Calendar No. 286

105TH CONGRESS

1ST SESSION S. 1414

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,

NOVEMBER 8, 1997

Read the second time and placed on the calendar
II

Calendar No. 286

105TH CONGRESS

1ST SESSION S. 1414

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 the first time

NOVEMBER 8, 1997

Read the second time and placed on the calendar

A BILL

To reform and restructure the processes by which tobacco

products are manufactured, marketed, and distributed,

to prevent the use of tobacco products by minors, to

redress the adverse health effects of tobacco use, and

for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

3 ‘‘Universal Tobacco Settlement Act’’.

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

5 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.

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
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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.

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
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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. 901. Short title.

Sec. 902. Definitions.

SUBTITLE A—TOBACCO COMMUNITY REVITALIZATION TRUST FUND

Sec. 911. Establishment of Trust Fund.

Sec. 912. Contributions by tobacco product manufacturers and importers.

SUBTITLE B—AGRICULTURAL MARKET TRANSITION ASSISTANCE

Sec. 921. Payments for lost tobacco quota.

Sec. 922. Industry payments for all Department costs associated with tobacco

production.

Sec. 923. Tobacco community economic development grants.

Sec. 924. Modifications in Federal tobacco programs.

SUBTITLE C—FARMER AND WORKER TRANSITION ASSISTANCE

Sec. 931. Tobacco worker transition program.

Sec. 932. Farmer opportunity grants.

SUBTITLE D—IMMUNITY

Sec. 941. General immunity for tobacco producers and warehousers.

TITLE X—EFFECTIVE DATES AND OTHER PROVISIONS

Sec. 1001. Effective dates.

Sec. 1002. Native Americans.

Sec. 1003. Preemption.
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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, pro22 motion, and distribution of such products are need23 ed.

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

25 many of the legal means and resources needed to ad-
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1 dress the societal problems caused by the use of to2 bacco products.

3 (5) Public health authorities believe that the so4 cietal benefits of enacting tobacco settlement legisla5 tion in human and economic terms would be vast.

6 The Food and Drug Administration found that re7 ducing underage tobacco use 50 percent ‘‘would pre8 vent well over 60,000 early deaths’’. The Food and

9 Drug Administration has estimated that the mone10 tary value of the regulations promulgated as a result

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

12 year in reduced medical costs, improved productivity,

13 and the benefit of avoiding the premature death of

14 loved ones.

15 (6) The unique position occupied by tobacco in

16 the history and economy of the United States, the

17 magnitude of the actual and potential tobacco-relat18 ed litigation, the need to avoid the cost, expense, un19 certainty, and inconsistency associated with such

20 protracted litigation, the need to limit the sale, dis21 tribution, marketing, and advertising of tobacco

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

23 educate the public (especially young people) of the

24 health effects of using tobacco products all dictate
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1 that it would be in the public interest to enact legis2 lation to facilitate a resolution of such matters.

3 (b) FINDINGS RELATED TO INTERSTATE COMMERCE

4 AND THE JUDICIAL SYSTEM.—Congress makes the follow5 ing findings:

6 (1) The sale, distribution, marketing, advertis7 ing, and use of tobacco products are activities sub8 stantially affecting interstate commerce. Such prod9 ucts are sold, marketed, advertised, and distributed

10 in interstate commerce on a nationwide basis and

11 have a substantial effect on the economy of the

12 United States.

13 (2) The sale, distribution, marketing, advertis14 ing, and use of tobacco products are activities that

15 substantially affect interstate commerce by virtue of

16 the health care and other costs that Federal and

17 State governmental authorities have incurred be18 cause of the usage of tobacco products.

19 (3) Various civil actions brought by State attor20 neys general, cities, counties, the Commonwealth of

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

22 classes and individuals to recover damages relating

23 to tobacco-related diseases, conditions and products

24 are pending throughout the United States, of these

25 actions are slow-moving, expensive, and burdensome
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1 not only for the litigants but also for Federal and

2 State judicial systems.

3 SEC. 3. PURPOSES.

4 It is the purpose of this Act to—

5 (1) reiterate and enhance the authority of the

6 Food and Drug Administration to regulate tobacco

7 products and provide for tobacco industry funding of

8 the oversight activities of the Administration;

9 (2) ban all outdoor tobacco advertising and ban

10 all cartoon characters and human figures used in

11 connection with tobacco advertising;

12 (3) provide for the funding by the tobacco in13 dustry of an aggressive Federal enforcement pro14 gram relating to tobacco advertising and distribu15 tion, including a State-administered retail licensing

16 system to prevent minors from obtaining tobacco

17 products;

18 (4) subject the tobacco industry to severe finan19 cial penalties in the event that underage tobacco

20 usage does not decline radically over the next 10

21 years;

22 (5) provide for the establishment of national

23 standards to control the manufacturing of tobacco

24 products and the ingredients used in such products;
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1 (6) provide certain regulatory powers to the

2 Food and Drug Administration to encourage the de3 velopment and marketing by the tobacco industry of

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

5 power to regulate the level of nicotine in such prod6 ucts;

7 (7) require the manufacturers of tobacco prod8 ucts to disclose all present and future non-public in9 ternal laboratory research regarding tobacco prod10 ucts;

11 (8) establish a minimum Federal standard to

12 limit smoking in public places;

13 (9) provide for the establishment of a National

14 Tobacco Settlement Trust Fund to be funded by the

15 tobacco industry and used in accordance with this

16 Act;

17 (10) provide for the establishment of a national

18 education-oriented counter advertising and tobacco

19 control campaign to be funded through the National

20 Tobacco Settlement Trust Fund;

21 (11) provide annual payments to States to fund

22 health benefits programs and to create a tobacco

23 products liability judgments and settlements fund to

24 be funded through the National Tobacco Settlement

25 Trust Fund; and
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1 (12) provide for the establishment of a national

2 program of smoking cessation to be funded through

3 the National Tobacco Settlement Trust Fund.

4 TITLE I—REGULATION OF THE

5 TOBACCO INDUSTRY

6 SEC. 100. DEFINITIONS.

7 In this Act:

8 (1) BRAND.—The term ‘‘brand’’ means a vari9 ety of a tobacco product distinguished by the tobacco

10 used, tar content, nicotine content, flavoring used,

11 size, filtration, or packaging.

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

13 of tobacco wrapped in leaf tobacco or in any sub14 stance containing tobacco (other than any roll of to15 bacco which is a cigarette or cigarillo within the

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

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

18 any product which contains nicotine, is intended to

19 be burned under ordinary conditions of use, and con20 sists of—

21 (A) any roll of tobacco wrapped in paper

22 or in any substance not containing tobacco; and

23 (B) any roll of tobacco wrapped in any

24 substance containing tobacco which, because of

25 its appearance, the type of tobacco used in the
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1 filler, or its packaging and labeling, is likely to

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

3 cigarette described in subparagraph (A).

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

5 any roll of tobacco wrapped in leaf tobacco or any

6 substance containing tobacco (other than any roll of

7 tobacco which is a cigarette within the meaning of

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

9 not more than 3 pounds.

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

11 tobacco’’ means any product that consists of loose

12 tobacco that contains or delivers nicotine and is in13 tended for use by persons in a cigarette. Unless oth14 erwise stated, the requirements of this Act pertain15 ing to cigarettes shall also apply to cigarette to16 bacco.

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

18 means—

19 (A) commerce between any State, the Dis20 trict of Columbia, the Commonwealth of Puerto

21 Rico, Guam, the Virgin Islands, American

22 Samoa, the Northern Mariana Islands or any

23 territory or possession of the United States;

24 (B) commerce between points in any State,

25 the District of Columbia, the Commonwealth of
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1 Puerto Rico, Guam, the Virgin Islands, Amer2 ican Samoa, the Northern Mariana Islands or

3 any territory or possession of the United States;

4 or

5 (C) commerce wholly within the District of

6 Columbia, Guam, the Virgin Islands, American

7 Samoa, the Northern Mariana Islands, or any

8 territory or possession of the United States.

9 (7) COMMISSIONER.—The term ‘‘Commis10 sioner’’ means the Commissioner of Food and

11 Drugs.

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

13 means any person who furthers the distribution of

14 tobacco products, whether domestic or imported, at

15 any point from the original place of manufacture to

16 the person who sells or distributes the product to in17 dividuals for personal consumption. Such term shall

18 not include common carriers.

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

20 means any roll of tobacco wrapped in leaf tobacco or

21 any substance containing tobacco (other than any

22 roll of tobacco which is a cigarette within the mean23 ing of subsection (1)) and as to which 1,000 units

24 weigh not more than 3 pounds.
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1 (10) MANUFACTURER.—The term ‘‘manufac2 turer’’ means any person, including any repacker or

3 relabeler, who manufactures, fabricates, assembles,

4 processes, or labels a finished tobacco product.

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

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

7 pyrrolidinyl) pyridine or C10H14N2, including any

8 salt or complex of nicotine.

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

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

11 tobacco products are offered for sale, sold, or other12 wise distributed to consumers.

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

14 individual, partnership, corporation, or any other

15 business or legal entity.

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

17 means any loose tobacco that, because of its appear18 ance, type, packaging, or labeling, is likely to be of19 fered to, or purchased by, consumers as a tobacco

20 product to be smoked in a pipe.

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

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

23 purchase or otherwise obtain tobacco products for

24 personal consumption.
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1 (16) RETAILER.—The term ‘‘retailer’’ means

2 any person who sells tobacco products to individuals

3 for personal consumption, or who operates a facility

4 where vending machines or self-service displays are

5 permitted under this title.

6 (17) SALE.—The term ‘‘sale’’ includes the sell7 ing, providing samples of, or otherwise making to8 bacco products available for personal consumption in

9 any place within the scope of this Act.

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

11 means the Secretary of Health and Human Services.

12 (19) SMOKELESS TOBACCO.—The term ‘‘smoke13 less tobacco’’ means any product that consists of

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

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

16 or nasal cavity.

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

18 several States, the District of Columbia, the Com19 monwealth of Puerto Rico, Guam, the Virgin Is20 lands, American Samoa, the Northern Mariana Is21 lands, and any other territory or possession of the

22 United States. Such term includes any political divi23 sion of any State.

24 (21) TOBACCO.—The term ‘‘tobacco’’ means to25 bacco in its unmanufactured form.
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1 (22) TOBACCO PRODUCT.—The term ‘‘tobacco

2 product’’ means cigars, cigarettes, cigarillos, ciga3 rette tobacco, little cigars, pipe tobacco, and smoke4 less tobacco.

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

6 means the National Tobacco Settlement Trust Fund

7 established under section 401.

8 Subtitle A—Restriction on

9 Marketing and Advertising

10 SEC. 101. PROHIBITIONS ON ADVERTISING.

11 (a) PROHIBITION ON OUTDOOR ADVERTISING.—

12 (1) IN GENERAL.—No manufacturer, distribu13 tor, or retailer may use any form of outdoor tobacco

14 product advertising, including billboards, posters, or

15 placards.

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

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

18 retailer shall not advertise tobacco products in any

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

20 other social or cultural events or activities occur.

21 (b) PROHIBITION ON USE OF HUMAN IMAGES AND

22 CARTOONS.—No manufacturer, distributor, or retailer

23 may use a human image or a cartoon character or cartoon24 type character in its advertising, labeling, or promotional

25 material with respect to a tobacco product.
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1 (c) PROHIBITION ON ADVERTISING ON THE

2 INTERNET.—No manufacturer, distributor, or retailer

3 may use the Internet to advertise tobacco products unless

4 such an advertisement is inaccessible in or from the Unit5 ed States.

6 (d) PROHIBITION ON POINT-OF-SALE ADVERTIS7 ING.—

8 (1) IN GENERAL.—Except as otherwise pro9 vided in this subsection, no manufacturer, distribu10 tor, or retailer may use point-of-sale advertising of

11 tobacco products.

12 (2) ADULT-ONLY STORES AND TOBACCO OUT13 LETS.—Paragraph (1) shall not apply to point of

14 sale advertising at adult-only stores and tobacco out15 lets.

16 (3) PERMISSIBLE ADVERTISING.—

17 (A) IN GENERAL.—Each manufacturer of

18 tobacco products may display not more than 2

19 separate point-of-sale advertisements in or at

20 each location at which tobacco products are of21 fered for sale.

22 (B) MARKET SHARE MANUFACTURERS.—A

23 manufacturer with at least 25 percent of the

24 market share of the tobacco product involved

25 may display an additional point-of-sale adver-
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1 tisement in or at each location at which tobacco

2 products are offered for sale.

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

4 more than 1 point-of-sale advertisement relating

5 to the retailer’s own or its wholesaler’s con6 tracted retailer or private label brand of tobacco

7 product. No manufacturer or distributor may

8 enter into any arragenment with a retailer to

9 limit the ability of the retailer to display any

10 form of permissible point-of-sale advertisement

11 or promotional material originating with an12 other manufacturer or distributor.

13 (4) LIMITATIONS.—

14 (A) IN GENERAL.—A point of sale adver15 tisement permitted under this subsection shall

16 be comprised of a display area than is not larg17 er than 576 square inches (either individually

18 or in the aggregate) and shall consist only of

19 black letters on a white background or other

20 recognized typographical marks. Such advertise21 ment shall not be attached to nor located within

22 2 feet of any fixture on which candy is dis23 played for sale.

24 (B) AUDIO AND VIDEO FORMATS.—Audio

25 and video advertisements permitted under sec-
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1 tion 103(c) may be distributed to individuals

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

3 but may not be played or viewed at such point

4 of sale.

5 (C) DISPLAY FIXTURES.—Display fixtures

6 in the form of signs consisting of brand name

7 and price and not larger than 2 inches in height

8 are permitted.

9 (5) DEFINITION.—For purposes of this sub10 section, the term ‘‘point-of-sale advertising’’ means

11 all printed or graphical materials bearing the brand

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

13 logo, motto, selling message, recognizable color or

14 pattern of colors, or any other indicia of product

15 identification similar or identical to those used for

16 tobacco products which, when used for its intended

17 purpose, can reasonably be anticipated to be seen by

18 customers at a location at which tobacco products

19 are offered for sale.

20 SEC. 102. GENERAL RESTRICTIONS.

21 (a) RESTRICTION ON PRODUCT NAMES.—A manu22 facturer shall not use a trade or brand name of a non23 tobacco product as the trade or brand name for a cigarette

24 or smokeless tobacco product, except for a tobacco product

25 whose trade or brand name was on both a tobacco product
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1 and a nontobacco product that were sold in the United

2 States on or before January 1, 1995.

3 (b) ADVERTISING LIMITED TO FDA SPECIFIED

4 MEDIA.—

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

6 or retailer may, in accordance with this title, dis7 seminate or cause to be disseminated advertising or

8 labeling which bears a tobacco product brand name

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

10 other indicia of tobacco product identification only in

11 newspapers, in magazines, in periodicals or other

12 publications (whether periodic or limited distribu13 tion), on billboards, posters and placards in accord14 ance with section 101(a), in nonpoint-of-sale pro15 motional material (including direct mail), in point16 of-sale promotional material, and in audio or video

17 formats delivered at a point-of-sale.

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

19 or retailer that intends to disseminate, or to cause

20 to be disseminated, advertising or labeling for a to21 bacco product in a medium that is not described in

22 paragraph (1) shall notify the Commissioner not less

23 than 30 days prior to the date on which such me24 dium is to be used. Such notice shall describe the

25 medium and discuss the extent to which the adver-
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1 tising or labeling may be seen by individuals who are

2 under 18 years of age.

3 (3) ACTION BY COMMISSIONER.—

4 (c) RESTRICTION ON PLACEMENT IN ENTERTAIN5 MENT MEDIA.—

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

7 by any manufacturer, distributor, or retailer for the

8 placement of any tobacco product or tobacco product

9 package or advertisement—

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

11 motion picture produced for viewing by the gen12 eral public; or

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

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

15 means any electronic amusement device that utilizes

16 a computer, microprocessor, or similar electronic cir17 cuitry and its own cathode ray tube, or is designed

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

19 interacts with the user of the device.

20 (d) RESTRICTIONS ON GLAMORIZATION OF TOBACCO

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

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

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

24 product through print or film media that appeals to indi25 viduals under 18 years of age or through a live perform-
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1 ance by an entertainment artist that appeals to such indi2 viduals.

3 SEC. 103. FORMAT AND CONTENT REQUIREMENTS FOR LA4 BELING AND ADVERTISING.

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

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

7 advertising or causing to be advertised, disseminating or

8 causing to be disseminated, any labeling or advertising for

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

10 background.

11 (b) CERTAIN ADVERTISING EXCEPTED.—

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

13 apply to advertising—

14 (A) in any facility where vending machines

15 and self-service displays are permitted under

16 this title if the advertising involved—

17 (i) is not visible from outside of the

18 facility; and

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

20 the facility;

21 (B) that appears in any publication

22 (whether periodic, limited, or controlled dis23 tribution) that the manufacturer, distributor, or

24 retailer demonstrates is an adult publication.
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1 (2) ADULT PUBLICATION.—For purposes of

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

3 means a newspaper, magazine, periodical, or other

4 publication—

5 (A) whose readers under 18 years of age

6 constitute 15 percent or less of the total reader7 ship as measured by competent and reliable

8 survey evidence; and

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

10 individuals who are under 18 years of age as

11 measured by competent and reliable survey evi12 dence.

13 (c) AUDIO OR VIDEO FORMATS.—Each manufac14 turer, distributor, and retailer advertising or causing to

15 be advertised any advertising for a tobacco product in an

16 audio or video format shall comply with the following:

17 (1) With respect to an audio format, the adver18 tising shall be limited to words only with no music

19 or sound effects.

20 (2) With respect to a video format, the advertis21 ing shall be limited to static black text only on a

22 white background. Any audio with the video adver23 tising shall be limited to words only with no music

24 or sound effects.
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1 SEC. 104. STATEMENT OF INTENDED USE.

2 (a) REQUIREMENT.—Each manufacturer, distribu3 tor, and retailer advertising or causing to be advertised,

4 disseminating or causing to be disseminated, advertising

5 concerning cigarettes, cigarette tobacco, or smokeless to6 bacco products otherwise permitted under this title shall

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

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

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

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

11 (b) USE STATEMENTS.—

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

13 for cigarettes or cigarette tobacco is as follows

14 (whichever is appropriate):

15 Cigarettes—A Nicotine-Delivery Device for Per16 sons 18 or Older.

17 Cigarette Tobacco—A Nicotine-Delivery Device

18 for Persons 18 or Older.

19 (2) SMOKELESS TOBACCO.—A statement of in20 tended use for a smokeless tobacco product is as fol21 lows (whichever is appropriate):

22 Loose Leaf Chewing Tobacco—A Nicotine-De23 livery Device for Persons 18 or Older.

24 Plug Chewing Tobacco—A Nicotine-Delivery

25 Device for Persons 18 or Older.
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1 Twist Chewing Tobacco—A Nicotine-Delivery

2 Device for Persons 18 or Older.

3 Moist Snuff—A Nicotine-Delivery Device for

4 Persons 18 or Older.

5 Dry Snuff—A Nicotine-Delivery Device for Per6 sons 18 or Older.

7 (c) TYPE AND LOCATION.—Requirements with re8 spect to type size, style, font, and location shall be deter9 mined by the Commissioner.

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

11 CONTESTS AND GAMES OF CHANCE, AND

12 SPONSORSHIP OF EVENTS.

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

14 manufacturer, importer, distributor, or retailer shall mar15 ket, license, distribute, sell, or cause to be marketed, li16 censed, distributed or sold any item (other than tobacco

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

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

19 motto, selling message, recognizable color or pattern of

20 colors, or any other indicia of product identification simi21 lar or identifiable to those used for any brand of tobacco

22 products.

23 (b) GIFTS, CONTESTS, AND LOTTERIES.—No manu24 facturer, distributor, or retailer shall offer or cause to be

25 offered to any person purchasing tobacco products any gift
25

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

2 of the purchase of such products, or to any person in con3 sideration of furnishing evidence, such as credits, proofs4 of-purchase, or coupons, of such a purchase.

5 (c) SPONSORSHIP.—

6 (1) IN GENERAL.—No manufacturer, distribu7 tor, or retailer shall sponsor or cause to be spon8 sored any athletic, musical, artistic, or other social

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

10 in which the brand name (alone or in conjunction

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

12 recognizable color or pattern of colors, or any other

13 indicia of product identification similar or identical

14 to those used for tobacco products is used.

15 (2) USE OF CORPORATE NAME.—A manufac16 turer, distributor, or retailer may sponsor or cause

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

18 other social or cultural event in the name of the cor19 poration which manufactures the tobacco product

20 if—

21 (A) both the corporate name and the

22 corporation were registered and in use in the

23 United States prior to January 1, 1995; and

24 (B) the corporate name does not include

25 any brand name (alone or in conjunction with
26

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

2 message, recognizable color or pattern of colors,

3 or any other indicia or product identification

4 identical or similar to, or identifiable with,

5 those used for any brand of tobacco products.

6 SEC. 106. USE OF PRODUCT DESCRIPTORS.

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

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

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

10 any advertisement concerning such product shall contain,

11 a mandatory disclaimer, to be established by the Sec12 retary, that states that such product has not been shown

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

14 (b) RULE OF CONSTRUCTION.—Nothing in this sec15 tion shall be construed to limit the authority of the Food

16 and Drug Administration with respect to words used as

17 product descriptors.

18 Subtitle B—Warnings, Labeling

19 and Packaging

20 SEC. 111. CIGARETTE WARNINGS.

21 (a) IN GENERAL.—

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

23 person to manufacture, package, or import for sale

24 or distribution within the United States any ciga25 rettes the package of which fails to bear, in accord-
27

•S 1414 PCS

1 ance with the requirements of this section, one of

2 the following labels:

3 WARNING: Cigarettes Are Addictive.

4 WARNING: Tobacco Smoke Can Harm Your

5 Children.

6 WARNING: Cigarettes Cause Fatal Lung Dis7 ease.

8 WARNING: Cigarettes Cause Cancer.

9 WARNING: Cigarettes Cause Strokes And

10 Heart Disease.

11 WARNING: Smoking During Pregnancy Can

12 Harm Your Baby.

13 WARNING: Smoking Can Kill You.

14 WARNING: Tobacco Smoke Causes Fatal

15 Lung Disease In Nonsmokers.

16 WARNING: Quitting Smoking Now Greatly

17 Reduces Serious Risks To Your Health.

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

19 manufacturer or importer of cigarettes to advertise

20 or cause to be advertised within the United States

21 any cigarette unless the advertising bears, in accord22 ance with the requirements of this section, one of

23 the following labels:

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

2 Children.

3 WARNING: Cigarettes Cause Fatal Lung Dis4 ease.

5 WARNING: Cigarettes Cause Cancer.

6 WARNING: Cigarettes Cause Strokes And

7 Heart Disease.

8 WARNING: Smoking During Pregnancy Can

9 Harm Your Baby.

10 WARNING: Smoking Can Kill You.

11 WARNING: Tobacco Smoke Causes Fatal

12 Lung Disease In Nonsmokers.

13 WARNING: Quitting Smoking Now Greatly

14 Reduces Serious Risks To Your Health.

15 (b) REQUIREMENTS FOR LABELING.—

16 (1) LOCATION.—Each label statement required

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

18 on the upper portion of the front panel of the ciga19 rette package (or carton) and occupy not less than

20 25 percent of such front panel.

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

22 label statement required by paragraph (1) of sub23 section (a), the phrase ‘‘WARNING’’ shall appear in

24 capital letters and the label statement shall be print25 ed in 17 point type with adjustments as determined
29

•S 1414 PCS

1 appropriate by the Commissioner to reflect the

2 length of the required statement. All the letters in

3 the label shall appear in conspicuous and legible

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

5 all other printed material on the package, and be

6 printed in an alternating black-on-white and white7 on-black format as determined appropriate by the

8 Commissioner.

9 (3) EXCEPTION.—The provisions of paragraph

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

11 package (offered for sale on the date of enactment

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

13 does not comprise at least 25 percent of the front

14 panel. In the case of such a package, the label state15 ment required by paragraph (1) of subsection (a)

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

17 (c) REQUIREMENTS FOR ADVERTISING.—

18 (1) LOCATION.—Each label statement required

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

20 less than 20 percent of the area of the advertisement

21 involved.

22 (2) TYPE AND COLOR.—

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

24 statement required by paragraph (2) of sub25 section (a), the phrase ‘‘WARNING’’ shall ap-
30

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1 pear in capital letters and the label statement

2 shall be printed in the following types:

3 (i) With respect to whole page adver4 tisements on broadsheet newspaper—45

5 point type.

6 (ii) With respect to half page adver7 tisements on broadsheet newspaper—39

8 point type.

9 (iii) With respect to whole page adver10 tisements on tabloid newspaper—39 point

11 type.

12 (iv) With respect to half page adver13 tisements on tabloid newspaper—27 point

14 type.

15 (v) With respect to DPS magazine ad16 vertisements—31.5 point type.

17 (vi) With respect to whole page maga18 zine advertisements—31.5 point type.

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

20 advertisements—22.5 point type.

21 (viii) With respect to 20cm x 2 col22 umn advertisements—15 point type.

23 The Commissioner may revise the required type

24 sizes as the Commissioner determines appro25 priate within the 20 percent requirement.
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1 (B) COLOR.—All the letters in the label

2 under this paragraph shall appear in conspicu3 ous and legible type, in contrast by typography,

4 layout, or color with all other printed material

5 on the package, and be printed in an alternat6 ing black-on-white and white-on-black format as

7 determined appropriate by the Commissioner.

8 (d) ROTATION OF LABEL STATEMENTS.—

9 (1) IN GENERAL.—Except as provided in para10 graph (2), the label statements specified in para11 graphs (1) and (2) of subsection (a) shall be rotated

12 by each manufacturer or importer of cigarettes quar13 terly in alternating sequence on packages of each

14 brand of cigarettes manufactured by the manufac15 turer or importer and in the advertisements for each

16 such brand of cigarettes in accordance with a plan

17 submitted by the manufacturer or importer and ap18 proved by the Federal Trade Commission. The Fed19 eral Trade Commission shall approve a plan submit20 ted by a manufacturer or importer of cigarettes

21 which will provide the rotation required by this sub22 section and which assures that all of the labels re23 quired by paragraphs (1) and (2) will be displayed

24 by the manufacturer or importer at the same time.
32

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1 (2) APPLICATION OF OTHER ROTATION RE2 QUIREMENTS.—

3 (A) IN GENERAL.—A manufacturer or im4 porter of cigarettes may apply to the Federal

5 Trade Commission to have the label rotation

6 described in subparagraph (C) apply with re7 spect to a brand style of cigarettes manufac8 tured or imported by such manufacturer or im9 porter if—

10 (i) the number of cigarettes of such

11 brand style sold in the fiscal year of the

12 manufacturer or importer preceding the

13 submission of the application is less than

1 14 ⁄4 of 1 percent of all the cigarettes sold in

15 the United States in such year; and

(ii) more than 1 16 ⁄2 of the cigarettes

17 manufactured or imported by such manu18 facturer or importer for sale in the United

19 States are packaged into brand styles

20 which meet the requirements of clause (i).

21 If an application is approved by the Commis22 sion, the label rotation described in subpara23 graph (C) shall apply with respect to the appli24 cant during the 1-year period beginning on the

25 date of the application approval.
33

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1 (B) PLAN.—An applicant under subpara2 graph (A) shall include in its application a plan

3 under which the label statements specified in

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

5 by the applicant manufacturer or importer in

6 accordance with the label rotation described in

7 subparagraph (C).

8 (C) OTHER ROTATION REQUIREMENTS.—

9 Under the label rotation which the manufac10 turer or importer with an approved application

11 may put into effect, each of the labels specified

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

13 on the packages of each brand style of ciga14 rettes with respect to which the application was

15 approved an equal number of times within the

16 12-month period beginning on the date of the

17 approval by the Commission of the application.

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

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

20 does not manufacture, package, or import cigarettes for

21 sale or distribution within the United States.

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

23 be unlawful to advertise cigarettes and little cigars on any

24 medium of electronic communications subject to the juris25 diction of the Federal Communications Commission.
34

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1 SEC. 112. SMOKELESS TOBACCO WARNINGS.

2 (a) IN GENERAL.—

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

4 person to manufacture, package, or import for sale

5 or distribution within the United States any smoke6 less tobacco product the package of which fails to

7 bear, in accordance with the requirements of this

8 section, one of the following labels:

9 WARNING: This Product May Cause Mouth

10 Cancer.

11 WARNING: This Product May Cause Gum

12 Disease And Tooth Loss.

13 WARNING: This Product Is Not A Safe Alter14 native To Cigarettes.

15 WARNING: Smokeless Tobacco Is Addictive.

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

17 manufacturer or importer of smokeless tobacco prod18 ucts to advertise or cause to be advertised within the

19 United States any smokeless tobacco product unless

20 the advertising bears, in accordance with the re21 quirements of this section, one of the following la22 bels:

23 WARNING: This Product May Cause Mouth

24 Cancer.

25 WARNING: This Product May Cause Gum

26 Disease And Tooth Loss.
35

•S 1414 PCS

1 WARNING: This Product Is Not A Safe Alter2 native To Cigarettes.

3 WARNING: Smokeless Tobacco Is Addictive.

4 (b) REQUIREMENTS FOR LABELING.—

5 (1) LOCATION.—Each label statement required

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

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

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

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

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

14 appropriate by the Commissioner to reflect the

15 length of the required statement. All the letters in

16 the label shall appear in conspicuous and legible type

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

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

20 black format as determined appropriate by the Com21 missioner.

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

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

24 advertisements for smokeless tobacco products and the ro-
36

•S 1414 PCS

1 tation of the label statements required under subsection

2 (a)(1) on such products.

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

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

5 tobacco products who does not manufacture, package, or

6 import such products for sale or distribution within the

7 United States.

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

9 be unlawful to advertise smokeless tobacco on any medium

10 of electronic communications subject to the jurisdiction of

11 the Federal Communications Commission.

12 SEC. 113. INGREDIENTS.

13 Each person who manufactures, packages, or imports

14 cigarettes or smokeless tobacco products shall annually

15 provide the Secretary with the information required under

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

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

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

20 (a) ENFORCEMENT.—

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

22 112 or the regulations promulgated pursuant to this

23 subtitle shall be considered a violation of section 5

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

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

3 be guilty of a misdemeanor and shall, on conviction

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

5 $10,000.

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

7 United States are vested with jurisdiction, for cause

8 shown, to prevent and restrain violations of this subtitle

9 upon the application of the Federal Trade Commission in

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

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

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

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

16 Commission shall promulgate such regulations as it may

17 require to implement sections 111 and 112.

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

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

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

21 the Federal Trade Commission with respect to unfair or

22 deceptive acts or practices in the advertising of cigarettes

23 or smokeless tobacco products.
38

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1 SEC. 115. PREEMPTION.

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

3 use of cigarettes or smokeless tobacco products and

4 health, other than the statements required by sections 111

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

6 on any package or in any advertisement of cigarettes or

7 a smokeless tobacco product.

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

10 and health, other than the statements required by sections

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

13 advertisement of cigarettes or a smokeless tobacco prod14 uct.

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

18 State statutory law to any other person.

19 SEC. 116. REPORTS.

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

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

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

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

26 tobacco products;
39

•S 1414 PCS

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

2 cigarettes and smokeless tobacco products;

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

6 and

7 (4) such recommendations for legislation and

8 administrative action as the Secretary considers ap9 propriate.

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

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

13 submit to Congress a report containing—

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

17 (2) such recommendations for legislation and

18 administrative action as the Commission deems ap19 propriate.

20 SEC. 117. EXPORTS.

21 Packages of cigarettes or smokeless tobacco products

22 manufactured, imported, or packaged—

23 (1) for export from the United States; or
40

•S 1414 PCS

1 (2) for delivery to a vessel or aircraft, as sup2 plies, for consumption beyond the jurisdiction of the

3 internal revenue laws of the United States;

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

5 such exemptions shall not apply to cigarettes or smokeless

6 tobacco products manufactured, imported, or packaged for

7 sale or distribution to members or units of the Armed

8 Forces of the United States located outside of the United

9 States.

10 SEC. 118. REPEALS.

11 The following Acts are repealed:

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

14 (2) The Comprehensive Smokeless Tobacco

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

16 seq.).

17 Subtitle C—Restriction on Access

18 to Tobacco Products

19 SEC. 121. REQUIREMENTS RELATING TO RETAILERS.

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

21 may distribute a tobacco product to any individual who

22 is under 18 years of age.

23 (b) PHOTO IDENTIFICATION.—

24 (1) REQUIREMENT.—Except as provided in

25 paragraph (2), each retailer shall verify, by means of
41

•S 1414 PCS

1 photographic identification containing the date of

2 birth of the bearer, that no individual purchasing a

3 tobacco product is under 18 years of age.

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

6 least 27 years of age.

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

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

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

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

14 the assistance of any electronic or mechanical device.

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

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

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

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

20 or any quantity of cigarette tobacco or smokeless tobacco

21 that is smaller than the smallest package distributed by

22 the retailer for individual consumer use).

23 (e) RETAILER COMPLIANCE WITH RESPECT TO

24 SELF-SERVICE.—Each retailer shall ensure that all to25 bacco-related self-service displays, advertising, labeling,
42

•S 1414 PCS

1 and other items that are located in the establishment of

2 the retailer and that do not comply with the requirements

3 of this title are removed or are brought into compliance

4 with the requirements of this title.

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

6 (a) MINIMUM CIGARETTE PACKAGE SIZE.—Except

7 as otherwise provided in this section, no manufacturer,

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

10 that contains fewer than 20 cigarettes.

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

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

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

16 (1) VENDING MACHINES.—No manufacturer,

17 distributor, or retailer may distribute or cause to be

18 distributed any tobacco product through a vending

19 machine.

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

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

22 or retailer may distribute or cause to be distributed

23 any tobacco product through a self-service display.

24 (d) PERMITTED SELF-SERVICE MODES OF SALE.—
43

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1 (1) IN GENERAL.—Notwithstanding this sub2 title, the following methods of distributing tobacco

3 products are permitted:

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

5 paragraph (2), except that mail-order redemp6 tion of coupons and the distribution of free

7 samples through the mail shall be prohibited.

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

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

11 permitted to enter at any time.

12 (2) MAIL-ORDER SALES.—

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

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

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

19 (B) REVIEW BY COMMISSIONER.—Not

20 later than 2 years after the date of enactment

21 of this Act, the Commissioner shall review the

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

24 under 18 years of age are obtaining tobacco

25 products through the mail. If the Commissioner
44

•S 1414 PCS

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

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

5 tobacco products through the mail.

6 Subtitle D—Licensing of Retail

7 Tobacco Sellers

8 SEC. 131. ESTABLISHMENT OF PROGRAM.

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

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

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

14 (b) PROHIBITION ON DISTRIBUTION.—No entity

15 shall sell or otherwise distribute tobacco products directly

16 to consumers unless such entity has in effect a tobacco

17 license issued or renewed in accordance with the laws of

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

19 distributed.

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

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

22 shall have in effect laws that meet the standards described

23 in this subtitle that provide for the licensing of entities

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

•S 1414 PCS

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

3 SEC. 132. REQUIREMENTS.

4 (a) LICENSURE AND NOTICE.—

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

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

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

9 be required for each place of business where tobacco

10 products are distributed or sold at retail.

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

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

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

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

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

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

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

22 this subtitle.

23 (c) APPLICATION.—

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

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

•S 1414 PCS

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

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

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

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

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

10 (2) ACTION BY STATE.—

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

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

14 of receiving a properly completed application

15 and the licensing fee. The State shall provide

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

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

20 deny the issuance or renewal of a license upon

21 an application if the State determines that the

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

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

•S 1414 PCS

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

3 SEC. 133. PENALTIES, REVOCATIONS AND SUSPENSIONS.

4 (a) PENALTIES.—

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

7 otherwise distributes tobacco products to a consumer

8 without a tobacco license in effect as provided for in

9 this subtitle shall be subject, under the applicable

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

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

14 not more than $50,000.

15 (2) CIVIL PENALTIES APPLICABLE TO SELLERS

16 IN VIOLATION OF LICENSE.—

17 (A) IN GENERAL.—In addition to any

18 criminal penalties that may be imposed under

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

20 subsection (b), impose civil penalties on any en21 tity that has sold or distributed tobacco prod22 ucts in the State in violation of the State to23 bacco licensing laws.
48

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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.
49

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1 (b) REVOCATION AND SUSPENSIONS.—

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

4 jurisdiction to have violated a provision of State law

5 under this subtitle during the license term, the State

6 shall notify the licensee in writing, served personally

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

9 such law at the same place of business may result

10 in an administrative action to suspend the license

11 for a period determined by the State in accordance

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

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

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

16 was issued and the licensee has been provided notice

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

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

21 license is initiated, the State shall immediately notify

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

24 and the reasons therefore and permit the licensee an

25 opportunity, at least 30 days after written notice is
50

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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-
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1 tion of standards to reduce the level of certain constituents

2 contained in such products, including nicotine.

3 ‘‘SEC. 903. PROMULGATION OF REGULATIONS.

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

6 tobacco products that are consistent with this chapter and

7 with the manner in which other products that are ingested

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

9 the Commissioner may not promulgate a regulation that

10 prohibits the sale and distribution of a tobacco product

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

12 Such regulations shall be promulgated not later than 6

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

15 ‘‘SEC. 904. MINIMUM REQUIREMENTS.

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

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

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

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

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

23 of the Universal Tobacco Settlement Act.

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

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

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

7 ‘‘SEC. 905. PERFORMANCE STANDARDS FOR TOBACCO

8 PRODUCTS.

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

11 shall include performance standards for such products as

12 established in accordance with this section.

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

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

16 modification of the product to minimize the illness

17 or injury that may result in consumers as a result

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

20 among such consumers; and

21 ‘‘(2) include, where appropriate—

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

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

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

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

9 or by another person at the direction of the

10 Secretary;

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

12 performance characteristics of the tobacco prod13 uct;

14 ‘‘(D) provisions requiring that the results

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

16 required to be made under subparagraph (B)

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

19 which the test or tests were required; and

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

21 and distribution of the device be restricted but

22 only to the extent that the sale and distribution

23 of a device may be otherwise restricted under

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

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

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

5 other technological data.

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

7 Secretary shall, to the maximum extent practicable—

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

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

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

15 ‘‘(3) invite appropriate participation, through

16 joint or other conferences, workshops, or other

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

20 make a significant contribution.

21 ‘‘(e) PROCEDURES.—

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

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

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

6 shall—

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

8 justification that the performance standard is

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

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

12 existing performance standard for the product,

13 including a draft or proposed performance

14 standard, for consideration by the Secretary.

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

16 provide for a comment period of not less than 60

17 days.

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

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

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

21 or revocation of any performance standard under

22 this section, except that any reference to an advisory

23 committee shall be deemed to be a reference 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, Unit24 ed States Code. Any such determination, and any

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

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

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

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

10 standard is completed.

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

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

14 determines the public should be informed of to protect

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

17 disclosures relating to tar and nicotine.

18 ‘‘SEC. 908. REDUCED RISK PRODUCTS.

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

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

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

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

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

2 other similar products.

3 ‘‘(b) EXCEPTION.—

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

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

6 claims of the manufacturer in connection with the

7 product, if—

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

9 evidence, demonstrates to the Commissioner

10 that the product significantly reduces the risk

11 to the health of the user as compared to other

12 similar tobacco products; and

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

16 manufacturer in connection with the product.

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

18 shall promulgate regulations to permit the inclusion

19 of scientifically-based specific health claims on the

20 labeling of a tobacco product package, or the making

21 of such claims by the manufacturer in connection

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

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

2 TECHNOLOGY.—

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

4 manufacturer of a tobacco product shall provide

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

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

9 ‘‘(2) CONFIDENTIALITY.—The Commissioner

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

12 with respect to technology that is the subject of a

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

16 ‘‘(3) LICENSING.—

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

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

20 use of such technology by other manufacturers

21 of tobacco products to which this chapter ap22 plies.

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

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

2 under subparagraph (A) to the manufacturer

3 that submits the notice under paragraph (1) for

4 such technology. Such regulations shall contain

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

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

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

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

13 made available to consumers.

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

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

17 users is technologically feasible, the Commissioner

18 may, in accordance with this subsection, require that

19 certain manufacturers of such products manufacture

20 and market such less hazardous products.

21 ‘‘(3) MANUFACTURER.—

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

23 in subparagraph (B), the requirement under

24 paragraph (2) shall apply to any manufacturer

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

3 of the Commissioner.

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

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

7 ‘‘(i) the manufacturer elects not to

8 manufacture such products and provides

9 notice to the Commissioner of such elec10 tion; and

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

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

17 the health of users.

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

19 no manufacturer elects or agrees to manufacture

20 and market tobacco products that are less hazardous

21 to the health of users through the use of technology

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

24 the Commissioner, the Commissioner, in consultation

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

2 grants or contracts, provide for the manufacture and

3 marketing of such products.

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

5 ‘‘(a) AUTHORITY.—

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

8 requiring that the methods used in, and the facilities

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

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

12 storage of a tobacco product conform to current

13 good manufacturing practice, as prescribed in such

14 regulations, to ensure that such products will be in

15 compliance with this chapter.

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

18 regulation under paragraph (1) the Secretary

19 shall—

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

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

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

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

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

7 system by the manufacturer of a tobacco product;

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

9 product material prior to the packaging of such

10 product to be determined by the Commissioner;

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

12 storage of the packaged tobacco product;

13 ‘‘(4) after consultation with the Administrator

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

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

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

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

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

23 information.

24 ‘‘(c) PETITIONS FOR EXEMPTIONS AND

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

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

6 and manner as the Secretary shall prescribe and

7 shall—

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

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

13 chapter;

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

16 proposed to be used in, and the facilities and

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

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

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

22 Secretary shall prescribe.

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

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

3 the Secretary with respect to a petition referred to

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

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

7 to the Secretary under paragraph (1); or

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

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

12 whichever occurs later, the Secretary shall by order

13 either deny the petition or approve it.

14 ‘‘(3) APPROVAL OF PETITION.—

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

16 approve—

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

18 tobacco product from a requirement if the

19 Secretary determines that compliance with

20 such requirement is not required to assure

21 that the product will comply with this

22 chapter; and

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

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

2 to be used for, the manufacture, packing,

3 and storage of the product in lieu of the

4 methods, controls, and facilities prescribed

5 by the requirement are sufficient to ensure

6 that the product will comply with this

7 chapter.

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

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

12 for, the manufacture, packing, and storage of

13 the tobacco product to be granted the variance

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

16 chapter.

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

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

20 informal hearing on such order.

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

22 may not promulgate any regulation under this section that

23 has the effect of placing regulatory burdens on tobacco

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

2 in excess of the regulatory burdens generally placed on

3 other agricultural commodity producers.

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

5 INGREDIENTS.

6 ‘‘(a) ANNUAL SUBMISSION.—

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

9 with—

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

11 and compounds (other than tobacco, water or

12 reconstituted tobacco sheet made wholly from

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

14 paper or filter of the product if applicable) in

15 the manufacture of the tobacco product, for

16 each brand of tobacco product so manufactured;

17 and

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

19 ingredients, substances, and compounds that

20 are listed under subparagraph (A) with respect

21 to each brand of tobacco product.

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

23 respect to each annual submission under paragraph

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

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

2 substance, or compound contained on the list of the

3 manufacturer for the year involved, disclose whether

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

6 public disclosure under this section.

7 ‘‘(b) SAFETY ASSESSMENTS.—

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

9 after the date of enactment of the Universal Tobacco

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

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

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

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

18 described in paragraph (1) shall—

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

21 the assessment; and

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

2 under the intended conditions of use.

3 ‘‘(c) PROHIBITION.—

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

5 after the date of enactment of the Universal Tobacco

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

9 manufacturer—

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

12 substance, or compound; or

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

14 safety of the ingredient, substance, or

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

17 ‘‘(2) REVIEW OF ASSESSMENTS.—

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

19 90 days after the receipt of a safety assessment

20 under subsection (b), the Secretary shall review

21 the findings contained in such assessment.

22 ‘‘(B) APPROVAL OR DISAPPROVAL.—Not

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

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

2 the subject of the assessment and provide notice

3 to the manufacturer of such action.

4 ‘‘(C) INACTION BY SECRETARY.—If the

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

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

8 substance, or compound involved shall be

9 deemed to be approved.

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

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

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

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

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

20 in accordance with the labeling provisions applicable

21 to food ingredients under this Act.

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

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

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

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

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

6 ‘‘(3) EXCEPTION.—Notwithstanding paragraph

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

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

12 for in subsection (c).

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

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

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

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

21 for the establishment or amendment of a performance

22 standard under section 905, except that such information

23 may be disclosed to other officers or employees concerned

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

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

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

4 Subtitle F—Compliance Plans and

5 Corporate Culture

6 SEC. 151. COMPLIANCE PLANS.

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

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

9 each manufacturer of a tobacco product shall prepare and

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

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

14 (b) REQUIREMENTS.—A compliance plan submitted

15 under subsection (a) shall—

16 (1) contain the assurances of the manufacturer

17 that tobacco products will only be manufactured and

18 distributed in accordance with this Act and the

19 amendments made by this Act;

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

21 (A) reducing the access of individuals

22 under 18 years of age to tobacco products; and

23 (B) reducing the incidence of the underage

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

2 incentives for achieving the reductions described in

3 paragraph (2);

4 (4) provide for the implementation of internal

5 incentives for the development of tobacco products

6 with a reduced health risk;

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

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

12 SEC. 152. COMPLIANCE PROGRAMS.

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

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

16 compliance programs designed to ensure the compliance

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

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

19 to tobacco products.

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

22 (1) implement standards and procedures to be

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

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

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

4 with the standards and procedures applicable under

5 this Act;

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

8 avoid delegating substantial discretionary authority

9 to individuals who the executives know (or should

10 have known through the exercise of due diligence)

11 have a propensity to disregard corporate policy;

12 (4) include procedures to inform all employees

13 and agents of the relevant standards and procedures

14 applicable to the manufacturer and the tobacco

15 products manufactured under this Act, including

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

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

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

22 in subsection (a);

23 (6) provide for the application of appropriate

24 disciplinary mechanisms and measures to employees

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

2 with this Act;

3 (7) include measures to respond appropriately

4 where violations of laws described in subsection (a)

5 are alleged to have occurred or are occurring;

6 (8) include the promulgation of corporate policy

7 statements that express and explain the commitment

8 of the manufacturer to—

9 (A) compliance with applicable Federal,

10 State, and local laws;

11 (B) reducing the use of tobacco products

12 by individuals who are under 18 years of age;

13 and

14 (C) developing tobacco products that pose

15 a reduced risk to the health of the user;

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

18 promote efforts to fulfill the commitment of the

19 manufacturer;

20 (10) include provisions for compiling reports on

21 compliance with this Act and the laws described in

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

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

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

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

6 by distributors or retailers. The compliance officer shall

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

9 authority.

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

14 retailers of the tobacco products manufactured by the

15 manufacturer in compliance with the Federal, State, and

16 local laws described in subsection (a).

17 SEC. 153. WHISTLEBLOWER PROTECTIONS.

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

19 any manufacturer, distributor, or retailer of a tobacco

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

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

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

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

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

3 enacted to further the purposes of this Act.

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

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

8 appropriate United States district court before the end of

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

10 demotion, or discrimination.

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

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

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

15 former position;

16 (2) pay compensatory damages; or

17 (3) take other appropriate actions to remedy

18 any past discrimination.

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

20 shall not apply to any employee who—

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

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

2 State or local regulatory or enforcement authority.

3 SEC. 154. PROVISIONS RELATING TO LOBBYING.

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

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

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

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

10 any lobbyist or lobbying firm employed or retained by the

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

19 (c) ADDITIONAL AGREEMENTS.—An individual shall

20 not be employed or retained to perform lobbying activities

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

22 tobacco product unless such individual enters into a signed

23 agreement with the manufacturer, distributor, or retailer

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

2 all applicable laws and regulations relating to the

3 manufacture and distribution of tobacco products;

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

5 requirements of this Act (and the amendments made

6 by this Act);

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

8 consent decree entered into under title VI as that

9 decree applies to the manufacturer, distributor, or

10 retailer involved; and

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

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

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

16 SEC. 155. TERMINATION OF CERTAIN ENTITIES.

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

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

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

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

22 and Council shall be dissolved.

23 (b) ESTABLISHMENT OF OTHER ENTITIES.—

24 (1) AUTHORITY.—Manufacturers, distributors,

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

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

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

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

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

12 than 20 percent (at least 1 member) shall

13 be individuals who are not current or

14 former directors, officers, or employees of

15 an entity terminated under subsection (a)

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

18 (ii) during the life of the association

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

22 (B) be administered by officers who are

23 appointed by the board of directors and who are

24 not otherwise employed by any of the members

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

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

4 of the members of the association or organiza5 tion.

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

7 industry association formed or participated in under

8 this subsection shall adopt by-laws that—

9 (A) prohibit meetings by members of the

10 association or organization who are competitors

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

13 (B) require that every meeting of the

14 board of directors, or a subcommittee of the

15 board or other general committee, proceed

16 under and strictly adhere to an agenda that is

17 approved by the legal counsel and circulated in

18 advance; and

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

21 members of the association or organization and

22 the maintenance of such minutes in the records

23 of the association or organization for a period

24 of 5 years following the meeting.

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

2 appropriate, State antitrust authorities shall exercise

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

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

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

10 provision of reasonable notice to the legal counsel of

11 the association or organization, have access to—

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

13 minutes, and other documents maintained by

14 the association or organization; and

15 (B) the directors, officers, and employees

16 of the association or organization for interview

17 purposes.

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

19 States, acting through the attorney general of each

20 such State, may establish a multi-State oversight

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

23 (4) CONFIDENTIALITY.—The Attorney General

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

2 with appropriate confidentiality protections.

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

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

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

7 to which subsection (b) applies.

8 SEC. 156. ENFORCEMENT.

9 (a) ASSESSMENT.—

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

11 civil penalty against any manufacturer of a tobacco

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

14 Secretary finds that such manufacturer has violated

15 or is violating any requirement of this subtitle.

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

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

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

24 amount or longer period of violation is appropriate

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

2 the Administrator and the Attorney General under

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

4 (b) PROCEDURE.—

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

7 order made after an opportunity for a hearing on

8 the record in accordance with sections 554 and 556

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

10 shall issue reasonable rules for discovery and other

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

13 written notice to the manufacturer against whom the

14 assessment is being made of the Secretary’s proposal

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

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

18 is received by such manufacturer.

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

22 section.

23 (c) FIELD CITATION PROGRAM.—

24 (1) IMPLEMENTATION.—The Secretary may

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

2 citation program through regulations establishing

3 appropriate minor violations of this subtitle for

4 which field citations, assessing civil penalties not to

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

6 officers or employees designated by the Secretary.

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

8 field citation is assessed may, within a reasonable

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

12 a hearing is not made within the time specified in

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

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

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

19 required by a field citation under this paragraph

20 shall not be a defense to further enforcement by the

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

22 assess the statutory maximum penalty pursuant to

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

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

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

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

4 may seek review of such assessment in the United

5 States District Court for the District of Columbia or

6 for the district in which the violation is alleged to

7 have occurred or in which the principal place of

8 business of the manufacturer is located, by filing in

9 such court within 30 days following the date the

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

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

15 to the Secretary and the Attorney General.

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

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

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

19 appropriate, of the record on which the penalty

20 order or assessment was issued.

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

22 aside or remand a penalty order or assessment

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

2 assessment constitutes an abuse of discretion.

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

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

9 (e) FAILURE TO PAY.—

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

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

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

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

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

18 the Secretary shall request the Attorney General to

19 bring a civil action in an appropriate district court

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

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

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

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

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

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

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

11 which such failure to pay persists. Such nonpayment

12 penalty shall be 10 percent of the aggregate amount

13 of such manufacturer’s outstanding penalties and

14 nonpayment penalties accrued as of the beginning of

15 such quarter.

16 (f) SCARLET LETTER ADVERTISING.—

17 TITLE II—REDUCTION IN

18 UNDERAGE TOBACCO USE

19 SEC. 201. PURPOSE.

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

22 of underage consumers of tobacco products through the

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

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

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

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

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

8 based on—

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

11 used cigarette products on a daily basis for each of

12 the calendar years 1986 through 1996;

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

15 used cigarette products on a daily basis for each of

16 the calendar years 1991 through 1996; and

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

19 cigarette products on a daily basis for each of the

20 calendar years 1991 through 1996.

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

24 Secretary, weighted by the relative population of the age

25 groups involved as determined using data compiled in

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

3 used smokeless tobacco products on a daily basis in

4 1996;

5 (2) the average of the percentages of 10th grad6 ers (individuals who are 14 or 15 years of age) who

7 used smokeless tobacco products on a daily basis in

8 1996; and

9 (3) the average of the percentages of 8th grad10 ers (individuals who are 13 years of age) who used

11 smokeless tobacco products on a daily basis in 1996.

12 (c) USE OF CERTAIN DATA OR METHODOLOGY.—For

13 purposes of determining the percentages under para14 graphs (1) through (3) of subsections (a) and (b), the Sec15 retary shall use the data contained in the National High

16 School Drug Use Survey entitled Monitoring the Future

17 by the University of Michigan or such other comparable

18 index, as determined appropriate by the Secretary after

19 notice and an opportunity for a hearing, that utilizes

20 methodology identical to that used by the University of

21 Michigan in such survey.

22 SEC. 203. ANNUAL DAILY INCIDENCE OF UNDERAGE USE OF

23 TOBACCO PRODUCTS.

24 (a) ANNUAL DETERMINATION.—Not later than the

25 expiration of the 5-year period beginning on the date of
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1 enactment of this Act, and annually thereafter, the Sec2 retary shall determine the average annual incidence of the

3 daily use of tobacco products by individuals who are under

4 18 years of age.

5 (b) CIGARETTES.—With respect to cigarette prod6 ucts, a determination under subsection (a) for a year shall

7 be based on the percentage, as weighted by the relative

8 population of the age groups involved as determined using

9 data compiled in 1995 by the Bureau of the Census, of—

10 (1) 12th graders (individuals who are 16 or 17

11 years of age) who used cigarette products on a daily

12 basis during the year involved;

13 (2) 10th graders (individuals who are 14 or 15

14 years of age) who used cigarette products on a daily

15 basis during the year involved; and

16 (3) 8th graders (individuals who are 13 years

17 of age) who used cigarette products on a daily basis

18 during the year involved.

19 (c) SMOKELESS TOBACCO.—With respect to smoke20 less tobacco products, a determination under subsection

21 (a) for a year shall be based on the percentage, as weight22 ed by the relative population of the age groups involved

23 as determined using data compiled in 1995 by the Bureau

24 of the Census, of—
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1 (1) 12th graders (individuals who are 16 or 17

2 years of age) who used smokeless tobacco products

3 on a daily basis during the year involved;

4 (2) 10th graders (individuals who are 14 or 15

5 years of age) who used smokeless tobacco products

6 on a daily basis during the year involved; and

7 (3) 8th graders (individuals who are 13 years

8 of age) who used cigarette smokeless tobacco on a

9 daily basis during the year involved.

10 (d) USE OF CERTAIN DATA OR METHODOLOGY.—

11 (1) IN GENERAL.—For purposes of determining

12 the percentages under paragraphs (1) through (3) of

13 subsections (b) and (c), the Secretary shall use the

14 data contained in the National High School Drug

15 Use Survey entitled Monitoring the Future by the

16 University of Michigan (if such survey is still being

17 undertaken) or such other comparable index, as de18 termined appropriate by the Secretary after notice

19 and an opportunity for a hearing, that utilizes meth20 odology identical to that used by the University of

21 Michigan in such survey.

22 (2) ALTERATION OF METHODOLOGY.—If the

23 Secretary determines that the methodology used by

24 the University of Michigan in the survey referred to

25 in paragraph (1) has been altered in a material
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1 manner from the 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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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 make 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 ad10 diction 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 Unit4 ed States Court of Appeals for the District of

5 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

2 of 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 Market

18 Transition Assistance

19 SEC. 921. PAYMENTS FOR LOST TOBACCO QUOTA.

20 (a) IN GENERAL.—Beginning with the 1999 market21 ing year, the Secretary shall make payments for lost to22 bacco quota to eligible quota holders, quota lessees, and

23 quota tenants as reimbursement for lost tobacco quota as

24 a result of a decrease in demand for domestically produced

25 tobacco.
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1 (b) ELIGIBILITY.—To be eligible to receive payments

2 under this section, a quota holder, quota lessee, or quota

3 tenant shall—

4 (1) prepare and submit to the Secretary an ap5 plication at such time, in such manner, and contain6 ing such information as the Secretary may require,

7 including information sufficient to make the dem8 onstration required under paragraph (2); and

9 (2) demonstrate to the satisfaction of the Sec10 retary that, with respect to the 1996 marketing

11 year—

12 (A) the producer was a quota holder and

13 realized income from the production of tobacco

14 through—

15 (i) the active production of tobacco;

16 (ii) the lease and transfer of tobacco

17 quota to another farm;

18 (iii) the rental of all or part of the

19 farm of the quota holder, including the

20 right to produce tobacco, to another to21 bacco producer; or

22 (iv) the hiring of a quota tenant to

23 produce tobacco;

24 (B) the producer was a quota lessee; or

25 (C) the producer was a quota tenant.
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1 (c) BASE QUOTA LEVEL.—

2 (1) IN GENERAL.—The Secretary shall deter3 mine, for each quota holder, quota lessee, and quota

4 tenant, the base quota level for the 1994 through

5 1996 marketing years.

6 (2) QUOTA HOLDERS.—The base quota level for

7 a quota holder shall be equal to the average tobacco

8 farm marketing quota established for the farm

9 owned by the quota holder for the 1994 through

10 1996 marketing years.

11 (3) QUOTA LESSEES.—The base quota level for

12 a quota lessee shall be equal to—

13 (A) 50 percent of the average number of

14 pounds of tobacco quota established for a farm

15 for the 1994 through 1996 marketing years—

16 (i) that was leased and transferred to

17 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; less

21 (B) 25 percent of the average number of

22 pounds of tobacco quota described in paragraph

23 (A) for which a quota tenant was the principal

24 producer of the tobacco quota.
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1 (4) QUOTA TENANTS.—The base quota level for

2 a quota tenant shall be equal to the sum of—

3 (A) 50 percent of the average number of

4 pounds of tobacco quota established for a farm

5 for the 1994 through 1996 marketing years—

6 (i) that was owned by a quota holder;

7 and

8 (ii) for which the quota tenant was

9 the principal producer of the tobacco on

10 the farm; and

11 (B) 25 percent of the average number of

12 pounds of tobacco quota for the 1994 through

13 1996 marketing years—

14 (i)(I) that was leased and transferred

15 to a farm owned by the quota lessee; or

16 (II) for which the rights to produce

17 the tobacco were rented to the quota les18 see; and

19 (ii) for which the quota tenant was

20 the principal producer of the tobacco on

21 the farm.

22 (5) MARKETING QUOTAS OTHER THAN POUND23 AGE QUOTAS.—For each kind of tobacco for which

24 there is a marketing quota or allotment (on an acre25 age basis), the base quota level for each quota hold-
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1 er, quota lessee, or quota tenant shall be determined

2 in accordance with this subsection (based on a

3 poundage conversion) in an amount equal to the

4 product obtained by multiplying—

5 (A) the average tobacco farm marketing

6 quota or allotment for the 1994 through 1996

7 marketing years; by

8 (B) the average county yield per acre for

9 the county in which the farm is located for the

10 kind of tobacco for the marketing years.

11 (d) PAYMENTS.—Except as otherwise provided in this

12 section, during any marketing year in which the national

13 marketing quota for a kind of tobacco is less than the av14 erage national marketing quota level for the kind of to15 bacco for the 1994 through 1996 marketing years, the

16 Secretary shall make payments for lost tobacco quota to

17 each quota holder, quota lessee, and quota tenant that is

18 eligible under subsection (b) in an amount that is equal

19 to the product obtained by multiplying—

20 (1) the percentage by which the national mar21 keting quota for the kind of tobacco is less than the

22 average national marketing quota level for the kind

23 of tobacco for the 1994 through 1996 marketing

24 years; by
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1 (2) the base quota level for the quota holder,

2 quota lessee, or quota tenant; by

3 (3) $4 per pound.

4 (e) LIFETIME LIMITATION ON PAYMENTS.—Except

5 as otherwise provided in this section, the total amount of

6 payments made under this section to a quota holder, quota

7 lessee, or quota tenant during the lifetime of the holder,

8 lessee, or tenant shall not exceed the product obtained by

9 multiplying—

10 (1) the base quota level for the quota holder,

11 quota lessee, or quota tenant; by

12 (2) $8 per pound.

13 (f) LIMITATIONS ON AGGREGATE ANNUAL PAY14 MENTS.—

15 (1) IN GENERAL.—Except as otherwise pro16 vided in this subsection, the total amount payable

17 under this section for any marketing year shall not

18 exceed $1,600,000,000.

19 (2) ACCELERATED PAYMENTS.—Paragraph (1)

20 shall not apply if accelerated payments for lost to21 bacco quota are made in accordance with subsection

22 (j).

23 (3) REDUCTIONS.—If the amount determined

24 under subsection (d) for a marketing year exceeds

25 the amount described in paragraph (1), the Sec-
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1 retary shall make a pro rata reduction in the

2 amounts payable to quota holders, quota lessees, and

3 quota tenants under this section to ensure that the

4 total amount of the payments for lost tobacco quota

5 does not exceed the limitation established under

6 paragraph (1).

7 (4) ROLLOVER OF PAYMENTS FOR LOST TO8 BACCO QUOTA.—Subject to paragraph (1), if the

9 Secretary makes a reduction in accordance with

10 paragraph (3), the amount of the reduction shall be

11 applied to the next marketing year and added to the

12 payments for lost tobacco for the marketing year.

13 (g) SUBSEQUENT SALE AND TRANSFER OF

14 QUOTA.—Effective beginning January 1, 1999, on the

15 sale and transfer of a farm marketing quota under section

16 316(g) or 319(g) of the Agricultural Adjustment Act of

17 1938 (7 U.S.C. 1314b(g), 1314e(g))—

18 (1) the person who sold and transferred the

19 quota shall have—

20 (A) the base quota level attributable to the

21 person reduced by the base quota level attrib22 utable to the quota that is sold and transferred;

23 and

24 (B) the lifetime limitation on payments es25 tablished under subsection (e) attributable to
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1 the person reduced by the product obtained by

2 multiplying—

3 (i) the base quota level attributable to

4 the quota; by

5 (ii) $8 per pound; and

6 (2) the person who acquired the quota shall

7 have—

8 (A) the base quota level attributable to the

9 person increased by the base quota level attrib10 utable to the quota that was sold and trans11 ferred; and

12 (B) the lifetime limitation on payments es13 tablished under subsection (e) attributable to

14 the person—

15 (i) increased by the product obtained

16 by multiplying—

17 (I) the base quota level attrib18 utable to the quota; by

19 (II) $8 per pound; but

20 (ii) decreased by any payments for

21 lost tobacco quota previously made that

22 are attributable to the quota that was sold

23 and transferred.

24 (h) SALE OR TRANSFER OF FARM.—On the sale or

25 transfer of ownership of a farm that is owned by a quota
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1 holder, the base quota level established under subsection

2 (c), the right to payments under subsection (d), and the

3 lifetime limitation on payments established under sub4 section (e) shall transfer to the new owner of the farm

5 to the same extent and in the same manner as those sub6 sections applied to the previous quota holder.

7 (i) DEATH OF QUOTA LESSEE OR QUOTA TENANT.—

8 If a quota lessee or quota tenant who is entitled to pay9 ments under this section dies and is survived by a spouse

10 or 1 or more dependents, the right to receive the payments

11 shall transfer to the surviving spouse or, if there is no

12 surviving spouse, to the surviving dependents in equal

13 shares.

14 (j) ACCELERATION OF PAYMENTS.—

15 (1) IN GENERAL.—On the occurrence of any of

16 the events described in paragraph (2), the Secretary

17 shall make an accelerated lump sum payment for

18 lost tobacco quota to each quota holder, quota les19 see, and quota tenant for any affected kind of to20 bacco in accordance with paragraph (3).

21 (2) TRIGGERING EVENTS.—The Secretary shall

22 make accelerated payments under paragraph (1) if

23 after the date of enactment of this title—

24 (A) for 3 consecutive marketing years, the

25 national marketing quota for a kind of tobacco
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1 is less than 50 percent of the national market2 ing quota for the kind of tobacco for the 1996

3 marketing year; or

4 (B) Congress repeals or makes ineffective,

5 directly or indirectly, any provision of—

6 (i) section 316(g) of the Agricultural

7 Adjustment Act of 1938 (7 U.S.C.

8 1314b(g));

9 (ii) section 319(g) of the Agricultural

10 Adjustment Act of 1938 (7 U.S.C.

11 1314e(g));

12 (iii) section 106 of the Agricultural

13 Act of 1949 (7 U.S.C. 1445);

14 (iv) section 106A of the Agricultural

15 Act of 1949 (7 U.S.C. 1445–1); or

16 (v) section 106B of the Agricultural

17 Act of 1949 (7 U.S.C. 1445–2).

18 (3) AMOUNT.—The amount of the accelerated

19 payments made to each quota holder, quota lessee,

20 and quota tenant under this subsection shall be

21 equal to—

22 (A) the amount of the lifetime limitation

23 established for the quota holder, quota lessee,

24 or quota tenant under subsection (e); less
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1 (B) any payments for lost tobacco quota

2 received by the quota holder, quota lessee, or

3 quota tenant before the occurrence of any of

4 the events described in paragraph (2).

5 SEC. 922. INDUSTRY PAYMENTS FOR ALL DEPARTMENT

6 COSTS ASSOCIATED WITH TOBACCO PRODUC7 TION.

8 (a) IN GENERAL.—The Secretary shall use such

9 amounts as are necessary from the Trust Fund at the end

10 of each fiscal year to reimburse the Secretary for—

11 (1) costs associated with the administration of

12 programs established under this title and amend13 ments made by this title;

14 (2) costs associated with the administration of

15 the tobacco quota and price support programs ad16 ministered by the Secretary;

17 (3) costs to the Federal Government of carrying

18 out crop insurance programs for tobacco;

19 (4) costs associated with all agricultural re20 search, extension, or education activities associated

21 with tobacco;

22 (5) costs associated with the administration of

23 loan association and cooperative programs for to24 bacco producers, as approved by the Secretary; and
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1 (6) any other costs incurred by the Department

2 of Agriculture associated with the production of to3 bacco.

4 (b) LIMITATIONS.—Amounts made available under

5 subsection (a) may not be used—

6 (1) to provide direct benefits to quota holders,

7 quota lessees, or quota tenants; or

8 (2) in a manner that results in a decrease, or

9 an increase relative to other crops, in the amount of

10 the crop insurance premiums assessed to active to11 bacco producers under the Federal Crop Insurance

12 Act (7 U.S.C. 1501 et seq.).

13 (c) DETERMINATIONS.—Not later than September

14 30, 1998, and each fiscal year thereafter, the Secretary

15 shall determine—

16 (1) the amount of costs described in subsection

17 (a); and

18 (2) the amount that will be provided under this

19 section as reimbursement for the costs.

20 SEC. 923. TOBACCO COMMUNITY ECONOMIC DEVELOP21 MENT GRANTS.

22 (a) AUTHORITY.—The Secretary shall make grants to

23 tobacco-growing States in accordance with this section to

24 enable the States to carry out economic development ini25 tiatives in tobacco-growing communities.
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1 (b) APPLICATION.—To be eligible to receive payments

2 under this section, a State shall prepare and submit to

3 the Secretary an application at such time, in such manner,

4 and containing such information as the Secretary may re5 quire, including—

6 (1) a description of the activities that the State

7 will carry out using amounts received under the

8 grant;

9 (2) a designation of an appropriate State agen10 cy to administer amounts received under the grant;

11 and

12 (3) a description of the steps to be taken to en13 sure that the funds are distributed in accordance

14 with subsection (e).

15 (c) AMOUNT OF GRANT.—

16 (1) IN GENERAL.—From the amounts available

17 to carry out this section for a fiscal year, the Sec18 retary shall allot to each State an amount that bears

19 the same ratio to the amounts available as the total

20 income of the State derived from the production of

21 tobacco during the 1994 through 1996 marketing

22 years (as determined under paragraph (2)) bears to

23 the total income of all States derived from the pro24 duction of tobacco during the 1994 through 1996

25 marketing years.
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1 (2) TOBACCO INCOME.—For the 1994 through

2 1996 marketing years, the Secretary shall determine

3 the amount of income derived from the production

4 of tobacco in each State and in all States.

5 (d) PAYMENTS.—

6 (1) IN GENERAL.—A State that has an applica7 tion approved by the Secretary under subsection (b)

8 shall be entitled to a payment under this section in

9 an amount that is equal to its allotment under sub10 section (c).

11 (2) FORM OF PAYMENTS.—The Secretary may

12 make payments under this section to a State in in13 stallments, and in advance or by way of reimburse14 ment, with necessary adjustments on account of

15 overpayments or underpayments, as the Secretary

16 may determine.

17 (3) REALLOTMENTS.—Any portion of the allot18 ment of a State under subsection (c) that the Sec19 retary determines will not be used to carry out this

20 section in accordance with an approved State appli21 cation required under subsection (b), shall be reallot22 ted by the Secretary to other States in proportion to

23 the original allotments to the other States.

24 (e) USE AND DISTRIBUTION OF FUNDS.—
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1 (1) IN GENERAL.—Amounts received by a State

2 under this section shall be used to carry out eco3 nomic development activities, including—

4 (A) rural business enterprise activities de5 scribed in subsections (c) and (e) of section

6 310B of the Consolidated Farm and Rural De7 velopment Act (7 U.S.C. 1932);

8 (B) down payment loan assistance pro9 grams that are similar to the program described

10 in section 310E of the Consolidated Farm and

11 Rural Development Act (7 U.S.C. 1935);

12 (C) activities designed to help create pro13 ductive farm or off-farm employment in rural

14 areas to provide a more viable economic base

15 and enhance opportunities for improved in16 comes, living standards, and contributions by

17 rural individuals to the economic and social de18 velopment of tobacco communities;

19 (D) activities that expand existing infra20 structure, facilities, and services to capitalize on

21 opportunities to diversify economies in tobacco

22 communities and that support the development

23 of new industries or commercial ventures;

24 (E) activities by agricultural organizations

25 that provide assistance directly to active tobacco
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1 producers to assist in developing other agricul2 tural activities that supplement tobacco-produc3 ing activities;

4 (F) initiatives designed to create or expand

5 locally owned value-added processing and mar6 keting operations in tobacco communities; and

7 (G) technical assistance activities by per8 sons to support farmer-owned enterprises, or

9 agriculture-based rural development enterprises,

10 of the type described in section 252 or 253 of

11 the Trade Act of 1974 (19 U.S.C. 2342, 2343).

12 (2) TOBACCO-GROWING COUNTIES.—Assistance

13 may be provided by a State under this section only

14 to assist a county in the State that has been deter15 mined by the Secretary to have in excess of

16 $100,000 in income derived from the production of

17 tobacco during 1 or more of the 1994 through 1996

18 marketing years.

19 (3) DISTRIBUTION.—

20 (A) ECONOMIC DEVELOPMENT ACTIVI21 TIES.—Not less than 20 percent of the amounts

22 received by a State under this section shall be

23 used to carry out—
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1 (i) economic development activities de2 scribed in subparagraph (E) or (F) of

3 paragraph (1); or

4 (ii) agriculture-based rural develop5 ment activities described in paragraph

6 (1)(G).

7 (B) TECHNICAL ASSISTANCE ACTIVI8 TIES.—Not less than 4 percent of the amounts

9 received by a State under this section shall be

10 used to carry out technical assistance activities

11 described in paragraph (1)(G).

12 (C) TOBACCO-GROWING COUNTIES.—To be

13 eligible to receive payments under this section,

14 a State shall demonstrate to the Secretary that

15 funding will be provided, during each 5-year pe16 riod for which funding is provided under this

17 section, for activities in each county in the

18 State that has been determined under para19 graph (2) to have in excess of $100,000 in in20 come derived from the production of tobacco, in

21 amounts that are at least equal to the product

22 obtained by multiplying—

23 (i) the ratio that the tobacco produc24 tion income in the county determined

25 under paragraph (2) bears to the total to-
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1 bacco production income for the State de2 termined under subsection (c); by

3 (ii) 50 percent of the total amounts

4 received by a State under this section dur5 ing the 5-year period.

6 (f) PREFERENCES IN HIRING.—A State may require

7 recipients of funds under this section to provide a pref8 erence in employment to—

9 (1) an individual who—

10 (A) during the 1996 calendar year, was

11 employed in the manufacture, processing, or

12 warehousing of tobacco or tobacco products, or

13 resided, in a county described in subsection

14 (e)(2); and

15 (B) is eligible for assistance under the to16 bacco worker transition program established

17 under section 301; or

18 (2) an individual who—

19 (A) during the 1996 marketing year, car20 ried out tobacco quota or relevant tobacco pro21 duction activities in a county described in sub22 section (e)(2);

23 (B) is eligible for a farmer opportunity

24 grant under subpart 9 of part A of title IV of

25 the Higher Education Act of 1965; and
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1 (C) has successfully completed a course of

2 study at an institution of higher education.

3 SEC. 924. MODIFICATIONS IN FEDERAL TOBACCO PRO4 GRAMS.

5 (a) PROGRAM REFERENDA.—Section 312(c) of the

6 Agricultural Adjustment Act of 1938 (7 U.S.C. 1312(c))

7 is amended—

8 (1) by striking ‘‘(c) Within thirty’’ and insert9 ing the following:

10 ‘‘(c) REFERENDA ON QUOTAS.—

11 ‘‘(1) IN GENERAL.—Not later than 30’’; and

12 (2) by adding at the end the following:

13 ‘‘(2) REFERENDA ON PROGRAM CHANGES.—

14 ‘‘(A) IN GENERAL.—In the case of any

15 kind of tobacco for which marketing quotas are

16 in effect, on the receipt of a petition from more

17 than 5 percent of the producers of that kind of

18 tobacco in a State, the Secretary shall conduct

19 a statewide referendum on any proposal related

20 to the lease and transfer of tobacco quota with21 in a State requested by the petition that is au22 thorized under this part.

23 ‘‘(B) APPROVAL OF PROPOSALS.—If a ma24 jority of producers of the kind of tobacco in the

25 State approve a proposal in a referendum con-
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1 ducted under subparagraph (A), the Secretary

2 shall implement the proposal in a manner that

3 applies to all producers and quota holders of

4 that kind of tobacco in the State.’’.

5 (b) PURCHASE REQUIREMENTS.—Section 320B of

6 the Agricultural Adjustment Act of 1938 (7 U.S.C.

7 1314h) is amended—

8 (1) in subsection (c), by striking paragraph (1)

9 and inserting the following:

10 ‘‘(1) 105 percent of the average market price

11 for the kind of tobacco involved during the preceding

12 marketing year; by’’; and

13 (2) by striking subsection (d) and inserting the

14 following:

15 ‘‘(d) USE OF PENALTY PAYMENTS.—An amount

16 equivalent to each penalty collected by the Secretary under

17 this section shall be transmitted by the Secretary to the

18 Secretary of the Treasury for deposit in the Tobacco Com19 munity Revitalization Trust Fund established under sec20 tion 101 of the LEAF Act.’’.

21 (c) ELIMINATION OF TOBACCO MARKETING ASSESS22 MENT.—

23 (1) IN GENERAL.—Section 106 of the Agricul24 tural Act of 1949 (7 U.S.C. 1445(g)) is amended by

25 striking subsection (g).
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1 (2) CONFORMING AMENDMENT.—Section

2 422(c) of the Uruguay Round Agreements Act (Pub3 lic Law 103–465; 7 U.S.C. 1445 note) is amended

4 by striking ‘‘section 106(g), 106A, or 106B of the

5 Agricultural Act of 1949 (7 U.S.C. 1445(g), 1445–

6 1, or 1445–2)’’ and inserting ‘‘section 106A or

7 106B of the Agricultural Act of 1949 (7 U.S.C.

8 1445–1, 1445–2)’’.

9 Subtitle C—Farmer and Worker

10 Transition Assistance

11 SEC. 931. TOBACCO WORKER TRANSITION PROGRAM.

12 (a) GROUP ELIGIBILITY REQUIREMENTS.—

13 (1) CRITERIA.—A group of workers (including

14 workers in any firm or subdivision of a firm involved

15 in the manufacture, processing, or warehousing of

16 tobacco or tobacco products) shall be certified as eli17 gible to apply for adjustment assistance under this

18 section pursuant to a petition filed under subsection

19 (b) if the Secretary of Labor determines that a sig20 nificant number or proportion of the workers in such

21 workers’ firm or an appropriate subdivision of the

22 firm have become totally or partially separated, or

23 are threatened to become totally or partially sepa24 rated, and—
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1 (A) the sales or production, or both, of

2 such firm or subdivision have decreased abso3 lutely; and

4 (B) the implementation of the national to5 bacco settlement contributed importantly to

6 such workers’ separation or threat of separation

7 and to the decline in the sales or production of

8 such firm or subdivision.

9 (2) DEFINITION OF CONTRIBUTED IMPOR10 TANTLY.—In paragraph (1)(B), the term ‘‘contrib11 uted importantly’’ means a cause that is important

12 but not necessarily more important than any other

13 cause.

14 (3) REGULATIONS.—The Secretary shall issue

15 regulations relating to the application of the criteria

16 described in paragraph (1) in making preliminary

17 findings under subsection (b) and determinations

18 under subsection (c).

19 (b) PRELIMINARY FINDINGS AND BASIC ASSIST20 ANCE.—

21 (1) FILING OF PETITIONS.—A petition for cer22 tification of eligibility to apply for adjustment assist23 ance under this section may be filed by a group of

24 workers (including workers in any firm or subdivi25 sion of a firm involved in the manufacture, process-
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1 ing, or warehousing of tobacco or tobacco products)

2 or by their certified or recognized union or other

3 duly authorized representative with the Governor of

4 the State in which such workers’ firm or subdivision

5 thereof is located.

6 (2) FINDINGS AND ASSISTANCE.—Upon receipt

7 of a petition under paragraph (1), the Governor

8 shall—

9 (A) notify the Secretary that the Governor

10 has received the petition;

11 (B) within 10 days after receiving the peti12 tion—

13 (i) make a preliminary finding as to

14 whether the petition meets the criteria de15 scribed in subsection (a)(1); and

16 (ii) transmit the petition, together

17 with a statement of the finding under

18 clause (i) and reasons for the finding, to

19 the Secretary for action under subsection

20 (c); and

21 (C) if the preliminary finding under sub22 paragraph (B)(i) is affirmative, ensure that

23 rapid response and basic readjustment services

24 authorized under other Federal laws are made

25 available to the workers.
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1 (c) REVIEW OF PETITIONS BY SECRETARY; CERTIFI2 CATIONS.—

3 (1) IN GENERAL.—The Secretary, within 30

4 days after receiving a petition under subsection

5 (b)(2)(B)(ii), shall determine whether the petition

6 meets the criteria described in subsection (a)(1).

7 Upon a determination that the petition meets such

8 criteria, the Secretary shall issue to workers covered

9 by the petition a certification of eligibility to apply

10 for the assistance described in subsection (d).

11 (2) DENIAL OF CERTIFICATION.—Upon the de12 nial of a certification with respect to a petition

13 under paragraph (1), the Secretary shall review the

14 petition in accordance with the requirements of

15 other applicable assistance programs to determine if

16 the workers may be certified under such other provi17 sions.

18 (d) COMPREHENSIVE ASSISTANCE.—

19 (1) IN GENERAL.—Workers covered by a certifi20 cation issued by the Secretary under subsection

21 (c)(1) shall be provided with benefits and services

22 described in paragraph (2) in the same manner and

23 to the same extent as workers covered under a cer24 tification under subchapter A of title II of the Trade

25 Act of 1974 (19 U.S.C. 2271 et seq.), except that
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1 the total amount of payments under this section for

2 any fiscal year shall not exceed $50,000,000.

3 (2) BENEFITS AND SERVICES.—The benefits

4 and services described in this paragraph are the fol5 lowing:

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

10 the Trade Act of 1974 (19 U.S.C. 2296), ex11 cept that notwithstanding the provisions of sec12 tion 236(a)(2)(A) of such Act, the total amount

13 of payments for training under this section for

14 any fiscal year shall not exceed $25,000,000.

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

19 2 of title II of the Trade Act of 1974 (19

20 U.S.C. 2291 et seq.), except that—

21 (i) the provisions of sections

22 231(a)(5)(C) and 231(c) of such Act (19

23 U.S.C. 2291(a)(5)(C), 2291(c)), authoriz24 ing the payment of trade readjustment al25 lowances upon a finding that it is not fea-
213

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1 sible or appropriate to approve a training

2 program for a worker, shall not be applica3 ble to payment of allowances under this

4 section; and

5 (ii) notwithstanding the provisions of

6 section 233(b) of such Act (19 U.S.C.

7 2293(b)), in order for a worker to qualify

8 for tobacco readjustment allowances under

9 this section, the worker shall be enrolled in

10 a training program approved by the Sec11 retary of the type described in section

12 236(a) of such Act (19 U.S.C. 2296(a)) by

13 the later of—

14 (I) the last day of the 16th week

15 of such worker’s initial unemployment

16 compensation benefit period; or

17 (II) the last day of the 6th week

18 after the week in which the Secretary

19 issues a certification covering such

20 worker.

21 In cases of extenuating circumstances re22 lating to enrollment of a worker in a train23 ing program under this section, the Sec24 retary may extend the time for enrollment

25 for a 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 serv9 ices may be provided under this section to any individual

10 who has received payments for lost tobacco quota under

11 section 201.

12 (f) FUNDING.—Of the amounts in the Trust Fund,

13 the Secretary may use not to exceed $50,000,000 for each

14 of fiscal years 1999 through 2008 to provide assistance

15 under this section.

16 (g) EFFECTIVE DATE.—This section shall take effect

17 on the date that is the later of—

18 (1) October l, 1998; or

19 (2) the date on which legislation implementing

20 the national tobacco settlement is enacted.

21 (h) TERMINATION DATE.—No assistance, vouchers,

22 allowances, 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. 932. FARMER OPPORTUNITY GRANTS.

6 Part A of title IV of the Higher Education Act of

7 1965 (20 U.S.C. 1070 et seq.) is amended by adding at

8 the end 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 eligi13 ble students (determined in accordance with section 420F)

14 in institutions of higher education by providing farmer op15 portunity grants to all eligible students.

16 ‘‘SEC. 420E. PROGRAM AUTHORITY; AMOUNT AND DETER17 MINATIONS; APPLICATIONS.

18 ‘‘(a) PROGRAM AUTHORITY AND METHOD OF

19 DISTRIBUTION.—

20 ‘‘(1) PROGRAM AUTHORITY.—From amounts

21 made available under section 101(d)(5) of the LEAF

22 Act, the Secretary, during the period beginning July

23 1, 1999, and ending September 30, 2024, shall pay

24 to each eligible institution such sums as may be nec25 essary to pay to each eligible student (determined in
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1 accordance with section 420F) for each academic

2 year during which that student is in attendance at

3 an institution of higher education, as an under4 graduate, a farmer opportunity grant in the amount

5 for which that student is eligible, as determined pur6 suant to subsection (b). Not less than 85 percent of

7 such sums shall be advanced to eligible institutions

8 prior to the start of each payment period and shall

9 be based upon an amount requested by the institu10 tion as needed to pay eligible students, except that

11 this sentence shall not be construed to limit the au12 thority of the Secretary to place an institution on a

13 reimbursement system of payment.

14 ‘‘(2) CONSTRUCTION.—Nothing in this section

15 shall be construed to prohibit the Secretary from

16 paying directly to students, in advance of the begin17 ning of the academic term, an amount for which the

18 students are eligible, in cases where the eligible in19 stitution elects not to participate in the disburse20 ment system required by paragraph (1).

21 ‘‘(3) DESIGNATION.—Grants made under this

22 subpart shall be known as ‘farmer opportunity

23 grants’.

24 ‘‘(b) AMOUNT OF GRANTS.—

25 ‘‘(1) AMOUNTS.—
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1 ‘‘(A) IN GENERAL.—The amount of the

2 grant for a student eligible under this subpart

3 shall be—

4 ‘‘(i) $1,700 for each of the academic

5 years 1999–2000 through 2003–2004;

6 ‘‘(ii) $2,000 for each of the academic

7 years 2004–2005 through 2008–2009;

8 ‘‘(iii) $2,300 for each of the academic

9 years 2009–2010 through 2013–2014;

10 ‘‘(iv) $2,600 for each of the academic

11 years 2014–2015 through 2018–2019; and

12 ‘‘(v) $2,900 for each of the academic

13 years 2019–2020 through 2023–2024.

14 ‘‘(B) PART-TIME RULE.—In any case

15 where a student attends an institution of higher

16 education on less than a full-time basis (includ17 ing a student who attends an institution of

18 higher education on less than a half-time basis)

19 during any academic year, the amount of the

20 grant for which that student is eligible shall be

21 reduced in proportion to the degree to which

22 that student is not so attending on a full-time

23 basis, in accordance with a schedule of reduc24 tions established by the Secretary for the pur25 poses of this subparagraph, computed in ac-
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1 cordance with this subpart. Such schedule of re2 ductions shall be established by regulation and

3 published in the Federal Register.

4 ‘‘(2) MAXIMUM.—No grant under this subpart

5 shall exceed the cost of attendance (as described in

6 section 472) at the institution at which that student

7 is in attendance. If, with respect to any student, it

8 is determined that the amount of a grant exceeds

9 the cost of attendance for that year, the amount of

10 the grant shall be reduced to an amount equal to the

11 cost of attendance at such institution.

12 ‘‘(3) PROHIBITION.—No grant shall be awarded

13 under this subpart to any individual who is incarcer14 ated in any Federal, State, or local penal institution.

15 ‘‘(c) PERIOD OF ELIGIBILITY FOR GRANTS.—

16 ‘‘(1) IN GENERAL.—The period during which a

17 student may receive grants shall be the period re18 quired for the completion of the first undergraduate

19 baccalaureate course of study being pursued by that

20 student at the institution at which the student is in

21 attendance, except that any period during which the

22 student is enrolled in a noncredit or remedial course

23 of study as described in paragraph (2) shall not be

24 counted for the purpose of this paragraph.
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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

7 the pursuit of a first undergraduate bacca8 laureate degree or certificate or, in the case of

9 courses in English language instruction, to be

10 necessary to enable the student to utilize al11 ready existing knowledge, training, or skills;

12 and

13 ‘‘(B) exclude from eligibility programs of

14 study abroad that are approved for credit by

15 the home institution at which the student is

16 enrolled.

17 ‘‘(3) PROHIBITION.—No student is entitled to

18 receive farmer opportunity grant payments concur19 rently from more than 1 institution or from the Sec20 retary and an institution.

21 ‘‘(d) APPLICATIONS FOR GRANTS.—

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

23 time to time set dates by which students shall file

24 applications for grants under this subpart. The filing

25 of applications under this subpart shall be coordi-
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1 nated with the filing of applications under section

2 401(c).

3 ‘‘(2) INFORMATION AND ASSURANCES.—Each

4 student desiring a grant for any year shall file with

5 the Secretary an application for the grant containing

6 such information and assurances as the Secretary

7 may deem necessary to enable the Secretary to carry

8 out the Secretary’s functions and responsibilities

9 under this subpart.

10 ‘‘(e) DISTRIBUTION OF GRANTS TO STUDENTS.—

11 Payments under this section shall be made in accordance

12 with regulations promulgated by the Secretary for such

13 purpose, in such manner as will best accomplish the pur14 pose of this section. Any disbursement allowed to be made

15 by crediting the student’s account shall be limited to tui16 tion and fees and, in the case of institutionally owned

17 housing, room and board. The student may elect to have

18 the institution provide other such goods and services by

19 crediting the student’s account.

20 ‘‘(f) INSUFFICIENT FUNDING.—If, for any fiscal

21 year, the funds made available to carry out this subpart

22 from the Tobacco Community Revitalization Trust Fund

23 are insufficient to satisfy fully all grants for students de24 termined to be eligible under section 420F, the amount
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1 of the grant provided under subsection (b) shall be re2 duced on a pro rata basis among all eligible students.

3 ‘‘(g) TREATMENT OF INSTITUTIONS AND STUDENTS

4 UNDER OTHER LAWS.—Any institution of higher edu5 cation that enters into an agreement with the Secretary

6 to disburse to students attending that institution the

7 amounts those students are eligible to receive under this

8 subpart shall not be deemed, by virtue of such agreement,

9 to be a contractor maintaining a system of records to ac10 complish a function of the Secretary. Recipients of farmer

11 opportunity grants shall not be considered to be individual

12 grantees for purposes of the Drug-Free Workplace Act of

13 1988 (41 U.S.C. 701 et seq.).

14 ‘‘SEC. 420F. STUDENT ELIGIBILITY.

15 ‘‘(a) IN GENERAL.—In order to receive any grant

16 under this subpart, a student shall—

17 ‘‘(1) be a member of a tobacco farm family in

18 accordance with subsection (b);

19 ‘‘(2) be enrolled or accepted for enrollment in

20 a degree, certificate, or other program (including a

21 program of study abroad approved for credit by the

22 eligible institution at which such student is enrolled)

23 leading to a recognized educational credential at an

24 institution of higher education that is an eligible in-
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1 stitution in accordance with section 487, and not be

2 enrolled in an elementary or secondary school;

3 ‘‘(3) if the student is presently enrolled at an

4 institution of higher education, be maintaining satis5 factory progress in the course of study the student

6 is pursuing in accordance with subsection (c);

7 ‘‘(4) not owe a refund on grants previously re8 ceived at any institution of higher education under

9 this title, or be in default on any loan from a stu10 dent loan fund at any institution provided for in

11 part D, or a loan made, insured, or guaranteed by

12 the Secretary under this title for attendance at any

13 institution;

14 ‘‘(5) file with the institution of higher education

15 that the student intends to attend, or is attending,

16 a document, that need not be notarized, but that

17 shall include—

18 ‘‘(A) a statement of educational purpose

19 stating that the money attributable to such

20 grant will be used solely for expenses related to

21 attendance or continued attendance at such in22 stitution; and

23 ‘‘(B) such student’s social security num24 ber; and

25 ‘‘(6) be a citizen of the United States.
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•S 1414 PCS

1 ‘‘(b) TOBACCO FARM FAMILIES.—

2 ‘‘(1) IN GENERAL.—For the purpose of sub3 section (a)(1), a student is a member of a tobacco

4 farm family if during calendar year 1996 the stu5 dent was—

6 ‘‘(A) an individual who—

7 ‘‘(i) is an active tobacco producer (as

8 defined in section 2 of the LEAF Act); or

9 ‘‘(ii) is otherwise actively engaged in

10 the production of tobacco;

11 ‘‘(B) a spouse, son, daughter, stepson, or

12 stepdaughter of an individual described in sub13 paragraph (A);

14 ‘‘(C) an individual—

15 ‘‘(i) who was a brother, sister, step16 brother, stepsister, son-in-law, or daughter17 in-law of an individual described in sub18 paragraph (A); and

19 ‘‘(ii) whose principal place of resi20 dence was the home of the individual de21 scribed in subparagraph (A); or

22 ‘‘(D) an individual who was a dependent

23 (within the meaning of section 152 of the Inter24 nal Revenue Code of 1986) of an individual de25 scribed in subparagraph (A).
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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 sub7 section (a)(3), a student is maintaining satisfactory

8 progress if—

9 ‘‘(A) the institution at which the student is

10 in attendance reviews the progress of the stu11 dent at the end of each academic year, or its

12 equivalent, as determined by the institution;

13 and

14 ‘‘(B) the student has at least a cumulative

15 C average or its equivalent, or academic stand16 ing consistent with the requirements for grad17 uation, as determined by the institution, at the

18 end of the second such academic year.

19 ‘‘(2) SPECIAL RULE.—Whenever a student fails

20 to meet the eligibility requirements of subsection

21 (a)(3) as a result of the application of this sub22 section and subsequent to that failure the student

23 has academic standing consistent with the require24 ments for graduation, as determined by the institu25 tion, for any grading period, the student may, sub-
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1 ject to this subsection, again be eligible under sub2 section (a)(3) for 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

11 by the institution.

12 ‘‘(d) STUDENTS WHO ARE NOT SECONDARY SCHOOL

13 GRADUATES.—In order for a student who does not have

14 a certificate of graduation from a school providing second15 ary education, or the recognized equivalent of such certifi16 cate, to be eligible for any assistance under this subpart,

17 the student 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 such student can benefit from the

22 education or training being offered. Such examina23 tion shall be approved by the Secretary on the basis

24 of compliance with such standards for development,
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1 administration, and scoring as the Secretary may

2 prescribe in regulations.

3 ‘‘(2) DETERMINATION.—The student shall be

4 determined as having the ability to benefit from the

5 education or training in accordance with such proc6 ess as the State shall prescribe. Any such process

7 described or approved by a State for the purposes of

8 this section shall be effective 6 months after the date

9 of submission to the Secretary unless the Secretary

10 disapproves such process. In determining whether to

11 approve or disapprove such process, the Secretary

12 shall take into account the effectiveness of such

13 process in enabling students without secondary

14 school diplomas or the recognized equivalent to bene15 fit from the instruction offered by institutions utiliz16 ing such process, and shall also take into account

17 the cultural diversity, economic circumstances, and

18 educational preparation of the populations served by

19 the institutions.

20 ‘‘(e) SPECIAL RULE FOR CORRESPONDENCE

21 COURSES.—A student shall not be eligible to receive a

22 grant under this subpart for a correspondence course un23 less such course is part of a program leading to an associ24 ate, bachelor, or graduate degree.
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1 ‘‘(f) COURSES OFFERED THROUGH TELECOMMUNI2 CATIONS.—

3 ‘‘(1) RELATION TO CORRESPONDENCE

4 COURSES.—A student enrolled in a course of in5 struction at an eligible institution of higher edu6 cation (other than an institute or school that meets

7 the definition in section 521(4)(C) of the Carl D.

8 Perkins Vocational and Applied Technology Edu9 cation Act (20 U.S.C. 2471(4)(C))) that is offered

10 in whole or in part through telecommunications and

11 leads to a recognized associate, bachelor, or graduate

12 degree conferred by such institution shall not be

13 considered to be enrolled in correspondence courses

14 unless the total amount of telecommunications and

15 correspondence courses at such institution equals or

16 exceeds 50 percent of such courses.

17 ‘‘(2) RESTRICTION OR REDUCTIONS OF FINAN18 CIAL AID.—A student’s eligibility to receive a grant

19 under this subpart may be reduced if a financial aid

20 officer determines under the discretionary authority

21 provided in section 479A that telecommunications

22 instruction results in a substantially reduced cost of

23 attendance to such student.

24 ‘‘(3) DEFINITION.—For the purposes of this

25 subsection, the term ‘telecommunications’ means the
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1 use of television, audio, or computer transmission,

2 including open broadcast, closed circuit, cable,

3 microwave, or satellite, audio conferencing, computer

4 conferencing, or video cassettes or discs, except that

5 such term does not include a course that is delivered

6 using video cassette or disc recordings at such insti7 tution and that is not delivered in person to other

8 students of that institution.

9 ‘‘(g) STUDY ABROAD.—Nothing in this subpart shall

10 be construed to limit or otherwise prohibit access to study

11 abroad programs approved by the home institution at

12 which a student is enrolled. An otherwise eligible student

13 who is engaged in a program of study abroad approved

14 for academic credit by the home institution at which the

15 student is enrolled shall be eligible to receive a grant under

16 this subpart, without regard to whether such study abroad

17 program is required as part of the student’s degree

18 program.

19 ‘‘(h) VERIFICATION OF SOCIAL SECURITY NUM20 BER.—The Secretary, in cooperation with the Commis21 sioner of Social Security, shall verify any social security

22 number provided by a student to an eligible institution

23 under subsection (a)(5)(B) and shall enforce the following

24 conditions:
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1 ‘‘(1) PENDING VERIFICATION.—Except as pro2 vided in paragraphs (2) and (3), an institution shall

3 not deny, reduce, delay, or terminate a student’s eli4 gibility for assistance under this subpart because so5 cial security number verification is pending.

6 ‘‘(2) DENIAL OR TERMINATION.—If there is a

7 determination by the Secretary that the social secu8 rity number provided to an eligible institution by a

9 student is incorrect, the institution shall deny or ter10 minate the student’s eligibility for any grant under

11 this subpart until such time as the student provides

12 documented evidence of a social security number

13 that is determined by the institution to be correct.

14 ‘‘(3) CONSTRUCTION.—Nothing in this sub15 section shall be construed to permit the Secretary to

16 take any compliance, disallowance, penalty, or other

17 regulatory action against—

18 ‘‘(A) any institution of higher education

19 with respect to any error in a social security

20 number, unless such error was a result of fraud

21 on the part of the institution; or

22 ‘‘(B) any student with respect to any error

23 in a social security number, unless such error

24 was a result of fraud on the part of the

25 student.’’.
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1 Subtitle D—Immunity

2 SEC. 941. GENERAL IMMUNITY FOR TOBACCO PRODUCERS

3 AND WAREHOUSERS.

4 Notwithstanding any other provision of this title, an

5 active tobacco producer, tobacco-related growers associa6 tion, or tobacco warehouse owner or employee may not be

7 subject to liability in any Federal or State court for any

8 cause of action resulting from the failure of any tobacco

9 product manufacturer, distributor, or retailer to comply

10 with national tobacco settlement legislation.

11 TITLE X—EFFECTIVE DATES

12 AND OTHER PROVISIONS

13 SEC. 1001. EFFECTIVE DATES.

14 (a) IN GENERAL.—Except as provided in subsection

15 (b), and as otherwise provided in this Act, the provisions

16 of this Act shall take effect on the date of enactment of

17 this Act.

18 (b) EXCEPTIONS.—The following provisions shall be19 come effective as follows:

20 (1) The retail tobacco product display provi21 sions under subtitle A of title I shall be applicable

22 to retailers on the date that is 9 months after the

23 date of enactment of this Act.

24 (2) The provisions relating to the display of to25 bacco product signs and displays by retailers under
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1 subtitle A of title I shall be applicable to retailers on

2 the date that is 5 months after the date of enact3 ment of this Act.

4 (3) The provisions of subtitle A of title I relat5 ing to advertising shall be applicable on the date

6 that is 9 months after the date of enactment of this

7 Act.

8 (4) The labeling requirements of subtitle A of

9 title I and of chapter 9 of the Federal Food, Drug

10 and Cosmetic Act (as added by section 143(3) of

11 this Act) shall be applicable (as determined under

12 regulations promulgated by the Secretary) with re13 spect to—

(A) 1 14 ⁄3 of all tobacco product packages, on

15 the date that is 90 days after the date of enact16 ment of this Act;

(B) 1 17 ⁄3 of all tobacco product packages, on

18 the date that is 120 days after the date of en19 actment of this Act; and

(C) 1 20 ⁄3 of all tobacco product packages, on

21 the date that is 180 days after the date of en22 actment of this Act.

23 (5) The provisions of section 105 relating to the

24 sponsorship of events shall be applicable on Decem25 ber 31, 1998.
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1 (6) The provisions of section 121 shall be appli2 cable on the date that is 3 months after the date of

3 enactment of this Act.

4 (7) The provisions of section 122 relating to

5 vending machines shall be applicable on the date

6 that is 12 months after the date of enactment of

7 this Act.

8 (8) The provisions of section 122 relating to

9 minimum package size shall be applicable on the

10 date that is 3 months after the date of enactment

11 of this Act.

12 (9) The provisions of section 122 relating to

13 vending machines shall be applicable on the date

14 that is 12 months after the date of enactment of

15 this Act.

16 (10) The provisions of section 122 relating to

17 sampling shall be applicable on the date that is 3

18 months after the date of enactment of this Act.

19 (11) The provisions of section 909 of the Fed20 eral Food, Drug and Cosmetic Act (as added by sec21 tion 143(3) of this Act) relating to good manufac22 turing practices shall be applicable on the date that

23 is 24 months after the date of enactment of this Act

24 or on a date determined appropriate by the Sec25 retary.
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1 (12) The provisions of subtitle F of title I relat2 ing to corporate compliance shall be applicable on

3 the date that is 12 months after the date of enact4 ment of this Act.

5 SEC. 1002. NATIVE AMERICANS.

6 (a) INDIAN COUNTRY.—The provisions of this Act (or

7 an amendment made by this Act) shall apply to the manu8 facture, distribution, and sale of tobacco products within

9 Indian country.

10 (b) INDIAN TRIBES.—To the extent that an Indian

11 tribe or tribal organization engages in the manufacture,

12 distribution, or sale of tobacco products, the provisions of

13 this Act (or an amendment made by this Act) shall apply

14 to such tribe or organization.

15 (c) PAYMENTS TO TRUST FUND.—Any Indian tribe

16 or tribal organization that engages in the manufacturer

17 of tobacco products shall be subject to liability under sec18 tion 402, or shall be considered a non-participating manu19 facturer for purposes of section 613, and shall be subject

20 to surcharges under section 205.

21 (d) APPLICATION OF FDA REQUIREMENTS.—

22 (1) IN GENERAL.—The Secretary shall promul23 gate regulations to provide for the application of the

24 requirements of the Food, Drug and Cosmetic Act
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1 to tobacco products manufactured, distributed, or

2 sold within Indian country.

3 (2) ELIGIBILITY FOR ASSISTANCE.—Under the

4 regulations promulgated under paragraph (1), the

5 Secretary may provide assistance to an Indian tribe

6 or tribal organization in meeting and enforcing the

7 requirements under such regulations if—

8 (A) the tribe or organization has a govern9 ing body that has powers and carries out duties

10 that are similar to the powers and duties of

11 State or local governments;

12 (B) the functions to be exercised through

13 the use of such assistance relate to activities on

14 lands within the jurisdiction of the tribe or or15 ganization; and

16 (C) the tribe or organization is reasonably

17 expected to be capable of carrying out the func18 tions required by the Secretary.

19 (e) RETAIL LICENSING REQUIREMENTS.—

20 (1) IN GENERAL.—The requirements of subtitle

21 D of title I shall apply to retailers that sell tobacco

22 products within Indian country.

23 (2) SELF-REGULATION.—The Secretary shall

24 promulgate regulations to permit the Indian tribe or

25 tribal organization with jurisdiction over the lands
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1 involved to implement a tribal licensing program

2 that is at least as strict as the program in operation

3 in the State in which the land involved is located.

4 (3) IMPLEMENTATION BY SECRETARY.—If the

5 Secretary determines that the Indian tribe or tribal

6 organization is not qualified to administer the re7 quirements of subtitle D of title I, the Secretary

8 shall implement such requirements on behalf of the

9 tribe or organization or delegate such authority to

10 the State involved.

11 (f) ELIGIBILITY FOR PUBLIC HEALTH PAYMENTS.—

12 (1) IN GENERAL.—Except as provided in para13 graph (2), an Indian tribe or tribal organization

14 shall be considered a State for purposes of eligibility

15 under title V.

16 (2) PUBLIC HEALTH PROGRAM.—

17 (A) IN GENERAL.—Each State that re18 ceives a payment under section 502 shall set19 aside an appropriate portion, as determined

20 under regulations prescribed by the Secretary,

21 of such payment for use by Indian tribes or

22 tribal organizations within the State.

23 (B) AMOUNT.—The amount of any funds

24 under subparagraph for which an Indian tribe

25 or tribal organization is eligible shall be deter-
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1 mined by the State based on the proportion of

2 the registered members of the tribe involved as

3 compared to the total population of all such

4 registered members in the State.

5 (C) USE.—Amounts provided to a tribe or

6 organization under this paragraph shall be used

7 as provided for in section 504 and in accord8 ance with a plan submitted by the tribe or orga9 nization and approved by the Secretary as being

10 in compliance with this Act.

11 (D) REALLOTMENT.—Any amounts set12 aside and not expended under this paragraph

13 shall be reallotted among other eligible tribes

14 and organizations.

15 (g) OBLIGATION OF MANUFACTURERS.—

16 (1) PROHIBITION.—A manufacturer shall not

17 engage in any activity within Indian country that is

18 otherwise prohibited under this Act (or an amend19 ment made by this Act).

20 (2) LIMITATION ON SALE.—A manufacturer

21 shall not sell or otherwise distribute a tobacco prod22 uct for subsequent manufacture, distribution, or sale

23 to an Indian tribe or tribal organization, or provide

24 such products to a manufacturer, distributor, or re25 tailer that is subject to the jurisdiction of a tribe or
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1 organization, except under the same terms and con2 ditions as the manufacturer imposes on other manu3 facturers, distributors, or retailers.

4 (h) DEFINITIONS.—In this section:

5 (1) INDIAN COUNTRY.—The term ‘‘Indian coun6 try’’ has the meaning given such term by section

7 1151 of title 18, United States Code.

8 (2) INDIAN TRIBE.—The term ‘‘Indian tribe’’

9 has the meaning given to such term by section 4(e)

10 of the Indian Self-Determination and Education As11 sistance Act (25 U.S.C. 450b(e)).

12 (3) TRIBAL ORGANIZATION.—The term ‘‘tribal

13 organization’’ has the meaning given such term in

14 section 4 of the Indian Self Determination and Edu15 cation Assistance Act (25 U.S.C. 450b).

16 SEC. 1003. PREEMPTION.

17 (a) GENERAL PREEMPTION.—Except as otherwise

18 provided for in this section, nothing in this Act shall be

19 construed as prohibiting a State from imposing require20 ments, prohibitions, penalties or other measures to further

21 the purposes of this Act that are in addition to the re22 quirements, prohibitions, or penalties required under this

23 Act. To the extent not inconsistent with the purposes of

24 this Act, State and local governments may impose addi-
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1 tional tobacco product control measures to further restrict

2 or limit the use of such products by minors.

3 (b) ENFORCEMENT.—A State may not impose obliga4 tions or requirements relating to the enforcement of this

5 Act in a manner that conflicts with the provisions of title

6 VI.

7 (c) PUBLIC EXPOSURE TO SMOKE.—Nothing in title

8 III shall be construed to preempt or otherwise affect any

9 other Federal, State or local law which provides greater

10 protection from the health hazards of environmental to11 bacco smoke.

12 (d) TAXES.—Nothing in this Act shall be construed

13 to prohibit a State from imposing taxes on tobacco prod14 ucts or tobacco product manufacturers, distributors, or re15 tailers.

16 (e) NATIVE AMERICANS.—Except as provided in sec17 tion 902, a State may not impose obligations or require18 ments relating to the application of this Act to Indian

19 tribes and tribal organizations.