Calendar No. 370

105TH CONGRESS

2D SESSION S. 1415

[Report No. 105–180]

A BILL

To reform and restructure the processes by which

effects of tobacco use, and for other purposes.products by minors, to redress the adverse healthand distributed, to prevent the use of tobaccotobacco products are manufactured, marketed,

MAY 13, 1998

Ordered referred to the Committee on Finance, until 9:00

chargedp.m. on Thursday, May 14, 1998, to report or be disMAY 14 (legislative day, MAY 13), 1998

Reported with amendments
II

Calendar No. 370

105TH CONGRESS

2D SESSION S. 1415

[Report No. 105–180]

To reform and restructure the processes by which tobacco products are

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

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

use, and for other purposes.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 7, 1997

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

MAY 1, 1998

Reported by Mr. MCCAIN, with an amendment in the nature of a substitute

[Strike all after the enacting clause and insert the part printed in italic]

MAY 13, 1998

Ordered referred to the Committee on Finance, until 9:00 p.m. on Thursday,

May 14, 1998, to report or be discharged

MAY 14 (legislative day, MAY 13), 1998

Reported by Mr. ROTH, with amendments

[Omit the part in boldface brackets and insert the part printed in bold italic]

A BILL

To reform and restructure the processes by which tobacco

products are manufactured, marketed, and distributed,

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

for other purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Universal Tobacco Settlement Act’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purposes.

TITLE I—REGULATION OF THE TOBACCO INDUSTRY

Sec. 100. Definitions.

Subtitle A—Restriction on Marketing and Advertising

Sec. 101. Prohibitions on advertising.

Sec. 102. General restrictions.

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

Sec. 104. Statement of intended use.

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

and sponsorship of events.

Sec. 106. Use of product descriptors.

Subtitle B—Warnings, Labeling and Packaging

Sec. 111. Cigarette warnings.

Sec. 112. Smokeless tobacco warnings.

Sec. 113. Ingredients.

Sec. 114. Enforcement, regulations, and construction.

Sec. 115. Preemption.

Sec. 116. Reports.

Sec. 117. Exports.

Sec. 118. Repeals.

Subtitle C—Restriction on Access to Tobacco Products

Sec. 121. Requirements relating to retailers.

Sec. 122. Manufacture, sale, and distribution.

Subtitle D—Licensing of Retail Tobacco Sellers

Sec. 131. Establishment of program.

Sec. 132. Requirements.
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Sec. 133. Penalties, revocations and suspensions.

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

Subtitle E—Regulation of Tobacco Product Development and Manufacturing

Sec. 141. Reference.

Sec. 142. Treatment of tobacco products as drugs.

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

Subtitle F—Compliance Plans and Corporate Culture

Sec. 151. Compliance plans.

Sec. 152. Compliance programs.

Sec. 153. Whistleblower protections.

Sec. 154. Provisions relating to lobbying.

Sec. 155. Termination of certain entities.

Sec. 156. Enforcement.

TITLE II—REDUCTION IN UNDERAGE TOBACCO USE

Sec. 201. Purpose.

Sec. 202. Determination of underage use base percentages.

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

Sec. 204. Required reduction in underage tobacco use.

Sec. 205. Application of surcharges.

Sec. 206. Abatement procedures.

TITLE III—STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO

TOBACCO SMOKE

Sec. 301. Definitions.

Sec. 302. Smoke-free environment policy.

Sec. 303. Citizen actions.

Sec. 304. Preemption.

Sec. 305. Regulations.

Sec. 306. Effective date.

TITLE IV—NATIONAL TOBACCO SETTLEMENT TRUST FUND

Sec. 401. Establishment of Trust Fund.

Sec. 402. Liability of industry sources.

Sec. 403. Enforcement.

TITLE V—PUBLIC HEALTH AND OTHER PROGRAMS

Subtitle A—Public Health Block Grant Program

Sec. 501. Public Health Trust Fund.

Sec. 502. Block grants to States.

Sec. 503. Allotments.

Sec. 504. Use of funds.

Sec. 505. Withholding of funds.

Subtitle B—Other Programs

Sec. 511. National Smoking Cessation Program.

Sec. 512. National Reduction in Tobacco Usage Program.

Sec. 513. National Tobacco-Free Public Education Program.

Sec. 514. National Event Sponsorship Program.
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Sec. 515. National Community Action Program.

Sec. 516. National Cessation Research Program.

Sec. 517. Use of surcharge payments.

TITLE VI—CONSENT DECREES, NON-PARTICIPATING

MANUFACTURERS, AND STATE ENFORCEMENT

Sec. 601. Purposes.

Subtitle A—Consent Decrees and Non-Participating Manufacturers

Sec. 611. Consent decrees.

Sec. 612. National tobacco control protocol.

Sec. 613. Non-participating manufacturers.

Subtitle B—State Enforcement

Sec. 621. Requirement of no sale to minors law.

Sec. 622. State reporting.

Sec. 623. Reduction in State payments.

TITLE VII—PROVISIONS RELATING TO TOBACCO-RELATED CIVIL

ACTIONS

Sec. 701. General immunity.

Sec. 702. Civil liability for past conduct.

Sec. 703. Civil liability for future conduct.

Sec. 704. Non-participating manufacturers.

TITLE VIII—PUBLIC DISCLOSURE OF HEALTH RESEARCH

Sec. 801. Purpose.

Sec. 802. National Tobacco Document Depository.

TITLE IX—ASSISTANCE TO TOBACCO GROWERS AND

COMMUNITIES

Sec. 1001. Short title; table of contents.

Sec. 1002. Definitions.

SUBTITLE A—TOBACCO COMMUNITY REVITALIZATION TRUST

FUND

Sec. 1011. Establishment of Trust Fund.

Sec. 1012. Contributions by tobacco product manufacturers and importers.

SUBTITLE B—AGRICULTURAL MARKET TRANSITION ASSISTANCE

Sec. 1021. Payments for lost tobacco quota.

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

production.

Sec. 1023. Tobacco community economic development grants.

Sec. 1024. Modifications in Federal tobacco programs.

SUBTITLE C—FARMER AND WORKER TRANSITION ASSISTANCE

Sec. 1031. Tobacco worker transition program.

Sec. 1032. Farmer opportunity grants.

SUBTITLE D—IMMUNITY
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Sec. 1041. General immunity for tobacco producers and warehousers.

TITLE IX—EFFECTIVE DATES AND OTHER PROVISIONS

Sec. 901. Effective dates.

Sec. 902. Native Americans.

Sec. 903. Preemption.

1 SEC. 2. FINDINGS.

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

4 (1) The Food and Drug Administration and

5 other public health authorities view the use of to6 bacco products by the nation’s children as a ‘‘pedi7 atric disease’’ of epic and worsening proportions that

8 results in new generations of tobacco-dependent chil9 dren and adults.

10 (2) There is a consensus within the scientific

11 and medical communities that tobacco products are

12 inherently dangerous and cause cancer, heart dis13 ease, and other serious adverse health effects.

14 (3) The Food and Drug Administration and

15 other health authorities have concluded that virtually

16 all new users of tobacco products are under the age

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

18 and entities believe that tobacco advertising and

19 marketing contribute significantly to the use of nico20 tine-containing tobacco products by adolescents and

21 as such, sweeping new restriction on the sale, pro-
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1 motion, and distribution of such products are need2 ed.

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

4 many of the legal means and resources needed to ad5 dress the societal problems caused by the use of to6 bacco products.

7 (5) Public health authorities believe that the so8 cietal benefits of enacting tobacco settlement legisla9 tion in human and economic terms would be vast.

10 The Food and Drug Administration found that re11 ducing underage tobacco use 50 percent ‘‘would pre12 vent well over 60,000 early deaths’’. The Food and

13 Drug Administration has estimated that the mone14 tary value of the regulations promulgated as a result

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

16 year in reduced medical costs, improved productivity,

17 and the benefit of avoiding the premature death of

18 loved ones.

19 (6) The unique position occupied by tobacco in

20 the history and economy of the United States, the

21 magnitude of the actual and potential tobacco-relat22 ed litigation, the need to avoid the cost, expense, un23 certainty, and inconsistency associated with such

24 protracted litigation, the need to limit the sale, dis25 tribution, marketing, and advertising of tobacco
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1 products to persons of legal age, and the need to

2 educate the public (especially young people) of the

3 health effects of using tobacco products all dictate

4 that it would be in the public interest to enact legis5 lation to facilitate a resolution of such matters.

6 (b) FINDINGS RELATED TO INTERSTATE COMMERCE

7 AND THE JUDICIAL SYSTEM.—Congress makes the follow8 ing findings:

9 (1) The sale, distribution, marketing, advertis10 ing, and use of tobacco products are activities sub11 stantially affecting interstate commerce. Such prod12 ucts are sold, marketed, advertised, and distributed

13 in interstate commerce on a nationwide basis and

14 have a substantial effect on the economy of the

15 United States.

16 (2) The sale, distribution, marketing, advertis17 ing, and use of tobacco products are activities that

18 substantially affect interstate commerce by virtue of

19 the health care and other costs that Federal and

20 State governmental authorities have incurred be21 cause of the usage of tobacco products.

22 (3) Various civil actions brought by State attor23 neys general, cities, counties, the Commonwealth of

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

25 classes and individuals to recover damages relating
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1 to tobacco-related diseases, conditions and products

2 are pending throughout the United States, of these

3 actions are slow-moving, expensive, and burdensome

4 not only for the litigants but also for Federal and

5 State judicial systems.

6 SEC. 3. PURPOSES.

7 It is the purpose of this Act to—

8 (1) reiterate and enhance the authority of the

9 Food and Drug Administration to regulate tobacco

10 products and provide for tobacco industry funding of

11 the oversight activities of the Administration;

12 (2) ban all outdoor tobacco advertising and ban

13 all cartoon characters and human figures used in

14 connection with tobacco advertising;

15 (3) provide for the funding by the tobacco in16 dustry of an aggressive Federal enforcement pro17 gram relating to tobacco advertising and distribu18 tion, including a State-administered retail licensing

19 system to prevent minors from obtaining tobacco

20 products;

21 (4) subject the tobacco industry to severe finan22 cial penalties in the event that underage tobacco

23 usage does not decline radically over the next 10

24 years;
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1 (5) provide for the establishment of national

2 standards to control the manufacturing of tobacco

3 products and the ingredients used in such products;

4 (6) provide certain regulatory powers to the

5 Food and Drug Administration to encourage the de6 velopment and marketing by the tobacco industry of

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

8 power to regulate the level of nicotine in such prod9 ucts;

10 (7) require the manufacturers of tobacco prod11 ucts to disclose all present and future non-public in12 ternal laboratory research regarding tobacco prod13 ucts;

14 (8) establish a minimum Federal standard to

15 limit smoking in public places;

16 (9) provide for the establishment of a National

17 Tobacco Settlement Trust Fund to be funded by the

18 tobacco industry and used in accordance with this

19 Act;

20 (10) provide for the establishment of a national

21 education-oriented counter advertising and tobacco

22 control campaign to be funded through the National

23 Tobacco Settlement Trust Fund;

24 (11) provide annual payments to States to fund

25 health benefits programs and to create a tobacco
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1 products liability judgments and settlements fund to

2 be funded through the National Tobacco Settlement

3 Trust Fund; and

4 (12) provide for the establishment of a national

5 program of smoking cessation to be funded through

6 the National Tobacco Settlement Trust Fund.

7 TITLE I—REGULATION OF THE

8 TOBACCO INDUSTRY

9 SEC. 100. DEFINITIONS.

10 In this Act:

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

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

14 size, filtration, or packaging.

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

16 of tobacco wrapped in leaf tobacco or in any sub17 stance containing tobacco (other than any roll of to18 bacco which is a cigarette or cigarillo within the

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

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

21 any product which contains nicotine, is intended to

22 be burned under ordinary conditions of use, and con23 sists of—

24 (A) any roll of tobacco wrapped in paper

25 or in any substance not containing tobacco; and
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1 (B) any roll of tobacco wrapped in any

2 substance containing tobacco which, because of

3 its appearance, the type of tobacco used in the

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

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

6 cigarette described in subparagraph (A).

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

8 any roll of tobacco wrapped in leaf tobacco or any

9 substance containing tobacco (other than any roll of

10 tobacco which is a cigarette within the meaning of

11 paragraph (3)) and as to which 1,000 units weigh

12 not more than 3 pounds.

13 (5) CIGARETTE TOBACCO.—The term ‘‘cigarette

14 tobacco’’ means any product that consists of loose

15 tobacco that contains or delivers nicotine and is in16 tended for use by persons in a cigarette. Unless oth17 erwise stated, the requirements of this Act pertain18 ing to cigarettes shall also apply to cigarette to19 bacco.

20 (6) COMMERCE.—The term ‘‘commerce’’

21 means—

22 (A) commerce between any State, the Dis23 trict of Columbia, the Commonwealth of Puerto

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

2 territory or possession of the United States;

3 (B) commerce between points in any State,

4 the District of Columbia, the Commonwealth of

5 Puerto Rico, Guam, the Virgin Islands, Amer6 ican Samoa, the Northern Mariana Islands or

7 any territory or possession of the United States;

8 or

9 (C) commerce wholly within the District of

10 Columbia, Guam, the Virgin Islands, American

11 Samoa, the Northern Mariana Islands, or any

12 territory or possession of the United States.

13 (7) COMMISSIONER.—The term ‘‘Commis14 sioner’’ means the Commissioner of Food and

15 Drugs.

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

17 means any person who furthers the distribution of

18 tobacco products, whether domestic or imported, at

19 any point from the original place of manufacture to

20 the person who sells or distributes the product to in21 dividuals for personal consumption. Such term shall

22 not include common carriers.

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

24 means any roll of tobacco wrapped in leaf tobacco or

25 any substance containing tobacco (other than any
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1 roll of tobacco which is a cigarette within the mean2 ing of subsection (1)) and as to which 1,000 units

3 weigh not more than 3 pounds.

4 (10) MANUFACTURER.—The term ‘‘manufac5 turer’’ means any person, including any repacker or

6 relabeler, who manufactures, fabricates, assembles,

7 processes, or labels a finished tobacco product.

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

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

10 pyrrolidinyl) pyridine or C10H14N2, including any

11 salt or complex of nicotine.

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

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

14 tobacco products are offered for sale, sold, or other15 wise distributed to consumers.

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

17 individual, partnership, corporation, or any other

18 business or legal entity.

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

20 means any loose tobacco that, because of its appear21 ance, type, packaging, or labeling, is likely to be of22 fered to, or purchased by, consumers as a tobacco

23 product to be smoked in a pipe.

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

25 sale’’ means any location at which an individual can
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1 purchase or otherwise obtain tobacco products for

2 personal consumption.

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

4 any person who sells tobacco products to individuals

5 for personal consumption, or who operates a facility

6 where vending machines or self-service displays are

7 permitted under this title.

8 (17) SALE.—The term ‘‘sale’’ includes the sell9 ing, providing samples of, or otherwise making to10 bacco products available for personal consumption in

11 any place within the scope of this Act.

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

13 means the Secretary of Health and Human Services.

14 (19) SMOKELESS TOBACCO.—The term ‘‘smoke15 less tobacco’’ means any product that consists of

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

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

18 or nasal cavity.

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

20 several States, the District of Columbia, the Com21 monwealth of Puerto Rico, Guam, the Virgin Is22 lands, American Samoa, the Northern Mariana Is23 lands, and any other territory or possession of the

24 United States. Such term includes any political divi25 sion of any State.
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1 (21) TOBACCO.—The term ‘‘tobacco’’ means to2 bacco in its unmanufactured form.

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

4 product’’ means cigars, cigarettes, cigarillos, ciga5 rette tobacco, little cigars, pipe tobacco, and smoke6 less tobacco.

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

8 means the National Tobacco Settlement Trust Fund

9 established under section 401.

10 Subtitle A—Restriction on

11 Marketing and Advertising

12 SEC. 101. PROHIBITIONS ON ADVERTISING.

13 (a) PROHIBITION ON OUTDOOR ADVERTISING.—

14 (1) IN GENERAL.—No manufacturer, distribu15 tor, or retailer may use any form of outdoor tobacco

16 product advertising, including billboards, posters, or

17 placards.

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

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

20 retailer shall not advertise tobacco products in any

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

22 other social or cultural events or activities occur.

23 (b) PROHIBITION ON USE OF HUMAN IMAGES AND

24 CARTOONS.—No manufacturer, distributor, or retailer

25 may use a human image or a cartoon character or cartoon-
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1 type character in its advertising, labeling, or promotional

2 material with respect to a tobacco product.

3 (c) PROHIBITION ON ADVERTISING ON THE INTER4 NET.—No manufacturer, distributor, or retailer may use

5 the Internet to advertise tobacco products unless such an

6 advertisement is inaccessible in or from the United States.

7 (d) PROHIBITION ON POINT-OF-SALE ADVERTIS8 ING.—

9 (1) IN GENERAL.—Except as otherwise pro10 vided in this subsection, no manufacturer, distribu11 tor, or retailer may use point-of-sale advertising of

12 tobacco products.

13 (2) ADULT-ONLY STORES AND TOBACCO OUT14 LETS.—Paragraph (1) shall not apply to point of

15 sale advertising at adult-only stores and tobacco out16 lets.

17 (3) PERMISSIBLE ADVERTISING.—

18 (A) IN GENERAL.—Each manufacturer of

19 tobacco products may display not more than 2

20 separate point-of-sale advertisements in or at

21 each location at which tobacco products are of22 fered for sale.

23 (B) MARKET SHARE MANUFACTURERS.—A

24 manufacturer with at least 25 percent of the

25 market share of the tobacco product involved
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1 may display an additional point-of-sale adver2 tisement in or at each location at which tobacco

3 products are offered for sale.

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

5 more than 1 point-of-sale advertisement relating

6 to the retailer’s own or its wholesaler’s con7 tracted retailer or private label brand of tobacco

8 product. No manufacturer or distributor may

9 enter into any arragenment with a retailer to

10 limit the ability of the retailer to display any

11 form of permissible point-of-sale advertisement

12 or promotional material originating with an13 other manufacturer or distributor.

14 (4) LIMITATIONS.—

15 (A) IN GENERAL.—A point of sale adver16 tisement permitted under this subsection shall

17 be comprised of a display area than is not larg18 er than 576 square inches (either individually

19 or in the aggregate) and shall consist only of

20 black letters on a white background or other

21 recognized typographical marks. Such advertise22 ment shall not be attached to nor located within

23 2 feet of any fixture on which candy is dis24 played for sale.
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1 (B) AUDIO AND VIDEO FORMATS.—Audio

2 and video advertisements permitted under sec3 tion 103(c) may be distributed to individuals

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

5 but may not be played or viewed at such point

6 of sale.

7 (C) DISPLAY FIXTURES.—Display fixtures

8 in the form of signs consisting of brand name

9 and price and not larger than 2 inches in height

10 are permitted.?

11 (5) DEFINITION.—For purposes of this sub12 section, the term ‘‘point-of-sale advertising’’ means

13 all printed or graphical materials bearing the brand

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

15 logo, motto, selling message, recognizable color or

16 pattern of colors, or any other indicia of product

17 identification similar or identical to those used for

18 tobacco products which, when used for its intended

19 purpose, can reasonably be anticipated to be seen by

20 customers at a location at which tobacco products

21 are offered for sale.

22 SEC. 102. GENERAL RESTRICTIONS.

23 (a) RESTRICTION ON PRODUCT NAMES.—A manu24 facturer shall not use a trade or brand name of a non25 tobacco product as the trade or brand name for a cigarette
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1 or smokeless tobacco product, except for a tobacco product

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

3 and a nontobacco product that were sold in the United

4 States on or before January 1, 1995.

5 (b) ADVERTISING LIMITED TO FDA SPECIFIED

6 MEDIA.—

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

8 or retailer may, in accordance with this title, dis9 seminate or cause to be disseminated advertising or

10 labeling which bears a tobacco product brand name

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

12 other indicia of tobacco product identification only in

13 newspapers, in magazines, in periodicals or other

14 publications (whether periodic or limited distribu15 tion), on billboards, posters and placards in accord16 ance with section 101(a), in nonpoint-of-sale pro17 motional material (including direct mail), in point18 of-sale promotional material, and in audio or video

19 formats delivered at a point-of-sale.

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

21 or retailer that intends to disseminate, or to cause

22 to be disseminated, advertising or labeling for a to23 bacco product in a medium that is not described in

24 paragraph (1) shall notify the Commissioner not less

25 than 30 days prior to the date on which such me-
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1 dium is to be used. Such notice shall describe the

2 medium and discuss the extent to which the adver3 tising or labeling may be seen by individuals who are

4 under 18 years of age.

5 (3) ACTION BY COMMISSIONER.—

6 (c) RESTRICTION ON PLACEMENT IN ENTERTAIN7 MENT MEDIA.—

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

9 by any manufacturer, distributor, or retailer for the

10 placement of any tobacco product or tobacco product

11 package or advertisement—

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

13 motion picture produced for viewing by the gen14 eral public; or

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

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

17 means any electronic amusement device that utilizes

18 a computer, microprocessor, or similar electronic cir19 cuitry and its own cathode ray tube, or is designed

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

21 interacts with the user of the device.

22 (d) RESTRICTIONS ON GLAMORIZATION OF TOBACCO

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

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

25 for the purpose of promoting the image or use of a tobacco
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1 product through print or film media that appeals to indi2 viduals under 18 years of age or through a live perform3 ance by an entertainment artist that appeals to such indi4 viduals.

5 SEC. 103. FORMAT AND CONTENT REQUIREMENTS FOR LA6 BELING AND ADVERTISING.

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

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

9 advertising or causing to be advertised, disseminating or

10 causing to be disseminated, any labeling or advertising for

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

12 background.

13 (b) CERTAIN ADVERTISING EXCEPTED.—

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

15 apply to advertising—

16 (A) in any facility where vending machines

17 and self-service displays are permitted under

18 this title if the advertising involved—

19 (i) is not visible from outside of the

20 facility; and

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

22 the facility;

23 (B) that appears in any publication

24 (whether periodic, limited, or controlled dis-
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1 tribution) that the manufacturer, distributor, or

2 retailer demonstrates is an adult publication.

3 (2) ADULT PUBLICATION.—For purposes of

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

5 means a newspaper, magazine, periodical, or other

6 publication—

7 (A) whose readers under 18 years of age

8 constitute 15 percent or less of the total reader9 ship as measured by competent and reliable

10 survey evidence; and

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

12 individuals who are under 18 years of age as

13 measured by competent and reliable survey evi14 dence.

15 (c) AUDIO OR VIDEO FORMATS.—Each manufac16 turer, distributor, and retailer advertising or causing to

17 be advertised any advertising for a tobacco product in an

18 audio or video format shall comply with the following:

19 (1) With respect to an audio format, the adver20 tising shall be limited to words only with no music

21 or sound effects.

22 (2) With respect to a video format, the advertis23 ing shall be limited to static black text only on a

24 white background. Any audio with the video adver-
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1 tising shall be limited to words only with no music

2 or sound effects.

3 SEC. 104. STATEMENT OF INTENDED USE.

4 (a) REQUIREMENT.—Each manufacturer, distribu5 tor, and retailer advertising or causing to be advertised,

6 disseminating or causing to be disseminated, advertising

7 concerning cigarettes, cigarette tobacco, or smokeless to8 bacco products otherwise permitted under this title shall

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

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

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

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

13 (b) USE STATEMENTS.—

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

15 for cigarettes or cigarette tobacco is as follows

16 (whichever is appropriate):

17 Cigarettes—A Nicotine-Delivery Device for Per18 sons 18 or Older.

19 Cigarette Tobacco—A Nicotine-Delivery Device

20 for Persons 18 or Older.

21 (2) SMOKELESS TOBACCO.—A statement of in22 tended use for a smokeless tobacco product is as fol23 lows (whichever is appropriate):

24 Loose Leaf Chewing Tobacco—A Nicotine-De25 livery Device for Persons 18 or Older.
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1 Plug Chewing Tobacco—A Nicotine-Delivery

2 Device for Persons 18 or Older.

3 Twist Chewing Tobacco—A Nicotine-Delivery

4 Device for Persons 18 or Older.

5 Moist Snuff—A Nicotine-Delivery Device for

6 Persons 18 or Older.

7 Dry Snuff—A Nicotine-Delivery Device for Per8 sons 18 or Older.

9 (c) TYPE AND LOCATION.—Requirements with re10 spect to type size, style, font, and location shall be deter11 mined by the Commissioner.

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

13 CONTESTS AND GAMES OF CHANCE, AND

14 SPONSORSHIP OF EVENTS.

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

16 manufacturer, importer, distributor, or retailer shall mar17 ket, license, distribute, sell, or cause to be marketed, li18 censed, distributed or sold any item (other than tobacco

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

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

21 motto, selling message, recognizable color or pattern of

22 colors, or any other indicia of product identification simi23 lar or identifiable to those used for any brand of tobacco

24 products.
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1 (b) GIFTS, CONTESTS, AND LOTTERIES.—No manu2 facturer, distributor, or retailer shall offer or cause to be

3 offered to any person purchasing tobacco products any gift

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

5 of the purchase of such products, or to any person in con6 sideration of furnishing evidence, such as credits, proofs7 of-purchase, or coupons, of such a purchase.

8 (c) SPONSORSHIP.—

9 (1) IN GENERAL.—No manufacturer, distribu10 tor, or retailer shall sponsor or cause to be spon11 sored any athletic, musical, artistic, or other social

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

13 in which the brand name (alone or in conjunction

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

15 recognizable color or pattern of colors, or any other

16 indicia of product identification similar or identical

17 to those used for tobacco products is used.

18 (2) USE OF CORPORATE NAME.—A manufac19 turer, distributor, or retailer may sponsor or cause

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

21 other social or cultural event in the name of the cor22 poration which manufactures the tobacco product

23 if—
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•S 1415 RS2

1 (A) both the corporate name and the cor2 poration were registered and in use in the

3 United States prior to January 1, 1995; and

4 (B) the corporate name does not include

5 any brand name (alone or in conjunction with

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

7 message, recognizable color or pattern of colors,

8 or any other indicia or product identification

9 identical or similar to, or identifiable with,

10 those used for any brand of tobacco products.

11 SEC. 106. USE OF PRODUCT DESCRIPTORS.

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

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

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

15 any advertisement concerning such product shall contain,

16 a mandatory disclaimer, to be established by the Sec17 retary, that states that such product has not been shown

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

19 (b) RULE OF CONSTRUCTION.—Nothing in this sec20 tion shall be construed to limit the authority of the Food

21 and Drug Administration with respect to words used as

22 product descriptors.
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1 Subtitle B—Warnings, Labeling

2 and Packaging

3 SEC. 111. CIGARETTE WARNINGS.

4 (a) IN GENERAL.—

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

6 person to manufacture, package, or import for sale

7 or distribution within the United States any ciga8 rettes the package of which fails to bear, in accord9 ance with the requirements of this section, one of

10 the following labels:

11 WARNING: Cigarettes Are Addictive.

12 WARNING: Tobacco Smoke Can Harm Your

13 Children.

14 WARNING: Cigarettes Cause Fatal Lung Dis15 ease.

16 WARNING: Cigarettes Cause Cancer.

17 WARNING: Cigarettes Cause Strokes And

18 Heart Disease.

19 WARNING: Smoking During Pregnancy Can

20 Harm Your Baby.

21 WARNING: Smoking Can Kill You.

22 WARNING: Tobacco Smoke Causes Fatal

23 Lung Disease In Nonsmokers.

24 WARNING: Quitting Smoking Now Greatly

25 Reduces Serious Risks To Your Health.
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•S 1415 RS2

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

2 manufacturer or importer of cigarettes to advertise

3 or cause to be advertised within the United States

4 any cigarette unless the advertising bears, in accord5 ance with the requirements of this section, one of

6 the following labels:

7 WARNING: Cigarettes Are Addictive.

8 WARNING: Tobacco Smoke Can Harm Your

9 Children.

10 WARNING: Cigarettes Cause Fatal Lung Dis11 ease.

12 WARNING: Cigarettes Cause Cancer.

13 WARNING: Cigarettes Cause Strokes And

14 Heart Disease.

15 WARNING: Smoking During Pregnancy Can

16 Harm Your Baby.

17 WARNING: Smoking Can Kill You.

18 WARNING: Tobacco Smoke Causes Fatal

19 Lung Disease In Nonsmokers.

20 WARNING: Quitting Smoking Now Greatly

21 Reduces Serious Risks To Your Health.

22 (b) REQUIREMENTS FOR LABELING.—

23 (1) LOCATION.—Each label statement required

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

25 on the upper portion of the front panel of the ciga-
29

•S 1415 RS2

1 rette package (or carton) and occupy not less than

2 25 percent of such front panel.

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

4 label statement required by paragraph (1) of sub5 section (a), the phrase ‘‘WARNING’’ shall appear in

6 capital letters and the label statement shall be print7 ed in 17 point type with adjustments as determined

8 appropriate by the Commissioner to reflect the

9 length of the required statement. All the letters in

10 the label shall appear in conspicuous and legible

11 type, in contrast by typography, layout, or color with

12 all other printed material on the package, and be

13 printed in an alternating black-on-white and white14 on-black format as determined appropriate by the

15 Commissioner.

16 (3) EXCEPTION.—The provisions of paragraph

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

18 package (offered for sale on the date of enactment

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

20 does not comprise at least 25 percent of the front

21 panel. In the case of such a package, the label state22 ment required by paragraph (1) of subsection (a)

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

24 (c) REQUIREMENTS FOR ADVERTISING.—
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•S 1415 RS2

1 (1) LOCATION.—Each label statement required

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

3 less than 20 percent of the area of the advertisement

4 involved.

5 (2) TYPE AND COLOR.—

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

7 statement required by paragraph (2) of sub8 section (a), the phrase ‘‘WARNING’’ shall ap9 pear in capital letters and the label statement

10 shall be printed in the following types:

11 (i) With respect to whole page adver12 tisements on broadsheet newspaper—45

13 point type.

14 (ii) With respect to half page adver15 tisements on broadsheet newspaper—39

16 point type.

17 (iii) With respect to whole page adver18 tisements on tabloid newspaper—39 point

19 type.

20 (iv) With respect to half page adver21 tisements on tabloid newspaper—27 point

22 type.

23 (v) With respect to DPS magazine ad24 vertisements—31.5 point type.
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•S 1415 RS2

1 (vi) With respect to whole page maga2 zine advertisements—31.5 point type.

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

4 advertisements—22.5 point type.

5 (viii) With respect to 20cm x 2 col6 umn advertisements—15 point type.

7 The Commissioner may revise the required type

8 sizes as the Commissioner determines appro9 priate within the 20 percent requirement.

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

11 under this paragraph shall appear in conspicu12 ous and legible type, in contrast by typography,

13 layout, or color with all other printed material

14 on the package, and be printed in an alternat15 ing black-on-white and white-on-black format as

16 determined appropriate by the Commissioner.

17 (d) ROTATION OF LABEL STATEMENTS.—

18 (1) IN GENERAL.—Except as provided in para19 graph (2), the label statements specified in para20 graphs (1) and (2) of subsection (a) shall be rotated

21 by each manufacturer or importer of cigarettes quar22 terly in alternating sequence on packages of each

23 brand of cigarettes manufactured by the manufac24 turer or importer and in the advertisements for each

25 such brand of cigarettes in accordance with a plan
32

•S 1415 RS2

1 submitted by the manufacturer or importer and ap2 proved by the Federal Trade Commission. The Fed3 eral Trade Commission shall approve a plan submit4 ted by a manufacturer or importer of cigarettes

5 which will provide the rotation required by this sub6 section and which assures that all of the labels re7 quired by paragraphs (1) and (2) will be displayed

8 by the manufacturer or importer at the same time.

9 (2) APPLICATION OF OTHER ROTATION RE10 QUIREMENTS.—

11 (A) IN GENERAL.—A manufacturer or im12 porter of cigarettes may apply to the Federal

13 Trade Commission to have the label rotation

14 described in subparagraph (C) apply with re15 spect to a brand style of cigarettes manufac16 tured or imported by such manufacturer or im17 porter if—

18 (i) the number of cigarettes of such

19 brand style sold in the fiscal year of the

20 manufacturer or importer preceding the

21 submission of the application is less than

1 22 ⁄4 of 1 percent of all the cigarettes sold in

23 the United States in such year; and

(ii) more than 1 24 ⁄2 of the cigarettes

25 manufactured or imported by such manu-
33

•S 1415 RS2

1 facturer or importer for sale in the United

2 States are packaged into brand styles

3 which meet the requirements of clause (i).

4 If an application is approved by the Commis5 sion, the label rotation described in subpara6 graph (C) shall apply with respect to the appli7 cant during the 1-year period beginning on the

8 date of the application approval.

9 (B) PLAN.—An applicant under subpara10 graph (A) shall include in its application a plan

11 under which the label statements specified in

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

13 by the applicant manufacturer or importer in

14 accordance with the label rotation described in

15 subparagraph (C).

16 (C) OTHER ROTATION REQUIREMENTS.—

17 Under the label rotation which the manufac18 turer or importer with an approved application

19 may put into effect, each of the labels specified

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

21 on the packages of each brand style of ciga22 rettes with respect to which the application was

23 approved an equal number of times within the

24 12-month period beginning on the date of the

25 approval by the Commission of the application.
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•S 1415 RS2

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

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

3 does not manufacture, package, or import cigarettes for

4 sale or distribution within the United States.

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

6 be unlawful to advertise cigarettes and little cigars on any

7 medium of electronic communications subject to the juris8 diction of the Federal Communications Commission.

9 SEC. 112. SMOKELESS TOBACCO WARNINGS.

10 (a) IN GENERAL.—

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

12 person to manufacture, package, or import for sale

13 or distribution within the United States any smoke14 less tobacco product the package of which fails to

15 bear, in accordance with the requirements of this

16 section, one of the following labels:

17 WARNING: This Product May Cause Mouth

18 Cancer.

19 WARNING: This Product May Cause Gum

20 Disease And Tooth Loss.

21 WARNING: This Product Is Not A Safe Alter22 native To Cigarettes.

23 WARNING: Smokeless Tobacco Is Addictive.

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

25 manufacturer or importer of smokeless tobacco prod-
35

•S 1415 RS2

1 ucts to advertise or cause to be advertised within the

2 United States any smokeless tobacco product unless

3 the advertising bears, in accordance with the re4 quirements of this section, one of the following la5 bels:

6 WARNING: This Product May Cause Mouth

7 Cancer.

8 WARNING: This Product May Cause Gum

9 Disease And Tooth Loss.

10 WARNING: This Product Is Not A Safe Alter11 native To Cigarettes.

12 WARNING: Smokeless Tobacco Is Addictive.

13 (b) REQUIREMENTS FOR LABELING.—

14 (1) LOCATION.—Each label statement required

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

16 on the principal display panel of the product and oc17 cupy not less than 25 percent of such panel.

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

19 label statement required by paragraph (1) of sub20 section (a), the phrase ‘‘WARNING’’ shall appear in

21 capital letters and the label statement shall be print22 ed in 17 point type with adjustments as determined

23 appropriate by the Commissioner to reflect the

24 length of the required statement. All the letters in

25 the label shall appear in conspicuous and legible type
36

•S 1415 RS2

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

2 other printed material on the package and be print3 ed in an alternating black on white and white on

4 black format as determined appropriate by the Com5 missioner.

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

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

8 advertisements for smokeless tobacco products and the ro9 tation of the label statements required under subsection

10 (a)(1) on such products.

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

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

13 tobacco products who does not manufacture, package, or

14 import such products for sale or distribution within the

15 United States.

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

17 be unlawful to advertise smokeless tobacco on any medium

18 of electronic communications subject to the jurisdiction of

19 the Federal Communications Commission.

20 SEC. 113. INGREDIENTS.

21 Each person who manufactures, packages, or imports

22 cigarettes or smokeless tobacco products shall annually

23 provide the Secretary with the information required under

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

25 (as added by section 143(3) of this Act).
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•S 1415 RS2

1 SEC. 114. ENFORCEMENT, REGULATIONS, AND CONSTRUC2 TION.

3 (a) ENFORCEMENT.—

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

5 112 or the regulations promulgated pursuant to this

6 subtitle shall be considered a violation of section 5

7 of the Federal Trade Commission Act.

8 (2) FINES.—Any person who is found to violate

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

10 be guilty of a misdemeanor and shall, on conviction

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

12 $10,000.

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

14 United States are vested with jurisdiction, for cause

15 shown, to prevent and restrain violations of this subtitle

16 upon the application of the Federal Trade Commission in

17 the case of a violation of section 111 or 112 or upon appli18 cation of the Attorney General of the United States acting

19 through the several United States attorneys in their sev20 eral districts in the case of a violation of section 113.

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

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

23 Commission shall promulgate such regulations as it may

24 require to implement sections 111 and 112.

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

26 than the requirements of sections 111, 112, and 113) shall
38

•S 1415 RS2

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

2 the Federal Trade Commission with respect to unfair or

3 deceptive acts or practices in the advertising of cigarettes

4 or smokeless tobacco products.

5 SEC. 115. PREEMPTION.

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

7 use of cigarettes or smokeless tobacco products and

8 health, other than the statements required by sections 111

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

10 on any package or in any advertisement of cigarettes or

11 a smokeless tobacco product.

12 (b) STATE AND LOCAL ACTION.—No statement relat13 ing to the use of cigarettes or smokeless tobacco products

14 and health, other than the statements required by sections

15 111 and 112, shall be required by any State or local stat16 ute or regulation to be included on any package or in any

17 advertisement of cigarettes or a smokeless tobacco prod18 uct.

19 (c) EFFECT ON LIABILITY LAW.—Except as other20 wise provided in this Act, nothing in this subtitle shall re21 lieve any person from liability at common law or under

22 State statutory law to any other person.

23 SEC. 116. REPORTS.

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

25 after the date of enactment of this Act, and biennially
39

•S 1415 RS2

1 thereafter, the Secretary shall prepare and submit to Con2 gress a report containing—

3 (1) a description of the effects of health edu4 cation efforts on the use of cigarettes and smokeless

5 tobacco products;

6 (2) a description of the use by the public of

7 cigarettes and smokeless tobacco products;

8 (3) an evaluation of the health effects of ciga9 rettes and smokeless tobacco products and the iden10 tification of areas appropriate for further research;

11 and

12 (4) such recommendations for legislation and

13 administrative action as the Secretary considers ap14 propriate.

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

16 the date of enactment of this Act, and biennially there17 after, the Federal Trade Commission shall prepare and

18 submit to Congress a report containing—

19 (1) a description of the current sales, advertis20 ing, and marketing practices associated with ciga21 rettes and smokeless tobacco products; and

22 (2) such recommendations for legislation and

23 administrative action as the Commission deems ap24 propriate.
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•S 1415 RS2

1 SEC. 117. EXPORTS.

2 Packages of cigarettes or smokeless tobacco products

3 manufactured, imported, or packaged—

4 (1) for export from the United States; or

5 (2) for delivery to a vessel or aircraft, as sup6 plies, for consumption beyond the jurisdiction of the

7 internal revenue laws of the United States;

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

9 such exemptions shall not apply to cigarettes or smokeless

10 tobacco products manufactured, imported, or packaged for

11 sale or distribution to members or units of the Armed

12 Forces of the United States located outside of the United

13 States.

14 SEC. 118. REPEALS.

15 The following Acts are repealed:

16 (1) The Federal Cigarette Labeling and Adver17 tising Act (15 U.S.C. 1331 et seq.).

18 (2) The Comprehensive Smokeless Tobacco

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

20 seq.).

21 Subtitle C—Restriction on Access

22 to Tobacco Products

23 SEC. 121. REQUIREMENTS RELATING TO RETAILERS.

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

25 may distribute a tobacco product to any individual who

26 is under 18 years of age.
41

•S 1415 RS2

1 (b) PHOTO IDENTIFICATION.—

2 (1) REQUIREMENT.—Except as provided in

3 paragraph (2), each retailer shall verify, by means of

4 photographic identification containing the date of

5 birth of the bearer, that no individual purchasing a

6 tobacco product is under 18 years of age.

7 (2) EXCEPTION.—No verification under para8 graph (1) is required for any individual who is at

9 least 27 years of age.

10 (3) LOCATION OF PRODUCTS.—Except as pro11 vided in section 122(d), a retailer shall ensure that

12 all tobacco products are located in areas where cus13 tomers do not have access to the products.

14 (c) FACE-TO-FACE TRANSACTIONS.—Except as pro15 vided in section 122(c)(1), a retailer may sell tobacco

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

17 the assistance of any electronic or mechanical device.

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

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

20 distribute to individuals portions of such product (includ21 ing individual cigarettes or a number of cigarettes that

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

23 or any quantity of cigarette tobacco or smokeless tobacco

24 that is smaller than the smallest package distributed by

25 the retailer for individual consumer use).
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•S 1415 RS2

1 (e) RETAILER COMPLIANCE WITH RESPECT TO

2 SELF-SERVICE.—Each retailer shall ensure that all to3 bacco-related self-service displays, advertising, labeling,

4 and other items that are located in the establishment of

5 the retailer and that do not comply with the requirements

6 of this title are removed or are brought into compliance

7 with the requirements of this title.

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

9 (a) MINIMUM CIGARETTE PACKAGE SIZE.—Except

10 as otherwise provided in this section, no manufacturer,

11 distributor, or retailer may sell or cause to be sold, or dis12 tribute or cause to be distributed, any cigarette package

13 that contains fewer than 20 cigarettes.

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

15 distributor, or retailer may distribute or cause to be dis16 tributed any free samples of any tobacco product.

17 (c) PROHIBITION ON DISTRIBUTION THROUGH SELF18 SERVICE MODES OF SALE.—

19 (1) VENDING MACHINES.—No manufacturer,

20 distributor, or retailer may distribute or cause to be

21 distributed any tobacco product through a vending

22 machine.

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

24 subsection (d)(1)(B), no manufacturer, distributor,
43

•S 1415 RS2

1 or retailer may distribute or cause to be distributed

2 any tobacco product through a self-service display.

3 (d) PERMITTED SELF-SERVICE MODES OF SALE.—

4 (1) IN GENERAL.—Notwithstanding this sub5 title, the following methods of distributing tobacco

6 products are permitted:

7 (A) Mail-order sales as provided for in

8 paragraph (2), except that mail-order redemp9 tion of coupons and the distribution of free

10 samples through the mail shall be prohibited.

11 (B) Self-service displays that are located in

12 facilities where the retailer ensures that no indi13 viduals under 18 years of age are present or

14 permitted to enter at any time.

15 (2) MAIL-ORDER SALES.—

16 (A) IN GENERAL.—A manufacturer, dis17 tributor, or retailer may distribute or cause to

18 be distributed a tobacco product through mail19 order sales only if such sales are subject to a

20 procedure for verifying that no individual pur21 chasing such products is under 18 years of age.

22 (B) REVIEW BY COMMISSIONER.—Not

23 later than 2 years after the date of enactment

24 of this Act, the Commissioner shall review the

25 verification procedures implemented under sub-
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•S 1415 RS2

1 paragraph (A) to determine whether individuals

2 under 18 years of age are obtaining tobacco

3 products through the mail. If the Commissioner

4 determines that a significant number of under5 age individuals are obtaining such products

6 through the mail, the Commissioner may pro7 mulgate regulations to ban the distribution of

8 tobacco products through the mail.

9 Subtitle D—Licensing of Retail

10 Tobacco Sellers

11 SEC. 131. ESTABLISHMENT OF PROGRAM.

12 (a) IN GENERAL.—The Commissioner, after con13 sultation with the Secretary, shall establish a program

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

15 or local license to sell or otherwise distribute tobacco prod16 ucts directly to consumers.

17 (b) PROHIBITION ON DISTRIBUTION.—No entity

18 shall sell or otherwise distribute tobacco products directly

19 to consumers unless such entity has in effect a tobacco

20 license issued or renewed in accordance with the laws of

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

22 distributed.

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

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

25 shall have in effect laws that meet the standards described
45

•S 1415 RS2

1 in this subtitle that provide for the licensing of entities

2 engaged in the sale or distribution of tobacco products di3 rectly to consumers and shall enforce such laws in accord4 ance with section 133.

5 SEC. 132. REQUIREMENTS.

6 (a) LICENSURE AND NOTICE.—

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

8 each person engaged in the sale or distribution of to9 bacco products directly to consumers obtain a license

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

11 be required for each place of business where tobacco

12 products are distributed or sold at retail.

13 (2) NOTICE.—The State shall notify every per14 son in the State who is engaged in the distribution

15 at retail of tobacco products of the license require16 ment of this section and of the date by which such

17 person shall have obtained a license in order to dis18 tribute such products.

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

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

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

22 fees shall be used to offset the administrative costs in23 curred by the State in issuing and renewing licenses under

24 this subtitle.

25 (c) APPLICATION.—
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•S 1415 RS2

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

2 submit to the State an application for a license (in3 cluding the renewal of a license) under this section,

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

5 set forth the name under which the applicant trans6 acts or intends to transact business, the location of

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

8 issued, the street address to which all notices rel9 evant to the license are to be sent (in this Act re10 ferred to as ‘‘notice address’’), and any other identi11 fying information that the State may require.

12 (2) ACTION BY STATE.—

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

14 renew a license or deny an application for a li15 cense or the renewal of a license within 30 days

16 of receiving a properly completed application

17 and the licensing fee. The State shall provide

18 notice to an applicant of an action on an appli19 cation denying the issuance of a license or re20 fusing to renew a license.

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

22 deny the issuance or renewal of a license upon

23 an application if the State determines that the

24 applicant has failed to comply with the require25 ments of this title.
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1 (3) SCOPE AND RENEWAL.—Every license

2 issued by the State shall be valid for a period deter3 mined by the State and shall be renewed upon appli4 cation except as otherwise provided in this section.

5 SEC. 133. PENALTIES, REVOCATIONS AND SUSPENSIONS.

6 (a) PENALTIES.—

7 (1) CRIMINAL PENALTIES APPLICABLE TO UN8 LICENSED SELLERS.—Any individual who sells or

9 otherwise distributes tobacco products to a consumer

10 without a tobacco license in effect as provided for in

11 this subtitle shall be subject, under the applicable

12 State law, to a fine of not less than $1,000, or im13 prisonment of not less than 6 months, or both. With

14 respect to any corporate employer of such an indi15 vidual, the corporation shall be subject to a fine of

16 not more than $50,000.

17 (2) CIVIL PENALTIES APPLICABLE TO SELLERS

18 IN VIOLATION OF LICENSE.—

19 (A) IN GENERAL.—In addition to any

20 criminal penalties that may be imposed under

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

22 subsection (b), impose civil penalties on any en23 tity that has sold or distributed tobacco prod24 ucts in the State in violation of the State to25 bacco licensing laws.
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1 (B) LIMITATIONS.—The civil penalties that

2 may be imposed under subparagraph (A) shall

3 not exceed the following:

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

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

6 the tobacco license, or both.

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

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

9 of the tobacco license, or both.

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

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

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

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

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

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

19 (vi) For a sixth and any subsequent

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

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

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

24 year period, the permanent revocation of

25 the tobacco license.
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•S 1415 RS2

1 (b) REVOCATION AND SUSPENSIONS.—

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

4 jurisdiction to have violated a provision of State law

5 under this subtitle during the license term, the State

6 shall notify the licensee in writing, served personally

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

9 such law at the same place of business may result

10 in an administrative action to suspend the license

11 for a period determined by the State in accordance

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

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

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

16 was issued and the licensee has been provided notice

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

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

21 license is initiated, the State shall immediately notify

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

24 and the reasons therefore and permit the licensee an

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

3 be unwarranted or unjust.

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

5 administrative action to revoke a tobacco license that

6 previously has been suspended under paragraph (2)

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

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

10 the same place of business for which the license was

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

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

15 and the reasons therefore and permit the licensee an

16 opportunity, at least 30 days after written notice is

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

19 be unwarranted or unjust.

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

21 judicial review of an action of the State suspending, revok22 ing, denying, or refusing to renew a license under this sec23 tion by filing a complaint in a court of competent jurisdic24 tion. A complaint shall be filed within 30 days after the
51

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1 date on which notice of the action involved is received by

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

3 SEC. 134. FEDERAL LICENSING OF MILITARY AND OTHER

4 ENTITIES.

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

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

9 to entities that sell or distribute tobacco products—

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

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

12 (2) in any United States embassy;

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

14 Federal Government either in the United States or

15 in a foreign country;

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

17 United States; or

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

19 other Federal property as determined appropriate by

20 the Commissioner.

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

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

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

4 products on Indian reservations (as defined in section

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

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

7 tribal organization (as such terms are defined in section

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

10 Subtitle E—Regulation of Tobacco

11 Product Development and Man12 ufacturing

13 SEC. 141. REFERENCE.

14 Whenever in this subtitle an amendment or repeal is

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

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

19 seq.).

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

21 (a) DEFINITIONS.—

22 (1) DRUG.—

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

24 U.S.C. 321(g)(1)) is amended by inserting be-
53

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1 fore the first period ‘‘; and (E) tobacco prod2 ucts’’.

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

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

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

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

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

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

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

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

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

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

19 otherwise affecting the characteristics of, any tobacco

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

22 substance’s original or modified form.

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

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

3 of the Universal Tobacco Settlement Act.’’.

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

5 amended by adding at the end thereof the following new

6 subsection:

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

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

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

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

12 Act.’’.

13 (c) ADULTERATED OR MISBRANDED PROVISIONS.—

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

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

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

17 with the provisions of chapter IX.’’.

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

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

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

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

23 Act.’’.

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

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

4 IX.’’.

5 SEC. 143. HEALTH AND SAFETY REGULATION OF TOBACCO

6 PRODUCTS.

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

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

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

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

11 and 1005, respectively; and

12 (3) by adding after chapter VIII the following

13 new chapter:

14 ‘‘CHAPTER IX—TOBACCO PRODUCTS

15 ‘‘SEC. 901. DEFINITIONS.

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

17 definitions contained in section 201, the definitions under

18 section 100 of the Universal Tobacco Settlement Act shall

19 apply.

20 ‘‘SEC. 902. PURPOSE.

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

25 of the ingredients used in such products and the imposi-
56

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1 tion of standards to reduce the level of certain constituents

2 contained in such products, including nicotine.

3 ‘‘SEC. 903. PROMULGATION OF REGULATIONS.

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

6 tobacco products that are consistent with this chapter and

7 with the manner in which other products that are ingested

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

9 the Commissioner may not promulgate a regulation that

10 prohibits the sale and distribution of a tobacco product

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

12 Such regulations shall be promulgated not later than 6

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

15 ‘‘SEC. 904. MINIMUM REQUIREMENTS.

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

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

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

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

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

23 of the Universal Tobacco Settlement Act.

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

25 under section 903 shall at a minimum require that a to-
57

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1 bacco product be deemed to be adulterated if the Commis2 sioner determines that any tobacco additive in such prod3 uct, regardless of the amount of such tobacco additive, ei4 ther by itself or in conjunction with any other tobacco ad5 ditive or ingredient significantly increases the risk to

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

7 ‘‘SEC. 905. PERFORMANCE STANDARDS FOR TOBACCO

8 PRODUCTS.

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

11 shall include performance standards for such products as

12 established in accordance with this section.

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

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

16 modification of the product to minimize the illness

17 or injury that may result in consumers as a result

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

20 among such consumers; and

21 ‘‘(2) include, where appropriate—

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

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

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

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

9 or by another person at the direction of the

10 Secretary;

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

12 performance characteristics of the tobacco prod13 uct;

14 ‘‘(D) provisions requiring that the results

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

16 required to be made under subparagraph (B)

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

19 which the test or tests were required; and

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

21 and distribution of the device be restricted but

22 only to the extent that the sale and distribution

23 of a device may be otherwise restricted under

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

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

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

5 other technological data.

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

7 Secretary shall, to the maximum extent practicable—

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

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

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

15 ‘‘(3) invite appropriate participation, through

16 joint or other conferences, workshops, or other

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

20 make a significant contribution.

21 ‘‘(e) PROCEDURES.—

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

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

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

6 shall—

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

8 justification that the performance standard is

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

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

12 existing performance standard for the product,

13 including a draft or proposed performance

14 standard, for consideration by the Secretary.

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

16 provide for a comment period of not less than 60

17 days.

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

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

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

21 or revocation of any performance standard under

22 this section, except that any reference to an advisory

23 committee shall be deemed to be a reference the Sci24 entific Advisory Committee established under section

25 906.
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1 ‘‘(f) NICOTINE.—Except as provided in section 907,

2 a performance standard established under this section

3 may not require the elimination of nicotine from tobacco

4 products.

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

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

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

11 under section 100 of the Universal Tobacco Settlement

12 Act.

13 ‘‘SEC. 906. SCIENTIFIC ADVISORY COMMITTEE.

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

15 the date of enactment of the Universal Tobacco Settlement

16 Act, the Secretary shall establish an advisory committee,

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

19 a performance standard under section 905.

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

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

2 employ of the Federal Government. The Secretary shall

3 designate one of the members of each advisory committee

4 to serve as chairperson of the Committee. The Committee

5 shall include as nonvoting members a representative of

6 consumer interests and a representative of interests of the

7 device manufacturing industry.

8 ‘‘(c) COMPENSATION AND EXPENSES.—

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

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

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

15 the Secretary, which rates may not exceed the daily

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

17 Executive Schedule under section 5382 of title 5,

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

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

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

24 diem in lieu of subsistence, as authorized by section

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

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

4 shall—

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

6 amending, or revoking performance standards under

7 section 905;

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

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

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

12 threshold level below which nicotine yields do not

13 produce dependence on the tobacco product involved,

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

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

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

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

19 OTHER CONSTITUENTS.

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

2 the product; or

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

5 ‘‘(b) REQUIRED FINDING.—

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

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

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

10 in the health risks associated with the use of

11 the tobacco product involved;

12 ‘‘(B) is technologically feasible; and

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

15 other tobacco products that do not meet the

16 performance standard that requires the modi17 fication.

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

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

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

22 ‘‘(A) the estimated number of dependent

23 tobacco product users residing in the United

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

2 thereof, of alternative products; and

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

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

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

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

14 States District Court for the District of Columbia.

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

16 years after the date of enactment of the Universal Tobacco

17 Settlement Act, and notwithstanding any performance

18 standard established under this chapter, no cigarette or

19 tobacco product shall be sold or otherwise distributed in

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

21 as determined using the testing methodology used by the

22 Federal Trade Commission on such date of enactment.

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

24 period beginning on the date of enactment of the Universal

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

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

4 ‘‘(e) ACTION AFTER PROHIBITION.—

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

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

8 standard to completely eliminate nicotine yields in a

9 tobacco product.

10 ‘‘(2) DETERMINATION.—Any performance

11 standard described in paragraph (1) shall not be

12 adopted unless the Secretary determines that the

13 standard—

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

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

18 tobacco products but use such products less

19 often and individuals who stop using such prod20 ucts;

21 ‘‘(B) is technologically feasible; and

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

24 other tobacco products that do not meet the

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

4 ‘‘(A) the number of dependent tobacco

5 users residing in the United States on the date

6 on which the proposed performance standard is

7 being considered;

8 ‘‘(B) the availability and demonstrated

9 market acceptance of alternative products;

10 ‘‘(C) the effectiveness of tobacco product

11 cessation techniques and devices on the market

12 on the date on which the proposed performance

13 standard is being considered; and

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

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

17 determination under paragraph (2) with respect to

18 the elimination of nicotine, or an action that would

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

23 comment rulemaking as required under title 5,

24 United States Code. Any such determination, and

25 any determination by the Secretary with respect to
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1 a petition filed for an administrative review of the

2 modification, shall be subject to judicial review in

3 the United States District Court for the District of

4 Columbia.

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

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

10 standard is completed.

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

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

14 determines the public should be informed of to protect

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

17 disclosures relating to tar and nicotine.

18 ‘‘SEC. 908. REDUCED RISK PRODUCTS.

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

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

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

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

25 by an objective consumer as stating or implying that the
69

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1 product presents a reduced health risk as compared to

2 other similar products.

3 ‘‘(b) EXCEPTION.—

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

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

6 claims of the manufacturer in connection with the

7 product, if—

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

9 evidence, demonstrates to the Commissioner

10 that the product significantly reduces the risk

11 to the health of the user as compared to other

12 similar tobacco products; and

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

16 manufacturer in connection with the product.

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

18 shall promulgate regulations to permit the inclusion

19 of scientifically-based specific health claims on the

20 labeling of a tobacco product package, or the making

21 of such claims by the manufacturer in connection

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

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

2 TECHNOLOGY.—

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

4 manufacturer of a tobacco product shall provide

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

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

9 ‘‘(2) CONFIDENTIALITY.—The Commissioner

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

12 with respect to technology that is the subject of a

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

16 ‘‘(3) LICENSING.—

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

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

20 use of such technology by other manufacturers

21 of tobacco products to which this chapter ap22 plies.

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

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

2 under subparagraph (A) to the manufacturer

3 that submits the notice under paragraph (1) for

4 such technology. Such regulations shall contain

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

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

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

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

13 made available to consumers.

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

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

17 users is technologically feasible, the Commissioner

18 may, in accordance with this subsection, require that

19 certain manufacturers of such products manufacture

20 and market such less hazardous products.

21 ‘‘(3) MANUFACTURER.—

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

23 in subparagraph (B), the requirement under

24 paragraph (2) shall apply to any manufacturer

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

3 of the Commissioner.

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

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

7 ‘‘(i) the manufacturer elects not to

8 manufacture such products and provides

9 notice to the Commissioner of such elec10 tion; and

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

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

17 the health of users.

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

19 no manufacturer elects or agrees to manufacture

20 and market tobacco products that are less hazardous

21 to the health of users through the use of technology

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

24 the Commissioner, the Commissioner, in consultation

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

2 grants or contracts, provide for the manufacture and

3 marketing of such products.

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

5 ‘‘(a) AUTHORITY.—

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

8 requiring that the methods used in, and the facilities

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

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

12 storage of a tobacco product conform to current

13 good manufacturing practice, as prescribed in such

14 regulations, to ensure that such products will be in

15 compliance with this chapter.

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

18 regulation under paragraph (1) the Secretary

19 shall—

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

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

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

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

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

7 system by the manufacturer of a tobacco product;

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

9 product material prior to the packaging of such

10 product to be determined by the Commissioner;

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

12 storage of the packaged tobacco product;

13 ‘‘(4) after consultation with the Administrator

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

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

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

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

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

23 information.

24 ‘‘(c) PETITIONS FOR EXEMPTIONS AND

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

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

6 and manner as the Secretary shall prescribe and

7 shall—

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

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

13 chapter;

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

16 proposed to be used in, and the facilities and

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

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

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

22 Secretary shall prescribe.

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

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

3 the Secretary with respect to a petition referred to

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

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

7 to the Secretary under paragraph (1); or

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

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

12 whichever occurs later, the Secretary shall by order

13 either deny the petition or approve it.

14 ‘‘(3) APPROVAL OF PETITION.—

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

16 approve—

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

18 tobacco product from a requirement if the

19 Secretary determines that compliance with

20 such requirement is not required to assure

21 that the product will comply with this

22 chapter; and

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

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

2 to be used for, the manufacture, packing,

3 and storage of the product in lieu of the

4 methods, controls, and facilities prescribed

5 by the requirement are sufficient to ensure

6 that the product will comply with this

7 chapter.

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

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

12 for, the manufacture, packing, and storage of

13 the tobacco product to be granted the variance

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

16 chapter.

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

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

20 informal hearing on such order.

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

22 may not promulgate any regulation under this section that

23 has the effect of placing regulatory burdens on tobacco

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

2 in excess of the regulatory burdens generally placed on

3 other agricultural commodity producers.

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

5 INGREDIENTS.

6 ‘‘(a) ANNUAL SUBMISSION.—

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

9 with—

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

11 and compounds (other than tobacco, water or

12 reconstituted tobacco sheet made wholly from

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

14 paper or filter of the product if applicable) in

15 the manufacture of the tobacco product, for

16 each brand of tobacco product so manufactured;

17 and

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

19 ingredients, substances, and compounds that

20 are listed under subparagraph (A) with respect

21 to each brand of tobacco product.

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

23 respect to each annual submission under paragraph

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

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

2 substance, or compound contained on the list of the

3 manufacturer for the year involved, disclose whether

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

6 public disclosure under this section.

7 ‘‘(b) SAFETY ASSESSMENTS.—

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

9 after the date of enactment of the Universal Tobacco

10 Settlement Act, and annually thereafter, each manu11 facturer shall submit to the Secretary a safety as12 sessment for each ingredient, substance, or com13 pound that is listed under subsection (a)(1)(A) with

14 respect to each brand of tobacco product manufac15 tured by each such manufacturer.

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

18 described in paragraph (1) shall—

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

21 the assessment; and

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

2 under the intended conditions of use.

3 ‘‘(c) PROHIBITION.—

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

5 after the date of enactment of the Universal Tobacco

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

9 manufacturer—

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

12 substance, or compound; or

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

14 safety of the ingredient, substance, or com15 pound that was the subject of the assessment

16 under paragraph (2).

17 ‘‘(2) REVIEW OF ASSESSMENTS.—

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

19 90 days after the receipt of a safety assessment

20 under subsection (b), the Secretary shall review

21 the findings contained in such assessment.

22 ‘‘(B) APPROVAL OR DISAPPROVAL.—Not

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

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

2 the subject of the assessment and provide notice

3 to the manufacturer of such action.

4 ‘‘(C) INACTION BY SECRETARY.—If the

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

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

8 substance, or compound involved shall be

9 deemed to be approved.

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

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

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

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

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

20 in accordance with the labeling provisions applicable

21 to food ingredients under this Act.

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

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

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

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

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

6 ‘‘(3) EXCEPTION.—Notwithstanding paragraph

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

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

12 for in subsection (c).

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

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

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

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

21 for the establishment or amendment of a performance

22 standard under section 905, except that such information

23 may be disclosed to other officers or employees concerned

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

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

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

4 Subtitle F—Compliance Plans and

5 Corporate Culture

6 SEC. 151. COMPLIANCE PLANS.

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

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

9 each manufacturer of a tobacco product shall prepare and

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

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

14 (b) REQUIREMENTS.—A compliance plan submitted

15 under subsection (a) shall—

16 (1) contain the assurances of the manufacturer

17 that tobacco products will only be manufactured and

18 distributed in accordance with this Act and the

19 amendments made by this Act;

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

21 (A) reducing the access of individuals

22 under 18 years of age to tobacco products; and

23 (B) reducing the incidence of the underage

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

2 incentives for achieving the reductions described in

3 paragraph (2);

4 (4) provide for the implementation of internal

5 incentives for the development of tobacco products

6 with a reduced health risk;

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

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

12 SEC. 152. COMPLIANCE PROGRAMS.

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

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

16 compliance programs designed to ensure the compliance

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

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

19 to tobacco products.

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

22 (1) implement standards and procedures to be

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

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

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

4 with the standards and procedures applicable under

5 this Act;

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

8 avoid delegating substantial discretionary authority

9 to individuals who the executives know (or should

10 have known through the exercise of due diligence)

11 have a propensity to disregard corporate policy;

12 (4) include procedures to inform all employees

13 and agents of the relevant standards and procedures

14 applicable to the manufacturer and the tobacco

15 products manufactured under this Act, including

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

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

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

22 in subsection (a);

23 (6) provide for the application of appropriate

24 disciplinary mechanisms and measures to employees

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

2 with this Act;

3 (7) include measures to respond appropriately

4 where violations of laws described in subsection (a)

5 are alleged to have occurred or are occurring;

6 (8) include the promulgation of corporate policy

7 statements that express and explain the commitment

8 of the manufacturer to—

9 (A) compliance with applicable Federal,

10 State, and local laws;

11 (B) reducing the use of tobacco products

12 by individuals who are under 18 years of age;

13 and

14 (C) developing tobacco products that pose

15 a reduced risk to the health of the user;

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

18 promote efforts to fulfill the commitment of the

19 manufacturer;

20 (10) include provisions for compiling reports on

21 compliance with this Act and the laws described in

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

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

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

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

6 by distributors or retailers. The compliance officer shall

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

9 authority.

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

14 retailers of the tobacco products manufactured by the

15 manufacturer in compliance with the Federal, State, and

16 local laws described in subsection (a).

17 SEC. 153. WHISTLEBLOWER PROTECTIONS.

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

19 any manufacturer, distributor, or retailer of a tobacco

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

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

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

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

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

3 enacted to further the purposes of this Act.

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

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

8 appropriate United States district court before the end of

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

10 demotion, or discrimination.

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

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

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

15 former position;

16 (2) pay compensatory damages; or

17 (3) take other appropriate actions to remedy

18 any past discrimination.

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

20 shall not apply to any employee who—

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

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

2 State or local regulatory or enforcement authority.

3 SEC. 154. PROVISIONS RELATING TO LOBBYING.

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

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

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

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

10 any lobbyist or lobbying firm employed or retained by the

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

19 (c) ADDITIONAL AGREEMENTS.—An individual shall

20 not be employed or retained to perform lobbying activities

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

22 tobacco product unless such individual enters into a signed

23 agreement with the manufacturer, distributor, or retailer

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

2 all applicable laws and regulations relating to the

3 manufacture and distribution of tobacco products;

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

5 requirements of this Act (and the amendments made

6 by this Act);

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

8 consent decree entered into under title VI as that

9 decree applies to the manufacturer, distributor, or

10 retailer involved; and

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

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

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

16 SEC. 155. TERMINATION OF CERTAIN ENTITIES.

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

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

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

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

22 and Council shall be dissolved.

23 (b) ESTABLISHMENT OF OTHER ENTITIES.—

24 (1) AUTHORITY.—Manufacturers, distributors,

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

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

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

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

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

12 than 20 percent (at least 1 member) shall

13 be individuals who are not current or

14 former directors, officers, or employees of

15 an entity terminated under subsection (a)

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

18 (ii) during the life of the association

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

22 (B) be administered by officers who are

23 appointed by the board of directors and who are

24 not otherwise employed by any of the members

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

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

4 of the members of the association or organiza5 tion.

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

7 industry association formed or participated in under

8 this subsection shall adopt by-laws that—

9 (A) prohibit meetings by members of the

10 association or organization who are competitors

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

13 (B) require that every meeting of the

14 board of directors, or a subcommittee of the

15 board or other general committee, proceed

16 under and strictly adhere to an agenda that is

17 approved by the legal counsel and circulated in

18 advance; and

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

21 members of the association or organization and

22 the maintenance of such minutes in the records

23 of the association or organization for a period

24 of 5 years following the meeting.

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

2 appropriate, State antitrust authorities shall exercise

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

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

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

10 provision of reasonable notice to the legal counsel of

11 the association or organization, have access to—

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

13 minutes, and other documents maintained by

14 the association or organization; and

15 (B) the directors, officers, and employees

16 of the association or organization for interview

17 purposes.

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

19 States, acting through the attorney general of each

20 such State, may establish a multi-State oversight

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

23 (4) CONFIDENTIALITY.—The Attorney General

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

2 with appropriate confidentiality protections.

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

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

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

7 to which subsection (b) applies.

8 SEC. 156. ENFORCEMENT.

9 (a) ASSESSMENT.—

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

11 civil penalty against any manufacturer of a tobacco

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

14 Secretary finds that such manufacturer has violated

15 or is violating any requirement of this subtitle.

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

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

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

24 amount or longer period of violation is appropriate

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

2 the Administrator and the Attorney General under

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

4 (b) PROCEDURE.—

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

7 order made after an opportunity for a hearing on

8 the record in accordance with sections 554 and 556

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

10 shall issue reasonable rules for discovery and other

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

13 written notice to the manufacturer against whom the

14 assessment is being made of the Secretary’s proposal

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

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

18 is received by such manufacturer.

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

22 section.

23 (c) FIELD CITATION PROGRAM.—

24 (1) IMPLEMENTATION.—The Secretary may

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

2 citation program through regulations establishing

3 appropriate minor violations of this subtitle for

4 which field citations, assessing civil penalties not to

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

6 officers or employees designated by the Secretary.

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

8 field citation is assessed may, within a reasonable

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

12 a hearing is not made within the time specified in

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

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

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

19 required by a field citation under this paragraph

20 shall not be a defense to further enforcement by the

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

22 assess the statutory maximum penalty pursuant to

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

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

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

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

4 may seek review of such assessment in the United

5 States District Court for the District of Columbia or

6 for the district in which the violation is alleged to

7 have occurred or in which the principal place of

8 business of the manufacturer is located, by filing in

9 such court within 30 days following the date the

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

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

15 to the Secretary and the Attorney General.

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

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

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

19 appropriate, of the record on which the penalty

20 order or assessment was issued.

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

22 aside or remand a penalty order or assessment

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

2 assessment constitutes an abuse of discretion.

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

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

9 (e) FAILURE TO PAY.—

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

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

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

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

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

18 the Secretary shall request the Attorney General to

19 bring a civil action in an appropriate district court

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

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

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

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

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

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

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

11 which such failure to pay persists. Such nonpayment

12 penalty shall be 10 percent of the aggregate amount

13 of such manufacturer’s outstanding penalties and

14 nonpayment penalties accrued as of the beginning of

15 such quarter.

16 (f) SCARLET LETTER ADVERTISING.—

17 TITLE II—REDUCTION IN

18 UNDERAGE TOBACCO USE

19 SEC. 201. PURPOSE.

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

22 of underage consumers of tobacco products through the

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

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

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

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

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

8 based on—

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

11 used cigarette products on a daily basis for each of

12 the calendar years 1986 through 1996;

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

15 used cigarette products on a daily basis for each of

16 the calendar years 1991 through 1996; and

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

19 cigarette products on a daily basis for each of the

20 calendar years 1991 through 1996.

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

24 Secretary, weighted by the relative population of the age

25 groups involved as determined using data compiled in

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

3 used smokeless tobacco products on a daily basis in

4 1996;

5 (2) the average of the percentages of 10th grad6 ers (individuals who are 14 or 15 years of age) who

7 used smokeless tobacco products on a daily basis in

8 1996; and

9 (3) the average of the percentages of 8th grad10 ers (individuals who are 13 years of age) who used

11 smokeless tobacco products on a daily basis in 1996.

12 (c) USE OF CERTAIN DATA OR METHODOLOGY.—For

13 purposes of determining the percentages under para14 graphs (1) through (3) of subsections (a) and (b), the Sec15 retary shall use the data contained in the National High

16 School Drug Use Survey entitled Monitoring the Future

17 by the University of Michigan or such other comparable

18 index, as determined appropriate by the Secretary after

19 notice and an opportunity for a hearing, that utilizes

20 methodology identical to that used by the University of

21 Michigan in such survey.

22 SEC. 203. ANNUAL DAILY INCIDENCE OF UNDERAGE USE OF

23 TOBACCO PRODUCTS.

24 (a) ANNUAL DETERMINATION.—Not later than the

25 expiration of the 5-year period beginning on the date of
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1 enactment of this Act, and annually thereafter, the Sec2 retary shall determine the average annual incidence of the

3 daily use of tobacco products by individuals who are under

4 18 years of age.

5 (b) CIGARETTES.—With respect to cigarette prod6 ucts, a determination under subsection (a) for a year shall

7 be based on the percentage, as weighted by the relative

8 population of the age groups involved as determined using

9 data compiled in 1995 by the Bureau of the Census, of—

10 (1) 12th graders (individuals who are 16 or 17

11 years of age) who used cigarette products on a daily

12 basis during the year involved;

13 (2) 10th graders (individuals who are 14 or 15

14 years of age) who used cigarette products on a daily

15 basis during the year involved; and

16 (3) 8th graders (individuals who are 13 years

17 of age) who used cigarette products on a daily basis

18 during the year involved.

19 (c) SMOKELESS TOBACCO.—With respect to smoke20 less tobacco products, a determination under subsection

21 (a) for a year shall be based on the percentage, as weight22 ed by the relative population of the age groups involved

23 as determined using data compiled in 1995 by the Bureau

24 of the Census, of—
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1 (1) 12th graders (individuals who are 16 or 17

2 years of age) who used smokeless tobacco products

3 on a daily basis during the year involved;

4 (2) 10th graders (individuals who are 14 or 15

5 years of age) who used smokeless tobacco products

6 on a daily basis during the year involved; and

7 (3) 8th graders (individuals who are 13 years

8 of age) who used cigarette smokeless tobacco on a

9 daily basis during the year involved.

10 (d) USE OF CERTAIN DATA OR METHODOLOGY.—

11 (1) IN GENERAL.—For purposes of determining

12 the percentages under paragraphs (1) through (3) of

13 subsections (b) and (c), the Secretary shall use the

14 data contained in the National High School Drug

15 Use Survey entitled Monitoring the Future by the

16 University of Michigan (if such survey is still being

17 undertaken) or such other comparable index, as de18 termined appropriate by the Secretary after notice

19 and an opportunity for a hearing, that utilizes meth20 odology identical to that used by the University of

21 Michigan in such survey.

22 (2) ALTERATION OF METHODOLOGY.—If the

23 Secretary determines that the methodology used by

24 the University of Michigan in the survey referred to

25 in paragraph (1) has been altered in a material
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1 manner from the methodoloy used during the period

2 from 1986 to 1996 (including by altering States or

3 regions on which the survey is based), the Secretary,

4 after notice and an opportunity for a hearing, shall

5 use percentages based on an index developed by the

6 Secretary that utilizes methodology identical to that

7 used by the University of Michigan in such survey.

8 SEC. 204. REQUIRED REDUCTION IN UNDERAGE TOBACCO

9 USE.

10 (a) IN GENERAL.—For purposes of assessing sur11 charges under section 205, the Secretary shall determine

12 whether the required percentage reduction in the underage

13 use of tobacco products for a year (based on the tables

14 contained in subsection (b)) has been achieved for the year

15 involved. Such determination shall be based on—

16 (1) with respect to cigarette products, the aver17 age annual incidence of the daily use of tobacco

18 products by individuals who are under 18 years of

19 age for the year involved (as determined under sec20 tion 203(b)) as compared to the underage use base

21 percentage for cigarette products (as determined

22 under section 202(a)); and

23 (2) with respect to smokeless tobacco products,

24 the average annual incidence of the daily use of

25 smokeless tobacco products by individuals who are
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1 under 18 years of age for the year involved (as de2 termined under section 203(c)) as compared to the

3 underage use base percentage for smokeless tobacco

4 products (as determined under section 202(b)).

5 (b) PERCENTAGE REDUCTION IN UNDERAGE USE OF

6 TOBACCO PRODUCTS.—For purposes of subsection (a),

7 the required percentage reduction in the underage use of

8 tobacco products with respect to each tobacco product

9 shall be determined according to the following tables:

10 (1) CIGARETTES.—

‘‘Calender year after enactment—The percentage decrease in the

use of cigarette products—

Fifth ......................................................................................... 30

Sixth ......................................................................................... 30

Seventh ..................................................................................... 50

Eighth ...................................................................................... 50

Ninth ........................................................................................ 50

Tenth and thereafter ............................................................... 60 .

11 (2) SMOKELESS TOBACCO PRODUCTS.—

‘‘Calender year after enactment—The percentage decrease in the

use of smokeless tobacco

products—

Fifth ......................................................................................... 25

Sixth ......................................................................................... 25

Seventh ..................................................................................... 35

Eighth ...................................................................................... 35

Ninth ........................................................................................ 35

Tenth and thereafter ............................................................... 45 .

12 SEC. 205. APPLICATION OF SURCHARGES.

13 (a) IN GENERAL.—If the Secretary determines that

14 the percentage reduction in the underage use of tobacco

15 products for a year has not been achieved as required

16 under section 204, the Secretary shall impose a surcharge

17 on the manufacturers of the tobacco products involved.
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1 (b) AMOUNT OF SURCHARGE.—

2 (1) IN GENERAL.—The amount of any sur3 charge to be imposed under this section for a cal4 endar year shall be equal to the product of—

5 (A) $80,000,000; and

6 (B) the number of applicable surcharge

7 percentage points as determined under sub8 section (c).

9 (2) ADJUSTMENTS.—The amount applicable

10 under paragraph (1) shall be annually adjusted by

11 the Secretary based on—

12 (A) with respect to subparagraph (A) of

13 such paragraph—

14 (i) the proportional percentage in15 crease or decrease, as compared to cal16 endar year 1995, in the population of indi17 viduals residing in the United States who

18 are at least 13 years of age but less than

19 18 years of age;

20 (ii) the proportional percentage in21 crease or decrease, as compared to cal22 endar year 1996, in the average profit per

23 unit (measured in cents and weighted by

24 annual sales) earned by tobacco manufac25 turers for the tobacco product involved (as
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1 determined by the Secretary through a

2 contract with a nationally recognized ac3 counting firm having no connection to to4 bacco manufacturers); and

5 (B) any methodology utilized to avoid the

6 double counting of underage individuals whose

7 tobacco use has previously resulted in the impo8 sition of a surcharge, limited to the extent that

9 there were not other underage users of tobacco

10 in such previous years for whom a surcharge

11 was not paid because of the limitation contained

12 in section 206.

13 (3) PROFIT PER UNIT.—For purposes of para14 graph (2)(A)(ii), the average profit per unit for cal15 endar 1996 shall be determined using the operating

16 profit reported by manufacturers to the Securities

17 and Exchange Commission.

18 (c) DETERMINATION OF APPLICABLE SURCHARGE

19 PERCENTAGE POINTS.—

20 (1) IN GENERAL.—Except as provided in para21 graph (2), with respect to a calendar year, the appli22 cable surcharge percentage points shall be equal to

23 the percentage point difference between—

24 (A) the required percentage reduction in

25 the underage use of the tobacco product in-
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1 volved for the year (based on the tables in sec2 tion 204(b)); and

3 (B) the number of percentage points by

4 which the average annual incidence of the daily

5 use of the tobacco products involved by individ6 uals who are under 18 years of age for the year

7 (as determined under section 203) is less than

8 the underage use base percentage for such

9 products (as determined under section 202).

10 (2) ADJUSTMENT.—If for any calendar year the

11 Secretary determines that the average annual inci12 dence of the daily use of the tobacco products in13 volved by individuals who are under 18 years of age

14 (as determined under section 203) is greater than

15 the underage use base percentage for such products

16 (as determined under section 202), the applicable

17 surcharge percentage point shall be equal to—

18 (A) the percentage point amount deter19 mined under paragraph (1)(A); and

20 (B) the number of percentage points by

21 which the average annual incidence of the daily

22 use of the tobacco products involved by individ23 uals who are under 18 years of age (as deter24 mined under section 203) is greater that the
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1 underage use base percentage for such products

2 (as determined under section 202).

3 (3) TYPE OF PRODUCT.—Separate determina4 tions shall be made under this section for cigarette

5 products and smokeless tobacco products.

6 (d) LIMITATION.—The total amount of surcharges

7 imposed with respect to each type of tobacco product (cig8 arette products or smokeless tobacco products) under this

9 section shall not exceed $2,000,000,000 (adjusted each

10 year by the Secretary to account for inflation) for any cal11 endar year.

12 (e) JOINT AND SEVERAL OBLIGATION.—Any sur13 charge imposed under this section with respect to a to14 bacco product (cigarette products or smokeless tobacco

15 products) shall be the joint and several obligation of all

16 manufacturers of such product as allocated by the market

17 share of each such manufacturer with respect to such

18 product. The market share of each manufacturer for each

19 such product shall be based on the actual Federal excise

20 tax payments made by such manufacturers for each such

21 product under the Internal Revenue Code of 1986.

22 (f) ASSESSMENT.—Not later than May 1 of each year

23 in which a surcharge will be imposed under this section,

24 the Secretary shall assess to each manufacturer the

25 amount for which such manufacturer is obligated. Not
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1 later than July 1 of any year in which a manufacturer

2 receives an assessment under this section, the manufac3 turer shall pay such assessment in full or be subject to

4 such interest on such amount as the Secretary may by

5 regulation prescribe.

6 (g) USE OF AMOUNTS.—Amounts received under this

7 section shall be used as provided for in section 517.

8 (h) PROHIBITION.—No stay or other injunctive relief

9 may be granted by the Secretary or any court that has

10 the effect of enjoining the imposition and collection of the

11 surcharges to be applied under this section.

12 SEC. 206. ABATEMENT PROCEDURES.

13 (a) PETITIONS.—Upon payment by a manufacturer

14 of the amount assessed to the manufacturer under section

15 205(f), the manufacturer may submit a petition to the

16 Secretary for an abatement of the assessment. A notice

17 of such abatement petition shall be submitted to the attor18 ney general of each State.

19 (b) HEARING.—The Secretary shall provide for the

20 conduct of a hearing on an abatement petition received

21 under subsection (a) pursuant to the procedures described

22 in sections 554, 556, and 557 of title 5, United States

23 Code. The attorney general of any State shall be permitted

24 to be heard at any hearing conducted under this sub25 section.
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1 (c) BURDEN.—The burden at any hearing under sub2 section (b) shall be on the manufacturer to prove, by a

3 preponderance of the evidence, that the manufacturer

4 should be granted the abatement.

5 (d) BASIS OF DECISION.—Any decision regarding a

6 petition for an abatement under this section shall be based

7 on a determination as to whether—

8 (1) the manufacturer has acted in good faith

9 and in full compliance with this Act (and any

10 amendment made by this Act) and any regulations

11 or State or local laws promulgated in furtherance of

12 this Act;

13 (2) the manufacturer has pursued all reason14 ably available measures to attain the reductions;

15 (3) there is any evidence of any direct or indi16 rect action by the manufacturer to undermine the

17 achievement of the reductions required under section

18 204 or to undermine any other provision of this Act

19 (or amendment); and

20 (4) the manufacturer has taken (or failed to

21 take) any other action as determined appropriate by

22 the Secretary.

23 (e) AMOUNT.—Upon a determination granting an

24 abatement under this section, the Secretary shall order the

25 abatement of not to exceed 75 percent of the amount paid
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1 by the manufacturer, together with interest that may have

2 accrued on such amount during the period between the

3 date on which payment by the manufacturer was made

4 and the date on which the abatement order was granted.

5 Such interest shall be equal to that provided for the aver6 age 52-week Treasury Bill during the period involved.

7 (f) AGGRIEVED PARTIES.—Any manufacturer or at8 torney general of any State that is aggrieved by an abate9 ment that is granted under this section may seek judicial

10 review of the abatement decision within 30 days of the

11 date of such decision in the Court of Appeals for the Dis12 trict of Columbia Circuit. Review in such cases shall be

13 subject to the procedures described in sections 701

14 through 706 of title 5, United States Code.

15 (g) PROHIBITION.—A manufacturer may not file a

16 petition under subsection (a) until such time as the manu17 facturer has fully paid the Secretary the amount assessed

18 to the manufacturer under section 205(f).

19 TITLE III—STANDARDS TO RE20 DUCE INVOLUNTARY EXPO21 SURE TO TOBACCO SMOKE

22 SEC. 301. DEFINITIONS.

23 In this title—
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1 (1) ADMINISTRATOR.—The term ‘‘Adminis2 trator’’ means the Administrator of the Occupational

3 Safety and Health Administration.

4 (2) PUBLIC FACILITY.—

5 (A) IN GENERAL.—The term ‘‘public facil6 ity’’ means any building regularly entered by 10

7 or more individuals at least 1 day per week, in8 cluding any such building owned by or leased to

9 a Federal, State, or local government entity.

10 Such term shall not include any building or

11 portion thereof regularly used for residential

12 purposes.

13 (B) EXCLUSIONS.—Such term does not in14 clude a building which is used as a restaurant

15 (other than a fast food restaurant), bar, private

16 club, hotel guest room, casino, bingo parlor, to17 bacco merchant, or prison.

18 (C) FAST FOOD RESTAURANT.—The term

19 ‘‘fast food restaurant’’ means any restaurant or

20 chain of restaurants that primarily distributes

21 food through a customer pick-up (either at a

22 counter or drive-through window). The Admin23 istrator of the Occupational Safety and Health

24 Administration may promulgate regulations to

25 clarify this subparagraph to ensure that the in-
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•S 1415 RS2

1 tended inclusion of establishments catering

2 largely to individuals under 18 years of age is

3 achieved.

4 (3) RESPONSIBLE ENTITY.—The term ‘‘respon5 sible entity’’ means, with respect to any public facil6 ity, the owner of such facility except that, in the

7 case of any such facility or portion thereof which is

8 leased, such term means the lessee.

9 SEC. 302. SMOKE-FREE ENVIRONMENT POLICY.

10 (a) POLICY REQUIRED.—In order to protect children

11 and adults from cancer, respiratory disease, heart disease,

12 and other adverse health effects from breathing environ13 mental tobacco smoke, the responsible entity for each pub14 lic facility shall adopt and implement at such facility a

15 smoke-free environment policy which meets the require16 ments of subsection (b).

17 (b) ELEMENTS OF POLICY.—

18 (1) IN GENERAL.—Each smoke-free environ19 ment policy for a public facility shall—

20 (A) prohibit the smoking of cigarettes, ci21 gars, and pipes, and any other combustion of

22 tobacco within the facility and on facility prop23 erty within the immediate vicinity of the en24 trance to the facility; and
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1 (B) post a clear and prominent notice of

2 the smoking prohibition in appropriate and visi3 ble locations at the public facility.

4 (2) EXCEPTION.—The smoke-free environment

5 policy for a public facility may provide an exception

6 to the prohibition specified in paragraph (1) for 1 or

7 more specially designated smoking areas within a

8 public facility if such area or areas meet the require9 ments of subsection (c).

10 (c) SPECIALLY DESIGNATED SMOKING AREAS.—A

11 specially designated smoking area meets the requirements

12 of this subsection if—

13 (1) the area is ventilated in accordance with

14 specifications promulgated by the Administrator that

15 ensure that air from the area is directly exhausted

16 to the outside and does not recirculate or drift to

17 other areas within the public facility;

18 (2) the area is maintained at negative pressure,

19 as compared to adjoined nonsmoking areas, as deter20 mined under regulations promulgated by the Admin21 istrator; and

22 (3) nonsmoking individuals do not have to enter

23 the area for any purpose while smoking is occurring

24 in such area.
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1 Cleaning and maintenance work shall be conducted in such

2 area only while no smoking is occurring in the area.

3 SEC. 303. CITIZEN ACTIONS.

4 (a) IN GENERAL.—An action may be brought to en5 force the requirements of this title by any aggrieved per6 son, any State or local government agency, or the Admin7 istrator.

8 (b) VENUE.—Any action to enforce this title may be

9 brought in any United States district court for the district

10 in which the defendant resides or is doing business to en11 join any violation of this title or to impose a civil penalty

12 for any such violation in the amount of not more than

13 $5,000 per day of violation. The district courts shall have

14 jurisdiction, without regard to the amount in controversy

15 or the citizenship of the parties, to enforce this title and

16 to impose civil penalties under this title.

17 (c) NOTICE.—An aggrieved person shall give any al18 leged violator notice of at least 60 days prior to commenc19 ing an action under this section. No action may be com20 menced by an aggrieved person under this section if such

21 alleged violator complies with the requirements of this title

22 within such 60-day period and thereafter.

23 (d) COSTS.—The court, in issuing any final order in

24 any action brought pursuant to this section, may award

25 costs of litigation (including reasonable attorney and ex-
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1 pert witness fees) to any prevailing plaintiff, whenever the

2 court determines such award is appropriate.

3 (e) PENALTIES.—The court, in any action under this

4 section to apply civil penalties, shall have discretion to

5 order that such civil penalties be used for projects which

6 further the policies of this title. The court shall obtain the

7 view of the Administrator in exercising such discretion and

8 selecting any such projects.

9 SEC. 304. PREEMPTION.

10 Nothing in this title shall preempt or otherwise affect

11 any other Federal, State or local law which provides pro12 tection from health hazards from environmental tobacco

13 smoke.

14 SEC. 305. REGULATIONS.

15 The Administrator is authorized to promulgate such

16 regulations as the Administrator deems necessary to carry

17 out this title.

18 SEC. 306. EFFECTIVE DATE.

19 The provisions of this title shall take effect on the

20 date that is 1 year after the date of enactment of this

21 Act.

22 TITLE IV—NATIONAL TOBACCO

23 SETTLEMENT TRUST FUND

24 SEC. 401. ESTABLISHMENT OF TRUST FUND.

25 (a) CREATION.—
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1 (1) IN GENERAL.—There is established in the

2 Treasury of the United States a trust fund to be

3 known as the ‘‘National Tobacco Settlement Trust

4 Fund’’, consisting of such amounts as may be appro5 priated or credited to the Trust Fund.

6 (2) TRUSTEES.—The trustees of the Trust

7 Fund shall be the Commissioner and the Secretary.

8 (b) TRANSFERS.—There are hereby appropriated and

9 transferred to the Trust Fund—

10 (1) amounts repaid or recovered under section

11 205, including interest thereon;

12 (2) amounts equivalent to amounts received

13 under section 402; and

14 (3) amounts paid as fines or penalties, includ15 ing interest thereon, under section 403.

16 (c) REPAYABLE ADVANCES.—

17 (1) AUTHORIZATION.—There are authorized to

18 be appropriated to the Trust Fund, as repayable ad19 vances, such sums as may from time to time be nec20 essary to make the expenditures described in sub21 section (d).

22 (2) REPAYMENT WITH INTEREST.—Repayable

23 advances made to the Trust Fund shall be repaid,

24 and interest on such advances shall be paid, to the

25 general fund of the Treasury when the Secretary of
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1 the Treasury determined that moneys are available

2 in the Trust Fund for such purposes.

3 (3) RATE OF INTEREST.—Interest on advances

4 made pursuant to this subsection shall be at a rate

5 determined by the Secretary of the Treasury (as of

6 the close of the calendar month proceeding the

7 month in which the advance is made) to be equal to

8 the current average market yield on outstanding

9 marketable obligations of the United States with re10 maining period to maturity comparable to the antici11 pated period during which the advance will be out12 standing.

13 (d) EXPENDITURES FROM TRUST FUND.—Amounts

14 in the Trust Fund shall be available in each calendar year,

15 as provided by appropriations Act, as follows:

16 (1) With respect to—

17 (A) the first and second years following the

18 establishment of the Trust Fund, not less than

19 $2,500,000,000 each year;

20 (B) the third year following the establish21 ment of the Trust Fund, not less than

22 $3,500,000,000;

23 (C) the fourth year following the establish24 ment of the Trust Fund, not less than

25 $4,000,000,000;
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1 (D) the fifth year following the establish2 ment of the Trust Fund, not less than

3 $5,000,000,000; and

4 (E) the sixth year following the establish5 ment of the Trust Fund, and each year there6 after, not less than $2,500,000,000;

7 of the amounts available in the Trust Fund shall be

8 made available to the Secretary to makes grants to

9 States to carry out subtitle A of title V.

10 (2) With respect to each of the first 4 years fol11 lowing the establishment of the Trust Fund, not less

12 than $1,000,000,000, and with respect to each year

13 thereafter, not less than $1,500,000,000, of the

14 amounts available in the Trust Fund shall be made

15 available to the Secretary to carry out the National

16 Smoking Cessation Program under section 511.

17 (3) With respect to each of the first 3 years fol18 lowing the establishment of the Trust Fund, not less

19 than $125,000,000, and with respect to each year

20 thereafter, not less than $225,000,000, of the

21 amounts available in the Trust Fund shall be made

22 available to the Secretary to carry out the National

23 Reduction in Tobacco Usage Program under section

24 512.
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1 (4) Not less than $500,000,000 of the amounts

2 available in the Trust Fund each year shall be made

3 available to the Tobacco-Free Education Board to

4 carry out activities under section 513.

5 (5) With respect to each of the first 10 years

6 following the establishment of the Trust Fund, not

7 less than $75,000,000 of the amounts available in

8 the Trust Fund shall be made available to the Sec9 retary to carry out the National Event Sponsorship

10 Program under section 514.

11 (6) With respect to each of the first 2 years fol12 lowing the establishment of the Trust Fund, not less

13 than $75,000,000, with respect to the third such

14 year, not less than $100,000,000, and with respect

15 to each year thereafter, not less than $125,000,000,

16 of the amounts available in the Trust Fund shall be

17 made available to the Secretary to carry out the Na18 tional Community Action Program under section

19 515.

20 (7) Not less than $100,000,000 of the amounts

21 available in the Trust Fund each year shall be made

22 available to the Secretary to carry out the National

23 Cessation Research Program under section 516.

24 (8) Not less than $300,000,000 of the amounts

25 available in the Trust Fund each year shall be made
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1 available to the Commissioner as reimbursement for

2 the costs incurred by the Food and Drug Adminis3 tration in implementing and enforcing requirements

4 relating to tobacco products.

5 (9) Not less than the amount collected under

6 section 205 and available each year shall be made

7 available to the Secretary for use as provided for in

8 section 517.

9 SEC. 402. LIABILITY OF INDUSTRY SOURCES.

10 (a) DEFINITION.—As used in this subtitle, the term

11 ‘‘industry sources’’ means all entities which are signatories

12 to the National Tobacco Control Protocol under section

13 612.

14 (b) PAYMENTS.—

15 (1) INITIAL PAYMENT.—Each industry source

16 shall pay to the Trust Fund on the date of enact17 ment of this Act, an amount that bears the same

18 ratio to $10,000,000,000 as the relevant domestic

19 tobacco product unit sales volume of the industry

20 source (as defined in paragraph (3)) bears to the

21 relevant domestic tobacco product unit volume of all

22 industry sources for 1996.

23 (2) ANNUAL PAYMENTS.—Each industry source

24 shall pay to the Trust Fund for each calendar year,

25 beginning on December 31 of the year following the
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1 year in which this Act is enacted, and each Decem2 ber 31 thereafter, an annual payment equal to—

3 (A) with respect to the first year for which

4 payments are to be made, an amount that bears

5 the same ratio to $8,500,000,000 as the rel6 evant domestic tobacco product unit sales vol7 ume of the industry source (as defined in para8 graph (3)) for the year involved bears to the

9 relevant domestic tobacco product unit sales

10 volume of all industry sources for such year;

11 (B) with respect to the second year for

12 which payments are to be made, an amount

13 that bears the same ratio to $9,500,000,000 as

14 the relevant domestic tobacco product unit sales

15 volume of the industry source (as defined in

16 paragraph (3)) for the year involved bears to

17 the relevant domestic tobacco product unit sales

18 volume of all industry sources for such year;

19 (C) with respect to the third year for

20 which payments are to be made, an amount

21 that bears the same ratio to $11,500,000,000

22 as the relevant domestic tobacco product unit

23 sales volume of the industry source (as defined

24 in paragraph (3)) for the year involved bears to
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1 the relevant domestic tobacco product unit sales

2 volume of all industry sources for such year;

3 (D) with respect to the fourth year for

4 which payments are to be made, an amount

5 that bears the same ratio to $14,000,000,000

6 as the relevant domestic tobacco product unit

7 sales volume of the industry source (as defined

8 in paragraph (3)) for the year involved bears to

9 the relevant domestic tobacco product unit sales

10 volume of all industry sources for such year;

11 and

12 (E) with respect to each of the fifth

13 through 25th years for which payments are to

14 be made, an amount that bears the same ratio

15 to $15,000,000,000 as the relevant domestic to16 bacco product unit sales volume of the industry

17 source (as defined in paragraph (3)) for the

18 year involved bears to the relevant domestic to19 bacco product unit sales volume of all industry

20 sources for such year.

21 (3) RELEVANT DOMESTIC TOBACCO PRODUCT

22 UNIT SALES VOLUME.—

23 (A) IN GENERAL.—For purposes of this

24 subsection, the relevant domestic tobacco prod25 uct unit sales volume of an industry source for
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1 a year shall be determined by the Commissioner

2 based on data submitted by industry sources

3 and other appropriate data.

4 (4) ADJUSTMENTS.—

5 (A) VOLUME DECREASE.—If the Commis6 sioner makes a determination under paragraph

7 (3)(B) that the total relevant domestic tobacco

8 product unit sales volume has decreased, the

9 Commissioner shall in subsequent years, make

10 determinations as to sales volume based solely

11 on adult use.

12 (B) INCREASE IN PROFITS.—

13 (i) IN GENERAL.—With respect to an

14 industry source that experiences a decrease

15 in the amount owed under paragraph (2)

16 for a year as compared to the previous

17 year, the industry source shall be subject

18 to an increase in such amount (as provided

19 for under clause (ii)) if the Commissioner

20 determines that the net operating profits

21 of the source derived from domestic sales

22 of tobacco products has increased over that

23 of the previous year.

24 (ii) AMOUNT OF INCREASE.—The

25 amount by which the amount owed by an
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1 industry source is increased under clause

2 (i) shall be equal to 25 percent of the

3 amount of the decrease involved.

4 (C) INFLATION.—Each of the amounts de5 scribed in subparagraphs (B) through (E) of

6 paragraph (2) shall be increased by 3 percent

7 each year, or adjusted each year to reflect the

8 increase in the Consumer Price Index for all

9 urban consumers (as published by the Bureau

10 of Labor Statistics) from the year previous to

11 the year for which the adjustment is being ap12 plied, whichever is greater.

13 (c) AFFECT OF BANKRUPTCY.—Section 507(a) of

14 title 11, United States Code, is amended by inserting after

15 paragraph (9) the following:

16 ‘‘Tenth, payments required to be paid into the

17 National Tobacco Settlement Trust Fund under sec18 tion 402 of the Universal Tobacco Settlement Act.’’.

19 (d) PASS-THROUGH.—An industry source that is re20 quired to make payments under this section shall annually

21 adjust the prices of the tobacco products sold by such

22 source to reflect the amounts of such payments.

23 (e) TAX TREATMENT OF PAYMENTS.—For purposes

24 of section 162 of the Internal Revenue Code of 1986, any

25 payment to the Tobacco Settlement Trust Fund under
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1 section 401 shall be considered to be an ordinary and nec2 essary expense in carrying on a trade or business and shall

3 be deductible in the taxable year in which paid.

4 SEC. 403. ENFORCEMENT.

5 (a) GENERAL RULE.—There is hereby imposed a

6 penalty on the failure of any industry source to make any

7 payment required under section 402.

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

10 to an industry source shall be established by the Commis11 sioner for each day during the noncompliance period.

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

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

15 section 402, the period—

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

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

19 is paid in full.

20 (d) LIMITATIONS.—

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

22 by subsection (a) on any failure to make payment

23 under section 402 during any period for which it is

24 established to the satisfaction of the Commissioner

25 that none of the persons responsible for such failure
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1 knew or, exercising reasonable diligence, would have

2 known, that such failure existed.

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

5 payment under section 402 if—

6 (A) such failure was due to reasonable

7 cause and not to willful neglect; and

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

9 day period beginning on the 1st date that any

10 of the persons responsible for such failure knew

11 or, exercising reasonable diligence, would have

12 known, that such failure existed.

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

14 make payment under section 402 that is due to rea15 sonable cause and not to willful neglect, the Com16 missioner may waive all or part of the penalty im17 posed under subsection (a) to the extent that the

18 Commissioner determines that the payment of such

19 penalty would be excessive relative to the failure in20 volved.
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1 TITLE V—PUBLIC HEALTH AND

2 OTHER PROGRAMS

3 Subtitle A—Public Health Block

4 Grant Program

5 SEC. 501. PUBLIC HEALTH TRUST FUND.

6 (a) ESTABLISHMENT.—

7 (1) IN GENERAL.—The Secretary shall estab8 lish, as a separate fund within the Trust Fund es9 tablished under section 401, a trust fund to be

10 known as the ‘‘Public Health Trust Fund’’, consist11 ing of such amounts as may be appropriated or cred12 ited to the Trust Fund.

13 (2) TRUSTEES.—The trustees of the Trust

14 Fund shall be the Commissioner and the Secretary.

15 (b) TRANSFERS.—There are hereby appropriated and

16 transferred to the Trust Fund the amounts described in

17 section 401(d)(1) with respect to the year involved.

18 (c) EXPENDITURES FROM TRUST FUND.—Amounts

19 in the Public Health Trust Fund shall be available in each

20 calendar year, as provided by appropriations Act, for block

21 grants under section 502.

22 SEC. 502. BLOCK GRANTS TO STATES.

23 (a) IN GENERAL.—For the purpose described in sub24 section (b), the Secretary shall award a block grant to

25 each State in each fiscal year in an amount based on the
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1 allotment of the State as determined in accordance with

2 section 503.

3 (b) AUTHORIZED ACTIVITIES.—A State shall use

4 amounts received under a block grant only for the purpose

5 of planning, carrying out, and evaluating activities as pro6 vided for in section 504.

7 (c) APPLICATION.—To be eligible to receive a grant

8 under this subtitle a State shall prepare and submit to

9 the Secretary an application at such time, in such manner,

10 and containing such information as the Secretary may re11 quire, including such assurances as the Secretary may re12 quire regarding the compliance of the State with the re13 quirements of this Act.

14 SEC. 503. ALLOTMENTS.

15 (a) IN GENERAL.—Of the amounts appropriated and

16 available for block grants for a fiscal year under section

17 502, the Secretary shall allot to each State an amount

18 determined under the allotment formula under subsection

19 (b).

20 (b) ALLOTMENT FORMULA.—

21 (c) REALLOTMENTS.—To the extent that all the

22 funds appropriated under section 501(c) for a fiscal year

23 and available for allotment in such fiscal year are not oth24 erwise allotted to States because—
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1 (1) one or more States have not submitted an

2 application in accordance with section 502(c) for the

3 fiscal year; or

4 (2) one or more States have notified the Sec5 retary that they do not intend to use the full amount

6 of their allotment;

7 such excess shall be reallotted among each of the remain8 ing States in proportion to the amount otherwise allotted

9 to such States for the fiscal year without regard to this

10 subsection.

11 (d) INDIAN TRIBES AND TRIBAL ORGANIZATIONS.—

12 (1) IN GENERAL.—If the Secretary—

13 (A) receives a request from the governing

14 body of an Indian tribe or tribal organization

15 within any State that funds under this subtitle

16 be provided directly by the Secretary to such

17 tribe or organization; and

18 (B) determines that the members of such

19 tribe or tribal organization would be better

20 served by means of grants made directly by the

21 Secretary under this subtitle;

22 the Secretary shall reserve from amounts which

23 would otherwise be allotted to such State under sub24 section (a) for the fiscal year the amount determined

25 under paragraph (2).
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1 (2) AMOUNT.—The Secretary shall reserve for

2 the purpose of paragraph (1) from amounts that

3 would otherwise be allotted to such State under sub4 section (a) an amount to be determined by a formula

5 developed by the Secretary after consultation with

6 the Secretary of the Interior.

7 (3) GRANT.—The amount reserved by the Sec8 retary on the basis of a determination under this

9 subsection shall be granted to the Indian tribe or

10 tribal organization serving the individuals for whom

11 such a determination has been made.

12 (4) PLAN.—In order for an Indian tribe or trib13 al organization to be eligible for a grant for a fiscal

14 year under this subsection, it shall submit to the

15 Secretary a plan for such fiscal year which meets

16 such criteria as the Secretary may prescribe.

17 (5) DEFINITIONS.—The terms ‘‘Indian tribe’’

18 and ‘‘tribal organization’’ shall have the same mean19 ing given such terms in section 4(b) and section 4(c)

20 of the Indian Self-Determination and Education As21 sistance Act (25 U.S.C. 450b(b) and (c)).

22 SEC. 504. USE OF FUNDS.

23 (a) IN GENERAL.—Amounts provided to a State

24 under a grant under this subtitle shall be used—
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1 (1) to reimburse the State for expenses in2 curred by the State under the State program under

3 title XIX of the Social Security Act (42 U.S.C. 1396

4 et seq.) relating to the treatment of tobacco-related

5 illnesses or conditions;

6 (2) to reimburse the State for other expenses

7 incurred by the State in providing directly, or reim8 bursing others for the provision of, treatment for to9 bacco-related illnesses or conditions;

10 (3) to provide health care coverage, either di11 rectly or through arrangements with other entities,

12 for uninsured individuals under 18 years of age who

13 reside in the State;

14 (4) to establish a State tobacco products liabil15 ity judgments and settlement fund, as provided for

16 in subsection (c);

17 (5) to reimburse the State for expenses in18 curred in carrying out the tobacco licensure require19 ments of subtitle D of title I; and

20 (6) to carry out any other activities determined

21 appropriate by the State.

22 (b) LIMITATIONS ON USES.—A State may not use

23 amounts provided under a grant under this subtitle for

24 programs or projects not approved of by the Secretary.

25 (c) JUDGMENT AND SETTLEMENT FUND.—
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1 (1) IN GENERAL.—Each State that receives a

2 grant under this subtitle shall establish a fund for

3 the purpose of making payments under paragraph

4 (2).

5 (2) PAYMENTS.—The fund established under

6 paragraph (1) shall be used to make payments to in7 dividuals who have obtained a judgment in a to8 bacco-related action brought in a State court, or who

9 have entered into a settlement of such an action, of

10 the amount of any award under such judgment or

11 settlement that represents punitive damages.

12 SEC. 505. WITHHOLDING OF FUNDS.

13 (a) AUTHORITY.—

14 (1) IN GENERAL.—The Secretary shall, after

15 adequate notice and an opportunity for a hearing

16 conducted within the affected State, withhold funds

17 from any State which does not use its allotment in

18 accordance with the requirements of this subtitle.

19 The Secretary shall withhold such funds until the

20 Secretary finds that the reason for the withholding

21 has been removed and there is reasonable assurance

22 that it will not recur.

23 (2) INVESTIGATION.—The Secretary may not

24 institute proceedings to withhold funds under para25 graph (1) unless the Secretary has conducted an in-
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1 vestigation concerning whether the State has used

2 its allotment in accordance with the requirements of

3 this subtitle. Investigations required by this para4 graph shall be conducted within the affected State

5 by qualified investigators.

6 (3) RESPONSE TO COMPLAINTS.—The Secretary

7 shall respond in an expeditious manner to com8 plaints of a substantial or serious nature that a

9 State has failed to use funds in accordance with the

10 requirements of this subtitle.

11 (4) MINOR FAILURE.—The Secretary may not

12 withhold funds under paragraph (1) from a State

13 for a minor failure to comply with the requirements

14 of this subtitle.

15 (b) INVESTIGATIONS.—The Secretary shall conduct

16 in several States in each fiscal year investigations of the

17 use of funds received by the States under this subtitle in

18 order to evaluate compliance with the requirements of this

19 subtitle.

20 (c) AVAILABILITY OF INFORMATION.—Each State,

21 and each entity which has received funds from an allot22 ment made to a State under this subtitle, shall make avail23 able to the Secretary, for examination, copying, or me24 chanical reproduction on or off the premises, appropriate
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1 books, documents, papers, and records of the entity upon

2 a reasonable request therefore.

3 Subtitle B—Other Programs

4 SEC. 511. NATIONAL SMOKING CESSATION PROGRAM.

5 (a) ESTABLISHMENT.—The Secretary shall establish

6 a program to be known as the ‘‘National Smoking Ces7 sation Program’’ under which the Secretary may award

8 grants to eligible public and nonprofit entities and individ9 uals for smoking cessation purposes.

10 (b) ELIGIBILITY.—

11 (1) OF ENTITIES.—To be eligible to receive a

12 grant under this section an entity shall—

13 (A) be a public or nonprofit private entity;

14 (B) prepare and submit to the Secretary

15 an application at such time, in such manner,

16 and containing such information as the Sec17 retary may require;

18 (C) provide assurances that amounts re19 ceived under the grant will be used in accord20 ance with subsection (c)(1); and

21 (D) meet any other requirements deter22 mined appropriate by the Secretary.

23 (2) OF INDIVIDUALS.—To be eligible to receive

24 a grant under this section an individual shall—
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1 (A) prepare and submit to the Secretary

2 an application at such time, in such manner,

3 and containing such information as the Sec4 retary may require;

5 (B) provide assurances that amounts re6 ceived under the grant will be used only in ac7 cordance with subsection (c)(2); and

8 (C) meet any other requirements deter9 mined appropriate by the Secretary.

10 (c) USE OF FUNDS.—

11 (1) BY ENTITIES.—An entity that receives a

12 grant under this section shall use amounts provided

13 under the grant to establish or administer tobacco

14 product use cessation programs that are approved in

15 accordance with subsection (d).

16 (2) BY INDIVIDUALS.—An individual that re17 ceive a grant under this section shall use amounts

18 provided under the grant to enroll in a tobacco prod19 uct use cessation program or to purchase a tobacco

20 product cessation device that has been approved in

21 accordance with subsection (d). Grants to individuals

22 under this section may be in the form of vouchers

23 that may be used to pay the costs of enrollment in

24 an approved program or to purchase an approved

25 device.
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1 (d) APPROVAL OF CESSATION PROGRAM OR DE2 VICES.—Using the best available scientific information,

3 the Secretary shall promulgate regulations to provide for

4 the approval of tobacco product use cessation programs

5 and devices. Such regulations shall be designed to ensure

6 that tobacco product users, if requested, are provided with

7 reasonable access to safe and effective cessation programs

8 and devices. Such regulations shall ensure that such indi9 viduals have access to a broad range of cessation options

10 that are tailored to the needs of the individual tobacco

11 user.

12 (e) FUNDING.—The Secretary shall use amounts

13 available under section 401(d)(2) to carry out this section.

14 SEC. 512. NATIONAL REDUCTION IN TOBACCO USAGE PRO15 GRAM.

16 (a) ESTABLISHMENT.—The Secretary shall establish

17 a program to be known as the ‘‘National Reduction in To18 bacco Usage Program’’ under which the Secretary may

19 award grants to eligible public and nonprofit entities to

20 carry out activities designed to reduce the use of tobacco

21 products.

22 (b) ELIGIBILITY.—To be eligible to receive a grant

23 under this section an entity shall—

24 (1) be a State health department, other public

25 entity, or a nonprofit private entity;
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1 (2) prepare and submit to the Secretary an ap2 plication at such time, in such manner, and contain3 ing such information as the Secretary may require;

4 (3) provide assurances that amounts received

5 under the grant will be used in accordance with sub6 section (c); and

7 (4) meet any other requirements determined ap8 propriate by the Secretary.

9 (c) USE OF FUNDS.—An entity that receives a grant

10 under this section shall use amounts provided under the

11 grant to—

12 (1) carry out media-based and nonmedia-based

13 education, prevention and cessation campaigns de14 signed to discourage the use of tobacco products by

15 individuals who are under 18 years of age and to en16 courage those who use such products to quit;

17 (2) carry out research concerning, and provide

18 for the development and public dissemination of,

19 technologies and methods to reduce the risk of de20 pendence and injury from tobacco product usage and

21 exposure;

22 (3) provide for the identification, testing, and

23 evaluation of the health effects of both tobacco and

24 non-tobacco constituents of tobacco products; or
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1 (4) carry out any other activities determined by

2 the Secretary to be consistent with the purposes of

3 this Act.

4 (d) FUNDING.—The Secretary shall use amounts

5 available under section 401(d)(3) to carry out this section.

6 SEC. 513. NATIONAL TOBACCO-FREE PUBLIC EDUCATION

7 PROGRAM.

8 (a) ESTABLISHMENT OF BOARD.—

9 (1) IN GENERAL.—The Secretary shall establish

10 an independent board to be known as the ‘‘Tobacco11 Free Education Board’’ (referred to in this section

12 as the ‘‘Board’’) to enter into contracts with or

13 award grants to eligible public and nonprofit private

14 entities to carry out public informational and edu15 cational activities designed to reduce the use of to16 bacco products.

17 (2) APPOINTMENT.—The Board shall be com18 posed of 9 members to be appointed by the Sec19 retary, of which—

20 (A) at least 3 such members shall be an in21 dividual who is widely recognized by the general

22 public for achievement in the athletic, cultural,

23 entertainment, educational, business, or politi24 cal field; and
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1 (B) at least 3 of whom shall be individuals

2 who are heads of a major public health organi3 zations.

4 (3) TERMS AND VACANCIES.—The members of

5 the Board shall serve staggered terms as determined

6 appropriate at the time of appointment by the Sec7 retary. Any vacancy in the Board shall not affect its

8 powers, but shall be filled in the same manner as the

9 original appointment.

10 (4) POWERS.—

11 (A) HEARINGS.—The Board may hold

12 such hearings, sit and act at such times and

13 places, take such testimony, and receive such

14 evidence as the Board considers advisable to

15 carry out the purposes of this section.

16 (B) INFORMATION FROM FEDERAL AGEN17 CIES.—The Board may secure directly from any

18 Federal department or agency such information

19 as the Board considers necessary to carry out

20 the provisions of this section.

21 (5) PERSONNEL MATTERS.—

22 (A) COMPENSATION.—Each member of the

23 Board who is not an officer or employee of the

24 Federal Government shall be compensated at a

25 rate equal to the daily equivalent of the annual
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1 rate of basic pay prescribed for level IV of the

2 Executive Schedule under section 5315 of title

3 5, United States Code, for each day (including

4 travel time) during which such member is en5 gaged in the performance of the duties of the

6 Board. All members of the Board who are offi7 cers or employees of the United States shall

8 serve without compensation in addition to that

9 received for their services as officers or employ10 ees of the United States.

11 (B) TRAVEL EXPENSES.—The members of

12 the Board shall be allowed travel expenses, in13 cluding per diem in lieu of subsistence, at rates

14 authorized for employees of agencies under sub15 chapter I of chapter 57 of title 5, United States

16 Code, while away from their homes or regular

17 places of business in the performance of serv18 ices for the Board.

19 (b) ESTABLISHMENT OF PROGRAM.—The Secretary

20 shall establish a program to be known as the ‘‘National

21 Tobacco-Free Public Education Program’’ under which

22 the Board may enter into contracts with or award grants

23 to eligible public and nonprofit private entities to carry

24 out public informational and educational activities de25 signed to reduce the use of tobacco products.
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1 (c) ELIGIBILITY.—To be eligible to receive a grant

2 under this section an entity shall—

3 (1) be a—

4 (A) public entity or a State health depart5 ment; or

6 (B) nonprofit private entity that—

7 (i) is not affiliated with a tobacco

8 product manufacturer or importer;

9 (ii) has a demonstrated record of

10 working effectively to reduce tobacco prod11 uct use; and

12 (iii) has expertise in conducting a

13 multi-media communications campaign;

14 (2) prepare and submit to the Secretary an ap15 plication at such time, in such manner, and contain16 ing such information as the Secretary may require,

17 including a description of the activities to be con18 ducted using amounts received under the grant or

19 contract;

20 (3) provide assurances that amounts received

21 under the grant will be used in accordance with sub22 section (d); and

23 (4) meet any other requirements determined ap24 propriate by the Secretary.
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1 (d) USE OF FUNDS.—An entity that receives a grant

2 or contract under this section shall use amounts provided

3 under the grant or contract to conduct multi-media public

4 educational or informational campaigns that are designed

5 to discourage and de-glamorize the use of tobacco prod6 ucts. Such campaigns shall be designed to discourage the

7 initiation of tobacco use by minors and encourage those

8 using such products to quit.

9 (e) NEEDS OF CERTAIN POPULATIONS.—In awarding

10 grants and contracts under this section, the Board shall

11 take into consideration the needs of particular popu12 lations.

13 (f) FUNDING.—The Secretary shall use amounts

14 available under section 401(d)(4) to carry out this section.

15 SEC. 514. NATIONAL EVENT SPONSORSHIP PROGRAM.

16 (a) ESTABLISHMENT.—The Secretary shall establish

17 a program to be known as the ‘‘National Event Sponsor18 ship Program’’ under which the Secretary may award

19 grants to eligible entities or individuals for the sponsorship

20 of activities described in subsection (c).

21 (b) ELIGIBILITY.—To be eligible to receive a grant

22 under this section an entity or individual shall—

23 (1) prepare and submit to the Secretary an ap24 plication at such time, in such manner, and contain-
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1 ing such information as the Secretary may require,

2 including—

3 (A) a description of the event, activity,

4 team, or entry for which the grant is to be pro5 vided;

6 (B) documentation that the event, activity,

7 team, or entry involved was sponsored or other8 wise funded by a tobacco manufacturer or dis9 tributor prior to the date of the application; and

10 (C) a certification that the applicant is un11 able to secure funding for the event, activity,

12 team, or entry involved from sources other than

13 those described in paragraph (2);

14 (2) provide assurances that amounts received

15 under the grant will be used in accordance with sub16 section (d); and

17 (3) meet any other requirements determined ap18 propriate by the Secretary.

19 (c) PERMISSIBLE SPONSORSHIP ACTIVITIES.—

20 Events, activities, teams, or entries for which a grant may

21 be provided under this section include—

22 (1) an athletic, musical, artistic, or other social

23 or cultural event or activity that was sponsored in

24 whole or in part by a tobacco manufacturer or dis25 tributor prior to the date of enactment of this Act;
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1 (2) the participation of a team that was spon2 sored in whole or in part by a tobacco manufacturer

3 or distributor prior to the date of enactment of this

4 Act, in an athletic event or activity; and

5 (3) the payment of a portion or all of the entry

6 fees of, or other financial or technical support pro7 vided to, an individual or team by a tobacco manu8 facturer or distributor prior to the date of enactment

9 of this Act, for participation of the individual in an

10 athletic, musical, artistic, or other social or cultural

11 event.

12 (d) USE OF FUNDS.—Amounts received under a

13 grant under this section shall be used to—

14 (1)(A) pay the costs associated with the spon15 sorship of an event or activity described in sub16 section (c)(1);

17 (B) provide for the sponsorship of an individual

18 or team;

19 (C) pay the required entry fees associated with

20 the participation of an individual or team in an

21 event or activity described in subsection (c)(3);

22 (D) provide financial or technical support to an

23 individual or team in connection with the participa24 tion of that individual or team in an activity de25 scribed in subsection (c)(3); or
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1 (E) for any other purposes determined appro2 priate by the Secretary; and

3 (2) promote images or activities to discourage

4 individuals from using tobacco products or encour5 age individuals who use such products to quit.

6 (e) ALLOCATION OF UNEXPENDED FUNDS.—

7 Amounts available for purposes of carrying out this sec8 tion and remaining available at the end of the 10-year pe9 riod described in section 401(d)(5), shall be used as fol10 lows:

11 (1) 50 percent of such amounts shall be used

12 to supplement amounts available for multi-media

13 campaigns under section 512;

14 (2) 25 percent of such amounts shall be used

15 to supplement amounts available for enforcement

16 purposes under section 401(d)(8); and

17 (3) 25 percent of such amounts shall be used

18 to supplement amounts available for community ac19 tion programs under section 515.

20 (f) FUNDING.—The Secretary shall use amounts

21 available under section 401(d)(5) to carry out this section.

22 SEC. 515. NATIONAL COMMUNITY ACTION PROGRAM.

23 (a) ESTABLISHMENT.—The Secretary shall establish

24 a program to be known as the ‘‘National Community Ac25 tion Program’’ under which the Secretary may award
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1 grants to eligible State and local governmental entities to

2 carry out community-based tobacco control efforts that

3 are designed to encourage community involvement in re4 ducing tobacco product use.

5 (b) ELIGIBILITY.—To be eligible to receive a grant

6 under this section an entity shall—

7 (1) be a State or local public entity;

8 (2) prepare and submit to the Secretary an ap9 plication at such time, in such manner, and contain10 ing such information as the Secretary may require;

11 (3) provide assurances that amounts received

12 under the grant will be used in accordance with the

13 purposes of this section; and

14 (4) meet any other requirements determined ap15 propriate by the Secretary.

16 (c) FUNDING.—The Secretary shall use amounts

17 available under section 401(d)(6) to carry out this section.

18 SEC. 516. NATIONAL CESSATION RESEARCH PROGRAM.

19 (a) ESTABLISHMENT.—The Secretary shall establish

20 a program to be known as the ‘‘National Cessation Re21 search Program’’ under which the Secretary may award

22 grants to eligible entities for research concerning, and the

23 development of methods, drugs, and devices to discourage

24 individuals from using tobacco products and to assist indi25 viduals who use such products in quitting such use.
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1 (b) ELIGIBILITY.—

2 (c) USE OF FUNDS.—

3 (d) ADDITIONAL REQUIREMENTS.—

4 (e) FUNDING.—The Secretary shall use amounts

5 available under section 401(d)(7) to carry out this section.

6 SEC. 517. USE OF SURCHARGE PAYMENTS.

7 (a) IN GENERAL.—Of the amount made available to

8 the Secretary each year under section 401(d)(9), the Sec9 retary shall—

10 (1) use not less than 90 percent of such amount

11 to award grants to State and local governmental and

12 public health agencies to carry out activities to fur13 ther reduce the use of tobacco products by individ14 uals who are under 18 years of age; and

15 (2) use not more than 10 percent of such

16 amount for the administrative costs associated with

17 the administration of title II and of chapter IX of

18 the Federal Food, Drug and Cosmetic Act (as added

19 by section 143(3)).

20 (b) TRANSFER OF CERTAIN AMOUNTS.—If the Sec21 retary determines that the administrative costs described

22 in subsection (a)(2) are less than the amount available

23 under section subsection, the Secretary may—

24 (1) transfer any such excess amount to other

25 Federal, State, or local agencies to meet the needs
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1 associated with the reduction of underage tobacco

2 usage; or

3 (2) expend such amounts directly for activities

4 to expedite the reduction of underage tobacco use.

5 (c) ELIGIBILITY.—To be eligible to receive a grant

6 under this section an entity shall—

7 (1) be a State or local governmental or public

8 health agency;

9 (2) prepare and submit to the Secretary an ap10 plication at such time, in such manner, and contain11 ing such information as the Secretary may require;

12 (3) provide assurances that amounts received

13 under the grant will be used in accordance with this

14 section; and

15 (4) meet any other requirements determined ap16 propriate by the Secretary.

17 (d) FUNDING.—The Secretary shall use amounts

18 available under section 401(d)(9) to carry out this section.

19 TITLE VI—CONSENT DECREES,

20 NON-PARTICIPATING MANU21 FACTURERS, AND STATE EN22 FORCEMENT

23 SEC. 601. PURPOSES.

24 It is the purpose of this title to provide for the estab25 lishment of consent decrees and the imposition of certain
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1 payment provisions, in addition to those otherwise pro2 vided for under Federal or State laws, to encourage manu3 facturers, distributors, and retailers to comply with this

4 Act, and to otherwise provide for the enforcement of this

5 Act with respect to non-participating manufacturers.

6 Subtitle A—Consent Decrees and

7 Non-Participating Manufacturers

8 SEC. 611. CONSENT DECREES.

9 (a) REQUIREMENT.—To be eligible to receive pay10 ments under title V, a State, and to be eligible to receive

11 liability protections under title VII, a tobacco manufac12 turer or distributor, shall enter into consent decrees under

13 this section to be effective on the date of enactment of

14 this Act.

15 (b) TERMS AND CONDITIONS.—

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

17 contained in the consent decrees described in sub18 section (a) shall contain provisions to clarify the ap19 plication and requirements of this Act (and the

20 amendments made by this Act), including provisions

21 relating to—

22 (A) restrictions on tobacco product adver23 tising and marketing and youth access to such

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

2 operation of trade associations;

3 (C) restrictions on tobacco lobbying;

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

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

8 (F) the disclosure of existing and future

9 documents relating to health, toxicity, and addi10 tion related to tobacco product usage;

11 (G) compliance and corporate culture;

12 (H) the obligation of manufacturers to

13 make payments for the benefit of States;

14 (I) the obligation of manufacturers to

15 interact only with distributors and retailers that

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

18 the marketing and sale of tobacco products;

19 (J) requirements for warnings, labeling,

20 and packaging of tobacco products;

21 (K) the dismissal of pending litigation as

22 required under title VII and as agreed to by the

23 parties to the decree; and

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

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

4 (A) tobacco product design, performance,

5 or modification;

6 (B) manufacturing standards and good

7 manufacturing practices;

8 (C) testing and regulation with respect to

9 toxicity and ingredients approval; and

10 (D) the required percentage reductions in

11 the underage use of tobacco products for a year

12 under section 204.

13 (3) WAIVER OF CONSTITUTIONAL CLAIMS.—The

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

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

19 (4) CONSTRUCTION.—The terms and conditions

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

22 will be construed in a manner that is consistent with

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

2 provisions of a consent decree must be approved by the

3 Secretary prior to approval or entry by a court.

4 (d) ENFORCEMENT.—

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

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

8 the provisions of this Act are amended, except that

9 any amendments to this Act that—

10 (A) establish Federal requirements that

11 are in conflict with obligations contained in the

12 consent decrees shall render such obligations

13 unenforceable;

14 (B) require allocations of funds that are in

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

17 allocation unenforceable; and

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

20 packaging requirements of the consent decree,

21 shall require that modifications be made in the

22 consent decree to conform with such amend23 ments.

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

2 action to enforce the provisions of any consent

3 decree under this section in any appropriate

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

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

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

10 (B) CONSISTENCY.—The Secretary, in con11 sultation with the Attorney General, shall pro12 mulgate regulations to ensure the consistency of

13 State court ruling with respect to conduct

14 under a consent decree that is not exclusively

15 local in nature.

16 SEC. 612. NATIONAL TOBACCO CONTROL PROTOCOL.

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

18 the date of enactment of this Act, each tobacco manufac19 turer to which this Act applies shall enter into a National

20 Tobacco Control Protocol.

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

22 to in subsection (a) shall be—

23 (1) developed by the Secretary as a binding and

24 enforceable contract that embodies the terms of this

25 Act; and
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1 (2) designed to be enforceable in Federal or

2 State courts.

3 SEC. 613. NON-PARTICIPATING MANUFACTURERS.

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

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

6 602, such manufacturer shall not be eligible to receive the

7 liability protections under title VII.

8 (b) IMPOSITION OF USER FEE.—

9 (1) IN GENERAL.—Each manufacturer that

10 elects not to enter into a consent decree under sec11 tion 602 and not to become a signatory to the Na12 tional Tobacco Control Protocol under section 603

13 shall be subject to an annual fee established under

14 this subsection.

15 (2) AMOUNT OF FEE.—

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

17 established under this subsection for a year

18 shall be equal to the amounts provided under

19 paragraphs (1) and (8) of section 401(d) for

20 the year.

21 (B) PER MANUFACTURER.—The Secretary

22 shall promulgate regulations for the purpose of

23 assessing fees under this subsection and deter24 mining the amount of the fee to be assessed to

25 each manufacturer.
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1 (c) SETTLEMENT RESERVE FUND.—

2 (1) IN GENERAL.—Each manufacturer to which

3 subsection (b)(1) applies shall annually deposit into

4 an escrowed reserve fund an amount equal to 150

5 percent of the amount that such manufacturer would

6 have paid under section 402 (except for that portion

7 of the payments that would have been made avail8 able under paragraphs (1) and (8) of section 401(d))

9 for the year in which the manufacturer is making

10 such deposit if the manufacturer had been a signa11 tory to the National Tobacco Control Protocol under

12 section 603.

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

14 fund of a manufacturer under paragraph (1) shall

15 be used solely for tobacco-related liability payments.

16 The manufacturer may reclaim any amounts remain17 ing in the fund (with interest) at the end of the 35-

18 year period beginning on the date on which such

19 fund is established.

20 Subtitle B—State Enforcement

21 SEC. 621. REQUIREMENT OF NO SALE TO MINORS LAW.

22 (a) RELEVANT LAW.—

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

24 for each calendar year, the Secretary may not make

25 any payments to a State under section 403 unless
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1 the State involved has in effect a law providing that

2 it is unlawful for any manufacturer, retailer, or dis3 tributor of tobacco products to sell or distribute any

4 such product to any individual under the age of 18

5 that meets the requirements of this section.

6 (2) DELAYED APPLICABILITY FOR CERTAIN

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

8 does not convene a regular session in fiscal year

9 1997, and in the case of a State whose legislature

10 does not convene a regular session in fiscal year

11 1998, the requirement described in paragraph (1) as

12 a condition of a receipt of payments under section

13 403 shall apply only for fiscal year 1999 and subse14 quent fiscal years.

15 (b) REQUIREMENTS.—A State law described in sub16 section (a) shall comply with the following:

17 (1) PROHIBITION ON SALE.—Such law shall

18 provide that it is unlawful for any manufacturer, re19 tailer, or distributor of tobacco products to sell or

20 distribute any such product within the State to any

21 individual under the age of 18 years.

22 (2) PURCHASE, RECEIPT OR POSSESSION.—

23 (A) IN GENERAL.—Such law shall provide

24 that an individual under 18 years of age shall

25 not purchase or attempt to purchase, receive or
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1 attempt to receive, possess or attempt to pos2 sess, smoke or attempt to smoke, or otherwise

3 use or consume or attempt to use or consume

4 a tobacco product in a public place.

5 (B) EMPLOYMENT.—Such law may permit

6 an individual under the age of 18 to possess a

7 tobacco product during regular working hours

8 and in the course of such individual’s employ9 ment if the tobacco product is not possessed for

10 such individual’s consumption.

11 (3) INSPECTIONS.—

12 (A) IN GENERAL.—Such law shall provide

13 that the State Police of a State, or such local

14 law enforcement authority duly designated by

15 the State Police, shall enforce this law in a

16 manner that can reasonably be expected to re17 duce the extent to which tobacco products are

18 distributed to individuals under 18 years of age

19 and shall, at least monthly, conduct random,

20 unannounced inspections in accordance with

21 regulations promulgated by the Secretary under

22 this section to ensure compliance with this law.

23 (B) CONDUCT.—Inspections under this

24 paragraph shall be conducted in communities

25 geographically and statistically representative of
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1 the entire State and the youth population of the

2 State. Not less than 250 such inspections shall

3 be conducted with respect to each 1,000,000

4 residents of the State.

5 SEC. 622. STATE REPORTING.

6 (a) IN GENERAL.—Not later than 2 years after the

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

8 the State shall prepare and submit to the Secretary a re9 duction in tobacco product usage report. Such report shall,

10 except as provided in subsection (b)(3), be made available

11 to the general public of the State.

12 (b) CONTENTS.—A report submitted under sub13 section (a) shall include—

14 (1) a detailed description of the enforcement ac15 tivities undertaken by the State and the political

16 subdivisions of the State concerning tobacco product

17 usage laws for the year for which the report is being

18 prepared;

19 (2) a detailed description of the progress of the

20 State in reducing the availability of tobacco products

21 to individuals under 18 years of age, including the

22 detailed statistical results of the compliance inspec23 tion required under section 621;

24 (3) a detailed description of the methods used

25 in such compliance inspection and in identifying out-
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1 lets which were tested (the Secretary shall provide

2 protections for the confidentiality of information

3 provided under this paragraph);

4 (4) a detailed description of the strategies that

5 the State intends to utilize in the current and suc6 ceeding years to make further progress on reducing

7 the availability of tobacco products to individuals

8 under 18 years of age; and

9 (5) the identity of a single State agency that is

10 responsible for administering the requirements of

11 title III in the State.

12 SEC. 623. REDUCTION IN STATE PAYMENTS.

13 (a) ANNUAL DETERMINATION.—Beginning with re14 spect to the fifth full fiscal year after the date of enact15 ment of this Act, and each fiscal year thereafter the Sec16 retary shall make a determination as to whether each

17 State has pursued all reasonably available measures to en18 force the law described in section 621.

19 (b) PRESUMPTIVE FINDING.—The Secretary shall

20 find presumptively that a State has not pursued all rea21 sonably available measures to enforce the law described

22 in section 621 if the Secretary determines that the State

23 has not achieved the following compliance rate results

24 based on the findings of the retail compliance inspections

25 conducted under the State law:
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1 (1) With respect to each of the fifth and sixth

2 fiscal years following the date of enactment, 75 per3 cent compliance with State law.

4 (2) With respect to each of the seventh through

5 ninth fiscal years following the date of enactment,

6 85 percent compliance with State law.

7 (3) With respect to the tenth and each subse8 quent fiscal year following the date of enactment, 90

9 percent compliance with State law.

10 (c) AMOUNT OF REDUCTION.—

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

12 the Secretary determines does not meet the compli13 ance rates described in subsection (b), the Secretary

14 may reduce the amount that the State may be eligi15 ble for under section 501. The amount of any such

16 reduction shall not exceed an amount equal to 1 per17 cent of the amount for which the State is eligible for

18 under section 501 for the fiscal year involved for

19 each 1 percentage point by which the State’s compli20 ance performance is below the applicable compliance

21 rate.

22 (2) LIMITATION.—In no event shall the amount

23 of any reduction under this section exceed an

24 amount equal to 20 percent of the amount for which
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1 the State is eligible for under section 501 for the fis2 cal year involved.

3 (3) REALLOTMENT.—The Secretary shall

4 reallot any amounts withheld under this subsection

5 to States with compliance rates that exceed the rates

6 applicable under subsection (b) in amounts to be de7 termined by the Secretary as appropriate to reward

8 States with the highest compliance rates.

9 (d) REVIEW.—

10 (1) PETITION FOR RELEASE.—Not later than

11 90 days after the date on which a notice from the

12 Secretary that the Secretary intends to make a re13 duction under subsection (c) is received, a State may

14 petition the Secretary for a release and disburse15 ment of such amount (referred to in this subsection

16 as the ‘‘withhold amount’’). The State shall give

17 prompt written notice of such petition to the State

18 attorney general.

19 (2) ACTION BY SECRETARY.—

20 (A) HOLDING AND INVESTING OF

21 FUNDS.—Upon receipt of a petition under para22 graph (1), the Secretary shall designate the

23 withhold amount as subject to a petition and in24 vest such amount in interest-bearing securities
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1 of the United States subject to a final disposi2 tion of the petition.

3 (B) BASIS FOR DETERMINATION.—In con4 sidering a petition received under paragraph

5 (1), the Secretary shall consider—

6 (i) whether the State has acted in

7 good faith and in full compliance with the

8 provisions of this Act (and the amend9 ments made by this Act) and any regula10 tions promulgated in furtherance of this

11 Act;

12 (ii) whether the State has pursued all

13 reasonably available measures to achieve

14 the compliance rates applicable under sub15 section (b) and the goals of this Act for re16 ducing the underage use of tobacco prod17 ucts;

18 (iii) whether there is any evidence of

19 any direct or indirect action taken by the

20 State to undermine the achievement of the

21 compliance rates and goals described in

22 clause (ii); and

23 (iv) any other evidence determined ap24 propriate by the Secretary.
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1 (C) BURDEN.—With respect to any action

2 by the Secretary on a petition under paragraph

3 (1), the burden shall be on the State to prove,

4 by a preponderance of the evidence, that the

5 State should be granted a release and disburse6 ment under the petition.

7 (D) HEARING.—The Secretary shall hold a

8 hearing, with notice and an opportunity to be

9 heard provided to the attorney general of the

10 State and to manufacturers, prior to making

11 any determination as to a petition under para12 graph (1).

13 (E) RELEASE OF FUNDS.—Upon a deter14 mination by the Secretary that the State has

15 met the burden imposed under subparagraph

16 (C) with respect to a petition, the Secretary

17 shall disburse not to exceed 75 percent of the

18 withhold amount (and any interest accrued on

19 such amount) to the State. The Secretary may

20 consider all relevant evidence in determining the

21 amount to disburse to the State under this sub22 paragraph.

23 (3) APPEALS.—

24 (A) IN GENERAL.—Any manufacturer or

25 State attorney general aggrieved by a decision
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1 of the Secretary under paragraph (2) may,

2 within 30 days of the date of such decision,

3 seek judicial review of the decision in the

4 United States Court of Appeals for the District

5 of Columbia Circuit. The provisions of sections

6 701 through 706 of title 5, United States Code,

7 shall apply to appeals filed under this para8 graph.

9 (B) LIMITATION.—No stay or other in10 junctive relief that has the effect of enjoining

11 the withholding of amounts under this section

12 shall be permitted during the pendency of an

13 appeal filed under this paragraph.

14 (C) FINALITY.—The decision of the Court

15 of Appeals in an action under this paragraph

16 shall be final.

17 TITLE VII—PROVISIONS RELAT18 ING TO TOBACCO-RELATED

19 CIVIL ACTIONS

20 SEC. 701. GENERAL IMMUNITY.

21 (a) STATE ATTORNEY GENERAL ACTIONS.—

22 (1) PENDING ACTIONS.—Civil actions that have

23 been commenced by a State or local governmental

24 entity, or on behalf of such an entity, against a

25 manufacturer, distributor, or retailer that is a signa-
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1 tory to the National Tobacco Control Protocol under

2 section 612, and that are pending on the date of en3 actment of this Act are terminated.

4 (2) FUTURE ACTIONS.—A manufacturer, dis5 tributor or retailer that is a signatory to the Na6 tional Tobacco Control Protocol under section 612

7 shall be immune from any civil action commenced

8 after the date of enactment of this Act by a Federal,

9 State, or local governmental entity, or on behalf of

10 such an entity, for all claims arising from the use

11 of a tobacco product.

12 (b) OTHER ACTIONS.—

13 (1) CLASS ACTIONS.—

14 (A) PENDING ACTIONS.—Class actions for

15 claims arising from the use of a tobacco prod16 uct that are pending against a manufacturer,

17 distributor, or retailer that is a signatory to the

18 National Tobacco Control Protocol under sec19 tion 612, are terminated.

20 (B) FUTURE ACTIONS.—A manufacturer,

21 distributor, or retailer that is a signatory to the

22 National Tobacco Control Protocol under sec23 tion 612 shall be immune from any class action

24 commenced after the date of enactment of this
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1 Act for all claims arising from the use of a to2 bacco product.

3 (2) ADDICTION AND DEPENDENCE CLAIMS.—

4 (A) PENDING ACTIONS.—Any civil action

5 for claims based on addition to or dependence

6 on a tobacco product that are pending against

7 a manufacturer, distributor, or retailer that is

8 a signatory to the National Tobacco Control

9 Protocol under section 612, are terminated.

10 (B) FUTURE ACTIONS.—A manufacturer,

11 distributor, or retailer that is a signatory to the

12 National Tobacco Control Protocol under sec13 tion 612 shall be immune from any civil action

14 commenced after the date of enactment of this

15 Act for all claims based on addition to or de16 pendence on a tobacco product.

17 (c) PRESERVATION.—All personal injury claims aris18 ing from the use of a tobacco product by an individual

19 shall be preserved.

20 SEC. 702. CIVIL LIABILITY FOR PAST CONDUCT.

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

22 shall apply to all civil actions permitted under section 701

23 for relief arising from the conduct of a manufacturer, dis24 tributor, or retailer that is a signatory to the National To-
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1 bacco Control Protocol under section 612 that occurred

2 prior to the date of enactment of this Act.

3 (b) PUNITIVE DAMAGES PROHIBITED.—No punitive

4 damages shall be awarded in any claim described in sub5 section (a).

6 (c) INDIVIDUAL TRIALS.—No class action suits, join7 der of parties, aggregation of claims, consolidation of ac8 tions, extrapolations, or other devices to resolve cases

9 other than on the basis of individual actions shall be per10 mitted without the consent of the defendant. Any defend11 ant, in an action that involves a violation of this sub12 section, may remove such action to an appropriate Federal

13 court.

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

15 National Tobacco Control Protocol under section 612, all

16 signatories shall agree to the joint sharing of any civil li17 ability for actions for damages arising from the use of to18 bacco products. Such signatories shall not be jointly and

19 severally liable for damages involving nonsignatories. Ac20 tions involving both signatories and nonsignatories shall

21 be severed.

22 (e) PERMISSIBLE PARTIES.—

23 (1) PLAINTIFFS.—The following individuals

24 may be plaintiffs in a civil action to which this sec25 tion applies:
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1 (A) Individuals bringing claims, or claims

2 derivative of such claims, on their own behalf

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

4 individuals.

5 (B) Third-party payors for claims not

6 based on subrogation that were pending on

7 June 9, 1997.

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

9 subrogation of individual claims permitted

10 under subparagraph (A).

11 (2) DEFENDANTS.—This section shall apply

12 only to actions brought against a signatory of the

13 National Tobacco Control Protocol under section

14 612, a successor or assign of such a signatory, any

15 future fraudulent transferees, or any entity for suit

16 designated to survive a defunct signatory. Such sig17 natories shall be vicariously liable for the actions of

18 their agents.

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

20 there shall be no removal of a action to which this section

21 applies.

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

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

24 the risk of injury or illness to a user shall not be admissi25 ble or discoverable.
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1 (h) CAPS ON SETTLEMENTS.—

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

3 a calendar year, the aggregate amount of all tobacco

4 claims judgments or settlements to which this sec5 tion applies, that the signatories of the National To6 bacco Control Protocol under section 612 shall be

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

8 33 percent of the annual payment required under

9 section 402 for the year involved.

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

11 the judgments and settlements described in para12 graph (1) exceed an amount equal to 33 percent of

13 the annual payment required under section 402 for

14 the year involved, such excess amount shall be paid

15 in the following year.

16 (3) AFFECT OF SETTLEMENT.—The signatories

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

18 be applied against the amount owed by such signato19 ries to the National Tobacco Settlement Trust Fund

20 for the year involved, in an amount equal to 80 per21 cent of the aggregate amounts paid under judgments

22 or settlements of tobacco-related claims to which this

23 section applies for such year.

24 (4) INDIVIDUAL CAP.—With respect to an ac25 tion to which this section applies, any amount
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1 awarded in excess of $1,000,000 may be paid in the

2 year following the year in which the judgment or

3 settlement was entered, except that this paragraph

4 shall not apply if all other awards under judgments

5 or settlements entered in the first year can be paid

6 without exceeding the aggregate annual cap under

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

8 from year to year with no payments in any single

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

10 on such amounts until such time as the annual ag11 gregate cap is not exceeded.

12 (5) UNUSED PORTION OF CREDIT.—

13 (i) DEFENSE COSTS.—The signatories of the Na14 tional Tobacco Control Protocol under section 612 shall

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

16 other costs associated with being a defendant in an action

17 to which this section applies.

18 SEC. 703. CIVIL LIABILITY FOR FUTURE CONDUCT.

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

20 shall apply to all civil actions permitted under section 701

21 for relief arising from the conduct of a manufacturer, dis22 tributor, or retailer that is a signatory to the National To23 bacco Control Protocol under section 612 that occurs after

24 the date of enactment of this Act.
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1 (b) GENERAL PROVISIONS.—The provisions of sub2 sections (c) and (e) through (i) of section 702 shall apply

3 to actions under this section.

4 (c) THIRD-PARTY PAYOR CLAIMS.—Third-party

5 payor claims that are not based on subrogation shall not

6 be commenced under this section.

7 SEC. 704. NON-PARTICIPATING MANUFACTURERS.

8 The provisions of this title shall not apply to any

9 manufacturer, distributor, or retailer that is not a signa10 tory to the National Tobacco Control Protocol under sec11 tion 612.

12 TITLE VIII—PUBLIC DISCLO13 SURE OF HEALTH RESEARCH

14 SEC. 801. PURPOSE.

15 It is the purpose of this title to provide for the disclo16 sure of previously nonpublic or confidential documents by

17 manufacturers of tobacco products, including the results

18 of internal health research, and to provide for a procedure

19 to settle claims of attorney-client privilege, work product,

20 or trade secrets with respect to such documents.

21 SEC. 802. NATIONAL TOBACCO DOCUMENT DEPOSITORY.

22 (a) ESTABLISHMENT.—To be eligible to receive the

23 protections provided under title VII, manufacturers of to24 bacco products, acting in conjunction with the Tobacco In25 stitute and the Council for Tobacco Research, U.S.A.
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1 (prior to the termination of such entities under section

2 155), shall, not later than 180 days after the date of en3 actment of this Act, establish and maintain a National To4 bacco Document Depository (in this title referred to as

5 the ‘‘Depository’’). Such Depository shall be located in the

6 Washington, D.C. area and be open to the public.

7 (b) USE OF DEPOSITORY.—The Depository shall be

8 maintained in a manner that permits the Depository to

9 be used as a resource for litigants, public health groups,

10 and any other individuals who have an interest in the cor11 porate records and research of the manufacturers concern12 ing smoking and health, addiction or nicotine dependency,

13 safer or less hazardous cigarettes, and underage tobacco

14 use and marketing.

15 (c) CONTENTS.—The Depository shall include (and

16 manufacturers and the Tobacco Institute and the Council

17 for Tobacco Research, U.S.A. shall provide)—

18 (1) within 180 days of the date of enactment of

19 this Act, all documents provided by such entities to

20 plaintiffs in—

21 (A) civil or criminal actions brought by

22 State attorneys general (including all docu23 ments selected by plaintiffs from the Guilford

24 Repository of the United Kingdom);
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1 (B) Philip Morris Companies Inc.’s defa2 mation action against Capital Cities/American

3 Broadcasting Company News;

4 (C) the Federal Trade Commission’s inves5 tigation concerning Joe Camel and underage

6 marketing;

7 (D) the Haines and Cippollone actions;

8 and

9 (E) the Butler action in Mississippi;

10 (2) within 90 days after the date of enactment

11 of this Act, any exiting documents discussing or re12 ferring to health research, addiction or dependency,

13 safer or less hazardous cigarettes, studies of the

14 smoking habits of minors, and the relationship be15 tween advertising or promotion and youth smoking,

16 that the entities described in subsection (a) have not

17 completed producing as required in the actions de18 scribed in paragraph (1);

19 (3) within 180 days of the date of enactment of

20 this Act, all documents relating to indices (as de21 fined by the court in the Minnesota Attorney Gen22 eral action) of documents relating to smoking and

23 health, including all indices identified by the manu24 facturers in the Washington, Texas, and Minnesota

25 Attorney General actions;
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1 (4) upon the settlement of any action referred

2 to in this subsection, and after a good-faith, de novo,

3 document-by-document review of all documents pre4 viously withheld from production in any actions on

5 the grounds of attorney-client privilege, all docu6 ments determined to be outside of the scope of the

7 privilege;

8 (5) all existing or future documents relating to

9 original laboratory research concerning the health or

10 safety of tobacco products, including all laboratory

11 research results relating to methods used to make

12 tobacco products less hazardous to consumers;

13 (6) a comprehensive new attorney-client privi14 lege log of all documents, itemized in sufficient de15 tail so as to enable any interested individual to de16 termine whether the individual will challenge the

17 claim of privilege, that the entities described in sub18 section (a) (based on the de novo review of such doc19 uments by such entities) claim are protected from

20 disclosure under the attorney-client privilege;

21 (7) all existing or future documents relating to

22 studies of the smoking habits of minors or docu23 ments referring to any relationship between advertis24 ing and promotion and underage smoking; and
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1 (8) all other documents determined appropriate

2 under regulations promulgated by the Secretary.

3 (d) DISPUTE RESOLUTION PANEL.—

4 (1) ESTABLISHMENT.—The Judicial Conference

5 of the United States shall establish a Tobacco Docu6 ments Dispute Resolution Panel, to be composed of

7 three Federal judges to be appointed by the Con8 ference, to resolve all disputes involving claims of at9 torney-client, work product, or trade secrets privilege

10 with respect to documents required to be deposited

11 into the Depository under subsection (c) that may be

12 brought by Federal, State, or local governmental of13 ficials or the public or asserted in any action by a

14 manufacturer.

15 (2) BASIS FOR DETERMINATIONS.—The deter16 minations of the Panel established under paragraph

17 (1) shall be based on—

18 (A) the American Bar Association/Amer19 ican Law Institute Model Rules or the prin20 cipals of Federal law with respect to attorney21 client or work product privilege; and

22 (B) the Uniform Trade Secrets Act with

23 respect to trade secrecy.
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1 (3) DECISION.—Any decision of the Panel es2 tablished under paragraph (1) shall be final and

3 binding upon all Federal and State courts.

4 (4) ASSESSING OF FEES.—As part of a deter5 mination under this subsection, the Panel estab6 lished under paragraph (1) shall determined whether

7 a claimant of the privilege acted in good faith and

8 had a factual and legal basis for asserting the claim.

9 If the Panel determines that the claimant did not

10 act in good faith, the Panel may assess costs against

11 the claimant, including a reasonable attorneys’ fee,

12 and may apply such other sanctions as the Panel de13 termines appropriate.

14 (5) ACCELERATED REVIEW.—The Panel estab15 lished under paragraph (1) shall establish proce16 dures for the accelerated review of challenges to a

17 claim of privilege. Such procedures shall include as18 surances that an individual filing a challenge to such

19 a claim need not make a prima facie showing of any

20 kind as a prerequisite to an in camera review of the

21 documents at issue.

22 (6) SPECIAL MASTERS.—The Panel established

23 under paragraph (1) may appoint Special Masters in

24 accordance with Rule 53 of the Federal Rules of

25 Civil Procedure. The cost relating to any Special
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1 Master shall be assessed to the manufacturers as

2 part of a fee process to be established under regula3 tions promulgated by the Secretary.

4 (e) OTHER PROVISIONS.—

5 (1) NO WAIVER OF PRIVILEGE.—Compliance

6 with this section by the entities described in sub7 section (a) shall not be deemed to be a waiver on be8 half of such entities of any applicable privilege or

9 protection.

10 (2) AVOIDANCE OF DESTRUCTION.—In estab11 lishing the Depository, procedures shall be imple12 mented to protect against the destruction of docu13 ments.

14 (3) DEEMED PRODUCED.—Any documents con15 tained in the Depository shall be deemed to have

16 been produced for purposes of any tobacco-related

17 litigation in the United States.

18 (f) DOCUMENTS.—For purposes of this section, the

19 term ‘‘documents’’ shall include any paper documents that

20 may be printed using data that is contained in computer

21 files.
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1 TITLE IX—ASSISTANCE TO TO2 BACCO GROWERS AND COM3 MUNITIES

4 SEC. 901. SHORT TITLE.

5 This title may be cited as the ‘‘Long-Term Economic

6 Assistance for Farmers Act’’ or the ‘‘LEAF Act’’.

7 SEC. 902. DEFINITIONS.

8 In this title:

9 (1) ACTIVE TOBACCO PRODUCER.—The term

10 ‘‘active tobacco producer’’ means a quota holder,

11 quota lessee, or quota tenant.

12 (2) QUOTA HOLDER.—The term ‘‘quota holder’’

13 means a producer that owns a farm for which a to14 bacco farm marketing quota or farm acreage allot15 ment was established under the Agricultural Adjust16 ment Act of 1938 (7 U.S.C. 1281 et seq.) for any

17 of the 1994, 1995, or 1996 crop years.

18 (3) QUOTA LESSEE.—The term ‘‘quota lessee’’

19 means—

20 (A) a producer that owns a farm that pro21 duced tobacco pursuant to a lease and transfer

22 to that farm of all or part of a tobacco farm

23 marketing quota or farm acreage allotment es24 tablished under the Agricultural Adjustment
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1 Act of 1938 (7 U.S.C. 1281 et seq.) for any of

2 the 1994, 1995, or 1996 crop years; or

3 (B) a producer that rented land from a

4 farm operator to produce tobacco under a to5 bacco farm marketing quota or farm acreage al6 lotment established under the Agricultural Ad7 justment Act of 1938 (7 U.S.C. 1281 et seq.)

8 for any of the 1994, 1995, or 1996 crop years.

9 (4) QUOTA TENANT.—The term ‘‘quota tenant’’

10 means a producer who—

11 (A) is the principal producer, as deter12 mined by the Secretary, of tobacco on a farm

13 where tobacco is produced pursuant to a to14 bacco farm marketing quota or farm acreage al15 lotment established under the Agricultural Ad16 justment Act of 1938 (7 U.S.C. 1281 et seq.)

17 for any of the 1994, 1995, or 1996 crop years;

18 and

19 (B) is not a quota holder or quota lessee.

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

21 means—

22 (A) in titles I and II, the Secretary of Ag23 riculture; and

24 (B) in section 301, the Secretary of Labor.
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1 (6) TOBACCO PRODUCT IMPORTER.—The term

2 ‘‘tobacco product importer’’ has the meaning given

3 the term ‘‘importer’’ in section 5702 of the Internal

4 Revenue Code of 1986.

5 (7) TOBACCO PRODUCT MANUFACTURER.—

6 (A) IN GENERAL.—The term ‘‘tobacco

7 product manufacturer’’ has the meaning given

8 the term ‘‘manufacturer of tobacco products’’ in

9 section 5702 of the Internal Revenue Code of

10 1986.

11 (B) EXCLUSION.—The term ‘‘tobacco

12 product manufacturer’’ does not include a per13 son that manufactures cigars or pipe tobacco.

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

15 means the Tobacco Community Revitalization Trust

16 Fund established under section 101.

17 SUBTITLE A—TOBACCO COMMUNITY

18 REVITALIZATION TRUST FUND

19 SEC. 911. ESTABLISHMENT OF TRUST FUND.

20 (a) IN GENERAL.—There is established in the Treas21 ury of the United States a trust fund to be known as the

22 ‘‘Tobacco Community Revitalization Trust Fund’’, con23 sisting of such amounts as may be appropriated or cred24 ited to the Trust Fund. The Trust Fund shall be adminis25 tered by the Secretary.
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1 (b) TRANSFERS TO TRUST FUND.—There are appro2 priated and transferred to the Trust Fund for each fiscal

3 year—

4 (1) amounts contributed by tobacco product

5 manufacturers and tobacco product importers under

6 section 102; and

7 (2) amounts made available to the Trust Fund

8 out of funds allocated through national tobacco set9 tlement legislation.

10 (c) REPAYABLE ADVANCES.—

11 (1) AUTHORIZATION.—There are authorized to

12 be appropriated to the Trust Fund, as repayable ad13 vances, such sums as may from time to time be nec14 essary to make expenditures under subsection (d).

15 (2) REPAYMENT WITH INTEREST.—Repayable

16 advances made to the Trust Fund shall be repaid,

17 and interest on the advances shall be paid, to the

18 general fund of the Treasury when the Secretary of

19 the Treasury determines that moneys are available

20 in the Trust Fund to make the payments.

21 (3) RATE OF INTEREST.—Interest on an ad22 vance made under this subsection shall be at a rate

23 determined by the Secretary of Treasury (as of the

24 close of the calendar month preceding the month in

25 which the advance is made) that is equal to the cur-
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1 rent average market yield on outstanding marketable

2 obligations of the United States with remaining pe3 riod to maturity comparable to the anticipated pe4 riod during which the advance will be outstanding.

5 (d) EXPENDITURES FROM TRUST FUND.—Amounts

6 in the Trust Fund shall be available for making expendi7 tures after October 1, 1998, to meet those necessary obli8 gations of the Federal Government that are authorized to

9 be paid under—

10 (1) section 201 for payments for lost tobacco

11 quota for each of fiscal years 1999 through 2023,

12 but not to exceed $1,600,000,000 for any fiscal year

13 except to the extent the payments are made in ac14 cordance with section 201(j);

15 (2) section 202 for industry payments for all

16 costs of the Department of Agriculture associated

17 with the production of tobacco;

18 (3) section 203 for tobacco community eco19 nomic development grants, but not to exceed—

20 (A) $400,000,000 for each of fiscal years

21 1999 through 2008, less any amount required

22 to be paid under section 202 for the fiscal year;

23 and

24 (B) $450,000,000 for each of fiscal year

25 2009 through 2023, less any amount required
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1 to be paid under section 202 during the fiscal

2 year;

3 (4) section 301 for assistance provided under

4 the tobacco worker transition program, but not to

5 exceed $50,000,000 for any fiscal year; and

6 (5) subpart 9 of part A of title IV of the High7 er Education Act of 1965 for farmer opportunity

8 grants, but not to exceed—

9 (A) $42,500,000 for each of the academic

10 years 1999–2000 through 2003–2004;

11 (B) $50,000,000 for each of the academic

12 years 2004–2005 through 2008–2009;

13 (C) $57,500,000 for each of the academic

14 years 2009–2010 through 2013–2014;

15 (D) $65,000,000 for each of the academic

16 years 2014–2015 through 2018–2019; and

17 (E) $72,500,000 for each of the academic

18 years 2019–2020 through 2023–2024.

19 (e) BUDGETARY TREATMENT.—This section con20 stitutes budget authority in advance of appropriations

21 Acts and represents the obligation of the Federal Govern22 ment to provide payments to States and eligible persons

23 in accordance with this title.
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1 SEC. 912. CONTRIBUTIONS BY TOBACCO PRODUCT MANU2 FACTURERS AND IMPORTERS.

3 (a) DEFINITION OF MARKET SHARE.—In this sec4 tion, the term ‘‘market share’’ means the ratio of—

5 (1) the tax liability of a tobacco product manu6 facturer or tobacco product importer (as defined in

7 section 2) for a calendar year under section 5703 of

8 the Internal Revenue Code of 1986; to

9 (2) the tax liability of all tobacco product man10 ufacturers or tobacco product importers (as defined

11 in section 2) for the calendar year under section

12 5703 of the Internal Revenue Code of 1986.

13 (b) DETERMINATIONS.—Not later than September

14 30 of each fiscal year, the Secretary of the Treasury

15 shall—

16 (1) determine—

17 (A) the market share of each tobacco prod18 uct manufacturer or tobacco product importer

19 during the most recent calendar year;

20 (B) the total amount of assessments pay21 able for the subsequent fiscal year under sub22 section (c); and

23 (C) the amount of an assessment payable

24 by the tobacco product manufacturer or tobacco

25 product importer for the fiscal year under sub26 section (d); and
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1 (2) notify each tobacco product manufacturer

2 and tobacco product importer of the determinations

3 made under paragraph (1) with respect to the manu4 facturer or importer.

5 (c) TOTAL AMOUNT OF ASSESSMENTS.—

6 (1) IN GENERAL.—The total amount of assess7 ments payable by all tobacco product manufacturers

8 and tobacco product importers into the Trust Fund

9 for a fiscal year shall be equal to—

10 (A) the amount of the contribution to the

11 Trust Fund for the fiscal year required under

12 paragraph (2); less

13 (B) any amount made available during the

14 preceding fiscal year to the Trust Fund out of

15 funds allocated through national tobacco settle16 ment legislation.

17 (2) TRUST FUND CONTRIBUTIONS.—The

18 amount of the contribution to the Trust Fund shall

19 be—

20 (A) $2,100,000,000 for each of fiscal years

21 1999 through 2008;

22 (B) $500,000,000 for each of fiscal years

23 2009 through 2023; and
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1 (C) for fiscal year 2024 and each subse2 quent fiscal year, the amount payable under

3 section 202.

4 (d) INDIVIDUAL AMOUNT OF ASSESSMENTS.—The

5 amount of an assessment payable by each tobacco product

6 manufacturer and tobacco product importer into the Trust

7 Fund for a fiscal year shall be equal to the product ob8 tained by multiplying—

9 (1) the total amount of assessments payable by

10 all tobacco product manufacturers and tobacco prod11 uct importers for the fiscal year under subsection

12 (c); by

13 (2) the market share of the tobacco product

14 manufacturer or tobacco product importer during

15 the most recent calendar year determined under sub16 section (b)(1)(A).

17 SUBTITLE B—AGRICULTURAL

18 MARKET TRANSITION ASSIST19 ANCE

20 SEC. 921. PAYMENTS FOR LOST TOBACCO QUOTA.

21 (a) IN GENERAL.—Beginning with the 1999 market22 ing year, the Secretary shall make payments for lost to23 bacco quota to eligible quota holders, quota lessees, and

24 quota tenants as reimbursement for lost tobacco quota as
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1 a result of a decrease in demand for domestically produced

2 tobacco.

3 (b) ELIGIBILITY.—To be eligible to receive payments

4 under this section, a quota holder, quota lessee, or quota

5 tenant shall—

6 (1) prepare and submit to the Secretary an ap7 plication at such time, in such manner, and contain8 ing such information as the Secretary may require,

9 including information sufficient to make the dem10 onstration required under paragraph (2); and

11 (2) demonstrate to the satisfaction of the Sec12 retary that, with respect to the 1996 marketing

13 year—

14 (A) the producer was a quota holder and

15 realized income from the production of tobacco

16 through—

17 (i) the active production of tobacco;

18 (ii) the lease and transfer of tobacco

19 quota to another farm;

20 (iii) the rental of all or part of the

21 farm of the quota holder, including the

22 right to produce tobacco, to another to23 bacco producer; or

24 (iv) the hiring of a quota tenant to

25 produce tobacco;
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1 (B) the producer was a quota lessee; or

2 (C) the producer was a quota tenant.

3 (c) BASE QUOTA LEVEL.—

4 (1) IN GENERAL.—The Secretary shall deter5 mine, for each quota holder, quota lessee, and quota

6 tenant, the base quota level for the 1994 through

7 1996 marketing years.

8 (2) QUOTA HOLDERS.—The base quota level for

9 a quota holder shall be equal to the average tobacco

10 farm marketing quota established for the farm

11 owned by the quota holder for the 1994 through

12 1996 marketing years.

13 (3) QUOTA LESSEES.—The base quota level for

14 a quota lessee shall be equal to—

15 (A) 50 percent of the average number of

16 pounds of tobacco quota established for a farm

17 for the 1994 through 1996 marketing years—

18 (i) that was leased and transferred to

19 a farm owned by the quota lessee; or

20 (ii) for which the rights to produce

21 the tobacco were rented to the quota les22 see; less

23 (B) 25 percent of the average number of

24 pounds of tobacco quota described in paragraph
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1 (A) for which a quota tenant was the principal

2 producer of the tobacco quota.

3 (4) QUOTA TENANTS.—The base quota level for

4 a quota tenant shall be equal to the sum of—

5 (A) 50 percent of the average number of

6 pounds of tobacco quota established for a farm

7 for the 1994 through 1996 marketing years—

8 (i) that was owned by a quota holder;

9 and

10 (ii) for which the quota tenant was

11 the principal producer of the tobacco on

12 the farm; and

13 (B) 25 percent of the average number of

14 pounds of tobacco quota for the 1994 through

15 1996 marketing years—

16 (i)(I) that was leased and transferred

17 to a farm owned by the quota lessee; or

18 (II) for which the rights to produce

19 the tobacco were rented to the quota les20 see; and

21 (ii) for which the quota tenant was

22 the principal producer of the tobacco on

23 the farm.

24 (5) MARKETING QUOTAS OTHER THAN POUND25 AGE QUOTAS.—For each kind of tobacco for which
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1 there is a marketing quota or allotment (on an acre2 age basis), the base quota level for each quota hold3 er, quota lessee, or quota tenant shall be determined

4 in accordance with this subsection (based on a

5 poundage conversion) in an amount equal to the

6 product obtained by multiplying—

7 (A) the average tobacco farm marketing

8 quota or allotment for the 1994 through 1996

9 marketing years; by

10 (B) the average county yield per acre for

11 the county in which the farm is located for the

12 kind of tobacco for the marketing years.

13 (d) PAYMENTS.—Except as otherwise provided in this

14 section, during any marketing year in which the national

15 marketing quota for a kind of tobacco is less than the av16 erage national marketing quota level for the kind of to17 bacco for the 1994 through 1996 marketing years, the

18 Secretary shall make payments for lost tobacco quota to

19 each quota holder, quota lessee, and quota tenant that is

20 eligible under subsection (b) in an amount that is equal

21 to the product obtained by multiplying—

22 (1) the percentage by which the national mar23 keting quota for the kind of tobacco is less than the

24 average national marketing quota level for the kind
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1 of tobacco for the 1994 through 1996 marketing

2 years; by

3 (2) the base quota level for the quota holder,

4 quota lessee, or quota tenant; by

5 (3) $4 per pound.

6 (e) LIFETIME LIMITATION ON PAYMENTS.—Except

7 as otherwise provided in this section, the total amount of

8 payments made under this section to a quota holder, quota

9 lessee, or quota tenant during the lifetime of the holder,

10 lessee, or tenant shall not exceed the product obtained by

11 multiplying—

12 (1) the base quota level for the quota holder,

13 quota lessee, or quota tenant; by

14 (2) $8 per pound.

15 (f) LIMITATIONS ON AGGREGATE ANNUAL PAY16 MENTS.—

17 (1) IN GENERAL.—Except as otherwise pro18 vided in this subsection, the total amount payable

19 under this section for any marketing year shall not

20 exceed $1,600,000,000.

21 (2) ACCELERATED PAYMENTS.—Paragraph (1)

22 shall not apply if accelerated payments for lost to23 bacco quota are made in accordance with subsection

24 (j).
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1 (3) REDUCTIONS.—If the amount determined

2 under subsection (d) for a marketing year exceeds

3 the amount described in paragraph (1), the Sec4 retary shall make a pro rata reduction in the

5 amounts payable to quota holders, quota lessees, and

6 quota tenants under this section to ensure that the

7 total amount of the payments for lost tobacco quota

8 does not exceed the limitation established under

9 paragraph (1).

10 (4) ROLLOVER OF PAYMENTS FOR LOST TO11 BACCO QUOTA.—Subject to paragraph (1), if the

12 Secretary makes a reduction in accordance with

13 paragraph (3), the amount of the reduction shall be

14 applied to the next marketing year and added to the

15 payments for lost tobacco for the marketing year.

16 (g) SUBSEQUENT SALE AND TRANSFER OF

17 QUOTA.—Effective beginning January 1, 1999, on the

18 sale and transfer of a farm marketing quota under section

19 316(g) or 319(g) of the Agricultural Adjustment Act of

20 1938 (7 U.S.C. 1314b(g), 1314e(g))—

21 (1) the person who sold and transferred the

22 quota shall have—

23 (A) the base quota level attributable to the

24 person reduced by the base quota level attrib-
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1 utable to the quota that is sold and transferred;

2 and

3 (B) the lifetime limitation on payments es4 tablished under subsection (e) attributable to

5 the person reduced by the product obtained by

6 multiplying—

7 (i) the base quota level attributable to

8 the quota; by

9 (ii) $8 per pound; and

10 (2) the person who acquired the quota shall

11 have—

12 (A) the base quota level attributable to the

13 person increased by the base quota level attrib14 utable to the quota that was sold and trans15 ferred; and

16 (B) the lifetime limitation on payments es17 tablished under subsection (e) attributable to

18 the person—

19 (i) increased by the product obtained

20 by multiplying—

21 (I) the base quota level attrib22 utable to the quota; by

23 (II) $8 per pound; but

24 (ii) decreased by any payments for

25 lost tobacco quota previously made that
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1 are attributable to the quota that was sold

2 and transferred.

3 (h) SALE OR TRANSFER OF FARM.—On the sale or

4 transfer of ownership of a farm that is owned by a quota

5 holder, the base quota level established under subsection

6 (c), the right to payments under subsection (d), and the

7 lifetime limitation on payments established under sub8 section (e) shall transfer to the new owner of the farm

9 to the same extent and in the same manner as those sub10 sections applied to the previous quota holder.

11 (i) DEATH OF QUOTA LESSEE OR QUOTA TENANT.—

12 If a quota lessee or quota tenant who is entitled to pay13 ments under this section dies and is survived by a spouse

14 or 1 or more dependents, the right to receive the payments

15 shall transfer to the surviving spouse or, if there is no

16 surviving spouse, to the surviving dependents in equal

17 shares.

18 (j) ACCELERATION OF PAYMENTS.—

19 (1) IN GENERAL.—On the occurrence of any of

20 the events described in paragraph (2), the Secretary

21 shall make an accelerated lump sum payment for

22 lost tobacco quota to each quota holder, quota les23 see, and quota tenant for any affected kind of to24 bacco in accordance with paragraph (3).
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1 (2) TRIGGERING EVENTS.—The Secretary shall

2 make accelerated payments under paragraph (1) if

3 after the date of enactment of this title—

4 (A) for 3 consecutive marketing years, the

5 national marketing quota for a kind of tobacco

6 is less than 50 percent of the national market7 ing quota for the kind of tobacco for the 1996

8 marketing year; or

9 (B) Congress repeals or makes ineffective,

10 directly or indirectly, any provision of—

11 (i) section 316(g) of the Agricultural

12 Adjustment Act of 1938 (7 U.S.C.

13 1314b(g));

14 (ii) section 319(g) of the Agricultural

15 Adjustment Act of 1938 (7 U.S.C.

16 1314e(g));

17 (iii) section 106 of the Agricultural

18 Act of 1949 (7 U.S.C. 1445);

19 (iv) section 106A of the Agricultural

20 Act of 1949 (7 U.S.C. 1445–1); or

21 (v) section 106B of the Agricultural

22 Act of 1949 (7 U.S.C. 1445–2).

23 (3) AMOUNT.—The amount of the accelerated

24 payments made to each quota holder, quota lessee,
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1 and quota tenant under this subsection shall be

2 equal to—

3 (A) the amount of the lifetime limitation

4 established for the quota holder, quota lessee,

5 or quota tenant under subsection (e); less

6 (B) any payments for lost tobacco quota

7 received by the quota holder, quota lessee, or

8 quota tenant before the occurrence of any of

9 the events described in paragraph (2).

10 SEC. 922. INDUSTRY PAYMENTS FOR ALL DEPARTMENT

11 COSTS ASSOCIATED WITH TOBACCO PRODUC12 TION.

13 (a) IN GENERAL.—The Secretary shall use such

14 amounts as are necessary from the Trust Fund at the end

15 of each fiscal year to reimburse the Secretary for—

16 (1) costs associated with the administration of

17 programs established under this title and amend18 ments made by this title;

19 (2) costs associated with the administration of

20 the tobacco quota and price support programs ad21 ministered by the Secretary;

22 (3) costs to the Federal Government of carrying

23 out crop insurance programs for tobacco;
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1 (4) costs associated with all agricultural re2 search, extension, or education activities associated

3 with tobacco;

4 (5) costs associated with the administration of

5 loan association and cooperative programs for to6 bacco producers, as approved by the Secretary; and

7 (6) any other costs incurred by the Department

8 of Agriculture associated with the production of to9 bacco.

10 (b) LIMITATIONS.—Amounts made available under

11 subsection (a) may not be used—

12 (1) to provide direct benefits to quota holders,

13 quota lessees, or quota tenants; or

14 (2) in a manner that results in a decrease, or

15 an increase relative to other crops, in the amount of

16 the crop insurance premiums assessed to active to17 bacco producers under the Federal Crop Insurance

18 Act (7 U.S.C. 1501 et seq.).

19 (c) DETERMINATIONS.—Not later than September

20 30, 1998, and each fiscal year thereafter, the Secretary

21 shall determine—

22 (1) the amount of costs described in subsection

23 (a); and

24 (2) the amount that will be provided under this

25 section as reimbursement for the costs.
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1 SEC. 923. TOBACCO COMMUNITY ECONOMIC DEVELOP2 MENT GRANTS.

3 (a) AUTHORITY.—The Secretary shall make grants to

4 tobacco-growing States in accordance with this section to

5 enable the States to carry out economic development ini6 tiatives in tobacco-growing communities.

7 (b) APPLICATION.—To be eligible to receive payments

8 under this section, a State shall prepare and submit to

9 the Secretary an application at such time, in such manner,

10 and containing such information as the Secretary may re11 quire, including—

12 (1) a description of the activities that the State

13 will carry out using amounts received under the

14 grant;

15 (2) a designation of an appropriate State agen16 cy to administer amounts received under the grant;

17 and

18 (3) a description of the steps to be taken to en19 sure that the funds are distributed in accordance

20 with subsection (e).

21 (c) AMOUNT OF GRANT.—

22 (1) IN GENERAL.—From the amounts available

23 to carry out this section for a fiscal year, the Sec24 retary shall allot to each State an amount that bears

25 the same ratio to the amounts available as the total

26 income of the State derived from the production of
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1 tobacco during the 1994 through 1996 marketing

2 years (as determined under paragraph (2)) bears to

3 the total income of all States derived from the pro4 duction of tobacco during the 1994 through 1996

5 marketing years.

6 (2) TOBACCO INCOME.—For the 1994 through

7 1996 marketing years, the Secretary shall determine

8 the amount of income derived from the production

9 of tobacco in each State and in all States.

10 (d) PAYMENTS.—

11 (1) IN GENERAL.—A State that has an applica12 tion approved by the Secretary under subsection (b)

13 shall be entitled to a payment under this section in

14 an amount that is equal to its allotment under sub15 section (c).

16 (2) FORM OF PAYMENTS.—The Secretary may

17 make payments under this section to a State in in18 stallments, and in advance or by way of reimburse19 ment, with necessary adjustments on account of

20 overpayments or underpayments, as the Secretary

21 may determine.

22 (3) REALLOTMENTS.—Any portion of the allot23 ment of a State under subsection (c) that the Sec24 retary determines will not be used to carry out this

25 section in accordance with an approved State appli-
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1 cation required under subsection (b), shall be reallot2 ted by the Secretary to other States in proportion to

3 the original allotments to the other States.

4 (e) USE AND DISTRIBUTION OF FUNDS.—

5 (1) IN GENERAL.—Amounts received by a State

6 under this section shall be used to carry out eco7 nomic development activities, including—

8 (A) rural business enterprise activities de9 scribed in subsections (c) and (e) of section

10 310B of the Consolidated Farm and Rural De11 velopment Act (7 U.S.C. 1932);

12 (B) down payment loan assistance pro13 grams that are similar to the program described

14 in section 310E of the Consolidated Farm and

15 Rural Development Act (7 U.S.C. 1935);

16 (C) activities designed to help create pro17 ductive farm or off-farm employment in rural

18 areas to provide a more viable economic base

19 and enhance opportunities for improved in20 comes, living standards, and contributions by

21 rural individuals to the economic and social de22 velopment of tobacco communities;

23 (D) activities that expand existing infra24 structure, facilities, and services to capitalize on

25 opportunities to diversify economies in tobacco
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1 communities and that support the development

2 of new industries or commercial ventures;

3 (E) activities by agricultural organizations

4 that provide assistance directly to active tobacco

5 producers to assist in developing other agricul6 tural activities that supplement tobacco-produc7 ing activities;

8 (F) initiatives designed to create or expand

9 locally owned value-added processing and mar10 keting operations in tobacco communities; and

11 (G) technical assistance activities by per12 sons to support farmer-owned enterprises, or

13 agriculture-based rural development enterprises,

14 of the type described in section 252 or 253 of

15 the Trade Act of 1974 (19 U.S.C. 2342, 2343).

16 (2) TOBACCO-GROWING COUNTIES.—Assistance

17 may be provided by a State under this section only

18 to assist a county in the State that has been deter19 mined by the Secretary to have in excess of

20 $100,000 in income derived from the production of

21 tobacco during 1 or more of the 1994 through 1996

22 marketing years.

23 (3) DISTRIBUTION.—

24 (A) ECONOMIC DEVELOPMENT ACTIVI25 TIES.—Not less than 20 percent of the amounts
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1 received by a State under this section shall be

2 used to carry out—

3 (i) economic development activities de4 scribed in subparagraph (E) or (F) of

5 paragraph (1); or

6 (ii) agriculture-based rural develop7 ment activities described in paragraph

8 (1)(G).

9 (B) TECHNICAL ASSISTANCE ACTIVI10 TIES.—Not less than 4 percent of the amounts

11 received by a State under this section shall be

12 used to carry out technical assistance activities

13 described in paragraph (1)(G).

14 (C) TOBACCO-GROWING COUNTIES.—To be

15 eligible to receive payments under this section,

16 a State shall demonstrate to the Secretary that

17 funding will be provided, during each 5-year pe18 riod for which funding is provided under this

19 section, for activities in each county in the

20 State that has been determined under para21 graph (2) to have in excess of $100,000 in in22 come derived from the production of tobacco, in

23 amounts that are at least equal to the product

24 obtained by multiplying—
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1 (i) the ratio that the tobacco produc2 tion income in the county determined

3 under paragraph (2) bears to the total to4 bacco production income for the State de5 termined under subsection (c); by

6 (ii) 50 percent of the total amounts

7 received by a State under this section dur8 ing the 5-year period.

9 (f) PREFERENCES IN HIRING.—A State may require

10 recipients of funds under this section to provide a pref11 erence in employment to—

12 (1) an individual who—

13 (A) during the 1996 calendar year, was

14 employed in the manufacture, processing, or

15 warehousing of tobacco or tobacco products, or

16 resided, in a county described in subsection

17 (e)(2); and

18 (B) is eligible for assistance under the to19 bacco worker transition program established

20 under section 301; or

21 (2) an individual who—

22 (A) during the 1996 marketing year, car23 ried out tobacco quota or relevant tobacco pro24 duction activities in a county described in sub25 section (e)(2);
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1 (B) is eligible for a farmer opportunity

2 grant under subpart 9 of part A of title IV of

3 the Higher Education Act of 1965; and

4 (C) has successfully completed a course of

5 study at an institution of higher education.

6 SEC. 924. MODIFICATIONS IN FEDERAL TOBACCO PRO7 GRAMS.

8 (a) PROGRAM REFERENDA.—Section 312(c) of the

9 Agricultural Adjustment Act of 1938 (7 U.S.C. 1312(c))

10 is amended—

11 (1) by striking ‘‘(c) Within thirty’’ and insert12 ing the following:

13 ‘‘(c) REFERENDA ON QUOTAS.—

14 ‘‘(1) IN GENERAL.—Not later than 30’’; and

15 (2) by adding at the end the following:

16 ‘‘(2) REFERENDA ON PROGRAM CHANGES.—

17 ‘‘(A) IN GENERAL.—In the case of any

18 kind of tobacco for which marketing quotas are

19 in effect, on the receipt of a petition from more

20 than 5 percent of the producers of that kind of

21 tobacco in a State, the Secretary shall conduct

22 a statewide referendum on any proposal related

23 to the lease and transfer of tobacco quota with24 in a State requested by the petition that is au25 thorized under this part.
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1 ‘‘(B) APPROVAL OF PROPOSALS.—If a ma2 jority of producers of the kind of tobacco in the

3 State approve a proposal in a referendum con4 ducted under subparagraph (A), the Secretary

5 shall implement the proposal in a manner that

6 applies to all producers and quota holders of

7 that kind of tobacco in the State.’’.

8 (b) PURCHASE REQUIREMENTS.—Section 320B of

9 the Agricultural Adjustment Act of 1938 (7 U.S.C.

10 1314h) is amended—

11 (1) in subsection (c), by striking paragraph (1)

12 and inserting the following:

13 ‘‘(1) 105 percent of the average market price

14 for the kind of tobacco involved during the preceding

15 marketing year; by’’; and

16 (2) by striking subsection (d) and inserting the

17 following:

18 ‘‘(d) USE OF PENALTY PAYMENTS.—An amount

19 equivalent to each penalty collected by the Secretary under

20 this section shall be transmitted by the Secretary to the

21 Secretary of the Treasury for deposit in the Tobacco Com22 munity Revitalization Trust Fund established under sec23 tion 101 of the LEAF Act.’’.

24 (c) ELIMINATION OF TOBACCO MARKETING ASSESS25 MENT.—
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1 (1) IN GENERAL.—Section 106 of the Agricul2 tural Act of 1949 (7 U.S.C. 1445(g)) is amended by

3 striking subsection (g).

4 (2) CONFORMING AMENDMENT.—Section

5 422(c) of the Uruguay Round Agreements Act (Pub6 lic Law 103–465; 7 U.S.C. 1445 note) is amended

7 by striking ‘‘section 106(g), 106A, or 106B of the

8 Agricultural Act of 1949 (7 U.S.C. 1445(g), 1445–

9 1, or 1445–2)’’ and inserting ‘‘section 106A or

10 106B of the Agricultural Act of 1949 (7 U.S.C.

11 1445–1, 1445–2)’’.

12 SUBTITLE C—FARMER AND

13 WORKER TRANSITION ASSIST14 ANCE

15 SEC. 931. TOBACCO WORKER TRANSITION PROGRAM.

16 (a) GROUP ELIGIBILITY REQUIREMENTS.—

17 (1) CRITERIA.—A group of workers (including

18 workers in any firm or subdivision of a firm involved

19 in the manufacture, processing, or warehousing of

20 tobacco or tobacco products) shall be certified as eli21 gible to apply for adjustment assistance under this

22 section pursuant to a petition filed under subsection

23 (b) if the Secretary of Labor determines that a sig24 nificant number or proportion of the workers in such

25 workers’ firm or an appropriate subdivision of the
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1 firm have become totally or partially separated, or

2 are threatened to become totally or partially sepa3 rated, and—

4 (A) the sales or production, or both, of

5 such firm or subdivision have decreased abso6 lutely; and

7 (B) the implementation of the national to8 bacco settlement contributed importantly to

9 such workers’ separation or threat of separation

10 and to the decline in the sales or production of

11 such firm or subdivision.

12 (2) DEFINITION OF CONTRIBUTED IMPOR13 TANTLY.—In paragraph (1)(B), the term ‘‘contrib14 uted importantly’’ means a cause that is important

15 but not necessarily more important than any other

16 cause.

17 (3) REGULATIONS.—The Secretary shall issue

18 regulations relating to the application of the criteria

19 described in paragraph (1) in making preliminary

20 findings under subsection (b) and determinations

21 under subsection (c).

22 (b) PRELIMINARY FINDINGS AND BASIC ASSIST23 ANCE.—

24 (1) FILING OF PETITIONS.—A petition for cer25 tification of eligibility to apply for adjustment assist-
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1 ance under this section may be filed by a group of

2 workers (including workers in any firm or subdivi3 sion of a firm involved in the manufacture, process4 ing, or warehousing of tobacco or tobacco products)

5 or by their certified or recognized union or other

6 duly authorized representative with the Governor of

7 the State in which such workers’ firm or subdivision

8 thereof is located.

9 (2) FINDINGS AND ASSISTANCE.—Upon receipt

10 of a petition under paragraph (1), the Governor

11 shall—

12 (A) notify the Secretary that the Governor

13 has received the petition;

14 (B) within 10 days after receiving the peti15 tion—

16 (i) make a preliminary finding as to

17 whether the petition meets the criteria de18 scribed in subsection (a)(1); and

19 (ii) transmit the petition, together

20 with a statement of the finding under

21 clause (i) and reasons for the finding, to

22 the Secretary for action under subsection

23 (c); and

24 (C) if the preliminary finding under sub25 paragraph (B)(i) is affirmative, ensure that
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1 rapid response and basic readjustment services

2 authorized under other Federal laws are made

3 available to the workers.

4 (c) REVIEW OF PETITIONS BY SECRETARY; CERTIFI5 CATIONS.—

6 (1) IN GENERAL.—The Secretary, within 30

7 days after receiving a petition under subsection

8 (b)(2)(B)(ii), shall determine whether the petition

9 meets the criteria described in subsection (a)(1).

10 Upon a determination that the petition meets such

11 criteria, the Secretary shall issue to workers covered

12 by the petition a certification of eligibility to apply

13 for the assistance described in subsection (d).

14 (2) DENIAL OF CERTIFICATION.—Upon the de15 nial of a certification with respect to a petition

16 under paragraph (1), the Secretary shall review the

17 petition in accordance with the requirements of

18 other applicable assistance programs to determine if

19 the workers may be certified under such other provi20 sions.

21 (d) COMPREHENSIVE ASSISTANCE.—

22 (1) IN GENERAL.—Workers covered by a certifi23 cation issued by the Secretary under subsection

24 (c)(1) shall be provided with benefits and services

25 described in paragraph (2) in the same manner and
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1 to the same extent as workers covered under a cer2 tification under subchapter A of title II of the Trade

3 Act of 1974 (19 U.S.C. 2271 et seq.), except that

4 the total amount of payments under this section for

5 any fiscal year shall not exceed $50,000,000.

6 (2) BENEFITS AND SERVICES.—The benefits

7 and services described in this paragraph are the fol8 lowing:

9 (A) Employment services of the type de10 scribed in section 235 of the Trade Act of 1974

11 (19 U.S.C. 2295).

12 (B) Training described in section 236 of

13 the Trade Act of 1974 (19 U.S.C. 2296), ex14 cept that notwithstanding the provisions of sec15 tion 236(a)(2)(A) of such Act, the total amount

16 of payments for training under this section for

17 any fiscal year shall not exceed $25,000,000.

18 (C) Tobacco worker readjustment allow19 ances, which shall be provided in the same man20 ner as trade readjustment allowances are pro21 vided under part I of subchapter B of chapter

22 2 of title II of the Trade Act of 1974 (19

23 U.S.C. 2291 et seq.), except that—

24 (i) the provisions of sections

25 231(a)(5)(C) and 231(c) of such Act (19
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1 U.S.C. 2291(a)(5)(C), 2291(c)), authoriz2 ing the payment of trade readjustment al3 lowances upon a finding that it is not fea4 sible or appropriate to approve a training

5 program for a worker, shall not be applica6 ble to payment of allowances under this

7 section; and

8 (ii) notwithstanding the provisions of

9 section 233(b) of such Act (19 U.S.C.

10 2293(b)), in order for a worker to qualify

11 for tobacco readjustment allowances under

12 this section, the worker shall be enrolled in

13 a training program approved by the Sec14 retary of the type described in section

15 236(a) of such Act (19 U.S.C. 2296(a)) by

16 the later of—

17 (I) the last day of the 16th week

18 of such worker’s initial unemployment

19 compensation benefit period; or

20 (II) the last day of the 6th week

21 after the week in which the Secretary

22 issues a certification covering such

23 worker.

24 In cases of extenuating circumstances re25 lating to enrollment of a worker in a train-
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1 ing program under this section, the Sec2 retary may extend the time for enrollment

3 for a period of not to exceed 30 days.

4 (D) Job search allowances of the type de5 scribed in section 237 of the Trade Act of 1974

6 (19 U.S.C. 2297).

7 (E) Relocation allowances of the type de8 scribed in section 238 of the Trade Act of 1974

9 (19 U.S.C. 2298).

10 (e) INELIGIBILITY OF INDIVIDUALS RECEIVING PAY11 MENTS FOR LOST TOBACCO QUOTA.—No benefits or serv12 ices may be provided under this section to any individual

13 who has received payments for lost tobacco quota under

14 section 201.

15 (f) FUNDING.—Of the amounts in the Trust Fund,

16 the Secretary may use not to exceed $50,000,000 for each

17 of fiscal years 1999 through 2008 to provide assistance

18 under this section.

19 (g) EFFECTIVE DATE.—This section shall take effect

20 on the date that is the later of—

21 (1) October l, 1998; or

22 (2) the date on which legislation implementing

23 the national tobacco settlement is enacted.
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1 (h) TERMINATION DATE.—No assistance, vouchers,

2 allowances, or other payments may be provided under this

3 section after the date that is the earlier of—

4 (1) the date that is 10 years after the effective

5 date of this section under subsection (g); or

6 (2) the date on which legislation establishing a

7 program providing dislocated workers with com8 prehensive assistance substantially similar to the as9 sistance provided by this section becomes effective.

10 SEC. 932. FARMER OPPORTUNITY GRANTS.

11 Part A of title IV of the Higher Education Act of

12 1965 (20 U.S.C. 1070 et seq.) is amended by adding at

13 the end the following:

14 ‘‘Subpart 9—Farmer Opportunity Grants

15 ‘‘SEC. 420D. STATEMENT OF PURPOSE.

16 ‘‘It is the purpose of this subpart to assist in making

17 available the benefits of postsecondary education to eligi18 ble students (determined in accordance with section 420F)

19 in institutions of higher education by providing farmer op20 portunity grants to all eligible students.

21 ‘‘SEC. 420E. PROGRAM AUTHORITY; AMOUNT AND DETER22 MINATIONS; APPLICATIONS.

23 ‘‘(a) PROGRAM AUTHORITY AND METHOD OF

24 DISTRIBUTION.—
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1 ‘‘(1) PROGRAM AUTHORITY.—From amounts

2 made available under section 101(d)(5) of the LEAF

3 Act, the Secretary, during the period beginning July

4 1, 1999, and ending September 30, 2024, shall pay

5 to each eligible institution such sums as may be nec6 essary to pay to each eligible student (determined in

7 accordance with section 420F) for each academic

8 year during which that student is in attendance at

9 an institution of higher education, as an under10 graduate, a farmer opportunity grant in the amount

11 for which that student is eligible, as determined pur12 suant to subsection (b). Not less than 85 percent of

13 such sums shall be advanced to eligible institutions

14 prior to the start of each payment period and shall

15 be based upon an amount requested by the institu16 tion as needed to pay eligible students, except that

17 this sentence shall not be construed to limit the au18 thority of the Secretary to place an institution on a

19 reimbursement system of payment.

20 ‘‘(2) CONSTRUCTION.—Nothing in this section

21 shall be construed to prohibit the Secretary from

22 paying directly to students, in advance of the begin23 ning of the academic term, an amount for which the

24 students are eligible, in cases where the eligible in-
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1 stitution elects not to participate in the disburse2 ment system required by paragraph (1).

3 ‘‘(3) DESIGNATION.—Grants made under this

4 subpart shall be known as ‘farmer opportunity

5 grants’.

6 ‘‘(b) AMOUNT OF GRANTS.—

7 ‘‘(1) AMOUNTS.—

8 ‘‘(A) IN GENERAL.—The amount of the

9 grant for a student eligible under this subpart

10 shall be—

11 ‘‘(i) $1,700 for each of the academic

12 years 1999–2000 through 2003–2004;

13 ‘‘(ii) $2,000 for each of the academic

14 years 2004–2005 through 2008–2009;

15 ‘‘(iii) $2,300 for each of the academic

16 years 2009–2010 through 2013–2014;

17 ‘‘(iv) $2,600 for each of the academic

18 years 2014–2015 through 2018–2019; and

19 ‘‘(v) $2,900 for each of the academic

20 years 2019–2020 through 2023–2024.

21 ‘‘(B) PART-TIME RULE.—In any case

22 where a student attends an institution of higher

23 education on less than a full-time basis (includ24 ing a student who attends an institution of

25 higher education on less than a half-time basis)
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1 during any academic year, the amount of the

2 grant for which that student is eligible shall be

3 reduced in proportion to the degree to which

4 that student is not so attending on a full-time

5 basis, in accordance with a schedule of reduc6 tions established by the Secretary for the pur7 poses of this subparagraph, computed in ac8 cordance with this subpart. Such schedule of re9 ductions shall be established by regulation and

10 published in the Federal Register.

11 ‘‘(2) MAXIMUM.—No grant under this subpart

12 shall exceed the cost of attendance (as described in

13 section 472) at the institution at which that student

14 is in attendance. If, with respect to any student, it

15 is determined that the amount of a grant exceeds

16 the cost of attendance for that year, the amount of

17 the grant shall be reduced to an amount equal to the

18 cost of attendance at such institution.

19 ‘‘(3) PROHIBITION.—No grant shall be awarded

20 under this subpart to any individual who is incarcer21 ated in any Federal, State, or local penal institution.

22 ‘‘(c) PERIOD OF ELIGIBILITY FOR GRANTS.—

23 ‘‘(1) IN GENERAL.—The period during which a

24 student may receive grants shall be the period re25 quired for the completion of the first undergraduate
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1 baccalaureate course of study being pursued by that

2 student at the institution at which the student is in

3 attendance, except that any period during which the

4 student is enrolled in a noncredit or remedial course

5 of study as described in paragraph (2) shall not be

6 counted for the purpose of this paragraph.

7 ‘‘(2) CONSTRUCTION.—Nothing in this section

8 shall be construed to—

9 ‘‘(A) exclude from eligibility courses of

10 study that are noncredit or remedial in nature

11 and that are determined by the institution to be

12 necessary to help the student be prepared for

13 the pursuit of a first undergraduate bacca14 laureate degree or certificate or, in the case of

15 courses in English language instruction, to be

16 necessary to enable the student to utilize al17 ready existing knowledge, training, or skills;

18 and

19 ‘‘(B) exclude from eligibility programs of

20 study abroad that are approved for credit by

21 the home institution at which the student is

22 enrolled.

23 ‘‘(3) PROHIBITION.—No student is entitled to

24 receive farmer opportunity grant payments concur-
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1 rently from more than 1 institution or from the Sec2 retary and an institution.

3 ‘‘(d) APPLICATIONS FOR GRANTS.—

4 ‘‘(1) IN GENERAL.—The Secretary shall from

5 time to time set dates by which students shall file

6 applications for grants under this subpart. The filing

7 of applications under this subpart shall be coordi8 nated with the filing of applications under section

9 401(c).

10 ‘‘(2) INFORMATION AND ASSURANCES.—Each

11 student desiring a grant for any year shall file with

12 the Secretary an application for the grant containing

13 such information and assurances as the Secretary

14 may deem necessary to enable the Secretary to carry

15 out the Secretary’s functions and responsibilities

16 under this subpart.

17 ‘‘(e) DISTRIBUTION OF GRANTS TO STUDENTS.—

18 Payments under this section shall be made in accordance

19 with regulations promulgated by the Secretary for such

20 purpose, in such manner as will best accomplish the pur21 pose of this section. Any disbursement allowed to be made

22 by crediting the student’s account shall be limited to tui23 tion and fees and, in the case of institutionally owned

24 housing, room and board. The student may elect to have
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1 the institution provide other such goods and services by

2 crediting the student’s account.

3 ‘‘(f) INSUFFICIENT FUNDING.—If, for any fiscal

4 year, the funds made available to carry out this subpart

5 from the Tobacco Community Revitalization Trust Fund

6 are insufficient to satisfy fully all grants for students de7 termined to be eligible under section 420F, the amount

8 of the grant provided under subsection (b) shall be re9 duced on a pro rata basis among all eligible students.

10 ‘‘(g) TREATMENT OF INSTITUTIONS AND STUDENTS

11 UNDER OTHER LAWS.—Any institution of higher edu12 cation that enters into an agreement with the Secretary

13 to disburse to students attending that institution the

14 amounts those students are eligible to receive under this

15 subpart shall not be deemed, by virtue of such agreement,

16 to be a contractor maintaining a system of records to ac17 complish a function of the Secretary. Recipients of farmer

18 opportunity grants shall not be considered to be individual

19 grantees for purposes of the Drug-Free Workplace Act of

20 1988 (41 U.S.C. 701 et seq.).

21 ‘‘SEC. 420F. STUDENT ELIGIBILITY.

22 ‘‘(a) IN GENERAL.—In order to receive any grant

23 under this subpart, a student shall—

24 ‘‘(1) be a member of a tobacco farm family in

25 accordance with subsection (b);
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1 ‘‘(2) be enrolled or accepted for enrollment in

2 a degree, certificate, or other program (including a

3 program of study abroad approved for credit by the

4 eligible institution at which such student is enrolled)

5 leading to a recognized educational credential at an

6 institution of higher education that is an eligible in7 stitution in accordance with section 487, and not be

8 enrolled in an elementary or secondary school;

9 ‘‘(3) if the student is presently enrolled at an

10 institution of higher education, be maintaining satis11 factory progress in the course of study the student

12 is pursuing in accordance with subsection (c);

13 ‘‘(4) not owe a refund on grants previously re14 ceived at any institution of higher education under

15 this title, or be in default on any loan from a stu16 dent loan fund at any institution provided for in

17 part D, or a loan made, insured, or guaranteed by

18 the Secretary under this title for attendance at any

19 institution;

20 ‘‘(5) file with the institution of higher education

21 that the student intends to attend, or is attending,

22 a document, that need not be notarized, but that

23 shall include—

24 ‘‘(A) a statement of educational purpose

25 stating that the money attributable to such
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1 grant will be used solely for expenses related to

2 attendance or continued attendance at such in3 stitution; and

4 ‘‘(B) such student’s social security num5 ber; and

6 ‘‘(6) be a citizen of the United States.

7 ‘‘(b) TOBACCO FARM FAMILIES.—

8 ‘‘(1) IN GENERAL.—For the purpose of sub9 section (a)(1), a student is a member of a tobacco

10 farm family if during calendar year 1996 the stu11 dent was—

12 ‘‘(A) an individual who—

13 ‘‘(i) is an active tobacco producer (as

14 defined in section 2 of the LEAF Act); or

15 ‘‘(ii) is otherwise actively engaged in

16 the production of tobacco;

17 ‘‘(B) a spouse, son, daughter, stepson, or

18 stepdaughter of an individual described in sub19 paragraph (A);

20 ‘‘(C) an individual—

21 ‘‘(i) who was a brother, sister, step22 brother, stepsister, son-in-law, or daughter23 in-law of an individual described in sub24 paragraph (A); and
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1 ‘‘(ii) whose principal place of resi2 dence was the home of the individual de3 scribed in subparagraph (A); or

4 ‘‘(D) an individual who was a dependent

5 (within the meaning of section 152 of the Inter6 nal Revenue Code of 1986) of an individual de7 scribed in subparagraph (A).

8 ‘‘(2) ADMINISTRATION.—On request, the Sec9 retary of Agriculture shall provide to the Secretary

10 such information as is necessary to carry out this

11 subsection.

12 ‘‘(c) SATISFACTORY PROGRESS.—

13 ‘‘(1) IN GENERAL.—For the purpose of sub14 section (a)(3), a student is maintaining satisfactory

15 progress if—

16 ‘‘(A) the institution at which the student is

17 in attendance reviews the progress of the stu18 dent at the end of each academic year, or its

19 equivalent, as determined by the institution;

20 and

21 ‘‘(B) the student has at least a cumulative

22 C average or its equivalent, or academic stand23 ing consistent with the requirements for grad24 uation, as determined by the institution, at the

25 end of the second such academic year.
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1 ‘‘(2) SPECIAL RULE.—Whenever a student fails

2 to meet the eligibility requirements of subsection

3 (a)(3) as a result of the application of this sub4 section and subsequent to that failure the student

5 has academic standing consistent with the require6 ments for graduation, as determined by the institu7 tion, for any grading period, the student may, sub8 ject to this subsection, again be eligible under sub9 section (a)(3) for a grant under this subpart.

10 ‘‘(3) WAIVER.—Any institution of higher edu11 cation at which the student is in attendance may

12 waive paragraph (1) or (2) for undue hardship based

13 on—

14 ‘‘(A) the death of a relative of the student;

15 ‘‘(B) the personal injury or illness of the

16 student; or

17 ‘‘(C) special circumstances as determined

18 by the institution.

19 ‘‘(d) STUDENTS WHO ARE NOT SECONDARY SCHOOL

20 GRADUATES.—In order for a student who does not have

21 a certificate of graduation from a school providing second22 ary education, or the recognized equivalent of such certifi23 cate, to be eligible for any assistance under this subpart,

24 the student shall meet either 1 of the following standards:
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1 ‘‘(1) EXAMINATION.—The student shall take an

2 independently administered examination and shall

3 achieve a score, specified by the Secretary, dem4 onstrating that such student can benefit from the

5 education or training being offered. Such examina6 tion shall be approved by the Secretary on the basis

7 of compliance with such standards for development,

8 administration, and scoring as the Secretary may

9 prescribe in regulations.

10 ‘‘(2) DETERMINATION.—The student shall be

11 determined as having the ability to benefit from the

12 education or training in accordance with such proc13 ess as the State shall prescribe. Any such process

14 described or approved by a State for the purposes of

15 this section shall be effective 6 months after the date

16 of submission to the Secretary unless the Secretary

17 disapproves such process. In determining whether to

18 approve or disapprove such process, the Secretary

19 shall take into account the effectiveness of such

20 process in enabling students without secondary

21 school diplomas or the recognized equivalent to bene22 fit from the instruction offered by institutions utiliz23 ing such process, and shall also take into account

24 the cultural diversity, economic circumstances, and
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1 educational preparation of the populations served by

2 the institutions.

3 ‘‘(e) SPECIAL RULE FOR CORRESPONDENCE

4 COURSES.—A student shall not be eligible to receive a

5 grant under this subpart for a correspondence course un6 less such course is part of a program leading to an associ7 ate, bachelor, or graduate degree.

8 ‘‘(f) COURSES OFFERED THROUGH TELECOMMUNI9 CATIONS.—

10 ‘‘(1) RELATION TO CORRESPONDENCE

11 COURSES.—A student enrolled in a course of in12 struction at an eligible institution of higher edu13 cation (other than an institute or school that meets

14 the definition in section 521(4)(C) of the Carl D.

15 Perkins Vocational and Applied Technology Edu16 cation Act (20 U.S.C. 2471(4)(C))) that is offered

17 in whole or in part through telecommunications and

18 leads to a recognized associate, bachelor, or graduate

19 degree conferred by such institution shall not be

20 considered to be enrolled in correspondence courses

21 unless the total amount of telecommunications and

22 correspondence courses at such institution equals or

23 exceeds 50 percent of such courses.

24 ‘‘(2) RESTRICTION OR REDUCTIONS OF FINAN25 CIAL AID.—A student’s eligibility to receive a grant
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1 under this subpart may be reduced if a financial aid

2 officer determines under the discretionary authority

3 provided in section 479A that telecommunications

4 instruction results in a substantially reduced cost of

5 attendance to such student.

6 ‘‘(3) DEFINITION.—For the purposes of this

7 subsection, the term ‘telecommunications’ means the

8 use of television, audio, or computer transmission,

9 including open broadcast, closed circuit, cable,

10 microwave, or satellite, audio conferencing, computer

11 conferencing, or video cassettes or discs, except that

12 such term does not include a course that is delivered

13 using video cassette or disc recordings at such insti14 tution and that is not delivered in person to other

15 students of that institution.

16 ‘‘(g) STUDY ABROAD.—Nothing in this subpart shall

17 be construed to limit or otherwise prohibit access to study

18 abroad programs approved by the home institution at

19 which a student is enrolled. An otherwise eligible student

20 who is engaged in a program of study abroad approved

21 for academic credit by the home institution at which the

22 student is enrolled shall be eligible to receive a grant under

23 this subpart, without regard to whether such study abroad

24 program is required as part of the student’s degree

25 program.
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1 ‘‘(h) VERIFICATION OF SOCIAL SECURITY NUM2 BER.—The Secretary, in cooperation with the Commis3 sioner of Social Security, shall verify any social security

4 number provided by a student to an eligible institution

5 under subsection (a)(5)(B) and shall enforce the following

6 conditions:

7 ‘‘(1) PENDING VERIFICATION.—Except as pro8 vided in paragraphs (2) and (3), an institution shall

9 not deny, reduce, delay, or terminate a student’s eli10 gibility for assistance under this subpart because so11 cial security number verification is pending.

12 ‘‘(2) DENIAL OR TERMINATION.—If there is a

13 determination by the Secretary that the social secu14 rity number provided to an eligible institution by a

15 student is incorrect, the institution shall deny or ter16 minate the student’s eligibility for any grant under

17 this subpart until such time as the student provides

18 documented evidence of a social security number

19 that is determined by the institution to be correct.

20 ‘‘(3) CONSTRUCTION.—Nothing in this sub21 section shall be construed to permit the Secretary to

22 take any compliance, disallowance, penalty, or other

23 regulatory action against—

24 ‘‘(A) any institution of higher education

25 with respect to any error in a social security
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1 number, unless such error was a result of fraud

2 on the part of the institution; or

3 ‘‘(B) any student with respect to any error

4 in a social security number, unless such error

5 was a result of fraud on the part of the

6 student.’’.

7 SUBTITLE D—IMMUNITY

8 SEC. 941. GENERAL IMMUNITY FOR TOBACCO PRODUCERS

9 AND WAREHOUSERS.

10 Notwithstanding any other provision of this title, an

11 active tobacco producer, tobacco-related growers associa12 tion, or tobacco warehouse owner or employee may not be

13 subject to liability in any Federal or State court for any

14 cause of action resulting from the failure of any tobacco

15 product manufacturer, distributor, or retailer to comply

16 with national tobacco settlement legislation.

17 TITLE X—EFFECTIVE DATES

18 AND OTHER PROVISIONS

19 SEC. 1001. EFFECTIVE DATES.

20 (a) IN GENERAL.—Except as provided in subsection

21 (b), and as otherwise provided in this Act, the provisions

22 of this Act shall take effect on the date of enactment of

23 this Act.

24 (b) EXCEPTIONS.—The following provisions shall be25 come effective as follows:
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1 (1) The retail tobacco product display provi2 sions under subtitle A of title I shall be applicable

3 to retailers on the date that is 9 months after the

4 date of enactment of this Act.

5 (2) The provisions relating to the display of to6 bacco product signs and displays by retailers under

7 subtitle A of title I shall be applicable to retailers on

8 the date that is 5 months after the date of enact9 ment of this Act.

10 (3) The provisions of subtitle A of title I relat11 ing to advertising shall be applicable on the date

12 that is 9 months after the date of enactment of this

13 Act.

14 (4) The labeling requirements of subtitle A of

15 title I and of chapter 9 of the Federal Food, Drug

16 and Cosmetic Act (as added by section 143(3) of

17 this Act) shall be applicable (as determined under

18 regulations promulgated by the Secretary) with re19 spect to—

(A) 1 20 ⁄3 of all tobacco product packages, on

21 the date that is 90 days after the date of enact22 ment of this Act;

(B) 1 23 ⁄3 of all tobacco product packages, on

24 the date that is 120 days after the date of en25 actment of this Act; and
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(C) 1 1 ⁄3 of all tobacco product packages, on

2 the date that is 180 days after the date of en3 actment of this Act.

4 (5) The provisions of section 105 relating to the

5 sponsorship of events shall be applicable on Decem6 ber 31, 1998.

7 (6) The provisions of section 121 shall be appli8 cable on the date that is 3 months after the date of

9 enactment of this Act.

10 (7) The provisions of section 122 relating to

11 vending machines shall be applicable on the date

12 that is 12 months after the date of enactment of

13 this Act.

14 (8) The provisions of section 122 relating to

15 minimum package size shall be applicable on the

16 date that is 3 months after the date of enactment

17 of this Act.

18 (9) The provisions of section 122 relating to

19 vending machines shall be applicable on the date

20 that is 12 months after the date of enactment of

21 this Act.

22 (10) The provisions of section 122 relating to

23 sampling shall be applicable on the date that is 3

24 months after the date of enactment of this Act.
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1 (11) The provisions of section 909 of the Fed2 eral Food, Drug and Cosmetic Act (as added by sec3 tion 143(3) of this Act) relating to good manufac4 turing practices shall be applicable on the date that

5 is 24 months after the date of enactment of this Act

6 or on a date determined appropriate by the Sec7 retary.

8 (12) The provisions of subtitle F of title I relat9 ing to corporate compliance shall be applicable on

10 the date that is 12 months after the date of enact11 ment of this Act.

12 SEC. 1002. NATIVE AMERICANS.

13 (a) INDIAN COUNTRY.—The provisions of this Act (or

14 an amendment made by this Act) shall apply to the manu15 facture, distribution, and sale of tobacco products within

16 Indian country.

17 (b) INDIAN TRIBES.—To the extent that an Indian

18 tribe or tribal organization engages in the manufacture,

19 distribution, or sale of tobacco products, the provisions of

20 this Act (or an amendment made by this Act) shall apply

21 to such tribe or organization.

22 (c) PAYMENTS TO TRUST FUND.—Any Indian tribe

23 or tribal organization that engages in the manufacturer

24 of tobacco products shall be subject to liability under sec25 tion 402, or shall be considered a non-participating manu-
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1 facturer for purposes of section 613, and shall be subject

2 to surcharges under section 205.

3 (d) APPLICATION OF FDA REQUIREMENTS.—

4 (1) IN GENERAL.—The Secretary shall promul5 gate regulations to provide for the application of the

6 requirements of the Food, Drug and Cosmetic Act

7 to tobacco products manufactured, distributed, or

8 sold within Indian country.

9 (2) ELIGIBILITY FOR ASSISTANCE.—Under the

10 regulations promulgated under paragraph (1), the

11 Secretary may provide assistance to an Indian tribe

12 or tribal organization in meeting and enforcing the

13 requirements under such regulations if—

14 (A) the tribe or organization has a govern15 ing body that has powers and carries out duties

16 that are similar to the powers and duties of

17 State or local governments;

18 (B) the functions to be exercised through

19 the use of such assistance relate to activities on

20 lands within the jurisdiction of the tribe or or21 ganization; and

22 (C) the tribe or organization is reasonably

23 expected to be capable of carrying out the func24 tions required by the Secretary.

25 (e) RETAIL LICENSING REQUIREMENTS.—
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1 (1) IN GENERAL.—The requirements of subtitle

2 D of title I shall apply to retailers that sell tobacco

3 products within Indian country.

4 (2) SELF-REGULATION.—The Secretary shall

5 promulgate regulations to permit the Indian tribe or

6 tribal organization with jurisdiction over the lands

7 involved to implement a tribal licensing program

8 that is at least as strict as the program in operation

9 in the State in which the land involved is located.

10 (3) IMPLEMENTATION BY SECRETARY.—If the

11 Secretary determines that the Indian tribe or tribal

12 organization is not qualified to administer the re13 quirements of subtitle D of title I, the Secretary

14 shall implement such requirements on behalf of the

15 tribe or organization or delegate such authority to

16 the State involved.

17 (f) ELIGIBILITY FOR PUBLIC HEALTH PAYMENTS.—

18 (1) IN GENERAL.—Except as provided in para19 graph (2), an Indian tribe or tribal organization

20 shall be considered a State for purposes of eligibility

21 under title V.

22 (2) PUBLIC HEALTH PROGRAM.—

23 (A) IN GENERAL.—Each State that re24 ceives a payment under section 502 shall set25 aside an appropriate portion, as determined
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1 under regulations prescribed by the Secretary,

2 of such payment for use by Indian tribes or

3 tribal organizations within the State.

4 (B) AMOUNT.—The amount of any funds

5 under subparagraph for which an Indian tribe

6 or tribal organization is eligible shall be deter7 mined by the State based on the proportion of

8 the registered members of the tribe involved as

9 compared to the total population of all such

10 registered members in the State.

11 (C) USE.—Amounts provided to a tribe or

12 organization under this paragraph shall be used

13 as provided for in section 504 and in accord14 ance with a plan submitted by the tribe or orga15 nization and approved by the Secretary as being

16 in compliance with this Act.

17 (D) REALLOTMENT.—Any amounts set18 aside and not expended under this paragraph

19 shall be reallotted among other eligible tribes

20 and organizations.

21 (g) OBLIGATION OF MANUFACTURERS.—

22 (1) PROHIBITION.—A manufacturer shall not

23 engage in any activity within Indian country that is

24 otherwise prohibited under this Act (or an amend25 ment made by this Act).
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1 (2) LIMITATION ON SALE.—A manufacturer

2 shall not sell or otherwise distribute a tobacco prod3 uct for subsequent manufacture, distribution, or sale

4 to an Indian tribe or tribal organization, or provide

5 such products to a manufacturer, distributor, or re6 tailer that is subject to the jurisdiction of a tribe or

7 organization, except under the same terms and con8 ditions as the manufacturer imposes on other manu9 facturers, distributors, or retailers.

10 (h) DEFINITIONS.—In this section:

11 (1) INDIAN COUNTRY.—The term ‘‘Indian coun12 try’’ has the meaning given such term by section

13 1151 of title 18, United States Code.

14 (2) INDIAN TRIBE.—The term ‘‘Indian tribe’’

15 has the meaning given to such term by section 4(e)

16 of the Indian Self-Determination and Education As17 sistance Act (25 U.S.C. 450b(e)).

18 (3) TRIBAL ORGANIZATION.—The term ‘‘tribal

19 organization’’ has the meaning given such term in

20 section 4 of the Indian Self Determination and Edu21 cation Assistance Act (25 U.S.C. 450b).

22 SEC. 1003. PREEMPTION.

23 (a) GENERAL PREEMPTION.—Except as otherwise

24 provided for in this section, nothing in this Act shall be

25 construed as prohibiting a State from imposing require-
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•S 1415 RS2

1 ments, prohibitions, penalties or other measures to further

2 the purposes of this Act that are in addition to the re3 quirements, prohibitions, or penalties required under this

4 Act. To the extent not inconsistent with the purposes of

5 this Act, State and local governments may impose addi6 tional tobacco product control measures to further restrict

7 or limit the use of such products by minors.

8 (b) ENFORCEMENT.—A State may not impose obliga9 tions or requirements relating to the enforcement of this

10 Act in a manner that conflicts with the provisions of title

11 VI.

12 (c) PUBLIC EXPOSURE TO SMOKE.—Nothing in title

13 III shall be construed to preempt or otherwise affect any

14 other Federal, State or local law which provides greater

15 protection from the health hazards of environmental to16 bacco smoke.

17 (d) TAXES.—Nothing in this Act shall be construed

18 to prohibit a State from imposing taxes on tobacco prod19 ucts or tobacco product manufacturers, distributors, or re20 tailers.

21 (e) NATIVE AMERICANS.—Except as provided in sec22 tion 902, a State may not impose obligations or require23 ments relating to the application of this Act to Indian

24 tribes and tribal organizations.
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the ‘‘Na3 tional Tobacco Policy and Youth Smoking Reduction Act’’.

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

5 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purpose.

Sec. 4. Scope and effect.

Sec. 5. Non-preemption of more restrictive laws.

Sec. 6. Definitions.

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

pipe and cigar smoking.

Sec. 8. Liability limitations disappear if manufacturers challenge advertising limits.

Sec. 9. FTC jurisdiction not affected.

Sec. 10. Congressional review provisions.

TITLE I—REGULATION OF THE TOBACCO INDUSTRY

Subtitle A—Jurisdiction, Etc., of Food and Drug Administration

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

‘‘CHAPTER IX—TOBACCO PRODUCTS

‘‘Sec. 901. FDA authority over tobacco products

‘‘Sec. 902. Adulterated tobacco products.

‘‘Sec. 903. Misbranded tobacco products.

‘‘Sec. 904. Submission of health information to the Secretary.

‘‘Sec. 905. Registration.

‘‘Sec. 906. General provisions respecting control of tobacco products.

‘‘Sec. 907. Performance standards.

‘‘Sec. 908. Notification and other remedies

‘‘Sec. 909. Records and reports on tobacco products.

‘‘Sec. 910. Premarket review of certain tobacco products.

‘‘Sec. 911. Judicial review.

‘‘Sec. 912. Postmarket surveillance

‘‘Sec. 913. Reduced risk tobacco products.

‘‘Sec. 914. Preservation of State and local authority.

‘‘Sec. 915. Tobacco Products Scientific Advisory Committee.

‘‘Sec. 916. Equal treatment of retail outlets.

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

Subtitle B—Advertising

Sec. 121. Advertising provisions in protocol.

Sec. 122. Tobacco product labeling and advertising .

Sec. 123. Point-of-sale restrictions.
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TITLE II—REDUCTIONS IN UNDERAGE TOBACCO USE

Subtitle A—Underage Use

Sec. 201. Goals for reducing underage tobacco use.

ƒSec. 202. Look-back assessment.≈

Sec. 203. Substantial non-attainment of required reductions.

Sec. 204. Definitions.

Subtitle B—State Enforcement Incentives

ƒSec. 211. Compliance bonus fund.≈

Sec. 212. Block grants.

Sec. 213. State enforcement incentives.

Sec. 214. Conforming change.

Subtitle C—Other Programs

Sec. 221. National smoking cessation program.

Sec. 222. National tobacco-free public education program.

Sec. 223. National community action program.

Sec. 224. State retail licensing program.

TITLE III—TOBACCO PRODUCT WARNINGS AND SMOKE

CONSTITUENT DISCLOSURE

Subtitle A—Product Warnings, Labeling and Packaging

Sec. 301. Cigarette label and advertising warnings.

‘‘Sec. 4. Labeling.

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

Sec. 303. Smokeless tobacco labels and advertising warnings.

‘‘Sec. 3. Smokeless tobacco warning.

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

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

Subtitle B—Testing and Reporting of Tobacco Product Smoke Constituents

Sec. 311. Regulation requirement.

TITLE IV—NATIONAL TOBACCO SETTLEMENT TRUST FUND

ƒSubtitle A—General Payment Provisions

ƒSec. 401. Establishment of trust fund.

ƒSec. 402. State litigation settlement account.

ƒSec. 403. Payments by industry

ƒSec. 404. Adjustments.

ƒSec. 405. Tax treatment of payments.

ƒSec. 406. Enforcement for nonpayment.

ƒSec. 407. Administrative provisions.≈

Subtitle B—General Spending Provisions

Sec. 411. Implementing and enforcement funds.

ƒSec. 412. Improving child care and early childhood development.≈
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TITLE V—STANDARDS TO REDUCE INVOLUNTARY EXPOSURE TO

TOBACCO SMOKE

Sec. 501. Definitions.

Sec. 502. Smoke-free environment policy.

Sec. 503. Citizen actions.

Sec. 504. Preemption.

Sec. 505. Regulations.

Sec. 506. Effective date.

Sec. 507. State choice.

TITLE VI—APPLICATION TO INDIAN TRIBES

Sec. 601. Short title.

Sec. 602. Findings and purposes.

Sec. 603. Application of tobacco-related provisions to native Americans.

Sec. 604. State tobacco excise tax compliance.

TITLE VII—CIVIL LIABILITY OF MANUFACTURERS OF TOBACCO

PRODUCTS

Sec. 701. Definitions.

Sec. 702. Application.

Sec. 703. Preemption and relationship to other law.

Sec. 704. Governmental claims and Castano civil actions.

Sec. 705. Concurrent jurisdiction; Federal cause of action; actions; damages; liability.

Sec. 706. Payment of tobacco claim settlements and judgments.

Sec. 707. Attorney’s fees and expenses.

Sec. 708. Non-participating manufacturers.

Sec. 709. Conforming amendments.

TITLE VIII—TOBACCO INDUSTRY COMPLIANCE AND EMPLOYEE

PROTECTION FROM REPRISALS

Sec. 801. Tobacco industry compliance accountability requirements.

Sec. 802. Tobacco product manufacturer employee protection.

TITLE IX—PUBLIC DISCLOSURE OF TOBACCO INDUSTRY

DOCUMENTS

Sec. 901. Findings.

Sec. 902. Applicability.

Sec. 903. National Tobacco Document Depository.

Sec. 904. Privilege and trade secret claims.

Sec. 905. Disclosure by the depository.

Sec. 906. National Tobacco Documents Review Board.

Sec. 907. Resolution of disputed privilege and trade secret claims.

Sec. 908. Appeal of board decision.

Sec. 909. Miscellaneous.

Sec. 910. Penalties.

Sec. 911. Definitions.

TITLE X—LONG-TERM ECONOMIC ASSISTANCE FOR FARMERS

Sec. 1001. Short title.

Sec. 1002. Definitions.
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ƒSubtitle A—Tobacco Community Revitalization Trust Fund

ƒSec. 1011. Establishment of trust fund.

ƒSec. 1012. Contributions by tobacco product manufacturers and importers.≈

Subtitle B—Tobacco Market Transition Assistance

Sec. 1021. Payments for lost tobacco quota.

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

production.

Sec. 1023. Tobacco community economic development grants.

Sec. 1024. Flue-cured tobacco production permits.

‘‘Sec. 317a. Flue-cured tobacco production permits.

Sec. 1025. Modifications in federal tobacco programs.

Subtitle C—Farmer and Worker Transition Assistance

Sec. 1031. Tobacco worker transition program.

Sec. 1032. Farmer opportunity grants.

‘‘Subpart 9—Farmer Opportunity Grants

‘‘Sec. 420d. Statement of purpose.

‘‘Sec. 420e. Program authority; amount and determinations; applications.

‘‘Sec. 420f. Student eligibility.

Subtitle D—Immunity

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

TITLE XI—MISCELLANEOUS

Subtitle A—Prohibitions Relating to Tobacco Products and Children

Sec. 1101. Short title.

Sec. 1102. Prohibitions relating to tobacco products and children.

‘‘Sec. 804. Prohibition on sale or distribution of tobacco products to children.

‘‘Sec. 805. Labeling.

Sec. 1103. Enforcement.

Sec. 1104. Reward.

Sec. 1105. Definitions.

Sec. 1106. Amendments to Public Health Service Act.

‘‘TITLE XXVIII—NATIONAL EFFORTS TO REDUCE YOUTH SMOKING

‘‘Subtitle E—Reducing Youth Smoking and Tobacco-Related Diseases Through

Research

‘‘Sec. 2801. Study by the Institute of Medicine.

‘‘Sec. 2802. National tobacco task force.

‘‘Sec. 2803. Research activities of the Centers for Disease Control and Prevention.

‘‘Sec. 2804. Research activities of the National Institutes of Health.

Sec. 1107. Ban on distribution of tobacco products produced by child labor.

Subtitle B—Federal Licensing of Tobacco Product Distribution

Sec. 1121. Licensing of Tobacco Product Distribution.
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Subtitle C—International Provisions

ƒSec. 1131. International tobacco control trust fund.≈

Sec. 1131. International enforcement.

Sec. 1132. American center on global health and tobacco.

Sec. 1133. Prohibition on use of funds to facilitate the exportation or promotion

of tobacco.

øSec. 1134. Harmonization with United States international commitments and

obligations.¿

Subtitle D—Prevention of Tobacco Smuggling

Sec. 1141. Definitions.

Sec. 1142. Tobacco product labeling requirements.

Sec. 1143. Requirements for the tracking of tobacco products.

Sec. 1144. Tobacco product permits.

Sec. 1145. Prohibitions.

Sec. 1146. Pricing and labeling of products sold on military installations or by

native Americans.

Sec. 1147. Prohibition against sale of tobacco products in or to duty-free shops

or forwarding through or manufacture in trade zones.

Sec. 1148. Jurisdiction; penalties; compromise of liability.

Sec. 1149. Amendments to the Contraband Cigarette Trafficking Act.

Sec. 1150. Authorization of appropriations.

Subtitle E—Antitrust Exemption

Sec. 1161. Limited Antitrust Exemption.

Subtitle F—Special Provisions Concerning Programs for Women, Minorities,

and Others

Sec. 1171. Research related to patterns of smoking by women and minorities.

Sec. 1172. Counter-advertising programs.

Sec. 1173. Prevention activities of community and migrant health centers.

Subtitle G—Sense of the Senate

Sec. 1181. Sense of the Senate.

Subtitle H—Ban On Sale Of Tobacco Products Through The Use Of

Vending Machines

Sec. 1191. Ban of sale of tobacco products through the use of vending machines.

øTITLE XII—TOBACCO ASBESTOS TRUST FUND

øSec. 1201. Definitions.

øSec. 1202. Tobacco Asbestos Trust Fund.

øSec. 1203. Payments from fund I.

øSec. 1204. Payments from fund II.

øSec. 1205. Transfers from National Tobacco Settlement Trust Fund.

øSec. 1206. Rules for claims against asbestos trusts, asbestos defendants, and

tobacco companies.¿

TITLE XIII—VETERANS’ BENEFITS

Sec. 1301. Recovery by secretary of veterans affairs.
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‘‘PART VII—RECOVERY OF COMPENSATION COSTS FOR TOBACCO-RELATED

DISABILITY OR DEATH

‘‘CHAPTER 91—TORT LIABILITY FOR DISABILITY OR DEATH DUE

TO TOBACCO USE

‘‘§ 9101. Recovery by Secretary of Veterans Affairs

‘‘§ 9102. Regulations

‘‘§ 9103. Limitation or repeal of other provisions for recovery of compensation

‘‘§ 9104. Exemption from annual limitation on damages

TITLE XIV—REVENUE AND OTHER PROVISIONS

Subtitle A—Taxes on Tobacco Products

Sec. 1400. Amendment of 1986 Code.

Sec. 1401. Taxes on tobacco products.

Sec. 1402. Excise tax on failure to meet underage smoking reduction goals.

Sec. 1403. Establishment of Trust Fund.

Subtitle B—Women’s Health and Cancer Rights

Sec. 1411. Short title.

Sec. 1412. Findings.

Sec. 1413. Amendments to the Employee Retirement Income Security Act of 1974.

Sec. 1414. Amendments to the Public Health Service Act relating to the group market.

Sec. 1415. Amendment to the Public Health Service Act relating

to the individual market.

Sec. 1416. Amendments to the Internal Revenue Code of 1986.

Sec. 1417. Research study on the management of breast cancer.

Subtitle C—Limitations Applicable to Other Provisions

Sec. 1421. Limitations on expenditures and obligations.

Sec. 1422. Limitation on user fees.

1 SEC. 2. FINDINGS.

2 The Congress finds the following:

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

4 children is a pediatric disease of epic and worsening

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

7 (2) A consensus exists within the scientific and

8 medical communities that tobacco products are inher-
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1 ently dangerous and cause cancer, heart disease, and

2 other serious adverse health effects.

3 (3) Nicotine is an addictive drug.

4 (4) Virtually all new users of tobacco products

5 are under the minimum legal age to purchase such

6 products.

7 (5) Tobacco advertising and marketing contrib8 ute significantly to the use of nicotine-containing to9 bacco products by adolescents.

10 (6) Because past efforts to restrict advertising

11 and marketing of tobacco products have failed ade12 quately to curb tobacco use by adolescents, comprehen13 sive restrictions on the sale, promotion, and distribu14 tion of such products are needed.

15 (7) Federal and State governments have lacked

16 the legal and regulatory authority and resources they

17 need to address comprehensively the public health and

18 societal problems caused by the use of tobacco prod19 ucts.

20 (8) Federal and State public health officials, the

21 public health community, and the public at large rec22 ognize that the tobacco industry should be subject to

23 ongoing oversight.

24 (9) Under Article I, Section 8 of the Constitu25 tion, the Congress is vested with the responsibility for
246

•S 1415 RS2

1 regulating interstate commerce and commerce with

2 Indian tribes.

3 (10) The sale, distribution, marketing, advertis4 ing, and use of tobacco products are activities in and

5 substantially affecting interstate commerce. Such

6 products are sold, marketed, advertised, and distrib7 uted in interstate commerce on a nationwide basis,

8 and have a substantial effect on the Nation’s economy.

9 (11) The sale, distribution, marketing, advertis10 ing, and use of such products substantially affect

11 interstate commerce through the health care and other

12 costs attributable to the use of tobacco products.

13 (12) Civil actions against tobacco product manu14 facturers and others are pending in Federal and State

15 courts arising from the use, marketing, and sale of to16 bacco products. Among these actions are cases brought

17 by the attorneys general of more than 40 States, cer18 tain cities and counties, and the Commonwealth of

19 Puerto Rico, and other parties, including Indian

20 tribes, and class actions brought by private claimants

21 (such as in the Castano Civil Actions), seeking to re22 cover monies expended to treat tobacco-related dis23 eases and for the protection of minors and consumers,

24 as well as penalties and other relief for violations of
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1 antitrust, health, consumer protection, and other

2 laws.

3 (13) Civil actions have been filed throughout the

4 United States against tobacco product manufacturers

5 and their distributors, trade associations, law firms,

6 and consultants on behalf of individuals or classes of

7 individuals claiming to be dependent upon and in8 jured by tobacco products.

9 (14) These civil actions are complex, time-con10 suming, expensive, and burdensome for both the liti11 gants and Federal and State courts. To date, these

12 civil actions have not resulted in sufficient redress for

13 smokers or non-governmental third-party payers. To

14 the extent that governmental entities have been or

15 may in the future be compensated for tobacco-related

16 claims they have brought, it is not now possible to

17 identify what portions of such past or future recover18 ies can be attributed to their various antitrust, health,

19 consumer protection, or other causes of action.

20 (15) It is in the public interest for Congress to

21 adopt comprehensive public health legislation because

22 of tobacco’s unique position in the Nation’s history

23 and economy; the need to prevent the sale, distribu24 tion, marketing and advertising of tobacco products to

25 persons under the minimum legal age to purchase
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1 such products; and the need to educate the public, es2 pecially young people, regarding the health effects of

3 using tobacco products.

4 (16) The public interest requires a timely, fair,

5 equitable, and consistent result that will serve the

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

7 costs of treatment for diseases and adverse health ef8 fects associated with the use of tobacco products is

9 borne by the manufacturers of these products, and (B)

10 restricting throughout the Nation the sale, distribu11 tion, marketing, and advertising of tobacco products

12 only to persons of legal age to purchase such products.

13 (17) Public health authorities estimate that the

14 benefits to the Nation of enacting Federal legislation

15 to accomplish these goals would be significant in

16 human and economic terms.

17 (18) Reducing the use of tobacco by minors by

18 50 percent would prevent well over 60,000 early

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

20 in reduced medical costs, improved productivity, and

21 the avoidance of premature deaths.

22 (19) Advertising, marketing, and promotion of

23 tobacco products have been especially directed to at24 tract young persons to use tobacco products and these

25 efforts have resulted in increased use of such products
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1 by youth. Past efforts to oversee these activities have

2 not been successful in adequately preventing such in3 creased use.

4 (20) In 1995, the tobacco industry spent close to

5 $4,900,000,000 to attract new users, retain current

6 users, increase current consumption, and generate fa7 vorable long-term attitudes toward smoking and to8 bacco use.

9 (21) Tobacco product advertising often

10 misleadingly portrays the use of tobacco as socially

11 acceptable and healthful to minors.

12 (22) Tobacco product advertising is regularly

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

14 under the age of 18 are regularly exposed to tobacco

15 product promotional efforts.

16 (23) Through advertisements during and spon17 sorship of sporting events, tobacco has become strongly

18 associated with sports and has become portrayed as

19 an integral part of sports and the healthy lifestyle as20 sociated with rigorous sporting activity.

21 (24) Children are exposed to substantial and un22 avoidable tobacco advertising that leads to favorable

23 beliefs about tobacco use, plays a role in leading

24 young people to overestimate the prevalence of tobacco
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1 use, and increases the number of young people who

2 begin to use tobacco.

3 (25) Tobacco advertising increases the size of the

4 tobacco market by increasing consumption of tobacco

5 products including increasing tobacco use by young

6 people.

7 (26) Children are more influenced by tobacco ad8 vertising than adults, they smoke the most advertised

9 brands, and children as young as 3 to 6 years old can

10 recognize a character associated with smoking at the

11 same rate as they recognize cartoons and fast food

12 characters.

13 (27) Tobacco company documents indicate that

14 young people are an important and often crucial seg15 ment of the tobacco market.

16 (28) Comprehensive advertising restrictions will

17 have a positive effect on the smoking rates of young

18 people.

19 (29) Restrictions on advertising are necessary to

20 prevent unrestricted tobacco advertising from under21 mining legislation prohibiting access to young people

22 and providing for education about tobacco use.

23 (30) International experience shows that adver24 tising regulations that are stringent and comprehen25 sive have a greater impact on overall tobacco use and
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1 young people’s use than weaker or less comprehensive

2 ones. Text-only requirements, while not as stringent

3 as a ban, will help reduce underage use of tobacco

4 products while preserving the informational function

5 of advertising.

6 (31) It is in the public interest for Congress to

7 adopt legislation to address the public health crisis

8 created by actions of the tobacco industry.

9 (32) If, as a direct or indirect result of this Act,

10 the consumption of tobacco products in the United

11 States is reduced significantly, then tobacco farmers,

12 their families, and their communities may suffer eco13 nomic hardship and displacement, notwithstanding

14 their lack of involvement in the manufacturing and

15 marketing of tobacco products.

16 SEC. 3. PURPOSE.

17 The purposes of this Act are—

18 (1) to confirm the authority of the Food and

19 Drug Administration to regulate tobacco products

20 under the Federal Food, Drug, and Cosmetic Act (21

21 U.S.C. 301 et seq.), by recognizing it as the primary

22 Federal regulatory authority with respect to the man23 ufacture, marketing, and distribution of tobacco prod24 ucts;
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1 (2) to require the tobacco industry to fund both

2 Federal and State oversight of the tobacco industry

3 from on-going payments by tobacco product manufac4 turers;

5 (3) to require tobacco product manufacturers to

6 provide ongoing funding to be used for an aggressive

7 Federal, State, and local enforcement program and

8 for a nationwide retail licensing system to prevent

9 minors from obtaining tobacco products, while ex10 pressly permitting the States to adopt additional

11 measures that further restrict or eliminate the prod12 ucts’ use;

13 (4) to ensure that the Food and Drug Adminis14 tration and the States may continue to address issues

15 of particular concern to public health officials, espe16 cially the use of tobacco by young people and depend17 ence on tobacco;

18 (5) to impose severe financial surcharges on to19 bacco product manufacturers if they do not substan20 tially reduce tobacco use by young people during the

21 next decade;

22 (6) to authorize appropriate agencies of the Fed23 eral government to set national standards controlling

24 the manufacture of tobacco products and the identity,
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1 public disclosure, and amount of ingredients used in

2 such products;

3 (7) to provide new and flexible enforcement au4 thority to ensure that the tobacco industry makes ef5 forts to develop and introduce less harmful tobacco

6 products;

7 (8) to confirm the Food and Drug Administra8 tion’s authority to regulate the levels of tar, nicotine,

9 and other harmful components of tobacco products;

10 (9) in order to ensure that adults are better in11 formed, to require tobacco product manufacturers to

12 disclose all research which has not previously been

13 made available, as well as research generated in the

14 future, relating to the health and dependency effects

15 or safety of tobacco products;

16 (10) to impose on tobacco product manufacturers

17 the obligation to provide funding for a variety of pub18 lic health initiatives;

19 (11) to establish a minimum Federal standard

20 for stringent restrictions on smoking in public places,

21 with funding to enforce such standard derived from

22 payments made by tobacco product manufacturers,

23 while also to permit State, Tribal, and local govern24 ments to enact additional and more stringent stand-
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1 ards or elect not to be covered by the Federal stand2 ard;

3 (12) to authorize and fund from payments by to4 bacco product manufacturers a continuing national

5 counter-advertising and tobacco control campaign

6 which seeks to educate consumers and discourage chil7 dren and adolescents from beginning to use tobacco

8 products, and which encourages current users of to9 bacco products to discontinue using such products;

10 (13) to establish a mechanism to compensate the

11 States in settlement of their various claims against

12 tobacco product manufacturers;

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

14 tobacco product manufacturers a nationwide program

15 of smoking cessation administered through State and

16 Tribal governments and the private sector;

17 (15) to establish and fund from payments by to18 bacco product manufacturers a National Tobacco Set19 tlement Fund;

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

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

22 to compensate them for harm caused by tobacco prod23 ucts;

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

25 products to adults in conjunction with measures to
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1 ensure that they are not sold or accessible to underage

2 purchasers;

3 (18) to impose appropriate regulatory controls

4 on the tobacco industry; and

5 (19) to protect tobacco farmers and their commu6 nities from the economic impact of this Act by pro7 viding full funding for and the continuation of the

8 Federal tobacco program and by providing funds for

9 farmers and communities to develop new opportuni10 ties in tobacco-dependent communities.

11 SEC. 4. SCOPE AND EFFECT.

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

13 (1) establish a precedent with regard to any

14 other industry, situation, circumstance, or legal ac15 tion;

16 (2) express any position of the Congress with re17 gard to the imposition of punitive damages in general

18 or as applied to any specific industry, case, con19 troversy, or product other than as provided in this

20 Act;

21 (3) provide any authority regarding the imposi22 tion of, or the appropriateness of imposing, punitive

23 damages; or

24 (4) except as provided in this Act, affect any ac25 tion pending in State, Tribal, or Federal court, or
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1 any agreement, consent decree, or contract of any

2 kind.

3 (b) TAXATION.—Notwithstanding any other provision

4 of law, this Act and the amendments made by this Act shall

5 not affect any authority of the Secretary of the Treasury

6 (including any authority assigned to the Bureau of Alcohol,

7 Tobacco and Firearms) or of State or local governments

8 with regard to taxation for tobacco or tobacco products.

9 (c) AGRICULTURAL ACTIVITIES.—The provisions of

10 this Act which authorize the Secretary to take certain ac11 tions with regard to tobacco and tobacco products shall not

12 be construed to affect any authority of the Secretary of Agri13 culture under existing law regarding the growing, cultiva14 tion, or curing of raw tobacco.

15 SEC. 5. NON-PREEMPTION OF MORE RESTRICTIVE LAWS.

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

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

18 seq.), as amended by this Act, shall prevent a Federal agen19 cy (including the Armed Forces), a State or its political

20 subdivisions, or the government of an Indian tribe from

21 adopting and enforcing additional measures that further re22 strict or prohibit tobacco product sale to, use by, and acces23 sibility to persons under the legal age of purchase estab24 lished by such agency, State, subdivision, or government of

25 an Indian tribe.
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1 (b) ADDITIONAL MEASURES.—Except as otherwise ex2 pressly provided in this Act, nothing in this Act, the Fed3 eral Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.),

4 or rules promulgated under such Acts, shall limit the au5 thority of a Federal agency (including the Armed Forces),

6 a State or its political subdivisions, or the government of

7 an Indian tribe to enact, adopt, promulgate, and enforce

8 any law, rule, regulation, or other measure with respect to

9 tobacco products, including laws, rules, regulations, or other

10 measures relating to or prohibiting the sale, distribution,

11 possession, exposure to, or use of tobacco products by per12 sons of any age that are in addition to the provisions of

13 this Act and the amendments made by this Act. No provi14 sion of this Act or amendment made by this Act shall limit

15 or otherwise affect any State, Tribal, or local taxation of

16 tobacco products.

17 (c) STATE LAW NOT AFFECTED.—Except as otherwise

18 expressly provided in this Act, nothing in this Act, the Fed19 eral Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.),

20 or rules promulgated under such Acts, shall supersede the

21 authority of the States, pursuant to State law, to expend

22 funds provided by this Act.

23 SEC. 6. DEFINITIONS.

24 In this Act:
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1 (1) BRAND.—The term ‘‘brand’’ means a variety

2 of tobacco product distinguished by the tobacco used,

3 tar content, nicotine content, flavoring used, size, fil4 tration, or packaging, logo, registered trademark or

5 brand name, identifiable pattern of colors, or any

6 combination of such attributes.

7 (2) CIGARETTE.—The term ‘‘cigarette’’ has the

8 meaning given that term by section 3(1) of the Fed9 eral Cigarette Labeling and Advertising Act (15

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

11 form, that is functional in the product, which, because

12 of its appearance, the type of tobacco used in the

13 filler, or its packaging and labeling, is likely to be of14 fered to, or purchased by, consumers as a cigarette or

15 as roll-your-own tobacco.

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

17 tobacco’’ means any product that consists of loose to18 bacco that is intended for use by consumers in a ciga19 rette. Unless otherwise stated, the requirements for

20 cigarettes shall also apply to cigarette tobacco.

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

22 meaning given that term by section 3(2) of the Fed23 eral Cigarette Labeling and Advertising Act (15

24 U.S.C. 1332(2)).
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1 (5) CONSENT DECREE.—The term ‘‘consent de2 cree’’ means a consent decree among participating to3 bacco product manufacturers whose substantive terms

4 are substantially equivalent to the form consent decree

5 published for purposes of this paragraph in the Con6 gressional Record.

7 (6) DISTRIBUTOR.—The term ‘‘distributor’’ as

8 regards a tobacco product means any person who fur9 thers the distribution of cigarette or smokeless tobacco,

10 whether domestic or imported, at any point from the

11 original place of manufacture to the person who sells

12 or distributes the product to individuals for personal

13 consumption. Common carriers are not considered

14 distributors for purposes of this Act.

15 (7) INDIAN COUNTRY; INDIAN LANDS.—The terms

16 ‘‘Indian country’’ and ‘‘Indian lands’’ have the mean17 ing given the term ‘‘Indian country’’ by section 1151

18 of title 18, United States Code, and includes lands

19 under the jurisdiction of an Indian tribe or tribal or20 ganization.

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

22 the meaning given such term in section 4(e) of the In23 dian Self Determination and Education Assistance

24 Act (25 U.S.C. 450b(e)).
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1 (9) LITTLE CIGAR.—The term ‘‘little cigar’’ has

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

3 Federal Cigarette Labeling and Advertising Act (15

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

5 (10) TOBACCO PRODUCT MANUFACTURER.—Ex6 cept in title VII, the term ‘‘tobacco product manufac7 turer’’ means any person, including any repacker or

8 relabeler, who manufactures, fabricates, assembles,

9 processes, or labels a finished cigarette or smokeless

10 tobacco product.

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

12 chemical substance named 3-(1-Methyl-2-pyrrolidinyl)

13 pyridine or C[10]H[14]N[2], including any salt or

14 complex of nicotine.

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

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

17 other container, any wrapping (including cellophane),

18 in which cigarettes or smokeless tobacco are offered for

19 sale, sold, or otherwise distributed to consumers.

20 (13) POINT-OF-SALE.—The term ‘‘point-of-sale’’

21 means any location at which a consumer can pur22 chase or otherwise obtain cigarettes or smokeless to23 bacco for personal consumption.

24 (14) RETAILER.—The term ‘‘retailer’’ means any

25 person who sells cigarettes or smokeless tobacco to in-
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1 dividuals for personal consumption, or who operates

2 a facility where self-service displays of tobacco prod3 ucts are permitted.

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

6 of its appearance, type, packaging, or labeling, is

7 suitable for use and likely to be offered to, or pur8 chased by, consumers as tobacco for making cigarettes.

9 (16) SECRETARY.—Except in title VII and where

10 the context otherwise requires, the term ‘‘Secretary’’

11 means the Secretary of Health and Human Services.

12 (17) SMOKELESS TOBACCO.—The term ‘‘smoke13 less tobacco’’ means any product that consists of cut,

14 ground, powdered, or leaf tobacco that contains nico15 tine and that is intended to be placed in the oral cav16 ity.

17 (18) STATE.—The term ‘‘State’’ means any

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

19 Act, includes the District of Columbia, the Common20 wealth of Puerto Rico, Guam, the Virgin Islands,

21 American Samoa, Wake Island, Midway Islands,

22 Kingman Reef, Johnston Atoll, the Northern Mariana

23 Islands, and any other trust territory or possession of

24 the United States.
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1 (19) TOBACCO PRODUCT.—The term ‘‘tobacco

2 product’’ means cigarettes, cigarette tobacco, smokeless

3 tobacco, little cigars, roll-your-own tobacco, and fine

4 cut products.

5 (20) UNITED STATES.—The term ‘‘United

6 States’’ means the 50 States of the United States of

7 America and the District of Columbia, the Common8 wealth of Puerto Rico, Guam, the Virgin Islands,

9 American Samoa, Wake Island, Midway Islands,

10 Kingman Reef, Johnston Atoll, the Northern Mariana

11 Islands, and any other trust territory or possession of

12 the United States.

13 (21) MASTER SETTLEMENT AGREEMENT.— The

14 term ‘‘Master Settlement Agreement’’ means the

15 agreement either previously entered or to be entered

16 into by the States, the participating tobacco product

17 manufacturers, and the Trade Associations imple18 menting the June 20, 1997, Proposed Resolution, and

19 published in the Congressional Record for purposes of

20 this Act.

21 (22) PARTICIPATING TOBACCO PRODUCT MANU22 FACTURER.— The term ‘‘participating tobacco prod23 uct manufacturer’’ means—

24 (A) a tobacco product manufacturer that,

25 within 45 days after the date of enactment of
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1 this Act (or within 45 days after the date on

2 which such manufacturer first manufactures to3 bacco products for sale or distribution in the

4 United States, if such date is after the date of

5 enactment of this Act)—

6 (i) becomes a signatory to the Master

7 Settlement Agreement; and

8 (ii) enters into consent decrees with

9 each State that made a request within the

10 time period described in section 704(b); or

11 (B) a surviving entity established by a par12 ticipating tobacco product manufacturer.

13 (23) NON-PARTICIPATING TOBACCO PRODUCT

14 MANUFACTURER.— The term ‘‘non-participating to15 bacco product manufacturer’’ means a tobacco prod16 uct manufacturer that is not a participating tobacco

17 product manufacturer.

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

19 the agreement to be entered into by the Secretary of

20 Health and Human Services with the participating

21 tobacco product manufacturers under this Act.

22 (25) NATIONAL TOBACCO SETTLEMENT

23 TRUST FUND.—The term ‘‘National Tobacco

24 Settlement Trust Fund’’ means the trust
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1 fund established in section 9512 of the In2 ternal Revenue Code of 1986.

3 SEC. 7. NOTIFICATION IF YOUTHFUL CIGARETTE SMOKING

4 RESTRICTIONS INCREASE YOUTHFUL PIPE

5 AND CIGAR SMOKING.

6 The Secretary shall notify the Congress if the Secretary

7 determines that a decrease in underage use of tobacco prod8 ucts resulting from the enactment of this Act has produced

9 an increase in underage use of pipe tobacco and cigars.

10 SEC. 8. LIABILITY LIMITATIONS DISAPPEAR IF TOBACCO

11 PRODUCT MANUFACTURER CHALLENGES AD12 VERTISING LIMITS.

13 If a tobacco product manufacturer, or any party act14 ing on behalf of, in collusion with, or at the request of, a

15 tobacco product manufacturer brings an action to have the

16 advertising restrictions imposed on tobacco products under

17 this Act, or the amendments made by this Act, or the appli18 cation of those regulations to any person or circumstance

19 held to be unconstitutional or otherwise invalid under the

20 laws of the United States then the provisions of title VII

21 relating to limitations on liability shall not apply to that

22 manufacturer, beginning on the date on which the action

23 is filed in a court of competent jurisdiction, and continuing

24 until such time as the action is withdrawn or dismissed.
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1 SEC. 9. FTC JURISDICTION NOT AFFECTED.

2 (a) IN GENERAL.—Except where expressly provided in

3 this Act, nothing in this Act shall be construed as limiting

4 or diminishing the authority of the Federal Trade Commis5 sion to enforce the laws under its jurisdiction with respect

6 to the advertising, sale, or distribution of tobacco products.

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

8 violates this Act, part 897 of title 21, Code of Federal Regu9 lations, or the Protocol is an unfair or deceptive act or

10 practice under section 5(a) of the Federal Trade Commis11 sion Act (15 U.S.C. 45(a)) and shall be considered a viola12 tion of a rule promulgated under section 18 of that Act (15

13 U.S.C. 57a).

14 SEC. 10. CONGRESSIONAL REVIEW PROVISIONS.

15 In accordance with section 801 of title 5, United States

16 Code, the Congress shall review, and may disapprove, any

17 rule under this Act that is subject to section 801. This sec18 tion does not apply to the rule set forth in part 897 of title

19 21, Code of Federal Regulations.
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1 TITLE I—REGULATION OF THE

2 TOBACCO INDUSTRY

3 Subtitle A—Jurisdiction, etc., of

4 Food and Drug Administration

5 SEC. 101. AMENDMENT OF FEDERAL FOOD, DRUG, AND COS6 METIC ACT OF 1938.

7 (a) DEFINITION OF TOBACCO PRODUCTS.—Section

8 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.

9 321) is amended by adding at the end the following:

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

11 product made or derived from tobacco that is intended

12 for human consumption, including any component,

13 part, or accessory of a tobacco product (except for raw

14 materials other than tobacco used in manufacturing

15 a component, part, or accessory of a tobacco prod16 uct).’’.

17 (b) FDA AUTHORITY OVER TOBACCO PRODUCTS.—

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

19 et seq.) is amended—

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

21 (2) by redesignating sections 901 through 907 as

22 sections 1001 through 1007; and

23 (3) by inserting after section 803 the following:
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1 ‘‘CHAPTER IX—TOBACCO PRODUCTS

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

3 ‘‘(a) IN GENERAL.—Tobacco products shall be regu4 lated by the Secretary under this chapter and shall not be

5 subject to the provisions of chapter V, unless—

6 ‘‘(1) such products are intended for use in the di7 agnosis, cure, mitigation, treatment, or prevention of

8 disease (within the meaning of section 201(g)(1)(B)

9 or section 201(h)(2)); or

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

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

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

13 tobacco products subject to the provisions of part 897 of title

14 21, Code of Federal Regulations, and to any other tobacco

15 products that the Secretary by regulation deems to be sub16 ject to this chapter.

17 ‘‘(c) FDA RULE IN EFFECT.—The provisions of part

18 897 of title 21, Code of Federal Regulations, shall be deemed

19 to be lawful and to have been lawfully promulgated under

20 the authority of this chapter. The provisions of such part

21 that are not in effect on the date of enactment of this chap22 ter shall take effect as in such part or upon such later date

23 as determined by the Secretary by order.

24 ‘‘(d) SCOPE.—
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1 ‘‘(1) Nothing in this chapter shall be construed

2 to affect the regulation of drugs and devices under

3 chapter V that are not tobacco products by the Sec4 retary under the Federal Food, Drug and Cosmetic

5 Act.

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

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

8 the manufacturer, or to the producers of tobacco leaf,

9 including tobacco growers, tobacco warehouses, and

10 tobacco grower cooperatives, nor shall any employee of

11 the Food and Drug Administration have any author12 ity whatsoever to enter onto a farm owned by a pro13 ducer of tobacco leaf without the written consent of

14 such producer. Notwithstanding any other provision

15 of this subparagraph, if a producer of tobacco leaf is

16 also a tobacco product manufacturer or controlled by

17 a tobacco product manufacturer, the producer shall be

18 subject to this chapter in the producer’s capacity as

19 a manufacturer. Nothing in this chapter shall be con20 strued to grant the Secretary authority to promulgate

21 regulations on any matter that involves the produc22 tion of tobacco leaf or a producer thereof, other than

23 activities by a manufacturer affecting production. For

24 purposes of the preceding sentence, the term ‘con25 trolled by’ means a member of the same controlled
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1 group of corporations as that term is used in section

2 52(a) of the Internal Revenue Code of 1986, or under

3 common control within the meaning of the regulations

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

5 ‘‘SEC. 902. ADULTERATED TOBACCO PRODUCTS.

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

7 if—

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

9 putrid, or decomposed substance, or is otherwise con10 taminated by any poisonous or deleterious substance

11 that may render the product injurious to health;

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

13 insanitary conditions whereby it may have been con14 taminated with filth, or whereby it may have been

15 rendered injurious to health;

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

17 part, of any poisonous or deleterious substance which

18 may render the contents injurious to health;

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

20 a tobacco product which is subject to a performance

21 standard established under section 907 unless such to22 bacco product is in all respects in conformity with

23 such standard;
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1 ‘‘(5) it is required by section 910(a) to have pre2 market approval, is not exempt under section 906(f),

3 and does not have an approved application in effect;

4 ‘‘(6) the methods used in, or the facilities or con5 trols used for, its manufacture, packing or storage are

6 not in conformity with applicable requirements under

7 section 906(e)(1) or an applicable condition pre8 scribed by an order under section 906(e)(2); or

9 ‘‘(7) it is a tobacco product for which an exemp10 tion has been granted under section 906(f) for inves11 tigational use and the person who was granted such

12 exemption or any investigator who uses such tobacco

13 product under such exemption fails to comply with a

14 requirement prescribed by or under such section.

15 ‘‘SEC. 903. MISBRANDED TOBACCO PRODUCTS.

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

17 to be misbranded—

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

19 particular;

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

21 containing—

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

23 tobacco product manufacturer, packer, or dis24 tributor; and
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1 ‘‘(B) an accurate statement of the quantity

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

3 numerical count,

4 except that under subparagraph (B) of this para5 graph reasonable variations shall be permitted, and

6 exemptions as to small packages shall be established,

7 by regulations prescribed by the Secretary;

8 ‘‘(3) if any word, statement, or other informa9 tion required by or under authority of this chapter to

10 appear on the label or labeling is not prominently

11 placed thereon with such conspicuousness (as com12 pared with other words, statements or designs in the

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

14 be read and understood by the ordinary individual

15 under customary conditions of purchase and use;

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

17 label bears, to the exclusion of any other nonpropri18 etary name, its established name prominently printed

19 in type as required by the Secretary by regulation;

20 ‘‘(5) if the Secretary has issued regulations re21 quiring that its labeling bear adequate directions for

22 use, or adequate warnings against use by children,

23 that are necessary for the protection of users unless its

24 labeling conforms in all respects to such regulations;
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1 ‘‘(6) if it was manufactured, prepared, propa2 gated, compounded, or processed in any State in an

3 establishment not duly registered under section

4 905(b), if it was not included in a list required by

5 section 905(i), if a notice or other information re6 specting it was not provided as required by such sec7 tion or section 905(j), or if it does not bear such sym8 bols from the uniform system for identification of to9 bacco products prescribed under section 905(e) as the

10 Secretary by regulation requires;

11 ‘‘(7) if, in the case of any tobacco product dis12 tributed or offered for sale in any State—

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

14 in any particular; or

15 ‘‘(B) it is sold, distributed, or used in viola16 tion of regulations prescribed under section

17 906(d);

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

19 distributed or offered for sale in any State, the manu20 facturer, packer, or distributor thereof includes in all

21 advertisements and other descriptive printed matter

22 issued or caused to be issued by the manufacturer,

23 packer, or distributor with respect to that tobacco

24 product—
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1 ‘‘(A) a true statement of the tobacco prod2 uct’s established name as defined in paragraph

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

4 ‘‘(B) a brief statement of—

5 ‘‘(i) the uses of the tobacco product and

6 relevant warnings, precautions, side effects,

7 and contraindications; and

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

9 products made subject to a finding by the

10 Secretary after notice and opportunity for

11 comment that such action is necessary to

12 protect the public health, a full description

13 of the components of such tobacco product or

14 the formula showing quantitatively each in15 gredient of such tobacco product to the ex16 tent required in regulations which shall be

17 issued by the Secretary after an oppor18 tunity for a hearing;

19 ‘‘(9) if it is a tobacco product subject to a per20 formance standard established under section 907, un21 less it bears such labeling as may be prescribed in

22 such performance standard; or

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

24 ‘‘(A) to comply with any requirement pre25 scribed under section 904 or 908;
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1 ‘‘(B) to furnish any material or informa2 tion required by or under section 909; or

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

4 section 912.

5 ‘‘(b) PRIOR APPROVAL OF STATEMENTS ON LABEL.—

6 The Secretary may, by regulation, require prior approval

7 of statements made on the label of a tobacco product. No

8 regulation issued under this subsection may require prior

9 approval by the Secretary of the content of any advertise10 ment and no advertisement of a tobacco product, published

11 after the date of enactment of the National Tobacco Policy

12 and Youth Smoking Reduction Act shall, with respect to

13 the matters specified in this section or covered by regula14 tions issued hereunder, be subject to the provisions of sec15 tions 12 through 15 of the Federal Trade Commission Act

16 (15 U.S.C. 52 through 55). This subsection does not apply

17 to any printed matter which the Secretary determines to

18 be labeling as defined in section 201(m).

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

20 SECRETARY.

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

22 the date of enactment of the National Tobacco Policy and

23 Youth Smoking Reduction Act, each tobacco product manu24 facturer or importer of tobacco products, or agents thereof,

25 shall submit to the Secretary the following information:
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1 ‘‘(1) A listing of all tobacco ingredients, sub2 stances and compounds that are, on such date, added

3 by the manufacturer to the tobacco, paper, filter, or

4 other component of each tobacco product by brand

5 and by quantity in each brand and subbrand.

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

7 form of nicotine in each tobacco product measured in

8 milligrams of nicotine.

9 ‘‘(3) All documents (including underlying sci10 entific information) relating to research activities,

11 and research findings, conducted, supported, or pos12 sessed by the manufacturer (or agents thereof) on the

13 health, behavioral, or physiologic effects of tobacco

14 products, their constituents, ingredients, and compo15 nents, and tobacco additives, described in paragraph

16 (1).

17 ‘‘(4) All documents (including underlying sci18 entific information) relating to research activities,

19 and research findings, conducted, supported, or pos20 sessed by the manufacturer that relate to the issue of

21 whether a reduction in risk to health from tobacco

22 products can occur upon the employment of tech23 nology available or known to the manufacturer.
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1 ‘‘(5) All documents (including underlying sci2 entific information) relating to marketing research

3 involving the use of tobacco products.

4 An importer of a tobacco product not manufactured in the

5 United States shall supply the information required of a

6 tobacco product manufacturer under this subsection.

7 ‘‘(b) ANNUAL SUBMISSION.—A tobacco product manu8 facturer or importer that is required to submit information

9 under subsection (a) shall update such information on an

10 annual basis under a schedule determined by the Secretary.

11 ‘‘(c) TIME FOR SUBMISSION.—

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

13 the delivery for introduction into interstate commerce

14 of a tobacco product not on the market on the date

15 of enactment of this chapter, the manufacturer of such

16 product shall provide the information required under

17 subsection (a) and such product shall be subject to the

18 annual submission under subsection (b).

19 ‘‘(2) MODIFICATION OF EXISTING PRODUCTS.—If

20 at any time a tobacco product manufacturer adds to

21 its tobacco products a new tobacco additive, increases

22 or decreases the quantity of an existing tobacco addi23 tive or the nicotine content, delivery, or form, or

24 eliminates a tobacco additive from any tobacco prod25 uct, the manufacturer shall within 60 days of such
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1 action so advise the Secretary in writing and ref2 erence such modification in submissions made under

3 subsection (b).

4 ‘‘SEC. 905. ANNUAL REGISTRATION.

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

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

7 compounding, or processing’ shall include repackag8 ing or otherwise changing the container, wrapper, or

9 labeling of any tobacco product package in further10 ance of the distribution of the tobacco product from

11 the original place of manufacture to the person who

12 makes final delivery or sale to the ultimate consumer

13 or user; and

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

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

16 case of a corporation, the name of each corporate offi17 cer and director, and the State of incorporation.

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

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

20 owns or operates any establishment in any State engaged

21 in the manufacture, preparation, compounding, or process22 ing of a tobacco product or tobacco products shall register

23 with the Secretary the name, places of business, and all such

24 establishments of that person.
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1 ‘‘(c) REGISTRATION OF NEW OWNERS AND OPERA2 TORS.—Every person upon first engaging in the manufac3 ture, preparation, compounding, or processing of a tobacco

4 product or tobacco products in any establishment owned or

5 operated in any State by that person shall immediately reg6 ister with the Secretary that person’s name, place of busi7 ness, and such establishment.

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

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

10 (c) shall immediately register with the Secretary any addi11 tional establishment which that person owns or operates in

12 any State and in which that person begins the manufacture,

13 preparation, compounding, or processing of a tobacco prod14 uct or tobacco products.

15 ‘‘(e) UNIFORM PRODUCT IDENTIFICATION SYSTEM.—

16 The Secretary may by regulation prescribe a uniform sys17 tem for the identification of tobacco products and may re18 quire that persons who are required to list such tobacco

19 products under subsection (i) of this section shall list such

20 tobacco products in accordance with such system.

21 ‘‘(f) PUBLIC ACCESS TO REGISTRATION INFORMA22 TION.—The Secretary shall make available for inspection,

23 to any person so requesting, any registration filed under

24 this section.
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1 ‘‘(g) BIENNIAL INSPECTION OF REGISTERED ESTAB2 LISHMENTS.—Every establishment in any State registered

3 with the Secretary under this section shall be subject to in4 spection under section 704, and every such establishment

5 engaged in the manufacture, compounding, or processing

6 of a tobacco product or tobacco products shall be so in7 spected by one or more officers or employees duly designated

8 by the Secretary at least once in the 2-year period begin9 ning with the date of registration of such establishment

10 under this section and at least once in every successive 2-

11 year period thereafter.

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

13 Any establishment within any foreign country engaged in

14 the manufacture, preparation, compounding, or processing

15 of a tobacco product or tobacco products, may register under

16 this section under regulations promulgated by the Sec17 retary. Such regulations shall require such establishment to

18 provide the information required by subsection (i) of this

19 section and shall include provisions for registration of any

20 such establishment upon condition that adequate and effec21 tive means are available, by arrangement with the govern22 ment of such foreign country or otherwise, to enable the Sec23 retary to determine from time to time whether tobacco prod24 ucts manufactured, prepared, compounded, or processed in

25 such establishment, if imported or offered for import into
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1 the United States, shall be refused admission on any of the

2 grounds set forth in section 801(a).

3 ‘‘(i) REGISTRATION INFORMATION.—

4 ‘‘(1) PRODUCT LIST.—Every person who reg5 isters with the Secretary under subsection (b), (c), or

6 (d) of this section shall, at the time of registration

7 under any such subsection, file with the Secretary a

8 list of all tobacco products which are being manufac9 tured, prepared, compounded, or processed by that

10 person for commercial distribution and which has not

11 been included in any list of tobacco products filed by

12 that person with the Secretary under this paragraph

13 or paragraph (2) before such time of registration.

14 Such list shall be prepared in such form and manner

15 as the Secretary may prescribe and shall be accom16 panied by—

17 ‘‘(A) in the case of a tobacco product con18 tained in the applicable list with respect to

19 which a performance standard has been estab20 lished under section 907 or which is subject to

21 section 910, a reference to the authority for the

22 marketing of such tobacco product and a copy of

23 all labeling for such tobacco product;

24 ‘‘(B) in the case of any other tobacco prod25 uct contained in an applicable list, a copy of all
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1 consumer information and other labeling for

2 such tobacco product, a representative sampling

3 of advertisements for such tobacco product, and,

4 upon request made by the Secretary for good

5 cause, a copy of all advertisements for a particu6 lar tobacco product; and

7 ‘‘(C) if the registrant filing a list has deter8 mined that a tobacco product contained in such

9 list is not subject to a performance standard es10 tablished under section 907, a brief statement of

11 the basis upon which the registrant made such

12 determination if the Secretary requests such a

13 statement with respect to that particular tobacco

14 product.

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

16 PRODUCT LIST.—Each person who registers with the

17 Secretary under this section shall report to the Sec18 retary once during the month of June of each year

19 and once during the month of December of each year

20 the following:

21 ‘‘(A) A list of each tobacco product intro22 duced by the registrant for commercial distribu23 tion which has not been included in any list pre24 viously filed by that person with the Secretary

25 under this subparagraph or paragraph (1) of
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1 this subsection. A list under this subparagraph

2 shall list a tobacco product by its established

3 name and shall be accompanied by the other in4 formation required by paragraph (1).

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

6 made a report under this paragraph that person

7 has discontinued the manufacture, preparation,

8 compounding, or processing for commercial dis9 tribution of a tobacco product included in a list

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

11 notice of such discontinuance, the date of such

12 discontinuance, and the identity of its estab13 lished name.

14 ‘‘(C) If since the date the registrant reported

15 under subparagraph (B) a notice of discontinu16 ance that person has resumed the manufacture,

17 preparation, compounding, or processing for

18 commercial distribution of the tobacco product

19 with respect to which such notice of discontinu20 ance was reported, notice of such resumption, the

21 date of such resumption, the identity of such to22 bacco product by established name, and other in23 formation required by paragraph (1), unless the

24 registrant has previously reported such resump25 tion to the Secretary under this subparagraph.
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1 ‘‘(D) Any material change in any informa2 tion previously submitted under this paragraph

3 or paragraph (1).

4 ‘‘(j) REPORT PRECEDING INTRODUCTION OF CERTAIN

5 SUBSTANTIALLY EQUIVALENT PRODUCTS INTO INTER6 STATE COMMERCE.—

7 ‘‘(1) IN GENERAL.—Each person who is required

8 to register under this section and who proposes to

9 begin the introduction or delivery for introduction

10 into interstate commerce for commercial distribution

11 of a tobacco product intended for human use that was

12 not commercially marketed (other than for test mar13 keting) in the United States as of August 11, 1995,

14 as defined by the Secretary by regulation shall, at

15 least 90 days before making such introduction or de16 livery, report to the Secretary (in such form and

17 manner as the Secretary shall by regulation pre18 scribe)—

19 ‘‘(A) the basis for such person’s determina20 tion that the tobacco product is substantially

21 equivalent, within the meaning of section 910, to

22 a tobacco product commercially marketed (other

23 than for test marketing) in the United States as

24 of August 11, 1995, that is in compliance with

25 the requirements of this Act; and
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1 ‘‘(B) action taken by such person to comply

2 with the requirements under section 907 that are

3 applicable to the tobacco product.

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

5 11TH PRODUCTS.—A report under this subsection for

6 a tobacco product that was first introduced or deliv7 ered for introduction into interstate commerce for

8 commercial distribution in the United States after

9 August 11, 1995, and before the date of enactment of

10 the National Tobacco Policy and Youth Smoking Re11 duction Act shall be submitted to the Secretary within

12 6 months after the date of enactment of that Act.

13 ‘‘SEC. 906. GENERAL PROVISIONS RESPECTING CONTROL

14 OF TOBACCO PRODUCTS.

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

16 under section 902, 903, 905, or 909 applicable to a tobacco

17 product shall apply to such tobacco product until the appli18 cability of the requirement to the tobacco product has been

19 changed by action taken under section 907, section 910, or

20 subsection (d) of this section, and any requirement estab21 lished by or under section 902, 903, 905, or 909 which is

22 inconsistent with a requirement imposed on such tobacco

23 product under section 907, section 910, or subsection (d)

24 of this section shall not apply to such tobacco product.
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1 ‘‘(b) INFORMATION ON PUBLIC ACCESS AND COM2 MENT.—Each notice of proposed rulemaking under section

3 907, 908, 909, or 910, or under this section, any other notice

4 which is published in the Federal Register with respect to

5 any other action taken under any such section and which

6 states the reasons for such action, and each publication of

7 findings required to be made in connection with rulemaking

8 under any such section shall set forth—

9 ‘‘(1) the manner in which interested persons may

10 examine data and other information on which the no11 tice or findings is based; and

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

13 may present their comments on the notice or findings

14 (including the need therefor) orally or in writing,

15 which period shall be at least 60 days but may not

16 exceed 90 days unless the time is extended by the Sec17 retary by a notice published in the Federal Register

18 stating good cause therefor.

19 ‘‘(c) LIMITED CONFIDENTIALITY OF INFORMATION.—

20 Any information reported to or otherwise obtained by the

21 Secretary or the Secretary’s representative under section

22 904, 907, 908, 909, or 910 or 704, or under subsection (e)

23 or (f) of this section, which is exempt from disclosure under

24 subsection (a) of section 552 of title 5, United States Code,

25 by reason of subsection (b)(4) of that section shall be consid-
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1 ered confidential and shall not be disclosed, except that the

2 information may be disclosed to other officers or employees

3 concerned with carrying out this chapter, or when relevant

4 in any proceeding under this chapter.

5 ‘‘(d) RESTRICTIONS.—

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

7 that a tobacco product be restricted to sale, distribu8 tion, or use upon such conditions, including restric9 tions on the access to, and the advertising and pro10 motion of, the tobacco product, as the Secretary may

11 prescribe in such regulation if, because of its poten12 tiality for harmful effect or the collateral measures

13 necessary to its use, the Secretary determines that

14 such regulation would be appropriate for the protec15 tion of the public health. The finding as to whether

16 such regulation would be appropriate for the protec17 tion of the public health shall be determined with re18 spect to the risks and benefits to the population as a

19 whole, including users and non-users of the tobacco

20 product, and taking into account—

21 ‘‘(A) the increased or decreased likelihood

22 that existing users of tobacco products will stop

23 using such products; and
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1 ‘‘(B) the increased or decreased likelihood

2 that those who do not use tobacco products will

3 start using such products.

4 No such condition may require that the sale or dis5 tribution of a tobacco product be limited to the writ6 ten or oral authorization of a practitioner licensed by

7 law to prescribe medical products.

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

9 such appropriate statements of the restrictions re10 quired by a regulation under subsection (a) as the

11 Secretary may in such regulation prescribe.

12 ‘‘(3) Because of the importance of any decision

13 by the Secretary to restrict the sale of any class of to14 bacco products on the market on the date of enact15 ment of the National Tobacco Policy and Youth

16 Smoking Reduction Act to specified categories of re17 tail outlets, it is appropriate for the Congress to have

18 the opportunity to review such a decision. Therefore,

19 any such restriction may not take effect before the

20 date that is 2 years after the President notifies the

21 Congress that a final regulation imposing the restric22 tion has been issued.

23 ‘‘(e) GOOD MANUFACTURING PRACTICE REQUIRE24 MENTS.—
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1 ‘‘(1) METHODS, FACILITIES, AND CONTROLS TO

2 CONFORM.—

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

4 with subparagraph (B), prescribe regulations re5 quiring that the methods used in, and the facili6 ties and controls used for, the manufacture, pre7 production design validation (including a proc8 ess to assess the performance of a tobacco prod9 uct), packing and storage of a tobacco product,

10 conform to current good manufacturing practice,

11 as prescribed in such regulations, to assure that

12 the public health is protected and that the to13 bacco product is in compliance with this chapter.

14 ‘‘(B) The Secretary shall—

15 ‘‘(i) before promulgating any regula16 tion under subparagraph (A), afford the To17 bacco Products Scientific Advisory Commit18 tee established under section 915 an oppor19 tunity to submit recommendations with re20 spect to the regulation proposed to be pro21 mulgated;

22 ‘‘(ii) before promulgating any regula23 tion under subparagraph (A), afford oppor24 tunity for an oral hearing;
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1 ‘‘(iii) provide the advisory committee a

2 reasonable time to make its recommendation

3 with respect to proposed regulations under

4 subparagraph (A); and

5 ‘‘(iv) in establishing the effective date

6 of a regulation promulgated under this sub7 section, take into account the differences in

8 the manner in which the different types of

9 tobacco products have historically been pro10 duced, the financial resources of the dif11 ferent tobacco product manufacturers, and

12 the state of their existing manufacturing fa13 cilities; and shall provide for a reasonable

14 period of time for such manufacturers to

15 conform to good manufacturing practices.

16 ‘‘(2) EXEMPTIONS; VARIANCES.—

17 ‘‘(A) Any person subject to any requirement

18 prescribed under paragraph (1) may petition the

19 Secretary for a permanent or temporary exemp20 tion or variance from such requirement. Such a

21 petition shall be submitted to the Secretary in

22 such form and manner as the Secretary shall

23 prescribe and shall—

24 ‘‘(i) in the case of a petition for an ex25 emption from a requirement, set forth the
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1 basis for the petitioner’s determination that

2 compliance with the requirement is not re3 quired to assure that the tobacco product

4 will be in compliance with this chapter;

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

6 variance from a requirement, set forth the

7 methods proposed to be used in, and the fa8 cilities and controls proposed to be used for,

9 the manufacture, packing, and storage of

10 the tobacco product in lieu of the methods,

11 facilities, and controls prescribed by the re12 quirement; and

13 ‘‘(iii) contain such other information

14 as the Secretary shall prescribe.

15 ‘‘(B) The Secretary may refer to the To16 bacco Products Scientific Advisory Committee es17 tablished under section 915 any petition submit18 ted under subparagraph (A). The advisory com19 mittee shall report its recommendations to the

20 Secretary with respect to a petition referred to it

21 within 60 days after the date of the petition’s re22 ferral. Within 60 days after—

23 ‘‘(i) the date the petition was submit24 ted to the Secretary under subparagraph

25 (A); or
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1 ‘‘(ii) the day after the petition was re2 ferred to an advisory committee,

3 whichever occurs later, the Secretary shall by

4 order either deny the petition or approve it.

5 ‘‘(C) The Secretary may approve—

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

7 tobacco product from a requirement if the

8 Secretary determines that compliance with

9 such requirement is not required to assure

10 that the tobacco product will be in compli11 ance with this chapter; and

12 ‘‘(ii) a petition for a variance for a to13 bacco product from a requirement if the

14 Secretary determines that the methods to be

15 used in, and the facilities and controls to be

16 used for, the manufacture, packing, and

17 storage of the tobacco product in lieu of the

18 methods, controls, and facilities prescribed

19 by the requirement are sufficient to assure

20 that the tobacco product will be in compli21 ance with this chapter.

22 ‘‘(D) An order of the Secretary approving a

23 petition for a variance shall prescribe such con24 ditions respecting the methods used in, and the

25 facilities and controls used for, the manufacture,
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•S 1415 RS2

1 packing, and storage of the tobacco product to be

2 granted the variance under the petition as may

3 be necessary to assure that the tobacco product

4 will be in compliance with this chapter.

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

6 subparagraph (B) respecting a petition, the peti7 tioner shall have an opportunity for an informal

8 hearing on such order.

9 ‘‘(3) Compliance with requirements under this

10 subsection shall not be required before the period end11 ing 3 years after the date of enactment of the Na12 tional Tobacco Policy and Youth Smoking Reduction

13 Act.

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

15 Secretary may exempt tobacco products intended for inves16 tigational use from this chapter under such conditions as

17 the Secretary may prescribe by regulation .

18 ‘‘(g) RESEARCH AND DEVELOPMENT.—The Secretary

19 may enter into contracts for research, testing, and dem20 onstrations respecting tobacco products and may obtain to21 bacco products for research, testing, and demonstration pur22 poses without regard to section 3324(a) and (b) of title 31,

23 United States Code, and section 5 of title 41, United States

24 Code.
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1 ‘‘SEC. 907. PERFORMANCE STANDARDS.

2 ‘‘(a) IN GENERAL.—

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

4 adopt performance standards for a tobacco product if

5 the Secretary finds that a performance standard is

6 appropriate for the protection of the public health.

7 This finding shall be determined with respect to the

8 risks and benefits to the population as a whole, in9 cluding users and non-users of the tobacco product,

10 and taking into account—

11 ‘‘(A) the increased or decreased likelihood

12 that existing users of tobacco products will stop

13 using such products; and

14 ‘‘(B) the increased or decreased likelihood

15 that those who do not use tobacco products will

16 start using such products.

17 ‘‘(2) CONTENT OF PERFORMANCE STANDARDS.—

18 A performance standard established under this section

19 for a tobacco product—

20 ‘‘(A) shall include provisions to provide per21 formance that is appropriate for the protection

22 of the public health, including provisions, where

23 appropriate—

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

25 nicotine yields of the product;
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1 ‘‘(ii) for the reduction or elimination

2 of other constituents or harmful components

3 of the product; or

4 ‘‘(iii) relating to any other require5 ment under (B);

6 ‘‘(B) shall, where necessary to be appro7 priate for the protection of the public health, in8 clude—

9 ‘‘(i) provisions respecting the construc10 tion, components, ingredients, and prop11 erties of the tobacco product;

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

13 sample basis or, if necessary, on an individ14 ual basis) of the tobacco product;

15 ‘‘(iii) provisions for the measurement

16 of the performance characteristics of the to17 bacco product;

18 ‘‘(iv) provisions requiring that the re19 sults of each or of certain of the tests of the

20 tobacco product required to be made under

21 clause (ii) show that the tobacco product is

22 in conformity with the portions of the

23 standard for which the test or tests were re24 quired; and
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1 ‘‘(v) a provision requiring that the sale

2 and distribution of the tobacco product be

3 restricted but only to the extent that the sale

4 and distribution of a tobacco product may

5 be restricted under a regulation under sec6 tion 906(d); and

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

8 use and prescribe the form and content of label9 ing for the proper use of the tobacco product.

10 ‘‘(3) PERIODIC RE-EVALUATION OF PERFORM11 ANCE STANDARDS.—The Secretary shall provide for

12 periodic evaluation of performance standards estab13 lished under this section to determine whether such

14 standards should be changed to reflect new medical,

15 scientific, or other technological data. The Secretary

16 may provide for testing under paragraph (2) by any

17 person.

18 ‘‘(4) INVOLVEMENT OF OTHER AGENCIES; IN19 FORMED PERSONS.—In carrying out duties under this

20 section, the Secretary shall, to the maximum extent

21 practicable—

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

23 technical support available in other Federal

24 agencies;
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1 ‘‘(B) consult with other Federal agencies

2 concerned with standard-setting and other na3 tionally or internationally recognized standard4 setting entities; and

5 ‘‘(C) invite appropriate participation,

6 through joint or other conferences, workshops, or

7 other means, by informed persons representative

8 of scientific, professional, industry, or consumer

9 organizations who in the Secretary’s judgment

10 can make a significant contribution.

11 ‘‘(b) ESTABLISHMENT OF STANDARDS.—

12 ‘‘(1) NOTICE.—

13 ‘‘(A) The Secretary shall publish in the Fed14 eral Register a notice of proposed rulemaking for

15 the establishment, amendment, or revocation of

16 any performance standard for a tobacco product.

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

18 the establishment or amendment of a perform19 ance standard for a tobacco product shall—

20 ‘‘(i) set forth a finding with supporting

21 justification that the performance standard

22 is appropriate for the protection of the pub23 lic health;

24 ‘‘(ii) set forth proposed findings with

25 respect to the risk of illness or injury that
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1 the performance standard is intended to re2 duce or eliminate; and

3 ‘‘(iii) invite interested persons to sub4 mit an existing performance standard for

5 the tobacco product, including a draft or

6 proposed performance standard, for consid7 eration by the Secretary.

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

9 the revocation of a performance standard shall

10 set forth a finding with supporting justification

11 that the performance standard is no longer nec12 essary to be appropriate for the protection of the

13 public health.

14 ‘‘(D) The Secretary shall consider all infor15 mation submitted in connection with a proposed

16 standard, including information concerning the

17 countervailing effects of the performance stand18 ard on the health of adolescent tobacco users,

19 adult tobacco users, or non-tobacco users, such as

20 the creation of a significant demand for contra21 band or other tobacco products that do not meet

22 the requirements of this chapter and the signifi23 cance of such demand, and shall issue the stand24 ard if the Secretary determines that the standard
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1 would be appropriate for the protection of the

2 public health.

3 ‘‘(E) The Secretary shall provide for a com4 ment period of not less than 60 days.

5 ‘‘(2) PROMULGATION.—

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

7 comment on a notice of proposed rulemaking

8 published under paragraph (1) respecting a per9 formance standard and after consideration of

10 such comments and any report from the Tobacco

11 Products Scientific Advisory Committee under

12 section 915, the Secretary shall—

13 ‘‘(i) promulgate a regulation establish14 ing a performance standard and publish in

15 the Federal Register findings on the matters

16 referred to in paragraph (1); or

17 ‘‘(ii) publish a notice terminating the

18 proceeding for the development of the stand19 ard together with the reasons for such ter20 mination.

21 ‘‘(B) A regulation establishing a perform22 ance standard shall set forth the date or dates

23 upon which the standard shall take effect, but no

24 such regulation may take effect before one year

25 after the date of its publication unless the Sec-
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1 retary determines that an earlier effective date is

2 necessary for the protection of the public health.

3 Such date or dates shall be established so as to

4 minimize, consistent with the public health, eco5 nomic loss to, and disruption or dislocation of,

6 domestic and international trade.

7 ‘‘(3) SPECIAL RULE FOR STANDARD BANNING

8 CLASS OF PRODUCT OR ELIMINATING NICOTINE CON9 TENT.—Because of the importance of a decision of the

10 Secretary to issue a regulation establishing a per11 formance standard—

12 ‘‘(A) eliminating all cigarettes, all smokeless

13 tobacco products, or any similar class of tobacco

14 products, or

15 ‘‘(B) requiring the reduction of nicotine

16 yields of a tobacco product to zero,

17 it is appropriate for the Congress to have the oppor18 tunity to review such a decision. Therefore, any such

19 standard may not take effect before a date that is 2

20 years after the President notifies the Congress that a

21 final regulation imposing the restriction has been

22 issued.

23 ‘‘(4) AMENDMENT; REVOCATION.—

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

25 own initiative or upon petition of an interested
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1 person may by a regulation, promulgated in ac2 cordance with the requirements of paragraphs

3 (1) and (2)(B) of this subsection, amend or re4 voke a performance standard.

5 ‘‘(B) The Secretary may declare a proposed

6 amendment of a performance standard to be ef7 fective on and after its publication in the Fed8 eral Register and until the effective date of any

9 final action taken on such amendment if the Sec10 retary determines that making it so effective is

11 in the public interest.

12 ‘‘(5) REFERENCE TO ADVISORY COMMITTEE.—

13 The Secretary—

14 ‘‘(A) may, on the Secretary’s own initiative,

15 refer a proposed regulation for the establishment,

16 amendment, or revocation of a performance

17 standard; or

18 ‘‘(B) shall, upon the request of an interested

19 person which demonstrates good cause for refer20 ral and which is made before the expiration of

21 the period for submission of comments on such

22 proposed regulation,

23 refer such proposed regulation to the Tobacco Prod24 ucts Scientific Advisory Committee established under

25 section 915, for a report and recommendation with
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1 respect to any matter involved in the proposed regula2 tion which requires the exercise of scientific judgment.

3 If a proposed regulation is referred under this sub4 paragraph to the advisory committee, the Secretary

5 shall provide the advisory committee with the data

6 and information on which such proposed regulation is

7 based. The advisory committee shall, within 60 days

8 after the referral of a proposed regulation and after

9 independent study of the data and information fur10 nished to it by the Secretary and other data and in11 formation before it, submit to the Secretary a report

12 and recommendation respecting such regulation, to13 gether with all underlying data and information and

14 a statement of the reason or basis for the rec15 ommendation. A copy of such report and rec16 ommendation shall be made public by the Secretary.

17 ‘‘SEC. 908. NOTIFICATION AND OTHER REMEDIES.

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

19 that—

20 ‘‘(1) a tobacco product which is introduced or de21 livered for introduction into interstate commerce for

22 commercial distribution presents an unreasonable risk

23 of substantial harm to the public health; and

24 ‘‘(2) notification under this subsection is nec25 essary to eliminate the unreasonable risk of such
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1 harm and no more practicable means is available

2 under the provisions of this chapter (other than this

3 section) to eliminate such risk,

4 the Secretary may issue such order as may be necessary

5 to assure that adequate notification is provided in an ap6 propriate form, by the persons and means best suited under

7 the circumstances involved, to all persons who should prop8 erly receive such notification in order to eliminate such

9 risk. The Secretary may order notification by any appro10 priate means, including public service announcements. Be11 fore issuing an order under this subsection, the Secretary

12 shall consult with the persons who are to give notice under

13 the order.

14 ‘‘(b) NO EXEMPTION FROM OTHER LIABILITY.—Com15 pliance with an order issued under this section shall not

16 relieve any person from liability under Federal or State

17 law. In awarding damages for economic loss in an action

18 brought for the enforcement of any such liability, the value

19 to the plaintiff in such action of any remedy provided under

20 such order shall be taken into account.

21 ‘‘(c) RECALL AUTHORITY.—

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

23 there is a reasonable probability that a tobacco prod24 uct contains a manufacturing or other defect not ordi25 narily contained in tobacco products on the market
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1 that would cause serious, adverse health consequences

2 or death, the Secretary shall issue an order requiring

3 the appropriate person (including the manufacturers,

4 importers, distributors, or retailers of the tobacco

5 product) to immediately cease distribution of such to6 bacco product. The order shall provide the person sub7 ject to the order with an opportunity for an informal

8 hearing, to be held not later than 10 days after the

9 date of the issuance of the order, on the actions re10 quired by the order and on whether the order should

11 be amended to require a recall of such tobacco prod12 uct. If, after providing an opportunity for such a

13 hearing, the Secretary determines that inadequate

14 grounds exist to support the actions required by the

15 order, the Secretary shall vacate the order.

16 ‘‘(2) AMENDMENT OF ORDER TO REQUIRE RE17 CALL.—

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

19 an informal hearing under paragraph (1), the

20 Secretary determines that the order should be

21 amended to include a recall of the tobacco prod22 uct with respect to which the order was issued,

23 the Secretary shall, except as provided in sub24 paragraph (B), amend the order to require a re25 call. The Secretary shall specify a timetable in
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1 which the tobacco product recall will occur and

2 shall require periodic reports to the Secretary de3 scribing the progress of the recall.

4 ‘‘(B) An amended order under subpara5 graph (A)—

6 ‘‘(i) shall not include recall of a to7 bacco product from individuals; and

8 ‘‘(ii) shall provide for notice to persons

9 subject to the risks associated with the use

10 of such tobacco product.

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

12 the Secretary may use the assistance of retailers

13 and other persons who distributed such tobacco

14 product. If a significant number of such persons

15 cannot be identified, the Secretary shall notify

16 such persons under section 705(b).

17 ‘‘(3) REMEDY NOT EXCLUSIVE.—The remedy pro18 vided by this subsection shall be in addition to rem19 edies provided by subsection (a) of this section.

20 ‘‘SEC. 909. RECORDS AND REPORTS ON TOBACCO PROD21 UCTS.

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

23 product manufacturer or importer of a tobacco product

24 shall establish and maintain such records, make such re25 ports, and provide such information, as the Secretary may
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1 by regulation reasonably require to assure that such tobacco

2 product is not adulterated or misbranded and to otherwise

3 protect public health. Regulations prescribed under the pre4 ceding sentence—

5 ‘‘(1) may require a tobacco product manufac6 turer or importer to report to the Secretary whenever

7 the manufacturer or importer receives or otherwise be8 comes aware of information that reasonably suggests

9 that one of its marketed tobacco products may have

10 caused or contributed to a serious unexpected adverse

11 experience associated with the use of the product or

12 any significant increase in the frequency of a serious,

13 expected adverse product experience;

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

15 adverse tobacco product experiences as determined by

16 the Secretary to be necessary to be reported;

17 ‘‘(3) shall not impose requirements unduly bur18 densome to a tobacco product manufacturer or im19 porter, taking into account the cost of complying with

20 such requirements and the need for the protection of

21 the public health and the implementation of this

22 chapter;

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

24 requests for reports or information, shall require that

25 each request made under such regulations for submis-
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1 sion of a report or information to the Secretary state

2 the reason or purpose for such request and identify to

3 the fullest extent practicable such report or informa4 tion;

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

6 information to the Secretary, shall state the reason or

7 purpose for the submission of such report or informa8 tion and identify to the fullest extent practicable such

9 report or information; and

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

11 patient or user be disclosed in records, reports, or in12 formation required under this subsection unless re13 quired for the medical welfare of an individual, to de14 termine risks to public health of a tobacco product, or

15 to verify a record, report, or information submitted

16 under this chapter.

17 In prescribing regulations under this subsection, the Sec18 retary shall have due regard for the professional ethics of

19 the medical profession and the interests of patients. The

20 prohibitions of paragraph (6) of this subsection continue

21 to apply to records, reports, and information concerning

22 any individual who has been a patient, irrespective of

23 whether or when he ceases to be a patient.

24 ‘‘(b) REPORTS OF REMOVALS AND CORRECTIONS.—
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1 (1) Except as provided in paragraph (3), the

2 Secretary shall by regulation require a tobacco prod3 uct manufacturer or importer of a tobacco product to

4 report promptly to the Secretary any corrective ac5 tion taken or removal from the market of a tobacco

6 product undertaken by such manufacturer or im7 porter if the removal or correction was undertaken—

8 ‘‘(A) to reduce a risk to health posed by the

9 tobacco product; or

10 ‘‘(B) to remedy a violation of this chapter

11 caused by the tobacco product which may present

12 a risk to health.

13 A tobacco product manufacturer or importer of a to14 bacco product who undertakes a corrective action or

15 removal from the market of a tobacco product which

16 is not required to be reported under this subsection

17 shall keep a record of such correction or removal.

18 ‘‘(2) No report of the corrective action or removal

19 of a tobacco product may be required under para20 graph (1) if a report of the corrective action or re21 moval is required and has been submitted under sub22 section (a) of this section.

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

24 PRODUCTS.

25 ‘‘(a) IN GENERAL.—
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1 ‘‘(1) PREMARKET APPROVAL REQUIRED.—

2 ‘‘(A) NEW PRODUCTS.—Approval under this

3 section of an application for premarket approval

4 for any tobacco product that is not commercially

5 marketed (other than for test marketing) in the

6 United States as of August 11, 1995, is required

7 unless the manufacturer has submitted a report

8 under section 905(j), and the Secretary has

9 issued an order that the tobacco product is sub10 stantially equivalent to a tobacco product com11 mercially marketed (other than for test market12 ing) in the United States as of August 11, 1995,

13 that is in compliance with the requirements of

14 this Act.

15 ‘‘(B) PRODUCTS INTRODUCED BETWEEN AU16 GUST 11, 1995, AND ENACTMENT OF THIS CHAP17 TER.—Subparagraph (A) does not apply to a to18 bacco product that—

19 ‘‘(i) was first introduced or delivered

20 for introduction into interstate commerce

21 for commerce for commercial distribution in

22 the United States after August 11, 1995,

23 and before the date of enactment of the Na24 tional Tobacco Policy and Youth Smoking

25 Reduction Act; and
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1 ‘‘(ii) for which a report was submitted

2 under section 905(j) within 6 months after

3 such date,

4 until the Secretary issues an order that the to5 bacco product is substantially equivalent for pur6 poses of this section or requires premarket ap7 proval.

8 ‘‘(2) SUBSTANTIALLY EQUIVALENT DEFINED.—

9 ‘‘(A) For purposes of this section and sec10 tion 905(j), the term ‘substantially equivalent’ or

11 ‘substantial equivalence’ mean, with respect to

12 the tobacco product being compared to the predi13 cate tobacco product, that the Secretary by order

14 has found that the tobacco product—

15 ‘‘(i) has the same characteristics as the

16 predicate tobacco product; or

17 ‘‘(ii) has different characteristics and

18 the information submitted contains infor19 mation, including clinical data if deemed

20 necessary by the Secretary, that dem21 onstrates that it is not appropriate to regu22 late the product under this section because

23 the product does not raise different ques24 tions of public health.
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1 ‘‘(B) For purposes of subparagraph (A), the

2 term ‘characteristics’ means the materials, ingre3 dients, design, composition, heating source, or

4 other features of a tobacco product.

5 ‘‘(C) A tobacco product may not be found to

6 be substantially equivalent to a predicate tobacco

7 product that has been removed from the market

8 at the initiative of the Secretary or that has been

9 determined by a judicial order to be misbranded

10 or adulterated.

11 ‘‘(3) HEALTH INFORMATION.—

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

13 905(j) respecting a tobacco product, the person

14 required to file a premarket notification under

15 such section shall provide an adequate summary

16 of any health information related to the tobacco

17 product or state that such information will be

18 made available upon request by any person.

19 ‘‘(B) Any summary under subparagraph

20 (A) respecting a tobacco product shall contain

21 detailed information regarding data concerning

22 adverse health effects and shall be made available

23 to the public by the Secretary within 30 days of

24 the issuance of a determination that such tobacco
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1 product is substantially equivalent to another to2 bacco product.

3 ‘‘(b) APPLICATION.—

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

5 approval shall contain—

6 ‘‘(A) full reports of all information, pub7 lished or known to or which should reasonably be

8 known to the applicant, concerning investiga9 tions which have been made to show the health

10 risks of such tobacco product and whether such

11 tobacco product presents less risk than other to12 bacco products;

13 ‘‘(B) a full statement of the components, in14 gredients, and properties, and of the principle or

15 principles of operation, of such tobacco product;

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

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

18 manufacture, processing, and, when relevant,

19 packing and installation of, such tobacco prod20 uct;

21 ‘‘(D) an identifying reference to any per22 formance standard under section 907 which

23 would be applicable to any aspect of such tobacco

24 product, and either adequate information to

25 show that such aspect of such tobacco product
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1 fully meets such performance standard or ade2 quate information to justify any deviation from

3 such standard;

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

5 and of components thereof as the Secretary may

6 reasonably require;

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

8 be used for such tobacco product; and

9 ‘‘(G) such other information relevant to the

10 subject matter of the application as the Secretary

11 may require.

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

13 Upon receipt of an application meeting the require14 ments set forth in paragraph (1), the Secretary—

15 ‘‘(A) may, on the Secretary’s own initiative;

16 or

17 ‘‘(B) shall, upon the request of an appli18 cant,

19 refer such application to the Tobacco Products Sci20 entific Advisory Committee established under section

21 915 and for submission (within such period as the

22 Secretary may establish) of a report and rec23 ommendation respecting approval of the application,

24 together with all underlying data and the reasons or

25 basis for the recommendation.
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1 ‘‘(c) ACTION ON APPLICATION.—

2 ‘‘(1) DEADLINE.—

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

4 event later than 180 days after the receipt of an

5 application under subsection (b) of this section,

6 the Secretary, after considering the report and

7 recommendation submitted under paragraph (2)

8 of such subsection, shall—

9 ‘‘(i) issue an order approving the ap10 plication if the Secretary finds that none of

11 the grounds for denying approval specified

12 in paragraph (2) of this subsection applies;

13 or

14 ‘‘(ii) deny approval of the application

15 if the Secretary finds (and sets forth the

16 basis for such finding as part of or accom17 panying such denial) that one or more

18 grounds for denial specified in paragraph

19 (2) of this subsection apply.

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

21 a tobacco product may require as a condition to

22 such approval that the sale and distribution of

23 the tobacco product be restricted but only to the

24 extent that the sale and distribution of a tobacco
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•S 1415 RS2

1 product may be restricted under a regulation

2 under section 906(d).

3 ‘‘(2) DENIAL OF APPROVAL.—The Secretary shall

4 deny approval of an application for a tobacco product

5 if, upon the basis of the information submitted to the

6 Secretary as part of the application and any other

7 information before the Secretary with respect to such

8 tobacco product, the Secretary finds that—

9 ‘‘(A) there is a lack of a showing that per10 mitting such tobacco product to be marketed

11 would be appropriate for the protection of the

12 public health;

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

14 controls used for, the manufacture, processing, or

15 packing of such tobacco product do not conform

16 to the requirements of section 906(e);

17 ‘‘(C) based on a fair evaluation of all mate18 rial facts, the proposed labeling is false or mis19 leading in any particular; or

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

21 conform in all respects to a performance stand22 ard in effect under section 907, compliance with

23 which is a condition to approval of the applica24 tion, and there is a lack of adequate information

25 to justify the deviation from such standard.
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1 ‘‘(3) DENIAL INFORMATION.—Any denial of an

2 application shall, insofar as the Secretary determines

3 to be practicable, be accompanied by a statement in4 forming the applicant of the measures required to

5 place such application in approvable form (which

6 measures may include further research by the appli7 cant in accordance with one or more protocols pre8 scribed by the Secretary).

9 ‘‘(4) BASIS FOR FINDING.—For purposes of this

10 section, the finding as to whether approval of a to11 bacco product is appropriate for the protection of the

12 public health shall be determined with respect to the

13 risks and benefits to the population as a whole, in14 cluding users and non-users of the tobacco product,

15 and taking into account—

16 ‘‘(A) the increased or decreased likelihood

17 that existing users of tobacco products will stop

18 using such products; and

19 ‘‘(B) the increased or decreased likelihood

20 that those who do not use tobacco products will

21 start using such products.

22 ‘‘(5) BASIS FOR ACTION.—

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

24 whether permitting a tobacco product to be mar25 keted would be appropriate for the protection of
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1 the public health shall, when appropriate, be de2 termined on the basis of well-controlled inves3 tigations, which may include one or more clini4 cal investigations by experts qualified by train5 ing and experience to evaluate the tobacco prod6 uct.

7 ‘‘(B) If the Secretary determines that there

8 exists valid scientific evidence (other than evi9 dence derived from investigations described in

10 subparagraph (A)) which is sufficient to evaluate

11 the tobacco product the Secretary may authorize

12 that the determination for purposes of paragraph

13 (2)(A) be made on the basis of such evidence.

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

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

16 obtaining, where appropriate, advice on scientific

17 matters from the Tobacco Products Scientific Advi18 sory Committee established under section 915, and

19 after due notice and opportunity for informal hearing

20 to the holder of an approved application for a tobacco

21 product, issue an order withdrawing approval of the

22 application if the Secretary finds—

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

24 tobacco product no longer is appropriate for the

25 protection of the public health;
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•S 1415 RS2

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

2 accompanied by an untrue statement of a mate3 rial fact;

4 ‘‘(C) that the applicant—

5 ‘‘(i) has failed to establish a system for

6 maintaining records, or has repeatedly or

7 deliberately failed to maintain records or to

8 make reports, required by an applicable reg9 ulation under section 909;

10 ‘‘(ii) has refused to permit access to, or

11 copying or verification of, such records as

12 required by section 704; or

13 ‘‘(iii) has not complied with the re14 quirements of section 905;

15 ‘‘(D) on the basis of new information before

16 the Secretary with respect to such tobacco prod17 uct, evaluated together with the evidence before

18 the Secretary when the application was ap19 proved, that the methods used in, or the facilities

20 and controls used for, the manufacture, process21 ing, packing, or installation of such tobacco

22 product do not conform with the requirements of

23 section 906(e) and were not brought into con24 formity with such requirements within a reason-
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1 able time after receipt of written notice from the

2 Secretary of nonconformity;

3 ‘‘(E) on the basis of new information before

4 the Secretary, evaluated together with the evi5 dence before the Secretary when the application

6 was approved, that the labeling of such tobacco

7 product, based on a fair evaluation of all mate8 rial facts, is false or misleading in any particu9 lar and was not corrected within a reasonable

10 time after receipt of written notice from the Sec11 retary of such fact; or

12 ‘‘(F) on the basis of new information before

13 the Secretary, evaluated together with the evi14 dence before the Secretary when the application

15 was approved, that such tobacco product is not

16 shown to conform in all respects to a perform17 ance standard which is in effect under section

18 907, compliance with which was a condition to

19 approval of the application, and that there is a

20 lack of adequate information to justify the devi21 ation from such standard.

22 ‘‘(2) APPEAL.—The holder of an application sub23 ject to an order issued under paragraph (1) with24 drawing approval of the application may, by petition

25 filed on or before the thirtieth day after the date upon
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1 which he receives notice of such withdrawal, obtain

2 review thereof in accordance with subsection (e) of

3 this section.

4 ‘‘(3) TEMPORARY SUSPENSION.—If, after provid5 ing an opportunity for an informal hearing, the Sec6 retary determines there is reasonable probability that

7 the continuation of distribution of a tobacco product

8 under an approved application would cause serious,

9 adverse health consequences or death, that is greater

10 than ordinarily caused by tobacco products on the

11 market, the Secretary shall by order temporarily sus12 pend the approval of the application approved under

13 this section. If the Secretary issues such an order, the

14 Secretary shall proceed expeditiously under para15 graph (1) to withdraw such application.

16 ‘‘(e) SERVICE OF ORDER.—An order issued by the Sec17 retary under this section shall be served—

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

19 department designated by the Secretary; or

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

21 certified mail addressed to the applicant at the appli22 cant’s last known address in the records of the Sec23 retary.

24 ‘‘SEC. 911. JUDICIAL REVIEW.

25 ‘‘(a) IN GENERAL.—Not later than 30 days after—
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•S 1415 RS2

1 ‘‘(1) the promulgation of a regulation under sec2 tion 907 establishing, amending, or revoking a per3 formance standard for a tobacco product; or

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

5 under section 910(c),

6 any person adversely affected by such regulation or order

7 may file a petition with the United States Court of Appeals

8 for the District of Columbia or for the circuit wherein such

9 person resides or has his principal place of business for ju10 dicial review of such regulation or order. A copy of the peti11 tion shall be transmitted by the clerk of the court to the

12 Secretary or other officer designated by the Secretary for

13 that purpose. The Secretary shall file in the court the record

14 of the proceedings on which the Secretary based the Sec15 retary’s regulation or order and each record or order shall

16 contain a statement of the reasons for its issuance and the

17 basis, on the record, for its issuance. For purposes of this

18 section, the term ‘record’ means all notices and other matter

19 published in the Federal Register with respect to the regula20 tion or order reviewed, all information submitted to the Sec21 retary with respect to such regulation or order, proceedings

22 of any panel or advisory committee with respect to such

23 regulation or order, any hearing held with respect to such

24 regulation or order, and any other information identified

25 by the Secretary, in the administrative proceeding held
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1 with respect to such regulation or order, as being relevant

2 to such regulation or order.

3 ‘‘(b) COURT MAY ORDER THE SECRETARY TO MAKE

4 ADDITIONAL FINDINGS.—If the petitioner applies to the

5 court for leave to adduce additional data, views, or argu6 ments respecting the regulation or order being reviewed and

7 shows to the satisfaction of the court that such additional

8 data, views, or arguments are material and that there were

9 reasonable grounds for the petitioner’s failure to adduce

10 such data, views, or arguments in the proceedings before

11 the Secretary, the court may order the Secretary to provide

12 additional opportunity for the oral presentation of data,

13 views, or arguments and for written submissions. The Sec14 retary may modify the Secretary’s findings, or make new

15 findings by reason of the additional data, views, or argu16 ments so taken and shall file with the court such modified

17 or new findings, and the Secretary’s recommendation, if

18 any, for the modification or setting aside of the regulation

19 or order being reviewed, with the return of such additional

20 data, views, or arguments.

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

22 petition under subsection (a) of this section for judicial re23 view of a regulation or order, the court shall have jurisdic24 tion to review the regulation or order in accordance with

25 chapter 7 of title 5, United States Code, and to grant appro-
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•S 1415 RS2

1 priate relief, including interim relief, as provided in such

2 chapter. A regulation or order described in paragraph (1)

3 or (2) of subsection (a) of this section shall not be affirmed

4 if it is found to be unsupported by substantial evidence on

5 the record taken as a whole.

6 ‘‘(d) FINALITY OF JUDGMENT.—The judgment of the

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

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

9 Supreme Court of the United States upon certiorari or cer10 tification, as provided in section 1254 of title 28, United

11 States Code.

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

13 this section shall be in addition to and not in lieu of any

14 other remedies provided by law.

15 ‘‘(f) REGULATIONS AND ORDERS MUST RECITE BASIS

16 IN RECORD.—To facilitate judicial review under this sec17 tion or under any other provision of law of a regulation

18 or order issued under section 906, 907, 908, 909, 910, or

19 914, each such regulation or order shall contain a statement

20 of the reasons for its issuance and the basis, in the record

21 of the proceedings held in connection with its issuance, for

22 its issuance.

23 ‘‘SEC. 912. POSTMARKET SURVEILLANCE.

24 ‘‘(a) DISCRETIONARY SURVEILLANCE.—The Secretary

25 may require a tobacco product manufacturer to conduct
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1 postmarket surveillance for a tobacco product of the manu2 facturer if the Secretary determines that postmarket surveil3 lance of the tobacco product is necessary to protect the pub4 lic health or is necessary to provide information regarding

5 the health risks and other safety issues involving the tobacco

6 product.

7 ‘‘(b) SURVEILLANCE APPROVAL.—Each tobacco prod8 uct manufacturer required to conduct a surveillance of a

9 tobacco product under subsection (a) of this section shall,

10 within 30 days after receiving notice that the manufacturer

11 is required to conduct such surveillance, submit, for the ap12 proval of the Secretary, a protocol for the required surveil13 lance. The Secretary, within 60 days of the receipt of such

14 protocol, shall determine if the principal investigator pro15 posed to be used in the surveillance has sufficient qualifica16 tions and experience to conduct such surveillance and if

17 such protocol will result in collection of useful data or other

18 information necessary to protect the public health. The Sec19 retary may not approve such a protocol until it has been

20 reviewed by an appropriately qualified scientific and tech21 nical review committee established by the Secretary.

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

23 ‘‘(a) REQUIREMENTS.—

24 ‘‘(1) IN GENERAL.—For purposes of this section,

25 the term ‘reduced risk tobacco product’ means a to-
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•S 1415 RS2

1 bacco product designated by the Secretary under

2 paragraph (2).

3 ‘‘(2) DESIGNATION.—

4 ‘‘(A) IN GENERAL.—A product may be des5 ignated by the Secretary as a reduced risk to6 bacco product if the Secretary finds that the

7 product will significantly reduce harm to indi8 viduals caused by a tobacco product and is oth9 erwise appropriate to protect public health, based

10 on an application submitted by the manufac11 turer of the product (or other responsible person)

12 that—

13 ‘‘(i) demonstrates through testing on

14 animals and short-term human testing that

15 use of such product results in ingestion or

16 inhalation of a substantially lower yield of

17 toxic substances than use of conventional to18 bacco products in the same category as the

19 proposed reduced risk product; and

20 ‘‘(ii) if required by the Secretary, in21 cludes studies of the long-term health effects

22 of the product.

23 If such studies are required, the manufacturer

24 may consult with the Secretary regarding proto25 cols for conducting the studies.
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1 ‘‘(B) BASIS FOR FINDING.—In making the

2 finding under subparagraph (A), the Secretary

3 shall take into account—

4 ‘‘(i) the risks and benefits to the popu5 lation as a whole, including both users of

6 tobacco products and non-users of tobacco

7 products;

8 ‘‘(ii) the increased or decreased likeli9 hood that existing users of tobacco products

10 will stop using such products including re11 duced risk tobacco products;

12 ‘‘(iii) the increased or decreased likeli13 hood that those who do not use tobacco

14 products will start to use such products, in15 cluding reduced risk tobacco products; and

16 ‘‘(iii) the risks and benefits to consum17 ers from the use of a reduced risk tobacco

18 product as compared to the use of products

19 approved under chapter V to reduce expo20 sure to tobacco.

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

22 product may be marketed and labeled as a reduced

23 risk tobacco product if it—
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1 ‘‘(A) has been designated as a reduced risk

2 tobacco product by the Secretary under para3 graph (2);

4 ‘‘(B) bears a label prescribed by the Sec5 retary concerning the product’s contribution to

6 reducing harm to health; and

7 ‘‘(C) complies with requirements prescribed

8 by the Secretary relating to marketing and ad9 vertising of the product, and other provisions of

10 this chapter as prescribed by the Secretary.

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

12 after the date on which a tobacco product is designated as

13 a reduced risk tobacco product under this section the Sec14 retary may, after providing an opportunity for an informal

15 hearing, revoke such designation if the Secretary deter16 mines, based on information not available at the time of

17 the designation, that—

18 ‘‘(1) the finding made under subsection (a)(2) is

19 no longer valid; or

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

21 of subsection (a)(3).

22 ‘‘(c) LIMITATION.—A tobacco product that is des23 ignated as a reduced risk tobacco product that is in compli24 ance with subsection (a) shall not be regulated as a drug

25 or device.
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•S 1415 RS2

1 ‘‘(d) DEVELOPMENT OF REDUCED RISK TOBACCO

2 PRODUCT TECHNOLOGY.—A tobacco product manufacturer

3 shall provide written notice to the Secretary upon the devel4 opment or acquisition by the manufacturer of any tech5 nology that would reduce the risk of a tobacco product to

6 the health of the user for which the manufacturer is not

7 seeking designation as a ‘reduced risk tobacco product’

8 under subsection (a).

9 ‘‘SEC. 914. PRESERVATION OF STATE AND LOCAL AUTHOR10 ITY.

11 ‘‘(a) ADDITIONAL REQUIREMENTS.—

12 ‘‘(1) IN GENERAL.—Except as provided in para13 graph (2), nothing in this Act shall be construed as

14 prohibiting a State or political subdivision thereof

15 from adopting or enforcing a requirement applicable

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

17 stringent than, requirements established under this

18 chapter.

19 ‘‘(2) PREEMPTION OF CERTAIN STATE AND LOCAL

20 REQUIREMENTS.—

21 ‘‘(A) Except as provided in subparagraph

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

23 may establish or continue in effect with respect

24 to a tobacco product any requirement which is

25 different from, or in addition to, any require-
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1 ment applicable under the provisions of this

2 chapter relating to performance standards, pre3 market approval, adulteration, misbranding,

4 registration, reporting, good manufacturing

5 standards, or reduced risk products.

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

7 requirements relating to the sale, use, or dis8 tribution of a tobacco product including require9 ments related to the access to, and the advertis10 ing and promotion of, a tobacco product.

11 ‘‘(b) RULE OF CONSTRUCTION REGARDING PRODUCT

12 LIABILITY.—No provision of this chapter relating to a to13 bacco product shall be construed to modify or otherwise af14 fect any action or the liability of any person under the

15 product liability law of any State.

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

17 political subdivision thereof, the Secretary may, by regula18 tion promulgated after notice and an opportunity for an

19 oral hearing, exempt from subsection (a), under such condi20 tions as may be prescribed in such regulation, a require21 ment of such State or political subdivision applicable to a

22 tobacco product if—

23 ‘‘(1) the requirement is more stringent than a re24 quirement applicable under the provisions described

25 in subsection (a)(3) which would be applicable to the
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1 tobacco product if an exemption were not in effect

2 under this subsection; or

3 ‘‘(2) the requirement—

4 ‘‘(A) is required by compelling local condi5 tions; and

6 ‘‘(B) compliance with the requirement

7 would not cause the tobacco product to be in vio8 lation of any applicable requirement of this

9 chapter.

10 ‘‘SEC. 915. TOBACCO PRODUCTS SCIENTIFIC ADVISORY

11 COMMITTEE.

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

13 date of enactment of the National Tobacco Policy and Youth

14 Smoking Reduction Act, the Secretary shall establish a 9-

15 member advisory committee, to be known as the ‘Tobacco

16 Products Scientific Advisory Committee’.

17 ‘‘(b) MEMBERSHIP.—

18 ‘‘(1) IN GENERAL.—The Secretary shall appoint

19 as members of the Tobacco Products Scientific Advi20 sory Committee individuals who are technically

21 qualified by training and experience in the medicine,

22 medical ethics, science, or technology involving the

23 manufacture, evaluation, or use of tobacco products,

24 who are of appropriately diversified professional

25 backgrounds. The committee shall be composed of—
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1 ‘‘(A) 3 individuals who are officers or em2 ployees of a State or local government, or of the

3 Federal government;

4 ‘‘(B) 2 individuals as representatives of in5 terests of the tobacco manufacturing industry;

6 ‘‘(C) 2 individuals as representatives of in7 terests of physicians and other healthcare profes8 sionals; and

9 ‘‘(D) 2 individuals as representatives of the

10 general public.

11 ‘‘(2) LIMITATION.—The Secretary may not ap12 point to the Advisory Committee any individual who

13 is in the regular full-time employ of the Food and

14 Drug Administration or any agency responsible for

15 the enforcement of this Act. The Secretary may ap16 point Federal officials as ex-officio members.

17 ‘‘(3) CHAIRPERSON.—The Secretary shall des18 ignate 1 of the members of the Advisory Committee to

19 serve as chairperson.

20 ‘‘(c) DUTIES.—The Tobacco Products Scientific Advi21 sory Committee shall provide advice, information, and rec22 ommendations to the Secretary—

23 ‘‘(1) as provided in this chapter;

24 ‘‘(2) on the effects of the alteration of the nicotine

25 yields from tobacco products;
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1 ‘‘(3) on whether there is a threshold level below

2 which nicotine yields do not produce dependence on

3 the tobacco product involved; and

4 ‘‘(4) on its review of other safety, dependence, or

5 health issues relating to tobacco products as requested

6 by the Secretary.

7 ‘‘(d) COMPENSATION; SUPPORT; FACA.—

8 ‘‘(1) COMPENSATION AND TRAVEL.—Members of

9 the Advisory Committee who are not officers or em10 ployees of the United States, while attending con11 ferences or meetings of the committee or otherwise en12 gaged in its business, shall be entitled to receive com13 pensation at rates to be fixed by the Secretary, which

14 may not exceed the daily equivalent of the rate in ef15 fect for level 4 of the Senior Executive Schedule under

16 section 5382 of title 5, United States Code, for each

17 day (including travel time) they are so engaged; and

18 while so serving away from their homes or regular

19 places of business each member may be allowed travel

20 expenses, including per diem in lieu of subsistence, as

21 authorized by section 5703 of title 5, United States

22 Code, for persons in the Government service employed

23 intermittently.
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1 ‘‘(2) ADMINISTRATIVE SUPPORT.—The Secretary

2 shall furnish the Advisory Committee clerical and

3 other assistance.

4 ‘‘(3) NONAPPLICATION OF FACA.—Section 14 of

5 the Federal Advisory Committee Act (5 U.S.C.

6 App.) does not apply to the Advisory Committee.

7 ‘‘(e) PROCEEDINGS OF ADVISORY PANELS AND COM8 MITTEES.—The Advisory Committee shall make and main9 tain a transcript of any proceeding of the panel or commit10 tee. Each such panel and committee shall delete from any

11 transcript made under this subsection information which

12 is exempt from disclosure under section 552(b) of title 5,

13 United States Code.

14 ‘‘SEC. 916. EQUAL TREATMENT OF RETAIL OUTLETS.

15 –‘‘The Secretary shall issue regulations to require that

16 retail establishments for which the predominant business is

17 the sale of tobacco products comply with any advertising

18 restrictions applicable to retail establishments accessible to

19 individuals under the age of 18.’’.

20 SEC. 102. CONFORMING AND OTHER AMENDMENTS TO GEN21 ERAL PROVISIONS.

22 (a) AMENDMENT OF FEDERAL FOOD, DRUG, AND COS23 METIC ACT.—Except as otherwise expressly provided, when24 ever in this section an amendment is expressed in terms

25 of an amendment to, or repeal of, a section or other provi-
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•S 1415 RS2

1 sion, the reference is to a section or other provision of the

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

3 seq.).

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

5 amended—

6 (1) by inserting ‘‘tobacco product,’’ in subsection

7 (a) after ‘‘device,’’;

8 (2) by inserting ‘‘tobacco product,’’ in subsection

9 (b) after ‘‘device,’’;

10 (3) by inserting ‘‘tobacco product,’’ in subsection

11 (c) after ‘‘device,’’;

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

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

14 (5) by inserting ‘‘tobacco product,’’ in subsection

15 (g) after ‘‘device,’’;

16 (6) by inserting ‘‘tobacco product,’’ in subsection

17 (h) after ‘‘device,’’;

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

19 and inserting ‘‘708, 721, 904, 905, 906, 907, 908, or

20 909’’;

21 (8) by inserting ‘‘tobacco product,’’ in subsection

22 (k) after ‘‘device,’’;

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

24 following:
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1 ‘‘(p) The failure to register in accordance with section

2 510 or 905, the failure to provide any information required

3 by section 510(j), 510(k), 905(i), or 905(j), or the failure

4 to provide a notice required by section 510(j)(2) or

5 905(J)(2).’’;

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

7 the following:

8 ‘‘(q)(1) The failure or refusal—

9 ‘‘(A) to comply with any requirement prescribed

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

11 ‘‘(B) to furnish any notification or other mate12 rial or information required by or under section 519,

13 520(g), 904, 906(f), or 909; or

14 ‘‘(C) to comply with a requirement under section

15 522 or 912.’’;

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

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

18 (12) by inserting ‘‘or tobacco product’’ in sub19 section (r) after ‘‘device’’ each time that it appears.

20 (c) SECTION 303.—Section 303(f)(1)(A) (21 U.S.C.

21 333(f)(1)(A)) is amended by inserting ‘‘or tobacco products’’

22 after ‘‘devices’’.

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

24 amended—
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1 (1) by striking ‘‘and’’ before ‘‘(D)’’ in subsection

2 (a)(2);

3 (2) by striking ‘‘device.’’ in subsection (a)(2) and

4 inserting a comma and ‘‘(E) Any adulterated or mis5 branded tobacco product.’’;

6 (3) by inserting ‘‘tobacco product,’’ in subsection

7 (d)(1) after ‘‘device,’’;

8 (4) by inserting ‘‘or tobacco product’’ in sub9 section (g)(1) after ‘‘device’’ each place it appears;

10 and

11 (5) by inserting ‘‘or tobacco product’’ in sub12 section (g)(2)(A) after ‘‘device’’ each place it appears.

13 (e) SECTION 702.—Section 702(a) (21 U.S.C. 372(a))

14 is amended—

15 (1) by inserting ‘‘(1)’’ after ‘‘(a)’’; and

16 (2) by adding at the end thereof the following:

17 ‘‘(2) For a tobacco product, to the extent feasible, the

18 Secretary shall contract with the States in accordance with

19 paragraph (1) to carry out inspections of retailers in con20 nection with the enforcement of this Act.’’.

21 (f) SECTION 703.—Section 703 (21 U.S.C. 373) is

22 amended—

23 (1) by inserting ‘‘tobacco product,’’ after ‘‘de24 vice,’’ each place it appears; and
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1 (2) by inserting ‘‘tobacco products,’’ after ‘‘de2 vices,’’ each place it appears.

3 (g) SECTION 704.—Section 704 (21 U.S.C. 374) is

4 amended—

5 (1) by inserting ‘‘tobacco products,’’ in sub6 section (a)(1)(A) after ‘‘devices,’’ each place it ap7 pears;

8 (2) by inserting ‘‘or tobacco products’’ in sub9 section (a)(1)(B) after ‘‘restricted devices’’ each place

10 it appears; and

11 (3) by inserting ‘‘tobacco product,’’ in subsection

12 (b) after ‘‘device,’’.

13 (h) SECTION 705.—Section 705(b) (21 U.S.C. 375(b))

14 is amended by inserting ‘‘tobacco products,’’ after ‘‘de15 vices,’’.

16 (i) SECTION 709.—Section 709 (21 U.S. C. 379) is

17 amended by inserting ‘‘or tobacco product’’ after ‘‘device’’.

18 (j) SECTION 801.—Section 801 (21 U.S.C. 381) is

19 amended—

20 (1) by inserting ‘‘tobacco products,’’ after ‘‘de21 vices,’’ in subsection (a) the first time it appears;

22 (2) by inserting ‘‘or subsection (j) of section 905’’

23 in subsection (a) after ‘‘section 510’’; and
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•S 1415 RS2

1 (3) by striking ‘‘drugs or devices’’ each time it

2 appears in subsection (a) and inserting ‘‘drugs, de3 vices, or tobacco products’’;

4 (4) by inserting ‘‘tobacco product,’’ in subsection

5 (e)(1) after ‘‘device,’’;

6 (2) by redesignating paragraph (4) of subsection

7 (e) as paragraph (5) and inserting after paragraph

8 (3), the following:

9 ‘‘(4) Paragraph (1) does not apply to any to10 bacco product—

11 ‘‘(A) which does not comply with an appli12 cable requirement of section 907 or 910; or

13 ‘‘(B) which under section 906(f) is exempt

14 from either such section.

15 This paragraph does not apply if the Secretary has

16 determined that the exportation of the tobacco product

17 is not contrary to the public health and safety and

18 has the approval of the country to which it is in19 tended for export or the tobacco product is eligible for

20 export under section 802.’’.

21 (k) SECTION 802.—Section 802 (21 U.S.C. 382) is

22 amended—

23 (1) by striking ‘‘device—’’ in subsection (a) and

24 inserting ‘‘device or tobacco product—’’;
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•S 1415 RS2

1 (2) by striking ‘‘and’’ after the semicolon in sub2 section (a)(1)(C);

3 (3) by striking subparagraph (C) of subsection

4 (a)(2) and all that follows in that subsection and in5 serting the following:

6 ‘‘(C) is a banned device under section 516;

7 or

8 ‘‘(3) which, in the case of a tobacco product—

9 ‘‘(A) does not comply with an applicable re10 quirement of section 907 or 910; or

11 ‘‘(B) under section 906(f) is exempt from ei12 ther such section,

13 is adulterated, misbranded, and in violation of such

14 sections or Act unless the export of the drug, device,

15 or tobacco product is, except as provided in subsection

16 (f), authorized under subsection (b), (c), (d), or (e) of

17 this section or section 801(e)(2) or 801(e)(4). If a

18 drug, device, or tobacco product described in para19 graph (1), (2), or (3) may be exported under sub20 section (b) and if an application for such drug or de21 vice under section 505, 515, or 910 of this Act or sec22 tion 351 of the Public Health Service Act (42 U.S.C.

23 262) was disapproved, the Secretary shall notify the

24 appropriate public health official of the country to
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•S 1415 RS2

1 which such drug, device, or tobacco product will be ex2 ported of such disapproval.’’;

3 (4) by inserting ‘‘or tobacco product’’ in sub4 section (b)(1)(A) after ‘‘device’’ each time it appears;

5 (5) by inserting ‘‘or tobacco product’’ in sub6 section (c) after ‘‘device’’ and inserting ‘‘or section

7 906(f)’’ after ‘‘520(g).’’;

8 (6) by inserting ‘‘or tobacco product’’ in sub9 section (f) after ‘‘device’’ each time it appears; and

10 (7) by inserting ‘‘or tobacco product’’ in sub11 section (g) after ‘‘device’’ each time it appears.

12 (l) SECTION 1003.—Section 1003(d)(2)(C) (as redesig13 nated by section 101(a)) is amended—

14 (1) by striking ‘‘and’’ after ‘‘cosmetics,’’; and

15 (2) inserting a comma and ‘‘and tobacco prod16 ucts’’ after ‘‘devices’’.

17 Subtitle B—Advertising

18 SEC. 121. ADVERTISING PROVISIONS IN PROTOCOL.

19 The Protocol shall contain provisions enforceable at

20 law under which tobacco product manufacturers commit to

21 observe limitations on advertising that meet the require22 ments set forth in this subtitle.
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1 SEC. 122. TOBACCO PRODUCT LABELING AND ADVERTIS2 ING.

3 (a) IN GENERAL.—The Protocol shall require that no

4 tobacco product will be sold or distributed in the United

5 States—

6 (1) unless its advertising and labeling (including

7 the package)—

8 (A) contain no human image, animal

9 image, or cartoon character;

10 (B) are not outdoor advertising, including

11 advertising in enclosed stadia and advertising

12 from within a retail establishment that is di13 rected toward or visible from the outside of the

14 establishment;

15 (C) are accompanied by a disclaimer in the

16 advertising that words such as ‘‘light’’ or ‘‘low

17 tar’’ describing the product do not render the

18 product less hazardous than any other tobacco

19 product, in addition to such other requirements

20 as the Secretary may impose;

21 (D) at the time the advertising or labeling

22 is first used are submitted to the Secretary so

23 that the Secretary may conduct regular review of

24 the advertising and labeling;

25 (E) comply with any applicable require26 ment of the Federal Food, Drug, and Cosmetic
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•S 1415 RS2

1 Act, the Federal Cigarette Labeling and Adver2 tising Act, and any regulation promulgated

3 under either of those Acts;

4 (F) do not appear on the international com5 puter network of both Federal and non-Federal

6 interoperable packet switches data networks (the

7 ‘‘Internet’’), unless such advertising is designed

8 to be inaccessible in or from the United States

9 to all individuals under the age of 18 years;

10 (G) use only black text on white back11 ground, other than—

12 (i) those locations where self-service

13 displays are permitted under subsection

14 123, if the advertising is not visible from

15 outside the establishment and is affixed to a

16 wall or fixture in the establishment; and

17 (ii) advertisements appearing in any

18 publication which the tobacco product man19 ufacturer, distributor, or retailer dem20 onstrates to the Secretary is a newspaper,

21 magazine, periodical, or other publication

22 whose readers under the age of 18 years

23 constitute 15 percent or less of the total

24 readership as measured by competent and

25 reliable survey evidence, and that is read by
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•S 1415 RS2

1 less than 2 million persons under the age

2 of 18 years as measured by competent and

3 reliable survey evidence;

4 (H) for video formats, use only static black

5 text on a white background, and any accom6 panying audio uses only words without music or

7 sound effects; and

8 (I) for audio formats, use only words with9 out music or sound effects;

10 (2) if a logo, symbol, motto, selling message, rec11 ognizable color or pattern of colors, or any other indi12 cia of product identification of the tobacco product is

13 contained in a movie, program, or video game for

14 which a direct or indirect payment has been made to

15 ensure its placement;

16 (3) if a direct or indirect payment has been

17 made by any tobacco product manufacturer, distribu18 tor, or retailer to any entity for the purpose of pro19 moting the image or use of the tobacco product

20 through print or film media that appeals to individ21 uals under the age of 18 years or through a live per22 formance by an entertainment artist that appeals to

23 such individuals;

24 (4) if a logo, symbol, motto, selling message, rec25 ognizable color or pattern of colors, or any other indi-
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•S 1415 RS2

1 cia or product identification identical to, similar to,

2 or identifiable with the tobacco product is used for

3 any item (other than a tobacco product) or service

4 marketed, licensed, distributed or sold or caused to be

5 marketed, licensed, distributed, or sold by the tobacco

6 product manufacturer or distributor of the tobacco

7 product;

8 (5) unless its package label and advertising bear

9 the product’s established name and a statement of its

10 intended use, as follows:

11 (A) ‘‘Cigarettes-A Nicotine Delivery De12 vice’’;

13 (B) ‘‘Cigarette Tobacco-A Nicotine Delivery

14 Device’’; or

15 (C)‘‘ Loose Leaf Chewing Tobacco’’, ‘‘Plug

16 Chewing Tobacco’’, ‘‘Twist Chewing Tobacco’’,

17 ‘‘Moist Snuff’’, or ‘‘Dry Snuff’’, whichever is ap18 propriate for the product, followed by ‘‘-A Nico19 tine Delivery Device’’; and

20 (6)(A) except as provided in subparagraph (B),

21 if advertising or labeling for such product that is oth22 erwise in accordance with the requirements of this

23 section bears a tobacco product brand name (alone or

24 in conjunction with any other word) or any other in25 dicia of tobacco product identification and is dissemi-
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•S 1415 RS2

1 nated in a medium other than newspapers, maga2 zines, periodicals or other publications (whether peri3 odic or limited distribution), nonpoint-of-sale pro4 motional material (including direct mail), point-of5 sale promotional material, or audio or video formats

6 delivered at a point-of-sale; but

7 (B) notwithstanding subparagraph (A), advertis8 ing or labeling for cigarettes or smokeless tobacco may

9 be disseminated in a medium that is not specified in

10 paragraph (1) if the tobacco product manufacturer,

11 distributor, or retailer notifies the Secretary not later

12 than 30 days prior to the use of such medium, and

13 the notice describes the medium and the extent to

14 which the advertising or labeling may be seen by per15 sons under the age of 18 years.

16 (b) COLOR PRINT ADS ON MAGAZINES.—The Protocol

17 shall also provide that no tobacco product may be sold or

18 distributed in the United States if any advertising for that

19 product on the outside back cover of a magazine appears

20 in any color or combination of colors.

21 SEC. 123. POINT-OF-SALE RESTRICTIONS.

22 (a) IN GENERAL.—Except as provided in subsection

23 (b), the Protocol shall provide that no participating tobacco

24 product manufacturer, distributor, or retailer shall engage

25 in point-of-sale advertising of any tobacco product in any
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•S 1415 RS2

1 retail establishment (other than an establishment that sells

2 only tobacco products) in which an individual under 18

3 years of age is present, or permitted to enter, at any time.

4 (b) PERMITTED POS LOCATIONS.—

5 (1) PLACEMENT.—A retailer may place 1 point6 of-sale advertisement in or at each retail establish7 ment for its brand or the contracted house retailer or

8 private label brand of its wholesaler.

9 (2) SIZE.—The display area of any such point10 of-sale advertisement (either individually or in the

11 aggregate) shall not be larger than 576 square inches

12 and shall consist of black letters on white background

13 or another recognized typography.

14 (3) PROXIMITY TO CANDY.—Any such point-of15 sale advertisement shall not be attached to or located

16 within 2 feet of any display fixture on which candy

17 is displayed for sale.

18 (c) AUDIO OR VIDEO.—Any audio or video format per19 mitted under regulations promulgated by the Secretary may

20 be distributed at the time of sale of a tobacco product to

21 individuals over the age of 18 years, but no such format

22 may be played or shown in or at any location where tobacco

23 products are offered for sale.

24 (d) NO RESTRICTIVE COVENANTS.—No participating

25 tobacco product manufacturer or distributor of tobacco
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1 products may enter into any arrangement with a retailer

2 that limits the retailer’s ability to display any form of ad3 vertising or promotional material originating with another

4 supplier and permitted by law to be displayed in a retail

5 establishment.

6 (e) DEFINITIONS.—As used in this section, the terms

7 ‘‘point-of-sale advertisement’’ and ‘‘point-of-sale advertis8 ing’’ mean all printed or graphical materials bearing the

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

10 logo, symbol, motto, selling message, or any other indicia

11 of product identification identical or similar to, or identifi12 able with, those used for any brand of cigarettes or smokeless

13 tobacco, which, when used for its intended purpose, can rea14 sonably be anticipated to be seen by customers at a location

15 where tobacco products are offered for sale.

16 TITLE II—REDUCTIONS IN

17 UNDERAGE TOBACCO USE

18 Subtitle A—Underage Use

19 SEC. 201. GOALS FOR REDUCING UNDERAGE TOBACCO USE.

20 (a) GOALS.—As part of a comprehensive national to21 bacco control policy, the Secretary, working in cooperation

22 with State, Tribal, and local governments and the private

23 sector, shall take all actions under this Act necessary to en24 sure that the required percentage reductions in underage

25 use of tobacco products set forth in this title are achieved.
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•S 1415 RS2

1 (b) REQUIRED REDUCTIONS FOR CIGARETTES.—With

2 respect to cigarettes, the required percentage reduction in

3 underage use, as set forth in ƒsection 202≈ section 5771

4 of the Internal Revenue Code of 1986, means—

Calendar Year After Date

of Enactment

Required Percentage Reduction as a Percentage of Base Incidence Percentage in Underage

Cigarette Use

Years 3 and 4 15 percent

Years 5 and 6 30 percent

Years 7, 8, and 9 50 percent

Year 10 and thereafter 60 percent

5 (c) REQUIRED REDUCTIONS FOR SMOKELESS TO6 BACCO.—With respect to smokeless tobacco products, the re7 quired percentage reduction in underage use, as set forth

8 in ƒsection 202≈ section 5771 of the Internal Reve9 nue Code of 1986, means—

Calendar Year After Date

of Enactment

Required Percentage Reduction as a Percentage of Base Incidence Percentage in Underage

Smokeless Tobacco Use

Years 3 and 4 12.5 percent

Years 5 and 6 25 percent

Years 7, 8, and 9 35 percent

Year 10 and thereafter 45 percent

10 ƒSEC. 202. LOOK-BACK ASSESSMENT.

11 ƒ(a) DETERMINATION OF UNDERAGE USE.—Upon the

12 conclusion of the third calendar year after the date of enact13 ment of this Act, and annually thereafter, the Secretary

14 shall determine the percent incidence of underage use of

15 cigarettes and of smokeless tobacco by calculating the aver16 age, weighted by relative population of such age groups in

17 1995 as determined by the Bureau of the Census, of the per-
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1 centages of individuals in grade 12 (ages 16 and 17), in

2 grade 10 (ages 14 and 15), and in grade 8 (age 13) who

3 used cigarettes or smokeless tobacco, as appropriate, on a

4 daily basis during the preceding calendar year. The per5 centages used in this calculation are to be those measured

6 by (1) the University of Michigan Survey, or (2) such com7 parable index using identical methodology as is chosen by

8 the Secretary after notice and the opportunity for comment

9 in accordance with section 553 of title 5, United States

10 Code. If the methodology employed by the University of

11 Michigan Survey is changed in a material manner from

12 that employed from 1986 through 1996 (including changes

13 in the States or regions on which the University of Michi14 gan Survey is based), or is (in the opinion of the Secretary)

15 no longer the best available data, the Secretary shall use

16 the percentages measured by an index chosen by the Sec17 retary, after notice and the opportunity for comment in ac18 cordance with section 553 of title 5, United States Code,

19 that has a methodology identical to that employed by the

20 University of Michigan Survey from 1986 through 1996.

21 The Secretary shall make the data on which the results of

22 the University of Michigan Survey or such other com23 parable index are based available to the public upon re24 quest.
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1 ƒ(b) CALCULATION OF NON-ATTAINMENT PEN2 ALTIES.—

3 ƒ(1) SECRETARY TO DETERMINE NON-ATTAIN4 MENT PERCENTAGE.—The Secretary shall determine

5 the non-attainment percentage for cigarettes and for

6 smokeless tobacco for each calendar year.

7 ƒ(2) NON-ATTAINMENT PENALTY FOR CIGA8 RETTES.—For each calendar year in which the per9 centage reduction in underage use required by section

10 201(b) is not attained, the Secretary shall assess a

11 penalty on cigarette manufacturers as follows:

If the non-attainment percentage is: The penalty is:

Not more than 5 percent $80,000,000 multiplied by the non-attainment

percentage

More than 5% but not more

than 10% $400,000,000, plus $160,000,000 multiplied by

the non-attainment percentage in excess of 5%

but not in excess of 10%

More than 10% but not more

than 20% $1,200,000,000, plus $240,000,000 multiplied

by the non-attainment percentage in excess of

10% but not in excess of 20%

More than 20% $3,500,000,000

12 ƒ(3) NON-ATTAINMENT PENALTY FOR SMOKE13 LESS TOBACCO.—For each year in which the percent14 age reduction in underage use required by section

15 201(c) is not attained, the Secretary shall assess a

16 penalty on smokeless tobacco product manufacturers

17 as follows:
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If the non-attainment percentage is: The penalty is:

Not more than 5 percent $8,000,000 multiplied by the non-attainment

percentage

More than 5% but not more

than 10% $40,000,000, plus $16,000,000 multiplied by

the non-attainment percentage in excess of 5%

but not in excess of 10%

More than 10% but not more

than 20% $120,000,000, plus $24,000,000 multiplied by

the non-attainment percentage in excess of

10% but not in excess of 20%

More than 20% $350,000,000

1 ƒ(4) PENALTIES TO BE ADJUSTED FOR INFLA2 TION.—

3 ƒ(A) IN GENERAL.—Beginning with the

4 fourth calendar year after the date of enactment

5 of this Act, each dollar amount in the tables in

6 paragraphs (2) and (3) shall be increased by the

7 inflation adjustment.

8 ƒ(B) INFLATION ADJUSTMENT.—For pur9 poses of subparagraph (A), the inflation adjust10 ment for any calendar year is the percentage (if

11 any) by which—

12 ƒ(i) the CPI for the preceding calendar

13 year, exceeds

14 ƒ(ii) the CPI for the calendar year

15 1998.

16 ƒ(C) CPI.—For purposes of subparagraph

17 (B), the CPI for any calendar year is the aver18 age of the Consumer Price Index for all-urban
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•S 1415 RS2

1 consumers published by the Department of

2 Labor.

3 ƒ(D) ROUNDING.—If any increase deter4 mined under subparagraph (A) is not a multiple

5 of $1,000, the increase shall be rounded to the

6 nearest multiple of $1,000.

7 ƒ(c) JOINT, SEVERAL, AND STRICT OBLIGATION FOR

8 PENALTIES.—

9 ƒ(1) CIGARETTE MANUFACTURERS.—Any pen10 alty due and payable by cigarette manufacturers shall

11 be the joint, several, and strict obligation of such

12 manufacturers.

13 ƒ(2) SMOKELESS TOBACCO.—Any penalty pay14 able by smokeless tobacco product manufacturers shall

15 be the joint, several, and strict obligation of such

16 manufacturers.

17 ƒ(d) EXEMPTIONS FOR SMALL MANUFACTURERS.—

18 ƒ(1) ALLOCATION BY MARKET SHARE.—The Sec19 retary shall make such allocations according to each

20 manufacturer’s share of the domestic cigarette or do21 mestic smokeless tobacco market, as appropriate, in

22 the year for which the penalty is being assessed, based

23 on actual Federal excise tax payments.

24 ƒ(2) EXEMPTION.—In any year in which a pen25 alty is being assessed, the Secretary shall exempt from
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1 payment any tobacco product manufacturer with less

2 than 1 percent of the domestic market share for a spe3 cific category of tobacco product unless the Secretary

4 finds that the manufacturer’s brands used by under5 age individuals at a rate equal to or greater than the

6 manufacturer’s total market share for the type of to7 bacco product.

8 ƒ(e) METHOD OF PENALTY ASSESSMENT.—The Sec9 retary shall assess a penalty for a specific calendar year

10 on or before May 1 of the subsequent calendar year. Penalty

11 payments shall be paid on or before July 1 of the year in

12 which they are assessed. The Secretary may establish, by

13 regulation, interest at a rate up to 3 times the prevailing

14 prime rate at the time the penalty is assessed, and addi15 tional charges in an amount up to 3 times the penalty,

16 for late payment of the penalty.

17 ƒ(f) BUSINESS EXPENSE DEDUCTION.—Any penalty

18 paid by a tobacco product manufacturer under this section

19 shall not be deductible as an ordinary and necessary busi20 ness expense or otherwise under the Internal Revenue Code

21 of 1986.

22 ƒ(g) PENALTY LIABILITY AMONG MANUFACTURERS.—

23 ƒ(1) IN GENERAL.—The District Courts of the

24 United States shall have jurisdiction to adjudicate

25 any claim brought under this section by a tobacco
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•S 1415 RS2

1 product manufacturer against one or more other to2 bacco product manufacturers—

3 ƒ(A) to recover a portion of the penalty

4 paid by the plaintiff manufacturer; or

5 ƒ(B) for a reallocation of the penalty

6 among tobacco product manufacturers.

7 ƒ(2) CONTRIBUTION OR REIMBURSEMENT LI8 ABILITY.—A tobacco product manufacturer shall be

9 liable under this subsection to one or more other man10 ufacturers if the plaintiff tobacco product manufac11 turer establishes by a preponderance of the evidence

12 that the defendant tobacco product manufacturer,

13 through its acts or omissions, was responsible for a

14 disproportionate share of the non-attainment penalty

15 as compared to the responsibility of the plaintiff

16 manufacturer, as contemplated in subsection (c)(3).

17 ƒ(3) RESPONSIBILITY FOR AGENTS, ETC.—In

18 any action brought under this subsection, a tobacco

19 product manufacturer shall be held responsible for

20 any act or omission of its attorneys, advertising agen21 cies, or other agents that contributed to that manufac22 turer’s responsibility for the penalty assessed under

23 this section.≈
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1 SEC. 203. SUBSTANTIAL NON-ATTAINMENT OF REQUIRED

2 REDUCTIONS.

3 (a) ACTION BY SECRETARY.—

4 (1) IN GENERAL.—If the Secretary determines

5 that the non-attainment percentage for any year is

6 greater than 20 percentage points for cigarettes or

7 smokeless tobacco, then the Secretary shall determine,

8 on a brand-by-brand basis, using data that reflects a

9 1999 baseline, which tobacco product manufacturers

10 are responsible within the 2 categories of tobacco

11 products for the excess. The Secretary may commence

12 an action under this section against the tobacco prod13 uct manufacturer or manufacturers of the brand or

14 brands of cigarettes or smokeless tobacco products for

15 which the non-attainment percentage exceeded 20 per16 centage points.

17 (2) DETERMINATION.—The Secretary shall use

18 research methodology that is similar to, or the same

19 as, that used in the University of Michigan Survey,

20 except—

21 (A) the methodology shall be adapted to de22 termining underage usage by brand; and

23 (B) the base period shall be calendar year

24 1999.

25 (b) PROCEDURES.—Any action under this section shall

26 be commenced by the Secretary in the United States Dis-
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•S 1415 RS2

1 trict Court for the District of Columbia within 90 days

2 after publication in the Federal Register of the determina3 tion that the non-attainment percentage for the tobacco

4 product in question is greater than 20 percentage points.

5 Any such action shall be heard and determined by a 3-judge

6 court under section 2284 of title 28, United States Code.

7 (c) DETERMINATION BY COURT.—In any action under

8 this section, the court shall determine whether the prepon9 derance of the evidence shows that a tobacco product manu10 facturer—

11 (1) has failed to comply substantially with the

12 provisions of this Act regarding underage tobacco use,

13 of any rules or regulations promulgated thereunder,

14 or of any Federal or State laws regarding underage

15 tobacco use;

16 (2) has taken any material action to undermine

17 the achievement of the required percentage reduction

18 for the tobacco product in question; or

19 (3) has failed to comply with all recommenda20 tions of the Tobacco Agreement Accountability Panel

21 established under section 801.

22 (d) REMOVAL OF ANNUAL AGGREGATE PAYMENT LIMI23 TATION.—Except as provided in subsections (e) and (g), if

24 the court determines that the preponderance of the evidence

25 shows that a tobacco product manufacturer engaged in con-
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•S 1415 RS2

1 duct described in subsection (c) then section 706(c) of this

2 Act does not apply to the enforcement against, or the pay3 ment by, such tobacco product manufacturer of any judg4 ment or settlement that becomes final after that determina5 tion is made. The liability apportionment agreement de6 scribed in section 706(e) of this Act shall not require that

7 other tobacco product manufacturers pay an increased

8 amount in any year over the amount they would have had

9 to pay but for this section.

10 (e) DEFENSE.—An action under this section shall be

11 dismissed, and subsection (d) shall not apply, if the court

12 finds that the Secretary’s determination under subsection

13 (a) was unlawful under subparagraph (A), (B), (C), or (D)

14 of section 706(2) of title 5, United States Code. Any judg15 ments paid under section 706(c) of this Act and section

16 (1)(d)(3) of the Protocol prior to a final judgment determin17 ing that the Secretary’s determination was erroneous shall

18 be fully credited, with interest, under section 707(e) of this

19 Act and section (1)(d)(3) of the Protocol.

20 (f) REVIEW.—Decisions of the court under this section

21 are reviewable only by the Supreme Court by writ of certio22 rari granted upon the petition of any party. The applicabil23 ity of subsection (d) shall be stayed during the pendency

24 of any such petition or review.
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1 (g) CONTINUING EFFECT.—Subsection (d) shall cease

2 to apply to a tobacco product manufacturer found to have

3 engaged in conduct described in subsection (c) upon the

4 later of—

5 (1) a determination by the Secretary under sec6 tion 201 after the commencement of action under sub7 section (a) that the non-attainment percentage for the

8 tobacco product in question is 20 or fewer percentage

9 points; or

10 (2) a finding by the court in an action filed

11 against the Secretary by the manufacturer, not earlier

12 than 2 years after the determination described in sub13 section (c) becomes final, that the preponderance of

14 the evidence shows that, in the period since that deter15 mination, the manufacturer—

16 (A) has complied with the provisions of this

17 Act regarding underage tobacco use, of any rules

18 or regulations promulgated thereunder, and of

19 any other applicable Federal, State, or local

20 laws, rules, or regulations;

21 (B) has not taken any action to undermine

22 the achievement of the required percentage reduc23 tion for the tobacco product in question; and

24 (C) has pursued substantial additional

25 measures reasonably calculated to attain the re-
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1 quired percentage reduction for the tobacco prod2 uct in question.

3 A judgment or settlement against the tobacco product man4 ufacturer that becomes final after a determination or find5 ing described in paragraph (1) or (2) of this subsection is

6 not subject to subsection (d). An action under paragraph

7 (2) of this subsection shall be commenced in the United

8 States District Court for the District of Columbia, and shall

9 be heard and determined by a 3-judge court under section

10 2284 of title 28, United States Code. A decision by the court

11 under paragraph (2) of this subsection is reviewable only

12 by the Supreme Court by writ of certiorari granted upon

13 the petition of any party, and the decision shall be stayed

14 during the pendency of the petition or review. A determina15 tion or finding described in paragraph (1) or (2) of this

16 subsection does not limit the Secretary’s authority to bring

17 a subsequent action under this section against any tobacco

18 product manufacturer or the applicability of subsection (d)

19 with respect to any such subsequent action.

20 (h) DEFINITIONS.—The definitions set forth in section

21 701 of this Act apply to terms used in this section. A judg22 ment or settlement becomes final within the meaning of this

23 section when it would qualify as a final judgment or final

24 settlement under section 701.
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1 SEC. 204. DEFINITIONS.

2 As used in this subtitle—

3 (1) The term ‘‘base incidence percentage’’

4 means—

5 (A) in the case of cigarettes, the average,

6 weighted by relative population of the following

7 age groups in 1995 as determined by the Bureau

8 of the Census, of (i) the average of the percent9 ages of individuals in grade 12 (ages 16 and 17)

10 from 1986 to 1996 who used cigarettes on a

11 daily basis; (ii) the average of the percentages of

12 individuals in grade 10 (ages 14 and 15) from

13 1991 to 1996 who used cigarettes on a daily

14 basis; and (iii) the average of the percentages of

15 individuals in grade 8 (age 13) from 1991 to

16 1996 who used cigarettes on a daily basis; and

17 (B) in the case of smokeless tobacco prod18 ucts, the average, weighted by relative population

19 of the following age groups in 1995 as deter20 mined by the Bureau of the Census, of the per21 centage of individuals in grade 12 (ages 16 and

22 17), individuals in grade 10 (ages 14 and 15),

23 and individuals in grade 8 (age 13) who used

24 smokeless tobacco products on a daily basis in

25 1996.
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1 The percentages specified in this paragraph are those meas2 ured by the University of Michigan Survey or by such com3 parable index using identical methodology as is chosen by

4 the Secretary after notice and the opportunity for comment

5 in accordance with section 553 of title 5, United States

6 Code.

7 (2) The term ‘‘cigarette manufacturers’’ means

8 manufacturers of cigarettes sold in the United States.

9 (3) The term ‘‘non-attainment percentage for

10 cigarettes’’ means the number of percentage points

11 yielded—

12 (A) for a calendar year in which the per13 cent incidence of underage use of cigarettes is less

14 than the base incidence percentage, by subtract15 ing—

16 (i) the percentage by which the percent

17 incidence of underage use of cigarettes in

18 that year is less than the base incidence per19 centage, from

20 (ii) the required percentage reduction

21 applicable in that year; and

22 (B) for a calendar year in which the per23 cent incidence of underage use of cigarettes is

24 greater than the base incidence percentage, add25 ing—
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•S 1415 RS2

1 (i) the percentage by which the percent

2 incidence of underage use of cigarettes in

3 that year is greater than the base incidence

4 percentage; and

5 (ii) the required percentage reduction

6 applicable in that year.

7 (4) The term ‘‘non-attainment percentage for

8 smokeless tobacco products’’ means the number of per9 centage points yielded—

10 (A) for a calendar year in which the per11 cent incidence of underage use of smokeless to12 bacco products is less than the base incidence

13 percentage, by subtracting—

14 (i) the percentage by which the percent

15 incidence of underage use of smokeless to16 bacco products in that year is less than the

17 base incidence percentage, from

18 (ii) the required percentage reduction

19 applicable in that year; and

20 (B) for a calendar year in which the per21 cent incidence of underage use of smokeless to22 bacco products is greater than the base incidence

23 percentage, by adding—

24 (i) the percentage by which the percent

25 incidence of underage use of smokeless to-
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•S 1415 RS2

1 bacco products in that year is greater than

2 the base incidence percentage; and

3 (ii) the required percentage reduction

4 applicable in that year.

5 (5) The term ‘‘smokeless tobacco product manu6 facturers’’ means manufacturers of smokeless tobacco

7 products sold in the United States.

8 (6) The term ‘‘University of Michigan Survey’’

9 means the University of Michigan’s National High

10 School Drug Use Survey entitled ‘‘Monitoring the Fu11 ture’’.

12 Subtitle B—State Enforcement

13 Incentives

14 ƒSEC. 211. COMPLIANCE BONUS FUND.

15 ƒ(a) ESTABLISHMENT.—There is established within

16 the National Tobacco Settlement Trust Fund established by

17 section 401 a separate account to be known as the Compli18 ance Bonus Account for States and Retailers. There are au19 thorized to be appropriated from such account such

20 amounts as may be necessary to carry out the provisions

21 of this subtitle.

22 ƒ(b) CREDITS TO ACCOUNT.—For each fiscal year

23 there shall be credited to the Account an amount equal to—
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•S 1415 RS2

1 ƒ(1) 5 percent of the amounts credited to the Na2 tional Tobacco Settlement Trust Fund under section

3 401(b)(3); and

4 ƒ(2) any amounts withheld under section 213.≈

5 SEC. 212. BLOCK GRANTS.

6 (a) IN GENERAL.—The Secretary shall award block

7 grants to States determined to be eligible under subsection

8 (b).

9 (b) ELIGIBLE STATES.—To be eligible to receive a

10 grant under subsection (a), a State shall—

11 (1) prepare and submit to the Secretary an ap12 plication, at such time, in such manner, and contain13 ing such information as the Secretary may require;

14 and

15 (2) with respect to the year involved, dem16 onstrate to the satisfaction of the Secretary that fewer

17 than 5 percent of all individuals under 18 years of

18 age who attempt to purchase tobacco products in the

19 State in such year are successful in such purchase.

20 (c) PAYOUT; USE OF FUNDS.—

21 (1) ANNUAL DISTRIBUTION.—For each fiscal

22 year in which one or more States is eligible to receive

23 a grant under this section, the Secretary shall pay

24 out ƒthe balance in the account established under sec25 tion 211(a) as of the end of the preceding fiscal year≈
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•S 1415 RS2

1 any amount appropriated for such fiscal

2 year.

3 (2) PAYMENT TO STATE.—If more than one State

4 is eligible to receive a grant under this section for any

5 fiscal year, the amount payable for that fiscal year

6 shall be apportioned among such eligible States on the

7 basis of population.

8 (3) USE OF FUNDS.—Each State that receives a

9 grant under this section shall distribute half of the

10 amount received among retail outlets of tobacco prod11 ucts that, for fiscal year for which the State met the

12 requirements of subsection (b), have outstanding

13 records of compliance with the restrictions on under14 age sales of tobacco products.

15 SEC. 213. STATE ENFORCEMENT INCENTIVES.

16 (a) IN GENERAL.—

17 (1) ACTIVITIES AND REPORTS REGARDING EN18 FORCEMENT.—A State shall—

19 (A) conduct monthly random, unannounced

20 inspections of sales or distribution outlets in the

21 State to ensure compliance with a law prohibit22 ing sales of tobacco products to individuals

23 under 18 years of age;

24 (B) annually submit to the Secretary a re25 port describing—
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•S 1415 RS2

1 (i) the activities carried out by the

2 State to enforce underage access laws dur3 ing the fiscal year; and

4 (ii) the extent of success the State has

5 achieved in reducing the availability of to6 bacco products to individuals under the age

7 of 18 years; and

8 (C)(i) a detailed description of how the in9 spections described in subparagraph (A) were

10 conducted and the methods used to identify out11 lets, with appropriate protection for the con12 fidentiality of information regarding the timing

13 of inspections and other investigative techniques

14 whose effectiveness depends on continued con15 fidentiality;

16 (ii) the identity of the single State agency

17 designated by the Governor of the State to be re18 sponsible for the implementation of the require19 ments of this section.

20 (2) MINIMUM INSPECTION SCHEDULE.—In order

21 to meet the requirements of paragraph (1)(A), inspec22 tions conducted by the State shall include at least 250

23 random, unannounced inspections of retail sale out24 lets annually for each 1,000,000 persons resident in

25 the State, as most recently determined by the Bureau
366

•S 1415 RS2

1 of the Census. Such inspections shall cover a range of

2 outlets (not preselected on the basis of prior viola3 tions) to measure overall levels of compliance as well

4 as to identify violations, and shall be conducted to

5 provide a probability sample of outlets. The sample

6 must reflect the distribution of the population under

7 the age of 18 years throughout the State and the dis8 tribution of the outlets throughout the State accessible

9 to youth. Indian tribes shall conduct such inspections

10 monthly of at least 1 retail outlet subject to their ju11 risdiction for each 4,000 reservation residents. Except

12 as provided in this paragraph, any reports required

13 by this paragraph shall be made public. As used in

14 this paragraph, the term ‘‘outlet’’ refers to any loca15 tion that sells at retail or otherwise distributes to16 bacco products to consumers, including to locations

17 that sell such products over-the-counter.

18 (b) NONCOMPLIANCE.—

19 (1) INSPECTIONS.—The Secretary shall withhold

20 from any State that fails to meet the requirements of

21 subsection (a) in any calendar year an amount equal

22 to an amount equal to 5 percent of the amount other23 wise payable under this subtitle to that State for the

24 next fiscal year.
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1 (2) COMPLIANCE RATE.—The Secretary shall

2 withhold from any State that fails to demonstrate a

3 compliance rate of—

4 (A) at least 75 percent in the fifth and sixth

5 fiscal years after the date of enactment of the

6 National Tobacco Policy and Youth Smoking

7 Act;

8 (B) at least 85 percent in the seventh,

9 eighth, and ninth fiscal years after such date;

10 and

11 (C) at least 90 percent in every fiscal year

12 beginning with the tenth fiscal year after such

13 date,

14 an amount equal to one percentage point for each per15 centage point by which the State failed to meet the

16 percentage set forth in this subsection for that year

17 from the amount otherwise payable under this subtitle

18 for that fiscal year.

19 (c) DEFINITION.—For the purposes of this section, the

20 term ‘‘first applicable fiscal year’’ means the first fiscal

21 year beginning after the fiscal year in which funding is

22 made available to the States under this section.

23 (f) RELEASE AND DISBURSEMENT.—

24 (1) Upon notice from the Secretary that an

25 amount payable under section 202(e) has been ordered
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•S 1415 RS2

1 withheld under subsection (b), a State may petition

2 the Secretary for a release and disbursement of up to

3 75 percent of the amount withheld, and shall give

4 timely written notice of such petition to the attorney

5 general of that State and to all tobacco product man6 ufacturers.

7 (2) The agency shall conduct a hearing on such

8 a petition, in which the attorney general of the State

9 and tobacco product manufacturers may participate

10 and be heard.

11 (3) The burden shall be on the State to prove, by

12 a preponderance of the evidence, that the release and

13 disbursement should be made. The Secretary’s deci14 sion on whether to grant such a release, and the

15 amount of any such disbursement, shall be based on

16 whether—

17 (A) the State has acted in good faith and in

18 full compliance with this Act, and any rules or

19 regulations promulgated under this Act;

20 (B) the State has pursued all reasonably

21 available measures to attain the compliance

22 rates and required percentage reductions appli23 cable in the year for which the release is being

24 sought;
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•S 1415 RS2

1 (C) there is evidence of any direct or indi2 rect action by the State to undermine the

3 achievement of the compliance rates, the required

4 percentage reductions, or other terms and objec5 tives of this Act or the National Tobacco Policy

6 and Youth Smoking Reduction Act; and

7 (D) any other relevant evidence.

8 (4) A State shall be entitled to interest on any

9 withheld amount released at the average United

10 States 52-Week Treasury Bill rate for the period be11 tween the withholding of the amount and its release.

12 (5) Any State attorney general or tobacco product

13 manufacturer aggrieved by a final decision on a peti14 tion filed under this subsection may seek judicial re15 view of such decision within 30 days in the United

16 States Court of Appeals for the District of Columbia

17 Circuit. Unless otherwise specified in this Act, judi18 cial review under this section shall be governed by

19 sections 701 through 706 of title 5, United States

20 Code.

21 (6) No stay or other injunctive relief enjoining a

22 reduction in a State’s allotment pending appeal or

23 otherwise may be granted by the Secretary or any

24 court.
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•S 1415 RS2

1 SEC. 214. CONFORMING CHANGE.

2 Section 1926 of the Public Health Service Act (42

3 U.S.C. 300x—26) is hereby repealed.

4 Subtitle C—Other Programs

5 SEC. 221. NATIONAL SMOKING CESSATION PROGRAM.

6 (a) ESTABLISHMENT.—The Secretary shall establish a

7 program to be known as the ‘‘National Smoking Cessation

8 Program’’ under which the Secretary may award grants to

9 eligible public and nonprofit entities and individuals for

10 tobacco product use cessation purposes.

11 (b) ELIGIBILITY.—

12 (1) OF ENTITIES.—To be eligible to receive a

13 grant under this section an entity shall—

14 (A) be a public or nonprofit private entity,

15 including community health centers and other

16 community-based organizations with a focus on

17 low-income populations;

18 (B) prepare and submit to the Secretary an

19 application at such time, in such manner, and

20 containing such information as the Secretary

21 may require;

22 (C) provide assurances that amounts re23 ceived under the grant will be used in accordance

24 with subsection (c)(1); and

25 (D) meet any other requirements deter26 mined appropriate by the Secretary.
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•S 1415 RS2

1 (2) OF INDIVIDUALS.—To be eligible to receive a

2 grant under this section an individual shall—

3 (A) prepare and submit to the Secretary an

4 application at such time, in such manner, and

5 containing such information as the Secretary

6 may require;

7 (B) provide assurances that amounts re8 ceived under the grant will be used only in ac9 cordance with subsection (c)(2); and

10 (C) meet any other requirements determined

11 appropriate by the Secretary.

12 (c) USE OF FUNDS.—

13 (1) BY ENTITIES.—An entity that receives a

14 grant under this section shall use amounts provided

15 under the grant to establish or administer tobacco

16 product use cessation programs that are approved in

17 accordance with subsection (d).

18 (2) BY INDIVIDUALS.—An individual who re19 ceives a grant under this section shall use amounts

20 provided under the grant to enroll in a tobacco prod21 uct use cessation program or to purchase a tobacco

22 product use cessation product that has been approved

23 in accordance with subsection (d). Grants to individ24 uals under this section may be in the form of vouchers

25 that may be used to pay the costs of enrollment in an
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•S 1415 RS2

1 approved program or to purchase an approved prod2 uct.

3 (d) APPROVAL OF CESSATION PROGRAM OR DE4 VICES.—Using the best available scientific information, the

5 Secretary shall promulgate regulations to provide for the

6 approval of tobacco product use cessation programs and

7 drugs, human biological products, or medical devices ap8 proved by the Food and Drug Administration or otherwise

9 legally marketed under the Federal Food, Drug, and Cos10 metic Act (21 U.S.C. 301 et seq.) or under the Public Health

11 Service Act (42 U.S.C. 201 et seq.) for use as smoking ces12 sation therapies or aids. The regulations shall ensure that

13 tobacco product users—

14 (1) have reasonable access upon request to such

15 comprehensive tobacco use cessation programs and

16 drugs, human biological products, or medical devices;

17 and

18 (2) have access to a broad range of cessation op19 tions that are tailored to the needs of the individual

20 tobacco user.

21 (e) MINORITY FOCUS.—The Secretary shall ensure

22 smoking cessation programs are directed to include minor23 ity populations in proportion to their prevalence in the

24 smoking population, and are linguistically and culturally

25 appropriate for such populations.
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•S 1415 RS2

1 (f) FUNDING.—There are authorized to be appro2 priated from the National Tobacco Settlement Trust Fund,

3 other than from amounts in the State Litigation Settlement

4 Account, such sums as may be necessary to carry out this

5 section.

6 SEC. 222. NATIONAL TOBACCO-FREE PUBLIC EDUCATION

7 PROGRAM.

8 (a) ESTABLISHMENT OF BOARD.—

9 (1) IN GENERAL.—The Secretary shall establish

10 an independent board to be known as the ‘‘Tobacco11 Free Education Board’’ (referred to in this section as

12 the ‘‘Board’’) to enter into contracts with or award

13 grants to eligible public and nonprofit private entities

14 to carry out public informational and educational ac15 tivities designed to reduce the use of tobacco products.

16 (2) APPOINTMENT.—The Board shall be com17 posed of 9 members to be appointed by the Secretary,

18 of whom—

19 (A) at least 3 such members shall be indi20 viduals who are widely recognized by the general

21 public for achievement in the athletic, cultural,

22 entertainment, educational, business, or political

23 field; and
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•S 1415 RS2

1 (B) at least 3 such members shall be indi2 viduals who are heads of major public health or3 ganizations.

4 (3) TERMS AND VACANCIES.—The members of the

5 Board shall serve staggered terms as determined ap6 propriate at the time of appointment by the Sec7 retary. A vacancy in the Board shall not affect its

8 powers, but shall be filled in the same manner as the

9 original appointment.

10 (4) POWERS.—

11 (A) HEARINGS.—The Board may hold such

12 hearings, sit and act at such times and places,

13 take such testimony, and receive such evidence as

14 the Board considers advisable to carry out the

15 purposes of this section.

16 (B) INFORMATION FROM FEDERAL AGEN17 CIES.—The Board may secure directly from any

18 Federal department or agency such information

19 as the Board considers necessary to carry out the

20 provisions of this section.

21 (5) PERSONNEL MATTERS.—

22 (A) COMPENSATION.—Each member of the

23 Board who is not an officer or employee of the

24 Federal Government shall be compensated at a

25 rate equal to the daily equivalent of the annual
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•S 1415 RS2

1 rate of basic pay prescribed for level IV of the

2 Executive Schedule under section 5315 of title 5,

3 United States Code, for each day (including

4 travel time) during which such member is en5 gaged in the performance of the duties of the

6 Board. All members of the Board who are officers

7 or employees of the United States shall serve

8 without compensation in addition to that re9 ceived for their services as officers or employees

10 of the United States.

11 (B) TRAVEL EXPENSES.—The members of

12 the Board shall be allowed travel expenses, in13 cluding per diem in lieu of subsistence, at rates

14 authorized for employees of agencies under sub15 chapter I of chapter 57 of title 5, United States

16 Code, while away from their homes or regular

17 places of business in the performance of services

18 for the Board.

19 (b) ESTABLISHMENT OF PROGRAM.—The Secretary

20 shall establish a program to be known as the ‘‘National To21 bacco-Free Public Education Program’’ under which the

22 Board may enter into contracts with or award grants to

23 eligible public and nonprofit private entities to carry out

24 public informational and educational activities designed to

25 reduce the use of tobacco products.
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•S 1415 RS2

1 (c) ELIGIBILITY.—To be eligible to receive a grant

2 under this section an entity shall—

3 (1) be a—

4 (A) public entity or a State; or

5 (B) nonprofit private entity that—

6 (i) is not affiliated with a tobacco

7 product manufacturer or importer;

8 (ii) has a demonstrated record of work9 ing effectively to reduce tobacco product use;

10 and

11 (iii) has expertise in conducting a

12 multi-media communications campaign, in13 cluding proven effective campaigns for mi14 nority populations;

15 (2) prepare and submit to the Secretary an ap16 plication at such time, in such manner, and contain17 ing such information as the Secretary may require,

18 including a description of the activities to be con19 ducted using amounts received under the grant or

20 contract;

21 (3) provide assurances that amounts received

22 under the grant will be used in accordance with sub23 section (d); and

24 (4) provide assurances to the Secretary that—
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•S 1415 RS2

1 (A) the entity will annually report to the

2 Secretary on the effectiveness of the approaches

3 implemented including approaches related to

4 high risk and minority populations;

5 (B) adequate records will be maintained

6 with respect to such assistance;

7 (C) amounts provided to individuals or en8 tities will be subject to independent audit; and

9 (D) activities of private entities or individ10 uals will be coordinated with State and local

11 public health officials in the planning and im12 plementation of the program; and

13 (5) meet any other requirements determined ap14 propriate by the Secretary.

15 (d) USE OF FUNDS.—An entity that receives a grant

16 or contract under this section shall use amounts provided

17 under the grant or contract to conduct multi-media public

18 educational or information campaigns that are designed to

19 discourage and de-glamorize the use of tobacco products.

20 Such campaigns shall be designed to discourage the initi21 ation of tobacco use by minors and other populations and

22 encourage those using such products to quit. These cam23 paigns shall include—
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1 (1) school-based programs that are focused on

2 those regions of the State with high smoking rates and

3 targeted at populations most at risk to start smoking;

4 (2) Statewide college and university based edu5 cation program to discourage individuals between the

6 ages of 18 and 24 from beginning to on colleges or

7 universities with high smoking rates; or

8 (3) community-based prevention programs that

9 are focused on those populations within the commu10 nity including minority populations, in proportion to

11 their prevalence in the smoking population that are

12 most at-risk to use tobacco products or that have been

13 targeted by tobacco advertising or marketing.

14 (e) NEEDS OF CERTAIN POPULATIONS.—In awarding

15 grants and contracts under this section, the Board shall

16 take into consideration the needs of particular populations,

17 including using methods that are proven and effective and

18 are culturally and linguistically appropriate.

19 (f) FUNDING.—There are authorized to be appro20 priated from the National Tobacco Settlement Trust Fund,

21 other than from amounts in the State Litigation Settlement

22 Account, such sums as may be necessary to carry out this

23 section.
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•S 1415 RS2

1 SEC. 223. NATIONAL COMMUNITY ACTION PROGRAM.

2 (a) ESTABLISHMENT.—The Secretary shall establish a

3 program to be known as the ‘‘National Community Action

4 Program’’ under which the Secretary may award grants to

5 eligible State and local governmental entities to carry out

6 community-based tobacco control efforts that are designed

7 to encourage community involvement in reducing tobacco

8 product use.

9 (b) ELIGIBILITY.—To be eligible to receive a grant

10 under this section an entity shall—

11 (1) be a State or local public entity;

12 (2) prepare and submit to the Secretary an ap13 plication at such time, in such manner, and contain14 ing such information as the Secretary may require;

15 (3) provide assurances that amounts received

16 under the grant will be used in accordance with the

17 purposes of this section; and

18 (4) meet any other requirements determined ap19 propriate by the Secretary.

20 (c) FUNDING.—There are authorized to be appro21 priated from the National Tobacco Settlement Trust Fund,

22 other than from amounts in the State Litigation Settlement

23 Account, such sums as may be necessary to carry out this

24 section.

25 SEC. 224. STATE RETAIL LICENSING PROGRAM.

26 (a) GENERAL REQUIREMENTS.—
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1 (1) ESTABLISHMENT OF PROGRAM.—The Sec2 retary shall provide a block grant under this Act to

3 each State that has in effect a law that—

4 (A) provides for the licensing of entities en5 gaged in the sale or distribution of tobacco prod6 ucts directly to consumers; and

7 (B) meets the standards described in this

8 section.

9 (2) STATE AGREEMENT REQUIRED.—In order to

10 receive a block grant under this section, a State—

11 (A) shall enter into an agreement with the

12 Secretary to assume responsibilities for the im13 plementation and enforcement of a tobacco re14 tailer licensing program;

15 (B) shall ensure compliance with the Youth

16 Access Restrictions regulations promulgated by

17 the Secretary (21 C.F.R. 897.1 et seq.); and

18 (C) shall establish to the satisfaction of the

19 Secretary that it has a law or regulation that in20 cludes the following:

21 (i) LICENSURE AND NOTICE.—A State

22 license is required for each retail establish23 ment involved in the sale or distribution of

24 tobacco products to consumers. The State

25 has a program under which notice is pro-
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1 vided to such establishments and their em2 ployees of all licensing requirements and re3 sponsibilities under State and Federal law

4 relating to the retail distribution of tobacco

5 products.

6 (ii) PENALTIES.—

7 (I) CRIMINAL.—Criminal pen8 alties are provided for the sale or dis9 tribution of tobacco products to a con10 sumer without a license.

11 (II) CIVIL.—Civil penalties are

12 provided for the sale or distribution of

13 tobacco products in violation of State

14 law, that include graduated fines and

15 suspension or revocation of licenses, for

16 repeated violations.

17 (III) OTHER.—There are other

18 programs in place, including such

19 measures as fines, suspension of driv20 er’s license privileges, or community

21 service requirements, for underage

22 youths who possess, purchase, or at23 tempt to purchase tobacco products.

24 (iii) JUDICIAL REVIEW.—Judicial re25 view procedures are in place for an action
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1 of the State suspending, revoking, denying,

2 or refusing to renew any license under its

3 program.

4 (b) ENFORCEMENT.—Each State that receives a grant

5 under this section shall undertake to enforce compliance

6 with its tobacco retailing licensing program in a manner

7 that can reasonably be expected to reduce the sale and dis8 tribution of tobacco products to individuals under 18 years

9 of age. If the Secretary determines that a State is not en10 forcing the law in accordance with such an undertaking,

11 the Secretary may withhold a portion of any unobligated

12 funds under this section otherwise payable to that State.

13 (c) NON-PARTICIPATING STATES LICENSING REQUIRE14 MENTS.—For retailers in States which have not established

15 a licensing program under subsection (a), the Secretary

16 may promulgate regulations establishing a Federal retail

17 licensing program for retailers engaged in tobacco sales to

18 consumers in those States. The Secretary may enter into

19 agreements with States for the enforcement of those regula20 tions. A State that enters into such an agreement shall re21 ceive a grant under this section to reimburse it for costs

22 incurred in carrying out that agreement.

23 (d) FUNDING.—There are authorized to be

24 appropriated from the National Tobacco Set25 tlement Trust Fund, other than from amounts
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1 in the State Litigation Settlement Account,

2 such sums as may be necessary to carry out

3 this section.

4 TITLE III—TOBACCO PRODUCT

5 WARNINGS AND SMOKE CON6 STITUENT DISCLOSURE

7 Subtitle A—Product Warnings,

8 Labeling and Packaging

9 SEC. 301. CIGARETTE LABEL AND ADVERTISING WARNINGS.

10 Section 4 of the Federal Cigarette Labeling and Adver11 tising Act (15 U.S.C. 1333) is amended to read as follows:

12 ‘‘SEC. 4. LABELING.

13 ‘‘(a) LABEL REQUIREMENTS.—

14 ‘‘(1) IN GENERAL.—It shall be unlawful for any

15 person to manufacture, package, or import for sale or

16 distribution within the United States any cigarettes

17 the package of which fails to bear, in accordance with

18 the requirements of this section, one of the following

19 labels:

20 ‘WARNING: Cigarettes are addictive’

21 ‘WARNING: Tobacco smoke can harm your children’

22 ‘WARNING: Cigarettes cause fatal lung disease’

23 ‘WARNING: Cigarettes cause cancer’

24 ‘WARNING: Cigarettes cause strokes and heart dis25 ease’
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1 ‘WARNING: Smoking during pregnancy can harm

2 your baby’

3 ‘WARNING: Smoking can kill you’

4 ‘WARNING: Tobacco smoke causes fatal lung disease

5 in non-smokers’

6 ‘WARNING: Quitting smoking now greatly reduces

7 serious risks to your health’

8 ‘‘(2) PLACEMENT; TYPOGRAPHY; ETC.—

9 ‘‘(A) IN GENERAL.—Each label statement

10 required by paragraph (1) shall be located in the

11 upper portion of the front and rear panels of the

12 package, directly on the package underneath the

13 cellophane or other clear wrapping. Except as

14 provided in subparagraph (B), each label state15 ment shall comprise at least the top 25 percent

16 of the front and rear panels of the package. The

17 word ‘WARNING’ shall appear in capital letters

18 and all text shall be in conspicuous and legible

19 17-point type, unless the text of the label state20 ment would occupy more than 70 percent of such

21 area, in which case the text may be in a smaller

22 conspicuous and legible type size, provided that

23 at least 60 percent of such area is occupied by

24 required text. The text shall be black on a white

25 background, or white on a black background, in
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1 a manner that contrasts, by typography, layout,

2 or color, with all other printed material on the

3 package, in an alternating fashion under the

4 plan submitted under subsection (b)(4).

5 ‘‘(B) FLIP-TOP BOXES.—For any cigarette

6 brand package manufactured or distributed be7 fore January 1, 2000, which employs a flip-top

8 style (if such packaging was used for that brand

9 in commerce prior to June 21, 1997), the label

10 statement required by paragraph (1) shall be lo11 cated on the flip-top area of the package, even if

12 such area is less than 25 percent of the area of

13 the front panel. Except as provided in this para14 graph, the provisions of this subsection shall

15 apply to such packages.

16 ‘‘(3) DOES NOT APPLY TO FOREIGN DISTRIBU17 TION.—The provisions of this subsection do not apply

18 to a tobacco product manufacturer or distributor of

19 cigarettes which does not manufacture, package, or

20 import cigarettes for sale or distribution within the

21 United States.

22 ‘‘(b) ADVERTISING REQUIREMENTS.—

23 ‘‘(1) IN GENERAL.—It shall be unlawful for any

24 tobacco product manufacturer, importer, distributor,

25 or retailer of cigarettes to advertise or cause to be ad-
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1 vertised within the United States any cigarette unless

2 its advertising bears, in accordance with the require3 ments of this section, one of the labels specified in

4 subsection (a) of this section.

5 ‘‘(2) TYPOGRAPHY, ETC.—Each label statement

6 required by subsection (a) of this section in cigarette

7 advertising shall comply with the standards set forth

8 in this paragraph. For press and poster advertise9 ments, each such statement and (where applicable)

10 any required statement relating to tar, nicotine, or

11 other constituent yield shall comprise 20 percent of

12 the area of the advertisement and shall appear in a

13 conspicuous and prominent format and location at

14 the top of each advertisement within the trim area.

15 The Secretary may revise the required type sizes in

16 such area in such manner as the Secretary determines

17 appropriate. The word ‘WARNING’ shall appear in

18 capital letters, and each label statement shall appear

19 in conspicuous and legible type. The text of the label

20 statement shall be black if the background is white

21 and white if the background is black, under the plan

22 submitted under paragraph (4) of this subsection. The

23 label statements shall be enclosed by a rectangular

24 border that is the same color as the letters of the state25 ments and that is the width of the first downstroke
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1 of the capital ‘W’ of the word ‘WARNING’ in the

2 label statements. The text of such label statements

3 shall be in a typeface pro rata to the following re4 quirements: 45-point type for a whole-page broadsheet

5 newspaper advertisement; 39-point type for a half6 page broadsheet newspaper advertisement; 39-point

7 type for a whole-page tabloid newspaper advertise8 ment; 27-point type for a half-page tabloid newspaper

9 advertisement; 31.5-point type for a double page

10 spread magazine or whole-page magazine advertise11 ment; 22.5-point type for a 28 centimeter by 3 col12 umn advertisement; and 15-point type for a 20 centi13 meter by 2 column advertisement. The label state14 ments shall be in English, except that in the case of—

15 ‘‘(A) an advertisement that appears in a

16 newspaper, magazine, periodical, or other publi17 cation that is not in English, the statements

18 shall appear in the predominant language of the

19 publication; and

20 ‘‘(B) in the case of any other advertisement

21 that is not in English, the statements shall ap22 pear in the same language as that principally

23 used in the advertisement.

24 ‘‘(3) ADJUSTMENT BY SECRETARY.—The Sec25 retary may, through a rulemaking under section 553
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1 of title 5, United States Code, adjust the format and

2 type sizes for the label statements required by this sec3 tion or the text, format, and type sizes of any re4 quired tar, nicotine yield, or other constituent disclo5 sures, or to establish the text, format, and type sizes

6 for any other disclosures required under the Federal

7 Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.).

8 The text of any such label statements or disclosures

9 shall be required to appear only within the 20 percent

10 area of cigarette advertisements provided by para11 graph (2) of this subsection. The Secretary shall pro12 mulgate regulations which provide for adjustments in

13 the format and type sizes of any text required to ap14 pear in such area to ensure that the total text re15 quired to appear by law will fit within such area.

16 ‘‘(4) MARKETING REQUIREMENTS.—

17 ‘‘(A) The label statements specified in sub18 section (a)(1) shall be randomly displayed in

19 each 12-month period, in as equal a number of

20 times as is possible on each brand of the product

21 and be randomly distributed in all areas of the

22 United States in which the product is marketed

23 in accordance with a plan submitted by the to24 bacco product manufacturer, importer, distribu25 tor, or retailer and approved by the Secretary.
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1 ‘‘(B) The label statements specified in sub2 section (a)(1) shall be rotated quarterly in alter3 nating sequence in advertisements for each brand

4 of cigarettes in accordance with a plan submit5 ted by the tobacco product manufacturer, im6 porter, distributor, or retailer to, and approved

7 by, the Secretary.

8 ‘‘(C) The Secretary shall review each plan

9 submitted under subparagraph (B) and approve

10 it if the plan—

11 ‘‘(i) will provide for the equal distribu12 tion and display on packaging and the ro13 tation required in advertising under this

14 subsection; and

15 ‘‘(ii) assures that all of the labels re16 quired under this section will be displayed

17 by the tobacco product manufacturer, im18 porter, distributor, or retailer at the same

19 time.’’.

20 SEC. 302. AUTHORITY TO REVISE CIGARETTE WARNING

21 LABEL STATEMENTS.

22 Section 4 of the Federal Cigarette Labeling and Adver23 tising Act (15 U.S.C. 1333), as amended by section 301 of

24 this title, is further amended by adding at the end the fol25 lowing:
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1 ‘‘(c) CHANGE IN REQUIRED STATEMENTS.—The Sec2 retary may, by a rulemaking conducted under section 553

3 of title 5, United States Code, revise the text of any of the

4 warning label statements required by subsection (a) of this

5 section if the Secretary determines that such a change would

6 promote greater public understanding of the risks associated

7 with the use of tobacco products.’’.

8 SEC. 303. SMOKELESS TOBACCO LABELS AND ADVERTISING

9 WARNINGS.

10 Section 3 of the Comprehensive Smokeless Tobacco

11 Health Education Act of 1986 (15 U.S.C. 4402) is amended

12 to read as follows:

13 ‘‘SEC. 3. SMOKELESS TOBACCO WARNING.

14 ‘‘(a) GENERAL RULE.—

15 ‘‘(1) It shall be unlawful for any person to man16 ufacture, package, or import for sale or distribution

17 within the United States any smokeless tobacco prod18 uct unless the product package bears, in accordance

19 with the requirements of this Act, one of the following

20 labels:

21 ‘WARNING: This product can cause mouth cancer’

22 ‘WARNING: This product can cause gum disease and

23 tooth loss’

24 ‘WARNING: This product is not a safe alternative to

25 cigarettes’
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1 ‘WARNING: Smokeless tobacco is addictive’

2 ‘‘(2) Each label statement required by paragraph

3 (1) shall be—

4 ‘‘(A) located on the 2 principal display

5 panels of the package, and each label statement

6 shall comprise at least 25 percent of each such

7 display panel; and

8 ‘‘(B) in 17-point conspicuous and legible

9 type and in black text on a white background, or

10 white text on a black background, in a manner

11 that contrasts by typography, layout, or color,

12 with all other printed material on the package,

13 in an alternating fashion under the plan submit14 ted under subsection (b)(3), except that if the text

15 of a label statement would occupy more than 70

16 percent of the area specified by subparagraph

17 (A), such text may appear in a smaller type size,

18 so long as at least 60 percent of such warning

19 area is occupied by the label statement.

20 ‘‘(3) The label statements required by paragraph

21 (1) shall be introduced by each tobacco product manu22 facturer, packager, importer, distributor, or retailer of

23 smokeless tobacco products concurrently into the dis24 tribution chain of such products.
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1 ‘‘(4) The provisions of this subsection do not

2 apply to a tobacco product manufacturer or distribu3 tor of any smokeless tobacco product that does not

4 manufacture, package, or import smokeless tobacco

5 products for sale or distribution within the United

6 States.

7 ‘‘(b) REQUIRED LABELS.—

8 ‘‘(1) It shall be unlawful for any tobacco product

9 manufacturer, packager, importer, distributor, or re10 tailer of smokeless tobacco products to advertise or

11 cause to be advertised within the United States any

12 smokeless tobacco product unless its advertising bears,

13 in accordance with the requirements of this section,

14 one of the labels specified in subsection (a).

15 ‘‘(2) Each label statement required by subsection

16 (a) in smokeless tobacco advertising shall comply with

17 the standards set forth in this paragraph. For press

18 and poster advertisements, each such statement and

19 (where applicable) any required statement relating to

20 tar, nicotine, or other constituent yield shall—

21 ‘‘(A) comprise at least 20 percent of the

22 area of the advertisement, and the warning area

23 shall be delineated by a dividing line of contrast24 ing color from the advertisement; and
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1 ‘‘(B) the word ‘WARNING’ shall appear in

2 capital letters and each label statement shall ap3 pear in conspicuous and legible type. The text of

4 the label statement shall be black on a white

5 background, or white on a black background, in

6 an alternating fashion under the plan submitted

7 under paragraph (3).

8 ‘‘(3)(A) The label statements specified in sub9 section (a)(1) shall be randomly displayed in each 12-

10 month period, in as equal a number of times as is

11 possible on each brand of the product and be ran12 domly distributed in all areas of the United States in

13 which the product is marketed in accordance with a

14 plan submitted by the tobacco product manufacturer,

15 importer, distributor, or retailer and approved by the

16 Secretary.

17 ‘‘(B) The label statements specified in subsection

18 (a)(1) shall be rotated quarterly in alternating se19 quence in advertisements for each brand of smokeless

20 tobacco product in accordance with a plan submitted

21 by the tobacco product manufacturer, importer, dis22 tributor, or retailer to, and approved by, the Sec23 retary.
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1 ‘‘(C) The Secretary shall review each plan sub2 mitted under subparagraph (B) and approve it if the

3 plan—

4 ‘‘(i) will provide for the equal distribution

5 and display on packaging and the rotation re6 quired in advertising under this subsection; and

7 ‘‘(ii) assures that all of the labels required

8 under this section will be displayed by the to9 bacco product manufacturer, importer, distribu10 tor, or retailer at the same time.’’.

11 SEC. 304. AUTHORITY TO REVISE SMOKELESS TOBACCO

12 PRODUCT WARNING LABEL STATEMENTS.

13 Section 3 of the Comprehensive Smokeless Tobacco

14 Health Education Act of 1986 (15 U.S.C. 4402), as amend15 ed by section 303 of this title, is further amended by adding

16 at the end the following:

17 ‘‘(c) AUTHORITY TO REVISE WARNING LABEL STATE18 MENTS.—The Secretary may, by a rulemaking conducted

19 under section 553 of title 5, United States Code, adjust the

20 format, type size, and text of any of the warning label state21 ments required by subsection (a) of this section, or establish

22 the format, type size, and text of any other disclosures re23 quired under the Federal Food, Drug, and Cosmetic Act (21

24 U.S.C. 301 et seq.), if the Secretary finds that such a change
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1 would promote greater public understanding of the risks as2 sociated with the use of smokeless tobacco products.’’.

3 SEC. 305. TAR, NICOTINE, AND OTHER SMOKE CONSTITU4 ENT DISCLOSURE TO THE PUBLIC.

5 Section 4(a) of the Federal Cigarette Labeling and Ad6 vertising Act (15 U.S.C. 1333 (a)), as amended by section

7 301 of this title, is further amended by adding at the end

8 the following:

9 ‘‘(4)(A) The Secretary shall, by a rulemaking

10 conducted under section 553 of title 5, United States

11 Code, determine (in the Secretary’s sole discretion)

12 whether cigarette and other tobacco product manufac13 turers shall be required to include in the area of each

14 cigarette advertisement specified by subsection (b) of

15 this section, or on the package label, or both, the tar

16 and nicotine yields of the advertised or packaged

17 brand. Any such disclosure shall be in accordance

18 with the methodology established under such regula19 tions, shall conform to the type size requirements of

20 subsection (b) of this section, and shall appear within

21 the area specified in subsection (b) of this section.

22 ‘‘(B) Any differences between the requirements

23 established by the Secretary under subparagraph (A)

24 and tar and nicotine yield reporting requirements es25 tablished by the Federal Trade Commission shall be
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1 resolved by a memorandum of understanding between

2 the Secretary and the Federal Trade Commission.

3 ‘‘(C) In addition to the disclosures required by

4 subparagraph (A) of this paragraph, the Secretary

5 may, under a rulemaking conducted under section

6 553 of title 5, United States Code, prescribe disclosure

7 requirements regarding the level of any cigarette or

8 other tobacco product smoke constituent. Any such

9 disclosure may be required if the Secretary determines

10 that disclosure would be of benefit to the public

11 health, or otherwise would increase consumer aware12 ness of the health consequences of the use of tobacco

13 products, except that no such prescribed disclosure

14 shall be required on the face of any cigarette package

15 or advertisement. Nothing in this section shall pro16 hibit the Secretary from requiring such prescribed

17 disclosure through a cigarette or other tobacco product

18 package or advertisement insert, or by any other

19 means under the Federal Food, Drug, and Cosmetic

20 Act (21 U.S.C. 301 et seq.).’’.
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1 Subtitle B—Testing and Reporting

2 of Tobacco Product Smoke Con3 stituents

4 SEC. 311. REGULATION REQUIREMENT.

5 (a) TESTING, REPORTING, AND DISCLOSURE.—Not

6 later than 24 months after the date of enactment of this

7 Act, the Secretary, through the Commissioner of the Food

8 and Drug Administration, shall promulgate regulations

9 under the Federal Food, Drug, and Cosmetic Act (21 U.S.C.

10 301 et seq.) that meet the requirements of subsection (b) of

11 this section.

12 (b) CONTENTS OF RULES.—The rules promulgated

13 under subsection (a) of this section shall require the testing,

14 reporting, and disclosure of tobacco product smoke constitu15 ents and ingredients that the Secretary determines should

16 be disclosed to the public in order to protect the public

17 health. Such constituents shall include tar, nicotine, carbon

18 monoxide, and such other smoke constituents or ingredients

19 as the Secretary may determine to be appropriate. The rule

20 may require that tobacco product manufacturers, packagers,

21 or importers make such disclosures relating to tar and nico22 tine through labels or advertising, and make such disclo23 sures regarding other smoke constituents or ingredients as

24 the Secretary determines are necessary to protect the public

25 health.
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1 (c) AUTHORITY.—The Food and Drug Administration

2 shall have authority to conduct or to require the testing,

3 reporting, or disclosure of tobacco product smoke constitu4 ents.

5 TITLE IV—NATIONAL TOBACCO

6 SETTLEMENT TRUST FUND

7 ƒSubtitle A—General Payment

8 Provisions

9 ƒSEC. 401. ESTABLISHMENT OF TRUST FUND.

10 ƒ(a) CREATION.—

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

12 Treasury of the United States a trust fund to be

13 known as the ‘‘National Tobacco Settlement Trust

14 Fund’’, consisting of such amounts as may be appro15 priated or credited to the trust fund.

16 ƒ(b) TRANSFERS TO NATIONAL TOBACCO SETTLE17 MENT TRUST FUND.—There shall be credited to the trust

18 fund the following amounts:

19 ƒ(1) Amounts paid under section 403.

20 ƒ(2) Amounts equivalent to the fines or penalties

21 paid under section 403, 404, or 406, including inter22 est thereon.

23 ƒ(3) Amounts equivalent to penalties paid under

24 section 202, including interest thereon.

25 ƒ(c) REPAYABLE ADVANCES.—
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1 ƒ(1) AUTHORIZATION.—There are authorized to

2 be appropriated to the trust fund, as repayable ad3 vances, such sums as may from time to time be nec4 essary to make the expenditures authorized by this

5 Act.

6 ƒ(2) REPAYMENT WITH INTEREST.—Repayable

7 advances made to the trust fund shall be repaid, and

8 interest on such advances shall be paid, to the general

9 fund of the Treasury when the Secretary of the Treas10 ury determines that moneys are available in the trust

11 fund for such purposes.

12 ƒ(3) RATE OF INTEREST.—Interest on advances

13 made under this subsection shall be at a rate deter14 mined by the Secretary of the Treasury (as of the

15 close of the calendar month preceding the month in

16 which the advance is made) to be equal to the current

17 average market yield on outstanding marketable obli18 gations of the United States with remaining period to

19 maturity comparable to the anticipated period during

20 which the advance will be outstanding.

21 ƒ(d) EXPENDITURES FROM TRUST FUND.—Amounts

22 in the trust fund shall be available in each calendar year,

23 as provided by appropriations Acts, except that distribu24 tions to the States from amounts credited to the State Liti25 gation Settlement Account shall not require further author-
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1 ization or appropriation and shall be as provided in the

2 Master Settlement Agreement and this Act, and not less

3 than 15 percent of the amounts shall be expended, without

4 further appropriation, notwithstanding any other provision

5 of this Act, from the trust fund for each fiscal year, in the

6 aggregate, for actitivities under this Act related to—

7 ƒ(1) the prevention of smoking;

8 ƒ(2) education;

9 ƒ(3) State, local, and private control of tobacco

10 product use; and

11 ƒ(4) smoking cessation.

12 ƒ(e) BUDGETARY TREATMENT OF TRUST FUND OPER13 ATIONS.—The receipts and disbursements of the National

14 Tobacco Settlement Trust Fund shall not be included in the

15 totals of the budget of the United States Government as sub16 mitted by the President or of the congressional budget and

17 shall be exempt from any general budget limitation imposed

18 by statute on expenditures and net lending (budget outlays)

19 of the United States Government.

20 ƒ(f) ADMINISTRATIVE PROVISIONS.—Section 9602 of

21 the Internal Revenue Code of 1986 shall apply to the trust

22 fund to the same extent as if it were established by sub23 chapter A of chapter 95 of such Code.
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1 ƒSEC. 402. STATE LITIGATION SETTLEMENT ACCOUNT.

2 ƒ(a) IN GENERAL.—There is established within the

3 trust fund a separate account, to be known as the State

4 Litigation Settlement Account.

5 ƒ(b) TRANSFERS TO ACCOUNT.—From amounts re6 ceived by the trust fund under section 403, the State Litiga7 tion Settlement Account shall be credited with all settlement

8 payments designated for allocation, without further appro9 priation, among the several States, which shall consist of—

10 ƒ(1) the sum of $196,500,000,000, to be paid in

11 installments over a period of 25 years; and

12 ƒ(2) beginning after the last installment under

13 paragraph (1), 50 percent of the total annual pay14 ments made by participating tobacco product manu15 facturers under section 403(b) each year thereafter.

16 ƒ(c) REIMBURSEMENT FOR STATE EXPENDITURES.—

17 ƒ(1) PAYMENT.—Amounts credited to the ac18 count are available, without further appropriation, in

19 each fiscal year to provide funds to each State to re20 imburse such State for amounts expended by the State

21 for the treatment of individuals with tobacco-related

22 illnesses or conditions.

23 ƒ(2) AMOUNT.—The amount for which a State is

24 eligible for under subparagraph (A) for a fiscal year

25 shall be based on the Master Settlement Agreement

26 and its ancillary documents in accordance with such
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1 agreements thereunder as may be entered into after

2 the date of enactment of this Act by the governors of

3 the several States.

4 ƒ(3) USE OF FUNDS.—A State may use amounts

5 received under this subsection as the State determines

6 appropriate.

7 ƒ(4) FUNDS NOT AVAILABLE AS MEDICAID REIM8 BURSEMENT.—Funds in the account shall not be

9 available to the Secretary as reimbursement of Medic10 aid expenditures or considered as Medicaid overpay11 ments for purposes of recoupment.

12 ƒ(d) PAYMENTS TO BE TRANSFERRED PROMPTLY TO

13 STATES.—The Secretary of the Treasury shall transfer

14 amounts available under subsection (c) to each State as

15 amounts are credited to the State Litigation Settlement Ac16 count without undue delay.

17 ƒSEC. 403. PAYMENTS BY INDUSTRY.

18 ƒ(a) INITIAL PAYMENT.—

19 ƒ(1) CERTAIN PARTICIPATING TOBACCO PROD20 UCT MANUFACTURERS.—The following participating

21 tobacco product manufacturers shall deposit into the

22 National Tobacco Settlement Trust Fund an aggre23 gate payment of $10,000,000,000, apportioned as fol24 lows:
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1 ƒ(A) Phillip Morris Incorporated—65.8

2 percent;

3 ƒ(B) Brown and Williamson Tobacco Cor4 poration—17.3 percent;

5 ƒ(C) Lorillard Tobacco Company—7.1 per6 cent;

7 ƒ(D) R.J. Reynolds Tobacco Company—6.6

8 percent; and

9 ƒ(E) United States Tobacco Company—3.2

10 percent.

11 ƒ(2) NO CONTRIBUTION FROM OTHER PARTICI12 PATING TOBACCO PRODUCT MANUFACTURERS.—No

13 other participating tobacco product manufacturer

14 shall be required to contribute to the payment re15 quired by this subsection.

16 ƒ(3) PAYMENT DATE; INTEREST.—Each partici17 pating tobacco product manufacturer required to

18 make a payment under paragraph (1) of this sub19 section shall make such payment within 30 days after

20 the date of enactment of this Act in accordance with

21 the terms of the Master Settlement Agreement and

22 shall owe interest on such payment at the prime rate

23 plus 10 percent, as published in the Wall Street Jour24 nal on the latest publication date on or before the date
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1 of enactment of this Act, for payments made after the

2 required payment date.

3 ƒ(b) ANNUAL PAYMENTS.—Each calendar year begin4 ning after the required payment date under subsection

5 (a)(3) the participating tobacco product manufacturers

6 shall make total payments into the Fund for each calendar

7 year in the following applicable base amounts, subject to

8 adjustment as provided in section 404:

9 ƒ(1) year 1—$14,400,000,000;

10 ƒ(2) year 2—$15,400,000,000;

11 ƒ(3) year 3—$17,700,000,000;

12 ƒ(4) year 4—$21,000,000,000;

13 ƒ(5) year 5—$23,600,000,000; and

14 ƒ(6) year 6 and thereafter—the adjusted appli15 cable base amount under section 404.

16 ƒ(c) PAYMENT SCHEDULE.—Each annual payment

17 due under subsection (b) shall be made in 3 equal install18 ments due on March 1st, on June 1st, and on September

19 1st of each year.

20 ƒ(d) APPORTIONMENT OF ANNUAL PAYMENT.—

21 ƒ(1) IN GENERAL.—Each participating tobacco

22 product manufacturer is liable for its share of the ap23 plicable base amount payment due each year under

24 subsection (b). Any separate collection of these pay25 ments among such participating tobacco product
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1 manufacturers shall be set forth in accordance with

2 an appendix to the Protocol. The annual payment is

3 the obligation and responsibility of only those partici4 pating tobacco product manufacturers and their af5 filiates that directly sell tobacco products in the do6 mestic market to wholesalers, retailers, or consumers,

7 their successors and assigns, and any subsequent

8 fraudulent transferee (but only to the extent of the in9 terest or obligation fraudulently transferred).

10 ƒ(2) DETERMINATION OF AMOUNT OF PAYMENT

11 DUE.—Each participating tobacco product manufac12 turer is liable for its share of each installment in pro13 portion to its share of tobacco products sold in the do14 mestic market for the most recent available calendar

15 quarter, as determined by the Secretary of the Treas16 ury not more than 2 months, and not less than 1

17 month, before the payment is due. One month before

18 each payment is due under this subsection, the Sec19 retary shall make a final determination of each to20 bacco product manufacturer’s applicable base amount

21 payment obligation.

22 ƒ(3) CALCULATION OF PARTICIPATING TOBACCO

23 PRODUCT MANUFACTURER’S SHARE OF ANNUAL PAY24 MENT.—The share of the annual payment appor25 tioned to a participating tobacco product manufac-
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1 turer shall be equal to that manufacturer’s share of

2 adjusted units. A participating tobacco product man3 ufacturer’s share of adjusted units shall be determined

4 as follows:

5 ƒ(A) UNITS.—A participating tobacco

6 product manufacturer’s number of units shall be

7 determined by counting each—

8 ƒ(i) pack of 20 cigarettes as 1 adjusted

9 unit;

10 ƒ(ii) 1.2 ounces of moist snuff as 0.4

11 adjusted unit; and

12 ƒ(iii) 3 ounces of other smokeless to13 bacco product as 0.24 adjusted units.

14 ƒ(B) DETERMINATION OF ADJUSTED

15 UNITS.—Except as provided in subparagraph

16 (C), a participating tobacco product manufac17 turer’s number of adjusted units shall be deter18 mined under the following table:

For units: Each unit shall be treated as:

Not exceeding 150 million 25% of a unit

Exceeding 150 million, but not

exceeding 300 milllion 50% of a unit

Exceeding 300 million 1 unit

19 ƒ(C) SPECIAL RULE FOR LARGE MANUFAC20 TURERS.—If a participating tobacco product

21 manufacturer has more than 500 million units

22 under subparagraph (A), then that manufactur-
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1 er’s number of adjusted units shall be equal to

2 the total number of units, and not determined

3 under subparagraph (B).

4 ƒ(e) COMPUTATIONS.—The determinations required by

5 subsection (d) shall be made and certified by the Secretary

6 of Treasury. The parties shall promptly provide the Treas7 ury Department with information sufficient for it to make

8 such determinations.

9 ƒ(f) NONAPPLICATION TO CERTAIN MANUFACTUR10 ERS.—

11 ƒ(1) EXEMPTION.—A participating manufac12 turer described in paragraph (3) is exempt from the

13 payments required by subsection (b).

14 ƒ(2) LIMITATION.—Paragraph (1) applies only

15 to assessments on cigarettes to the extent that those

16 cigarettes constitute less than 3 percent of all ciga17 rettes manufactured and distributed to consumers in

18 any calendar year.

19 ƒ(3) PARTICIPATING TOBACCO PRODUCT MANU20 FACTURERS TO WHICH SUBSECTION APPLIES.—A par21 ticipating tobacco product manufacturer is described

22 in this paragraph if it—

23 ƒ(A) resolved tobacco-related civil actions

24 with more than 25 States before January 1,

25 1998, through written settlement agreements
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1 signed by the attorneys general (or the equivalent

2 chief legal officer if there is no office of attorney

3 general) of those States; and

4 ƒ(B) provides to all other States, not later

5 than December 31, 1998, the opportunity to

6 enter into written settlement agreements that—

7 ƒ(i) are substantially similar to the

8 agreements entered into with those 25

9 States; and

10 ƒ(ii) provide the other States with an11 nual payment terms that are equivalent to

12 the most favorable annual payment terms of

13 its written settlement agreements with those

14 25 States.

15 ƒSEC. 404. ADJUSTMENTS.

16 ƒThe applicable base amount under section 403(b) for

17 a given calendar year shall be adjusted as follows in deter18 mining the annual payment for that year:

19 ƒ(1) INFLATION ADJUSTMENT.—

20 ƒ(A) IN GENERAL.—Beginning with the

21 fourth calendar year after the date of enactment

22 of this Act, the adjusted applicable base amount

23 under section 403(b)(6) is the amount of the an24 nual payment made for the preceding year in25 creased by the greater of 3 percent or the infla-
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•S 1415 RS2

1 tion adjustment, adjusted (for calendar year

2 2005 and later years) by the volume adjustment

3 under paragraph (2).

4 ƒ(B) INFLATION ADJUSTMENT.—For pur5 poses of subparagraph (A), the inflation adjust6 ment for any calendar year is the percentage (if

7 any) by which—

8 ƒ(i) the CPI for the preceding calendar

9 year, exceeds

10 ƒ(ii) the CPI for the second preceding

11 calendar year.

12 ƒ(C) CPI.—For purposes of subparagraph

13 (B), the CPI for any calendar year is the aver14 age of the Consumer Price Index for all-urban

15 consumers published by the Department of

16 Labor.

17 ƒ(D) ROUNDING.—If any increase deter18 mined under subparagraph (A) is not a multiple

19 of $1,000, the increase shall be rounded to the

20 nearest multiple of $1,000.

21 ƒ(2) VOLUME ADJUSTMENT.—Beginning with

22 calendar year 2005, the applicable base amount (as

23 adjusted for inflation under paragraph (1)) shall be

24 adjusted for changes in volume of domestic sales by

25 multiplying the applicable base amount by the ratio
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•S 1415 RS2

1 of the actual volume for the preceding year to the base

2 volume. For purposes of this paragraph, the term

3 ‘‘base volume’’ means the number of units of tobacco

4 products sold domestically by the participating to5 bacco product manufacturers in calendar year 1996,

6 as reported by such manufacturers to the Secretary of

7 the Treasury.

8 ƒSEC. 405. PAYMENTS TO BE PASSED THROUGH TO CON9 SUMERS.

10 ƒ(a) TARGET PRICE.—Each participating tobacco

11 product manufacturer shall use its best efforts to adjust the

12 price at which it sells each unit of tobacco products in the

13 domestic market or to an importer for resale in the domestic

14 market by an amount sufficient to pass through to each

15 purchaser on a per-unit basis an equal share of the annual

16 payments to be made by such participating tobacco product

17 manufacturer under this Act and the Master Settlement

18 agreement for the year in which the sale occurs.

19 ƒ(b) COLLECTION OF DEFICIENCY.—

20 ƒ(1) IN GENERAL.—If the Secretary determines

21 that a participating tobacco product manufacturer

22 failed to comply with subsection (a), the Secretary

23 shall assess a penalty against that manufacturer in

24 an amount equal to—

25 ƒ(A) 110 percent of the shortfall amount; or
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•S 1415 RS2

1 ƒ(B) if the failure to comply with sub2 section (a) was intentional, up to 125 percent of

3 the shortfall amount.

4 ƒ(2) SHORTFALL AMOUNT.—For purposes of

5 paragraph (1), the term ‘‘shortfall amount’’ means—

6 ƒ(A) the number of units of tobacco prod7 ucts sold by a tobacco product manufacturer dur8 ing a calendar year, multiplied by—

9 ƒ(B) the excess of—

10 ƒ(i) the average adjusted price for

11 which each such unit would have been sold

12 during that year if the tobacco product

13 manufacturer had met the price con14 templated by subsection (a); over

15 ƒ(ii) the average adjusted price for

16 which each such unit was sold during that

17 year.

18 ƒ(3) SOLE REMEDY FOR FAILURE TO PASS PAY19 MENT THROUGH TO CONSUMERS.—This subsection is

20 the sole remedy available to any person, including

21 any State, for the failure by a participating tobacco

22 product manufacturer to pass through the payments

23 under section 403 to consumers as required by sub24 section (a).
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1 ƒSEC. 406. TAX TREATMENT OF PAYMENTS.

2 ƒAll payments made under section 403 are ordinary

3 and necessary business expenses for purposes of chapter 1

4 of the Internal Revenue Code of 1986, and no part thereof

5 is either in settlement of an actual or potential liability

6 for a fine or penalty (civil or criminal) or the cost of a

7 tangible or intangible asset or other future benefit.

8 ƒSEC. 407. ENFORCEMENT FOR NONPAYMENT.

9 ƒ(a) PENALTY.—Any participating tobacco product

10 manufacturer that fails to make any payment required

11 under section 403 or 405 within 60 days after the date on

12 which such fee is due is liable for a civil penalty of $100,000

13 for each day during the noncompliance period.

14 ƒ(b) NONCOMPLIANCE PERIOD.—For purposes of this

15 section, the term ‘‘noncompliance period’’ means, with re16 spect to any failure to make a payment required under sec17 tion 403 or 405, the period—

18 ƒ(1) beginning on the due date for such pay19 ment; and

20 ƒ(2) ending on the date on which such payment

21 is paid in full.

22 ƒ(c) LIMITATIONS.—

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

24 by subsection (a) on any failure to make a payment

25 under section 403 during any period for which it is

26 established to the satisfaction of the Secretary of the
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•S 1415 RS2

1 Treasury that none of the persons responsible for such

2 failure knew or, exercising reasonable diligence,

3 should have known, that such failure existed.

4 ƒ(2) CORRECTIONS.—No penalty shall be im5 posed under subsection (a) on any failure to make a

6 payment under section 403 if—and

7 ƒ(B) such failure is corrected during the

8 30-day period beginning on the 1st date that any

9 of the persons responsible for such failure knew

10 or, exercising reasonable diligence, should have

11 known, that such failure existed.

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

13 make a payment under section 403 that is due to rea14 sonable cause and not to willful neglect, the Secretary

15 of the Treasury may waive all or part of the penalty

16 imposed under subsection (a) to the extent that the

17 Secretary determines that the payment of such pen18 alty would be excessive relative to the failure involved.

19 ƒ(d) STATUS AS PARTICIPATING TOBACCO PRODUCT

20 MANUFACTURER.—If, at the end of the 1-year period begin21 ning on the date on which a participating tobacco product

22 manufacturer fails to make a timely payment as required

23 under section 403, such manufacture has not fully paid the

24 amount owed by such manufacturer under such section,

25 such manufacturer shall be considered a nonparticipating
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•S 1415 RS2

1 tobacco product manufacturer and shall not be eligible for

2 any protections or assistance provided for under this Act.≈

3 Subtitle B—General Spending

4 Provisions

5 SEC. 411. IMPLEMENTING AND ENFORCEMENT FUNDS.

6 ƒNotwithstanding section 401(d), not less than

7 $300,000,000 of the amounts available in the trust fund,

8 other than in the State Litigation Settlement Account, shall

9 be made available for each fiscal year without further ap10 propriation to≈ Subject to the availability of ap11 propriations, the Secretary shall make pay12 ments from amounts in the National Tobacco

13 Settlement Trust Fund, other than in the State

14 Litigation Settlement Account, to the Commis15 sioner of Food and Drugs as reimbursement for the costs

16 incurred by the Food and Drug Administration in imple17 menting and enforcing requirements relating to tobacco

18 products. In order to ensure that the amounts provided by

19 this section are used for the purposes for which they are

20 made available, the Commissioner shall submit an account

21 of such costs for each fiscal year to the Secretary of the

22 Treasury, in such detail as the Secretary may require, with23 in 60 days after the close of the fiscal year and transmit

24 a copy of the report to the Congress at the same time as

25 it is submitted to the Secretary.
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1 ƒSEC. 412. IMPROVING CHILD CARE AND EARLY CHILD2 HOOD DEVELOPMENT.

3 ƒ(a) IN GENERAL.—The Secretary of the Treasury

4 may transfer funds from the National Tobacco Settlement

5 Trust Fund for each fiscal year to be used by the Secretary

6 for the following purposes:

7 ƒ(1) Improving the affordability of child care

8 through increased appropriations for child care under

9 the Child Care and Development Block Grant Act of

10 1990 (42 U.S.C. 9859 et seq.).

11 ƒ(2) Enhancing the quality of child care and

12 early childhood development through the provision of

13 grants to States under the Child Care and Develop14 ment Block Grant Act of 1990 (42 U.S.C. 9859 et

15 seq.).

16 ƒ(3) Expanding the availability and quality of

17 school-age care through the provision of grants to

18 States under the Child Care and Development Block

19 Grant Act of 1990 (42 U.S.C. 9859 et seq.).

20 ƒ(4) Assisting young children by providing

21 grants to local collaboratives under the Child Care

22 and Development Block Grant Act of 1990 (42 U.S.C.

23 9859 et seq.) for the purpose of improving parent edu24 cation and supportive services, strengthening the

25 quality of child care, improving health services, and

26 improving services for children with disabilities.
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•S 1415 RS2

1 ƒ(b) SUPPLEMENT NOT SUPPLANT.—Amounts made

2 available to a State under this section shall be used to sup3 plement and not supplant other Federal, State, and local

4 funds provided for programs that serve the health and devel5 opmental needs of children. Amounts provided to the State

6 under any of the provisions of law referred to in this section

7 shall not be reduced solely as a result of the availability

8 of funds under this section.

9 ƒ(c) AUTHORIZATION OF APPROPRIATIONS.—There

10 are authorized to be appropriated from the trust fund estab11 lished by section 401, other than from amounts in the State

12 Litigation Settlement Account, such sums as are necessary

13 to carry out this section.≈

14 TITLE V—STANDARDS TO RE15 DUCE INVOLUNTARY EXPO16 SURE TO TOBACCO SMOKE

17 SEC. 501. DEFINITIONS.

18 In this title:

19 (1) ASSISTANT SECRETARY.—The term ‘‘Assist20 ant Secretary’’ means the Assistant Secretary of the

21 Occupational Safety and Health Administration of

22 the Department of Labor.

23 (2) PUBLIC FACILITY.—

24 (A) IN GENERAL.—The term ‘‘public facil25 ity’’ means any building used for purposes that
417

•S 1415 RS2

1 affect interstate or foreign commerce that is regu2 larly entered by 10 or more individuals at least

3 1 day per week including any building owned by

4 or leased to an agency, independent establish5 ment, department, or branch of the United States

6 Government.

7 (B) EXCLUSIONS.—The term ‘‘public facil8 ity’’ does not include a building or portion there9 of which is used for residential purposes or as a

10 restaurant (other than a fast food restaurant),

11 bar, private club, hotel guest room or common

12 area, casino, bingo parlor, tobacconist’s shop, or

13 prison.

14 (C) FAST FOOD RESTAURANT.—The term

15 ‘‘fast food restaurant’’ means any restaurant or

16 chain of restaurants that primarily distributes

17 food through a customer pick-up (either at a

18 counter or drive-through window). The Assistant

19 Secretary may promulgate regulations to clarify

20 this subparagraph to ensure that the intended

21 inclusion of establishments catering to individ22 uals under 18 years of age is achieved.

23 (3) RESPONSIBLE ENTITY.—The term ‘‘respon24 sible entity’’ means, with respect to any public facil25 ity, the owner of such facility except that, in the case
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•S 1415 RS2

1 of any such facility or portion thereof which is leased,

2 such term means the lessee.

3 SEC. 502. SMOKE-FREE ENVIRONMENT POLICY.

4 (a) POLICY REQUIRED.—In order to protect children

5 and adults from cancer, respiratory disease, heart disease,

6 and other adverse health effects from breathing environ7 mental tobacco smoke, the responsible entity for each public

8 facility shall adopt and implement at such facility a smoke9 free environment policy which meets the requirements of

10 subsection (b).

11 (b) ELEMENTS OF POLICY.—

12 (1) IN GENERAL.—The responsible entity for a

13 public facility shall—

14 (A) prohibit the smoking of cigarettes, ci15 gars, and pipes, and any other combustion of to16 bacco within the facility and on facility property

17 within the immediate vicinity of the entrance to

18 the facility; and

19 (B) post a clear and prominent notice of the

20 smoking prohibition in appropriate and visible

21 locations at the public facility.

22 (2) EXCEPTION.—The responsible entity for a

23 public facility may provide an exception to the prohi24 bition specified in paragraph (1) for 1 or more spe25 cially designated smoking areas within a public facil-
419

•S 1415 RS2

1 ity if such area or areas meet the requirements of sub2 section (c).

3 (c) SPECIALLY DESIGNATED SMOKING AREAS.—A spe4 cially designated smoking area meets the requirements of

5 this subsection if—

6 (1) the area is ventilated in accordance with

7 specifications promulgated by the Assistant Secretary

8 that ensure that air from the area is directly ex9 hausted to the outside and does not recirculate or

10 drift to other areas within the public facility;

11 (2) the area is maintained at negative pressure,

12 as compared to adjoining nonsmoking areas, as deter13 mined under regulations promulgated by the Assist14 ant Secretary;

15 (3) nonsmoking individuals do not have to enter

16 the area for any purpose while smoking is occurring

17 in such area; and

18 (4) cleaning and maintenance work are con19 ducted in such area only when no smoking is occur20 ring in the area.

21 SEC. 503. CITIZEN ACTIONS.

22 (a) IN GENERAL.—An action may be brought to en23 force the requirements of this title by any aggrieved person,

24 any State or local government agency, or the Assistant Sec25 retary.
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•S 1415 RS2

1 (b) VENUE.—Any action to enforce this title may be

2 brought in any United States district court for the district

3 in which the defendant resides or is doing business to enjoin

4 any violation of this title or to impose a civil penalty for

5 any such violation in the amount of not more than $5,000

6 per day of violation. The district courts shall have jurisdic7 tion, without regard to the amount in controversy or the

8 citizenship of the parties, to enforce this title and to impose

9 civil penalties under this title.

10 (c) NOTICE.—An aggrieved person shall give any al11 leged violator notice at least 60 days prior to commencing

12 an action under this section. No action may be commenced

13 by an aggrieved person under this section if such alleged

14 violator complies with the requirements of this title within

15 such 60-day period and thereafter.

16 (d) COSTS.—The court, in issuing any final order in

17 any action brought under this section, may award costs of

18 litigation (including reasonable attorney and expert witness

19 fees) to any prevailing plaintiff, whenever the court deter20 mines such award is appropriate.

21 (e) PENALTIES.—The court, in any action under this

22 section to apply civil penalties, shall have discretion to

23 order that such civil penalties be used for projects which

24 further the policies of this title. The court shall obtain the
421

•S 1415 RS2

1 view of the Assistant Secretary in exercising such discretion

2 and selecting any such projects.

3 SEC. 504. PREEMPTION.

4 Nothing in this title shall preempt or otherwise affect

5 any other Federal, State, or local law which provides great6 er protection from health hazards from environmental to7 bacco smoke.

8 SEC. 505. REGULATIONS.

9 The Assistant Secretary is authorized to promulgate

10 such regulations as the Assistant Secretary deems necessary

11 to carry out this title.

12 SEC. 506. EFFECTIVE DATE.

13 Except as provided in section 507, the provisions of

14 this title shall take effect on the first day of January next

15 following the next regularly scheduled meeting of the State

16 legislature occurring after the date of enactment of this Act

17 at which, under the procedural rules of that legislature, a

18 measure under section 507 may be considered.

19 SEC. 507. STATE CHOICE.

20 This title shall not apply to any State that, by law,

21 provides that it shall not apply to that State.
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•S 1415 RS2

1 TITLE VI—APPLICATION TO

2 INDIAN TRIBES.

3 SEC. 601. SHORT TITLE.

4 This title may be cited as the ‘‘Reduction in Tobacco

5 Use and Regulation of Tobacco Products in Indian Country

6 Act of 1998’’.

7 SEC. 602. FINDINGS AND PURPOSES.

8 (a) FINDINGS.—Congress finds that Native Americans

9 have used tobacco products for recreational, ceremonial, and

10 traditional purposes for centuries.

11 (b) PURPOSES.—It is the purpose of this title to—

12 (1) provide for the implementation of the Na13 tional Tobacco Policy and Youth Smoking Reduction

14 Act with respect to the regulation of tobacco products

15 and other tobacco-related activities on Indian lands;

16 (2) recognize the historic Native American tradi17 tional and ceremonial use of tobacco products, and to

18 preserve and protect the cultural, religious, and cere19 monial uses of tobacco by members of Indian tribes;

20 (3) recognize and respect Indian tribal sov21 ereignty and tribal authority to make and enforce

22 laws regarding the regulation of tobacco distributors

23 and tobacco products on Indian lands; and

24 (4) ensure that the necessary funding is made

25 available to tribal governments for licensing and en-
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•S 1415 RS2

1 forcement of tobacco distributors and tobacco products

2 on Indian lands.

3 SEC. 603. APPLICATION OF TOBACCO-RELATED PROVISIONS

4 TO NATIVE AMERICANS.

5 (a) IN GENERAL.—The provisions of this Act apply

6 to the manufacture, distribution, or sale of tobacco or to7 bacco products in Indian country and on other trust lands

8 subject to the jurisdiction of an Indian tribe. To the extent

9 that an Indian tribe engages in the manufacture, distribu10 tion, or sale of tobacco products, the provisions of this Act

11 apply to that tribe.

12 (b) TRADITIONAL USE EXCEPTION.—

13 (1) IN GENERAL.—In recognition of the religious,

14 ceremonial, and traditional uses of tobacco and to15 bacco products by Indian tribes and the members of

16 such tribes, nothing in this Act shall be construed to

17 infringe upon the right of such tribes or members of

18 such tribes to acquire, possess, use, or transfer any to19 bacco or tobacco products for such purposes, or to per20 mit an infringement upon the ability of minors to

21 participate and use tobacco products for religious,

22 ceremonial, or traditional purposes.

23 (2) APPLICATION OF PROVISIONS.—Paragraph

24 (1) shall apply only to those quantities of tobacco or

25 tobacco products necessary to fulfill the religious, cere-
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•S 1415 RS2

1 monial, or traditional purposes of an Indian tribe or

2 the members of such tribe, and shall not be construed

3 to permit the general marketing of tobacco or tobacco

4 products in a manner that is not in compliance with

5 chapter IX of the Federal Food, Drug, and Cosmetic

6 Act as added by this Act.

7 (3) LIMITATION.—Nothing in this Act shall be

8 construed to permit an Indian tribe or member of

9 such a tribe to acquire, possess, use, or transfer any

10 tobacco or tobacco product in violation of section 2342

11 of title 18, United States Code, with respect to the

12 transportation of contraband cigarettes.

13 ƒ(c) PAYMENTS TO TOBACCO TRUST FUND.—Any In14 dian tribe that engages in the manufacture of tobacco prod15 ucts shall be subject to liability for any annual fee pay16 ments that are levied on other tobacco product manufactur17 ers for purposes of the National Tobacco Settlement Trust

18 Fund. Any Indian tribe that does not pay such fees shall

19 be considered a nonparticipating tobacco product manufac20 turer under section 708 of this Act.≈

21 (d) APPLICATION OF FEDERAL FOOD, DRUG, AND COS22 METIC ACT REQUIREMENTS.—

23 (1) IN GENERAL.—The provisions of this Act and

24 the provisions of the Food, Drug, and Cosmetic Act

25 (21 U.S.C. 301 et seq.) relating to the manufacture,
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•S 1415 RS2

1 distribution, and sale of tobacco products shall apply

2 in Indian country and on other trust lands subject to

3 the jurisdiction of an Indian tribe. To the extent that

4 an Indian tribe engages in the manufacture, distribu5 tion, or sale of tobacco products, the provisions of this

6 Act apply to that tribe.

7 (2) JURISDICTION.—With respect to tobacco-re8 lated activities that take place in Indian country or

9 on trust lands within the jurisdiction of an Indian

10 tribe, the responsibility for enforcing the regulations

11 promulgated under paragraph (1) shall be vested in—

12 (A) the Indian tribe involved;

13 (B) the State within which the lands of the

14 Indian tribe are located, under a voluntary coop15 erative agreement entered into by the State and

16 the Indian tribe or tribal organization; or

17 (C) the Secretary.

18 (3) ELIGIBILITY FOR ASSISTANCE.—Under the

19 regulations promulgated under paragraph (1), the

20 Secretary, in consultation with the Secretary of the

21 Interior, shall provide assistance to an Indian tribe

22 in meeting and enforcing the requirements under such

23 regulations, including grant funds, if—

24 (A) the tribe or tribal organization has a

25 governing body that has powers and carries out
426

•S 1415 RS2

1 duties that are similar to the powers and duties

2 of State or local governments;

3 (B) the functions to be exercised through the

4 use of such assistance relate to activities con5 ducted in Indian country and on other trust

6 lands subject to the jurisdiction of the tribe; and

7 (C) the tribe is reasonably expected to be ca8 pable of carrying out the functions required by

9 the Secretary.

10 (4) DETERMINATIONS.—Not later than 60 days

11 after the date on which an Indian tribe submits an

12 application for assistance under paragraph (3), the

13 Secretary shall make a determination concerning the

14 eligibility of such tribe for such assistance.

15 (5) IMPLEMENTATION BY THE SECRETARY.—If

16 the Secretary determines that the Indian tribe is not

17 willing or not qualified to administer the require18 ments of the regulations promulgated under this sub19 section, or the tribe is considered to be a non-partici20 pating tobacco product manufacturer, the Secretary,

21 in consultation with the Secretary of the Interior,

22 shall implement and enforce such regulations on be23 half of the tribe.

24 (6) DEFICIENT APPLICATIONS; OPPORTUNITY TO

25 CURE.—If the Secretary determines under paragraph
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•S 1415 RS2

1 (4) that a tribe is not eligible for assistance under

2 this subsection, the Secretary shall—

3 (A) submit to such tribe in writing, a state4 ment of the reasons for such determination; and

5 (B) shall assist such tribe in overcoming

6 any deficiencies that resulted in the determina7 tion of ineligibility.

8 After an opportunity to review and cure such defi9 ciencies, the tribe may re-apply to the Secretary for

10 assistance under this subsection.

11 (e) RETAIL LICENSING REQUIREMENTS.—

12 (1) IN GENERAL.—The requirements of the Fed13 eral Food, Drug, and Cosmetic Act (21 U.S.C. 301 et

14 seq.) and this Act with respect to the licensing of to15 bacco retailers shall apply to retailers that sell to16 bacco or tobacco products in Indian country or on

17 trust lands within the jurisdiction of an Indian tribe.

18 (2) MINIMUM FEDERAL STANDARDS.—

19 (A) IN GENERAL.—Not later than 180 days

20 after the date of enactment of this Act, the Sec21 retary shall promulgate regulations to authorize

22 an Indian tribe to implement a tribal tobacco

23 product licensing program in Indian country or

24 on trust lands within the jurisdiction of that In25 dian tribe.
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•S 1415 RS2

1 (B) MINIMUM STANDARDS.—In order for an

2 Indian tribe to assume responsibility for the li3 censing and regulation of tobacco-related activi4 ties conducted in Indian country or on other

5 trust lands subject to the jurisdiction of an In6 dian tribe, the Indian tribe shall establish terms,

7 conditions, and standards similar to those de8 scribed in section 224 of this Act for a State li9 censing law.

10 (C) WAIVER.—An Indian tribe shall have

11 the same right to apply for waiver and modifica12 tion of the law described in subparagraph (B) as

13 a State under the Act involved.

14 (3) IMPLEMENTATION BY THE SECRETARY.—If

15 the Secretary, in consultation with the Secretary of

16 the Interior, determines that the Indian tribe is not

17 qualified to meet the minimum standards of para18 graph (2)(B), or the Secretary, in consultation with

19 the Secretary of the Interior, shall implement such re20 quirements on behalf of the Indian tribe.

21 (f) ELIGIBILITY FOR PUBLIC HEALTH PAYMENTS.—

22 (1) GRANT.—For each fiscal year the Secretary

23 shall award a grant to each Indian tribe that has an

24 approved anti-smoking plan for the fiscal year in-
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•S 1415 RS2

1 volved under paragraph (2) in an amount equal to

2 the amount determined under paragraph (3).

3 (2) TRIBAL PLANS.—To be eligible to receive a

4 grant under paragraph (1), an Indian tribe shall pre5 pare and submit to the Secretary an anti-smoking

6 plan and shall otherwise meet the requirements of

7 subsection (e). The Secretary shall promulgate regula8 tions providing for the form and content of anti9 smoking plans to be submitted under this paragraph.

10 (3) AMOUNT DETERMINED.—Except as provided

11 in this subsection, the amount of any grant for which

12 an Indian tribe is eligible under paragraph (1) shall

13 be determined by the Secretary based on the product

14 of—

15 (A) the ratio of the total number of individ16 ual residing on or in such tribe’s reservation, ju17 risdictional lands, or the active user population,

18 relative to the total population of the State in19 volved; and

20 (B) the amount allocated under this Act to

21 the State for such public health purposes.

22 (4) USE.—Amounts provided to a tribe under

23 this subsection shall be used to reimburse the tribe for

24 smoking-related health expenditures, to further the

25 purposes of this Act and in accordance with a tribal
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1 anti-smoking plan approved by the Secretary. Indian

2 tribes shall have the flexibility to utilize such amounts

3 to meet the unique health care needs of persons within

4 their service populations within the context of tribal

5 health programs if such programs meet the fundamen6 tal Federal goals and purposes of Federal Indian

7 health care law and policy.

8 (5) REALLOTMENT.—Amounts set aside and not

9 expended under this subsection shall be reallotted

10 among other eligible Indian tribes.

11 (g) OBLIGATIONS OF TOBACCO PRODUCT MANUFAC12 TURERS.—Tobacco product manufacturers, including In13 dian tribes, participating in, or covered under this any Act

14 shall not engage in any activity in Indian country or on

15 other trust lands subject to the jurisdiction of an Indian

16 tribe that is prohibited by this Act.

17 (h) USE OF TRUST FUND PAYMENTS.—Amounts made

18 available from the ƒtobacco trust fund≈ National To19 bacco Settlement Trust Fund under any Indian

20 health provisions of this Act shall be provided to the Indian

21 Health Service and, through the provisions of the Indian

22 Self Determination and Education Assistance Act (25

23 U.S.C. 450b et seq.), to Indian tribes to be used to reduce

24 tobacco consumption, promote smoking cessation, and to

25 fund related activities including—
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1 (1) clinic and facility design, construction, re2 pair, renovation, maintenance, and improvement;

3 (2) health care provider services and equipment;

4 (3) domestic and community sanitation associ5 ated with clinic and facility construction and im6 provement;

7 (4) inpatient and outpatient services; and

8 (5) other programs and services which have as

9 their goal raising the health status of Indians.

10 (i) PREEMPTION.—

11 (1) IN GENERAL.—Except as otherwise provided

12 in this section, nothing in this Act shall be construed

13 to prohibit an Indian tribe from imposing require14 ments, prohibitions, penalties, or other measures to

15 further the purposes of this title that are in addition

16 to the requirements, prohibitions, or penalties re17 quired by this title.

18 (2) PUBLIC EXPOSURE TO SMOKE.—Nothing in

19 this title shall be construed to preempt or otherwise

20 affect any Indian tribe rule or practice that provides

21 greater protections from the health hazards of envi22 ronmental tobacco smoke.

23 SEC. 604. STATE TOBACCO EXCISE TAX COMPLIANCE.

24 An Indian tribe or tribal corporation shall collect any

25 excise or sales tax imposed by a State, within the exterior
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1 borders or which the sale occurs, on non-members of the In2 dian tribe as a consequence of the purchase of tobacco prod3 ucts by the non-member from the Indian tribe or tribal cor4 poration. The Indian tribe or tribal corporation shall remit

5 such taxes collected to the Treasury of the United States,

6 which shall, in turn, remit the taxes to the State in which

7 they were collected.

8 TITLE VII—CIVIL LIABILITY OF

9 TOBACCO PRODUCT MANU10 FACTURERS

11 SEC. 701. DEFINITIONS

12 In this title:

13 (1) ADDICTION CLAIM; DEPENDENCE CLAIM.—

14 The term ‘‘addiction claim’’ or ‘‘dependence claim’’

15 refers only to any claim for relief which is predicated

16 upon claims of addiction to, or dependence on, to17 bacco products, but neither term includes claims

18 based upon manifestation of tobacco-related diseases.

19 (2) AFFILIATE.—The term ‘‘affiliate’’ means a

20 person who directly or indirectly owns or controls, is

21 owned or controlled by, or is under common owner22 ship or control with, another person. For purposes of

23 this definition, ownership means ownership of an eq24 uity interest, or the equivalent thereof, of 10 percent

25 or more, and person means an individual, partner-
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1 ship, committee, association, corporation, or any

2 other organization or group of persons.

3 (3) CIVIL ACTION.—The term ‘‘civil action’’

4 means any action, lawsuit, or proceeding that is not

5 a criminal action.

6 (4) COMPENSATORY DAMAGES.—The term ‘‘com7 pensatory damages’’ refers to those damages necessary

8 to reimburse an injured party, and includes actual,

9 general, and special damages.

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

12 States, including without limitation any Federal,

13 State, or tribal court.

14 (6) FINAL JUDGMENT.—The term ‘‘final judg15 ment’’ means a judgment on which all rights of ap16 peal or discretionary review have been exhausted or

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

18 discretionary review has expired.

19 (7) FINAL SETTLEMENT.—The term ‘‘final settle20 ment’’ means a settlement agreement that is executed

21 and approved as necessary to be fully binding on all

22 relevant parties.

23 (8) INDIVIDUAL.—The term ‘‘individual’’ means

24 a human being and does not include a corporation,

25 partnership, unincorporated association, trust, estate,
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1 or any other public or private entity, State or local

2 government, or Indian tribe.

3 (9) PUNITIVE DAMAGES.—The term ‘‘punitive

4 damages’’ means damages in addition to compen5 satory damages having the character of punishment

6 or penalty.

7 (10) REDUCED RISK TOBACCO PRODUCTS.—The

8 term ‘‘reduced risk tobacco product’’ means a product

9 designated as a reduced risk tobacco product under

10 section 916(a)(2) of the Federal Food, Drug, and Cos11 metic Act.

12 (11) SECRETARY.—The term ‘‘Secretary’’ means

13 the Secretary of the Treasury, except where the con14 text otherwise requires.

15 (12) TOBACCO CLAIM.—The term ‘‘tobacco

16 claim’’ means a claim directly or indirectly arising

17 out of, based on, or related to the health-related effects

18 of tobacco products, including without limitation a

19 claim arising out of, based on, or related to allega20 tions regarding any conduct, statement, or omission

21 respecting the health-related effects of such products.

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

23 product’’ means cigarettes, cigarette tobacco, smokeless

24 tobacco, little cigars, roll-your-own tobacco, and fine

25 cut tobacco products.
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1 (14) TOBACCO PRODUCT MANUFACTURER.—The

2 term ‘‘tobacco product manufacturer’’ means—

3 (A) a person who directly, and not through

4 any affiliate—

5 (i) manufactures tobacco products for

6 sale in the United States after the date of

7 enactment of this Act, including tobacco

8 products for sale in the United States

9 through an importer;

10 (ii) is, after the date of enactment of

11 this Act, the first purchaser for resale in the

12 United States of tobacco products manufac13 tured for sale outside of the United States;

14 (iii) engaged in activities described in

15 clause (i) or (ii) prior to the date of enact16 ment of this Act, has not engaged in such

17 activities after the date of enactment of this

18 Act, and was not as of June 20, 1997, an

19 affiliate of a participating tobacco product

20 manufacturer in which the participating to21 bacco product manufacturer or its other af22 filiates owned a 50 percent or greater inter23 est;

24 (iv) is a successor or assign of any of

25 the foregoing; or
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1 (v) is an entity to which any of the

2 foregoing directly or indirectly makes, after

3 the date of enactment of this Act, a fraudu4 lent conveyance or a transfer that would

5 otherwise be voidable under part 5 of title

6 11 of the United States Code, but only to

7 the extent of the interest or obligation trans8 ferred; but

9 (B) does not include an affiliate of a to10 bacco product manufacturer unless that affiliate

11 is described in clause (i), (ii), (iii), (iv), or (v)

12 of subparagraph (A).

13 SEC. 702. APPLICATION.

14 (a) IN GENERAL.—The provisions of this title shall

15 apply to any civil action involving a tobacco claim, includ16 ing any such claim that has not reached final judgment

17 or final settlement as of the date of enactment of this Act,

18 that is brought or maintained against—

19 (1) a participating tobacco product manufac20 turer or its predecessors;

21 (2) any person that at any time was or is an

22 affiliate, officer, director, employee, attorney, or agent

23 of a participating tobacco product manufacturer, un24 less such person is itself a non-participating tobacco

25 product manufacturer;
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1 (3) an importer, distributor, wholesaler, or re2 tailer of tobacco products—

3 (A) that, after the date of enactment of this

4 Act, does not import, distribute, or sell tobacco

5 products made or sold by a non-participating to6 bacco product manufacturer;

7 (B) whose business practices with respect to

8 sales or operations occurring within the United

9 States, conform to the applicable requirements of

10 the marketing and advertising provisions of the

11 Master Settlement Agreement; and

12 (C) that is not itself a non-participating to13 bacco product manufacturer;

14 (4) a supplier of component or constituent parts

15 of tobacco products—

16 (A) that, after the date of enactment of this

17 Act, does not knowingly sell any component or

18 constituent parts of tobacco products to a non19 participating tobacco product manufacturer;

20 (B) whose business practices with respect to

21 sales or operations occurring within the United

22 States, conform to the applicable requirements of

23 the marketing and advertisement provisions of

24 the Master Settlement Agreement; and
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1 (C) that is not itself a non-participating to2 bacco product manufacturer;

3 (5) a grower of tobacco products, unless such per4 son is itself a non-participating tobacco product man5 ufacturer; or

6 (6) an insurer of any person described in para7 graph (1), (2), (3), (4), or (5) based on, arising out

8 of, or related to tobacco products manufactured, im9 ported, distributed, or sold (or tobacco grown) by such

10 person (other than an action brought by the insured

11 person), unless such insurer is itself a non-participat12 ing tobacco product manufacturer.

13 (b) EXCEPTIONS.—The provisions of this title shall not

14 apply to any tobacco claim—

15 (1) brought against any person other than a per16 son described in subsection (a) or to any tobacco

17 claim that reached final judgment or final settlement

18 prior to the date of enactment of this Act;

19 (2) against an employer under valid workers’

20 compensation laws;

21 (3) arising under the securities laws of a State

22 or the United States;

23 (4) brought by the United States;
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1 (5) brought under this title by a State or a par2 ticipating tobacco product manufacturer to enforce

3 this Act;

4 (6) asserting damage to the environment from

5 exposures other than environmental smoke or second

6 hand smoke; or

7 (7) against a participating tobacco product

8 manufacturer if that manufacturer, or any of its

9 principal officers, acting in that officer’s corporate

10 capacity, is convicted of—

11 (A) manufacturing or distributing mis12 branded tobacco products in violation of the Fed13 eral Food, Drug, and Cosmetic Act;

14 (B) violating the reporting requirements of

15 section 5762(a)(4) of the Internal Revenue Code

16 of 1986 (26 U.S.C. 5762(a)(4));

17 (C) violating, or aiding and abetting the

18 violation of, any provision of chapter 114 of title

19 18, United States Code; or

20 (D) violating any provision of chapter 47

21 or chapter 63 of title 18, United States Code, in

22 making reports or disclosures under this Act.

23 (c) STATE OPTION FOR ONE-TIME OPT OUT.—The

24 Secretary shall establish procedures under which the attor25 ney general of a State may, not later than 1 year after
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1 the date of enactment of this Act, elect not to resolve a civil

2 action described in subsection (a) or not to enter into the

3 Master Settlement Agreement. A State whose attorney gen4 eral makes such an election shall not be eligible to receive

5 payments from the ƒtrust fund established by section 401≈

6 National Tobacco Settlement Trust Fund. Pro7 cedures under this paragraph shall permit such a State to

8 make such an election on a one-time basis.

9 SEC. 703. PREEMPTION AND RELATIONSHIP TO OTHER LAW.

10 (a) PREEMPTION.—No civil action involving a tobacco

11 claim to which this title applies shall be maintained in any

12 court except in accordance with this title.

13 (b) RELATIONSHIP TO STATE LAW.—This title super14 sedes State law only to the extent that State law is incon15 sistent with this title.

16 (c) CRIMINAL LIABILITY.—Nothing in this title shall

17 be construed to limit the criminal liability of tobacco prod18 uct manufacturers, retailers, or distributors, or their offi19 cers, directors, employees, successors, or assigns.

20 SEC. 704. GOVERNMENTAL CLAIMS AND CASTANO CIVIL AC21 TIONS.

22 (a) IN GENERAL.—Except as provided in subsection

23 (b) and in section 702(c), no State, political subdivision

24 of a State, municipal corporation, governmental entity or

25 corporation, Indian tribe, or agency or subdivision thereof,
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•S 1415 RS2

1 or other entity acting in parens patriae, may file or main2 tain any civil action involving a tobacco claim.

3 (b) EFFECT OF SETTLEMENT AGREEMENT OR CON4 SENT DECREE.—Within 30 days after the date of enactment

5 of this Act, any State may request that tobacco product

6 manufacturers enter into the Master Settlement Agreement

7 or a consent decree. If a State makes such a request and

8 enters into a consent decree, it may maintain a civil action

9 involving a tobacco claim only to the extent necessary to

10 permit continuing court jurisdiction over the consent de11 cree. Nothing herein shall preclude any State from bringing

12 suit or seeking a court order to enforce the terms of the Mas13 ter Settlement Agreement or a consent decree.

14 (c) CASTANO CIVIL ACTIONS.—

15 (1) The rights and benefits afforded in section

16 221 of this Act, and the various research activities en17 visioned by this Act, are provided in settlement of,

18 and shall constitute the exclusive remedy for the pur19 pose of determining civil liability as to those claims

20 asserted in the Castano Civil Actions, and all bases

21 for any such claim under the laws of any State are

22 preempted (including State substantive, procedural,

23 remedial, and evidentiary provisions) and settled. The

24 Castano Civil Actions shall be dismissed with full res25 ervation of the rights of individual class members to
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•S 1415 RS2

1 pursue claims not based on addiction or dependency

2 in civil actions in accordance with this Act. For pur3 poses of determining application of statutes of limita4 tion or repose, individual actions filed within one

5 year after the effective date of this Act by those who

6 were included within a Castano Civil Action shall be

7 considered to have been filed as of the date of the

8 Castano Civil Action applicable to said individual.

9 (2) For purposes of awarding attorneys fees and

10 expenses for those actions subject to this subsection,

11 the matter at issue shall be submitted to arbitration

12 before one panel of arbitrators. In any such arbitra13 tion, the arbitration panel shall consist of 3 persons,

14 one of whom shall be chosen by the attorneys of the

15 Castano Plaintiffs’ Litigation Committee who were

16 signatories to the Memorandum of Understanding

17 dated June 20, 1997, by and between tobacco product

18 manufacturers, the Attorneys General, and private at19 torneys, one of whom shall be chosen by the partici20 pating tobacco product manufacturers, and one of

21 whom shall be chosen jointly by those 2 arbitrators.

22 (3) The participating tobacco product manufac23 turers shall pay the arbitration award.
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1 SEC. 705. CONCURRENT JURISDICTION; FEDERAL CAUSE OF

2 ACTION; ACTIONS; DAMAGES; LIABILITY.

3 (a) IN GENERAL.—Any tobacco claim in any civil ac4 tion to which this title applies shall be deemed to arise

5 under this section and shall be governed by the provisions

6 of this title, but the substantive rules of decision for such

7 claim shall be derived from the law of the State or Tribe

8 that would have been applicable but for the operation of

9 this section, to the extent that such law is not inconsistent

10 with the provisions of this title. This Federal cause of action

11 shall be the exclusive means for the purpose of determining

12 civil liability on any such tobacco claim in any civil action

13 to which this title applies, and all other bases for tobacco

14 claims under State, Tribal, and local law are hereby pre15 empted. District courts of the United States and tribal

16 courts shall have concurrent jurisdiction with the courts of

17 the States over any tobacco claim in any civil action under

18 this section.

19 (b) PERMISSIBLE DEFENDANTS.—In any civil action

20 to which this subtitle applies, tobacco claims may be filed

21 or maintained only against—

22 (1) a tobacco product manufacturer; or

23 (2) a surviving entity established by a tobacco

24 product manufacturer.
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•S 1415 RS2

1 (c) ADDICTION AND DEPENDENCE CLAIMS BARRED.—

2 In any civil action to which this title applies, no addiction

3 claim or dependence claim may be filed or maintained.

4 (d) REQUIREMENTS.—The following requirements

5 apply to civil actions to which this title applies:

6 (1) FUTURE REDUCED-RISK PRODUCTS.—In any

7 civil action to which this subtitle applies, no allega8 tion or evidence relating to reduced-risk tobacco prod9 ucts developed after the date of enactment of this Act

10 shall be admissible or discoverable in any action on

11 a tobacco claim arising out of, based on, or related

12 to any other tobacco product.

13 (2) PRODUCTION OF DOCUMENTS.—All docu14 ments or other records included in the document de15 pository required to be established and maintained

16 under section 903 of this Act shall be deemed pro17 duced in any civil action involving a tobacco claim,

18 and no court in such action shall require additional

19 production of any such document or record. Any such

20 document submitted to the court shall be considered

21 authenticated with the same legal status as the origi22 nal.

23 (e) LIABILITY.—The following provisions regarding li24 ability shall apply in civil actions to which this title ap25 plies:
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•S 1415 RS2

1 (1) A tobacco product manufacturer shall be lia2 ble for any act or omission of its attorneys, advertis3 ing agencies, and agents undertaken in the represen4 tation of such tobacco product manufacturer.

5 (2) A tobacco product manufacturer shall be lia6 ble in connection with any tobacco claim for the li7 ability, if any, of any of its affiliates arising from to8 bacco products sold directly by such affiliate in the

9 United States or to an importer for resale in the

10 United States, unless such affiliate is a participating

11 tobacco product manufacturer or a non-participating

12 tobacco product manufacturer.

13 (3) Participating tobacco product manufacturers

14 shall not be jointly and severally liable on a tobacco

15 claim with non-participating tobacco product manu16 facturers. Nothing in this title prevents a participat17 ing tobacco product manufacturer from being held

18 jointly and severally liable with any other person

19 other than a non-participating tobacco product man20 ufacturer if such liability exists under the applicable

21 substantive rules of decision as determined under sub22 section (a), except that any such imposition of joint

23 and several liability against a participating tobacco

24 product manufacturer shall be subject to the provi25 sions of section 706.
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1 (4) In any civil action involving both a tobacco

2 claim against a participating tobacco product manu3 facturer based in whole or in part upon conduct oc4 curring prior to the date of enactment of this Act and

5 a claim against 1 or more non-participating tobacco

6 product manufacturers, the court, upon application of

7 a participating tobacco product manufacturer shall

8 sever a trial so that all claims against participating

9 tobacco product manufacturers shall be tried sepa10 rately from any claim involving non-participating to11 bacco product manufacturers. If such severance results

12 in a tobacco claim being submitted to more than 1

13 jury or to the same jury for separate deliberation the

14 participating tobacco product manufacturer may not

15 assert any claim that would prejudice the dollar

16 amount to be recovered by the holder of the tobacco

17 claim from the participating tobacco product manu18 facturer due to the severance of the action including

19 satisfaction by way of jury verdict against the non20 participating tobacco product manufacturer. In any

21 action brought against a participating tobacco manu22 facturer and a person that is not a tobacco product

23 manufacturer, the court may sever the trial so that all

24 claims against such person may be tried separately.
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1 (5) In any civil action brought involving a to2 bacco claim, there shall be a presumption that nico3 tine is addictive and that the diseases identified as

4 being caused by use of tobacco products in the Center

5 for Disease Control and Prevention Reducing the

6 Health Consequences of Smoking: 25 Years of

7 Progress: A Report of the Surgeon General (United

8 States Public Health Service 1989), The Health Con9 sequences of Smoking: Involuntary Smoking,

10 (USPHS 1986); and The Health Consequences of

11 Using Smokeless Tobacco, (USPHS 1986), are caused

12 in whole or in part by the use of tobacco products,

13 (referred to elsewhere in this paragraph as the ‘‘gen14 eral causation presumption’’), and a jury empaneled

15 to hear a tobacco claim shall be so instructed. In all

16 other respects, the burden of proof as to the issue of

17 whether a plaintiff’s specific disease or injury was

18 caused by smoking shall be governed by the law of

19 the State or Tribe in which the tobacco claim was

20 brought. The general causation presumption shall in

21 no way affect the ability of the defendant to introduce

22 evidence or argument which the defendant would oth23 erwise be entitled to present under the law of the

24 State or Tribe in which the tobacco claim was

25 brought to rebut the general causation presumption,
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•S 1415 RS2

1 or with respect to general causation, specific causa2 tion, or alternative causation, or to introduce any

3 other evidence or argument which the defendant

4 would otherwise be entitled to make.

5 ƒ(f) PRESERVATION OF INSURANCE CLAIMS.—

6 ƒ(1) IN GENERAL.—If all participating tobacco

7 product manufacturers fail to make the payments re8 quired by this Act for any calendar year, then—

9 ƒ(A) beginning on the first day of the next

10 calendar year, subsection (a) does not apply to

11 any insurance claim (including a direct action

12 claim) that is a tobacco claim, regardless of

13 when that claim arose;

14 ƒ(B) any statute of limitations or doctrine

15 of laches under applicable law shall be tolled for

16 the period—

17 ƒ(i) beginning on the date of enact18 ment of this Act; and

19 ƒ(ii) ending on the last day of that

20 calendar year; and

21 ƒ(C) an insurance claim (including a di22 rect action claim) that is a tobacco claim and

23 that is pending on the date of enactment of this

24 Act shall be preserved.
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•S 1415 RS2

1 ƒ(2) APPLICATION OF TITLE 11, UNITED STATES

2 CODE.—For purposes of this subsection, nothing in

3 this Act shall be construed to modify, suspend, or oth4 erwise affect the application of title 11, United States

5 Code, to participating tobacco manufacturers that fail

6 to make such payments.

7 ƒ(3) STATE LAW NOT AFFECTED.—Nothing in

8 this subsection shall be construed to expand or abridge

9 State law.≈

10 SEC. 706. PAYMENT OF TOBACCO CLAIM SETTLEMENTS AND

11 JUDGMENTS.

12 (a) IN GENERAL.—Except as provided below, any

13 judgment or settlement in any civil action to which this

14 subtitle applies shall be subject to the process for payment

15 of judgments and settlements set forth in this section. No

16 participating tobacco product manufacturer shall be obli17 gated to pay a judgment or settlement on a tobacco claim

18 in any civil action to which this title applies except in ac19 cordance with this section. This section shall not apply to

20 the portion, if any, of a judgment that imposes punitive

21 damages based on any conduct that—

22 (1) occurs after the date of enactment of this Act;

23 and

24 (2) is other than the manufacture, development,

25 advertising, marketing, or sale of tobacco products in
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•S 1415 RS2

1 compliance with this Act and the Master Settlement

2 Agreement.

3 (b) REGISTRATION WITH THE SECRETARY OF THE

4 TREASURY.—

5 (1) The Secretary shall maintain a record of set6 tlements, judgments, and payments in civil actions to

7 which this title applies.

8 (2) Any party claiming entitlement to a mone9 tary payment under a final judgment or final settle10 ment on a tobacco claim shall register such claim

11 with the Secretary by filing a true and correct copy

12 of the final judgment or final settlement agreement

13 with the Secretary and providing a copy of such fil14 ing to all other parties to the judgment or settlement.

15 (3) The Secretary shall assign a priority for

16 payment based upon the date on which a proper reg17 istration of a final judgment or final settlement oc18 curs.

19 (4) Any participating tobacco product manufac20 turer making a payment on any final judgment or

21 final settlement to which this section applies shall cer22 tify such payment to the Secretary by filing a true

23 and correct copy of the proof of payment and a state24 ment of the remaining unpaid portion, if any, of such

25 final judgment or final settlement with the Secretary
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•S 1415 RS2

1 and shall provide a copy of such filing to all other

2 parties to the judgment or settlement.

3 (c) LIABILITY CAP.—The aggregate payments made by

4 all participating tobacco product manufacturers in any cal5 endar year may not exceed $6,500,000,000. The Secretary

6 shall initiate a rulemaking within 30 days after the date

7 of enactment of this Act to establish a mechanism for imple8 menting this subsection in such a way that payments may

9 be made from all awards payable in that year. Amounts

10 not payable because of the application of this subsection,

11 shall be carried forward and paid in the next year, subject

12 to the provisions of this subsection.

13 (d) INJUNCTIVE RELIEF.—A participating tobacco

14 product manufacturer may commence an action to enjoin

15 any State court proceeding to enforce or execute any judg16 ment or settlement where payment has not been authorized

17 under this section. Such an action shall arise under the

18 laws of the United States and may be commenced in the

19 district court of the United States for the district in which

20 the State court proceeding is pending.

21 (e) JOINT AND SEVERAL LIABILITY.—All participat22 ing tobacco product manufacturers shall be jointly and sev23 erally liable for, and shall enter into an agreement to ap24 portion among them, any amounts payable under judg25 ments and settlements governed by this section arising in
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•S 1415 RS2

1 whole or in part from conduct occurring prior to the date

2 of enactment of this Act. No participating tobacco product

3 manufacturer shall cease operations without establishing a

4 surviving entity against which a tobacco claim may be

5 brought. Any obligation or interest of a participating, to6 bacco product manufacturer arising under such liability

7 apportionment agreement shall be given priority and shall

8 not be rejected, avoided, or discharged in a proceeding,

9 under title 11, United States Code, or in any liquidation,

10 reorganization, receivership, or other insolvency proceeding

11 under State law.

12 SEC. 707. ATTORNEY’S FEES AND EXPENSES.

13 (a) ARBITRATION PANEL.—

14 (1) ESTABLISHMENT.—For the purpose of

15 awarding of attorneys’ fees and expenses relating to

16 litigation affected by, or legal services that, in whole

17 or in part, resulted in or created a model for pro18 grams in, this Act, and with respect to which litiga19 tion or services the attorney involved is unable to

20 agree with the plaintiff who employed that attorney

21 with respect to any dispute that may arise between

22 them regarding the fee agreement, the matter at issue

23 shall be submitted to arbitration. In any such arbi24 tration, the arbitration panel shall consist of 3 per25 sons, one of whom shall be chosen by the plaintiff, one
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•S 1415 RS2

1 of whom shall be chosen by the attorney, and one of

2 whom shall be chosen jointly by those 2 arbitrators.

3 (2) OPERATION.—Not later than 30 days after

4 the date on which all members of an arbitration panel

5 are appointed under paragraph (1), the panel shall

6 establish the procedures under which the panel will

7 operate which shall include—

8 (A) a requirement that any finding by the

9 arbitration panel must be in writing and sup10 ported by written reasons;

11 (B) procedures for the exchanging of exhib12 its and witness lists by the various claimants for

13 awards;

14 (C) to the maximum extent practicable, re15 quirements that proceedings before the panel be

16 based on affidavits rather than live testimony;

17 and

18 (D) a requirement that all claims be sub19 mitted to an arbitration panel not later than 3

20 months after the date of this Act and a deter21 mination made by the panel with respect to such

22 claims not later than 7 months after such date

23 of enactment.

24 (3) RIGHT TO PETITION.—Any individual attor25 ney or group of attorneys involved in litigation af-
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•S 1415 RS2

1 fected by this Act shall have the right to petition an

2 arbitration panel for attorneys’ fees and expenses.

3 (4) CRITERIA.—In making any award under

4 this section, an arbitration panel shall consider the

5 following criteria:

6 (A) The time and labor required by the

7 claimant.

8 (B) The novelty and difficulty of the ques9 tions involved in the action for which the claim10 ant is making a claim.

11 (C) The skill requisite to perform the legal

12 service involved properly.

13 (D) The preclusion of other employment by

14 the attorney due to acceptance of the action in15 volved.

16 (E) Whether the fee is fixed or a percentage.

17 (F) Time limitations imposed by the client

18 or the circumstances.

19 (G) The amount involved and the results ob20 tained.

21 (H) The experience, reputation, and ability

22 of the attorneys involved.

23 (I) The undesirability of the action.

24 (J) Such other factors as justice may re25 quire.
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1 (5) APPEAL AND ENFORCEMENT.—The findings

2 of an arbitration panel shall be final, binding, non3 appealable, and payable within 30 days after the date

4 on which the finding is made public, except that if an

5 award is to be paid in installments, the first install6 ment shall be payable within such 30 day period and

7 succeeding installments shall be paid annually there8 after.

9 (b) VALIDITY AND ENFORCEABILITY OF PRIVATE

10 AGREEMENTS.—Notwithstanding any other provision of

11 this Act, nothing in this section shall be construed to abro12 gate or restrict in any way the rights of any parties to

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

14 issues to which this section applies, or to enter into private

15 agreements with respect to the allocation or division of fees

16 among the attorneys party to any such agreement.

17 (c) OFFSET FOR AMOUNTS ALREADY PAID.—In mak18 ing a determination under this section with regard to a

19 dispute between a State that pursued independent civil ac20 tion against tobacco product manufacturers and its attor21 ney, the arbitration panel shall take into account any

22 amounts already paid by the State under the agreement in

23 dispute.
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1 SEC. 708. NON-PARTICIPATING TOBACCO PRODUCT MANU2 FACTURERS.

3 (a) IN GENERAL.—If a tobacco product manufacturer

4 does not enter into a consent decree or the Protocol before

5 the date of enactment of this Act, then the limitations on

6 liability under this title do not apply to that manufacturer.

7 ƒ(b) IMPOSITION OF FEE.—

8 ƒ(1) IN GENERAL.—There is hereby imposed on

9 each tobacco product manufacturer described in sub10 section (a) an annual fee for any calendar year end11 ing after the date of enactment of this Act for which

12 it does not enter into a consent decree or sign the Pro13 tocol.

14 ƒ(2) AMOUNT.—

15 ƒ(A) TOTAL.—The amount of the annual

16 fee imposed by paragraph (1) is equal to 150

17 percent of the amount that would be paid under

18 section 403 of this Act for that year by that to19 bacco product manufacturer if it were a partici20 pating tobacco product manufacturer.

21 ƒ(B) PER TOBACCO PRODUCT MANUFAC22 TURER.—The Secretary shall promulgate regula23 tions—

24 ƒ(i) under which the amount of the fee

25 imposed under paragraph (1) for any to-
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1 bacco product manufacturer is to be deter2 mined; and

3 ƒ(ii) establishing procedures for the as4 sessment and collection of any fee imposed

5 under paragraph (1).≈

6 SEC. 709. CONFORMING AMENDMENTS.

7 (a) Section 362(b) of title 11, United States Code, is

8 amended by—

9 (1) striking ‘‘or’’ after the semicolon in para10 graph (17);

11 (2) striking ‘‘petition.’’ in paragraph (18) and

12 inserting ‘‘petition; or’’; and

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

14 ‘‘(19) under subsection (a) of this section, of the

15 commencement or continuation of any action or other

16 proceeding by or against a participating tobacco

17 product manufacturer as defined in section 6(22) of

18 the National Tobacco Policy and Youth Smoking Re19 duction Act regarding any interest or obligation aris20 ing under or directly related to the Master Settlement

21 Agreement as defined in section 6(21) of that Act or

22 the liability apportionment agreement.’’.

23 (b) Section 365 of title 11, United States Code, is

24 amended by—
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1 (1) striking ‘‘and (d)’’ in subsection (a) and in2 serting ‘‘(d), and (p)’’; and

3 (2) adding at the end thereof the following:

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

5 have assumed as of the commencement of the case, and shall

6 cause the debtor to perform on an executory contract of a

7 participating tobacco product manufacturer as defined in

8 section 6(22) of the National Tobacco Policy and Youth

9 Smoking Reduction Act, to the extent such executory con10 tract is, or is directly related to, the Master Settlement

11 Agreement as defined in section 6(21) of that Act, or the

12 liability apportionment agreement described.’’.

13 (c) Section 507(a) of title 11, United States Code, is

14 amended by adding at the end thereof the following:

15 ‘‘(10) Tenth, any unsecured claim of or against

16 a participating tobacco product manufacturer as de17 fined in section 6(22) of the National Tobacco Policy

18 and Youth Smoking Reduction Act, regarding any in19 terest or obligation that arises under or is directly re20 lated to the Master Settlement Agreement as defined

21 in section 6(21) of that Act, or the liability appor22 tionment agreement.’’.

23 (d) Section 541(a) of title 11, United States Code, is

24 amended by adding at the end thereof the following:
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1 ‘‘(8) Any interest of the debtor in property to the

2 extent that the debtor has transferred or agreed to

3 transfer such interest under the Master Settlement

4 Agreement as defined in section 6(21) of the National

5 Tobacco Policy and Youth Smoking Reduction Act or

6 any written agreement directly related to such Master

7 Settlement Agreement, or the liability apportionment

8 agreement, or any written agreement directly related

9 to such liability apportionment agreement.’’.

10 (e) Section 1141 of title 11, United States Code, is

11 amended by—

12 (1) striking ‘‘(d)(2) and (d)(3)’’ in subsection (a)

13 and inserting ‘‘(d)(2), (d)(3), and (d)(5)’’;

14 (2) striking ‘‘(d)(2) and (d)(3)’’ in subsection (c)

15 and inserting ‘‘(d)(2), (d)(3), and (d)(5)’’; and

16 (3) adding at the end of subsection (d) the fol17 lowing:

18 ‘‘(5) The confirmation of a plan does not dis19 charge a debtor from any debt or other obligation

20 arising under or directly related to the Master Settle21 ment Agreement as defined in section 6(21) of the Na22 tional Tobacco Policy and Youth Smoking Reduction

23 Act, or the liability apportionment agreement.’’.
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1 TITLE VIII—TOBACCO INDUSTRY

2 COMPLIANCE AND EMPLOYEE

3 PROTECTION FROM REPRIS4 ALS

5 SEC. 801. TOBACCO INDUSTRY COMPLIANCE ACCOUNTABIL6 ITY REQUIREMENTS.

7 (a) ESTABLISHMENT OF ACCOUNTABILITY PANEL.—

8 The Commissioner of Food and Drugs, in consultation with

9 the Secretary, shall establish an advisory panel, to be

10 known as the ‘‘Tobacco Agreement Accountability Panel’’.

11 The panel shall consist of the Surgeon General, the Director

12 of the Center for Disease Control or the Director’s delegate,

13 and the Director of the Health and Human Services Office

14 of Minority Health.

15 (b) TOBACCO COMPANY PLAN.—Within a year after

16 the date of enactment of this Act, each participating tobacco

17 product manufacturer shall adopt and submit to the Com18 missioner a plan to achieve the required percentage reduc19 tions in underage use of tobacco products set forth in section

20 201, and thereafter shall update its plan no less frequently

21 than annually. The Commissioner shall provide a copy of

22 each such plan to the panel, which shall review the plan

23 and submit its views on the plan to the Commissioner. The

24 panel may recommend amendment of any plan to incor-
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1 porate additional measures to reduce underage tobacco use

2 that are consistent with the provisions of this Act.

3 (c) ANNUAL REPORT.—The panel shall submit a report

4 to the Commissioner and to the Congress by January 31

5 of each year, which shall be published in the Federal Reg6 ister. In its report, the panel shall—

7 (1) describe in detail each tobacco product man8 ufacturer’s compliance with the provisions of this Act

9 and its plan submitted under subsection (b);

10 (2) report on whether each tobacco product man11 ufacturer’s efforts to reduce underage smoking are

12 likely to result in attainment of smoking reduction

13 targets under section 201;

14 (3) recommend, where necessary, additional

15 measures individual tobacco companies should under16 take to meet those targets; and

17 (4) include, where applicable, the extent to which

18 prior panel recommendations have been adopted by

19 each tobacco product manufacturer.

20 (d) PUBLIC HEALTH EMERGENCY.—If the panel deter21 mines unanimously at any time that a tobacco product

22 manufacturer’s actions or inactions with respect to its com23 pliance with the Act are of such a nature as to create a

24 clear and present danger to the attainment of the targets

25 for underage smoking reduction, it shall immediately report
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1 such acts or omissions to the Commissioner. If the Commis2 sioner determines that such report is supported by clear and

3 convincing evidence, the Commissioner may bring an action

4 under section 203 seeking the immediate suspension of the

5 tobacco product manufacturer’s annual limitation cap on

6 civil judgments. If the court determines that the Commis7 sioner has proved by clear and convincing evidence that the

8 subject manufacturer’s actions or inactions are of such a

9 nature that they present a clear and present danger to the

10 attainment of the targets for underage smoking reduction,

11 the court may suspend the subject manufacturer’s annual

12 limitation cap on civil judgments.

13 SEC. 802. TOBACCO PRODUCT MANUFACTURER EMPLOYEE

14 PROTECTION.

15 (a) PROHIBITED ACTS.—No tobacco product manufac16 turer may discharge, demote, or otherwise discriminate

17 against any employee with respect to compensation, terms,

18 conditions, benefits, or privileges of employment because the

19 employee (or any person acting under a request of the em20 ployee)—

21 (1) notified the manufacturer, the Commissioner

22 of Food and Drugs, the Attorney General, or any Fed23 eral, State, or local public health or law enforcement

24 authority of an alleged violation of this or any other

25 Act;
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1 (2) refused to engage in any practice made un2 lawful by such Acts, if the employee has identified the

3 alleged illegality to the manufacturer;

4 (3) testified before Congress or at any Federal or

5 State proceeding regarding any provision (or pro6 posed provision) of such Acts;

7 (4) commenced, caused to be commenced, or is

8 about to commence or cause to be commenced a pro9 ceeding under such Acts, or a proceeding for the ad10 ministration or enforcement of any requirement im11 posed under such Acts;

12 (5) testified or is about to testify in any such

13 proceeding; or

14 (6) assisted or participated, or is about to assist

15 or participate, in any manner in such a proceeding

16 or in any other manner in such a proceeding or in

17 any other action to carry out the purposes of such

18 Acts.

19 (b) EMPLOYEE COMPLAINT.—

20 (1) Any employee of a tobacco product manufac21 turer who believes that he or she has been discharged,

22 demoted, or otherwise discriminated against by any

23 person in violation of subsection (a) of this section

24 may, within 180 days after such violation occurs, file

25 (or have any person file on his or her behalf) a com-
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1 plaint with the Secretary alleging such discharge, de2 motion, or discrimination. Upon receipt of such a

3 complaint, the Secretary shall notify the person

4 named in the complaint of its filing.

5 (2)(A) Upon receipt of a complaint under para6 graph (1) of this subsection, the Secretary shall con7 duct an investigation of the violation alleged in the

8 complaint. Within 30 days after the receipt of such

9 complaint, the Secretary shall complete such inves10 tigation and shall notify in writing the complainant

11 (and any such person acting in his or her behalf) and

12 the person alleged to have committed such violation of

13 the results of the investigation conducted under this

14 paragraph. Within 90 days after the receipt of such

15 complaint, the Secretary shall (unless the proceeding

16 on the complaint is terminated by the Secretary on

17 the basis of a settlement entered into by the Secretary

18 and the person alleged to have committed such viola19 tion) issue an order either providing the relief pre20 scribed in subparagraph (B) of this paragraph or de21 nying the complaint. An order of the Secretary shall

22 be made on the record after notice and the oppor23 tunity for a hearing in accordance with sections 554

24 and 556 of title 5, United States Code. Upon the con25 clusion of such a hearing and the issuance of a rec-
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1 ommended decision that the complaint has merit, the

2 Secretary shall issue a preliminary order providing

3 the relief prescribed in subparagraph (B) of this

4 paragraph, but may not order compensatory damages

5 pending a final order. The Secretary may not enter

6 into a settlement terminating a proceeding on a com7 plaint without the participation and consent of the

8 complainant.

9 (B) If, in response to a complaint under para10 graph (1) of this subsection, the Secretary determines

11 that a violation of this paragraph has occurred, the

12 Secretary shall order the person who committed such

13 violation to (i) take affirmative action to abate the

14 violation, and (ii) reinstate the complainant to his or

15 her former position together with compensation (in16 cluding back pay), terms, conditions, and privileges of

17 his or her employment. The Secretary may order such

18 person to provide compensatory damages to the com19 plainant. If an order is issued under this subpara20 graph, the Secretary, at the request of the complain21 ant, shall assess the person against whom the order is

22 issued a sum equal to the aggregate amount of all

23 costs and expenses (including attorneys’ and expert

24 witness fees) reasonably incurred (as determined by

25 the Secretary), by the complainant for, or in connec-
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1 tion with, the bringing of the complaint upon which

2 the order is issued.

3 (3)(A) The Secretary shall dismiss a complaint

4 filed under paragraph (1) of this subsection, and shall

5 not conduct the investigation required under para6 graph (2) of this subsection, unless the complainant

7 has made a prima facie showing that any behavior

8 described in subsection (a) of this section was a con9 tributing factor in the unfavorable personnel action

10 alleged in the complaint.

11 (B) Notwithstanding a finding by the Secretary

12 that the complainant has made the showing required

13 by subparagraph (A) of this paragraph, no investiga14 tion required under paragraph (2) of this subsection

15 shall be conducted if the manufacturer demonstrates

16 by clear and convincing evidence that it would have

17 taken the same unfavorable personnel action in the

18 absence of such behavior. Relief may not be ordered

19 under paragraph (1) of this subsection if the manu20 facturer demonstrates by clear and convincing evi21 dence that it would have taken the same unfavorable

22 personnel action in the absence of such behavior.

23 (C) The Secretary may determine that a viola24 tion of subsection (a) of this section has occurred only

25 if the complainant has demonstrated that any behav-
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1 ior described in subsection (a) of this section was a

2 contributing factor in unfavorable personnel action

3 alleged in the complaint.

4 (c) JUDICIAL REVIEW.—

5 (1) Any person adversely affected or aggrieved by

6 an order issued under subsection (a) of this section

7 may obtain review of the order in the United States

8 court of appeals for the circuit in which the violation,

9 with respect to which the order was issued, allegedly

10 occurred. The petition for review must be filed within

11 60 days after the issuance of the Secretary’s order.

12 Judicial review shall be available as provided in

13 chapter 7 of title 5, United States Code. The com14 mencement of proceedings under this subsection shall

15 not, unless ordered by the court, operate as a stay of

16 the Secretary’s order.

17 (2) An order of the Secretary with respect to

18 which review could have been obtained under para19 graph (1) of this subsection shall not be subject to ju20 dicial review in any criminal or civil proceeding.

21 (d) NONCOMPLIANCE.—Whenever a person has failed

22 to comply with an order issued under subsection (b)(2) of

23 this section, the Secretary may file a civil action in the

24 United States district court for the district in which the

25 violation occurred to enforce such order. In actions brought
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1 under this subsection, the district courts shall have jurisdic2 tion to grant all appropriate relief, including injunctive re3 lief and compensatory and exemplary damages.

4 (e) ACTION TO ENSURE COMPLIANCE.—

5 (1) Any person on whose behalf an order was

6 issued under subsection (b)(2) of this section may

7 commence a civil action to require compliance with

8 such order against the person to whom such order was

9 issued. The appropriate United States district court

10 shall have jurisdiction to enforce such order, without

11 regard to the amount in controversy or the citizenship

12 of the parties.

13 (2) The court, in issuing any final order under

14 this subsection, may award costs of litigation (includ15 ing reasonable attorneys’ and expert witness fees) to

16 any party whenever the court determines such award

17 is appropriate.

18 (f) ENFORCEMENT.—Any non-discretionary duty im19 posed by this section shall be enforceable in a mandamus

20 proceeding brought under section 1361 of title 28, United

21 States Code.

22 (g) APPLICABILITY TO CERTAIN EMPLOYEES.—Sub23 section (a) of this section shall not apply with respect to

24 any employee who, acting without direction from the manu25 facturer (or the agent of the manufacturer) deliberately
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1 causes a violation of any requirement of this Act, the Fed2 eral Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.),

3 or any other law or regulation relating to tobacco products.

4 (h) EFFECT ON OTHER LAWS.—This section shall not

5 be construed to expand, diminish, or otherwise affect any

6 right otherwise available to an employee under Federal or

7 State law to redress the employee’s discharge or other dis8 criminatory action taken by a tobacco product manufac9 turer against the employee.

10 (i) POSTING.—The provisions of this section shall be

11 prominently posted in any place of employment to which

12 this section applies.

13 TITLE IX—PUBLIC DISCLOSURE

14 OF TOBACCO INDUSTRY DOC15 UMENTS

16 SEC. 901. FINDINGS.

17 The Congress finds that—

18 (1) the American tobacco industry has made

19 claims of attorney-client privilege, attorney work

20 product, and trade secrets to protect from public dis21 closure thousands of internal documents sought by

22 civil litigants;

23 (2) a number of courts have found that these

24 claims of privilege were not made in good faith; and
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1 (3) a prompt and full exposition of tobacco docu2 ments will—

3 (A) promote understanding by the public of

4 the tobacco industry’s research and practices;

5 and

6 (B) further the purposes of this Act.

7 SEC. 902. APPLICABILITY.

8 This title shall apply to all participating tobacco prod9 uct manufacturers.

10 SEC. 903. NATIONAL TOBACCO DOCUMENT DEPOSITORY.

11 (a) ESTABLISHMENT.—Participating tobacco product

12 manufacturers shall, within 180 days after the enactment

13 of this Act, establish a National Tobacco Document Deposi14 tory in the Washington, D.C., area. The cost of establishing

15 and operating the Depository shall be allocated among such

16 manufacturers on the basis of market share or as otherwise

17 agreed among them.

18 (b) DOCUMENT CATEGORIES.—Within 30 days after

19 the establishment of the Depository, each participating to20 bacco product manufacturer shall submit to the Deposi21 tory—

22 (1) all original laboratory research conducted or

23 funded, directly or indirectly, by any participating

24 tobacco product manufacturers, the Center for To25 bacco Research and Tobacco Institute relating to the
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1 health effects or safety of tobacco products, including

2 without limitation all original laboratory research re3 lating to any method or means of making tobacco

4 products less hazardous to consumers;

5 (2) all documents produced by any participating

6 tobacco product manufacturer, the Center of Tobacco

7 Research or Tobacco Institute to the Attorney General

8 of any State during discovery in any action brought

9 on behalf of any State and commenced after January

10 1, 1994;

11 (3) all documents produced by any participating

12 tobacco product manufacturer, Center for Tobacco Re13 search or Tobacco Institute to the Federal Trade Com14 mission in connection with its investigation into the

15 ‘‘Joe Camel’’ advertising campaign and any underage

16 marketing of tobacco products to minors;

17 (4) all documents produced by any participating

18 tobacco product manufacturers, the Center for To19 bacco Research or the Tobacco Institute to litigation

20 adversaries during discovery in any private litigation

21 matters;

22 (5) all documents produced by any participating

23 tobacco product manufacturer, the Center for Tobacco

24 Research, or the Tobacco Institute in any of the fol25 lowing private litigation matters:
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1 (A) Philip Morris v. American Broadcast2 ing Co., Law No. 7609CL94x00181–00 (Cir. Ct.

3 Va. filed Mar. 26, 1994);

4 (B) Estate of Butler v. R.J. Reynolds To5 bacco Co., Civ. A. No. 94–5–53 (Cir. Ct. Miss.,

6 filed May 12, 1994);

7 (C) Haines v. Liggett Group, No. 84–CV–

8 678 (D.N.J., filed Feb. 22, 1984); and

9 (D) Cipollone v. Liggett Group, No. 83–CV–

10 284 (D.N.J., filed Aug. 1, 1983);

11 (6) any document produced as evidence or poten12 tial evidence or submitted to the court by participat13 ing tobacco product manufacturers in any of the ac14 tions described in paragraph (5), including briefs and

15 other pleadings, memoranda, interrogatories, tran16 scripts of depositions, and expert witnesses and con17 sultants materials, including correspondence, reports,

18 and testimony;

19 (7) any additional documents that any partici20 pating tobacco product manufacturer, the Center for

21 Tobacco Research, or the Tobacco Institute have

22 agreed or been required by any court to produce to

23 litigation adversaries as part of discovery in any ac24 tion listed in paragraph (2), (3), (4), or (5) but have
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1 not yet completed producing as of the date of enact2 ment of this Act;

3 (8) all indices of documents relating to tobacco

4 products and health, with any such indices that are

5 maintained in computerized form placed into the de6 pository in both a computerized and hard-copy form;

7 (9) a privilege log describing each document or

8 portion of a document otherwise subject to production

9 in the actions enumerated in this subsection that any

10 participating tobacco product manufacturer, the Cen11 ter for Tobacco Research, or the Tobacco Institute

12 maintains, based upon a good faith de novo re-review

13 conducted after June 20, 1997, is exempt from public

14 disclosure under this title; and

15 (10) a trade secrecy log describing each docu16 ment or portion of a document that any participating

17 tobacco product manufacturer, the Center for Tobacco

18 Research, or the Tobacco Institute maintains is ex19 empt from public disclosure under this title.

20 (c) FUTURE DOCUMENTS.—With respect to documents

21 created after the date of enactment of this Act, the partici22 pating tobacco product manufacturers and their trade asso23 ciations shall place into the depository in accordance with

24 a schedule established by the Board the following documents:
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1 (1) All original laboratory research conducted or

2 funded, directly or indirectly, by any participating

3 tobacco product manufacturer relating to the health

4 effects or safety of tobacco products, including without

5 limitation all original laboratory research relating to

6 any methods or means of making tobacco products

7 less hazardous to consumers.

8 (2) All studies conducted or funded, directly or

9 indirectly, by any participating tobacco product

10 manufacturer, relating to tobacco product use by mi11 nors.

12 (3) All documents discussing or referring to the

13 relationship, if any, between advertising and pro14 motion and the use of tobacco products by minors.

15 (4) A privilege log describing each document or

16 each portion of a document otherwise subject to public

17 disclosure under this subsection that any participat18 ing tobacco product manufacturer maintains is ex19 empt from public disclosure under this title.

20 (5) A trade secrecy log describing each document

21 or each portion of a document otherwise subject to

22 public disclosure under this subsection that any par23 ticipating tobacco product manufacturer, the Center

24 for Tobacco Research, or the Tobacco Institute main25 tains is exempt from public disclosure under this Act.
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1 (d) DOCUMENT IDENTIFICATION AND INDEX.—Docu2 ments submitted to the Depository under this section shall

3 be sequentially numbered and marked to identify the par4 ticipating tobacco product manufacturer. Within 15 days

5 after submission of documents to the Depository, each to6 bacco product manufacturer shall supply the Depository

7 with a comprehensive document index which references the

8 applicable document categories contained in subsection (b).

9 SEC. 904. PRIVILEGE AND TRADE SECRET CLAIMS.

10 (a) SEPARATE SUBMISSION OF DOCUMENTS.—Any

11 document that is subject to a claim by a participating to12 bacco product manufacturer of attorney-client privilege, at13 torney work product, or trade secret protection shall be so

14 marked and shall be submitted separately to the Depository.

15 Compliance with this subsection shall not be deemed to be

16 a waiver of any applicable claim of privilege or trade secret

17 protection.

18 (b) CONFIDENTIALITY.—Notwithstanding the provi19 sions of section 552 of title 5 of the United States Code

20 or the provisions of any State law, documents, and infor21 mation provided to the United States Department of Justice

22 or to State antitrust authorities under the Protocol shall

23 be kept confidential by and among the United States De24 partment of Justice and such authorities and shall be used

25 only for the governmental purposes of enforcing this Act,
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1 the Protocol, and the consent decrees. The inspection and

2 discovery rights provided to the States under the Protocol

3 and this section shall be exercised by each State but coordi4 nated through a multi-state States’ Attorneys General over5 sight committee.

6 (c) PRIVILEGE AND TRADE SECRET LOGS.—

7 (1) IN GENERAL.—Within 15 days after submit8 ting documents to the Depository under subsection

9 (a), each participating tobacco product manufacturer

10 shall submit to the Depository a comprehensive log

11 which identifies on a document-by-document basis all

12 documents produced to the Depository for which the

13 manufacturer asserts attorney-client privilege, attor14 ney work-product, or trade secrecy. With respect to

15 documents for which the manufacturer previously has

16 asserted one or more of the aforementioned privileges

17 or trade secret protection, the manufacturer shall con18 duct a good faith de novo review of such documents

19 to determine whether such privilege or trade secret

20 protection is appropriate.

21 (2) ORGANIZATION OF LOG.—The log shall be or22 ganized in numerical order based upon the document

23 identifier assigned to each document. For each docu24 ment, the log shall contain—
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1 (A) a description of the document, includ2 ing type of document, title of document, name

3 and position or title of each author, addressee,

4 and other recipient who was intended to receive

5 a copy, document date, document purpose, and

6 general subject matter;

7 (B) an explanation why the document or a

8 portion of the document is privileged or subject

9 to trade secret protection; and

10 (C) a statement whether any previous claim

11 of privilege or trade secret was denied and, if so,

12 in what proceeding.

13 (3) PUBLIC INSPECTION.—Within 5 days of re14 ceipt of such a log, the Depository shall make it avail15 able for public inspection and review.

16 (d) DECLARATION OF COMPLIANCE.—Each participat17 ing tobacco product manufacturer shall submit to the Board

18 a declaration, in accordance with the requirements of sec19 tion 1746 of title 28, United States Code, by an individual

20 with responsibility for the de novo review of documents,

21 preparation of the privilege log, and knowledge of its con22 tents. The declarant shall attest to the manufacturer’s com23 pliance with the requirements of this title pertaining to the

24 review of documents and preparation of a privilege log.
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1 SEC. 905. DISCLOSURE BY THE DEPOSITORY.

2 (a) IN GENERAL.—Within 30 days after receipt of a

3 document that is not subject to a claim of attorney-client

4 privilege, attorney work product, or trade secret protection,

5 the Depository shall make the document available to the

6 public using the Internet and other means.

7 (b) EVIDENTIARY STATUS.—The provisions of section

8 2116(a) and (b) of title 44, United States Code, apply to

9 records and documents submitted to the Depository in the

10 same manner and to the same extent as if they were records

11 submitted to the National Archives of the United States re12 quired by statute to be retained indefinitely.

13 (c) APPLICATION OF CONFIDENTIALITY LAW.—The re14 lease by the National Tobacco Documents Review Board es15 tablished under section 906 or any employee of the Deposi16 tory of any document recognized by the Depository as pro17 tected as a trade secret is a violation of section 1905 of

18 title 18, United States Code.

19 SEC. 906. NATIONAL TOBACCO DOCUMENTS REVIEW

20 BOARD.

21 (a) ESTABLISHMENT.—There shall be a National To22 bacco Documents Review Board consisting of 5 members,

23 qualified by training and experience to carry out the func24 tions of the Board, each of whom shall be appointed by the

25 President and with the advice and consent of the Senate.

26 Any person who is a citizen of the United States shall be
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1 eligible to serve as a member of the Board. Each Board

2 member shall be appointed for a term of 7 years and shall

3 be eligible for reappointment. The Board shall have the

4 power to hire such staff and establish such operating proce5 dures as it deems necessary to carry out its functions as

6 specified hereunder.

7 (b) RESPONSIBILITY FOR DEPOSITORY.—The Board

8 shall have the responsibility of maintaining the Depository

9 and shall, in consultation with the General Services Admin10 istration, establish guidelines and procedures for the estab11 lishment and operation of the Depository, including guide12 lines for the immediate disclosure of documents that are not

13 subject to unresolved claims of privilege or trade secrecy.

14 The Depository shall be open to the public and maintained

15 in a manner that permits it to be used as a resource for

16 litigants, public health groups, and persons with an interest

17 in tobacco industry records and research concerning smok18 ing and health, addiction or nicotine dependency, safer or

19 less hazardous cigarettes, and underage tobacco use and

20 marketing. The Board may grant reasonable extensions of

21 time for compliance upon a showing of good cause.

22 (c) PRIVILEGE.—The Board shall apply the attorney23 client privilege and the attorney work-product doctrine in

24 a manner consistent with Federal law.
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1 SEC. 907. RESOLUTION OF DISPUTED PRIVILEGE AND

2 TRADE SECRET CLAIMS.

3 (a) IN GENERAL.—The Board shall determine whether

4 to uphold or reject disputed claims of attorney client privi5 lege, attorney work product, or trade secret protection with

6 respect to documents submitted to the Depository. Any per7 son may petition the Board to resolve a claim that a docu8 ment submitted to the Depository may not be disclosed to

9 the public. Such a determination shall be made by a major10 ity of the Board, in writing, and shall be subject to judicial

11 review as specified in this title. All such determinations

12 shall be made solely on consideration of the subject docu13 ment and written submissions from the person claiming

14 that the document is privileged or protected by trade secrecy

15 and from any person seeking disclosure of the document.

16 The Board shall cause notice of the petition and the Board’s

17 decision to be published in the Federal Register.

18 (b) FINAL DECISION.—The Board may uphold a claim

19 of privilege or protection in its entirety or, in its sole discre20 tion, it may redact that portion of a document that it deter21 mines is protected from public disclosure under subsection

22 (a). Any decision of the Board shall be final unless judicial

23 review is sought under section 908. In the event that judi24 cial review is so sought, the Board’s decision shall be stayed

25 pending a final judicial decision.
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1 SEC. 908. APPEAL OF BOARD DECISION.

2 (a) PETITION; RIGHT OF APPEAL.—Any person may

3 obtain judicial review of a final decision of the Board by

4 filing a petition for review with the United States Court

5 of Appeals for the Federal Circuit within 60 days after the

6 publication of such decision in the Federal Register. A copy

7 of the petition shall be transmitted by the Clerk of the Court

8 to the Board. The Board shall file in the court the record

9 of the proceedings on which the Board based its decision

10 (including any documents reviewed by the Board in cam11 era) as provided in section 2112 of title 28, United States

12 Code. Upon the filing of such petition, the court shall have

13 exclusive jurisdiction to affirm or set aside the Board’s deci14 sion, except that until the filing of the record the Board

15 may modify or set aside its decision.

16 (b) ADDITIONAL EVIDENCE AND ARGUMENTS.—If the

17 any party applies to the court for leave to adduce addi18 tional evidence respecting the decision being reviewed and

19 shows to the satisfaction of the court that such additional

20 evidence or arguments are material and that there were rea21 sonable grounds for the failure to adduce such evidence or

22 arguments in the proceedings before the Board, the court

23 may order the Board to provide additional opportunity for

24 the presentation of evidence or arguments in such manner

25 and upon such terms as the court deems proper. The Board

26 may modify its findings or make new findings by reason
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1 of the additional evidence or arguments and shall file with

2 the court such modified or new findings, and its rec3 ommendation, if any, for the modification or setting aside

4 of the decision being reviewed.

5 (c) STANDARD OF REVIEW; FINALITY OF JUDG6 MENTS.—The Board’s findings of fact, if supported by sub7 stantial evidence on the record taken as a whole, shall be

8 conclusive. The court shall review the Board’s legal conclu9 sions de novo. The judgment of the court affirming or set10 ting aside the Board’s decision shall be final, subject to re11 view by the Supreme Court of the United States upon cer12 tiorari or certification, as provided in section 1254 of title

13 28, United States Code.

14 (d) PUBLIC DISCLOSURE AFTER FINAL DECISION.—

15 Within 30 days after a final decision that a document, as

16 redacted by the Board or in its entirety, is not protected

17 from disclosure by a claim of attorney-client privilege, at18 torney work product, or trade secret protection, the Board

19 shall direct the Depository to make the document available

20 to the public. No Federal, Tribal, or State court shall have

21 jurisdiction to review a claim of attorney-client privilege,

22 attorney work product, or trade secret protection for a docu23 ment that has lawfully been made available to the public

24 under this subsection.
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1 (e) EFFECT OF NON-DISCLOSURE DECISION ON JUDI2 CIAL PROCEEDINGS.—The Board’s decision that a docu3 ment is protected by attorney-client privilege, attorney work

4 product, or trade secret protection is binding only for the

5 purpose of protecting the document from disclosure by the

6 Depository. The decision by the Board shall not be con7 strued to prevent a document from being disclosed in a judi8 cial proceeding.

9 (f) DISCLOSURE TO THE FOOD AND DRUG ADMINIS10 TRATION.—Within 240 days after the date of enactment of

11 this Act, each participating tobacco product manufacturer

12 shall submit to the Food and Drug Administration the doc13 uments identified in section 903(b) or 903(c), including

14 documents for which trade secret protection is claimed, with

15 the exception of any document for which privilege is

16 claimed, and identified in accordance with section 904(a).

17 Each such manufacturer shall provide the Administration

18 with the privilege and trade secret logs identified under sec19 tion 904(b). With respect to documents that are claimed to

20 contain trade secret material, unless and until it is finally

21 determined under this title, either through judicial review

22 or because time for judicial review has expired, that such

23 a document does not constitute or contain trade secret mate24 rial, the Administration shall treat the document as a trade

25 secret in accordance with section 708 of the Federal Food,
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1 Drug, and Cosmetic Act (21 U.S.C. 379) and the regula2 tions promulgated thereunder. Nothing herein shall limit

3 the authority of the Administration to obtain and use, in

4 accordance with any provision of the Federal Food, Drug,

5 and Cosmetic Act and the regulations promulgated there6 under, any document constituting or containing trade se7 cret material. Documents and materials received by the Ad8 ministration under this provision shall not be obtainable

9 by or releasable to the public through section 552 of title

10 5, United States Code, or any other provision of law, and

11 the only recourse to obtain these documents shall be through

12 the Board and Depository.

13 SEC. 909. MISCELLANEOUS.

14 The disclosure process in this title is not intended to

15 affect the Federal Rules of Civil or Criminal Procedure or

16 any Federal law which requires the disclosure of documents

17 or which deals with attorney-client privilege, attorney work

18 product, or trade secret protection.

19 SEC. 910. PENALTIES.

20 (a) GOOD FAITH REQUIREMENT.—Each participating

21 tobacco product manufacturer must act in good faith in

22 asseting claims of privilege or trade secret protection based

23 on fact and law. If the Board determines that a participat24 ing tobacco product manufacturer has not acted in good

25 faith with full knowledge of the truth of the facts asserted
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1 and with a reasonable basis under existing law, the manu2 facturer shall be assessed costs, which shall include the full

3 administrative costs of handling the claim of privilege, and

4 all attorneys’ fees incurred by the Board and any party

5 contesting the privilege. The Board may also impose civil

6 penalties of up to $10,000 per violation if it determines

7 that the manufacturer acted in bad faith in asserting a

8 privilege, or knowingly acted with the intent to delay, frus9 trate, defraud, or obstruct the Board’s determination of

10 privilege or trade secret protection claims.

11 (b) FAILURE TO PRODUCE DOCUMENT.—A failure by

12 a participating tobacco product manufacturer to produce

13 indexes and documents in compliance with the schedule set

14 forth in this title, or with such extension as may be granted

15 by the Board, shall be punished by a civil penalty of up

16 to $500 per violation. A separate violation occurs for each

17 document the manufacturer has failed to produce in a time18 ly manner. The maximum penalty under this subsection for

19 a related series of violations is $10,000. In determining the

20 amount of any civil penalty, the Board shall consider the

21 number of documents, length of delay, any history of prior

22 violations, the ability to pay, and such other matters as

23 justice requires. Nothing in this title shall replace or super24 sede any criminal sanction under title 18, United States

25 Code, or any other provision of law.
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1 SEC. 911. DEFINITIONS.

2 For the purposes of this title—

3 (1) DOCUMENT.—The term ‘‘document’’ includes

4 originals and drafts of any kind of written or graphic

5 matter, regardless of the manner of production or re6 production, of any kind or description, whether sent

7 or received or neither, and all copies thereof that are

8 different in any way from the original (whether by

9 interlineation, receipt stamp, notation, indication of

10 copies sent or received or otherwise) regardless of

11 whether confidential, privileged, or otherwise, includ12 ing any paper, book, account, photograph, blueprint,

13 drawing, agreement, contract, memorandum, adver14 tising material, letter, telegram, object, report, record,

15 transcript, study, note, notation, working paper,

16 intra-office communication, intra-department com17 munication, chart, minute, index sheet, routing sheet,

18 computer software, computer data, delivery ticket,

19 flow sheet, price list, quotation, bulletin, circular,

20 manual, summary, recording of telephone or other

21 conversation or of interviews, or of conferences, or any

22 other written, recorded, transcribed, punched, taped,

23 filmed, or graphic matter, regardless of the manner

24 produced or reproduced. Such term also includes any

25 tape, recording, videotape, computerization, or other
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•S 1415 RS2

1 electronic recording, whether digital or analog or a

2 combination thereof.

3 (2) TRADE SECRET.—The term ‘‘trade secret’’

4 means any commercially valuable plan, formula,

5 process, or device that is used for making,

6 compounding, processing, or preparing trade com7 modities and that can be said to be the end-product

8 of either innovation or substantial effort, for which

9 there is a direct relationship between the plan, for10 mula, process, or device and the productive process.

11 (3) CERTAIN ACTIONS DEEMED TO BE PROCEED12 INGS.—Any action undertaken under this title, in13 cluding the search, indexing, and production of docu14 ments, is deemed to be a ‘‘proceeding’’ before the exec15 utive branch of the United States.

16 (4) OTHER TERMS.—Any term used in this title

17 that is defined in section 701 has the meaning given

18 to it by that section.

19 TITLE X—LONG-TERM ECONOMIC

20 ASSISTANCE FOR FARMERS

21 SEC. 1001. SHORT TITLE.

22 This title may be cited as the ‘‘Long-Term Economic

23 Assistance for Farmers Act’’ or the ‘‘LEAF Act’’.

24 SEC. 1002. DEFINITIONS.

25 In this title:
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1 (1) PARTICIPATING TOBACCO PRODUCER.—The

2 term ‘‘participating tobacco producer’’ means a quota

3 holder, quota lessee, or quota tenant.

4 (2) QUOTA HOLDER.—The term ‘‘quota holder’’

5 means a producer that owns a farm for which a to6 bacco farm marketing quota or farm acreage allot7 ment was established under the Agricultural Adjust8 ment Act of 1938 (7 U.S.C. 1281 et seq.) for any of

9 the 1995, 1996, or 1997 crop years.

10 (3) QUOTA LESSEE.—The term ‘‘quota lessee’’

11 means—

12 (A) a producer that owns a farm that pro13 duced tobacco pursuant to a lease and transfer

14 to that farm of all or part of a tobacco farm

15 marketing quota or farm acreage allotment es16 tablished under the Agricultural Adjustment Act

17 of 1938 (7 U.S.C. 1281 et seq.) for any of the

18 1995, 1996, or 1997 crop years; or

19 (B) a producer that rented land from a

20 farm operator to produce tobacco under a tobacco

21 farm marketing quota or farm acreage allotment

22 established under the Agricultural Adjustment

23 Act of 1938 (7 U.S.C. 1281 et seq.) for any of

24 the 1995, 1996, or 1997 crop years.
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1 (4) QUOTA TENANT.—The term ‘‘quota tenant’’

2 means a producer that—

3 (A) is the principal producer, as determined

4 by the Secretary, of tobacco on a farm where to5 bacco is produced pursuant to a tobacco farm

6 marketing quota or farm acreage allotment es7 tablished under the Agricultural Adjustment Act

8 of 1938 (7 U.S.C. 1281 et seq.) for any of the

9 1995, 1996, or 1997 crop years; and

10 (B) is not a quota holder or quota lessee.

11 (5) SECRETARY.—The term ‘‘Secretary’’

12 means—

13 (A) in subtitles A and B, the Secretary of

14 Agriculture; and

15 (B) in section 1031, the Secretary of Labor.

16 (6) TOBACCO PRODUCT IMPORTER.—The term

17 ‘‘tobacco product importer’’ has the meaning given the

18 term ‘‘importer’’ in section 5702 of the Internal Reve19 nue Code of 1986.

20 (7) TOBACCO PRODUCT MANUFACTURER.—

21 (A) IN GENERAL.—The term ‘‘tobacco prod22 uct manufacturer’’ has the meaning given the

23 term ‘‘manufacturer of tobacco products’’ in sec24 tion 5702 of the Internal Revenue Code of 1986.
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1 (B) EXCLUSION.—The term ‘‘tobacco prod2 uct manufacturer’’ does not include a person

3 that manufactures cigars or pipe tobacco.

4 (8) TOBACCO WAREHOUSE OWNER.—The term

5 ‘‘tobacco warehouse owner’’ means a warehouseman

6 that participated in an auction market (as defined in

7 the first section of the Tobacco Inspection Act (7

8 U.S.C. 511)) during the 1998 marketing year.

9 ƒ(9) TRUST FUND.—The term ‘‘Trust Fund’’

10 means the Tobacco Community Revitalization Trust

11 Fund established under section 1011.

12 ƒSubtitle A—Tobacco Community

13 Revitalization Trust Fund

14 ƒSEC. 1011. ESTABLISHMENT OF TRUST FUND.

15 ƒ(a) IN GENERAL.—There is established in the Treas16 ury of the United States a trust fund to be known as the

17 ‘‘Tobacco Community Revitalization Trust Fund’’, consist18 ing of such amounts as may be appropriated or credited

19 to the Trust Fund. The Trust Fund shall be administered

20 by the Secretary.

21 ƒ(b) TRANSFERS TO TRUST FUND.—There are appro22 priated and transferred to the Trust Fund for each fiscal

23 year—
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1 ƒ(1) amounts contributed by tobacco product

2 manufacturers and tobacco product importers under

3 section 1012; and

4 ƒ(2) an amount from the National Tobacco Set5 tlement Trust Fund established by section 401 equal

6 to the aggregate amount of assessments under section

7 1012 against participating tobacco manufacturers for

8 that fiscal year.

9 ƒ(c) REPAYABLE ADVANCES.—

10 ƒ(1) AUTHORIZATION.—There are authorized to

11 be appropriated to the Trust Fund, as repayable ad12 vances, such sums as may from time to time be nec13 essary to make expenditures under subsection (d).

14 ƒ(2) REPAYMENT WITH INTEREST.—Repayable

15 advances made to the Trust Fund shall be repaid, and

16 interest on the advances shall be paid, to the general

17 fund of the Treasury when the Secretary of the Treas18 ury determines that moneys are available in the

19 Trust Fund to make the payments.

20 ƒ(3) RATE OF INTEREST.—Interest on an ad21 vance made under this subsection shall be at a rate

22 determined by the Secretary of Treasury (as of the

23 close of the calendar month preceding the month in

24 which the advance is made) that is equal to the cur25 rent average market yield on outstanding marketable
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1 obligations of the United States with remaining pe2 riod to maturity comparable to the anticipated period

3 during which the advance will be outstanding.

4 ƒ(d) EXPENDITURES FROM TRUST FUND.—Amounts

5 in the Trust Fund shall be available for making expendi6 tures after October 1, 1998, to meet those necessary obliga7 tions of the Federal Government that are authorized to be

8 paid under—

9 ƒ(1) section 1021 for payments for lost tobacco

10 quota for each of fiscal years 1999 through 2023, but

11 not to exceed $1,650,000,000 for any fiscal year ex12 cept to the extent the payments are made in accord13 ance with subsection (d)(12) or (e)(9) of section 1021;

14 ƒ(2) section 1022 for industry payments for all

15 costs of the Department of Agriculture associated with

16 the production of tobacco;

17 ƒ(3) section 1023 for tobacco community eco18 nomic development grants, but not to exceed—

19 ƒ(A) $375,000,000 for each of fiscal years

20 1999 through 2008, less any amount required to

21 be paid under section 1022 for the fiscal year;

22 and

23 ƒ(B) $450,000,000 for each of fiscal year

24 2009 through 2023, less any amount required to
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1 be paid under section 1022 during the fiscal

2 year;

3 ƒ(4) section 1031 for assistance provided under

4 the tobacco worker transition program, but not to ex5 ceed $25,000,000 for any fiscal year; and

6 ƒ(5) subpart 9 of part A of title IV of the Higher

7 Education Act of 1965 for farmer opportunity grants,

8 but not to exceed—

9 ƒ(A) $42,500,000 for each of the academic

10 years 1999–2000 through 2003–2004;

11 ƒ(B) $50,000,000 for each of the academic

12 years 2004–2005 through 2008–2009;

13 ƒ(C) $57,500,000 for each of the academic

14 years 2009–2010 through 2013–2014;

15 ƒ(D) $65,000,000 for each of the academic

16 years 2014–2015 through 2018–2019; and

17 ƒ(E) $72,500,000 for each of the academic

18 years 2019–2020 through 2023–2024.

19 ƒ(e) BUDGETARY TREATMENT.—This section con20 stitutes budget authority in advance of appropriations Acts

21 and represents the obligation of the Federal Government to

22 provide payments to States and eligible persons in accord23 ance with this title.
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1 ƒSEC. 1012. CONTRIBUTIONS BY TOBACCO PRODUCT MANU2 FACTURERS AND IMPORTERS.

3 ƒ(a) DEFINITION OF MARKET SHARE.—In this sec4 tion, the term ‘‘market share’’ means the ratio of—

5 ƒ(1) the tax liability of a tobacco product manu6 facturer or tobacco product importer for a calendar

7 year under section 5703 of the Internal Revenue Code

8 of 1986; to

9 ƒ(2) the tax liability of all tobacco product man10 ufacturers or tobacco product importers for the cal11 endar year under section 5703 of the Internal Reve12 nue Code of 1986.

13 ƒ(b) DETERMINATIONS.—Not later than September 30

14 of each fiscal year, the Secretary of the Treasury shall—

15 ƒ(1) determine—

16 ƒ(A) the market share of each tobacco prod17 uct manufacturer or tobacco product importer

18 during the most recent calendar year;

19 ƒ(B) the total amount of assessments pay20 able for the subsequent fiscal year under sub21 section (c); and

22 ƒ(C) the amount of an assessment payable

23 by the tobacco product manufacturer or tobacco

24 product importer for the fiscal year under sub25 section (d); and
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1 ƒ(2) notify each tobacco product manufacturer

2 and tobacco product importer of the determinations

3 made under paragraph (1) with respect to the manu4 facturer or importer.

5 ƒ(c) TOTAL AMOUNT OF ASSESSMENTS.—

6 ƒ(1) IN GENERAL.—The total amount of assess7 ments payable by all tobacco product manufacturers

8 and tobacco product importers into the Trust Fund

9 for a fiscal year shall be equal to—

10 ƒ(A) the amount of the contribution to the

11 Trust Fund for the fiscal year required under

12 paragraph (2); less

13 ƒ(B) any amount made available during

14 the preceding fiscal year to the Trust Fund out

15 of funds transferred from National Tobacco Set16 tlement Trust Fund under section 1011(b)(2).

17 ƒ(2) TRUST FUND CONTRIBUTIONS.—The

18 amount of the contribution to the Trust Fund shall

19 be—

20 ƒ(A) $2,100,000,000 for each of fiscal years

21 1999 through 2008;

22 ƒ(B) $500,000,000 for each of fiscal years

23 2009 through 2023; and
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1 ƒ(C) for fiscal year 2024 and each subse2 quent fiscal year, the amount payable under sec3 tion 1022.

4 ƒ(d) INDIVIDUAL AMOUNT OF ASSESSMENTS.—The

5 amount of an assessment payable by each tobacco product

6 manufacturer and tobacco product importer into the Trust

7 Fund for a fiscal year shall be equal to the product obtained

8 by multiplying—

9 ƒ(1) the total amount of assessments payable by

10 all tobacco product manufacturers and tobacco prod11 uct importers for the fiscal year under subsection (c);

12 and

13 ƒ(2) the market share of the tobacco product

14 manufacturer or tobacco product importer during the

15 most recent calendar year determined under sub16 section (b)(1)(A).

17 ƒ(e) CREDIT FOR PAYMENTS BY PARTICIPATING TO18 BACCO PRODUCT MANUFACTURERS.—There shall be allowed

19 as a credit against the amount of any assessment under

20 this section for a participating tobacco product manufac21 turer an amount equal to the amount paid by that manu22 facturer under section 403 of this Act (other than as penalty

23 or interest) for the calendar year ending in that fiscal

24 year.≈
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1 Subtitle B—Tobacco Market

2 Transition Assistance

3 SEC. 1021. PAYMENTS FOR LOST TOBACCO QUOTA.

4 (a) IN GENERAL.—Beginning with the 1999 marketing

5 year, the Secretary shall make payments for lost tobacco

6 quota to eligible quota holders, quota lessees, and quota ten7 ants as reimbursement for lost tobacco quota as a result

8 of a decrease in demand for domestically produced tobacco.

9 (b) ELIGIBILITY.—To be eligible to receive payments

10 under this section, a quota holder, quota lessee, or quota

11 tenant shall—

12 (1) prepare and submit to the Secretary an ap13 plication at such time, in such manner, and contain14 ing such information as the Secretary may require,

15 including information sufficient to make the dem16 onstration required under paragraph (2); and

17 (2) demonstrate to the satisfaction of the Sec18 retary that, with respect to the 1997 marketing

19 year—

20 (A) the producer was a quota holder and re21 alized income from the production of tobacco

22 through—

23 (i) the active production of tobacco;

24 (ii) the lease and transfer of tobacco

25 quota to another farm;
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1 (iii) the rental of all or part of the

2 farm of the quota holder, including the right

3 to produce tobacco, to another tobacco pro4 ducer; or

5 (iv) the hiring of a quota tenant to

6 produce tobacco;

7 (B) the producer was a quota lessee; or

8 (C) the producer was a quota tenant.

9 (c) BASE QUOTA LEVEL.—

10 (1) IN GENERAL.—The Secretary shall deter11 mine, for each quota holder, quota lessee, and quota

12 tenant, the base quota level for the 1995 through 1997

13 marketing years.

14 (2) QUOTA HOLDERS.—The base quota level for

15 a quota holder shall be equal to the average tobacco

16 farm marketing quota established for the farm owned

17 by the quota holder for the 1995 through 1997 mar18 keting years.

19 (3) QUOTA LESSEES.—The base quota level for a

20 quota lessee shall be equal to—

21 (A) 50 percent of the average number of

22 pounds of tobacco quota established for a farm

23 for the 1995 through 1997 marketing years—

24 (i) that was leased and transferred to

25 a farm owned by the quota lessee; or
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1 (ii) for which the rights to produce the

2 tobacco were rented to the quota lessee; less

3 (B) 25 percent of the average number of

4 pounds of tobacco quota described in subpara5 graph (A) for which a quota tenant was the

6 principal producer of the tobacco quota.

7 (4) QUOTA TENANTS.—The base quota level for a

8 quota tenant shall be equal to the sum of—

9 (A) 50 percent of the average number of

10 pounds of tobacco quota established for a farm

11 for the 1995 through 1997 marketing years—

12 (i) that was owned by a quota holder;

13 and

14 (ii) for which the quota tenant was the

15 principal producer of the tobacco on the

16 farm; and

17 (B) 25 percent of the average number of

18 pounds of tobacco quota for the 1995 through

19 1997 marketing years—

20 (i)(I) that was leased and transferred

21 to a farm owned by the quota lessee; or

22 (II) for which the rights to produce the

23 tobacco were rented to the quota lessee; and
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1 (ii) for which the quota tenant was the

2 principal producer of the tobacco on the

3 farm.

4 (5) MARKETING QUOTAS OTHER THAN POUND5 AGE QUOTAS.—

6 (A) IN GENERAL.—For each type of tobacco

7 for which there is a marketing quota or allot8 ment (on an acreage basis), the base quota level

9 for each quota holder, quota lessee, or quota ten10 ant shall be determined in accordance with this

11 subsection (based on a poundage conversion) by

12 multiplying—

13 (i) the average tobacco farm marketing

14 quota or allotment for the 1995 through

15 1997 marketing years; and

16 (ii) the average yield per acre for the

17 farm for the type of tobacco for the market18 ing years.

19 (B) YIELDS NOT AVAILABLE.—If the average

20 yield per acre is not available for a farm, the

21 Secretary shall calculate the base quota for the

22 quota holder, quota lessee, or quota tenant (based

23 on a poundage conversion) by determining the

24 amount equal to the product obtained by mul25 tiplying—
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1 (i) the average tobacco farm marketing

2 quota or allotment for the 1995 through

3 1997 marketing years; and

4 (ii) the average county yield per acre

5 for the county in which the farm is located

6 for the type of tobacco for the marketing

7 years.

8 (d) PAYMENTS FOR LOST TOBACCO QUOTA FOR TYPES

9 OF TOBACCO OTHER THAN FLUE-CURED TOBACCO.—

10 (1) ALLOCATION OF FUNDS.—Of the amounts

11 made available ƒunder section 1011(d)(1)≈ out of

12 the National Tobacco Settlement Trust

13 Fund for payments for lost tobacco quota, the Sec14 retary shall make available for payments under this

15 subsection an amount that bears the same ratio to the

16 amounts made available as—

17 (A) the sum of all national marketing

18 quotas for all types of tobacco other than flue19 cured tobacco during the 1995 through 1997

20 marketing years; bears to

21 (B) the sum of all national marketing

22 quotas for all types of tobacco during the 1995

23 through 1997 marketing years.

24 (2) OPTION TO RELINQUISH QUOTA.—
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1 (A) IN GENERAL.—Each quota holder shall

2 be given the option to relinquish the farm mar3 keting quota or farm acreage allotment of the

4 quota holder in exchange for a payment made

5 under paragraph (3).

6 (B) NOTIFICATION.—A quota holder shall

7 give notification of the intention of the quota

8 holder to exercise the option at such time and in

9 such manner as the Secretary may require, but

10 not later than January 15, 1999.

11 (3) PAYMENTS FOR LOST TOBACCO QUOTA TO

12 QUOTA HOLDERS EXERCISING OPTIONS TO RELIN13 QUISH QUOTA.—

14 (A) IN GENERAL.—Subject to subparagraph

15 (E), for each of fiscal years 1999 through 2008,

16 the Secretary shall make annual payments for

17 lost tobacco quota to each quota holder that has

18 relinquished the farm marketing quota or farm

19 acreage allotment of the quota holder under

20 paragraph (2).

21 (B) AMOUNT.—The amount of a payment

22 made to a quota holder described in subparagraph (A) for a marketing year shall equal 1 23 ⁄10

24 of the lifetime limitation established under sub25 paragraph (E).
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1 (C) TIMING.—The Secretary shall begin

2 making annual payments under this paragraph

3 for the marketing year in which the farm mar4 keting quota or farm acreage allotment is relin5 quished.

6 (D) ADDITIONAL PAYMENTS.—The Sec7 retary may increase annual payments under this

8 paragraph in accordance with paragraph (7)(E)

9 to the extent that funding is available.

10 (E) LIFETIME LIMITATION ON PAYMENTS.—

11 The total amount of payments made under this

12 paragraph to a quota holder shall not exceed the

13 product obtained by multiplying the base quota

14 level for the quota holder by $8 per pound.

15 (4) REISSUANCE OF QUOTA.—

16 (A) REALLOCATION TO LESSEE OR TEN17 ANT.—If a quota holder exercises an option to re18 linquish a tobacco farm marketing quota or farm

19 acreage allotment under paragraph (2), a quota

20 lessee or quota tenant that was the primary pro21 ducer during the 1997 marketing year of tobacco

22 pursuant to the farm marketing quota or farm

23 acreage allotment, as determined by the Sec24 retary, shall be given the option of having an al25 lotment of the farm marketing quota or farm
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1 acreage allotment reallocated to a farm owned by

2 the quota lessee or quota tenant.

3 (B) CONDITIONS FOR REALLOCATION.—

4 (i) TIMING.—A quota lessee or quota

5 tenant that is given the option of having an

6 allotment of a farm marketing quota or

7 farm acreage allotment reallocated to a

8 farm owned by the quota lessee or quota

9 tenant under subparagraph (A) shall have 1

10 year from the date on which a farm market11 ing quota or farm acreage allotment is re12 linquished under paragraph (2) to exercise

13 the option.

14 (ii) LIMITATION ON ACREAGE ALLOT15 MENT.—In the case of a farm acreage allot16 ment, the acreage allotment determined for

17 any farm subsequent to any reallocation

18 under subparagraph (A) shall not exceed 50

19 percent of the acreage of cropland of the

20 farm owned by the quota lessee or quota

21 tenant.

22 (iii) LIMITATION ON MARKETING

23 QUOTA.—In the case of a farm marketing

24 quota, the marketing quota determined for

25 any farm subsequent to any reallocation
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1 under subparagraph (A) shall not exceed an

2 amount determined by multiplying—

3 (I) the average county farm yield,

4 as determined by the Secretary; and

5 (II) 50 percent of the acreage of

6 cropland of the farm owned by the

7 quota lessee or quota tenant.

8 (C) ELIGIBILITY OF LESSEE OR TENANT

9 FOR PAYMENTS.—If a farm marketing quota or

10 farm acreage allotment is reallocated to a quota

11 lessee or quota tenant under subparagraph (A)—

12 (i) the quota lessee or quota tenant

13 shall not be eligible for any additional pay14 ments under paragraph (5) or (6) as a re15 sult of the reallocation; and

16 (ii) the base quota level for the quota

17 lessee or quota tenant shall not be increased

18 as a result of the reallocation.

19 (D) REALLOCATION TO QUOTA HOLDERS

20 WITHIN SAME COUNTY OR STATE.—

21 (i) IN GENERAL.—Except as provided

22 in clause (ii), if there was no quota lessee

23 or quota tenant for the farm marketing

24 quota or farm acreage allotment for a type

25 of tobacco, or if no quota lessee or quota
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1 tenant exercises an option of having an al2 lotment of the farm marketing quota or

3 farm acreage allotment for a type of tobacco

4 reallocated, the Secretary shall reapportion

5 the farm marketing quota or farm acreage

6 allotment among the remaining quota hold7 ers for the type of tobacco within the same

8 county.

9 (ii) CROSS-COUNTY LEASING.—In a

10 State in which cross-county leasing is au11 thorized pursuant to section 319(l) of the

12 Agricultural Adjustment Act of 1938 (7

13 U.S.C. 1314e(l)), the Secretary shall re14 apportion the farm marketing quota among

15 the remaining quota holders for the type of

16 tobacco within the same State.

17 (iii) ELIGIBILITY OF QUOTA HOLDER

18 FOR PAYMENTS.—If a farm marketing

19 quota is reapportioned to a quota holder

20 under this subparagraph—

21 (I) the quota holder shall not be

22 eligible for any additional payments

23 under paragraph (5) or (6) as a result

24 of the reapportionment; and
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1 (II) the base quota level for the

2 quota holder shall not be increased as

3 a result of the reapportionment.

4 (E) SPECIAL RULE FOR TENANT OF LEASED

5 TOBACCO.—If a quota holder exercises an option

6 to relinquish a tobacco farm marketing quota or

7 farm acreage allotment under paragraph (2), the

8 farm marketing quota or farm acreage allotment

9 shall be divided evenly between, and the option

10 of reallocating the farm marketing quota or farm

11 acreage allotment shall be offered in equal por12 tions to, the quota lessee and to the quota tenant,

13 if—

14 (i) during the 1997 marketing year,

15 the farm marketing quota or farm acreage

16 allotment was leased and transferred to a

17 farm owned by the quota lessee; and

18 (ii) the quota tenant was the primary

19 producer, as determined by the Secretary, of

20 tobacco pursuant to the farm marketing

21 quota or farm acreage allotment.

22 (5) PAYMENTS FOR LOST TOBACCO QUOTA TO

23 QUOTA HOLDERS.—

24 (A) IN GENERAL.—Except as otherwise pro25 vided in this subsection, during any marketing
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1 year in which the national marketing quota for

2 a type of tobacco is less than the average na3 tional marketing quota for the 1995 through

4 1997 marketing years, the Secretary shall make

5 payments for lost tobacco quota to each quota

6 holder that is eligible under subsection (b), and

7 has not exercised an option to relinquish a to8 bacco farm marketing quota or farm acreage al9 lotment under paragraph (2), in an amount that

10 is equal to the product obtained by multiply11 ing—

12 (i) the number of pounds by which the

13 basic farm marketing quota (or poundage

14 conversion) is less than the base quota level

15 for the quota holder; and

16 (ii) $4 per pound.

17 (B) POUNDAGE CONVERSION FOR MARKET18 ING QUOTAS OTHER THAN POUNDAGE QUOTAS.—

19 (i) IN GENERAL.—For each type of to20 bacco for which there is a marketing quota

21 or allotment (on an acreage basis), the

22 poundage conversion for each quota holder

23 during a marketing year shall be deter24 mined by multiplying—
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1 (I) the basic farm acreage allot2 ment for the farm for the marketing

3 year; and

4 (II) the average yield per acre for

5 the farm for the type of tobacco.

6 (ii) YIELD NOT AVAILABLE.—If the av7 erage yield per acre is not available for a

8 farm, the Secretary shall calculate the

9 poundage conversion for each quota holder

10 during a marketing year by multiplying—

11 (I) the basic farm acreage allot12 ment for the farm for the marketing

13 year; and

14 (II) the average county yield per

15 acre for the county in which the farm

16 is located for the type of tobacco.

17 (6) PAYMENTS FOR LOST TOBACCO QUOTA TO

18 QUOTA LESSEES AND QUOTA TENANTS.—Except as

19 otherwise provided in this subsection, during any

20 marketing year in which the national marketing

21 quota for a type of tobacco is less than the average

22 national marketing quota for the type of tobacco for

23 the 1995 through 1997 marketing years, the Secretary

24 shall make payments for lost tobacco quota to each

25 quota lessee and quota tenant that is eligible under
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1 subsection (b) in an amount that is equal to the prod2 uct obtained by multiplying—

3 (A) the percentage by which the national

4 marketing quota for the type of tobacco is less

5 than the average national marketing quota for

6 the type of tobacco for the 1995 through 1997

7 marketing years;

8 (B) the base quota level for the quota lessee

9 or quota tenant; and

10 (C) $4 per pound.

11 (7) LIFETIME LIMITATION ON PAYMENTS.—Ex12 cept as otherwise provided in this subsection, the total

13 amount of payments made under this subsection to a

14 quota holder, quota lessee, or quota tenant during the

15 lifetime of the quota holder, quota lessee, or quota ten16 ant shall not exceed the product obtained by multiply17 ing—

18 (A) the base quota level for the quota holder,

19 quota lessee, or quota tenant; and

20 (B) $8 per pound.

21 (8) LIMITATIONS ON AGGREGATE ANNUAL PAY22 MENTS.—

23 (A) IN GENERAL.—Except as otherwise pro24 vided in this paragraph, the total amount pay25 able under this subsection for any marketing
511

•S 1415 RS2

1 year shall not exceed the amount made available

2 under paragraph (1).

3 (B) ACCELERATED PAYMENTS.—Paragraph

4 (1) shall not apply if accelerated payments for

5 lost tobacco quota are made in accordance with

6 paragraph (12).

7 (C) REDUCTIONS.—If the sum of the

8 amounts determined under paragraphs (3), (5),

9 and (6) for a marketing year exceeds the amount

10 made available under paragraph (1), the Sec11 retary shall make a pro rata reduction in the

12 amounts payable under paragraphs (5) and (6)

13 to quota holders, quota lessees, and quota tenants

14 under this subsection to ensure that the total

15 amount of payments for lost tobacco quota does

16 not exceed the amount made available under

17 paragraph (1).

18 (D) ROLLOVER OF PAYMENTS FOR LOST TO19 BACCO QUOTA.—Subject to subparagraph (A), if

20 the Secretary makes a reduction in accordance

21 with subparagraph (C), the amount of the reduc22 tion shall be applied to the next marketing year

23 and added to the payments for lost tobacco quota

24 for the marketing year.
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1 (E) ADDITIONAL PAYMENTS TO QUOTA

2 HOLDERS EXERCISING OPTION TO RELINQUISH

3 QUOTA.—If the amount made available under

4 paragraph (1) exceeds the sum of the amounts

5 determined under paragraphs (3), (5), and (6)

6 for a marketing year, the Secretary shall distrib7 ute the amount of the excess pro rata to quota

8 holders that have exercised an option to relin9 quish a tobacco farm marketing quota or farm

10 acreage allotment under paragraph (2) by in11 creasing the amount payable to each such holder

12 under paragraph (3).

13 (9) SUBSEQUENT SALE AND TRANSFER OF

14 QUOTA.—Effective beginning with the 1999 marketing

15 year, on the sale and transfer of a farm marketing

16 quota or farm acreage allotment under section 316(g)

17 or 319(g) of the Agricultural Adjustment Act of 1938

18 (7 U.S.C. 1314b(g), 1314e(g))—

19 (A) the person that sold and transferred the

20 quota or allotment shall have—

21 (i) the base quota level attributable to

22 the person reduced by the base quota level

23 attributable to the quota that is sold and

24 transferred; and
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•S 1415 RS2

1 (ii) the lifetime limitation on pay2 ments established under paragraph (7) at3 tributable to the person reduced by the

4 product obtained by multiplying—

5 (I) the base quota level attrib6 utable to the quota; and

7 (II) $8 per pound; and

8 (B) if the quota or allotment has never been

9 relinquished by a previous quota holder under

10 paragraph (2), the person that acquired the

11 quota shall have—

12 (i) the base quota level attributable to

13 the person increased by the base quota level

14 attributable to the quota that is sold and

15 transferred; and

16 (ii) the lifetime limitation on pay17 ments established under paragraph (7) at18 tributable to the person—

19 (I) increased by the product ob20 tained by multiplying—

21 (aa) the base quota level at22 tributable to the quota; and

23 (bb) $8 per pound; but

24 (II) decreased by any payments

25 under paragraph (5) for lost tobacco
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•S 1415 RS2

1 quota previously made that are attrib2 utable to the quota that is sold and

3 transferred.

4 (10) SALE OR TRANSFER OF FARM.—On the sale

5 or transfer of ownership of a farm that is owned by

6 a quota holder, the base quota level established under

7 subsection (c), the right to payments under paragraph

8 (5), and the lifetime limitation on payments estab9 lished under paragraph (7) shall transfer to the new

10 owner of the farm to the same extent and in the same

11 manner as those provisions applied to the previous

12 quota holder.

13 (11) DEATH OF QUOTA LESSEE OR QUOTA TEN14 ANT.—If a quota lessee or quota tenant that is enti15 tled to payments under this subsection dies and is

16 survived by a spouse or 1 or more dependents, the

17 right to receive the payments shall transfer to the sur18 viving spouse or, if there is no surviving spouse, to

19 the surviving dependents in equal shares.

20 (12) ACCELERATION OF PAYMENTS.—

21 (A) IN GENERAL.—On the occurrence of any

22 of the events described in subparagraph (B), the

23 Secretary shall make an accelerated lump sum

24 payment for lost tobacco quota as established

25 under paragraphs (5) and (6) to each quota
515

•S 1415 RS2

1 holder, quota lessee, and quota tenant for any af2 fected type of tobacco in accordance with sub3 paragraph (C).

4 (B) TRIGGERING EVENTS.—The Secretary

5 shall make accelerated payments under subpara6 graph (A) if after the date of enactment of this

7 Act—

8 (i) subject to subparagraph (D), for 3

9 consecutive marketing years, the national

10 marketing quota or national acreage allot11 ment for a type of tobacco is less than 50

12 percent of the national marketing quota or

13 national acreage allotment for the type of

14 tobacco for the 1998 marketing year; or

15 (ii) Congress repeals or makes ineffec16 tive, directly or indirectly, any provision

17 of—

18 (I) section 316 of the Agricultural

19 Adjustment Act of 1938 (7 U.S.C.

20 1314b);

21 (II) section 319 of the Agricul22 tural Adjustment Act of 1938 (7 U.S.C.

23 1314e);

24 (III) section 106 of the Agricul25 tural Act of 1949 (7 U.S.C. 1445);
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•S 1415 RS2

1 (IV) section 106A of the Agricul2 tural Act of 1949 (7 U.S.C. 1445–1);

3 or

4 (V) section 106B of the Agricul5 tural Act of 1949 (7 U.S.C. 1445–2).

6 (C) AMOUNT.—The amount of the acceler7 ated payments made to each quota holder, quota

8 lessee, and quota tenant under this subsection

9 shall be equal to—

10 (i) the amount of the lifetime limita11 tion established for the quota holder, quota

12 lessee, or quota tenant under paragraph (7);

13 less

14 (ii) any payments for lost tobacco

15 quota received by the quota holder, quota

16 lessee, or quota tenant before the occurrence

17 of any of the events described in subpara18 graph (B).

19 (D) REFERENDUM VOTE NOT A TRIGGERING

20 EVENT.—A referendum vote of producers for any

21 type of tobacco that results in the national mar22 keting quota or national acreage allotment not

23 being in effect for the type of tobacco shall not

24 be considered a triggering event under this para25 graph.
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•S 1415 RS2

1 (13) BAN ON SUBSEQUENT SALE OR LEASING OF

2 FARM MARKETING QUOTA OR FARM ACREAGE ALLOT3 MENT TO QUOTA HOLDERS EXERCISING OPTION TO

4 RELINQUISH QUOTA.—No quota holder that exercises

5 the option to relinquish a farm marketing quota or

6 farm acreage allotment for any type of tobacco under

7 paragraph (2) shall be eligible to acquire a farm mar8 keting quota or farm acreage allotment for the type

9 of tobacco, or to obtain the lease or transfer of a farm

10 marketing quota or farm acreage allotment for the

11 type of tobacco, for a period of 25 crop years after the

12 date on which the quota or allotment was relin13 quished.

14 (e) PAYMENTS FOR LOST TOBACCO QUOTA FOR FLUE15 CURED TOBACCO.—

16 (1) ALLOCATION OF FUNDS.—Of the amounts

17 made available ƒunder section 1011(d)(1)≈ out of

18 the National Tobacco Settlement Trust

19 Fund for payments for lost tobacco quota, the Sec20 retary shall make available for payments under this

21 subsection an amount that bears the same ratio to the

22 amounts made available as—

23 (A) the sum of all national marketing

24 quotas for flue-cured tobacco during the 1995

25 through 1997 marketing years; bears to
518

•S 1415 RS2

1 (B) the sum of all national marketing

2 quotas for all types of tobacco during the 1995

3 through 1997 marketing years.

4 (2) RELINQUISHMENT OF QUOTA.—

5 (A) IN GENERAL.—Each quota holder of

6 flue-cured tobacco during the 1998 marketing

7 year shall relinquish the farm marketing quota

8 or farm acreage allotment in exchange for a pay9 ment made under paragraph (3) or (4).

10 (B) NOTIFICATION.—The Secretary shall

11 notify the quota holders of the relinquishment of

12 their quota or allotment at such time and in

13 such manner as the Secretary may require, but

14 not later than November 15, 1998.

15 (3) PAYMENTS FOR LOST FLUE-CURED TOBACCO

16 QUOTA TO QUOTA HOLDERS THAT RELINQUISH

17 QUOTA.—

18 (A) IN GENERAL.—For each of fiscal years

19 1999 through 2008, the Secretary shall make an20 nual payments for lost flue-cured tobacco to each

21 quota holder that has relinquished the farm mar22 keting quota or farm acreage allotment of the

23 quota holder under paragraph (2).

24 (B) AMOUNT.—The amount of a payment

25 made to a quota holder described in subpara-
519

•S 1415 RS2

graph (A) for a marketing year shall equal 1 1 ⁄10

2 of the lifetime limitation established under para3 graph (6).

4 (C) TIMING.—The Secretary shall begin

5 making annual payments under this paragraph

6 for the marketing year in which the farm mar7 keting quota or farm acreage allotment is relin8 quished.

9 (D) ADDITIONAL PAYMENTS.—The Sec10 retary may increase annual payments under this

11 paragraph in accordance with paragraph (7)(E)

12 to the extent that funding is available.

13 (4) PAYMENTS FOR LOST FLUE-CURED TOBACCO

14 QUOTA TO QUOTA LESSEES AND QUOTA TENANTS

15 THAT HAVE NOT RELINQUISHED PERMITS.—

16 (A) IN GENERAL.—Except as otherwise pro17 vided in this subsection, during any marketing

18 year in which the national marketing quota for

19 flue-cured tobacco is less than the average na20 tional marketing quota for the 1995 through

21 1997 marketing years, the Secretary shall make

22 payments for lost tobacco quota to each quota

23 lessee or quota tenant that—

24 (i) is eligible under subsection (b);
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•S 1415 RS2

1 (ii) has been issued an individual to2 bacco production permit under section

3 317A(b) of the Agricultural Adjustment Act

4 of 1938; and

5 (iii) has not exercised an option to re6 linquish the permit.

7 (B) AMOUNT.—The amount of a payment

8 made to a quota holder described in subpara9 graph (A) for a marketing year shall be equal to

10 the product obtained by multiplying—

11 (i) the number of pounds by which the

12 individual marketing limitation established

13 for the permit is less than twice the base

14 quota level for the quota holder; and

15 (ii) $2 per pound.

16 (5) PAYMENTS FOR LOST FLUE-CURED TOBACCO

17 QUOTA TO QUOTA LESSEES AND QUOTA TENANTS

18 THAT HAVE RELINQUISHED PERMITS.—

19 (A) IN GENERAL.—For each of fiscal years

20 1999 through 2008, the Secretary shall make an21 nual payments for lost flue-cured tobacco quota

22 to each quota lessee and quota tenant that has

23 relinquished an individual tobacco production

24 permit under section 317A(b)(5) of the Agricul25 tural Adjustment Act of 1938.
521

•S 1415 RS2

1 (B) AMOUNT.—The amount of a payment

2 made to a quota holder described in subpara3 graph (A) for a marketing year shall be equal to

1 4 ⁄10 of the lifetime limitation established under

5 paragraph (6).

6 (C) TIMING.—The Secretary shall begin

7 making annual payments under this paragraph

8 for the marketing year in which the individual

9 tobacco production permit is relinquished.

10 (D) ADDITIONAL PAYMENTS.—The Sec11 retary may increase annual payments under this

12 paragraph in accordance with paragraph (7)(E)

13 to the extent that funding is available.

14 (E) PROHIBITION AGAINST PERMIT EXPAN15 SION.—A quota lessee or quota tenant that re16 ceives a payment under this paragraph shall be

17 ineligible to receive any new or increased tobacco

18 production permit from the county production

19 pool established under section 317A(b)(8) of the

20 Agricultural Adjustment Act of 1938.

21 (6) LIFETIME LIMITATION ON PAYMENTS.—Ex22 cept as otherwise provided in this subsection, the total

23 amount of payments made under this subsection to a

24 quota holder, quota lessee, or quota tenant during the

25 lifetime of the quota holder, quota lessee, or quota ten-
522

•S 1415 RS2

1 ant shall not exceed the product obtained by multiply2 ing—

3 (A) the base quota level for the quota holder,

4 quota lessee, or quota tenant; and

5 (B) $8 per pound.

6 (7) LIMITATIONS ON AGGREGATE ANNUAL PAY7 MENTS.—

8 (A) IN GENERAL.—Except as otherwise pro9 vided in this paragraph, the total amount pay10 able under this subsection for any marketing

11 year shall not exceed the amount made available

12 under paragraph (1).

13 (B) ACCELERATED PAYMENTS.—Paragraph

14 (1) shall not apply if accelerated payments for

15 lost flue-cured tobacco quota are made in accord16 ance with paragraph (9).

17 (C) REDUCTIONS.—If the sum of the

18 amounts determined under paragraphs (3), (4),

19 and (5) for a marketing year exceeds the amount

20 made available under paragraph (1), the Sec21 retary shall make a pro rata reduction in the

22 amounts payable under paragraph (4) to quota

23 lessees and quota tenants under this subsection to

24 ensure that the total amount of payments for lost
523

•S 1415 RS2

1 flue-cured tobacco quota does not exceed the

2 amount made available under paragraph (1).

3 (D) ROLLOVER OF PAYMENTS FOR LOST

4 FLUE-CURED TOBACCO QUOTA.—Subject to sub5 paragraph (A), if the Secretary makes a reduc6 tion in accordance with subparagraph (C), the

7 amount of the reduction shall be applied to the

8 next marketing year and added to the payments

9 for lost flue-cured tobacco quota for the market10 ing year.

11 (E) ADDITIONAL PAYMENTS TO QUOTA

12 HOLDERS EXERCISING OPTION TO RELINQUISH

13 QUOTAS OR PERMITS, OR TO QUOTA LESSEES OR

14 QUOTA TENANTS RELINQUISHING PERMITS.—If

15 the amount made available under paragraph (1)

16 exceeds the sum of the amounts determined under

17 paragraphs (3), (4), and (5) for a marketing

18 year, the Secretary shall distribute the amount of

19 the excess pro rata to quota holders by increasing

20 the amount payable to each such holder under

21 paragraphs (3) and (5).

22 (8) DEATH OF QUOTA HOLDER, QUOTA LESSEE,

23 OR QUOTA TENANT.—If a quota holder, quota lessee or

24 quota tenant that is entitled to payments under para25 graph (4) or (5) dies and is survived by a spouse or
524

•S 1415 RS2

1 1 or more descendants, the right to receive the pay2 ments shall transfer to the surviving spouse or, if

3 there is no surviving spouse, to the surviving descend4 ants in equal shares.

5 (9) ACCELERATION OF PAYMENTS.—

6 (A) IN GENERAL.—On the occurrence of any

7 of the events described in subparagraph (B), the

8 Secretary shall make an accelerated lump sum

9 payment for lost flue-cured tobacco quota as es10 tablished under paragraphs (3), (4), and (5) to

11 each quota holder, quota lessee, and quota tenant

12 for flue-cured tobacco in accordance with sub13 paragraph (C).

14 (B) TRIGGERING EVENTS.—The Secretary

15 shall make accelerated payments under subpara16 graph (A) if after the date of enactment of this

17 Act—

18 (i) subject to subparagraph (D), for 3

19 consecutive marketing years, the national

20 marketing quota or national acreage allot21 ment for flue-cured tobacco is less than 50

22 percent of the national marketing quota or

23 national acreage allotment for flue-cured to24 bacco for the 1998 marketing year; or
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•S 1415 RS2

1 (ii) Congress repeals or makes ineffec2 tive, directly or indirectly, any provision

3 of—

4 (I) section 316 of the Agricultural

5 Adjustment Act of 1938 (7 U.S.C.

6 1314b);

7 (II) section 319 of the Agricul8 tural Adjustment Act of 1938 (7 U.S.C.

9 1314e);

10 (III) section 106 of the Agricul11 tural Act of 1949 (7 U.S.C. 1445);

12 (IV) section 106A of the Agricul13 tural Act of 1949 (7 U.S.C. 1445–1);

14 (V) section 106B of the Agricul15 tural Act of 1949 (7 U.S.C. 1445–2);

16 or

17 (VI) section 317A of the Agricul18 tural Adjustment Act of 1938.

19 (C) AMOUNT.—The amount of the acceler20 ated payments made to each quota holder, quota

21 lessee, and quota tenant under this subsection

22 shall be equal to—

23 (i) the amount of the lifetime limita24 tion established for the quota holder, quota
526

•S 1415 RS2

1 lessee, or quota tenant under paragraph (6);

2 less

3 (ii) any payments for lost flue-cured

4 tobacco quota received by the quota holder,

5 quota lessee, or quota tenant before the oc6 currence of any of the events described in

7 subparagraph (B).

8 (D) REFERENDUM VOTE NOT A TRIGGERING

9 EVENT.—A referendum vote of producers for flue10 cured tobacco that results in the national mar11 keting quota or national acreage allotment not

12 being in effect for flue-cured tobacco shall not be

13 considered a triggering event under this para14 graph.

15 SEC. 1022. INDUSTRY PAYMENTS FOR ALL DEPARTMENT

16 COSTS ASSOCIATED WITH TOBACCO PRODUC17 TION.

18 (a) IN GENERAL.—The Secretary shall use such

19 amounts as are necessary from the National Tobacco

20 Settlement Trust Fund at the end of each fiscal year to

21 reimburse the Secretary for—

22 (1) costs associated with the administration of

23 programs established under this title and amendments

24 made by this title;
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•S 1415 RS2

1 (2) costs associated with the administration of

2 the tobacco quota and price support programs admin3 istered by the Secretary;

4 (3) costs to the Federal Government of carrying

5 out crop insurance programs for tobacco;

6 (4) costs associated with all agricultural re7 search, extension, or education activities associated

8 with tobacco;

9 (5) costs associated with the administration of

10 loan association and cooperative programs for tobacco

11 producers, as approved by the Secretary; and

12 (6) any other costs incurred by the Department

13 of Agriculture associated with the production of to14 bacco.

15 (b) LIMITATIONS.—Amounts made available under

16 subsection (a) may not be used—

17 (1) to provide direct benefits to quota holders,

18 quota lessees, or quota tenants; or

19 (2) in a manner that results in a decrease, or an

20 increase relative to other crops, in the amount of the

21 crop insurance premiums assessed to participating to22 bacco producers under the Federal Crop Insurance

23 Act (7 U.S.C. 1501 et seq.).
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•S 1415 RS2

1 (c) DETERMINATIONS.—Not later than September 30,

2 1998, and each fiscal year thereafter, the Secretary shall

3 determine—

4 (1) the amount of costs described in subsection

5 (a); and

6 (2) the amount that will be provided under this

7 section as reimbursement for the costs.

8 SEC. 1023. TOBACCO COMMUNITY ECONOMIC DEVELOP9 MENT GRANTS.

10 (a) AUTHORITY.—The Secretary shall make grants to

11 tobacco-growing States in accordance with this section to

12 enable the States to carry out economic development initia13 tives in tobacco-growing communities.

14 (b) APPLICATION.—To be eligible to receive payments

15 under this section, a State shall prepare and submit to the

16 Secretary an application at such time, in such manner, and

17 containing such information as the Secretary may require,

18 including—

19 (1) a description of the activities that the State

20 will carry out using amounts received under the

21 grant;

22 (2) a designation of an appropriate State agency

23 to administer amounts received under the grant; and
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•S 1415 RS2

1 (3) a description of the steps to be taken to en2 sure that the funds are distributed in accordance with

3 subsection (e).

4 (c) AMOUNT OF GRANT.—

5 (1) IN GENERAL.—From the amounts available

6 to carry out this section for a fiscal year, the Sec7 retary shall allot to each State an amount that bears

8 the same ratio to the amounts available as the total

9 farm income of the State derived from the production

10 of tobacco during the 1995 through 1997 marketing

11 years (as determined under paragraph (2)) bears to

12 the total farm income of all States derived from the

13 production of tobacco during the 1995 through 1997

14 marketing years.

15 (2) TOBACCO INCOME.—For the 1995 through

16 1997 marketing years, the Secretary shall determine

17 the amount of farm income derived from the produc18 tion of tobacco in each State and in all States.

19 (d) PAYMENTS.—

20 (1) IN GENERAL.—A State that has an applica21 tion approved by the Secretary under subsection (b)

22 shall be entitled to a payment under this section in

23 an amount that is equal to its allotment under sub24 section (c).
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•S 1415 RS2

1 (2) FORM OF PAYMENTS.—The Secretary may

2 make payments under this section to a State in in3 stallments, and in advance or by way of reimburse4 ment, with necessary adjustments on account of over5 payments or underpayments, as the Secretary may

6 determine.

7 (3) REALLOTMENTS.—Any portion of the allot8 ment of a State under subsection (c) that the Sec9 retary determines will not be used to carry out this

10 section in accordance with an approved State appli11 cation required under subsection (b), shall be reallot12 ted by the Secretary to other States in proportion to

13 the original allotments to the other States.

14 (e) USE AND DISTRIBUTION OF FUNDS.—

15 (1) IN GENERAL.—Amounts received by a State

16 under this section shall be used to carry out economic

17 development activities, including—

18 (A) rural business enterprise activities de19 scribed in subsections (c) and (e) of section 310B

20 of the Consolidated Farm and Rural Develop21 ment Act (7 U.S.C. 1932);

22 (B) down payment loan assistance pro23 grams that are similar to the program described

24 in section 310E of the Consolidated Farm and

25 Rural Development Act (7 U.S.C. 1935);
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•S 1415 RS2

1 (C) activities designed to help create pro2 ductive farm or off-farm employment in rural

3 areas to provide a more viable economic base

4 and enhance opportunities for improved incomes,

5 living standards, and contributions by rural in6 dividuals to the economic and social development

7 of tobacco communities;

8 (D) activities that expand existing infra9 structure, facilities, and services to capitalize on

10 opportunities to diversify economies in tobacco

11 communities and that support the development

12 of new industries or commercial ventures;

13 (E) activities by agricultural organizations

14 that provide assistance directly to participating

15 tobacco producers to assist in developing other

16 agricultural activities that supplement tobacco17 producing activities;

18 (F) initiatives designed to create or expand

19 locally owned value-added processing and mar20 keting operations in tobacco communities;

21 (G) technical assistance activities by per22 sons to support farmer-owned enterprises, or ag23 riculture-based rural development enterprises, of

24 the type described in section 252 or 253 of the

25 Trade Act of 1974 (19 U.S.C. 2342, 2343); and
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•S 1415 RS2

1 (H) initiatives designed to partially com2 pensate tobacco warehouse owners for lost reve3 nues and assist the tobacco warehouse owners in

4 establishing successful business enterprises.

5 (2) TOBACCO-GROWING COUNTIES.—Assistance

6 may be provided by a State under this section only

7 to assist a county in the State that has been deter8 mined by the Secretary to have in excess of $100,000

9 in income derived from the production of tobacco dur10 ing 1 or more of the 1995 through 1997 marketing

11 years.

12 (3) DISTRIBUTION.—

13 (A) ECONOMIC DEVELOPMENT ACTIVI14 TIES.—Not less than 20 percent of the amounts

15 received by a State under this section shall be

16 used to carry out—

17 (i) economic development activities de18 scribed in subparagraph (E) or (F) of para19 graph (1); or

20 (ii) agriculture-based rural develop21 ment activities described in paragraph

22 (1)(G).

23 (B) TECHNICAL ASSISTANCE ACTIVITIES.—

24 Not less than 4 percent of the amounts received

25 by a State under this section shall be used to
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•S 1415 RS2

1 carry out technical assistance activities described

2 in paragraph (1)(G).

3 (C) TOBACCO WAREHOUSE OWNER INITIA4 TIVES.—

5 (i) IN GENERAL.—Not less than 6 per6 cent of the amounts received by a State

7 under this section during each of fiscal

8 years 1999 through 2008 shall be used to

9 carry out initiatives described in paragraph

10 (1)(H).

11 (ii) DIRECT PAYMENTS.—Of the

12 amount made available under clause (i),

13 not less than 80 percent of the amount shall

14 be used to provide direct payments to to15 bacco warehouse owners based on any de16 cline in the annual volume of tobacco sales

17 as compared to the volume of tobacco sales

18 during the 1998 marketing year.

19 (D) TOBACCO-GROWING COUNTIES.—To be

20 eligible to receive payments under this section, a

21 State shall demonstrate to the Secretary that

22 funding will be provided, during each 5-year pe23 riod for which funding is provided under this

24 section, for activities in each county in the State

25 that has been determined under paragraph (2) to
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•S 1415 RS2

1 have in excess of $100,000 in income derived

2 from the production of tobacco, in amounts that

3 are at least equal to the product obtained by

4 multiplying—

5 (i) the ratio that the tobacco produc6 tion income in the county determined under

7 paragraph (2) bears to the total tobacco

8 production income for the State determined

9 under subsection (c); and

10 (ii) 50 percent of the total amounts re11 ceived by a State under this section during

12 the 5-year period.

13 (f) PREFERENCES IN HIRING.—A State may require

14 recipients of funds under this section to provide a preference

15 in employment to—

16 (1) an individual who—

17 (A) during the 1998 calendar year, was em18 ployed in the manufacture, processing, or

19 warehousing of tobacco or tobacco products, or

20 resided, in a county described in subsection

21 (e)(2); and

22 (B) is eligible for assistance under the to23 bacco worker transition program established

24 under section 1031; or

25 (2) an individual who—
535

•S 1415 RS2

1 (A) during the 1998 marketing year, car2 ried out tobacco quota or relevant tobacco pro3 duction activities in a county described in sub4 section (e)(2);

5 (B) is eligible for a farmer opportunity

6 grant under subpart 9 of part A of title IV of

7 the Higher Education Act of 1965; and

8 (C) has successfully completed a course of

9 study at an institution of higher education.

10 (g) MAINTENANCE OF EFFORT.—

11 (1) IN GENERAL.—Subject to paragraph (2), a

12 State shall provide an assurance to the Secretary that

13 the amount of funds expended by the State and all

14 counties in the State described in subsection (e)(2) for

15 any activities funded under this section for a fiscal

16 year is not less than 90 percent of the amount of

17 funds expended by the State and counties for the ac18 tivities for the preceding fiscal year.

19 (2) REDUCTION OF GRANT AMOUNT.—If a State

20 does not provide an assurance described in paragraph

21 (1), the Secretary shall reduce the amount of the

22 grant determined under subsection (c) by an amount

23 equal to the amount by which the amount of funds ex24 pended by the State and counties for the activities is

25 less than 90 percent of the amount of funds expended
536

•S 1415 RS2

1 by the State and counties for the activities for the

2 preceding fiscal year, as determined by the Secretary.

3 (3) FEDERAL FUNDS.—For purposes of this sub4 section, the amount of funds expended by a State or

5 county shall not include any amounts made available

6 by the Federal Government.

7 SEC. 1024. FLUE-CURED TOBACCO PRODUCTION PERMITS.

8 The Agricultural Adjustment Act of 1938 is amended

9 by inserting after section 317 (7 U.S.C. 1314c) the follow10 ing:

11 ‘‘SEC. 317A. FLUE-CURED TOBACCO PRODUCTION PERMITS.

12 ‘‘(a) DEFINITIONS.—In this section:

13 ‘‘(1) INDIVIDUAL ACREAGE LIMITATION.—The

14 term ‘individual acreage limitation’ means the num15 ber of acres of flue-cured tobacco that may be planted

16 by the holder of a permit during a marketing year,

17 calculated—

18 ‘‘(A) prior to—

19 ‘‘(i) any increase or decrease in the

20 number due to undermarketings or over21 marketings; and

22 ‘‘(ii) any reduction under subsection

23 (i); and

24 ‘‘(B) in a manner that ensures that—
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•S 1415 RS2

1 ‘‘(i) the total of all individual acreage

2 limitations is equal to the national acreage

3 allotment, less the reserve provided under

4 subsection (h); and

5 ‘‘(ii) the individual acreage limitation

6 for a marketing year bears the same ratio

7 to the individual acreage limitation for the

8 previous marketing year as the ratio that

9 the national acreage allotment for the mar10 keting year bears to the national acreage al11 lotment for the previous marketing year,

12 subject to adjustments by the Secretary to

13 account for any reserve provided under sub14 section (h).

15 ‘‘(2) INDIVIDUAL MARKETING LIMITATION.—The

16 term ‘individual marketing limitation’ means the

17 number of pounds of flue-cured tobacco that may be

18 marketed by the holder of a permit during a market19 ing year, calculated—

20 ‘‘(A) prior to—

21 ‘‘(i) any increase or decrease in the

22 number due to undermarketings or over23 marketings; and

24 ‘‘(ii) any reduction under subsection

25 (i); and
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•S 1415 RS2

1 ‘‘(B) in a manner that ensures that—

2 ‘‘(i) the total of all individual market3 ing limitations is equal to the national

4 marketing quota, less the reserve provided

5 under subsection (h); and

6 ‘‘(ii) the individual marketing limita7 tion for a marketing year is obtained by

8 multiplying the individual acreage limita9 tion by the permit yield, prior to any ad10 justment for undermarketings or over11 marketings.

12 ‘‘(3) INDIVIDUAL TOBACCO PRODUCTION PER13 MIT.—The term ‘individual tobacco production per14 mit’ means a permit issued by the Secretary to a per15 son authorizing the production of flue-cured tobacco

16 for any marketing year during which this section is

17 effective.

18 ‘‘(4) NATIONAL ACREAGE ALLOTMENT.—The term

19 ‘national acreage allotment’ means the quantity deter20 mined by dividing—

21 ‘‘(A) the national marketing quota; by

22 ‘‘(B) the national average yield goal.

23 ‘‘(5) NATIONAL AVERAGE YIELD GOAL.—The

24 term ‘national average yield goal’ means the national

25 average yield for flue-cured tobacco during the 5 mar-
539

•S 1415 RS2

1 keting years immediately preceding the marketing

2 year for which the determination is being made.

3 ‘‘(6) NATIONAL MARKETING QUOTA.—For the

4 1999 and each subsequent crop of flue-cured tobacco,

5 the term ‘national marketing quota’ for a marketing

6 year means the quantity of flue-cured tobacco, as de7 termined by the Secretary, that is not more than 103

8 percent nor less than 97 percent of the total of—

9 ‘‘(A) the aggregate of the quantities of flue10 cured tobacco that domestic manufacturers of

11 cigarettes estimate that the manufacturers intend

12 to purchase on the United States auction mar13 kets or from producers during the marketing

14 year, as compiled and determined under section

15 320A;

16 ‘‘(B) the average annual quantity of flue17 cured tobacco exported from the United States

18 during the 3 marketing years immediately pre19 ceding the marketing year for which the deter20 mination is being made; and

21 ‘‘(C) the quantity, if any, of flue-cured to22 bacco that the Secretary, in the discretion of the

23 Secretary, determines is necessary to increase or

24 decrease the inventory of the producer-owned co25 operative marketing association that has entered
540

•S 1415 RS2

1 into a loan agreement with the Commodity Cred2 it Corporation to make price support available

3 to producers of flue-cured tobacco to establish or

4 maintain the inventory at the reserve stock level

5 for flue-cured tobacco.

6 ‘‘(7) PERMIT YIELD.—The term ‘permit yield’

7 means the yield of tobacco per acre for an individual

8 tobacco production permit holder that is—

9 ‘‘(A) based on a preliminary permit yield

10 that is equal to the average yield during the 5

11 marketing years immediately preceding the mar12 keting year for which the determination is made

13 in the county where the holder of the permit is

14 authorized to plant flue-cured tobacco, as deter15 mined by the Secretary, on the basis of actual

16 yields of farms in the county; and

17 ‘‘(B) adjusted by a weighted national yield

18 factor calculated by—

19 ‘‘(i) multiplying each preliminary per20 mit yield by the individual acreage limita21 tion, prior to adjustments for overmarket22 ings, undermarketings, or reductions re23 quired under subsection (i); and

24 ‘‘(ii) dividing the sum of the products

25 under clause (i) for all flue-cured individual
541

•S 1415 RS2

1 tobacco production permit holders by the

2 national acreage allotment.

3 ‘‘(b) INITIAL ISSUANCE OF PERMITS.—

4 ‘‘(1) TERMINATION OF FLUE-CURED MARKETING

5 QUOTAS.—On approval through referendum under

6 subsection (c), farm marketing quotas as provided

7 under section 317 shall no longer be in effect for flue8 cured tobacco.

9 ‘‘(2) ISSUANCE OF PERMITS TO QUOTA HOLDERS

10 THAT WERE PRINCIPAL PRODUCERS.—

11 ‘‘(A) IN GENERAL.—On approval through a

12 referendum under subsection (c), each individual

13 quota holder under section 317 that was a prin14 cipal producer of flue-cured tobacco during the

15 1998 marketing year, as determined by the Sec16 retary, shall be issued an individual tobacco pro17 duction permit under this section.

18 ‘‘(B) NOTIFICATION.—The Secretary shall

19 notify the holder of each permit of the individual

20 acreage limitation and the individual marketing

21 limitation applicable to the holder for each mar22 keting year.

23 ‘‘(C) INDIVIDUAL ACREAGE LIMITATION FOR

24 1999 MARKETING YEAR.—In establishing the indi25 vidual acreage limitation for the 1999 marketing
542

•S 1415 RS2

1 year under this section, the farm acreage allot2 ment that was allotted to a farm owned by the

3 quota holder during the 1997 marketing year

4 shall be considered the individual acreage limita5 tion for the previous marketing year.

6 ‘‘(D) INDIVIDUAL MARKETING LIMITATION

7 FOR 1999 MARKETING YEAR.—In establishing the

8 individual marketing limitation for the 1999

9 marketing year under this section, the farm mar10 keting quota that was allotted to a farm owned

11 by the quota holder during the 1997 marketing

12 year shall be considered the individual market13 ing limitation for the previous marketing year.

14 ‘‘(3) QUOTA HOLDERS THAT WERE NOT PRIN15 CIPAL PRODUCERS.—

16 ‘‘(A) IN GENERAL.—Except as provided in

17 subparagraph (B), on approval through a ref18 erendum under subsection (c)—

19 ‘‘(i) each person that was a quota hold20 er under section 317 but that was not a

21 principal producer of flue-cured tobacco

22 during the 1997 marketing year, as deter23 mined by the Secretary, shall not be eligible

24 to own a permit; and
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•S 1415 RS2

1 ‘‘(ii) the Secretary shall not issue any

2 permit during the 25-year period beginning

3 on the date of enactment of this Act to any

4 person that was a quota holder and was not

5 the principal producer of flue-cured tobacco

6 during the 1997 marketing year.

7 ‘‘(B) MEDICAL HARDSHIPS AND CROP DIS8 ASTERS.—Subparagraph (A) shall not apply to

9 a person that would have been the principal pro10 ducer of flue-cured tobacco during the 1997 mar11 keting year but for a medical hardship or crop

12 disaster that occurred during the 1997 marketing

13 year.

14 ‘‘(C) ADMINISTRATION.—The Secretary

15 shall issue regulations—

16 ‘‘(i) defining the term ‘person’ for the

17 purpose of this paragraph; and

18 ‘‘(ii) prescribing such rules as the Sec19 retary determines are necessary to ensure a

20 fair and reasonable application of the pro21 hibition established under this paragraph.

22 ‘‘(4) ISSUANCE OF PERMITS TO PRINCIPAL PRO23 DUCERS OF FLUE-CURED TOBACCO.—

24 ‘‘(A) IN GENERAL.—On approval through a

25 referendum under subsection (c), each individual
544

•S 1415 RS2

1 quota lessee or quota tenant (as defined in sec2 tion 1002 of the LEAF Act) that was the prin3 cipal producer of flue-cured tobacco during the

4 1997 marketing year, as determined by the Sec5 retary, shall be issued an individual tobacco pro6 duction permit under this section.

7 ‘‘(B) INDIVIDUAL ACREAGE LIMITATIONS.—

8 In establishing the individual acreage limitation

9 for the 1999 marketing year under this section,

10 the farm acreage allotment that was allotted to

11 a farm owned by a quota holder for whom the

12 quota lessee or quota tenant was the principal

13 producer of flue-cured tobacco during the 1997

14 marketing year shall be considered the individ15 ual acreage limitation for the previous market16 ing year.

17 ‘‘(C) INDIVIDUAL MARKETING LIMITA18 TIONS.—In establishing the individual market19 ing limitation for the 1999 marketing year

20 under this section, the individual marketing lim21 itation for the previous year for an individual

22 described in this paragraph shall be calculated

23 by multiplying—

24 ‘‘(i) the farm marketing quota that

25 was allotted to a farm owned by a quota
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•S 1415 RS2

1 holder for whom the quota lessee or quota

2 holder was the principal producer of flue3 cured tobacco during the 1997 marketing

4 year, by

5 ‘‘(ii) the ratio that—

6 ‘‘(I) the sum of all flue-cured to7 bacco farm marketing quotas for the

8 1997 marketing year prior to adjusting

9 for undermarketing and overmarketing;

10 bears to

11 ‘‘(II) the sum of all flue-cured to12 bacco farm marketing quotas for the

13 1998 marketing year, after adjusting

14 for undermarketing and overmarketing.

15 ‘‘(D) SPECIAL RULE FOR TENANT OF

16 LEASED FLUE-CURED TOBACCO.—If the farm

17 marketing quota or farm acreage allotment of a

18 quota holder was produced pursuant to an agree19 ment under which a quota lessee rented land

20 from a quota holder and a quota tenant was the

21 primary producer, as determined by the Sec22 retary, of flue-cured tobacco pursuant to the

23 farm marketing quota or farm acreage allotment,

24 the farm marketing quota or farm acreage allot25 ment shall be divided proportionately between
546

•S 1415 RS2

1 the quota lessee and quota tenant for purposes of

2 issuing individual tobacco production permits

3 under this paragraph.

4 ‘‘(5) OPTION OF QUOTA LESSEE OR QUOTA TEN5 ANT TO RELINQUISH PERMIT.—

6 ‘‘(A) IN GENERAL.—Each quota lessee or

7 quota tenant that is issued an individual tobacco

8 production permit under paragraph (4) shall be

9 given the option of relinquishing the permit in

10 exchange for payments made under section

11 1021(e)(5) of the LEAF Act.

12 ‘‘(B) NOTIFICATION.—A quota lessee or

13 quota tenant that is issued an individual tobacco

14 production permit shall give notification of the

15 intention to exercise the option at such time and

16 in such manner as the Secretary may require,

17 but not later than 30 days after the permit is

18 issued.

19 ‘‘(C) REALLOCATION OF PERMIT.—The Sec20 retary shall add the authority to produce flue21 cured tobacco under the individual tobacco pro22 duction permit relinquished under this para23 graph to the county production pool established

24 under paragraph (8) for reallocation by the ap25 propriate county committee.
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•S 1415 RS2

1 ‘‘(6) ACTIVE PRODUCER REQUIREMENT.—

2 ‘‘(A) REQUIREMENT FOR SHARING RISK.—

3 No individual tobacco production permit shall be

4 issued to, or maintained by, a person that does

5 not fully share in the risk of producing a crop

6 of flue-cured tobacco.

7 ‘‘(B) CRITERIA FOR SHARING RISK.—For

8 purposes of this paragraph, a person shall be

9 considered to have fully shared in the risk of pro10 duction of a crop if—

11 ‘‘(i) the investment of the person in the

12 production of the crop is not less than 100

13 percent of the costs of production associated

14 with the crop;

15 ‘‘(ii) the amount of the person’s return

16 on the investment is dependent solely on the

17 sale price of the crop; and

18 ‘‘(iii) the person may not receive any

19 of the return before the sale of the crop.

20 ‘‘(C) PERSONS NOT SHARING RISK.—

21 ‘‘(i) FORFEITURE.—Any person that

22 fails to fully share in the risks of production

23 under this paragraph shall forfeit an indi24 vidual tobacco production permit if, after

25 notice and opportunity for a hearing, the
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•S 1415 RS2

1 appropriate county committee determines

2 that the conditions for forfeiture exist.

3 ‘‘(ii) REALLOCATION.—The Secretary

4 shall add the authority to produce flue5 cured tobacco under the individual tobacco

6 production permit forfeited under this sub7 paragraph to the county production pool es8 tablished under paragraph (8) for realloca9 tion by the appropriate county committee.

10 ‘‘(D) NOTICE.—Notice of any determination

11 made by a county committee under subpara12 graph (C) shall be mailed, as soon as practicable,

13 to the person involved.

14 ‘‘(E) REVIEW.—If the person is dissatisfied

15 with the determination, the person may request,

16 not later than 15 days after notice of the deter17 mination is received, a review of the determina18 tion by a local review committee under the pro19 cedures established under section 363 for farm

20 marketing quotas.

21 ‘‘(7) COUNTY OF ORIGIN REQUIREMENT.—For

22 the 1999 and each subsequent crop of flue-cured to23 bacco, all tobacco produced pursuant to an individual

24 tobacco production permit shall be produced in the

25 same county in which was produced the tobacco pro-
549

•S 1415 RS2

1 duced during the 1997 marketing year pursuant to

2 the farm marketing quota or farm acreage allotment

3 on which the individual tobacco production permit is

4 based.

5 ‘‘(8) COUNTY PRODUCTION POOL.—

6 ‘‘(A) IN GENERAL.—The authority to

7 produce flue-cured tobacco under an individual

8 tobacco production permit that is forfeited, relin9 quished, or surrendered within a county may be

10 reallocated by the appropriate county committee

11 to tobacco producers located in the same county

12 that apply to the committee to produce flue-cured

13 tobacco under the authority.

14 ‘‘(B) PRIORITY.—In reallocating individual

15 tobacco production permits under this para16 graph, a county committee shall provide a prior17 ity to—

18 ‘‘(i) an active tobacco producer that

19 controls the authority to produce a quantity

20 of flue-cured tobacco under an individual

21 tobacco production permit that is equal to

22 or less than the average number of pounds

23 of flue-cured tobacco that was produced by

24 the producer during each of the 1995
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•S 1415 RS2

1 through 1997 marketing years, as deter2 mined by the Secretary; and

3 ‘‘(ii) a new tobacco producer.

4 ‘‘(C) CRITERIA.—Individual tobacco pro5 duction permits shall be reallocated by the ap6 propriate county committee under this para7 graph in a fair and equitable manner after tak8 ing into consideration—

9 ‘‘(i) the experience of the producer;

10 ‘‘(ii) the availability of land, labor,

11 and equipment for the production of to12 bacco;

13 ‘‘(iii) crop rotation practices; and

14 ‘‘(iv) the soil and other physical factors

15 affecting the production of tobacco.

16 ‘‘(D) MEDICAL HARDSHIPS AND CROP DIS17 ASTERS.—Notwithstanding any other provision

18 of this Act, the Secretary may issue an individ19 ual tobacco production permit under this para20 graph to a producer that is otherwise ineligible

21 for the permit due to a medical hardship or crop

22 disaster that occurred during the 1997 marketing

23 year.

24 ‘‘(c) REFERENDUM.—
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•S 1415 RS2

1 ‘‘(1) ANNOUNCEMENT OF QUOTA AND ALLOT2 MENT.—Not later than December 15, 1998, the Sec3 retary pursuant to subsection (b) shall determine and

4 announce—

5 ‘‘(A) the quantity of the national marketing

6 quota for flue-cured tobacco for the 1999 market7 ing year; and

8 ‘‘(B) the national acreage allotment and na9 tional average yield goal for the 1999 crop of

10 flue-cured tobacco.

11 ‘‘(2) SPECIAL REFERENDUM.—Not later than 30

12 days after the announcement of the quantity of the

13 national marketing quota, the Secretary shall conduct

14 a special referendum of the producers that were the

15 principal producers of flue-cured tobacco of the 1997

16 crop to determine whether the producers approve or

17 oppose the establishment of individual tobacco pro18 duction permits on an acreage-poundage basis as pro19 vided in this section for the 1999 through 2001 mar20 keting years.

21 ‘‘(3) APPROVAL OF PERMITS.—If the Secretary

determines that more than 662 22 ⁄3 percent of the pro23 ducers voting in the special referendum approve the

24 establishment of individual tobacco production per25 mits on an acreage-poundage basis—
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•S 1415 RS2

1 ‘‘(A) individual tobacco production permits

2 on an acreage-poundage basis as provided in this

3 section shall be in effect for the 1999 through

4 2001 marketing years; and

5 ‘‘(B) marketing quotas on an acreage6 poundage basis shall cease to be in effect for the

7 1999 through 2001 marketing years.

8 ‘‘(4) DISAPPROVAL OF PERMITS.—If individual

9 tobacco production permits on an acreage-poundage

basis are not approved by more than 662 10 ⁄3 percent of

11 the producers voting in the referendum, no marketing

12 quotas on an acreage-poundage basis shall continue

13 in effect that were proclaimed under section 317 prior

14 to the referendum.

15 ‘‘(5) APPLICABLE MARKETING YEARS.—If indi16 vidual tobacco production permits have been made ef17 fective for flue-cured tobacco on an acreage-poundage

18 basis pursuant to this subsection, the Secretary shall,

19 not later than December 15 of any future marketing

20 year, announce a national marketing quota for that

21 type of tobacco for the next 3 succeeding marketing

22 years if the marketing year is the last year of 3 con23 secutive years for which individual tobacco produc24 tion permits previously proclaimed will be in effect.
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•S 1415 RS2

1 ‘‘(d) ANNUAL ANNOUNCEMENT OF NATIONAL MARKET2 ING QUOTA.—The Secretary shall determine and announce

3 the national marketing quota, national acreage allotment,

4 and national average yield goal for the second and third

5 marketing years of any 3-year period for which individual

6 tobacco production permits are in effect on or before the

7 December 15 immediately preceding the beginning of the

8 marketing year to which the quota, allotment, and goal

9 apply.

10 ‘‘(e) ANNUAL ANNOUNCEMENT OF INDIVIDUAL TO11 BACCO PRODUCTION PERMITS.—If a national marketing

12 quota, national acreage allotment, and national average

13 yield goal are determined and announced, the Secretary

14 shall provide for the determination of individual tobacco

15 production permits, individual acreage limitations, and in16 dividual marketing limitations under this section for the

17 crop and marketing year covered by the determinations.

18 ‘‘(f) ASSIGNMENT OF TOBACCO PRODUCTION PER19 MITS.—

20 ‘‘(1) LIMITATION TO SAME COUNTY.—Each indi21 vidual tobacco production permit holder shall assign

22 the individual acreage limitation and individual

23 marketing limitation to 1 or more farms located with24 in the county of origin of the individual tobacco pro25 duction permit.
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•S 1415 RS2

1 ‘‘(2) FILING WITH COUNTY COMMITTEE.—The as2 signment of an individual acreage limitation and in3 dividual marketing limitation shall not be effective

4 until evidence of the assignment, in such form as re5 quired by the Secretary, is filed with and determined

6 by the county committee for the county in which the

7 farm involved is located.

8 ‘‘(3) LIMITATION ON TILLABLE CROPLAND.—The

9 total acreage assigned to any farm under this sub10 section shall not exceed the acreage of cropland on the

11 farm.

12 ‘‘(g) PROHIBITION ON SALE OR LEASING OF INDIVID13 UAL TOBACCO PRODUCTION PERMITS.—

14 ‘‘(1) IN GENERAL.—Except as provided in para15 graphs (2) and (3), the Secretary shall not permit the

16 sale and transfer, or lease and transfer, of an individ17 ual tobacco production permit issued under this sec18 tion.

19 ‘‘(2) TRANSFER TO DESCENDANTS.—

20 ‘‘(A) DEATH.—In the case of the death of a

21 person to whom an individual tobacco produc22 tion permit has been issued under this section,

23 the permit shall transfer to the surviving spouse

24 of the person or, if there is no surviving spouse,

25 to surviving direct descendants of the person.
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•S 1415 RS2

1 ‘‘(B) TEMPORARY INABILITY TO FARM.—In

2 the case of the death of a person to whom an in3 dividual tobacco production permit has been

4 issued under this section and whose descendants

5 are temporarily unable to produce a crop of to6 bacco, the Secretary may hold the license in the

7 name of the descendants for a period of not more

8 than 18 months.

9 ‘‘(3) VOLUNTARY TRANSFERS.—A person that is

10 eligible to obtain an individual tobacco production

11 permit under this section may at any time transfer

12 all or part of the permit to the person’s spouse or di13 rect descendants that are actively engaged in the pro14 duction of tobacco.

15 ‘‘(h) RESERVE.—

16 ‘‘(1) IN GENERAL.—For each marketing year for

17 which individual tobacco production permits are in

18 effect under this section, the Secretary may establish

19 a reserve from the national marketing quota in a

20 quantity equal to not more than 1 percent of the na21 tional marketing quota to be available for—

22 ‘‘(A) making corrections of errors in indi23 vidual acreage limitations and individual mar24 keting limitations;

25 ‘‘(B) adjusting inequities; and
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•S 1415 RS2

1 ‘‘(C) establishing individual tobacco produc2 tion permits for new tobacco producers (except

3 that not less than two-thirds of the reserve shall

4 be for establishing such permits for new tobacco

5 producers).

6 ‘‘(2) ELIGIBLE PERSONS.—To be eligible for a

7 new individual tobacco production permit, a producer

8 must have owned a farm on which tobacco was not

9 produced or considered produced during the imme10 diately preceding 5 years.

11 ‘‘(3) APPORTIONMENT FOR NEW PRODUCERS.—

12 The part of the reserve held for apportionment to new

13 individual tobacco producers shall be allotted on the

14 basis of—

15 ‘‘(A) land, labor, and equipment available

16 for the production of tobacco;

17 ‘‘(B) crop rotation practices;

18 ‘‘(C) soil and other physical factors affect19 ing the production of tobacco; and

20 ‘‘(D) the past tobacco-producing experience

21 of the producer.

22 ‘‘(4) PERMIT YIELD.—The permit yield for any

23 producer for which a new individual tobacco produc24 tion permit is established shall be determined on the

25 basis of available productivity data for the land in-
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•S 1415 RS2

1 volved and yields for similar farms in the same coun2 ty.

3 ‘‘(i) PENALTIES.—

4 ‘‘(1) PRODUCTION ON OTHER FARMS.—If any

5 quantity of tobacco is marketed as having been pro6 duced under an individual acreage limitation or in7 dividual marketing limitation assigned to a farm but

8 was produced on a different farm, the individual

9 acreage limitation or individual marketing limitation

10 for the following marketing year shall be forfeited.

11 ‘‘(2) FALSE REPORT.—If a person to which an

12 individual tobacco production permit is issued files,

13 or aids or acquiesces in the filing of, a false report

14 with respect to the assignment of an individual acre15 age limitation or individual marketing limitation for

16 a quantity of tobacco, the individual acreage limita17 tion or individual marketing limitation for the fol18 lowing marketing year shall be forfeited.

19 ‘‘(j) MARKETING PENALTIES.—

20 ‘‘(1) IN GENERAL.—When individual tobacco

21 production permits under this section are in effect,

22 provisions with respect to penalties for the marketing

23 of excess tobacco and the other provisions contained in

24 section 314 shall apply in the same manner and to
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•S 1415 RS2

1 the same extent as they would apply under section

2 317(g) if farm marketing quotas were in effect.

3 ‘‘(2) PRODUCTION ON OTHER FARMS.—If a pro4 ducer falsely identifies tobacco as having been pro5 duced on or marketed from a farm to which an indi6 vidual acreage limitation or individual marketing

7 limitation has been assigned, future individual acre8 age limitations and individual marketing limitations

9 shall be forfeited.’’.

10 SEC. 1025. MODIFICATIONS IN FEDERAL TOBACCO PRO11 GRAMS.

12 (a) PROGRAM REFERENDA.—Section 312(c) of the Ag13 ricultural Adjustment Act of 1938 (7 U.S.C. 1312(c)) is

14 amended—

15 (1) by striking ‘‘(c) Within thirty’’ and inserting

16 the following:

17 ‘‘(c) REFERENDA ON QUOTAS.—

18 ‘‘(1) IN GENERAL.—Not later than 30’’; and

19 (2) by adding at the end the following:

20 ‘‘(2) REFERENDA ON PROGRAM CHANGES.—

21 ‘‘(A) IN GENERAL.—In the case of any type

22 of tobacco for which marketing quotas are in ef23 fect, on the receipt of a petition from more than

24 5 percent of the producers of that type of tobacco

25 in a State, the Secretary shall conduct a state-
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1 wide referendum on any proposal related to the

2 lease and transfer of tobacco quota within a

3 State requested by the petition that is authorized

4 under this part.

5 ‘‘(B) APPROVAL OF PROPOSALS.—If a ma6 jority of producers of the type of tobacco in the

7 State approve a proposal in a referendum con8 ducted under subparagraph (A), the Secretary

9 shall implement the proposal in a manner that

10 applies to all producers and quota holders of that

11 type of tobacco in the State.’’.

12 (b) PURCHASE REQUIREMENTS.—Section 320B of the

13 Agricultural Adjustment Act of 1938 (7 U.S.C. 1314h) is

14 amended—

15 (1) in subsection (c)—

16 (A) by striking ‘‘(c) The amount’’ and in17 serting ‘‘(c) AMOUNT OF PENALTY.—For the

18 1998 and subsequent marketing years, the

19 amount’’; and

20 (B) by striking paragraph (1) and inserting

21 the following:

22 ‘‘(1) 105 percent of the average market price for

23 the type of tobacco involved during the preceding

24 marketing year; and’’; and
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1 (2) by striking subsection (d) and inserting the

2 following:

3 ‘‘(d) USE OF PENALTY PAYMENTS.—An amount equiv4 alent to each penalty collected by the Secretary under this

5 section shall be transmitted by the Secretary to the Sec6 retary of the Treasury for deposit in the ƒTobacco Commu7 nity Revitalization Trust Fund established under section

8 1011 of the LEAF Act≈ National Tobacco Settle9 ment Trust Fund.’’.

10 (c) ELIMINATION OF TOBACCO MARKETING ASSESS11 MENT.—

12 (1) IN GENERAL.—Section 106 of the Agricul13 tural Act of 1949 (7 U.S.C. 1445) is amended by

14 striking subsection (g).

15 (2) CONFORMING AMENDMENT.—Section 422(c)

16 of the Uruguay Round Agreements Act (Public Law

17 103–465; 7 U.S.C. 1445 note) is amended by striking

18 ‘‘section 106(g), 106A, or 106B of the Agricultural

19 Act of 1949 (7 U.S.C. 1445(g), 1445–1, or 1445–2)’’

20 and inserting ‘‘section 106A or 106B of the Agricul21 tural Act of 1949 (7 U.S.C. 1445–1, 1445–2)’’.

22 (d) ADJUSTMENT FOR LAND RENTAL COSTS.—Section

23 106 of the Agricultural Act of 1949 (7 U.S.C. 1445) is

24 amended by adding at the end the following:
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1 ‘‘(h) ADJUSTMENT FOR LAND RENTAL COSTS.—For

2 each of the 1999 and 2000 marketing years for flue-cured

3 tobacco, after consultation with producers, State farm orga4 nizations and cooperative associations, the Secretary shall

5 make an adjustment in the price support level for flue-cured

6 tobacco equal to the annual change in the average cost per

7 pound to flue-cured producers, as determined by the Sec8 retary, under agreements through which producers rent

9 land to produce flue-cured tobacco.’’.

10 (e) FIRE-CURED AND DARK AIR-CURED TOBACCO

11 PROGRAMS.—

12 (1) LIMITATION ON TRANSFERS.—Section 318(g)

13 of the Agricultural Adjustment Act of 1938 (7 U.S.C.

14 13l4d(g)) is amended—

15 (A) by striking ‘‘ten’’ and inserting ‘‘30’’;

16 and

17 (B) by inserting ‘‘during any crop year’’

18 after ‘‘transferred to any farm’’.

19 (2) LOSS OF ALLOTMENT OR QUOTA THROUGH

20 UNDERPLANTING.—Section 318 of the Agricultural

21 Adjustment Act of 1938 (7 U.S.C. 1314d) is amended

22 by adding at the end the following:

23 ‘‘(k) LOSS OF ALLOTMENT OR QUOTA THROUGH

24 UNDERPLANTING.—Effective for the 1999 and subsequent

25 marketing years, no acreage allotment or acreage-poundage
562

•S 1415 RS2

1 quota, other than a new marketing quota, shall be estab2 lished for a farm on which no fire-cured or dark air-cured

3 tobacco was planted or considered planted during at least

4 2 of the 3 crop years immediately preceding the crop year

5 for which the acreage allotment or acreage-poundage quota

6 would otherwise be established.’’.

7 (f) EXPANSION OF TYPES OF TOBACCO SUBJECT TO

8 NO NET COST ASSESSMENT.—

9 (1) NO NET COST TOBACCO FUND.—Section

10 106A(d)(1)(A) of the Agricultural Act of 1949 (7

11 U.S.C. 1445–1(d)(1)(A)) is amended—

12 (A) in clause (ii), by inserting after ‘‘Bur13 ley quota tobacco’’ the following: ‘‘and fire-cured

14 and dark air-cured quota tobacco’’; and

15 (B) in clause (iii)—

16 (i) in the matter preceding subclause

17 (I), by striking ‘‘Flue-cured or Burley to18 bacco’’ and inserting ‘‘each kind of tobacco

19 for which price support is made available

20 under this Act, and each kind of like to21 bacco,’’; and

22 (ii) by striking subclause (II) and in23 serting the following:

24 ‘‘(II) the sum of the amount of the

25 per pound producer contribution and
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•S 1415 RS2

1 purchaser assessment (if any) for the

2 kind of tobacco payable under clauses

3 (i) and (ii); and’’.

4 (2) NO NET COST TOBACCO ACCOUNT.—Section

5 106B(d)(1) of the Agricultural Act of 1949 (7 U.S.C.

6 1445–2(d)(1)) is amended—

7 (A) in subparagraph (B), by inserting after

8 ‘‘Burley quota tobacco’’ the following: ‘‘and fire9 cured and dark air-cured tobacco’’; and

10 (B) in subparagraph (C), by striking ‘‘Flue11 cured and Burley tobacco’’ and inserting ‘‘each

12 kind of tobacco for which price support is made

13 available under this Act, and each kind of like

14 tobacco,’’.

15 Subtitle C—Farmer and Worker

16 Transition Assistance

17 SEC. 1031. TOBACCO WORKER TRANSITION PROGRAM.

18 (a) GROUP ELIGIBILITY REQUIREMENTS.—

19 (1) CRITERIA.—A group of workers (including

20 workers in any firm or subdivision of a firm involved

21 in the manufacture, processing, or warehousing of to22 bacco or tobacco products) shall be certified as eligible

23 to apply for adjustment assistance under this section

24 pursuant to a petition filed under subsection (b) if the

25 Secretary of Labor determines that a significant
564

•S 1415 RS2

1 number or proportion of the workers in the workers’

2 firm or an appropriate subdivision of the firm have

3 become totally or partially separated, or are threat4 ened to become totally or partially separated, and—

5 (A) the sales or production, or both, of the

6 firm or subdivision have decreased absolutely;

7 and

8 (B) the implementation of the national to9 bacco settlement contributed importantly to the

10 workers’ separation or threat of separation and

11 to the decline in the sales or production of the

12 firm or subdivision.

13 (2) DEFINITION OF CONTRIBUTED IMPOR14 TANTLY.—In paragraph (1)(B), the term ‘‘contributed

15 importantly’’ means a cause that is important but

16 not necessarily more important than any other cause.

17 (3) REGULATIONS.—The Secretary shall issue

18 regulations relating to the application of the criteria

19 described in paragraph (1) in making preliminary

20 findings under subsection (b) and determinations

21 under subsection (c).

22 (b) PRELIMINARY FINDINGS AND BASIC ASSIST23 ANCE.—

24 (1) FILING OF PETITIONS.—A petition for cer25 tification of eligibility to apply for adjustment assist-
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•S 1415 RS2

1 ance under this section may be filed by a group of

2 workers (including workers in any firm or subdivi3 sion of a firm involved in the manufacture, process4 ing, or warehousing of tobacco or tobacco products) or

5 by their certified or recognized union or other duly

6 authorized representative with the Governor of the

7 State in which the workers’ firm or subdivision there8 of is located.

9 (2) FINDINGS AND ASSISTANCE.—On receipt of a

10 petition under paragraph (1), the Governor shall—

11 (A) notify the Secretary that the Governor

12 has received the petition;

13 (B) within 10 days after receiving the peti14 tion—

15 (i) make a preliminary finding as to

16 whether the petition meets the criteria de17 scribed in subsection (a)(1); and

18 (ii) transmit the petition, together with

19 a statement of the finding under clause (i)

20 and reasons for the finding, to the Secretary

21 for action under subsection (c); and

22 (C) if the preliminary finding under sub23 paragraph (B)(i) is affirmative, ensure that

24 rapid response and basic readjustment services
566

•S 1415 RS2

1 authorized under other Federal laws are made

2 available to the workers.

3 (c) REVIEW OF PETITIONS BY SECRETARY; CERTIFI4 CATIONS.—

5 (1) IN GENERAL.—The Secretary, within 30

6 days after receiving a petition under subsection

7 (b)(2)(B)(ii), shall determine whether the petition

8 meets the criteria described in subsection (a)(1). On

9 a determination that the petition meets the criteria,

10 the Secretary shall issue to workers covered by the pe11 tition a certification of eligibility to apply for the as12 sistance described in subsection (d).

13 (2) DENIAL OF CERTIFICATION.—On the denial

14 of a certification with respect to a petition under

15 paragraph (1), the Secretary shall review the petition

16 in accordance with the requirements of other applica17 ble assistance programs to determine if the workers

18 may be certified under the other programs.

19 (d) COMPREHENSIVE ASSISTANCE.—

20 (1) IN GENERAL.—Workers covered by a certifi21 cation issued by the Secretary under subsection (c)(1)

22 shall be provided with benefits and services described

23 in paragraph (2) in the same manner and to the

24 same extent as workers covered under a certification

25 under subchapter A of title II of the Trade Act of
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1 1974 (19 U.S.C. 2271 et seq.), except that the total

2 amount of payments under this section for any fiscal

3 year shall not exceed $25,000,000.

4 (2) BENEFITS AND SERVICES.—The benefits and

5 services described in this paragraph are the following:

6 (A) Employment services of the type de7 scribed in section 235 of the Trade Act of 1974

8 (19 U.S.C. 2295).

9 (B) Training described in section 236 of the

10 Trade Act of 1974 (19 U.S.C. 2296), except that

11 notwithstanding the provisions of section

12 236(a)(2)(A) of that Act, the total amount of

13 payments for training under this section for any

14 fiscal year shall not exceed $12,500,000.

15 (C) Tobacco worker readjustment allow16 ances, which shall be provided in the same man17 ner as trade readjustment allowances are pro18 vided under part I of subchapter B of chapter 2

19 of title II of the Trade Act of 1974 (19 U.S.C.

20 2291 et seq.), except that—

21 (i) the provisions of sections

22 231(a)(5)(C) and 231(c) of that Act (19

23 U.S.C. 2291(a)(5)(C), 2291(c)), authorizing

24 the payment of trade readjustment allow25 ances on a finding that it is not feasible or
568

•S 1415 RS2

1 appropriate to approve a training program

2 for a worker, shall not be applicable to pay3 ment of allowances under this section; and

4 (ii) notwithstanding the provisions of

5 section 233(b) of that Act (19 U.S.C.

6 2293(b)), in order for a worker to qualify

7 for tobacco readjustment allowances under

8 this section, the worker shall be enrolled in

9 a training program approved by the Sec10 retary of the type described in section

11 236(a) of that Act (19 U.S.C. 2296(a)) by

12 the later of—

13 (I) the last day of the 16th week

14 of the worker’s initial unemployment

15 compensation benefit period; or

16 (II) the last day of the 6th week

17 after the week in which the Secretary

18 issues a certification covering the

19 worker.

20 In cases of extenuating circumstances relat21 ing to enrollment of a worker in a training

22 program under this section, the Secretary

23 may extend the time for enrollment for a

24 period of not to exceed 30 days.
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1 (D) Job search allowances of the type de2 scribed in section 237 of the Trade Act of 1974

3 (19 U.S.C. 2297).

4 (E) Relocation allowances of the type de5 scribed in section 238 of the Trade Act of 1974

6 (19 U.S.C. 2298).

7 (e) INELIGIBILITY OF INDIVIDUALS RECEIVING PAY8 MENTS FOR LOST TOBACCO QUOTA.—No benefits or services

9 may be provided under this section to any individual who

10 has received payments for lost tobacco quota under section

11 1021.

12 (f) FUNDING.—Of the amounts ƒin the≈ made

13 available out of the National Tobacco Settle14 ment Trust Fund, the Secretary may use not to exceed

15 $25,000,000 for each of fiscal years 1999 through 2008 to

16 provide assistance under this section.

17 (g) EFFECTIVE DATE.—This section shall take effect

18 on the date that is the later of—

19 (1) October l, 1998; or

20 (2) the date of enactment of this Act.

21 (h) TERMINATION DATE.—No assistance, vouchers, al22 lowances, or other payments may be provided under this

23 section after the date that is the earlier of—

24 (1) the date that is 10 years after the effective

25 date of this section under subsection (g); or
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1 (2) the date on which legislation establishing a

2 program providing dislocated workers with com3 prehensive assistance substantially similar to the as4 sistance provided by this section becomes effective.

5 SEC. 1032. FARMER OPPORTUNITY GRANTS.

6 Part A of title IV of the Higher Education Act of 1965

7 (20 U.S.C. 1070 et seq.) is amended by adding at the end

8 the following:

9 ‘‘Subpart 9—Farmer Opportunity Grants

10 ‘‘SEC. 420D. STATEMENT OF PURPOSE.

11 ‘‘It is the purpose of this subpart to assist in making

12 available the benefits of postsecondary education to eligible

13 students (determined in accordance with section 420F) in

14 institutions of higher education by providing farmer oppor15 tunity grants to all eligible students.

16 ‘‘SEC. 420E. PROGRAM AUTHORITY; AMOUNT AND DETER17 MINATIONS; APPLICATIONS.

18 ‘‘(a) PROGRAM AUTHORITY AND METHOD OF DIS19 TRIBUTION.—

20 ‘‘(1) PROGRAM AUTHORITY.—From amounts

21 made available ƒunder section 1011(d)(5) of the

22 LEAF Act≈ out of the National Tobacco Set23 tlement Trust Fund, the Secretary, during the

24 period beginning July 1, 1999, and ending September

25 30, 2024, shall pay to each eligible institution such
571

•S 1415 RS2

1 sums as may be necessary to pay to each eligible stu2 dent (determined in accordance with section 420F)

3 for each academic year during which that student is

4 in attendance at an institution of higher education,

5 as an undergraduate, a farmer opportunity grant in

6 the amount for which that student is eligible, as deter7 mined pursuant to subsection (b). Not less than 85

8 percent of the sums shall be advanced to eligible insti9 tutions prior to the start of each payment period and

10 shall be based on an amount requested by the institu11 tion as needed to pay eligible students, except that

12 this sentence shall not be construed to limit the au13 thority of the Secretary to place an institution on a

14 reimbursement system of payment.

15 ‘‘(2) CONSTRUCTION.—Nothing in this section

16 shall be construed to prohibit the Secretary from pay17 ing directly to students, in advance of the beginning

18 of the academic term, an amount for which the stu19 dents are eligible, in cases where the eligible institu20 tion elects not to participate in the disbursement sys21 tem required by paragraph (1).

22 ‘‘(3) DESIGNATION.—Grants made under this

23 subpart shall be known as ‘farmer opportunity

24 grants’.

25 ‘‘(b) AMOUNT OF GRANTS.—
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1 ‘‘(1) AMOUNTS.—

2 ‘‘(A) IN GENERAL.—The amount of the

3 grant for a student eligible under this subpart

4 shall be—

5 ‘‘(i) $1,700 for each of the academic

6 years 1999–2000 through 2003–2004;

7 ‘‘(ii) $2,000 for each of the academic

8 years 2004–2005 through 2008–2009;

9 ‘‘(iii) $2,300 for each of the academic

10 years 2009–2010 through 2013–2014;

11 ‘‘(iv) $2,600 for each of the academic

12 years 2014–2015 through 2018–2019; and

13 ‘‘(v) $2,900 for each of the academic

14 years 2019–2020 through 2023–2024.

15 ‘‘(B) PART-TIME RULE.—In any case where

16 a student attends an institution of higher edu17 cation on less than a full-time basis (including

18 a student who attends an institution of higher

19 education on less than a half-time basis) during

20 any academic year, the amount of the grant for

21 which that student is eligible shall be reduced in

22 proportion to the degree to which that student is

23 not so attending on a full-time basis, in accord24 ance with a schedule of reductions established by

25 the Secretary for the purposes of this subpara-
573

•S 1415 RS2

1 graph, computed in accordance with this sub2 part. The schedule of reductions shall be estab3 lished by regulation and published in the Federal

4 Register.

5 ‘‘(2) MAXIMUM.—No grant under this subpart

6 shall exceed the cost of attendance (as described in

7 section 472) at the institution at which that student

8 is in attendance. If, with respect to any student, it

9 is determined that the amount of a grant exceeds the

10 cost of attendance for that year, the amount of the

11 grant shall be reduced to an amount equal to the cost

12 of attendance at the institution.

13 ‘‘(3) PROHIBITION.—No grant shall be awarded

14 under this subpart to any individual who is incarcer15 ated in any Federal, State, or local penal institution.

16 ‘‘(c) PERIOD OF ELIGIBILITY FOR GRANTS.—

17 ‘‘(1) IN GENERAL.—The period during which a

18 student may receive grants shall be the period re19 quired for the completion of the first undergraduate

20 baccalaureate course of study being pursued by that

21 student at the institution at which the student is in

22 attendance, except that any period during which the

23 student is enrolled in a noncredit or remedial course

24 of study as described in paragraph (2) shall not be

25 counted for the purpose of this paragraph.
574

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1 ‘‘(2) CONSTRUCTION.—Nothing in this section

2 shall be construed to—

3 ‘‘(A) exclude from eligibility courses of

4 study that are noncredit or remedial in nature

5 and that are determined by the institution to be

6 necessary to help the student be prepared for the

7 pursuit of a first undergraduate baccalaureate

8 degree or certificate or, in the case of courses in

9 English language instruction, to be necessary to

10 enable the student to utilize already existing

11 knowledge, training, or skills; and

12 ‘‘(B) exclude from eligibility programs of

13 study abroad that are approved for credit by the

14 home institution at which the student is enrolled.

15 ‘‘(3) PROHIBITION.—No student is entitled to re16 ceive farmer opportunity grant payments concur17 rently from more than 1 institution or from the Sec18 retary and an institution.

19 ‘‘(d) APPLICATIONS FOR GRANTS.—

20 ‘‘(1) IN GENERAL.—The Secretary shall from

21 time to time set dates by which students shall file ap22 plications for grants under this subpart. The filing of

23 applications under this subpart shall be coordinated

24 with the filing of applications under section 401(c).
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•S 1415 RS2

1 ‘‘(2) INFORMATION AND ASSURANCES.—Each stu2 dent desiring a grant for any year shall file with the

3 Secretary an application for the grant containing

4 such information and assurances as the Secretary

5 may deem necessary to enable the Secretary to carry

6 out the Secretary’s functions and responsibilities

7 under this subpart.

8 ‘‘(e) DISTRIBUTION OF GRANTS TO STUDENTS.—Pay9 ments under this section shall be made in accordance with

10 regulations promulgated by the Secretary for such purpose,

11 in such manner as will best accomplish the purpose of this

12 section. Any disbursement allowed to be made by crediting

13 the student’s account shall be limited to tuition and fees

14 and, in the case of institutionally owned housing, room and

15 board. The student may elect to have the institution provide

16 other such goods and services by crediting the student’s ac17 count.

18 ‘‘(f) INSUFFICIENT FUNDING.—If, for any fiscal year,

19 the funds made available to carry out this subpart from

20 the ƒTobacco Community Revitalization≈ National To21 bacco Settlement Trust Fund are insufficient to satisfy

22 fully all grants for students determined to be eligible under

23 section 420F, the amount of the grant provided under sub24 section (b) shall be reduced on a pro rata basis among all

25 eligible students.
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•S 1415 RS2

1 ‘‘(g) TREATMENT OF INSTITUTIONS AND STUDENTS

2 UNDER OTHER LAWS.—Any institution of higher education

3 that enters into an agreement with the Secretary to disburse

4 to students attending that institution the amounts those stu5 dents are eligible to receive under this subpart shall not be

6 deemed, by virtue of the agreement, to be a contractor main7 taining a system of records to accomplish a function of the

8 Secretary. Recipients of farmer opportunity grants shall

9 not be considered to be individual grantees for purposes of

10 the Drug-Free Workplace Act of 1988 (41 U.S.C. 701 et

11 seq.).

12 ‘‘SEC. 420F. STUDENT ELIGIBILITY.

13 ‘‘(a) IN GENERAL.—In order to receive any grant

14 under this subpart, a student shall—

15 ‘‘(1) be a member of a tobacco farm family in

16 accordance with subsection (b);

17 ‘‘(2) be enrolled or accepted for enrollment in a

18 degree, certificate, or other program (including a pro19 gram of study abroad approved for credit by the eligi20 ble institution at which the student is enrolled) lead21 ing to a recognized educational credential at an insti22 tution of higher education that is an eligible institu23 tion in accordance with section 487, and not be en24 rolled in an elementary or secondary school;
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•S 1415 RS2

1 ‘‘(3) if the student is presently enrolled at an in2 stitution of higher education, be maintaining satisfac3 tory progress in the course of study the student is

4 pursuing in accordance with subsection (c);

5 ‘‘(4) not owe a refund on grants previously re6 ceived at any institution of higher education under

7 this title, or be in default on any loan from a student

8 loan fund at any institution provided for in part D,

9 or a loan made, insured, or guaranteed by the Sec10 retary under this title for attendance at any institu11 tion;

12 ‘‘(5) file with the institution of higher education

13 that the student intends to attend, or is attending, a

14 document, that need not be notarized, but that shall

15 include—

16 ‘‘(A) a statement of educational purpose

17 stating that the money attributable to the grant

18 will be used solely for expenses related to attend19 ance or continued attendance at the institution;

20 and

21 ‘‘(B) the student’s social security number;

22 and

23 ‘‘(6) be a citizen of the United States.

24 ‘‘(b) TOBACCO FARM FAMILIES.—
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•S 1415 RS2

1 ‘‘(1) IN GENERAL.—For the purpose of subsection

2 (a)(1), a student is a member of a tobacco farm fam3 ily if during calendar year 1998 the student was—

4 ‘‘(A) an individual who—

5 ‘‘(i) is a participating tobacco pro6 ducer (as defined in section 1002 of the

7 LEAF Act); or

8 ‘‘(ii) is otherwise actively engaged in

9 the production of tobacco;

10 ‘‘(B) a spouse, son, daughter, stepson, or

11 stepdaughter of an individual described in sub12 paragraph (A);

13 ‘‘(C) an individual—

14 ‘‘(i) who was a brother, sister, step15 brother, stepsister, son-in-law, or daughter16 in-law of an individual described in sub17 paragraph (A); and

18 ‘‘(ii) whose principal place of residence

19 was the home of the individual described in

20 subparagraph (A); or

21 ‘‘(D) an individual who was a dependent

22 (within the meaning of section 152 of the Inter23 nal Revenue Code of 1986) of an individual de24 scribed in subparagraph (A).
579

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1 ‘‘(2) ADMINISTRATION.—On request, the Sec2 retary of Agriculture shall provide to the Secretary

3 such information as is necessary to carry out this

4 subsection.

5 ‘‘(c) SATISFACTORY PROGRESS.—

6 ‘‘(1) IN GENERAL.—For the purpose of subsection

7 (a)(3), a student is maintaining satisfactory progress

8 if—

9 ‘‘(A) the institution at which the student is

10 in attendance reviews the progress of the student

11 at the end of each academic year, or its equiva12 lent, as determined by the institution; and

13 ‘‘(B) the student has at least a cumulative

14 C average or its equivalent, or academic stand15 ing consistent with the requirements for gradua16 tion, as determined by the institution, at the end

17 of the second such academic year.

18 ‘‘(2) SPECIAL RULE.—Whenever a student fails

19 to meet the eligibility requirements of subsection

20 (a)(3) as a result of the application of this subsection

21 and subsequent to that failure the student has aca22 demic standing consistent with the requirements for

23 graduation, as determined by the institution, for any

24 grading period, the student may, subject to this sub-
580

•S 1415 RS2

1 section, again be eligible under subsection (a)(3) for

2 a grant under this subpart.

3 ‘‘(3) WAIVER.—Any institution of higher edu4 cation at which the student is in attendance may

5 waive paragraph (1) or (2) for undue hardship based

6 on—

7 ‘‘(A) the death of a relative of the student;

8 ‘‘(B) the personal injury or illness of the

9 student; or

10 ‘‘(C) special circumstances as determined by

11 the institution.

12 ‘‘(d) STUDENTS WHO ARE NOT SECONDARY SCHOOL

13 GRADUATES.—In order for a student who does not have a

14 certificate of graduation from a school providing secondary

15 education, or the recognized equivalent of the certificate, to

16 be eligible for any assistance under this subpart, the student

17 shall meet either 1 of the following standards:

18 ‘‘(1) EXAMINATION.—The student shall take an

19 independently administered examination and shall

20 achieve a score, specified by the Secretary, dem21 onstrating that the student can benefit from the edu22 cation or training being offered. The examination

23 shall be approved by the Secretary on the basis of

24 compliance with such standards for development, ad-
581

•S 1415 RS2

1 ministration, and scoring as the Secretary may pre2 scribe in regulations.

3 ‘‘(2) DETERMINATION.—The student shall be de4 termined as having the ability to benefit from the

5 education or training in accordance with such process

6 as the State shall prescribe. Any such process de7 scribed or approved by a State for the purposes of this

8 section shall be effective 6 months after the date of

9 submission to the Secretary unless the Secretary dis10 approves the process. In determining whether to ap11 prove or disapprove the process, the Secretary shall

12 take into account the effectiveness of the process in en13 abling students without secondary school diplomas or

14 the recognized equivalent to benefit from the instruc15 tion offered by institutions utilizing the process, and

16 shall also take into account the cultural diversity, eco17 nomic circumstances, and educational preparation of

18 the populations served by the institutions.

19 ‘‘(e) SPECIAL RULE FOR CORRESPONDENCE

20 COURSES.—A student shall not be eligible to receive a grant

21 under this subpart for a correspondence course unless the

22 course is part of a program leading to an associate, bach23 elor, or graduate degree.

24 ‘‘(f) COURSES OFFERED THROUGH TELECOMMUNI25 CATIONS.—
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1 ‘‘(1) RELATION TO CORRESPONDENCE

2 COURSES.—A student enrolled in a course of instruc3 tion at an eligible institution of higher education

4 (other than an institute or school that meets the defi5 nition in section 521(4)(C) of the Carl D. Perkins Vo6 cational and Applied Technology Education Act (20

7 U.S.C. 2471(4)(C))) that is offered in whole or in

8 part through telecommunications and leads to a rec9 ognized associate, bachelor, or graduate degree con10 ferred by the institution shall not be considered to be

11 enrolled in correspondence courses unless the total

12 amount of telecommunications and correspondence

13 courses at the institution equals or exceeds 50 percent

14 of the courses.

15 ‘‘(2) RESTRICTION OR REDUCTIONS OF FINAN16 CIAL AID.—A student’s eligibility to receive a grant

17 under this subpart may be reduced if a financial aid

18 officer determines under the discretionary authority

19 provided in section 479A that telecommunications in20 struction results in a substantially reduced cost of at21 tendance to the student.

22 ‘‘(3) DEFINITION.—For the purposes of this sub23 section, the term ‘telecommunications’ means the use

24 of television, audio, or computer transmission, includ25 ing open broadcast, closed circuit, cable, microwave,
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1 or satellite, audio conferencing, computer conferenc2 ing, or video cassettes or discs, except that the term

3 does not include a course that is delivered using video

4 cassette or disc recordings at the institution and that

5 is not delivered in person to other students of that in6 stitution.

7 ‘‘(g) STUDY ABROAD.—Nothing in this subpart shall

8 be construed to limit or otherwise prohibit access to study

9 abroad programs approved by the home institution at

10 which a student is enrolled. An otherwise eligible student

11 who is engaged in a program of study abroad approved for

12 academic credit by the home institution at which the stu13 dent is enrolled shall be eligible to receive a grant under

14 this subpart, without regard to whether the study abroad

15 program is required as part of the student’s degree program.

16 ‘‘(h) VERIFICATION OF SOCIAL SECURITY NUMBER.—

17 The Secretary, in cooperation with the Commissioner of So18 cial Security, shall verify any social security number pro19 vided by a student to an eligible institution under sub20 section (a)(5)(B) and shall enforce the following conditions:

21 ‘‘(1) PENDING VERIFICATION.—Except as pro22 vided in paragraphs (2) and (3), an institution shall

23 not deny, reduce, delay, or terminate a student’s eligi24 bility for assistance under this subpart because social

25 security number verification is pending.
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1 ‘‘(2) DENIAL OR TERMINATION.—If there is a de2 termination by the Secretary that the social security

3 number provided to an eligible institution by a stu4 dent is incorrect, the institution shall deny or termi5 nate the student’s eligibility for any grant under this

6 subpart until such time as the student provides docu7 mented evidence of a social security number that is

8 determined by the institution to be correct.

9 ‘‘(3) CONSTRUCTION.—Nothing in this subsection

10 shall be construed to permit the Secretary to take any

11 compliance, disallowance, penalty, or other regulatory

12 action against—

13 ‘‘(A) any institution of higher education

14 with respect to any error in a social security

15 number, unless the error was a result of fraud on

16 the part of the institution; or

17 ‘‘(B) any student with respect to any error

18 in a social security number, unless the error was

19 a result of fraud on the part of the student.’’.

20 Subtitle D—Immunity

21 SEC. 1041. GENERAL IMMUNITY FOR TOBACCO PRODUCERS

22 AND TOBACCO WAREHOUSE OWNERS.

23 Notwithstanding any other provision of this title, a

24 participating tobacco producer, tobacco-related growers as25 sociation, or tobacco warehouse owner or employee may not
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1 be subject to liability in any Federal or State court for any

2 cause of action resulting from the failure of any tobacco

3 product manufacturer, distributor, or retailer to comply

4 with the National Tobacco Policy and Youth Smoking Re5 duction Act.

6 TITLE XI—MISCELLANEOUS

7 Subtitle A—Prohibitions Relating

8 to Tobacco Products and Children

9 SEC. 1101. SHORT TITLE.

10 This subtitle may be cited as the ‘‘Tobacco Use by Mi11 nors Prevention Act’’.

12 SEC. 1102. PROHIBITIONS RELATING TO TOBACCO PROD13 UCTS AND CHILDREN.

14 Chapter VIII of the Federal Food, Drug, and Cosmetic

15 Act is amended by adding at the end the following:

16 ‘‘SEC. 804. PROHIBITION ON SALE OR DISTRIBUTION OF TO17 BACCO PRODUCTS TO CHILDREN.

18 ‘‘(a) GENERAL RULE.—It shall be unlawful for any

19 domestic concern or any officer, director, employee, or agent

20 of such concern to make use of the mails or any means or

21 instrumentality of interstate commerce to cause or contrib22 ute, either directly or through a foreign subsidiary, joint

23 venture, affiliate, or licensee, to—

24 ‘‘(1) the sale or distribution of tobacco products

25 in a foreign country to children; or
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1 ‘‘(2) the advertising or promotion of tobacco

2 products in a foreign country in a manner that does

3 not comply with Federal requirements for the adver4 tisement or promotion of tobacco products in the

5 United States

6 ‘‘(b) DEFENSE.—In an action brought to enforce sub7 section (a), it shall be an affirmative defense that the to8 bacco products involved were sold, distributed, advertised,

9 or promoted in the foreign country involved in a manner

10 that would be lawful if such conduct occurred in the United

11 States.

12 ‘‘SEC. 805. LABELING.

13 ‘‘It shall be unlawful for any domestic concern or any

14 officer, director, employee, or agent of such concern, either

15 directly or through a foreign subsidiary, joint venture, affil16 iate, or licensee, to make use of the mails or any means

17 or instrumentality of interstate commerce to cause or con18 tribute to the export from the United States or the sale or

19 distribution in, or export from, any other country any to20 bacco product the package of which does not contain a

21 warning label that—

22 ‘‘(1) is in the primary language or languages of

23 the country in which the tobacco product is sold or

24 distributed to consumers; and
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1 ‘‘(2) except for the requirement of paragraph

2 (1)—

3 ‘‘(A) complies with Federal requirements for

4 labeling of similar tobacco products manufac5 tured, imported, or packaged for sale or distribu6 tion in the United States; or

7 ‘‘(B) complies with the labeling require8 ments of the foreign country in which the prod9 uct is sold or distributed to consumers and which

10 labeling requirements the Secretary determines

11 are substantially similar to Federal requirements

12 and are adequately enforced by such country.’’.

13 SEC. 1103. ENFORCEMENT.

14 Section 301 of the Federal Food, Drug, and Cosmetic

15 Act (21 U.S.C. 331) is amended by adding at the end the

16 following:

17 ‘‘(aa) To carry out an act made unlawful by section

18 804 or 805.’’.

19 SEC. 1104. REWARD.

20 Section 303(b)(5) of the Federal Food, Drug, and Cos21 metic Act (21 U.S.C. 333(b)(5)) is amended by adding at

22 the end the following: ‘‘If a person provides information

23 leading to the institution of a criminal proceeding against,

24 and conviction of, a person for a violation of section

25 301(aa), such person shall be entitled to one-half of the
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1 criminal fine imposed and collected for such violation but

2 not more than $125,000.’’.

3 SEC. 1105. DEFINITIONS.

4 Section 201 of the Federal Food, Drug, and Cosmetic

5 Act (21 U.S.C. 321), as amended by section 101(a) of this

6 Act is amended by adding at the end the following:

7 ‘‘(ll) The term ‘domestic concern’ means—

8 ‘‘(1) any individual who is a citizen, national,

9 or resident of the United States; and

10 ‘‘(2) any corporation, partnership, association,

11 joint-stock company, business trust, unincorporated

12 organization, or sole proprietorship which has its

13 principal place of business in the United States or

14 which is organized under the laws of a State of the

15 United States or a territory, possession, or common16 wealth of the United States.

17 ‘‘(mm) The term ‘children’ means individuals under

18 the age of 18.’’.

19 SEC. 1106. AMENDMENTS TO PUBLIC HEALTH SERVICE ACT.

20 (a) IN GENERAL.—The Public Health Service Act (42

21 U.S.C. 201 et seq.) is amended by adding at the end the

22 following:
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1 ‘‘TITLE XXVIII—NATIONAL EF2 FORTS TO REDUCE YOUTH

3 SMOKING

4 ‘‘Subtitle E—Reducing Youth Smok5 ing and Tobacco-Related Dis6 eases Through Research

7 ‘‘SEC. 2801. STUDY BY THE INSTITUTE OF MEDICINE.

8 ‘‘(a) CONTRACT.—Not later than 60 days after the date

9 of enactment of the National Tobacco Policy and Youth

10 Smoking Reduction Act, the Secretary shall enter into a

11 contract with the Institute of Medicine for the conduct of

12 a study on the framework for a research agenda and re13 search priorities to be used by the National Tobacco Task

14 Force established under section 2802.

15 ‘‘(b) CONSIDERATIONS.—

16 ‘‘(1) IN GENERAL.—In developing the framework

17 for the research agenda and research priorities under

18 subsection (a) the Institute of Medicine shall focus on

19 increasing knowledge concerning the biological, social,

20 behavioral, public health, and community factors in21 volved in the prevention of tobacco use, reduction of

22 tobacco use, and health consequences of tobacco use.

23 ‘‘(2) SPECIFIC CONSIDERATIONS.—In the study

24 conducted under subsection (a), the Institute of Medi25 cine shall specifically consider—
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1 ‘‘(A) public health and community research

2 relating to tobacco use prevention methods, in3 cluding public education, media, community

4 strategies;

5 ‘‘(B) behavioral research relating to addic6 tion and tobacco use;

7 ‘‘(C) health services research relating to to8 bacco product prevention and cessation treat9 ment methodologies;

10 ‘‘(D) surveillance and epidemiology research

11 relating to tobacco;

12 ‘‘(E) biomedical, including clinical, re13 search relating to prevention and treatment of

14 tobacco-related diseases; and

15 ‘‘(F) economic research relating to the re16 sponsiveness of youth smoking to price and other

17 economic factors.

18 ‘‘(c) REPORT.—Not later than 10 months after the date

19 on which the Secretary enters into the contract under sub20 section (a), the Institute of Medicine shall prepare and sub21 mit to the Secretary, the National Task Force, the Commit22 tee on Labor and Human Resources of the Senate, and the

23 Committee on Commerce of the House of Representatives,

24 a report that shall contain the findings and recommenda-
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1 tions of the Institute for the purposes described in subsection

2 (b).

3 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There

4 are authorized to be appropriated $750,000 to carry out

5 this section.

6 ‘‘SEC. 2802. NATIONAL TOBACCO TASK FORCE.

7 ‘‘(a) ESTABLISHMENT.—The Secretary shall establish

8 a National Tobacco Task Force (referred to in this subtitle

9 as the ‘National Task Force’) to foster coordination among

10 public health agencies, academic bodies, and community

11 groups that conduct or support tobacco-related biomedical,

12 clinical, behavioral, health services, public health and com13 munity, and surveillance and epidemiology research activi14 ties.

15 ‘‘(b) COMPOSITION.—The National Task Force shall be

16 composed of—

17 ‘‘(1) the Surgeon General;

18 ‘‘(2) the Director of the Office of Smoking and

19 Health of the Centers for Disease Control and Preven20 tion;

21 ‘‘(3) the Administrator of the Agency for Health

22 Care Policy and Research;

23 ‘‘(4) the Director of the National Institutes of

24 Health;
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1 ‘‘(5) two representatives from non-governmental

2 public health or tobacco control organizations; and

3 ‘‘(6) two representatives from State or local gov4 ernment public health agencies and offices.

5 ‘‘(c) CHAIR.—The National Task Force shall be

6 chaired by the Secretary, and shall be staffed by the Centers

7 for Disease Control and Prevention.

8 ‘‘(d) DUTIES.—The Task Force shall—

9 ‘‘(1) in accordance with research agenda rec10 ommended under section 2801, coordinate and advise

11 tobacco-related research activities among Federal pub12 lic health service agencies;

13 ‘‘(2) collect and make available to States and

14 communities, through publication and other appro15 priate means, evidence-based tobacco-related research

16 results and recommendations and the practical appli17 cation of such results; and

18 ‘‘(3) report on a biennial basis to the Secretary

19 and the Committee on Labor and Human Resources

20 of the Senate, and the Committee on Commerce of the

21 House of Representatives on the current and planned

22 activities of participating Federal agencies;

23 ‘‘(e) RESEARCH ACTIVITIES.—The research activities

24 referred to in subsection (a) shall be designed to address

25 tobacco-related research priorities, and shall include—
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1 ‘‘(1) the development of effective strategies to pre2 vent the use of tobacco products among youth;

3 ‘‘(2) an outline of cost-effective, accessible, and

4 successful methods for tobacco use cessation among

5 adults and youths who want to quit;

6 ‘‘(3) the development of breakthroughs in the un7 derstanding of the effects on the human body of nico8 tine and other non-tobacco constituents of tobacco

9 products; and

10 ‘‘(4) the development of an enhanced ability to

11 prevent and treat tobacco-related diseases.

12 ‘‘SEC. 2803. RESEARCH ACTIVITIES OF THE CENTERS FOR

13 DISEASE CONTROL AND PREVENTION.

14 ‘‘(a) FUNDING.—There are authorized to be appro15 priated from the National Tobacco Settlement Trust Fund

16 established by section ƒ401 of the National Tobacco Policy

17 and Youth Smoking Reduction Act≈ 9512 of the Inter18 nal Revenue Code of 1986, other than from amounts

19 in the State Litigation Settlement Account, the following

20 amounts to carry out this section—

21 ‘‘(1) $450,000,000 for each of the first 3 fiscal

22 years after the date of enactment of the National To23 bacco Policy and Youth Smoking Reduction Act;

24 ‘‘(2) $505,000,000 for each of the 4th and 5th fis25 cal years after that date;
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1 ‘‘(3) $405,000,000 for each of the 6th and 7th fis2 cal years after that date;

3 ‘‘(4) $360,000,000 for each of the 8th and 9th fis4 cal years after that date; and

5 ‘‘(5) $305,000,000 for the 10th fiscal year after

6 that date.

7 ‘‘(b) DUTIES.—The Director of the Centers for Disease

8 Control and Prevention, working in consultation with Na9 tional Task Force, shall carry out tobacco-related surveil10 lance and epidemiologic studies and develop tobacco control

11 and prevention strategies under this section.

12 ‘‘(c) TRIGGER.—No expenditures shall be made under

13 this section during any fiscal year in which the annual

14 amount appropriated for the Centers for Disease Control

15 and Prevention is less than the amount so appropriated for

16 the prior fiscal year.

17 ‘‘SEC. 2804. RESEARCH ACTIVITIES OF THE NATIONAL IN18 STITUTES OF HEALTH.

19 ‘‘(a) FUNDING.—There are authorized to be appro20 priated, from amounts in the National Tobacco Settlement

21 Trust Fund established by section ƒ401 of the National To22 bacco Policy and Youth Smoking Reduction Act≈ 9512 of

23 the Internal Revenue Code of 1986, other than

24 from amounts in the State Litigation Settlement Account,
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1 to carry out this section $2,500,000,000 for each of the fiscal

2 years 1999 through 2008.

3 ‘‘(b) ESTABLISHMENT.—The Secretary shall establish,

4 within the Office of the Director of the National Institutes

5 of Health, a Tobacco-Related Research Initiative (referred

6 to in this section as the ‘tobacco initiative’) to be headed

7 by the Director.

8 ‘‘(c) EXPENDITURE OF FUNDS.—The Director of the

9 National Institutes of Health acting through the tobacco

10 initiative, and in consultation with the National Tobacco

11 Task Force, shall provide funds to conduct or support epide12 miological, behavioral, biomedical, and social science re13 search (including the training of researchers) related to the

14 prevention and treatment of tobacco addiction, and the pre15 vention and treatment of diseases associated with tobacco

16 use.

17 ‘‘(d) GUARANTEED MINIMUM.—Of the funds made

18 available to the National Institutes of Health under this

19 section, not less than 33 percent of such funds shall be used

20 to support epidemiological, behavioral, and social science

21 research related to the prevention and treatment of tobacco

22 addiction.

23 ‘‘(e) LIMITATION.—Except as may be necessary to

24 study one of the specific purposes described in subsection

25 (f), funds made available under subsection (d) shall not be
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1 used to support neurobiological research, or research in

2 which the behavior of an organism is observed for the pur3 pose of determining activity at the cellular or molecular

4 level.

5 ‘‘(f) NATURE OF RESEARCH.—Funds made available

6 under subsection (d) shall be used to conduct or support

7 research with respect to one or more of the following—

8 ‘‘(1) the epidemiology of tobacco use;

9 ‘‘(2) the etiology of tobacco use;

10 ‘‘(3) risk factors for tobacco use by children;

11 ‘‘(4) prevention of tobacco use by children, in12 cluding school and community-based programs, and

13 alternative activities;

14 ‘‘(5) the relationship between tobacco use, alcohol

15 abuse and illicit drug abuse;

16 ‘‘(6) behavioral and pharmacological smoking

17 cessation methods and technologies, including relapse

18 prevention;

19 ‘‘(7) the toxicity of tobacco products and their

20 ingredients;

21 ‘‘(8) the relative harmfulness of different tobacco

22 products;

23 ‘‘(9) environmental exposure to tobacco smoke;

24 ‘‘(10) the impact of tobacco use by pregnant

25 women on their fetuses; and
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1 ‘‘(11) the redesign of tobacco products to reduce

2 risks to public health and safety.

3 ‘‘(g) COORDINATION.—In carrying out tobacco-related

4 research under this section, the Director of the National In5 stitutes of Health, in coordination with the National To6 bacco Task Force, shall ensure appropriate coordination

7 with the research of other agencies, and shall avoid duplica8 tive efforts through all appropriate means, including

9 through the establishment of an Office of Tobacco-Related

10 Research.

11 ‘‘(h) OFFICE OF TOBACCO-RELATED RESEARCH.—

12 ‘‘(1) ESTABLISHMENT.—There is established

13 within the National Institutes of Health and Office of

14 Tobacco-Related Research (referred to in this sub15 section as the ‘Office’). The Office shall be headed by

16 a director to be appointed by the Secretary.

17 ‘‘(2) DUTIES.—The director of the Office shall—

18 ‘‘(A) in coordination with the National To19 bacco Task Force, identify tobacco-related re20 search projects that should be conducted or sup21 ported by the research institutes, and develop

22 such projects in cooperation with such institutes;

23 ‘‘(B) coordinate tobacco-related research

24 that is conducted or supported by the National

25 Institutes of Health;
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1 ‘‘(C) through the activities of the National

2 Tobacco Task Force, take steps to further co3 operation and collaboration between the insti4 tutes of the National Institutes of Health and

5 other Federal agencies with respect to tobacco-re6 lated research conducted or supported by such

7 agencies;

8 ‘‘(D) ensure compliance with the funding

9 levels described in subsection (d) and the limita10 tion described in subsection (e);

11 ‘‘(E) annually recommend to Congress the

12 allocation of anti-tobacco research funds among

13 the national research institutes; and

14 ‘‘(F) establish a clearinghouse for informa15 tion about tobacco-related research conducted by

16 governmental and non-governmental bodies.

17 ‘‘(3) ADMINISTRATION.—The Director of the Na18 tional Institutes of Health shall set-aside not less than

19 1 percent and not more than 3 percent of the funds

20 made available under subsection (d) to administer the

21 Office.

22 ‘‘(i) TRIGGER.—No expenditure shall be made under

23 subsection (a) during any fiscal year in which the annual

24 amount appropriated for the National Institutes of Health
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1 is less than the amount so appropriated for the prior fiscal

2 year.’’.

3 (b) RESEARCH ON MINORITY SMOKING AND TOBACCO4 RELATED DISEASES.—

5 Section 1707(b) of the Public Health Service Act (42

6 U.S.C. 300u–6(b)) is amended by striking ‘‘(b) DUTIES.—

7 The Secretary’’ and inserting the following:

8 ‘‘(b) DUTIES.—

9 ‘‘(1) IN GENERAL.—

10 ‘‘(A) INTERAGENCY COORDINATION.—With

11 respect to minority health activities of the Public

12 Health Service, and the National Institutes of

13 Health, a representative of the Office of Minority

14 Health within the Department of Health and

15 Human Services, a representative of the Office of

16 Minority Health within the National Institutes

17 of Health, and a representative of the Surgeon

18 General shall—

19 ‘‘(i) seek to assure coordination of re20 search, service delivery and inclusion of

21 community-based organizations related to

22 tobacco-related diseases, prevention, and ces23 sation programs for ethnic, socio-economic

24 and culturally-diverse populations;
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1 ‘‘(ii) monitor and report to Congress

2 biannually the amount of Federal funds

3 targeted for research related to minority to4 bacco-related diseases, research into effective

5 smoking cessation programs that are cul6 turally and linguistically appropriate,

7 health service delivery, and for community8 based organizations providing smoking pre9 vention and cessation services, and report

10 biannually to the Congress the demonstrated

11 effectiveness of these programs.’’.

12 ƒ(c) MEDICAID COVERAGE OF OUTPATIENT SMOKING

13 CESSATION AGENTS.—Paragraph (2) of section 1927(d) of

14 the Public Health Service Act (42 U.S.C. 1396r–8(d)) is

15 amended—

16 ƒ(1) by striking subparagraph (E) and redesig17 nating subparagraphs (F) through (J) as subpara18 graphs (E) through (I); and

19 ƒ(2) by striking ‘‘drugs.’’ in subparagraph (F),

20 as redesignated, and inserting ‘‘drugs, except agents,

21 approved by the Food and Drug Administration,

22 when used to promote smoking cessation.’’.≈

23 (c) ELIMINATION OF LIMITATION ON MEDIC24 AID COVERAGE OF SMOKING CESSATION

25 AGENTS.—Section 1927(d)(2) of the Social Secu-
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1 rity Act (42 U.S.C. 1396r–8(d)(2)) is amended by

2 striking subparagraph (E) and redesignating

3 subparagraphs (F) through (J) as subpara4 graphs (E) through (I), respectively.

5 SEC. 1107. BAN ON DISTRIBUTION OF TOBACCO PRODUCTS

6 PRODUCED BY CHILD LABOR.

7 Section 307 of the Tariff Act of 1930 (19 U.S.C. 1307)

8 is amended by inserting after ‘‘United States.’’ the follow9 ing: ‘‘The provisions of this section apply with equal force

10 to tobacco products produced or manufactured wholly or in

11 part in any foreign country by forced or/and inden12 tured child labor.’’.

13 Subtitle B—Federal Licensing of

14 Tobacco Product Distribution

15 SEC. 1121. LICENSING OF TOBACCO PRODUCT DISTRIBU16 TION.

17 (a) IN GENERAL.—Except for any retailer licensed

18 under section 224 of this Act, no domestic concern may en19 gage in the manufacture, or distribution of tobacco products

20 for sale, in the United States more than 1 year after the

21 date of enactment of this Act, either directly or through its

22 foreign subsidiaries, affiliates, joint ventures, or licensees,

23 unless it is licensed to do so by the Secretary.

24 ƒ(b) FEE.—
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1 ƒ(1) IN GENERAL.—The annual license fee shall

2 be $1 per every 1000 cigarettes manufactured, or dis3 tributed for sale, by a domestic concern either directly

4 or through its foreign subsidiaries, affiliates, joint

5 ventures, or licensees and an equivalent amount, as

6 established by the Secretary, for other tobacco prod7 ucts.

8 ƒ(2) CREDIT.—In any year, a domestic concern

9 shall receive as a credit towards that portion of its li10 cense fee under clause (i) which is attributable to the

11 manufacture of tobacco products subject to the Federal

12 excise tax under section 5701 of the Internal Revenue

13 Code of 1986 the amount of tax it paid under that

14 section.≈

15 (c) REGULATIONS.—Within 6 months after the date of

16 the enactment of this Act, the Secretary shall promulgate

17 regulations to implement the requirements of this section.

18 (d) PENALTY.—Any domestic concern which engages

19 in the manufacture of cigarettes or other tobacco products

20 either directly or through its foreign subsidiaries, affiliates,

21 joint ventures, or licensees without the license required by

22 subsection (a) shall be considered to have committed a pro23 hibited act under section 301 of the Federal Food, Drug,

24 and Cosmetic Act (21 U.S.C. 331).
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1 (e) DOMESTIC CONCERN DEFINED.—For purposes of

2 this section, the term ‘‘domestic concern’’ means—

3 (1) any individual who is a citizen, national, or

4 resident of the United States;

5 (2) any corporation, partnership, association,

6 joint-stock company, business trust, unincorporated

7 organization, or sole proprietorship which has its

8 principal place of business in the United States or

9 which is organized under the laws of a State of the

10 United States or a territory, possession, or common11 wealth of the United States; and

12 (3) includes any person engaged in the manufac13 ture, or distribution for sale, of cigarettes or other to14 bacco products on Indian lands.

15 Subtitle C—International

16 Provisions

17 ƒSEC. 1131. INTERNATIONAL TOBACCO CONTROL TRUST

18 FUND.

19 ƒ(a) ESTABLISHMENT.—There is established in the

20 Treasury an International Tobacco Control Trust Fund (re21 ferred to as the ‘‘International Trust Fund’’) which shall

22 be funded by the license fees collected under section 1121.

23 ƒ(b) USE OF INTERNATIONAL TRUST FUND.—Funds

24 from the International Trust Fund shall be available for

25 use as follows:
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1 ƒ(1) AMERICAN CENTER ON GLOBAL HEALTH

2 AND TOBACCO.—Annual funds of $150,000,000 may

3 be used from the International Trust Fund for the

4 American Center on Global Health and Tobacco as

5 provided in appropriation Acts.

6 ƒ(2) HEALTH AND HUMAN SERVICES.—The Sec7 retary of Health and Human Services may use the

8 funds deposited in the International Trust Fund for

9 grants and other forms of assistance to foreign gov10 ernments, nongovernmental organizations, and inter11 national organizations to support tobacco control ac12 tivities in foreign countries as provided in appropria13 tion Acts.

14 ƒ(3) ENFORCEMENT.—The Secretary may use

15 funds deposited in the International Trust Fund for

16 enforcement of any requirements related to the sale,

17 distribution, marketing, or promotion of tobacco

18 products internationally as provided in appropria19 tion Acts.

20 SEC. 1131. INTERNATIONAL ENFORCEMENT.

21 Funds appropriated from the National To22 bacco Settlement Trust Fund shall be avail23 able for use as follows:

24 (1) AMERICAN CENTER ON GLOBAL

25 HEALTH AND TOBACCO.—For the American
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1 Center on Global Health and Tobacco as

2 provided in appropriation Acts.

3 (2) HEALTH AND HUMAN SERVICES.—The

4 Secretary of Health and Human Services

5 may use such funds for grants and other

6 forms of assistance to foreign govern7 ments, nongovernmental organizations,

8 and international organizations to sup9 port tobacco control activities in foreign

10 countries as provided in appropriation

11 Acts.

12 (3) ENFORCEMENT.—The Secretary may

13 use such funds for enforcement of any re14 quirements related to the sale, distribu15 tion, marketing, or promotion of tobacco

16 products internationally as provided in

17 appropriation Acts.

18 SEC. 1132. AMERICAN CENTER ON GLOBAL HEALTH AND TO19 BACCO.

20 (a) FINDINGS AND PURPOSE.—

21 (1) FINDINGS.—Congress makes the following

22 findings:

23 (A) Tobacco use is estimated to have caused

24 nearly 3,000,000 deaths a year worldwide in the

25 early 1990’s, and is projected to cause in excess
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1 of 10,000,000 additional deaths a year globally

2 by 2030, more than any single disease. More

3 than 70 percent of those deaths are expected in

4 developing countries.

5 (B) Many countries are unprepared to ad6 dress increases in tobacco deaths, including the

7 impact on health systems and health costs. While

8 tobacco consumption in the United States and

9 other established market economies has fallen

10 over the last decade, consumption is rising in

11 China, India, East Asia, and former socialist

12 economies. Tobacco companies in the United

13 States and elsewhere have increasingly targeted

14 those markets.

15 (C) Tobacco use markedly reduces good

16 health and threatens to erode the major health

17 gains in life expectancy of the last century. Only

18 HIV/AIDS infection and tobacco are large and

19 growing causes of death and disease worldwide.

20 The total projected deaths from tobacco over the

21 next 10 years likely will exceed deaths from HIV/

22 AIDS, maternal and childhood conditions, and

23 tuberculosis combined.

24 (D) The United States consistently has pro25 vided leadership and funding to address the
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1 world’s most pressing public health needs, in2 cluding HIV/AIDS, hunger, maternal and child

3 health, and immunization.

4 (E) Through exports and overseas oper5 ations, United States tobacco companies sell

6 more cigarettes overseas than they do in the

7 United States. Foreign sales now account for

8 more than half of all sales for the 2 leading

9 United States tobacco product manufacturers.

10 (F) United States companies spend billions

11 of dollars on aggressive tobacco marketing cam12 paigns overseas that associate smoking with the

13 United States, affluence, freedom, and liberation.

14 In many markets, American companies reach

15 youthful audiences through television and radio

16 advertising, free samples, and other methods that

17 are outlawed in the United States.

18 (G) In light of the role the United States to19 bacco companies have played in spreading to20 bacco use globally, and in light of the large fi21 nancial benefits they continue to enjoy from to22 bacco exports, it is appropriate that this section

23 be enacted in order to provide assistance and

24 funding for international public education and
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1 mass media programs to inform the public about

2 the hazards of tobacco use.

3 (H) Smoking in United States films is per4 vasive and influences persons in other countries

5 who seek to emulate ‘‘American activities’’ de6 picted in motion pictures. According to one

7 study, more than half of the top-grossing United

8 States films released between 1991 and 1996 ex9 hibited smoking. In these films, 80 percent of the

10 male lead characters and 27 percent of the fe11 male characters smoked. The motion picture in12 dustry is painting a distorted picture that smok13 ing is a truly American activity.

14 (2) PURPOSE.—The purpose of this section is to

15 establish the American Center on Global Health and

16 Tobacco (herein after referred to as ‘‘ACT’’). ACT

17 shall assist organizations in other countries to reduce

18 and prevent the use of tobacco. Activities ACT shall

19 support include—

20 (A) public education programs that inform

21 the public about the hazards of tobacco use and

22 of environmental tobacco smoke;

23 (B) mass media campaigns, including paid

24 counter-tobacco advertisements, to reverse the

25 image appeal of pro-tobacco messages, especially
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1 those that glamorize and ‘‘Westernize’’ tobacco

2 use to young people; and

3 (C) education about the economic and soci4 etal costs of tobacco use, and effective tobacco use

5 prevention and cessation strategies that are ap6 propriate for the country involved.

7 (b) ESTABLISHMENT.—

8 (1) IN GENERAL.—There is hereby established in

9 the District of Columbia a private, nonprofit corpora10 tion to be known as the American Center on Global

11 Health and Tobacco. ACT shall—

12 (A) not be an agency or establishment of the

13 United States; and

14 (B) except as otherwise provided in this sec15 tion, be subject to, and have all the powers con16 ferred upon a nonprofit corporation by the Dis17 trict of Columbia Nonprofit Corporation Act

18 (D.C. Code section 29–501 et seq.).

19 (2) RELATION TO UNITED STATES.—Nothing in

20 this section shall be construed as making ACT an

21 agency or establishment of the United States, or as

22 making the members of the Board of ACT, or its em23 ployees, officers or employees of the United States.

24 (3) RELATION TO NONGOVERNMENTAL ORGANIZA25 TIONS.—ACT shall have a limited staff, and, to the
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1 maximum extent practicable, utilize the available ex2 perience and talents of nongovernmental organiza3 tions with specialized experience in health, education,

4 media, and tobacco.

5 (4) GOVERNING BOARD.—ACT shall be governed

6 by a board of up to 25 members including—

7 (A) on a bipartisan basis, Members of the

8 Senate and of the House of Representatives;

9 (B) the heads of American public health or10 ganizations;

11 (C) the heads of American media, market12 ing, and other nongovernment institutions and

13 corporations; and

14 (D) individuals active in education, public

15 health, and other relevant activities.

16 (5) INTERNATIONAL ADVISORY COUNCIL.—An

17 International Advisory Council consisting of rep18 resentatives from key global, regional, and national

19 public health organizations, and leading individual

20 educators and health professionals shall provide advi21 sory assistance to ACT.

22 (c) FUNDING.—Subject to apppriations, there

23 are authorized to be appropriated from the

24 National Tobacco Settlement Trust Fund,

25 other than amounts in the State Litigation
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1 Settlement Account, such sums as may be nec2 essary to carry out this section.

3 ƒ(1) DEFINITION OF TRUST FUND.—In this sec4 tion, the term ‘‘Trust Fund’’ means the National To5 bacco Settlement Trust Fund established by section

6 401 of this Act, other than amounts in the State Liti7 gation Settlement Account.

8 ƒ(2) ESTABLISHMENT OF GLOBAL PUBLIC

9 HEALTH AND EDUCATION RESOURCE ACCOUNT.—

10 There is established within the Trust Fund the Global

11 Public Health and Education Resource Account that

12 shall be credited with $150,000,000 for each fiscal

13 year.

14 ƒ(3) TRANSFER AUTHORITY.—The Secretary of

15 the Treasury shall on October 1 of each fiscal year be16 ginning after the date of enactment of this section,

17 transfer $150,000,000 from the Global Public Health

18 and Education Resource Account of the Trust Fund

19 to the account of ACT to carry out the activities au20 thorized under this section.

21 ƒ(4) TERMINATION OF TRANSFER AUTHORITY.—

22 The authority of the Secretary of the Treasury to

23 transfer funds from the Trust Fund shall expire with

24 the expiration of the Trust Fund.≈
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1 (d) REQUIREMENTS FOR ELIGIBILITY FOR ANNUAL

2 TRANSFERS FROM THE TRUST FUND.—

3 (1) OVERSIGHT.—ACT and its grantees shall be

4 subject to the oversight and supervision of Congress,

5 and shall annually submit a report of its activities to

6 Congress in accordance with paragraph (5)(A)(iii).

7 (2) COMPLIANCE.—

8 (A) FUNDING CONTINGENT ON COMPLI9 ANCE.—Annual payments from the Trust Fund

10 may be made to ACT under this section only if

11 ACT complies with the requirements specified in

12 this section.

13 (B) USE OF FUNDS.—ACT may only fund

14 programs for private sector groups, and may not

15 carry out programs directly. ACT may provide

16 funding only for programs which are consistent

17 with the purposes of this section.

18 (3) SALARIES AND COMPENSATION.—

19 (A) NO OTHER SOURCE OF COMPENSA20 TION.—Officers and employees of ACT may not

21 receive any salary or other compensation from

22 any source other than ACT for services per23 formed for ACT.

24 (B) UNITED STATES OFFICERS AND EM25 PLOYEES.—An individual who is an officer or
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1 employee of the United States who also serves on

2 the Board of Directors or as an officer or em3 ployee of ACT, may not receive any compensa4 tion or travel expenses in connection with serv5 ices performed for ACT.

6 (4) STOCKS AND DIVIDENDS.—ACT shall not

7 issue any shares of stock or declare or pay any divi8 dends.

9 (5) AUDITS.—

10 (A) INDEPENDENT PUBLIC ACCOUNTANTS.—

11 (i) IN GENERAL.—The accounts of ACT

12 shall be audited annually in accordance

13 with generally accepted auditing standards

14 by independent certified public accountants

15 or independent licensed public accountants

16 certified or licensed by a regulatory author17 ity of a State or other political subdivision

18 of the United States. The audits shall be

19 conducted at the place or places where the

20 accounts of ACT are normally kept. All

21 books, accounts, financial records, reports,

22 files, and all other papers, things, or prop23 erty belonging to or in use by ACT and nec24 essary to facilitate the audits shall be made

25 available to the person or persons conduct-
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1 ing the audits, and full facilities for verify2 ing transactions with any assets held by de3 positories, fiscal agents, and custodians

4 shall be afforded to such person or persons.

5 (ii) CONTENT OF AUDIT.—The report

6 of each audit conducted under clause (i)

7 shall be included in the annual report re8 quired under this subsection. The audit re9 port shall set forth the scope of the audit

10 and include such statements as are nec11 essary to present fairly ACT’s assets and li12 abilities, surplus or deficit, with an analy13 sis of the changes therein during the year,

14 supplemented in reasonable detail by a

15 statement of the income and expenses of

16 ACT during the year, and a statement of

17 the application of funds, together with the

18 independent auditor’s opinion of those state19 ments.

20 (iii) REPORT.—Not later than Decem21 ber 31 of each year, ACT shall submit an

22 annual report for the preceding fiscal year

23 to the President for transmittal to Congress.

24 The report shall include a comprehensive

25 and detailed report of ACT’s operations, ac-
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1 tivities, financial condition, and accom2 plishments under this section and may in3 clude such recommendations as ACT deems

4 appropriate.

5 (B) COMPTROLLER GENERAL.—

6 (i) IN GENERAL.—The financial trans7 actions of ACT for each fiscal year may be

8 audited by the Comptroller General in ac9 cordance with such principles and proce10 dures and under such rules and regulations

11 as the Comptroller General may prescribe.

12 Any such audit shall be conducted at the

13 place or places where accounts of ACT are

14 normally kept. The Comptroller General

15 shall have access to all books, accounts,

16 records, reports, files, and all other papers,

17 things, or property belonging to or in use by

18 ACT pertaining to its financial trans19 actions and necessary to facilitate the audit.

20 All books, accounts, records, reports, files,

21 papers, and property of ACT shall remain

22 in the possession and custody of ACT.

23 (ii) REPORT.—A report of each audit

24 shall be made by the Comptroller General to

25 Congress. A copy of each report shall be fur-
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1 nished to the President and to ACT at the

2 time the report is submitted to Congress.

3 (6) RECORDKEEPING.—

4 (A) IN GENERAL.—ACT shall ensure that

5 each recipient of assistance from ACT under this

6 section keeps such records as may be reasonably

7 necessary to fully disclose the amount and the

8 disposition by such recipient of the proceeds of

9 such assistance, the total cost of the project or

10 undertaking in connection with which such as11 sistance is given or used, and the amount and

12 nature of that portion of the cost of the project

13 or undertaking supplied by other sources, and

14 such other records as will facilitate an effective

15 audit.

16 (B) ACCESS.—ACT shall ensure that it, or

17 any of its duly authorized representatives, shall

18 have access for the purpose of audit and exam19 ination to any books, documents, papers, and

20 records of each recipient of assistance from ACT

21 that are pertinent to assistance provided through

22 ACT under this section.
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1 SEC. 1133. PROHIBITION ON USE OF FUNDS TO FACILITATE

2 THE EXPORTATION OR PROMOTION OF TO3 BACCO.

4 ƒ(a) IN GENERAL.—Notwithstanding any other provi5 sion of law, no funds made available by appropriations or

6 otherwise made available may be used by any officer, em7 ployee, department, or agency of the United States—

8 ƒ(1) to promote or encourage the export, re-ex9 port, sale, manufacture, advertising, promotion, dis10 tribution, or use of tobacco or tobacco products to or

11 in a foreign country; or

12 ƒ(2) to seek, through negotiation or otherwise,

13 the removal or reduction by any foreign country of

14 any restriction or proposed restriction in that coun15 try on the importation, export, re-export, sale, manu16 facture, advertising, promotion, distribution, packag17 ing, labeling, use, content, imposition of tariffs, or

18 taxation, of tobacco or tobacco products.

19 ƒ(b) EXCEPTION.—Subsection (a)(2) shall not apply

20 to any restriction or proposed restriction by a foreign coun21 try if—

22 ƒ(1) the restriction is applied in a manner

23 which constitutes a means of arbitrary or unjustifi24 able discrimination between countries;

25 ƒ(2) the Secretary of Commerce certifies in writ26 ing to Congress that the restriction is being applied
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1 in a manner that constitutes a means of arbitrary or

2 unjustifiable discrimination between countries; and

3 ƒ(3) the Secretary of Health and Human Serv4 ices certifies to Congress in writing that the restric5 tion is not a reasonable means of protecting the pub6 lic health.

7 ƒ(c) DEFINITION.—In this section, the term ‘‘arbitrary

8 or unjustifiable discrimination’’ means a restriction or pro9 posed restriction by a foreign country that—

10 ƒ(1) is arbitrary or unjustifiable; and

11 ƒ(2) does not adhere to the principle of national

12 treatment and applies less favorable treatment to

13 goods that are imported into that country than the

14 country applies to like goods that are the product,

15 growth, or manufacture of that country.≈

16 No officer, employee, department, or agen17 cy of the United States may promote the sale

18 or export of tobacco or tobacco products, or

19 seek the reduction or removal of any foreign

20 country restrictions on the marketing of to21 bacco or tobacco products, if the restrictions

22 are applied in a nondiscriminatory manner.

23 Nothing in this section shall apply to any min24 isterial or clerical functions performed by any
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1 officer, employee, department, or agency of the

2 United States.

3 ƒSEC. 1134. HARMONIZATION WITH UNITED STATES INTER4 NATIONAL COMMITMENTS AND OBLIGA5 TIONS.

6 ƒThe United States Trade Representative shall report

7 to the Congress within 90 days after the date of enactment

8 of this Act on any provisions of this Act that are inconsist9 ent with obligations of the United States under treaties or

10 other international agreements to which it is a signatory,

11 including any treaty pending ratification, together with

12 recommendations as to how to implement or modify the

13 provision without violating international law.≈

14 Subtitle D—Prevention of Tobacco

15 Smuggling

16 SEC. 1141. DEFINITIONS.

17 (a) INCORPORATION OF CERTAIN DEFINITIONS.—In

18 this subtitle, the terms ‘‘cigar’’, ‘‘cigarette’’, ‘‘person’’, ‘‘pipe

19 tobacco’’, ‘‘smokeless tobacco’’, ‘‘State’’, ‘‘tobacco product’’,

20 and ‘‘United States’’ shall have the meanings given such

21 terms in sections 5702(a), 5702(b), 7701(a)(1), 5702(o),

22 5702(n)(1), 3306(j)(1), 5702(c), and 3306(j)(2) respectively

23 of the Internal Revenue Code of 1986.

24 (b) OTHER DEFINITIONS.—In this subtitle:
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1 (1) AFFILIATE.—The term ‘‘affiliate’’ means any

2 one of 2 or more persons if 1 of such persons has ac3 tual or legal control, directly or indirectly, whether by

4 stock ownership or otherwise, of the other or others of

5 such persons, and any one of 2 or more persons sub6 ject to common control, actual or legal, directly or in7 directly, whether by stock ownership or otherwise.

8 (2) INTERSTATE OR FOREIGN COMMERCE.—The

9 term ‘‘interstate or foreign commerce’’ means com10 merce between any State and any place outside there11 of, or commerce within any Territory or the District

12 of Columbia, or between points within the same State

13 but through any place outside thereof.

14 (3) SECRETARY.—The term ‘‘Secretary’’ means

15 the Secretary of the Treasury.

16 (4) PACKAGE.—The term ‘‘package’’ means the

17 innermost sealed container irrespective of the mate18 rial from which such container is made, in which a

19 tobacco product is placed by the manufacturer and in

20 which such tobacco product is offered for sale to a

21 member of the general public.

22 (5) RETAILER.—The term ‘‘retailer’’ means any

23 dealer who sells, or offers for sale, any tobacco product

24 to any person other than a wholesaler.
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1 SEC. 1142. TOBACCO PRODUCT LABELING REQUIREMENTS.

2 (a) IN GENERAL.—It shall be unlawful for any person

3 to sell or ship or deliver for sale or shipment, or otherwise

4 introduce in interstate or foreign commerce, or to receive

5 therein, or to remove from customs custody for use, any to6 bacco product unless such product is packaged and labeled

7 in conformity with this section.

8 (b) LABELING.—

9 (1) IDENTIFICATION.—Not later than 1 year

10 after the date of enactment of this subtitle, the Sec11 retary shall promulgate regulations that require each

12 manufacturer of tobacco products to legibly print a

13 unique serial number on all packages of tobacco prod14 ucts manufactured for sale or distribution. Such se15 rial number shall be designed to enable the Secretary

16 to identify the manufacturer of the product, and the

17 location and date of manufacture. The Secretary shall

18 determine the size and location of the serial number.

19 (2) COUNTRY OF FINAL DESTINATION.—Each

20 package of a tobacco product that is exported shall be

21 labeled with the name of the country of final destina22 tion. The Secretary shall promulgate regulations to

23 determine the size and location of the label and under

24 what circumstances a waiver of this paragraph shall

25 be granted.
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1 (c) PROHIBITION ON ALTERATION.—It shall be unlaw2 ful for any person to alter, mutilate, destroy, obliterate, or

3 remove any mark or label required under this subtitle upon

4 a tobacco product in or affecting commerce, except as au5 thorized by Federal law or except under regulations of the

6 Secretary authorizing relabeling for purposes of compliance

7 with the requirements of this section or of State law.

8 SEC. 1143. REQUIREMENTS FOR THE TRACKING OF TO9 BACCO PRODUCTS.

10 (a) POSTING OF BOND.—

11 (1) IN GENERAL.—It shall be unlawful for any

12 person to export any tobacco product unless such per13 son—

14 (A) has posted with the Secretary a tobacco

15 product bond in accordance with this section for

16 such product that contains a disclosure of the

17 country to which such product will be exported;

18 and

19 (B) receives a written statement from the

20 recipient of the tobacco products involved that

21 such person—

22 (i) will not knowingly and willfully

23 violate any law or regulation of such coun24 try with respect to such products; and
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1 (ii) has never been convicted of any of2 fense with respect to tobacco products.

3 (2) REGULATIONS.—The Secretary shall promul4 gate regulations that determine the frequency and the

5 amount of each bond that must be posted under para6 graph (1), but in no case shall such amount be less

7 than an amount equal to the Federal tax imposed

8 under chapter 52 of the Internal Revenue Code of

9 1986 on the value of the shipment of the products in10 volved if such products were consumed within the

11 United States.

12 (b) RETURN OF BOND.—The Secretary shall return a

13 bond posted under subsection (a) upon a determination by

14 the Secretary (based on documentation provided by the per15 son who posted the bond in accordance with regulations

16 promulgated by the Secretary) that the tobacco products to

17 which the bond applies have been received in the country

18 of final destination as designated in the bond.

19 SEC. 1144. TOBACCO PRODUCT PERMITS.

20 (a) IN GENERAL.—Not later than 1 year after the date

21 of enactment of this Act, the Secretary shall establish a pro22 gram under which tobacco product permits are issued to

23 persons (desiring to sell or ship, or deliver for sale or ship24 ment, or otherwise introduce in interstate or foreign com-
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•S 1415 RS2

1 merce, or to receive therein, or to remove from customs cus2 tody for use, any tobacco product).

3 (b) CONDITIONS.—The issuance of a permit to a to4 bacco product manufacturer under this section shall be con5 ditioned upon the compliance of the manufacturer with the

6 requirements of this subtitle.

7 (c) REVOCATION, SUSPENSION, AND ANNULMENT.—

8 The program established under subsection (a) shall permit

9 the Secretary to revoke, suspend, or annul a permit issued

10 under this section if the Secretary determines that the terms

11 or conditions of the permit have not been complied with.

12 Prior to any action under this subsection, the Secretary

13 shall provide the permittee with due notice and the oppor14 tunity for a hearing.

15 (d) RECORDS AND AUDITS.—The Secretary shall,

16 under the program established under subsection (a), require

17 permit holders to keep records concerning the chain of cus18 tody of the tobacco products that are the subject of the per19 mit and make such records available to the Secretary for

20 inspection and audit.

21 (e) RETAILERS.—This section shall not apply to retail22 ers of tobacco products, except that retailers shall maintain

23 commercial records of receipt, and such records shall be

24 available to the Secretary for inspection and audit.
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1 SEC. 1145. PROHIBITIONS.

2 ƒ(a) IMPORTATION AND SALE.—It shall be unlawful,

3 except under a permit issued by the Secretary under section

4 1144—

5 ƒ(1) to engage in the business of importing into

6 the United States tobacco products; or

7 ƒ(2) for any person so engaged to sell, offer, or

8 deliver for sale, contract to sell, or ship, in or affect9 ing commerce, directly or indirectly or through affili10 ate, tobacco products so imported.

11 ƒ(b) MANUFACTURE AND SALE.—It shall be unlawful,

12 except under a permit issued by the Secretary under section

13 1144—

14 ƒ(1) to engage in the business of manufacturing,

15 packaging or warehousing tobacco products; or

16 ƒ(2) for any person so engaged to sell, offer, or

17 deliver for sale, contract to sell, or ship, in interstate

18 or foreign commerce, directly or indirectly or through

19 an affiliate, tobacco products so manufactured, pack20 aged or warehoused.

21 ƒ(c) WHOLESALE.—It shall be unlawful, except under

22 a permit issued by the Secretary under section 1144—

23 ƒ(1) to engage in the business of purchasing for

24 resale at wholesale tobacco products, or, as a prin25 cipal or agent, to sell, offer for sale, negotiate for, or

26 hold out by solicitation, advertisement, or otherwise
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1 as selling, providing, or arranging for, the purchase

2 for resale at wholesale of tobacco products; or

3 ƒ(2) for any person so engaged to receive or sell,

4 offer or deliver for sale, contract to sell, or ship, in

5 or affecting commerce, directly or indirectly or

6 through an affiliate, tobacco products so purchased.

7 ƒ(d) EFFECTIVE DATE.—The provisions of this section

8 shall become effective on the date that is 180 days after the

9 date of enactment of this Act.≈

10 (a) IN GENERAL.—It shall be unlawful, ex11 cept pursuant to a permit issued by the Sec12 retary under section 1144—

13 (1) to engage in the business of im14 porting into the United States, manufac15 turing, packaging, warehousing, or pur16 chasing for resale at wholesale tobacco

17 products, or, as a principal or agent, to

18 sell, offer for sale, negotiate for, or hold

19 out by solicitation, advertisement, or oth20 erwise as selling, providing, or arranging

21 for, the purchase for resale at wholesale

22 of tobacco products; or

23 (2) for any person engaged in a busi24 ness described in paragraph (1) to receive

25 or sell, offer or deliver for sale, contract to
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•S 1415 RS2

1 sell, or ship, in or affecting commerce, di2 rectly or indirectly or through an affili3 ate, tobacco products.

4 (b) EFFECTIVE DATE.—The provisions of this

5 section shall become effective on the date that

6 is 180 days after the date of enactment of this

7 Act.

8 SEC. 1146. PRICING AND LABELING OF PRODUCTS SOLD ON

9 MILITARY INSTALLATIONS OR BY NATIVE

10 AMERICANS.

11 (a) MILITARY INSTALLATIONS.—

12 (1) IN GENERAL.—The Secretary, in consultation

13 with the Secretary of Defense, shall promulgate regu14 lations that ensure that the price charged for a to15 bacco product sold on a military installation (as de16 fined in section 2801(c)(2) of title 10, United States

17 Code) is equal to—

18 (A) the average price for which such prod19 uct is sold in the metropolitan area immediately

20 bordering the military installation; or

21 (B) the highest price (inclusive of Federal or

22 State taxes) for which such product is sold on

23 military installations located in the United

24 States;

25 whichever is greater.
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1 (2) LABEL.—The regulations under paragraph

2 (1) shall require that each package of a tobacco prod3 uct that is sold on a military installation be labeled

4 as such. Such regulations shall include requirements

5 for the size and location of the label.

6 (b) INDIAN TRIBES.—The Secretary, in consultation

7 with the Secretary of Interior, shall promulgate regulations

8 that require that each package of a tobacco product that

9 is sold on an Indian reservation (as defined in section

10 403(9) of the Indian Child Protection and Family Violence

11 Prevention Act (25 U.S.C. 3202(9))) be labeled as such.

12 Such regulations shall include requirements for the size and

13 location of the label.

14 SEC. 1147. PROHIBITION AGAINST SALE OF TOBACCO PROD15 UCTS IN OR TO DUTY-FREE SHOPS OR FOR16 WARDING THROUGH OR MANUFACTURE IN

17 TRADE ZONES.

18 (a) DUTY-FREE SHOPS.—It shall be unlawful for any

19 person to sell a tobacco product—

20 (1) in any duty-free shop located within the

21 United States; or

22 (2) to any duty-free shop.

23 (b) TRADE ZONES.—No person may forward through

24 or manufacture a tobacco product in any foreign trade zone,
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1 as defined for purposes of the Act of June 18, 1934 (19

2 U.S.C. 81a et seq.).

3 SEC. 1148. JURISDICTION; PENALTIES; COMPROMISE OF LI4 ABILITY.

5 (a) JURISDICTION.—The District Courts of the United

6 States, and the United States court for any Territory, of

7 the District where the offense is committed or of which the

8 offender is an inhabitant or has its principal place of busi9 ness, are vested with jurisdiction of any suit brought by

10 the Attorney General in the name of the United States, to

11 prevent and restrain violations of any of the provisions of

12 this subtitle.

13 (b) PENALTIES.—The provisions of section 3571 of

14 title 18, United States Code, shall apply to any person con15 victed of violating any of the provisions of this subtitle as

16 if such person were convicted of a felony under such title.

17 (c) COMPROMISE OF LIABILITY.—The Secretary is au18 thorized, with respect to any violation of this subtitle, to

19 compromise the liability arising with respect to a violation

20 of this subtitle—

21 (1) upon payment of a sum not in excess of

22 $10,000 for each offense, to be collected by the Sec23 retary and to be paid into the Treasury as mis24 cellaneous receipts; and
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1 (2) in the case of repetitious violations and in

2 order to avoid multiplicity of criminal proceedings,

3 upon agreement to a stipulation, that the United

4 States may, on its own motion upon 5 days’ notice

5 to the violator, cause a consent decree to be entered

6 by any court of competent jurisdiction enjoining the

7 repetition of such violation.

8 SEC. 1149. AMENDMENTS TO THE CONTRABAND CIGARETTE

9 TRAFFICKING ACT.

10 (a) DEFINITIONS.—Section 2341 of title 18, United

11 States Code, is amended—

12 (1) in paragraph (2)—

13 (A) by striking ‘‘60,000’’ and inserting

14 ‘‘30,000’’; and

15 (B) by inserting after ‘‘payment of cigarette

16 taxes,’’ the following: ‘‘or in the case of a State

17 that does not require any such indication of tax

18 payment, if the person in possession of the ciga19 rettes is unable to provide any evidence that the

20 cigarettes are moving legally in interstate com21 merce,’’; and

22 (2) in paragraph (4), by striking ‘‘and’’ at the

23 end;

24 (3) in paragraph (5), by striking the period and

25 inserting a semicolon; and
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1 (4) by adding at the end the following:

2 ‘‘(6) the term ‘tobacco product’ means cigars,

3 cigarettes, smokeless tobacco, and pipe tobacco (as

4 such terms are defined in section 5701 of the Internal

5 Revenue Code of 1986); and

6 ‘‘(7) the term ‘contraband tobacco product’

7 means a quantity in excess of 30,000 of any tobacco

8 product that is manufactured, sold, shipped, deliv9 ered, transferred, or possessed in violation of Federal

10 laws relating to the distribution of tobacco products.’’.

11 (b) UNLAWFUL ACTS.—Section 2342 of title 18, United

12 States Code, is amended—

13 (1) in subsection (a), by inserting ‘‘or contra14 band tobacco products’’ before the period;

15 (2) in subsection (b)—

16 (A) by striking ‘‘cigarettes’’ and inserting

17 ‘‘tobacco products’’;

18 (B) by striking ‘‘60,000’’ and inserting

19 ‘‘30,000’’; and

20 (C) by inserting before the period the follow21 ing: ‘‘or knowingly to fail to maintain distribu22 tion records, alter or obliterate required mark23 ings, or interfere with any inspection as required

24 with respect to such quantity of tobacco prod25 ucts’’; and
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1 (3) by adding at the end the following:

2 ‘‘(c) It shall be unlawful for any person knowingly to

3 transport tobacco products under a false bill of lading or

4 without any bill of lading.’’.

5 (c) RECORDKEEPING.—Section 2343 of title 18, United

6 States Code, is amended—

7 (1) by striking ‘‘cigarettes’’ each place that such

8 appears and inserting ‘‘tobacco products’’;

9 (2) in subsection (a), by striking ‘‘60,000’’ and

10 inserting ‘‘30,000’’;

11 (3) in subsection (b), by striking ‘‘60,000’’ and

12 inserting ‘‘30,000’’.

13 (d) PENALTIES.—Section 2344 of title 18, United

14 States Code, is amended—

15 (1) in subsection (c), by inserting ‘‘or contra16 band tobacco products’’ after ‘‘cigarettes’’; and

17 (2) by adding at the end the following:

18 ‘‘(d) Any proceeds from the unlawful distribution of

19 tobacco products shall be subject to seizure and forfeiture

20 under section 981(a)(1)(C).’’.

21 SEC. 1150. AUTHORIZATION OF APPROPRIATIONS.

22 There are authorized to be appropriated such sums as

23 may be necessary to carry out this subtitle.
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1 Subtitle E—Antitrust Exemption

2 SEC. 1161. LIMITED ANTITRUST EXEMPTION.

3 (a) IN GENERAL.—The antitrust laws of the United

4 States (as defined in section 1 of the Clayton Act (15 U.S.C.

5 12) and any other statute in pari materia, and any similar

6 law of a State, do not apply to the joint discussion, consid7 eration, review, action, agreement, or understanding by or

8 among any participating tobacco product manufacturers,

9 for the purposes of, and limited to—

10 (1) entering into and complying with the Proto11 col, Trust Agreement, or Consent Decree;

12 (2) refusing to deal with a distributor, retailer,

13 or other seller of tobacco products who distributes such

14 products for sale to, or offers for sale or sells such

15 products to, underage persons, or who otherwise fails

16 to comply with the applicable requirements of the Act,

17 the Protocol, or Consent Decree; or

18 (3) submitting an application relating to a plan

19 or program of the type referred to in subsection (b)

20 of this section or, entering into, complying with or

21 otherwise carrying out the terms of, any plan or pro22 gram that has been approved under subsection (b) of

23 this section.

24 (b) APPROVAL BY ATTORNEY GENERAL.—The Attorney

25 General of the United States is authorized to approve, upon
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1 application by one or more participating tobacco product

2 manufacturers, plans, or programs to reduce the use of to3 bacco products by underage individuals. Before approving

4 any such plan or program, the Attorney General shall deter5 mine that approval is appropriate as part of the effort to

6 reduce the use of tobacco products by underage individuals

7 and will not have the effect of unduly restraining competi8 tion. The Attorney General shall approve or disapprove any

9 such application in writing within 90 days from the date

10 it is received by the Department of Justice. Upon written

11 withdrawal by the Attorney General of any approval under

12 this subsection, the provisions of subsection (a)(3) shall not

13 apply to any subsequent act or omission with respect to

14 the plan or program to which the approval related.

15 Subtitle F—Special Provisions Con16 cerning Programs for Women,

17 Minorities, and Others

18 SEC. 1171. RESEARCH RELATED TO PATTERNS OF SMOKING

19 BY WOMEN AND MINORITIES.

20 (a) RESEARCH DESIGN CRITERIA.—Any research

21 funded under this Act, or under any amendment made by

22 this Act, that is conducted for the purpose of investigating

23 factors affecting tobacco use and patterns of smoking, shall

24 if appropriate to the scope and purpose of the investigation
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•S 1415 RS2

1 include data and analysis with respect to different factors

2 that may be present in the case of women or minorities.

3 (b) PATTERNS OF SMOKING.—Research funded under

4 this Act, or under any amendment made by this Act, exam5 ining patterns of smoking among minorities should be con6 ducted in proportion to their prevalence in the smoking

7 population and shall be conducted at minority education

8 institutions, where available, or institutions that provide

9 the greatest amount of health care to minority populations

10 in a State.

11 SEC. 1172. COUNTER-ADVERTISING PROGRAMS.

12 (a) IN GENERAL.—The Secretary shall carry out pro13 grams to reduce tobacco usage through media-based (such

14 as counter-advertising campaigns) and nonmedia-based

15 education, prevention, and cessation campaigns designed to

16 discourage the use of tobacco products by individuals and

17 to encourage those who use such products to quit. Such pro18 grams shall target, in a culturally and linguistically appro19 priate manner, adults, children, women, and minorities

20 who have been targeted by tobacco industry advertising.

21 (b) ELIGIBILITY.—To be eligible to receive assistance

22 under this section an entity or individual shall prepare and

23 submit to the Secretary an application at such time, in

24 such manner, and containing such information as the Sec25 retary may require.
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1 (c) USE OF FUNDS.—Amounts received by an individ2 ual or entity under this section shall be used to carry out

3 activities under the programs established under subsection

4 (a). Such amounts may be used to design and implement

5 such activities and to conduct research concerning the effec6 tiveness of such programs.

7 (d) FUNDING.—There are authorized to be appro8 priated from the National Tobacco Settlement Trust Fund

9 ƒestablished by section 401≈, other than from amounts not

10 in the State Litigation Settlement Account, or otherwise ob11 ligated under this Act such sums as are necessary to carry

12 out the provisions of this section.

13 SEC. 1173. PREVENTION ACTIVITIES OF COMMUNITY AND

14 MIGRANT HEALTH CENTERS.

15 (a) FUNDING.—There are authorized to be appro16 priated from the National Tobacco Settlement Trust Fund

17 ƒestablished by section 401≈, other than from amounts in

18 the State Litigation Settlement Account, ƒof this Act

19 $300,000,000≈ for each of the first 10 fiscal years beginning

20 after the date of enactment of this Act to carry out the pro21 visions of subsection (b).

22 (b) PROGRAM.—The Secretary shall make amounts

23 made available under subsection (a) available to Commu24 nity, Migrant, and Homeless Health Centers receiving

25 grants under section 330 of the Public Health Service Act
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1 (42 U.S.C. 254c) to provide health services for diseases re2 lated to tobacco and to prevent tobacco-related diseases.

3 (c) LIMITATION.—No amount may be expended or obli4 gated under subsection (b) for any fiscal year in which the

5 annual amount appropriated for Community, Migrant,

6 and Homeless Health Centers is less than the amount ap7 propriated for the previous fiscal year.

8 Subtitle G—Sense of the Senate

9 SEC. 1181. SENSE OF THE SENATE.

10 It is the sense of the Senate that the proceeds of this

11 Act may be used for purposes including, but not limited

12 to—

13 (1) reimbursing public health care financing

14 programs for tobacco-related costs, including Medi15 care;

16 (2) supporting tobacco use prevention and ces17 sation, particularly with respect to youth, including

18 counter-advertising at the Federal, State, Tribal, and

19 local level;

20 (3) supporting tobacco-related health services re21 search activities;

22 (4) assisting tobacco farmers and tobacco de23 pendent communities;
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1 (5) creating, and fully and adequately funding,

2 a Tobacco Asbestos Trust to assist victims of the

3 unique harm that smoking causes to asbestos workers;

4 (6) settling with and reimbursing States for to5 bacco-related health care costs and damages, includ6 ing Medicaid;

7 (7) providing funding for the Federal Black

8 Lung Program;

9 (8) providing funding for child care and early

10 childhood development;

11 (9) providing funding for veterans’ benefit pro12 grams; and

13 (10) providing funding for clinical trials at the

14 National Institutes of Health.

15 Subtitle H—Ban On Sale Of To16 bacco Products Through The Use

17 Of Vending Machines

18 SEC. 1191. BAN OF SALE OF TOBACCO PRODUCTS THROUGH

19 THE USE OF VENDING MACHINES.

20 (a) BAN OF SALE OF TOBACCO PRODUCTS THROUGH

21 THE USE OF VENDING MACHINES.—Effective 12 months

22 after the date of enactment of this Act, it shall be unlawful

23 to sell tobacco products through the use of a vending ma24 chine.
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•S 1415 RS2

1 (b) COMPENSATION FOR BANNED VENDING MA2 CHINES.—

3 (1) IN GENERAL.—The owners and operators of

4 tobacco vending machines shall be reimbursed for the

5 fair market value of their businesses, including the

6 cost of banned vending machines, compensation for

7 lost profits, unexpired contracts, and for the owner’s

8 or operator’s plant and equipment related only to the

9 production of tobacco vending machines.

10 (2) TOBACCO VENDING REIMBURMENT CORPORA11 TION.—

12 (A) CORPORATION.—Reimbursment shall be

13 directed through a private, nonprofit corporation

14 established in the District of Columbia, known as

15 the Tobacco Vending Reimburment Corporation

16 (in this section referred to as the ‘‘Corporation’’).

17 The Corporation is—

18 (i) not an agency or establishment of

19 the United States; and

20 (ii) except as otherwise provided in

21 this section, is subject to, and has all the

22 powers conferred upon a nonprofit corpora23 tion by the District of Columbia Nonprofit

24 Corporation Act (D.C. Code section 29-501

25 et seq.).
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•S 1415 RS2

1 (B) DUTIES.—The Corporation shall—

2 (i) disburse compensation funds to

3 vending companies under this section;

4 (ii) verify operational machines; and

5 (iii) maintain complete records of ma6 chine verification and accountings of dis7 bursements and administration of the com8 pensation fund established under paragraph

9 (4).

10 (3) MANAGEMENT OF CORPORATION.—

11 (A) BOARD OF DIRECTORS.—The Corpora12 tion shall be managed by a Board of Directors

13 that—

14 (i) consists of distinguished Americans

15 with experience in finance, public policy, or

16 fund management;

17 (ii) includes at least 1 member of the

18 United States tobacco vending machine in19 dustry;

20 (iii) shall be paid an annual salary on

21 an individualized basis of $40,000 out of

22 amounts transferred to the Corporation

23 under paragraph (4)(A);
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1 (iv) shall appoint a President to man2 age the day-to-day activities of the Corpora3 tion;

4 (v) shall develop guidelines by which

5 the President shall direct the Corporation;

6 (vi) shall retain a national accounting

7 firm to verify the distribution of funds and

8 audit the compensation fund established

9 under paragraph (4);

10 (vii) shall retain such legal, manage11 ment, or consulting assistance as is nec12 essary and proper; and

13 (viii) shall periodically report to Con14 gress regarding the activities of the Cor15 poration.

16 (B) DUTIES OF THE PRESIDENT OF THE

17 CORPORATION.—The President of the Corpora18 tion shall—

19 (i) hire appropriate staff;

20 (ii) prepare the report of the Board of

21 Directors of the Corporation required under

22 subparagraph (A)(viii); and

23 (iii) oversee Corporation functions, in24 cluding verification of machines, adminis25 tration and disbursement of funds, mainte-
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•S 1415 RS2

1 nance of complete records, operation of ap2 peals procedures, and other directed func3 tions.

4 (4) COMPENSATION FUND.—

5 (A) TRANSFER OF FUNDS FROM TOBACCO

6 INDUSTRY PAYMENTS.—The Secretary of the

7 Treasury shall transfer to the Corporation, out of

8 funds in the National Tobacco Settlement Trust

9 Fund, other than from amounts in the State

10 Litigation Settlement Account, such sums as are

11 ƒnecessary≈ provided in appropriations

12 Acts to make due compensation to owners and

13 operators of tobacco vending machines and to

14 carry out the duties of the Corporation. ƒNot

15 later than 1 year after such date on which the

16 first transfer is made under this subparagraph,

17 the Secretary of the Treasury shall transfer to

18 the Corporation out of funds paid to the United

19 States by the tobacco industry, such additional

20 sums as may be necessary for such purposes.≈

21 (B) RULES FOR DISBURSEMENT OF

22 FUNDS.—

23 (i) PAYMENTS TO OWNERS AND OPERA24 TORS.—The Corporation shall disburse

25 funds to compensate the owners and opera-
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•S 1415 RS2

1 tors of tobacco vending machines in accord2 ance with the following:

3 (I) The fair market value of each

4 tobacco vending machine verified by

5 the Corporation President in accord6 ance with subparagraph (C), and prov7 en to have been in operation before Au8 gust 10, 1995, shall be disbursed to the

9 owner of the machine seeking com10 pensation.

11 (II) No compensation shall be

12 made for a spiral glass front vending

13 machine.

14 (ii) OTHER PAYMENTS.—Funds trans15 ferred to the Corporation under subpara16 graph (A) may be used to pay the adminis17 trative costs of the Corporation that are

18 necessary and proper or required by law.

19 The total amount paid by the Corporation

20 for administrative and overhead costs, in21 cluding accounting fees, legal fees, consult22 ant fees, and associated administrative costs

23 shall not exceed 5 percent of the total

24 amount transferred to the Corporation

25 under subparagraph (A).
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1 (C) VERIFICATION OF VENDING MA2 CHINES.—Verification of vending machines shall

3 be based on copies of official State vending li4 censes, company computerized or handwritten

5 sales records, or physical inspection by the Cor6 poration President or by an inspection agent

7 designated by the President. The Corporation

8 President and the Board of Directors of the Cor9 poration shall work vigorously to prevent and

10 prosecute any fraudulent claims submitted for

11 compensation.

12 (D) RETURN OF ACCOUNT FUNDS NOT DIS13 TRIBUTED TO VENDORS.—The Corporation shall

14 be dissolved on the date that is 4 years after the

15 date of enactment of this Act. Any funds not dis16 persed or allocated to claims pending as of that

17 date shall be transferred to ƒa public anti-smok18 ing trust, or used for such other purposes as Con19 gress may designate≈ the National To20 bacco Settlement Trust Fund.

21 (c) SETTLEMENT OF LEGAL CLAIMS PENDING

22 AGAINST THE UNITED STATES.—Acceptance of a com23 pensation payment from the Corporation by a vending ma24 chine owner or operator shall settle all pending and future

25 claims of the owner or operator against the United States
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•S 1415 RS2

1 that are based on, or related to, the ban of the use of tobacco

2 vending machines imposed under this section and any other

3 laws or regulations that limit the use of tobacco vending

4 machines.

5 (d) AUTHORIZATION OF APPROPRIATIONS.—There are

6 authorized to be appropriated from the National Tobacco

7 Settlement Trust Fund, other than from amounts in the

8 Senate Litigation Settlement Account, such sums as may

9 be necessary to carry out this section.

10 ƒTITLE XII—TOBACCO ASBESTOS

11 TRUST FUND

12 ƒSEC. 1201. DEFINITIONS.

13 ƒIn this title:

14 ƒ(1) ASBESTOS CLAIM.—The term ‘‘asbestos

15 claim’’ means a claim brought or capable of being

16 brought in a court of competent jurisdiction by a per17 son for personal injury, wrongful death, loss of con18 sortium, or other damages arising from occupational

19 exposure to asbestos or asbestos containing products,

20 including claims by spouses or household members

21 who were exposed to asbestos through the occupational

22 exposure of another person.

23 ƒ(2) ASBESTOS CLAIMANT.—The term ‘‘asbestos

24 claimant’’ means a person who brings an asbestos

25 claim.
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1 ƒ(3) ASBESTOS DEFENDANT.—The term ‘‘asbes2 tos defendant’’ means a person or existing entity (in3 cluding a partnership or corporation) who as part of

4 its operations is defending asbestos claims on the date

5 of enactment of this Act.

6 ƒ(4) ASBESTOS/TOBACCO CLAIM.—The term ‘‘as7 bestos/tobacco claim’’ means a legally justiciable as8 bestos claim of a person who also claims injury, dis9 ease, or death arising from exposure to tobacco.

10 ƒ(5) ASBESTOS/TOBACCO CLAIMANT.—The term

11 ‘‘asbestos/tobacco claimant’’ means a person who has

12 an asbestos/tobacco claim.

13 ƒ(6) ASBESTOS TRUST.—The term ‘‘asbestos

14 trust’’ means a court-supervised trust that was estab15 lished to resolve asbestos claims arising directly or in16 directly from exposure to asbestos or asbestos contain17 ing products of an asbestos defendant, including a

18 trust created under the bankruptcy laws of the United

19 States, or Rule 23 of the Federal Rules of Civil Proce20 dure.

21 ƒ(7) EXPOSURE TO TOBACCO.—The term ‘‘expo22 sure to tobacco’’ means any instance in which a per23 son consumes, inhales, ingests, or uses a tobacco prod24 uct.
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1 ƒ(8) TOBACCO.—The term ‘‘tobacco’’ means to2 bacco in its manufactured form, including cigars,

3 cigarettes, cigarillos, cigarette tobacco, little cigars,

4 pipe tobacco, and smokeless tobacco.

5 ƒ(9) TOBACCO COMPANY.—The term ‘‘tobacco

6 company’’ means any person, including any repacker,

7 or relabeler, who manufactures, fabricates, assembles,

8 processes, or labels a finished tobacco product.

9 ƒ(10) TRUST FUND.—The term ‘‘trust fund’’

10 means the Tobacco Asbestos Trust Fund established

11 under section 1202.

12 ƒSEC. 1202. TOBACCO ASBESTOS TRUST FUND.

13 ƒ(a) ESTABLISHMENT.—

14 ƒ(1) IN GENERAL.—There is established in the

15 Treasury of the United States a trust fund to be

16 known as the ‘‘Tobacco Asbestos Trust Fund’’, consist17 ing of such amounts as may be appropriated or cred18 ited to the trust fund.

19 ƒ(2) DIVISION.—

20 ƒ(A) IN GENERAL.—The trust fund shall be

21 composed of 2 funds to be known as ‘‘Fund I’’

22 and ‘‘Fund II’’. Each such fund shall meet the

23 requirements of this title.

24 ƒ(B) FUND I.—
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1 ƒ(i) ADMINISTRATION.—Fund I shall

2 be administered by the trustees appointed

3 under paragraphs (1) and (3) of subsection

4 (b). Fund I shall be considered to be a des5 ignated settlement fund within the meaning

6 of section 468B of the Internal Revenue

7 Code of 1986.

8 ƒ(ii) PURPOSE AND USE.—The pur9 pose of Fund I shall be for the reimburse10 ment of asbestos trusts and asbestos defend11 ants for payments made by such trust and

12 defendants for the tobacco-caused portion of

13 asbestos/tobacco claims. Fund I shall be

14 used to allocate credits to asbestos trusts

15 and asbestos defendants who settled and

16 paid the civil claims of individuals who had

17 exposure to tobacco and asbestos. Such cred18 its may be used to direct the payment of

19 funds by the trustees to pay asbestos claims

20 and asbestos/tobacco claims, as described in

21 section 1203.

22 ƒ(C) FUND II.—

23 ƒ(i) ADMINISTRATION.—Fund II shall

24 be administered by the trustees appointed

25 under paragraphs (2) and (3) of subsection
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•S 1415 RS2

1 (b). Fund II shall be considered to be a des2 ignated settlement fund within the meaning

3 of section 468B of the Internal Revenue

4 Code of 1986.

5 ƒ(ii) PURPOSE.—The purpose of Fund

6 II shall be to pay asbestos/tobacco claims

7 brought after the date of enactment of this

8 Act for the tobacco-caused portion of the

9 claimant’s harm, as described in section

10 1204.

11 ƒ(3) SEPARATE OPERATIONS.—The operations of

12 each Fund shall be conducted separately. Upon ma13 jority vote of the trustees of Fund I and upon major14 ity vote of the trustees of Fund II, the Funds may,

15 in the interest of efficiency and economy, conduct cer16 tain tasks as a single operation.

17 ƒ(b) TRUSTEES.—Not later than 60 days after the

18 date of enactment of this Act—

19 ƒ(1) the Secretary shall appoint 2 individuals to

20 serve as trustees of the trust fund, of which—

21 ƒ(A) 1 individual shall represent asbestos

22 trusts; and

23 ƒ(B) 1 individual shall represent asbestos

24 defendants;
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•S 1415 RS2

1 ƒ(2) the Secretary of Labor shall appoint 2 indi2 viduals to serve as trustees of the trust fund, of

3 which—

4 ƒ(A) 1 individual shall represent asbestos

5 claimants; and

6 ƒ(B) 1 individual shall represent labor or7 ganizations with asbestos claimants as members;

8 and

9 ƒ(3) the trustees appointed under paragraphs

10 (1) and (2) shall appoint an individual who shall be

11 a member of the health care profession with experi12 ence in asbestos disease or disability to serve as a

13 trustee.

14 ƒ(c) AUTHORIZATION AND ALLOCATIONS.—

15 ƒ(1) AUTHORIZATION.—There are appropriated,

16 out of amounts in the National Tobacco Settlement

17 Trust Fund established by section 401 (other than

18 amounts in the State Litigation Settlement Account

19 or otherwise obligated), to the trust fund the amounts

20 set forth in section 1205. The Secretary of the Treas21 ury shall transfer amounts appropriated under this

22 paragraph to the trust fund.

23 ƒ(2) ALLOCATION BETWEEN FUNDS.—Of the

24 amounts transferred under paragraph (1), 50 percent
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1 shall be deposited into Fund I and 50 percent shall

2 be deposited into Fund II.

3 ƒ(B) TIMING ADJUSTMENT.—The trustees of

4 Fund II may provide an advance to Fund I as

5 a loan (to be repaid from proceeds of Fund I)

6 from funds available in Fund II as may be nec7 essary to further the purposes of Fund I.

8 ƒ(d) REPAYABLE ADVANCES.—

9 ƒ(1) AUTHORIZATION.—In addition to the

10 amounts appropriated under subsection (c), there are

11 authorized to be appropriated to the trust fund, as re12 payable advances, such sums as may be necessary for

13 fiscal year 1999 and each subsequent fiscal year to

14 make the expenditures described in sections 1203 and

15 1204.

16 ƒ(2) REPAYMENT WITH INTEREST.—Repayable

17 advances made to the trust fund shall be repaid, and

18 interest on the advances shall be paid to the general

19 fund of the Treasury when the Secretary of the Treas20 ury determines that monies are available in the To21 bacco Asbestos Trust Fund to make the payments.

22 ƒ(3) RATE OF INTEREST.—Interest on an ad23 vance made under this subsection shall be at a rate

24 determined by the Secretary of the Treasury (as of the

25 close of the calendar month preceding the month in
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•S 1415 RS2

1 which the advance is made) that is equal to the cur2 rent average market yield on outstanding marketable

3 obligations of the United States with remaining pe4 riod to maturity comparable to the anticipated period

5 during which the advance will be outstanding.

6 ƒ(e) USE OF TRUST FUND.—

7 ƒ(1) IN GENERAL.—The trust fund shall be used

8 as provided for in this title. No amount shall be ex9 pended or obligated from the trust fund unless the ex10 penditure or obligation is authorized by an appro11 priation Act.

12 ƒ(2) LIMITATION.—Amounts may only be made

13 available from the trust fund to, or for the direct ben14 efit of, asbestos claimants and asbestos/tobacco claim15 ants.

16 ƒ(f) AUTHORITY OF TRUSTEES.—

17 ƒ(1) DECISIONS BASED ON VOTES.—Except as

18 provided in this Act, the trustees of each Fund shall

19 make decisions with regard to the respective Funds

20 based on a majority vote.

21 ƒ(2) GENERAL AUTHORITY.—The trustees shall

22 have the authority to take such actions as may be nec23 essary to effectuate the purposes of the trust fund, in24 cluding—
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•S 1415 RS2

1 ƒ(A) the investment of the trust fund assets

2 in a reasonable and prudent manner consistent

3 with the needs and purposes of the trust fund;

4 and

5 ƒ(B) commencing actions to enforce any

6 provisions or obligations imposed under this

7 title.

8 ƒ(3) ADMINISTRATIVE AUTHORITY.—The trustees

9 shall have the authority to employ officers, adminis10 trators, claims analysts, attorneys, actuaries, invest11 ment specialists, and such other employees and agents

12 as may be required to administer the trust fund.

13 ƒ(g) ACCOUNTING FOR EXPENSES.—Except for the

14 compensation and expenses of the trustees, which shall be

15 charged equally to Fund I and Fund II, the trustees shall,

16 to the extent feasible, separately account for all salaries,

17 overhead, and other costs and expenses as between Fund I

18 and Fund II on the basis of activities conducted separately

19 with respect to each such Fund.

20 ƒ(h) EXPENDITURES FROM TRUST FUND.—Amounts

21 in the trust fund, and each of its Funds, shall be made

22 available in each fiscal year, as provided by appropriations

23 Acts, as necessary to make the expenditures and allocations

24 provided for in sections 1203 and 1204.
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1 ƒSEC. 1203. PAYMENTS FROM FUND I.

2 ƒ(a) IN GENERAL.—Credits applying to the amounts

3 deposited into Fund I shall be allocated and disbursed as

4 provided for in this section.

5 ƒ(b) DETERMINATION OF BASE.—

6 ƒ(1) NOTICE.—Not later than 90 days after the

7 date on which the trustees for Fund I are appointed,

8 the trustees shall provide notice to all asbestos trusts

9 and asbestos defendants of the establishment of the

10 Fund.

11 ƒ(2) REQUEST FOR INFORMATION.—The notice

12 under paragraph (1) shall request that each asbestos

13 trust and asbestos defendant, within a reasonable pe14 riod of time, provide the trustees with information as

15 to the amount of payments or settlements made by or

16 on behalf of such trusts or defendants (and, in the

17 case of non-bankruptcy trusts, also made by or on be18 half of their predecessor organizations), and the

19 amount of any outstanding bonded judgments, on as20 bestos claims as of the date of enactment of this Act.

21 ƒ(3) DETERMINATION.—Based on the informa22 tion provided under paragraph (2), the trustees for

23 Fund I shall determine the total amount of payments

24 and settlements and outstanding bonded judgments

25 (reasonably adjusted for the probable resolution as of

26 the date the information is submitted under para-
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•S 1415 RS2

1 graph (2)) on the asbestos claims of all asbestos trusts

2 and asbestos defendants that responded to the notice.

3 ƒ(c) ALLOCATION OF CREDITS.—

4 ƒ(1) IN GENERAL.—Upon review of the informa5 tion submitted under subsection (b)(2), the trustees for

6 Fund I shall provide a credit with respect to each as7 bestos trust and asbestos defendant submitting such

8 information.

9 ƒ(2) AMOUNT.—A credit under paragraph (1)

10 with respect to an asbestos trust or asbestos defendant

11 shall be based on the ratio of—

12 ƒ(A) the amount of settlement payments

13 and outstanding bonded judgments on asbestos

14 claims made by or on behalf of the trust or de15 fendant; and

16 ƒ(B) the total amount of settlement pay17 ments and outstanding bonded judgments on as18 bestos claims made by or on behalf of all asbestos

19 trusts and asbestos defendants described in para20 graph (1).

21 ƒ(d) ADDITIONAL FACTORS.—

22 ƒ(1) INTEREST.—In making the allocation of

23 credits under this section, the trustees for Fund I

24 shall consider the timing of past cash payments and
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•S 1415 RS2

1 include an appropriate interest factor in making

2 their allocation determinations.

3 ƒ(2) UNPAID SETTLEMENTS.—In making the al4 location of credits under this section, the trustees for

5 Fund I shall include the settlements of asbestos trusts

6 and asbestos defendants that have not been paid as of

7 the date of enactment of this Act in an amount not

8 to exceed 20 percent of the amount of such unpaid set9 tlements.

10 ƒ(3) LIMITATION.—The aggregate amount of

11 Fund I credits allocated to asbestos trusts or asbestos

12 defendants to account for unpaid settlements under

13 paragraph (2) shall not exceed an amount equal to 6

14 percent of the amounts contained in Fund I for the

15 year involved. Any necessary reductions from the ap16 plication of the limitation under this paragraph shall

17 be determined using the ratios described in subsection

18 (c).

19 ƒ(4) UNUSED CREDITS.—To the extent that any

20 asbestos trust or asbestos defendant has credits from

21 its allocation under this section that have not been the

22 subject of a request and direction to be paid for a pe23 riod of 2 years from the date on which such credits

24 are made available, such unused credits shall be re25 allocated proportionally to each asbestos trust and as-
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•S 1415 RS2

1 bestos defendant submitting information under sub2 section (b)(2) according to the amount of the unpaid

3 settlements of such trust and defendants which remain

4 unpaid after making the allocations required by this

5 section.

6 ƒ(e) REVIEW OF DETERMINATIONS.—

7 ƒ(1) IN GENERAL.—Any dispute regarding a de8 termination made by the trustees for Fund I under

9 this section shall be resolved not later than 6 months

10 after the date on which notice of such dispute is pro11 vided to the trustees. Such resolution shall be under

12 final and binding arbitration under the rules of the

13 American Arbitration Association.

14 ƒ(2) SCOPE.—The scope of any review under

15 paragraph (1) shall be limited to determining whether

16 the determinations of the trustees were unsupported

17 by substantial evidence or were contrary to law.

18 ƒ(3) APPLICATION OF SECTION.—During the

19 pendency of any dispute resolution proceeding under

20 this subsection, the trustees may continue to imple21 ment the provisions of this section, reserving sufficient

22 monies as may be necessary in their judgment to sat23 isfy the resolution of such disputes.

24 ƒ(f) USE OF FUND I CREDITS.—
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1 ƒ(1) FOR BENEFIT OF VICTIMS.—All monies

2 credited to asbestos trusts and asbestos defendants

3 under this section shall be used solely for the payment

4 of asbestos claims and asbestos/tobacco claims. None of

5 the credits allocated under this section to an asbestos

6 trust or asbestos defendant shall be used for the costs

7 of defending against an asbestos claims, for payment

8 of corporate dividends, for reimbursement of insurers,

9 or for any other corporate purpose.

10 ƒ(2) MECHANISM FOR PAYMENT OF VICTIMS.—

11 ƒ(A) ASBESTOS DEFENDANTS.—An asbestos

12 defendant that receives an allocation of credit

13 under this section may only use such credit to

14 direct that a payment be made from Fund I to

15 any asbestos claimant as compensation for an

16 asbestos claim or asbestos/tobacco claim. The

17 payment of such claimant shall be under a writ18 ten request submitted by the defendant to the

19 Fund. Such requests are not subject to approval

20 by the Fund so long as they do not exceed the de21 fendant’s allocation of credit under this section.

22 ƒ(B) ASBESTOS TRUST.—All monies result23 ing from credits allocated to an asbestos trust

24 under this section shall be paid to such trust for

25 use according to the rules of such trust with re-
659

•S 1415 RS2

1 gard to the payment of asbestos claims and as2 bestos/tobacco claims.

3 ƒSEC. 1204. PAYMENTS FROM FUND II.

4 ƒ(a) IN GENERAL.—Amounts deposited into II shall

5 be disbursed as provided for in this section.

6 ƒ(b) ESTABLISHMENT OF FUND.—The trustee for

7 Fund II shall establish procedures and standards under

8 subsection (c) for the payment, upon approval of an appro9 priate application, of a reasonable reimbursement for the

10 costs, expenses, and fees incurred in connection with an as11 bestos claim or an asbestos/tobacco claim.

12 ƒ(c) PROCEDURES AND STANDARDS.—The procedures

13 and standards established under this subsection for the pay14 ment of compensation to asbestos claimants and asbestos/

15 tobacco claimants, shall include—

16 ƒ(1) rules to ensure that compensation from

17 Fund II is paid only for that portion of an asbestos

18 claimant’s or an asbestos/tobacco claimant’s harm

19 caused by exposure to tobacco;

20 ƒ(2) rules ensuring that—

21 ƒ(A) all present and future such claimants

22 are treated equitably in relationship to each

23 other; and

24 ƒ(B) if future demands against Fund II re25 quire limitations on current payment, that pri-
660

•S 1415 RS2

1 ority be given to payment of asbestos claimants

2 or asbestos/tobacco claimants with the most seri3 ous harm due to exposure to asbestos and to4 bacco;

5 ƒ(3) rules establishing application forms and

6 procedures for the submission of claims and support7 ing documentation;

8 ƒ(4) criteria establishing a minimum degree of

9 asbestos disability or impairment that must be dem10 onstrated in order for a claimant to receive com11 pensation under this section;

12 ƒ(5) criteria for the coordination of the adminis13 tration of Fund II with the signatories to the Louisi14 ana Agreement Providing Administrative Alternatives

15 for Claimants with Asbestos Related Conditions to ex16 pand the agreement to include national coverage for

17 claimants who may not be compensated under the cri18 teria provided for under paragraph (4);

19 ƒ(6) rules requiring recipients of funds from

20 Fund II to execute a release of personal injury claims

21 for tobacco-caused harm; and

22 ƒ(7) rules to ensure that the administration of

23 the claims process, including attorney’s fees, is fair

24 and equitable to asbestos claimants and asbestos/to25 bacco claimants.
661

•S 1415 RS2

1 ƒ(d) PERIOD FOR FINAL DETERMINATIONS.—The

2 trustees for Fund II shall make a final determination with

3 respect to a claim submitted under this section not later

4 than 120 days after the date on which the claim is submit5 ted. In the event that exigent circumstances exist with re6 spect to a such a claim, as verified by a competent medical

7 professional, such final determination shall be made as soon

8 as practicable, but in no case later than 60 days after the

9 date of the submission of such claim.

10 ƒ(e) NO LIMITATION ON RIGHT TO SUE.—Except as

11 provided in section 1206(b), nothing in this title shall be

12 construed to limit the rights of any individual to bring a

13 civil suit against a tobacco company.

14 ƒ(f) CLAIMS ADMINISTRATION.—The trustees for Fund

15 II may establish, or enter into a contract for the establish16 ment or operation of, a claims facility for the processing,

17 evaluation, and settlement of claims submitted to Fund II.

18 ƒ(g) REVIEW JURISDICTION.—The District Courts of

19 the United States shall have exclusive jurisdiction, without

20 regard to the amount in controversy or the citizenship of

21 the parties, to review a determination (or failure to make

22 a determination as required by section 1206(a)) by or on

23 behalf of the trustees with respect to compensation under

24 Fund II by an individual bringing a claim. No such deter25 mination may be overturned or remanded if it is supported
662

•S 1415 RS2

1 by substantial evidence. A claimant may not file a proceed2 ing under this subsection unless the plaintiff has provided

3 the trustees with a notice of intent of the plaintiff to file

4 such an action, at least 90 days prior to the filing of such

5 action.

6 ƒSEC. 1205. TRANSFERS FROM NATIONAL TOBACCO SETTLE7 MENT TRUST FUND.

8 ƒ(a) SPECIAL ASBESTOS-TOBACCO VICTIM TRANS9 FERS.—Beginning with calendar year 1999, the Secretary

10 of the Treasury shall, for each calendar year, transfer from

11 the National Tobacco Settlement Trust Fund established

12 under section 401 (other than from amounts in the State

13 Litigation Settlement Account) the amounts sufficient to

14 provide the trust fund established by section 1202 the follow15 ing amounts:

16 ƒ(l) For calendar year 1999, $1,000,000,000.

17 ƒ(2) For calendar year 2000, $1,500,000,000.

18 ƒ(3) For calendar year 2001, $3,000,000,000.

19 ƒ(4) For calendar year 2002, $3,000,000,000.

20 ƒ(5) For calendar year 2003, $3,000,000,000.

21 ƒ(6) For calendar year 2004, $4,000,000,000.

22 ƒ(7) For each of the calendar years 2005

23 through 2014, $550,000,000.
663

•S 1415 RS2

1 ƒ(b) PAYMENTS.—The Secretary of the Treasury shall

2 ensure that transfers are made under this section on a time3 ly basis.

4 ƒSEC. 1206. RULES FOR CLAIMS AGAINST ASBESTOS

5 TRUSTS, ASBESTOS DEFENDANTS, AND TO6 BACCO COMPANIES.

7 ƒ(a) PURPOSE.—

8 ƒ(1) IN GENERAL.—It is the purpose of this title

9 to ensure that asbestos claimants and asbestos/tobacco

10 claimants who are eligible, by reason of harm result11 ing from exposure to asbestos and tobacco, to receive

12 compensation on a fair and timely basis.

13 ƒ(2) RULE OF CONSTRUCTION.—Nothing in this

14 title shall be construed to expand the rights of asbestos

15 claimants and asbestos/tobacco claimants in civil ac16 tions pending (or resolved) against asbestos defend17 ants or asbestos trusts on the date of enactment of this

18 Act.

19 ƒ(b) NON-BINDING SUBMISSION OF TOBACCO/ASBES20 TOS CLAIMS TO FUND II.—

21 ƒ(1) IN GENERAL.—A civil action by an indi22 vidual for harm caused by the combined effects of to23 bacco and asbestos shall not proceed to trial or result

24 in a judgment against an asbestos defendant or asbes25 tos trust until a claim is submitted to Fund II by
664

•S 1415 RS2

1 such individual and finally resolved in accordance

2 with section 1204(c)(3) as determined by the trustees

3 for Fund II. For purposes of this paragraph, the term

4 ‘‘proceed to trial’’ means—

5 ƒ(A) in a jury trial, to commence voir dire;

6 and

7 ƒ(B) in a nonjury trial, to begin the trial.

8 ƒ(2) DENIAL OF CLAIM.—A claimant whose

9 claim under paragraph (1) is denied, or who rejects

10 an offer made by the trustees for Fund II, may pro11 ceed to judgment or trial. All claimants shall receive

12 a final determination from Fund II within 120 days

13 after submission of a claim. In the event of exigent

14 circumstances, verified by a competent medical profes15 sional, a claimant shall receive a final determination

16 from Fund II as soon as practicable, but in all events

17 within 60 days after submission.

18 ƒ(c) LIABILITY OF TOBACCO COMPANIES.—

19 ƒ(1) IN GENERAL.—The provisions of this sub20 section limiting the civil liability of tobacco compa21 nies shall remain in effect so long as the transfers and

22 deposits are made in accordance with the provisions

23 of this title.

24 ƒ(2) CLAIMS OF ASBESTOS-TOBACCO VICTIMS.—

25 Any claimant who receives a payment from Fund II,
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•S 1415 RS2

1 shall execute a release of liability for all tobacco2 caused harm.

3 ƒ(3) CONTRIBUTION CLAIMS FOR PAST AMOUNTS

4 PAID.—Notwithstanding any other provision of law,

5 no tobacco company shall be liable for contribution,

6 indemnity, or otherwise to any asbestos trust or asbes7 tos defendant on any claim arising from payments or

8 obligations for payments to asbestos claimants and

9 asbestos/tobacco claimants made or incurred prior to

10 the date of enactment of this Act. All such claims by

11 asbestos defendants or asbestos trusts filed as of the

12 date of enactment of this Act are terminated.

13 ƒ(4) CONTRIBUTION CLAIMS FOR FUTURE

14 AMOUNTS.—Notwithstanding any other provision of

15 law, in any contribution or similar action against a

16 tobacco company arising from the payments or obli17 gations for payments to asbestos claimants and asbes18 tos/tobacco claimants made or incurred after the date

19 of enactment of this Act, an asbestos trust or asbestos

20 defendant may aggregate and establish a claim based

21 on valid statistical proof on a consolidated basis. In

22 such an action, the assessment of damages to a to23 bacco company defendant shall be based upon the de24 gree of relative causation as between asbestos and to-
666

•S 1415 RS2

1 bacco based on statistical data applicable to relevant

2 disease categories.

3 ƒ(5) RIGHTS RESERVED.—Nothing in this sub4 section shall be construed to limit the rights of any

5 person that chooses not to receive compensation from

6 Fund II to commence a civil action against any to7 bacco company.

8 ƒ(d) LIABILITY OF ASBESTOS TRUSTS AND ASBESTOS

9 DEFENDANTS.—

10 ƒ(1) ACCEPTANCE OF FUND II AWARD.—A

11 claimant who accepts a payment from Fund II shall

12 execute a release of liability for all tobacco-caused

13 harm, and shall not recover from an asbestos defend14 ant in any civil action any damages for any portion

15 of the harm caused by exposure to tobacco.

16 ƒ(2) FUND II CLAIMANT’S RIGHT TO SUE.—A

17 claimant, whose claim has been denied by the trustees

18 for Fund II, or who has rejected the offer of a pay19 ment from Fund II, may pursue a civil action

20 against a tobacco defendant or asbestos defendant for

21 personal injury attributable to both tobacco and as22 bestos, to the extent that such action is otherwise per23 missible under applicable law.

24 ƒ(3) SUCCESSION TO CLAIMANT’S RIGHTS.—Any

25 asbestos defendant that pays a part or all of a judg-
667

•S 1415 RS2

1 ment that includes damages for tobacco-caused harm

2 may elect—

3 ƒ(A) to—

4 ƒ(i) succeed to the rights of the claim5 ant involved, in the same proportion that

6 the payment by the defendant in the action

7 involved bears to the total amount of the

8 judgment; and

9 ƒ(ii) to request compensation on behalf

10 of the claimant from Fund II as in the

11 same manner as if the claimant had made

12 a timely and proper election to receive such

13 compensation, and on the same basis as

14 other claimants similarly situated; or

15 ƒ(B) to pursue an action for indemnity or

16 contribution against any tobacco company.

17 ƒ(4) CONTRIBUTION CLAIMS AGAINST ASBESTOS

18 COMPANIES.—An asbestos trust or asbestos defendant

19 shall not be liable to a tobacco company for contribu20 tion, indemnity, or otherwise with respect to any

21 claim arising from payments or obligations for pay22 ments to asbestos claimants or for exposure to tobacco

23 and asbestos made or incurred either prior to or by

24 virtue of, the enactment of this Act. All such claims
668

•S 1415 RS2

1 filed as of the date of enactment of this Act are termi2 nated.

3 ƒ(e) PRESERVATION OF JOINT LIABILITY FOR ASBES4 TOS-CAUSED INJURY OR CONDITION.—Nothing in this title

5 shall be construed to—

6 ƒ(1) limit any joint liability under otherwise

7 applicable law among asbestos defendants or asbestos

8 trusts for the portion of a claimant’s harm caused by

9 asbestos;

10 ƒ(2) limit the ability of any individual to claim

11 that his or her harm was caused by asbestos; or

12 ƒ(3) delay the resolution of a claim brought by

13 any individual against an asbestos trust or asbestos

14 defendant for compensation for harm caused by asbes15 tos.≈

16 TITLE XIII—VETERANS’

17 BENEFITS

18 SEC. 1301. RECOVERY BY SECRETARY OF VETERANS AF19 FAIRS.

20 Title 38, United States Code, is amended by adding

21 after part VI the following:
669

•S 1415 RS2

1 ‘‘PART VII—RECOVERY OF COMPENSATION COSTS

2 FOR TOBACCO-RELATED DISABILITY OR DEATH

3 ‘‘CHAPTER 91—TORT LIABILITY FOR DISABILITY OR

4 DEATH DUE TO TOBACCO USE

‘‘Sec.

‘‘9101. Recovery by Secretary of Veterans Affairs

‘‘9102. Regulations

‘‘9103. Limitation or repeal of other provisions for recovery of compensation

‘‘9104. Exemption from annual limitation on damages

5 ‘‘§ 9101. Recovery by Secretary of Veterans Affairs

6 ‘‘(a) CONDITIONS; EXCEPTIONS; PERSONS LIABLE;

7 AMOUNT OF RECOVERY; SUBROGATION.—In any case in

8 which the Secretary is authorized or required by law to pro9 vide compensation under this title for disability or death

10 from injury or disease attributable in whole or in part to

11 the use of tobacco products by a veteran during the veterans

12 active military, naval, or air service under circumstances

13 creating a tort liability upon a participating tobacco prod14 uct manufacturer, distributor, or retailer of a tobacco prod15 uct (other than or in addition to the United States) to pay

16 damages therefor, the Secretary shall have a right to recover

17 (independent of the rights of the injured or diseased veteran)

18 from said participating tobacco product manufacturer, dis19 tributor, or retailer the cost of the compensation paid or

20 to be paid and shall, as to this right, be subrogated to any

21 right or claim that the injured or diseased veteran, his or

22 her guardian, personal representative, estate, dependents, or
670

•S 1415 RS2

1 survivors has against such third person to the extent of the

2 cost of the compensation paid or to be paid.

3 ‘‘(b) ENFORCEMENT PROCEDURE; INTERVENTION;

4 JOINDER OF PARTIES; STATE OR FEDERAL COURT PRO5 CEEDINGS.—The Secretary may, to enforce such right under

6 subsection (a) of this section:

7 ‘‘(1) intervene or join in any action or proceed8 ing brought by the injured or diseased veteran, his or

9 her guardian, personal representative, estate, depend10 ents, or survivors, against the participating tobacco

11 product manufacturer, distributor, or retailer of a to12 bacco product who is liable for the injury or disease;

13 or

14 ‘‘(2) if such action or proceeding is not com15 menced within six months after the first day on

16 which compensation is paid by the Secretary in con17 nection with the injury or disease involved, institute

18 and prosecute legal proceedings against the partici19 pating tobacco product manufacturer, distributor, or

20 retailer of a tobacco product who is liable for the in21 jury or disease, in a State or Federal court, either

22 alone (in its own name or in the name of the injured

23 veteran, his or her guardian, personal representative,

24 estate, dependents, or survivors) or in conjunction

25 with the injured or diseased veteran, his or her guard-
671

•S 1415 RS2

1 ian, personal representative, estate, dependents, or

2 survivors.

3 ‘‘(c) CREDITS TO APPROPRIATIONS.—Any amount re4 covered or collected under this section for compensation

5 paid by the Secretary shall be credited to a revolving fund

6 established in the Treasury of the United States known as

7 the Department of Veterans Affairs Tobacco Recovery Fund

8 (hereafter called the Fund). The Fund shall be available to

9 the Secretary without fiscal year limitation for purposes

10 of veterans benefit programs, including administrative

11 costs. The Secretary may transfer such funds as deemed nec12 essary to the various Department of Veterans Affairs appro13 priations, which shall remain available until expended.

14 ‘‘(d) DEFINITION.—For purposes of this section, the

15 term participating tobacco product manufacturer, distribu16 tor, or retailer of a tobacco product means a manufacturer,

17 distributor, or retailer of tobacco products that has entered

18 into a consent decree as such term is defined in section 701

19 of the National Tobacco Policy and Youth Smoking Reduc20 tion Act and that is a signatory to the Protocol as such

21 term is defined in section 6 of that Act.

22 ‘‘§ 9102. Regulations

23 ‘‘(a) DETERMINATION AND ESTABLISHMENT OF

24 PRESENT VALUE OF COMPENSATION TO BE PAID.—The Sec25 retary may prescribe regulations to carry out this chapter,
672

•S 1415 RS2

1 including regulations with respect to the determination and

2 establishment of the present value of compensation to be

3 paid to an injured or diseased veteran or his or her surviv4 ing spouse, child, or parent.

5 ‘‘(b) SETTLEMENT, RELEASE AND WAIVER OF

6 CLAIMS.—To the extent prescribed by regulations under

7 subsection (a) of this section, the Secretary may—

8 ‘‘(1) compromise, or settle and execute a release

9 of, any claim which the Secretary has by virtue of the

10 right established by section 9101 of this title; or

11 ‘‘(2) waive any such claim, in whole or in part,

12 for the convenience of the Government, or if he or she

13 determines that collection would result in undue

14 hardship upon the veteran who suffered the injury or

15 disease or his or her surviving spouse, child or parent

16 resulting in payment of compensation.

17 ‘‘(c) DAMAGES RECOVERABLE FOR PERSONAL INJURY

18 UNAFFECTED.—No action taken by the Secretary in connec19 tion with the rights afforded under this chapter shall oper20 ate to deny to the injured veteran or his or her surviving

21 spouse, child or parent the recovery for that portion of his

22 or her damage not covered hereunder.
673

•S 1415 RS2

1 ‘‘§ 9103. Limitation or repeal of other provisions for

2 recovery of compensation

3 ‘‘This chapter does not limit or repeal any other provi4 sion of law providing for recovery by the Secretary of the

5 cost of compensation described in section 9101 of this title.

6 ‘‘§ 9104. Exemption from annual limitation on dam7 ages

8 ‘‘Any amount recovered under section 9101 of this title

9 for compensation paid or to be paid by the Secretary for

10 disability or death from injury or disease attributable in

11 whole or in part to the use of tobacco products by a veteran

12 during the veterans active military, naval, or air service

13 shall not be subject to the limitation on the annual amount

14 of damages for which the participating tobacco product

15 manufacturers, distributors, and retailers may be found lia16 ble as provided in the National Tobacco Policy and Youth

17 Smoking Reduction Act and shall not be counted in com18 puting the annual amount of damages for purposes of that

19 section.’’.

20 TITLE XIV—REVENUE AND

21 OTHER PROVISIONS

22 Subtitle A—Taxes on Tobacco

23 Products

24 SEC. 1400. AMENDMENT OF 1986 CODE.

25 Except as otherwise expressly provided,

26 whenever in this title an amendment or repeal
674

•S 1415 RS2

1 is expressed in terms of an amendment to, or

2 repeal of, a section or other provision, the ref3 erence shall be considered to be made to a sec4 tion or other provision of the Internal Revenue

5 Code of 1986.

6 SEC. 1401. TAXES ON TOBACCO PRODUCTS.

7 (a) CIGARETTES.—Subsection (b) of section

8 5701 is amended—

9 (1) by striking ‘‘$12 per thousand ($10

10 per thousand on cigarettes removed dur11 ing 1991 or 1992);’’ in paragraph (1) and

12 inserting ‘‘the applicable rate per thou13 sand determined in accordance with the

14 following table:

The applicable

‘‘In the case of cigarettes removed

during:

rate is:

1999 ................................................................................ $37.00

2000 ................................................................................ $67.00

2001 ................................................................................ $92.00

2002 and thereafter .................................................... $94.50.’’;

15 and

16 (2) by striking paragraph (2) and in17 serting the following:

18 ‘‘(2) LARGE CIGARETTES.—

19 ‘‘(A) IN GENERAL.—Except as pro20 vided in subparagraph (B), on ciga21 rettes, weighing more than 3 pounds

22 per thousand, the applicable rate per
675

•S 1415 RS2

1 thousand determined in accordance

2 with the following table:

The applicable

‘‘In the case of cigarettes removed

during:

rate is:

1999 ................................................................................ $77.70

2000 ................................................................................ $140.70

2001 ................................................................................ $193.20

2002 and thereafter .................................................... $198.45.

3 ‘‘(B) EXCEPTION.—On cigarettes

more than 61 4 ⁄2 inches in length, at the

5 rate prescribed for cigarettes weigh6 ing not more than 3 pounds per thousand, counting each 23 7 ⁄4 inches, or

8 fraction thereof, of the length of each

9 as one cigarette.’’

10 (b) CIGARS.—Subsection (a) of section 5701

11 is amended—

12 (1) by striking ‘‘$1.125 cents per thou13 sand (93.75 cents per thousand on cigars

14 removed during 1991 or 1992),’’ in para15 graph (1) and inserting ‘‘the applicable

16 rate per thousand determined in accord17 ance with the following table:

‘‘In the case of cigars removed during:The applicable

rate is:

1999 .................................................... $3.4687 cents

2000 .................................................... $6.2822 cents

2001 .................................................... $8.6264 cents

2002 and thereafter ......................... $8.8588 cents.’’;

18 and
676

•S 1415 RS2

1 (2) by striking paragraph (2) and in2 serting the following:

3 ‘‘(2) LARGE CIGARS.—On cigars, weigh4 ing more than 3 pounds per thousand, the

5 applicable percentage of the price for

6 which sold but not more that the applica7 ble rate per thousand determined in ac8 cordance with the following table:

‘‘In the case of

cigars removed during:

The applicable

percentage is:

The applicable rate

is:

1999 39.312% $92.50

2000 71.189% $167.50

2001 97.753% $230.00

2002 and

thereafter

100.407% $236.25.’’

9 (c) CIGARETTE PAPERS.—Subsection (c) of

10 section 5701 is amended to read as follows:

11 ‘‘(c) CIGARETTE PAPERS.—

12 ‘‘(1) IN GENERAL.—Except as provided

13 in paragraph (2), on each book or set of

14 cigarette papers containing more than 25

15 papers, manufactured in or imported into

16 the United States, there shall be imposed

17 a tax of the applicable rate for each 50

18 papers or fractional part thereof as deter19 mined in accordance with the following

20 table:
677

•S 1415 RS2

The applicable

‘‘In the case of cigarette papers removed during:rate is:

1999 ................................................................................ 2.31 cents

2000 ................................................................................ 4.18 cents

2001 ................................................................................ 5.74 cents

2002 and thereafter .................................................... 5.91 cents.

1 ‘‘(2) EXCEPTION.—If cigarette papers

measure more than 61 2 ⁄2 inches in length,

3 such cigarette papers shall be taxable at

the rate prescribed, counting each 23 4 ⁄4

5 inches, or fraction thereof, of the length of

6 each as one cigarette paper.’’

7 (d) CIGARETTE TUBES.—Subsection (d) of

8 section 5701 is amended to read as follows:

9 ‘‘(d) CIGARETTE TUBES.—

10 ‘‘(1) IN GENERAL.—Except as provided

11 in paragraph (2), on cigarette tubes, man12 ufactured in or imported into the United

13 States, there shall be imposed a tax of the

14 applicable rate for each 50 tubes or frac15 tional part thereof as determined in ac16 cordance with the following table:

The applicable

‘‘In the case of cigarette tubes removed during:rate is:

1999 ................................................................................ 4.62 cents

2000 ................................................................................ 8.39 cents

2001 ................................................................................ 11.53 cents

2002 and thereafter .................................................... 11.82 cents.

17 ‘‘(2) EXCEPTION.—If cigarette tubes

measure more than 61 18 ⁄2 inches in length,
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•S 1415 RS2

1 such cigarette tubes shall be taxable at

the rate prescribed, counting each 23 2 ⁄4

3 inches, or fraction thereof, of the length of

4 each as one cigarette tube.’’

5 (e) SMOKELESS TOBACCO.—Paragraphs (1)

6 and (2) of subsection (e) of section 5701 are

7 amended to read as follows:

8 ‘‘(1) SNUFF.—On snuff, the applicable

9 rate per pound determined in accordance

10 with the following table (and a propor11 tionate tax at the like rate on all frac12 tional parts of a pound):

The applicable

‘‘In the case of snuff removed during:rate is:

1999 ................................................................................ $1.11

2000 ................................................................................ $2.01

2001 ................................................................................ $2.76

2002 and thereafter .................................................... $2.835

cents.

13 ‘‘(2) CHEWING TOBACCO.—On chewing

14 tobacco, the applicable rate per pound de15 termined in accordance with the follow16 ing table (and a proportionate tax at the

17 like rate on all fractional parts of a

18 pound):

The applicable

‘‘In the case of chewing tobacco removed during:rate is:

1999 ................................................................................ 37 cents

2000 ................................................................................ 67 cents

2001 ................................................................................ 92 cents

2002 and thereafter .................................................... 94.5 cents.’’
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•S 1415 RS2

1 (f) PIPE TOBACCO.—Subsection (f) of section

2 5701 is amended to read as follows:

3 ‘‘(f) PIPE TOBACCO.—On pipe tobacco, man4 ufactured in or imported into the United

5 States, there shall be imposed a tax of the ap6 plicable rate per pound determined in accord7 ance with the following table (and a propor8 tionate tax at the like rate on all fractional

9 parts of a pound):

‘‘In the case of pipe tobacco removed

during:

The applicable

rate is:

1999 .................................................... $2.0812 cents

2000 .................................................... $3.7705 cents

2001 .................................................... $5.1774 cents

2002 and therafter ........................... $5.3157 cents.’’

10 (g) IMPOSITION OF EXCISE TAX ON MANUFAC11 TURE OR IMPORTATION OF ROLL-YOUR-OWN TO12 BACCO.—

13 (1) IN GENERAL.—Section 5701 (relat14 ing to rate of tax) is amended by redesig15 nating subsection (g) as subsection (h)

16 and by inserting after subsection (f) the

17 following new subsection:

18 ‘‘(g) ROLL-YOUR-OWN TOBACCO.—On roll19 your-own tobacco, manufactured in or im20 ported into the United States, there shall be

21 imposed a tax of the applicable rate per pound

22 determined in accordance with the following
680

•S 1415 RS2

1 table (and a proportionate tax at the like rate

2 on all fractional parts of a pound):

‘‘In the case of roll-your-own tobacco removed during:The applicable

rate is:

1999 .................................................... $2.0812 cents

2000 .................................................... $3.7705 cents

2001 .................................................... $5.1774 cents

2002 and thereafter ......................... $5.3157 cents.’’

3 (2) ROLL-YOUR-OWN TOBACCO.—Section

4 5702 (relating to definitions) is amended

5 by adding at the end the following new

6 subsection:

7 ‘‘(p) ROLL-YOUR-OWN TOBACCO.—The term

8 ‘roll-your-own tobacco’ means any tobacco

9 which, because of its appearance, type, pack10 aging, or labeling, is suitable for use and like11 ly to be offered to, or purchased by, consumers

12 as tobacco for making cigarettes.’’

13 (3) TECHNICAL AMENDMENTS.—

14 (A) Subsection (c) of section 5702

15 is amended by striking ‘‘and pipe to16 bacco’’ and inserting ‘‘pipe tobacco,

17 and roll-your-own tobacco’’.

18 (B) Subsection (d) of section 5702

19 is amended—

20 (i) in the material preceding

21 paragraph (1), by striking ‘‘or

22 pipe tobacco’’ and inserting ‘‘pipe
681

•S 1415 RS2

1 tobacco, or roll-your-own tobacco’’,

2 and

3 (ii) by striking paragraph (1)

4 and inserting the following new

5 paragraph:

6 ‘‘(1) a person who produces cigars,

7 cigarettes, smokeless tobacco, pipe to8 bacco, or roll-your-own tobacco solely for

9 the person’s own personal consumption or

10 use, and’’.

11 (C) The chapter heading for chap12 ter 52 is amended to read as follows:

13 ‘‘CHAPTER 52—TOBACCO PRODUCTS AND

14 CIGARETTE PAPERS AND TUBES’’.

15 (D) The table of chapters for sub16 title E is amended by striking the item

17 relating to chapter 52 and inserting

18 the following new item:

‘‘CHAPTER 52. Tobacco products and cigarette papers

and tubes.’’

19 (h) INFLATION ADJUSTMENT OF RATES,

20 FLOOR STOCKS TAXES, AND APPLICATION OF

21 TAXES TO POSSESSIONS.—Section 5701, as

22 amended by subsection (g), is amended by re23 designating subsection (h) as subsection (j)
682

•S 1415 RS2

1 and by inserting after subsection (g) the fol2 lowing:

3 ‘‘(h) INFLATION ADJUSTMENT.—

4 ‘‘(1) IN GENERAL.—In the case of any

5 calendar year after 2001, the dollar

6 amount contained in the table in each of

7 the preceding subsections (and the per8 centage contained in the table contained

9 in subsection (b)(2)) otherwise applicable

10 to such calendar year shall be increased

11 by an amount equal to—

12 ‘‘(A) such dollar amount (or per13 centage), multiplied by

14 ‘‘(B) the cost-of-living adjustment

15 determined under section 1(f)(3) for

16 such calendar year by substituting

17 ‘calendar year 2000’ for ‘calendar year

18 1992’ in subparagraph (B) thereof.

19 ‘‘(2) ROUNDING.—If any increase deter20 mined under paragraph (1) is not a mul21 tiple of—

22 ‘‘(A) in the case of a dollar

23 amount in the table contained in sub24 section (a)(2) or (b), 50 cents, and
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•S 1415 RS2

1 ‘‘(B) in the case of a dollar

2 amount in the table contained in sub3 section (a)(1), (e), (f), or (g), 1 cent,

4 ‘‘(C) in the case of a dollar

5 amount in the table contained in sub6 section (c) or (d), .01 cent,

7 such increase shall be rounded to the

8 nearest multiple of the applicable cent

9 unit.

10 ‘‘(i) FLOOR STOCKS TAXES.—

11 ‘‘(1) IMPOSITION OF TAX.—On tobacco

12 products manufactured in or imported

13 into the United States or any possession of

14 the United States which are removed be15 fore any tax increase date, and held on

16 such date for sale by any person, there is

17 hereby imposed a tax in an amount equal

18 to the excess of—

19 ‘‘(A) the tax which would be im20 posed under any preceding subsection

21 of this section on the article if the ar22 ticle had been removed on such date,

23 over

24 ‘‘(B) the prior tax (if any) imposed

25 under such subsection on such article.
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1 ‘‘(2) CREDIT AGAINST TAX.—Each person

2 shall be allowed as a credit against the

3 taxes imposed by paragraph (1) an

4 amount equal to $500. Such credit shall

5 not exceed the amount of taxes imposed by

6 paragraph (1) on any tax increase date,

7 for which such person is liable.

8 ‘‘(3) LIABILITY FOR TAX AND METHOD OF

9 PAYMENT.—

10 ‘‘(A) LIABILITY FOR TAX.—A person

11 holding cigarettes on any tax increase

12 date, to which any tax imposed by

13 paragraph (1) applies shall be liable

14 for such tax.

15 ‘‘(B) METHOD OF PAYMENT.—The tax

16 imposed by paragraph (1) shall be

17 paid in such manner as the Secretary

18 shall prescribe by regulations.

19 ‘‘(C) TIME FOR PAYMENT.—The tax

20 imposed by paragraph (1) shall be

21 paid on or before the date which is

22 180 days after any tax increase date.

23 ‘‘(4) ARTICLES IN FOREIGN TRADE

24 ZONES.—Notwithstanding the Act of June

25 18, 1934 (48 Stat. 998, 19 U.S.C. 81a) and
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•S 1415 RS2

1 any other provision of law, any article

2 which is located in a foreign trade zone

3 on any tax increase date, shall be subject

4 to the tax imposed by paragraph (1) if—

5 ‘‘(A) internal revenue taxes have

6 been determined, or customs duties

7 liquidated, with respect to such arti8 cle before such date pursuant to a re9 quest made under the 1st proviso of

10 section 3(a) of such Act, or

11 ‘‘(B) such article is held on such

12 date under the supervision of a cus13 toms officer pursuant to the 2d pro14 viso of such section 3(a).

15 ‘‘(5) TAX INCREASE DATE.—The term

16 ‘‘tax increase date’’ means January 1 in

17 any calendar year after 1998.

18 ‘‘(6) CONTROLLED GROUPS.—Rules simi19 lar to the rules of section 5061(e)(3) shall

20 apply for purposes of this subsection.

21 ‘‘(7) OTHER LAWS APPLICABLE.—All pro22 visions of law, including penalties, appli23 cable with respect to the taxes imposed by

24 the preceding subsections of this section

25 shall, insofar as applicable and not in-
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•S 1415 RS2

1 consistent with the provisions of this sub2 section, apply to the floor stocks taxes im3 posed by paragraph (1), to the same extent

4 as if such taxes were imposed by such sub5 sections. The Secretary may treat any per6 son who bore the ultimate burden of the

7 tax imposed by paragraph (1) as the per8 son to whom a credit or refund under

9 such provisions may be allowed or made.

10 ‘‘(j) APPLICATION OF TAXES TO U.S. POSSES11 SIONS.—Notwithstanding subsections (b) and

12 (c) of section 7653 and any other provision of

13 law—

14 ‘‘(1) IN GENERAL.—On tobacco products

15 manufactured in or imported into any

16 possession of the United States, there is

17 hereby imposed a tax at the rate equal to

18 the excess of—

19 ‘‘(A) the rate of tax applicable

20 under this section to like articles

21 manufactured in the United States,

22 over

23 ‘‘(B) the rate referred to in sub24 paragraph (A) which would have been

25 in effect if the amendments made by
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•S 1415 RS2

1 the National Tobacco Policy and

2 Youth Smoking Reduction Act had not

3 been enacted.

4 ‘‘(2) SHIPMENTS TO U.S. POSSESSIONS

5 FROM THE UNITED STATES.—Only the rates

6 of tax which would have been in effect if

7 the amendments made by the National To8 bacco Policy and Youth Smoking Reduc9 tion Act had not been enacted shall be

10 taken into account in determining the

11 amount of any exemption from, or credit

12 or drawback of, any tax imposed by this

13 section on any article shipped to any pos14 session of the United States from the

15 United States.

16 ‘‘(3) SHIPMENTS FROM U.S. POSSESSIONS

17 TO THE UNITED STATES.—The rates of tax

18 taken into account under section 7652(a)

19 with respect to tobacco products coming

20 into the United States from any possession

21 of the United States shall be the rates of

22 tax which would have been in effect if the

23 amendments made by the National To24 bacco Policy and Youth Smoking Reduc25 tion Act had not been enacted.
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•S 1415 RS2

1 ‘‘(4) DISPOSITION OF REVENUES.—The

2 provisions of section 7652(a)(3) shall not

3 apply to any tax imposed by reason of this

4 subsection.’’

5 (j) MODIFICATIONS OF CERTAIN TOBACCO TAX

6 PROVISIONS.—

7 (1) EXEMPTION FOR EXPORTED TOBACCO

8 PRODUCTS AND CIGARETTE PAPERS AND

9 TUBES TO APPLY ONLY TO ARTICLES MARKED

10 FOR EXPORT.—

11 (A) Subsection (b) of section 5704

12 is amended by adding at the end the

13 following new sentence: ‘‘Tobacco

14 products and cigarette papers and

15 tubes may not be transferred or re16 moved under this subsection unless

17 such products or papers and tubes

18 bear such marks, labels, or notices as

19 the Secretary shall by regulations pre20 scribe.’’

21 (B) Section 5761 is amended by re22 designating subsections (c) and (d) as

23 subsections (d) and (e), respectively,

24 and by inserting after subsection (b)

25 the following new subsection:
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•S 1415 RS2

1 ‘‘(c) SALE OF TOBACCO PRODUCTS AND CIGA2 RETTE PAPERS AND TUBES FOR EXPORT.—Except

3 as provided in subsections (b) and (d) of sec4 tion 5704—

5 ‘‘(1) every person who sells, relands, or

6 receives within the jurisdiction of the

7 United States any tobacco products or cig8 arette papers or tubes which have been la9 beled or shipped for exportation under

10 this chapter,

11 ‘‘(2) every person who sells or receives

12 such relanded tobacco products or ciga13 rette papers or tubes, and

14 ‘‘(3) every person who aids or abets in

15 such selling, relanding, or receiving,

16 shall, in addition to the tax and any other pen17 alty provided in this title, be liable for a pen18 alty equal to the greater of $1,000 or 5 times

19 the amount of the tax imposed by this chapter.

20 All tobacco products and cigarette papers and

21 tubes relanded within the jurisdiction of the

22 United States, and all vessels, vehicles, and

23 aircraft used in such relanding or in removing

24 such products, papers, and tubes from the
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•S 1415 RS2

1 place where relanded, shall be forfeited to the

2 United States.’’

3 (C) Subsection (a) of section 5761

4 is amended by striking ‘‘subsection

5 (b)’’ and inserting ‘‘subsection (b) or

6 (c)’’.

7 (D) Subsection (d) of section 5761,

8 as redesignated by subparagraph (B),

9 is amended by striking ‘‘The penalty

10 imposed by subsection (b)’’ and insert11 ing ‘‘The penalties imposed by sub12 sections (b) and (c)’’.

13 (E)(i) Subpart F of chapter 52 is

14 amended by adding at the end the fol15 lowing new section:

16 ‘‘SEC. 5754. RESTRICTION ON IMPORTATION OF PRE17 VIOUSLY EXPORTED TOBACCO PRODUCTS.

18 ‘‘(a) IN GENERAL.—Tobacco products and

19 cigarette papers and tubes previously exported

20 from the United States may be imported or

21 brought into the United States only as pro22 vided in section 5704(d). For purposes of this

23 section, section 5704(d), section 5761, and such

24 other provisions as the Secretary may specify

25 by regulations, references to exportation shall
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•S 1415 RS2

1 be treated as including a reference to ship2 ment to the Commonwealth of Puerto Rico.

3 ‘‘(b) CROSS REFERENCE.—

‘‘For penalty for the sale of tobacco products and

cigarette papers and tubes in the United States

which are labeled for export, see section 5761(c).’’

4 (ii) The table of sections for sub5 part F of chapter 52 is amended by

6 adding at the end the following new

7 item:

‘‘Sec. 5754. Restriction on importation of previously

exported tobacco products.’’

8 (2) IMPORTERS REQUIRED TO BE QUALI9 FIED.—

10 (A) Sections 5712, 5713(a), 5721,

11 5722, 5762(a)(1), and 5763 (b) and (c)

12 are each amended by inserting ‘‘or im13 porter’’ after ‘‘manufacturer’’.

14 (B) The heading of subsection (b)

15 of section 5763 is amended by insert16 ing ‘‘QUALIFIED IMPORTERS,’’ after

17 ‘‘MANUFACTURERS,’’.

18 (C) The heading for subchapter B

19 of chapter 52 is amended by inserting

20 ‘‘and Importers’’ after ‘‘Manufactur21 ers’’.
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•S 1415 RS2

1 (D) The item relating to sub2 chapter B in the table of subchapters

3 for chapter 52 is amended by inserting

4 ‘‘and importers’’ after ‘‘manufactur5 ers’’.

6 (3) BOOKS OF 25 OR FEWER CIGARETTE

7 PAPERS SUBJECT TO TAX.—Subsection (c) of

8 section 5701 is amended by striking ‘‘On

9 each book or set of cigarette papers con10 taining more than 25 papers,’’ and insert11 ing ‘‘On cigarette papers,’’.

12 (4) STORAGE OF TOBACCO PRODUCTS.—

13 Subsection (k) of section 5702 is amended

14 by inserting ‘‘under section 5704’’ after

15 ‘‘internal revenue bond’’.

16 (5) AUTHORITY TO PRESCRIBE MINIMUM

17 MANUFACTURING ACTIVITY REQUIREMENTS.—

18 Section 5712 is amended by striking ‘‘or’’

19 at the end of paragraph (1), by redesig20 nating paragraph (2) as paragraph (3),

21 and by inserting after paragraph (1) the

22 following new paragraph:

23 ‘‘(2) the activity proposed to be carried

24 out at such premises does not meet such
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•S 1415 RS2

1 minimum capacity or activity require2 ments as the Secretary may prescribe, or’’.

3 (k) REPEAL OF DUPLICATIVE PROVISIONS.—

4 Section 9302 of the Balanced Budget Act of

5 1997 (other than subsection (i)(2)) and the

6 amendments made by such section are re7 pealed, and the Internal Revenue Code of 1986

8 shall be administered as if such section and

9 such amendments had not been enacted.

10 (l) EFFECTIVE DATE.—The amendments and

11 repeal made by this section shall apply to arti12 cles removed (as defined in section 5702(k) of

13 the Internal Revenue Code of 1986, as amend14 ed by this section) after December 30, 1998.

15 SEC. 1402. EXCISE TAX ON FAILURE TO MEET UNDERAGE

16 SMOKING REDUCTION GOALS.

17 (a) IN GENERAL.—Subchapter G of chapter

18 52 (relating to penalties and forfeitures) is

19 amended by adding at the end the following

20 new part:

21 ‘‘PART II—FAILURE TO MEET UNDERAGE

22 SMOKING REDUCTION GOALS

‘‘Sec. 5771. Excise tax on failure to meet underage smoking

reduction goals.
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•S 1415 RS2

1 ‘‘SEC. 5771. EXCISE TAX ON FAILURE TO MEET UNDERAGE

2 SMOKING REDUCTION GOALS.

3 ‘‘(a) IMPOSITION OF TAX.—If the Secretary

4 determines under subsection (f) for any cal5 endar year that there is a failure to attain the

6 required percentage reduction in underage

7 use of cigarettes or smokeless tobacco, then

8 there is hereby imposed on each applicable

9 person with respect to such product a tax in

10 the amount determined under subsection (b).

11 ‘‘(b) AMOUNT OF TAX.—The amount of the

12 tax imposed by subsection (a) on any applica13 ble person with respect to cigarettes or smoke14 less tobacco for any calendar year shall be an

15 amount equal to such person’s applicable per16 centage of the non-attainment penalty for such

17 product for such calendar year.

18 ‘‘(c) LIABILITY FOR AND PAYMENT OF TAX.—

19 ‘‘(1) LIABILITY.—

20 ‘‘(A) IN GENERAL.—Each applicable

21 person shall be liable for the tax im22 posed under subsection (a) on such

23 person.

24 ‘‘(B) JOINT, SEVERAL, AND STRICT LI25 ABILITY.—
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•S 1415 RS2

1 ‘‘(i) CIGARETTES.—Any tax im2 posed by subsection (a) on any ap3 plicable person with respect to

4 cigarettes shall be the joint, sev5 eral, and strict liability of all ap6 plicable persons with respect to

7 cigarettes.

8 ‘‘(ii) SMOKELESS TOBACCO.—Any

9 tax imposed by subsection (a) on

10 any applicable person with re11 spect to smokeless tobacco shall be

12 the joint, several, and strict liabil13 ity of all applicable persons with

14 respect to smokeless tobacco.

15 The Secretary shall make a reason16 able effort to collect any tax under

17 this section on the person on which

18 the tax was imposed (without regard

19 to this subparagraph).

20 ‘‘(2) TIME FOR PAYMENT.—Any tax im21 posed by subsection (a) for any calendar

22 year shall be due and payable on April 1

23 of the following calendar year.

24 ‘‘(d) APPLICABLE PERSON; APPLICABLE PER25 CENTAGE.—For purposes of this section—
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•S 1415 RS2

1 ‘‘(1) APPLICABLE PERSON.—The term

2 ‘applicable person’ means, with respect to

3 any calendar year, any person liable for

4 tax imposed by section 5201 with respect

5 to cigarettes or smokeless tobacco.

6 ‘‘(2) APPLICABLE PERCENTAGE.—The

7 term ‘applicable percentage’ means, with

8 respect to any product of an applicable

9 person for a calendar year, the percentage

10 (determined by the Secretary) equal to the

11 ratio of—

12 ‘‘(A) the liability of the person for

13 the taxes imposed by section 5701 on

14 such product for the calendar year, to

15 ‘‘(B) such liability for all applica16 ble persons with respect to such prod17 uct for the calendar year.

18 ‘‘(3) LIABILITY FOR TAX.—For purposes

19 of this subsection, liability for tax im20 posed by section 5701 shall be determined

21 without regard to section 5703 and net of

22 any credit or refund before the determina23 tion date.

24 ‘‘(e) CALCULATION OF NON-ATTAINMENT PEN25 ALTIES.—
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•S 1415 RS2

1 ‘‘(1) SECRETARY TO DETERMINE NON-AT2 TAINMENT PENALTY.—Not later than Feb3 ruary 15 of each calendar year, the Sec4 retary shall determine and publish—

5 ‘‘(A) the non-attainment penalty

6 (if any) for cigarettes and for smoke7 less tobacco for the preceding cal8 endar year, and

9 ‘‘(B) the applicable percentage for

10 such preceding calendar year for each

11 applicable person.

12 ‘‘(2) NON-ATTAINMENT PENALTY FOR

13 CIGARETTES.—The non-attainment penalty

14 for cigarettes for any calendar year for

15 which a failure is determined under sub16 section (f) shall be determined as follows:

If the non-attainment percentage is:

The penalty is:

Not more than 5

percent $80,000,000 multiplied by the nonattainment percentage

More than 5% but

not more than

10% $400,000,000, plus $160,000,000 multiplied

by the non-attainment percentage in excess

of 5% but not in excess of 10%

More than 10%

but not more

than 20% $1,200,000,000, plus $240,000,000 multiplied

by the non-attainment percentage in excess

of 10% but not in excess of 20%

More than 20% $3,600,000,000
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1 ‘‘(3) NON-ATTAINMENT PENALTY FOR

2 SMOKELESS TOBACCO.—The non-attainment

3 penalty for smokeless tobacco for any cal4 endar year for which a failure is deter5 mined under subsection (f) shall be deter6 mined as follows:

If the non-attainment percentage is:

The penalty is:

Not more than 5

percent $8,000,000 multiplied by the non-attainment

percentage

More than 5% but

not more than

10% $40,000,000, plus $16,000,000 multiplied by

the non-attainment percentage in excess of

5% but not in excess of 10%

More than 10%

but not more

than 20% $120,000,000, plus $24,000,000 multiplied by

the non-attainment percentage in excess of

10% but not in excess of 20%

More than 20% $360,000,000

7 ‘‘(4) PENALTIES TO BE ADJUSTED FOR IN8 FLATION.—

9 ‘‘(A) IN GENERAL.—Beginning with

10 the fourth calendar year beginning

11 after the date of enactment of this sec12 tion, each dollar amount in the tables

13 in paragraphs (2) and (3) shall be in14 creased by the inflation adjustment.

15 ‘‘(B) INFLATION ADJUSTMENT.—For

16 purposes of subparagraph (A), the in-
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•S 1415 RS2

1 flation adjustment for any calendar

2 year is the percentage (if any) by

3 which—

4 ‘‘(i) the CPI for the preceding

5 calendar year, exceeds

6 ‘‘(ii) the CPI for the calendar

7 year 1998.

8 ‘‘(C) CPI.—For purposes of sub9 paragraph (B), the CPI for any cal10 endar year is the average of the Con11 sumer Price Index for all-urban con12 sumers published by the Department

13 of Labor as of the close of the 12-

14 month period ending August 31 of

15 such calendar year.

16 ‘‘(D) ROUNDING.—If any increase

17 determined under subparagraph (A)

18 is not a multiple of $1,000, the in19 crease shall be rounded to the nearest

20 multiple of $1,000.

21 ‘‘(f) FAILURES TO WHICH SECTION APPLIES.—

22 For purposes of this section—

23 ‘‘(1) REQUIRED REDUCTION.—

24 ‘‘(A) REQUIRED REDUCTIONS FOR

25 CIGARETTES.—With respect to ciga-
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•S 1415 RS2

1 rettes, the required percentage reduc2 tion in underage use means—

Calendar

Year

Required Percentage Reduction as a Percentage of Base Incidence Percentage in Underage Cigarette Use

2001 and 2002 15 percent

2003 and 2004 30 percent

2005, 2006, and

2007 50 percent

2008 and thereafter 60 percent

3 ‘‘(B) REQUIRED REDUCTIONS FOR

4 SMOKELESS TOBACCO.—With respect to

5 smokeless tobacco products, the re6 quired percentage reduction in under7 age use means—
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•S 1415 RS2

Calendar

Year

Required Percentage Reduction as a Percentage of Base Incidence Percentage in Underage Smokeless Tobacco Use

2001 and 2002 12.5 percent

2003 and 2004 25 percent

2005, 2006, and

2007 35 percent

2008 and thereafter 45 percent

1 ‘‘(2) DETERMINATION OF UNDERAGE

2 USE.—As soon as practicable after cal3 endar year 2001, and annually thereafter,

4 the Secretary shall determine the percent

5 incidence of underage use of cigarettes

6 and of smokeless tobacco by calculating

7 the average, weighted by relative popu8 lation of such age groups in 1995 as deter9 mined by the Bureau of the Census, of the

10 percentages of individuals in grade 12

11 (ages 16 and 17), in grade 10 (ages 14 and

12 15), and in grade 8 (age 13) who used

13 cigarettes or smokeless tobacco, as appro14 priate, on a daily basis during the preced15 ing calendar year. The percentages used

16 in this calculation are to be those meas17 ured by (A) the University of Michigan

18 Survey, or (B) such other index as is cho19 sen by the Secretary after consultation

20 with the Secretary of Health and Human
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•S 1415 RS2

1 Services and after notice and the oppor2 tunity for comment in accordance with

3 section 553 of title 5, United States Code.

4 ‘‘(3) BASE INCIDENCE PERCENTAGE.—The

5 term ‘base incidence percentage’ means—

6 ‘‘(A) in the case of cigarettes, the

7 average, weighted by relative popu8 lation of the following age groups in

9 1995 as determined by the Bureau of

10 the Census, of (i) the average of the

11 percentages of individuals in grade 12

12 (ages 16 and 17) from 1986 to 1996

13 who used cigarettes on a daily basis;

14 (ii) the average of the percentages of

15 individuals in grade 10 (ages 14 and

16 15) from 1991 to 1996 who used ciga17 rettes on a daily basis; and (iii) the

18 average of the percentages of individ19 uals in grade 8 (age 13) from 1991 to

20 1996 who used cigarettes on a daily

21 basis; and

22 ‘‘(B) in the case of smokeless to23 bacco products, the average, weighted

24 by relative population of the following

25 age groups in 1995 as determined by
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•S 1415 RS2

1 the Bureau of the Census, of the per2 centage of individuals in grade 12

3 (ages 16 and 17), individuals in grade

4 10 (ages 14 and 15), and individuals

5 in grade 8 (age 13) who used smoke6 less tobacco products on a daily basis

7 in 1996.

8 The percentages specified in this para9 graph are those measured by using an

10 index similar to the index used for pur11 poses of paragraph (2).

12 ‘‘(4) NON-ATTAINMENT PERCENTAGE FOR

13 CIGARETTES.—The term ‘non-attainment

14 percentage for cigarettes’ means the num15 ber of percentage points yielded—

16 ‘‘(A) for a calendar year in which

17 the percent incidence of underage use

18 of cigarettes is less than the base inci19 dence percentage for such use, by sub20 tracting—

21 ‘‘(i) the percentage by which

22 the percent incidence of underage

23 use of cigarettes in that year is

24 less than the base incidence per25 centage, from
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•S 1415 RS2

1 ‘‘(ii) the required percentage

2 reduction applicable in that year;

3 and

4 ‘‘(B) for a calendar year in which

5 the percent incidence of underage use

6 of cigarettes is greater than the base

7 incidence percentage for such use, by

8 adding—

9 ‘‘(i) the percentage by which

10 the percent incidence of underage

11 use of cigarettes in that year is

12 greater than the base incidence

13 percentage; and

14 ‘‘(ii) the required percentage

15 reduction applicable in that year.

16 ‘‘(5) NON-ATTAINMENT PERCENTAGE FOR

17 SMOKELESS TOBACCO PRODUCTS.—The term

18 ‘non-attainment percentage for smokeless

19 tobacco products’ means the number of

20 percentage points yielded—

21 ‘‘(A) for a calendar year in which

22 the percent incidence of underage use

23 of smokeless tobacco products is less

24 than the base incidence percentage

25 for such use, by subtracting—
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•S 1415 RS2

1 ‘‘(i) the percentage by which

2 the percent incidence of underage

3 use of smokeless tobacco products

4 in that year is less than the base

5 incidence percentage, from

6 ‘‘(ii) the required percentage

7 reduction applicable in that year;

8 and

9 ‘‘(B) for a calendar year in which

10 the percent incidence of underage use

11 of smokeless tobacco products is great12 er than the base incidence percentage

13 for such use, by adding—

14 ‘‘(i) the percentage by which

15 the percent incidence of underage

16 use of smokeless tobacco products

17 in that year is greater than the

18 base incidence percentage; and

19 ‘‘(ii) the required percentage

20 reduction applicable in that year.

21 ‘‘(g) PENALTY LIABILITY AMONG MANUFAC22 TURERS.—

23 ‘‘(1) IN GENERAL.—The District Courts

24 of the United States shall have jurisdic25 tion to adjudicate any claim brought
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•S 1415 RS2

1 under this section by an applicable person

2 against one or more other applicable per3 sons—

4 ‘‘(A) to recover a portion of the

5 penalty paid by the plaintiff applica6 ble person; or

7 ‘‘(B) for a reallocation of the pen8 alty among applicable persons.

9 ‘‘(2) CONTRIBUTION OR REIMBURSEMENT

10 LIABILITY.—An applicable person shall be

11 liable under this subsection to one or

12 more other applicable persons if the

13 plaintiff establishes by a preponderance

14 of the evidence that the defendant,

15 through its acts or omissions, was respon16 sible for a disproportionate share of the

17 non-attainment penalty as compared to

18 the responsibility of the plaintiff.

19 ‘‘(3) RESPONSIBILITY FOR AGENTS, ETC.—

20 In any action brought under this sub21 section, an applicable person shall be

22 held responsible for any act or omission of

23 its attorneys, advertising agencies, or

24 other agents that contributed to that per-
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•S 1415 RS2

1 son’s responsibility for the penalty as2 sessed under this section.’’

3 (b) TAX NOT DEDUCTIBLE.—Section 275(a)

4 is amended by adding after paragraph (6) the

5 following new paragraph:

6 ‘‘(7) The tax imposed by section 5771.’’

7 (c) CONFORMING AMENDMENTS.—So much of

8 subchapter G of chapter 52 as precedes section

9 5761 as amended reads as follows:

‘‘Subchapter G—Penalties and Forfeitures

‘‘Part I—General provisions.

‘‘Part II—Failure to meet underage smoking reduction goals.

10 ‘‘PART I—GENERAL PROVISIONS’’.

11 SEC. 1403. ESTABLISHMENT OF TRUST FUND.

12 (a) IN GENERAL.—Subchapter A of chapter

13 98 (relating to establishment of trust funds) is

14 amended by adding at the end the following

15 new section:

16 ‘‘SEC. 9512. NATIONAL TOBACCO SETTLEMENT TRUST

17 FUND.

18 ‘‘(a) CREATION OF TRUST FUND.—There is

19 established in the Treasury of the United

20 States a trust fund to be known as the ‘Na21 tional Tobacco Settlement Trust Fund’, con22 sisting of such amounts as may be appro23 priated or credited to the National Tobacco
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•S 1415 RS2

1 Settlement Trust Fund as provided in this sec2 tion.

3 ‘‘(b) TRANSFERS TO NATIONAL TOBACCO SET4 TLEMENT TRUST FUND.—

5 ‘‘(1) IN GENERAL.—There are appro6 priated to the National Tobacco Settle7 ment Trust Fund—

8 ‘‘(A) amounts equivalent to the net

9 revenues received in the Treasury

10 after December 31, 1998, from the

11 taxes imposed by section 5701 to the

12 extent attributable to increases in the

13 rates of tax imposed by such section

14 over the rates which would have been

15 imposed if the National Tobacco Pol16 icy and Youth Smoking Reduction Act

17 had not been enacted,

18 ‘‘(B) amounts equivalent to the net

19 revenues received in the Treasury

20 after December 31, 1998, from the tax

21 imposed by section 5771, and

22 ‘‘(C) amounts determined by the

23 Secretary to be equivalent to the

24 amounts of civil penalties collected

25 under the provisions of, and amend-
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•S 1415 RS2

1 ments made by, the National Tobacco

2 Policy and Youth Smoking Reduction

3 Act.

4 ‘‘(2) NET REVENUES.—The term ‘net rev5 enues’ means the amount estimated by the

6 Secretary based on the excess of—

7 ‘‘(A) the taxes received in the

8 Treasury as described in subpara9 graphs (A) and (B) of paragraph (1),

10 over

11 ‘‘(B) the decrease in the tax im12 posed by chapter 1 resulting from the

13 imposition of the taxes described in

14 subparagraph (A).

15 ‘‘(c) EXPENDITURES FROM TRUST FUND.—

16 ‘‘(1) IN GENERAL.—Except as provided

17 in this subsection and subsection (d),

18 amounts in the National Tobacco Settle19 ment Trust Fund shall be available, as

20 provided by appropriations Acts, for mak21 ing expenditures after December 31, 1998,

22 under the provisions of, and the amend23 ments made by, the National Tobacco Pol24 icy and Youth Smoking Reduction Act, as
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•S 1415 RS2

1 in effect on the date of the enactment of

2 this section.

3 ‘‘(2) ECONOMIC ASSISTANCE TO FARM4 ERS.—

5 ‘‘(A) IN GENERAL.—Amounts in the

6 National Tobacco Settlement Trust

7 Fund shall be available, without fur8 ther appropriations, for the purposes

9 set forth in sections 1021, 1022, 1023,

10 and 1031 of the National Tobacco Pol11 icy and Youth Smoking Reduction Act,

12 and subpart 9 of part A of title IV of

13 the Higher Education Act of 1965 (re14 lating to long-term economic assist15 ance to farmers), as in effect on the

16 date of the enactment of this Act.

17 ‘‘(B) BUDGETARY TREATMENT.—This

18 paragraph constitutes budget author19 ity in advance of appropriations Acts

20 and represents the obligation of the

21 Federal Government to provide pay22 ments to States and eligible persons in

23 accordance with the provisions de24 scribed in subparagraph (A).
711

•S 1415 RS2

1 ‘‘(3) TAX REFUNDS.—The Secretary

2 shall pay from time to time from the Na3 tional Tobacco Settlement Trust Fund

4 into the general fund of the Treasury

5 amounts equivalent to refunds provided

6 under subchapter A of chapter 52 to the

7 extent such refunds are attributable to the

8 revenues transferred to such Trust Fund

9 under this section.

10 ‘‘(d) STATE LITIGATION SETTLEMENT AC11 COUNT.—

12 ‘‘(1) IN GENERAL.—There is established

13 in the National Tobacco Settlement Trust

14 Fund a separate account to be known as

15 the ‘State Litigation Settlement Account’,

16 consisting of such amounts as may be

17 transferred to such Account under para18 graph (2).

19 ‘‘(2) TRANSFERS TO ACCOUNT.—The Sec20 retary of the Treasury shall transfer to

21 the State Litigation Settlement Account

22 an amount equal to 45 percent (30 percent

23 in the case of calendar years 1999, 2000,

24 2001, 2002, and 2003) of the amounts ap-
712

•S 1415 RS2

1 propriated to the National Tobacco Settle2 ment Trust Fund under subsection (b).

3 ‘‘(3) EXPENDITURES FROM ACCOUNT.—

4 ‘‘(A) IN GENERAL.—Except as pro5 vided in paragraph (5), amounts in

6 the State Litigation Settlement Ac7 count shall be available, without fur8 ther appropriations, to make pay9 ments to each State in the amount de10 termined under subparagraph (B).

11 The Secretary shall transfer amounts

12 available under this subsection to

13 each State as amounts are credited to

14 the State Litigation Settlement Ac15 count without undue delay.

16 ‘‘(B) AMOUNT.—Except as provided

17 in paragraph (4), the amount of any

18 payment to a State under subpara19 graph (A) for any calendar year shall

20 be equal to the percentage of the

21 amounts transferred to the State Liti22 gation Settlement Account for such

23 calendar year determined in accord24 ance with the following table:

‘‘States: Percentage:

Alabama ........................................................................... 1.237

Alaska ............................................................................... 0.400
713

•S 1415 RS2

Arizona ............................................................................. 1.709

Arkansas .......................................................................... 0.954

California ........................................................................ 8.695

Colorado ........................................................................... 0.990

Connecticut ..................................................................... 1.548

Delaware .......................................................................... 0.400

District of Columbia ...................................................... 0.474

Florida ............................................................................. 4.768

Georgia ............................................................................. 2.735

Hawaii .............................................................................. 0.800

Idaho ................................................................................ 0.400

Illinois .............................................................................. 3.930

Indiana ............................................................................ 1.490

Iowa .................................................................................. 0.932

Kansas .............................................................................. 0.800

Kentucky .......................................................................... 1.664

Louisiana ......................................................................... 1.723

Maine ................................................................................ 0.800

Maryland ......................................................................... 1.425

Massachusetts ................................................................. 3.802

Michigan .......................................................................... 3.586

Minnesota ........................................................................ 1.246

Mississippi ....................................................................... 1.701

Missouri ........................................................................... 1.701

Montana ........................................................................... 0.400

Nebraska .......................................................................... 0.400

Nevada ............................................................................. 0.400

New Hampshire .............................................................. 0.400

New Jersey ....................................................................... 3.755

New Mexico ...................................................................... 0.800

New York .......................................................................... 12.812

North Carolina ............................................................... 1.977

North Dakota .................................................................. 0.400

Ohio .................................................................................. 4.205

Oklahoma ........................................................................ 0.800

Oregon .............................................................................. 1.353

Pennsylvania ................................................................... 4.421

Rhode Island ................................................................... 0.800

South Carolina ............................................................... 1.090

South Dakota .................................................................. 0.400

Tennessee ......................................................................... 2.851

Texas ................................................................................. 5.930

Utah .................................................................................. 0.400

Vermont ............................................................................ 0.400

Virginia ............................................................................ 1.348

Washington ...................................................................... 1.726

West Virginia .................................................................. 0.782

Wisconsin ......................................................................... 1.841

Wyoming ........................................................................... 0.400.

1 ‘‘(C) APPLICATION OF MEDICAID COST

2 RECOVERY RULES.—Subject to section
714

•S 1415 RS2

1 1903(d)(7) of the Social Security Act, a

2 State may use amounts received under

3 this paragraph as the State deter4 mines appropriate.

5 ‘‘(4) MINIMUM PAYMENTS TO SETTLEMENT

6 STATES.—

7 ‘‘(A) IN GENERAL.—In the case of

8 the State of Florida, Minnesota, Mis9 sissippi, or Texas, the payment under

10 paragraph (3)(A) for any calendar

11 year shall be equal to the greater of—

12 ‘‘(i) the amount of the payment

13 determined under paragraph

14 (3)(B), or

15 ‘‘(ii) the aggregate payments

16 which, but for paragraph (5),

17 would have been received by such

18 State for such calendar year

19 under the settlement, judgment, or

20 other agreement with respect to

21 which payments were waived

22 under paragraph (5).

23 ‘‘(B) REALLOCATION OF AMOUNTS

24 FOR OTHER STATES.—If the amount de25 termined under subparagraph (A)(ii)
715

•S 1415 RS2

1 exceeds the amount determined under

2 subparagraph (A)(i) for 1 or more

3 States for any calendar year, the

4 amount of the payments under para5 graph (3)(A) to all States to which

6 subparagraph (A) does not apply shall

7 be ratably reduced by the aggregate

8 amount of such excess for all 4 States.

9 ‘‘(5) WAIVER OF PAYMENTS FROM STATE

10 LITIGATION.—

11 ‘‘(A) IN GENERAL.—No payment

12 shall be made from the State Litiga13 tion Settlement Account to any State

14 unless such State agrees to waive its

15 rights to receive funds after the date

16 of the enactment of this Act under any

17 settlement, entry of a court judgment,

18 or other agreement, that resolves liti19 gation by the State against a tobacco

20 manufacturer or a group of tobacco

21 manufacturers for expenditures of the

22 State for tobacco-related diseases or

23 conditions.

24 ‘‘(B) REDISTRIBUTION OF WAIVED

25 PAYMENTS.—If a waiver is not in effect
716

•S 1415 RS2

1 under this paragraph with respect to

2 a State for a calendar year, any pay3 ments out of the State Litigation Set4 tlement Account which would other5 wise have been made to such State

6 shall be reallocated to all other States

7 receiving such payments for such cal8 endar year in the same proportion as

9 the payments received by any State

10 bear to all such payments.

11 ‘‘(C) WAIVER.—Any waiver under

12 subparagraph (A) shall be made be13 fore the date which is 1 year after the

14 date of the enactment of this section

15 and, once made, is irrevocable.

16 ‘‘(6) BUDGETARY TREATMENT.—This sub17 section constitutes budget authority in ad18 vance of appropriations Acts and rep19 resents the obligation of the Federal Gov20 ernment to provide payments to States in

21 accordance with the provisions described

22 in paragraph (3).

23 ‘‘(e) LIMITATION ON TRANSFERS TO TRUST

24 FUND.—No amount may be appropriated to the

25 National Tobacco Settlement Trust Fund or
717

•S 1415 RS2

1 the State Litigation Settlement Account on or

2 after the date of any expenditure from such

3 Trust Fund or Account which is not permitted

4 by this section. The determination of whether

5 an expenditure is so permitted shall be made

6 without regard to—

7 ‘‘(1) any provision of law which is not

8 contained or referenced in this title or in

9 a revenue Act, and

10 ‘‘(2) whether such provision of law is a

11 subsequently enacted provision or directly

12 or indirectly seeks to waive the applica13 tion of this subsection.’’

14 (b) INTEREST NOT CREDITED TO TRUST

15 FUND.—Section 9602(b)(3) (relating to interest

16 on certain proceeds) is amended by striking

17 ‘‘The interest’’ and inserting ‘‘Except with re18 spect to the National Tobacco Settlement Trust

19 Fund, the interest’’.

20 (c) APPLICATION OF MEDICAID COST RECOV21 ERY RULES.—Section 1903(d) of the Social Se22 curity Act (42 U.S.C. 1396b(d)) is amended by

23 adding at the end the following:

24 ‘‘(7)(A) Except as provided under subpara25 graph (B), the provisions of this subsection re-
718

•S 1415 RS2

1 lating to the treatment of overpayments, and

2 any other cost recovery rules applicable to pay3 ments made under this title, shall apply to the

4 portion of any of the following amounts that

5 is used for expenditures under or related to the

6 State plan (or a waiver of such plan) under

7 this title:

8 ‘‘(i) Payments from the State Litiga9 tion Settlement Account established under

10 section 9512(d) of the Internal Revenue

11 Code of 1986.

12 ‘‘(ii) Payments received as a result of

13 litigation by the State against a tobacco

14 manufacturer or a group of tobacco man15 ufacturers based on expenditures of the

16 State for tobacco-related diseases or con17 ditions that is resolved through a settle18 ment, entry of a court judgment, or other19 wise.

20 ‘‘(B) Upon receipt of certification by the

21 chief executive officer of a State that the State

22 shall not use payments described in clauses (i)

23 or (ii) of subparagraph (A) for expenditures

24 under or related to the State plan (or a waiver

25 of such plan) under this title, the Secretary
719

•S 1415 RS2

1 shall waive the application of the provisions

2 of this subsection relating to the treatment of

3 overpayments, and any other cost recovery

4 rules applicable to payments made under this

5 title, to such payments.’’

6 (d) CLERICAL AMENDMENT.—The table of

7 sections for subchapter A of chapter 98 is

8 amended by adding at the end the following:

‘‘Sec. 9512. National Tobacco Settlement Trust Fund.’’

9 (e) EFFECTIVE DATE.—The amendments

10 made by this section shall take effect on the

11 date of the enactment of this Act.

12 Subtitle B—Women’s Health and

13 Cancer Rights

14 SEC. 1411. SHORT TITLE.

15 This subtitle may be cited as the ‘‘Women’s

16 Health and Cancer Rights Act of 1998’’.

17 SEC. 1412. FINDINGS.

18 Congress finds that—

19 (1) the offering and operation of

20 health plans affect commerce among the

21 States;

22 (2) health care providers located in a

23 State serve patients who reside in the

24 State and patients who reside in other

25 States; and
720

•S 1415 RS2

1 (3) in order to provide for uniform

2 treatment of health care providers and

3 patients among the States, it is necessary

4 to cover health plans operating in 1 State

5 as well as health plans operating among

6 the several States.

7 SEC. 1413. AMENDMENTS TO THE EMPLOYEE RETIREMENT

8 INCOME SECURITY ACT OF 1974.

9 (a) IN GENERAL.—Subpart B of part 7 of

10 subtitle B of title I of the Employee Retirement

11 Income Security Act of 1974 (29 U.S.C. 1185 et

12 seq.) is amended by adding at the end the fol13 lowing new section:

14 ‘‘SEC. 713. REQUIRED COVERAGE FOR MINIMUM HOSPITAL

15 STAY FOR MASTECTOMIES AND LYMPH NODE

16 DISSECTIONS FOR THE TREATMENT OF

17 BREAST CANCER AND COVERAGE FOR RECON18 STRUCTIVE SURGERY FOLLOWING

19 MASTECTOMIES.

20 ‘‘(a) INPATIENT CARE.—

21 ‘‘(1) IN GENERAL.—A group health

22 plan, and a health insurance issuer pro23 viding health insurance coverage in con24 nection with a group health plan, that

25 provides medical and surgical benefits
721

•S 1415 RS2

1 shall ensure that inpatient coverage with

2 respect to the surgical treatment of breast

3 cancer (including a mastectomy,

4 lumpectomy, or lymph node dissection for

5 the treatment of breast cancer) is pro6 vided for a period of time as is determined

7 by the attending physician, in his or her

8 professional judgment consistent with sci9 entific evidence-based practice, in con10 sultation with the patient, and subject to

11 subsection (d), to be medically appro12 priate.

13 ‘‘(2) EXCEPTION.—Nothing in this sec14 tion shall be construed as requiring the

15 provision of inpatient coverage if the at16 tending physician in consultation with

17 the patient determine that a shorter pe18 riod of hospital stay is medically appro19 priate.

20 ‘‘(b) RECONSTRUCTIVE SURGERY.—A group

21 health plan, and a health insurance issuer

22 providing health insurance coverage in con23 nection with a group health plan, that pro24 vides medical and surgical benefits with re25 spect to a mastectomy shall ensure that, in a
722

•S 1415 RS2

1 case in which a mastectomy patient elects

2 breast reconstruction, coverage is provided

3 for—

4 ‘‘(1) all stages of reconstruction of the

5 breast on which the mastectomy has been

6 performed;

7 ‘‘(2) surgery and reconstruction of the

8 other breast to produce a symmetrical ap9 pearance; and

10 ‘‘(3) the costs of prostheses and com11 plications of mastectomy including

12 lymphedemas;

13 in the manner determined by the attending

14 physician and the patient to be appropriate.

15 Such coverage may be subject to annual

16 deductibles and coinsurance provisions as

17 may be deemed appropriate and as are consist18 ent with those established for other benefits

19 under the plan or coverage. Written notice of

20 the availability of such coverage shall be de21 livered to the participant upon enrollment and

22 annually thereafter.

23 ‘‘(c) NOTICE.—A group health plan, and a

24 health insurance issuer providing health in25 surance coverage in connection with a group
723

•S 1415 RS2

1 health plan shall provide notice to each par2 ticipant and beneficiary under such plan re3 garding the coverage required by this section

4 in accordance with regulations promulgated

5 by the Secretary. Such notice shall be in writ6 ing and prominently positioned in any lit7 erature or correspondence made available or

8 distributed by the plan or issuer and shall be

9 transmitted—

10 ‘‘(1) in the next mailing made by the

11 plan or issuer to the participant or bene12 ficiary;

13 ‘‘(2) as part of any yearly informa14 tional packet sent to the participant or

15 beneficiary; or

16 ‘‘(3) not later than January 1, 1998;

17 whichever is earlier.

18 ‘‘(d) NO AUTHORIZATION REQUIRED.—

19 ‘‘(1) IN GENERAL.—An attending physi20 cian shall not be required to obtain au21 thorization from the plan or issuer for

22 prescribing any length of stay in connec23 tion with a mastectomy, a lumpectomy, or

24 a lymph node dissection for the treatment

25 of breast cancer.
724

•S 1415 RS2

1 ‘‘(2) PRENOTIFICATION.—Nothing in

2 this section shall be construed as prevent3 ing a group health plan from requiring

4 prenotification of an inpatient stay re5 ferred to in this section if such require6 ment is consistent with terms and condi7 tions applicable to other inpatient bene8 fits under the plan, except that the provi9 sion of such inpatient stay benefits shall

10 not be contingent upon such notification.

11 ‘‘(e) PROHIBITIONS.—A group health plan,

12 and a health insurance issuer offering group

13 health insurance coverage in connection with

14 a group health plan, may not—

15 ‘‘(1) deny to a patient eligibility, or

16 continued eligibility, to enroll or to renew

17 coverage under the terms of the plan, sole18 ly for the purpose of avoiding the require19 ments of this section;

20 ‘‘(2) provide monetary payments or re21 bates to individuals to encourage such in22 dividuals to accept less than the mini23 mum protections available under this sec24 tion;
725

•S 1415 RS2

1 ‘‘(3) penalize or otherwise reduce or

2 limit the reimbursement of an attending

3 provider because such provider provided

4 care to an individual participant or bene5 ficiary in accordance with this section;

6 ‘‘(4) provide incentives (monetary or

7 otherwise) to an attending provider to in8 duce such provider to provide care to an

9 individual participant or beneficiary in a

10 manner inconsistent with this section;

11 and

12 ‘‘(5) subject to subsection (f)(3), re13 strict benefits for any portion of a period

14 within a hospital length of stay required

15 under subsection (a) in a manner which is

16 less favorable than the benefits provided

17 for any preceding portion of such stay.

18 ‘‘(f) RULES OF CONSTRUCTION.—

19 ‘‘(1) IN GENERAL.—Nothing in this sec20 tion shall be construed to require a pa21 tient who is a participant or beneficiary—

22 ‘‘(A) to undergo a mastectomy or

23 lymph node dissection in a hospital;

24 or
726

•S 1415 RS2

1 ‘‘(B) to stay in the hospital for a

2 fixed period of time following a mas3 tectomy or lymph node dissection.

4 ‘‘(2) LIMITATION.—This section shall

5 not apply with respect to any group

6 health plan, or any group health insur7 ance coverage offered by a health insur8 ance issuer, which does not provide bene9 fits for hospital lengths of stay in connec10 tion with a mastectomy or lymph node dis11 section for the treatment of breast cancer.

12 ‘‘(3) COST SHARING.—Nothing in this

13 section shall be construed as preventing a

14 group health plan or issuer from impos15 ing deductibles, coinsurance, or other

16 cost-sharing in relation to benefits for

17 hospital lengths of stay in connection

18 with a mastectomy or lymph node dissec19 tion for the treatment of breast cancer

20 under the plan (or under health insur21 ance coverage offered in connection with

22 a group health plan), except that such co23 insurance or other cost-sharing for any

24 portion of a period within a hospital

25 length of stay required under subsection
727

•S 1415 RS2

1 (a) may not be greater than such coinsur2 ance or cost-sharing for any preceding

3 portion of such stay.

4 ‘‘(4) LEVEL AND TYPE OF REIMBURSE5 MENTS.—Nothing in this section shall be

6 construed to prevent a group health plan

7 or a health insurance issuer offering

8 group health insurance coverage from ne9 gotiating the level and type of reimburse10 ment with a provider for care provided in

11 accordance with this section.

12 ‘‘(g) PREEMPTION, RELATION TO STATE

13 LAWS.—

14 ‘‘(1) IN GENERAL.—Nothing in this sec15 tion shall be construed to preempt any

16 State law in effect on the date of enact17 ment of this section with respect to health

18 insurance coverage that—

19 ‘‘(A) requires coverage for a mini20 mum hospital length of stay following

21 a surgical treatment for breast can22 cer;

23 ‘‘(B) requires coverage of at least

24 the coverage of reconstructive breast
728

•S 1415 RS2

1 surgery otherwise required under this

2 section; or

3 ‘‘(C) requires coverage for breast

4 cancer treatments (including breast

5 reconstruction) in accordance with

6 scientific evidence-based practices or

7 guidelines recommended by estab8 lished medical associations.

9 ‘‘(2) APPLICATION OF SECTION.—With re10 spect to a State law—

11 ‘‘(A) described in paragraph

12 (1)(A), the provisions of this section

13 relating to breast reconstruction shall

14 apply in such State; and

15 ‘‘(B) described in paragraph

16 (1)(B), the provisions of this section

17 relating to length of stays for surgical

18 breast treatment shall apply in such

19 State.

20 ‘‘(3) ERISA.—Nothing in this section

21 shall be construed to affect or modify the

22 provisions of section 514 with respect to

23 group health plans.’’.

24 (b) CLERICAL AMENDMENT.—The table of

25 contents in section 1 of the Employee Retire-
729

•S 1415 RS2

1 ment Income Security Act of 1974 (29 U.S.C.

2 1001 note) is amended by inserting after the

3 item relating to section 712 the following new

4 item:

‘‘Sec. 713. Required coverage for minimum hospital stay for

mastectomies and lymph node dissections for the

treatment of breast cancer and coverage for reconstructive surgery following mastectomies.’’.

5 (c) EFFECTIVE DATES.—

6 (1) IN GENERAL.—The amendments

7 made by this section shall apply with re8 spect to plan years beginning on or after

9 the date of enactment of this Act.

10 (2) SPECIAL RULE FOR COLLECTIVE BAR11 GAINING AGREEMENTS.—In the case of a

12 group health plan maintained pursuant

13 to 1 or more collective bargaining agree14 ments between employee representatives

15 and 1 or more employers, any plan

16 amendment made pursuant to a collective

17 bargaining agreement relating to the

18 plan which amends the plan solely to con19 form to any requirement added by this

20 section shall not be treated as a termi21 nation of such collective bargaining

22 agreement.
730

•S 1415 RS2

1 SEC. 1414. AMENDMENTS TO THE PUBLIC HEALTH SERVICE

2 ACT RELATING TO THE GROUP MARKET.

3 (a) IN GENERAL.—Subpart 2 of part A of

4 title XXVII of the Public Health Service Act (42

5 U.S.C. 300gg-4 et seq.) is amended by adding

6 at the end the following new section:

7 ‘‘SEC. 2706. REQUIRED COVERAGE FOR MINIMUM HOSPITAL

8 STAY FOR MASTECTOMIES AND LYMPH NODE

9 DISSECTIONS FOR THE TREATMENT OF

10 BREAST CANCER AND COVERAGE FOR RECON11 STRUCTIVE SURGERY FOLLOWING

12 MASTECTOMIES.

13 ‘‘(a) INPATIENT CARE.—

14 ‘‘(1) IN GENERAL.—A group health

15 plan, and a health insurance issuer pro16 viding health insurance coverage in con17 nection with a group health plan, that

18 provides medical and surgical benefits

19 shall ensure that inpatient coverage with

20 respect to the surgical treatment of breast

21 cancer (including a mastectomy,

22 lumpectomy, or lymph node dissection for

23 the treatment of breast cancer) is pro24 vided for a period of time as is determined

25 by the attending physician, in his or her

26 professional judgment consistent with sci-
731

•S 1415 RS2

1 entific evidence-based practice, in con2 sultation with the patient, and subject to

3 subsection (d), to be medically appro4 priate.

5 ‘‘(2) EXCEPTION.—Nothing in this sec6 tion shall be construed as requiring the

7 provision of inpatient coverage if the at8 tending physician in consultation with

9 the patient determine that a shorter pe10 riod of hospital stay is medically appro11 priate.

12 ‘‘(b) RECONSTRUCTIVE SURGERY.—A group

13 health plan, and a health insurance issuer

14 providing health insurance coverage in con15 nection with a group health plan, that pro16 vides medical and surgical benefits with re17 spect to a mastectomy shall ensure that, in a

18 case in which a mastectomy patient elects

19 breast reconstruction, coverage is provided

20 for—

21 ‘‘(1) all stages of reconstruction of the

22 breast on which the mastectomy has been

23 performed;
732

•S 1415 RS2

1 ‘‘(2) surgery and reconstruction of the

2 other breast to produce a symmetrical ap3 pearance; and

4 ‘‘(3) the costs of prostheses and com5 plications of mastectomy including

6 lymphedemas;

7 in the manner determined by the attending

8 physician and the patient to be appropriate.

9 Such coverage may be subject to annual

10 deductibles and coinsurance provisions as

11 may be deemed appropriate and as are consist12 ent with those established for other benefits

13 under the plan or coverage. Written notice of

14 the availability of such coverage shall be de15 livered to the enrollee upon enrollment and

16 annually thereafter.

17 ‘‘(c) NOTICE.—A group health plan, and a

18 health insurance issuer providing health in19 surance coverage in connection with a group

20 health plan shall provide notice to each par21 ticipant and beneficiary under such plan re22 garding the coverage required by this section

23 in accordance with regulations promulgated

24 by the Secretary. Such notice shall be in writ25 ing and prominently positioned in any lit-
733

•S 1415 RS2

1 erature or correspondence made available or

2 distributed by the plan or issuer and shall be

3 transmitted—

4 ‘‘(1) in the next mailing made by the

5 plan or issuer to the participant or bene6 ficiary;

7 ‘‘(2) as part of any yearly informa8 tional packet sent to the participant or

9 beneficiary; or

10 ‘‘(3) not later than January 1, 1998;

11 whichever is earlier.

12 ‘‘(d) NO AUTHORIZATION REQUIRED.—

13 ‘‘(1) IN GENERAL.—An attending physi14 cian shall not be required to obtain au15 thorization from the plan or issuer for

16 prescribing any length of stay in connec17 tion with a mastectomy, a lumpectomy, or

18 a lymph node dissection for the treatment

19 of breast cancer.

20 ‘‘(2) PRENOTIFICATION.—Nothing in

21 this section shall be construed as prevent22 ing a plan or issuer from requiring

23 prenotification of an inpatient stay re24 ferred to in this section if such require25 ment is consistent with terms and condi-
734

•S 1415 RS2

1 tions applicable to other inpatient bene2 fits under the plan, except that the provi3 sion of such inpatient stay benefits shall

4 not be contingent upon such notification.

5 ‘‘(e) PROHIBITIONS.—A group health plan,

6 and a health insurance issuer offering group

7 health insurance coverage in connection with

8 a group health plan, may not—

9 ‘‘(1) deny to a patient eligibility, or

10 continued eligibility, to enroll or to renew

11 coverage under the terms of the plan, sole12 ly for the purpose of avoiding the require13 ments of this section;

14 ‘‘(2) provide monetary payments or re15 bates to individuals to encourage such in16 dividuals to accept less than the mini17 mum protections available under this sec18 tion;

19 ‘‘(3) penalize or otherwise reduce or

20 limit the reimbursement of an attending

21 provider because such provider provided

22 care to an individual participant or bene23 ficiary in accordance with this section;

24 ‘‘(4) provide incentives (monetary or

25 otherwise) to an attending provider to in-
735

•S 1415 RS2

1 duce such provider to provide care to an

2 individual participant or beneficiary in a

3 manner inconsistent with this section;

4 and

5 ‘‘(5) subject to subsection (f)(3), re6 strict benefits for any portion of a period

7 within a hospital length of stay required

8 under subsection (a) in a manner which is

9 less favorable than the benefits provided

10 for any preceding portion of such stay.

11 ‘‘(f) RULES OF CONSTRUCTION.—

12 ‘‘(1) IN GENERAL.—Nothing in this sec13 tion shall be construed to require a pa14 tient who is a participant or beneficiary—

15 ‘‘(A) to undergo a mastectomy or

16 lymph node dissection in a hospital;

17 or

18 ‘‘(B) to stay in the hospital for a

19 fixed period of time following a mas20 tectomy or lymph node dissection.

21 ‘‘(2) LIMITATION.—This section shall

22 not apply with respect to any group

23 health plan, or any group health insur24 ance coverage offered by a health insur25 ance issuer, which does not provide bene-
736

•S 1415 RS2

1 fits for hospital lengths of stay in connec2 tion with a mastectomy or lymph node dis3 section for the treatment of breast cancer.

4 ‘‘(3) COST SHARING.—Nothing in this

5 section shall be construed as preventing a

6 group health plan or issuer from impos7 ing deductibles, coinsurance, or other

8 cost-sharing in relation to benefits for

9 hospital lengths of stay in connection

10 with a mastectomy or lymph node dissec11 tion for the treatment of breast cancer

12 under the plan (or under health insur13 ance coverage offered in connection with

14 a group health plan), except that such co15 insurance or other cost-sharing for any

16 portion of a period within a hospital

17 length of stay required under subsection

18 (a) may not be greater than such coinsur19 ance or cost-sharing for any preceding

20 portion of such stay.

21 ‘‘(4) LEVEL AND TYPE OF REIMBURSE22 MENTS.—Nothing in this section shall be

23 construed to prevent a group health plan

24 or a health insurance issuer offering

25 group health insurance coverage from ne-
737

•S 1415 RS2

1 gotiating the level and type of reimburse2 ment with a provider for care provided in

3 accordance with this section.

4 ‘‘(g) PREEMPTION, RELATION TO STATE

5 LAWS.—

6 ‘‘(1) IN GENERAL.—Nothing in this sec7 tion shall be construed to preempt any

8 State law in effect on the date of enact9 ment of this section with respect to health

10 insurance coverage that—

11 ‘‘(A) requires coverage for a mini12 mum hospital length of stay following

13 a surgical treatment for breast can14 cer;

15 ‘‘(B) requires coverage of at least

16 the coverage of reconstructive breast

17 surgery otherwise required under this

18 section; or

19 ‘‘(C) requires coverage for breast

20 cancer treatments (including breast

21 reconstruction) in accordance with

22 scientific evidence-based practices or

23 guidelines recommended by estab24 lished medical associations.
738

•S 1415 RS2

1 ‘‘(2) APPLICATION OF SECTION.—With re2 spect to a State law—

3 ‘‘(A) described in paragraph

4 (1)(A), the provisions of this section

5 relating to breast reconstruction shall

6 apply in such State; and

7 ‘‘(B) described in paragraph

8 (1)(B), the provisions of this section

9 relating to length of stays for surgical

10 breast treatment shall apply in such

11 State.

12 ‘‘(3) ERISA.—Nothing in this section

13 shall be construed to affect or modify the

14 provisions of section 514 of the Employee

15 Retirement Income Security Act of 1974

16 with respect to group health plans.’’.

17 (b) EFFECTIVE DATES.—

18 (1) IN GENERAL.—The amendments

19 made by this section shall apply to group

20 health plans for plan years beginning on

21 or after the date of enactment of this Act.

22 (2) SPECIAL RULE FOR COLLECTIVE BAR23 GAINING AGREEMENTS.—In the case of a

24 group health plan maintained pursuant

25 to 1 or more collective bargaining agree-
739

•S 1415 RS2

1 ments between employee representatives

2 and 1 or more employers, any plan

3 amendment made pursuant to a collective

4 bargaining agreement relating to the

5 plan which amends the plan solely to con6 form to any requirement added by this

7 section shall not be treated as a termi8 nation of such collective bargaining

9 agreement.

10 SEC. 1415. AMENDMENT TO THE PUBLIC HEALTH SERVICE

11 ACT RELATING TO THE INDIVIDUAL MARKET.

12 (a) IN GENERAL.—Subpart 3 of part B of

13 title XXVII of the Public Health Service Act (42

14 U.S.C. 300gg-11 et seq.) is amended by adding

15 at the end the following new section:

16 ‘‘SEC. 2752. REQUIRED COVERAGE FOR MINIMUM HOSPITAL

17 STAY FOR MASTECTOMIES AND LYMPH NODE

18 DISSECTIONS FOR THE TREATMENT OF

19 BREAST CANCER.

20 ‘‘The provisions of section 2706 shall apply

21 to health insurance coverage offered by a

22 health insurance issuer in the individual mar23 ket in the same manner as they apply to health

24 insurance coverage offered by a health insur-
740

•S 1415 RS2

1 ance issuer in connection with a group health

2 plan in the small or large group market.’’.

3 (b) EFFECTIVE DATE.—The amendment

4 made by this section shall apply with respect

5 to health insurance coverage offered, sold,

6 issued, renewed, in effect, or operated in the

7 individual market on or after the date of en8 actment of this Act.

9 SEC. 1416. AMENDMENTS TO THE INTERNAL REVENUE

10 CODE OF 1986.

11 (a) IN GENERAL.—Subchapter A of chapter

12 100 (relating to group health plan portability,

13 access, and renewability requirements) is

14 amended by inserting after section 9803 the

15 following new section:

16 ‘‘SEC. 9804. REQUIRED COVERAGE FOR MINIMUM HOSPITAL

17 STAY FOR MASTECTOMIES AND LYMPH NODE

18 DISSECTIONS FOR THE TREATMENT OF

19 BREAST CANCER AND COVERAGE FOR RECON20 STRUCTIVE SURGERY FOLLOWING

21 MASTECTOMIES.

22 ‘‘(a) INPATIENT CARE.—

23 ‘‘(1) IN GENERAL.—A group health

24 plan, and a health insurance issuer pro25 viding health insurance coverage in con-
741

•S 1415 RS2

1 nection with a group health plan, that

2 provides medical and surgical benefits

3 shall ensure that inpatient coverage with

4 respect to the surgical treatment of breast

5 cancer (including a mastectomy,

6 lumpectomy, or lymph node dissection for

7 the treatment of breast cancer) is pro8 vided for a period of time as is determined

9 by the attending physician, in his or her

10 professional judgment consistent with sci11 entific evidence-based practice, in con12 sultation with the patient, and subject to

13 subsection (d), to be medically appro14 priate.

15 ‘‘(2) EXCEPTION.—Nothing in this sec16 tion shall be construed as requiring the

17 provision of inpatient coverage if the at18 tending physician in consultation with

19 the patient determine that a shorter pe20 riod of hospital stay is medically appro21 priate.

22 ‘‘(b) RECONSTRUCTIVE SURGERY.—A group

23 health plan, and a health insurance issuer

24 providing health insurance coverage in con25 nection with a group health plan, that pro-
742

•S 1415 RS2

1 vides medical and surgical benefits with re2 spect to a mastectomy shall ensure that, in a

3 case in which a mastectomy patient elects

4 breast reconstruction, coverage is provided

5 for—

6 ‘‘(1) all stages of reconstruction of the

7 breast on which the mastectomy has been

8 performed;

9 ‘‘(2) surgery and reconstruction of the

10 other breast to produce a symmetrical ap11 pearance; and

12 ‘‘(3) the costs of prostheses and com13 plications of mastectomy including

14 lymphedemas;

15 in the manner determined by the attending

16 physician and the patient to be appropriate.

17 Such coverage may be subject to annual

18 deductibles and coinsurance provisions as

19 may be deemed appropriate and as are consist20 ent with those established for other benefits

21 under the plan or coverage. Written notice of

22 the availability of such coverage shall be de23 livered to the participant upon enrollment and

24 annually thereafter.
743

•S 1415 RS2

1 ‘‘(c) NOTICE.—A group health plan, and a

2 health insurance issuer providing health in3 surance coverage in connection with a group

4 health plan shall provide notice to each par5 ticipant and beneficiary under such plan re6 garding the coverage required by this section

7 in accordance with regulations promulgated

8 by the Secretary. Such notice shall be in writ9 ing and prominently positioned in any lit10 erature or correspondence made available or

11 distributed by the plan or issuer and shall be

12 transmitted—

13 ‘‘(1) in the next mailing made by the

14 plan or issuer to the participant or bene15 ficiary;

16 ‘‘(2) as part of any yearly informa17 tional packet sent to the participant or

18 beneficiary; or

19 ‘‘(3) not later than January 1, 1998;

20 whichever is earlier.

21 ‘‘(d) NO AUTHORIZATION REQUIRED.—

22 ‘‘(1) IN GENERAL.—A, attending physi23 cian shall not be required to obtain au24 thorization from the plan or issuer for

25 prescribing any length of stay in connec-
744

•S 1415 RS2

1 tion with a mastectomy, a lumpectomy, or

2 a lymph node dissection for the treatment

3 of breast cancer.

4 ‘‘(2) PRENOTIFICATION.—Nothing in

5 this section shall be construed as prevent6 ing a plan or issuer from requiring

7 prenotification of an inpatient stay re8 ferred to in this section if such require9 ment is consistent with terms and condi10 tions applicable to other inpatient bene11 fits under the plan, except that the provi12 sion of such inpatient stay benefits shall

13 not be contingent upon such notification.

14 ‘‘(e) PROHIBITIONS.—A group health plan,

15 and a health insurance issuer offering group

16 health insurance coverage in connection with

17 a group health plan, may not—

18 ‘‘(1) deny to a patient eligibility, or

19 continued eligibility, to enroll or to renew

20 coverage under the terms of the plan, sole21 ly for the purpose of avoiding the require22 ments of this section;

23 ‘‘(2) provide monetary payments or re24 bates to individuals to encourage such in25 dividuals to accept less than the mini-
745

•S 1415 RS2

1 mum protections available under this sec2 tion;

3 ‘‘(3) penalize or otherwise reduce or

4 limit the reimbursement of an attending

5 provider because such provider provided

6 care to an individual participant or bene7 ficiary in accordance with this section;

8 ‘‘(4) provide incentives (monetary or

9 otherwise) to an attending provider to in10 duce such provider to provide care to an

11 individual participant or beneficiary in a

12 manner inconsistent with this section;

13 and

14 ‘‘(5) subject to subsection (f)(3), re15 strict benefits for any portion of a period

16 within a hospital length of stay required

17 under subsection (a) in a manner which is

18 less favorable than the benefits provided

19 for any preceding portion of such stay.

20 ‘‘(f) RULES OF CONSTRUCTION.—

21 ‘‘(1) IN GENERAL.—Nothing in this sec22 tion shall be construed to require a pa23 tient who is a participant or beneficiary—
746

•S 1415 RS2

1 ‘‘(A) to undergo a mastectomy or

2 lymph node dissection in a hospital;

3 or

4 ‘‘(B) to stay in the hospital for a

5 fixed period of time following a mas6 tectomy or lymph node dissection.

7 ‘‘(2) LIMITATION.—This section shall

8 not apply with respect to any group

9 health plan, or any group health insur10 ance coverage offered by a health insur11 ance issuer, which does not provide bene12 fits for hospital lengths of stay in connec13 tion with a mastectomy or lymph node dis14 section for the treatment of breast cancer.

15 ‘‘(3) COST SHARING.—Nothing in this

16 section shall be construed as preventing a

17 group health plan or issuer from impos18 ing deductibles, coinsurance, or other

19 cost-sharing in relation to benefits for

20 hospital lengths of stay in connection

21 with a mastectomy or lymph node dissec22 tion for the treatment of breast cancer

23 under the plan (or under health insur24 ance coverage offered in connection with

25 a group health plan), except that such co-
747

•S 1415 RS2

1 insurance or other cost-sharing for any

2 portion of a period within a hospital

3 length of stay required under subsection

4 (a) may not be greater than such coinsur5 ance or cost-sharing for any preceding

6 portion of such stay.

7 ‘‘(4) LEVEL AND TYPE OF REIMBURSE8 MENTS.—Nothing in this section shall be

9 construed to prevent a group health plan

10 or a health insurance issuer offering

11 group health insurance coverage from ne12 gotiating the level and type of reimburse13 ment with a provider for care provided in

14 accordance with this section.

15 ‘‘(g) PREEMPTION, RELATION TO STATE

16 LAWS.—

17 ‘‘(1) IN GENERAL.—Nothing in this sec18 tion shall be construed to preempt any

19 State law in effect on the date of enact20 ment of this section with respect to health

21 insurance coverage that—

22 ‘‘(A) requires coverage for a mini23 mum hospital length of stay following

24 a surgical treatment for breast can25 cer;
748

•S 1415 RS2

1 ‘‘(B) requires coverage of at least

2 the coverage of reconstructive breast

3 surgery otherwise required under this

4 section; or

5 ‘‘(C) requires coverage for breast

6 cancer treatments (including breast

7 reconstruction) in accordance with

8 scientific evidence-based practices or

9 guidelines recommended by estab10 lished medical associations.

11 ‘‘(2) APPLICATION OF SECTION.—With re12 spect to a State law—

13 ‘‘(A) described in paragraph

14 (1)(A), the provisions of this section

15 relating to breast reconstruction shall

16 apply in such State; and

17 ‘‘(B) described in paragraph

18 (1)(B), the provisions of this section

19 relating to length of stays for surgical

20 breast treatment shall apply in such

21 State.

22 ‘‘(3) ERISA.—Nothing in this section

23 shall be construed to affect or modify the

24 provisions of section 514 of the Employee
749

•S 1415 RS2

1 Retirement Income Security Act of 1974

2 with respect to group health plans.’’.

3 (b) CONFORMING AMENDMENTS.—

4 (1) The heading for subtitle K is

5 amended to read as follows:

6 ‘‘Subtitle K—Group Health Plan

7 Portability, Access, Renewabil8 ity, and Other Requirements’’.

9 (2) The heading for chapter 100 is

10 amended to read as follows:

11 ‘‘CHAPTER 100—GROUP HEALTH PLAN

12 PORTABILITY, ACCESS, RENEWABIL13 ITY, AND OTHER REQUIREMENTS’’.

14 (3) Section 4980D(a) is amended by

15 striking ‘‘and renewability’’ and inserting

16 ‘‘renewability, and other’’.

17 (c) CLERICAL AMENDMENTS.—

18 (1) The table of contents for chapter

19 100 is amended inserting after the item re20 lating to section 9803 the following new

21 item:

‘‘Sec. 9804. Required coverage for minimum hospital stay for

mastectomies and lymph node dissections for the

treatment of breast cancer and coverage for reconstructive surgery following mastectomies.’’.

22 (2) The item relating to subtitle K in

23 the table of subtitles is amended by strik-
750

•S 1415 RS2

1 ing ‘‘and renewability’’ and inserting ‘‘re2 newability, and other’’.

3 (3) The item relating to chapter 100 in

4 the table of chapters for subtitle K is

5 amended by striking ‘‘and renewability’’

6 and inserting ‘‘renewability, and other’’.

7 (d) EFFECTIVE DATES.—

8 (1) IN GENERAL.—The amendments

9 made by this section shall apply with re10 spect to plan years beginning on or after

11 the date of enactment of this Act.

12 (2) SPECIAL RULE FOR COLLECTIVE BAR13 GAINING AGREEMENTS.—In the case of a

14 group health plan maintained pursuant

15 to 1 or more collective bargaining agree16 ments between employee representatives

17 and 1 or more employers, any plan

18 amendment made pursuant to a collective

19 bargaining agreement relating to the

20 plan which amends the plan solely to con21 form to any requirement added by this

22 section shall not be treated as a termi23 nation of such collective bargaining

24 agreement.
751

•S 1415 RS2

1 SEC. 1417. RESEARCH STUDY ON THE MANAGEMENT OF

2 BREAST CANCER.

3 (a) STUDY.—To improve survival, quality of

4 life and patient satisfaction in the care of pa5 tients with breast cancer, the Agency for

6 Health Care Policy and Research shall con7 duct a study of the scientific issues relating

8 to—

9 (1) disease management strategies for

10 breast cancer that can achieve better pa11 tient outcomes;

12 (2) controlled clinical evidence that

13 links specific clinical procedures to im14 proved health outcomes;

15 (3) the definition of quality measures

16 to evaluate plan and provider perform17 ance in the management of breast cancer;

18 (4) the identification of quality im19 provement interventions that can change

20 the process of care to achieve better out21 comes for individuals with breast cancer;

22 (5) preventive strategies utilized by

23 health plans for the treatment of breast

24 cancer; and
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•S 1415 RS2

1 (6) the extent of clinical practice vari2 ation including its impact on cost, quality

3 and outcomes.

4 (b) REPORT.—Not later than January 1,

5 2000, the Agency for Health Care Policy and

6 Research shall prepare and submit to the ap7 propriate committees of Congress a report con8 cerning the results of the study conducted

9 under subsection (a).

10 Subtitle C—Limitations Applicable

11 to Other Provisions

12 SEC. 1421. LIMITATIONS ON EXPENDITURES AND OBLIGA13 TIONS.

14 Notwithstanding any other provision of

15 this Act—

16 (1) any expenditure required by this

17 Act shall be made from the National To18 bacco Settlement Trust Fund or the De19 partment of Veterans Affairs Tobacco Re20 covery Fund, whichever is applicable; and

21 (2) with the exception of title X of this

22 Act and section 9512(d) of the Internal

23 Revenue Code of 1986, the Federal Govern24 ment shall only be obligated to make ex25 penditures as required by this Act, includ-
753

•S 1415 RS2

1 ing any payment to any person or govern2 ment, as provided in advance in appro3 priations Acts.

4 SEC. 1422. LIMITATION ON USER FEES.

5 (a) IN GENERAL.—Notwithstanding any

6 other provision of, or amendment made by, this

7 Act, no fee or charge imposed by such provi8 sion or amendment shall take effect unless

9 such fee or charge is—

10 (1) for a voluntary service,

11 (2) imposed on the direct beneficiaries

12 of such service, and

13 (3) in an amount which does not ex14 ceed the direct cost of providing such serv15 ice to such beneficiaries.

16 (b) FEE OR CHARGE.—For purposes of sub17 section (a), the term ‘‘fee or charge’’ does not

18 include any civil or criminal penalty or fine.