating subsections (c), (d), and (g) as 
        subsections (b), (c), and (d), respectively.
    (b) Budget Deficit Assessment.--Section 106 of the Agricultural Act 
of 1949 (7 U.S.C. 1445) (as amended by subsection (a)(3)) is amended by 
striking subsection (d) and inserting the following:
    ``(d) Tobacco Transition Payment.--Effective only for the 1998 crop 
of tobacco, the Secretary of the Treasury shall transfer from the 
Tobacco Transition Account of the National Tobacco Settlement Trust 
Fund an amount equal to the product obtained by multiplying--
            ``(1) the amount per pound equal to 2 percent of the 
        national price support level for each kind of tobacco for which 
        price support is made available under this Act; and
            ``(2) the total quantity of the kind of tobacco that is 
        produced or purchased in, or imported into, the United 
        States.''.
    (c) No Net Cost Tobacco Fund and Account.--
            (1) No net cost tobacco fund.--Section 106A of the 
        Agricultural Act of 1949 (7 U.S.C. 1445-1) is amended to read 
        as follows:

``SEC. 106A. NO NET COST TOBACCO FUND.

    ``(a) Definitions.--In this section:
            ``(1) Association.--The term `association' means a 
        producer-owned cooperative marketing association that has 
        entered into a loan agreement with the Corporation to make 
        price support available to producers of a kind of tobacco.
            ``(2) Corporation.--The term `Corporation' means the 
        Commodity Credit Corporation, an agency and instrumentality of 
        the United States within the Department of Agriculture through 
        which the Secretary makes price support available to producers.
            ``(3) Net gains.--The term `net gains' means the amount by 
        which the total proceeds obtained from the sale by an 
        association of a crop of quota tobacco pledged to the 
        Corporation for a price support loan exceeds the principal 
        amount of the price support loan made by the Corporation to the 
        association on the crop, plus interest, charges, and costs of 
        administering the price support program.
            ``(4) No net cost tobacco fund.--The term `No Net Cost 
        Tobacco Fund' means the capital account established within each 
        association under this section.
            ``(5) Purchaser.--The term `purchaser' means any person who 
        purchases in the United States, either directly or indirectly 
        for the account of the person or another person, Flue-cured or 
        burley quota tobacco.
            ``(6) Quota tobacco.--The term `quota tobacco' means any 
        kind of tobacco for which marketing quotas are in effect or for 
        which marketing quotas are not disapproved by producers.
            ``(7) Trust fund.--The term `Trust Fund' means the National 
        Tobacco Settlement Trust Fund established in the Treasury of 
        the United States consisting of amounts that are appropriated 
        or credited to the Trust Fund from the tobacco settlement 
        approved by Congress.
    ``(b) Price Support Program; Loans.--The Secretary--
            ``(1) may carry out the tobacco price support program 
        through the Corporation; and
            ``(2) shall, except as otherwise provided by this section, 
        continue to make price support available to producers through 
        loans to associations that, under agreements with the 
        Corporation, agree to make loan advances to producers.
    ``(c) Establishment of Fund.--
            ``(1) In general.--Each association shall establish within 
        the association a No Net Cost Tobacco Fund.
            ``(2) Amount.--There shall be transferred from the Trust 
        Fund to each No Net Cost Tobacco Fund such amount as the 
        Secretary determines will be adequate to reimburse the 
        Corporation for any net losses that the Corporation may sustain 
        under its loan agreements with the association, based on--
                    ``(A) reasonable estimates of the amounts that the 
                Corporation has lent or will lend to the association 
                for price support for the 1982 and subsequent crops of 
                quota tobacco, except that for the 1986 and subsequent 
                crops of burley quota tobacco, the Secretary shall 
                determine the amount of assessments without regard to 
any net losses that the Corporation may sustain under the loan 
agreements of the Corporation with the association for the 1983 crop of 
burley quota tobacco;
                    ``(B) the cost of administering the tobacco price 
                support program (as determined by the Secretary); and
                    ``(C) the proceeds that will be realized from the 
                sales of tobacco that are pledged to the Corporation by 
                the association as security for loans.
    ``(d) Administration.--The Secretary shall--
            ``(1) require that the No Net Cost Tobacco Fund established 
        by each association be kept and maintained separately from all 
        other accounts of the association and be used exclusively, as 
        prescribed by the Secretary, for the purpose of ensuring, 
        insofar as practicable, that the Corporation, under its loan 
        agreements with the association with respect to 1982 and 
        subsequent crops of quota tobacco, will suffer no net losses 
        (including recovery of the amount of loans extended to cover 
        the overhead costs of the association), after any net gains are 
        applied to net losses of the Corporation under paragraph (3), 
        except that, notwithstanding any other provision of law, the 
        association may, with the approval of the Secretary, use funds 
        in the No Net Cost Tobacco Fund, including interest and other 
        earnings, for--
                    ``(A) the purposes of reducing the association's 
                outstanding indebtedness to the Corporation associated 
                with 1982 and subsequent crops of quota tobacco and 
                making loan advances to producers as authorized; and
                    ``(B) any other purposes that will be mutually 
                beneficial to producers and purchasers and to the 
                Corporation;
            ``(2) permit an association to invest the funds in the No 
        Net Cost Tobacco Fund in such manner as the Secretary may 
        approve, and require that the interest or other earnings on the 
        investment shall become a part of the No Net Cost Tobacco Fund;
            ``(3) require that loan agreements between the Corporation 
        and the association provide that the Corporation shall retain 
        the net gains from each of the 1982 and subsequent crops of 
        tobacco pledged by the association as security for price 
        support loans, and that the net gains will be used for the 
        purpose of--
                    ``(A) offsetting any losses sustained by the 
                Corporation under its loan agreements with the 
                association for any of the 1982 and subsequent crops of 
                tobacco; or
                    ``(B) reducing the outstanding balance of any price 
                support loan made by the Corporation to the association 
                under the loan agreements for 1982 and subsequent crops 
                of tobacco; and
            ``(4) effective for the 1986 and subsequent crops of quota 
        tobacco, if the Secretary determines that the amount in the No 
        Net Cost Tobacco Fund or the net gains referred to in paragraph 
        (3) exceeds the total amount necessary for the purposes 
        specified in this section, suspend the transfer of amounts from 
        the Trust Fund to the No Net Cost Tobacco Fund under this 
        section.
    ``(e) Noncompliance.--
            ``(1) In general.--If any association that has entered into 
        a loan agreement with the Corporation with respect to any of 
        the 1982 or subsequent crops of quota tobacco fails or refuses 
        to comply with this section (including regulations promulgated 
        under this section) or the terms of the agreement, the 
        Secretary may terminate the agreement or provide that no 
        additional loan funds may be made available under the agreement 
        to the association.
            ``(2) Price support.--If the Secretary takes action under 
        paragraph (1), the Secretary shall make price support available 
        to producers of the kind or kinds of tobacco, the price of 
        which had been supported through loans to the association, 
        through such other means as are authorized by this Act or the 
        Commodity Credit Corporation Charter Act (15 U.S.C. 714 et 
        seq.).
    ``(f) Termination of Agreement or Association.--If, under 
subsection (e), a loan agreement with an association is terminated, or 
if an association having a loan agreement with the Corporation is 
dissolved, merges with another association, or otherwise ceases to 
operate, the No Net Cost Tobacco Fund or the net gains referred to in 
subsection (d)(3) shall be applied or disposed of in such manner as the 
Secretary may approve or prescribe, except that the net gains shall, to 
the extent necessary, first be applied or used for the purposes 
specified in this section.
    ``(g) Regulations.--The Secretary shall issue such regulations as 
are necessary to carry out this section.''.
            (2) No net cost tobacco account.--Section 106B of the 
        Agricultural Act of 1949 (7 U.S.C. 1445-2) is amended to read 
        as follows:

``SEC. 106B. NO NET COST TOBACCO ACCOUNT.

    ``(a) Definitions.--In this section:
            ``(1) Area.--The term `area', when used in connection with 
        an association, means the general geographical area in which 
        farms of the producer-members of the association are located, 
        as determined by the Secretary.
            ``(2) Association.--The term `association' has the meaning 
        given the term in section 106A(a)(1).
            ``(3) Corporation.--The term `Corporation' has the meaning 
        given the term in section 106A(a)(2).
            ``(4) Net gains.--The term `net gains' has the meaning 
        given the term in section 106A(a)(3).
            ``(5) No net cost tobacco account.--The term `No Net Cost 
        Tobacco Account' means an account established by and in the 
        Corporation for an association under this section.
            ``(6) Purchaser.--The term `purchaser' has the meaning 
        given the term in section 106A(a)(5).
            ``(7) Tobacco.--The term `tobacco' means any kind of 
        tobacco (as defined in section 301(b) of the Agricultural 
        Adjustment Act of 1938 (7 U.S.C. 1301(b))) for which marketing 
        quotas are in effect or for which marketing quotas are not 
        disapproved by producers.
            ``(8) Trust fund.--The term `Trust Fund' has the meaning 
        given the term in section 106A(a)(7).
    ``(b) Price Support Program; Loans.--Notwithstanding section 106A, 
the Secretary shall, on the request of any association, and may, if the 
Secretary determines, after consultation with the association, that the 
accumulation of the No Net Cost Tobacco Fund for the association under 
section 106A is, and is likely to remain, inadequate to reimburse the 
Corporation for net losses that the Corporation sustains under its loan 
agreements with the association--
            ``(1) continue to make price support available to producers 
        through the association in accordance with loan agreements 
        entered into between the Corporation and the association; and
            ``(2) establish and maintain in accordance with this 
        section a No Net Cost Tobacco Account for the association in 
        lieu of the No Net Cost Tobacco Fund established within the 
        association under section 106A.
    ``(c) Establishment of Account.--
            ``(1) In general.--A No Net Cost Tobacco Account 
        established for an association under subsection (b)(2) shall be 
        established within the Corporation.
            ``(2) Amount.--There shall be transferred from the Trust 
        Fund to each No Net Cost Tobacco Account such amount as the 
        Secretary determines will be adequate to reimburse the 
        Corporation for any net losses that the Corporation may sustain 
        under its loan agreements with the association, based on--
                    ``(A) reasonable estimates of the amounts that the 
                Corporation has lent or will lend to the association 
                for price support for the 1982 and subsequent crops of 
                quota tobacco, except that for the 1986 and subsequent 
                crops of burley quota tobacco, the Secretary shall 
                determine the amount of assessments without regard to 
                any net losses that the Corporation may sustain under 
                the loan agreements of the Corporation with the 
                association for the 1983 crop of burley quota tobacco;
                    ``(B) the cost of administering the tobacco price 
                support program (as determined by the Secretary); and
                    ``(C) the proceeds that will be realized from the 
                sales of the kind of tobacco involved that are pledged 
to the Corporation by the association as security for loans.
            ``(3) Administration.--On the establishment of a No Net 
        Cost Tobacco Account for an association, any amount in the No 
        Net Cost Tobacco Fund established within the association under 
        section 106A shall be applied or disposed of in such manner as 
        the Secretary may approve or prescribe, except that the amount 
        shall, to the extent necessary, first be applied or used for 
        the purposes specified in that section.
    ``(d) Use.--Amounts deposited in a No Net Cost Tobacco Account 
established for an association shall be used by the Secretary for the 
purpose of ensuring, insofar as practicable, that the Corporation under 
its loan agreements with the association will suffer, with respect to 
the crop involved, no net losses (including recovery of the amount of 
loans extended to cover the overhead costs of the association), after 
any net gains are applied to net losses of the Corporation under 
subsection (g).
    ``(e) Excess Amounts.--If the Secretary determines that the amount 
in the No Net Cost Tobacco Account or the net gains referred to in 
subsection (g) exceed the total amount necessary to carry out this 
section, the Secretary shall suspend the transfer of amounts from the 
Trust Fund to the No Net Cost Tobacco Account under this section.
    ``(f) Termination of Agreement or Association.--In the case of an 
association for which a No Net Cost Tobacco Account is established 
under subsection (b)(2), if a loan agreement between the Corporation 
and the association is terminated, if the association is dissolved or 
merges with another association that has entered into a loan agreement 
with the Corporation to make price support available to producers of 
the kind of tobacco involved, or if the No Net Cost Tobacco Account 
terminates by operation of law, amounts in the No Net Cost Tobacco 
Account and the net gains referred to in subsection (g) shall be 
applied to or disposed of in such manner as the Secretary may 
prescribe, except that the net gains shall, to the extent necessary, 
first be applied to or used for the purposes specified in this section.
    ``(g) Net Gains.--The provisions of section 106A(d)(3) relating to 
net gains shall apply to any loan agreement between an association and 
the Corporation entered into on or after the establishment of a No Net 
Cost Tobacco Account for the association under subsection (b)(2).
    ``(h) Regulations.--The Secretary shall issue such regulations as 
are necessary to carry out this section.''.
            (3) Conforming amendments.--
                    (A) Section 314(a) of the Agricultural Adjustment 
                Act of 1938 (7 U.S.C. 1314(a)) is amended in the first 
                sentence--
                            (i) by striking ``(1)''; and
                            (ii) by striking ``, or (2)'' and all that 
                        follows through ``106B(d)(1) of that Act''.
                    (B) Section 320B(c)(1) of the Agricultural 
                Adjustment Act of 1938 (7 U.S.C. 1314h(c)(1)) is 
                amended by inserting after ``1445-2)'' the following: 
                ``(as in effect before the effective date of the 
                amendments made by section 831(c) of the Tobacco 
                Transition Act)''.
    (d) Administrative Costs.--Section 1109 of the Agriculture and Food 
Act of 1981 (Public Law 97-98; 7 U.S.C. 1445 note) is repealed.
    (e) Crops.--This section and the amendments made by this section 
shall apply with respect to the 1999 and subsequent crops of the kind 
of tobacco involved.

SEC. 832. TERMINATION OF TOBACCO PRICE SUPPORT PROGRAM.

    (a) Parity Price Support.--Section 101 of the Agricultural Act of 
1949 (7 U.S.C. 1441) is amended--
            (1) in the first sentence of subsection (a), by striking 
        ``tobacco (except as otherwise provided herein), corn,'' and 
        inserting ``corn'';
            (2) by striking subsections (c), (g), (h), and (i);
            (3) in subsection (d)(3)--
                    (A) by striking ``, except tobacco,''; and
                    (B) by striking ``and no price support shall be 
                made available for any crop of tobacco for which 
                marketing quotas have been disapproved by producers;''; 
                and
            (4) by redesignating subsections (d) and (e) as subsections 
        (c) and (d), respectively.
    (b) Termination of Tobacco Price Support and No Net Cost 
Provisions.--Sections 106, 106A, and 106B of the Agricultural Act of 
1949 (7 U.S.C. 1445, 1445-1, 1445-2) are repealed.
    (c) Definition of Basic Agricultural Commodity.--Section 408(c) of 
the Agricultural Act of 1949 (7 U.S.C. 1428(c)) is amended by striking 
``tobacco,''.
    (d) Review of Burley Tobacco Imports.--Section 3 of Public Law 98-
59 (7 U.S.C. 625) is repealed.
    (e) Powers of Commodity Credit Corporation.--Section 5 of the 
Commodity Credit Corporation Charter Act (15 U.S.C. 714c) is amended by 
inserting ``(other than tobacco)'' after ``agricultural commodities'' 
each place it appears.
    (f) Transition Provisions.--
            (1) Liability.--The amendments made by this section shall 
        not affect the liability of any person under any provision of 
        law as in effect before the effective date of this section.
            (2) Tobacco stocks and loans.--The Secretary shall issue 
        regulations that require--
                    (A) the orderly disposition of tobacco stocks; and
                    (B) the repayment of all tobacco price support 
                loans by not later than 1 year after the effective date 
                of this section.
    (g) Crops.--This section and the amendments made by this section 
shall apply with respect to the 2002 and subsequent crops of the kind 
of tobacco involved.

           CHAPTER 2--TOBACCO PRODUCTION ADJUSTMENT PROGRAMS

SEC. 835. TERMINATION OF TOBACCO PRODUCTION ADJUSTMENT PROGRAMS.

    (a) Declaration of Policy.--Section 2 of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1282) is amended by striking 
``tobacco,''.
    (b) Definitions.--Section 301(b) of the Agricultural Adjustment Act 
of 1938 (7 U.S.C. 1301(b)) is amended--
            (1) in paragraph (3)--
                    (A) by striking subparagraph (C); and
                    (B) by redesignating subparagraph (D) as 
                subparagraph (C);
            (2) in paragraph (6)(A), by striking ``tobacco,'';
            (3) in paragraph (7), by striking the following:
                    ``tobacco (flue-cured), July 1-June 30;
                    ``tobacco (other than flue-cured), October 1-
                September 30;'';
            (4) in paragraph (10)--
                    (A) by striking subparagraph (B); and
                    (B) by redesignating subparagraph (C) as 
                subparagraph (B);
            (5) in paragraph (11)(B), by striking ``and tobacco'';
            (6) in paragraph (12), by striking ``tobacco,'';
            (7) in paragraph (14)--
                    (A) in subparagraph (A), by striking ``(A)''; and
                    (B) by striking subparagraphs (B), (C), and (D);
            (8) by striking paragraph (15);
            (9) in paragraph (16)--
                    (A) by striking subparagraph (B); and
                    (B) by redesignating subparagraph (C) as 
                subparagraph (B); and
            (10) by redesignating paragraphs (16) and (17) as 
        paragraphs (15) and (16), respectively.
    (c) Parity Payments.--Section 303 of the Agricultural Adjustment 
Act of 1938 (7 U.S.C. 1303) is amended in the first sentence by 
striking ``rice, or tobacco,'' and inserting ``or rice,''.
    (d) Marketing Quotas.--Part I of subtitle B of title III of the 
Agricultural Adjustment Act of 1938 (7 U.S.C. 1311 et seq.) is 
repealed.
    (e) Administrative Provisions.--Section 361 of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1361) is amended by striking 
``tobacco,''.
    (f) Adjustment of Quotas.--Section 371 of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1371) is amended--
            (1) in the first sentence of subsection (a), by striking 
        ``peanuts, or tobacco'' and inserting ``or peanuts''; and
            (2) in the first sentence of subsection (b), by striking 
        ``peanuts or tobacco'' and inserting ``or peanuts''.
    (g) Reports and Records.--Section 373 of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1373) is amended--
            (1) by striking ``peanuts, or tobacco'' each place it 
        appears in subsections (a) and (b) and inserting ``or 
        peanuts''; and
            (2) in subsection (a)--
                    (A) in the first sentence, by striking ``all 
                persons engaged in the business of redrying, prizing, 
                or stemming tobacco for producers,''; and
                    (B) in the last sentence, by striking ``$500;'' and 
                all that follows through the period at the end of the 
                sentence and inserting ``$500.''.
    (h) Regulations.--Section 375(a) of the Agricultural Adjustment Act 
of 1938 (7 U.S.C. 1375(a)) is amended by striking ``peanuts, or 
tobacco'' and inserting ``or peanuts''.
    (i) Eminent Domain.--Section 378 of the Agricultural Adjustment Act 
of 1938 (7 U.S.C. 1378) is amended--
            (1) in the first sentence of subsection (c), by striking 
        ``cotton, tobacco, and peanuts'' and inserting ``cotton and 
        peanuts''; and
            (2) by striking subsections (d), (e), and (f).
    (j) Burley Tobacco Farm Reconstitution.--Section 379 of the 
Agricultural Adjustment Act of 1938 (7 U.S.C. 1379) is amended--
            (1) in subsection (a)--
                    (A) by striking ``(a)''; and
                    (B) in paragraph (6), by striking ``, but this 
                clause (6) shall not be applicable in the case of 
                burley tobacco''; and
            (2) by striking subsections (b) and (c).
    (k) Acreage-Poundage Quotas.--Section 4 of the Act entitled ``An 
Act to amend the Agricultural Adjustment Act of 1938, as amended, to 
provide for acreage-poundage marketing quotas for tobacco, to amend the 
tobacco price support provisions of the Agricultural Act of 1949, as 
amended, and for other purposes'', approved April 16, 1965 (Public Law 
89-12; 7 U.S.C. 1314c note), is repealed.
    (l) Burley Tobacco Acreage Allotments.--The Act entitled ``An Act 
relating to burley tobacco farm acreage allotments under the 
Agricultural Adjustment Act of 1938, as amended'', approved July 12, 
1952 (7 U.S.C. 1315), is repealed.
    (m) Transfer of Allotments.--Section 703 of the Food and 
Agriculture Act of 1965 (7 U.S.C. 1316) is repealed.
    (n) Advance Recourse Loans.--Section 13(a)(2)(B) of the Food 
Security Improvements Act of 1986 (7 U.S.C. 1433c-1(a)(2)(B)) is 
amended by striking ``tobacco and''.
    (o) Tobacco Field Measurement.--Section 1112 of the Omnibus Budget 
Reconciliation Act of 1987 (Public Law 100-203) is amended by striking 
subsection (c).
    (p) Liability.--The amendments made by this section shall not 
affect the liability of any person under any provision of law as in 
effect before the effective date under subsection (q).
    (q) Crops.--This section and the amendments made by this section 
shall apply with respect to the 1999 and subsequent crops of the kind 
of tobacco involved.

                          Subtitle C--Funding

SEC. 841. TRUST FUND.

    (a) Request.--The Secretary of Agriculture shall request the 
Trustees to transfer to the Tobacco Transition Account, amounts 
authorized or necessary under sections 814, 815, 816, 817, and 821, and 
the amendments made by section 831, to the account of the Commodity 
Credit Corporation.
    (b) Transfer.--On receipt of such a request, the Trustees shall 
transfer amounts requested under subsection (a).
    (c) Use.--The Secretary of Agriculture shall use the amounts 
transferred under subsection (b) to carry out the activities described 
in subsection (a).
    (d) Termination of Authority.--The authority provided under this 
section shall expire on September 30, 2001.

SEC. 842. COMMODITY CREDIT CORPORATION.

    The Secretary may use the funds, facilities, and authorities of the 
Commodity Credit Corporation to carry out this title and the amendments 
made by this title.

                   TITLE IX--MISCELLANEOUS PROVISIONS

SEC. 901. PROVISIONS RELATING TO NATIVE AMERICANS.

    (a) Indian Country.--
            (1) In general.--The provisions of this Act (or an 
        amendment made by this Act) shall apply to the manufacture, 
        distribution, and sale of tobacco products within Indian 
        country.
            (2) Definition.--As used in this section, the term ``Indian 
        country'' has the meaning given such term in section 1151 of 
        title 18, United States Code.
    (b) Indian Tribes.--
            (1) In general.--To the extent that an Indian tribe or 
        tribal organization engages in the manufacture, distribution, 
        or sale of tobacco products, the provisions of this Act (or an 
        amendment made by this Act) shall apply to such tribe or 
        organization.
            (2) Religious practice exception.--In recognition of the 
        religious and ceremonial uses of tobacco and tobacco products 
        by many Indian tribes and the members of such tribes, nothing 
        in this Act (or and amendment made by this Act) shall be 
        construed to infringe upon the rights of such tribes or members 
        to transfer, acquire, possess, or use any tobacco or tobacco 
        products for such purposes. The preceding sentence shall only 
        be construed to apply to those quantities of tobacco products 
        necessary to fulfill recognized religious or ceremonial 
        purposes and not to permit the general marketing of tobacco 
        products not in compliance with chapter IX of the Federal Food, 
        Drug and Cosmetic Act.
    (c) Payments to Trust Fund.--Any Indian tribe or tribal 
organization that engages in the manufacturer of tobacco products shall 
be subject to liability for fee payments under section 102, or shall be 
considered a non-participating manufacturer and shall be subject to 
surcharges under subtitle B of title III.
    (d) Application of Federal Food, Drug and Cosmetic Act 
Requirements.--
            (1) In general.--The Secretary, in consultation with the 
        Secretary of the Interior, shall promulgate regulations to 
        provide for the waiver of any requirements of the Food, Drug 
        and Cosmetic Act with respect to tobacco products manufactured, 
        distributed, or sold within Indian country as appropriate to 
        comply with subsection (b)(1).
            (2) Eligibility for assistance.--Under the regulations 
        promulgated under paragraph (1), the Secretary, after 
        consultation with the Secretary of the Interior, may provide 
        assistance to an Indian tribe or tribal organization in meeting 
        and enforcing the requirements under such regulations if--
                    (A) the tribe or organization has a governing body 
                that has powers and carries out duties that are similar 
to the powers and duties of State or local governments;
                    (B) the functions to be exercised through the use 
                of such assistance relate to activities within the 
                exterior boundaries of the reservation or other areas 
                within the jurisdiction of the tribe involved; and
                    (C) the tribe or organization is reasonably 
                expected to be capable of carrying out the functions 
                required by the Secretary.
            (3) Determinations.--The Secretary shall make 
        determinations concerning the eligibility of an Indian tribe or 
        tribal organization for assistance under regulations under 
        paragraph (1) not later than 90 days after the date on which 
        such tribe or organization submits an application for such 
        assistance.
    (e) Retail Licensing Requirements.--
            (1) In general.--The requirements of subtitle C of title I 
        shall apply to retailers that sell tobacco products within 
        Indian country.
            (2) Self-regulation.--Not later than 6 months after the 
        date of enactment of this Act, the Secretary shall promulgate 
        regulations to permit the Indian tribe or tribal organization 
        to implement a tribal licensing program within the exterior 
        boundaries of the reservation or other areas within the 
        jurisdiction of the tribe.
            (3) Implementation by secretary.--If the Secretary 
        determines that the Indian tribe or tribal organization is not 
        qualified to administer the requirements of subtitle C of title 
        I, the Secretary, in consultation with the Secretary of the 
        Interior, shall implement such requirements on behalf of the 
        tribe or organization.
    (f) Eligibility for Public Health Payments.--
            (1) In general.--For each fiscal year the Secretary shall 
        pay to each Indian tribe that has an approved tribal anti-
        smoking plan a tribal grant for the fiscal year in an amount 
        equal to the amount determined under paragraph (2), and shall 
        reduce the amounts payable under section 501 to any State in 
        which the service area or areas of the Indian tribe are located 
        by the amount so determined.
            (2) Amount determined.--The amount of any funds for which 
        an Indian tribe is eligible under paragraph (1) shall be 
        determined by the Secretary based on the proportion of the 
        total number of Indians residing on such tribe's reservation in 
        the State as compared to the total population of the State and 
        the amount allocated to Indian tribes under section 501.
            (3) Use.--Amounts provided to a tribe or organization under 
        this paragraph shall be used to further the purposes of this 
        Act and in accordance with a plan submitted by the tribe or 
        organization and approved by the Secretary as being in 
        compliance with this Act. Tribes and tribal organizations shall 
        have the flexibility to utilize such amounts to meet the unique 
        health needs of such tribes within the context of tribal health 
        programs if such programs meet the fundamental Federal 
        requirements under this Act as determined by the Secretary.
            (4) Reallotment.--Any amounts set-aside and not expended 
        under this paragraph shall be reallotted among other eligible 
        tribes and organizations.
    (g) Obligation of Manufacturers.--A participating manufacturer 
shall not engage in any activity within Indian country that is 
prohibited under the Protocol.
    (h) Indian Health Service.--Amounts made available under section 
101(c)(3)(F) shall be provided to the Indian Health Service to be used 
for anti-tobacco-related consumption and cessation activities 
including--
            (1) clinic and facility design, construction, repair, 
        renovation, maintenance and improvement;
            (2) provider services and equipment;
            (3) domestic and community sanitation associated with 
        clinic and facility construction and improvement;
            (4) inpatient and outpatient services; and
            (5) other programs and services provided through the Indian 
        Health Service or through tribal contracts, compacts, grants or 
        cooperative agreements with the Indian Health Service and which 
        are deemed appropriate to raising the health status of Indians.
    (i) Preemption.--
            (1) General preemption.--Except as otherwise provided for 
        in this section, nothing in this Act shall be construed as 
        prohibiting an Indian tribe or tribal organization from 
        imposing requirements, prohibitions, penalties or other 
        measures to further the purposes of this Act that are in 
        addition to the requirements, prohibitions, or penalties 
        required under this Act.
            (2) Public exposure to smoke.--Nothing in title VI shall be 
        construed to preempt or otherwise affect any Indian tribe or 
        tribal organization rule or practice that provides greater 
protection from the health hazards of environmental tobacco smoke.
            (3) Native americans.--Except as provided in this section, 
        a State may not impose obligations or requirements relating to 
        the application of this Act to Indian tribes and tribal 
        organizations.

SEC. 902. WHISTLEBLOWER PROTECTIONS.

    (a) Prohibition of Reprisals.--An employee of any manufacturer, 
distributor, or retailer of a tobacco product may not be discharged, 
demoted, or otherwise discriminated against (with respect to 
compensation, terms, conditions, or privileges of employment) as a 
reprisal for disclosing to an employee of the Food and Drug 
Administration, the Department of Justice, or any State or local 
regulatory or enforcement authority, information relating to a 
substantial violation of law related to this Act (or an amendment made 
by this Act) or a State or local law enacted to further the purposes of 
this Act.
    (b) Enforcement.--Any employee or former employee who believes that 
such employee has been discharged, demoted, or otherwise discriminated 
against in violation of subsection (a) may file a civil action in the 
appropriate United States district court before the end of the 2-year 
period beginning on the date of such discharge, demotion, or 
discrimination.
    (c) Remedies.--If the district court determines that a violation 
has occurred, the court may order the manufacturer, distributor, or 
retailer involved to--
            (1) reinstate the employee to the employee's former 
        position;
            (2) pay compensatory damages; or
            (3) take other appropriate actions to remedy any past 
        discrimination.
    (d) Limitation.--The protections of this section shall not apply to 
any employee who--
            (1) deliberately causes or participates in the alleged 
        violation of law or regulation; or
            (2) knowingly or recklessly provides substantially false 
        information to the Food and Drug Administration, the Department 
        of Justice, or any other Federal, State or local regulatory or 
        enforcement authority.

SEC. 903. LIMITED ANTITRUST EXEMPTION.

    (a) In General.--The Federal antitrust laws, and any similar laws 
of any State, shall not apply to any joint discussion, consideration, 
review, action or agreement by or among any participating 
manufacturers, or any individuals acting on behalf of any participating 
manufacturers, for the purposes of, and limited to--
            (1) entering into the Protocol under section 201 or a 
        consent decree under section 241;
            (2) refusing to deal with a distributor, retailer, or other 
        seller of tobacco products who distributes such products for 
        sale to, or offers for sale or sells such products to, underage 
        individuals, or who otherwise fails to comply with applicable 
        requirements of this Act, the Protocol or a consent decree; or
            (3) submitting an application relating to, entering into, 
        or complying with or otherwise carrying out the terms of any 
        plan or program that has been approved under subsection (b).
    (b) Programs for Reductions in Underage Use.--
            (1) In general.--The Attorney General may approve, upon the 
        application of 1 or more participating manufacturers, a plan or 
        program to reduce the use of tobacco products by underage 
        individuals.
            (2) Determination.--Not later than 90 days after the date 
        on which a plan or program is received under paragraph (1), the 
        Attorney General shall approve or disapprove such plan or 
        program. In determining whether to approve a plan or program 
        under paragraph (1), the Secretary shall consider whether the 
        plan or program is appropriate as part of the effort to reduce 
        the use of tobacco products by underage individuals and will 
        not have the effect of unduly restraining competition.
            (3) Withdrawing of approval.--Subsection (a)(3) shall not 
        apply with respect to any plan or program that has not been 
        approved by the Attorney General or that has had such an 
        approval subsequently withdrawn.

SEC. 904. PASS-THROUGH.

    Nothing in this Act shall be construed as prohibiting a 
manufacturer from passing the costs of the amount of any payments, 
including surcharges, assessed under this Act on to consumers of 
tobacco products as a further economic deterrent to the use of such 
products.

SEC. 905. EFFECTIVE DATE.

    This Act shall become effective on the date of enactment of this 
Act.
                                 <all>
```